497 1 vaneckfundssaimay12025asrea.htm 497E AS REVISED SAI VanEckFundsSAIMay12025AsRevisedMay132025

VANECK FUNDS
STATEMENT OF ADDITIONAL INFORMATION

Dated May 1, 2025, as revised on May 13, 2025

CM COMMODITY INDEX FUND
CLASS A: CMCAX / CLASS I: COMIX / CLASS Y: CMCYX

EMERGING MARKETS BOND FUND
CLASS A: EMBAX / CLASS I: EMBUX / CLASS Y: EMBYX

EMERGING MARKETS FUND
CLASS A : GBFAX / CLASS I: EMRIX / CLASS Y: EMRYX/ CLASS Z: EMRZX

GLOBAL RESOURCES FUND
CLASS A : GHAAX / CLASS I: GHAIX / CLASS Y: GHAYX

INTERNATIONAL INVESTORS GOLD FUND
CLASS A : INIVX / CLASS C: IIGCX / CLASS I: INIIX / CLASS Y: INIYX

ONCHAIN ECONOMY ETF1: NODE

VANECK MORNINGSTAR WIDE MOAT FUND
CLASS I: MWMIX / CLASS Z: MWMZX

This statement of additional information (“SAI”) is not a prospectus. It should be read in conjunction with the prospectuses for VanEck Funds (the “Trust”) (i) dated April 16, 2025, relating to Onchain Economy ETF, and (ii) dated May 1, 2025, relating to CM Commodity Index Fund, Emerging Markets Bond Fund, Emerging Markets Fund, Global Resources Fund, International Investors Gold Fund and VanEck Morningstar Wide Moat Fund; (each, a “Fund” and collectively, the “Funds”), as each may be revised from time to time (each, a “Prospectus”). The audited financial statements of the Funds (except for Onchain Economy ETF) for the fiscal year ended December 31, 2024 are hereby incorporated by reference from the Funds’filings on Form N-CSR. A copy of the Prospectuses, Annual and Semi-Annual Reports for the Trust, and filings on Form N-CSR, relating to the Funds, may be obtained without charge by visiting the VanEck website at vaneck.com, by calling toll-free 800.826.2333 or by writing to the Trust or Van Eck Securities Corporation, the Funds’ distributor (the “Distributor”). The Trust’s and the Distributor’s address is 666 Third Avenue, 9th Floor, New York, New York 10017. Capitalized terms used herein that are not defined have the same meaning as in the Prospectuses, unless otherwise noted.

1 The Shares of Onchain Economy ETF are expected to be approved for listing, subject to notice of issuance, on the Cboe BZX Exchange, Inc.


TABLE OF CONTENTS
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STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2025, as revised on MAY 13, 2025
GENERAL INFORMATION
The Trust is an open-end management investment company organized as a business trust under the laws of the Commonwealth of Massachusetts on April 3, 1985. On May 1, 2016, Van Eck Funds changed its name to VanEck Funds. The Trust’s series which are currently being offered are the following: Emerging Markets Fund, which offers Class A, Class I, Class Y and Class Z shares; International Investors Gold Fund, which offers Class A, Class C, Class I and Class Y shares; CM Commodity Index Fund, Global Resources Fund (formerly, Global Hard Assets Fund prior to May 1, 2021), and Emerging Markets Bond Fund, each of which offers Class A, Class I and Class Y shares; and VanEck Morningstar Wide Moat Fund which offers Class I and Class Z shares. Additionally, Onchain Economy ETF, a series of the Trust, commenced operations on or about the date of this SAI. The Board of Trustees of the Trust (the “Board”) has authority, without the necessity of a shareholder vote, to create additional series or funds, each of which may issue separate classes of shares.
Emerging Markets Bond Fund, International Investors Gold Fund and Onchain Economy ETF are classified as non-diversified funds under the Investment Company Act of 1940, as amended (the “1940 Act”). CM Commodity Index Fund, Emerging Markets Fund, Global Resources Fund and VanEck Morningstar Wide Moat Fund are classified as diversified funds under the 1940 Act. Van Eck Associates Corporation (“VEAC”) serves as investment adviser to all the Funds, except for CM Commodity Index Fund and Onchain Economy ETF. Van Eck Absolute Return Advisers Corporation (“VEARA” and together with VEAC, each an “Adviser” or the “Advisers”) serves as investment adviser to CM Commodity Index Fund and the Onchain Economy ETF.

Onchain Economy ETF offers and issues Shares at their net asset value (“NAV”) only in aggregations of a specified number of Shares (each, a “Creation Unit”). Similarly, shares are redeemable by the Onchain Economy ETF only in Creation Units, as further described herein. The Shares of Onchain Economy ETF are expected to be listed on the Cboe BZX Exchange, Inc. (“Cboe” or the “Exchange”), and shares of the Onchain Economy ETF will trade in the secondary market at market prices that may differ from the Shares’ NAV. The Trust reserves the right to permit or require a “cash” option for creations and redemptions of Shares of the Onchain Economy ETF (subject to applicable legal requirements) to the extent Shares are not created or redeemed wholly in cash.

INVESTMENT POLICIES AND RISKS
The following is additional information regarding the investment policies and strategies used by the Funds in attempting to achieve their respective objectives, and should be read with the sections of the Funds’ Prospectuses titled “Summary Information - Principal Investment Strategies”, “Summary Information - Principal Risks” and “Investment Objectives, Strategies, Policies, Risks and Other Information”. The Funds, except for VanEck Morningstar Wide Moat Fund, may take temporary defensive positions in anticipation of or in an attempt to respond to adverse market, economic, political or other conditions. Such a position could have the effect of reducing any benefit a Fund may receive from a market increase. When taking a temporary defensive position, a Fund may invest all or a substantial portion of its total assets in cash or cash equivalents, government securities, short-term or medium-term fixed income securities, which may include, but not be limited to, shares of other mutual funds, U.S. Treasury bills, commercial paper or repurchase agreements. A Fund may not achieve its investment objective while it is investing defensively. Each of the Emerging Markets Bond Fund and VanEck Morningstar Wide Moat Fund may engage in active and frequent trading of its portfolio securities.
CM Commodity Index Fund seeks to achieve its investment objective by investing in instruments that derive their value from the performance of the UBS Constant Maturity Commodity Total Return Index (the “CMCI”), as described below, and in bonds, debt securities and other fixed income instruments (“Fixed Income Instruments”) issued by various U.S. public- or private-sector entities. CM Commodity Index Fund invests in commodity-linked derivative instruments, including commodity index-linked notes, swap agreements, commodity futures contracts and options on futures contracts that provide economic exposure to the investment returns of the commodities markets, as represented by the CMCI and its constituents. A derivative is an investment whose value depends on (or is derived from) that value of an underlying security. Commodities are assets that have tangible properties, such as oil, metals, and agricultural products. A commodity-linked derivative is a derivative instrument whose value is linked to the movement of a commodity, commodity index, commodity option or futures contract. The value of commodity-linked derivative instruments may be affected by overall market movements and other factors affecting the value of a particular industry or commodity, such as weather, disease, embargoes, or political and regulatory developments.
The CMCI is a rules-based, composite benchmark index diversified across 29 commodity components from the following five sectors: energy, precious metals, industrial metals, agriculture and livestock. The CMCI is comprised of futures contracts with maturities ranging from three months up to a maximum of about three years for each commodity, depending on
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liquidity. The return of the CMCI reflects a combination of (i) the returns on the futures contracts comprising the CMCI; and (ii) the fixed-income return that would be earned on a hypothetical portfolio of 13-week U.S. Treasury bills theoretically deposited as full collateral for the notional exposure of the hypothetical positions in the futures contracts comprising the CMCI. The selection and relative weightings of the components of the CMCI are designed to reflect the economic significance and market liquidity of each commodity, as determined based on global economic data, consumption data, commodity futures prices, open interest and volume data. The maturity of each commodity component in the CMCI remains fixed at a predefined time interval from the current date at all times by means of a continuous rolling process, in which a weighted percentage of shorter dated contracts for each commodity are swapped for longer dated contracts on a daily basis. The CMCI is rebalanced monthly back to the target weightings of the commodity components of the CMCI and the target weightings of all commodity components are revised once per year. A more detailed description of the CMCI is contained in the section of this SAI entitled “Additional Information About the CMCI.”
CM Commodity Index Fund seeks to track the returns of the CMCI by entering into swap contracts and commodity index-linked notes with one or more counterparties, which contracts and notes will rise and fall in value in response to changes in the value of the CMCI. As of the date of this SAI, UBS was the only available counterparty with which CM Commodity Index Fund may enter into such swap contracts on the CMCI. CM Commodity Index Fund may enter into such contracts and notes directly or indirectly through a wholly-owned subsidiary of the Fund (the “CMCI Subsidiary”). Commodity index-linked notes are derivative debt instruments with principal and/or coupon payments linked to the performance of commodity indices (such as the CMCI). These commodity index-linked notes are sometimes referred to as “structured notes” because the terms of these notes may be structured by the issuer and the purchaser of the note. CM Commodity Index Fund may also seek to gain exposure to the individual commodity components of the CMCI by investing in futures contracts that comprise the CMCI, either directly or indirectly through the CMCI Subsidiary.
Under normal conditions, the VanEck Morningstar Wide Moat Fund invests at least 80% of its net assets in securities that comprise the Morningstar® Wide Moat Focus IndexSM (the “Wide Moat Index”). The Wide Moat Index is comprised of securities issued by companies that Morningstar, Inc. (“Morningstar”) determines to have sustainable competitive advantages based on a proprietary methodology that considers quantitative and qualitative factors (“wide moat companies”). Wide moat companies are selected from the universe of companies represented in the Morningstar® US Market IndexSM, a broad market index representing 97% of U.S. market capitalization. The Wide Moat Index targets a select group of wide moat companies: those that according to Morningstar’s equity research team are attractively priced as of each Wide Moat Index review. Out of the companies in the Morningstar US Market Index that Morningstar determines are wide moat companies, Morningstar selects companies to be included in Index as determined by the ratio of Morningstar’s estimate of fair value of the issuer’s common stock to the price. Morningstar’s equity research fair value estimates are calculated using a standardized, proprietary valuation model. Wide moat companies may include medium-capitalization companies. VanEck Morningstar Wide Moat Fund’s 80% investment policy is non-fundamental and may be changed without shareholder approval upon 60 days’ prior written notice to shareholders. In seeking to achieve its investment objective, VanEck Morningstar Wide Moat Fund may also invest in VanEck Morningstar Wide Moat ETF (the “underlying fund”), an affiliated fund, which also seeks to replicate the price and yield performance of the Wide Moat Index, and such investment will count towards the VanEck Morningstar Wide Moat Fund’s 80% investment policy. VanEck Morningstar Wide Moat Fund, using a “passive” or indexing investment approach, attempts to replicate the price and yield performance of the Index by investing in a portfolio of securities that generally replicate the performance of the Wide Moat Index.
ASSET-BACKED SECURITIES
The Funds may invest in asset-backed securities. Asset-backed securities, directly or indirectly, represent interests in, or are secured by and payable from, pools of consumer loans (generally unrelated to mortgage loans) and most often are structured as pass-through securities. Interest and principal payments ultimately depend on payment of the underlying loans, although the securities may be supported by letters of credit or other credit enhancements. The value of asset-backed securities may also depend on the creditworthiness of the servicing agent for the loan pool, the originator of the loans, or the financial institution providing the credit enhancement.
Asset-backed securities are subject to certain risks. These risks generally arise out of the security interest in the assets collateralizing the security. For example, credit card receivables are generally unsecured and the debtors are entitled to a number of protections from the state and through federal consumer laws, many of which give the debtor the right to offset certain amounts of credit card debts and thereby reducing the amounts due.
BELOW INVESTMENT GRADE SECURITIES
The Funds may invest in below investment grade debt securities. Investments in securities rated below investment grade that are eligible for purchase by a Fund are described as “speculative” by Moody’s, S&P and Fitch, Inc. Investments in lower rated corporate debt securities (“high yield securities” or “junk bonds”) generally provide greater income and increased
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opportunity for capital appreciation than investments in higher quality securities, but they also typically entail greater price volatility and principal and income risk.
These high yield securities are regarded as predominantly speculative with respect to the issuer’s continuing ability to meet principal and interest payments. Analysis of the creditworthiness of issuers of debt securities that are high yield may be more complex than for issuers of higher quality debt securities.
High yield securities may be more susceptible to real or perceived adverse economic and competitive industry conditions than investment grade securities. The prices of high yield securities have been found to be less sensitive to interest-rate changes than higher-rated investments, but more sensitive to adverse economic downturns or individual corporate developments. A projection of an economic downturn or of a period of rising interest rates, for example, could cause a decline in high yield security prices because the advent of a recession could lessen the ability of a highly leveraged company to make principal and interest payments on its debt securities. If an issuer of high yield securities defaults, in addition to risking payment of all or a portion of interest and principal, a Fund by investing in such securities may incur additional expenses to seek recovery. In the case of high yield securities structured as zero-coupon or pay-in-kind securities, their market prices are affected to a greater extent by interest rate changes, and therefore tend to be more volatile than securities which pay interest periodically and in cash.
The secondary market on which high yield securities are traded may be less liquid than the market for higher grade securities. Less liquidity in the secondary trading market could adversely affect the price at which a Fund could sell a high yield security, and could adversely affect the daily net asset value of the shares. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high yield securities, especially in a thinly-traded market. When secondary markets for high yield securities are less liquid than the market for higher grade securities, it may be more difficult to value the securities because such valuation may require more research, and elements of judgment may play a greater role in the valuation because there is less reliable, objective data available.
BORROWING; LEVERAGE
Borrowing to invest more is called “leverage.” A Fund may borrow from banks provided that the amount of borrowing is no more than one third of the net assets of the Fund plus the amount of the borrowings. A Fund is required to be able to restore borrowing to its permitted level within three days, if it should increase to more than one-third of its net assets as stated above. Methods that may be used to restore borrowings in this context include selling securities, even if the sale hurts a Fund’s investment performance. Leverage exaggerates the effect of rises or falls in prices of securities bought with borrowed money. Borrowing also costs money, including fees and interest. The Funds expect to borrow only through negotiated loan agreements with commercial banks or other institutional lenders.
COLLATERALIZED MORTGAGE OBLIGATIONS
The Funds may invest in collateralized mortgage obligations (“CMOs”). CMOs are fixed-income securities which are collateralized by pools of mortgage loans or mortgage-related securities created by commercial banks, savings and loan institutions, private mortgage insurance companies and mortgage bankers. In effect, CMOs “pass through” the monthly payments made by individual borrowers on their mortgage loans. Prepayments of the mortgages included in the mortgage pool may influence the yield of the CMO. In addition, prepayments usually increase when interest rates are decreasing, thereby decreasing the life of the pool. As a result, reinvestment of prepayments may be at a lower rate than that on the original CMO. There are different classes of CMOs, and certain classes have priority over others with respect to prepayment of the mortgages. Timely payment of interest and principal (but not the market value) of these pools is supported by various forms of insurance or guarantees. Each Fund may buy CMOs without insurance or guarantees if, in the opinion of its Adviser, the pooler is creditworthy or if rated investment grade. In the event that any CMOs are determined to be investment companies, the Funds will be subject to certain limitations under the 1940 Act.
COMMERCIAL PAPER
The Funds may invest in commercial paper that is indexed to certain specific foreign currency exchange rates which may entail the risk of loss of principal. The terms of such commercial paper typically provide that its principal amount is adjusted upwards or downwards (but not below zero) at maturity to reflect changes in the exchange rate between two currencies while the obligation is outstanding. The Funds purchase such commercial paper with the currency in which it is denominated and, at maturity, will typically receive interest and principal payments thereon in that currency, but the amount or principal payable by the issuer at maturity will change in proportion to the change (if any) in the exchange rate between two specified currencies between the date the instrument is issued and the date the instrument matures.
The Funds may invest in commercial paper with the principal amount indexed to the difference, up or down, in value between two foreign currencies. The Funds segregate asset accounts with an equivalent amount of cash, U.S. government securities or other highly liquid securities equal in value to this commercial paper.
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COMMODITIES AND COMMODITY-LINKED DERIVATIVES
Exposure to the commodities markets may subject the Funds to greater volatility than investments in traditional securities. The commodities markets may fluctuate widely based on a variety of factors including changes in overall market movements, political and economic events and policies, war, disease, acts of terrorism, natural disasters, and changes in interest rates or inflation rates. Prices of various commodities may also be affected by factors such as drought, floods, weather, embargoes, tariffs and other regulatory developments. The prices of commodities can also fluctuate widely due to supply and demand disruptions in major producing or consuming regions. Certain commodities may be produced in a limited number of countries and may be controlled by a small number of producers. As a result, political, economic and supply related events in such countries could have a disproportionate impact on the prices of such commodities.
Commodity-Linked “Structured” Securities. Because the value of a commodity-linked derivative instrument typically is based upon the price movements of a physical commodity, the value of the commodity-linked derivative instrument may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry. The value of these securities typically rises or falls in response to changes in the underlying commodity or related index of investment.
Structured Notes. Structured notes expose CM Commodity Index Fund economically to movements in commodity prices. The performance of a structured note is determined by the price movement of the commodity underlying the note. A liquid secondary market may not exist for structured notes, and there can be no assurance that one will develop. These notes are often leveraged, increasing the volatility of each note’s market value relative to changes in the underlying commodity, commodity futures contract or commodity index.
Based on Onchain Economy ETF’s and its wholly-owned subsidiary’s (the “Onchain Subsidiary”) current investment strategies, the Onchain Economy ETF and the Onchain Subsidiary are each a “commodity pool” and VEARA, which is currently registered with the CFTC as a commodity pool operator (“CPO”) and commodity trading adviser under the CEA, is considered a CPO with respect to the Onchain Economy ETF and the Onchain Subsidiary. Accordingly, the Fund and VEARA are subject to dual regulation by the CFTC and the SEC. Pursuant to certain CFTC regulations, the Onchain Economy ETF and VEARA have elected to meet the requirements of certain CFTC regulations by complying with specific SEC rules and regulations relating to disclosure and reporting requirements. The CFTC could deem the Onchain Economy ETF or VEARA in violation of an applicable CFTC regulation if the Onchain Economy ETF or VEARA failed to comply with a related SEC regulatory requirement. In addition, the Onchin Economy ETF and VEARA will remain subject to certain CFTC-mandated disclosure, reporting and recordkeeping regulations with respect to the Onchain Economy ETF and the Onchain Subsidiary. Compliance with the CFTC regulations could increase the Onchain Economy ETF’s expenses, adversely affecting the Onchain Economy ETF’s total return.

CONCENTRATION
To the extent that the Wide Moat Index is concentrated in a particular sector or sectors or industry or group of industries, VanEck Morningstar Wide Moat Fund will be subject to the risk that economic, political or other conditions that have a negative effect on that sector or industry may negatively impact the Fund to a greater extent than if the Fund’s assets were invested in a wider variety of sectors or industries.

CONVERTIBLE SECURITIES
The Funds may invest in securities that are convertible into common stock or other securities of the same or a different issuer or into cash within a particular period of time at a specified price or formula. Convertible securities are generally fixed income securities (but may include preferred stock) and generally rank senior to common stocks in a corporation’s capital structure and, therefore, entail less risk than the corporation’s common stock. The value of a convertible security is a function of its “investment value” (its value as if it did not have a conversion privilege), and its “conversion value” (the security’s worth if it were to be exchanged for the underlying security, at market value, pursuant to its conversion privilege).
To the extent that a convertible security’s investment value is greater than its conversion value, its price will generally be primarily a reflection of such investment value and its price will be likely to increase when interest rates fall and decrease when interest rates rise, as with a fixed-income security (the credit standing of the issuer and other factors may also have an effect on the convertible security’s value). If the conversion value exceeds the investment value, the price of the convertible security will generally rise above its investment value and, in addition, will generally sell at some premium over its conversion value. (This premium represents the price investors are willing to pay for the privilege of purchasing a fixed-income security with a possibility of capital appreciation due to the conversion privilege.) At such times, the price of the convertible security will tend to fluctuate directly with the price of the underlying equity security. Convertible securities may be purchased by the Funds at varying price levels above their investment values and/or their conversion values in keeping with the Funds’ objectives.
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CREDIT
Credit risk is the risk that the issuer or guarantor of a debt security or the counterparty to an over-the-counter (“OTC”) contract (including many derivatives) will be unable or unwilling to make timely principal, interest or settlement payments or otherwise honor its obligations. The Funds invest in debt securities that are subject to varying degrees of risk that the issuers of the securities will have their credit ratings downgraded or will default, potentially reducing the value of the securities. A Fund may enter into financial transactions that involve a limited number of counterparties, which may increase the Fund’s exposure to credit risk. The Fund does not specifically limit its credit risk with respect to any single counterparty. Further, there is a risk that no suitable counterparties will be willing to enter into, or continue to enter into, transactions with the Fund and, as a result, the Fund may not be able to achieve its investment objective.

CURRENCY FORWARDS
A currency forward transaction is a contract to buy or sell a specified quantity of currency at a specified date in the future at a specified price which may be any fixed number of days from the date of the contract agreed upon by the parties. Currency forward contracts may be used to increase or reduce exposure to currency price movements.
The use of currency forward transactions involves certain risks. For example, if the counterparty under the contract defaults on its obligation to make payments due from it as a result of its bankruptcy or otherwise, a Fund may lose such payments altogether or collect only a portion thereof, which collection could involve costs or delays.

CURRENCY MANAGEMENT STRATEGIES
Currency management strategies are generally used in an attempt to reduce the risk and impact of adverse currency movements to protect the value of, or seek to mitigate the currency exposure associated with, an investment (including, for example, mitigating the exposure to the Euro that may be embedded in the Polish zloty). Currency management strategies, including currency forward contracts (described above) and cross-hedging, may substantially change a Fund’s exposure to currency exchange rates and could result in losses to the Fund if currencies do not perform as an Adviser expects. In addition, currency management strategies, to the extent that such strategies reduce a Fund’s exposure to currency risks, may also reduce the Fund’s ability to benefit from favorable changes in currency exchange rates. There is no assurance that an Adviser’s use of currency management strategies will benefit a Fund or that they will be, or can be, used at appropriate times. Furthermore, there may not be a perfect correlation between the amount of exposure to a particular currency and the amount of securities in the portfolio denominated in that currency or exposed to that currency. Currency markets are generally less regulated than securities markets. Derivatives transactions, especially currency forward contracts, currency related futures contracts and swap agreements, may involve significant amounts of currency management strategies risk. The Emerging Markets Bond Fund, which may utilize these types of instruments to a significant extent, will be especially subject to currency management strategies risk.

CYBER SECURITY
The Funds and their service providers are susceptible to cyber security risks that include, among other things, theft, unauthorized monitoring, release, misuse, loss, destruction or corruption of confidential and highly restricted data; denial of service attacks; unauthorized access to relevant systems; compromises to networks or devices that the Funds and their service providers use to service the Funds’ operations; and operational disruption or failures in the physical infrastructure or operating systems that support the Funds and their service providers. Cyber attacks against or security breakdowns of the Funds or their service providers may adversely impact the Funds and their shareholders, potentially resulting in, among other things, financial losses; the inability of Fund shareholders to transact business and the Funds to process transactions; the inability to calculate the Funds’ NAV; violations of applicable privacy and other laws; regulatory fines, penalties, reputational damage, reimbursement or other compensation costs; and/or additional compliance costs. The Funds may incur additional costs for cyber security risk management and remediation purposes. In addition, cyber security risks may also impact issuers of securities in which the Funds invest, which may cause the Funds’ investments in such issuers to lose value. There can be no assurance that the Funds or their service providers will not suffer losses relating to cyber attacks or other information security breaches in the future.
DEBT SECURITIES
The Funds may invest in debt securities. The market value of debt securities generally varies in response to changes in interest rates and the financial condition of each issuer and the value of a global resource if linked to the value of a global resource. Debt securities with similar maturities may have different yields, depending upon several factors, including the relative financial condition of the issuers. Investment grade means a rating of Baa3 or better by Moody’s or BBB- or better by S&P, or of comparable quality in the judgment of a Fund’s Adviser or if no rating has been given by either service. Many
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securities of foreign issuers are not rated by these services. Therefore, the selection of such issuers depends to a large extent on the credit analysis performed by an Adviser. During periods of declining interest rates, the value of debt securities generally increases. Conversely, during periods of rising interest rates, the value of such securities generally declines. These changes in market value will be reflected in a Fund’s net asset value. Debt securities with similar maturities may have different yields, depending upon several factors, including the relative financial condition of the issuers. For example, higher yields are generally available from securities in the lower rating categories of S&P or Moody’s. However, the values of lower-rated securities generally fluctuate more than those of high-grade securities. Many securities of foreign issuers are not rated by these services. Therefore the selection of such issuers depends to a large extent on the credit analysis performed by an Adviser.
New issues of certain debt securities are often offered on a when-issued basis. That is, the payment obligation and the interest rate are fixed at the time the buyer enters into the commitment, but delivery and payment for the securities normally take place after the date of the commitment to purchase. The value of when-issued securities may vary prior to and after delivery depending on market conditions and changes in interest rate levels. However, the Funds do not accrue any income on these securities prior to delivery. The Funds may also invest in low rated or unrated debt securities. Low rated debt securities present a significantly greater risk of default than do higher rated securities, in times of poor business or economic conditions, the Funds may lose interest and/or principal on such securities.
The Funds may also invest in various money market securities for cash management purposes or when assuming a temporary defensive position. Money market securities may include commercial paper, bankers’ acceptances, bank obligations, corporate debt securities, certificates of deposit, U.S. government securities and obligations of savings institutions.
 
DEPOSITARY RECEIPTS
The Funds may invest in Depositary Receipts, which represent an ownership interest in securities of foreign companies (an “underlying issuer”) that are deposited with a depositary. Depositary Receipts are not necessarily denominated in the same currency as the underlying securities. Depositary Receipts include American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”) and other types of Depositary Receipts (which, together with ADRs and GDRs, are hereinafter collectively referred to as “Depositary Receipts”). ADRs are dollar-denominated Depositary Receipts typically issued by a U.S. financial institution which evidence an ownership interest in a security or pool of securities issued by a foreign issuer. ADRs are listed and traded in the United States. GDRs and other types of Depositary Receipts are typically issued by foreign banks or trust companies, although they also may be issued by U.S. financial institutions, and evidence ownership interests in a security or pool of securities issued by either a foreign or a U.S. corporation. Generally, Depositary Receipts in registered form are designed for use in the U.S. securities market and Depositary Receipts in bearer form are designed for use in securities markets outside the United States.
Depositary Receipts may be “sponsored” or “unsponsored.” Sponsored Depositary Receipts are established jointly by a depositary and the underlying issuer, whereas unsponsored Depositary Receipts may be established by a depositary without participation by the underlying issuer. Holders of unsponsored Depositary Receipts generally bear all the costs associated with establishing unsponsored Depositary Receipts. In addition, the issuers of the securities underlying unsponsored Depository Receipts are not obligated to disclose material information in the United States and, therefore, there may be less information available regarding such issuers and there may not be a correlation between such information and the market value of the Depositary Receipts.
DERIVATIVES
The Funds may also use derivatives, such as futures contracts, options, forward contracts and swaps as part of various investment techniques and strategies, such as creating non-speculative “synthetic” positions (covered by segregation of liquid assets) or implementing “cross-hedging” strategies. A “synthetic” position is the duplication of a cash market transaction. “Cross-hedging” involves the use of one currency to hedge against the decline in the value of another currency. The use of such instruments as described herein involves several risks. First, there can be no assurance that the prices of such instruments and the hedge security or the cash market position will move as anticipated. If prices do not move as anticipated, a Fund may incur a loss on its investment, may not achieve the hedging protection it anticipated and/or may incur a loss greater than if it had entered into a cash market position. Second, investments in such instruments may reduce the gains which would otherwise be realized from the sale of the underlying securities or assets which are being hedged. Third, positions in such instruments can be closed out only on an exchange that provides a market for those instruments. There can be no assurance that such a market will exist for a particular derivative. If the Fund cannot close out an exchange traded derivative which it holds, it may have to perform its contract obligation or exercise its option to realize any profit and may incur transaction cost on the sale of the underlying assets. In addition, the use of derivative instruments involves the risk that a loss may be sustained as a result of the failure of the counterparty to the derivatives contract to make required payments or otherwise comply with the contract’s terms.
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When the Funds intend to acquire securities (or gold bullion or coins as the case may be) for their portfolio, they may use call derivatives as a means of fixing the price of the security (or gold) they intend to purchase at the exercise price or contract price depending on the derivative. An increase in the acquisition cost may be offset, in whole or part, by a gain on the derivative. Options and futures contracts requiring delivery of a security may also be useful to the Funds in purchasing a large block of securities that would be more difficult to acquire by direct market purchases. If the Funds hold a call option rather than the underlying security itself, the Funds are partially protected from any unexpected decline in the market price of the underlying security and in such event could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option. Using a futures contract would not offer such partial protection against market declines and the Funds may experience a loss as if they had owned the underlying security.
In addition, the Funds may invest in Participation Notes or P-Notes which are issued by banks or broker-dealers and are designed to offer a return linked to the performance of a particular underlying equity security or market. P-Notes can have the characteristics or take the form of various instruments, including, but not limited to, certificates or warrants. The holder of a P-Note that is linked to a particular underlying security is entitled to receive any dividends paid in connection with the underlying security. However, the holder of a P-Note generally does not receive voting rights as it would if it directly owned the underlying security. P-Notes constitute direct, general and unsecured contractual obligations of the banks or broker-dealers that issue them, which therefore subject a Fund to counterparty risk, as discussed below. Investments in P-Notes involve certain risks in addition to those associated with a direct investment in the underlying foreign companies or foreign securities markets whose return they seek to replicate. For instance, there can be no assurance that the trading price of a P-Note will equal the underlying value of the foreign company or foreign securities market that it seeks to replicate. As the purchaser of a P-Note, a Fund is relying on the creditworthiness of the counterparty issuing the P-Note and has no rights under a P-Note against the issuer of the underlying security. Therefore, if such counterparty were to become insolvent, a Fund would lose its investment. The risk that a Fund may lose its investments due to the insolvency of a single counterparty may be amplified to the extent the Fund purchases P-Notes issued by one issuer or a small number of issuers. P-Notes also include transaction costs in addition to those applicable to a direct investment in securities. In addition, the use of P-Notes by VanEck Morningstar Wide Moat Fund may cause the Fund’s performance to deviate from the performance of the portion of the Wide Moat Index to which the Fund is gaining exposure through the use of P-Notes.
Due to liquidity and transfer restrictions, the secondary markets on which P-Notes are traded may be less liquid than the markets for other securities, which may lead to the absence of readily available market quotations for securities in a Fund’s portfolio. The ability of a Fund to value its securities becomes more difficult and the judgment in the application of fair value procedures may play a greater role in the valuation of a Fund’s securities due to reduced availability of reliable objective pricing data. Consequently, while such determinations will be made in good faith, it may nevertheless be more difficult for a Fund to accurately assign a daily value to such securities.
Under Rule 18f-4 (the “derivatives rule”), funds need to trade derivatives and other transactions that create future fund payment or delivery obligations subject to a value-at-risk (“VaR”) leverage limit, and certain derivatives risk management program and reporting requirements. Generally, these requirements apply unless a fund qualifies as a “limited derivatives user,” as defined in the derivatives rule. Under the derivatives rule, when a fund trades reverse repurchase agreements or similar financing transactions, including certain tender option bonds, it needs to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness when calculating the fund’s asset coverage ratio or treat all such transactions as derivatives transactions. Reverse repurchase agreements or similar financing transactions aggregated with other indebtedness do not need to be included in the calculation of whether a fund is a limited derivatives user, but for funds subject to the VaR testing, reverse repurchase agreements and similar financing transactions must be included for purposes of such testing whether treated as derivatives transactions or not. The Securities and Exchange Commission (“SEC”) also provided guidance in connection with the derivatives rule regarding use of securities lending collateral that may limit a fund's securities lending activities. In addition, under the derivatives rule, the Fund is permitted to invest in a security on a when-issued or forward-settling basis, or with a non-standard settlement cycle, and the transaction will be deemed not to involve a senior security under the 1940 Act, provided that (i) the Fund intends to physically settle the transaction and (ii) the transaction will settle within 35 days of its trade date (the “Delayed-Settlement Securities Provision”). The Fund may otherwise engage in such transactions that do not meet the conditions of the Delayed-Settlement Securities Provision so long as the Fund treats any such transaction as a “derivatives transaction” for purposes of compliance with the derivatives rule. Furthermore, under the derivatives rule, the Fund will be permitted to enter into an unfunded commitment agreement, and such unfunded commitment agreement will not be subject to the asset coverage requirements under the 1940 Act, if the Fund reasonably believes, at the time it enters into such agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all such agreements as they come due.

DIRECT INVESTMENTS
The Funds, except CM Commodity Index Fund, Emerging Markets Bond Fund, Onchain Economy ETF and VanEck Morningstar Wide Moat Fund, may not invest more than 10% of their total assets in direct investments. Direct investments
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include (i) the private purchase from an enterprise of an equity interest in the enterprise, and (ii) the purchase of such an equity interest in an enterprise from an investor in the enterprise. In each case, a Fund may, at the time of making an investment, enter into a shareholder or similar agreement with the enterprise and one or more other holders of equity interests in the enterprise.
Certain of the Funds’ direct investments may include investments in smaller, less seasoned companies. These companies may have limited product lines, markets or financial resources, or they may be dependent on a limited management group. In some cases, the Funds’ direct investments may fund new start-up operations for an enterprise. With respect to Emerging Markets Fund, such direct investments may be made in entities that are reasonably expected in the foreseeable future to become growth companies, either by expanding current operations or establishing significant operations.
Direct investments may involve a high degree of business and financial risk that can result in substantial losses. Because of the absence of any public trading market for these investments, the Funds may take longer to liquidate these positions than would be the case for publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices on these sales could be less than those originally paid by the Funds. Furthermore, issuers whose securities are not publicly traded may not be subject to public disclosure and other investor protection requirements applicable to publicly traded securities. If such securities are required to be registered under the securities laws of one or more jurisdictions before being resold, the Funds may be required to bear the expense of the registration. Direct investments are generally considered illiquid and will be aggregated with other illiquid investments for purposes of the limitation on illiquid investments. Direct investments can be difficult to price. The pricing of direct investments may not be reflective of the price at which these assets could be liquidated.
EQUITY SECURITIES
The Funds may invest in equity securities. Equity securities, such as common stock, represent an ownership interest, or the right to acquire an ownership interest, in an issuer.
Common stock generally takes the form of shares in a corporation. The value of a company’s stock may fall as a result of factors directly relating to that company, such as decisions made by its management or lower demand for the company’s products or services. A stock’s value also may fall because of factors affecting not just the company, but also companies in the same industry or in a number of different industries, such as increases in production costs. The value of a company’s stock also may be affected by changes in financial markets that are relatively unrelated to the company or its industry, such as changes in interest rates or currency exchange rates. In addition, a company’s stock generally pays dividends only after the company invests in its own business and makes required payments to holders of its bonds, other debt and preferred stock. For this reason, the value of a company’s stock usually reacts more strongly than its bonds, other debt and preferred stock to actual or perceived changes in the company’s financial condition or prospects. Stocks of smaller companies may be more vulnerable to adverse developments than those of larger companies. Stocks of companies that the portfolio manager believes are fast-growing may trade at a higher multiple of current earnings than other stocks. The value of such stocks may be more sensitive to changes in current or expected earnings than the values of other stocks.
Different types of equity securities provide different voting and dividend rights and priority in the event of the bankruptcy and/or insolvency of the issuer. In addition to common stock, equity securities may include preferred stock, convertible securities and warrants, which are discussed elsewhere in the Prospectus and this Statement of Additional Information. Equity securities other than common stock are subject to many of the same risks as common stock, although possibly to different degrees.
Environmental, social and governance (“ESG”) considerations, may be utilized as a component of a Fund’s investment process to implement its investment strategy in pursuit of its investment objective. ESG factors may be incorporated to evaluate an issuer, as part of risk analysis, opportunity analysis, or in other manners. ESG factors may vary across types of investments and issuers, and not every ESG factor may be identified or evaluated. The incorporation of ESG factors may affect a Fund’s exposure to certain issuers or industries and may not work as intended. A Fund may underperform other funds that do not assess an issuer’s ESG factors as part of the investment process or that use a different methodology to identify and/or incorporate ESG factors. Because ESG considerations may be used as one part of an overall investment process, a Fund may still invest in securities of issuers that are not considered ESG-focused or that may be viewed as having a high ESG risk profile. As investors can differ in their views regarding ESG factors, a Fund may invest in issuers that do not reflect the views with respect to ESG of any particular investor. Information used by a Fund to evaluate such factors, including information from reliance on third-party research and/or proprietary research, may not be readily available, complete or accurate, and may vary across providers and issuers as ESG is not a uniformly defined characteristic, which could negatively impact a Fund’s ability to accurately assess an issuer, which could negatively impact a Fund’s performance. There is no guarantee that the evaluation of ESG considerations will be additive to a Fund’s performance.
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FOREIGN SECURITIES
Foreign securities include securities issued by a foreign government, quasi-government or corporate entity, traded in foreign currencies or issued by companies with most of their business interests in foreign countries. Investors should recognize that investing in foreign securities involves certain special considerations that are not typically associated with investing in United States securities. Since investments in foreign companies frequently involve currencies of foreign countries, and since the Funds may hold securities and funds in foreign currencies, the Funds may be affected favorably or unfavorably by changes in currency rates and in exchange control regulations, if any, and may incur costs in connection with conversions between various currencies. Most foreign stock markets, while growing in volume of trading activity, have less volume than the New York Stock Exchange (“NYSE”), and securities of some foreign companies may be less liquid and more volatile than securities of comparable domestic companies. Similarly, volume and liquidity in most foreign bond markets may be less than in the United States, and at times volatility of price can be greater than in the United States. Fixed commissions on foreign securities exchanges are generally higher than negotiated commissions on United States exchanges. There is generally less government supervision and regulation of securities exchanges, brokers and listed companies in foreign countries than in the United States. In addition, with respect to certain foreign countries, there is the possibility of exchange control restrictions, expropriation or confiscatory taxation, political, economic or social instability, which could affect investments in those countries. Foreign securities such as those purchased by the Funds may be subject to foreign government taxes, higher custodian fees, higher brokerage commissions and dividend collection fees which could reduce the yield on such securities.
Trading in futures contracts traded on foreign commodity exchanges may be subject to the same or similar risks as trading in foreign securities.
FOREIGN SECURITIES - EMERGING MARKET SECURITIES
The Funds, except for VanEck Morningstar Wide Moat Fund, may have a substantial portion of their assets invested in emerging markets. A Fund’s Adviser has broad discretion to identify countries that it considers to qualify as emerging markets. Each Fund’s Adviser selects emerging market countries and currencies that the Fund will invest in based on the Adviser’s evaluation of economic fundamentals, legal structure, political developments and other specific factors the Adviser believes to be relevant. An instrument may qualify as an emerging market debt security if it is either (i) issued by an emerging market government, quasi-government or corporate entity (regardless of the currency in which it is denominated) or (ii) denominated in the currency of an emerging market country (regardless of the location of the issuer).
Investing in the equity and fixed income markets of emerging market countries involves exposure to potentially unstable governments, the risk of nationalization of businesses, restrictions on foreign ownership, prohibitions on repatriation of assets and a system of laws that may offer less protection of property rights. Emerging market economies may be based on only a few industries, may be highly vulnerable to changes in local and global trade conditions, and may suffer from extreme and volatile debt burdens or inflation rates.
    Additionally, the government in an emerging market country may restrict or control to varying degrees the ability of foreign investors to invest in securities of issuers located or operating in such emerging market countries. These restrictions and/or controls may at times limit or prevent foreign investment in securities of issuers located or operating in emerging market countries. In addition, a Fund may not be able to buy or sell securities or receive full value for such securities. Moreover, certain emerging market countries may require governmental approval or special licenses prior to investments by foreign investors and may limit the amount of investments by foreign investors in a particular industry and/or issuer; may limit such foreign investment to a certain class of securities of an issuer that may have less advantageous rights than the classes available for purchase by domiciliaries of such emerging market countries; and/or may impose additional taxes on foreign investors. A delay in obtaining a required government approval or a license would delay investments in those emerging market countries, and, as a result, a Fund may not be able to invest in certain securities while approval is pending. The government of certain emerging market countries may also withdraw or decline to renew a license that enables a Fund to invest in such country. These factors make investing in issuers located or operating in emerging market countries significantly riskier than investing in issuers located or operating in more developed countries, and any one of them could cause a decline in the value of a Fund’s shares.

    Additionally, investments in issuers located in certain emerging market countries may be subject to a greater degree of risk associated with governmental approval in connection with the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. Moreover, there is the risk that if the balance of payments in an emerging market country declines, the government of such country may impose temporary restrictions on foreign capital remittances. Consequently, a Fund could be adversely affected by delays in, or a refusal to grant, required governmental approval for repatriation of capital, as well as by the application to the Fund of any restrictions on investments. Furthermore, investments in emerging market countries may require a Fund to adopt special procedures, seek local government approvals or take other actions, each of which may involve additional costs to a Fund.

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The securities markets in emerging markets are substantially smaller, less liquid and more volatile than the major securities markets in the United States. A high proportion of the shares of many issuers may be held by a limited number of persons and financial institutions, which may limit the number of shares available for investment by the portfolio. Similarly, volume and liquidity in the bond markets in Asia, Eastern and Central Europe and other emerging markets are less than in the United States and, at times, price volatility can be greater than in the United States. A limited number of issuers in Asian and emerging market securities markets may represent a disproportionately large percentage of market capitalization and trading value. The limited liquidity of securities markets in these regions may also affect a Fund’s ability to acquire or dispose of securities at the price and time it wishes to do so. Accordingly, during periods of rising securities prices in the more illiquid regions’ securities markets, a Fund’s ability to participate fully in such price increases may be limited by its investment policy of investing not more than 15% of its net assets in illiquid investments. Conversely, the inability of a Fund to dispose fully and promptly of positions in declining markets may cause such Fund’s net asset values to decline as the values of the unsold positions are marked to lower prices. In addition, these securities markets are susceptible to being influenced by large investors trading significant blocks of securities. Also, stockbrokers and other intermediaries in emerging markets may not perform in the same way as their counterparts in the United States and other more developed securities markets. The prices at which a Fund may acquire investments may be affected by trading by persons with material non-public information and by securities transactions by brokers in anticipation of transactions by the Fund in particular securities.
The Funds may invest in Latin American, Asian, Eurasian and other countries with emerging economies or securities markets. Political and economic structures in many such countries may be undergoing significant evolution and rapid development, and such countries may lack the social, political and economic stability characteristic of the United States. Certain such countries have in the past failed to recognize private property rights and have at times nationalized or expropriated the assets of private companies. As a result, the risks described above, including the risks of nationalization or expropriation of assets, may be heightened. In addition, unanticipated political or social developments may affect the value of the Fund’s investments in those countries and the availability to the Fund of additional investments in those countries. Emerging market countries may have different accounting, auditing and financial reporting standards and may employ other regulatory practices and requirements as compared to more developed markets.
The Russian, Eastern and Central European, Chinese and Taiwanese stock markets are undergoing a period of growth and change which may result in trading volatility and difficulties in the settlement and recording of transactions, and in interpreting and applying the relevant law and regulations.
Certain Risks of Investing in Asia-Pacific Countries. In addition to the risks of foreign investing and the risks of investing in developing markets, the developing market Asia-Pacific countries in which a Fund may invest are subject to certain additional or specific risks. A Fund may make substantial investments in Asia-Pacific countries. In many of these markets, there is a high concentration of market capitalization and trading volume in a small number of issuers representing a limited number of industries, as well as a high concentration of investors and financial intermediaries. Many of these markets also may be affected by developments with respect to more established markets in the region such as in Japan and Hong Kong. Brokers in developing market Asia-Pacific countries typically are fewer in number and less well capitalized than brokers in the United States. These factors, combined with the U.S. regulatory requirements for open-end investment companies, result in potentially fewer investment opportunities for the Fund and may have an adverse impact on the investment performance of a Fund.
Many of the developing market Asia-Pacific countries may be subject to a greater degree of economic, political and social instability than is the case in the United States and Western European countries. Such instability may result from, among other things: (i) authoritarian governments or military involvement in political and economic decision-making, including changes in government through extra-constitutional means; (ii) popular unrest associated with demands for improved political, economic and social conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring countries; and (v) ethnic, religious and racial disaffection. Public health crises or major health-related developments may have a substantial impact on the economy of certain Asian-Pacific countries. Outbreaks of contagious viruses and diseases, including the novel viruses commonly known as SARS, MERS, and Covid-19 (Coronavirus), may reduce business activity or disrupt market activity, and have the potential to exacerbate market risks such as volatility in exchange rates or the trading of Asian-Pacific securities listed domestically or abroad.
In addition, the governments of many of such countries, such as Indonesia, have a substantial role in regulating and supervising the economy. Another risk common to most such countries is that the economy is heavily export oriented and, accordingly, is dependent upon international trade. The existence of overburdened infrastructure and obsolete financial systems also presents risks in certain countries, as do environmental problems. Certain economies also depend to a significant degree upon exports of primary commodities and, therefore, are vulnerable to changes in commodity prices that, in turn, may be affected by a variety of factors.
Governments of many developing market Asia-Pacific countries have exercised and continue to exercise substantial influence over many aspects of the private sector. In certain cases, the government owns or controls many companies, including the largest in the country. Accordingly, government actions in the future could have a significant effect on economic conditions
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in developing market Asia-Pacific countries, which could affect private sector companies and a Fund itself, as well as the value of securities in the Fund’s portfolio. In addition, economic statistics of developing market Asia-Pacific countries may be less reliable than economic statistics of more developed nations.
Investments through Stock Connect. The Emerging Markets Fund may invest in A-shares listed and traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange through the Shanghai-Hong Kong Stock Connect Program and the Shenzhen-Hong Kong Stock Connect Program (together, “Stock Connect”), or on such other stock exchanges in China which participate in Stock Connect from time to time or in the future. Trading through Stock Connect is subject to a number of restrictions that may affect the Fund's investments and returns. For example, purchases of A-shares through Stock Connect are subject to a daily quota which does not belong to the Fund and can only be utilised on a first-come-first-serve basis. Once the daily quota is exceeded, buy orders may be rejected. The the Fund’s ability to invest in A-shares may therefore be limited. In addition, investments made through Stock Connect are subject to trading, clearance and settlement procedures that are relatively untested in the PRC, which could pose risks to the Fund. Furthermore, securities purchased via Stock Connect will be held via a book entry omnibus account in the name of Hong Kong Securities Clearing Company Limited (“HKSCC”), Hong Kong’s clearing entity, at the China Securities Depository and Clearing Corporation Limited (“CSDCC”). These Funds' ownership interest in Stock Connect securities will not be reflected directly in book entry with CSDCC and will instead only be reflected on the books of its Hong Kong sub-custodian. The Fund may therefore depend on HKSCC’s ability or willingness as record-holder of Stock Connect securities to enforce the Fund’s shareholder rights. PRC law did not historically recognize the concept of beneficial ownership; while PRC regulations and the Hong Kong Stock Exchange have issued clarifications and guidance supporting the concept of beneficial ownership via Stock Connect, the interpretation of beneficial ownership in the PRC by regulators and courts may continue to evolve. Moreover, Stock Connect A-shares generally may not be sold, purchased or otherwise transferred other than through Stock Connect in accordance with applicable rules.
A primary feature of Stock Connect is the application of the home market’s laws and rules applicable to investors in A-shares. Therefore, the Fund’s investments in Stock Connect A-shares are generally subject to PRC securities regulations and listing rules, among other restrictions.The Stock Exchange of Hong Kong, Shenzhen Stock Exchange (“SZSE”) and Shanghai Stock Exchange (“SSE”) reserve the right to suspend trading if necessary for ensuring an orderly and fair market and managing risks prudently, which could adversely affect the Fund's ability to access the mainland China market. A stock may be recalled from the scope of eligible SSE securities or SZSE securities for trading via the Stock Connect for various reasons, and in such event, the stock can only be sold but is restricted from being bought. Stock Connect is only available on days when markets in both the PRC and Hong Kong are open, which may limit the Fund's ability to trade when it would be otherwise attractive to do so.
Uncertainties in permanent PRC tax rules governing taxation of income and gains from investments in Stock Connect A-shares could result in unexpected tax liabilities for the Fund.
    The Fund may, through the Stock Connect, access securities listed on the ChiNext market and STAR Board of the SZSE. Listed companies on the ChiNext market and STAR Board are usually of an emerging nature with smaller operating scale. Listed companies on the ChiNext Market and STAR Board are subject to wider price fluctuation limits and due to higher entry thresholds for investors, may have limited liquidity, compared to other boards. They are subject to higher fluctuation in stock prices and liquidity and have higher risks and turnover ratios than companies listed on the main board of the SZSE. Securities listed on the ChiNext Market may be overvalued and such exceptionally high valuation may not be sustainable. Stock prices may be more susceptible to manipulation due to fewer circulating shares. It may be more common and faster for companies listed on the ChiNext to delist. This may have an adverse impact on the Fund if the companies that it invests in are delisted. Also, the rules and regulations regarding companies listed on the ChiNext Market and STAR Board are less stringent in terms of profitability and share capital than those on the main board. Investments in the ChiNext Market and STAR Board may result in significant losses for the Fund and its investors. STAR Board is a newly established board and may have a limited number of listed companies during the initial stage. Investments in STAR board may be concentrated in a small number of stocks and subject the Fund to higher concentration risk.

The Stock Connect only operates on days when both the PRC and Hong Kong markets are open for trading and when banks in both markets are open on the corresponding settlement days. So it is possible that there are occasions when it is a normal trading day for the PRC market but the Fund cannot carry out any China A-Shares trading via the Stock Connect. The Fund may be subject to a risk of price fluctuations in China A-Shares during the time when any of the Stock Connect is not trading as a result.

PRC regulations require that before an investor sells any share, there should be sufficient shares in the account; otherwise the SSE or SZSE will reject the sell order concerned. SEHK will carry out pre-trade checking on China A-Shares sell orders of its participants (i.e. the stock brokers) to ensure there is no over-selling. If the Fund intends to sell certain China A-Shares it holds, it must transfer those China A-Shares to the respective accounts of its broker(s) before the market opens on the
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day of selling (“trading day”). If it fails to meet this deadline, it will not be able to sell those shares on the trading day. Because of this requirement, the Fund may not be able to dispose of its holdings of China A-Shares in a timely manner.

The Stock Connect program is a relatively new program and may be subject to further interpretation and guidance. There can be no assurance as to the program’s continued existence or whether future developments regarding the program may restrict or adversely affect the Fund's investments or returns. In addition, the application and interpretation of the laws and regulations of Hong Kong and the PRC, and the rules, policies or guidelines published or applied by relevant regulators and exchanges in respect of the Stock Connect program are uncertain, and they may have a detrimental effect on the Fund's investments and returns. Moreover, the rules and regulations may have potential retrospective effect. There can be no assurance that the Stock Connects will not be abolished. Investments in mainland China markets through the Stock Connects may adversely affect the Funds as a result of such changes.
Investments through Bond Connect. The Emerging Markets Bond Fund may invest in Renminbi (“RMB”)-denominated bonds issued in the PRC by Chinese credit, government, and quasi-governmental issuers (“RMB Bonds”). RMB Bonds are available through the “Mutual Bond Market Access between Mainland China and Hong Kong” (“Bond Connect”) program. The Emerging Markets Bond Fund’s investments in bonds will be subject to a number of additional risks and restrictions that may affect the Emerging Markets Bond Fund’s investments and returns.

Bond Connect Risks (VanEck Emerging Markets Bond Fund only)
The “Mutual Bond Market Access between Mainland China and Hong Kong” (“Bond Connect”) program is an initiative established to facilitate investors from Mainland China and Hong Kong to trade in each other’s bond markets through connection between the Mainland China and Hong Kong financial institutions.
Under the prevailing PRC regulations, eligible foreign investors will be allowed to invest in the bonds available on the China Interbank Bond Market (“CIBM”) through the northbound trading of Bond Connect (“Northbound Trading Link”). There will be no investment quota for the Northbound Trading Link.
Under the Northbound Trading Link, eligible foreign investors are required to appoint the China Foreign Exchange Trade System & National Interbank Funding Centre (“CFETS”) or other institutions recognized by the PBOC as registration agents to apply for registration with the PBOC.
Eligible foreign investors may submit trade requests for bonds circulated in the CIBM through the Northbound Trading Link provided by offshore electronic bond trading platforms, which will in turn transmit their requests for quotation to CFETS. CFETS will send the requests for quotation to a number of approved onshore dealers (including market makers and others engaged in the market-making business) in Mainland China. The approved onshore dealers will respond to the requests for quotation via CFETS, and CFETS will send their responses to those eligible foreign investors through the same offshore electronic bond trading platforms. Once the eligible foreign investor accepts the quotation, the trade is concluded on CFETS.
On the other hand, the settlement and custody of bond securities traded in the CIBM under Bond Connect will be done through the settlement and custody link between an offshore custody agent and onshore custodian and clearing institutions in mainland China. In August 2018, Bond Connect enhanced its settlement system to fully implement real-time delivery-versus-payment settlement of trades, which has resulted in increased adoption of Bond Connect by investors. However, there is a risk that Chinese regulators may alter all or part of the structure and terms of, as well as a China Fund’s access to, Bond Connect in the future or eliminate it altogether, which may limit or prevent the Fund from investing directly in or selling its bond securities. Pursuant to the prevailing regulations in mainland China, all bonds traded by eligible foreign investors will be registered in the name of the Central Moneymarkets Unit of the Hong Kong Monetary Authority (“CMU”), which will hold such bonds as a nominee owner.
Bond Connect is relatively new. Laws, rules, regulations, policies, notices, circulars or guidelines relating to Bond Connect as published or applied by any of the Bond Connect authorities are untested and are subject to change from time to time. There can be no assurance that Bond Connect will not be restricted, suspended or abolished. If such event occurs, the Fund’s ability to invest in the CIBM through Bond Connect will be adversely affected, and if the Fund is unable to adequately access the CIBM through other means, the Fund’s ability to achieve its investment objective will be adversely affected.
Under the prevailing regulations, eligible foreign investors who wish to participate in Bond Connect may do so through an offshore custody agent, registration agent or other third parties (as the case may be), who would be responsible for making the relevant filings and account opening with the relevant authorities. The Fund is therefore subject to the risk of default or errors on the part of such agents.
Trading through Bond Connect is performed through newly developed trading platforms and operational systems. There is no assurance that such systems will function properly (in particular, under extreme market conditions) or will continue to be adapted to changes and developments in the market. In the event that the relevant systems fails to function properly,
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trading through Bond Connect may be disrupted. The Fund’s ability to trade through Bond Connect (and hence to pursue its investment strategy) may therefore be adversely affected. In addition, where the Fund invests in the CIBM through Bond Connect, it may be subject to risks of delays inherent in the order placing and/or settlement.
The CMU (i.e. the Hong Kong Monetary Authority) is the “nominee holder” of the bonds acquired by the Fund through Bond Connect. Whilst the Bond Connect Authorities have expressly stated that investors will enjoy the rights and interests of the bonds acquired through Bond Connect in accordance with applicable laws, the exercise and the enforcement of beneficial ownership rights over such bonds in the courts in China is yet to be tested. In addition, in the event that the nominee holder becomes insolvent, such bonds may form part of the pool of assets of the nominee holder available for distribution to its creditors and the Fund, as a beneficial owner, may have no rights whatsoever in respect thereof.

Chinese Variable Interest Entities Risks

Chinese operating companies sometimes rely on variable interest entity (“VIE”) structures to raise capital from non Chinese investors. In a VIE structure, a China-based operating company establishes an entity (typically offshore) that enters into service and other contracts with the Chinese company designed to provide economic exposure to the company. The offshore entity then issues exchange-traded shares that are sold to the public, including non-Chinese investors (such as a Fund). Shares of the offshore entity are not equity ownership interests in the Chinese operating company and therefore the ability of the offshore entity to control the activities of the Chinese company are limited and the Chinese company may engage in activities that negatively impact investment value. The VIE structure is designed to provide the offshore entity (and in turn, investors in the entity) with economic exposure to the Chinese company that replicates equity ownership, without actual equity ownership. VIE structures are used due to Chinese government prohibitions on foreign ownership of companies in certain industries and it is not clear that the contracts are enforceable or that the structures will otherwise work as intended.

Intervention by the Chinese government with respect to VIE structures could adversely affect the Chinese operating company’s performance, the enforceability of the offshore entity’s contractual arrangements with the Chinese company and the value of the offshore entity’s shares. Further, if the Chinese government determines that the agreements establishing the VIE structure do not comply with Chinese law and regulations, including those related to prohibitions on foreign ownership, the Chinese government could subject the Chinese company to penalties, revocation of business and operating licenses or forfeiture of ownership interests. The offshore entity’s control over the Chinese company may also be jeopardized if certain legal formalities are not observed in connection with the agreements, if the agreements are breached or if the agreements are otherwise determined not to be enforceable. If any of the foregoing were to occur, the market value of a Fund’s associated portfolio holdings would likely fall, causing substantial investment losses for the Fund.

In addition, Chinese companies listed on U.S. exchanges, including ADRs and companies that rely on VIE structures, may be delisted if they do not meet U.S. accounting standards and auditor oversight requirements. Delisting could significantly decrease the liquidity and value of the securities of these companies, decrease the ability of a Fund to invest in such securities and increase the cost of the Fund if it is required to seek alternative markets in which to invest in such securities.

Risks Relating to Investing in India (VanEck Emerging Markets Fund only)

Investments in securities of Indian issuers involve risks and special considerations not typically associated with investments in the U.S. securities markets. Such heightened risks include, among others, greater government control over the economy, including the risk that the Indian government may decide not to continue to support economic reform programs, political and legal uncertainty, competition from low-cost issuers of other emerging economies in Asia, currency fluctuations or blockage of foreign currency exchanges and the risk of nationalization or expropriation of assets. Large portions of many Indian companies remain in the hands of individuals and corporate governance standards of Indian companies may be weaker and less transparent, which may increase the risk of loss and unequal treatment of investors. In addition, religious and border disputes persist in India. India has experienced civil unrest and hostilities with neighboring countries, including Pakistan, and the Indian government has confronted separatist movements in several Indian states. India has also experienced acts of terrorism that have targeted foreigners, which have had a negative impact on tourism, an important sector of the Indian economy. India has tested nuclear arms, and the threat of deployment of such weapons could hinder development of the Indian economy and escalating tensions could impact the broader region.

The Indian securities markets are smaller and less liquid than securities markets in more developed economies and are subject to greater price volatility. Issuers in India are subject to less stringent requirements regarding accounting, auditing and financial reporting than are issuers in more developed markets, and therefore, all material information may not be available or reliable. India also has less developed clearance and settlement procedures, and there have been times when settlements have been unable to keep pace with the volume of securities and have been significantly delayed. Indian stock exchanges have experienced problems such as temporary exchange closures, broker defaults, settlement delays and strikes by brokers that have
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affected the market price and liquidity of the securities of Indian companies. In addition, the governing bodies of the Indian stock exchanges have from time to time restricted securities from trading, limited price movements and restricted margin requirements. Further, from time to time, disputes have occurred between listed companies and the Indian stock exchanges and other regulatory bodies that, in some cases, have had a negative effect on market sentiment. In addition, inflation in India may be at very high levels. High inflation may lead to the adoption of corrective measures designed to moderate growth, regulate prices of staples and other commodities and otherwise contain inflation. Such measures could inhibit economic activity in India. Additionally, each of the factors described below could have a negative impact on the Fund’s performance and increase the volatility of the Fund.

Economic Risk. The Indian government has exercised and continues to exercise significant influence over many aspects of the economy, and the number of public sector enterprises in India is substantial. Accordingly, Indian government actions in the future could have a significant effect on the Indian economy. The Indian government has experienced chronic structural public sector deficits. High amounts of debt and public spending could have an adverse impact on India’s economy. Services are the major source of economic growth, accounting for half of India’s output with less than one quarter of its labor force. Additionally, the Indian economy may be dependent upon agriculture. About two thirds of the workforce is in agriculture. The Fund’s investments may be susceptible to adverse weather changes including the threat of monsoons and other natural disasters. Despite strong growth, the World Bank and others express concern about the combined state and federal budget deficit.

Regulatory Risk. A foreign portfolio investor (“FPI”) in India is subject to certain restrictions on buying, selling or otherwise dealing in securities.

The Fund is registered as an FPI with the Securities and Exchange Board of India in order to obtain the ability to make and dispose of investments. There can be no assurance that the Fund will continue to qualify for the FPI license. Loss of the FPI registration could adversely impact the ability of the Fund to make investments in India. The Securities and Exchange Board of India imposes certain limitations on participation in an FPI. The Fund may compulsorily redeem units held by such investor(s) or take other actions in order to comply with applicable Indian law.

Investment and Repatriation Restrictions. The Central Government and the Reserve Bank of India impose certain limits on the foreign ownership of Indian securities. These restrictions and/or controls may at times limit or prevent foreign investment in securities of issuers located or operating in India and may inhibit the Fund’s ability to pursue its investment objective.

In the case of an ultimate beneficial owner who has direct or indirect common shareholding/beneficial ownership/beneficial interest of more than 50% in an FPI and an offshore derivative instrument (“ODI”) subscriber entity or two or more FPIs/ODI subscribers, the participation through ODIs would be aggregated with the direct holding of FPIs or the other concerned ODI subscribers while determining whether the above investment cap in an Indian company has been triggered.

Tax Risks. The taxation of income and capital gains of the Fund is subject to the fiscal laws and practices of different jurisdictions. Any of those jurisdictions may change their fiscal laws and practices (or interpretation thereof) and enforcement policies, possibly with retroactive effect.

a. Indirect Transfer Risk: Indian capital gains tax can be imposed on income arising from the transfer of shares in
a company registered outside India which derives, directly or indirectly, its value substantially from the assets located in India. Being a Category I FPI, the Fund is currently exempt from the application of these rules. In case of loss of the Fund's registration as a Category I FPI or changes in Indian rules, the Fund could be subject to the indirect transfer tax provisions in the future.

b. Exposure to Permanent Establishment (“PE”): While the Fund believes that its activities should not create a PE in India, the Indian tax authorities may claim that these activities have resulted in a PE in India. Under such circumstances, the profits of the Fund to the extent attributable to the PE would be subject to taxation in India.

c. Exposure to Place of Effective Management (“POEM”) risk: While the Fund believes that its activities or the activities of the Adviser described in the Prospectus or this SAI should not lead to a situation where the POEM of the Fund or the Adviser is considered to be in India, there may be a risk that the Indian tax authorities will claim that these activities have resulted in a POEM of the Fund and/or the Adviser in India. If for any reason the activities are held to be a POEM of the Fund and/or the Adviser in India, then the worldwide profits of the Fund would be subject to taxation in India.
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FOREIGN SECURITIES - FOREIGN CURRENCY TRANSACTIONS
Although the Funds value their assets daily in terms of U.S. dollars, they do not generally physically convert their holdings of foreign currencies into U.S. dollars on a daily basis. The Funds may do so from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (the “spread”) between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the Funds at one rate, while offering a lesser rate of exchange should the Funds desire to resell that currency to the dealer. The Funds may use forward contracts, along with futures contracts, foreign exchange swaps and put and call options (all types of derivatives) as part of their overall hedging strategy. The Funds generally conduct their foreign currency exchange transactions, either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through purchasing put and call options on, or entering into futures contracts or forward contracts to purchase or sell foreign currencies. See “Options, Futures, Warrants and Subscription Rights.”
Changes in currency exchange rates may affect the Funds’ net asset value and performance. The Adviser may not be able to anticipate currency fluctuations in exchange rates accurately. The Funds may invest in a variety of derivatives and enter into hedging transactions to attempt to moderate the effect of currency fluctuations. The Funds may purchase and sell put and call options on, or enter into futures contracts or forward contracts to purchase or sell foreign currencies. This may reduce a Fund’s losses on a security when a foreign currency’s value changes. Hedging against a change in the value of a foreign currency does not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of such securities decline. Furthermore, such hedging transactions reduce or preclude the opportunity for gain if the value of the hedged currency should change relative to the other currency. Finally, when the Funds use options and futures in anticipation of the purchase of a portfolio security to hedge against adverse movements in the security’s underlying currency, but the purchase of such security is subsequently deemed undesirable, a Fund may incur a gain or loss on the option or futures contract.
The Funds may enter into forward contracts to duplicate a cash market transaction. See also “Options, Futures, Warrants and Subscription Rights.”
A Fund may (but is not required to) engage in these transactions in order to protect against uncertainty in the level of future foreign exchange rates in the purchase and sale of securities. A Fund may also use foreign currency options and foreign currency forward contracts to increase exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one country to another. Suitable currency hedging transactions may not be available in all circumstances and an Adviser may decide not to use hedging transactions that are available.
In those situations where foreign currency options or futures contracts, or options on futures contracts may not be readily purchased (or where they may be deemed illiquid or unattractive) in the primary currency in which the hedge is desired, the hedge may be obtained by purchasing or selling an option, futures contract or forward contract on a secondary currency. There can be no assurances that the exchange rate or the primary and secondary currencies will move as anticipated, or that the relationship between the hedged security and the hedging instrument will continue. If they do not move as anticipated or the relationship does not continue, a loss may result to a Fund on its investments in the hedging positions.
A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. Although forwards are intended to minimize the risk of loss due to a decline in the value of the hedged currencies, at the same time, they tend to limit any potential gain which might result should the value of such currencies increase.
The forecasting of currency market movement is extremely difficult, and whether any hedging strategy will be successful is highly uncertain. Moreover, it is impossible to forecast with precision the market value of portfolio securities at the expiration of a foreign currency forward contract. Accordingly, a Fund may be required to buy or sell additional currency on the spot market (and bear the expense of such transaction) if an Adviser’s predictions regarding the movement of foreign currency or securities markets prove inaccurate. In addition, the use of cross-hedging transactions may involve special risks, and may leave the Fund in a less advantageous position than if such a hedge had not been established.
At the maturity of a forward contract, the Funds may either sell the portfolio security and make delivery of the foreign currency, or they may retain the security and terminate their contractual obligation to deliver the foreign currency prior to maturity by purchasing an “offsetting” contract with the same currency trader, obligating it to purchase, on the same maturity date, the same amount of the foreign currency. There can be no assurance, however, that the Funds will be able to effect such a closing purchase transaction.
It is impossible to forecast the market value of a particular portfolio security at the expiration of the contract. Accordingly, if a decision is made to sell the security and make delivery of the foreign currency it may be necessary for a Fund to purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency that a Fund is obligated to deliver.
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If a Fund retains the portfolio security and engages in an offsetting transaction, the Fund may incur a gain or a loss to the extent that there has been movement in forward contract prices. Additionally, although such contracts tend to minimize the risk of loss due to a decline in the value of the hedged currency, at the same time, they tend to limit any potential gain which might result should the value of such currency increase.
FUTURE DEVELOPMENTS
The Funds may take advantage of opportunities in the area of options, futures contracts, options on futures contracts, warrants, swaps and any other investments which are not presently contemplated for use or which are not currently available, but which may be developed, to the extent such investments are considered suitable for the Funds by each Adviser.
GLOBAL RESOURCES SECURITIES
Global resources securities include securities of global resource companies and instruments that derive their value from global resources. Global resources include precious metals (including gold), base and industrial metals, energy (including, but not limited to, gas, petroleum, petrochemicals and other hydrocarbons, and renewable energy resources such as solar, wind, geothermal, or biofuel), natural resources and other commodities. A global resource company is a company that derives, directly or indirectly, at least 50% of its revenues from exploration, development, production, distribution or facilitation of processes relating to global resources.
Since the market action of global resources securities may move against or independently of the market trend of industrial shares, the addition of such securities to an overall portfolio may increase the return and reduce the price fluctuations of such a portfolio. There can be no assurance that an increased rate of return or a reduction in price fluctuations of a portfolio will be achieved. Global resources securities are affected by many factors, including movement in the stock market.
Inflation may cause a decline in the market, including global resource securities. The Global Resources Fund has a fundamental policy of concentrating in “global resource” industries, and more than 50% of the Global Resources Fund’s assets may be invested in any one of the above sectors. Precious metal and natural resource securities are at times volatile and there may be sharp fluctuations in prices, even during periods of rising prices.
HEDGING
Hedging is a strategy in which a derivative or other instrument or practice is used to offset the risks associated with other Fund holdings. Losses on the other investment may be substantially reduced by gains on a derivative that reacts in an opposite manner to market movements. Hedging can reduce or eliminate gains or cause losses if the market moves in a manner different from that anticipated by a Fund or if the cost of the derivative outweighs the benefit of the hedge. Hedging also involves correlation risk, i.e. the risk that changes in the value of the derivative will not match those of the holdings being hedged as expected by a Fund, in which case any losses on the holdings being hedged may not be reduced or may be increased. The inability to close options and futures positions also could have an adverse impact on a Fund’s ability to hedge effectively its portfolio. There is also a risk of loss by a Fund of margin deposits or collateral in the event of bankruptcy of a broker with whom the Fund has an open position in an option, a futures contract or a related option. There can be no assurance that a Fund’s hedging strategies will be effective. The use of hedging may invoke the application of the mark-to-market and straddle provisions of the Internal Revenue Code of 1986, as amended (the “Code”). If such provisions are applicable, there could be an increase (or decrease) in the amount of taxable dividends paid by a Fund and may impact whether dividends paid by the Fund are classified as capital gains or ordinary income. The use of derivatives increases the risk that a Fund will be unable to close out certain hedged positions to avoid adverse tax consequences.

ILLIQUID INVESTMENTS
Each Fund may not acquire any illiquid investment if, immediately after the acquisition, the Fund would have invested more than 15% of its net assets in illiquid investments that are assets. For purposes of the above 15% limitation, illiquid investment means any investment that a Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment, as determined pursuant to the 1940 Act and applicable rules and regulations thereunder.
INDEXED SECURITIES AND STRUCTURED NOTES
The Funds may invest in indexed securities, i.e., structured notes securities and index options, whose value is linked to one or more currencies, interest rates, commodities, or financial or commodity indices. An indexed security enables the investor to purchase a note whose coupon and/or principal redemption is linked to the performance of an underlying asset. Indexed securities may be positively or negatively indexed (i.e., their value may increase or decrease if the underlying instrument appreciates). Indexed securities may have return characteristics similar to direct investments in the underlying instrument or to one or more options on the underlying instrument. Indexed securities may be more volatile than the underlying instrument itself, and present many of the same risks as investing in futures and options. Indexed securities are also subject to credit risks
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associated with the issuer of the security with respect to both principal and interest. Securities linked to one or more non-agriculture commodities or commodity indices may be considered a global resources securities.
Indexed securities may be publicly traded or may be two-party contracts (such two-party agreements are referred to hereafter collectively as structured notes). When a Fund purchases a structured note, it makes a payment of principal to the counterparty. Some structured notes have a guaranteed repayment of principal while others place a portion (or all) of the principal at risk. Notes determined to be illiquid will be aggregated with other illiquid securities and will be subject to the Funds’ limitations on illiquid investments.
Credit Linked Notes. The Funds may invest in credit linked securities or credit linked notes (“CLNs”). CLNs are typically issued by a limited purpose trust or other vehicle (the “CLN trust”) that, in turn, invests in a derivative or basket of derivatives instruments, such as credit default swaps, interest rate swaps and/or other securities, in order to provide exposure to certain high yield, sovereign debt, emerging markets, or other fixed income markets. Generally, investments in CLNs represent the right to receive periodic income payments (in the form of distributions) and payment of principal at the end of the term of the CLN. However, these payments are conditioned on the CLN trust’s receipt of payments from, and the CLN trust’s potential obligations, to the counterparties to the derivative instruments and other securities in which the CLN trust invests. For example, the CLN trust may sell one or more credit default swaps, under which the CLN trust would receive a stream of payments over the term of the swap agreements provided that no event of default has occurred with respect to the referenced debt obligation upon which the swap is based. If a default were to occur, the stream of payments may stop and the CLN trust would be obligated to pay the counterparty the par (or other agreed upon value) of the referenced debt obligation. This, in turn, would reduce the amount of income and principal that the Fund would receive as an investor in the CLN trust. A Fund may also enter in CLNs to gain access to sovereign debt and securities in emerging markets particularly in markets where the Fund is not able to purchase securities directly due to domicile restrictions or tax restrictions or tariffs. In such an instance, the issuer of the CLN may purchase the reference security directly and/or gain exposure through a credit default swap or other derivative. The Fund’s investments in CLNs is subject to the risks associated with the underlying reference obligations and derivative instruments.
INITIAL PUBLIC OFFERINGS
The Funds may invest in initial public offerings (IPOs) of common stock or other primary or secondary syndicated offerings of equity or debt securities issued by a corporate issuer. A purchase of IPO securities often involves higher transaction costs than those associated with the purchase of securities already traded on exchanges or markets. IPO securities are subject to market risk and liquidity risk. The market value of recently issued IPO securities may fluctuate considerably due to factors such as the absence of a prior public market, unseasoned trading and speculation, a potentially small number of securities available for trading, limited information about the issuer, and other factors. A Fund may hold IPO securities for a period of time, or may sell them soon after the purchase. Investments in IPOs could have a magnified impact – either positive or negative – on the Fund’s performance while the Fund’s assets are relatively small. The impact of an IPO on the Fund’s performance may tend to diminish as the Fund’s assets grow.

INVESTMENTS IN OTHER INVESTMENT COMPANIES AND POOLED INVESTMENT VEHICLES
Emerging Markets Bond Fund, Emerging Markets Fund, Global Resources Fund and International Investors Gold Fund may invest up to 20% of its net assets in securities issued by other investment companies (excluding money market funds), including open end and closed end funds and exchange-traded funds (“ETFs”), subject to the limitations under the 1940 Act. The Funds’ investments in money market funds are not subject to this limitation. CM Commodity Index Fund and Onchain Economy ETF may invest in securities issued by other investment companies, including open end and closed end funds and ETFs, subject to the limitations of under the 1940 Act. Onchain Economy ETF may invest in other pooled investment vehicles. The Funds may invest in investment companies or pooled investment vehicles which are sponsored or advised by each Adviser and/or their affiliates (each, a “VanEck Investment Company”).
A Fund’s investment in another investment company may subject such Fund indirectly to the underlying risks of the investment company. Such Fund also will bear its share of the underlying investment company’s fees and expenses, which are in addition to the Fund’s own fees and expenses. Shares of closed-end funds and ETFs may trade at prices that reflect a premium above or a discount below the investment company’s net asset value, which may be substantial in the case of closed-end funds. If investment company securities are purchased at a premium to net asset value, the premium may not exist when those securities are sold and the Fund could incur a loss.
Rule 12d1-4 under the 1940 Act, which became effective January 19, 2022, created a regulatory framework for Funds’ investments in other funds. Rule 12d1-4 allows a fund to acquire the securities of another investment company in excess of the limitations imposed by Section 12 without obtaining an exemptive order from the SEC, subject to certain limitations and conditions. Among those conditions is the requirement that, prior to a fund relying on Rule 12d1-4 to acquire securities of another fund in excess of the limits of Section 12(d)(1), the acquiring fund must enter into a Fund of Funds Agreement with the acquired fund, unless the acquiring fund’s investment adviser acts as the acquired fund’s investment adviser and does not act as
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sub-adviser to either fund. In connection with the adoption of Rule 12d1-4, the SEC also rescinded certain prior exemptive relief. These regulatory changes may adversely impact a Fund’s investment strategies and operations to the extent that it invests, or might otherwise have invested, in shares issued by other investment companies.

MARKET
    A Fund could lose money over short periods due to short-term market movements and over longer periods during more prolonged market downturns.  The prices of the securities in a Fund are subject to the risks associated with investing in the securities market, including general economic conditions, sudden and unpredictable drops in value, exchange trading suspensions and closures and public health risks.  Market risk arises mainly from uncertainty about future values of financial instruments and may be influenced by price, currency and interest rate movements. These risks may be magnified if certain social, political, economic and other conditions and events (such as natural disasters, epidemics and pandemics, terrorism, conflicts, social unrest, recessions, inflation, interest rate changes, supply chain disruptions, embargoes, tariffs, sanctions and other trade barriers) adversely interrupt the global economy; in these and other circumstances, such events or developments might affect companies world-wide. As global systems, economies and financial markets are increasingly interconnected, events that occur in one country, region or financial market will, more frequently, adversely impact issuers in other countries, regions or markets. During a general market downturn, multiple asset classes may be negatively affected.  Changes in market conditions and interest rates generally do not have the same impact on all types of securities and instruments.
MASTER LIMITED PARTNERSHIPS
Other equity securities in which Global Resources Fund may invest include master limited partnerships (“MLPs”). MLPs are limited partnerships in which the ownership units are publicly traded. MLP units are registered with the SEC and are freely traded on a securities exchange or in the OTC market. MLPs often own several properties or businesses (or own interests) that are related to oil and gas industries, but they also may finance research and development and other projects. Generally, an MLP is operated under the supervision of one or more managing general partners. Limited partners are not involved in the day-to-day management of the partnership. The risks of investing in an MLP are generally those involved in investing in a partnership as opposed to a corporation. Investments in securities of MLPs involve risks that differ from an investment in common stock. Holders of the units of MLPs have more limited control and limited rights to vote on matters affecting the partnership. There are also certain tax risks associated with an investment in units of MLPs. In addition, conflicts of interest may exist between common unit holders, subordinated unit holders and the general partner of an MLP, including a conflict arising as a result of incentive distribution payments.

OPTIONS, FUTURES, WARRANTS AND SUBSCRIPTION RIGHTS
Options Transactions. Each Fund may purchase and sell (write) exchange-traded and OTC call and put options on domestic and foreign securities, foreign currencies, stock and bond indices and financial futures contracts. Global Resources Fund may also buy and sell options linked to the price of global resources.
Purchasing Call and Put Options. Each of Emerging Markets Fund, Global Resources, International Investors Gold Fund and Emerging Markets Bond Fund may invest up to 5% of its total assets in premiums on call and put options. The purchase of a call option would enable a Fund, in return for the premium paid, to lock in a purchase price for a security or currency during the term of the option. The purchase of a put option would enable a Fund, in return for a premium paid, to lock in a price at which it may sell a security or currency during the term of the option. OTC options are typically purchased from or sold (written) to dealers or financial institutions which have entered into direct agreements with a Fund. With OTC options, such variables as expiration date, exercise price and premium are typically agreed upon between the Fund and the transacting dealer.
The principal factors affecting the market value of a put or a call option include supply and demand, interest rates, the current market price of the underlying security or index in relation to the exercise price of the option, the volatility of the underlying security or index, and the time remaining until the expiration date. Accordingly, the successful use of options depends on the ability of an Adviser to forecast correctly interest rates, currency exchange rates and/or market movements.
When a Fund sells put or call options it has previously purchased, the Fund may realize a net gain or loss, depending on whether the amount realized on the sale is more or less than the premium and other transaction costs paid on the put or call option which is sold. There is no assurance that a liquid secondary market will exist for options, particularly in the case of OTC options. In the event of the bankruptcy of a broker through which a Fund engages in transactions in options, such Fund could experience delays and/or losses in liquidating open positions purchased or sold through the broker and/or incur a loss of all or part of its margin deposits with the broker. In the case of OTC options, if the transacting dealer fails to make or take delivery of the securities underlying an option it has written, in accordance with the terms of that option, due to insolvency or otherwise, a Fund would lose the premium paid for the option as well as any anticipated benefit of the transaction. If trading were suspended
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in an option purchased by a Fund, the Fund would not be able to close out the option. If restrictions on exercise were imposed, the Fund might be unable to exercise an option it has purchased.
A call option on a foreign currency gives the purchaser of the option the right to purchase the currency at the exercise price until the option expires. A put option on a foreign currency gives the purchaser of the option the right to sell a foreign currency at the exercise price until the option expires. The markets in foreign currency options are relatively new and the Fund’s ability to establish and close out positions on such options is subject to the maintenance of a liquid secondary market. Currency options traded on U.S. or other exchanges may be subject to position limits, which may limit the ability of a Fund to reduce foreign currency risk using such options. 
Writing Covered Call and Put Options. VanEck Morningstar Wide Moat Fund and Onchain Economy ETF may write covered call options on portfolio securities. Emerging Markets Fund, Global Resources Fund, International Investors Gold Fund and Emerging Markets Bond Fund may write covered call options on portfolio securities to the extent that the value of all securities with respect to which covered calls are written does not exceed 10% of the Fund’s net asset value. When a Fund writes a covered call option, the Fund incurs an obligation to sell the security underlying the option to the purchaser of the call, at the option’s exercise price at any time during the option period, at the purchaser’s election. When a Fund writes a put option, the Fund incurs an obligation to buy the security underlying the option from the purchaser of the put, at the option’s exercise price at any time during the option period, at the purchaser’s election.
Such Fund may be required, at any time during the option period, to deliver the underlying security (or currency) against payment of the exercise price on any calls it has written, or to make payment of the exercise price against delivery of the underlying security (or currency) on any puts it has written. This obligation is terminated upon the expiration of the option period or at such earlier time as the writer effects a closing purchase transaction. A closing purchase transaction is accomplished by purchasing an option of the same series as the option previously written. However, once the Fund has been assigned an exercise notice, the Fund will typically be unable to effect a closing purchase transaction.
During the option period, the Fund gives up, in return for the premium on the option, the opportunity for capital appreciation above the exercise price should the market price of the underlying security (or the value of its denominated currency) increase, but retains the risk of loss should the price of the underlying security (or the value of its denominated currency) decline.
Futures Contracts. The Funds may buy and sell financial futures contracts which may include security and interest-rate futures, stock and bond index futures contracts and foreign currency futures contracts. Global Resources Fund may also buy and sell futures contracts and options thereon linked to the price of global resources. CM Commodity Index Fund may engage in these transactions for hedging purposes or other purposes. A futures contract is an agreement between two parties to buy and sell a security for a set price on a future date. An interest rate, commodity, foreign currency or index futures contract provides for the future sale by one party and purchase by another party of a specified quantity of a financial instrument, commodity, foreign currency or the cash value of an index at a specified price and time. 
Futures contracts and options on futures contracts may be used to reduce a Fund’s exposure to fluctuations in the prices of portfolio securities and may prevent losses if the prices of such securities decline. Similarly, such investments may protect a Fund against fluctuation in the value of securities in which a Fund is about to invest.
The Funds may purchase and write (sell) call and put options on futures contracts and enter into closing transactions with respect to such options to terminate an existing position. An option on a futures contract gives the purchaser the right (in return for the premium paid), and the writer the obligation, to assume a position in a futures contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the term of the option. Upon exercise of the option, the delivery of the futures position by the writer of the option to the holder of the option is accompanied by delivery of the accumulated balance in the writer’s futures margin account, which represents the amount by which the market price of the futures contract at the time of exercise exceeds (in the case of a call) or is less than (in the case of a put) the exercise price of the option contract.
Future contracts are traded on exchanges, so that, in most cases, either party can close out its position on the exchange for cash, without delivering the security or commodity. However, there is no assurance that a Fund will be able to enter into a closing transaction.
Risks of Transactions in Futures Contracts and Related Options. There are several risks associated with the use of futures contracts and futures options as hedging techniques. A purchase or sale of a futures contract may result in losses in excess of the amount invested in the futures contract. There can be no guarantee that there will be a correlation between price movements in the hedging vehicle and in the Fund securities being hedged. In addition, there are significant differences between the securities and futures markets that could result in an imperfect correlation between the markets, causing a given hedge not to achieve its objectives. As a result, a hedge may be unsuccessful because of market behavior or unexpected interest rate trends.
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Investments in options, futures contracts and options on futures contracts may reduce the gains which would otherwise be realized from the sale of the underlying securities or assets which are being hedged. Additionally, positions in futures contracts and options can be closed out only on an exchange that provides a market for those instruments. There can be no assurances that such a market will exist for a particular futures contract or option. If a Fund cannot close out an exchange traded futures contract or option which it holds, it would have to perform its contractual obligation or exercise its option to realize any profit, and would incur transaction costs on the sale of the underlying assets.
There is a risk of loss by a Fund of the initial and variation margin deposits in the event of bankruptcy of the futures commission merchant (“FCM”) with which the Fund has an open position in a futures contract.
Futures exchanges may limit the amount of fluctuation permitted in certain futures contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day’s settlement price at the end of the current trading session. Once the daily limit has been reached in a futures contract subject to the limit, no more trades may be made on that day at a price beyond that limit. The daily limit governs only price movements during a particular trading day and therefore does not limit potential losses because the limit may work to prevent the liquidation of unfavorable positions. For example, futures prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of positions and subjecting some holders of futures contracts to substantial losses.
There can be no assurance that an active market will exist at a time when a Fund seeks to close out a futures or a futures option position, and that Fund would remain obligated to meet margin requirements until the position is closed. In such situations, if a Fund had insufficient cash, it might have to sell securities to meet margin requirements at a time when it would be disadvantageous to do so. Losses incurred in futures transactions and the costs of these transactions will affect the performance of a Fund. Positions in futures contracts may be closed out only on the exchange on which they were entered into (or through a linked exchange). No secondary market for such contract exists.
It is the policy of each Fund to meet the requirements of the Code, to qualify as a regulated investment company and thus to prevent double taxation of the Fund and its shareholders. One of the requirements is that at least 90% of a Fund’s gross income be derived from dividends, interest, payment with respect to securities loans and gains from the sale or other disposition of stocks or other securities. Gains from commodity futures contracts do not currently qualify as income for purposes of the 90% test. The extent to which a Fund may engage in options and futures contract transactions may be materially limited by this test.
Risks Associated With Commodity Futures Contracts. There are several additional risks associated with transactions in commodity futures which are discussed below:
Storage. Unlike the financial futures markets, in the commodity futures markets there are costs of physical storage associated with purchasing the underlying commodity. The price of the commodity futures contract reflect the storage costs of purchasing the physical commodity, including the time value of money invested in the physical commodity. To the extent that the storage costs for an underlying commodity change while the Fund is invested in futures contracts on that commodity, the value of the futures contract may change proportionately.
Reinvestment. In the commodity futures markets, producers of the underlying commodity may decide to hedge the price risk of selling the commodity by selling futures contracts today to lock in the price of the commodity at delivery tomorrow. In order to induce speculators to purchase the other side of the same futures contract, the commodity producer generally must sell the futures contract at a lower price than the expected future spot price. Conversely, if most hedgers in the futures market are purchasing futures contracts to hedge against a rise in prices, then speculators tend to only sell the other side of the futures contract at a higher futures price than the expected future spot price of the commodity. The changing nature of the hedgers and speculators in the commodity markets influence whether futures prices are above or below the expected future spot price, which can have significant implications for the Fund. If the nature of hedgers and speculators in futures markets has shifted when it is time for the Fund to reinvest the proceeds of a maturing contract in a new futures contract, the Fund might reinvest at higher or lower futures prices, or choose to pursue other investments.
Other Economic Factors. The commodities which underlie commodity futures contracts may be subject to additional economic and non-economic variables, such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political and regulatory developments. These factors may have a larger impact on commodity prices and commodity-linked instruments, including futures contracts, than on traditional securities. Certain commodities are also subject to limited pricing flexibility because of supply and demand factors. Others are subject to broad price fluctuations as a result of the volatility of the prices for certain raw materials and the instability of supplies of other materials. These additional variables may create additional investment risks which subject the Fund’s investments to greater volatility than investments in traditional securities.
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Combined Positions. CM Commodity Index Fund may purchase and write options in any combination. For example, the Fund may purchase a put option and write a call option on the same underlying instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures contract. Another possible combined position would involve writing a call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out.
Warrants and Subscription Rights. The Funds may invest in warrants, which are instruments that permit, but do not obligate, the holder to subscribe for other securities. Subscription rights are similar to warrants, but normally have a short duration and are distributed directly by the issuer to its shareholders. Warrants and rights are not dividend-paying investments and do not have voting rights like common stock. They also do not represent any rights in the assets of the issuer. As a result, warrants and rights may be considered more speculative than direct equity investments. In addition, the value of warrants and rights do not necessarily change with the value of the underlying securities and may cease to have value if they are not exercised prior to their expiration dates.
PARTLY PAID SECURITIES
Securities paid for on an installment basis. A partly paid security trades net of outstanding installment payments—the buyer “takes over payments.” The buyer’s rights are typically restricted until the security is fully paid. If the value of a partly-paid security declines before a Fund finishes paying for it, the Fund will still owe the payments, but may find it hard to sell and as a result may incur a loss.
PRIVATE INVESTMENT IN PUBLIC EQUITY
The Funds may acquire equity securities of an issuer that are issued through a private investment in public equity (PIPE) transaction, including on a when-issued basis. See “When, As and If Issued Securities.” A Fund will earmark an amount of cash or high quality securities equal (on a daily mark to market basis) to the amount of its commitment to purchase the when-issued securities. PIPE transactions typically involve the purchase of securities directly from a publicly traded company or its affiliates in a private placement transaction, typically at a discount to the market price of the company’s securities. See also “Direct Investments.” There is a risk that if the market price of the securities drops below a set threshold, the company may have to issue additional stock at a significantly reduced price, which may dilute the value of a Fund’s investment. Shares in PIPES generally are not registered with the SEC until after a certain time period from the date the private sale is completed. This restricted period can last many months. Until the public registration process is completed, PIPES are restricted as to resale and a Fund cannot freely trade the securities. Generally, such restrictions cause the PIPES to be illiquid during this time. PIPES may contain provisions that the issuer will pay specified financial penalties to the holder if the issuer does not publicly register the restricted equity securities within a specified period of time, but there is no assurance that the restricted equity securities will be publicly registered, or that the registration will remain in effect. See “Rule 144A and Section 4(a)(2) Securities.”

PREFERRED STOCK
The Funds may invest in preferred stock. Preferred stock represents an equity interest in a company that generally entitles the holder to receive, in preference to the holders of other stocks such as common stocks, dividends and a fixed share of the proceeds resulting from a liquidation of the company. Some preferred stocks also entitle their holders to receive additional liquidation proceeds on the same basis as holders of a company’s common stock, and thus also represent an ownership interest in that company.
Preferred stocks may pay fixed or adjustable rates of return. Preferred stock is subject to issuer-specific and market risks applicable generally to equity securities. In addition, a company’s preferred stock generally pays dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of preferred stock will usually react more strongly than bonds and other debt to actual or perceived changes in the company’s financial condition or prospects. Preferred stock of smaller companies may be more vulnerable to adverse developments than preferred stock of larger companies.

REAL ESTATE SECURITIES
The Funds may not purchase or sell real estate, except that the Funds may invest in securities of issuers that invest in real estate or interests therein. These include equity securities of real estate investment trusts (“REITs”) and other real estate industry companies or companies with substantial real estate investments. Global Resources Fund may invest more than 50% of its assets in such securities. The Funds are therefore subject to certain risks associated with direct ownership of real estate and with the real estate industry in general. These risks include, among others: possible declines in the value of real estate; possible lack of availability of mortgage funds; extended vacancies of properties; risks related to general and local economic conditions;
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overbuilding; increases in competition, property taxes and operating expenses; changes in zoning laws; costs resulting from the clean-up of, and liability to third parties for damages resulting from, environmental problems; casualty or condemnation losses; uninsured damages from floods, earthquakes or other natural disasters; limitations on and variations in rents; and changes in interest rates.
REITs are pooled investment vehicles whose assets consist primarily of interests in real estate and real estate loans. REITs are generally classified as equity REITs, mortgage REITs or hybrid REITs. Equity REITs own interest in property and realize income from the rents and gain or loss from the sale of real estate interests. Mortgage REITs invest in real estate mortgage loans and realize income from interest payments on the loans. Hybrid REITs invest in both equity and debt. Equity REITs may be operating or financing companies. An operating company provides operational and management expertise to and exercises control over, many if not most operational aspects of the property. REITS are not taxed on income distributed to shareholders, provided they comply with several requirements of the Code.
Investing in REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. Equity REITs may be affected by changes in the value of the underlying property owned by the REITs, while mortgage REITs may be affected by the quality of any credit extended. REITs are dependent upon management skills, are not diversified, and are subject to the risks of financing projects. REITs are subject to heavy cash flow dependency, default by borrowers, self-liquidation and the possibilities of failing to qualify for the exemption from tax for distributed income under the Code. REITs (especially mortgage REITs) are also subject to interest rate risk (i.e., as interest rates rise, the value of the REIT may decline).
Under recent tax legislation, individuals (and certain other non-corporate entities) are generally eligible for a 20% deduction with respect to taxable ordinary dividends from REITs and certain taxable income from publicly traded partnerships. Regulations issued by the Internal Revenue Service (“IRS”) enable the Fund to pass through the special character of “qualified REIT dividends” (i.e., ordinary REIT dividends other than capital gain dividends and portions of REIT dividends designated as qualified dividend income), but not qualified publicly traded partnership income, to a shareholder, provided both the Fund and a shareholder meet certain holding period requirements with respect to their shares. A noncorporate shareholder receiving such dividends would treat them as eligible for the 20% deduction, provided the RIC shares were held by the shareholder for more than 45 days during the 91-day period beginning on the date that is 45 days before the date on which the shares become ex-dividend with respect to such dividend. The amount of a RIC’s dividends eligible for the 20% deduction for a taxable year is limited to the excess of the RIC’s qualified REIT dividends for the taxable year over allocable expenses.

REGULATORY
Changes in the laws or regulations of the United States or the Cayman Islands, including any changes to applicable tax laws and regulations, could impair the ability of the CM Commodity Index Fund, the International Investors Gold Fund and Onchain Economy ETF to achieve their investment objective and could increase the operating expenses of each of these Funds or the wholly owned subsidiary of the International Investors Gold Fund (the “Gold Subsidiary”), the CMCI Subsidiary or the Onchain Subsidiary (the Gold Subsidiary, the CMCI Subsidiary and the Onchain Subsidiary, each a “Subsidiary”). For example, in 2012, the CFTC adopted amendments to its rules that affect the ability of certain investment advisers to registered investment companies and other entities to rely on previously available exclusions or exemptions from registration under the CEA and regulations thereunder. In addition, the CFTC or the SEC could at any time alter the regulatory requirements governing the use of commodity futures, options on commodity futures, structured notes or swap transactions by investment companies, which could result in the inability of the International Investors Gold Fund, the CM Commodity Index Fund or the Onchain Economy ETF to achieve its investment objective through its current strategies.

REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
Each of the Funds may enter into repurchase agreements. Repurchase agreements, which may be viewed as a type of secured lending by a Fund, typically involve the acquisition by a Fund of debt securities from a selling financial institution such as a bank, savings and loan association or broker-dealer. The agreements typically provide that a Fund will sell back to the institution, and that the institution will repurchase, the underlying security serving as collateral at a specified price and at a fixed time in the future, usually not more than seven days from the date of purchase. The collateral is marked-to-market daily to determine that the value of the collateral, as specified in the agreement, does not decrease below the purchase price plus accrued interest. If such decrease occurs, additional collateral will be requested and, when received, added to the account to maintain full collateralization. A Fund accrues interest from the institution until the time when the repurchase is to occur.
The Funds may also enter into reverse repurchase agreements. Reverse repurchase agreements involve sales by the Funds of portfolio assets concurrently with an agreement by the Fund to repurchase the same assets at a later date at a fixed price. Such transactions are advantageous only if the interest cost to the Funds of the reverse repurchase transaction is less than
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the cost of obtaining the cash otherwise. Opportunities to achieve this advantage may not always be available, and the Funds seek to use the reverse repurchase technique only when it will be advantageous to the Funds. In addition, reverse repurchase agreements may be viewed as a form of borrowing, and borrowed assets used for investment creates leverage risk. Leverage can create interest expense that may lower the Funds’ overall returns. Leverage may exaggerate the Funds’ volatility and risk of loss.
RULE 144A AND SECTION 4(a)(2) SECURITIES
The Funds may invest in securities which are subject to restrictions on resale because they have not been registered under the Securities Act of 1933, as amended (the “1933 Act”), or which are otherwise not readily marketable.
Rule 144A under the 1933 Act allows a broader institutional trading market for securities otherwise subject to restriction on resale to the general public. Rule 144A establishes a “safe harbor” from the registration requirements of the 1933 Act of resale of certain securities to qualified institutional buyers.
Each Adviser monitors the liquidity determinations of restricted securities in the Funds’ holdings pursuant to Rule 22e-4. The determination of whether a Rule 144A security is liquid or illiquid generally takes into account relevant market, trading, and investment-specific considerations consistent with applicable SEC guidance. Additional factors that may be considered include: (1) the frequency of trades and quotes for the security; (2) the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; (3) dealer undertakings to make a market in the security; and (4) the nature of the security and the nature of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanisms of the transfer).
In addition, commercial paper may be issued in reliance on the “private placement” exemption from registration afforded by Section 4(a)(2) of the 1933 Act. Such commercial paper is restricted as to disposition under the federal securities laws and, therefore, any resale of such securities must be effected in a transaction exempt from registration under the 1933 Act.
Securities eligible for resale pursuant to Rule 144A under the 1933 Act and commercial paper issued in reliance on the Section 4(a)(2) exemption under the 1940 Act may be determined to be liquid in accordance with Rule 22e-4 for purposes of complying with investment restrictions applicable to investments by the Funds in illiquid investments. To the extent such securities are determined to be illiquid, they will be aggregated with other illiquid investments for purposes of the limitation on illiquid investments.

RISKS RELATED TO RUSSIAN INVASION OF UKRAINE
In late February 2022, Russian military forces invaded Ukraine, significantly amplifying already existing geopolitical tensions among Russia, Ukraine, Europe, NATO, and the West. Russia’s invasion, the responses of countries and political bodies to Russia’s actions, and the potential for wider conflict may increase financial market volatility and could have severe adverse effects on regional and global economic markets, including the markets for certain securities and commodities such as oil and natural gas. Following Russia’s actions, various countries, including the U.S., Canada, the United Kingdom, Germany, and France, as well as the European Union, issued broad-ranging economic sanctions against Russia. The sanctions consist of the prohibition of trading in certain Russian securities and engaging in certain private transactions, the prohibition of doing business with certain Russian corporate entities, large financial institutions, officials and oligarchs, and the freezing of Russian assets. The sanctions include a commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications, commonly called “SWIFT,” the electronic network that connects banks globally, and imposed restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions. A number of large corporations and U.S. states have also announced plans to divest interests or otherwise curtail business dealings with certain Russian businesses.
The imposition of these current sanctions (and potential further sanctions in response to continued Russian military activity) and other actions undertaken by countries and businesses may adversely impact various sectors of the Russian economy, including but not limited to, the financials, energy, metals and mining, engineering, and defense and defense-related materials sectors. Such actions also may result in a weakening of the ruble, a downgrade of Russia’s credit rating, and the decline of the value and liquidity of Russian securities, and could impair the ability of a Fund to buy, sell, receive, or deliver those securities. Moreover, the measures could adversely affect global financial and energy markets and thereby negatively affect the value of a Fund's investments beyond any direct exposure to Russian issuers or those of adjoining geographic regions. In response to sanctions, the Russian Central Bank raised its interest rates and banned sales of local securities by foreigners, which may include a Fund. Russia may take additional counter measures or retaliatory actions, which may further impair the value and liquidity of Russian securities and Fund investments. Such actions could, for example, include restricting gas exports to other countries, seizure of U.S. and European residents' assets, conducting cyberattacks on other governments, corporations or individuals, or undertaking or provoking other military conflict elsewhere in Europe, any of which could exacerbate negative consequences on global financial markets and the economy. The actions discussed above could have a negative effect on the performance of Funds that have exposure to Russia. While diplomatic efforts have been ongoing, the conflict between Russia and Ukraine is currently unpredictable and has the potential to result in broadened military actions. The duration of ongoing
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hostilities and corresponding sanctions and related events cannot be predicted and may result in a negative impact on performance and the value of Fund investments, particularly as it relates to Russia exposure.
Due to difficulties transacting in impacted securities, a Fund may experience challenges liquidating the applicable positions to continue to seek a Fund’s investment objective. Additionally, due to current and potential future sanctions or potential market closure impacting the ability to trade Russian securities, a Fund may experience higher transaction costs. Furthermore, any exposure that a Fund may have to Russian counterparties or counterparties that are otherwise impacted by sanctions also could negatively impact the Fund’s portfolio.

SECURITIES LENDING
The Funds may lend securities to approved borrowers, including affiliates of the Funds’ securities lending agent, State Street Bank and Trust Company (“State Street”). Securities lending allows a Fund to retain ownership of the securities loaned and, at the same time, earn additional income. The borrower provides cash or non-cash collateral equal to at least 102% (105% for foreign securities) of the value of the securities loaned. Collateral is maintained by State Street on behalf of the Funds. Cash received as collateral through loan transactions is generally invested in shares of a money market fund. Investing this cash subjects that investment, as well as the securities loaned, to market appreciation or depreciation. Non-cash collateral consists of securities issued or guaranteed by the United States government or one of its agencies and cannot be re-hypothecated by the Funds. The Funds maintain the ability to vote or consent on proxy proposals involving material events affecting securities loaned. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a Fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. These delays and costs could be greater for foreign securities. If a Fund is not able to recover the securities loaned, the collateral may be sold and a replacement investment may be purchased in the market. The value of the collateral could decrease below the value of the replacement investment by the time the replacement investment is purchased.

SHORT SALES
The Funds may short sell equity securities. A short sale of an equity security is the sale of a security that the seller does not own. In order to deliver the security to the purchaser, the short seller borrows the security, typically from a broker-dealer or an institutional investor, for a fee. The short seller later closes out the position by returning the security to the lender, typically by purchasing the same security on the open market. A short sale theoretically carries the risk of an unlimited loss, because the price of the underlying security could increase without limit, thus increasing the cost of buying that security to cover the short position. In addition, there can be no assurance that the security needed to cover a short position will be available for purchase. Also, the purchase of a security to close out the short position can itself cause the price of the security to rise further, thereby exacerbating the loss. Short selling is often used to profit from an expected downward price movement in a security.

SPECIAL PURPOSE ACQUISITION COMPANIES
The Funds may invest in stock, warrants, and other securities of special purpose acquisition companies (SPACs) or similar special purpose entities. A SPAC is typically a publicly traded company that raises investment capital via an IPO for the purpose of acquiring the equity securities of one or more existing companies (or interests therein) via merger, combination, acquisition or other similar transactions. A Fund may acquire an interest in a SPAC in an IPO or a secondary market transaction. See also “Equity Securities” and “Options, Futures, Warrants and Subscription Rights.”
Unless and until an acquisition is completed, a SPAC generally invests its assets (less a portion retained to cover expenses) in U.S. government securities, money market securities and cash. To the extent the SPAC is invested in cash or similar securities, this may negatively affect a Fund’s performance. Because SPACs and similar entities are in essence blank check companies without operating history or ongoing business other than seeking acquisitions, the value of their securities is particularly dependent on the ability of the entity’s management to identify and complete a profitable acquisition. There is no guarantee that the SPACs in which a Fund invests will complete an acquisition or that any acquisitions that are completed will be profitable. Some SPACs may pursue acquisitions only within certain industries or regions, which may increase the volatility of their prices. In addition, these securities, which are typically traded in the over-the-counter market, may be considered illiquid and/or be subject to restrictions on resale.
Other risks of investing in SPACs include that a significant portion of the monies raised by the SPAC may be expended during the search for a target transaction; an attractive transaction may not be identified at all (or any requisite approvals may not be obtained) and the SPAC may dissolve and be required to return any remaining monies to shareholders, causing a Fund to incur the opportunity cost of missed investment opportunities the Fund otherwise could have benefited from; a transaction once identified or effected may prove unsuccessful and an investment in the SPAC may lose value; the warrants or
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other rights with respect to the SPAC held by a Fund may expire worthless or may be repurchased or retired by the SPAC at an unfavorable price; and an investment in a SPAC may be diluted by additional later offerings of interests in the SPAC or by other investors exercising existing rights to purchase shares of the SPAC. In addition, a SPAC target company may have limited operating experience, a smaller size, limited product lines, markets, distribution channels and financial and managerial resources. Investing in the securities of smaller companies involves greater risk, and portfolio price volatility.
SUBSIDIARY 
International Investors Gold Fund’s investments in the Gold Subsidiary and CM Commodity Index Fund’s investments in the CMCI Subsidiary are expected to provide such Funds with exposure to the commodity markets within the limitations of Subchapter M of the Code and the Internal Revenue Service (“IRS”) revenue rulings, as discussed below under “Taxation.” Onchain Economy ETF’s investments in the Onchain Subsidiary are expected to provide such Fund with exposure to Digital Assets Instruments (as defined in the Prospectus) within the limitations of Subchapter M of the Code and the Internal Revenue Service (“IRS”) revenue rulings, as discussed below under “Taxation.” Each of the Subsidiaries is a company organized under the laws of the Cayman Islands and is overseen by its own board of directors. International Investors Gold Fund is the sole shareholder of the Gold Subsidiary, and it is not currently expected that shares of the Gold Subsidiary will be sold or offered to other investors. CM Commodity Index Fund is the sole shareholder of the CMCI Subsidiary, and it is not currently expected that shares of the CMCI Subsidiary will be sold or offered to other investors. Onchain Economy ETF is the sole shareholder of the Onchain Subsidiary, and it is not currently expected that shares of the Onchain Subsidiary will be sold or offered to other investors. It is expected that the Gold Subsidiary will primarily invest in gold bullion, gold futures and other instruments that provide direct or indirect exposure to gold, including ETFs, and also may invest in silver, platinum and palladium bullion and futures. It is expected that the CMCI Subsidiary will primarily invest in commodity-linked derivative instruments, including swap agreements, futures and options on futures. It is expected Onchain Economy ETF’s investment in the Onchain Subsidiary generally provides Onchain Economy ETF with exposure to Digital Asset Instruments (as defined in the Onchain Economy ETF’s prospectus) within the limits of the federal tax laws, which limit the ability of investment companies like the Onchain Economy ETF to invest directly in such instruments. To the extent that International Investors Gold Fund invests in the Gold Subsidiary, such Fund may be subject to the risks associated with those instruments and other securities. To the extent that the CM Commodity Index Fund invests in the CMCI Subsidiary, such Fund may be subject to the risks associated with those derivative instruments and other securities. To the extent that the Onchain Economy ETF invests in the Onchain Subsidiary, such Fund may be subject to the risks associated with those derivative instruments and other securities.
While each of the Subsidiaries may be considered similar to investment companies, they are not registered under the 1940 Act and, unless otherwise noted in the applicable Prospectus and this SAI, is not subject to all of the investor protections of the 1940 Act and other U.S. regulations. Changes in the laws of the United States and/or the Cayman Islands could result in the inability of such Funds and/or their respective subsidiaries to operate as described in the applicable Prospectus and this SAI and could eliminate or severely limit such Fund’s ability to invest in their respective Subsidiary which may adversely affect such Funds and their shareholders.

SWAPS
The Funds may enter into swap agreements. A swap is a derivative in the form of an agreement to exchange the return generated by one instrument for the return generated by another instrument. The payment streams are calculated by reference to a specified index and agreed upon notional amount. The term “specified index” includes currencies, fixed interest rates, prices, total return on interest rate indices, fixed income indices, stock indices and commodity indices (as well as amounts derived from arithmetic operations on these indices). For example, a Fund may agree to swap the return generated by a fixed income index for the return generated by a second fixed income index. The currency swaps in which a Fund may enter will generally involve an agreement to pay interest streams in one currency based on a specified index in exchange for receiving interest streams denominated in another currency. Such swaps may involve initial and final exchanges that correspond to the agreed upon notional amount. The swaps in which the CM Commodity Index Fund may engage also include rate caps, floors and collars under which one party pays a single or periodic fixed amount(s) (or premium), and the other party pays periodic amounts based on the movement of a specified index.
A Fund may also enter into credit default swaps, index swaps and interest rate swaps. Credit default swaps may have as reference obligations one or more securities or a basket of securities that are or are not currently held by the Fund. The protection “buyer” in a credit default contract is generally obligated to pay the protection “seller” an upfront or a periodic stream of payments over the term of the contract provided that no credit event, such as a default, on a reference obligation has occurred. If a credit event occurs, the seller generally must pay the buyer the “par value” (full notional value) of the swap in exchange for an equal face amount of deliverable obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount, if the swap is cash settled. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest, e.g., an exchange of fixed rate payments for floating rate payments. Index swaps, also called total return swaps, involves a Fund entering into a contract with a counterparty in which the counterparty makes payments to the Fund based on the positive returns of an index, such as a corporate bond
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index, in return for the Fund paying to the counterparty a fixed or variable interest rate, as well as paying to the counterparty any negative returns on the index. In a sense, a Fund is purchasing exposure to an index in the amount of the notional principal in return for making interest rate payments on the notional principal. As with interest-rate swaps, the notional principal does not actually change hands at any point in the transaction. Cross-currency swaps are interest rate swaps in which the notional amount upon which the fixed interest rate is accrued is denominated in another currency and the notional amount upon which the floating rate is accrued is denominated in another currency. The notional amounts are typically determined based on the spot exchange rate at the inception of the trade. The swaps in which a Fund may engage also include rate caps, floors and collars under which one party pays a single or periodic fixed amount(s) (or premium), and the other party pays periodic amounts based on the movement of a specified index. Global Resources Fund may also enter into other asset swaps. Asset swaps are similar to swaps in that the performance of one global resource (e.g., gold) may be “swapped” for another (e.g., energy).
Swaps do not typically involve the delivery of securities, other underlying assets, or principal. Accordingly, the risk of loss with respect to swaps is limited to the net amount of payments that a Fund is contractually obligated to make. If the other party to a swap defaults, a Fund’s risk of loss consists of the net amount of payments that a Fund is contractually entitled to receive. Currency swaps usually involve the delivery of the entire principal value of one designated currency in exchange for the other designated currency. Therefore, the entire principal value of a currency swap is subject to the risk that the other party to the swap will default on its contractual delivery obligations. If there is a default by the counterparty, a Fund may have contractual remedies pursuant to the agreements related to the transaction. In addition, as of the date of this SAI, UBS Financial Services, Inc. was the only available counterparty with which the CM Commodity Index Fund may enter into swaps contracts on the CMCI. Accordingly, this increases the CM Commodity Index Fund’s exposure to these counterparty risks. The use of swaps is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary fund securities transactions. If an Adviser is incorrect in its forecasts of market values, interest rates, and currency exchange rates, the investment performance of a Fund would be less favorable than it would have been if this investment technique were not used. Also, if a counterparty’s creditworthiness declines, the value of the swap would likely decline.
Certain standardized swaps are subject to mandatory central clearing and exchange-trading. Central clearing is intended to reduce counterparty credit risk and increase liquidity, but central clearing does not eliminate these risks and may involve additional costs and risks not involved with uncleared swaps. Credit risk of cleared swap participants is concentrated in a few clearinghouses, and the consequences of insolvency of a clearinghouse are not clear. There is also a risk of loss by a Fund of the initial and variation margin deposits in the event of bankruptcy of the FCM with which the Fund has an open position, or the central counterparty in a swap contract.

TRACKING ERROR
The returns of VanEck Morningstar Wide Moat Fund and CM Commodity Index Fund’s return may not match the return of the indexes that each of these funds seeks to track due to, among other factors, the Fund incurring operating expenses, and not being fully invested at all times as a result of cash inflows and cash reserves to meet redemptions.

U.S. GOVERNMENT AND RELATED OBLIGATIONS
U.S. government obligations include U.S. Treasury obligations and securities issued or guaranteed by various agencies of the U.S. government or by various instrumentalities which have been established or sponsored by the U.S. government. U.S. Treasury obligations and securities issued or guaranteed by various agencies of the U.S. government differ in their interest rates, maturities and time of issuance, as well as with respect to whether they are guaranteed by the U.S. government. U.S. government and related obligations may be structured as fixed-, variable- or floating-rate obligations.
While U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. government, securities issued or guaranteed by federal agencies and U.S. government-sponsored instrumentalities may or may not be backed by the full faith and credit of the U.S. government. These securities may be supported by the ability to borrow from the U.S. Treasury or only by the credit of the issuing agency or instrumentality and, as a result, may be subject to greater credit risk than securities issued or guaranteed by the U.S. Treasury. Obligations of U.S. government agencies, authorities, instrumentalities and sponsored enterprises historically have involved limited risk of loss of principal if held to maturity. However, no assurance can be given that the U.S. government would provide financial support to any of these entities if it is not obligated to do so by law. Additionally, from time to time uncertainty regarding the status of negotiations in the U.S. government to increase the statutory debt limit, commonly called the “debt ceiling,” could increase the risk that the U.S. government may default on payments on certain U.S. government securities, cause the credit rating of the U.S. government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of a Fund that holds securities of that entity will be adversely impacted.
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WHEN, AS AND IF ISSUED SECURITIES
Each Fund may purchase securities on a “when, as and if issued” basis, under which the issuance of the security depends upon the occurrence of a subsequent event, such as approval of a merger, corporate reorganization or debt restructuring. At that time, the Fund will record the transaction and, in determining its net asset value, will reflect the value of the security daily. An increase in the percentage of the Fund assets committed to the purchase of securities on a “when, as and if issued” basis may increase the volatility of its net asset value. A Fund may also sell securities on a “when, as and if issued” basis provided that the issuance of the security will result automatically from the exchange or conversion of a security owned by the Fund at the time of sale.

ADDITIONAL INFORMATION ABOUT THE CMCI
The following is a more complete description of the UBS Constant Maturity Commodity Total Return Index (the “CMCI” or the “Index”), including, without limitation, information about the composition, weighting, method of calculation and procedures for changes in components and weights.
Overview of the CMCI
The CMCI represents a basket of commodity futures contracts with 29 commodity components (as of February 28, 2025). Exposure to each component is allocated across a range of maturity pillars ranging from three months up to a maximum of three years. Not all commodities have the full range of maturity exposures. In contrast, traditional commodity indices typically invest in front-month and next-month futures contracts which have shorter tenors (time to maturity) than the average CMCI tenor.
The CMCI also employs a “constant maturity” approach by relying on a continuous roll methodology in which the Index invests in and out of future contracts on a daily basis in order to maintain the average maturity of each pillar. This methodology differs from traditional commodity indices, which usually are pre-defined to roll during a fixed window of days on a monthly or bi-monthly basis. The CMCI represents commodities in five primary sectors: Energy, Agriculture, Industrial Metals, Precious Metals and Livestock. The underlying commodities trade on various exchanges.
The return of the CMCI is generated by two components: (i) uncollateralized returns from holding and rolling of futures contracts comprising the Index and (ii) the fixed income return reflecting the Secured Overnight Financing Rate (“SOFR”)-based interest earned on a hypothetical portfolio theoretically deposited as full collateral for the notional exposure of hypothetical positions in the futures contracts comprising the Index.
As of February 28, 2025, the Index consisted of the following commodity sectors with the following relative target weights: Energy (32.1%), Agriculture (30.8%), Industrial Metals (26.0%), Precious Metals (6.5%) and Livestock (4.6%).
Component Selection and Target Weights
The weighting process for the Index is designed to reflect the economic significance and market liquidity of each commodity. The Index sponsors use a two-step approach to determine Target Weights: first, economic indicators (regional Consumer Price Indexes (CPI), Producer Price Indexes (PPI) and Gross Domestic Product (GDP)), along with liquidity analysis, are used to determine the sector weights (Energy, Agriculture, Industrial Metals, Precious Metals and Livestock); secondly, global consumption data in conjunction with further liquidity analysis is used to calculate the individual component target weights.
Changes in the Target Weights and/or Index Composition
Target weights for each Index commodity futures contract are established on an annual basis. The Index is rebalanced to the new Target Weights during the maintenance period, which is the final three business days of July.
Tenors of Contracts
The CMCI represents a weighted average of all available CMCI constant maturities (ranging from three months to over three years). The distribution of weights to available tenors (time to maturity) is a function of relative liquidity of the underlying futures contracts. As of February 28, 2025, the average tenor of the futures contracts comprising the Index is approximately 6.4 months. Since the relative liquidity of commodity futures contracts for a given commodity tends to decline as time to maturity increases, the weights of the longer-dated tenors are typically lower than those for the short-dated tenors for a given commodity.
Rebalancing of the Index Components
Due to price movements, the weight of each component in the Index will fluctuate from its Target Weight over time. The weight of each Index component is rebalanced over the final three CMCI Business Days of each month in order to bring
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each underlying commodity risk position back to its Target Weight for each tenor. The process is automatic and is implemented via a pre-defined methodology. The Index provider may delay or change a scheduled rebalancing or reconstitution of the CMCI or the implementation of certain rules at its sole discretion.
Calculation of the Index
The CMCI is calculated and disseminated by MerQube, Inc. with a daily closing Index level published on each Trading Day. Index information is available via Bloomberg on pages CUBS, CMCN or CMCX and from Reuters on page UBSCMCI. For further information on CMCI methodology and CMCI index values, investors can go to http://www.ubs.com/cmci or https://merqube.com/index/CMCITR.
Total Return
CMCI is a “total return” index. In addition to uncollateralized returns generated from the futures contracts comprising the Index, a daily fixed-income return is added, which reflects the interest earned on a hypothetical fixed income portfolio which theoretically collateralizes 100% of the notional value of the hypothetical positions in the futures contracts comprising the Index. The rate used to calculate the daily fixed income return is the SOFR, as published by the New York Federal Reserve Bank every business day and generally made effective with respect to the Index on the following Trading Day.
UBS may delay or change a scheduled rebalancing or reconstitution of the Index or the implementation of certain rules as its sole discretion.

ADDITIONAL INFORMATION ABOUT MORNINGSTAR WIDE MOAT FOCUS INDEX
The Wide Moat Focus Index is a rules-based index intended to offer exposure to companies that the Index Provider determines have sustainable competitive advantages based on a proprietary methodology that considers quantitative and qualitative factors (“wide moat companies”). Wide moat companies are selected from the universe of companies represented in the Morningstar® US Market IndexSM, a broad market index representing 97% of U.S. market capitalization. The Wide Moat Focus Index targets a select group of wide moat companies: those that according to Morningstar’s equity research team are attractively priced as of each Wide Moat Focus Index review. Out of the companies in the Morningstar US Market Index that the Index Provider determines are wide moat companies, the Index Provider selects companies to be included in the Wide Moat Focus Index as determined by the ratio of the Index Provider’s estimate of fair value of the issuer’s common stock to the price. The Index Provider’s equity research team’s fair value estimates are calculated using a standardized, proprietary valuation model.
A selection committee, comprising members of Morningstar’s equity research team, makes the final determination of whether a company is a wide moat company. Only those companies with one or more of the identifiable competitive advantages, as determined by the Index Provider’s equity research team and agreed to by the selection committee, are wide moat companies. The quantitative factors used to identify competitive advantages include historical and projected returns on invested capital relative to cost of capital. The qualitative factors used to identify competitive advantages include customer switching cost (i.e., the costs of customers switching to competitors), internal cost advantages, intangible assets (e.g., intellectual property and brands), network effects (i.e., whether products or services become more valuable as the number of customers grows) and efficient scale (i.e., whether the company effectively serves a limited market that potential rivals have little incentive to enter into). The Index Provider’s equity research team uses a standardized, proprietary valuation model to assign fair values to potential Wide Moat Focus Index constituents’ common stock.
The Index Provider’s equity research team estimates the issuer’s future free cash flows and then calculates an enterprise value using weighted average costs of capital as the discount rate. The Index Provider’s equity research team then assigns each issuer’s common stock a fair value by adjusting the enterprise value to account for net debt and other adjustments.
A buffer rule is applied to the current Wide Moat Focus Index constituents. Those that are ranked in the top 150% of stocks representing the lowest current market price/fair value price eligible for inclusion in the Wide Moat Focus Index will remain in the Wide Moat Focus Index at the time of reconstitution and those that fall outside of the top 150% are excluded from the Index. The maximum weight of an individual sector in the Wide Moat Focus Index is capped at 10% more than its corresponding weight in the Morningstar US Market Index at the time of reconstitution, or 40%, whichever is higher.
As of December 31, 2024, the Wide Moat Focus Index included 51 securities of companies with a market capitalization range of between approximately $7.51 billion to $3.13 trillion and a weighted average market capitalization of $171.27 billion. These amounts are subject to change.
The Wide Moat Focus Index employs a staggered rebalance methodology. The Wide Moat Focus Index is divided into two equally-weighted sub-portfolios, and each is reconstituted and rebalanced semi-annually on alternating quarters. Each subportfolio will contain 40 equally-weighted securities at its semi-annual reconstitution and weights will vary with market prices until the next reconstitution date. Due to the staggered rebalance methodology, constituents and weightings may vary
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between sub-portfolios. Each sub-portfolio is reweighted to 50% of the total Wide Moat Focus Index every six months. Adjustments to one sub-portfolio are performed after the close of business on the third Friday of March and September and adjustments to the other sub-portfolio are performed after the close of business on the third Friday of June and December, and all adjustments are effective on the following Monday. If the Monday is a market holiday, reconstitution and rebalancing occurs on the Tuesday immediately following. The Index provider may delay or change a scheduled rebalancing or reconstitution of the Wide Moat Focus Index or the implementation of certain rules at its sole discretion.
Rebalancing data, including constituent weights and related information, is posted on the Index Provider’s website at the end of each quarter-end month. Target weights of the constituents are not otherwise adjusted between quarters except in the event of certain types of corporate actions.

FUNDAMENTAL INVESTMENT RESTRICTIONS
The following investment restrictions are in addition to those described in the Prospectuses. These investment restrictions are “fundamental” and may be changed with respect to the Fund only with the approval of the holders of a majority of the Fund’s “outstanding voting securities”, (which for this purpose and under the 1940 Act, means the lesser of (i) 67% of the shares represented at a meeting at which more than 50% of the outstanding shares are represented; or (ii) more than 50% of the outstanding shares). As to any of the following investment restrictions, if a percentage restriction is adhered to at the time of investment, a later increase or decrease in percentage resulting from a change in value of portfolio securities or amount of net assets will not be considered a violation of the investment restriction. In the case of borrowing, however, a Fund will promptly take action to reduce the amount of the Fund’s borrowings outstanding if, because of changes in the net asset value of the Fund due to market action, the amount of such borrowings exceeds one-third of the value of the Fund’s net assets. The fundamental investment restrictions are as follows:
Each Fund may not:
1.Borrow money, except as permitted under the 1940 Act, as amended and as interpreted or modified by regulation from time to time.
2.Engage in the business of underwriting securities issued by others, except to the extent that the Fund may be considered an underwriter within the meaning of the Securities Act of 1933 in the disposition of restricted securities or in connection with its investments in other investment companies.
3.Make loans, except that the Fund may (i) lend portfolio securities, (ii) enter into repurchase agreements, (iii) purchase all or a portion of an issue of debt securities, bank loan participation interests, bank certificates of deposit, bankers’ acceptances, debentures or other securities, whether or not the purchase is made upon the original issuance of the securities, and (iv) participate in an interfund lending program with other registered investment companies.
4.Issue senior securities, except as permitted under the 1940 Act, as amended and as interpreted or modified by regulation from time to time.
5.Purchase or sell real estate, except that the Fund may (i) invest in securities of issuers that invest in real estate or interests therein, (ii) invest in mortgage-related securities and other securities that are secured by real estate or interests therein, and (iii) hold and sell real estate acquired by the Fund as a result of the ownership of securities.
Each of the Emerging Markets Fund, Global Resources Fund and International Investors Gold Fund may not:
6.Purchase or sell commodities, unless acquired as a result of owning securities or other instruments, but it may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments and may invest in securities or other instruments backed by commodities, except that International Investors Gold Fund may invest in gold and silver coins which are legal tender in the country of issue and gold and silver bullion, and palladium and platinum group metals bullion.
7.Purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry, except that (i) Global Resources Fund will invest 25% or more of its total assets in “global resource” industries as defined in its Prospectus; and (ii) International Investors Gold Fund may invest 25% or more of its total assets in the gold-mining industry. This limit does not apply to securities issued or guaranteed by the U.S. government, its agencies or instrumentalities.
Emerging Markets Bond Fund may not:
6.    Purchase or sell commodities, unless acquired as a result of owning securities or other instruments, but it may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments and may invest in securities or other instruments backed by commodities.
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7.    Purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry. This limit does not apply to (i) securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, or (ii) securities of other investment companies.
CM Commodity Index Fund may not:
 6.    Purchase or sell commodities, unless acquired as a result of owning securities or other instruments, but it may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments and may invest in securities or other instruments backed by commodities.
7.    Purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry, provided that this restriction does not limit the Fund’s investments in (i) securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, (ii) securities of other investment companies, and provided further that (iii) to the extent the benchmark index for the Fund is concentrated in a particular industry, the Fund will necessarily be concentrated in that industry.
VanEck Morningstar Wide Moat Fund may not:
6.    Purchase or sell commodities, unless acquired as a result of owning securities or other instruments, but it may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments and may invest in securities or other instruments backed by commodities.
7.    Purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry, except that the Fund may invest 25% or more of the value of its total assets in securities of issuers in any one industry or group of industries if the index that the Fund replicates concentrates in an industry or group of industries. This limit does not apply to securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities.

Onchain Economy ETF may not:

6.     Purchase or sell commodities, unless acquired as a result of owning securities or other instruments, but it may purchase, sell or enter into financial options and futures, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments and may invest in securities or other instruments backed by commodities.

7.    Purchase any security if, as a result of that purchase, 25% or more of its total assets would be invested in securities of issuers having their principal business activities in the same industry, except that the Fund will invest 25% or more of its total assets in investments that provide exposure to the digital asset economy. This limit does not apply to securities issued or guaranteed by the U.S. government, its agencies or instrumentalities.

In addition, each of CM Commodity Index Fund, Emerging Markets Fund, Global Resources Fund and VanEck Morningstar Wide Moat Fund may not invest in a manner inconsistent with each of their classifications as a “diversified company” as provided by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief applicable to the Fund from the provisions of the 1940 Act, as amended from time to time.
For purposes of Restriction 1, the 1940 Act generally permits a Fund to borrow money in amounts of up to one-third of the Fund’s total assets from banks, and to borrow up to 5% of the Fund’s total assets from banks or other lenders for temporary purposes. To limit the risks attendant to borrowing, the 1940 Act generally requires a Fund to maintain at all times an “asset coverage” of at least 300% of the amount of its borrowings. Asset coverage generally means the ratio that the value of a Fund’s total assets, minus liabilities other than borrowings, bears to the aggregate amount of all borrowings.
For purposes of Restriction 4, “senior securities” are generally Fund obligations that have a priority over the Fund’s shares with respect to the payment of dividends or the distribution of Fund assets. The 1940 Act generally prohibits a Fund from issuing senior securities, except that the Fund may borrow money in amounts of up to one-third of the Fund’s total assets from banks. A Fund also may borrow an amount equal to up to 5% of the Fund’s total assets from banks or other lenders for temporary purposes, and these borrowings are not considered senior securities.
For the purposes of Restriction 7, companies in different geographical locations will not be deemed to be in the same industry if the investment risks associated with the securities of such companies are substantially different. For example,
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although generally considered to be “interest rate-sensitive,” investing in banking institutions in different countries is generally dependent upon substantially different risk factors, such as the condition and prospects of the economy in a particular country and in particular industries, and political conditions. Similarly, each foreign government issuing securities (together with its agencies and instrumentalities) will be treated as a separate industry. Additionally, the securities of state and municipal governments and their political subdivisions are not considered to be issued by members of any industry. Also, for the purposes of Restriction 7, investment companies are not considered to be part of an industry. To the extent a Fund invests its assets in underlying investment companies, 25% or more of such Fund’s total assets may be indirectly exposed to a particular industry or group of related industries through its investment in one or more underlying investment companies. In accordance with each of VanEck Morningstar Wide Moat Fund’s principal investment strategies as set forth in its Prospectus, each Fund invests its assets in underlying investment companies.
VanEck Morningstar Wide Moat Fund may invest its remaining assets in securities not included in the Moat Index, money market instruments or funds which reinvest exclusively in money market instruments, exchange traded products, in stocks that are in the relevant market but not the Fund’s Index, and/or in combinations of certain stock index futures contracts, options on such futures contracts, stock options, stock index options, options on the shares, and stock index swaps and swaptions, each with a view towards providing the Fund with exposure to the securities in its respective Index. These investments may be made to invest uncommitted cash balances or, in limited circumstances, to assist in meeting shareholder redemptions. The Fund will not invest in money market instruments as part of a temporary defensive strategy to protect against potential stock market declines.
EXCHANGE LISTING AND TRADING (Onchain Economy ETF only)

A discussion of exchange listing and trading matters associated with an investment in the Fund is contained in the Fund’s Prospectus under the headings “Summary Information—Principal Risks of Investing in the Fund,” “Additional Information About the Fund’s Investment Strategies and Risks—Risks of Investing in the Fund,” “Shareholder Information—Determination of NAV” and “Shareholder Information—Buying and Selling Exchange-Traded Shares.” The discussion below supplements, and should be read in conjunction with, such sections of the Fund’s Prospectus.

The Shares of the Fund are expected to be approved for listing on the Cboe BZX Exchange, Inc. (the "Exchange"), subject to notice of issuance, and will trade in the secondary market at prices that may differ to some degree from their NAV. The Exchange may but is not required to remove the Shares of the Fund from listing if: (1) following the initial twelve-month period beginning upon the commencement of trading of the Fund, there are fewer than 50 beneficial holders of the Shares, (2) the Exchange becomes aware that the Fund is no longer eligible to operate in reliance on Rule 6c-11 under the 1940 Act, (3) the Fund no longer complies with certain listing exchange rules, or (4) such other event shall occur or condition exists that, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. In addition, the Exchange will remove the Shares from listing and trading upon termination of the Trust. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of Shares of the Fund will continue to be met.

As in the case of other securities traded on the Exchange, brokers’ commissions on secondary market transactions in Shares of the Fund will be based on negotiated commission rates at customary levels.

In order to provide investors with a basis to gauge whether the market price of the Shares on the Exchange is approximately consistent with the current value of the assets of the Fund on a per Share basis, an “intra-day indicative value” (“IIV” and also known as the Indicative Optimized Portfolio Value) for the Fund may be disseminated through the facilities of the Consolidated Tape Association’s Network B. IIVs are disseminated during regular Exchange trading hours. The Fund is not involved in or responsible for the calculation or dissemination of the IIVs and makes no warranty as to the accuracy of the IIVs.

The IIV has a securities component and a cash component reflecting cash and other assets that may be held by the Fund. The securities values included in the IIV are the values of the Deposit Securities (as defined below under the heading “Creation and Redemption of Creation Units—Fund Deposit”) for the Fund. While the IIV reflects the approximate current value of the Deposit Securities required to be deposited in connection with the purchase of a Creation Unit, it does not necessarily reflect the precise composition of the current portfolio of securities held by the Fund at a particular point in time because the current portfolio of the Fund may include securities that are not a part of the current Deposit Securities. Therefore, the Fund’s IIV that may be disseminated during the Exchange trading hours should not be viewed as a real-time update of the Fund’s NAV, which is calculated only once a day.

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The cash component included in the IIV could consist of estimated accrued interest, dividends and other income, less expenses. If applicable, the IIV also reflects changes in currency exchange rates between the U.S. dollar and the applicable currency.
PORTFOLIO HOLDINGS DISCLOSURE
The Funds have adopted policies and procedures governing the disclosure of information regarding the Funds’ portfolio holdings. They are reasonably designed to prevent selective disclosure of the Funds’ portfolio holdings to third parties, other than disclosures that are consistent with the best interests of the Funds’ shareholders. The Board is responsible for overseeing the implementation of these policies and procedures, and will review them annually to ensure their adequacy.
These policies and procedures apply to employees of the Advisers, administrator, principal underwriter, and all other service providers to the Funds that, in the ordinary course of their activities, come into possession of information about the Funds’ portfolio holdings. These policies and procedures are made available to each service provider.
The following outlines the policies and procedures adopted by the Funds regarding the disclosure of portfolio-related information:
Generally, it is the policy of the Funds that no current or potential investor (or their representative), including any Fund shareholder (collectively, “Investors”), shall be provided information about a Fund’s portfolio on a preferential basis in advance of the provision of that same information to other investors.
Disclosure to Investors (all Funds except for Onchain Economy ETF). Portfolio holdings information for the Funds is available to all investors on the VanEck website at vaneck.com. Information regarding the Funds’ top holdings and country and sector weightings, updated as of each month-end, is located on this website. Generally, this information is posted to the website within 10 business days of the end of the applicable month. The Funds may also publish a detailed list of the securities held by such Fund as of each month-end, which is generally posted to the website within 10 business days after the end of the applicable month. This information generally remains available on the website until new information is posted. Each Fund reserves the right to exclude any portion of these portfolio holdings from publication when deemed in the best interest of the Fund, and to discontinue the posting of portfolio holdings information at any time, without prior notice.
Disclosure to Investors (Onchain Economy ETF only). Onchain Economy ETF’s portfolio holdings are publicly disseminated each day such Fund is open for business through financial reporting and news services, including publicly accessible Internet web sites, such as www.vaneck.com. In addition, a basket composition file, which includes the security names and share quantities to deliver in exchange for Creation Units, together with estimates and actual cash components is publicly disseminated daily prior to the opening of the Exchange via the National Securities Clearing Corporation (the “NSCC”), a clearing agency that is registered with the SEC. The basket represents one Creation Unit of such Fund. The Trust, Adviser, Custodian (defined below) and Distributor (defined below) will not disseminate non-public information concerning the Trust.
Best Interest of the Funds: Information regarding the Funds’ specific security holdings, sector weightings, geographic distribution, issuer allocations and related information (“Portfolio-Related Information”), shall be disclosed to the public only (i) as required by applicable laws, rules or regulations, (ii) pursuant to the Funds’ Portfolio-Related Information disclosure policies and procedures, or (iii) otherwise when the disclosure of such information is determined by the Trust’s officers to be in the best interest of Fund shareholders.
Conflicts of Interest: Should a conflict of interest arise between a Fund and any of the Fund’s service providers regarding the possible disclosure of Portfolio-Related Information, the Trust’s officers shall resolve any conflict of interest in favor of the Fund’s interest. In the event that an officer of the Fund is unable to resolve such a conflict of interest, the matter shall be referred to the Trust’s Audit Committee for resolution.
Equality of Dissemination: Shareholders of the same Fund shall be treated alike in terms of access to the Fund’s portfolio holdings. With the exception of certain selective disclosures, noted in the paragraph below, Portfolio-Related Information with respect to a Fund shall not be disclosed to any Investor prior to the time the same information is disclosed publicly (e.g., posted on the Fund’s website). Accordingly, all Investors will have equal access to such information.
Selective Disclosure of Portfolio-Related Information in Certain Circumstances: In some instances, it may be appropriate for a Fund to selectively disclose a Fund’s Portfolio-Related Information (e.g., for due diligence purposes, disclosure to a newly hired adviser or sub-adviser, or disclosure to a rating agency) prior to public dissemination of such information.
Conditional Use of Selectively-Disclosed Portfolio-Related Information: To the extent practicable, each of the Trust’s officers shall condition the receipt of Portfolio-Related Information upon the receiving party’s written agreement to both keep such information confidential and not to trade Fund shares based on this information.
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Compensation: No person, including officers of the Funds or employees of other service providers or their affiliates, shall receive any compensation in connection with the disclosure of Portfolio-Related Information. Notwithstanding the foregoing, the Funds reserve the right to charge a nominal processing fee, payable to the Funds, to non-shareholders requesting Portfolio-Related Information. This fee is designed to offset the Fund’s costs in disseminating such information.
Source of Portfolio-Related Information: All Portfolio-Related Information shall be based on information provided by the Fund’s administrator(s)/accounting agent.
The Funds may provide non-public portfolio holdings information to third parties in the normal course of their performance of services to the Funds, including to the Funds’ auditors; custodian; financial printers; counsel to the Funds or counsel to the Funds’ independent trustees; regulatory authorities; and securities exchanges and other listing organizations. In addition, the Funds may provide non-public portfolio holdings information to data providers, fund ranking/rating services, and fair valuation services. The entities to which the Funds voluntarily disclose portfolio holdings information are required, either by explicit agreement or by virtue of their respective duties to the Funds, to maintain the confidentiality of the information disclosed.
There can be no assurance that the Funds’ policies and procedures regarding selective disclosure of the Funds’ portfolio holdings will protect the Funds from potential misuse of that information by individuals or entities to which it is disclosed.
The Board shall be responsible for overseeing the implementation of these policies and procedures. These policies and procedures shall be reviewed by the Board on an annual basis for their continuing appropriateness.
Additionally, the Funds shall maintain and preserve permanently in an easily accessible place a written copy of these policies and procedures. The Fund shall also maintain and preserve, for a period not less than six years (the first two years in an easily accessible place), all Portfolio-Related Information disclosed to the public.

INVESTMENT ADVISORY SERVICES
The following information supplements and should be read in conjunction with the section in the Prospectuses entitled “Shareholder Information – Management of the Funds.”
Van Eck Associates Corporation acts as investment manager to all the Funds (except CM Commodity Index Fund and Onchain Economy ETF) and, subject to the supervision of the Board, is responsible for the day-to-day investment management of the Funds. VEAC is a private company with headquarters in New York and acts as adviser or sub-adviser to other mutual funds, ETFs, other pooled investment vehicles and separate accounts. Van Eck Absolute Return Advisers Corporation acts as investment manager to each of CM Commodity Index Fund and Onchain Economy ETF, and, subject to the supervision of the Board, is responsible for the day-to-day investment management of CM Commodity Index Fund. VEARA is a private company with headquarters in New York and acts as adviser to other pooled investment vehicles. VEARA is a wholly owned subsidiary of VEAC and is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended, and with the CFTC as a CPO and a CTA under the CEA.
VEAC and VEARA each serve as investment manager to the applicable Funds pursuant to investment advisory agreements between the Trust and such Adviser (each, an “Advisory Agreement”). The advisory fee paid pursuant to each Advisory Agreement is computed daily and paid monthly by each Fund to its Adviser at the following annual rates: CM Commodity Index Fund pays VEARA a fee at the annual rate of 0.65% of the Fund’s average daily net assets, which includes the fee paid to VEARA for accounting and administrative services; Emerging Markets Fund pays VEAC a fee at the annual rate of 0.75% of average daily net assets of the Fund; Global Resources Fund pays VEAC a fee at the annual rate of 0.95% of the first $2.5 billion of average daily net assets of the Fund and 0.90% of average daily net assets in excess of $2.5 billion, which includes the fee paid to VEAC for accounting and administrative services; International Investors Gold Fund pays VEAC a fee at the annual rate of 0.75% of the first $500 million of average daily net assets of the Fund, 0.65% of the next $250 million of average daily net assets and 0.50% of average daily net assets in excess of $750 million; Emerging Markets Bond Fund pays VEAC a fee at the annual rate of 0.80% of the first $1.5 billion of average daily net assets of the Fund and 0.75% of average daily net assets in excess of $1.5 billion, which includes the fee paid to VEAC for accounting and administrative services; VanEck Morningstar Wide Moat Fund pays VEAC a fee at the annual rate of 0.45% of average daily net assets, which includes the fee paid to VEAC for accounting and administrative services; and Onchain Economy ETF pays VEARA a fee at the annual rate of 0.69% of the Fund’s average daily net assets, which includes the fee paid to VEARA for accounting and administrative services. Each class of a Fund’s shares, if applicable, pays its proportionate share of the Fund’s fee. For purposes of calculating these fees for the International Investors Gold Fund, CM Commodity Index Fund, and Onchain Economy ETF, the net assets of each Fund include the value of each Fund’s interest in its respective Subsidiary. Each of the Subsidiaries does not pay VEAC or
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VEARA, as applicable, a fee for managing the such Subsidiary’s portfolio. From time to time, the Adviser may waive all or a portion of its fees.
Under its respective Advisory Agreement, each Adviser, subject to the supervision of the Board and in conformity with the stated investment policies of each Fund to which it serves as an adviser, manages the investment of such Fund’s assets. Each Adviser is responsible for placing purchase and sale orders and providing continuous supervision of the investment portfolio of the Funds it manages.
Onchain Economy ETF only. Under the Investment Management Agreement for such Fund, the Adviser is responsible for all expenses of the Fund (inclusive of any Subsidiary expenses), including the costs of transfer agency, custody, fund administration, legal, audit and other services, except for the fee payment under the Investment Management Agreement, acquired fund fees and expenses, interest expense, offering costs, trading expenses, taxes (including accrued deferred tax liability) and extraordinary expenses. Offering costs excluded from the annual unitary management fee are: (a) legal fees pertaining to the Fund’s Shares offered for sale; (b) SEC and state registration fees; and (c) initial fees paid for Shares of the Fund to be listed on an exchange.

All Funds except Onchain Economy ETF. Each Adviser has agreed to waive fees and/or pay Fund expenses to the extent necessary to prevent the operating expenses of each Fund (excluding acquired fund fees and expenses, interest expense, trading expenses, dividends and interest payments on securities sold short, taxes and extraordinary expenses) from exceeding the following:
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FUND
EXPENSE CAPFEE ARRANGEMENT
DURATION DATE
CM Commodity Index Fund  
Class A0.95%May 1, 2026
Class I0.65%May 1, 2026
Class Y0.70%May 1, 2026
Emerging Markets Fund  
Class A1.60%May 1, 2026
Class I1.00%May 1, 2026
Class Y1.10%May 1, 2026
Class Z0.90%May 1, 2026
Global Resources Fund  
Class A1.38%May 1, 2026
Class I0.95%May 1, 2026
Class Y1.13%May 1, 2026
International Investors Gold Fund  
Class A1.45%May 1, 2026
Class C2.20%May 1, 2026
Class I1.00%May 1, 2026
Class Y1.10%May 1, 2026
Emerging Markets Bond Fund  
Class A1.20%May 1, 2026
Class I0.85%May 1, 2026
Class Y0.95%May 1, 2026
VanEck Morningstar Wide Moat Fund  
Class I0.59%May 1, 2026
Class Z0.49%May 1, 2026
During such time, the expense limitation is expected to continue until the Board of Trustees acts to discontinue all or a portion of such expense limitation.
In addition to providing investment advisory services, VEAC also performs accounting and administrative services for Emerging Markets Fund and International Investors Gold Fund pursuant to a written agreement. For these accounting and administrative services, a fee is calculated daily and paid monthly at the following annual rates: Emerging Markets Fund pays VEAC a fee of 0.25% of average daily net assets and International Investors Gold Fund pays the VEAC a fee equal to 0.25% on the first $750 million of average daily net assets, and 0.20% of average daily net assets in excess of $750 million. 
Pursuant to each Advisory Agreement, the Trust has agreed to indemnify each Adviser for certain liabilities, including certain liabilities arising under the federal securities laws, unless such loss or liability results from willful misfeasance, bad faith or gross negligence in the performance of its duties or the reckless disregard of its obligations and duties.
Investments in the securities of underlying funds or pooled investment vehicles involve duplication of advisory fees and certain other expenses. By investing in an underlying fund or pooled investment vehicle, a Fund becomes a shareholder of that underlying fund or pooled investment vehicle. As a result, such Fund’s shareholders will indirectly bear the Fund’s proportionate share of the fees and expenses paid by shareholders of the underlying fund or pooled investment vehicle, in addition to the fees and expenses the Fund’s shareholders directly bear in connection with the Fund’s own operations. To minimize the duplication of fees, VEAC has agreed to waive the management fee it charges to VanEck Morningstar Wide Moat
35

Fund by any amount it collects as a management fee from an underlying fund managed by VEAC or its affiliates, as a result of an investment of the Fund’s assets in such underlying fund. To minimize the duplication of fees, VEARA has agreed to waive the management fee it charges to Onchain Economy ETF by any amount it collects as a management fee from an underlying pooled investment vehicle managed by VEARA or its affiliates, as a result of an investment of the Fund’s assets in such underlying pooled investment vehicle.
The management fees earned and the expenses waived or assumed by each Adviser for the past three fiscal years are as follows:
 
 
MANAGEMENT FEESEXPENSES
WAIVED/ASSUMED
BY THE ADVISERS
CM Commodity Index Fund
2024$3,511,117 $1,126,345 
 2023$3,664,535 $1,331,993 
2022$5,482,985 $2,156,029 
Emerging Markets Fund2024$3,951,333 $788,502 
 2023$6,519,555 $1,397,165 
 2022$10,272,610 $1,817,800 
Global Resources Fund1
2024$5,973,986  $911,771
 2023$8,373,950 $1,062,790 
 2022$9,585,474 $927,930 
International Investors Gold Fund2024$5,213,205 $278,661 
 2023$5,150,544 $300,843 
 2022$5,378,333 $194,811 
Emerging Markets Bond Fund2024$629,432 $346,018 
 2023$465,161 $268,801 
 2022$97,787 $183,588 
Onchain Economy ETF2
2024
N/A
N/A
2023
N/A
N/A
2022
N/A
N/A
VanEck Morningstar Wide Moat Fund2024$136,482 $197,381 
2023$85,801 $167,345 
 2022$75,893 $155,382 

1 Effective July 1, 2024, Global Resources Fund’s management fee rate changed from 1.00% to 0.95% of the first $2.5 billion of average daily net assets of the Fund and 0.90% of average daily net assets in excess of $2.5 billion, which includes the fee paid to VEAC for accounting and administrative services.
2 Onchain Economy ETF commenced operations on or about the date of this SAI.

Each Advisory Agreement provides that it shall continue in effect from year to year as long as it is approved at least annually by (1) the Board or (2) a vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of each Fund, provided that in either event such continuance also is approved by a majority of the Trustees who are not interested persons (as defined in the 1940 Act) of the Trust by a vote cast in person at a meeting called for the purpose of voting on such approval. Each Advisory Agreement is terminable without penalty, on 60 days’ notice, by the Board or by a vote of the holders of a majority (as defined in the 1940 Act) of a Fund’s outstanding voting securities. Each Advisory Agreement is also terminable upon 60 days’ notice by the applicable Adviser and will terminate automatically in the event of its assignment (as defined in the 1940 Act).
THE DISTRIBUTOR
All Funds except Onchain Economy ETF

Shares of the Funds are offered on a continuous basis and are distributed through Van Eck Securities Corporation, the Distributor, 666 Third Avenue, New York, New York, 10017, a wholly owned subsidiary of VEAC and an affiliate of VEARA. The Board has approved a Distribution Agreement appointing the Distributor as distributor of shares of the Funds.
36

The Trust has authorized one or more intermediaries (who are authorized to designate other intermediaries) to accept purchase and redemption orders on the Trust’s behalf. The Trust will be deemed to have received a purchase or redemption order when the authorized broker or its designee accepts the order. Orders will be priced at the net asset value next computed after they are accepted by the authorized broker or its designee.
The Distribution Agreement provides that the Distributor will pay all fees and expenses in connection with printing and distributing prospectuses and reports for use in offering and selling shares of the Funds and preparing, printing and distributing advertising or promotional materials. The Funds will pay all fees and expenses in connection with registering and qualifying their shares under federal and state securities laws. The Distribution Agreement is reviewed and approved annually by the Board.
The Distributor retained underwriting commissions on sales of shares of the Funds during the past three fiscal years, after reallowance to dealers, as follows:
 
 
VAN ECK SECURITIES
CORPORATION		REALLOWANCE TO
DEALERS
CM Commodity Index Fund2024$1,835 $12,916 
 2023$8,044 $65,350 
 2022$3,207 $21,192 
Emerging Markets Fund2024$1,072 $7,125 
 2023$1,032 $46,709 
 2022$2,492 $28,249 
Global Resources Fund2024$4,500 $98,731 
 2023$12,851 $85,266 
 2022$34,890 $314,006 
International Investors Gold Fund2024$22,818 $187,969
 2023$19,671 $289,018 
 2022$28,961 $229,891 
Emerging Markets Bond Fund2024$431 $4,837 
 2023$217 $1,526 
 2022$2,085 $13,142 
VanEck Morningstar Wide Moat Fund2024
N/A
N/A
 2023N/AN/A
2022N/AN/A
Onchain Economy ETF only
VESC is the principal underwriter and distributor of Shares. Its principal address is 666 Third Avenue, New York, New York 10017 and investor information can be obtained by calling 800.826.2333. The Distributor has entered into an agreement with the Trust (the “Distribution Agreement”), pursuant to which it distributes Shares. Shares of Onchain Economy ETF will be continuously offered for sale by the Trust through the Distributor only in Creation Units, as described below under “Creation and Redemption of Creation Units—Procedures for Creation of Creation Units.” Shares in less than Creation Units are not distributed by the Distributor. The Distributor will deliver a prospectus to persons purchasing Shares in Creation Units and will maintain records of both orders placed with it and confirmations of acceptance furnished by it. The Distributor is a broker-dealer registered under the Exchange Act and a member of the Financial Industry Regulatory Authority (“FINRA”). The Distributor has no role in determining the investment policies of the Trust or which securities are to be purchased or sold by the Trust.

The Distributor may also enter into sales and investor services agreements with broker-dealers or other persons that are Participating Parties and DTC Participants (as defined below) to provide distribution assistance, including broker-dealer and shareholder support and educational and promotional services but must pay such broker-dealers or other persons, out of its own assets.


37

PLAN OF DISTRIBUTION (12B-1 PLAN) (All Funds except Onchain Economy ETF)
Each Fund has adopted a plan of distribution pursuant to Rule 12b-1 (collectively, the “Plan”) on behalf of its Class A and Class C shares (where applicable) which provides for the compensation of brokers and dealers who sell shares of the Funds and/or provide servicing. The Plan is a compensation-type plan. Pursuant to the Plan, the Distributor provides the Funds at least quarterly with a written report of the amounts expended under the Plan and the purpose for which such expenditures were made. The Board reviews such reports on a quarterly basis.
The Plan is reapproved annually for each Fund’s Class A and Class C shares (where applicable) by the Board, including a majority of the Trustees who are not “interested persons” of the Fund and who have no direct or indirect financial interest in the operation of the Plan.
The Plan shall continue in effect as to each Fund’s Class A and Class C shares, provided such continuance is approved annually by a vote of the Board in accordance with the 1940 Act. The Plan may not be amended to increase materially the amount to be spent for the services described therein without approval of the Class A or Class C shareholders of the Funds (as applicable), and all material amendments to the Plan must also be approved by the Board in the manner described above. The Plan may be terminated at any time, without payment of any penalty, by vote of a majority of the Trustees who are not “interested persons” of a Fund and who have no direct or indirect financial interest in the operation of the Plan, or by a vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund’s Class A or Class C shares (as applicable) on written notice to any other party to the Plan. The Plan will automatically terminate in the event of its assignment (as defined in the 1940 Act). So long as the Plan is in effect, the election and nomination of Trustees who are not “interested persons” of the Trust shall be committed to the discretion of the Trustees who are not “interested persons.” The Board has determined that, in its judgment, there is a reasonable likelihood that the Plan will benefit the Funds and their shareholders. The Funds will preserve copies of the Plan and any agreement or report made pursuant to Rule 12b-1 under the 1940 Act, for a period of not less than six years from the date of the Plan or such agreement or report, the first two years in an easily accessible place. For additional information regarding the Plan, see the Prospectuses.
For the fiscal year ended December 31, 2024, it is estimated that the Distributor spent the amounts received under the Plan in the following ways:
 
CM COMMODITY INDEX
FUND
 Class A
  
Total 12b-1 Fees$59,202
  
Compensation to Dealers(59,141)
  
Net 12b-1 Fees61
Expenditures: 
Printing and Mailing(80)
Telephone and Internal Sales(413)
Marketing Department(25,560)
External Wholesalers(47,214)
Total Expenditures(73,267)
  
Expenditures in Excess of Net 12b-1 Fees
(73,206)(1)
(1) Represents 0.01% of the Fund’s net assets as of December 31, 2024.

38

 
EMERGING MARKETS FUNDGLOBAL RESOURCES
FUND
 Class A
Class C+
Class A
Class C+
Total 12b-1 Fees$132,382$72,758$287,265$79,062
Compensation to Dealers(115,196)(72,672)(267,088)(79,053)
Net 12b-1 Fees17,1868620,1779
Expenditures:    
Printing and Mailing(80)(80)(80)(80)
Telephone and Internal Sales(1,506)(108)(4,435)(117)
Marketing Department(64,041)(9,031)(171,751)(11,198)
External Wholesalers(141,072)(24,225)(346,180)(28,473)
Total Expenditures(206,699)(33,444)(522,446)(39,868)
Expenditures in Excess of Net 12b-1 Fees
(189,513)(2)
 (33,358)(1)
 (502,269)(3)
 (39,859)(1)
 
+ Class C Shares of Emerging Markets Fund and Global Resources Fund are no longer offered.
(2) Represents 0.05% of the Fund’s net assets as of December 31, 2024.
(3) Represents 0.10% of the Fund’s net assets as of December 31, 2024.
 INTERNATIONAL INVESTORS
GOLD FUND		EMERGING
 MARKETS BOND FUND
 Class AClass CClass A
Total 12b-1 Fees$664,369$311,118$20,816
Compensation to Dealers(545,407)(310,249)(18,236)
Net 12b-1 Fees118,9628692,580
Expenditures:   
Printing and Mailing(80)(80)(80)
Telephone and Internal Sales(13,148)(446)(133)
Marketing Department(447,348)(51,171)(14,383)
External Wholesalers(869,384)(120,294)(25,137)
Total Expenditures(1,329,960)(171,991)(39,733)
Expenditures in Excess of Net 12b-1 Fees
 (1,210,998)(4)
 (171,122)(5)
 (37,153)(2)
(4) Represents 0.18% of the Fund’s net assets as of December 31, 2024.
(5) Represents 0.03% of the Fund's net assets as of December 31, 2024.


39




ADMINISTRATIVE AND PROCESSING SUPPORT PAYMENTS (All Funds except Onchain Economy ETF)
The Funds may make payments (either directly or as reimbursement to the Distributor or an affiliate of the Distributor for payments made by the Distributor) to financial intermediaries (such as brokers or third party administrators) for providing the types of services that would typically be provided by the Funds’ transfer agent, including sub-accounting, sub-transfer agency or similar recordkeeping services, shareholder reporting, shareholder transaction processing, and/or the provision of call center support. These payments will be in lieu of, and may differ from, amounts paid to the Funds’ transfer agent for providing similar services to other accounts. These payments may be in addition to any amounts the intermediary may receive as compensation for distribution or shareholder servicing pursuant to the Plan or as part of any revenue sharing or similar arrangement with the Distributor or its affiliates, as described elsewhere in the Prospectuses.
PORTFOLIO MANAGER COMPENSATION
The Advisers’ portfolio managers are paid a fixed base salary and a bonus. The bonus is based upon the quality of investment analysis and management of the funds for which they serve as portfolio manager. Portfolio managers who oversee accounts with significantly different fee structures are generally compensated by discretionary bonus rather than a set formula to help reduce potential conflicts of interest. At times, the Adviser and affiliates may manage accounts with incentive fees.
The Advisers’ portfolio managers may serve as portfolio managers to other clients. Such “Other Clients” may have investment objectives or may implement investment strategies similar to those of the Funds. When the portfolio managers implement investment strategies for Other Clients that are similar or directly contrary to the positions taken by a Fund, the prices of the Fund’s securities may be negatively affected. The compensation that a Fund’s portfolio manager receives for managing other client accounts may be higher than the compensation the portfolio manager receives for managing the Fund. The portfolio managers do not believe that their activities materially disadvantage the Fund. The Advisers have implemented procedures to monitor trading across funds and its Other Clients.
PORTFOLIO MANAGER SHARE OWNERSHIP
As of December 31, 2024, the dollar range of equity securities in a Fund beneficially owned by such Fund’s portfolio manager(s) and deputy portfolio manager (if any) is shown below.
Onchain Economy ETF commenced operations on or about the date of this SAI, and as such is not reflected in the table below.
FundNone$1 to
$10,000		$10,001 to
$50,000		$50,001 to
$100,000		$100,001 to
$500,000		$500,001 to
$1,000,000		Over $1,000,000
David Austerweil
Emerging Markets Bond Fund (Deputy Portfolio Manager)   X  
Charles Cameron
Global Resources Fund (Deputy Portfolio Manager)    X 
Imaru Casanova
International Investors Gold Fund (Portfolio Manager)   X  
Ola El-Shawarby
Emerging Markets Fund (Portfolio Manager)
X
Eric Fine
Emerging Markets Bond Fund (Portfolio Manager)    X  
Chris Mailloux, CFA1
CM Commodity Index Fund (Deputy Portfolio Manager) 
X
    
VanEck Morningstar Wide Moat Fund (Deputy Portfolio Manager)  
X
  
40

FundNone$1 to
$10,000		$10,001 to
$50,000		$50,001 to
$100,000		$100,001 to
$500,000		$500,001 to
$1,000,000		Over $1,000,000
Peter H. Liao
VanEck Morningstar Wide Moat Fund (Portfolio Manager) 
X
  
Roland Morris, Jr.
CM Commodity Index Fund (Portfolio Manager)  X   
Shawn Reynolds
Global Resources Fund (Portfolio Manager)   X 
Angus Shillington
Emerging Markets Fund (Deputy Portfolio Manager)  X  
1 Mr. Mailloux became Deputy Portfolio Manager on May 1, 2024.


OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS
The following table provides the number of other accounts managed (excluding the Fund) and the total assets managed of such accounts by each Fund’s portfolio manager(s) and deputy portfolio manager (if any) within each category of accounts, as of December 31, 2024.
FundName of Portfolio
Manager/Deputy
Portfolio Manager		Category of AccountOther Accounts Managed
(As of December 31, 2024)		Accounts with respect to which the
advisory fee is based on the
performance of the account
Number of
Accounts		Total Assets in
Accounts		Number of
Accounts		Total Assets in
Accounts
CM Commodity Index FundRoland Morris, Jr.
(Portfolio Manager)		Registered investment companies1
$2.42 Million
0$0
Other pooled investment vehicles0$00$0
Other accounts0$00$0
CM Commodity Index Fund
Chris Mailloux, CFA (Deputy Portfolio Manager)1
Registered investment companies
1
$31.99 Million
0$0
Other pooled investment vehicles0$00$0
Other accounts0$00$0
VanEck Morningstar Wide Moat Fund
Chris Mailloux, CFA (Deputy Portfolio Manager)1
Registered investment companies
1
$545.51 Million
0$0
Other pooled investment vehicles0$00$0
Other accounts0$00$0
Emerging Markets FundOla El-Shawarby (Portfolio Manager)Registered investment companies2
$158.89 Million
0$0
Other pooled investment vehicles2
$84.43 Million
0$0
Other accounts1
$79.63 Million
0$0
Emerging Markets FundAngus Shillington (Deputy Portfolio Manager)Registered investment companies2
$158.89 Million
0$0
Other pooled investment vehicles2
$84.43 Million
0$0
Other accounts1
$79.63 Million
0$0
41

FundName of Portfolio
Manager/Deputy
Portfolio Manager		Category of AccountOther Accounts Managed
(As of December 31, 2024)		Accounts with respect to which the
advisory fee is based on the
performance of the account
Number of
Accounts		Total Assets in
Accounts		Number of
Accounts		Total Assets in
Accounts
Global Resources FundCharles Cameron (Deputy Portfolio Manager)Registered investment companies2
$983.77 Million
0$0
Other pooled investment vehicles1
$17.12 Million
0$0
Other accounts0$00$0
Global Resources FundShawn Reynolds (Portfolio Manager)Registered investment companies3
$987.02 Million
0$0
Other pooled investment vehicles1
$17.12 Million
0$0
Other accounts0$00$0
International Investors Gold FundImaru Casanova (Portfolio Manager)Registered investment companies1
$58.01 Million
0$0
Other pooled investment vehicles0$00$0
Other accounts0$00$0
Emerging Markets Bond FundDavid Austerweil (Deputy Portfolio Manager)Registered investment companies1
$16.24 Million
0$0
Other pooled investment vehicles2
$214.87 Million
0$0
Other accounts0$00$0
Emerging Markets Bond FundEric Fine (Portfolio Manager)Registered investment companies1
$16.24 Million
0$0
Other pooled investment vehicles2
$214.87 Million
0$0
Other accounts0$00$0
Onchain Economy ETF
Matthew Sigel (Portfolio Manager)
Registered investment companies0$00$0
Other pooled investment vehicles1
$12.10 Million
0$0
Other accounts0$00$0
VanEck Morningstar Wide Moat FundPeter H. Liao (Portfolio Manager)Registered investment companies43$52,477.43 Million0$0
Other pooled investment vehicles0$00$0
Other accounts0$00$0
1 Mr. Mailloux became Deputy Portfolio Manager on May 1, 2024.



SECURITIES LENDING ARRANGEMENTS
Pursuant to a securities lending agreement (the “Securities Lending Agreement”) between the Funds and State Street (in such capacity, the “Securities Lending Agent”), the Funds may lend their securities through the Securities Lending Agent to certain qualified borrowers. The Securities Lending Agent administers the Funds’ securities lending program. During the fiscal year ended December 31, 2024, these services include arranging the securities loans with approved borrowers and collecting fees and rebates due to the Funds from each borrower. The Securities Lending Agent maintains records of loans made and income derived therefrom and makes available such records that the Funds deem necessary to monitor the securities lending program.
42

For the fiscal year ended December 31, 2024, the Onchain Economy ETF did not participate in securities lending.

For the fiscal year ended December 31, 2024, each of the Funds listed below earned income and incurred the following costs and expenses, during its respective fiscal year, as a result of its securities lending activities:
Fund
Gross Income(1)
Revenue Split(2)
Cash Collateral Management Fees(3)
Administrative Fees(4)
Indemnification Fees(5)
Rebates to BorrowersOther FeesTotal Costs of the Securities Lending ActivitiesNet Income from the Securities Lending Activities
CM Commodity Index Fund$331,375 $10,868 $— $— $— $222,774 $— $233,642 $97,733 
Emerging Markets Bond Fund49,721 617 — — — 43,518 — 44,135 5,586 
Emerging Markets Fund66,162 2,292 — — — 43,204 — 45,496 20,666 
Global Resources Fund487,598 14,391 — — — 343,570 — 357,961 129,637 
International Investors Gold Fund951,497 42,464 — — — 523,708 — 566,172 385,325 
VanEck Morningstar Wide Moat Fund156 15 — — — — — 15 141 
1Gross income includes income from the reinvestment of cash collateral and rebates paid by the borrower.
2Revenue split represents the share of revenue generated by the securities lending program and paid to the Securities Lending Agent.
3Cash collateral management fees include fees deducted from a pooled cash collateral reinvestment vehicle that are not included in the revenue split.
4These administrative fees are not included in the revenue split.
5These indemnification fees are not included in the revenue split.

43

PORTFOLIO TRANSACTIONS AND BROKERAGE
When selecting brokers and dealers to handle the purchase and sale of portfolio securities, each Adviser looks for prompt execution of the order at a favorable price. Generally, an Adviser works with recognized dealers in these securities, except when a better price and execution of the order can be obtained elsewhere. The Funds will not deal with affiliates in principal transactions unless permitted by exemptive order or applicable rule or regulation. Each Adviser owes a duty to its clients to provide best execution on trades effected.
Each Adviser assumes general supervision over placing orders on behalf of the Trust for the purchase or sale of portfolio securities. If purchases or sales of portfolio securities of the Trust and one or more other investment companies or clients supervised by an Adviser are considered at or about the same time, transactions in such securities are allocated among the several investment companies and clients in a manner deemed equitable to all by the Adviser. In some cases, this procedure could have a detrimental effect on the price or volume of the security so far as the Trust is concerned.
The portfolio managers may deem it appropriate for one fund or account they manage to sell a security while another fund or account they manage is purchasing the same security. Under such circumstances, the portfolio managers may arrange to have the purchase and sale transactions effected directly between the funds and/or accounts (“cross transactions”). Cross transactions will be effected in accordance with procedures adopted pursuant to Rule 17a-7 under the 1940 Act.
Portfolio turnover may vary from year to year, as well as within a year. High turnover rates are likely to result in comparatively greater brokerage expenses, additional taxable income at the Fund level and additional taxable distributions. The overall reasonableness of brokerage commissions is evaluated by each Adviser based upon its knowledge of available information as to the general level of commissions paid by other institutional investors for comparable services.
The Advisers may cause the Funds to pay a broker-dealer who furnishes brokerage and/or research services, a commission that is in excess of the commission another broker-dealer would have received for executing the transaction, if it is determined that such commission is reasonable in relation to the value of the brokerage and/or research services as defined in Section 28(e) of the Securities Exchange Act of 1934, as amended, which have been provided. Such research services may include, among other things, analyses and reports concerning issuers, industries, securities, economic factors and trends and portfolio strategy. Any such research and other information provided by brokers to an Adviser is considered to be in addition to and not in lieu of services required to be performed by the Adviser under its Advisory Agreement with the Trust. The research services provided by broker-dealers can be useful to an Adviser in serving its other clients or clients of the Adviser’s affiliates. The Board periodically reviews an Adviser’s performance of its responsibilities in connection with the placement of portfolio transactions on behalf of the Funds. The Board also reviews the commissions paid by the Funds over representative periods of time to determine if they are reasonable in relation to the benefits to the Funds.
Because the Onchain Economy ETF commenced operations on or about the date of this SAI, it is not reflected in the table below.

The aggregate amount of brokerage transactions directed to a broker during the fiscal year ended December 31, 2024 for, among other things, research services, and the commissions and concessions related to such transactions were as follows:
 Transaction
Amount		Commissions and
Concessions
CM Commodity Index Fund$0$0
Emerging Markets Fund$184,744,694$283,179
Global Resources Fund$599,830,226$491,779
International Investors Gold Fund$451,490,004$583,784
Emerging Markets Bond Fund$0$0
VanEck Morningstar Wide Moat Fund$0$0


The table below shows the aggregate amount of brokerage commissions paid on purchases and sales of portfolio securities by each Fund during the Fund’s three most recent fiscal years ended December 31. None of such amounts were paid to brokers or dealers which furnished daily quotations to the Fund for the purpose of calculating daily per share net asset value or to brokers and dealers which sold shares of the Fund.
44

2024
COMMISSIONS
CM Commodity Index Fund$0
Emerging Markets Fund$513,263
Global Resources Fund$557,812
International Investors Gold Fund$690,701
Emerging Markets Bond Fund$0
VanEck Morningstar Wide Moat Fund$10,175
2023
COMMISSIONS
CM Commodity Index Fund$0
Emerging Markets Fund$490,808
Global Resources Fund$552,473
International Investors Gold Fund$359,487
Emerging Markets Bond Fund$0
VanEck Morningstar Wide Moat Fund$8,255
 
2022
COMMISSIONS
 
CM Commodity Index Fund$0
Emerging Markets Fund$860,703
Global Resources Fund$413,191
International Investors Gold Fund$395,885
Emerging Markets Bond Fund$32
VanEck Morningstar Wide Moat Fund$4,612
  
45

Each Adviser does not consider sales of shares of the Funds as a factor in the selection of broker-dealers to execute portfolio transactions for the Funds. Each Adviser has implemented policies and procedures pursuant to Rule 12b-1(h) that are reasonably designed to prevent the consideration of the sales of fund shares when selecting broker-dealers to execute trades.
Due to the potentially high rate of turnover, the Funds may pay a greater amount in brokerage commissions than a similar size fund with a lower turnover rate. The portfolio turnover rates of all Funds may vary greatly from year to year. See “Taxes” in the Prospectus and the SAI.
BOOK ENTRY ONLY SYSTEM (Onchain Economy ETF only)

The following information supplements and should be read in conjunction with the section in the Fund’s Prospectus entitled “Shareholder Information—Buying and Selling Exchange-Traded Shares.”

The Depository Trust Company (“DTC”) acts as securities depositary for the Shares. Shares of the Fund are represented by securities registered in the name of DTC or its nominee and deposited with, or on behalf of, DTC. Certificates will not be issued for Shares.

DTC, a limited-purpose trust company, was created to hold securities of its participants (the “DTC Participants”) and to facilitate the clearance and settlement of securities transactions among the DTC Participants in such securities through electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. More specifically, DTC is owned by a number of its DTC Participants and by the New York Stock Exchange (“NYSE”) and FINRA. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the “Indirect Participants”).

Beneficial ownership of Shares is limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests in Shares (owners of such beneficial interests are referred to herein as “Beneficial Owners”) is shown on, and the transfer of ownership is effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners will receive from or through the DTC Participant a written confirmation relating to their purchase of Shares.

Conveyance of all notices, statements and other communications to Beneficial Owners is effected as follows. Pursuant to the depositary agreement between the Trust and DTC, DTC is required to make available to the Trust upon request and for a fee to be charged to the Trust a listing of the Shares holdings of each DTC Participant. The Trust shall inquire of each such DTC Participant as to the number of Beneficial Owners holding Shares, directly or indirectly, through such DTC Participant. The Trust shall provide each such DTC Participant with copies of such notice, statement or other communication, in such form, number and at such place as such DTC Participant may reasonably request, in order that such notice, statement or communication may be transmitted by such DTC Participant, directly or indirectly, to such Beneficial Owners. In addition, the Trust shall pay to each such DTC Participant a fair and reasonable amount as reimbursement for the expenses attendant to such transmittal, all subject to applicable statutory and regulatory requirements.

Share distributions shall be made to DTC or its nominee, Cede & Co., as the registered holder of all Shares. DTC or its nominee, upon receipt of any such distributions, shall credit immediately DTC Participants’ accounts with payments in amounts proportionate to their respective beneficial interests in Shares as shown on the records of DTC or its nominee. Payments by DTC Participants to Indirect Participants and Beneficial Owners of Shares held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in a “street name,” and will be the responsibility of such DTC Participants.

The Trust has no responsibility or liability for any aspects of the records relating to or notices to Beneficial Owners, or payments made on account of beneficial ownership interests in such Shares, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests or for any other aspect of the relationship between DTC and the DTC Participants or the relationship between such DTC Participants and the Indirect Participants and Beneficial Owners owning through such DTC Participants.

DTC may determine to discontinue providing its service with respect to the Shares at any time by giving reasonable notice to the Trust and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the Trust shall take action either to find a replacement for DTC to perform its functions at a comparable cost or, if such a
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replacement is unavailable, to issue and deliver printed certificates representing ownership of Shares, unless the Trust makes other arrangements with respect thereto satisfactory to the Exchange.

CREATION AND REDEMPTION OF CREATION UNITS (Onchain Economy ETF only)

General
The Onchain Economy ETF issues and sells Shares only in Creation Units on a continuous basis through the Distributor, without an initial sales load, at their NAV next determined after receipt, on any Business Day (as defined herein), of an order in proper form. An Authorized Participant that is not a “qualified institutional buyer,” as such term is defined under Rule 144A of the Securities Act, will not be able to receive, as part of a redemption, restricted securities eligible for resale under Rule 144A.

A “Business Day” with respect to the Fund is any day on which the NYSE is open for business. As of the date of this SAI, the NYSE observes the following holidays: New Year’s Day, Martin Luther King, Jr. Day, President’s Day (Washington’s Birthday), Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The times described below may change due to certain events such as the early closing of trading on the NYSE.

Fund Deposit
The consideration for a purchase of Creation Units generally consists of the in-kind deposit of a designated portfolio of securities (the “Deposit Securities”) and an amount of cash computed as described below (the “Cash Component”). The Cash Component together with the Deposit Securities, as applicable, are referred to as the “Fund Deposit,” which represents the minimum initial and subsequent investment amount for Shares. The Cash Component represents the difference between the NAV of a Creation Unit and the market value of the Deposit Securities plus applicable transaction fees (as described below).

The Administrator, through the NSCC, makes available on each Business Day, prior to the opening of business on the NYSE (currently 9:30 a.m., Eastern time), the list of the names and the required amounts of each Deposit Security that the Fund would accept as Fund Deposit that day. Such Fund Deposit is applicable, subject to any adjustments as described below, until such time as the next-announced Fund Deposit composition is made available.

The Fund reserves the right to permit or require the substitution of an amount of cash—referred to as “cash in lieu” - to replace any Deposit Security. This may occur, for example, if a Deposit Security is not available in sufficient quantity for delivery, not eligible for transfer through the systems of DTC, the Federal Reserve System or the clearing process through the Continuous Net Settlement System of the NSCC, not permitted to be re-registered in the name of the Trust as a result of an in-kind purchase order pursuant to local law or market convention, restricted under the securities laws or not eligible for trading by an Authorized Participant or the investor for which it is acting. In such cases where the Trust makes Market Purchases (as defined below) because a Deposit Security may not be permitted to be re-registered in the name of the Trust as a result of an in-kind creation order pursuant to local law or market convention, or for other reasons, the Authorized Participant will reimburse the Trust for, among other things, any difference between the market value at which the securities were purchased by the Trust and the cash in lieu amount (which amount, at the Adviser’s discretion, may be capped), applicable registration fees and taxes. Brokerage commissions incurred in connection with the Trust’s acquisition of Deposit Securities may be at the expense of the Fund and, to the extent such commissions are at the expense of the Fund, will affect the value of all Shares of the Fund, but the Adviser may adjust the transaction fee to protect ongoing shareholders.

The Administrator, through the NSCC, also makes available on each Business Day, the estimated Cash Component effective through and including the previous Business Day, per outstanding Shares of the Fund.

Procedures for Creation of Creation Units

To be eligible to place orders with the Distributor to create Creation Units of the Fund, an entity or person must be an “Authorized Participant” which is a member or participant of a clearing agency registered with the SEC, which has a written agreement with the Fund that allows the Authorized Participant to place order (“Participant Agreement”).

All orders to create Creation Units, whether through the Clearing Process or outside the Clearing Process, must be received by the Distributor no later than the closing time of the regular trading session on the NYSE (“Closing Time”) (ordinarily 4:00 p.m., Eastern time) on the date such order is placed in order for creation of Creation Units to be effected based on the NAV of the Fund as determined on such date. The Business Day on which a creation order (or order to redeem as discussed below) is placed is herein referred to as the “Transmittal Date.” Orders must be transmitted by telephone or other
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transmission method acceptable to the Distributor, as generally described below (see “—Placement of Creation Orders Using Clearing Process”). Severe economic or market disruptions or changes, or telephone or other communication failure, may impede the ability to reach the Distributor or an Authorized Participant.

Creation Units may be created in advance of the receipt by the Trust of all or a portion of the Fund Deposit. In such cases, the Authorized Participant will remain liable for the full deposit of the missing portion(s) of the Fund Deposit and will be required to post collateral with the Trust consisting of cash at least equal to a percentage of the marked-to-market value of such missing portion(s). The Trust may use such collateral to buy the missing portion(s) of the Fund Deposit at any time and will subject such Authorized Participant to liability for any shortfall between the cost to the Trust of purchasing such securities and the value of such collateral. The Trust will have no liability for any such shortfall. The Trust will return any unused portion of the collateral to the Authorized Participant once the entire Fund Deposit has been properly received by the Distributor and deposited into the Trust.

Orders to create Creation Units of the Fund shall be placed with an Authorized Participant, as applicable, in the form required by such Authorized Participant. Investors should be aware that their particular broker may not have executed a Participant Agreement, and that, therefore, orders to create Creation Units of the Fund may have to be placed by the investor’s broker through an Authorized Participant who has executed a Participant Agreement. At any given time there may be only a limited number of broker-dealers that have executed a Participant Agreement. Those placing orders to create Creation Units of the Fund through the Clearing Process should afford sufficient time to permit proper submission of the order to the Distributor prior to the Closing Time on the Transmittal Date.

Orders for creation that are effected outside the Clearing Process are likely to require transmittal by the Authorized Participant earlier on the Transmittal Date than orders effected using the Clearing Process. Those persons placing orders outside the Clearing Process should ascertain the deadlines applicable to DTC and the Federal Reserve Bank wire system by contacting the operations department of the broker or depository institution effectuating such transfer of Deposit Securities and Cash Component.

Orders to create Creation Units of the Fund may be placed through the Clearing Process utilizing procedures applicable to funds holding domestic securities (“Domestic Funds”) (see “Placement of Creation Orders Using Clearing Process”) or outside the Clearing Process utilizing the procedures applicable to either Domestic Funds or funds holding foreign securities (“Foreign Funds”) (see “Placement of Creation Orders Outside Clearing Process--Domestic Funds” and “Placement of Creation Orders Outside Clearing Process—Foreign Funds”). In the event that the Fund includes both domestic and foreign securities, the time for submitting orders is as stated in the “Placement of Creation Orders Outside Clearing Process—Foreign Funds” and “Placement of Redemption Orders Outside Clearing Process—Foreign Funds” sections below shall operate.

Placement of Creation Orders Using Clearing Process

Fund Deposits created through the Clearing Process, if available, must be delivered through an Authorized Participant that has executed a Participant Agreement.

The Participant Agreement authorizes the Distributor to transmit to NSCC on behalf of the Authorized Participant such trade instructions as are necessary to effect the Authorized Participant’s creation order. Pursuant to such trade instructions from the Distributor to NSCC, the Authorized Participant agrees to transfer the requisite Deposit Securities (or contracts to purchase such Deposit Securities that are expected to be delivered in a “regular way” manner) and the Cash Component to the Trust by the prescribed settlement date. An order to create Creation Units of the Fund through the Clearing Process is deemed received by the Distributor on the Transmittal Date if (i) such order is received by the Distributor not later than the Closing Time on such Transmittal Date and (ii) all other procedures set forth in the Participant Agreement are properly followed. The delivery of Creation Units so created will occur by the prescribed settlement date.

Placement of Creation Orders Outside Clearing Process—Domestic Funds

Fund Deposits created outside the Clearing Process must be delivered through an Authorized Participant that has executed a Participant Agreement. An Authorized Participant who wishes to place an order creating Creation Units of the Fund to be effected outside the Clearing Process must state in such order that the Authorized Participant is not using the Clearing Process and that the creation of Creation Units will instead be effected through a transfer of securities and cash. The Fund Deposit transfer must be ordered by the Authorized Participant in a manner so as to ensure the timely delivery of the requisite amounts of Deposit Securities through DTC to the account of the Trust.

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All questions as to the amounts of Deposit Securities to be delivered, and the validity, form and eligibility (including time of receipt) for the deposit of any tendered securities, will be determined by the Trust, whose determination shall be final and binding. The cash equal to the Cash Component must be transferred directly to the Distributor through the Federal Reserve wire system in a timely manner. An order to create Creation Units of the Fund outside the Clearing Process is deemed received by the Distributor on the Transmittal Date if (i) such order is received by the Distributor not later than the Closing Time on such Transmittal Date; and (ii) all other procedures set forth in the Participant Agreement are properly followed. However, if the Distributor does not receive both the requisite Deposit Securities and the Cash Component in a timely fashion, such order may be cancelled. Upon written notice to the Distributor, such cancelled order may be resubmitted the following Business Day using the Fund Deposit as newly constituted to reflect the current NAV of the Fund. The delivery of Creation Units so created will occur by the prescribed settlement date.

Additional transaction fees may be imposed with respect to transactions effected outside the Clearing Process (through an Authorized Participant) and in circumstances in which any cash can be used in lieu of Deposit Securities to create Creation Units. (See “Creation Transaction Fee” section below.)

Placement of Creation Orders Outside Clearing Process—Foreign Funds

The Distributor will inform the Transfer Agent, the Adviser and the Custodian upon receipt of a Creation Order. The Custodian will then provide such information to the appropriate sub-custodian. The Custodian will cause the sub-custodian of the Fund to maintain an account into which the Deposit Securities (or the cash value of all or part of such securities, or “cash in lieu” amount) will be delivered. Deposit Securities must be delivered to an account maintained at the applicable local custodian. The Trust must also receive, on or before the contractual settlement date, immediately available or same day funds estimated by the Custodian to be sufficient to pay the Cash Component next determined after receipt in proper form of the purchase order, together with the creation transaction fee described below.

Once the Transfer Agent has accepted a creation order, the Transfer Agent will confirm the issuance of a Creation Unit of the Fund against receipt of payment, at such NAV as will have been calculated after receipt in proper form of such order. The Transfer Agent will then transmit a confirmation of acceptance of such order.

Creation Units will not be issued until the transfer of good title to the Trust of the Deposit Securities and the payment of the Cash Component have been completed. When the sub-custodian has confirmed to the Custodian that the required Deposit Securities (or the cash value thereof) have been delivered to the account of the relevant sub-custodian, the Distributor and the Adviser will be notified of such delivery and the Transfer Agent will issue and cause the delivery of the Creation Units.

Acceptance of Creation Orders

The Trust reserves the right to reject a creation order transmitted to it by the Distributor, for any reason, including but not limited to the following: (a) the order is not in proper form; (b) the creator or creators, upon obtaining the Shares, would own 80% or more of the currently outstanding Shares of the Fund; (c) the Deposit Securities delivered are not as specified by the Administrator, as described above; (d) the acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful; or (e) in the event that circumstances outside the control of the Trust, the Distributor and the Adviser make it for all practical purposes impossible to process creation orders. Examples of such circumstances include, without limitation, acts of God or public service or utility problems such as earthquakes, fires, floods, extreme weather conditions and power outages resulting in telephone, telecopy and computer failures; wars; civil or military disturbances, including acts of civil or military authority or governmental actions; terrorism; sabotage; epidemics; riots; labor disputes; market conditions or activities causing trading halts; systems failures involving computer or other information systems affecting the Trust, the Adviser, the Distributor, DTC, the NSCC or any other participant in the creation process, and similar extraordinary events. The Transfer Agent will notify an Authorized Participant if an order is rejected. The Trust, the Custodian, any sub-custodian, the Distributor and the Transfer Agent are under no duty, however, to give notification of any defects or irregularities in the delivery of Fund Deposits to Authorized Participants nor shall any of them incur any liability to Authorized Participants for the failure to give any such notification.

All questions as to the amounts of the Deposit Securities and the validity, form, eligibility and acceptance for deposit of any securities to be delivered shall be determined by the Trust, and the Trust’s determination shall be final and binding.

Creation Transaction Fee

A standard (fixed) creation transaction fee for the Fund payable to the Custodian, in the amount of $400, is imposed on each creation transaction regardless of the number of Creation Units purchased in the transaction. However, the Custodian may
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increase the standard (fixed) creation transaction fee for administration and settlement of non-standard orders requiring additional administrative processing by the Custodian.

In addition, a variable charge for cash creations or for creations outside the Clearing Process may be imposed. In the case of cash creations or where the Trust permits or requires a creator to substitute cash in lieu of depositing a portion of Deposit Securities, the creator may be assessed an additional variable charge to compensate the Fund for the costs associated with purchasing the applicable securities. (See “Fund Deposit” section above.) As a result, in order to seek to replicate the in-kind creation order process, the Trust expects to purchase, in the secondary market or otherwise gain exposure to, the portfolio securities that could have been delivered as a result of an in-kind creation order pursuant to local law or market convention, or for other reasons (“Market Purchases”). In such cases where the Trust makes Market Purchases, the Authorized Participant will reimburse the Trust for, among other things, any difference between the market value at which the securities and/or financial instruments were purchased by the Trust and the cash in lieu amount (which amount, at the Adviser’s discretion, may be capped), the costs associated with certain derivative transactions, applicable registration fees, brokerage commissions and certain taxes. The Adviser may adjust the transaction fee to the extent the composition of the creation securities changes or cash in lieu is added to the Cash Component to protect ongoing shareholders. Creators of Creation Units are responsible for the costs of transferring the securities constituting the Deposit Securities to the account of the Trust. The Fund may adjust or waive all or a portion of its creation transaction fee (including both the fixed and variable components) from time to time.

Redemption of Creation Units

Shares may be redeemed only in Creation Units at their NAV next determined after receipt of a redemption request in proper form by the Distributor, only on a Business Day and only through an Authorized Participant who has executed a Participant Agreement. The Trust will not redeem Shares in amounts less than Creation Units. Beneficial Owners also may sell Shares in the secondary market, but must accumulate enough Shares to constitute a Creation Unit in order to have such Shares redeemed by the Trust. There can be no assurance, however, that there will be sufficient liquidity in the public trading market at any time to permit assembly of a Creation Unit. Investors should expect to incur brokerage and other costs in connection with assembling a sufficient number of Shares to constitute a redeemable Creation Unit. See the section entitled “Summary Information—Principal Risks of Investing in the Fund” and “Additional Information About the Fund’s Investment Strategies and Risks—Risks of Investing in the Fund” in the Prospectus.

The Fund Securities that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form (as defined below) are made available by the Administrator, through NSCC, prior to the opening of business on the NYSE (currently 9:30 a.m., Eastern Time) on each day that the NYSE is open for business. An Authorized Participant submitting a redemption request is deemed to make certain representations to the Trust. The Trust reserves the right to verify these representations at its discretion, and will typically require verification with respect to a redemption request from the Fund in connection with higher levels of redemption activity and/or short interest in the Fund. If the Authorized Participant, upon receipt of a verification request, does not provide sufficient verification of its representations as determined by the Trust, the redemption request will not be considered to have been received in proper form, and may be rejected by the Trust.

The redemption proceeds for a Creation Unit generally consist of Fund Securities as announced by the Administrator on the Business Day of the request for redemption, plus cash in an amount equal to the difference between the NAV of the Shares being redeemed, as next determined after a receipt of a request in proper form, and the value of the Fund Securities, less the redemption transaction fee and variable fees described below. Should the Fund Securities have a value greater than the NAV of the Shares being redeemed, a compensating cash payment to the Trust equal to the differential plus the applicable redemption transaction fee will be required to be arranged for by or on behalf of the redeeming shareholder. The Fund reserves the right to honor a redemption request by delivering a basket of securities or cash that differs from the Fund Securities.

Redemption Transaction Fee

The standard (fixed) redemption transaction fee for the Fund payable to the Custodian, in the amount of $400, is imposed on each redemption transaction regardless of the number of Creation Units redeemed in the transaction. However, the Custodian may increase the standard (fixed) redemption transaction fee for administration and settlement of non-standard orders requiring additional administrative processing by the Custodian.

In addition, a variable charge for cash redemptions or redemptions outside the Clearing Process may be imposed. In the case of cash redemptions or partial cash redemptions (when cash redemptions are permitted or required for the Fund), an additional variable charge may also be imposed to compensate the Fund for the costs associated with selling the applicable securities. As a result, in order to seek to replicate the in-kind redemption order process, the Trust expects to sell, in the secondary market, the portfolio securities or settle any financial instruments that may not be permitted to be re-registered in the
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name of the Authorized Participant as a result of an in-kind redemption order pursuant to local law or market convention, or for other reasons (“Market Sales”). In such cases where the Trust makes Market Sales, the Authorized Participant will reimburse the Trust for, among other things, any difference between the market value at which the securities and/or financial instruments were sold or settled by the Trust and the cash in lieu amount (which amount, at the Adviser’s discretion, may be capped), the costs associated with certain derivatives transactions, applicable registration fees, brokerage commissions and certain taxes (“Transaction Costs”). The Adviser may adjust the transaction fee to the extent the composition of the redemption securities changes or cash in lieu is added to the Cash Component to protect ongoing shareholders. In no event will the variable fees charged by the Fund in connection with a redemption exceed 2% of the value of each Creation Unit. Investors who use the services of a broker or other such intermediary may be charged a fee for such services. To the extent the Fund cannot recoup the amount of Transaction Costs incurred in connection with a redemption from the redeeming shareholder because of the 2% cap or otherwise, those Transaction Costs will be borne by the Fund’s remaining shareholders and negatively affect the Fund’s performance. The Fund may adjust or waive all or a portion of its redemption transaction fee (including both the fixed and variable components) from time to time.

Portfolio Trading by Authorized Participants

When creation or redemption transactions consist of cash, the transactions may require the Fund to contemporaneously transact with broker-dealers for purchases or sales of portfolio securities, as applicable. Depending on the timing of the transactions and certain other factors, such transactions may be placed with the purchasing or redeeming Authorized Participant in its capacity as a broker-dealer or with its affiliated broker-dealer and conditioned upon an agreement with the Authorized Participant or its affiliated broker-dealer to transact at guaranteed prices in order to reduce transaction costs incurred as a consequence of settling creations or redemptions in cash rather than in-kind.

Specifically, following the Fund’s receipt of a creation or redemption order, to the extent such purchases or redemptions consist of a cash portion, the Fund may enter an order with the Authorized Participant or its affiliated broker-dealer to purchase or sell the portfolio securities, as applicable. Such Authorized Participant or its affiliated broker-dealer will be required to guarantee that the Fund will achieve execution of its order at a price at least as favorable to the Fund as the Fund’s valuation of the portfolio securities used for purposes of calculating the NAV applied to the creation or redemption transaction giving rise to the order. Whether the execution of the order is at a price at least as favorable to the Fund will depend on the results achieved by the executing firm and will vary depending on market activity, timing and a variety of other factors.

If the broker-dealer executing the order achieves executions in market transactions at a price more favorable than the Fund’s valuation of the Deposit Securities, then the Authorized Participant generally may retain the benefit of the favorable executions, and the Fund will return to the Authorized Participant the execution performance deposit. If, however, the broker-dealer executing the order is unable to achieve executions in market transactions at a price at least equal to the Fund’s valuation of the securities, the Fund retains the portion of the execution performance deposit equal to the full amount of the execution shortfall (including any taxes, brokerage commissions or other costs) and may require the Authorized Participant to deposit any additional amount required to cover the full amount of the actual execution performance guarantee.

Placement of Redemption Orders Using Clearing Process

Orders to redeem Creation Units of the Fund through the Clearing Process, if available, must be delivered through an Authorized Participant that has executed a Participant Agreement. An order to redeem Creation Units of the Fund using the Clearing Process is deemed received on the Transmittal Date if (i) such order is received by the Transfer Agent not later than 4:00 p.m. Eastern time on such Transmittal Date; and (ii) all other procedures set forth in the Participant Agreement are properly followed; such order will be effected based on the NAV of the Fund as next determined. An order to redeem Creation Units of the Fund using the Clearing Process made in proper form but received by the Fund after 4:00 p.m. Eastern time, will be deemed received on the next Business Day immediately following the Transmittal Date. The requisite Fund Securities (or contracts to purchase such Fund Securities which are expected to be delivered in a “regular way” manner) and the applicable cash payment will be transferred by the prescribed settlement date.

Placement of Redemption Orders Outside Clearing Process—Domestic Funds

Orders to redeem Creation Units of the Fund outside the Clearing Process must be delivered through an Authorized Participant that has executed a Participant Agreement. An Authorized Participant who wishes to place an order for redemption of Creation Units of the Fund to be effected outside the Clearing Process must state in such order that the Authorized Participant is not using the Clearing Process and that redemption of Creation Units of the Fund will instead be effected through transfer of Creation Units of the Fund directly through DTC. An order to redeem Creation Units of the Fund outside the Clearing Process is deemed received by the Transfer Agent on the Transmittal Date if (i) such order is received by the Transfer
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Agent not later than 4:00 p.m. Eastern time on such Transmittal Date; (ii) such order is preceded or accompanied by the requisite number of Shares of Creation Units specified in such order, which delivery must be made through DTC to the Transfer Agent on such Transmittal Date; and (iii) all other procedures set forth in the Participant Agreement are properly followed.
After the Transfer Agent has deemed an order for redemption outside the Clearing Process received, the Transfer Agent will initiate procedures to transfer the requisite Fund Securities (or contracts to purchase such Fund Securities) and the cash redemption payment to the redeeming Beneficial Owner by the prescribed settlement date. An additional variable redemption transaction fee may also be imposed.

Placement of Redemption Orders Outside Clearing Process—Foreign Funds

Arrangements satisfactory to the Trust must be in place for the Authorized Participant to transfer the Creation Units through DTC on or before the settlement date. Redemptions of Shares for Fund Securities will be subject to compliance with applicable U.S. federal and state securities laws and the Fund reserves the right to redeem Creation Units for cash to the extent that the Fund could not lawfully deliver specific Fund Securities upon redemptions or could not do so without first registering the Deposit Securities under such laws.

In connection with taking delivery of Shares for Fund Securities upon redemption of Creation Units, a redeeming shareholder or entity acting on behalf of a redeeming shareholder must maintain appropriate custody arrangements with a qualified broker-dealer, bank or other custody providers in each jurisdiction in which any of the Fund Securities are customarily traded, to which account such Fund Securities will be delivered. If neither the redeeming shareholder nor the entity acting on behalf of a redeeming shareholder has appropriate arrangements to take delivery of the Fund Securities in the applicable foreign jurisdiction and it is not possible to make other such arrangements, or if it is not possible to effect deliveries of the Fund Securities in such jurisdictions, the Trust may, in its discretion, exercise its option to redeem such Shares in cash, and the redeeming shareholder will be required to receive its redemption proceeds in cash.

Due to the schedule of holidays in certain countries or for other reasons, however, the delivery of redemption proceeds may take longer than the normal settlement periods. In such cases, the local market settlement procedures will not commence until the end of the local holiday periods. For redemptions submitted on a dividend declaration date, the Fund intends to settle redemption transactions on the third (3rd) Business Day following the date on which such request for redemption is deemed received date (“T+3”).

The Fund may effect deliveries of Creation Units and redemption proceeds on a basis other than as described above in order to accommodate local holiday schedules, to account for different treatment among foreign and U.S. markets of dividend record dates and ex-dividend dates, or under certain other circumstances. If in-kind creations are permitted or required by the Fund, the ability of the Trust to effect in-kind creations and redemptions as described above, of receipt of an order in good form is subject to, among other things, the condition that, within the time period from the date of the order to the date of delivery of the securities, there are no days that are holidays in the applicable foreign market.

For every occurrence of one or more intervening holidays in the applicable non-U.S. market that are not holidays observed in the U.S. equity market, the redemption settlement cycle may be extended by the number of such intervening holidays. In addition to holidays, other unforeseeable closings in a non-U.S. market due to emergencies may also prevent the Foreign Funds from delivering securities within the normal settlement period.

The securities delivery cycles currently practicable for transferring portfolio securities to redeeming investors, coupled with non-U.S. market holiday schedules, will require a delivery process longer than seven calendar days, in certain circumstances. In such cases, the local market settlement procedures will not commence until the end of the local holiday periods. The timing of settlement may also be affected by the proclamation of new holidays, the treatment by market participants of certain days as “informal holidays” (e.g., days on which no or limited securities transactions occur, as a result of substantially shortened trading hours), the elimination of existing holidays or changes in local securities delivery practices.
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TRUSTEES AND OFFICERS
LEADERSHIP STRUCTURE AND THE BOARD
The Board has general oversight responsibility with respect to the operation of the Trust and the Funds. The Board has engaged VEAC to serve as the investment adviser for the Emerging Markets Fund, Global Resources Fund, International Investors Gold Fund, Emerging Markets Bond Fund and VanEck Morningstar Wide Moat Fund, and has engaged VEARA to serve as the investment adviser for the CM Commodity Index Fund and Onchain Economy ETF. The Board is responsible for overseeing the provision of services to the Trust and the Funds by each Adviser and the other service providers in accordance with the provisions of the 1940 Act and other applicable laws. The Board is currently composed of five (5) Trustees, four of whom are Independent Trustees. In addition to five (5) regularly scheduled meetings per year, the Independent Trustees meet regularly in executive sessions among themselves and with their counsel to consider a variety of matters affecting the Trust. These sessions generally occur prior to, or during, scheduled Board meetings and at such other times as the Trustees may deem necessary. Each Independent Trustee attended at least 75% of the total number of meetings of the Board in the year ending December 31, 2024. As discussed in further detail below, the Board has established three (3) standing committees to assist the Board in performing its oversight responsibilities.
The Board believes that the Board’s leadership structure is appropriate in light of the characteristics and circumstances of the Trust and each of the Funds, including factors such as the number of Funds that comprise the Trust, the variety of asset classes in which those Funds invest, the net assets of the Funds, the committee structure of the Trust, and the management, distribution and other service arrangements of the Funds. In connection with its determination, the Board considered that the Board is comprised primarily of Independent Trustees, and that the Chairperson of the Board and the Chairperson of each of the Audit Committee and the Governance Committee is an Independent Trustee. The Board believes having an interested trustee on the Board and as Chairperson of the Investment Oversight Committee provides it with additional access to the perspectives and resources of the Advisers and their affiliates. In addition, to further align the Trustees’ interests with those of Fund shareholders, the Board has, among other things, adopted a policy requiring each Trustee to maintain a minimum direct or indirect investment in the Funds.
The Chairperson presides at all meetings of the Board and participates in the preparation of the agenda for such meetings. She also serves as a liaison with management, service providers, officers, attorneys, and the other Trustees generally between meetings. The Chairperson may also perform other such functions as may be delegated by the Board from time to time. The Trustees believe that the Chairperson’s independence facilitates meaningful dialogue between each Adviser and the Independent Trustees. Except for any duties specified herein or pursuant to the Trust’s Master Trust Agreement, the designation of Chairperson does not impose on such Independent Trustee any duties, obligations or liability that is greater than the duties, obligations or liability imposed on such person as a member of the Board, generally.
The Independent Trustees regularly meet outside the presence of management and are advised by independent legal counsel. The Board believes that its Committees help ensure that the Trust has effective and independent governance and oversight. The Board also believes that its leadership structure facilitates the orderly and efficient flow of information to the Trustees from management of the Trust, and from the Advisers.
RISK OVERSIGHT
The Funds and the Trust are subject to a number of risks, including investment, compliance, operational, and valuation risks. Day-to-day risk management functions are within the responsibilities of the Advisers, the Distributor and the other service providers (depending on the nature of the risk) that carry out the Funds’ investment management, distribution and business affairs. Each of the Advisers, the Distributor and the other service providers have their own, independent interests and responsibilities in risk management, and their policies and methods of carrying out risk management functions will depend, in part, on their individual priorities, resources and controls.
Risk oversight forms part of the Board’s general oversight of the Funds and the Trust and is addressed through various activities of the Board and its Committees. As part of its regular oversight of the Funds and Trust, the Board, directly or through a Committee, meets with representatives of various service providers and reviews reports from, among others, the Advisers, the Distributor, the Chief Compliance Officer of the Funds, and the independent registered public accounting firm for the Funds regarding risks faced by the Funds and relevant risk management functions. The Board or Investment Oversight Committee, with the assistance of management, reviews investment policies and related risks in connection with its review of the Funds’ performance and its evaluation of the nature and quality of the services provided by each Adviser. The Board has appointed a Chief Compliance Officer for the Funds who oversees the implementation and testing of the Funds’ compliance program and reports to the Board regarding compliance matters for the Funds and their principal service providers. The Chief Compliance Officer’s designation, removal and compensation must be approved by the Board, including a majority of the Independent Trustees. Material changes to the compliance program are reviewed by and approved by the Board. In addition, as part of the Board’s periodic review of the Funds’ advisory, distribution and other service provider agreements, the Board may consider risk management aspects of their operations and the functions for which they are responsible, including the manner in which
53

such service providers implement and administer their codes of ethics and related policies and procedures. For certain of its service providers, such as the Advisers and Distributor, the Board also receives reports periodically regarding business continuity and disaster recovery plans, as well as actions being taken to address cybersecurity and other information technology risks. With respect to valuation, the Board approves and periodically reviews valuation policies and procedures applicable to valuing the Funds’ shares. Each Adviser is responsible for the implementation and day-to-day administration of these valuation policies and procedures and provides reports periodically to the Board regarding these and related matters. In addition, the Board or the Audit Committee of the Board receives reports at least annually from the independent registered public accounting firm for the Funds regarding tests performed by such firm on the valuation of all securities. Reports received from the Advisers and the independent registered public accounting firm assist the Board in performing its oversight function of valuation activities and related risks.
The Board recognizes that not all risks that may affect the Funds and the Trust can be identified, that it may not be practical or cost-effective to eliminate or mitigate certain risks, that it may be necessary to bear certain risks to achieve the Funds’ or Trust’s goals, and that the processes, procedures and controls employed to address certain risks may be limited in their effectiveness. Moreover, reports received by the Board that may relate to risk management matters are typically summaries of the relevant information. As a result of the foregoing and other factors, the function of the Board with respect to risk management is one of oversight and not active involvement in, or coordination of, day-to-day risk management activities for the Funds or Trust. The Board may, at any time and in its discretion, change the manner in which it conducts its risk oversight role.
54

TRUSTEE INFORMATION
The Trustees of the Trust, their address, position with the Trust, age and principal occupations during the past five years 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:
Jayesh Bhansali
1964 (A)(G)(I)
Trustee (since 2022); Chairperson of the Audit Committee (since 2025)
Chief Investment Officer, IRIQIV LLC (a multi-family office). Formerly, Managing Director and Lead Portfolio Manager, Nuveen, a TIAA company.11Trustee, YMCA Retirement Fund; Trustee of Judge Baker Children’s Center; Director of Under One Roof.
Jon Lukomnik
1956 (A)(G)(I)
Trustee (since 2006); Chairperson of the Governance Committee (since 2025)
Managing Partner, Sinclair Capital LLC (consulting firm). Adjunct Professor, School of International and Public Affairs, Columbia University.
11
Director, The Shareholder Commons; Director of VanEck ICAV (an Irish UCITS); VanEck Vectors UCITS ETF plc (an Irish UCITS). Member, Education Committee, MFDF.
Jane DiRenzo Pigott
1957(A)(G) (I)		Trustee (since 2007); Chairperson of the Board (since 2020)Managing Director, R3 Group LLC (consulting firm).11
Board member for Gratitude
Railroad LLC and Impact Engine Management, PBC; 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)(G)(I)		Trustee (since 2004)President, Apex Capital Corporation (personal investment vehicle).79Chairman and Independent Director, EULAV Asset Management; Lead
Independent Director, Total
Fund Solution; Independent
Director, Contingency
Capital, LLC; Trustee, Kenyon Review; Trustee, Children's Village. Formerly,
Independent Director, Tremont offshore funds.
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 VEAC, VEARA and VESC; Officer and/or Director of other companies affiliated with VEAC and/or the Trust.79Director, National Committee on US-China Relations.
55

(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 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.

Set forth below is additional information relating to the professional experience, attributes and skills of each Trustee relevant to such individual’s qualifications to serve as a Trustee:
Jayesh Bhansali has extensive business and financial experience and currently serves as the Chief Investment Officer of IRIQIV LLC, a multi-family office. He was previously a Managing Director and Lead Portfolio Manager at Nuveen, a TIAA company, and has over 25 years of experience in the investment management industry. Mr. Bhansali also serves as a member of the board for multiple not-for-profit organizations.

Jon Lukomnik has extensive business and financial experience, particularly in the investment management industry. He currently serves as: Managing Partner of Sinclair Capital LLC, a consulting firm to the investment management industry. He previously served as chairman of the Advisory Committee of Legion Partners Asset Management, a registered investment advisor that provides investment management and consulting services to various institutional clients; and was a member of the Deloitte LLP’s Audit Quality Advisory Council and the Standards and Emerging Issues Advisory Group to the Public Company Accounting Oversight Board.
Jane DiRenzo Pigott has extensive business and financial experience and serves as Managing Director of R3 Group LLC, a firm specializing in talent retention, development and matriculation consulting services. Ms. Pigott has prior experience as an independent trustee of other mutual funds and previously served as chair of the global Environmental Law practice group at Winston & Strawn LLP.
R. Alastair Short has extensive business and financial experience, particularly in the investment management industry. He has served as a president, board member or executive officer of various businesses, including asset management and private equity investment firms.
Jan F. van Eck has extensive business and financial experience, particularly in the investment management industry.  He currently serves as president, executive officer and/or board member of various businesses, including VEAC, VESC, and VEARA.
The forgoing information regarding the experience, qualifications, attributes and skills of each Trustee is provided pursuant to requirements of the SEC, and does not constitute holding out of the Board or any Trustee as having any special expertise or experience, and shall not impose any greater responsibility or liability on any such person or on the Board by reason thereof.
COMMITTEE STRUCTURE
The Board has established a standing Audit Committee, a standing Governance Committee, and a standing Investment Oversight Committee to assist the Board in the oversight and direction of the business and affairs of the Trust.
Audit Committee. The duties of this Committee include meeting with representatives of the Trust’s independent registered public accounting firm to review fees, services, procedures, conclusions and recommendations of independent registered public accounting firm and to discuss the Trust’s system of internal controls. Thereafter, the Committee reports to the Board the Committee’s findings and recommendations concerning internal accounting matters as well as its recommendation for retention or dismissal of the auditing firm. Except for any duties specified herein or pursuant to the Trust’s charter document, the designation of Chairperson of the Audit Committee does not impose on such Independent Trustee any duties, obligations or liability that is greater than the duties, obligations or liability imposed on such person as a member of the Board, generally. The Audit Committee met four times during the last fiscal year, and currently consists of the following Trustees: Mr. Bhansali (Chairperson), Mr. Short, Ms. Pigott and Mr. Lukomnik.
Governance Committee. The duties of this Committee include the consideration of recommendations to the Trustees for the Board nominations for Trustees, review of the composition of the Board, compensation and similar matters. In addition, the Governance Committee periodically reviews the performance of the Board and its Committees, including the effectiveness and composition of the overall Board, Board’s Committees, and the Chairperson of the Board and other related matters. When considering potential nominees for election to the Board and to fill vacancies occurring on the Board, where shareholder
56

approval is not required, and as part of the annual self-evaluation, the Governance Committee reviews the mix of skills and other relevant experiences of the Trustees. The Governance Committee met four times during the last fiscal year, and currently consists of the following Trustees: Mr. Lukomnik (Chairperson), Mr. Short, Ms. Pigott and Mr. Bhansali.
The Independent Trustees shall, when identifying candidates for the position of Independent Trustee, consider candidates recommended by a shareholder of a Fund if such recommendation provides sufficient background information concerning the candidate and evidence that the candidate is willing to serve as an Independent Trustee if selected, and is received in a sufficiently timely manner. Shareholders should address recommendations in writing to the attention of the Governance Committee, c/o the Secretary of the Trust, at 666 Third Avenue, 9th Floor, New York, NY 10017. The Secretary shall retain copies of any shareholder recommendations which meet the foregoing requirements for a period of not more than 12 months following receipt. The Secretary shall have no obligation to acknowledge receipt of any shareholder recommendations.
Investment Oversight Committee. The duties of this Committee include the review of investment performance of the Funds, meeting with relevant Adviser personnel and outside experts, and overseeing the provision of investment-related services for the Funds. In addition, the Committee will review on a periodic basis and consider a variety of matters, such as proposed material changes to, each Fund’s investment strategy (if applicable), investment processes, investment personnel, non-personnel resources, and relevant investment markets. The Investment Oversight Committee was established by vote of the Board, effective January 1, 2020. This Committee met four times during the last fiscal year, and currently consists of all the Trustees, and Mr. van Eck serves as Chairperson.

57

OFFICER INFORMATION
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
Lawrence G. Altadonna, 1966Vice President and TreasurerSince 2024Vice President of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. Formerly, Fund Assistant Treasurer and Vice President of Credit Suisse Asset Management, LLC (June 2022- January 2024).
Matthew A. Babinsky, 1983Assistant Vice President and Assistant SecretarySince 2016Vice President, Associate General Counsel and Assistant Secretary of VEAC, VEARA and Van Eck Securities Corporation (VESC); Officer of other investment companies advised by VEAC and VEARA. Formerly, Assistant Vice President of
VEAC, VEARA and VESC.
Russell G. Brennan, 1964Assistant Vice President and Assistant TreasurerSince 2008Assistant Vice President of VEAC; Officer of other investment companies advised by VEAC and VEARA.
Charles T. Cameron, 1960Vice PresidentSince 1996Portfolio 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, Chief Financial Officer and Principal Accounting OfficerSince 2012Vice President of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA. Formerly, Vice President of VESC. Formerly, Treasurer of other investment companies advised by VEAC and VEARA.
Susan Curry, 1966Assistant Vice PresidentSince 2022Assistant Vice President of VEAC, VEARA and VESC; Formerly, Managing Director, Legg Mason, Inc.
F. Michael Gozzillo,
1965		Chief Compliance OfficerSince 2018Vice 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 PresidentSince 2019Assistant Vice President of VEAC and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly, Operations Manager of Royce & Associates.
Laura I. Martínez,
1980		Vice President and Assistant SecretaryVice 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.
Lisa A. Moss, 1965
Assistant Vice President and Assistant SecretarySince 2022Assistant Vice President of VEAC, VEARA and VESC; Officer of other investment companies advised by VEAC and VEARA. Formerly Senior Counsel, Perkins Coie LLP.
58

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
James Parker,
1969		Assistant TreasurerSince 2014Assistant Vice President of VEAC and VEARA; Manager, Portfolio Administration of VEAC and VEARA; Officer of other investment companies advised by VEAC and VEARA.
Jonathan R. Simon, 1974Senior Vice President; Secretary and Chief Legal OfficerSenior 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.
Andrew Tilzer,
1972		Assistant Vice PresidentSince 2021Vice President of VEAC and VEARA; Vice
President of Portfolio Administration of VEAC.
Formerly, Assistant Vice President, Portfolio
Operations of VEAC.
(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.  
59

TRUSTEE SHARE OWNERSHIP
For each Trustee, the dollar range of equity securities beneficially owned by the Trustee in the Funds and in all registered investment companies advised by the Advisers or their affiliates (“Family of Investment Companies”) that are overseen by the Trustee is shown below:
 Name of Trustee 
Dollar Range of Equity
Securities in CM
Commodity Index Fund
(As of December 31,
2024)
 
Dollar Range of Equity
Securities in
Emerging Markets
Bond Fund
(As of December 31,
2024)
 
Dollar Range of Equity
Securities in Emerging
Markets Fund
(As of December 31,
2024)
  
Jayesh Bhansali$10,001 - $50,000*$10,001 - $50,000*None
 Jon Lukomnik Over  $100,000* Over  $100,000* Over $100,000*  
 Jane DiRenzo Pigott Over $100,000* None Over $100,000  
 R. Alastair Short None None $10,001 - $50,000  
 Richard D. Stamberger $50,001 - $100,000* None Over $100,000*  
Jan F. van Eck$50,001 - $100,000Over $100,000Over $100,000
 Name of Trustee  
Dollar Range of Equity
Securities in Global
Resources Fund
(As of December 31,
2024)
 
Dollar Range of
Equity Securities in
International
Investors Gold Fund
(As of December 31,
2024)
 
Dollar Range of Equity Securities in Onchain Economy ETF (As of December 31, 2024)
Dollar Range of
Equity Securities in
VanEck Morningstar
Wide Moat Fund
(As of December 31,
2024)
 
Jayesh BhansaliNoneNone
None
None
 Jon Lukomnik  None Over $100,000* 
None
Over $100,000* 
 Jane DiRenzo Pigott  $50,001 - $100,000 Over $100,000 
None
Over $100,000* 
 R. Alastair Short  
$10,001 - $50,000
 $1 - $10,000 
None
Over $100,000 
 Richard D. Stamberger  
None
 Over $100,000* 
None
Over $100,000* 
Jan F. van EckOver $100,000Over $100,000
None
Over $100,000
 Name of Trustee 
Aggregate Dollar Range of Equity
Securities in all Registered Investment
Companies Overseen By Trustee In
Family of Investment Companies
(As of December 31, 2024)
 
Jayesh Bhansali(1)
$50,001 - $100,000*
 Jon Lukomnik Over $100,000* 
 Jane DiRenzo Pigott Over $100,000* 
 R. Alastair Short Over $100,000 
Jan F. van EckOver $100,000
*    Includes ownership through the Trust's deferred compensation plan as of December 31, 2024.

As of March 31, 2025, the Trustees and officers, as a group, (i) owned less than 1% of each Fund, except for VanEck Morningstar Wide Moat Fund (7.67%), VanEck Emerging Markets Bond Fund (1.31%), and VanEck Emerging Markets Fund (1.04%), and (ii) owned less than 1% of each class of each Fund, except for Class A shares of Emerging Markets Bond Fund (2.86%), Class I shares of Emerging Markets Bond Fund (4.16%), Class I shares of VanEck Morningstar Wide Moat Fund (42.44%), Class A shares of Emerging Markets Fund (5.33%), Class I shares of Emerging Markets Fund (1.47%), and Class Z shares of Emerging Markets Fund (1.57%).
As to each Independent Trustee and his/her immediate family members, no person owned beneficially or of record securities in an investment manager or principal underwriter of the Funds, or a person (other than a registered investment company) directly or indirectly controlling, controlled by or under common control with the investment manager or principal underwriter of the Funds.
60

2024 COMPENSATION TABLE
The Trustees are paid for services rendered to the Trust and VanEck VIP Trust (the “VanEck Trusts”), each a registered investment company managed by the Advisers or their affiliates, which are allocated to each series of the VanEck Trusts based on their average daily net assets. Each Independent Trustee is paid an annual retainer of $80,000, a per meeting fee of $10,000 for regularly scheduled meetings of the Board and a per meeting fee of $5,000 for special Board and/or Committee meetings. The VanEck Trusts pay the Chairperson of the Board an annual retainer of $30,000, the Chairperson of the Audit Committee an annual retainer of $15,000 and the Chairperson of the Governance Committee an annual retainer of $15,000. The VanEck Trusts also reimburse each Trustee for travel and other out-of-pocket expenses incurred in attending such meetings. No pension or retirement benefits are accrued as part of Trustee compensation.
The table below shows the compensation paid to the Independent Trustees for the fiscal year ended December 31, 2024. Annual Independent Trustee fees may be reviewed periodically and changed by the Board.
 
Jayesh Bhansali(1)
Jon
Lukomnik(2)
Jane DiRenzo
Pigott(3)
R. Alastair
Short
Richard D. Stamberger(4)
Aggregate Compensation from the VanEck Trusts$130,000$72,500$160,000$130,000$116,000
Aggregate Deferred Compensation from the VanEck Trusts$—$72,500$-$-$29,000
Pension or Retirement Benefits Accrued as Part of the VanEck Trusts’ ExpensesN/AN/AN/AN/A
N/A
Estimated Annual Benefits Upon RetirementN/AN/AN/AN/A
N/A
Total Compensation From the VanEck Trusts and the Fund Complex(5) Paid to Trustee
$130,000$145,000$160,000$486,000$445,000
(1) As of December 31, 2024, the value of Mr. Bhansali's account under the deferred compensation plan was $69,649.
(2) As of December 31, 2024, the value of Mr. Lukomnik’s account under the deferred compensation plan was $1,548,554.
(3) As of December 31, 2024, the value of Ms. Pigott’s account under the deferred compensation plan was $756,563.
(4) As of December 31, 2024, the value of Mr. Stamberger's account under the deferred compensation plan was $1,047,535. Mr. Stamberger retired from the Board of Trustees effective December 31, 2024.
(5) The “Fund Complex” consists of the VanEck Trusts and VanEck ETF Trust.



61

PRINCIPAL SHAREHOLDERS
Principal Holders Ownership
Onchain Economy ETF commenced operations on or about the date of this SAI, and as such is not reflected in the table below.

As of March 31, 2025, shareholders of record of 5% or more of the outstanding shares of each class2 of each such Fund were as follows:
FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE
OF CLASS OF
FUND OWNED
Emerging Markets Fund
Class AMorgan Stanley Smith Barney LLC
14.74%
for the Exclusive Benefit of its Customers
1 New York Plaza FL 12
New York, NY 10004-1932
Emerging Markets Fund
Class ACharles Schwab & Co., Inc.12.00 %
Special Custody Acct FBO Customers INSTL
211 Main St.
San Francisco, CA 94105-1905
Emerging Markets Fund
Class ANational Financial Services LLC
8.58%
for the Exclusive Benefit of its Customers
Attn: Mutual Funds Dept., 4th FL.
499 Washington Blvd.
Jersey City, NJ 07310-1995
Emerging Markets Fund
Class AMerrill Lynch Pierce Fenner & Smith
7.41%
for the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246-6484
Emerging Markets Fund
Class AWells Fargo Clearing Services LLC7.28 %
Special Custody Omnibus Account
For Exclusive Benefit of Customers
2810 Market Street
Saint Louis, MO 63103-2523
Emerging Markets Fund
Class APershing LLC7.28 %
2 Class C shares of Emerging Markets Fund and Global Resources Fund are no longer offered.
62

FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE
OF CLASS OF
FUND OWNED
Omnibus Acct-Mutual Fund OPS
1 Pershing PLZ
Jersey City NJ 07399-0002
Emerging Markets Fund
Class A
LPL Financial
5.65 %
9785 Towne Centre Drive
San Diego, CA 92121-1968
Emerging Markets Fund
Class ASigrid Van Eck TR5.46 %
Sigrid Van Eck Revocable Trust
Palm Beach FL 33480-6704
Emerging Markets Fund
Class ARaymond James5.05 %
Omnibus For Mutual Funds
880 Carillon Pkwy
Saint Petersburg Fl 33716-1102
Emerging Markets Fund
Class CRaymond James
30.81%
Omni Account M/F
880 Carillon Pkwy
Saint Petersburg, FL 33716-1102
Emerging Markets FundWells Fargo Clearing Services LLC
Class CSpecial Custody Omnibus Account
29.02%
for the Exclusive Benefit of Customers
2801 Market Street
Saint Louis, MO 63103-2523
Emerging Markets Fund
Class CMorgan Stanley Smith Barney LLC
16.62%
for the Exclusive Benefit of its Customers
1 New York Plaza Fl. 12
New York, NY 10004-1932
Emerging Markets Fund
Class CUBS Financial Services Inc.
5.13%
Special Custody Account for the Exclusive Benefit of Customers
Attn Department Manager
1000 Harbor Blvd. FL 5
Weehawken, NJ 07086-6761
63


FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE
OF CLASS OF
FUND OWNED
Emerging Markets Fund
Class ICharles Schwab & Co., Inc.24.51 %
Special Custody Acct FBO Customers INSTL
211 Main St.
San Francisco, CA 94105-1905
Emerging Markets Fund
Class ISaxon & Co.23.47 %
Po Box 94597
Cleveland Oh 44101-4597
Emerging Markets Fund
Class IMerrill Lynch Pierce Fenner & Smith
16.94%
for the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484
Emerging Markets Fund
Class IMatrix Trust Company
12.24%
Superomnibus (Van Eck) Cash/Cash
717 17Th St Ste 1300
Denver Co 80202-3304
Emerging Markets Fund
Class INational Financial Services LLC6.68 %
For The Exclusive Benefit Of Our Customers
Attn Mutual Funds Dept 4Th Fl
499 Washington Blvd
Jersey City NJ 07310-1995
Emerging Markets Fund
Class IBNY Mellon NA6.41 %
ATT: Custody Mutual Funds OPS
PO Box 534005
Pittsburgh, PA 15253-4005
Emerging Markets Fund
Class YMorgan Stanley Smith Barney LLC
47.51%
for the Exclusive Benefit of its Customers
1 New York Plaza, Fl 12
New York, NY 10004-1932
64

FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE
OF CLASS OF
FUND OWNED
Emerging Markets Fund
Class YMerrill Lynch Pierce Fenner & Smith
18.36%
for the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484
Emerging Markets Fund
Class YWells Fargo Clearing Services LLC
11.25%
Special Custody Omnibus Account
for Exclusive Benefit of Customers
2801 Market Street
Saint Louis, MO 63103-2523
Emerging Markets Fund
Class YUBS Financial Services Inc6.63 %
Special Custody Accout for the
Exclusive benefit of customers of
Attn Department Manager
1000 Harbor Blvd FL 5
Weehawken NJ 07086-6761
Emerging Markets Fund
Class ZArvest Bank - Trust Division67.58 %
P.O. Box 1156
Bartlesville, OK 74005-1156
Emerging Markets Fund
Class ZWells Fargo Bank NA13.39 %
FBO Omnibus Cash
PO Box 1533
Minneapolis MN 55480-1533
Emerging Markets Fund
Class ZState Street Bank & Trust Co. Tr and/or Custodian8.58 %
FBO Adp Access Product
Attn: Retirement Services
1 Lincoln Street
Boston, MA 02111-2901
65

FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE
OF CLASS OF
FUND OWNED
Global Resources Fund
Class A
Charles Schwab & Co., Inc.
20.97 %
Special Custody A/C FBO Customers
Attn: Mutual Funds
211 Main Street
San Francisco, CA 94105-1901
Global Resources Fund
Class AWells Fargo Clearing Services LLC9.99 %
Special Custody Omnibus Account
for Exclusive Benefit of Customers
2801 Market Street
Saint Louis, MO 63103-2523
Global Resources Fund
Class ALPL Financial9.17 %
9785 Towne Centre Drive
San Diego, CA 92121-1968
Global Resources FundNational Financial Services LLC8.76 %
Class Afor the Exclusive Benefit of Its Customers
Attn: Mutual Funds Dept., 4th FL
499 Washington Blvd.
Jersey City, NJ 07310-1995
Global Resources Fund
Class APershing LLC7.88 %
Omnibus Account - Mutual Fund OPS
1 Pershing Plaza
Jersey City, NJ 07399-0002
Global Resources Fund
Class A
Morgan Stanley Smith Barney LLC
7.77 %
For the Exclusive Benefit of its Customers
1 New York Plaza, Fl.12
New York, New York 10004-1932
Global Resources FundMerrill Lynch Pierce Fenner & Smith5.93 %
Class Afor the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484
66


FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE OF CLASS OF FUND OWNED
Global Resources Fund
Class CWells Fargo Clearing Services LLC
27.67%
Special Custody Omnibus Account
for Exclusive Benefit of Customers
2801 Market Street
Saint Louis, MO 63103-2523
Global Resources Fund
Class CRaymond James23.57 %
Omni Account M/F
880 Carillon PKWY
Saint Petersburg, FL 33716-1102
Global Resources Fund
Class CMorgan Stanley Smith Barney LLC13.41 %
For the Exclusive Benefit of its Customers
1 New York Plaza, Fl.12
New York, New York 10004-1932
Global Resources Fund
Class CMerrill Lynch Pierce Fenner & Smith13.39 %
for the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246-6484
Global Resources Fund
Class CLPL Financial
7.59%
9785 Towne Centre Drive
San Diego, CA 92121-1968
Global Resources Fund
Class ISEI Private Trust Company
24.46%
One Freedom Valley Drive
Oaks, PA 19456-9989
Global Resources Fund
Class INational Financial Services LLC
15.97%
for the Exclusive Benefit of Its Customers
Attn: Mutual Funds Dept., 4th FL
499 Washington Blvd.
Jersey City, NJ 07310-1995
67

FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE OF CLASS OF FUND OWNED
Global Resources Fund
Class I
Charles Schwab & Co., Inc.
9.37%
Special Custody A/C FBO Customers
Attn: Mutual Funds
211 Main Street
San Francisco, CA 94105-1901
Global Resources Fund
Class IMerrill Lynch Pierce Fenner & Smith
7.62%
for the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246-6484
Global Resources Fund
Class IAmerican University of Beirut7.07 %
3 DAG Hammarskjold Plz Fl8
New York NY 10017-2324
Global Resources Fund
Class ITower Hill Inflation Hedge LLC5.88 %
C/O Prager Metis CPAS LLC
ATT: Gerard A Dimino
800 Westchester Ave Ste N400
Rye Brook, NY 10573-1301
Global Resources Fund
Class ISEI Private Trust Company5.54 %
C/O Regions Bank
One Freedom Valley Drive
Oaks PA 19456-9989
Global Resources Fund
Class YWells Fargo Clearing Services LLC
23.13%
Special Custody Omnibus Account
for Exclusive Benefit of Customers
2801 Market Street
Saint Louis, MO 63103-2523
Global Resources Fund
Class YPershing LLC
15.80%
Omnibus Acct-Mutual Fund OPS
1 Pershing Plaza
Jersey City, NJ 07399-0002
68

FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE OF CLASS OF FUND OWNED
Global Resources Fund
Class YMerrill Lynch Pierce Fenner & Smith14.01 %
for the Sole Benefit of its Customers
Attn: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246-6484
Global Resources Fund
Class YMorgan Stanley Smith Barney LLC
11.43%
for the Exclusive Benefit of its Customers
1 New York Plaza Fl. 12
New York, NY 10004-1932
Global Resources Fund
Class YCharles Schwab & Co., Inc.7.12 %
Special Custody Acct FBO
Customers MF Clearing Services
211 Main St
San Francisco CA 94105-1901
Global Resources Fund
Class YLPL Financial
7.06%
9785 Towne Centre Drive
San Diego, CA 92121-1968
International Investors Gold Fund
Class ANational Financial Services LLC
9.84%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept., 4th FL
499 Washington Blvd.
Jersey City, NJ 07310-1995
International Investors Gold Fund
Class ACharles Schwab & Co., Inc.8.79 %
Special Custody Acct FBO
Customers Instl
211 Main St
San Francisco CA 94105-1901
International Investors Gold Fund
Class AWells Fargo Clearing Services LLC8.77 %
Special Custody Omnibus Account
69

FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE OF CLASS OF FUND OWNED
For the Exclusive Benefit of Customers
2801 Market Street
Saint Louis, MO 63103-2523
International Investors Gold Fund
Class APershing LLC
7.73%
Omnibus Acct-Mutual Funds OPS
1 Pershing Plaza
Jersey City, NJ 07399-0002
International Investors Gold FundAmerican Enterprise Investment Service6.46 %
Class A707 2nd Avenue S
Minneapolis, MN 55402-2405
International Investors Gold Fund
Class AMorgan Stanley Smith Barney LLC
5.69%
For the Exclusive Benefit of its Customers
1 New York Plaza, Fl. 12
New York, NY 10004-1932
International Investors Gold Fund
Class ARaymond James5.35 %
Omni Account M/F
880 Carillon Pkwy
Saint Petersburg, FL 33716-1102
International Investors Gold Fund
Class CRaymond James
30.11%
Omni Account M/F
880 Carillon Pkwy
Saint Petersburg, FL 33716-1102
International Investors Gold Fund
Class CWells Fargo Clearing Services LLC
23.32%
Special Custody Omnibus Account
for Exclusive Benefit of Customers
2801 Market Street
Saint Louis, MO 63103-2523
International Investors Gold Fund
Class CCharles Schwab & Co., Inc.15.59 %
Special Custody Acct FBO
Customers Loan Non-Clearing
70

FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE OF CLASS OF FUND OWNED
211 Main St
San Francisco, CA 94105-1901
International Investors Gold Fund
Class CMorgan Stanley Smith Barney LLC
11.41%
for the Exclusive Benefit of its Customers
1 New York Plaza Fl. 12
New York, NY 10004-1932
International Investors Gold Fund
Class CLPL Financial
5.57%
9785 Towne Centre Drive
San Diego CA 92121-1968
International Investors Gold Fund
Class ICharles Schwab & Co., Inc.41.87 %
Special Custody Acct FBO
Customers Instl
211 Main St.
San Francisco, CA 94105-1905
International Investors Gold Fund
Class INational Financial Services LLC
12.91%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept. 4th FL
499 Washington Blvd
Jersey City, NJ 07310-1995
International Investors Gold Fund
Class IState Street Bank & Trust Co. TR and/or CUST
8.81%
FBO ADP Access Product
Attn Retirement Services
1 Lincoln St
Boston, MA 02111-2901
International Investors Gold Fund
Class IPershing LLC8.78 %
Omnibus Acct-Mutual Fund Ops
1 Pershing Plz
Jersey City NJ 07399-0002
71



FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE
OF CLASS OF
FUND OWNED
International Investors Gold Fund
Class YMorgan Stanley Smith Barney LLC
21.36%
For the Exclusive Benefit of its Customers
1 New York Plaza FL 12
New York, NY 10004-1932
International Investors Gold Fund
Class YRaymond James12.27 %
Omni Account M/F
880 Carillon Pkwy
Saint Petersburg, FL 33716-1102
International Investors Gold Fund
Class YNational Financial Services LLC
11.32%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept., 4th FL
499 Washington Blvd.
Jersey City, NJ 07310-1995
International Investors Gold Fund
Class YUBS Financial Services Inc.
6.17%
Special Custody Account for the Exclusive Benefit of its Customers
Attn: Department Manager
1000 Harbor Blvd., 5th Floor
Weehawken, NJ 07086-6761
International Investors Gold Fund
Class YMLPF&S For The Sole Benefit5.44 %
Of Its Customers
Att: Fund Administration
4800 Deer Lake Dr. East, 2nd Floor
Jacksonville, FL 32246-6484
International Investors Gold Fund
Class YWells Fargo Clearing Services LLC5.27 %
Special Custody Omnibus Account
For Exclusive Benefit of Customers
2801 Market Street
Saint Louis, MO 63103-2523
72

FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE
OF CLASS OF
FUND OWNED
CM Commodity Index Fund
Class ANational Financial Services LLC
45.15%
for the Exclusive Benefit of Its Customers
Attn: Mutual Funds Dept., 4th Fl.
499 Washington Blvd.
Jersey City, NJ 07310-1995
CM Commodity Index Fund
Class ACharles Schwab & Co., Inc.12.48 %
Special Custody Acct FBO
Customers Instl
211 Main St
San Francisco, CA 94105-1905
CM Commodity Index Fund
Class AMinnesota Life Insurance Co,8.03 %
400 Robert Street North
Saint Paul, MN 5511-2037
Greenwood Village CO 80111-5002
CM Commodity Index Fund
Class AEmpower Trust FBO7.63 %
FBO Employee Benefits Clients 401K
8515 E Orchard Rd. 2T2
Greenwood Village CO 80111-5002
73

FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE
OF CLASS OF
FUND OWNED
CM Commodity Index Fund
Class IMerrill Lynch Pierce Fenner & Smith
29.51%
for the Sole Benefit of its Customers
Att: Fund Administration
4800 Deer Lake Dr. East, 3rd Floor
Jacksonville, FL 32246-6484
CM Commodity Index Fund
Class ISEI Private Trust Company10.72 %
Attn: Mutual Fund Administrator
One Freedom Valley Drive
Oaks, PA 19456-9989
CM Commodity Index Fund
Class IPershing LLC8.54 %
Omnibus Acct-Mutual Fund OPS
1 Pershing PLZ
Jersey City NJ 07399-0002
CM Commodity Index Fund
Class IMAC & Co.7.54 %
Attn: Mutual Fund OPS
PO Box 3198
Pittsburgh, PA 15230-3198
CM Commodity Index Fund
Class ICharles Schwab & Co., Inc.7.48 %
Special Custody Acct FBO
Customers Instl
211 Main St
San Francisco, CA 94105-1905
CM Commodity Index Fund
Class ISEI Private Trust Company
7.07%
Attn: Mutual Fund Administrator
One Freedom Valley Drive
Oaks, PA 19456-9989
CM Commodity Index Fund
Class INational Financial Services LLC6.81 %
for the Exclusive Benefit of Its Customers
Attn: Mutual Funds Dept., 4th Fl.
74

FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE
OF CLASS OF
FUND OWNED
499 Washington Blvd.
Jersey City, NJ 07310-1995
CM Commodity Index Fund
Class YPershing LLC
87.96%
Omnibus Acct-Mutual Fund OPS
1 Pershing Plz
Jersey City, NJ 07399-0002
CM Commodity Index Fund
Class YNational Financial Services LLC
5.03%
for the Exclusive Benefit of Its Customers
Attn: Mutual Funds Dept., 4th Fl.
499 Washington Blvd.
Jersey City, NJ 07310-1995
VanEck Morningstar Wide Moat Fund
Class IVan Eck Securities Corporation
70.21%
Attn: Lee Rappaport
666 3rd Avenue, FL 8
New York, NY 10017-4033
VanEck Morningstar Wide Moat FundCharles Schwab & Co., Inc.29.26 %
Class ISpecial Custody Acct FBO
Customers Instl
211 Main St
San Francisco, CA 94105-1901
VanEck Morningstar Wide Moat Fund
Class ZState Street Bank & Trust Co. TR and/or CUST41.24 %
FBO ADP Access Product
Attn: Retirement Services
1 Lincoln St
Boston, MA 02111-2901
VanEck Morningstar Wide Moat Fund
Class ZVan Eck Securities Corporation35.59 %
Attn: Lee Rappaport
666 3rd Avenue, FL 8
New York, NY 10017-4033
VanEck Morningstar Wide Moat Fund
Class Z
State Street Bank & Trust Co Tr and/or Cust
13.81 %
75

FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE
OF CLASS OF
FUND OWNED
FBO Pioneers, Inc.
Attn Retirement Services
1 Lincoln St
Boston MA 02111-2901
Emerging Markets Bond Fund
Class ACharles Schwab & Co., Inc.37.59 %
Special Custody Acct. FBO Customers Instl
211 Main St
San Francisco, CA 94105-1901
Emerging Markets Bond Fund
Class ANational Financial Services LLC
21.14%
For the Exclusive Benefit of Our Customers
Attn: Mutual Funds Dept., 4th Fl.
499 Washington Blvd
Jersey City, NJ 07310-1995
Emerging Markets Bond Fund
Class ALPL Financial12.79 %
9785 Towne Centre Drive
San Diego CA 92121-1968
Emerging Markets Bond Fund
Class ASigrid S Van Eck TR 11.24 %
Sigrid S Van Eck Revocable Trust
Palm Beach, FL 33480-6704
Emerging Markets Bond Fund
Class APershing LLC
5.70%
Omnibus Account-Mutual Fund OPS
1 Pershing Plaza
Jersey City, NJ 07399-0002
Emerging Markets Bond Fund
Class ICharles Schwab & Co., Inc.73.56 %
Special Custody Acct. FBO Customers Instl
211 Main St
San Francisco, CA 94105-1901
Emerging Markets Bond Fund
Class IState Street Bank & Trust Co. TR and/or CUST18.27 %
FBO ADP Access Product
Attn: Retirement Services
76

FUND AND CLASSNAME AND ADDRESS OF OWNER
PERCENTAGE
OF CLASS OF
FUND OWNED
1 Lincoln St
Boston, MA 02111-2901
Emerging Markets Bond Fund
Class INational Financial Services LLC5.24 %
For The Exclusive Benefit Of Our Customers
Attn Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City, NJ 07310-1995
Emerging Markets Bond Fund
Class YNational Financial Services LLC37.50 %
For The Exclusive Benefit Of Our Customers
Attn Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City, NJ 07310-1995
Emerging Markets Bond Fund
Class YLPL Financial31.95 %
9785 Towne Centre Drive
San Diego CA 92121-1968
Emerging Markets Bond Fund
Class YRaymond James
10.35%
Omni Account Mutual Funds
Attn: Courtney Waller
880 Carillon Pkwy
Emerging Markets Bond FundCharles Schwab & Co., Inc.8.73 %
Class YSpecial Custody Acct FBO
Customers Instl
211 Main St
San Francisco CA 94105-1901
77


Control Person Ownership
As of March 31, 2025, no person owned directly or through one or more controlled companies more than 25% of the voting securities of a Fund, except for Emerging Markets Bond Fund, CM Commodity Index Fund and VanEck Morningstar Wide Moat Fund. For Emerging Markets Bond Fund, CM Commodity Index Fund and VanEck Morningstar Wide Moat Fund, a shareholder who may be deemed to be a “control person” (as that term is defined in the 1940 Act) because the shareholder owns of record more than 25% of the outstanding shares of the Fund by virtue of its fiduciary roles with respect to its clients or otherwise, is shown below. A control person may be able to facilitate shareholder approval of proposals it approves and to impede shareholder approval of proposals it opposes. If a control person’s record ownership of the Fund’s outstanding shares exceeds 50%, then, for certain shareholder proposals, such control person may be able to approve, or prevent approval, of such proposals without regard to votes by other Fund shareholders.
FUNDNAME AND ADDRESS OF OWNER
PERCENTAGE
OF
FUND OWNED
CM Commodity Index FundPershing LLC
Omnibus Acct- Mutual Fund OPS
1 Pershing Plaza
Jersey City, NJ 07399-0002		69.27%
VanEck Emerging Markets Fund
Morgan Stanley Smith Barney LLC
29.96%
For the Exclusive Benefit of its Customers
1 New York Plaza Fl 12
New York, NY 10004-1965
VanEck Morningstar Wide Moat FundState Street Bank & Trust Co.
Attn: Retirement Services
1 Lincoln Street
Boston, MA 02111-2901		48.97%
Van Eck Securities Corp.
Attn: Lee Rappaport
666 3rd Avenue
New York, NY 10017-4033		39.42%
Emerging Markets Bond Fund
National Financial Services LLC
For the Exclusive Benefit of Our Customers
Attn Mutual Funds Dept. 4th Fl
499 Washington Blvd.
Jersey City, NJ 07310-1995
28.22%
Charles Schwab & Co., Inc.
Special Custody Acct FBO Customers Instl    
211 Main Street
San Francisco, CA 94105-1901
26.79%

POTENTIAL CONFLICTS OF INTEREST
Each Adviser (and its principals, affiliates or employees) may serve as investment adviser to other client accounts and conduct investment activities for their own accounts. Such “Other Clients” may have investment objectives or may implement investment strategies similar to those of the Funds. When an Adviser implements investment strategies for Other Clients that are similar or directly contrary to the positions taken by a Fund, the prices of the Fund’s securities may be negatively affected.
78

For example, when purchase or sales orders for a Fund are aggregated with those of other Funds and/or Other Clients and allocated among them, the price that the Fund pays or receives may be more in the case of a purchase or less in a sale than if the Adviser served as adviser to only the Fund. When Other Clients are selling a security that a Fund owns, the price of that security may decline as a result of the sales. The compensation that an Adviser receives from Other Clients may be higher than the compensation paid by a Fund to the Adviser. Each Adviser has implemented procedures to monitor trading across the Funds and its Other Clients. Furthermore, each Adviser may recommend a Fund purchase securities of issues to which it, or its affiliate, acts as adviser, manager, sponsor, distributor, marketing agent, or in another capacity and for which it receives advisory or other fees. While this practice may create conflicts of interest, the Adviser has adopted procedures to minimize such conflicts.

PROXY VOTING POLICIES AND PROCEDURES
The Funds’ proxy voting record is available upon request and on the SEC’s website at http://www.sec.gov. Proxies for each Fund’s portfolio securities are voted in accordance with the applicable Adviser’s proxy voting policies and procedures, which are set forth in Appendix A to this SAI.
The Trust is required to disclose annually each Fund’s complete proxy voting record on Form N-PX covering the period July 1 through June 30 and file it with the SEC no later than August 31. Form N-PX for the Funds is available through the Funds’ website, at vaneck.com, or by writing to 666 Third Avenue, 9th Floor, New York, New York 10017. The Funds’ Form N-PX is also available on the SEC’s website at www.sec.gov.

CODE OF ETHICS
The Funds, each Adviser and the Distributor have each adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940 Act (“Rule 17j-1”). Such Codes of Ethics require, among other things, that “access persons” (as defined in Rule 17j-1) conduct personal securities transactions in a manner that avoids any actual or potential conflict of interest or any abuse of a position of trust and responsibility. The Codes of Ethics allow such access persons to invest in securities that may be purchased and held by a Fund, provided such investments are done consistently with the provisions of the Codes of Ethics.

PURCHASE OF SHARES (All Funds except Onchain Economy ETF)
The Funds may invest in securities or futures contracts listed on foreign exchanges which trade on Saturdays or other customary United States national business holidays (i.e., days on which the Funds are not open for business). Consequently, since the Funds will compute their net asset values only Monday through Friday, exclusive of national business holidays, the net asset values of shares of the Funds may be significantly affected on days when an investor has no access to the Funds. The sale of shares will be suspended during any period when the determination of net asset value is suspended, and may be suspended by the Board whenever the Board judges it is in a Fund’s best interest to do so.
Certificates for shares of the Funds will not be issued.
The Funds may reject a purchase order for any reason, including an exchange purchase, either before or after the purchase.
If you purchase shares through a financial intermediary, different purchase minimums than those set forth herein may apply. VanEck reserves the right to waive the investment minimums under certain circumstances.
VanEck reserves the right to allow a financial intermediary that has a Class I Agreement with VanEck to purchase shares for its own account and for its clients’ accounts in Class I shares of a Fund on behalf of its eligible clients which are Employer-Sponsored Retirement Plans with plan assets of $3 million or more.

AVAILABILITY OF DISCOUNTS (All Funds except Onchain Economy ETF)
An investor or the Broker or Agent must notify DST Systems, Inc., the Funds’ transfer agent (“DST”), or the Distributor at the time of purchase whenever a quantity discount or reduced or waived sales charge is applicable to a purchase. Quantity discounts described above may be modified or terminated at any time without prior notice.

79

VALUATION OF SHARES
All Funds except Onchain Economy ETF. The net asset value per share of each of the Funds is computed by dividing the value of all of a Fund’s securities plus cash and other assets, less liabilities, by the number of shares outstanding. The net asset value per share is computed as of the close of the NYSE, usually 4:00 p.m. New York time, Monday through Friday, exclusive of national business holidays. The Funds will be closed on the following national business holidays: New Year’s Day, Martin Luther King Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day (or the days on which these holidays are observed).
Shares of the Funds are sold at the public offering price, which is determined once each day the Funds are open for business and is the net asset value per share. The net asset values need not be computed on a day in which no orders to purchase, sell or redeem shares of the Funds have been received.
Dividends paid by a Fund with respect to Class A, Class C, Class I, Class Y and Class Z shares will be calculated in the same manner, at the same time and on the same day and will be in the same amount, as adjusted by share Class, for any distribution service fees, transfer agency fees, registration costs and expense waivers that are attributable to a share Class. The Board has determined that currently no conflict of interest exists between the Class A, Class C, Class I, Class Y and Class Z shares. On an ongoing basis, the Board, pursuant to their fiduciary duties under the 1940 Act and state laws, will seek to ensure that no such conflict arises.
Class A shares of the Funds are sold at the public offering price, which is determined once each day the Funds are open for business and is the net asset value per share plus a sales charge in accordance with the schedule set forth in the Prospectuses.
Set forth below is an example of the computation of the public offering price for a Class A share of each Fund (which offers Class A shares) on December 31, 2024, under the then-current maximum sales charge:
 CM
Commodity
Index Fund -
Class A		Emerging
Markets
Fund - Class A		Global
Resources
Fund -
Class A		International
Investors
Gold Fund -
Class A		Emerging
Markets Bond
Fund -
Class A
Net asset value and repurchase price per share on $.001 par value capital shares outstanding
$65.61$13.23$36.43$10.40$5.20
Maximum sales charge (as described in the Prospectus)$4.01$0.81$2.22$0.64$0.32
Maximum offering price per share$69.62$14.04$38.65$11.04$5.52
In determining whether a deferred sales charge is applicable to Class C shares, the calculation will be determined in the manner that results in the lowest possible rate being charged. Therefore, it will be assumed that the redemption is first from any Class A shares in the shareholder’s Fund account (unless a specific request is made to redeem a specific class of shares), Class C shares held for over one year and shares attributable to appreciation or shares acquired pursuant to reinvestment, and third of any Class C shares held longest during the applicable period.
Each Fund’s investments are generally valued based on market quotations which may be based on quotes obtained from a quotation reporting system, established market makers, broker dealers or by an independent pricing service. Short-term debt investments having a maturity of 60 days or less are valued at amortized cost, which approximates the fair value of the security. Assets or liabilities denominated in currencies other than the U.S. dollar are converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more sources. When market quotations are not readily available for a portfolio security or other asset, or, in the opinion of its Adviser, are deemed unreliable, a Fund will use the security’s or asset’s “fair value” as determined in good faith in accordance with the Funds’ Fair Value Pricing Policies and Procedures, which have been approved by the Board. As a general principle, the current fair value of a security or other asset is the amount which a Fund might reasonably expect to receive for the security or asset upon its current sale. The Funds’ Pricing Committee, whose members are selected by the senior management of the Advisers and reported to the Board, is responsible for recommending fair value procedures to the Board and for administering the process used to arrive at fair value prices. Factors
80

that may cause a Fund’s Pricing Committee to fair value a security include, but are not limited to: (1) market quotations are not readily available because a portfolio security is not traded in a public market, trading in the security has been suspended, or the principal market in which the security trades is closed, (2) trading in a portfolio security is limited or suspended and not resumed prior to the time at which the Fund calculates its NAV, (3) the market for the relevant security is thin, or the price for the security is “stale” because its price has not changed for 5 consecutive business days, (4) an Adviser determines that a market quotation is not reliable, for example, because price movements are highly volatile and cannot be verified by a reliable alternative pricing source, or (5) a significant event affecting the value of a portfolio security is determined to have occurred between the time of the market quotation provided for a portfolio security and the time at which the Fund calculates its NAV.
In determining the fair value of securities, the Pricing Committee will consider, among other factors, the fundamental analytical data relating to the security, the nature and duration of any restrictions on the disposition of the security, and the forces influencing the market in which the security is traded.
Foreign equity securities in which the Funds invest may be traded in markets that close before the time that each Fund calculates its NAV. Foreign equity securities are normally priced based upon the market quotation of such securities as of the close of their respective principal markets, as adjusted to reflect an Adviser’s determination of the impact of events, such as a significant movement in the U.S. markets occurring subsequent to the close of such markets but prior to the time at which the Fund calculates its NAV. In such cases, the Pricing Committee may apply a fair valuation formula to those foreign equity securities based on the Committee’s determination of the effect of the U.S. significant event with respect to each local market.
Certain of the Funds’ portfolio securities are valued by an independent pricing service approved by the Board. The independent pricing service may utilize an automated system incorporating a model based on multiple parameters, including a security’s local closing price (in the case of foreign securities), relevant general and sector indices, currency fluctuations, and trading in depositary receipts and futures, if applicable, and/or research evaluations by its staff, in determining what it believes is the fair valuation of the portfolio securities valued by such independent pricing service.
There can be no assurance that the Funds could purchase or sell a portfolio security or other asset at the price used to calculate the Funds’ NAV. Because of the inherent uncertainty in fair valuations, and the various factors considered in determining value pursuant to the Funds’ fair value procedures, there can be material differences between a fair value price at which a portfolio security or other asset is being carried and the price at which it is purchased or sold. Furthermore, changes in the fair valuation of portfolio securities or other assets may be less frequent, and of greater magnitude, than changes in the price of portfolio securities or other assets valued by an independent pricing service, or based on market quotations.

Onchain Economy ETF only

The following information supplements and should be read in conjunction with the section in the Fund’s Prospectus entitled “Shareholder Information—Determination of NAV.”

The NAV per Share for the Fund is computed by dividing the value of the net assets of the Fund (i.e., the value of its total assets less total liabilities) by the total number of Shares outstanding. Expenses and fees, including the management fee, are accrued daily and taken into account for purposes of determining NAV. The NAV of the Fund is determined each business day as of the close of trading (ordinarily 4:00 p.m., Eastern time) on the NYSE.

The values of the Fund’s portfolio securities are based on the securities’ closing prices on the markets on which the securities trade, when available. Due to the time differences between the United States and certain countries in which the Fund invests, securities on these exchanges may not trade at times when Shares of the Fund will trade. In the absence of a last reported sales price, or if no sales were reported, and for other assets for which market quotes are not readily available, values may be based on quotes obtained from a quotation reporting system, established market makers or by an outside independent pricing service. Debt instruments with remaining maturities of more than 60 days are valued at the evaluated mean price provided by an outside independent pricing service. If an outside independent pricing service is unable to provide a valuation, the instrument is valued at the mean of the highest bid and the lowest asked quotes obtained from one or more brokers or dealers selected by the Adviser. Prices obtained by an outside independent pricing service may use information provided by market makers or estimates of market values obtained from yield data related to investments or securities with similar characteristics and may use a computerized grid matrix of securities and its evaluations in determining what it believes is the fair value of the portfolio securities. Short-term debt instruments having a maturity of 60 days or less are valued at amortized cost. Any assets or liabilities denominated in currencies other than the U.S. dollar are converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more sources. If a market quotation for a security or other asset is not readily available or the Adviser believes it does not otherwise accurately reflect the market value of the security or asset at the time the Fund calculates its NAV, the security or asset will be fair valued by the Adviser in accordance with the Trust’s valuation policies and procedures approved by the Board of Trustees. The Fund may also use fair value pricing in a variety of
81

circumstances, including but not limited to, situations when the value of a security in the Fund’s portfolio has been materially affected by events occurring after the close of the market on which the security is principally traded (such as a corporate action or other news that may materially affect the price of a security) or trading in a security has been suspended or halted. In addition, the Fund currently expects that it will fair value certain of the foreign equity securities held by the Fund, if any, each day the Fund calculates its NAV, except those securities principally traded on exchanges that close at the same time the Fund calculates its NAV.

Accordingly, the Fund’s NAV may reflect certain portfolio securities’ fair values rather than their market prices at the time the exchanges on which they principally trade close. Fair value pricing involves subjective judgments and it is possible that a fair value determination for a security or other asset is materially different than the value that could be realized upon the sale of such security or asset. With respect to securities that are principally traded on foreign exchanges, the value of the Fund’s portfolio securities may change on days when you will not be able to purchase or sell your Shares.
82

EXCHANGE PRIVILEGE
Shareholders of a Fund may exchange their shares for shares of the same class of other funds in the Trust that offer an Exchange Privilege for that class. The Exchange Privilege will not be available if the proceeds from a redemption of shares of a Fund whose shares qualify are paid directly to the shareholder. The Exchange Privilege is not available for shares which are not on deposit with DST or UMB Bank (“UMB”), or shares which are held in escrow pursuant to a Letter of Intent. If certificates representing shares of a Fund accompany a written exchange request, such shares will be deposited into an account with the same registration as the certificates upon receipt by DST.
The Funds each reserve the right to (i) charge a fee of not more than $5.00 per exchange payable to a Fund or charge a fee reasonably intended to cover the costs incurred in connection with the exchange; (ii) establish a limit on the number and amount of exchanges made pursuant to the Exchange Privilege, as disclosed in the Prospectuses and (iii) terminate the Exchange Privilege without written notice. In the event of such termination, shareholders who have acquired their shares pursuant to the Exchange Privilege will be afforded the opportunity to re-exchange such shares for shares of the Fund originally purchased without sales charge, for a period of not less than three (3) months.
By exercising the Exchange Privilege, each shareholder whose shares are subject to the Exchange Privilege will be deemed to have agreed to indemnify and hold harmless the Trust and each of its series, their Adviser, sub-investment adviser (if any), distributor, transfer agent, UMB and the officers, directors, employees and agents thereof against any liability, damage, claim or loss, including reasonable costs and attorneys’ fees, resulting from acceptance of, or acting or failure to act upon, or acceptance of unauthorized instructions or non-authentic telephone instructions given in connection with, the Exchange Privilege, so long as reasonable procedures are employed to confirm the authenticity of such communications. (For more information on the Exchange Privilege, see the Prospectuses).

CLASS CONVERSIONS (All Funds except Onchain Economy ETF)
Eligible shareholders may convert their shares from one class to another class within the same Fund, without any conversion fee, upon request by such shareholders or their financial intermediaries. For federal income tax purposes, a same-fund conversion from one class to another is not expected to result in the realization by the shareholder of a capital gain or loss (non-taxable conversion). Generally, Class A shares subject to a contingent deferred sales charge (“CDSC”) and Class C shares subject to a contingent deferred redemption charge (“CDRC”) are not eligible for conversion until the applicable CDSC or CDRC period has expired. However, some waivers of the CDSC or CDRC may apply as specified in the Prospectus. Shares eligible for conversion are exchanged between classes of the same fund on a dollar-for-dollar basis at NAV. Not all share classes are available through all financial intermediaries or all their account types or programs. To determine whether you are eligible to invest in a specific class of shares, see the section of the Prospectuses entitled “Shareholder Information - How to Choose a Class of Shares” and contact your financial intermediary for additional information.

INVESTMENT PROGRAMS (All Funds except Onchain Economy ETF)
Dividend Reinvestment Plan. Reinvestments of dividends of the Funds will occur on a date selected by the Board.
Automatic Exchange Plan. Investors with accounts held directly at the Fund may arrange under the Automatic Exchange Plan to have DST collect a specified amount once a month or quarter from the investor’s account in one of the Funds and purchase full and fractional shares of another Fund in the same class at the public offering price next computed after receipt of the proceeds. Further details of the Automatic Exchange Plan are given in the application which is available from DST or the Funds. Class C shares are not eligible. Accounts opened through a financial intermediary may be eligible for a similar plan offered by that financial intermediary. Please contact your financial intermediary for details.
An investor should realize that he is investing his funds in securities subject to market fluctuations, and accordingly the Automatic Exchange Plan does not assure a profit or protect against depreciation in declining markets. The Automatic Exchange Plan contemplates the systematic purchase of securities at regular intervals regardless of price levels.
The expenses of the Automatic Exchange Plan are general expenses of a Fund and will not involve any direct charge to the participating shareholder. The Automatic Exchange Plan is completely voluntary and may be terminated on fifteen days’ notice to DST.
Letter of Intent (“LOI” or “Letter”). For LOIs, out of an initial purchase (or subsequent purchases if necessary), 5% of the specified dollar amount of an LOI will be held in escrow by DST in a shareholder’s account until the shareholder’s total purchases of the VanEck Funds pursuant to the LOI plus a shareholder’s accumulation credit (if any) equal the amount specified in the Letter. A purchase not originally made pursuant to an LOI may be included under a backdated Letter executed within 90 days of such purchase (accumulation credit). If total purchases pursuant to the Letter plus any accumulation credit are less than the specified amount of the Letter, the shareholder must remit to the Distributor an amount equal to the difference in
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the dollar amount of the sales charge the shareholder actually paid and the amount of the sales charge which the shareholder would have paid on the aggregate purchases if the total of such purchases had been made at a single time. If the shareholder does not, within 20 business days after written request by the dealer or bank or by the Distributor, pay such difference in sales charge, DST, upon instructions from the Distributor, is authorized to cause to be repurchased (liquidated) an appropriate number of the escrowed shares in order to realize such difference. A shareholder irrevocably constitutes and appoints DST, as escrow agent, to surrender for repurchase any or all escrowed shares with full power of substitution in the premises and agree to the terms and conditions set forth in the Prospectuses and SAI. A LOI is not effective until it is accepted by the Distributor.
Automatic Investment Plan. Investors with accounts held directly at the Fund may arrange under the Automatic Investment Plan to have DST collect a specified amount once a month or quarter from the investor’s checking account and purchase full and fractional shares of a Fund at the public offering price next computed after receipt of the proceeds. Further details of the Automatic Investment Plan are given in the application which is available from DST or the Funds. Accounts opened through a financial intermediary may be eligible for a similar plan offered by that financial intermediary. Please contact your financial intermediary for details.
An investor should realize that he is investing his funds in securities subject to market fluctuations, and accordingly the Automatic Investment Plan does not assure a profit or protect against depreciation in declining markets. The Automatic Investment Plan contemplates the systematic purchase of securities at regular intervals regardless of price levels.
The expenses of the Automatic Investment Plan are general expenses of a Fund and will not involve any direct charge to the participating shareholder. The Automatic Investment Plan is completely voluntary. The Automatic Investment Plan may be terminated on thirty days’ notice to DST.
Automatic Withdrawal Plan. Investors with accounts held directly at the Fund may establish the Automatic Withdrawal Plan which is designed to provide a convenient method of receiving fixed redemption proceeds at regular intervals from shares of a Fund deposited by the investor under this Plan. Class C shares are not eligible, except for automatic withdrawals for the purpose of retirement account distributions. Further details of the Automatic Withdrawal Plan are given in the application, which is available from DST or the Funds. Accounts opened through a financial intermediary may be eligible for a similar plan offered by that financial intermediary. Please contact your financial intermediary for details.
In order to open an Automatic Withdrawal Plan, the investor must complete the Application and deposit or purchase for deposit, with DST, the agent for the Automatic Withdrawal Plan, shares of a Fund having a total value of not less than $10,000 based on the offering price on the date the Application is accepted, except for automatic withdrawals for the purpose of retirement account distributions.
Income dividends and capital gains distributions on shares under an Automatic Withdrawal Plan will be credited to the investor’s Automatic Withdrawal Plan account in full and fractional shares at the net asset value in effect on the reinvestment date.
Periodic checks for a specified amount will be sent to the investor, or any person designated by him, monthly or quarterly. A Fund will bear the cost of administering the Automatic Withdrawal Plan.
Redemption of shares of a Fund deposited under the Automatic Withdrawal Plan may deplete or possibly use up the initial investment plus income dividends and distributions reinvested, particularly in the event of a market decline. In addition, the amounts received by an investor cannot be considered an actual yield or income on his investment, since part of such payments may be a return of his capital. The redemption of shares under the Automatic Withdrawal Plan may give rise to a taxable event.
The maintenance of an Automatic Withdrawal Plan concurrently with purchases of additional shares of a Fund would be disadvantageous because of the sales charge payable with respect to such purchases. An investor may not have an Automatic Withdrawal Plan in effect and at the same time have in effect an Automatic Investment Plan or an Automatic Exchange Plan. If an investor has an Automatic Investment Plan or an Automatic Exchange Plan, such service must be terminated before an Automatic Withdrawal Plan may take effect.
The Automatic Withdrawal Plan may be terminated at any time (1) on 30 days notice to DST or from DST to the investor, (2) upon receipt by DST of appropriate evidence of the investor’s death or (3) when all shares under the Automatic Withdrawal Plan have been redeemed. Upon termination, unless otherwise requested, certificates representing remaining full shares, if any, will be delivered to the investor or his duly appointed legal representatives.

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TAXES
The following summary outlines certain federal income tax considerations relating to an investment in the Funds by a taxable U.S. investor (as defined below). This summary is intended only to provide general information to U.S. investors that hold the shares as a capital asset, is not intended as a substitute for careful tax planning, does not address any foreign, state or local tax consequences of an investment in the Fund, and does not address the tax considerations that may be relevant to investors subject to special treatment under the Code, including, without limitation, U.S. expatriates, brokers or dealers in securities, traders in securities that use the mark-to-market method of accounting, tax-exempt entities, Non-U.S. investors (except to the limited extent discussed below), regulated investment companies, REITs, grantor trusts, U.S. investors that have a functional currency other than the U.S. dollar, financial institutions, insurance companies, personal holding companies, or persons who acquire an interest in the Funds in connection with the performance of services. This summary should not be construed as legal or tax advice. This summary is based on the provisions of the Code, applicable U.S. Treasury regulations, administrative pronouncements of the IRS and judicial decisions in effect as of the date of this SAI. Those authorities may be changed, possibly retroactively, or may be subject to differing interpretations so as to result in U.S. federal income tax consequences different from those summarized herein. Prospective investors should consult their own tax advisors concerning the potential federal, state, local and foreign tax consequences of an investment in the Fund, with specific reference to their own tax situation.
As used herein, the term “U.S. investor” means an investor that, for U.S. federal income tax purposes, is (1) an individual who is a citizen or resident of the U.S., (2) a corporation, or other entity taxable as a corporation, that is created or organized in or under the laws of the U.S. or of any political subdivision thereof, (3) an estate, the income of which is subject to U.S. federal income tax regardless of its source, or (4) a trust if (i) it is subject to the primary supervision of a court within the U.S. and one or more U.S. persons as described in Code Section 7701(a)(30) have the authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. The term “Non-U.S. investor” means any investor that is not a U.S. investor, and who, in addition, is not a partnership or other fiscally transparent entity. If a partnership or other entity treated as a partnership for U.S. federal income tax purposes holds the shares, the tax treatment of a partner in such partnership or equity owner in such other entity generally will depend on the status of the partner or equity owner and the activities of the partnership or other entity.

TAXATION OF THE FUNDS IN GENERAL
Each of the Funds has elected and intends to operate in a manner that will permit it to qualify to be treated each taxable year as a “regulated investment company” under Subchapter M of the Code. To qualify, each Fund must, among other things: (a) derive at least 90% of its gross income from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, or other income (including gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies; and (b) satisfy certain diversification requirements.
As a regulated investment company, a Fund will not be subject to federal income tax on its net investment income and capital gain net income (net long-term capital gains in excess of net short-term capital losses) that it distributes to shareholders if at least 90% of its investment company taxable income for the taxable year is distributed. However, if for any taxable year a Fund does not satisfy the requirements of Subchapter M of the Code, all of its taxable income will be subject to tax at the corporate income tax rate without any deduction for distributions to shareholders, and such distributions will be taxable to shareholders as dividend income to the extent of the Fund’s current or accumulated earnings or profits. In lieu of potential disqualification, a Fund is permitted to pay a tax for certain failures to satisfy the above requirements, which, in general, are limited to those due to reasonable cause and not willful neglect.
Each Fund will be liable for a nondeductible 4% excise tax on amounts not distributed on a timely basis in accordance with a calendar year distribution requirement. To avoid the excise tax, during each calendar year the Fund must distribute, or be deemed to have distributed, (i) at least 98% of its ordinary income (not taking into account any capital gains or losses) for the calendar year, (ii) at least 98.2% of its capital gains in excess of its capital losses (adjusted for certain ordinary losses) for the twelve month period ending on October 31 (or December 31, if the Fund so elects), and (iii) all ordinary income and capital gains for previous years that were not distributed during such years. For this purpose, any income or gain retained by the Fund that is subject to corporate tax will be considered to have been distributed by year-end. The Funds intend to make sufficient distributions to avoid this 4% excise tax.
The capital losses of a Fund, if any, do not flow through to shareholders. Rather, the Fund may use its capital losses, subject to applicable limitations, to offset its capital gains without being required to pay taxes on or distribute to shareholders such gains that are offset by the losses. Any net capital losses of a Fund realized that are not used to offset capital gains may be carried forward indefinitely to reduce any future capital gains realized by the Fund in succeeding taxable years.

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TAXATION OF THE FUNDS’ INVESTMENTS
Original Issue Discount and Market Discount. For federal income tax purposes, debt securities purchased by a Fund may be treated as having original issue discount. Original issue discount represents interest for federal income tax purposes and can generally be defined as the excess of the stated redemption price at maturity of a debt obligation over the issue price. Original issue discount is treated for federal income tax purposes as income earned by the Funds, whether or not any income is actually received, and therefore is subject to the distribution requirements of the Code. Generally, the amount of original issue discount included in the income of the Fund each year is determined on the basis of a constant yield to maturity which takes into account the compounding of accrued interest. Because the Funds must include original issue discount in income regardless of whether they actually receive income, investment in original issue discount securities will make it more difficult for the Funds to make the distributions required for them to maintain their status as a regulated investment company under Subchapter M of the Code or to avoid the 4% excise tax described above.
Debt securities may be purchased by the Funds at a discount which exceeds the original issue discount remaining on the securities, if any, at the time the Funds purchased the securities. This additional discount represents market discount for federal income tax purposes. In the case of any debt security issued after July 18, 1984, having a fixed maturity date of more than one year from the date of issue and having market discount, the gain realized on disposition will be treated as interest to the extent it does not exceed the accrued market discount on the security (unless the Funds elect to include such accrued market discount in income in the tax year to which it is attributable). Generally, market discount is accrued on a daily basis. The Funds may be required to capitalize, rather than deduct currently, part or all of any direct interest expense incurred or continued to purchase or carry any debt security having market discount, unless they make the election to include market discount currently.
Options, Futures, Forward Contracts, Swap Agreements and Hedging Transactions. In general, option premiums received by a Fund are not immediately included in the income of the Fund. Instead, the premiums are recognized when the option contract expires, the option is exercised by the holder, or the Fund transfers or otherwise terminates the option (e.g., through a closing transaction). If an option written by a Fund is exercised and the Fund sells or delivers the underlying stock, the Fund generally will recognize capital gain or loss equal to (a) the sum of the strike price and the option premium received by the Fund minus (b) the Fund’s basis in the stock. Such gain or loss generally will be short-term or long-term depending upon the holding period of the underlying stock. If securities are purchased by a Fund pursuant to the exercise of a put option written by it, the Fund generally will subtract the premium received from its cost basis in the securities purchased. The gain or loss with respect to any termination of a Fund’s obligation under an option other than through the exercise of the option and related sale or delivery of the underlying stock generally will be short-term gain or loss depending on whether the premium income received by the Fund is greater or less than the amount paid by the Fund (if any) in terminating the transaction. Thus, for example, if an option written by a Fund expires unexercised, the Fund generally will recognize short-term gain equal to the premium received.
The tax treatment of certain futures contracts entered into by a Fund as well as listed non-equity options written or purchased by the Fund on U.S. exchanges (including options on futures contracts, broad-based equity indices and debt securities) may be governed by section 1256 of the Code (“section 1256 contracts”). Gains or losses on section 1256 contracts generally are considered 60% long-term and 40% short-term capital gains or losses (“60/40”), although certain foreign currency gains and losses from such contracts may be treated as ordinary in character. Also, any section 1256 contracts held by a Fund at the end of each taxable year (and, for purposes of the 4% excise tax, on certain other dates as prescribed under the Code) are “marked to market” with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as ordinary or 60/40 gain or loss, as applicable. Section 1256 contracts do not include any interest rate swap, currency swap, basis swap, interest rate cap, interest rate floor, commodity swap, equity swap, equity index swap, credit default swap, or similar agreement.
In addition to the special rules described above in respect of options and futures transactions, a Fund’s transactions in other derivatives instruments (including options, forward contracts and swap agreements) as well as its other hedging, short sale, or similar transactions, may be subject to one or more special tax rules (including the constructive sale, notional principal contract, straddle, wash sale and short sale rules). These rules may affect whether gains and losses recognized by a Fund are treated as ordinary or capital or as short-term or long-term, accelerate the recognition of income or gains to the Fund, defer losses to the Fund, and cause adjustments in the holding periods of the Fund’s securities. These rules, therefore, could affect the amount, timing and/or character of distributions to shareholders. Moreover, because the tax rules applicable to derivatives instruments are in some cases uncertain under current law, an adverse determination or future guidance by the IRS with respect to these rules (which determination or guidance could be retroactive) may affect whether a Fund has made sufficient distributions, and otherwise satisfied the relevant requirements, to maintain its qualification as a regulated investment company and avoid a Fund-level tax.
Certain of a Fund’s investments in derivatives and foreign currency-denominated instruments, and the Fund’s transactions in foreign currencies and hedging activities, may produce a difference between its book income and its taxable income. If a Fund’s book income is less than the sum of its taxable income and net tax-exempt income (if any), the Fund could
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be required to make distributions exceeding book income to qualify as a regulated investment company. If a Fund’s book income exceeds the sum of its taxable income and net tax-exempt income (if any), the distribution of any such excess will be treated as (i) a dividend to the extent of the Fund’s remaining earnings and profits (including current earnings and profits arising from tax-exempt income, reduced by related deductions), (ii) thereafter, as a return of capital to the extent of the recipient’s basis in the shares, and (iii) thereafter, as gain from the sale or exchange of a capital asset.
Foreign Currency Transactions. Under Section 988 of the Code, special rules are provided for certain foreign currency transactions. Foreign currency gains or losses from foreign currency contracts (whether or not traded in the interbank market), from futures contracts on foreign currencies that are not “regulated futures contracts,” and from unlisted or equity options are treated as ordinary income or loss under Section 988 of the Code. The Funds may elect to have foreign currency-related regulated futures contracts and listed non-equity options be subject to ordinary income or loss treatment under Section 988 of the Code. In addition, in certain circumstances, the Funds may elect capital gain or loss treatment for foreign currency transactions. The rules under Section 988 of the Code may also affect the timing of income recognized by the Funds. The Treasury Department is authorized to issue regulations excluding foreign currency gains that are not directly related to a regulated investment company’s investment in stock or securities (or its options contracts or futures contracts with respect to stock or securities) for purposes of the qualifying income test described above, and so the Funds may have to limit their investments in order to enable them to satisfy this test.
PFIC investments. A Fund may invest in securities of foreign companies that may be classified under the Code as PFICs. In general, a foreign company is classified as a PFIC if at least one-half of its assets constitute investment-type assets or 75% or more of its gross income is investment-type income. When investing in PFIC securities, a Fund generally intends to mark-to-market these securities under certain provisions of the Code and recognize any unrealized gains as ordinary income at the end of the Fund’s fiscal and excise tax years. Deductions for losses are allowable only to the extent of any current or previously recognized gains. These gains (reduced by allowable losses) are treated as ordinary income that a Fund is required to distribute, even though it has not sold or received dividends from these securities. You should also be aware that the designation of a foreign security as a PFIC security will cause its income dividends to fall outside of the definition of qualified foreign corporation dividends. These dividends generally will not qualify for the reduced rate of taxation on qualified dividends when distributed to you by a Fund. Foreign companies are not required to identify themselves as PFICs. Due to various complexities in identifying PFICs, a Fund can give no assurances that it will be able to identify portfolio securities in foreign corporations that are PFICs in time for the Fund to make a mark-to-market or other appropriate election. If a Fund is unable to identify an investment as a PFIC and thus does not make a mark-to-market election, the Fund may be subject to U.S. federal income tax on a portion of any “excess distribution” or gain from the disposition of such shares even if such income is distributed as a taxable dividend by the Fund to its shareholders. Additional charges in the nature of interest may be imposed on a Fund in respect of deferred taxes arising from such distributions or gains.
Investments in Commodities and Commodity-Linked Derivatives. The Funds may gain exposure to the commodities markets through investments in commodity index-linked derivative instruments and, in the case of the International Investors Gold Fund, CM Commodity Index Fund and Onchain Economy ETF, through its investment in the Subsidiary (discussed below). Commodities, including precious metals, are not qualifying assets for purposes of satisfying the diversification requirements and gains from these investments are not considered qualifying income for purposes of satisfying the income requirement for treatment as a regulated investment company. An IRS revenue ruling holds that income derived from commodity-linked swaps also is not qualifying income for purposes of the income requirement. In September 2016 the Internal Revenue Service announced that it will no longer issue private letter rulings on questions relating to the treatment of a corporation as a regulated investment company that require a determination of whether a financial instrument or position is a security under section 2(a)(36) of the 1940 Act. (A financial instrument or position that constitutes a security under section 2(a)(36) of the 1940 Act generates qualifying income for a corporation taxed as a regulated investment company.) The IRS also revoked private letter rulings issued to some funds regarding the treatment of income from commodity-linked notes held directly by such funds. Given the uncertainty surrounding the treatment of certain commodity-linked derivative instruments under the qualification tests for a regulated investment company, the Fund may face limits on its ability to invest directly in such derivative instruments.
Subsidiary. Each of CM Commodity Index Fund, International Investors Gold Fund and Onchain Economy ETF intends to invest a portion of its assets in its respective Subsidiary, which will each be classified as a corporation for U.S. federal income tax purposes. For U.S. federal income tax purposes, each of the Subsidiaries will be treated as a controlled foreign corporation (“CFC”) and each of the CM Commodity Index Fund, International Investors Gold Fund and Onchain Economy ETF will be treated as a “U.S. shareholder” of the respective Subsidiary. As a result, each of the CM Commodity Index Fund, International Investors Gold Fund and Onchain Economy ETF will be required to include in gross income for U.S. federal income tax purposes all of its Subsidiary’s “subpart F income,” whether or not such income is distributed to the Fund (deemed inclusions). Recently released Treasury Regulations permit the Fund to treat deemed inclusions as satisfying the Income Requirement even if the Subsidiary does not make a distribution of such income. It is expected that all of the CMCI Subsidiary, Gold Subsidiary and Onchain Subsidiary’s income will be “subpart F income.” CM Commodity Index Fund,
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International Investors Gold Fund and Onchain Economy ETF’s recognition of their Subsidiary’s “subpart F income” will increase the Fund’s tax basis in the Subsidiary. Distributions by the CMCI Subsidiary, the Gold Subsidiary and the Onchain Subsidiary to CM Commodity Index Fund, International Investors Gold Fund and Onchain Economy ETF, respectively will be tax-free, to the extent of its previously undistributed “subpart F income,” and will correspondingly reduce each of CM Commodity Index Fund, International Investors Gold Fund and Onchain Economy ETF’s tax basis in its respective Subsidiary. “Subpart F income” is generally treated as ordinary income, regardless of the character of the CMCI Subsidiary, Gold Subsidiary or Onchain Subsidiary’s underlying income. If a net loss is realized by the CMCI Subsidiary, Gold Subsidiary or Onchain Subsidiary, such loss is not generally available to offset the income earned by the Subsidiary’s parent Fund.
A foreign corporation, such as the CMCI Subsidiary, the Gold Subsidiary or the Onchain Subsidiary, will generally not be subject to U.S. federal income taxation unless it is deemed to be engaged in a U.S. trade or business. It is expected that each of the CMCI Subsidiary, the Gold Subsidiary and the Onchain Subsidiary will conduct its activities in a manner so as to meet the requirements of a safe harbor under Section 864(b)(2) of the Code under which the Subsidiary may engage in trading in stocks or securities or certain commodities under certain circumstances without being deemed to be engaged in a U.S. trade or business. However, if certain of the CMCI Subsidiary, Gold Subsidiary or Onchain Subsidiary’s activities were determined not to be of the type described in the safe harbor (which the CM Commodity Index Fund, the International Investor Gold Fund and the Onchain Economy ETF do not expect), then the activities of such Subsidiary may constitute a U.S. trade or business, or be taxed as such.
In general, foreign corporations, such as the CMCI Subsidiary, the Gold Subsidiary and the Onchain Subsidiary, that do not conduct a U.S. trade or business are nonetheless subject to tax at a flat rate of 30 percent (or lower tax treaty rate), generally payable through withholding, on the gross amount of certain U.S.-source income that is not effectively connected with a U.S. trade or business. There is presently no tax treaty in force between the U.S. and the Cayman Islands, where each of the CMCI Subsidiary, the Gold Subsidiary and the Onchain Subsidiary is a resident for U.S. federal income tax purposes, that would reduce this rate of withholding tax. It is not expected that the CMCI Subsidiary, the Gold Subsidiary or the Onchain Subsidiary will derive income subject to such withholding tax.
Investments in Chinese Bonds
The Emerging Markets Bond Fund may invest in RMB-denominated bonds issued in the PRC.
There are some uncertainties in the PRC tax rules governing taxation of income and gains from investments in the PRC due to the lack of formal guidance from the PRC’s tax authorities that could result in unexpected tax liabilities. On the basis that nonresidents enterprises (i) do not have places of business, establishments or permanent establishments in the PRC; and (ii) are not PRC tax resident enterprises, China generally may impose Withholding Income Tax (“WHT”) at a rate of 10% (which may be reduced by the double taxation agreement/arrangement) on interest derived by nonresidents, from issuers resident in the PRC.  However, on November 7, 2018, the PRC Ministry of Finance (MOF) and PRC State Administration of Taxation (SAT) jointly issued Caishui 2018 108 (Circular 108) to clarify the temporary three-year tax exemption on bond interest derived by foreign institutional investors (FIIs). Pursuant to Circular 108, FIIs are temporarily exempt from withholding income tax and value added tax with respect to bond interest income derived in the domestic bond market (via CIBM and Hong Kong Bond Connect) from November 7, 2018 to November 6, 2021. On November 26, 2021, the PRC Ministry of Finance and PRC State Taxation Administration jointly issued Caishui [2021] No. 34 (“Circular 34”) to formally extend the tax exemption period provided in Circular 108 to December 31, 2025. Additionally, prior to November 7, 2018, interest received by nonresidents from PRC government bonds issued by the PRC Ministry of Finance (“MOF”) or local government bonds was exempt from WHT. The term “local government bonds” refers to bonds which are approved by the PRC State Council to be issued by governments of provinces, autonomous regions, municipalities directly under the PRC government or municipalities separately listed on the state plan. 

Under the PRC Corporate Income Tax regime, PRC also imposes WHT at a rate of 10% (subject to treaty relief) on PRC-sourced capital gains derived by nonresident enterprises, provided that the nonresident enterprises (i) do not have places of business, establishments or permanent establishments in the PRC; and (ii) are not PRC tax resident enterprises. The Emerging Markets Bond Fund currently considers capital gains derived from bonds issued by PRC entities to be non PRC-sourced income, and thus nonresident enterprises should not be subject to WHT on such gains.
Gains derived by nonresidents from the trading of bonds issued by PRC entities should be exempt from value-added tax. 
PRC rules for taxation of nonresidents trading bonds via Bond Connect are evolving, and the PRC tax regulations to be issued by the PRC State Administration of Taxation and/or PRC MOF to clarify the subject matter may apply retrospectively, even if such rules are adverse to the nonresident investors. If the PRC tax authorities were to issue differing formal guidance or tax rules regarding the taxation of interest and capital gains derived by nonresident investors from PRC bonds, and / or begin collecting WHT on gains from such investments, the Emerging Markets Bond Fund could be subject to additional tax liabilities.

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TAXATION OF U.S. INVESTORS
Fund Distributions. Distributions of net investment income generally are taxable as ordinary income to the extent of a Fund’s earnings and profits, a portion of which may be qualified dividends eligible to be taxed at reduced rates as discussed below. Dividends of net investment income and the excess of net short-term capital gain over net long-term capital loss are generally taxable as ordinary income to shareholders. Distributions of net capital gain (the excess of net long-term capital gain over net short-term capital loss) that are properly reported by the Fund as such are taxable to shareholders as long-term capital gain, regardless of the length of time the shares of the Fund have been held by such shareholders, except to the extent of gain from a sale or disposition of collectibles, such as precious metals, taxable currently at a maximum 24% rate. Any loss incurred on a redemption or exchange of shares held for six months or less will be treated as long-term capital loss to the extent of any long-term capital gain distributed to you by the Fund on those shares. Distributions by a Fund that are not paid from earnings and profits will be treated as a return of capital to the extent of (and in reduction of) the shareholder’s tax basis in his shares; any excess will be treated as gain from the sale of shares.
Dividends of net investment income and distributions of net capital gain will be taxable as described above whether received in cash or reinvested in additional shares. When distributions are received in the form of shares issued by the Funds, the amount of the dividend/distribution deemed to have been received by participating shareholders generally is the amount of cash which would otherwise have been received. In such case, participating shareholders will have a tax liability without a corresponding receipt of cash and will also have a basis for federal income tax purposes in each share received from the Funds equal to such amount of cash.
Dividends and/or distributions by the Funds result in a reduction in the net asset value of the Funds’ shares. Should a dividend/distribution reduce the net asset value below a shareholder’s cost basis, such dividend/distribution nevertheless would be taxable to the shareholder as ordinary income or long-term capital gain as described above, even though, from an investment standpoint, it may constitute a partial return of capital. In particular, investors should be careful to consider the tax implications of buying shares just prior to a dividend/distribution. The price of shares purchased at that time includes the amount of any forthcoming dividend/distribution. Those investors purchasing shares just prior to a dividend/distribution will then receive a return of their investment upon payment of such dividend/distribution which will nevertheless be taxable to them.
Qualified Dividend Income. A portion of the dividend income received by a Fund may constitute qualified dividend income eligible to be taxed at a maximum rate of 20% to individuals, trusts and estates. If the aggregate amount of qualified dividend income received by the Fund during any taxable year is less than 95% of the Fund’s gross income (as specifically defined for that purpose), qualified dividend treatment applies only if and to the extent reported by the Fund as qualified dividend income. A Fund may report such dividends as qualified dividend income only to the extent the Fund itself has qualified dividend income for the taxable year with respect to which such dividends are made. Qualified dividend income is generally dividend income from taxable domestic corporations and certain foreign corporations (e.g., foreign corporations incorporated in a possession of the United States or in certain countries with comprehensive tax treaties with the United States, or whose stock is readily tradable on an established securities market in the United States), provided the Fund has held the stock in such corporations for more than 60 days during the 121 day period beginning on the date which is 60 days before the date on which such stock becomes ex-dividend with respect to such dividend (the “holding period requirement”). In order to be eligible for the 20% maximum rate on dividends from the Fund attributable to qualified dividends, shareholders must separately satisfy the holding period requirement with respect to their Fund shares.
Dividends-Received Deduction for Corporations. For corporate shareholders, a portion of the dividends paid by a Fund may qualify for the 50% corporate dividends-received deduction. The portion of dividends paid by the Fund that so qualifies will be reported by the Fund to shareholders each year and cannot exceed the gross amount of dividends received by the Fund from domestic (U.S.) corporations. The availability of the dividends-received deduction is subject to certain holding period and debt financing restrictions that apply to both the Fund and the investor. Specifically, the amount that the Fund may report as eligible for the dividends-received deduction will be reduced or eliminated if the shares on which the dividends earned by the Fund were debt-financed or held by the Fund for less than a minimum period of time, generally 46 days during a 91-day period beginning 45 days before the stock becomes ex-dividend. Similarly, if your Fund shares are debt-financed or held by you for less than a 46-day period then the dividends-received deduction for Fund dividends on your shares may also be reduced or eliminated. Income derived by the Fund from investments in derivatives, fixed income and foreign securities generally is not eligible for this treatment.
Sales Load (All Funds except Onchain Economy ETF). If a shareholder (i) incurs a sales load in acquiring shares in the Funds, and (ii) by reason of incurring such charge or making such acquisition acquires the right to acquire shares of one or more regulated investment companies without the payment of a load or with the payment of a reduced load (“reinvestment right”), and (iii) disposes of the shares before the 91st day after the date on which the shares were acquired, and (iv) subsequently acquires shares in that regulated investment company or in another regulated investment company and the otherwise applicable load charge is reduced pursuant to the reinvestment right, then the load charge will not be taken into
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account for purposes of determining the shareholder’s gain or loss on the disposition. For sales charges incurred in taxable years beginning after December 22, 2010, this sales charge deferral rule shall apply only when a shareholder makes such new acquisition of Fund shares or shares of a different regulated investment company during the period beginning on the date the original Fund shares are disposed of and ending on January 31 of the calendar year following the calendar year of the disposition of the original Fund shares. To the extent such charge is not taken into account in determining the amount of gain or loss, the charge will be treated as incurred in connection with the subsequently acquired shares and will have a corresponding effect on the shareholder’s basis in such shares.
Pass-through of Foreign Tax Credits. A Fund may be subject to a tax on dividend or interest income received from securities of a non-U.S. issuer withheld by a foreign country at the source. The U.S. has entered into tax treaties with many foreign countries that entitle a Fund to a reduced rate of tax or exemption from tax on such income. It is impossible to determine the effective rate of foreign tax in advance since the amount of a Fund’s assets to be invested within various countries is not known. If more than 50% of the value of a Fund’s total assets at the close of a taxable year consists of stocks or securities in foreign corporations, and the Fund satisfies the holding period requirements, the Fund may elect to pass through to its shareholders the foreign income taxes paid thereby. A qualified fund of funds, i.e. a Fund at least 50 percent of the value of the total assets of which (at the close of each quarter of the taxable year) is represented by interests in other RICs, is eligible to pass-through to shareholders foreign tax credits. In such case, the shareholders would be treated as receiving, in addition to the distributions actually received by the shareholders, their proportionate share of foreign income taxes paid by the Fund or received from underlying funds, and will be treated as having paid such foreign taxes. The shareholders generally will be entitled to deduct or, subject to certain limitations, claim a foreign tax credit with respect to such foreign income taxes. A foreign tax credit may be allowed for shareholders who hold shares of the Fund for at least 16 days during the 31-day period beginning on the date that is 15 days before the ex-dividend date. Under certain circumstances, individual shareholders who have been passed through foreign tax credits of no more than $300 ($600 in the case of married couples filing jointly) during a tax year can elect to claim the foreign tax credit for these amounts directly on their federal income tax returns (IRS Forms 1040) without having to file a separate Form 1116 or having to comply with most foreign tax credit limitations, provided certain other requirements are met.
Backup Withholding. Each Fund may be required to backup withhold federal income tax at a current rate of 24% from dividends paid to any shareholder who fails to furnish a certified taxpayer identification number (“TIN”) or who fails to certify that he or she is exempt from such withholding, or who the IRS notifies the Fund as having provided the Fund with an incorrect TIN or failed to properly report interest or dividends for federal income tax purposes. Any such withheld amount will be fully creditable on the shareholder’s U.S. federal income tax return, provided certain requirements are met. If a shareholder fails to furnish a valid TIN upon request, the shareholder can also be subject to IRS penalties.
Medicare Tax. A U.S. person that is an individual is subject to a 3.8% tax on the lesser of (1) the U.S. person’s “net investment income” for the relevant taxable year and (2) the excess of the U.S. person’s modified gross income for the taxable year over a certain threshold (which currently is between $125,000 and $250,000, depending on the individual’s circumstances). Estates and trusts that do not fall into a special class of trusts that is exempt from such tax are subject to the same 3.8% tax on the lesser of their undistributed net investment income and the excess of their adjusted gross income over a certain threshold. Net investment income generally includes dividends on our stock and gain from the sale of our stock. A prospective investor that is a U.S. individual, estate or trust is urged to consult a tax advisor regarding the applicability of this tax.
Dividends Declared in December and Paid in January. Ordinarily, shareholders are required to take distributions by the Fund into account in the year in which the distributions are made. However, dividends declared in October, November or December of any year and payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders (and made by the Fund) on December 31 of such calendar year if such dividends are actually paid in January of the following year. Shareholders will be advised annually as to the U.S. federal income tax consequences of distributions made (or deemed made) during the year in accordance with the guidance that has been provided by the IRS.
Wash Sales. All or a portion of any loss that you realize on a redemption of your Fund shares will be disallowed to the extent that you buy other shares in the Fund (through reinvestment of dividends or otherwise) within 30 days before or after your share redemption. Any loss disallowed under these rules will be added to your tax basis in the new shares.
Securities lending. While securities are loaned out by a Fund, the Fund generally will receive from the borrower amounts equal to any dividends or interest paid on the borrowed securities. For federal income tax purposes, payments made “in lieu of” dividends are not considered dividend income. These distributions will neither qualify for the reduced rate of taxation for individuals on qualified dividends nor the 50% dividends-received deduction for corporations. Also, any foreign tax withheld on payments made “in lieu of” dividends or interest will not qualify for the pass-through of foreign tax credits to shareholders.
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Reportable Transactions. Under Treasury regulations, if a shareholder recognizes a loss with respect to the Fund’s shares of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder (or certain greater amounts over a combination of years), the shareholder must file with the IRS a disclosure statement on Form 8886. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of their individual circumstances.
    
TAXATION OF NON-U.S. INVESTORS
The U.S. federal income tax treatment of a Non-U.S. investor investing in the Fund is complex and will vary depending upon the circumstances of the Non-U.S. investor and the activities of the Fund. Distributions of ordinary income paid to Non-U.S. investors generally will be subject to a 30% U.S. withholding tax unless a reduced rate of withholding or a withholding exemption is provided under an applicable treaty. Exemptions from U.S. withholding tax are provided for certain capital gain dividends paid by a Fund from net long-term capital gains, interest-related dividends and short-term capital gain dividends, if such amounts are reported by a Fund. However, notwithstanding such exemptions from U.S. withholding at the source, any such dividends and distributions of income and capital gains will be subject to backup withholding at a rate of 24% if you fail to properly certify that you are not a U.S. person. Prospective Non-U.S. investors are urged to consult their tax advisors regarding the specific tax consequences applicable to them.

FOREIGN ACCOUNT TAX COMPLIANCE ACT
As part of the Foreign Account Tax Compliance Act, (“FATCA”), the Funds are required to impose a 30% withholding tax on income dividends paid by the Fund to (i) foreign financial institutions (“FFI’s”), including non-U.S. investment funds, unless they agree to collect and disclose to the IRS information regarding their direct and indirect U.S. account holders and (ii) certain nonfinancial foreign entities (“NFFE’s”), unless they certify certain information regarding their direct and indirect U.S. owners. After December 31, 2018, FATCA withholding also would have applied to certain capital gain distributions, return of capital distributions and the proceeds arising from the sale of Fund shares; however, based on proposed regulations recently issued by the IRS, which can be relied on currently, such withholding is no longer required unless final regulations provide otherwise (which is not expected). To avoid possible withholding, FFI’s, other than FFIs subject to special treatment under certain intergovernmental agreements, will need to enter into agreements with the IRS which state that they will provide the IRS information, including the names, account numbers and balances, addresses and taxpayer identification numbers of U.S. account holders and comply with due diligence procedures with respect to the identification of U.S. accounts as well as agree to withhold tax on certain types of withholdable payments made to non-compliant foreign financial institutions or to applicable foreign account holders who fail to provide the required information to the IRS, or similar account information and required documentation to a local revenue authority, should an applicable intergovernmental agreement be implemented. NFFE’s will need to provide certain information regarding each substantial U.S. owner or certifications of no substantial U.S. ownership, unless certain exceptions apply, or agree to provide certain information to the IRS.
The Funds may be subject to the FATCA withholding obligation, and also will be required to perform due diligence reviews to classify foreign entity investors for FATCA purposes. Investors are required to agree to provide information necessary to allow the Funds to comply with the FATCA rules. If the Funds are required to withhold amounts from payments pursuant to FATCA, investors will receive distributions that are reduced by such withholding amounts.
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ADDITIONAL PURCHASE AND REDEMPTION INFORMATION (All Funds except Onchain Economy ETF)
PROCESSING AND SERVICE FEES
Dealers and intermediaries may charge their customers a processing or service fee in connection with the purchase or redemption of fund shares. The amount and applicability of such a fee is determined and disclosed to its customers by each individual dealer. Processing or service fees typically are fixed, nominal dollar amounts and are in addition to the sales and other charges described in the Prospectuses and this SAI. Your dealer will provide you with specific information about any processing or service fees you will be charged.
REDEMPTIONS IN KIND
The Trust has reserved the right to redeem its shares in kind.  With respect to such reservation of rights, each of Global Resources Fund and International Investors Gold Fund has committed itself to pay in cash all requests for redemption by any shareholder of record limited in amount with respect to each shareholder of record during any ninety-day period to the lesser of (i) $250,000 or (ii) 1% of the net asset value of such company at the beginning of such period.
REDEMPTIONS INITIATED BY A FUND
Each Fund reserves the right to redeem your shares in the Fund if the Fund’s Board determines that the failure to so redeem may have materially adverse consequences to the shareholders of the Fund. For example, the Board may make such a determination if a shareholder’s residence in a particular foreign jurisdiction would cause the Fund to be subject to burdensome regulatory restrictions.

DESCRIPTION OF THE TRUST
The Trust is an open-end management investment company organized as a business trust under the laws of the Commonwealth of Massachusetts on April 3, 1985. On May 1, 2016, Van Eck Funds changed its name to VanEck Funds.
The Board has authority to issue an unlimited number of shares of beneficial interest of each Fund, $.001 par value.
Emerging Markets Bond Fund, International Investors Gold Fund and Onchain Economy ETF are classified as non-diversified funds under the 1940 Act. CM Commodity Index Fund, Emerging Markets Fund, Global Resources Fund and VanEck Morningstar Wide Moat Fund are classified as diversified funds under the 1940 Act. A diversified fund is a fund which meets the following requirements: At least 75% of the value of its total assets is represented by cash and cash items (including receivables), Government securities, securities of other investment companies and other securities for the purpose of this calculation limited in respect of any one issuer to an amount not greater than 5% of the value of the fund’s total assets, and to not more than 10% of the outstanding voting securities of such issuer. A non-diversified fund is any fund other than a diversified fund. This means that the fund at the close of each quarter of its taxable year must, in general, limit its investment in the securities of a single issuer to (i) no more than 25% of its assets, (ii) with respect to 50% of the fund’s assets, no more than 5% of its assets, and (iii) the fund will not own more than 10% of outstanding voting securities. Each Fund is a separate pool of assets of the Trust which is separately managed and which may have a different investment objective from that of another Fund. The Board has the authority, without the necessity of a shareholder vote, to create any number of new series.
Each share of a Fund has equal dividend, redemption and liquidation rights and when issued is fully paid and non-assessable by the Trust. Under the Trust’s Amended and Restated Master Trust Agreement, as amended (the “Master Trust Agreement”), no annual or regular meeting of shareholders is required. Thus, there will ordinarily be no shareholder meetings unless required by the 1940 Act. The Board is a self-perpetuating body unless and until fewer than 50% of the Trustees, then serving as Trustees, are Trustees who were elected by shareholders. At that time a meeting of shareholders will be called to elect additional trustees. On any matter submitted to the shareholders, the holder of each Trust share is entitled to one vote per share (with proportionate voting for fractional shares). Under the Master Trust Agreement, any Trustee may be removed by vote of two-thirds of the outstanding Trust shares, and holders of ten percent or more of the outstanding shares of the Trust can require the Board to call a meeting of shareholders for purposes of voting on the removal of one or more Trustees. Shares of each Fund vote as a separate class, except with respect to the election of Trustees and as otherwise required by the 1940 Act. On matters affecting an individual Fund, a separate vote of that Fund is required. Shareholders of a Fund are not entitled to vote on any matter not affecting that Fund. In accordance with the 1940 Act, under certain circumstances, the Trust will assist shareholders in communicating with other shareholders in connection with calling a special meeting of shareholders.
Under Massachusetts law, the shareholders of the Trust could, under certain circumstances, be held personally liability for the obligations of the Trust. However, the Master Trust Agreement disclaims shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the Trustees. The Master Trust Agreement provides for indemnification out of the Trust’s property of all losses and expenses of any shareholder held personally liable for the obligations of the Trust. Thus, the risk of a shareholder
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incurring financial loss on account of shareholder liability is limited to circumstances in which the Trust itself would be unable to meet its obligations. The Advisers believe that, in view of the above, the risk of personal liability to shareholders is remote.

ADDITIONAL INFORMATION
Custodian. State Street Bank and Trust Company, One Lincoln Street, Boston, MA 02111, serves as the custodian of the Trust’s portfolio securities, cash, coins and bullion. The Custodian is authorized, upon the approval of the Trust, to establish credits or debits in dollars or foreign currencies with, and to cause portfolio securities of a Fund to be held by its overseas branches or subsidiaries, and foreign banks and foreign securities depositories which qualify as eligible foreign custodians under the rules adopted by the SEC.
Transfer Agent (all Funds except Onchain Economy ETF). SS&C GIDS, Inc., 801 Pennsylvania Avenue, Suite 218407, Kansas City, MO 64105-1307, serves as transfer agent for all funds except Onchain Economy ETF.
Transfer Agent (Onchain Economy ETF only). State Street Bank and Trust Company, One Lincoln Street, Boston, MA 02111, serves as transfer agent for Onchain Economy ETF.

Independent Registered Public Accounting Firm. PricewaterhouseCoopers LLP, 300 Madison Avenue, New York, NY 10017, serves as independent registered public accounting firm for the Trust.
Counsel. Stradley Ronon Stevens and Young LLP, 2005 Market Street, Suite 2600, Philadelphia, PA 19103, serves as counsel to the Trust.

FINANCIAL STATEMENTS
The audited financial statements of the Funds (except Onchain Economy ETF) for the fiscal year ended December 31, 2024 are incorporated by reference from the Funds’ filings on Form N-CSR. Onchain Economy ETF commenced operations on or about the date of this SAI and therefore does not have a financial history. The Funds’ filings on Form N-CSR are available at no charge by visiting the VanEck website at vaneck.com, or upon written or telephone request to the Trust at the address or telephone number set forth on the first page of this SAI.

LICENSING AGREEMENTS AND DISCLAIMERS
VEAC has entered into a licensing agreement with Morningstar to use the Wide Moat Index. VanEck Morningstar Wide Moat Fund is entitled to use the Wide Moat Index pursuant to a sub-licensing arrangement with VEAC.
VanEck Morningstar Wide Moat Fund is not sponsored, endorsed, sold or promoted by Morningstar. Morningstar makes no representation or warranty, express or implied, to the shareholders of VanEck Morningstar Wide Moat Fund or any member of the public regarding the advisability of investing in securities generally or in VanEck Morningstar Wide Moat Fund in particular or the ability of the Fund to track general stock market performance. Morningstar’s only relationship to VEAC is the licensing of certain service marks and service names of Morningstar and of the Wide Moat Index, which are determined, composed and calculated by Morningstar without regard to VEAC or VanEck Morningstar Wide Moat Fund. Morningstar has no obligation to take the needs of VEAC or the shareholders of the VanEck Morningstar Wide Moat Fund into consideration in determining, composing or calculating the Wide Moat Index. Morningstar is not responsible for and has not participated in the determination of the prices and amount of VanEck Morningstar Wide Moat Fund or the timing of the issuance or sale of the Fund or in the determination or calculation of the equation by which the Fund is converted into cash. Morningstar has no obligation or liability in connection with the administration, marketing or trading of VanEck Morningstar Wide Moat Fund.
MORNINGSTAR DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE WIDE MOAT INDEX OR ANY DATA INCLUDED THEREIN AND MORNINGSTAR SHALL HAVE NOT LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. MORNINGSTAR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY VEAC, SHAREHOLDERS OF THE VANECK MORNINGSTAR WIDE MOAT FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE WIDE MOAT INDEX OR ANY DATA INCLUDED THEREIN. MORNINGSTAR MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE WIDE MOAT INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL MORNINGSTAR HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
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VEAC has also entered into a licensing agreement with UBS AG, London (“UBS”) to use the UBS Constant Maturity Commodity Total Return Index (the “CMCI”). The CM Commodity Index Fund is entitled to use the CMCI pursuant to a sub-licensing arrangement with VEAC.
UBS owns or exclusively licenses all proprietary rights with respect to the CMCI. Any third-party product based on or related to the CMCI (“Product”) may only be issued upon the prior joint written approval of UBS and upon the execution of a license agreement between UBS and the party intending to launch a Product (a “Licensee”). In no way does UBS sponsor or endorse, nor is it otherwise involved in the issuance and offering of a Product nor does it make any representation or warranty, express or implied, to the holders of the Product or any member of the public regarding the advisability of investing in the Product or commodities generally or in futures particularly, or as to results to be obtained from the use of the CMCI or from the Product. Further, UBS does not provide investment advice to any Licensee specific to the Product, other than providing the CMCI as agreed in the license agreement with the Licensee, and which will be done without consideration of the particular needs of the Product or the Licensee. UBS specifically disclaims any liability to any party for any inaccuracy in the data on which the CMCI is based, for any mistakes, errors, omissions or interruptions in the calculation and/or dissemination of the Fund, or for the manner in which such is applied in connection with the issuance and offering of a Product. In no event shall UBS have any liability to any party for any lost profits or indirect, punitive, special or consequential damages or losses.

THIS IS NOT AN OFFER OR SOLICITATION BY UBS OF AN OFFER TO BUY OR SELL ANY SECURITY OR INVESTMENT. PAST PERFORMANCE OF THE UBS CONSTANT MATURITY COMMODITY INDEX IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
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APPENDIX A
VEAC AND VEARA’S PROXY VOTING POLICIES
VANECK PROXY VOTING POLICIES
VanEck (the “Adviser” or “VanEck”) has adopted the following policies and procedures which are reasonably designed to ensure that proxies are voted in a manner that is consistent with the best interests of its clients in accordance with its fiduciary duties and Rule 206(4)-6 under the Investment Advisers Act of 1940. When an adviser has been granted proxy voting authority by a client, the adviser owes its clients the duties of care and loyalty in performing this service on their behalf. The duty of care requires the adviser to monitor corporate actions and vote client proxies. The duty of loyalty requires the adviser to cast the proxy votes in a manner that is consistent with the best interests of the client.
Rule 206(4)-6 also requires the Adviser to disclose information about the proxy voting procedures to its clients and to inform clients how to obtain information about how their proxies were voted. Additionally, Rule 204-2 under the Advisers Act requires the Adviser to maintain certain proxy voting records.
An adviser that exercises voting authority without complying with Rule 206(4)-6 will be deemed to have engaged in a “fraudulent, deceptive, or manipulative” act, practice or course of business within the meaning of Section 206(4) of the Advisers Act.
The Adviser intends to vote all proxies in accordance with applicable rules and regulations, and in the best interests of clients without influence by real or apparent conflicts of interest. To assist in its responsibility for voting proxies and the overall voting process, the Adviser has engaged an independent third party proxy voting specialist, Glass Lewis & Co., LLC. The services provided by Glass Lewis include in-depth research, global issuer analysis, and voting recommendations as well as vote execution, reporting and recordkeeping.
Resolving Material Conflicts of Interest
When a material conflict of interest exists, proxies will be voted in the following manner:
1. Strict adherence to the Glass Lewis guidelines, or
2.The potential conflict will be disclosed to the client:
a.with a request that the client vote the proxy,
b.with a recommendation that the client engage another party to determine how the proxy should be voted or
c.if the foregoing are not acceptable to the client, disclosure of how VanEck intends to vote and a written consent to that vote by the client.
Any deviations from the foregoing voting mechanisms must be approved by the Chief Compliance Officer with a written explanation of the reason for the deviation.
A material conflict of interest means the existence of a business relationship between a portfolio company or an affiliate and the Adviser, any affiliate or subsidiary, or an “affiliated person” of a VanEck mutual fund. Examples of when a material conflict of interest exists include a situation where the adviser provides significant investment advisory, brokerage or other services to a company whose management is soliciting proxies; an officer of the Adviser serves on the board of a charitable organization that receives charitable contributions from the portfolio company and the charitable organization is a client of the Adviser; a portfolio company that is a significant selling agent of the Adviser’s products and services solicits proxies; a broker-dealer or insurance company that controls 5% or more of the Adviser’s assets solicits proxies; the Adviser serves as an investment adviser to the pension or other investment account of the portfolio company; the Adviser and the portfolio company have a lending relationship. In each of these situations voting against management may cause the Adviser a loss of revenue or other benefit.
Client Inquiries
All inquiries by clients as to how the Adviser has voted proxies must immediately be forwarded to Portfolio Administration.
Disclosure to Clients:
1.Notification of Availability of Information
a.Client Brochure - The Client Brochure or Part II of Form ADV will inform clients that they can obtain information from the Adviser on how their proxies were voted. The Client Brochure or Part II of Form ADV will be mailed to each client annually. The Legal Department will be responsible for coordinating the mailing with Sales/Marketing Departments.
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2.Availability of Proxy Voting Information
a.At the client’s request or if the information is not available on the Adviser’s website, a hard copy of the account’s proxy votes will be mailed to each client.
Recordkeeping Requirements
1. VanEck will retain the following documentation and information for each matter relating to a portfolio security with respect to which a client was entitled to vote:
a.proxy statements received;
b.identifying number for the portfolio security;
c.shareholder meeting date;
d.brief identification of the matter voted on;
e.whether the vote was cast on the matter;
f.how the vote was cast (e.g., for or against proposal, or abstain; for or withhold regarding election of directors);
g.records of written client requests for information on how the Adviser voted proxies on behalf of the client;
h.a copy of written responses from the Adviser to any written or oral client request for information on how the Adviser voted proxies on behalf of the client; and any documents prepared by the Adviser that were material to the decision on how to vote or that memorialized the basis for the decision, if such documents were prepared.
2.Copies of proxy statements filed on EDGAR, and proxy statements and records of proxy votes maintained with a third party (i.e., proxy voting service) need not be maintained. The third party must agree in writing to provide a copy of the documents promptly upon request.
3.If applicable, any document memorializing that the costs of voting a proxy exceed the benefit to the client or any other decision to refrain from voting, and that such abstention was in the client’s best interest.
4.Proxy voting records will be maintained in an easily accessible place for five years, the first two at the office of the Adviser. Proxy statements on file with EDGAR or maintained by a third party and proxy votes maintained by a third party are not subject to these particular retention requirements.
Voting Foreign Proxies
At times the Adviser may determine that, in the best interests of its clients, a particular proxy should not be voted. This may occur, for example, when the cost of voting a foreign proxy (translation, transportation, etc.) would exceed the benefit of voting the proxy or voting the foreign proxy may cause an unacceptable limitation on the sale of the security. Any such instances will be documented by the Portfolio Manager and reviewed by the Chief Compliance Officer.
Securities Lending
Certain portfolios managed by the Adviser participate in securities lending programs to generate additional revenue. Proxy voting rights generally pass to the borrower when a security is on loan. The Adviser will use its best efforts to recall a security on loan and vote such securities if the Portfolio Manager determines that the proxy involves a material event.
Proxy Voting Policy
The Adviser has reviewed the Glass Lewis Proxy Guidelines (“Guidelines”) and has determined that the Guidelines are consistent with the Adviser’s proxy voting responsibilities and its fiduciary duty with respect to its clients. The Adviser will review any material amendments to the Guidelines.
While it is the Adviser’s policy to generally follow the Guidelines, the Adviser retains the right, on any specific proxy, to vote differently from the Guidelines, if the Adviser believes it is in the best interests of its clients. Any such exceptions will be documented by the Adviser and reviewed by the Chief Compliance Officer.
The portfolio manager or analyst covering the security is responsible for making proxy voting decisions. Portfolio Administration, in conjunction with the portfolio manager and the custodian, is responsible for monitoring corporate actions and ensuring that corporate actions are timely voted.
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United States
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GLASS LEWIS
2025 Benchmark Policy Guidelines
www.glasslewis.com
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Table of Contents
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Stock Exchange Diversity Disclosure Requirements43
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About Glass Lewis
Glass Lewis is the world’s choice for governance solutions. We enable institutional investors and publicly
listed companies to make informed decisions based on research and data. We cover 30,000+ meetings each
year, across approximately 100 global markets. Our team has been providing in-depth analysis of companies
since 2003, relying solely on publicly available information to inform its policies, research, and voting
recommendations.
Our customers include the majority of the world’s largest pension plans, mutual funds, and asset
managers, collectively managing over $40 trillion in assets. We have teams located across the United States,
Europe, and Asia-Pacific giving us global reach with a local perspective on the important governance issues.
Investors around the world depend on Glass Lewis’ Viewpoint platform to manage their proxy voting, policy
implementation, recordkeeping, and reporting. Our industry leading Proxy Paper product provides
comprehensive environmental, social, and governance research and voting recommendations weeks ahead of
voting deadlines. Public companies can also use our innovative Report Feedback Statement to deliver their
opinion on our proxy research directly to the voting decision makers at every investor client in time for voting
decisions to be made or changed.
The research team engages extensively with public companies, investors, regulators, and other industry
stakeholders to gain relevant context into the realities surrounding companies, sectors, and the market in
general. This enables us to provide the most comprehensive and pragmatic insights to our customers.
Join the Conversation
Glass Lewis is committed to ongoing engagement with all market participants.
info@glasslewis.com|www.glasslewis.com
2024 Benchmark Policy Guidelines — United States
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Guidelines Introduction
Summary of Changes for 2025
Glass Lewis evaluates these guidelines on an ongoing basis and formally updates them on an annual basis. This
year we’ve made noteworthy revisions in the following areas, which are summarized below but discussed in
greater detail in the relevant section of this document:
Update: 17 December 2024. We have removed our discussion on page 42 of stock exchange diversity disclosure
requirements.
Board Oversight of AI
We have included a new discussion on our approach to artificial intelligence (AI)-related risk oversight. In recent
years, companies have rapidly begun to develop and adopt uses for artificial intelligence (AI) technologies
throughout various aspects of their operations. Deployed and overseen effectively, AI technologies have the
potential to make companies’ operations and systems more efficient and productive. However, as the use of
these technologies has grown, so have the potential risks associated with companies’ development and use of
AI. Given these potential risks, the benchmark policy takes the view that boards should be cognizant of, and take
steps to mitigate exposure to, any material risks that could arise from their use or development of AI.
In the absence of material incidents related to a company’s use or management of AI-related issues, our
benchmark policy will generally not make voting recommendations on the basis of a company’s oversight of, or
disclosure concerning, AI-related issues. However, in instances where there is evidence that insufficient
oversight and/or management of AI technologies has resulted in material harm to shareholders, Glass Lewis will
review a company’s overall governance practices and identify which directors or board-level committees have
been charged with oversight of AI-related risks. We will also closely evaluate the board’s response to, and
management of, this issue as well as any associated disclosures and the benchmark policy may recommend
against appropriate directors should we find the board’s oversight, response or disclosure concerning AI-related
issues to be insufficient.
Change-In-Control Provisions
We have updated our discussion of change-in-control provisions in the section “The Link Between Compensation
and Performance” to define our benchmark policy view that companies that allow for committee discretion over
the treatment of unvested awards should commit to providing clear rationale for how such awards are treated
in the event a change in control occurs.
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Clarifying Amendments
The following clarifications of our existing policies are included this year:
Board Responsiveness to Shareholder Proposals
We have revised our discussion of board responsiveness to shareholder proposal to reflect that when
shareholder proposals receive significant shareholder support (generally more than 30% but less than majority
of votes cast), the benchmark policy generally takes the view that boards should engage with shareholders on
the issue and provide disclosure addressing shareholder concerns and outreach initiatives.
Reincorporation
We have revised our discussion on reincorporations to reflect that we review all proposals to reincorporate to a
different state or country on a case-by-case basis. Our review includes the changes in corporate governance
provisions, especially those relating to shareholder rights, material differences in corporate statutes and legal
precedents, and relevant financial benefits, among other factors, resulting from the change in domicile.
Approach to Executive Pay Program
We have provided some clarifying statements to the discussion of in the section titled “The Link Between
Compensation and Performance” to emphasize Glass Lewis’ holistic approach to analyzing executive
compensation programs. There are few program features that, on their own, lead to an unfavorable
recommendation from Glass Lewis for a say-on-pay proposal. Our analysis reviews pay programs on a case-by-
case basis. We do not utilize a pre-determined scorecard approach when considering individual features such as
the allocation of the long-term incentive between performance-based awards and time-based awards.
Unfavorable factors in a pay program are reviewed in the context of rationale, overall structure, overall
disclosure quality, the program’s ability to align executive pay with performance and the shareholder experience
and the trajectory of the pay program resulting from changes introduced by the compensation committee.
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A Board of Directors that Serves Shareholder
Interest
Election of Directors
The purpose of Glass Lewis’ proxy research and advice is to facilitate shareholder voting in favor of governance
structures that will drive performance, create shareholder value and maintain a proper tone at the top. Glass
Lewis looks for talented boards with a record of protecting shareholders and delivering value over the medium-
and long-term. We believe that a board can best protect and enhance the interests of shareholders if it is
sufficiently independent, has a record of positive performance, and consists of individuals with diverse
backgrounds and a breadth and depth of relevant experience.
Independence
The independence of directors, or lack thereof, is ultimately demonstrated through the decisions they make. In
assessing the independence of directors, we will take into consideration, when appropriate, whether a director
has a track record indicative of making objective decisions. Likewise, when assessing the independence of
directors we will also examine when a director’s track record on multiple boards indicates a lack of objective
decision-making. Ultimately, we believe the determination of whether a director is independent or not must
take into consideration both compliance with the applicable independence listing requirements as well as
judgments made by the director.
We look at each director nominee to examine the director’s relationships with the company, the company’s
executives, and other directors. We do this to evaluate whether personal, familial, or financial relationships (not
including director compensation) may impact the director’s decisions. We believe that such relationships make it
difficult for a director to put shareholders’ interests above the director’s or the related party’s interests. We also
believe that a director who owns more than 20% of a company can exert disproportionate influence on the
board, and therefore believe such a director’s independence may be hampered, in particular when serving on
the audit committee.
Thus, we put directors into three categories based on an examination of the type of relationship they have with
the company:
Independent Director — An independent director has no material financial, familial or other current
relationships with the company, its executives, or other board members, except for board service and
standard fees paid for that service. Relationships that existed within three to five years1 before the
1 NASDAQ originally proposed a five-year look-back period but both it and the NYSE ultimately settled on a three-year look-
back prior to finalizing their rules. A five-year standard for former employment relationships is more appropriate, in our
view, because we believe that the unwinding of conflicting relationships between former management and board members
is more likely to be complete and final after five years. However, Glass Lewis does not apply the five-year look-back period
to directors who have previously served as executives of the company on an interim basis for less than one year.
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inquiry are usually considered “current” for purposes of this test. For material financial relationships
with the company, we apply a three-year look back, and for former employment relationships with the
company, we apply a five-year look back.
Affiliated Director — An affiliated director has, (or within the past three years, had) a material financial,
familial or other relationship with the company or its executives, but is not an employee of the
company.2 This includes directors whose employers have a material financial relationship with the
company.3 In addition, we view a director who either owns or controls 20% or more of the company’s
voting stock, or is an employee or affiliate of an entity that controls such amount, as an affiliate.4
We view 20% shareholders as affiliates because they typically have access to and involvement with the
management of a company that is fundamentally different from that of ordinary shareholders. More
importantly, 20% holders may have interests that diverge from those of ordinary holders, for reasons such as
the liquidity (or lack thereof) of their holdings, personal tax issues, etc.
Glass Lewis applies a three-year look back period to all directors who have an affiliation with the company other
than former employment, for which we apply a five-year look back.
Definition of “Material”: A material relationship is one in which the dollar value exceeds:
•$50,000 (or where no amount is disclosed) for directors who are paid for a service they have agreed
to perform for the company, outside of their service as a director, including professional or other
services. This threshold also applies to directors who are the majority or principal owner of a firm that
receives such payments; or
•$120,000 (or where no amount is disclosed) for those directors employed by a professional services firm
such as a law firm, investment bank, or consulting firm and the company pays the firm, not the
individual, for services.5 This dollar limit would also apply to charitable contributions to schools where a
2 If a company does not consider a non-employee director to be independent, Glass Lewis will classify that director as an
affiliate.
3 We allow a five-year grace period for former executives of the company or merged companies who have consulting
agreements with the surviving company. (We do not automatically recommend voting against directors in such cases for
the first five years.) If the consulting agreement persists after
this five-year grace period, we apply the materiality thresholds outlined in the definition of “material.”
4 This includes a director who serves on a board as a representative (as part of his or her basic responsibilities) of an
investment firm with greater than 20% ownership. However, while we will generally consider him/her to be affiliated, we
will not recommend voting against unless (i) the investment firm has disproportionate board representation or (ii) the
director serves on the audit committee.
5 We may deem such a transaction to be immaterial where the amount represents less than 1% of the firm’s annual
revenues and the board provides a compelling rationale as to why the director’s independence is not affected by the
relationship.
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board member is a professor; or charities where a director serves on the board or is an executive;6 and
any aircraft and real estate dealings between the company and the director’s firm; or
•1% of either company’s consolidated gross revenue for other business relationships (e.g., where the
director is an executive officer of a company that provides services or products to or receives services or
products from the company).7
Definition of “Familial” — Familial relationships include a person’s spouse, parents, children, siblings,
grandparents, uncles, aunts, cousins, nieces, nephews, in-laws, and anyone (other than domestic employees)
who shares such person’s home. A director is an affiliate if: i) he or she has a family member who is employed by
the company and receives more than $120,0008 in annual compensation; or, ii) he or she has a family member
who is employed by the company and the company does not disclose this individual’s compensation.
Definition of “Company” — A company includes any parent or subsidiary in a group with the company or any
entity that merged with, was acquired by, or acquired the company.
Inside Director — An inside director simultaneously serves as a director and as an employee of the
company. This category may include a board chair who acts as an employee of the company or is paid as
an employee of the company. In our view, an inside director who derives a greater amount of income as
a result of affiliated transactions with the company rather than through compensation paid by the
company (i.e., salary, bonus, etc. as a company employee) faces a conflict between making decisions
that are in the best interests of the company versus those in the director’s own best interests.
Therefore, we will recommend voting against such a director.
Additionally, we believe a director who is currently serving in an interim management position should be
considered an insider, while a director who previously served in an interim management position for less than
one year and is no longer serving in such capacity is considered independent. Moreover, a director who
previously served in an interim management position for over one year and is no longer serving in such capacity
is considered an affiliate for five years following the date of the director’s resignation or departure from the
interim management position.
Voting Recommendations on the Basis of Board Independence
Glass Lewis believes a board will be most effective in protecting shareholders’ interests if it is at least two-thirds
independent. We note that each of the Business Roundtable, the Conference Board, and the Council of
Institutional Investors advocates that two-thirds of the board be independent. Where more than one-third of
6 We will generally take into consideration the size and nature of such charitable entities in relation to the company’s size and
industry along with any other relevant factors such as the director’s role at the charity. However, unlike for other types of
related party transactions, Glass Lewis generally does not apply a look-back period to affiliated relationships involving
charitable contributions; if the relationship between the director and the school or charity ceases, or if the company
discontinues its donations to the entity, we will consider the director to be independent.
7 This includes cases where a director is employed by, or closely affiliated with, a private equity firm that profits from an
acquisition made by the company. Unless disclosure suggests otherwise, we presume the director is affiliated.
8 Pursuant to SEC rule Item 404 of Regulation S-K under the Securities Exchange Act, compensation exceeding $120,000 is
the minimum threshold deemed material for disclosure of transactions involving family members of directors.
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the members are affiliated or inside directors, we typically8 recommend voting against some of the inside and/or
affiliated directors in order to satisfy the two-thirds threshold.
In the case of a less than two-thirds independent board, Glass Lewis strongly supports the existence of a
presiding or lead director with authority to set the meeting agendas and to lead sessions outside the insider
chair’s presence.
In addition, we scrutinize avowedly “independent” chairs and lead directors. We believe that they should be
unquestionably independent, or the company should not tout them as such.
Committee Independence
We believe that only independent directors should serve on a company’s audit, compensation, nominating, and
governance committees.9 We typically recommend that shareholders vote against any affiliated or inside
director seeking appointment to an audit, compensation, nominating, or governance committee, or who has
served in that capacity in the past year.
Pursuant to Section 952 of the Dodd-Frank Act, as of January 11, 2013, the U.S. Securities and Exchange
Commission (SEC) approved new listing requirements for both the NYSE and NASDAQ which require that boards
apply enhanced standards of independence when making an affirmative determination of the independence of
compensation committee members. Specifically, when making this determination, in addition to the factors
considered when assessing general director independence, the board’s considerations must include: (i) the
source of compensation of the director, including any consulting, advisory or other compensatory fee paid by
the listed company to the director (the “Fees Factor”); and (ii) whether the director is affiliated with the listing
company, its subsidiaries, or affiliates of its subsidiaries (the “Affiliation Factor”).
Glass Lewis believes it is important for boards to consider these enhanced independence factors when assessing
compensation committee members. However, as discussed above in the section titled Independence, we apply
our own standards when assessing the independence of directors, and these standards also take into account
consulting and advisory fees paid to the director, as well as the director’s affiliations with the company and its
subsidiaries and affiliates. We may recommend voting against compensation committee members who are not
independent based on our standards.
Independent Chair
Glass Lewis believes that separating the roles of CEO (or, more rarely, another executive position) and chair
creates a better governance structure than a combined CEO/chair position. An executive manages the business
8 With a staggered board, if the affiliates or insiders that we believe should not be on the board are not up for election, we will
express our concern regarding those directors, but we will not recommend voting against the other affiliates or insiders who are
up for election just to achieve two-thirds independence. However, we will consider recommending voting against the directors
subject to our concern at their next election if the issue giving rise to the concern is not resolved.
9 We will recommend voting against an audit committee member who owns 20% or more of the company’s stock, and we
believe that there should be a maximum of one director (or no directors if the committee is composed of less than three
directors) who owns 20% or more of the company’s stock on the compensation, nominating, and governance committees.
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according to a course the board charts. Executives should report to the board regarding their performance in
achieving goals set by the board. This is needlessly complicated when a CEO chairs the board, since a CEO/chair
presumably will have a significant influence over the board.
While many companies have an independent lead or presiding director who performs many of the same
functions of an independent chair (e.g., setting the board meeting agenda), we do not believe this alternate
form of independent board leadership provides as robust protection for shareholders as an independent chair.
It can become difficult for a board to fulfill its role of overseer and policy setter when a CEO/chair controls the
agenda and the boardroom discussion. Such control can allow a CEO to have an entrenched position, leading to
longer-than-optimal terms, fewer checks on management, less scrutiny of the business operation, and
limitations on independent, shareholder-focused goal-setting by the board.
A CEO should set the strategic course for the company, with the board’s approval, and the board should enable
the CEO to carry out the CEO’s vision for accomplishing the board’s objectives. Failure to achieve the board’s
objectives should lead the board to replace that CEO with someone in whom the board has confidence.
Likewise, an independent chair can better oversee executives and set a pro-shareholder agenda without the
management conflicts that a CEO and other executive insiders often face. Such oversight and concern for
shareholders allows for a more proactive and effective board of directors that is better able to look out for the
interests of shareholders.
Further, it is the board’s responsibility to select a chief executive who can best serve a company and its
shareholders and to replace this person when his or her duties have not been appropriately fulfilled. Such a
replacement becomes more difficult and happens less frequently when the chief executive is also in the position
of overseeing the board.
Glass Lewis believes that the installation of an independent chair is almost always a positive step from a
corporate governance perspective and promotes the best interests of shareholders. Further, the presence of an
independent chair fosters the creation of a thoughtful and dynamic board, not dominated by the views of senior
management. Encouragingly, many companies appear to be moving in this direction — one study indicates that
only 10 percent of incoming CEOs in 2014 were awarded the chair title, versus 48 percent in 2002.10 Another
study finds that 53 percent of S&P 500 boards now separate the CEO and chair roles, up from 37 percent in
2009, although the same study found that only 34 percent of S&P 500 boards have truly independent chairs.11
We do not recommend that shareholders vote against CEOs who chair the board. However, we typically
recommend that our clients support separating the roles of chair and CEO whenever that question is posed in a
proxy (typically in the form of a shareholder proposal), as we believe that it is in the long-term best interests of
the company and its shareholders.
Further, where the company has neither an independent chair nor independent lead director, we will
recommend voting against the chair of the governance committee.
10 Ken Favaro, Per-Ola Karlsson and Gary L. Nelson. “The $112 Billion CEO Succession Problem.” (Strategy+Business, Issue 79,
Summer 2015).
11 Spencer Stuart Board Index, 2019, p. 6.
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Performance
The most crucial test of a board’s commitment to the company and its shareholders lies in the actions of the
board and its members. We look at the performance of these individuals as directors and executives of the
company and of other companies where they have served.
We find that a director’s past conduct is often indicative of future conduct and performance. We often find
directors with a history of overpaying executives or of serving on boards where avoidable disasters have
occurred serving on the boards of companies with similar problems. Glass Lewis has a proprietary database of
directors serving at over 8,000 of the most widely held U.S. companies. We use this database to track the
performance of directors across companies.
Voting Recommendations on the Basis of Performance
We typically recommend that shareholders vote against directors who have served on boards or as executives of
companies with records of poor performance, inadequate risk oversight, excessive compensation, audit- or
accounting-related issues, and/or other indicators of mismanagement or actions against the interests of
shareholders. We will reevaluate such directors based on, among other factors, the length of time passed since
the incident giving rise to the concern, shareholder support for the director, the severity of the issue, the
director’s role (e.g., committee membership), director tenure at the subject company, whether ethical lapses
accompanied the oversight lapse, and evidence of strong oversight at other companies.
Likewise, we examine the backgrounds of those who serve on key board committees to ensure that they have
the required skills and diverse backgrounds to make informed judgments about the subject matter for which the
committee is responsible.
We believe shareholders should avoid electing directors who have a record of not fulfilling their responsibilities
to shareholders at any company where they have held a board or executive position. We typically recommend
voting against:
•A director who fails to attend a minimum of 75% of board and applicable committee meetings,
calculated in the aggregate.12
•A director who belatedly filed a significant form(s) 4 or 5, or who has a pattern of late filings if the late
filing was the director’s fault (we look at these late filing situations on a case-by-case basis).
•A director who is also the CEO of a company where a serious and material restatement has occurred
after the CEO had previously certified the pre-restatement financial statements.
•A director who has received two against recommendations from Glass Lewis for identical reasons within
the prior year at different companies (the same situation must also apply at the company being
analyzed).
Furthermore, with consideration given to the company’s overall corporate governance, pay-for-performance
alignment and board responsiveness to shareholders, we may recommend voting against directors who served
12 However, where a director has served for less than one full year, we will typically not recommend voting against for failure to
attend 75% of meetings. Rather, we will note the poor attendance with a recommendation to track this issue going forward. We
will also refrain from recommending to vote against directors when the proxy discloses that the director missed the meetings
due to serious illness or other extenuating circumstances.
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throughout a period in which the company performed significantly worse than peers and the directors have not
taken reasonable steps to address the poor performance.
Board Responsiveness
Glass Lewis believes that boards should be responsive to shareholders when a significant percentage of
shareholders vote contrary to the recommendation of management, depending on the issue.
When 20% of more of shareholders vote contrary to management (which occurs when more than 20% of votes
on the proposal are cast as AGAINST and/or ABSTAIN), we believe that boards should engage with shareholders
on the issue and demonstrate some initial level of responsiveness. These include instances when 20% or more of
shareholders:
(i)withhold votes from (or vote against) a director nominee; or
(ii)vote against a management-sponsored proposal.
In our view, a 20% threshold is significant enough to warrant a close examination of the underlying issues and an
evaluation of whether the board responded appropriately following the vote, particularly in the case of a
compensation or director election proposal. While the 20% threshold alone will not automatically generate a
negative vote recommendation from Glass Lewis on a future proposal (e.g., to recommend against a director
nominee, against a say-on-pay proposal, etc.), it may be a contributing factor to our recommendation to vote
against management’s recommendation in the event we determine that the board did not respond
appropriately.
When a majority of shareholders vote contrary to management, we believe that boards should engage with
shareholders on the issue and provide a more robust response to fully address shareholder concerns. These
include instances when a majority or more of shareholders:
(i)withhold votes from (or vote against) a director nominee;
(ii)vote against a management-sponsored proposal;
At controlled companies and companies that have multi-class share structures with unequal voting rights, we
will carefully examine the level of approval or disapproval attributed to unaffiliated shareholders when
determining whether board responsiveness is warranted. In the case of companies that have multi-class share
structures with unequal voting rights, we will generally examine the level of approval or disapproval attributed
to unaffiliated shareholders on a “one share, one vote” basis. At controlled and multi-class companies, when at
least 20% or more of unaffiliated shareholders vote contrary to management, we believe that boards should
engage with shareholders and demonstrate some initial level of responsiveness, and when a majority or more of
unaffiliated shareholders vote contrary to management, we believe that boards should engage with
shareholders and provide a more robust response to address shareholder concerns.
As a general framework, our evaluation of board responsiveness involves a review of publicly available
disclosures (e.g., the proxy statement, annual report, 8-Ks, company website, etc.) released following the date of
the company’s last annual meeting up through the publication date of our most current Proxy Paper. Depending
on the specific issue, our focus typically includes, but is not limited to, the following:
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•At the board level, any changes in directorships, committee memberships, disclosure of related party
transactions, meeting attendance, or other responsibilities;
•Any revisions made to the company’s articles of incorporation, bylaws or other governance documents;
•Any press or news releases indicating changes in, or the adoption of, new company policies, business
practices or special reports; and
•Any modifications made to the design and structure of the company’s compensation program, as well as
an assessment of the company’s engagement with shareholders on compensation issues as discussed in
the Compensation Discussion & Analysis (CD&A), particularly following a material vote against a
company’s say-on-pay.
•Proxy statement disclosure discussing the board’s efforts to engage with shareholders and the actions
taken to address shareholder concerns.
Our Proxy Paper analysis will include a case-by-case assessment of the specific elements of board
responsiveness that we examined along with an explanation of how that assessment impacts our current voting
recommendations.
Board Responsiveness to Shareholder Proposals
Majority-Supported Shareholder Proposals
We expect clear action from the board when shareholder proposals receive support from a majority of votes
cast (excluding abstentions and broker non-votes). In our view, this may include fully implementing the request
of the shareholder proposal and/or engaging with shareholders on the issue and providing sufficient disclosures
to address shareholder concerns.
Significantly Supported Shareholder Proposals
When shareholder proposals receive significant support (generally more than 30% but less than majority of
votes cast), we believe an initial level of board responsiveness is warranted. In instances where a shareholder
proposal has received at least 30% shareholder support, we generally believe boards should engage with
shareholders on the issue and provide disclosure addressing shareholder concerns and outreach initiatives.
Further, as discussed above, at controlled companies and companies that have multi-class share structures with
unequal voting rights, we will carefully examine the level of approval or disapproval attributed to unaffiliated
shareholders when determining whether board responsiveness is warranted.
The Role of a Committee Chair
Glass Lewis believes that a designated committee chair maintains primary responsibility for the actions of his or
her respective committee. As such, many of our committee-specific voting recommendations are against the
applicable committee chair rather than the entire committee (depending on the seriousness of the issue). In
cases where the committee chair is not up for election due to a staggered board, and where we have identified
multiple concerns, we will generally recommend voting against other members of the committee who are up for
election, on a case-by-case basis.
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In cases where we would ordinarily recommend voting against a committee chair but the chair is not specified,
we apply the following general rules, which apply throughout our guidelines:
•If there is no committee chair, we recommend voting against the longest-serving committee member or,
if the longest-serving committee member cannot be determined, the longest-serving board member
serving on the committee (i.e., in either case, the “senior director”); and
•If there is no committee chair, but multiple senior directors serving on the committee, we recommend
voting against both (or all) such senior directors.
In our view, companies should provide clear disclosure of which director is charged with overseeing each
committee. In cases where that simple framework is ignored and a reasonable analysis cannot determine which
committee member is the designated leader, we believe shareholder action against the longest serving
committee member(s) is warranted. Again, this only applies if we would ordinarily recommend voting against
the committee chair but there is either no such position or no designated director in such role.
Audit Committees and Performance
Audit committees play an integral role in overseeing the financial reporting process because stable capital
markets depend on reliable, transparent, and objective financial information to support an efficient and
effective capital market process. Audit committees play a vital role in providing this disclosure to shareholders.
When assessing an audit committee’s performance, we are aware that an audit committee does not prepare
financial statements, is not responsible for making the key judgments and assumptions that affect the financial
statements, and does not audit the numbers or the disclosures provided to investors. Rather, an audit
committee member monitors and oversees the process and procedures that management and auditors
perform. The 1999 Report and Recommendations of the Blue Ribbon Committee on Improving the Effectiveness
of Corporate Audit Committees stated it best:
A proper and well-functioning system exists, therefore, when the three main groups responsible for
financial reporting — the full board including the audit committee, financial management including the
internal auditors, and the outside auditors — form a ‘three legged stool’ that supports responsible
financial disclosure and active participatory oversight. However, in the view of the Committee, the audit
committee must be ‘first among equals’ in this process, since the audit committee is an extension of the
full board and hence the ultimate monitor of the process.
Standards for Assessing the Audit Committee
For an audit committee to function effectively on investors’ behalf, it must include members with sufficient
knowledge to diligently carry out their responsibilities. In its audit and accounting recommendations, the
Conference Board Commission on Public Trust and Private Enterprise said “members of the audit committee
must be independent and have both knowledge and experience in auditing financial matters.”13
13 Commission on Public Trust and Private Enterprise. The Conference Board. 2003.
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We are skeptical of audit committees where there are members that lack expertise as a Certified Public
Accountant (CPA), Chief Financial Officer (CFO) or corporate controller, or similar experience. While we will not
necessarily recommend voting against members of an audit committee when such expertise is lacking, we are
more likely to recommend voting against committee members when a problem such as a restatement occurs
and such expertise is lacking.
Glass Lewis generally assesses audit committees against the decisions they make with respect to their oversight
and monitoring role. The quality and integrity of the financial statements and earnings reports, the
completeness of disclosures necessary for investors to make informed decisions, and the effectiveness of the
internal controls should provide reasonable assurance that the financial statements are materially free from
errors. The independence of the external auditors and the results of their work all provide useful information by
which to assess the audit committee.
When assessing the decisions and actions of the audit committee, we typically defer to its judgment and
generally recommend voting in favor of its members. However, we will consider recommending that
shareholders vote against the following:
•All members of the audit committee when options were backdated, there is a lack of adequate controls
in place, there was a resulting restatement, and disclosures indicate there was a lack of documentation
with respect to the option grants.
•The audit committee chair, if the audit committee does not have a financial expert or the committee’s
financial expert does not have a demonstrable financial background sufficient to understand the
financial issues unique to public companies.
•The audit committee chair, if the audit committee did not meet at least four times during the year.
•The audit committee chair, if the committee has less than three members.
•Any audit committee member who sits on more than three public company audit committees, unless
the audit committee member is a retired CPA, CFO, controller or has similar experience, in which case
the limit shall be four committees, taking time and availability into consideration including a review of
the audit committee member’s attendance at all board and committee meetings.14
•All members of an audit committee who are up for election and who served on the committee at the
time of the audit, if audit and audit-related fees total one-third or less of the total fees billed by the
auditor.
•The audit committee chair when tax and/or other fees are greater than audit and audit-related fees paid
to the auditor for more than one year in a row (in which case we also recommend against ratification of
the auditor).
•The audit committee chair when fees paid to the auditor are not disclosed.
•All members of an audit committee where non-audit fees include fees for tax services (including, but not
limited to, such things as tax avoidance or shelter schemes) for senior executives of the company. Such
services are prohibited by the Public Company Accounting Oversight Board (PCAOB).
14 Glass Lewis may exempt certain audit committee members from the above threshold if, upon further analysis of relevant
factors such as the director’s experience, the size, industry-mix and location of the companies involved and the director’s
attendance at all the companies, we can reasonably determine that the audit committee member is likely not hindered by
multiple audit committee commitments.
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•All members of an audit committee that reappointed an auditor that we no longer consider to be
independent for reasons unrelated to fee proportions.
•All members of an audit committee when audit fees are excessively low, especially when compared with
other companies in the same industry.
•The audit committee chair if the committee failed to put auditor ratification on the ballot for
shareholder approval. However, if the non-audit fees or tax fees exceed audit plus audit-related fees in
either the current or the prior year, then Glass Lewis will recommend voting against the entire audit
committee.
•All members of an audit committee where the auditor has resigned and reported that a section 10A15
letter has been issued.
•All members of an audit committee at a time when material accounting fraud occurred at the
company.16
•All members of an audit committee at a time when annual and/or multiple quarterly financial
statements had to be restated, and any of the following factors apply:17
oThe restatement involves fraud or manipulation by insiders;
oThe restatement is accompanied by an SEC inquiry or investigation;
oThe restatement involves revenue recognition;
oThe restatement results in a greater than 5% adjustment to costs of goods sold, operating
expense, or operating cash flows; or
oThe restatement results in a greater than 5% adjustment to net income, 10% adjustment to
assets or shareholders equity, or cash flows from financing or investing activities.
•All members of an audit committee if the company repeatedly fails to file its financial reports in a timely
fashion. For example, the company has filed two or more quarterly or annual financial statements late
within the last five quarters.
•All members of an audit committee when it has been disclosed that a law enforcement agency
has charged the company and/or its employees with a violation of the Foreign Corrupt Practices
Act (FCPA).
•All members of an audit committee when the company has aggressive accounting policies and/or poor
disclosure or lack of sufficient transparency in its financial statements.
15 Auditors are required to report all potential illegal acts to management and the audit committee unless they are clearly
inconsequential in nature. If the audit committee or the board fails to take appropriate action on an act that has been
determined to be a violation of the law, the independent auditor is required to send a section 10A letter to the SEC. Such letters
are rare and therefore we believe should be taken seriously.
16 Research indicates that revenue fraud now accounts for over 60% of SEC fraud cases, and that companies that engage in
fraud experience significant negative abnormal stock price declines—facing bankruptcy, delisting, and material asset sales
at much higher rates than do non-fraud firms (Committee of Sponsoring Organizations of the Treadway Commission.
“Fraudulent Financial Reporting: 1998-2007.” May 2010).
17 The SEC issued guidance in March 2021 related to classification of warrants as liabilities at special purpose acquisition
companies (SPACs). We will generally refrain from recommending against audit committee members when the restatement
in question is solely as a result of the aforementioned SEC guidance.
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•All members of the audit committee when there is a disagreement with the auditor and the auditor
resigns or is dismissed (e.g., the company receives an adverse opinion on its financial statements from
the auditor).
•All members of the audit committee if the contract with the auditor specifically limits the auditor’s
liability to the company for damages.18
•All members of the audit committee who served since the date of the company’s last annual meeting if,
since the last annual meeting, the company has reported a material weakness that has not yet been
corrected and the company has not disclosed a remediation plan; or when a material weakness has
been ongoing for more than one year and the company has not disclosed an updated remediation plan
that clearly outlines the company’s progress toward remediating the material weakness.
Material Weaknesses
Effective internal controls over financial reporting should ensure the integrity of companies’ accounting and
financial reporting.
The SEC guidance regarding Management's Report on Internal Control Over Financial Reporting requires that
reports on internal control should include: (i) a statement of management's responsibility for establishing and
maintaining adequate internal control over financial reporting for the company; (ii) management's assessment
of the effectiveness of the company's internal control over financial reporting as of the end of the company's
most recent fiscal year; (iii) a statement identifying the framework used by management to evaluate the
effectiveness of the company's internal control over financial reporting; and (iv) a statement that the registered
public accounting firm that audited the company's financial statements included in the annual report has issued
an attestation report on management's assessment of the company's internal control over financial reporting.
A material weakness occurs when a company identifies a deficiency, or a combination of deficiencies, in internal
controls over financial reporting, such that there is a reasonable possibility that a material misstatement of the
company's annual or interim financial statements will not be prevented or detected on a timely basis. Failure to
maintain effective internal controls can create doubts regarding the reliability of financial reporting and the
preparation of financial statements in accordance with U.S. GAAP and may lead to companies publishing
financial statements that are not free of errors or misstatements.
We believe it is the responsibility of audit committees to ensure that material weaknesses are remediated in a
timely manner and that companies disclose remediation plans that include detailed steps to resolve a given
material weakness. In cases where a material weakness has been ongoing for more than one fiscal year, we
expect the company to disclose an updated remediation plan at least annually thereafter. Updates to existing
remediation plans should state the progress the company has made toward remediating the material weakness
and the remaining actions the company plans to take until the material weakness is fully remediated. As such,
we are critical of audit committees when companies disclose remediation plans that remain unchanged from a
prior period.
18 The Council of Institutional Investors. “Corporate Governance Policies,” p. 4, April 5, 2006; and “Letter from Council of
Institutional Investors to the AICPA,” November 8, 2006.
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When a material weakness is reported and the company has not disclosed a remediation plan, or when a
material weakness has been ongoing for more than one year and the company has not disclosed an updated
remediation plan that clearly outlines the company’s progress toward remediating the material weakness, we
will consider recommending that shareholders vote against all members of a company’s audit committee who
served on the committee during the time when the material weakness was identified.
We also take a dim view of audit committee reports that are boilerplate, and which provide little or no
information or transparency to investors. When a problem such as a material weakness, restatement or late
filings occurs, in forming our judgment with respect to the audit committee we take into consideration the
transparency of the audit committee report.
Compensation Committee Performance
Compensation committees have a critical role in determining the compensation of executives. This includes
deciding the basis on which compensation is determined, as well as the amounts and types of compensation
to be paid. This process begins with the hiring and initial establishment of employment agreements, including
the terms for such items as pay, pensions and severance arrangements. It is important in establishing
compensation arrangements that compensation be consistent with, and based on the long-term economic
performance of, the business’s long-term shareholders returns.
Compensation committees are also responsible for the oversight of the transparency of compensation. This
oversight includes disclosure of compensation arrangements, the matrix used in assessing pay for performance,
and the use of compensation consultants. In order to ensure the independence of the board’s compensation
consultant, we believe the compensation committee should only engage a compensation consultant that is not
also providing any services to the company or management apart from their contract with the compensation
committee. It is important to investors that they have clear and complete disclosure of all the significant terms
of compensation arrangements in order to make informed decisions with respect to the oversight and decisions
of the compensation committee.
Finally, compensation committees are responsible for oversight of internal controls over the executive
compensation process. This includes controls over gathering information used to determine compensation,
establishment of equity award plans, and granting of equity awards. For example, the use of a compensation
consultant who maintains a business relationship with company management may cause the committee to
make decisions based on information that is compromised by the consultant’s conflict of interests. Lax controls
can also contribute to improper awards of compensation such as through granting of backdated or spring-
loaded options, or granting of bonuses when triggers for bonus payments have not been met.
Central to understanding the actions of compensation committee is a careful review of the CD&A report
included in each company’s proxy. We review the CD&A in our evaluation of the overall compensation practices
of a company, as overseen by the compensation committee. The CD&A is also integral to the evaluation of
compensation proposals at companies, such as advisory votes on executive compensation, which allow
shareholders to vote on the compensation paid to a company’s top executives.
When assessing the performance of compensation committees, we will consider recommending that
shareholders vote against the following:
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•All members of a compensation committee during whose tenure the committee failed to address
shareholder concerns following majority shareholder rejection of the say-on-pay proposal in the
previous year. Where the proposal was approved but there was a significant shareholder vote (i.e.,
greater than 20% of votes cast) against the say-on-pay proposal in the prior year, if the board did not
respond sufficiently to the vote including actively engaging shareholders on this issue, we will also
consider recommending voting against the chair of the compensation committee or all members of the
compensation committee, depending on the severity and history of the compensation problems and the
level of shareholder opposition.
•All members of the compensation committee who are up for election and served when the company
failed to align pay with performance if shareholders are not provided with an advisory vote on executive
compensation at the annual meeting.19
•Any member of the compensation committee who has served on the compensation committee of at
least two other public companies that have consistently failed to align pay with performance and whose
oversight of compensation at the company in question is suspect.
•All members of the compensation committee (during the relevant time period) if the company entered
into excessive employment agreements and/or severance agreements.
•All members of the compensation committee when performance goals were changed (i.e., lowered)
when employees failed or were unlikely to meet original goals, or performance-based compensation
was paid despite goals not being attained.
•All members of the compensation committee if excessive employee perquisites and benefits
were allowed.
•The compensation committee chair if the compensation committee did not meet during the year.
•All members of the compensation committee when the company repriced options or completed a “self
tender offer” without shareholder approval within the past two years.
•All members of the compensation committee when vesting of in-the-money options is accelerated.
•All members of the compensation committee when option exercise prices were backdated. Glass Lewis
will recommend voting against an executive director who played a role in and participated in
option backdating.
•All members of the compensation committee when option exercise prices were spring-loaded or
otherwise timed around the release of material information.
•All members of the compensation committee when a new employment contract is given to an executive
that does not include a clawback provision and the company had a material restatement, especially if
the restatement was due to fraud.
•The chair of the compensation committee where the CD&A provides insufficient or unclear information
about performance metrics and goals, where the CD&A indicates that pay is not tied to performance, or
where the compensation committee or management has excessive discretion to alter performance
terms or increase amounts of awards in contravention of previously defined targets.
19 If a company provides shareholders with a say-on-pay proposal, we will initially only recommend voting against the
company's say-on-pay proposal and will not recommend voting against the members of the compensation committee unless
there is a pattern of failing to align pay and performance and/or the company exhibits egregious compensation practices. For
cases in which the disconnect between pay and performance is marginal and the company has outperformed its peers, we will
consider not recommending against compensation committee members.
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•All members of the compensation committee during whose tenure the committee failed to implement a
shareholder proposal regarding a compensation-related issue, where the proposal received the
affirmative vote of a majority of the voting shares at a shareholder meeting, and when a reasonable
analysis suggests that the compensation committee (rather than the governance committee) should
have taken steps to implement the request.20
•All members of the compensation committee when the board has materially decreased proxy statement
disclosure regarding executive compensation policies and procedures in a manner which substantially
impacts shareholders’ ability to make an informed assessment of the company’s executive pay practices.
•All members of the compensation committee when new excise tax gross-up provisions are adopted in
employment agreements with executives, particularly in cases where the company previously
committed not to provide any such entitlements in the future.
•All members of the compensation committee when the board adopts a frequency for future advisory
votes on executive compensation that differs from the frequency approved by shareholders.
•The chair of the compensation committee when” mega-grants” have been granted and the awards
present concerns such as excessive quantum, lack of sufficient performance conditions, and/or are
excessively dilutive, among others.
Nominating and Governance Committee Performance
The nominating and governance committee is responsible for the governance by the board of the company and
its executives. In performing this role, the committee is responsible and accountable for selection of objective
and competent board members. It is also responsible for providing leadership on governance policies adopted
by the company, such as decisions to implement shareholder proposals that have received a majority vote. At
most companies, a single committee is charged with these oversight functions; at others, the governance and
nominating responsibilities are apportioned among two separate committees.
Consistent with Glass Lewis’ philosophy that boards should have diverse backgrounds and members with a
breadth and depth of relevant experience, we believe that nominating and governance committees should
consider diversity when making director nominations within the context of each specific company and its
industry. In our view, shareholders are best served when boards make an effort to ensure a constituency that is
not only reasonably diverse on the basis of age, race, gender and ethnicity, but also on the basis of geographic
knowledge, industry experience, board tenure and culture.
Regarding the committee responsible for governance, we will consider recommending that shareholders vote
against the following:
•All members of the governance committee21 during whose tenure a shareholder proposal relating to
important shareholder rights received support from a majority of the votes cast (excluding abstentions
20 In all other instances (i.e., a non-compensation-related shareholder proposal should have been implemented) we recommend
that shareholders vote against the members of the governance committee.
21 If the board does not have a committee responsible for governance oversight and the board did not implement a
shareholder proposal that received the requisite support, we will recommend voting against the entire board. If the
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and broker non-votes) and the board has not begun to implement or enact the proposal’s subject
matter.22 Examples of such shareholder proposals include those seeking a declassified board structure, a
majority vote standard for director elections, or a right to call a special meeting. In determining whether
a board has sufficiently implemented such a proposal, we will examine the quality of the right enacted
or proffered by the board for any conditions that may unreasonably interfere with the shareholders’
ability to exercise the right (e.g., overly restrictive procedural requirements for calling a special
meeting).
•All members of the governance committee when a shareholder resolution is excluded from the meeting
agenda but the SEC has declined to state a view on whether such resolution should be excluded, or
when the SEC has verbally permitted a company to exclude a shareholder proposal but there is no
written record provided by the SEC about such determination and the company has not provided any
disclosure concerning this no-action relief.
•The governance committee chair when the chair is not independent and an independent lead or
presiding director has not been appointed.23
•The governance committee chair at companies with a multi-class share structure and unequal voting
rights when the company does not provide for a reasonable sunset of the multi-class share structure
(generally seven years or less).
•In the absence of a nominating committee, the governance committee chair when there are fewer than
five, or the whole governance committee when there are more than 20 members on the board.
•The governance committee chair when the committee fails to meet at all during the year.
•The governance committee chair, when for two consecutive years the company provides what we
consider to be “inadequate” related party transaction disclosure (i.e., the nature of such transactions
and/or the monetary amounts involved are unclear or excessively vague, thereby preventing a share-
holder from being able to reasonably interpret the independence status of multiple directors above and
beyond what the company maintains is compliant with SEC or applicable stock exchange listing
requirements).
•The governance committee chair, when during the past year the board adopted a forum selection clause
(i.e., an exclusive forum provision)24 designating either a state's courts for intra-corporate disputes,
shareholder proposal at issue requested that the board adopt a declassified structure, we will recommend voting against all
director nominees up for election.
22 Where a compensation-related shareholder proposal should have been implemented, and when a reasonable analysis
suggests that the members of the compensation committee (rather than the governance committee) bear the responsibility
for failing to implement the request, we recommend that shareholders only vote against members of the compensation
committee.
23 We believe that one independent individual should be appointed to serve as the lead or presiding director. When such a
position is rotated among directors from meeting to meeting, we will recommend voting against the governance committee
chair as we believe the lack of fixed lead or presiding director means that, effectively, the board does not have an
independent board leader.
24 A forum selection clause is a bylaw provision stipulating that a certain state or federal jurisdiction is the exclusive forum
for specified legal matters. Such a clause effectively limits a shareholder's legal remedy regarding appropriate choice of
venue and related relief.
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and/or federal courts for matters arising under the Securities Act of 1933 without shareholder
approval,25 or if the board is currently seeking shareholder approval of a forum selection clause pursuant
to a bundled bylaw amendment rather than as a separate proposal.
•All members of the governance committee during whose tenure the board adopted, without
shareholder approval, provisions in its charter or bylaws that, through rules on director compensation,
may inhibit the ability of shareholders to nominate directors.
•The governance committee chair when the board takes actions to limit shareholders’ ability to vote on
matters material to shareholder rights (e.g., through the practice of excluding a shareholder proposal by
means of ratifying a management proposal that is materially different from the shareholder proposal).
•The governance committee chair when directors’ records for board and committee meeting attendance
are not disclosed, or when it is indicated that a director attended less than 75% of board and committee
meetings but disclosure is sufficiently vague that it is not possible to determine which specific director’s
attendance was lacking.
•The governance committee chair when a detailed record of proxy voting results from the prior annual
meeting has not been disclosed.
•The governance committee chair when a company does not clearly disclose the identity of a shareholder
proponent (or lead proponent when there are multiple filers) in their proxy statement. For a detailed
explanation of this policy, please refer to our comprehensive Proxy Paper Guidelines for Shareholder
Proposals & ESG-Related Issues, available at www.glasslewis.com/voting-policies-current/.
In addition, we may recommend that shareholders vote against the chair of the governance committee, or the
entire committee, where the board has amended the company’s governing documents to reduce or remove
important shareholder rights, or to otherwise impede the ability of shareholders to exercise such right, and has
done so without seeking shareholder approval. Examples of board actions that may cause such a
recommendation include: the elimination of the ability of shareholders to call a special meeting or to act by
written consent; an increase to the ownership threshold required for shareholders to call a special meeting; an
increase to vote requirements for charter or bylaw amendments; the adoption of provisions that limit the ability
of shareholders to pursue full legal recourse — such as bylaws that require arbitration of shareholder claims
or that require shareholder plaintiffs to pay the company’s legal expenses in the absence of a court victory
(i.e., “fee-shifting” or “loser pays” bylaws); the adoption of a classified board structure; and the elimination of
the ability of shareholders to remove a director without cause.
Regarding the nominating committee, we will consider recommending that shareholders vote against the
following:
•All members of the nominating committee, when the committee nominated or renominated
an individual who had a significant conflict of interest or whose past actions demonstrated a lack of
integrity or inability to represent shareholder interests.
•The nominating committee chair, if the nominating committee did not meet during the year.
25 Glass Lewis will evaluate the circumstances surrounding the adoption of any forum selection clause as well as the general
provisions contained therein. Where it can be reasonably determined that a forum selection clause is narrowly crafted to suit
the particular circumstances facing the company and/or a reasonable sunset provision is included, we may make an exception
to this policy.
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•In the absence of a governance committee, the nominating committee chair when the chair is not
independent, and an independent lead or presiding director has not been appointed.
•The nominating committee chair, when there are fewer than five, or the whole nominating committee
when there are more than 20 members on the board.
•The nominating committee chair, when a director received a greater than 50% against vote the prior
year and not only was the director not removed, but the issues that raised shareholder concern were
not corrected.26
•The chair of the nominating committee of a board that is not at least 30 percent gender diverse,27 or all
members of the nominating committee of a board with no gender diverse directors, at companies
within the Russell 3000 index. For companies outside of the Russell 3000 index, we will recommend
voting against the chair of the nominating committee if there are no gender diverse directors.
•The chair of the nominating committee of a board with fewer than one director from an
underrepresented community on the board, at companies within the Russell 1000 index.
•The nominating committee chair when, alongside other governance or board performance concerns, the
average tenure of non-executive directors is 10 years or more and no new independent directors have
joined the board in the past five years. We will not be making voting recommendations solely on this
basis; rather, insufficient board refreshment may be a contributing factor in our recommendations when
additional board-related concerns have been identified.
In addition, we may consider recommending shareholders vote against the chair of the nominating committee
where the board’s failure to ensure the board has directors with relevant experience, either through periodic
director assessment or board refreshment, has contributed to a company’s poor performance. Where these
issues warrant an against vote in the absence of both a governance and a nominating committee, we will
recommend voting against the board chair, unless the chair also serves as the CEO, in which case we will
recommend voting against the longest-serving director.
Board-Level Risk Management Oversight
Glass Lewis evaluates the risk management function of a public company board on a strictly case-by-case basis.
Sound risk management, while necessary at all companies, is particularly important at financial firms which
inherently maintain significant exposure to financial risk. We believe such financial firms should have a chief risk
officer reporting directly to the board and a dedicated risk committee or a committee of the board charged with
risk oversight. Moreover, many non-financial firms maintain strategies which involve a high level of exposure to
financial risk. Similarly, since many non-financial firms have complex hedging or trading strategies, those firms
should also have a chief risk officer and a risk committee.
26 Considering that shareholder disapproval clearly relates to the director who received a greater than 50% against vote rather
than the nominating chair, we review the severity of the issue(s) that initially raised shareholder concern as well as company
responsiveness to such matters, and will only recommend voting against the nominating chair if a reasonable analysis suggests
that it would be most appropriate. In rare cases, we will consider recommending against the nominating chair when a director
receives a substantial (i.e., 20% or more) vote against based on the same analysis.
27 Women and directors that identify with a gender other than male or female.
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Our views on risk oversight are consistent with those expressed by various regulatory bodies. In its December
2009 Final Rule release on Proxy Disclosure Enhancements, the SEC noted that risk oversight is a key
competence of the board and that additional disclosures would improve investor and shareholder
understanding of the role of the board in the organization’s risk management practices. The final rules, which
became effective on February 28, 2010, now explicitly require companies and mutual funds to describe (while
allowing for some degree of flexibility) the board’s role in the oversight of risk.
When analyzing the risk management practices of public companies, we take note of any significant losses or
writedowns on financial assets and/or structured transactions. In cases where a company has disclosed a sizable
loss or writedown, and where we find that the company’s board-level risk committee’s poor oversight
contributed to the loss, we will recommend that shareholders vote against such committee members on that
basis. In addition, in cases where a company maintains a significant level of financial risk exposure but fails to
disclose any explicit form of board-level risk oversight (committee or otherwise),28 we will consider
recommending to vote against the board chair on that basis. However, we generally would not recommend
voting against a combined chair/CEO, except in egregious cases.
Board Oversight of Environmental and Social Issues
Glass Lewis recognizes the importance of ensuring the sustainability of companies’ operations. We believe that
insufficient oversight of material environmental and social issues can present direct legal, financial, regulatory
and reputational risks that could serve to harm shareholder interests. Therefore, we believe that these issues
should be carefully monitored and managed by companies, and that all companies should have an appropriate
oversight structure in place to ensure that they are mitigating attendant risks and capitalizing on related
opportunities to the best extent possible.
To that end, Glass Lewis believes that companies should ensure that boards maintain clear oversight of material
risks to their operations, including those that are environmental and social in nature. These risks could include,
but are not limited to, matters related to climate change, human capital management, diversity, stakeholder
relations, and health, safety & environment. Given the importance of the board’s role in overseeing
environmental and social risks, we believe this responsibility should be formally designated and codified in the
appropriate committee charters or other governing documents.
While we believe that it is important that these issues are overseen at the board level and that shareholders are
afforded meaningful disclosure of these oversight responsibilities, we believe that companies should determine
the best structure for this oversight. In our view, this oversight can be effectively conducted by specific directors,
the entire board, a separate committee, or combined with the responsibilities of a key committee.
For companies in the Russell 3000 index and in instances where we identify material oversight concerns, Glass
Lewis will review a company’s overall governance practices and identify which directors or board-level
committees have been charged with oversight of environmental and/or social issues. Furthermore, given the
importance of the board’s role in overseeing environmental and social risks, Glass Lewis will generally
28 A committee responsible for risk management could be a dedicated risk committee, the audit committee, or the finance
committee, depending on a given company’s board structure and method of disclosure. At some companies, the entire board is
charged with risk management.
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recommend voting against the governance committee chair of a company in the Russell 1000 index that fails to
provide explicit disclosure concerning the board’s role in overseeing these issues.
When evaluating the board’s role in overseeing environmental and/or social issues, we will examine a
company’s committee charters and governing documents to determine if the company has codified and
maintained a meaningful level of oversight of and accountability for a company’s material environmental and
social impacts.
Board Oversight of Technology
Cyber Risk Oversight
Companies and consumers are exposed to a growing risk of cyber-attacks. These attacks can result in customer
or employee data breaches, harm to a company’s reputation, significant fines or penalties, and interruption to a
company’s operations. Further, in some instances, cyber breaches can result in national security concerns, such
as those impacting companies operating as utilities, defense contractors, and energy companies.
In response to these issues, regulators have increasingly been focused on ensuring companies are providing
appropriate and timely disclosures and protections to stakeholders that could have been adversely impacted by
a breach in a company’s cyber infrastructure.
On July 26, 2023, the SEC approved final rules requiring public companies to report cybersecurity incidents
deemed material within four days of identifying them, detailing their nature, scope, timing, and material impact
under Item 1.05 on Form 8-K.
Furthermore, in annual reports, companies must disclose their processes for assessing, identifying, and
managing material cybersecurity risks, along with their material effects; and describe whether any risks from
prior incidents have materially affected its business strategy, results of operations, or financial condition (or are
reasonably likely to), pursuant to Regulation S-K Item 106. Item 106 will also require registrants to describe the
board of directors’ oversight of risks from cybersecurity threats and management’s role and expertise in
assessing and managing material risks from cybersecurity threats. Similar rules were also adopted for foreign
private issuers. The final rules became effective on September 5, 2023.
Given the regulatory focus on, and the potential adverse outcomes from, cyber-related issues, it is our view that
cyber risk is material for all companies. We therefore believe that it is critical that companies evaluate and
mitigate these risks to the greatest extent possible. With that view, we encourage all issuers to provide clear
disclosure concerning the role of the board in overseeing issues related to cybersecurity, including how
companies are ensuring directors are fully versed on this rapidly evolving and dynamic issue. We believe such
disclosure can help shareholders understand the seriousness with which companies take this issue.
In the absence of material cyber incidents, we will generally not make voting recommendations on the basis of a
company’s oversight or disclosure concerning cyber-related issues. However, in instances where cyber-attacks
have caused significant harm to shareholders we will closely evaluate the board’s oversight of cybersecurity as
well as the company’s response and disclosures.
Moreover, in instances where a company has been materially impacted by a cyber-attack, we believe
shareholders can reasonably expect periodic updates communicating the company’s ongoing progress towards
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resolving and remediating the impact of the cyber-attack. We generally believe shareholders are best served
when such updates include (but are not necessarily limited to) details such as when the company has fully
restored its information systems, when the company has returned to normal operations, what resources the
company is providing for affected stakeholders, and any other potentially relevant information, until the
company considers the impact of the cyber-attack to be fully remediated. These disclosures should focus on the
company’s response to address the impacts to affected stakeholders and should not reveal specific and/or
technical details that could impede the company’s response or remediation of the incident or that could assist
threat actors.
In such instances, we may recommend against appropriate directors should we find the board’s oversight,
response or disclosure concerning cybersecurity-related issues to be insufficient, or are not provided to
shareholders.
Board Oversight of Artificial Intelligence
In recent years, companies have rapidly begun to develop and adopt uses for artificial intelligence (AI)
technologies throughout various aspects of their operations. Deployed and overseen effectively, AI technologies
have the potential to make companies’ operations and systems more efficient and productive. However, as the
use of these technologies has grown, so have the potential risks associated with companies’ development and
use of AI. Given these potential risks, we believe that boards should be cognizant of, and take steps to mitigate
exposure to, any material risks that could arise from their use or development of AI.
Companies that use or develop AI technologies should consider adopting strong internal frameworks that
include ethical considerations and ensure they have provided a sufficient level of oversight of AI. As such,
boards may seek to ensure effective oversight and address skills gaps by engaging in continued board education
and/or appointing directors with AI expertise. With that view, we believe that all companies that develop or
employ the use of AI in their operations should provide clear disclosure concerning the role of the board in
overseeing issues related to AI, including how companies are ensuring directors are fully versed on this rapidly
evolving and dynamic issue. We believe such disclosure can help shareholders understand the seriousness with
which companies take this issue.
While we believe that it is important that these issues are overseen at the board level and that shareholders are
afforded meaningful disclosure of these oversight responsibilities, we believe that companies should determine
the best structure for this oversight. In our view, this oversight can be effectively conducted by specific directors,
the entire board, a separate committee, or combined with the responsibilities of a key committee.
In the absence of material incidents related to a company’s use or management of AI-related issues, we will
generally not make voting recommendations on the basis of a company’s oversight of, or disclosure concerning,
AI-related issues. However, in instances where there is evidence that insufficient oversight and/or management
of AI technologies has resulted in material harm to shareholders, Glass Lewis will review a company’s overall
governance practices and identify which directors or board-level committees have been charged with oversight
of AI-related risks. We will also closely evaluate the board’s response to, and management of, this issue as well
as any associated disclosures and may recommend against appropriate directors should we find the board’s
oversight, response or disclosure concerning AI-related issues to be insufficient.
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Board Accountability for Environmental and Social Performance
Glass Lewis carefully monitors companies’ performance with respect to environmental and social issues,
including those related to climate and human capital management. In situations where we believe that a
company has not properly managed or mitigated material environmental or social risks to the detriment of
shareholder value, or when such mismanagement has threatened shareholder value, Glass Lewis may
recommend that shareholders vote against the members of the board who are responsible for oversight of
environmental and social risks. In the absence of explicit board oversight of environmental and social issues,
Glass Lewis may recommend that shareholders vote against members of the audit committee. In making these
determinations, Glass Lewis will carefully review the situation, its effect on shareholder value, as well as any
corrective action or other response made by the company.
For more information on how Glass Lewis evaluates environmental and social issues, please see Glass Lewis’
Overall Approach to ESG as well as our comprehensive Proxy Paper Guidelines for Shareholder Proposals & ESG-
Related Issues, available at www.glasslewis.com/voting-policies-current/.
Board Accountability for Climate-related Issues
Given the exceptionally broad impacts of a changing climate on companies, the economy, and society in general,
we view climate risk as a material risk for all companies. We therefore believe that boards should be considering
and evaluating their operational resilience under lower-carbon scenarios. While all companies maintain
exposure to climate-related risks, we believe that additional consideration should be given to, and that
disclosure should be provided by those companies whose GHG emissions represent a financially material risk.
We believe that companies with this increased risk exposure should provide clear and comprehensive disclosure
regarding these risks, including how they are being mitigated and overseen. We believe such information is
crucial to allow investors to understand the company’s management of this issue, as well as the impact of a
lower carbon future on the company’s operations.
In line with this view, Glass Lewis will carefully examine the climate-related disclosures provided by companies
in the S&P 500 index with material exposure to climate risk stemming from their own operations29, as well as
companies where we believe emissions or climate impacts, or stakeholder scrutiny thereof, represent an
outsized, financially material risk, in order to assess whether they have produced disclosures in line with the
recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) or IFRS S2 Climate-related
Disclosures. We will also assess whether these companies have disclosed explicit and clearly defined board-level
oversight responsibilities for climate-related issues. In instances where we find either (or both) of these
disclosures to be absent or significantly lacking, we may recommend voting against the chair of the committee
(or board) charged with oversight of climate-related issues, or if no committee has been charged with such
oversight, the chair of the governance committee. Further, we may extend our recommendation on this basis to
additional members of the responsible committee in cases where the committee chair is not standing for
29 This policy will generally apply to companies in the following SASB-defined industries: agricultural products, air freight &
logistics, airlines, chemicals, construction materials, containers & packaging, cruise lines, electric utilities & power generators,
food retailers & distributors, health care distributors, iron & steel producers, marine transportation, meat, poultry & dairy,
metals & mining, non-alcoholic beverages, oil & gas, pulp & paper products, rail transportation, road transportation,
semiconductors, waste management.
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election due to a classified board, or based on other factors, including the company’s size, industry and its
overall governance profile.
Director Commitments
We believe that directors should have the necessary time to fulfill their duties to shareholders. In our view, an
overcommitted director can pose a material risk to a company’s shareholders, particularly during periods of
crisis. In addition, recent research indicates that the time commitment associated with being a director has been
on a significant upward trend in the past decade.30 As a result, we generally recommend that shareholders vote
against a director who serves as an executive officer (other than executive chair) of any public company31 while
serving on more than one external public company board, a director who serves as an executive chair of any
public company while serving on more than two external public company boards, and any other director who
serves on more than five public company boards.
Because we believe that executives will primarily devote their attention to executive duties, we generally will
not recommend that shareholders vote against overcommitted directors at the companies where they serve as
an executive.
When determining whether a director’s service on an excessive number of boards may limit the ability of the
director to devote sufficient time to board duties, we may consider relevant factors such as the size and location
of the other companies where the director serves on the board, the director’s board roles at the companies in
question, whether the director serves on the board of any large privately-held companies, the director’s tenure
on the boards in question, and the director’s attendance record at all companies. In the case of directors who
serve in executive roles other than CEO (e.g., executive chair), we will evaluate the specific duties and
responsibilities of that role in determining whether an exception is warranted.
We may also refrain from recommending against certain directors if the company provides sufficient rationale
for their continued board service. The rationale should allow shareholders to evaluate the scope of the
directors’ other commitments, as well as their contributions to the board including specialized knowledge of the
company’s industry, strategy or key markets, the diversity of skills, perspective and background they provide,
and other relevant factors. We will also generally refrain from recommending to vote against a director who
serves on an excessive number of boards within a consolidated group of companies in related industries, or a
director that represents a firm whose sole purpose is to manage a portfolio of investments which include the
company.
30 For example, the 2015-2016 NACD Public Company Governance Survey states that, on average, directors spent a total of
248.2 hours annual on board-related matters during the past year, which it describes as a “historically high level” that is
significantly above the average hours recorded in 2006. Additionally, the 2020 Spencer Stuart Board Index indicates that,
while 39% of S&P 500 CEOs serve on one additional public board, just 2% of S&P 500 CEOs serve on two additional public
boards and only one CEO serves on three.
31 When the executive officer in question serves only as an executive at a special purpose acquisition company (SPAC) we
will generally apply the higher threshold of five public company directorships.
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Other Considerations
In addition to the three key characteristics — independence, performance, experience — that we use to
evaluate board members, we consider conflict-of-interest issues as well as the size of the board of directors
when making voting recommendations.
Conflicts of Interest
We believe board members should be wholly free of identifiable and substantial conflicts of interest, regardless
of the overall level of independent directors on the board. Accordingly, we recommend that shareholders vote
against the following types of directors:
•A CFO who is on the board: In our view, the CFO holds a unique position relative to financial reporting
and disclosure to shareholders. Due to the critical importance of financial disclosure and reporting, we
believe the CFO should report to the board and not be a member of it.
•A director who provides — or a director who has an immediate family member who provides — material
consulting or other material professional services to the company. These services may include legal,
consulting,32 or financial services. We question the need for the company to have consulting
relationships with its directors. We view such relationships as creating conflicts for directors, since they
may be forced to weigh their own interests against shareholder interests when making board decisions.
In addition, a company’s decisions regarding where to turn for the best professional
services may be compromised when doing business with the professional services firm of one of the
company’s directors.
•A director, or a director who has an immediate family member, engaging in airplane, real estate, or
similar deals, including perquisite-type grants from the company, amounting to more than $50,000.
Directors who receive these sorts of payments from the company will have to make unnecessarily
complicated decisions that may pit their interests against shareholder interests.
•Interlocking directorships: CEOs or other top executives who serve on each other’s boards create an
interlock that poses conflicts that should be avoided to ensure the promotion of shareholder interests
above all else.33
•All board members who served at a time when a poison pill with a term of longer than one year was
adopted without shareholder approval within the prior twelve months.34 In the event a board is
classified and shareholders are therefore unable to vote against all directors, we will recommend voting
against the remaining directors the next year they are up for a shareholder vote. If a poison pill with a
32 We will generally refrain from recommending against a director who provides consulting services for the company if the
director is excluded from membership on the board’s key committees and we have not identified significant governance
concerns with the board.
33 We do not apply a look-back period for this situation. The interlock policy applies to both public and private companies.
On a case-by-case basis, we evaluate other types of interlocking relationships, such as interlocks with close family members
of executives or within group companies. Further, we will also evaluate multiple board interlocks among non-insiders (i.e.,
multiple directors serving on the same boards at other companies), for evidence of a pattern of poor oversight.
34 Refer to the “Governance Structure and the Shareholder Franchise” section for further discussion of our policies
regarding anti-takeover measures, including poison pills.
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term of one year or less was adopted without shareholder approval, and without adequate justification,
we will consider recommending that shareholders vote against all members of the governance
committee. If the board has, without seeking shareholder approval, and without adequate justification,
extended the term of a poison pill by one year or less in two consecutive years, we will consider
recommending that shareholders vote against the entire board.
Size of the Board of Directors
While we do not believe there is a universally applicable optimal board size, we do believe boards should have
at least five directors to ensure sufficient diversity in decision-making and to enable the formation of key board
committees with independent directors. Conversely, we believe that boards with more than 20 members will
typically suffer under the weight of “too many cooks in the kitchen” and have difficulty reaching consensus and
making timely decisions. Sometimes the presence of too many voices can make it difficult to draw on the
wisdom and experience in the room by virtue of the need to limit the discussion so that each voice may be
heard.
To that end, we typically recommend voting against the chair of the nominating committee (or the governance
committee, in the absence of a nominating committee) at a board with fewer than five directors or more than
20 directors.
Controlled Companies
We believe controlled companies warrant certain exceptions to our independence standards. The board’s
function is to protect shareholder interests; however, when an individual, entity (or group of shareholders party
to a formal agreement) owns more than 50% of the voting shares, the interests of the majority of shareholders
are the interests of that entity or individual. Consequently, Glass Lewis does not apply our usual two-thirds
board independence rule and therefore we will not recommend voting against boards whose composition
reflects the makeup of the shareholder population.
Independence Exceptions
The independence exceptions that we make for controlled companies are as follows:
•We do not require that controlled companies have boards that are at least two-thirds independent. So
long as the insiders and/or affiliates are connected with the controlling entity, we accept the presence
of non-independent board members.
•The compensation committee and nominating and governance committees do not need to consist solely
of independent directors.
oWe believe that standing nominating and corporate governance committees at controlled
companies are unnecessary. Although having a committee charged with the duties of searching
for, selecting, and nominating independent directors can be beneficial, the unique composition
of a controlled company’s shareholder base makes such committees weak and irrelevant.
oLikewise, we believe that independent compensation committees at controlled companies are
unnecessary. Although independent directors are the best choice for approving and monitoring
senior executives’ pay, controlled companies serve a unique shareholder population whose
voting power ensures the protection of its interests. As such, we believe that having affiliated
directors on a controlled company’s compensation committee is acceptable. However, given
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that a controlled company has certain obligations to minority shareholders we feel that an
insider should not serve on the compensation committee. Therefore, Glass Lewis will
recommend voting against any insider (the CEO or otherwise) serving on the compensation
committee.
•Controlled companies do not need an independent chair or an independent lead or presiding director.
Although an independent director in a position of authority on the board — such as chair or presiding
director — can best carry out the board’s duties, controlled companies serve a unique shareholder
population whose voting power ensures the protection of its interests.
Size of the Board of Directors
We have no board size requirements for controlled companies.
Audit Committee Independence
Despite a controlled company’s status, unlike for the other key committees, we nevertheless believe that audit
committees should consist solely of independent directors. Regardless of a company’s controlled status, the
interests of all shareholders must be protected by ensuring the integrity and accuracy of the company’s financial
statements. Allowing affiliated directors to oversee the preparation of financial reports could create an
insurmountable conflict of interest.
Board Responsiveness at Multi-Class Companies
At controlled companies and companies that have multi-class share structures with unequal voting rights, we
will carefully examine the level of approval or disapproval attributed to unaffiliated shareholders when
determining whether board responsiveness is warranted. In the case of companies that have multi-class share
structures with unequal voting rights, we will generally examine the level of approval or disapproval attributed
to unaffiliated shareholders on a “one share, one vote” basis. At controlled and multi-class companies, when at
least 20% or more of unaffiliated shareholders vote contrary to management, we believe that boards should
engage with shareholders and demonstrate some initial level of responsiveness, and when a majority or more of
unaffiliated shareholders vote contrary to management we believe that boards should engage with shareholders
and provide a more robust response to fully address shareholder concerns.
Significant Shareholders
Where an individual or entity holds between 20-50% of a company’s voting power, we believe it is reasonable to
allow proportional representation on the board and committees (excluding the audit committee) based on the
individual or entity’s percentage of ownership.
Governance Following an IPO, Spin-Off, or Direct Listing
We believe companies that have recently completed an initial public offering (IPO), spin-off, or direct listing
should be allowed adequate time to fully comply with marketplace listing requirements and meet basic
corporate governance standards. Generally speaking, we refrain from making recommendations on the basis of
governance standards (e.g., board independence, committee membership and structure, meeting attendance,
etc.) during the one-year period following an IPO.
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However, some cases warrant shareholder action against the board of a company that have completed an IPO,
spin-off, or direct listing within the past year. When evaluating companies that have recently gone public, Glass
Lewis will review the terms of the applicable governing documents in order to determine whether shareholder
rights are being severely restricted indefinitely. We believe boards that approve highly restrictive governing
documents have demonstrated that they may subvert shareholder interests following the IPO. In conducting this
evaluation, Glass Lewis will consider:
•The adoption of anti-takeover provisions such as a poison pill or classified board
•Supermajority vote requirements to amend governing documents
•The presence of exclusive forum or fee-shifting provisions
•Whether shareholders can call special meetings or act by written consent
•The voting standard provided for the election of directors
•The ability of shareholders to remove directors without cause
•The presence of evergreen provisions in the company’s equity compensation arrangements
•The presence of a multi-class share structure which does not afford common shareholders voting power
that is aligned with their economic interest
In cases where Glass Lewis determines that the board has approved overly restrictive governing documents, we
will generally recommend voting against members of the governance committee. If there is no governance
committee, or if a portion of such committee members are not standing for election due to a classified board
structure, we will expand our recommendations to additional director nominees, based on who is standing for
election.
In cases where, preceding an IPO, the board adopts a multi-class share structure where voting rights are not
aligned with economic interest, or an anti-takeover provision, such as a poison pill or classified board, we will
generally recommend voting against all members of the board who served at the time of the IPO if the board: (i)
did not also commit to submitting these provisions to a shareholder vote at the company’s first shareholder
meeting following the IPO; or (ii) did not provide for a reasonable sunset of these provisions (generally three to
five years in the case of a classified board or poison pill; or seven years or less in the case of a multi-class share
structure). In the case of a multi-class share structure, if these provisions are put to a shareholder vote, we will
examine the level of approval or disapproval attributed to unaffiliated shareholders when determining the vote
outcome.
In our view, adopting an anti-takeover device unfairly penalizes future shareholders who (except for electing to
buy or sell the stock) are unable to weigh in on a matter that could potentially negatively impact their ownership
interest. This notion is strengthened when a board adopts a classified board with an infinite duration or a poison
pill with a five- to ten-year term immediately prior to going public, thereby insulating management for a
substantial amount of time.
In addition, shareholders should also be wary of companies that adopt supermajority voting requirements
before their IPO. Absent explicit provisions in the articles or bylaws stipulating that certain policies will be
phased out over a certain period of time, long-term shareholders could find themselves in the predicament of
having to attain a supermajority vote to approve future proposals seeking to eliminate such policies.
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Governance Following a Business Combination with a Special Purpose Acquisition Company
The business combination of a private company with a publicly traded special purpose acquisition company
(SPAC) facilitates the private entity becoming a publicly traded corporation. Thus, the business combination
represents the private company’s de-facto IPO. We believe that some cases warrant shareholder action against
the board of a company that have completed a business combination with a SPAC within the past year.
At meetings where shareholders vote on the business combination of a SPAC with a private company,
shareholders are generally voting on a new corporate charter for the post-combination company as a condition
to approval of the business combination. In many cases, shareholders are faced with the dilemma of having to
approve corporate charters that severely restrict shareholder rights to facilitate the business combination.
Therefore, when shareholders are required to approve binding charters as a condition to approval of a business
combination with a SPAC, we believe shareholders should also be provided with advisory votes on material
charter amendments as a means to voice their opinions on such restrictive governance provisions.
When evaluating companies that have recently gone public via business combination with a SPAC, Glass Lewis
will review the terms of the applicable governing documents to determine whether shareholder rights are being
severely restricted indefinitely and whether these restrictive provisions were put forth for a shareholder vote on
an advisory basis at the prior meeting where shareholders voted on the business combination.
In cases where, prior to the combined company becoming publicly traded, the board adopts a multi-class share
structure where voting rights are not aligned with economic interest, or an anti-takeover provision, such as a
poison pill or classified board, we will generally recommend voting against all members of the board who served
at the time of the combined company becoming publicly traded if the board: (i) did not also submit these
provisions to a shareholder vote on an advisory basis at the prior meeting where shareholders voted on the
business combination; (ii) did not also commit to submitting these provisions to a shareholder vote at the
company’s first shareholder meeting following the company becoming publicly traded; or (iii) did not provide for
a reasonable sunset of these provisions (generally three to five years in the case of a classified board or poison
pill; or seven years or less in the case of a multi-class share structure).
Consistent with our view on IPOs, adopting an anti-takeover device unfairly penalizes future shareholders who
(except for electing to buy or sell the stock) are unable to weigh in on a matter that could potentially negatively
impact their ownership interest.
Dual-Listed or Foreign-Incorporated Companies
For companies that trade on multiple exchanges or are incorporated in foreign jurisdictions but trade only in the
U.S., we will apply the governance standard most relevant in each situation. We will consider a number of
factors in determining which Glass Lewis country-specific policy to apply, including but not limited to: (i) the
corporate governance structure and features of the company including whether the board structure is unique to
a particular market; (ii) the nature of the proposals; (iii) the location of the company’s primary listing, if one can
be determined; (iv) the regulatory/governance regime that the board is reporting against; and (v) the availability
and completeness of the company’s SEC filings.
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OTC-listed Companies
Companies trading on the OTC Bulletin Board are not considered “listed companies” under SEC rules and
therefore not subject to the same governance standards as listed companies. However, we believe that more
stringent corporate governance standards should be applied to these companies given that their shares are still
publicly traded.
When reviewing OTC companies, Glass Lewis will review the available disclosure relating to the shareholder
meeting to determine whether shareholders are able to evaluate several key pieces of information, including: (i)
the composition of the board’s key committees, if any; (ii) the level of share ownership of company insiders or
directors; (iii) the board meeting attendance record of directors; (iv) executive and non-employee director
compensation; (v) related-party transactions conducted during the past year; and (vi) the board’s leadership
structure and determinations regarding director independence.
We are particularly concerned when company disclosure lacks any information regarding the board’s key
committees. We believe that committees of the board are an essential tool for clarifying how the responsibilities
of the board are being delegated, and specifically for indicating which directors are accountable for ensuring: (i)
the independence and quality of directors, and the transparency and integrity of the nominating process; (ii)
compensation programs that are fair and appropriate; (iii) proper oversight of the company’s accounting,
financial reporting, and internal and external audits; and (iv) general adherence to principles of good corporate
governance.
In cases where shareholders are unable to identify which board members are responsible for ensuring oversight
of the above-mentioned responsibilities, we may consider recommending against certain members of the board.
Ordinarily, we believe it is the responsibility of the corporate governance committee to provide thorough
disclosure of the board’s governance practices. In the absence of such a committee, we believe it is appropriate
to hold the board’s chair or, if such individual is an executive of the company, the longest-serving non-executive
board member accountable.
Mutual Fund Boards
Mutual funds, or investment companies, are structured differently from regular public companies (i.e., operating
companies). Typically, members of a fund’s advisor are on the board and management takes on a different role
from that of regular public companies. Thus, we focus on a short list of requirements, although many of our
guidelines remain the same.
The following mutual fund policies are similar to the policies for regular public companies:
•Size of the board of directors — The board should be made up of between five and twenty directors.
•The CFO on the board — Neither the CFO of the fund nor the CFO of the fund’s registered investment
advisor should serve on the board.
•Independence of the audit committee — The audit committee should consist solely of independent
directors.
•Audit committee financial expert — At least one member of the audit committee should be designated
as the audit committee financial expert.
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The following differences from regular public companies apply at mutual funds:
•Independence of the board — We believe that three-fourths of an investment company’s board should
be made up of independent directors. This is consistent with a proposed SEC rule on investment
company boards. The Investment Company Act requires 40% of the board to be independent, but in
2001, the SEC amended the Exemptive Rules to require that a majority of a mutual fund board be
independent. In 2005, the SEC proposed increasing the independence threshold to 75%. In 2006, a
federal appeals court ordered that this rule amendment be put back out for public comment, putting it
back into “proposed rule” status. Since mutual fund boards play a vital role in overseeing the
relationship between the fund and its investment manager, there is greater need for independent
oversight than there is for an operating company board.
•When the auditor is not up for ratification — We do not recommend voting against the audit
committee if the auditor is not up for ratification. Due to the different legal structure of an investment
company compared to an operating company, the auditor for the investment company (i.e., mutual
fund)
does not conduct the same level of financial review for each investment company as for an
operating company.
•Non-independent chair — The SEC has proposed that the chair of the fund board be independent. We
agree that the roles of a mutual fund’s chair and CEO should be separate. Although we believe this
would be best at all companies, we recommend voting against the chair of an investment company’s
nominating committee as well as the board chair if the chair and CEO of a mutual fund are the same
person and the fund does not have an independent lead or presiding director. Seven former SEC
commissioners support the appointment of an independent chair and we agree with them that “an
independent board chair would be better able to create conditions favoring the long-term interests of
fund shareholders than would a chair who is an executive of the advisor.” (See the comment letter sent
to the SEC in support of the proposed rule at http://www.sec.gov/news/studies/indchair.pdf.)
•Multiple funds overseen by the same director — Unlike service on a public company board, mutual
fund boards require much less of a time commitment. Mutual fund directors typically serve on dozens of
other mutual fund boards, often within the same fund complex. The Investment Company Institute’s
(ICI) Overview of Fund Governance Practices, 1994-2012, indicates that the average number of funds
served by an independent director in 2012 was 53. Absent evidence that a specific director is hindered
from being an effective board member at a fund due to service on other funds’ boards, we refrain from
maintaining a cap on the number of outside mutual fund boards that we believe a director can serve on.
Declassified Boards
Glass Lewis favors the repeal of staggered boards and the annual election of directors. We believe staggered
boards are less accountable to shareholders than boards that are elected annually. Furthermore, we feel the
annual election of directors encourages board members to focus on shareholder interests.
Empirical studies have shown: (i) staggered boards are associated with a reduction in a firm’s valuation; and (ii)
in the context of hostile takeovers, staggered boards operate as a takeover defense, which entrenches
management, discourages potential acquirers, and delivers a lower return to target shareholders.
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In our view, there is no evidence to demonstrate that staggered boards improve shareholder returns in a
takeover context. Some research has indicated that shareholders are worse off when a staggered board blocks a
transaction; further, when a staggered board negotiates a friendly transaction, no statistically significant
difference in premium occurs.35 Additional research found that charter-based staggered boards “reduce the
market value of a firm by 4% to 6% of its market capitalization” and that “staggered boards bring about and not
merely reflect this reduction in market value.”36 A subsequent study reaffirmed that classified boards reduce
shareholder value, finding “that the ongoing process of dismantling staggered boards, encouraged by
institutional investors, could well contribute to increasing shareholder wealth.”37
Shareholders have increasingly come to agree with this view. In 2019, 90% of S&P 500 companies had
declassified boards, up from 68% in 2009.38 Management proposals to declassify boards are approved with near
unanimity and shareholder proposals on the topic also receive strong shareholder support; in 2014, shareholder
proposals requesting that companies declassify their boards received average support of 84% (excluding
abstentions and broker non-votes), whereas in 1987, only 16.4% of votes cast favored board declassification.39
Further, a growing number of companies, nearly half of all those targeted by shareholder proposals requesting
that all directors stand for election annually, either recommended shareholders support the proposal or made
no recommendation, a departure from the more traditional management recommendation to vote against
shareholder proposals.
Given our belief that declassified boards promote director accountability, the empirical evidence suggesting
staggered boards reduce a company’s value and the established shareholder opposition to such a structure,
Glass Lewis supports the declassification of boards and the annual election of directors.
Board Composition and Refreshment
Glass Lewis strongly supports routine director evaluation, including independent external reviews, and periodic
board refreshment to foster the sharing of diverse perspectives in the boardroom and the generation of new
ideas and business strategies. Further, we believe the board should evaluate the need for changes to board
composition based on an analysis of skills and experience necessary for the company, as well as the results of
the director evaluations, as opposed to relying solely on age or tenure limits. When necessary, shareholders can
address concerns regarding proper board composition through director elections.
35 Lucian Bebchuk, John Coates IV, Guhan Subramanian, “The Powerful Antitakeover Force of Staggered Boards: Further
Findings and a Reply to Symposium Participants,” 55 Stanford Law Review 885-917 (2002).
36 Lucian Bebchuk, Alma Cohen, “The Costs of Entrenched Boards” (2004).
37 Lucian Bebchuk, Alma Cohen and Charles C.Y. Wang, “Staggered Boards and the Wealth of Shareholders: Evidence from
a Natural Experiment,”
SSRN: http://ssrn.com/abstract=1706806 (2010), p. 26.
38 Spencer Stuart Board Index, 2019, p. 15.
39 Lucian Bebchuk, John Coates IV and Guhan Subramanian, “The Powerful Antitakeover Force of Staggered Boards: Theory,
Evidence, and Policy”.
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In our view, a director’s experience can be a valuable asset to shareholders because of the complex, critical
issues that boards face. This said, we recognize that in rare circumstances, a lack of refreshment can contribute
to a lack of board responsiveness to poor company performance.
We will note as a potential concern instances where the average tenure of non-executive directors is 10 years or
more and no new directors have joined the board in the past five years. While we will be highlighting this as a
potential area of concern, we will not be making voting recommendations strictly on this basis, unless we have
identified other governance or board performance concerns.
On occasion, age or term limits can be used as a means to remove a director for boards that are unwilling to
police their membership and enforce turnover. Some shareholders support term limits as a way to force change
in such circumstances.
While we understand that age limits can aid board succession planning, the long-term impact of age limits
restricts experienced and potentially valuable board members from service through an arbitrary means. We
believe that shareholders are better off monitoring the board’s overall composition, including the diversity of its
members, the alignment of the board’s areas of expertise with a company’s strategy, the board’s approach to
corporate governance, and its stewardship of company performance, rather than imposing inflexible rules that
don’t necessarily correlate with returns or benefits for shareholders.
However, if a board adopts term/age limits, it should follow through and not waive such limits. In cases where
the board waives its term/age limits for two or more consecutive years, Glass Lewis will generally recommend
that shareholders vote against the nominating and/or governance committee chair, unless a compelling
rationale is provided for why the board is proposing to waive this rule, such as consummation of a corporate
transaction.
Board Diversity
Glass Lewis recognizes the importance of ensuring that the board is composed of directors who have a diversity
of skills, thought and experience, as such diversity benefits companies by providing a broad range of
perspectives and insights. Glass Lewis closely reviews the composition of the board for representation of diverse
director candidates.
Board Gender Diversity
We consider the nominating and governance committee to be responsible for ensuring sufficient board
diversity, or for publicly communicating its rationale or a plan for increasing diversity. As such, we will generally
recommend voting against the chair of the nominating committee of a board that is not at least 30 percent
gender diverse, or all members of the nominating committee of a board with no gender diverse directors, at
companies within the Russell 3000 index. For companies outside the Russell 3000 index, our policy requires a
minimum of one gender diverse director.
When making these voting recommendations, we will carefully review a company’s disclosure of its diversity
considerations and may refrain from recommending that shareholders vote against directors when boards have
provided sufficient rationale for the lack of diversity or a plan to address the lack of diversity, including a
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timeline of when the board intends to appoint additional gender diverse directors (generally by the next annual
meeting or as soon as reasonably practicable).
We may extend our gender diversity recommendations to additional members of the nominating committee in
cases where the committee chair is not standing for election due to a classified board, or based on other factors,
including the company’s size and industry, applicable laws in its state of headquarters, and its overall
governance profile.
Board Underrepresented Community Diversity
We will generally recommend against the chair of the nominating committee of a board with fewer than one
director from an underrepresented community on the board at companies within the Russell 1000 index.
We define “underrepresented community director” as an individual who self-identifies as Black, African
American, North African, Middle Eastern, Hispanic, Latino, Asian, Pacific Islander, Native American, Native
Hawaiian, or Alaskan Native, or who self-identifies as a member of the LGBTQIA+ community. For the purposes
of this evaluation, we will rely solely on self-identified demographic information as disclosed in company proxy
statements.
When making these voting recommendations, we will carefully review a company’s disclosure of its diversity
considerations and may refrain from recommending that shareholders vote against directors when boards have
provided a sufficient rationale or plan to address the lack of diversity on the board, including a timeline to
appoint additional directors from an underrepresented community (generally by the next annual meeting or as
soon as reasonably practicable).
We may extend our underrepresented community diversity recommendations to additional members of the
nominating committee in cases where the committee chair is not standing for election due to a classified board,
or based on other factors, including the company’s size and industry, applicable laws in its state of headquarters,
and its overall governance profile.
State Laws on Diversity
Several states have begun to encourage board diversity through legislation. Some state laws imposed
mandatory board composition requirements, while other states have enacted or are considering legislation that
encourages companies to diversify their boards but does not mandate board composition requirements.
Furthermore, several states have enacted or are considering enacting certain disclosure or reporting
requirements in filings made with each respective state annually.
Glass Lewis will recommend in accordance with mandatory board composition requirements set forth in
applicable state laws when they come into effect. We will generally refrain from recommending against
directors when applicable state laws do not mandate board composition requirements, are non-binding, or
solely impose disclosure or reporting requirements.
We note that during 2022, California’s Senate Bill 826 and Assembly Bill 979 regarding board gender and
“underrepresented community” diversity, respectively, were both deemed to violate the equal protection clause
of the California state constitution. These laws are currently in the appeals process.
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Accordingly, where we previously recommended in accordance with mandatory board composition
requirements set forth in California’s SB 826 and AB 979, we will refrain from providing recommendations
pursuant to these state board composition requirements until further notice while we continue to monitor the
appeals process. However, we will continue to monitor compliance with these requirements.
Disclosure of Director Diversity and Skills
Because company disclosure is critical when measuring the mix of diverse attributes and skills of directors, Glass
Lewis assesses the quality of such disclosure in companies’ proxy statements. Accordingly, we reflect how a
company’s proxy statement presents: (i) the board’s current percentage of racial/ethnic diversity; (ii) whether
the board’s definition of diversity explicitly includes gender and/or race/ethnicity; (iii) whether the board has
adopted a policy requiring women and minorities to be included in the initial pool of candidates when selecting
new director nominees (aka “Rooney Rule”); and (iv) board skills disclosure. Such ratings will help inform our
assessment of a company’s overall governance and may be a contributing factor in our recommendations when
additional board-related concerns have been identified.
At companies in the Russell 1000 index that have not provided any disclosure in any of the above categories, we
will generally recommend voting against the chair of the nominating and/or governance committee. Further,
when companies in the Russell 1000 index have not provided any disclosure of individual or aggregate racial/
ethnic minority board demographic information, we will generally recommend voting against the chair of the
nominating and/or governance committee.
Proxy Access
In lieu of running their own contested election, proxy access would not only allow certain shareholders to
nominate directors to company boards but the shareholder nominees would be included on the company’s
ballot, significantly enhancing the ability of shareholders to play a meaningful role in selecting their
representatives. Glass Lewis generally supports affording shareholders the right to nominate director candidates
to management’s proxy as a means to ensure that significant, long-term shareholders have an ability to
nominate candidates to the board.
Companies generally seek shareholder approval to amend company bylaws to adopt proxy access in response to
shareholder engagement or pressure, usually in the form of a shareholder proposal requesting proxy access,
although some companies may adopt some elements of proxy access without prompting. Glass Lewis considers
several factors when evaluating whether to support proposals for companies to adopt proxy access including the
specified minimum ownership and holding requirement for shareholders to nominate one or more directors, as
well as company size, performance and responsiveness to shareholders.
For a discussion of recent regulatory events in this area, along with a detailed overview of the Glass Lewis
approach to shareholder proposals regarding Proxy Access, refer to Glass Lewis’ Proxy Paper Guidelines for
Shareholder Proposals & ESG-Related Issues, available at www.glasslewis.com.
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Majority Vote for Election of Directors
Majority voting for the election of directors is fast becoming the de facto standard in corporate board elections.
In our view, the majority voting proposals are an effort to make the case for shareholder impact on director
elections on a company-specific basis.
While this proposal would not give shareholders the opportunity to nominate directors or lead to elections
where shareholders have a choice among director candidates, if implemented, the proposal would allow
shareholders to have a voice in determining whether the nominees proposed by the board should actually serve
as the overseer-representatives of shareholders in the boardroom. We believe this would be a favorable
outcome for shareholders.
The number of shareholder proposals requesting that companies adopt a majority voting standard has declined
significantly during the past decade, largely as a result of widespread adoption of majority voting or director
resignation policies at U.S. companies. In 2019, 89% of the S&P 500 Index had implemented a resignation policy
for directors failing to receive majority shareholder support, compared to 65% in 2009.40
The Plurality Vote Standard
Today, most U.S. companies still elect directors by a plurality vote standard. Under that standard, if one
shareholder holding only one share votes in favor of a nominee (including that director, if the director is a
shareholder), that nominee “wins” the election and assumes a seat on the board. The common concern among
companies with a plurality voting standard is the possibility that one or more directors would not receive a
majority of votes, resulting in “failed elections.”
Advantages of a Majority Vote Standard
If a majority vote standard were implemented, a nominee would have to receive the support of a majority of the
shares voted in order to be elected. Thus, shareholders could collectively vote to reject a director they believe
will not pursue their best interests. Given that so few directors (less than 100 a year) do not receive majority
support from shareholders, we think that a majority vote standard is reasonable since it will neither result in
many failed director elections nor reduce the willingness of qualified, shareholder-focused directors to serve in
the future. Further, most directors who fail to receive a majority shareholder vote in favor of their election do
not step down, underscoring the need for true majority voting.
We believe that a majority vote standard will likely lead to more attentive directors. Although shareholders only
rarely fail to support directors, the occasional majority vote against a director’s election will likely deter the
election of directors with a record of ignoring shareholder interests. Glass Lewis will therefore generally support
proposals calling for the election of directors by a majority vote, excepting contested director elections.
In response to the high level of support majority voting has garnered, many companies have voluntarily taken
steps to implement majority voting or modified approaches to majority voting. These steps range from a
40 Spencer Stuart Board Index, 2019, p. 15.
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modified approach requiring directors that receive a majority of withheld votes to resign (i.e., a resignation
policy) to actually requiring a majority vote of outstanding shares to elect directors.
We feel that the modified approach does not go far enough because requiring a director to resign is not the
same as requiring a majority vote to elect a director and does not allow shareholders a definitive voice in the
election process. Further, under the modified approach, the corporate governance committee could reject a
resignation and, even if it accepts the resignation, the corporate governance committee decides on the
director’s replacement. And since the modified approach is usually adopted as a policy by the board or a board
committee, it could be altered by the same board or committee at any time.
Conflicting and Excluded Proposals
SEC Rule 14a-8(i)(9) allows companies to exclude shareholder proposals “if the proposal directly conflicts with
one of the company’s own proposals to be submitted to shareholders at the same meeting.” On October 22,
2015, the SEC issued Staff Legal Bulletin No. 14H (SLB 14H) clarifying its rule concerning the exclusion of certain
shareholder proposals when similar items are also on the ballot. SLB 14H increased the burden on companies to
prove to SEC staff that a conflict exists; therefore, many companies still chose to place management proposals
alongside similar shareholder proposals in many cases.
During the 2018 proxy season, a new trend in the SEC’s interpretation of this rule emerged. Upon submission of
shareholder proposals requesting that companies adopt a lower special meeting threshold, several companies
petitioned the SEC for no-action relief under the premise that the shareholder proposals conflicted with
management’s own special meeting proposals, even though the management proposals set a higher threshold
than those requested by the proponent. No-action relief was granted to these companies; however, the SEC
stipulated that the companies must state in the rationale for the management proposals that a vote in favor of
management’s proposal was tantamount to a vote against the adoption of a lower special meeting threshold. In
certain instances, shareholder proposals to lower an existing special meeting right threshold were excluded on
the basis that they conflicted with management proposals seeking to ratify the existing special meeting rights.
We find the exclusion of these shareholder proposals to be especially problematic as, in these instances,
shareholders are not offered any enhanced shareholder right, nor would the approval (or rejection) of the
ratification proposal initiate any type of meaningful change to shareholders’ rights.
In instances where companies have excluded shareholder proposals, such as those instances where special
meeting shareholder proposals are excluded as a result of “conflicting” management proposals, Glass Lewis will
take a case-by-case approach, taking into account the following issues:
•The threshold proposed by the shareholder resolution;
•The threshold proposed or established by management and the attendant rationale for the threshold;
•Whether management’s proposal is seeking to ratify an existing special meeting right or adopt a bylaw
that would establish a special meeting right; and
•The company’s overall governance profile, including its overall responsiveness to and engagement with
shareholders.
Glass Lewis generally favors a 10-15% special meeting right. Accordingly, Glass Lewis will generally recommend
voting for management or shareholder proposals that fall within this range. When faced with conflicting
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proposals, Glass Lewis will generally recommend in favor of the lower special meeting right and will recommend
voting against the proposal with the higher threshold. However, in instances where there are conflicting
management and shareholder proposals and a company has not established a special meeting right, Glass Lewis
may recommend that shareholders vote in favor of the shareholder proposal and that they abstain from a
management-proposed bylaw amendment seeking to establish a special meeting right. We believe that an
abstention is appropriate in this instance in order to ensure that shareholders are sending a clear signal
regarding their preference for the appropriate threshold for a special meeting right, while not directly opposing
the establishment of such a right.
In cases where the company excludes a shareholder proposal seeking a reduced special meeting right by means
of ratifying a management proposal that is materially different from the shareholder proposal, we will generally
recommend voting against the chair or members of the governance committee.
In other instances of conflicting management and shareholder proposals, Glass Lewis will consider the following:
•The nature of the underlying issue;
•The benefit to shareholders of implementing the proposal;
•The materiality of the differences between the terms of the shareholder proposal and management
proposal;
•The context of a company’s shareholder base, corporate structure and other relevant circumstances;
and
•A company’s overall governance profile and, specifically, its responsiveness to shareholders as
evidenced by a company’s response to previous shareholder proposals and its adoption of progressive
shareholder rights provisions.
In recent years, we have seen the dynamic nature of the considerations given by the SEC when determining
whether companies may exclude certain shareholder proposals. We understand that not all shareholder
proposals serve the long-term interests of shareholders, and value and respect the limitations placed on
shareholder proponents, as certain shareholder proposals can unduly burden companies. However, Glass Lewis
believes that shareholders should be able to vote on issues of material importance.
We view the shareholder proposal process as an important part of advancing shareholder rights and
encouraging responsible and financially sustainable business practices. While recognizing that certain proposals
cross the line between the purview of shareholders and that of the board, we generally believe that companies
should not limit investors’ ability to vote on shareholder proposals that advance certain rights or promote
beneficial disclosure. Accordingly, Glass Lewis will make note of instances where a company has successfully
petitioned the SEC to exclude shareholder proposals. If after review we believe that the exclusion of a
shareholder proposal is detrimental to shareholders, we may, in certain very limited circumstances, recommend
against members of the governance committee.
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Transparency and Integrity in Financial
Reporting
Auditor Ratification
The auditor’s role as gatekeeper is crucial in ensuring the integrity and transparency of the financial information
necessary for protecting shareholder value. Shareholders rely on the auditor to ask tough questions and to do a
thorough analysis of a company’s books to ensure that the information provided to shareholders is complete,
accurate, fair, and that it is a reasonable representation of a company’s financial position. The only way
shareholders can make rational investment decisions is if the market is equipped with accurate information
about a company’s fiscal health. As stated in the October 6, 2008 Final Report of the Advisory Committee on the
Auditing Profession to the U.S. Department of the Treasury:
“The auditor is expected to offer critical and objective judgment on the financial matters under
consideration, and actual and perceived absence of conflicts is critical to that expectation. The
Committee believes that auditors, investors, public companies, and other market participants must
understand the independence requirements and their objectives, and that auditors must adopt a mindset
of skepticism when facing situations that may compromise their independence.”
As such, shareholders should demand an objective, competent and diligent auditor who performs at or above
professional standards at every company in which the investors hold an interest. Like directors, auditors should
be free from conflicts of interest and should avoid situations requiring a choice between the auditor’s interests
and the public’s interests. Almost without exception, shareholders should be able to annually review an
auditor’s performance and to annually ratify a board’s auditor selection. Moreover, in October 2008, the
Advisory Committee on the Auditing Profession went even further, and recommended that “to further enhance
audit committee oversight and auditor accountability ... disclosure in the company proxy statement regarding
shareholder ratification [should] include the name(s) of the senior auditing partner(s) staffed on the
engagement.”41
On August 16, 2011, the PCAOB issued a Concept Release seeking public comment on ways that auditor
independence, objectivity and professional skepticism could be enhanced, with a specific emphasis on
mandatory audit firm rotation. The PCAOB convened several public roundtable meetings during 2012 to further
discuss such matters. Glass Lewis believes auditor rotation can ensure both the independence of the auditor and
the integrity of the audit; we will typically recommend supporting proposals to require auditor rotation when
the proposal uses a reasonable period of time (usually not less than 5-7 years), particularly at companies with a
history of accounting problems.
On June 1, 2017, the PCAOB adopted new standards to enhance auditor reports by providing additional
important information to investors. For companies with fiscal year end dates on or after December 15, 2017,
reports were required to include the year in which the auditor began serving consecutively as the company’s
auditor. For large accelerated filers with fiscal year ends of June 30, 2019 or later, and for all other companies
with fiscal year ends of December 15, 2020 or later, communication of critical audit matters (CAMs) will also be
required. CAMs are matters that have been communicated to the audit committee, are related to accounts or
41 “Final Report of the Advisory Committee on the Auditing Profession to the U.S. Department of the Treasury.” p. VIII:20,
October 6, 2008.
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disclosures that are material to the financial statements, and involve especially challenging, subjective, or
complex auditor judgment.
Glass Lewis believes the additional reporting requirements are beneficial for investors. The additional
disclosures can provide investors with information that is critical to making an informed judgment about an
auditor’s independence and performance. Furthermore, we believe the additional requirements are an
important step toward enhancing the relevance and usefulness of auditor reports, which too often are seen as
boilerplate compliance documents that lack the relevant details to provide meaningful insight into a particular
audit.
Voting Recommendations on Auditor Ratification
We generally support management’s choice of auditor except when we believe the auditor’s independence or
audit integrity has been compromised. Where a board has not allowed shareholders to review and ratify an
auditor, we typically recommend voting against the audit committee chair. When there have been material
restatements of annual financial statements or material weaknesses in internal controls, we usually recommend
voting against the entire audit committee.
Reasons why we may not recommend ratification of an auditor include:
•When audit fees plus audit-related fees total less than the tax fees and/or other non-audit fees.
•Recent material restatements of annual financial statements, including those resulting in the reporting
of material weaknesses in internal controls and including late filings by the company where the auditor
bears some responsibility for the restatement or late filing.42
•When the auditor performs prohibited services such as tax-shelter work, tax services for the CEO or CFO,
or contingent-fee work, such as a fee based on a percentage of economic benefit to the company.
•When audit fees are excessively low, especially when compared with other companies in the same
industry.
•When the company has aggressive accounting policies.
•When the company has poor disclosure or lack of transparency in its financial statements.
•Where the auditor limited its liability through its contract with the company or the audit contract
requires the corporation to use alternative dispute resolution procedures without adequate
justification.
•We also look for other relationships or concerns with the auditor that might suggest a conflict between
the auditor’s interests and shareholder interests.
•In determining whether shareholders would benefit from rotating the company’s auditor, where
relevant we will consider factors that may call into question an auditor’s effectiveness, including auditor
tenure, a pattern of inaccurate audits, and any ongoing litigation or significant controversies. When
Glass Lewis considers ongoing litigation and significant controversies, it is mindful that such matters may
involve unadjudicated allegations. Glass Lewis does not assume the truth of such allegations or that the
42 An auditor does not audit interim financial statements. Thus, we generally do not believe that an auditor should be opposed
due to a restatement of interim financial statements unless the nature of the misstatement is clear from a reading of the
incorrect financial statements.
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law has been violated. Instead, Glass Lewis focuses more broadly on whether, under the particular facts
and circumstances presented, the nature and number of such lawsuits or other significant controversies
reflects on the risk profile of the company or suggests that appropriate risk mitigation measures may be
warranted.”
Pension Accounting Issues
A pension accounting question occasionally raised in proxy proposals is what effect, if any, projected returns on
employee pension assets should have on a company’s net income. This issue often arises in the executive-
compensation context in a discussion of the extent to which pension accounting should be reflected in business
performance for purposes of calculating payments to executives.
Glass Lewis believes that pension credits should not be included in measuring income that is used to award
performance-based compensation. Because many of the assumptions used in accounting for retirement plans
are subject to the company’s discretion, management would have an obvious conflict of interest if pay were tied
to pension income. In our view, projected income from pensions does not truly reflect a company’s
performance.
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The Link Between Compensation and
Performance
Glass Lewis carefully reviews the compensation awarded to senior executives, as we believe that this is an
important area in which the board’s priorities are revealed. Glass Lewis strongly believes executive
compensation should be linked directly with the performance of the business the executive is charged with
managing. We believe the most effective compensation arrangements provide for an appropriate mix of
performance-based short- and long-term incentives in addition to fixed pay elements while promoting a prudent
and sustainable level of risk-taking.
Glass Lewis believes that comprehensive, timely and transparent disclosure of executive pay is critical to
allowing shareholders to evaluate the extent to which pay is aligned with company performance. When
reviewing proxy materials, Glass Lewis examines whether the company discloses the performance metrics used
to determine executive compensation. We recognize performance metrics must necessarily vary depending on
the company and industry, among other factors, and may include a wide variety of financial measures as well as
industry-specific performance indicators. However, we believe companies should disclose why the specific
performance metrics were selected and how the actions they are designed to incentivize will lead to better
corporate performance.
Moreover, it is rarely in shareholders’ interests to disclose competitive data about individual salaries below the
senior executive level. Such disclosure could create internal personnel discord that would be counterproductive
for the company and its shareholders. We do not believe shareholders need or will benefit from detailed
reports about individual management employees other than the most senior executives.
Advisory Vote on Executive Compensation (Say-
on-Pay)
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) required most
companies to hold an advisory vote on executive compensation at the first shareholder meeting that occurs six
months after enactment of the bill (January 21, 2011).
This practice of allowing shareholders a non-binding vote on a company’s compensation report is standard
practice in many non-U.S. countries, and has been a requirement for most companies in the United Kingdom
since 2003 and in Australia since 2005. Although say-on-pay proposals are non-binding, a high level of
“against” or “abstain” votes indicates substantial shareholder concern about a company’s compensation policies
and procedures.
Given the complexity of most companies’ compensation programs, Glass Lewis applies a highly nuanced
approach when analyzing advisory votes on executive compensation. We review each company’s compensation
on a case-by-case basis, recognizing that each company must be examined in the context of industry, size,
maturity, performance, financial condition, its historic pay for performance practices, and any other relevant
internal or external factors.
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We believe that each company should design and apply specific compensation policies and practices that are
appropriate to the circumstances of the company and, in particular, will attract and retain competent executives
and other staff, while motivating them to grow the company’s long-term shareholder value.
Where we find those specific policies and practices serve to reasonably align compensation with performance,
and such practices are adequately disclosed, Glass Lewis will recommend supporting the company’s approach.
If, however, those specific policies and practices fail to demonstrably link compensation with performance, Glass
Lewis will generally recommend voting against the say-on-pay proposal.
Glass Lewis reviews say-on-pay proposals on both a qualitative basis and a quantitative basis, with a focus on
several main areas:
•The overall design and structure of the company’s executive compensation programs including selection
and challenging nature of performance metrics;
•The implementation and effectiveness of the company’s executive compensation programs including
pay mix and use of performance metrics in determining pay levels;
•The quality and content of the company’s disclosure;
•The quantum paid to executives; and
•The link between compensation and performance as indicated by the company’s current and past pay-
for-performance grades.
We also review any significant changes or modifications, including post fiscal year-end changes and one-time
awards, particularly where the changes touch upon issues that are material to Glass Lewis recommendations.
Additionally, while we recognize their rarity in the U.S. market, beneficial features such as but not limited to
post-vesting and/or post-retirement holding requirements may be viewed positively in our holistic analysis.
Say-on-Pay Voting Recommendations
In cases where we find deficiencies in a company’s compensation program’s design, implementation or
management, we will recommend that shareholders vote against the say-on-pay proposal. Generally, such
instances include:
•Evidence of a pattern of poor pay-for-performance practices (e.g., deficient or failing pay-for-
performance grades or a misalignment between incentive payouts and the shareholder experience),
•Unclear or questionable disclosure regarding the overall compensation structure (e.g., limited
information regarding benchmarking processes, limited rationale for bonus performance metrics and
targets, etc.),
•Questionable adjustments to certain aspects of the overall compensation structure (e.g., limited
rationale for significant changes to performance targets or metrics, the payout of guaranteed bonuses
or sizable retention grants, etc.), and/or
•Other egregious compensation practices.
Glass Lewis approaches its analysis of executive compensation programs on a case-by-case basis. Glass Lewis
reviews all factors related to named executive officer compensation, including quantitative analyses, structural
features, the presence of effective best practice policies, disclosure quality and trajectory-related factors. Except
for particularly egregious pay decisions and practices, no one factor would ordinarily lead to an unfavorable
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recommendation without a review of the company’s rationale and/or the influence of such decisions or
practices on other aspects of the pay program, most notably the company’s ability to align executive pay with
performance and the shareholder experience.
Although not an exhaustive list, the following factors are viewed negatively. When weighed together, they may
cause Glass Lewis to recommend voting against a say-on-pay vote:
•Inappropriate or outsized self-selected peer groups and/or benchmarking issues such as compensation
targets set well above the median without adequate justification;
•Egregious or excessive bonuses, equity awards, perquisites or severance payments, including golden
handshakes and golden parachutes;
•Insufficient response to low shareholder support;
•Problematic contractual payments, such as guaranteed bonuses;
•Adjustments to performance results that lead to problematic pay outcomes;
•Insufficiently challenging performance targets and/or high potential payout opportunities;
•Performance targets lowered without justification;
•Discretionary bonuses paid when short- or long-term incentive plan targets were not met;
•High executive pay relative to peers that is not justified by outstanding company performance; and
•The terms of the long-term incentive plans are inappropriate (please see “Long-Term Incentives”).
The aforementioned issues influence Glass Lewis’ assessment of the structure of a company’s compensation
program. We evaluate structure on a “Good, Fair, Poor” rating scale whereby a “Good” rating represents a
compensation program with little to no concerns and market-leading practices, a “Fair” rating represents a
compensation program with some concerns but general adherence to best practices and a “Poor” rating
represents a compensation program that deviates significantly from best practice or contains one or more
egregious compensation practices.
We believe that it is important for companies to provide investors with clear and complete disclosure of all the
significant terms of compensation arrangements. Similar to structure, we evaluate disclosure on a “Good, Fair,
Poor” rating scale. A “Good” rating represents a thorough discussion of all elements of compensation with
rationale. A “Fair” rating represents an adequate discussion of all or most elements of compensation with
rationale. A “Poor” rating represents an incomplete or absent discussion of compensation. In instances where a
company has simply failed to provide sufficient disclosure of its policies, we may recommend shareholders vote
against this proposal solely on this basis, regardless of the appropriateness of compensation levels. Glass Lewis
understands that regulatory disclosure rules such as smaller reporting company disclosure standards may
condone the omission of key executive compensation information. However, we believe that companies should
provide sufficient information in the proxy statement to enable shareholders to vote in an informed manner.
In general, most companies will fall within the “Fair” range for both structure and disclosure, and Glass Lewis
largely uses the “Good” and “Poor” ratings to highlight outliers.
Where we identify egregious compensation practices, we may also recommend voting against the compensation
committee based on the practices or actions of its members during the year. Such practices may include
approving large one-off payments, the inappropriate, unjustified use of discretion, or sustained poor pay for
performance practices. (Refer to the section on "Compensation Committee Performance" for more
information.)
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Company Responsiveness
When companies receive a significant level of shareholder opposition to a say-on-pay proposal, which occurs
when more than 20% of votes on the proposal are cast as AGAINST and/or ABSTAIN, we believe the board
should demonstrate a commensurate level of engagement and responsiveness to the concerns behind the
disapproval, with a particular focus on responding to shareholder feedback. When assessing the level of
opposition to say-on-pay proposals, we may further examine the level of opposition among disinterested
shareholders as an independent group. While we recognize that sweeping changes cannot be made to a
compensation program without due consideration, and that often a majority of shareholders may have voted in
favor of the proposal, given that the average approval rate for say-on-pay proposals is about 90%, we believe
the compensation committee should demonstrate in its proxy statement a level of response to a significant vote
against. In general, our expectations regarding the minimum appropriate levels of responsiveness will
correspond with the level of shareholder opposition, as expressed both through the magnitude of opposition in
a single year, and through the persistence of shareholder disapproval over time.
Responses we consider appropriate include engaging with large shareholders, especially dissenting
shareholders, to identify their concerns, and, where reasonable, implementing changes and/or making
commitments that directly address those concerns within the company’s compensation program. In cases where
particularly egregious pay decisions caused the say on pay proposal to fail, Glass Lewis will closely consider
whether any changes were made directly relating to the pay decision that may address structural concerns that
shareholders have. In the absence of any evidence in the disclosure that the board is actively engaging
shareholders on these issues and responding accordingly, we may recommend holding compensation
committee members accountable for failing to adequately respond to shareholder opposition. Regarding such
recommendations, careful consideration will be given to the level of shareholder protest and the severity and
history of compensation practices.
Pay for Performance
Glass Lewis believes an integral part of a well-structured compensation package is a successful link between pay
and performance. Our proprietary pay-for-performance model, which serves as our primary quantitative
analysis, was developed to better evaluate the link between pay and performance. Generally, compensation and
performance are measured against a peer group of appropriate companies that may overlap, to a certain extent,
with a company’s self-disclosed peers. This quantitative analysis provides a consistent framework and historical
context for our clients to determine how well companies link executive compensation to relative performance.
Companies that demonstrate a weaker link are more likely to receive a negative recommendation; however,
other qualitative factors such as overall incentive structure, significant forthcoming changes to the
compensation program or reasonable long-term payout levels may mitigate our concerns to a certain extent.
While we assign companies a letter grade of A, B, C, D or F based on the alignment between pay and
performance under our primary model, the grades derived from the Glass Lewis pay-for-performance analysis
do not follow the traditional U.S. school letter grade system. Rather, the grades are generally interpreted as
follows:
Grade of A: The company’s percentile rank for pay is significantly less than its percentile rank for performance
Grade of B: The company’s percentile rank for pay is moderately less than its percentile rank for performance
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Grade of C: The company’s percentile rank for pay is approximately aligned with its percentile rank for
performance
Grade of D: The company’s percentile rank for pay is higher than its percentile rank for performance
Grade of F: The company’s percentile rank for pay is significantly higher than its percentile rank for performance
Separately, a specific comparison between the company’s executive pay and its peers’ executive pay levels may
be discussed in the analysis for additional insight into the grade. Likewise, a specific comparison between the
company’s performance and its peers’ performance is reflected in the analysis for further context.
We use this analysis to inform our voting decisions on say-on-pay proposals. If a company receives a “D” or “F”
from our proprietary model, we are more likely to recommend that shareholders vote against the say-on-pay
proposal. However, important supplemental quantitative factors like analyses of realized pay levels and the
“compensation actually paid” data mandated by the SEC’s 2022 final rule regarding pay versus performance may
be considered, and other qualitative factors such as an effective overall incentive structure, the relevance of
selected performance metrics, significant forthcoming enhancements or reasonable long-term payout levels
may give us cause to recommend in favor of a proposal even when we have identified a disconnect between pay
and performance.
In determining the peer groups used in our pay-for-performance letter grades, Glass Lewis utilizes a proprietary
methodology that considers both market and industry peers, along with each company’s self-disclosed peers
and peers of those company-disclosed peers. Each component is considered on a weighted basis and is subject
to size-based ranking and screening. Since the peer group used is based on an independent, proprietary
technique, it will often differ from the one used by the company which, in turn, will affect the resulting analyses.
While Glass Lewis believes that the independent, rigorous methodology it uses provides a valuable perspective
on the company’s compensation program, the company’s self-selected peer group may also presented in the
Proxy Paper for comparative purposes and for supplemental analyses.
Short-Term Incentives
A short-term bonus or incentive (STI) should be demonstrably tied to performance. Whenever possible, we
believe a mix of corporate and individual performance measures is appropriate. We would normally expect
performance measures for STI plans to be based on company-wide or divisional financial measures as well as
non-financial, qualitative or non-formulaic factors such as those related to safety, environmental issues, and
customer satisfaction when they are material to the company’s overall health. While we recognize that
companies operating in different sectors or markets may seek to utilize a wide range of metrics, we expect such
measures to be appropriately tied to a company’s business drivers.
Further, the threshold, target and maximum performance goals and corresponding payout levels that can be
achieved under STI plans should be disclosed. Shareholders should expect stretching performance targets for
the maximum award to be achieved. Any increase in the potential target and maximum award should be clearly
justified to shareholders, as should any decrease in target and maximum performance levels from the previous
year.
Glass Lewis recognizes that disclosure of some measures or performance targets may include commercially
confidential information. Therefore, we believe it may be reasonable to exclude such information in some cases
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as long as the company provides sufficient justification for non-disclosure. However, where a short-term bonus
has been paid, companies should disclose the extent to which performance has been achieved against relevant
targets, including disclosure of the actual target achieved.
Where management has received significant short-term incentive payments but overall performance and/or the
shareholder experience over the measurement year prima facie appears to be poor or negative, we believe the
company should provide a clear explanation of why these significant short-term payments were made. We also
believe any significant changes to the program structure should be accompanied by rationalizing disclosure.
Further, where a company has applied upward discretion, which includes lowering goals mid-year, increasing
calculated payouts or retroactively pro-rating performance periods, we expect a robust discussion of why the
decision was necessary.
Adjustments to GAAP figures may be considered in Glass Lewis’ assessment of the effectiveness of the incentive
at tying executive pay with performance. We believe that where companies use non-GAAP or bespoke metrics,
clear reconciliations between these figures and GAAP figures in audited financial statements should be provided.
Moreover, Glass Lewis believes that in circumstances where significant adjustments were applied to
performance results, thorough, detailed discussion of adjustments akin to a GAAP-to-non-GAAP reconciliation
and their impact on payouts within the proxy statement is warranted. The absence of such enhanced disclosure
for significant adjustments will impact Glass Lewis' assessment of the quality of disclosure and, in turn, may play
a role in the overall recommendation for the advisory vote on executive compensation.
Glass Lewis recognizes the importance of the compensation committee’s prudent and responsible exercise of
discretion over incentive pay outcomes to account for significant, material events that would otherwise be
excluded from performance results of selected metrics of incentive programs. For instance, litigation settlement
charges are typically removed from non-GAAP results before the determination of formulaic incentive payouts,
or health and safety failures may not be reflected in performance results where companies do not expressly
include health and safety metrics in incentive plans. Such events may nevertheless be consequential to
corporate performance results, impact the shareholder experience, and, in some cases, may present material
risks. Conversely, certain events may adversely impact formulaic payout results despite being outside
executives' control. We believe that companies should provide thorough discussion of how such events were
considered in the committee’s decisions to exercise discretion over incentive payouts.
We do not generally recommend against a pay program due to the use of a non-formulaic plan. If a company has
chosen to rely primarily on a subjective assessment or the board’s discretion in determining short-term bonuses,
we believe that the proxy statement should provide a meaningful discussion of the board’s rationale in
determining the bonuses paid as well as a rationale for the use of a non-formulaic mechanism. Particularly
where the aforementioned disclosures are substantial and satisfactory, such a structure will not provoke serious
concern in our analysis on its own. However, in conjunction with other significant issues in a program’s design or
operation, such as a disconnect between pay and performance, the absence of a cap on payouts, or a lack of
performance-based long-term awards, the use of a non-formulaic bonus may help drive a negative
recommendation.
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Long-Term Incentives
Glass Lewis recognizes the value of equity-based incentive programs, which are often the primary long-term
incentive for executives. When used appropriately, they can provide a vehicle for linking an executive’s pay to
company performance, thereby aligning their interests with those of shareholders. In addition, equity-based
compensation can be an effective way to attract, retain and motivate key employees.
There are certain elements that Glass Lewis believes are common to most well-structured long-term incentive
(LTI) plans. These include:
•No re-testing or lowering of performance conditions;
•Performance metrics that cannot be easily manipulated by management;
•Two or more performance metrics;
•At least one relative performance metric that compares the company’s performance to a relevant peer
group or index;
•Performance periods of at least three years;
•Stretching metrics that incentivize executives to strive for outstanding performance while not
encouraging excessive risk-taking;
•Reasonable individual award limits;
•Equity granting practices that are clearly disclosed and
•Additional post-vesting holding periods to encourage long-term executive share ownership.
In evaluating long-term incentive grants, Glass Lewis generally believes that at least half of the grant should
consist of performance-based awards, putting a material portion of executive compensation at-risk and
demonstrably linked to the performance of the company. While we will consistently raise concern with
programs that do not meet this criterion, we may refrain from a negative recommendation in the absence of
other significant issues with the program’s design or operation. However, in cases where performance-based
awards are significantly rolled back or eliminated from a company’s long-term incentive plan, such decisions will
generally be viewed negatively outside of exceptional circumstances. Given the reduction in rigor and
accountability in the pay program, Glass Lewis will assess the revision’s impact on the pay program’s ability to
align executive pay with performance and shareholder experience; programs that fail our assessment may
receive an unfavorable recommendation. They may also lead to an unfavorable recommendation from Glass
Lewis if the change is not offset by meaningful revisions such as to pay quantum and vesting periods, particularly
in the absence of cogent rationale.
As with the short-term incentive, Glass Lewis recognizes the importance of the compensation committee’s
judicious and responsible exercise of discretion over incentive pay outcomes to account for significant events
that would otherwise be excluded from performance results of selected metrics of incentive programs. We
believe that companies should provide thorough discussion of how such events were considered in the
committee’s decisions to exercise discretion or refrain from applying discretion over incentive pay outcomes.
Furthermore, considerations related to the use of non-GAAP metrics under the STI plan similarly apply to the
long-term incentive program.
Performance measures should be carefully selected and should relate to the specific business/industry in which
the company operates and, especially, to the key value drivers of the company’s business. As with short-term
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incentive plans, the basis for any adjustments to metrics or results should be clearly explained, as should the
company’s judgment on the use of discretion and any significant changes to the performance program structure.
While cognizant of the inherent complexity of certain performance metrics, Glass Lewis generally believes that
measuring a company’s performance with multiple metrics serves to provide a more complete picture of the
company’s performance than a single metric. Further, reliance on just one metric may focus too much
management attention on a single target and is therefore more susceptible to manipulation. When utilized for
relative measurements, external benchmarks such as a sector index or peer group should be disclosed and
transparent. The rationale behind the selection of a specific index or peer group should also be disclosed.
Internal performance benchmarks should also be disclosed and transparent, unless a cogent case for
confidentiality is made and fully explained. Similarly, actual performance and vesting levels for previous grants
earned during the fiscal year should be disclosed.
We also believe shareholders should evaluate the relative success of a company’s compensation programs,
particularly with regard to existing equity-based incentive plans, in linking pay and performance when evaluating
potential changes to LTI plans and determining the impact of additional stock awards. We will therefore review
the company’s pay-for-performance analyses (see above for more information) and specifically the proportion
of total compensation that is stock-based.
Grants of Front-Loaded Awards
Many U.S. companies have chosen to provide large grants, usually in the form of equity awards, that are
intended to serve as compensation for multiple years. This practice, often called front-loading, is taken up either
in the regular course of business or as a response to specific business conditions and with a predetermined
objective. The so-called “mega-grant”, an outsized award to one individual sometimes valued at over $100
million is sometimes but not always provided as a front-loaded award. We believe shareholders should generally
be wary of this granting approach, and we accordingly weigh these grants with particular scrutiny.
While the use of front-loaded awards is intended to lock-in executive service and incentives, the same rigidity
also raises the risk of effectively tying the hands of the compensation committee. As compared with a more
responsive annual granting schedule program, front-loaded awards may preclude improvements or changes to
reflect evolving business strategies or to respond to other unforeseen factors. Additionally, if structured poorly,
early vesting of such awards may reduce or eliminate the retentive power at great cost to shareholders. The
considerable emphasis on a single grant can place intense pressures on every facet of its design, amplifying any
potential perverse incentives and creating greater room for unintended consequences. In particular, provisions
around changes of control or separations of service must ensure that executives do not receive excessive
payouts that do not reflect shareholder experience or company performance.
We consider a company’s rationale for granting awards under this structure and also expect any front-loaded
awards to include a firm commitment not to grant additional awards for a defined period, as is commonly
associated with this practice. Even when such a commitment is provided, unexpected circumstances may lead
the board to make additional payments or awards for retention purposes, or to incentivize management
towards more realistic goals or a revised strategy. If a company breaks its commitment not to grant further
awards, we may recommend against the pay program unless a convincing rationale is provided. The multiyear
nature of these awards generally lends itself to significantly higher compensation figures in the year of grant
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than might otherwise be expected. In our qualitative analysis of the grants of front-loaded awards to executives,
Glass Lewis considers the quantum of the award on an annualized basis and may compare this result to the prior
practice and peer data, among other benchmarks. Additionally, for awards that are granted in the form of
equity, Glass Lewis may consider the total potential dilutive effect of such award on shareholders.
In situations where the front-loaded award was meant to cover a certain portion of the regular long-term
incentive grant for each year during the covered period, our analysis of the value of the remaining portion of the
regular long-term incentives granted during the period covered by the award will account for the annualized
value of the front-loaded portion, and we expect no supplemental grant be awarded during the vesting period of
the front-loaded portion.
Linking Executive Pay to Environmental and Social Criteria
Glass Lewis believes that explicit environmental and/or social (E&S) criteria in executive incentive plans, when
used appropriately, can serve to provide both executives and shareholders a clear line of sight into a company’s
ESG strategy, ambitions, and targets. Although we are strongly supportive of companies’ incorporation of
material E&S risks and opportunities in their long-term strategic planning, we believe that the inclusion of E&S
metrics in compensation programs should be predicated on each company’s unique circumstances. In order to
establish a meaningful link between pay and performance, companies must consider factors including their
industry, size, risk profile, maturity, performance, financial condition, and any other relevant internal or external
factors.
When a company is introducing E&S criteria into executive incentive plans, we believe it is important that
companies provide shareholders with sufficient disclosure to allow them to understand how these criteria align
withtheir strategies. Additionally, Glass Lewis recognizes that there may be situations where certain E&S
performance criteria are reasonably viewed as prerequisites for executive performance, as opposed to
behaviors and conditions that need to be incentivized. For example, we believe that shareholders should
interrogate the use of metrics that award executives for ethical behavior or compliance with policies and
regulations. It is our view that companies should provide shareholders with disclosures that clearly lay out the
rationale for selecting specific E&S metrics, the target-setting process, and corresponding payout opportunities.
Further, particularly in the case of qualitative metrics, we believe that shareholders should be provided with a
clear understanding of the basis on which the criteria will be assessed. Where quantitative targets have been
set, we believe that shareholders are best served when these are disclosed on an ex-ante basis, or the board
should outline why it believes it is unable to do so.
While we believe that companies should generally set long-term targets for their environmental and social
ambitions, we are mindful that not all compensation schemes lend themselves to the inclusion of E&S metrics.
We also are of the view that companies should retain flexibility in not only choosing to incorporate E&S metrics
in their compensation plans, but also in the placement of these metrics. For example, some companies may
resolve that including E&S criteria in the annual bonus may help to incentivize the achievement of short-term
milestones and allow for more maneuverability in strategic adjustments to long-term goals. Other companies
may determine that their long-term sustainability targets are best achieved by incentivizing executives through
metrics included in their long-term incentive plans.
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One-Time Awards
Glass Lewis believes shareholders should generally be wary of awards granted outside of the standard incentive
schemes, as such awards have the potential to undermine the integrity of a company’s regular incentive plans or
the link between pay and performance, or both. We generally believe that if the existing incentive programs fail
to provide adequate incentives to executives, companies should redesign their compensation programs rather
than make additional grants.
However, Glass Lewis reviews grants of supplemental awards on a case-by-case, company-by-company basis to
give adequate consideration for unique circumstances. Companies should provide a thorough description of the
awards, including a cogent and convincing explanation of their necessity and why existing awards do not provide
sufficient motivation and a discussion of how the quantum of the award and its structure were determined.
Further, such awards should be tied to future service and performance whenever possible.
Additionally, we believe companies making supplemental or one-time awards should also describe if and how
the regular compensation arrangements will be affected by these additional grants. In reviewing a company’s
use of supplemental awards, Glass Lewis will evaluate the terms and size of the grants in the context of the
company’s overall incentive strategy and granting practices, as well as the current operating environment.
Contractual Payments and Arrangements
Beyond the quantum of contractual payments, Glass Lewis will also consider the design of any entitlements.
Certain executive employment terms may help to drive a negative recommendation, including, but not limited
to:
•Excessively broad change in control triggers;
•Inappropriate severance entitlements;
•Inadequately explained or excessive sign-on arrangements;
•Guaranteed bonuses (especially as a multiyear occurrence); and
•Failure to address any concerning practices in amended employment agreements.
In general, we are wary of terms that are excessively restrictive in favor of the executive, or that could
potentially incentivize behaviors that are not in a company’s best interest.
Sign-on Awards and Severance Benefits
We acknowledge that there may be certain costs associated with transitions at the executive level. In evaluating
the size of severance and sign-on arrangements, we may consider the executive’s regular target compensation
level, or the sums paid to other executives (including the recipient’s predecessor, where applicable) in
evaluating the appropriateness of such an arrangement.
We believe sign-on arrangements should be clearly disclosed and accompanied by a meaningful explanation of
the payments and the process by which the amounts were reached. Further, the details of and basis for any
“make-whole” payments (paid as compensation for awards forfeited from a previous employer) should be
provided.
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With respect to severance, we believe companies should abide by predetermined payouts in most
circumstances. While in limited circumstances some deviations may not be inappropriate, we believe
shareholders should be provided with a meaningful explanation of any additional or increased benefits agreed
upon outside of regular arrangements. However, where Glass Lewis determines that such predetermined
payouts are particularly problematic or unfavorable to shareholders, we may consider the execution of such
payments in a negative recommendation for the advisory vote on executive compensation.
In the U.S. market, most companies maintain severance entitlements based on a multiple of salary and, in many
cases, bonus. In almost all instances we see, the relevant multiple is three or less, even in the case of a change in
control. We believe the basis and total value of severance should be reasonable and should not exceed the
upper limit of general market practice. We consider the inclusion of long-term incentives in cash severance
calculations to be inappropriate, particularly given the commonality of accelerated vesting and the proportional
weight of long-term incentives as a component of total pay. Additional considerations, however, will be
accounted for when reviewing atypically structured compensation approaches.
Change in Control
Glass Lewis considers double-trigger change in control arrangements, which require both a change in control
and termination or constructive termination, to be best practice. Any arrangement that is not explicitly double-
trigger may be considered a single-trigger or modified single-trigger arrangement. Companies that allow for
committee discretion over the treatment of unvested awards should commit to providing clear rationale for the
committee's ultimate decision as to how such awards should be treated in the event a change in control occurs.
Further, we believe that excessively broad definitions of change in control are potentially problematic as they
may lead to situations where executives receive additional compensation where no meaningful change in status
or duties has occurred.
Excise Tax Gross-ups
Among other entitlements, Glass Lewis is strongly opposed to excise tax gross-ups related to IRC § 4999 and
their expansion, especially where no consideration is given to the safe harbor limit. We believe that under no
normal circumstance is the inclusion of excise tax gross-up provisions in new agreements or the addition of such
provisions to amended agreements acceptable. In consideration of the fact that minor increases in change-in-
control payments can lead to disproportionately large excise taxes, the potential negative impact of tax gross-
ups far outweighs any retentive benefit.
Depending on the circumstances, the addition of new gross-ups around this excise tax may lead to negative
recommendations for a company’s say-on-pay proposal, the chair of the compensation committee, or the entire
committee, particularly in cases where a company had committed not to provide any such entitlements in the
future. For situations in which the addition of new excise tax gross ups will be provided in connection with a
specific change-in-control transaction, this policy may be applied to the say-on-pay proposal, the golden
parachute proposal and recommendations related to the compensation committee for all involved corporate
parties, as appropriate.
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Amended Employment Agreements
Any contractual arrangements providing for problematic pay practices which are not addressed in materially
amended employment agreements will potentially be viewed by Glass Lewis as a missed opportunity on the part
of the company to align its policies with current best practices. Such problematic pay practices include, but are
not limited to, excessive change in control entitlements, modified single-trigger change in control entitlements,
excise tax gross-ups, and multi-year guaranteed awards.
Recoupment Provisions (Clawbacks)
On October 26, 2022, the SEC adopted Rule 10D-1 under the Securities Exchange Act of 1934. The rule mandates
national securities exchanges and associations to promulgate new listing standards requiring companies to
maintain recoupment policies (“clawback provisions”). The final clawback listing standards were approved by
the SEC, effective October 2, 2023 and required listed companies to adopt a compliant policy by December 1,
2023. Glass Lewis believes that clawback provisions play an important role in mitigating excessive risk-taking
that may be encouraged by poorly structured variable incentive programs. Current listing standards require
recoupment of erroneously awarded payouts to current and former executive officers in the event of an
accounting restatement or correction to previous financial statements that is material to the current period,
regardless of fault or misconduct.
Glass Lewis recognizes that excessive risk-taking that can materially and adversely impact shareholders may not
necessarily result in such restatements. We believe that clawback policies should allow recovery from current
and former executive officers in the event of a restatement of financial results or similar revision of performance
indicators upon which the awards were based. Additionally, recoupment policies should provide companies with
the ability to claw back variable incentive payments (whether time-based or performance-based) when there is
evidence of problematic decisions or actions, such as material misconduct, a material reputational failure,
material risk management failure, or a material operational failure, the consequences of which have not already
been reflected in incentive payments and where recovery is warranted.
In situations where the company ultimately determines not to follow through with recovery, Glass Lewis will
assess the appropriateness of such determination for each case. A thorough, detailed discussion of the
company's decision to not pursue recoupment and, if applicable, how the company has otherwise rectified the
disconnect between executive pay outcomes and negative impacts of their actions on the company and the
shareholder experience will be considered. The absence of such enhanced disclosure may impact Glass Lewis'
assessment of the quality of disclosure and, in turn, may play a role in Glass Lewis' overall recommendation for
the advisory vote on executive compensation. The clawback policy should provide recoupment authority
regardless of whether the employment of the executive officer was terminated with or without cause.
Hedging of Stock
Glass Lewis believes that the hedging of shares by executives in the shares of the companies where they are
employed severs the alignment of interests of the executive with shareholders. We believe companies should
adopt strict policies to prohibit executives from hedging the economic risk associated with their share ownership
in the company.
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Pledging of Stock
Glass Lewis believes that shareholders should examine the facts and circumstances of each company rather than
apply a one-size-fits-all policy regarding employee stock pledging. Glass Lewis believes that shareholders benefit
when employees, particularly senior executives, have meaningful financial interest in the success of the
company under their management, and therefore we recognize the benefits of measures designed to encourage
employees to both buy shares out of their own pocket and to retain shares they have been granted; blanket
policies prohibiting stock pledging may discourage executives and employees from doing either.
However, we also recognize that the pledging of shares can present a risk that, depending on a host of factors,
an executive with significant pledged shares and limited other assets may have an incentive to take steps to
avoid a forced sale of shares in the face of a rapid stock price decline. Therefore, to avoid substantial losses from
a forced sale to meet the terms of the loan, the executive may have an incentive to boost the stock price in the
short term in a manner that is unsustainable, thus hurting shareholders in the long-term. We also recognize
concerns regarding pledging may not apply to less senior employees, given the latter group’s significantly more
limited influence over a company’s stock price. Therefore, we believe that the issue of pledging shares should be
reviewed in that context, as should policies that distinguish between the two groups.
Glass Lewis believes that the benefits of stock ownership by executives and employees may outweigh the risks
of stock pledging, depending on many factors. As such, Glass Lewis reviews all relevant factors in evaluating
proposed policies, limitations and prohibitions on pledging stock, including:
•The number of shares pledged;
•The percentage executives’ pledged shares are of outstanding shares;
•The percentage executives’ pledged shares are of each executive’s shares and total assets;
•Whether the pledged shares were purchased by the employee or granted by the company;
•Whether there are different policies for purchased and granted shares;
•Whether the granted shares were time-based or performance-based;
•The overall governance profile of the company;
•The volatility of the company’s stock (in order to determine the likelihood of a sudden stock price drop);
•The nature and cyclicality, if applicable, of the company’s industry;
•The participation and eligibility of executives and employees in pledging;
•The company’s current policies regarding pledging and any waiver from these policies for employees
and executives; and
•Disclosure of the extent of any pledging, particularly among senior executives.
Executive Ownership Guidelines
The alignment between shareholder interests and those of executives helps to ensure that executives are acting
in the best long-term interests of disinterested shareholders. Companies should facilitate this relationship
through the adoption and enforcement of meaningful minimum executive share ownership requirements.
Companies should clearly disclose their executive ownership requirements in their Compensation Discussion and
Analysis section and how the various types of outstanding equity awards are counted or excluded from the
ownership level calculation.
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In determining whether executives have met the requirements or not, the inclusion of unearned performance-
based full value awards and/or unexercised stock options without cogent rationale may be viewed as
problematic. While Glass Lewis views the inclusion of unearned performance-based equity in the ownership
determination renders executive share ownership policies less effective, we continue to believe that
performance-based equity compensation plays an important role in the separate issue of aligning executive pay
with performance.
Compensation Consultant Independence
As mandated by Section 952 of the Dodd-Frank Act, as of January 11, 2013, the SEC approved listing
requirements for both the NYSE and NASDAQ which require compensation committees to consider six factors
(https://www.sec.gov/rules/final/2012/33-9330.pdf, p.31-32) in assessing compensation advisor independence.
According to the SEC, “no one factor should be viewed as a determinative factor.” Glass Lewis believes this six-
factor assessment is an important process for every compensation committee to undertake but believes
companies employing a consultant for board compensation, consulting and other corporate services should
provide clear disclosure beyond just a reference to examining the six points, in order to allow shareholders to
review the specific aspects of the various consultant relationships.
We believe compensation consultants are engaged to provide objective, disinterested, expert advice to the
compensation committee. When the consultant or its affiliates receive substantial income from providing other
services to the company, we believe the potential for a conflict of interest arises and the independence of the
consultant may be jeopardized. Therefore, Glass Lewis will, when relevant, note the potential for a conflict of
interest when the fees paid to the advisor or its affiliates for other services exceed those paid for compensation
consulting.
CEO Pay Ratio
As mandated by Section 953(b) of the Dodd-Frank Wall Street Consumer and Protection Act, beginning in 2018,
issuers will be required to disclose the median annual total compensation of all employees except the CEO, the
total annual compensation of the CEO or equivalent position, and the ratio between the two amounts. Glass
Lewis will display the pay ratio as a data point in our Proxy Papers, as available. While we recognize that the pay
ratio has the potential to provide additional insight when assessing a company’s pay practices, at this time it will
not be a determinative factor in our voting recommendations. On the other hand, we believe the underlying
data may help shareholders evaluate the rationale for certain executive pay decisions such as increases in fixed
pay levels.
Frequency of Say-on-Pay
The Dodd-Frank Act also requires companies to allow shareholders a non-binding vote on the frequency of say-
on-pay votes (i.e., every one, two or three years). Additionally, Dodd-Frank requires companies to hold such
votes on the frequency of say-on-pay votes at least once every six years.
We believe companies should submit say-on-pay votes to shareholders every year. We believe that the time and
financial burdens to a company with regard to an annual vote are relatively small and incremental and are
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outweighed by the benefits to shareholders through more frequent accountability. Implementing biannual or
triennial votes on executive compensation limits shareholders’ ability to hold the board accountable for its
compensation practices through means other than voting against the compensation committee. Unless a
company provides a compelling rationale or unique circumstances for say-on-pay votes less frequent than
annually, we will generally recommend that shareholders support annual votes on compensation.
Vote on Golden Parachute Arrangements
The Dodd-Frank Act also requires companies to provide shareholders with a separate non-binding vote on
approval of golden parachute compensation arrangements in connection with certain change-in-control
transactions. However, if the golden parachute arrangements have previously been subject to a say-on-pay vote
which shareholders approved, then this required vote is waived.
Glass Lewis believes the narrative and tabular disclosure of golden parachute arrangements benefits all
shareholders. Glass Lewis analyzes each golden parachute arrangement on a case-by-case basis, taking into
account, among other items: the nature of the change-in-control transaction, the ultimate value of the
payments particularly compared to the value of the transaction, any excise tax gross-up obligations, the tenure
and position of the executives in question before and after the transaction, any new or amended employment
agreements entered into in connection with the transaction, and the type of triggers involved (i.e., single vs.
double). In cases where new problematic features, such as excise tax gross-up obligations or new and excessive
single-trigger entitlements, are introduced in a golden parachute proposal, such features may contribute to a
negative recommendation not only for the golden parachute proposal under review, but for the next say-on-pay
proposal of any involved corporate parties, as well as recommendations against their compensation committee
as appropriate.
Equity-Based Compensation Proposals
We believe that equity compensation awards, when not abused, are useful for retaining employees and
providing an incentive for them to act in a way that will improve company performance. Glass Lewis recognizes
that equity-based compensation plans are critical components of a company’s overall compensation program,
and we analyze such plans accordingly based on both quantitative and qualitative factors.
Our quantitative analysis assesses the plan’s cost and the company’s pace of granting utilizing a number of
different analyses, comparing the program with absolute limits we believe are key to equity value creation and
with a carefully chosen peer group. In general, our model seeks to determine whether the proposed plan is
either absolutely excessive or is more than one standard deviation away from the average plan for the peer
group on a range of criteria, including dilution to shareholders and the projected annual cost relative to the
company’s financial performance. Each of the analyses (and their constituent parts) is weighted and the plan is
scored in accordance with that weight.
We compare the program’s expected annual expense with the business’s operating metrics to help determine
whether the plan is excessive in light of company performance. We also compare the plan’s expected annual
cost to the enterprise value of the firm rather than to market capitalization because the employees, managers
and directors of the firm contribute to the creation of enterprise value but not necessarily market capitalization
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(the biggest difference is seen where cash represents the vast majority of market capitalization). Finally, we do
not rely exclusively on relative comparisons with averages because, in addition to creeping averages serving to
inflate compensation, we believe that some absolute limits are warranted.
We then consider qualitative aspects of the plan such as plan administration, the method and terms of exercise,
repricing history, express or implied rights to reprice, and the presence of evergreen provisions. We also closely
review the choice and use of, and difficulty in meeting, the awards’ performance metrics and targets, if any. We
believe significant changes to the terms of a plan should be explained for shareholders and clearly indicated.
Other factors such as a company’s size and operating environment may also be relevant in assessing the severity
of concerns or the benefits of certain changes. Finally, we may consider a company’s executive compensation
practices in certain situations, as applicable.
We evaluate equity plans based on certain overarching principles:
•Companies should seek more shares only when needed;
•Requested share amounts or share reserves should be conservative in size so that companies must seek
shareholder approval every three to four years (or more frequently);
•If a plan is relatively expensive, it should not grant options solely to senior executives and board
members;
•Dilution of annual net share count or voting power, along with the “overhang” of incentive plans, should
be limited;
•Annual cost of the plan (especially if not shown on the income statement) should be reasonable as a
percentage of financial results and should be in line with the peer group;
•The expected annual cost of the plan should be proportional to the business’s value;
•The intrinsic value that option grantees received in the past should be reasonable compared with the
business’s financial results;
•Plans should not permit repricing of stock options without shareholder approval;
•Plans should not contain excessively liberal administrative or payment terms;
•Plans should not count shares in ways that understate the potential dilution, or cost, to common
shareholders. This refers to “inverse” full-value award multipliers;
•Selected performance metrics should be challenging and appropriate, and should be subject to relative
performance measurements; and
•Stock grants should be subject to minimum vesting and/or holding periods sufficient to ensure
sustainable performance and promote retention.
Meanwhile, for individual equity award proposals where the recipient of the proposed grant is also a large
shareholder of the company whose vote can materially affect the passage of the proposal, we believe that the
company should strongly consider the level of approval from disinterested shareholders before proceeding with
the proposed grant. Glass Lewis recognizes potential conflicts of interests when vote outcomes can be heavily
influenced by the recipient of the grant. A required abstention vote or non-vote from the recipient for an equity
award proposal in these situations can help to avoid such conflicts. This favorable feature will be weighed
alongside the structure, disclosure, dilution, provided rationale, and other provisions related to the individual
award to assess the award’s alignment with long-term shareholder interests.
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Option Exchanges and Repricing
Glass Lewis is generally opposed to the repricing of employee and director options regardless of how it is
accomplished. Employees should have some downside risk in their equity-based compensation program and
repricing eliminates any such risk. As shareholders have substantial risk in owning stock, we believe that the
equity compensation of employees and directors should be similarly situated to align their interests with those
of shareholders. We believe this will facilitate appropriate risk- and opportunity-taking for the company by
employees.
We are concerned that option grantees who believe they will be “rescued” from underwater options will be
more inclined to take unjustifiable risks. Moreover, a predictable pattern of repricing or exchanges substantially
alters a stock option’s value because options that will practically never expire deeply out of the money are
worth far more than options that carry a risk of expiration.
In short, repricings and option exchange programs change the bargain between shareholders and employees
after the bargain has been struck.
There is one circumstance in which a repricing or option exchange program may be acceptable: if
macroeconomic or industry trends, rather than specific company issues, cause a stock’s value to decline
dramatically and the repricing is necessary to motivate and retain employees. In viewing the company’s stock
decline as part of a larger trend, we would expect the impact to approximately reflect the market or industry
price decline in terms of timing and magnitude. In this circumstance, we think it fair to conclude that option
grantees may be suffering from a risk that was not foreseeable when the original “bargain” was struck. In such a
scenario, we may opt to support a repricing or option exchange program only if sufficient conditions are met.
We look for the following features in a repricing or exchange proposal:
•Officers and board members cannot participate in the program; and
•The exchange is value-neutral or value-creative to shareholders using very conservative assumptions.
In our evaluation of the appropriateness of the program design, we also consider the inclusion of the following
features:
•The vesting requirements on exchanged or repriced options are extended beyond one year;
•Shares reserved for options that are reacquired in an option exchange will permanently retire (i.e., will
not be available for future grants) so as to prevent additional shareholder dilution in the future; and
•Management and the board make a cogent case for needing to motivate and retain existing employees,
such as being in a competitive employment market.
Option Backdating, Spring-Loading and Bullet-Dodging
Glass Lewis views option backdating, and the related practices of spring-loading and bullet-dodging, as egregious
actions that warrant holding the appropriate management and board members responsible. These practices are
similar to repricing options and eliminate much of the downside risk inherent in an option grant that is designed
to induce recipients to maximize shareholder return.
Backdating an option is the act of changing an option’s grant date from the actual grant date to an earlier date
when the market price of the underlying stock was lower, resulting in a lower exercise price for the option. In
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past studies, Glass Lewis identified over 270 companies that have disclosed internal or government
investigations into their past stock-option grants.
Spring-loading is granting stock options while in possession of material, positive information that has not been
disclosed publicly. Bullet-dodging is delaying the grants of stock options until after the release of material,
negative information. This can allow option grants to be made at a lower price either before the release of
positive news or following the release of negative news, assuming the stock’s price will move up or down in
response to the information. This raises a concern similar to that of insider trading, or the trading on material
non-public information.
The exercise price for an option is determined on the day of grant, providing the recipient with the same market
risk as an investor who bought shares on that date. However, where options were backdated, the executive or
the board (or the compensation committee) changed the grant date retroactively. The new date may be at or
near the lowest price for the year or period. This would be like allowing an investor to look back and select the
lowest price of the year at which to buy shares.
A 2006 study of option grants made between 1996 and 2005 at 8,000 companies found that option backdating
can be an indication of poor internal controls. The study found that option backdating was more likely to occur
at companies without a majority independent board and with a long-serving CEO; both factors, the study
concluded, were associated with greater CEO influence on the company’s compensation and governance
practices.43
Where a company granted backdated options to an executive who is also a director, Glass Lewis will recommend
voting against that executive/director, regardless of who decided to make the award. In addition, Glass Lewis
will recommend voting against those directors who either approved or allowed the backdating. Glass Lewis feels
that executives and directors who either benefited from backdated options or authorized the practice have
failed to act in the best interests of shareholders.
Given the severe tax and legal liabilities to the company from backdating, Glass Lewis will consider
recommending voting against members of the audit committee who served when options were backdated, a
restatement occurs, material weaknesses in internal controls exist and disclosures indicate there was a lack of
documentation. These committee members failed in their responsibility to ensure the integrity of the company’s
financial reports.
When a company has engaged in spring-loading or bullet-dodging, Glass Lewis will consider recommending
voting against the compensation committee members where there has been a pattern of granting options at or
near historic lows. Glass Lewis will also recommend voting against executives serving on the board who
benefited from the spring-loading or bullet-dodging.
43 Lucian Bebchuk, Yaniv Grinstein and Urs Peyer. “LUCKY CEOs.” November, 2006.
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Director Compensation Plans
Glass Lewis believes that non-employee directors should receive reasonable and appropriate compensation for
the time and effort they spend serving on the board and its committees. However, a balance is required. Fees
should be competitive in order to retain and attract qualified individuals, but excessive fees represent a financial
cost to the company and potentially compromise the objectivity and independence of non-employee directors.
We will consider recommending support for compensation plans that include option grants or other equity-
based awards that help to align the interests of outside directors with those of shareholders. However, to
ensure directors are not incentivized in the same manner as executives but rather serve as a check on imprudent
risk-taking in executive compensation plan design, equity grants to directors should not be performance-based.
Where an equity plan exclusively or primarily covers non-employee directors as participants, we do not believe
that the plan should provide for performance-based awards in any capacity.
When non-employee director equity grants are covered by the same equity plan that applies to a company’s
broader employee base, we will use our proprietary model and analyst review of this model to guide our voting
recommendations. If such a plan broadly allows for performance-based awards to directors or explicitly provides
for such grants, we may recommend against the overall plan on this basis, particularly if the company has
granted performance-based awards to directors in past.
Employee Stock Purchase Plans
Glass Lewis believes that employee stock purchase plans (ESPPs) can provide employees with a sense of
ownership in their company and help strengthen the alignment between the interests of employees and
shareholders. We evaluate ESPPs by assessing the expected discount, purchase period, expected purchase
activity (if previous activity has been disclosed) and whether the plan has a “lookback” feature. Except for the
most extreme cases, Glass Lewis will generally support these plans given the regulatory purchase limit of
$25,000 per employee per year, which we believe is reasonable. We also look at the number of shares
requested to see if a ESPP will significantly contribute to overall shareholder dilution or if shareholders will not
have a chance to approve the program for an excessive period of time. As such, we will generally recommend
against ESPPs that contain “evergreen” provisions that automatically increase the number of shares available
under the ESPP each year.
Executive Compensation Tax Deductibility —
Amendment to IRC 162(M)
The “Tax Cut and Jobs Act” had significant implications on Section 162(m) of the Internal Revenue Code, a
provision that allowed companies to deduct compensation in excess of $1 million for the CEO and the next three
most highly compensated executive officers, excluding the CFO, if the compensation is performance-based and
is paid under shareholder-approved plans. Glass Lewis does not generally view amendments to equity plans and
changes to compensation programs in response to the elimination of tax deductions under 162(m) as
problematic. This specifically holds true if such modifications contribute to the maintenance of a sound
performance-based compensation program.
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As grandfathered contracts may continue to be eligible for tax deductions under the transition rule for Section
162(m), companies may therefore submit incentive plans for shareholder approval to take of advantage of the
tax deductibility afforded under 162(m) for certain types of compensation.
We believe the best practice for companies is to provide robust disclosure to shareholders so that they can
make fully informed judgments about the reasonableness of the proposed compensation plan. To allow for
meaningful shareholder review, we prefer that disclosure should include specific performance metrics, a
maximum award pool, and a maximum award amount per employee. We also believe it is important to analyze
the estimated grants to see if they are reasonable and in line with the company’s peers.
We typically recommend voting against a 162(m) proposal where: (i) a company fails to provide at least a list of
performance targets; (ii) a company fails to provide one of either a total maximum or an individual maximum; or
(iii) the proposed plan or individual maximum award limit is excessive when compared with the plans of the
company’s peers.
The company’s record of aligning pay with performance (as evaluated using our proprietary pay-for-
performance model) also plays a role in our recommendation. Where a company has a record of setting
reasonable pay relative to business performance, we generally recommend voting in favor of a plan even if the
plan caps seem large relative to peers because we recognize the value in special pay arrangements for continued
exceptional performance.
As with all other issues we review, our goal is to provide consistent but contextual advice given the specifics of
the company and ongoing performance. Overall, we recognize that it is generally not in shareholders’ best
interests to vote against such a plan and forgo the potential tax benefit since shareholder rejection of such plans
will not curtail the awards; it will only prevent the tax deduction associated with them.
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Governance Structure and the Shareholder
Franchise
Anti-Takeover Measures
Poison Pills (Shareholder Rights Plans)
Glass Lewis believes that poison pill plans are not generally in shareholders’ best interests. They can reduce
management accountability by substantially limiting opportunities for corporate takeovers. Rights plans can thus
prevent shareholders from receiving a buy-out premium for their stock. Typically we recommend that
shareholders vote against these plans to protect their financial interests and ensure that they have an
opportunity to consider any offer for their shares, especially those at a premium.
We believe boards should be given wide latitude in directing company activities and in charting the company’s
course. However, on an issue such as this, where the link between the shareholders’ financial interests and their
right to consider and accept buyout offers is substantial, we believe that shareholders should be allowed to vote
on whether they support such a plan’s implementation. This issue is different from other matters that are
typically left to board discretion. Its potential impact on and relation to shareholders is direct and substantial. It
is also an issue in which management interests may be different from those of shareholders; thus, ensuring that
shareholders have a voice is the only way to safeguard their interests.
In certain circumstances, we will support a poison pill that is limited in scope to accomplish a particular
objective, such as the closing of an important merger, or a pill that contains what we believe to be a reasonable
qualifying offer clause. We will consider supporting a poison pill plan if the qualifying offer clause includes each
of the following attributes:
•The form of offer is not required to be an all-cash transaction;
•The offer is not required to remain open for more than 90 business days;
•The offeror is permitted to amend the offer, reduce the offer, or otherwise change the terms;
•There is no fairness opinion requirement; and
•There is a low to no premium requirement.
Where these requirements are met, we typically feel comfortable that shareholders will have the opportunity to
voice their opinion on any legitimate offer.
NOL Poison Pills
Similarly, Glass Lewis may consider supporting a limited poison pill in the event that a company seeks
shareholder approval of a rights plan for the express purpose of preserving Net Operating Losses (NOLs). While
companies with NOLs can generally carry these losses forward to offset future taxable income, Section 382
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of the Internal Revenue Code limits companies’ ability to use NOLs in the event of a “change of ownership.”44 In
this case, a company may adopt or amend a poison pill (NOL pill) in order to prevent an inadvertent change of
ownership by multiple investors purchasing small chunks of stock at the same time, and thereby preserve the
ability to carry the NOLs forward. Often such NOL pills have trigger thresholds much lower than the common
15% or 20% thresholds, with some NOL pill triggers as low as 5%.
In many cases, companies will propose the adoption of bylaw amendments specifically restricting certain share
transfers, in addition to proposing the adoption of a NOL pill. In general, if we support the terms of a particular
NOL pill, we will generally support the additional protective amendment in the absence of significant concerns
with the specific terms of that proposal.
As with traditional poison pills, NOL pills may deter shareholders and potentially serve as entrenchment
mechanisms. Certain features such as low thresholds combined with acting in concert provisions, among other
concerning terms, may disempower shareholders and insulate the board and management. When acting in
concert provisions are present within the terms of a NOL pill, we believe this may raise concerns as to the true
objective of the pill.
Acting in concert provisions broaden the definition of beneficial ownership to prohibit parallel conduct, or
multiple shareholders party to a formal or informal agreement collaborating to influence the board and
management of a company, and aggregate the ownership of such shareholders towards the triggering
threshold. In our view, acting in concert provisions broadly limit the voice of shareholders and may diminish
their ability to engage in a productive dialogue with the company and with other shareholders. When a board
adopts defensive measures without engaging with shareholders, we take a dim view of the board and the
overall governance of the company.
As such, Glass Lewis evaluates NOL pills on a strictly case-by-case basis, taking into consideration, among other
factors: (i) the value of the NOLs to the company; (ii) the likelihood of a change of ownership based on the size
of the holdings and the nature of the larger shareholders; (iii) the trigger threshold; (iv) the duration of the plan
(i.e., whether it contains a reasonable “sunset” provision, generally one year or less); (v) the inclusion of an
acting in concert provision; (vi) whether the pill is implemented following the filing of a Schedule 13D by a
shareholder or there is evidence of hostile activity or shareholder activism; and (vii) if the pill is subject to
periodic board review and/or shareholder ratification.
We believe that shareholders should be offered the opportunity to vote on any adoption or renewal of a NOL
pill regardless of any potential tax benefit that it offers a company. As such, we will consider recommending
voting against those members of the board who served at the time when an NOL pill was adopted without
shareholder approval within the prior twelve months and where the NOL pill is not subject to shareholder
ratification.
44 Section 382 of the Internal Revenue Code refers to a “change of ownership” of more than 50 percentage points by one or
more 5% shareholders within a three-year period. The statute is intended to deter the “trafficking” of net operating losses.
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Fair Price Provisions
Fair price provisions, which are rare, require that certain minimum price and procedural requirements be
observed by any party that acquires more than a specified percentage of a corporation’s common stock. The
provision is intended to protect minority shareholder value when an acquirer seeks to accomplish a merger or
other transaction which would eliminate or change the interests of the minority shareholders. The provision is
generally applied against the acquirer unless the takeover is approved by a majority of “continuing directors”
and holders of a majority, in some cases a supermajority as high as 80%, of the combined voting power of all
stock entitled to vote to alter, amend, or repeal the above provisions.
The effect of a fair price provision is to require approval of any merger or business combination with an
“interested shareholder” by 51% of the voting stock of the company, excluding the shares held by the interested
shareholder. An interested shareholder is generally considered to be a holder of 10% or more of the company’s
outstanding stock, but the trigger can vary.
Generally, provisions are put in place for the ostensible purpose of preventing a back-end merger where the
interested shareholder would be able to pay a lower price for the remaining shares of the company than he or
she paid to gain control. The effect of a fair price provision on shareholders, however, is to limit their ability to
gain a premium for their shares through a partial tender offer or open market acquisition which typically raise
the share price, often significantly. A fair price provision discourages such transactions because of the potential
costs of seeking shareholder approval and because of the restrictions on purchase price for completing a merger
or other transaction at a later time.
Glass Lewis believes that fair price provisions, while sometimes protecting shareholders from abuse in a
takeover situation, more often act as an impediment to takeovers, potentially limiting gains to shareholders
from a variety of transactions that could significantly increase share price. In some cases, even the independent
directors of the board cannot make exceptions when such exceptions may be in the best interests of
shareholders. Given the existence of state law protections for minority shareholders such as Section 203 of the
Delaware Corporations Code, we believe it is in the best interests of shareholders to remove fair price
provisions.
Control Share Statutes
Certain states, including Delaware, have adopted control share acquisition statutes as an anti-takeover defense
for certain closed-end investment companies and business development companies. Control share statutes may
prevent changes in control by limiting voting rights of a person that acquires the ownership of “control shares.”
Control shares are shares of stock equal to or exceeding specified percentages of company voting power, and a
control share statute prevents shares in excess of the specified percentage from being voted, unless: (i) the
board approves them to be voted; or (ii) the holder of the “control shares” receives approval from a
supermajority of “non-interested” shareholders.
Depending on the state of incorporation, companies may automatically rely on control share statutes unless the
fund’s board of trustees eliminates the application of the control share statute to any or all fund share
acquisitions, through adoption of a provision in the fund's governing instrument or by fund board action alone.
In certain other states, companies must adopt control share statutes.
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In our view, control share statues disenfranchise shareholders by reducing their voting power to a level less than
their economic interest and effectively function as an anti-takeover device. We believe all shareholders should
have an opportunity to vote all of their shares. Moreover, anti-takeover measures may prevent shareholders
from receiving a buy-out premium for their stock.
As such, we will generally recommend voting for proposals to opt out of control share acquisition statutes,
unless doing so would allow the completion of a takeover that is not in the best interests of shareholders; and
against proposals to amend the charter to include control share acquisition provisions.
Further, in cases where a closed-end fund or business development company has received a public buyout offer
and has relied on a control share statute as a defense mechanism in the prior year, we will generally recommend
shareholders vote against the chair of the nominating and governance committee, absent a compelling rationale
as to why a rejected acquisition was not in the best interests of shareholders.
Quorum Requirements
Glass Lewis believes that a company’s quorum requirement should be set at a level high enough to ensure that a
broad range of shareholders are represented in person or by proxy, but low enough that the company can
transact necessary business. Companies in the U.S. are generally subject to quorum requirements under the
laws of their specific state of incorporation. Additionally, those companies listed on the NASDAQ Stock Market
are required to specify a quorum in their bylaws, provided however that such quorum may not be less than one-
third of outstanding shares. Prior to 2013, the New York Stock Exchange required a quorum of 50% for listed
companies, although this requirement was dropped in recognition of individual state requirements and
potential confusion for issuers. Delaware, for example, required companies to provide for a quorum of no less
than one-third of outstanding shares; otherwise such quorum shall default to a majority.
We generally believe a majority of outstanding shares entitled to vote is an appropriate quorum for the
transaction of business at shareholder meetings. However, should a company seek shareholder approval of a
lower quorum requirement we will generally support a reduced quorum of at least one-third of shares entitled
to vote, either in person or by proxy. When evaluating such proposals, we also consider the specific facts and
circumstances of the company, such as size and shareholder base.
Director and Officer Indemnification
While Glass Lewis strongly believes that directors and officers should be held to the highest standard when
carrying out their duties to shareholders, some protection from liability is reasonable to protect them against
certain suits so that these officers feel comfortable taking measured risks that may benefit shareholders. As
such, we find it appropriate for a company to provide indemnification and/or enroll in liability insurance to cover
its directors and officers so long as the terms of such agreements are reasonable.
Officer Exculpation
In August 2022, the Delaware General Assembly amended Section 102(b)(7) of the Delaware General
Corporation Law (“DGCL”) to authorize corporations to adopt a provision in their certificate of incorporation to
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eliminate or limit monetary liability of certain corporate officers for breach of fiduciary duty of care. Previously,
the DGCL allowed only exculpation of corporate directors from breach of fiduciary duty of care claims if the
corporation’s certificate of incorporation includes an exculpation provision.
The amendment authorizes corporations to provide for exculpation of the following officers: (i) the
corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer,
controller, treasurer or chief accounting officer, (ii) “named executive officers” identified in the corporation’s
SEC filings, and (iii) individuals who have agreed to be identified as officers of the corporation.
Corporate exculpation provisions under the DGCL only apply to claims for breach of the duty of care, and not to
breaches of the duty of loyalty. Exculpation provisions also do not apply to acts or omissions not in good faith or
that involve intentional misconduct, knowing violations of the law, or transactions involving the receipt of any
improper personal benefits. Furthermore, officers may not be exculpated from claims brought against them by,
or in the right of, the corporation (i.e., derivative actions).
Under Section 102(b)(7), a corporation must affirmatively elect to include an exculpation provision in its
certificate of incorporation. We will closely evaluate proposals to adopt officer exculpation provisions on a case-
by-case basis. We will generally recommend voting against such proposals eliminating monetary liability for
breaches of the duty of care for certain corporate officers, unless compelling rationale for the adoption is
provided by the board, and the provisions are reasonable.
Reincorporation
In general, Glass Lewis believes that the board is in the best position to determine the appropriate jurisdiction of
incorporation for the company. We review all proposals to reincorporate to a different state or country on a
case-by-case basis. Our review includes the changes in corporate governance provisions, especially those
relating to shareholder rights, material differences in corporate statutes and legal precedents, and relevant
financial benefits, among other factors, resulting from the change in domicile.
Glass Lewis closely examines the impact on shareholder rights arising from a change in domicile and governing
law, including the following:
•Will shareholders gain/retain certain rights (i.e. the right to call special meetings, the right to act by
written consent, the ability to remove directors)?
•Does the proposed new jurisdiction allow for director and officer exculpation and/or exclusive forum
provisions?
•What are the fiduciary duties (if any) of directors, officers, and majority shareholders under the new
jurisdiction’s statutes?
•What are the material differences in corporate statutes, case law, and judicial systems?
•Is the company proposing to reincorporate to a jurisdiction considered to be a “tax haven”?
In addition, when examining a proposal to reincorporate, we will also consider the overall governance of the
company, including, but not limited to, the following:
•Does the company have anti-takeover protections such as a poison pill or classified board in place?
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•Does the company have a significant shareholder or is the company otherwise considered controlled?45
•Has the board been previously unresponsive to shareholders (such as failing to implement a shareholder
proposal that received majority shareholder support)?
•Does the company have an independent chair and is the board sufficiently independent?
•Are there other material governance issues of concern at the company? Has the company’s
performance matched or exceeded its peers in the past one and three years?
•How has the company ranked in Glass Lewis’ pay-for-performance analysis during the last three years?
Where there is a decline in shareholder rights, the financial benefits are de minimis, and the proposed
jurisdiction has significantly worse shareholder protections, we will generally recommend voting against the
transaction.
In addition, costly, shareholder-initiated reincorporations are typically not the best route to achieve the
furtherance of shareholder rights. We believe shareholders are generally better served by proposing specific
shareholder resolutions addressing pertinent issues which may be implemented at a lower cost, and perhaps
even with board approval. However, when shareholders propose a shift into a jurisdiction with enhanced
shareholder rights, Glass Lewis examines the significant ways the company would benefit from shifting
jurisdictions including an evaluation of the criteria listed above. We note, however, that we will only support
shareholder proposals to change a company’s place of incorporation in exceptional circumstances.
Exclusive Forum and Fee-Shifting Bylaw Provisions
Glass Lewis recognizes that companies may be subject to frivolous and opportunistic lawsuits, particularly in
conjunction with a merger or acquisition, that are expensive and distracting. In response, companies have
sought ways to prevent or limit the risk of such suits by adopting bylaws regarding where the suits must be
brought or shifting the burden of the legal expenses to the plaintiff, if unsuccessful at trial.
Glass Lewis believes that charter or bylaw provisions limiting a shareholder’s choice of legal venue are not in the
best interests of shareholders. Such clauses may effectively discourage the use of shareholder claims by
increasing their associated costs and making them more difficult to pursue. As such, shareholders should be
wary about approving any limitation on their legal recourse including limiting themselves to a single jurisdiction
(e.g., Delaware or federal courts for matters arising under the Securities Act of 1933) without compelling
evidence that it will benefit shareholders.
For this reason, we recommend that shareholders vote against any bylaw or charter amendment seeking to
adopt an exclusive forum provision unless the company: (i) provides a compelling argument on why the
provision would directly benefit shareholders; (ii) provides evidence of abuse of legal process in other, non-
favored jurisdictions; (iii) narrowly tailors such provision to the risks involved; and (iv) maintains a strong record
of good corporate governance practices.
45 In cases where a controlled company is seeking to change its domicile, we will closely evaluate how the independent
members of the board came to its recommendation, if the controlling shareholder had any ability to influence the board, and if
the proposal is also put to a vote of disinterested shareholders.
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Moreover, in the event a board seeks shareholder approval of a forum selection clause pursuant to a bundled
bylaw amendment rather than as a separate proposal, we will weigh the importance of the other bundled
provisions when determining the vote recommendation on the proposal. We will nonetheless recommend
voting against the chair of the governance committee for bundling disparate proposals into a single proposal
(refer to our discussion of nominating and governance committee performance in Section I of the guidelines).
Similarly, some companies have adopted bylaws requiring plaintiffs who sue the company and fail to receive a
judgment in their favor pay the legal expenses of the company. These bylaws, also known as “fee-shifting” or
“loser pays” bylaws, will likely have a chilling effect on even meritorious shareholder lawsuits as shareholders
would face an strong financial disincentive not to sue a company. Glass Lewis therefore strongly opposes the
adoption of such fee-shifting bylaws and, if adopted without shareholder approval, will recommend voting
against the governance committee. While we note that in June of 2015 the State of Delaware banned the
adoption of fee-shifting bylaws, such provisions could still be adopted by companies incorporated in other
states.
Authorized Shares
Glass Lewis believes that adequate capital stock is important to a company’s operation. When analyzing a
request for additional shares, we typically review four common reasons why a company might need additional
capital stock:
1.Stock Split — We typically consider three metrics when evaluating whether we think a stock split is likely
or necessary: The historical stock pre-split price, if any; the current price relative to the company’s most
common trading price over the past 52 weeks; and some absolute limits on stock price that, in our view,
either always make a stock split appropriate if desired by management or would almost never be a
reasonable price at which to split a stock.
2.Shareholder Defenses — Additional authorized shares could be used to bolster takeover defenses such
as a poison pill. Proxy filings often discuss the usefulness of additional shares in defending against or
discouraging a hostile takeover as a reason for a requested increase. Glass Lewis is typically against such
defenses and will oppose actions intended to bolster such defenses.
3.Financing for Acquisitions — We look at whether the company has a history of using stock for
acquisitions and attempt to determine what levels of stock have typically been required to accomplish
such transactions. Likewise, we look to see whether this is discussed as a reason for additional shares in
the proxy.
4.Financing for Operations — We review the company’s cash position and its ability to secure financing
through borrowing or other means. We look at the company’s history of capitalization and whether the
company has had to use stock in the recent past as a means of raising capital.
Issuing additional shares generally dilutes existing holders in most circumstances. Further, the availability of
additional shares, where the board has discretion to implement a poison pill, can often serve as a deterrent to
interested suitors. Accordingly, where we find that the company has not detailed a plan for use of the proposed
shares, or where the number of shares far exceeds those needed to accomplish a detailed plan, we typically
recommend against the authorization of additional shares. Similar concerns may also lead us to recommend
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against a proposal to conduct a reverse stock split if the board does not state that it will reduce the number of
authorized common shares in a ratio proportionate to the split.
With regard to authorizations and/or increases in preferred shares, Glass Lewis is generally against such
authorizations, which allow the board to determine the preferences, limitations and rights of the preferred
shares (known as “blank-check preferred stock”). We believe that granting such broad discretion should be of
concern to common shareholders, since blank-check preferred stock could be used as an anti-takeover device or
in some other fashion that adversely affects the voting power or financial interests of common shareholders.
Therefore, we will generally recommend voting against such requests, unless the company discloses a
commitment to not use such shares as an anti-takeover defense or in a shareholder rights plan, or discloses a
commitment to submit any shareholder rights plan to a shareholder vote prior to its adoption.
While we think that having adequate shares to allow management to make quick decisions and effectively
operate the business is critical, we prefer that, for significant transactions, management come to shareholders
to justify their use of additional shares rather than providing a blank check in the form of a large pool of
unallocated shares available for any purpose.
Advance Notice Requirements
We typically recommend that shareholders vote against proposals that would require advance notice of
shareholder proposals or of director nominees.
These proposals typically attempt to require a certain amount of notice before shareholders are allowed to
place proposals on the ballot. Notice requirements typically range between three to six months prior to the
annual meeting. Advance notice requirements typically make it impossible for a shareholder who misses the
deadline to present a shareholder proposal or a director nominee that might be in the best interests of the
company and its shareholders.
We believe shareholders should be able to review and vote on all proposals and director nominees.
Shareholders can always vote against proposals that appear with little prior notice. Shareholders, as owners of a
business, are capable of identifying issues on which they have sufficient information and ignoring issues on
which they have insufficient information. Setting arbitrary notice restrictions limits the opportunity for
shareholders to raise issues that may come up after the window closes.
Virtual Shareholder Meetings
A growing contingent of companies have elected to hold shareholder meetings by virtual means only. Glass
Lewis believes that virtual meeting technology can be a useful complement to a traditional, in-person
shareholder meeting by expanding participation of shareholders who are unable to attend a shareholder
meeting in person (i.e., a “hybrid meeting”). However, we also believe that virtual-only meetings have the
potential to curb the ability of a company’s shareholders to meaningfully communicate with the company’s
management.
Prominent shareholder rights advocates, including the Council of Institutional Investors, have expressed
concerns that such virtual-only meetings do not approximate an in-person experience and may serve to reduce
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the board’s accountability to shareholders. When analyzing the governance profile of companies that choose to
hold virtual-only meetings, we look for robust disclosure in a company’s proxy statement which assures
shareholders that they will be afforded the same rights and opportunities to participate as they would at an in-
person meeting.
Examples of effective disclosure include: (i) addressing the ability of shareholders to ask questions during the
meeting, including time guidelines for shareholder questions, rules around what types of questions are allowed,
and rules for how questions and comments will be recognized and disclosed to meeting participants; (ii)
procedures, if any, for posting appropriate questions received during the meeting and the company’s answers,
on the investor page of their website as soon as is practical after the meeting; (iii) addressing technical and
logistical issues related to accessing the virtual meeting platform; and (iv) procedures for accessing technical
support to assist in the event of any difficulties accessing the virtual meeting.
We will generally recommend voting against members of the governance committee where the board is
planning to hold a virtual-only shareholder meeting and the company does not provide such disclosure.
Voting Structure
Multi-Class Share Structures
Glass Lewis believes multi-class voting structures are typically not in the best interests of common shareholders.
Allowing one vote per share generally operates as a safeguard for common shareholders by ensuring that those
who hold a significant minority of shares are able to weigh in on issues set forth by the board.
Furthermore, we believe that the economic stake of each shareholder should match their voting power and that
no small group of shareholders, family or otherwise, should have voting rights different from those of other
shareholders. On matters of governance and shareholder rights, we believe shareholders should have the power
to speak and the opportunity to effect change. That power should not be concentrated in the hands of a few for
reasons other than economic stake.
We generally consider a multi-class share structure to reflect negatively on a company’s overall corporate
governance. Because we believe that companies should have share capital structures that protect the interests
of non-controlling shareholders as well as any controlling entity, we typically recommend that shareholders vote
in favor of recapitalization proposals to eliminate dual-class share structures. Similarly, we will generally
recommend against proposals to adopt a new class of common stock. We will generally recommend voting
against the chair of the governance committee at companies with a multi-class share structure and unequal
voting rights when the company does not provide for a reasonable sunset of the multi-class share structure
(generally seven years or less).
In the case of a board that adopts a multi-class share structure in connection with an IPO, spin-off, or direct
listing within the past year, we will generally recommend voting against all members of the board who served at
the time of the IPO if the board: (i) did not also commit to submitting the multi-class structure to a shareholder
vote at the company’s first shareholder meeting following the IPO; or (ii) did not provide for a reasonable sunset
of the multi-class structure (generally seven years or less). If the multi-class share structure is put to a
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shareholder vote, we will examine the level of approval or disapproval attributed to unaffiliated shareholders
when determining the vote outcome.
At companies that have multi-class share structures with unequal voting rights, we will carefully examine the
level of approval or disapproval attributed to unaffiliated shareholders when determining whether board
responsiveness is warranted. In the case of companies that have multi-class share structures with unequal
voting rights, we will generally examine the level of approval or disapproval attributed to unaffiliated
shareholders on a “one share, one vote” basis. At controlled and multi-class companies, when at least 20% or
more of unaffiliated shareholders vote contrary to management, we believe that boards should engage with
shareholders and demonstrate some initial level of responsiveness, and when a majority or more of unaffiliated
shareholders vote contrary to management we believe that boards should engage with shareholders and
provide a more robust response to fully address shareholder concerns.
Cumulative Voting
Cumulative voting increases the ability of minority shareholders to elect a director by allowing shareholders to
cast as many shares of the stock they own multiplied by the number of directors to be elected. As companies
generally have multiple nominees up for election, cumulative voting allows shareholders to cast all of their votes
for a single nominee, or a smaller number of nominees than up for election, thereby raising the likelihood of
electing one or more of their preferred nominees to the board. It can be important when a board is controlled
by insiders or affiliates and where the company’s ownership structure includes one or more shareholders who
control a majority-voting block of company stock.
Glass Lewis believes that cumulative voting generally acts as a safeguard for shareholders by ensuring that those
who hold a significant minority of shares can elect a candidate of their choosing to the board. This allows the
creation of boards that are responsive to the interests of all shareholders rather than just a small group of
large holders.
We review cumulative voting proposals on a case-by-case basis, factoring in the independence of the board and
the status of the company’s governance structure. But we typically find these proposals on ballots at companies
where independence is lacking and where the appropriate checks and balances favoring shareholders are not in
place. In those instances we typically recommend in favor of cumulative voting.
Where a company has adopted a true majority vote standard (i.e., where a director must receive a majority of
votes cast to be elected, as opposed to a modified policy indicated by a resignation policy only), Glass Lewis will
recommend voting against cumulative voting proposals due to the incompatibility of the two election methods.
For companies that have not adopted a true majority voting standard but have adopted some form of majority
voting, Glass Lewis will also generally recommend voting against cumulative voting proposals if the company has
not adopted anti-takeover protections and has been responsive to shareholders.
Where a company has not adopted a majority voting standard and is facing both a shareholder proposal to
adopt majority voting and a shareholder proposal to adopt cumulative voting, Glass Lewis will support only the
majority voting proposal. When a company has both majority voting and cumulative voting in place, there is a
higher likelihood of one or more directors not being elected as a result of not receiving a majority vote. This is
because shareholders exercising the right to cumulate their votes could unintentionally cause the failed election
of one or more directors for whom shareholders do not cumulate votes.
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Supermajority Vote Requirements
Glass Lewis believes that supermajority vote requirements impede shareholder action on ballot items critical to
shareholder interests. An example is in the takeover context, where supermajority vote requirements can
strongly limit the voice of shareholders in making decisions on such crucial matters as selling the business. This
in turn degrades share value and can limit the possibility of buyout premiums to shareholders. Moreover,
we believe that a supermajority vote requirement can enable a small group of shareholders to overrule the will
of the majority shareholders. We believe that a simple majority is appropriate to approve all matters presented
to shareholders.
Transaction of Other Business
We typically recommend that shareholders not give their proxy to management to vote on any other business
items that may properly come before an annual or special meeting. In our opinion, granting unfettered
discretion is unwise.
Anti-Greenmail Proposals
Glass Lewis will support proposals to adopt a provision preventing the payment of greenmail, which would serve
to prevent companies from buying back company stock at significant premiums from a certain shareholder.
Since a large or majority shareholder could attempt to compel a board into purchasing its shares at a large
premium, the anti-greenmail provision would generally require that a majority of shareholders other than the
majority shareholder approve the buyback.
Mutual Funds: Investment Policies and Advisory Agreements
Glass Lewis believes that decisions about a fund’s structure and/or a fund’s relationship with its investment
advisor or sub-advisors are generally best left to management and the members of the board, absent a showing
of egregious or illegal conduct that might threaten shareholder value. As such, we focus our analyses of such
proposals on the following main areas:
•The terms of any amended advisory or sub-advisory agreement;
•Any changes in the fee structure paid to the investment advisor; and
•Any material changes to the fund’s investment objective or strategy.
We generally support amendments to a fund’s investment advisory agreement absent a material change that is
not in the best interests of shareholders. A significant increase in the fees paid to an investment advisor would
be reason for us to consider recommending voting against a proposed amendment to an investment advisory
agreement or fund reorganization. However, in certain cases, we are more inclined to support an increase in
advisory fees if such increases result from being performance-based rather than asset-based. Furthermore, we
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generally support sub-advisory agreements between a fund’s advisor and sub-advisor, primarily because the
fees received by the sub-advisor are paid by the advisor, and not by the fund.
In matters pertaining to a fund’s investment objective or strategy, we believe shareholders are best served
when a fund’s objective or strategy closely resembles the investment discipline shareholders understood and
selected when they initially bought into the fund. As such, we generally recommend voting against amendments
to a fund’s investment objective or strategy when the proposed changes would leave shareholders with stakes
in a fund that is noticeably different than when originally purchased, and which could therefore potentially
negatively impact some investors’ diversification strategies.
Real Estate Investment Trusts
The complex organizational, operational, tax and compliance requirements of Real Estate Investment Trusts
(REITs) provide for a unique shareholder evaluation. In simple terms, a REIT must have a minimum of 100
shareholders (the 100 Shareholder Test) and no more than 50% of the value of its shares can be held by five or
fewer individuals (the “5/50 Test”). At least 75% of a REITs’ assets must be in real estate, it must derive 75% of
its gross income from rents or mortgage interest, and it must pay out 90% of its taxable earnings as dividends. In
addition, as a publicly traded security listed on a stock exchange, a REIT must comply with the same general
listing requirements as a publicly traded equity.
In order to comply with such requirements, REITs typically include percentage ownership limitations in their
organizational documents, usually in the range of 5% to 10% of the REITs outstanding shares. Given the
complexities of REITs as an asset class, Glass Lewis applies a highly nuanced approach in our evaluation of REIT
proposals, especially regarding changes in authorized share capital, including preferred stock.
Preferred Stock Issuances at REITs
Glass Lewis is generally against the authorization of "blank-check preferred stock." However, given the
requirement that a REIT must distribute 90% of its net income annually, it is inhibited from retaining capital to
make investments in its business. As such, we recognize that equity financing likely plays a key role in a REIT’s
growth and creation of shareholder value. Moreover, shareholder concern regarding the use of preferred stock
as an anti-takeover mechanism may be allayed by the fact that most REITs maintain ownership limitations in
their certificates of incorporation. For these reasons, along with the fact that REITs typically do not engage in
private placements of preferred stock (which result in the rights of common shareholders being adversely
impacted), we may support requests to authorize shares of blank-check preferred stock at REITs.
Business Development Companies
Business Development Companies (BDCs) were created by the U.S. Congress in 1980; they are regulated under
the Investment Company Act of 1940 and are taxed as regulated investment companies (RICs) under the Internal
Revenue Code. BDCs typically operate as publicly traded private equity firms that invest in early stage to mature
private companies as well as small public companies. BDCs realize operating income when their investments are
sold off, and therefore maintain complex organizational, operational, tax and compliance requirements that are
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similar to those of REITs—the most evident of which is that BDCs must distribute at least 90% of their taxable
earnings as dividends.
Authorization to Sell Shares at a Price Below Net Asset Value
Considering that BDCs are required to distribute nearly all their earnings to shareholders, they sometimes need
to offer additional shares of common stock in the public markets to finance operations and acquisitions.
However, shareholder approval is required in order for a BDC to sell shares of common stock at a price below
Net Asset Value (NAV). Glass Lewis evaluates these proposals using a case-by-case approach, but will
recommend supporting such requests if the following conditions are met:
•The authorization to allow share issuances below NAV has an expiration date of one year or less from
the date that shareholders approve the underlying proposal (i.e., the meeting date);
•The proposed discount below NAV is minimal (ideally no greater than 20%);
•The board specifies that the issuance will have a minimal or modest dilutive effect (ideally no greater
than 25% of the company’s then-outstanding common stock prior to the issuance); and
•A majority of the company’s independent directors who do not have a financial interest in the issuance
approve the sale.
In short, we believe BDCs should demonstrate a responsible approach to issuing shares below NAV, by
proactively addressing shareholder concerns regarding the potential dilution of the requested share issuance,
and explaining if and how the company’s past below-NAV share issuances have benefitted the company.
Auditor Ratification and Below-NAV Issuances
When a BDC submits a below-NAV issuance for shareholder approval, we will refrain from recommending
against the audit committee chair for not including auditor ratification on the same ballot. Because of the
unique way these proposals interact, votes may be tabulated in a manner that is not in shareholders’ interests.
In cases where these proposals appear on the same ballot, auditor ratification is generally the only “routine
proposal,” the presence of which triggers a scenario where broker non-votes may be counted toward
shareholder quorum, with unintended consequences.
Under the 1940 Act, below-NAV issuance proposals require relatively high shareholder approval. Specifically,
these proposals must be approved by the lesser of: (i) 67% of votes cast if a majority of shares are represented
at the meeting; or (ii) a majority of outstanding shares. Meanwhile, any broker non-votes counted toward
quorum will automatically be registered as “against” votes for purposes of this proposal. The unintended result
can be a case where the issuance proposal is not approved, despite sufficient voting shares being cast in favor.
Because broker non-votes result from a lack of voting instruction by the shareholder, we do not believe
shareholders’ ability to weigh in on the selection of auditor outweighs the consequences of failing to approve an
issuance proposal due to such technicality.
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Special Purpose Acquisition Companies
Special Purpose Acquisition Companies (SPACs), also known as “blank check companies,” are publicly traded
entities with no commercial operations and are formed specifically to pool funds in order to complete a merger
or acquisition within a set time frame. In general, the acquisition target of a SPAC is either not yet identified or
otherwise not explicitly disclosed to the public even when the founders of the SPAC may have at least one target
in mind. Consequently, IPO investors often do not know what company they will ultimately be investing in.
SPACs are therefore very different from typical operating companies. Shareholders do not have the same
expectations associated with an ordinary publicly traded company and executive officers of a SPAC typically do
not continue in employment roles with an acquired company.
Extension of Business Combination Deadline
Governing documents of SPACs typically provide for the return of IPO proceeds to common shareholders if no
qualifying business combination is consummated before a certain date. Because the time frames for the
consummation of such transactions are relatively short, SPACs will sometimes hold special shareholder meetings
at which shareholders are asked to extend the business combination deadline. In such cases, an acquisition
target will typically have been identified, but additional time is required to allow management of the SPAC to
finalize the terms of the deal.
Glass Lewis believes management and the board are generally in the best position to determine when the
extension of a business combination deadline is needed. We therefore generally defer to the recommendation
of management and support reasonable extension requests.
SPAC Board Independence
The board of directors of a SPAC’s acquisition target is in many cases already established prior to the business
combination. In some cases, however, the board’s composition may change in connection with the business
combination, including the potential addition of individuals who served in management roles with the SPAC. The
role of a SPAC executive is unlike that of a typical operating company executive. Because the SPAC’s only
business is identifying and executing an acquisition deal, the interests of a former SPAC executive are also
different. Glass Lewis does not automatically consider a former SPAC executive to be affiliated with the acquired
operating entity when their only position on the board of the combined entity is that of an otherwise
independent director. Absent any evidence of an employment relationship or continuing material financial
interest in the combined entity, we will therefore consider such directors to be independent.
Director Commitments of SPAC Executives
We believe the primary role of executive officers at SPACs is identifying acquisition targets for the SPAC and
consummating a business combination. Given the nature of these executive roles and the limited business
operations of SPACs, when a directors’ only executive role is at a SPAC, we will generally apply our higher limit
for company directorships. As a result, we generally recommend that shareholders vote against a director who
serves in an executive role only at a SPAC while serving on more than five public company boards.
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Shareholder Proposals
Glass Lewis believes that shareholders should seek to promote governance structures that protect shareholders,
support effective ESG oversight and reporting, and encourage director accountability. Accordingly, Glass Lewis
places a significant emphasis on promoting transparency, robust governance structures and companies’
responsiveness to and engagement with shareholders. We also believe that companies should be transparent on
how they are mitigating material ESG risks, including those related to climate change, human capital
management, and stakeholder relations.
To that end, we evaluate all shareholder proposals on a case-by-case basis with a view to protecting long-term
shareholder value. While we are generally supportive of those that promote board accountability, shareholder
rights, and transparency, we consider all proposals in the context of a company’s unique operations and risk
profile.
For a detailed review of our policies concerning compensation, environmental, social, and governance
shareholder proposals, please refer to our comprehensive Proxy Paper Guidelines for Shareholder Proposals &
ESG-Related Issues, available at www.glasslewis.com/voting-policies-current/.
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Overall Approach to Environmental, Social &
Governance Issues
Glass Lewis evaluates all environmental and social issues through the lens of long-term shareholder value. We
believe that companies should be considering material environmental and social factors in all aspects of their
operations and that companies should provide shareholders with disclosures that allow them to understand
how these factors are being considered and how attendant risks are being mitigated. We also are of the view
that governance is a critical factor in how companies manage environmental and social risks and opportunities
and that a well-governed company will be generally managing these issues better than one without a
governance structure that promotes board independence and accountability.
We believe part of the board’s role is to ensure that management conducts a complete risk analysis of company
operations, including those that have material environmental and social implications. We believe that directors
should monitor management’s performance in both capitalizing on environmental and social opportunities and
mitigating environmental and social risks related to operations in order to best serve the interests of
shareholders. Companies face significant financial, legal and reputational risks resulting from poor
environmental and social practices, or negligent oversight thereof. Therefore, in cases where the board or
management has neglected to take action on a pressing issue that could negatively impact shareholder value,
we believe that shareholders should take necessary action in order to effect changes that will safeguard their
financial interests.
Given the importance of the role of the board in executing a sustainable business strategy that allows for the
realization of environmental and social opportunities and the mitigation of related risks, relating to
environmental risks and opportunities, we believe shareholders should seek to promote governance structures
that protect shareholders and promote director accountability. When management and the board have
displayed disregard for environmental or social risks, have engaged in egregious or illegal conduct, or have failed
to adequately respond to current or imminent environmental and social risks that threaten shareholder value,
we believe shareholders should consider holding directors accountable. In such instances, we will generally
recommend against responsible members of the board that are specifically charged with oversight of the issue
in question.
When evaluating environmental and social factors that may be relevant to a given company, Glass Lewis does so
in the context of the financial materiality of the issue to the company’s operations. We believe that all
companies face risks associated with environmental and social issues. However, we recognize that these risks
manifest themselves differently at each company as a result of a company’s operations, workforce, structure,
and geography, among other factors. Accordingly, we place a significant emphasis on the financial implications
of a company’s actions with regard to impacts on its stakeholders and the environment.
When evaluating environmental and social issues, Glass Lewis examines companies’:
Direct environmental and social risk — Companies should evaluate financial exposure to direct environmental
risks associated with their operations. Examples of direct environmental risks include those associated with oil
or gas spills, contamination, hazardous leakages, explosions, or reduced water or air quality, among others.
Social risks may include non-inclusive employment policies, inadequate human rights policies, or issues that
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adversely affect the company’s stakeholders. Further, we believe that firms should consider their exposure to
risks emanating from a broad range of issues, over which they may have no or only limited control, such as
insurance companies being affected by increased storm severity and frequency resulting from climate change
Risk due to legislation and regulation — Companies should evaluate their exposure to changes or potential
changes in regulation that affect current and planned operations. Regulation should be carefully monitored in all
jurisdictions in which the company operates. We look closely at relevant and proposed legislation and evaluate
whether the company has responded proactively.
Legal and reputational risk — Failure to take action on important environmental or social issues may carry the
risk of inciting negative publicity and potentially costly litigation. While the effect of high-profile campaigns on
shareholder value may not be directly measurable, we believe it is prudent for companies to carefully evaluate
the potential impacts of the public perception of their impacts on stakeholders and the environment. When
considering investigations and lawsuits, Glass Lewis is mindful that such matters may involve unadjudicated
allegations or other charges that have not been resolved. Glass Lewis does not assume the truth of such
allegations or charges or that the law has been violated. Instead, Glass Lewis focuses more broadly on whether,
under the particular facts and circumstances presented, the nature and number of such concerns, lawsuits or
investigations reflects on the risk profile of the company or suggests that appropriate risk mitigation measures
may be warranted.
Governance risk — Inadequate oversight of environmental and social issues carries significant risks to
companies. When leadership is ineffective or fails to thoroughly consider potential risks, such risks are likely
unmitigated and could thus present substantial risks to the company, ultimately leading to loss of shareholder
value.
Glass Lewis believes that one of the most crucial factors in analyzing the risks presented to companies in the
form of environmental and social issues is the level and quality of oversight over such issues. When
management and the board have displayed disregard for environmental risks, have engaged in egregious or
illegal conduct, or have failed to adequately respond to current or imminent environmental risks that threaten
shareholder value, we believe shareholders should consider holding directors accountable. When companies
have not provided for explicit, board-level oversight of environmental and social matters and/or when a
substantial environmental or social risk has been ignored or inadequately addressed, we may recommend voting
against members of the board. In addition, or alternatively, depending on the proposals presented, we may also
consider recommending voting in favor of relevant shareholder proposals or against other relevant
management-proposed items, such as the ratification of auditor, a company’s accounts and reports, or
ratification of management and board acts.
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Connect with Glass Lewis
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DISCLAIMER
© 2024 Glass, Lewis & Co., and/or its affiliates. All Rights Reserved.
This document is intended to provide an overview of Glass Lewis’ proxy voting guidelines. It is not intended to
be exhaustive and does not address all potential voting issues. Glass Lewis’ proxy voting guidelines, as they apply
to certain issues or types of proposals, are further explained in supplemental guidelines and reports that are
made available on Glass Lewis’ website – http://www.glasslewis.com. These guidelines have not been set or
approved by the U.S. Securities and Exchange Commission or any other regulatory body. Additionally, none of
the information contained herein is or should be relied upon as investment advice. The content of this
document has been developed based on Glass Lewis’ experience with proxy voting and corporate governance
issues, engagement with clients and issuers, and review of relevant studies and surveys, and has not been
tailored to any specific person or entity.
Glass Lewis’ proxy voting guidelines are grounded in corporate governance best practices, which often exceed
minimum legal requirements. Accordingly, unless specifically noted otherwise, a failure to meet these guidelines
should not be understood to mean that the company or individual involved has failed to meet applicable legal
requirements.
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and solely responsible for making their own decisions, including, but not limited to, ensuring that such decisions
comply with all agreements, codes, duties, laws, ordinances, regulations, and other obligations applicable to
such subscriber.
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GLASS LEWIS
        2025 Benchmark Policy Guidelines
            An Overview of Glass Lewis’ Approach to Proxy Advice
       
   
    www.glasslewis.com
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About Glass Lewis
Glass Lewis is the world’s choice for governance solutions. We enable institutional investors and publicly
listed companies to make informed decisions based on research and data. We cover 30,000+ meetings each year,
across approximately 100 global markets. Our team has been providing in-depth analysis of companies since
2003, relying solely on publicly available information to inform its policies, research, and voting
recommendations.
Our customers include the majority of the world’s largest pension plans, mutual funds, and asset
managers, collectively managing over $40 trillion in assets. We have teams located across the United States,
Europe, and Asia-Pacific giving us global reach with a local perspective on the important governance issues.
Investors around the world depend on Glass Lewis’ Viewpoint platform to manage their proxy voting, policy
implementation, recordkeeping, and reporting. Our industry leading Proxy Paper product provides
comprehensive environmental, social, and governance research and voting recommendations weeks ahead of
voting deadlines. Public companies can also use our innovative Report Feedback Statement to deliver their
opinion on our proxy research directly to the voting decision makers at every investor client in time for voting
decisions to be made or changed.
The research team engages extensively with public companies, investors, regulators, and other industry
stakeholders to gain relevant context into the realities surrounding companies, sectors, and the market in
general. This enables us to provide the most comprehensive and pragmatic insights to our customers.
Join the Conversation
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Introduction
These guidelines provide a general overview of Glass Lewis’ Benchmark Policy approach to proxy advice globally.
Glass Lewis publishes separate, detailed guidelines for all major global markets, which are publicly available on
the Glass Lewis website. Glass Lewis' regional Benchmark Policy guidelines are largely based on the regulations,
listing rules, codes of best practice and other relevant standards set in each country. While these guidelines
provide a high-level overview of our general policy approach, implementation varies in accordance with relevant
requirements or best practices in each market. For detailed information on the implementation of the policy
approach described below, refer to the Glass Lewis Benchmark Policy guidelines for the relevant country. 
Summary of Changes for 2025
Board Oversight of Artificial Intelligence
In a new section of these guidelines, we have outlined our belief that boards should be cognizant of, and take
steps to mitigate exposure to, any material risks that could arise from their use or development of AI. Companies
that use or develop AI technologies should adopt strong internal frameworks that include ethical considerations
and ensure effective oversight of AI. Clear disclosure on how boards are overseeing AI and expanding their
collective expertise and understanding in this area is likely to be of value to shareholders.
In instances where there is evidence that insufficient oversight and/or management of AI technologies has
resulted in material harm to shareholders, we may recommend that shareholders vote against the re-election of
accountable directors, or other matters up for a shareholder vote, as appropriate, should we find the board’s
oversight, response or disclosure concerning AI-related issues to be insufficient.
Please refer to the “Board Oversight of Artificial Intelligence” section of these guidelines for further information.
Appointment of Auditor for Sustainability Reporting
We have introduced wording to outline that when a company provides a shareholder vote on the appointment
of an auditor for sustainability reporting, the Benchmark Policy will generally recommend that shareholders
support the company’s proposed choice, subject to our general policies on the company providing sufficient
information on the identity of and fees paid to the auditor, as well as to the independence and performance of
the auditor.
Please refer to the “Appointment of Auditors and Authority to Set Fees” section of these guidelines for further
information.
Board Responsiveness to Shareholder Proposals
We have expanded our commentary on board responsiveness to outline that when shareholder proposals
receive significant shareholder support (generally more than 30% of votes cast), the Benchmark Policy generally
takes the view that boards should engage with shareholders on the issue and provide disclosure addressing
shareholder concerns and outreach initiatives.
Please refer to the “Board Responsiveness” section of these guidelines for further information.
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Clarifying Amendments
The following clarifications of our existing policies are included this year:
Director Accountability
We have clarified that the Benchmark Policy may recommend a vote against the chair, or all members, or key
board committees when there are material performance concerns with the committee in question. Further, we
have clarified that the Benchmark Policy may recommend a vote against a director in a board leadership position
(e.g. board chair or vice chair, lead independent director, committee chair) when we conclude that this director
holds primary accountability on the board for a certain issue.
Please refer to the “Board Composition” and “Committee Composition” sections of these guidelines for further
information.
Overall Approach to Executive Compensation
We have expanded the discussion of Glass Lewis’ overall nuanced approach to reviewing executive
compensation proposals. In particular, we have highlighted that we conduct a holistic review of all relevant
factors and take a case-by-case approach to our analysis of pay programs, with a negative recommendation
being based on an individual factor only in particularly egregious cases.
Please refer to the “Compensation Report/Compensation Policy” section of these guidelines for further
information.
Election of Directors
We have restructured this section of the guidelines to group policy areas under the headings “Board and
Committee Composition and Performance”, “Election Procedures”, and “Board Oversight of Material Issues”.
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Election of Directors
Board and Committee Composition and Performance
Boards are put in place to represent shareholders and protect their interests. Glass Lewis seeks boards with a
proven record of protecting shareholders and delivering value over the medium- and long-term. In our view,
boards working to protect and enhance the best interests of shareholders should include some independent
directors (the percentage will vary by local market practice and regulations), boast a record of positive
performance, have directors with diverse backgrounds, and appoint directors with a breadth and depth of
experience. 
Board Composition
We look at each individual on the board and examine their relationships with the company, the company’s
executives, and with other board members. The purpose of this inquiry is to determine whether pre-existing
personal, familial, or financial relationships are likely to impact the decisions of that board member. 
Where the company does not disclose the names or backgrounds of director nominees with sufficient time in
advance of the shareholder meeting to evaluate their independence, performance or skills the Benchmark Policy
will generally recommend voting against or abstaining from voting on the election. 
We recommend voting in favor of governance structures that will drive positive performance and enhance
shareholder value. The most crucial test of a board’s commitment to the company and to its shareholders is the
performance of the board and its members. The performance of directors in their capacity as board members
and as executives of the company, when applicable, and in their roles at other companies where they serve is
critical to this evaluation. We generally believe that a board will be most effective in protecting shareholders'
interests when a majority of shareholder representatives on the board are independent, although we set higher
and lower thresholds in some markets on the basis of local best practice recommendations and prevailing
market practice. We typically accept the presence of representatives of a company's major shareholder(s) on the
board in line with their stake in a company's issued share capital or voting rights, so long as there is a sufficient
number of independent directors to represent free-float shareholders and allow for the formation of sufficiently
independent board committees.
We believe a director can be considered independent if they have no material financial, familial, or other current
relationships with the company, its executives or other board members except for service on the board and
standard fees paid for that service. Relationships that have existed within the three to five years, dependent on
the nature of the relationship, prior to the inquiry are usually considered to be “current” for purposes of this
test. 
We consider a director to be affiliated if they have a material financial, familial or other relationship with the
company or its executives, but are not an employee of the company. This includes directors whose employers
have a material financial relationship with the company. This also includes a director who owns or controls,
directly or indirectly, 10% or more of the company’s voting stock (except where local regulations or best practice
set a different threshold). 
1 In some cases, the Benchmark Policy will consider directors in leadership positions on the board to hold primary
accountability for an issue and recommend against their re-election to the board. Depending on this issue, this could apply
to the chair or vice chair of the board, the lead independent director (if applicable), or the chair of key board committees.
2 For instance, the Benchmark Policy will generally recommend a vote against the audit committee chair for ongoing
excessive non-audit fees or when a company fails to disclose audit fees, and may recommend a vote against all members of
the compensation committee for ongoing egregious compensation policies and practices. Please refer to local market
guidelines for further information on how committee members are held accountable for poor committee performance in
each market.
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We define an inside director as one who simultaneously serves as a director and as an employee of the
company. This category may include a board chair who acts as an employee of the company or is paid as an
employee of the company. 
Although we typically recommend that shareholders support the election of independent directors, we will
recommend voting against directors for the following reasons: 
•A director who attends less than 75% of the board and applicable committee meetings. 
•A director who is also the CEO of a company where a serious restatement has occurred after the CEO
certified the pre-restatement financial statements. 
•An affiliated director where the board is not sufficiently independent in accordance with market best
practice standards.
•There are substantial concerns regarding the performance and/or skills and experience of a director.
•The director can be considered to hold primary accountability for an issue due to their leadership
position on the board1.
We also feel that the following conflicts of interest may hinder a director’s performance and will therefore
recommend voting against a: 
•Director who sits on an excessive number of boards. 
•Director who, or a director whose immediate family member, currently provides material professional
services to the company. 
•Director who, or a director whose immediate family member, engages in airplane, real estate or other
similar deals, including perquisite type grants from the company. 
•Director with an interlocking directorship.
Committee Composition
We believe that independent directors should serve on a company’s audit, compensation, nominating and
governance committees. We will support boards with such a structure and encourage change where this is not
the case. We generally recommend that shareholders oppose the presence of executive directors on the audit
and compensation committee given the risks for conflicts of interest. We generally believe that the majority of
shareholder representatives on key board committees should be independent, although we set higher and lower
thresholds in some markets on the basis of local best practice recommendations and prevailing market practice.
The Benchmark Policy may recommend that shareholders vote against the chair, or all members, of key
committees when there are material performance concerns2.
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Board Diversity
Glass Lewis values the importance of board diversity, believing there are a number of benefits from having
individuals with a variety of backgrounds serving on boards. We consider the diversity of gender, backgrounds,
skills and experience of directors when evaluating board diversity. If a board has failed to address material
concerns regarding the mix of skills and experience of the non-executive directors or when it fails to meet legal
requirements or the best practice standard prevalent in the market for gender quotas and has not disclosed any
cogent explanation or plan regarding its approach to board diversity, we will consider recommending voting
against the chair of the nominating committee. We expect boards of main market companies listed in most
major global markets (e.g. Australia, Canada, Europe, Japan, United Kingdom and United States), to comprise at
least one gender diverse director (women, or directors that identify with a gender other than male or female).
For European and North American companies listed on a blue-chip or mid-cap index (e.g. Russell 3000, TSX, FTSE
350, etc.), we expect at least 30% of the board to be composed of gender diverse directors. We apply a higher
standard where best practice recommendations or listing regulations set a higher target.
We also monitor company disclosure on diversity of ethnicity and other underrepresented communities at board
level. We expect large companies in markets with legal requirements or best practice recommendations in this
area (e.g. United States; United Kingdom) to provide clear disclosure on the board's performance or transition
plans.
Board Tenure and Refreshment
Glass Lewis strongly supports routine director evaluation, including independent external reviews, and periodic
board refreshment to foster the sharing of diverse perspectives in the boardroom and the generation of new
ideas and business strategies. In our view, a director’s experience can be a valuable asset to shareholders
because of the complex, critical issues that boards face. This said, we recognize a lack of refreshment can
contribute to a lack of board responsiveness to poor company performance. We may consider recommending
voting against directors with a lengthy tenure (e.g. over 12 years) when we identify significant performance or
governance concerns indicating that a fresh perspective would be beneficial and we find no evidence of board
refreshment.
Where a board has established an age or term limit, we believe these should generally be applied equally for all
members of the board. If a board waives its age/term limits, the Benchmark Policy will consider recommending
shareholders vote against the chair of the nominating committee or equivalent, unless compelling rationale is
provided for why the board is proposing to waive this rule through an election/re-election.
Separation of the Roles of Chair and CEO
Glass Lewis believes that separating the roles of corporate officers and the chair of the board is a better
governance structure than a combined executive/chair position. The role of executives is to manage the
business on the basis of the course charted by the board. Executives should be in the position of reporting and
answering to the board for their performance in achieving the goals set out by such board. This becomes much
more complicated when management actually sits on, or chairs, the board. 
We view an independent chair as better able to oversee the executives of the company and set a pro-
shareholder agenda without the management conflicts that a CEO and other executive insiders often face. This,
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in turn, leads to a more proactive and effective board of directors that is looking out for the interests of
shareholders above all else. 
In the absence of an independent chair, we support the appointment of a presiding or lead director with
authority to set the agenda for the meetings and to lead sessions outside the presence of the insider chair.
We may recommend voting against the chair of the nominating committee when the chair and CEO roles are
combined and the board has not appointed an independent presiding or lead director.
Board Responsiveness
Glass Lewis believes that any time 20% or more of shareholders vote contrary to the recommendation of
management, the board should, depending on the issue, demonstrate some level of responsiveness to address
the concerns of shareholders, particularly in the case of a compensation or director election proposal. While the
20% threshold alone will not automatically generate a negative vote recommendation from Glass Lewis on a
future proposal (e.g., to recommend against a director nominee, against a remuneration proposal, etc.), it will
be a contributing factor to recommend a vote against management's recommendation in the event we
determine that the board did not respond appropriately. Additionally, when shareholder proposals receive
significant support (generally more than 30% of votes cast), we believe that boards should engage with
shareholders on the issue and provide disclosure addressing shareholder concerns and outreach initiatives.
In the case of companies with a controlling shareholder and/or with a multi-class share structure, we will
carefully examine the level of disapproval attributable to minority shareholders. As a general framework, our
evaluation of board responsiveness involves a review of the publicly available disclosures released following the
date of the company's last annual meeting up through the publication date of our most current Proxy Paper.
Election Procedures
Slate Elections
In some countries, companies elect their board members as a slate, whereby shareholders are unable to vote on
the election of each individual director, but rather are limited to voting for or against the board as a whole. In
countries where slate elections are common market practice, we will not recommend that shareholders oppose
an election on the basis of this election method alone.
We will generally recommend that shareholders support a director slate, unless we have identified
independence or performance concerns. When the proposed slate raises concerns regarding board or
committee independence, we will generally recommend that shareholders vote against the slate. In egregious
cases where we have identified concerns regarding the performance and/or experience of the board, its
committees, and/or individual directors, we will similarly recommend that shareholders vote against the director
slate.
Classified Boards
The Benchmark Policy favors the repeal of staggered boards in favor of the annual election of directors. We
believe that staggered boards are less accountable to shareholders than annually elected boards. Furthermore,
we feel that the annual election of directors encourages board members to focus on protecting the interests of
shareholders. 
3 E.g., S&P 500, FTSE 100, Nikkei 225, etc.
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Board Oversight of Material Issues
Board Oversight of Risk Management Controls
We believe companies, particularly financial firms, should have a dedicated risk committee, or a committee of
the board charged with risk oversight, as well as a chief risk officer who reports directly to that committee, not
to the CEO or another executive. In cases where a company has disclosed a sizable loss or write-down, and
where a reasonable analysis indicates that the company’s board-level risk committee should be held
accountable for poor oversight, we would recommend that shareholders vote against such committee members
on that basis. In addition, in cases where a company maintains a significant level of financial risk exposure but
fails to disclose any explicit form of board-level risk oversight (committee or otherwise), we will consider
recommending to vote against the board chair on that basis. 
Board Oversight of Environmental and Social Issues
Glass Lewis recognizes the importance of ensuring the sustainability of companies’ operations. We believe that
insufficient oversight of material environmental and social issues can present direct legal, financial, regulatory
and reputational risks that could serve to harm shareholder interests. Therefore, we believe that these issues
should be carefully monitored and managed by companies, and that companies should have an appropriate
oversight structure in place to ensure that they are mitigating attendant risks and capitalizing on related
opportunities to the best extent possible.  The Benchmark Policy will generally recommend that shareholders
vote against the chair of the governance committee (or equivalent) of companies listed on a major blue-chip
index in key global markets that do not provide clear disclosure concerning the board-level oversight afforded to
material environmental and/or social issues. In general, we believe that shareholders are best served when this
responsibility is formally designated and codified in the appropriate committee charters or other governing
documents.
Board Accountability for Climate-Related Issues
Given the exceptionally broad impacts of a changing climate on companies, the economy, and society in general,
we view climate risk as a material risk for all companies. We therefore believe that boards should be considering
and evaluating their operational resilience under lower-carbon scenarios. While all companies maintain
exposure to climate-related risks, we believe that additional consideration should be given to, and that
disclosure should be provided by, those companies whose GHG emissions represent a financially material risk.
We believe that companies with this increased risk exposure should provide clear and comprehensive disclosure
regarding these risks, including how they are being mitigated and overseen. We believe such information is
crucial to allow investors to understand the company’s management of this issue, as well as the impact of a
lower carbon future on the company’s operations.
In line with this view, Glass Lewis will carefully examine the climate-related disclosures provided by large-cap
companies in developed capital markets3 with material exposure to climate risk stemming from their own
4 This policy will generally apply to companies in the following SASB-defined industries: agricultural products, air freight &
logistics, airlines, chemicals, construction materials, containers & packaging, cruise lines, electric utilities & power
generators, food retailers & distributors, health care distributors, iron & steel producers, marine transportation, meat,
poultry & dairy, metals & mining, non-alcoholic beverages, oil & gas, pulp & paper products, rail transportation, road
transportation, semiconductors, waste management.
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operations4 as well as companies where we believe emissions or climate impacts, or stakeholder scrutiny
thereof, represent an outsized, financially material risk in order to assess whether they have produced disclosure
that is aligned with the recommendations of the Task Force on Climate-related Disclosures (TCFD) or IFRS S2
Climate-related Disclosures. We will also assess whether these companies have disclosed explicit and clearly
defined board-level oversight responsibilities for climate-related issues.
In instances where we find either (or both) of these disclosures to be absent or significantly lacking, we may
recommend voting against the chair of the committee (or board) charged with oversight of climate-related
issues, or if no committee has been charged with such oversight, the chair of the governance committee.
Further, we may extend our recommendation on this basis to additional members of the responsible committee
in cases where the committee chair is not standing for election due to a classified board, or based on other
factors, including the company’s size and industry and its overall governance profile. In instances where
appropriate directors are not standing for election, we may instead recommend shareholders vote against other
matters that are up for a vote, such as the ratification of board acts, or the accounts and reports proposal.
Board Oversight of Technology
Cyber Risk Oversight
Companies and consumers are exposed to a growing risk of cyber-attacks. These attacks can result in customer
or employee data breaches, harm to a company’s reputation, significant fines or penalties, and interruption to a
company’s operations. Further, in some instances, cyber breaches can result in national security concerns, such
as those impacting companies operating as utilities, defense contractors, and energy companies.
In response to these issues, regulators have increasingly been focused on ensuring companies are providing
appropriate and timely disclosures and protections to stakeholders that could have been adversely impacted by
a breach in a company’s cyber infrastructure.
Given the regulatory focus on, and the potential adverse outcomes from, cyber-related issues, it is our view that
cyber risk is material for all companies. We therefore believe that it is critical that companies evaluate and
mitigate these risks to the greatest extent possible. With that view, we encourage all issuers to provide clear
disclosure concerning the role of the board in overseeing issues related to cybersecurity, including how
companies are ensuring directors are fully versed on this rapidly evolving and dynamic issue. We believe such
disclosure can help shareholders understand the seriousness with which companies take this issue.
In the absence of material cyber incidents, we will generally not make voting recommendations on the basis of a
company’s oversight or disclosure concerning cyber-related issues. However, in instances where cyber-attacks
have caused significant harm to shareholders, we will closely evaluate the board’s oversight of cybersecurity as
well as the company’s response and disclosures.
Moreover, in instances where a company has been materially impacted by a cyber-attack, we believe
shareholders can reasonably expect periodic updates communicating the company’s ongoing progress towards
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resolving and remediating the impact of the cyber-attack. We generally believe that shareholders are best
served when such updates include (but are not necessarily limited to) details such as when the company has
fully restored its information systems, when the company has returned to normal operations, what resources
the company is providing for affected stakeholders, and any other potentially relevant information, until the
company considers the impact of the cyber-attack to be fully remediated. These disclosures should focus on the
company’s response to address the impacts to affected stakeholders and should not reveal specific and/or
technical details that could impede the company’s response or remediation of the incident or that could assist
threat actors.
In such instances, we may recommend against appropriate directors should we find the board’s oversight,
response or disclosure concerning cybersecurity-related issues to be insufficient, or not provided to
shareholders.
Board Oversight of Artificial Intelligence
In recent years, companies have rapidly begun to develop and adopt uses for artificial intelligence (AI)
technologies throughout various aspects of their operations. Deployed and overseen effectively, AI technologies
have the potential to make companies’ operations and systems more efficient and productive. However, as the
use of these technologies has grown, so have the potential risks associated with companies’ development and
use of AI. Given these potential risks, we believe that boards should be cognizant of, and take steps to mitigate
exposure to, any material risks that could arise from their use or development of AI.
Companies that use or develop AI technologies should consider adopting strong internal frameworks that
include ethical considerations and ensure they have provided a sufficient level of oversight of AI. As such, boards
may seek to ensure effective oversight and address skills gaps by engaging in continued board education and/or
appointing directors with AI expertise. With that view, we believe that all companies that develop or employ the
use of AI in their operations should provide clear disclosure concerning the role of the board in overseeing issues
related to AI, including how companies are ensuring directors are fully versed on this rapidly evolving and
dynamic issue. We believe such disclosure can help shareholders understand the seriousness with which
companies take this issue.
While we believe that it is important that these issues are overseen at the board level and that shareholders are
afforded meaningful disclosure of these oversight responsibilities, we believe that companies should determine
the best structure for this oversight. In our view, this oversight can be effectively conducted by specific directors,
the entire board, a separate committee, or combined with the responsibilities of a key committee.
In the absence of material incidents related to a company’s use or management of AI-related issues, we will
generally not make voting recommendations on the basis of a company’s oversight of, or disclosure concerning,
AI-related issues. However, in instances where there is evidence that insufficient oversight and/or management
of AI technologies has resulted in material harm to shareholders, Glass Lewis will review a company’s overall
governance practices and identify which directors or board-level committees have been charged with oversight
of AI-related risks. We will also closely evaluate the board’s response to, and management of, this issue as well
as any associated disclosures and may recommend voting against the re-election of accountable directors, or
other matters up for a shareholder vote, as appropriate, should we find the board’s oversight, response or
disclosure concerning AI-related issues to be insufficient.
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Financial Reporting
Accounts and Reports
Many countries require companies to submit the annual financial statements, director reports, and independent
auditors’ reports to shareholders at a general meeting. The Benchmark Policy will usually recommend voting in
favor of these proposals except when there are concerns about the integrity of the statements/reports.
However, should the audited financial statements, auditor’s report and/or annual report not be published at the
writing of our report, the Benchmark Policy will recommend that shareholders abstain from voting on this
proposal. 
Income Allocation (Distribution of Dividends)
In many countries, companies must submit the allocation of income for shareholder approval. The Benchmark
Policy will generally recommend voting for such a proposal. However, we will give particular scrutiny to cases
where the company’s dividend payout ratio is exceptionally low or excessively high relative to its peers, or the
proposed distribution represents a substantial departure from a company's disclosed dividend policy, and the
company has not provided a satisfactory explanation. 
Appointment of Auditors and Authority to Set Fees
We believe that role of the auditor is crucial in protecting shareholder value. Like directors, auditors should be
free from conflicts of interest and should assiduously avoid situations that require them to make choices
between their own interests and the interests of the shareholders. The Benchmark Policy generally supports
management’s recommendation regarding the selection of an auditor and supports granting the board the
authority to fix auditor fees except in cases where we conclude that the independence of an incumbent auditor
or the integrity of the audit has been compromised. However, the Benchmark Policy generally recommends
voting against ratification of the auditor and/or authorizing the board to set auditor fees for the following
reasons: 
•When audit fees added to audit-related fees total less than one-half of total fees. 
•When there have been any recent restatements or late filings by the company where the auditor bears
some responsibility for the restatement or late filing (e.g., a restatement due to a reporting error). 
•When the company has aggressive accounting policies. 
•When the company has poor disclosure or lack of transparency in financial statements. 
•When there are other relationships or issues of concern with the auditor that might suggest a conflict
between the interest of the auditor and the interests of shareholders. 
•When the company is changing auditors as a result of a disagreement between the company and the
auditor on a matter of accounting principles or practices, financial statement disclosure or auditing
scope or procedures.
•Where the auditor’s tenure is lengthy (e.g. over 10 years) and when we identify any ongoing litigation or
significant controversies which call into question an auditor's effectiveness.
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When a company is seeking to appoint an auditor for sustainability reporting, the Benchmark Policy will
generally recommend that shareholders support a company’s choice, subject to the company providing
sufficient information on the identity of and fees paid to the auditor, as well as to the independence and
performance of the auditor, as outlined above. 
Compensation
Compensation Report/Compensation Policy
We closely review companies’ remuneration practices and disclosure as outlined in company filings to evaluate
management-submitted compensation report and policy vote proposals. In evaluating these proposals, which
can be binding or non-binding depending on the country, we examine how well the company has disclosed
information pertinent to its compensation programs, the extent to which overall compensation is tied to
performance, the performance metrics selected by the company, and the levels of remuneration in comparison
to company performance and that of its peers.
Given the complexity of most companies’ remuneration programs, Glass Lewis applies a highly nuanced
approach when analyzing executive compensation; we review all factors, including structural features, the
presence of effective best practices, disclosure quality, and trajectory-related factors. Further, we review
executive compensation on both a qualitative and quantitative basis, recognizing that each company must be
examined in the context of its industry, size, financial condition, its historic pay-for-performance practices,
ownership structure, and any other relevant internal or external factors. We also review any significant changes
or modifications, and associated rationale, made to a company’s compensation structure or award levels,
including base salaries, on a case-by-case basis.
Except for particularly egregious pay decisions and practices, no one factor would ordinarily lead to an
unfavorable recommendation under the Benchmark Policy without a review of the company’s rationale and/or
the influence of such decisions or practices on other aspects of the pay program, most notably the company’s
ability to align executive pay with performance and the shareholder experience. 
Nevertheless, while not an exhaustive list, the Benchmark Policy considers the following to be problematic pay
practices which may lead, or strongly contribute, to a recommendation to vote against a company’s
compensation report or policy:
•Gross disconnect between pay and performance; 
•Gross disconnect between remuneration outcomes and the experience of shareholders and other key
stakeholders (in particular company employees) in the year under review;
•Performance goals and metrics are inappropriate or insufficiently challenging; 
•Lack of disclosure regarding performance metrics and goals as well as the extent to which the
performance metrics, targets and goals are implemented to enhance company performance and
encourage prudent risk-taking; 
•Excessive weighting of short-term (e.g., generally less than three year) performance measurement in
incentive plans;
•Excessive discretion afforded to or exercised by management or the compensation committee to
deviate from defined performance metrics and goals in making awards; 
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•Ex gratia or other non-contractual payments have been made and the reasons for making the payments
have not been fully explained or the explanation is unconvincing; 
•Guaranteed bonuses are established; 
•Egregious or excessive bonuses, equity awards or severance payments; 
•Excessive increases (e.g. over 10%) in fixed payments such as salary or pension entitlements that are not
adequately justified; and
•The proposed changes to the existing policy represent, on aggregate, a worsening of the overall
structure.
In addition, we look for the presence of other structural safeguards, such as executive shareholding
requirements, and clawback and malus policies for incentive plans. The absence of such safeguards may
contribute to a negative recommendation. In particularly egregious cases where we conclude that the
compensation committee has substantially failed to fulfill its duty to shareholders, we may also recommend that
shareholders vote against the chair, senior members, or all members of the committee, depending on the
seriousness and persistence of the issues identified.
Long-Term Incentive Plans
Glass Lewis recognizes the value of equity-based incentive programs. When used appropriately, they can provide
a vehicle for linking an employee’s pay to a company’s performance, thereby aligning their interests with those
of shareholders. Tying a portion of an employee’s compensation to the performance of the company provides an
incentive to maximize share value. In addition, equity-based compensation is an effective way to attract, retain
and motivate key employees. In order to allow for meaningful shareholder review,  incentive programs should
generally include: (i) specific and appropriate performance goals; (ii) a maximum award pool; and (iii) a
maximum award amount per employee. In addition, the payments made should be reasonable relative to the
performance of the business and total compensation to those covered by the plan should be in line with
compensation paid by the company’s peers. 
Performance-Based Equity Compensation
Glass Lewis believes in performance-based equity compensation plans for senior executives. We feel that
executives should be compensated with equity when their performance and that of the company warrants such
rewards. While we do not believe that equity-based compensation plans for all employees need to be based on
overall company performance, the Benchmark Policy does support such limitations for grants to senior
executives (although even some equity-based compensation of senior executives without performance criteria is
acceptable, such as in the case of moderate incentive grants made in an initial offer of employment). Boards
often argue that such a proposal would hinder them in attracting talent. We believe that boards can develop a
consistent, reliable approach, as boards of many companies have, that would still attract executives who believe
in their ability to guide the company to achieve its targets. 
The Benchmark Policy generally recommends that shareholders vote in favor of performance-based option
requirements. There should be no retesting of performance conditions for all share- and option- based incentive
schemes. The Benchmark Policy will generally recommend that shareholders vote against performance-based
equity compensation plans that allow for re-testing.
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We pay particular attention to awards to major shareholders that serve as senior executives, mindful of the
natural alignment between shareholders' and the executive's interests and the potential for such grants to
further consolidate the executive's ownership level. We generally believe that the inclusion of challenging
targets attached to a diverse set of performance metrics can serve to mitigate concerns with such awards.
Where a company is proposing an individual equity award where the recipient of the proposed grant is also a
large shareholder, we believe that the company should strongly consider the level of approval from
disinterested shareholders before proceeding with the proposed grant. Glass Lewis recognizes potential conflicts
of interest when vote outcomes can be heavily influenced by the recipient of the grant. A required abstention
vote or non-vote from the recipient for an equity award proposal in these situations can help to avoid such
conflicts.
Director Compensation
Glass Lewis believes that non-employee directors should receive appropriate types and levels of compensation
for the time and effort they spend serving on the board and its committees. Director fees should be reasonable
in order to retain and attract qualified individuals. The Benchmark Policy supports compensation plans that
include non-performance-based equity awards. Glass Lewis compares the costs of these plans to the plans of
peer companies with similar market capitalizations in the same country to help inform its judgment on this issue. 
Retirement Benefits for Directors
The Benchmark Policy will typically recommend voting against proposals to grant retirement benefits to non-
executive directors. Such extended payments can impair the objectivity and independence of these board
members. Directors should receive adequate compensation for their board service through initial and annual
fees. 
Governance Structure 
Amendments to the Articles of Association
We will evaluate proposed amendments to a company’s articles of association on a case-by-case basis. We are
opposed to the practice of bundling several amendments under a single proposal because it prevents
shareholders from evaluating each amendment on its own merits. In such cases, we will analyze each change
individually and will recommend voting for the proposal only when we believe that the amendments on balance
are in the best interests of shareholders. 
Virtual Meetings
Glass Lewis unequivocally supports companies facilitating the virtual participation of shareholders in general
meetings. We believe that virtual meeting technology can be a useful complement to a traditional, in-person
shareholder meeting by expanding participation of shareholders who are unable to attend a shareholder
meeting in person (i.e. a "hybrid meeting"). However, we also believe that virtual-only shareholder meetings can
curb the ability of a company's shareholders to participate in the meeting and meaningfully communicate with
company management and directors. 
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Where companies are convening a meeting at which in-person attendance of shareholders is limited, we expect
companies to set and disclose clear procedures at the time of convocation regarding: 
i)When, where, and how shareholders will have an opportunity to ask questions related to the
subjects normally discussed at the annual meeting, including a timeline for submitting questions,
types of appropriate questions, and rules for how questions and comments will be recognized and
disclosed to shareholders; 
ii)In particular where there are restrictions on the ability of shareholders to question the board during
the meeting - the manner in which appropriate questions received during the meeting will be
addressed by the board; this should include a commitment that questions which meet the board’s
guidelines are answered in a format that is accessible by all shareholders, such as on the company’s
AGM or investor relations website;
iii)The procedure and requirements to participate in the meeting and access the meeting platform; and 
iv)Technical support that is available to shareholders prior to and during the meeting. In egregious
cases where inadequate disclosure of the aforementioned has been provided to shareholders at the
time of convocation, we will generally recommend that shareholders hold the board or relevant
directors accountable. 
Depending on a company’s governance structure, country of incorporation, and the agenda of the meeting, this
may lead to recommendations that shareholders vote against members of the governance committee (or
equivalent; if up for re-election); the chair of the board (if up for re-election); and/or other agenda items
concerning board composition and performance as applicable (e.g. ratification of board acts). We will always
take into account local laws, best practices, and disclosure standards when assessing a company’s performance
on this issue.
Anti-Takeover Measures 
Multi-Class Share Structures
Glass Lewis believes multi-class voting structures are typically not in the best interests of common shareholders.
We believe the economic stake of each shareholder should match their voting power and that no small group of
shareholders, family or otherwise, should have voting rights different from those of other shareholders.
We generally consider a multi-class share structure to reflect negatively on a company's overall corporate
governance. Because we believe that allowing one vote per share best protects the interests of shareholders, we
typically recommend that shareholders vote in favor of recapitalization proposals to eliminate multi-class share
structures. Similarly, we will generally recommend voting against proposals to adopt a new class of common
stock.
The Benchmark Policy will generally recommend that shareholders vote against (a) certain director(s) and/or
other relevant agenda items at a North American or European company that adopts a multi-class share structure
with unequal voting rights in connection with an IPO, spin-off, or direct listing within the past year if the board:
(i) did not also commit to submitting the multi-class structure to a shareholder vote at the company’s first
shareholder meeting following the IPO; or (ii) did not provide for a reasonable sunset of the multi-class structure
(generally seven years or less). The approach of the Benchmark Policy toward companies with existing multi-
class share structures with unequal voting varies between regions and is dependent on, inter alia, local market
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practice and legislation, as well as our assessment on whether evidence exists that the share structure is
contributing to poor governance or the suppression of minority shareholder concerns.
Poison Pills (Shareholder Rights Plans)
Glass Lewis believes that poison pill plans generally are not in the best interests of shareholders. Specifically,
they can reduce management accountability by substantially limiting opportunities for corporate takeovers.
Rights plans can thus prevent shareholders from receiving a buy-out premium for their stock. We believe that
boards should be given wide latitude in directing the activities of the company and charting the company’s
course. However, on an issue such as this where the link between the financial interests of shareholders and
their right to consider and accept buyout offers is so substantial, we believe that shareholders should be allowed
to vote on whether or not they support such a plan’s implementation. In certain limited circumstances, we will
support a limited poison pill to accomplish a particular objective, such as the closing of an important merger, or
a pill that contains what we believe to be a reasonable ‘qualifying offer’ clause. 
Supermajority Vote Requirements
Glass Lewis favors a simple majority voting structure except where a supermajority voting requirement is
explicitly intended to protect the rights of minority shareholders in a controlled company. In the case of
noncontrolled companies, supermajority vote requirements act as impediments to shareholder action on ballot
items that are critical to their interests. One key example is in the takeover context where supermajority vote
requirements can strongly limit shareholders’ input in making decisions on such crucial matters as selling the
business. 
Increase in Authorized Shares
Glass Lewis believes that having adequate capital stock available for issuance is important to the operation of a
company. We will generally support proposals when a company could reasonably use the requested shares for
financing, stock splits and stock dividends. While we believe that having adequate shares to allow management
to make quick decisions and effectively operate the business is critical, we prefer that, for significant
transactions, management come to shareholders to justify their use of additional shares rather than providing a
blank check in the form of large pools of unallocated shares available for any purpose. 
In general, the Benchmark Policy will support proposals to increase authorized shares up to 100% of the number
of shares currently authorized unless, after the increase the company would be left with less than 30% of its
authorized shares outstanding. In markets where such authorities typically also authorize the board to issue new
shares without separate shareholder approval, we apply the policy described below on the issuance of shares. 
Issuance of Shares
Issuing additional shares can dilute existing holders in some circumstances. Further, the availability of additional
shares, where the board has discretion to implement a poison pill, can often serve as a deterrent to interested
suitors. Accordingly, where we find that the company has not disclosed a detailed plan for use of the proposed
shares, or where the number of shares requested are excessive, the Benchmark Policy typically recommends
against the issuance. In the case of a private placement, we will also consider whether the company is offering a
discount to its share price. 
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In general, the Benchmark Policy will support proposals to authorize the board to issue shares (with preemptive
rights) when the requested increase is equal to or less than the current issued share capital. This authority
should generally not exceed five years. In accordance with differing market best practice, in some countries, if a
proposal seeks to issue shares exceeding 33% of issued share capital, the company should explain the specific
rationale, which we analyze on a case-by-case basis.
We will also generally support proposals to suspend preemptive rights for a maximum of 5-20% of the issued
ordinary share capital of the company, depending on best practice in the country in which the company is
located. This authority should not exceed five years, or less for some countries. 
Repurchase of Shares
The Benchmark Policy will recommend voting in favor of a proposal to repurchase shares when the plan includes
the following provisions: (i) a maximum number of shares which may be purchased (typically not more than
10-20% of the issued share capital); and (ii) a maximum price which may be paid for each share (as a percentage
of the market price). The Benchmark Policy may support a larger proposed repurchase program where the terms
of the program stipulate that repurchased shares must be cancelled.
Shareholder Proposals
Glass Lewis believes that shareholders should seek to promote governance structures that protect shareholders,
support effective ESG oversight and reporting, and encourage director accountability. Accordingly, Glass Lewis
places a significant emphasis on promoting transparency, robust governance structures and companies’
responsiveness to and engagement with shareholders. We also believe that companies should be transparent on
how they are mitigating material ESG risks, including those related to climate change, human capital
management, and stakeholder relations.
To that end, we evaluate all shareholder proposals on a case-by-case basis with a view to promoting long-term
shareholder value. While we are generally supportive of those that promote board accountability, shareholder
rights, and transparency, we consider all proposals in the context of a company’s unique operations and risk
profile.
For a detailed review of our Benchmark Policy concerning compensation, environmental, social, and governance
shareholder proposals, please refer to our comprehensive Proxy Paper Guidelines for Shareholder Proposals &
ESG-Related Issues, available at www.glasslewis.com/voting-policies-current/.
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Overall Approach to
Environmental, Social & Governance
Glass Lewis evaluates all environmental and social issues through the lens of long-term shareholder value. We
believe that companies should be considering material environmental and social factors in all aspects of their
operations and that companies should provide shareholders with disclosures that allow them to understand how
these factors are being considered and how attendant risks are being mitigated. We also are of the view that
governance is a critical factor in how companies manage environmental and social risks and opportunities and
that a well-governed company will be generally managing these issues better than one without a governance
structure that promotes board independence and accountability.
We believe part of the board’s role is to ensure that management conducts a complete risk analysis of company
operations, including those that have material environmental and social implications. We believe that directors
should monitor management’s performance in both capitalizing on environmental and social opportunities and
mitigating environmental and social risks related to operations in order to best serve the interests of
shareholders. Companies face significant financial, legal and reputational risks resulting from poor
environmental and social practices, or negligent oversight thereof. Therefore, in cases where the board or
management has neglected to take action on a pressing issue that could negatively impact shareholder value,
we believe that shareholders should take necessary action in order to effect changes that will safeguard their
financial interests.
Given the importance of the role of the board in executing a sustainable business strategy that allows for the
realization of environmental and social opportunities and the mitigation of related risks, relating to
environmental risks and opportunities, we believe shareholders should seek to promote governance structures
that protect shareholders and promote director accountability. When management and the board have
displayed disregard for environmental or social risks, have engaged in egregious or illegal conduct, or have failed
to adequately respond to current or imminent environmental and social risks that threaten shareholder value,
we believe shareholders should consider holding directors accountable. In such instances, we will generally
recommend against responsible members of the board that are specifically charged with oversight of the issue in
question.
When evaluating environmental and social factors that may be relevant to a given company, Glass Lewis does so
in the context of the financial materiality of the issue to the company’s operations. We believe that all
companies face risks associated with environmental and social issues. However, we recognize that these risks
manifest themselves differently at each company as a result of a company’s operations, workforce, structure,
and geography, among other factors. Accordingly, we place a significant emphasis on the financial implications
of a company’s actions with regard to impacts on its stakeholders and the environment.
When evaluating environmental and social issues, Glass Lewis examines companies’:
Direct environmental and social risk — Companies should evaluate financial exposure to direct environmental
risks associated with their operations. Examples of direct environmental risks include those associated with oil or
gas spills, contamination, hazardous leakages, explosions, or reduced water or air quality, among others. Social
risks may include non-inclusive employment policies, inadequate human rights policies, or issues that adversely
affect the company’s stakeholders. Further, we believe that firms should consider their exposure to risks
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emanating from a broad range of issues, over which they may have no or only limited control, such as insurance
companies being affected by increased storm severity and frequency resulting from climate change.
Risk due to legislation and regulation — Companies should evaluate their exposure to changes or potential
changes in regulation that affect current and planned operations. Regulation should be carefully monitored in all
jurisdictions in which the company operates. We look closely at relevant and proposed legislation and evaluate
whether the company has responded proactively.
Legal and reputational risk — Failure to take action on important environmental or social issues may carry the
risk of inciting negative publicity and potentially costly litigation. While the effect of high-profile campaigns on
shareholder value may not be directly measurable, we believe it is prudent for companies to carefully evaluate
the potential impacts of the public perception of their impacts on stakeholders and the environment. When
considering investigations and lawsuits, Glass Lewis is mindful that such matters may involve unadjudicated
allegations or other charges that have not been resolved. Glass Lewis does not assume the truth of such
allegations or charges or that the law has been violated. Instead, Glass Lewis focuses more broadly on whether,
under the particular facts and circumstances presented, the nature and number of such concerns, lawsuits or
investigations reflects on the risk profile of the company or suggests that appropriate risk mitigation measures
may be warranted.
Governance risk — Inadequate oversight of environmental and social issues carries significant risks to
companies. When leadership is ineffective or fails to thoroughly consider potential risks, such risks are likely
unmitigated and could thus present substantial risks to the company, ultimately leading to loss of shareholder
value.
Glass Lewis believes that one of the most crucial factors in analyzing the risks presented to companies in the
form of environmental and social issues is the level and quality of oversight over such issues. When management
and the board have displayed disregard for environmental risks, have engaged in egregious or illegal conduct, or
have failed to adequately respond to current or imminent environmental risks that threaten shareholder value,
we believe shareholders should consider holding directors accountable. When companies have not provided for
explicit, board-level oversight of environmental and social matters and/or when a substantial environmental or
social risk has been ignored or inadequately addressed, we may recommend voting against members of the
board. In addition, or alternatively, depending on the proposals presented, we may also consider recommending
voting in favor of relevant shareholder proposals or against other relevant management-proposed items, such as
the ratification of auditor, a company’s accounts and reports, or ratification of management and board acts.
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Connect with Glass Lewis
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Email |  info@glasslewis.com
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This document is intended to provide an overview of Glass Lewis’ proxy voting guidelines. It is not intended to be
exhaustive and does not address all potential voting issues. Glass Lewis’ proxy voting guidelines, as they apply to
certain issues or types of proposals, are further explained in supplemental guidelines and reports that are made
available on Glass Lewis’ website – http://www.glasslewis.com. These guidelines have not been set or approved
by the U.S. Securities and Exchange Commission or any other regulatory body. Additionally, none of the
information contained herein is or should be relied upon as investment advice. The content of this document
has been developed based on Glass Lewis’ experience with proxy voting and corporate governance issues,
engagement with clients and issuers, and review of relevant studies and surveys, and has not been tailored to
any specific person or entity.
Glass Lewis’ proxy voting guidelines are grounded in corporate governance best practices, which often exceed
minimum legal requirements. Accordingly, unless specifically noted otherwise, a failure to meet these guidelines
should not be understood to mean that the company or individual involved has failed to meet applicable legal
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