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1933 ACT REGISTRATION NO. 2-97596
1940 ACT REGISTRATION NO. 811-4297
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 42
-AND-
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 43
VAN ECK FUNDS
(EXACT NAME AND TITLE OF REGISTRANT)
99 PARK AVENUE, NEW YORK, NEW YORK 10016
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
212-687-5200
(REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)
THADDEUS LESZCZYNSKI, ESQ. - VAN ECK ASSOCIATES CORPORATION
99 PARK AVENUE, NEW YORK, NEW YORK 10016
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO: PHILIP NEWMAN, ESQ., GOODWIN PROCTER & HOAR
EXCHANGE PLACE, BOSTON, MA. 02109
__________________________________________________________________
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
[_] TO PARAGRAPH (B), OR [_] PARAGRAPH (B), OR
IMMEDIATELY UPON FILING PURSUANT ON _____PURSUANT TO
[_] 60 DAYS AFTER FILING PURSUANT TO [_] ON _____ PURSUANT TO
PARAGRAPH (A)(1), OR PARAGRAPH (A)(1) OF RULE 485
[X] 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.
___________________________________________
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VAN ECK FUNDS
CROSS-REFERENCE PAGE
PURSUANT TO RULE 501(B) OF REGULATION S-K
UNDER THE SECURITIES ACT OF 1933
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
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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>
SUBJECT TO COMPLETION
MAY 16, 1996
VAN ECK FUNDS
CORE INTERNATIONAL INDEX FUND
July___, 1996
________________________________________________________________________________
99 Park Avenue, New York, New York 10016
Shareholder Services: (800) 544-4653
The Core International Index Fund (the "Fund") seeks to provide a total return
approximating the total return of the Morgan Stanley Capital International
Europe, Australia and Far East ("EAFE") index ("EAFE Index" or "Index") by
investing in securities of certain companies that are included in the EAFE
index.
Shares of the Fund are sold without a sales charge.
Van Eck Associates Corporation ("Van Eck") serves as investment adviser and
administrator to the Fund and Axe Houghton Associates, Inc. (the "Sub-Adviser")
serves as sub-investment adviser to the Fund.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, a bank. The shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
governmental agency, and are subject to investment risks, including possible
loss of principal.
This Prospectus sets forth concisely information about the Fund that you should
know before investing. It should be read and retained for future reference.
A Statement of Additional Information ("SAI") dated July__, 1996 which further
discusses the Fund has been filed with the Securities and Exchange Commission
("SEC") and is incorporated herein by reference. For a free copy of the SAI,
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.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOME
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
1
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TABLE OF CONTENTS PAGE
----
Shareholder Transaction Data...................... 3
Fund Summary...................................... 4
Fund Details...................................... 5
Fund's Investment Objectives, Policies and Risks.. 6
Buying and Selling Fund Shares.................... 11
Exchange Privilege................................ 13
Dividends and Distributions....................... 14
Investment Programs............................... 14
Tax-Sheltered Retirement Plans.................... 15
Facts About Your Account.......................... 15
ManagementT....................................... 16
Advertising....................................... 17
Taxes............................................. 17
Additional Information............................ 18
2
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SHAREHOLDER TRANSACTION DATA
The following table is intended to assist you in understanding the various
direct and indirect costs and expenses you will bear when you invest in the
Fund. All of the Annual Fund Operating Expenses are paid out of Fund assets.
The Fund's Sub-Adviser and Van Eck may, voluntarily from time to time waive fees
and Van Eck may also voluntarily reimburse certain operating expenses of the
Fund.
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases
(as a per cent of offering price) 0%
Contingent Deferred Sales Charge (as a percent of the lesser
of purchase price or NAV at redemption) 0%
ANNUAL FUND OPERATING EXPENSES:
(as a percent of average net assets)
Management Fees 0.65%
Rule 12b-1 fees 0%
*Other Expenses 0.20%
Transfer Agent and Custodian Fees 0.15%
Other Expenses 0.05%
_____
Total Fund Operating Expenses 0.85%
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 3 years
THE ABOVE EXAMPLE IS MEANT TO ILLUSTRATE THE EFFECT OF EXPENSES ON RETURN AND
SHOULD NOT BE CONSIDERED TO REPRESENT PAST OR FUTURE RETURNS OR EXPENSES, WHICH
MAY BE GREATER OR LESS THAN THOSE SHOWN. For more information see "Management."
*Other Expenses are estimates which assume $30 million in average daily net
assets. Actual "Other Expenses" may vary.
Van Eck has voluntarily agreed to waive management fees and/or assume Operating
Expenses (excluding interest, taxes, brokerage commissions and extraordinary
expenses) to limit Total Fund Operating Expenses to an annual rate of 1.00% of
the Fund's average daily net assets until the earlier of December 31, 1996 or
until total assets reach $30 million.
3
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FUND SUMMARY
[WHO SHOULD CONSIDER INVESTING IN THE FUND]
Investors who are interested in investing globally through a fund that
approximates the gain/loss characteristics of the EAFE Index and are willing to
assume the risks associated with these investments should consider the Fund. The
Fund can allow investors to obtain investment exposure to broad international
markets. The Fund offers investors a way to participate in the growth of the
markets included in the EAFE Index. The Fund's investments are expected to
consist primarily of American Depository Receipts ("ADRs") and foreign
securities that are easily converted to ADRs. ADRs represent an ownership of
securities that are held in custody by a bank or trust company located in the
U.S. See "Buying and Selling Shares".
The value of the Fund's investments will vary from day to day, and generally
reflect market, economic and political conditions, interest rates and company,
political or economic news. In the short-term, stock prices can fluctuate
dramatically in response to these factors. Over time, however, stocks have
shown greater growth potential than other types of securities, such as bonds.
Bonds fluctuate in response to interest rates and the credit rating of the
issuer, generally declining in value when interest rates rise or the credit
rating of the issuer declines. See "Fund's Investment Objective, Policies and
Risks."
[RISK PROFILE]
The value of the Fund's shares can be expected to fluctuate more and to be more
volatile than funds investing only in securities of large U.S. companies or bond
funds. The Fund is not meant to be a complete or balanced investment program and
is intended for those investors who can assume greater risk with respect to a
portion of their investment portfolio.
The Fund attempts to approximate the total return performance of the EAFE Index.
The Fund's risks include: share price and currency fluctuations, confiscatory
taxation, expropriation, nationalization, inefficiencies in certain securities
markets and settlement practices, lack of developed legal systems in certain
markets, and the cost and risks associated with investing in ADRs. Further,
since the Fund does not invest proportionately in all the issues comprising the
EAFE Index, the Fund may not achieve the performance of the Index. The Fund may
employ certain techniques and strategies that could result in additional risk
to the Fund and may be deemed speculative. See "Fund's Investment Objective,
Policies and Risks - Risk Factors."
[INVESTMENT ADVISER, SUB-ADVISER AND DISTRIBUTOR]
As investment adviser, Van Eck supervises the investments of the Fund and the
performance of the Sub-Adviser and handles the other business affairs of the
Fund under supervision of the Board of Trustees. Van Eck acts as investment
adviser to other investment companies registered with the U.S. Securities and
Exchange Commission ("SEC"). As of June 30, 1996 Van Eck managed assets totaling
approximately $2 billion. The Sub-Adviser manages the investment of the Fund.
The Sub-Adviser does not act as adviser to any other investment companies, and
as of ______________, the Sub-Adviser managed assets totalling____ billion. See
"Management."
4
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Van Eck Securities Corporation ("Distributor"), a Delaware corporation, is a
wholly-owned subsidiary of Van Eck, and serves as the Fund's distributor and
markets the Fund's shares.
FUND DETAILS
[ORGANIZATION OF THE FUND]
The Fund is a separate series of Van Eck Funds (the "Trust"), and is an
open-end investment company. The Trust was organized as a Massachusetts business
trust on April 3, 1985. The Fund is a diversified fund as that term is used in
the Investment Company Act of 1940, as amended (the "1940 Act"). With respect
to 75% of the Fund's assets, no more than 5% of its assets may be invested in
the securities of any one issuer and not more than 10% of the outstanding voting
securities of an issuer may be owned.
[BOARD OF TRUSTEES]
The Trust is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders. The Trustees are experienced
executives who meet throughout the year to oversee the Fund's activities, review
contractual arrangements with companies that provide services to the Fund and
review performance. The majority of Trustees are not otherwise affiliated with
Van Eck or the Sub-Adviser.
[SHAREHOLDER MEETINGS]
The Fund may hold special shareholder meetings and mail proxy materials. These
meetings may be called to elect or remove Trustees, change the fundamental
investment objective and policies, approve an investment advisory contract or
for other purposes. You are entitled to one vote for each share you own. If
you cannot attend a shareholder meeting you may vote by proxy.
[FUND PORTFOLIO TRANSACTIONS]
Van Eck may utilize its broker-dealer and other affiliated broker-dealers and
other firms that sell Fund shares to purchase and sell the Fund's portfolio
securities and other assets, provided that their services and commissions are
comparable to those of other firms.
[PORTFOLIO MANAGEMENT]
A Portfolio Manager is responsible for the day-to-day management of the Fund.
___is Portfolio Manager.
Other investment professionals at the Sub-Adviser who are expected to have
significant input in determining the Fund's investments include:
Van Eck and the Sub-Adviser, each of its investment personnel and its affiliated
companies may invest for their own accounts in securities which the Fund may own
or purchase pursuant to a code of ethics and other established procedures for
personal investing which restrict certain activities.
5
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FUND'S INVESTMENT OBJECTIVE, POLICIES AND RISKS
[OBJECTIVE] The Fund seeks to provide a total return approximating the total
return of the EAFE Index. The Fund will normally invest at least 65% of its
assets in the securities of issuers which are represented in the EAFE Index.
[FUND'S BENEFITS AND RISKS]
[BENEFITS] Van Eck believes markets outside the U.S. have potential for
dramatic economic growth. The Fund offers investors who believe that investing
outside the U.S. is prudent diversification and may provide greater return. The
Fund will attempt to achieve its objective by investing in the securities of
companies that issue ADRs or securities that are easily convertible into ADRs.
The Fund's performance is closely tied to economic and political conditions in
the regions that are represented in the EAFE Index. The Fund may not be suitable
for all investors and is intended for investors who are willing to assume
greater risk, and as a complement to a broader investment plan. The Fund is not
intended as a complete investment program.
The Sub-Adviser normally will invest the Fund's assets according to its
investment objective and policies. When allocating the Fund's investments among
countries, the Sub-Adviser will consider such factors as the market weightings
and the sector weighting in the EAFE Index, favoring large capitalization
companies. There can be no assurance that the Fund will achieve its investment
objective.
[INDEX MANAGEMENT]
The EAFE Index is a weighted average of the performance of approximately 1100
companies based upon their market capitalization. Currently, these companies are
listed on exchanges in Australia, Austria, Denmark, Finland, France, Germany,
Hong Kong, Ireland, Italy, Japan, Malaysia, the Netherlands, New Zealand,
Norway, Singapore, Spain, Sweden, Switzerland and the United Kingdom. The Index
includes reinvestment of gross dividends before reduction of withholding taxes.
The Fund does not intend to invest in all of the companies. The Fund will
generally invest in less than 200 of the companies, which will be subject to the
availability of ADRs.
The Fund's investments will be selected in a manner to approximate the total
return performance of the EAFE Index. While the Sub-Adviser will attempt to
outperform the Index, it will do so by selecting large capitalization companies,
not by active allocation among countries, markets and industries. In doing so
the Fund may forgo a potential gain by not increasing its allocation to a
particular issuer or market and similarly, the Fund may suffer a loss by not
decreasing its allocation.
Tracking the Index. The Fund is managed in a "passive" style, which means that
the Sub-Adviser does not attempt to select individual securities based on their
fundamental merits by analyzing information about the company. Rather, the Fund
attempts to select a portfolio of ADRs that is representative of the country,
industry sector, and currency profiles of the EAFE Index. The Fund may not track
the Index because the ADRs are not representative of the Index, because of the
Fund's expenses or for other reasons. There can be no assurance that the Fund
will track the Index for any period of time.
6
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[RISKS]
When you sell your Fund shares they may be worth more or less than you paid for
them. Their value will depend upon the value of the Fund's investments, which
varies in response to many factors. Stock values fluctuate in response to the
activities of the companies in which the Fund invests, and general market,
economic and political conditions. The securities of smaller, less well-known
companies may be particularly volatile. In addition, although the Fund's
investments will be denominated in U.S. dollars, their value will depend upon
the value of foreign currencies which fluctuate in response to global economic,
market and political factors. The Sub-Adviser will select investments,
primarily ADRs, for the Fund that it believes offer the greatest opportunity for
long-term capital appreciation and that will approximate the performance of the
EAFE Index. There can be no assurance that the Sub-Adviser will be successful.
[INTERNATIONAL INVESTING RISKS]
While ADRs are denominated in U.S. dollars and trade on U.S. securities
exchanges, ADRs represent ownership of a foreign security and their value is
closely related to the value of the underlying foreign security. The Fund's
policy of investing through ADRs and other non-U.S. markets involves increased
or additional economic and political risks from those mentioned above as
compared to investing in the U.S. The Fund's share price will be affected by
events and factors in the various world markets.
The EAFE Index includes various foreign markets. Certain of these markets have
generally less stringent investor protection rules and enforcement, disclosure
standards and governmental regulation. In addition, some foreign companies are
not subject to the same financial accounting, auditing and reporting standards
that are required of U.S. companies. Compared to U.S. markets, foreign markets
are less developed and less liquid, have fewer issuers, may be more subject to
influence by large investors and more susceptible to manipulation. These
markets may lack developed securities markets and effective regulations; have
less developed legal and economic sectors, restrict foreign ownership of
securities; and governments that in the past have failed to recognize private
ownership, have nationalized or expropriated private property, imposed currency
exchange controls, levied confiscatory taxes and limited the removal of funds or
other assets. The return of Hong Kong to Chinese control may affect the entire
region known as "Great China". Foreign securities markets may be subject to
emergencies caused by governmental actions and political and economic factors.
In the event an emergency exists, the Fund may, with the approval of the SEC,
suspend your right to redeem your Fund shares during the emergency.
[OTHER RISKS]
In addition, because the Fund may invest in a wide variety of investments and
use various investment techniques, the Fund may be riskier and more volatile
than funds whose investments and investment techniques are less varied. Some of
the more common risks associated with the investments and investment techniques
available to the Fund and not discussed here are summarized below in "Fund's
Investments and Techniques." See also "Risk Factors" in the SAI.
[INVESTMENT POLICIES] In pursuing its goals, the Fund intends to focus primarily
on ADRs and equity securities that are easily convertible into ADRs but may also
invest in other types of financial
7
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instruments, including debt securities of any quality. The Fund may invest in
the securities of any issuer within the Index. The Fund is managed using
quantitative and analytical tools intended to select a portfolio of these
securities that is representative of the country, industry sector, and currency
profiles of the Index. It is a reasonable expectation that there will be a close
correlation between the Fund's and the Index's performance. The Fund will
attempt to achieve a correlation between the performance of its portfolio and
the Index's of at least [0.95], without taking into account Fund expenses. A
correlation of 1.00 would mean that the Fund's and the Index's total return
would be exactly equal to each other. The value of the Fund's shares plus
dividends and capital gains distributions will increase or decrease in exact
proportion to changes in the Index. The Fund's ability to achieve the
performance of the Index will be affected by, among other things, expenses of
the Fund, the availability of ADRs and continued ability of the Sub-Adviser's
quantitative and analytical methods to select a representative portfolio of
securities. Except in unusual circumstances, nearly all of the Fund's total
assets will normally be invested in securities of issuers in the Index. The Fund
will normally invest in at least three countries outside the U.S.
The Sub-Adviser may use different investment techniques to attempt to achieve
the Fund's investment objective but there is no guarantee that these strategies
will work as the Sub-Adviser intends. Also, attempting to track the Index, the
Fund seeks to spread investment risks by diversifying its holdings among many
companies and countries. Of course, diversification does not eliminate risk and
when you sell your Fund shares, they may be worth more or less than you paid for
them. Unlike many other funds, the Fund does not intend to hedge security,
market, currency (except for settlement purposes) and other risks.
The Fund's investments will normally be denominated in the U.S. dollar; however,
the Fund may purchase equity and other securities that are denominated in a
foreign currency. The Fund intends to be fully invested at all times except for
cash to meet redemption requests or settlement of portfolio transactions. There
is no limit on the amount of foreign currencies or short-term instruments
denominated in a foreign currency the Fund may hold.
The Fund may invest in a variety of instruments that are or may become available
in the market, and the Sub-Adviser may use a number of investment techniques and
strategies to achieve the Fund's objective. There are a number of risks and
restrictions associated with these investment types and investment practices
that should be considered by investors. The investment types and investment
practices that will be used most often are listed below under "Fund's
Investments and Techniques." (A complete listing of the Fund's policies and
limitations and more detailed information about the investments and strategies
is contained in the Fund's SAI.) Policies and limitations are considered at the
time of purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
The Sub-Adviser may not buy all of these instruments or use all of these
techniques to the full extent permitted unless it believes that doing so will
help the Fund achieve its goals. Current holdings and recent investment
strategies are described in the Fund's financial reports which are sent to
shareholders twice a year. For a free SAI or annual or semi-annual report, call
(800) 544-4653 or write to the Fund at the address on the cover. The Fund
commenced operations on ____, 1996. The first annual report for the period ended
December 31, 1996 will be available on or about March 1, 1997.
8
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[FUND'S INVESTMENTS AND TECHNIQUES]
EQUITY SECURITIES. Equity securities may include common stocks, ADRs, preferred
stocks, convertible securities, and warrants of companies comprising the Index.
Common stocks, the most familiar type of equity security, represent an equity
(ownership) interest in a corporation. ADRs represent an ownership interest in
common stocks. Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's financial
condition and on overall market, economic and political conditions. Options,
futures contracts, equity swaps, indexed securities and similar instruments
whose values are tied to one or more equity securities included in the Index are
considered to be equity securities.
[ADRs]
ADRs are securities issued by large U.S. banks and represent ownership of
foreign equity shares held in a foreign depository. The U.S. dollar price of an
ADR generally reflects the current foreign currency price at its current
exchange rate. While ADRs provide investment exposure to foreign markets, they
offer certain advantages: they are priced in U.S. dollars and their purchase and
sale do not involve currency transaction costs, custody costs are significantly
lower in most cases than comparable costs in the issuer's country, dividends are
received in dollars and transactions are promptly settled in the U.S. Issuance
and trade settlement of ADRs involves a series of intermediaries, including a
broker in the issuer's home market, a local custodian, and a bank depository.
Each of these intermediaries imposes fees or charges which are passed on to the
Fund. These fees and expenses are less than a U.S. investor would typically
incur in purchasing or selling ordinary shares in a foreign country.
Although the purpose of ADRs is to provide total return characteristics of
common stock of foreign companies, there can be no guarantee that the price of
an ADR on a U.S. exchange will precisely match the price of the underlying
equity security in its home market. In addition, there may be no buyer for an
ADR. In this case, the ADRs can be exchanged for ordinary shares, but certain
expenses will be incurred by the Fund.
ADRs are either sponsored or unsponsored. The company in a sponsored ADR has
arranged with the custodian bank to issue the ADR. Unsponsored ADRs are issued
by the custodian bank without any formal arrangement with the company.
DIVERSIFICATION. Diversification of the Fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money invested
in any one issuer.
RESTRICTIONS: With respect to 75% of total assets, the Fund may not invest more
than 5% of its total assets in securities (including debt securities) of any one
issuer. These limitations do not apply to U.S. government securities. Except to
reflect the composition of the Index, the Fund will not invest more than 25% of
its total assets in any industry.
FOREIGN SECURITIES. The Fund will normally invest a significant portion of its
assets in foreign securities, including ADRs of securities of foreign companies
whose securities are traded outside the U.S. These investments will usually be
U.S. dollar denominated (ADRs) but may be non-U.S. dollar denominated. Changes
in the value of the foreign currency of the underlying securities can
significantly affect the value of the Fund's investments and share price.
9
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ADJUSTING INVESTMENT EXPOSURE. The Fund may use various techniques to obtain its
exposure to the Index. These techniques may involve derivative transactions such
as buying and selling options, futures and forward contracts, entering into
currency exchange contracts, swap agreements and purchasing indexed securities.
The Sub-Adviser may use these practices to adjust the risk and return
characteristics of the Fund's portfolio of investments and to achieve a better
or more efficient correlation with the Index. If the Sub-Adviser judges market
conditions incorrectly or employs a strategy that does not correlate well with
the Index, these techniques could result in a loss to the Fund. These techniques
may increase the volatility of the Fund and may involve a small investment of
cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss to the Fund if the counterpart to the
transaction does not perform as promised.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by Van
Eck, under the supervision of the Board of Trustees, to be illiquid, which means
that they may be difficult to sell promptly at an acceptable price. Securities
subject to legal or contractual restrictions and repurchase agreements maturing
in more than seven days are considered illiquid. Difficulty in selling these
securities may result in a loss or may be costly to the Fund.
RESTRICTIONS: The Fund may not invest more than 15% of its net assets in
illiquid securities.
OTHER INSTRUMENTS. Other securities in which the Fund may invest include
rights.
LEVERAGE. The Fund does not intend to borrow for leveraging purposes. The Fund
may borrow from banks to meet redemptions and enter into futures, options, swaps
and similar transactions.
RESTRICTIONS: A Fund may borrow for emergency purposes only an amount not
exceeding 33-1/3% of its total assets.
LENDING OF PORTFOLIO SECURITIES. Securities may be lent to broker-dealers and
institutions, including affiliates of Van Eck or the Sub-Adviser. Lending is a
means for the Fund to earn income. This practice could result in a loss or a
delay in recovering the Fund's securities.
RESTRICTIONS: Loans of the Fund's securities, in the aggregate, may not exceed
33-1/3% of the Fund's total assets.
FUNDAMENTAL POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, which are subject to change only with shareholder approval, and are
all listed below. All policies stated throughout this Prospectus, other than
those identified in this section as fundamental, can be changed without
shareholder approval.
The Fund's investment objective is to seek to provide a total return
approximating the total return of the EAFE Index by investing in the securities
of certain companies included in the Index. The Fund's objective can be changed
only with shareholder approval.
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The Fund, with respect to 75% of total assets, may not invest more than 5% of
its total assets in the securities (including debt securities) of any one
issuer, and may not own more than 10% of the outstanding voting securities of a
single issuer, excluding entities of which it is the sole owner. The Fund will
not invest more than 25% of its total assets in any one industry except to
reflect the composition of the Index. The Fund may borrow in an amount not
exceeding 33-1/3% of its total assets. Loans of the Fund's securities, in the
aggregate, may not exceed 33-1/3% of its total assets.
BUYING AND SELLING FUND SHARES
You may purchase shares of the Fund on any day the New York Stock Exchange
("NYSE") is open for business at the net asset value without payment of a sales
charge. Shares will be purchased or redeemed at the next share price calculated
after the investment or request for redemption is received and accepted. The
share price is calculated at the close of regular trading on the NYSE currently
4:00 P.M., Eastern Time, on each day the NYSE is open for business. Purchases
and sales will be made in U.S. Dollars. The Fund may, without notice, suspend
the offering of shares or reject any purchase order. You may purchase or sell
full and fractional shares.
[HOW TO BUY SHARES]
[THROUGH A FINANCIAL INSTITUTION OR DST]
Fund shares may be purchased either by (1) ordering the shares through a
financial institution and forwarding a completed Application or investment firm
settlement instructions with payment; or (2) completing an Application and
mailing it with payment to the Fund's Transfer Agent and Dividend Paying Agent,
DST Systems, Inc., c/o Van Eck Funds, P.O. Box 418407, Kansas City, Missouri
64141.
[BROKERS, BANKS AND FINANCIAL PROFESSIONALS]
You may purchase or sell your shares through a broker, a bank or investment
professional. These financial institutions may charge a fee for their services.
Your financial institution has the responsibility of submitting orders it
receives from you prior to the close of trading on the NYSE 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, to receive
that day's price.
Certain financial institutions may enter into sales agreements with the
Distributor and may place confirmed purchase orders on behalf of their
customers, with payment to follow within three business days. If payment is not
received by the Fund, the financial institution will be held liable for any fees
or losses the Fund or the Distributor may incur.
Some unaffiliated financial institutions have entered into agreements with the
Fund, the Distributor and/or Van Eck to provide services to shareholders. If
such financial institutions provide assistance in marketing the Fund, the
financial institutions will be compensated by Van Eck from its own resources.
[PAYMENT] Payment for shares 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. Double endorsed checks will not be accepted.
11
<PAGE>
[MINIMUM PURCHASES] Initial purchases for Fund shares must be in the amount of
$10,000 or more per account. Subsequent purchases must be in the amount of $100
or more. Purchases may be made through selected dealers or banks or investment
professionals or by forwarding payment to DST Systems, Inc. ("DST"). Either
minimum may be waived by the Fund in special circumstances deemed to be
appropriate by the Fund.
Purchases of Fund shares do not qualify under special programs.
[HOW TO SELL SHARES]
You may sell your shares on any business day by writing to or calling DST or
your financial institution. If you purchased shares through an investment
professional you may be required to sell your shares through that investment
professional if your shares are held in "street name". The redemption price will
be the net asset value per share next determined after the receipt of a request
in proper form as described herein. Sales proceeds checks are mailed to your
address on record or, if you specifically request, wired to your account of
record. When sales proceeds checks are wired to your bank account this is called
an Expedited Redemption and must be elected on the Application. Currently, the
Fund does not impose a fee for redemption checks or wires, but may do so at a
later date. ["Street name" shares are registered in a financial institution's
name, such as a broker/dealer or bank].
[IN WRITING]
To sell shares you may write to DST, c/o Van Eck Funds, P.O. Box
418407 Kansas City, Missouri 64141. Your redemption request must (1) be signed
by all owners exactly as their names appear on the account registration (2)
specify the number of shares or amount of investment to be redeemed or that all
shares be redeemed (3) contain a signature guarantee of each owner's signature
by an eligible guarantor institution (notarization by a notary public is not
acceptable) for redemptions of $50,000 or more, or if the redemption check is to
be made payable to other than the owners or is to be sent to an address other
than the registered address or the registered address has been changed within
the past 30 days and (4) provide any additional documents regarding accounts of
estates, trusts, guardianships, custodianships, partnerships and corporations
(e.g., appointment as executor or administrator, trust instruments or
certificates of corporate authority) requested by DST. Banks, trust companies,
savings institutions and broker/dealers are eligible to guarantee your
signature.
[SELLING OR EXCHANGING BY TELEPHONE]
If you have elected the Telephone Redemption or Exchange Privilege, you may sell
or exchange your shares by telephone by calling either (1) your financial
institution (which may charge a transaction fee) or (2) DST at 1-800-345-8506,
if the shares are not held in "street name". Estates, trusts, guardianships,
custodianships, partnerships, corporations and certain retirement plans may not
call DST to exchange their shares. Telephone calls to DST are recorded. Shares
will be redeemed or exchanged by telephone if you provide the correct social
security number, tax identification number or account number. To protect
against fraud or losses DST may require additional information. The Fund
reserves the right to refuse a request for the telephone redemption or exchange
privilege without prior notice, either before, during or after the call.
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<PAGE>
Telephone instructions accepted after the close of business on the NYSE will not
be processed until the following business day. In the case of joint or multiple
owners, one owner's call may effect the telephone redemption or exchange.
Because of unusual market conditions it may be difficult and/or impossible to
contact DST or your broker, bank or investment professional to redeem or
exchange your shares. You should continue to try contacting them by telephone
at their telephone number or written instructions may be sent by post or
courier. Telefaxed instructions will not be accepted.
You may request Telephone Redemption of $50,000 or less per day if the proceeds
check is to be payable to you and sent to the address we have on our records or
the proceeds are to be wired to the bank account of record. To protect you and
the Fund from fraud, a telephone redemption request will not be accepted if you
changed the registered address within one month of the request.
[UNAUTHORIZED TELEPHONE EXCHANGES OR REDEMPTIONS] Like most mutual funds, the
Fund and DST may only be liable for losses resulting from unauthorized
transactions if they do not follow reasonable procedures designed to verify the
caller's identity. Telephone calls may be recorded and account number and other
information may be requested. If you do not want the ability to redeem or
exchange by telephone, check the appropriate box on the Application or call DST
for instructions.
[PAYMENT OF SALES PROCEEDS] Payment for shares sold will normally be made
within seven days after a proper redemption request is received, except for
delays which may be permitted under applicable law or rule. If Fund shares to
be redeemed were purchased by check, to protect the Fund from losses, the Fund
will pay the proceeds only after it is satisfied that your check has been
cleared for payment. This may take as long as 15 days. Payment will generally
be made by check unless you request a wire transfer to your designated account
at a domestic commercial bank. Checks will be made payable to record owners at
the address of record. The Fund may meet redemption and exchange redemption
requests by distributing portfolio securities. Nevertheless, in any 90 day
period the Fund will pay in cash redemption proceeds to a shareholder equal to
the lesser of $250,000 or 1% of the Fund's value at the beginning of the period.
EXCHANGE PRIVILEGE
The Van Eck Group of Funds consists of a number of mutual funds with different
investment objectives and policies. When your investment objective or
investment outlook changes you may exchange shares of the Fund for shares of
any of the funds in the Van Eck Group of Funds by paying the applicable sales
charge. Currently there are no charges or fees on exchanges. Short-term trading
by some investors may result in the Fund incurring additional expenses, may
impair the Fund's investment program or result in other disadvantages to the
Fund and its shareholders. To discourage short-term trading, the Fund has
limited exchanges to six per calendar year. This exchange limitation does not
apply to the US Government Money Fund or to International Investors Gold Fund
(Class A), if the Fund or Van Eck believes that permitting unlimited exchanges
will not be disadvantageous to other shareholders. This limitation applies in
aggregate to Fund accounts having the same beneficial owner or under common
control. The Fund may modify or terminate the exchange privilege of any
shareholder or limit or reject any exchange at any time with or without prior
notice, if it considers it to be in the best interest of the remaining
shareholders. If an exchange is rejected, a shareholder will still be able to
redeem the shares. For federal income tax purposes, an exchange is considered a
sale of shares and gains or losses must generally be recognized.
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<PAGE>
Written Exchange
- ----------------
Shares may be exchanged by sending to DST a written request in proper form
signed by all registered owners exactly as their names appear on the account
registration, showing the names of the Fund to and from which the exchange is to
be made, and the number of shares or the amount to be exchanged, or that all
shares are to be exchanged. DST may request additional documents regarding
certain accounts to assure itself that the exchange request is genuine. Written
exchange requests may be sent by regular mail to Van Eck Funds, c/o DST, PO Box
418407, Kansas City, MO 64141, or by overnight courier to 1004 Baltimore, Kansas
City, MO 64105.
If you do not already have an account in the fund into which you are exchanging
a new account will be established. The registered owners on the new account and
the dividend and other options will be the same. However, if you would like the
new account to participate in the Automatic Withdrawal, Automatic Exchange or
Automatic Investment Plan you must request it at the time of the exchange and
may have to file an Application.
DIVIDENDS AND DISTRIBUTIONS
The Fund will distribute its net investment income and net capital gains
annually, generally in December. Dividends or distributions declared in
December but paid in the following January will be includible in your income as
of the record date (usually in December) of such dividends or distributions.
The fiscal year of the Fund ends on December 31.
DIVIDEND REINVESTMENT PLAN
[DIVIDEND REINVESTMENT]
Dividends and distributions will be automatically reinvested in Fund shares at
net asset value unless you or your financial institution notifies DST in writing
that dividends and distributions are to be paid in cash. In addition, dividend
and distributions may be automatically invested in any other Class A shares of
the Van Eck Funds without paying a sales charge. Shareholders may contact DST
for more details.
INVESTMENT PROGRAMS
The Fund offers several investment programs. An application for these programs
may be obtained from DST or the Distributor. More details about each program
may be found in the SAI under "Investment Programs."
Automatic Investment Plan
- -------------------------
This plan permits you to regularly invest a specified dollar amount in the Fund.
The amount you select will be deducted from your checking account and used to
purchase Fund shares on a monthly or quarterly basis.
Automatic Exchange Plan
- -----------------------
This plan allows a regular exchange of a specified dollar amount from the Fund
for shares of another Fund in the Van Eck Group of Funds.
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<PAGE>
Automatic Withdrawal Plan
- -------------------------
If the value of your account is $10,000 or more at the current offering price,
you may establish an Automatic Withdrawal Plan. This plan allows you to receive
a monthly or quarterly check in a stated amount of $50.00 or more.
TAX-SHELTERED RETIREMENT PLANS
You may purchase Fund shares for your tax-sheltered retirement plans. These
plans allow individuals to shelter investment income and capital gains from
current taxes. Contributions may be tax deductible. These accounts require
separate applications to open. Additional information about these plans may be
found in the SAI or may be requested from the Fund.
[IRAS] An Individual Retirement Account and Spousal Individual Retirement
Account (IRA/SPIRA) are available to anyone who has earned income. (Investments
may also be made for a spouse, if the spouse has earned income of less than
$250.)
[SEP] A Simplified Employee Pension Plan (SEP) is available to employers,
including self-employed individuals that want to provide retirement income to
their employees without all the administrative requirements of qualified plans.
[QUALIFIED PENSION PLAN] A Qualified Pension Plan is available to self-employed
individuals, partnerships, corporations and their employees.
[403 (b) PLANS] A 403(b)(7) Program is available to employees of certain tax-
exempt organizations and schools.
FACTS ABOUT YOUR ACCOUNT
[YOUR ACCOUNT] DST maintains Fund account records. However, brokers, banks and
financial institutions maintain account records for shares that are held in
street name for their clients. If you purchased your shares from a financial
institution and the shares are held in street name you must call or write to the
institution if you have questions about your account or want to sell shares you
own. DST will have no record of your account.
[MINIMUM ACCOUNT SIZE] If, at any time, the number of shares in your account
falls below a specified amount, currently 50 shares, you will be notified and
will have 30 days to bring the number of shares you own up to the minimum
amount. If you do not meet the account minimum within 30 days, the Fund may
redeem your Fund shares involuntarily and mail the proceeds to you. Your shares
would be redeemed at the net asset value on the day your account is closed.
[FUND'S BUSINESS DAYS] You may transact business (buy and sell shares) in your
account on each day the NYSE is open. Shares are purchased and sold at the net
asset value per share (NAV) next calculated after your order is received and
accepted. The NAV is calculated at the close of business on the NYSE, currently
4:00 P.M., Eastern Time.
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<PAGE>
[FUND'S NAV] The Fund's NAV is the value of one share. It is computed by adding
the value of the Fund's investments, cash and other assets, subtracting the
Fund's liabilities and dividing the result by the number of shares outstanding
at the time.
[VALUATION OF FUND'S INVESTMENTS] The assets of the Fund are primarily valued
on the basis of market quotations. Foreign securities are valued on the basis
of quotations from the primary market in which they are traded. If market value
is not ascertainable, investments are valued at fair value as determined in good
faith by the Board of Trustees. Foreign investments will be valued in U.S.
Dollars using the prevailing exchange rates on that day. The Fund may invest in
securities, options or futures contracts listed or traded on foreign exchanges
which may trade on Saturdays or other customary U.S. national business holidays
(days on which the Fund is not open for business). Consequently, the Fund's NAV
may be affected on days when you may not purchase or redeem shares.
[SPECIAL SERVICES] You may charged a fee for special services you request, such
as providing historical account documents.
[TRANSFER OF OWNERSHIP] To transfer ownership of (re-register) all or a portion
of your shares you must provide a written request with any documents DST may
request to satisfy itself that the request is genuine. See "Buying and Selling
Fund Shares - How to Sell Shares." DST will require the same information and
certifications, all in proper form, necessary to open and close an account.
MANAGEMENT
[INVESTMENT ADVISER] Van Eck is the investment adviser and supervises the
performance of the Sub-Adviser pursuant to an Investment Advisory Agreement. Van
Eck manages the affairs of the Fund and performs accounting and administrative
services for the Fund such as calculating the Fund's NAV, maintaining the
Fund's records and providing certain other accounting and administrative
services. It is paid an investment advisory fee ("Management Fee") by the Fund
at an annual rate of 0.65% of average daily net assets. Van Eck currently acts
as adviser to 16 mutual funds registered with the SEC under the 1940 Act and
manages pension plans and other portfolios. Total aggregate assets under
management by Van Eck were approximately $2.0 billion as of ___,1996.
Axe Houghton Associates, Inc. serves as sub-investment adviser to the Fund
pursuant to a Sub-Advisory Agreement and manages the Fund's portfolio of
investments. The Sub-Adviser is paid a fee by Van Eck at an annual rate of ___%
average daily net assets. The Sub-Adviser currently does not serve as advisor to
any mutual funds registered with the SEC under the 1940 Act, and as of
___________, 1996 managed $___ billion in assets for pension plans and other
institutional accounts.
Van Eck and the Sub-Adviser have voluntarily agreed to waive the Advisory Fee
and/or assume operating expenses (excluding interest, taxes, brokerage
commissions and extraordinary expenses) in order to limit the Fund's total
expenses to an annual rate of 1.00% of the average daily net assets until the
Fund's net assets reach $30 million or December 31, 1996, whichever is earlier.
The Management Fee paid by the Fund is generally more that that paid by other
comparable mutual funds.
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<PAGE>
ADVERTISING
From time to time, the Fund may advertise its performance. Past performance is
not indicative of future performance.
[AVERAGE ANNUAL TOTAL RETURN] The Fund may advertise its performance in terms
of average annual total return, which is computed by finding the average annual
compounded rate of return over a period so that the initial amount invested
would equal the ending account value. The calculation assumes that all dividends
and distributions by the Fund are reinvested and includes all recurring fees
charged to all shareholder accounts. It is not the actual return in each year,
but an average. The actual return in any year may be more or less than the
average. Average annual total return for periods of less than a year is equal
to the actual return annualized and assumes that performance to date will
continue for the rest of the year.
[AGGREGATE TOTAL RETURN] The Fund may advertise aggregate total return for a
specified period of time, which is the percentage change in the net asset value
of Fund shares initially purchased assuming reinvestment of dividends and
capital gains distributions without giving consideration to the length of time
of the investment.
Non-recurring expenses may be excluded from the calculation of rates of return
so that the rates may be higher than if these expenses were included. The SAI
describes the methods used to calculate the Fund's total return.
The Fund may quote performance results from recognized services and publications
which monitor the performance of mutual funds and the Fund may compare their
performance to various published historical indices. These include market,
economic and performance data and indices. For example, the Fund may quote the
market performance of the S&P 500; the Morgan Stanley Capital International
Europe Australia Far East (EAFE) Index or another appropriate index; performance
of various world economies or economic indicators; or compilations of historical
performance data from rating agencies. The Fund is rated in the Global Funds
Category by performance rating agencies. Micropal, Ltd., a worldwide mutual
fund performance evaluation service, is one rating agency; Lipper Analytical
Services is another.
TAXES
[FUND'S TAX STATUS] The Fund intends to qualify as a "regulated investment
company" under the Internal Revenue Code and will not pay income or excise taxes
to the extent that it distributes its net taxable investment income and capital
gains.
[TAXATION OF DIVIDENDS YOU RECEIVE] Notice as to the tax status of dividends
and distributions will be mailed to you 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. If the Fund fulfills certain requirements, shareholders of the Fund may
be able to claim a foreign tax credit or deduction for foreign taxes paid to
foreign governments by the Fund during the year. The Fund does not
17
<PAGE>
anticipate that any portion of the Fund's dividends will be eligible for the
70% corporate dividends received deduction.
[TAXATION ON SALE OF SHARES] When you redeem your shares you may incur a
capital gain or loss for tax purposes. The amount of the capital gain or loss,
if any, is the difference between what you paid for your shares and what you
receive. Be sure to keep your regular statements - they contain the information
necessary to calculate the capital gain or loss.
This discussion was a brief description of the tax consequences of an investment
in the Fund. You should consult your tax adviser for additional tax
consequences, including state and local taxation, of dividends, distributions
and sale of Fund shares.
[NON-RESIDENTS] 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 Fund is not required to withhold tax from long-term
capital gains distributions paid to non-resident aliens.
ADDITIONAL INFORMATION
[QUESTIONS ABOUT THE FUND] For further information about the Fund, please call
your financial advisor or the Fund toll free at 800.826.1115 or write to the
Fund at the cover page address.
[CUSTODIAN] The custodian of the assets of the Trust is The Chase Manhattan
Bank, N.A., 4 Chase Metrotech Center, Brooklyn, New York 11245.
[INDEPENDENT ACCOUNTANTS] Coopers & Lybrand L.L.P., 1301 Avenue of the Americas,
New York, New York 10036, is the Fund's independent accountant. The Fund's
annual financial statements are audited by Coopers & Lybrand.
[COUNSEL] Goodwin, Proctor & Hoar, 1 Exchange Place, Boston, Massachusetts
02109, serves as outside counsel to the Trust.
[TRANSFER AND DIVIDEND DISBURSING AGENT] DST Systems, Inc., 1004 Baltimore,
Kansas City, Missouri 64105, serves as the Fund's transfer, dividend disbursing
and shareholder servicing agent.
[INVESTMENT ADVISER] Van Eck Associates Corporation, 99 Park Avenue, New York,
New York 10016, serves as the investment adviser to the Fund.
[SUB-ADVISER] Axe-Houghton Associates, Inc., Royal Executive Park, 4
International Drive, Rye Brook, NY 10573, serves as the sub-investment adviser
to the Fund.
[DISTRIBUTOR] Van Eck Securities Corporation, 99 Park Avenue, New York, New
York 10016, serves as distributor for the Fund's shares.
18
<PAGE>
SUBJECT TO COMPLETION
MAY 16, 1996
VAN ECK FUNDS (THE"TRUST")
CORE INTERNATIONAL INDEX FUND
99 PARK AVENUE, NEW YORK, N.Y. 10016
SHAREHOLDER SERVICES: TOLL FREE (800) 544-4653
Van Eck Funds is a mutual fund consisting of thirteen separate series. The Core
International Index Fund (the "Fund") offers its shares at net asset value
without payment of a sales charge.
TABLE OF CONTENTS Page
----
General Information......................................... 2
Overview of Investment Objective and Policies of the Fund... 2
Risk Factors................................................ 3
Foreign Securities..................................... 3
Foreign Currency Transactions.......................... 4
Futures and Options Contracts and Complex Securities... 4
Options, Futures and Forward Contracts................. 4
Hedging and Other Investment Techniques................ 6
Indexed Securities and Structured Notes................ 6
Swap Agreements........................................ 7
Loans of Portfolio Securities.......................... 7
Borrowing.............................................. 8
Rights................................................. 8
Partly Paid Securities................................. 8
Repurchase Agreements.................................. 8
Investment Restrictions..................................... 9
Investment Advisory Services................................ 10
The Distributor............................................. 11
Portfolio Transactions and Brokerage........................ 12
Trustees and Officers....................................... 13
Valuation of Shares......................................... 17
Exchange Privilege.......................................... 18
Tax-Sheltered Retirement Plans.............................. 18
Investment Programs......................................... 21
Taxes....................................................... 22
Redemptions in Kind......................................... 25
Performance................................................. 25
Additional Information...................................... 27
Financial Statements........................................ 27
Appendix.................................................... 28
Performance Charts.......................................... 29
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Fund's current Prospectus, dated July__, 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.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT . A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY ANY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE A
PROSPECTUS.
STATEMENT OF ADDITIONAL INFORMATION - July____, 1996
GENERAL INFORMATION
-------------------
Van Eck Funds (the "Trust") is an open-end management investment company
organized as a "business trust" under the law 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 thirteen series of Van Eck Funds: Van Eck Asia Sector
Portfolios: Asia Select Financial Services Portfolio (Class A, B and D), Asia
Select Property Portfolio (Class A, B and D) and Asia Select Utilities Portfolio
(Class A, B and D), Global Balanced Fund (Class A and B), Asia Dynasty Fund
(Class A and B), Asia Infrastructure Fund (Class A and B), Core International
Index Fund, 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 Global Balanced Fund, Asia Dynasty Fund, Asia Infrastructure Fund, Global
Income Fund and Global Hard Assets Fund are referred to as the Van Eck Global
Funds. International Investors Gold Fund, Gold/Resources Fund, Gold Opportunity
Fund and Global Hard Assets Fund are referred to as the Van Eck Gold Funds. Asia
Select Financial Services Portfolio, Asia Select Property Portfolio and Asia
Select Utilities Portfolio are referred to as the Van Eck Asia Sector
Portfolios.
The Fund is classified as a diversified fund under the Investment Company Act of
1940, as amended ("1940 Act").
Van Eck Associates Corporation (the "Adviser") serves as investment adviser to
the Fund and Axe Houghton Associates, Inc. serves as sub-investment adviser
("Sub-Adviser") to the Fund.
OVERVIEW OF INVESTMENT OBJECTIVES AND POLICIES OF THE FUND
----------------------------------------------------------
The Fund seeks to provide a total return approximating the total return of the
Morgan Stanley Capital International Europe, Australia and Far East ("EAFE")
Index ("Index") by investing in the securities of certain companies that are
included in the Index. The Index is an arithmetic market value-weighted average
of the performance of approximately 1100 companies listed on exchanges in
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. The companies in the Index are changed from time
to time. The countries represented in the Index currently include Australia,
Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy,
Japan, Malaysia, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden,
Switzerland and the United Kingdom.
The Fund may invest in a broad range of equity securities, warrants and equity
options of companies that comprise the Index. Equity securities include common
and preferred stocks, structured notes, equity swaps, financial futures
contracts and options on financial futures contracts, put or call options on a
security or securities indices and other instruments which may be or become
available that are consistent with the Fund's investment objective. In
addition, the Fund may buy and sell forward, futures and options contracts on
foreign currencies, currency swaps and currency indexed and
2
<PAGE>
structured notes and other similar instruments to lock in the value of its
settlement obligation between the time the securities are purchased and must be
paid for. The Fund may also lend its portfolio obligation securities and borrow
money to meet redemptions but not for investment purposes (i.e., leverage its
portfolio). Although the Fund will invest its assets in a manner consistent with
its investment objectives and policies there can be no assurance the Fund will
be able to achieve its objective.
The Fund may invest, without limitation, in depository shares or depository
receipts, such as American Depository Receipts and Shares and Global Depository
Receipts and Shares. Depository receipts and shares are generally issued by
custodian banks as evidence of ownership of the underlying foreign securities.
The Fund intends to be fully invested at all times. However, the Fund may, for
cash management purposes (i.e., to meet redemptions), purchase money market
instruments which include, but are not limited to, negotiable or short-term
deposits with domestic or foreign banks with total surplus and undivided profits
of at least $50 million; high quality commercial paper; and repurchase
agreements maturing within seven days with domestic or foreign dealers, banks
and other financial institutions deemed to be creditworthy under guidelines
approved by the Board of Trustees of the Fund. The commercial paper in which the
Fund may invest will, at the time of purchase, be rated P-1 or better by Moody's
Investors Services, Inc. ("Moody's") or, A-1 or better by Standard & Poor's
Corporation ("S&P") or, Fitch-1 by Fitch or Duff-1 by Duff & Phelps or, a
comparable rating by a recognized rating agency or, if unrated, will be of
comparable high quality as determined by the Adviser.
RISK FACTORS
------------
FOREIGN SECURITIES
------------------
While the Fund intends to invest primarily in American Depository Receipt
("ADRs") which are traded on U.S. exchanges and are denominated in U.S. dollars,
ADRs represent an ownership interest in foreign securities. 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 Fund may hold securities
and funds in foreign currencies, the Fund 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
equity 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. 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 and be reflected in the price of the
securities and ADRs. Foreign securities such as those purchased by the Fund may
be subject to foreign government taxes, higher custodian fees and dividend
collection fees which could reduce the return on such securities.
The Index includes several securities markets which 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
3
<PAGE>
the number of shares available for investment by the Fund. A limited number of
issuers in these securities markets may represent a disproportionately large
percentage of market capitalization and trading value. The limited liquidity of
certain securities markets 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 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, securities markets in Asia are susceptible to being influenced by
large investors trading significant blocks of securities.
Economies of countries in the Index 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. Some are export-driven economies which may
affected by developments in the economies of their principal trading partners.
FOREIGN CURRENCY TRANSACTIONS
-----------------------------
The Fund may purchase foreign securities for conversion into ADRs, When it
purchases foreign securities it will have to pay for them in a foreign currency.
The Fund will purchase foreign currency on either a "spot" or "forward" basis,
and will incur costs. 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. The
Fund, at times, will use forward contracts, along with futures contracts,
foreign exchange swaps, structured notes and put and call options (all types of
derivatives), to "lock in" the U.S. Dollar price of a security bought or sold
that has not yet settled, as part of itstheir overall hedging strategy, for
defensive purposes and for cash management purposes. The Fund will conduct
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 selling foreign currencies or using structured
notes, swap agreements or other instruments that may become available. See
"Futures and Options Contracts and Complex SecuritiesTransactions."
FUTURES AND OPTIONS CONTRACTS AND COMPLEX SECURITIES
----------------------------------------------------
The Fund may buy and sell forward, futures and options contracts, structured
notes, swap agreements and other complex securities which are or may become
available for currency hedging and investment purposes. These are commonly
referred to as "derivatives.". DSome derivatives are futures and forward
contracts and include financial futures and forward contracts onwhich may
include foreign currency, securities, stock and bond indicesex or forward
futures and forward contracts. The Fund will use these instruments as part of a
program to construct a portfolio whose country allocation and sector weightings
and return will approximate that of the Index, and will do so only when it is
more cost effective, provides for additional diversification or is more
transactionally efficient than purchasing or selling ADRs or securities.
OPTIONS, FUTURES AND FORWARD CONTRACTS
--------------------------------------
A forward contract, like a futures contract, involves an obligation to purchase
or sell a specific asset at a future date, which may be any fixed number of days
from the date of the contract as agreed upon by the parties, at a price set at
the time of the contract. Unlike futures contracts which are standardized
exchange-traded contracts, forward contracts are usually traded in the over-the-
counter market conducted directly between financial institutions and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for such trades. There is, however, an
interest rate factor reflected in the delivery prices. A security or interest-
rate futures or forward contract is an agreement to buy or sell a specified
security at a set price on a future date. An index contract is an agreement to
take or make delivery of an amount
4
<PAGE>
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 contract is an
agreement to buy or sell a specified amount of a currency for a set price on a
future date.
When the Fund enters into a futures contract, it must make an initial deposit,
known as "initial margin," as a partial guarantee of its performance under the
contract. As the value of the security, index 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 Fund will not commit more than 5% of its total assets to initial
margin deposits on futures contracts and premiums on options, except that 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 or forward contract, which may be a long
or short position, the Fund will own an offsetting position orfor other than
hedging purposes appropriate high grade, liquid assets, such as U.S. Government
securities or cash will be segregated with the Fund's Custodian to ensure that
the position is not leveraged above applicable limits. See "Borrowing" below.
This segregated account will be marked-to-market daily to reflect changes in the
value of the underlying futures or forward contract. 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 thea Fund's commitments with respect to
such contracts. Certain exchanges do not permit trading in particular futures
contracts at prices in excess of daily price fluctuation limits set by the
exchange. Trading in futures contracts traded on foreign exchanges may be
subject to the same or similar risks as trading in foreign securities.
The 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 Fund because the maximum exposure is the
amount of the premiums paid for the options.
The Fund may invest up to 5% of its total assets, taken at market value at the
time of investment, in premiums on call and put options on domestic and foreign
securities, foreign currencies, stock and bond indices and financial futures
contracts (entered into for other than bona fide hedging purposes). 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 ("American"("American" option) or at expiration of the
contract ("European"("European" option). An option on a futures contract gives
the purchaser the right, but not the obligation, in return for the premium paid,
to assume a position in a specified underlying futures contract (which position
may be a long or short position) at a specified exercise price during the option
exercise period. If the call or put is not exercised or sold (whether or not at
a profit), it will become worthless at its expiration date and the Fund will
lose its premium payment. The Fund may, with respect to options it has
purchased, sell them, exercise them or permit them to expire.
The Fund may write call or put options. As the writer of an option, the Fund
receives a premium. The Fund keeps the premium whether or not the option is
exercised. If the call or put option is exercised, the Fund must sell (in the
case of a written call option) or buy (in the case of written put option) the
underlying asset at the exercise price. The Fund may write only covered put and
call options. A covered call option, which is one where the Fund owns the
underlying asset, sold by the Fund exposes it during the term of the option to
possible loss of opportunity to realize appreciation in the market price of the
underlying asset or to possible continued holding of an underlying 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.
5
<PAGE>
The Fund may invest in options which are either listed on a domestic securities
exchange, traded on a foreign exchange or over-the-counter.
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. With respect to over-the-
counter options, the Fund is exposed to the risk that the other party will fail
to perform under the contract;, in such a case the Fund would incur a loss equal
to the then current "market" value of the option.
HEDGING AND OTHER INVESTMENT TECHNIQUES
---------------------------------------
The Fund intends, under normal market conditions, to be fully invested and does
not intend to hedge its investment exposure to the Index or any of its
components. The Fundss may use futures contracts, options, structured and
indexed notes, forward contracts and swaps and other similar instruments on
foreign currencies to lock in the dollar value of securities which it has
purchased but has not paid for and one of more securities with Index for
investment purposes, such as creating non-speculative "synthetic" positions. A
synthetic position will beis not deemed to be speculative if the position is
covered by segregation of short-term liquid assets. A synthetic position
permits the Fund to obtain investment exposure and is the duplication of a cash
market transaction when deemed advantageous by the Adviser for cost, liquidity,
tax or transactional efficiency reasons. A cash market transaction is the
purchase or sale of a security or other asset for cash. For example, broader
exposure to a market within the Index may be obtained at a lower overall cost by
entering into a swap agreement than through the purchase of ADRs or securities.
By segregating cash, the Fund's swap agreement position would generally be no
more leveraged or riskier than if it had invested in the cash market - i.e.,
purchased the securities.
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
currency 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 or investment exposure it anticipated and/or incur a loss
greater than if it had entered into a cash market position. Second, positions in
some of these 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. Third, if
the other party to a swap, structured or indexed note, forward contract or over-
the-counter option were to default on its obligation, the Fund would incur a
loss. There is no assurance that a "synthetic" position will perform identically
to a cash market position. Finally, certain of these derivative instruments may
be illiquidillegal, difficult to value accurately and subject to extreme
volatility.
It is the policy of the Fund 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 Fund and its shareholders. One of
these requirements is that less than 30% of the Fund's gross income must be
derived from gains from the sale or other disposition of securities held for
less than three months. The extent to which the Fund may engage in the
foregoing transactions may be materially limited by this requirementtest.
INDEXED SECURITIES AND STRUCTURED NOTES
---------------------------------------
The Fund may invest in securities whose value is linked to one or more
currencies, or indices or markets comprising the Index. An indexed security or
structured note enables the Fund to purchase
6
<PAGE>
a note whose coupons and/or principal redemption are linked to the performance
of an underlying asset, such as a component of the Index. Indexed securities may
have return characteristics similar to direct investments in the underlying
instrument or to one or more options on the underlying asset or other assets.
Indexed securities may be more volatile than the underlying instrument itself,
and present many of the same risks as investing in forwards, futures and options
contracts. Indexed securities are also subject to credit risks associated with
the issuer of the security with respect to both principal and interest. 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, 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. Structured notes
may give the Fund investment exposure to one or more component of the Index.
These instruments may also be difficult to value accurately.
The Adviser will monitor the liquidity of these instruments under the
supervision of the Board of Trustees and those instrumentsnotes determined to be
illiquid will be aggregated with other illiquid securities and limited to 15% of
the net assets of the Fund and structured notes may give the Fund access to
markets that it might otherwise be precluded from investing in or increased
liquidity.
SWAP AGREEMENTS
---------------
The Fund may enter into swap agreements. Swap agreements permit a Fund to swap
(trade) the performance of one asset for another. For example, the Fund may
swap the performance of the Hang Seng Index (Hong Kong) for the Japanese Index,
(India). By entering into such a swap, the Fund could simultaneously reduce of
its exposure to the Hong Kong market and gain exposure to the Japanese market.
Rather than enter into a swap agreement, the Fund could have sold its Hong Kong
holdings and purchased Japanese ADRs or securities, thereby incurring
transaction and other costs. The Fund would enter into this type swap agreement
to maintain an appropriate Index weighting. Since swaps are individually
negotiated, the Fund may expect to achieve an acceptable degree of correlation
between its portfolio investments and its swap position. 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.
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 Sub-Adviser is incorrect in its forecasts of market values
and currency exchange rates, the investment performance of the Fund would be
less favorable than it would have been if this investment technique were not
used. Swaps are generally considered illiquid and will be aggregated with other
illiquid positions for purpose of the limitation on illiquid investments.
High grade, liquid assets, such as U.S. Government securities or cash will be
segregated with the Fund's custodian in an amount equal to the Fund's net
obligation on such swap agreements. 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 thea Fund's commitments with respect to such contracts.
LOANS OF PORTFOLIO SECURITIES
-----------------------------
The Fund may lend to broker-dealers portfolio securities with an aggregate
market value of up to one-third of its total assets. Such loans must be secured
by collateral (consisting of any combination of cash, U.S. Government securities
or irrevocable letters of credit) in an amount at least equal (on a daily mark-
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
7
<PAGE>
will continue to have voting rights with respect to the securities. The Fund
might experience a loss if the broker-dealer with which it has engaged in a
portfolio loan transaction breaches its agreement.
BORROWING
---------
The Fund may borrow for temporary purposes up to 33-1/3 % of the value of its
net assets to satisfy redemption requests not to increase its holdings. Under
the 1940 Act, the Fund is required to maintain continuous asset coverage of 300%
with respect to such borrowings and to sell (within three days) sufficient
portfolio holdings to restore such coverage if it should decline to less than
300% because of market fluctuations or other factors, even if the sale would be
disadvantageous from an investment standpoint. While the borrowing is
outstanding the Fund will be leveraged which 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). It is anticipated that such borrowings would be pursuant to a
negotiated loan agreement with a commercial bank.
RIGHTS
------
Rights are privileges granted to existing shareholders or may be attached to
other securities. Rights entitle the holder to purchase shares of a new issue
before being offered to the public, often below the public offering price the
stock is offered to the public. Some rights are registered and are freely
transferable while others are not. Rights are similar to options in that they
give the holder the right, notand the obligation, to purchase shares.
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.
High grade, liquid assets, such as U.S. Government securities or cash will be
segregated with the Fund's custodian in an amount equal to the "unpaid""unpaid"
installments on these securities. 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 thea Fund's commitments with respect to such contracts.
REPURCHASE AGREEMENTS
---------------------
The Funds may engage in repurchase agreement transactions. Under the terms of a
typical repurchase agreement, the Fund acquires an underlying asset 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 asset at an
agreed upon price and time, thereby determining the yield during the holding
period. The agreement results in a rate of return that is not subject to market
fluctuations during the holding period. Repurchase agreements could involve
certain risks in the event of default or insolvency of the other party,
including possible delays or restrictions upon the Fund's ability to dispose of
the underlying asset. The Adviser acting under the supervision of the Board of
Trustees, reviews the creditworthiness of those non-bank dealers with which the
Fund enters into repurchase agreements to evaluate these risks. Entering into
repurchase agreements with foreign dealers poses similar risks to investing in
foreign securities.
8
<PAGE>
The Fund will not enter into a repurchase agreement with a maturity of more than
seven business days if, as a result, more than 15% of the value of the Fund's
total assets would then be invested in such repurchase agreements and other
illiquid securities. The Fund will only enter into a repurchase agreement where
(i) the underlying asset is 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.
INVESTMENT RESTRICTIONS
-----------------------
The following investment restrictions are in addition to those described in the
Prospectus. Policies that are identified as fundamental may be changed 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 the
Fund's outstanding shares are present in person or by proxy, or (ii) more than
50% of the 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. Restrictions 1, 4, 5, 9, 11, 12, 14, and 15 are not fundamental,
unless otherwise provided for by applicable federal or state law.
The Fund may not:
1. Invest in securities which 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 15% of the Fund's net assets would be invested in such securities,
excluding securities which are deemed to be liquid under Rule 144A or
Regulations under the Securities Act of 1933.
2. Purchase or sell real estate, except the Fund may purchase securities
included in the Index 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 or commodities futures contracts.
4. Purchase more than 3% of the total outstanding voting stock of any
investment company or invest more than 5% of its total assets in the
securities of any investment company or invest more than 10% of its total
assets in investment companies in general. Such purchases may involve only
customary broker's commissions.
5. Lend to broker-dealers portfolio securities with an aggregate market value
in excess of 33 -1/3% of its total assets.
6. As to 75% of the Fund's total assets, purchase securities of any issuer, if
immediately thereafter (i) more than 5% of the 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 voting securities of such issuer would be
held by the Fund except as may be included in the Index. This restriction
does not apply to any securities acquired as part of a merger, acquisition
of assets or other reorganization.
9
<PAGE>
7. Underwrite any issue of securities (except to the extent that the Fund may
be deemed to be an underwriter within the meaning of the Securities Act of
1933 in the purchase of securities for investment or disposition of
restricted securities).
8. Borrow money, except for temporary purposes in excess of 33- 1/3% of the
value of its net assets.
9. Mortgage, pledge or otherwise encumber its assets except to secure borrowing
effected within the limitations set forth in restriction (8).
10. Issue senior securities. The Fund may(for purposes of this restriction (i)
borrowing money in accordance with restrictions described above,; (ii)
entering into forward contracts, (iii) purchase futures contracts purchased
on margin, (iv) issueing multiple classes of securities, and (v) entering
into swap agreement or purchaseing or sell structured notes or similar
instruments which are or may become available. are not deemed senior
securities).
11. Purchase any security on margin, except that it may obtain such short-term
credits as are necessary for clearance of securities transactions and, may
make initial or maintenance margin payments in connection with options and
futures contracts and options on future contracts and borrowing effected
within the limitations set forth in these restrictions.
12. Participate on a joint or joint and several basis in any trading account in
securities, although transactions for the Fund and any other account under
common or affiliated management may be combined or allocated between the
Fund and such account. or a foreign government its agencies or
instrumentalities.
13. Purchase participations or other interests (other than equity stock
interests) in oil, gas or other mineral, leases or exploration or
development programs.
14. Invest in real estate limited partnerships or in oil, gas or other
mineral leases.
INVESTMENT ADVISORY SERVICES
----------------------------
The investment adviser and manager of the Fund is Van Eck Associates Corporation
(the "Adviser"), a Delaware corporation, pursuant to an Advisory Agreement with
the Trust dated as of June 30, 1996. Axe Houghton Associates, Inc. (the "Sub-
Adviser") furnishes an investment program for the Fund and determines, subject
to the overall supervision and review of the Board of Trustees, what investments
should be purchased, sold and held pursuant a Sub-Advisory Agreement dated as of
June 30, 1996.
The Adviser provides the Fund with office space, facilities and simple business
equipment and provides the services of executive and clerical personnel for
administering their affairs. The Adviser and Sub-Adviser compensate 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 annual rate of 0.65% of
the Fund's average daily net assets from which the Adviser pays to the Sub-
Adviser a fee at an annual rate of ___% of the Fund's average daily net assets.
The expense borne by the Fund 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, 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
10
<PAGE>
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), if any, fees of Trustees who are not "interested persons" of the Adviser,
membership dues of the Investment Company Institute, fidelity bond and errors
and omissions insurance premiums, cost of maintaining the books and records of
the Fund, and any other charges and fees not specifically enumerated as an
obligation of the Distributor or Adviser or Sub-Adviser.
The Advisory Agreement provides that the 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, the maximum annual expenses which the Trust may be required
to bear, inclusive of the advisory fee but exclusive of interest, taxes,
brokerage fees, Rule 12b-1 Plan distribution payments, if any, and extraordinary
items, may not exceed the lowest expense limitation imposed by any state in
which the Fund are registered. Currently, only one state imposes such an expense
limitation on the Fund. For the purposes of the expense limitations imposed on
the Fund 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 Fund for that month exceeds the
foregoing limitations. At the end of the fiscal year, if the aggregate annual
expenses of the Fund exceeds the amount permissible under the foregoing
limitations, then the Adviser will be required promptly to reimburse the Fund
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.
The Advisory Agreement provides that it shall continue in effect from year to
year with the respect to the 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 Agreement
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 Fund 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 Trust have approved a Distribution Agreement appointing the
Distributor as distributor of shares of the Fund. The Distribution Agreement
with respect to the Funds was approved by the action of the Trustees on July
__, 1996.
The Distribution Agreement provides that the Distributor will pay all fees and
expenses in connection with printing and distributing prospectuses and reports
for use in offering and selling shares of the Funds and preparing, printing and
distributing advertising or promotional materials. The Fund will pay all fees
and expenses in connection with registering and qualifying their shares under
federal and state securities and foreign laws.
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<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
------------------------------------
The Sub-Adviser is responsible for decisions to buy and sell securities and
other investments for the Fund, 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. 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 Fund's portfolio investments, it is the Adviser's
and Sub-Adviser's policy to obtain quality execution at the most favorable
prices through responsible broker-dealers. In selecting broker-dealers, the
Sub-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 Fund 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 Sub-Adviser or Adviser are considered to be in addition to and not in
lieu of services required to be performed by the Sub-Adviser or Adviser under
these respective Agreements. 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 affiliates.
The Trustees periodically review the Sub-Adviser's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Fund and review the commissions paid by the Fund over
representative periods of time to determine if they are reasonable in relation
to the benefits to the Fund.
Investment decisions for the Fund are made independently from those of the other
investment accounts managed by the 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
12
<PAGE>
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 may consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
While it is the policy of the Fund generally not to engage in trading for short-
term gains, the Fund will effect portfolio transactions without regard to the
holding period as maybe required to meet redemption. The Fund anticipates that
its annual portfolio turnover rate will not exceed 25%. The portfolio turnover
rate of the Fund may vary greatly from year to year. See "Taxes" in the
Prospectus and the Statement of Additional Information.
The Adviser and Sub-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 and Sub-Adviser recognize 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 and Sub-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. In addition, other procedures have been adopted and
implemented to minimize conflicts. 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 and Sub-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 and Sub-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:
*@JOHN C. van ECK, C.F.A. - Chairman of the Board
- ------------------------
270 River Road, Briarcliff Manor, New York; Chairman of the Board and President
of other affiliated investment companies advised by the Adviser; Chairman, Van
Eck Associates Corporation (investment adviser) and Van Eck Securities
Corporation (broker-dealer); Director, Eclipse Financial Asset Trust (mutual
fund); Former President of the Adviser and its affiliated companies; Former
Director (1992-1995), Abex Inc. (aerospace), Former Director (1983-1986), The
Signal Companies, Inc. (high technology and engineering); Former Director (1982-
1984), Pullman Transportation Co., Inc. (transportation equipment). Former
Director (1986-1992) The Henley Group, Inc. (technology and health).
13
<PAGE>
@#+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
investment companies affiliated with the Adviser; Chairman of the Board to all
funds of Davis Funds Group (mutual fund management company); Former Director,
International Investors Incorporated (1990-1991).
#+RICHARD C. COWELL - Trustee
- -------------------
240 El Vedado Way, Palm Beach, Florida 33480; Trustee of other affiliated
investment companies advised by the Adviser; Private Investor; Director, West
Indies & Caribbean Development Ltd. (real estate); Former Director, Compo
Industries, Inc. (machinery manufacturer); Former Director, International
Investors Incorporated (1957-1991); Former Director (1978-1981), American Eagle
Petroleums, Ltd. (oil and gas exploration); Former President and Director (1968-
1976), Minerals and Industries, Inc. (petroleum products); Former Director
(1978-1983) Duncan Gold Resources, Inc. (oil exploration and gold mining);
Former Director (1981-1984), Crested Butte Silver Mining Co.; Former Chairman
and Member of Executive Committee (1974-1981), Allerton Resources, Inc. (oil and
gas exploration); Former Director (1976-1982), Western World Insurance Co.
@RODGER 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
14
<PAGE>
Board, Former Chairman of the Executive Committee and Chief Executive Officer of
Discount Corporation of New York (dealer in U.S. Treasury and Federal Agency
Securities) (1981-1988); Director, Sun Life Insurance and Annuity Company of New
York; Director, U.S. Life Income Fund, Inc., New York; Former Director,
International Investors Incorporated.
RICHARD D. STAMBERGER - Trustee
- ---------------------
888 17th Street, N.W., Washington, D.C. 20006; Principal, National Strategies,
Inc., a public policy firm in Washington, D.C.; Partner and Co-founder, Quest
Partners, Inc. (management consulting firm/since 1988); Executive Vice
President, Chief Operating Officer, and a Director of NuCable Resources
Corporation (technology firm/since 1988); Trustee, Peregrine Funds; associated
with Anderson Benjamin & Reed, a regulatory consulting firm based in Washington,
D.C. (1985-1986); White House Fellow-Office of Vice President (1984-1985);
Director of Special Projects, National Cable Television Association (1983-1984).
**@FRED M. van ECK - Trustee
- -------------------
99 Park Avenue, New York, New York; Private Investor; Trustee of other
affiliated investment companies advised by the Adviser; Director, Van Eck
Associates Corporation; Director, Van Eck Securities Corporation; Former General
Partner (1950-1976) J. H. Whitney & Co. (venture capital).
Officers of the Trust:
HENRY J. BINGHAM - Executive Vice President
- ----------------
99 Park Avenue, New York, New York; Executive Vice President of the Trust;
President of International Investors Gold Fund series of Van Eck Funds and Gold
and Natural Resources Fund series of Van Eck Worldwide Insurance Trust;
Executive Vice President of other affiliated investment companies advised by the
Adviser; Executive Managing Director of the Adviser; Formerly an officer of the
Adviser and affiliated companies; Director and Vice President (1978-1983),
United Services Gold Shares, Inc., United Services Group of Funds, Inc. and The
Good and Bad Times Fund, Inc. (mutual funds) and Growth Research and Management,
Inc. (investment adviser). Formerly General Partner and Director of Spencer
Trask & Co.
LUCILLE PALERMO - Executive Vice President
- ---------------
99 Park Avenue, New York, New York; Executive Vice President of the Trust;
President, Gold/Resources Fund and Gold Opportunity Fund series of Van Eck
Funds; Associate Director, Mining Research of the Adviser; Investment Strategist
and Analyst with Drexel Burnham Lambert (1979-1989).
MADIS SENNER - Executive Vice President
- ------------
99 Park Avenue, New York, New York; Executive Vice President of the Trust;
President of Global Income Fund series of Van Eck Funds and Worldwide Bond Fund
series of Van Eck Worldwide Insurance Trust; Director, Global Fixed Income of
the Adviser; Executive Vice President of other affiliated investment companies
advised by the Adviser; Former Global Bond Manager, Chase Manhattan Private Bank
(1992-1994); Former President and founder, Sunray Securities, Inc. (1989-1992).
***@DEREK van ECK, C.F.A. - Executive Vice President
- ------------------------
99 Park Avenue, New York, New York; Executive Vice President of the Trust;
President of Global Hard Assets Fund series of Van Eck Funds and Worldwide Hard
Assets Fund series of Van Eck Worldwide Insurance Trust; Vice President of
Global Balanced Fund, Gold
15
<PAGE>
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.
STEPHEN ILNITZKI - Vice President
- ----------------
99 Park Avenue, New York, New York; Vice President of the Trust, Chief Operating
Officer of Van Eck Associates Corporation and Van Eck Securities Corporation
(since 1994); Vice President, Bankers Trust (1991-1994). Vice President and
Chief Operating Officer of other affiliated investment companies advised by the
Adviser.
BRUCE J. SMITH - Vice President and Treasurer
- --------------
99 Park Avenue, New York, New York; Vice President and Treasurer of the Trust,
Senior Managing Director, Portfolio Accounting of Van Eck Associates Corporation
and Senior Managing Director of Van Eck Securities Corporation; Vice President
and Treasurer of other affiliated investment companies advised by the Adviser.
JOSEPH P. DiMAGGIO - Controller
- ------------------
99 Park Avenue, New York, New York; Controller of the Trust, Director of
Portfolio Accounting of Van Eck Associates Corporation (since 1993); Accounting
Manager, Alliance Capital Management (1985-1993); Controller of other affiliated
investment companies advised by the Adviser.
WILLIAM A. TREBILCOCK
- ---------------------
99 Park Avenue, New York, New York; Director, Mining Research of Van Eck
Associates Corporation; Former Director, Corner Bay Explorations Ltd.; Former
Director, Precambrian Explorations Inc. (mining exploration); Former Director
and Secretary (1981-1984) of Tioga Land Company, Inc. (oil exploration); Former
Director (1984-1987), Lacana Gold Inc. (mining company); Former Director, Royex
Gold Mining Corporation (mining company); Former Director, Pez Corona Gold
Corporation (a wholly-owned subsidiary of Royex Gold Mining Corporation); Former
Director, International Corona Corporation.
THADDEUS M. LESZCZYNSKI - Vice President and Secretary
- -----------------------
99 Park Avenue, New York, New York; Vice President and Secretary of the Trust,
Vice President and Secretary of other affiliated investment companies advised by
the Adviser; Vice President, Secretary and General Counsel of Van Eck Associates
Corporation and Van Eck Securities Corporation.
SUSAN C. LASHLEY - Vice President
- ----------------
99 Park Avenue, New York, New York; Vice President of the Trust, Managing
Director, Mutual Fund Operations of Van Eck Securities Corporation.
PAUL A. DiPERNA - Vice President
- ---------------
99 Park Avenue, New York, New York; Assistant Vice President of the Trust,
Associate Manager, Trading, of Van Eck Associates Corporation; Portfolio Manager
of U.S. Government Money Fund series of Van Eck Funds.
16
<PAGE>
CHARLES CAMERON - Vice President
- ---------------
99 Park Avenue, New York, New York; Vice President of the Trust, Director of
Trading of Van Eck Associates Corporation; Bond Trader, Standard Chartered Bank
(1989-1995)
BARBARA J. ALLEN - Assistant Secretary
- ----------------
99 Park Avenue, New York, New York; Assistant Secretary of the Trust, Compliance
Officer of Van Eck Associates Corporation and Van Eck Securities Corporation;
Senior Counsel, Arizona Corporation Commission, Securities Division (1990-1994).
________________________
@ An "interested person" as defined in the Act.
* Member of Executive Committee - exercises general powers of Board of
Trustees between meetings of the Board.
** Brother of Mr. John C. van Eck.
*** Son of John C. van Eck and nephew of Fred M. van Eck.
# Member of Nominating Committee.
+ Member of Audit Committee - reviews fees, services, procedures,
conclusions and recommendations of independent auditors.
VALUATION OF SHARES
-------------------
The net asset value per share of the Fund is computed by dividing the value of
all of the 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 Fund will be closed on the following national
business holidays: New Years Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas. The net asset value
need not be computed on a day in which no orders to purchase, sell or redeem
shares of the Fund 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.
17
<PAGE>
Generally, trading in foreign securities and futures contracts, 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
Fund 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.
EXCHANGE PRIVILEGE
------------------
Shareholders of the Fund may exchange their shares for shares of other funds in
the Van Eck Group of Funds and will be subject to the applicable sales charge.
The Exchange Privilege will not be available if the proceeds from a redemption
of Fund shares 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"). If certificates representing shares of the
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 Fund reserves the right to (i) charge a fee of not more than $5.00 per
exchange payable to the Fund or charge a fee reasonably intended to cover the
costs incurred in connection with the exchange; (ii) establish a limit on the
number and amount of exchanges made pursuant to the Exchange Privilege and (iii)
terminate the Exchange Privilege without written notice. In the event of such
termination, shareholders who have acquired their shares pursuant to the
Exchange Privilege will be afforded the opportunity to re-exchange such shares
for shares of the Fund originally purchased without sales charge, for a period
of not less than three (3) months.
By exercising the Exchange Privilege each shareholder whose shares are subject
to the Exchange Privilege will be deemed to have agreed to indemnify and hold
harmless the Trust and each of its series, their investment adviser, sub-
investment adviser (if any), distributor, transfer agent, IFTC and the officers,
directors, employees and agents thereof against any liability, damage, claim or
loss, including reasonable costs and attorneys' fees, resulting from acceptance
of, or acting or failure to act upon, or acceptance of unauthorized instructions
or non-authentic telephone instructions given in connection with, the Exchange
Privilege, so long as reasonable procedures are employed to confirm the
authenticity of such communications. (For more information on the Exchange
Privilege, see the Prospectus).
TAX-SHELTERED RETIREMENT PLANS
------------------------------
The Trust offers several prototype tax-sheltered retirement plans through which
shares of the 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 Fund.
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
18
<PAGE>
and wish to purchase shares of the 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.
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 the 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.
19
<PAGE>
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
1996) under a salary reduction agreement is the lesser of $____ (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 the 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 the Fund and accumulate tax-free until distribution.
Withdrawals of contributions prior to age 59-1/2, unless made as a result of
disability, death or early retirement, may result in adverse tax consequences
and penalties.
403(b)(7) Program. The Tax-Deferred Annuity Program and Custodial Account
- -----------------
offered by the Fund (the "403(b)(7) Program") allows employees of certain tax
exempt organizations and schools to have a portion of their compensation set
aside for their retirement years in shares held in an investment company
custodial account.
In general, the maximum limit on annual contributions for each employee is the
lesser of $30,000 per year (as adjusted by the IRS for cost-of-living
increases), 25% of the employee's compensation or the employee's exclusion
allowance specified in Section 403(b) of the Code. However, an employee's
salary reduction contributions to a 403(b)(7) Program may not exceed $9,500 a
year (as adjusted for cost of living expenses). Contributions in excess of
permissible amounts may result in adverse tax consequences and penalties.
Dividends and capital gains on amounts invested in the 403(b)(7) Program are
automatically reinvested in shares of the Fund. It is intended that dividends
and capital gains on amounts invested in the 403(b)(7) Program will accumulate
tax-free until distribution.
20
<PAGE>
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 Fund, will occur
- --------------------------
on a date selected by the Board of Trustees.
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 the Fund 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 Fund.
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 the 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 the Fund
at the public offering price next computed after receipt of the proceeds.
Further details of the Automatic Investment Plan are given in the application
which is available from DST or the Fund.
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 the 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 the Fund deposited by the investor under this Plan. Further
details of the Automatic Withdrawal Plan are given in the application which is
available from DST or the Fund.
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 the Fund having a total value of not less
than $10,000 based on the offering price on the date the Application is
accepted.
21
<PAGE>
Income dividends and capital gains distributions on shares under an Automatic
Withdrawal Plan will be credited to the investor's Automatic Withdrawal Plan
account in full and fractional shares at the net asset value in effect on the
reinvestment date.
Periodic checks for a specified amount will be sent to the investor, or any
person designated by him, monthly or quarterly (January, April, July and
October). The Fund will bear the cost of administering the Automatic Withdrawal
Plan.
Redemption of Fund shares 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 the Fund would be disadvantageous because of the sales
charge payable with respect to such purchases. An investor may not have an
Automatic Withdrawal Plan in effect and at the same time have in effect an
Automatic Investment Plan or an Automatic Exchange Plan. If an investor has an
Automatic Investment Plan or an Automatic Exchange Plan, such service must be
terminated before an Automatic Withdrawal Plan may take effect.
The Automatic Withdrawal Plan may be terminated at any time (1) on 30 days
notice to DST or from DST to the investor, (2) upon receipt by DST of
appropriate evidence of the investor's death or (3) when all shares under the
Automatic Withdrawal Plan have been redeemed. Upon termination, unless
otherwise requested, certificates representing remaining full shares, if any,
will be delivered to the investor or his duly appointed legal representatives.
TAXES
-----
Taxation of the Fund -- In General
- ----------------------------------
The Fund 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,
the 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, the 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 the 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.
22
<PAGE>
The 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 the 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. The Fund intends to make sufficient
distributions to avoid this 4% excise tax.
Taxation of the Fund's Investments
- ----------------------------------
Original issue discount. For federal income tax purposes, debt securities
- -----------------------
purchased by the 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 the 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 the 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 the Fund at a discount which exceeds the
original issue discount remaining on the securities, if any, at the time the
Fund purchased the securities. This additional discount represents market
discount for income tax purposes. In the case of any debt security issued after
July 18, 1984, having a fixed maturity date of more than one year from the date
of issue and having market discount, the gain realized on disposition will be
treated as interest to the extent it does not exceed the accrued market discount
on the security (unless the Fund elects to include such accrued market discount
in income in the tax year to which it is attributable). Generally, market
discount is accrued on a daily basis. The 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 the 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 Fund's investments may be
- --------------------------------
subject to provisions of the Code that (i) require inclusion of unrealized gains
or losses in the Fund's 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 Fund makes 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.
The 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, the 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.
23
<PAGE>
Taxation of the Shareholders
- ----------------------------
Distributions of net investment income and the excess of net short-term capital
gain over net long-term capital loss are taxable as ordinary income to
shareholders. Distributions of net capital gain (the excess of net long-term
capital gain over net short-term capital loss) are taxable to shareholders as
long-term capital gain, regardless of the length of time the shares of the Fund
have been held by such shareholders. Any loss realized upon a taxable
disposition of shares within six months from the date of their purchase will be
treated as a long-term capital loss to the extent of any long-term capital gain
distributions received by shareholders during such period.
Distributions of net investment income and capital gain net income will be
taxable as described above whether received in cash or reinvested in additional
shares. When distributions are received in the form of shares issued by the
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 the Fund equal to the fair market value of
such share on the payment date.
Distributions by the Fund result in a reduction in the net asset value of the
Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable to the
shareholder as ordinary income or long-term capital gain as described above,
even though, from an investment standpoint, it may constitute a partial return
of capital. In particular, investors should be careful to consider the tax
implications of buying shares just prior to a distribution. The price of shares
purchased at that time includes the amount of any forthcoming distribution.
Those investors purchasing shares just prior to a distribution will then receive
a return of their investment upon distribution which will nevertheless be
taxable to them.
If a shareholder (i) incurs a sales load in acquiring shares in the 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 the Fund may give rise to withholding and other taxes imposed
by foreign countries. If more than 50% of the value of the 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 the Fund, subject to
limitations contained in the Code. When the 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 Fund cannot assure investors that they will be eligible for the foreign tax
credit. The Fund will advise shareholders annually of your share of any
creditable foreign taxes paid by the Fund.
The 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
24
<PAGE>
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 Fund 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
-------------------
The Fund elects to have the ability to redeem its shares in kind, committing
itself to pay in cash all requests for redemption by any shareholder of record
limited in amount with respect to each shareholder of record during any ninety-
day period to the lesser of (i) $250,000 or (ii) 1% of the net asset value of
such company at the beginning of such period.
PERFORMANCE
-----------
The Fund may advertise performance in terms of average annual total return for
1, 5 and 10 year periods, or for such lesser periods as the Fund has been in
existence. Average annual total return is computed by finding the average
annual compounded rates of return over the periods that would equate the initial
amount invested to the ending redeemable value, according to the following
formula:
P(1+T)to the power of 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.
The 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
25
<PAGE>
The calculation assumes the maximum sales charge is deducted from the initial
payment and assumes all 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.
Advertising Performance
- -----------------------
As discussed in the Fund's Prospectus, the Fund 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 Fund
may quote and compare its performance to the performance of various economic and
market indices and indicators, such as the S & P 500, Financial Times Index,
Morgan Stanley Capital International Europe, Australia, Far East Index, Morgan
Stanley Capital International World Index, Morgan Stanley Capital International
Combined Far East (ex-Japan) Free Index, Salomon Brothers World Bond Index,
Salomon Brothers World Government Bond Index, GNP and GDP data. Descriptions of
these indices are provided in Part B of the Appendix.
ADDITIONAL INFORMATION
----------------------
Custodian. The Chase Manhattan Bank, N.A., Chase Metrotech Center, Brooklyn,
- ---------
New York is the custodian of the Trust's portfolio securities, cash, coins and
bullion. The Custodian is authorized, upon the approval of the Trust, to
establish credits or debits in dollars or foreign currencies with, and to cause
portfolio securities of the 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 audited financial statements will be available on or about March 1, 1997 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.
26
<PAGE>
APPENDIX
--------
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.
27
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE CHARTS
Annual Real (Inflation-Adjusted) GDP Growth
(in local currency terms)
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Hong Kong 2.6% 3.4% 5.1% 6.3% 6.4% 5.4%
Singapore 9.4% 8.1% 7.0% 6.4% 10.1% 10.1%
Thailand 12.2% 11.6% 8.4% 7.9% 8.2% 8.5%
Malaysia 9.2% 9.7% 8.7% 7.8% 8.3% 8.7%
Indonesia 7.5% 7.2% 7.0% 6.5% 6.5% 7.3%
Philippines 6.2% 3.0% -0.5% 0.3% 2.1% 4.4%
South Korea 6.4% 9.5% 9.1% 5.1% 5.8% 8.4%
China 4.3% 3.9% 8.0% 13.2% 13.8% 11.9%
</TABLE>
Source: All Countries except Hong Kong: International Financial Statistics
(International Monetary Fund) - 2/96
Hong Kong: Datastream
Gross Domestic Product: The market value of all final goods and services
produced by labor and property supplied by residents of the applicable country
in a given period of time, usually one year. Gross Domestic Product comprises
(1) purchases of persons (2) purchases of governments (Federal, State & Local)
(3) gross private domestic investment (includes change in business inventories)
and (4) international trade balance from exports.
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 8 yr. compounded
avg. annual return avg. annual return
1988 1989 1990 1991 1992 1993 1994 1995 12/31/92 12/31/95
---- ---- ---- ---- ---- ---- ---- ---- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hong Kong 22.7% 3.4% 3.7% 42.8% 27.4% 109.9% -31.0% 18.2% 25.5% 19.3%
Indonesia 227.8% 77.1% 5.2% -46.4% -2.1% 102.2% -27.0% 7.5% -3.6% 22.5%
Malaysia 23.9% 52.6% -9.9% 3.1% 15.7% 107.3% -20.7% 4.0% 15.3% 16.8%
Philippines 40.0% 62.9% -47.7% 83.5% 37.1% 121.4% -8.3% -11.8% 35.1% 23.4%
Singapore 32.3% 43.3% -15.8% 41.6% 3.0% 71.4% 4.7% 11.0% 23.8% 21.2%
So. Korea 94.0% 0.4% -28.5% -17.1% 0.0% 29.1% 22.1% -4.6% 4.5% 7.2%
Taiwan 117.3% 83.5% -55.4% 11.8% -24.6% 82.3% 19.7% -30.2% 5.1% 10.9%
Thailand 41.6% 106.1% -29.7% 18.1% 30.4% 97.8% -11.2% -5.7% 20.6% 23.0%
</TABLE>
Source: Morgan Stanley & Co. Incorporated
Performance provided in U.S. dollar terms and does not include reinvestment of
dividends. Past performance is not indicative of future results.
**These are unmanaged indices and are not the investment results of the Fund nor
are they the results the Fund would have obtained, which may vary from returns
of these markets. Value of shares of the Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
____________________________
28
<PAGE>
<TABLE>
<CAPTION>
Morgan Stanley Capital International Stock Market Information
(in US currency with net dividends reinvested)
as of December 31, 1995
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Australia 11.2% 5.4% 35.2% -10.8% 33.6% -17.5% 9.3% 36.4% 9.3% 42.3%
Austria -4.7% -6.3% 28.1% -10.7% -12.2% 6.3% 103.9% 0.6% 2.2% 34.7%
Belgium 25.9% 8.2% 23.5% -1.5% 13.8% -11.0% 17.3% 53.6% 7.9% 78.4%
Canada 18.3% -3.0% 17.6% -12.2% 11.1% -13.0% 24.3% 17.1% 13.9% 9.9%
Denmark 18.8% 3.8% 32.8% -28.3% 16.6% -0.9% 43.9% 52.7% 13.2% 1.2%
Finland 4.6% 52.2% 82.7% -13.0% -18.1% -31.7% -9.6% 13.7% N/A N/A
France 14.1% -5.2% 20.9% 2.8% 17.8% -13.8% 36.2% 37.9% -13.8% 78.4%
Germany 16.4% 4.7% 35.6% -10.3% 8.2% -9.4% 46.3% 20.6% -24.8% 35.3%
Hong Kong 22.6% -28.9% 116.7% 32.3% 49.5% 9.2% 8.4% 28.1% -4.1% 56.1%
Ireland 22.4% 14.5% 42.4% -21.2% 12.2% -16.7% 41.2% 25.1% N/A N/A
Italy 1.0% 11.6% 28.5% -22.2% -1.8% -19.2% 19.4% 11.5% -21.3% 108.3%
Japan 0.7% 21.4% 25.5% -21.5% 8.9% -36.1% 1.7% 35.4% 43.0% 99.4%
Malaysia 5.2% -19.9% 110.0% 17.8% 5.0% -7.9% 55.8% 26.5% N/A N/A
Netherlands 27.7% 11.7% 35.3% 2.3% 17.8% -3.2% 35.8% 14.2% 7.1% 40.7%
New Zealand 20.9% 8.9% 67.7% -1.4% 18.3% -37.7% 11.4% -13.8% N/A N/A
Norway 6.0% 23.6% 42.0% -22.3% -15.5% 0.7% 45.5% 42.4% 5.7% -2.5%
Singapore 6.5% 6.7% 68.0% 6.3% 25.0% -11.7% 42.3% 33.3% 2.3% 45.2%
Spain 29.8% -4.8% 29.8% -21.9% 15.6% -13.7% 9.8% 13.5% 36.9% 121.2%
Sweden 33.4% 18.3% 37.0% -14.4% 14.4% -21.0% 31.8% 48.3% 2.0% 65.6%
Switzerland 44.1% 3.5% 45.8% 17.2% 15.8% -6.2% 26.2% 6.2% -9.5% 33.4%
United Kingdom 21.3% -1.6% 24.4% -3.7% 16.0% 10.3% 21.9% 6.0% 35.1% 27.0%
US 37.1% 1.1% 9.1% 6.4% 30.1% -3.2% 30.0% 14.6% 2.9% 16.3%
</TABLE>
29
<PAGE>
Morgan Stanley Capital International Index
(in US currency with net dividends reinvested)
as of December 31, 1995
10 year annual total return
---------------------------
Australia 13.7%
Austria 10.4%
Belgium 19.3%
Canada 7.6%
Denmark 13.1%
Finland N/A
France 14.7%
Germany 10.1%
Hong Kong 23.8%
Ireland N/A
Italy 6.9%
Japan 12.7%
Malaysia N/A
Netherlands 18.1%
New Zealand N/A
Norway 10.1%
Singapore 20.2%
Spain 16.8%
Sweden 18.6%
Switzerland 16.2%
United Kingdom 15.0%
USA 13.7%
30
<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.
31
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
---------------------------------
a) FINANCIAL STATEMENTS and FINANCIAL HIGHLIGHTS
(1) Financial Statements (None)
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 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);
Eighth Amendment to Amended and Restated Master Trust Agreement adding Gold
Opportunity Fund as series of the Trust (incorporated by reference from
Post-effective Amendment No. 37). Ninth Amendment to Amended and Restated
Master Trust Agreement adding Class B shares to Asia Infrastructure Fund,
Global Hard Assets Fund and Gold Opportunity Fund series of the Trust
(incorporated by reference from Post-effective Amendment No. 39).
1
<PAGE>
# (1)(b) Tenth Amendment to Amended and Restated Master Trust Agreement
adding Asia Select Portfolios and Core International Index Fund.
(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 Gold Opportunity Fund
(incorporated by reference from Post-effective Amendment No. 35); Form of
certificate of Class B shares of beneficial interest of Asia Infrastructure
Fund, Global Hard Assets Fund and Gold Opportunity Fund (incorporated by
reference from Post-effective Amendment No. 39); Form of certificate of
Class A and Class B shares of benefiial interest of Asia Select Portfolio
(incorporated by reference from Post-effective Amendment No. 41).
* (4)(b) Form of certificate of shares of beneficial interest of Core
International Index 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).
(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).
2
<PAGE>
(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); Form of Letter
Agreement adding Asia Select Portfolios (incorporated by reference from
Post-effective Amendment No. 41).
* (5)(g)(1) Form of Letter Agreement adding Core International Index Fund.
(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).
* (5)(h)(1) Form of Sub-Advisory Agreement with AXE Houghton Associates Inc.
and Van Eck Associates with respect to Core International Index Fund.
(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). Form of
Letter Agreement adding Asia Select Portfolios (incorporated by reference
from Post-effective Amendment No. 41).
* (6)(c)(1) Form of Letter Agreement adding Core International Index Fund.
(6)(d) Amendment to Form of Selling Group Agreement (incorporated by
reference from Post-Effective Amendment No. 9).
3
<PAGE>
(6)(e) Selling Agency Agreement (incorporated by reference from Post-
Effective Amendment No. 12).
(7) Form of Deferred Compensation Plan. (incorporated by reference from
Post-Effective Amendment No. 40)
(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).
(8)(c) Form of Custody Agreement between the Van Eck Funds and Chase
Manhattan Bank (incorporated by reference from Post-effective amendment No.
41)
(9)(a) Forms of Procedural Agreement, Customer Agreement and Safekeeping
Agreement with Merrill Lynch Futures Inc. utilized by World Income Fund,
and Forms of Procedural Agreement, Customer Agreement and Safe Keeping
Agreement with Morgan Stanley & Co. utilized by World Income Fund
(incorporated by reference 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
4
<PAGE>
Goodwin, Procter & Hoar with regard to Gold/Resources Fund and U.S.
Government Money Fund (incorporated by reference from Post-Effective
Amendment No. 1); Opinion of Goodwin, Procter & Hoar with regard to World
Income Fund (incorporated by reference from Post-Effective Amendment No.
7); Opinion of Goodwin, Procter & Hoar and consent with regard to
International Investors (incorporated by reference from Post-Effective
Amendment No. 17); Opinion of Goodwin, Procter and Hoar with regard to Asia
Dynasty Fund (incorporated by reference from Post-effective Amendment No.
24); Opinion of Goodwin, Procter & Hoar with respect to the issuance of
Class B shares of Asia Dynasty Fund and with respect to the issuance of
Class A and Class B shares of Global Balanced Fund (incorporated by
reference from Post-effective Amendment No. 27); Opinion of Goodwin,
Procter & Hoar with respect to the issuance of Class A and Class B shares
of Asia Infrastructure Fund and Global SmallCap Fund (incorporated by
reference from Post-effective Amendment No. 31) and Opinion of Goodwin,
Procter & Hoar, including consent, with regard to the issuance of Class A
and Class C shares of Global Hard Assets Fund (incorporated by reference
from Post-effective Amendment No. 36). Opinion of Goodwin, Procter & Hoar,
including consent, with regard to the issuance of Class A and Class C
shares of Gold Opportunity Fund (incorporated by reference from Post-
effective Amendment No. 37). Opinion of Goodwin, Proctor & Hoar including
consent, with regard to the issuance of Class B shares of Asia
Infrastructure Fund, Golf Opportunity Fund and Global Hard Assets Fund
(incorporated by reference from Post-effective Amendment No. 40).
# 10)(a) Opinion of Goodwin, Procter & Hoar, on Asia Sector Portfolios and
Core International Index Fund.
11) Not Applicable
(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). 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). Letter Agreement to add
Global SmallCap Fund (Class A) and Asia Infrastructure Fund (Class A)
(incorporated by reference from Post-effective Amendment No. 31). 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
5
<PAGE>
(Class A) (incorporated by reference from Post-effective Amendment No. 36).
Form of Letter Agreement to add Gold Opportunity Fund (Class A and Class C)
and Letter Agreement to add Global Hard Assets Fund (Class C) (incorporated
by reference from Post-effective Amendment No. 37. Form of Plan of
Distribution with respect to Asia Infrastructure Fund (Class B), Global
Hard Assets Fund (Class B) and Gold Opportunity Fund (Class B)
(incorporated by reference from Post-effective Amendment No. 39). Form of
Letter Agreement to add Asia Select Portfolios (incorporated by reference
from Post-effective Amendment No. 41).
(16) Not applicable.
(17) Power of Attorney (incorporated by reference from Post-Effective
Amendment No. 5).
(18) Form of plan entered into pursuant to Rule 18f-3.
ITEM 25. Persons controlled by or under common control with Registrant
-------------------------------------------------------------
Not Applicable.
ITEM 26. Number of Holders of Securities
-------------------------------
Not Applicable.
ITEM 27. Indemnification
---------------
Reference is made to Article VI of the Master Trust Agreement of the Registrant,
as amended, previously filed as Exhibit (1) to the Registration Statement.
Insofar as indemnification by the Registrant for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers, underwriters and
controlling persons of the Registrant, pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification is against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such trustee, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 28. Business and other Connections of Investment Adviser
----------------------------------------------------
Reference is made to 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.
6
<PAGE>
(b) The following table presents certain information with respect to each
director and officer of Van Eck Securities Corporation:
Name and Principal Position and Offices Position and Office
Business Address with Underwriter with Registrant
- ---------------------- ----------------------------- -------------------
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
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
7
<PAGE>
Michael G. Doorley Senior Vice President, Chief Vice President
99 Park Avenue Financial Officer, Treasurer and
New York, NY 10016 Controller
Thaddeus Leszczynski Vice President Vice President/
99 Park Avenue General Counsel and Secretary 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, Marketing None
99 Park Avenue
New York, NY 10016
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
(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.
Accounts, books and
documents listed by
reference to specific
subsection of 17 CFR 270 31a-1 Person in Possession and
to 31a-3 Address
- -------- -------
31a-1(b)(1) Bruce J. Smith
Van Eck Funds
99 Park Avenue
New York, NY 10016
8
<PAGE>
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
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) AXE Houghton Associates, Inc.
Royal Executive Park
4 International Drive
Rye Brook, NY 10573
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
9
<PAGE>
31a-1(b)(9) AXE Houghton Associates, Inc.
Royal Executive Park
4 International Drive
Rye Brook, NY 10573
31a-1(b)(10) AXE Houghton Associates, Inc.
Royal Executive Park
4 International Drive
Rye Brook, NY 10573
31a-1(b)(11) AXE Houghton Associates, Inc.
Royal Executive Park
4 International Drive
Rye Brook, NY 10573
31a-1(b)(12) AXE Houghton Associates, Inc.
Royal Executive Park
4 International Drive
Rye Brook, NY 10573
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
AXE Houghton Associates, Inc.
Royal Executive Park
4 International Drive
Rye Brook, NY 10573
10
<PAGE>
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
Item 31. Management Services
-------------------
None
Item 32. Undertakings
------------
None
11
<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)(2) 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 15th day of May, 1996.
VAN ECK FUNDS
By: /s/ John C. van Eck
__________________________________
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
/s/ John C. van Eck
___________________ President, Chairman / /
John C. van Eck and Chief Exec. Officer
/s/ Bruce J. Smith
___________________ 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 INDEX
(4)(b) Form of Certificate of shares of beneficial interest of Core
International Index Fund
(5)(g)(1) Form of Letter Agreement adding Core International Index Fund to
Investment Advisory Agreement
(5)(h)(1) Form of Sub-Advisory Agreement with AXE Houghton Associates Inc.
and Van Eck Associates
(6)(c)(1) Form of Letter Agreement adding Core International Index Fund to
Distribution Agreement
<PAGE>
EXHIBIT(4)(b)
[CERTIFICATE]
NUMBER SHARES
VAN ECK FUNDS
(A Massachusetts Business Trust)
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO. ALPHA CODE
THIS CERTIFIES THAT CUSIP
SEE REVERSE FOR CERTAIN DEFINITIONS
[VOID]
is the registered owner of
FULLY PAID AND NON-ASSESSABLE SHARES ($.001 PAR VALUE)OF
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.
Bruce John C. van Eck
TREASURER PRESIDENT
VAN ECK FUND
<PAGE>
EXHIBIT (5)(g)(1)
FORM OF
VAN ECK FUNDS
99 Park Avenue
New York, New York 10016
Van Eck Associates Corporation
99 Park Avenue
New York, New York 10016
Ladies/Gentlemen:
Pursuant to Section 9(b) of the Investment Advisory Agreement, dated
October 20, 1994 (the "Agreement"), between Van Eck Funds (the "Trust") and Van
Eck Associates Corporation (the "Adviser"), please be advised that an additional
series of the Trust, namely, _______________________________ (the "Fund:) has
adopted the Agreement and retained the Adviser to render services contemplated
by the Agreement for the Fund. A certification by the Secretary of the trust of
the resolution adopted by the Board of Trustees and an amended Exhibit A
reflecting the addition of the Fund to the Plan are attached.
Please confirm below your willingness to render such services.
VAN ECK FUNDS
ATTEST:___________________________ By:___________________________
Confirmed, Agreed to and Accepted this _____________________
VAN ECK ASSOCIATES
CORPORATION
ATTEST:___________________________ By:_____________________________
<PAGE>
EXHIBIT A
Annual Advisory Fee
Name of Series (as a % of average daily net assets)
- -------------- ------------------------------------
Global Hard Assets Fund 1.00%
Gold Opportunity Fund 1.00%
Core International Index Fund
<PAGE>
EXHIBIT (5)(h)(1)
FORM OF SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the _____ day of , 199_ by and between
________________ a Corporation organized under the laws of the State of
__________ and having its principal place of business in ___________________
(the "Sub-Advisor") and VAN ECK ASSOCIATES CORPORATION, a corporation organized
under the laws of the State of Delaware and having its principal place of
business in New York, New York (the "Advisor").
WHEREAS, Van Eck Funds (the "Trust") is engaged in business as an open-end
investment company and is so registered under the Investment Company Act of 1940
("1940 Act"); and
WHEREAS, the Sub-Advisor is engaged principally in the business of rendering
investment management services and is registered under the Investment Advisers
Act of 1940 ("Advisors Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust intends to offer shares in one of such series, namely,
__________ (the "Fund") and invest the proceeds in securities and other assets,
the Trust has retained the Advisor to render management and advisory services;
and
WHEREAS, the Advisor desires to retain the Sub-Advisor to render investment
advisory and other services hereunder to the Fund and the Sub-Advisor is willing
to do so.
NOW, THEREFORE, WITNESSETH:
That it is hereby agreed between the parties hereto as follows:
1. APPOINTMENT OF SUB-ADVISOR
The Advisor hereby appoints the Sub-Advisor to act as investment advisor to the
Fund for the period and on the terms herein set forth. The Sub-Advisor accepts
such appointment and agrees to render the services herein set forth, for the
compensation herein provided. So long as the Sub-Advisor serves as investment
advisor to the Fund pursuant to this Agreement the obligation of the Advisor
under Agreement with respect to the Fund shall be, subject in any event to the
control of the Trustees of the Trust, to determine and review with Sub-Advisor
investment policies of the Fund and the Sub-Advisor shall have the obligation of
furnishing continuously an investment program and making investment decisions
for the Fund, adhering to applicable investment objectives, policies and
restrictions and placing all orders for the purchase and sale of portfolio
securities for the Fund and such other services set forth in Section 2 hereof.
The Adviser will compensate the Sub-Advisor of the Fund for its services to the
Fund. The Adviser or the Fund, subject to the terms of this Agreement, may
terminate the services of the Sub-Advisor at any time in their sole discretion,
and the Advisor shall at such time assume the responsibilities of the Sub-
Advisor unless and until a successor investment advisor is selected.
DUTIES OF SUB-ADVISOR.
The Sub-Advisor, at its own expense, shall furnish the following services and
facilities to the Trust:
(a) Investment Program. The Sub-Advisor will(i) furnish continuously an
-------------------
investment program for the Fund, (ii) determine (subject to the overall
<PAGE>
supervision and review of the Board of Trustees of the Trust and the Advisor)
what investments shall be purchased, held, sold or exchanged and what portion,
if any, of the assets of the Fund shall be held uninvested, and (iii) make
changes on behalf of the Fund in the investments. The Sub-Advisor will provide
the services hereunder in accordance with the Fund's investment objectives,
policies and restrictions as stated in the then current prospectus and statement
of additional information which is part of the Trust's Registration Statement
filed with the Securities and Exchange Commission, as amended from time to time,
copies of which shall be sent to the Sub-Advisor by the Adviser. The Sub-Advisor
also will manage, supervise and conduct such other affairs and business of the
Trust and matters incidental thereto, as the Sub-Advisor and the Trust agree,
subject always to the control of the Board of Trustees of the Trust and to the
provisions of the Master Trust Agreement of the Trust, the Trust's By-laws and
the 1940 Act. The Sub-Advisor will manage the Fund so that it will qualify as a
regulated investment company under sub-chapter M of the Internal Revenue Code of
1986, as it may be amended from time to time; and, with respect to the services
provided by the Sub-Advisor under this Agreement, it shall be responsible for
compliance with all applicable laws, rules and regulations. Sub-Advisor will
adopt procedures reasonably designed to ensure compliance.
(b) Office Space and Facilities. The Sub-Advisor will arrange to furnish office
----------------------------
space, all necessary office facilities, simple business equipment, supplies,
utilities, and telephone service required for managing the investments of the
Fund.
(c) Personnel. The Sub-Advisor shall provide executive and clerical personnel
----------
for managing the investments of the Fund, and shall compensate officers and
Trustees of the Trust or Fund if such persons are also employees of the Sub-
Advisor or its affiliates, except as otherwise provided herein.
(d) Portfolio Transactions. The Sub-Advisor shall place all orders for the
----------------------
purchase and sale of portfolio securities for the account of the Fund with
brokers or dealers selected by the Sub-Advisor, although the Fund will pay the
actual transaction costs, including without limitation brokerage commissions on
portfolio transactions in accordance with this Paragraph 3(d). In executing
portfolio transactions and selecting brokers or dealers, the Sub-Advisor will
use its best efforts to seek on behalf of the Fund the best overall terms
available. In assessing the best overall terms available for any transaction,
the Advisor shall consider all factors it deems relevant, including, without
limitation, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any (for the specific
transaction and on a continuing basis). In evaluating the best overall terms
available, and in selecting the broker or dealer to execute a particular
transaction, the Sub-Advisor may also consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934) provided to Sub- Advisor or an affiliate of the Sub-Advisor is or
in respect of accounts over which it exercises investment discretion. The Sub-
Advisor is or is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Advisor
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of that particular transaction or in terms of all of the
accounts over which investment discretion is so exercised by the Sub-Advisor or
its affiliates. Nothing in this Agreement shall preclude the combining of orders
for the sale or purchase of securities or other investments with other accounts
managed by the Sub-Advisor or its affiliates provided that the Sub-Advisor does
not favor any account over any other account and provided that any purchase or
sale orders executed contemporaneously shall be allocated in an equitable manner
among the accounts involved in accordance with procedures adopted by the Sub-
Adviser.
<PAGE>
(e) In connection with the purchase and sale of securities for the Fund, the
Sub-Advisor will arrange for the transmission to the custodian and record
keeping agent for the Trust on a daily basis, such confirmation, trade tickets,
and other documents and information, including, but not limited to, Cusip,
Sedol, or other numbers that identify securities to be purchased or sold on
behalf of the Fund, as may be reasonable necessary to enable the custodian and
record keeping agent to perform its administrative and record keeping
responsibilities with respect to the Fund. With respect to portfolio securities
to be purchased or sold through the Depository Trust Company, the Sub Advisor
will arrange for the automatic transmission of the confirmation of such trades
to the Fund's custodian and record keeping agent.
(f) The Sub-Advisor will monitor on a daily basis the determination by the
custodian and record keeping agent for the Fund of the valuation of portfolio
securities and other investments of the Fund. The Sub-Advisor will assist the
custodian and record keeping agent for the Fund in determining or confirming,
consistent with the procedures and policies stated in the Registration Statement
for the Trust, the value of any portfolio securities or other assets of the Fund
for which the custodian and record keeping agent seeks assistance from, or
identifies for review by, the Sub- Advisor shall assist the Board in determining
fair value of such securities or assets for which market quotations are not
readily available.
(g) The Sub-Advisor will provide the Trust or the Advisor with all of the Fund's
investment records and ledgers maintained by the Sub-Advisor (which shall not
include the records and ledgers maintained by the custodian and record keeping
agent for the Trust) as are necessary to assist the Trust and the Advisor to
comply with requirements of the 1940 Act and the Advisers Act as well as other
applicable laws. The Sub-Advisor will furnish to regulatory authorities having
the requisite authority any information or reports in connection with such
services which may be requested in order to ascertain whether the operations of
the Trust are being conducted in a manner consistent with applicable laws and
regulations.
(h) The Portfolio Manager will provide reports to the Trust's Board of Trustees
for consideration at meetings of the Board on the investment program for the
Fund and the issues and securities represented in the Fund's portfolio, and will
furnish the Trust's Board of Trustees with respect to the Fund such periodic
and, at the Fund's expense, special reports as the Trustees or the Adviser may
reasonably request.
3. EXPENSES OF THE TRUST
Except as provided in sections 2(d) and (h) above, the Sub-Advisor shall assume
and pay all of its own costs and expenses related to providing an investment
program for the Fund.
4. SUB-ADVISORY FEE.
For the services and facilities to be provided to the Fund by the Advisor as
provided in Paragraph 2 hereof, the Advisor shall pay the Sub-Advisor a fee,
payable monthly, at the annual rate of of 1% of the Fund's average daily net
assets from the Advisory fee it receives from the Fund, as determined by the
Trust or its third party administrator in accordance with procedures
established, from time to time, by or under the direction of the Board of
Trustees of the Trust. The Trust shall not be liable for the obligation of the
Adviser to make payment to the Sub-Adviser.
5. REPRESENTATIONS AND COVENANTS
(a) The Advisor hereby represents and warrants as follows:
<PAGE>
(1) That it is registered in good standing with the Securities and Exchange
Commission as an investment adviser under the Advisers Act, and such
registration is current, complete and in full compliance with all applicable
provisions of the Advisers Act and the rules and regulations thereunder;
(2) That it has all the requisite authority to enter into, execute, deliver and
perform its obligations under this Agreement; and
(3) Its performance of its obligations under this Agreement does not conflict
with any law, regulation or order to which it is subject.
(b) The Advisor hereby covenants and agrees that, so long as this Agreement
shall remain in effect:
(1) It shall maintain its registration in good standing as an investment adviser
under the Advisers Act, and such registration shall at all times remain current,
complete and in full compliance with all applicable provisions of the Advisers
Act and the rules and regulations thereunder;
(2) Its performance of its obligations under this Agreement does not conflict
with any law, regulation or order to which it is subject; and
(3) It shall at all times fully comply with the Advisers Act, the 1940 Act, all
applicable rules and regulations under such Acts and all other applicable law.
(c) The Sub-Advisor hereby represents and warrants as follows:
(1) That it is registered in good standing with the Securities and Exchange
Commission as an investment adviser under the Advisers Act, and such
registration is current, complete and in full compliance with all applicable
provisions of the Advisers Act and the rules and regulations thereunder;
(2) That it has all the requisite authority to enter into, execute, deliver and
perform its obligations under this Agreement; and
(3) Its performance of its obligations under this Agreement does not conflict
with any law, regulation or order to which it is subject.
(d) The Sub-Advisor hereby covenants and agrees that, so long as this Agreement
shall remain in effect:
(1) It shall maintain its registration in good standing as an investment adviser
under the Advisers Act, and such registration shall at all times remain current,
complete and in full compliance with all applicable provisions of the Advisers
Act and the rules and regulations thereunder;
(2) Its performance of its obligations under this Agreement does not conflict
with any law, regulation or order to which it is subject;
(3) It shall at all times fully comply with the Advisers Act, the 1940 Act, all
applicable rules and regulations under such Acts and all other applicable law;
and
(4) It shall promptly notify the Adviser and the Fund upon occurrence of any
event that might disqualify or prevent it from performing its duties under this
Agreement. It further agrees to notify the Adviser and the Fund promptly with
respect to written material that has been provided to the Fund or the Adviser
for inclusion in the Registration Statement, prospectus and statement of
additional information for the Fund or any supplement or amendment thereto,
<PAGE>
or, if written material has not been provided, with respect to the information
in the Registration Statement, prospectus and statement of additional
information or any supplement or amendment thereto, reviewed by the Sub-Adviser,
in either case, of any untrue statement of a material fact or of any omission of
any statement of a material fact which is required to be stated therein or is
necessary to make the statements contained therein not misleading
6. TRUST TRANSACTIONS.
The Advisor agrees that neither it nor any of its officers, directors, employees
or agents will take any long- or short-term position in the shares of the Trust;
provided, however, that such prohibition shall not prevent the purchase of
shares of the Trust by any of the persons above described for their account and
for investment at the price (net asset value) at which such shares are available
to the public at the time of purchase or as part of the initial capital of the
Trust.
7. RELATIONS WITH TRUST.
Subject to and in accordance with the Declaration of Trust and By-Laws of the
Trust and the Articles of Incorporation and By-Laws of the Advisor and Sub-
Advisor it is understood (i) that Trustees, officers, agents and shareholders of
the Trust are or may be interested in the Sub-Advisor (or any successor thereof)
as directors, officers, or otherwise; (ii) that directors, officers, agents and
shareholders of the Sub-Advisor are or may be interested in the Trust as
Trustees, officers, shareholders or otherwise; and (iii) that the Sub-Advisor
(or any such successor) is or may be interested in the Trust as a shareholder or
otherwise and that the effect of any such adverse interests shall be governed by
said Declaration of Trust and By-laws.
8. LIABILITY OF ADVISOR, SUB-ADVISOR AND OFFICERS AND TRUSTEES OF THE TRUST.
Neither the Advisor, Sub-Advisor nor any of their officers, directors,
employees, agents or controlling persons or assigns or Trustees or officers of
the Trust shall be liable for any error of judgment or law, or for any loss
suffered by the Trust or its shareholders in connection with the matters to
which this Agreement relates, except that no provision of this Agreement shall
be deemed to protect the Advisor, Sub-Advisor or such persons against any
liability, to the Trust or its shareholders to which the Advisor or Sub-Advisor
might otherwise be subject by reason of any willful misfeasance, bad faith or
gross negligence in the performance of its duties or the reckless disregard of
its obligations and duties under this Agreement.
9. INDEMNIFICATION
(a) Not withstanding Section 8 of the Agreement, the Advisor agrees to indemnify
and hold harmlesS the Sub-Advisor, any affiliated person of the Sub-Advisor, and
each person, if any, who, within the meaning of Section 15 of the Securities Act
of 1933 ("1933 Act") controls ("controlling person")the Sub-Advisor (all of such
persons being referred to as "Sub-Advisor Indemnified Persons") against any and
all losses, claims, damages, liabilities (excluding salary charges of employees,
officers or partners of the Sub-Advisor), or
<PAGE>
litigation (including legal and other) expenses to which a Sub-Advisor
Indemnified Person may become subject under the 1933 Act, the 1940 Act, Advisers
Act, under any other statue, at common law or otherwise, arising out of the
Advisor's responsibilities to the Trust which (1) may be based upon any untrue
statement or alleged untrue statement of a material fact supplied by, or which
is the responsibility of, the Advisor and contained in the Registration
Statement or prospectus or statement of additional information covering shares
of the Fund or any other series, or any amendment thereof or any supplement
thereto, or the omission or alleged omission or failure to state therein a
material fact known or which should have been known to the Advisor and was
required to be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon
information furnished to the Advisor or the Trust or to any affiliated person of
the Advisor by a Sub-Advisor Indemnified Person; or (2) may be based upon a
failure to comply with, or a breach of, any provision of this Agreement provided
however, that in no case shall the indemnity in favor of the Sub-Advisor
Indemnified Person be deemed to protect such person against any liability to
which any such person would otherwise be subject by reason of any misfeasance or
negligence in the discharge of its obligations and the performance of its duties
under this Agreement.
(b) Notwithstanding Section 8 of this Agreement, the Sub-Advisor agrees to
indemnify and hold harmless the Advisor, any affiliated person of the Advisor
(except the Funds), and each person, if any, who, within the meaning of Section
15 of the 1933 Act, controls ("controlling person") the Advisor (all of such
persons being referred to as "Advisor Indemnified Persons") against any and all
losses, claims, damages, liabilities (excluding salary charges of employees,
officers or partners of the Advisor), or litigation (including legal and other)
expenses to which an Advisor Indemnified Person may become subject under the
1933 Act, 1940 Act, Advisers Act, under any other statute, at common law or
otherwise, arising out of the Sub-Advisor's responsibilities as sub-investment
adviser to the Fund which (1) may be based upon any untrue statement or alleged
untrue statement of a material fact supplied in writing by the Sub-Advisor for
inclusion in the Registration Statement or prospectus or statement of additional
information covering shares of the Fund, or any amendment thereof or any
supplement thereto, or, with respect to such material fact supplied by the Sub-
Adviser, the omission or alleged omission or failure to state therein a material
fact known or which should have been known to the Advisor and was required to be
stated therein or necessary to make the statements therein not misleading,
unless such statement or omission was made in reliance upon information
furnished to the Sub-Advisor, the Trust, or any affiliated person of the Sub-
Advisor or Trust by an Advisor Indemnified Person; or (2) may be based upon a
failure to comply with, or a breach of any provision of this Agreement provided
however, that in no case shall the indemnity in favor of an Advisor Indemnified
Person be deemed to protect such person against any liability to which any such
person would otherwise be subject by reason of misfeasance or negligence in the
discharge of its obligations and the performance of its duties under this
Agreement.
(c) Neither the Advisor nor the Sub-Advisor shall be liable under this Section
with respect to any claim made against an Indemnified Person unless such
Indemnified Person shall have notified the indemnifying party in writing within
a reasonable time after the summons or other first legal process giving
<PAGE>
information of the nature of the claim shall have been served upon such
Indemnified Person (or such Indemnified Person shall have received notice of
such service on any designated agent), but failure to notify the indemnifying
party of any such claim shall not relieve the indemnifying party from any
liability which it may have to the Indemnified Person against whom such action
is brought otherwise than on account of this Section. In case any such action is
brought against the Indemnified Person, the indemnifying party will be entitled
to participate, at its own expense, in the defense thereof or, after notice to
the Indemnified Person, to assume the defense thereof, with counsel satisfactory
to the Indemnified Person. If the indemnifying party assumes the defense and the
selection of counsel by the indemnifying party to represent both the Indemnified
Person and the indemnifying party would result in a conflict of interests and
would not, in the reasonable judgment of the Indemnified Person, adequately
represent the interests of the Indemnified Person, the indemnifying party will
at its own expense, assume the defense with counsel to the indemnifying party
and, also at its own expense, with separate counsel to the Indemnified Person
which counsel shall be satisfactory to the indemnifying party and the
Indemnified Person. The Indemnified Person will bear the fees and expenses of
any additional counsel retained by it, and the indemnifying party shall not be
liable to the Indemnified Person under this Agreement for any legal or other
expenses subsequently incurred by the Indemnified Person independently in
connection with the defense thereof other than reasonable costs of
investigation. The indemnifying party shall not have the right to compromise or
settle the litigation without the prior written consent of the Indemnified
Person if the compromise or settlement results, or may result in a finding or
wrongdoing on the part of the Indemnified Person.
l0. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective on the date hereof unless
---------
terminated as herein provided, this Agreement shall remain in full force and
effect until and shall continue in full force and
effect for periods of one year thereafter so long as such continuance is
approved at least annually (i) by either the Trustees of the Trust or by vote of
a majority of the outstanding voting shares (as defined in the 1940 Act) of the
Trust, and (ii) in either event by the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement or "interested persons" (as defined
in the 1940 Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(b) Termination. This Agreement may be terminated at any time, without payment
------------
of any penalty, by vote of the Trustees of the Trust or by vote of a majority of
the outstanding shares (as defined in the 1940 Act), or by the Advisor or Sub-
Advisor or, on sixty (60) days written notice to the other party.
(c) Automatic Termination. This Agreement shall automatically and immediately
----------------------
terminate in the event of its assignment.
11. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject matter
hereof between the parties.
<PAGE>
12. SERVICES EXCLUSIVE.
The services of the Sub-Advisor and any of its affiliates sharing common
investment personnel with the Sub-Advisor or having, in common,
investment personnel which are listed in the Form ADV currently on file with the
Securities and Exchange Commission for the Sub-Advisor or ("Affiliates")
shall be exclusive with regards to the Trust as provided in this Section 12, and
Sub-Advisor and Affiliates shall be prohibited from serving as investment
adviser to any open-end investment company having substantially similar
investment objectives and policies offered for sale in the United States for a
period of 12 months after the effective date of a public offering of shares of
the Fund ("Initial Period") and thereafter so long as this Agreement (and any
continuation) is in effect if the value of the Fund's total assets, at any time,
equals or exceeds US $100 million, whether or not such assets remain at that
level thereafter. This provision shall survive any termination of this Agreement
by the Sub-Advisor pursuant to Section 10(b) of this Agreement during the
Initial Period.
The services of the Sub-Advisor and Affiliates to the Trust hereunder are not to
be deemed exclusive if the investment advisory agreement between the Fund and
the Advisor is terminated, this Agreement is terminated by the Sub-Adviser after
the Initial Period or by the Advisor at any time, or, if this Agreement is in
then effect, after the expiration of the Initial Period if the total assets of
the Fund do not equal or exceed US S100 million during the Initial Period,
whether or not such assets remain at that level, and the Sub-Advisor and
Affiliates shall be free to render similar services to others and to engage in
other activities otherwise deemed exclusive.
13. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
(b) If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
14. USE OF NAME
(a) It is understood that the name "Van Eck" or any derivative thereof or logo
associated with that name is the valuable property of the Adviser and its
affiliates, and that the Trust and Sub-Advisor have the right to use such name
(or derivative or logo) only with the approval of the Advisor and only so long
as the Advisor is Advisor to the Fund. Upon termination of the Sub-Advisor
Investment Advisory and Management Agreement between the Trust and the Advisor,
the Sub-Advisor shall forthwith cease to use such name (or derivative or logo).
(b) It is understood that the name or any
derivative thereof or logo associated with that name is the valuable property of
the Sub-Advisor and its affiliates and that the Trust and/or the Fund have the
right to use such name (or derivative or logo) in offering materials of the
Trust with the approval of the Sub-Advisor and for so long as the Sub-Advisor is
investment advisor to the Fund. Upon termination of this
<PAGE>
Agreement between the Trust, the Advisor, and the Sub-Advisor, the Trust and
Advisor shall forthwith cease to use such name (or derivative or logo).
15. LIMITATION OF LIABILITY.
The Term "Van Eck Funds" means and refers to the Trustees from time to time
serving under the Master Trust Agreement of the Trust dated April 3, 1985 as the
same may subsequently thereto have been, or subsequently hereto be amended. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any Trustees, shareholders, nominees, officers, agents or employees
of the Trust, personally, but bind only the assets and property of the Trust, as
provided in the Master Trust Agreement of the Trust. The execution and delivery
of this Agreement have been authorized by the Trustees and the Trust, acting as
such, and neither such authorization by such officer shall be deemed to have
been made by any of them personally, but shall bind only the assets and property
of the Trust as provided in its Master Trust Agreement.
In WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first set forth above.
VAN ECK ASSOCIATES CORPORATION
Attest:
By _____
President
Attest:
By _____
President
<PAGE>
EXHIBIT(6)(c)(1)
FORM OF
VAN ECK FUNDS
99 Park Avenue
New York, New York 10016
Van Eck Securities Corporation
99 Park Avenue
New York, New York 10016
Ladies/Gentlemen:
Pursuant to Section 1 of the Distribution Agreement, dated July 30, 1985
(the "Agreement"), between Van Eck Funds (the "Trust") and Van Eck Securities
Corporation (the "Distributor"), please be advised an additional series of the
Trust, namely, ______________________________ (the "Fund") has adopted the
Agreement and retained the Distributor to render services contemplated by the
Agreement for the Fund.
Please confirm below your willingness to render such services.
VAN ECK FUNDS
ATTEST:_________________________ BY:___________________________
Confirmed, Agreed to and Accepted this _____________________
VAN ECK SECURITIES
CORPORATION
ATTEST:_________________________ BY:____________________________
