|Income Potential||Variable monthly coupon linked to 2 times the cash distributions, if any, of the Index constituents, less any withholding taxes|
|2x Index Yield*||24.82%|
|Underlying Index||Market Vectors ® Global Mortgage REITs Index|
|Leverage||2x Leverage with Monthly Reset|
- Monthly compounded 2x leveraged exposure to the Market Vectors ® Global Mortgage REITs Index, less fees, making it the only exchange-traded product with leveraged exposure to a mortgage REIT index offered on U.S. exchanges.
- Significant income potential in the form of a variable monthly coupon linked to 2 times the cash distributions, if any, on the index constituents, less any withholding taxes.
- Leverage that is reset monthly, not daily.
About Mortgage REITsMortgage real estate investment trusts (“mortgage REITs”) raise capital in the secondary market, primarily through the use of short-term loans, and use that capital to issue mortgages and/or acquire longer-termed, higher yielding mortgage-related assets, primarily mortgage-backed securities. The mortgage REIT business model relies heavily on the “spread” or difference between the mortgage REIT’s short-term borrowing costs and the investment yield earned by it on its longer-termed investments. In general, wider spreads result in greater operating margins for mortgage REITs. Narrower spreads will generally compress margins and negatively affect mortgage REITs. Because mortgage REITs, like all REITs, must distribute at least 90% of their ordinary taxable income to investors, mortgage REITs have typically produced attractive historical yields. About the Market Vectors ® Global Mortgage REITs Index The Market Vectors ® Global Mortgage REITs Index (the “Index”) is a float-adjusted, market capitalization-weighted index designed to measure the performance of publicly-traded mortgage REITs. The index provides 90% coverage of the investable mortgage REIT universe based on strict size and liquidity requirements. The Index is a price return index (i.e., the reinvestment of dividends is not reflected in the Index; rather, any cash distributions on the Index constituents, less any withholding taxes, are reflected in the variable monthly coupon that may be paid to investors of the ETN). While the Index is designed to represent global mortgage REITs, it currently consists of only US-listed mortgage REITs. The Index was created on August 4, 2011 and, therefore, has no performance history prior to that date.
|Top 10 Index Constituents*|
|Annaly Capital Management Inc||NLY||US||19.03||%|
|American Capital Agency Corp||AGNC||US||14.53||%|
|Two Harbors Investment Corp||TWO||US||5.20||%|
|MFA Financial Inc||MFA||US||5.17||%|
|Hatteras Financial Corp||HTS||US||4.84||%|
|Invesco Mortgage Capital||IVR||US||4.70||%|
|Armour Residential REIT Inc||ARR||US||4.64||%|
|Chimera Investment Corp||CIM||US||4.63||%|
|Starwood Property Trust Inc||STWD||US||4.43||%|
|CYS Investments Inc.||CYS||US||4.37||%|
|* Source: Market Vectors; as of October 11, 2012|
- Access to asset classes with historically low correlations to more traditional asset classes
- Convenience of an exchange-traded security
- Transparent exposure to a published index
The Index is the exclusive property of Market Vectors, which has contracted with Structured Solutions AG (the “Index Calculation Agent”) to maintain and calculate the Index. The Index Calculation Agent uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards Market Vectors, the Index Calculation Agent has no obligation to point out errors in the Index to third parties including, but not limited to, investors and/or financial intermediaries of MORL. MORL is not sponsored, promoted, sold or supported in any other manner by the Index Calculation Agent nor does the Index Calculation Agent offer any express or implicit guarantee or assurance either with regard to the results of using the Index and/or Index trade mark or the Index level at any time or in any other respect. Neither publication of the Index by the Index Calculation Agent nor the licensing of the Index or Index trademark for the purpose of use in connection with the financial instrument constitutes a recommendation by the Index Calculation Agent to invest capital in said financial instrument nor does it in any way represent an assurance or opinion of the Index Calculation Agent with regard to any investment in MORL. The Index Calculation Agent is not responsible for fulfilling the legal requirements concerning the accuracy and completeness of the financial instrument’s prospectus.MORL is not sponsored, endorsed, sold or promoted by Van Eck. Van Eck makes no representation or warranty, express or implied, nor accepts any responsibility, regarding the accuracy or completeness of this pricing supplement, or the advisability of investing in securities or financial instruments, or in MORL. VAN ECK AND ITS AFFILIATES DO NOT GUARANTEE THE ACCURACY AND/OR COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN AND SHALL NOT HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS, AND MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY OWNERS OF MORL OR ANY OTHER PERSON OR ENTITY FROM THE USE OF MORL. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL VAN ECK OR ANY OF ITS AFFILIATES HAVE ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES OR LOSSES, EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.
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