<PAGE>
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
POST-EFFECTIVE AMENDMENT NO. 39
-AND-
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 40
VAN ECK FUNDS
(EXACT NAME AND TITLE OF REGISTRANT)
99 PARK AVENUE, NEW YORK, NEW YORK 10016
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIPCODE)
212-687-5200
(REGISTRANT'S TELEPHONE NUMBER INCLUDING AREACODE)
THADDEUS LESZCZYNSKI, ESQ. - VAN ECK ASSOCIATESCORPORATION
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, MA. 02109
------------------------------------------------------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
[_] TO PARAGRAPH (B), OR [_] PARAGRAPH (B), OR
IMMEDIATELY UPON FILING PURSUANT ON _____ PURSUANT TO
[X] 60 DAYS AFTER FILING PURSUANT TO [_] ON _____ PURSUANT TO
PARAGRAPH (A)(1), OR PARAGRAPH (A)(1) OF RULE 485
[_] 75 DAYS AFTER FILING PURSUANT TO [_] ON _____ PURSUANT TO
PARAGRAPH (A)(2), OR PARAGRAPH (A)(2) OF RULE 485
----------------------------------------------------
Registrant has heretofore declared its intention to register an indefinite
number of shares of beneficial interest, $.001 par value, of the Gold/Resources
Fund, U.S. Government Money Fund, International Investors Gold Fund, Global
Income Fund, Asia Dynasty Fund, Global Balanced Fund, Asia Infrastructure Fund,
Global Hard Assets Fund and Gold Opportunity Fund series, pursuant to Rule 24f-
2(a)(1) under the Investment Company Act of 1940, as amended (the "Act"). A
Rule 24f-2 Notice was filed on or about February 16, 1996 for all series.
-------------------------------------------
<PAGE>
VAN ECK FUNDS
CROSS-REFERENCE PAGE
PURSUANT TO RULE 501(b) OF REGULATION S-K
UNDER THE SECURITIES ACT OF 1933
FORM N-1A
PART A
ITEM NO. LOCATION IN PROSPECTUS
- -------- ----------------------
1 COVER PAGE
2 N/A
3 FINANCIAL HIGHLIGHTS
4 INVESTMENT OBJECTIVES AND POLICIES; DESCRIPTION OF THE
TRUST; RISK FACTORS; LIMITING INVESTMENT RISK;
ADVERTISING
5 MANAGEMENT
6 DESCRIPTION OF THE TRUST; TAXES; DIVIDENDS AND
DISTRIBUTIONS
7 HOW TO BUY SHARES OF THE FUNDS; PLAN OF DISTRIBUTION
8 HOW TO REDEEM SHARES
9 N/A
PART B LOCATION IN STATEMENT OF ADDITIONAL INFORMATION
- ------ -----------------------------------------------
10 COVER PAGE
11 TABLE OF CONTENTS
12 N/A
13 INVESTMENT OBJECTIVES AND POLICIES; FOREIGN CURRENCY
TRANSACTIONS; OPTIONS TRANSACTIONS; INVESTMENT
RESTRICTIONS; RISK FACTORS - FOREIGN SECURITIES;
REPURCHASE AGREEMENTS
14 TRUSTEES AND OFFICERS
15 N/A
<PAGE>
16 INVESTMENT ADVISORY SERVICES; THE DISTRIBUTOR;
ADDITIONAL INFORMATION
17 PORTFOLIO TRANSACTIONS AND BROKERAGE
18 GENERAL INFORMATION
19 DETERMINATION OF NET ASSET VALUE; TAX-SHELTERED
RETIREMENT PLANS; INVESTMENT PROGRAMS
20 TAXES
21 THE DISTRIBUTOR
22 YIELD AND PERFORMANCE
23 FINANCIAL STATEMENTS
<PAGE>
PROSPECTUS APRIL , 1996
VAN ECK GLOBAL FUNDS
- -------------------------------------------------------------------------------
The Van Eck Global Funds consist of separate mutual funds (the "Funds")
each of which has a specific investment objective and is a
separate series of Van Eck Funds, a Massachusetts
business trust. The Funds are managed by Van
Eck Associates Corporation (the
"Adviser"), 99 Park Avenue, New
York, N.Y. 10016
. Account Assistance: (800) 544-4653
- -------------------------------------------------------------------------------
See "Purchase of Shares--Alternative Purchase Arrangements" on page 29 herein
to determine your purchase options for Funds offering two classes of shares.
Global Hard Assets Fund (Class A, Class B and Class C)--seeks long-term
capital appreciation by investing globally, primarily in "Hard Asset
Securities." Income is a secondary consideration.
Global Balanced Fund (Class A and Class B)--seeks long-term capital
appreciation together with current income. Fiduciary International, Inc.
("FII" or "Sub-Adviser") serves as sub-investment adviser to this Fund. The
Fund is part of the Van Eck "Global Partnership Series."SM Class B shares are
closed to new sales.
ASIA DYNASTY FUND (CLASS A AND CLASS B)--seeks long-term capital appreciation
by investing in the equity securities of companies that are expected to
benefit from the development and growth of the economies of the Asia region.
AIG Asset Management, Inc., ("AIGAM" or "Sub-Adviser") serves as sub-
investment adviser to this Fund. The Fund is part of the Van Eck "Global
Partnership Series."SM Class B shares are closed to new sales.
ASIA INFRASTRUCTURE FUND (CLASS A AND CLASS B)--seeks long-term capital
appreciation by investing in the equity securities of infrastructure companies
that are expected to benefit from the development and growth of the economies
of the Asia Region. AIGAM serves as sub-investment adviser to this Fund. The
Fund is part of the Van Eck "Global Partnership Series." SM
GLOBAL INCOME FUND (CLASS A)--seeks high total return through a flexible
policy of investing globally, primarily in debt securities. The Fund
emphasizes the current income component of total return.
Investors should be aware that an investment in the Global Hard Assets Fund,
Global Balanced Fund, Asia Dynasty Fund and Asia Infrastructure Fund have
greater investment risk than many mutual funds. The Funds intend to engage in
a number of investment activities including borrowing for investment purposes
(i.e., engage in leveraging), investing in countries with emerging securities
markets and economies and investing in restricted securities of unseasoned
issuers and non-readily marketable securities. These investment activities are
considered to be speculative and could result in additional cost and
investment risk to the Funds. Consequently, these Funds are not intended to be
a complete investment and are intended for those investors who can assume
greater risk with respect to a portion of their investment portfolio. Further
information on the Funds and these activities is provided under "Risk Factors"
on pages 21-28 and investors should read this material carefully.
---------------
Shares in the Funds 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.
This Prospectus sets forth concisely information about the Funds that you
should know before investing. It should be read and retained for future
reference.
A Statement of Additional Information dated April , 1996 about the Funds has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. For a free copy, write to the above address or call the
telephone number listed above.
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
- --------------------------------------------------------------------------------
<S> <C>
Transaction Data........................................................... 3
Financial Highlights....................................................... 4
The Funds.................................................................. 9
Investment Objectives and Policies......................................... 9
Risk Factors............................................................... 20
Limiting Investment Risks.................................................. 27
Purchase of Shares......................................................... 28
Exchange Privilege......................................................... 35
Dividends and Distributions................................................ 37
Tax-Sheltered Retirement Plans............................................. 37
Investment Programs........................................................ 38
Redemption of Shares....................................................... 38
Management................................................................. 40
Plan of Distribution....................................................... 43
Advertising................................................................ 45
Taxes...................................................................... 45
Description of the Trusts.................................................. 46
Additional Information..................................................... 47
</TABLE>
2
<PAGE>
TRANSACTION DATA
The following table is intended to assist an investor in understanding the
various direct and indirect costs and expenses borne by an investor in a Fund.
The sales charges are the maximum sales charges an investor would incur. Sales
charges decline depending on the amount of the purchase, the number of shares
an investor already owns or use of various investment programs. See "How to
Buy Shares of the Funds." The Adviser may from time to time waive fees and/or
reimburse certain expenses of a Fund.
<TABLE>
<CAPTION>
ASIA
GLOBAL ASIA GLOBAL INFRASTRUCTURE
INCOME FUND DYNASTY FUND BALANCED FUND FUND
------------ ------------------------ ---------------------- -----------------------
CLASS-A CLASS-A CLASS-B CLASS-A CLASS-B CLASS-A CLASS-B
------------ ---------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES:
Maximum Sales
Charge Imposed
on Purchases(as
a percent of
offering
price)......... 4.75% 4.75% 0% 4.75% 0% 4.75%
+Contingent
Deferred Sales
or Redemption
Charge......... 0% 0% 6.0% 0% 5.0% 0%
===== ==== ==== ==== ==== ====
ANNUAL FUND OPERATING
EXPENSES: (as a percent
of average net assets)
Management Fees. .75% .75%++ .75%++ .75%++ .75%++ .75%++
12b-1
Fees/Shareholder
Servicing
Fees*.......... .25% .50% 1.00% .50% 1.00% .50%
Administration
Fee............ 0% .25% .25% .25% .25% .25%
Other Expenses.. .39% .35% .38% 1.09% 1.21% .56%
----- ---- ---- ---- ---- ----
Transfer and
Dividend
Disbursing..... .16% .16% .16% .25% .28% .15%
Custodian Fees.. .05% .14% .14% .27% .30% .12%
Other Expenses.. .18% .05% .08% .57% .63% .29%
----- ---- ---- --- --- ----
Total Fund
Operating
Expenses....... 1.39% 1.85% 2.38% 2.59% 3.21% 2.06%
===== ==== ==== ==== ==== ====
EXAMPLE: You
would bear the
following
expenses on a
$1,000
investment
assuming (1) 5%
annual return
and (2)
redemption at
the end of each
time period
1 year......... $ 60.98 $ 65.40 $ 84.11 $ 72.47 $ 82.39 $ 67.41
3 years........ $ 89.41 $102.91 $114.25 $124.22 $128.91 $109.00
5 years+++..... $119.94 $142.81 $147.04 $178.50 $187.84 $153.08
10 years+++..... $206.43 $254.11 $271.63 $326.06 $351.25 $275.12
<CAPTION>
GLOBAL HARD ASSETS FUND**
-------------------------------
CLASS A CLASS B CLASS C
----------- ------- -----------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES:
Maximum Sales
Charge Imposed
on Purchases(as
a percent of
offering
price)......... 4.75% 0%
+Contingent
Deferred Sales
or Redemption
Charge......... 0% 1.00%
===== =====
ANNUAL FUND OPERATING
EXPENSES: (as a percent
of average net assets)
Management Fees. 1.00% 1.00%
12b-1
Fees/Shareholder
Servicing
Fees*.......... .50% 1.00%
Administration
Fee............ 0% 0%
Other Expenses.. .56% .58%
----- -----
Transfer and
Dividend
Disbursing..... .15% .17%
Custodian Fees.. .12% .12%
Other Expenses.. .29% .29%
----- -----
Total Fund
Operating
Expenses....... 2.06% 2.58%
===== =====
EXAMPLE: You
would bear the
following
expenses on a
$1,000
investment
assuming (1) 5%
annual return
and (2)
redemption at
the end of each
time period
1 year......... $ 67.41 $36.11
3 years........ $109.00 $80.25
5 years+++..... -- --
10 years+++..... -- --
</TABLE>
- --------
* Long-term shareholders in Funds may pay more than the economic equivalent
of the maximum front-end sales charge permitted by the NASD. The
shareholder servicing fee will not exceed .25%.
** The Adviser may temporarily reimburse and or waive certain operating
expenses of the Fund including management and administrative fees. Such
temporary reimbursements/waivers will have the effect of lowering the
Fund's expense ratio.
+ The Contingent Deferred Sales Charge on Class B shares is applied to the
lesser of purchase price or net asset value at redemption. The charge
imposed on such amount is scaled down from 6% during the first year to 0%
after the sixth year for Asia Dynasty Fund and Asia Infrastructure Fund and
is scaled down from 5% during the first year to 0% after the sixth year for
Global Balanced Fund and Global Hard Assets Fund. Redemption Charge on
Class C shares of 1% is applied to redemptions during the first year of
purchase and is applied to the lesser of purchase price or net asset value
at redemption.
++ Inclusive of the sub-investment advisory fee paid by the Adviser.
+++ The 5 and 10 year expenses are not required of those funds in operation
for a period of less than 10 months.
Total Fund Operating Expenses are the actual operating expenses, before fee
waivers or expense reimbursements, if any, of Global Income Fund-A, Asia
Dynasty Fund, Global Balanced Fund, Asia Infrastructure Fund-A, Global Hard
Assets Fund-A and Global Hard Assets Fund-C for the period ended December 31,
1995. The Funds' expense ratios have been annualized. Operating expenses for
Asia Infrastructure Fund-B and Global Hard Assets Fund-B assume $30,000,000 in
net assets and are estimates.
The above examples should not be considered a representation of past or future
expenses or investment return. Actual expenses may be greater or less than
those shown. Information regarding management fees and 12b-1 fees can be found
under "Management" and "Plan of Distribution."
3
<PAGE>
FINANCIAL HIGHLIGHTS
The Financial Highlights below give selected information for a share of each
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Deloitte & Touche LLP, independent accountants,
for Global Income Fund for fiscal years through April 30, 1992. The Financial
Highlights presented have been audited by Coopers & Lybrand L.L.P.,
independent accountants, for all other fiscal years ended December 31 whose
reports thereon appear in the Funds' Annual Reports, which are incorporated by
reference into the Statement of Additional Information. This information
should be read in conjunction with the financial statements and related notes
that also appear in the Funds' Annual Reports.
<TABLE>
<CAPTION>
GLOBAL INCOME FUND CLASS A
--------------------------------------------------------------------------------------
YEAR
ENDED EIGHT MONTHS
DECEMBER 31, ENDED YEAR ENDED APRIL 30,
--------------------------- DECEMBER 31, --------------------------------------------
1995 1994 1993 1992 1992 1991 1990 1989 1988
-------- -------- -------- ------------ -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 8.96 $ 9.28 $ 9.91 $ 9.75 $ 9.44 $ 9.10 $ 10.09 $ 9.25
-------- -------- -------- -------- -------- ------- ------- ------- -------
Income From Investment
Operations:
Net Investment
Income(d)............. 0.55+ 0.75 0.51 0.770 0.99 0.953 0.86 0.67
Net Gains or (Losses)
on Securities (both
realized and
unrealized)........... (0.80) (0.31) (0.50) 0.460 0.51 0.347 (0.47) 0.53
-------- -------- -------- -------- -------- ------- ------- ------- -------
Total From Investment
Operations........... (0.25) 0.44 0.01 1.230 1.50 1.300 0.39 1.20
======== ======== ======== ======== ======== ======= ======= ======= =======
Less Distributions:
Dividends From Net
Investment Income(b).. -- (0.05) (0.47) (0.853) (0.96) (0.944) (1.11) (0.35)
Distributions From
Capital Gains......... -- (0.01) (0.17) (0.217) (0.23) (0.016) (0.27) (0.01)
Distributions from
Aggregate Paid in
Capital............... (0.56) (0.70) -- -- -- -- -- --
-------- -------- -------- -------- -------- ------- ------- ------- -------
Total Distributions... (0.56) (0.76) (0.64) (1.070) (1.19) (0.960) (1.38) (0.36)
======== ======== ======== ======== ======== ======= ======= ======= =======
Net Asset Value, End of
Period................. $ 8.15 $ 8.96 $ 9.28 $ 9.91 $ 9.75 $ 9.44 $ 9.10 $ 10.09
======== ======== ======== ======== ======== ======= ======= ======= =======
- ------------------------------------------------------------------------------------------------------------------
Total Return(a)(c)...... (2.79%) 4.90% (0.18%) 13.19% 16.49% 15.00% 4.17% 13.30%
- ------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary
Data
Net Assets, End of
Period (000)........... $137,242 $251,725 $290,961 $187,241 $84,016 $39,592 $36,383 $27,646
Ratio of Expenses to
Average Net Assets..... 1.39% 1.27% 1.32%** 1.39% 1.61% 1.42%* 0.40%* 0.00%*
Ratio of Net Income to
Average Net Assets..... 6.55% 8.01% 7.58%** 7.92% 10.00% 10.27% 9.10% 9.20%
Portfolio Turnover Rate. 148.4% 108.6% 44.2% 108.9% 276.1% 289.7% 386.3% 306.0%
</TABLE>
- --------
* The expense ratio would have been 1.93%, 1.56% and 1.60% for the years
ended April 30, 1988, 1989 and 1990, respectively, if expenses were not
assumed by the investment advisor.
** Annualized
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends and
distributions at net asset value during the year and a redemption on the
last day of the period. A sales charge is not reflected in the calculation
of total return. Total return for periods of less than one year are not
annualized.
(b) Due to a change in the dividend declaration policy, thirteen monthly
dividends were recorded in the fiscal year ended April 30, 1992.
(c) The Adviser waived and/or reimbursed all or a portion of the Fund's fees
and expenses for fiscal years ended April 30, 1988, 1989 and 1990. If all
or a portion of fees and expenses were not waived or reimbursed, total
return would have been 11.37%, 3.01%, and 14.82%, respectively.
(d) The Adviser waived fees and assumed expenses of the Global Income Fund in
the amount of $.14, $.11 and $.016 a share for the years ended April 30,
1988, 1989 and 1990, respectively.
(e) Commencement of Operations.
+ Based on average shares outstanding.
See Notes to Financial Statements set forth in the Fund's Annual Report for
the year ended December 31, 1995.
4
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
The Financial Highlights below give selected information for a share of each
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Coopers & Lybrand L.L.P., independent
accountants, whose reports thereon appear in the Funds' Annual Reports, which
are incorporated by reference into the Statement of Additional Information.
This information should be read in conjunction with the financial statements
and related notes that also appear in the Funds' Annual Reports.
<TABLE>
<CAPTION>
ASIA DYNASTY FUND
---------------------------------------------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------------------- --------------------------------------------------------
FOR THE PERIOD FOR THE PERIOD
MARCH 22, 1993(A) SEPTEMBER 1, 1993(A)
YEAR ENDED YEAR ENDED TO YEAR ENDED YEAR ENDED TO
DECEMBER 31, 1995 DECEMBER 31, 1994 DECEMBER 31, 1993 DECEMBER 31, 1995 DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- ----------------- ----------------- ----------------- ----------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Pe-
riod............ $ 15.28 $ 9.525 $ 15.25 $ 11.33
------- ------- -------- ------- ------- -------
Income from In-
vestment Opera-
tions:
Net Investment
Loss........... -- (0.062)+ (0.06) (0.07)+
Net Gains (Loss-
es) on Securi-
ties (both re-
alized and
unrealized).... (2.86) 5.887 (2.86) 4.06
------- ------- -------- ------- ------- -------
Total from In-
vestment Opera-
tions........... (2.86) 5.825 (2.92) 3.99
------- ------- -------- ------- ------- -------
Less Distribu-
tions:
Dividends in Ex-
cess of Net
Investment In-
come........... (0.07) -- (0.02) --
Distributions
from Capital
Gains.......... (0.22) (0.070) (0.22) (0.07)
-------- -------
------- ------- -------
Total Distribu-
tions........... (0.29) (0.070) (0.24) (0.07)
------- ------- -------- ------- ------- -------
Net Asset Value,
End of Period... $ 12.13 $ 15.28 $ 12.09 $ 15.25
======= ======= ======== ======= ======= =======
Total Return (b). (18.72%) 61.16% ** (19.15%) 35.22%
- -------------------------------------------------------------------------------
Ratios/Supplementary
Data
Net Assets, End
of Period (000). $83,787 $108,661 $35,024 $26,205
Ratio of Expenses
to Average Net
Assets.......... 1.85% 1.92%(c) * 2.38% 3.04% *
Ratio of Net In-
vestment Loss to
Average Net As-
sets............ -- % (0.68%)* (0.50%) (2.17%)*
Portfolio Turn-
over Rate....... 51.08% 14.63% 51.08% 14.63%
</TABLE>
- -------
(a)Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends and
distributions at net asset value during the year and a redemption on the
last day of the period. A sales charge is not reflected in the calculation
of total return. Total return for periods of less than one year are not
annualized.
(c)The expense ratio for Class A shares would have been 2.09% if expenses were
not assumed by the advisor.
*Annualized.
** The Adviser waived and/or reimbursed all or a portion of Asia Dynasty Fund-
A's fees and expenses for fiscal year ended December 31, 1993. If all or a
portion of fees and expenses were not waived or reimbursed, total return
would have been 61.1%.
+ Based on average shares outstanding.
See Notes to Financial Statements set forth in the Fund's Annual Report for
the year ended December 31, 1995.
5
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
GLOBAL BALANCED FUND
-----------------------------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------------- --------------------------------------------------------
FOR THE PERIOD FOR THE PERIOD
DECEMBER 20, 1993(A) DECEMBER 20, 1993(A)
YEAR ENDED YEAR ENDED TO YEAR ENDED YEAR ENDED TO
DECEMBER 31, 1995 DECEMBER 31, 1994 DECEMBER 31, 1993 DECEMBER 31, 1995 DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- ----------------- -------------------- ----------------- ----------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period.......... $ 9.53 $ 9.53 $ 9.53 $ 9.53
------- -------- ------- ------ ------- -------
Income from In-
vestment
Operations:
Net Investment
Income......... 0.19 + -- 0.11 + --
Net Losses on
Securities both
(realized and
unrealized).... (0.56) -- (0.57) --
------- -------- ------- ------ ------- -------
Total from In-
vestment Opera-
tions........... (0.37) -- (0.46) --
------- -------- ------- ------ ------- -------
Less Distribu-
tions:
Dividends from
Net Investment
Income......... (0.09) -- (0.05) --
------- -------- ------- ------ ------- -------
Net Asset Value,
End of Period... $ 9.07 $ 9.53 $ 9.02 $ 9.53
======= ======== ======= ====== ======= =======
Total Return (b). (3.90%) 0% (4.84%) 0%
- -------------------------------------------------------------------------------
Ratios/Supplementary
Data
Net Assets, End
of Period (000). $ 13,986 $ 562 $ 5,628 $130
Ratio of Expenses
to Average Net
Assets (c)...... 1.06% 0.25% * 1.88% 1.00% *
Ratio of Net In-
vestment Income
(Loss) to Aver-
age Net Assets.. 1.99% (0.25%)* 1.14% (1.00%)*
Portfolio Turn-
over Rate....... 174.76% 0% 174.76% 0%
</TABLE>
- -------
(a)Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends and
distribution at net asset value during the period and a redemption on the
last day of the period. A sales charge is not reflected in the
calculations of total return. Total return for a period of less than one
year is not annualized.
(c) The expense ratios for Class A shares and Class B shares would have been
2.59%, 7.76% and 3.21% and 8.51%, respectively if the expenses were not
assumed by the Advisor.
*Annualized.
+Based on average shares outstanding.
See Notes to Financial Statements set forth in the Fund's Annual Report for
the year ended December 31, 1995.
6
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
The Financial Highlights below give selected information for a share of each
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Coopers & Lybrand L.L.P., independent
accountants, whose reports thereon appear in the Funds' Annual Reports, which
are incorporated by reference into the Statement of Additional Information.
This information should be read in conjunction with the financial statements
and related notes that also appear in the Funds' Annual Reports.
<TABLE>
<CAPTION>
GLOBAL HARD ASSETS FUND
---------------------------------------------------------------------------
CLASS A CLASS C
------------------------------------- -------------------------------------
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 2, 1994(A) NOVEMBER 2, 1994(A)
YEAR ENDED TO YEAR ENDED TO
DECEMBER 31, 1995 DECEMBER 31, 1994 DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- ------------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Period......... $ 9.53 $ 9.53
------- ------- ------- -------
Income from Investment
Operations:
Net Investment Income.. .010 0.01
Net Losses on Invest-
ment (both realized
and unrealized)....... (0.115) (0.12)
------- ------- ------- -------
Total from Investment
Operations............. (0.105) (0.11)
------- ------- ------- -------
Less Distributions:
Dividends from Net
Investment Income..... (0.015) (.01)
------- ------- ------- -------
Net Asset Value, End of
Period................. $ 9.41 $ 9.41
======= ======= ======= =======
Total Return (b)........ (1.10%) (1.20%)
- -------------------------------------------------------------------------------
Ratios/Supplementary
Data
Net Assets, End of Pe-
riod (000)............. $ 1,419 $ 8
Ratio of Expenses to Av-
erage Net Assets (c)... 0.15% * 0.56% *
Ratio of Net Investment
Income to Average Net
Assets................. 0.84% * 0.53% *
Portfolio Turnover Rate. 0% 0%
</TABLE>
- --------
(a)Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period and a redemption on the last
day of the period. A sales charge is not reflected in the calculation of
total return. Total return for a period of less than one year is not
annualized.
(c) The expense ratios for Class A shares and Class C shares would have been
3.40% and 39.49%, respectively if the expenses were not assumed by the
Advisor.
*Annualized.
See Notes to Financial Statements set forth in the Fund's Annual Report for
the period ended December 31, 1995.
7
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
ASIA INFRASTRUCTURE FUND
-----------------------------------
CLASS A
-----------------------------------
FOR THE PERIOD
AUGUST 3, 1994(A)
YEAR ENDED TO
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
Net Asset Value, Beginning of Period....... $ 9.53
------- -------
Income from Investment Operations:
Net Investment Income..................... 0.18 +
Net Losses on Securities (both realized
and unrealized).......................... (2.50)
------- -------
Total from Investment Operations........... (2.32)
------- -------
Dividends from Net Investment Income....... (.17)
------- -------
Net Asset Value, End of Period............. $ 7.04
======= =======
Total Return (b)........................... (24.3%)
- -------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Period (000)............ $ 1,038
Ratio of Expenses to Average Net Assets
(c)....................................... 0.28% *
Ratio of Net Investment Income to Average
Net Assets................................ 1.78% *
Portfolio Turnover Rate.................... 147%
</TABLE>
- --------
(a)Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period and a redemption on the last day
of the period. A sales charge is not reflected in the calculation of total
return. Total return for a period of less than one year is not annualized.
(c) The expense ratios for Class A shares and Class C shares would have been
2.71% and 24.29%, respectively if the expenses were not assumed by the
Advisor.
* Annualized.
+ Based on average shares outstanding.
See Notes to Financial Statements set forth in the Fund's Annual Report for the
period ended December 31, 1995.
8
<PAGE>
THE FUNDS
Van Eck Global Funds refers to the series of Van Eck Funds (the "Trust") which
engage in investing in equity and/or debt securities globally. The Van Eck
Global Funds are: Global Balanced Fund, Asia Dynasty Fund, Asia Infrastructure
Fund, Global Income Fund, and Global Hard Assets Fund. The Funds are open-end
management investment companies. Each of the Funds is a separate series of Van
Eck Funds, a business trust organized under the laws of the Commonwealth of
Massachusetts on April 3, 1985. Class A shares of Asia Dynasty Fund, Global
Balanced Fund, Asia Infrastructure Fund, Global Hard Assets Fund and Global
Income Fund are denoted with the suffix -A (e.g., Global Hard Assets Fund-A),
Class B Shares with the suffix -B (e.g. Global Hard Assets Fund-B) and Class C
Shares with the suffix -C (e.g., Global Hard Assets Fund-C).
Asia Dynasty Fund is classified as diversified. A diversified fund is a fund
which meets the following requirements: At least 75% of the value of its total
assets is represented by cash and cash items (including receivables),
government securities, securities of other investment companies and other
securities for the purpose of this calculation limited in respect of any one
issuer to an amount not greater than 5% of the value of the fund's total
assets and to not more than 10% of the outstanding voting securities of such
issuer. Global Hard Assets Fund, Global Income Fund, Asia Infrastructure Fund
and Global Balanced Fund are classified as non-diversified. "Non-diversified"
as defined in the Investment Company Act of 1940 (the "1940 Act"), means that
the proportion of the Fund's assets that may be invested in the securities of
a single issuer is not limited by the 1940 Act. However, to meet federal tax
requirements for qualification as a regulated investment company, the Fund, in
addition to meeting other qualification requirements, must, in general, limit
its investments so that at the close of each quarter of its taxable year (i)
no more than 25% of its assets are invested in the securities of a single
issuer, (ii) with respect to 50% of the Fund's total assets, no more than 5%
of its total assets are invested in the securities of a single issuer and
(iii) the Fund will not own more than 10% of the outstanding voting securities
of any one issuer.
The Adviser to the Funds is also investment adviser to each of the following
mutual funds: International Investors Gold Fund, Gold/Resources Fund, Gold
Opportunity Fund and U.S. Government Money Fund. These mutual funds, together
with the Funds, are hereinafter referred to as the "Van Eck Group of Funds."
AIG Global Investment Corporation ("AIG") serves as sub-investment adviser to
the Asia Dynasty Fund and Asia Infrastructure Fund, and Fiduciary
International Inc. ("FII") serves as sub-investment adviser to the Global
Balanced Fund.
The Asia Dynasty Fund, Asia Infrastructure Fund and Global Balanced Fund are
part of the Van Eck "Global Partnership Series." SM In the "Global Partnership
Series," SM the Adviser seeks to retain as sub-investment adviser firms with
unique knowledge of, and experience with, particular markets or which possess
a unique investment discipline or style.
INVESTMENT OBJECTIVES AND POLICIES
A description of the investment objectives and policies of each Fund is set
forth below. The investment objective of a Fund may not be changed without the
affirmative vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of that Fund. Investors should understand that,
despite the best efforts of the Adviser (and the Sub-Adviser), there is no
assurance that the Funds will achieve their objectives. For further
information about a Fund's investment policies, see "Investment Objectives and
Policies of the Funds" in the Statement of Additional Information.
GLOBAL HARD ASSETS FUND
OBJECTIVE:
The Fund seeks long-term capital appreciation by investing primarily in "Hard
Asset Securities." Income is a secondary consideration.
POLICIES:
The Adviser believes "Hard Asset Securities" (as defined below) offer an
opportunity to achieve long-term capital appreciation and to protect wealth
against eroding monetary values during periods of cyclical economic
expansions. Since the market action
9
<PAGE>
of Hard Asset Securities may move against or independently of the market trend
of industrial shares, the addition of such securities to an overall portfolio
may increase the return and reduce the price fluctuations of such a portfolio.
There can be no assurance that an increased rate of return or a reduction in
price fluctuations of a portfolio will be achieved. An investment in the
Fund's shares should be considered part of an overall investment program
rather than a complete investment program.
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 Hard Asset commodity or a
commodity index. Indexed securities and structured notes are more fully
described on p. 13 under "Risk Factors--Indexed Securities and Structured
Notes." 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 (together "Hard
Assets"): (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 invested in any one of the above sectors.
Since the Fund may so concentrate, it may be subject to greater risks and
market fluctuations than other investment companies with more diversified
portfolios. The production and marketing of Hard Assets may be affected by
actions and changes in governments. In addition, Hard Assets and securities of
Hard Asset Companies may be cyclical in nature. During periods of economic or
financial instability, the securities of some Hard Asset Companies may be
subject to broad price fluctuations, reflecting volatility of energy and basic
materials prices and possible instability of supply of various Hard Assets. In
addition, some Hard Asset Companies may also be subject to the risks generally
associated with extraction of natural resources, such as the risks of mining
and oil drilling, and the risks of the hazards associated with natural
resources, such as fire, drought, increased regulatory and environmental
costs, and others. Securities of Hard Asset Companies may also experience
greater price fluctuations than the relevant Hard Asset. In periods of rising
Hard Asset prices, such securities may rise at a faster rate, and, conversely,
in time of falling Hard Asset prices, such securities may suffer a greater
price decline.
The Adviser believes the Fund may offer a hedge against inflation,
particularly commodity price driven inflation. However, there is no assurance
that rising commodity (or other Hard Asset) prices will result in higher
earnings or share prices for the Hard Asset Companies in the Fund. Hard Asset
Companies' equities are affected by many factors, including movements in the
overall stock market, inflation may cause a decline in the overall stock
market, including the stocks of Hard Asset Companies.
The Fund seeks investment opportunities in the world's major stock, bond and
commodity markets. The Fund may invest in securities issued anywhere in the
world, including the United States. Under normal conditions, the Fund will
invest its assets in at least three countries including the United States.
There is no limitation or restriction on the amount of assets to be invested
in any one country. There is no limitation on the amount the Fund can invest
in emerging markets. The Fund may purchase securities in any foreign country,
developed or underdeveloped. 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 investments. Global investing involves economic and
political considerations not typically applicable to the U.S. markets. See
"Risk Factors--Foreign Securities" and "Risk Factors--Emerging Market
Securities" below.
The 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
incorporated entities or enterprises; 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 the U.S. or foreign 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 Fund may, as described below in "Risk Factors" on
pages 21-28, 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 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
10
<PAGE>
risks that are described below. The Fund may invest up to 10% of its net
assets, taken at market value at the time of investment, in precious metals,
whether in bullion or coins. In addition, the Fund may invest in futures and
forward contracts and options on precious metals and other Hard Assets.
The Fund may invest up to 5% of its net assets in premiums for options on
equity securities and equity indexes and up to 5% of its net assets in
warrants, including options and warrants traded in over-the-counter markets.
Warrants received as dividends on securities held by the Fund and warrants
acquired in units or attached to securities are not included in this
restriction. The Fund may buy and sell financial futures contracts and options
on financial futures contracts. The Fund may purchase or sell puts and calls
on foreign currencies and securities; invest in "when issued" securities,
"partly paid" securities (securities paid for over a period of time),
securities of foreign issuers; and may lend its portfolio securities and
borrow money for investment purposes.
The Fund may invest up to 35% of its total assets in debt securities whose
value is not linked to the value of a Hard Asset of Hard Asset Companies and
other issuers and equity securities of companies which are not Hard Asset
Companies. Non-Hard Asset debt securities include high grade, liquid debt
securities of foreign 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. The average maturity of the debt securities in
the Fund's portfolio will be based on the Adviser's judgment as to future
interest rate changes. Normally, the average maturity will be shorter when
interest rates are expected to rise and longer when interest rates are
expected to fall.
LOW RATED DEBT SECURITIES: The Fund may invest in lower quality, high-yielding
debt securities (commonly referred to as "junk bonds") of Hard Asset Companies
rated as low as CCC by Standard & Poor's Corporation ("S&P") or Caa by Moody's
Investors Service, Inc. ("Moody's"). These debt instruments have some "equity"
characteristics in that, while not directly linked, their value may increase
or decrease with the value of a Hard Asset, reflecting the ability of the Hard
Asset Company to make scheduled payments of interest and principal. Lower
rated debt securities are considered speculative and involve greater risk of
loss than higher rated debt securities and are more sensitive to changes in
the issuer's capacity to pay. Debt rated Caa or CCC presents a significantly
greater risk of default than do higher rated securities and, in times of poor
business or economic conditions, the Fund may lose interest and/or principal
on such securities. In addition to sensitivity to interest rates, debt
securities of Hard Asset Companies may fluctuate in price in connection with
changes in the price of the relevant Hard Asset. The Fund will not invest more
than 25% of its assets in debt securities rated below BBB by S&P or Baa by
Moody's.
The assets of the Fund invested in fixed income securities, excluding fixed
income securities whose value is linked to the value of a Hard Asset and of
Hard Asset Companies, will consist of securities which are believed by the
Adviser to be high grade, that is rated A or better by S&P or Moody's, Fitch-1
by Fitch or Duff-1 by Duff & Phelps or if unrated, to be of comparable quality
in the judgment of the Adviser subject to the supervision of the Board of
Trustees. The assets of the Fund invested in short-term instruments will
consist primarily of securities rated in the highest category (for example,
commercial paper rated ""Prime-1'' or ""A-1'' by Moody's and S&P,
respectively) or if unrated, in instruments that are determined to be of
comparable quality in the judgment of the Adviser subject to the supervision
of the Board of Trustees, or are insured by foreign or U.S. governments, their
agencies or instrumentalities as to payment of principal and interest. The
Fund may invest up to 10% of its assets in asset-backed securities such as
collateralized mortgage obligations and other mortgage and non-mortgage asset-
backed securities. Asset-backed securities backed by Hard Assets and whose
value is expected to be linked to underlying Hard Assets are excluded from the
10% limitation.
During periods when the Adviser expects adverse or unusual economic and/or
market conditions, the Fund may, for temporary defensive purposes, make
substantial investments in obligations of the U.S. Government, debt
obligations of one or more foreign governments, certificates of deposit,
bankers' acceptances, high grade commercial paper and repurchase agreements.
FACTORS AFFECTING GLOBAL HARD ASSETS FUND:
REAL ESTATE SECURITIES
Although the Fund will not invest in real estate directly, it may invest up to
50% of its assets in equity securities of real estate investment trusts
("REIT's") and other real estate industry companies or companies with
substantial real estate investments
11
<PAGE>
and therefore, the Fund may be 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; increase 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. In order to comply with certain securities laws of a state in
which shares of the Fund are currently sold, the Fund has undertaken not to
invest more than 15% of its assets in securities of REITs which are NOT self-
managed or self-administered. To the extent the above restriction has been
adopted to comply with state securities laws, it shall not apply to the Fund
once such laws are no longer in effect.
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 Internal Revenue Code of 1986, as amended (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).
PRECIOUS METALS
The Fund may invest in precious metal coins (including gold, silver, platinum
and palladium) which have no numismatic value. The value of such coins moves
correspondingly with the price of bullion in that the value of the coins is
based primarily on their precious metal content. Since such investments do not
generate any investment income, the sole source of return from such
investments would be from gains realized on sales of the coins or bullion, and
a negative return would be realized to the extent such coins or bullion are
sold at a loss. Although subject to substantial fluctuations in value,
management believes such investments could be beneficial to the investment
performance of the Fund and could be a potential hedge against inflation, as
well as an investment with possible growth potential. In addition, at the
appropriate time, investments in precious metal coins or bullion could help to
moderate fluctuations in the Fund's portfolio value, as at times the prices of
precious metals have tended not to fluctuate as widely as shares of issuers
engaged in the mining of such precious metals.
In view of the established world market for precious metals, the daily value
of such coins is readily ascertainable and their liquidity is assured since
they are readily saleable to dealers which maintain markets in such coins. The
Fund will maintain its precious metal coins and bullion with Wilmington Trust
Company. Precious metals incur storage costs which are higher than the custody
fees paid on financial assets.
Precious metals trading is a speculative activity. Prices of precious metals
are affected by factors such as cyclical economic conditions, political events
and monetary policies of various countries. Gold and other precious metals are
also subject to governmental action for political reasons. Markets are,
therefore, at times, volatile and there may be sharp fluctuations in prices
even during periods of rising prices. Under current U.S. tax law, the Fund may
not receive more than 10% of its yearly income from gains resulting from
selling precious metals or any other physical commodity. The Fund may be
required, therefore, to hold its precious metals or sell them at a loss, or to
sell its portfolio securities at a gain, when it would not otherwise do so for
investment reasons.
12
<PAGE>
INDEXED SECURITIES AND STRUCTURED NOTES
The Fund may invest in indexed securities whose value is linked to one or more
currencies, interest rates, commodities, or financial or commodity indices. An
indexed security enables the investor to purchase a note whose coupons and/or
principal redemption are linked to the performance of an underlying asset.
Indexed securities may be positively or negatively indexed (i.e., their value
may increase or decrease if the underlying instrument appreciates). Indexed
securities may have return characteristics similar to direct investments in
the underlying instrument or to one or more options on the underlying
instrument. Indexed securities may be more volatile than the underlying
instrument itself, and present many of the same risks as investing in futures
and options. Indexed securities are also subject to credit risks associated
with the issuer of the security with respect to both principal and interest.
Only securities linked to one or more non-agricultural commodities or
commodity indices will be considered a Hard Asset Security.
Indexed securities may be publicly traded or may be two-party contracts (such
two-party agreements are referred to here collectively as structured notes).
When the Fund purchases a structured note, a type of derivative, it will make
a payment of principal to the counterparty. Some structured notes have a
guaranteed repayment of principal while others place a portion (or all) of the
principal at risk. The Fund will purchase structured notes only from
counterparties rated A or better by S&P, Moody's or another nationally
recognized statistical rating organization. The Adviser will monitor the
liquidity of structured notes under the supervision of the Board of Trustees
and structured notes determined to be illiquid will be aggregated with other
illiquid securities and limited to 15% of the net assets of the Fund.
For a discussion of other investments associated with investing in the Fund,
see "Factors Affecting Asia Dynasty Fund, Asia Infrastructure Fund, Global
Global Balanced Fund and Global Hard Assets Fund" and "Risk Factors."
GLOBAL INCOME FUND
OBJECTIVE:
Global Income Fund seeks high total return through a flexible policy of
investing globally, primarily in debt securities.
POLICIES:
Total return is comprised of current income and capital appreciation. The Fund
emphasizes the current income component of total return and attempts to
achieve this objective by taking advantage of investment opportunities in the
United States as well as in other countries throughout the world where
opportunities may be more rewarding.
The Adviser believes that diversification of assets on an international basis
may reduce the risk that events in any one country, including the United
States, may adversely affect the entire portfolio. There can be no assurance
that diversification of assets will reduce this risk. The Adviser will
determine the amount of the Fund's assets to be invested in corporate and
government securities in the United States and the amount to be invested in
each country abroad based on its assessment of where opportunities for total
return are expected to be most attractive. When making this determination, the
Adviser will evaluate the political and economic risks of the principal
countries of the world, prospects for the relationship of their currencies to
the U.S. Dollar, the outlook for their interest rates, credit quality and
other factors. In some countries, yields of comparable quality securities
denominated in foreign currencies may be either higher than in the United
States, or may be expected to decline faster (leading to higher bond prices),
or such currencies may be expected to appreciate against the U.S. Dollar. The
long-term assets of the Fund will consist primarily of securities which are
believed by the Adviser to be high grade, that is, rated A or better by
Standard & Poor's Corporation ("S&P") or Moody's Investors Service, Inc.
("Moody's") or, if unrated, to be of comparable quality in the judgment of the
Adviser, subject to the supervision of the Board of Trustees. The assets of
the Fund invested in short-term instruments will consist primarily of
securities rated in the highest category (for example, commercial paper rated
"Prime-1" or "A-1" by Moody's and S&P, respectively) or if unrated, in
instruments that are determined to be of comparable quality or are insured by
foreign or U.S. governments, their agencies or instrumentalities as to payment
of principal and interest. Please see the Appendix to the Statement of
Additional Information for a description of ratings.
During normal market conditions, the Fund expects to invest at least 65% of
its assets in debt securities, such as obligations issued or guaranteed by a
government or any of its political subdivisions, agencies, or
instrumentalities, or by a supranational organization such as the World Bank
or European Economic Community (or other organizations which are chartered to
promote
13
<PAGE>
economic development and are supported by various governments and government
entities), bonds, debentures, notes, commercial paper, certificates of
deposit, and repurchase agreements, as well as 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. Such instruments will be
obligations issued or guaranteed as to both principal and interest by the U.S.
Government or backed by the "full faith and credit" of the United States. In
addition to direct obligations of the U.S. Treasury such as Treasury bonds and
bills, these include securities issued or guaranteed by different agencies
such as: Federal Housing Administration, Government National Mortgage
Association and the Small Business Administration. The Fund may invest in
collateralized mortgage obligations and other asset-backed securities.
The average maturity of the debt securities in the Fund's portfolio will be
based on the Adviser's judgment as to future interest rate changes. Normally,
the average maturity will be shorter when interest rates are expected to rise
and longer when rates are expected to fall. The Adviser expects the average
maturity to be between three and ten years. In addition, when the Adviser
determines that a temporary defensive strategy is warranted, the Fund may
invest in securities maturing in 13 months or less, and most or all of its
investments may be in the United States or another country.
There is no limit on the amount the Fund may invest in any one country or in
securities denominated in the currency of any one country. Normally, the Fund
will invest in at least three countries besides the United States. However,
the Fund may invest solely in the securities of one country when economic
conditions warrant, such as an extreme undervaluation of a currency and
exceptionally high returns of that country's currency relative to other
currencies.
For a discussion of other investments and risks associated with investing in
the Fund, see "Risk Factors."
GLOBAL BALANCED FUND
OBJECTIVE:
Global Balanced Fund seeks long-term capital appreciation together with
current income.
Policies:
The Fund intends to achieve its investment objective by investing its assets
in the United States and other countries throughout the world, and by
allocating its assets among equity securities, fixed-income securities and
short-term instruments.
The Adviser believes that through diversification both on an international
basis and across various asset classes the Fund can attempt to take advantage
of the best investment opportunities worldwide. The Adviser believes that
allocation of assets into many countries and across asset classes can, over
the long-term, provide higher returns than portfolios invested solely in bonds
with lower risk (or volatility, as measured by standard deviation of monthly
returns) than portfolios invested entirely in stocks. Investors should note
that a balanced portfolio will generally be more volatile than a portfolio
consisting solely of bonds and may provide lower returns than a portfolio
consisting solely of stocks. Thus, the "risk-adjusted return" of a diversified
portfolio has the potential to be more attractive than some other, more
concentrated portfolios. In addition, the balanced approach reduces the risk
where events in any one country, including the United States, or affecting one
asset class may adversely affect the entire portfolio. Investors should be
aware that although the Fund diversifies across more investment types than
most mutual funds, no one mutual fund can provide a complete investment
program for all investors. There can be no assurance that allocation of assets
both globally and across asset classes will reduce these risks or that the
Fund will achieve its investment objective.
Fiduciary International, Inc. ("FII") serves as Sub-Adviser to the Fund. FII
is a wholly-owned subsidiary of Fiduciary Investment Corporation, which, in
turn, is a wholly-owned subsidiary of Fiduciary Trust Company International.
Fiduciary Trust Company International has more than 30 years of experience in
managing funds which invest in the international markets. The Adviser believes
FII has unique knowledge and experience in global investing. See "Management."
The Fund seeks investment opportunities in the world's major stock, bond and
money markets. The Fund may invest in securities issued anywhere in the world
including the United States. Under normal conditions, the Fund will invest its
assets in at least three countries including the United States. There is no
limitation or restriction on the amount of assets to be invested
14
<PAGE>
in any one asset class or country. However, at least 25% of the Fund's total
assets will always be invested in fixed-income senior securities and at least
25% of the Fund's total assets will always be invested in equities. Over the
long-term, the Fund will attempt to invest a minimum of 25% of its assets in
the United States, with the balance outside the United States and the Fund
will attempt to maintain an asset allocation of 60% in equity securities and
40% in fixed income securities and short-term instruments. Over shorter
periods, for temporary defensive purposes, the Fund can have all of its assets
invested in any one country or currency. FII will determine when geographic or
asset class reallocations should occur. These reallocations are not expected
to be sudden, rather such reallocations will be made gradually over time. The
Fund may also allocate a portion of its assets to securities whose value is
relative to the price of gold.
The Fund will not invest more than 10% of its assets in the securities of
developing countries with emerging economies or securities markets. The Fund
may invest in asset-backed securities such as collateralized mortgage
obligations and other mortgage and non-mortgage asset-backed securities.
The average maturity of the debt securities in the Fund's portfolio will be
based on FII's judgment as to future interest rate changes. Normally, the
average maturity will be shorter when interest rates are expected to rise and
longer when interest rates are expected to fall. The assets of the Fund
invested in fixed income securities will consist of securities which are
believed by FII to be high grade, that is, rated A or better by Standard &
Poor's Corporation or Moody's Investors Service, Inc., Fitch-1 by Fitch or
Duff-1 by Duff & Phelps or if unrated, to be of comparable high quality in the
judgment of FII subject to the supervision of the Adviser and the Board of
Trustees. The assets of the Fund invested in short-term instruments will
consist primarily of securities rated in the highest category (for example,
commercial paper rated "Prime-1" or "A-1" by Moody's and S&P, respectively) or
if unrated, in instruments that are determined to be of comparable quality or
are insured by foreign or U.S. governments, their agencies or
instrumentalities as to payment of principal and interest.
FII will determine the amount of the Fund's assets to be invested in domestic
and foreign securities and the allocations to each asset class abroad will be
based on its assessment of where opportunities for long-term capital
appreciation and current income are expected to be most attractive. When
making this determination, FII will evaluate the political and economic risks
of the principal countries of the world, the relationship of their currencies
to the U.S. dollar, the outlook for their interest rates, credit quality, GNP
growth, inflation trends, yield relationships between markets, sectors, and
issues, demand and supply for funds, and a variety of other factors. FII
employs a "top down" assessment approach of countries, regions and currencies
and a "bottom up" assessment approach of stocks within selected sectors. FII's
global economic analysis is conducted in over 30 markets worldwide and by
closely following approximately 1,200 stocks and visiting with over 600
companies each year.
During periods of adverse or unusual economic and/or market conditions, the
Fund may, for temporary defensive purposes, make substantial investments in
obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, bankers' acceptances, high grade
commercial paper and repurchase agreements. FII will determine if market
conditions warrant this strategy.
For a discussion of other investments and risks associated with investing in
the Fund, see "Factors Affecting Asia Dynasty Fund, Asia Infrastructure Fund,
Global Balanced Fund and Global Hard Assets Fund" and "Risk Factors."
ASIA DYNASTY FUND
OBJECTIVE:
Asia Dynasty Fund seeks long-term capital appreciation by investing in the
equity securities of companies that are expected to benefit from the
development and growth of the economies of the Asia region.
POLICIES:
Over the past 20 years, the major Asian economies have generally performed
better than those of Europe and the United States. The Adviser believes the
Asia region has potential for continued dramatic growth and that AIGAM, the
sub-investment adviser to the Fund, has a unique knowledge of emerging Asian
markets. See "Management." The Fund will, under normal market conditions,
invest at least 65% of its total assets in equity securities of companies
located in, or expected to benefit from the
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growth of the economies of countries located in the "Asia Region." Asia Region
countries include Burma, Cambodia, Hong Kong, India, Indonesia, Korea, Laos,
Malaysia, Pakistan, Peoples Republic of China ("China"), the Philippines,
Singapore, Sri Lanka, Taiwan, Thailand, and Vietnam. Currently, the Fund does
not expect to invest any of its assets in companies located in and expected to
benefit from the growth of the economies of, or markets in Australia, Japan
and New Zealand and that are not "Asia Growth Companies," but the Fund may so
invest in the future. The countries constituting the Asia Region may be
changed by the Board without obtaining shareholder approval. See "Risk
Factors" below.
In the past five years, the newly emerging securities markets in the Asia
Region have had strong economic growth which has been reflected in stronger
market returns than those of Western Europe and the United States on average
and have demonstrated significant growth in market capitalization, in numbers
of listed securities and in volume of transactions. Over this same period, the
underlying economies of the region have grown against a background of high
savings rates and generally moderate inflation.
The Fund expects that substantially all of its assets will normally be
invested in equity securities, warrants and equity options of "Asia Growth
Companies." Asia Growth Companies consist of companies that (a) are located in
or whose securities are principally traded in an Asia Region country, (b)(i)
have at least 50% of their assets in one or more countries located in the Asia
Region or (ii) derive at least 50% of their gross sales revenues or profits
from providing goods or services to or from within one or more countries
located in the Asia Region or (c) have manufacturing or other operations in
China that are significant to such companies. These investments are typically
listed on stock exchanges or traded in the over-the-counter markets in Asia
Region countries, but may be traded on exchanges or in markets outside the
Asia Region. Similarly, the principal offices of these companies may be
located outside these countries. The Fund may commit 25% or more of its total
assets to any one country in the Asia Region. The Fund initially expects to
invest more than 25% of its total assets in Hong Kong, but has not identified
any other country in which it currently intends to invest to this extent.
Equity securities, for purposes of the 65% policy, 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 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. Debt
securities issued by Asia Growth Companies are typically unrated. See "Risk
Factors--Direct Investments" for a discussion of the risks associated with
direct investments.
The Fund may, for temporary defensive purposes, invest more than 35% of its
total assets in high grade, liquid debt securities of foreign and United
States companies which are not Asia Growth 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 or A-1
or better by S&P or, Fitch-1 by Fitch or Duff-1 by Duff & Phelps or if
unrated, will be of comparable high quality as determined by the Adviser.
For a discussion of other investments and risks associated with investing in
the Fund, see "Factors Affecting Asia Dynasty Fund, Asia Infrastructure Fund,
Global Balanced Fund and Global Hard Assets Fund" and "Risk Factors."
ASIA INFRASTRUCTURE FUND
OBJECTIVE:
Asia Infrastructure Fund seeks long-term capital appreciation by investing in
the equity securities of infrastructure companies that are expected to benefit
from the development and growth of the economies of the Asia Region.
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POLICIES:
Over the past twenty years, the major Asian economies have generally performed
better than those of Europe and the United States. The Adviser believes the
Asia region has potential for continued dramatic growth and that AIGAM, the
sub-investment adviser to the Fund, has a unique knowledge of emerging Asian
markets. See "Management." The Fund, will, under normal market conditions,
invest at least 65% of its total assets in equity securities of "Asia Region
Infrastructure companies" (as defined below). The "Asia Region" countries, for
purposes of this Fund are Burma, Cambodia, Hong Kong, India, Indonesia, Korea,
Laos, Malaysia, Pakistan, Peoples Republic of China ("China"), the
Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Vietnam and Japan. The
countries constituting the Asia Region may be changed by the Board without
obtaining shareholder approval. See "Risk Factors" below.
The term "Asia Region infrastructure companies" includes companies that (i)
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, telecommunications 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
other 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 that, in the opinion of the Sub-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. The Fund has a fundamental policy of concentrating in such
industries and up to 100% of the Fund's total assets may be invested in any
one of the above sectors. See "Risk Factors" below. The Fund may commit 25% or
more of its total assets to any one country in the Asia Region.
In the past five years, the newly emerging securities markets in the Asia
Region (with the exception of Japan) have had strong economic growth which has
been reflected in stronger market returns than those of Western Europe or the
United States on average and have demonstrated considerable growth in market
capitalization, in numbers of listed securities and in volume of transactions.
Over this same period the underlying economies of the region have grown
against a background of high savings rates and generally moderate inflation.
The infrastructure of most of the Asia Region countries, however, is currently
far less developed than in the United States and Western Europe. The Adviser
believes that future economic growth in the Asia Region will encourage, and,
to a significant extent, be dependent upon the upgrading and expansion of
infrastructure in Asia Region countries. The Adviser believes that investments
in companies that do business in the infrastructure industry, or that supply
the material or expertise required for development of infrastructure, present
significant opportunities for long-term capital appreciation.
Equity securities, for purposes of the 65% policy, 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 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. Debt
securities issued by Asia Region infrastructure companies are typically
unrated. See "Risk Factors--Direct Investments" for a discussion of the risks
associated with direct investments.
The Fund may, for temporary defensive purposes, invest more than 35% of its
total assets in high grade, liquid debt securities of foreign and United
States companies which are not Asia Region infrastructure companies, foreign
governments and the
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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 or A-1
or better by S&P or, Fitch-1 by Fitch or Duff-1 by Duff & Phelps or if
unrated, will be of comparable high quality as determined by the Adviser.
For a discussion of other investments and risks associated with investing in
the Fund, see "Factors Affecting Asia Dynasty Fund, Asia Infrastructure Fund,
Global Balanced Fund and Global Hard Assets Fund" and "Risk Factors."
FACTORS AFFECTING ASIA DYNASTY FUND, ASIA INFRASTRUCTURE FUND, GLOBAL BALANCED
FUND AND GLOBAL HARD ASSETS FUND:
EMERGING MARKET SECURITIES
Investors should be aware that these Funds will invest in countries with
emerging economies or securities markets. Political and economic structures in
many such countries may be undergoing significant evolution and rapid
development, and therefore, such countries may lack the social, political and
economic stability characteristic of the United States. Certain of these
countries have in the past failed to recognize private property rights and
have at times nationalized or expropriated the assets of private companies. An
investment in these Funds presents a greater risk of loss to investors than
would an investment in a fund investing in a more diversified portfolio of
companies located in more stable countries. The economies of countries with
developing markets may be highly vulnerable to changes 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. On the other hand, the Adviser believes the potential for gain may be
greater. In addition, infrastructure companies in the Asia Region are
undergoing significant change due to varying and evolving levels of
governmental regulation or deregulation and other factors. Competitive
pressures are intense and the securities of such companies may be subject to
increased share price volatility. Also, certain infrastructure companies are
subject to the risk that technological innovations will make their services
obsolete. In virtually every country in the Asia Region, certain industries
providing infrastructure services, including those engaged in the generation,
transmission or distribution of electricity or gas, telecommunications and
transportation, are subject to government regulation. The nature and scope of
such regulation generally is subject to political forces and market
considerations, the effect of which cannot be predicted. Certain governments
have taken measures to foster infrastructure companies because of the
importance of these companies to the development of their economies. However,
government regulation of certain infrastructure companies, such as
telecommunications companies, typically limits the rates that may be charged
or the returns that may be earned, and place limits on the providers of
services, types of services, service areas and terms for dealing with
competitors and customers. Regulation may also limit the use of new
technologies and hamper efficient deployment of existing assets. By their
nature, infrastructure services have high public visibility, and may therefore
be subject to political pressures to reduce service rates or allowed rates of
return. Government regulation can have significant effects upon the operations
of an infrastructure company. It is not possible to predict the directions,
types or effects of future regulation, any of which could have a material
adverse effect on the Fund and its investments. Each Fund is not intended to
be a complete investment program, and a prospective investor should evaluate
personal objectives and other investments when considering the purchase of
Fund shares. There is no assurance the Funds will be able to achieve their
investment objective.
Many of these emerging markets limit the percentage foreign investors, such as
the Funds, 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 in some markets may be convertible into local
18
<PAGE>
shares. Foreign shares may be subject to restrictions on the right to receive
dividends and other distributions, and may 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 some 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
Funds were to purchase foreign shares at a time when there is a premium and
sell when there is a lower or no premium, the Funds could realize a loss on
their 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 (while foreign
holders of foreign shares would participate). If the Funds were to own local
shares and could not participate in a stock, warrant or other distribution,
the Funds could suffer material dilution of their interest in that issuer and
the value of its holdings could decline dramatically, over a very short
period, causing a loss on their investment. Generally, it is expected that the
Funds will hold foreign shares. However, because of their limited number,
foreign shares may, at times, not be available for purchase by the Funds or
the premiums may be, in the opinion of the Adviser or Sub-Adviser, unjustified
or prohibitively high. In order to participate in these markets, the Funds may
deem it advisable to purchase local shares which may expose the Funds to the
additional risks described above. The Funds will only purchase local shares
where foreign shares are not available for purchase or premiums are excessive
and, when in the opinion of the Adviser or Sub-adviser, the potential for gain
in these markets outweighs the risks that issuers will take corporate actions
which may result in dilution to the Funds. Where permitted by local law, the
Funds will attempt to convert local shares to foreign shares promptly. There
can be no assurance that the Adviser or Sub-Adviser will be able to assess
these risks accurately or that the Funds will be able to convert their local
shares to foreign shares or that dilution will not result.
Asia Dynasty Fund intends to invest more than 25% of its assets in Hong Kong
and Asia Infrastructure Fund may invest in Hong Kong to such an extent. China
is scheduled to assume sovereignty over Hong Kong on July 1, 1997 and British
proposals to extend certain democratic reforms have caused periodic political
tensions. Although China has committed by treaty to preserve the economic and
social freedoms enjoyed by Hong Kong for fifty years after regaining control
of Hong Kong, the continuation of the current form of the economic system in
Hong Kong after reversion to Chinese control will depend on the actions of the
government of China. In addition, such reversion has increased sensitivity in
Hong Kong to political developments in China. Business confidence in Hong Kong
therefore, can be significantly affected by such developments and statements
made by Chinese officials, which in turn can affect markets and business
performance.
The securities markets in the Asia Region (with the exception of Japan with
respect to Asia Infrastructure Fund) and other 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 Funds' ability to participate fully in the markets may be
limited by their investment policy of investing not more than 15% of their net
assets in illiquid securities. In addition, limited liquidity may impair the
Funds' ability to liquidate a position at the time and price it wishes to do
so.
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 and laws regarding fiduciary duties of officers and directors and the
protection of shareholders are not well developed. China and certain of the
other Asia Region countries do not have a comprehensive system of laws,
although substantial changes have occurred in China in this regard in recent
years. 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. 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. 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. 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. As
changes to the Chinese legal system develop, the promulgation of new laws,
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interpretation of existing laws and the preemption of local laws by national
laws may adversely affect foreign investors, including the Fund. 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.
In addition, Chinese and other Asia Region 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
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. The
securities markets in Burma, Cambodia, Laos and Vietnam are currently non-
existent. The Fund may invest in these countries once their securities markets
are opened to foreign investors.
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 Funds' 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. In addition, 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.
RISK FACTORS
Since shares of the Funds represent an investment in securities with
fluctuating market prices, shareholders should understand that the value of
shares of the Funds will vary as the aggregate value of the Funds' portfolio
securities increases or decreases. Moreover, any dividends paid by the Funds
will increase or decrease in relation to the income received by the Funds from
their investments.
Investors should be aware that some of the securities in which the Funds may
invest, such as structured or indexed notes, swaps and foreign securities pose
additional risks. These instruments may be subject to periods of extreme
volatility, illiquidity and may be difficult to value. Despite these risks,
these instruments may offer unique investment opportunities.
The Funds may invest up to 5% of their net assets in options on equity
securities and up to 5% of their net assets in warrants, including options and
warrants traded in over-the-counter markets. With respect to Global Income
Fund, not more than 2% may be invested in warrants that are not listed on the
New York Stock Exchange or American Stock Exchange. Warrants received as
dividends on securities held by the Fund and warrants acquired in units or
attached to securities are not included in this restriction. Global Income
Fund may invest up to 5% of their assets at the time of purchase in preferred
stocks and preferred stocks which may be convertible into common stock. Each
Fund may buy and sell financial futures contracts and options on financial
futures contracts. The Funds may purchase or sell puts and calls on foreign
currencies and securities, and invest in "when issued" securities, "partly
paid" securities (securities paid for over a period of time), and securities
of foreign issuers; and Global Balanced Fund, Global Hard Assets Fund, Asia
Infrastructure Fund, Asia Dynasty Fund and Global Income Fund may lend their
portfolio securities and borrow money for investment purposes. The risks
associated with investing in equity securities and fixed-income securities are
that stock values tend to fluctuate with general market and economic
conditions and fixed-income and short-term instrument values tend to fluctuate
with interest rates and the credit rating of the issuer.
FOREIGN SECURITIES
The Funds 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 controls, less publicly available information, and the possibility
of expropriation, confiscatory taxation or political, economic or social
instability. In addition, some foreign companies are not generally subject to
the same uniform accounting, auditing and financial reporting standards as are
American companies, and there may be less government supervision and
regulation of foreign stock exchanges, brokers and companies.
Foreign securities may 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 a
Fund may, subject to
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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 a Fund. In addition, some foreign securities in which a Fund may
invest may be denominated in foreign currencies, and since a Fund may
temporarily hold funds in foreign currencies, the value of the assets of a
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 in Investing in
Foreign Securities" in the Statement of Additional Information.
The Funds may 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--see "Investment Restrictions"
in the Statement of Additional Information).
ADR's 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 or
trust company. Generally, ADR's, in registered form, are designed for use in
United States securities markets.
FOREIGN CURRENCY AND FOREIGN CURRENCY TRANSACTIONS
Since some foreign securities in which the Funds may invest may be denominated
in foreign currencies, and since the Funds may temporarily hold foreign
currencies, the value of the assets of these Funds (and thus their net asset
values) may be affected by changes in currency exchange rates. A 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 (or Sub-Adviser) will be able to
anticipate currency fluctuations in exchange rates accurately. The Funds may
invest in a variety of derivatives. The Funds may purchase and sell put and
call options on, or enter into futures contracts or forward contracts to
purchase or sell, foreign currencies. The Funds may use forward currency
contracts to hedge the U.S. Dollar value of a security which they already own.
A forward currency contract may thus help reduce the Funds' losses on a
security when a foreign currency's value changes. The Funds will enter into
forward contracts to duplicate a cash market transaction and the Asia Dynasty
Fund, Asia Infrastructure Fund, Global Balanced Fund and Global Hard Assets
Fund may enter into currency swaps. The Funds enter into hedging transactions
to attempt to moderate currency fluctuations. However, the Funds will invest
in securities, including short-term obligations, denominated in a range of
foreign currencies and the value of the Funds will be affected by changes in
currency exchange rates. See "Currency Swaps", "Futures Contracts", "Options"
and "Hedging and Other Investment Techniques and Strategies" below and
"Foreign Currency Transactions" and "Futures and Options Transactions" in the
Statement of Additional Information.
SWAPS
Asia Dynasty Fund, Asia Infrastructure Fund, Global Balanced Fund and Global
Hard Assets Fund may enter into currency swaps solely for hedging purposes.
Global Hard Assets Fund may also enter into asset swaps. Currency swaps
involve the exchange of rights to make or receive payments in specified
currencies. Since currency swaps are individually negotiated a 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. Asset swaps are
similar to currency swaps in that the performance of one Hard Asset (e.g.,
gold) may be "swapped" for another (e.g., energy).
The use of swaps is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
transactions. If AIGAM or FII is incorrect in its forecasts of market values
and currency exchange rates, the investment performance of the respective 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.
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FUTURES CONTRACTS
Global Income 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 for hedging purposes. Asia
Infrastructure Fund, Asia Dynasty Fund and Global Hard Assets Fund may also
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 for hedging and other purposes. In addition, Global
Hard Assets Fund may buy and sell commodity futures contracts including
futures contracts on commodity indices for hedging and other purposes, such as
creating "synthetic" positions. The Funds will segregate with the custodian,
among other things, cash and/or other liquid securities so that the Funds are
not leveraged in excess of applicable limits. See "Borrowing" below.
A security or interest-rate futures contract is an agreement 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.
A commodity futures contract is an agreement to take or make delivery of a
specified amount of a commodity, such as gold, at a set price on a future
date.
When a 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 security, index, commodity or currency
fluctuates, either party to the contract is required to make additional margin
payments, known as "variation margin," to cover any additional obligation they
may have under the contract. None of the Funds will commit more than 5% of its
total assets to initial margin deposits on futures contracts and premiums on
options on securities and futures contracts except that with respect to Global
Hard Assets Fund, Asia Infrastructure Fund, Asia Dynasty Fund and Global
Balanced Fund margin deposits for futures positions entered into for BONA FIDE
hedging purposes are excluded from the 5% limitation.
In establishing a position in a futures contract, which may be a long or short
position, appropriate high grade, liquid assets, such as U.S. Government
securities or cash will be segregated with the Custodian, as may be required,
to ensure that the position is not leveraged above applicable limits. 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. 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".
OPTIONS
For hedging and other purposes (such as creating synthetic positions), the
Funds may invest up to 5% of their 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 they have purchased, sell them, exercise them or permit them to
expire.
The Funds 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 written put option) the
underlying instrument 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 instrument, sold by the Fund
exposes it during the term of the option to possible loss of opportunity to
realize appreciation in
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the market price of the underlying instrument or to possible continued holding
of an underlying instrument which might otherwise have been sold to protect
against depreciation in the market price of the underlying instrument. A
covered put option written by the Fund exposes it during the term of the
option to a decline in price of the underlying instrument. 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 Funds may invest in options which are either listed on a domestic
securities exchange or traded on a recognized foreign exchange. In addition,
the Funds may purchase or sell over-the-counter options to hedge securities or
currencies from dealers or banks 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 aggregated with other illiquid positions for
purposes of the limitation on illiquid investments.
HEDGING AND OTHER INVESTMENT TECHNIQUES AND STRATEGIES
To protect against anticipated declines in the value of the Funds' investment
holdings, the Funds may use, options, forward and futures contracts,
structured notes (Global Hard Assets Fund only), swaps and similar investments
(commonly referred to as derivatives) as a defensive technique to protect the
value of an asset the Adviser deems desirable to hold for tax or other
considerations. One defensive technique involves selling a futures or forward
contract, purchasing a put option or entering into a swap agreement whose
value is expected to be inversely related to the 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 asset is eventually sold.
The Funds may hedge against changes in the value of the U.S. Dollar in
relation to a foreign currency in which portfolio securities may be
denominated. A 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 a 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 Funds may use options and futures contracts, forward contracts and swaps
as part of various investment techniques and strategies. The Funds may use
futures contracts and options, forward contracts and currency swaps for
investment purposes, such as creating non-speculative "synthetic" positions or
implementing "cross-hedging" strategies. A synthetic position is not deemed to
be speculative if the position is covered by segregation of short-term liquid
assets. However, since the financial markets in the 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
or enter into certain transactions. A "synthetic position" is the duplication
of a cash market transaction when deemed advantageous by the Adviser (or Sub-
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, each of the Funds experience 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 would 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.
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The Funds 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 and other "cross-
hedging" strategies. Cross-hedging involves the use of one currency to hedge
against the decline in value of another currency. For example, a Fund could
hedge against a currency-related decline in the value of a security
denominated in deutschemarks by taking a short position in the Swiss franc.
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 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
net assets for Asia Dynasty Fund, Asia Infrastructure Fund, Global Hard Assets
Fund and Global Balanced Fund and will be limited to 10% for the other Funds,
except that for Global Income Fund short-term money market instruments, such
as repurchase agreements and time deposits which are considered illiquid, are
limited to an additional 5%. Over-the-counter options are deemed by the
Securities and Exchange Commission to be illiquid. The Funds do not write
naked options.
Global Income Fund, Global Hard Assets Fund and Global Balanced 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. Each 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 the 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 rates enables Global Income Fund and Global Balanced Fund 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 Fund 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. Global Income Fund, Global Balanced Fund and
Global Hard Assets Fund 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.
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 Funds.
REPURCHASE AGREEMENTS
Each of the Funds may engage in repurchase agreement transactions. Under the
terms of a typical repurchase agreement, a Fund acquires 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 holding period. The agreement results in a fixed rate of return
that is not subject to market fluctuations during the holding period. A 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.
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Repurchase agreements could involve certain risks in the event of default or
insolvency of the other party, including possible delays or restrictions upon
a Fund's ability to dispose of the underlying securities. The Adviser (or Sub-
Adviser), acting under the supervision of the Board of Trustees, reviews the
creditworthiness of those non-bank dealers with which the Funds enter into
repurchase agreements to evaluate these risks. See "Repurchase Agreements" in
the Statement of Additional Information.
DEBT SECURITIES
The Funds 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 or Moody's. However, the values of lower-rated
securities generally fluctuate more than those of high grade securities. High
grade means a rating of A or better by Moody's or S&P, 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 Funds do not accrue any income on these securities prior to delivery. The
Funds will maintain in a segregated account with their 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 Global Balanced Fund, Global Hard Assets Fund, Asia Infrastructure Fund
and Global Income 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.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS")
The Asia Infrastructure Fund, Global Balanced Fund, Global Hard Assets Fund
and Global Income 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. These Funds may buy CMOs without insurance
or guarantees if, in the opinion of the Adviser or 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 Asia Dynasty Fund, Asia Infrastructure Fund, Global Balanced Fund, Global
Hard Assets Fund and Global Income Fund may lend to broker-dealers portfolio
securities with an aggregate market value of up to one-third of their total
assets. Such loans
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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. Each Fund may terminate the loans at any time and obtain
the return of the securities loaned within one business day. Each 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. Each
might experience risk of loss if the broker-dealer with which it has engaged
in a portfolio loan transaction breaches its agreement.
BORROWING
Asia Dynasty Fund, Asia Infrastructure Fund, Global Balanced Fund, Global Hard
Assets Fund and Global Income Fund may borrow up to 30% of the value of their
net assets to increase their holdings of portfolio securities. Under the 1940
Act, the Funds are 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 values, 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 income 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.
SHORT SALES
Global Hard Assets Fund may make short sales of equity securities. A short
sale occurs when the Fund sells a security which it does not own by borrowing
it from a broker. Following the short sale, the Fund must deposit collateral
with the broker. In the event that the value of the security that the Fund
sold short declines, the Fund will gain as it repurchases the security in the
market at a lower price. If the price of the security increases, the Fund will
suffer a loss as it will have to repurchase the security at the higher price.
Short sales may incur higher transaction costs than regular securities
transactions.
The Fund will establish a segregated account with respect to its short sales
and 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 difference between (i) the market value of the securities
sold short at the time they were sold short and (ii) any cash, U.S. Government
Securities or other liquid, high-quality debt securities required to be
deposited as collateral with the broker in connection with the short sale (not
including the proceeds from the short sale). Such segregated account will be
marked to market daily, so that (i) the amount in the segregated account plus
the amount deposited with the broker as collateral equals the current market
value of the securities sold short and (ii) in no event will the amount in the
segregated account plus the amount deposited with the broker as collateral
fall below the original value of the securities at the time they were sold
short. The total value of the assets deposited as collateral with the broker
and deposited in the segregated account will not exceed 50% of the Fund's net
assets. In order to comply with certain securities laws of a state in which
shares of the Fund are currently sold, the Fund has undertaken to (i) limit
the value of its assets deposited as collateral and deposited in the
segregated account to 25%, (ii) limit the value of securities of any one
issuer sold short to the lesser of 2% of the Fund's net assets or 2% of the
securities of any class of any one issuer and (iii) limit short sales to
liquid securities, as determined by the Adviser and ratified at least
quarterly by the Board of Trustees. The Fund will comply with these
undertakings so long as the Fund's shares are sold in such state or such state
restrictions remain in effect. The Fund's ability to engage in short sales may
be further limited by the requirements of current U.S. tax law that the Fund
derive less than 30% of its gross income from the sale or other disposition of
securities held less than three months. Securities sold short and then
repurchased, regardless of the actual time between the two transactions, are
considered to have been held for less than three months.
PARTLY PAID SECURITIES
Partly paid securities are securities for which the purchaser pays on an
installment basis. A partly paid security trades net of outstanding
installment payments. For this reason, the obligation to make payment is
usually transferred upon sale of the security. Fluctuations in the market
value do not affect the obligation to make installment payments when due.
Partly paid
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securities become fully paid securities upon payment of the final installment.
Until that time, the issuer of a partly paid security typically may retain the
right to restrict the voting and dividend rights of the security and to impose
restrictions and penalties in the event of a purchaser's default.
DIRECT INVESTMENTS
Asia Dynasty Fund, Asia Infrastructure Fund, Global Balanced Fund and Global
Hard Assets 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 a Fund
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 Adviser (or Sub-Adviser) anticipates that
these agreements will, in appropriate circumstances, provide the Fund with the
ability to appoint a representative to the board of directors or similar body
of the enterprise and for eventual disposition of the Fund's investment in the
enterprise. Such a representative of the Fund will be expected to provide the
Fund 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, particularly the Asia Dynasty Fund's
and Asia Infrastructure Fund's investments in China, 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. With respect to the Asia Dynasty Fund and Asia
Infrastructure Fund such direct investments may be made in entities that are
reasonably expected in the foreseeable future to become Asia Growth Companies
or Asia Region infrastructure companies, respectively, either by expanding
current operations or establishing significant operations in the Asia Region.
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, a Fund 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
Fund. 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, a Fund may be required to bear the expenses of registration. In
addition, in the event a Fund sells 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. Direct
investments can be difficult to price and shall be valued at fair value as
determined in good faith by the Board of Trustees. The pricing of direct
investments may not be reflective of the price at which these assets could be
liquidated.
LIMITING INVESTMENT RISKS
While an investment in any of the Funds is not without risk, the Funds follow
certain policies in managing their investments which may help to reduce risk.
Certain of these policies are deemed fundamental and may be changed as to a
Fund only with the approval of the holders of a majority of 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 outstanding shares are present in person or by proxy, or (ii) more than
50% of outstanding shares. Certain of the more significant investment
restrictions applicable to the Funds are set forth below. Additional
restrictions are described in the Statement of Additional Information.
1. Global Income Fund will not invest more than 10% and Global Hard Assets
Fund, Asia Infrastructure Fund, Asia Dynasty Fund and Global Balanced
Fund will not invest more than 15% of the value of their total assets in
securities which are not readily marketable (including repurchase
agreements which mature in more than seven days and over-the-counter
options and over-the-counter foreign currency options).
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2. The Funds will not purchase more than 10% of any class of securities of
a company, including more than 10% of its outstanding voting securities
except the Global Hard Assets Fund, Asia Infrastructure Fund, Asia
Dynasty Fund and Global Balanced Fund may purchase more than 10% of any
non-voting class of securities; and Global Balanced Fund, Asia Dynasty
Fund and Global Income Fund Fund will not invest more than 25% of the
value of their total assets in securities of any one industry.
3. The Funds will not invest more than 10% of their total assets in
securities of other investment companies.
Further information regarding these and other of the Funds' 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 must be made in
U.S. Dollars. 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.
ALTERNATIVE PURCHASE ARRANGEMENTS
Asia Dynasty Fund (Class A and B), Global Balanced Fund (Class A and B),
Global Income Fund (Class A), Asia Infrastructure Fund (Class A and B) and
Global Hard Assets Fund (Class A, B and C)
With respect to the Class C shares of Global Hard Assets Fund, the Fund will
waive the 12b-1 fee until November 1, 1996 and the redemption charge on
purchases until November 1, 1996. Brokers or Agents will be paid a commission
by the Distributor in the thirteenth month equal to 1% of the purchase price
of shares held in the Fund for one year or more. Prior to November 1, 1996,
purchases of the Class C shares of Global Hard Assets Fund will be more
advantageous. However, shareholders should
- --------
* Except for Investors Fiduciary Trust Company (not affiliated with FII)
fiduciary retirement accounts.
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be aware that Class A shares have a broader exchange privilege and offer a
means of compensating investment professionals for the services they provide.
The following discussion applies to shares of Global Hard Asset Fund-C
purchases after November 1, 1996.
Shares of the Asia Dynasty Fund (Class A and B), Asia Infrastructure Fund
(Class A and B), Global Hard Assets (Class A, B and C), Global Balanced Fund
(Class A and B) and Global Income Fund (Class A) 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
29
<PAGE>
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.
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.
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. See "Dividends and
Distributions." 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 in accordance with the exchange privilege (see
"Exchange Privilege").
The Trustees 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.
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
30
<PAGE>
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"). Global Hard Assets Fund-C will waive the 12b-1 fee until
November 1, 1996.
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 shares of Global
Hard Assets Fund-B at $10 per share (at a cost of $1000) 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 $200 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, $280 of the $600 redemption proceeds
will be charged at a rate of 5% (the applicable rate in the second year after
purchase). Instead, assume an investor purchased 100 shares of Global Hard
Assets Fund-C at $10 per share (at a cost of $1,000) and with the first 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, $400 of the $600 redemption proceeds will be charged
at a rate of 1%.
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 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.
31
<PAGE>
SALES CHARGES, DISTRIBUTION AND SERVICE FEES
Sales charges on purchases of shares of each of the Funds are set forth in the
table below. Each Fund imposes a 12b-1 distribution and services fee. Global
Income Fund-A has a 12b-1 fees of .25% of average daily net assets per annum.
Asia Dynasty Fund-A, Asia Infrastructure Fund-A, Global Hard Assets Fund-A and
Global Balanced Fund-A each have 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. Asia Dynasty Fund-B, Global
Balanced Fund-B, Asia Infrastructure Fund-B, Global Hard Assets Fund-B and
Global Hard Assets Fund-C each impose a 12b-1 fee of 1% of average daily net
assets. This fee is being waived by Global Hard Assets Fund-C until November
1, 1996, thereafter during the first year following the purchase of Global
Hard Assets Fund-C shares, the fee is retained by the Fund as compensation for
advanced distribution and services fees paid to brokers or agents. 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 INCOME FUND (CLASS A), ASIA DYNASTY FUND (CLASS A), ASIA INFRASTRUCTURE
FUND (CLASS A), GLOBAL HARD ASSETS FUND (CLASS A), AND GLOBAL BALANCED 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>
ASIA DYNASTY FUND (CLASS B) AND ASIA INFRASTRUCTURE FUND (CLASS B)**
<TABLE>
<CAPTION>
SHAREHOLDER'S TIME OF REDEMPTION CONTINGENT DEFERRED SALES CHARGE
- -------------------------------- --------------------------------
<S> <C>
During Year One.................... 6.0% of the lesser of NAV or purchase price
During Year Two.................... 5.0% 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>
GLOBAL BALANCED FUND (CLASS B) AND GLOBAL HARD ASSETS 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.................. 3.0% 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>
32
<PAGE>
GLOBAL HARD ASSETS FUND (CLASS C)** GLOBAL HARD ASSETS FUND (CLASS C) WILL
WAIVE THE 1% CONTINGENT DEFERRED REDEMPTION CHARGE ON PURCHASES UNTIL NOVEMBER
1, 1996.
<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. Until
November 1, 1996 Global Hard Assets Fund-C has suspended payment under its
12b-1 Plan. Brokers or Agents who sell Class C shares of Global Hard Assets
Fund will not receive the 1% 12b-1 fee for distribution and servicing on
eligible purchases prior to November 1, 1996 but will receive 1% of the
purchase price as a commission after the thirteenth month on assets
remaining in the Fund for twelve months.
*** For any sale of $1,000,000 or more of each of Global Income Fund-A, Asia
Dynasty Fund-A, Asia Infrastructure Fund-A, Global Hard Assets Fund-A or
Global Balanced 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
33
<PAGE>
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.
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 Income 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.
34
<PAGE>
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 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 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
35
<PAGE>
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 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 International Investors,
Global Hard Assets Fund and Gold Opportunity Fund may only exchange between
those three 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.
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
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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. 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
Asia Dynasty Fund, Asia Infrastructure Fund, and Global Hard Assets Fund
intend 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. The Global Balanced Fund intends to
make distributions from net investment income on a quarterly basis in March,
June, September and December and distribute any net realized capital gains
resulting from investment activity annually in December. The Global Income
Fund intends to declare and pay dividends monthly and net realized capital
gains resulting from 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 each of the Funds 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.
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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.
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 stated amount, not less than $50.
The Plan is not available to Class B and C shareholders. Further details on
the Automatic Withdrawal Plan are contained 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.
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TELEPHONE REDEMPTION (SEE "TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGE" ON
PAGE 37)
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. 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 honor 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 Asia Dynasty Fund-A, Asia
Infrastructure Fund-A, Global Hard Assets Fund-A, Global Balanced Fund-A or
Global Income Fund-A has a one-time right to reinvest in shares of these Funds
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.
REDEMPTION BY CHECK
Shareholders of the Global Income Fund-A and Global Balanced Fund-A may, upon
completion of the "Redemption by Check" portion of the Application, elect to
redeem by check shares of the Fund which are on deposit with DST. These
checks, which are drawn on The United Missouri Bank of Kansas City (the
"Bank") may be made payable to the order of any person and may not be drawn
for less than $500 or more than $5,000,000. The amount of the check may not be
in excess of 90% of the net asset value of the shares in the shareholder's
account (excluding for this purpose the current month's accumulated dividends
and shares for which certificates have been issued). When such a check is
presented to the Bank for payment, the Bank as the
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<PAGE>
shareholders' agent acting under the authority of the Redemption by Check
procedure will cause the Fund to redeem a sufficient number of full and
fractional shares to cover the amount of the check. A shareholder may not
write a check to close his account but should follow the appropriate procedure
set forth above. Retirement plan accounts and accounts held on behalf of
minors are not eligible for Redemption by check. For further information
concerning Redemption by Check, shareholders should contact DST.
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.
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. The Global Income
Fund pays the Adviser a monthly fee at the annual rate of .75 of 1% of the
first $500 million of the average daily net assets of the Fund, .65 of 1% of
the next $250 million of the average daily net assets and .50 of 1% of the
average daily net assets in excess of $750 million. The Asia Dynasty Fund,
Asia Infrastructure Fund and Global Balanced Fund each pay the Adviser a
monthly fee at the annual rate of .75% of average daily net assets. Global
Hard Assets 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).
Van Eck Associates Corporation also performs accounting and administrative
services for Asia Dynasty Fund, Asia Infrastructure Fund and Global Balanced
Fund and is paid a fee at an annual rate of .25% of each of the Fund's average
daily net assets.
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.
AIG, 70 Pine Street, New York, NY 10270 serves as sub-investment adviser to
the Asia Dynasty Fund and Asia Infrastructure Fund pursuant to a Sub-
Investment Advisory Agreement with the Adviser. AIG manages the investment
operations of the Asia Dynasty Fund and Asia Infrastructure Fund and furnishes
the Funds with a continuous investment program which includes determining
which securities should be bought, sold or held. The Adviser manages and
administers the business and affairs of the Funds. As compensation for its
services, AIG 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 Funds.
AIG is a second-tier subsidiary of American International Group, Inc.
("American International"). American International is an international
insurance organization whose member companies write insurance in approximately
130 countries and jurisdictions and are engaged in a network of financial
services businesses. American International traces its Asian roots back to
Shanghai, China in 1919.
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AIG is a wholly owned subsidiary of AIG Investment Corporation ("AIGIC").
AIGIC and its affiliates currently have more than 40 investment professionals
throughout Southeast Asia. In providing sub-advisory services to the Asia
Dynasty Fund and Asia Infrastructure Fund, AIGAM utilizes the services of AIG
Investment Corp. (Asia) ("AIGIC (Asia)"), one of AIGIC's affiliates. AIGIC
(Asia) currently has seven investment professionals based in Hong Kong and
generally has access to the resources of AIGIC and its local affiliates
throughout Southeast Asia. As of December 31, 1995, total assets under
management by AIGIC and its affiliates on behalf of all clients amounted to
approximately $ billion. AIGAM serves as an investment adviser to another
registered investment company.
FII, Two World Trade Center, New York, New York 10048, serves as sub-
investment adviser to the Global Balanced Fund pursuant to a Sub-Investment
Advisory Agreement with the Trust. FII manages the investment operations of
the Global Balanced 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, FII is paid a monthly fee at an annual rate of
.50% of average daily net assets by the Adviser from the advisory fee it
receives from the Fund. FII serves as an investment adviser to other
registered investment companies.
FII is an indirect subsidiary of Fiduciary Trust Company International
("FTCI"). FTCI is a New York State chartered bank specializing in investment
and administration of assets for pensions and other institutional accounts
including individuals and families. FII has access to all of FTCI's investment
infrastructure. FTCI began investing globally in the 1960's and serves its
worldwide investment management and custody clients from offices in New York,
Los Angeles, Miami, Washington, D.C., London, Geneva and Hong Kong. FTCI has
over 60 investment professionals. FTCI has over 30 years of experience in
global management with over $16 billion managed under the global balanced
discipline. As of December 31, 1995, total assets under management by FII and
its parent organization FTCI, on behalf of all clients, amounted to over $36
billion.
Madis Senner--Portfolio Manager of Global Income Fund is responsible for
managing the Fund's portfolio of investments. Before joining Van Eck, Mr.
Senner was a global bond manager with Chase Manhattan Private Bank. Prior to
that, he was President of Sunray Securities, Inc., an investment management
firm that he founded, and, before that, was a global fixed income manager with
Clemente Capital, Inc. in New York City. Mr. Senner has 13 years experience in
the investment business.
Derek S. van Eck--Portfolio Manager of Global Hard Assets Fund is responsible
for managing the Fund's portfolio of investments. He is Director of Global
Investments and Executive Vice President of the Adviser and an officer of
other mutual funds advised by the Adviser.
Peter Soo, Investment Officer of AIGAM is responsible for managing the Asia
Dynasty Fund's and Asia Infrastructure Fund's portfolio of investments and has
been serving in such capacity since the Funds commenced operations. He is also
Vice President of AIG Investment Corporation (Asia), an indirect subsidiary of
American International along with AIG Asset Management Corporation, which
serves as Sub-Investment Adviser to the Funds.
FII assigns a team of managers led by a global strategist, which includes a
global equity manager and a global fixed-income manager, to manage the Fund's
portfolio of investments. The team consults with the FTCI research department,
which includes international analysts who specialize in the equity markets of
Japan, Europe, the Pacific Basin and Latin America, when making investment
decisions. The two primary portfolio managers for the Global Balanced Fund
(the "Fund") are listed below:
Anne M. Tatlock--Global Strategist of the Fund has been serving in such
capacity since the Fund commenced operations. Ms. Tatlock joined FTCI in 1984
and is currently President of the company where she is responsible for
managing institutional investment management. Ms. Tatlock is head of the
Institutional Investment Department and a member of the Board of Directors,
the International Investment Committee and the Investment Policy Committee at
FTCI.
Steven J. Miller--FII's Portfolio Manager of GBF joined FTCI in 1994 after
working for seven years with Vital Forsikring and Heller Financial, Inc. Mr.
Miller is responsible for managing institutional and international portfolios.
He is Vice President of FTCI as well as a member of the Global Investment
Committee at FTCI.
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MANAGEMENT DISCUSSION AND ANALYSIS
GLOBAL INCOME FUND
ASIA DYNASTY FUND
GLOBAL BALANCED FUND
GLOBAL HARD ASSETS FUND
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EXPENSES
The total expense ratio for the fiscal year ended December 31, 1995 of Asia
Dynasty Fund-A, Asia Dynasty Fund-B, Global Balanced Fund-A, Global Balanced
Fund-B, Global Income Fund-A, Global Hard Assets Fund-A, Global Hard Assets
Fund-C and Asia Infrastructure Fund-A were .
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
- --------
* annualized
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Distributor shall be entitled to reimbursement of all carry-forward amounts
and other costs properly incurred in respect of shares 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 Income Fund-A and Asia Dynasty Fund-A are reimbursement type plans. The
12b-1 fees are accrued daily at an annual rate of .25% of the average daily
net assets for Global Income Fund-A and at an annual rate of .50% of average
daily net assets for Asia Dynasty Fund-A. With respect to these Funds, only
Asia Dynasty Fund-A has a carry-forward provision.
Asia Dynasty Fund-B, Asia Infrastructure Fund-A, Asia Infrastructure Fund-B,
Global Hard Assets Fund-A, Global Balanced Fund-A and Global Balanced 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 Balanced Fund-A, Asia
Infrastructure Fund-A and Global Hard Assets Fund-A and at an annual rate of
1.00% of average daily net assets for Asia Dynasty Fund-B, Asia Infrastructure
Fund-B, Global Hard Assets Fund-B and Global Balanced Fund-B. While the Plans
in effect for Asia Dynasty Fund-B, Global Balanced Fund-A, Global Balanced
Fund-B, Global Hard Assets Fund-A, Global Hard Assets Fund-B, Asia
Infrastructure Fund-A and Asia Infrastructure Fund-B 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. 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.
Global Hard Assets Fund-C is a compensation type plan which has a carry-
forward provision. It provides that the Distributor, in the event of
termination of the Plan, will recoup amounts expended under the Plan, subject
to the annual limitation. For the periods prior to April 30, 1997, the
Distributor has agreed, 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. 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. Until November 1, 1996, Global Hard
Assets Fund-C has suspended payment under its 12b-1 Plan. Brokers or Agents
who sell Class C shares of Global Hard Assets will not receive the 1% 12b-1
fee for distribution and servicing on eligible purchases prior to November
1,1996 but will receive 1% of the purchase price as a commission after the
thirteenth month on assets remaining in the Fund for twelve months.
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. For the period to November 1, 1996, Global Hard Assets Fund-C will
waive the 1% Contingent Deferred Redemption Charge.
Of the amounts expended under the Plan for the fiscal year ended December 31,
1995 for Global Income Fund, Global Balanced Fund and Asia Dynasty Fund
approximately 75% was paid to Brokers and Agents who sold shares and/or
service shareholder accounts of the Funds. The remaining 25% was retained by
the Distributor as reimbursement for expenses such as printing and mailing
prospectuses and sales material to other than current Fund shareholders.
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
44
<PAGE>
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.
Global Income Fund may advertise performance in terms of 30-day yield, which
is computed by dividing the net investment income per share earned during the
30 days by the maximum offering price per share on the last day of the period.
Yield of the Fund is a function of the kind and quality of the instruments in
the Fund's portfolio, portfolio maturity, operating expenses and market
conditions.
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 with Class A and Class C Shares 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 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 Hard
Assets is expected to be rated in the Natural Resources Funds category; Global
Balanced Fund is rated in the Balanced Funds category and Global Income Fund
in the World Income Funds category. The Morgan Stanley Capital International
Equity and Salomon Brothers World Bond Indices, among others, are indices to
which the Global Balanced Fund and Global Income Fund may be compared. Global
Income Fund may be compared against certain indices or services which monitor
or publish certificate of deposit or other money market rates or yields, such
as the Federal Reserve Bulletin. Asia Dynasty Fund is rated in the
Asia/Pacific Basin Funds category and may be compared to a Morgan Stanley
Capital International Index, an Asia (Ex-Japan) 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.
45
<PAGE>
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.
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 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.
46
<PAGE>
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 (except the Asia Infrastructure Fund
series) is Bankers Trust Company, New York, New York.
The custodian of the assets of the Asia Infrastructure Fund series of the
Trust is State Street Bank & Trust Company.
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.
47
<PAGE>
-----------------
Van Eck Funds
-----------------
Asia Dynasty Fund - A & B
Asia Infrastructure Fund - A & B
Global Hard Assets Fund (A, B & C)
Global Balanced Fund - A & B
Global Income Fund - A
Gold Opportunity Fund (A, B & C)
International Investors
Gold Fund (A & C)
Gold/Resources Fund - A
U.S. Government Money Fund
Your Investment Dealer is:
--------------------------------
Transfer Agent and Shareholder Service Representative:
DST Systems, Inc.
P.O. BOX 418407
Kansas City, Missouri 64141
(800) 544-4653
[LOGO OF VAN ECK GLOBAL APPEARS HERE]
This prospectus is good until 4/30/97 unless superceded.
---------------------------
-----------------
May 1, 1996
-----------------
VAN ECK
-----------------
GLOBAL
-----------------
FUNDS
-----------------
PROSPECTUS
-----------------
GLOBAL HARD ASSETS FUND
GLOBAL BALANCED FUND
ASIA DYNASTY FUND
ASIA INFRASTRUCTURE FUND
GLOBAL INCOME FUND
---------------------------
[LOGO OF VAN ECK GLOBAL APPEARS HERE]
<PAGE>
PROSPECTUS APRIL , 1996
VAN ECK GOLD AND MONEY FUNDS
- -------------------------------------------------------------------------------
The Van Eck Gold and Money Funds (the "Funds") each has a specific investment
objective. The Funds are managed by Van Eck Associates Corporation (the
"Adviser"), 99 Park Avenue, New York, N.Y. 10016 . Account Assistance: (800)
544-4653
GOLD FUNDS
See "Purchase of Shares--Alternative Purchase Arrangements" on page 29 herein
to determine your purchase options for Funds offering two classes of shares.
INTERNATIONAL INVESTORS GOLD FUND (CLASS A AND CLASS C) ("INTERNATIONAL
INVESTORS")--seeks long-term capital appreciation, while retaining freedom to
take current income into consideration. The Fund has concentrated its
investments in gold mining shares since 1968 and has investments in other
worldwide companies and industries.
GOLD OPPORTUNITY FUND (CLASS A, CLASS B AND CLASS C)--seeks capital
appreciation by investing globally in equity securities of companies engaged
in the exploration, development, production and distribution of gold and other
precious metals and in other assets whose value is related to the value of
precious metals.
GOLD/RESOURCES FUND (CLASS A)--seeks long-term capital appreciation by
investing in equity and debt securities of companies engaged in the
exploration, development, production and distribution of gold and other
natural resources such as strategic and other metals, minerals, oil, natural
gas and coal. Current income is not a consideration. This Fund will not invest
in the securities of South African issuers.
GLOBAL HARD ASSETS FUND (CLASS A, CLASS B AND CLASS C)--seeks long-term
capital appreciation by investing globally, primarily in "Hard Assets
Securities." Income is a secondary consideration.
Investors should be aware that an investment in the Gold Opportunity Fund and
Global Hard Assets Fund have greater investment risk than many mutual funds.
The Funds intend to engage in a number of investment activities including
borrowing for investment purposes (i.e., engage in leveraging), making short
sales of securities (i.e., make sales of securities the Fund does not own),
investing in countries with emerging securities markets and economies and
investing in restricted securities, securities of unseasoned issuers and non-
readily marketable securities. These investment activities are considered to
be speculative and could result in additional cost and investment risk to the
Funds. Consequently, the Funds are not intended to be a complete investment
and are intended for those investors who can assume greater risk with respect
to a portion of their investment portfolio. Further information on the Funds
and these activities is provided under "Risk Factors" on pages 17-27 and
investors should read this material carefully.
MONEY FUND
U.S. GOVERNMENT MONEY FUND--seeks safety of principal, daily liquidity and
current income by investing in short-term U.S. Treasury securities and other
securities carrying the "full faith and credit" guarantee of the U.S.
Government. OF COURSE, THE FUND'S SHARES ARE NOT INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO
MAINTAIN A $1.00 NET ASSET VALUE OR THAT THE FUND'S NET ASSET VALUE WILL NOT
FLUCTUATE.
---------------
SHARES IN THE FUNDS 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.
This Prospectus sets forth concisely information about the Funds that you
should know before investing. It should be read and retained for future
reference.
A Statement of Additional Information dated April , 1996 about the Funds has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. For a free copy, write to the above address or call the
telephone number listed above.
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF
CONTENTS PAGE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Transaction Data............................................................ 3
Financial Highlights........................................................ 4
The Trust................................................................... 9
Investment Objectives and Policies.......................................... 9
Risk Factors................................................................ 17
Limiting Investment Risks................................................... 28
Purchase of Shares.......................................................... 28
Exchange Privilege.......................................................... 36
Dividends and Distributions................................................. 38
Tax-Sheltered Retirement Plans.............................................. 39
Investment Programs......................................................... 39
Redemption of Shares........................................................ 40
Management.................................................................. 41
Plan of Distribution........................................................ 45
Advertising................................................................. 46
Taxes....................................................................... 47
Description of the Trust.................................................... 47
Additional Information...................................................... 48
</TABLE>
2
<PAGE>
TRANSACTION DATA
The following table is intended to assist an investor in understanding the
various direct and indirect costs and expenses borne by an investor in a Fund.
The sales charges are the maximum sales charges an investor would incur. Sales
charges decline depending on the amount of the purchase, the number of shares
an investor already owns or use of various investment programs. See "Purchase
of Shares."
<TABLE>
<CAPTION>
GOLD/
INTERNATIONAL RESOURCES
INVESTORS GOLD OPPORTUNITY FUND** FUND
---------------------------- --------------------------------- ------------
CLASS A CLASS C CLASS A CLASS B CLASS C CLASS A
------------ ----------- ------------ ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES:
Maximum Sales
Charge Imposed
on Purchases (as
a percent of
offering price). 5.75% 0% 5.75% 0% 5.75%
==== ====
+Contingent
Deferred Sales
or Redemption
Charge.......... 1.00% 0% 1.00%
==== ==== ====
ANNUAL FUND
OPERATING
EXPENSES:
(as a percentage
of average net
assets)
Management Fees. .75% .75% 1.00% 1.00% .75%
12b-1
Fees/Shareholder
Servicing Fees*. 0% 1.00% .50% 1.00% .25%
Administration
Fee............. .25% .25% 0% 0% .25%
Other Expenses.. .27% .27% .56% .58% .39%
---- ---- ---- ---- ----
Transfer and
Dividend
Disbursing..... .19% .19% .15% .17% .20%
Custodian Fees. .03% .03% .12% .12% .04%
Other Expenses. .05% .05% .29% .29% .15%
--- --- --- --- ---
Total Fund
Operating
Expenses........ 1.27%*** 2.27% 2.06% 2.58% 1.64%***
==== ==== ==== ==== ====
EXAMPLE: You
would bear the
following
expenses on a
$1,000 investment
assuming (1) 5%
annual return and
(2) redemption at
the end of each
time period
1 year.......... $ 69.69 $33.01 $ 77.20 $36.11 $ 73.22
3 years......... $ 95.46 $70.93 $118.36 $80.25 $106.25
5 years++....... $123.19 $ -- $ -- $ -- $141.54
10 years++...... $202.07 $ -- $ -- $ -- $240.69
<CAPTION>
U.S.
GOVERNMENT
GLOBAL HARD ASSETS FUND** MONEY FUND
------------------------------- ----------
CLASS A CLASS B CLASS C
----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES:
Maximum Sales
Charge Imposed
on Purchases (as
a percent of
offering price). 4.75% 0% 0%
====
+Contingent
Deferred Sales
or Redemption
Charge.......... 0% 1.00%
ANNUAL FUND
OPERATING
EXPENSES:
(as a percentage
of average net
assets)
Management Fees. 1.00% 1.00% .50%
12b-1
Fees/Shareholder
Servicing Fees*. .50% 1.00% .25%
Administration
Fee............. 0% 0% 0%
Other Expenses.. .56% .58% .37%
----- ----- ----
Transfer and
Dividend
Disbursing..... .15% .17% .12%
Custodian Fees. .12% .12% .06%
Other Expenses. .29% .29% .19%
--- ---- ---
Total Fund
Operating
Expenses........ 2.06% 2.58% 1.12%
==== ==== ====
EXAMPLE: You
would bear the
following
expenses on a
$1,000 investment
assuming (1) 5%
annual return and
(2) redemption at
the end of each
time period
1 year.......... $ 11.42
3 years......... $ 35.60
5 years++....... $ 61.69
10 years++...... $136.32
</TABLE>
* Long-term shareholders in Funds may pay more than the economic equivalent
of the maximum front end sales charge permitted by the NASD .
** The Adviser may temporarily reimburse and or waive certain operating
expenses of the Fund including management and administrative fees. Such
temporary reimbursements/waivers will have the effect of lowering the
Fund's expense ratio.
*** The Total Fund Operating Expenses for International Investors (Class A)
and Gold/Resources Fund (Class A) are greater than those presented in the
Financial Highlights due to the addition of the Administration Fee
effective July 25, 1994.
+ The Contingent Deferred Sales Charge on Class B shares is applied to the
lesser of purchase price or net asset value at redemption. The charge
imposed on such amount is scaled down from 6% during the first year to 0%
after the sixth year. Redemption Charge on Class C shares of 1% is applied
to the lesser of purchase price or net asset value at redemption. The
charge is imposed on such amount which is redeemed within one year of
purchase.
++ The 5 and 10 year expenses are not required of those Funds in operation
for a period of less than 10 months.
Total Fund Operating Expenses are the actual annual operating expenses, before
fee waivers or expense reimbursements, if any, of International Investors Gold
Fund-A, International Investors Gold Fund-C, Gold/Resources Fund-A, Global
Hard Assets Fund-A, Global Hard Assets Fund-C and U.S. Government Money Fund
for the year ended December 31, 1995 and of Global Opportunity Fund-A and
Global Opportunity Fund-C for the period ended December 31, 1995. Operating
expenses for Gold Opportunity Fund-B and Global Hard Assets Fund-B assume
$30,000,000 in net assets and are estimates.
The above examples should not be considered a representation of past or future
expenses or investment return. Actual expenses may be greater or less than
those shown. Information regarding management fees and 12b-1 fees can be found
under "Management" and "Plan of Distribution."
<PAGE>
FINANCIAL HIGHLIGHTS
The Financial Highlights below give selected information for a share of each
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Deloitte & Touche LLP, independent accountants,
for all years through December 31, 1991. The Financial Highlights presented
have been audited by Coopers & Lybrand L.L.P., independent accountants, for
all other fiscal years ended December 31 whose reports thereon appear in the
Funds' Annual Reports, which are incorporated by reference into the Statement
of Additional Information. This information should be read in conjunction with
the financial statements and related notes that also appear in the Funds'
Annual Reports.
<TABLE>
<CAPTION>
INTERNATIONAL INVESTORS GOLD FUND (CLASS A)**
--------------------------------------------------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989* 1988* 1987 1986
--------------------------------- -------- -------- -------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year...... $ $16.08 $ 7.81 $11.29 $11.32 $16.38 $11.30 $15.29 $12.04 $ 9.48
-------------- -------- -------- -------- -------- -------- -------- -------- --------- --------
Income from Investment
Operations:
Net Investment Income. 0.19 0.14 0.17 0.16 0.26 0.32 0.34 0.48 0.43
Net Gains or Losses on
Securities
(both realized and
unrealized)........... (0.36) 8.70 (3.44) 0.13 (4.67) 5.39 (3.69) 3.72 2.73
-------------- -------- -------- -------- -------- -------- -------- -------- --------- --------
Total from Investment
Operations............. (0.17) 8.84 (3.27) 0.29 (4.41) 5.71 (3.35) 4.20 3.16
-------------- -------- -------- -------- -------- -------- -------- -------- --------- --------
Less Distributions:....
Dividends from net
investment income
(a)(b)................ (0.18) (0.13) (0.12) (0.17) (0.25) (0.31) (0.29) (0.42) (0.40)
Distributions from
capital gains......... (0.52) (0.44) (0.09) (0.15) (0.40) (0.32) (0.35) (0.53) (0.20)
-------------- -------- -------- -------- -------- -------- -------- -------- --------- --------
Total Distributions.... (0.70) (0.57) (0.21) (0.32) (0.65) (0.63) (0.64) (0.95) (0.60)
-------------- -------- -------- -------- -------- -------- -------- -------- --------- --------
Net Asset Value, End of
Year................... $ $15.21 $16.08 $ 7.81 $11.29 $11.32 $16.38 $11.30 $15.29 $12.04
============== ======== ======== ======== ======== ======== ======== ======== ========= ========
Total Return (d)....... % (1.04%) 113.41% (29.09%) 2.56% (27.00%) 51.30% (22.00%) 34.70% 34.00%
Ratios/Supplementary
Data...................
Net Assets, End of
Year (000)............ $ $634,808 $706,171 $360,177 $568,859 $611,401 $924,110 $712,078 $1,040,381 $824,386
Ratio of Expenses to
Average Net Assets.... % 1.15% 1.12% 1.18% 1.17% 0.97% 0.88% 0.83% 0.71% 0.86%
Ratio of Net Income
(Loss) to Average Net
Assets (c)............ % 1.23% 1.13% 1.72% 1.41% 1.83% 2.38% 2.67% 3.34% 4.73%
Portfolio Turnover
Rate.................. % 7.08% 7.20% 2.30% 2.20% 2.10% 3.50% 5.30% 1.00% 3.10%
- ------------------
(a) Net of foreign taxes withheld (the
entire
amount, except for 1988--$.05,
1989--
$.06, 1990--$.06, 1991--$0.03, 199
--$.04, 1993--$.05 and 1994--$.07
must be included in income and may
be taken
as a deduction or credit by the
shareholder for Federal income tax
purposes; the balances of the 1988,
1989, 1990 and 1991 amounts are
attributable to South African taxes withheld for which
a deduction was taken by the
Fund)............. $.07 $.07 $.05 $.04 $.03 $.07 $.07 $.06 $.07 $.05
(b) Includes net equalization credits of approximately $.15 a share for the
year ended December 31, 1985.
(c) Net investment income for this purpose includes foreign taxes withheld.
(d) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the year, reinvestment of all dividends
and distributions at net asset value during the year and a redemption on
the last day of the year. A sales charge is not reflected in the
calculation of total return.
(e) Based on average shares outstanding.
+ From October 14, 1994 (initial offering of Class C shares).
++ Annualized.
* Certain per share amounts have been reclassified.
** International Investors became a series of the Trust on April 30, 1991
pursuant to the reorganization of International Investors Incorporated, a
Delaware corporation, as a series of the Trust.
</TABLE>
<TABLE>
<CAPTION>
(Class C)
---------------
1995 1994+
-------- ------
<S> <C> <C>
Net Asset Value,
Beginning of Year...... $ $17.56
------- -------
Income from Investment
Operations:
Net Investment Income. 0.04(e)
Net Gains or Losses on
Securities
(both realized and
unrealized)........... (1.78)
-------- ------
Total from Investment
Operations............. (1.74)
-------- ------
Less Distributions:....
Dividends from net
investment income
(a)(b)................ (0.17)
Distributions from
capital gains......... (0.52)
-------- ------
Total Distributions.... (0.69)
-------- ------
Net Asset Value, End of
Year................... $ $15.13
======== ======
Total Return (d)....... % (9.9%)
Ratios/Supplementary
Data...................
Net Assets, End of
Year (000)............ $ $ 430
Ratio of Expenses to
Average Net Assets.... % 2.27%++
Ratio of Net Income
(Loss) to Average Net
Assets (c)............ % 1.25%++
Portfolio Turnover
Rate.................. % 7.08%
- ------------------
(a) Net of foreign taxes withheld (the
entire
amount, except for 1988--$.05,
1989--
$.06, 1990--$.06, 1991--$0.03, 1992
--$.04, 1993--$.05 and 1994--$.07
must be included in income and may
be taken
as a deduction or credit by the
shareholder for Federal income tax
purposes; the balances of the 1988,
1989, 1990 and 1991 amounts are
attributable to South African taxes withheld for which
a deduction was taken by the
Fund)............. $.06 $.07
(b) Includes net equalization credits of approximately $.15 a share for the
year ended December 31, 1985.
(c) Net investment income for this purpose includes foreign taxes withheld.
(d) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the year, reinvestment of all dividends
and distributions at net asset value during the year and a redemption on
the last day of the year. A sales charge is not reflected in the
calculation of total return.
(e) Based on average shares outstanding.
+ From October 14, 1994 (initial offering of Class C shares).
++ Annualized.
* Certain per share amounts have been reclassified.
** International Investors became a series of the Trust on April 30, 1991
pursuant to the reorganization of International Investors Incorporated, a
Delaware corporation, as a series of the Trust.
</TABLE>
See Notes to Financial Statements set forth in the Fund's Annual Report for
the year ended December 31, 1995.
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GOLD/RESOURCES FUND (CLASS A)
------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986+(E)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ $ 6.34 $ 3.56 $ 3.73 $ 3.90 $ 5.33 $ 4.49 $ 5.72 $ 3.90 $ 3.08
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------
Income from Investment
Operations:
Net Investment Income
(Loss)................ (0.02) (0.014) 0.002 0.010 0.025 0.002 0.01 0.02 --
Net Gains or Losses on
Securities (both
realized and
unrealized)........... (0.97) 2.794 (0.170) (0.169) (1.430) 0.846 (1.23) 1.82 0.82
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------
Total from Investment
Operations............. (0.99) 2.780 (0.168) (0.159) (1.405) 0.848 (1.22) 1.84 0.82
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------
Less Distributions:
Dividends from Net
Investment Income (a).. -- -- -- 0.002 0.011 0.025 0.008 0.01 0.02 --
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------
Net Asset Value, End of
Period................. $ $ 5.35 $ 6.34 $ 3.56 $ 3.73 $ 3.90 $ 5.33 $ 4.49 $ 5.72 $ 3.90
======== ======== ======== ======== ======== ======== ======== ======== ======== =======
- ---------------------------------------------------------------------------------------------------------------------------
Total Return (b)........ ( %) (15.6%) 78.09% (4.50%) (4.07%) (26.36%) 18.90% (21.30%) 47.30% 26.38%
- ---------------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary
Data
Net Assets, End of
Period (000)........... $ $186,091 $211,450 $114,257 $136,288 $175,171 $252,860 $228,558 $252,717 $38,691
Ratio of Expenses to
Average Net
Assets (c)............. % 1.52% 1.39% 1.57% 1.62% 1.44% 1.48% 1.39% 1.27% 1.52%*
Ratio of Net Income
(Loss) to Average Net
Assets (d)............. (0.30%) (0.29%) 0.07% 0.27% 0.57% 0.04% 0.23% 0.39% (0.02%)*
Portfolio Turnover Rate. % 13.75% 7.79% 0.93% 7.89% 12.12% 4.17% 1.59% 1.99% --
</TABLE>
- --------
(a) Net of foreign taxes withheld (to be included in income and claimed as a
tax credit or deduction by the shareholder for federal income tax purposes)
of $.0060 for 1992, $.0080 for 1991, $.0083 for 1990, $.0070 for 1989,
$.0051 for 1988 and $.0237 for 1987.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends at net
asset value during the year and a redemption on the last day of the period.
A sales charge is not reflected in the calculation of total return. Total
return for a period of less than one year is not annualized.
(c) Had the Adviser not reimbursed expenses, the 1986 expense ratio would have
been 1.55%.
(d) Net investment income for this purpose includes foreign tax withheld.
(e) Adjusted for 200% stock dividend paid in September 1987.
* Annualized.
+ From February 15, 1986 (commencement of operations) to December 31, 1986.
See Notes to Financial Statements set forth in the Fund's Annual Report for
the year ended December 31, 1995
5
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
The Financial Highlights below give selected information for a share of each
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Coopers & Lybrand L.L.P., independent
accountants, whose reports thereon appear in the Funds' Annual Reports, which
are incorporated by reference into the Statement of Additional Information.
This information should be read in conjunction with the financial statements
and related notes that also appear in the Funds' Annual Reports.
<TABLE>
<CAPTION>
GOLD OPPORTUNITY FUND
------------------------------------
CLASS A CLASS C
----------------- ------------------
FOR THE PERIOD
JANUARY FOR THE PERIOD
9, 1995(A) JANUARY 9, 1995(A)
TO TO
DECEMBER 31, 1995 DECEMBER 31, 1995
----------------- ------------------
<S> <C> <C>
Net Asset Value, Beginning of Period...... $ $
-------- --------
Income from Investment Operations:
Net Investment Income....................
Net Losses on Investment (both realized
and unrealized)..........................
-------- --------
Total from Investment Operations..........
-------- --------
Less Distributions:
Dividends from Net Investment Income.....
-------- --------
Net Asset Value, End of Period............ $ $
======== ========
Total Return (b)..........................
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000)........... $ $
Ratio of Expenses to Average Net Assets
(c).......................................
Ratio of Net Investment Income to Average
Net Assets................................
Portfolio Turnover Rate...................
</TABLE>
- --------
(a) Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period and a redemption on the last
day of the period. A sales charge is not reflected in the calculation of
total return. Total return for a period of less than one year is not
annualized.
(c) The expense ratios for Class A shares and Class C shares would have been
% and %, respectively if the expenses were not assumed by the Adviser.
* Annualized.
See Notes to Financial Statements set forth in the Fund's Annual Report for
the period ended December 31, 1995.
6
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
The Financial Highlights below give selected information for a share of each
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Coopers & Lybrand L.L.P., independent
accountants, whose reports thereon appear in the Funds' Annual Reports, which
are incorporated by reference into the Statement of Additional Information.
This information should be read in conjunction with the financial statements
and related notes that also appear in the Funds' Annual Reports.
<TABLE>
<CAPTION>
GLOBAL HARD ASSETS FUND
-----------------------------------------------------------------
CLASS A CLASS C
-------------------------------- --------------------------------
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED NOVEMBER 2, 1994(A) YEAR ENDED NOVEMBER 2, 1994(A)
DECEMBER 31, TO DECEMBER 31, TO
1995 DECEMBER 31, 1994 1995 DECEMBER 31, 1994
------------ ------------------- ------------ -------------------
<S> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Period......... $ 9.53 $ 9.53
------- --- -------
Income from Investment
Operations:
Net Investment Income.. .010 0.01
Net Losses on Invest-
ment (both realized
and unrealized)....... (0.115)
(0.12)
------- --- -------
Total from Investment
Operations............. (0.105) (0.11)
------- --- -------
Less Distributions:
Dividends from Net
Investment Income...... (0.015) (.01)
------- --- -------
Net Asset Value, End of
Period................. $ 9.41 $ 9.41
======= === =======
Total Return (b)........ (1.10%) (1.20%)
- -------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Pe-
riod (000).............. $ 1,419 $ 8
Ratio of Expenses to Av-
erage Net Assets (c).... 0.15% * 0.56% *
Ratio of Net Investment
Income to Average Net
Assets.................. 0.84% * 0.53% *
Portfolio Turnover Rate. 0% 0%
</TABLE>
- --------
(a) Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period and a redemption on the last
day of the period. A sales charge is not reflected in the calculation of
total return. Total return for a period of less than one year is not
annualized.
(c) The expense ratios for Class A shares and Class C shares would have been
3.40% and 39.49%, respectively if the expenses were not assumed by the
Adviser.
* Annualized.
See Notes to Financial Statements set forth in the Fund's Annual Report for
the period ended December 31, 1995.
7
<PAGE>
FINANCIAL HIGHLIGHTS--(CONCLUDED)
The Financial Highlights below give selected information for a share of each
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Deloitte & Touche LLP, independent accountants,
for all years through December 31, 1991. The Financial Highlights presented
have been audited by Coopers & Lybrand L.L.P., independent accountants, for
all other fiscal years ended December 31 whose reports thereon appear in the
Funds' Annual Reports, which are incorporated by reference into the Statement
of Additional Information. This information should be read in conjunction with
the financial statements and related notes that also appear in the Funds'
Annual Reports.
<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY FUND
----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986+
----- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income From Investment
Operations:
Net Investment Income.. 0.0311 0.0183 0.0220 0.0456 0.0685 0.0748 0.0594 0.0492 0.0427
Less Distributions:
Dividends From Net In-
vestment Income....... (0.0311) (0.0183) (0.0220) (0.0456) (0.0685) (0.0748) (0.0594) (0.0492) (0.0427)
----- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===== ======= ======= ======= ======= ======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------
Total Return............ % 3.11% 1.83% 2.20% 4.56% 6.85% 7.48% 5.94% 4.92% 4.27%
- ----------------------------------------------------------------------------------------------------------------
Ratios/Supplementary
Data
Net Assets, End of
Period (000)........... $ $47,078 $31,109 $24,853 $35,287 $43,353 $47,620 $51,840 $45,126 $10,420
Ratio of Expenses to
Average Net Assets (a). % 1.12% 1.24% 1.44% 1.30% 1.17% 1.26% 0.80% 0.89% 1.16%*
Ratio of Net Income to
Average Net Assets..... % 3.07% 1.83% 2.25% 4.61% 6.82% 7.47% 5.95% 5.07% 4.75%*
</TABLE>
- --------
+ From February 15, 1986 (commencement of operations) to December 31, 1986.
(a) Had the Adviser not waived management fees, the 1989, 1988, 1987 and 1986
expense ratios would have been 1.31%, 1.30%, 1.39% and 1.66%,
respectively.
* Annualized.
See Notes to Financial Statements set forth in the Fund's Annual Report for
the year ended December 31, 1995.
8
<PAGE>
THE TRUST
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 Van Eck Gold and Money Funds are:
International Investors Gold Fund, Gold/Resources Fund, Gold Opportunity Fund,
Global Hard Assets Fund and U.S. Government Money Fund (the "Funds").
International Investors Gold Fund, Gold/Resources Fund and U.S. Government
Money Fund are classified as diversified funds under the Investment Company
Act of 1940 ("1940 Act'). A diversified fund is a fund which meets the
following requirements: At least 75% of the value of its total assets is
represented by cash and cash items (including receivables), Government
securities, securities of other investment companies and other securities,
which for the purpose of this calculation are limited in respect of any one
issuer to an amount not greater than 5% of the value of the Fund's total
assets and to not more than 10% of the outstanding voting securities of such
issuer (see "Description of the Trust"). Gold Opportunity Fund and Global Hard
Assets Fund are classified as "non-diversified", which means that the
proportion of the Fund's assets that may be invested in the securities of a
single issuer is not limited by the 1940 Act. However, to meet federal tax
requirements for qualification as a regulated investment company, the Fund, in
addition to meeting other qualification requirements, must, in general, limit
its investments so that at the close of each quarter of its taxable year (i)
no more than 25% of its assets are invested in the securities of a single
issuer, (ii) with respect to 50% of the Fund's total assets, no more than 5%
of its total assets at the time of purchase are invested in the securities of
a single issuer and (iii) the Fund will not own more than 10% of the
outstanding voting securities of any one issuer. The Funds are open-end
management investment companies. Each of the Funds is a separate series of the
Trust. Class A shares of International Investors Gold Fund, Gold/Resources
Fund, Gold Opportunity Fund and Global Hard Assets Fund are denoted with the
suffix-A (e.g., Gold Opportunity Fund-A), Class B shares with the suffix-B
(e.g., Gold Opportunity Fund-B) and Class C Shares with the suffix-C (e.g.,
Gold Opportunity Fund-C).
The Adviser to the Funds is also Adviser to each of the following mutual
funds: Asia Dynasty Fund, Global Balanced Fund, Global Income Fund and Asia
Infrastructure Fund. These mutual funds, together with the Funds, are
hereinafter referred to as the "Van Eck Group of Funds."
INVESTMENT OBJECTIVES AND POLICIES
A description of the investment objectives and policies of each Fund is set
forth below. The investment objective of a Fund may not be changed without the
affirmative vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of that Fund. Investors should understand that,
despite the best efforts of the Adviser, there is no assurance that the Funds
will achieve their objectives. For further information about a Fund's
investment policies, see "Investment Objectives and Policies of the Funds" in
the Statement of Additional Information.
INTERNATIONAL INVESTORS GOLD FUND ("INTERNATIONAL INVESTORS")
OBJECTIVE:
International Investors' primary investment objective is long-term capital
appreciation by investing in common stocks of gold mining companies, while
retaining freedom to take current income into consideration in selecting
investments. It may invest in that industry up to 100% of the value of its
assets. However, in some future period or periods due to adverse market
conditions, the Fund may temporarily have less than 25% of the value of its
assets invested in that industry.
REASONS FOR OBJECTIVE:
International Investors believes securities of gold mining companies offer an
opportunity to achieve long-term capital appreciation and to protect wealth
against eroding monetary values. Recent history indicates that governments of
many leading industrial nations have persistently pursued policies which may
have long-term inflationary consequences. These policies, especially the long-
term increases in government deficits and high rates of growth of monetary
reserves and credit, along with other factors such as increases in wage and
benefit payments exceeding increases in productivity, have been major factors
in the inflationary
9
<PAGE>
cycles experienced over the past twenty-five years in the United States and
abroad. During periods of accelerating inflation or currency uncertainty,
worldwide investment demand for gold and securities of gold mining companies
tends to increase and during periods of decelerating inflation and currency
stability, it tends to decrease. Other uncertain and unstable political and
social conditions have also stimulated demand for gold. The Fund believes that
the accelerating growth of monetary reserves and credit in major industrial
markets may have favorable effects on gold and gold mining share prices.
The five largest gold producing countries are South Africa, the United States,
Australia, CIS (former U.S.S.R.) and Canada. Although investing in securities
of issuers engaged in the mining of gold and in foreign issuers may involve
special considerations and additional investment risks (see "Risk Factors,"
below), management believes that selective investment in such securities may
offer a greater return than shares of domestic industrial issuers. Also, since
the market action of gold mining shares has tended to move against or
independently of the market trend of industrial shares, the addition of gold
mining shares to a portfolio may increase the return and may reduce overall
fluctuations in portfolio value. Thus, an investment in the Fund's shares
should be considered part of an overall investment program rather than a
complete investment program. There is, of course, no assurance that the
opinion of management will prevail, that the Fund will in fact achieve its
objectives or that gold mining shares will continue to move against or
independently of the market and of industrial shares.
POLICIES:
The Fund's policy is to concentrate its investments in common stocks of gold
mining companies, and will normally have at least 25% of its assets invested
in that industry. Additionally, it is the Fund's policy 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. The Fund does not concentrate its investments in any industry
other than the gold mining industry. Under normal conditions, the Fund's
policy is to select investments so that over 50% of the value of its assets
will be securities of foreign companies. Under unusual economic, political or
financial conditions, it may temporarily place a substantial portion (no more
than 75%) of its investments in debt or equity securities issued by foreign
companies, debt obligations of one or more foreign governments and/or United
States Treasury securities. Debt securities invested in by the Fund will
consist primarily of securities which are believed by the Adviser to be high
grade, that is, rated A or better by Standard & Poor's Corporation or Moody's
Investors Service ("S&P" and "Moody's," respectively) or, if unrated, to be of
comparable quality in the judgment of the Adviser. The Fund may also enter
into repurchase agreements with domestic broker-dealers, banks and financial
institutions in amounts up to an aggregate of 10% of the value of the Fund's
assets. However, the Fund has not within the past year had, nor does it
currently intend to have, more than 5% of its assets invested in repurchase
agreements at any one time.
Since the Fund may invest substantially all of its assets in securities of
companies engaged in gold mining and natural resources activities, the Fund
may be subject to greater risks and market fluctuations than other investment
companies with more diversified portfolios. The production and marketing of
gold and other natural resources may be affected by actions and changes in
governments, changes in supply and demand and other economic factors.
The Fund may invest up to 12 1/2% of its total assets in gold and silver coins
which are legal tender in the country of issue, such as the United States
Eagle and the Canadian Maple Leaf, and in gold and silver bullion.
Since coins and bullion do not generate any investment income, the sole source
of return to the Fund from such investments would be from gains realized on
sales of the coins or bullion, and a negative return would be realized to the
extent they are sold at a loss. The Fund incurs custody costs in storing gold
bullion and coins.
These policies are fundamental policies which may be changed only by the
affirmative vote of a majority of the outstanding voting securities, as
defined in the 1940 Act.
The Fund may, for hedging purposes, invest up to 5% of its total assets, taken
at market value at the time of investment, in call and put options on domestic
and foreign securities and foreign currencies. This policy, adopted by the
Board of Trustees, may be changed without shareholder approval. The Fund may
purchase call options for the purpose of acquiring the underlying
10
<PAGE>
securities for its portfolio. The Fund may purchase put options as a defensive
technique in order to protect against an anticipated decline in the value of
securities held by the Fund. The Fund may also invest in options on foreign
currencies which are either listed on a domestic securities exchange or traded
on a recognized foreign exchange. In addition, the Fund may purchase over-the-
counter foreign currency options from dealers or banks approved by the Trust's
Board of Trustees to hedge securities for which neither domestic nor foreign
exchange-traded options exist.
The Fund, under normal circumstances, will maintain investments in issuers
located in at least three countries other than the United States.
GOLD/RESOURCES FUND
OBJECTIVE:
Gold/Resources Fund seeks long-term capital appreciation by investing in
equity and debt securities of companies engaged in the exploration,
development, production and distribution of gold and other natural resources
such as strategic and other metals, minerals, oil, natural gas and coal, and
by investing in gold bullion and coins. The Fund may also invest in equity and
debt securities of companies which themselves invest in companies engaged in
these activities. Although current income may be realized, it is not an
investment objective. It is anticipated that the Fund will realize only a
nominal amount of current income. Normally, the Fund will have at least 65% of
its total assets invested in some combination of securities of companies
engaged in gold mining and natural resources activities.
REASONS FOR OBJECTIVE:
The Adviser believes that securities of precious metals and certain natural
resources companies offer an opportunity to protect wealth against eroding
monetary values. Recent history indicates that the policies of many
governments, particularly persistent budget deficits and high rates of growth
of monetary reserves and money supply, have had long-term inflationary
consequences. During periods of accelerating inflation the prices of many
precious metals equity securities have risen faster than the rate of inflation
and the Adviser believes that they will continue to do so in the future. While
inflation has been moderate over the past several years and the price of gold
has traded in the $300-$500 range, the Adviser anticipates that inflation and
the price of gold will resume on a long-term upward trend with alternating
cycles as credit is overexpanded and subsequently tightened. Since the market
action of gold mining shares may move against or independently of the market
trend of industrial shares, the addition of such shares to an overall
portfolio may increase the return and reduce the fluctuations of such
portfolio. There can be no assurance that an increased rate of return or a
reduction in fluctuations of a portfolio will be achieved. Thus, an investment
in the Fund's shares should be considered part of an overall investment
program rather than a complete investment program.
Since the Fund may invest substantially all of its assets in securities of
companies engaged in gold mining and natural resources activities, the Fund
may be subject to greater risks and market fluctuations than other investment
companies with more diversified portfolios. The production and marketing of
gold and other natural resources may be affected by actions and changes in
governments. In addition, gold and natural resources securities may be
cyclical in nature.
POLICIES:
The five largest gold producing countries are South Africa, the United States,
Australia, CIS (the former U.S.S.R.) and Canada. During normal market
conditions, the Fund expects to invest at least 25% of its assets in
securities of companies in Canada and the United States which are engaged in
gold mining. The Fund will not invest in securities of South African issuers.
This is a fundamental policy of the Fund which may be changed only with
shareholder approval.
The Fund may invest up to 35% of the value of its total assets in: (a) common
stock of companies not in the gold mining/natural resources areas; (b) high
grade corporate debt securities; and (c) obligations issued or guaranteed by
U.S. or foreign governments and repurchase agreements. For a discussion of
other investments, see "Risk Factors."
11
<PAGE>
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, certificates of deposit, bankers'
acceptances, high grade commercial paper and repurchase agreements.
The Fund has reserved the right to invest up to 10% of its net assets, taken
at market value at the time of investment, in gold bullion and coins. Since
coins and bullion do not generate any investment income, the sole source of
return to the Fund from such investments would be from gains realized on sales
of the coins or bullion, and a negative return would be realized to the extent
they are sold at a loss. The Fund incurs custody costs in storing gold bullion
and coins.
The Fund has no restrictions on the amount of its assets that may be invested
in securities of foreign issuers and thus the relative amount of such
investments will change from time to time. Investments by the Fund in
securities of foreign issuers may involve particular investment risks. See
"Risk Factors--Foreign Securities."
GOLD OPPORTUNITY FUND
OBJECTIVE:
The Gold Opportunity Fund seeks capital appreciation by investing globally in
equity securities of companies engaged in the exploration, development,
production and distribution of gold and other precious metals and in other
investments whose value is related to the value of precious metals ("Precious
Metals Securities").
POLICIES:
The Adviser believes that investing in Precious Metals Securities (as defined
below) offers an opportunity to achieve long-term capital growth and to
protect wealth against eroding monetary values. Governments of many leading
industrial nations have pursued policies that may have long-term inflationary
consequences. These policies, especially long-term increases in government
deficits and high rates of growth of monetary reserves and credit, along with
other factors such as increases in wage and benefit payments exceeding
increases in productivity, have been major factors in the inflationary cycles
experienced over the past twenty-five years in the United States and abroad.
During periods of accelerating inflation or currency uncertainty, worldwide
investment demand for gold and other precious metals tends to increase and
during periods of decelerating inflation and currency stability, it tends to
decrease. Other uncertain and unstable political and social conditions have
also stimulated demand for gold and other precious metals.
The Fund will attempt to achieve its objective by investing in Precious Metals
Securities. Under normal market conditions, the Fund will invest at least 65%
of its total assets in Precious Metals Securities. Precious Metals Securities
include equity securities; preferred stock; convertible debt and equity
securities; warrants; options, futures and forward contracts on precious
metals and precious metals securities; indexed securities and structured notes
on precious metals and precious metals indices; and precious metals bullion
and coins. Indexed securities and structured notes are more fully described on
p. 24 under "Risk Factors--Indexed Securities and Structured Notes."
In pursuing an aggressive strategy, the Fund may invest a significant portion
of its assets in the securities of smaller companies engaged in the precious
metals industry ("Emerging and Marginal Producers") and anticipates that its
portfolio turnover rate will be higher than other funds with similar
investment objectives but anticipates that it will not exceed 200% annually.
In addition, when the Adviser anticipates that the price of Precious Metals
Securities may suffer a significant market decline, the Fund may hold cash or
invest in high quality money market instruments (as defined below) for
defensive purposes. While the Fund expects to do so only temporarily,
conditions may arise that cause the Fund to be invested in money market
instruments for extended periods. The Fund may also invest in South Africa and
in the securities of issuers located in countries with developing markets and
economies. In addition, the Fund may borrow up to 30% of its assets for
leveraging purposes. The Fund may also make short sales of Precious Metals
Securities. While the Adviser believes that the Fund offers a potential for
gain, it also may be subject to steep price declines.
12
<PAGE>
Therefore, the Fund is expected to be more volatile and riskier than other
funds that invest their assets in securities of larger precious metals
issuers, employ a more passive "buy and hold" strategy, invest in countries
with more developed economies and markets, have a lower portfolio turnover
rate and do not have the ability to leverage their portfolio. In addition, the
Fund may invest in foreign securities; warrants; derivatives (including
futures contracts, forward contracts, options, swaps and structured notes) on
securities, indices, currencies and commodities; precious metals; repurchase
agreements; asset-backed securities; make short sales of securities; make
direct investments; and lend its portfolio securities, all of which may make
the Fund riskier than those Funds which do not engage in such activities.
Prospective investors are directed to a more complete discussion of these
securities and investment techniques both below and in the section entitled
"Risk Factors." The Fund is not intended as a complete investment program,
rather Fund shares should be considered as part of an overall investment
program. Prospective investors should evaluate personal objectives and other
investments when considering purchase of Fund shares. As with all mutual
funds, there is no assurance that the Fund will be able to achieve its
investment objective.
During periods when, in the Adviser's opinion, a defensive position in the
market is appropriate, the Fund may invest without limitation, up to 100% of
its total assets, in cash or high quality money market instruments including,
but not limited to, certificates of deposit, commercial paper and obligations
issued by the U.S. government or any of its agencies or instrumentalities.
The Fund seeks investment opportunities in the world's major stock, bond and
commodity markets. The Fund may invest in securities issued anywhere in the
world, including the United States. There is no limitation or restriction on
the amount of assets to be invested in any one country. There is no limitation
on the amount the Fund can invest in emerging markets. The Fund may purchase
securities in any foreign country, developed or underdeveloped. 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 investments. Global
investing involves economic and political considerations not typically
applicable to the U.S. markets. See "Risk Factors--Foreign Securities" and
"Risk Factors--Emerging Market Securities" below.
In addition to the equity securities listed above, the Fund may invest in
rights, direct equity interests in trusts, partnerships, joint ventures and
other incorporated entities or enterprises, 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. Direct
investments are generally considered illiquid and will be aggregated with
other illiquid investments for purposes of the limitation on illiquid
investments. The Fund may, as described below in "Risk Factors" on pages 17-
27, 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 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. While there is no limitation on the total
percentage of the Fund's assets which may be invested in such derivative
securities, the Fund's ability to invest in these securities may be restricted
by other policies such as the 15% limitation on illiquid/restricted securities
and the 5% limitation on option premiums and initial margin deposits on
futures contracts. These securities may be listed on the U.S. or foreign
securities exchanges or traded over-the-counter. In addition, the Fund may
invest in futures and forward contracts and options on precious metals.
The Fund may invest up to 5% of its net assets in warrants and premiums for
options on equity securities, equity indices, commodities and commodity
indices and up to 5% of its net assets in warrants, including options and
warrants traded in over-the-counter markets. Warrants received as dividends on
securities held by the Fund and warrants acquired in units or attached to
securities are not included in this restriction. The Fund may buy and sell
financial futures contracts and options on financial futures contracts. The
Fund may purchase or sell puts and calls on foreign currencies and securities;
invest in "when-issued" securities, "partly paid" securities (securities paid
for over a period of time), securities of foreign issuers; and may lend its
portfolio securities and borrow money for investment purposes.
The Fund may invest up to 35% of the value of its total assets in debt and
equity securities which are not Precious Metals Securities, including high
grade, liquid debt securities of foreign companies, foreign governments and
the U.S. Government and
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their respective agencies, instrumentalities, political subdivisions and
authorities, as well as in money market instruments denominated in U.S.
dollars or a foreign currency. The average maturity of the debt securities in
the Fund's portfolio will be based on the Adviser's judgment as to future
interest rate changes. Normally, the average maturity will be shorter when
interest rates are expected to rise and longer when interest rates are
expected to fall.
The assets of the Fund invested in fixed income securities, will consist of
securities that are believed by the Adviser to be high grade, that is, rated A
or better by S&P or Moody's, Fitch-1 by Fitch or Duff-1 by Duff & Phelps or if
unrated, to be of comparable quality in the judgment of the Adviser subject to
the supervision of the Board of Trustees. The assets of the Fund invested in
short-term instruments will consist primarily of securities rated in the
highest category (for example, commercial paper rated "Prime-1" or "A-1" by
Moody's and S&P, respectively) or if unrated, in instruments that are
determined to be of comparable quality in the judgment of the Adviser subject
to the supervision of the Board of Trustees, or are insured by foreign or U.S.
governments, their agencies or instrumentalities as to payment of principal
and interest. The Fund may invest in asset-backed securities such as
collateralized mortgage obligations and other mortgage and non-mortgage asset-
backed securities.
GLOBAL HARD ASSETS FUND
OBJECTIVE:
The Fund seeks long-term capital appreciation by investing primarily in "Hard
Asset Securities." Income is a secondary consideration.
POLICIES:
The Adviser believes "Hard Asset Securities" (as defined below) offer an
opportunity to achieve long-term capital appreciation and to protect wealth
against eroding monetary values during periods of cyclical economic
expansions. Since the market action of Hard Asset Securities may move against
or independently of the market trend of industrial shares, the addition of
such securities to an overall portfolio may increase the return and reduce the
price fluctuations of such a portfolio. There can be no assurance that an
increased rate of return or a reduction in price fluctuations of a portfolio
will be achieved. An investment in the Fund's shares should be considered part
of an overall investment program rather than a complete investment program.
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 Hard Asset commodity or a
commodity index. Indexed securities and structured notes are more fully
described on p. 24 under "Risk Factors--Indexed Securities and Structured
Notes." 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 (together "Hard
Assets"): (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 invested in any one of the above sectors.
Since the Fund may so concentrate, it may be subject to greater risks and
market fluctuations than other investment companies with more diversified
portfolios. The production and marketing of Hard Assets may be affected by
actions and changes in governments. In addition, Hard Assets and securities of
Hard Asset Companies may be cyclical in nature. During periods of economic or
financial instability, the securities of some Hard Asset Companies may be
subject to broad price fluctuations, reflecting volatility of energy and basic
materials prices and possible instability of supply of various Hard Assets. In
addition, some Hard Asset Companies may also be subject to the risks generally
associated with extraction of natural resources, such as the risks of mining
and oil drilling, and the risks of the hazards associated with natural
resources, such as fire, drought, increased regulatory and environmental
costs, and others. Securities of Hard Asset Companies may also experience
greater price fluctuations than the relevant Hard Asset. In periods of rising
Hard Asset prices, such securities may rise at a faster rate, and, conversely,
in time of falling Hard Asset prices, such securities may suffer a greater
price decline.
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The Adviser believes the Fund may offer a hedge against inflation,
particularly commodity price driven inflation. However, there is no assurance
that rising commodity (or other Hard Asset) prices will result in higher
earnings or share prices for the Hard Asset Companies in the Fund. Hard Asset
Companies' equities are affected by many factors, including movements in the
overall stock market, inflation may cause a decline in the overall stock
market, including the stocks of Hard Asset Companies.
The Fund seeks investment opportunities in the world's major stock, bond and
commodity markets. The Fund may invest in securities issued anywhere in the
world, including the United States. Under normal conditions, the Fund will
invest its assets in at least three countries including the United States.
There is no limitation or restriction on the amount of assets to be invested
in any one country. There is no limitation on the amount the Fund can invest
in emerging markets. The Fund may purchase securities in any foreign country,
developed or underdeveloped. 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 investments. Global investing involves economic and
political considerations not typically applicable to the U.S. markets. See
"Risk Factors--Foreign Securities" and "Risk Factors--Emerging Market
Securities" below.
The 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
incorporated entities or enterprises; 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 the U.S. or foreign 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 Fund may, as described below in "Risk Factors,"
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 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 invest up to 10% of its net assets,
taken at market value at the time of investment, in precious metals, whether
in bullion or coins. In addition, the Fund may invest in futures and forward
contracts and options on precious metals and other Hard Assets.
The Fund may invest up to 5% of its net assets in premiums for options on
equity securities and equity indexes and up to 5% of its net assets in
warrants, including options and warrants traded in over-the-counter markets.
Warrants received as dividends on securities held by the Fund and warrants
acquired in units or attached to securities are not included in this
restriction. The Fund may buy and sell financial futures contracts and options
on financial futures contracts. The Fund may purchase or sell puts and calls
on foreign currencies and securities; invest in "when issued" securities,
"partly paid" securities (securities paid for over a period of time),
securities of foreign issuers; and may lend its portfolio securities and
borrow money for investment purposes.
The Fund may invest up to 35% of its total assets in debt securities whose
value is not linked to the value of a Hard Asset of Hard Asset Companies and
other issuers and equity securities of companies which are not Hard Asset
Companies. Non-Hard Asset debt securities include high grade, liquid debt
securities of foreign 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. The average maturity of the debt securities in
the Fund's portfolio will be based on the Adviser's judgment as to future
interest rate changes. Normally, the average maturity will be shorter when
interest rates are expected to rise and longer when interest rates are
expected to fall.
LOW RATED DEBT SECURITIES: The Fund may invest in lower quality, high-yielding
debt securities (commonly referred to as "junk bonds") of Hard Asset Companies
rated as low as CCC by Standard & Poor's Corporation ("S&P") or Caa by Moody's
Investors Service, Inc. ("Moody's"). These debt instruments have some "equity"
characteristics in that, while not directly linked, their value may increase
or decrease with the value of a Hard Asset, reflecting the ability of the Hard
Asset Company to make scheduled payments of interest and principal. Lower
rated debt securities are considered speculative and involve greater risk of
loss than higher rated debt securities and are more sensitive to changes in
the issuer's capacity to pay. Debt rated Caa or CCC presents a significantly
greater risk of default than do higher rated securities and, in times of poor
business or economic conditions, the Fund may lose interest and/or principal
on such securities. In addition to sensitivity to interest rates, debt
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<PAGE>
securities of Hard Asset Companies may fluctuate in price in connection with
changes in the price of the relevant Hard Asset. The Fund will not invest more
than 25% of its assets in debt securities rated below BBB by S&P or Baa by
Moody's.
The assets of the Fund invested in fixed income securities, excluding fixed
income securities whose value is linked to the value of a Hard Asset and of
Hard Asset Companies, will consist of securities which are believed by the
Adviser to be high grade, that is rated A or better by S&P or Moody's, Fitch-1
by Fitch or Duff-1 by Duff & Phelps or if unrated, to be of comparable quality
in the judgment of the Adviser subject to the supervision of the Board of
Trustees. The assets of the Fund invested in short-term instruments will
consist primarily of securities rated in the highest category (for example,
commercial paper rated ""Prime-1'' or ""A-1'' by Moody's and S&P,
respectively) or if unrated, in instruments that are determined to be of
comparable quality in the judgment of the Adviser subject to the supervision
of the Board of Trustees, or are insured by foreign or U.S. governments, their
agencies or instrumentalities as to payment of principal and interest. The
Fund may invest up to 10% of its assets in asset-backed securities such as
collateralized mortgage obligations and other mortgage and non-mortgage asset-
backed securities. Asset-backed securities backed by Hard Assets and whose
value is expected to be linked to underlying Hard Assets are excluded from the
10% limitation.
During periods when the Adviser expects adverse or unusual economic and/or
market conditions, the Fund may, for temporary defensive purposes, make
substantial investments in obligations of the U.S. Government, debt
obligations of one or more foreign governments, certificates of deposit,
bankers' acceptances, high grade commercial paper and repurchase agreements.
FACTORS AFFECTING GLOBAL HARD ASSETS FUND:
REAL ESTATE SECURITIES
Although the Fund will not invest in real estate directly, it may invest up to
50% of its assets in equity securities of real estate investment trusts
("REIT's") and other real estate industry companies or companies with
substantial real estate investments and therefore, the Fund may be 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; increase 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. In order to comply with
certain securities laws of a state in which shares of the Fund are currently
sold, the Fund has undertaken not to invest more than 15% of its assets in
securities of REITs which are NOT self-managed or self-administered. To the
extent the above restriction has been adopted to comply with state securities
laws, it shall not apply to the Fund once such laws are no longer in effect.
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 Internal Revenue Code of 1986, as amended (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).
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U.S. GOVERNMENT MONEY FUND
OBJECTIVES:
U.S. Government Money Fund seeks safety of principal, daily liquidity and
current income by investing in U.S. Treasury bills, notes, bonds and other
obligations guaranteed by the "full faith and credit" of the U.S. Government.
POLICIES:
Securities guaranteed by the U.S. Government include such obligations as
securities issued by the General Services Administration and the Small
Business Administration. The Fund may from time to time invest, without
limitation, in repurchase agreements collateralized by such securities. As a
matter of fundamental policy, at least 80% of the Fund's total assets will at
all times be maintained in U.S. Government securities and repurchase
agreements collateralized by such securities.
The Fund follows an operating policy in order to maintain, pursuant to an SEC
rule, a constant net asset value of $1.00 per share, although there is no
assurance it can do so on a continuing basis. Although the Fund's fundamental
policy allows it to invest, with respect to 25% of its assets, more than 5% in
any one issuer (other than U.S. Government securities), it may do so only if
the Rule is amended in the future. All securities in which the Fund invests
have remaining maturities of 397 days or less at the date of purchase and have
been determined to be of high quality, with minimal credit risk, by the
Adviser acting under the supervision of the Board of Trustees of the Trust.
The Fund also maintains an average-weighted portfolio maturity of 90 days or
less.
RISK FACTORS
Gold/Resources Fund, Gold Opportunity Fund and Global Hard Assets Fund may
invest up to 5% of assets at the time of purchase in warrants. With respect to
Gold/Resources Fund, of this 5%, not more than 2% may be invested in warrants
that are not listed on the New York Stock Exchange or American Stock Exchange.
Gold/Resources Fund and Gold Opportunity Fund may invest up to 5% of assets at
the time of purchase in preferred stocks and preferred stocks which may be
convertible into common stock. Gold/Resources Fund, International Investors,
Gold Opportunity Fund and Global Hard Assets Fund may buy and sell financial
futures contracts and options on financial futures contracts and may write,
purchase or sell puts and calls on foreign currencies and securities, invest
in "when issued" securities, "partly paid" securities (securities paid for
over a period of time), and securities of foreign issuers; and may buy and
sell commodity futures contracts on precious metals and on precious metals
indices and may write, purchase or sell covered put and call options thereon.
Since shares of the Funds represent an investment in securities with
fluctuating market prices, shareholders should understand that the value of
shares of the Funds will vary as the aggregate value of the Funds' portfolio
securities increases or decreases. Moreover, any dividends paid by the Funds
will increase or decrease in relation to the income received by the Funds from
their investments.
Investors should be aware that some of the securities in which the Funds may
invest, such as structured or indexed notes, swaps and foreign securities pose
additional risks. These instruments may be subject to periods of extreme
volatility, illiquidity and may be difficult to value. Despite these risks,
these instruments may offer unique investment opportunities.
FOREIGN SECURITIES
International Investors, Gold/Resources Fund, Gold Opportunity Fund and Global
Hard Assets Fund may purchase securities of foreign issuers. Investments in
foreign securities may involve a greater degree of risk than investments in
domestic securities due to the possibility of exchange controls, less publicly
available information, and the possibility of expropriation, confiscatory
taxation or political, economic or social instability. In addition, some
foreign companies are not generally subject to the same uniform accounting,
auditing and financial reporting standards as are American companies, and
there may be less government supervision and regulation of foreign stock
exchanges, brokers and companies.
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Foreign securities may be subject to foreign taxes, higher custodian fees and
dividend collection fees which could reduce the yield on such securities,
although a shareholder of a Fund may, subject to certain limitations, be
entitled to claim a credit or deduction for United States federal income tax
purposes for his or her proportionate share of such foreign taxes paid by a
Fund. In addition, some foreign securities in which a Fund may invest may be
denominated in foreign currencies, and since a Fund may temporarily hold funds
in foreign currencies, the value of the assets of a Fund (and thus its net
asset value) will be affected by changes in currency exchange rates.
Transactions in the securities of foreign issuers may be subject to settlement
delays.
Investments of these Funds may be made from time to time in companies in
developing countries as well as in developed countries. Shareholders should be
aware that investing in the equity and fixed income markets of developing
countries (such as, Singapore, Brazil and Mexico) 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; 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.
International Investors, Gold Opportunity Fund and Global Hard Assets Fund may
invest in South African issuers. Political and social conditions in South
Africa, due to former segregation policies of the South African government and
unsettled political conditions prevailing in South Africa and neighboring
countries, may pose certain risks to the Fund's investments. If aggravated by
local or international developments, such risks could have an adverse effect
on investments in South Africa, including the Funds' investments and, under
certain conditions, on the liquidity of the Funds' portfolio and their ability
to meet shareholder redemption requests. The ability of the Funds to invest,
or hold their investments, in South African companies may be further affected
by changes in United States or South African laws or regulations.
In addition to investing directly in the securities of United States and
foreign issuers, International Investors, Gold/Resources Fund, Gold
Opportunity Fund and Global Hard Assets Fund may also invest in American
Depositary Receipts (ADRs). European Depositary Receipts (EDRs), American
Depositary Shares (ADRSs), Global Depositary Shares (GDSs) and securities of
foreign investment funds or trusts (including passive foreign investment
companies--see "Investment Restrictions" in the Statement of Additional
Information). 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 or
trust company. 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. Transactions in the securities of foreign issuers may be
subject to settlement delays. Dividend collection fees on foreign securities
and ADR's are generally higher than on U.S. securities, and dividends and
interest may be subject to foreign withholding tax at the source which may or
may not be permitted to be passed through to U.S. shareholders. See "Taxes" in
the Prospectus and "Risks in Investing in Foreign Securities" in the Statement
of Additional Information.
PRECIOUS METALS--INTERNATIONAL INVESTORS, GOLD/RESOURCES FUND, GOLD
OPPORTUNITY FUND AND GLOBAL HARD ASSETS FUND
International Investors, Gold/Resources Fund, Gold Opportunity Fund and Global
Hard Assets Fund may invest in precious metal coins (including gold, silver,
platinum and palladium) which have no numismatic value. The value of such
coins generally, moves correspondingly with the price of bullion in that the
value of the coins is based on their precious metal content. Since such
investments do not generate any investment income, the sole source of return
from such investments would be from gains realized on sales of the coins or
bullion, and a negative return would be realized to the extent such coins or
bullion are sold at a loss. Although subject to substantial fluctuations in
value, management believes such investments could be beneficial to the
investment performance of International Investors, Gold/Resources Fund, Gold
Opportunity Fund and Global Hard Assets Fund and could be a potential hedge
against inflation, as well as an investment with possible growth potential. In
addition, at the appropriate time, investments in precious metal coins or
bullion could help to moderate fluctuations in a Funds portfolio value, as at
times the prices of precious metals have tended not to fluctuate as widely as
shares of issuers engaged in the mining of such precious metals.
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In view of the established world market for precious metals, the daily value
of such coins is readily ascertainable and their liquidity is generally
assured since they are readily saleable to dealers which maintain markets in
such coins. International Investors and Gold/Resources Fund maintain their
precious metal coins and bullion with Bankers Trust Company, New York, or
Delaware Trust Company. Gold Opportunity Fund and Global Hard Assets Fund will
maintain its precious metal coins and bullion with Wilmington Trust Company.
Precious metals trading is a speculative activity. Prices of precious metals
are affected by factors such as cyclical economic conditions, political events
and monetary policies of various countries. Gold and other precious metals are
also subject to governmental action for political reasons. Markets are,
therefore, at times volatile and there may be sharp fluctuations in prices
even during periods of rising prices. Under current U.S. tax law, the Funds
may not receive more than 10% of their yearly income from gains resulting from
selling precious metals or any other physical commodity. The Funds may be
required, therefore, to hold their precious metals or sell them at a loss, or
to sell their portfolio securities at a gain, when it would not otherwise do
so for investment reasons.
Investments in physical commodities could present concerns, including
practical problems of delivery, storage and maintenance, possible illiquidity,
the unavailability of accurate market valuations and increased expenses. When
a precious metal is purchased, the Adviser currently intends that it will only
be in a form that is readily marketable and that it will be delivered to and
stored with Bankers Trust Company, Delaware Trust Company or Wilmington Trust
Company. Investments in bullion earn no investment income and may involve
higher custody and transaction costs than investments in securities.
During the calendar year 1995, the closing price of a fine troy ounce of gold
ranged from a low of $373.00 to a high of $396.70. During the same period, the
closing price of a troy ounce of silver ranged from a low of $4.42 to a high
of $6.04.
EMERGING MARKETS SECURITIES
Investments of the Funds (other than the U.S. Government Money Fund) may be
made in companies in developing countries as well as in developed 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 changes 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. Certain of these markets have only
existed or been available to investment by foreign nationals for a limited
period of time.
Many of these emerging markets limit the percentage foreign investors, such as
the Funds, 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 in some markets may be convertible into local shares. Foreign
shares may, among other things, be subject to restrictions on the right to
receive dividends and other distributions, and may have limited voting and
other rights. 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 some 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 (while foreign holders of
foreign
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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 over a very short period, 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 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
or premiums are excessive and, when in the opinion of the Adviser, 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 net assets in illiquid
securities. 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.
EMERGING AND MARGINAL PRODUCERS
The term "Emerging Producers" refers to issuers of Precious Metals Securities
which are in the early stages of developing newly discovered ore bodies.
"Marginal Producers" are those that have a high degree of operating leverage
or marginal profitability at current precious metals price levels. While these
companies offer a greater potential for gain during periods of rising prices,
they are subject to steeper declines during periods of stable or declining
prices. These companies tend to be less well capitalized, have limited access
to capital, higher debt-to-equity ratios and pose greater risk of insolvency;
tend to be less liquid during market imbalances and more difficult to value
than securities of larger, more established companies; and often are subject
to higher transaction costs.
FOREIGN CURRENCY AND FOREIGN CURRENCY TRANSACTIONS
Since some foreign securities in which the International Investors,
Gold/Resources Fund, Gold Opportunity Fund and Global Hard Assets Fund may
invest may be denominated in foreign currencies, and since the Funds may
temporarily hold foreign currencies, the value of the assets of these Funds
(and thus their net asset values) may be affected by changes in currency
exchange rates. The Funds' 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 fluctuations in exchange rates accurately. The Funds may
invest in a variety of derivatives. The Funds may purchase and sell put and
call options on, or enter into futures contracts or forward contracts to
purchase or sell, foreign currencies. The
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Funds may use forward currency contracts to hedge the U.S. Dollar value of a
security which they already own. A forward currency contract may thus help
reduce the Funds' losses on a security when a foreign currency's value
changes. The Funds will enter into forward contracts to duplicate a cash
market transaction. The Funds enter into hedging transactions to attempt to
moderate currency fluctuations. However, the Funds will invest in securities,
including short-term obligations, denominated in a range of foreign currencies
and the value of the Funds will be affected by changes in currency exchange
rates. See "Currency Swaps," "Futures Contracts," "Options" and "Hedging and
Other Investment Techniques and Strategies" below and "Foreign Currency
Transactions" and "Futures and Options Transactions" in the Statement of
Additional Information.
SWAPS
Gold Opportunity Fund and Global Hard Assets Fund may enter into currency
swaps solely for hedging purposes. Global Hard Assets may also enter into
asset swaps. 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.
Asset swaps are similar to currency swaps in that the performance of one Hard
Asset (e.g. gold) may be "swapped" for another (e.g., energy).
The use of swaps is a highly specialized activity that involves investment
techniques and risks different from those associated with ordinary portfolio
transactions. If the 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
Gold/Resources Fund may for hedging purposes only, invest up to 5% of its
total assets, taken at market value at the time of investment, in premiums on
call and put options (a type of derivative) on domestic and foreign
securities, foreign currencies and stock, bond and commodity indices, and for
hedging purposes only, may invest in call and put options on commodities, and
financial futures contracts and commodity futures contracts.
International Investors, Gold Opportunity Fund and Global Hard Assets Fund may
for hedging and other purposes (such as creating synthetic positions) invest
up to 5% of their 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, bond and commodity indices,
commodities, financial futures contracts and commodity futures contracts.
These policies may be changed without shareholder approval.
As the holder of a call or put option, the Funds pay a premium and have 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 a 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 Funds will lose their premium payment. The Funds may,
with respect to options they have purchased, sell them, exercise them or
permit them to expire.
Gold Resources Fund, International Investors, Gold Opportunity Fund and Global
Hard Assets Fund may write, without limit, 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
Funds must sell (in the case of a written call option) or buy (in the case of
written put option) the underlying instrument at the exercise price. The Funds
may write only covered put and call options. A covered call option, which is a
call option with respect to which the Funds owns the underlying instrument,
sold by the Funds
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exposes it during the term of the option to possible loss of opportunity to
realize appreciation in the market price of the underlying futures contract or
to possible continued holding of a futures contract which might otherwise have
been sold to protect against depreciation in the market price of the futures
contract. A covered put option written by the Fund exposes it during the term
of the option to a decline in price of the underlying instrument. 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 Funds may invest in options which are either listed on a domestic
securities exchange or traded on a recognized foreign exchange. In addition,
the Funds may purchase or sell over-the-counter options to hedge securities or
currencies for which neither domestic nor foreign exchange-traded options
exist from dealers or banks approved by the Board of Trustees. In general,
exchange traded options are third party contracts with standardized prices and
expiration dates. Over-the-counter transactions are two party contracts with
price and terms negotiated by the buyer and seller and are generally
considered illiquid.
FUTURES CONTRACTS
Gold/Resources Fund may, for hedging purposes only, buy and sell financial
futures contracts, a type of derivative, which may include security and
interest-rate futures, stock and bond index futures contracts and foreign
currency futures contracts and may also buy and sell commodity futures
contracts which may include futures contracts on gold and other natural
resources and on gold and other natural resources indices.
International Investors, Gold Opportunity Fund and Global Hard Assets Fund
may, for hedging and other purposes (such as creating synthetic positions),
buy and sell financial futures contracts, which may include security and
interest-rate futures, stock and bond index futures contracts, foreign
currency futures contracts and commodity futures contracts including futures
contracts on commodity indices. The Funds will segregate with the custodian,
among other things, cash and/or other liquid securities so that they are not
leveraged in excess of applicable limits. See "Borrowing and Leverage" below.
A security or interest-rate futures contract is an agreement 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.
A commodity futures contract is an agreement to take or make delivery of a
specified amount of a commodity, such as gold, at a set price on a future
date. A lack of correlation between the hedging instrument and the asset being
hedged may expose the Fund to additional risk. The Funds do not currently
intend to use futures on bond indices to hedge more than 5% of their
portfolio.
When a 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 security, index, commodity or currency
fluctuates, either party to the contract is required to make additional margin
payments, known as "variation margin," to cover any additional obligation they
may have under the contract.
The Funds will not commit more than 5% of their total assets to initial margin
deposits on futures contracts and premiums on options on futures contracts
except that margin deposits for futures positions entered into for BONA FIDE
hedging purposes, as defined in the Commodity Exchange Act are excluded from
the 5% limitation.
In establishing a position in a futures contract, which may be a long or short
position, appropriate high grade liquid assets, such as U.S. Government
securities or cash will be segregated with the Custodian, as may be required,
to ensure that the 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. When imposed by an Exchange, such price fluctuation limits may
prevent the Fund from being able to close out a position. 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").
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HEDGING AND OTHER INVESTMENT TECHNIQUES AND STRATEGIES
Gold/Resources Fund, International Investors, Gold Opportunity Fund and Global
Hard Assets Fund may use options and futures contracts as part of various
hedging techniques and strategies.
To protect against anticipated declines in the value of investment holdings,
Gold/Resources Fund and International Investors may use options, futures and
forward contracts and Gold Opportunity Fund and Global Hard Assets Fund may
use options, forward and futures contracts, structured notes, swaps and
similar investments (commonly referred to as derivatives) as a defensive
technique to protect the value of an asset the Adviser deems desirable to hold
for tax or other considerations. One defensive technique involves selling a
futures contract or forward contract, purchasing a put option or entering into
a swap agreement whose value is expected to be inversely related to the 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 or forward
contract, put option or swap. The premium paid for the put option would reduce
any capital gain otherwise available for distribution when the asset is
eventually sold.
The Funds may hedge against changes in the value of the U.S. Dollar in
relation to a foreign currency in which portfolio securities may be
denominated. A 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 a 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, a Fund may incur a gain or
loss on the option or futures contract.
International Investors, Gold Opportunity Fund and Global Hard assets Fund may
use forwards, futures contracts and options for investment purposes, such as
creating non-speculative "synthetic" positions or implementing "cross-hedging"
strategies. A "synthetic position" is the duplication of a cash market
transaction when deemed advantageous by the Adviser (or Sub-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, each of the Funds experience 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 would 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.
"Cross-hedging" involves the use of one currency to hedge against the decline
in value of another currency. For example, the Fund could hedge against a
currency-related decline in the value of a security denominated in
deutschemarks by taking a short position in the Swiss franc. 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 that 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 that 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.
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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 will, because of liquidity considerations, be limited to 10%
of net assets with respect to Gold Resources Fund and U.S. Government Money
Fund and will be limited to 15% with respect to the Gold Opportunity Fund and
Global Hard Assets Fund. Over-the-counter options are deemed by the Securities
and Exchange Commission to be illiquid securities. The Funds do not write
naked options.
Gold Opportunity Fund and Global Hard Assets Fund may invest in commercial
paper that 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 Fund 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 of principal payable by the issuer at
maturity will change in proportion to the change (if any) in the exchange rate
between the 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 rates enables the Fund 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 Fund will establish a segregated account with respect to its investments
in this type of commercial paper and 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.
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 Funds.
INDEXED SECURITIES AND STRUCTURED NOTES
Gold Opportunity Fund and Global Hard Assets Fund may invest in indexed
securities whose value is linked to one or more currencies, interest rates,
commodities, or financial or commodity indices. An indexed security enables
the investor to purchase a note whose coupons and/or principal redemption are
linked to the performance of an underlying asset. Indexed securities may be
positively or negatively indexed (i.e., their value may increase or decrease
if the underlying instrument appreciates). Indexed securities may have return
characteristics similar to direct investments in the underlying instrument or
to one or more options on the underlying instrument. Indexed securities may be
more volatile than the underlying instrument itself, and present many of the
same risks as investing in futures and options. Indexed securities are also
subject to credit risks associated with the issuer of the security with
respect to both principal and interest. Only securities linked to one or more
precious metals or precious metals indices will be considered a Precious
Metals Security and only securities linked to one or more non-agricultural
commodities or commodity indices will be considered a Hard Asset Security.
Indexed securities may be publicly traded or may be two-party contracts (such
two-party agreements are referred to here collectively as structured notes).
When the Fund purchases a structured note, a type of derivative, it will make
a payment of principal to the counterparty. Some structured notes have a
guaranteed repayment of principal while others place a portion (or all) of the
principal at risk. The Fund will purchase structured notes only from
counterparties rated A or better by S&P, Moody's or another nationally
recognized statistical rating organization. The Adviser will monitor the
liquidity of structured notes under the supervision of the Board of Trustees
and notes determined to be illiquid will be aggregated with other illiquid
securities and limited to 15% of the net assets of the Fund.
REPURCHASE AGREEMENTS
Each of the Funds, including U.S. Government Money Fund, may engage in
repurchase agreement transactions. Under the terms of a typical repurchase
agreement, a Fund would acquire an underlying debt obligation for a relatively
short period (usually
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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 holding period. The agreement results
in a fixed rate of return that is not subject to market fluctuations during
the holding period. A 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
a Fund's ability to dispose of the underlying securities. The Adviser, acting
under the supervision of the Boards of Trustees, reviews the creditworthiness
of those non-bank dealers with which the Funds enter into repurchase
agreements to evaluate these risks. See "Repurchase Agreements" in the
Statement of Additional Information.
DEBT SECURITIES
The Funds 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 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. 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 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.
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 Funds will not accrue any income on these securities prior to delivery.
The Funds will maintain in a segregated account with their 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
Gold Opportunity Fund and Global Hard Assets 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.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS")
Global Hard Assets 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 Adviser, the pooler is creditworthy or if
rated A or better by S&P or Moody's.
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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 reduce
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
Fund will be subject to certain limitations under the 1940 Act.
LOANS OF PORTFOLIO SECURITIES
Gold Opportunity Fund and Global Hard Assets 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. Each might experience risk of loss if the broker-dealer
with which it has engaged in a portfolio loan transaction breaches its
agreement.
BORROWING AND LEVERAGE
Gold/Resources Fund may borrow up to 10% of the value of total assets (valued
at cost), for temporary or emergency purposes (International Investors may so
borrow temporarily for extraordinary purposes). Gold Opportunity Fund and
Global Assets Fund may increase its market exposure (i.e., leverage the
portfolio) by up to 30% of the value of its net assets. The Fund may achieve
such leverage through the use of futures contracts or by borrowing to increase
its holdings of portfolio securities. Under the 1940 Act, the Funds are
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 will exaggerate the effect of any
increase or decrease in the value of portfolio securities on the Fund's net
asset values (thereby increasing the Fund's investment risk), 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 income received from the securities purchased with
borrowed funds. It is anticipated that borrowings for leveraging purposes
would be pursuant to a negotiated loan agreement with a commercial bank or
other institutional lender.
SHORT SALES
Gold Opportunity Fund may make short sales of Precious Metals Securities and
Global Hard Assets Fund may make short sales of equity securities. A short
sale occurs when the Fund sells a security which it does not own by borrowing
it from a broker. Following the short sale, the Fund must deposit collateral
with the broker. In the event that the value of the security that the Fund
sold short declines, the Fund will gain as it repurchases the security in the
market at the lower price. If the price of the security increases, the Fund
will suffer a loss as it will have to repurchase the security at the higher
price. Short sales may incur higher transaction costs than regular securities
transactions.
The Fund will establish a segregated account with respect to its short sales
and 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 difference between (i) the market value of the securities
sold short at the time they were sold short and (ii) any cash, U.S. Government
Securities or other liquid, high-quality debt securities required to be
deposited as collateral with the broker in connection with the short sale (not
including the proceeds from the short sale). Such segregated account will be
marked to market daily, so that (i) the amount in the segregated account plus
the amount deposited with the broker as collateral equals the current market
value of the securities sold short and (ii) in no event will the amount in the
segregated account plus the amount deposited with the broker as collateral
fall below the original value of the securities at the time they were sold
short. The total value of the assets deposited as collateral with the broker
and deposited in the segregated account will not exceed 50% of the Fund's net
assets. In order to comply with certain securities laws of a state in which
shares of the Fund are currently sold, the Fund has
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undertaken to (i) limit the value of its assets deposited as collateral and
deposited in the segregated account to 25%, (ii) limit the value of securities
of any one issuer sold short to the lesser of 2% of the Fund's net assets or
2% of the securities of any class of any one issuer and (iii) limit short
sales to liquid securities, as determined by the Adviser and ratified at least
quarterly by the Board of Trustees. The Fund will comply with these
undertakings so long as the Fund's shares are sold in such state or such state
restrictions remain in effect. The Fund's ability to engage in short sales may
be further limited by the requirements of current U.S. tax law that the Fund
derive less than 30% of its gross income from the sale or other disposition of
securities held less than three months. Securities sold short and then
repurchased, regardless of the actual time between the two transactions, are
considered to have been held for less than three months.
PARTLY PAID SECURITIES
Partly paid securities are securities for which the purchaser pays on an
installment basis. A partly paid security trades net of outstanding
installment payments. For this reason, the obligation to make payment is
usually transferred upon sale of the security. Fluctuations in the market
value do not affect the obligation to make installment payments when due.
Partly paid securities become fully paid securities upon payment of the final
installment. Until that time, the issuer of a partly paid security typically
may retain the right to restrict the voting and dividend rights of the
security and to impose restrictions and penalties in the event of a
purchaser's default.
DIRECT INVESTMENTS
Gold Opportunity Fund and Global Hard Assets Fund may invest up to 10% of its
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 Fund 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 Adviser anticipates that
these agreements will, in appropriate circumstances, provide the Fund with the
ability to appoint a representative to the board of directors or similar body
of the enterprise and for eventual disposition of the Fund's investment in the
enterprise. Such a representative of the Fund will be expected to provide the
Fund 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 Fund's 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 Fund does not anticipate making direct investments in
start-up operations, although it is expected that in some cases the Fund's
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 Fund 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
Fund. 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 Fund may be required to bear the expenses of registration.
In addition, in the event the Fund sells 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. Direct investments can be difficult to price and shall be valued
at fair value as determined in good faith by the Board of Trustees. The
pricing of direct investments may not be reflective of the price at which
these assets could be liquidated.
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LIMITING INVESTMENT RISKS
While an investment in any of the Funds is not without risk, the Funds follow
certain policies in managing their investments which may help to reduce risk.
Certain of these policies are deemed fundamental and may be changed as to a
Fund only with the approval of the holders of a majority of 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 outstanding shares are present in person or by proxy, or (ii) more than
50% of outstanding shares. Certain of the more significant investment
restrictions applicable to the Funds and Portfolios are set forth below.
Additional restrictions are described in the Statement of Additional
Information.
INTERNATIONAL INVESTORS
The following apply to International Investors only:
1. The Fund will not invest more than 5% of the value of its total assets
in securities of any one issuer (other than the United States
Government).
2. The Fund will not acquire more than 10% of the outstanding or voting
securities of any one company.
3. The Fund will not invest in the securities of investment companies,
except by purchases in the open market where no commission or profit to
a sponsor or dealer results from such purchases (other than the
customary brokers' commissions) and then not in excess of 10% of total
assets, or except when such purchases, though not made in the open
market, are part of a plan of merger or consolidation.
4. The Fund will not invest more than 5% of total assets in securities of
companies which, including predecessors, do not have a record of at
least three years of continuous operation.
5. The Fund will not borrow money, except temporarily for extraordinary
purposes, in which case such borrowings shall not exceed 10% of total
assets (valued at cost).
GOLD/RESOURCES FUND, GOLD OPPORTUNITY FUND, GLOBAL HARD ASSETS FUND AND U.S.
GOVERNMENT MONEY FUND
1. Gold/Resources Fund and U.S. Government Money Fund will not invest more
than 10% and Gold Opportunity Fund and Global Hard Assets Fund will not
invest more than 15% of the value of their total assets in securities
which are not readily marketable (including repurchase agreements which
mature in more than seven days and over-the-counter options and over-
the-counter foreign currency options).
2. The Funds under this heading will not purchase more than 10% of any
class of securities of a company, including more than 10% of its
outstanding voting securities, except that Global Hard Assets Fund may
purchase more than 10% of any non-voting class of securities;
3. The Funds under this heading will not invest more than 10% of their
total assets in securities of other investment companies.
4. Gold/Resources Fund and U.S. Government Money Fund may borrow money for
temporary or emergency purposes in amounts not exceeding 10% of the
value of their total assets valued at cost. These Funds will not
purchase securities for investment while borrowings equaling 5% or more
of their total assets are outstanding.
Further information regarding these and other of the Funds' investment
policies and restrictions is provided in the Statement of Additional
Information. (See "Investment Restrictions" in the Statement of Additional
Information).
PURCHASE OF SHARES
Shares of the Gold/Resources Fund, International Investors, Gold Opportunity
Fund and Global Hard Assets Fund 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 must be
made in U.S. Dollars. 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 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
- --------
* Except for Investors Fiduciary Trust Company fiduciary retirement accounts.
28
<PAGE>
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.
Other than through the Exchange Privilege, shares of the U.S. Government Money
Fund may only be initially purchased by completing an Application and mailing
it with payment to DST. Shares of the U.S. Government Money Fund are not
purchased until payment of the amount of purchase in U.S. Dollars is accepted
by DST. Since the U.S. Government Money Fund will be investing in instruments
which normally require immediate payment in federal funds (monies credited to
a bank's account with its regional Federal Reserve Bank), your purchase order
will be accepted as follows: payment by check or other negotiable bank draft
drawn on a U.S. bank is normally considered accepted on the day following
receipt. Orders to purchase shares of the U.S. Government Money Fund through a
selected dealer or bank, other than through an existing exchange privilege
where the shares are on deposit with DST, are not effected until the proceeds
of the purchase are received in good order by DST. Dividends begin accruing on
the business day following acceptance of your order (i.e., when federal funds
are made available to the Fund).
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 photostat 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 and a notice 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 Van Eck Associates Corporation,
has entered into a Distribution Agreement with the Trust 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.
ALTERNATIVE PURCHASE ARRANGEMENTS
Gold/Resources Fund (Class A), International Investors Gold Fund
(Class A and C),
Gold Opportunity Fund (Class A, B and C) and Global Hard Assets Fund
(Class A, B and C)
Shares of the Gold/Resources Fund-A, International Investors Gold Fund (Class
A and C), Gold Opportunity Fund (Class A, B and C) and Global Hard Assets Fund
(Class A, B and C) 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 one year 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 except
for International Investors Gold Fund-A. With respect to the Class C shares of
Gold Opportunity Fund and Global Hard Assets Fund,
29
<PAGE>
the Fund will waive the 12b-1 fee until November 1, 1996 and the redemption
charge on purchases until November 1, 1996. Brokers or Agents will be paid a
commission by the Distributor in the thirteenth month equal to 1% of the
purchase price of shares held in the Fund for one year or more. Prior to
November 1, 1996, purchases of the Class C shares of Gold Opportunity Fund and
Global Hard Assets Fund will be more advantageous. However, shareholders
should be aware that Class A shares have a broader exchange privilege and
offer a means of compensating investment professionals for the services they
provide. The following discussion applies to shares of Gold Opportunity Fund-C
and Global Hard Assets Fund-C purchases after November 1, 1996. The
distribution and 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 and services fee, if
any, on Class A shares. To assist investors in making this determination, the
table under the caption "Transaction Date" 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 at the $25,000 breakpoint. 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 charge when they are
redeemed. Class A shares of Gold/Resources Fund are subject to an ongoing
distribution and services fee at an annual rate of up to .25% of the Fund's
aggregate daily net assets attributable to the Class A shares (See "Plan of
Distribution"). Class A shares of Gold Opportunity Fund and Global Hard Assets
Fund 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 Class A
shares. Class A shares of International Investors Gold Fund are not subject to
an ongoing distribution and services charge. 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 $25,000 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 alternative 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 shareholders 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.
30
<PAGE>
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
shares, from the proceeds of the ongoing distribution and services fee and the
contingent deferred sales charge incurred upon redemption within six years of
purchase and in the case of Class C shares, from the proceeds of the ongoing
distribution and services fee and the redemption charge incurred upon
redemption within one year (see redemption chart on page 33). 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 and ongoing distribution and services fees with respect to the Class B
shares and the redemption charge and ongoing distribution and services fees
with respect to the 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.
Class A shares acquired under the initial sales charge alternative are subject
to a lower distribution and services fee (or no distribution and services fee
in the case of International Investors Gold Fund-A) 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.
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 and C shares
will be borne exclusively by that Class. See "Dividends and Distributions."
Class A, Class B and Class C shareholders of a Fund may exchange their shares
for shares of the same class of other funds in the Van Eck Group of Funds in
accordance with the exchange privilege (see "Exchange Privilege").
The Trustees 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.
Conversion Feature. Class B and C shares include all shares purchased pursuant
to the contingent deferred sales charge or redemption charge alternative.
Eight years after the end of the month in which the shareholder's order to
purchase was accepted, Class B and C shares will automatically convert to
Class A shares and will no longer be subject to the higher distribution and
services fee. Such conversion will be on the basis of the relative net asset
value 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 the Class B and 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 the purposes of conversion to Class A shares, shares purchased through the
reinvestment of dividends and distributions paid in respect to Class B and C
shares in a shareholder's Fund account will convert in proportionate amount to
the non-reinvestment shares converted.
It is not recommended that certificates be requested for Class B or C shares,
since the return and deposit for such certificated shares may delay the
conversion to Class A shares.
31
<PAGE>
The conversion of Class B and 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 and C shares does not result in the Fund's dividends
or distributions constituting "preferential dividends" under the Code, and
(ii) the conversion of shares does not constitute a taxable event under
federal income tax law. The conversion of Class B and 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 and 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 Class B and C shares. However, the Funds
pay an annual fee for promotion and distribution services (12b-1 fee) not to
exceed 1% of average daily net assets. Gold Opportunity Fund-C and Global Hard
Assets Fund-C will waive the 12b-1 fee until November 1, 1996. See "Plan of
Distribution."
In determining whether a contingent deferred sales charge is applicable to a
redemption of Class B shares or a redemption charge is applicable to a
redemption of 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 Class
B or C shares), second of Class B shares held for over six years or Class C
shares held for over one year, shares attributable to appreciation or acquired
pursuant to reinvestment, and third of Class B shares held longest during the
six year period or Class C shares held less than one year.
To provide two examples, assume an investor purchased 100 shares of Gold
Opportunity Fund-B 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 $200 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, $280 of the $600 redemption proceeds
will be charged at a rate of 5% (the applicable rate in the second year after
purchase). Instead, assume an investor purchased 100 shares of Gold
Opportunity Fund-C 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
a redemption charge at a rate of 1%.
The contingent deferred sales charge on Class B shares and the redemption
charge on Class C shares are waived on redemptions following the death or
disability of a Class B or C shareholder. An individual will be considered
disabled for this purpose if 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 redemption charge applies.
32
<PAGE>
SALES CHARGES, DISTRIBUTION AND SERVICE FEES
Sales charges on purchases of shares of each of the Funds are set forth in the
table below. Each Fund (except International Investors Gold Fund-A) imposes a
12b-1 distribution and services fee. Gold/Resources Fund-A and U.S. Government
Money Fund each have 12b-1 fees of .25% of average daily net assets per annum.
Gold Opportunity Fund-A and Global Hard Assets Fund-A each have a 12b-1 fee of
.50% of average daily net assets. Gold Opportunity Fund-B, Global Hard Assets
Fund-B, International Investors Gold Fund-C, Gold Opportunity Fund-C and
Global Hard Assets Fund-C impose a 12b-1 fee of 1% of average daily net
assets. This fee is being waived by Gold Opportunity Fund-C and Global Hard
Assets Fund-C until November 1, 1996, thereafter during the first year
following the purchase of shares, the fee is retained by the Fund as
compensation for advanced distribution and services fees paid to brokers or
agents. 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 of distribution expenses. 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."
THERE IS NO SALES CHARGE ON PURCHASES OF THE U.S. GOVERNMENT MONEY FUND.
However, the Fund pays the Distributor a fee for promotion and distribution
services (See "Plan of Distribution").
INTERNATIONAL INVESTORS GOLD FUND (CLASS A), GOLD/RESOURCES FUND (CLASS A) AND
GOLD OPPORTUNITY FUND (CLASS A)
<TABLE>
<CAPTION>
SALES CHARGE AS A DISCOUNT TO
PERCENTAGE OF BROKER OR AGENTS
------------------- AS A PERCENTAGE
OFFERING NET AMOUNT OF THE
PRICE INVESTED OFFERING PRICE*
-------- ---------- ----------------
<S> <C> <C> <C>
Less than $25,000.......................... 5.75% 6.1% 4.75%
$25,000 to less than $50,000............... 5.00% 5.3% 4.00%
$50,000 to less than $100,000.............. 4.50% 4.7% 3.60%
$100,000 to less than $250,000............. 3.00% 3.1% 2.40%
$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% 1.60%
$1,000,000 and over........................ None***
</TABLE>
GLOBAL HARD ASSETS 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>
GOLD OPPORTUNITY FUND (CLASS B) AND GLOBAL HARD ASSETS 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.................. 3.0% 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>
33
<PAGE>
INTERNATIONAL INVESTORS GOLD FUND (CLASS C), GOLD OPPORTUNITY FUND (CLASS C)**
AND GLOBAL HARD ASSETS FUND (CLASS C)**. GOLD OPPORTUNITY FUND-C AND GLOBAL
HARD ASSETS FUND-C WILL WAIVE THE 1% CONTINGENT DEFERRED REDEMPTION CHARGE ON
PURCHASES UNTIL NOVEMBER 1, 1996.
<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 receive a sales commission of
4.0% of the value of the shares sold at the time of investment. Brokers or
Agents who sell Class C shares receive a distribution and a servicing fee
of .75 of 1% and .25 of 1%, respectively, of the value of the shares sold
at the time of investment (See "Plan of Distribution"). The Distributor
may alter this amount. Until November 1, 1996 Gold Opportunity Fund-C and
Global Hard Assets Fund-C have suspended payment under its 12b-1 Plan.
Brokers or Agents who sell Class C shares of Gold Opportunity Fund and
Global Hard Assets Fund will not receive the 1% 12b-1 fee for distribution
and servicing on eligible purchases prior to November 1, 1996 but will
receive 1% of the purchase price as a commission after the thirteenth
month on assets remaining in the Fund for twelve months.
*** For any sale of $1,000,000 or more of Gold/Resources Fund-A, International
Investors Gold Fund-A, Gold Opportunity Fund-A and Global Hard Assets
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 generally be paid on the 20th day of
the following month. Please contact the Distributor to determine
eligibility to receive such a 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. Except for International
Investors, 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, 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
34
<PAGE>
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.
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.
This public offering price is computed once daily on each business day and is
the net asset value plus a sales charge (except for the U.S. Government Money
Fund which has no 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 International Investors, Gold/Resources Fund,
Gold Opportunity Fund and Global Hard Assets Fund are valued at market or, if
market value is not ascertainable, at fair market value as determined in good
faith by the Board of Trustees. The assets of the U.S. Government Money Fund
are valued on the basis of amortized cost, which involves valuing a portfolio
security 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 security. The U.S.
Government Money Fund attempts to maintain a constant net asset value of $1.00
per share. 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). Consequently, since these Funds will compute their net asset
values only Monday through Friday, exclusive of national business holidays,
the net asset values of shares of these 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 and 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 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,
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calculated at current offering price, of Gold/Resources Fund-A shares and now
were investing $25,000, the sales charge would be 3.0%. 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 the 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 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 $25,000
for International Investors, Gold Opportunity Fund and Gold/Resources Fund (or
more than $100,000 for the other Van Eck Funds), 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-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
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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 Asia Dynasty Fund (Class A and B), Asia
Infrastructure Fund (Class A and B), Global Balanced Fund (Class A and B),
Global Hard Assets Fund (Class A, B and C), Gold Opportunity Fund (Class A, B
and C) International Investors Gold Fund (Class A and C), Gold/Resources Fund
(Class A), 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
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 International Investors, Gold Opportunity Fund
and Global Hard Assets Fund may only exchange between those three 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.
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.
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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 any one 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. 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 Plan 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
Gold/Resources Fund, Gold Opportunity Fund and Global Hard Assets Fund intend
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. U.S. Government Money Fund declares dividends
from its net investment income on each day on which the Fund is open for
business and distributes dividends on the last day of the month. International
Investors' policy is to pay dividends from net investment income in March,
June, September and December, and make distributions of net realized capital
gains, if any, 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 each of the Funds ends on December 31.
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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 Board of Trustees. Dividends paid
on shares of the U.S. Government Money Fund will be accrued daily and
reinvested at the end of the month at net asset value.
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.
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 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 stated amount, not less than $50,
for the proceeds of shares redeemed. The Plan is not available to Class B and
C shareholders. Further details on the Automatic Withdrawal Plan are contained
in the Statement of Additional Information.
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<PAGE>
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 to a retirement plan held by another recognized
custodian/trustee.
TELEPHONE REDEMPTION (SEE "TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGE" ON
PAGE 37)
BROKER/AGENT CONFIRMED REDEMPTION
For the convenience of shareholders, the Funds have authorized the Distributor
as its agent to accept confirmed orders only from Brokers and Agents for the
repurchase of its shares of International Investors, Gold/Resources Fund, Gold
Opportunity Fund and Global Hard Assets Fund. 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. 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 other than U.S. Government Money
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 honor 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,
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<PAGE>
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 International Investors Gold Fund-A,
Gold/Resources Fund-A, Gold Opportunity Fund-A or Global Hard Assets Fund-A
has a one-time right to reinvest in shares of these Funds 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 one-time 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 U.S. Government Money Fund 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 at least $5,000 of shares of the U.S. Government Money
Fund which are on deposit with DST may redeem by telephoning DST toll free
(800) 345-8506. The Fund reserves the right to impose a minimum amount that
may be wired for redemptions. 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.
REDEMPTION BY CHECK
Shareholders of U.S. Government Money Fund may, upon completion of the
"Redemption by Check" portion of the Application, elect to redeem by check
shares of the U.S. Government Money Fund WHICH ARE ON DEPOSIT WITH DST. These
checks, which are drawn on The United Missouri Bank of Kansas City (the
"Bank") may be made payable to the order of any person and may not be drawn
for less than $500 or more than $5 million dollars. When such a check is
presented to the Bank for payment, the Bank as the shareholders' agent acting
under the authority of the Redemption by Check procedure will cause the Fund
to redeem a sufficient number of full and fractional shares to cover the
amount of the check. A shareholder may not write a check to close his account
but should follow the appropriate procedure set forth above. Retirement plan
accounts and accounts held on behalf of minors are not eligible for Redemption
by Check. For further information concerning Redemption by Check, shareholders
should contact DST.
TRANSFER OF OWNERSHIP
To transfer ownership (re-register) of 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.
MANAGEMENT
TRUSTEES
The management of the business and affairs 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.
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INVESTMENT ADVISER
Van Eck Associates Corporation, 99 Park Avenue, New York, NY 10016, serves as
the investment adviser and manager pursuant to an Advisory Agreement 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. International
Investors and Gold/Resources Fund each pay the Adviser a monthly fee at the
annual rate of .75 of 1% of the first $500 million of the average daily net
assets of the Fund, .65 of 1% of the next $250 million of the average daily
net assets and .50 of 1% of the average daily net assets in excess of $750
million. Gold Opportunity Fund and Global Hard Assets Fund pay the Adviser a
monthly fee at the annual rate of 1% of average daily net assets, a portion of
which is paid to the Adviser for accounting and administrative services it
provides to the Fund. U.S. Government Money Fund pays the Adviser a monthly
fee at the annual rate of .50 of 1% of the first $500 million of average daily
net assets, .40 of 1% of the next $250 million of average daily net assets and
.375 of 1% of average daily net assets in excess of $750 million. The advisory
fees paid by International Investors, Gold/Resources Fund, Gold Opportunity
Fund and Global Hard Assets Fund 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).
Van Eck Associates Corporation also performs accounting and administrative
services for the International Investors Gold Fund and Gold/Resources Fund and
is paid at an annual rate of .25% of the first $750 million of average daily
net assets and .20% of average daily net assets in excess of $750 million.
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--Serves as Chief Gold Strategist of the gold funds. He is
Chairman of the Adviser and previously served as the Portfolio Manager of
International Investors Gold Fund. Mr. van Eck has over 45 years of investment
experience.
Henry J. Bingham--President and Portfolio Manager of International Investors
Gold Fund series of Van Eck Funds is responsible for managing the Fund's
portfolio of investments. He is Executive Managing Director of the Adviser and
an officer of other mutual funds advised by the Adviser.
Lucille Palermo--President and Portfolio Manager of the Gold/Resources Fund
and Gold Opportunity Fund series of Van Eck Funds is responsible for managing
the Funds' portfolio of investments. She is Associate Director, Mining
Research of the Adviser and an officer of other mutual funds advised by the
Adviser. Ms. Palermo has over 20 years of experience in the investment
business.
Derek S. van Eck--President and Portfolio Manager of the Global Hard Assets
Fund and Vice President of Global Opportunity Fund. He is Director of Global
Investments and Executive Vice President of the Adviser and an officer of
other mutual funds advised by the Adviser.
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.
At April , 1996, Mr. John C. van Eck and members of his immediate family
owned directly and indirectly approximately shares of the U.S.
Government Money Fund which represented approximately % of the Fund.
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MANAGEMENT DISCUSSION AND ANALYSIS
INTERNATIONAL INVESTORS GOLD FUND
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GOLD/RESOURCES FUND
GOLD OPPORTUNITY FUND
GLOBAL HARD ASSETS FUND
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EXPENSES
Total expense ratios for the fiscal year ended December 31, 1995 of
International Investors Gold Fund-A, International Investors Gold Fund-C,
Gold/Resources Fund-A, Gold Opportunity Fund-A, Gold Opportunity Fund-C,
Global Hard Assets Fund-A and Global Hard Assets Fund-C were, %
and , respectively. The expense ratio for U.S. Government Money Fund for
the fiscal year ended December 31, 1995 was %.
Each Fund bears all expenses of its operation other than those incurred by the
Adviser under its Advisory Agreement with the Trust. 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
(exclusive of International Investors), 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 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 compensates Trustees of the Trust if such persons are
employees or affiliates of the 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 Gold and Money Funds (except International Investors Gold
Fund-A) 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 the
vote of a majority of the Trustees or by a vote of a majority of the
outstanding voting securities of the respective Fund or Class. 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 does not 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 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.
Gold/Resources Fund-A and U.S. Government Money Fund, are reimbursement type
plans. The 12b-1 fees are accrued daily at an annual rate of .25% of the
average daily net assets.
Gold Opportunity Fund-A and Global Hard Assets Fund-A are compensation type
plans. The 12b-1 fees are accrued daily at an annual rate of .50% of average
daily net assets. The Plan also has 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. 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.
- --------
* Annualized
45
<PAGE>
Gold Opportunity Fund-B, Global Hard Assets Fund-B, Gold Opportunity Fund-C,
International Investors Gold Fund-C and Global Hard Assets Fund-C 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 Plans, subject to the annual limitation. For the
periods prior to April 30, 1996, the Distributor has agreed, with respect to
the 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.
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. For the period to November 1,
1996, Gold Opportunity Fund-C and Global Hard Assets Fund-C has suspended
payment under its 12b-1 Plan. Brokers or Agents who sell Class C shares of
Gold Opportunity Fund and Global Hard Assets Fund will not receive the 1% 12b-
1 fee for distribution and servicing on eligible purchases prior to November
1, 1996.
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 current 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. For shares purchased prior to November 1, 1996, Gold Opportunity
Fund-C and Global Hard Assets Fund-C will waive the 1% Contingent Deferred
Redemption Charge.
Of the amounts expended under the Plan for the fiscal year ended December 31,
1995 for Gold/Resources Fund-A and U.S. Government Money Fund approximately
89% was paid to Brokers and Agents who sold shares and/or service shareholder
accounts of the Funds. The remaining 11% was retained by the Distributor as
reimbursement for expenses such as printing and mailing prospectuses and sales
material to other than current Fund shareholders.
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.
U.S. Government Money Fund may advertise its "yield" and "effective yield."
Both yield figures are based on historical earnings and are not intended to
indicate future performance. The "yield" of the Fund refers to the income
generated by an investment in the Fund over a seven-day period (which period
will be stated in the advertisement). This income is then "annualized," I.E.
the amount of income generated by the investment during that week is assumed
to be generated each week over a 52-week period and is shown as a percentage
of the investment. The "effective yield" is calculated similarly but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.
46
<PAGE>
All Funds except U.S. Government Money Fund 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.
The annual total return, before sales charges, for International Investors for
each of the twenty years ended December 31, below, was:
<TABLE>
<CAPTION>
1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986
---- ---- ---- ------ ----- ------- ----- ---- ------- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(28.6%) 33% 9.5% 176.7% 64.6% (19.8%) 51.9% 8.8% (22.9%) (2.0%) 34%
</TABLE>
<TABLE>
<CAPTION>
1987 1988 1989 1990 1991 1992 1993 1994 (CLASS A) 1994 (CLASS C) 1995 (CLASS A) 1995 (CLASS C)
---- ----- ----- ----- ----- -------- ------- -------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
34.7% (22%) 51.3% (27%) 2.56% (29.09%) 113.41% (1.04%) (9.9%)
</TABLE>
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. 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.
International Investors, Gold/Resources Fund and Gold Opportunity Fund are
rated in the Gold Oriented Funds category. Gold/Resources Fund may be compared
to indices such as the historical price of gold. Global Hard Assets Fund is
expected to be rated in the Natural Resources Funds category.
TAXES
Each Fund has qualified and intends 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 Gold/Resources Fund are likely to qualify for the 70%
dividends received deduction allowable to corporations. None of the dividends
paid by the U.S. Government Money Fund qualifies for such deduction. If the
Funds fulfill certain requirements, shareholders 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 TRUST
Van Eck Funds 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 Trustees of the Trust 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 Trust have been authorized, which shares constitute
the interests in the Asia
47
<PAGE>
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), Gold Opportunity Fund (Class A, B and
C), Global Hard Assets Fund (Class A, B and C), Global Income Fund (Class A),
and U.S. Government Money Fund. Each series of the Trust, other than the
Global Income Fund, Gold Opportunity Fund, Global Hard Assets Fund, Global
Balanced Fund, and Asia Infrastructure Fund, is classified as a diversified
fund under the 1940 Act. A "series" is a separate pool of assets of the Trust
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.
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 Trust's 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. On April 8, 1986 the shareholders of
the Trust elected the Board of Trustees. The Trustees will be a self-
perpetuating body 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 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 requires 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
Trust. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations. The Funds' 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 adviser or
the Funds toll free at (800) 544-4653 or write to the Funds at the cover page
address.
CUSTODIAN
The Custodian of the assets of the Trust is Bankers Trust Company, New York,
New York.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., New York, New York provides audit services, provides
consultations and advice with respect to the financial information in the
Trust's filings with the Securities and Exchange Commission, consults with the
Trust on accounting and financial reporting matters and prepares the Trust's
tax returns.
COUNSEL
Goodwin, Procter & Hoar, Exchange Place, Boston, Massachusetts 02109.
48
<PAGE>
-------------------
Van Eck Funds
-------------------
Asia Dynasty Fund - A & B
Asia Infrastructure Fund - A & B
Global Hard Assets Fund (A, B & C)
Global SmallCap Fund - A
Global Balanced Fund - A & B
Global Income Fund - A
World Trends Fund
Gold Opportunity Fund (A, B & C)
International Investors
Gold Fund (A&C)
Gold/Resources Fund - A
U.S. Government Money Fund
Your Investment Dealer is:
-------------------------------
Transfer Agent and Shareholder Service Representative:
DST Systems, Inc.
P.O. BOX 418407
Kansas City, Missouri 64141
(800) 544-4653
[LOGO OF VAN ECK GLOBAL APPEARS HERE]
This prospectus is good until 4/30/97 unless superceded.
---------------------------------
---------------------------
May 1, 1996
---------------------------
VAN ECK
---------------------------
GOLD AND
---------------------------
MONEY
---------------------------
FUNDS
---------------------------
PROSPECTUS
---------------------------
INTERNATIONAL INVESTORS
GOLD FUND
GOLD OPPORTUNITY FUND
GOLD/RESOURCES FUND
GLOBAL HARD ASSETS FUND
U. S. GOVERNMENT MONEY FUND
---------------------------------
[LOGO OF VAN ECK GLOBAL APPEARS HERE]
<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), 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").
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
----
<S> <C>
General Information.............................. 3
Investment Objectives and Policies of the Funds.. 3
Risk Factors - Investing in Foreign Securities... 9
Foreign Currency Transactions.................... 12
Futures and Options.............................. 13
Repurchase Agreements............................ 14
Rule 144A Securities............................. 14
Investment Restrictions.......................... 15
Investment Advisory Services..................... 20
The Distributor.................................. 23
Portfolio Transactions and Brokerage............. 26
Trustees and Officers............................ 29
Valuation of Shares.............................. 33
Exchange Privilege............................... 35
Tax-Sheltered Retirement Plans................... 36
Investment Programs.............................. 38
Taxes............................................ 40
Redemptions in Kind.............................. 42
Performance...................................... 43
Additional Information........................... 47
Financial Statements............................. 47
Appendix......................................... 48
Performance Charts............................... 52
</TABLE>
1
<PAGE>
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE READ
IN CONJUNCTION WITH THE FUNDS' CURRENT PROSPECTUSES, DATED APRIL __, 1996 (THE
"PROSPECTUS"), WHICH IS AVAILABLE AT NO CHARGE UPON WRITTEN OR TELEPHONE REQUEST
TO THE TRUST AT THE ADDRESS OR TELEPHONE NUMBER SET FORTH 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 - APRIL __, 1996
2
<PAGE>
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 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) 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. AIG Global Investment Corp. ("AIG") serves as sub-investment adviser
to Asia Dynasty Fund and Asia Infrastructure 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 present 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.
3
<PAGE>
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 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).
4
<PAGE>
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 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.
5
<PAGE>
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).
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
6
<PAGE>
("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 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.
7
<PAGE>
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, 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 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.
8
<PAGE>
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 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 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 and Asia Infrastructure
Fund in companies in developing countries as well as in developed countries.
Asia Dynasty Fund, Asia Infrastructure Fund, Global Hard Assets Fund and Gold
Opportunity Fund may
9
<PAGE>
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 Asia Dynasty Fund and Asia Infrastructure Fund 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
10
<PAGE>
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 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 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 judgement 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
11
<PAGE>
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.
FOREIGN CURRENCY TRANSACTIONS
-----------------------------
- --------------------------------------------------------------------------------
GLOBAL BALANCED FUND, GLOBAL HARD ASSETS FUND, ASIA DYNASTY FUND, ASIA
INFRASTRUCTURE 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 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.
12
<PAGE>
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.
FUTURES AND OPTIONS TRANSACTIONS
--------------------------------
Global Balanced Fund, Global Hard Assets Fund, Gold Opportunity Fund, Asia
Dynasty 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
13
<PAGE>
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.
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 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.
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
- ------------
/1/ From time to time, legislation has been proposed in Congress which, if
enacted, will repeal this requirement.
14
<PAGE>
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.
- --------------------------------------------------------------------------------
GLOBAL BALANCED FUND, GLOBAL HARD ASSETS FUND, GOLD OPPORTUNITY FUND, ASIA
DYNASTY 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, 3, 7,
10, 15 and 21 are not fundamental. With respect to Global Balanced Fund, Global
Hard Assets Fund, Gold Opportunity Fund, Asia Dynasty Fund and Asia
Infrastructure Fund restrictions 1, 3, 4, 6, 7, 10, 12, 13, 16, 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, 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 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 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.
15
<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 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 Gold/Resources Fund, Asia
Dynasty Fund, Asia Infrastructure Fund, Global Balanced Fund, Global Hard
Assets Fund, Gold Opportunity Fund and Global Income 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. A Fund may not commit more than 5% of its total assets to initial
margin deposits on futures contracts. In addition, Gold/Resources Fund,
International Investors Gold Fund, Global Hard Assets Fund and Gold
Opportunity Fund may invest in gold bullion and coins. 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.
4. Exclusive of the Global Balanced Fund, Global Hard Assets Fund, Gold
Opportunity Fund, Asia Dynasty 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, 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, 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,
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
16
<PAGE>
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,
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, Asia Dynasty Fund, 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, 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, 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 and
Asia Infrastructure Fund); and (vi) issuing two classes of shares (Global
Balanced Fund, Global Hard Assets Fund, Gold Opportunity Fund and Asia
Dynasty Fund). Fund).
12. Except for Gold Opportunity Fund and Global Hard Assets Fund, make short
sales of securities, except that Global Balanced 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, 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).
17
<PAGE>
14. Write, purchase or sell puts, calls, straddles, spreads or combinations
thereof, except that Global Balanced Fund, Global Hard Assets Fund, Gold
Opportunity 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, 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 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, Asia Dynasty Fund, Asia Infrastructure Fund,
Gold/Resources Fund and Global Income Fund) in oil, gas or other mineral
exploration or development programs.
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, 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.
21. Invest in real estate limited partnerships or in oil, gas or other mineral
leases.
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.
18
<PAGE>
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 8 are fundamental policies of International Investors
Gold Fund and may not be changed without shareholder approval. Restrictions 9
through 15 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.
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. 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.
10. Invest in real estate limited partnerships.
11. Make short sales of foreign currencies.
19
<PAGE>
12. Seek short-term trading profits.
13. Make investments in companies for the purpose of exercising control or
management.
14. 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.
15. 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.
AIG Global Investment Corp. ("AIG"), a Delaware Corporation, is sub-adviser to
the Asia Dynasty Fund and Asia Infrastructure Fund pursuant to Sub-Investment
Advisory Agreements dated March 1, 1993 and May 31, 1994, respectively.
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 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 and Global Hard Assets each pay the
Adviser 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.
20
<PAGE>
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) - $___________,
$634,808,000 and $706,171,000, respectively; Gold/Resources Fund (Class A) -
$___________, $186,091,000 and $211,450,000, respectively; U.S. Government Money
Fund - $__________, $47,078,000 and $31,109,000, respectively; Global Income
Fund (Class A) - $___________, $137,242,000 and $251,725,000, respectively;
Asia Dynasty Fund (Class A) $__________, $83,787,000 and $108,661,000,
respectively; Asia Dynasty Fund (Class B) - $__________, $35,024,000 and
$26,205,000, respectively; Global Balanced Fund (Class A) - $__________,
$13,986,000 and $562,000, respectively; Global Balanced Fund (Class B) -
$_________, $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) - $_______ and $430,000 respectively; Asia Infrastructure Fund
(Class A) - $______ and $1,038,000 respectively; Global Hard Assets Fund (Class
A) - $_________ and $1,419,000 respectively; and Global Hard Assets Fund (Class
C) - $_______ and $8,000 respectively. Gold Opportunity Fund (Class A) at
December 31, 1995 - $_________ respectively; and Gold Opportunity Fund (Class
C) at December 31, 1995 - $_______ respectively.
In 1995, 1994 and 1993, the aggregate remuneration received by the Adviser from
International Investors Gold Fund was $_________, $4,792,990 and $4,056,306,
respectively; from Gold/Resources Fund was $_________, $1,569,404 and
$1,237,378, respectively; from U.S. Government Money Fund was $_______, $316,603
and $164,283, respectively; from Global Income Fund was $_________, $1,312,169
and $2,167,616, respectively; from Asia Dynasty Fund was $_________, $1,011,806
and $243,120, respectively. In 1995 and 1994, the aggregate remuneration
received by the Adviser from Global Balanced Fund was $_______ and $127,782,
respectively; from Global Hard Assets Fund was $______ and $1,893, respectively;
from Asia Infrastructure Fund
21
<PAGE>
was $______ and $12,806, respectively. In 1995, the aggregate remuneration
received by the Adviser from Gold Opportunity Fund was $______,
respectively.
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.
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 and the Advisory Agreements
for the other 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 18, 1995. The
Advisory Agreement was approved by shareholders of the
22
<PAGE>
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
18, 1995.
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.
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:
23
<PAGE>
<TABLE>
<CAPTION>
Van Eck
Securities Reallowance to
Corporation Dealers
----------- -------
<S> <C> <C> <C>
1995 $_______ $_________
International 1994 423,706 1,665,173
Investors Gold Fund 1993 485,198 1,851,096
1995 $_______ $_________
Gold/Resources Fund 1994 286,592 1,117,992
1993 342,459 1,290,246
1995 $_______ $_________
Global Income Fund 1994 33,396 136,949
1993 337,156 1,517,371
1995 $_______ $_________
Asia Dynasty 1994 236,565 1,181,535
Fund 3/22/93-12/31/93 211,110 2,409,342
1995 $_______ $_________
Global Balanced 1994 19,768 308,987
Fund 12/20/93-12/31/93 51 5,368
Asia Infra- 1995 $_______ $_________
structure 8/3/94-12/31/94 1,142 36,798
Fund
</TABLE>
24
<PAGE>
<TABLE>
<S> <C> <C> <C>
Global Hard 1995 $_______ $_________
Assets Fund 11/2/94-12/31/94 64 16,554
Gold Opportunity 1995 $_______ $_________
Fund
</TABLE>
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.
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 18, 1995. 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
25
<PAGE>
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 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.
26
<PAGE>
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>
Fund (fiscal year end) 1995
% Daily
Commissions Quotations %Fund Sales
<S> <C> <C> <C>
International Investors Gold Fund (Class A and C) (12/31) $ % %
Gold/Resources Fund (Class A) (12/31) $ % %
Global Income Fund (Class A) (12/31) $ % %
Asia Dynasty Fund (Class A and B) (12/31) $ % %
Global Balanced Fund (Class A and B) (12/31) $ % %
Asia Infrastructure Fund (Class A) (12/31) $ % %
Global Hard Assets Fund (Class A and C) (12/31) $ % %
Gold Opportunity Fund (Class A and C)(12/31) $ % %
<CAPTION>
Fund (fiscal year end) 1994
% Daily
Commissions Quotations %Fund Sales
<S> <C> <C> <C>
International Investors Gold Fund (Class A and C) (12/31) $ 403,615.77 30.92% 15.24%
Gold/Resources Fund (12/31) $ 199,612.85 2.74% 8.75%
Global Income Fund (12/31) $ 40,339.75 78.09% -0-
Asia Dynasty Fund (Class A and B) (12/31) $1,011,934.02 2.36% 2.36%
Global Balanced Fund (Class A and B) (12/31) $ 65,743.63 10.32% 1.28%
Asia Infrastructure Fund (12/31) $ 57,894.03 4.75% 3.64%
Global Hard Assets Fund (Class A and C) (12/31) $ 2,686.74 78.75% 32.04%
<CAPTION>
Fund (fiscal year end) 1993
% Daily
Commissions Quotations %Fund Sales
<S> <C> <C> <C>
International Investors Gold Fund (12/31) $ 285,945.52 11.49% 13.89%
Gold/Resources Fund (12/31) 100,986.32 -0- -0-
Global Income Fund (12/31) 32,000.00 -0- -0-
Asia Dynasty Fund (Class A and B) (12/31) 518,223.23 22.80% 0.10%
Global Balanced Fund (Class A and B) (12/31) -0- -0- -0-
</TABLE>
27
<PAGE>
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 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, 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.
28
<PAGE>
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.
Trustees of Van Eck Funds:
*oJOHN 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,
Van Eck Associates Corporation (investment adviser); Chairman and
President, 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).
o#+JEREMY H. BIGGS - Trustee
- ------------------
1220 Park Avenue, New York, NY 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
29
<PAGE>
Committee (1974-1981), Allerton Resources, Inc. (oil and gas exploration);
Former Director (1976-1982), Western World Insurance Co.
oRODGER A. LAWSON - Trustee
- -----------------
330 East 38th Street, New York, New York 10016; Trustee of other affiliated
investment companies advised by the Adviser; President, Chief Executive
Officer and a Director of the Adviser and Van Eck Securities Corporation;
Former Managing Director and Head of Global Private Banking and Mutual
Funds, Bankers Trust Company (1992-1994); Former Managing Director, Member
of the Management Committee, and President/CEO of Fidelity Investments
Retail Group, FMR Corp. (1985-1991); Former Corporate Officer, Member of
the Management Committee, and Head of Retail and Institutional Businesses,
Dreyfus Corporation (1982-1985).
#+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 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).
30
<PAGE>
**oFRED 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, International Investors Gold Fund series of Van Eck Funds;
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
- ---------------
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; Director, Global
Fixed Income of the Adviser; Executive Vice President of other affiliated
investment companies advised by the Adviser; President of Worldwide Bond
Fund series of Van Eck Worldwide Insurance Trust; Former Global Bond
Manager, Chase Manhattan Private Bank (1992-1994); Former President and
founder, Sunray Securities, Inc. (1989-1992).
***oDEREK 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 and 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.
31
<PAGE>
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.
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 - Assistant 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.
- -------------------------
o 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.
32
<PAGE>
+ 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: _______ of International Investors Gold Fund,
equal to less than 1% of shares outstanding; ______ shares of Gold/Resources
Fund, equal to less than 1% of shares outstanding; _______ shares of U.S.
Government Money Fund, equal to approximately 1.5% of shares outstanding; ______
shares of Global Income Fund, equal to less than 1% of shares outstanding;
______ shares of Asia Dynasty Fund, equal to less than 1% of shares outstanding;
______ shares of Global Balanced Fund, equal to approximately 1.9% of shares
outstanding; ______ shares of Asia Infrastructure Fund, equal to approximately
2.5% of shares outstanding; ______ shares of Global Hard Assets Fund, equal to
approximately 10.5% of shares outstanding and ______ shares of Gold Opportunity
Fund, equal to approximately 10.5% of shares outstanding.
At April __, 1996, Mr. John C. van Eck and members of his family owned _______
shares of the U.S. Government Money Fund, which represented approximately ___%
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.
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, Asia Infrastructure Fund-B, Global Hard Assets
Fund-B and Gold Opportunity Fund-B are sold with a contingent deferred sales
charge. Shares of International Investors Gold Fund-C, Global Hard Assets Fund-
C and Gold Opportunity Fund-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:
33
<PAGE>
<TABLE>
<CAPTION>
Gold/ Global Hard Global International Asia Asia Global Gold
Resources Assets Income Investors Dynasty Infrastruc- Balanced Opportunity
Fund-A Fund-A Fund-A Gold Fund-A Fund-A ture 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
Maximum sales charge (as
described in the
Prospectus)
Maximum offering price per
share
</TABLE>
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.
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.
34
<PAGE>
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.
EXCHANGE PRIVILEGE
------------------
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
35
<PAGE>
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 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.
36
<PAGE>
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.
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
37
<PAGE>
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
38
<PAGE>
details of the Automatic Investment Plan are given in the application which is
available from DST or the Funds.
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.
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 of not less than $50 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.
39
<PAGE>
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.
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
40
<PAGE>
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.
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
41
<PAGE>
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 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.
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.
42
<PAGE>
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 March __, 1996 were ___% and ____%, 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:
43
<PAGE>
- --------------------------------------------------------------------------------
P (1 + T)/n/ = ERV
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;
- --------------------------------------------------------------------------------
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.
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) % % % %
International Investors
Gold Fund (Class C) - - - %
Gold/Resources Fund (Class A) % % - %
Gold Opportunity Fund (Class A) - - - %
Gold Opportunity Fund (Class C) - - - %
Global Income Fund (Class A) % % - %
Asia Dynasty Fund (Class A) % - - %
Asia Dynasty Fund (Class B) % - - %
Global Balanced Fund (Class A) % - - %
Global Balanced Fund (Class B) % - - %
Asia Infrastructure Fund (Class A) - - - %
Global Hard Assets Fund (Class A) - - - %
Global Hard Assets Fund (Class C) - - - %
</TABLE>
44
<PAGE>
The Global Balanced Fund, Asia Dynasty Fund, Asia Infrastructure Fund,
Gold/Resources Fund, Global Income Fund, Gold Opportunity Fund, Global Hard
Assets 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]
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
================================================================================
The 30-day yield for the 30-days ended March __, 1996 for the Class A shares of
the Global Income Fund was ____%.
The Global Balanced Fund, Gold Opportunity Fund, Global Hard Assets Fund, Asia
Dynasty Fund, Asia Infrastructure Fund, Gold/Resources Fund, Global Income 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
Where: A = initial investment
B = value at end of period
ATR = aggregate total return
================================================================================
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.
45
<PAGE>
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)
% % % %
International Investors
Gold Fund (Class C)
Gold/Resources Fund (Class A)
Gold Opportunity Fund (Class A) % %
Gold Opportunity Fund (Class C) % %
Global Income Fund (Class A) % % %
Global Balanced Fund (Class A) % %
Global Balanced Fund (Class B) % %
Asia Dynasty Fund (A) % %
Asia Dynasty Fund (B) % %
Asia Infrastructure Fund (Class A) % %
Global Hard Assets Fund (Class A) % %
Global Hard Assets Fund (ClassC) % %
</TABLE>
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.
46
<PAGE>
ADDITIONAL INFORMATION
----------------------
Custodian. Bankers Trust Company, New York, New York is the custodian of the
- ---------
Trust's (except for the Asia Infrastructure Fund series) portfolio securities,
cash, coins and bullion. State Street Bank and Trust Co., Boston,
Massachusetts, is the custodian of the Asia Infrastructure Fund series'
portfolio securities and cash. 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
- -------
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.
47
<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
48
<PAGE>
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.
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 every 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.
49
<PAGE>
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 may 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 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.
50
<PAGE>
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.
51
<PAGE>
PERFORMANCE CHARTS
BEST PERFORMING WORLD BOND MARKETS*
1986 THROUGH DECEMBER, 1995
<TABLE>
<S> <C> <C>
1986 JAPANESE YEN GOVERNMENTS 40.1%
1987 U.K. GOVERNMENTS 46.6%
1988 AUSTRALIAN GOVERNMENTS 28.8%
1989 CANADIAN GOVERNMENTS 16.2%
1990 U.K. GOVERNMENTS 30.9%
1991 AUSTRALIAN GOVERNMENTS 23.5%
1992 JAPANESE YEN GOVERNMENTS 10.8%
1993 JAPANESE YEN GOVERNMENTS 29.1%**
1994 BELGIAN GOVERNMENTS 12.22
1995 %
</TABLE>
*in U.S. dollar terms **(YEAR-TO-DATE THROUGH NOVEMBER)
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.
52
<PAGE>
ANNUAL REAL (INFLATION-ADJUSTED) GDP GROWTH
(IN LOCAL CURRENCY TERMS)
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993 1994
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
HONG KONG 7.5% 2.5% 2.3% 4.0% 5.2% N/A
SINGAPORE 11.0% 9.2% 8.3% 6.5% 5.4% 12.55%
THAILAND 11.0% 11.0% 12.2% 7.5% 7.5% N/A
MALAYSIA 8.1% 8.5% 8.5% 8.9% 7.7% 12.23%
INDONESIA 5.7% 6.2% 6.5% 6.4% 5.8% 14.28%
PHILIPPINES 6.4% 5.8% 5.7% -1.0% -.04% 8.49%
TAIWAN 7.1% 7.3% 5.2% 7.2% 6.1% N/A
SOUTH KOREA 12.2% 6.5% 8.6% 8.3% 5.1% 10.46%
PEOPLE'S REPUBLIC 11.0% 3.9% 4.5% 7.0% 12.8%* 30.64%
OF CHINA
Source: International Financial Statistics (International Monetary Fund) - 3/95
</TABLE>
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.
*AIG Investment Corporation (GNP figure)
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. COMPOUNDED 7 YR. COMPOUNDED
AVG. ANNUAL RETURN AVG. ANNUAL RETUTRN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993 1994 12/31/92 12/31/94
----- ----- ----- ----- ----- ----- ----- ----------------- -------------------
HONG KONG 22.7% 3.4% 3.7% 42.8% 27.4% 109.9% -31.0% 22.3% 19.4%
INDONESIA 227.8% 77.1% 5.2% -46.4% -2.1% 102.2% -27.0% -4.0% 24.9%
MALAYSIA 23.9% 52.6% -9.9% 3.1% 15.7% 107.3% -20.7% 12.1% 18.8%
PHILIPPINES 0.0% 62.9% -47.7% 83.5% 37.1% 121.4% -8.3% 21.7% 29.5%
SINGAPORE 30.8% 36.1% -14.3% 33.8% -0.8% 71.4% -4.7% 15.4% 20.2%
SO. KOREA 94.0% 0.4% -28.5% -17.1% 0.0% 29.1% 22.1% -1.3% 9.0%
TAIWAN 117.3% 83.5% -55.4% 11.8% -24.6% 82.3% 19.7% -3.9% 18.4%
THAILAND 41.6% 106.1% -29.7% 18.1% 30.4% 97.8% -11.1% 13.7% 27.7%
</TABLE>
Source: Morgan Stanley & Co. Incorporated
Performance provided in U.S. dollar terms and does not include reinvestment of
dividends. Past performance is not necessarily 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.
53
<PAGE>
MORGAN STANLEY CAPITAL INTERNATIONAL STOCK MARKET INFORMATION
(IN US CURRENCY WITH NET DIVIDENDS REINVESTED)
AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
----- ----- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AUSTRALIA 5.4% 35.2% -10.82% 33.64% -17.54% 9.30% 36.40% 9.25% 42.28% 19.56%
AUSTRIA -6.3% 28.1% -10.65% -12.63% 6.33% 103.91% 0.57% 2.23% 34.74% 176.26%
BELGIUM 8.2% 23.5% -1.47% 13.77% -10.98% 17.29% 53.63% 7.88% 78.37% 76.61%
CANADA -3.0% 17.6% -12.15% 13.08% -13.00% 24.30% 17.07% 13.91% 9.94% 15.05%
DENMARK 3.8% 32.8% -28.25% 16.56% -0.91% 43.94% 52.67% 13.23% 1.24% 60.29%
FINLAND 52.2% 82.7% -12.96% -18.07% -31.66% -9.63% 13.72% N/A N/A N/A
FRANCE -5.2% 20.9% 2.81% 17.83% -13.83% 36.15% 37.87% -13.81% 78.35% 82.01%
GERMANY 4.7% 35.6% -10.27% 8.16% -9.36% 46.26% 20.60% -24.75% 35.29% 135.19%
HONG KONG -28.9% 116.7% 32.29% 49.52% 9.17% 8.39% 28.12% -4.11% 56.11% 51.69%
IRELAND 14.5% 42.4% 12.18% -16.73% 41.16% 25.09% N/A N/A N/A N/A
ITALY 11.6% 28.5% -22.22% -1.82% -19.19% 19.42% 11.46% -21.30% 108.28% 131.74%
JAPAN 21.4% 25.5% -21.45% 8.92% -36.10% 1.71% 35.39% 43.03% 99.41% 43.07%
MALAYSIA -19.9% 110.0% 17.76% 4.95% -7.91% 55.76% 26.54% N/A N/A N/A
NETHERLANDS 11.7% 35.3% 2.30% 17.80% -3.19% 35.79% 14.19% 7.07% 40.74% 59.62%
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
----- ----- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NEW ZEALAND 8.9% 67.7% -1.43% 18.26% -37.67% 11.44% -13.75% N/A N/A N/A
NORWAY 23.6% 42.0% -22.69% -15.50% 0.65% 45.53% 42.40% 5.67% -2.52% 68.60%
SINGAPORE 6.7% 68.0% 6.28% 24.96% -11.66% 42.26% 33.32% 2.28% 45.17% -22.19%
SPAIN -4.8% 29.8% -21.87% 15.63% -13.65% 9.76% 13.53% 36.91% 121.24% 54.75%
SWEDEN 18.3% 37.0% -14.41% 14.42% -20.99% 31.79% 48.33% 1.99% 65.59% 56.96%
SWITZERLAND 3.5% 45.8% 17.23% 15.77% -6.23% 26.21% 6.18% -9.45% 33.37% 105.72%
UNITED KINGDOM -1.6% 24.4% -3.65% 16.02% 10.29% 21.87% 5.95% 35.09% 26.95% 53.02%
USA 1.1% 9.1% 6.39% 30.07% -3.15% 30.01% 14.61% 2.91% 16.28% 31.08%
</TABLE>
MORGAN STANLEY CAPITAL INTERNATIONAL INDEX
(IN US CURRENCY WITH NET DIVIDENDS REINVESTED)
AS OF DECEMBER 31, 1994
10 YEAR ANNUAL TOTAL RETURN
---------------------------
AUSTRALIA 13.9%
AUSTRIA 23.6%
BELGIUM 22.4%
CANADA 7.7%
DENMARK 16.1%
FINLAND N/A
FRANCE 20.08%
GERMANY 17.6%
HONG KONG 31.0%
IRELAND N/A
ITALY 14.9%
JAPAN 14.5%
MALAYSIA N/A
NETHERLANDS 19.4%
NEW ZEALAND N/A
NORWAY 12.9%
SINGAPORE 15.8%
SPAIN 19.5%
SWEDEN 18.6%
SWITZERLAND 20.0%
UNITED KINGDOM 17.9%
USA 13.1%
55
<PAGE>
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.
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.
56
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
---------------------------------
a) FINANCIAL STATEMENTS and FINANCIAL HIGHLIGHTS
(1) Financial Statements included in Part A of this Registration
Statement:
# Financial Highlights for Gold/Resources Fund, U.S. Government Money
Fund, Global Income Fund, International Investors Gold Fund, Global
Balanced Fund, Asia Dynasty Fund, Asia Infrastructure Fund, Global Hard
Assets Fund and Gold Opportunity Fund.
(2) Financial Statements included in Part B of this Registration
Statement:
# Report of Independent Accountants, Financial Highlights, Statement of
Assets and Liabilities, Statement of Operations and Statement of
Changes in Net Assets of Gold/Resources Fund, U.S. Government Money
Fund, Global Income Fund, International Investors Gold Fund, Global
Balanced Fund, Asia Dynasty Fund, Asia Infrastructure Fund, Global Hard
Assets Fund and Gold Opportunity Fund for the fiscal year ended
December 31, 1995 (incorporated by reference to the Annual
Reports).
b) EXHIBITS (An * denotes inclusion in this filing and /#/ denotes an
item to be filed in a subsequent amendment)
(1) Master Trust Agreement (incorporated by reference from Registration
Statement No. 2-97596); Form of First Amendment to Master Trust
Agreement (incorporated by reference from Registration Statement No. 2-
97596); Form of Second Amendment to Master Trust Agreement
(incorporated by reference from Pre-Effective Amendment No. 1); Form of
Third Amendment to Master Trust Agreement (incorporated by reference
from Post-Effective Amendment No. 1); Form of Fourth Amendment to
Master Trust Agreement (incorporated by reference from Post-Effective
Amendment No. 3); Form of Sixth Amendment to the Master Trust
Agreement, adding International Investors as a series of the Trust and
establishing investment limitations therefore, respectively
(incorporated by reference from Post Effective Amendment No. 17); Form
of Seventh Amendment to Master Trust Agreement, adding Short-Term World
Income Fund and International Equities Fund as series of the Trust
(Incorporated by reference from Post-Effective Amendment No. 19).
(1)(a) Form of Amended and Restated Master Trust Agreement (Incorporated
by reference from Post-Effective Amendment No. 20); Form of Amendment to
the Master Trust Agreement changing the name of Short-Term World Income
Fund to Short-Term World Income Fund-C, and changing the name of
International Equities Fund to International Growth Fund (Incorporated
by reference from Post-Effective Amendment No. 20); Form of second
Amendment to the Amended and Restated Master Trust Agreement adding Asia
Dynasty Fund as a series of the Trust (Incorporated by reference from
Post-effective Amendment No. 23); Third Amendment to the Amended and
Restated Master Trust Agreement adding Global Balanced Fund as a series
of the Trust and changing the name of International Investors to
International Investors Gold Fund (incorporated by reference from Post-
Effective Amendment No. 28); Fourth Amendment to the Amended and
Restated Master Trust Agreement adding Global SmallCap Fund and Asia
Infrastructure
<PAGE>
Fund as series of the Trust (incorporated by reference from Post-
effective Amendment No. 30); Form of Fifth Amendment to the Amended and
Restated Master Trust Agreement (incorporated by reference from Post-
effective Amendment No. 35); Form of Sixth Amendment to Amended and
Restated Master Trust Agreement (incorporated by reference from Post-
effective Amendment No. 35); Seventh Amendment to Amended and Restated
Master Trust Agreement adding Global Hard Assets Fund as series of the
Trust (incorporated by reference from Post-effective Amendment No. 36).
* (1)(b) Eighth Amendment to Amended and Restate Master Trust Agreement
adding Aggressive Gold Opportunity Fund as series of the Trust
(incorporated by reference from Post-effective Amendment No. 37).
(2) By-laws of Registrant (incorporated by reference from Registration
Statement No. 2-97596).
(3) Not Applicable.
(4)(a) Form of certificate of shares of beneficial interest of the World
Trends Fund (incorporated by reference from Pre-Effective Amendment No.
1); Forms of certificates of shares of beneficial interest of the
Gold/Resources Fund and U.S. Government Money Fund (incorporated by
reference from Post-Effective Amendment No. 1); Form of certificate of
shares of beneficial interest of the World Income Fund (incorporated by
reference from Post-Effective Amendment No. 6). Forms of certificates of
shares of beneficial interest of Short-Term World Income Fund-C and
International Growth Fund (Incorporated by reference from Post-effective
Amendment No. 23); Form of certificate of shares of beneficial interest
of Asia Dynasty Fund (incorporated by reference from Post-effective
Amendment No. 23); Form of certificate of Class B shares of beneficial
interest of Asia Dynasty Fund (incorporated by reference from Post-
Effective Amendment No. 26); Form of certificate of Class A and Class B
shares of beneficial interest of Global Balanced Fund (incorporated by
reference from Post-Effective Amendment No. 26); Form of certificate of
Class B shares of beneficial interest of World Income Fund (incorporated
by reference from Post-effective Amendment No. 29); Certificate of Class
A shares of beneficial interest of World Income Fund; Form of
Certificate of Class A and Class B shares of beneficial interest of
Global SmallCap Fund and Asia Infrastructure Fund (incorporated by
reference from Post-Effective Amendment No. 30) and Form of Certificate
of Class A and Class C shares of beneficial interest of Global Hard
Assets Fund (incorporated by reference from Post-Effective Amendment No.
33); Form of Certificate of Class A and Class C shares of beneficial
interest of Aggressive Gold Opportunity Fund (incorporated by reference
from Post-effective Amendment No. 35).
* (4)(b) Form of certificate of Class B shares of beneficial interest of
Asia Infrastructure Fund, Global Hard Assets Fund and Gold Opportunity
Fund.
(4)(c) Instruments defining rights of security holders (See Exhibit
(1) above).
(5)(a) Advisory Agreement (incorporated by reference from Post-Effective
Amendment No. 1).
(5)(b) Letter Agreement to add Gold/Resources Fund and U.S. Government
Money Fund (incorporated by reference from Post-Effective Amendment No.
1); Letter Agreement to add World Income Fund (incorporated by reference
from Post-Effective Amendment No. 6).
<PAGE>
(5)(c) Form of Advisory Agreement between Van Eck Associates Corporation
and Van Eck Funds with respect to Asia Dynasty Fund (Incorporated by
reference from Post-effective Amendment No. 23).
(5)(d) Advisory Agreement between Van Eck Associates Corporation and Van
Eck Funds with respect to Global Balanced Fund (incorporated by
reference from Post-effective Amendment No. 31).
(5)(e) Letter Agreement to add Global SmallCap Fund and Asia
Infrastructure Fund (incorporated by reference from Post-effective
Amendment No. 31) and Letter Agreement to add Gold/Resources Fund and
International Investors Gold Fund (incorporated by reference from Post-
effective Amendment No. 34).
(5)(f) Advisory Agreement between Van Eck Associates Corporation and
Global Hard Assets Fund (incorporated by reference from Post-effective
Amendment No. 36).
(5)(g) Form of Letter Agreement to add Gold Opportunity Fund
(incorporated by reference from Post-effective Amendment No. 37).
(5)(h) Sub-Advisory Agreement among AIG Asset Management, Inc., Van Eck
Associates Corporation and Van Eck Funds with respect to Asia Dynasty
Fund (Incorporated by reference from Post-effective Amendment No. 24);
Sub-Advisory Agreement among Fiduciary International, Inc., Van Eck
Associates Corporation and Van Eck Funds with respect to Global Balanced
Fund (incorporated by reference from Post-effective Amendment No. 27);
and Sub-Advisory Agreement among AIG Asset Management, Inc., Van Eck
Associates Corporation and Van Eck Funds with respect to Asia
Infrastructure Fund (incorporated by reference from Post-Effective
Amendment No. 30).
(6)(a) Distribution Agreement (incorporated by reference from Post-
Effective Amendment No. 1).
(6)(b) Letter Agreement to add Gold/Resources Fund and U.S. Government
Money Fund (incorporated by reference from Post-Effective Amendment No.
1); Letter Agreement to add World Income Fund (incorporated by reference
from Post-Effective Amendment No. 9); Letter Agreement to add Asia
Dynasty Fund (Incorporated by reference from Post-effective Amendment
No.23).
(6)(c) Letter Agreement to add Global SmallCap Fund and Asia
Infrastructure Fund (incorporated by reference from Post-effective
Amendment No. 31); Letter Agreement to add Gold/Resources Fund-C,
International Investors Gold Fund-C, Global SmallCap Fund-C and Asia
Infrastructure Fund-C (incorporated by reference from Post-effective
Amendment No. 34) and Letter Agreement to add Global Hard Assets Fund
(incorporated by reference from Post-effective Amendment No. 36). Form
of Letter Agreement to add Gold Opportunity Fund (incorporated by
reference from Post-effective Amendment No. 37).
(6)(d) Amendment to Form of Selling Group Agreement (incorporated by
reference from Post-Effective Amendment No. 9).
(6)(e) Selling Agency Agreement (incorporated by reference from Post-
Effective Amendment No. 12).
(7) Not Applicable.
<PAGE>
(8)(a) Custodian Agreement (incorporated by reference from Post-
Effective Amendment No. 1).
(8)(a)(1) Form of Custody Agreement between the Van Eck Funds and
Bankers Trust Company (Incorporated by reference from Post-Effective
Amendment No. 20).
(8)(b) Letter Agreement to add Gold/Resources Fund and U.S. Government
Money Fund (incorporated by reference from Post-Effective Amendment No.
1); Letter Agreement to add World Income Fund (incorporated by reference
from Post-Effective Amendment No. 6).
(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 from Post-Effective Amendment No. 9).
(9)(b) Commodity Customer's Agreement between World Income Fund and
Morgan Stanley & Co. (incorporated by reference from 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
from Post-Effective Amendment No. 17).
(9)(d) Form of Accounting and Administrative Services Agreement with
respect to Asia Dynasty Fund (Incorporated by reference from Post-
effective Amendment No. 23).
(9)(e) Accounting and Administrative Services Agreement with respect to
Global Balanced Fund (incorporated by reference from Post-effective
Amendment No. 31).
(9)(f) Letter Agreement to add Global SmallCap Fund and Asia
Infrastructure Fund (incorporated by reference from Post-effective
Amendment No. 31) and Letter Agreement to add Gold/Resources Fund and
International Investors Gold Fund (incorporated by reference from Post-
effective Amendment no. 34). Letter Agreement to add Global Hard Assets
Fund (incorporated by reference from Post-effective Amendment No. 36).
Letter Agreement to add Gold Opportunity Fund (incorprated by reference
from Post-effective Amendment No. 37).
(10) Opinion of Goodwin, Procter & Hoar, including consent, with regard
to World Trends Fund (incorporated by reference from Pre-Effective
Amendment No. 1); Opinion Of Goodwin, Procter & Hoar with regard to
Gold/Resources Fund and U.S. Government Money Fund (incorporated by
reference from Post-Effective Amendment No. 1); Opinion of Goodwin,
Procter & Hoar with regard to World Income Fund (incorporated by
reference from Post-Effective Amendment No. 7); Opinion of Goodwin,
Procter & Hoar and consent with regard to International Investors
(incorporated by reference from Post-Effective Amendment No. 17);
Opinion of Goodwin, Procter and Hoar with regard to Asia Dynasty Fund
(incorporated by reference from Post-effective Amendment No. 24);
Opinion of Goodwin, Procter & Hoar with respect to the issuance of Class
B shares of Asia Dynasty Fund and with respect to the issuance of Class
A and Class B shares of Global Balanced Fund (incorporated by reference
from Post-effective Amendment No. 27); Opinion of Goodwin, Procter &
Hoar with respect to the issuance of Class A and Class B shares of Asia
Infrastructure Fund and Global SmallCap Fund (incorporated by reference
from Post-
<PAGE>
effective Amendment No. 31) and Opinion of Goodwin, Procter & Hoar,
including consent, with regard to the issuance of Class A and Class C
shares of Global Hard Assets Fund (incorporated by reference from Post-
effective Amendment No. 36). Opinion of Goodwin, Procter & Hoar,
including consent, with regard to the issuance of Class A and Class C
shares of Gold Opportunity Fund (incorporated by reference from Post-
effective Amendment No. 37).
# (10)(a) Opinion of Goodwin, Procter & Hoar, including consent, with
regard to the issuance of Class B shares of Asia Infrastructure Fund,
Global Hard Assets Fund and Gold Opportunity Fund
# (11) Consents of Deloitte & Touche LLP and Coopers & Lybrand L.L.P.
(12) Not Applicable.
(13) Not Applicable.
(14)(a) Forms of prototype "Keogh" and 403(b)(7) Plans utilized by
registrant (incorporated by reference from Post-Effective Amendment No.
10).
(14)(b) Registrant's revised form of IRA Plan (incorporated by reference
from Post-Effective Amendment No. 10).
(14)(c) Registrant's form of Simplified Employee Plan (incorporated by
reference from 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 from Post-Effective Amendment No.
14).
(15) Plan of Distribution with respect to International Growth Fund and
Asia Dynasty Fund Incorporated by reference form Post-effective
Amendment No. 23). Form of Plan of Distribution with respect to Class B
shares of Asia Dynasty Fund (Incorporated by reference from Post-
effective Amendment No. 25).
(15)(a) Form of Plan of Distribution with respect to Global Balanced
Fund (Class A and B) and World Income Fund (Class B) (incorporated by
reference from Post-Effective Amendment No. 26).
(15)(b) Letter Agreement to add Global SmallCap Fund (Class A) and Asia
Infrastructure Fund (Class A) (incorporated by reference from Post-
effective Amendment No. 31) and Letter Agreement to add Global Hard
Assets Fund (Class A) (incorporated by reference from Post-effective
Amendment No. 36). Form of Letter Agreement to add Gold Opportunity Fund
(Class A) (incorporated by reference from Post-effective Amendment No.
37).
(15)(c) Form of Plan of Distribution with respect to Gold/Resources Fund
(Class C), International Investors Gold Fund (Class C), Global SmallCap
Fund (Class C) and Asia Infrastructure Fund (Class C) (incorporated by
reference from Post-effective Amendment No. 34). Letter Agreement to add
Global Hard Assets Fund (Class C) (incorporated by reference from Post-
effective Amendment No. 37). Form of Letter Agreement to add Gold
Opportunity Fund (Class C) (incorporated by reference from Post-
effective Amendment No. 37).
<PAGE>
* (15)(d) Form of Plan of Distribution with respect to Asia Infrastructure
Fund (Class B), Global Hard Assets Fund (Class B) and Gold Opportunity
Fund (Class B).
(16) Not applicable.
(17) Power of Attorney (incorporated by reference from Post-Effective
Amendment No. 5).
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 February 2, 1996, of
each class of securities of the Registrant:
<TABLE>
<CAPTION>
Class and Title Number of Record Holders
- --------------- ------------------------
<S> <C>
Gold/Resources Fund (Class A) 18,679
U.S. Government Money Fund 1,849
Global Income Fund (Class A) 6,856
International Investors Gold Fund (Class A) 53,503
International Investors Gold Fund (Class C) 119
Asia Dynasty Fund (Class A) 4,699
Asia Dynasty Fund (Class B) 1,470
Global Balanced Fund (Class A) 3,192
Global Balanced Fund (Class B) 390
Asia Infrastructure Fund (Class A) 123
Global Hard Assets Fund (Class A) 275
Global Hard Assets Fund (Class C) 31
Gold Opportunity Fund (Class A) 231
Gold Opportunity Fund (Class C) 24
</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.
<PAGE>
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 the caption "Management" in the Prospectus and to the
captions "The Distributor" and "Trustees and Officers" in the Statement of
Additional Information.
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
- ------------------ --------------------------- -----------------------
<C> <S> <C>
John C. van Eck Chairman Chairman and
99 Park Avenue President
New York, NY 10016
Sigrid S. van Eck Director, V.P. and None
270 River Road Assistant Treasurer
Briarcliff Manor, NY
Fred M. van Eck Director Trustee
99 Park Avenue
New York, NY 10016
Derek van Eck Director Executive V.P.
99 Park Avenue
New York, NY 10016
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
Jan van Eck Director and None
99 Park Avenue Executive Vice President
New York, NY 10016
Rodger A. Lawson President and Chief Executive Trustee
99 Park Avenue Officer
New York, NY 10016
Michael G. Doorley Senior Vice President, Chief Vice President
99 Park Avenue Financial Officer, Treasurer
New York, NY 10016 and Controller
Thaddeus Leszczynski Vice President Vice President/Secretary
99 Park Avenue General Counsel and Secretary
New York, NY 10016
Stephen Ilnitzki Chief Operating Officer None
99 Park Avenue
New York, New York
Bruce J. Smith Senior Managing Director, Vice President and
99 Park Avenue Portfolio Accounting Treasurer
New York, NY 10016
Joseph P. DiMaggio None Controller
99 Park Avenue
New York, NY
Keith Fletcher Senior Managing Director, None
99 Park Avenue Marketing
New York, NY 10016
Tom Keffer Senior Managing Director None
99 Park Avenue
New York, New York
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
Susan C. Lashley Managing Director, Operations Vice President
99 Park Avenue
New York, NY 10016
Robin Kunhardt Director, Product Management None
99 Park Avenue
New York, NY 10016
</TABLE>
(c) Not Applicable
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 and the Rules promulgated thereunder.
<TABLE>
<CAPTION>
Accounts, books and
documents listed by
reference to specific
subsection of 17 CFR 270 31a-1 Person in Possession and
to 31a-3 Address
- ------------------------------ ------------------------
<S> <C>
31a-1(b)(1) Bruce J. Smith
Van Eck Funds 99 Park Avenue
New York, NY 10016
31a-1(b)(2)(i) Bruce J. Smith
Van Eck Funds 99 Park Avenue
New York, NY 10016
31a-1(b)(2)(ii) Bruce J. Smith
Van Eck Funds 99 Park Avenue
New York, NY 10016
31a-1(b)(2)(iii) Bruce J. Smith
Van Eck Funds 99 Park Avenue
New York, NY 10016
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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) Thaddeus Leszczynski
Van Eck Funds 99 Park Avenue
New York, NY 10016
31a-1(b)(5) AIG Investment Corp (Asia) Ltd.
A.I.A. Building
1 Stubbs Road
Wanchai, Hong Kong
Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
31a-1(b)(6) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(b)(7) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(b)(8) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(b)(9) AIG Investment
Corp (Asia) Ltd.
A.I.A. Building
1 Stubbs Road
Wanchai, Hong Kong
Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
</TABLE>
<PAGE>
<TABLE>
<S> <C>
31a-1(b)(10) AIG Investment Corp (Asia) Ltd.
A.I.A. Building
1 Stubbs Road
Wanchai, Hong Kong
Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
31a-1(b)(11) AIG Investment Corp (Asia) Ltd.
A.I.A. Building
1 Stubbs Road
Wanchai, Hong Kong
Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
31a-1(b)(12) AIG Investment Corp (Asia) Ltd.
A.I.A. Building
1 Stubbs Road
Wanchai, Hong Kong
Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(c) Not Applicable
31a-1(d) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
31a-1(e) Not Applicable
31a-1(f) Michael G. Doorley
Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-2(a)(1) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, New York 10016
DST Systems, Inc.
21 West Tenth Street
Kansas City, Missouri 64105
AIG Investment Corp (Asia) Ltd.
A.I.A. Building
1 Stubbs Road
Wanchai, Hong Kong
Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
</TABLE>
<PAGE>
<TABLE>
<S> <C>
31a-2(b) Not Applicable
31a-2(c) Bruce J. Smith
Van Eck Securities Corporation
99 Park Avenue
New York, NY 10016
31a-2(d) Not Applicable
31a-2(e) Michael G. Doorley
Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-3 Not Applicable
</TABLE>
Item 31. Management Services
-------------------
None
<PAGE>
Item 32. Undertakings
------------
None
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant hereby certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(a)(1) under the Securities Act of 1933 and 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 22nd day of February, 1996.
VAN ECK FUNDS
By:
----------------------------------
John C. van Eck, President and CEO
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
- ------------------------- President, Chairman / /
John C. van Eck and Chief Exec. Officer
- ------------------------- Vice President and / /
Bruce J. Smith Treasurer
/s/ Jeremy Biggs*
- ------------------------- Trustee / /
Jeremy Biggs
/s/ Richard Cowell*
- ------------------------- Trustee / /
Richard Cowell
/s/ Wesley G. McCain*
- ------------------------- Trustee / /
Wesley G. McCain
/s/ Ralph F. Peters*
- ------------------------- Trustee / /
Ralph F. Peters
/s/ Rodger A. Lawson*
- ------------------------- Trustee / /
Rodger A. Lawson
/s/ David J. Olderman*
- ------------------------- Trustee / /
David J. Olderman
<PAGE>
/s/ Richard Stamberger*
- ------------------------- Trustee / /
Richard Stamberger
/s/ Fred M. van Eck*
- ------------------------- Trustee / /
Fred M. van Eck
_________________________
*Executed on behalf of Trustee by John C. van Eck, attorney-in-fact.
<PAGE>
EXHIBIT 99 1(B)
VAN ECK FUNDS
AMENDMENT NO. 8
TO AMENDED AND RESTATED MASTER TRUST AGREEMENT
Amendment No. 8 to the Amended and Restated Master Trust Agreement dated
February 6, 1992 (amending the Master Trust Agreement dated April 3, 1985) (the
"Agreement"), of Van Eck Funds (the "Trust"), made at New York, New York this
21st day of December, 1994.
W I T N E S S E T H:
--------------------
WHEREAS, Article VII, Section 7.3 of the Agreement provides that any
amendment to the Agreement that adversely affects the rights of shareholders may
be adopted at any time by an instrument in writing signed by a majority of the
Trustees (or by an officer of the Trust pursuant to a vote of a majority of such
Trustees) when authorized to do so by the vote in accordance with subsection (e)
of Section 4.2 of shareholders holding a majority of the shares entitled to
vote; and
WHEREAS, Section 4.1 of the Agreement provides that the Trustees of the
Trust may establish and designate series of Shares of the Trust and classes
thereof; and
WHEREAS, a majority of the outstanding shares of each Sub-Trust have voted
to amend Article IV, Section 4.2(e) of the Agreement with respect to all Sub-
Trusts; and
WHEREAS, a majority of the outstanding shares of each Sub-Trust have voted
to amend Article VII, Section 7.2 of the Agreement; and
WHEREAS, a majority of the outstanding shares of each Sub-Trust have voted
to amend Article VII, Section 7.3 of the Agreement; and
WHEREAS, a majority of the Trustees have voted to establish a new series of
the Trust, which is designated as Gold Opportunity Fund and to establish two
classes of Shares thereof, which are designated as Class A and Class C; and
WHEREAS, a majority of Trustees have duly approved this amendment to the
Agreement and authorized the same to be filed with the Secretary of State of the
Commonwealth of Massachusetts.
NOW, THEREFORE, the undersigned Thaddeus Leszczynski, a duly elected and
serving Secretary of the Trust, pursuant to the authorization described above,
hereby declares that the initial paragraph of Article IV, Section 4.2 of the
Agreement is amended to read as follows:
"Section 4.2 Establishment and Description of Sub-Trusts. Without
--------------------------------------------
limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Sub-Trusts, the Trustees hereby
establish and designate eleven Sub-Trusts: World Trends Fund,
Gold/Resources Fund (Class A and Class C), U.S. Government Money Fund,
Global
<PAGE>
Income Fund (Class A and Class B), International Investors Gold Fund
(Class A and Class C), Asia Dynasty Fund (Class A and Class B), Asia
Infrastructure Fund (Class A and Class C), Global Balanced Fund (Class
A and Class B), Global SmallCap Fund (Class A and Class C), Global
Hard Assets Fund (Class A and Class C) and Gold Opportunity Fund
(Class A and Class C). The World Trends Fund, Gold/Resources Fund
(Class A and Class C), U.S. Government Money Fund, Global Income Fund
(Class A and Class B), International Investors Gold Fund (Class A and
Class C), Asia Dynasty Fund (Class A and Class B), Asia Infrastructure
Fund (Class A and Class C), Global Balanced Fund (Class A and Class
B), Global SmallCap Fund (Class A and Class C), Global Hard Assets
Fund (Class A and Class C) and Gold Opportunity Fund (Class A and
Class C) and any Shares of any further Sub-Trusts that may from time
to time be established and designated by the Trustees shall (unless
the Trustees otherwise determine with respect to some further Sub-
Trust at the time of establishing and designating the same) have the
following relative rights and preferences:"
and hereby declares that Article IV, Section 4.2(e) of the Agreement is amended
to read as follows:
"Section 4.2(e) Voting. On each matter submitted to a vote of the
------
shareholders, each holder of the Share shall be entitled to one vote
for each whole share and to a proportionate fractional vote for each
fractional Share standing in his name on the books of the Trust
irrespective of the Sub-Trusts thereof or class thereof and all Shares
of all Sub-Trusts and classes thereof shall vote together as a single
class; provided, however, that as to any matter (i) with respect to
which a separate vote by such Sub-Trust or class thereof is required
by the 1940 Act or the provisions of the writing or vote establishing
and designating the Sub-Trust or class, such requirements as to a
separate vote by such Sub-Trust or class thereof shall apply in lieu
of all Shares of all Sub-trusts and classes thereof voting together;
and (ii) as to any matter which affects the interests of one or more
affected Sub-Trusts or classes shall be entitled to vote, and each
such Sub-Trust or class shall vote as a separate class."
and hereby declares that the second paragraph of Article VII, Section 7.2 of the
Agreement is amended to read as follows:
"Section 7.2 Reorganization. The Trust or any one or more Sub-Trusts
---------------
may, either as the successor, or survivor, or non-survivor, (1)
consolidate with one or more other trusts, partnerships, associations
or corporations organized under the laws of the Commonwealth of
Massachusetts or any other state of the United States, to form a new
consolidated trust, partnership, association or corporation under the
laws of which any one of the constituent entities is organized, or (2)
merge into one or more other trusts, partnerships, associations or
corporations organized under the laws of the Commonwealth of
Massachusetts or any other state of the United States, or have one or
more such trusts,
<PAGE>
partnerships, associations or corporations merged into it, any such
consolidation or merger to be upon such terms and conditions as are
specified in an agreement and plan of reorganization entered into by
the Trust, or one or more such Sub-Trusts as the case may be, in
connection therewith. The terms "merge" or "merger" as used herein
shall also include the purchase or acquisition of any assets of any
other trust, partnership, association or corporation which is an
investment company organized under the laws of the Commonwealth of
Massachusetts or any other state of the United States. Any such
consolidation or merger shall require the affirmative vote of the
holders of a majority of the outstanding voting securities, as defined
in the 1940 Act, of the Sub-Trust so affected thereby if the Sub-Trust
is not the successor or survivor of such consolidation or merger."
and hereby declares that Article VII, Section 7.3 of the Agreement is amended to
read as follows:
"Section 7.3 Amendments. All rights granted to the Shareholders under
-----------
this Declaration of Trust are granted subject to the reservation of
the right to amend this Declaration of Trust as herein provided,
except that no amendment shall repeal the limitations on personal
liability of any Shareholder or Trustee or repeal the prohibition of
assessment upon the Shareholders without the express consent of each
Shareholder or Trustee involved. Subject to the foregoing, the
provisions of the Declaration of Trust (whether or not related to the
rights of Shareholders) may be amended at any time, so long as such
amendment does not adversely affect the rights of any Shareholder with
respect to which such amendment is or purports to be applicable and so
long as such amendment is not in contravention of applicable law,
including the 1940 Act, by an instrument in writing signed by a
majority of such trustees. Any amendment to this Declaration of Trust
that adversely affects the rights of Shareholders may be adopted at
any time by an instrument in writing signed by a majority of the then
Trustees (or by an officer of the Trust pursuant to a vote of a
majority of such trustees) when authorized to do so by the vote in
accordance with subsection (e) of Section 4.2 of Shareholders holding
a majority of the outstanding voting securities entitled to vote (as
defined in the 1940 Act); provided, however, that any amendment to
Section 3.6 may be adopted at any time by an instrument in writing
signed by a majority of the then Trustees (or by an officer of the
Trust pursuant to a vote of a majority of such trustees) only when
authorized to do so by the vote of a "majority of the outstanding
voting securities" of International Investors, as such term is defined
in the 1940 Act. Subject to the foregoing, any such amendment shall be
effective as provided in the instrument containing the terms of such
amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument and of a
certificate (which may be a part of such instrument)
<PAGE>
executed by 9 Trustee or officer of the Trust to the effect that such
amendment has been duly adopted."
WITNESS my hand and seal this 21st day of December, 1994.
- -------------------------------------------
Thaddeus Leszczynski, Secretary
STATE OF NEW YORK
COUNTY OF NEW YORK
Then personally appeared the above-named Thaddeus Leszczynski and acknowledged
this instrument to be his free act and deed this 21st day of December, 1994.
Notary Public
HENRY G. NEGER
NOTARY PUBLIC, State of New York
No. 30-4654092
Qualified in Nassau County
Commission Expires 12/31/95
<PAGE>
EXHIBIT 99 4(B)
NUMBER VAN ECK FUNDS SHARES
__________ (A MASSACHUSETTS BUSINESS TRUST) ___________
ASIA INFRASTRUCTURE FUND - B
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO ALPHA CODE
THIS CERTIFIES THAT
CUSIP_______________________________
SEE REVERSE FOR CERTAIN DEFINITIONS
is the registered owner of
FULLY PAID AND NON-ASSESSABLE SHARES ($.001 PAR VALUE) OF
ASIA INFRASTRUCTURE FUND - B
A Series of Shares established and designated under the Master Trust Agreement
of the Van Eck Funds, a Massachusetts business trust (the "Trust") dated April
3, 1985 as amended from time to time (the "Trust Agreement"). The Terms of the
Trust Agreement, a copy of which is on file with the Secretary of the
Commonwealth of Massachusetts, are hereby incorporated by reference as fully as
if set down herein in their entirety. As provided in the Trust Agreement, the
beneficial interest in the Trust has been divided into Shares of such Series as
may be established and designated from time to time, and the Shares evidenced
hereby represent the beneficial interest in an undivided proportionate part of
the assets belonging to the above designated Series subject to the liabilities
belonging to such Series. Such Series and other Series have the relative rights
and preferences set forth in the Trust Agreement and the Trust will furnish to
the holder of this certificate upon written request and without charge a
statement of such relative rights and preferences. THE SHARES EVIDENCED HEREBY
ARE SUBJECT TO REDEMPTION BY THE TRUST pursuant to the procedures that may be
determined by the Trustees in accordance with the Trust Agreement. This
certificate is issued by the Trustees of VAN ECK FUNDS not individually but as
Trustees under the Trust Agreement, and represents shares of the above
designated Series and does not bind any of the Trustees, Shareholders, Officers,
Employees or Agents of the Trust personally but only the assets and property of
the Trust. Subject to the provisions of the Trust Agreement the shares
represented by this certificate are transferable upon the books of the Trust by
the registered holder hereof in person or by his duly authorized attorney upon
surrender of this certificate.
Witness the facsimile signature of the President and Treasurer of the Trust
and the signature of its duly authorized agent.
/s/ Michael S. Occuley [VAN ECK FUNDS SEAL] /s/ John C. van Eck
TREASURER PRESIDENT
Transfer Agent
Authorized Signature
<PAGE>
NUMBER VAN ECK FUNDS SHARES
__________ (A MASSACHUSETTS BUSINESS TRUST) ___________
GLOBAL HARD ASSETS FUND - B
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO ALPHA CODE
THIS CERTIFIES THAT
CUSIP_______________________________
SEE REVERSE FOR CERTAIN DEFINITIONS
is the registered owner of
FULLY PAID AND NON-ASSESSABLE SHARES ($.001 PAR VALUE) OF
GLOBAL HARD ASSETS FUND - B
A Series of Shares established and designated under the Master Trust Agreement
of the Van Eck Funds, a Massachusetts business trust (the "Trust") dated April
3, 1985 as amended from time to time (the "Trust Agreement"). The Terms of the
Trust Agreement, a copy of which is on file with the Secretary of the
Commonwealth of Massachusetts, are hereby incorporated by reference as fully as
if set down herein in their entirety. As provided in the Trust Agreement, the
beneficial interest in the Trust has been divided into Shares of such Series as
may be established and designated from time to time, and the Shares evidenced
hereby represent the beneficial interest in an undivided proportionate part of
the assets belonging to the above designated Series subject to the liabilities
belonging to such Series. Such Series and other Series have the relative rights
and preferences set forth in the Trust Agreement and the Trust will furnish to
the holder of this certificate upon written request and without charge a
statement of such relative rights and preferences. THE SHARES EVIDENCED HEREBY
ARE SUBJECT TO REDEMPTION BY THE TRUST pursuant to the procedures that may be
determined by the Trustees in accordance with the Trust Agreement. This
certificate is issued by the Trustees of VAN ECK FUNDS not individually but as
Trustees under the Trust Agreement, and represents shares of the above
designated Series and does not bind any of the Trustees, Shareholders, Officers,
Employees or Agents of the Trust personally but only the assets and property of
the Trust. Subject to the provisions of the Trust Agreement the shares
represented by this certificate are transferable upon the books of the Trust by
the registered holder hereof in person or by his duly authorized attorney upon
surrender of this certificate.
Witness the facsimile signature of the President and Treasurer of the Trust
and the signature of its duly authorized agent.
/s/ Michael S. Occuley [VAN ECK FUNDS SEAL] /s/ John C. van Eck
TREASURER PRESIDENT
Transfer Agent
Authorized Signature
<PAGE>
NUMBER VAN ECK FUNDS SHARES
__________ (A MASSACHUSETTS BUSINESS TRUST) ___________
GOLD OPPORTUNITY FUND - B
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO ALPHA CODE
THIS CERTIFIES THAT
CUSIP_______________________________
SEE REVERSE FOR CERTAIN DEFINITIONS
is the registered owner of
FULLY PAID AND NON-ASSESSABLE SHARES ($.001 PAR VALUE) OF
GOLD OPPORTUNITY FUND - B
A Series of Shares established and designated under the Master Trust Agreement
of the Van Eck Funds, a Massachusetts business trust (the "Trust") dated April
3, 1985 as amended from time to time (the "Trust Agreement"). The Terms of the
Trust Agreement, a copy of which is on file with the Secretary of the
Commonwealth of Massachusetts, are hereby incorporated by reference as fully as
if set down herein in their entirety. As provided in the Trust Agreement, the
beneficial interest in the Trust has been divided into Shares of such Series as
may be established and designated from time to time, and the Shares evidenced
hereby represent the beneficial interest in an undivided proportionate part of
the assets belonging to the above designated Series subject to the liabilities
belonging to such Series. Such Series and other Series have the relative rights
and preferences set forth in the Trust Agreement and the Trust will furnish to
the holder of this certificate upon written request and without charge a
statement of such relative rights and preferences. THE SHARES EVIDENCED HEREBY
ARE SUBJECT TO REDEMPTION BY THE TRUST pursuant to the procedures that may be
determined by the Trustees in accordance with the Trust Agreement. This
certificate is issued by the Trustees of VAN ECK FUNDS not individually but as
Trustees under the Trust Agreement, and represents shares of the above
designated Series and does not bind any of the Trustees, Shareholders, Officers,
Employees or Agents of the Trust personally but only the assets and property of
the Trust. Subject to the provisions of the Trust Agreement the shares
represented by this certificate are transferable upon the books of the Trust by
the registered holder hereof in person or by his duly authorized attorney upon
surrender of this certificate.
Witness the facsimile signature of the President and Treasurer of the Trust
and the signature of its duly authorized agent.
/s/ Michael S. Occuley [VAN ECK FUNDS SEAL] /s/ John C. van Eck
TREASURER PRESIDENT
Transfer Agent
Authorized Signature
<PAGE>
EXHIBIT 99 15(D)
FORM OF
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
(Class B Shares)
WHEREAS, VAN ECK FUNDS, an unincorporated business trust organized under
the laws of the Commonwealth of Massachusetts (hereinafter called the "Trust"),
is engaged in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Trust is authorized to issue shares of beneficial interest, in
separate series, with each such series representing the interests in a separate
portfolio of securities and other assets;
WHEREAS, shares of beneficial interest of certain series of the Trust may
be divided into two or more classes (any series, currently existing or hereafter
established by the Trust offering two or more classes of its shares adopting
this plan being referred hereafter, individually or collectively as the context
may require, as "Series");
WHEREAS, the class of shares of a Series offered to the public at the
public offering price per share and subject to a contingent deferred sales
charge ("CDSC") on the terms and conditions set forth in the Trust's then-
current prospectus shall be designated as Class B shares (the Class B Shares
hereinafter "Shares");
WHEREAS, Van Eck Securities Corporation (the "Underwriter"') serves as
principal underwriter of Shares of each Series pursuant to a written agreement;
WHEREAS, the Trust hereby intends to act as a distributor of Shares in
accordance with Rule 12b1 under the Act, as it may from time to time be amended
(Rule 12-1"), and desires to adopt a Plan of Distribution pursuant to such Rule
on the terms and conditions as hereinafter set forth, in respect of Shares (the
"Plan");
WHEREAS, initially, the Asia Dynasty Fund ("Initial Series" shall issue
Shares;
WHEREAS, the Trustees as a whole, and the Trustees who are not interested
persons of the Trust (as defined in the Act) and who have no direct or indirect
financial interest in the operation of the Plan and any agreements relating to
it (the "Qualified Trustees"), having determined, in the exercise of their
reasonable business judgement and in light of their fiduciary duties under state
law and under Sections 3B(a) and (b) of the Act, that there is a reasonable
likelihood that the Plan will benefit the Initial Series and the holders of the
Shares of such Series, have approved the Plan by vote cast in person at a
meeting called for the purpose of voting on the Plan and agreements related
thereto; and
WHEREAS, Van Eck Associates Corporation, as the sole shareholder of the
Shares of the Initial Series, has approved the Plan.
<PAGE>
NOW, THEREFORE, the Trust hereby adopts the Plan in accordance with Rule
12b-1:
Section 1. Distribution Activities
-----------------------
Subject to the supervision of the Trustees, the Trust or the Underwriter on
behalf of the Trust for the compensation set forth herein may, directly or
indirectly, engage in any activities primarily intended to result in the sale of
Shares, which activities may include, but are not limited to, one or more of the
following: (1) advancing commissions to securities dealers in respect of sales
of Shares "Advanced Commissions"; (2) making payments to securities dealers and
others engaged in the sale of Shares, including making payments of fees to the
broker of record for servicing shareholder accounts ("Maintenance Fees"); (3)
paying compensation to and expenses of personnel (including personnel of the
Underwriter and organizations with which the Trust or the Underwriter has
entered into agreements pursuant to this Plan) who engage in or support
distribution of Shares or who render shareholder support services, including but
not limited, to office space and equipment, telephone facilities and expenses,
answering routine inquiries regarding the Trust, processing shareholder
transactions and providing such other shareholder services, other than those
provided by the transfer agent and other agents of the Trust, as the Trust may
reasonably request; (4) formulating and implementing marketing and promotional
activities, including but not limited to direct mail promotions and television,
radio, newspaper, magazine and other mass media advertising; (5) preparing,
printing and distributing sales literature; (6) preparing, printing and
distributing prospectuses of the Trust and reports for recipients other than
existing shareholders of the Trust; (7) obtaining such information, analyses and
reports with respect to marketing and promotional activities as the Trust may,
from time to time, deem advisable and; (8) paying, or reimbursing the
Underwriter for, interest on unrecouped Carry Forward Commissions (as hereafter
defined) at a rate paid by the Underwriter, or, if such amounts are funded by
the Underwriter or an affiliate, at the Broker Call Loan Rate as reported in the
Wall Street Journal, as such rates may vary from day to day. The Underwriter on
behalf of the Trust is authorized to engage in the activities listed above, and
in any other activities primarily intended to result in the sale of Shares,
either directly or through other persons with which the Trust or the Underwriter
has entered into agreements pursuant to the Plan (all such activities hereafter
"Distribution Activities" ). The Underwriter is not obligated to perform all of
the Distribution Activities enumerated above or maintain any level of services
or expenditures, but shall in its sole discretion, determine which Distribution
Activities to engage in and the resources to be committed to such activities.
Section 2. Fees, Maximum Expenditures
--------------------------
(a) Payment for Distribution activities - The Trust is authorized to pay
-----------------------------------
the Underwriter for the Distribution Activities performed under the Plan a fee
at the annual rate set forth in Exhibit A ("Annual Fee"). Such Series shall
calculate daily amounts payable by it in respect of Shares hereunder and shall
pay such amounts monthly or at such other intervals as the Trustees may
determine. In the event the Plan is terminated, the Underwriter shall be
entitled to recoup amounts expended on Distribution Activities on behalf of the
Series in excess of the Annual Fees, CDSC and any other compensation received in
connection with the distribution of the Shares ("Unrecouped Amounts"). The
Payment of Unrecouped Amounts in the case of a Series shall not exceed, on an
annual basis, the Annual Fee ("Annual Limitation")). Unrecouped Amounts payable
under the Plan that are not paid because they exceed the Annual Fee ("Carry
Forward Amounts") shall be carried
<PAGE>
forward by a Series and shall be paid within the Annual Limitation in accordance
with this Plan. Carry Forward Amounts attributable to commissions advanced by,
or on behalf of, the Underwriter in respect of Shares pursuant to Section 1(1)
hereof are "Carry Forward Commissions".
(b) Application of Proceeds - the excess of amounts received by the
-----------------------
Underwriter under Section 2(b) hereof over amounts paid by it as Maintenance
Fees to third parties which are not "affiliated persons(as defined in the Act)
of the Trust and the proceeds received by the Underwriter from CDSC payments
shall be applied first toward interest on unreimbursed Carry Forward
Commissions, then to reduce any unreimbursed Carry Forward Commissions and then
to reduce the costs incurred by the Underwriter in performing Distribution
Activities.
(c) Any unreimbursed Carry Forward Amounts under Section 2(b) attributable
to a fiscal year of a Series shall be paid by the Trust in respect of Shares in
a subsequent year within the limitations set forth herein. Expenditures made by
one class under the Plan may not be used to subsidize the sale of shares of
another class of a Series.
Section 3. Term and Termination
--------------------
(a) Initial Series. The Plan shall become effective on ______with respect
---------------
to the Initial Series.
(b) Additional Series. As additional Series other than the Initial Series
------------------
are established, the Plan shall become effective with respect to each such
Series listed in Exhibit A at the Annual Fee set forth in such Exhibit upon the
initial public offering of such new Series, provided that the Plan has
previously been approved for continuation, together with any related agreements,
by votes of a majority of both (a) the Trustees of the Trust and (b) the
Qualified Trustees, cast in person at a meeting held before the initial public
offering of such new Series and called for the purpose of voting on such
approval.
(c) Continuation of the Plan. The Plan and any related agreements shall
------------------------
continue in effect with respect to a Series for so long as such continuance is
specifically approved at least annually by votes of a majority of both (a) the
Trustees of the Trust and (b) the Qualified Trustees, cast in person at a
meeting called for the purpose of voting on this Plan and such related
agreements.
(d) Termination of the Plan. The Plan may be terminated at any time with
------------------------
respect to any Series by vote of a majority of the Qualified Trustees, or by
vote of a majority of the outstanding Shares. The Underwriter shall not be
entitled to payments or reimbursement in respect of costs incurred in performing
Distribution Activities which occur after termination of the Plan. However, the
Underwriter shall be entitled to reimbursement of all Carry Forward Amounts and
other costs properly incurred in respect of Shares prior to termination, and the
Trust shall continue to make any required payments to the Underwriter pursuant
to Section 2 subject to the Annual Limitation until such time as all such
amounts have been reimbursed. The Underwriter shall also be entitled to receive
all CDSC's paid or payable with respect to Shares purchased before the
termination of the Plan that are redeemed or repurchased by the Trust subsequent
to termination of the Plan. The Plan may remain in effect with respect to a
Series even if it has been
<PAGE>
terminated in accordance with this Section 3(d) with respect to one or more
other Series.
Section 4. Amendments
----------
The Plan may not be amended to increase materially the amount of
distribution expenditures provided for in Section 2 hereof unless such amendment
is approved by a vote of the majority of the outstanding voting securities of
each of the affected classes of a Series and no material amendment to the Plan
shall be made unless approved in the manner provided for annual renewal in
Section 3(c) hereof.
Section 5. Independent Trustees
--------------------
While the Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Trust shall be
committed to the discretion of the Trustees who are not interested persons.
Section 6. Quarterly Reports: Annual Reports
---------------------------------
The Treasurer of the Trust shall provide to the Trustees and the Trustees
shall review, at least quarterly, a written report of the amounts expended for
Distribution Activities and the purpose for which such expenditures were made.
The Treasurer shall review, at least annually the revenues received and expenses
incurred by the Underwriter pursuant to the Plan.
Section 7. Recordkeeping
-------------
The Trust shall preserve copies of the Plan and any related agreements and
all reports made pursuant to Section 6 hereof, for a period of not less than six
years from the date of the Plan, or the agreements and such report, as the case
may be, the first two years in an easily accessible place.
Section 8 Limitation of Liability
-----------------------
The term "Van Eck Funds" means and refers to the Trustees from time to time
serving under the Amended and Restated Master Trust Agreement dated February 6,
1992, as the same may subsequently thereto have been, or subsequently hereto be,
amended. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the assets and
property of the Trust, as provided in the Amended and Restated Master Trust
Agreement of the Trust. The execution and delivery of the Plan have been
authorized by the Trustees and shareholders of the Trust and signed by an
authorized officer of the Trust, acting as such, and neither such authorization
by such Trustees and shareholders nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on 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 Trust has executed this Plan of Distribution on the
day and year set forth below in New York, New York.
Date:
VAN ECK FUNDS
..................................
Vice President
ATTEST:
..................................
Secretary
<PAGE>
VAN ECK FUNDS
EXHIBIT A
Name of Series Maximum 12b-1 Fees/Annual Limitation
(Annually as a % of average daily net assets)
Asia Infrastructure Fund - B 1.00%
Global Hard Assets Fund - B 1.00%
Gold Opportunity Fund - B 1.00%
