|
B.
|
Federal Income
Taxes–
It is each Fund’s
policy to comply with the provisions of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no federal income tax provision is
required.
|
|
|
|
C.
|
Dividends and Distributions
to Shareholders—
Dividends to
shareholders from net investment income, if any, are declared and paid at least
monthly by each Fund. Distributions of net realized capital gains, if any,
generally are declared and paid annually.
|
|
|
|
|
Income dividends and capital
gain distributions are determined in accordance with income tax regulations,
which may differ from such amounts determined in accordance with U.S. generally
accepted accounting principles. Dividends and distributions cannot be
automatically reinvested in additional shares of the Funds.
|
|
|
|
D.
|
Other–
Security transactions are accounted for on trade date. Transactions in certain
securities may take longer than the customary settlement cycle to be completed.
The counterparty is required to collateralize such trades with cash in excess
of the market value of the transaction, which is held at the custodian and
marked to market daily. Realized gains and losses are calculated on the
identified cost basis. Interest income is recorded on the accrual basis. Market
premiums are accreted to interest income over the lives of the respective
investments.
|
|
|
|
E.
|
Use of Derivative
Instruments
|
|
|
|
|
Option
Contracts–
Each Fund may
invest in call and put options on securities to seek performance that
corresponds to the Index and in managing cash flows. The risk in purchasing an
option is that a Fund pays a premium whether or not the option is exercised.
The Fund also has the additional risk of being unable to enter into a closing
transaction at an acceptable price if a liquid secondary market does not exist.
Option contracts also involve the risk that they may result in loss due to
unanticipated developments in market conditions or other causes. Options
purchased are recorded as an asset and written options are recorded as
liabilities to the extent of premiums paid or received. Gains or losses are
realized when the option transaction expires or closes. When an option is
exercised, the cost of a security for a purchased put or call option is
adjusted by the amount of the premium received or paid. There were no options
outstanding at April 30, 2008.
|
|
|
|
|
Futures–
Each Fund may buy and sell futures contracts. The Funds may engage in these
transactions to seek performance that corresponds to the Index and in managing
cash flows. A futures contract is an agreement between two parties to buy or
sell a specified instrument at a set price on a future date. Realized gains and
losses from futures contracts are reported separately. The Funds did not have
any futures contracts outstanding at April 30, 2008.
|
|
|
|
|
Swaps–
Each Fund may enter into swaps to seek performance that corresponds to the
Index and in managing cash flows. A swap is an agreement that obligates the
parties to exchange cash flows at specified intervals. A Fund is obligated to
pay the counterparty on trade date an amount based upon the value of the
underlying instrument (notional amount) and, at termination date, final payment
is settled based on the value of the underlying security on trade date versus
the value on termination date plus accrued income. Risks may arise as a result
of the failure of the counterparty to the contract to comply with the terms of
the swap contract.
|
|
|
|
|
|
The Fund bears the risk of
loss of the amount expected to be received under a swap agreement in the event
of the default of the counterparty. Therefore, the Fund considers the
creditworthiness of each counterparty to a swap contract in evaluating
potential credit risk. Additionally, risks may arise from unanticipated
movements in the value of the swap relative to the underlying securities. The
Fund records a net receivable or payable daily, based on the change in the
value of the underlying securities. The net receivable or payable for financial
statement purposes is shown as due to or from broker on the Statements of
Assets and Liabilities. The Fund collateralizes 100% of the notional amount of
the swap. Such amounts are reflected in the Statements of Assets and
Liabilities as cash-initial margin. At April 30, 2008, the Funds had no
outstanding swaps.
|
Notes To Financial
Statements
At April 30, 2008, the components of
accumulated earnings on a tax basis, for each Fund, were as follows:
|
|
|
Undistributed
|
|
Post October
|
|
Other
|
|
|
|
|
|
|
|
|
|
Tax Exempt
|
|
Capital
|
|
Temporary
|
|
Unrealized
|
|
|
|
|
Fund
|
|
|
Income
|
|
Losses
|
|
Differences
|
|
Depreciation
|
|
Total
|
|
Intermediate
|
|
$21,955
|
|
$(891
|
)
|
|
$(43
|
)
|
|
$(165,956
|
)
|
|
$(144,935
|
)
|
|
Long
|
|
68,351
|
|
—
|
|
|
(39
|
)
|
|
(70,659
|
)
|
|
(2,347
|
)
|
|
Short
|
|
3,127
|
|
(10,010
|
)
|
|
(21
|
)
|
|
(14,770
|
)
|
|
(21,674
|
)
|
Net capital losses incurred after October
31, and within the taxable year, are deemed to arise on the first day of the Fund’s
next taxable year. For the period ended April 30, 2008, the Funds intend to defer to May 1,
2008 for federal tax purposes post-October capital losses as shown above.
The tax character of dividends paid to
shareholders during the period ended April 30, 2008 was as follows:
|
|
|
|
Tax-exempt
|
|
|
Fund
|
|
|
|
Dividends
|
|
|
Intermediate
|
|
|
$128,955
|
|
|
Long
|
|
|
135,700
|
|
|
Short
|
|
|
20,600
|
|
During the period ended April 30, 2008, as
a result of permanent book to tax differences, one of the Funds incurred a difference that
affected undistributed net investment income and undistributed net realized gains as shown
in the table below. This difference was due to the tax treatment of market discount on tax
exempt debt instruments. Net assets were not affected by this reclassification.
|
|
|
|
Decrease
in
|
|
|
|
|
|
|
|
|
Undistributed
|
|
|
Increase
in
|
|
|
|
|
|
Net
Investment
|
|
|
Undistributed
|
|
|
Fund
|
|
|
Income
|
|
|
Realized Gain
|
|
|
Long
|
|
|
$(1,251
|
)
|
|
$1,251
|
|
In July 2006, the Financial Accounting
Standards Board (“FASB”) issued FASB Interpretation No. 48 “Accounting
for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for
how certain tax provisions should be recognized, measured, presented and disclosed in the
financial statements. FIN 48 requires the evaluation of tax positions taken or expected to
be taken in the course of preparing the Funds’ tax returns to determine whether the
tax positions will “more-likely-than-not” be sustained by the applicable tax
authority, and is applicable to all open tax years (tax year ended April 30, 2008). The
Funds adopted the provisions of FIN 48, evaluated the tax positions taken and to be taken,
and concluded that no provision for income tax is required in the Funds’ financial
statements.
Note 6–Capital Share
Transactions–
As of April 30, 2008, there
were an unlimited number of capital shares of beneficial interest authorized by the Trust
with a par value per share of $0.001. Shares are issued and redeemed by the Funds only in
Creation Units consisting of 50,000 shares or multiples thereof. The Funds generally issue
and redeem Creation Units only in-kind in exchange for cash, or a portfolio of fixed income
securities included in each respective bench mark index and a relatively small cash
payment. The portfolio of securities required for purchase of Creation Units may differ
from the portfolio of securities the Fund will deliver upon redemption of Fund shares. For
the period ended April 30, 2008, the Trust had only cash contributions.
Note 7–Concentration of
Risk–
The investment objective of each
Fund is to seek investment results that correspond generally to the price and yield
performance, before fees and expenses, of its underlying index, as indicated in the name of
each Fund. The Adviser uses a “passive” or index approach to achieve each
Fund’s investment objective. The Funds use a sampling approach in which the Adviser
uses quantitative analysis to select municipal bonds that represent a sample of securities
in the index in terms of key risk factors, performance attributes and other
characteristics. Each of the Funds is classified as a non-diversified fund under the 1940
Act. Non-diversified funds generally hold securities of fewer issuers than diversified
funds and may be more susceptible to the risks associated with these particular issuers, or
to a single economic, political or regulatory occurrence affecting these issuers.
Investments in municipal securities involve risks similar to those of investing in any fund
of fixed income securities traded on exchanges, such as market fluctuations caused by such
factors as economic and political developments, changes in interest rates and perceived
trends in security prices.
Note 8–Trustee Deferred
Compensation Plan–
The Trust has a
Deferred Compensation Plan (the “Plan”) for Trustees under which the Trustees
can elect to defer receipt of their trustee fees until retirement, disability or
termination from the Board of Trustees. The fees otherwise payable to the participating
Trustees are deemed invested in shares of the Funds as directed by the Trustees.
The expense for the deferred compensation
plan is included in “Trustees fees and expenses” in the Statements of
Operations. The liability for the deferred compensation plan is shown as “Deferred
Trustee fees” in the Statements of Assets and Liabilities.
Note 9—Regulatory
Matters—
In July 2004, the Adviser
received a “Wells Notice” from the SEC in connection with the SEC’s
investigation of market-timing activities. This Wells Notice informed the Adviser that the
SEC staff was considering recommending that the SEC bring a civil or administrative action
alleging violations of U.S. securities laws against the Adviser and two of its senior
officers. Under SEC procedures, the Adviser has an opportunity to respond to the SEC staff
before the staff makes a formal recommendation. The time period for the Adviser’s
response has been extended until further notice from the SEC and, to the best knowledge of
the Adviser; no formal recommendation has been made to the SEC to date. There cannot be any
assurance that, if the SEC were to assess sanctions against the Adviser, such sanctions
would not materially and adversely affect the Adviser. If it is determined that the Adviser
or its affiliates engaged in improper or wrongful activity that caused a loss to a Fund,
the Board of Trustees of the Funds will determine the amount of restitution that should be
made to a Fund or its shareholders. At the present time, the amount of such restitution, if
any, has not been determined. The Board and the Adviser are currently working to resolve
outstanding issues relating to these matters.
Note 10—Subsequent
Events—
The following dividends from net
investment income were declared and paid subsequent to April 30, 2008:
|
|
|
|
|
Record
|
|
Payable
|
|
|
|
Fund
|
|
Ex-Date
|
|
Date
|
|
Date
|
|
Per Share
|
|
Intermediate
|
|
5/1/2008
|
|
5/5/2008
|
|
5/7/2008
|
|
$0.188
|
|
Long
|
|
5/1/2008
|
|
5/5/2008
|
|
5/7/2008
|
|
$0.278
|
|
Short
|
|
5/1/2008
|
|
5/5/2008
|
|
5/7/2008
|
|
$0.030
|
|
|
|
Intermediate
|
|
6/2/2008
|
|
6/4/2008
|
|
6/6/2008
|
|
$0.290
|
|
Long
|
|
6/2/2008
|
|
6/4/2008
|
|
6/6/2008
|
|
$0.380
|
|
Short
|
|
6/2/2008
|
|
6/4/2008
|
|
6/6/2008
|
|
$0.120
|
26
Report of Independent Registered Public
Accounting Firm
To the Shareholders and Board of Trustees of
Market Vectors ETF Trust
We have audited the accompanying
statements of assets and liabilities of the Market Vectors Lehman Brothers AMT-Free
Intermediate, Long and Short Municipal Index ETFs (collectively the “Funds”),
including the schedules of investments, as of April 30, 2008, and the related statements of
operations, the statements of changes in net assets and the financial highlights for each
of the periods indicated therein. These financial statements and financial highlights are
the responsibility of the Funds’ management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Funds’ internal control
over financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Funds’ internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements and financial highlights, assessing the
accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation of
securities owned as of April 30, 2008 by correspondence with the custodian and brokers or
by other appropriate auditing procedures where replies from brokers were not received. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements
and financial highlights referred to above present fairly, in all material respects, the
financial position of the above mentioned Funds at April 30, 2008, and the results of their
operations, the changes in their net assets and the financial highlights for each of the
periods indicated therein, in conformity with U.S. generally accepted accounting
principles.
New York, New York
June 24, 2008
27
|
Board of Trustees/Officers
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
Term of
|
|
|
|
Portfolios
|
|
|
|
|
|
Position(s),
|
|
Office
2
and
|
|
Principal
|
|
in Fund
|
|
Other
|
|
Name,
Address
1
|
|
Held with
|
|
Length of
|
|
Occupation(s)
During
|
|
Complex
3
|
|
Directorships
|
|
and Age
|
|
Funds
|
|
Time Served
|
|
Past 5 Years
|
|
Overseen
|
|
Held By Trustee
|
|
|
|
Independent
Trustees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David H. Chow
|
|
Trustee
|
|
Since 2006
|
|
Chief Investment Officer,
Torch Hill
|
|
21
|
|
None.
|
|
50
|
|
|
|
|
|
Investment Partners
(private equity firm),
|
|
|
|
|
|
|
|
|
|
|
|
September 2007 to present;
Managing
|
|
|
|
|
|
|
|
|
|
|
|
Partner, Lithos Capital
Partners LLC
|
|
|
|
|
|
|
|
|
|
|
|
(private equity firm),
January 2006 to
|
|
|
|
|
|
|
|
|
|
|
|
September 2007; Managing
Director,
|
|
|
|
|
|
|
|
|
|
|
|
DanCourt Management LLC
(strategy
|
|
|
|
|
|
|
|
|
|
|
|
consulting firm), March
1999 to present;
|
|
|
|
|
|
|
|
|
|
|
|
Managing Director, AIG
Horizon Partners,
|
|
|
|
|
|
|
|
|
|
|
|
LLC (venture capital
firm), May 2000 to
|
|
|
|
|
|
|
|
|
|
|
|
July 2002.
|
|
|
|
|
|
|
|
R. Alastair Short
|
|
Trustee
|
|
Since 2006
|
|
Vice Chairman, W.P.
Stewart & Co., Ltd.
|
|
30
|
|
Director, Kenyon
|
|
54
|
|
|
|
|
|
(asset management firm),
September 2007
|
|
|
|
Review; Director,
|
|
|
|
|
|
|
|
to present; Managing
Director, The GlenRock
|
|
|
|
The Medici Archive
|
|
|
|
|
|
|
|
Group, LLC (private equity
investment firm),
|
|
|
|
Project.
|
|
|
|
|
|
|
|
May 2004 to September
2007; President,
|
|
|
|
|
|
|
|
|
|
|
|
Apex Capital Corporation
(personal
|
|
|
|
|
|
|
|
|
|
|
|
investment vehicle), Jan.
1988 to present;
|
|
|
|
|
|
|
|
|
|
|
|
President, Matrix Global
Investments, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
and predecessor company
(private
|
|
|
|
|
|
|
|
|
|
|
|
investment company),
September 1995 to
|
|
|
|
|
|
|
|
|
|
|
|
January 1999.
|
|
|
|
|
|
|
|
Richard D.
Stamberger
|
|
Trustee
|
|
Since 2006
|
|
Director, President and
CEO, SmartBrief, Inc.
|
|
30
|
|
None.
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interested
Trustee:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jan F. van
Eck
4
|
|
Trustee
|
|
Since 2006
|
|
Director and Executive
Vice President,
|
|
21
|
|
Director, Greylock
|
|
44
|
|
|
|
|
|
Van Eck Associates
Corporation; Director,
|
|
|
|
Capital Associates
|
|
|
|
|
|
|
|
Executive Vice President
and Chief
|
|
|
|
LLC.
|
|
|
|
|
|
|
|
Compliance Officer, Van
Eck Securities
|
|
|
|
|
|
|
|
|
|
|
|
Corporation (VESC);
Director and President,
|
|
|
|
|
|
|
|
|
|
|
|
Van Eck Absolute Return
Advisers Corp.
|
|
|
|
|
|
|
|
|
|
|
|
(VEARA).
|
|
|
|
|
28
Board of Trustees/Officers (unaudited)
(continued)
|
|
|
|
|
Term
of
|
|
|
|
|
|
Position(s),
|
|
Office
2
and
|
|
|
|
Name,
Address
1
|
|
Held
with
|
|
Length
of
|
|
Principal
Occupation(s)
|
|
and Age
|
|
Fund
|
|
Time Served
|
|
During Past 5 Years
|
|
|
|
Charles T.
Cameron
|
|
Vice
President
|
|
Since
2006
|
|
Director of
Trading and Portfolio Manager for the Adviser; Officer of three other
|
|
48
|
|
|
|
|
|
investment
companies advised by the Adviser.
|
|
|
|
Keith J.
Carlson
|
|
Chief
|
|
Since
2006
|
|
President of
the Adviser and VESC; Private Investor (June 2003 – January 2004);
|
|
51
|
|
Executive
|
|
|
|
Independent
Consultant, Waddell & Reed, Inc. (December 2002 – May 2003);
|
|
|
|
Officer
and
|
|
|
|
Officer of
three other investment companies advised by the Adviser.
|
|
|
|
President
|
|
|
|
|
|
|
|
Susan C.
Lashley
|
|
Vice
President
|
|
Since
2006
|
|
Vice President
of the Adviser and VESC; Officer of three other investment
|
|
53
|
|
|
|
|
|
companies
advised by the Adviser.
|
|
|
|
Thomas K.
Lynch
|
|
Chief
|
|
Since
2006
|
|
Chief
Compliance Officer of the Adviser and VEARA (Since January 2007);
|
|
51
|
|
Compliance
|
|
|
|
Vice President
of the Adviser and VEARA; Treasurer and Officer of three other
|
|
|
|
Officer
|
|
|
|
investment
companies advised by the Adviser (April 2005 – December 2006);
|
|
|
|
|
|
|
|
Second Vice
President of Investment Reporting, TIAA-CREF (January 1996 –
|
|
|
|
|
|
|
|
April
2005).
|
|
|
|
Joseph J.
McBrien
|
|
Senior
Vice
|
|
Since
2006
|
|
Senior Vice
President, General Counsel and Secretary of the Adviser, VESC
|
|
59
|
|
President
and
|
|
|
|
and VEARA
(Since December 2005); Managing Director, Chatsworth Securities
|
|
|
|
Secretary
|
|
|
|
LLC (March
2001 – November 2005); Officer of three other investment
|
|
|
|
|
|
|
|
companies
advised by the Adviser.
|
|
|
|
Alfred J.
Ratcliffe
|
|
Vice
President
|
|
Since
2006
|
|
Vice President
of the Adviser (Since 2006); Vice President and Director of
|
|
60
|
|
and
Treasurer
|
|
|
|
Mutual Fund
Accounting and Administration, PFPC (March 2000 – November
|
|
|
|
|
|
|
|
2006); Officer
of three other investment companies advised by the Adviser.
|
|
|
|
Jonathan R.
Simon
|
|
Vice
President
|
|
Since
2006
|
|
Vice President
and Associate General Counsel of the Adviser (Since 2006);
|
|
33
|
|
and
Assistant
|
|
|
|
Vice President
and Assistant Secretary of VEARA and VESC (Since 2006);
|
|
|
|
Secretary
|
|
|
|
Associate,
Schulte Roth & Zabel (July 2004 – July 2006); Associate, Carter
|
|
|
|
|
|
|
|
Ledyard &
Milburn LLP (September 2001 – July 2004); Officer of three other
|
|
|
|
|
|
|
|
investment
companies advised by the Adviser.
|
|
|
|
Bruce J.
Smith
|
|
Senior
Vice
|
|
Since
2006
|
|
Senior Vice
President and Chief Financial Officer of the Adviser; Senior Vice
|
|
53
|
|
President
and
|
|
|
|
President,
Chief Financial Officer, Treasurer and Controller of VESC and
|
|
|
|
Chief
Financial
|
|
|
|
VEARA; Officer
of three other investment companies advised by the Adviser.
|
|
|
|
Officer
|
|
|
|
|
|
|
|
Derek S. van
Eck
4
|
|
Executive Vice Since 2006
|
|
Director and
Executive Vice President of the Adviser, VESC and VEARA;
|
|
43
|
|
President
|
|
|
|
Director of
Greylock Capital Associates LLC; Officer of three other investment
|
|
|
|
|
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companies
advised by the Adviser.
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Jan F. van
Eck
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Executive Vice Since 2006
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Director and
Executive Vice President of the Adviser; Director, Executive Vice
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President
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President and
Chief Compliance Officer of VESC; Director and President of
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VEARA;
Director of Greylock Capital Associates LLC; Trustee, Market Vectors
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ETF Trust;
Officer of three other investment companies advised by the Adviser.
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1
The address for each Trustee and Officer is 99 Park
Avenue, 8th Floor, New York, New York 10016.
2
Each Trustee serves until resignation, death, retirement
or removal. Officers are elected annually by the Trustees.
3
The Fund Complex consists of the Van Eck Funds, Van Eck
Funds, Inc., Van Eck Worldwide Insurance Trust and Market Vectors ETF Trust.
4
An “interested person” as defined in the 1940
Act. Messrs. Jan F. van Eck and Derek S. van Eck are brothers.
29
Approval of Management Agreement for
the Fiscal Year ended April 30, 2008
At a meeting held on March 10, 2008 (the
“Meeting”), the Board, including all of the Independent Trustees, approved the
continuation of the investment management agreement between the Trust and the Adviser (the
“Investment Management Agreement”) with respect to the Market Vectors-Lehman
Brothers AMT-Free California Long Municipal Index ETF, Market Vectors-Lehman Brothers High
Yield Municipal Index ETF, Market Vectors-Lehman Brothers AMT-Free Intermediate Municipal
Index ETF, Market Vectors-Lehman Brothers AMT-Free Long Municipal Index ETF, Market
Vectors-Lehman Brothers AMT-Free Massachusetts Municipal Index ETF, Market Vectors-Lehman
Brothers AMT-Free New Jersey Municipal Index ETF, Market Vectors-Lehman Brothers AMT-Free
New York Long Municipal Index ETF, Market Vectors-Lehman Brothers AMT-Free Ohio Municipal
Index ETF, Market Vectors-Lehman Brothers AMT-Free Pennsylvania Municipal Index ETF and
Market Vectors-Lehman Brothers AMT-Free Short Municipal Index ETF (the “ETFs”)
through the next in-person meeting of the Board. The Board’s approval of the
Investment Management Agreement was based on a comprehensive consideration of all
information available to the Trustees and was not the result of any single factor. Some of
the factors that figured particularly into the Trustees’ deliberations and how the
Trustees considered these factors are described below, although individual Trustees may
have evaluated the information presented differently, giving different weights to various
factors.
In advance of the Meeting, the Trustees
received materials from the Adviser, including expense information for comparative funds.
The Independent Trustees’ consideration of the Investment Management Agreement was
based on information obtained through discussions at the Meeting or at prior meetings among
themselves or with management or based on their review of the materials provided by the
Adviser, including the background and experience of the portfolio managers and others
involved in the administration of the Trust. The Trustees also considered the terms of, and
scope of services the Adviser provided under the Investment Management Agreement, including
the Adviser’s commitment to waive fees and/or pay expenses of the ETFs to the extent
necessary to prevent the operating expenses of each ETF (excluding interest expense,
brokerage commissions, offering costs and other trading expenses, fees, taxes and
extraordinary expenses) from exceeding 0.24% (0.16% with respect to the Market
Vectors-Lehman Brothers AMT-Free Short Municipal Index ETF, 0.20% with respect to the
Market Vectors-Lehman Brothers AMT-Free Intermediate Municipal Index ETF and 0.35% with
respect to the Market Vectors-Lehman Brothers High Yield Municipal Index ETF) of average
daily net assets per year at least until April 30, 2009. The Trustees also considered
information relating to the each ETF’s underlying Index, the financial condition of
the Adviser, pending regulatory inquiries with respect to the Adviser and certain
affiliates, the current status, as they understood it, of the Adviser’s compliance
environment and the Adviser’s analysis on the service providers for the
ETFs.
In addition, the Trustees were given data
on the exchange-traded fund market and expense ratios of certain other exchange-traded
funds (some of which operate as unit investment trusts and do not involve portfolio
management). The Trustees were also aware of the other benefits received by the Adviser
from serving as adviser of the ETFs and from providing administrative services to the ETFs,
and from an affiliate of the Adviser serving as distributor for the ETFs. The Trustees
considered information provided by the Adviser about the overall profitability of the
Adviser and the extent to which the Adviser believes economies of scale exist with respect
to the ETFs and whether the fees paid to the Adviser reflect these economies of scale for
the benefit of shareholders. In this regard the Trustees noted that the ETFs had only
recently been launched and did not have at the time of the meeting substantial
assets.
The Independent Trustees met in executive
session with their independent counsel as part of their consideration of the Investment
Management Agreement.
In voting to approve the continuation of
the Investment Management Agreement, the Trustees, including the
30
Independent Trustees, concluded that the
terms of the Investment Management Agreement are reasonable and fair in light of the
services to be performed, the fees paid by certain other exchange-traded funds, expenses to
be incurred and such other matters as the Trustees considered relevant in the exercise of
their reasonable judgment. The Trustees further concluded that the Investment Management
Agreement is in the interest of the ETFs and each ETF’s shareholders.
Tax Information
(unaudited)
The information set forth below is for
each Fund’s fiscal year as required by federal laws. Shareholders, however, must
report dividends on a calendar year basis for income tax purposes, which may include
dividends for portions of two fiscal years of a Fund. Accordingly, the information needed
by shareholders for calendar year 2008 income tax purposes will be sent to them in early
2009. Please consult your tax advisor for proper treatment of this information.
Of the dividends paid by the Funds, the
corresponding percentages represent the amount of such dividends which are tax exempt for
regular Federal income tax purposes.
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Fund
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Intermediate
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100.00%
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Long
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100.00%
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Short
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100.00%
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None of this income is subject to
alternative minimum tax.
31
Item 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics (the "Code of Ethics") that
applies to the principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions.
(b) Not applicable.
(c) The Registrant has not amended its Code of Ethics during the period
covered by the shareholder report presented in Item 1 hereto.
(d) The Registrant has not granted a waiver or an implicit waiver from a
provision of its Code of Ethics during the period covered by the
shareholder report presented in Item 1 hereto.
(e) Not applicable.
(f) The Registrant's Code of Ethics is attached as an Exhibit hereto.
Item 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Registrant's Board of Trustees has determined that David Chow, R.
Alastair Short and Richard Stamberger, members of the Audit and Governance
Committees, are "audit committee financial experts" and "independent" as
such terms are defined in the instructions to Form N-CSR Item 3(a)(2).
Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
Ernst & Young, as principal accountant for the Market Vectors ETF
Trust, billed audit fees of $105,000 for periods ended April 30, 2007 for
Market Vectors-Lehman Brothers AMT-Free Intermediate Municipal Index
ETF, Long Municipal Index ETF and Short Municipal Index ETF.
(b) Audit-Related Fees
None
(c) Tax Fees
None.
(d) All Other Fees
None.
(e) The Audit Committee will pre-approve all audit and non-audit services,
to be provided to the Fund, by the independent accountants as required by
Section 10A of the Securities Exchange Act of 1934. The Audit Committee
has authorized the Chairman of the Audit Committee to approve, between
meeting dates, appropriate non-audit services.
The Audit Committee after considering all factors, including a review of
independence issues, will recommend to the Board of Trustees the
independent auditors to be selected to audit the financial statements of
the Funds.
(f) Not applicable.
(g) Ernst & Young does not provide services to the Registrant's investment
adviser or any entity controlling, controlled by, or under common
control with the adviser.
(h) Not applicable.
Item 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
Item 6. SCHEDULE OF INVESTMENTS.
Information included in Item 1.
Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
Item 8. PORTFOLIO MANAGER OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
Item 9. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
Item 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
Item 11. CONTROLS AND PROCEDURES.
(a) The Chief Executive Officer and the Chief Financial Officer have concluded
that the Market Vectors-Lehman Brothers AMT-Free Intermediate Municipal
Index ETF, Long Municipal Index ETF and Short Municipal Index ETF
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act) provide reasonable assurances that material
information relating to the Market Vectors ETF Trust is made known to them
by the appropriate persons, based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) There were no significant changes in the registrant's internal controls
over financial reporting or in other factors that could significantly
affect these controls over financial reporting subsequent to the date of
our evaluation.
Item 12. EXHIBITS.
(a)(1) The code of ethics is attached as EX-99.CODE ETH
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Act (17 CFR 270.30a-2) is attached as Exhibit 99.CERT.
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is
furnished as Exhibit 99.906CERT.
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