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1933 ACT REGISTRATION NO. 2-97596
1940 ACT REGISTRATION NO. 811-4297
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT")
POST-EFFECTIVE AMENDMENT NO. 46
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED (THE "1940 ACT")
AMENDMENT NO. 47
VAN ECK FUNDS
(exact name of Registrant as specified in charter)
99 PARK AVENUE, NEW YORK, NEW YORK 10016
(address of principal executive offices and zip code)
212-687-5200
(Registrant's telephone number including area code)
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 NEWMAN, ESQ., GOODWIN, PROCTER & HOAR
EXCHANGE PLACE, BOSTON, MASSACHUSETTS 02109
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IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX):
[_]IMMEDIATELY UPON FILING PURSUANT [_]ON (DATE) PURSUANT TO PARAGRAPH
TO PARAGRAPH (b) (b)
[_]60 DAYS AFTER FILING PURSUANT TO [_]ON(DATE) PURSUANT TO PARAGRAPH
PARAGRAPH (a)(1) (a)(1)
[X]75 DAYS AFTER FILING PURSUANT TO [_]ON (DATE) PURSUANT TO PARAGRAPH
PARAGRAPH (a)(2) (a)(2) OF RULE 485
IF APPROPRIATE, CHECK THE FOLLOWING
BOX:
[_]THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT
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REGISTRANT HEREBY DECLARES ITS INTENTION TO REGISTER AN INDEFINITE AMOUNT OF
SHARES OF BENEFICIAL INTEREST, $0.01 PAR VALUE, OF VAN ECK GLOBAL EMERGING
MARKETS FUND. REGISTRANT HAS HERETOFORE DECLARED ITS INTENTION TO REGISTER AN
INDEFINITE NUMBER OF SHARES OF BENEFICIAL INTEREST, $0.01 PAR VALUE, OF GLOBAL
BALANCED FUND, ASIA DYNASTY FUND, ASIA INFRASTRUCTURE FUND, INTERNATIONAL
INVESTORS GOLD FUND, GOLD/RESOURCES FUND, GLOBAL INCOME FUND, GOLD OPPORTUNITY
FUND, GLOBAL HARD ASSETS FUND AND U.S. GOVERNMENT MONEY FUND, PURSUANT TO RULE
24f-2(a)(1) UNDER THE INVESTMENT COMPANY ACT OF 1940. A RULE 24f-2 NOTICE WAS
FILED ON OR ABOUT FEBRUARY 16, 1996 FOR ALL SERIES.
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VAN ECK FUNDS
CROSS-REFERENCE PAGE
PURSUANT TO RULE 501 (b) OF REGULATION S-K
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
FORM N-1A
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PART A
ITEM NO. LOCATION IN PROSPECTUS
-------- ----------------------
<C> <S>
1.Cover Page........................... Cover Page
2.Synopsis............................. N/A
3.Condensed Financial Information...... Transaction Data
4.General Description of Registrant.... The Fund; Investment Objectives and
Policies; Risk Factors; Limiting
Investment Risks; Description of the
Trust
5.Management of the Fund............... Management; Additional Information
5A.Management's Discussion of Fund N/A
Performance............................
6.Capital Stock and Other Securities... Dividends and Distributions;
Description of the Trust; Additional
Information
7.Purchase of Securities Being Offered. Purchase of Shares; Plan of
Distribution
8.Redemption or Repurchase............. Redemption of Shares
9.Pending Legal Proceedings............ N/A
<CAPTION>
PART B LOCATION IN STATEMENT
ITEM NO. ADDITIONAL INFORMATION
-------- ----------------------
<C> <S>
10.Cover Page........................... Cover Page
11.Table of Contents.................... Table of Contents
12.General Information and History...... N/A
13.Investment Objectives and Policies... Investment Objectives and Policies
of the Funds; Foreign Currency
Transactions; Futures and Options
Transactions; Risk Factors--
Investing in Foreign Securities;
Investment Restrictions; Portfolio
Transactions and Brokerage;
Repurchase Agreements
14.Management of the Fund............... Trustees and Officers
15.Control Persons and Principal........ Trustees and Officers
16.Investment Advisory and Other Investment Advisory Services; The
Services............................... Distributor; Trustees and Officers;
Additional Information
17.Brokerage Allocation and Other Portfolio Transactions and Brokerage
Practices..............................
18.Capital Stock and Other Securities... General Information
19. Purchase, Redemption and Pricing of
Securities Being Offered............ Valuation of Shares; Redemptions in
Kind; Tax Sheltered Retirement
Plans; Investment Programs
20.Tax Status........................... Taxes
21.Underwriters......................... The Distributor
22.Calculation of Performance Data...... Performance
23.Financial Statements................. Financial Statements
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PROSPECTUS , 1996
VAN ECK GLOBAL EMERGING MARKETS FUND
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The Van Eck Global Emerging Markets Fund is a Massachusetts business
trust. The Fund is managed by Van Eck Associates Corporation
(the "Adviser"). 99 Park Avenue, New York, New York 10016
. Account Assistance (800) 544-4653
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Van Eck Funds is an open-end management investment company organized as a
"business trust" under the laws of the Commonwealth of Massachusetts. The
Global Emerging Markets Fund is a new fund offered under the Van Eck Global
Funds. As the Fund will be a newly created series of the Van Eck Global Funds,
the Fund has no operating history.
Shares of the Global Emerging Markets Fund (the "Fund") are offered in three
classes. See "Purchase of Shares--Alternative Purchase Arrangements" on page
14 of this prospectus to determine your purchase options for the Fund.
GLOBAL EMERGING MARKETS FUND (CLASS A, B AND C)--seeks long-term capital
appreciation by investing primarily in equity securities in emerging markets
around the world. Peregrine Asset Management (Hong Kong) Limited ("PAM" or
"Sub-Adviser") will serve as sub-investment adviser to this Fund.
The Fund is managed by Van Eck Associates Corporation (the "Adviser"), 99 Park
Avenue, New York, New York 10016. See "Management." Van Eck Securities
Corporation (the "Distributor"), a wholly-owned subsidiary of the Adviser,
serves as Distributor of the Fund's shares.
This Prospectus sets forth concisely information about the Fund that you
should know before investing. It should be read in conjunction with the
prospectus for the Contract which accompanies this Prospectus and should be
retained for future reference. For further information about the Fund, please
call the Fund or the Distributor at the above telephone number.
The Contracts involve certain expenses not described in this Prospectus and
also may involve certain restrictions or limitations on the allocation of
purchase payments or Contract values to the Fund. See the applicable Contract
prospectus for information regarding expenses of the Contract and any
applicable restrictions or limitations with respect to the Fund.
---------------
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, a bank, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
A Statement of Additional Information, dated , 1996, which further
discusses the Trust and the Fund has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. It is available
without charge upon request to the Fund or the Distributor at the above
address or by calling the telephone number listed above.
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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 UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
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<S> <C>
The Fund................................................................... 3
Financial Highlights....................................................... 5
Investment Objective and Policies of the Fund.............................. 5
Risk Factors............................................................... 5
Limiting Investment Risks.................................................. 13
Purchase of Shares......................................................... 13
Exchange Privilege......................................................... 19
Dividends and Distributions................................................ 21
Tax-Sheltered Retirement Plans............................................. 21
Investment Programs........................................................ 21
Redemption of Shares....................................................... 22
Management................................................................. 24
Plan of Distribution....................................................... 25
Advertising................................................................ 26
Taxes...................................................................... 27
Description of the Trust................................................... 27
Additional Information..................................................... 28
</TABLE>
2
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THE FUND
Global Emerging Markets Fund (the "Fund") will be part of the Van Eck Funds,
an open-end management investment company organized as a "business trust"
under the laws of the Commonwealth of Massachusetts on January 7, 1987. The
Fund is classified as diversified under the Investment Company Act of 1940, as
amended (the "Act").
GLOBAL EMERGING MARKETS FUND
OBJECTIVE:
GLOBAL EMERGING MARKETS FUND SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES IN EMERGING MARKETS AROUND THE WORLD.
POLICIES:
In pursuit of its investment objective, the Fund emphasizes countries that
compared to the world's major economies exhibit relatively low gross national
product per capita as well as the potential for rapid economic growth.
Specifically, an "emerging market" or "Emerging Country" is any country that
the World Bank, the International Finance Corporation, the United Nations or
its authorities has determined to have a low or middle income economy.
Emerging Countries can be found in regions such as Asia, Latin America,
Eastern Europe and Africa. The countries that will not be considered Emerging
Countries include the United States, Australia, Canada, Japan, New Zealand and
most countries located in Western Europe such as Austria, Belgium, Denmark,
Finland, France, Germany, Great Britain, Ireland, Italy, the Netherlands,
Norway, Spain, Sweden and Switzerland.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in Emerging Country and emerging market equity securities. The Fund
considers emerging market securities to include securities which are (i)
principally traded in the capital markets of an emerging market country; (ii)
securities of companies that derive at least 50% of their total revenues from
either goods produced or services performed in emerging market countries or
from sales made in Emerging Countries, regardless of where the securities of
such companies are principally traded; (iii) securities of companies organized
under the laws of, and with a principal office in an Emerging Country; (iv)
securities of investment companies (such as country funds) that principally
invest in emerging market securities, and (v) American Depositary Receipts
(ADRs), American Depositary Shares (ADSs), European Depositary Receipts
(EDRs), and Global Depositary Receipts (GDRs) with respect to the securities
of such companies.
Equity securities in which the Fund may invest include common stocks;
preferred stocks (either convertible or non-convertible); rights; warrants;
direct equity interests in trusts, partnerships, joint ventures and other
unincorporated entities or enterprises; convertible debt instruments; and
special classes of shares available only to foreign persons in those markets
that restrict ownership of certain classes of equity to nationals or residents
of that country. These securities may be listed on securities exchanges or
traded over-the-counter. Direct investments are generally considered illiquid
and will be aggregated with other illiquid investments for purposes of the
limitation on illiquid investments. See "Risk Factors--Emerging Market
Securities".
The Fund may invest indirectly in emerging markets by investing in other
investment companies. Due to restrictions on direct investment by foreign
entities in certain emerging market countries, investment in other investment
companies may be the most practical or only manner in which the Fund can
invest in the securities markets of certain emerging market countries. Such
investments may involve the payment of premiums above the net asset value of
such issuers' portfolio securities, are subject to limitations under the Act,
are constrained by market availability and may constitute passive foreign
investment companies for Federal income tax purposes. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. The
Adviser and Sub-Adviser have agreed to waive their management fees with
respect to the portion of the Fund's assets invested in shares of other open-
end investment companies. The Fund would continue to pay its own management
fees and other expenses with respect to its investments in shares of closed-
end investment companies.
The Fund may, as described below in "Risk Factors" on pages 5-12, invest in
derivatives. Derivatives are instruments whose value is "derived" from an
underlying asset. Derivatives in which the Fund may invest include futures
contracts, forward
3
<PAGE>
contracts, options, swaps and structured notes and other similar securities as
may become available in the market. These instruments offer certain
opportunities and are subject to additional risks that are described below.
The Fund may, for temporary defensive purposes, invest more than 35% of its
total assets in securities which are not emerging market securities, such as
high grade, liquid debt securities of foreign and United States companies
foreign governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in money
market instruments denominated in U.S. dollars or a foreign currency. These
money market instruments include, but are not limited to, negotiable or short-
term deposits with domestic or foreign banks with total surplus and undivided
profits of at least $50 million; high quality commercial paper; and repurchase
agreements maturing within seven days with domestic or foreign dealers, banks
and other financial institutions deemed to be creditworthy under guidelines
approved by the Board of Trustees of the Fund. The commercial paper in which
the Fund may invest will, at the time of purchase, be rated P-1 or better by
Moody's; A-I or better by S&P; Fitch-1 by Fitch; Duff-1 by D&P, or if unrated,
will be of comparable high quality as determined by the Adviser or Sub-Adviser.
The Adviser expects that the Fund will normally invest in at least three
different countries. The Fund emphasizes equity securities, but may also invest
in other types of instruments, including debt securities of any quality (other
than commercial paper as described herein). Debt securities may include fixed
or floating rate bonds, notes, debentures, commercial paper, loans, convertible
securities and other debt securities issued or guaranteed by governments,
agencies or instrumentalities, central banks, commercial banks or private
issuers. See "Risk Factors--Debt Securities".
The Adviser believes that the economies of emerging markets will continue to
have among the world's fastest rates of growth over the next decade. In many
instances, the growth in these countries is brought on by a move away from
governmental intervention in the marketplace, and an aggressive move towards
free market capitalism. While many emerging markets are experiencing rapid
growth by U.S. standards, such markets are still developing and considerably
less liquid. Investors can expect there will be periods of volatility and
reduced liquidity in these markets. The Fund involves above-average risk, and
as such, is designed as a long-term investment. There can be no assurance that
the Fund will achieve its investment objective. See "Risk Factors-Foreign
Securities" and "Risk Factors-Emerging Markets Securities" below.
Peregrine Asset Management (Hong Kong) Limited ("PAM" or the "Sub-Adviser")
will serve as sub-adviser to the Fund. PAM has been registered with the SEC as
an investment adviser since April 17, 1995. PAM was incorporated in Hong Kong
in 1991 and is a 100% owned subsidiary of Peregrine Asset Management Limited
which is a 75% owned subsidiary of Peregrine Investment Holdings Limited
("Peregrine"). Peregrine and its affiliates comprise the largest independent
Asian based investment bank located outside of Japan and Korea. Established in
1988, Peregrine and its affiliates have offices in thirteen Asian countries as
well as in Europe and the United States. Investment professionals at PAM
collectively have over forty years experience in managing funds which invest in
emerging markets. The Adviser believes PAM has unique knowledge and experience
in global emerging market investing. See "Management".
There is no limitation on the amount the Fund can invest in emerging markets.
Investors should consider carefully the substantial risks involved in investing
in securities issued by companies and governments of foreign nations, which are
in addition to the usual risks inherent in domestic investment. Global
investing involves economic and political considerations not typically
applicable to the U.S. markets. These considerations, which may favorably or
unfavorably affect the Fund's performance, include changes in exchange rates
and exchange rate controls (which may include suspension of the ability to
transfer currency from a given country), cost incurred in conversion between
currencies, non-negotiable brokerage commissions, default in foreign government
securities, lower trading volume and greater market volatility, the difficulty
of enforcing obligations in other countries, war, expropriation,
nationalization, confiscatory taxation, taxation of income earned in foreign
nations or other taxes imposed with respect to investments in foreign nations,
political and social instability and diplomatic developments which could affect
investments in securities of issuers in foreign nations.
In addition, there is typically less publicly available information concerning
foreign companies than for domestic companies. Foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards, and the Fund may encounter difficulty or be unable to pursue legal
remedies and obtain judgments in foreign courts. Further, the settlement period
of securities transactions in foreign markets may be longer than in domestic
markets. In many foreign countries there is
4
<PAGE>
less government supervision and regulation of business and industry practices,
stock exchanges, brokers and listed companies than in the U.S. The foreign
securities markets of many of the countries in which the Fund may invest may
also be smaller, less liquid, and subject to greater price volatility than
those in the U.S. See "Risk Factors--Foreign Securities" and "Risk Factors--
Emerging Markets Securities" below.
PAM will select investments for the Fund based on its assessment of where
emerging market opportunities for long-term capital appreciation are most
attractive. When making investment decisions, PAM will evaluate
characteristics of various Emerging Countries such as the outlook for economic
growth and inflation and government monetary and fiscal policies. In selecting
specific companies for investment, PAM will analyze such factors as growth
potential, financial strength and management experience.
FINANCIAL HIGHLIGHTS
As the Fund will be a newly created series of the Van Eck Global Funds, the
Fund has no operating history. The Trustees have the authority, without the
necessity of a shareholder vote, to create any number of new series of funds
under the Van Eck Global Funds. It is expected that the Trustees will approval
the Global Emerging Markets Fund series and all associated agreements at the
next Board of Trustees meeting, scheduled for December 1996.
INVESTMENT OBJECTIVE AND POLICIES OF THE FUND
A description of the investment objective and policies of the Fund is set
forth below. The investment objective of the Fund may not be changed without
the affirmative vote of a majority of the outstanding voting securities of the
Fund. As a result of the market risk inherent in any investment, there is no
assurance that the Fund will achieve its objective. For further information
about the Fund's investment policies, see "Investment Objective and Policies"
in the Statement of Additional Information.
RISK FACTORS
Assets of the Fund are subject to market fluctuations and risks inherent in
all securities. In addition, assets of the Fund may be subject to other
special considerations, such as those listed below.
FOREIGN SECURITIES
The Fund may purchase securities of foreign issuers including foreign
investment companies. Investments in foreign securities may involve a greater
degree of risk than investments in domestic securities due to the possibility
of exchange rate fluctuations and exchange controls, less publicly available
information, more volatile or less liquid securities markets, 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 be subject to foreign taxes, higher custodian fees
higher brokerage commissions and higher dividend collection fees which could
reduce the yield or return on such securities, although a shareholder of the
Fund may, subject to certain limitations, be entitled to claim a credit or
deduction for United States federal income tax purposes for his proportionate
share of such foreign taxes paid by the Fund. In addition, some foreign
securities in which the Fund may invest may be denominated in foreign
currencies, and since the Fund may temporarily hold funds in foreign
currencies, the value of the assets of the Fund (and thus its net asset value)
will be affected by changes in currency exchange rates. See "Foreign Currency
and Foreign Currency Transactions" below. Transactions in the securities of
foreign issuers may be subject to settlement delays. See "Taxes" in the
Prospectus and "Risks Factors--Foreign Securities" in the Statement of
Additional Information. However, the Sub-Adviser believes that diversification
of assets on an international basis decreases the degree to which events in
any one country will adversely affect an entire portfolio.
5
<PAGE>
In addition to investing directly in the securities of United States and
foreign issuers, the Fund may also invest in American Depositary Receipts
(ADRs), European Depositary Receipts (EDRs), American Depositary Shares
(ADSs), Global Depositary Shares (GDSs) and securities of foreign investment
funds or trusts (including passive foreign investment companies). ADRs are
certificates that are issued by a United States bank or trust company
representing the right to receive securities of a foreign issuer deposited in
a foreign subsidiary, branch or correspondent of that bank. Generally, ADRs,
in registered form, are designed for use in United States securities markets.
Foreign brokerage commissions and custodial expenses are generally higher than
in the United States. Dividend collection fees on foreign securities and ADRs
are generally higher than on United States securities and dividends and
interest may be subject to foreign withholding tax at their source which may
not be permitted to be passed through to shareholders.
EMERGING MARKETS SECURITIES
Investments of the Fund will be made in companies in developing countries.
Shareholders should be aware that investing 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. Countries with developing markets may
present the risk of nationalization of businesses, restrictions on foreign
ownership or prohibitions of repatriation of assets, and may have less
protection of property rights than more developed countries. The economies of
countries with developing markets may be highly vulnerable to change in local
or global trade conditions, and may suffer from extreme and volatile debt
burdens or inflation rates. Local securities markets may be unable to respond
effectively to increases in trading volume, potentially making prompt
liquidation of substantial holdings difficult or impossible at times.
Securities of issuers located in developing markets may have limited
marketability and may be subject to more abrupt or erratic price movements.
However, such markets have in the past provided the opportunity for higher
rates of return to investors. There is no assurance that these markets will
offer such opportunity in the future.
For example, political and social conditions in a developing country, due to
an unstable government may pose certain risks to the Fund's investments. If
aggravated by local or international developments, such risks could have an
adverse affect on investments in such developing country, including the Fund's
investments and, under certain conditions, on the liquidity of the Fund's
portfolio and its ability to meet shareholder redemption requests. The ability
of the Fund to invest, or hold its investments, in companies situated in
developing countries may be further affected by changes in United States or
such countries' laws or regulations.
Many of these emerging markets limit the percentage foreign investors, such as
the Fund, may own of their domestic issuers by requiring that such issuers
issue two classes of shares--"local" and "foreign" shares. Foreign shares may
be held only by investors that are not considered nationals or residents of
that country and generally are convertible into local shares. Foreign shares
may be subject to restrictions on the right to receive dividends and other
distributions, have limited voting and other rights, to name a few. Local
shares are intended for ownership by nationals or residents of the country.
The market for foreign shares is generally less liquid than the market for
local shares, although in most cases foreign shares may be converted into
local shares. In addition, foreign shares often trade at a premium to local
shares, while at other times there is no premium. If the Fund were to purchase
foreign shares at a time when there is a premium and sell when there is a
lower or no premium, the Fund could realize a loss on its investment.
Ownership by foreign investors of local shares may be illegal in some
jurisdictions and, in others, foreign owners of local shares may not be
entitled, among other things, to participate in certain corporate actions such
as stock dividends, rights and warrant offerings or to vote at stockholders'
meetings (while foreign holders of foreign shares would participate). If the
Fund were to own local shares and could not participate in a stock, warrant or
other distribution, the Fund could suffer material dilution of its interest in
that issuer and the value of its holdings could decline dramatically causing a
loss on its investment. Generally, it is expected that the Fund will hold
foreign shares. However, because of their limited number foreign shares may,
at times, not be available for purchase by the Fund or, if available, the
premiums may be, in the opinion of the Adviser, unjustified or prohibitively
high. In order to participate in these markets, the Fund may deem it advisable
to purchase local shares which may expose the Fund to the additional risks
described above. The Fund will only purchase local shares where foreign shares
are not available for purchase and, when in the opinion of the Adviser,
6
<PAGE>
the potential for gain in these markets outweighs the risks that issuers will
take corporate actions which may result in dilution to the Fund. Where
permitted by local law, the Fund will attempt to convert local shares to
foreign shares promptly. There can be no assurance that the Adviser will be
able to assess these risks accurately or that the Fund will be able to convert
its local shares to foreign shares or that dilution will not result.
The securities markets in the emerging markets are substantially smaller, less
liquid and more volatile than the major securities markets in the United
States. A high proportion of the shares of many issuers may be held by a
limited number of persons and financial institutions, a limited number of
issuers may represent a disproportionately large percentage of market
capitalization and trading value and the securities markets are susceptible to
being influenced by large investors trading significant blocks of securities.
The Fund's ability to participate fully in the markets may be limited by its
investment policy of investing not more than 15% of its total net assets in
illiquid securities (including repurchase agreements which mature in more than
seven days and over-the-counter foreign currency options). In addition,
limited liquidity may impair the Fund's ability to liquidate a position at the
time and price it wishes to do so. Many of these stock markets are undergoing
a period of growth and change which may result in trading volatility and
difficulties in the settlement and recording of transactions, and in
interpreting and applying the relevant law and regulations. Certain developing
countries do not have a comprehensive system of laws, although substantial
changes have occurred in many developing countries in this regard in recent
years. Even where adequate law exists in certain developing countries, it may
be impossible to obtain swift and equitable enforcement of such law, or to
obtain enforcement of the judgment by a court of another jurisdiction.
In addition, stockbrokers and other intermediaries in emerging markets may not
perform as well as their counterparts in the United States and other more
developed securities markets. The prices at which the Fund may acquire
investments may be affected by trading by persons with material non-public
information and by securities transactions by brokers in anticipation of
transactions by the Fund in particular securities.
FOREIGN CURRENCY AND FOREIGN CURRENCY TRANSACTIONS
Since some foreign securities in which the Fund may invest may be denominated
in foreign currencies, and since the Fund may temporarily hold foreign
currencies, the value of the assets of the Fund (and thus its net asset value)
may be affected by changes in currency exchange rates. The Fund's performance
will be less favorable if foreign currency exchange rates move adversely,
relative to the U.S. dollar. Foreign exchange rates are affected by actual and
anticipated Balance of Payments accounts, central bank policy, political
concerns and changes in interest rates, to name a few factors. There can be no
assurance that the Adviser will be able to anticipate currency fluctuations in
exchange rates accurately. The Fund may invest in a variety of derivatives.
The Fund may purchase and sell put and call options on, or enter into futures
contracts or forward contracts to purchase or sell, foreign currencies. The
Fund will enter into foreign currency contracts for hedging purposes only and
not for speculation. The Fund may also use foreign currency contracts to hedge
the U.S. dollar value of a security which it already owns or anticipates
purchasing. A forward currency contract may thus help reduce the Fund's losses
on a security when a foreign currency's value changes. The Fund will enter
into forward contracts to duplicate a cash market transaction. However, the
Fund will invest in securities including short-term obligations, denominated
in a range of foreign currencies and the value of the Fund will be affected by
changes in currency exchange rates. The Fund will not purchase or sell foreign
currency as an investment. See "Options," "Futures Contracts" and "Hedging and
Other Investment Techniques and Strategies" below and "Foreign Currency
Transactions" and "Futures and Options Transactions" in the Statement of
Additional Information.
CURRENCY SWAPS
The Fund may enter into currency swaps solely for hedging purposes. Currency
swaps involve the exchange of rights to make or receive payments in specified
currencies. Since currency swaps are individually negotiated, the Fund may
expect to achieve an acceptable degree of correlation between its portfolio
investments and its currency swap positions. 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 a currency swap is subject to the risk that the other party to the
swap will default on its contractual delivery obligations.
7
<PAGE>
The use of swaps is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
transactions. If the Sub-Adviser is incorrect in its forecasts of 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. Swaps are generally considered illiquid and will be aggregated
with other illiquid positions for purposes of the limitation on illiquid
investments.
OPTIONS
For hedging and other purposes (such as creating synthetic positions), the
Fund may invest up to 5% of its total assets, taken at market value at the
time of investment, in premiums on call and put options on domestic and
foreign securities, foreign currencies, stock and bond indices, financial
futures contracts and commodity futures contracts. This policy may be changed
without shareholder approval.
As the holder of a call or put option, the Fund pays a premium and has the
right (for generally 3 to 9 months) to purchase (in the case of a call option)
or sell (in the case of a put option) the underlying asset at the exercise
price at any time during the option period. An option on a futures contract
gives the purchaser the right, but not the obligation, in return for the
premium paid, to assume a position in a specified underlying futures contract
(which position may be a long or short position) at a specified exercise price
during the option exercise period. If the call or put is not exercised or sold
(whether or not at a profit), it will become worthless at its expiration date
and the Fund will lose its premium payment. The Fund may, with respect to
options it has purchased, sell them, exercise them or permit them to expire.
The Fund may write call or put options. As the writer of an option, the Fund
receives a premium. The Fund keeps the premium whether or not the option is
exercised. If the call or put option is exercised, the Fund must sell (in the
case of a written call option) or buy (in the case of a written put option)
the underlying asset at the exercise price. The Fund may write only covered
put and call options. A covered call option, which is a call option with
respect to which the Fund owns the underlying asset, sold by the Fund exposes
it during the term of the option to possible loss of opportunity to realize
appreciation in the market price of the underlying asset or to possible
continued holding of an underlying asset which might otherwise have been sold
to protect against depreciation in the market price of the underlying asset. A
covered put option written by the Fund exposes it during the term of the
option to a decline in price of the underlying asset. A put option sold by the
Fund is covered when, among other things, cash or short-term liquid securities
are placed in a segregated account to fulfill the obligations undertaken.
Covering a put option sold does not reduce the risk of loss.
The Fund may invest in options which are either listed on a domestic
securities exchange or traded on a recognized foreign exchange. In addition,
the Fund may purchase or sell over-the-counter options from dealers or banks
to hedge securities or currencies as approved by the Board of Trustees. In
general, exchange traded options are third party contracts with standardized
prices and expiration dates. Over-the-counter options are two party contracts
with price and terms negotiated by the buyer and seller, are generally
considered illiquid, and will be limited to 15% of net assets of the Fund.
FUTURES CONTRACTS
The Fund may buy and sell financial futures contracts which may include
security and interest-rate futures, stock and bond index futures contracts and
foreign currency futures contracts. A security or interest-rate futures
contract is an agreement between two parties to buy or sell a specified
security at a set price on a future date. An index futures contract is an
agreement to take or make delivery of an amount of cash based on the
difference between the value of the index at the beginning and at the end of
the contract period. A foreign currency futures contract is an agreement to
buy or sell a specified amount of a currency for a set price on a future date.
When the Fund enters into a futures contract, it must make an initial deposit,
known as "initial margin," as a partial guarantee of its performance under the
contract. As the value of the underlying asset fluctuates, either party to the
contract is required to make additional margin payments, known as "variation
margin," to cover any additional obligation it may have under the contract.
The Fund will not commit more than 5% of its total assets to initial margin
deposits on futures contracts and premiums on options on futures contracts;
however, margin deposits for futures positions entered into for BONA FIDE
hedging purposes, as such term is defined in the Commodity Exchange Act, are
excluded from the 5% limitation. The Fund may write, purchase or
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<PAGE>
sell put and call options on financial futures contracts and, in addition, the
Fund may write, purchase or sell put and call options on commodity futures
contracts. The Fund may write only covered put and call options. An option on
a futures contract gives the purchaser the right, but not the obligation, in
return for the premium paid, to assume a position in a specified underlying
futures contract (which position may be a long or short position) at a
specified exercise price during the option exercise period. The writer of an
option is obligated to assume a position in a specified futures contract if
the option is exercised.
In establishing a position in a futures contract, which may be a long or short
position, cash or high quality debt instruments equal in value to the current
value of the underlying securities less the margin requirement will be
segregated, as may be required, with the Fund's Custodian to ensure that the
Fund's position is unleveraged. This segregated account will be marked-to-
market daily to reflect changes in the value of the underlying futures
contract. Certain exchanges do not permit trading in particular commodities at
prices in excess of daily price fluctuation limits set by the exchange, and
thus the Fund could be prevented from liquidating its position and thus be
subjected to losses. Trading in futures contracts traded on foreign commodity
exchanges may be subject to the same or similar risks as trading in foreign
securities. See "Risk Factors-Foreign Securities."
HEDGING AND OTHER INVESTMENT TECHNIQUES AND STRATEGIES
Options and futures contracts can be used by the Fund as part of various
hedging techniques and strategies.
When the Fund intends to acquire securities for its portfolio it may use call
options or futures contracts as a means of fixing the price of the security it
intends to purchase at the exercise price (in the case of an option) or
contract price (in the case of a futures contract). An increase in the
acquisition cost would be offset, in whole or part, by a gain on the option or
futures contract. Options and futures contracts requiring delivery of a
security may also be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
If the Fund holds a call option rather than the underlying security itself,
the Fund is partially protected from any unexpected decline in the market
price of the underlying security and in such event could allow the call option
to expire, incurring a loss only to the extent of the premium paid for the
option. Using a futures contract would not offer such partial protection
against market declines and the Fund would experience a loss as if it had
owned the underlying security.
To protect against anticipated declines in the value of the Fund's investment
holdings the Fund may use options, forward and futures contracts, and similar
investments (commonly referred to as derivatives) as a defensive technique to
protect the value of an asset the Sub-Adviser deems desirable to hold for tax
or other considerations or for investment reasons. One defensive technique
involves selling a futures or forward contract or purchasing a put option
whose value is expected to be inversely related to the security or asset being
hedged. If the anticipated decline in the value of the asset occurs, it would
be offset, in whole or part, by a gain on the futures contract or put option.
The premium paid for the put option would reduce any capital gain otherwise
available for distribution when the security is eventually sold.
The Fund may hedge against changes in the value of the U.S. dollar in relation
to a foreign currency in which portfolio securities of the Fund may be
denominated. The Fund may employ hedging strategies with options and futures
contracts on foreign currencies before the Fund purchases a foreign security,
during the period the Fund holds the foreign security, or between the date the
foreign security is purchased or sold and the date on which payment therefore
is made or received. Hedging against a change in the value of a foreign
currency in the foregoing manner does not eliminate fluctuations in the prices
of portfolio securities or prevent losses if the prices of such securities
decline. Furthermore, such hedging transactions reduce or preclude the
opportunity for gain if the value of the hedged currency should change
relative to the U.S. dollar. Last, where the Fund uses options and futures in
anticipation of the purchase of a portfolio security to hedge against adverse
movements in the security's underlying currency, but where the purchase of
such security is subsequently deemed undesirable, the Fund may incur a gain or
loss on the option or futures contract.
The Fund may use futures contracts, options and forward contracts as part of
various investment techniques and strategies, such as creating non-speculative
"synthetic" positions or implementing "cross-hedging" strategies. A synthetic
position is deemed not to be speculative if the position is covered by
segregation of short-term liquid assets. However, since the financial
9
<PAGE>
markets in the developing countries are not as developed as in the United
States, these financial investments may not be available to the Fund and the
Fund may be unable to hedge certain risks or enter into certain transactions.
A "synthetic position" is the duplication of a cash market transaction when
deemed advantageous by the Adviser for cost, liquidity or transactional
efficiency reasons. A cash market transaction is the purchase or sale of a
security or other asset for cash. For example, from time to time, the Fund
experiences large cash inflows which may be redeemed from the Fund in a
relatively short period. In this case, the Fund currently can leave the
amounts uninvested in anticipation of the redemption or the Fund can invest in
securities for a relatively short period, incurring transaction costs on the
purchase and subsequent sale. Alternatively, the Fund may create a synthetic
position by investing in a futures contract on a security, such as a
deutschemark bond or on a securities index gaining investment exposure to the
relevant market while incurring lower overall transaction costs. The Fund
should enter into such transactions if the markets for these instruments were
sufficiently liquid and there was an acceptable degree of correlation to the
cash market. By segregating cash, the Fund's futures contract position would
generally be no more leveraged or riskier than if it had invested in the cash
market-i.e., purchased securities.
Consistent with the hedging strategy described above, the Fund may invest in
options and futures contracts and options on futures contracts on foreign
currencies for the purpose of hedging against a decline in the value of
certain U.S. dollar denominated securities or other "cross-hedging"
strategies. "Cross-hedging" involves the use of one currency to hedge against
the decline in the value of another currency. For example, the Fund could
hedge against a currency-related decline in the value of a security
denominated in Deutschemark by taking a short position in the Swiss franc. The
Sub-Adviser believes that the value of certain U.S. dollar denominated debt
securities is affected by fluctuations in the value of the U.S. Dollar
relative to foreign currencies. Furthermore, the Sub-Adviser believes it can
identify those currencies whose value is likely to move inversely with the
value of the U.S. dollar. By investing a portion of the Fund's assets in
options or futures contracts on those identified currencies, the Sub-Adviser
believes that it may be able to reduce the Fund's exposure to declines in the
value of U.S. dollar denominated securities attributable to currency value
fluctuations. The use of such instruments as described herein involves several
risks. First, there can be no assurance that the prices of such instruments
and the hedged security or the cash market position will move as anticipated.
If prices do not move as anticipated the Fund may incur a loss on its
investment, may not achieve the hedging protection it anticipated and/or incur
a loss greater than if it had entered into a cash market position. Second,
investments in such instruments may reduce the gains which would otherwise be
realized from the sale of the underlying securities or assets which are being
hedged. Third, positions in such instruments can be closed out only on an
exchange that provides a market for those instruments. There can be no
assurance that such a market will exist for a particular futures contract or
option. If the Fund cannot close out an exchange traded futures contract or
option which it holds, it would have to perform its contract obligation or
exercise its option to realize any profit and would incur transaction costs on
the sale of the underlying assets.
Over-the-counter options, together with repurchase agreements maturing in more
than seven days and other investments which do not have readily available
market quotations are, because of liquidity considerations, limited to 15% of
total net assets of the Fund.
In those situations where foreign currency options or futures contracts, or
options on futures contracts may not be readily purchased (or where such
options or contracts may be deemed illiquid) in the primary currency in which
the hedge is desired, the hedge may be obtained by purchasing or selling an
option or futures contract or forward contract on a secondary currency. The
secondary currency will be selected based upon the Adviser's belief that there
exists a significant correlation between the exchange rate movements of the
primary and secondary currencies. This strategy may be employed with respect
to other securities and assets in which the Fund may invest. For example,
because the Fund invests in securities whose value is related to the price of
gold or other natural resources, it may use options or futures contracts on
gold or other natural resources or an index as hedging instruments. However,
there can be no assurances that in the case of foreign currencies the exchange
rate or the primary and secondary currencies will move as anticipated or, in
the case of other securities, or generally, that the relationship between the
hedged security and the hedging instrument will continue. If they do not move
as anticipated or the relationship does not continue, a loss may result to the
Fund on its investments in the hedging positions.
See "Futures and Options Transactions" in the Statement of Additional
Information for further information about futures contracts and options,
including tax effects and risks to the Fund.
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REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement transactions. Under the terms of a
typical repurchase agreement, the Fund would acquire an underlying debt
obligation for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase, and the Fund to resell,
the obligation at an agreed upon price and time, thereby determining the yield
during the Fund's holding period. The agreement results in a fixed rate of
return that is not subject to market fluctuations during the Fund's holding
period. The Fund will enter into repurchase agreements with respect to
securities in which it may invest with member banks of the Federal Reserve
System or certain non-bank dealers. Under each repurchase agreement the
selling institution will be required to maintain the value of the securities
subject to the repurchase agreement at not less than their repurchase price.
Repurchase agreements could involve certain risks in the event of default or
insolvency of the other party, including possible delays or restrictions upon
the Fund's ability to dispose of the underlying securities. The Adviser acting
under the supervision of the Board of Trustees, reviews the creditworthiness
of those non-bank dealers with which the Fund enters into repurchase
agreements to evaluate these risks. See "Repurchase Agreements" in the
Statement of Additional Information.
DEBT SECURITIES
The Fund may invest in debt securities. The market value of debt securities
generally varies in response to changes in interest rates and the financial
condition of each 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. These
changes in market value will be reflected in the Fund's net asset value.
Debt securities with similar maturities may have different yields, depending
upon several factors, including the relative financial condition of the
issuers. For example, higher yields are generally available from securities in
the lower rating categories of S&P's or Moody's. However, the values of lower-
rated securities generally fluctuate more than those of high grade securities
and lower-rated securities present greater risk of default. Low rated and
unrated securities are especially subject to changes in the financial
condition of their issuers and to price fluctuation in response to changes in
interest rates. A description of debt securities ratings is contained in the
Appendix to the Statement of Additional Information. High grade means a rating
of A or better by Moody's or S&P's, or of comparable quality in the judgment
of the Adviser (or Sub-Adviser) if no rating has been given by either service.
Many securities of foreign issuers are not rated by these services. Therefore,
the selection of such issuers depends to a large extent on the credit analysis
performed by the Adviser (or Sub-Adviser).
New issues of certain debt securities are often offered on a when-issued
basis, that is, the payment obligation and the interest rate are fixed at the
time the buyer enters into the commitment, but delivery and payment for the
securities normally take place after the date of the commitment to purchase.
The value of when-issued securities may vary prior to and after delivery
depending on market conditions and changes in interest rate levels. However,
the Fund will not accrue any income on these securities prior to delivery. The
Fund will maintain in a segregated account with its Custodian an amount of
cash or high quality debt securities equal (on a daily marked-to-market basis)
to the amount of its commitment to purchase the when-issued securities.
ASSET-BACKED SECURITIES
The Fund may invest in asset-backed securities. Asset-backed securities
represent interests in pools of consumer loans (generally unrelated to
mortgage loans) and most often are structured as pass-through securities.
Interest and principal payments ultimately depend on payment of the underlying
loans by individuals, although the securities may be supported by letters of
credit or other credit enhancements. The value of asset-backed securities may
also depend on the creditworthiness of the servicing agent for the loan pool,
the originator of the loans, or the financial institution providing the credit
enhancement. The issuer of asset-backed securities may not, in certain
instances, be able to perfect its security interest in the underlying
collateral.
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<PAGE>
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS")
The Fund may invest in CMOs. CMOs are fixed-income securities which are
collateralized by pools of mortgage loans created by commercial banks, savings
and loan institutions, private mortgage insurance companies and mortgage
bankers. In effect, CMOs "pass through" the monthly payments made by
individual borrowers on their mortgage loans. Timely payment of interest and
principal (but not the market value) of these pools is supported by various
forms of insurance or guarantees issued by U.S. Government agencies, private
issuers and the mortgage poolers. The Fund may buy CMOs without insurance or
guarantees if, in the opinion of the Sub-Adviser, the pooler is creditworthy
or if rated A or better by S&P or Moody's. S&P and Moody's assign the same
rating classifications to CMOs as they do to bonds. Prepayments of the
mortgages included in the mortgage pool may influence the yield of the CMO. In
addition, prepayments usually increase when interest rates are decreasing,
thereby decreasing the life of the pool. As a result, reinvestment of
prepayments may be at a lower rate than that on the original CMO. In the event
that any CMOs are determined to be investment companies, the Funds will be
subject to certain limitations under the 1940 Act.
LOANS OF PORTFOLIO SECURITIES
The Fund may lend to broker-dealers portfolio securities with an aggregate
market value of up to one-third of its total assets. Such loans must be
secured by collateral (consisting of any combination of cash, U.S. Government
securities or irrevocable letters of credit) in an amount at least equal (on a
daily marked-to-market basis) to the current market value of the securities
loaned. The Fund may terminate the loans at any time and obtain the return of
the securities loaned within one business day.
The Fund will continue to receive any interest or dividends paid on the loaned
securities and will continue to have voting rights with respect to the
securities. The Fund might experience risk of loss if the broker-dealer with
which it has engaged in a portfolio loan transaction breaches its agreement
with the Fund.
BORROWING
The Fund may borrow up to 30% of the value of its net assets to increase its
holdings of portfolio securities. Under the Act, the Fund is required to
maintain continuous asset coverage of 300% with respect to such borrowings and
to sell (within three days) sufficient portfolio holdings to restore such
coverage if it should decline to less than 300% because of market fluctuations
or other factors, even if the sale would be disadvantageous from an investment
standpoint. Leveraging by means of borrowing will exaggerate the effect of any
increase or decrease in the value of portfolio securities on the Fund's net
asset value, and money borrowed will be subject to interest and other costs
(which may include commitment fees and/or the cost of maintaining minimum
average balances) which may or may not exceed the investment return received
from the securities purchased with borrowed funds. It is anticipated that such
borrowings would be pursuant to a negotiated loan agreement with a commercial
bank or other institutional lender.
COMMERCIAL PAPER
The Fund may invest in commercial paper which is indexed to certain specific
foreign currency exchange rates. See "Risk Factors-Commercial paper" in the
Statement of Additional information.
DIRECT INVESTMENTS
The Fund may invest up to 10% of its total assets in direct investments;
however, the Fund does not currently intend to invest more than 5% of its net
assets in direct investments. For more information, see "Risk Factors--Direct
Investments" in the Statement of Additional information.
TEMPORARY DEFENSIVE STRATEGIES
During periods of less favorable economic and/or market conditions, the Fund
may make substantial investments for temporary defensive purposes in
obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, time deposits, bankers' acceptances,
high grade commercial paper and repurchase agreements.
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LIMITING INVESTMENT RISKS
While an investment in the Fund is not without risk, the Fund follows certain
policies in managing its investments which may help to reduce risk. These
policies may not be changed without shareholder approval. The following are
some of the more significant investment limitations:
1. The Fund will not purchase more than 10% of its outstanding voting
securities.
2. The Fund will not invest more than 10% of its total assets in securities
of other investment companies.
Further information regarding these and other of the Fund's investment policies
and restrictions is provided in the Statement of Additional Information.
PURCHASE OF SHARES
Shares of the Funds may be purchased either by (1) ordering the shares through
a selected broker-dealer or bank, and forwarding a completed Application or
brokerage firm settlement instructions with payment;* or (2) completing an
Application and mailing it with payment to the Funds' Transfer Agent and
Dividend Paying Agent, DST Systems, Inc., ("DST"). Payment, made payable to the
Van Eck Funds, must be made in U.S. Dollars. Third party checks will not be
accepted. Checks drawn on a foreign bank will not be accepted unless provisions
are made for payment in U.S. Dollars through a U.S. bank. Each Fund reserves
the right to reject any purchase order.
Orders respecting shares of any of the Van Eck Global Funds that are mailed to
DST will be processed as of the day of receipt at DST, provided the order is in
proper form and is received at DST prior to 4:00 p.m. Eastern Time. Orders
mailed to DST, addressed to P.O. Box 418407, Kansas City, Missouri, 64141, must
be deposited in the DST P.O. Box prior to 11:30 a.m. Eastern Time in order to
receive the price computed that day. If a shareholder desires to guarantee a
price based on a given date of receipt, the order should be mailed by overnight
courier to DST at 1004 Baltimore, 4th Fl., Kansas City, Missouri, 64105, and
must be received by DST on the date desired before 4:00 p.m. Eastern Time.
Orders received by DST after the above times will be processed on the next
business day. Do not send mail to DST marked personal and/or confidential as
this may delay the processing of the order.
An investor who wishes to purchase shares of more than one Fund must complete
separate Applications for each Fund and remit separate checks to each Fund. An
investor may request additional Applications from the Funds or photocopy the
blank Application included with this Prospectus and complete it for each Fund.
If an investor fails to indicate the Fund to be purchased, the check will be
applied to a purchase of the U.S. Government Money Fund, a series of Van Eck
Funds, and notification and a prospectus will be sent to the investor. The
investor may then exchange at current price into the desired Fund. Initial
purchases must be in the amount of $1,000 or more per account. Subsequent
purchases must be in the amount of $100 or more, and may be made through
selected dealers or banks or by forwarding payment to DST. Either minimum may
be waived by the Funds for pension or retirement plans, for investment plans
calling for periodic investments in shares of the Funds, for sponsored payroll
deduction plans, for split funding or other insurance purchase plans or in
other appropriate circumstances.
Van Eck Securities Corporation (the "Distributor"), 99 Park Avenue, New York,
New York 10016, a wholly-owned subsidiary of the Adviser, has entered into a
Distribution Agreement with the Trusts in which the Distributor has indicated
that it will exercise its best efforts to solicit sales of the Funds' shares.
The Distributor has entered into Selling Group Agreements with selected broker-
dealers which have agreed to solicit purchasers for shares of the Funds
("Brokers") and into Selling Agency Agreements with banks or their subsidiaries
which have agreed to act as agent for their customers in the purchase of shares
of the Funds ("Agents"). A bank may be required to register as a broker-dealer
pursuant to state law.
- --------
* Except for Investors Fiduciary Trust Company (not affiliated with FII)
fiduciary retirement accounts.
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ALTERNATIVE PURCHASE ARRANGEMENTS
Global Emerging Markets Fund (Class A, B and C)
Shares of the Global Emerging Markets Fund may be purchased under any one of
the following arrangements: (i) with an initial sales charge imposed at the
time of purchase ("Class A shares"), (ii) with a contingent deferred sales
charge imposed at the time of redemption if such redemption is within six
years of the initial purchase ("Class B shares") or (iii) with a redemption
charge imposed at the time of redemption if such redemption is within 12
months of the initial purchase ("Class C shares"). With respect to each class
of shares, an ongoing asset-based fee for distribution and services (12b-1
fee) is charged. The distribution services fee applicable to Class B and C
shares will be higher than that applicable to Class A shares.
The alternative purchase arrangements permit an investor to choose the method
of purchasing shares that is more beneficial given the amount of the purchase,
the length of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution services fee
and, in the case of the Class B shares, the contingent deferred sale charge or
in the case of the Class C shares, the redemption charge would be less than
the initial sales charge and accumulated distribution services fee on Class A
shares. To assist investors in making this determination, the table under the
caption "Transaction Data" on page 3 sets forth examples of the charges
applicable to each class of shares. In this regard, Class A shares will
normally be more beneficial to the investor who qualifies for a reduced
initial sales charge. It is the sole responsibility of the investor, and his
or her Broker or Agent, to determine which sales charge alternative is most
advantageous.
An investor who elects the initial sales charge alternative acquires Class A
shares. Class A shares incur an initial sales charge when they are purchased
and enjoy the benefit of not being subject to any sales or redemption charge
when they are redeemed. Class A shares are subject to an ongoing distribution
and services fee at an annual rate of up to .50% of the Fund's aggregate daily
net assets attributable to the Class A shares (See "Plan of Distribution").
Certain purchases of Class A shares qualify for reduced initial sales charges.
It may be more advantageous to purchase Class A shares than Class B and C
shares when the purchase amount is $100,000 or more or when a lesser purchase
amount would qualify for a quantity discount or reduced sales charge at that
breakpoint in the Class A shares.
An investor who elects the contingent deferred sales charge alternative
acquires Class B shares. Class B shares do not incur a sales charge when they
are purchased, but they are subject to a sales charge if they are redeemed
within six years of purchase. Class B shares are subject to an ongoing
distribution and services fee at an annual rate of up to 1% of the Fund's
aggregate average daily net assets attributable to the Class B shares (See
"Plan of Distribution"). Class B shares enjoy the benefit of permitting all of
the investor's dollars to work from the time the investment is made. The
higher ongoing distribution and services fee paid by Class B shares will cause
such shares to have a higher expense ratio, pay lower dividends and have a
lower return than those of Class A shares. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month in
which the shareholder's order to purchase was accepted, in the circumstances
and subject to the qualifications described in this Prospectus. The purpose of
the conversion feature is to relieve the holder of the Class B shares that
have been outstanding for a period of time sufficient for the Distributor to
have been compensated for distribution expenses from the continuing burden of
such distribution-related expenses over an open-ended period of time. See
"Conversion Feature," below.
An investor who elects the redemption charge acquires Class C shares. Class C
shares do not incur a sales charge when they are purchased, but they are
subject to a redemption charge if they are redeemed within one year of
purchase. Class C shares are subject to an ongoing distribution and services
fee at an annual rate of up to 1% of the Fund's average daily net assets
attributable to the Class C shares (See "Plan of Distribution"). Class C
shares enjoy the benefit of permitting all of an investor's dollars to work
from the time the investment is made. Class C shares convert to Class A shares
eight years after the end of the month in which the shareholder's purchase
order was accepted. The higher ongoing distribution and services fees paid by
the Class C shares will cause such shares to have a higher expense ratio, pay
lower dividends and have a lower return than those of Class A shares.
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<PAGE>
Class A shares acquired under the initial sales charge alternative are subject
to a lower distribution and services fee and, accordingly, pay correspondingly
higher dividends per share and can be expected to have a higher return per
share than Class B and C shares. However, because initial sales charges are
deducted at the time of purchase, such investors would not have all their
money invested initially and, therefore, would initially own fewer shares.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time might consider
purchasing Class A shares because the accumulated distribution charges on
Class B or C shares may exceed the initial sales charge on Class A shares
during the life of the investment. Again, however, such investors must weigh
this consideration against the fact that, because of such initial sales
charge, not all their money will be invested initially. However, other
investors might determine that it would be more advantageous to purchase Class
B or C shares to have all their money invested initially, although remaining
subject to higher distribution charges and, in the case of Class B shares, for
a six-year period being subject to a contingent deferred sales charge or in
the case of Class C shares, for a one-year period being subject to a
redemption charge.
The distribution expenses incurred by the Fund or its Distributor in
connection with the sale of the shares will be paid, in the case of Class B
and Class C shares, from the proceeds of the ongoing distribution and services
fee and the contingent deferred sales or redemption charge incurred upon
redemption within applicable time. (See redemption charts on page 33 and 34).
Sales personnel of Brokers and Agents distributing the Fund's shares may
receive differing compensation from selling Class A, Class B or Class C
shares. Investors should understand that the purpose and function of the
contingent deferred sales charge or redemption charge and ongoing distribution
and services fees with respect to the Class B and Class C shares are the same
as those of the initial sales charge and ongoing distribution and services fee
with respect to the Class A shares.
Conversion Feature. Class B and Class C shares include all shares purchased
pursuant to the contingent deferred sales charge or redemption charge
alternative which have been outstanding for less than the period ending eight
years after the end of the month in which the shareholder's order to purchase
was accepted. At the end of this period, Class B and Class C shares will
automatically convert to Class A shares and will no longer be subject to the
higher distribution and services fees. Such conversion will be on the basis of
the relative net asset values of the two classes, without the imposition of
any sales load, fee or other charge. The purpose of the conversion feature is
to relieve the holder of Class B and Class C shares from most of the burden of
distribution-related expenses for shares that have been outstanding for a
period of time sufficient for the Fund or its Distributor to have been
compensated for such expenses.
For purposes of conversion to Class A shares, shares purchased through the
reinvestment of dividends and distributions paid in respect to Class B or
Class C shares in a shareholder's Fund account will convert in a proportionate
amount to the non-reinvestment shares converted.
It is not recommended that certificates be requested for Class B or Class C
shares, since the return and deposit for such certificated shares may delay
the conversion to Class A shares.
The conversion of Class B or Class C shares to Class A shares is subject to
the continuing availability of an opinion of counsel to the effect that (i)
the assessment of the higher distribution services fee and transfer agency
costs with respect to Class B or Class C shares does not result in the Fund's
dividends or distributions constituting "preferential dividends" under the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) the
conversion of shares does not constitute a taxable event under federal income
tax law. The conversion of Class B or Class C shares to Class A shares may be
suspended if such an opinion is no longer available. In that event, no further
conversions of Class B or Class C shares would occur, and shares might
continue to be subject to the higher distribution services fee for an
indefinite period which may extend beyond the period ending eight years after
the end of the month in which the shareholder's order to purchase was
accepted.
There is no initial sales charge on purchases of Class B or Class C Shares.
However, each class pays the Distributor an annual 12b-1 fee for promotion and
distribution services not to exceed 1% of average daily net assets (see "Plan
of Distribution").
The contingent deferred sales charge on Class B and the redemption charge on
Class C is waived on redemptions of shares following the death or disability
of a Class B or Class C shareholder. An individual will be considered disabled
for this purpose if
15
<PAGE>
he or she meets the definition thereof in Section 72(m)(7) of the Code. The
Distributor will require satisfactory proof of death or disability. The charge
may be waived where the decedent or disabled person is either an individual
shareholder or owns the shares with his or her spouse as a joint tenant with
right of survivorship, and where the redemption is made within one year of the
death or initial determination of disability. The waiver of the charge applies
to a total or partial redemption but only to redemptions of shares held at the
time of the death or initial determination of disability. Additionally, the
charge may be waived when a total or partial redemption is made in connection
with certain distributions from Retirement Plans. The charge may be waived for
any redemption in connection with a lump-sum or other distribution following
retirement or, in the case of an IRA or Keogh Plan or custodial account
pursuant to Section 403(b) of the Code after attaining age 70 1/2 or, in the
case of a qualified pension or profit-sharing plan, after termination of
employment after age 55. The charge also may be waived on any redemption which
results from the tax-free return of an excess contribution pursuant to Section
408(d)(4) or (5) of the Code, the return of excess deferral amounts pursuant
to Sections 401(k)(8) or 402(g) of the Code, or from the death or disability
of the employee. The charge is not waived from any distributions from IRAs or
other qualified retirement plans not specifically described above. A
shareholder, or the Broker or Agent, must notify DST at the time the
redemption instructions are provided whenever a waiver of the contingent
deferred sales charge or redemption charge applies.
SALES CHARGES, DISTRIBUTION AND SERVICE FEES
Sales charges on purchases of shares of the Fund are set forth in the table
below. The Fund imposes a 12b-1 distribution and services fee. Global Emerging
Markets Fund-A has a 12b-1 fee of .50%. All or a portion of these fees are
paid to banks, brokers and dealers for their shareholder servicing, promotion
or distribution activities. The portion paid to banks, brokers and dealers is
determined from time-to-time by the Funds. Shareholders in Class B and Class C
Funds should be aware that dividends reinvested in new shares of the Fund will
continue to be assessed the full 12b-1 fee, including that portion which is
retained by the Distributor. Global Emerging Markets Fund-B and Global
Emerging Markets Fund-C imposes a 12b-1 fee of 1% of average daily net assets.
For Global Emerging Markets Fund-C, following the first year, of the 1% paid
by the Fund, a portion will be retained by the Distributor and up to .75% of
1% may be paid to Brokers and Agents for distribution and up to .25 of 1% is
for servicing. The portion retained by the Distributor is in payment for
distribution expenses. The Distributor may vary the portion retained by it
from time to time, but the amount payable by the Fund will not exceed 1%. The
Distributor will monitor payments under the Plans and will reduce such
payments or take such other steps as may be necessary, including payments from
its own resources, to assure that Plan payments will be consistent with the
applicable rules of the National Association of Securities Dealers, Inc. See
"Plan of Distribution".
GLOBAL EMERGING MARKETS FUND (CLASS A)
<TABLE>
<CAPTION>
SALES CHARGE AS A DISCOUNT TO
PERCENTAGE OF BROKERS OR AGENTS
-------------------- AS A PERCENTAGE
OFFERING NET AMOUNT OF THE
DOLLAR AMOUNT OF PURCHASE PRICE INVESTED OFFERING PRICE*
- ------------------------- -------- ---------- -----------------
<S> <C> <C> <C>
Less than $100,000....................... 4.75% 5.0% 4.00%
$100,000 to less than $250,000........... 3.75% 3.9% 3.15%
$250,000 to less than $500,000........... 2.50% 2.6% 2.00%
$500,000 to less than $1,000,000......... 2.00% 2.0% 1.65%
$1,000,000 and over...................... None***
</TABLE>
GLOBAL EMERGING MARKETS FUND (CLASS B)**
<TABLE>
<CAPTION>
SHAREHOLDER'S TIME OF REDEMPTION CONTINGENT DEFERRED SALES CHARGE
- -------------------------------- --------------------------------
<S> <C>
During Year One.................... 5.0% of the lesser of NAV or purchase price
During Year Two.................... 4.0% of the lesser of NAV or purchase price
During Year Three.................. 4.0% of the lesser of NAV or purchase price
During Year Four................... 3.0% of the lesser of NAV or purchase price
During Year Five................... 2.0% of the lesser of NAV or purchase price
During Year Six.................... 1.0% of the lesser of NAV or purchase price
Thereafter......................... None
</TABLE>
16
<PAGE>
GLOBAL EMERGING MARKETS FUND (CLASS C)
<TABLE>
<CAPTION>
SHAREHOLDER'S TIME OF REDEMPTION CONTINGENT DEFERRED REDEMPTION CHARGE
- -------------------------------- -------------------------------------
<S> <C>
During Year One.................... 1.0% of the lesser of NAV or purchase price
Thereafter......................... None
</TABLE>
- --------
* Brokers or Agents who receive substantially all of the sales charge for
shares they sell may be deemed to be statutory underwriters.
** Brokers or Agents who sell Class B shares will receive a sales commission
of 4.0% of the value of the shares sold at the time of investment.
*** For any sale of $1,000,000 or more of Global Emerging Markets Fund-A, the
Distributor may pay a finder's fee to parties eligible to receive such a
fee. The fee will be paid during the first two years after any such sale
and is calculated as a quarterly payment equal to 0.0625% (.25% on an
annual basis) of the average daily net asset value of the shares sold that
remain outstanding throughout such months. An eligible sale is a single
sale for a single client (sales for other clients cannot be aggregated for
purposes of qualification for the finder's fee). Eligible sales registered
to a street or nominee name account must provide appropriate verification
of eligibility and average daily net assets upon which payment is to be
made. Sales made through a Bank Trust Department or Advisory Firm which
purchases shares at net asset value do not qualify for the finder's fee.
The finder's fee will be credited to the dealer of record on the record
date (currently, the last calendar day of February, May, August and
November) and will be generally paid on the 20th day of the following
month. Please contact the Distributor to determine eligibility to receive
such fee.
- --------
- --------
Brokers and Agents may receive different compensation for selling Class A,
Class B or Class C shares.
The Class A initial sales charges vary depending on the amount of the
purchase, the number of shares of the Van Eck Group of Funds which are
eligible for the Right of Accumulation that an investor already owns, a Letter
of Intent to purchase additional shares during a 13-month period, or other
special purchase programs. See "Group Purchases," "Combined Purchases,"
"Letter of Intent" and "Right of Accumulation" below. These Funds also pay the
Distributor a fee for promotional and distribution services (see "Plan of
Distribution"). Shares of the Funds may be purchased without a sales charge by
Trustees, officers and full-time employees (and their parents, spouses and
children) and agents of the Trust, the Adviser, Sub-Adviser or the Distributor
and their affiliates and agents and by employees of Brokers or Agents (and
their spouses and children under the age of 21) or in connection with a merger
or other business combination, or by the Adviser for the benefit of certain
discretionary advisory accounts it manages meeting minimum asset requirements.
Shares may be purchased at net asset value (a) (i) through an investment
adviser who makes such purchases through a broker/dealer, bank or trust
company (each of which may impose transaction fees on the purchase), (ii) by
an investment adviser for its own account or for a bona fide advisory account
over which the investment adviser has investment discretion or (iii) through a
financial planner who charges a fee and makes such purchases through a
financial institution which maintains a net asset value purchase program that
enables the Distributor to realize certain economies of scale or (b) through
bank trust departments or trust company on behalf of bona fide trust or
fiduciary accounts by notifying the Distributor in advance of purchase. A bona
fide advisory, trust or fiduciary account is one which is charged an asset-
based fee and whose purpose is other than purchase of Fund shares at net asset
value. Shares of the Funds which are sold with a sales charge may be purchased
by a foreign bank or other foreign fiduciary account for the benefit of
foreign investors at the sales charge applicable to the Funds' $500,000
breakpoint level, in lieu of the sales charges in the above scale. The
Distributor has entered into arrangements with foreign financial institutions
pursuant to which such institutions may be compensated by the Distributor from
its own resources for assistance in distributing Fund shares. Clients of
Netherlands' insurance companies who are not U.S. citizens or residents may
purchase shares without a sales charge. Shares may be purchased at net asset
value on behalf of retirement and deferred compensation plans and trusts
funding such plans (excluding Individual Retirement Accounts ("IRAs") and SEP-
IRAs unless they qualify for such purchase under one of the prior exceptions)
including, but not limited to, plans and trusts defined in Sections 401(a),
403(b) or 457 of the Internal Revenue Code and "rabbi trusts" which
participate in a program for the purchase of shares at net asset value offered
by a financial institution and which institution maintains an omnibus account
with the Fund. Brokers may charge a transaction fee for effecting purchases at
net asset value or redemptions. See "Availability of Discounts."
The term "purchase" refers to a single purchase by an individual, to the
aggregate of concurrent purchases by an individual, his spouse and children
under the age of 21, or to a purchase by a corporation, a partnership or a
trustee or other fiduciary for a single trust, estate or fiduciary account.
17
<PAGE>
Shares of the Funds are sold at the public offering price next computed after
receipt of a purchase order by the Broker, Agent or DST, provided that the
Broker or Agent receives the purchase order before the close of trading on the
New York Stock Exchange and transmits it to the Distributor by 5:00 P.M.
Eastern Time or to DST through the facilities of the National Securities
Clearing Corporation by 7:00 P.M. Eastern Time. If a Broker or Agent receives
an investor's order before the close of trading on the New York Stock Exchange
and fails to transmit it to the Distributor by the above times, any resulting
loss will be borne by the Broker or Agent.
The public offering price is computed once daily on each business day and is
the net asset value plus any applicable sales charge. The net asset value for
each Fund is computed as of the close of business on the New York Stock
Exchange which is normally at 4:00 P.M. Eastern Time, Monday through Friday,
exclusive of national business holidays. The assets of the Funds are valued at
market or, if market value is not ascertainable, at fair value as determined
in good faith by the Board of Trustees. The Funds may invest in securities or
futures contracts listed or traded on foreign exchanges which trade on
Saturdays or other customary United States national business holidays (i.e.,
days on which the Funds are not open for business), and consequently, the net
asset values of shares of the Funds may be significantly affected on days when
an investor has no access to the Funds.
Certificates for shares of the Funds are issued only upon specific request to
DST. Due to the conversion feature, certificates are not recommended for Class
B or Class C shareholders.
In addition to the discounts allowed to Brokers and Agents, the Distributor
will, at its own expense, subject to applicable state laws, provide additional
promotional incentives or payments in the form of merchandise (including
luxury merchandise) or trips (including trips to luxury resorts at exotic
locations or attendance at seminars/conferences at luxury resorts) to Brokers
or Agents that sell shares of the Funds. In some instances, these incentives
or payments will be offered only to certain Brokers or Agents who have sold or
may sell significant amounts of shares. Brokers and Agents who receive
additional concessions may be deemed to be underwriters as that term is
defined in the Securities Act of 1933.
GROUP PURCHASES
An individual who is a member of a qualified group may purchase shares of the
Funds at the reduced commission applicable to the group taken as a whole. The
commission is based upon the aggregate dollar value, at the current offering
price, of shares owned by the group, plus the securities currently being
purchased. For example, if members of the group held $80,000, calculated at
current offering price, of Global Emerging Markets Fund-A's shares and now
were investing $25,000, the sales charge would be 3.75%. Information
concerning the current sales charge applicable to a group may be obtained by
contacting the Distributor.
A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring a Fund's shares at a discount
and (iii) satisfies uniform criteria which enables the Distributor to realize
economies of scale in its costs of distributing shares. A qualified group must
have more than 10 members, must be available to arrange for group meetings
between representatives of the Distributor and the members of the group, must
agree to include sales and other materials related to the Funds in its
publications and mailings to members at reduced or no cost to the Distributor,
and must seek to arrange the use of the Automatic Investment Plan. See
"Investment Programs" for information concerning the Automatic Investment
Plan.
COMBINED PURCHASES
Shares of Funds in the Van Eck Group of Funds (except U.S. Government Money
Fund ) may be purchased at the initial sales charge applicable to the quantity
purchase levels shown above by combining concurrent purchases.
LETTER OF INTENT
Purchasers who anticipate that they will invest $100,000 or more (other than
through exchanges) in the Van Eck Group of Funds, except for U.S. Government
Money Fund, (or $25,000 or more in International Investors, Gold Opportunity
Fund and Gold/Resources Fund), within thirteen months may execute a Letter of
Intent on the form in the Application. The execution of a
18
<PAGE>
Letter of Intent will result in the purchaser paying a lower initial sales
charge, at the appropriate quantity purchase level shown above on all
purchases during a thirteen month period. Purchases of other Funds in the Van
Eck Group of Funds, except for the U.S. Government Money Fund, may be included
to fulfill the Letter of Intent. A purchase not originally made pursuant to a
Letter of Intent may be included under a backdated Letter of Intent executed
within 90 days after such purchase. For further details, including escrow
provisions, see the Letter of Intent provisions in the Instructions to the
Application.
RIGHT OF ACCUMULATION
The above scale of initial sales charges also applies to current purchases of
shares of the Van Eck Group of Funds (except for U.S. Government Money Fund)
by any of the persons enumerated above, where the aggregate quantity of shares
of these Funds previously purchased, and then owned, determined at the current
offering price, plus the shares being purchased amount to more than $100,000
(or more than $25,000 for International Investors, Gold Opportunity Fund and
Gold/Resources Fund), provided the Distributor or DST is notified by such
person or the Broker or Agent each time a purchase is made which would so
qualify. See "Investment Programs" in the Statement of Additional Information.
AVAILABILITY OF DISCOUNTS
An investor or the Broker or Agent must notify DST or the Distributor at the
time of purchase whenever a quantity discount or reduced sales charge is
applicable to his purchase. Quantity discounts described above may be modified
or terminated at any time without prior notice.
EXCHANGE PRIVILEGE
The Adviser discourages trading in response to short-term market fluctuations.
Such activity may hinder the Adviser's or Sub-Adviser's ability to invest the
Funds' assets in accordance with their respective investment objectives and
policies, cause a Fund to incur additional brokerage, registration and other
expenses, and may be disadvantageous to other shareholders in either the Fund
being exchanged from or into or both. Effective May 1, 1995, Shareholders will
be limited to six exchanges per calendar year; however, exchanges from
International Investors Gold Fund (Class A) may be excluded from this
limitation, if the Fund or Adviser believes that exclusion will not be
materially disadvantageous to other shareholders. Active shareholders should
consult the Fund as to current policy. For purposes of determining the number
of exchanges made per calendar year, Fund accounts having the same beneficial
owner or under common control will be aggregated. This exchange limitation
does not apply to the U.S. Government Money Fund.
Each Fund reserves the right to modify or terminate the Exchange Privilege of
any shareholder or to limit or reject any exchange. Although each Fund will
attempt to give shareholders prior notice whenever it is reasonable to do so,
it may impose these restrictions at any time when it deems it to be within the
best interest of remaining shareholders. If the exchange is rejected,
shareholders will nevertheless be able to redeem their shares.
Each Fund has the ability to redeem its shares in kind. Each Fund will pay in
cash all requests for redemption by any shareholder of record limited in
amount with respect to each shareholder of record during any ninety-day period
to the lesser of (i) $250,000 or (ii) 1% of the net asset value of such Fund
at the beginning of such period. See "Exchange Privilege" and "Redemption in
Kind" in the Statement of Additional Information. In addition, the Funds have
reserved the right to refuse any purchase order.
The Van Eck Group of Funds consists of Global Emerging Markets Fund (Class A,
B and C), Asia Dynasty Fund (Class A and B), Asia Infrastructure (Class A and
B), Global Balanced Fund (Class A and B), Global Hard Assets Fund (Class A, B
and C), International Investors Gold Fund (Class A and C), Gold/Resources Fund
(Class A), Gold Opportunity Fund (Class A, B and C), U.S. Government Money
Fund, and Global Income Fund (Class A). Shareholders of these Funds, may
exchange shares for shares of the same class of any of the other Funds (the
"Exchange Privilege"). Class B shareholders of Global Emerging Markets Fund,
Asia Dynasty Fund, Asia Infrastructure Fund, Global Balanced Fund, Global Hard
Assets Fund and Gold Opportunity Fund may only exchange between those five
Funds. Class C shareholders of Global Emerging Markets Fund, International
Investors Gold Fund, Global Hard Assets Fund and Gold Opportunity Fund may
only exchange between those four Funds. Shares of the U.S. Government Money
Fund acquired other than pursuant to the Exchange Privilege, may only be
exchanged into the other Class A Funds included in the Exchange Privilege
subject to payment of the applicable sales charge. For federal income tax
purposes, any exchange pursuant to the Exchange Privilege, other than
exchanges in retirement plans offered by the Funds, will be regarded as a sale
of shares, and any gain or loss must generally be recognized by the
shareholder.
19
<PAGE>
Class B or C shares exchanged for Class B or C shares of another fund with a
different contingent deferred sales charge or redemption charge schedule will
be subject to the contingent deferred sales charge or redemption charge
applicable to those shares at the time of original purchase.
The Exchange Privilege may be modified or terminated at any time. See "Exchange
Privilege" in the Statement of Additional Information.
WRITTEN EXCHANGE
Shareholders wishing to exchange shares may do so by sending to DST a written
request in proper form signed by all registered owners exactly as the account
is registered, specifying the number of shares or amount of investment to be
exchanged (or that all shares credited to a fund account be exchanged).
Exchanges are only available in states where exchanges may legally be made,
along with appropriate documentation, if necessary. A person(s) authorized to
sign on behalf of joint owners, corporations, trusts, custodians, or other
organizations must supply appropriate evidence of the authority of each
signatory with each written request. Accounts not eligible for the telephone
exchange privilege may make a written exchange request. Written exchange
requests will be executed on the first business day of receipt in proper order.
Written exchange requests may be sent by regular mail to: Van Eck Funds, c/o
DST, P.O. Box 418407, Kansas City, MO 64141, or by overnight courier to 1004
Baltimore, Kansas City, MO 64105.
TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGE
Completion of the Application (or the application for an IRA/SPIRA, Qualified
Pension Plan, 403(b)(7) Plan or SEP for telephone exchange only) or receipt of
settlement instructions from a Broker or Agent for an eligible account shall
constitute an election by the investor to have available the Telephone Exchange
Privilege and Telephone Redemption Privilege, unless otherwise indicated. By
electing the Privileges the investor is authorizing each Fund, its agents and
affiliates to act on any instructions they believe to be genuine. Such persons
will employ reasonable procedures to confirm the authenticity of these
communications and cannot be responsible for the authenticity of any telephone
instructions nor will they be liable for any loss of expenses resulting from
acting on any instructions, including those which are fraudulent and those not
authorized by the investor unless such persons fail to employ such procedures.
Those shareholders that elected NOT to establish the Telephone Exchange
Privilege or the Telephone Redemption Privilege on their accounts may later
establish the privilege by written request, signed by all registered owners on
the account and with appropriate documentation, as necessary.
The Telephone Exchange Privilege may not be available to accounts held by a
brokerage firm in street name and participants in retirement plans sponsored by
organizations other than the Trust, and participants in such plans should
consult with their sponsors to determine the availability of the Telephone
Exchange Privilege prior to exercising the Telephone Exchange Privilege.
The Telephone Redemption Privilege is not available to accounts registered in
"street name", nominee or corporate name and custodial accounts held by a
financial institution including Investors Fiduciary Trust Company retirement
accounts.
After acceptance by DST of an Application, a telephone exchange or telephone
redemption may be effected by contacting DST at 1-800-345-8506. Telephone calls
are recorded. Telephone instructions for exchanging or redeeming shares on
deposit with DST may be given by anyone claiming to be the shareholder, the
Broker or Agent of record, or an authorized representative of any of the
foregoing [the caller must identify his/her name and relationship to the
account] and will be executed only if they include the correct social security
number, tax identification number or account number. Telephone instructions
accepted after the close of business on the New York Stock Exchange will not be
effected until the following business day (see "Purchase of Shares"). In the
case of joint or multiple owners, one owner's call may effect the telephone
exchange or redemption. Because of unusual market conditions it may be
difficult and/or impossible to contact DST to effect the exchange or
redemption.
20
<PAGE>
Shareholders should continue to try to contact DST by telephone at the above
telephone number or may deliver written instructions by post or courier. The
Funds reserve the right to refuse a request for the Telephone Redemption
Privilege without prior notice either during or after the call. The Funds
reserve the right to modify or terminate the Exchange Privilege at any time.
See "Exchange Privilege" in the Statement of Additional Information.
If the exchanging shareholder does not have an account in the Fund into which
he/she is exchanging, a new account will be established with the same
registration, dividend and capital gain options, and dealer of record specified
in the shareholder's account in the existing Fund. In order to establish an
Automatic Withdrawal or Automatic Investment Plan or other options for the new
account, an exchanging shareholder must make the request at the time of
exchange and may be required to file an application which can be obtained from
DST or the Fund.
For accounts with the Telephone Redemption Privilege, telephone redemption
requests will only be accepted on shares held on deposit for amounts of $50,000
or less per day if the check is payable to the shareholder(s) and sent to the
address of record. A telephone redemption will not be accepted if a change to
the registered address has been effected within one month of such request.
DIVIDENDS AND DISTRIBUTIONS
Global Emerging Markets Fund intends to make distributions from net investment
income in June and December and distribute any net realized capital gains
resulting from the Funds' investment activity annually in December. Dividends
or distributions declared in December but paid in January will be includible in
a shareholder's income as of the record date (usually in December) of such
dividends or distributions. Short-term capital gains, if declared, are treated
the same as dividend income. The fiscal year of the Fund ends on December 31.
TAX-SHELTERED RETIREMENT PLANS
Shares of the Funds are available for purchase in connection with the following
tax-sheltered retirement plans:
INDIVIDUAL RETIREMENT ACCOUNT AND SPOUSAL INDIVIDUAL RETIREMENT ACCOUNT
("IRA/SPIRA")--available to anyone who has earned income (investments may also
be made in the name of a spouse, if the spouse is treated as having no earned
income).
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP")--available to employers, including
self-employed individuals seeking to provide retirement income to employees
through employer contributions or salary reduction contributions to employee
individual retirement accounts.
QUALIFIED PENSION PLAN--available to self-employed individuals, partnerships,
corporations and their employees.
403(B)(7) PROGRAM--available to employees of certain tax exempt organizations
and schools. See "Tax Sheltered Retirement Plans" in the Statement of
Additional Information. In addition, information concerning these plans is
available from the Funds. This information should be read carefully and
consultation with an attorney or tax adviser is advisable.
INVESTMENT PROGRAMS
DIVIDEND REINVESTMENT PLAN
Unless a shareholder has given notice directly, or through his Broker or Agent,
to DST (the Funds' dividend paying agent) that he elects to receive dividends
and capital gains distributions in cash, dividends and distributions of a Fund
will be reinvested in shares of that Fund at net asset value without a sales
charge. Reinvestments of dividends and distributions on shares of the Funds
will occur on a date selected by the respective Board of Trustees.
In addition, dividends and capital gains distributions paid by the Funds
(except Class B and C shares) in cash may be automatically invested at net
asset value on the payable date in Class A shares of any series of the Van Eck
Group of Funds. A shareholder wishing to exercise this option should contact
DST for instructions.
21
<PAGE>
AUTOMATIC INVESTMENT PLAN
The Funds offer to investors a program for regularly investing specified
dollar amounts in a Fund. In establishing the Automatic Investment Plan, an
investor authorizes DST to collect a specified amount from his checking
account and use the proceeds to purchase shares of a Fund for the investor's
account. Further details of the Automatic Investment Plan are given in an
application which is available from DST or the Distributor. See "Investment
Programs" in the Statement of Additional Information.
AUTOMATIC EXCHANGE PLAN
The Funds offer a program for regularly exchanging specified dollar amounts
into a Fund from an exchange of shares from one of the other series of the Van
Eck Group of Funds (except Class B and C shares). In establishing the
Automatic Exchange Plan, an investor authorizes DST to regularly exchange a
specified amount from any series of the Van Eck Funds and purchase shares of a
Fund for the investor's account. Further details of the Automatic Exchange
Plan are given in an application which is available from DST or the Fund. See
"Investment Programs" in the Statement of Additional Information.
AUTOMATIC WITHDRAWAL PLAN
Any shareholder who owns shares of a Fund valued at $10,000 or more at current
offering price may establish an Automatic Withdrawal Plan under which he will
receive a monthly or quarterly check in a specified amount. The Plan is not
available to Class B and C shareholders. Further details on the Automatic
Withdrawal Plan are given in an application which is available from DST or the
Funds. See "Investment Programs" in the Statement of Additional Information.
REDEMPTION OF SHARES
WRITTEN REDEMPTION
A shareholder wishing to redeem shares of any of the Funds may do so by
sending to DST, P.O. Box 418407, Kansas City, Missouri 64141 (for additional
mailing instructions to DST and times of processing see "Purchase of Shares"):
(1) a written request for redemption in proper form signed by all registered
owners exactly as the account is registered, specifying the number of shares
or amount of investment to be redeemed (or that all shares credited to a Fund
account be redeemed); (2) if the amount redeemed is $50,000 or more, or if the
proceeds of redemption are paid to other than the registered owner of the
shares at the address on record at DST, a guarantee of the signature of each
registered owner by an eligible guarantor institution (a notarization by a
notary public is not acceptable); and (3) any additional documents concerning
authority and related matters in the case of estates, trusts, guardianships,
custodianships, partnerships and corporations (e.g. appointments as executor
or administrator, trust instruments or certificates of corporate authority)
requested by DST. If the shares to be redeemed were issued in certificate
form, the certificates must be endorsed for transfer (or be accompanied by an
endorsement) and must be submitted with the written request for redemption.
The requirement for a signature guarantee is waived for redemptions of $50,000
or less if the redemption is a transfer of assets from an IFTC held retirement
plan in one of the Funds in the Van Eck Group of Funds to a retirement plan
held by another recognized custodian/trustee.
TELEPHONE REDEMPTION (SEE "TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGE" ON
PAGE 20)
BROKER/AGENT CONFIRMED REDEMPTION
For the convenience of shareholders, the Funds have authorized the Distributor
as agent to accept confirmed orders only from Brokers and Agents for the
repurchase of shares of the Funds. If a shareholder uses the services of a
Broker or Agent in effecting repurchases of shares, the Broker or Agent may
charge a fee for its services. The repurchase price is the net asset value per
share next determined after the repurchase order is received by the Broker or
Agent prior to the close of business on the New York Stock Exchange on the day
received. Brokers and Agents have the responsibility of submitting such
repurchase orders, to the Distributor not later than 5:00 p.m., Eastern Time,
or to DST through the facilities of the National Securities Clearing
Corporation by 7:00 p.m., Eastern Time, on such day in order to obtain that
day's applicable redemption price.
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Settlement of confirmed orders from accounts will not be effected until receipt
of instructions in proper form as described above or an indemnity from the
Broker or Agent of record on the account and any shares held in certificated
form. Some Brokers or Agents may have self-imposed restrictions regarding the
submission of confirmed redemption orders on behalf of shareholders.
The redemption price will be the net asset value per share next determined
after the receipt of a request in proper form as described above. See "Purchase
of Shares" for DST processing receipt of mail. The market value of the
securities in the portfolio of each Fund is subject to daily fluctuations and
the net asset value of these Funds' shares will fluctuate accordingly.
Therefore, the redemption value may be more or less than the shareholder's
cost.
Except as noted, payment will normally be made within three days after delivery
of a proper redemption request except for such delays as may be permitted under
applicable law or rule. If shares of any Fund to be redeemed were purchased by
check, the Trust reserves the right to make payment on such redemption request
only after it has assured itself that a shareholder's check has been cleared
for payment, which may take as long as 15 days. The right of redemption may be
suspended and payment postponed for any period during which the New York Stock
Exchange is closed (other than customary weekend and holiday closings) or
trading on that Exchange is restricted as determined by the applicable rules
and regulations of the Securities and Exchange Commission; or during an
emergency, as determined by the Securities and Exchange Commission, as a result
of which it is not reasonably practical for the Funds to dispose of the
securities owned by them or to determine fairly their net asset values; or for
any period that the Securities and Exchange Commission may by order permit for
the protection of shareholders of the Funds.
The Funds reserve the right to redeem shares of a Fund and mail the proceeds to
a shareholder if, at any time, the number of shares in a shareholder's account
falls, subsequent to satisfying the initial investment requirement, below a
specified amount, currently 50 shares. Shareholders will be notified and will
have 30 days to bring the number of shares owned by them up to the required
amount before any redemption is made by that Fund.
Any shareholder who redeems his shares of the Global Emerging Markets Fund-A
has a one-time right to reinvest in shares of this Fund at net asset value
without the payment of a sales charge. Such reinvestment must be made within 30
days after the redemption of shares of these Funds and is limited to no more
than the amount of the redemption proceeds. The shareholder must inform the
Fund or DST that he is exercising his onetime right to reinvest at NAV.
Although redemption of shares is normally a taxable event and a gain or a loss
must be recognized, subsequent reinvestment within such thirty-day period in
the same Fund is considered a "wash sale" under the federal income tax law and
no loss on such redemption may be recognized for federal income tax purposes.
EXPEDITED REDEMPTION
Requests for Expedited Redemption of the Van Eck Group of Funds may be made by
telephone, telegram, other wire communication or by letter upon completion of
the Expedited Redemption portion set forth in the Application. Shareholders
redeeming a minimum of at least $1,000 of shares which are on deposit with DST
may redeem by telephoning DST toll free (800) 345-8506. Proceeds of redeemed
shares will be transmitted by wire to the shareholder's bank account designated
on the application form (which must be at a domestic commercial bank which is a
member of the Federal Reserve System). The wire cost involved may automatically
be deducted from the amount wired. The Fund and/or DST reserve the right to
refuse telephone requests at any time. Shareholders may contact DST for
additional information concerning an Expedited Redemption. Due to unusual
market conditions it may be difficult or impossible to contact DST to effect
the redemption. Shareholders should continue to try to contact DST by telephone
at the above telephone numbers.
TRANSFER OF OWNERSHIP
To transfer ownership (re-register) all or a portion of shares held in a
shareholder's account, the shareholder must provide a written request with any
certificated shares and any documents concerning authority and related matters
as described above (See "Redemption of Shares") in proper form. Also, the
shareholder should provide a properly certified social security number,
taxpayer identification number, or certification of non-resident alien status
of the new owner at the time of transfer.
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MANAGEMENT
TRUSTEES
The management of the business and affairs of each Fund is the responsibility
of the Board of Trustees. For information on the Trustees and officers of the
Funds see "Trustees and Officers" in the Statement of Additional Information.
INVESTMENT ADVISER, MANAGER AND ADMINISTRATOR
Van Eck Associates Corporation, 99 Park Avenue, New York, NY 10016, serves as
the investment adviser and manager pursuant to Advisory Agreements with the
Trust. The Adviser manages the investment operations of the Funds and
furnishes the Funds with a continuous investment program which includes
determining which securities should be bought, sold or held. Global Emerging
Markets Fund pays the Adviser a monthly fee at the annual rate of 1.00% of
average daily net assets, a portion of which is paid to the Adviser for
accounting and administrative services it provides to the Fund. The advisory
fees paid to the Adviser with respect to these Funds are higher than the fees
paid by most investment companies because of the complexities of managing
these types of funds (such as following trends, industries and companies in
many different countries and stock markets throughout the world).
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 Van Eck Associates
Corporation at December 31, 1995 were approximately $1.6 billion. John C. van
Eck, Chairman and President of the Trust, and members of his immediate family
own 100% of the voting stock of Van Eck Associates Corporation.
Peregrine Asset Management (Hong Kong) Limited ("PAM"), 1704 New World Tower,
16-18 Queen's Road Central, Hong Kong, serves as sub-investment adviser to the
Global Emerging Markets Fund pursuant to a Sub-Investment Advisory Agreement
with the Adviser. PAM manages the investment operations of the Global Emerging
Markets Fund and furnishes the Fund with a continuous investment program that
includes which securities should be bought, sold or held. The Adviser manages
and administers the business and affairs of the Fund. As compensation for its
services, PAM is paid a monthly fee at an annual rate of .50% of average daily
net assets by the Adviser from the advisory fees it receives from the Fund. In
addition to advising foreign funds, PAM serves as an investment adviser to one
U.S. registered investment company. PAM is a 100% owned subsidiary of
Peregrine Asset Management Limited which in turn is a 75% owned subsidiary of
Peregrine Investment Holdings Limited ("Peregrine") which was founded in 1988
and is, along with its affiliates, the largest independent Asian based
investment bank outside of Japan and Korea. Peregrine and its affiliates have
offices in fifteen Asian countries as well as in Europe and the United States.
As of June 30, 1996, total assets under management by Peregrine exceeded $170
million.
The primary portfolio manager responsible for the day-to-day management of the
Global Emerging Markets Fund is listed below:
Gary Greenberg. C.F.A.--Manager of the Fund has been serving in such capacity
since the Fund commenced operations. Mr. Greenberg, Deputy Managing Director
of PAM, joined PAM in July, 1994 and is responsible for PAM's investment
strategy in various regions of the world including portfolio manager for a
fund which invests in smaller companies in India. Prior to joining PAM, Mr.
Greenberg served a co-manager of the Acorn International Fund from 1992 to
1994. During that time period he was principal and portfolio manager of an
asset management company which manages over U.S.$4 billion, including
approximately U.S.$2 billion in non-U.S. companies. Mr. Greenberg was employed
by Harris Associates as an analyst from 1989 until 1992.
Other investment professionals at PAM who are expected to have significant
input with respect to the Fund's investments include:
Bruce Seton--Chief Investment Officer of PAM has been serving in such capacity
since the Fund commenced operations. Mr. Seton serves as Chief Executive
Officer of PAM and is responsible for establishing PAM's overall investment
guidelines and strategies. Prior to joining PAM in 1994, Mr. Seton spent
twenty-two years at Gartmore Investment Limited managing funds emphasizing
Asian emerging market investments.
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<PAGE>
Aureole Foong--Senior Fund Manager of the Fund has been serving in this
capacity since the Fund commenced operations. Mr. Foong joined PAM in 1994 as
a fund manager. His responsibilities at PAM include managing a fund which
invests in equities and derivatives in the Asia region. Prior to joining PAM,
Mr. Foong worked from 1990 to 1994 at Unifund, a Geneva based private
investment company, where he served as a Senior Vice President.
EXPENSES
Each Fund bears all expenses of its operation other than those incurred by the
Adviser under its Advisory Agreement with the Trust and those incurred by the
Sub-Adviser, if any, under its Sub-Investment Advisory Agreement. In
particular, the Funds pay: investment advisory fees, custodian fees and
expenses, legal, accounting and auditing fees and expenses, brokerage fees,
taxes, expenses of preparing prospectuses and shareholder reports for existing
shareholders, registration fees and expenses (including compensation of the
Adviser's employees in relation to the time spent on such matters), Rule 12b-1
distribution expenses, expenses of the transfer and dividend disbursing agent,
the compensation and expenses of Trustees who are not otherwise affiliated
with the Trust, the Adviser or Sub-Adviser or any of their affiliates, and any
extraordinary expenses. Expenses incurred jointly by the Funds are allocated
among the Funds in a manner determined by the Trustees to be fair and
equitable. Under the Advisory Agreement, the Adviser provides the Funds with
office space, facilities and simple business equipment and provides the
services of executive and clerical personnel for administering the affairs of
the Funds. The Adviser or Sub-Adviser compensates Trustees of the Trust if
such persons are employees or affiliates of the Adviser or Sub-Adviser or its
affiliates. The Funds reimburse the Adviser for its costs in servicing
shareholder accounts and maintaining books and records of each Fund, including
general ledger and daily net asset value accounting.
PLAN OF DISTRIBUTION
Each of the Van Eck Global Funds has adopted a Plan of Distribution pursuant
to Rule 12b-1 (the "Plans") under the 1940 Act. The Plans may be terminated at
any time by a vote of a majority of the Trustees, or by a vote of a majority
of the outstanding voting securities of the respective Fund. These Plans fall
into two broad categories: reimbursement plans and compensation plans. The
fees under all Plans will be paid quarterly. The National Association of
Securities Dealers, Inc. rules may limit the amount payable under the Plans.
Under a reimbursement type plan, the fees, or a percentage thereof, are used
for payments to Agents and Brokers who service shareholder accounts of a Fund
and the remainder is used for other actual promotional and distribution
expenses incurred by the Distributor. A Plan's fees accrued by a Fund in
excess of payments to Brokers and Agents and reimbursement to the Distributor
for its actual expenses will be retained by the Fund. A reimbursement type
plan may provide for the payment of interest as a distribution expense.
Under a compensation type plan, the fees under the Plan are not directly tied
to expenses and payments by the Fund and may be more or less than actual
expenses incurred under the Plan. The excess of fees received over
expenditures may constitute a "profit" to the Distributor.
Both reimbursement and compensation type plans may have a "carry-forward"
provision. A Plan with such a provision provides that any reimbursable or
payable amount under the Plan attributable to a fiscal year of the Fund may be
paid by the Fund in a subsequent fiscal year, including after the termination
of a Plan. Amounts payable or reimbursable to the Distributor under the Plan
that are not paid because they exceed the annual limitations (carry-forward
amounts) shall be carried forward by the Funds to subsequent years and shall
be paid within the annual limitation in accordance with the Plans.
Consequently, shareholders may pay distribution expenses incurred by a Fund
prior to becoming a shareholder. Under a Plan without a carry-forward
provision, fees paid by a Fund will be paid or used to reimburse the
Distributor for servicing, promotional and distribution expenses incurred only
during the applicable fiscal year.
In the event a Plan with a carry-forward provision is terminated, the
Distributor shall not be entitled to reimbursement in respect of costs
incurred in, or payment for, performing distribution activities which occur
after termination of a Plan. However, the Distributor shall be entitled to
reimbursement of all carry-forward amounts and other costs properly incurred
in respect of shares
25
<PAGE>
distributed prior to termination of the Plan. The Fund shall continue to make
payments to the Distributor subject to the annual limitation until such time
as all such amounts have been reimbursed.
Global Emerging Markets Fund-A, and Global Emerging Markets Fund-B are
compensation type plans. The 12b-1 fees are accrued daily at an annual rate of
.50% of average daily net assets for Global Emerging Markets-A and at an
annual rate of 1.00% of average daily net assets for Global Emerging Markets
Fund-B and Global Emerging Markets Fund-C. While the Plans in effect are
compensation type Plans, they have a carry-forward provision which provides
that the Distributor, in the event of termination of the Plans, will recoup
amounts expended under the Plan, subject to the annual limitation.
Each Fund pays dealers, through the Distributor, (i) a service fee and a
distribution fee, at the time the shares are sold, not to exceed .25% and
.75%, respectively, of the net asset value of such shares (excluding shares
issued for reinvested dividends and distributions) and (ii) after the first
anniversary of the sale of shares, fees for services and distribution at
annual rates not to exceed an annual rate of .25% and .75%, respectively, of
the average daily net assets (including shares issued for reinvested dividends
and distributions). The Distributor may retain from the distribution fee, for
the payment of distribution expenses, an amount not to exceed an annual rate
of .25% of the average daily net assets. No dealer shall receive more than
.25% of average daily net assets for servicing. The Distributor will monitor
payments under the Plans and will reduce such payments or take such other
steps as may be necessary, including payments from its own resources, to
assure that Plan payments will be consistent with the applicable rules of the
National Association of Securities Dealers, Inc.
Holders of Class C shares on which service and distribution fees were paid at
the time of sale will be required to pay to the Fund a contingent deferred
redemption charge of 1% of the lower of cost or the then net asset value of
the shares redeemed from that Fund before the first anniversary of their
purchase. If the shares are exchanged into another Fund offering Class C
shares and subsequently redeemed before the first anniversary of their
original purchase, the charge will be collected by the other Fund for the
first Fund.
The Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities such as shares of a mutual
fund. Although the scope of this prohibition under the Glass-Steagall Act has
not been fully defined, in the Distributor's opinion it should not prohibit
banks from being compensated for shareholder servicing. If, because of changes
in law or regulation, or because of new interpretations of existing law, a
bank or the Funds were prevented from continuing these arrangements, it is
expected that the Board would make other arrangements for these services and
that shareholders would not suffer adverse financial consequences.
ADVERTISING
From time to time the Funds may use various media to advertise performance.
Past performance is not necessarily indicative of future performance.
All Funds may advertise performance in terms of average annual total return,
which is computed by finding the average annual compounded rates of return
over a period that would equate the initial amount invested to the ending
redeemable value. The calculation assumes the maximum sales charge is deducted
from the initial $1,000 payment and assumes all dividends and distributions by
the Funds are reinvested on the reinvestment dates during the period, and
includes all recurring fees that are charged to all shareholder accounts. In
addition, these Funds may advertise aggregate total return for a specified
period of time which is determined by ascertaining the percentage change in
the net asset value of shares of a Fund initially purchased assuming
reinvestment of dividends and capital gains distributions on such shares
without giving effect to the length of time of the investment. Sales loads and
other non-recurring expenses may be excluded from the calculation of rates of
return with the result that such rates may be higher than if such expenses and
sales loads were included. All other fees will be included in the calculation
of rates of return. Performance of Funds are computed separately for each
class.
The Funds may quote performance results from recognized services and
publications which monitor the performance of mutual funds and the Funds may
compare their performance to various published historical indices. These
include market, economical and performance data and indices. For example, the
Funds may quote market performance of the S&P 500, Europe Australia
26
<PAGE>
Far East Index, etc.; performance of various economies or economic indicators;
or compilations of historical performance data from rating agencies. Micropal,
Ltd., a worldwide mutual fund performance evaluation service, is one such
rating agency. Lipper Analytical Services is another such rating agency. The
Lipper performance analysis assumes reinvestment of capital gains and
distributions, but does not give effect to sales charges or taxes. Global
Emerging Markets Fund may be compared to a Morgan Stanley Capital International
Index, or another appropriate index. (See the Appendix in the Statement of
Additional Information).
TAXES
Each Fund has qualified and intends to continue to qualify as a "regulated
investment company" under the Code and will not pay income or excise taxes to
the extent that it distributes its net taxable investment income and capital
gains. See "Taxes" in the Statement of Additional Information.
Notice as to the tax status of a shareholder's dividends and distributions will
be mailed to shareholders annually. Income from dividends and distributions is
normally taxable whether or not reinvested. Distributions from net investment
income and short-term capital gains will be taxed as ordinary income.
Distributions of long-term capital gains will be taxed at capital gain rates.
Dividends or distributions declared in December of any calendar year but paid
during January of the following year are treated as received by a shareholder
on December 31 of the calendar year. Only a portion of the dividends paid by
the Funds is likely to qualify for the 70% dividends received deduction
allowable to corporations. If the Funds fulfill certain requirements,
shareholders of these Funds may be able to claim a foreign tax credit or
deduction with respect to certain foreign withholding or other taxes paid to
foreign governments during the year.
Distributions of net investment income and short-term capital gains, if any,
made to non-resident aliens will be subject to 30% withholding or lower tax
treaty rates because such distributions are considered U.S. source income.
Currently, the Funds are not required to withhold tax from long-term capital
gains distributions paid to non-resident aliens.
The foregoing discussion relates only to generally applicable federal income
tax provisions. Shareholders should consult their own tax advisers regarding
taxes, including state and local taxes, applicable to dividends, distributions
and redemptions.
DESCRIPTION OF THE TRUSTS
Van Eck Funds is an open-end management investment company organized as a
"business trust" under the laws of the Commonwealth of Massachusetts.
The Trustees have authority to issue an unlimited number of shares of
beneficial interest of separate series (funds), $.001 par value. To date, nine
series of the Van Eck Funds have been authorized, which shares constitute the
interests in the Asia Dynasty Fund (Class A and B), Asia Infrastructure Fund
(Class A and B), Global Balanced Fund (Class A and B), International Investors
Gold Fund (Class A and C), Gold/Resources Fund (Class A), Global Income Fund
(Class A), Global Hard Assets Fund (Class A, B and C), Gold Opportunity Fund
(Class A, B and C) and U.S. Government Money Fund. A "series" is a separate
pool of assets which is separately managed and which may have different
investment objectives from those of another series. The Trustees have the
authority, without the necessity of a shareholder vote, to create any number of
new series. The Global Emerging Markets Fund is the tenth in the series of Van
Eck Funds. As the Fund is a newly created series of the Van Eck Global Funds,
the Fund has no operating history.
Each share of a Fund has equal dividend, redemption and liquidation rights,
and, when issued, is fully paid and non-assessable by the Trust, except that
expenses related to the distribution of shares of the separate classes, if any,
would be borne by the respective classes as appropriate, and could have
differing voting rights regarding, for example, the Plans of Distribution.
Under the Master Trust Agreement, no annual or regular meeting of shareholders
is required. Thus, there will ordinarily be no shareholder meetings unless
required by the 1940 Act. The Boards of Trustees are self-perpetuating bodies
until fewer than 50% of the Trustees serving as such are Trustees who were
elected by shareholders. At that time another meeting of shareholders will be
called to elect Trustees. On any matter submitted to the shareholders, the
holder of each Trust share is entitled to one vote per share (with
proportionate voting for fractional shares). Under the Master Trust Agreement,
any Trustee
27
<PAGE>
may be removed by vote of two thirds of the outstanding Trust shares; 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. Shareholders of all Funds are entitled to
vote on matters affecting all of the Funds (such as the elections of Trustees
and ratification of the selection of the Trust's independent accountants). On
matters affecting an individual Fund a separate vote of that Fund is required.
Shareholders of a Fund are not entitled to vote on any matter not affecting
that Fund and requiring a separate vote of one of the other Funds.
Under Massachusetts law, the shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the 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 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 respective Trust.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Trusts
themselves would be unable to meet their respective obligations. The Adviser
believes that, in view of the above, the risk of personal liability to
shareholders is remote.
ADDITIONAL INFORMATION
QUESTIONS ABOUT THE FUNDS
For further information about the Funds, please call your financial advisor or
the Funds toll free at (800) 544-4653 or write the Funds at the cover page
address.
CUSTODIAN
The Custodian of the assets of the Trust is Chase Manhattan Bank, New York, New
York.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., New York, New York provides audit services,
consultation and advice with respect to financial information in the Trust
filings with the Securities and Exchange Commission, consults with the Trust on
accounting and financial reporting matters and prepares the Trust tax returns.
COUNSEL
Goodwin, Procter & Hoar, Exchange Place, Boston, Massachusetts 02109.
28
<PAGE>
VAN ECK FUNDS (THE "TRUST")
VAN ECK GLOBAL FUNDS
VAN ECK GOLD AND MONEY FUNDS
99 PARK AVENUE, NEW YORK, N.Y. 10016
SHAREHOLDER SERVICES: TOLL FREE (800) 544-4653
Van Eck Funds is a mutual fund consisting of nine separate series: Global
Balanced Fund (Class A and B), Asia Dynasty Fund (Class A and B), Asia
Infrastructure Fund (Class A and B), Global Emerging Markets Fund (Class A, B
and C), International Investors Gold Fund (Class A and C), Gold/Resources Fund
(Class A), Global Income Fund (Class A), Gold Opportunity Fund (Class A, B and
C), Global Hard Assets Fund (Class A, B and C) and U.S. Government Money Fund
(the "Funds"). The Global Emerging Markets Fund (Class A, B and C) will be a
new addition to the fund after the Trustees approve the Global Emerging
Markets Fund series and all associated agreements at the next Board of
Trustees meeting, scheduled for December 1996. As the Fund will be a newly
created series of the Van Eck Global Funds, it has no operating history.
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
- --------------------------------------------------------------------------------
<S> <C>
General Information........................................................ 2
Investment Objectives and Policies of the Funds............................ 2
Risk Factors--Investing in Foreign Securities.............................. 8
Foreign Currency Transactions.............................................. 11
Futures and Options Transactions........................................... 12
Mortgage-Backed Securities................................................. 13
Real Estate Securities..................................................... 13
Commercial Paper........................................................... 14
Direct Investments......................................................... 15
Repurchase Agreements...................................................... 15
Rule 144A Securities....................................................... 15
Investment Restrictions.................................................... 16
Investment Advisory Services............................................... 21
The Distributor............................................................ 23
Portfolio Transactions and Brokerage....................................... 25
Trustees and Officers...................................................... 28
Valuation of Shares........................................................ 32
Exchange Privilege......................................................... 35
Tax-Sheltered Retirement Plans............................................. 35
Investment Programs........................................................ 38
Taxes...................................................................... 39
Redemptions in Kind........................................................ 42
Performance................................................................ 42
Additional Information..................................................... 45
Financial Statements....................................................... 45
Appendix................................................................... 46
Performance Charts......................................................... 50
</TABLE>
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ IN CONJUNCTION WITH THE FUNDS' CURRENT PROSPECTUSES, DATED APRIL 23, 1996
(THE "PROSPECTUS"), EXCEPT FOR THE GLOBAL EMERGING MARKETS FUND PROSPECTUS,
DATED , 1996, WHICH IS AVAILABLE AT NO CHARGE UPON WRITTEN OR TELEPHONE
REQUEST TO THE TRUST AT THE ADDRESS OR TELEPHONE NUMBER AT THE TOP OF THIS
PAGE.
SHAREHOLDERS ARE ADVISED TO READ AND RETAIN THIS STATEMENT OF ADDITIONAL
INFORMATION FOR FUTURE REFERENCE.
STATEMENT OF ADDITIONAL INFORMATION-- , 1996
1
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GENERAL INFORMATION
Van Eck Funds (the "Trust") is an open-end management investment company
organized as a "business trust" under the laws of The Commonwealth of
Massachusetts on April 3, 1985. The Board of Trustees has authority to create
additional series or funds, each of which may issue a separate class of
shares. There are currently nine series of Van Eck Funds: Global Balanced Fund
(Class A and B), Asia Dynasty Fund (Class A and B), Asia Infrastructure Fund
(Class A and B), International Investors Gold Fund (Class A and C),
Gold/Resources Fund (Class A), Global Income Fund (Class A), Gold Opportunity
Fund (Class A, B and C), Global Hard Assets Fund (Class A, B and C) and U.S.
Government Money Fund, each of which commenced operations as a series of Van Eck
Funds. The Global Emerging Markets Fund (Class A, B and C) will be a new
addition to the fund, the tenth of a series.
The Global Balanced Fund (Class A and B), Asia Dynasty Fund (Class A and B),
Asia Infrastructure Fund (Class A and B), Global Income Fund (Class A), Global
Emerging Markets Fund (Class A, B and C) and Global Hard Assets Fund (Class A,
B and C) are referred to as the Van Eck Global Funds. International Investors
Gold Fund (Class A and C), Gold/Resources Fund (Class A), Gold Opportunity
Fund (Class A, B and C) and Global Hard Assets Fund (Class A, B and C) are
referred to as the Van Eck Gold Funds.
International Investors Gold Fund was formerly a mutual fund incorporated
under the laws of the state of Delaware under the name of International
Investors Incorporated. International Investors Incorporated was reorganized
as a series of the Trust on April 30, 1991. International Investors
Incorporated had been in continuous existence since 1955, and had been
concentrating in gold mining shares since 1968.
Each series of the Trust, other than the Global Income Fund, Global Balanced
Fund, Asia Infrastructure Fund, Gold Opportunity Fund and Global Hard Assets
Fund are classified as a diversified fund under the 1940 Act.
Van Eck Associates Corporation (the "Adviser") serves as investment adviser to
the Funds. Peregrine Asset Management serves as sub-investment adviser to
Global Emerging Markets Fund and Fiduciary International, Inc. ("FII") serves
as sub-investment adviser to the Global Balanced Fund and
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
INTERNATIONAL INVESTORS GOLD FUND
The Fund's primary objective is long-term capital appreciation, while
retaining freedom to take current income into consideration in selecting
investments. The Fund's fundamental policy is to concentrate its investments
in common stocks of gold mining companies. It may invest in that industry up
to 100% of the value of its assets. In some future period or periods, due to
adverse conditions in that industry, the Fund may for temporary defensive
purposes have less than 25% of the value of its assets invested in that
industry, however, under normal circumstances the Fund will have at least 65%
of its total assets invested in that industry.
The Fund's policy is to invest primarily in securities of companies, wherever
organized, whose properties, products or services are international in scope
or substantially in countries outside the United States, of foreign
governments, and in United States Treasury securities.
GOLD/RESOURCES FUND
Gold/Resources Fund may invest in debt and equity securities of companies
engaged in the exploration, development and production of gold and other
natural resources. Gold, other precious metals and natural resources
securities are at times volatile and there may be sharp fluctuations in prices
even during periods of rising prices.
The Fund may invest in any type of security including, but not limited to,
common stocks and equivalents (such as convertible debt securities and
warrants), preferred stocks and bonds and debt obligations of domestic and
foreign companies, governments (including their political subdivisions) and
international organizations. The Fund may purchase and sell financial and
commodity
2
<PAGE>
futures contracts and options on financial futures and commodity futures
contracts and may also write, purchase or sell put or call options on
securities, foreign currencies, commodities and commodity indices.
GOLD OPPORTUNITY FUND
The Fund will, under normal market conditions, invest at least 65% of its
total assets in debt and equity securities of companies engaged in the
exploration, development, production and distribution of gold and other
precious metal and in other investments whose value is related to the value of
precious metals ("Precious Metals Securities"). Precious Metals Securities
include debt and equity securities; preferred stock; convertible debt and
equity securities; warrants; options, futures and forward contracts on
precious metals; structured notes; and precious metals bullion and coins. The
Fund will normally invest a substantial portion of its assets in the
securities of smaller companies engaged in the precious metals industry
("Emerging Producers") and anticipates that its portfolio turnover rate will
be higher than other funds with similar investment objectives but will not
exceed 200% annually. Precious metal and natural resource securities are at
times volatile and there may be sharp fluctuations in prices even during
periods of rising prices.
The Fund may invest in equity securities. Equity securities include common and
preferred stocks; equity and equity index swap agreements; direct equity
interests in trusts, partnerships, joint ventures and other unincorporated
entities or enterprises; special classes of shares available only to foreign
persons in such markets that restrict the ownership of certain classes of
equity to nationals or residents of the country; convertible preferred stocks
and convertible debt instruments. The Fund may also invest in fixed-income
securities which include obligations issued or guaranteed by a government or
any of its political subdivisions, agencies, instrumentalities, or by a
supranational organization such as the World Bank or European Economic
Community (or other organizations which are chartered to promote economic
development and are supported by various governments and government entities),
adjustable-rate preferred stock, interest rate swaps, corporate bonds,
debentures, notes, commercial paper, certificates of deposit, time deposits,
repurchase agreements, and debt obligations which may have a call on a common
stock or commodity by means of a conversion privilege or attached warrants.
The Fund may invest in debt instruments of the U.S. government and its
agencies having varied maturities.
The Fund may purchase securities, including structured notes, whose value is
linked to the price of a commodity or a commodity index. The Fund may purchase
and sell financial and commodity futures contracts and options on financial
futures and commodity futures contracts and may also write, purchase or sell
put or call options on securities, foreign currencies, commodities and
commodity indices. The preceding securities are all commonly referred to as
derivatives. The Fund may invest in non-mortgage asset-backed securities. The
Fund may also lend its portfolio securities and borrow money for investment
purposes (i.e. leverage its portfolio).
The Fund may also invest in "when issued" securities and "partly paid"
securities. The Appendix to this Statement of Additional Information contains
an explanation of the rating categories of Moody's Investors Service and
Standard & Poor's Corporation relating to the fixed-income securities and
preferred stocks in which the Funds may invest, including a description of the
risks associated with each category.
GLOBAL HARD ASSETS FUND
The Fund will, under normal market conditions, invest at least 65% of its
total assets in "Hard Asset Securities." Hard Asset Securities include equity
securities of "Hard Asset Companies" and securities, including structured
notes, whose value is linked to the price of a commodity or a commodity index.
The term "Hard Asset Companies" includes companies that are directly or
indirectly (whether through supplier relationships, servicing agreements or
otherwise) engaged to a significant extent in the exploration, development,
production or distribution of one or more of the following: (i) precious
metals, (ii) ferrous and non-ferrous metals, (iii) gas, petroleum,
petrochemicals or other hydrocarbons, (iv) forest products, (v) real estate
and (vi) other basic non-agricultural commodities which, historically, have
been produced and marketed profitably during periods of significant inflation.
Under normal market conditions, the Fund will invest at least 5% of its assets
in each of the first five sectors listed above. The Fund has a fundamental
policy of concentrating in such industries and up to 50% of the Fund's assets
may be
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invested in any one of the above sectors. Precious metal and natural resource
securities are at times volatile and there may be sharp fluctuations in prices
even during periods of rising prices.
The Fund may invest in equity securities. Equity securities include common and
preferred stocks; equity and equity index swap agreements; direct equity
interests in trusts, partnerships, joint ventures and other unincorporated
entities or enterprises; special classes of shares available only to foreign
persons in such markets that restrict the ownership of certain classes of
equity to nationals or residents of the country; convertible preferred stocks
and convertible debt instruments. The Fund may also invest in fixed-income
securities which include obligations issued or guaranteed by a government or
any of its political subdivisions, agencies, instrumentalities, or by a
supranational organization such as the World Bank or European Economic
Community (or other organizations which are chartered to promote economic
development and are supported by various governments and government entities),
adjustable-rate preferred stock, interest rate swaps, corporate bonds,
debentures, notes, commercial paper, certificates of deposit, time deposits,
repurchase agreements, and debt obligations which may have a call on a common
stock or commodity by means of a conversion privilege or attached warrants.
The Fund may invest in debt instruments of the U.S. government and its
agencies having varied maturities.
The Fund may purchase securities, including structured notes, whose value is
linked to the price of a commodity or a commodity index. The Fund may purchase
and sell financial and commodity futures contracts and options on financial
futures and commodity futures contracts and may also write, purchase or sell
put or call options on securities, foreign currencies, commodities and
commodity indices. The Fund may invest in asset-backed securities such as
collateralized mortgage obligations and other mortgage and non-mortgage asset-
backed securities. The Fund may also lend its portfolio securities and borrow
money for investment purposes (i.e. leverage its portfolio).
The Fund may also invest in "when issued" securities and "partly paid"
securities. The Appendix to this Statement of Additional Information contains
an explanation of the rating categories of Moody's Investors Service and
Standard & Poor's Corporation relating to the fixed-income securities and
preferred stocks in which the Funds may invest, including a description of the
risks associated with each category.
GLOBAL BALANCED FUND
Global Balanced Fund may invest in equity securities. Equity securities
include common and preferred stocks; equity and equity index swap agreements;
direct equity interests in trusts, partnerships, joint ventures and other
unincorporated entities or enterprises; special classes of shares available
only to foreign persons in such markets that restrict the ownership of certain
classes of equity to nationals or residents of the country; convertible
preferred stocks and convertible debt instruments; financial futures contracts
and options on financial futures contracts; forward currency contracts and put
and call options on securities, securities indices and foreign currencies and
foreign currency swaps.
The Fund may also invest in fixed-income securities which include obligations
issued or guaranteed by a government or any of its political subdivisions,
agencies, instrumentalities, or by a supranational organization such as the
World Bank or European Economic Community (or other organizations which are
chartered to promote economic development and are supported by various
governments and government entities), adjustable-rate preferred stock,
interest rate swaps, corporate bonds, debentures, notes, commercial paper,
certificates of deposit, time deposits, repurchase agreements, and debt
obligations which may have a call on a common stock or commodity by means of a
conversion privilege or attached warrants. The Fund may invest in debt
instruments of the U.S. government and its agencies having varied maturities.
The Fund may invest in asset-backed securities such as collateralized mortgage
obligations and other mortgage and non-mortgage asset-backed securities. The
Fund may also lend its portfolio securities and borrow money for investment
purposes (i.e. leverage its portfolio).
GLOBAL EMERGING MARKETS FUND
The Global Emerging Markets Fund seeks long-term capital appreciation by
investing primarily in equity securities in emerging markets around the world.
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<PAGE>
Under normal conditions, at least 65% of the Fund's total assets will be
invested in Emerging Country and emerging market equity securities. An
"emerging market" or "Emerging Country" is any country that the World Bank,
the International Finance Corporation or the United Nations or its authorities
has determined to have a low or middle income economy. Emerging Countries can
be found in regions such as Asia, Latin America, Africa and Eastern Europe.
The countries that will not be considered Emerging Countries include the
United States, Australia, Canada, Japan, New Zealand and most countries
located in Western Europe such as Austria, Belgium, Denmark, Finland, France,
Germany, Great Britain, Ireland, Italy, the Netherlands, Norway, Spain, Sweden
and Switzerland.
The Fund considers emerging market securities to include securities which are
(i) principally traded in the capital markets of an emerging market country;
(ii) securities of companies that derive at least 50% of their total revenues
from either goods produced or services performed in Emerging Countries or from
sales made in Emerging Countries, regardless of where the securities of such
companies are principally traded; (iii) securities of companies organized
under the laws of, and with a principal office in an Emerging Country; (iv)
securities of investment companies (such as country funds) that principally
invest in emerging market securities; and (v) American Depositary Receipts
(ADRs), American Depositary Shares (ADSs), European Depositary Receipts (EDRs)
and Global Depositary Receipts (GDRs) with respect to the securities of such
companies.
Equity securities in which the Fund may invest include common stocks;
preferred stocks (either convertible or non-convertible); rights; warrants;
direct equity interests in trusts, partnerships, joint ventures and other
unincorporated entities or enterprises; convertible debt instruments; and
special classes of shares available only to foreign persons in those markets
that restrict ownership of certain classes of equity to nationals or residents
of that country. These securities may be listed on securities exchanges or
traded over-the-counter. Direct investments are generally considered illiquid
and will be aggregated with other illiquid investments for purposes of the
limitation on illiquid investments.
The Adviser expects that the Fund will normally invest in at least three
different countries. The Fund emphasizes equity securities, but may also
invest in other types of instruments, including debt securities of any quality
(other than commercial paper as described herein). Debt securities may include
fixed or floating rate bonds, notes, debentures, commercial paper, loans,
convertible securities and other debt securities issued or guaranteed by
governments, agencies or instrumentalities, central banks or private issuers.
The Fund may, for temporary defensive purposes, invest more than 35% of its
total assets in securities which are not emerging market securities, such as
high grade, liquid debt securities of foreign and United States companies,
foreign governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in money
market instruments denominated in U.S. dollars or a foreign currency. These
money market instruments include, but are not limited to, negotiable or short-
term deposits with domestic or foreign banks with total surplus and undivided
profits of at least $50 million; high quality commercial paper; and repurchase
agreements maturing within seven days with domestic or foreign dealers, banks
and other financial institutions deemed to be creditworthy under guidelines
approved by the Board of Trustees of the Fund. The commercial paper in which
the Fund may invest will, at the time of purchase, be rated P-1 or better by
Moody's Investors Service, Inc. ("Moody's"); A-1 or better by Standard &
Poor's Corporation ("S&P"); Fitch-1 by Fitch; Duff-1 by Duff & Phelps ("D&P"),
or if unrated, will be of comparable high qualify as determined by the Adviser
ASIA DYNASTY FUND
Asia Dynasty Fund may invest in equity securities, warrants and equity options
of companies located in, or expected to benefit from the developmental growth
of the economies of countries located in the Asia region ("Asia Growth
Companies"). These countries include Burma, Peoples Republic of China
("China"), Cambodia, Hong Kong, India, Indonesia, Korea, Laos, Malaysia,
Pakistan, the Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam
and, when the Fund is in a defensive posture, Australia, Japan and New
Zealand. Equity securities include common and preferred stocks, direct equity
interests in trusts, partnerships, joint ventures and other unincorporated
entities or enterprises, special classes of shares available only to foreign
persons in those markets that restrict ownership of certain classes of equity
to nationals or residents of that country, convertible preferred stocks and
convertible debt instruments. The Fund may buy and sell financial futures
contracts and options on financial futures contracts, forward currency
contracts and put or call options on securities, securities indices and
foreign currencies and
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<PAGE>
foreign currency swaps. The Fund may also lend its portfolio securities and
borrow money for investment purposes (i.e. leverage its portfolio).
ASIA INFRASTRUCTURE FUND
Asia Infrastructure Fund may invest in equity securities, warrants and equity
options of infrastructure companies located in, or expected to benefit from
the developmental growth of the economies of countries located in the Asia
region. These countries include Burma, Peoples Republic of China ("China"),
Cambodia, Hong Kong, India, Indonesia, Korea, Laos, Malaysia, Pakistan, the
Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam and Japan.
Equity securities include common and preferred stocks, direct equity interests
in trusts, partnerships, joint ventures and other unincorporated entities or
enterprises, special classes of shares available only to foreign persons in
those markets that restrict ownership of certain classes of equity to
nationals or residents of that country, convertible preferred stocks and
convertible debt instruments. The Fund may buy and sell financial futures
contracts and options on financial futures contracts, forward currency
contracts and put or call options on securities, securities indices and
foreign currencies and foreign currency swaps. The Fund may also lend its
portfolio securities and borrow money for investment purposes (i.e. leverage
its portfolio).
The term "Asia Region infrastructure companies" includes companies that (i)
that are directly or indirectly (whether through supplier relationships,
servicing agreements or otherwise) involved to a significant extent in any one
or more of the design, construction, development, manufacture, sale, leasing,
installation or operation of, or the ownership of property in connection with,
(a) electricity generation, transmission or distribution facilities, (b) gas,
petroleum, or petrochemical collection, storage, processing or distribution
facilities, (c) roads or other public works, including water storage,
treatment and distribution facilities and waste processing and disposal
facilities, (d) transportation systems and related products, technologies and
equipment, including mass transit systems and vehicles, airports, airlines,
cargo terminals, ports and shipping facilities, (e) telecommunications systems
and related facilities, products, technologies and equipment, including long
distance and local telephone services, cellular radio telephone services and
other radio common carrier communication services, paging and specialized
mobile radio systems, telecommunication cables and wires, telegraph,
satellite, cable, fiber optic, microwave and private communication networks,
electronic mail and other telecommunications technologies, (f) cement plants,
asphalt plants and other facilities for the manufacture or processing of
building products and materials, (g) property development companies and (h)
other public service activities, which, in the opinion of the Adviser, relate
to the development of the basic structure on which a portion of a given
country's economic activities relate, and (ii) that (a) are organized under
the laws of an Asia Region country, (b) have equity securities listed on a
securities exchange in the Asia Region, (c) have 50% or more of their assets
in or derive 50% or more of their revenues or profits from the Asia Region, or
(d) have or are expected to have significant assets or investments committed
to the Asia Region and that, in the opinion of the Adviser, are likely to
contribute significantly to the infrastructure projects and developments in
the Asia Region while providing an opportunity for the Fund to benefit from
such activities.
GLOBAL INCOME FUND
Global Income Fund may invest in any type of security including, but not
limited to, common stocks and equivalents (such as convertible debt securities
and warrants), preferred stocks and bonds and debt obligations of domestic and
foreign companies, governments (including their political subdivisions) and
international organizations. The Fund may buy and sell financial futures
contracts and options on financial futures contracts, which may include bond
and stock index futures contracts and foreign currency futures contracts. The
Fund may write, purchase or sell put or call options on securities and foreign
currencies. In addition, the Fund may lend its portfolio securities and borrow
money for investment purposes (i.e. leverage its portfolio).
- -------------------------------------------------------------------------------
CERTAIN POLICIES APPLICABLE TO GLOBAL BALANCED FUND, GLOBAL HARD ASSETS FUND,
ASIA DYNASTY FUND, GLOBAL EMERGING MARKETS FUND, ASIA INFRASTRUCTURE FUND,
GOLD OPPORTUNITY FUND, INTERNATIONAL INVESTORS GOLD FUND, GLOBAL INCOME FUND
AND GOLD/RESOURCES FUND
- -------------------------------------------------------------------------------
The above Funds may invest in "when issued" securities and "partly paid"
securities. Additionally, Global Balanced Fund, Global Hard Assets Fund, Gold
Opportunity Fund, Asia Dynasty Fund, Asia Infrastructure Fund and Global
Income Fund may invest in
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<PAGE>
collateralized mortgage obligations. The Appendix to this Statement of
Additional Information contains an explanation of the rating categories of
Moody's Investors Service and Standard & Poor's Corporation relating to the
fixed-income securities and preferred stocks in which the Funds may invest,
including a description of the risks associated with each category.
U.S. GOVERNMENT MONEY FUND
U.S. Government Money Fund seeks safety of principal, daily liquidity and
current income through investments in short-term U.S. Treasury securities and
other securities carrying the "full faith and credit" guarantee of the U.S.
Government. The Fund invests in U.S. Treasury bills, notes, and bonds and
other obligations guaranteed by the full faith and credit of the U.S.
Government and repurchase agreements collateralized by such obligations (at
least 80% of its assets will be so invested). All securities mature within
thirteen months from the date of purchase, although repurchase agreements may
be collateralized by securities maturing in more than one year.
Direct obligations issued by the U.S. Treasury include bills, notes and bonds
which differ from each other only in interest rates, maturities and times of
issuance: Treasury bills have maturities of thirteen months or less, Treasury
notes have maturities of one to ten years and Treasury bonds generally have
maturities of greater than ten years. Securities guaranteed by the U.S.
Government include such obligations as securities issued by the General
Services Administration and the Small Business Administration.
U.S. Government Money Fund may also invest in other short-term instruments (up
to 20% of its assets), in all cases subject to the credit quality requirements
of the 1940 Act, including commercial paper, banker's acceptances, and
certificates of deposit. Commercial paper consists of short-term, unsecured
promissory notes issued principally by banks and corporations to finance
short-term credit needs. The commercial paper purchased by the Fund will
consist only of direct obligations of the issuer. Banker's acceptances are
drafts or bills of exchange that have been guaranteed as to payment by a bank
or trust company. Banker's acceptances are used to effect payment of
merchandise sold in import-export transactions, and are backed by the credit
strength of the bank which assumes the obligation. Time deposits are credit
instruments evidencing the obligation of a bank to repay funds deposited with
it for a specified period of time. Certificates of deposit are certificates
evidencing the obligation of a bank to repay funds deposited with it for a
specific period of time.
Gold/Resources Fund and U.S. Government Money Fund, as a fundamental
investment policy, may not invest in securities of South African issuers;
Global Balanced Fund, Asia Dynasty Fund, Asia Infrastructure Fund,
International Investors Gold Fund and Global Income Fund are not so restricted
by their fundamental investment policies.
RISK FACTORS--INVESTING IN FOREIGN SECURITIES
- -------------------------------------------------------------------------------
GLOBAL BALANCED FUND, GLOBAL HARD ASSETS FUND, ASIA DYNASTY FUND, ASIA
INFRASTRUCTURE FUND, GLOBAL EMERGING MARKETS FUND, GLOBAL INCOME FUND,
INTERNATIONAL INVESTORS GOLD FUND, GOLD OPPORTUNITY FUND AND GOLD/RESOURCES
FUND
- -------------------------------------------------------------------------------
Investors should recognize that investing in foreign securities involves
certain special considerations which are not typically associated with
investing in United States securities. Since investments in foreign companies
will frequently involve currencies of foreign countries, and since the above
Funds may hold securities and funds in foreign currencies, these Funds may be
affected favorably or unfavorably by changes in currency rates and in exchange
control regulations, if any, and may incur costs in connection with
conversions between various currencies. Most foreign stock markets, while
growing in volume of trading activity, have less volume than the New York
Stock Exchange, and securities of some foreign companies are less liquid and
more volatile than securities of comparable domestic companies. Similarly,
volume and liquidity in most foreign bond markets are less than in the United
States, and at times volatility of price can be greater than in the United
States. Fixed commissions on foreign securities exchanges are generally higher
than negotiated commissions on United States exchanges, although these Funds
endeavor to achieve most favorable net results on their portfolio
transactions. There is generally less government supervision and regulation of
securities exchanges, brokers and listed companies in foreign countries than
in the United States. In addition, with respect to certain foreign countries,
there is the possibility of exchange control restrictions, expropriation or
7
<PAGE>
confiscatory taxation, political, economic or social instability, which could
affect investments in those countries. Foreign securities such as those
purchased by these Funds may be subject to foreign government taxes, higher
custodian fees and dividend collection fees which could reduce the yield on
such securities.
Investments may be made from time to time by Global Balanced Fund, Global Hard
Assets Fund, Gold Opportunity Fund, Asia Dynasty Fund, Global Emerging Markets
Fund and Asia Infrastructure Fund in companies in developing countries as well
as in developed countries. Asia Dynasty Fund, Global Emerging Markets Fund,
Asia Infrastructure Fund, Global Hard Assets Fund and Gold Opportunity Fund
may have a substantial portion of their assets in developing countries.
Although there is no universally accepted definition, a developing country is
generally considered by the Adviser to be a country which is in the initial
stages of industrialization. Shareholders should be aware that investing in
the equity and fixed income markets of developing countries involves exposure
to unstable governments, economies based on only a few industries, and
securities markets which trade a small number of securities. Securities
markets of developing countries tend to be more volatile than the markets of
developed countries; however, such markets have in the past provided the
opportunity for higher rates of return to investors.
Since the Global Emerging Markets Fund may, and the Asia Dynasty Fund and Asia
Infrastructure Fund will invest at least 65% of their total assets in Asia
Region investments, their investment performance will be especially affected
by events affecting Asia Region companies. The value and liquidity of Asia
Region investments may be affected favorably or unfavorably by political,
economic, fiscal, regulatory or other developments in the Asia Region or
neighboring regions. The extent of economic development, political stability
and market depth of different countries in the Asia Region varies widely.
Certain countries in the Asia Region, including Cambodia, China, Laos,
Indonesia, Malaysia, the Philippines, Thailand, and Vietnam are either
comparatively underdeveloped or are in the process of becoming developed.
Investments typically involve greater potential for gain or loss than
investments in securities of issuers in developed countries. Given the Funds'
investments, the Funds will likely be particularly sensitive to changes in
China's economy as the result of a reversal of economic liberalization,
political unrest or changes in China's trading status.
The Asia Infrastructure Fund will invest at least 65% of its assets in Asia
Region infrastructure companies. Investing in infrastructure and related
companies involves certain special considerations. Infrastructure companies in
the Asia Region are undergoing significant change due to varying and evolving
levels of government regulation or deregulation and other factors. Competitive
pressures are intense and the securities of such companies may be subject to
increased share price volatility. In addition, certain infrastructure
companies are subject to the risk that technological innovations will make
their services obsolete.
The securities markets in the Asia Region are substantially smaller, less
liquid and more volatile than the major securities markets in the United
States. A high proportion of the shares of many issuers may be held by a
limited number of persons and financial institutions, which may limit the
number of shares available for investment by the portfolio. Similarly, volume
and liquidity in the bond markets in the Asia Region are less than in the
United States and, at times, price volatility can be greater than in the
United States. A limited number of issuers in the Asia Region securities
markets may represent a disproportionately large percentage of market
capitalization and trading value. The limited liquidity of securities markets
in the Asia Region may also affect the Fund's ability to acquire or dispose of
securities at the price and time it wishes to do so. Accordingly, during
periods of rising securities prices in the more illiquid Asia Region
securities markets, the Fund's ability to participate fully in such price
increases may be limited by its investment policy of investing not more than
15% of its net assets in illiquid securities. Conversely, the Fund's inability
to dispose fully and promptly of positions in declining markets will cause the
Fund's net asset value to decline as the value of the unsold positions is
marked to lower prices. In addition, Asia Region securities markets are
susceptible to being influenced by large investors trading significant blocks
of securities.
The Chinese, Hong Kong and Taiwanese stock markets are undergoing a period of
growth and change which may result in trading volatility and difficulties in
the settlement and recording of transactions, and in interpreting and applying
the relevant law and regulations. In particular, the securities industry in
China is not well developed. China has no securities laws of nationwide
applicability. The municipal securities regulations adopted by Shanghai and
Shenzhen municipalities are very new, as are their respective securities
exchanges and other self-regulatory organizations. In addition, Chinese
stockbrokers and other intermediaries may not perform as well as their
counterparts in the United States and other more developed securities markets.
The prices at which the Funds may acquire investments may be affected by
trading by persons with material non-public
8
<PAGE>
information and by securities transactions by brokers in anticipation of
transactions by the Funds in particular securities. The securities markets in
Cambodia, Laos and Vietnam are currently non-existent.
Asia Dynasty Fund, Global Emerging Markets Fund and Asia Infrastructure Fund
will invest in Asia Region countries with emerging economies or securities
markets. Political and economic structures in many of such countries may be
undergoing significant evolution and rapid development, and such countries may
lack the social, political and economic stability characteristic of the United
States. Certain of such countries have in the past failed to recognize private
property rights and have at times nationalized or expropriated the assets of
private companies. As a result, the risks described above, including the risks
of nationalization or expropriation of assets, may be heightened. In addition,
unanticipated political or social developments may affect the value of the
Funds' investments in those countries and the availability to the Funds of
additional investments in those countries.
Economies of countries in the Asia Region may differ favorably or unfavorably
from the United States economy in such respects as rate of growth of gross
national product, rate of inflation, capital reinvestment, resource self-
sufficiency and balance of payments position. As export-driven economies, the
economies of countries in the Asia Region are affected by developments in the
economies of their principal trading partners. Revocation by the United States
of China's "Most Favored Nation" trading status, which the United States
President and Congress reconsider annually, would adversely affect the trade
and economic development of China and Hong Kong. Hong Kong, Japan and Taiwan
have limited natural resources, resulting in dependence on foreign sources for
certain raw materials and economic vulnerability to global fluctuations of
price and supply.
China governmental actions can have a significant effect on the economic
conditions in the Asia Region, which could adversely affect the value and
liquidity of the Fund's investments. Although the Chinese Government has
recently begun to institute economic reform policies, there can be no
assurances that it will continue to pursue such policies or, if it does, that
such policies will succeed.
China and certain of the other Asia Region countries do not have comprehensive
systems of laws, although substantial changes have occurred in China in this
regard in recent years. The corporate form of organization has only recently
been permitted in China and national regulations governing corporations were
introduced only in May 1992. Prior to the introduction of such regulations
Shanghai had adopted a set of corporate regulations applicable to corporations
located or listed in Shanghai, and the relationship between the two sets of
regulations is not clear. Consequently, until a firmer legal basis is
provided, even such fundamental corporate law tenets as the limited liability
status of Chinese issuers and their authority to issue shares remain open to
question. Laws regarding fiduciary duties of officers and directors and the
protection of shareholders are not well developed. China's judiciary is
relatively inexperienced in enforcing the laws that exist, leading to a higher
than usual degree of uncertainty as to the outcome of litigation. Even where
adequate law exists in China, it may be impossible to obtain swift and
equitable enforcement of such law, or to obtain enforcement of the judgment by
a court of another jurisdiction. The bankruptcy laws pertaining to state
enterprises have rarely been used and are untried in regard to an enterprise
with foreign shareholders, and there can be no assurance that such
shareholders, including the Funds, would be able to realize the value of the
assets of the enterprise or receive payment in convertible currency. As the
changes to the Chinese legal system develop, the promulgation of new laws,
existing laws and the preemption of local laws by national laws may adversely
affect foreign investors, including the Funds. The uncertainties faced by
foreign investors in China are exacerbated by the fact that many laws,
regulations and decrees of China are not publicly available, but merely
circulated internally. Similar risks exist in other Asia Region countries.
Trading in futures contracts traded on foreign commodity exchanges may be
subject to the same or similar risks as trading in foreign securities.
9
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FOREIGN CURRENCY TRANSACTIONS
- -------------------------------------------------------------------------------
GLOBAL BALANCED FUND, GLOBAL HARD ASSETS FUND, ASIA DYNASTY FUND, ASIA
INFRASTRUCTURE FUND, GLOBAL EMERGING MARKETS FUND, GLOBAL INCOME FUND,
INTERNATIONAL INVESTORS GOLD FUND, GOLD OPPORTUNITY FUND, GOLD/RESOURCES FUND
- -------------------------------------------------------------------------------
Under normal circumstances, consideration of the prospects for currency
exchange rates will be incorporated into the long-term investment decisions
made for the above Funds with regard to overall diversification strategies.
Although the Funds value their assets daily in terms of U.S. Dollars, they do
not intend physically to convert their holdings of foreign currencies into
U.S. dollars on a daily basis. The Funds will do so from time to time, and
investors should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the "spread") between the prices at which they
are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Funds at one rate, while offering a lesser rate of
exchange should the Funds desire to resell that currency to the dealer. The
Funds will use forward contracts, along with futures contracts, foreign
exchange swaps (Global Hard Assets Fund, Gold Opportunity Fund, Global
Balanced Fund, Asia Dynasty Fund, Global Emerging Markets Fund and Asia
Infrastructure Fund only) and put and call options (all types of derivatives),
to "lock in" the U.S. Dollar price of a security bought or sold and as part of
their overall hedging strategy. The Funds will conduct their foreign currency
exchange transactions, either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market, or through purchasing put
and call options on, or entering into futures contracts or forward contracts
to purchase or sell foreign currencies. See "Futures and Options
Transactions."
A forward foreign currency contract, like a futures contract, involves an
obligation to purchase or sell a specific amount of currency at a future date,
which may be any fixed number of days from the date of the contract agreed
upon by the parties, at a price set at the time of the contract. Unlike
foreign currency futures contracts which are standardized exchange-traded
contracts, forward currency contracts are usually traded in the interbank
market conducted directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no deposit
requirement, and no commissions are charged at any stage for such trades.
The Funds' custodian will place cash or U.S. government securities or debt
securities into a segregated account of the Fund in an amount equal to the
value of the Fund's total assets committed to the consummation of forward
foreign currency contracts. If the value of the securities placed in the
segregated account declines, additional cash or securities will be placed in
the account on a daily basis so that the value of the account will equal the
amount of a Fund's commitments with respect to such contracts. At the maturity
of a forward contract, a Fund may either sell the portfolio security and make
delivery of the foreign currency, or may retain the security and terminate its
contractual obligation to deliver the foreign currency prior to maturity by
purchasing an "offsetting" contract with the same currency trader obligating
it to purchase, on the same maturity date, the same amount of the foreign
currency. There can be no assurance, however, that the Fund will be able to
effect such a closing purchase transaction.
It is impossible to forecast the market value of a particular portfolio
security at the expiration of the contract. Accordingly, if a decision is made
to sell the security and make delivery of the foreign currency it may be
necessary for a Fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency that a Fund is obligated
to deliver.
If a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. Additionally, although such
contracts tend to minimize the risk of loss due to a decline in the value of
the hedged currency, at the same time, they tend to limit any potential gain
which might result should the value of such currency increase.
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FUTURES AND OPTIONS TRANSACTIONS
Global Balanced Fund, Global Hard Assets Fund, Gold Opportunity Fund, Asia
Dynasty Fund, Global Emerging Markets Fund, Asia Infrastructure Fund,
Gold/Resources Fund and Global Income Fund may invest in options on futures
contracts. Compared to the purchase or sale of futures contracts, the purchase
and sale of options on futures contracts involves less potential risk to the
Funds because the maximum exposure is the amount of the premiums paid for the
options. Futures contracts and options thereon are both types of derivatives.
The use of financial futures contracts and commodity futures contracts,
options on such futures contracts and commodities (Gold/Resources Fund, Global
Hard Assets Fund, Gold Opportunity Fund, and International Investors Gold
Fund), may reduce a Fund's exposure to fluctuations in the prices of portfolio
securities and may prevent losses if the prices of such securities decline.
Similarly, such investments may protect a Fund against fluctuation in the
value of securities in which a Fund is about to invest. Because the financial
markets in the Asia Region countries and other developing countries are not as
developed as in the United States these financial investments may not be
available to the Funds and the Funds may be unable to hedge certain risks.
The use of financial futures and commodity futures contracts and options on
such futures contracts and commodities (Gold/Resources Fund, Global Hard
Assets Fund, Gold Opportunity Fund and International Investors Gold Fund) as
hedging instruments involves several risks. First, there can be no assurance
that the prices of the futures contracts or options and the hedged security or
the cash market position will move as anticipated. If prices do not move as
anticipated, a Fund may incur a loss on its investment, may not achieve the
hedging protection anticipated and/or incur a loss greater than if it had
entered into a cash market position. Second, investments in options, futures
contracts and options on futures contracts may reduce the gains which would
otherwise be realized from the sale of the underlying securities or assets
which are being hedged. Third, positions in futures contracts and options can
be closed out only on an exchange that provides a market for those
instruments. There can be no assurances that such a market will exist for a
particular futures contract or option. If a Fund cannot close out an exchange
traded futures contract or option which it holds, it would have to perform its
contractual obligation or exercise its option to realize any profit and would
incur transaction costs on the sale of the underlying assets.
It is the policy of each of the Funds to meet the requirements of the Internal
Revenue Code of 1986, as amended (the "Code") to qualify as a regulated
investment company to prevent double taxation of the Funds and their
shareholders. One of these requirements is that less than 30% of a Fund's
gross income must be derived from gains from the sale or other disposition of
securities held for less than three months./1/ Another test requires that at
least 90% of a Fund's gross income be derived from dividends, interest,
payment with respect to securities loans and gains from the sale or other
disposition of stocks or other securities. Gains from commodity futures
contracts do not currently qualify as income for purposes of the 90% test. The
extent to which the Funds may engage in options and futures contract
transactions may be materially limited by these tests.
MORTGAGE-BACKED SECURITIES
The Funds (except Gold and Natural Resources Fund) may invest in mortgage-
backed securities. A mortgage-backed security may be an obligation of the
issuer backed by a mortgage or pool of mortgages or a direct interest in an
underlying pool of mortgages. The value of mortgage-backed securities may
change due to shifts in the market's perception of issuers. In addition,
regulatory or tax changes may adversely affect the mortgage securities market
as a whole. Stripped mortgage-backed securities are created when a U.S.
governmental agency or a financial institution separates the interest and
principal components of a mortgage-backed security and sells them as
individual securities. The holder of the "principal-only" security ("PO")
receives the principal payments made by the underlying mortgage-backed
security, while the holder of the "interest-only" security ("IO") receives
interest payments from the same underlying security. The prices of stripped
mortgage-backed securities may be particularly affected by change in interest
rates. As interest rates fall, prepayment rates tend to increase, which tends
to reduce the price of IOs and increase prices of POs. Rising interest rates
can have the opposite effect. Changes in interest rates may also affect the
liquidity of IOs and POs.
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/1/ From time to time, legislation has been proposed in Congress which, if
enacted, will repeal this requirement.
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REAL ESTATE SECURITIES
Although Gold and Natural Resources Fund and Global Hard Assets Fund will not
invest in real estate directly, each of these Funds may invest a percentage of
its assets in equity securities of REITs and other real estate industry
companies or companies with substantial real estate investments. Worldwide
Hard Assets Fund may invest up to 50% of its assets in such securities. Gold
and Natural Resources Fund and Worldwide Hard Assets Fund are therefore
subject to certain risks associated with direct ownership of real estate and
with the real estate industry in general. These risks include, among others:
possible declines in the value of real estate; possible lack of availability
of mortgage funds; extended vacancies of properties; risks related to general
and local economic conditions; overbuilding; increases in competition,
property taxes and operating expenses; changes in zoning laws; costs resulting
from the clean-up of, and liability to third parties for damages resulting
from, environmental problems; casualty or condemnation losses; uninsured
damages from floods, earthquakes or other natural disasters; limitations on
and variations in rents; and changes in interest rates.
REITs are pooled investment vehicles which invest primarily in income
producing real estate or real estate related loans or interests. REITs are
generally classified as equity REITs, mortgage REITs or hybrid REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. REITs are not taxed on income
distributed to shareholders provided they comply with several requirements of
the Code.
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by
the REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to the risks of financing projects. REITs are subject to heavy
cash flow dependency, default by borrowers, self-liquidation and the
possibilities of failing to qualify for the exemption from tax for distributed
income under the Code. REITs (especially mortgage REITs) are also subject to
interest rate risk (i.e., as interest rates rise, the value of the REIT may
decline).
COMMERCIAL PAPER
Global Emerging Markets Fund, Global Balanced Fund, Global Hard Assets Fund
and Global Income Fund may invest in commercial paper which is indexed to
certain specific foreign currency exchange rates. The terms of such commercial
paper provide that its principal amount is adjusted upwards or downwards (but
not below zero) at maturity to reflect changes in the exchange rate between
two currencies while the obligation is outstanding. The Funds will purchase
such commercial paper with the currency in which it is denominated and, at
maturity, will receive interest and principal payments thereon in that
currency, but the amount or principal payable by the issuer at maturity will
change in proportion to the change (if any) in the exchange rate between two
specified currencies between the date the instrument is issued and the date
the instrument matures. While such commercial paper entails the risk of loss
of principal, the potential for realizing gains as a result of changes in
foreign currency exchange rate enables the Funds to hedge or cross-hedge
against a decline in the U.S. dollar value of investments denominated in
foreign currencies while providing an attractive money market rate of return.
The Funds will purchase such commercial paper for hedging purposes only, not
for speculation. The staff of the Securities and Exchange Commission is
currently considering whether the purchase of this type of commercial paper
would result in the issuance of a "senior security" within the meaning of the
1940 Act. The Funds believe that such investments do not involve the creation
of such a senior security, but nevertheless will establish a segregated
account with respect to its investments in this type of commercial paper and
to maintain in such account cash not available for investment or U.S.
Government securities or other liquid high quality debt securities having a
value equal to the aggregate principal amount of outstanding commercial paper
of this type.
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<PAGE>
DIRECT INVESTMENTS
Global Emerging Markets Fund, Global Hard Assets Fund and Global Balanced Fund
may invest up to 10% of their total assets in direct investments. Direct
investments include (i) the private purchase from an enterprise of an equity
interest in the enterprise in the form of shares of common stock or equity
interests in trusts, partnerships, joint ventures or similar enterprises, and
(ii) the purchase of such an equity interest in an enterprise from a principal
investor in the enterprise. In each case the Funds will, at the time of making
the investment, enter into a shareholder or similar agreement with the
enterprise and one or more other holders of equity interests in the
enterprise. The Sub-Adviser anticipates that these agreements will, in
appropriate circumstances, provide the Funds with the ability to appoint a
representative to the board of directors or similar body of the enterprise and
for eventual disposition of the Funds' investment in the enterprise. Such a
representative of the Funds will be expected to provide the Funds with the
ability to monitor its investment and protect its rights in the investment and
will not be appointed for the purpose of exercising management or control of
the enterprise.
Certain of the Funds' direct investments will include investments in smaller,
less seasoned companies. These companies may have limited product lines,
markets or financial resources, or they may be dependent on a limited
management group. The Funds do not anticipate making direct investments in
start-up operations, although it is expected that in some cases the Funds'
direct investments will fund new operations for an enterprise which itself is
engaged in similar operations or is affiliated with an organization that is
engaged in similar operations.
Direct investments may involve a high degree of business and financial risk
that can result in substantial losses. Because of the absence of any public
trading market for these investments, the Funds may take longer to liquidate
these positions than would be the case for publicly traded securities.
Although these securities may be resold in privately negotiated transactions,
the prices on these sales could be less than those originally paid by the
Funds. Furthermore, issuers whose securities are not publicly traded may not
be subject to public disclosure and other investor protection requirements
applicable to publicly traded securities. If such securities are required to
be registered under the securities laws of one or more jurisdictions before
being resold, the Funds may be required to bear the expense of the
registration. In addition, in the event the Funds sell unlisted foreign
securities, any capital gains realized on such transactions may be subject to
higher rates of taxation than taxes payable on the sale of listed securities.
Direct investments are generally considered illiquid and will be aggregated
with other illiquid investments for purposes of the limitation on illiquid
investments.
REPURCHASE AGREEMENTS
None of the Funds will enter into a repurchase agreement with a maturity of
more than seven business days if, as a result, more than 10% of the value of a
Fund's total assets would then be invested in such repurchase agreements and
other illiquid securities (except that Global Income Fund may invest no more
than 15% of its assets in such repurchase agreements and other money market
instruments and Global Balanced Fund, Global Hard Assets Fund, Gold
Opportunity Fund, Asia Dynasty Fund, Global Emerging Markets Fund and Asia
Infrastructure Fund may invest no more than 15% of their total assets in
illiquid securities). A Fund will only enter into a repurchase agreement where
(i) the underlying securities are of the type which the Fund's investment
policies would allow it to purchase directly, (ii) the market value of the
underlying security, including accrued interest, will be at all times equal to
or exceed the value of the repurchase agreement, and (iii) payment for the
underlying securities is made only upon physical delivery or evidence of book-
entry transfer to the account of the custodian or a bank acting as agent.
RULE 144A SECURITIES AND SECTION 4(2) COMMERCIAL PAPER
The Securities and Exchange Commission adopted Rule 144A which allows a
broader institutional trading market for securities otherwise subject to
restriction on resale to the general public. Rule 144A establishes a "safe
harbor" from the registration requirements of the Securities Act of 1933 of
resales of certain securities to qualified institutional buyers. The Adviser
anticipates that the market for certain restricted securities such as
institutional commercial paper will expand further as a result of this new
regulation and the development of an automated system for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers.
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<PAGE>
The Adviser will monitor the liquidity of restricted securities in the Funds'
holdings under the supervision of the Board of Trustees. In reaching liquidity
decisions, the Adviser will consider, among other things, the following
factors: (1) the frequency of trades and quotes for the security; (2) the
number of dealers wishing to purchase or sell the security and the number of
other potential purchasers; (3) dealer undertakings to make a market in the
security and (4) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanisms of the transfer).
In addition, commercial paper may be issued in reliance on the "private
placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933. Such commercial paper is restricted as to disposition
under the federal securities laws and, therefore, any resale of such
securities must be effected in a transaction exempt from registration under
the Securities Act of 1933. Such commercial paper is normally resold to other
investors through or with the assistance of the issuer or investment dealers
who make a market in such securities, thus providing liquidity.
Securities eligible for resale pursuant to Rule 144A under the Securities Act
of 1933 and commercial paper issued in reliance on the Section 4(2) exemption
under the Act may be determined to be liquid in accordance with guidelines
established by the Board of Trustees for purposes of complying with investment
restrictions applicable to investments by the Funds (except the U.S.
Government Money Fund) in illiquid securities.
INVESTMENT RESTRICTIONS
The following investment restrictions are in addition to those described in
the Prospectus. Policies that are identified as fundamental may be changed
with respect to a Fund only with the approval of the holders of a majority of
the Fund's outstanding shares. Such majority is defined as the vote of the
lesser of (i) 67% or more of the outstanding shares present at a meeting, if
the holders of more than 50% of a Fund's outstanding shares are present in
person or by proxy, or (ii) more than 50% of a Fund's outstanding shares. As
to any of the following policies, if a percentage restriction is adhered to at
the time of investment, a later increase or decrease in percentage resulting
from a change in value of portfolio securities or amount of net assets will
not be considered a violation of the policy.
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GLOBAL BALANCED FUND, GLOBAL HARD ASSETS FUND, GOLD OPPORTUNITY FUND, ASIA
DYNASTY FUND, GLOBAL EMERGING MARKETS FUND, ASIA INFRASTRUCTURE FUND,
GOLD/RESOURCES FUND, GLOBAL INCOME FUND AND U.S. GOVERNMENT MONEY FUND.
- -------------------------------------------------------------------------------
With respect to Gold/Resources Fund and U.S. Government Money Fund, all of the
following restrictions are fundamental policies except restriction 21, unless
otherwise indicated. With respect to Global Income Fund, restrictions 1, 7,
10, 15 and 21 are not fundamental. With respect to Global Balanced Fund,
Global Hard Assets Fund, Gold Opportunity Fund, Asia Dynasty Fund, Global
Emerging Markets Fund and Asia Infrastructure Fund restrictions 1, 4, 6, 7,
10, 12, 13, 17, 18, 19 and 20, are not fundamental, unless otherwise provided
for by applicable federal or state law.
The Global Balanced Fund, Global Hard Assets Fund, Gold Opportunity Fund,
Global Emerging Markets Fund, Asia Dynasty Fund, Asia Infrastructure Fund,
Gold/Resources Fund, Global Income Fund and U.S. Government Money Fund may
not:
1. Invest in securities which (i) with respect to Gold/Resources Fund,
Global Income Fund and U.S. Government Money Fund, are subject to legal
or contractual restrictions on resale ("restricted securities") or for
which there is no readily available market quotation or engage in a
repurchase agreement maturing in more than seven days with respect to
any security if the result is that more than 10% of a Fund's net assets
would be invested in such securities, and (ii) with respect to Global
Balanced Fund, Global Hard Assets Fund, Gold Opportunity Fund, Asia
Dynasty Fund Global Emerging Markets Fund and Asia Infrastructure Fund,
are "illiquid" securities, including repurchase agreements maturing in
more than 7 days and options traded over-the-counter if the result is
that more than 15% of Global Balanced Fund's, Global Hard Assets Fund's,
Gold Opportunity Fund's, Asia Dynasty Fund's, Global Emerging Markets
Fund or Asia Infrastructure Fund's net assets would be invested in such
securities, except that Global Income Fund may invest an additional 5%
of its net assets in short term money market investments, such as
repurchase agreements and time deposits maturing in more than seven
days.
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<PAGE>
2. Purchase or sell real estate, although the Global Balanced Fund, Gold
Opportunity Fund, Global Hard Assets Fund, Asia Dynasty Fund, Asia
Infrastructure Fund, Gold/Resources Fund, Global Emerging Markets Fund
and Global Income Fund may purchase securities of companies which deal
in real estate, including securities of real estate investment trusts,
and may purchase securities which are collateralized by interests in
real estate.
3. Purchase or sell commodities (non-Hard Asset commodities with respect to
Global Hard Assets) or commodity futures contracts (for the purpose of
this restriction, forward foreign exchange contracts are not deemed to
be a commodity or commodity contract) except that Global Emerging
Markets Fund may for hedging and other purposes, Gold/Resources Fund
may, for hedging purposes, buy and sell financial futures contracts
which may include stock and bond index futures contracts and foreign
currency futures contracts and Gold/Resources Fund may, for hedging
purposes only, buy and sell commodity futures contracts on gold and
other natural resources or on an index thereon. The Fund may not commit
more than 5% of its total assets to initial margin deposits on futures
contracts, (however, the Global Emerging Markets Fund is excluded from
the 5% limitation for margin deposit for futures position entered into
for bona fide hedging purposes). In addition, Gold/Resources Fund,
International Investors Gold Fund, Global Hard Assets Fund and Gold
Opportunity Fund may invest in gold bullion and coins.
4. Exclusive of the Global Balanced Fund, Global Hard Assets Fund, Gold
Opportunity Fund, Asia Dynasty Fund, Global Emerging Markets Fund and
Asia Infrastructure Fund, purchase securities of other open-end
investment companies except as part of a merger, consolidation,
reorganization or acquisition of assets; Asia Dynasty Fund, Global
Emerging Markets Fund, Asia Infrastructure Fund, Global Balanced Fund,
Global Hard Assets Fund, Gold Opportunity Fund, Gold/Resources Fund or
Global Income Fund may not purchase more than 3% of the total
outstanding voting stock of any closed-end investment company if more
than 5% of any of these Funds' total assets would be invested in
securities of any closed-end investment company, or more than 10% of
such value in closed-end investment companies in general. In addition,
Global Balanced Fund, Global Hard Assets Fund, Gold Opportunity Fund, Asia
Dynasty Fund, Asia Infrastructure Fund, Gold/Resources Fund or Global
Income Fund may not invest in the securities of closed-end investment
companies, except by purchase in the open market involving only customary
broker's commissions.
5. Make loans, except by (i) purchase of marketable bonds, debentures,
commercial paper and similar marketable evidences of indebtedness and
(ii) repurchase agreements. Global Balanced Fund, Global Hard Assets
Fund, Gold Opportunity Fund, Asia Dynasty Fund, Global Emerging Markets
Fund, Asia Infrastructure Fund and Global Income Fund may lend to
broker-dealers portfolio securities with an aggregate market value up to
one-third of its total assets.
6. As to 75% of the total assets of each of the Asia Dynasty Fund, Global
Emerging Markets Fund, Gold/Resources Fund, International Investors Gold
Fund and U.S. Government Money Fund, purchase securities of any issuer,
if immediately thereafter (i) more than 5% of a Fund's total assets
(taken at market value) would be invested in the securities of such
issuer, or (ii) more than 10% of the outstanding securities of any class
of such issuer would be held by a Fund (provided that these limitations
do not apply to obligations of the United States Government, its
agencies or instrumentalities). This limitation does not apply to the
Global Income Fund, Global Balanced Fund, Global Hard Assets Fund, Gold
Opportunity Fund, or Asia Infrastructure Fund.
7. Invest more than 5 percent of the value of its total assets in
securities of companies having, together with their predecessors, a
record of less than three years of continuous operation. This
restriction does not apply to Global Balanced Fund, Global Hard Assets
Fund, Gold Opportunity Fund, Global Emerging Markets Fund, Asia Dynasty
Fund or Asia Infrastructure Fund.
8. Underwrite any issue of securities (except to the extent that a Fund may
be deemed to be an underwriter within the meaning of the Securities Act
of 1933 in the disposition of restricted securities).
9. Borrow money, except that each of the Gold/Resources Fund and U.S.
Government Money Fund may borrow up to 10% of its total assets valued at
cost for temporary or emergency purposes. These Funds will not purchase
securities for investment while borrowings equaling 5% or more of their
total assets are outstanding. In addition, Global Balanced Fund, Global
Hard Assets Fund, Gold Opportunity Fund, Global Emerging Markets Fund,
Asia Dynasty Fund,
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<PAGE>
Asia Infrastructure Fund and Global Income Fund may borrow up to 30% of
the value of their respective net assets to increase their holdings of
portfolio securities.
10. Mortgage, pledge or otherwise encumber its assets except to secure
borrowing effected within the limitations set forth in restriction (9).
11. Issue senior securities except insofar as a Fund may be deemed to have
issued a senior security by reason of (i) borrowing money in accordance
with restrictions described above; (ii) entering into forward foreign
currency contracts (Global Balanced Fund, Global Hard Assets Fund, Gold
Opportunity Fund, Global Emerging Markets Fund, Asia Dynasty Fund, Asia
Infrastructure Fund, Gold/Resources Fund and Global Income Fund); (iii)
financial futures contracts purchased on margin (Global Balanced Fund,
Global Hard Assets Fund, Gold Opportunity Fund, Global Emerging Markets
Fund, Asia Dynasty Fund, Asia Infrastructure Fund, Gold/Resources Funds
and Global Income Fund), (iv) commodity futures contracts purchased on
margin (Gold/Resources Fund, Global Hard Assets Fund, Gold Opportunity
Fund); (v) foreign currency swaps (Global Balanced Fund, Global Hard
Assets Fund, Gold Opportunity Fund, Asia Dynasty Fund, Global Emerging
Markets Fund and Asia Infrastructure Fund); and (vi) issuing multiple
classes of shares (Global Balanced Fund, Global Hard Assets Fund, Gold
Opportunity Fund, Global Emerging Markets Fund, Asia Infrastructure Fund
and Asia Dynasty Fund).
12. Except for Gold Opportunity Fund and Global Hard Assets Fund, make
short sales of securities, except that Global Balanced Fund, Global
Emerging Markets Fund, Asia Dynasty Fund, Asia Infrastructure Fund,
Gold/Resources Fund and Global Income Fund may engage in the
transactions specified in restrictions (3) and (14).
13. Purchase any security on margin, except that it may obtain such short-
term credits as are necessary for clearance of securities transactions
and, with respect to Global Balanced Fund, Global Hard Assets Fund,
Gold Opportunity Fund, Global Emerging Markets Fund, Asia Dynasty Fund,
Asia Infrastructure Fund, Gold/Resources Fund and Global Income Fund,
may make initial or maintenance margin payments in connections with
options and futures contracts and related options and borrowing
effected within the limitations set forth in restriction (9).
14. Write, purchase or sell puts, calls, straddles, spreads or combinations
thereof, except that Global Balanced Fund, Global Hard Assets Fund,
Gold Opportunity Fund, Global Emerging Markets Fund, Asia Dynasty Fund,
Asia Infrastructure Fund, Gold/Resources Fund and Global Income Fund
may purchase or sell puts and calls on foreign currencies and on
securities described under "Options Transactions" herein and in the
Prospectus and that Global Balanced Fund, Global Hard Assets Fund, Gold
Opportunity Fund, Global Emerging Markets Fund, Asia Dynasty Fund, Asia
Infrastructure Fund, Gold/Resources Fund and Global Income Fund may
write, purchase or sell put and call options on financial futures
contracts, which include bond and stock index futures contracts and
Gold/Resources Fund may write, purchase, or sell put and call options
on gold or other natural resources or an index thereon and on commodity
futures contracts on gold or other natural resources or an index
thereon.
15. Make investments for the purpose of exercising control or management.
16. Invest more than 25 percent of the value of a Fund's total assets in
the securities of issuers having their principal business activities in
the same industry, except the Gold/Resources Fund and as otherwise
stated in any Fund's fundamental investment objective, and provided
that this limitation does not apply to obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities.
17. Participate on a joint or joint and several basis in any trading
account in securities, although transactions for the Funds and any
other account under common or affiliated management may be combined or
allocated between the Funds and such account.
18. Purchase participations or other interests (other than equity stock
interests in the case of the Global Balanced Fund, Global Hard Assets
Fund, Gold Opportunity Fund, Global Emerging Markets Fund, Asia Dynasty
Fund, Asia Infrastructure Fund, Gold/Resources Fund and Global Income
Fund) in oil, gas or other mineral exploration or development programs.
16
<PAGE>
19. Invest more than 5% of its total assets in warrants, whether or not the
warrants are listed on the New York or American Stock Exchanges, or
more than 2% of the value of the assets of a Fund (except Global
Balanced Fund, Global Hard Assets Fund, Gold Opportunity Fund, Global
Emerging Markets Fund, Asia Dynasty Fund and Asia Infrastructure Fund)
in warrants which are not listed on those exchanges. Warrants acquired
in units or attached to securities or received as dividends are not
included in this restriction. The U.S. Government Money Fund will not
invest in warrants.
20. Purchase or retain a security of any issuer if any of the officers,
directors or Trustees of a Fund or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer, or
if such persons taken together own more than 5% of the securities of
such issuer (except Global Emerging Markets Fund).
21. Invest in real estate limited partnerships or in oil, gas or other
mineral leases.
With respect to restriction 3, forward foreign exchange contracts are not
deemed to be a commodity or commodity contract. The following are not
considered fundamental policies. Asia Dynasty Fund, Asia Infrastructure Fund,
Global Balanced Fund, Global Hard Assets Fund, Gold Opportunity Fund, Global
Income Fund and Global Emerging Markets Fund may, for hedging purposes, buy
and sell financial futures contracts which may include stock and bond index
futures contracts and foreign currency futures contracts. A Fund may not
commit more than 5% of its total assets to initial margin deposits on futures
contracts. Global Emerging Markets Fund, Asia Dynasty Fund, Asia
Infrastructure Fund, Global Balanced Fund, Global Hard Assets Fund and Gold
Opportunity Fund may not commit more than 5% of their total assets to initial
margin deposits on futures contracts not used for hedging purposes.
With respect to restriction 16, companies in different geographical locations
will not be deemed to be in the same industry if the investment risks
associated with the securities of such companies are substantially different.
For example, although generally considered to be "interest rate sensitive,"
investing in banking institutions in different countries is generally
dependent upon substantially different risk factors, such as the condition and
prospects of the economy in a particular country and in particular industries,
and political conditions.
In order to comply with certain securities laws of a state in which shares of
the Funds are currently sold, the Funds have undertaken with respect to
investment restriction number 1, not to invest more than 10% of their assets
in "restricted securities." To the extent the above restriction has been
adopted to comply with state securities laws, it shall not apply to the Funds
once such laws are no longer in effect.
In order to comply with certain securities laws of a state in which shares of
the Funds are currently sold, the Funds have undertaken with respect to
investment restriction number 7, not to invest more than 5% of their assets in
securities of unseasoned issuers. To the extent the above restriction has been
adopted to comply with state securities laws, it shall not apply to the Funds
once such laws are no longer in effect.
INTERNATIONAL INVESTORS GOLD FUND
Restrictions 1 through 9 are fundamental policies of International Investors
Gold Fund and may not be changed without shareholder approval. Restrictions 10
through 16 are not fundamental policies and may be changed without shareholder
approval.
International Investors Gold Fund may not:
1. Underwrite securities of other issuers.
2. Invest in real estate, commodity contracts or commodities (except that,
subject to applicable state laws, the Fund may invest up to 12.5% of
the value of its total assets as of the date of investment in gold and
silver coins which are legal tender in the country of issue and gold
and silver bullion).
3. Make loans to other persons, except through repurchase agreements or
the purchase of publicly distributed bonds, debentures and other debt
securities.
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<PAGE>
4. Purchase securities on margin or make short sales.
5. Purchase or retain a security of any issuer if any of the officers or
directors of the Company or its investment adviser own beneficially as
much as 1/2 of 1%, or if such persons taken together own over 5%, of
the issuer's securities.
6. Lend its funds or assets, except through the purchase of securities the
Fund would otherwise be authorized to purchase.
7. Mortgage, pledge or hypothecate more than 15% of the Company's total
assets, taken at cost.
8. Purchase any restricted securities which may not be sold to the public
without registration under the Securities Act of 1933, if by reason of
such purchase the value of the Company's aggregate holdings in all such
securities would exceed 10% of total assets.
9. Issue senior securities. The Fund may (I) borrow money in accordance
with restrictions described above, (ii) enter into forward contracts,
(iii) purchase futures contracts on margin, (iv) issue multiple classes
of securities, and (v) enter into swap agreement or purchase or sell
structured notes or similar instruments.
10. Invest in interests (other than equity stock interests) in oil, gas or
other mineral exploration or development programs or in oil, gas or
other mineral leases.
11. Invest in real estate limited partnerships.
12. Make short sales of foreign currencies.
13. Seek short-term trading profits.
14. Make investments in companies for the purpose of exercising control or
management.
15. Invest more than 10% of its assets in repurchase agreements having
maturities of greater than seven days or in a combination of such
agreements together with restricted securities and securities for which
market quotations are not readily available.
16. Purchase securities for investment while borrowings equal to 5% or more
of the Fund's assets are outstanding.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of net assets will not be considered a
violation of any of the foregoing restrictions.
INVESTMENT ADVISORY SERVICES
The investment adviser and manager of the Funds is Van Eck Associates
Corporation (the "Adviser"), a Delaware corporation, pursuant to an Advisory
Agreement with the Trust dated as of July 30, 1985, as amended. The Adviser
furnishes an investment program for the Funds and determines, subject to the
overall supervision and review of the Board of Trustees, what investments
should be purchased, sold and held. The Adviser is currently the oldest and
largest gold manager investing in gold mining shares. The Adviser's team of
gold managers and analysts average over 25 years of experience.
Peregrine Asset Management (Hong Kong) Limited ("PAM"), a Hong Kong
Corporation, is a sub-adviser to the Emerging Markets Fund pursuant to a Sub-
Investment Advisory Agreement dated October 9, 1995. Fiduciary International,
Inc. ("FII"), a New York Corporation, is sub-adviser to the Global Balanced
Fund pursuant to a Sub-Investment Advisory Agreement dated October 30, 1993.
The Adviser (and Sub-Adviser) provides the Funds with office space, facilities
and simple business equipment and provides the services of consultants,
executive and clerical personnel for administering their affairs. The Adviser
(and Sub-Adviser) compensates all executive and clerical personnel and
Trustees of the Trust if such persons are employees or affiliates of the
18
<PAGE>
Adviser, Sub-Adviser, or its affiliates. The Advisory fee is computed daily
and paid monthly at the following annual rates: International Investors Gold
Fund, Global Income Fund and Gold/Resources Fund pay a fee equal to .75 of 1%
of the first $500 million of average daily net assets, .65 of 1% of the next
$250 million of average daily net assets and .50 of 1% of the average daily
net assets in excess of $750 million. Asia Dynasty Fund, Asia Infrastructure
Fund and Global Balanced Fund pay the Adviser a fee of .75 of 1% of average
daily net assets. From this fee the Adviser pays the Sub-Adviser a fee of .50
of 1% of average daily net assets. Gold Opportunity Fund, Global Emerging
Markets Fund and Global Hard Assets Fund each pay the Adviser 1% of average
daily net assets. From the fee paid by the Global Emerging Markets Fund, the
Advisor pays the Sub-Advisor a fee of .50 of 1% of average daily net assets.
The U.S. Government Money Fund pays a monthly fee at the annual rate of .50 of
1% for the first $500 million of average daily net assets, .40 of 1% on the
next $250 million of average daily net assets, and .375 of 1% of the average
daily net assets in excess of $750 million.
The Adviser also performs accounting and administrative services for Global
Balanced Fund, Asia Dynasty Fund, Asia Infrastructure Fund, Gold/Resources
Fund and International Investors Gold Fund pursuant to a written agreement.
For these accounting and administrative services, Asia Dynasty Fund, Asia
Infrastructure Fund and Global Balanced Fund each pays .25 of 1% of its
respective average daily net assets. Gold/Resources Fund and International
Investors Gold Fund pay an annual rate of .25 of 1% of the first $750 million
of their respective average daily net assets and .20 of 1% of their respective
average daily net assets in excess of $750 million.
The net assets of the Funds at December 31, 1995, 1994, and 1993 were
approximately: International Investors Gold Fund (Class A)--$519,795,000,
$634,808,000 and $706,171,000, respectively; Gold/Resources Fund (Class A)--
$155,974,000, $186,091,000 and $211,450,000, respectively; U.S. Government
Money Fund--$70,130,000, $47,078,000 and $31,109,000, respectively; Global
Income Fund (Class A)--$112,375,000, $137,242,000 and $251,725,000,
respectively; Asia Dynasty Fund (Class A) $64,275,000, $83,787,000 and
$108,661,000, respectively; Asia Dynasty Fund (Class B)--$27,234,000,
$35,024,000 and $26,205,000, respectively; Global Balanced Fund (Class A)--
$30,632,000, $13,986,000 and $562,000, respectively; Global Balanced Fund
(Class B)--$6,151,000, $5,628,000 and $130,000, respectively. The net assets
of the Funds at December 31, 1995 and 1994 were approximately: International
Investors Gold Fund (Class C)--$720,000 and $430,000 respectively; Asia
Infrastructure Fund (Class A)--$738,000 and $1,038,000 respectively; Global
Hard Assets Fund (Class A)--$3,820,000 and $1,419,000 respectively; and Global
Hard Assets Fund (Class C)--$181,000 and $8,000 respectively. Gold Opportunity
Fund (Class A) at December 31, 1995--$1,906,000 and Gold Opportunity Fund
(Class C) at December 31, 1995--$105,000.
In 1995, 1994 and 1993, the aggregate remuneration received by the Adviser
from International Investors Gold Fund was $4,256,866, $4,792,990 and
$4,056,306, respectively; from Gold/Resources Fund was $1,317,580, $1,569,404
and $1,237,378, respectively; from U.S. Government Money Fund was $286,736,
$316,603 and $164,283, respectively; from Global Income Fund was $984,254,
$1,312,169 and $2,167,616, respectively; from Asia Dynasty Fund was $818,148,
$1,011,806 and $243,120, respectively. In 1995 and 1994, the aggregate
remuneration received by the Adviser from Global Balanced Fund was $141,393
and $127,782, respectively; from Global Hard Assets Fund was $29,887 and
$1,893, respectively; from Asia Infrastructure Fund was $7,143 and $12,806,
respectively. In 1995, the aggregate remuneration received by the Adviser from
Gold Opportunity Fund was $14,095.
The expenses borne by each of the Funds include: all the charges and expenses
of the transfer and dividend disbursing agent, custodian fees and expenses,
legal, auditors' and accountants' fees and expenses, brokerage commissions for
portfolio transactions, taxes, if any, the advisory fee (and accounting and
administrative services fees, if any), extraordinary expenses (as determined
by the Trustees of the Trust), expenses of shareholders' and Trustees'
meetings, and of preparing, printing and mailing proxy statements, reports and
other communications to shareholders, expenses of preparing and setting in
type prospectuses and periodic reports and expenses of mailing them to current
shareholders, legal and accounting expenses and expenses of registering and
qualifying shares for sale (including compensation of the Adviser's employees
in relation to the time spent on such matters), expenses relating to the Plan
of Distribution (Rule 12b-1 Plan) exclusive of International Investors Gold
Fund, fees of Trustees who are not "interested persons" of the Adviser (or
Sub-Adviser), membership dues of the Investment Company Institute, fidelity
bond and errors and omissions insurance premiums, cost of maintaining the
books and records of each Fund, and any other charges and fees not
specifically enumerated as an obligation of the Distributor or Adviser or Sub-
Adviser.
19
<PAGE>
The Advisory Agreement with respect to Gold Opportunity Fund was approved at a
meeting of the Board of Trustees held on December 13, 1994. The Advisory
Agreement with respect to Global Hard Assets Fund was approved at a meeting of
the Board of Trustees held on October 18, 1994. The Advisory Agreement and
Sub-Advisory Agreements provide that the Adviser and Sub-Adviser shall
reimburse the Trust for expenses of the Trust in excess of certain expense
limitations required by state regulation unless the Trust has obtained an
appropriate waiver of such expense limitations or expense items from a
particular state authority. Under the Advisory Agreement and Sub-Advisory
Agreement, the maximum annual expenses which the Trust may be required to
bear, inclusive of the advisory fee (from which the Adviser pays the Sub-
Adviser its fee) but exclusive of interest, taxes, brokerage fees, Rule 12b-1
Plan distribution payments and extraordinary items, may not exceed the lowest
expense limitation imposed by any state in which the Funds are registered.
Currently, only one state imposes such an expense limitation on the Funds. For
the purposes of the expense limitations imposed on the Funds by this state,
expenses may not exceed: (i) 2.5% of the first $30,000,000 of average net
assets, 2.0% of the next $70,000,000 of average net assets and 1.5% of the
remaining average net assets. The amount of the advisory fee to be paid to the
Adviser each month will be reduced by the amount, if any, by which the
annualized expenses of the Funds for that month exceed the foregoing
limitations. At the end of the fiscal year, if the aggregate annual expenses
of the Funds exceed the amount permissible under the foregoing limitations,
then the Adviser and/or Sub-Adviser will be required promptly to reimburse the
Funds for the total amount by which expenses exceed the amount of the
limitations, not limited (with respect to the Adviser only) to the amount of
the fees paid. If aggregate annual expenses are within the limitations,
however, any excess amount previously withheld will be paid to the Adviser
and/or Sub-Adviser.
The Advisory Agreement and Sub-Advisory Agreement with respect to Global
Balanced Fund were approved at a meeting of the Board of Trustees held on
October 12, 1993. The Sub-Advisory Agreement with respect to Asia Dynasty Fund
was reapproved at a meeting of the Board of Trustees of the Trust held on July
12, 1994. The Advisory Agreement with respect to Gold/Resources Fund and
International Investors Gold Fund was approved at a meeting of the Board of
Trustees held on May 24, 1994. The Advisory Agreements and Sub-Advisory
Agreements for Asia Infrastructure Fund was approved on April 18, 1995.
Advisory Agreements for all the Funds were reapproved by the Board of Trustees
of the Trust, including a majority of the Trustees who are not parties to such
Agreements or interested persons of any such party at a meeting held on April
23, 1996. The Advisory Agreement was approved by shareholders of the U.S.
Government Money Fund on January 23, 1987; Global Income Fund on April 12,
1988; and Gold/Resources Fund and International Investors Gold Fund on July
25, 1994. The Advisory Agreements and Sub-Investment Advisory Agreements were
approved by shareholders of Global Balanced Fund on December 17, 1993 and Asia
Dynasty Fund on July 25, 1994. The Advisory Agreement and Sub-Advisory
Agreement provide that they shall continue in effect from year to year with
respect to a Fund as long as it is approved at least annually both (i) by a
vote of a majority of the outstanding voting securities of the Fund (as
defined in the Act) or by the Trustees of the Trust, and (ii) in either event
by a vote of a majority of the Trustees who are not parties to the Advisory
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Agreements may
be terminated on 60 days written notice by either party and will terminate
automatically in the event of an assignment within the meaning of the Act.
Mr. John C. van Eck is Chairman of the Board of Directors of the Adviser as
well as President and Trustee of the Trust. Mr. Van Eck offered the first
global mutual fund to U.S. investors in 1955 and offered the first gold fund
to U.S. investors in 1968.
THE DISTRIBUTOR
Shares of the Funds are offered on a continuous basis and are distributed
through Van Eck Securities Corporation, 99 Park Avenue, New York, New York
(the "Distributor"), a wholly-owned subsidiary of Van Eck Associates
Corporation. The Trustees of the Trusts have approved a Distribution Agreement
appointing the Distributor as distributor of shares of the Funds. The
Distribution Agreement with respect to all Funds was reapproved by the action
of the Trustees on April 23, 1996.
The Distribution Agreement provides that the Distributor will pay all fees and
expenses in connection with printing and distributing prospectuses and reports
for use in offering and selling shares of the Funds and preparing, printing
and distributing advertising or promotional materials. The Funds will pay all
fees and expenses in connection with registering and qualifying their shares
under federal and state securities laws.
20
<PAGE>
Van Eck Securities Corporation retained distributing commissions on sales of
shares of the Funds for the following fiscal years ended December 31 (except
as noted) after reallowance to dealers as follows:
<TABLE>
<CAPTION>
VAN ECK
SECURITIES REALLOWANCE TO
CORPORATION DEALERS
----------- --------------
<S> <C> <C> <C>
International Investors Gold 1995 $161,888 $ 650,766
Fund............................. 1994 423,706 1,665,173
1993 485,198 1,851,096
Gold/Resources Fund.............. 1995 $ 64,047 $ 274,644
1994 286,592 1,117,992
1993 342,459 1,290,246
Global Income Fund............... 1995 $ 19,771 $ 98,774
1994 33,396 136,949
1993 337,156 1,517,371
Asia Dynasty Fund................ 1995 $ 25,162 $ 119,247
1994 236,565 1,181,535
3/22/93-12/31/93 211,110 2,409,342
Global Balanced Fund............. 1995 $ 1,982 $ 8,982
1994 $ 19,768 308,987
612/20/93-12/31/93 51 5,368
Asia Infrastructure Fund......... 1995 $ 717 $ 3,792
8/3/94-12/31/94 1,142 36,798
Global Hard Assets Fund.......... 1995 $ 8,060 $ 44,788
11/2/94-12/31/94 64 16,554
Gold Opportunity Fund............ 1995 $ 1,740 $ 7,164
</TABLE>
As the Global Emerging Markets Fund will be a newly created series of the Van
Eck Global Funds, the Globally Emerging Markets Fund has no operating history
and therefore is not on the above chart.
To compensate the Distributor for the services it provides and for the
expenses it bears under the Distribution Agreement, each of Gold/Resources
Fund (Class A), Global Income Fund (Class A), and U.S. Government Money Fund
has adopted a Plan of Distribution pursuant to Rule 12b-1 (the "Plan") under
the Act. Fees paid by the Funds under the Plan will be used for servicing
and/or distribution expenses incurred only during the applicable year.
Additionally, Global Balanced Fund (Class A and B), Asia Dynasty Fund (Class A
and B), Asia Infrastructure Fund (Class A and B), International Investors Gold
Fund (Class C), Gold Opportunity Fund (Class A, B and C) and Global Hard
Assets Fund (Class A, B and C) have also adopted a Plan which provides for the
compensation of brokers and dealers who sell shares of these Funds or provide
servicing. The Plan for Asia Dynasty Fund (Class A) is a reimbursement type
plan and provides for the payment of carry-over expenses to the Distributor,
incurred in one year but payable in a subsequent year(s), up to the maximum
for the Fund in any given year. Global Balanced Fund (Class A and Class B),
Asia Dynasty Fund (Class B), Asia Infrastructure Fund (Class A and B),
International Investors Gold Fund (Class C), Gold Opportunity Fund (Class A, B
and C) and Global Hard Assets Fund (Class A, B and C) Plans are compensation
type plans with a carry-forward provision which provides that the Distributor
recoup distribution expenses in the event the Plan is terminated. For the
periods prior to April 30, 1997, the Distributor has agreed with respect to
Plans with a carry-forward provision, notwithstanding anything to the contrary
in the Plan, to waive its right to reimbursement of 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. Pursuant to
the Plans, the Distributor provides the Funds at least quarterly with a
written report of the amounts expended under the Plans and the purpose for
which such expenditures were made. The Trustees review such reports on a
quarterly basis.
21
<PAGE>
The Plan was approved with respect to Gold Opportunity Fund by the Trustees of
the Trust on December 13, 1994. The Plan was approved with respect to Global
Hard Assets Fund by the Trustees of the Trust on October 18, 1994. The Plans
were approved, in the case of Asia Infrastructure (Class A) and International
Investors Gold Fund (Class C) by the Trustees of the Trust on October 18,
1994. The Plans were reapproved for all Funds, by the Trustees of the Trust,
including a majority of the Trustees who are not "interested persons" of the
Funds and who have no direct or indirect financial interest in the operation
of the Plan, cast in person at a meeting called for the purpose of voting on
each such Plan on April 23, 1996. The Plan was approved by shareholders of the
Gold/Resources Fund (Class A) and U.S. Government Money Fund on January 23,
1987; Global Income Fund on April 12, 1988; Asia Dynasty Fund (Class B) on
August 31, 1993; Global Balanced Fund (Class A and B) on December 17, 1993;
International Investors Gold Fund (Class C) and Asia Dynasty Fund (Class A) on
July 25, 1994. A Plan shall continue in effect as to each Fund, provided such
continuance is approved annually by a vote of the Trustees in accordance with
the Act. A Plan may not be amended to increase materially the amount to be
spent for the services described therein without approval of the shareholders
of the Funds, and all material amendments to the Plan must also be approved by
the Trustees in the manner described above. A Plan may be terminated at any
time, without payment of any penalty, by vote of a majority of the Trustees
who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of the Plan, or by a vote of a
majority of the outstanding voting securities of the Fund (as defined in the
Act) on written notice to any other party to the Plan. A Plan will
automatically terminate in the event of its assignment (as defined in the
Act). So long as the Plan is in effect, the election and nomination of
Trustees who are not "interested persons" of the Trust shall be committed to
the discretion of the Trustees who are not "interested persons." The Trustees
have determined that, in their judgment, there is a reasonable likelihood that
the Plan will benefit the Funds and their shareholders. The Funds will
preserve copies of the Plan and any agreement or report made pursuant to Rule
12b-1 under the Act, for a period of not less than six years from the date of
the Plan or such agreement or report, the first two years in an easily
accessible place. For additional information regarding the Plans, see the
Prospectus.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser or the Sub-Adviser is responsible for decisions to buy and sell
securities and other investments for the Funds, the selection of brokers and
dealers to effect the transactions and the negotiation of brokerage
commissions, if any. In transactions on stock and commodity exchanges in the
United States, these commissions are negotiated, whereas on foreign stock and
commodity exchanges these commissions are generally fixed and are generally
higher than brokerage commissions in the United States. In the case of
securities traded on the over-the-counter markets, there is generally no
stated commission, but the price usually includes an undisclosed commission or
markup. In underwritten offerings, the price includes a disclosed fixed
commission or discount. Most obligations in which the U.S. Government Money
Fund invests are normally traded on a "principal" rather than agency basis.
This may be done through a dealer (e.g. securities firm or bank) who buys or
sells for its own account rather than as an agent for another client, or
directly with the issuer. A dealer's profit, if any, is the difference, or
spread, between the dealer's purchase and sale price for the obligation.
In purchasing and selling the Funds' portfolio investments, it is the
Adviser's or Sub-Adviser's policy to obtain quality execution at the most
favorable prices through responsible broker-dealers. In selecting broker-
dealers, the Adviser will consider various relevant factors, including, but
not limited to, the size and type of the transaction; the nature and character
of the markets for the security or asset to be purchased or sold; the
execution efficiency, settlement capability, and financial condition of the
broker-dealer's firm; the broker-dealer's execution services rendered on a
continuing basis; and the reasonableness of any commissions.
The Adviser or Sub-Adviser may cause the Funds to pay a broker-dealer who
furnishes brokerage and/or research services a commission that is in excess of
the commission another broker-dealer would have received for executing the
transaction if it is determined that such commission is reasonable in relation
to the value of the brokerage and/or research services as defined in Section
28(e) of the Securities Exchange Act of 1934 which have been provided. Such
research services may include, among other things, analyses and reports
concerning issuers, industries, securities, economic factors and trends, and
portfolio strategy. Any such research and other information provided by
brokers to the Adviser and Sub-Adviser are considered to be in addition to
22
<PAGE>
and not in lieu of services required to be performed by the Adviser and Sub-
Adviser under the Advisory Agreement and Sub-Advisory Agreements with the
Trust. The research services provided by broker-dealers can be useful to the
Adviser and Sub-Adviser in serving its other clients or clients of the
Adviser's or Sub-Adviser's affiliates.
The table below shows the commissions paid on purchases and sales of portfolio
securities by each Fund during its respective fiscal year, and the percentages
of such amounts paid to brokers or dealers which furnished daily quotations to
the Funds for the purpose of calculating daily per share net asset value and
to brokers and dealers which sold shares of the Funds. The U.S. Government
Money Fund did not pay brokerage commissions.
<TABLE>
<CAPTION>
1995
% DAILY
FUND (FISCAL YEAR END) COMMISSIONS QUOTATIONS %FUND SALES
- ---------------------- ----------- ---------- -----------
<S> <C> <C> <C>
International Investors Gold Fund (Class A
and C) (12/31)............................. $ 212,002 1.86% 18.63%
Gold/Resources Fund (Class A) (12/31)....... $ 235,161 0.00% 17.59%
Global Income Fund (Class A) (12/31)........ $ 31,325 0.00% 0.00%
Asia Dynasty Fund (Class A and B) (12/31)... $ 900,977 0.00% 3.10%
Global Balanced Fund (Class A and B)
(12/31).................................... $ 89,406 3.50% 1.92%
Asia Infrastructure Fund (Class A) (12/31).. $ 10,104 0.00% 1.36%
Global Hard Assets Fund (Class A and C)
(12/31).................................... $ 28,075 2.07% 25.86%
Gold Opportunity Fund (Class A and
C)(12/31).................................. $ 26,628 0.00% 11.49%
<CAPTION>
1994
% DAILY
FUND (FISCAL YEAR END) COMMISSIONS QUOTATIONS %FUND SALES
- ---------------------- ----------- ---------- -----------
<S> <C> <C> <C>
International Investors Gold Fund (Class A
and C) (12/31)............................. $ 403,616 30.92% 15.24%
Gold/Resources Fund (12/31)................. $ 199,613 2.74% 8.75%
Global Income Fund (12/31).................. $ 40,340 78.09% -0-
Asia Dynasty Fund (Class A and B) (12/31)... $1,011,934 2.36% 2.36%
Global Balanced Fund (Class A and B)
(12/31).................................... $ 65,744 10.32% 1.28%
Asia Infrastructure Fund (12/31)............ $ 57,894 4.75% 3.64%
Global Hard Assets Fund (Class A and C)
(12/31).................................... $ 2,687 78.75% 32.04%
<CAPTION>
1993
% DAILY
FUND (FISCAL YEAR END) COMMISSIONS QUOTATIONS %FUND SALES
- ---------------------- ----------- ---------- -----------
<S> <C> <C> <C>
International Investors Gold Fund (12/31)... $ 285,946 11.49% 13.89%
Gold/Resources Fund (12/31)................. $ 100,986 -0- -0-
Global Income Fund (12/31).................. $ 32,000 -0- -0-
Asia Dynasty Fund (Class A and B) (12/31)... $ 518,223 22.80% 0.10%
Global Balanced Fund (Class A and B)
(12/31).................................... -0- -0- -0-
</TABLE>
As the Global Emerging Markets Fund will be a newly created series of the Van
Eck Global Funds, the Globally Emerging Markets Fund has no operating history
and therefore is not on the above chart.
The Trustees periodically review the Adviser's and Sub-Adviser's performance
of its responsibilities in connection with the placement of portfolio
transactions on behalf of the Funds and review the commissions paid by the
Funds over representative periods of time to determine if they are reasonable
in relation to the benefits to the Funds.
Investment decisions for the Funds are made independently from those of the
other investment accounts managed by the Adviser, Sub-Adviser or affiliated
companies. Occasions may arise, however, when the same investment decision is
made for more than one client's account. It is the practice of the Adviser and
Sub-Adviser to allocate such purchases or sales insofar as feasible among its
several clients or the clients of its affiliates in a manner it deems
equitable. The principal factors which the Adviser and Sub-Adviser considers
in making such allocations are the relative investment objectives of the
clients, the relative size of the portfolio holdings of the same or comparable
securities and the then availability in the particular account of funds for
23
<PAGE>
investment. Portfolio securities held by one client of the Adviser or Sub-
Adviser may also be held by one or more of its other clients or by clients of
its affiliates. When two or more of its clients or clients of its affiliates
are engaged in the simultaneous sale or purchase of securities, transactions
are allocated as to amount in accordance with formulae deemed to be equitable
as to each client. There may be circumstances when purchases or sales of
portfolio securities for one or more clients will have an adverse effect on
other clients.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Trustees may determine, the
Adviser or Sub-Adviser may consider sales of shares of the Funds as a factor
in the selection of broker-dealers to execute portfolio transactions for the
Funds.
While it is the policy of the Funds generally not to engage in trading for
short-term gains, the Funds will effect portfolio transactions without regard
to the holding period if, in the judgment of the Adviser or 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. The Global Hard Assets Fund, Global
Emerging Markets Fund, Asia Dynasty Fund, Asia Infrastructure Fund and
Gold/Resources Fund anticipate that their annual portfolio turnover rates will
not exceed 100%.
The annual portfolio turnover rate of the Global Balanced Fund, Global Income
Fund and Gold Opportunity Fund may exceed 100%. Due to the high rate of
turnover the Funds may pay a greater amount in brokerage commissions than a
similar size fund with a lower turnover rate. The portfolio turnover rates of
all Funds may vary greatly from year to year. In addition, since the Funds may
have a high rate of portfolio turnover, the Funds may realize capital gains or
losses. Capital gains will be distributed annually to the shareholders.
Capital losses cannot be distributed to shareholders but may be used to offset
capital gains at the Fund level. See "Taxes" in the Prospectus and the
Statement of Additional Information.
The Adviser and related persons, may from time to time, buy and sell for their
own accounts securities recommended to clients for purchase or sale. The
Adviser recognizes that this practice may result in conflicts of interest.
However, to minimize or eliminate such conflicts a Code of Ethics has been
adopted by the Adviser which requires that all trading in securities suitable
for purchase by client accounts must be approved in advance by a person
familiar with purchase and sell orders or recommendations. Approval will be
granted if the security has not been purchased or sold or recommended for
purchase or sale on behalf of a client account within seven days; or if the
security has been purchased or sold or recommended for purchase or sale by a
client account, it is determined that the trading activity will not have a
negative or appreciable impact on the price or market of the security or the
activity is of such a nature that it does not present the dangers or potential
for abuses or likely to result in harm or detriment to a client account. At
the end of each calendar quarter, all related personnel of the Adviser are
required to file a report of all transactions entered into during the quarter.
These reports are reviewed by a senior officer of the Adviser.
TRUSTEES AND OFFICERS
The Trustees and Officers of the Van Eck Funds, their addresses, positions
with the Trust and principal occupations during the past five years are set
forth below. For the fiscal year ended December 31, 1995, compensation
received by any Trustee did not exceed $60,000.
TRUSTEES OF VAN ECK FUNDS:
*.JOHN C. VAN ECK, C.F.A.--Chairman of the Board
270 River Road, Briarcliff Manor, New York; Chairman of the Board and
President of other affiliated investment companies advised by the Adviser;
Chairman, Van Eck Associates Corporation (investment adviser) and Van Eck
Securities Corporation (broker-dealer); Director, Eclipse Financial Asset
Trust (mutual fund); Former President of the Adviser and its affiliated
companies; Former Director (1992-1995), Abex Inc. (aerospace), Former
Director (1983-1986), The Signal Companies, Inc. (high technology and
engineering); Former Director (1982-1984), Pullman Transportation Co., Inc.
(transportation equipment). Former Director (1986-1992) The Henley Group,
Inc. (technology and health).
24
<PAGE>
.#+JEREMY H. BIGGS--Trustee
1220 Park Avenue, New York, New York 10128; Trustee of other affiliated
investment companies advised by the Adviser; Vice Chairman, Director and
Chief Investment Officer, Fiduciary Trust Company International (investment
manager), parent company of Fiduciary International, Inc., which serves as
sub-advisor to the Global Balanced Fund; Chairman of the Board to all funds
of Davis Funds Group (mutual fund management company); Former Director,
International Investors Incorporated (1990-1991).
#+RICHARD C. COWELL--Trustee
240 El Vedado Way, Palm Beach, Florida 33480; Trustee of other affiliated
investment companies advised by the Adviser; Private Investor; Director,
West Indies & Caribbean Development Ltd. (real estate); Former Director,
Compo Industries, Inc. (machinery manufacturer); Former Director,
International Investors Incorporated (1957-1991); Former Director (1978-
1981), American Eagle Petroleums, Ltd. (oil and gas exploration); Former
President and Director (1968-1976), Minerals and Industries, Inc.
(petroleum products); Former Director (1978-1983) Duncan Gold Resources,
Inc. (oil exploration and gold mining); Former Director (1981-1984),
Crested Butte Silver Mining Co.; Former Chairman and Member of Executive
Committee (1974-1981), Allerton Resources, Inc. (oil and gas exploration);
Former Director (1976-1982), Western World Insurance Co.
PHILIP DEFEO--
#+WESLEY G. MCCAIN--Trustee
144 East 30th Street, New York, New York 10016; Chairman, Towneley Capital
Management, Inc., (investment adviser); Chairman, Eclipse Financial Asset
Trust (mutual fund); Trustee of other affiliated investment companies
advised by the Adviser; General Partner, Pharoah Partners, L.P.; President,
Millbrook Associates, Inc.; Trustee, Libre Group Trust; Chairman, Eclipse
Financial Services, Inc.; Trustee, Peregrine Funds; Former Director,
International Investors Incorporated; and Former Secretary and Treasurer,
Millbrook Advisers, Inc. (investment adviser) Former Chairman, Finacor,
Inc. (financial services).
DAVID J. OLDERMAN--Trustee
40 East 52nd Street, New York, New York 10022; Chairman of the Board, Chief
Executive Officer and Owner, Carret & Company, Inc. (since 1988); Chairman
of the Board, American Copy Equipment Co. (1991-present); Chairman of the
Board, Brighton Partners, Inc. (1993-present); Principal, Olderman &
Raborn, Inc., (investment advisers-1984-1988); Chairman of the Board,
Railoc, Inc., (farm equipment manufacturing-1979-1984); Head of Corporate
Finance, Halsey Stuart (investment Banking-1974-1975); Vice Chairman of the
Board, Stone and Webster Securities Corp. (investment banking, retail sales
and investment advisory divisions-1964 to 1974).
*#RALPH F. PETERS--Trustee
55 Strimples Mill Road, Stockton, New Jersey 08559; Trustee of other
affiliated investment companies advised by the Adviser; Former Chairman of
the Board, Former Chairman of the Executive Committee and Chief Executive
Officer of Discount Corporation of New York (dealer in U.S. Treasury and
Federal Agency Securities) (1981-1988); Director, Sun Life Insurance and
Annuity Company of New York; Director, U.S. Life Income Fund, Inc., New
York; Former Director, International Investors Incorporated.
RICHARD D. STAMBERGER--Trustee
888 17th Street, N.W., Washington, D.C. 20006; Principal, National
Strategies, Inc., a public policy firm in Washington, D.C.; Partner and Co-
founder, Quest Partners, Inc. (management consulting firm/since 1988);
Executive Vice President, Chief Operating Officer, and a Director of
NuCable Resources Corporation (technology firm/since 1988); Trustee,
Peregrine Funds; associated with Anderson Benjamin & Reed, a regulatory
consulting firm based in Washington, D.C. (1985-1986); White House Fellow-
Office of Vice President (1984-1985); Director of Special Projects,
National Cable Television Association (1983-1984).
25
<PAGE>
**.FRED M. VAN ECK--Trustee
99 Park Avenue, New York, New York; Private Investor; Trustee of other
affiliated investment companies advised by the Adviser; Director, Van Eck
Associates Corporation; Director, Van Eck Securities Corporation; Former
General Partner (1950-1976) J. H. Whitney & Co. (venture capital).
OFFICERS OF THE TRUST:
HENRY J. BINGHAM--Executive Vice President
99 Park Avenue, New York, New York; Executive Vice President of the Trust;
President of International Investors Gold Fund series of Van Eck Funds and
Gold and Natural Resources Fund series of Van Eck Worldwide Insurance
Trust; Executive Vice President of other affiliated investment companies
advised by the Adviser; Executive Managing Director of the Adviser;
Formerly an officer of the Adviser and affiliated companies; Director and
Vice President (1978-1983), United Services Gold Shares, Inc., United
Services Group of Funds, Inc. and The Good and Bad Times Fund, Inc. (mutual
funds) and Growth Research and Management, Inc. (investment adviser).
Formerly General Partner and Director of Spencer Trask & Co.
LUCILLE PALERMO--Executive Vice President
99 Park Avenue, New York, New York; Executive Vice President of the Trust;
President, Gold/Resources Fund and Gold Opportunity Fund series of Van Eck
Funds; Associate Director, Mining Research of the Adviser; Investment
Strategist and Analyst with Drexel Burnham Lambert (1979-1989).
MADIS SENNER--Executive Vice President
99 Park Avenue, New York, New York; Executive Vice President of the Trust;
President of Global Income Fund series of Van Eck Funds and Worldwide Bond
Fund series of Van Eck Worldwide Insurance Trust; Director, Global Fixed
Income of the Adviser; Executive Vice President of other affiliated
investment companies advised by the Adviser; Former Global Bond Manager,
Chase Manhattan Private Bank (1992-1994); Former President and founder,
Sunray Securities, Inc. (1989-1992).
***.DEREK VAN ECK, C.F.A.--Executive Vice President
99 Park Avenue, New York, New York; Executive Vice President of the Trust;
President of Global Hard Assets Fund series of Van Eck Funds and Worldwide
Hard Assets Fund series of Van Eck Worldwide Insurance Trust; Vice
President of Global Balanced Fund, Gold Opportunity Fund and Asia
Infrastructure Fund series of Van Eck Funds; Executive Vice President,
Director, Global Investments and Director of Van Eck Associates Corporation
and Van Eck Securities Corporation.
MICHAEL G. DOORLEY--Vice President
99 Park Avenue, New York, New York; Vice President of the Trust, Senior
Vice President and Chief Financial Officer of Van Eck Associates
Corporation and Van Eck Securities Corporation, Senior Vice President and
Chief Financial Officer of other affiliated investment companies advised by
the Adviser.
BRUCE J. SMITH--Vice President and Treasurer
99 Park Avenue, New York, New York; Vice President and Treasurer of the
Trust, Senior Managing Director, Portfolio Accounting of Van Eck Associates
Corporation and Senior Managing Director of Van Eck Securities Corporation;
Vice President and Treasurer of other affiliated investment companies
advised by the Adviser.
JOSEPH P. DIMAGGIO--Controller
99 Park Avenue, New York, New York; Controller of the Trust, Director of
Portfolio Accounting of Van Eck Associates Corporation (since 1993);
Accounting Manager, Alliance Capital Management (1985-1993); Controller of
other affiliated investment companies advised by the Adviser.
WILLIAM A. TREBILCOCK
99 Park Avenue, New York, New York; Director, Mining Research of Van Eck
Associates Corporation; Former Director, Corner Bay Explorations Ltd.;
Former Director, Precambrian Explorations Inc. (mining exploration); Former
Director and Secretary (1981-1984) of Tioga Land Company, Inc. (oil
exploration); Former Director (1984-1987), Lacana Gold Inc. (mining
company); Former Director, Royex Gold Mining Corporation (mining company);
Former Director, Pez Corona Gold Corporation (a wholly-owned subsidiary of
Royex Gold Mining Corporation); Former Director, International Corona
Corporation.
26
<PAGE>
THADDEUS M. LESZCZYNSKI--Vice President and Secretary
99 Park Avenue, New York, New York; Vice President and Secretary of the
Trust, Vice President and Secretary of other affiliated investment
companies advised by the Adviser; Vice President, Secretary and General
Counsel of Van Eck Associates Corporation and Van Eck Securities
Corporation.
SUSAN C. LASHLEY--Vice President
99 Park Avenue, New York, New York; Vice President of the Trust, Managing
Director, Mutual Fund Operations of Van Eck Securities Corporation.
PAUL A. DIPERNA--Vice President
99 Park Avenue, New York, New York; Assistant Vice President of the Trust,
Associate Manager, Trading, of Van Eck Associates Corporation; Portfolio
Manager of U.S. Government Money Fund series of Van Eck Funds.
CHARLES CAMERON--Vice President
99 Park Avenue, New York, New York; Vice President of the Trust, Director
of Trading of Van Eck Associates Corporation
BARBARA J. ALLEN--Assistant Secretary
99 Park Avenue, New York, New York; Assistant Secretary of the Trust,
Compliance Officer of Van Eck Associates Corporation and Van Eck Securities
Corporation.
- --------
. An "interested person" as defined in the Act.
* Member of Executive Committee--exercises general powers of Board of
Trustees between meetings of the Board.
** Brother of Mr. John C. van Eck.
*** Son of John C. van Eck and nephew of Fred M. van Eck.
# Member of Nominating Committee.
+ Member of Audit Committee--reviews fees, services, procedures, conclusions
and recommendations of independent auditors.
As of April 1, 1996, all Officers and Trustees as a group owned the number of
shares indicated of each Fund: 142,672 of International Investors Gold Fund,
equal to less than 1% of shares outstanding; 23,104 shares of Gold/Resources
Fund, equal to less than 1% of shares outstanding; 848,997 shares of U.S.
Government Money Fund, equal to less than 1% of shares outstanding; 18,451
shares of Global Income Fund, equal to less than 1% of shares outstanding;
20,799 shares of Asia Dynasty Fund, equal to less than 1% of shares
outstanding; 22,456 shares of Global Balanced Fund, equal to less than 1% of
shares outstanding; 22,058 shares of Global Hard Assets Fund, equal to
approximately 4.8% of shares outstanding and 3,368 shares of Gold Opportunity
Fund, equal to less than 1% of shares outstanding.
At April 1, 1996, Mr. John C. van Eck and members of his family owned
1,271,508 shares of the U.S. Government Money Fund, which represented
approximately 1.3% of the Fund. Mr. van Eck has agreed to vote his shares in
the same proportion as the votes cast by other shareholders of the Fund.
VALUATION OF SHARES
The net asset value per share of each of the Funds is computed by dividing the
value of all of a Fund's securities plus cash and other assets, less
liabilities, by the number of shares outstanding. The net asset value per
share is computed as of the close of the New York Stock Exchange, Monday
through Friday, exclusive of national business holidays. The Funds will be
closed on the following national business holidays: New Years Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas. The net asset values need not be computed on a day in which no
orders to purchase, sell or redeem shares of the Funds have been received.
Dividends paid by a Fund with respect to Class A, Class B and Class C shares
will be calculated in the same manner, at the same time and on the same day
and will be in the same amount, except that the higher distribution services
fee and any incremental transfer agency costs relating to Class B or Class C
shares will be borne exclusively by that Class. The Trustees
27
<PAGE>
have determined that currently no conflict of interest exists between the
Class A and Class B shares or Class A and Class C shares. On an ongoing basis,
the Board of Trustees, pursuant to their fiduciary duties under the 1940 Act
and state laws, will seek to ensure that no such conflict arises.
Shares of International Investors Gold Fund-A, Global Income Fund-A,
Gold/Resources Fund-A, Global Hard Assets Fund-A, Gold Opportunity Fund-A,
Asia Dynasty Fund-A, Asia Infrastructure Fund-A and Global Balanced Fund-A are
sold at the public offering price which is determined once each day the Funds
are open for business and is the net asset value per share plus a sales charge
in accordance with the schedule set forth in the Prospectus. Shares of the
U.S. Government Money Fund are sold without a sales charge. Shares of Asia
Dynasty Fund-B, Global Balanced Fund-B, Global Emerging Markets Fund-A, Global
Emerging Markets Fund-B, Global Emerging Markets-C, Asia Infrastructure Fund-
B, Global Hard Assets Fund-B and Gold Opportunity Fund-B are sold with a
contingent deferred sales charge. Shares of Global Emerging Markets Fund,
International Investors Gold Fund-C, Global Hard Assets Fund-C and Gold
Opportunity Fund -A-C are sold with a redemption fee.
Set forth below is an example of the computation of the public offering price
for shares of the Global Income Fund-A, International Investors Gold Fund-A,
Gold/Resources Fund-A, Gold Opportunity Fund-A, Asia Dynasty Fund-A, Asia
Infrastructure Fund-A, Global Hard Assets Fund-A and Global Balanced Fund-A on
December 31, 1995 under the then-current maximum sales charge:
<TABLE>
<CAPTION>
GLOBAL ASIA
GOLD/ HARD GLOBAL INTERNATIONAL ASIA INFRASTRUC- GLOBAL GOLD
RESOURCES ASSETS INCOME INVESTORS GOLD DYNASTY TURE BALANCED OPPORTUNITY
FUND-A FUND-A FUND-A FUND-A FUND-A FUND-A FUND-A FUND-A
--------- ------ ------ -------------- ------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value and
repurchase price per
share on $.001 par
value capital shares
outstanding............ $5.58 $10.68 $9.00 $13.35 $12.40 $7.57 $10.31 $ 9.67
Maximum sales charge (as
described in the
Prospectus)............ .34 .53 .45 .81 .62 .38 .51 .59
Maximum offering price
per share.............. $5.92 $11.21 $9.45 $14.16 $13.02 $7.95 $10.82 $10.26
</TABLE>
As the Global Emerging Markets Fund will be a newly created series of the Van
Eck Global Funds, the Global Emerging Markets Fund has no operating history,
therefore, it does not appear on the above chart.
In determining whether a contingent deferred sales charge is applicable to a
redemption of Class B shares or a redemption charge is applicable to Class C
shares, the calculation will be determined in the manner that results in the
lowest possible rate being charged. Therefore, it will be assumed that the
redemption is first of any Class A shares in the shareholder's Fund account
(unless a specific request is made to redeem a specific class of shares),
second of Class B shares held for over six years, Class C shares held for over
one year, shares attributable to appreciation or shares acquired pursuant to
reinvestment, and third of any Class C shares or Class B held longest during
the applicable period.
To provide two examples, assume an investor purchased 100 Class B shares of
Global Hard Assets Fund at $10 per share (at a cost of $1,000) and in the
second year after purchase, the net asset value per share is $12 and, during
such time, the investor has acquired 10 additional shares upon dividend
reinvestment. If at such time the investor makes his first redemption of 50
shares (proceeds $600), 10 shares or $120 will not be subject to charge
because of dividend reinvestment. With respect to the remaining 40 shares, the
charge is not applied to the $80 attributable to appreciation but is applied
only to the original cost of $10 per share and not to the increase in net
asset value of $2 per share. Therefore, $200 of the $600 redemption proceeds
will be charged at a rate of 4% (the applicable rate in the second year after
purchase). Instead, assume an investor purchased 100 Class C shares of Global
Hard Assets Fund at $10 per share (at a cost of $1,000) and six months after
purchase, the net asset value per share is $12 and, during such time, the
investor has acquired 10 additional shares upon dividend reinvestment. If at
such time the investor makes his first redemption of 50 shares (proceeds
$600), 10 shares or $120 will not be subject to charge because of dividend
reinvestment. With respect to the remaining 40 shares, the charge is not
applied to the $80 attributable to appreciation but is applied only to the
original cost of $10 per share and not to the increase in net asset value of
$2 per share. Therefore, $400 of the $600 redemption proceeds will be charged
at a rate of 1%.
28
<PAGE>
The value of a financial futures or commodity futures contract equals the
unrealized gain or loss on the contract that is determined by marking it to
the current settlement price for a like contract acquired on the day on which
the commodity futures contract is being valued. A settlement price may not be
used if the market makes a limit move with respect to a particular commodity.
Securities or futures contracts for which market quotations are readily
available are valued at market value, which is currently determined using the
last reported sale price. If no sales are reported as in the case of most
securities traded over-the-counter, securities are valued at the mean of their
bid and asked prices at the close of trading on the New York Stock Exchange
(the "Exchange"). In cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated by or under the
authority of the Board of Trustees as the primary market. Short-term
investments having a maturity of 60 days or less are valued at amortized cost,
which approximates market. Options are valued at the last sales price unless
the last sales price does not fall within the bid and ask prices at the close
of the market, in which case the mean of the bid and ask prices is used. All
other securities are valued at their fair value as determined in good faith by
the Trustees. Foreign securities or futures contracts quoted in foreign
currencies are valued at appropriately translated foreign market closing
prices or as the Board of Trustees may prescribe.
Generally, trading in foreign securities and futures contracts, as well as
corporate bonds, United States government securities and money market
instruments, is substantially completed each day at various times prior to the
close of the Exchange. The values of such securities used in determining the
net asset value of the shares of the Funds may be computed as of such times.
Foreign currency exchange rates are also generally determined prior to the
close of the Exchange. Occasionally, events affecting the value of such
securities and such exchange rates may occur between such times and the close
of the Exchange which will not be reflected in the computation of the Fund's
net asset values. If events materially affecting the value of such securities
occur during such period, then these securities will be valued at their fair
value as determined in good faith by the Trustees.
U.S. GOVERNMENT MONEY FUND
It is the policy of the U.S. Government Money Fund to use its best efforts to
maintain a constant per share price equal to $1.00.
The portfolio instruments of the U.S. Government Money Fund are valued on the
basis of amortized cost. This involves valuing an instrument at its cost
initially and, thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides certainty in
valuation, it may result in periods during which the value, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the instrument.
The valuation of the Fund's portfolio instruments based upon their amortized
cost and simultaneous maintenance of the Fund's per share net asset value at
$1.00 are permitted by a rule adopted by the Securities and Exchange
Commission. Under this rule, the Fund must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of thirteen months or less, and invest only in securities
determined by the Trustees to be of high quality with minimal credit risks. In
accordance with the rule, the Trustees have established procedures designed to
stabilize, to the extent reasonably practicable, the Fund's price per share as
computed for the purpose of sales and redemptions at $1.00. Such procedures
include review of the Fund's portfolio holdings by the Trustees, at such
intervals as they may deem appropriate, to determine whether the net asset
value of the Fund calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. The rule
also provides that the extent of any deviation between the Fund's net asset
value based upon available market quotations or market equivalents and $1.00
per share net asset value based on amortized cost must be examined by the
Trustees. In the event the Trustees determine that a deviation exists which
may result in material dilution or is otherwise unfair to investors or
existing shareholders, they must cause the Fund to take such corrective action
as they regard as necessary and appropriate, including: selling portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity; withholding dividends or paying distributions from
capital or capital gains; redeeming shares in kind; or establishing a net
asset value per share by using available market quotations.
29
<PAGE>
EXCHANGE PRIVILEGE
Class A, Class B and Class C shareholders of a Fund may exchange their shares
for shares of the same class of other of the funds in the Van Eck Group of
Funds. The Exchange Privilege will not be available if the proceeds from a
redemption of shares of a Fund whose shares qualify are paid directly to the
shareholder. The Exchange Privilege is not available for shares which are not
on deposit with DST or Investors Fiduciary Trust Company ("IFTC"), or shares
which are held in escrow pursuant to a Letter of Intent. If certificates
representing shares of a Fund accompany a written exchange request, such
shares will be deposited into an account with the same registration as the
certificates upon receipt by DST.
The Funds each reserve the right to (i) charge a fee of not more than $5.00
per exchange payable to a Fund or charge a fee reasonably intended to cover
the costs incurred in connection with the exchange; (ii) establish a limit on
the number and amount of exchanges made pursuant to the Exchange Privilege and
(iii) terminate the Exchange Privilege without written notice. In the event of
such termination, shareholders who have acquired their shares pursuant to the
Exchange Privilege will be afforded the opportunity to re-exchange such shares
for shares of the Fund originally purchased without sales charge, for a period
of not less than three (3) months.
By exercising the Exchange Privilege each shareholder whose shares are subject
to the Exchange Privilege will be deemed to have agreed to indemnify and hold
harmless the Trust and each of its series, their investment adviser, sub-
investment adviser (if any), distributor, transfer agent, IFTC and the
officers, directors, employees and agents thereof against any liability,
damage, claim or loss, including reasonable costs and attorneys' fees,
resulting from acceptance of, or acting or failure to act upon, or acceptance
of unauthorized instructions or non-authentic telephone instructions given in
connection with, the Exchange Privilege, so long as reasonable procedures are
employed to confirm the authenticity of such communications. (For more
information on the Exchange Privilege, see the Prospectuses).
TAX-SHELTERED RETIREMENT PLANS
The Trust offers several prototype tax-sheltered retirement plans through
which shares of a Fund may be purchased. These plans are more fully described
below. IFTC, P.O. Box 418407, Kansas City, Missouri acts as the trustee and/or
custodian (the "Trustee") under the retirement plans offered by the Trusts.
Persons who wish to establish a tax-sheltered retirement plan should consult
their own tax advisers or attorneys regarding their eligibility to do so and
the laws applicable thereto, such as the fiduciary responsibility provisions
and diversification requirements and the reporting and disclosure obligations
under the Employee Retirement Income Security Act of 1974. The Trusts are not
responsible for compliance with such laws. Further information regarding the
retirement plans, including applications and fee schedules, may be obtained
upon request to the Funds.
INDIVIDUAL RETIREMENT ACCOUNT AND SPOUSAL INDIVIDUAL RETIREMENT ACCOUNT. The
IRA is available to all individuals, including self-employed individuals, who
receive compensation for services rendered and wish to purchase shares of a
Fund. An IRA may also be established pursuant to a SEP. Spousal Individual
Retirement Accounts ("SPIRA") are available to individuals who are otherwise
eligible to establish an IRA for themselves and whose spouses are treated as
having no compensation of their own.
In general, the maximum deductible contribution to an IRA which may be made
for any one year is $2,000 or 100% of annual compensation includible in gross
income, whichever is less. If an individual establishes a SPIRA, the maximum
deductible amount that the individual may contribute annually is the lesser of
$2,250 or 100% of such individual's compensation includible in his gross
income for such year; provided, however, that no more than $2,000 per year for
either individual may be contributed to either the IRA or SPIRA. Contributions
to a SEP are excluded from an employee's gross income and are subject to
different limitations.
In the case of a taxpayer who is deemed to be an active participant in an
employer-sponsored retirement plan, no deduction is available for
contributions to an IRA or SPIRA if his adjusted gross income exceeds the
following levels: $35,000 for a single taxpayer, $50,000 for married taxpayers
who file joint returns, and $10,000 for married taxpayers who file separate
tax returns. (Married taxpayers who file joint tax returns will generally be
deemed to be active participants if either spouse is an active
30
<PAGE>
participant under an employer-sponsored retirement plan.) All taxpayers,
including those who are active participants in employer-sponsored retirement
plans, will be able to make fully deductible IRA contributions at the same
levels discussed above, if their adjusted gross income is less than the
following levels: $25,000 for single taxpayers and $40,000 for married
taxpayers who file joint returns.
In the case of taxpayers who are active participants in employer-sponsored
retirement plans and who have adjusted gross income which exceeds these
specified levels, deductible IRA contributions will be phased out on the basis
of adjusted gross income between $25,000 and $35,000 for single taxpayers,
adjusted gross income of $10,000 and under for married taxpayers who file
separate returns, and combined adjusted gross income between $40,000 and
$50,000 for married taxpayers who file joint returns. The $2,000 IRA deduction
is reduced by $200 for each $1,000 of adjusted gross income in excess of the
following levels: $25,000 for single taxpayers, $40,000 for married taxpayers
who file joint returns, and $0 for married taxpayers who file separate
returns. In the case of a taxpayer who contributes to an IRA and a SPIRA, the
$2,250 IRA deduction is reduced by $225 for each $1,000 of adjusted gross
income in excess of $40,000.
Individuals who are ineligible to make fully deductible contributions may make
nondeductible contributions up to an aggregate of $2,000 in the case of
contributions (deductible and nondeductible) to an IRA and up to an aggregate
of $2,250 in the case of contributions (deductible and nondeductible) to an
IRA and SPIRA and the income upon all such contributions will accumulate tax
free until distribution.
In addition, a separate IRA may be established by a "rollover" contribution,
which may permit the tax-free transfer of assets from qualified retirement
plans under specified circumstances. A "rollover contribution" includes a lump
sum distribution received by an individual, because of severance of
employment, from a qualified plan and paid into an individual retirement
account within 60 days after receipt.
Dividends and capital gains earned on amounts invested in either an IRA or
SPIRA are automatically reinvested by the Trustee in shares of a Fund and
accumulate tax-free until distribution. Distributions from either an IRA or
SPIRA prior to age 59 1/2, unless made as a result of disability or death, may
result in adverse tax consequences and penalties. In addition, there is a
penalty on contributions in excess of the contribution limits and other
penalties are imposed on insufficient payouts after age 70 1/2.
SIMPLIFIED EMPLOYEE PENSION PLAN. A SEP may be utilized by employers to
provide retirement income to employees by making contributions to employee SEP
IRAs. Owners and partners may qualify as employees. The employee is always
100% vested in contributions made under a SEP. The maximum contribution to a
SEP-IRA (an IRA established to receive SEP contributions) is the lesser of
$30,000 or 15% of compensation, excluding contributions made pursuant to a
salary reduction arrangement. Subject to certain limitations, an employer may
also make contributions to a SEP-IRA under a salary reduction arrangement by
which the employee elects contributions to a SEP-IRA in lieu of immediate cash
compensation. The maximum amount which may be contributed to a SEP-IRA (for
1993) under a salary reduction agreement is the lesser of $8,994 (as adjusted
for cost of living increases) or 15% of compensation.
Contributions by employers under a SEP arrangement up to the maximum
permissible amounts are deductible for federal income tax purposes.
Contributions up to the maximum permissible amounts are not includible in the
gross income of the employee. Dividends and capital gains on amounts invested
in SEP-IRAs are automatically reinvested by the Trustee in shares of the
mutual fund that paid such amounts and accumulate tax-free until distribution.
Contributions in excess of the maximum permissible amounts may be withdrawn by
the employee from the SEP-IRA no later than April 15 of the calendar year
following the year in which the contribution is made without tax penalties.
Such amounts will, however, be included in the employee's gross income.
Withdrawals of such amounts after April 15 of the year next following the year
in which the excess contributions is made and withdrawals of any other amounts
prior to age 59 1/2, unless made as a result of disability or death, may
result in adverse tax consequences.
QUALIFIED PENSION PLANS. The Qualified Pension Plan can be utilized by self-
employed individuals, partnerships and corporations (for this purpose called
"Employers") and their employees who wish to purchase shares of a Fund under a
retirement program.
31
<PAGE>
The maximum contribution which may be made to a Qualified Pension Plan in any
one year on behalf of a participant is, depending on the benefit formula
selected by the Employer, up to the lesser of $30,000 or 25 percent of
compensation (net earned income in the case of a self-employed individual).
Contributions by Employers to Qualified Pension Plans up to the maximum
permissible amounts are deductible for Federal income tax purposes.
Contributions in excess of permissible amounts will result in adverse tax
consequences and penalties to the Employer. Dividends and capital gains earned
on amounts invested in Qualified Pension Plans are automatically reinvested by
the Trustee in shares of a Fund and accumulate tax-free until distribution.
Withdrawals of contributions prior to age 59 1/2, unless made as a result of
disability, death or early retirement, may result in adverse tax consequences
and penalties.
403(B)(7) PROGRAM. The Tax-Deferred Annuity Program and Custodial Account
offered by the Fund (the "403(b)(7) Program") allows employees of certain tax
exempt organizations and schools to have a portion of their compensation set
aside for their retirement years in shares held in an investment company
custodial account.
In general, the maximum limit on annual contributions for each employee is the
lesser of $30,000 per year (as adjusted by the IRS for cost-of-living
increases), 25% of the employee's compensation or the employee's exclusion
allowance specified in Section 403(b) of the Code. However, an employee's
salary reduction contributions to a 403(b)(7) Program may not exceed $9,500 a
year (as adjusted for cost of living expenses). Contributions in excess of
permissible amounts may result in adverse tax consequences and penalties.
Dividends and capital gains on amounts invested in the 403(b)(7) Program are
automatically reinvested in shares of a Fund. It is intended that dividends
and capital gains on amounts invested in the 403(b)(7) Program will accumulate
tax-free until distribution.
Employees will receive distributions from their accounts under the 403(b)(7)
Program following termination of employment by retirement or at such other
time as the employer shall designate, but in no case later than an employee's
reaching age 65. Withdrawals of contributions prior to age 59 1/2, unless made
as a result of disability, death or early retirement, may result in adverse
tax consequences and penalties. Employees will also receive distributions from
their accounts under the 403(b)(7) Program in the event they become disabled.
INVESTMENT PROGRAMS
DIVIDEND REINVESTMENT PLAN. Reinvestments of dividends of the Funds, except
for U.S. Government Money Fund, will occur on a date selected by the Board of
Trustees. Reinvestment of U.S. Government Money Fund will occur on the last
day of the month.
AUTOMATIC EXCHANGE PLAN. Investors may arrange under the Exchange Plan to have
DST collect a specified amount once a month or quarter from the investor's
account in one of the Funds and purchase full and fractional shares of another
Fund at the public offering price next computed after receipt of the proceeds.
Further details of the Automatic Exchange Plan are given in the application
which is available from DST or the Funds. This does not apply to Class B or
Class C shares.
An investor should realize that he is investing his funds in securities
subject to market fluctuations, and accordingly the Automatic Exchange Plan
does not assure a profit or protect against depreciation in declining markets.
The Automatic Exchange Plan contemplates the systematic purchase of securities
at regular intervals regardless of price levels.
The expenses of the Automatic Exchange Plan are general expenses of a Fund and
will not involve any direct charge to the participating shareholder. The
Automatic Exchange Plan is completely voluntary and may be terminated on
thirty days notice to DST.
AUTOMATIC INVESTMENT PLAN. Investors may arrange under the Automatic
Investment Plan to have DST collect a specified amount once a month or quarter
from the investor's checking account and purchase full and fractional shares
of a Fund at the public offering price next computed after receipt of the
proceeds. Further details of the Automatic Investment Plan are given in the
application which is available from DST or the Funds.
32
<PAGE>
An investor should realize that he is investing his funds in securities
subject to market fluctuations, and accordingly the Automatic Investment Plan
does not assure a profit or protect against depreciation in declining markets.
The Automatic Investment Plan contemplates the systematic purchase of
securities at regular intervals regardless of price levels.
The expenses of the Automatic Investment Plan are general expenses of a Fund
and will not involve any direct charge to the participating shareholder. The
Automatic Investment Plan is completely voluntary. The Automatic Investment
Plan may be terminated on thirty days notice to DST.
AUTOMATIC WITHDRAWAL PLAN. The Automatic Withdrawal Plan is designed to
provide a convenient method of receiving fixed redemption proceeds at regular
intervals from shares of a Fund deposited by the investor under this Plan.
This Plan is not available to Class B or Class C shareholders. Further details
of the Automatic Withdrawal Plan are given in the application which is
available from DST or the Funds.
In order to open an Automatic Withdrawal Plan, the investor must complete the
Application and deposit, or purchase for deposit, with DST, agent for the
Automatic Withdrawal Plan, shares of a Fund having a total value of not less
than $10,000 based on the offering price on the date the Application is
accepted.
Income dividends and capital gains distributions on shares under an Automatic
Withdrawal Plan will be credited to the investor's Automatic Withdrawal Plan
account in full and fractional shares at the net asset value in effect on the
reinvestment date.
Periodic checks for a specified amount will be sent to the investor, or any
person designated by him, monthly or quarterly (January, April, July and
October). A Fund will bear the cost of administering the Automatic Withdrawal
Plan.
Redemption of shares of a Fund deposited under the Automatic Withdrawal Plan
may deplete or possibly use up the initial investment plus income dividends
and distributions reinvested, particularly in the event of a market decline.
In addition, the amounts received by an investor cannot be considered as an
actual yield or income on his investment since part of such payments may be a
return of his capital. The redemption of shares under the Automatic Withdrawal
Plan may give rise to a taxable event.
The maintenance of an Automatic Withdrawal Plan concurrently with purchases of
additional shares of a Fund would be disadvantageous because of the sales
charge payable with respect to such purchases. An investor may not have an
Automatic Withdrawal Plan in effect and at the same time have in effect an
Automatic Investment Plan or an Automatic Exchange Plan. If an investor has an
Automatic Investment Plan or an Automatic Exchange Plan, such service must be
terminated before an Automatic Withdrawal Plan may take effect.
The Automatic Withdrawal Plan may be terminated at any time (1) on 30 days
notice to DST or from DST to the investor, (2) upon receipt by DST of
appropriate evidence of the investor's death or (3) when all shares under the
Automatic Withdrawal Plan have been redeemed. Upon termination, unless
otherwise requested, certificates representing remaining full shares, if any,
will be delivered to the investor or his duly appointed legal representatives.
TAXES
TAXATION OF THE FUNDS--IN GENERAL
Each Fund has qualified and intends to qualify and elect to be treated each
taxable year as a "regulated investment company" under Subchapter M of the
Code. To so qualify, a Fund must, among other things, (a) derive at least 90%
of its gross income from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stock,
securities or foreign currencies, or other income (including gains from
options, futures or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies; (b) derive less than 30% of
its gross income from the sale or other disposition of any of the following
which was held less than three months (the "30% test"): (i) short sales of
securities; (ii) stock or securities; (iii) options, futures or forward
contracts (other than on foreign currencies) or (iv) foreign currencies (or
options, futures or forward contracts on foreign currencies) but only if such
currencies (or options, futures or forward contracts) are not directly related
to the Fund's principal business of investing in stock or securities; and (c)
satisfy certain diversification requirements.
33
<PAGE>
As a regulated investment company, a Fund will not be subject to federal
income tax on its net investment income and capital gain net income (capital
gains in excess of its capital losses) that it distributes to shareholders if
at least 90% of its net investment income and short-term capital gains for the
taxable year are distributed. However, if for any taxable year a Fund does not
satisfy the requirements of Subchapter M of the Code, all of its taxable
income will be subject to tax at regular corporate rates without any deduction
for distribution to shareholders, and such distributions will be taxable to
shareholders as ordinary income to the extent of the Fund's current or
accumulated earnings or profits.
Each Fund will be liable for a nondeductible 4% excise tax on amounts not
distributed on a timely basis in accordance with a calendar year distribution
requirement. To avoid the tax, during each calendar year a Fund must
distribute (i) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year, (ii) at least 98% of its
capital gain net income for the twelve month period ending on October 31 (or
December 31, if the Fund so elects), and (iii) any portion (not taxed to the
Fund) of the 2% balance from the prior year. Each Fund intends to make
sufficient distributions to avoid this 4% excise tax.
TAXATION OF THE FUNDS' INVESTMENTS
ORIGINAL ISSUE DISCOUNT. For federal income tax purposes, debt securities
purchased by a Fund may be treated as having an original issue discount.
Original issue discount represents interest for federal income tax purposes
and can generally be defined as the excess of the stated redemption price at
maturity of a debt obligation over the issue price. Original issue discount is
treated for federal income tax purposes as income earned by a Fund, whether or
not any income is actually received, and therefore is subject to the
distribution requirements of the Code. Generally, the amount of original issue
discount included in the income of a Fund each year is determined on the basis
of a constant yield to maturity which takes into account the compounding of
accrued interest.
Debt securities may be purchased by a Fund at a discount which exceeds the
original issue discount remaining on the securities, if any, at the time the
Fund purchased the securities. This additional discount represents market
discount for income tax purposes. In the case of any debt security issued
after July 18, 1984, having a fixed maturity date of more than one year from
the date of issue and having market discount, the gain realized on disposition
will be treated as interest to the extent it does not exceed the accrued
market discount on the security (unless the Fund elects to include such
accrued market discount in income in the tax year to which it is
attributable). Generally, market discount is accrued on a daily basis. A Fund
may be required to capitalize, rather than deduct currently, part or all of
any direct interest expense incurred or continued to purchase or carry any
debt security having market discount, unless the it makes the election to
include market discount currently. Because a Fund must include original issue
discount in income, it will be more difficult for the Fund to make the
distributions required for it to maintain its status as a regulated investment
company under Subchapter M of the Code or to avoid the 4% excise tax described
above.
OPTIONS AND FUTURES TRANSACTIONS. Certain of the Funds' investments may be
subject to provisions of the Code that (i) require inclusion of unrealized
gains or losses in the Funds' income for purposes of the 90% test, the 30%
test, the excise tax and the distribution requirements applicable to regulated
investment companies, (ii) defer recognition of realized losses, and (iii)
characterize both realized and unrealized gain or loss as short-term or long-
term gain or loss. Such provisions generally apply to options and futures
contracts. The extent to which the Funds make such investments may be
materially limited by these provisions of the Code.
FOREIGN CURRENCY TRANSACTIONS. Under section 988 of the Code, special rules
are provided for certain foreign currency transactions. Foreign currency gains
or losses from foreign currency contracts (whether or not traded in the
interbank market), from futures contracts that are not "regulated futures
contracts," and from unlisted options are treated as ordinary income or loss
under section 988. A Fund may elect to have foreign currency-related regulated
futures contracts and listed options subject to ordinary income or loss
treatment under section 988. In addition, in certain circumstances, a Fund may
elect capital gain or loss for foreign currency transactions. The rules under
section 988 may also affect the timing of income recognized by a Fund.
34
<PAGE>
TAXATION OF THE SHAREHOLDERS
Distributions of net investment income and the excess of net short-term
capital gain over net long-term capital loss are taxable as ordinary income to
shareholders. Distributions of net capital gain (the excess of net long-term
capital gain over net short-term capital loss) are taxable to shareholders as
long-term capital gain, regardless of the length of time the shares of the
Fund have been held by such shareholders. Any loss realized upon a taxable
disposition of shares within six months from the date of their purchase will
be treated as a long-term capital loss to the extent of any long-term capital
gain distributions received by shareholders during such period.
Distributions of net investment income and capital gain net income will be
taxable as described above whether received in cash or reinvested in
additional shares. When distributions are received in the form of shares
issued by a Fund, the amount of the distribution deemed to have been received
by participating shareholders is the fair market value of the shares received
rather than the amount of cash which would otherwise have been received. In
such case, participating shareholders will have a basis for federal income tax
purposes in each share received from a Fund equal to the fair market value of
such share on the payment date.
Except in the case of the U.S. Government Money Fund, distributions by a Fund
result in a reduction in the net asset value of the Fund's shares. Should a
distribution reduce the net asset value below a shareholder's cost basis, such
distribution nevertheless would be taxable to the shareholder as ordinary
income or long-term capital gain as described above, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a distribution. The price of shares purchased at
that time includes the amount of any forthcoming distribution. Those investors
purchasing shares just prior to a distribution will then receive a return of
their investment upon distribution which will nevertheless be taxable to them.
If a shareholder (i) incurs a sales load in acquiring shares in a Fund, and
(ii) by reason of incurring such charge or making such acquisition acquires
the right to acquire shares of one or more regulated investment companies
without the payment of a load or with the payment of a reduced load
("reinvestment right"), and (iii) disposes of the shares before the 91st day
after the date on which the shares were acquired, and (iv) subsequently
acquires shares in that regulated investment company or in another regulated
investment company and the otherwise applicable load charge is reduced
pursuant to the reinvestment right, then the load charge will not be taken
into account for purposes of determining the shareholder's gain or loss. To
the extent such charge is not taken into account in determining the amount of
gain or loss, the charge will be treated as incurred in connection with the
subsequently acquired shares and will have a corresponding effect on the
shareholder's basis in such shares.
Income received by a Fund may give rise to withholding and other taxes imposed
by foreign countries. If more than 50% of the value of a Fund's assets at the
close of a taxable year consists of securities of foreign corporations, the
Fund may make an election that will permit an investor to take a credit (or,
if more advantageous, a deduction) for foreign income taxes paid by that Fund,
subject to limitations contained in the Code. When any of Global Balanced
Fund, Gold Opportunity Fund, Global Hard Assets Fund, Asia Dynasty Fund, Asia
Infrastructure Fund, International Investors Gold Fund, Gold/Resources Fund,
Global Emerging Markets Fund or Global Income Fund satisfies this requirement,
the Fund will make such an election. As an investor, you would then include in
gross income both dividends paid to you and the foreign taxes paid by the Fund
on its foreign investments.
The Funds cannot assure investors that they will be eligible for the foreign
tax credit. The Funds will advise shareholders annually of your share of any
creditable foreign taxes paid by the Funds.
A Fund may be required to withhold federal income tax at a rate of 31% from
dividends made to any shareholder who fails to furnish a certified taxpayer
identification number ("TIN") or who fails to certify that he is exempt from
such withholding or who the Internal Revenue Service notifies the Fund as
having provided the Fund with an incorrect TIN or failed to properly report
for federal income tax purposes. Any such withheld amount will be fully
creditable on each shareholder's individual Federal income tax return.
The foregoing discussion is a general summary of certain of the current
federal income tax laws affecting the Funds and investors in the shares. The
discussion does not purport to deal with all of the federal income tax
consequences applicable to the Fund, or to all categories of investors, some
of which may be subject to special rules. Investors should consult their own
advisors regarding the tax consequences, including state and local tax
consequences, to them of investment in the Fund.
35
<PAGE>
REDEMPTIONS IN KIND
Each Fund elects to have the ability to redeem its shares in kind, committing
itself to pay in cash all requests for redemption by any shareholder of record
limited in amount with respect to each shareholder of record during any
ninety-day period to the lesser of (i) $250,000 or (ii) 1% of the net asset
value of such company at the beginning of such period.
PERFORMANCE
U.S. GOVERNMENT MONEY FUND
The U.S. Government Money Fund may advertise performance in terms of yield
based on a seven day yield or an effective yield.
Seven-day yield is computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts, and
dividing the difference by the value of the account at the beginning of the
base period to obtain the base period return, and then multiplying the base
period return by (365/7) with the resulting yield figure carried to at least
the nearest hundredth of one percent.
Effective yield quotation is based on the seven days ended on the date of the
calculation and is computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts, and
dividing the difference by the value of the account at the beginning of the
base period to obtain the base period return, and then compounding the base
period return by adding 1, raising the sum to a power equal to 365 divided by
7, and subtracting 1 from the result, according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)365/7]-1 with the resulting yield
figure carried to at least the nearest hundredth of one percent.
In calculating yield or effective yield quotations, the net change in an
account value includes: (a) the value of additional shares purchased with
dividends from the original share and dividends declared on both the original
share and any such additional shares; (b) all fees, other than nonrecurring
account or sales charges, that are charged to all shareholder accounts in
proportion to the length of the base period. The calculation excludes realized
gains and losses from the sale of securities and unrealized appreciation and
depreciation.
The seven day yield and seven day effective yield for the U.S. Government
Money Fund at April 11, 1996 were 3.72% and 3.79%, respectively.
- -------------------------------------------------------------------------------
GLOBAL BALANCED FUND, GOLD OPPORTUNITY FUND, GLOBAL HARD ASSETS FUND, ASIA
DYNASTY FUND, ASIA INFRASTRUCTURE FUND, GOLD/RESOURCES FUND, INTERNATIONAL
INVESTORS GOLD FUND AND GLOBAL INCOME FUND
- -------------------------------------------------------------------------------
The above Funds may advertise performance in terms of average annual total
return for 1, 5 and 10 year periods, or for such lesser periods as any of such
Funds have been in existence. Average annual total return is computed by
finding the average annual compounded rates of return over the periods that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
P(1+T)n = ERV
<TABLE>
<S> <C> <C> <C>
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning
of the 1, 5, or 10 year periods at the end of the year or period;
</TABLE>
The calculation assumes the maximum sales load (or other charges deducted from
payments) is deducted from the initial $1,000 payment and assumes all
dividends and distributions by the Fund are reinvested at the price stated in
the prospectus on the reinvestment dates during the period, and includes all
recurring fees that are charged to all shareholder accounts.
36
<PAGE>
Average Annual Total Return for the Period ended December 31, 1995 (after
maximum sales charge).
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS LIFE
------ ------- -------- ------
<S> <C> <C> <C> <C>
International Investors
Gold Fund (Class A)..... (14.18)% 5.69% 7.44% 11.67 %
International Investors
Gold Fund (Class C)..... (10.78)% -- (15.84)%
Gold/Resources Fund
(Class A).............. (1.76)% 6.23% -- 5.74 %
Gold Opportunity Fund
(Class A).............. -- -- -- (1.72)%
Gold Opportunity Fund
(Class C).............. -- -- -- 3.44 %
Global Income Fund
(Class A).............. 11.65 % 5.65% -- 8.55 %
Asia Dynasty Fund (Class
A)..................... (1.73)% -- -- 9.49 %
Asia Dynasty Fund (Class
B)..................... (3.35)% -- -- 3.45 %
Global Balanced Fund
(Class A).............. 9.85 % -- -- 2.65 %
Global Balanced Fund
(Class B).............. 9.54 % -- -- 2.89 %
Asia Infrastructure Fund
(Class A).............. 2.44 % -- -- (16.58)%
Global Hard Assets Fund
(Class A).............. 14.37 % -- -- 11.20 %
Global Hard Assets Fund
(Class C).............. 19.94 % -- -- 16.50 %
</TABLE>
As the Global Emerging Markets Fund will be a newly created series of the Van
Eck Global Funds, the Global Emerging Markets Fund has no operating history,
therefore, it does not appear on the above chart.
The Global Balanced Fund, Asia Dynasty Fund, Asia Infrastructure Fund,
Gold/Resources Fund, Global Income Fund, Gold Opportunity Fund, Global Hard
Assets Fund, Global Emerging Markets Fund, and International Investors Gold
Fund may advertise performance in terms of a 30-day yield quotation. The 30-
day yield quotation is computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
YIELD = 2[(A - B/CD + 1)/6/ - 1]
<TABLE>
<S> <C> <C> <C>
Where: A = dividends and interest earned during the period
B = expenses accrued for the period (net of reimbursement)
C = the average daily number of shares outstanding during the period that were
entitled to receive dividends
D = the maximum offering price per share on the last day of the period after adjustment for
payment of dividends within 30 days thereafter
</TABLE>
The 30-day yield for the 30-days ended March 31, 1996 for the Class A shares
of the Global Income Fund was 4.33%.
The Global Balanced Fund, Gold Opportunity Fund, Global Hard Assets Fund, Asia
Dynasty Fund, Asia Infrastructure Fund, Gold/Resources Fund, Global Income
Fund, Global Emerging Markets Fund, and International Investors Gold Fund may
also advertise performance in terms of aggregate total return. Aggregate total
return for a specified period of time is determined by ascertaining the
percentage change in the net asset value of shares of the Fund initially
acquired assuming reinvestment of dividends and distributions and without
giving effect to the length of time of the investment according to the
following formula:
[(B - A)/A](100)=ATR
<TABLE>
<S> <C> <C> <C>
Where: A = initial investment
B = value at end of period
ATR = aggregate total return
</TABLE>
37
<PAGE>
The calculation assumes the maximum sales charge is deducted from the initial
payment and assumes all distributions by the Funds are reinvested at the price
stated in the Prospectus on the reinvestment dates during the period, and
includes all recurring fees that are charged to all shareholder accounts.
Aggregate Total Return for the period ended December 31, 1995 (after maximum
sales charge).
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS LIFE
------ ------- -------- -------
<S> <C> <C> <C> <C>
International Investors Gold Fund (Class
A)......................................... (14.18)% 31.85% 104.90% 8,165.7 %
International Investors Gold Fund (Class
C)......................................... (10.78)% -- -- (18.8)%
Gold/Resources Fund (Class A).............. (1.76)% 35.26% -- 73.5 %
Gold Opportunity Fund (Class A)............ (1.70)% -- -- (1.7)%
Gold Opportunity Fund (Class C)............ -- -- -- 3.35 %
Global Income Fund (Class A)............... 11.65 % 31.62% -- 103.5 %
Global Balanced Fund (Class A)............. 9.85 % -- -- 5.5 %
Global Balanced Fund (Class B)............. 9.54 % -- -- 9.0 %
Asia Dynasty Fund (A)...................... (1.73)% -- -- 28.7 %
Asia Dynasty Fund (B)...................... (3.35)% -- -- 12.2 %
Asia Infrastructure Fund (Class A)......... 2.44 % -- -- -22.6 %
Global Hard Assets Fund (Class A).......... 14.37 % -- -- 13.1 %
Global Hard Assets Fund (Class C).......... 19.94 % -- -- 19.5 %
</TABLE>
As the Global Emerging Markets Fund will be a newly created series of the Van
Eck Global Funds, the Global Emerging Markets Fund has no operating history,
therefore, it does not appear on the above chart.
ADVERTISING PERFORMANCE
As discussed in the Funds' Prospectus, the Funds may quote performance results
from recognized publications which monitor the performance of mutual funds,
and the Funds may compare their performance to various published historical
indices. These publications are listed in Part B of the Appendix. In addition,
the Funds may quote and compare their performance to the performance of
various economic and market indices and indicators, such as the S & P 500,
Financial Times Index, Morgan Stanley Capital International Europe, Australia,
Far East Index, Morgan Stanley Capital International World Index, Morgan
Stanley Capital International Combined Far East (ex-Japan) Free Index, Salomon
Brothers World Bond Index, Salomon Brothers World Government Bond Index, GNP
and GDP data. Descriptions of these indices are provided in Part B of the
Appendix.
ADDITIONAL INFORMATION
CUSTODIAN. Chase Manhattan Bank, New York, New York is the custodian of the
Trust's portfolio securities, cash, coins and bullion. The Custodian is
authorized, upon the approval of the Trust, to establish credits or debits in
dollars or foreign currencies with, and to cause portfolio securities of a
Fund to be held by its overseas branches or subsidiaries, and foreign banks
and foreign securities depositories which qualify as eligible foreign
custodians under the rules adopted by the Securities and Exchange Commission.
INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P., 1301 Avenue of the
Americas, New York, New York 10019, serve as the independent accountants for
the Trust.
COUNSEL. Goodwin, Procter & Hoar, Exchange Place, Boston, Massachusetts 02109
38
<PAGE>
FINANCIAL STATEMENTS
The financial statements of Asia Dynasty Fund, Asia Infrastructure Fund,
Global Hard Assets Fund, Global Balanced Fund, International Investors Gold
Fund, Global Income Fund, Gold Opportunity Fund, Gold/Resources Fund and U.S.
Government Money Fund for the fiscal year ended December 31, 1995, are hereby
incorporated by reference from the Funds' Annual Reports to Shareholders,
which have been delivered with this Statement of Additional Information and
are available at no charge upon written or telephone request to the Trust at
the address or telephone numbers set forth on the first page of this Statement
of Additional Information. As the Global Emerging Markets Fund will be a newly
created series of the Van Eck Global Funds, the Global Emerging Markets Fund
has no operating history, therefore, it does not have a financial statement.
39
<PAGE>
APPENDIX
PART A.
CORPORATE BOND RATINGS
Description of Moody's Investors Service, Inc. corporate bond ratings:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt-
edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors given security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue
ranks in the lower end of its generic rating category.
Description of Standard & Poor's Corporation corporate bond ratings;
AAA--Bonds rated AAA have the highest rating assigned by S&P to a debt
obligations. Capacity to pay interest and repay principal is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated
categories.
BBB--Bonds rated BBB are regarding as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.
PREFERRED STOCK RATINGS
Moody's Investors Service, Inc. describes its preferred stock ratings as:
aaa--An issue which is rated aaa is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of convertible preferred stocks.
aa--An issue which is rated aa is considered a high-grade preferred stock.
This rating indicates that there is reasonable assurance that earnings and
asset protection will remain relatively well maintained in the foreseeable
future.
40
<PAGE>
a--An issue which is rated a is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the aaa
and aa classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
baa--An issue which is rated baa is considered to be medium-grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
ba--An issue which is rated ba is considered to have speculative elements, and
its future cannot be considered well assured. Earnings and asset protection
may be very moderate and not well safe-guarded during adverse periods.
Uncertainty of position characterizes preferred stocks in this class.
b--An Issue which is rated b generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of other
terms of the issue over any long period of time may be small.
caa--An issue which is rated caa is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future
status of payment.
ca--An issue which is rated ca is speculative in a high degree and is likely
to be in arrears on dividends with little likelihood of eventual payment.
c--This is the lowest rated class of preferred or preference stock. Issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Standard & Poor's Corporation describes its preferred stock ratings as:
AAA--This is the highest rating that may be assigned by Standard & Poor's to a
preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.
AA--A preferred stock issue rated AA also qualifies as a high-quality fixed
income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated AAA.
A--An issue rated A is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effect of
changes in circumstances and economic conditions.
BBB--An issue rated BBB is regarded as backed by an adequate capacity to play
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to make payments for a
preferred stock in this category than for issues in the A category.
BB, B, CCC--Preferred stocks rated BB, B, and CCC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
preferred stock obligations. BB indicates the lowest degree of speculation and
CCC the highest degree of speculation. While such issues will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
SHORT-TERM DEBT RATINGS
Description of Moody's short-term debt ratings:
Prime-1--Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries, higher rates of
return of funds employed, conservative capitalization structure with moderate
reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
Prime-2--Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends
41
<PAGE>
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected
be external conditions. Ample alternate liquidity is maintained.
Prime-3--Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt
protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
Not Prime--Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Description of Standard & Poor's short-term debt ratings:
A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1'.
A-3--Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes
in circumstances than obligations carrying the higher designations.
B--Issues rated B are regarded as having only speculative capacity for timely
payment.
C--This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
PART B
The publications and services from which the Funds will quote performance are:
Micropal, Ltd. (an international investment fund information service),
Fortune, Changing Times, Money, U.S. News & World Report, Money Fund
Scorecard, Morningstar, Inc., Business Week, Institutional Investor, The Wall
Street Journal, Wall Street Transcripts, New York Post, Investment Company
Institute publications, The New York Times, Barron's, Forbes magazine,
Research magazine, Donaghues Money Fund Report, Donaghue's Money Letter, The
Economist, FACS, FACS of the Week, Financial Planning, Investment Daily,
Johnson's Charts, Mutual Fund Profiles (S&P), Powell Monetary Analysis, Sales
& Marketing Management Magazine, Life magazine, Black Enterprise, Fund Action,
Speculators Magazine, Time, NewsWeek, U.S.A Today, Wiesenberger Investment
Service, Mining Journal Quarterly, Mining Journal Weekly, Northern Miner, Gold
Gazette, George Cross Newsletter, Engineering and Mining Journal, Weekly Stock
Charts-Canadian Resources, Jeweler's Circular Keystone, Financial Times,
Journal of Commerce, Mikuni's Credit Ratings, Money Market Directory of
Pension Funds, Oil and Gas Journal, Pension Funds and Their Advisers,
Investment Company Data, Inc., Mutual Funds Almanac, Callan Associates, Inc.,
Media General Financial Services, Financial World, Pensions & Investment Age,
Registered Investment Advisors, Aden Analysis, Baxter Weekly, Congressional
Yellow Book, Crain's New York Business, Survey of Current Business, Treasury
Bulletin, U.S. Industrial Outlook, Value Line Survey, Bank Credit Analyst, S&P
Corporation Records, Euromoney, Moody's, Investment Dealer's Digest, Financial
Mail, Financial Post, Futures, Grant's Interest Rate Observer, Institutional
Investor, International Currency Review, International Bank Credit Analyst,
Investor's Daily, German Business Weekly, GATT Trade Annual Report, and
Dimensional Fund Advisers, Inc.
42
<PAGE>
PERFORMANCE CHARTS
BEST PERFORMING WORLD GOVERNMENT BOND MARKETS*
1986 THROUGH DECEMBER, 1995
<TABLE>
<S> <C> <C>
1986............................. Japan 47.4%
1987............................. U.K. 46.6%
1988............................. Australia 28.8%
1989............................. Canada 16.2%
1990............................. U.K. 30.9%
1991............................. Australia 23.5%
1992............................. Japan 10.8%
1993............................. Japan 27.6%
1994............................. Belgium 12.2%
1995............................. Sweden 34.8%
</TABLE>
* in U.S. dollar terms
Source: Salomon Brothers World Government Bond Index, a market capitalization
weighted total return index of developed world government bonds with
remaining maturities of one year or more.
ANNUAL REAL (INFLATION-ADJUSTED) GDP GROWTH
(IN LOCAL CURRENCY TERMS)
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Hong Kong............................. 2.6% 3.4% 5.1% 6.3% 6.4% 5.4%
Singapore............................. 9.4% 8.1% 7.0% 6.4% 10.1% 0.1%
Thailand.............................. 12.2% 11.6% 8.4% 7.9% 8.2% 8.5%
Malaysia.............................. 9.2% 9.7% 8.7% 7.8% 8.3% 8.7%
Indonesia............................. 7.5% 7.2% 7.0% 6.5% 6.5% 7.3%
Philippines........................... 6.2% 3.0% -0.5% 0.3% 2.1% 4.4%
South Korea........................... 6.4% 9.5% 9.1% 5.1% 5.8% 8.4%
China................................. 4.3% 3.9% 8.0% 13.2% 13.8% 11.9%
</TABLE>
Source: All Countries except Hong Kong: International Financial Statistics
(International Monetary Fund)--2/96 Hong Kong: Datastream
GROSS DOMESTIC PRODUCT: The market value of all final goods and services
produced by labor and property supplied by residents of the applicable country
in a given period of time, usually one year. Gross Domestic Product comprises
(1) purchases of persons (2) purchases of governments (Federal, State & Local)
(3) gross private domestic investment (includes change in business
inventories) and (4) international trade balance from exports.
43
<PAGE>
ASIAN STOCK MARKET TOTAL RETURNS**
The chart below provides returns for the key developing Asian stock markets
for the given periods. While these markets can be volatile, the long-term
returns may be greater than those achieved by more mature equity markets.
<TABLE>
<CAPTION>
5 YR. 8 YR.
COMPOUNDED COMPOUNDED
AVG. AVG.
ANNUAL ANNUAL
RETURN RETURN
1988 1989 1990 1991 1992 1993 1994 1995 12/31/92 12/31/95
------ ------ ------ ------ ------ ------ ------ ------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hong Kong............... 22.7% 3.4% 3.7% 42.8% 27.4% 109.9% -31.0% 18.2% 25.5% 19.3%
Indonesia............... 227.8% 77.1% 5.2% -46.4% -2.1% 102.2% -27.0% 7.5% -3.6% 22.5%
Malaysia................ 23.9% 52.6% -9.9% 3.1% 15.7% 107.3% -20.7% 4.0% 15.3% 16.8%
Philippines............. 40.0% 62.9% -47.7% 83.5% 37.1% 121.4% -8.3% -11.8% 35.1% 23.4%
Singapore............... 32.3% 43.3% -15.8% 41.6% 3.0% 71.4% 4.7% 11.0% 23.8% 21.2%
So. Korea............... 94.0% 0.4% -28.5% -17.1% 0.0% 29.1% 22.1% -4.6% 4.5% 7.2%
Taiwan.................. 117.3% 83.5% -55.4% 11.8% -24.6% 82.3% 19.7% -30.2% 5.1% 10.9%
Thailand................ 41.6% 106.1% -29.7% 18.1% 30.4% 97.8% -11.2% -5.7% 20.6% 23.0%
</TABLE>
Source:Morgan Stanley & Co. Incorporated
Performance provided in U.S. dollar terms and does not include reinvestment of
dividends. Past performance is not indicative of future results.
** These are unmanaged indices and are not the investment results of the Fund
nor are they the results the Fund would have obtained, which may vary from
returns of these markets. Value of shares of the Fund will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost.
MORGAN STANLEY CAPITAL INTERNATIONAL STOCK MARKET INFORMATION
(IN US CURRENCY WITH NET DIVIDENDS REINVESTED)
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Australia............... 11.2% 5.4% 35.2% -10.8% 33.6% -17.5% 9.3% 36.4% 9.3% 42.3%
Austria................. -4.7% -6.3% 28.1% -10.7% -12.2% 6.3% 103.9% 0.6% 2.2% 34.7%
Belgium................. 25.9% 8.2% 23.5% -1.5% 13.8% -11.0% 17.3% 53.6% 7.9% 78.4%
Canada.................. 18.3% -3.0% 17.6% -12.2% 11.1% -13.0% 24.3% 17.1% 13.9% 9.9%
Denmark................. 18.8% 3.8% 32.8% -28.3% 16.6% -0.9% 43.9% 52.7% 13.2% 1.2%
Finland................. 4.6% 52.2% 82.7% -13.0% -18.1% -31.7% -9.6% 13.7% N/A N/A
France.................. 14.1% -5.2% 20.9% 2.8% 17.8% -13.8% 36.2% 37.9% -13.8% 78.4%
Germany................. 16.4% 4.7% 35.6% -10.3% 8.2% -9.4% 46.3% 20.6% -24.8% 35.3%
Hong Kong............... 22.6% -28.9% 116.7% 32.3% 49.5% 9.2% 8.4% 28.1% -4.1% 56.1%
Ireland................. 22.4% 14.5% 42.4% -21.2% 12.2% -16.7% 41.2% 25.1% N/A N/A
Italy................... 1.0% 11.6% 28.5% -22.2% -1.8% -19.2% 19.4% 11.5% -21.3% 108.3%
Japan................... 0.7% 21.4% 25.5% -21.5% 8.9% -36.1% 1.7% 35.4% 43.0% 99.4%
Malaysia................ 5.2% -19.9% 110.0% 17.8% 5.0% -7.9% 55.8% 26.5% N/A N/A
Netherlands............. 27.7% 11.7% 35.3% 2.3% 17.8% -3.2% 35.8% 14.2% 7.1% 40.7%
New Zealand............. 20.9% 8.9% 67.7% -1.4% 18.3% -37.7% 11.4% -13.8% N/A N/A
Norway.................. 6.0% 23.6% 42.0% -22.3% -15.5% 0.7% 45.5% 42.4% 5.7% -2.5%
Singapore............... 6.5% 6.7% 68.0% 6.3% 25.0% -11.7% 42.3% 33.3% 2.3% 45.2%
Spain................... 29.8% -4.8% 29.8% -21.9% 15.6% -13.7% 9.8% 13.5% 36.9% 121.2%
Sweden.................. 33.4% 18.3% 37.0% -14.4% 14.4% -21.0% 31.8% 48.3% 2.0% 65.6%
Switzerland............. 44.1% 3.5% 45.8% 17.2% 15.8% -6.2% 26.2% 6.2% -9.5% 33.4%
United Kingdom.......... 21.3% -1.6% 24.4% -3.7% 16.0% 10.3% 21.9% 6.0% 35.1% 27.0%
US...................... 37.1% 1.1% 9.1% 6.4% 30.1% -3.2% 30.0% 14.6% 2.9% 16.3%
</TABLE>
44
<PAGE>
MORGAN STANLEY CAPITAL INTERNATIONAL INDEX
(IN US CURRENCY WITH NET DIVIDENDS REINVESTED)
AS OF DECEMBER 31, 1995
10 YEAR ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
Australia.......................... 13.7%
Austria............................ 10.4%
Belgium............................ 19.3%
Canada............................. 7.6%
Denmark............................ 13.1%
Finland............................ N/A
France............................. 14.7%
Germany............................ 10.1%
Hong Kong.......................... 23.8%
Ireland............................ N/A
Italy.............................. 6.9%
Japan.............................. 12.7%
Malaysia........................... N/A
Netherlands........................ 18.1%
New Zealand........................ N/A
Norway............................. 10.1%
Singapore.......................... 20.2%
Spain.............................. 16.8%
Sweden............................. 18.6%
Switzerland........................ 16.2%
United Kingdom..................... 15.0%
USA................................ 13.7%
</TABLE>
MARKET INDEX DESCRIPTIONS
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA, FAR EAST INDEX (US$
TERMS): An arithmetic, market value-weighted average of the performance of
over 1,079 companies listed on the stock exchanges of Europe, Australia, New
Zealand and the Far East. The index is calculated on a total return basis,
which includes reinvestment of gross dividends before deduction of withholding
taxes.
MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX (US$ TERMS): An arithmetic,
market value-weighted average of the performance of over 1,515 companies
listed on the stock exchanges of the following countries: Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy,
Japan, Malaysia, the Netherlands, New Zealand, Norway, Singapore, Spain,
Sweden, Switzerland, the United Kingdom and the United States. The index is
calculated on a total return basis, which includes reinvestment of gross
dividends before deduction of withholding taxes. The combined market
capitalization of these countries represents approximately 60% of the
aggregate market value of the stock exchanges of the above 22 countries.
MORGAN STANLEY CAPITAL INTERNATIONAL COMBINED FAR EAST EX-JAPAN FREE INDEX: An
arithmetic, market value-weighted average of the performance of companies
listed on the stock exchanges of the following countries: Hong Kong,
Indonesia, Korea (Korea is included at 20% of its market capitalization in the
Combined Free Index), Malaysia, Philippines Free, Singapore Free and Thailand.
The combined market capitalization of these countries represents approximately
60% of the aggregate market value of the stock exchanges of the above seven
countries.
45
<PAGE>
SALOMON BROTHERS WORLD BOND INDEX (US$ TERMS): Measures the total return
performance of high quality securities in major sectors of the international
bond market. The index covers approximately 600 bonds from 10 currencies:
Australian Dollars, Canadian Dollars, European Currency Units, French Francs,
Japanese Yen, Netherlands Guilder, Swiss Francs, UK pounds Sterling, US
Dollars and German Deutsche Marks. Only high-quality, straight issues are
included. The index is calculated on both a weighted basis and an unweighted
basis. Generally, index samples for each market are restricted to bonds with
at least five years' remaining life.
SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX (US$ TERMS): The WGBI includes
the Government bonds markets of the United States, Japan, Germany, France, the
United Kingdom, Canada, Italy, Australia, Belgium, Denmark, the Netherlands,
Spain, Sweden and Austria. Country eligibility is determined based on market
capitalization and investability criteria. A market's eligible issues must
total at least US$20 billion, Y2.5 trillion and DM30 billion for three
consecutive months for the market to be considered eligible for inclusion.
Once a market satisfies this criteria, it will be added at the end of the
following quarter. Guidelines by which a market may be excluded from the index
have also been established. A market will be excluded if the market
capitalization of eligible issues falls below half of all of the entry levels
for six consecutive months. Once again, the market will be removed at the end
of the following quarter. In addition, market entry barriers are a reason for
exclusion despite meeting the size criteria (for example, if a market
discourages foreign investor participation).
GROSS DOMESTIC PRODUCT: The market value of all final goods and services
produced by labor and property supplied by residents of the United States in a
given period of time, usually one year. Gross Domestic Product comprises (1)
purchases of persons (2) purchases of governments (Federal, State & Local) (3)
gross private domestic investment (includes change in business inventories)
and (4) international trade balance from exports. Nominal GDP is expressed in
1993 dollars. Real GDP is adjusted for inflation and is currently expressed in
1987 dollars.
46
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
a) Financial Statements included in Prospectus (Proforma Numbers)
b) Exhibits (An * denotes inclusion in this filing)
(1)(a) Master Trust Agreement (incorporated by reference to Registration
Statement No. 2-97596); Form of First Amendment to Master Trust
Agreement (incorporated by reference to Registration Statement No. 2-
97596). Form of Second Amendment to Master Trust Agreement
(incorporated by reference to Pre-Effective Amendment No. 1). Form of
Third Amendment to Master Trust Agreement (incorporated by reference to
Post-Effective Amendment No. 1). Form of Fourth Amendment to Master
Trust Agreement (incorporated by reference to Post-Effective Amendment
No. 3). Form of Fifth Amendment to the Master Trust Agreement, adding
World Income Fund as a series to the trust (incorporated by reference
to Post-Effective Amendment No. 7). Form of Sixth Amendment to Master
Trust Agreement, adding International Investors Fund as a series of the
Trust and establishing investment limitations therefore, respectively,
(incorporated by reference to Post-Effective Amendment No. 17). Form of
Seventh Amendment to the Master Trust Agreement, adding Short-Term
World Income Fund and International Equities Fund as series of the
Trust (incorporated by reference to Post-Effective Amendment No. 19).
(1)(b) Form of Amended and Restated Master Trust Agreement (incorporated by
reference to 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 to 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
to 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 Fund to
International Investors Gold Fund (incorporated by reference to Post-
Effective Amendment No. 29); 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
to Post-Effective Amendment No. 30); Form of Fifth Amendment to the
Amended and Restated Master Trust Agreement (incorporated by reference
to Post-Effective Amendment No. 35); Form of Sixth Amendment to the
Amended and Restated Master Trust Agreement (incorporated by reference
to Post-Effective Amendment No. 35); Seventh Amendment to Amended and
Restated Master Trust Agreement adding Global Hard Assets Fund as a
series of the Trust (incorporated by reference to Post-Effective
Amendment No. 36); Eighth Amendment to Amended and Restated Master
Trust Agreement adding Gold Opportunity Fund as a series of the Trust
(incorporated by reference to Post-Effective Amendment No. 37); Ninth
Amendment to the Amended and Restated Master Trust Agreement adding
Class B shares to Asia Infrastructure Fund, Global Hard Assets Fund and
Gold Opportunity Fund series of the Trust (incorporated by reference to
Post-Effective Amendment No. 39).
(1)(c) Tenth Amendment to Amended and Restated Master Trust Agreement adding
Asia Select Portfolios and Core International Index Fund.
(1)(d) Eleventh Amendment to Amended and Restated Master Trust Agreement
adding Global Emerging Markets Fund as series of the Trust (to be filed
by Amendment).
(2) By-laws of Registrant (incorporated by reference to Registration
Statement No. 2-97596).
(3) Not Applicable.
(4)(a) Form of certificate of shares of beneficial interest of the World Trend
Fund (incorporated by reference to Pre-Effective Amendment No. 1).
Forms of certificates of shares of beneficial interest of
Gold/Resources Fund and
<PAGE>
U.S. Government Money Fund (incorporated by reference to Post-Effective
Amendment No. 1); Form of certificate of shares of beneficial interest
of the World Income Fund (incorporated by reference to Post-Effective
Amendment No. 6); Forms of certificates of shares of beneficial
interest of the Short-Term World Income Fund-C and International Growth
Fund (incorporated by reference to Post-Effective Amendment No. 23);
Form of certificate of shares of beneficial interest of Asia Dynasty
Fund (incorporated by reference to Post-Effective Amendment No. 23);
Form of certificate of Class B shares of beneficial interest of Asia
Dynasty Fund (incorporated by reference to 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 to Post-
Effective Amendment No. 26); Form of certificate of Class B shares of
beneficial interest of the World Income Fund (incorporated by reference
to Post-Effective Amendment No. 29); Certificate of Class A shares of
beneficial interest of the 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 to Post-
Effective Amendment No. 30); Form of certificate of Class A and Class C
shares of beneficial interest of Global Hard Assets Fund (incorporated
by reference to Post-Effective Amendment No. 33); Form of certificate
of Class A and Class C shares of beneficial interest of Gold
Opportunity Fund (incorporated by reference to Post-Effective Amendment
No. 35); Form of certificate of Class B shares of beneficial interest
of Asia Infrastructure Fund, Global Hard Assets Fund and Gold
Opportunity Fund (incorporated by reference to Post-Effective Amendment
No. 39); and Form of certificate of Class A and Class B shares of
beneficial interest of Asia Select Portfolio (incorporated by reference
to Post-Effective Amendment No. 41).
(4)(b) Instruments defining rights of security holders (See Exhibit (1)
above).
(5)(a) Advisory Agreement (incorporated by reference to Post-Effective
Amendment No. 1).
(5)(b) Letter Agreement to add Gold/Resources Fund and U.S. Government Money
Fund (incorporated by reference to Post-Effective Amendment No. 1);
Letter Agreement to add World Income Fund (incorporated by reference to
Post-Effective Amendment No. 6)
(5)(c) Form of Advisory Agreement between Van Eck Associates Corporation and
Van Eck Funds with respect to Asia Dynasty Fund (incorporated by
reference to Post-Effective Amendment No. 23).
(5)(d) Advisory Agreement between Van Eck Associates Corporation and Van Eck
Funds with respect to Global Balanced Fund (incorporated by reference
to Post-Effective Amendment No. 31).
(5)(e) Letter Agreement to add Global SmallCap Fund and Asia Infrastructure
Fund (incorporated by reference to Post-Effective Amendment No. 31);
and. Letter Agreement to add Gold/Resources Fund and International
Investors Gold Fund (incorporated by reference to Post-Effective
Amendment No. 34)
(5)(f) Advisory Agreement between Van Eck Associates Corporation and Global
Hard Assets Fund (incorporated by reference to Post-Effective Amendment
No. 36).
(5)(g) Form of Letter Agreement to add Gold Opportunity Fund (incorporated by
reference to Post-Effective Amendment No. 37); and Form of Letter
Agreement adding Asia Select Portfolios (incorporated by reference to
Post-Effective Amendment No. 41).
(5)(h) Sub-Advisory Agreement among Fiduciary International, Inc., Van Eck
Associates Corporation and Van Eck Funds with respect to Global
Balanced Fund (incorporated by reference to Post-Effective Amendment
No. 27).
(5)(i) Form of Advisory Agreement between Van Eck Associates Corporation and
Van Eck Funds with respect to Global Emerging Markets Fund
(incorporated by reference to Post-Effective Amendment No. 36).
(5)(j) Letter Agreement to add Global Emerging Markets Fund (to be filed by
amendment).
*(5)(k) Form of Sub-Advisory Agreement among Peregrine Asset Management (Hong
Kong) Limited, Van Eck Associates Corporation and Van Eck Funds with
respect to Global Emerging Markets Fund.
2
<PAGE>
(6)(a) Distribution Agreement (incorporated by reference to Post-Effective
Amendment No. 1).
(6)(b) Letter Agreement to add Gold/Resources Fund and U.S. Government Money
Fund (incorporated by reference to Post-Effective Amendment No. 1);
Letter Agreement to add World Income Fund (incorporated by reference
to Post-Effective Amendment No. 6); and Letter Agreement to add Asia
Dynasty Fund (incorporated by reference to Post-Effective Amendment
No. 23)
(6)(c) Letter Agreement to add Global SmallCap Fund and Asia Infrastructure
Fund (incorporated by reference to 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 to Post-Effective Amendment No.
34); Letter Agreement to add Global Hard Assets Fund (incorporated by
reference to Post-Effective Amendment No. 36); Form of Letter
Agreement to add Gold Opportunity Fund (incorporated by reference to
Post-Effective Amendment No. 37); Form of Letter Agreement adding
Asia Select Portfolios (incorporated by reference to Post-Effective
Amendment No. 41); and Form of Letter Agreement adding Core
International Index Fund (incorporated by reference to Post-Effective
Amendment No. 42)
(6)(d) Amendment to Form of Selling Group Agreement (incorporated by
reference to Post-Effective Amendment No. 9).
(6)(e) Selling Group Agreement (incorporated by reference to Post-Effective
Amendment No. 12).
(6)(f) Letter Agreement to add Global Emerging Markets Fund (to be filed by
amendment).
(7) Form of Deferred Compensation Plan (incorporated by reference to
Post-Effective Amendment No. 40).
(8)(a) Custodian Agreement (incorporated by reference to Post-Effective
Amendment No. 1).
(8)(a)(1) Form of Custody Agreement between the Van Eck Funds and Bankers Trust
Company (incorporated by reference to Post-Effective Amendment No.
20).
(8)(b) Letter Agreement to add Gold/Resources Fund and U.S. Government Money
Fund (incorporated by reference to Post-Effective Amendment No. 1);
and Letter Agreement to add World Income Fund (incorporated by
reference to Post-Effective Amendment No. 6).
(8)(c) Form of Custody Agreement between the Van Eck Funds and The Chase
Manhattan Bank (incorporated by reference to Post-Effective Amendment
No. 41).
(9)(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 to Post-Effective Amendment No. 9).
(9)(b) Commodity Customer's Agreement between World Income Fund and Morgan
Stanley & Co. (incorporated by reference to Post-Effective Amendment
No. 10 ).
(9)(c) Agreement and Plan of Redomicile and Reorganization between the Trust
and International Investors Incorporated respecting the
reorganization of International Investors Incorporated into the Trust
as its fifth series, International Investors. (incorporated by
reference to Post-Effective Amendment No. 17).
(9)(d) Form of Accounting and Administrative Services Agreement with respect
to Asia Dynasty Fund (Incorporated by reference to Post-effective
Amendment No. 23).
(9)(e) Accounting and Administrative Services Agreement with respect to
Global Balanced Fund (incorporated by reference to Post-effective
Amendment No. 31).
(9)(f) Letter Agreement to add Global SmallCap Fund and Asia Infrastructure
Fund (incorporated by reference to Post-effective Amendment No. 31)
and Letter Agreement to add Gold/Resources Fund and International
Investors Gold Fund (incorporated by reference to Post-effective
Amendment No. 34). Letter Agreement to add Global Hard Assets
3
<PAGE>
Fund (incorporated by reference to Post-effective Amendment No. 36).
Letter Agreement to add Gold Opportunity Fund (incorporated by
reference to Post-effective Amendment No. 37).
(9)(g) Form of Accounting and Administrative Services Agreement with respect
to Global Emerging Markets Fund (incorporated by reference to Post-
Effective Amendment No. 36).
(9)(h) Letter Agreement to add Global Emerging Markets Fund (to be filed by
amendment).
(10) Opinion of Goodwin, Procter & Hoar, including consent, with regard to
World Trends Fund (incorporated by reference to Pre-Effective
Amendment No. 1); Opinion Of Fund (incorporated by reference to Post-
Effective Amendment No. 1); Opinion of Goodwin, Procter & Hoar with
regard to World Income Fund (incorporated by reference to Post-
Effective Amendment No. 7); Opinion of Goodwin, Procter & Hoar and
consent with regard to International Investors (incorporated by
reference to Post-Effective Amendment No. 17); Opinion of Goodwin,
Procter and Hoar with regard to Asia Dynasty Fund (incorporated by
reference to 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 to 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 to 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 to 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 to Post-Effective Amendment No. 37). Opinion of Goodwin,
Proctor & Hoar including consent, with regard to the issuance of
Class B shares of Asia Infrastructure Fund, Golf Opportunity Fund and
Global Hard Assets Fund (incorporated by reference to Post-Effective
Amendment No. 40).
(10)(a) Opinion of Goodwin, Procter & Hoar, on Asia Sector Portfolios and
Core International Index Fund.
(10)(b) Opinion of Goodwin, Procter & Hoar, with respect to issuance of Class
A, Class B and Class C shares of Global Emerging Markets Fund (to be
filed by amendment).
(11) Consents of Deloitte & Touche and Coopers & Lybrand LLP (to be filed
by amendment).
(12) Not Applicable.
(13) Not Applicable.
(14)(a) Forms of prototype "Keogh" and 403(b)(7) Plans utilized by registrant
(incorporated by reference to Post-Effective Amendment No. 10).
(14)(b) Registrant's revised form of IRA Plan (incorporated by reference to
Post-Effective Amendment No. 10).
(14)(c) Registrant's form of Simplified Employee Plan (incorporated by
reference to Post-Effective Amendment No. 10).
(14)(d) Amendments to the Retirement Plan for Self-Employed Individuals,
Partnerships and Corporation using shares of Van Eck Funds and
International Investors Incorporated; Profit Sharing Plan Adoption
Agreement. (incorporated by reference to Post-Effective Amendment No.
14).
(15)(a) Plan of Distribution with respect to International Growth Fund and
Asia Dynasty Fund Incorporated by reference to Post-Effective
Amendment No. 23). Form of Plan of Distribution with respect to Class
B shares of Asia Dynasty Fund (Incorporated by reference to 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 to Post-Effective Amendment No.
26). Letter Agreement to add Global SmallCap Fund (Class A) and Asia
Infrastructure Fund (Class A) (incorporated by reference to
Gold/Resources Fund (Class C), International Investors Gold Fund
(Class C), Global (Class A) (incorporated by reference to Post-
Effective Amendment No. 36). Form of Letter Agreement to add Gold
Opportunity Fund (Class A and Class C) and Letter Agreement to add
Global Hard Assets Fund (Class C) (incorporated by reference to Post-
Effective Amendment No. 37. Form of Plan of Distribution with respect
to Asia Infrastructure Fund (Class B), Global Hard Assets Fund (Class
B) and Gold Opportunity Fund
4
<PAGE>
(Class B) (incorporated by reference to Post-Effective Amendment No.
39). Form of Letter Agreement to add Asia Select Portfolios
(incorporated by reference to Post-Effective Amendment No. 41).
(15)(b) Letter Agreement to add Global Emerging Markets Fund (Class A/Class
B/Class C) (to be filed by amendment).
(16) Not applicable.
(17) Not applicable.
(18) Power of Attorney (incorporated by reference from Post-Effective
Amendment No. 5).
(19) Form of plan entered into pursuant to Rule 18f-3.
ITEM 25. Persons controlled by or under common control with Registrant
Not Applicable.
ITEM 26. Number of Holders of Securities
Set forth below are the number of Record Holders as of September 30, 1996 of
each series of the Registrant:
<TABLE>
<CAPTION>
TITLE NUMBER OF RECORD HOLDERS
----- ------------------------
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C>
Global Balanced Fund..... 2,759 321 ---
Asia Dynasty Fund........ 3,978 1,263 ---
Asia Infrastructure Fund. 201 9 ---
International Investors
Gold Fund............... 49,783 --- 143
Gold/Resources Fund...... 17,201 --- ---
Global Income Fund....... 5,473 --- ---
Gold Opportunity Fund.... 713 16 66
Global Hard Assets Fund.. 643 48 120
U.S. Government Money
Fund.................... 1,859 Holders
Global Emerging Markets
Fund.................... --- --- ---
</TABLE>
ITEM 27. 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 28. Business and other Connections of Investment Adviser
Reference is made to Form ADV of Van Eck Associates Corporation (File No. 801-
21340), as currently on file with the Securities and Exchange Commission, and
to the caption "Management" in the Registrant's Prospectus and to the captions
"The Distributor", "Investment Advisory Services" and "Trustees and Officers"
in the Registrant's Statement of Additional Information.
5
<PAGE>
ITEM 29. Principal Underwriters
(a) Van Eck Securities Corporation, principal underwriter for the Registrant,
also distributes shares of Van Eck Worldwide Insurance Trust.
(b) The following table presents certain information with respect to each
director and officer of Van Eck Securities Corporation:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES POSITION AND OFFICE
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------ -------------------- -------------------
<S> <C> <C>
John C. van Eck Chairman, President and Chief Executive Officer Chairman and President
99 Park Avenue
New York, NY 10016
Jan van Eck Director and Executive Vice President None
99 Park Avenue
New York, NY 10016
Sigrid S. van Eck Director, Vice President and Assistant Treasurer None
270 River Road
Briarcliff Manor,
NY
Fred M. van Eck Director Trustee
99 Park Avenue
New York, NY 10016
Derek van Eck Director Executive Vice President
99 Park Avenue
New York, NY 10016
Michael G. Doorley Vice President, Treasurer, Controller and Chief Financial Officer Vice President
99 Park Avenue
New York, NY 10016
Thaddeus Leszczynski Vice President, General Counsel and Secretary Vice President and Secretary
99 Park Avenue
New York, NY 10016
Stephen Ilnitzki Chief Operating Officer Vice President
99 Park Avenue
New York, New York
Bruce J. Smith Senior Managing Director, Portfolio Accounting Vice President and Treasurer
99 Park Avenue
New York, NY 10016
Joseph P. DiMaggio None Controller
99 Park Avenue
New York, NY
Susan C. Lashley Managing Director, Operations Vice President
99 Park Avenue
New York, NY 10016
Keith Fletcher Senior Managing Director and Chief Marketing Officer None
99 Park Avenue
New York, NY 10016
Robin Kunhardt Director, Product Management None
99 Park Avenue
New York, NY 10016
</TABLE>
(c) Not Applicable
6
<PAGE>
ITEM 30. Location of Accounts and Records
The following table sets forth information as to the location of accounts,
books and other documents required to be maintained pursuant to Section 31(a)
of the Investment Company Act of 1940, as amended, and the Rules promulgated
thereunder.
<TABLE>
<CAPTION>
ACCOUNTS, BOOKS AND DOCUMENTS LISTED BY
REFERENCE TO SPECIFIC SUBSECTION OF
17 CFR 270 31A-1 TO 31A-3 PERSON IN POSSESSION AND ADDRESS
--------------------------------------- --------------------------------
<S> <C>
31a-1(b)(1) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(2)(i) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(2)(ii) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(2)(iii) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(2)(iv) DST Systems, Inc.
21 West Tenth Street
Kansas City, Missouri 64105
31a-1(b)(3) Not Applicable
31a-1(b)(4) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(5) Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
Peregrine Asset Management (Hong Kong) Limited
17/F, New World Tower
16-18 Queen's Road Central
Hong Kong
31a-1(b)(6) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(7) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(8) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
ACCOUNTS, BOOKS AND DOCUMENTS LISTED BY
REFERENCE TO SPECIFIC SUBSECTION OF
17 CFR 270 31A-1 TO 31A-3 PERSON IN POSSESSION AND ADDRESS
--------------------------------------- --------------------------------
<S> <C>
31a-1(b)(9) Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
Peregrine Asset Management (Hong Kong) Limited
17/F, New World Tower
16-18 Queen's Road Central
Hong Kong
31a-1(b)(10) Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
Peregrine Asset Management (Hong Kong) Limited
17/F, New World Tower
16-18 Queen's Road Central
Hong Kong
31a-1(b)(11) Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
Peregrine Asset Management (Hong Kong) Limited
17/F, New World Tower
16-18 Queen's Road Central
Hong Kong
31a-1(b)(12) Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
Peregrine Asset Management (Hong Kong) Limited
17/F, New World Tower
16-18 Queen's Road Central
Hong Kong
Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(c) Not Applicable
31a-1(d) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(e) Not Applicable
31a-1(f) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
ACCOUNTS, BOOKS AND DOCUMENTS LISTED BY
REFERENCE TO SPECIFIC SUBSECTION OF
17 CFR 270 31A-1 TO 31A-3 PERSON IN POSSESSION AND ADDRESS
--------------------------------------- --------------------------------
<S> <C>
31a-2(a)(1) Van Eck Associates Corporation
99 Park Avenue
New York, New York 10016
DST Systems, Inc.
21 West Tenth Street
Kansas City, Missouri 64105
Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
Peregrine Asset Management (Hong Kong) Limited
17/F, New World Tower
16-18 Queen's Road Central
Hong Kong
31a-2(b) Not Applicable
31a-2(c) Van Eck Securities Corporation
99 Park Avenue
New York, NY 10016
31a-2(d) Not Applicable
31a-2(e) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-3 Not Applicable
</TABLE>
ITEM 31. Management Services
None
ITEM 32. Undertakings
The Trust will file a Post-Effective Amendment on behalf of Van Eck Global
Emerging Markets Fund, using financial statements which may not be certified,
within four to six months following the commencement of operations of the Fund.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Amendment to the
Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 15th day of October, 1996.
Van Eck Funds
/s/ John C. van Eck
By: _________________________________
JOHN C. VAN ECK,PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT TO
THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATE INDICATED:
SIGNATURE TITLE DATE
/s/ John C. van Eck President, Chairman 10/15/96
- ------------------------------------- and Chief Executive
JOHN C. VAN ECK Officer
/s/ Bruce J. Smith Vice President, 10/15/96
- ------------------------------------- Treasurer and
BRUCE J. SMITH Principal Financial
and Accounting
Officer
/s/ Jeremy Biggs * Trustee 10/15/96
- -------------------------------------
JEREMY BIGGS
/s/ Richard Cowell * Trustee 10/15/96
- -------------------------------------
RICHARD COWELL
/s/ Wesley G. McCain * Trustee 10/15/96
- -------------------------------------
WESLEY G. MCCAIN
/s/ Ralph F. Peters * Trustee 10/15/96
- -------------------------------------
RALPH F. PETERS
/s/ David J. Olderman * Trustee 10/15/96
- -------------------------------------
DAVID J. OLDERMAN
/s/ Richard Stamberger * Trustee 10/15/96
- -------------------------------------
RICHARD STAMBERGER
/s/ Fred M. van Eck * Trustee 10/15/96
- -------------------------------------
FRED M. VAN ECK
/s/ John C. van Eck *
- -------------------------------------
* Executed on behalf of Trustee by
John C. van Eck, as attorney-in-
fact.
10
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. ITEM
----------- ----
Exhibit (5)(K) Form of Sub-Advisory Agreement with respect to Global Emerging
Markets Fund.
<PAGE>
EXHIBIT (5)(k)
FORM OF SUB-INVESTMENT ADVISORY AGREEMENT
WITH RESPECT TO GLOBAL EMERGING MARKETS
AGREEMENT made as of the ____ day of _________________, 1996 by and among
PEREGRINE ASSET MANAGEMENT (HONG KONG) LIMITED a corporation organized under the
laws of Hong Kong and having its principal place of business in Hong Kong (the
"Sub-Adviser") and VAN ECK ASSOCIATES CORPORATION, a corporation organized under
the laws of the State of Delaware and having its principal place of business in
New York, New York (the "Adviser") and VAN ECK FUNDS, a Massachusetts business
trust, having its principal place of business in New York, New York (the
"Trust").
WHEREAS, the Trust is engaged in business as an open-end investment company and
is so registered under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, the Sub-Adviser is engaged principally in the business of rendering
investment management services and is registered under the Investment Advisers
Act of 1940 ("Advisers Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust intends to offer shares in one of such series, namely, Global
Emerging Markets Fund (the "Fund") and in order to invest the proceeds of the
Fund in securities and other assets, the Trust has retained the Adviser to
render management and advisory services; and
WHEREAS, the Adviser desires to retain the Sub-Adviser to render investment
advisory and other services hereunder to the Fund and the Sub-Adviser is willing
to do so.
NOW, THEREFORE, WITNESSETH:
That it is hereby agreed among the parties hereto as follows:
<PAGE>
1. APPOINTMENT OF SUB-ADVISER
The Adviser hereby appoints the Sub-Adviser to act as investment advisor to the
Fund for the period and on the terms herein set forth. The Sub-Adviser accepts
such appointment and agrees to render the services herein set forth, for the
compensation herein provided. So long as the Sub-Adviser serves as investment
advisor to the Fund pursuant to this Agreement the obligation of the Adviser
under this Agreement with respect to the Fund shall be, subject in any event to
the control of the Trustees of the Trust, to determine and review with the Sub-
Adviser investment policies of the Fund, and the Sub-Adviser shall have the
obligation of furnishing continuously an investment program and making
investment decisions for the Fund, adhering to applicable investment objectives,
policies and restrictions and placing all orders for the purchase and sale of
portfolio securities for the Fund and such other services set forth in Section 2
hereof. The Adviser will compensate the Sub-Adviser of the Fund for its
services to the Fund. The Adviser or the Fund, subject to the terms of this
Agreement, may terminate the services of the Sub-Adviser at any time in its sole
discretion, and the Adviser shall at such time assume the responsibilities of
the Sub-Adviser unless and until a successor investment advisor is selected.
2. DUTIES OF SUB-ADVISER.
The Sub-Adviser, at its own expense, shall furnish the following services and
facilities to the Trust:
(a) Investment Program. The Sub-Adviser will (i) furnish continuously an
------------------
investment program for the Fund, (ii) determine (subject to the overall
supervision and review of the Board of Trustees of the Trust and the
Adviser) what investments shall be purchased, held, sold or exchanged and
what portion, if any, of the assets of the Fund shall be held uninvested,
and (iii) make changes on behalf of the Fund in the investments. The Sub-
Adviser will provide the services hereunder in accordance with the Fund's
investment objectives, policies and restrictions as stated in the then-
current prospectus and statement of additional information which is part of
the Trust's Registration Statement filed with the Securities and Exchange
Commission, as amended from time to time, copies of which shall be sent to
the Sub-Adviser by the Adviser. The Sub-Adviser also will manage,
supervise and conduct such other affairs and business of the Trust and
matters incidental thereto as the Sub-Adviser and the Trust agree, subject
always to the control of the Board of Trustees of the Trust and to the
provisions of the Master Trust Agreement of the Trust, the Trust's By-laws
and the 1940 Act. The Sub-Adviser will manage the Fund so that it will
qualify as a regulated investment company under sub-chapter M of the
Internal Revenue Code of 1986, as amended, as it may be amended from time
to time; and, with respect to the services provided by the Sub-Adviser
under this Agreement, it shall be responsible for compliance with all
applicable laws, rules and regulations. The Sub-Adviser will adopt
procedures reasonably designed to ensure compliance.
<PAGE>
(b) Office Space and Facilities. The Sub-Adviser will arrange to furnish office
---------------------------
space, all necessary office facilities, simple business equipment,
supplies, utilities, and telephone service required for managing the
investments of the Fund.
(c) Personnel. The Sub-Adviser shall provide executive and clerical personnel
---------
for managing the investments of the Fund, and shall compensate officers and
Trustees of the Fund or Trust if such persons are also employees of the
Sub-Advisor or its affiliates, except as otherwise provided herein.
(d) Portfolio Transactions. The Sub-Adviser shall place all orders for the
----------------------
purchase and sale of portfolio securities for the account of the Fund with
brokers or dealers selected by the Sub-Adviser, although the Fund will pay
the actual transaction costs, including without limitation brokerage
commissions on portfolio transactions in accordance with this Paragraph
2(d). The Fund shall provide the Sub-Adviser with a list of broker/dealers
which are affiliated persons of the Trust and its other Sub-Advisers. An
affiliated broker may transmit, clear and settle transactions for the Fund
that are executed on a securities exchange provided that the affiliated
broker arranges for unaffiliated brokers to execute the transactions. In
executing portfolio transactions and selecting brokers or dealers, the Sub-
Adviser will use its best efforts to seek on behalf of the Fund the best
overall terms available. In assessing the best overall terms available for
any transaction, the Sub-Adviser shall consider all factors it deems
relevant, including, without limitation, the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any (for the specific transaction and on a continuing
basis). In evaluating the best overall terms available, and in selecting
the broker or dealer to execute a particular transaction, the Sub-Adviser
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided
to Sub-Adviser or an affiliate of the Sub-Adviser in respect of accounts
over which it exercises investment discretion. The Sub-Adviser is
authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction which
is in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if the Sub-Adviser determines
in good faith that such commission was reasonable in relation to the value
of the brokerage and research services provided by such broker or dealer,
viewed in terms of that particular transaction or in terms of all of the
accounts over which investment discretion is so exercised by the Sub-
Adviser or its affiliates. Nothing in this Agreement shall preclude the
combining of orders for the sale or purchase of securities or other
investments with other accounts managed by the Sub-Adviser or its
affiliates provided that the Sub-Adviser does not favor any account over
any other account and provided that any purchase or sale orders executed
contemporaneously shall be allocated in an equitable manner among the
accounts involved in accordance with procedures adopted by the Sub-Adviser.
<PAGE>
(e) In connection with the purchase and sale of securities for the Fund, the
Sub-Adviser will arrange for the transmission to the custodian and
recordkeeping agent for the Trust on a daily basis, such confirmation,
trade tickets, and other documents and information, including, but not
limited to, Cusip, Sedol, or other numbers that identify securities to be
purchased or sold on behalf of the Fund, as may be reasonably necessary to
enable the custodian and recordkeeping agent to perform its administrative
and recordkeeping responsibilities with respect to the Fund. With respect
to portfolio securities to be purchased or sold through the Depository
Trust Company, the Sub-Adviser will arrange for the automatic transmission
of the confirmation of such trades to the Fund's custodian and
recordkeeping agent.
(f) The Sub-Adviser will monitor on a daily basis the determination by the
custodian and recordkeeping agent for the Fund of the valuation of
portfolio securities and other investments of the Fund. The Sub-Adviser
will assist the custodian and recordkeeping agent for the Fund in
determining or confirming, consistent with the procedures and policies
stated in the Registration Statement for the Trust, the value of any
portfolio securities or other assets of the Fund for which the custodian
and recordkeeping agent seeks assistance from, or identifies for review by,
the Sub-Adviser. The Sub-Adviser shall assist the Board in determining
fair value of such securities or assets for which market quotations are not
readily available.
(g) The Sub-Adviser will provide the Trust or the Adviser with copies (or, if
required for regulatory purposes) of all of the Fund's investment records
and ledgers maintained by the Sub-Adviser (which shall not include the
records and ledgers maintained by the custodian and recordkeeping agent for
the Trust) as are necessary to assist the Trust and the Adviser to comply
with requirements of the 1940 Act and the Advisers Act as well as other
applicable laws. The Sub-Adviser will furnish to regulatory authorities
having the requisite authority any information, reports or investment
records and ledgers maintained by the Sub-Adviser in connection with such
services which may be requested in order to ascertain whether the
operations of the Trust are being conducted in a manner consistent with
applicable laws and regulations.
(h) The Sub-Adviser will provide reports to the Trust's Board of Trustees for
consideration at meetings of the Board on the investment program for the
Fund and the issues and securities represented in the Fund's portfolio, and
will furnish the Trust's Board of Trustees with respect to the Fund such
periodic and special reports as the Trustees or the Adviser may reasonably
request.
<PAGE>
3. EXPENSES OF THE TRUST
Except as provided in sections 2(d) above, the Sub-Adviser shall assume and pay
all of its own costs and expenses related to providing an investment program for
the Fund. The Trust shall pay all of its expenses and liabilities, including
compensation of its independent Trustees; taxes and governmental fees; interest
charges; fees and expenses of the Trust's independent auditors and legal
counsel; trade association membership dues; fees and expenses of any custodian
(including safekeeping of funds and securities, maintenance of books and
accounts and calculation of the net asset value of beneficial interests of each
series of the Trust), transfer agent and registrar and dividend disbursing agent
of the Trust; expenses of preparing and mailing reports to investors nd
regulatory agencies; expenses relating to issuance, registration and
qualification of charges of each series, and the preparation, printing and
mailing of prospectuses for such purposes; insurance premiums; brokerage and
other expenses of executing portfolio transactions; expenses of investors' and
trustees' meetings; organization expenses; and extraordinary expenses.
4. SUB-ADVISORY FEE.
For the services and facilities to be provided to the Fund by the Sub-Adviser as
provided in Paragraph 2 hereof, the Adviser shall pay the Sub-Adviser a fee,
payable monthly, at the annual rate of .50 of 1% of the Fund's average daily net
assets from the Advisory fee it receives from the Fund, as set forth in the
Trust's charter documents for the computation of the value of the Fund's net
assets as determined by the Trust or its third party administrator in accordance
with procedures established, from time to time, by or under the direction of the
Board of Trustees of the Trust. The Trust shall not be liable for the
obligation of the Adviser to make payment to the Sub-Adviser.
5. REPRESENTATIONS AND COVENANTS
(a) The Adviser hereby represents and warrants as follows:
(1) That it is registered in good standing with the Securities and
Exchange Commission as an investment adviser under the Advisers Act,
and such registration is current, complete and in full compliance with
all applicable provisions of the Advisers Act and the rules and
regulations thereunder;
(2) That it has all the requisite authority to enter into, execute,
deliver and perform its obligations under this Agreement; and
(3) Its performance of its obligations under this Agreement does not
conflict with any law, regulation or order to which it is subject.
(b) The Adviser hereby covenants and agrees that, so long as this Agreement
shall remain in effect:
(1) It shall maintain its registration in good standing as an investment
adviser under the Advisers Act, and such registration shall at all
times remain current, complete and in full compliance with all
applicable provisions of the Advisers Act and the rules and
regulations thereunder;
<PAGE>
(2) Its performance of its obligations under this Agreement does not
conflict with any law, regulation or order to which it is subject; and
(3) It shall at all times fully comply with the Advisers Act, the 1940
Act, all applicable rules and regulations under such Acts and all
other applicable law; and
(4) It shall promptly notify the Sub-Adviser upon occurrence of any event
that might disqualify or prevent it from performing its duties under
this Agreement.
(c) The Sub-Adviser hereby represents and warrants as follows:
(1) That it is registered in good standing with the Securities and
Exchange Commission as an investment adviser under the Advisers Act,
and such registration is current, complete and in full compliance with
all applicable provisions of the Advisers Act and the rules and
regulations thereunder;
(2) That it has all the requisite authority to enter into, execute,
deliver and perform its obligations under this Agreement; and
(3) Its performance of its obligations under this Agreement does not
conflict with any law, regulation or order to which it is subject.
(d) The Sub-Adviser hereby covenants and agrees that, so long as this Agreement
shall remain in effect:
(1) It shall maintain its registration in good standing as an investment
adviser under the Advisers Act, and such registration shall at all
times remain current, complete and in full compliance with all
applicable provisions of the Advisers Act and the rules and
regulations thereunder;
(2) Its performance of its obligations under this Agreement does not
conflict with any law, regulation or order to which it is subject;
(3) It shall at all times fully comply with the Advisers Act, the 1940
Act, all applicable rules and regulations under such Acts and all
other applicable law; and
(4) It shall promptly notify the Adviser upon occurrence of any event
that might disqualify or prevent it from performing its duties under
this Agreement.
<PAGE>
6. TRUST TRANSACTIONS.
The Adviser and Sub-Adviser each agrees that neither it nor any of its
officers, directors, employees or agents will take any long- or short-term
position in the shares of the Trust; provided, however, that such
prohibition shall not prevent the purchase of shares of the Trust by any of
the persons above described for their account and for investment at the
price (net asset value) at which such shares are available at the time of
purchase or as part of the initial capital of the Trust.
7. RELATIONS WITH TRUST.
Subject to and in accordance with the Declaration of Trust and By-Laws of
the Trust and the Articles of Incorporation and By-Laws of the Adviser and
Sub-Adviser it is understood (i) that Trustees, officers, agents and
shareholders of the Trust are or may be interested in the Sub-Adviser (or
any successor thereof) as directors, officers, or otherwise; (ii) that
directors, officers, agents and shareholders of the Sub-Advisor are or may
be interested in the Trust as Trustees, officers, shareholders or
otherwise; and (iii) that the Sub-Advisor (or any such successor) is or may
be interested in the Trust as a shareholder or otherwise and that the
effect of any such adverse interests shall be governed by said Declaration
of Trust and By-laws.
8. LIABILITY OF ADVISER, SUB-ADVISER AND OFFICERS AND TRUSTEES OF THE TRUST.
Neither the Adviser, Sub-Adviser nor any of their officers, directors,
employees, agents or controlling persons or assigns or Trustees or officers of
the Trust shall be liable for any error of judgment or law, or for any loss
suffered by the Trust or its shareholders in connection with the matters to
which this Agreement relates, except that no provision of this Agreement shall
be deemed to protect the Adviser, Sub-Adviser or such persons against any
liability to the Trust or its shareholders to which the Adviser or Sub-Adviser
might otherwise be subject by reason of any wilful misconduct, negligence or
actions taken in bad faith in the discharge of its respective obligations and
performance of its respective duties under this Agreement.
9. INDEMNIFICATION
(a) Notwithstanding Section 8 of the Agreement, the Adviser agrees to indemnify
and hold harmless the Sub-Adviser, any affiliated person of the Sub-Adviser
(except the Trust), and each person, if any, who, within the meaning of
Section 15 of the Securities Act of 1933 ("1933 Act") controls
("controlling person") the Sub-Adviser (all of such persons being referred
to as "Sub-Adviser Indemnified Persons") against any and all losses,
claims, damages, liabilities (excluding salary charges of employees,
officers or partners of the Sub-Adviser), or litigation (including legal
and other) expenses to which a Sub-Adviser Indemnified Person may become
subject under the 1933 Act, the 1940 Act, the Advisers Act, any other
statute, common law or otherwise, arising out of the Adviser's
responsibilities to the Trust which (1) may be based upon any untrue
statement or alleged untrue statement of a material fact supplied by, or
which is
<PAGE>
the responsibility of, the Adviser and contained in the Registration
Statement or prospectus or statement of additional information covering
shares of the Fund or any other series, or any amendment thereof or any
supplement thereto, or the omission or alleged omission or failure to state
therein a material fact known or which should have been known to the
Adviser and was required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was
made in reliance upon information furnished to the Adviser or the Trust or
to any affiliated person of the Adviser by a Sub-Adviser Indemnified Person
in writing for inclusion in the Registration Statement or prospectus or
statement of additional information; or (2) may be based upon a failure by
the Adviser to comply with, or a breach of, any provision of this Agreement
or any other agreement with the Fund; or (3) may be based upon misfeasance
or negligence by the Adviser in the discharge of its duties and performance
of its obligations under this Agreement or any other agreement with the
Fund, provided however, that in no case shall the indemnity in favor of the
Sub-Adviser Indemnified Person be deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
any misfeasance or negligence in the discharge of its obligations and the
performance of its duties under this Agreement. The Adviser shall not be
liable for any losses, liabilities or expenses that the Sub-Adviser may
incur due to errors of judgment or omissions of the Adviser.
(b) Notwithstanding Section 8 of this Agreement, the Sub-Adviser agrees to
indemnify and hold harmless the Adviser, any affiliated person of the
Adviser (except the Trust), and each person, if any, who, within the
meaning of Section 15 of the 1933 Act, controls ("controlling person") the
Adviser (all of such persons being referred to as "Adviser Indemnified
Persons") against any and all losses, claims, damages, liabilities
(excluding salary charges of employees, officers or partners of the
Adviser), or litigation (including legal and other) expenses to which an
Adviser Indemnified Person may become subject under the 1933 Act, the 1940
Act, the Advisers Act, any other statute, common law or otherwise, arising
out of the Sub-Adviser's responsibilities as sub-investment adviser to the
Fund which (1) may be based upon any untrue statement or alleged untrue
statement of a material fact supplied by the Sub-Adviser for inclusion in
the Registration Statement or prospectus or statement of additional
information covering shares of the Fund, or any amendment thereof or any
supplement thereto, or, with respect to a material fact supplied by the
Sub-Adviser for inclusion in the Registration Statement or prospectus or
statement of additional information, the omission or alleged omission or
failure to state therein a material fact known or which should have been
known to the Sub-Adviser and was required to be stated therein or necessary
to make the statements therein not misleading, unless such statement or
omission was made in reliance upon information furnished to the Sub-
Adviser, the Trust, or any affiliated person of the Sub-Adviser or Trust by
an Adviser Indemnified Person; or (2) may be based upon a failure by the
Sub-Adviser to comply with, or a breach of, any provision of this Agreement
or any other agreement with the Fund; or (3) may be based upon misfeasance
or negligence by the Sub-Adviser in the discharge of its duties and
performance of its obligations under this Agreement or any other agreement
with the Fund provided however, that in no case shall the indemnity in
favor of an Adviser Indemnified Person be deemed
<PAGE>
to protect such person against any liability to which any such person would
otherwise be subject by reason of misfeasance or negligence in the
discharge of its obligations and the performance of its duties under this
Agreement.
(c) Neither the Adviser nor the Sub-Adviser shall be liable under this Section
with respect to any claim made against an Indemnified Person unless such
Indemnified Person shall have notified the indemnifying party in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Person (or such Indemnified Person shall have received
notice of such service on any designated agent), but failure to notify the
indemnifying party of any such claim shall not relieve the indemnifying
party from any liability which it may have to the Indemnified Person
against whom such action is brought otherwise than on account of this
Section. In case any such action is brought against the Indemnified
Person, the indemnifying party will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Indemnified Person,
to assume the defense thereof, with counsel satisfactory to the Indemnified
Person. If the indemnifying party assumes the defense and the selection of
counsel by the indemnifying party to represent both the Indemnified Person
and the indemnifying party would result in a conflict of interests and
would not, in the reasonable judgment of the Indemnified Person, adequately
represent the interests of the Indemnified Person, the indemnifying party
will at its own expense, assume the defense with counsel to the
indemnifying party and, also at its own expense, with separate counsel to
the Indemnified Person which counsel shall be satisfactory to the
indemnifying party and the Indemnified Person. The Indemnified Person will
bear the fees and expenses of any additional counsel retained by it, and
the indemnifying party shall not be liable to the Indemnified Person under
this Agreement for any legal or other expenses subsequently incurred by the
Indemnified Person independently in connection with the defense thereof
other than reasonable costs of investigation. The indemnifying party shall
not have the right to compromise or settle the litigation without the prior
written consent of the Indemnified Person if the compromise or settlement
results, or may result, in a finding of wrongdoing on the part of the
Indemnified Person.
10. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective on the date hereof. Unless
--------
terminated as herein provided, this Agreement shall remain in full force
and effect until _____________, 1996 and shall continue in full force and
effect for periods of one year thereafter so long as such continuance is
approved at least annually (i) by either the Trustees of the Trust or by
vote of a majority of the outstanding voting shares (as defined in the 1940
Act) of the Trust, and (ii) in either event by the vote of a majority of
the Trustees of the Trust who are not parties to this Agreement or
"interested persons" (as defined in the 1940 Act) of any such party, cast
in person at a meeting called for the purpose of voting on such approval.
<PAGE>
(b) Termination. This Agreement may be terminated at any time, without payment
-----------
of any penalty, by vote of the Trustees of the Trust or by vote of a
majority of the outstanding shares (as defined in the 1940 Act), or by the
Adviser or Sub-Adviser, on sixty (60) days written notice to the other
parties.
(c) Automatic Termination. This Agreement shall automatically and immediately
---------------------
terminate in the event of its assignment.
11. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject matter
hereof between the parties.
12. SERVICES EXCLUSIVE.
The services of the Sub-Adviser and its affiliates, taken collectively, shall be
exclusive with regards to the Trust as provided in this Section 12. So long as
this Agreement (and any continuation) is in effect, the Sub-Adviser and its
affiliates shall be prohibited from serving as investment adviser to any open-
end investment company offered for sale in the United States as part of a
variable annuity or life insurance contract meeting the requirements of Section
817(h) of the Internal Revenue Code of 1986, as amended, which has (i) the same
investment objective and policies (i.e., to provide long term capital
appreciation by investing primarily in equity securities in emerging markets
around the world) as the Fund or (ii) the word "emerge" or any derivative
thereof or the word "develop" or any derivative thereof in its name. The Sub-
Adviser and its affiliates shall be permitted to serve as investment adviser to
open-end investment companies offered for sale as part of variable annuity or
life insurance contracts which have investment objectives and policies to
provide long term capital appreciation by investing their assets primarily in
securities of developed (non-emerging market) countries and Asia, provided that
any such investment company does not have the word "emerge" or any derivative
thereof or the word "develop" or any derivative thereof in its name.
The services of the Sub-Adviser (and its affiliates) to the Trust hereunder are
not to be deemed exclusive if this Agreement is terminated by the Fund or
Adviser; and nothing in this Agreement shall preclude the Sub-Adviser or its
affiliates from serving as an investment adviser or sub-adviser with respect to
any mutual funds.
13. EXPENSE LIMITATION.
The Adviser and Sub-Adviser agree that for any fiscal year of the Fund during
which the total of all expenses of the Fund (including investment advisory fees
under the investment advisory agreement, but excluding interest, portfolio
brokerage commissions and expenses, taxes and extraordinary items) exceeds the
lowest expense limitation imposed in any state in which the Fund is then making
sales of its shares or in which its shares are then qualified for sale, the
Adviser and Sub-Adviser will bear expenses on a pro rata basis with respect to
expenses not otherwise excluded from reimbursement by this Paragraph 13 to the
extent that they exceed such expense limitation but in no event shall such
reimbursement exceed the advisory, sub-advisory and administrative fees
retained.
<PAGE>
14. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
(b) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
15. USE OF NAME
(a) It is understood that the name "Van Eck" or any derivative thereof or
logo associated with that name is the valuable property of the Adviser
and its affiliates, and that the Trust and Sub-Adviser have the right
to use such name (or derivative or logo) only with the approval of the
Adviser and only so long as the Adviser is Adviser to the Fund. Upon
termination of the Investment Advisory and Management Agreement
between the Trust and the Adviser, the Trust and the Sub-Adviser shall
forthwith cease to use such name (or derivative or logo).
(b) It is understood that the name Peregrine Asset Management (Hong Kong)
Limited any derivative thereof or logo associated with that name is
the valuable property of the Sub-Adviser and its affiliates and that
the Trust and/or the Fund have the right to use such name (or
derivative or logo) in offering materials of the Trust only with the
approval of the Sub-Adviser and only for so long as the Sub-Adviser is
investment advisor to the Fund. Upon termination of this Agreement,
the Trust and Adviser shall forthwith cease to use such name (or
derivative or logo).
16. LIMITATION OF LIABILITY.
The Term "Van Eck Funds" means and refers to the Trustees from time to time
serving under the Master Trust Agreement of the Trust dated April 3, 1985 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 Trustees, shareholders, nominees, officers, agents or employees
of the Trust, personally, but bind only the assets and property of the Trust, as
provided in the Amended and Restated Master Trust Agreement of the Trust. The
execution and delivery of this Agreement have been authorized by the Trustees
and the Trust, acting as such, and neither such authorization by such officer
shall be deemed to have been made by any of them personally, but shall bind only
the assets and property of the Trust as provided in its Amended and Restated
Master Trust Agreement.
<PAGE>
In WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
Attest: VAN ECK FUNDS
__________________________ By _________________________________
Name Name
President
Attest: VAN ECK ASSOCIATES CORPORATION
__________________________ By________________________________
Name Name
President
Attest: PEREGRINE ASSET MANAGEMENT (HONG KONG)
LIMITED
___________________________ By________________________________
Name Name
President
