Share-split context: A forward split was recorded on May 5, 2023 with coefficient 2. A forward split turns each old share into multiple new shares and lowers the quoted price per share proportionally. Proportional ownership is unchanged at the split moment, so the split itself creates neither a gain nor a loss. The price-return figures in this report are already split-adjusted.

ETF Education Report: VANECK SEMICONDUCTOR ETF (SMH)

What this ETF is trying to do

The VANECK SEMICONDUCTOR ETF (ticker: SMH) is an exchange-traded fund that focuses on the semiconductor industry. This means it holds many different companies that make the computer chips used in electronics. Based on its top holdings, the fund has significant exposure to companies like NVIDIA CORP and TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD ADR.

What the numbers show

When looking at how this ETF has performed, it is important to understand two different types of returns: price return (how much the share price changed) and total return (which includes both price changes and any cash distributions).

Because this ETF has a history of "forward splits," we use split-adjusted numbers. A forward split means each old share became multiple new shares, which makes the price per share look lower, even though your total ownership stayed the same.

Here is the performance data:

• Year-to-Date (YTD): The price return is approximately 73.56%. The total return is also approximately 73.56%.

• One-Year: The price return was approximately 85.44%, while the total return was approximately 86.01%.

• Three-Year: The price return was approximately 321.32%, while the total return was approximately 326.98%.

• Five-Year: The five-year total return was approximately 400.82%.

Income and distribution explanation

Some investors look for "distributions," which are cash payments made by the ETF. The distribution yield for SMH is approximately 0.18%. This is considered a low yield. The fund has an irregular distribution frequency, meaning it does not pay out cash on a regular schedule.

NAV erosion explanation

"NAV erosion" refers to a situation where the value of the underlying assets in the fund decreases significantly. For this ETF, the erosion-risk score is 100, and the label states "No price erosion detected." There is no severe erosion-risk flag for this fund.

Pros

• The ETF has shown very high price returns over the last one, three, and five years.

• It holds major companies in the semiconductor industry, such as NVIDIA CORP and AMD.

Cons

• The distribution yield is very low (0.18%), so it may not be a primary choice for investors seeking high regular income.

• The fund's holdings can change over time.

Beginner takeaway

This ETF tracks the semiconductor industry and has experienced significant price growth over several years. When studying this fund, remember that the total return is a more complete picture of performance than the price return alone because it includes distributions. Always remember that past performance does not guarantee what will happen in the future.