<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ___
/ X /
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PRE-EFFECTIVE AMENDMENT NO. __
/__/
POST-EFFECTIVE AMENDMENT NO. __
/__/
VAN ECK FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
99 PARK AVENUE, NEW YORK, NEW YORK 10016
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
212-687-5200
(REGISTRANT'S TELEPHONE NUMBER)
THADDEUS LESZCZYNSKI, ESQ.
VAN ECK ASSOCIATES CORPORATION
99 PARK AVENUE, NEW YORK, NEW YORK 10016
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO: PHILIP H. NEWMAN, ESQ., GOODWIN PROCTER & HOAR
EXCHANGE PLACE, BOSTON, MASSACHUSETTS 02109
__________________________________________________________________
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: AS SOON AS PRACTICABLE AFTER
THE REGISTRATION STATEMENT BECOMES EFFECTIVE UNDER THE SECURITIES ACT OF 1933.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON THE THIRTIETH DAY
AFTER THE DATE OF FILING PURSUANT TO RULE 488 UNDER THE SECURITIES ACT OF 1933.
NO FILING FEE IS REQUIRED BECAUSE THE REGISTRANT HAS HERETOFORE DECLARED
ITS INTENTION TO REGISTER AN INDEFINITE NUMBER OF SHARES OF BENEFICIAL INTEREST,
$.001 PAR VALUE, OF THE GLOBAL BALANCED FUND SERIES, PURSUANT TO RULE 24F-
2(A)(1) UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "ACT"). A
RULE 24F-2 NOTICE WAS FILED ON OR ABOUT FEBRUARY 24, 1995 FOR THE REGISTRANT.
<PAGE>
VAN ECK FUNDS
Cross-Reference Sheet
Pursuant to Rule 481(a) under the Securities Act of 1933
Form N-14 Item No. Location in Proxy Statement/Prospectus
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PART A
1. Cover Page of Registration Statement; Prospectus Cover
Page
2. Table of Contents
3. Synopsis; Special Considerations and Risk Factors
4. Synopsis, The Reorganization
5. Prospectus Cover Page; Synopsis; Global Balanced Fund
and Additional Information
6. Prospectus Cover Page; Synopsis; World Trends Fund;
Additional Information
7. Notice of Special Meeting; Introduction; Synopsis; The
Reorganization; Global Balanced Fund; World Trends
Fund; Information Concerning Special Meeting;
Additional Information
8. Not Applicable
9. Not Applicable
PART B
10. Cover Page of Statement of Additional Information
11. Table of Contents
12. General Information
13. General Information
14. Financial Statements
<PAGE>
VAN ECK FUNDS
World Trends Fund
99 Park Avenue, New York, New York 10016
1-800-221-2220
______________________________________________
NOTICE OF MEETING OF SHAREHOLDERS
DECEMBER __, 1995
______________________________________________
A MEETING OF SHAREHOLDERS OF THE WORLD TRENDS FUND SERIES OF VAN ECK FUNDS (the
"Fund") will be held at 99 Park Avenue, 8th Floor, New York, New York, on
________, December __, 1995 at 10:00 A.M., New York Time, for the following
purposes:
(1) To consider approval of the Agreement and Plan of Reorganization and
Liquidation between the Fund and the Global Balanced Fund series of Van Eck
Funds which contemplates the exchange of substantially all of the Fund's
assets for shares of Global Balanced Fund and the distribution of such
shares to the Fund's shareholders, and the liquidation of the Fund; and
(2) To act upon such other matters as may properly come before the meeting or
any adjournment or adjournments thereof.
Shareholders of record at the close of business on November __, 1995 are
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
By order of the Board of Trustees
THADDEUS M. LESZCZYNSKI,
Secretary
November __, 1995
_____________________________________________________________________________
YOUR VOTE IS IMPORTANT!
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY.
<PAGE>
PROXY
VAN ECK FUNDS
WORLD TRENDS FUND
PROXY FOR SPECIAL SHAREHOLDERS MEETING TO BE HELD December __, 1995
The undersigned shareholder of WORLD TRENDS FUND series of Van Eck Funds
(the "Fund'), having received Notice of the Meeting of Shareholders of the Fund
to be held on December __, 1995 and the Proxy Statement/Prospectus accompanying
such Notice, hereby constitutes and appoints Barbara Allen and Jennifer Barber
and each of them, true and lawful attorneys or attorney for the undersigned,
with several powers of substitution, for and in the name, place and stead of the
undersigned, to attend and vote all shares of the Fund which the undersigned
would be entitled to vote at the Meeting to be held at 99 Park Avenue, 8th
Floor, New York, New York, on ________, December __, 1995, at 10:00 A.M., New
York Time, and at any and all adjournments thereof, with all powers the
undersigned would possess if personally present.
MANAGEMENT RECOMMENDS A VOTE FOR THE PROPOSAL ON THE REVERSE SIDE HEREOF. THE
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SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR
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THE PROPOSAL IF NO CHOICE IS INDICATED.
PLEASE MARK YOUR PROXY, DATE AND SIGN IT ON THE REVERSE SIDE AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
- --------------------------------------------------------------------------------
PROPOSAL
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1. To approve the Agreement and Plan of Reorganization and Liquidation between
the Fund and the Global Balanced Fund series of Van Eck Funds which
contemplates the exchange of substantially all of the Fund's assets for
shares of Global Balanced Fund and the distribution of such shares to the
shareholders of the Fund and the subsequent liquidation of the Fund.
FOR _____ AGAINST ____ ABSTAIN _____
Dated: _______________________ 1995
_________________________________
Signature of Shareholder
_________________________________
Signature of Co-Owner
For joint accounts, all co-owners must
sign. Executors, administrators, trustees,
etc. should so indicate when signing.
<PAGE>
Investors are advised to read and retain this Proxy Statement/Prospectus
------------------------------------------------------------------------
for future reference.
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VAN ECK FUNDS
99 PARK AVENUE, 8TH FLOOR, NEW YORK, NEW YORK 10016
1-800-221-2220
PROXY STATEMENT/PROSPECTUS
Van Eck Funds (the "Trust") has filed a Registration Statement with the
Securities and Exchange Commission for the registration of the Class A shares of
Global Balanced Fund series of the Trust ("GBF") to be offered to the
shareholders of World Trends Fund series of the Trust ("WTF") pursuant to an
Agreement and Plan of Reorganization and Liquidation between GBF and WTF which
contemplates the exchange of WTF's assets and liabilities for Class A shares of
GBF and the distribution of such shares to WTF's shareholders (the
"Reorganization"). This Proxy Statement also constitutes a Prospectus of the
Trust filed as part of such Registration Statement.
GBF is an open-end, non-diversified management investment company which
seeks long-term capital appreciation together with current income. GBF attempts
to achieve its investment objective by investing its assets in the United States
and other countries throughout the world, and by allocating its assets among
equity securities, fixed-income securities and short-term instruments. There
can be no guarantee that GBF will achieve its investment objective.
A copy of the prospectus for GBF and WTF dated March 17, 1995 (the
"Prospectus") and Statement of Additional Information for GBF and WTF, dated
March 17, 1995 (the "Statement of Additional Information") are incorporated by
reference in this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus sets forth concisely information about GBF
and WTF that the shareholders of WTF should know before considering the
Reorganization and should be retained for future reference. WTF has authorized
the solicitation of proxies in connection with the Reorganization solely on the
basis of this Proxy Statement/Prospectus and the accompanying documents.
A Statement of Additional Information relating to the Reorganization,
including historical financial statements of GBF and WTF, dated October __,
1995, is incorporated by reference into this Proxy Statement/Prospectus and is
available from the Funds by calling the telephone number listed above or by
writing to the Funds at the above address.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Proxy Statement/Prospectus is dated October __, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Introduction......................................................... 3
Synopsis
Investment Objectives and Policies.............................. 4
Reasons for the Transaction..................................... 4
Investment Advisory Fees........................................ 5
Other Fees...................................................... 6
Purchase of Shares.............................................. 7
Exchange Rights................................................. 7
Redemption Procedures........................................... 7
Dividends and Distributions..................................... 7
Net Asset Value................................................. 8
Tax Consequences................................................ 8
Special Considerations and Risk Factors.............................. 8
The Reorganization
Procedures...................................................... 10
Terms of the Agreement and Plan of Reorganization............... 10
Benefits to WTF as a Result of Reorganization................... 11
Benefits to GBF as a Result of Reorganization................... 12
Tax Consequences................................................ 12
Capitalization.................................................. 13
Global Balanced Fund and World Trends Fund
Financial Highlights............................................ 13
Investment Objectives and Policies.............................. 15
Management Discussion and Analysis.............................. 15
Management...................................................... 17
Shares of GBF to be Issued in Reorganization and Shares of WTF.. 18
Purchase of Shares.............................................. 19
Redemption Procedures........................................... 20
Other Matters................................................... 20
Information Concerning the Special Meeting
Date, Time and Place of Meeting................................. 20
Solicitation, Revocation and Use of Proxies..................... 20
Record Date and Outstanding Shares.............................. 20
Security Ownership of Certain Beneficial Owners and Management.. 20
Voting Rights and Required Vote................................. 21
Additional Information............................................... 21
Plan of Reorganization and Liquidation............................... Exhibit A
</TABLE>
2
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VAN ECK FUNDS
WORLD TRENDS FUND
GLOBAL BALANCED FUND
99 Park Avenue, 8th Floor, New York, New York 10016
1-800-221-2220
PROXY STATEMENT/PROSPECTUS
Meeting of Shareholders of Van Eck Funds
To Be Held on December __, 1995, 10:00 A.M.
99 Park Avenue, 8th Floor, New York, New York
INTRODUCTION
This proxy statement is furnished to the shareholders of WTF in connection
with the solicitation by the Board of Trustees of WTF of proxies to be used at
the special meeting of shareholders of the Trust to be held on December __,
1995, or any adjournments thereof (the "Meeting"), to approve or disapprove a
Plan of Reorganization and Liquidation (the "Plan") which contemplates the
exchange of assets from WTF for Class A shares of GBF and the distribution of
such shares to the shareholders of WTF as set forth herein (the
"Reorganization"). As of November __, 1995, the record date, there were
approximately _________ shares of WTF outstanding and __________ shares of
Global Balanced Fund (representing _______ Class A shares and ________ Class B
shares). Each shareholder of WTF will be entitled to one vote for each share and
a fractional vote for each fractional share held on the record date. It is
expected that the mailing of this proxy statement will commence on or about
November __, 1995.
The enclosed form of proxy, if properly executed and returned, will be
voted in accordance with the choice specified thereon. The proxy will be voted
in favor of the proposals unless a choice is indicated to vote against a
proposal. Proxies properly executed and returned, but which fail to specify how
the shares are to be voted, will be voted FOR of the proposal.
The proxy may be revoked at any time prior to the voting thereof by
executing a superseding proxy, by giving written notice to the secretary of the
Trust at the address listed on the front cover of this Proxy Statement/
Prospectus or by voting in person at a Meeting.
In the event there are not sufficient votes to approve the proposal at the
time of the Special Meeting, the Special Meeting may be adjourned in order to
permit further solicitations of proxies by WTF. If WTF proposes to adjourn the
Special Meeting by a vote of the shareholders, the persons named in the enclosed
proxy card will vote all shares for which they have voting authority in favor of
such adjournment.
To the knowledge of WTF as of record date, no shareholder owned of record
or beneficially more than 5% or more of the outstanding shares of the Fund,
except __________________ which owned of record approximately ____%. To the
knowledge of GBF, as of record date, no shareholder owned of record or
beneficially more than 5% of the outstanding shares of the Fund, except
______________________ which owned of record approximately ___%. In addition,
as of record date, the Trustees and officers of WTF and GBF as a group owned
___% of the outstanding shares each of GBF and WTF.
The cost of the preparation and distribution of the proxies and proxy
statements and any other direct out-of-pocket expenses associated with the Plan
incurred directly by each Fund shall be paid by that Fund. In addition to the
solicitation of proxies by mail, proxies may be solicited by officers of the
Funds and DST Systems, Inc., the Funds' Transfer Agent and Dividend Paying Agent
(the "Transfer Agent" or "DST"),
3
<PAGE>
personally or by telephone or telegraph. These expenses and other expenses of
solicitation of proxies incurred will be borne by WTF. Brokerage houses, banks
and other fiduciaries will be requested to forward soliciting material to the
beneficial owners of the shares of the Fund and to obtain authorization for the
execution of proxies. For those services, they will be reimbursed by the Fund
for their out-of-pocket expenses.
SYNOPSIS
The following is a synopsis of the information contained in or incorporated
by reference in this Proxy Statement/Prospectus regarding the Reorganization,
and presents key considerations for shareholders of WTF to assist them in
determining whether to approve the Reorganization.
INVESTMENT OBJECTIVES AND POLICIES
GBF is an open-end, non-diversified management investment company which is
a series of Van Eck Funds (the "Trust"), a Massachusetts business trust. GBF
seeks long-term capital appreciation together with current income. GBF attempts
to achieve its investment objective by investing its assets in the United States
and other countries throughout the world, and by allocating its assets among
equity securities, fixed-income securities and short-term instruments. GBF
will, under normal market conditions, have at least 25% of its assets in equity
securities and at least 25% of its assets in fixed-income securities. GBF may
invest in equity and debt securities of both domestic and foreign issuers,
collateralized mortgage obligations, money market instruments and certain
hedging instruments.
WTF is an open-end, diversified management investment company which is a
series of the Trust. The Fund seeks long-term capital appreciation by
identifying new and changing worldwide economic and investment trends and
investing its assets globally to benefit therefrom. Current income is a
secondary objective. WTF may invest in equity and debt securities of both
domestic and foreign issuers, collateralized mortgage obligations, money market
instruments and certain hedging instruments. The investment objectives of GBF
and WTF are more fully described under "Investment Objectives and Policies" in
the Prospectus and some of the risks associated with GBF are outlined in
"Special Considerations and Risk Factors" hereunder.
GBF has been in operation since December 20, 1993. The Adviser and
Fiduciary International, Inc. ("FII") each have more than 30 years of experience
in managing assets internationally, see "Investment Advisory Fees" below.
REASONS FOR THE TRANSACTION
Sales of WTF have, overall, fallen short of the expectations of Van Eck
Securities Corporation (the "Distributor"). In addition, the Fund has
experienced a high level of redemptions over the last several years. Total net
assets of the Fund have declined steadily from $85.6 million as of December 31,
1987 to approximately $46.8 million as of December 31, 1990 and were $22.6
million as of June 30, 1995. Net redemptions (redemptions less sales) during
the four most recent fiscal years were $3.3 million, $3.1 million, $15.3 million
and $4.1 million, respectively. This decline in the net asset level has meant
that the Fund's expense ratio has been higher than anticipated, and, with
redemptions continuing, will probably rise in the future as fixed costs are
distributed over a smaller asset base.
GBF, on the other hand, has seen a significant increase in assets from
basically nothing at inception (December 20, 1993) to approximately $18.5
million as of June 30, 1995. The Distributor anticipates that assets of GBF,
whether the Reorganization is approved or not, will continue to increase. After
the Reorganization, shareholders of WTF will be subject to GBF's higher total
expense ratio. As
4
<PAGE>
described more fully below, GBF pays a higher fee pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended (the "1940 Act"). The aggregate
of advisory administrative fees paid by GBF is higher than those paid by WTF.
However, certain fixed share expenses (such as accounting, transfer agent,
legal, etc.) will be lower for GBF than they currently are for WTF. Thus, the
increase in 12b-1 fees and administrative fees may be partially offset by a
decrease in the per share fixed costs. Shareholders of GBF would benefit from
the reduction in per share fixed costs following the increase in total net
assets after the Reorganization. See "Synopsis--Investment Advisory Fees" and
"Synopsis--Other Fees" hereafter for more information regarding the funds' fee
structures.
Although WTF and GBF differ in some respects, they have similar investment
objectives and portfolios. As more fully described in "Investment Objectives
and Policies" above and "Special Considerations and Risk Factors" hereafter,
both GBF and WTF seek long-term capital appreciation by investing globally in a
mix of equity and debt securities. GBF does, however, place greater emphasis on
current income and invests more heavily in fixed-income securities than does
WTF. GBF will have no difficulty absorbing the net assets of WTF while
continuing to attempt to achieve its investment objective.
The Board of Trustees considered a number of factors and alternatives. In
particular, the Board considered whether to continue operations in the face of
an eroding asset base and an increasing expense ratio, merge WTF with GBF or
liquidate WTF. The Trustees determined that the Reorganization, as described
herein, provided greater benefits to shareholders than liquidation. Both options
required WTF to call a shareholder meeting. Liquidating WTF would have required
most shareholders to recognize either gains or losses in the current tax year
when many shareholders might have preferred to defer such gains or losses. In
addition, as more fully described in "Synopsis--Redemption of Shares", the
exchange privilege allows all shareholders of WTF to exchange into another fund
within the Van Eck group of funds without imposition of any exchange fees or
sales charges or to redeem their shares without imposition of a sales charge. An
exchange into GBF forces the shareholder to recognize a gain or loss for tax
purposes, whereas the merger will achieve the same result as an exchange, but on
a tax-free basis. The redemption procedure and exchange privilege allow any
shareholder not desiring to participate in the Reorganization to achieve the
same results as liquidation of WTF. The Board also considered FII's resources
and performance record; compatibility of the Funds' investment objectives,
policies, restrictions and portfolios; any factors which might require an
adjustment to the exchange price or formula, such as costs or tax and other
benefits to be derived by the Funds; tax consequences of the reorganization;
relative benefits to be derived by the Adviser and/or its affiliates or other
persons; and other factors.
INVESTMENT ADVISORY FEES
Van Eck Associates Corporation (the "Adviser") acts as the investment
adviser for GBF and WTF. The Adviser acts as investment adviser or sub-
investment adviser to other mutual funds registered with the Securities and
Exchange Commission under the 1940 Act and manages or advises managers of
portfolios of pension plans and others. Total aggregate assets under management
of the Adviser at June 30, 1995 were approximately $1.82 billion. John C. van
Eck, Chairman and President of Van Eck Funds and Van Eck Worldwide Insurance
Trust, and members of his immediate family own 100% of the voting stock of the
Adviser.
FII serves as sub-investment adviser (the "Sub-Adviser") to GBF. FII is a
wholly-owned subsidiary of Fiduciary Investment Corporation, which, in turn, is
a wholly-owned subsidiary of Fiduciary Trust Company International ("FTCI").
FTCI, a New York State chartered bank specializing in investment and
administration of assets for pensions and other institutional accounts, has more
than 30 years of experience in managing funds which invest in the international
markets. FII has access to all of FTCI's investment infrastructure. The
Adviser believes FII has unique knowledge and experience in global investing.
FII also serves as Sub-Adviser to the Worldwide Balanced Fund series of Van Eck
Worldwide Insurance Trust.
5
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GBF and WTF pay investment advisory and administrative fees (the "Advisory
Fee") to the Adviser according to the following schedule/(1)/ :
<TABLE>
<CAPTION>
Net Assets WTF GBF/(2)//(3)/
- --------------------------- ---- ------------
<S> <C> <C>
0-$500 million............. .75% 1.00%
$500-$750 million.......... .65% 1.00%
In excess of $750 million.. .50% 1.00%
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</TABLE>
(1) The Advisory Fee is payable monthly computed on the average daily net
assets.
(2) The Advisory Fee listed for GBF includes an investment advisory fee of .75%
and an administrative fee, which includes certain accounting and legal
expenses, of .25%. WTF does not pay a separate administrative fee and such
services are billed to WTF by the Adviser.
(3) Of the investment advisory fee of .75%, the Adviser pays a fee to FII of
.50% for its sub-investment advisory services.
OTHER FEES
GBF adopted a Plan of Distribution pursuant to Rule 12b-1 of the 1940 Act for
its Class A shares. Under this plan, GBF pays a fee to the Distributor accrued
daily at an annual rate of 0.50% of the average daily net assets. Of the 12b-1
fee paid by GBF, the Distributor retains 50% of the fee and pays the balance to
Brokers who have sold shares of GBF and to Brokers and Agents who service
shareholder accounts of the Fund. GBF's 12b-1 Plan is a "compensation plan".
Under a compensation plan, the fees paid by a fund under the Plan are not
directly tied to expenses and payments by a fund and may be more or less than
the actual expenses incurred under the Plan. GBF's 12b-1 Plan is also subject
to a "carry-forward provision". In the event that any reimbursable or payable
amount attributable to a fiscal year is in excess of GBF's annual limitation
(.50% of average daily net assets) for that fiscal year (a "Carry-Forward
Amount"), such expenses may be paid in a subsequent fiscal year, including after
termination of the Plan, subject to the annual limitation. For all periods
through April 30, 1996, the Distributor has agreed to waive its right to any
Carry-Forward Amounts in the event the Plan is terminated unless the Board of
Trustees has determined that reimbursement of such Carry-Forward amounts is
appropriate. The Plan of Distribution in effect for GBF is described in more
detail in the Prospectus under "Plan of Distribution."
WTF also adopted a 12b-1 Plan and WTF pays a fee to the Distributor accrued
daily at an annual rate of .25% of the average daily net assets. Of the 12b-1
fee paid by WTF, the Distributor pays the entire fee to Brokers and Agents who
service WTF shareholder accounts. The Fund's 12b-1 Plan is a "reimbursement
plan". Under a reimbursement plan, any fees accrued by a fund in excess of
payments to Brokers and Agents and reimbursement of the Distributor for its
actual expenses will be retained by the Fund. However, WTF has paid nearly the
entire fee to Brokers and Agents as described above and to date, expenditures by
the Distributor have exceeded payments. WTF's 12b-1 Plan does not have a carry-
forward provision as described above.
GBF, as described in footnote number 2 in the above chart, also pays the
Adviser a fee for administrative and accounting services (the "Administrative
Fee") at an annual rate of .25% of daily net assets. GBF's total operating
expenses, annualized as of June 30, 1995, was 2.32% of average daily net assets.
WTF's total operating expenses, annualized as of June 30, 1995, was 2.59% (and
are currently running at a rate of 2.07%) of average daily net assets. The
difference is due to extra-ordinary expenses and accruals for the period ending
June 30, 1995. The following chart provides a comparison of the expenses paid by
GBF and WTF.
6
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Fund Operating Expenses
<TABLE>
<CAPTION>
GBF After
Expense GBF-A/(1)/ WTF/(2)/ Merger/(3)/
- -------------------------------------- ---------- -------- -----------
<S> <C> <C> <C>
Management Fee .75% .75% .75%
12b-1 Fees/Shareholder Servicing Fee .50% .25% .50%
Administration Fee .25% 0% .25%
Other Expenses .82% 1.07% .75%
---- ---- ----
Transfer and Dividend Disbursing .19% .22% .21%
Custodian Fees .20% .11% .24%
Other Expenses .43% .74% .30%
---- ---- ----
Total Fund Expenses 2.32% 2.07% 2.25%
==== ==== ====
- --------------
</TABLE>
(1) Unaudited, annualized as of June 30, 1995
(2) Unaudited, annualized as of June 30, 1995 and adjusted for extra-ordinary
expenses and accruals.
(3) Unaudited, annualized as of June 30, 1995, assumes exchange of
approximately $22 million from WTF to GBF
PURCHASE OF SHARES
Shares of GBF and WTF may be purchased either by (1) ordering the shares
through a selected broker-dealer or bank (a "Broker or Agent"), and forwarding a
completed application or brokerage firm settlement instruction with payment or
(2) completing an application and mailing it with payment to the Funds' Transfer
Agent. GBF offers its Class A shares and WTF offers its shares continuously at
a price equal to net asset value plus a front-end sales charge of 4.75% of the
offering price, subject to discounts on transactions greater than $100,000.
See "Purchase of Shares" in the Prospectus.
EXCHANGE RIGHTS
Shares of the Funds may be exchanged for shares in the following funds which
are also advised by the Adviser at the current net asset value: World Trends
Fund (in the case of GBF), Gold/Resources Fund (Class A), U.S. Government Money
Fund, Global Income Fund (Class A), International Investors Gold Fund (Class A),
Asia Dynasty Fund (Class A), Global Balanced Fund (Class A), Asia Infrastructure
Fund (Class A), Global SmallCap Fund (Class A), Global Hard Assets Fund (Class
A) and Gold Opportunity Fund (Class A). Shareholders of GBF and WTF are limited
to six exchanges per calendar year. In addition, each Fund reserves the right
to terminate, modify or impose a fee in connection with the exchange privilege
as described in more detail in the Statement of Additional Information under
"Exchange Privilege."
REDEMPTION PROCEDURES
Class A Shares of GBF and shares of WTF may be redeemed at net asset value at
any time. Shares of either of the funds may be redeemed by writing to DST,
through the shareholder's Broker or Agent (although the Broker or Agent may
charge a fee for its services) or, if the shareholder has so elected, by
contacting DST by telephone. See "Redemption of Shares" in the Prospectus for
more information.
DIVIDENDS AND DISTRIBUTIONS
GBF intends to make distributions from net investment income on a quarterly
basis in March, June, September and December while WTF intends to make
distributions from net investment income in January and
7
<PAGE>
August. Both funds intend to make distributions from net realized capital gains
resulting from investment activities annually in January. If the Reorganization
is approved by shareholders, WTF intends to declare any applicable dividends and
distributions prior to the Exchange Date.
NET ASSET VALUE
The net asset value of GBF and WTF is determined at the close of business of
each day the New York Stock Exchange is open for trading. Both funds compute
net asset value by dividing the value of the fund's securities, plus cash and
other assets (including interest and dividends accrued but not yet received),
less all liabilities (including accrued expenses), by the number of shares
outstanding. Expenses, including fees paid to the Adviser, are accrued daily
for the funds.
TAX CONSEQUENCES
The Fund has obtained a private letter ruling from the Internal Revenue
Service that: (i) the transfer of the net assets of WTF to GBF solely in
exchange for GBF Class A shares and the distribution of such shares to the
shareholders of WTF, as provided in the Plan, will constitute a reorganization
within the meaning of section 368(a)(1)(C) of the Internal Revenue Code of 1986,
as amended (the "Code"), (ii) WTF will not recognize gain or loss on the
transfer of its assets to GBF in the Reorganization, (iii) WTF will not
recognize gain or loss upon its distribution to its shareholders of the GBF
shares received in the Reorganization, (iv) GBF will not recognize a gain or
loss upon the receipt of the assets of WTF in exchange for the GBF shares, (v)
shareholders of WTF will not recognize a gain or loss in the exchange of shares
of WTF for shares of GBF, (vi) the basis of GBF in the assets of WTF transferred
in the Reorganization will be the same as the basis of WTF in such assets
immediately prior to the Reorganization, (vii) the basis of the GBF shares
received by the shareholders of WTF will be the same as the basis of the WTF
shares exchanged, (viii) the holding period of the GBF shares received by
shareholders of WTF will include the holding period of the WTF shares exchanged
(provided that the WTF shares exchanged were held as a capital asset on the date
of the reorganization) and (ix) GBF's holding period of WTF's assets transferred
in the Reorganization will include the period for which such assets were held by
WTF immediately prior to the Reorganization. For a discussion of additional tax
considerations, see "Tax Consequences".
SPECIAL CONSIDERATIONS AND RISK FACTORS
Since both GBF and WTF invest primarily in equity and debt securities of both
foreign and domestic issuers, any risks inherent in such investments are
applicable to both entities. GBF will, however, under normal market conditions,
invest at least 25% of its assets in debt securities while WTF is not required
to invest in debt securities to such an extent. Thus GBF may be more exposed to
the risks involved with investing in debt securities. The market value of debt
securities generally varies in direct response to changes in interest rates and
the financial condition of the issuer. 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. Debt securities with similar maturities may have different yields,
depending upon several factors, including the relative financial condition of
the issuers.
While it is the policy of GBF generally not to engage in trading for
short-term gains, GBF will effect portfolio transactions without regard to the
holding period if, in the judgment of the Adviser and Sub-Adviser, such
transactions are advisable in light of a change in circumstances of a particular
company, within a particular industry or country, or in general market, economic
or political conditions. This may lead to a higher portfolio turnover ratio.
The annual portfolio turnover rate of GBF for the past two fiscal years has
exceeded 100% while WTF's rate has been well below 100%. Due to the higher rate
of turnover, GBF has paid a greater amount in brokerage commissions than WTF.
The portfolio turnover rate of all funds may vary greatly from year to year.
WTF is a diversified investment company while Global Balanced Fund is a non-
diversified investment company. A diversified fund is one which meets the
following definition: 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
purposes of this calculation limited in respect to 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 voting securities of such issuer. A non-diversified fund is any
other fund. By virtue of being a non-diversified fund, GBF retains the ability
to concentrate its portfolio of investments in a smaller number of issuers.
Such concentration would expose GBF to greater risk of loss in the event of a
price decline in one or more issuers in which it held substantial positions. As
of June 30, 1995, GBF had not invested more than
8
<PAGE>
5% of its assets in any one issuer, but GBF may become more concentrated in the
future.
GBF may invest up to 10% of its assets in the securities of developing
countries with emerging economies or securities markets while WTF may only
invest up to 5% of its assets in such securities. Thus GBF may be more exposed
to the risks involved with investing in such securities. Investments in the
equity and fixed income markets of developing countries involves exposure to
potentially unstable governments, economies based on only a few industries, and
securities markets which trade a small number of securities and may therefore at
times be illiquid. Securities markets of developing countries tend to be more
volatile than the markets of developed countries. See "Risk Factors" in the
Prospectus for a more detailed discussion of the risks involved with investments
in developing countries.
For hedging purposes only, GBF may enter into currency swaps while WTF is
prohibited from making such investments. Currency swaps involve the exchange of
rights to make or receive payments in specified currencies. 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 the currency swap is subject to the risk that the other party
to the swap will default on its delivery obligations. The use of currency swaps
is a highly specialized activity which involves investment techniques and risks
different from those associated with ordinary portfolio transactions. If FII is
incorrect in its forecasts about market values and currency exchange rates, the
investment performance of the Fund would be less favorable than it would have
been if this investment technique were not used.
GBF may borrow up to 30% of the value of its net assets to increase holdings
of portfolio securities (i.e., engage in leveraging) while WTF can only borrow
up to 10% of its net assets for emergency purposes only and may not purchase
securities if it has outstanding borrowings equal to 5% or more of its net
assets. Leveraging by means of borrowing will exaggerate the effect of any
increase or decrease in the value of the portfolio securities on the Fund's net
asset values and money borrowed will be subject to interest and other costs
which may or may not exceed the income received from the securities purchased
with borrowed funds. In addition, GBF may lend to broker-dealers portfolio
securities with an aggregate market value of up to one-third of its total assets
while WTF may not make such loans. Such loans must be secured by collateral at
least equal to the market value of the securities loaned and the Fund will
continue to receive any interest or dividends paid on the loaned securities and
will retain voting rights with respect to the securities. The Fund might
experience the risk of loss if the broker-dealer involved in such a loan
breaches its agreement.
Investments in foreign securities may involve a greater degree of risk than
investments in domestic securities due to the possibility of exchange controls,
less publicly available information, and the possibility of expropriation,
confiscatory taxation or political, economic or social instability. In
addition, some foreign companies are not generally subject to the same uniform
accounting, auditing and financial reporting standards as are American
companies, and there may be less government supervision and regulation of
foreign stock exchanges, brokers and companies. Foreign securities may also be
subject to foreign taxes, higher custodian fees and dividend collection fees
which could reduce the yield on such securities. Foreign securities, unless
fully hedged, will be subjected to fluctuations in currency exchange rates.
Both GBF and WTF, subject to certain restrictions, are allowed to utilize
portfolio strategies involving options, futures, and repurchase agreements which
may involve additional risks. See "Risk Factors" in both the Prospectus and the
Statement of Additional Information for a more detailed discussion of the risks
involved with these practices and strategies as well as the other practices and
strategies discussed in this section.
9
<PAGE>
THE REORGANIZATION
PROCEDURES
The Trustees are hereby soliciting a shareholder vote of WTF to approve the
Reorganization. It is anticipated that the shareholders meeting of Van Eck
Funds, of which this proposal is a part, will be held on December __, 1995 at 99
Park Avenue, 8th Floor, New York, New York at 10:00 A.M. If the Funds'
shareholders approve the Reorganization, the Reorganization will take place on
or about December __, 1995.
TERMS OF THE AGREEMENT AND PLAN OF REORGANIZATION
The following is a summary of the significant terms of the Plan which has been
considered and approved by the Trustees of Van Eck Funds at meetings held on
July 12, 1994 and October 17, 1995 and is attached to this Proxy
Statement/Prospectus as Exhibit A. This summary is qualified in its entirety by
reference to the Plan.
Valuation of Assets and Liabilities. The assets of GBF and WTF will be valued
on the business day prior to the date on which the Reorganization will take
place (the "Exchange Date"). The assets in each portfolio will be valued
according to the procedures set forth under "Determination of Net Asset Value"
in the Statement of Additional Information (a summary of that method appears
herein under "Synopsis--Net Asset Value"). Redemption requests for WTF which
have not been settled as of the Exchange Date will be treated as liabilities for
purposes of the Reorganization. Exchange requests for WTF shares received on
the Exchange Date will be treated and processed as exchanges from GBF and will
be effected as of the close of business on the Exchange Date.
Distribution of Shares and Transfer of Assets. On the Exchange Date, GBF will
issue to WTF a number of Class A shares of beneficial interest, the aggregate
net asset value of which will equal the aggregate net asset value of the assets
transferred to GBF by WTF on the Exchange Date. Each shareholder of WTF will
receive a number of Class A shares of GBF having an aggregate net asset value of
his or her shares of WTF. No sales charge or fee of any kind will be charged to
the shareholders of WTF in connection with their receipt of Class A shares of
GBF in the Reorganization.
Expenses. The expenses of the Reorganization that are directly attributable
to each Fund will be borne by that Fund. Expenses attributable to GBF are
expected to amount to approximately $________. The expenses of the
Reorganization to be borne by WTF are expected to amount to approximately
$_________. These expenses are expected to include the expenses incurred in
printing and distributing the WTF's proxy statement and legal fees and
accounting fees associated with each Fund's financial statements. The expenses
of the Reorganization that are attributable to the transaction itself will be
borne by WTF. These expenses are expected to include expenses incurred in
connection with Board of Trustees meetings, portfolio transaction costs, if any,
and other ordinary operating costs. Any registration fees under the Securities
Act of 1933 and state securities commission registration and filing fees in
connection with the Reorganization will be borne by GBF.
Required Approvals. Approval of the Plan requires that a majority of WTF's
outstanding voting shares, as defined in the 1940 Act, must vote in favor of
the Plan. Such majority is defined as the lesser of (i) 67% or more of the
outstanding shares present at the meeting, provided the holders of 50% or more
of the outstanding shares are present in person or by proxy, or (ii) more than
50% of the outstanding shares.
Amendments and Conditions. The Plan may be amended at any time prior to the
Exchange Date with
10
<PAGE>
respect to any of the terms therein. The obligations of GBF and WTF are subject
to various conditions, including a registration statement on Form N-14 being
declared effective by the Securities and Exchange Commission, approval of the
Reorganization by the shareholders of WTF and the continuing accuracy of various
representations and warranties of GBF and WTF being confirmed by the respective
parties.
BENEFITS TO WTF AS A RESULT OF REORGANIZATION
1. Certain fixed costs, such as costs of printing shareholder reports,
prospectuses, statements of additional information and proxy statements, legal
expenses, transfer agency fees, audit fees, registration fees, mailing costs and
other expenses will be spread across a larger asset base.
The asset level of WTF has been steadily declining during the past several
years. Net assets have declined from $85.6 million as of December 31, 1987 to
approximately $46.8 million as of December 31, 1990 and were $22.6 million as of
June 30, 1995. Net redemptions during the four most recent fiscal years were
$3.3 million, $3.1 million, $15.3 million and $4.1 million, respectively. This
decrease in net assets has meant that some fixed costs, such as those listed
above have been spread over a smaller asset base. This has pushed WTF's expense
ratio from 1.55% as of December 31, 1987 to 1.71% as of December 31, 1990 and
the expense ratio had further risen to 1.85% as of December 31, 1994. If WTF
continues to experience net redemptions, it expects that its expense ratio will
continue to rise. Restrictions under various state securities laws prohibit
total expenses of WTF (excluding certain expenses such as, but not limited to,
interest, taxes, brokerage costs and litigation) from increasing beyond 2.50%
plus an additional .25% in 12b-1 fees, for a maximum annual expense ratio of
2.75% of average daily net assets.
GBF, on the other hand, has seen a significant increase in net assets from
basically nothing at inception (December 20, 1993) to approximately $18.5
million as of June 30, 1995. The Distributor anticipates that net assets of GBF
will continue to increase, whether or not the Reorganization is approved. It is
estimated that after the Reorganization, assuming that substantially all of the
net assets of WTF are part of the Reorganization, the total expense ratio of GBF
would be 2.25%. As can be seen by the June 30, 1995 expense ratio, as WTF's net
assets continue to erode and the net assets of GBF continue to grow, the gap
between the two Fund's expense ratios will most likely narrow, and may cease to
exist at all. There can be no guarantee that GBF's net assets or expense ratio
will remain at current levels, or that such reduction in the expense ratio will
be available in the future.
2. GBF's net assets have been steadily increasing while the continuing
redemptions in WTF may have adverse effects on the investment management
strategies of the Fund.
As described above, net redemptions in WTF during the past four fiscal years
have exceeded $25 million, or roughly half of the Fund's net assets. The
continuing net redemptions in WTF can be detrimental to the Fund and its
shareholders for a number of reasons: investment programs which the Adviser may
wish to implement or has implemented for WTF may be impaired; portfolio holdings
which would otherwise be retained for investment reasons may have to be
liquidated and additional transaction costs from the forced sale of securities
to raise cash to meet redemptions would be incurred; and the recognition by a
Fund of gains or losses from such forced sales which, from the shareholder's
standpoint, might be detrimental. A stable and growing asset base, as the
Distributor believes will be the case with GBF, with predictable cash flows,
enables purchases of larger denomination investments and the resulting increase
in negotiating capability; and increases the ability of WTF to diversify. There
can be no guarantee that GBF's assets will continue to grow. Should such growth
not materialize or GBF begin to experience net redemptions, the same portfolio
management problems described may affect GBF.
3. The Reorganization allows shareholders of WTF to defer recognition of gains
or losses on their shares until they choose to do so.
11
<PAGE>
As more fully explained in "The Reorganization--Tax Consequences" below, WTF
has obtained a private letter ruling from the Internal Revenue Service that the
Reorganization will, for Federal income tax purposes, be on a tax-free basis.
Thus, a shareholder of WTF will be able to defer the recognition of any gains or
losses on his or her shares of WTF until shares of GBF received pursuant to the
Reorganization are exchanged or sold. If WTF were liquidated rather than
reorganized, a shareholder would have no choice but to recognize any gains or
losses in the current tax year.
BENEFITS TO GBF AS A RESULT OF THE REORGANIZATION
1. Certain fixed costs, such as costs of printing shareholder reports,
prospectuses, statements of additional information and proxy statements, legal
expenses, transfer agency fees, audit fees, registration fees, mailing costs and
other expenses will be spread across a larger asset base, resulting in a lower
overall expense ratio.
As of June 30, 1995, the annualized expense ratio for the Class A shares of
Global Balanced Fund ("GBF-A") was 2.32% of average daily net assets. Of this
total expense ratio, .82% consists of fixed costs including printing costs,
legal expenses, transfer agency fees and the like. As the assets of GBF grows,
these costs are spread over a larger asset base and the total expense ratio
usually declines. After the Reorganization, assuming that substantially all of
the assets of WTF are transferred in the Reorganization, the total expense ratio
of GBF-A is estimated at 2.25%, with other expenses per share totalling
approximately .75% of average daily net assets. There can be no guarantee that
GBF's assets or expense ratio will remain at current levels, or that such
reduction in the expense ratio will be available in the future.
2. GBF will receive the portfolio securities of WTF without incurring the
normal transaction costs associated with purchasing such securities in the open
market (brokerage commissions, etc.)
The Adviser and FII have reviewed the portfolio of WTF and have determined
that alterations of the portfolio will be necessary. Approximately one-half of
the WTF portfolio will be liquidated for investment purposes. However, since
cash will be transferred all at once, volume discounts allow GBF to replace
these liquidated securities at less then normal transaction costs. GBF would be
required to pay more had the cash come into the Fund over a period of time from
sales and been used to purchase securities in the open market. Therefore, the
reorganization will provide GBF with greater diversification at less then what
it would have cost had the securities been purchased outside the reorganization.
In addition, the Adviser, FII and the Trustees have determined that GBF will not
suffer adverse tax consequences as a result of the transfer of assets from WTF
in connection with the Reorganization.
TAX CONSEQUENCES
The Reorganization has been structured with the intention that it will qualify
for Federal income tax purposes as a tax-free reorganization under Section
368(a)(1)(C) of the Code. GBF and WTF have both elected to qualify as a
regulated investment company under the Code and GBF intends to continue to elect
to so qualify. For Federal income tax purposes: (i) the transfer of the assets
of WTF to GBF solely in exchange for GBF shares and the distribution of such
shares to the shareholders of WTF, as provided in the Plan, will constitute a
reorganization within the meaning of section 368(a)(1)(C) of the Code, (ii) WTF
will not recognize gain or loss on the transfer of its assets to GBF in the
Reorganization, (iii) WTF will not recognize gain or loss upon its distribution
to its shareholders of the GBF shares received in the Reorganization, (iv) GBF
will not recognize a gain or loss upon the receipt of the assets of WTF in
exchange for the GBF shares, (v) shareholders of WTF will not recognize a gain
or loss on the exchange of shares of WTF for shares of GBF, (vi) the basis of
GBF in the assets of WTF transferred in the Reorganization will be the same as
the basis of WTF in such assets immediately prior to the Reorganization, (vii)
the basis of the GBF shares received by the shareholders of WTF will be the same
as the basis of WTF shares exchanged, (viii) the holding period of the GBF
shares received by shareholders of WTF will include the holding period of WTF
12
<PAGE>
shares exchanged (provided that the WTF shares exchanged were held as a capital
asset on the date of the reorganization) and (ix) GBF's holding period of WTF's
assets transferred in the Reorganization will include the period for which such
assets were held by WTF immediately prior to the Reorganization.
Shareholders should consult their tax advisers regarding the Plan in light of
their individual circumstances. As the foregoing relates only to Federal income
tax consequences, shareholders should also consult with their tax advisers as to
the state and local tax consequences of such transactions.
CAPITALIZATION
The following table sets forth, as of June 30, 1995, the capitalization of GBF
(Class A and B shares) and the capitalization of WTF.
Capitalization/(1)/
<TABLE>
<CAPTION>
Proforma Reorganization(2)
-------------------------
GBF-A GBF-B WTF GBF-A (3) GBF-B
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total Net Assets........... $12,575,374 $5,925,661 $22,611,677 $35,191,991 $5,925,661
Shares Outstanding......... 1,267,004 600,531 1,792,378 3,544,609 600,531
Net Asset Value Per Share.. $ 9.93 $ 9.87 $ 12.62 $ 9.93 $ 9.87
- -------------------
</TABLE>
(1) Unaudited
(2) Data does not take into account expenses incurred in the Reorganization.
(3) Had the Reorganization been consummated on June 30, 1995, WTF would have
received 2,277,605 Class A shares of GBF, which would then have been
available for distribution to its shareholders. No assurance can be given
as to how many shares of GBF shareholders of WTF will receive on the date
the Reorganization takes place, and the foregoing should not be relied upon
to reflect the number of shares of GBF that will actually be received on or
after such date.
GLOBAL BALANCED FUND AND WORLD TRENDS FUND
For a general description of GBF and WTF, see the Prospectus. For the
information of WTF's shareholders, certain cross references, as well as
additional information regarding GBF are set forth below:
FINANCIAL HIGHLIGHTS
The Financial Highlights below give selected information for a share of GBF
and WTF outstanding for the year or period indicated. The Financial Highlights
for the periods ending December 31, 1994 and 1993 have been audited by Coopers &
Lybrand L.L.P., independent accountants, whose reports thereon appear in GBF's
and WTF's Annual Reports, which are incorporated by reference into the Statement
of Additional Information. This information should be read in conjunction with
the financial statements and related notes that also appear in GBF's Annual and
Semi-Annual Reports.
13
<PAGE>
GLOBAL BALANCED FUND (CLASS A)
<TABLE>
<CAPTION>
For the Period
December 20, 1993
Six Months For the Year (Commencement of
Ended Ended Operations) to
June 30, 1995(a) December 31, 1994 December 31, 1993
---------------- ------------------ -----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 9.07 $ 9.53 $9.53
------ ------ -----
Income from Investment Operations:
Net Investment Income................. 0.06 0.19 0.00
Net Gain/(Loss) on Securities
(both realized and unrealized)..... 0.82 (0.56) 0.00
------ ------ -----
Total from Investment Operations........ 0.88 (0.37) 0.00
------ ------ -----
Less Distributions:
Dividends from Net Investment Income.. (0.02) (.09) 0.00
------ ------ -----
Net Asset Value, End of Period.......... $ 9.93 $ 9.07 $ 9.53
==== ==== ====
Total Return (b) 9.71% (3.90%) 0.00%
</TABLE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios/Supplementary Data
<S> <C> <C> <C>
Net assets, End of Period (000)................... $12,575 $13,986 $ 562
Ratio of Expenses to Average
Net Assets.................................... 2.32%* 1.06%(c) 0.25%*(c)
Ratio of Net Investment Income/(Loss) to Average
Net Assets.................................... 1.37%* 1.99% (0.25%)*
Portfolio Turnover Rate........................... 115.22% 174.76% 0.00%
- ---------------------
</TABLE>
* Annualized
(a) Unaudited
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends at net
asset value during the year and a redemption on the last day of the period.
A sales charge is not reflected in the calculations of total return. Total
return for the period ended December 31, 1993 was not annualized.
(c) The expense ratios for Class A shares would have been 2.59% and 7.76% if the
expenses were not assumed by the Adviser.
WORLD TRENDS FUND
<TABLE>
<CAPTION>
Six Months For the Year For the Year
Ended Ended Ended
June 30, 1995(a) December 31, 1994 December 31, 1993
---------------- ------------------ ------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period....... $12.29 $14.57 $12.42
------ ------ ------
Income from Investment Operations:
Net Investment Loss.................. (0.04) (0.07) (0.02)
Net Gain on Securities
(both realized and unrealized).. 0.37 0.40 2.79
------ ------ ------
Total from Investment Operations........... 0.33 0.33 2.77
------ ------ ------
</TABLE>
14
<PAGE>
<TABLE>
<S> <C> <C> <C>
Less Distributions:
Distributions from Capital Gains (0.00) (2.61) (0.62)
------ ------ ------
Net Asset Value, End of Period $12.62 $12.29 $14.57
===== ====== =====
Total Return (b) 2.69% 2.27% 22.30%
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplementary Data
<S> <C> <C> <C>
Net assets, End of Period (000)................... $22,612 $21,348 $28,425
Ratio of Expenses to Average
Net Assets.................................... 2.59%* 1.85% 1.86%
Ratio of Net Investment Income/(Loss) to Average
Net Assets.................................... (0.66%)* (0.32%) (0.16%)
Portfolio Turnover Rate........................... 0.33% 12.31% 0.12%
- ---------------------
</TABLE>
* Annualized
(a) Unaudited
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of capital gains at
net asset value during the year and a redemption on the last day of the
period. A sales charge is not reflected in the calculations of total
return.
INVESTMENT OBJECTIVES AND POLICIES
For a discussion of GBF's and WTF's investment objective and policies, see
"Investment Objective and Policies" in the prospectus and "Synopsis--Investment
Objectives and Policies" herein.
MANAGEMENT DISCUSSION AND ANALYSIS
GLOBAL BALANCED FUND
The 1994 year started with much promise since the U.S. and U.K. economies were
well into their recovery phases. Continental Europe and Japan were just showing
signs of recovery following recessions which had been amongst the most severe
since the oil shocks of the mid-1970's. However, the Fed became concerned that
the strong economy would be inflationary and so they began a series of interest
rate hikes in early February. The effect of this was to reduce liquidity
flowing into both the domestic bond and equity markets which caused the worst
performance in the U.S. bond market since 1969 and a 1.5% fall in the U.S.
equity market
The global bull market was fueled by U.S. liquidity and so the Fed tightening
cut cash flows into the Asian markets, resulting in sharp falls which were
further exacerbated by the over-heating in the Chinese economy. Subsequently,
the worst performing markets in 1994 included Hong Kong, Malaysia, Singapore and
Thailand which had performed particularly well in 1993.
The final quarter of 1994 saw the collapse of the Mexican economy, following the
realization that the foreign debt level was unsustainably high, and the
subsequent rush to sell Mexican Pesos resulted in a 45% devaluation against the
dollar in December alone and a 42% fall in dollar terms in the Mexican Bolsa
index for the year overall. The Argentinean market was dragged down with
Mexico, falling 21% in 1994.
Not everything was negative. The underlying weakness of the U.S. dollar against
the main European currencies and Japanese yen meant that these markets were up
in dollar terms. In addition, the Japanese market responded to the improved
economy and subsequent profits recovered by 13%, although this was
15
<PAGE>
all in the first half of the year when this portfolio was still being funded.
Overall, therefore, 1994 was a very disappointing year for both bonds and
equities. Investors, including U.S. mutual funds, slowed their investing mainly
for fear that they would experience redemptions. The subsequent flow of funds
caused the smaller markets in particular to underperform.
<TABLE>
<CAPTION>
60% MSCI World Equities/40%
Global Balanced-A Salomon Brothers World Bond
----------------- ---------------------------
<S> <C> <C>
Dec-93 9,520 10,000
Jan-94 9,700 10,429
Feb-94 9,540 10,322
Mar-94 9,201 10,050
Apr-94 9,281 10,242
May-94 9,341 10,223
Jun-94 9,171 10,266
Jul-94 9,361 10,416
Aug-94 9,511 10,591
Sep-94 9,451 10,456
Oct-94 9,651 10,703
Nov-94 9,179 10,367
Dec-94 9,149 10,439
</TABLE>
WORLD TRENDS FUND
The World Trends Fund achieved a total return of 2.3% for the 12 months ended
December 31, 1994.
Higher than expected economic growth and fears of resurgent inflation prompted
the United States Federal Reserve Board to raise short-term interest rates
substantially during the year, from 3% in January to 5.5% by December 31.
Interest rates throughout much of Europe also reversed course, creeping upward.
These rate hikes, on the tail of unusually strong 1993 performance that left
many world markets overvalued, pushed many markets into declines despite strong
corporate earnings and economic growth throughout much of the world. Certain
markets and selective stocks, however, still provided moderate value.
The relative success of your Fund in 1994 resulted from a portfolio emphasis on
both Japan and Germany, which accounted for approximately 20% and 15% of total
investments respectively, during the year.
Over the course of the year, we hedged approximately 20% of our position in the
U.S. stock market, which accounted for about 30% of total investments. Although
the market was virtually flat, our emphasis in the U.S. has been on the
pharmaceutical sector and the technology sector. Avoidance of the volatile
emerging markets, some of which witnessed declines of over 30%, also proved
beneficial.
16
<PAGE>
<TABLE>
<CAPTION>
World Trends Fund S&P 500 MSCI World Index
----------------- ------- ----------------
<S> <C> <C> <C>
Sep-85 9,526 10,000 10,000
Dec-85 9,990 11,714 12,058
Jun-86 12,461 14,143 15,582
Dec-86 14,039 13,895 17,110
Jun-87 16,328 17,699 22,191
Dec-87 15,146 14,614 23,540
Jun-88 15,457 16,469 22,177
Dec-88 16,071 17,025 22,459
Jun-89 15,502 19,836 25,550
Dec-89 18,214 22,404 28,112
Jun-90 18,300 23,087 24,967
Dec-90 16,775 21,706 22,053
Jun-91 16,965 24,793 26,558
Dec-91 18,876 28,290 27,461
Jun-92 18,416 28,104 26,269
Dec-92 17,264 30,443 27,183
Jun-93 18,265 31,919 29,436
Dec-93 21,114 33,497 32,687
Jun-94 20,969 32,376 33,416
Dec-94 21,592 33,952 35,155
</TABLE>
MANAGEMENT
Trustees. The management of the business and affairs of GBF and WTF is the
responsibility of the Board of Trustees. The Trustees of Van Eck Funds (of
which GBF and WTF are series), consist of nine persons, five of whom are not
"interested persons" as defined in the 1940 Act.
Investment Adviser and Administrator. Van Eck Associates Corporation, 99 Park
Avenue, New York, New York 10016, the Adviser, serves as the investment adviser
and manager for the Funds pursuant to Advisory Agreements with the Trust. The
Adviser manages the business and affairs of GBF pursuant to the Investment
Advisory Agreement and Accounting and Administrative Services Agreement. FII
serves as sub-investment adviser to GBF and provides the Fund with a continuous
investment program which includes determining which securities should be bought
and sold. GBF pays the Adviser fees and the Adviser pays the Sub-Adviser fees
at the rates indicated under "Synopsis--Investment Advisory Fees" herein. The
Advisory fees paid to the Adviser with respect to GBF are higher than the fees
paid by most investment companies because of the complexities of managing this
type of fund (such as following interest rates, currency exchange rates,
industries and companies in many different countries and financial markets
throughout the world). For a more complete description of the Adviser and its
agreements with GBF see "Management" in the Prospectus and "Investment Advisory
Services" in the Statement of Additional Information.
Under the Investment Advisory Agreement with WTF, the Adviser provides WTF
with a continuous investment program which includes determining which securities
should be bought, sold or held. For additional information see "Management" in
the Prospectus and "Investment Advisory Services" in the Statement of Additional
Information.
17
<PAGE>
Portfolio Manager. FII assigns a team of managers led by a global strategist,
which includes a global equity manager and a global fixed-income manager, to
manage the Fund's portfolio of investments. The team consults with the FTCI
research department, which includes international analysts who specialize in the
equity markets of Japan, Europe, the Pacific Basin and Latin America, when
making investment decisions. The two primary portfolio managers for GBF are
listed below:
Anne M. Tatlock -- FII's Chief Investment Strategist and Chief Investment
Strategist of GBF has been serving in such capacity since the Fund commenced
operations. Ms. Tatlock joined FTCI in 1984 and is currently President of the
company where she is responsible for managing institutional investment
management. Ms. Tatlock is head of the Institutional Investment Department and
a member of the Board of Directors, the International Investment Committee and
the Investment Policy Committee at FTCI.
Brian Hopkinson -- FII's Portfolio Manager of GBF has been serving in such
capacity since the Fund commenced operations. Mr. Hopkinson joined FTCI in 1986
after twelve years with Legal Assurance Society, Ltd. and C.S. Investments. He
is Senior Vice President and Senior Global Equity Manager of FTCI as well as a
member of the International Investment Committee at FTCI.
Derek S. van Eck is the Portfolio Manager for WTF and is responsible for
managing the funds' portfolio of investments. He is Director of Global
Investments and Executive Vice President of the Adviser and an officer of other
mutual funds advised by the Adviser.
Transfer Agent. The Transfer Agent and Dividend Paying Agent for the funds is
DST Systems, Inc., P.O. Box 418407, Kansas City, Missouri 64141.
Expenses. For a discussion of the Funds' expenses, see "Transaction Data",
"Purchase of Shares", "Management" and "Plan of Distribution" in the Prospectus
and "Investment Advisory Services" and "The Distributor" in the Statement of
Additional Information.
Brokerage. For a discussion of the Funds' policies regarding brokerage
commissions and transactions, see "Portfolio Transactions and Brokerage" in the
Statement of Additional Information.
SHARES OF GBF TO BE ISSUED IN THE REORGANIZATION AND SHARES OF WTF
Shares. On the Exchange Date, all shareholders of WTF will be given a number
of Class A shares of beneficial interest, par value $.001 of GBF having an
aggregate net asset value equal to the net asset value of his or her shares of
WTF. The shares of GBF to be issued in the Reorganization will be identical in
all respects to all Class A shares of GBF then outstanding.
Voting Rights. Shareholders of GBF and WTF are entitled to one vote for each
share and a fractional vote for each fractional share held in the election of
Trustees (to the extent hereafter provided) and on other matters submitted to a
vote of shareholders. With respect to the 12b-1 Plans in effect for GBF, Class
A shareholders are only entitled to vote on matters affecting their particular
plan. Under the Amended and Restated Master Trust Agreement, no annual or
regular meeting of shareholders is required. Thus, there will ordinarily be no
shareholder meeting unless required by the 1940 Act. The Board of Trustees is a
self-perpetuating body until fewer than 50% of the Trustees serving as such are
Trustees who were elected by the shareholders. Under the Amended and Restated
Master Trust Agreement, any Trustee may be removed by a vote of two-thirds of
the outstanding Trust shares (outstanding Trust shares include shares of all
series
18
<PAGE>
of the Trust and not solely shares of GBF or WTF); and holders of ten percent or
more of the outstanding shares of the Trust can require Trustees to call a
meeting of shareholders for purposes of voting on the removal of one or more
Trustees. With respect to each of WTF and GBF, each issued and outstanding
share is entitled to participate equally in dividends and distributions declared
by such fund and, upon liquidation or dissolution, in the net assets of such
fund remaining after satisfaction of outstanding liabilities.
Shareholder Liability. Under Massachusetts law, the Shareholders of the Trust
could, under certain circumstances, be held personally liable for the
obligations of the Trust. However, the Amended and Restated Master Trust
Agreement of the Trust disclaims shareholder liability for acts or obligations
of the Trust and require that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Trust or the
Trustees. The Amended and Restated Master Trust Agreement provides for
indemnification out of the Trust's property for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Trust itself would be unable
to meet its respective obligations. The Adviser believes that, in view of the
above, the risk of personal liability to shareholders is remote. The liability
provisions are identical for shareholders of GBF and WTF.
Control. There are no persons who exercise control over GBF as "control" is
defined in the 1940 Act except _____________. There are no persons who exercise
control over WTF except _____________.
Other Classes. WTF does not have any other classes of securities outstanding
as defined in the 1940 Act. GBF has two classes of shares outstanding which are
designated Class A and Class B shares. The two classes are identical in all
respects except that: (1) the Class A shares will be subject to a front-end
sales charge while the Class B shares will be subject to a Contingent Deferred
Sales Charge, (2) each class has adopted its own Rule 12b-1 Plan, (3) the two
classes will vote separately on their respective 12b-1 Plans and (4) any higher
incremental transfer agency costs and any other costs attributable solely to
Class A or Class B shares will be borne exclusively by such class. GBF has no
other classes of securities outstanding as defined in the 1940 Act.
Shareholder Inquiries. Shareholder inquiries with respect to GBF or WTF
should be addressed to the Funds by telephone at (800) 544-4653 or in writing at
the address set forth on the cover page of the Proxy Statement/ Prospectus.
Dividends and Distributions. GBF intends to make distributions from net
investment income on a quarterly basis in March, June, September and December
while WTF intends to make distributions from net investment income in January
and August. Both funds intend to make distributions from net realized capital
gains resulting from investment activities annually in January. Dividends and
capital gains may be received by the shareholder in cash or may be reinvested in
GBF or WTF at the net asset value (without imposition of a sales charge) on the
day so determined by the Board of Trustees. In addition, dividends and capital
gains may also be reinvested in any other series of Van Eck Funds.
Tax Consequences. For a discussion of the tax consequences associated with an
investment in GBF or WTF, see "Taxes" in the Statement of Additional
Information. Under present Massachusetts law, neither GBF nor WTF is subject to
any Massachusetts income taxation during any year in which it qualifies as a
regulated investment company under the Code. Either GBF or WTF may be subject
to Massachusetts income taxes for any taxable year in which it does not so
qualify. Shareholders are urged to consult their tax advisers regarding
specific questions as to Federal, foreign, state and local taxes.
PURCHASE OF SHARES
Both prior to, and subsequent to the Reorganization, shares of GBF will be
offered continuously for sale by the Distributor or by Brokers and Agents which
have entered into selling group or selling agency
19
<PAGE>
agreements with Van Eck Securities Corporation, 99 Park Avenue, New York, New
York 10016 (the "Distributor"). The Reorganization will have no effect on the
purchase procedures for shares of GBF. The purchase procedures for WTF are
identical to those of GBF. See "Purchase of Shares" in the Prospectus. For
more information on the Distributor, see "The Distributor" in the Statement of
Additional Information.
GBF and WTF have each adopted a 12b-1 Plan in accordance with the 1940 Act.
GBF Class A shareholders pay a 12b-1 fee accrued daily at an annual rate of .50%
of the average daily net assets and WTF shareholders at an annual rate of 0.25%.
The 12b-1 Plan must be approved annually by the Board of Trustees. For more
discussion of the 12b-1 Plan, see "Plan of Distribution" in the Prospectus.
REDEMPTION PROCEDURES
Redemption procedures for Class A shares of GBF are identical to the
redemption procedures currently in effect for WTF. Shares of the funds will be
redeemed at the net asset value on the day on which proper instructions are
received by DST. See "Redemption of Shares" in the Prospectus.
OTHER MATTERS
It is not anticipated that any matters other than the adoption of the Plan
described above will be brought before the Meeting. If, however, any other
business is properly brought before the special meetings, proxies will be voted
in accordance with the judgment of the persons designated on such proxies.
INFORMATION CONCERNING THE SPECIAL MEETING
DATE, TIME AND PLACE OF MEETING
The Meeting for shareholders of WTF will be held on December __, 1995 at 99
Park Avenue, 8th Floor, New York, New York at 10:00 A.M.
SOLICITATION, REVOCATION AND USE OF PROXIES
A shareholder executing and returning a proxy has the power to revoke it at
any time prior to its exercise by executing a superseding proxy or by submitting
a notice of revocation to the Secretary of the Fund at 99 Park Avenue, 8th
Floor, New York, New York 10016. Although mere attendance at the Meeting will
not revoke a proxy, a shareholder present at the Meeting may withdraw his or her
proxy and vote in person.
All shares represented by properly executed proxies, unless such proxies have
previously been revoked, will be voted at the Special Meeting in accordance with
the directions on the proxies; if no direction is indicated, the shares will be
voted "FOR" the approval of the Plan and the other proposals.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of each Fund's shares of beneficial interest, par value
$.001 per share, at the close of business on November __, 1995 (the "Record
Date") are entitled to vote at the Special Meeting and any adjournment thereof.
At the close of business on the Record Date, there were approximately _________
shares of WTF outstanding and entitled to vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No person or entity owns beneficially 5% or more of WTF's shares except
____________________.
20
<PAGE>
No person or entity owns beneficially more than 5% or more of GBF's shares
except __________________.
VOTING RIGHTS AND REQUIRED VOTE
Voting procedures are described under "The Reorganization--Terms of the
Agreement and Plan of Reorganization".
A proxy that is properly executed and returned accompanied by instructions to
withhold authority to vote with respect to the reorganization represents a
broker "non-vote" (that is, a proxy from a broker or nominee indicating that
such person has not received instructions from the beneficial owner or other
person entitled to vote shares on the particular matter with respect to which
the broker or nominee does not have the discretionary power), and the shares
represented thereby will be considered not to be present at the Special Meeting
for purposes of determining the existence of a quorum for the transaction of
business for that proposal and be deemed not cast with respect to such proposal.
Also, a properly executed and returned proxy marked with an abstention will be
considered present at the Special Meeting for purposes of determining the
existence of a quorum for the transaction of business. However, abstentions and
broker "non-votes" do not constitute a vote "for" or "against" the matter, and,
therefore have the effect of a negative vote on matters which require approval
by a requisite percentage of the outstanding shares.
In the event a quorum is not present at the Special Meeting or in the event
that a quorum is present but sufficient votes to approve the reorganization are
not received, the persons named as proxies may propose one or more adjournments
of such Special Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of those shares
voted at the Special Meeting in person or by proxy. The persons named as
proxies will vote those proxies that they are entitled to vote in such manner as
they determine to be in the best interest of shareholders with respect to any
proposal to adjourn the Special Meeting. A shareholder vote may be taken on the
reorganization prior to such adjournment if sufficient votes have been received
for approval.
Under Massachusetts law, shareholders of a registered investment company are
not entitled to demand fair value of the shares and will be bound by the terms
of the Reorganization if the Plan is approved at the Meeting. Any shareholder
in WTF may, however, either redeem his or her shares at net asset value or
exchange his or her shares into another Van Eck fund (without imposition of any
sales or redemption charge) prior to the date of the Reorganization.
ADDITIONAL INFORMATION
This Proxy Statement/Prospectus and the related Statement of Additional
Information do not include all the information set forth in the registration
statements and exhibits relating thereto which GBF and WTF, respectively, have
filed with the Securities and Exchange Commission, Washington, DC 20549, under
the Securities Act of 1933 and the Investment Company Act of 1940, to which
reference is hereby made.
Reports, proxy statements, registration statements and other information filed
by GBF and WTF can be inspected and copied at the public reference facilities of
the Securities and Exchange Commission in Washington, DC and Regional Offices of
the Commission located at 7 World Trade Center, New York, New York 10048 and
Suite 1400, 500 West Madison Street, Chicago, Illinois 60621. Copies of such
material can also be obtained by mail from the Public Reference Branch, Office
of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, DC 20549 and its public reference facilities in New
York, New York and Chicago, Illinois, at prescribed rates.
21
<PAGE>
EXHIBIT A
PLAN OF REORGANIZATION AND LIQUIDATION
PLAN OF REORGANIZATION AND LIQUIDATION dated as of November __, 1995, adopted
by Van Eck Funds, a Massachusetts business trust (the "Trust"), on behalf of the
World Trends Fund, a series of the Trust, and the Global Balanced Fund, a series
of the Trust. The World Trends Fund and the Global Balanced Fund are referred
to collectively as the "Funds" and individually as a "Fund."
W I T N E S S E T H:
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, this Plan is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended, such reorganization to consist of the
transfer of all of the assets of the World Trends Fund in exchange solely for
Class A shares of beneficial interest, par value $0.001 per share, of the Global
Balanced Fund ("Global Balanced Fund Shares") and the assumption by the Global
Balanced Fund of all of the stated liabilities of the World Trends Fund and the
distribution, after the Closing hereinafter referred to, of Global Balanced Fund
Shares to the shareholders of the World Trends Fund in liquidation of the World
Trends Fund, all upon the terms and conditions hereinafter set forth in this
Plan; and
WHEREAS, the Trustees of the Trust, including a majority of the Trustees who
are not interested persons, have determined with regard to each Fund that
participating in the transactions contemplated by this Plan is in the best
interests of the respective Funds.
NOW, THEREFORE, the Trustees hereby declare the following Plan:
1. Transfer of Assets. Subject to the terms and conditions set forth herein,
------------------
at the closing provided for in Section 5 (herein referred to as the "Closing"),
the Trust shall transfer all of the assets of the World Trends Fund, and assign
all Assumed Liabilities (as hereinafter defined) to the Global Balanced Fund,
and the Global Balanced Fund shall acquire all such assets, and shall assume all
such Assumed Liabilities, upon delivery to the Trust of Global Balanced Fund
Shares having a net asset value equal to the value of the net assets of the
World Trends Fund transferred (the "New Shares"). "Assumed Liabilities" shall
mean all liabilities, expenses, costs, charges and reserves reflected in an
unaudited statement of assets and liabilities of the World Trends Fund as of the
close of business on the Valuation Date (as hereinafter defined), determined in
accordance with generally accepted accounting principles consistently applied
from the prior audited period. The net asset value of the New Shares and the
value of the net assets of the World Trends Fund to be transferred shall be
determined as of the close of regular trading on the New York Stock Exchange on
the business day next preceding the Closing (the "Valuation Date") using the
valuation procedures set forth in the then current prospectus and statement of
additional information of the Global Balanced Fund.
All Assumed Liabilities of the World Trends Fund, to the extent that they
exist at or after the Closing, shall after the Closing attach to the Global
Balanced Fund and may be enforced against the Global Balanced Fund to the same
extent as if the same had been incurred by the Global Balanced Fund.
2. Liquidation of the World Trends Fund. At or as soon as practicable after
------------------------------------
the Closing, the World Trends Fund will be liquidated and the New Shares
delivered to the Trust on behalf of the World Trends Fund will be distributed to
shareholders of the World Trends Fund, each shareholder to receive the number of
New Shares equal to the pro rata portion of shares of beneficial interest of the
World Trends Fund held by such shareholder as of the close of business on the
Valuation Date. Such liquidation and distribution will be accompanied by the
establishment of an open account on the share records of the Global Balanced
Fund
<PAGE>
in the name of each shareholder of the World Trends Fund and representing the
respective pro rata number of New Shares due such shareholder. As soon as
practicable after the Closing, the Trust shall file on behalf of the World
Trends Fund such instruments of dissolution, if any, as are necessary to effect
the dissolution of the World Trends Fund and shall take all other steps
necessary to effect a complete liquidation and dissolution of the World Trends
Fund.
3. Conditions Precedent. The obligations of the Trust to effectuate the Plan
--------------------
of Reorganization and Liquidation hereunder shall be subject to the satisfaction
of the following conditions:
(a) At or immediately prior to the Closing, the Trust shall have declared and
paid a dividend or dividends which, together with all previous such dividends,
shall have the effect of distributing to the shareholders of the World Trends
Fund all of the Fund's investment company taxable income for taxable years
ending at or prior to the Closing (computed without regard to any deduction for
dividends paid) and all of its net capital gain, if any, realized in taxable
years ending at or prior to the Closing (after reduction for any capital loss
carry-forward);
(b) Such authority and orders from the Securities and Exchange Commission (the
"Commission") and state securities commissions as may be necessary to permit the
Trust to carry out the transactions contemplated by this Plan shall have been
received;
(c) A registration statement of the Trust on Form N-14 under the Securities
Act of 1933, as amended (the "Securities Act"), registering the New Shares under
the Securities Act, and such amendment or amendments thereto as are determined
by the Board of Trustees of the Trust to be necessary and appropriate to effect
such registration of the New Shares (the "Registration Statement"), shall have
been filed with the Commission and the Registration Statement shall have become
effective, and no stop-order suspending the effectiveness of such Registration
Statement shall have been issued, and no proceeding for that purpose shall have
been initiated or threatened by the Commission (and not withdrawn or
terminated);
(d) The New Shares shall have been duly qualified for offering to the public
in all states in which such qualification is required for consummation of the
transactions contemplated hereunder;
(e) The Trustees of the Trust shall have received a legal opinion from
Goodwin, Procter & Hoar, counsel to the Trust, in form and substance reasonably
satisfactory to the Trustees of the Trust, as to such matters as the Trustees
may reasonably request;
(f) A vote approving this Plan and the reorganization contemplated hereby
shall have been adopted by at least a majority (as defined in the 1940 Act) of
the outstanding shares of beneficial interest of the World Trends Fund entitled
to vote at the special meeting of shareholders of the World Trends Fund duly
called for such purpose.
4. Closing. The Closing shall be held at the offices of the Trust and shall
-------
occur (a) as of the close of business on [December __, 1995], (b) if all
regulatory or shareholder approvals shall not have been received, then on the
first Monday following receipt of all necessary regulatory approvals and the
final adjournment of the meetings of shareholders of the World Trends Fund at
which this Agreement is considered or (c) such later time as the parties may
agree. All acts taking place at the Closing shall be deemed to take place
simultaneously unless otherwise provided. At, or as soon as may be practicable
following the Closing, the Trust shall distribute the New Shares to the World
Trends Fund Record Holders (as herein defined) by instructing the Global
Balanced Fund to register the appropriate number of New Shares in the names of
the World Trends Fund's shareholders and the Global Balanced Fund agrees
promptly to comply with said instruction. The shareholders of record of the
World Trends Fund as of the close of business on the Valuation Date shall be
certified by the Trust's transfer agent (the "World Trends Fund Record
Holders").
A-2
<PAGE>
5. Expenses. The expenses of the transactions contemplated by this Plan shall
--------
be borne by World Trends Fund and Global Balanced Fund, except those expenses
which are expressly set forth herein as expenses to be borne by Van Eck
Associates Corporation, in its capacity as the sponsor of the World Trends Fund
(the "Sponsor"). Such expenses shall be borne by World Trends Fund, Global
Balanced Fund and the Sponsor whether or not the transactions contemplated
hereby are consummated, except that the Sponsor shall have no responsibility
with respect to pre-paid expenses in the event the transactions contemplated
hereunder are not consummated. The expenses to be borne by the Sponsor shall
consist of the following: (i) World Trends Fund's pre-paid fidelity bond and
errors and omissions insurance premiums, (ii) operating expenses, costs, and
liabilities arising in the ordinary course of business of the World Trends
Fund to the extent such expenses were not properly accrued for as of the Closing
Date and (iii) Fifty percent of the cost associated with engaging a proxy
solicitor if necessary.
6. Termination. This Plan and the transactions contemplated hereby may be
-----------
terminated and abandoned by resolution of the Board of Trustees of the Trust
with respect to either of the World Trends Fund or the Global Balanced Fund, at
any time prior to the Closing, if circumstances should develop that, in the
opinion of the Board, in its sole discretion, make proceeding with this Plan
inadvisable for either Fund. In the event of any such termination, there shall
be no liability for damages on the part of either the World Trends Fund or the
Global Balanced Fund, or their respective trustees or officers, to the other
party or its trustees or officers.
7. Amendments. This Plan may be amended, waived or supplemented in such manner
----------
as may be mutually agreed upon in writing by the authorized officers of the
Trust with respect to either Fund; provided, however, that following the meeting
of the World Trends Fund shareholders called by the Trust pursuant to Section
3(f) of this Agreement, no such amendment, waiver or supplement may have the
effect of changing the provisions for determining the number of Global Balanced
Fund Shares to be issued to the World Trends Fund shareholders under this Plan
to the detriment of such shareholders without their further approval.
8. Governing Law. This Plan shall be governed and construed in accordance with
-------------
the laws of the Commonwealth of Massachusetts, without giving effect to the
conflicts of laws provisions thereof.
9. Further Assurances. The Trust, with respect to World Trends Fund and Global
------------------
Balanced Fund, shall take such further action, prior to, at, and after the
Closing, as may be necessary or desirable and proper to consummate the
transactions contemplated hereby.
10. Limitations of Liability. The term "Van Eck Funds" means and refers to the
------------------------
trustees from time to time serving under the Amended and Restated Master Trust
Agreement (the "Master Trust Agreement") of the Trust, as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding-upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but bind only the assets and property of the
World Trends Fund or the Global Balanced Fund series of the Trust, as the case
may be, as provided in the Master Trust Agreement. With respect to each Fund,
the execution and delivery of this Plan has been authorized by the Trustees of
the Trust and signed by an authorized officer of the Trust, acting as such, and
neither such authorization nor such execution and delivery shall be deemed to
have been made individually or to impose any personal liability, but shall bind
only the Trust property of the respective series of the Trust as provided in its
Master Trust Agreement. The Master Trust Agreement of the Trust provides, and it
is expressly agreed, that each Fund shall be solely and exclusively responsible
for the payment of its debts, liabilities and obligations, and that no other
Fund shall be responsible for the same.
A-3
<PAGE>
IN WITNESS WHEREOF, the Trustees have caused this Plan to be executed on
behalf of each Fund as of the date first set forth above by their duly
authorized representatives.
Attest: VAN ECK FUNDS
on behalf of World Trends Fund
______________________________ By:_______________________________
Attest: VAN ECK FUNDS
on behalf of Global Balanced Fund
______________________________ By:_______________________________
The undersigned hereby accept their obligation to pay expenses pursuant to
Section 5 hereof.
Attest: VAN ECK ASSOCIATES CORPORATION
______________________________ By:_______________________________
A-4
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
VAN ECK FUNDS
GLOBAL BALANCED FUND
WORLD TRENDS FUND
99 Park Avenue, 8th Floor
New York, New York 10016
1-800-221-2220
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Proxy Statement/Prospectus of World Trends Fund
(the "Fund" or "WTF"), a series of Van Eck Funds dated October __, 1995, which
is enclosed. This Statement of Additional Information has been incorporated by
reference into the Proxy Statement/Prospectus.
Further information about the Global Balanced Fund series of Van Eck Funds
("GBF") is contained in and incorporated by reference to its latest prospectus,
dated March 17, 1995, its latest Statement of Additional Information, dated
March 17, 1995, its Annual Report to shareholders for the year ended December
31, 1994 and its Semi-Annual Report to shareholders for the six months ended
June 30,1995, all of which are incorporated by reference herein and are
available at no cost by either calling the Funds at the phone number listed
above or by writing to the Funds at the above address.
Further information about the Fund is contained in and incorporated by
reference to its latest prospectus, dated March 17, 1995, its latest Statement
of Additional Information, dated March 17, 1995, its Annual Report to
Shareholders for the year ended December 31, 1994 and its Semi-Annual Report to
shareholders for the six months ended June 30,1995, all of which are
incorporated by reference herein and are available at no cost by either calling
the Funds at the phone number listed above or by writing to the Funds at the
above address.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED OCTOBER __, 1995
<PAGE>
TABLE OF CONTENTS
Page
----
General Information ............................................ 2
Pro Forma Financial Statements (Unaudited) ..................... 3
GENERAL INFORMATION
The shareholders of WTF are being asked to approve an Agreement and Plan of
Reorganization and liquidation (the "Plan") which contemplates the exchange of
net assets of WTF for Class A shares of GBF and the distribution of such shares
to the shareholders of WTF. GBF is an open-end, non-diversified management
investment company and Van Eck Funds is organized as a Massachusetts business
trust. A Special Meeting of Shareholders to consider the Plan and other matters
described in the Proxy Statement/Prospectus will be held at 99 Park Avenue, 8th
Floor, New York, New York on December __, 1995 at 10:00 A.M.
For detailed information about the Plan, shareholders of WTF should refer
to the Proxy Statement/Prospectus. For further information about WTF and GBF,
shareholders should refer to the Van Eck Funds Statement of Additional
Information, dated March 17, 1995, each Fund's Annual Report to shareholders for
the year ended December 31, 1994 and each Fund's Semi-Annual Report to
shareholders for the six months ended June 30, 1995, all of which are
incorporated by reference into this Statement of Additional Information.
2
<PAGE>
PRO FORMA INVESTMENT PORTFOLIO OF MERGER BETWEEN GLOBAL BALANCED FUND AND WORLD
TRENDS FUND AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
No. of Shares
or Principal
Amount Securities (a) Value
- ------------- -------------- ----------
<S> <C> <C>
Australia: 0.9%
6,053 Amcor Ltd. $ 44,667
4,467 Broken Hill Proprietary Co., Ltd. 54,073
15,817 News Corporation Ltd. Pfd. 78,112
525,300 Peptide Technology Limited 190,091
-----------
366,943
-----------
Canada: 0.3%
CAD 204,000 Government of Canada Bond 6.50% 6/1/2004 135,242
-----------
Chile: 0.2%
700 Chilgener S.A. (ADR) 22,138
300 Embotelladora Andina S.A. (ADR) 10,538
2,000 Madeco S.A. (ADR) 57,500
-----------
90,176
-----------
China: 0.1%
2,000 Jilin Chemical Industrial Company
Ltd. (ADR) 38,500
-----------
Columbia: 0.1%
2,500 Cementos Paz Del Rio, S.A. (ADR) 42,188
-----------
Denmark: 0.8%
DKK 1,929,000 Kingdom of Denmark Bond 7.00%
12/ 15/2004 321,857
-----------
France: 6.3%
1,950 AXA Ex Cie Du 105,471
FRF 1,195,000 Bons de Tresor 7.00% 11/12/1999 245,796
470 Castorama Dubois Investisse 78,010
1,200 Cetelem S.A. 185,797
600 Compagnie Bancaire S.A. 71,841
4,000 Compagnie de Saint-Gobain 483,898
6,000 Compagnie Generale des Eaux 668,869
1,390 Credit Local de France 129,129
FRF 990,000 France O.A.T Principal Strip 8.50% 10/25/2019 27,636
430 Groupe Danone 72,436
500 Legrand S.A. 79,480
200 LVMH--(Moet-Hennessy) 36,045
510 Lyonnaise Des Eaux S.A. 48,305
250 Primagaz Cie 43,611
FRF 650,000 Republic of France Bond 8.50% 11/25/2002 141,795
610 Saint Gobain Papier Bois S.A. 73,794
-----------
2,491,913
-----------
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
Germany: 11.3%
709 Bayerische Motoren Werke Pfd. $ 282,051
10,000 Deutsche Bank AG 486,058
DEM 919,000 Deutschland Republic Bond 7.125% 12/20/2002 671,560
DEM 38,000 Deutschland Republic Bond 7.375% 1/03/2005 28,079
500 Allianz AG Holding 892,554
112 Fresenius USA AG (Pfd). 75,582
1,080 Linde AG 640,556
168 Linde AG 99,642
405 Mannesman AG 123,766
600 Rheinelektra AG 460,020
1,000 Siemens AG 496,875
305 VEBA AG 119,900
125 Wella AG Pfd. 99,454
-----------
4,476,097
-----------
Hong Kong: 0.8%
8,000 Cheung Kong Holdings Ltd. 39,598
70,901 First Pacific Co. Ltd. 62,767
6,000 Guoco Group Ltd. 27,993
6,299 HSBC Holdings PLC 80,796
8,000 Sun Hung Kai Properties Ltd. 59,191
8,000 Swire Pacific Ltd. "A" 61,000
-----------
331,345
-----------
India: 2.4%
4,000 Arvind Mills Ltd. (GDR) (144A) 21,240
20,000 India Magnum Fund N.V. Series B 950,000
-----------
971,240
-----------
Indonesia: 0.3%
37,500 Lippo Bank (Foreign) 66,092
1,500 PT. Indonesia Satellite (ADR) 57,375
-----------
123,467
-----------
Ireland: 0.3%
8,625 Bank of Ireland 49,479
6,000 CRH PLC 40,270
14,000 Jefferson Smurfit Group PLC 42,387
-----------
132,136
-----------
Italy:0.9%
3,750 Instituto Mobiliare Italino S.p.A. (ADR) 69,375
ITL 550,000,000 Buoni Poliennali Bond 9.50% 12/01/1999 306,815
-----------
376,190
-----------
Japan: 13.8%
400 Autobacs Seven 38,961
2,000 Canon Sales 55,490
10,000 Daicel Chemical Industries 51,240
100,000 Dai-Tokyo Fire & Marine Insurance Co., Ltd. 708,383
50,000 Ebara Corporation 608,028
100,000 Hitachi. Ltd. 1,000,000
Yen 8,700,000 Japanese Government Bond #151 5.00% 9/20/02 117,958
Yen 29,200,000 Japanese Government Bond #10 4.90% 3/20/09 408,007
60,000 Koa Fire & Marine Insurance Co., Ltd. 368,359
2,000 Mitsubishi Bank Ltd. 43,211
4,000 Mitsubishi Estate Co. Ltd. 45,100
3,000 Mitsubishi Trust & Banking Corp. 42,503
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C>
6 Nippon Telegraph & Telephone $ 50,295
170 Nippon Television Network 38,335
4,000 Sehsui Chemical Co. 47,226
16,000 Sony Corporation ADR 776,000
5,000 Sumitomo Bakelite Co. Ltd 34,238
8,000 Taisei Corp. 47,320
51,000 The Nomura Securities Co., Ltd. 891,145
1,000 Tokyo Electron Ltd. 34,238
2,000 Tostem Corporation 61,629
-----------
5,467,666
-----------
Malaysia: 0.4%
23,000 DCB Holdings Berhad 67,453
5,000 Genting Berhad 49,426
10,000 United Engineers Ltd. 63,577
-----------
180,456
-----------
Mexico: 0.0%
50,000 Fotoluz Corporacion S.A. "B" 12,780
-----------
Netherlands: 3.9%
3,188 Aegon N.V. 110,347
480 Heineken N.V. 72,699
2,800 Koninklijke Ahold N.V. 100,368
2,600 Philips Electronics N.V. 110,160
8,000 Royal Dutch Petroleum Company 975,000
1,900 Royal PTT Nederland N.V. 68,352
1,110 Wolters Kluwer 98,002
-----------
1,534,928
-----------
New Zealand: 0.9%
10,000 Carter Holt Harvey 24,462
20,000 Fletcher Forestry Shares 26,333
NZ$485,000 New Zealand Government Bond 6.50% 2/15/2000 308,156
-----------
358,951
-----------
Norway: 0.3%
2,360 Orkla A/S "A" 105,549
-----------
Philippines: 0.1%
78,650 S M Prime Holdings Inc. 21,544
-----------
Singapore: 1.3%
3,000 Fraser & Neave Ltd. 34,574
5,000 Keppel Corporation Ltd. 40,802
6,000 United Overseas Bank Ltd. 56,693
40,000 Singapore Airlines Limited (Foreign) 369,363
-----------
501,432
-----------
South Africa: 0.4%
5,000 Barlow Limited 51,000
12,000 General Mining Union Corp. 40,800
5,000 Sasol Ltd. 47,813
-----------
139,613
-----------
South Korea: 0.4%
1,000 Korea Mobile Telecommunications 35,750
800 Pohang Iron & Steel Ltd. (ADR) 23,600
1,911 Samsung Electronics Ltd. (GDS) 101,264
-----------
160,614
-----------
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
Spain: 3.6%
1,575 Banco Central Hispano
Americano $ 33,415
3,000 Banco Santander, S.A. 118,486
ESP 93,300,000 King of Spain Bond 10.25% 11/30/1998 744,278
16,200 Repsol, S.A. (ADR) 512,325
-----------
1,408,504
-----------
Sweden: 1.8%
10,900 Autoliv AB 582,851
600 Hennes & Mauritz AB "B" 35,135
8,400 SSAB Svenskt Stal AB ("A" Free Shares) 97,570
-----------
715,556
-----------
Switzerland: 1.4%
130 Alusuisse-Lonza Holdings AG 82,218
110 BBC Brown Boveri Ltd. 114,067
300 Merkur Holding AG Reg'd. 84,298
415 Oerlikon-Buehrle Hldg. AG 36,283
18 Roche Holdings AG 116,190
195 Winterthur Schweiz. (Right) 1,408
195 Winterthur Schweiz. Vers 117,390
-----------
551,854
-----------
Taiwan: 0.1%
3,751 Tuntex Distinct (GDS) 34,697
-----------
Thailand: 0.2%
50,000 Bangkok Bank Public Company Ltd. (Foreign) 50,875
6,000 Krung Thai Bank Ltd. (Foreign) 24,306
-----------
75,181
-----------
United Kingdom: 7.7%
9,200 British Aerospace PLC 82,537
29,000 British Air Capital Conv. B 86,300
8,069 British Airport Authority 63,261
15,359 British Petroleum Co., PLC 110,258
15,900 BTR PLC 80,951
90,000 Cable and Wireless PLC 616,685
13,100 Cadbury Schweppes PLC 95,816
4,000 Carlton Communications PLC 60,744
11,300 Chubb Security PLC 56,541
15,300 Compass Group PLC 90,452
5,000 David S. Smith Holdings 51,629
10,400 Granada Group PLC 100,760
5,700 Greencore Group PLC 43,053
8,500 Guinness PLC 64,067
9,600 Legal & General Group 81,383
22,000 Morrison Wm. Supermarket 51,534
10,800 National Westminster Bank 93,966
12,000 Reuters Holdings PLC Class B AD 601,500
8,900 Powergen PLC 27,159
10,181 Siebe PLC 101,559
10,883 Smithkline Beecham-A 98,676
18,800 Takare PLC 57,519
4,096 Thorn EMI PLC 85,177
GBP55,000 United Kingdom Treasury Note 9.75% 8/27/2002 93,736
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C>
GBP55,000 United Kingdom Treasury Note 7.00% 11/6/2001 $ 81,891
GBP42,000 United Kingdom Treasury Note 8.50% 12/7/2005 67,105
-----------
3,044,259
-----------
United States: 35.8%
2,000 American Express Co. 6.25% "FDC" DECS (b) 97,000
4,200 American Express Company 147,525
12,000 American International Group, Inc. 1,368,000
8,000 Archer-Daniels Midland Co. 149,000
4,000 Bank of New York Co. Inc. 161,500
6,500 Bergen Brunswig Corporation 148,688
6,500 BJ Service Company 147,875
10,000 Bristol-Myers Squibb Company 681,250
2,900 CBS Inc. 194,300
3,500 Cabletron Systems, Inc. 186,375
2,500 Capital Cities ABC, Inc.* 270,000
5,000 Cisco Systems, Inc.* 252,813
4,800 Coastal Corp. 145,800
5,000 Davidson & Associates Inc. 198,750
8,000 Deere & Company 685,000
4,600 The Walt Disney Company* 255,875
1,500 Du Pont de Nemours (E.I.) 103,125
3,700 Eaton Corp.* 215,063
5,800 Enron Corp.* 203,725
6,100 Federated Department Stores, Inc. 157,075
10,000 Fort Howard Corp. 141,250
26,000 Ingersoll-Rand Company 994,500
3,000 General Electric Co. 169,125
5,000 General Instruments Corp.* 191,875
5,700 Health Management Associates, Inc. 166,725
12,000 Hewlett Packard Company (U.S.) 894,000
1,600 International Business Machines Corp. 153,600
$180,000 Liberty Property L.P Convertible Sub. Deb. 8.00%
07/01/2001 176,625
7,125 Mattel Inc.* 185,250
24,000 Merck & Co., Inc. 1,176,000
2,000 Mobil Corp. 192,000
500 Pakistan Telecom (GDR) 50,750
1,700 Pfizer Inc.* 157,038
2,000 Procter & Gamble Co. 143,750
$200,000 RTC Commercial MTG Pass thru
CRT 1994 Class A 2C 7.45% 6/25/26* 203,250
3,500 SunAmerica Inc. Series D Convertible 3/01/96 161,000
20,000 Sun Microsystems, Inc. 970,000
8,000 Tanger Factory Outlet Centers, Inc. 203,000
30,000 Templeton Emerging Markets Fund, Inc. 600,000
2,000 Texas Instruments Inc.* 267,750
2,800 Union Camp Corp. 162,050
$319,000 U.S. Treasury Bond 7.25% 5/15/2016* 338,888
$209,000 U.S. Treasury Bond 10.50% 11/15/2024* 231,631
$218,000 U.S. Treasury Bond 10.75% 8/15/2005* 289,293
$196,000 U.S.Treasury Note 7.50% 11/15/2001* 210,333
$7,000 U.S. Treasury Note 7 50% 2/15/2005* 7,625
-----------
14,206,047
-----------
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Total Stocks and Other Investments: 96.8%
(Cost: $ 26,608,889) $38,416,925
-----------
Principal Amt. Short-Term Obligations: 3.2%
$156,000 American Express Credit Corp C.P. due
07/03/95 interest yield of 5.93% 155,949
1,100,000 GE Capital Corporation C.P. due
07/03/95 interest yield of 5.88% 1,099,646
-----------
Total Short-Term Obligations 1,255,595
-----------
(Amortized Cost $1,255,595)
Options Purchased: 0.0%
- -----------------------
700,000 YEN Nikkei 225 Call Option (strike @19,830 expiring
09/08/ 95) 0
459,875 DEM DEM Put Option (strike DEM
@1.415 expiring 08/01/95) 2,328
-----------
(Cost $56,872) 2,328
-----------
Total Investments: 100% (Cost: 27,921,356) 39,674,848
-----------
Options Written: 0,0%
- ---------------------
422,500 DEM Call Option (strike DEM @1.30 08/01/95) (733)
487,500 DEM Put Option (strike [email protected] expiring 08/01/95) (141)
-----------
(Premiums Received $4,872) (874)
-----------
Total Investments Net of Options Written: 100%
(cost: $ 27,916,484) $39,673,974
===========
</TABLE>
(a) Unless otherwise indicated, securities owned are Shares of common stock.
(b) Matures October 15, 1996 with a value based upon the average closing price
of First Data Corp. common stock.
* These securities are segregated for forward currency contracts.
8
<PAGE>
PRO FORMA STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
GLOBAL WORLD PRO FORMA PRO FORMA
BALANCED FUND TRENDS FUND ADJUSTMENTS COMBINED
---------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments at value (cost $15,958,153, $11,963,203 and
$27,921,356, respectively) $17,311,359 $22,363,489 $39,674,848
Cash 1,181,394 99,491 1,280,885
Receivables: 0
Receivable for securities sold 56,528 37,173 93,701
Capital shares sold 117,440 2,254 119,694
Dividends and interest 215,582 316,005 531,587
Open forward currency contracts 50,637 0 50,637
Deferred organization costs 24,151 0 24,151
---------------- ----------- ----------- -----------
Total assets 18,957,091 22,818,412 41,775,503
---------------- ----------- ----------- -----------
LIABILITIES:
Payables:
Securities purchased 18,826 0 18,826
Open forward currency contracts 150,334 0 150,334
Capital shares redeemed 139,211 50,297 189,508
Distribution fee 10,111 4,726 $ 28,137 42,974
Options written (premiums received $4,872) 874 0 874
Accounts payable 136,700 151,712 (33,077) 255,335
---------------- ----------- ----------- -----------
Total liabilities 456,056 206,735 (4,940) 657,851
---------------- ----------- ----------- -----------
NET ASSETS $18,501,035 $22,611,677 $4,940 $41,117,652
================ =========== =========== ===========
CLASS A:
Net asset value and redemption price per share $ 9.93 $12.62 $ 9.93
($12,575,374/ 1,267,004, $22,611,677/ 1,792,378
and $35,191,991/ 3,544,609, respectively)
Maximum offering price per share $10.43 $13.25 $10.43
CLASS B:
Net asset value, offering price and redemption price $ 9.87 $ 9.87
per share ($5,925,661/ 600,531)
</TABLE>
9
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
GLOBAL WORLD PRO FORMA PRO FORMA
BALANCED FUND TRENDS FUND ADJUSTMENTS COMBINED
------------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME:
Dividends $ 138,550 $ 175,476 $ 314,026
Interest 205,138 41,839 246,977
------------- ----------- ----------
Total income 343,688 217,315 561,003
EXPENSES
Management 69,795 84,412 154,207
Distribution Class A 32,352 28,137 $ 28,137 88,626
Distribution class B 28,355 0 28,355
Transfer agent 17,482 42,205 (4,058) 55,629
Custodian 18,766 27,440 (2,500) 43,706
Professional 10,630 28,925 (12,500) 27,055
Administrative 23,265 26,935 1,202 51,402
Reports to shareholders 8,267 21,994 (1,400) 28,861
Amortization of deferred organization costs 3,415 0 3,415
Registration 6,192 13,821 (13,821) 6,192
Trustees 2,646 3,632 6,278
Other 8,779 14,174 22,953
------------- ----------- ----------- ----------
229,944 291,675 (4,940) 516,679
Net investment income 113,744 (74,360) 4,940 44,324
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions and options (537,382) 1,180,622 643,240
Realized gain (loss) from currency transactions 521,011 (606,807) (85,796)
Realized loss from futures contracts 0 (242,817) (242,817)
Change in unrealized appreciation of investments 1,675,043 155,369 1,830,412
Change in unrealized appreciation of futures contracts 0 28,350 28,350
Change in unrealized appreciation of options written (4,894) 0 (4,894)
Change in unrealized appreciation of forward currency
contracts and other assets and liabilities (59,162) 100,317 41,155
------------- ----------- ----------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,708,360 $ 540,674 $ 4,940 $2,253,974
============= =========== =========== ==========
</TABLE>
10
<PAGE>
Pro Forma Footnotes of Merger Between Global Balanced Fund and
World Trends Fund.
June 30, 1995 (unaudited)
1. General
The accompanying pro forma financial statements are presented to show the effect
of the proposed acquisition of World Trends Fund by Global Balanced Fund, as if
such acquisition had taken place as of January 1, 1995.
Under the terms of the Plan of Reorganization, the combination of Global
Balanced Fund and World Trends Fund will be taxed as a tax free business
combination and accordingly will be accounted for by a method of accounting for
tax free mergers of investment companies (sometimes referred to as the pooling
without restatement method). The acquisition would be accomplished by an
acquisition of the net assets of World Trends Fund in exchange for shares of
Global Balanced Fund at net asset value. The statement of assets and liabilities
and the related statement of operations of Global Balanced Fund and World Trends
Fund have been combined as of and for the period ended June 30, 1995.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements and schedules of investments of World Trends Fund
and Global Balanced Fund which are included in their respective semi-annual
reports dated June 30, 1995.
2. PRO FORMA ADJUSTMENTS
The accompanying pro forma financial statements reflects changes in fund shares
as if the merger had taken place on June, 30, 1995. Adjustments made to expenses
for duplicated services that would not have been incurred if the merger took
place on January 1, 1995.
11
<PAGE>
PRO FORMA INVESTMENT PORTFOLIO OF GLOBAL BALANCED FUND
AND WORLD TRENDS FUND AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
No. of Shares or
Principal
Amount Securities (a) Value
- ---------------- -------------- -------------
<S> <C> <C>
Argentina: 0.3%
3,160 CIA Interamericana de Automobile+ $ 27,649
6,000 Mirgor (ADR)+ 31,500
2,000 *YPF Sociedad Anonima (ADS) 42,750
------------
101,899
------------
Australia: 2.4%
6,053 Amcor Ltd. 43,735
8,000 Broken Hill Proprietary Co., Ltd. 121,435
A$355,000 Government of Australia 7.0% 04/15/00 241,528
9,000 National Australia Bank, Ltd. 72,145
15,817 News Corporation Ltd. Pfd. 54,566
525,300 Peptide Technology Limited+ 384,841
10,000 Western Mining Corp. Holdings Ltd. 58,438
------------
976,688
------------
Belgium: 0.1%
BEF 2,000,000 Kingdom of Belgium 8.0% 12/24/12 58,466
------------
Chile: 0.5%
2,200 Compania Cervecerias Unidas S.A.
(ADR) 55,275
560 Compania de Telefonos de Chile S.A.
(ADR) 44,100
2,800 *Cristalerias de Chile S.A. (ADR) 44,100
2,000 *Madeco S.A. (ADR) 53,000
------------
196,475
------------
Colombia: 0.1%
2,500 Cementos Paz Del Rio, S.A. (ADR)+ 50,313
------------
Denmark: 0.6%
DKK 1,711,000 Kingdom of Denmark 7.0% 12/15/04 243,736
------------
Finland: 0.3%
795 Nokia AB (Cum. Pfd. free shares) 117,129
------------
France: 5.7%
259 Carrefour S.A. 107,346
1,220 Cetelem S .A. 218,307
314 Colas S.A. 51,833
350 Compagnie De Fives-Lille 31,413
5,000 Compagnie de Saint-Gobain 575,230
8,000 Compagnie Generale des Eaux 777,965
1,370 Credit Local de France S.A. 98,059
FRF 1,140,000 France O.A.T. 5.5% 04/25/04 176,287
70 Legrand S.A. 84,992
800 SEB S.A. 81,694
720 Ugine S.A. 50,590
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C>
1,900 Valeo $ 94,662
------------
2,348,378
------------
Germany: 13.4%
500 Allianz AG Holding 803,485
709 Bayrische Motoren Werke Pfd. 253,035
100 Buderus AG 42,788
DEM 360,000 Bundesrepublik Deutschland 8.875% 12/20/00 246,296
DEM 182,000 Bundesrepublik Deutschland 6.75% 01/04/24 94,847
1,000 Deutsche Bank AG 464,666
DEM 75,000 Deutsche Bundespost 6.75% 4/01/04 44,811
112 Fresenius USA AG (Pfd.) 54,066
670 Fried Krupp AG Hoesch-Krupp 92,533
345 Kaufhof Holdings AG 106,651
1,800 Linde AG 1,051,307
405 Mannesman AG 110,300
360 Preussag AG 104,550
1,200 Rheinelektra AG 1,049,371
1,000 Siemens AG 416,875
DEM 730,000 Treuhandanstalt Obligation 6.375% 07/01/99 454,383
305 VEBA AG 106,292
------------
5,496,256
------------
Hong Kong: 0.9%
8,000 China Light & Power Co. Ltd. 34,117
15,000 CITIC Pacific Ltd. 36,153
70,000 First Pacific Co. Ltd. 51,111
6,136 HSBC Holdings PLC 66,213
15,000 Hutchison Whampoa Ltd. 60,675
9,000 Sun Hung Kai Properties Ltd. 53,735
8,000 Swire Pacific Ltd. "A" 49,832
------------
351,836
------------
India: 2.9%
4,000 *Arvind Mills Ltd. (GDR) (144A) 19,000
20,000 The India Magnum Fund N.V. Series B+ 1,150,000
------------
1,169,000
------------
Indonesia: 0.3%
37,500 Lippo Bank (Foreign) 58,007
1,500 P.T. Indonesia Satellite (ADR) 53,625
------------
111,632
------------
Ireland: 0.4%
8,500 Bank of Ireland 39,679
6,000 CRH PLC 33,104
13,000 Irish Life PLC 38,693
7,000 Jefferson Smurfit Group PLC 40,460
------------
151,936
------------
Italy: 1.1%
3,750 Instituto Mobiliare Italiano S.p.A. (ADR) 68,906
ITL 715,000,000 Republic of Italy 8.50% 01/01/99 395,749
------------
464,655
------------
Japan: 21.3%
7,000 Amway Japan Ltd. (ADR) 113,750
3,000 Canon Sales 90,827
7,800 Comson 100,872
20,000 Daido Steel Co., Ltd. 116,291
100,000 The Dai-Tokyo Fire & Marine Insurance Co., Ltd. 727,820
</TABLE>
13
<PAGE>
<TABLE>
<S> <C> <C>
50,000 Ebara Corporation $ 842,105
114,000 Hitachi, Ltd. 1,125,757
22,000 Hitachi Zosen Corp. 117,554
Yen 63,650,000 Japanese Government Bond #129 6.4% 03/20/00 703,755
6,000 Japan Securites Finance Co. Ltd. 99,248
5.000 Jusco Co., Ltd. 111,278
60,000 The Koa Fire & Marine Insurance Co., Ltd. 412,632
2,000 Kyocera Corp. 148,170
2,000 Mabuchi Motor 150,376
7,000 Matsushita Electric Industrial Co. Ltd. 115,088
17,000 Minebea, Co. 143,158
4,000 Mitsubishi Bank Ltd. 98,246
8,000 Mitsubishi Estate Co. Ltd. 85,815
9,000 Mitsubishi Trust & Banking Corp. 134,436
6,000 Mori Seiki Co., Ltd. 143,759
9,000 NEC Corp. 102,857
10,000 Nippon Express 100,251
35,000 Nippon Steel Co. 131,579
10 Nippon Telegraph & Telephone 88,321
51,000 The Nomura Securities Co., Ltd. 1,058,346
5,000 Sanwa Bank, Ltd. 99,248
7,000 Sharp Corp. 126,316
16,000 Sony Corporation (ADR) 898,000
7,000 Sumitomo Electric Industries 99,649
12,000 Taisei Corp. 74,346
26,000 Tokuyama Corporation 153,784
30,000 Tosoh Corp. 120,902
20,000 Yaskawa Electric Corp. 108,672
------------
8,743,208
------------
Korea: 0.4%
3,000 Goldstar Co., Ltd. (GDR)+ 46,500
1,500 Pohang Iron & Steel Co., Ltd. (ADR) 43,875
1,500 Samsung Electronics Co., Ltd. (GDR) (144A)+ 74,250
62 Samsung Electronics Co., LTD. (GDR)+ 3,069
------------
167,694
------------
Malaysia: 0.4%
6,000 Aokam Perdana Berhad 37,126
6,000 Edaran Otomobil Nasional Bhd. 45,584
5,000 Genting Berhad 42,882
8,000 Malayan Banking Berhad 48,248
------------
173,840
------------
Mexico: 1.0%
3,200 Grupo Elektra S.A. CPO+ 22,848
1,950 Grupo Industrial Durango ADR+ 27,544
50,000 Fotoluz Corporacion S.A "B"+ 28,000
3,000 Sigma Alimentos S.A. BCP+ 31,500
150,000 Telefonos de Mexico, S.A. de C.V. 306,000
------------
415,892
------------
Netherlands: 4.1%
980 Akzo Nobel 113,207
10,350 Elsevier 107,987
3,950 Koninklijke Boskalis Westminster N.V. 80,603
3,605 Koninklijke KNP 102,656
NLG 180,000 Netherlands Government 7.25% 10/01/04 99,992
</TABLE>
14
<PAGE>
<TABLE>
<S> <C> <C>
2,355 Polygram N.V. $ 109,551
10,000 Royal Dutch Petroleum Company 1,075,000
------------
1,688,996
------------
New Zealand: 0.4%
10,000 Carter Holt Harvey Ltd. 20,485
NZ$ 190,000 New Zealand 6.5% 02/15/00 110,572
20,370 Skellerup Group Limited 30,513
------------
161,570
------------
Philippines: 0.1%
40,000 Petron Corp. 34,988
60,500 S M Prime Holdings Inc.+ 19,691
------------
54,679
------------
Singapore: 2.7%
7,200 City Development Ltd. 40,247
3,000 Fraser & Neave Ltd. 31,070
6,000 Sembawang Shipyard Ltd. (Foreign) 44,856
100,000 Singapore Airlines Limited 919,067
5,000 United Overseas Bank Ltd. (Foreign) 52,812
------------
1,088,052
------------
South Africa: 0.4%
3,600 Pepkor Ltd. (ADR) (144A) 40,050
5,000 South African Breweries Ltd. 118,438
------------
158,488
------------
Spain: 1.7%
3,000 Banco Santander, S.A. 114,806
ESP 23,470,000 Kingdom of Spain 7.40% 07/30/99 152,546
16,200 Repsol, S.A. (ADR) 441,450
------------
708,802
------------
Sweden: 2.0%
11,170 Autoliv AB+ 450,139
9,900 Bylock & Nordsjofrakt ("B" Free Shares) 77,909
6,450 Sandvik AB (''A" Free Shares) 104,120
2,100 SSAB Svenskt Stal AB ("A" Free Shares) 91,812
6,065 Volvo AB ("B" Free Shares) 114,223
------------
838,203
------------
Switzerland: 1.2%
270 Alusuisse-Lonza Holdings AG 135,722
125 BBC Brown Boveri Ltd. 107,620
245 Danzas Holding AG Participant Cert. 43,048
27 Kuoni Reisebuuero AG P.C. 34,859
37 Rieter Holding Ltd. AG Reg'd Shares 50,879
180 Swiss Re Registered 108,495
------------
480,623
------------
Taiwan: 0.4%
3,499 Tuntex Distinct (GDS)+ 45,487
$100,000 Yang Ming Marine CV (144A) 2% 10/06/01 113,250
------------
158,737
------------
Thailand: 0.1%
5,000 Bangkok Bank Public Company Ltd. (Foreign) 53,376
------------
United Kingdom: 6.1%
9,200 British Airport Authority 68,168
8,000 British Petroleum Co., PLC 53,324
9,000 British Sky Broadcasting Group PLC+(b) 36,163
</TABLE>
15
<PAGE>
<TABLE>
<S> <C> <C>
14,000 BTR PLC $ 64,367
100,000 Cable and Wireless PLC 589,004
4,000 Carlton Communications PLC 56,175
8,500 Guinness PLC 59,919
9,000 Hanson PLC 32,532
5,500 Lloyds Bank PLC 47,602
16,000 Reuters Holdings PLC Class B (ADR) 702,000
10,102 Siebe PLC 88,223
14,000 Takare PLC 48,248
4,096 Thorn EMI PLC 66,410
Pds327,000 United Kingdom Treasury Note 8.5% 12/07/05 504,082
30,614 Vodafone Group PLC 101,668
------------
2,517,885
------------
United States: 28.3%
2,000 *American Express Co. 6.25% "FDC"
DECS(c) 85,250
12,000 American International Group, Inc. 1,176,000
4,000 *Bank of New York Co. Inc. 116,000
3,500 Cabletron Systems, Inc. 162,750
10,000 Bristol-Myers Squibb Company 578,750
3,000 *Capital Cities ABC, Inc. 255,750
2,900 CBS Inc. 160,588
5,000 *Chrysler Corporation 245,000
5,000 Cirrus Logic, Inc.+ 112,500
6,000 Cisco Systems, Inc. 210,750
3,500 *Coastal Corp. 90,125
1,700 *Cyrk International Inc.+ 70,338
8,000 Deere & Company 530,000
4,100 Dentsply International Inc. 129,150
4,700 *Eaton Corp 232,650
3,800 Enron Corp. 115,900
7,000 *Equitable Companies Inc. 126,875
8,000 *Federated Department Stores, Inc.+ 154,000
$200,000 Federal National Mortgage Association
Discount Note 03/24/95 197,351
2,000 *General Electric Co. 102,000
6,000 Hewlett-Packard Company 599,250
4,000 *Home Depot Inc. 184,000
26,000 Ingersoll-Rand Company 819,000
7,400 *Kennametal Inc. 181,300
180,000 Liberty Property L.P. Convertible Sub Deb. 8.00% 7/01/01 176,625
5,700 Mattel Inc. 143,213
9,000 *MCI Communications Corp . 165,375
21,000 Merck & Co., Inc. 800,625
1,500 Mobil Corp. 126,375
8,000 Novell, Inc. 137,000
300 Pakistan Telecom GDR + 40,650
2,000 *Procter & Gamble Co. 124,000
$200,000 RTC Commercial MTG Pass thru CRT
1994 Class A 2C 7.45% 06/25/26 185,250
5,200 *Sunbeam-Oster Co. Inc. 133,900
20,000 Sun Microsystems, Inc.+ 710,000
8,000 Tanger Factory Outlet Centers, Inc . 188,000
30,000 Templeton Emerging Markets Fund, Inc. 585,000
</TABLE>
16
<PAGE>
<TABLE>
<S> <C>
4,500 *United Healthcare Corp. $ 203,063
$218,000 *U.S. Treasury Bond 10.75% 8/15/05 262,043
$30,000 U.S. Treasury Bond 7.25% 05/15/16 27,727
$630,000 *U.S. Treasury Bond 7.5% 11/15/24 602,438
5,900 Walt Disney Co. 272,128
3,000 Wheeling-Pittsburgh Corp. 128,250
------------
11,646,939
------------
Total Stocks and Other Investments: 99.6%
(Cost: $30,972,248) 40,895,383
------------
Principal. Amt. Short-Term Obligations: 0.3%
U.S.$140,000 GE Capital Corporation C.P. due
01/03/95 interest Yield of 5.0% 139,962
------------
(Amortized Cost: $139,962)
Notional Value Options Purchased: 0.1%
700,000 YEN Nikkei 225 Call Option
(strike @ 19,830 expinng 09/08/95)+ 28,560
15,850,000 YEN Japanese Gov't Bond #144 Eurostyle
Call Option (strike 108.44 expiring 01/03/95)+ 906
44,000,000 YEN Japanese Gov't Bond #164 Eurostyle
Call Option (strike 96.447 expiring 02/01/95)+ 2,382
103,004,000 YEN Eurostyle Put Option
(strike JPY @ 98.5 expiring 5/18/95)+ 23,647
------------
(Cost: $55,510) 55,495
------------
Total Investments: 100% (Cost: $31,167,720) 41,090,840
------------
Notional Value Options Written:
103,004,000 JPY (strike @ 94.08 expiring 5/18/95)
(Premium Received $ 18,702) (9,810)
------------
Total Investments net of options written
(cost: $31,149,018) $ 41,081,030
============
</TABLE>
(a) Unless otherwise indicated, securities owned are shares of common stock.
(b) Securities paid for by the fund which will be received at a future date.
(c) Matures October 15, 1996 with a value based upon the average closing price
of First Data Corp. common stock.
*These secunties are segregated for forward currency contracts.
+Non-income producing security.
17
<PAGE>
PRO FORMA STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
GLOBAL WORLD PRO FORMA PRO FORMA
BALANCED FUND TRENDS FUND ADJUSTMENTS COMBINED
--------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments at value (cost $18,876,787 $12,290,973
and $31,167,720, respectively) $18,554,950 $22,535,890 $41,090,840
Cash 794,645 110,098 904,743
Initial margin 0 70,000 70,000
Receivables:
Receivable for securities sold 376,673 2,941,430 3,318,103
Capital shares sold 84,878 214,597 299,475
Dividends and interest 162,085 266,549 428,634
Receivable from Advisor 109,462 0 109,462
Open forward currency contracts 146,818 1,479 148,297
Deferred organization costs and other assets 27,908 12,320 40,228
------------ ----------- -----------
Total assets 20,257,419 26,152,363 46,409,782
------------ ----------- -----------
LIABILITIES:
Payables:
Securities purchased 198,578 0 198,578
Open forward currency contracts 235,531 108,357 343,888
Capital shares redeemed 7,636 93,881 101,517
Management fee 422 0 422
Distribution fee 3,930 0 $ 69,218 73,148
Dividends payable 95,740 4,509,751 4,605,491
Broker-variation margin 0 28,350 28,350
Options written (premiums received $18,702) 9,810 0 9,810
Accounts payable 91,768 64,151 (28,795) 127,124
------------ ---------- --------- -----------
Total liabilities 643,415 4,804,490 40,423 5,488,328
------------ ----------- --------- -----------
NET ASSETS $19,614,004 $21,347,873 ($40,423) $40,921,454
============ =========== ========= ===========
CLASS A:
Net asset value and redemption price per share $9.07 $12.29 $9.07
($13,986,078/ 1,542,805, $21,347,873/ 1,736,605
and $35,293,528/3,892,028, respectively)
Maximum offering price per share $9.52 $12.90 $9.52
CLASS B:
Net asset value, offering price and redemption price
per share ($5,627,926/ 623,619) $9.02 $9.02
</TABLE>
18
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
GLOBAL WORLD PRO FORMA PRO FORMA
BALANCED FUND TRENDS FUND ADJUSTMENTS COMBINED
---------------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME:
Dividends $ 157,533 $ 382,938 $ 540,471
Interest 358,597 36,202 394,799
---------- ----------- -----------
Total income 516,130 419,140 935,270
EXPENSES
Management 127,782 206,804 334,586
Distribution Class A 63,302 69,218 $ 69,218 201,738
Distribution Class B 43,723 0 43,723
Transfer agent 43,502 49,500 (8,114) 84,888
Custodian 46,696 32,183 (5,000) 73,879
Professional 26,452 33,925 (25,000) 35,377
Administrative 43,781 48,816 20,119 112,716
Reports to shareholders 20,570 25,796 (2,800) 43,566
Amortization of deferred organization costs 6,888 0 6,888
Registration 15,409 8,000 (8,000) 15,409
Trustees 6,584 4,260 10,844
Other 21,844 30,419 52,263
---------- ----------- ------------ -----------
466,533 508,921 40,423 1,015,877
Expenses assumed by advisor (251,034) 0 (251,034)
---------- ----------- ------------ -----------
Total expenses 215,499 508,921 40,423 764,843
---------- ----------- ------------ -----------
Net investment income(loss) 300,631 (89,781) (40,423) 170,427
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from security transactions and options (565,965) 4,628,650 4,062,685
Realized loss from currency transactions (58,569) (15,064) (73,633)
Realized loss from futures contracts 0 (4,624) (4,624)
Change in unrealized appreciation of investments (321,837) (3,668,228) (3,990,065)
Change in unrealized appreciation of futures contracts 0 (28,350) (28,350)
Change in unrealized appreciation of options written 8,892 0 8,892
Change in unrealized appreciation of forward currency
contracts and other assets and liabilities (88,500) (122,804) (211,304)
---------- ----------- ------------ -----------
NET INCREASE(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ($725,348) $ 699,799 ($40,423) ($65,972)
========== =========== ============ ===========
</TABLE>
19
<PAGE>
Pro Forma Footnotes of Merger Between Global Balanced Fund and
World Trends Fund.
December 31, 1994 (unaudited)
1. General
The accompanying pro forma financial statements are presented to show the effect
of the proposed acquisition of World Trends Fund by Global Balanced Fund, as if
such acquisition had taken place as of January 1, 1994.
Under the terms of the Plan of Reorganization, the combination of Global
Balanced Fund and World Trends Fund will be taxed as a tax-free business
combination and accordingly will be accounted for by a method of accounting for
tax free mergers of investment companies (sometimes referred to as the pooling
without restatement method). The acquisition would be accomplished by an
acquisition of the net assets of World Trends Fund in exchange for shares of
Global Balanced Fund at net asset value. The statement of assets and liabilities
and the related statement of operations of Global Balanced Fund and World Trends
Fund have been combined as of and for the year ended December 31, 1994.
The accompanying pro forma financial statements should be read in conjunction
with the financial statements and schedules of investments of World Trends Fund
and Global Balanced Fund which are included in their respective annual reports
dated December 31, 1994.
The following notes refer to the accompanying pro forma statements as if the
above mentioned acquisition of Global Balanced Fund and World Trends Fund had
taken place as of January 1, 1994.
2. Pro Forma Adjustments
The accompanying pro forma financial statements reflect changes in fund shares
as if the merger had taken place on December 31, 1994. Adjustments made to
expenses for duplicated services that would not have been incurred if the
merger took place on January 1, 1994.
20
<PAGE>
Van Eck World Trends Fund
--------------------------------------------------
1994 Annual Report
Dear Fellow Shareholder:
Most world stock markets performed below expectations in nineteen ninety-four
with the notable exception of certain European countries and Japan. A
weakening dollar versus most foreign currencies helped performance for U.S.
investors, and in some cases even turned losses into moderate gains. We are
pleased to report that the World Trends Fund achieved a total return of 2.3%
for the 12 months ended December 31, 1994 compared to the average of -2.9%
among all 94 global equity funds tracked by Micropal, Inc., a mutual fund
evaluation service.*
Higher than expected economic growth and fears of resurgent inflation prompted
the United States Federal Reserve Board to raise short-term interest rates
substantially during the year, from 3% in January to 5.5% by December 31.
Interest rates throughout much of Europe also reversed course, creeping
upward. These rate hikes, on the tail of unusually strong 1993 performance
that left many world markets overvalued, pushed many markets into decline
despite strong corporate earnings and economic growth throughout much of the
world. Certain markets and selective stocks, however, still provided moderate
value.
The relative success of your Fund in 1994 resulted from a portfolio emphasis
on both Japan and Germany, which accounted for approximately 20% and 15% of
total investments respectively, during the year. Strength in the yen
contributed to Japanese market gains of over 20% for the year in U.S. dollar
terms. The German stock market, following much of Europe, declined in local
currency terms, but the strength of the Deutschemark against the dollar left
U.S. investors with positive results for the year.
Over the course of the year, we hedged approximately 20% of our position in
the U.S. stock market, which accounted for about 30% of total investments,
since we were cautious given the Federal Reserve's actions. Although the
market was virtually flat, our emphasis in the U.S. has been on the
pharmaceutical sector, with companies such as Merck and Bristol-Myers Squibb,
and the technology sector, including Sun Microsystems and Hewlett Packard.
Some of these holdings were among the portfolio's top performers. Avoidance of
the volatile emerging markets, some of which witnessed declines of over 30%,
also proved beneficial.
- -------
* Includes global growth and global total return funds.
THE OUTLOOK
The U.S. economy has considerable momentum which should continue in 1995,
driven by improved exports, capital spending and continued consumer spending.
Thus, despite favorable news about inflation, we expect the Federal Reserve to
continue raising short-term interest rates until there is clearly evidence of
a cooling economy and lower expectations for inflation. Relative to the yen
and the Deutschemark, the dollar may decline further since the promise of
better U.S. finances implied by the Republican victory in November may be
unrealized.
Thus, we continue to emphasize Europe and Japan as beneficiaries of economic
recoveries while U.S. growth and profits remain under pressure from rising
rates. We have, however, hedged the European currencies against a near-term
rise of the dollar.
Since expectations for inflation in the United States for 1995 are already
anticipated in current interest rate levels, any temporary abatement of these
pressures should be positive for financial markets worldwide.
We appreciate your participation in the World Trends Fund and look forward to
helping you meet your investment objectives in the future.
/s/ David R. Kenerson, Jr. /s/ Derek S. van Eck
David R. Kenerson, Jr. Derek S. van Eck
Co-Portfolio Manager Co-Portfolio Manager
January 17, 1995
- -------------------------------------------------------------------------------
Performance Record 12/31/94
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual After Maximum Before
Total Return Sales Charge of 4.75% Sales Charge
- -------------- --------------------- ------------
<S> <C> <C>
Life (since (9/20/85) 8.7 % 9.2%
5 year 2.5 % 3.5%
1 year (2.6)% 2.3%
</TABLE>
- -------------------------------------------------------------------------------
The performance data represents past performance and is not indicative of
future results. Investment return and principal value of an investment in the
Fund will vary so that shares, when redeemed, may be worth more or less than
their original cost.
<PAGE>
World Trends Fund Investment Portfolio December 31, 1994
<TABLE>
<CAPTION>
NO. OF SHARES SECURITIES* VALUE (NOTE 1)
- ----------------------------------------------------------------------------------------------------
<C> <S> <C>
FINANCE/INSURANCE: 22.1%
500 Allianz AG Holding (Germany) $ 803,485
12,000 American International
Group, Inc. (U.S.) 1,176,000
3,000 Banco Santander, S.A.
(Spain) 114,806
800 Cetelem S.A. (France) 143,152
100,000 The Dai-Tokyo Fire & Marine
Insurance Co., Ltd. (Japan) 727,820
1,000 Deutsche Bank AG (Germany) 464,666
3,750 Instituto Mobiliare
Italiano S.p.A. (ADR)
(Italy) 68,906
60,000 The Koa Fire & Marine
Insurance Co., Ltd. (Japan) 412,632
51,000 The Nomura Securities Co.,
Ltd. (Japan) 1,058,346
-----------
4,969,813
-----------
CAPITAL GOODS/AUTOMOTIVE: 21.9%
10,000 Autoliv AB (Sweden)+ 384,734
709 Bayrische Motoren Werke
Pfd. (Germany) 253,035
8,000 Deere & Company (U.S.) 530,000
50,000 Ebara Corporation (Japan) 842,105
26,000 Ingersoll-Rand Company
(U.S.) 819,000
1,800 Linde AG (Germany) 1,051,307
1,200 Rheinelektra AG (Germany) 1,049,371
-----------
4,929,552
-----------
TECHNOLOGY/ELECTRONICS: 16.0%
6,000 Hewlett-Packard Company
(U.S.) 599,250
100,000 Hitachi, Ltd. (Japan) 987,506
1,000 Siemens AG (Germany) 416,875
16,000 Sony Corporation ADR (Japan) 898,000
20,000 Sun Microsystems, Inc.
(U.S.)+ 710,000
-----------
3,611,631
-----------
CONSUMER/BUSINESS SERVICES: 14.6%
100,000 Cable and Wireless PLC
(U.K.) 589,004
8,000 Compagnie Generale des Eaux
(France) 777,965
16,000 Reuters Holdings PLC Class
B ADR (U.K.) 702,000
100,000 Singapore Airlines Limited
(Singapore) 919,067
150,000 Telefonos de Mexico, S.A.
de C.V. (Mexico) 306,000
-----------
3,294,036
-----------
</TABLE>
- -------
*Unless otherwise indicated, securities owned are shares of common stock.
+Non-income producing security.
<TABLE>
<CAPTION>
NO. OF SHARES SECURITIES* VALUE (NOTE 1)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE: 7.8%
10,000 Bristol-Myers Squibb Company
(U.S.) $ 578,750
21,000 Merck & Co., Inc. (U.S.) 800,625
525,300 Peptide Technology Limited
(Australia)+ 384,841
----------
1,764,216
----------
INVESTMENT COMPANIES: 7.7%
20,000 The India Magnum Fund N.V.
Series B (India)+ 1,150,000
30,000 Templeton Emerging Markets
Fund, Inc. (U.S.) 585,000
----------
1,735,000
----------
NATURAL RESOURCES: 6.7%
16,200 Repsol, S.A. ADR (Spain) 441,450
10,000 Royal Dutch Petroleum
Company (Netherlands) 1,075,000
----------
1,516,450
----------
REAL ESTATE/CONSTRUCTION: 2.6%
5,000 Compagnie de Saint-Gobain
(France) 575,230
----------
TOTAL STOCKS: 99.4%
(Cost: $12,150,971) 22,395,928
----------
</TABLE>
<TABLE>
<CAPTION>
PRINC. AMT. SHORT-TERM OBLIGATIONS: 0.6%
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S.$140,000 GE Capital Corporation C.P.
due 01/03/95 interest Yield
of 5.0% (Amortized Cost:
$139,962) 139,962
-----------
TOTAL INVESTMENTS: 100%
(Cost: $12,290,973) $22,535,890
===========
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF INVESTMENTS BY COUNTRY % OF PORTFOLIO
- --------------------------------- --------------
<S> <C>
Australia 1.7%
France 6.6
Germany 17.9
India 5.1
Italy .3
Japan 21.9
Mexico 1.4
Netherlands 4.8
Singapore 4.1
Spain 2.5
Sweden 1.7
United Kingdom 5.7
United States (includes short-term obligations) 26.3
-----
100.0%
=====
</TABLE>
See Notes to Financial Statements.
<PAGE>
World Trends Fund Financial Statements
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments at value (cost, $12,290,973) (Note 1) $22,535,890
Cash 110,098
Initial margin (Note 5) 70,000
Receivables:
Securities sold 2,941,430
Dividends 266,549
Capital shares sold 214,597
Open forward currency contracts (Note 6) 1,479
Other 12,320
-----------
Total assets 26,152,363
-----------
LIABILITIES:
Payables:
Dividend payable 4,509,751
Open forward currency contracts (Note 6) 108,357
Capital shares repurchased 93,881
Broker-variation margin (Note 5) 28,350
Accounts payable 64,151
-----------
Total liabilities 4,804,490
-----------
NET ASSETS $21,347,873
===========
Shares of beneficial interest outstanding (unlimited
number of $.001 par value shares authorized) 1,736,605
===========
Net asset value and redemption price per share $12.29
======
Maximum offering price per share (NAV/(1-maximum sales
commission)) $12.90
======
Net assets consist of:
Aggregate paid in capital $11,434,173
Unrealized appreciation of investments, futures contracts
and forward currency contracts 10,109,689
Distributions in excess of net investment income (53,139)
Distributions in excess of realized gains (142,850)
-----------
$21,347,873
===========
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividends (less foreign taxes withheld
of $56,324) $ 382,938
Interest 36,202
----------
Total income 419,140
EXPENSES:
Management (Note 2) $ 206,804
Distribution (Note 4) 69,218
Transfer agent 49,500
Custodian 32,183
Professional 33,925
Administrative (Note 2) 48,816
Reports to shareholders 25,796
Registration 8,000
Trustees 4,260
Insurance 5,587
Other 24,832
------------
Total expenses 508,921
----------
Net investment loss (89,781)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3)
Realized gain from security transactions
(excluding short-term securities):
Proceeds from sales 11,146,693
Cost of securities sold 6,518,043
------------
Realized gain 4,628,650
Realized loss from foreign currency
transactions (15,064)
Realized loss from futures contracts (4,624)
Change in unrealized depreciation of
futures contracts (28,350)
Unrealized appreciation of investments:
Beginning of year 13,913,145
End of year 10,244,917
------------
Change in unrealized appreciation (3,668,228)
Change in unrealized depreciation of
forward currency contracts (122,804)
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 699,799
==========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994
and 1993
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS: 1994 1993
----------- -----------
<S> <C> <C>
Operations:
Net investment loss $ (89,781) $ (45,483)
Realized gain from security
transactions 4,628,650 1,516,108
Realized gain (loss) from foreign
currency transactions (15,064) 3,551
Realized loss from futures contracts (4,624) --
Change in unrealized appreciation of
investments (3,668,228) 4,296,775
Change in unrealized depreciation of
futures contracts (28,350) --
Change in unrealized depreciation of
forward currency contracts (122,804) 15,926
----------- -----------
Increase in net assets resulting from
operations 699,799 5,786,877
Undistributed net investment income
included in price of shares sold and
reacquired (Note 1) 49,859 (31,440)
Dividends to shareholders from:
Net realized gain (4,510,635) (1,209,481)
----------- -----------
(3,760,977) 4,545,956
----------- -----------
Capital share transactions*
(exclusive of amounts allocated
to net investment income):
Net proceeds from sales of shares 27,448,559 58,743,652
Reinvestment of dividends 1,011,717 1,894,004
----------- -----------
28,460,276 60,637,656
Cost of shares reacquired (31,726,962) (63,700,726)
----------- -----------
Decrease in net assets
resulting from capital share
transactions (3,266,686) (3,063,070)
Decrease in additional paid in
capital for reversal of amounts
previously allocated to undistributed
net investment income (Note 1) (49,859) --
----------- -----------
Total increase (decrease) in net assets (7,077,522) 1,482,886
NET ASSETS:
Beginning of year 28,425,395 26,942,509
----------- -----------
End of year (including distributions
in excess of net investment income of
($53,139) and ($220,775), respectively) $21,347,873 $28,425,395
=========== ===========
*SHARES OF BENEFICIAL INTEREST
ISSUED AND REDEEMED
Shares sold 1,843,879 4,420,137
Reinvestment of dividends 70,087 154,474
----------- -----------
1,913,966 4,574,611
Shares reacquired (2,128,778) (4,791,703)
----------- -----------
Net decrease (214,812) (217,092)
=========== ===========
</TABLE>
<PAGE>
World Trends Fund Financial Statements
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985+
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $14.57 $12.42 $14.76 $ 13.27 $ 14.83 $ 13.27 $ 13.15 $ 13.41 $ 9.70 $ 9.25
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Income
(Loss)................. (0.07) (0.02) 0.02 0.068 0.22 0.23 0.16 0.29 0.28 0.05
Net Gains or Losses on
Securities (both
realized and
unrealized)............ 0.40 2.79 (1.28) 1.592 (1.38) 1.53 0.64 0.79 3.63 0.40
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations.............. 0.33 2.77 (1.26) 1.66 (1.16) 1.76 0.80 1.08 3.91 0.45
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from Net
Investment Income...... -- -- (0.03) (0.078) (0.14) (0.20) (0.15) (0.41) (0.15) --
Distributions from
Capital Gains.......... (2.61) (0.62) (1.05) (0.092) (0.26) -- (0.53) (0.93) (0.05) --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions...... (2.61) (0.62) (1.08) (0.17) (0.40) (0.20) (0.68) (1.34) (0.20) --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period.................. $12.29 $14.57 $12.42 $14.76 $13.27 $14.83 $13.27 $13.15 $13.41 $9.70
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total Return (a)......... 2.27% 22.30% (8.54%) 12.52% (7.90%) 13.30% 6.10% 7.90% 40.54% 4.87%
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period
(000)................... $21,348 $28,425 $26,943 $47,878 $46,819 $61,536 $71,452 $85,581 $66,627 $12,348
Ratio of Expenses to
Average Net Assets...... 1.85% 1.86% 1.75% 1.67% 1.71% 1.56% 1.63% 1.55% 1.46% 1.39%*
Ratio of Net Income
(Loss) to Average Net
Assets.................. (0.32%) (0.16%) 0.12% 0.48% 1.54% 1.72% 1.17% 2.00% 2.37% 2.22%*
Portfolio Turnover Rate.. 12.31% 0.12% 0.10% 2.98% 16.62% 21.06% 81.26% 50.35% 31.60% --
</TABLE>
- -----------
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends and
distributions at net asset value during the year and a redemption on the
last day of the period. A sales charge is not reflected in the calculation
of total return. Total return for a period of less than one year is not
annualized.
* Annualized.
+ From August 15, 1985 (commencement of operations) to December 31, 1985.
See Notes to Financial Statements.
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Van Eck Funds (the "Trust"), organized as a Massachusetts business trust on
April 3, 1985, is registered under the Investment Company Act of 1940. The
following is a summary of significant accounting policies consistently
followed by the World Trends Fund series, a diversified fund (the "Fund") of
the Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
A. SECURITY VALUATION--Securities traded on national exchanges and traded in
the NASDAQ National Market System are valued at the last sales prices
reported at the close of business on the last business day of the period.
Over-the-counter securities not included in the NASDAQ National Market
System and listed securities for which no sale was reported are valued at
the mean of the bid and asked prices. Short-term obligations are valued at
cost which with accrued interest approximates value. Forward currency
contracts are valued at the spot currency rate plus an amount ("points")
which reflects the differences in interest rates between the U.S. and the
foreign markets. Securities for which quotations are not available are
stated at fair value as determined by the Board of Trustees.
B. FEDERAL INCOME TAXES--It is the 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. ACCOUNTING CHANGE--Prior to July 1, 1994, the Fund used equalization
accounting to keep a continuing shareholder's per share interest in
undistributed net investment income unaffected by shareholder activity.
This was accomplished by allocating a per share portion of the proceeds
from sales and the cost of redemptions of Fund shares to undistributed net
investment income. As of July 1, 1994, the Fund discontinued using
equalization. This change has no effect on the Fund's net assets, net asset
value per share, or its net decrease in net assets resulting from
operations. Discontinuing the use of book equalization will result in
simpler financial statements. The cumulative effect of the change was to
increase undistributed net investment income and decrease paid in capital
previously reported through June 30, 1994 by $49,859.
D. CURRENCY TRANSLATION--Assets and liabilities denominated in foreign
currencies and commitments under forward currency contracts are translated
into U.S. Dollars at the mean of the quoted bid and asked prices of such
currencies. Purchases and sales of investments are translated at the
exchange rates prevailing when such investments were acquired or sold.
Income and expenses are translated at the exchange rates prevailing when
accrued. Recognized gains or losses attributable to foreign currency
fluctuations on foreign denominated assets and liabilities are recorded as
net realized gains and losses from foreign currency transactions. The
portion of realized and unrealized gains and losses on investments that
result from fluctuations in foreign currency exchange rates are not
separately disclosed.
E. DIVIDENDS AND DISTRIBUTIONS--Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due
<PAGE>
World Trends Fund
- --------------------------------------------------------------------------------
to differing treatments for foreign currency transactions, net operating
losses, and passive foreign investment companies. The effect of these
differences for the year ended December 31, 1994 increased undistributed net
investment income by $225,977, decreased cumulative realized losses by
$147,536 and decreased aggregate paid in capital by $78,441.
F. OTHER--Security transactions are accounted for on the date the securities
are purchased or sold. Interest income is accrued as earned.
NOTE 2--Van Eck Associates Corporation earned fees of $206,804 for the year
ended December 31, 1994 for investment management and advisory services. The
fee was based on an annual rate of .75 of 1% of the first $500 million of
average daily net assets, .65 of 1% on the next $250 million and .50 of 1% of
the excess over $750 million. Van Eck Securities Corporation received $3,209
for the year ended December 31, 1994 from commissions earned on sales of shares
of beneficial interest of the Fund after deducting $9,625 allowed to other
dealers. In accordance with the advisory agreement, the Fund reimbursed Van Eck
Associates Corporation ($48,816) for costs incurred in connection with certain
administrative and operating functions. Certain of the officers and trustees of
the Trust are officers, directors or stockholders of Van Eck Associates
Corporation and Van Eck Securities Corporation.
NOTE 3--Purchases of investments other than short-term obligations aggregated
$3,249,929 for the year ended December 31, 1994. For federal income tax
purposes the cost of investments owned at December 31, 1994 was $12,603,796. As
of December 31, 1994 net unrealized appreciation for federal income tax
purposes aggregated $9,932,094 of which $10,307,005 related to appreciated
investments and $374,911 related to depreciated investments.
NOTE 4--Pursuant to a Plan of Distribution (Rule 12b-1) the Fund accrues fees
of .25 of 1% of the average daily net assets of the Fund. The fees are intended
to be used principally for payments to securities dealers who have sold shares
and service shareholder accounts of the Fund and the remainder will be used for
other actual promotion and distribution expenses incurred by Van Eck Securities
Corporation, the distributor. Fees accrued for the year ended December 31, 1994
were $69,218.
NOTE 5--The Fund was short 7 S&P 500 March 95 futures contracts with a total
contract value of $1,615,600 as of December 31, 1994 as a hedge against a
decline in value of the U.S. stocks held in the portfolio. The value of the
U.S. stocks held exceeds the contract value of the futures contracts. An
initial margin deposit of $70,000 was made. As of December 31, 1994, $28,350 of
variation margin is due to the broker. In the remote chance the counterparty of
the contract cannot fulfill its obligation, the Fund would lose its initial
margin deposit and any variation margin due it.
NOTE 6--At December 31, 1994 the Fund had outstanding forward currency
contracts to sell the following:
<TABLE>
<CAPTION>
VALUE AT
SETTLEMENT
DATE UNREALIZED
RECEIVABLE CURRENT APPRECIATION
CONTRACT (PAYABLE) VALUE (DEPRECIATION)
-------- ----------- ----------- --------------
<S> <C> <C> <C>
DM 12,600,000
expiring 1/19/95 $(8,135,369) $(8,027,012) $(108,357)
ESP 37,818,370
expiring 1/05/95 $ 285,680 $ 287,159 $ 1,479
</TABLE>
The Fund may incur additional risk from investments in forward currency
contracts if the counterparty is unable to fulfill its obligation or there are
unanticipated movements of the foreign currency relative to the U.S. dollar.
NOTE 7--The Fund declared a long-term capital gain distribution of $2.61 a
share payable on January 9, 1995 to shareholders of record on December 29,
1994, with a reinvestment date of December 30, 1994.
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of
Trustees of the Van Eck Funds:
We have audited the accompanying statement of assets and liabilities of the
World Trends Fund (the "Fund"), (one of the series constituting the Van Eck
Funds), including the investment portfolio, as of December 31, 1994, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the three years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The
financial highlights for each of the six years in the period ended December 31,
1991 and the period August 15, 1985 (commencement of operations) to December
31, 1985 were audited by other auditors, whose report dated January 24, 1992,
expressed an unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1994 by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. 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
World Trends Fund series of the Van Eck Funds as of December 31, 1994, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 17, 1995
<PAGE>
Van Eck Family of Funds
- ------------------------
Global Hard Assets Fund (A&C)
Seeks long-term capital appreciation by investing globally, primarily in "Hard
Asset Securities". Income is a secondary consideration.
International Investors Gold Fund (A&C)
Founded in 1955, this Fund is the oldest gold-oriented mutual fund in the U.S.
It invests in gold-mining shares globally and seeks long-term capital
appreciation, moderate yield and protection against monetary uncertainties.
Gold/Resources Fund (A&C)
Seeking a long-term global hedge against inflation and other risks, this Fund
invests in gold-mining and natural resources companies outside South Africa.
Gold Opportunity Fund (A&C)
Seeks capital appreciation by investing globally in equity securities of
companies engaged in the exploration, development, production and distribution
of gold and other precious metals, and through active asset allocation between
gold-related assets and cash instruments.
Asia Dynasty Fund-A
This Fund seeks long-term capital appreciation by investing in the equity
securities of companies that are expected to benefit from the development and
growth of the economies in the Asia Region. AIG Asset Management, Inc. serves
as sub-investment advisor to this Fund.
Asia Infrastructure Fund (A&C)
Seeks long-term capital appreciation by investing in the equity securities of
infrastructure companies that are expected to benefit from the development and
growth of the economies in the Asia Region. AIG Asset Management, Inc. serves
as sub-investment advisor to this Fund.
Global SmallCap Fund (A&C)
Seeks long-term capital appreciation by investing globally in equity securities
of companies with small market capitalizations. The Fund is sub-advised by
Pictet International Management, Ltd.
Global Balanced Fund-A
This Fund seeks long-term capital appreciation together with current income by
investing in stocks, bonds and money market instruments worldwide. Fiduciary
International, Inc. serves as sub-investment advisor to this Fund.
World Trends Fund
This Fund combines trend investing and risk-control strategies to seek
long-term capital appreciation in the global marketplace.
Global Income Fund-A
This Fund emphasizes the current income component of total return by investing
principally in debt securities of foreign or U.S. government entities.
U.S. Government Money Fund
This Fund seeks the highest safety of principal and daily liquidity by
investing in U.S. Treasury bills and repurchase agreements collateralized by
U.S. Government obligations.
- -------------------------------------------------------------------------------
This report must be accompanied or preceded by a Van Eck Global Funds
prospectus which includes more complete information such as charges and
expenses and the risks associated with international investing including
currency fluctuations or controls, expropriation, nationalization and
confiscatory taxation. For a free Van Eck Gold & Money Funds prospectus, please
call the number listed below. Please read the prospectus before investing.
[LOGO]
[Van Eck Global
The Unusual Funds]
Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016
For account assistance please call (800) 544-4653
B95-0131-003
D E C E M B E R 3 1 , 1 9 9 4
Van Eck
World
Trends
Fund
Annual
Report
[LOGO]
[Van Eck Global
The Unusual Funds]
<PAGE>
Van Eck Global Balanced Fund
----------------------
1994 Annual Report
Dear Fellow Shareholder:
Despite economic strength throughout much of the world during 1994, most stock
and bond markets were flat or down for the year as central banks began to
tighten monetary policy. The Japanese equity market was one notable exception,
achieving solid returns on the strength of economic recovery. A weakening U.S.
dollar helped moderate losses for U.S. investors in European markets, while
augmenting returns on Japan. Your Fund emphasized high quality, core markets,
which tended to be less severely affected by market volatility. The Global
Balanced Fund declined 3.9% for the year ended December 31.
Stronger than expected economic growth and fears of resurgent inflation
prompted the United States Federal Reserve Board to raise the federal funds
rate six times during the year, from 3% in January to 5.5% by December 31. The
resulting drop in liquidity was felt not only in the U.S., but in markets
around the world, which had achieved exceptional performance in 1993, in large
part due to an enormous influx of U.S. capital.
World Equity Markets
In the U.S. equity market, which accounts for approximately 32% of your Fund's
total investments, higher than expected corporate earnings and economic growth
did not translate into market performance as investors reacted to interest rate
hikes. The market remained flat for the year. As the U.S. economy moved into
the later stages of recovery, we emphasized basic growth sectors, particularly
consumer technology companies such as Novell and Cirrus Logic, as personal
computer sales continued to skyrocket.
Japan's economic recovery, after a deep and prolonged recession, led to
positive results for the year. Up 9% in yen terms, the U.S.-Japan trade
conflict pushed the yen to post-World War II highs against the dollar, and
returns in U.S. dollar terms surged to 21%. In the beginning of the year,
Japanese equity holdings (about 20% of the Portfolio) were weighted to sectors
that would benefit from low Japanese interest rates, such as Mitsubishi Bank
and Sanwa Bank. We later increased holdings of cyclical stocks, such as
chemicals, steel and machinery (Tokuyama, Nippon Steel and Mori Seiki) to take
advantage of the improving economy, and export-driven companies which performed
well despite a strong yen.
The European stock markets showed mixed results. Signs of economic recovery and
sizable increases in profits for certain companies were positive, although
decreased liquidity took a toll on the markets overall. Selective stock
holdings helped performance substantially. Some of your Fund's top performers
for the year included Nokia, a Finnish cellular phone manufacturer, Autoliv, a
Swedish automobile parts company, and LeGrand, a French consumer electrical
manufacturer. In Europe, as in Japan, we were heavily weighted to interest rate
sensitive stocks at the beginning of the year, but began shifting assets to
fundamental growth stocks as the European economies proved solid and interest
rates stabilized.
Secondary market positions, such as Latin America and emerging Asia, where
recent overheating and diminished foreign investment were keenly felt,
remained at very low levels (less than 5% of investments dedicated to each of
these regions).
World Bond Markets
Strong economic growth, rising interest rates and an unwinding of leverage
roiled world bond markets in 1994. Virtually every major bond market was down
for the year in local currencies, although dollar weakness again helped U.S.
investors recoup losses. In anticipation of further declines, we reduced bond
exposure from approximately 40% to 27% of net assets by year-end. Peripheral
market holdings were significantly reduced--the Swedish bond position was
liquidated and the Italian and Spanish bond positions were reduced to
approximately 2% and 0.8% of investments, respectively. Holdings in the core,
higher quality bond markets such as Germany, Japan and the Netherlands, where
price volatility was typically not as severe, were increased, as was the UK
gilt position during the second half.
<PAGE>
Currencies
The U.S. dollar declined further against most foreign currencies throughout
much of the year. In anticipation of continued weakness, we lowered the
portfolio's U.S. dollar exposure from over 60% to about 30% of the portfolio by
year-end by reducing foreign currency hedges.
The Outlook
As we begin 1995, we will continue to emphasize major world markets. Net
assets are currently about 68% in stocks, 26% in bonds and 6% in cash and
equivalents. Good earnings growth should have a positive effect on global
equity markets, while already discounted interest rate hikes and reasonable
valuations make certain bond markets attractive. The Japanese stock market,
which remains at half the level it was at its 1989 peak, is undervalued and
appears poised for healthy returns this year as the underlying economic
recovery picks up. At the time of this writing, the city of Kobe in central
Japan was hit by a large earthquake. It is presently impossible to estimate the
full cost of this to the Japanese economy, but it will probably adversely
affect the economy in the short-term, although boost it in 1995 overall.
The European economies should also continue to show strength as Germany comes
off its deepest recession since World War II. With earnings growth expectations
in the double digits, these markets are also attractive. Although the U.S. has
probably reached the apex of its growth cycle, corporate earnings overall were
strong for 1994 and should show solid gains this year. Given that this did not
result in good market returns last year, we believe U.S. equities are no longer
overvalued and that selective stocks offer good potential. We remain cautious
on the emerging markets, forecasting continued short-term volatility despite
long-term promise.
Our bond market emphasis is shifting in favor of New Zealand, Australia and the
U.S. New Zealand's fundamentals are particularly promising, with low inflation
and sound fiscal and monetary policies. Yields in Australia are relatively high
despite a strong central bank and low inflation. The U.S. bond market, coming
off one of the toughest years in recent history, also offers solid value as
near-term rate hikes appear to be already discounted in the marketplace. These
bonds should have the added benefit of modest U.S. dollar appreciation during
the year.
We appreciate your participation in the Global Balance Fund and look forward
to helping you meet your investment objectives in the future.
Photo of Anne M. Tatlock Photo of Brian Hopkinson Photo of Cheng-Hock Lau
Appears Here Appears Here Appears Here
\s\ \s\ \s\
Anne M. Tatlock Brian Hopkinson Cheng-Hock Lau
Global Strategist Sr. Global Equity Global Bond
Manager Manager
January 24, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
PERFORMANCE RECORD AS OF 12/31/94
- -------------------------------------------------------------------------
Average Annual After Maximum Before
Total Return Sales Charge+ Sales Charge
- -------------------------------------------------------------------------
<S> <C> <C>
A shares-Life (since 12/17/93) (8.2)% (3.8)%
- -------------------------------------------------------------------------
1 year (8.5)% (3.9)%
- -------------------------------------------------------------------------
B shares-Life (since 12/17/93) (8.3)% (4.7)%
- -------------------------------------------------------------------------
1 year (9.6)% (4.8)%
- -------------------------------------------------------------------------
</TABLE>
The performance data represents past performance and is not indicative of future
results. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
+A shares: maximum sales charge = 4.75%
B shares: maximum contingent deferred sales charge = 5.00%
<PAGE>
Representative Holdings*
------------------------------
December 31, 1994
ALUISSE-LONZA HOLDINGS AG
(SWITZERLAND, 0.7%)
Aluisse's three principal businesses are aluminum, packaging and fine chemicals.
Having relied heavily on the aluminum division in the past, the company's
strategic goal is to increase the contribution of the less cyclical areas of
packaging and fine chemicals. Within the packaging division, last year's
acquisition of the Canadian company Lawson Mardon Group (LMG) has given
Alusuisse the critical mass it requires to service in a more competitive
environment. In addition, cost cutting opportunities should arise from the new
synergies. The fine chemicals and aluminum divisions should see a boost to both
the top line and margins as restructuring and a shift toward higher value-added
products take effect over the next several years.
NOKIA AB
(FINLAND, 0.6%)
Formerly a conglomerate engaging in a wide range of activities, Nokia has found
a niche for itself in the field of telecommunications, specifically in the
mobile phone handset market. The devaluation of the Finnish markka several years
ago has given the company a competitive edge and has helped propel Nokia into a
leading position in mobile phone technology. Consumer electronics accounts for
some 29% of sales and, given the economic downturn in Europe, has been in the
red for the past few years. However, major restructuring combined with economic
recovery is expected to return this line of business to profit in 1995. The
company continues to enjoy strong volume growth in its market and, despite
excellent performance over the past several years, offers good value at current
price levels.
BROKER HILL PROPRIETARY CO., LTD. (BHP)
(AUSTRALIA, 0.7%)
As Australia's largest company, BHP is a diversified global resources group with
interests in steel, energy and minerals. Steel operations rank 16th in the world
in terms of production. BHP ranks among the top ten oil companies in the world.
In its energy division, BHP's activities include petroleum exploration,
production, refiing and marketing. The company continues to benefit from
improved operating efficiencies and increased capacity utilizations in all three
of its operating divisions.
CARLTON COMMUNICATIONS PLC
(U.K., 0.3%)
Carlton is a media company with principal operations in film and video
production and duplication, broadcast television stations in England, and video
and sound products. The company is the largest global source of video
duplication and film processing, having long-term contracts with Disney and
Warner Brothers. These operations, along with the U.K. television stations which
are currently benefiting from economic recovery, are extremely cash generative.
Carlton's earnings should grow at 15% to 20% through 1996, and the company will
likely use the positive cash flow to increase its investment in the next
generation of video duplication (CD video), while continuing to make
acquisitions in related businesses.
CAPITAL CITIES ABC, INC.
(U.S., 1.4%)
Capital Cities ABC, Inc. (CCB) is a major media company with interests in
broadcasting (television and radio stations) and publishing. CCB's long-term
growth rate should continue to be supported by its outstanding cable
programming, strong advertising revenues and strong ratings momentum, which has
held steady against encroachments from other networks in a very competitive
environment. The company has the wherewithal to acquire large station groups,
and it has the leanest operating structure of any broadcast company. The network
and station businesses are incredibly buoyant, and the video and international
businesses are growing at exceptional rates.
THE WALT DISNEY COMPANY
(U.S., 1.5%)
The Walt Disney Company ia a diversified international entertainment company
with operations in three business segments: filmed entertainments, theme parks
and resorts, and consumer products. Disney has tremendous value in each of its
franchises and the possibility of returns of 15% to 20%. Disney has one of the
most valuable libraries of films and TV programming. The company has an enormous
number of talented executives, and concerns as to the depth of management have
been allayed. The stock has come back from its 52-week low with strong filmed
entertainment and consumer sales growth. Theme park attendance has been
improving in the U.S. as well as in Europe and Japan.
*Portfolio is subject to change.
<PAGE>
TOKUYAMA CORPORATION
(JAPAN, 0.8%)
Tokuyama is one of Japan's mid-sized chemical companies which specializes in the
production of caustic soda and chlorine and has subsequently diversified
upstream into such products as plastics and cement. The 1992-1993 recession in
Japan was hard on Japanese material suppliers since the period of high growth
which ended in 1991 encouraged such companies to increase capacity. Although
Tokuyama did this, the company was early in realizing that is should cut its
under-utilized plants. This has left them with a very efficient manufacturing
base just as the economy is improving, and the return to high margins should be
swift.
MABUCHI MOTOR
(JAPAN, 0.8%)
Mabuchi Motor is the world's largest manufacturer of electric motors, which are
used in a diversity of products from remote control toys to electric windows in
motor cars to CD and video players. As consumer goods become more sophisticated,
there is a demand for a greater degree of automation, and each of these
automated parts uses a multiple of motors. Demand is rising fast and the
economic recovery in both Japan and Europe, along with the strong U.S. economy,
should ensure good growth in both sales and profits.
VODAFONE GROUP PLC
(U.K., 0.5%)
Vodafone is the largest U.K. cellular operator, with its U.K. network
representing the most profitable contiguous mobile telephone service in the
world. The company has used the strong cash flow generation of its domestic
operations to finance expansion into ten additional overseas markets. As growth
in the U.K. market slows down near the turn of the century, the international
operations should generate significant profits, allowing for a continuation of
strong earnings growth.
SAMSUNG ELECTRONICS CO. LTD.
(REPUBLIC OF KOREA, 0.4%)
Samsung Electronics is one of South Korea's leading blue chip electronics
companies. Currently, it is the world's largest producer of semiconductor memory
chips and has benefited from the continued strong demand for personal computers
worldwide. Samsung also produces consumer electronics such as VCRs and personal
computers. The company exports globally with the U.S. as its largest export
market. We continue to like Samsung due to the strong demand in the PC market
and memory capacity upgrades by users.
Note: Equities listed as percentage of investments held.
Geographical Distribution
-------------------------
December 31, 1994
Percent of Total Investments Held
[PIE CHART APPEARS HERE]
[CAPTION TO PIE CHART]
Other*3.4% United States 31.5%
Continental Europe 26.2% Pacific (ex-Japan) 10.9%
U.K. and Ireland 7.4% Japan 20.6%
*includes other markets and .2% held in options
<PAGE>
GLOBAL BALANCED FUND INVESTMENT PORTFOLIO DECEMBER 31, 1994
- ------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Shares
or Principal
Amount Securities (a) Value (Note 1)
- ----------------------------------------------------------------------
<S> <C> <C>
Argentina: 0.6%
3,160 CIA Interamericana de Automobile+ $ 27,649
6,000 Mirgor (ADR)+ 31,500
2,000 *YPF Sociedad Anonima (ADS) 42,750
---------
101,899
---------
Australia: 3.2%
6,053 Amcor Ltd. 43,735
8,000 Broken Hill Proprietary Co., Ltd. 121,435
A$ 355,000 Government of Australia 7.0% 04/15/00 241,528
9,000 National Australia Bank, Ltd. 72,145
15,817 News Corporation Ltd. Pfd. 54,566
10,000 Western Mining Corp. Holdings Ltd. 58,438
---------
591,847
---------
Belgium: 0.3%
BEF 2,000,000 Kingdom of Belgium 8.0% 12/24/12 58,466
---------
Chile: 1.1%
2,200 Compania Cervecerias Unidas S.A. (ADR) 55,275
560 Compania de Telefonos de Chile S.A. (ADR) 44,100
2,800 *Cristalerias de Chile S.A. (ADR) 44,100
2,000
*Madeco S.A. (ADR) 53,000
---------
196,475
---------
Colombia: 0.3%
2,500 Cementos Paz Del Rio, S.A. (ADR)+ 50,313
---------
Denmark: 1.3%
DKK 1,711,000 Kingdom of Denmark 7.0% 12/15/04 243,736
---------
Finland: 0.6%
795 Nokia AB (Cum. Pfd. free shares) 117,129
---------
France: 4.6%
259 Carrefour S.A. 107,346
420 Cetelem S.A. 75,155
314 Colas S.A. 51,833
350 Compagnie De Fives-Lille 31,413
1,370 Credit Local de France S.A. 98,059
FRF 1,140,000 France O.A.T. 5.5% 04/25/04 176,287
70 Legrand S.A. 84,992
800 SEB S.A. 81,694
720 Ugine S.A. 50,590
1,900 Valeo 94,662
---------
852,031
---------
Germany: 7.9%
100 Buderus AG 42,788
DEM 360,000 Bundesrepublik Deutschland 8.875%
12/20/00 $ 246,296
DEM 182,000 Bundesrepublik Deutschland 6.25%
01/04/24 94,847
DEM 75,000 Deutsche Bundespost 6.75% 04/01/04 44,811
112 Fresenius USA AG (Pfd.) 54,066
670 Fried Krupp AG Hoesch-Krupp 92,533
345 Kaufhof Holdings AG 106,651
405 Mannesman AG 110,300
360 Preussag AG 104,550
DEM 730,000 Treuhandanstalt Obligation 6.375%
07/01/99 454,383
305 VEBA AG 106,292
---------
1,457,517
---------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Hong Kong: 1.9%
8,000 China Light & Power Co. Ltd. 34,117
15,000 CITIC Pacific Ltd. 36,153
70,000 First Pacific Co. Ltd. 51,111
6,136 HSBC Holdings PLC 66,213
15,000 Hutchison Whampoa Ltd. 60,675
9,000 Sun Hung Kai Properties Ltd. 53,735
8,000 Swire Pacific Ltd. "A" 49,832
---------
351,836
---------
India: 0.1%
4,000 *Arvind Mills Ltd. (GDR) (144A) 19,000
---------
Indonesia: 0.6%
37,500 Lippo Bank (Foreign) 58,007
1,500 P.T. Indonesia Satellite (ADR) 53,625
---------
111,632
---------
Ireland: 0.8%
8,500 Bank of Ireland 39,679
6,000 CRH PLC 33,104
13,000 Irish Life PLC 38,693
7,000 Jefferson Smurfit Group PLC 40,460
---------
151,936
---------
Italy: 2.1%
ITL 715,000,000 Republic of Italy 8.50% 01/01/99 395,749
---------
Japan: 20.6%
7,000 Amway Japan Ltd. (ADR) 113,750
3,000 Canon Sales 90,827
7,800 Comson 100,872
20,000 Daido Steel Co., Ltd. 116,291
14,000 Hitachi, Ltd. 138,251
22,000 Hitachi Zosen Corp. 117,554
</TABLE>
See Notes to Financial Statements.
<PAGE>
GLOBAL BALANCED FUND INVESTMENT PORTFOLIOS DECEMBER 31, 1994
- ------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Shares
or Principal
Amount Securities (a) Value (Note 1)
- ----------------------------------------------------------------------
<S> <C> <C>
Japan: (cont'd)
Yen 63,650,000 Japanese Government Bond #129 6.4%
03/20/00 $703,755
6,000 Japan Securities Finance Co. Ltd. 99,248
5,000 Jusco Co., Ltd. 111,278
2,000 Kyocera Corp. 148,170
2,000 Mabuchi Motor 150,376
7,000 Matsushita Electric Industrial Co.
Ltd. 115,088
17,000 Minebea, Co. 143,158
4,000 Mitsubishi Bank Ltd. 98,246
8,000 Mitsubishi Estate Co. Ltd. 85,815
9,000 Mitsubishi Trust & Banking Corp. 134,436
6,000 Mori Seiki Co., Ltd. 143,759
9,000 NEC Corp. 102,857
10,000 Nippon Express 100,251
35,000 Nippon Steel Co. 131,579
10 Nippon Telegraph & Telephone 88,321
5,000 Sanwa Bank, Ltd. 99,248
7,000 Sharp Corp. 126,316
7,000 Sumitomo Electric Industries 99,649
12,000 Taisei Corp. 74,346
26,000 Tokuyama Corporation 153,784
30,000 Tosoh Corp. 120,902
20,000 Yaskawa Electric Corp. 108,672
---------
3,816,799
---------
Korea: 0.9%
3,000 Goldstar Co., Ltd. (GDR)+ 46,500
1,500 Pohang Iron & Steel Co., Ltd.
(ADR) 43,875
1,500 Samsung Electronics Co., Ltd.
(GDR) (144A)+ 74,250
62 Samsung Electronics Co., LTD.
(GDS)+ 3,069
---------
167,694
---------
Malaysia: 0.9%
6,000 Aokam Perdana Berhad 37,126
6,000 Edaran Otomobil Nasional Bhd. 45,584
5,000 Genting Berhad 42,882
8,000 Malayan Banking Berhad 48,248
---------
173,840
---------
Mexico: 0.6%
1,950 Grupo Industrial Durango ADR+ 27,544
3,200 Grupo Elektra S.A. CPO+ 22,848
50,000 Fotoluz Corporacion S.A "B"+ 28,000
3,000 Sigma Alimentos S.A. BCP+ 31,500
---------
109,892
---------
Netherlands: 3.3%
980 Akzo Nobel $ 113,207
10,350 Elsevier 107,987
3,950 Koninklijke Boskalis Westminster
N.V. 80,603
3,605 Koninklijke KNP 102,656
NLG 180,000 Netherlands Government 7.25%
10/01/04 99,992
2,355 Polygram N.V. 109,551
---------
613,996
---------
New Zealand: 0.9%
10,000 Carter Holt Harvey Ltd. 20,485
20,370 Skellerup Group Limited 30,513
NZ$ 190,000 New Zealand 6.5% 02/15/00 110,572
---------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
161,570
---------
Philippines: 0.3%
40,000 Petron Corp. 34,988
60,500 S M Prime Holdings Inc.+ 19,691
---------
54,679
---------
Singapore: 0.9%
7,200 City Development Ltd. 40,247
3,000 Fraser & Neave Ltd. 31,070
6,000 Sembawang Shipyard Ltd. (Foreign) 44,856
5,000 United Overseas Bank Ltd. (Foreign) 52,812
---------
168,985
---------
South Africa: 0.9%
3,600 Pepkor Ltd. (ADR) (144A) 6 40,050
5,000 South African Breweries Ltd. 118,438
---------
158,488
---------
Spain: 0.8%
ESP 23,470,000 Kingdom of Spain 7.40% 07/30/99 152,546
---------
Sweden: 2.4%
1,700 Autoliv AB+ 65,405
9,900 Bylock & Nordsjofrakt ("B" Free
Shares) 77,909
6,450 Sandvik AB ("A" Free Shares) 104,120
2,100 SSAB Svenskt Stal AB ("A" Free
Shares) 91,812
6,065 Volvo AB ("B" Free Shares) 114,223
---------
453,469
---------
Switzerland: 2.6%
270 Alusuisse-Lonza Holdings AG 135,722
125 BBC Brown Boveri Ltd. 107,620
245 Danzas Holding AG Participant
Cert. 43,048
27 Kuoni Reisebuuero AG P.C. 34,859
180 Swiss Re Registered 108,495
37 Rieter Holding Ltd. AG Reg'd
Shares 50,879
---------
480,623
---------
</TABLE>
See Notes to Financial Statements.
<PAGE>
GLOBAL BALANCED FUND INVESTMENT PORTFOLIO DECEMBER 31, 1994
- -----------------------------------------------------------
<TABLE>
<CAPTION>
No. of Shares
or Principal
Amount Securities (a) Value (Note 1)
- ----------------------------------------------------------------------
<S> <C> <C>
Taiwan: 0.8%
3,499 Tuntex Distinct GDS+ $ 45,487
$100,000 Yang Ming Marine CV (144A) 2%
10/06/01 113,250
------------
158,737
------------
Thailand: 0.3%
5,000 Bangkok Bank Public Company Ltd.
(Foreign) 53,376
------------
United Kingdom: 6.6%
9,200 British Airport Authority 68,168
8,000 British Petroleum Co., PLC 53,324
9,000 British Sky Broadcasting Group
PLC+(b) 36,163
14,000 BTR PLC 64,367
4,000 Carlton Communications PLC 56,175
8,500 Guinness PLC 59,919
9,000 Hanson PLC 32,532
5,500 Lloyds Bank PLC 47,602
10,102 Siebe PLC 88,223
14,000 Takare PLC 48,248
4,096 Thorn EMI PLC 66,410
(pound) 327,000 United Kingdom Treasury Note 8.5%
12/07/05 504,082
30,614 Vodafone Group PLC 101,668
------------
1,226,881
------------
United States: 31.5%
2,000 *American Express Co. 6.25% "FDC"
DECS(c) 85,250
4,000 *Bank of New York Co. Inc. 116,000
3,500 Cabletron Systems, Inc. 162,750
3,000 *Capital Cities ABC, Inc. 255,750
2,900 CBS Inc. 160,588
5,000 *Chrysler Corporation 245,000
5,000 Cirrus Logic, Inc.+ 112,500
6,000 Cisco Systems, Inc. 210,750
3,500 *Coastal Corp. 90,125
1,700 *Cyrk International Inc.+ 70,338
4,100 Dentsply International Inc. 129,150
4,700 *Eaton Corp 232,650
3,800 Enron Corp. 115,900
7,000 *Equitable Companies Inc. 126,875
8,000 *Federated Department Stores, Inc.+ 154,000
$200,000 Federal National Mortgage Association
Discount Note 03/24/95 197,351
2,000 *General Electric Co. 102,000
4,000 *Home Depot Inc. 184,000
7,400 *Kennametal Inc. 181,300
$180,000 Liberty Property L.P. Convertible Sub.
Deb. 8.00% 07/01/01 176,625
United States: (cont'd)
5,700 Mattel Inc. $143,213
9,000 *MCI Communications Corp. 165,375
1,500 Mobil Corp. 126,375
8,000 Novell, Inc. 137,000
300 Pakistan Telecom GDR+ 40,650
2,000 *Procter & Gamble Co. 124,000
$200,000 RTC Commercial MTG Pass thru CRT
1994 Class A 2C 7.45% 06/25/26 185,250
5,200 *Sunbeam-Oster Co. Inc. 133,900
8,000 Tanger Factory Outlet Centers, Inc. 188,000
4,500 *United Healthcare Corp. 203,063
$218,000 *U.S. Treasury Bond 10.75% 8/15/05 262,043
$30,000 U.S. Treasury Bond 7.25%, 05/15/16 27,727
$630,000 *U.S. Treasury Bond 7.5%, 11/15/24 602,438
5,900 Walt Disney Co. 272,128
3,000 Wheeling-Pittsburgh Corp. 128,250
-------------
5,848,314
-------------
Total Stocks and Other Investments: 99.7%
(Cost: $18,821,277) 18,499,455
-------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Notional Value Options Purchased: 0.3%
- -----------------------------------------------------------------------
<S> <C> <C>
Yen 700,000 Nikkei 225 Call Option
(strike @ 19,830 expiring 09/08/95)+ 28,560
Yen 15,850,000 Japanese Gov't Bond #144 Eurostyle
Call Option (strike 108.44 expiring
01/03/95)+ 906
Yen 44,000,000 Japanese Gov't Bond #164 Eurostyle
Call Option (strike 96.447 expiring
02/01/95)+ 2,382
Yen 103,004,000 Eurostyle Put Option
(strike JPY @ 98.5 expiring
5/18/95)+ 23,647
-----------
(Cost: $55,510) 55,495
-----------
Total Investments: 100% (Cost: 18,876,787) 18,554,950
-----------
</TABLE>
<TABLE>
<CAPTION>
Notional Value Options Written:
- --------------------------------------------------
<S> <C> <C>
Yen 103,004,000 JPY (strike 94.08 expiring
5/18/95)
(Premium Received $18,702) (9,810)
-----------
Total Investments net of options written (cost:
$18,858,085) $18,545,140
===========
</TABLE>
(a) Unless otherwise indicated, securities owned are Shares of common stock.
(b) Securities paid for by the fund which will be received at a future date.
(c) Matures October 15, 1996 with a value based upon the average closing price
of First Data Corp. common stock.
+ Non-income producing.
* These securities are segregated for forward currency contracts.
See Notes to Financial Statements.
<PAGE>
Global Balanced Fund Financial Statements
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
December 31, 1994
<S> <C>
Assets:
Investments at value (cost, $18,876,787) (Note 1) $18,554,950
Cash 794,645
Receivables:
Securities sold 376,673
Interest and dividends 162,085
Capital shares sold 84,878
Open forward foreign currency contracts (Note 5) 146,818
Receivable from Advisor 109,462
Other 27,908
-----------
Total assets 20,257,419
-----------
Liabilities:
Payables:
Management fee payable 422
Capital shares repurchased 7,636
Securities purchased 198,578
Open forward currency contracts (Note 5) 235,531
Dividends payable 95,740
Distribution fees payable 3,930
Options written (premiums received $18,702) 9,810
Accounts payable 91,768
-----------
Total liabilities 643,415
-----------
Net assets $19,614,004
===========
Class A
Net asset value and redemption price per share
($13,986,078/1,542,805) $ 9.07
===========
Maximum offering price per share
(NAV/(1-maximum sales commission) $ 9.52
-==========
Class B
Net asset value, offering price and redemption
price per share ($5,627,926/623,619)
(Redemption may be subject to a contingent
deferred sales charge
within the first six years of ownership) $ 9.02
===========
Net assets consist of:
Aggregate paid in capital $20,514,993
Unrealized depreciation of investments (401,445)
Undistributed net investment income (28,004)
Cumulative realized losses (471,540)
------------
$19,614,004
============
</TABLE>
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of Operations
For the Year Ended December 31, 1994
<S> <C> <C>
Income
Interest $358,597
Dividends (less foreign taxes withheld
of $16,537) 157,533
--------
516,130
Expenses:
Management (Note 2) $ 127,782
Distribution Class A (Note 4) 63,302
Distribution Class B (Note 4) 43,723
Transfer agent 43,502
Custodian 46,696
Professional 26,452
Administrative (Note 2) 43,781
Reports to shareholders 20,570
Amortization of deferred organization
costs 6,888
Registration 15,409
Trustees 6,584
Other 21,844
---------
466,533
Expenses assumed by the Advisor (Note 2) (251,034)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
---------
Total expenses 215,499
--------
Net investment income 300,631
Statement of Operations--(cont'd)
Realized and Unrealized Gain (Loss) on
Investments (Note 3)
Realized loss from security
transactions (excluding short-term
securities):
Proceeds from sales $27,268,679
Cost of securities sold 27,834,644
-----------
Realized loss $(565,965)
Realized loss from foreign currency
transactions (58,569)
Change in unrealized depreciation of
investments (321,837)
Change in unrealized appreciation of
options written 8,892
Change in unrealized depreciation of
forward currency contracts and
other assets and liabilities (88,500)
-------
Net Decrease in Net Assets Resulting
from Operations $(725,348)
=======
</TABLE>
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
For the Period
Year December 20,
Ended 1993+ to
December 31, December 31,
1994 1993
------------ --------------
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income (loss) $300,631 $ (12)
Realized loss from security
transactions (565,965) --
Realized loss from foreign
currency transactions (58,569) --
Change in unrealized depreciation
of investments and options
written (312,945) --
Change in unrealized depreciation
of forward currency contracts
and other assets and liabilities (88,500) --
-------- ---------
Decrease in net assets resulting
from operations (725,348) (12)
-------- ---------
Dividends to shareholders from net
investment income:
Class A Shares (144,891) --
Class B Shares (30,750) --
-------- ---------
(175,641) --
-------- ---------
(900,989) --
-------- ---------
Capital share transactions (Note 6):
Net proceeds from sales of shares:
Class A Shares 20,677,424 561,579
Class B Shares 7,497,962 130,515
-------- ---------
28,175,386 692,094
-------- ---------
Reinvestment of dividends:
Class A Shares 52,830 --
Class B Shares 10,017 --
-------- ---------
62,847 --
-------- ---------
Cost of shares reacquired:
Class A Shares (6,679,916) --
Class B Shares (1,735,396) (10)
-------- ---------
(8,415,312) (10)
-------- ---------
Increase in net assets resulting from
capital share transactions 19,822,921 692,084
-------- --------
Total increase in net assets 18,921,932 692,072
Net Assets:
Beginning of period 692,072 --
-------- --------
End of period (including
undistributed net investment income
of $28,004 and $0, respectively) $19,614,004 $692,072
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
======== ========
</TABLE>
- -------------------------
+Commencement of operations.
See Notes to Financial Statements.
<PAGE>
Global Balanced Fund
----------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each period
<TABLE>
<CAPTION>
Class A Class B
------------------------------------ --------------------------------------
For the Period For the Period
Year December 20, 1993 (a) Year December 20, 1993 (a)
Ended to Ended to
December 31, 1994 December 31, 1993 December 31, 1994 December 31, 1993
----------------- --------------- -------------- -----------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.53 $9.53 $ 9.53 $9.53
------------ ------------- ------------ ---------------
Income from Investment Operations:
Net Investment Income 0.19+ -- 0.11+ --
Net Losses on Securities
(both realized and unrealized) (0.56) -- (0.57) --
------------ ------------- ------------ ---------------
Total from Investment Operations (0.37) -- (0.46) --
------------ ------------- ------------ ---------------
Less Distributions:
Dividends from Net Investment Income (0.09) -- (0.05) --
------------ ------------- ------------ ---------------
Net Asset Value, End of Period $ 9.07 $9.53 $ 9.02 $9.53
============ ============= ============ ===============
Total Return (b) (3.90%) 0% (4.84%) 0%
- ------------------------------------------ ------------ ------------- ------------ ---------------
Ratios/Supplementary Data
Net Assets, End of Period (000) $13,986 $562 $5,628 $130
Ratio of Expenses to
Average Net Assets (c) 1.06% 0.25%* 1.88% 1.00%*
Ratio of Net Investment Income (Loss) to
Average Net Assets 1.99% (0.25%)* 1.14% (1.00%)*
Portfolio Turnover Rate 174.76% 0% 174.76% 0%
</TABLE>
- ----------------
(a) Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends and
distribution at net asset value during the period and a redemption on the
last day of the period. A sales charge is not reflected in the calculations
of total return. Total return for a period of less than one year is not
annualized.
(c) The expense ratios for Class A shares and Class B shares would have been
2.59%, 7.76%, and 3.21% and 8.51%, respectively if the expenses were not
assumed by the Advisor.
* Annualized.
+ Based on average shares outstanding.
See Notes to Financial Statements.
- -------------------------------------------------------------------------------
Notes to Financial Statements
Note 1--Significant Accounting Policies:
Van Eck Funds (the "Trust"), organized as a Massachusetts business trust on
April 3, 1985, is registered under the Investment Company Act of 1940. The
following is a summary of significant accounting policies consistently followed
by the Global Balanced Fund series, a non-diversified fund (the "Fund") of the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
A. Security Valuation--Securities traded on national or foreign exchanges are
valued at the last sales prices reported at the close of business on the last
business day of the period. Over-the-counter securities and listed securities
for which no sale was reported are valued at the mean of the bid and asked
prices. Short-term obligations are valued at cost which with accrued interest
approximates value. Securities for which quotations are not available are
stated at fair value as determined by the Board of Trustees.
B. Federal Income Taxes--It is the 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. Currency Translation--Assets and liabilities denominated in foreign
currencies and commitments under forward currency contracts are translated into
U.S. dollars at the mean of the quoted bid and asked prices of such currencies.
Purchases and sales of investments are translated at the exchange rates
prevailing when such investments were acquired or sold. Income and expenses are
translated at the exchange rates prevailing when accrued. Recognized gains or
losses on security transactions and other foreign currency denominated assets
and liabilities attributable to foreign currency fluctuations are recorded as
realized gains and losses from foreign currency transactions. The portion of
unrealized gains and losses on investments that result from fluctuations in
<PAGE>
foreign currency exchange rates are not separately disclosed.
D. Distributions--Dividends to shareholders from net investment income and
realized gains, if any, are recorded on the ex-dividend date. Income and
capital gains distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to the differing treatment of foreign
currency transactions and net capital loss carryforwards. This resulted in a
decrease in accumulated realized losses of $152,994 and a decrease in
undistributed net investment income of $152,994.
<PAGE>
Global Balanced Fund
--------------------
E. Other--Security transactions are accounted for on the date the securities
are purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned. Premiums paid on bonds purchased are not
amortized.
F. Deferred Organization Costs--Deferred organization costs are being amortized
over a period not exceeding five years.
Note 2--Van Eck Associates Corporation (the "Advisor") earns fees for
investment management and advisory services. The fee is based on an annual rate
of .75 of 1% of the Fund's average daily net assets. Van Eck Associates
Corporation also earns fees for accounting and administrative services. The fee
is based on an annual rate of .25 of 1% of the Fund's average daily net assets.
Fiduciary International, Inc., the sub-investment advisor, earns fees for
investment management. The fee is based on an annual rate of .50 of 1% of the
Fund's average daily net assets and is paid by the Advisor from the advisory
fees it receives from the Fund. The sub- investment advisor waived its fee for
the six months ended June 30, 1994. Van Eck Associates Corporation agreed to
waive its management and administrative fees, to assume for Class A shares the
distribution expenses in excess of .25 of 1% of the Fund's average daily net
assets and to assume all other expenses for the period December 20, 1993 to
September 30, 1994. Van Eck Securities Corporation received $19,768 for the
year ended December 31, 1994 from commissions earned on sales of Class A shares
after deducting $308,987 allowed to other dealers. Certain of the officers and
trustees of the Trust are officers, directors or stockholders of Van Eck
Associates Corporation and Van Eck Securities Corporation.
Note 3--Purchases of investments other than short-term obligations aggregated
$46,699,788 for the year ended December 31, 1994. For federal income tax
purposes the cost of investments owned at December 31, 1994 was $18,928,069. As
of December 31, 1994 net unrealized depreciation for federal income tax
purposes aggregated $373,119 of which $755,852 related to appreciated
investments and $1,128,971 related to depreciated investments. At December 31,
1994, the Fund had $508,759 of capital loss carryforwards available to offset
future capital gains expiring December 31, 2002.
Transactions in call and put options written for the year ended December 31,
1994 were as follows:
<TABLE>
<CAPTION>
CALLS PUTS
U.S. $ U.S. $
Equivalent Equivalent
of Foreign of Foreign
Currency Premium Currency Premium
Contracts Received Contracts Received
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Options
outstanding at
beginning of
period $ -- $ -- $ -- $ --
Options written 1,234,731 19,403 79,575 2,816
Options expired 139,876 701 79,575 2,816
---------- ------- -------- -------
Options
outstanding at
end of period $1,094,855 $18,702 $ -- $ --
========== ======= ======== =======
</TABLE>
The Fund may incur additional risk from investments in written currency options
if there are unanticipated movements in the underlying currencies.
Note 4--Pursuant to a Rule 12b-1 Plan of Distribution (the "Plan"), the Fund is
authorized to incur distribution expenses which will principally be payments to
securities dealers who have sold shares and service shareholder accounts and
payments to Van Eck Securities Corporation ("VESC"), the distributor, for
reimbursement of other actual promotion and distribution expenses incurred by
the distributor on behalf of the Fund. The amount paid under the Plan in any
one year is limited to .50% of average daily net assets for Class A shares and
1.00% of average daily net assets for Class B shares (the "Annual Limitation").
Distribution expenses incurred under the Plan that have not been paid because
they exceed the Annual Limitation may be carried forward to future years and
paid by the Fund within the Annual Limitation. VESC has waived its right to
reimbursement for the carried forward amounts incurred for the year ended
December 31, 1994 through April 30, 1995 in the event the Plan is terminated,
unless the Board of Trustees determines that reimbursement of carried forward
amounts is appropriate.
The excess of distribution expenses incurred over the Annual Limitation for the
year ended December 31, 1994 was $153,606 for Class A shares and $263,847 for
Class B shares.
Note 5--At December 31, 1994 the Fund had the following outstanding forward
currency contracts.
<PAGE>
<TABLE>
<CAPTION>
Value at Unrealized
Settlement Current Appreciation
Contracts Date Value (Depreciation)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Foreign Currency Buy Contracts:
ATS 481,000 expiring 2/23/95 $ 44,048 $ 44,173 $ 125
CAD 190,000 expiring 3/13/95 138,363 135,450 (2,913)
DEM 5,195,000 expiring
1/4/95-2/14/95 3,447,560 3,357,370 (90,190)
DKK 2,643,000 expiring
2/10/95-2/14/95 432,234 434,464 2,230
ESP 5,649,000 expiring
5/3/95 42,295 42,196 (99)
FRF 667,000 expiring 2/10/95 124,285 125,007 722
GBP 208,000 expiring 1/30/95 324,709 325,797 1,088
ITL 462,689,000 expiring
1/17/95 282,290 285,207 2,917
JPY 738,593,227 expiring
1/4/95-3/6/95 7,481,113 7,426,869 (54,244)
NZD 589,000 expiring 1/18/95 361,145 376,592 15,447
SEK 1,760,000 expiring
1/12/95 232,460 236,618 4,158
Foreign Currency Sales Contracts:
ATS 968,967 expiring
1/4/95-2/23/95 88,803 88,910 (107)
AUD 329,000 expiring 2/14/95 248,395 254,557 (6,162)
BEF 2,032,000 expiring
2/14/95 62,959 63,945 (986)
</TABLE>
See Notes to Financial Statements.
<PAGE>
Global Balance Fund
<TABLE>
<CAPTION>
Value at Unrealized
Settlement Current Appreciation
Contracts Date Value (Depreciation)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DEM 2,493,000 expiring
2/14/95 $1,611,882 $1,610,933 $ 949
DKK 4,757,911 expiring
1/4/95-2/10/95 790,797 782,100 8,697
ESP 15,732,000 expiring
5/3/95 124,758 117,511 7,247
FRF 1,651,000 expiring
2/10/95 316,078 309,427 6,651
GBP 530,538 expiring 1/30/95 826,164 830,998 (4,834)
ITL 1,087,676,000 expiring
1/17/95 668,313 670,455 (2,142)
JPY 622,441,204 expiring
1/4/95-3/6/95 6,291,299 6,254,145 37,154
NLG 178,000 expiring 3/16/95 101,251 102,842 (1,591)
NZD 547,000 expiring 1/18/95 336,422 349,737 (13,315)
SEK 1,617,000 expiring
1/12/95 217,878 217,393 485
--------
$(88,713)
========
</TABLE>
The Fund may incur additional risk from investments in forward currency
contracts if the counterparty is unable to fulfill its obli-
gations or there are unanticipated movements of the foreign currency relative
to the U.S. dollar.
Note 6--Shares of Beneficial Interest Issued and Redeemed (unlimited number of
$.001 Par Value Shares Authorized):
<TABLE>
<CAPTION>
Year Ended Period Ended
December 31, December 31,
1994 1993
---------- ------------
<S> <C> <C>
Class A Class A
Shares sold 2,191,127 58,928
Reinvestment of dividends 5,529 --
-------- ----------
2,196,656 58,928
Shares reacquired (712,779) --
-------- ----------
Net increase 1,483,877 58,928
======== ==========
Class B Class B
Shares sold 797,147 13,695
Reinvestment of dividends 1,045 --
-------- ----------
798,192 13,695
Shares reacquired (188,267) (1)
-------- ----------
Net increase 609,925 13,694
======== ==========
</TABLE>
Note 7--The Fund declared income dividends of $0.05 and $0.03 a share for Class
A and Class B shares, respectively. The dividends were payable on January 9,
1995 to shareholders of record on December 29, 1994 with a reinvestment date of
December 30, 1994.
- -------------------------------------------------------------------------------
Report of Independent Accountants
To the Board of Trustees and Shareholders of the
Van Eck Funds:
We have audited the accompanying statement of assets and liabilities of the
Global Balanced Fund (the "Fund") (one of the series constituting the Van Eck
Funds) including the investment portfolio, as of December 31, 1994, and the
related statement of operations for the year then ended, and the statements of
changes in net assets and the financial highlights for the year then ended, and
for the period December 20, 1993 (commencement of operations) to December 31,
1993. These financial statements and financial highlights are the
responsibility of the Fund's 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
<PAGE>
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. 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
Global Balanced Fund series of the Van Eck Funds as of December 31, 1994, the
results of its operations for the year then ended, the changes in its net
assets and the financial highlights for the year then ended, and for the period
December 20, 1993 (commencement of operations) to December 31, 1993, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 28, 1995
See Notes to Financial Statements.
<PAGE>
Van Eck Family of Funds
- ------------------------
Global Hard Assets Fund (A&C)
Seeks long-term capital appreciation by investing globally, primarily in "Hard
Asset Securities". Income is a secondary consideration.
International Investors Gold Fund (A&C)
Founded in 1955, this Fund is the oldest gold-oriented mutual fund in the U.S.
It invests in gold-mining shares globally and seeks long-term capital
appreciation, moderate yield and protection against monetary uncertainties.
Gold/Resources Fund (A&C)
Seeking a long-term global hedge against inflation and other risks, this Fund
invests in gold-mining and natural resources companies outside South Africa.
Gold Opportunity Fund (A&C)
Seeks capital appreciation by investing globally in equity securities of
companies engaged in the exploration, development, production and distribution
of gold and other precious metals, and through active asset allocation between
gold-related assets and cash instruments.
Asia Dynasty Fund-A
This Fund seeks long-term capital appreciation by investing in the equity
securities of companies that are expected to benefit from the development and
growth of the economies in the Asia Region. AIG Asset Management, Inc. serves
as sub-investment advisor to this Fund.
Asia Infrastructure Fund (A&C)
Seeks long-term capital appreciation by investing in the equity securities of
infrastructure companies that are expected to benefit from the development and
growth of the economies in the Asia Region. AIG Asset Management, Inc. serves
as sub-investment advisor to this Fund.
Global SmallCap Fund (A&C)
Seeks long-term capital appreciation by investing globally in equity securities
of companies with small market capitalizations. The Fund is sub-advised by
Pictet International Management, Ltd.
Global Balanced Fund-A
This Fund seeks long-term capital appreciation together with current income by
investing in stocks, bonds and money market instruments worldwide. Fiduciary
International, Inc. serves as sub-investment advisor to this Fund.
World Trends Fund
This Fund combines trend investing and risk-control strategies to seek
long-term capital appreciation in the global marketplace.
Global Income Fund-A
This Fund emphasizes the current income component of total return by investing
principally in debt securities of foreign or U.S. government entities.
U.S. Government Money Fund
This Fund seeks the highest safety of principal and daily liquidity by
investing in U.S. Treasury bills and repurchase agreements collateralized by
U.S. Government obligations.
- -------------------------------------------------------------------------------
This report must be accompanied or preceded by a Van Eck Global Funds
prospectus which includes more complete information such as charges and
expenses and the risks associated with international investing including
currency fluctuations or controls, expropriation, nationalization and
confiscatory taxation. For a free Van Eck Gold & Money Funds prospectus, please
call the number listed below. Please read the prospectus before investing.
[LOGO]
[Van Eck Global
The Unusual Funds]
B95-0131-003
Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016
For account assistance please call (800) 544-4653
D E C E M B E R 3 1 , 1 9 9 4
Van Eck
Global
Balanced
Fund
Annual
Report
[LOGO]
[Van Eck Global
The Unusual Funds]
<PAGE>
PART C
OTHER INFORMATION
ITEM 15. Indemnification
---------------
Reference is made to Article VI of the Master Trust Agreement of the
Registrant, as amended, previously filed as Exhibit (1) to the Registration
Statement.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act of 1933 may be permitted to trustees, officers,
underwriters and controlling persons of the Registrant, pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification is against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such trustee, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 16. Exhibits
--------
(1) Master Trust Agreement (incorporated by reference from Registration
Statement No. 2-97596); Form of First Amendment to Master Trust Agreement
(incorporated by reference from Registration Statement No. 2-97596); Form
of Second Amendment to Master Trust Agreement (incorporated by reference
from Pre-Effective Amendment No. 1); Form of Third Amendment to Master
Trust Agreement (incorporated by reference from Post-Effective Amendment
No. 1); Form of Fourth Amendment to Master Trust Agreement (incorporated
by reference from Post-Effective Amendment No. 3); Form of Sixth Amendment
to the Master Trust Agreement, adding International Investors as a series
of the Trust and establishing investment limitations therefore,
respectively (incorporated by reference from Post Effective Amendment No.
17); Form of Seventh Amendment to Master Trust Agreement, adding Short-Term
World Income Fund and International Equities Fund as series of the Trust
(Incorporated by reference from Post-Effective Amendment No. 19).
(1)(a) Form of Amended and Restated Master Trust Agreement (Incorporated by
reference from Post-Effective Amendment No. 20); Form of Amendment to the
Master Trust Agreement changing the name of Short-Term World Income Fund to
Short-Term World Income Fund-C, and changing the name of International
Equities Fund to International Growth Fund (Incorporated by reference from
Post-Effective Amendment No. 20); Form of second Amendment to the Amended
and Restated Master Trust Agreement adding Asia Dynasty Fund as a series of
the Trust (Incorporated by reference from Post-effective Amendment No. 23);
Third Amendment to the Amended and Restated Master Trust Agreement adding
Global Balanced Fund as a series of the Trust and changing the name of
International Investors to International Investors Gold Fund (incorporated
by reference from Post-Effective Amendment No. 28); Fourth Amendment to the
Amended and Restated Master Trust Agreement adding Global SmallCap Fund and
Asia Infrastructure Fund as series of the Trust (incorporated by reference
from Post-effective Amendment No. 30); Form of Fifth Amendment to the
Amended and Restated Master Trust
<PAGE>
Agreement (incorporated by reference from Post-effective Amendment No. 35);
Form of Sixth Amendment to Amended and Restated Master Trust Agreement
(incorporated by reference from Post-effective Amendment No. 35); Seventh
Amendment to Amended and Restated Master Trust Agreement adding Global Hard
Assets Fund as series of the Trust (incorporated by reference from Post-
effective Amendment No. 36); Eighth Amendment to Amended and Restate Master
Trust Agreement adding Aggressive Gold Opportunity Fund as series of the
Trust (incorporated by reference from Post-effective Amendment No. 37).
(2) By-laws of Registrant (incorporated by reference from Registration
Statement No. 2-97596).
(3) Not Applicable.
* (4) Form of Plan of Reorganization and Liquidation between World Trends
Fund and Global Balanced Fund (See Exhibit A to Part A of this filing).
(5)(a) Form of certificate of shares of beneficial interest of the World
Trends Fund (incorporated by reference from Pre-Effective Amendment No.
1); Forms of certificates of shares of beneficial interest of the
Gold/Resources Fund and U.S. Government Money Fund (incorporated by
reference from Post-Effective Amendment No. 1); Form of certificate of
shares of beneficial interest of the World Income Fund (incorporated by
reference from Post-Effective Amendment No. 6). Forms of certificates of
shares of beneficial interest of Short-Term World Income Fund-C and
International Growth Fund (Incorporated by reference from Post-effective
Amendment No. 23); Form of certificate of shares of beneficial interest of
Asia Dynasty Fund (incorporated by reference from Post-effective Amendment
No. 23); Form of certificate of Class B shares of beneficial interest of
Asia Dynasty Fund (incorporated by reference from Post-Effective Amendment
No. 26); Form of certificate of Class A and Class B shares of beneficial
interest of Global Balanced Fund (incorporated by reference from Post-
Effective Amendment No. 26); Form of certificate of Class B shares of
beneficial interest of World Income Fund (incorporated by reference from
Post-effective Amendment No. 29); Certificate of Class A shares of
beneficial interest of World Income Fund; Form of Certificate of Class A
and Class B shares of beneficial interest of Global SmallCap Fund and Asia
Infrastructure Fund (incorporated by reference from Post-Effective
Amendment No. 30) and Form of Certificate of Class A and Class C shares of
beneficial interest of Global Hard Assets Fund (incorporated by reference
from Post-Effective Amendment No. 33); Form of Certificate of Class A and
Class C shares of beneficial interest of Aggressive Gold Opportunity Fund
(incorporated by reference from Post-effective Amendment No. 35).
(5)(b) Instruments defining rights of security holders (See Exhibit (1)
above).
(6)(a) Advisory Agreement (incorporated by reference from Post-Effective
Amendment No. 1).
(6)(b) Letter Agreement to add Gold/Resources Fund and U.S. Government
Money Fund (incorporated by reference from Post-Effective Amendment No. 1);
Letter Agreement to add World Income Fund (incorporated by reference from
Post-Effective Amendment No. 6).
(6)(c) Form of Advisory Agreement between Van Eck Associates Corporation
and Van Eck Funds with respect to Asia Dynasty Fund (Incorporated by
reference from Post-effective Amendment No. 23).
(6)(d) Advisory Agreement between Van Eck Associates Corporation and Van
Eck Funds with respect to Global Balanced Fund (incorporated by reference
from Post-effective Amendment No. 31).
(6)(e) Letter Agreement to add Global SmallCap Fund and Asia Infrastructure
Fund (incorporated
<PAGE>
by reference from Post-effective Amendment No. 31) and Letter Agreement to
add Gold/Resources Fund and International Investors Gold Fund (incorporated
by reference from Post-effective Amendment No. 34).
(6)(f) Advisory Agreement between Van Eck Associates Corporation and Global
Hard Assets Fund (incorporated by reference from Post-effective Amendment
No. 36).
(6)(g) Form of Letter Agreement to add Gold Opportunity Fund (incorporated
by reference from Post-effective Amendment No. 37).
(6)(h) Sub-Advisory Agreement among AIG Asset Management, Inc., Van Eck
Associates Corporation and Van Eck Funds with respect to Asia Dynasty Fund
(Incorporated by reference from Post-effective Amendment No. 24); Sub-
Advisory Agreement among Fiduciary International, Inc., Van Eck Associates
Corporation and Van Eck Funds with respect to Global Balanced Fund
(incorporated by reference from Post-effective Amendment No. 27); and Sub-
Advisory Agreement among AIG Asset Management, Inc., Van Eck Associates
Corporation and Van Eck Funds with respect to Asia Infrastructure Fund and
Form of Sub-Advisory Agreement among Pictet International Management
Limited, Van Eck Associates Corporation and Van Eck Funds with respect to
Global SmallCap Fund (incorporated by reference from Post-Effective
Amendment No. 30).
(7)(a) Distribution Agreement (incorporated by reference from Post-
Effective Amendment No. 1).
(7)(b) Letter Agreement to add Gold/Resources Fund and U.S. Government
Money Fund (incorporated by reference from Post-Effective Amendment No. 1);
Letter Agreement to add World Income Fund (incorporated by reference from
Post-Effective Amendment No. 9); Letter Agreement to add Asia Dynasty Fund
(Incorporated by reference from Post-effective Amendment No.23).
(7)(c) Letter Agreement to add Global SmallCap Fund and Asia Infrastructure
Fund (incorporated by reference from Post-effective Amendment No. 31);
Letter Agreement to add Gold/Resources Fund-C, International Investors Gold
Fund-C, Global SmallCap Fund-C and Asia Infrastructure Fund-C (incorporated
by reference from Post-effective Amendment No. 34) and Letter Agreement to
add Global Hard Assets Fund (incorporated by reference from Post-effective
Amendment No. 36). Form of Letter Agreement to add Gold Opportunity Fund
(incorporated by reference from Post-effective Amendment No. 37).
(7)(d) Amendment to Form of Selling Group Agreement (incorporated by
reference from Post-Effective Amendment No. 9).
(7)(e) Selling Agency Agreement (incorporated by reference from Post-
Effective Amendment No. 12).
(8) Not Applicable.
(9)(a) Custodian Agreement (incorporated by reference from Post-Effective
Amendment No. 1).
(9)(a)(1) Form of Custody Agreement between the Van Eck Funds and Bankers
Trust Company (Incorporated by reference from Post-Effective Amendment No.
20).
(9)(b) Letter Agreement to add Gold/Resources Fund and U.S. Government
Money Fund (incorporated by reference from Post-Effective Amendment No. 1);
Letter Agreement to add World Income Fund (incorporated by reference from
Post-Effective Amendment No. 6).
<PAGE>
(10) Plan of Distribution with respect to International Growth Fund and
Asia Dynasty Fund Incorporated by reference form Post-effective Amendment
No. 23). Form of Plan of Distribution with respect to Class B shares of
Asia Dynasty Fund (Incorporated by reference from Post- effective Amendment
No. 25). Form of Plan of Distribution with respect to Global Balanced Fund
(Class A and B) and World Income Fund (Class B) (incorporated by reference
from Post-Effective Amendment No. 26). Form of Plan of Distribution with
respect to Gold/Resources Fund (Class C), International Investors Gold Fund
(Class C), Global SmallCap Fund (Class C) and Asia Infrastructure Fund
(Class C) (incorporated by reference from Post-effective Amendment No. 34).
(10)(a) Letter Agreement to add Global SmallCap Fund (Class A) and Asia
Infrastructure Fund (Class A) (incorporated by reference from Post-
effective Amendment No. 31) and Letter Agreement to add Global Hard Assets
Fund (Class A) (incorporated by reference from Post-effective Amendment No.
36). Form of Letter Agreement to add Gold Opportunity Fund (Class A)
(incorporated by reference from Post-effective Amendment No. 37). Letter
Agreement to add Global Hard Assets Fund (Class C) (incorporated by
reference from Post-effective Amendment No. 37). Form of Letter
Agreement to add Gold Opportunity Fund (Class C) (incorporated by
reference from Post-effective Amendment No. 37).
* (10)(b) Plan of Distribution with respect to Global Balanced Fund.
* (10)(c) Plan of Distribution with respect to World Trends Fund.
* (11) Opinion of Goodwin, Procter & Hoar, including consent, with regard to
World Trends Fund (incorporated by reference from Pre-Effective Amendment
No. 1); Opinion Of Goodwin, Procter & Hoar with regard to Gold/Resources
Fund and U.S. Government Money Fund (incorporated by reference from Post-
Effective Amendment No. 1); Opinion of Goodwin, Procter & Hoar with regard
to World Income Fund (incorporated by reference from Post-Effective
Amendment No. 7); Opinion of Goodwin, Procter & Hoar and consent with
regard to International Investors (incorporated by reference from Post-
Effective Amendment No. 17); Opinion of Goodwin, Procter and Hoar with
regard to Asia Dynasty Fund (incorporated by reference from Post-effective
Amendment No. 24); Opinion of Goodwin, Procter & Hoar with respect to the
issuance of Class B shares of Asia Dynasty Fund and with respect to the
issuance of Class A and Class B shares of Global Balanced Fund
(incorporated by reference from Post-effective Amendment No. 27); Opinion
of Goodwin, Procter & Hoar with respect to the issuance of Class A and
Class B shares of Asia Infrastructure Fund and Global SmallCap Fund
(incorporated by reference from Post- effective Amendment No. 31) and
Opinion of Goodwin, Procter & Hoar, including consent, with regard to the
issuance of Class A and Class C shares of Global Hard Assets Fund
(incorporated by reference from Post-effective Amendment No. 36). Opinion
of Goodwin, Procter & Hoar, including consent, with regard to the issuance
of Class A and Class C shares of Gold Opportunity Fund (incorporated by
reference from Post-effective Amendment No. 37).
* (12) Copy of Ruling from the Internal Revenue Service, supporting the tax
matters and consequences to shareholders discussed in the prospectus.
(13)(a) Forms of Procedural Agreement, Customer Agreement and Safekeeping
Agreement with Merrill Lynch Futures Inc. utilized by World Income Fund,
and Forms of Procedural Agreement, Customer Agreement and Safe Keeping
Agreement with Morgan Stanley & Co. utilized by World Income Fund
(incorporated by reference from Post-Effective Amendment No. 9).
(13)(b) Commodity Customer's Agreement between World Income Fund and Morgan
Stanley & Co. (incorporated by reference from Post Effective Amendment No.
10).
(13)(c) Agreement and Plan of Redomicile and Reorganization between the
Trust and International Investors Incorporated respecting the
reorganization of International Investors
<PAGE>
Incorporated into the Trust as its fifth series, International Investors.
(incorporated by reference from Post-Effective Amendment No. 17).
(13)(d) Form of Accounting and Administrative Services Agreement with
respect to Asia Dynasty Fund (Incorporated by reference from Post-effective
Amendment No. 23).
(13)(e) Accounting and Administrative Services Agreement with respect to
Global Balanced Fund (incorporated by reference from Post-effective
Amendment No. 31).
(13)(f) Letter Agreement to add Global SmallCap Fund and Asia
Infrastructure Fund (incorporated by reference from Post-effective
Amendment No. 31) and Letter Agreement to add Gold/Resources Fund and
International Investors Gold Fund (incorporated by reference from Post-
effective Amendment no. 34). Letter Agreement to add Global Hard Assets
Fund (incorporated by reference from Post-effective Amendment No. 36).
Letter Agreement to add Gold Opportunity Fund (incorprated by reference
from Post-effective Amendment No. 37).
* (14) Consent of Coopers & Lybrand L.L.P.
(15) Not Applicable.
(16) Power of Attorney (incorporated by reference from Post-Effective
Amendment No. 5).
(17) Not Applicable.
_______________
* Enclosed herewith.
Item 17. Undertakings
------------
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is part
of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act of
1933, as amended, the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by persons
who may be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is
effective, and that, in determining liability under the Securities Act of
1933, as amended, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the offering
of the securities at that time shall be deemed to be the initial bona fide
offering of them.
<PAGE>
SIGNATURES
----------
As required by the Securities Act of 1933, this registration Statement on
Form N-14 has been signed on behalf of the Registrant by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on
the 17th day of October, 1995.
Van Eck Funds
By: _________________________________
John C. van Eck, President and CEO
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in
the capacities and on the date indicated:
Signature Title Date
___________________ President, Chairman 10/17/95
John C. van Eck and Chief Exec. Officer
___________________ Principal Accounting 10/17/95
Bruce J. Smith Officer, Controller
/s/ Jeremy Biggs*
___________________ Trustee / /
Jeremy Biggs
/s/ Richard Cowell*
___________________ Trustee / /
Richard Cowell
/s/ Wesley G. McCain*
___________________ Trustee / /
Wesley G. McCain
/s/ Rodger A. Lawson*
___________________ Trustee / /
Rodger A. Lawson
/s/ Ralph F. Peters*
___________________ Trustee / /
Ralph F. Peters
/s/ David J. Olderman*
___________________ Trustee / /
David J. Olderman
/s/ Richard Stamberger*
___________________ Trustee / /
Richard Stamberger
<PAGE>
/s/ Fred M. van Eck*
___________________ Trustee / /
Fred M. van Eck
_____________________________
*Executed on behalf of Trustee by John C. van Eck, attorney-in-fact.
<PAGE>
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
Index Number: 0368.04-00
Washington, DC 20224
Person to Contact:
Howard A. Cubell John F. Tarrant
Goodwin, Procter & Hoar Telephone Number:
Exchange Place (202) 622-7790
Boston, MA 02109 Refer Reply
CC:DOM:CORP:3-TR-31-2222-94
Date:
DEC 22 1994
Dear Mr. Cubell:
The enclosed copy of a letter is sent to you under the provisions of a power of
attorney, authorization and declaration, or other proper authorization currently
on file with the Internal Revenue Service.
Sincerely yours,
Assistant Chief Counsel (Corporate)
_________________________________
John N. Geracimos
Assistant to the Chief
Branch 3
Enclosure:
Copy of letter
<PAGE>
Index Number: 0368.04-00
Thaddeus Leszczyowski, John F. Tarrant
Vice President
Van Eck Funds (202) 622-7790
122 East 42nd Street
New York, NY 10168 CC:DOM:CORP:3 TR-31-2222-94
DEC 22 1994
Target = World Trends Fund
EIN: 13-6855959
Acquiring = Global Balanced Fund
EIN: 13-7027829
State X = Massachusetts
y = 10
Dear Mr. Leszczyowski:
This letter responds to your request dated August 18, 1994 for rulings on the
federal income tax consequences of a proposed transaction. You have submitted
additional information in letters dated October 11 and December 14, 1994. The
information submitted for consideration is summarized below.
Trust is a State X business trust registered with the Securities and Exchange
-
Commission under the Investment Company Act of l940 (the "l940 Act") as a no-
load, open-end diversified management investment company. It consists of y
-
separate series, including Acquiring and Target.
Acquiring and Target have each elected to be a regulated investment company
under Subchapter M of the Code, and each are treated as a corporation for
federal income tax purposes. Acquiring and Target each hold a portfolio of
stocks and bonds of both domestic and foreign issuers.
Acquiring has two classes of common stock outstanding (Class A and Class B),
with the only material differences relating to sales charge and service charges
paid by each class. Target has only one class of common stock outstanding. Both
Acquiring and Target stock are widely held and publicly traded. No single
shareholder beneficially owns more than five percent of any class of Acquiring
or Target stock.
For what are represented to be valid business purposes, the taxpayers propose
the following transaction:
<PAGE>
TR-31-2222-92
(i) Target will transfer all of its assets to Acquiring in exchange for shares
of Acquiring Class A stock and Acquiring's assumption of Target liabilities.
(ii) Target will distribute the Acquiring shares received in step (i), above,
to its shareholders in complete liquidation of Target.
After the acquisition, Acquiring may dispose of former assets of Target that are
not consistent with the investment strategy of Acquiring.
In connection with the transaction, the taxpayers have made the following
representations:
(a) The fair market value of the Acquiring shares received by each Target
shareholder will approximately equal the fair market value of the Target shares
surrendered in the exchange.
(b) There is no plan or intention by the Target shareholders who own five
percent or more of the Target shares, and to the best of the knowledge of Target
management, there is no plan or intention on the part of the remaining Target
shareholders to redeem, sell, exchange, or otherwise dispose of a number of
shares of Acquiring received in the transaction that would reduce the Target
shareholders' ownership of Acquiring shares to a number of shares having a
value, as of the date of the transaction, of less than 50 percent of the value
of all of the formerly outstanding shares of Target as of the same date. For
purposes of this representation, shares of Target exchanged for cash or other
property, surrendered by dissenters or exchanged for cash in lieu of fractional
shares of Acquiring, if any, have been treated as outstanding Target shares on
the date of the transaction. Moreover, shares of target and shares of Acquiring
held by Target shareholders and otherwise sold, redeemed, or disposed of prior
to or subsequent to the transaction will be considered in making this
representation.
(c) Acquiring will acquire at least 90 percent of the fair market value of the
net assets and at least 70 percent of the fair market value of the gross assets
held by Target immediately prior to the transaction. For purposes of this
representation, amounts paid by Target to dissenters, amounts used by Target to
pay its reorganization expenses, amounts paid by target to shareholders who
receive cash or other property, and all redemptions (except for redemptions
under Section 22(e) of the 1940 Act pursuant to a demand by a shareholder) and
distributions (except for regular, normal
<PAGE>
TR-31-2222-92
dividends) made by Target immediately preceding the transfer will be included as
assets of Target held immediately prior to the transaction.
(d) After the transaction, Target shareholders will control Acquiring within the
meaning of Section 368(a)(2)(H) and Section 304(c).
(e) Acquiring has no plan or intention to reacquire any of its shares issued in
the transaction, except in satisfaction of its legal obligation to redeem under
Section 22(e) of the 1940 Act.
(f) The Target liabilities assumed by Acquiring and the liabilities, if any, to
which the transferred assets of Target are subject were incurred by Target in
the ordinary course of its business.
(g) Following the transaction, Acquiring will continue the historic business of
target.
(h) At the time of the transaction, Acquiring will not have outstanding any
warrants, options, convertible securities, or any other type of right pursuant
to which any person could acquire shares in Acquiring that, if exercised or
converted, would affect the Target shareholders' acquisition or retention of
control of Acquiring, as defined by Section 368(a)(2)(H) and 304(c).
(i) Acquiring, Target, and the Target shareholders will pay their respective
expenses, if any, incurred in connection with the transaction.
(j) There is no intercorporate indebtedness existing between Target and
Acquiring that was issued, acquired, or will be settled at a discount.
(k) Acquiring and Target both qualify as regulated investment companies under
Section 851.
(l) The fair market value of the Target assets transferred to Acquiring will
equal or exceed the sum of the liabilities assumed by Acquiring plus the amount
of liabilities, if any, to which the transferred assets are subject.
(m) The total adjusted basis of the Target assets transferred to Acquiring will
equal or exceed the sum of the liabilities assumed by Acquiring, plus the amount
of liabilities, if any, to which the transferred assets are subject.
(n) Target is not under the jurisdiction of a court in a Title ll or similar
case within the meaning of Section 368(a)(3)(A).
<PAGE>
TR-31-2222-92
(o) Target will distribute the stock, securities, and other property it receives
in the transaction, and its other properties, in pursuance of the plan of
reorganization.
(p) Acquiring will not pay cash in lieu of fractional shares.
Based solely on the information submitted and on the representations set forth
above, we hold as follows:
(1) Acquiring's acquisition of all of the Target assets in exchange for shares
of Acquiring stock and Acquiring's assumption of Target liabilities, followed by
Target's distribution of the shares of Acquiring stock in complete liquidation
will be a "reorganization" within the meaning of Section 368(a)(1)(D). Target
and Acquiring will each be "a party to a reorganization" within the meaning of
Section 368(b).
(2) Target will recognize no gain or loss upon its transfer of all of its assets
to Acquiring solely in exchange for shares of Acquiring and Acquiring's
assumption of Target liabilities (Section 361(a)); Target will recognize no gain
or loss on its distribution of the shares of Acquiring received in the
transaction (Section 361(C)).
(3) Acquiring will recognize no gain or loss on its exchange of Acquiring shares
for Target assets (Section 1032(a)).
(4) Acquiring's basis of the Target assets received in the transaction will, in
each instance, equal the basis of such assets in the hands of Target immediately
before the transfer (Section 362(b)).
(5) Acquiring's holding period of the Target assets received in the transaction
will, in each instance, include Target's holding period for those assets
(Section 1223(2)).
(6) Target shareholders will not recognize gain or loss upon their exchange of
shares of Target stock for shares of Acquiring stock (Section 354(a)(1)).
(7) A Target shareholder's basis in the shares of Acquiring stock received in
exchange for shares of Target stock will equal the basis of the shares of Target
stock surrendered in exchange therefor (Section 358(a)(1)).
(8) A Target shareholder's holding period of the shares of Acquiring stock
received in exchange for shares of Target stock will include the holding period
for the shares of Target stock surrendered in exchange therefor, provided the
<PAGE>
TR-31-2222-92
shareholder held the shares of Target stock as capital assets on the date of the
exchange (Section 1223(1)).
We express no opinion about the tax treatment of the transaction under other
provisions of the Code and regulations or about the tax treatment of any
conditions existing at the time of, or effects resulting from, the transaction
that are not specifically covered by the above rulings.
This ruling has no effect on any earlier documents and is directed only to the
taxpayer who requested it. Section 6110(j)(3) of the Code provides that it may
not be used or cited as precedent.
Each affected taxpayer must attach a copy of this letter to the taxpayer's
federal income tax return for the taxable year in which the transaction covered
by this ruling letter is consummated.
Pursuant to a power of attorney on file in this office, we have sent a copy of
this letter to the taxpayer's representative.
Sincerely yours,
Assistant Chief Counsel (Corporate)
By _____________________________
John N. Geracimos
Assistant to the Chief, Branch 3
<PAGE>
COOPERS COOPERS & LYBRAND L.L.P.
&LYBRAND
a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We consent to the incorporation by reference in the Registration Statement of
Van Eck Funds on Form N-14 and the Statement of Additional Information of Van
Eck Funds dated March 17, 1995 (the "SAI") which has been incorporated by
reference in the Form N-14 of our reports dated February 28, 1995 and February
17, 1995 for the Global Balanced Fund and World Trends Fund, respectively, on
our audits of the financial statements and financial highlights of the Global
Balanced Fund and the World Trends Fund which reports are included in their
respective Annual Reports to Shareholders which are also incorporated by
reference in the Registration Statement and SAI.
We also consent to the references to our firm in the Prospectus under the
caption "Financial Highlights" and in the SAI under the caption "Independent
Accountants".
COOPERS & LYBRAND L.L.P.
New York, New York
October 9, 1995
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International, a
limited liability association incorporated in Switzerland
<PAGE>
[LETTERHEAD OF GOODWIN, PROCTER & HOAR]
October 10, 1995
Van Eck Funds
99 Park Avenue
New York, New York 10016
Re: Acquisition by Global Balanced Fund, a series of Van Eck Global Funds, of
Assets of World Trends Fund, another series of Van Eck Global Funds
-------------------------------------------------------------------
Ladies and Gentlemen:
You have requested our opinion as counsel to Van Eck Global Funds (the
"Trust"), a business trust organized under the laws of the Commonwealth of
Massachusetts, in connection with the transfer of all of the assets of World
Trends Fund (the "Acquired Fund"), a series of the Trust, to the Global Balanced
Fund (the "Acquiring Fund"), another series of the Trust, in exchange for shares
of beneficial interest of the Acquiring Fund (the "Shares") and the assumption
by the Acquiring Fund of certain liabilities of the Acquired Fund, pursuant to
an Agreement and Plan of Reorganization and Liquidation (the "Agreement") by the
Trust, on behalf of each of the Acquiring Fund and the Acquired Fund.
In connection with this opinion, we have examined:
1. the Agreement;
2. the Amended and Restated Master Trust Agreement of the Trust, dated as
of February 6, 1992, as amended to date, certified by the Secretary of
the Trust (the "Declaration of Trust");
3. the By-laws of the Trust, as amended to date, certified by the
Secretary of the Trust;
4. a certificate as of a recent date of the Secretary of State of the
Commonwealth of Massachusetts as to the good standing of the Trust and
the authority of the Trust to exercise in the Commonwealth all of the
powers recited in the Declaration of Trust and to transact business in
the Commonwealth; and
5. a certificate of the Secretary of the Trust as to, among other things,
actions of the trustees of the Trust relating to the adoption and
approval of the Agreement.
<PAGE>
Van Eck Funds
October 10, 1995
Page 2
As to matters of fact underlying the opinions expressed herein, we have
relied exclusively upon certificates of certain public officials and officers of
the Trust and upon the representations and warranties of the Trust contained in
the Agreement. We have assumed the authenticity of all documents submitted to
us as originals, the genuineness of all signatures, the legal capacity of
natural persons and the conformity to the originals of all documents submitted
to us as copies.
We have made such examination of Massachusetts law as in our judgment is
necessary and appropriate for the purposes of this opinion. We do not purport
to be experts in the laws of any jurisdiction other than the laws of the
Commonwealth of Massachusetts and our opinions expressed herein are limited
solely to the laws of the Commonwealth of Massachusetts.
Anything in this opinion to the contrary notwithstanding, we render or
imply no opinion with respect to compliance with any applicable securities or
anti-fraud statutes, rules, regulations or other similar laws of any state
(including Massachusetts) or the United States of America. In rendering the
opinions herein, we assume that there will be no material changes in the facts
and conditions on which we base such opinions between the date hereof and the
time of issuance of the Shares pursuant to the Agreement.
Based upon and subject to the foregoing, we are of the opinion that all
necessary Trust action precedent to the issuance of the Shares pursuant to the
Agreement has been duly taken. We are further of the opinion that the Shares
when issued in accordance with the terms of the Agreement will be validly
issued, fully paid and nonassessable by the Trust.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement of the Trust on Form N-14 pursuant to which the Shares
are to be registered under the Securities Act of 1933, as amended. This opinion
is issued to, and may be relied upon only by, you in connection with the
registration of the Shares and this opinion may not be used by any other person
or for any other purpose without our prior written consent.
Very truly yours,
/s/ Goodwin, Procter & Hoar
GOODWIN, PROCTER & HOAR
