STRATFOR Special Report: China and the Future of Rare Earth Elements
Investment Case for Rare Earth/Strategic Metals
WHAT ARE RARE EARTH/STRATEGIC METALS??? HOW ARE THEY USED?
Rare earth/strategic metals are industrial metals that are typically mined as by-products in operations focused on precious metals and base metals. Compared to base metals, they have more specialized uses and are often more difficult to extract. Currently, approximately 49 elements in the periodic table are considered rare earth/strategic metals. They include such elements as cerium, manganese, titanium and tungsten. Strategic metals are used in a variety of technologies including jet engines, hybrid cars, steel alloys, wind turbines, flat screen televisions and cellular phones. Rare earth metals, a subset of strategic metals, are a collection of 17 chemical elements that are essential in many of today?s most advanced technologies, with particular applications in electronics.
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Underlying index comprised of global companies with a ?pure-play? focus, including miners, refiners, recyclers and producers
?Liquid, Inclusive, Diversified, Transparent
*On March 17, 2010 Assistant Secretary of Energy for Policy & International Affairs announced that the U.S. Department of Energy is developing its first-ever strategic plan concerning rare earth metals and other materials.?
** China is considering the implementation of a ban on the export of rare earth metals, a move that could have a significant impact on industries around the globe.
Investments in companies involved in the various activities related to the mining, refining and manufacturing of rare earth/strategic metals are subject to elevated risks including international political and economic developments, adverse governmental or environmental regulations, and commodity prices. Moreover, some companies may be subject to the risks generally associated with extraction of natural resources, such as the risks and hazards associated with metals and mining, such as fire, drought, and increased regulatory and environmental costs. In addition, companies involved in the various activities that are related to the mining, refining and manufacturing of rare earth/strategic metals may be at risk for environmental damage claims. In particular, small and mid-cap mining companies may be subject to additional risks including inability to commence production and generate material revenues, significant expenditures and inability to secure financing, which may cause such companies to operate at a loss, greater volatility, lower trading volume and less liquidity than larger companies. Investors should be willing to accept a high degree of volatility and the potential of significant loss.? China is currently the primary source of rare earth/strategic metals; a ban on the export of rare earth metals, or alternatively a reversal of China?s policies on export limits, could have a significant impact on industries around the globe. Radioactive materials are sometimes associated with rare earth mining projects and may cause difficulties in obtaining necessary permits.
The Market Vectors Rare Earth/Strategic Metals Index (the ?Index?; MVREMXTR) is the exclusive property of Market Vectors Index Solutions GmbH (a wholly owned subsidiary of the Adviser), which has contracted with Structured Solutions AG to maintain and calculate the Index. Structured Solutions AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards Market Vectors Index Solutions GmbH, Structured Solutions AG has no obligation to point out errors in the Index to third parties.
Index returns are not Fund returns and do not reflect any management fees or brokerage expenses. Investors can not invest directly in the Index. Returns for actual Fund investors may differ from what is shown because of differences in timing, the amount invested and fees and expenses. Index returns assume that dividends have been reinvested.
The ?Net Asset Value? (NAV) of a Market Vectors Exchange Traded Fund (ETF) is determined at the close of each business day, and represents the dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as the ETF?s intraday trading value.? Market Vectors ETF investors should not expect to buy or sell shares at NAV.
Fund shares are not individually redeemable and will be issued and redeemed at their NAV only through certain authorized broker-dealers in large, specified blocks of shares called "creation units" and otherwise can be bought and sold only through exchange trading. Creation units are issued and redeemed principally in kind. Shares may trade at a premium or discount to their NAV in the secondary market. You will incur brokerage expenses when trading Fund shares in the secondary market. Past performance is no guarantee of future results. Returns for actual Fund investments may differ from what is shown because of differences in timing, the amount invested, and fees and expenses.
Investing involves substantial risk and high volatility, including possible loss of principal. Bonds and bond funds will decrease in value as interest rates rise. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus , which contains this and other information, call 888.MKT.VCTR or visit vaneck.com/etf. Please read the prospectus and summary prospectus carefully before investing.
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