<PAGE>
1933 ACT REGISTRATION NO. 2-97596
1940 ACT REGISTRATION NO. 811-4297
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 50
-AND-
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 51
VAN ECK FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
99 PARK AVENUE, NEW YORK, NEW YORK 10016
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
212-687-5200
(REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)
THOMAS ELWOOD, ESQ. - VAN ECK ASSOCIATES CORPORATION
99 PARK AVENUE, NEW YORK, NEW YORK 10016
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO: PHILIP NEWMAN, ESQ., GOODWIN PROCTER & HOAR
EXCHANGE PLACE, BOSTON, MASSACHUSETTS 02109
__________________________________________________________________
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX):
[ ] IMMEDIATELY UPON FILING PURSUANT [X] ON MAY 1, 1998 PURSUANT TO
TO PARAGRAPH (B) PARAGRAPH (B)
[ ] 60 DAYS AFTER FILING PURSUANT TO [ ] ON [DATE] PURSUANT TO
PARAGRAPH (A)(1) PARAGRAPH (A)(1)
[ ] 75 DAYS AFTER FILING PURSUANT TO [ ] ON (DATE) PURSUANT TO
PARAGRAPH (A)(2) PARAGRAPH (A)(2) OF RULE 485
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[ ] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT
____________________________________________________
Title of securities being registered. Shares of beneficial interest, $.001 par
value, of Asia Dynasty Fund, Emerging Markets Growth Fund, Global Balanced Fund,
Global Hard Assets Fund, Global Real Estate Fund, Gold/Resources Fund,
International Investors Gold Fund and U.S. Government Money Fund.
<PAGE>
VAN ECK FUNDS
CROSS-REFERENCE PAGE
PURSUANT TO RULE 501 (B) OF REGULATION S-K
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
FORM N-1A
PART A
ITEM NO. LOCATION IN PROSPECTUS
- -------- ----------------------
1. Cover Page Cover Page
2. Synopsis Transaction Data
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant The Trust; Investment Objective and
Policies; Risk Factors; Limiting
Investment Risks; Description of the
Trust
5. Management of the Fund Management; Additional Information
5A. Management's Discussion of Fund
Performance Management
6. Capital Stock and Other Securities Dividends and Distributions; Taxes;
Description of the Trust; Additional
Information
7. Purchase of Securities Being
Offered Purchase of Shares
8. Redemption or Repurchase Redemption of Shares
9. Pending Legal Proceedings N/A
PART B LOCATION IN STATEMENT
ITEM NO. ADDITIONAL INFORMATION
- -------- ----------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History N/A
13. Investment Objectives and Policies Investment Objectives and Policies;
Risk Factors; Investment Restrictions;
Portfolio Transactions and Brokerage
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Trustees and Officers
Holders of Securities
<PAGE>
Prospectus May 1, 1998
VAN ECK FUNDS
- -------------------------------------------------------------------------------
99 PARK AVENUE, NEW YORK, NEW YORK 10016
ACCOUNT ASSISTANCE: (800) 544-4653
WWW.VANECK.COM
Van Eck Funds (the "Trust") is an open-end management investment company
consisting of eight separate funds (the "Funds"), each of which has a specific
investment objective.
ASIA DYNASTY FUND (CLASS A AND CLASS B)--seeks long-term capital appreciation
by investing in the equity securities of companies that are expected to
benefit from the development and growth of the economies of the Asian region.
GLOBAL BALANCED FUND (CLASS A AND CLASS B)--seeks long-term capital
appreciation together with current income. Fiduciary International, Inc.
("FII" or "Sub-Adviser") serves as sub-investment adviser to this Fund.
EMERGING MARKETS GROWTH FUND (CLASS A, CLASS B AND CLASS C)--seeks long-term
capital appreciation by investing primarily in equity securities in emerging
markets around the world.
GLOBAL HARD ASSETS FUND (CLASS A, CLASS B AND CLASS C)--seeks long-term
capital appreciation by investing globally, primarily in "Hard Assets
Securities." Income is a secondary consideration.
GLOBAL REAL ESTATE FUND (CLASS A, CLASS B AND CLASS C)--seeks to maximize
total return by investing primarily in equity securities of domestic and
foreign companies which are principally engaged in the real estate industry or
which own significant real estate assets.
GOLD/RESOURCES FUND (CLASS A)--seeks long-term capital appreciation by
investing in equity and debt securities of companies engaged in the
exploration, development, production and distribution of gold and other
natural resources. Current income is not a consideration. This Fund will not
invest in the securities of South African issuers.
INTERNATIONAL INVESTORS GOLD FUND (CLASS A)--seeks long-term capital
appreciation, while retaining freedom to take current income into
consideration. The Fund has concentrated its investments in gold mining shares
since 1968 and has investments in other worldwide companies and industries.
U.S. GOVERNMENT MONEY FUND--seeks safety of principal, daily liquidity and
current income by investing in short-term U.S. Treasury securities and other
securities carrying the "full faith and credit" guarantee of the U.S.
Government. The Fund's shares are not insured or guaranteed by the U.S.
Government. There can be no assurance that the Fund will be able to maintain a
$1.00 net asset value or that the Fund's net asset value will not fluctuate.
Van Eck Associates Corporation (the "Adviser") 99 Park Avenue, New York, New
York 10016, serves as investment adviser to Global Balanced Fund, Global Hard
Assets Fund, Global Real Estate Fund, Gold/Resources Fund, International
Investors Gold Fund and U.S. Government Money Fund. Van Eck Global Asset
Management (Asia) Limited, a wholly-owned subsidiary of the Adviser, located
in Hong Kong, serves as investment adviser to Asia Dynasty Fund and Emerging
Markets Growth Fund. See "Management." Van Eck Securities Corporation (the
"Distributor"), a wholly-owned subsidiary of the Adviser, serves as
Distributor of the Funds' shares. See "Purchase of Shares--Alternative
Purchase Arrangements" to determine your purchase options for Funds offering
different classes of shares.
INVESTORS SHOULD BE AWARE THAT AN INVESTMENT IN ASIA DYNASTY FUND, GLOBAL
BALANCED FUND, GLOBAL HARD ASSETS FUND AND GLOBAL REAL ESTATE FUND HAS GREATER
INVESTMENT RISK THAN MANY MUTUAL FUNDS. THE FUNDS INTEND TO ENGAGE IN ONE OR
MORE OF THE FOLLOWING INVESTMENT ACTIVITIES: BORROWING FOR INVESTMENT PURPOSES
(I.E., ENGAGE IN LEVERAGING), MAKING SHORT SALES OF SECURITIES (I.E., MAKE
SALES OF SECURITIES THE FUND DOES NOT OWN), INVESTING IN COUNTRIES WITH
EMERGING SECURITIES MARKETS AND ECONOMIES AND INVESTING IN RESTRICTED
SECURITIES, SECURITIES OF UNSEASONED ISSUERS AND NON-READILY MARKETABLE
SECURITIES. THESE INVESTMENT ACTIVITIES ARE CONSIDERED TO BE SPECULATIVE AND
COULD RESULT IN ADDITIONAL COST AND INVESTMENT RISK TO THE FUNDS.
CONSEQUENTLY, THESE FUNDS ARE NOT INTENDED TO BE A COMPLETE INVESTMENT PROGRAM
AND ARE INTENDED FOR THOSE INVESTORS WHO CAN ASSUME GREATER RISK WITH RESPECT
TO A PORTION OF THEIR INVESTMENT PORTFOLIO. FURTHER INFORMATION ON THE FUNDS
AND THESE ACTIVITIES IS PROVIDED UNDER "RISK FACTORS" AND INVESTORS SHOULD
READ THIS MATERIAL CAREFULLY.
---------------
SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, A BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
This Prospectus sets forth concisely information about the Trust and the Funds
that you should know before investing. It should be read and retained for
future reference. For more information about the Funds, please call the Funds
or the Distributor at the above telephone number.
A Statement of Additional Information dated May 1, 1998, which discusses the
Trust and the Funds, has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. For a free copy, write to
the above address or call the telephone number listed above.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF
CONTENTS PAGE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Transaction Data............................................................ 3
Financial Highlights........................................................ 5
The Trust................................................................... 13
Investment Objectives and Policies.......................................... 13
Risk Factors................................................................ 24
Limiting Investment Risks................................................... 35
Purchase of Shares.......................................................... 36
Exchange Privilege.......................................................... 44
Tax-Sheltered Retirement Plans.............................................. 46
Investment Programs......................................................... 46
Redemption of Shares........................................................ 47
Dividends and Distributions................................................. 50
Management.................................................................. 50
Plan of Distribution........................................................ 70
Advertising................................................................. 72
Taxes....................................................................... 73
Description of the Trust.................................................... 74
Additional Information...................................................... 75
</TABLE>
2
<PAGE>
TRANSACTION DATA
The following table is intended to assist an investor in understanding the
various direct and indirect costs and expenses borne by an investor in a Fund.
The sales charges are the maximum sales charges an investor would incur. Sales
charges decline depending on the amount of the purchase, the number of shares
an investor already owns or the use of various investment programs. See
"Purchase of Shares." The Adviser may from time to time waive fees and/or
reimburse certain expenses of a Fund.
<TABLE>
<CAPTION>
ASIA GLOBAL EMERGING MARKETS
DYNASTY FUND BALANCED FUND GROWTH FUND**
------------------- --------------------- -----------------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS C
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES:
Maximum Sales Charge
Imposed on Purchases
(as a percent of offering
price)................... 4.75% 0% 4.75% 0% 4.75% 0% 0%
+Contingent Deferred
Sales or
Redemption Charge........ 0% 5.0% 0% 5.0% 0% 5.0% 1.00%
===== ===== ===== ===== ===== ===== =====
ANNUAL FUND OPERATING
EXPENSES:
(as a percentage of
average net assets)
Management/Administration
Fees..................... 1.00% 1.00% 1.00%++ 1.00%++ .50% 0% 0%
12b-1 Fees /Shareholder
Servicing Fees*.......... .50% 1.00% .50% 1.00% .50% 1.00% 1.00%
Other Expenses........... .88% 1.00% .50% .50% 0% 0% 0%
----- ----- ----- ----- ----- ----- -----
Total Fund Operating
Expenses................. 2.38% 3.00% 2.00% 2.50% 1.00% 1.00% 1.00%
===== ===== ===== ===== ===== ===== =====
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................... $ 70 $ 80 $ 67 $ 75 $ 57 $ 60 $ 20
3 years.................. $118 $133 $107 $118 $ 78 $ 72 $ 32
5 years.................. $169 $178 $150 $153 $100 $ 75 $ 55
10 years................. $306 $332 $269 $284 $164 $122 $122
</TABLE>
- ----
* Long-term shareholders in Funds may pay more than the economic equivalent of
the maximum front-end sales charge permitted by the NASD.
** The Adviser may temporarily reimburse and or waive certain operating
expenses of the Fund including management and administrative fees. Such
temporary reimbursements/waivers will have the effect of lowering the
Fund's expense ratio.
+ The Contingent Deferred Sales Charge on Class B shares is applied to the
lesser of purchase price or net asset value at redemption. The charge
imposed on such amount is scaled down from 5% during the first year to 0%
after the sixth year. A Redemption Charge on Class C shares of 1% is applied
to redemptions within the first year after purchase and is applied to the
lesser of purchase price or net asset value at redemption.
++ Inclusive of the sub-investment advisory fee.
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR INVESTMENT RETURN. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN. INFORMATION REGARDING MANAGEMENT FEES AND 12B-1 FEES CAN BE FOUND
UNDER "MANAGEMENT" AND "PLAN OF DISTRIBUTION."
3
<PAGE>
TRANSACTION DATA--(CONTINUED)
<TABLE>
<CAPTION>
GOLD/ U.S.
GLOBAL RESOURCES INTERNATIONAL GOVERNMENT
GLOBAL HARD ASSETS FUND** REAL ESTATE FUND** FUND INVESTORS MONEY FUND
-------------------------------- -------------------------------- ---------- -------------- ----------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS A
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES:
Maximum Sales
Charge Imposed
on Purchases (as
a percent of
offering price). 4.75% 0% 0% 4.75% 0% 0% 5.75% 5.75% 0%
+Contingent
Deferred Sales
or
Redemption Charge. 0% 5.0% 1.00% 0% 5.00% 1.00% 0% 0% 0%
===== ===== ===== ===== ===== ===== ===== ======= =====
ANNUAL FUND
OPERATING
EXPENSES:
(as a percentage
of average net
assets)
Management/Administration
Fees............ 1.00% 1.00% 1.00% .50% 0% 0% 1.00% 1.00% .50%
12b-1
Fees /Shareholder
Servicing Fees*. .50% 1.00% 1.00% .50% 1.00% 1.00% .25% 0% .25%
Other Expenses.. .47% .50% .50% 0% 0% 0% .62% .47% .53%
----- ----- ----- ----- ----- ----- ----- ------- -----
Total Fund
Operating
Expenses........ 1.97% 2.50% 2.50% 1.00% 1.00% 1.00% 1.87% 1.47% 1.28%
===== ===== ===== ===== ===== ===== ===== ======= =====
EXAMPLE: You
would bear the
following
expenses on a
$1,000 investment
assuming (1) 5%
annual return and
(2) redemption at
the end of each
time period
1 year.......... $ 67 $ 75 $ 35 $ 57 $ 60 $ 20 $ 75 $ 72 $ 60
3 years......... $106 $118 $ 78 $ 78 $ 72 $ 32 $113 $101 $ 86
5 years......... $149 $153 $133 $100 $ 75 $ 55 $153 $133 $114
10 years........ $266 $284 $284 $164 $122 $122 $264 $223 $195
</TABLE>
- ----
* Long-term shareholders in Funds may pay more than the economic equivalent of
the maximum front-end sales charge permitted by the NASD.
** The Adviser may temporarily reimburse and or waive certain operating
expenses of the Fund including management and administrative fees. Such
temporary reimbursements/waivers will have the effect of lowering the
Fund's expense ratio.
+ The Contingent Deferred Sales Charge on Class B shares is applied to the
lesser of purchase price or net asset value at redemption. The charge
imposed on such amount is scaled down from 5% during the first year to 0%
after the sixth year. A Redemption Charge on Class C shares of 1% is applied
to redemptions within the first year after purchase and is applied to the
lesser of purchase price or net asset value at redemption.
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR INVESTMENT RETURN. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN. INFORMATION REGARDING MANAGEMENT FEES AND 12B-1 FEES CAN BE FOUND
UNDER "MANAGEMENT" AND "PLAN OF DISTRIBUTION."
4
<PAGE>
FINANCIAL HIGHLIGHTS
The Financial Highlights below give selected information for a share of each
Fund outstanding for the year or period indicated. The Financial Highlights
presented for all periods after April 30, 1992 have been audited by Coopers &
Lybrand L.L.P., independent accountants, whose report thereon appears in the
Funds' Annual Reports, which are incorporated by reference into the Trust's
Statement of Additional Information. This information should be read in
conjunction with the financial statements and related notes that also appear
in the Funds' Annual Reports.
<TABLE>
<CAPTION>
ASIA DYNASTY FUND
---------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------------------- --------------------------------------
FOR THE
PERIOD
MARCH 22,
1993(A)
FOR A SHARE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED TO YEAR ENDED YEAR ENDED YEAR ENDED
OUTSTANDING DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
THROUGHOUT EACH 1997 1996 1995 1994 1993 1997 1996 1995
PERIOD ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period........... $ 13.21 $ 12.40 $ 12.13 $ 15.28 $ 9.53 $ 13.08 $ 12.33 $ 12.09
------- ------- ------- ------- -------- ------- ------- -------
Income from
Investment
Operations:
Net Investment
Loss............ (0.28) (0.20) (0.02) -- (0.06)+ (0.30) (0.24) (0.08)
Net Gains (Loss)
on Securities
(both realized
and unrealized). (3.82) 1.01 0.40 (2.86) 5.88 (3.86) 0.99 0.40
------- ------- ------- ------- -------- ------- ------- -------
Total from
Investment
Operations....... (4.10) 0.81 0.38 (2.86) 5.82 (4.16) 0.75 0.32
------- ------- ------- ------- -------- ------- ------- -------
Less
Distributions:
Dividends from
Net Investment
Income.......... -- -- (0.09) (0.07) -- -- -- (0.06)
Distributions
from Capital
Gains........... (1.15) -- -- (0.22) (0.07) (1.15) -- --
Tax Return of
Capital......... (0.14) -- (0.02) -- -- (0.14) -- (0.02)
------- ------- ------- ------- -------- ------- ------- -------
Total
Distributions.... (1.29) -- (0.11) (0.29) (0.07) (1.29) -- (0.08)
------- ------- ------- ------- -------- ------- ------- -------
Net Asset Value,
End of Period.... $ 7.82 $ 13.21 $ 12.40 $ 12.13 $ 15.28 $ 7.63 $ 13.08 $ 12.33
======= ======= ======= ======= ======== ======= ======= =======
Total Return (b). (32.10%) 6.53% 3.13% (18.72%) 61.16% (32.87%) 6.08% 2.65%
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End
of Period (000).. $12,873 $44,351 $64,275 $83,787 $108,661 $6,914 $20,296 $27,234
Ratios of Gross
Expenses to
Average Net
Assets........... 2.38% 2.42% 2.03% 1.85% 2.09%(c) 3.00% 2.86% 2.41%
Ratio of Net
Expenses to
Average Net
Assets........... 2.38% 2.42% 2.03% 1.85% 1.92% * 3.00% 2.86% 2.41%
Ratio of Net
Investment Loss
to Average Net
Assets........... (0.76%) (0.73%) (0.08%) -- % (0.68%)* (1.36%) (1.14%) (0.52%)
Portfolio
Turnover Rate.... 200.45% 52.99% 57.06% 51.08% 14.63% 200.45% 52.99% 57.06%
Average
Commission
Rate Paid (d).... $0.0024 $0.0049 $0.0024 $0.0049
<CAPTION>
FOR THE
PERIOD
SEPTEMBER 1,
1993(A)
FOR A SHARE YEAR ENDED TO
OUTSTANDING DECEMBER 31, DECEMBER 31,
THROUGHOUT EACH 1994 1993
PERIOD ------------ ------------
<S> <C> <C>
Net Asset Value,
Beginning of
Period........... $ 15.25 $ 11.33
------------ ------------
Income from
Investment
Operations:
Net Investment
Loss............ (0.06) (0.07)+
Net Gains (Loss)
on Securities
(both realized
and unrealized). (2.86) 4.06
------------ ------------
Total from
Investment
Operations....... (2.92) 3.99
------------ ------------
Less
Distributions:
Dividends from
Net Investment
Income.......... (0.02) --
Distributions
from Capital
Gains........... (0.22) (0.07)
Tax Return of
Capital......... -- --
------------ ------------
Total
Distributions.... (0.24) (0.07)
------------ ------------
Net Asset Value,
End of Period.... $ 12.09 $ 15.25
============ ============
Total Return (b). (19.15%) 35.22%
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End
of Period (000).. $35,024 $26,205
Ratios of Gross
Expenses to
Average Net
Assets........... 2.38% 3.04%
Ratio of Net
Expenses to
Average Net
Assets........... 2.38% 3.04% *
Ratio of Net
Investment Loss
to Average Net
Assets........... (0.50%) (2.17%)*
Portfolio
Turnover Rate.... 51.08% 14.63%
Average
Commission
Rate Paid (d)....
</TABLE>
- ----
(a) Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and capital gains at net asset value during the period and a redemption on
the last day of the period. A sales charge is not reflected in the
calculation of total dividends and return. Total return for the period of
less than one year is not annualized.
(c) Had the Adviser not agreed to assume a portion of expenses for Class A.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades in
which a commission is charged.
* Annualized.
+ Based on average shares outstanding.
5
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
EMERGING MARKETS GROWTH FUND
------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------ ------------ ------------
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
FOR A SHARE OUTSTANDING 1997 1997 1997
THROUGHOUT THE PERIOD ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 9.52 $ 9.52 $ 9.52
------- ------- -------
Income from Investment
Operations:
Net Investment Income.. 0.16 0.15 0.13
Net Losses on
Investments (both
realized and
unrealized)........... (1.31) (1.28) (1.28)
------- ------- -------
Total from Investment
Operations............. (1.15) (1.13) (1.15)
------- ------- -------
Less Distributions:
From Net Investment
Income................ (0.09) (0.10) (0.12)
From realized gains.... (0.15) (0.15) (0.15)
From Tax return of
Capital............... (0.00) (0.00) (0.00)
------- ------- -------
Total Distributions..... (0.24) (0.25) (0.27)
------- ------- -------
Net Asset Value, End of
Period................. $ 8.13 $ 8.14 $ 8.10
======= ======= =======
Total Return (a)........ (12.22%) (12.01%) (12.22%)
- --------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End of
Period (000)........... $ 2,201 $ 166 $ 294
Ratio of Gross Expenses
to Average Net Assets
(b).................... 6.01% 16.47% 16.06%
Ratio of Net Expenses to
Average Net Assets..... 0.00% 0.00% 0.00%
Ratio of Net Investment
Income to Average Net
Assets................. 1.94% 2.35% 2.66%
Portfolio Turnover Rate. 151% 151% 151%
Average Commission Rate
Paid................... $0.0014 $0.0014 $0.0014
</TABLE>
- --------
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, the reinvestment of dividend
distribution, and a redemption on the last day of the period. A sales
charge is not reflected in the calculation of total return.
(b) If the expenses had not been assumed by the Adviser.
6
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
GLOBAL BALANCED FUND
------------------------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------------------------- ---------------------------------------
FOR THE PERIOD
DECEMBER 20,
1993(A)
FOR A SHARE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED TO YEAR ENDED YEAR ENDED YEAR ENDED
OUTSTANDING DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
THROUGHOUT EACH 1997 1996 1995 1994 1993 1997 1996 1995
PERIOD ------------ ------------ ------------ ------------ -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning
of Period........ $ 10.37 $ 10.31 $ 9.07 $ 9.53 $ 9.53 $ 10.32 $ 10.28 $ 9.02
-------- ------- ------- ------- ------ -------- ------- -------
Income from
Investment
Operations:
Net Investment
Income.......... 0.10 0.12 0.07+ 0.19 + -- 0.04 0.06 0.01
Net Gains (Loss)
on Securities
(both realized
and unrealized). 1.43 1.15 1.31 (0.56) -- 1.43 1.14 1.28
-------- ------- ------- ------- ------ -------- ------- -------
Total from
Investment
Operations....... 1.53 1.27 1.38 (0.37) -- 1.47 1.20 1.29
-------- ------- ------- ------- ------ -------- ------- -------
Less
Distributions:
Dividends from
Net Investment
Income(e)....... (0.08) (0.11) (0.14) (0.09) -- (0.03) (0.06) (0.03)
Distribution
from Capital
Gains........... (1.43) (1.10) -- -- -- (1.45) (1.10) --
Tax return of
Capital......... (0.01) --
-------- ------- ------- ------- ------ -------- ------- -------
(1.52) (1.21) (0.14) (0.09) -- (1.48) (1.16) (0.03)
-------- ------- ------- ------- ------ -------- ------- -------
Net Asset Value,
End of Period.... $ 10.38 $ 10.37 $ 10.31 $ 9.07 $ 9.53 $ 10.31 $ 10.32 $ 10.28
======== ======= ======= ======= ====== ======== ======= =======
Total Return (b). 14.77% 12.28% 15.30% (3.90%) 0% 14.26% 11.49% 14.54%
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End
of Period (000).. $ 24,630 $29,331 $30,632 $13,986 $ 562 $ 5,055 $ 4,932 $ 6,151
Ratio of Gross
Expenses to
Average Net
Assets........... 2.45% 2.54% 2.69% 2.59% 7.76% 2.51% 3.19% 3.20%
Ratio of Net
Expenses to
Average Net
Assets........... 2.00% 2.17%(c) 2.69% 1.06%(c) 0.25%*(c) 2.50% 2.71%(c) 3.20%
Ratio of Net
Investment Income
(Loss) to Average
Net Assets....... 0.85% 1.05% 0.68% 1.99% (0.25%)* 0.36% 0.51% 0.14%
Portfolio
Turnover Rate.... 78.07% 114.30% 196.69% 174.76% 0% 78.07% 114.30% 196.69%
Average
Commission Rate
Paid(d).......... $ 0.0399 $0.0399 $ 0.0399 $0.0399
<CAPTION>
FOR THE PERIOD
DECEMBER 20,
1993(A)
FOR A SHARE YEAR ENDED TO
OUTSTANDING DECEMBER 31, DECEMBER 31,
THROUGHOUT EACH 1994 1993
PERIOD ------------- ---------------
<S> <C> <C>
Net Asset Value,
Beginning
of Period........ $ 9.53 $ 9.53
------------- ---------------
Income from
Investment
Operations:
Net Investment
Income.......... 0.11 + --
Net Gains (Loss)
on Securities
(both realized
and unrealized). (0.57) --
------------- ---------------
Total from
Investment
Operations....... (0.46) --
------------- ---------------
Less
Distributions:
Dividends from
Net Investment
Income(e)....... (0.05) --
Distribution
from Capital
Gains........... -- --
Tax return of
Capital.........
------------- ---------------
(0.05) --
------------- ---------------
Net Asset Value,
End of Period.... $ 9.02 $ 9.53
============= ===============
Total Return (b). (4.84%) 0%
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End
of Period (000).. $ 5,628 $130
Ratio of Gross
Expenses to
Average Net
Assets........... 3.21% 8.51%
Ratio of Net
Expenses to
Average Net
Assets........... 1.88%(c) 1.00%*(c)
Ratio of Net
Investment Income
(Loss) to Average
Net Assets....... 1.14% (1.00%)*
Portfolio
Turnover Rate.... 174.76% 0%
Average
Commission Rate
Paid(d)..........
</TABLE>
- ----
(a) Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends at
net asset value during the period and a redemption on the last day of the
period. A sales charge is not reflected in the calculations of total
return. Total return for a period of less than one year is not annualized.
(c) After expenses reduced by a custodian fee, directed brokerage or advisory
fee waiver arrangement.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades in
which a commission is charged.
(e) Net of foreign taxes withheld (to be included in income and claimed as a
tax credit on deduction by the shareholder for federal income tax
purposes) of $0.01 for 1997.
* Annualized.
+ Based on average shares outstanding.
7
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
GLOBAL HARD ASSETS FUND
---------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
--------------------------------------- ------------------------- ---------------------------------------
FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD
NOVEMBER 2, YEAR APRIL 24, YEAR ENDED NOVEMBER 2,
FOR A SHARE YEAR ENDED DECEMBER 31, 1994(A) TO ENDED 1996(A) TO DECEMBER 31, 1994(A) TO
OUTSTANDING ------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, ------------------------- DECEMBER 31,
THROUGHOUT EACH 1997 1996 1995 1994 1997 1996 1997 1996 1995 1994
PERIOD ------- ------- ------- ------------ ------------ ------------ ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period............ $ 14.42 $ 10.68 $ 9.41 $ 9.53 $ 14.50 $ 12.55 $ 14.52 $ 10.76 $ 9.41 $ 9.53
------- ------- ------- ------ ------- ------- ------- ------- ------- -------
Income from
Investment
Operations:
Net Investment
Income........... 0.05 0.15 0.32+ 0.010+ (0.01) 0.11 (0.01) 0.11 0.34+ 0.01+
Net Gains (Loss)
on Investments
(both realized
and unrealized).. 2.01 4.70 1.57 (0.115) 2.00 2.95 2.00 4.73 1.63 (0.12)
------- ------- ------- ------ ------- ------- ------- ------- ------- -------
Total from
Investment
Operations........ 2.06 4.85 1.89 (0.105) 1.99 3.06 1.99 4.84 1.97 (0.11)
------- ------- ------- ------ ------- ------- ------- ------- ------- -------
Less
Distributions:
Dividends from
Net Investment
Income........... (0.02) (0.14) (0.62) (0.015) -- (0.14) -- (0.11) (0.62) (0.01)
Distributions
from Capital
Gains............ (0.96) (0.95) -- -- (0.89) (0.95) (0.87) (0.95) -- --
Tax Return of
Capital.......... -- (0.02) -- -- -- (0.02) -- (0.02) -- --
------- ------- ------- ------ ------- ------- ------- ------- ------- -------
(0.98) (1.11) (0.62) (0.015) (0.89) (1.11) (0.87) (1.08) (0.62) (0.01)
------- ------- ------- ------ ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Period..... $ 15.50 $ 14.42 $ 10.68 $ 9.41 $ 15.60 $ 14.50 $ 15.64 $ 14.52 $ 10.76 $ 9.41
======= ======= ======= ====== ======= ======= ======= ======= ======= =======
Total Return (b).. 14.29% 45.61% 20.09% (1.10%) 13.72% 24.55% 13.71% 45.18% 20.94% (1.20%)
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End of
Period (000)...... $61,341 $27,226 $ 3,820 $1,419 $10,541 $ 1,806 $ 8,698 $ 1,935 $ 181 $ 8
Ratio of Gross
Expenses to
Average Net Assets
(c)............... 2.00% 2.63% 4.05% 3.40% 2.73% 3.27% 2.94% 6.02% 37.88% 39.49%
Ratio of Net
Expenses to
Average Net
Assets............ 1.97% 0.72% 0% 0.15%* 2.50% 1.64%* 2.50% 1.31% 0% 0.56%*
Ratio of Net
Investment Income
to Average Net
Assets............ 0.36% 1.45% 3.08% 0.84%* (0.13%) 0.53%* (0.15%) 0.84% 3.30% 0.53%*
Portfolio Turnover
Rate.............. 118.10% 163.91% 179.33% 0% 118.10% 163.91% 118.10% 163.91% 179.33% 0%
Average Commission
Rate Paid (d)..... $0.0199 $0.0178 $0.0199 $0.0178 $0.0199 $0.0178
</TABLE>
- ----
(a) Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends at
net asset value during the period and a redemption on the last day of the
period. A sales charge is not reflected in the calculation of total
return. Total return for a period of less than one year is not annualized.
(c) Had the Adviser not assumed expenses or had expenses not been reduced by
custodian fee and directed brokerage arrangements.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades in
which a commission is charged.
* Annualized.
+ Based on average shares outstanding.
8
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
GLOBAL REAL ESTATE FUND
-------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
----------------- ------------------- -------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
JUNE 23, 1997+ TO OCTOBER 9, 1997+ TO OCTOBER 9, 1997+ TO
FOR A SHARE OUTSTANDING DECEMBER 31, 1997 DECEMBER 31, 1997 DECEMBER 31, 1997
THROUGHOUT THE PERIOD ----------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 9.52 $ 11.46 $ 11.46
------- ------- -------
Income from Investment
Operations:
Net Investment Income... 0.16 0.04 0.06
Net Gains on Investments
(both realized
and unrealized)........ 1.60 (0.23) (0.24)
------- ------- -------
Total from Investment
Operations.............. 1.76 (0.19) (0.18)
------- ------- -------
Less Distributions:
From Net Investment
Income................. (0.13) (0.13) (0.13)
From realized gains..... (0.44) (0.44) (0.44)
From Tax return of
Capital................ (0.07) (0.07) (0.07)
------- ------- -------
Total Distributions...... (0.64) (0.64) (0.64)
------- ------- -------
Net Asset Value, End of
Period.................. $ 10.64 $ 10.63 $ 10.64
======= ======= =======
Total Return (a)......... 18.49% (2.27%) (2.18%)
- ----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period
(000)................... $ 1,449 $ 116 $ 118
Ratio of Gross Expenses
to Average Net Assets
(b) (c)................. 12.05% 27.20% 15.13%
Ratio of Net Expenses to
Average Net Assets (c).. 0% 0% 0%
Ratio of Net Investment
Income to Average
Net Assets (c).......... 3.95% 6.70% 5.13%
Portfolio Turnover Rate.. 82% 82% 82%
Average Commission Rate
Paid.................... $0.0265 $0.0265 $0.0265
</TABLE>
- --------
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of distributions,
and a redemption on the last day of the period. A sales charge is not
reflected in the calculation of total return. Total return for a period of
less than one year is not annualized.
(b) If the expenses had not been assumed by the Adviser.
(c) Annualized.
+ Commencement of operations.
9
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
GOLD/RESOURCES FUND
-------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
THROUGHOUT EACH YEAR ------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year...... $ 5.72 $ 5.58 $ 5.35 $ 6.34 $ 3.56 $ 3.73 $ 3.90 $ 5.33 $ 4.49 $ 5.72
------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net Investment Income
(Loss)................ (0.04) (0.06) (0.03) (0.02) (0.014) 0.002 0.010 0.025 0.002 0.01
Net Gains (Losses) on
Securities (both
realized and
unrealized)........... (2.21) 0.20 0.26 (0.97) 2.794 (0.170) (0.169) (1.430) 0.846 (1.23)
------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from Investment
Operations............. (2.25) 0.14 0.23 (0.99) 2.780 (0.168) (0.159) (1.405) 0.848 (1.22)
------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from
Net Investment
Income (a)............ -- -- -- -- -- (0.002) (0.011) (0.025) (0.008) (0.01)
------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value,
End of Year............ $ 3.47 $ 5.72 $ 5.58 $ 5.35 $ 6.34 $ 3.56 $ 3.73 $ 3.90 $ 5.33 $ 4.49
======= ======== ======== ======== ======== ======== ======== ======== ======== ========
Total Return (b)........ (39.34%) 2.51% 4.3% (15.6%) 78.09% (4.50%) (4.07%) (26.36%) 18.90% (21.30%)
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End of Year
(000).................. $66.151 $132,298 $155,974 $186,091 $211,450 $114,257 $136,288 $175,171 $252,860 $228,558
Ratio of Expenses to
Average Net Assets..... 1.87% 1.71% 1.81% 1.52% 1.39% 1.57% 1.62% 1.44% 1.48% 1.39%
Ratio of Net Income
(Loss) to Average Net
Assets................. (0.57%) (0.75%) (0.44%) (0.30%) (0.29%) 0.07% 0.27% 0.57% 0.04% 0.23%
Portfolio Turnover Rate. 32.46% 12.95% 6.16% 13.75% 7.79% 0.93% 7.89% 12.12% 4.17% 1.59%
Average Commission Rate
Paid (c)............... $0.0185 $ .0186
</TABLE>
- -------
(a) Net of foreign taxes withheld (to be included in income and claimed as a
tax credit or deduction by the shareholder for federal income tax
purposes) of $.0060 for 1992, $.0080 for 1991, $.0083 for 1990, $.0070 for
1989, $.0051 for 1988 and $.0237 for 1987.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the year, reinvestment of dividends at net
asset value during the year and a redemption on the last day of the year.
A sales charge is not reflected in the calculation of total return.
(c) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades in
which a commission is charged.
10
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
INTERNATIONAL INVESTORS GOLD FUND (CLASS A)**
--------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING 1997 1996 1995 1994 1993 1992 1991 1990 1989* 1988*
THROUGHOUT EACH YEAR -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 11.90 $ 13.35 $ 15.21 $ 16.08 $7.81 $ 11.29 $ 11.32 $ 16.38 $ 11.30 $ 15.29
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net Investment Income.. 0.09 0.05 0.08 0.19 0.14 0.17 0.16 0.26 0.32 0.34
Net Gain/(Loss) on
Securities (both
realized and
unrealized)........... (4.36) (1.29) (1.44) (0.36) 8.70 (3.44) 0.13 (4.67) 5.39 (3.69)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from Investment
Operations............. (4.27) (1.24) (1.36) (0.17) 8.84 (3.27) 0.29 (4.41) 5.71 (3.35)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from Net
Investment Income (a). (0.09) (0.07) (0.10) (0.18) (0.13) (0.12) (0.17) (0.25) (0.31) (0.29)
Distributions from
Capital Gains......... (0.00) (0.14) (0.38) (0.52) (0.44) (0.09) (0.15) (0.40) (0.32) (0.35)
Tax Return of Capital.. (0.00) -- (0.02) -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total Distributions..... (0.09) (0.21) (0.50) (0.70) (0.57) (0.21) (0.32) (0.65) (0.63) (0.64)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of
Year................... $ 7.54 $ 11.90 $ 13.35 $ 15.21 $ 16.08 $ 7.81 $ 11.29 $ 11.32 $ 16.38 $ 11.30
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total Return (b)........ (36.00%) (9.37%) (8.93%) (1.04%) 113.41% (29.09%) 2.56% (27.00%) 51.30% (22.00%)
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End of
Period (000)........... $232,944 $409,331 $519,795 $634,808 $706,171 $360,177 $568,859 $611,401 $924,110 $712,078
Ratio of Gross Expenses
to Average Net Assets.. 1.52% 1.43% 1.42% 1.15% 1.12% 1.18% 1.17% 0.97% 0.88% 0.83%
Ratio of Net Expenses to
Average Net Assets..... 1.47% 1.43% 1.42% 1.15% 1.12% 1.18% 1.17% 0.97% 0.88% 0.83%
Ratio of Net Income
(Loss) to Average Net
Assets................. 0.90% 0.36% 0.55% 1.23% 1.13% 1.72% 1.41% 1.83% 2.38% 2.67%
Portfolio Turnover Rate. 19.99% 12.45% 4.10% 7.08% 7.20% 2.30% 2.20% 2.10% 3.50% 5.30%
Average Commission Rate
Paid (c)............... $ 0.0145 $ 0.0197
</TABLE>
- -------
(a) Net of foreign taxes withheld (to be included in income and claimed as a
tax credit or deduction by the shareholder for Federal income tax
purposes) of $0 for 1997, $0.01 for 1996, $0.03 for 1995, $0.07 for 1994,
$0.05 for 1993, $0.04 for 1992, $0.03 for 1991, $0.07 for 1990, $0.07 for
1989 and $0.06 for 1988.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and a redemption on
the last day of the period. A sales charge is not reflected in the
calculation of total return. Total return calculated for a period of less
than one year is not annualized.
(c) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades in
which a commission is charged.
* Certain per share amounts have been reclassified.
** International Investors became a series of the Trust on April 30, 1991
pursuant to the reorganization of International Investors Incorporated, a
Delaware corporation, as a series of the Trust.
11
<PAGE>
FINANCIAL HIGHLIGHTS--(CONCLUDED)
<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY FUND
-----------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
THROUGHOUT EACH YEAR ------- -------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Income From Investment
Operations:
Net Investment Income.. 0.0377 .0385 0.0456 0.0311 0.0183 0.0220 0.0456 0.0685 0.0748 0.0594
Less Distributions:
Dividends From Net
Investment Income..... (0.0377) (.0385) (0.0456) (0.0311) (0.0183) (0.0220) (0.0456) (0.0685) (0.0748) (0.0594)
------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Year................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======== ======= ======= ======= ======= ======= ======= ======= =======
Total Return............ 3.77% 3.85% 4.56% 3.11% 1.83% 2.20% 4.56% 6.85% 7.48% 5.94%
- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End of Year
(000).................. $76,650 $107,698 $70,130 $47,078 $31,109 $24,853 $35,287 $43,353 $47,620 $51,840
Ratio of Expenses to
Average Net Assets (a). 1.28% 1.23% 1.25% 1.12% 1.24% 1.44% 1.30% 1.17% 1.26% 0.80%
Ratio of Net Income to
Average Net Assets..... 3.91% 4.02% 4.45% 3.07% 1.83% 2.25% 4.61% 6.82% 7.47% 5.95%
</TABLE>
- --------
(a) Had the Adviser not waived management fees, the 1989 and 1988 expense
ratios would have been 1.31% and 1.30%, respectively.
12
<PAGE>
THE TRUST
Each of the Funds is a series (fund) of the Trust, a business trust organized
under the laws of the Commonwealth of Massachusetts on April 3, 1985. Class A
shares are denoted with the suffix-A, Class B shares with the suffix-B and
Class C shares with the suffix-C. The Funds are known as the "Van Eck Group of
Funds."
Asia Dynasty Fund, Emerging Markets Growth Fund, Gold/Resources Fund,
International Investors Gold Fund and U.S. Government Money Fund are
classified as diversified funds under the Investment Company Act of 1940, as
amended (the "Act"). Global Balanced Fund, Global Hard Assets Fund and Global
Real Estate Fund are non-diversified Funds. (See "Description of the Trust.")
INVESTMENT OBJECTIVES AND POLICIES
A description of the investment objectives and policies of each Fund is set
forth below. The investment objective of a Fund may not be changed without the
affirmative vote of a majority of the outstanding securities of that Fund, as
defined in the Act. As a result of the market risk inherent in any investment,
there is no assurance that the Funds will achieve their objectives. In
addition, global investing involves economic and political considerations,
which may favorably or unfavorably affect a Fund's performance. For further
information about a Fund's investment policies, see "Risk Factors" below and
"Investment Objectives and Policies" in the Statement of Additional
Information.
ASIA DYNASTY FUND
OBJECTIVE:
Asia Dynasty Fund seeks long-term capital appreciation by investing in the
equity securities of companies that are expected to benefit from the
development and growth of the economies of the Asian region.
POLICIES:
The Fund expects that substantially all of its assets will normally be
invested in equity securities, warrants and equity options of "Asia Growth
Companies." Asia Growth Companies consist of companies that (a) are located in
or whose securities are principally traded in an "Asian Region" country, as
defined below, (b)(i) have at least 50% of their assets in one or more
countries located in the Asian Region or (ii) derive at least 50% of their
gross sales revenues or profits from providing goods or services to, from or
within one or more countries located in the Asian Region or (c) have
manufacturing or other operations in China that are significant to such
companies. These investments are typically listed on stock exchanges or traded
in the over-the-counter markets in Asian Region countries, but may be traded
on exchanges or in markets outside the Asian Region. Similarly, the principal
offices of these companies may be located outside these countries.
The Fund will, under normal market conditions, invest at least 65% of its
total assets in equity securities of companies located in, or expected to
benefit from the growth of the economies of countries located in the Asian
Region. Asian Region countries include Burma, Cambodia, Hong Kong, India,
Indonesia, Korea, Laos, Malaysia, Pakistan, Peoples Republic of China
("China"), the Philippines, Singapore, Sri Lanka, Taiwan, Thailand and
Vietnam. Currently, the Fund does not consider Australia, Japan and New
Zealand to be part of the Asian Region. The countries constituting the Asian
Region may be changed by the Board without shareholder approval. The Fund may
commit 25% or more of its total assets to any one country in the Asian Region.
13
<PAGE>
Equity securities, for purposes of the 65% policy, include common and
preferred stocks; direct equity interests in trusts, partnerships, joint
ventures and other unincorporated entities or enterprises; special classes of
shares available only to foreign persons in such markets that restrict the
ownership of certain classes of equity to nationals or residents of the
country; convertible preferred stocks; and convertible debt instruments. Debt
securities issued by Asia Growth Companies are typically unrated.
The Fund may invest up to 5% of its net assets in options on equity securities
and up to 5% of its net assets in warrants, including options and warrants
traded in over-the-counter markets. The Fund may buy and sell financial
futures contracts and options on financial futures contracts. The Fund may
purchase or sell puts and calls on foreign currencies and securities, and
invest in "when issued" securities, "partly paid" securities (securities paid
for over a period of time), and securities of foreign issuers. The Fund may
lend its portfolio securities and borrow money for investment purposes (i.e.,
leverage its portfolio).
The Fund currently invests more than 25% of its total assets in Hong Kong, but
has not identified any other country in which it currently intends to invest
to this extent. China assumed sovereignty over Hong Kong in July 1997. The
long-term effect of this development on Hong Kong markets and business
performance may be significant. China governmental actions can also have a
significant effect on the economic conditions in the rest of the Asian Region,
all of which could adversely affect the value and liquidity of the Fund's
investments.
The Chinese, Hong Kong and Taiwanese stock markets continue to experience
growth and change, which may result in trading volatility and difficulties in
the settlement and recording of transactions, and in interpreting and applying
the relevant law and regulations. In particular, the securities industry in
China and laws regarding fiduciary duties of officers and directors and the
protection of shareholders are not well developed. China and certain of the
other Asian Region countries do not have many securities laws of nationwide
applicability. As changes to the Chinese legal system develop, foreign
investors, including the Fund, may be adversely affected. The uncertainties
faced by foreign investors in China are exacerbated by the fact that many
laws, regulations and decrees of China are not publicly available, but merely
circulated internally. Similar risks exist in other Asian Region countries.
EMERGING MARKETS GROWTH FUND
OBJECTIVE:
Emerging Markets Growth Fund seeks long-term capital appreciation by investing
primarily in equity securities in emerging markets around the world.
POLICIES:
In pursuit of its investment objective, the Fund emphasizes countries that,
compared to the world's major economies, exhibit relatively low gross national
product per capita as well as the potential for rapid economic growth.
Specifically, an "emerging market" or "Emerging Country" is any country that
the World Bank, the International Finance Corporation, the United Nations or
its authorities has determined to have a low or middle income economy.
Emerging Countries can be found in regions such as Asia, Latin America,
Eastern Europe and Africa. The countries that will not be considered Emerging
Countries include the United States, Australia, Canada, Japan, New Zealand and
most countries located in Western Europe. It is expected that the Fund will
14
<PAGE>
normally invest in at least three different countries. While many emerging
markets are experiencing rapid growth by U.S. standards, such markets are
still developing and considerably less liquid. Investors can expect there will
be periods of volatility and reduced liquidity in these markets. The Fund
involves above-average risk, and as such, is designed as a long-term
investment. There can be no assurance that the Fund will achieve its
investment objective. See "Risk Factors--Foreign Securities" and "Risk
Factors--Emerging Markets Securities" below.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in Emerging Countries and emerging market equity securities. The Fund
considers emerging market securities to include securities that (i)
principally trade in the capital markets of an emerging market country; (ii)
are of companies that derive at least 50% of total revenues from either goods
produced or services performed in emerging market countries or from sales made
in Emerging Countries, regardless of where the securities of such companies
are principally traded; (iii) are of companies organized under the laws of,
and with a principal office in, an Emerging Country; (iv) are of investment
companies (such as country funds) that principally invest in emerging market
securities; and (v) are American Depositary Receipts (ADRs), American
Depositary Shares (ADSs), European Depositary Receipts (EDRs) and Global
Depositary Receipts (GDRs) with respect to the securities of such companies.
Equity securities in which the Fund may invest include common stocks;
preferred stocks (either convertible or non-convertible); rights; warrants;
direct equity interests in trusts, partnerships, joint ventures and other
unincorporated entities or enterprises; convertible debt instruments; and
special classes of shares available only to foreign persons in those markets
that restrict ownership of certain classes of equity to nationals or residents
of that country. These securities may be listed on securities exchanges or
traded over-the-counter. Direct investments are generally considered illiquid
and will be aggregated with other illiquid investments for purposes of the
limitation on illiquid investments.
The Fund emphasizes equity securities, but may also invest in other types of
instruments, including debt securities of any quality (other than commercial
paper as described herein). The Fund will not invest more than 25% of its
assets in debt securities rated below BBB by S&P or Baa by Moody's. Debt
securities may include fixed or floating rate bonds, notes, debentures,
commercial paper, loans, convertible securities and other debt securities
issued or guaranteed by governmental, banking and private entities. See "Risk
Factors--Debt Securities" and "Risk Factors--Low Rated or Unrated Debt
Securities".
The Fund may, as described below in "Risk Factors," invest in derivatives.
Derivatives in which the Fund may invest include futures contracts, forward
contracts, options, swaps, structured notes and other similar securities as
may become available in the market. These instruments offer certain
opportunities and additional risks that are described below.
The Fund may invest indirectly in emerging markets by investing in other
investment companies due to restrictions on direct investment by foreign
entities in certain emerging market countries. Such investments may involve
the payment of premiums above the net asset value of the companies' portfolio
securities; are subject to limitations under the Act and the Internal Revenue
Code; are constrained by market availability; and would have the Fund bearing
its ratable share of that investment company's expenses, including its
advisory and administration fees. The Fund's investment adviser has agreed to
waive its management fee with respect to the portion of the Fund's assets
invested in shares of other open-end investment companies. The Fund would
continue to pay its own management fees and other expenses with respect to any
investments in shares of closed-end investment companies.
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The Fund may, for temporary defensive purposes, invest more than 35% of its
total assets in securities which are not emerging market securities, such as
high grade, liquid debt securities of foreign and United States companies,
foreign governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in money
market instruments denominated in U.S. dollars or a foreign currency. These
money market instruments include, but are not limited to, negotiable or short-
term deposits with domestic or foreign banks with total surplus and undivided
profits of at least $50 million; high quality commercial paper; and repurchase
agreements maturing within seven days with domestic or foreign dealers, banks
and other financial institutions deemed to be creditworthy under guidelines
approved by the Board of Trustees of the Trust. The commercial paper in which
the Fund may invest will, at the time of purchase, be rated P-1 or better by
Moody's; A-1 or better by S&P; Fitch-1 by Fitch; Duff-1 by D&P or if unrated,
will be of comparable high quality as determined by the Fund's investment
adviser.
GLOBAL BALANCED FUND
OBJECTIVE:
Global Balanced Fund seeks long-term capital appreciation together with
current income.
POLICIES:
The Fund intends to achieve its investment objective by investing its assets
in the United States and other countries throughout the world, and by
allocating its assets among equity securities, fixed-income securities and
short-term instruments.
The Adviser believes that allocation of assets into many countries and across
asset classes can, over the long-term, provide higher returns than portfolios
invested solely in bonds with lower risk or volatility or than portfolios
invested entirely in stocks. Thus, the "risk-adjusted return" of a diversified
portfolio has the potential to be more attractive than some other, more
concentrated portfolios. In addition, the balanced approach reduces the risk
where events in any one country may adversely affect the entire portfolio.
Investors should note, however, that a balanced portfolio will generally be
more volatile than a portfolio consisting solely of bonds and may provide
lower returns than a portfolio consisting solely of stocks. Investors should
also be aware that although the Fund diversifies across more investment types
than most mutual funds, no one mutual fund can provide a complete investment
program for all investors. There can be no assurance that allocation of assets
both globally and across asset classes will reduce these risks or that the
Fund will achieve its investment objective.
FII serves as sub-investment adviser to the Fund. FII is a wholly-owned
subsidiary of Fiduciary Investment Corporation, which, in turn, is a wholly-
owned subsidiary of Fiduciary Trust Company International. Fiduciary Trust
Company International has more than 30 years of experience in managing funds
that invest in international markets. The Adviser believes FII has unique
knowledge and experience in global investing.
The Fund seeks investment opportunities in the world's major stock, bond and
money markets. Under normal conditions, the Fund will invest its assets in at
least three countries including the United States. There is no limitation or
restriction on the amount of assets to be invested in any one asset class or
country. However, the Fund will not invest more than 10% of its assets in the
securities of developing countries with emerging economies or securities
markets. In addition, at least 25% of the Fund's total assets will always be
invested in fixed-income senior securities and at least 25% of the Fund's
total assets will always be invested in equities.
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Over the long-term, the Fund will attempt to invest a minimum of 25% of its
assets in the United States, with the balance outside the United States, and
the Fund will attempt to maintain an asset allocation of 60% in equity
securities and 40% in fixed-income securities and short-term instruments.
The average maturity of the debt securities in the Fund's portfolio will be
based on the judgment of FII as to future interest rate changes. The assets of
the Fund invested in fixed income securities will consist of securities which
are believed by FII to be high grade, that is, rated A or better by Standard &
Poor's Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's),
Fitch-1 by Fitch or Duff-1 by Duff & Phelps ("D&P") or if unrated, to be of
comparable high quality in the judgment of FII, subject to the supervision of
the Board of Trustees and the Adviser. The assets of the Fund invested in
short-term instruments will consist primarily of securities rated in the
highest category (for example, commercial paper rated "Prime-1" or "A-1" by
Moody's and S&P, respectively) or if unrated, in instruments that are
determined to be of comparable quality or are insured by foreign or U.S.
governments, their agencies or instrumentalities as to payment of principal
and interest.
The Fund may invest up to 5% of its net assets in options on equity securities
and up to 5% of its net assets in warrants, including options and warrants
traded in over-the-counter markets. The Fund may buy and sell financial
futures contracts and options on financial futures contracts. The Fund may
purchase or sell puts and calls on foreign currencies and securities, and
invest in "when-issued" securities, "partly paid" securities (securities paid
for over a period of time), and securities of foreign issuers. The Fund may
lend its portfolio securities and borrow money for investment purposes (i.e.,
leverage its portfolio). The Fund may invest in asset-backed securities such
as collateralized mortgage obligations and other mortgage and non-mortgage
asset-backed securities.
During periods of adverse or unusual economic and/or market conditions, the
Fund may, for temporary defensive purposes, make substantial investments in
obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, bankers' acceptances, high grade
commercial paper and repurchase agreements. For temporary defensive purposes,
the Fund can have all of its assets invested in any one country or currency.
GLOBAL HARD ASSETS FUND
OBJECTIVE:
Global Hard Assets Fund seeks long-term capital appreciation by investing
primarily in "Hard Asset Securities." Income is a secondary consideration.
POLICIES:
Hard Asset Securities include equity securities of "Hard Asset Companies" and
securities, including structured notes, whose value is linked to the price of
a Hard Asset commodity or a commodity index. "Hard Asset Companies" includes
companies that are directly or indirectly (whether through supplier
relationships, servicing agreements or otherwise) engaged to a significant
extent in the exploration, development, production or distribution of one or
more of the following (together "Hard Assets"): (i) precious metals, (ii)
ferrous and non-ferrous metals, (iii) gas, petroleum, petrochemicals or other
hydrocarbons, (iv) forest products, (v) real estate and (vi) other basic non-
agricultural commodities. The Adviser considers that a company is engaged to a
"significant extent" in these activities if it derives at least 50% of its
gross sales revenues or profits from them.
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Under normal market conditions, the Fund will invest at least 65% of its total
assets in "Hard Asset Securities" and the Fund will invest at least 5% of its
assets in each of the first five sectors listed above. The Fund has a
fundamental policy of concentrating in such industries and may invest up to
50% of its assets in any one of the above sectors. Therefore, it may be
subject to greater risks and market fluctuations than other investment
companies with more diversified portfolios. Some of these risks include:
volatility of energy and basic materials prices; possible instability of the
supply of various Hard Assets; the risks generally associated with extraction
of natural resources; actions and changes in government which could affect the
production and marketing of Hard Assets; and greater price fluctuations that
may be experienced by Hard Asset Securities than the underlying Hard Asset.
The Adviser believes Hard Asset Securities offer an opportunity to achieve
long-term capital appreciation and to protect wealth against eroding monetary
values during periods of cyclical economic expansions. Since the market action
of Hard Asset Securities may move against or independently of the market trend
of industrial shares, the addition of such securities to an overall portfolio
may increase the return and reduce the price fluctuations of such a portfolio.
There can be no assurance that an increased rate of return or a reduction in
price fluctuations of a portfolio will be achieved. Hard Asset Securities are
affected by many factors, including movement in the stock market. Inflation
may cause a decline in the market, including Hard Asset Securities. An
investment in the Fund's shares should be considered part of an overall
investment program rather than a complete investment program.
The Fund seeks investment opportunities worldwide. Under normal conditions,
the Fund will invest its assets in at least three countries including the
United States. There is no limitation or restriction on the amount of assets
to be invested in any one country, developed or underdeveloped. Global
investing involves economic and political considerations not typically
applicable to the U.S. markets.
The Fund may invest in common stocks; preferred stocks (either convertible or
non-convertible); rights; warrants; direct equity interests in trusts,
partnerships, joint ventures and other incorporated entities or enterprises;
and special classes of shares available only to foreign persons in those
markets that restrict ownership of certain classes of equity to nationals or
residents of that country. Direct investments are generally considered
illiquid and will be aggregated with other illiquid investments for purposes
of the limitation on illiquid investments. The Fund may invest up to 10% of
its net assets, taken at market value at the time of investment, in precious
metals, whether in bullion or coins.
The Fund may invest in derivatives, including futures contracts, forward
contracts, options, swaps and indexed securities, such as structured notes,
and other similar securities as may become available in the market. The Fund
may invest in indexed securities whose value is linked to one or more
currencies, interest rates, commodities, or financial or commodity indices.
When the Fund purchases a structured note (a non-publicly traded indexed
security entered into directly between two parties) it will make a payment of
principal to the counterparty. The Fund will purchase structured notes only
from counterparties rated A or better by S&P, Moody's or another nationally
recognized statistical rating organization. The Adviser will monitor the
liquidity of structured notes under the supervision of the Board of Trustees
and structured notes determined to be illiquid will be aggregated with other
illiquid securities and limited to 15% of the net assets of the Fund. Indexed
securities may be more volatile than the underlying instrument itself, and
present many of the same risks as investing in futures and options. Indexed
securities are also subject to credit risks associated with the issuer of the
security with respect to both principal and interest. In addition, the Fund
may invest in futures and forward contracts and options on precious metals and
other Hard Assets. The Fund may buy and sell financial
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futures contracts and options in financial futures contracts. The Fund may
purchase or sell puts and calls on foreign currencies and securities. Only
securities linked to one or more non-agricultural commodities or commodity
indices will be considered a Hard Asset Security.
The Fund may invest up to 5% of its net assets in premiums for options on
equity securities and equity indexes and up to 5% of its net assets in
warrants, including options and warrants traded in over-the-counter markets.
Warrants received as dividends on securities held by the Fund and warrants
acquired in units or attached to securities are not included in this
restriction. The Fund may invest in "when-issued" securities, "partly paid"
securities (securities paid for over a period of time) and securities of
foreign issuers; and may lend its portfolio securities and borrow money for
investment purposes. The Fund will not invest more than 25% of its assets in
debt securities rated below BBB by S&P or Baa by Moody's.
Although the Fund will not invest in real estate directly, it may invest up to
50% of its assets in equity securities of real estate investment trusts
("REITs") and other real estate industry companies or companies with
substantial real estate investments. REITs are pooled investment vehicles
whose assets generally consist primarily of interest in real estate or real
estate loans. REIT's and other real estate investments of the Fund are subject
to certain risks. See "Risk Factors--Real Estate Securities."
The Fund may invest up to 10% of its assets in asset-backed securities such as
collateralized mortgage obligations and other mortgage and non-mortgage asset-
backed securities. Asset-backed securities backed by Hard Assets and whose
value is expected to be linked to underlying Hard Assets are excluded from the
10% limitation.
The Fund may invest up to 35% of its total assets in debt securities whose
value is not linked to the value of a Hard Asset or a Hard Asset Company and
in other securities of companies which are not Hard Asset Companies. Non-Hard
Asset debt securities include high grade, liquid debt securities of foreign
companies, foreign governments and the U.S. Government and their respective
agencies, instrumentalities, political subdivisions and authorities, as well
as in money market instruments denominated in U.S. dollars or a foreign
currency. High grade debt securities are those that are rated A or better by
S&P or Moody's, Fitch-1 by Fitch or Duff-1 by D&P or if unrated, of comparable
quality in the judgment of the Adviser, subject to the supervision of the
Board of Trustees. The assets of the Fund invested in short-term instruments
will consist primarily of securities rated in the highest category (for
example, commercial paper rated "Prime-1" or "A-1" by Moody's and S&P,
respectively) or if unrated, in instruments that are determined to be of
comparable quality in the judgment of the Adviser, subject to the supervision
of the Board of Trustees, or are insured by foreign or U.S. governments, their
agencies or instrumentalities as to payment of principal and interest.
The Fund may, for temporary defensive purposes, make substantial investments
in obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, bankers' acceptances, high grade
commercial paper and repurchase agreements.
GLOBAL REAL ESTATE FUND
OBJECTIVE:
Global Real Estate Fund seeks to maximize total return, through both income
and capital appreciation, by investing primarily in equity securities of
domestic and foreign companies which are principally engaged in the real
estate industry or which own significant real estate assets.
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POLICIES:
The Fund will, under normal conditions, invest at least 65% (and at times,
nearly all) of its total assets in equity securities of domestic and foreign
companies which are principally engaged in the real estate industry or which
own significant real estate assets ("Real Estate Companies"). Equity
securities include common stocks, rights or warrants to purchase common
stocks, securities convertible into common stocks, preferred shares and real
estate investment trusts ("REITs"). American Depositary Receipts (ADRs),
American Depositary Shares (ADSs), European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs), equity swaps, indexed securities and similar
instruments whose values are tied to one or more equity securities are
considered to be equity securities. These securities may be listed on
securities exchanges or traded over-the-counter. A Real Estate Company is one
that has at least 50% of its assets in, or derives at least 50% of its
revenues or net profits from, the ownership, construction, financing,
management or sale of residential, commercial, industrial or hospitality real
estate. Real Estate Companies may include, among others: equity REITs;
mortgage REITs; hybrid REITs; hotel companies; real estate brokers or
developers; and companies which own significant real estate assets.
A REIT's assets generally consist primarily of interest in real estate and
real estate loans. REITs are often classified as equity, mortgage or hybrids.
An equity REIT owns interests in property and realizes income from rents and
gain or loss from the sale of real estate interests. A mortgage REIT invests
in real estate mortgage loans and realizes income from interest payments on
the loans. A hybrid REIT invests in both equity and debt. An equity REIT may
be an operating or financing company. An operating company provides
operational and management expertise to and exercises control over, many if
not most operational aspects of the property.
The Fund pursues a flexible strategy of investing in a diversified portfolio
of securities of companies throughout the world including the United States.
The percentage of the Fund's assets invested in particular geographic regions
will shift from time to time in accordance with the judgment of the Adviser.
The Fund will normally invest in at least three countries including the United
States. The Fund will give particular consideration to investments in the
United States, Canada, Western Europe, Japan, Australia, Hong Kong and
Singapore. The Fund may also invest in other non-U.S. markets, including
emerging markets in Asia, Latin America and Eastern Europe.
The Fund may invest up to 35% of its assets in debt securities of Real Estate
Companies and in equity and debt securities of non-Real Estate Companies,
which may include issuers whose products and services are related to the real
estate industry or which own real estate assets.
To attempt to protect against uncertainties in the markets or in anticipation
of the need for cash to meet redemption requests or settlement of portfolio
transactions, the Fund may, for temporary defensive purposes, invest in short-
term debt securities and money market instruments in excess of 35% of its
total assets. 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 more than 25% of its total assets in any one sector of the
real estate industry or any real estate related industry. Because the Fund
concentrates investments in a single industry, an investment in the Fund can
be expected to be more volatile than an investment in funds that invest in
many industries. Risks associated with investment in securities of companies
in the real estate industry include: declines in the value of real estate,
risks related to general and local economic conditions, overbuilding and
increased competition, increases in property taxes and operating expenses,
changes in zoning and other laws, casualty or condemnation losses, variations
or limitations in rental income, changes in neighborhood values, the appeal of
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properties to tenants, governmental actions, the ability of borrowers and
tenants to make loan payments and rents, and increase in interest rates. In
addition, equity REITs may be affected by changes in the value of the
underlying property owned by the REITs, while mortgage REITs may be affected
by the quality of credit extended. Equity and mortgage REITs are dependent
upon management skills, may not be diversified and are subject to the risks of
financing projects. They are also subject to heavy cash flow dependency,
defaults by borrowers, self liquidation and the possibility of failing to
qualify for tax-free pass-through of income under the Internal Revenue Code of
1986, as amended (the "Code") and failing to maintain exemption from the Act.
The Fund currently intends to limit its investments in debt securities rated
lower than Baa by Moody's to 25% of its total assets. Purchase of a debt
security is consistent with the Fund's debt quality policy if it is rated at
or above the stated level by Moody's or rated in the equivalent categories by
S&P, or other rating agency or is unrated but judged to be of equivalent
rating quality by the Adviser. Up to 10% of total assets may be invested in
unrated debt securities of issuers secured by real estate assets where the
Adviser believes that the securities are trading at a discount and the
underlying collateral will ensure repayment of principal. In such situations,
it is conceivable that the Fund could, in the event of default, end up holding
the underlying real estate directly. See "Risk Factors--Debt Securities" and
"Risk Factors--Low Rated or Unrated Debt Securities."
The Fund may, as described below in "Risk Factors," invest in derivatives.
Derivatives in which the Fund may invest include futures contracts, forward
contracts, options, swaps, indexed securities, currency exchange contracts and
other similar securities as may become available in the market. The Fund may
also invest up to 10% of its total assets in direct investments. For more
information, see "Risk Factors--Direct Investments."
GOLD/RESOURCES FUND
OBJECTIVE:
Gold/Resources Fund seeks long-term capital appreciation by investing in
equity and debt securities of companies engaged in the exploration,
development, production and distribution of gold and other natural resources
such as strategic and other metals, minerals, oil, natural gas and coal, and
by investing in gold bullion and coins. The Fund may also invest in equity and
debt securities of companies which themselves invest in companies engaged in
these activities. Although current income may be realized, it is not an
investment objective. It is anticipated that the Fund will realize only a
nominal amount of current income.
POLICIES:
Normally, the Fund will have at least 65% of its total assets invested in some
combination of securities of companies engaged in gold mining and natural
resources activities. The five largest gold producing countries are South
Africa, the United States, Australia, CIS (the former U.S.S.R.) and Canada.
During normal market conditions, the Fund expects to invest at least 25% of
its assets in securities of companies in Canada and the United States which
are engaged in gold mining. The Fund has no restrictions on the amount of its
assets that may be invested in securities of foreign issuers. The Fund will
not invest in securities of South African issuers. This is a fundamental
policy of the Fund which may be changed only with shareholder approval.
The Adviser believes that securities of precious metals and certain natural
resources companies offer an opportunity to protect wealth against eroding
monetary values during periods of accelerating inflation. Since the market
action of gold mining shares may move against or independently of the market
trend of industrial shares, the addition of such shares to an overall
portfolio may increase the portfolio's return and reduce overall fluctuations
in value. There can be no assurance that the Fund will achieve its investment
objective or that an
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increased rate of return or a reduction in value fluctuation will be realized.
Thus, an investment in the Fund's shares should be considered part of an
overall investment program rather than a complete investment program.
Since the Fund may invest substantially all of its assets in securities of
companies engaged in gold mining and natural resources activities, the Fund
may be subject to greater risks and market fluctuations than other investment
companies with more diversified portfolios. The production and marketing of
gold and other natural resources may be affected by actions and changes in
governments. In addition, gold and natural resources securities may be
cyclical in nature.
The Fund has reserved the right to invest up to 10% of its net assets, taken
at market value at the time of investment, in gold bullion and coins.
The Fund may invest up to 5% of assets at the time of purchase in warrants. Of
this 5%, not more than 2% may be invested in warrants that are not listed on
the New York Stock Exchange or American Stock Exchange. The Fund may invest up
to 5% of assets at the time of purchase in preferred stocks and preferred
stocks which may be convertible into common stock. The Fund may buy and sell
financial futures contracts and options on financial futures contracts and may
write, purchase or sell puts and calls on foreign currencies and securities,
invest in "when issued" securities, "partly paid" securities (securities paid
for over a period of time), and securities of foreign issuers; and may buy and
sell commodity futures contracts on precious metals and on precious metals
indices and may write, purchase or sell covered put and call options thereon.
The Fund may invest up to 35% of the value of its total assets in: (a) common
stock of companies not in the gold mining/natural resources areas; (b) high
grade corporate debt securities; and (c) obligations issued or guaranteed by
U.S. or foreign governments and repurchase agreements.
During periods of less favorable economic or market conditions, the Fund may
make substantial investments for temporary defensive purposes in obligations
of the U.S. Government, certificates of deposit, bankers' acceptances, high
grade commercial paper and repurchase agreements.
INTERNATIONAL INVESTORS GOLD FUND
OBJECTIVE:
International Investors Gold Fund seeks primarily long-term capital
appreciation by investing in common stocks of gold mining companies, while
retaining freedom to take current income into consideration in selecting
investments.
POLICIES:
Under normal circumstances, the Fund will have at least 65% of its total
assets invested in the gold mining industry. The Fund will concentrate at
least 25% of its assets invested in common stocks of gold mining companies.
The Fund only concentrates its investments in the gold mining industry.
However, the Fund may invest up to 100% of its assets or, for temporary
defensive purposes, less than 25% of its assets in that industry. The five
largest gold producing countries are South Africa, the United States,
Australia, CIS (former U.S.S.R.) and Canada. Although investing in securities
of issuers engaged in the mining of gold and in foreign issuers may involve
special considerations and additional investment risks, management believes
that selective investment in such securities may offer a greater return than
shares of domestic industrial issuers. The Fund may invest in South African
issuers. Political and social conditions in and affecting South Africa could
have an adverse
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effect on investments in South Africa, including the Fund's investments and,
under certain conditions, on the liquidity of the Fund's portfolio and its
ability to meet shareholder redemption requests.
The Fund believes securities of gold mining companies offer an opportunity to
achieve long-term capital appreciation and to protect wealth against eroding
monetary values. The Fund also believes that the accelerating growth of
monetary reserves and credit in major industrial markets may have favorable
effects on gold and gold mining share prices. Since the market action of gold
mining shares has tended to move against or independently of the market trend
of industrial shares, the addition of such shares to an overall portfolio may
increase the portfolio's return and reduce overall fluctuations in value.
There can be no assurance that the Fund will achieve its objectives or that an
increased rate of return or a reduction in value fluctuation will be realized.
Thus, an investment in the Fund's shares should be considered part of an
overall investment program rather than a complete investment program.
Since the Fund may invest substantially all of its assets in securities of
companies engaged in gold mining and natural resources activities, the Fund
may be subject to greater risks and market fluctuations than other investment
companies with more diversified portfolios. The production and marketing of
gold and other natural resources may be affected by actions and changes in
governments. In addition, gold and natural resources securities may be
cyclical in nature.
It is the Fund's policy to invest primarily in securities of companies,
wherever organized, whose properties, products or services are international
in scope or substantially in countries outside the United States, in
securities of foreign governments, and in United States Treasury securities.
Under normal conditions, the Fund's policy is to select investments so that
over 50% of the value of its assets will be securities of foreign companies.
However, under unusual conditions, it may temporarily place a substantial
portion (no more than 75%) of its investments in debt or equity securities
issued by foreign companies, debt obligations of one or more foreign
governments and/or United States Treasury securities. Debt securities invested
in by the Fund will consist primarily of securities which are believed by the
Adviser to be high grade, that is, rated A or better by S&P or Moody's or, if
unrated, of comparable quality in the judgment of the Adviser. The Fund may
also enter into repurchase agreements with domestic broker-dealers, banks and
financial institutions in amounts up to an aggregate of 10% of the value of
the Fund's assets. However, the Fund has not in the past year invested, nor
does it currently intend to invest, more than 5% of its assets in repurchase
agreements at any one time.
The Fund may invest up to 12 1/2% of its total assets in gold and silver coins
which are legal tender in the country of issue. The sole source of return to
the Fund from coins and bullion would be from gains or losses realized on
their sale. The Fund incurs custody costs in storing gold bullion and coins.
These policies are fundamental policies which may be changed only by the
affirmative vote of a majority of the outstanding voting securities, as
defined in the Act.
The Fund may, for hedging purposes, invest up to 5% of its total assets, taken
at market value at the time of investment, in put and call options on domestic
and foreign securities and foreign currencies. This policy, adopted by the
Board of Trustees, may be changed without shareholder approval. The Fund may
purchase call options for the purpose of acquiring the underlying securities
for its portfolio. The Fund may purchase put options as a defensive technique
in order to protect against an anticipated decline in the value of securities
held by the Fund. The Fund may also invest in options on foreign currencies
which are either listed on a domestic securities exchange or traded on a
recognized foreign exchange. In addition, the Fund may purchase over-the-
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counter foreign currency options from dealers or banks approved by the Trust's
Board of Trustees to hedge securities for which neither domestic nor foreign
exchange-traded options exist.
The Fund, under normal circumstances, will maintain investments in issuers
located in at least three countries other than the United States.
U.S. GOVERNMENT MONEY FUND
OBJECTIVES:
U.S. Government Money Fund seeks safety of principal, daily liquidity and
current income by investing in U.S. Treasury bills, notes, bonds and other
obligations guaranteed by the "full faith and credit" of the U.S. Government.
POLICIES:
Securities guaranteed by the U.S. Government include such obligations as
securities issued by the General Services Administration and the Small
Business Administration. The Fund may from time to time invest, without
limitation, in repurchase agreements collateralized by such securities. As a
matter of fundamental policy, at least 80% of the Fund's total assets will at
all times be maintained in U.S. Government securities and repurchase
agreements collateralized by such securities.
The Fund follows an operating policy in order to maintain, pursuant to a rule
adopted by the Securities and Exchange Commission ("SEC"), a constant net
asset value of $1.00 per share, although there is no assurance it can do so on
a continuing basis. Although the Fund's fundamental policy allows it to
invest, with respect to 25% of its assets, more than 5% in any one issuer
(other than U.S. Government securities), it may do so only if the SEC rule is
amended in the future. All securities in which the Fund invests have remaining
maturities of 397 days or less at the date of purchase and have been
determined to be of high quality, with minimal credit risk, by the Adviser
acting under the supervision of the Board of Trustees of the Trust. The Fund
also maintains an average-weighted portfolio maturity of 90 days or less.
RISK FACTORS
Assets of the Funds are subject to market fluctuations and risks inherent in
all securities. In addition, assets of the Funds may be subject to other
special considerations, such as those listed below. See also "Risk Factors" in
the Statement Additional Information.
ASSET-BACKED SECURITIES
Emerging Markets Growth Fund, Global Balanced Fund, Global Hard Assets Fund
and Global Real Estate Fund may invest in asset-backed securities. Asset-
backed securities represent interests in pools of consumer loans (generally
unrelated to mortgage loans) and most often are structured as pass-through
securities. Interest and principal payments ultimately depend on payment of
the underlying loans, although the securities may be supported by letters of
credit or other credit enhancements. The value of asset-backed securities may
also depend on the creditworthiness of the servicing agent for the loan pool,
the originator of the loans, or the financial institution providing the credit
enhancement.
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BORROWING
Asia Dynasty Fund, Emerging Markets Growth Fund, Global Balanced Fund and
Global Hard Assets Fund and Global Real Estate Fund may borrow up to 30% of
their net assets to increase their holdings of portfolio securities.
Gold/Resources Fund may borrow up to 10% of the value of its total assets
(valued at cost) for temporary or emergency purposes. International Investors
Gold Fund may borrow up to 10% of the value of its total assets (valued at
cost) temporarily for emergency purposes. Under the Act, each Fund is required
to maintain continuous asset coverage of 300% with respect to these borrowings
and to sell (within three days) sufficient portfolio holdings to restore this
asset coverage if it should decline to less than 300% even if the sale would
be disadvantageous from an investment standpoint. Leveraging by means of
borrowing will exaggerate the effect of any increase or decrease in the value
of portfolio securities on a Fund's net asset value, and money borrowed will
be subject to interest and other costs which may or may not exceed the
investment return received from the securities purchased with borrowed funds.
It is anticipated that any borrowings would be pursuant to a negotiated loan
agreement with a commercial bank or other institutional lender.
COLLATERALIZED MORTGAGE OBLIGATIONS
Asia Dynasty Fund, Emerging Markets Growth Fund, Global Balanced Fund, Global
Hard Assets Fund and Global Real Estate Fund may invest in collateralized
mortgage obligations ("CMOs"). CMOs are fixed-income securities which are
collateralized by pools of mortgage loans created by commercial banks, savings
and loan institutions, private mortgage insurance companies and mortgage
bankers. In effect, CMOs "pass through" the monthly payments made by
individual borrowers on their mortgage loans. Prepayments of the mortgages
included in the mortgage pool may influence the yield of the CMO. In addition,
prepayments usually increase when interest rates are decreasing, thereby
decreasing the life of the pool. As a result, reinvestment of prepayments may
be at a lower rate than that on the original CMO. Timely payment of interest
and principal (but not the market value) of these pools is supported by
various forms of insurance or guarantees. The Funds may buy CMOs without
insurance or guarantees if, in the opinion of the Adviser, the pooler is
creditworthy or if rated A or better by S&P or Moody's. S&P and Moody's assign
the same rating classifications to CMOs as they do to bonds. In the event that
any CMOs are determined to be investment companies, the Funds will be subject
to certain limitations under the Act.
COMMERCIAL PAPER
Emerging Markets Growth Fund, Global Balanced Fund and Global Hard Assets Fund
may invest in commercial paper which is indexed to certain specific foreign
currency exchange rates. The principal amount is adjusted upwards or downwards
(but not below zero) at maturity to reflect changes in the exchange rate
between two currencies while the obligation is outstanding. Each Fund will
purchase indexed commercial paper with the currency in which it is denominated
and, at maturity, will receive interest and principal payments thereon in that
currency, but the amount or principal payable by the issuer at maturity will
change in proportion to the change (if any) in the exchange rate between the
two specified currencies between the date the instrument is issued and the
date the instrument matures. While such commercial paper entails the risk of
loss of principal, the potential for realizing gains as a result of changes in
foreign currency exchange rates enables the Fund to hedge or cross-hedge
against a decline in the U.S. dollar value of investments denominated in
foreign currencies while providing an attractive money market rate of return.
Each Fund will purchase indexed commercial paper for hedging purposes only,
not for speculation. The Funds will establish a segregated account with
respect to their investments in this type of commercial paper and will
maintain in the account cash not available for
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investment or U.S. Government securities or other liquid high quality
securities having a value equal to the aggregate principal amount of
outstanding commercial paper of this type. See "Risk Factors--Commercial
Paper" in the Statement of Additional Information.
DEBT SECURITIES
The market value of debt securities generally varies in response to changes in
interest rates, the financial condition of each issuer and the value of a Hard
Asset if linked to the value of a Hard Asset. Debt securities with similar
maturities may have different yields, depending upon several factors,
including the relative financial condition of the issuers. A description of
debt securities ratings is contained in the Appendix to the Statement of
Additional Information. High grade means a rating of A or better by Moody's or
S&P's, or of comparable quality in the judgment of the Adviser (or Sub-
Adviser) if no rating has been given by either service. Many securities of
foreign issuers are not rated by these services. Therefore, the selection of
such issuers depends to a large extent on the credit analysis performed by the
Adviser (or Sub-Adviser).
When Issued Securities. New issues of certain debt securities are often
offered on a when-issued basis, that is, the payment obligation and the
interest rate are fixed at the time the buyer enters into the commitment, but
delivery and payment for the securities normally take place after the date of
the commitment to purchase. The value of when-issued securities may vary prior
to and after delivery depending on market conditions and changes in interest
rate levels. However, the Funds do not accrue any income on these securities
prior to delivery. The Funds will maintain in a segregated account with their
custodian an amount of cash or high quality securities equal (on a daily
marked-to-market basis) to the amount of its commitment to purchase the when-
issued securities.
DERIVATIVES
To protect against anticipated declines in the value of the Funds' investment
holdings, the Funds (except U.S. Government Money Fund) may use options,
forward and futures contracts, swaps (Asia Dynasty Fund, Emerging Markets
Growth Fund, Global Balanced Fund, Global Hard Assets Fund and Global Real
Estate Fund) and structured notes (Global Hard Assets Fund and Global Real
Estate Fund), and similar investments (commonly referred to as derivatives) as
a defensive technique to protect the value of an asset the Funds' investment
adviser (or Sub-Adviser) deems it desirable to hold for tax or other
considerations or for investment reasons. If the anticipated decline in the
value of the asset occurs, it would be offset, in whole or part, by a gain on
the futures contract, put option or swap. The premium paid for the put option
would reduce any capital gain otherwise available for distribution when the
security is eventually sold.
The Funds may also use futures contracts and options, forward contracts and
swaps as part of various investment techniques and strategies, such as
creating non-speculative "synthetic" positions (covered by segregation of
liquid assets) or implementing "cross-hedging" strategies. A "synthetic
position" is the duplication of a cash market transaction when deemed
advantageous by the Funds' adviser (or Sub-Adviser) for cost, liquidity or
transactional efficiency reasons. A cash market transaction is the purchase or
sale of a security or other asset for cash. "Cross-hedging" involves the use
of one currency to hedge against the decline in the value of another currency.
The use of such instruments as described herein involves several risks. First,
there can be no assurance that the prices of such instruments and the hedged
security or the cash market position will move as anticipated. If prices do
not move as anticipated, a Fund may incur a loss on its investment, may
not achieve the hedging protection it anticipated and/or may incur a loss
greater than if it had entered into a
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cash market position. Second, investments in such instruments may reduce the
gains which would otherwise be realized from the sale of the underlying
securities or assets which are being hedged. Third, positions in such
instruments can be closed out only on an exchange that provides a market for
those instruments. There can be no assurance that such a market will exist for
a particular futures contract or option. If the Fund cannot close out an
exchange traded futures contract or option which it holds, it would have to
perform its contract obligation or exercise its option to realize any profit
and would incur transaction costs on the sale of the underlying assets.
When the Funds intend to acquire securities (or gold bullion or coins as the
case may be) for their portfolios, they may use call options or futures
contracts as a means of fixing the price of the security (or gold) they intend
to purchase at the exercise price (in the case of an option) or contract price
(in the case of a futures contract). An increase in the acquisition cost would
be offset, in whole or part, by a gain on the option or futures contract.
Options and futures contracts requiring delivery of a security may also be
useful to the Funds in purchasing a large block of securities that would be
more difficult to acquire by direct market purchases. If the Funds hold a call
option rather than the underlying security itself, the Funds are partially
protected from any unexpected decline in the market price of the underlying
security and in such event could allow the call option to expire, incurring a
loss only to the extent of the premium paid for the option. Using a futures
contract would not offer such partial protection against market declines and
the Funds would experience a loss as if they had owned the underlying
security.
Currency Swaps
Asia Dynasty Fund, Emerging Markets Growth Fund, Global Balanced Fund, Global
Hard Assets Fund and Global Real Estate Fund may enter into currency swaps for
hedging purposes. Currency swaps involve the exchange of rights to make or
receive payments of the entire principal value in specified currencies. Since
currency swaps are individually negotiated, a Fund may expect to achieve an
acceptable degree of correlation between its portfolio investments and its
currency swap positions. 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. Global Hard Assets may also enter into other
asset swaps. Asset swaps are similar to swaps in that the performance of one
Hard Asset (e.g., gold) may be "swapped" for another (e.g., energy).
The use of swaps is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
transactions. If the Funds' investment adviser (or Sub-Adviser) is incorrect
in its forecasts of market values and currency exchange rates and/or Hard
Assets values, the investment performance of the Fund would be less favorable
than it would have been if this investment technique were not used. Swaps are
generally considered illiquid and will be aggregated with other illiquid
positions for purposes of the limitation on illiquid investments.
Foreign Currency and Foreign Currency Transactions
Changes in currency exchange rates may affect the Funds' net asset value and
performance. There can be no assurance that the Funds' investment adviser (or
Sub-Adviser) will be able to anticipate currency fluctuations in exchange
rates accurately. The Funds may invest in a variety of derivatives and enter
into hedging transactions to attempt to moderate the effect of currency
fluctuations. The Funds may purchase and sell put and call options on, or
enter into futures contracts or forward contracts to purchase or sell, foreign
currencies. This may reduce a Fund's losses on a security when a foreign
currency's value changes. Hedging against a change in the
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value of a foreign currency does not eliminate fluctuations in the prices of
portfolio securities or prevent losses if the prices of such securities
decline. Furthermore, such hedging transactions reduce or preclude the
opportunity for gain if the value of the hedged currency should change
relative to the other currency. Last, when the Funds use options and futures
in anticipation of the purchase of a portfolio security to hedge against
adverse movements in the security's underlying currency, but the purchase of
such security is subsequently deemed undesirable, the Fund may incur a gain or
loss on the option or futures contract.
The Funds will enter into forward contracts to duplicate a cash market
transaction. The Funds will not purchase or sell foreign currency as an
investment, except that Asia Dynasty Fund, Emerging Markets Growth Fund,
Global Balanced Fund, Global Hard Assets Fund and Global Real Estate Fund may
enter into currency swaps. See also "Foreign Currency Transactions" and
"Futures and Options Transactions" in the Statement of Additional Information.
In those situations where foreign currency options or futures contracts, or
options on futures contracts may not be readily purchased (or where they may
be deemed illiquid) in the primary currency in which the hedge is desired, the
hedge may be obtained by purchasing or selling an option, or futures contract
or forward contract on a secondary currency. The secondary currency will be
selected based upon the investment adviser's (or Sub-Adviser's) belief that
there exists a significant correlation between the exchange rate movements of
the two currencies. However, there can be no assurances that the exchange rate
or the primary and secondary currencies will move as anticipated or that the
relationship between the hedged security and the hedging instrument will
continue. If they do not move as anticipated or the relationship does not
continue, a loss may result to the Funds on their investments in the hedging
positions.
Futures Contracts
The Funds may buy and sell financial futures contracts which may include
security and interest-rate futures, stock and bond index futures contracts and
foreign currency futures contracts. The Funds may engage in these transactions
for hedging purposes and (except for Gold/Resources Fund) for other purposes.
Global Hard Assets Fund may also buy and sell commodity futures contracts,
which may include futures on natural resources and natural resource indices. A
security or interest-rate futures contract is an agreement between two parties
to buy or sell a specified security at a set price on a future date. An index
futures contract is an agreement to take or make delivery of an amount of cash
based on the difference between the value of the index at the beginning and at
the end of the contract period. A foreign currency futures contract is an
agreement to buy or sell a specified amount of a currency for a set price on a
future date. A commodity futures contract is an agreement to take or make
delivery of a specified amount of a commodity, such as gold, at a set price on
a future date.
A Fund will not commit more than 5% of its total assets to initial margin
deposits on futures contracts and premiums on options on futures contracts,
except that margin deposits for futures positions entered into for bona fide
hedging purposes, as that term is defined in the Commodity Exchange Act, are
excluded from the 5% limitation. As the value of the underlying asset
fluctuates, either party to the contract is required to make additional margin
payments, known as "variation margin," to cover any additional obligation it
may have under the contract. In addition, cash or high quality securities
equal in value to the current value of the underlying securities less the
margin requirement will be segregated, as may be required, with the Fund's
custodian to ensure that the Fund's position is unleveraged. This segregated
account will be marked-to-market daily to reflect changes in the value of the
underlying futures contract.
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Global Hard Assets Fund may invest in commodity futures contracts and in
options on commodity futures contracts, which involves numerous risks such as
leverage, high volatility illiquidity, governmental intervention designed to
influence commodity prices and the possibility of delivery of the underlying
commodities. If the Fund were required to take delivery of a commodity, it
would be deemed illiquid and the Fund would bear the cost of storage and might
incur substantial costs in its disposition. The Fund will not use commodity
futures contracts for leveraging purposes in excess of applicable limitations.
Certain exchanges do not permit trading in particular commodities at prices in
excess of daily price fluctuation limits set by the exchange, and thus Global
Hard Assets Fund could be prevented from liquidating its positions and thus be
subjected to losses. Trading in futures contracts traded on foreign commodity
exchanges may be subject to the same or similar risks as trading in foreign
securities. See "Risk Factors--Foreign Securities" below and "Futures and
Options Transactions" in the Statement of Additional Information.
Indexed Securities and Structured Notes
Global Hard Assets Fund and Global Real Estate Fund may invest in indexed
securities whose value is linked to one or more currencies, interest rates,
commodities, or financial or commodity indices. An indexed security enables
the investor to purchase a note whose coupons and/or principal redemption are
linked to the performance of an underlying asset. Indexed securities may be
positively or negatively indexed (i.e., their value may increase or decrease
if the underlying instrument appreciates). Indexed securities may have return
characteristics similar to direct investments in the underlying instrument or
to one or more options on the underlying instrument. Indexed securities may be
more volatile than the underlying instrument itself, and present many of the
same risks as investing in futures and options. Indexed securities are also
subject to credit risks associated with the issuer of the security with
respect to both principal and interest. Only securities linked to one or more
non-agricultural commodities or commodity indices will be considered a Hard
Asset Security.
Indexed securities may be publicly traded or may be two-party contracts (such
two-party agreements are referred to here collectively as structured notes).
When a 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. The
Funds will purchase structured notes only from counterparties rated A or
better by S&P, Moody's or another nationally recognized statistical rating
organization. The Adviser will monitor the liquidity of structured notes under
the supervision of the Board of Trustees and notes determined to be illiquid
will be aggregated with other illiquid securities and subject to the Funds'
limitation on illiquid securities.
Options
For hedging purposes, each Fund, and for other purposes (such as creating
synthetic positions), each Fund except Gold/Resources Fund, may invest up to
5% of its total assets, taken at market value at the time of investment, in
premiums on call and put options on domestic and foreign securities, foreign
currencies, stock and bond indices, financial futures contracts and commodity
futures contracts. This policy may be changed without shareholder approval.
See "Futures Contracts" above.
The Funds may write, purchase or sell covered call or put options. An options
transaction involves the writer of the option, upon receipt of a premium,
giving the right to sell (call option) or buy (put option) an underlying asset
at an agreed-upon exercise price. The holder of the option has the right to
purchase (call option) or sell (put option) the underlying asset at the
exercise price. If the option is not exercised or sold, it becomes worthless
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at its expiration date and the premium payment is lost to the option holder.
As the writer of an option, the Fund keeps the premium whether or not the
option is exercised. When a Fund sells a covered call option, which is a call
option with respect to which the Fund owns the underlying asset, the Fund may
lose the opportunity to realize appreciation in the market price of the
underlying asset or may have to hold the underlying asset, which might
otherwise have been sold to protect against depreciation. A covered put option
written by the Fund exposes it during the term of the option to a decline in
the price of the underlying asset. A put option sold by the Fund is covered
when, among other things, cash or short-term liquid securities are placed in a
segregated account to fulfill the obligations undertaken. Covering a put
option sold does not reduce the risk of loss.
The Funds may invest in options which are either listed on a domestic
securities exchange or traded on a recognized foreign exchange. In addition,
the Funds may purchase or sell over-the-counter options from dealers or banks
to hedge securities or currencies as approved by the Board of Trustees. In
general, exchange traded options are third party contracts with standardized
prices and expiration dates. Over-the-counter options are two party contracts
with price and terms negotiated by the buyer and seller, are generally
considered illiquid and will be subject to the limitation on investments in
illiquid securities.
DIRECT INVESTMENTS
Asia Dynasty Fund, Emerging Markets Growth Fund, Global Balanced Fund, Global
Hard Assets Fund and Global Real Estate Fund may invest up to 10% of their
total assets in direct investments; however, Emerging Markets Growth Fund does
not currently intend to invest more than 5% of its total net assets in direct
investments. Direct investments include the private purchase from an
enterprise or a principal investor in the enterprise of any equity interest in
the enterprise in the form of shares of common stock, rights or warrants to
purchase common stocks, securities convertible into common stock or equity
interests in trusts, partnerships, joint ventures or similar enterprises. In
each case a Fund will, at the time of making the investment, enter into a
shareholder or similar agreement with the enterprise and one or more other
holders of equity interests in the enterprise. The Adviser (or Sub-Adviser)
anticipates that these agreements may, in appropriate circumstances, provide
for the Fund to appoint a representative to the board of directors or similar
body of the enterprise and for eventual disposition of the Fund's investment
in the enterprise. Such a representative of the Fund will be expected to
provide the Fund with the ability to monitor its investment and protect its
rights in the investment and will not be appointed for the purpose of
exercising management or control of the enterprise.
Certain of the Funds' direct investments, particularly the Asia Dynasty Fund's
investments in China, will include investments in smaller, less seasoned
companies. These companies may have limited product lines or scope of
operations, markets or financial resources, or they may be dependent on a
limited management group. The Funds do not anticipate making direct
investments in start-up operations, although it is expected that in some cases
the Funds' direct investments will fund new operations for an enterprise which
itself is engaged in similar operations or is affiliated with an organization
that is engaged in similar operations. With respect to the Asia Dynasty Fund,
such direct investments may be made in entities that are reasonably expected
in the foreseeable future to become Asia Growth Companies, either by expanding
current operations or establishing significant operations in the Asian Region.
Direct investments may involve a high degree of business and financial risk
that can result in substantial losses. Because of the absence of any public
trading market for these investments, a Fund may take longer to liquidate
these positions than would be the case for publicly traded securities.
Although these securities may be resold in
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privately negotiated transactions, the prices on these sales could be less
than those originally paid by the Fund. Futhermore, issuers whose securities
are not publicly traded may not be subject to public disclosure and other
investor protection requirements applicable to publicly traded securities. If
such securities are required to be registered under the securities laws of one
or more jurisdictions before being resold, a Fund may be required to bear the
expenses of registration. In addition, in the event a Fund sells unlisted
foreign securities, any capital gains realized on such transactions may be
subject to higher rates of taxation than taxes payable on the sale of listed
securities. Direct investments are generally considered illiquid and will be
aggregated with other illiquid investments for purposes of the limitation on
illiquid investments. Direct investments can be difficult to price and will be
valued at fair value as determined in good faith by the Board of Trustees. The
pricing of direct investments may not be reflective of the price at which
these assets could be liquidated. For more information, see "Risk Factors--
Direct Investments" in the Statement of Additional Information.
EMERGING MARKETS SECURITIES
Investments of the Funds (except U.S. Government Money Fund) may be made from
time to time in companies in developing countries as well as in developed
countries. Shareholders should be aware that investing in the equity and fixed
income markets of developing countries involves exposure to potentially
unstable governments, the risk of nationalization of businesses, restrictions
on foreign ownership, prohibitions on repatriation of assets and a system of
laws that may offer less protection of property rights. Emerging market
economies may be based on only a few industries, may be highly vulnerable to
changes in local or global trade conditions, and may suffer from extreme and
volatile debt burdens or inflation rates.
Securities markets in these countries may trade a small number of securities,
may have a limited number of issuers and a high proportion of shares of many
issuers may be held by a relatively small number of persons or institutions.
Local securities markets may be unable to respond effectively to increases in
trading volume, potentially making prompt liquidation of substantial holdings
difficult or impossible at times. Securities of issuers located in developing
markets may have limited marketability and may be subject to more abrupt or
erratic price movements. Many of these stock markets are undergoing a period
of growth and change which may result in trading volatility, and in
difficulties in the settlement and recording of transactions and in
interpreting and applying the relevant law and regulations. In addition,
stockbrokers and other intermediaries in emerging markets may not perform in
the way their counterparts in the United States and other more developed
securities markets do. The prices at which a Fund may acquire investments may
be affected by trading by persons with material non-public information and by
securities transactions by brokers in anticipation of transactions by the Fund
in particular securities. Limited liquidity may impair a Fund's ability to
liquidate a position at the time and price it wishes to do so. In addition, a
Fund's ability to participate fully in the smaller, less liquid emerging
markets may be limited by the policy restricting its investments in illiquid
securities.
FOREIGN SECURITIES
The Funds (except U.S. Government Money Fund) may purchase securities of
foreign issuers including foreign investment companies. Investments in foreign
securities may involve a greater degree of risk than investments in domestic
securities due to the possibility of exchange rate fluctuations and exchange
controls, less publicly available information, more volatile or less liquid
securities markets, and the possibility of expropriation, confiscatory
taxation or political, economic or social instability. In addition, some
foreign companies are not generally subject to the same uniform accounting,
auditing and financial reporting standards as are American companies and there
may be less government supervision and regulation of foreign stock exchanges,
brokers and companies.
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Foreign securities also may be subject to foreign taxes, higher custodian
fees, higher brokerage commissions and higher dividend collection fees which
could reduce the yield or return on such securities, although a shareholder of
a Fund may, subject to certain limitations, be entitled to claim a credit or
deduction for United States federal income tax purposes for his or her
proportionate share of such foreign taxes paid by the Fund.
The Funds may invest in South African issuers. Political and social conditions
in South Africa and its neighboring countries, as well as changes in United
States or South African laws or regulations, may pose certain risks to the
Funds' investments, and, under certain conditions, on the liquidity of the
Funds' portfolios and their ability to meet shareholder redemption requests.
Emerging Markets Growth Fund and Global Hard Assets Fund may invest in Russian
issuers. Settlement, clearing and registration of securities in Russia is in
an underdeveloped state. Ownership of shares (except those held through
depositories that meet the requirements of the Act) is defined according to
entries in the issuer's share register and normally evidenced by extracts from
that register, which have no legal enforceability. Furthermore, share
registration is carried out either by the issuer or registrars located
throughout Russia, which are not necessarily subject to effective government
supervision. To reasonably ensure that its ownership interest continues to be
appropriately recorded, the Funds will invest only in those Russian companies
whose registrars have entered into a contract with the Funds' Russian sub-
custodian, which gives the sub-custodian the right, among others, to inspect
the share register and to obtain extracts of share registers through regular
audits. While these procedures reduce the risk of loss, there can be no
assurance that they will be effective. This limitation may prevent the Funds
from investing in the securities of certain Russian issuers otherwise deemed
suitable by the Funds' investment adviser.
In addition to investing directly in the securities of United States and
foreign issuers, the Funds may also invest in American Depositary Receipts
(ADRs), European Depositary Receipts (EDRs), American Depositary Shares
(ADSs), Global Depositary Shares (GDSs) and securities of foreign investment
funds or trusts (including passive foreign investment companies). See "Foreign
Securities" in the Statement of Additional Information.
LOANS OF PORTFOLIO SECURITIES
Asia Dynasty Fund, Emerging Markets Growth Fund, Global Balanced Fund, Global
Hard Assets Fund and Global Real Estate Fund may lend to broker-dealers
portfolio securities with an aggregate market value of up to one-third of
their total assets. These loans must be secured by collateral (consisting of
any combination of cash, U.S. Government securities or irrevocable letters of
credit) in an amount at least equal (on a daily marked-to-market basis) to the
current market value of the securities loaned. The Funds may terminate the
loans at any time and obtain the return of the securities loaned within one
business day. The Funds will continue to receive any interest or dividends
paid on the loaned securities and will continue to have voting rights with
respect to the securities. The Funds might experience a loss if the borrowing
broker-dealer breaches its agreement with the Funds.
LOW RATED OR UNRATED DEBT SECURITIES
Emerging Markets Growth Fund, Global Hard Assets Fund and Global Real Estate
Fund may invest in lower quality, high-yielding debt securities, including
high-yielding foreign debt securities (commonly referred to as "junk bonds")
which are (i) rated as low as Baa by Moody's (Global Real Estate Fund) or CCC
by S&P or Caa by Moody's or (ii) unrated. Lower rated and unrated debt
securities have some "equity" characteristics and are considered speculative
and involve greater risk of loss than higher rated debt securities and are
more sensitive to changes in the financial condition of their issuers and to
price fluctuations in response to changes in interest
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rates. Lower rated debt securities present a significantly greater risk of
default than do higher rated securities and, in times of poor business or
economic conditions, the Funds may lose interest and/or principal on such
securities.
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.
PRECIOUS METALS
Global Hard Assets Fund, Gold/Resources Fund and International Investors Gold
Fund, may invest in precious metal coins, which have no numismatic value, and
bullion. The value of these coins and bullion is based primarily on their
precious metal content, and the sole source of return would be from gains or
losses realized on their sale. Management believes precious metals investments
could be a potential hedge against inflation, as well as an investment with
possible growth potential. In addition, at the appropriate time, investments
in precious metal coins or bullion could help to moderate fluctuations in the
Funds' portfolio value, as at times the prices of precious metals have tended
not to fluctuate as widely as shares of issuers engaged in the mining of
precious metals. In view of the established world market for precious metals,
the daily value of precious metal coins is readily ascertainable and their
liquidity is assured. The Funds will maintain their precious metal coins and
bullion with Wilmington Trust Company.
Precious metal trading is a speculative activity and its markets at times
volatile. There may be sharp fluctuations in prices, even during periods of
rising prices. Prices of precious metals are affected by factors such as
cyclical economic conditions, political events and monetary policies of
various countries. Under current U.S. tax law, the Funds may not receive more
than 10% of their yearly income from gains resulting from the sale of precious
metals or any other physical commodity. The Funds may be required, therefore,
to hold their precious metals or sell them at a loss, or to sell their
portfolio securities at a gain, when they would not otherwise do so for
investment reasons. The Funds incur additional costs in storing gold bullion
and coins, which are generally higher than custodial costs for securities.
REAL ESTATE SECURITIES
Although Global Hard Assets Fund will not invest in real estate directly, the
Fund may invest up to 50% of its assets in equity securities of real estate
investment trusts ("REITs") and other real estate industry companies or
companies with substantial real estate investments. The Fund is therefore
subject to certain risks associated with the real estate industry in general
and REITs in particular. See "Investment Objectives and Policies--Global Real
Estate Fund" above and "Real Estate Securities" in the Statement of Additional
Information.
REPURCHASE AGREEMENTS
In a repurchase agreement, a Fund acquires a security for a relatively short
period, and simultaneously agrees to sell it back at an agreed upon price and
time. The agreement results in a fixed rate of return that is not
33
<PAGE>
subject to market fluctuations during the Fund's holding period. The Funds
will enter into repurchase agreements with respect to securities in which they
may invest with member banks of the Federal Reserve System or certain non-bank
dealers. Under each repurchase agreement, the selling institution will be
required to maintain the value of the securities subject to the repurchase
agreement at not less than their repurchase price. Repurchase agreements could
involve certain risks in the event of default or insolvency of the other
party. The Adviser (or Sub-Adviser), acting under the supervision of the Board
of Trustees, reviews the creditworthiness of those non-bank dealers with which
the Funds enter into repurchase agreements to evaluate these risks.
SHORT SALES
Global Hard Assets Fund and Global Real Estate Fund may make short sales of
equity securities. A short sale occurs when the Fund sells a security which it
does not own by borrowing it from a broker. In the event that the value of the
security that the Fund sold short declines, the Fund will gain as it
repurchases the security in the market at the lower price. If the price of the
security increases, the Fund will suffer a loss as it will have to repurchase
the security at the higher price. Short sales may incur higher transaction
costs than regular securities transactions.
The Funds will maintain in a segregated account cash not available for
investment, U.S. Government securities or other liquid, high-quality
securities having a value equal to the difference between (i) the market the
securities sold short at the time they were sold short and (ii) any collateral
required to be deposited with the broker in connection with the short sale
(not including the proceeds from the short sale). The account will be marked
to market daily, so that (i) the amount in the segregated account plus the
amount deposited with the broker as collateral equals the current market value
of the securities sold short and (ii) in no event will the amount in the
segregated account plus the amount deposited with the broker as collateral
fall below the original value of the securities at the time they were sold
short. The total value of the assets deposited as collateral with the broker
and deposited in the segregated account will not exceed 50% of the Global Hard
Assets Fund's net assets or 25% of Global Real Estate Fund's net assets. With
respect to Global Real Estate Fund, the value of securities of any one issuer
sold short will constitute no more than 5% of the Fund's net assets or no more
than 2% of the issuer's outstanding class of securities.
YEAR 2000
Like other mutual funds, financial and business organizations and individuals
around the world, each of the Funds could be adversely affected if the
computer systems used by the Adviser, and other service providers (including
the Sub-Adviser) do not properly process and calculate date-related
information from and after January 1, 2000. This is commonly known as the
"Year 2000 Problem." The Adviser is taking steps that it believes are
reasonably designed to address the Year 2000 Problem with respect to the
computer systems that it uses and to obtain satisfactory assurances that
comparable steps are being taken by each of the Funds' other major service
providers. At this time, however, there can be no assurance that these steps
will be sufficient to avoid any adverse impact on the Funds.
34
<PAGE>
LIMITING INVESTMENT RISKS
While an investment in any of the Funds is not without risk, each Fund follows
certain policies in managing its investments which may help to reduce risk.
Certain of these policies are deemed fundamental and may not be changed
without shareholder approval. The following are some of the more significant
investment limitations:
INTERNATIONAL INVESTORS GOLD FUND
The following apply to International Investors Gold Fund only:
1. The Fund will not invest more than 5% of the value of its total assets
in securities of any one issuer (other than the United States
Government).
2. The Fund will not acquire more than 10% of the outstanding or voting
securities of any one company.
3. The Fund will not invest in the securities of investment companies,
except by purchases in the open market where no commission or profit to
a sponsor or dealer results from such purchases (other than the
customary brokers' commissions) and then not in excess of 10% of total
assets, or except when such purchases, though not made in the open
market, are part of a plan of merger or consolidation.
4. The Fund will not invest more than 5% of total assets in securities of
companies which, including predecessors, do not have a record of at
least three years of continuous operation.
5. The Fund will not borrow money, except temporarily for extraordinary
purposes, in which case such borrowings shall not exceed 10% of total
assets (valued at cost).
ASIA DYNASTY FUND, EMERGING MARKETS FUND, GLOBAL BALANCED FUND, GLOBAL HARD
ASSETS FUND, GLOBAL REAL ESTATE FUND, GOLD/RESOURCES FUND AND U.S. GOVERNMENT
MONEY FUND
1. Gold/Resources Fund and U.S. Government Money Fund will not invest more
than 10% and Asia Dynasty Fund, Emerging Markets Fund, Global Balanced
Fund, and Global Hard Assets Fund will not invest more than 15% of the
value of their net assets in securities which are not readily marketable
(including repurchase agreements which mature in more than seven days
and over-the-counter options and over-the-counter foreign currency
options).
2. Asia Dynasty Fund, Global Balanced Fund, Global Hard Assets Fund,
Gold/Resources Fund and U.S. Government Money Fund will not purchase
more than 10% of any class of securities of a company, including more
than 10% of its outstanding voting securities, except that Asia Dynasty
Fund, Global Balanced Fund and Global Hard Assets Fund may purchase more
than 10% of any non-voting class of securities; and Asia Dynasty Fund
and Global Balanced Fund will not invest more than 25% of the value of
their total assets in securities of any one industry. Emerging Markets
Growth Fund will not purchase more than 10% of any class of an issuer's
outstanding voting securities. Global Real Estate Fund will not purchase
more than 10% of any class of a company's outstanding voting securities.
3. The Funds under this heading will not invest more than 10% of their
total assets in securities of other investment companies.
4. Gold/Resources Fund and U.S. Government Money Fund may borrow money for
temporary or emergency purposes in amounts not exceeding 10% of the
value of their total assets valued at cost. These Funds will not
purchase securities for investment while borrowings equaling 5% or more
of their total assets are outstanding.
Further information regarding these and other of the Funds' investment
policies and restrictions is provided in the Statement of Additional
Information.
35
<PAGE>
PURCHASE OF SHARES
Shares of the Funds may be purchased either by (1) ordering the shares through
a "Broker" or "Agent," as defined below, and forwarding a completed
Application or brokerage firm settlement instructions with payment (except for
Investors Fiduciary Trust Company fiduciary retirement accounts, which must be
purchased direct); or (2) completing an Application and mailing it with
payment to the Funds' Transfer Agent and Dividend Paying Agent, DST Systems,
Inc., ("DST"). Payment, made payable to the Van Eck Funds, must be in U.S.
Dollars. Third party checks will not be accepted. Checks drawn on a foreign
bank will not be accepted unless provisions are made for payment in U.S.
Dollars through a U.S. bank. Each Fund reserves the right to reject any
purchase order.
Initial purchases must be in the amount of $1,000 or more per account.
Subsequent purchases must be in the amount of $100 or more. Either minimum may
be reduced or waived by the Funds for pension or retirement plans, for
investment plans calling for periodic investments in shares of the Funds, for
sponsored payroll deduction plans, for split funding or other insurance
purchase plans or in other appropriate circumstances.
Shares of the Funds are sold at the public offering price (net asset value
plus applicable sales charge) next computed after receipt of a purchase order
in proper form, as follows. Generally, orders must be received by DST prior to
the close of business on the New York Stock Exchange, currently 4:00 p.m.,
Eastern Time. Orders mailed to DST, addressed to P.O. Box 418407, Kansas City,
Missouri, 64141, must be deposited in the DST P.O. Box prior to 11:30 a.m.,
Eastern Time, in order to receive the price computed that day. If a
shareholder desires to guarantee a given date of receipt, the order may be
mailed by overnight courier to DST at 210 W. 10th St., 8th Fl., Kansas City,
Missouri, 64105. Do not send mail to DST marked personal and/or confidential
as this may delay the processing of the order. If the Broker or Agent receives
the purchase order before the close of trading on the New York Stock Exchange
and transmits it to the Distributor by 5:00 P.M., Eastern Time, or to DST
through the facilities of the National Securities Clearing Corporation by 8:00
P.M., Eastern Time, the investor will receive the price of that day. If a
Broker or Agent receives an investor's order before the close of trading on
the New York Stock Exchange and fails to transmit it to the Distributor by the
above times, any resulting loss will be borne by the Broker or Agent. Orders
received after the above times will be processed on the next business day.
The net asset value of each Fund is computed once daily, as of the close of
business on the New York Stock Exchange which is normally at 4:00 P.M.,
Eastern Time, on each business day, Monday through Friday, exclusive of
national business holidays. The assets of the Funds (except U.S. Government
Money Fund) are valued at market or, if market value is not ascertainable, at
fair value as determined in good faith by the Board of Trustees. The assets of
U.S. Government Money Fund are valued on the basis of amortized cost, which
involves valuing a portfolio security at its cost initially and, thereafter,
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the security. U.S. Government Money Fund attempts to maintain a constant net
asset value of $1.00 per share; however, there can be no assurance that the
Fund will be able to do so. The Funds may invest in securities or futures
contracts listed or traded on foreign exchanges which trade on Saturdays or
other customary United States national business holidays (i.e., days on which
the Funds are not open for business), and consequently, the net asset values
of shares of the Funds may be significantly affected on days when an investor
has no access to the Funds.
36
<PAGE>
An investor who wishes to purchase shares of more than one Fund must complete
separate Applications for each Fund and remit separate checks to each Fund. If
an investor fails to indicate the Fund to be purchased, the check will be
applied to a purchase of the U.S. Government Money Fund and the investor may
then exchange at current price into the desired Fund.
Certificates for shares of the Funds are issued only upon specific request to
DST. Due to the conversion feature, certificates are not recommended for Class
B or Class C shareholders.
Van Eck Securities Corporation, 99 Park Avenue, New York, New York 10016,
which is a wholly-owned subsidiary of the Adviser, serves as distributor of
the Funds' shares and of shares of Van Eck/Chubb Funds, Inc., together known
as the "Van Eck Global Group" and has entered into Selling Group Agreements
with selected broker-dealers which have agreed to solicit purchasers for
shares of the Funds ("Brokers") and into Selling Agency Agreements with banks
or their subsidiaries which have agreed to act as agent for their customers in
the purchase of shares of the Funds ("Agents"). A bank may be required to
register as a broker-dealer pursuant to state law.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares of the Funds (except for U.S. Government Money Fund) may be purchased
under any one or all of the following arrangements:
(i) with an initial sales charge imposed at the time of purchase ("CLASS A
SHARES");
(ii) with a contingent deferred sales charge imposed at the time of
redemption if such redemption is within six years of the initial
purchase ("CLASS B SHARES"); or
(iii) with a redemption charge imposed at the time of redemption if such
redemption is within 12 months of the initial purchase ("CLASS C
SHARES").
With respect to each class of shares (except for International Investors Gold
Fund A), an ongoing asset-based fee for distribution and services (12b-1 fee)
is charged. The distribution services fee applicable to Class B and C shares
will be higher than that applicable to Class A shares. Class B and Class C
shares convert automatically to Class A shares after eight years. See
"Conversion Feature" below.
The alternative purchase arrangements permit an investor to choose the method
of purchasing shares that is more beneficial given the amount of the purchase,
the length of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the anticipated life
of their investment in the Fund, the accumulated distribution services fee
and, in the case of the Class B shares the contingent deferred sale charge, or
in the case of the Class C shares the redemption charge, would be less than
the initial sales charge and accumulated distribution services fee on Class A
shares. To assist investors in making this determination, the table under the
caption "Transaction Data" on page 3 sets forth examples of the charges
applicable to each class of shares. In this regard, Class A shares will
normally be more beneficial to the investor who qualifies for a reduced
initial sales charge. It is the sole responsibility of the investor, and his
or her Broker or Agent, to determine which sales charge alternative is most
advantageous.
Class A shares incur an initial sales charge when they are purchased and enjoy
the benefit of not being subject to any sales or redemption charge when they
are redeemed. Certain purchases of Class A shares qualify for reduced initial
sales charges. Class A shares are subject to an ongoing distribution and
services fee at an annual rate of up to .50% of the Fund's aggregate daily net
assets attributable to the Class A shares (See "Plan of
37
<PAGE>
Distribution"). Because Class A shares are subject to a lower distribution and
services fee, they pay correspondingly higher dividends per share and can be
expected to have a higher return per share than Class B and C shares. However,
because initial sales charges are deducted at the time of purchase, investors
do not have all their money invested initially and, therefore, would initially
own fewer shares. Investors not qualifying for reduced initial sales charges
who expect to maintain their investment for an extended period of time might
consider purchasing Class A shares because the accumulated distribution
charges on Class B or C shares may exceed the initial sales charge on Class A
shares during the life of the investment.
Class B and Class C shares do not incur a sales charge when they are
purchased, but Class B shares are subject to a sales charge if they are
redeemed within six years of purchase and Class C shares are subject to a
redemption charge if they are redeemed within one year of purchase. Class B
and Class C shares are subject to an ongoing distribution and services fee at
an annual rate of up to 1% of the Fund's aggregate average daily net assets
attributable to that Class of shares (see "Plan of Distribution"). Class B and
Class C shares enjoy the benefit of permitting all of the investor's dollars
to work from the time the investment is made. The higher ongoing distribution
and services fee paid by Class B and Class C shares will cause such shares to
have a higher expense ratio, pay lower dividends and have a lower return than
those of Class A shares. Class B and Class C shares will automatically convert
to Class A shares eight years after the end of the calendar month in which the
shareholder's order to purchase was accepted, in the circumstances and subject
to the qualifications described in this Prospectus. The purpose of the
conversion feature is to relieve the holder of the Class B and Class C shares
that have been outstanding for a period of time sufficient for the Distributor
to have been compensated for distribution expenses from the continuing burden
of such distribution-related expenses over an open-ended period of time. See
"Conversion Feature," below. Some investors might determine that it would be
more advantageous to purchase Class B or C shares in order to have all their
money invested initially, although remaining subject to higher distribution
charges and, in the case of Class B shares, for a six-year period being
subject to a contingent deferred sales charge, or, in the case of Class C
shares, for a one-year period being subject to a redemption charge.
The distribution expenses incurred by the Fund or its Distributor in
connection with the sale of Fund shares will be paid, in the case of Class B
and Class C shares, from the proceeds of the ongoing distribution and services
fee and the contingent deferred sales or redemption charge incurred upon
redemption within applicable time periods. (See tables of sales charges
below.) Sales personnel of Brokers and Agents distributing the Fund's shares
may receive differing compensation from selling Class A, Class B or Class C
shares. Investors should understand that the purpose and function of the
contingent deferred sales charge or redemption charge and ongoing distribution
and services fees with respect to the Class B and Class C shares are the same
as those of the initial sales charge and ongoing distribution and services fee
with respect to the Class A shares.
CONVERSION FEATURE. Eight years after the end of the month in which the
shareholder's order to purchase Class B or Class C shares was accepted, such
shares will automatically convert to Class A shares and will no longer be
subject to the higher distribution and services fees. This conversion will be
on the basis of the relative net asset values of the two Classes, without the
imposition of any sales load, fee or other charge. The purpose of the
conversion feature is to relieve the holder of Class B and Class C shares from
most of the burden of distribution-related expenses for shares that have been
outstanding for a period of time sufficient for the Fund or its Distributor to
have been compensated for such expenses.
For purposes of conversion to Class A shares, shares purchased through the
reinvestment of dividends and distributions paid in respect to Class B or
Class C shares in a shareholder's Fund account will convert in a proportionate
amount to the non-reinvestment shares converted.
38
<PAGE>
The conversion of Class B or Class C shares to Class A shares is subject to
the continuing availability of an opinion of counsel to the effect that (i)
the assessment of the higher distribution services fee and transfer agency
costs with respect to Class B or Class C shares does not result in the Fund's
dividends or distributions constituting "preferential dividends" under the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) the
conversion of shares does not constitute a taxable event under federal income
tax law. The conversion of Class B or Class C shares to Class A shares may be
suspended if such an opinion is no longer available. In that event, no further
conversions of Class B or Class C shares would occur, and shares might
continue to be subject to the higher distribution services fee for an
indefinite period which may extend beyond the period ending eight years after
the end of the month in which the shareholder's order to purchase was
accepted.
SALES CHARGES, DISTRIBUTION AND SERVICE FEES
Sales charges on purchases of shares of each of the Funds are set forth in the
tables below. Each Fund (except for International Investors Gold Fund-A)
imposes a 12b-1 distribution and services fee. Class A shares of Asia Dynasty
Fund, Global Balanced Fund, Emerging Markets Growth Fund, Global Hard Assets
Fund and Global Real Estate Fund have a 12b-1 fee of .50% of average daily net
assets per annum. Shares of Gold/Resources Fund-A and U.S. Government Money
Fund have a 12b-1 fee of .25 of 1% of average daily net assets per annum. All
or a portion of these fees may be paid to banks, brokers and dealers for their
shareholder servicing, promotion or distribution activities, as determined
from time to time by the Funds.
Holders of Class B and Class C Funds should be aware that dividends reinvested
in new shares of the Fund will continue to be assessed the full 12b-1 fee,
including that portion which is retained by the Distributor. Each Fund's Class
B and/or Class C shares imposes a 12b-1 fee of 1% of average daily net assets.
Of the 1% paid by the Fund, a portion will be retained by the Distributor and
up to .75 of 1% may be paid to Brokers and Agents for distribution and up to
.25 of 1% for servicing. The portion retained by the Distributor is in payment
for distribution expenses. The Distributor may vary the portion retained by it
from time to time, but the amount payable by the Fund will not exceed 1%. The
Distributor will monitor payments under the Plans and will reduce such
payments or take such other steps as may be necessary, including payments from
its own resources, to assure that Plan payments will be consistent with the
applicable rules of the National Association of Securities Dealers, Inc.
THERE IS NO SALES CHARGE ON PURCHASES OF U.S. GOVERNMENT MONEY FUND. However,
the Fund pays the Distributor a fee for promotion and distribution services.
See "Plan of Distribution" below.
39
<PAGE>
CLASS A
(GOLD/RESOURCES FUND AND INTERNATIONAL INVESTORS GOLD FUND)
<TABLE>
<CAPTION>
SALES CHARGE AS A DISCOUNT TO
PERCENTAGE OF BROKER OR AGENTS
------------------- AS A PERCENTAGE
OFFERING NET AMOUNT OF THE
DOLLAR AMOUNT OF PURCHASE PRICE INVESTED OFFERING PRICE*
- ------------------------- -------- ---------- -----------------
<S> <C> <C> <C>
Less than $25,000......................... 5.75% 6.1% 4.75%
$25,000 to less than $50,000.............. 5.00% 5.3% 4.00%
$50,000 to less than $100,000............. 4.50% 4.7% 3.60%
$100,000 to less than $250,000............ 3.00% 3.1% 2.40%
$250,000 to less than $500,000............ 2.50% 2.6% 2.00%
$500,000 to less than $1,000,000.......... 2.00% 2.0% 1.60%
$1,000,000 and over....................... None**
(ASIA DYNASTY FUND, EMERGING MARKETS GROWTH FUND, GLOBAL BALANCED FUND, GLOBAL
HARD ASSETS FUND AND GLOBAL REAL ESTATE FUND)
<CAPTION>
SALES CHARGE AS A DISCOUNT TO
PERCENTAGE OF BROKERS OR AGENTS
------------------- AS A PERCENTAGE
OFFERING NET AMOUNT OF THE
DOLLAR AMOUNT OF PURCHASE PRICE INVESTED OFFERING PRICE*
- ------------------------- -------- ---------- -----------------
<S> <C> <C> <C>
Less than $100,000........................ 4.75% 5.0% 4.00%
$100,000 to less than $250,000............ 3.75% 3.9% 3.15%
$250,000 to less than $500,000............ 2.50% 2.6% 2.00%
$500,000 to less than $1,000,000.......... 2.00% 2.0% 1.65%
$1,000,000 and over....................... None**
</TABLE>
CLASS B***+
(ASIA DYNASTY FUND, EMERGING MARKETS GROWTH FUND, GLOBAL BALANCED FUND, GLOBAL
HARD ASSETS FUND AND GLOBAL REAL ESTATE FUND)
<TABLE>
<CAPTION>
SHAREHOLDER'S TIME OF REDEMPTION CONTINGENT DEFERRED SALES CHARGE
- -------------------------------- --------------------------------
<S> <C>
During Year One.................... 5.0% of the lesser of NAV or purchase price
During Year Two.................... 4.0% of the lesser of NAV or purchase price
During Year Three.................. 4.0% of the lesser of NAV or purchase price
During Year Four................... 3.0% of the lesser of NAV or purchase price
During Year Five................... 2.0% of the lesser of NAV or purchase price
During Year Six.................... 1.0% of the lesser of NAV or purchase price
Thereafter......................... None
</TABLE>
CLASS C***
(EMERGING MARKETS GROWTH FUND, GLOBAL HARD ASSETS FUND AND GLOBAL REAL ESTATE
FUND)
<TABLE>
<CAPTION>
SHAREHOLDER'S TIME OF REDEMPTION CONTINGENT DEFERRED REDEMPTION CHARGE
- -------------------------------- -------------------------------------
<S> <C>
During Year One.................... 1.0% of the lesser of NAV or purchase price
Thereafter......................... None
</TABLE>
40
<PAGE>
- --------
* Brokers or Agents who receive substantially all of the sales charge for
shares they sell may be deemed to be statutory underwriters.
** For any single purchase of $1,000,000 or more of Class A shares the
Distributor may pay a finder's fee to parties eligible to receive such a
fee. The fee will be paid during the first two years after any such
purchase and is calculated as a quarterly payment equal to 0.0625% (.25% on
an annual basis) of the average daily net asset value of the shares
purchased that remain outstanding throughout such months. An eligible
purchase is a single purchase for a single client (purchases for other
clients cannot be aggregated for purposes of qualification for the finder's
fee). Eligible purchases registered to a street or nominee name account
must provide appropriate verification of eligibility and average daily net
assets upon which payment is to be made. Purchases made through a bank
trust department, advisory firm or special program, as determined by the
Distributor, which purchases shares at net asset value do not qualify for
the finder's fee. The finder's fee will be credited to the dealer of record
on the record date (currently, the last calendar day of February, May,
August and November) and will be generally paid on the 20th day of the
following month. Please contact the Distributor to determine eligibility to
receive such fee.
*** Brokers or Agents who sell Class B shares receive a sales commission of
4.0% of the value of the shares sold at the time of investment. Brokers or
Agents who sell Class C shares receive a distribution and a servicing fee
of .75 of 1% and .25 of 1%, respectively, of the value of the shares sold
at the time of investment (see "Plan of Distribution"). The Distributor
may alter these amounts.
+ Shares purchased prior to April 30, 1997 remain subject to the contingent
deferred sales charge schedule in effect at the time of purchase.
- --------
- --------
Brokers and Agents may receive different compensation for selling Class A,
Class B or Class C shares.
The Class A initial sales charges vary depending on the amount of the
purchase, the number of shares of the Van Eck Group of Funds which are
eligible for the Right of Accumulation that an investor already owns, a Letter
of Intent to purchase additional shares during a 13-month period, or other
special purchase or promotional programs. See "Group Purchases," "Combined
Purchases," "Letter of Intent" and "Right of Accumulation" below.
The contingent deferred sales charge on Class B and the redemption charge on
Class C is waived on redemptions of shares following the death or disability
of a Class B or Class C shareholder. An individual will be considered disabled
for this purpose if he or she meets the definition thereof in Section 72(m)(7)
of the Internal Revenue Code. The Distributor will require satisfactory proof
of death or disability. The charge may be waived where the decedent or
disabled person is either an individual shareholder or owns the shares with
his or her spouse as a joint tenant with right of survivorship, and where the
redemption is made within one year of the death or initial determination of
disability. The waiver of the charge applies to a total or partial redemption
but only to those shares held at the time of the death or initial
determination of disability. Additionally, the charge may be waived when a
total or partial redemption is made in connection with certain distributions
from retirement plans. The charge may be waived for any redemption in
connection with a lump-sum or other distribution following retirement or, in
the case of an IRA or Keogh Plan or custodial account pursuant to Section
403(b) of the Code, after attaining age 70 1/2 or, in the case of a qualified
pension or profit-sharing plan, after termination of employment after age 55.
The charge also may be waived on any redemption which results from the tax-
free return of an excess contribution pursuant to Section 408(d)(4) or (5) of
the Code, the return of excess deferral amounts pursuant to Sections 401(k)(8)
or 402(g) of the Code, or from the death or disability of the employee. The
charge is not waived from any distributions from IRAs or other qualified
retirement plans not specifically described above. A shareholder, or the
Broker or Agent, must notify DST at the
41
<PAGE>
time the redemption instructions are provided whenever a waiver of the
contingent deferred sales charge or redemption charge applies.
Shares of the Funds may be purchased without a sales charge (i) by present and
retired Trustees, officers and full-time employees (and their parents,
grandparents, siblings, spouses, children and dependents) and agents of the
Funds, the Adviser or the Distributor and their affiliates and agents, (ii) by
employees of Brokers or Agents (and their spouses and children under the age
of 21), (iii) in connection with a merger or other business combination, or
(iv) by the Adviser for the benefit of certain discretionary advisory accounts
it manages meeting minimum asset requirements. Shares may also be purchased at
net asset value (a) (i) through an investment adviser who makes such purchases
through a broker/dealer, bank or trust company (each of which may impose
transaction fees on the purchase), (ii) by an investment adviser for its own
account or for a bona fide advisory account over which the investment adviser
has investment discretion or (iii) through a financial planner who charges a
fee and makes such purchases through a financial institution which maintains a
net asset value purchase program that enables the Distributor to realize
certain economies of scale or (b) through bank trust departments or a trust
company on behalf of bona fide trust or fiduciary accounts by notifying the
Distributor in advance of purchase. A bona fide advisory, trust or fiduciary
account is one which is charged an asset-based fee and whose purpose is other
than purchase of Fund shares at net asset value.
Shares may be purchased at net asset value on behalf of retirement and
deferred compensation plans and trusts funding such plans (excluding
Individual Retirement Accounts ("IRAs") and SEP-IRAs unless they qualify for
such purchase under one of the prior exceptions) including, but not limited
to, plans and trusts defined in Sections 401(a), 403(b) or 457 of the Internal
Revenue Code and "rabbi trusts" which participate in a program for the
purchase of shares at net asset value offered by a financial institution and
which institution maintains an omnibus account with the Fund. Brokers may
charge a transaction fee for effecting purchases at net asset value or
redemptions. See "Availability of Discounts."
Shares of the Funds which are sold with a sales charge may be purchased by a
foreign bank or other foreign fiduciary account for the benefit of foreign
investors at the sales charge applicable to the Funds' $500,000 breakpoint
level, in lieu of the sales charges in the above scale. The Distributor has
entered into arrangements with foreign financial institutions pursuant to
which such institutions may be compensated by the Distributor from its own
resources for assistance in distributing Fund shares. Clients of Netherlands'
insurance companies who are not U.S. citizens or residents may purchase shares
without a sales charge.
The term "purchase" refers to a single purchase by an individual, to the
aggregate of concurrent purchases by an individual, his spouse and children
under the age of 21, or to a purchase by a corporation, a partnership or a
trustee or other fiduciary for a single trust, estate or fiduciary account.
Class A shares purchased and paid for with the proceeds of shares redeemed in
the past 3 months from a mutual fund (other than a fund managed by the Adviser
or any of its affiliates) on which a sales charge was paid (including Fund
shares purchased by means of an exchange from U.S. Government Money Fund whose
shares were purchased and paid for in this manner) may be purchased at net
asset value, provided that the representative of record is the same for the
Fund account as it was for the other mutual fund account. This waiver must be
requested when the purchase (or exchange) order is placed for shares of the
Fund, and the Distributor may require evidence of the investor's qualification
for this waiver.
In addition to the discounts allowed to Brokers and Agents, the Distributor
may, at its own expense, subject to applicable laws, provide additional
promotional incentives or payments in the form of merchandise (including
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luxury merchandise) or trips (including trips to luxury resorts at exotic
locations or attendance at seminars/conferences at luxury resorts) to Brokers
or Agents that sell shares of the Funds. In some instances, these incentives
or payments will be offered only to certain Brokers or Agents who have sold or
may sell significant amounts of shares. Brokers and Agents who receive
additional concessions may be deemed to be underwriters as that term is
defined in the Securities Act of 1933.
GROUP PURCHASES
An individual who is a member of a qualified group may purchase shares of the
Funds at the reduced commission applicable to the group taken as a whole. The
commission is based upon the aggregate dollar value, at the current offering
price, of shares owned by the group, plus the securities currently being
purchased. For example, if members of the group held $20,000, calculated at
current offering price, of Gold/Resources Fund-A's shares and now were
investing $5,000, the sales charge would be 5.00%. Information concerning the
current sales charge applicable to a group may be obtained by contacting the
Distributor.
A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring a Fund's shares at a discount
and (iii) satisfies uniform criteria which enables the Distributor to realize
economies of scale in its costs of distributing shares. A qualified group must
have more than 10 members, must be available to arrange for group meetings
between representatives of the Distributor and the members of the group, must
agree to include sales and other materials related to the Funds in its
publications and mailings to members at reduced or no cost to the Distributor,
and must seek to arrange the use of the Automatic Investment Plan. See
"Investment Programs" for information concerning the Automatic Investment
Plan.
COMBINED PURCHASES
Shares of funds in the Van Eck Global Group of Funds (except U.S. Government
Money Fund) may be purchased at the initial sales charge applicable to the
quantity purchase levels shown above by combining concurrent purchases.
LETTER OF INTENT
Purchasers who anticipate that they will invest (other than through exchanges)
$100,000 or more in one or more of the funds in the Van Eck Global Group of
Funds (except for U.S. Government Money Fund) (or $25,000 or more in
International Investors Gold Fund and Gold/Resources Fund), within thirteen
months may execute a Letter of Intent on the form in the Application. The
execution of a Letter of Intent will result in the purchaser paying a lower
initial sales charge, at the appropriate quantity purchase level shown above,
on all purchases during a thirteen month period. A purchase not originally
made pursuant to a Letter of Intent may be included under a backdated Letter
of Intent executed within 90 days after such purchase. For further details,
including escrow provisions, see the Letter of Intent provisions in the
Instructions to the Application.
RIGHT OF ACCUMULATION
The above scale of initial sales charges also applies to an investor's current
purchase of shares of any of the funds in the Van Eck Global Group of Funds
(except for U.S. Government Money Fund) where the aggregate value of those
shares plus shares of these funds previously purchased and still owned,
determined at the current offering price, is more than $100,000 (or more than
$25,000 for International Investors Gold Fund and Gold/Resources Fund),
provided the Distributor or DST is notified by the investor or the Broker or
Agent each time a purchase is made which would so qualify. See "Investment
Programs" in the Statement of Additional Information.
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AVAILABILITY OF DISCOUNTS
An investor or the Broker or Agent must notify DST or the Distributor at the
time of purchase whenever a quantity discount or reduced sales charge is
applicable to a purchase. Quantity discounts described above may be modified
or terminated at any time without prior notice.
EXCHANGE PRIVILEGE
The Adviser discourages trading in response to short-term market fluctuations.
Such activity may hinder the Adviser's or Sub-Adviser's ability to invest the
Funds' assets in accordance with their respective investment objectives and
policies, cause a Fund to incur additional brokerage, registration and other
expenses, and may be disadvantageous to other shareholders in either the Fund
being exchanged from or into or both. Shareholders are limited to six
exchanges per calendar year; however, exchanges from International Investors
Gold Fund may be excluded from this limitation if the Fund or Adviser believes
that exclusion will not be materially disadvantageous to other shareholders.
For purposes of determining the number of exchanges made per calendar year,
Fund accounts having the same beneficial owner or under common control will be
aggregated. This exchange limitation does not apply to U.S. Government Money
Fund. The Adviser may impose other restrictions on trading in Fund shares in
response to short-term market fluctuations. Active shareholders should consult
the Fund as to current policy.
Each Fund reserves the right to modify or terminate the Exchange Privilege of
the Fund or of any shareholder or to limit or reject any exchange. Although
each Fund will attempt to give shareholders prior notice whenever it is
reasonable to do so, it may impose these restrictions at any time when it
deems it to be in the best interest of remaining shareholders. If the exchange
is rejected, shareholders will nevertheless be able to redeem their shares.
Shareholders of funds in the Van Eck Global Group of Funds may exchange
shares, at net asset value, for shares of the same Class of any of the other
funds. Shares of U.S. Government Money Fund acquired other than pursuant to
the Exchange Privilege may only be exchanged into Class A shares, subject to
payment of the applicable sales charge. For federal income tax purposes, any
exchange pursuant to the Exchange Privilege, other than exchanges in
retirement plans offered by the Funds, will be regarded as a sale of shares,
and any gain or loss must generally be recognized by the shareholder.
Class B or C shares exchanged for Class B or C shares of another fund with a
different contingent deferred sales charge or redemption charge schedule will
be subject to the contingent deferred sales charge or redemption charge
applicable to the original purchase.
Each Fund has the ability to redeem its shares in kind. Each Fund will pay in
cash all requests for redemption by any shareholder of record limited in
amount with respect to each shareholder of record during any ninety-day period
to the lesser of (i) $250,000 or (ii) 1% of the net asset value of such Fund
at the beginning of such period. See "Exchange Privilege" and "Redemptions in
Kind" in the Statement of Additional Information.
WRITTEN EXCHANGE
Shareholders wishing to exchange shares may do so by sending to DST a written
request in proper form signed by all registered owners exactly as the account
is registered, specifying the number of shares or amount of investment to be
exchanged (or that all shares credited to a fund account be exchanged), along
with
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appropriate documentation, if necessary. Exchanges are only available in
states where purchases may legally be made. All persons authorized to sign on
behalf of joint owners, corporations, trusts, custodians, or other
organizations must supply appropriate evidence of the authority of each
signatory with each written request. Written exchange requests in proper order
will be executed on the day of receipt (or, if that is not a business day of
the Fund, on the next business day following receipt). Written exchange
requests may be sent to Van Eck Funds, c/o DST, either by regular mail to:
P.O. Box 418407, Kansas City, MO 64141, or by overnight courier to: 210 W.
10th St., 8th Floor, Kansas City, MO 64105.
TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGES
Completion of the Account Application or receipt of settlement instructions
from a Broker or Agent for an eligible account shall constitute an election by
the investor to have available the Telephone Exchange Privilege and, except
for retirement plan accounts, the Telephone Redemption Privilege, unless
otherwise indicated. By electing one or both of the Privileges, the investor
is authorizing each Fund, its agents and affiliates to act on any instructions
they believe to be genuine. Each Fund, its agents and affiliates will employ
reasonable procedures, described below, to confirm the authenticity of these
communications and cannot be responsible for the authenticity of any telephone
instructions nor will they be liable for any loss or expenses resulting from
acting on any instructions, including those which are fraudulent and those not
authorized by the investor, unless they fail to employ these procedures.
Shareholders that elected NOT to establish the Telephone Exchange Privilege or
the Telephone Redemption Privilege on their accounts may later establish the
privilege by written request, signed by all registered owners on the account
and with appropriate documentation, as necessary.
The Telephone Exchange Privilege may not be available to accounts held by a
brokerage firm in street name and participants in retirement plans sponsored
by organizations other than the Trust, and participants in such plans should
consult with their sponsors to determine the availability of the Telephone
Exchange Privilege prior to exercising it.
The Telephone Redemption Privilege is not available to accounts registered in
"street name", nominee or corporate name and custodial accounts held by a
financial institution including Investors Fiduciary Trust Company retirement
accounts.
After acceptance by DST of an Application, a telephone exchange or telephone
redemption may be effected by contacting DST at 1-800-345-8506. Telephone
calls are recorded. Telephone instructions for exchanging or redeeming shares
on deposit with DST may be given by anyone claiming to be the shareholder, the
Broker or Agent of record, or an authorized representative of any of the
foregoing [the caller must identify his/her name and relationship to the
account] and will be executed only if they include the correct social security
number, tax identification number or account number. Telephone instructions
accepted after the close of business on the New York Stock Exchange will not
be effected until the following business day (see "Purchase of Shares"). In
the case of joint or multiple owners, one owner's call may effect the
telephone exchange or redemption.
If the exchanging shareholder does not have an account in the Fund into which
he/she is exchanging, a new account will be established with the same
registration, dividend and capital gain options, and dealer of record
specified in the shareholder's account in the existing Fund. In order to
establish an Automatic Withdrawal or Automatic Investment Plan or other
options for the new account, an exchanging shareholder must make the request
at the time of exchange and may be required to file an application which can
be obtained from DST or the Fund.
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For accounts with the Telephone Redemption Privilege, telephone redemption
requests will only be accepted if the shares are held on deposit, if the
amount of the request is $50,000 or less per day and if the check is payable
to the shareholder(s) and sent to the address of record. A telephone
redemption will not be accepted if a change to the registered address has been
effected within one month of such request.
Because of unusual market conditions it may be difficult and/or impossible to
contact DST to effect the exchange or redemption. Shareholders should continue
to try to contact DST by telephone at the above telephone number or may
deliver written instructions by post or courier.
The Funds reserve the right to refuse a request for the Telephone Redemption
or Exchange Privilege without prior notice either during or after the call.
The Funds reserve the right to modify or terminate the Exchange Privilege at
any time. Shareholders may remove the Telephone Redemption or Telephone
Exchange Privilege by written notice effective within 3 business days of
receipt by DST. See "Exchange Privilege" in the Statement of Additional
Information.
TAX-SHELTERED RETIREMENT PLANS
Shares of the Funds are available for purchase in connection with the
following tax-sheltered retirement plans:
INDIVIDUAL RETIREMENT ACCOUNT AND SPOUSAL INDIVIDUAL RETIREMENT ACCOUNT
("IRA/SPIRA")--available to anyone who has earned income. Investments may also
be made in the name of a spouse, if the spouse is treated as having no earned
income.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP")--available to employers, including
self-employed individuals, seeking to provide retirement income to employees
through employer contributions or salary reduction contributions to employee
individual retirement accounts.
QUALIFIED PENSION PLAN--available to self-employed individuals, partnerships,
corporations and their employees.
403(B)(7) PROGRAM--available to employees of certain tax exempt organizations
and schools. See "Tax Sheltered Retirement Plans" in the Statement of
Additional Information. In addition, information concerning these plans is
available from the Funds. This information should be read carefully and
consultation with an attorney or tax adviser is advisable.
INVESTMENT PROGRAMS
DIVIDEND REINVESTMENT PLAN
Unless a shareholder has given notice to DST (the Funds' dividend paying
agent), either directly, or through a Broker or Agent, that dividends and
capital gains distributions of a Fund should be paid in cash, dividends and
capital gains distributions will be reinvested in shares of that Fund at net
asset value without a sales charge. Reinvestments of dividends and capital
gains distributions on shares of the Funds will occur on a date selected by
the Board of Trustees.
In addition, dividends and capital gains distributions paid by the Funds
(except Class B and C shares) in cash may be automatically invested at net
asset value on the payable date in Class A shares of any fund in the Van Eck
Global Group of Funds. A shareholder wishing to exercise this option should
contact DST for instructions.
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AUTOMATIC INVESTMENT PLAN
The Funds offer to investors a program for regularly investing specified
dollar amounts in a Fund. In establishing the Automatic Investment Plan, an
investor authorizes DST to collect a specified amount from his or her checking
account and use the proceeds to purchase shares of a Fund for the investor's
account. Further details of the Automatic Investment Plan are given in an
application which is available from DST or the Distributor. See "Investment
Programs" in the Statement of Additional Information.
AUTOMATIC EXCHANGE PLAN
The Funds offer a program for regularly exchanging a specified dollar amount
from one fund to another fund in the Van Eck Global Group of Funds (except
Class B and C shares). In establishing the Automatic Exchange Plan, an
investor authorizes DST to regularly exchange a specified amount from, and
purchase shares of, another fund in the Van Eck Global Group. Further details
of the Automatic Exchange Plan are given in an application which is available
from DST or the Fund. See "Investment Programs" in the Statement of Additional
Information.
AUTOMATIC WITHDRAWAL PLAN
Any shareholder who owns shares of a Fund valued at $10,000 or more at current
offering price may establish an Automatic Withdrawal Plan under which he or
she will receive a monthly or quarterly check in a specified amount. The Plan
is not available to Class B and C shareholders. Further details on the
Automatic Withdrawal Plan are given in an application which is available from
DST or the Fund. See "Investment Programs" in the Statement of Additional
Information.
REDEMPTION OF SHARES
The market value of the securities in the portfolio of each Fund other than
U.S. Government Money Fund is subject to daily fluctuations and the net asset
value of the Funds' shares will fluctuate accordingly. U.S. Government Money
Fund attempts to maintain a constant net asset value of $1.00 per share;
however there can be no assurance that the Fund will be able to do so.
Therefore, the Funds' redemption value may be more or less than the
shareholder's cost. (See "Purchase of Shares.")
Except as noted, payment will normally be made within three days after
delivery of a proper redemption request except for such delays as may be
permitted under applicable law or rule. If shares of any Fund to be redeemed
were purchased by check, the Trust reserves the right to make payment on such
redemption request only after it has assured itself that the check has been
cleared for payment, which may take as long as 15 days. No interest will
accrue on uncashed redemption checks.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed (other than customary
weekend and holiday closings) or trading on that Exchange is restricted as
determined by the applicable rules and regulations of the Securities and
Exchange Commission; or during an emergency, as determined by the Securities
and Exchange Commission, as a result of which it is not reasonably practical
for the Funds to dispose of the securities owned by them or to determine
fairly their net asset values; or for any period that the Securities and
Exchange Commission may by order permit for the protection of shareholders of
the Funds.
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The Funds reserve the right to redeem shares of a Fund and mail the proceeds
to a shareholder if, at any time, the number of shares in a shareholder's
account falls, subsequent to satisfying the initial investment requirement,
below a specified amount, currently 50 shares. Shareholders will be notified
and will have 30 days to bring the number of shares owned by them up to the
required amount before any redemption is made by that Fund.
WRITTEN REDEMPTION
A shareholder wishing to redeem shares of any of the Funds may do so by
sending to DST, P.O. Box 418407, Kansas City, Missouri 64141: (1) a written
request for redemption in proper form signed by all registered owners exactly
as the account is registered, specifying the number of shares or amount of
investment to be redeemed (or that all shares credited to a Fund account be
redeemed); (2) if the amount redeemed is $50,000 or more, or if the proceeds
of redemption are paid to other than the registered owner of the shares at the
address on record at DST, a guarantee of the signature of each registered
owner by an eligible guarantor institution (such as a broker-dealer or bank; a
notarization by a notary public is not acceptable); and (3) any additional
documents concerning authority and related matters in the case of estates,
trusts, guardianships, custodianships, partnerships and corporations (e.g.,
appointments as executor or administrator, trust instruments or certificates
of corporate authority) requested by DST. If the shares to be redeemed were
issued in certificate form, the certificates must be endorsed for transfer (or
be accompanied by an endorsement) and must be submitted with the written
request for redemption. The requirement for a signature guarantee is waived
for redemptions of $50,000 or less if the redemption is a transfer of assets
from an IFTC held retirement plan in one of the funds in the Van Eck Global
Group of Funds to a retirement plan held by another recognized
custodian/trustee. For additional mailing instructions to DST and times of
processing, see "Purchase of Shares."
TELEPHONE REDEMPTION (SEE "TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGES"
ABOVE)
BROKER/AGENT CONFIRMED REDEMPTION
For the convenience of shareholders, the Funds (except U.S. Government Money
Fund) have authorized the Distributor as agent to accept confirmed orders only
from Brokers and Agents for the redemption of shares of the Funds. If a
shareholder uses the services of a Broker or Agent in effecting a redemption
of shares, the Broker or Agent may charge a fee for its services. The
redemption price is the net asset value per share next determined after the
redemption order is received by the Broker or Agent prior to the close of
business on the New York Stock Exchange on the day received. Brokers and
Agents have the responsibility of submitting such redemption orders to the
Distributor not later than 5:00 p.m., Eastern Time, or to DST through the
facilities of the National Securities Clearing Corporation by 8:00 p.m.,
Eastern Time, on such day in order to obtain that day's applicable redemption
price. Settlement of confirmed orders from accounts will not be effected until
receipt of instructions in proper form (including any share certificates) as
described above or an indemnity from the Broker or Agent of record on the
account. Some Brokers or Agents may have self-imposed restrictions regarding
the submission of confirmed redemption orders on behalf of shareholders. See
"Purchase of Shares" for DST's times of processing.
EXPEDITED REDEMPTION
Requests for Expedited Redemption of shares of any of the Funds in the Van Eck
Global Group of Funds may be made by telephone, telegram, other wire
communication or by letter upon completion of the Expedited Redemption portion
of the Account Application. Shareholders redeeming a minimum of at least
$1,000 of shares
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which are on deposit with DST may redeem by telephoning DST at 1-800-345-8506.
The Fund and/or DST reserve the right to refuse telephone requests at any
time. Proceeds of redeemed shares will be transmitted by wire to the
shareholder's bank account designated on the Application (which must be at a
domestic commercial bank which is a member of the Federal Reserve System). The
wire cost involved may automatically be deducted from the amount wired,
although the Funds are currently waiving such cost. Shareholders may contact
DST for additional information concerning an Expedited Redemption. Due to
unusual market conditions it may be difficult or impossible to contact DST to
effect the redemption. Shareholders should continue to try to contact DST by
telephone at the above telephone numbers or may deliver written instructions
by post or courier. See "Expedited Redemption" in the Statement of Additional
Information.
REDEMPTION BY CHECK
Shareholders of Global Balanced Fund-A and U.S. Government Money Fund may,
upon completion of the "Redemption by Check" portion of the Application, elect
to redeem by check shares of the Fund which are on deposit with DST. These
checks, which are drawn on The United Missouri Bank of Kansas City (the
"Bank") may be made payable to the order of any person and may not be drawn
for less than $250 or more than $5,000,000. Checks drawn on a Fund account
(except for U.S. Government Money Fund) may not be in excess of 90% of the net
asset value of the shares in the shareholder's account (excluding for this
purpose the current month's accumulated dividends and shares for which
certificates have been issued). When such a check is presented to the Bank for
payment, the Bank as the shareholders' agent, acting under the authority of
the Redemption by Check procedure, will cause the Fund to redeem a sufficient
number of full and fractional shares to cover the amount of the check. A
shareholder may not write a check to close an account but should follow the
appropriate procedure set forth above. Retirement plan accounts, accounts held
on behalf of minors and accounts with IRS withholding are not eligible for
Redemption by Check. For further information concerning Redemption by Check,
shareholders should contact DST.
BUY-BACK PRIVILEGE
Any shareholder of a Fund (except U.S. Government Money Fund) who redeems
Class A shares (which paid an initial sales charge) of any of the Van Eck
Global Group of Funds has a one-time right to reinvest in Class A shares of
these Funds at net asset value without the payment of a sales charge within 30
days after the redemption. The amount of this reinvestment cannot exceed the
amount of the redemption proceeds and shareholders must inform the Fund or DST
that they are exercising this right at the time of the reinvestment. Although
redemption of shares is normally a taxable event and a gain or a loss must be
recognized, subsequent reinvestment within such 30-day period in the same Fund
is considered a "wash sale" under federal income tax law and no loss on such
redemption may be recognized for federal income tax purposes.
TRANSFER OF OWNERSHIP
To transfer ownership (re-register) all or a portion of shares held in a
shareholder's account, the shareholder must provide a written request with any
certificated shares and any documents concerning authority and related matters
as described above (see "Redemption of Shares") in proper form. Also, the
shareholder should provide a properly certified social security number,
taxpayer identification number, or certification of non-resident alien status
of the new owner at the time of transfer.
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DIVIDENDS AND DISTRIBUTIONS
Asia Dynasty Fund, Emerging Markets Growth Fund, Global Hard Assets Fund,
Global Real Estate Fund and Gold/Resources Fund intend to make distributions
from net investment income in June and December and distribute any net
realized capital gains resulting from the Funds' investment activity annually
in December. Global Balanced Fund and International Investors Gold Fund intend
to pay dividends from net investment income on a quarterly basis in March,
June, September and December and distribute any net realized capital gains
annually in December. U.S. Government Money Fund declares dividends from its
net investment income on each day on which the Fund is open for business and
distributes dividends on the last day of the month. Dividend or capital gain
distributions declared in December but paid in January will be includible in a
shareholder's income as of the record date (usually in December) of such
distributions. Short-term capital gains, if declared, are treated the same as
dividend income. The fiscal year of each of the Funds ends on December 31.
MANAGEMENT
TRUSTEES
The management of the Funds' business and affairs is the responsibility of the
Board of Trustees. For information on the Trustees and officers of the Trust,
see "Trustees and Officers" in the Statement of Additional Information.
INVESTMENT ADVISER
Van Eck Associates Corporation, 99 Park Avenue, New York, NY 10016, or an
affiliate of the Adviser serve as the investment adviser and manager to each
of the Funds pursuant to Advisory Agreements with the Trust. The Adviser or
its affiliate manage or oversee the investment operations of the Funds and
furnish the Funds with a continuous investment program which includes
determining which securities should be bought, sold or held.
Asia Dynasty Fund and Global Balanced Fund each pay the Adviser or its
affiliate a monthly fee at the annual rate of .75% of average daily net
assets. Emerging Markets Growth Fund, Global Hard Assets Fund and Global Real
Estate Fund each pay the Adviser a monthly fee at the annual rate of 1% of
average daily net assets, a portion of which is paid to the Adviser for
accounting and administrative services it provides to the Fund. Gold/Resources
Fund and International Investors Gold Fund each pay the Adviser a monthly fee
at the annual rate of .75 of 1% of the first $500 million of the average daily
net assets of the Fund, .65 of 1% of the next $250 million of the average
daily net assets and .50 of 1% of the average daily net assets in excess of
$750 million. U.S. Government Money Fund pays the Adviser a monthly fee at the
annual rate of .50 of 1% of the first $500 million of average daily net
assets, .40 of 1% of the next $250 million of average daily net assets and
.375 of 1% of average daily net assets in excess of $750 million.
Van Eck Associates Corporation also performs accounting and administrative
services for Asia Dynasty Fund, Global Balanced Fund, Gold/Resources Fund and
International Investors Gold Fund and is paid at an annual rate of .25% of
average daily net assets (Asia Dynasty Fund and Global Balanced Fund) or at an
annual rate of .25% of the first $750 million of each Fund's average daily net
assets and .20% of average daily net assets in excess of $750 million
(Gold/Resources Fund and International Investors Gold Fund).
The Adviser, which has been an investment adviser since 1955, also acts as
investment adviser or sub-investment adviser to other mutual funds registered
with the SEC under the Act and manages or advises managers of portfolios of
pension plans and others.
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John C. van Eck, Chairman and President of the Trust, and members of his
immediate family own 100% of the voting stock of the Adviser. At March 31,
1998, total aggregate assets under management of Van Eck Associates
Corporation were approximately $1.1 billion.
PORTFOLIO MANAGERS
John C. van Eck--Chief Gold Strategist of the gold funds. He is Chairman of
the Adviser and previously served as the Portfolio Manager of International
Investors Gold Fund. Mr. van Eck has over 45 years of investment experience.
Derek S. van Eck--Co-Portfolio Manager of Global Hard Assets Fund. He is the
Director of Global Investments and Executive Vice President of the Adviser.
Mr. van Eck serves as a Trustee and officer of the Trust and a trustee,
officer and/or portfolio manager of other mutual funds advised or sub-advised
by the Adviser.
Gary Greenberg--Co-Portfolio Manager of Asia Dynasty Fund and Portfolio
Manager of Emerging Markets Growth Fund. He is Managing Director and Chief
Investment Officer of Van Eck Global Asset Management (Asia) Limited, and an
officer and/or portfolio manager of other mutual funds advised by Van Eck
Global Asset Management (Asia) Limited. Prior to joining Van Eck, Mr.
Greenberg was Chief Investment Officer and Deputy Managing Director of
Peregrine Asset Management (Hong Kong) Limited (July 1994-February 1998) and
principal and portfolio manager at Wanger Asset Management Company (June 1992-
June 1994).
Gregory Krenzer--Portfolio Manager of U.S. Government Money Fund. He serves as
a research analyst for the Adviser specializing in global fixed income
securities and is the co-portfolio manager of the Worldwide Bond Fund series
of Van Eck Worldwide Insurance Trust.
Lucille Palermo--Portfolio Manager of Gold/Resources Fund and of International
Investors Gold Fund. She is Associate Director, Mining Research of the Adviser
and serves as an officer of other mutual funds advised by the Adviser. Prior
to joining Van Eck, Ms. Palermo was a gold mining analyst at Drexel Burnham
Lambert. Ms. Palermo has over 20 years of experience in the investment
business.
Kevin Reid--Co-Portfolio Manager of Global Hard Assets and Portfolio Manager
of Global Real Estate Fund. He serves as Director of Real Estate Research for
the Adviser and is an officer of the Trust and an officer and/or portfolio
manager of other mutual funds advised by the Adviser. Prior to joining Van
Eck, Mr. Reid was employed by Trammell Crow Co., a real estate company (1988-
August 1993) and was a principal in a private contracting firm (September
1993-1994).
David Semple--Co-Portfolio Manager of Asia Dynasty Fund. He is an Investment
Director of Van Eck Global Asset Management (Asia) Limited. Prior to joining
Van Eck, Mr. Semple was an investment manager with Peregrine Asset Management
(Hong Kong) Limited (February 1997-February 1998), a Regional (Asia)
Strategist or member of the Group Sales area of Peregrine Brokerage Limited
(October 1993-February 1997) and an investment manager at Murray Johnstone, an
investment management company (August 1990-October 1993).
SUB-ADVISER
FII, Two World Trade Center, New York, New York 10048, serves as sub-
investment adviser to the Global Balanced Fund pursuant to a Sub-Investment
Advisory Agreement with the Trust. FII manages the investment operations of
the Global Balanced Fund and furnishes the Fund with a continuous investment
program that includes which securities should be bought, sold or held. The
Adviser manages and administers the business
51
<PAGE>
and affairs of the Fund. As compensation for its services, FII is paid a
monthly fee at an annual rate of .50% of average daily net assets by the
Adviser from the advisory fee it receives from the Fund. FII serves as an
investment adviser to other registered investment companies.
FII is an indirect subsidiary of Fiduciary Trust Company International
("FTCI"). FTCI is a New York State chartered bank specializing in investment
and administration of assets for pensions and other institutional accounts
including individuals and families. FII has access to all of FTCI's investment
infrastructure. FTCI began investing globally in the 1960's and serves its
worldwide investment management and custody clients from offices in New York,
Los Angeles, Miami, Washington, D.C., London, Geneva, Hong Kong and Melbourne.
FTCI has over 60 investment professionals. FTCI has over 30 years of
experience in global management with over $12 billion managed under the global
balanced discipline. As of December 31, 1997, total assets under management by
FII, its parent organization FTCI and its subsidiaries, on behalf of all
clients, amounted to over $38 billion.
FII assigns a team of managers led by a global strategist, which includes a
global equity manager and a global fixed-income manager, to manage the Fund's
portfolio of investments. The team consults with the FTCI research department,
which includes international analysts who specialize in the equity markets of
Japan, Europe, the Pacific Basin and Latin America, when making investment
decisions. The three primary portfolio managers for the Global Balanced Fund
are listed below:
Anne M. Tatlock--FII's Global Strategist of the Fund. She has been serving in
that capacity since the Fund commenced operations. Ms. Tatlock joined FTCI in
1984 and is currently President of the company where she is responsible for
managing institutional investment management. Ms. Tatlock is a member of the
Board of Directors, the Global Investment Committee and the Investment Policy
Committee at FTCI.
Steven J. Miller--FII's Equity Portfolio Manager of the Fund. He joined FTCI
in 1994 after working for seven years with Vital Forsikring and Heller
Financial, Inc. Mr. Miller is responsible for managing institutional and
international portfolios. He is a Senior Vice President of FTCI as well as a
member of the Global Investment Committee and the Investment Policy Committee
at FTCI.
Anthony S. Gould--FII's Fixed Income Portfolio Manager of the Fund. He has
been serving in such capacity since July 1995. Mr. Gould joined FTCI in 1995
following six and a half years at BZW Investment Management, the asset
management subsidiary of the Barclays Group. He is a Senior Vice President of
FTCI where he is responsible for the management of global and international
fixed income portfolios for institutions.
MANAGEMENT DISCUSSION AND ANALYSIS
ASIA DYNASTY FUND
It was an unforgettable and difficult year for investors in Asian stock
markets, particularly in the second half of 1997. The turmoil in Asia was the
global investment story that eclipsed all others in 1997. For the year, the
Morgan Stanley Capital International (MSCI) Far East Free ex-Japan Index fell
45.5% Mutual funds invested in Asian markets also suffered. The group of 59
Asian ex-Japan equity funds measured by Micropal, Inc., a mutual fund
evaluation service, fell an average 36.3% for the year. By comparison, the
Asia Dynasty Fund outperformed the Index and its peers by declining 32.1%.
In the first half of 1997, the Fund achieved good absolute and relative
performance by investing heavily in the Greater China region. As Asian's
financial plight deepened at the start of the third quarter, the Fund adopted
a more defensive strategy. The Fund's cash holding increased substantially,
from 1.6% at June 30 to 27% at December 31, and its equity holdings were pared
from 64 to 38. These portfolio shifts in the second half helped the Fund
outperform for the year.
52
<PAGE>
With regard to country allocation, the Fund maintained an overweighted
position in Hong Kong, but was heavily underweighted in the ASEAN markets
throughout 1997. In terms of sector allocations, the banking and
telecommunication industries were emphasized. At year end, The Hong Kong and
Shanghai Banking Corporation (HSBC Holdings) and Hong Kong Telecom accounted
for nearly 10% and 7% of total net assets, respectively, and both outperformed
the market by a wide margin last year.
VAN ECK ASIA DYNASTY FUND (CLASS A)
VS. MSCI FAR EAST EX-JAPAN FREE INDEX AND S&P 500 INDEX
- ------------------------------------------------------------------
Asia Dynasty Fund, MSCI Far East
Class A (with sales Ex-Japan Free Index S&P 500 Index
charge)
Mar-93 9,525 10,000 10,000
Jun-93 10,500 11,149 10,049
Sep-93 11,580 12,560 10,308
Dec-93 15,350 18,298 10,547
Mar-94 12,527 14,252 10,147
Jun-94 12,567 14,792 10,190
Sep-94 13,863 16,542 10,688
Dec-94 12,477 14,820 10,687
Mar-95 11,798 14,557 11,727
Jun-95 12,765 15,857 12,847
Sep-95 12,693 15,537 13,868
Dec-95 12,868 15,829 14,702
Mar-96 13,729 17,281 15,492
Jun-96 13,470 17,154 16,187
Sep-96 13,293 16,826 16,687
Dec-96 13,708 17,282 18,078
Mar-97 13,158 16,556 18,563
Jun-97 13,781 17,316 21,804
Sep-97 12,027 14,018 23,437
Dec-97 9,308 9,422 24,110
Returns for the Van Eck Asia Dynasty Fund - Class A reflect all recurring
expenses and include the reinvestment of all dividends and distributions. The
maximum sales charge is 4.75%.
Inception date for the Van Eck Asia Dynasty Fund - Class A is 3/22/93.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance and the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
This graph compares an initial $10,000 investment made in the Van Eck Asia
Dynasty Fund - Class A at its inception with a similar investment in the Morgan
Stanley Capital International Far East Ex-Japan Free Index and the S&P 500
Index.
THE MORGAN STANLEY CAPITAL INTERNATIONAL FAR EAST EX-JAPAN FREE INDEX AND THE
S&P 500 INDEX ARE UNMANAGED INDICES AND INCLUDE THE REINVESTMENT OF ALL
DIVIDENDS, BUT DO NOT REFLECT THE PAYMENT OF TRANSACTION COSTS, ADVISORY FEES OR
EXPENSES THAT ARE ASSOCIATED WITH AN INVESTMENT IN THE FUND.
53
<PAGE>
VAN ECK ASIA DYNASTY FUND (CLASS B)
VS. MSCI FAR EAST EX-JAPAN FREE INDEX AND S&P 500 INDEX
- --------------------------------------------------------------------
Asia Dynasty Fund, MSCI Far East
Class B (with sales Ex-Japan Free Index S&P 500 Index
charge)
9/1/93 10,000 10,000 10,000
9/93 10,221 10,367 9,923
12/93 13,522 15,103 10,153
3/94 11,012 11,764 9,768
6/94 11,039 12,209 9,809
9/94 12,165 13,654 10,289
12/94 10,933 12,232 10,288
3/95 10,318 12,016 11,289
6/95 11,150 13,088 12,367
9/95 11,059 12,824 13,350
12/95 11,222 13,065 14,153
3/96 11,959 14,263 14,913
6/96 11,723 14,159 15,582
9/96 11,568 13,888 16,064
12/96 11,905 14,265 17,403
3/97 11,386 13,665 17,870
6/97 11,914 14,292 20,989
9/97 10,385 11,571 22,561
12/97 7,831 7,777 23,209
Returns for the Van Eck Asia Dynasty Fund - Class B reflect all recurring
expenses and include the reinvestment of all dividends and distributions.
Applicable contingent deferred sales charge taken into account. See sales
charge schedule in Purchase of Shares section.
Inception date for the Van Eck Asia Dynasty Fund - Class B is 9/1/93.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance and the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
This graph compares an initial $10,000 investment made in the Van Eck Asia
Dynasty Fund - Class B at its inception with a similar investment in the Morgan
Stanley Capital International Far East Ex-Japan Free Index and the S&P 500
Index.
THE MORGAN STANLEY CAPITAL INTERNATIONAL FAR EAST EX-JAPAN FREE INDEX AND THE
S&P 500 INDEX ARE UNMANAGED INDICES AND INCLUDE THE REINVESTMENT OF ALL
DIVIDENDS, BUT DO NOT REFLECT THE PAYMENT OF TRANSACTION COSTS, ADVISORY FEES OR
EXPENSES THAT ARE ASSOCIATED WITH AN INVESTMENT IN THE FUND.
54
<PAGE>
EMERGING MARKETS GROWTH FUND
Although the Fund had risen 19.9% in the first six months of 1997 and as much
as 25.7% by the end of July, Asia's debt and currency crisis, which unfolded
in late summer, had a negative impact on the Fund's overall performance for
1997. For the twelve months ending December 31, 1997, the Emerging Markets
Growth Fund lost 12.2%. This compares to an 11.6% decline in the benchmark
Morgan Stanley Capital International Emerging Markets Free Index (MSCI EMF
Index) and a 10.3% drop by the Fund's mutual fund peer group as measured by
the Lipper Emerging Markets Fund Index.
The Fund's performance in 1997 was most directly affected by Asia's crisis
through its Hong Kong holdings, which comprised 12.7% of net assets at June 30
and were reduced to 8.0% at year end.
Overall, the Fund maintained an underweight position in Asia relative to the
MSCI EMF Index, with less emphasis on Malaysia, Taiwan, and Korea and greater
concentration in China/Hong Kong. Elsewhere in Asia, India was one of the
region's positive performers in 1997. At year end and throughout the year, the
Fund maintained an overweight position in India, given prospects of a
resumption of its economic reform program, improved economic growth and
foreign investment flow.
In 1997, Latin America was somewhat immune to the impact of Asia's turmoil.
The region continued to benefit from its own economic recovery that followed
the peso crisis in early 1995. Mexico led the region as a return of confidence
in its economy has pushed shares in consumer goods and financial services
companies higher. In 1997, the Fund's holdings in the Mexican brewer Femsa and
its listed subsidiaries, Coca-Cola Femsa, were particularly strong. Brazil's
impressive response to attacks on its currency reassured investors that
although economic growth will dip in 1998, its commitment to economic reform
remained in place. In the longer term, Brazil's privatization program will be
the key to its economic health. Elsewhere in Latin America, Argentina's market
failed to regain momentum at year end due to exaggerated fears of an economic
collapse in Brazil. However, IYE de la Patagonia, a regional supermarket chain
held by the Fund, rose 91% for the year and was among the region's best
performers.
At year end, the Fund held an overweight position in Eastern Europe relative
to the MSCI EMF Index, with holdings concentrated in Russia, Hungary and
Romania. The Middle East and Africa, highly disparate regions, posted mixed
results in 1997.
55
<PAGE>
VAN ECK EMERGING MARKETS GROWTH FUND (CLASS A)
VS. MSCI EMERGING MERKETS FREE INDEX
- -------------------------------------------------------------------------
Emerging Markets
Growth Fund, Class A MSCI Emerging Markets
(with sales charge) Free Index S&P 500 Index
Dec-96 9,530 10,000 10,000
Jan-97 9,910 10,682 10,629
Feb-97 10,220 11,140 10,709
Mar-97 9,780 10,847 10,269
Apr-97 10,040 10,866 10,886
May-97 10,671 11,177 11,541
Jun-97 11,421 11,775 12,060
Jul-97 11,974 11,951 13,021
Aug-97 10,848 10,431 12,291
Sep-97 10,939 10,720 12,963
Oct-97 9,149 8,961 12,534
Nov-97 8,415 8,634 13,111
Dec-97 8,365 8,816 13,335
Returns for the Van Eck Emerging Markets Growth Fund - Class A reflect all
recurring expenses and include the reinvestment of all dividends and
distributions. The maximum sales charge is 4.75%.
Inception date for the Van Eck Asia Emerging Markets Growth Fund - Class A is
12/30/96.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance and the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
This graph compares an initial $10,000 investment made in the Van Eck Emerging
Markets Growth Fund - Class A at its inception with a similar investment in the
Morgan Stanley Capital International Emerging Markets Free Index.
THE MORGAN STANLEY CAPITAL INTERNATIONAL FREE INDEX AND THE S&P 500 INDEX ARE
UNMANAGED INDICES AND INCLUDE THE REINVESTMENT OF ALL DIVIDENDS, BUT DO NOT
REFLECT THE PAYMENT OF TRANSACTION COSTS, ADVISORY FEES OR EXPENSES THAT ARE
ASSOCIATED WITH AN INVESTMENT IN THE FUND.
56
<PAGE>
VAN ECK EMERGING MARKETS GROWTH FUND (CLASS B)
VS. MSCI EMERGING MARKETS FREE INDEX
- ----------------------------------------------------------------
Emerging Markets MSCI Emerging
Growth Fund, Class B Markets Free
(with sales charge) Index S&P 500 Index
Dec-96 10,000 10,000 10,000
Jan-97 10,420 10,682 10,629
Feb-97 10,746 11,140 10,709
Mar-97 10,284 10,847 10,269
Apr-97 10,557 10,866 10,886
May-97 11,229 11,177 11,541
Jun-97 12,017 11,775 12,060
Jul-97 12,587 11,951 13,021
Aug-97 11,415 10,431 12,291
Sep-97 11,500 10,720 12,963
Oct-97 9,622 8,961 12,534
Nov-97 8,841 8,634 13,111
Dec-97 8,447 8,816 13,335
Returns for the Van Eck Emerging Markets Growth Fund - Class B reflect all
recurring expenses and include the reinvestment of all dividends and
distributions. Applicable contingent deferred sales charge taken into account.
See sales charge schedule in Purchase of Shares section.
Inception date for the Van Eck Emerging Markets Growth Fund - Class B is
12/30/96.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance and the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
This graph compares an initial $10,000 investment made in the Van Eck Emerging
Market Growth Fund - Class B at its inception with a similar investment in the
Morgan Stanley Capital International Emerging Markets Free Index.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS FREE INDEX AND THE S&P
500 INDEX ARE UNMANAGED INDICES AND INCLUDE THE REINVESTMENT OF ALL DIVIDENDS,
BUT DO NOT REFLECT THE PAYMENT OF TRANSACTION COSTS, ADVISORY FEES OR EXPENSES
THAT ARE ASSOCIATED WITH AN INVESTMENT IN THE FUND.
57
<PAGE>
VAN ECK EMERGING MARKETS GROWTH FUND (CLASS C)
VS. MSCI EMERGING MARKETS FREE INDEX
- ---------------------------------------------------------------------------
Emerging Markets
Growth Fund,
Class C (with sales MSCI Emerging Markets
charge) Free Index S&P 500 Index
Dec-96 10,000 10,000 10,000
Jan-97 10,399 10,682 10,629
Feb-97 10,725 11,140 10,709
Mar-97 10,263 10,847 10,269
Apr-97 10,536 10,866 10,886
May-97 11,197 11,177 11,541
Jun-97 11,985 11,775 12,060
Jul-97 12,566 11,951 13,021
Aug-97 11,384 10,431 12,291
Sep-97 11,479 10,720 12,963
Oct-97 9,601 8,961 12,534
Nov-97 8,831 8,634 13,111
Dec-97 8,711 8,816 13,335
Returns for the Van Eck Emerging Markets Growth Fund - Class C reflect all
recurring expenses and include the reinvestment of all dividends and
distributions. One-year redemption charge of 1% taken into account.
Inception date for the Van Eck Emerging Market Fund - Class C is 12/30/96.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance and the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
This graph compares an initial $10,000 investment made in the Van Eck Emerging
Markets Growth Fund - Class C at its inception with a similar investment in the
Morgan Stanley Capital International Emerging Markets Free Index.
THE MORGAN STANLEY CAPITAL INTERNATIONAL FREE INDEX AND THE S&P 500 INDEX ARE
UNMANAGED INDICES AND INCLUDE THE REINVESTMENT OF ALL DIVIDENDS, BUT DO NOT
REFLECT THE PAYMENT OF TRANSACTION COSTS, ADVISORY FEES OR EXPENSES THAT ARE
ASSOCIATED WITH AN INVESTMENT IN THE FUND.
58
<PAGE>
GLOBAL BALANCED FUND
Once again, as they did in 1995 and 1996, global equity markets registered
strong gains in 1997, with western markets considerably more upbeat than those
in Asia. Although global bond markets benefited from falling inflation
expectations in the wake of Asia's turmoil, the strength of the U.S. dollar
limited gains to unhedged investors. The Global Balanced Fund had a strong
year in 1997, achieving a total return of 14.8%. This compares very favorably
to the average 8.6% return posted by the 72 global asset allocation/global
market funds as measured by Micropal, Inc., a mutual fund evaluation service.
The Fund's limited exposure to Japanese and Asian Pacific equities contributed
to its superior performance in 1997.
In aggregate, global equity markets turned in a solid performance in 1997,
gaining 15.8%. However, as has been the norm through the 1990s, performance
varied significantly among individual regions. Strong earnings growth and a
favorable interest rate environment propelled the U.S. stock market to a 33.4%
gain, as measured by the S&P 500 Index. The UK, Europe and Latin America
turned in solid 20%-plus returns; unfortunately, Asian countries posted
returns of a similar magnitude in negative territory. This was largely due to
the meltdown of Asian currencies, equities and economies--the investment story
that eclipsed all others this past year. The fallout soon spread to Japan's
already fragile market and economy, as well as to Latin America's previously
healthy markets. Europe, the UK and the U.S., although affected by the
turmoil, were more resilient and thus able to recover from an initial bout of
investor jitters.
In 1997, the MSCI Far East Emerging Markets Free Index declined 56.2% (34.6%
in local terms). The Fund maintained minimal exposure to the Asia Pacific
region, focusing on defensive companies like Telstra (Australian telecom), and
long-term investments such as HSBC Holdings (based in Hong Kong, but more
appropriately classified as a global banking group).
For global fixed income markets, 1997 was marked by four major themes: 1) the
fall of global inflation rates and expectations; 2) the continued strength of
the U.S. dollar; 3) the march towards EMU; and most recently, 4) Asia's
turbulence. While not well positioned for the first of these trends, the Fund
was well placed to profit from the latter three.
With regard to currency exposure in 1997, the Fund's bond currency allocations
were overweight (relative to the Salomon Smith Barney World Government Bond
Index) in dollar bloc allocations, underweight in European currencies and
underweight in Japanese yen. Correspondingly, 35% to 40% of the Fund's yen and
core-European equity exposure was hedged back into dollars. Overall, the Fund
remained overweight in the U.S. dollar, acknowledging, however, that any
additional appreciation is unlikely to match 1996's advance. The Sub-Adviser
made more significant changes in bond market exposures, increasing duration
exposures in both the dollar bloc and Europe.
59
<PAGE>
VAN ECK GLOBAL BALANCED FUND (CLASS A)
VS. GLOBAL BALANCED INDEX AND S&P 500 INDEX
- -------------------------------------------------------------------
Global Balanced Fund,
Class A (with sales
charge) Global Balanced Index S&P 500 Index
Dec-93 9,520 10,000 10,000
Mar-94 9,201 10,050 9,621
Jun-94 9,171 10,265 9,661
Sep-94 9,451 10,456 10,134
Dec-94 9,149 10,439 10,132
Mar-95 9,462 11,194 11,119
Jun-95 10,037 11,730 12,180
Sep-95 10,351 12,080 13,148
Dec-95 10,548 12,578 13,940
Mar-96 10,732 12,796 14,688
Jun-96 10,998 13,049 15,347
Sep-96 11,214 13,312 15,821
Dec-96 11,844 13,815 17,140
Mar-97 11,833 13,620 17,600
Jun-97 13,273 15,010 20,672
Sep-97 13,767 15,368 22,221
Dec-97 13,594 15,173 22,859
Returns for the Van Eck Global Balanced Fund - Class A reflect all recurring
expenses and include the reinvestment of all dividends and distributions. The
maximum sales charge is 4.75%.
Inception date for the Van Eck Global Balanced Fund - Class A is 12/20/93.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance and the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
The Global Balanced Index consists of 60% Morgan Stanley Capital International
World Equity Index and 40% Salomon Smith Barney World Government Bond Index.
This graph compares an initial $10,000 investment made in the Van Eck Global
Balanced Fund - Class A at its inception with a similar investment in a Global
Balanced Index and the S&P 500
Index.
THE GLOBAL BALANCED INDEX AND THE S&P 500 INDEX ARE UNMANAGED INDICES AND
INCLUDE THE INVESTMENT OF ALL DIVIDENDS, BUT DO NOT REFLECT THE PAYMENT OF
TRANSACTION COSTS, ADVISORY FEES OR EXPENSES THAT ARE ASSOCIATED WITH AN
INVESTMENT IN THE FUND.
60
<PAGE>
VAN ECK GLOBAL BALANCED FUND (CLASS B)
VS. GLOBAL BALANCED INDEX AND S&P 500 INDEX
- --------------------------------------------------------------------
Global Balanced Fund,
Class B (with sales Global
charge) Balanced Index S&P 500 Index
Dec-93 10,000 10,000 10,000
Mar-94 9,654 10,050 9,621
Jun-94 9,591 10,265 9,661
Sep-94 9,864 10,456 10,134
Dec-94 9,516 10,439 10,132
Mar-95 9,833 11,194 11,119
Jun-95 10,424 11,730 12,180
Sep-95 10,741 12,080 13,148
Dec-95 10,899 12,578 13,940
Mar-96 10,069 12,796 14,688
Jun-96 11,323 13,049 15,347
Sep-96 11,524 13,312 15,821
Dec-96 12,152 13,815 17,140
Mar-97 12,128 13,620 17,600
Jun-97 13,590 15,010 20,672
Sep-97 14,074 15,368 22,221
Dec-97 13,685 15,173 22,859
Returns for the Van Eck Global Balanced Fund - Class B reflect all recurring
expenses and include the reinvestment of all dividends and distributions.
Applicable contingent deferred sales charge taken into account. See sales
charge schedule in Purchase of Shares section.
Inception date for the Van Eck Global Balanced Fund - Class B is 12/20/93.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance and the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
The Global Balanced Index consists of 60% Morgan Stanley Capital International
World Equity Index and 40% Salomon Smith Barney World Government Bond Index.
This graph compares an initial $10,000 investment made in the Van Eck Global
Balanced Fund - Class B at its inception with a similar investment in the Global
Balanced Index and the S&P 500 Index.
THE MORGAN STANLEY CAPITAL INTERNATIONAL FAR EAST EX-JAPAN FREE INDEX AND THE
S&P 500 INDEX ARE UNMANAGED INDICES AND INCLUDE THE REINVESTMENT OF ALL
DIVIDENDS, BUT DO NOT REFLECT THE PAYMENT OF TRANSACTION COSTS, ADVISORY FEES OR
EXPENSES THAT ARE ASSOCIATED WITH AN INVESTMENT IN THE FUND.
61
<PAGE>
GLOBAL HARD ASSETS FUND
The Global Hard Assets Fund rose 14.3% in 1997. The Fund outperformed most of
its relevant benchmarks last year, including commodities (down 14.1%), gold
and gold-mining shares (down 21.4% and 39.8%, respectively), and natural
resource equities (off 0.5%). Within the hard assets group, only real estate,
which rose 18.6%, outpaced the Fund. Since its inception in November 1994, the
Fund has provided shareholders with a 24.1% compound annual rate of growth,
outpacing all its benchmarks and outperforming the broader global equity
markets, which returned 14.4% annually for the period as measured by Morgan
Stanley Capital International World Index (with net dividends reinvested).
Throughout the year, the shifting economic picture was critical to the
performance of hard asset securities and commodities and to the Fund's sector
allocations. For example, in the first nine months, strong economic growth
fueled the outperformance of natural resource companies. By contrast, the more
interest-rate sensitive real estate sector out-performed in the fourth quarter
as Asia's plight dampened economic growth expectations and caused interest
rates to fall. Sector allocations generally mirrored this pattern. Natural
resource shares accounted for 60% of assets at midyear and were pared to less
than 45% of assets by year end; specifically, the Adviser reduced the Fund's
exposure to oil, metals and mining and forest product holdings. Real estate
shares represented approximately 25% of assets through September 30 and were
increased to nearly 40% by year end, based on their relative attractiveness.
Throughout the year, the Fund's gold position was maintained at the minimum
5%--in hindsight, a very prudent decision given that gold and gold-mining
shares suffered their worst performance in decades.
The Fund's leading performers in 1997 included equity holdings in oil service
and drilling companies, real estate companies and selected energy exploration
and production companies.
Commodity holdings contributed to the Fund's performance, despite the group's
lackluster return for the year. The bulk of commodity profits came from
hedging energy equity positions through short positions in crude and heating
oil. These positions were particularly helpful during the fourth quarter of
the year as oil prices fell more than 20%, following OPEC's decision to
increase production quotas by 10%, and tensions in the Middle East subsided.
In addition, some opportunistic long positions benefited the Fund; these
included holdings in aluminum and zinc.
62
<PAGE>
VAN ECK GLOBAL HARD ASSETS FUND (CLASS A)
VS. IBBOTSON HARD ASSETS INDEX AND S&P 500 INDEX
- ----------------------------------------------------------------
Gold/Resources Fund
(with sales charge) S&P 500 Index
Dec-87 9,423 10,000
Jun-88 8,649 11,273
Dec-88 7,414 11,661
Jun-89 7,281 13,590
Dec-89 8,814 15,356
Jun-90 6,929 15,831
Dec-90 6,490 14,879
Jun-91 6,357 17,001
Dec-91 6,226 19,412
Jun-92 6,426 19,281
Dec-92 5,945 20,891
Jun-93 9,736 21,909
Dec-93 10,588 22,996
Jun-94 9,419 22,217
Dec-94 8,935 23,300
Jun-95 9,002 28,010
Dec-95 9,319 32,056
Jun-96 10,120 35,292
Dec-96 9,553 39,416
Jun-97 7,799 47,538
Dec-97 5,795 52,566
Returns for the Van Eck Hard Assets Fund - Class A reflect all recurring
expenses and include the reinvestment of all dividends and distributions.
The maximum sales charge is 4.75%.
Inception date for the Van Eck Global Hard Assets Fund - Class A is 11/2/94.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance and the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
This graph compares an initial $10,000 investment made in the Van Eck Global
Hards Asset Fund - Class A at its inception with a similar investment in the
Ibbotson Hard Assets Index and the S&P 500 Index.
THE IBBOTSON HARD ASSETS INDEX AND THE S&P 500 INDEX ARE UNMANAGED INDICES AND
INCLUDE THE REINVESTMENT OF ALL DIVIDENDS, BUT DO NOT REFLECT THE PAYMENT OF
TRANSACTION COSTS, ADVISORY FEES OR EXPENSES THAT ARE ASSOCIATED WITH AN
INVESTMENT IN THE FUND.
63
<PAGE>
VAN ECK GLOBAL HARD ASSETS FUND (CLASS B)
VS. IBBOTSON HARD ASSETS INDEX AND S&P 500 INDEX
- -------------------------------------------------------------------
Global Hard Assets Fund, Ibbotson Hard
Class B (with sales charge) Assets Index S&P 500 Index
4/24/96 10,000 10,000 10,000
Jun-96 10,303 9,614 10,297
Sep-96 10,825 9,637 10,615
Dec-96 12,455 10,216 11,500
Mar-97 12,455 9,991 11,808
Jun-97 13,477 10,312 13,870
Sep-97 16,037 10,915 14,909
Dec-97 13,764 9,143 15,337
Returns for the Van Eck Global Hard Assets Fund - Class B reflect all recurring
expenses and include the reinvestment of all dividends and distributions.
Applicable contingent deferred sales charge taken into account. See sales
charge schedule in Purchase of Shares section.
Inception date for the Van Eck Global Hard Assets Fund - Class B is 4/24/96.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance and the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
This graph compares an initial $10,000 investment made in the Van Eck Global
Hard Assets Fund - Class B at its inception with a similar investment in the
Ibbotson Hard Assets Index and the S&P 500 Index.
THE IBBOTSON HARD ASSETS INDEX AND THE S&P 500 INDEX ARE UNMANAGED INDICES AND
INCLUDE THE REINVESTMENT OF ALL DIVIDENDS, BUT DO NOT REFLECT THE PAYMENT OF
TRANSACTION COSTS, ADVISORY FEES OR EXPENSES THAT ARE ASSOCIATED WITH AN
INVESTMENT IN THE FUND.
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VAN ECK GLOBAL HARD ASSETS FUND (CLASS C)
VS. IBBOTSON HARD ASSETS INDEX AND S&P 500 INDEX
- --------------------------------------------------------------
Global Hard
Assets Fund,
Class C Ibbotson Hard
(with sales charge) Assets Index S&P 500 Index
11/2/94 10,000 10,000 10,000
Dec-94 9,885 9,720 9,779
Mar-95 10,420 9,880 10,731
Jun-95 10,914 10,120 11,755
Sep-95 11,292 10,446 12,689
Dec-95 11,954 10,689 13,453
Mar-96 13,387 11,457 14,175
Jun-96 14,365 11,288 14,812
Sep-96 15,092 11,315 15,269
Dec-96 17,354 11,994 16,542
Mar-97 17,354 11,730 16,986
Jun-97 18,776 12,106 19,951
Sep-97 22,338 12,815 21,446
Dec-97 19,733 10,735 22,061
Returns for the Van Eck Hard Assets Fund - Class C reflect all recurring
expenses and include the reinvestment of all dividends and distributions.
One-year redemption charge of 1% taken into account where applicable.
Inception date for the Van Eck Global Hard Assets Fund - Class C is 11/2/94.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance and the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
This graph compares an initial $10,000 investment made in the Van Eck Global
Hard Assets Fund - Class C at its inception with a similar investment in the
Ibbotson Hard Assets Index and the S&P 500 Index.
THE IBBOTSON HARD ASSETS INDEX AND THE S&P 500 INDEX ARE UNMANAGED INDICES AND
INCLUDE THE REINVESTMENT OF ALL DIVIDENDS, BUT DO NOT REFLECT THE PAYMENT OF
TRANSACTION COSTS, ADVISORY FEES OR EXPENSES THAT ARE ASSOCIATED WITH AN
INVESTMENT IN THE FUND.
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<PAGE>
GOLD/RESOURCES FUND
The year 1997 was an extraordinary and difficult one for the gold market. The
price of gold fell to $289.05 an ounce at the end of 1997, down 21% from the
previous year. For the year, the Gold/Resources Fund lost 39.3%, less than the
43.9% average decline posted by its peer group of 40 gold funds as measured by
the Lipper Gold Fund Index.
Gold's poor performance in 1997 weighed heavily on gold-mining shares around
the world. The worst affected region was Australia, as its currency was hard
hit by its export exposure to Asia. The Australian Stock Exchange Gold Index
declined 44% in local currency terms and 55% in U.S. dollar terms. During the
year, the Adviser reduced the Fund's Australian exposure to 16%.
The Johannesburg Gold Index was the second-worst performer in 1997,
registering a decline of 49% in U.S. dollar terms (47% in rand terms).
The Toronto Gold & Silver Index fell 46% last year in U.S. dollar terms (44%
in Canadian dollars), making Canada the second-best performer. The Canadian
junior sector was especially hard hit after the Bre-X Minerals scandal, with
some exploration shares falling up to 90% by year end (the Fund owned no Bre-X
shares). The Fund was never more than 15%-20% invested in the juniors and
escaped the worst of the carnage.
In 1997, the U.S. was clearly the place to be. The Philadelphia Gold & Silver
Index (XAU) slid 37%, helped by a relatively mild decline of under 15% for
Battle Mountain, a low-cost, financially sound producer. At year end, U.S.
companies represented 34% of the Fund. Finally, reflecting the Adviser's
cautious stance on gold and gold shares, the Fund was nearly 10% in cash at
year end.
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<PAGE>
VAN ECK GOLD/RESOURCES FUND
VS. S&P 500 INDEX
- ------------------------------------------------
Gold/Resources Fund
(with sales charge) S&P 500 Index
Dec-87 9,423 10,000
Jun-88 8,649 11,273
Dec-88 7,414 11,661
Jun-89 7,281 13,590
Dec-89 8,814 15,356
Jun-90 6,929 15,831
Dec-90 6,490 14,879
Jun-91 6,357 17,001
Dec-91 6,226 19,412
Jun-92 6,426 19,281
Dec-92 5,945 20,891
Jun-93 9,736 21,909
Dec-93 10,588 22,996
Jun-94 9,419 22,217
Dec-94 8,935 23,300
Jun-95 9,002 28,010
Dec-95 9,319 32,056
Jun-96 10,120 35,292
Dec-96 9,553 39,416
Jun-97 7,799 47,538
Dec-97 5,795 52,566
Returns for the Van Eck Gold/Resources Fund reflect all recurring expenses and
include the reinvestment of all dividends and distributions. The maximum sales
charge is 5.75%.
Inception date for the Van Eck Gold/Resources Fund is 2/15/86.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance and the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
This graph compares an initial $10,000 investment made in the Van Eck
Gold/Resources Fund ten years ago with a similar investment in the S&P 500
Index.
THE S&P 500 INDEX IS AN ARE UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL
DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS, ADVISORY FEES
OR EXPENSES THAT ARE ASSOCIATED WITH AN INVESTMENT IN THE FUND.
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<PAGE>
INTERNATIONAL INVESTORS GOLD FUND
The year 1997 was an extraordinary and difficult one for the gold market. The
price of gold fell to $289.05 an ounce at the end of 1997, down 21% from the
previous year. For the year, the International Investors Gold Fund lost 36.0%,
less than the 43.9% average decline posted by its peer group of 40 gold funds
as measured by the Lipper Gold Fund Index.
Gold's poor performance in 1997 weighed heavily on gold-mining shares around
the world. The worst affected region was Australia, as its currency was hurt
by its export exposure to Asia. The Australian Stock Exchange Gold Index
declined 44% in local currency terms and 55% in U.S. dollar terms. During the
year, the Adviser reduced the Fund's Australian exposure to 8%.
The Johannesburg Gold Index was the second-worst performer in 1997,
registering a decline of 49% in U.S. dollar terms (47% in rand terms).
The Toronto Gold & Silver Index fell 46% last year in U.S. dollar terms (44%
in Canadian dollars), making Canada the second-best performer. The Canadian
junior sector was especially hard hit after the Bre-X Minerals scandal, with
some exploration shares falling up to 90% by year end (the Fund owned no Bre-X
shares). The Fund was never more than 6%-7% invested in the juniors and
escaped relatively unharmed by the carnage.
In 1997, the U.S. was clearly the place to be. The Philadelphia Gold & Silver
Index (XAU) slid 37%, helped by a relatively mild decline of under 15% for
Battle Mountain, a low-cost, financially sound producer. At year end, U.S.
companies represented 24% of the Fund, including some 7% in non-gold
investments (primarily energy and real estate). Finally, reflecting the
Adviser's cautious stance on gold and gold shares, the Fund was 20% in cash at
year end.
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<PAGE>
VAN ECK INTERNATIONAL INVESTORS GOLD FUND
VS. MSCI GOLD MINES INDEX AND S&P 500 INDEX
- -------------------------------------------------------------
International
Investors
Gold Fund MSCI Gold
(with sales charge) Mines Index S&P 500 Index
Dec-87 9,427 10,000 10,000
Jun-88 7,949 7,699 11,273
Dec-88 7,349 6,652 11,661
Jun-89 7,886 7,069 13,590
Dec-89 11,118 9,950 15,356
Jun-90 8,754 7,458 15,831
Dec-90 8,114 7,370 14,879
Jun-91 8,872 7,368 17,001
Dec-91 8,322 6,771 19,412
Jun-92 7,593 6,040 19,281
Dec-92 5,902 4,911 20,891
Jun-93 10,803 9,641 21,909
Dec-93 12,595 11,313 22,996
Jun-94 11,365 9,822 22,217
Dec-94 12,463 10,050 23,300
Jun-95 10,987 10,507 28,010
Dec-95 11,350 10,645 32,056
Jun-96 11,849 11,138 35,292
Dec-96 10,287 10,348 39,416
Jun-97 8,513 8,187 47,538
Dec-97 6,584 6,231 52,566
Returns for the Van Eck International Investors Gold Fund reflect all recurring
expenses and include the reinvestment of all dividends and distributions.
The maximum sales charge is 5.75%.
Inception date for the Van Eck International Investors Gold Fund is 2/10/56.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance and the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
This graph compares an initial $10,000 investment made in the Van Eck
International Investors Gold Fund ten years ago with a similar investment in
the Morgan Stanley Gold Mines Index and the S&P 500 Index.
THE MORGAN STANLEY GOLD MINES INDEX AND THE S&P 500 INDEX ARE UNMANAGED INDICES
AND INCLUDE THE REINVESTMENT OF ALL DIVIDENDS, BUT DO NOT REFLECT THE PAYMENT OF
TRANSACTION COSTS, ADVISORY FEES OR EXPENSES THAT ARE ASSOCIATED WITH AN
INVESTMENT IN THE FUND.
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<PAGE>
EXPENSES
Each Fund bears all expenses of its operation other than those incurred by the
Adviser or its affiliate under its Advisory Agreement with the Trust. In
particular, the Funds pay: investment advisory fees, custodian fees and
expenses, legal, accounting and auditing fees and expenses, brokerage fees,
taxes, expenses of preparing prospectuses and shareholder reports for existing
shareholders, registration fees and expenses (including compensation of
employees of the Adviser or its affiliate in relation to the time spent on
such matters), Rule 12b-1 distribution expenses (exclusive of International
Investors), expenses of the transfer and dividend disbursing agent, the
compensation and expenses of Trustees who are not otherwise affiliated with
the Trust, the Adviser, the Sub-Adviser or any of their affiliates, and any
extraordinary expenses. Expenses incurred jointly by the Funds are allocated
among the Funds in a manner determined by the Trustees to be fair and
equitable. Under the Advisory Agreements, the Adviser provides the Funds with
office space, facilities and simple business equipment and provides the
services of executive and clerical personnel for administering the affairs of
the Funds. The Adviser compensates Trustees of the Trust if such persons are
employees or affiliates of the Adviser or its affiliates. The Funds reimburse
the Adviser for its costs in servicing shareholder accounts and maintaining
books and records of each Fund, including general ledger and daily net asset
value accounting.
The Adviser may from time to time, at its discretion, waive the management fee
and/or agree to pay some or all expenses of the Funds. This has the effect of
increasing the yield and total return of the Funds during this period.
PLAN OF DISTRIBUTION
Each of the Funds (except International Investors Gold Fund) has adopted a
Plan of Distribution pursuant to Rule 12b-1 (the "Plans") under the Act. The
Plans may be terminated at any time by the vote of a majority of the Trustees
or by a vote of a majority of the outstanding voting securities of the
respective Fund or Class. These plans fall into two broad categories:
reimbursement plans and compensation plans. The fees under all Plans are paid
quarterly. The National Association of Securities Dealers, Inc. rules may
limit the amount payable under the Plans.
Under a reimbursement type plan, the fees, or a percentage thereof, are used
for payments to Agents and Brokers who service shareholder accounts of a Fund
and the remainder is used for other actual promotional and distribution
expenses incurred by the Distributor. A Plan's fees accrued by a Fund in
excess of payments to Brokers and Agents and reimbursement to the Distributor
for its actual expenses will be retained by the Fund. A reimbursement type
plan does not provide for the payment of interest as a distribution expense.
Under a compensation type plan, the fees under the Plan are not directly tied
to expenses and payments by the Fund may be more or less than actual expenses
incurred under the Plan. The excess of fees received over expenditures may
constitute a "profit" to the Distributor.
Both reimbursement and compensation type plans may have a "carry-forward"
provision. This provision provides that any reimbursable or payable amount
under the Plan attributable to a fiscal year of the Fund may be paid by the
Fund in a subsequent fiscal year, including after the termination of a Plan.
Amounts payable or reimbursable to the Distributor under the Plan that are not
paid because they exceed the annual limitation (carry-forward amounts) are
carried forward by the Funds to subsequent years and are paid within the
annual limitation in accordance with the Plans. Consequently, shareholders may
pay distribution expenses incurred by
70
<PAGE>
a Fund prior to becoming a shareholder. Under a Plan without a carry-forward
provision, fees paid by a Fund are paid or used to reimburse the Distributor
for servicing, promotional and distribution expenses incurred only during the
applicable fiscal year.
In the event a Plan with a carry-forward provision is terminated, the
Distributor would not be entitled to reimbursement in respect of costs
incurred in, or payment for, performing distribution activities which occur
after termination of the Plan. However, the Distributor would be entitled to
reimbursement of all carry-forward amounts and other costs properly incurred
in respect of shares distributed prior to termination of the Plan. The Fund
would continue to make payments to the Distributor subject to the annual
limitation until such time as all such amounts had been reimbursed.
Asia Dynasty Fund-A, Gold/Resources Fund-A and U.S. Government Money Fund have
reimbursement type plans. The 12b-1 fees are accrued daily at an annual rate
of .50% (Asia Dynasty Fund-A) and .25% of average daily net assets
(Gold/Resources Fund and U.S. Government Money Fund). Asia Dynasty Fund-A's
Plan has a carry-forward provision.
Asia Dynasty-B, Emerging Markets Growth Fund-A, -B and -C, Global Balanced-A
and -B, Global Hard Assets Fund-A, -B and -C and Global Real Estate Fund-A, -B
and -C have compensation type plans. The 12b-1 fees are accrued daily at an
annual rate of .50% of average daily net assets for Class A and at an annual
rate of 1.00% of average daily net assets for Class B and Class C. These Plans
have a carry-forward provision which provides that the Distributor, in the
event of termination of the Plans, will recoup amounts expended under the
Plan, subject to the annual limitation. For the periods prior to April 30,
1999, the Distributor has agreed, with respect to Plans with a carry-forward
provision, notwithstanding anything to the contrary in the Plan, to waive its
right to reimbursement of carry-forward amounts in the event the Plan is
terminated unless the Board of Trustees has determined that reimbursement of
such carry-forward amounts is appropriate.
Each Fund pays dealers, through the Distributor, (i) a service fee and a
distribution fee, at the time the shares are sold, not to exceed .25% for
Class A shares and .75% for Class B shares, of the net asset value of such
shares (excluding shares issued for reinvested dividends and distributions)
and (ii) after the first anniversary of the sale of shares, fees for services
and distribution at annual rates not to exceed an annual rate of .75% for
Class C shares, of the average daily net assets (including shares issued for
reinvested dividends and distributions). The Distributor may retain from the
distribution fee, for the payment of distribution expenses, an amount not to
exceed an annual rate of .50% of the average daily net assets. No dealer will
receive more than .25% of average daily net assets for servicing. The
Distributor will monitor payments under the Plans and will reduce such
payments or take such other steps as may be necessary, including payments from
its own resources, to assure that Plan payments are consistent with the
applicable rules of the National Association of Securities Dealers, Inc.
Holders of Class C shares on which service and distribution fees were paid at
the time of sale will be required to pay to the Fund a contingent deferred
redemption charge of 1% of the lower of cost or the then current net asset
value of any shares redeemed from that Fund before the first anniversary of
their purchase. If the shares are exchanged into another fund in the Van Eck
Group of Funds offering Class C shares and subsequently redeemed before the
first anniversary of their original purchase, the charge will be collected by
the other fund for the first fund.
Of the amounts expended under the Plan for the fiscal year ended December 31,
1997 for all of the Funds, approximately 58% was paid to Brokers and Agents
who sold shares and/or service shareholder accounts of
71
<PAGE>
the Funds. The remaining 42% was retained by the Distributor as reimbursement
for expenses such as printing and mailing prospectuses and sales material to
other than current Fund shareholders.
The Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities such as shares of a mutual
fund. Although the scope of this prohibition under the Glass-Steagall Act has
not been fully defined, in the Distributor's opinion it should not prohibit
banks from being compensated for shareholder servicing. If, because of changes
in law or regulation, or because of new interpretations of existing law, a
bank or the Funds were prevented from continuing these arrangements, it is
expected that the Board would make other arrangements for these services and
that shareholders would not suffer adverse financial consequences.
ADVERTISING
From time to time, the Funds may use various media to advertise performance.
Past performance is not necessarily indicative of future performance.
U.S. Government Money Fund may advertise its "yield" and "effective yield."
Both yield figures are based on historical earnings and are not intended to
indicate future performance. The "yield" of the Fund refers to the income
generated by an investment in the Fund over a seven-day period (which period
will be stated in the advertisement). This income is then "annualized," i.e.
the amount of income generated by the investment during that week is assumed
to be generated each week over a 52-week period and is shown as a percentage
of the investment. The "effective yield" is calculated similarly but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.
All Funds except U.S. Government Money Fund may advertise performance in terms
of average annual total return, which is computed by finding the average
annual compounded rates of return over a period that would equate the initial
amount invested to the ending redeemable value. The calculation assumes the
maximum sales charge is deducted from the initial $1,000 payment and assumes
all dividends and distributions by the Funds are reinvested on the
reinvestment dates during the period, and includes all recurring fees that are
charged to all shareholder accounts. In addition, these Funds may advertise
aggregate total return for a specified period of time which is determined by
ascertaining the percentage change in the net asset value of shares of a Fund
initially purchased assuming reinvestment of dividends and capital gains
distributions on such shares without giving effect to the length of time of
the investment. Sales loads and other non-recurring expenses may be excluded
from the calculation of rates of return with the result that such rates may be
higher than if such expenses and sales loads were included. All other fees
will be included in the calculation of rates of return. Performance of the
Funds is computed separately for each Class.
The annual total return, before sales charges, of International Investors Gold
Fund for each of the twenty years ended December 31, below, was:
<TABLE>
<CAPTION>
1978 1979 1980 1981 1982 1983 1984 1985 1986 1987
----- ------ ----- ------- -------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9.5% 176.7% 64.6% (19.8%) 51.9% 8.8% (22.9%) (2.0%) 34% 34.7%
<CAPTION>
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
----- ------ ----- ------- -------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(22%) 51.3% (27%) 2.56% (29.09%) 113.41% (1.04%) (8.93%) (9.37%) (36.00)%
</TABLE>
72
<PAGE>
The Funds may quote performance results from recognized services and
publications which monitor the performance of mutual funds and the Funds may
compare their performance to various published historical indices. These
include market, economic and performance data and indices. For example, the
Funds may quote Morningstar ratings; market performance of the S&P 500;
performance of various economies or economic indicators; or compilations of
historical performance data from rating agencies. Micropal, Ltd., a worldwide
mutual fund performance evaluation service, is one such rating agency. Lipper
Analytical Services is another such rating agency. The Lipper performance
analysis assumes reinvestment of capital gains and distributions, but does not
give effect to sales charges or taxes. Asia Dynasty Fund is rated in the Asia
ex-Japan Funds category; Global Balanced Fund is rated in the Global Balanced
Funds or the Global Asset Allocation category; Global Hard Assets Fund is
rated in the Natural Resources Funds category or the Global Equity Funds
category. Gold/Resources Fund and International Investors Gold Fund are rated
in the Gold Oriented Funds category. Asia Dynasty Fund may be compared to a
Morgan Stanley Capital International Index, an Asia (Ex-Japan) Index or
another appropriate index. The Morgan Stanley Capital International Equity and
Salomon Brothers World Bond Indices, among others, are indices to which the
Global Balanced Fund may be compared. Emerging Markets Growth Fund may be
compared to a Morgan Stanley Capital International Index, or another
appropriate index. Global Hard Assets Fund may be compared to the Ibbotson
Hard Assets Index or Morgan Stanley natural resource indices. Global Real
Estate Fund may be compared to the following indices; Salomon Brothers World
Property Index, Morgan Stanley Capital International Real Estate Index, NAREIT
Equity Index, Wilshire Real Estate Securities Index and Morgan Stanley REIT
Index, among others. Gold/Resources Fund and International Investors Gold Fund
may be compared to indices such as the historical price of gold. See the
Appendix in the Statement of Additional Information.
TAXES
Each Fund has qualified and intends to continue to qualify as a "regulated
investment company" under the Code and will not pay federal income or excise
taxes to the extent that it distributes its net taxable investment income and
capital gains. See "Taxes" in the Statement of Additional Information.
Notice as to the tax status of a shareholder's dividends and distributions
will be mailed to shareholders annually. Income from dividends and
distributions is normally taxable whether or not reinvested. Distributions
from net investment income and short-term capital gains are taxed as ordinary
income. Distributions of long-term capital gains are taxed at capital gain
rates. Dividends or distributions declared in December of any calendar year
but paid during January of the following year are treated as received by a
shareholder on December 31 of the calendar year. Only a portion of the
dividends paid by the Funds except U.S. Government Money Fund are likely to
qualify for the 70% dividends received deduction allowable to corporations.
None of the dividends paid by the U.S. Government Money Fund qualifies for
such deduction. If the Funds fulfill certain requirements, shareholders may be
able to claim a foreign tax credit or deduction with respect to certain
foreign withholding or other taxes paid to foreign governments during the
year.
Distributions of net investment income, and short-term capital gains if any,
made to non-resident aliens will be subject to 30% withholding or lower tax
treaty rates because such distributions are considered U.S. source income.
Currently, the Funds are not required to withhold tax from long-term capital
gains distributions paid to non-resident aliens.
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<PAGE>
The foregoing discussion relates only to generally applicable federal income
tax provisions. Shareholders should consult their own tax advisors regarding
taxes, including foreign, state and local taxes, applicable to dividends,
distributions, exchanges and redemptions.
DESCRIPTION OF THE TRUST
Van Eck Funds is an open-end management investment company organized as a
"business trust" under the laws of the Commonwealth of Massachusetts.
The Trustees have authority to issue an unlimited number of shares of
beneficial interest of each Fund (funds), $.001 par value. Currently eight
Funds of the Trust are being offered, which shares constitute the interests in
the Asia Dynasty Fund (Class A and B), Global Balanced Fund (Class A and B),
Emerging Markets Growth Fund (Class A, B and C), Global Hard Assets Fund
(Class A, B and C), Global Real Estate Fund (Class A, B and C), Gold/Resources
Fund (Class A), International Investors Gold Fund (Class A), and U.S.
Government Money Fund. Asia Dynasty Fund, Emerging Markets Growth Fund,
Gold/Resources Fund, International Investors Gold Fund and U.S. Government
Money Fund are classified as diversified funds and Global Balanced Fund,
Global Hard Assets Fund and Global Real Estate Fund are classified as non-
diversified funds under the Act. A diversified fund is a fund which meets the
following requirements: At least 75% of the value of its total assets is
represented by cash and cash items (including receivables), Government
securities, securities of other investment companies and other securities for
the purpose of this calculation limited in respect of any one issuer to an
amount not greater than 5% of the value of the Fund's total assets and to not
more than 10% of the outstanding voting securities of such issuer. A non-
diversified fund is any fund other than a diversified fund. This means that
the Fund at the close of each quarter of its taxable year, must, in general,
limit its investments in the securities of a single issuer to (i) no more than
25% of its assets, (ii) with respect to 50% of the Fund's assets, no more than
5% of its assets, and (iii) the Fund will not own more than 10% of outstanding
voting securities. A Fund is a separate pool of assets which is separately
managed and which may have different investment objectives from those of
another Fund. The Trustees have the authority, without the necessity of a
shareholder vote, to create any number of new Funds.
Each share of a Fund has equal dividend, redemption and liquidation rights,
and, when issued, is fully paid and non-assessable by the Trust, except that
expenses related to the distribution of shares of the separate classes, if
any, would be borne by the respective classes as appropriate, and could have
differing voting rights regarding, for example, the Plans of Distribution.
Under the Master Trust Agreement, no annual or regular meeting of shareholders
is required. Thus, there will ordinarily be no shareholder meetings unless
required by the Act. The Board of Trustees is a self-perpetuating body unless
and until fewer than 50% of the Trustees, then serving as Trustees, are
Trustees who were elected by shareholders. At that time another meeting of
shareholders will be called to elect Trustees. On any matter submitted to the
shareholders, the holder of each Trust share is entitled to one vote per share
(with proportionate voting for fractional shares). Under the Master Trust
Agreement, any Trustee may be removed by vote of two thirds of the outstanding
Trust shares; and holders of ten percent or more of the outstanding shares of
the Trust can require Trustees to call a meeting of shareholders for purposes
of voting on the removal of one or more Trustees. Shareholders of all Funds
are entitled to vote on matters affecting all of the Funds (such as the
election of Trustees and ratification of the selection of the Trust's
independent accountants). On matters affecting an individual Fund a separate
vote of that Fund is required. Shareholders of a Fund are not entitled to vote
on any matter not affecting that Fund.
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<PAGE>
Under Massachusetts law, the shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Master Trust Agreement of the Trust disclaims shareholder
liability for acts or obligations of the Trust and require that notice of such
disclaimer be given in each agreement, obligation or instrument entered into
or executed by the Trust or the Trustees. The Master Trust Agreement provides
for indemnification out of the Trust's property for all losses and expenses of
any shareholder held personally liable for the obligations of the Trust. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Trust itself would be
unable to meet its obligations. The Adviser believes that, in view of the
above, the risk of personal liability to shareholders is remote.
ADDITIONAL INFORMATION
CUSTODIAN
The Custodian of the assets of the Trust is The Chase Manhattan Bank, Chase
Metrotech Center, Brooklyn, New York 11245.
TRANSFER AGENT
DST Systems, Inc., 210 W. 10th St., 8th Floor, Kansas City, Missouri 64105,
serves as the Funds' transfer agent.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New York, New York
10019, provides audit services, consultation and advice with respect to
financial information in the Trust's filings with the Securities and Exchange
Commission, consults with the Trust on accounting and financial reporting
matters and prepares the Trust's tax returns.
COUNSEL
Goodwin, Procter & Hoar LLP, One Exchange Place, Boston, Massachusetts 02109,
serves as Counsel for the Trust.
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Your Investment Dealer is:
- ---------------------------
VAN ECK GLOBAL [LOGO]
Transfer Agent and Shareholder Service Representative
DST Systems, Inc.
P.O. Box 418407
Kansas City, Missouri 64141
(800) 544-4653
This prospectus is good until 5/1/99 unless superceded.
Form# VEFP1
05/98
VAN ECK GLOBAL
PROSPECTUS
May 1, 1998
Asia Dynasty Fund
Emerging Markets Growth Fund
Global Balanced Fund
Global Hard Assets Fund
Global Real Estate Fund
Gold/Resources
International Investors Gold Fund
U.S. Government Money Fund
A TRADITION OF GLOBAL SOLUTIONS DESIGNED
FOR INTELLIGENT INVESTMENT PLANNING AND DIVERSIFICATION
<PAGE>
VAN ECK WORLDWIDE INSURANCE TRUST
99 PARK AVENUE, NEW YORK, N.Y. 10016
(212) 687-5200
Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company currently consisting of four separate series: Worldwide Bond
Fund, Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund and Worldwide
Real Estate Fund (the "Funds"). Shares of the Funds are offered only to
separate accounts of various insurance companies to fund the benefits of
variable life insurance and variable annuity policies ("Contracts"). Each Fund
has specific investment objectives.
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information............................................................................................................. 2
Investment Objectives and Policies............................................................................................. 2
Risk Factors.................................................................................................................... 5
Foreign Securities.......................................................................................................... 5
Foreign Currency Transactions............................................................................................... 7
Futures and Options Transactions............................................................................................ 8
Repurchase Agreements....................................................................................................... 8
Mortgage-Backed Securities.................................................................................................. 8
Real Estate Securities...................................................................................................... 9
Commercial Paper............................................................................................................ 9
Debt Securities............................................................................................................. 10
Short Sales................................................................................................................. 10
Direct Investments.......................................................................................................... 11
Investment Restrictions......................................................................................................... 11
Investment Advisory Services.................................................................................................... 14
The Distributor................................................................................................................. 16
Portfolio Transactions and Brokerage............................................................................................ 16
Trustees and Officers........................................................................................................... 18
Principal Shareholders.......................................................................................................... 22
Valuation of Shares............................................................................................................. 23
Taxes........................................................................................................................... 23
Redemptions in Kind............................................................................................................. 24
Performance..................................................................................................................... 24
Additional Information.......................................................................................................... 26
Financial Statements............................................................................................................ 26
Appendix........................................................................................................................ 27
</TABLE>
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Trust's current Prospectus, dated May 1, 1998 (the
"Prospectus"), which is available at no charge upon written or telephone request
to the Trust at the address or telephone number set forth at the top of this
page.
Shareholders are advised to read and retain this Statement
of Additional Information for future reference
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998
<PAGE>
GENERAL INFORMATION
Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company organized as a "business trust" under the laws of the
Commonwealth of Massachusetts on January 7, 1987 as Van Eck Variable Insurance
Products Trust. 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 four series of the Trust: Worldwide Bond Fund, Worldwide Emerging
Markets Fund, Worldwide Hard Assets Fund and Worldwide Real Estate Fund (the
"Funds"). Worldwide Emerging Markets Fund and Worldwide Hard Assets Fund are
classified as diversified funds and Worldwide Bond Fund and Worldwide Real
Estate Fund are classified as non-diversified funds under the Investment Company
Act of 1940, as amended (the "1940 Act").
INVESTMENT OBJECTIVES AND POLICIES
WORLDWIDE BOND FUND
Worldwide Bond Fund seeks high total return through a flexible policy of
investing globally, primarily in debt securities.
Total return is comprised of current income and capital appreciation. The Fund
attempts to achieve its objective by taking advantage of investment
opportunities in the United States as well as in other countries throughout the
world where opportunities may be more rewarding and may emphasize either
component of total return. Normally, the Fund will have at least 65% of its
total assets invested in bonds of varying maturities.
The Fund may invest in any type of security including, but not limited to,
common stocks and equivalents (such as convertible debt securities and
warrants), preferred stocks and bonds and debt obligations of domestic and
foreign companies, governments (including their political subdivisions) and
international organizations. The Fund may buy and sell financial futures
contracts and options on financial futures contracts, which may include bond and
stock index futures contracts and foreign currency futures contracts. The Fund
may write, purchase or sell put or call options on securities and foreign
currencies. In addition, the Fund may lend its portfolio securities and borrow
money for investment purposes (i.e. leverage its portfolio).
The Fund may invest in "when-issued" securities and collateralized mortgage
obligations. The Appendix to this Statement of Additional Information contains
an explanation of the rating categories of Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Corporation ("S&P") relating to the fixed-
income securities and preferred stocks in which the Fund may invest, including a
description of the risks associated with each category.
WORLDWIDE EMERGING MARKETS FUND
Worldwide Emerging Markets Fund seeks long-term capital appreciation by
investing primarily in equity securities in emerging markets around the world.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in Emerging Country and emerging market equity securities. An
"emerging market" or "Emerging Country" is any country that the World Bank, the
International Finance Corporation or the United Nations or its authorities has
determined to have a low or middle income economy. Emerging Countries can be
found in regions such as Asia, Latin America, Africa and Eastern Europe. The
countries that will not be considered Emerging
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Countries include the United States, Australia, Canada, Japan, New Zealand and
most countries located in Western Europe such as Austria, Belgium, Denmark,
Finland, France, Germany, Great Britain, Ireland, Italy, the Netherlands,
Norway, Spain, Sweden and Switzerland.
The Fund considers emerging market securities to include securities which are
(i) principally traded in the capital markets of an emerging market country;
(ii) securities of companies that derive at least 50% of their total revenues
from either goods produced or services performed in Emerging Countries or from
sales made in Emerging Countries, regardless of where the securities of such
companies are principally traded; (iii) securities of companies organized under
the laws of, and with a principal office in an Emerging Country; (iv) securities
of investment companies (such as country funds) that principally invest in
emerging market securities; and (v) American Depositary Receipts (ADRs),
American Depositary Shares (ADSs), European Depositary Receipts (EDRs) and
Global Depositary Receipts (GDRs) with respect to the securities of such
companies.
Equity securities in which the Fund may invest include common stocks; preferred
stocks (either convertible or non-convertible); rights; warrants; direct equity
interests in trusts, partnerships, joint ventures and other unincorporated
entities or enterprises; convertible debt instruments; and special classes of
shares available only to foreign persons in those markets that restrict
ownership of certain classes of equity to nationals or residents of that
country. These securities may be listed on securities exchanges or traded over-
the-counter. Direct investments are generally considered illiquid and will be
aggregated with other illiquid investments for purposes of the limitation on
illiquid investments.
The Adviser expects that the Fund will normally invest in at least three
different countries. The Fund emphasizes equity securities, but may also invest
in other types of instruments, including debt securities of any quality (other
than commercial paper as described herein). Debt securities may include fixed
or floating rate bonds, notes, debentures, commercial paper, loans, convertible
securities and other debt securities issued or guaranteed by governments,
agencies or instrumentalities, central banks or private issuers.
The Fund may, for temporary defensive purposes, invest more than 35% of its
total assets in securities which are not emerging market securities, such as
high grade, liquid debt securities of foreign and United States companies,
foreign governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in money
market instruments denominated in U.S. dollars or a foreign currency. These
money market instruments include, but are not limited to, negotiable or short-
term deposits with domestic or foreign banks with total surplus and undivided
profits of at least $50 million; high quality commercial paper; and repurchase
agreements maturing within seven days with domestic or foreign dealers, banks
and other financial institutions deemed to be creditworthy under guidelines
approved by the Board of Trustees of the Trust. The commercial paper in which
the Fund may invest will, at the time of purchase, be rated P-1 or better by
Moody's; A-1 or better by S&P; Fitch-1 by Fitch; Duff-1 by Duff & Phelps
("D&P"), or if unrated, will be of comparable high quality as determined by the
Adviser.
WORLDWIDE HARD ASSETS FUND
(Formerly, Gold and Natural Resources Fund)
The Fund will, under normal market conditions, invest at least 65% of its total
assets in "Hard Asset Securities." Hard Assets Securities include equity
securities of "Hard Asset Companies" and securities, including structured notes,
whose value is linked to the price of a commodity or a commodity index. The
term "Hard Asset Companies" includes companies that are directly or indirectly
(whether through supplier relationships, servicing agreements or otherwise)
engaged to a significant extent in the exploration, development, production or
distribution of one or more of the following: (i) precious metals,
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<PAGE>
(ii) ferrous and non-ferrous metals, (iii) gas, petroleum, petrochemicals or
other hydrocarbons, (iv) forest products, (v) real estate and (vi) other basic
non-agricultural commodities which, historically, have been produced and
marketed profitably during periods of significant inflation. Under normal market
conditions, the Fund will invest at least 5% of its assets in each of the first
five sectors listed above. The Fund has a fundamental policy of concentrating in
such industries and up to 50% of the Fund's assets may be invested in any one of
the above sectors. Precious metal and natural resource securities are at times
volatile and there may be sharp fluctuations in prices even during periods of
rising prices.
The Fund may invest in equity securities. Equity securities include common and
preferred stocks; equity and equity index swap agreements; direct equity
interests in trusts, partnerships, joint ventures and other unincorporated
entities or enterprises; special classes of shares available only to foreign
persons in such markets that restrict the ownership of certain classes of equity
to nationals or residents of the country; convertible preferred stocks and
convertible debt instruments. The Fund may also invest in fixed-income
securities which include obligations issued or guaranteed by a government or any
political subdivisions, agencies, instrumentalities, or by a supranational
organization such as the World Bank or European Economic Community (or other
organizations which are chartered to promote economic development and are
supported by various governments and government entities), adjustable-rate
preferred stock, interest rate swaps, corporate bonds, debentures, notes,
commercial paper, certificates of deposit, time deposits, repurchase agreements,
and debt obligations which may have a call on a common stock or commodity by
means of a conversion privilege or attached warrants. The Fund may invest in
debt instruments of the U.S. Government and its agencies having varied
maturities.
The Fund may purchase securities, including structured notes, whose value is
linked to the price of a commodity or a commodity index. The Fund may purchase
and sell financial futures and commodity futures contracts and may also write,
purchase or sell put or call options on securities, foreign currencies,
commodities and commodity indices. The Fund may invest in asset-backed
securities such as collateralized mortgage obligations and other mortgage and
non-mortgage asset-backed securities. The Fund may also lend its portfolio
securities and borrow money for investment purposes (i.e. leverage its
portfolio).
The Fund may also invest in "when-issued" securities and "partly paid"
securities. The Appendix to this Statement of Additional Information contains
an explanation of the rating categories of Moody's and S&P relating to the
fixed-income securities and preferred stocks in which the Funds may invest,
including a description of the risks associated with each category. Although
the Fund will not invest in real estate directly, it may invest up to 50% of
its assets in equity securities of real estate investment trusts ("REITs") and
other real estate industry companies or companies with substantial real estate
investments. The Fund may therefore be subject to certain risks associated with
direct ownership of real estate and with the real estate industry in general.
WORLDWIDE REAL ESTATE FUND
Worldwide Real Estate Fund seeks to maximize total return by investing primarily
in equity securities of domestic and foreign companies which are principally
engaged in the real estate industry or which own significant real estate assets.
The Fund will, under normal conditions, invest at least 65% (and at times nearly
all) of its total assets in equity securities of domestic and foreign companies
which are principally engaged in the real estate industry or which own
significant real estate assets ("Real Estate Companies").
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<PAGE>
The Fund may invest up to 35% of its assets in debt securities of Real Estate
Companies and in equity and debt securities of non-Real Estate Companies, which
may include issuers whose products and services are related to the real estate
industry or which own real estate assets.
The Fund may, for temporary defensive purposes, invest more than 35% of its
total assets in securities which are not emerging market securities, such as
high grade, liquid debt securities of foreign and United States companies,
foreign governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in money
market instruments denominated in U.S. dollars or a foreign currency. These
money market instruments include, but are not limited to, negotiable or short-
term deposits with domestic or foreign banks with total surplus and undivided
profits of at least $50 million; high quality commercial paper; and repurchase
agreements maturing within seven days with domestic or foreign dealers, banks
and other financial institutions deemed to be creditworthy under guidelines
approved by the Board of Trustees of the Trust. The commercial paper in which
the Fund may invest will, at the time of purchase, be rated P-1 or better by
Moody's; ; A-1 or better by S&P; Fitch-1 by Fitch; Duff-1 by D&P, or if unrated,
will be of comparable high qualify as determined by the Adviser.
RISK FACTORS
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 Funds may hold
securities and funds in foreign currencies, the Funds may be affected favorably
or unfavorably by changes in currency rates and in exchange control regulations,
if any, and may incur costs in connection with conversions between various
currencies. Most foreign stock markets, while growing in volume of trading
activity, have less volume than the New York Stock Exchange ("NYSE"), and
securities of some foreign companies are less liquid and more volatile than
securities of comparable domestic companies. Similarly, volume and liquidity in
most foreign bond markets are less than in the United States and at times,
volatility of price can be greater than in the United States. Fixed commissions
on foreign securities exchanges are generally higher than negotiated commissions
on United States exchanges, although the Funds endeavor to achieve the most
favorable net results on their portfolio transactions. There is generally less
government supervision and regulation of securities exchanges, brokers and
listed companies in foreign countries than in the United States. In addition,
with respect to certain foreign countries, there is the possibility of exchange
control restrictions, expropriation or confiscatory taxation, political,
economic or social instability, which could affect investments in those
countries. Foreign securities such as those purchased by the Funds may be
subject to foreign government taxes, higher custodian fees and dividend
collection fees which could reduce the yield on such securities.
Investments may be made from time to time by Worldwide Emerging Markets Fund,
Worldwide Hard Assets Fund and Worldwide Real Estate Fund in companies in
developing countries as well as in developed countries. Worldwide Emerging
Markets Fund and Worldwide Hard Assets Fund may have a substantial portion of
their assets in developing countries. Although there is no universally accepted
definition, a developing country is generally considered by the Adviser to be a
country which is in the initial stages of industrialization. Shareholders
should be aware that investing in the equity and fixed income markets of
developing countries involves exposure to unstable governments, economies based
on only a few industries, and securities markets which trade a small number of
securities. Securities markets of developing countries tend to be more volatile
than the markets of developed countries; however, such markets have in the past
provided the opportunity for higher rates of return to investors.
5
<PAGE>
The value and liquidity of investments in developing countries may be affected
favorably or unfavorably by political, economic, fiscal, regulatory or other
developments in the particular countries or neighboring regions. The extent of
economic development, political stability and market depth of different
countries varies widely. Certain developing countries do not have comprehensive
systems of law. Even where adequate law exists in such developing countries, it
may be impossible to obtain swift and equitable enforcement of such law, or to
obtain enforcement of the judgment by a court of another jurisdiction. Certain
countries in the Asia region, including Cambodia, China, Laos, Indonesia,
Malaysia, the Philippines, Thailand and Vietnam are either comparatively
underdeveloped or are in the process of becoming developed. Investments
typically involve greater potential for gain or loss than investments in
securities of issuers in developed countries.
The securities markets in developing countries are substantially smaller, less
liquid and more volatile than the major securities markets in the United States.
A high proportion of the shares of many issuers may be held by a limited number
of persons and financial institutions, which may limit the number of shares
available for investment by the portfolio. Similarly, volume and liquidity in
the bond markets in developing countries are less than in the United States and,
at times, price volatility can be greater than in the United States. A limited
number of issuers in developing countries' securities markets may represent a
disproportionately large percentage of market capitalization and trading value.
The limited liquidity of securities markets in developing countries 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 regarding 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 developing countries are
susceptible to being influenced by large investors trading significant blocks of
securities.
Political and economic structures in many of such countries may be undergoing
significant evolution and rapid development, and such countries may lack the
social, political and economic stability characteristic of the United States.
Certain of such countries have in the past failed to recognize private property
rights and have at times nationalized or expropriated the assets of private
companies. As a result, the risks described above, including the risks of
nationalization or expropriation of assets, may be heightened. In addition,
unanticipated political or social developments may affect the value of the
Funds' investments in those countries and the availability to the Funds of
additional investments in those countries.
Economies of developing countries may differ favorably or unfavorably from the
United States economy in such respects as rate of growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. As export-driven economies, the economies of
countries in the Asia Region are affected by developments in the economies of
their principal trading partners. Hong Kong, Japan and Taiwan have limited
natural resources, resulting in dependence on foreign sources for certain raw
materials and economic vulnerability to global fluctuations of price and supply.
Certain developing countries do not have comprehensive systems of laws, although
substantial changes have occurred in many such countries in this regard in
recent years. Laws regarding fiduciary duties of officers and directors and the
protection of shareholders may not be well developed. Even where adequate law
exists in such developing countries, it may be impossible to obtain swift and
equitable enforcement of such law, or to obtain enforcement of the judgment by a
court of another jurisdiction.
Trading in futures contracts traded on foreign commodity exchanges may be
subject to the same or similar risks as trading in foreign securities.
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FOREIGN CURRENCY TRANSACTIONS
Under normal circumstances, consideration of the prospects for currency exchange
rates will be incorporated into the long-term investment decisions made for the
Funds, with regard to overall diversification strategies. Although the Funds
value their assets daily in terms of U.S. dollars, they do not intend physically
to convert their holdings of foreign currencies into U.S. dollars on a daily
basis. The Funds will do so from time to time, and investors should be aware of
the costs of currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Funds at
one rate, while offering a lesser rate of exchange should the Funds desire to
resell that currency to the dealer. The Funds will use forward contracts, along
with futures contracts and put and call options, to "lock in" the U.S. dollar
price of a security bought or sold and as part of their overall hedging
strategy. The Funds will conduct their foreign currency exchange transactions,
either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through purchasing put and call options on, or
entering into futures contracts or forward contracts to purchase or sell foreign
currencies. See "Futures and Options Transactions."
A forward foreign currency contract, like a futures contract, involves an
obligation to purchase or sell a specific amount of currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. Unlike foreign
currency futures contracts which are standardized exchange-traded contracts,
forward currency contracts are usually traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for such trades.
The Adviser will not commit any Fund to deliver under forward contracts an
amount of foreign currency in excess of the value of the Fund's portfolio
securities or other assets or obligations denominated in that currency. The
Funds' Custodian will place the securities being hedged, cash or U.S. Government
securities or debt or equity securities into a segregated account of the Fund in
an amount equal to the value of the Fund's total assets committed to the
consummation of forward foreign currency contracts to ensure that the Fund is
not leveraged beyond applicable limits. 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 the Funds' commitments with respect to such contracts. At the
maturity of a forward contract, the Funds may either sell the portfolio security
and make delivery of the foreign currency, or they may retain the security and
terminate their contractual obligation to deliver the foreign currency prior to
maturity by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. There can be no assurance, however, that the Funds will be
able to effect such a closing purchase transaction.
It is impossible to forecast the market value of a particular portfolio security
at the expiration of the contract. Accordingly, it may be necessary for the
Funds to purchase additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency that the Funds are obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign currency.
If the Funds retain the portfolio security and engage in an offsetting
transaction, the Funds will incur a gain or a loss to the extent that there has
been movement in forward contract prices. Additionally, although such contracts
tend to minimize the risk of loss due to a decline in the value of the hedged
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currency, at the same time they tend to limit any potential gain which might
result should the value of such currency increase.
FUTURES AND OPTIONS TRANSACTIONS
The Funds may invest in options on futures contracts. Compared to the purchase
or sale of futures contracts, the purchase and sale of options on futures
contracts involves less potential risk to the Funds because the maximum exposure
is the amount of the premiums paid for the options.
The Funds' use of financial futures contracts and options on such futures
contracts, and Worldwide Hard Assets Fund and Worldwide Real Estate Fund's use
of commodity futures contracts and options on such futures contracts may reduce
a Fund's exposure to fluctuations in the prices of portfolio securities and may
prevent losses if the prices of such securities decline. Similarly, such
investments may protect a Fund against fluctuation in the value of securities in
which a Fund is about to invest. Because the financial markets in the
developing countries are not as developed in the United States, these financial
investments may not be available to the Funds and the Funds may be unable to
hedge certain risks.
The use of financial futures and/or commodity futures contracts and options on
such futures contracts as hedging instruments involves several risks. First,
there can be no assurance that the prices of the futures contracts or options
and the hedged security or the cash market position will move as anticipated.
If prices do not move as anticipated, the Funds may incur a loss on their
investment, may not achieve the hedging protection anticipated and/or incur a
loss greater than if it had entered into a cash market position. Second,
investments in options, futures contracts and options on futures contracts may
reduce the gains which would otherwise be realized from the sale of the
underlying securities or assets which are being hedged. Third, positions in
futures contracts and options can be closed out only on an exchange that
provides a market for those instruments. There can be no assurances that such a
market will exist for a particular futures contract or option. If 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.
It is the policy of the Funds to meet the requirements of the Internal Revenue
Code of 1986, as amended (the "Code"), to qualify as a regulated investment
company to prevent double taxation of the Funds and their shareholders. One of
these requirements is that at least 90% of a Fund's gross income be derived from
dividends, interest, payment with respect to securities loans and gains from the
sale or other disposition of stocks or other securities. Gains from commodity
futures contracts do not currently qualify as income for purposes of the 90%
test. The extent to which the Funds may engage in options and futures contracts
transactions may be materially limited by this test.
REPURCHASE AGREEMENTS
A Fund will only enter into a repurchase agreement where (i) the underlying
securities are of the type which the Fund's investment policies would allow it
to purchase directly, (ii) the market value of the underlying security,
including accrued interest, will be at all times equal to or exceed the value of
the repurchase agreement, and (iii) payment for the underlying securities is
made only upon physical delivery or evidence of book-entry transfer to the
account of the custodian or a bank acting as agent.
MORTGAGE-BACKED SECURITIES
The Funds may invest in mortgage-backed securities. A mortgage-backed security
may be an obligation of the issuer backed by a mortgage or pool of mortgages or
a direct interest in an underlying pool of mortgages. The value of mortgage-
backed securities may change due to shifts in the market's perception
8
<PAGE>
of issuers. In addition, regulatory or tax changes may adversely affect the
mortgage securities market as a whole. Stripped mortgage-backed securities are
created when a U.S. governmental agency or a financial institution separates the
interest and principal components of a mortgage-backed security and sells them
as individual securities. The holder of the "principal-only" security ("PO")
receives the principal payments made by the underlying mortgage-backed security,
while the holder of the "interest-only" security ("IO") receives interest
payments from the same underlying security. The prices of stripped mortgage-
backed securities may be particularly affected by change in interest rates. As
interest rates fall, prepayment rates tend to increase, which tends to reduce
the price of IOs and increase prices of POs. Rising interest rates can have the
opposite effect. Changes in interest rates may also affect the liquidity of IOs
and POs.
REAL ESTATE SECURITIES
Although Worldwide Hard Assets Fund will not invest in real estate directly, the
Fund may invest up to 50% of its assets in equity securities of REITs and other
real estate industry companies or companies with substantial real estate
investments. Worldwide Hard Assets Fund and Worldwide Real Estate Fund are
therefore subject to certain risks associated with ownership of real estate and
with the real estate industry in general. These risks include, among others:
possible declines in the value of real estate; possible lack of availability of
mortgage funds; extended vacancies of properties; risks related to general and
local economic conditions; overbuilding; increases in competition, property
taxes and operating expenses; changes in zoning laws; costs resulting from the
clean-up of, and liability to third parties for damages resulting from,
environmental problems; casualty or condemnation losses; uninsured damages from
floods, earthquakes or other natural disasters; limitations on and variations in
rents; and changes in interest rates.
REITs are pooled investment vehicles whose assets consist primarily of interest
in real estate and real estate loans. REITs are generally classified as equity
REITs, mortgage REITs or hybrid REITs. Equity REITs own interest in property
and realize income from the rents and gain or loss from the sale of real estate
interests. Mortgage REITs invest in real estate mortgage loans and realize
income from interest payments on the loans. Hybrid REITs invest in both equity
and debt. Equity REITs may be operating or financing companies. An operating
company provides operational and management expertise to and exercises control
over, many if not most operational aspects of the property.
REITs are not taxed on income distributed to shareholders provided they comply
with several requirements of the Code.
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to the risks of financing projects. REITs are subject to heavy cash
flow dependency, default by borrowers, self-liquidation and the possibilities of
failing to qualify for the exemption from tax for distributed income under the
Code. REITs (especially mortgage REITs) are also subject to interest rate risk
(i.e., as interest rates rise, the value of the REIT may decline).
COMMERCIAL PAPER
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The Funds may invest in commercial paper which is indexed to certain specific
foreign currency exchange rates. The terms of such commercial paper provide
that its principal amount is adjusted upwards or downwards (but not below zero)
at maturity to reflect changes in the exchange rate between two currencies while
the obligation is outstanding. The Funds will purchase such commercial paper
with the currency in which it is denominated and, at maturity, will receive
interest and principal payments thereon in that currency, but the amount or
principal payable by the issuer at maturity will change in proportion to the
change (if any) in the exchange rate between two specified currencies between
the date the instrument is issued and the date the instrument matures. While
such commercial paper entails the risk of loss of principal, the potential for
realizing gains as a result of changes in foreign currency exchange rate enables
the Funds to hedge or cross-hedge against a decline in the U.S. dollar value of
investments denominated in foreign currencies while providing an attractive
money market rate of return. The Funds will purchase such commercial paper for
hedging purposes only, not for speculation. The staff of the Securities and
Exchange Commission has been considering whether the purchase of this type of
commercial paper would result in the issuance of a "senior security" within the
meaning of the 1940 Act. The Funds believe that such investments do not involve
the creation of such a senior security, but nevertheless will establish a
segregated account with respect to its investments in this type of commercial
paper and to maintain in such account cash not available for investment or U.S.
Government securities or other liquid high quality securities having a value
equal to the aggregate principal amount of outstanding commercial paper of this
type.
DEBT SECURITIES
The Funds may invest in debt securities. The market value of debt securities
generally varies in response to changes in interest rates and the financial
condition of each issuer. During periods of declining interest rates, the value
of debt securities generally increases. Conversely, during periods of rising
interest rates, the value of such securities generally declines. These changes
in market value will be reflected in the Fund's net asset value. Debt
securities with similar maturities may have different yields, depending upon
several factors. including the relative financial condition of the issuers. For
example, higher yields are generally available from securities in the lower
rating categories of S&P or Moody's. However, the values of lower-rated
securities generally fluctuate more than those of high grade securities. Many
securities of foreign issuers are not rated by these services. Therefore the
selection of such issuers depends to a large extent on the credit analysis
performed by the Adviser.
New issues of certain debt securities are often offered on a when-issued basis,
that is, the payment obligation and the interest rate are fixed at the time the
buyer enters into the commitment, but delivery and payment for the securities
normally take place after the date of the commitment to purchase. The value of
when-issued securities may vary prior to and after delivery depending on market
conditions and changes in interest rate levels. However, the Funds do not
accrue any income on these securities prior to delivery. The Funds will
maintain in a segregated account with their Custodian an amount of cash or high
quality securities equal (on a daily marked-to-market-basis) to the amount of
its commitment to purchase the when-issued securities.
SHORT SALES
Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund and Worldwide Real
Estate Fund may make short sales of equity securities. The Funds will establish
a segregated account with respect to their short sales and maintain in the
account cash not available for investment or US Government securities or other
liquid, high-quality securities having a value equal to the difference between
(i) the market value of the securities sold short at the time they were sold
short and (ii) any cash, US Government securities or other liquid, high-quality
securities required to be deposited as collateral with the broker in connection
with the short sale (not including the proceeds from the short sale). The
segregated account will be
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<PAGE>
marked to market daily, so that (i) the amount in the segregated account plus
the amount deposited with the broker as collateral equals the current market
value of the securities sold short and (ii) in no event will the amount in the
segregated account plus the amount deposited with the broker as collateral fall
below the original value of the securities at the time they were sold short. The
total value of the assets deposited as collateral with the broker and deposited
in the segregated account will not exceed 50% of the Fund's net assets.
DIRECT INVESTMENTS
Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund and Worldwide Real
Estate Fund may invest up to 10% of their total assets in direct investments.
Direct investments include (i) the private purchase from an enterprise of an
equity interest in the enterprise in the form of shares of common stock or
equity interests in trusts, partnerships, joint ventures or similar enterprises,
and (ii) the purchase of such an equity interest in an enterprise from a
principal investor in the enterprise. In each case, the Funds will, at the time
of making the investment, enter into a shareholder or similar agreement with the
enterprise and one or more other holders of equity interests in the enterprise.
The Adviser anticipates that these agreements will, in appropriate
circumstances, provide the Funds with the ability to appoint a representative to
the board of directors or similar body of the enterprise and for eventual
disposition of the Funds' investment in the enterprise. Such a representative
of the Funds will be expected to provide the Funds with the ability to monitor
its investment and protect its rights in the investment and will not be
appointed for the purpose of exercising management or control of the enterprise.
Certain of the Funds' direct investments will include investments in smaller,
less seasoned companies. These companies may have limited product lines,
markets or financial resources, or they may be dependent on a limited management
group. The Funds do not anticipate making direct investments in start-up
operations, although it is expected that in some cases the Funds' direct
investments will fund new operations for an enterprise which itself is engaged
in similar operations or is affiliated with an organization that is engaged in
similar operations.
Direct investments may involve a high degree of business and financial risk that
can result in substantial losses. Because of the absence of any public trading
market for these investments, the Funds may take longer to liquidate these
positions than would be the case for publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices on
these sales could be less than those originally paid by the Funds. Furthermore,
issuers whose securities are not publicly traded may not be subject to public
disclosure and other investor protection requirements applicable to publicly
traded securities. If such securities are required to be registered under the
securities laws of one or more jurisdictions before being resold, the Funds may
be required to bear the expense of the registration. In addition, in the event
the Funds sell unlisted foreign securities, any capital gains realized on such
transactions may be subject to higher rates of taxation than taxes payable on
the sale of listed securities. Direct investments are generally considered
illiquid and will be aggregated with other illiquid investments for purposes of
the limitation on illiquid investments. Direct investments can be difficult to
price and will be valued at fair value as determined in good faith by the Board
of Trustees. The pricing of direct investments may not be reflective of the
price at which these assets could be liquidated.
INVESTMENT RESTRICTIONS
The following restrictions are fundamental policies which cannot be changed
without the approval of the holders of a majority of a Fund's outstanding
shares. Such majority is defined by the 1940 Act as the vote of the lesser of
(i) 67% or more of the outstanding shares present at a meeting, if the holders
of more
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<PAGE>
than 50% of the outstanding shares are present in person or by proxy or (ii)
more than 50% of a Fund's outstanding shares.
A Fund may not:
1. Purchase or sell real estate, although the Funds may purchase securities of
companies which deal in real estate, including securities of real estate
investment trusts, and may purchase securities which are secured by
interests in real estate;
2. Purchase or sell commodities or commodity futures contracts (for the
purpose of this restriction, forward foreign exchange contracts are not
deemed to be a commodity or commodity contract) except that the Worldwide
Emerging Markets Fund may, for hedging and other purposes, and the
Worldwide Hard Assets Fund, Worldwide Bond Fund and Worldwide Real Estate
Fund may, for hedging purposes only, buy and sell financial futures
contracts which may include stock and bond index futures contracts and
foreign currency futures contracts. The Worldwide Hard Assets Fund and
Worldwide Real Estate Fund may, for hedging purposes only, buy and sell
commodity futures contracts on gold and other natural resources or on an
index thereon. A Fund may not commit more than 5% of its total assets to
initial margin deposits on futures contracts not used for hedging purposes
(except that with respect to Worldwide Emerging Markets Fund, Worldwide
Hard Assets Fund and Worldwide Real Estate Fund margin deposits for futures
positions entered into for bona fide hedging purposes are excluded from the
5% limitation). In addition, Worldwide Hard Assets Fund and Worldwide Real
Estate Fund may invest in gold bullion and coins;
3. Make loans, except by (i) purchase of marketable bonds, debentures,
commercial paper and similar marketable evidences of indebtedness (such as
structured notes, indexed securities and swaps with respect to Worldwide
Hard Assets Fund and Worldwide Real Estate Fund) and (ii) repurchase
agreements. The Funds may lend to broker-dealers portfolio securities with
an aggregate market value up to one-third of its total assets;
4. As to 75% of the total assets of the Worldwide Hard Assets Fund and
Worldwide Emerging Markets Fund purchase securities of any issuer, if
immediately thereafter (i) more than 5% of a Fund's total assets (taken at
market value) would be invested in the securities of such issuer, or (ii) with
respect to the Worldwide Hard Assets Fund, more than 10% of the outstanding
securities of any class of such issuer would be held by a Fund; and in the case
of Worldwide Emerging Markets Fund more than 10% of the outstanding voting
securities of such issuer would be held by a Fund (provided that these
limitations do not apply to obligations of the United States Government, its
agencies or instrumentalities). This limitation does not apply to the Worldwide
Bond Fund and Worldwide Real Estate Fund;
5. Underwrite any issue of securities (except to the extent that a Fund may be
deemed to be an underwriter within the meaning of the Securities Act of
1933, as amended, in the disposition of restricted securities);
6. Borrow money, except that each of the Funds may borrow up to 30% of the
value of its net assets to increase its holding of portfolio securities;
7. Issue senior securities except insofar as a Fund may be deemed to have
issued a senior security by reason of (i) borrowing money in accordance
with restrictions described above; (ii) entering into forward foreign
currency contracts; (iii) financial futures contracts purchased on margin
(iv) commodity futures contracts purchased on margin (Worldwide Hard Assets
Fund) and; (v)
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<PAGE>
foreign currency swaps (Worldwide Emerging Markets Fund, Worldwide Hard
Assets Fund and Worldwide Real Estate Fund);
8. Invest more than 25 percent of the value of a Fund's total assets in the
securities of issuers having their principal business activities in the
same industry, except the Worldwide Emerging Markets Fund, Worldwide Hard
Assets Fund and Worldwide Real Estate Fund, and provided that this
limitation does not apply to obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities;
9. Make investments for the purpose of exercising control or management;
10. Invest in real estate limited partnerships (except Worldwide Real Estate
Fund) or in oil, gas or other mineral leases.
The following policies have been adopted by the Board of Trustees with respect
to each Fund and may be changed without shareholder approval.
A Fund may not:
11. Exclusive of Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund
and Worldwide Real Estate Fund, purchase securities of other open-end
investment companies except as part of a merger, consolidation,
reorganization or acquisition of assets; (i) purchase more than 3% of the
total outstanding voting stock of any investment company, (ii) invest more
than 5% of any of the Fund's total assets in securities of any one
investment company or (iii) invest more than 10% of such value in
investment companies in general. In addition, the Fund may not invest in
the securities of closed-end investment companies, except by purchase in
the open market involving only customary broker's commissions.
12. Invest in securities which are (i) subject to legal or contractual
restrictions on resale ("restricted securities"), or in securities 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 as a result, more than 10% of its total net assets would be
invested in such securities, except that Worldwide Emerging Markets Fund,
Worldwide Hard Assets Fund and Worldwide Real Estate Fund will not invest
more than 15% of the value of their total net assets in such securities
and; (ii) with respect to Worldwide Emerging Markets Fund, Worldwide Hard
Assets Fund and Worldwide Real Estate Fund "illiquid" securities, including
repurchase agreements maturing in more than 7 days and options traded over-
the-counter if the result is that more than 15% of its total net assets
would be invested in such securities;
13. Invest more than 5 percent of the value of its total assets in securities
of companies having together with their predecessors, a record of less than
three years of continuous operation (this restriction does not apply to the
Worldwide Emerging Markets Fund, and Worldwide Real Estate Fund);
14. Write, purchase or sell puts, calls, straddles, spreads or combinations
thereof, except that the Funds may purchase or sell puts and calls on
foreign currencies and on securities as described under "Futures and
Options Transactions" herein and in the Prospectus and that these Funds may
write, purchase or sell put and call options on financial futures
contracts, which include bond and stock index futures contracts and
Worldwide Hard Assets Fund and Worldwide Real Estate Fund may write,
purchase, or sell put and call options on gold or other natural resources
or an index
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<PAGE>
thereon and on commodity futures contracts on gold or other natural
resources or an index thereon;
15. Purchase participations or other interests (other than equity stock
interests) in oil, gas or other mineral exploration or development
programs;
16. Invest more than 5% of its total assets in warrants, whether or not the
warrants are listed on the New York or American Stock Exchanges or more
than 2% of the value of the assets of a Fund (except Worldwide Emerging
Markets Fund and Worldwide Real Estate Fund) in warrants which are not
listed. Warrants acquired in units or attached to securities are not
included in this restriction;
17. Mortgage, pledge or otherwise encumber its assets except to secure
borrowings effected within the limitations set forth in restriction (6);
18. Except for Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund and
Worldwide Real Estate Fund, make short sales of securities, except that the
Worldwide Bond Fund may engage in the transactions specified in
restrictions (1), (2) and (14);
19. 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 related options and borrowing effected within the
limitations set forth in restriction (6);
20. Participate on a joint or joint and several basis in any trading account in
securities, although transactions for the Funds and any other account under
common or affiliated management may be combined or allocated between the
Funds and such account;
21. Purchase or retain a security of any issuer if any of the officers,
directors or Trustees of a Fund or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer, or if such persons
taken together own more than 5% of the securities of such issuer.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of net assets will not be considered a violation
of any of the foregoing restrictions.
INVESTMENT ADVISORY SERVICES
The investment adviser and manager of the Funds (except for the Worldwide
Emerging Markets Fund) is Van Eck Associates Corporation (the "Adviser"), a
Delaware corporation, pursuant to an Advisory Agreement with the Trust dated as
of August 30, 1989. The Adviser furnishes an investment program for the Funds
and determines, subject to the overall supervision and review of the Board of
Trustees, what investments should be purchased, sold or held.
The investment adviser and manager of Worldwide Emerging Markets Fund is Van Eck
Global Asset Management (Asia) Limited (Van Eck-Hong Kong), which is a wholly
owned subsidiary of the Adviser located at 2 Pacific Place, Hong Kong. Van Eck-
Hong Kong has served in this capacity since February 24, 1998. Between
September 28, 1995 and February 24, 1998, the Adviser acted as investment
manager and adviser to Worldwide Emerging Markets Fund.
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<PAGE>
The Adviser or its affiliates provides the Funds with office space, facilities
and simple business equipment and provides the services of consultants,
executive and clerical personnel for administering the affairs of the Funds.
Except as provided for in the Advisory Agreements, the Adviser or its affiliate
compensates all executive and clerical personnel and Trustees of the Trust if
such persons are employees or affiliates of the Adviser or its affiliates. The
advisory fee is computed daily and paid monthly.
The Advisory Agreements provide that they shall each continue in effect from
year to year with respect to a Fund as long as it is approved at least annually
both (i) by a vote of a majority of the outstanding voting securities of the
Fund (as defined in the 1940 Act) or by the Trustees of the Trust, and (ii) in
either event 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 Advisory
Agreements may be terminated on 60 days' written notice by either party and will
terminate automatically if they are assigned within the meaning of the 1940 Act.
The Advisory Agreements for each of the Funds were last reapproved by the Board
of Trustees on April 22, 1998.
The expenses borne by each of the Funds include the charges and expenses of the
transfer and dividend disbursing agent, custodian fees and expenses, legal,
auditors' fees and expenses, brokerage commissions for portfolio transactions,
taxes, (if any), the advisory and administrative fees, extraordinary expenses
(as determined by the Trustees of the Trust), expenses of shareholder and
Trustee meetings and of preparing, printing and mailing proxy statements,
reports and other communications to shareholders, expenses of preparing and
setting in type prospectuses and periodic reports and expenses of mailing them
to current shareholders, legal and accounting expenses, expenses of registering
and qualifying shares for sale (including compensation of the employees of the
Adviser or its affiliate in relation to the time spent on such matters), 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 each Fund, and any other
charges and fees not specifically enumerated as an obligation of the Distributor
or Adviser.
The management fee for each of Worldwide Bond Fund and Worldwide Hard Assets
Fund is based on an annual rate of 1% of the first $500 million of average daily
net assets, .90 of 1% on the next $250 million and .70 of 1% in excess of $750
million. Prior to September 29, 1995, the management fee for each of Worldwide
Bond Fund and Worldwide Hard Assets Fund was based on an annual rate of .75 of
1% of the first $500 million of average daily net assets, .65 of 1% on the next
$250 million and .50 of 1% in excess of $750 million. The management fee for
Worldwide Emerging Markets Fund and Worldwide Real Estate Fund are computed
daily and paid monthly at an annual rate of 1% of average daily net assets,
which includes the fee paid to the Adviser for accounting and administrative
services.
For the fiscal years ended April 30, 1995, April 30, 1996, the eight months
ended December 31, 1996 and for the full year ended December 31, 1997, the
Adviser earned fees with respect to Worldwide Bond Fund of $641,065, $985,741,
$755,274 and $1,117,119, respectively. The Adviser earned fees for the same
period with respect to Worldwide Hard Assets Fund, of $837,780, $1,251,773,
$1,127,303 and $1,736,208, respectively. There were no fee waivers or expense
reimbursements with respect to these two Funds for this period. The Adviser of
Worldwide Emerging Markets Fund waived advisory fees from the date of the Fund's
commencement of operations (December 21, 1995) to December 31, 1996. In
addition, during the same time period the Adviser assumed the operating expenses
of Worldwide Emerging Markets Fund. Commencing January 11, 1997 through
February 3, 1997, the Adviser waived and assumed all fees and expenses, to the
extent they exceeded 1% of Worldwide Emerging Markets Fund's average daily net
assets. From February 4, to December 31, 1997, the Adviser agreed to limit all
expenses to 1.5% of the average daily net assets. For the year ended December
31, 1997, the Adviser waived expenses in the amount of $18,137. The Adviser of
Worldwide Real Estate Fund waived advisory fees from the date of the Fund's
commencement of operations (June 23, 1997) to December 31, 1997; in
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<PAGE>
addition, during the same time period, the Adviser assumed the operating
expenses of Worldwide Real Estate Fund.
Under the Advisory Agreements, the Adviser is responsible for
determining the net asset value per share and maintaining the accounting records
of the Funds. For these services the agreements provide for reimbursement to the
Adviser.
Mr. John C. van Eck is Chairman of the Board of Directors of the Adviser as well
as President and Trustee of the Trust.
THE DISTRIBUTOR
Shares of the Funds are offered on a continuous basis and are distributed
through Van Eck Securities Corporation, 99 Park Avenue, New York, New York (the
"Distributor"), a wholly-owned subsidiary of Van Eck Associates Corporation. The
Trustees of the Trust have approved a Distribution Agreement appointing the
Distributor as distributor of shares of the Funds. The Distribution Agreements
for each of the Funds were last reapproved by action of the Trustees on April
22, 1998.
The Distribution Agreement provides that the Distributor will pay all fees and
expenses in connection with printing and distributing prospectuses and reports
for use in offering and selling shares of the Funds and preparing, printing and
distributing advertising or promotional materials. The Funds will pay all fees
and expenses in connection with registering and qualifying their shares under
federal and state securities laws.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser is responsible for decisions to buy and sell securities and other
investments for the Funds, the selection of brokers and dealers to effect the
transactions and the negotiation of brokerage commissions, if any. In
transactions on stock and commodity exchanges in the United States, these
commissions are negotiated, whereas on foreign stock and commodity exchanges
these commissions are generally fixed and are generally higher than brokerage
commissions in the United States. In the case of securities traded on the over-
the-counter markets, there is generally no stated commission, but the price
usually includes an undisclosed commission or markup. In underwritten
offerings, the price includes a disclosed, fixed commission or discount. Most
short term obligations are normally traded on a "principal" rather than agency
basis. This may be done through a dealer (e.g., securities firm or bank) who
buys or sells for its own account rather than as an agent for another client, or
directly with the issuer. A dealer's profit, if any, is the difference, or
spread, between the dealer's purchase and sale price for the obligation.
In purchasing and selling the Funds' portfolio investments, it is the Adviser's
policy to obtain quality execution at the most favorable prices through
responsible broker-dealers. In selecting broker-dealers, the Adviser will
consider various relevant factors, including, but not limited to, the size and
type of the transaction; the nature and character of the markets for the
security or asset to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer's firm; the broker-
dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions.
The Adviser may cause the Funds to pay a broker-dealer who furnishes brokerage
and/or research services a commission that is in excess of the commission
another broker-dealer would have received for executing the transaction if it is
determined that such commission is reasonable in relation to the value of
16
<PAGE>
the brokerage and/or research services as defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended, which have been provided. Such
research services may include, among other things, analyses and reports
concerning issuers, industries, securities, economic factors and trends and
portfolio strategy. Any such research and other information provided by brokers
to the Adviser is considered to be in addition to and not in lieu of services
required to be performed by the Adviser under its Advisory Agreement with the
Trust. The research services provided by broker-dealers can be useful to the
Adviser in serving its other clients or clients of the Adviser's affiliates.
The Trustees periodically review the Adviser's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Funds and review the commissions paid by the Funds over
representative periods of time to determine if they are reasonable in relation
to the benefits to the Funds.
Investment decisions for the Funds are made independently from those of the
other investment accounts managed by the Adviser 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 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 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 may also be held by one or more of its other clients or by clients of
its affiliates. When two or more of its clients or clients of its affiliates
are engaged in the simultaneous sale or purchase of securities, transactions are
allocated as to amount in accordance with formulae deemed to be equitable as to
each client. There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on other clients.
While it is the policy of the Funds generally not to engage in trading for
short-term gains, the Funds will effect portfolio transactions without regard to
the holding period if, in the judgment of the Adviser, such transactions are
advisable in light of a change in circumstances of a particular company, within
a particular industry or country, or in general market, economic or political
conditions. The portfolio turnover rates of all the Funds may vary greatly from
year to year.
Worldwide Emerging Markets Fund and Worldwide Hard Assets Fund anticipate that
their annual portfolio turnover rates will not exceed 100%. For the period from
commencement of operations (December 21, 1995) to April 30, 1996, the eight
months ended December 31, 1996 and the full year ended December 31 1997, the
portfolio turnover rates for Worldwide Emerging Markets Fund were 45.89%, 29.53%
and 142.39%,* respectively. For fiscal years ended April 30, 1995, April 30,
1996, the eight months ended December 31, 1996 and the full year ended December
31, 1997, the portfolio turnover rates for Worldwide Hard Assets Fund were
23.30%, 26.37%, 46.14% and 102.82%, respectively. The annual portfolio turnover
rate of the Worldwide Bond Fund and Worldwide Real Estate Fund may exceed 100%.
For fiscal years ended April 30, 1995, April 30, 1996, the eight months ended
December
- --------------------------
* The portfolio turnover rate normally does not exceed 100%. Extraordinary
volatile conditions do, however, occasionally require high levels of turnover in
order to preserve capital. These conditions were in evidence during the third
and fourth quarters of 1997 while the Asian markets were in crisis. This crisis
resulted in high levels of volatility throughout global emerging markets. The
high level of turnover reflected a switch to more defensive issues with the goal
of preserving shareholder capital. It is not anticipated that future yeas will
show a repeat of this level of volatility or turnover.
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<PAGE>
31, 1996 and the full year ended December 31, 1997, the portfolio turnover rates
for Worldwide Bond Fund were 265.87%, 208.05%, 73.95% and 135.36%, respectively,
and the Adviser anticipates the turnover rate for the current fiscal year will
also exceed 100%. For the period from June 23 to December 31, 1997, the
portfolio turnover rate of Worldwide Real Estate Fund was 123%. Due to the high
rate of turnover, the Fund will pay a greater amount in brokerage commissions
than a similar size fund with a lower turnover rate, though commissions are not
generally charged in fixed-income transactions. In addition, since the Fund may
have a high rate of portfolio turnover, the Fund may realize capital gains or
losses. Capital gains will be distributed annually to the shareholders. Capital
losses cannot be distributed to shareholders but may be used to offset capital
gains at the Fund level. See "Taxes" in the Prospectus and the Statement of
Additional Information.
The Adviser does not consider sales of shares of the Funds as a factor in the
selection of broker-dealers to execute portfolio transactions for the Funds. For
the fiscal year or period ended April 30, 1995, Worldwide Balanced Fund did not
pay any brokerage commissions, Worldwide Bond Fund paid $24,354 and Worldwide
Hard Assets Fund paid $250,357 in brokerage commissions. For the fiscal year or
period ended December 31, 1996, Worldwide Balanced Fund paid $1,892, Worldwide
Bond Fund paid $7,340, Worldwide Emerging Markets Fund paid $39,037 and
Worldwide Hard Assets Fund paid $457,007 in brokerage commissions. For the
fiscal period or year ended December 31, 1997, Worldwide Real Estate Fund paid
$4,317, Worldwide Emerging Markets Fund paid $1,000,327 and Worldwide Hard
Assets Fund paid $663,946 in brokerage commissions.
For the fiscal year or period ended December 31, 1997, Worldwide Hard Assets
Fund paid $84,043.22, Worldwide Real Estate Fund paid $715.00 and Worldwide
Emerging Markets Fund paid $70,038.68 in commissions to broker-dealers providing
research and certain other services, representing 12.66%, 16.56% and 7.00%,
respectively, of total commissions paid by such Funds.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust, their address, position with the Trust,
age and principal occupations during the past five years are set forth below.
Trustees of the Trust:
@*JOHN C. van ECK, C.F.A. (82) - Chairman of the Board and President
- -------------------------
270 River Road, Briarcliff Manor, New York 10510; Chairman of the Board and
President of another investment company 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).
@#+JEREMY H. BIGGS (62) - Trustee
- ------------------
1220 Park Avenue, New York, New York 10128; Trustee of another investment
company advised by the Adviser; Vice Chairman, Director and Chief Investment
Officer, Fiduciary Trust Company International (investment manager), parent
company of Fiduciary International, Inc.; Chairman of Davis Funds Group
(mutual fund management company); Treasurer and Director of the Royal Oak
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Foundation (the UK National Trust); Director and former chairman of the Union
Settlement Association (the community service organization); First Vice
President, Trustee and Chairman of the Finance Committee of Saint James
School, St. James, Maryland; Former Director, International Investors
Incorporated (1990-1991).
#+RICHARD C. COWELL (70) - Trustee
- -------------------
240 El Vedado Way, Palm Beach, Florida 33480; Trustee of another investment
company advised by the Adviser; Private Investor; Director, West Indies &
Caribbean Development Ltd. (real estate); Former Director, Compo Industries,
Inc. (machinery manufacturer); Former Director, International Investors
Incorporated (1957-1991); Former Director (1978-1981), American Eagle
Petroleums, Ltd. (oil and gas exploration); Former President and Director
(1968-1976), Minerals and Industries, Inc. (petroleum products); Former
Director (1978-1983), Duncan Gold Resources Inc. (oil exploration and gold
mining); Former Director (1981-1984), Crested Butte Silver Mining Co.; Former
Chairman and Member of Executive Committee (1974-1981), Allerton Resources,
Inc. (oil and gas exploration); Former Director (1976-1982), Western World
Insurance Co.
@PHILIP D. DEFEO (52) - Trustee
----------------
99 Park Avenue, New York, NY 10016; Trustee of another investment company
advised by the Adviser; President, Chief Executive Officer and Director of Van
Eck Associates Corporation (invest-ment adviser) and Van Eck Securities
Corporation (broker-dealer) since September 1996; Former Executive Vice
President and Director of Marketing and Customer Services (June 1994 - August
1996), Cedel International (finance and settlements); Former Managing Director
(July 1992 - April 1994); Lehman Brothers (investment bank and broker-dealer);
Former Senior Vice President, Fidelity Investments and Former President,
Fidelity Services Company (financial services) (1987 - 1992).
#+WESLEY G. McCAIN (55) - Trustee
- ------------------
144 East 30th Street, New York, New York 10016; Trustee of two other
investment companies advised or administered by the Adviser; Chairman and
Owner, Towneley Capital Management, Inc., (investment adviser, since 1971);
Chairman, Eclipse Funds (mutual fund, since 1986); Chairman and Owner, Eclipse
Financial Services, Inc. (since 1986); General Partner, Pharaoh Partners, L.P.
(since 1992); Principal, Pharaoh Partners (Cayman) LDC (since 1996); President
and Owner, Millbrook Associates, Inc. (economic and marketing consulting,
since 1989); Trustee, Libre Group Trust (since 1994); Director, Libre
Investments (Cayman) Ltd. (since 1996); Former Director, International
Investors Incorporated.
#DAVID J. OLDERMAN (62) - Trustee
- -----------------
40 East 52nd Street, New York, New York 10022; Trustee of another investment
company advised by the Adviser; 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).
19
<PAGE>
#*RALPH F. PETERS (69) - Trustee
- -----------------
66 Strimples Mill Road, Stockton, New Jersey 08559-1703; Trustee of another
investment company advised by the Adviser; Former Chairman of the Board,
Former Chairman of the Executive Committee and Chief Executive Officer of
Discount Corporation of New York (dealer in U.S. Treasury and Federal Agency
Securities) (1981-1988); Director, Sun Life Insurance and Annuity Company of
New York; Director, U.S. Life Income Fund Inc., New York; Former Director,
International Investors Incorporated.
#RICHARD D. STAMBERGER (38) - Trustee
- ------------------
888 17th Street, N.W., Washington, D.C. 20006; Trustee of two other investment
companies advised or administered by the Adviser; Principal, National
Strategies, Inc., a public policy firm in Washington, D.C.; Partner and Co-
founder, Quest Partners, L.L.C. (management consulting firm/since 1988);
Executive Vice President, Chief Operating Officer, and a Director of NuCable
Resources Corporation (technology firm/since 1988); 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).
@**JAN F. van ECK (34) Trustee
- ------------------
99 Park Avenue, New York, New York 10016; Director of Van Eck Associates
Corporation; Executive Vice President and Director of Van Eck Securities
Corporation and other affiliated companies; President and Director of Van Eck
Capital Inc.; President and Director of Van Eck Absolute Return Advisers
Corporation; Co-President and Director of Shenyin Wanguo Van Eck Asset
Management (Asia) Limited and President, Chief Executive Officer and Director
of Van Eck Global Asset Management (Asia) Ltd.
@**DEREK S. van ECK (32) Trustee and Executive Vice President
- ----------------
99 Park Avenue, New York, New York 10016; President of the Worldwide Hard
Assets Fund series of Van Eck Worldwide Insurance Trust and the Global Hard
Assets Fund series of Van Eck Funds; Vice President of another investment
company advised by the Adviser; Executive Vice President, Director, Global
Investments and Director of Van Eck Associates Corporation and Executive Vice
President and Director of Van Eck Securities Corporation and other affiliated
companies.
Officers of the Trust:
LUCILLE PALERMO (51) - Executive Vice President
------------
99 Park Avenue, New York, NY 10016; Executive Vice President of another
investment company advised by the Adviser; Associate Director, Mining
Research, of the Adviser.
BRUCE J. SMITH (43) - Vice President and Treasurer
--------------
99 Park Avenue, New York, New York 10016; Officer of two other investment
companies advised or administered by the Adviser; Senior Managing Director,
Portfolio Accounting of Van Eck Associates Corporation and Senior Managing
Director of Van Eck Securities Corporation.
20
<PAGE>
THOMAS H. ELWOOD (50)- Vice President and Secretary
- -------------------
99 Park Avenue, New York, New York 10016; Officer of three other investment
companies advised or administered by the Adviser; Vice President, Secretary
and General Counsel of Van Eck Associates Corporation, Van Eck Securities
Corporation and other affiliated companies. Former Assistant Counsel of
Jefferson Pilot Insurance Company and officer of other investment companies
distributed by Jefferson Pilot and its affiliates. Former Associate Counsel
of New York Life Insurance Company.
JOSEPH P. DiMAGGIO (41) - Controller
- ------------------
99 Park Avenue, New York, New York 10016; Controller of another investment
company advised by the Adviser; Director of Portfolio Accounting of Van Eck
Associates Corporation (since 1993); Former Accounting Manager with Alliance
Capital Management (1985-1993).
CHARLES CAMERON (38) - Vice President
------------------
99 Park Avenue, New York, New York 10016; Vice President of another investment
company advised by the Adviser; Director of Trading of Van Eck Securities
Corporation; currently, has primary responsibility for the Worldwide Balanced
Fund series of the Trust, in consultation with Fiduciary International Inc.
SUSAN C. LASHLEY (43) - Vice President
------------------
99 Park Avenue, New York, New York 10016; Vice President of another investment
company advised by the Adviser; Managing Director, Mutual Fund Operations of
Van Eck Securities Corporation.
KEVIN REID (35) - Vice President
------------------
99 Park Avenue, New York, New York 10016; President of the Global Real Estate
Fund series and Vice President of the Global Hard Assets Fund series of Van
Eck Funds and President of Worldwide Real Estate Fund and Vice President of
the Worldwide Hard Assets Fund series of Van Eck Worldwide Insurance Trust;
officer of another investment company advised by the Adviser; Director, Real
Estate Research, of Van Eck Associates Corporation; Former Chief Financial
Officer of E.P. Reid, Inc. (construction-1993 to 1994); Former Chief Financial
Officer and Chief Operating Officer (1991 - 1993) and Former Vice President
and portfolio manager (1988 - 1991) of Trammell Crow Company (real estate).
BARBARA J. ALLEN (41) - Assistant Secretary
- ------------------
99 Park Avenue, New York, New York 10016; Assistant Secretary of another
investment company advised by the Adviser; Compliance Officer of Van Eck
Associates Corporation and Van Eck Securities Corporation; Former Senior
Counsel, Arizona Corporation Commission, Securities Division (1990 - 1994).
SUSAN I. GRANT (45) Assistant Secretary
- -------------------
99 Park Avenue, New York, New York 10016; Assistant Secretary of other
investment companies advised or administered by the Adviser, Senior Attorney
of Van Eck Associates Corporation; formerly employed by the Royce Funds (1994-
1996) and First Investors Corporation (1989-1994).
21
<PAGE>
GREGORY KRENZER (25) President of Van Eck U.S. Government Money Fund
- ------------------
99 Park Avenue, New York, New York 10016; Research Analyst and Portfolio
Assistant (Global Fixed Income) of Van Eck Associates Corporation since 1994.
_______________________
@ An "interested person" as defined in the 1940 Act.
* Member of Executive Committee - exercises general powers of Board of
Trustees between meetings of the Board.
** Son of Mr. John C. van Eck.
# Member of the Nominating Committee.
+ Member of the Audit Committee - reviews fees, services, procedures,
conclusions and recommendations of independent auditors.
<TABLE>
<CAPTION>
1997
Compensation Table
------------------
Van Eck Worldwide Van Eck Worldwide
Insurance Trust Insurance Trust Total Fund Complex
(Current Trustees Fees) (Deferred Compensation) Compensation (a)
<S> <C> <C> <C>
John C. van Eck $ 0 $ 0 $ 0
Jeremy H. Biggs $ 0 $11,814 $34,750
Richard C. Cowell $11,814 $ 0 $33,500
Philip D. DeFeo $ 0 $ 0 $ 0
Wesley G. McCain $ 0 $11,814 $34,750
David J. Olderman $ 0 $10,934 $32,250
Ralph F. Peters $ 9,522 $ 0 $37,000
Richard D. Stamberger $ 5,466 $ 5,466 $31,000
Derek S. van Eck N/A N/A N/A
Jan F. van Eck N/A N/A N/A
------- ------- -------
</TABLE>
(a) The term "fund complex" refers to the Funds of the Trust, the series of the
Van Eck Funds, which are also managed by the Adviser and the series of Van
Eck/Chubb Funds, Inc., which are administered by the Adviser. The Trustees
are paid a fee for their services to the Trust. No other compensation,
including pension or other retirement benefits, is paid to the Trustees by
the fund complex.
PRINCIPAL SHAREHOLDERS
As of April 30, 1997, shareholders of record of 5% or more of the outstanding
shares of the Funds were as follows: Approximately 60.7% of Worldwide Balanced
Fund was owned by Security Life of Denver, Security Life Center, 1290 Broadway,
Denver, Colorado 80203-5699; approximately 18.8% of Worldwide Balanced Fund was
owned by AIG Life Insurance Company, 80 Pine Street, New York, New York 10005;
and approximately 13.6% of Worldwide Balanced Fund was owned by Indianapolis
Life Annuity and Insurance Company, 2960 North Meridian Street, Indianapolis,
Indiana 46208. Approximately 94.2% of Worldwide Bond Fund, approximately 94.3%
of Worldwide Emerging Markets Fund and approximately 93.1% of Worldwide Hard
Assets Fund, respectively, was owned by The Best of America IV, a separate
account offered by Nationwide Life Insurance Company, One Nationwide Plaza,
Columbus, Ohio 43216 to fund the benefits of the separate account's variable
annuity contractowners.
22
<PAGE>
Approximately 5.3% of Worldwide Emerging Markets Fund
was owned by Provident Mutual Life Insurance Company - Variable Life, 1050 West
Lakes Drive, Berwyn, Pennsylvania 19312.
VALUATION OF SHARES
The net asset value per share of each of the Funds is computed by dividing the
value of all of a Fund's securities plus cash and other assets, less
liabilities, by the number of shares outstanding. The net asset value per share
is computed as of the close of the New York Stock Exchange, Monday through
Friday, exclusive of national business holidays. The Funds will be closed on
the following national business holidays: New Year's Day, Martin Luther King
Jr.'s birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas (or the days on which these holidays
are observed).
Shares of the Funds are sold at the public offering price which is determined
once each day the Funds are open for business and is the net asset value per
share.
The net asset values need not be computed on a day in which no orders to
purchase, sell or redeem shares of the Funds have been received.
The value of a financial futures or commodity futures contract equals the
unrealized gain or loss on the contract that is determined by marking it to the
current settlement price for a like contract acquired on the day on which the
commodity futures contract is being valued. A settlement price may not be used
if the market makes a limit move with respect to a particular commodity.
Securities or futures contracts for which market quotations are readily
available are valued at market value, which is currently determined using the
last reported sale price. If no sales are reported as in the case of most
securities traded over-the-counter, securities are valued at the mean of their
bid and asked prices at the close of trading on the NYSE. 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, at which time the mean of the bid and
ask prices is used. All other securities are valued at their fair value as
determined in good faith by the Trustees. Foreign securities or futures
contracts quoted in foreign currencies are valued at appropriately translated
foreign market closing prices or as the Board of Trustees may prescribe.
Generally, trading in foreign securities and futures contracts, as well as
corporate bonds, United States Government securities and money market
instruments, is substantially completed each day at various times prior to the
close of the NYSE. The values of such securities used in determining the net
asset value of the shares of the Funds may be computed as of such times.
Foreign currency exchange rates are also generally determined prior to the close
of the NYSE. Occasionally, events affecting the value of such securities and
such exchange rates may occur between such times and the close of the NYSE 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.
TAXES
Each 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, a
Fund must, among other things, (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, gains
23
<PAGE>
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 and (b) satisfy certain diversification requirements.
As a regulated investment company, a Fund will not be subject to federal income
tax on its net investment income and capital gain net income (capital gains in
excess of its capital losses) that it distributes to shareholders if at least
90% of its investment company taxable income for the taxable year is
distributed. However, if for any taxable year a Fund does not satisfy the
requirements of Subchapter M of the Code, all of its taxable income will be
subject to tax at regular corporate rates without any deduction for distribution
to shareholders, and such distributions will be taxable to shareholders as
ordinary income to the extent of the Fund's current or accumulated earnings or
profits.
REDEMPTIONS IN KIND
The Trust has elected 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 in 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 Funds may advertise performance in terms of average annual total return for
1, 5 and 10 year periods, or for such lesser periods as any of such Funds have
been in existence. Average annual total return is computed by finding the
average annual compounded rates of return over the periods that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P(1+T)/to the nth power/ = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5, or 10
year periods at the end of the year or period;
The calculation assumes the maximum sales load (or other charges deducted from
payments) is deducted from the initial $1,000 payment and assumes all dividends
and distributions by the fund are reinvested at the price stated in the
prospectus on the reinvestment dates during the period, and includes all
recurring fees that are charged to all shareholder accounts.
Average annual total returns for the Funds for various periods ended December
31, 1997 (after maximum sales charge) are as follows:
1 Year 5 Years 10 Years Life
Worldwide Bond Fund 2.38% 5.55% -- 6.16%
Worldwide Emerging
Markets Fund (11.61)% -- -- 5.29%
24
<PAGE>
Worldwide Hard Assets
Fund (1.67)% 15.12% -- 7.00%
Worldwide Real Estate
Fund -- -- -- 40.17%
The Funds may advertise performance in terms of a 30-day yield quotation. The
30-day yield quotation is computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
YIELD = 2[(A-B/CD + 1)/to the sixth power/-1]
Where: A dividends and interest earned during the period
B expenses accrued for the period (net of reimbursement)
C the average daily number of shares outstanding during the
period that were entitled to receive dividends
D the maximum offering price per share on the last day of the
period after adjustment for payment of dividends within 30
days thereafter
The Funds may also advertise performance in terms of aggregate total return.
Aggregate total return for a specified period of time is determined by
ascertaining the percentage change in the net asset value of shares of the Fund
initially acquired assuming reinvestment of dividends and distributions and
without giving effect to the length of time of the investment according to the
following formula:
[(B-A)/A](100)=ATR
Where: A initial investment
B value at end of period
ATR aggregate total return
The calculation assumes the maximum sales charge is deducted from the initial
payment and assumes all distributions by the Funds are reinvested at the price
stated in the Prospectus on the reinvestment dates during the period, and
includes all recurring fees that are charged to all shareholder accounts.
Aggregate Total Return for the period ended December 31, 1997 (after maximum
sales charge).
1 Year 5 Years 10 Years Life
Worldwide Bond Fund 2.38% 30.98% -- 64.59%
Worldwide Emerging
Markets Fund (11.61)% -- -- 10.98%
Worldwide Hard Assets
Fund (1.67)% 102.19% -- 75.73%
Worldwide Real Estate
Fund -- -- -- 19.60%
25
<PAGE>
Performance figures of a Fund are not useful for comparison purposes because
they do not reflect the charges and deductions at the separate account level.
ADDITIONAL INFORMATION
Custodian. The Chase Manhattan Bank, Chase Metrotech Center, Brooklyn, New York
- ---------
11245, serves as the custodian of the Trust's portfolio securities and cash.
The Custodian is authorized, upon the approval of the Trust, to establish
credits or debits in dollars or foreign currencies with, and to cause portfolio
securities of a Fund to be held by its overseas branches or subsidiaries, and
foreign banks and foreign securities depositories which qualify as eligible
foreign custodians under the rules adopted by the Securities and Exchange
Commission.
Transfer Agent. Van Eck Associates Corporation, 99 Park Avenue, New York, New
- ---------------
York 10016, serves as the Funds' transfer agent.
Independent Accountants. Coopers & Lybrand L.L.P., 1301 Avenue of the Americas,
- -----------------------
New York, New York 10019, serves as the Trust's independent accountants.
Counsel. Goodwin, Procter & Hoar, Exchange Place, Boston, Massachusetts 02109,
- -------
serves as counsel to the Trust.
FINANCIAL STATEMENTS
The financial statements of Worldwide Bond Fund, Worldwide Emerging Markets
Fund, Worldwide Hard Assets Fund and Worldwide Real Estate Fund for the fiscal
year or period ended December 31, 1997, are incorporated by reference from the
Funds' Annual Reports to Shareholders which are available at no charge upon
written or telephone request to the Trust at the address or telephone number set
forth on the first page of this Statement of Additional Information.
26
<PAGE>
APPENDIX
CORPORATE BOND RATINGS
- ----------------------
Description of Moody's Investors Service, Inc. Corporate Bond Ratings:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt-
edge". Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be greater or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors given security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements. Their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack the characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
Caa-Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category.
27
<PAGE>
Description of Standard & Poor's Corporation Corporate Bond Ratings:
AAA -- Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB -- Bonds rated BBB are regarding as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB--Bonds rated BB have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
B--Bonds rated B have a greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating is also used for debt
subordinated to senior debt that is assigned an actual or implied BB rating.
CCC--Bonds rated CCC have a current identifiable vulnerability to default, and
are dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, they are not likely to have the
capacity to pay interest and repay principal.
The ratings from AA to CCC may be modified by the addition of a plus or minus to
show relative standing within the major rating categories.
PREFERRED STOCK RATINGS
- -----------------------
Description of Moody's Investors Service, Inc. Preferred Stock Ratings:
aaa - An issue which is rated aaa is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of convertible preferred stocks.
aa - An issue which is rated aa is considered a high-grade preferred stock. This
rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
a - An issue which is rated a is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the aaa
and aa classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
28
<PAGE>
baa - An issue which is rated baa is considered to be medium-grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
ba - An issue which is rated ba is considered to have speculative elements, and
its future cannot be considered well assured. Earnings and asset protection may
be very moderate and not well safe-guarded during adverse periods. Uncertainty
of position characterizes preferred stocks in this class.
b - An issue which is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of
the issue over any long period of time may be small.
caa - An issue which is rated caa is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future
status of payment.
ca - An issue which is rated ca is speculative in a high degree and is likely to
be in arrears on dividends with little likelihood of eventual payment.
c - This is the lowest rated class of preferred or preference stock. Issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Description of Standard & Poor's Corporation Preferred Stock Ratings:
AAA - This is the highest rating that may be assigned by Standard & Poor's to a
preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.
AA - A preferred stock issue rated AA also qualifies as a high-quality fixed
income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated AAA.
A - An issue rated A is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effect of
changes in circumstances and economic conditions.
BBB - An issue rated BBB is regarded as backed by an adequate capacity to pay
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the A category.
BB, B, CCC - Preferred stocks rated BB, B and CCC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay preferred
stock obligations. BB indicates the lowest degree of speculation and CCC the
highest degree of speculation. While such issues will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
SHORT TERM DEBT RATINGS
- -----------------------
Description of Moody's Investors Service, Inc. Short-Term Debt Ratings:
Prime-1--Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following
29
<PAGE>
characteristics: leading market positions in well-established industries, higher
rates of return of funds employed, conservative capitalization structure with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation and well-
established access to range of financial markets and assured sources of
alternate liquidity.
Prime-2--Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3--Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
30
<PAGE>
VAN ECK FUNDS (the "Trust")
VAN ECK GLOBAL FUNDS
VAN ECK GOLD AND MONEY FUNDS
99 PARK AVENUE, NEW YORK, N.Y. 10016
SHAREHOLDER SERVICES: TOLL FREE (800) 544-4653
Van Eck Funds is a mutual fund consisting of eight separate series: Global
Balanced Fund (Class A and B), Asia Dynasty Fund (Class A and B), Emerging
Markets Growth Fund (Class A, B and C), International Investors Gold Fund (Class
A), Gold/Resources Fund (Class A), Global Hard Assets Fund (Class A, B), Global
Real Estate Fund (Class A, B and C) and U.S. Government Money Fund (the
"Funds").
TABLE OF CONTENTS Page
- ----------------- ----
GENERAL INFORMATION............................................ 2
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS................ 2
INVESTING IN FOREIGN
SECURITIES..................................................... 7
FOREIGN CURRENCY
TRANSACTIONS................................................... 10
FUTURES AND OPTIONS
TRANSACTIONS................................................... 11
MORTGAGE-BACKED
SECURITIES..................................................... 11
REAL ESTATE
SECURITIES..................................................... 12
COMMERCIAL
PAPER.......................................................... 12
DEBT SECURITIES................................................ 13
SHORT SALES.................................................... 13
DIRECT INVESTMENTS............................................. 14
REPURCHASE AGREEMENTS.......................................... 14
RULE 144A SECURITIES........................................... 15
INVESTMENT RESTRICTIONS........................................ 15
INVESTMENT ADVISORY SERVICES................................... 20
THE DISTRIBUTOR................................................ 23
PORTFOLIO TRANSACTIONS AND BROKERAGE........................... 25
TRUSTEES AND OFFICERS.......................................... 28
VALUATION OF SHARES............................................ 36
EXCHANGE PRIVILEGE............................................. 39
TAX-SHELTERED RETIREMENT PLANS................................. 39
INVESTMENT PROGRAMS............................................ 41
TAXES.......................................................... 43
REDEMPTIONS IN KIND............................................ 45
PERFORMANCE.................................................... 46
ADDITIONAL INFORMATION......................................... 48
FINANCIAL STATEMENTS........................................... 49
APPENDIX....................................................... 50
MARKET INDEX DESCRIPTIONS...................................... 56
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ IN CONJUNCTION WITH THE FUNDS' CURRENT PROSPECTUS, DATED MAY 1, 1998 (THE
"PROSPECTUS"), WHICH IS AVAILABLE AT NO CHARGE UPON WRITTEN OR TELEPHONE REQUEST
TO THE TRUST AT THE ADDRESS OR TELEPHONE NUMBER AT THE TOP OF THIS PAGE.
SHAREHOLDERS ARE ADVISED TO READ AND RETAIN THIS STATEMENT OF ADDITIONAL
INFORMATION FOR FUTURE REFERENCE.
STATEMENT OF ADDITIONAL INFORMATION May 1, 1998
<PAGE>
GENERAL INFORMATION
-------------------
Van Eck Funds (the "Trust") is an open-end management investment company
organized as a "business trust" under the laws of The Commonwealth of
Massachusetts on April 3, 1985. The Board of Trustees has authority to create
additional series or funds, each of which may issue a separate class of shares.
There are currently eight series of Van Eck Funds: Global Balanced Fund (Class
A and B), Asia Dynasty Fund (Class A and B), Emerging Markets Growth Fund (Class
A, B and C) International Investors Gold Fund (Class A), Gold/Resources Fund
(Class A), Global Income Fund (Class A), Global Hard Assets Fund (Class A, B and
C) Global Real Estate Fund (Class A, B and C) and U.S. Government Money Fund,
each of which commenced operations as a series of Van Eck Funds.
The Global Balanced Fund (Class A and B), Asia Dynasty Fund (Class A and
B), Global Real Estate Fund (Class A, B and C), Emerging Markets Growth Fund
(Class A, B and C) and Global Hard Assets Fund (Class A, B and C) are referred
to as the Van Eck Global Funds. International Investors Gold Fund (Class A),
Gold/Resources Fund (Class A) and U.S. Government Money Fund are referred to as
the Van Eck Gold and Money Funds.
International Investors Gold Fund was formerly a mutual fund incorporated
under the laws of the state of Delaware under the name of International
Investors Incorporated. International Investors Incorporated was reorganized as
a series of the Trust on April 30, 1991. International Investors Incorporated
had been in continuous existence since 1955, and had been concentrating in gold
mining shares since 1968.
Each series of the Trust, other than the Global Balanced Fund, Global Hard
Assets Fund and Global Real Estate Fund are classified as a diversified fund
under the 1940 Act.
Van Eck Associates Corporation (the "Adviser") serves as investment adviser
to the Funds (except for the Asia Dynasty Fund and Emerging Markets Growth
Fund). Van Eck Global Asset Management (Asia) Limited ("Van Eck-Hong Kong")
serves as the investment adviser to the Asia Dynasty Fund and Emerging Markets
Growth Fund. Fiduciary International, Inc. ("FII") serves as sub-investment
adviser to the Global Balanced Fund.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
-----------------------------------------------
International Investors Gold Fund
- ---------------------------------
The Fund's primary objective is long-term capital appreciation, while
retaining freedom to take current income into consideration in selecting
investments. The Fund's fundamental policy is to concentrate its investments in
common stocks of gold mining companies. It may invest in that industry up to
100% of the value of its assets. In some future period or periods, due to
adverse conditions in that industry, the Fund may for temporary defensive
purposes have less than 25% of the value of its assets invested in that
industry, however, under normal circumstances the Fund will have at least 65% of
its total assets invested in that industry.
The Fund's policy is to invest primarily in securities of companies,
wherever organized, whose properties, products or services are international in
scope or substantially in countries outside the United States, of foreign
governments, and in United States Treasury securities.
2
<PAGE>
Gold/Resources Fund
- -------------------
Gold/Resources Fund may invest in debt and equity securities of companies
engaged in the exploration, development and production of gold and other natural
resources. Gold, other precious metals and natural resources securities are at
times volatile and there may be sharp fluctuations in prices even during periods
of rising prices.
The Fund may invest in any type of security including, but not limited to,
common stocks and equivalents (such as convertible debt securities and
warrants), preferred stocks and bonds and debt obligations of domestic and
foreign companies, governments (including their political subdivisions) and
international organizations. The Fund may purchase and sell financial and
commodity futures contracts and options on financial futures and commodity
futures contracts and may also write, purchase or sell put or call options on
securities, foreign currencies, commodities and commodity indices.
Global Hard Assets Fund
- -----------------------
Global Hard Assets Fund will, under normal market conditions, invest at
least 65% of its total assets in "Hard Asset Securities." Hard Asset Securities
include equity securities of "Hard Asset Companies" and securities, including
structured notes, whose value is linked to the price of a commodity or a
commodity index. The term "Hard Asset Companies" includes companies that are
directly or indirectly (whether through supplier relationships, servicing
agreements or otherwise) engaged to a significant extent in the exploration,
development, production or distribution of one or more of the following: (i)
precious metals, (ii) ferrous and non-ferrous metals, (iii) gas, petroleum,
petrochemicals or other hydrocarbons, (iv) forest products, (v) real estate and
(vi) other basic non-agricultural commodities which, historically, have been
produced and marketed profitably during periods of significant inflation. Under
normal market conditions, the Fund will invest at least 5% of its assets in each
of the first five sectors listed above. The Fund has a fundamental policy of
concentrating in such industries and up to 50% of the Fund's assets may be
invested in any one of the above sectors. Precious metal and natural resource
securities are at times volatile and there may be sharp fluctuations in prices
even during periods of rising prices.
The Fund may invest in equity securities. Equity securities include common
and preferred stocks; equity and equity index swap agreements; direct equity
interests in trusts, partnerships, joint ventures and other unincorporated
entities or enterprises; special classes of shares available only to foreign
persons in such markets that restrict the ownership of certain classes of equity
to nationals or residents of the country; convertible preferred stocks and
convertible debt instruments. The Fund may also invest in fixed-income
securities which include obligations issued or guaranteed by a government or any
of its political subdivisions, agencies, instrumentalities, or by a
supranational organization such as the World Bank or European Economic Community
(or other organizations which are chartered to promote economic development and
are supported by various governments and government entities), adjustable-rate
preferred stock, interest rate swaps, corporate bonds, debentures, notes,
commercial paper, certificates of deposit, time deposits, repurchase agreements,
and debt obligations which may have a call on a common stock or commodity by
means of a conversion privilege or attached warrants. The Fund may invest in
debt instruments of the U.S. government and its agencies having varied
maturities.
The Fund may purchase securities, including structured notes, whose value
is linked to the price of a commodity or a commodity index. The Fund may
purchase and sell financial and commodity futures contracts and options on
financial futures and commodity futures contracts and may also write, purchase
or sell put or call options on securities, foreign currencies, commodities and
commodity indices. The Fund may invest in asset-backed securities such as
collateralized mortgage obligations and other mortgage and non-mortgage asset-
backed securities. The Fund may also lend its portfolio securities and borrow
money for investment purposes (i.e. leverage its portfolio).
3
<PAGE>
Global Balanced Fund
- --------------------
Global Balanced Fund may invest in equity securities. Equity securities
include common and preferred stocks; equity and equity index swap agreements;
direct equity interests in trusts, partnerships, joint ventures and other
unincorporated entities or enterprises; special classes of shares available only
to foreign persons in such markets that restrict the ownership of certain
classes of equity to nationals or residents of the country; convertible
preferred stocks and convertible debt instruments; financial futures contracts
and options on financial futures contracts; forward currency contracts and put
and call options on securities, securities indices and foreign currencies and
foreign currency swaps.
The Fund may also invest in fixed-income securities which include
obligations issued or guaranteed by a government or any of its political
subdivisions, agencies, instrumentalities, or by a supranational organization
such as the World Bank or European Economic Community (or other organizations
which are chartered to promote economic development and are supported by various
governments and government entities), adjustable-rate preferred stock, interest
rate swaps, corporate bonds, debentures, notes, commercial paper, certificates
of deposit, time deposits, repurchase agreements, and debt obligations which may
have a call on a common stock or commodity by means of a conversion privilege or
attached warrants. The Fund may invest in debt instruments of the U.S.
government and its agencies having varied maturities. The Fund may invest in
asset-backed securities such as collateralized mortgage obligations and other
mortgage and non-mortgage asset-backed securities. The Fund may also lend its
portfolio securities and borrow money for investment purposes (i.e. leverage its
portfolio).
Global Real Estate Fund
- -----------------------
The Global Real Estate Fund seeks to maximize total return by investing
primarily in equity securities of domestic and foreign companies which are
principally engaged in the real estate industry or which owns significant real
estate assets.
The Fund will, under normal conditions, invest at least 65% (and at times
nearly all) of its total assets in equity securities of domestic and foreign
companies which are principally engaged in the real estate industry or which
owns significant real estate assets ("Real Estate Companies").
The Fund may invest up to 35% of its assets in debt securities of Real
Estate Companies and in equity and debt securities of non-Real Estate Companies,
which may include issuers whose products and services are related to the real
estate industry or which own real estate assets.
The Fund may, for temporary defensive purposes, invest more than 35% of its
total assets in securities which are not emerging markets securities, such as
high grade, liquid debt securities of foreign and United States companies,
foreign governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in money
market instruments dominated in the U.S. dollars or a foreign currency. These
money markets instruments include, but are not limited to, negotiable or short-
term deposits with domestic or foreign banks with total surplus and undivided
profits of at least $50 million; high quality commercial paper, and repurchase
agreements maturing within seven days with domestic or foreign dealers, banks
and other financial institutions deemed to be creditworthy under guidelines
approved by the Board of Trustees of the Trust. The commercial paper in which
the Fund may invest will, at the time of purchase, be rated P-1 or better by
Moody's Investors Service, Inc. ("Moody's"); A-1 or better Standard & Poor's
Corporation ("S&P"); Fitch-1 by Fitch; Duff-1 by Duff & Phelps ("D&P"); or if
unrated, will be of comparable high quality as determined by the Adviser.
4
<PAGE>
Emerging Markets Growth Fund
- ----------------------------
The Emerging Markets Growth Fund seeks long-term capital appreciation by
investing primarily in equity securities in emerging markets around the world.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in Emerging Country and emerging market equity securities. An
"emerging market" or "Emerging Country" is any country that the World Bank, the
International Finance Corporation or the United Nations or its authorities has
determined to have a low or middle-income economy. Emerging Countries can be
found in regions such as Asia, Latin America, Africa and Eastern Europe. The
countries that will not be considered Emerging Countries include the United
States, Australia, Canada, Japan, New Zealand and most countries located in
Western Europe such as Austria, Belgium, Denmark, Finland, France, Germany,
Great Britain, Ireland, Italy, the Netherlands, Norway, Spain, Sweden and
Switzerland.
The Fund considers emerging market securities to include securities which
are (i) principally traded in the capital markets of an emerging market country;
(ii) securities of companies that derive at least 50% of their total revenues
from either goods produced or services performed in Emerging Countries or from
sales made in Emerging Countries, regardless of where the securities of such
companies are principally traded; (iii) securities of companies organized under
the laws of, and with a principal office in an Emerging Country; (iv) securities
of investment companies (such as country funds) that principally invest in
emerging market securities; and (v) American Depositary Receipts (ADRs),
American Depositary Shares (ADSs), European Depositary Receipts (EDRs) and
Global Depositary Receipts (GDRs) with respect to the securities of such
companies.
Equity securities in which the Fund may invest include common stocks;
preferred stocks (either convertible or non-convertible); rights; warrants;
direct equity interests in trusts, partnerships, joint ventures and other
unincorporated entities or enterprises; convertible debt instruments; and
special classes of shares available only to foreign persons in those markets
that restrict ownership of certain classes of equity to nationals or residents
of that country. These securities may be listed on securities exchanges or
traded over-the-counter. Direct investments are generally considered illiquid
and will be aggregated with other illiquid investments for purposes of the
limitation on illiquid investments. See "Risk Factors - Emerging Market
Securities."
The Adviser and the Sub-Adviser expect that the Fund will normally invest
in at least three different countries. The Fund emphasizes equity securities,
but may also invest in other types of instruments, including debt securities of
any quality (other than commercial paper as described herein). Debt securities
may include fixed or floating rate bonds, notes, debentures, commercial paper,
loans, convertible securities and other debt securities issued or guaranteed by
governments, agencies or instrumentalities, central banks or private issuers.
The Fund may, for temporary defensive purposes, invest more than 35% of its
total assets in securities which are not emerging market securities, such as
high grade, liquid debt securities of foreign and United States companies,
foreign governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in money
market instruments denominated in U.S. dollars or a foreign currency. These
money market instruments include, but are not limited to, negotiable or short-
term deposits with domestic or foreign banks with total surplus and undivided
profits of at least $50 million; high quality commercial paper; and repurchase
agreements maturing within seven days with domestic or foreign dealers, banks
and other financial institutions deemed to be creditworthy under guidelines
approved by the Board of Trustees of the Fund. The commercial paper in which
the Fund may invest will, at the time of purchase, be rated P-1 or better by
Moody's Investors Service, Inc. ("Moody's"); A-1 or better by Standard & Poor's
Corporation ("S&P"); Fitch-1 by Fitch;
5
<PAGE>
Duff-1 by Duff & Phelps ("D&P"), or if
unrated, will be of comparable high qualify as determined by the Adviser
Asia Dynasty Fund
- -----------------
Asia Dynasty Fund may invest in equity securities, warrants and equity
options of companies located in, or expected to benefit from the developmental
growth of the economies of countries located in the Asia region ("Asia Growth
Companies"). These countries include Burma, Peoples Republic of China
("China"), Cambodia, Hong Kong, India, Indonesia, Korea, Laos, Malaysia,
Pakistan, the Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam
and, when the Fund is in a defensive posture, Australia, Japan and New Zealand.
Equity securities include common and preferred stocks, direct equity interests
in trusts, partnerships, joint ventures and other unincorporated entities or
enterprises, special classes of shares available only to foreign persons in
those markets that restrict ownership of certain classes of equity to nationals
or residents of that country, convertible preferred stocks and convertible debt
instruments. The Fund may buy and sell financial futures contracts and options
on financial futures contracts, forward currency contracts and put or call
options on securities, securities indices and foreign currencies and foreign
currency swaps. The Fund may also lend its portfolio securities and borrow
money for investment purposes (i.e. leverage its portfolio).
CERTAIN POLICIES APPLICABLE TO GLOBAL BALANCED FUND, GLOBAL HARD ASSETS
FUND, ASIA DYNASTY FUND, EMERGING MARKETS GROWTH FUND, INTERNATIONAL INVESTORS
GOLD FUND, GLOBAL INCOME FUND AND GOLD/RESOURCES FUND.
The above Funds may invest in "when issued" securities and "partly paid"
securities. Additionally, Global Balanced Fund, Global Hard Assets Fund, Asia
Dynasty Fund and Global Income Fund may invest in collateralized mortgage
obligations. The Appendix to this Statement of Additional Information contains
an explanation of the rating categories of Moody's Investors Service and
Standard & Poor's Corporation relating to the fixed-income securities and
preferred stocks in which the Funds may invest, including a description of the
risks associated with each category.
U.S. Government Money Fund
- --------------------------
U.S. Government Money Fund seeks safety of principal, daily liquidity and
current income through investments in short-term U.S. Treasury securities and
other securities carrying the "full faith and credit" guarantee of the U.S.
Government. The Fund invests in U.S. Treasury bills, notes, and bonds and other
obligations guaranteed by the full faith and credit of the U.S. Government and
repurchase agreements collateralized by such obligations (at least 80% of its
assets will be so invested). All securities mature within thirteen months from
the date of purchase, although repurchase agreements may be collateralized by
securities maturing in more than one year.
Direct obligations issued by the U.S. Treasury include bills, notes and
bonds which differ from each other only in interest rates, maturities and times
of issuance: Treasury bills have maturities of thirteen months or less,
Treasury notes have maturities of one to ten years and Treasury bonds generally
have maturities of greater than ten years. Securities guaranteed by the U.S.
Government include such obligations as securities issued by the General Services
Administration and the Small Business Administration.
U.S. Government Money Fund may also invest in other short-term instruments
(up to 20% of its assets), in all cases subject to the credit quality
requirements of the 1940 Act, including commercial paper, banker's acceptances,
and certificates of deposit. Commercial paper consists of short-term, unsecured
promissory notes issued principally by banks and corporations to finance short-
term credit needs. The commercial paper purchased by the Fund will consist only
of direct obligations of the issuer. Banker's acceptances are drafts or bills of
exchange that have been guaranteed as to payment by a bank or trust
6
<PAGE>
company. Banker's acceptances are used to effect payment of merchandise sold in
import-export transactions, and are backed by the credit strength of the bank
which assumes the obligation. Time deposits are credit instruments evidencing
the obligation of a bank to repay funds deposited with it for a specified period
of time. Certificates of deposit are certificates evidencing the obligation of a
bank to repay funds deposited with it for a specific period of time.
Gold/Resources Fund and U.S. Government Money Fund, as a fundamental
investment policy, may not invest in securities of South African issuers; Global
Balanced Fund, Asia Dynasty Fund, International Investors Gold Fund, Global Hard
Assets Fund, Emerging Markets Growth Fund and Global Real Estate Fund are not so
restricted by their fundamental investment policies.
RISK FACTORS
------------
Investing In Foreign Securities
-------------------------------
GLOBAL BALANCED FUND, GLOBAL HARD ASSETS FUND, ASIA DYNASTY FUND, EMERGING
MARKETS GROWTH FUND, GLOBAL REAL ESTATE FUND, INTERNATIONAL INVESTORS GOLD FUND
AND GOLD/RESOURCES FUND.
Investors should recognize that investing in foreign securities involves
certain special considerations which are not typically associated with investing
in United States securities. Since investments in foreign companies will
frequently involve currencies of foreign countries, and since the above Funds
may hold securities and funds in foreign currencies, these Funds may be affected
favorably or unfavorably by changes in currency rates and in exchange control
regulations, if any, and may incur costs in connection with conversions between
various currencies. Most foreign stock markets, while growing in volume of
trading activity, have less volume than the New York Stock Exchange, and
securities of some foreign companies are less liquid and more volatile than
securities of comparable domestic companies. Similarly, volume and liquidity in
most foreign bond markets are less than in the United States, and at times
volatility of price can be greater than in the United States. Fixed commissions
on foreign securities exchanges are generally higher than negotiated commissions
on United States exchanges, although these Funds endeavor to achieve most
favorable net results on their portfolio transactions. There is generally less
government supervision and regulation of securities exchanges, brokers and
listed companies in foreign countries than in the United States. In addition,
with respect to certain foreign countries, there is the possibility of exchange
control restrictions, expropriation or confiscatory taxation, political,
economic or social instability, which could affect investments in those
countries. Foreign securities such as those purchased by these Funds may be
subject to foreign government taxes, higher custodian fees and dividend
collection fees which could reduce the yield on such securities.
Investments may be made from time to time by Global Balanced Fund, Global
Hard Assets Fund, Global Real Estate Fund, Asia Dynasty Fund and Emerging
Markets Growth Fund in companies in developing countries as well as in developed
countries. Asia Dynasty Fund, Emerging Markets Growth Fund and Global Hard
Assets Fund may have a substantial portion of their assets in developing
countries. Although there is no universally accepted definition, a developing
country is generally considered by the Adviser to be a country which is in the
initial stages of industrialization. Shareholders should be aware that
investing in the equity and fixed income markets of developing countries
involves exposure to unstable governments, economies based on only a few
industries, and securities markets which trade a small number of securities.
Securities markets of developing countries tend to be more volatile than the
markets of developed countries; however, such markets have in the past provided
the opportunity for higher rates of return to investors.
7
<PAGE>
Since the Emerging Markets Growth Fund will invest at least 65% of its
total assets in emerging market countries and the Asia Dynasty Fund will invest
at least 65% of its total assets in Asia Region investments, its investment
performance will be especially affected by events affecting emerging market
countries and Asia Region companies. The value and liquidity of emerging market
countries and Asia Region investments may be affected favorably or unfavorably
by political, economic, fiscal, regulatory or other developments in the emerging
market countries and Asia Region or their neighboring regions. The extent of
economic development, political stability and market depth of different
countries in the emerging market countries and Asia Region varies widely.
Certain countries in the Asia Region, including Cambodia, China, Laos,
Indonesia, Malaysia, the Philippines, Thailand, and Vietnam are either
comparatively underdeveloped or are in the process of becoming developed.
Investments typically involve greater potential for gain or loss than
investments in securities of issuers in developed countries. Given the Fund's
investments, the Fund will likely be particularly sensitive to changes in
China's economy as the result of a reversal of economic liberalization,
political unrest or changes in China's trading status.
The securities markets in the emerging market countries and Asia Region are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. A high proportion of the shares of many issuers
may be held by a limited number of persons and financial institutions, which may
limit the number of shares available for investment by the portfolio.
Similarly, volume and liquidity in the bond markets in the emerging market
countries and Asia Region are less than in the United States and, at times,
price volatility can be greater than in the United States. A limited number of
issuers in emerging market countries and the Asia Region securities markets may
represent a disproportionately large percentage of market capitalization and
trading value. The limited liquidity of securities markets in the emerging
market countries and Asia Region may also affect the Fund's ability to acquire
or dispose of securities at the price and time it wishes to do so. Accordingly,
during periods of rising securities prices in the more illiquid emerging market
countries and Asia Region securities markets, the Fund's ability to participate
fully in such price increases may be limited by its investment policy of
investing not more than 15% of its net assets in illiquid securities.
Conversely, the Fund's inability to dispose fully and promptly of positions in
declining markets will cause the Fund's net asset value to decline as the value
of the unsold positions is marked to lower prices. In addition, emerging market
countries and Asia Region securities markets are susceptible to being influenced
by large investors trading significant blocks of securities.
The Chinese, Hong Kong and Taiwanese stock markets are undergoing a period
of growth and change which may result in trading volatility and difficulties in
the settlement and recording of transactions, and in interpreting and applying
the relevant law and regulations. In particular, the securities industry in
China is not well developed. China has no securities laws of nationwide
applicability. The municipal securities regulations adopted by Shanghai and
Shenzhen municipalities are very new, as are their respective securities
exchanges and other self-regulatory organizations. In addition, Chinese
stockbrokers and other intermediaries may not perform as well as their
counterparts in the United States and other more developed securities markets.
The prices at which the Funds may acquire investments may be affected by trading
by persons with material non-public information and by securities transactions
by brokers in anticipation of transactions by the Funds in particular
securities. The securities markets in Cambodia, Laos and Vietnam are currently
non-existent.
Asia Dynasty Fund will invest in Asia Region countries with emerging
economies or securities markets, and the Emerging Markets Growth Fund will
invest world-wide in countries with emerging economies or securities markets.
Political and economic structures in many of such countries may be undergoing
significant evolution and rapid development, and such countries may lack the
social, political and economic stability characteristic of the United States.
Certain of such countries have in the past failed to recognize private property
rights and have at times nationalized or expropriated the assets of private
companies. As a result, the risks described above, including the risks of
nationalization or expropriation of assets, may be heightened. In addition,
unanticipated political or social developments may affect the value
8
<PAGE>
of the Funds' investments in those countries and the availability to the Funds
of additional investments in those countries.
Global Real Estate Fund will invest worldwide in countries with emerging
economies or securities markets. Political and economic structures in many of
such countries may be undergoing significant evolution and rapid development,
and such countries may lack the social, political and economic stability
characteristic of the United States. Certain of such countries have in the past
failed to recognize private property rights and have at times nationalized or
expropriated the assets of private companies. As a result, the risks described
above, including the risks of nationalization or expropriation of assets may be
heightened. In addition, unanticipated political or social developments may
affect the value of the Fund's investments in those countries and the
availability of the Fund of additional investments in those countries.
Economies in the emerging market countries and the Asia Region may differ
favorably or unfavorably from the United States economy in such respects as rate
of growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position. As export-driven
economies, the economies of the emerging market countries and Asia Region are
affected by developments in the economies of their principal trading partners.
Revocation by the United States of China's "Most Favored Nation" trading status,
which the United States President and Congress reconsider annually, would
adversely affect the trade and economic development of China and Hong Kong. Hong
Kong, Japan and Taiwan have limited natural resources, resulting in dependence
on foreign sources for certain raw materials and economic vulnerability to
global fluctuations of price and supply.
China governmental actions can have a significant effect on the economic
conditions in the Asia Region, which could adversely affect the value and
liquidity of the Fund's investments. Although the Chinese Government has
recently begun to institute economic reform policies, there can be no assurances
that it will continue to pursue such policies or, if it does, that such policies
will succeed.
China and certain of the other emerging market countries and Asia Region
countries do not have comprehensive systems of laws, although substantial
changes have occurred in China in this regard in recent years. The corporate
form of organization has only recently been permitted in China and national
regulations governing corporations were introduced only in May 1992. Prior to
the introduction of such regulations Shanghai had adopted a set of corporate
regulations applicable to corporations located or listed in Shanghai, and the
relationship between the two sets of regulations is not clear. Consequently,
until a firmer legal basis is provided, even such fundamental corporate law
tenets as the limited liability status of Chinese issuers and their authority to
issue shares remain open to question. Laws regarding fiduciary duties of
officers and directors and the protection of shareholders are not well
developed. China's judiciary is relatively inexperienced in enforcing the laws
that exist, leading to a higher than usual degree of uncertainty as to the
outcome of litigation. Even where adequate law exists in China, it may be
impossible to obtain swift and equitable enforcement of such law, or to obtain
enforcement of the judgment by a court of another jurisdiction. The bankruptcy
laws pertaining to state enterprises have rarely been used and are untried in
regard to an enterprise with foreign shareholders, and there can be no assurance
that such shareholders, including the Funds, would be able to realize the value
of the assets of the enterprise or receive payment in convertible currency. As
the changes to the Chinese legal system develop, the promulgation of new laws,
existing laws and the preemption of local laws by national laws may adversely
affect foreign investors, including the Funds. The uncertainties faced by
foreign investors in China are exacerbated by the fact that many laws,
regulations and decrees of China are not publicly available, but merely
circulated internally. Similar risks exist in other emerging market countries
and Asia Region countries.
Trading in futures contracts traded on foreign commodity exchanges may be
subject to the same or similar risks as trading in foreign securities.
9
<PAGE>
Foreign Currency Transactions
-----------------------------
GLOBAL BALANCED FUND, GLOBAL HARD ASSETS FUND, ASIA DYNASTY FUND, EMERGING
MARKETS GROWTH FUND, GLOBAL REAL ESTATE FUND, INTERNATIONAL INVESTORS GOLD FUND
AND GOLD/RESOURCES FUND.
Under normal circumstances, consideration of the prospects for currency
exchange rates will be incorporated into the long-term investment decisions made
for the above Funds with regard to overall diversification strategies. Although
the Funds value their assets daily in terms of U.S. Dollars, they do not intend
physically to convert their holdings of foreign currencies into U.S. dollars on
a daily basis. The Funds will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign currency
to the Funds at one rate, while offering a lesser rate of exchange should the
Funds desire to resell that currency to the dealer. The Funds will use forward
contracts, along with futures contracts, foreign exchange swaps (Global Hard
Assets Fund, Global Balanced Fund, Global Real Estate Fund, Asia Dynasty Fund
and Emerging Markets Growth Fund only) and put and call options (all types of
derivatives), to "lock in" the U.S. Dollar price of a security bought or sold
and as part of their overall hedging strategy. The Funds will conduct their
foreign currency exchange transactions, either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
purchasing put and call options on, or entering into futures contracts or
forward contracts to purchase or sell foreign currencies. See "Futures and
Options Transactions."
A forward foreign currency contract, like a futures contract, involves an
obligation to purchase or sell a specific amount of currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. Unlike foreign
currency futures contracts which are standardized exchange-traded contracts,
forward currency contracts are usually traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for such trades.
The Adviser will not commit any Fund to deliver under forward contracts an
amount of foreign currency in excess of the value of the Fund's portfolio
securities or other assets or obligations denominated in that currency. The
Funds' Custodian will place the securities being hedged, cash or U.S. government
securities or debt or equity securities into a segregated account of the Fund in
an amount equal to the value of the Fund's total assets committed to the
consummation of forward foreign currency contracts to ensure that the Fund is
not leveraged beyond applicable limits. 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 the Funds' commitments with respect to such contracts. At the
maturity of a forward contract, the Funds may either sell the portfolio security
and make delivery of the foreign currency, or they may retain the security and
terminate their contractual obligation to deliver the foreign currency prior to
maturity by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. There can be no assurance, however, that the Funds will be
able to effect such a closing purchase transaction.
It is impossible to forecast the market value of a particular portfolio
security at the expiration of the contract. Accordingly, if a decision is made
to sell the security and make delivery of the foreign currency it may be
necessary for a Fund to purchase additional foreign currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of foreign currency that a Fund is obligated to deliver.
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If a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. Additionally, although such contracts
tend to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time, they tend to limit any potential gain which might
result should the value of such currency increase.
Futures And Options Transactions
--------------------------------
Global Balanced Fund, Global Hard Assets Fund, Asia Dynasty Fund, Emerging
Markets Growth Fund, Gold/Resources Fund, Global Real Estate Fund, and Global
Income Fund. These Funds may invest in options on futures contracts. Compared
to the purchase or sale of futures contracts, the purchase and sale of options
on futures contracts involves less potential risk to the Funds because the
maximum exposure is the amount of the premiums paid for the options. Futures
contracts and options thereon are both types of derivatives.
The use of financial futures contracts and commodity futures contracts,
options on such futures contracts and commodities (Gold/Resources Fund, Global
Hard Assets Fund, Global Real Estate Fund and International Investors Gold
Fund), may reduce a Fund's exposure to fluctuations in the prices of portfolio
securities and may prevent losses if the prices of such securities decline.
Similarly, such investments may protect a Fund against fluctuation in the value
of securities in which a Fund is about to invest. Because the financial markets
in the Asia Region countries and other developing countries are not as developed
as in the United States these financial investments may not be available to the
Funds and the Funds may be unable to hedge certain risks.
The use of financial futures and commodity futures contracts and options on
such futures contracts and commodities (Gold/Resources Fund, Global Hard Assets
Fund, Global Real Estate Fund and International Investors Gold Fund) as hedging
instruments involves several risks. First, there can be no assurance that the
prices of the futures contracts or options and the hedged security or the cash
market position will move as anticipated. If prices do not move as anticipated,
a Fund may incur a loss on its investment, may not achieve the hedging
protection anticipated and/or incur a loss greater than if it had entered into a
cash market position. Second, investments in options, futures contracts and
options on futures contracts may reduce the gains which would otherwise be
realized from the sale of the underlying securities or assets which are being
hedged. Third, positions in futures contracts and options can be closed out
only on an exchange that provides a market for those instruments. There can be
no assurances that such a market will exist for a particular futures contract or
option. If a Fund cannot close out an exchange traded futures contract or
option which it holds, it would have to perform its contractual obligation or
exercise its option to realize any profit and would incur transaction costs on
the sale of the underlying assets.
It is the policy of each of the Funds to meet the requirements of the
Internal Revenue Code of 1986, as amended (the "Code") to qualify as a regulated
investment company to prevent double taxation of the Funds and their
shareholders. One of the requirements is that at least 90% of a Fund's gross
income be derived from dividends, interest, payment with respect to securities
loans and gains from the sale or other disposition of stocks or other
securities. Gains from commodity futures contracts do not currently qualify as
income for purposes of the 90% test. The extent to which the Funds may engage
in options and futures contract transactions may be materially limited by these
tests.
Mortgage-Backed Securities
--------------------------
The Funds may invest in mortgage-backed securities. A mortgage-backed
security may be an obligation of the issuer backed by a mortgage or pool of
mortgages or a direct interest in an underlying pool of mortgages. The value of
mortgage-backed securities may change due to shifts in the market's perception
of issuers. In addition, regulatory or tax changes may adversely affect the
mortgage securities market as a
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whole. Stripped mortgage-backed securities are created when an U.S. governmental
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security ("PO") receives the
principal payments made by the underlying mortgage-backed security, while the
holder of the "interest-only" security ("IO") receives interest payments from
the same underlying security. The prices of stripped mortgage-backed securities
may be particularly affected by change in interest rates. As interest rates
fall, prepayment rates tend to increase, which tends to reduce the price of IOs
and increase prices of POs. Rising interest rates can have the opposite effect.
Changes in interest rates may also affect the liquidity of IOs and POs.
Real Estate Securities
----------------------
Global Real Estate Fund may invest in real estate directly, whereas,
Gold/Resources Fund and Global Hard Assets Fund cannot. However, each of these
Funds may invest a percentage of its assets in equity securities of REITs and
other real estate industry companies or companies with substantial real estate
investments. Hard Assets Fund may invest up to 50% of its assets in such
securities. Gold/Resources Fund and Global Hard Assets Fund are therefore
subject to certain risks associated with direct ownership of real estate and
with the real estate industry in general. These risks include, among others:
possible declines in the value of real estate; possible lack of availability of
mortgage funds; extended vacancies of properties; risks related to general and
local economic conditions; overbuilding; increases in competition, property
taxes and operating expenses; changes in zoning laws; costs resulting from the
clean-up of, and liability to third parties for damages resulting from,
environmental problems; casualty or condemnation losses; uninsured damages from
floods, earthquakes or other natural disasters; limitations on and variations in
rents; and changes in interest rates.
REITs are pooled investment vehicles which invest primarily in income
producing real estate or real estate related loans or interests. REITs are
generally classified as equity REITs, mortgage REITs or hybrid REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. REITs are not taxed on income
distributed to shareholders provided they comply with several requirements of
the Internal Revenue Code of 1986, as amended (the "Code").
REITS are not taxed on income distributed to shareholders provided they
comply with several requirements of the Internal Revenue Code of 1986, as
amended (the "Code").
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to the risks of financing projects. REITs are subject to heavy cash
flow dependency, default by borrowers, self-liquidation and the possibilities of
failing to qualify for the exemption from tax for distributed income under the
Code. REITs (especially mortgage REITs) are also subject to interest rate risk
(i.e., as interest rates rise, the value of the REIT may decline).
Commercial Paper
----------------
Emerging Markets Growth Fund, Global Balanced Fund, Global Hard Assets Fund
and Global Real Estate Fund may invest in commercial paper which is indexed to
certain specific foreign currency exchange rates. The terms of such commercial
paper provide that its principal amount is adjusted upwards or downwards (but
not below zero) at maturity to reflect changes in the exchange rate between two
currencies while the obligation is outstanding. The Funds will purchase such
commercial paper with the currency in
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<PAGE>
which it is denominated and, at maturity, will receive interest and principal
payments thereon in that currency, but the amount or principal payable by the
issuer at maturity will change in proportion to the change (if any) in the
exchange rate between two specified currencies between the date the instrument
is issued and the date the instrument matures. While such commercial paper
entails the risk of loss of principal, the potential for realizing gains as a
result of changes in foreign currency exchange rate enables the Funds to hedge
or cross-hedge against a decline in the U.S. dollar value of investments
denominated in foreign currencies while providing an attractive money market
rate of return. The Funds will purchase such commercial paper for hedging
purposes only, not for speculation. The staff of the Securities and Exchange
Commission is currently considering whether the purchase of this type of
commercial paper would result in the issuance of a "senior security" within the
meaning of the 1940 Act. The Funds believe that such investments do not involve
the creation of such a senior security, but nevertheless will establish a
segregated account with respect to its investments in this type of commercial
paper and to maintain in such account cash not available for investment or U.S.
Government securities or other liquid high quality debt securities having a
value equal to the aggregate principal amount of outstanding commercial paper of
this type.
Debt Securities
---------------
The Funds may invest in debt securities. The market value of debt
securities generally varies in response to changes in interest rates and the
financial condition of each issuer. During periods of declining interest rates,
the value of debt securities generally increases. Conversely, during periods of
rising interest rates, the value of such securities generally declines. These
changes in market value will be reflected in the Fund's net asset value. Debt
securities with similar maturities may have different yields, depending upon
several factors, including the relative financial condition of the issuers. For
example, higher yields are generally available from securities in the lower
rating categories of S&P or Moody's. However, the values of lower-rated
securities generally fluctuate more than those of high-grade securities. Many
securities of foreign issuers are not rated by these services. Therefore the
selection of such issuers depends to a large extent on the credit analysis
performed by the Adviser.
New issues of certain debt securities are often offered on a when-issued
basis, that is, the payment obligation and the interest rate are fixed at the
time the buyer enters into the commitment, but delivery and payment for the
securities normally take place after the date of the commitment to purchase.
The value of when-issued securities may vary prior to and after delivery
depending on market conditions and changes in interest rate levels. However,
the Funds do not accrue any income on these securities prior to delivery. The
Funds will maintain in a segregated account with their Custodian an amount of
cash or high quality debt securities equal (on a daily marked-to-market basis)
to the amount of its commitment to purchase the when-issued securities.
Short Sales
-----------
Currently, Global Hard Assets Fund and Global Real Estate Fund are the only
Funds that can engage in short sales. The Funds will establish a segregated
account with respect to its short sales and maintain in the account cash not
available for investment or US Government securities or other liquid, high-
quality securities having a value equal to the difference between (i) the market
value of the securities sold short at the time they were sold short and (ii) any
cash, US Government Securities or other liquid, high-quality securities required
to be deposited as collateral with the broker in connection with the short sale
(not including the proceeds from the short sale). The segregated account will
be marked to market daily, so that (i) the amount in the segregated account plus
the amount deposited with the broker as collateral equals the current market
value of the securities sold short and (ii) in no event will the amount in the
segregated account plus the amount deposited with the broker as collateral fall
below the original value of the securities at the time they were sold short.
The total value of the assets deposited as collateral with the broker and
deposited in the segregated account will not exceed 50% of the Global Hard
Assets Fund and 25% of the Global Real Estate Fund's net assets. In order to
comply with certain securities laws of a state in which
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<PAGE>
shares of the Fund are currently sold, the Fund has undertaken to (i) limit the
value of its assets deposited as collateral and deposited in the segregated
account to 25% of the securities of any class of any one issuer and (ii) limit
short sales to liquid securities, as determined by the Adviser and ratified at
least quarterly by the Board of Trustees. The Fund will comply with the
undertaking so long as the Fund's shares are sold in such state for such state
restrictions remain in effect. The Funds' ability to engage in short sales may
be further limited by the requirements of current US tax law that the Fund
derive less then 30% of its gross income from the sale or other disposition of
securities held less than three months. Securities sold short and then
repurchased, regardless of the actual time between the tow transactions, are
considered to have been held for less than three months.
Direct Investments
------------------
Emerging Markets Growth Fund, Global Hard Assets Fund, Global Real Estate
Fund and Global Balanced Fund may invest up to 10% of their total assets in
direct investments. Direct investments include (i) the private purchase from an
enterprise of an equity interest in the enterprise in the form of shares of
common stock or equity interests in trusts, partnerships, joint ventures or
similar enterprises, and (ii) the purchase of such an equity interest in an
enterprise from a principal investor in the enterprise. In each case the Funds
will, at the time of making the investment, enter into a shareholder or similar
agreement with the enterprise and one or more other holders of equity interests
in the enterprise. The Sub-Adviser anticipates that these agreements will, in
appropriate circumstances, provide the Funds with the ability to appoint a
representative to the board of directors or similar body of the enterprise and
for eventual disposition of the Funds' investment in the enterprise. Such a
representative of the Funds will be expected to provide the Funds with the
ability to monitor its investment and protect its rights in the investment and
will not be appointed for the purpose of exercising management or control of the
enterprise.
Certain of the Funds' direct investments will include investments in
smaller, less seasoned companies. These companies may have limited product
lines, markets or financial resources, or they may be dependent on a limited
management group. The Funds do not anticipate making direct investments in
start-up operations, although it is expected that in some cases the Funds'
direct investments will fund new operations for an enterprise which itself is
engaged in similar operations or is affiliated with an organization that is
engaged in similar operations.
Direct investments may involve a high degree of business and financial risk
that can result in substantial losses. Because of the absence of any public
trading market for these investments, the Funds may take longer to liquidate
these positions than would be the case for publicly traded securities. Although
these securities may be resold in privately negotiated transactions, the prices
on these sales could be less than those originally paid by the Funds.
Furthermore, issuers whose securities are not publicly traded may not be subject
to public disclosure and other investor protection requirements applicable to
publicly traded securities. If such securities are required to be registered
under the securities laws of one or more jurisdictions before being resold, the
Funds may be required to bear the expense of the registration. In addition, in
the event the Funds sell unlisted foreign securities, any capital gains realized
on such transactions may be subject to higher rates of taxation than taxes
payable on the sale of listed securities. Direct investments are generally
considered illiquid and will be aggregated with other illiquid investments for
purposes of the limitation on illiquid investments
Repurchase Agreements
---------------------
None of the Funds will enter into a repurchase agreement with a maturity of
more than seven business days if, as a result, more than 10% of the value of a
Fund's total assets would then be invested in such repurchase agreements and
other illiquid securities (except that Global Income Fund may invest no more
than 15% of its assets in such repurchase agreements and other money market
instruments and Global Balanced Fund, Global Hard Assets Fund, Asia Dynasty
Fund, Global Real Estate Fund and Emerging
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<PAGE>
Markets Growth Fund may invest no more than 15% of their total assets in
illiquid securities). A Fund will only enter into a repurchase agreement where
(i) the underlying securities are of the type which the Fund's investment
policies would allow it to purchase directly, (ii) the market value of the
underlying security, including accrued interest, will be at all times equal to
or exceed the value of the repurchase agreement, and (iii) payment for the
underlying securities is made only upon physical delivery or evidence of book-
entry transfer to the account of the custodian or a bank acting as agent.
Rule 144a Securities And Section 4(2) Commercial Paper
------------------------------------------------------
The Securities and Exchange Commission adopted Rule 144A which allows a
broader institutional trading market for securities otherwise subject to
restriction on resale to the general public. Rule 144A establishes a "safe
harbor" from the registration requirements of the Securities Act of 1933 of
resales of certain securities to qualified institutional buyers. The Adviser
anticipates that the market for certain restricted securities such as
institutional commercial paper will expand further as a result of this new
regulation and the development of an automated system for the trading, clearance
and settlement of unregistered securities of domestic and foreign issuers, such
as the PORTAL System sponsored by the National Association of Securities
Dealers.
The Adviser will monitor the liquidity of restricted securities in the
Funds' holdings under the supervision of the Board of Trustees. In reaching
liquidity decisions, the Adviser will consider, among other things, the
following factors: (1) the frequency of trades and quotes for the security; (2)
the number of dealers wishing to purchase or sell the security and the number of
other potential purchasers; (3) dealer undertakings to make a market in the
security and (4) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanisms of the transfer).
In addition, commercial paper may be issued in reliance on the "private
placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933. Such commercial paper is restricted as to disposition
under the federal securities laws and, therefore, any resale of such securities
must be effected in a transaction exempt from registration under the Securities
Act of 1933. Such commercial paper is normally resold to other investors through
or with the assistance of the issuer or investment dealers who make a market in
such securities, thus providing liquidity.
Securities eligible for resale pursuant to Rule 144A under the Securities
Act of 1933 and commercial paper issued in reliance on the Section 4(2)
exemption under the Act may be determined to be liquid in accordance with
guidelines established by the Board of Trustees for purposes of complying with
investment restrictions applicable to investments by the Funds (except the U.S.
Government Money Fund) in illiquid securities.
Investment Restrictions
-----------------------
The following investment restrictions are in addition to those described in
the Prospectus. Policies that are identified as fundamental may be changed with
respect to a Fund only with the approval of the holders of a majority of the
Fund's outstanding shares. Such majority is defined as the vote of the lesser
of (i) 67% or more of the outstanding shares present at a meeting, if the
holders of more than 50% of a Fund's outstanding shares are present in person or
by proxy, or (ii) more than 50% of a Fund's outstanding shares. As to any of
the following policies, if a percentage restriction is adhered to at the time of
investment, a later increase or decrease in percentage resulting from a change
in value of portfolio securities or amount of net assets will not be considered
a violation of the policy.
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<PAGE>
GLOBAL BALANCED FUND, GLOBAL HARD ASSETS FUND, ASIA DYNASTY FUND, EMERGING
MARKETS GROWTH FUND, GOLD/RESOURCES FUND, GLOBAL REAL ESTATE FUND AND U.S.
GOVERNMENT MONEY FUND.
With respect to Gold/Resources Fund and U.S. Government Money Fund, all of
the following restrictions are fundamental policies except restriction 21,
unless otherwise indicated. With respect to Global Income Fund, restrictions 1,
7, 10, 15 and 21 are not fundamental. With respect to Global Balanced Fund,
Global Hard Assets Fund, Asia Dynasty Fund and Emerging Markets Growth Fund
restrictions 1, 4, 6, 7, 10, 12, 13, 17, 18, 19 and 20, are not fundamental,
unless otherwise provided for by applicable federal or state law. With respect
to Global Real Estate Fund restrictions 1, 4, 10, 13, 17, 18 and 19 are not
fundamental, unless otherwise provided for by applicable federal or state law.
The Global Balanced Fund, Global Hard Assets Fund, Emerging Markets Growth
Fund, Asia Dynasty Fund, Gold/Resources Fund, Global Real Estate Fund and U.S.
Government Money Fund may not:
1. Invest in securities which (i) with respect to Gold/Resources Fund,
and U.S. Government Money Fund, are subject to legal or contractual
restrictions on resale ("restricted securities") or for which there is
no readily available market quotation or engage in a repurchase
agreement maturing in more than seven days with respect to any
security if the result is that more than 10% of a Fund's net assets
would be invested in such securities, and (ii) with respect to Global
Balanced Fund, Global Hard Assets Fund, Asia Dynasty Fund, Global Real
Estate Fund and Emerging Markets Growth Fund and are "illiquid"
securities, including repurchase agreements maturing in more than 7
days and options traded over-the-counter if the result is that more
than 15% of Global Balanced Fund's, Global Hard Assets Fund's, Asia
Dynasty Fund's, Global Real Estate Fund's or Emerging Markets Growth
Fund's net assets would be invested in such securities, except that
Global Income Fund may invest an additional 5% of its net assets in
short term money market investments, such as repurchase agreements and
time deposits maturing in more than seven days.
2. Purchase or sell real estate, although the Global Balanced Fund,
Global Hard Assets Fund, Asia Dynasty Fund, Gold/Resources Fund,
Emerging Markets Growth Fund and Global Real Estate Fund may purchase
securities of companies which deal in real estate, including
securities of real estate investment trusts, and may purchase
securities which are collateralized by interests in real estate.
3. Purchase or sell commodities (non-Hard Asset commodities with respect
to Global Hard Assets) or commodity futures contracts (for the purpose
of this restriction, forward foreign exchange contracts are not deemed
to be a commodity or commodity contract) except that Emerging Markets
Growth Fund and Global Real Estate Fund may for hedging and other
purposes, Gold/Resources Fund may, for hedging purposes, buy and sell
financial futures contracts which may include stock and bond index
futures contracts and foreign currency futures contracts and
Gold/Resources Fund may, for hedging purposes only, buy and sell
commodity futures contracts on gold and other natural resources or on
an index thereon. The Fund may not commit more than 5% of its total
assets to initial margin deposits on futures contracts, (however, the
Emerging Markets Growth Fund and Global Real Estate Fund are excluded
from the 5% limitation for margin deposit for futures position entered
into for bona fide hedging purposes). In addition, Gold/Resources
Fund, International Investors Gold Fund and Global Hard Assets Fund
may invest in gold bullion and coins.
4. Exclusive of the Global Balanced Fund, Global Hard Assets Fund, Asia
Dynasty Fund and Emerging Markets Growth Fund purchase securities of
other open-end investment companies except as part of a merger,
consolidation, reorganization or acquisition of assets; Asia Dynasty
Fund, Emerging Markets Growth Fund, Global Balanced Fund, Global Hard
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<PAGE>
Assets Fund, Gold/Resources Fund or Global Real Estate Fund may not
purchase more than 3% of the total outstanding voting stock of any
closed-end investment company if more than 5% of any of these Funds'
total assets would be invested in securities of any closed-end
investment company, or more than 10% of such value in closed-end
investment companies in general. In addition, Global Balanced Fund,
Global Hard Assets Fund, Asia Dynasty Fund, Gold/Resources Fund or
Global Real Estate Fund may not invest in the securities of closed-end
investment companies, except by purchase in the open market involving
only customary broker's commissions.
5. Make loans, except by (i) purchase of marketable bonds, debentures,
commercial paper and similar marketable evidences of indebtedness and
(ii) repurchase agreements. Global Balanced Fund, Global Hard Assets
Fund, Asia Dynasty Fund, Emerging Markets Growth Fund and Global Real
Estate Fund may lend to broker-dealers portfolio securities with an
aggregate market value up to one-third of its total assets.
6. As to 75% of the total assets of each of the Asia Dynasty Fund,
Emerging Markets Growth Fund, Gold/Resources Fund, International
Investors Gold Fund and U.S. Government Money Fund, purchase
securities of any issuer, if immediately thereafter (i) more than 5%
of a Fund's total assets (taken at market value) would be invested in
the securities of such issuer, or (ii) more than 10% of the
outstanding securities of any class of such issuer would be held by a
Fund (provided that these limitations do not apply to obligations of
the United States Government, its agencies or instrumentalities).
This limitation does not apply to the Global Balanced Fund or Global
Hard Assets Fund.
7. Invest more than 5 percent of the value of its total assets in
securities of companies having, together with their predecessors, a
record of less than three years of continuous operation. This
restriction does not apply to Global Balanced Fund, Global Hard Assets
Fund, Emerging Markets Growth Fund or Asia Dynasty Fund.
8. Underwrite any issue of securities (except to the extent that a Fund
may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities).
9. Borrow money, except that each of the Gold/Resources Fund and U.S.
Government Money Fund may borrow up to 10% of its total assets valued
at cost for temporary or emergency purposes. These Funds will not
purchase securities for investment while borrowings equaling 5% or
more of their total assets are outstanding. In addition, Global
Balanced Fund, Global Hard Assets Fund, Emerging Markets Growth Fund,
Asia Dynasty Fund and Global Real Estate Fund may borrow up to 30% of
the value of their respective net assets to increase their holdings of
portfolio securities.
10. Mortgage, pledge or otherwise encumber its assets except to secure
borrowing effected within the limitations set forth in restriction
(9).
11. Issue senior securities except insofar as a Fund may be deemed to have
issued a senior security by reason of (i) borrowing money in
accordance with restrictions described above; (ii) entering into
forward foreign currency contracts (Global Balanced Fund, Global Hard
Assets Fund, Emerging Markets Growth Fund, Asia Dynasty Fund,
Gold/Resources Fund and Global Real Estate Fund); (iii) financial
futures contracts purchased on margin (Global Balanced Fund, Global
Hard Assets Fund, Emerging Markets Growth Fund, Asia Dynasty Fund,
Gold/Resources Funds and Global Real Estate Fund), (iv) commodity
futures contracts purchased on margin (Gold/Resources Fund, Global
Hard Assets Fund, Global
17
<PAGE>
Real Estate Fund); (v) foreign currency swaps (Global Balanced Fund,
Global Hard Assets Fund, Asia Dynasty Fund, Global Real Estate Fund
and Emerging Markets Growth Fund); and (vi) issuing multiple classes
of shares (Global Balanced Fund, Global Hard Assets Fund, Emerging
Markets Growth Fund, Global Real Estate Fund and Asia Dynasty Fund).
12. Except for Emerging Markets Growth Fund and Global Hard Assets Fund,
make short sales of securities, except that Global Balanced Fund,
Emerging Markets Growth Fund, Asia Dynasty Fund and Gold/Resources
Fund may engage in the transactions specified in restrictions (2), (3)
and (14).
13. Purchase any security on margin, except that it may obtain such short-
term credits as are necessary for clearance of securities transactions
and, with respect to Global Balanced Fund, Global Hard Assets Fund,
Emerging Markets Growth Fund, Asia Dynasty Fund, Gold/Resources Fund
and Global Real Estate Fund, may make initial or maintenance margin
payments in connections with options and futures contracts and related
options and borrowing effected within the limitations set forth in
restriction (9).
14. Write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except that Global Balanced Fund, Global Hard
Assets Fund, Emerging Markets Growth Fund, Asia Dynasty Fund,
Gold/Resources Fund and Global Real Estate Fund may purchase or sell
puts and calls on foreign currencies and on securities described under
"Options Transactions" herein and in the Prospectus and that Global
Balanced Fund, Global Hard Assets Fund, Emerging Markets Growth Fund,
Asia Dynasty Fund, Gold/Resources Fund and Global Real Estate Fund may
write, purchase or sell put and call options on financial futures
contracts, which include bond and stock index futures contracts and
Gold/Resources Fund may write, purchase, or sell put and call options
on gold or other natural resources or an index thereon and on
commodity futures contracts on gold or other natural resources or an
index thereon.
15. Make investments for the purpose of exercising control or management.
16. Invest more than 25 percent of the value of a Fund's total assets in
the securities of issuers having their principal business activities
in the same industry, except the Gold/Resources Fund, Global Hard
Assets Fund, Global Real Estate Fund and Emerging Markets Growth Fund
and as otherwise stated in any Fund's fundamental investment
objective, and provided that this limitation does not apply to
obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities.
17. Participate on a joint or joint and several basis in any trading
account in securities, although transactions for the Funds and any
other account under common or affiliated management may be combined or
allocated between the Funds and such account.
18. Purchase participations or other interests (other than equity stock
interests in the case of the Global Balanced Fund, Global Hard Assets
Fund, Emerging Markets Growth Fund, Asia Dynasty Fund, Gold/Resources
Fund and Global Real Estate Fund) in oil, gas or other mineral
exploration or development programs.
19. Invest more than 5% of its total assets in warrants, whether or not
the warrants are listed on the New York or American Stock Exchanges
(Global Real Estate Fund), or more than 2% of the value of the assets
of a Fund (except Global Balanced Fund, Global Hard Assets Fund,
Emerging Markets Growth Fund and Asia Dynasty Fund) in warrants which
are not listed on those exchanges. Warrants acquired in units or
attached to securities or received as
18
<PAGE>
dividends are not included in this restriction. The U.S. Government
Money Fund will not invest in warrants.
20. Purchase or retain a security of any issuer if any of the officers,
directors or Trustees of a Fund or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer, or
if such persons taken together own more than 5% of the securities of
such issuer (except Emerging Markets Growth Fund and Global Real
Estate Fund).
21. Invest in real estate limited partnerships or in oil, gas or other
mineral leases.
With respect to restriction 3, forward foreign exchange contracts are not
deemed to be a commodity or commodity contract. The following are not
considered fundamental policies. Asia Dynasty Fund, Global Balanced Fund,
Global Hard Assets Fund, Global Real Estate Fund and Emerging Markets Growth
Fund may, for hedging purposes, buy and sell financial futures contracts which
may include stock and bond index futures contracts and foreign currency futures
contracts. A Fund may not commit more than 5% of its total assets to initial
margin deposits on futures contracts. Emerging Markets Growth Fund, Asia
Dynasty Fund, Global Balanced Fund and Global Hard Assets Fund may not commit
more than 5% of their total assets to initial margin deposits on futures
contracts not used for hedging purposes.
With respect to restriction 16, companies in different geographical
locations will not be deemed to be in the same industry if the investment risks
associated with the securities of such companies are substantially different.
For example, although generally considered to be "interest rate sensitive,"
investing in banking institutions in different countries is generally dependent
upon substantially different risk factors, such as the condition and prospects
of the economy in a particular country and in particular industries, and
political conditions.
In order to comply with certain securities laws of a state in which shares
of the Funds are currently sold, the Funds have undertaken with respect to
investment restriction number 1, not to invest more than 10% of their assets in
"restricted securities." To the extent the above restriction has been adopted
to comply with state securities laws, it shall not apply to the Funds once such
laws are no longer in effect.
In order to comply with certain securities laws of a state in which shares
of the Funds are currently sold, the Funds have undertaken with respect to
investment restriction number 7, not to invest more than 5% of their assets in
securities of unseasoned issuers. To the extent the above restriction has been
adopted to comply with state securities laws, it shall not apply to the Funds
once such laws are no longer in effect.
International Investors Gold Fund
- ---------------------------------
Restrictions 1 through 9 are fundamental policies of International
Investors Gold Fund and may not be changed without shareholder approval.
Restrictions 10 through 16 are not fundamental policies and may be changed
without shareholder approval.
International Investors Gold Fund may not:
1. Underwrite securities of other issuers.
2. Invest in real estate, commodity contracts or commodities (except
that, subject to applicable state laws, the Fund may invest up to
12.5% of the value of its total assets as of the date of investment in
gold and silver coins which are legal tender in the country of issue
and gold and silver bullion).
3. Make loans to other persons, except through repurchase agreements or
the purchase of publicly distributed bonds, debentures and other debt
securities.
19
<PAGE>
4. Purchase securities on margin or make short sales.
5. Purchase or retain a security of any issuer if any of the officers or
directors of the Company or its investment adviser own beneficially as
much as 1/2 of 1%, or if such persons taken together own over 5%, of
the issuer's securities.
6. Lend its funds or assets, except through the purchase of securities
the Fund would otherwise be authorized to purchase.
7. Mortgage, pledge or hypothecate more than 15% of the Company's total
assets, taken at cost.
8. Purchase any restricted securities which may not be sold to the public
without registration under the Securities Act of 1933, if by reason of
such purchase the value of the Company's aggregate holdings in all
such securities would exceed 10% of total assets.
9. Issue senior securities. The Fund may (i) borrow money in accordance
with restrictions described above, (ii) enter into forward contracts,
(iii) purchase futures contracts on margin, (iv) issue multiple
classes of securities, and (v) enter into swap agreement or purchase
or sell structured notes or similar instruments.
10. Invest in interests (other than equity stock interests) in oil, gas or
other mineral exploration or development programs or in oil, gas or
other mineral leases.
11. Invest in real estate limited partnerships.
12. Make short sales of foreign currencies.
13. Seek short-term trading profits.
14. Make investments in companies for the purpose of exercising control or
management.
15. Invest more than 10% of its assets in repurchase agreements having
maturities of greater than seven days or in a combination of such
agreements together with restricted securities and securities for
which market quotations are not readily available.
16. Purchase securities for investment while borrowings equal to 5% or
more of the Fund's assets are outstanding.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of net assets will not be considered a violation
of any of the foregoing restrictions.
INVESTMENT ADVISORY SERVICES
----------------------------
The investment adviser and manager of the Funds (except for the Asia
Dynasty Fund and Emerging Markets Growth Fund) is Van Eck Associates Corporation
(the "Adviser"), a Delaware corporation, pursuant to an Advisory Agreement with
the Trust dated as of July 30, 1985, as amended. The Adviser oversees an
investment program for the Funds and determines, subject to the overall
supervision and review of the Board of Trustees. The Adviser is currently the
oldest and largest gold manager investing in gold mining shares. The Adviser's
team of gold managers and analysts average over 25 years of experience.
20
<PAGE>
The investment adviser and manager of the Asia Dynasty Fund and Emerging
Markets Growth Fund is Van Eck Global Asset Management (Asia) Limited (Van Eck-
Hong Kong), which is a wholly-owned subsidiary of the Adviser located at 2
Pacific Place, Hong Kong. Van Eck-Hong Kong has served in this capacity since
October 8, 1996 for Asia Dynasty Fund. Between August 1 and October 8 1996, the
Adviser acted as investment manager and adviser to the Asia Dynasty Fund. Van
Eck-Hong Kong has served as investment manager since February 24, 1998. Between
December 30, 1996 and February 24, 1998, the adviser acted as investment manager
and adviser to the Emerging Markets Growth Fund.
Fiduciary International, Inc. ("FII"), a New York corporation, is sub-
adviser to the Global Balanced Fund pursuant to a Sub-Investment Advisory
Agreement dated October 30, 1993.
The Adviser or Van Eck-Hong Kong (or Sub-Adviser) provides the Funds with
office space, facilities and simple business equipment and provides the services
of consultants, executive and clerical personnel for administering their
affairs. The Adviser or Van Eck-Hong Kong (or Sub-Adviser) compensates all
executive and clerical personnel and Trustees of the Trust if such persons are
employees or affiliates of the Adviser, Sub-Adviser, or its affiliates. The
Advisory fee is computed daily and paid monthly at the following annual rates:
International Investors Gold Fund, and Gold/Resources Fund pay a fee equal to
.75 of 1% of the first $500 million of average daily net assets, .65 of 1% of
the next $250 million of average daily net assets and .50 of 1% of the average
daily net assets in excess of $750 million. Global Balanced Fund pays the
Adviser a fee of .75 of 1% of average daily net assets. From this fee the
Adviser pays the Sub-Adviser a fee of .50 of 1% of average daily net assets.
Asia Dynasty Fund pays Van Eck-Hong Kong a fee of .75 of 1% of average daily net
assets and Emerging Markets Growth Fund pays Van Eck-Hong Kong a fee of 1% of
average daily net assets. Global Hard Assets Fund and Global Real Estate Fund
each pay the Adviser 1% of average daily net assets. The U.S. Government Money
Fund pays a monthly fee at the annual rate of .50 of 1% for the first $500
million of average daily net assets, .40 of 1% on the next $250 million of
average daily net assets, and .375 of 1% of the average daily net assets in
excess of $750 million.
The Adviser also performs administrative services for Global Balanced Fund,
Asia Dynasty Fund, Gold/Resources Fund and International Investors Gold Fund
pursuant to a written agreement. The Adviser is also responsible for providing
accounting services to these Funds. For these accounting and administrative
services, Asia Dynasty Fund and Global Balanced Fund each pays .25 of 1% of its
respective average daily net assets. Gold/Resources Fund and International
Investors Gold Fund pay an annual rate of .25 of 1% of the first $750 million of
their respective average daily net assets and .20 of 1% of their respective
average daily net assets in excess of $750 million.
The net assets of the Funds at December 31, 1997, 1996 and 1995 were
approximately: International Investors Gold Fund (Class A) - $232,944,326,
$409,330,944, and $519,795,000, respectively; Gold/Resources Fund (Class A) -
$66,150,715, $132,298 and 375, $155,974,000, respectively; U.S. Government Money
Fund - $76,649,948, $107,697,508 and $70,130,000, respectively; Asia Dynasty
Fund (Class A) - $12,872,516, $44,351,438 and $64,275,000, respectively; Asia
Dynasty Fund (Class B) - $6,913,723, $20,296,022 and $27,234,000, respectively;
Global Balanced Fund (Class A) - $24,630,386, $24,399,362 and $30,632,000,
respectively; Global Balanced Fund (Class B) - $5,054,706, $4,931,669 and
$6,151,000, respectively; Global Hard Assets Fund (Class A) - $61,341,105,
$27,226,101 and $3,820,000, respectively; Global Hard Assets Fund (Class B) -
$10,541,237, $62,429 and $1,805,589 respectively, and Global Hard Assets Fund
(Class C) - $8,698,296, $1,934,906 and $181,000, respectively.
The net assets of Emerging Markets Growth Fund at December 31, 1997 were
approximately: Emerging Markets Growth Fund (Class A) - $2,201,040; Emerging
Markets Growth Fund (Class B) - $165,552 and Emerging Markets Growth Fund (Class
C) - $294,395.
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<PAGE>
The net assets of Global Real Estate Fund at December 31, 1997 were
approximately: Global Real Estate Fund (Class A) - $1,448,614; Global Real
Estate Fund (Class B) - $115,732 and Global Real Estate Fund (Class C) $118,151.
In 1997, 1996 and 1995 the aggregate remuneration received by the Adviser
from International Investors Gold Fund was $2,619,794, $4,087,710 and
$4,256,866, respectively; from Gold/Resources Fund was $752,214, $1,198,836 and
$1,317,580, respectively; from U.S. Government Money Fund was $386,515, $382,786
and $286,736, respectively; from Global Balanced Fund was $219,469, $242,447 and
$141,393, respectively; from Global Hard Assets Fund was $660,306, $121,846 and
$29,887, respectively; from Asia Dynasty Fund was $339,096, $621,605 and
$818,148, respectively.
In 1997, the aggregate remuneration received by the Adviser from Emerging
Markets Growth Fund and Global Real Estate Fund was $24,075 and $6,082,
respectively.
The expenses borne by each of the Funds include: all the charges and
expenses of the transfer and dividend disbursing agent, custodian fees and
expenses, legal, auditors' and accountants' fees and expenses, brokerage
commissions for portfolio transactions, taxes, if any, the advisory fee (and
accounting and administrative services fees, if any), extraordinary expenses (as
determined by the Trustees of the Trust), expenses of shareholders' and
Trustees' meetings, and of preparing, printing and mailing proxy statements,
reports and other communications to shareholders, expenses of preparing and
setting in type prospectuses and periodic reports and expenses of mailing them
to current shareholders, legal and accounting expenses and expenses of
registering and qualifying shares for sale (including compensation of the
Adviser's employees in relation to the time spent on such matters), expenses
relating to the Plan of Distribution (Rule 12b-1 Plan) exclusive of
International Investors Gold Fund, fees of Trustees who are not "interested
persons" of the Adviser (or Sub-Adviser), membership dues of the Investment
Company Institute, fidelity bond and errors and omissions insurance premiums,
cost of maintaining the books and records of each Fund, and any other charges
and fees not specifically enumerated as an obligation of the Distributor or
Adviser or Sub-Adviser.
The Advisory Agreement with respect to Global Hard Assets Fund was approved
at a meeting of the Board of Trustees held on October 18, 1994. The Advisory
Agreement and Sub-Advisory Agreements provide that the Adviser and Sub-Adviser
shall reimburse the Trust for expenses of the Trust in excess of certain expense
limitations required by state regulation unless the Trust has obtained an
appropriate waiver of such expense limitations or expense items from a
particular state authority. Under the Advisory Agreement and Sub-Advisory
Agreement, the maximum annual expenses which the Trust may be required to bear,
inclusive of the advisory fee (from which the Adviser pays the Sub-Adviser its
fee) but exclusive of interest, taxes, brokerage fees, Rule 12b-1 Plan
distribution payments and extraordinary items, may not exceed the lowest expense
limitation imposed by any state in which the Funds are registered. The amount
of the advisory fee to be paid to the Adviser each month will be reduced by the
amount, if any, by which the annualized expenses of the Funds for that month
exceed the such limitations. At the end of the fiscal year, if the aggregate
annual expenses of the Funds exceed the amount permissible under the foregoing
limitations, then the Adviser and/or Sub-Adviser will be required promptly to
reimburse the Funds for the total amount by which expenses exceed the amount of
the limitations, not limited (with respect to the Adviser only) to the amount of
the fees paid. If aggregate annual expenses are within the limitations, however,
any excess amount previously withheld will be paid to the Adviser and/or Sub-
Adviser.
The Advisory Agreement and Sub-Advisory Agreement with respect to Global
Balanced Fund were approved at a meeting of the Board of Trustees held on
October 12, 1993. The Advisory and Sub-Advisory Agreement with respect Emerging
Markets Growth Fund were approved at a meeting of the Board of Trustees held on
December 10, 1996. The Advisory Agreement with respect to Gold/Resources Fund
and International Investors Gold Fund was approved at a meeting of the Board of
Trustees held on May 24, 1994. The Advisory Agreement with respect to Global
Real Estate Fund was approved at a meeting of the Board of Trustees held on
April 22, 1997. Advisory Agreements for all the Funds were reapproved by the
22
<PAGE>
Board of Trustees of the Trust, including a majority of the Trustees who are not
parties to such Agreements or interested persons of any such party at a meeting
held on April 22, 1998. The Advisory Agreement was approved by shareholders of
the U.S. Government Money Fund on January 23, 1987; and Gold/Resources Fund and
International Investors Gold Fund on July 25, 1994. The Advisory Agreements and
Sub-Investment Advisory Agreements were approved by shareholders of Global
Balanced Fund on December 17, 1993. The Advisory Agreement and Sub-Advisory
Agreement provide that they shall continue in effect from year to year with
respect to a Fund as long as it is approved at least annually both (i) by a vote
of a majority of the outstanding voting securities of the Fund (as defined in
the Act) or by the Trustees of the Trust, and (ii) in either event by a vote of
a majority of the Trustees who are not parties to the Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Agreements may be terminated on
60 days written notice by either party and will terminate automatically in the
event of an assignment within the meaning of the Act.
Mr. John C. van Eck is Chairman of the Board of Directors of the Adviser as
well as President and Trustee of the Trust. Mr. Van Eck offered the first
global mutual fund to U.S. investors in 1955 and offered the first gold fund to
U.S. investors in 1968. John C. van Eck, Chairman and President of Van Eck
Funds and Van Eck Worldwide Insurance Trust, and members of his immediate family
own 100% of the voting stock of the Adviser.
THE DISTRIBUTOR
---------------
Shares of the Funds are offered on a continuous basis and are distributed
through Van Eck Securities Corporation, 99 Park Avenue, New York, New York (the
"Distributor"), a wholly-owned subsidiary of Van Eck Associates Corporation.
The Trustees of the Trusts have approved a Distribution Agreement appointing the
Distributor as distributor of shares of the Funds. The Distribution Agreement
with respect to all Funds was reapproved by the action of the Trustees on April
22, 1998.
The Distribution Agreement provides that the Distributor will pay all fees
and expenses in connection with printing and distributing prospectuses and
reports for use in offering and selling shares of the Funds and preparing,
printing and distributing advertising or promotional materials. The Funds will
pay all fees and expenses in connection with registering and qualifying their
shares under federal and state securities laws.
Van Eck Securities Corporation retained distributing commissions on sales
of shares of the Funds for the following fiscal years ended December 31 (except
as noted) after reallowance to dealers as follows:
Van Eck Securities Reallowance to
Corporation Dealers
------------------ --------------
International 1997 $122,745 $401,483
Investors Gold Fund 1996 160,019 917,169
1995 161,888 650,766
Gold/Resources Fund 1997 $ 38,280 $156,899
1996 33,278 231,559
1995 64,047 274,644
Asia Dynasty Fund 1997 $ 2,455 $ 13,752
1996 22,269 109,025
1995 25,162 119,247
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<PAGE>
Van Eck Securities Reallowance to
Corporation Dealers
------------------ --------------
Global Balanced 1997 $ 1,726 $ 5,635
Fund 1996 2,382 11,231
1995 1,982 8,982
Global Hard 1997 $151,014 $629,428
Assets Fund 1996 53,056 273,203
1995 8,060 44,788
Emerging Markets 1997 $ 2,985 $ 14,741
Growth Fund
Global Real Estate 1997 $116,763 $663,680
Fund
To compensate the Distributor for the services it provides and for the
expenses it bears under the Distribution Agreement, each of Gold/Resources Fund
(Class A) and U.S. Government Money Fund has adopted a Plan of Distribution
pursuant to Rule 12b-1 (the "Plan") under the Act. Fees paid by the Funds under
the Plan will be used for servicing and/or distribution expenses incurred only
during the applicable year. Additionally, Global Balanced Fund (Class A and B),
Asia Dynasty Fund (Class A and B), Global Real Estate Fund (Class A, B and C)
and Global Hard Assets Fund (Class A, B and C) have also adopted a Plan which
provides for the compensation of brokers and dealers who sell shares of these
Funds or provide servicing. The Plan for Asia Dynasty Fund (Class A) is a
reimbursement type plan and provides for the payment of carry-over expenses to
the Distributor, incurred in one year but payable in a subsequent year(s), up to
the maximum for the Fund in any given year. Global Balanced Fund (Class A and
Class B), Asia Dynasty Fund (Class B), Global Real Estate Fund and Global Hard
Assets Fund (Class A, B and C) Plans are compensation type plans with a carry-
forward provision which provides that the Distributor recoup distribution
expenses in the event the Plan is terminated. For the periods prior to April
30, 1998, the Distributor has agreed with respect to Plans with a carry-forward
provision, notwithstanding anything to the contrary in the Plan, to waive its
right to reimbursement of carry-forward amounts in the event the Plan is
terminated unless the Board of Trustees has determined that reimbursement of
such carry-forward amounts is appropriate. Pursuant to the Plans, the
Distributor provides the Funds at least quarterly with a written report of the
amounts expended under the Plans and the purpose for which such expenditures
were made. The Trustees review such reports on a quarterly basis.
The Plans were reapproved for all Funds, by the Trustees of the Trust,
including a majority of the Trustees who are not "interested persons" of the
Funds and who have no direct or indirect financial interest in the operation of
the Plan, cast in person at a meeting called for the purpose of voting on each
such Plan on April 23, 1996. The Plan was approved with respect to Global Hard
Assets Fund by the Trustees of the Trust on October 18, 1994. The Plan was
approved by shareholders of the Gold/Resources Fund (Class A) and U.S.
Government Money Fund on January 23, 1987; Global Income Fund on April 12, 1988;
Asia Dynasty Fund (Class B) on August 31, 1993; Global Balanced Fund (Class A
and B) on December 17, 1993; Asia Dynasty Fund (Class A) on July 25, 1994. The
Plan was approved with respect to Global Real Estate Fund (Class A, B and C) by
the Trustees of the Trust on April 22, 1997. A Plan shall continue in effect as
to each Fund, provided such continuance is approved annually by a vote of the
Trustees in accordance with the Act. A Plan may not be amended to increase
materially the amount to be spent for the services described therein without
approval of the shareholders of the Funds, and all material amendments to the
Plan must
24
<PAGE>
also be approved by the Trustees in the manner described above. A
Plan may be terminated at any time, without payment of any penalty, by vote of a
majority of the Trustees who are not "interested persons" of the Fund and who
have no direct or indirect financial interest in the operation of the Plan, or
by a vote of a majority of the outstanding voting securities of the Fund (as
defined in the Act) on written notice to any other party to the Plan. A Plan
will automatically terminate in the event of its assignment (as defined in the
Act). So long as the Plan is in effect, the election and nomination of Trustees
who are not "interested persons" of the Trust shall be committed to the
discretion of the Trustees who are not "interested persons." The Trustees have
determined that, in their judgment, there is a reasonable likelihood that the
Plan will benefit the Funds and their shareholders. The Funds will preserve
copies of the Plan and any agreement or report made pursuant to Rule 12b-1 under
the Act, for a period of not less than six years from the date of the Plan or
such agreement or report, the first two years in an easily accessible place.
For additional information regarding the Plans, see the Prospectus.
PORTFOLIO TRANSACTIONS AND BROKERAGE
------------------------------------
The Adviser, Van Eck-Hong Kong or the Sub-Adviser is responsible for
decisions to buy and sell securities and other investments for the Funds, the
selection of brokers and dealers to effect the transactions and the negotiation
of brokerage commissions, if any. In transactions on stock and commodity
exchanges in the United States, these commissions are negotiated, whereas on
foreign stock and commodity exchanges these commissions are generally fixed and
are generally higher than brokerage commissions in the United States. In the
case of securities traded on the over-the-counter markets, there is generally no
stated commission, but the price usually includes an undisclosed commission or
markup. In underwritten offerings, the price includes a disclosed fixed
commission or discount. Most obligations in which the U.S. Government Money
Fund invests are normally traded on a "principal" rather than agency basis.
This may be done through a dealer (e.g. securities firm or bank) who buys or
sells for its own account rather than as an agent for another client, or
directly with the issuer. A dealer's profit, if any, is the difference, or
spread, between the dealer's purchase and sale price for the obligation.
In purchasing and selling the Funds' portfolio investments, it is the
Adviser's, Van Eck-Hong Kong's or Sub-Adviser's policy to obtain quality
execution at the most favorable prices through responsible broker-dealers. In
selecting broker-dealers, the Adviser, Van Eck-Hong Kong or 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.
In addition, the Adviser, Van Eck-Hong Kong or the Sub-Adviser may allocate
brokerage transactions to broker-dealers who have entered into arrangements with
the Adviser, Van Eck-Hong Kong or the Sub-Adviser under which the broker-dealer
allocates a portion of the commissions paid by a Fund toward payment of the
Fund's expenses such as transfer agency, printing or other expenses. The
services of the broker-dealer must be comparable to those of other qualified
broker-dealers.
The Adviser, Van Eck-Hong Kong or the Sub-Adviser may cause the Funds to
pay a broker-dealer who furnishes brokerage and/or research services a
commission that is in excess of the commission another broker-dealer would have
received for executing the transaction if it is determined that such commission
is reasonable in relation to the value of the brokerage and/or research services
as defined in Section 28(e) of the Securities Exchange Act of 1934 which have
been provided. Such research services may include, among other things, analyses
and reports concerning issuers, industries, securities, economic factors and
trends, and portfolio strategy. Any such research and other information
provided by brokers to the Adviser, Van Eck-Hong Kong or the Sub-Adviser are
considered to be in addition to and not in lieu of services required to be
performed by the Adviser, Van Eck-Hong Kong and Sub-Adviser under the relevant
Advisory Agreement or Sub-Advisory Agreement with the Trust. The research
services provided by broker-dealers
25
<PAGE>
can be useful to the Adviser, Van Eck-Hong Kong and Sub-Adviser in serving its
other clients or clients of the Adviser, Sub-Adviser or their affiliates.
For the fiscal year ended December 31, 1997, the Global Hard Assets Fund
paid $41,526.50, the Gold/Resources Fund paid $775.00, the Global Real Estate
Fund paid $705.00 and the International Investors Gold Fund paid $11,400.00 in
commissions to broker dealers providing research and other services to the
Adviser or its affiliates representing 12.07, 0.26%, 11.94% and 1.97%,
respectively, of the total commissions paid by such Funds; such payments
involved $3,562,413, in the case of Global Hard Assets Fund, and $741,900, in
the case of International Investors Gold Fund, in portfolio securities purchased
and sold on behalf of the relevant Fund.
The table below shows the commissions paid on purchases and sales of
portfolio securities by each Fund during its respective fiscal year, and the
percentages of such amounts paid to brokers or dealers which furnished daily
quotations to the Funds for the purpose of calculating daily per share net asset
value and to brokers and dealers which sold shares of the Funds. The U.S.
Government Money Fund did not pay brokerage commissions.
FUND (FISCAL YEAR END) 1997
Commissions
International Investors Gold Fund (Class A and C) (12/31) $611,085
Gold/Resources Fund (Class A) (12/31) $327,261
Asia Dynasty Fund (Class A and B) (12/31) $675,167
Global Balanced Fund (Class A and B) (12/31) $ 63,682
Global Hard Assets Fund (Class A, B and C) (12/31) $505,063
Emerging Markets Growth Fund (Class A, B and C) (12/31) $ 37,453
Global Real Estate Fund (Class A, B and C) (12/31) $ 6,191
FUND (FISCAL YEAR END) 1996
Commissions
International Investors Gold Fund (Class A and C) (12/31) $347,781
Gold/Resources Fund (Class A) (12/31) $271,356
Global Income Fund (Class A) (12/31) $ 0
Asia Dynasty Fund (Class A and B) (12/31) $643,451
Global Balanced Fund (Class A and B) (12/31) $ 96,428
Global Hard Assets Fund (Class A and C) (12/31) $110,278
Fund (fiscal year end) 1995
Commissions
International Investors Gold Fund (Class A and C) (12/31) $212,002
Gold/Resources Fund (Class A) (12/31) $235,161
Global Income Fund (Class A) (12/31) $ 31,325
Asia Dynasty Fund (Class A and B) (12/31) $900,977
Global Balanced Fund (Class A and B) (12/31) $ 89,406
Global Hard Assets Fund (Class A and C) (12/31) $ 28,075
26
<PAGE>
The Trustees periodically review the Adviser's and Sub-Adviser's
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of the Funds and review the commissions paid by
the Funds over representative periods of time to determine if they are
reasonable in relation to the benefits to the Funds.
Investment decisions for the Funds are made independently from those of the
other investment accounts managed by the Adviser, Sub-Adviser or affiliated
companies. Occasions may arise, however, when the same investment decision is
made for more than one client's account. It is the practice of the Adviser and
Sub-Adviser to allocate such purchases or sales insofar as feasible among its
several clients or the clients of its affiliates in a manner it deems equitable.
The principal factors which the Adviser and Sub-Adviser considers in making such
allocations are the relative investment objectives of the clients, the relative
size of the portfolio holdings of the same or comparable securities and the then
availability in the particular account of funds for investment. Portfolio
securities held by one client of the Adviser or Sub-Adviser may also be held by
one or more of its other clients or by clients of its affiliates. When two or
more of its clients or clients of its affiliates are engaged in the simultaneous
sale or purchase of securities, transactions are allocated as to amount in
accordance with formulae deemed to be equitable as to each client. There may be
circumstances when purchases or sales of portfolio securities for one or more
clients will have an adverse effect on other clients.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and execution
available and such other policies as the Trustees may determine, the Adviser or
Sub-Adviser may consider sales of shares of the Funds as a factor in the
selection of broker-dealers to execute portfolio transactions for the Funds.
While it is the policy of the Funds generally not to engage in trading for
short-term gains, the Funds will effect portfolio transactions without regard to
the holding period if, in the judgment of the Adviser or Sub-Adviser such
transactions are advisable in light of a change in circumstances of a particular
company, within a particular industry or country, or in general market, economic
or political conditions. The Global Hard Assets Fund, Emerging Markets Growth
Fund, Asia Dynasty Fund and Gold/Resources Fund anticipate that their annual
portfolio turnover rates will not exceed 100%.
The annual portfolio turnover rate of the Global Balanced Fund and Global
Real Estate Fund may exceed 100%. Due to the high rate of turnover the Funds
may pay a greater amount in brokerage commissions than a similar size fund with
a lower turnover rate. The portfolio turnover rates of all Funds may vary
greatly from year to year. In addition, since the Funds may have a high rate of
portfolio turnover, the Funds may realize capital gains or losses. Capital
gains will be distributed annually to the shareholders. Capital losses cannot
be distributed to shareholders but may be used to offset capital gains at the
Fund level. See "Taxes" in the Prospectus and the Statement of Additional
Information.
The Adviser and related persons, may from time to time, buy and sell for
their own accounts securities recommended to clients for purchase or sale. The
Adviser recognizes that this practice may result in conflicts of interest.
However, to minimize or eliminate such conflicts a Code of Ethics has been
adopted by the Adviser which requires that all trading in securities suitable
for purchase by client accounts must be approved in advance by a person familiar
with purchase and sell orders or recommendations. Approval will be granted if
the security has not been purchased or sold or recommended for purchase or sale
on behalf of a client account within seven days; or if the security has been
purchased or sold or recommended for purchase or sale by a client account, it is
determined that the trading activity will not have a negative or appreciable
impact on the price or market of the security or the activity is of such a
nature that it does not present the dangers or potential for abuses or likely to
result in harm or detriment to a client account. At the end of each calendar
quarter, all related personnel of the Adviser are required to file a report of
all transactions entered into during the quarter. These reports are reviewed by
a senior officer of the Adviser.
27
<PAGE>
TRUSTEES AND OFFICERS
---------------------
The Trustees and Officers of the Van Eck Funds, their address, position
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. (82) - Chairman of the Board and President
- ----------------------------
270 River Road, Briarcliff Manor, New York; Chairman of the Board and
President of another investment company 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).
@ # + JEREMY H. BIGGS (62) - Trustee
- ---------------------
1220 Park Avenue, New York, NY 10128; Trustee of another investment company
advised by the adviser; Vice Chairman, Director and Chief Investment
Officer, Fiduciary Trust Company International (investment manager), parent
company of Fiduciary International, Inc.; Chairman of Davis Funds Group
(mutual fund management company); Treasurer and Director of the Royal Oak
Foundation (the UK National Trust); Director and former Chairman of the
Union Settlement Association (the community service organization); First
Vice President, Trustee and Chairman of the Financial Committee of St.
James School, St. James, Maryland; Former Director, International Investors
Incorporated (1990-1991).
# + RICHARD C. COWELL (70) - Trustee
- ---------------------
240 El Vedado Way, Palm Beach, Florida 33480; Trustee of another investment
company advised by the Adviser; Private Investor; Director, West Indies &
Caribbean Development Ltd. (real estate); Former Director, Compo
Industries, Inc. (machinery manufacturer); Former Director, International
Investors Incorporated (1957-1991); Former Director (1978-1981), American
Eagle Petroleums, Ltd. (oil and gas exploration); Former President and
Director (1968-1976), Minerals and Industries, Inc. (petroleum products);
Former Director (1978-1983) Duncan Gold Resources, Inc. (oil exploration
and gold mining); Former Director (1981-1984), Crested Butte Silver Mining
Co.; Former Chairman and Member of Executive Committee (1974-1981),
Allerton Resources, Inc. (oil and gas exploration); Former Director (1976-
1982), Western World Insurance Co.
@ PHILIP D. DEFEO (52) - Trustee
- ------------------
99 Park Avenue, New York, NY 10016; Trustee of another investment company
advised by the Adviser; President, Chief Executive Officer and Director of
Van Eck Associates Corporation (investment adviser) and Van Eck Securities
Corporation (broker-dealer) since September 1996; Former Executive Vice
President and Director of Marketing and Customer Services (June 1994 -
August 1996), Cedel International (finance and settlements); Former
Managing Director (July 1992 - April 1994), Lehman Brothers (investment
bank and broker-dealer); Former Senior Vice President, Fidelity Investments
and Former President, Fidelity Services Company (financial services);
(1987-1992).
# + WESLEY G. McCAIN (55) - Trustee
- --------------------
144 East 30th Street, New York, New York 10016; Trustee of other affiliated
investment companies advised or administered by the Adviser; Chairman and
Owner, Towneley Capital Management, Inc.,
28
<PAGE>
(investment adviser since 1971); Chairman, Eclipse Funds (mutual fund since
1986); Chairman and Owner, Eclipse Financial Services, Inc.(since 1986;
General Partner, Pharaoh Partners, L.P. (since 1992); Principal, Pharaoh
Partners (Cayman) LDC (since 1996); President and Owner, Millbrook
Associates, Inc. (economic and marketing consulting, since 1989); Trustee,
Libre Group Trust (since 1994) Director, Libre Investments (Cayman)
Ltd.(since 1996); Former Director, International Investors
Incorporated.
# DAVID J. OLDERMAN (62) - Trustee
- -------------------
40 East 52nd Street, New York, New York 10022; Trustee of another
investment company advised by the Adviser; 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 (69) - Trustee
- -------------------
66 Strimples Mill Road, Stockton, New Jersey 08559-1703; Trustee of another
investment company advised by the Adviser; Former Chairman of the Board,
Former Chairman of the Executive Committee and Chief Executive Officer of
Discount Corporation of New York (dealer in U.S. Treasury and Federal
Agency Securities) (1981-1988); Director, Sun Life Insurance and Annuity
Company of New York; Director, U.S. Life Income Fund, Inc., New York;
Former Director, International Investors Incorporated.
# RICHARD D. STAMBERGER (38) - Trustee
- -----------------------
888 17th Street, N.W., Washington, D.C. 20006; Trustee of two other
investment companies advised or administered by the Adviser; Principal,
National Strategies, Inc., a public policy firm in Washington, D.C.;
Partner and Co-founder, Quest Partners, L.L.C. (management consulting
firm/since 1988); Executive Vice President, Chief Operating Officer, and a
Director of NuCable Resources Corporation (technology firm/since 1988);
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).
JAN van ECK (34) Trustee
- -----------
99 Park Avenue, New York, New York 10016; Director of Van Eck Associates
Corporation; Executive Vice President and Director of Van Eck Securities
Corporation and other affiliated companies; President and Director of Van
Eck Capital, Inc.; President and Director of Van Eck Absolute Return
Advisers Corporation; Co-President and Director of Shenyin Wanguo Van Eck
Asset Management (Asia) Limited and President, Chief Executive Officer and
Director of Van Eck Global Asset Management (Asia) Ltd.
DEREK van ECK (33) - Executive Vice President
- -------------
99 Park Avenue, New York, New York 10016; President of the 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 series of Van Eck Funds; Executive Vice President, Director, Global
Investments and Director of Van Eck Associates Corporation and Executive
Vice President and Director of Van Eck Securities Corporation and other
affiliated companies.
Officers of the Trust:
29
<PAGE>
LUCILLE PALERMO (51) - Executive Vice President
- ---------------
99 Park Avenue, New York, New York 10016; Executive Vice President of
another investment company advised by the Adviser; Associate Director,
Mining Research of the Adviser; Investment Strategist and Analyst with
Drexel Burnham Lambert (1979-1989).
BRUCE J. SMITH (43) - Vice President and Treasurer
- --------------
99 Park Avenue, New York, New York 10016; Officer of two other investment
companies advised or administered by the Adviser; Senior Managing Director,
Portfolio Accounting of Van Eck Associates Corporation and Senior Managing
Director of Van Eck Securities Corporation.
THOMAS H. ELWOOD (50) - Vice President and Secretary
----------------
99 Park Avenue, New York, New York 10016; Officer of three other investment
companies advised or administered by the Adviser; Vice President, Secretary
and General Counsel of Van Eck Associates Corporation, Van Eck Securities
Corporation and other affiliated companies. Former Assistant Counsel of
Jefferson Pilot Insurance company and officer of other investment companies
distributed by Jefferson Pilot and its affiliates. Former Associate
Counsel of New York Life Insurance company
JOSEPH P. DiMAGGIO (41) - Controller
- ------------------
99 Park Avenue, New York, New York 10016; Controller of another investment
company advised by the Adviser; Director of Portfolio Accounting of Van Eck
Associates Corporation (since 1993); Former Accounting Manager, Alliance
Capital Management (1985-1993).
CHARLES CAMERON (38) - Vice President
- ---------------
99 Park Avenue, New York, New York 10016; Vice President of another
investment company advised by the Adviser; Director of Trading of Van Eck
Securities Corporation
SUSAN C. LASHLEY (43) - Vice President
- ----------------
99 Park Avenue, New York, New York 10016; Vice President of another
investment company advised by the Adviser; Managing Director, Mutual Fund
Operations of Van Eck Securities Corporation.
KEVIN REID (35) - Vice President
- ----------
99 Park Avenue, New York, New York 10016; President of the Global Real
Estate Fund series and Vice President of the Global Hard Assets Fund series
of Van Eck Funds and President of the Worldwide Real Estate Fund and Vice
President of the Worldwide Hard Assets Fund series of Van Eck Worldwide
Insurance Trust; Officer of another investment company advised by the
Adviser; Director, Real Estate Research, of Van Eck Associates Corporation;
Former Chief Financial Officer of E.P. Reid, Inc (construction 1993 to
1994); Former Chief Financial Officer and Chief Operating Officer (1991
1993) and Former Vice President and portfolio manager (1998 1991) of
Trammell Crow Company (real estate).
30
<PAGE>
BARBARA J. ALLEN (41) - Assistant Secretary
- ----------------
99 Park Avenue, New York, New York 10016; Assistant Secretary of another
investment company advised by the Adviser; Compliance Officer of Van Eck
Associates Corporation and Van Eck Securities Corporation; Former Senior
Counsel, Arizona Corporation Commission, Securities Division (1990-1994).
SUSAN I. GRANT (45) Assistant Secretary
- -------------------
99 Park Avenue, New York, New York 10016; Assistant Secretary of other
investment companies advised or administered by the Adviser, Senior
Attorney of Van Eck Associates Corporation; formerly employed by the Royce
Funds (1994 1996) and First Investors Corporation (1989 1994).
GREGORY KRENZER (25) President of Van Eck U.S. Government Money Fund
- ---------------
99 Park Avenue, New York, New York 10016, Research Analyst and Portfolio
Assistant (Global Fixed Income) of Van Eck Associates Corporation since
1994.
- -------------------------
@ An "interested person" as defined in the 1940 Act.
* Member of Executive Committee -exercises general powers of Board of
Trustees between meetings of the Board.
. # Member of the Nominating Committee.
. + Member of the Audit Committee -reviews fees, services, procedures,
conclusions and recommendations of independent auditors.
31
<PAGE>
COMPENSATION TABLE
------------------
<TABLE>
<CAPTION>
Van Eck Funds Van Eck Funds Total Fund Complex
(Current Trustees Fees) (Deferred Compensation) Compensation(a)
----------------------- ----------------------- -------------------
<S> <C> <C> <C>
John C. van Eck $ 0 $ 0 $ 0
Jeremy H. Biggs $ 0 $21,686 $34,750
Richard C. Cowell $21,686 $ 0 $33,500
Philip D. DeFeo $ 0 $ 0 $ 0
Wesley G. McCain $ 0 $21,686 $34,750
David J. Olderman $ 0 $20,066 $32,250
Ralph F. Peters $17,478 $ 0 $27,000
Richard D. Stamberger $10,034 $10,034 $31,000
Fred M. van Eck $ 0 $ 0 $ 0
</TABLE>
(a) The term "fund complex" refers to the Funds of the Trust, the series of the
Van Eck Worldwide Insurance Trust and the Van Eck/Chubb, Funds, Inc., which are
also managed by the Adviser. The Trustees are paid a fee for their services to
the Trust. No other compensation, including pension or other retirement
benefits, is paid to the Trustees by the fund complex.
As of April 17, 1998, all of the Officers and Trustees of the Trust as a
group owned the number of shares indicated of each Fund: 112,134.341 shares of
Global Balanced Fund-A, equal to approximately 5.01% of shares outstanding;
1,185,996.77 shares of the U.S. Government Money Fund, equal to approximately
2.23% of the shares outstanding; 56,871.741 shares of Global Hard Assets Fund-A,
equal to approximately 1.57% of shares outstanding; 78,755.586 of the Emerging
Markets Growth Fund-A, equal to approximately 31.38% of shares outstanding;
986.3480 shares of Emerging Markets Growth FundB, equal to approximately 6.14%
of the shares outstanding; 988.6800 shares of Emerging Markets Growth FundC,
equal to approximately 2.47% of the shares outstanding; 115,378.744 shares of
Global Real Estate FundA, equal to approximately 73.72% of the shares
outstanding. As of April, 30, 1998, all of the Officers and Trustees of the
Trust as a group owned less than 1% of shares outstanding of each of the other
Funds and Classes.
As of April 17, 1998, the following persons owned 5% or more of the shares
of the Fund(s) indicated below:
<TABLE>
<CAPTION>
International Investors Gold Fund (Class A shares) Asia Dynasty Fund (Class B shares)
- --------------------------------------------------------- -------------------------
<S> <C> <C> <C>
MLPF&S for the sole benefit 5.96% MLPF&S for the sole benefit 45.61%
of its customers of its customers
4800 Deer Lake Drive East 4800 Deer Lake Drive East
3rd Floor 3rd Floor
Jacksonville, FL 32246-6484 Jacksonville, FL 32246-6484
U.S. Government Money Fund Global Balanced Fund (Class B shares)
- ------------------------------- -----------------------------
J.C. Bradford & Co. Cust. FBO 13.46% MLPF&S for the sole benefit 19.33%
RCIP Limited Partners I of its customers
330 Commerce St. 4800 Deer Lake Drive East
Nashville, TN 37201-1805 3rd Floor
Jacksonville, FL 32246-6484
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Merrill Lynch FBO 7.19% M. Club Foundation 6.48%
Confidential A/C #626-07A23 University of Maryland Inc
141 W. Jackson Blvd. P.O. Box 273
Room 290 College Park, MD 20741-0273
Chicago, IL 60604-2904
LLT Limited 5.19% Global Hard Assets Fund (Class A shares)
----------------------------------
Washington Mall I Reid St.
4th Floor Charles Schwab & Co. Inc. 19.73%
Hamilton HM 11 Bermuda Special Custody Acct. FEBO
Customers Instl. Onesource
Edward M. Miller & Edward W. 5.12% 101 Montgomery St.
Rodier & Michael Reddington TR San Francisco, CA 94104-4122
Meridian Venture Partners II LTD
c/o Meridian Venture Group MLPF&S for the sole benefit 7.81%
57 Plandome Rd of its customers
Manhasset, NY 11030-2330 4800 Deer Lake Drive East
3rd Floor
Gold/Resources Fund (Class A Shares) Jacksonville, FL 32246-6484
- --------------------------------------
MLPF&S for the sole benefit 6.76%
of its customers KAS Associate NV 5.48%
4800 Deer Lake Drive East Stitching Vermogensgiro
3rd Floor Beleggingsrekening
Jacksonville, FL 32246-6484 c/o RAJ Sporri/Internal Code 24893
P.O. Box 178/1000 AD Amsterdam
Asia Dynasty Fund (Class A shares) The Netherlands
- --------------------------------------
MLPF&S for the sole benefit 17.56%
of its customers Global Hard Assets Fund (Class B shares)
----------------------------------
4800 Deer Lake Drive East MLPF&S for the sole benefit 24.24%
3rd Floor of its customers
Jacksonville, FL 32246-6484 4800 Deer Lake Drive East
3rd Floor
Jacksonville, FL 32246-6484
Global Hard Assets Fund (Class C shares)
----------------------------------------
MLPF&S for the sole benefit 29.32%
of its customers
4800 Deer Lake Drive East
3rd Floor
Jacksonville, FL 32246-6484
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Emerging Markets Growth Fund (Class A shares) Emerging Markets Growth Fund (Class C shares)
- --------------------------------------------- --------------------------------------------
<S> <C> <C> <C>
Van Eck Associates Corp. 20.61% Bear Stearns Securities Corp. 28.97%
99 Park Avenue FBO 183-97769-19
8th Floor 1 Metrotech Center North
New York, NY 10016-1501 Brooklyn, NY 11201-3870
Charles Schwab & Co. Inc. 5.56% INV Fiduciary Trust Co CUST 25.30%
Special Custody Acct. FEBO IRA A/C Barton B. Antista
Customer Instl. Onesource 2622 Katherine St.
Attn: Mutual Funds El Cajon, CA 92020-2036
101 Montgomery St.
San Francisco, CA 94104-4122 Bear Stearns Securities Corp. 14.49%
FBO 183-70596-15
Emerging Markets Growth Fund (Class B shares) 1 Metrotech Center North
- --------------------------------------------- Brooklyn, NY 11201-3870
Gloria Dublon 21.61%
86 Sycamore Avenue Bear Stearns Securities Corp 8.66%
Mt. Vernon, NY 10553-1216 FBO 183-70610-17
1 Metrotech Center North
Merrill Lynch Pierce 16.16% Brooklyn, NY 11201-3870
Fenner & Smith Inc.
Mutual Funds Operations First Trust Corp., as Trustee 5.14%
P.O. Box 45286 U/A 4-18-96
Jacksonville, FL 32232-5286 FBO Abraham Michael Bernstein IRA
P.O. Box 173301
XLN Enterprises Inc. 13.98% Denver, CO 80217-3301
Target Benefit Pension Pla
U/A 7/2/84 Global Real Estate Fund (Class A shares)
----------------------------------------
181 East Industry Court
Deer Park, NY 11729-4718 Van Eck Securities Corporation 51.90%
99 Park Avenue
Inv. Fiduciary Trust Co. 10.91% New York, NY 10016
Custodian IRA A/C Linda K. Brown
132 Saxton St.
Patchogue, NY 11772-1826 Philip DeFeo 5.33%
1151 Oenoke Ridge Road
Steven C. Shapiro TR 7.84% New Canaan, CT 06840-2609
U/A 06/15/78
Steven C. Shapiro MD INC PEN PL
1938 State Street
New Orleans, LA 70118-6252
Van Eck Associates Corp. 6.14%
99 Park Avenue
8th Floor
New York, NY 10016-1501
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Global Real Estate Fund (Class B shares) Global Real Estate Fund (Class C shares)
- ----------------------------------------------- --------------------------------
<S> <C> <C> <C>
Cowen & Co CUST 13.59% Bear Stearns SEC Corp. Cust. 33.55%
FBO #6B-00174-7 FBO 183-97769-19
Financial Square 1 Metrotech Center North
New York, NY 10005 Brooklyn, NY 11201-3870
Cowen & Co CUST 9.75% Bear Stearns SEC Corp. Cust. 28.75%
FBO #6B-000383 FBO 183-70688-14
Financial Square, 25th Floor 1 Metrotech Center North
New York, NY 10005 Brooklyn, NY 11201-3870
Olde Discount 9.43% Bear Stearns SEC Corp. Cust. 17.90%
FBO 13108822 FBO 183-70610-17
751 Griswold Street 1 Metrotech Center North
Detroit, MU 48226-3274 Brooklyn, NY 11201-3870
Cowen &Co CUST 6.83% Donaldson Lufkin Jenrette 9.41%
FBO #6B-00050-6 Securities Corporation Inc.
Financial Square P.O. Box 2052
New York, NY 10005 Jersey City, NJ 07303-2052
Cowen &Co CUST 6.64% MLPF&S for the sole benefit 7.97%
FBO #6B-00057-9 of its customers
Financial Square Attn: Fund Administration
New York, NY 10005 4800 Deer Lake Drive East, 3rd Floor
Jacksonville, FL 32246- 6484
Cowen & Co CUST 6.40%
FBO #6B-00137-3
Financial Square
New York, NY 10005
Cowen & Co CUST 6.35%
FBO #6B-00040-9
Financial Square
New York, NY 10005
Herzog Heine Geduld Inc. 5.58%
FBO #064-49191-10
Attn: Mutual Fund Dept.
525 Washington Blvd.
Jersey City, NJ 07310-1600
</TABLE>
35
<PAGE>
VALUATION OF SHARES
-------------------
The net asset value per share of each of the Funds is computed by dividing
the value of all of a Fund's securities plus cash and other assets, less
liabilities, by the number of shares outstanding. The net asset value per share
is computed as of the close of the New York Stock Exchange, Monday through
Friday, exclusive of national business holidays. The Funds will be closed on
the following national business holidays: New Years Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas. The net asset values need not be computed on a day in which no orders
to purchase, sell or redeem shares of the Funds have been received.
Dividends paid by a Fund with respect to Class A, Class B and Class C
shares will be calculated in the same manner, at the same time and on the same
day and will be in the same amount, except that the higher distribution services
fee and any incremental transfer agency costs relating to Class B or Class C
shares will be borne exclusively by that Class. The Trustees have determined
that currently no conflict of interest exists between the Class A and Class B
shares or Class A and Class C shares. On an ongoing basis, the Board of
Trustees, pursuant to their fiduciary duties under the 1940 Act and state laws,
will seek to ensure that no such conflict arises.
Shares of International Investors Gold Fund-A, Global Real Estate Fund-A,
Gold/Resources Fund-A, Global Hard Assets Fund-A, Asia Dynasty Fund-A and Global
Balanced Fund-A are sold at the public offering price which is determined once
each day the Funds are open for business and is the net asset value per share
plus a sales charge in accordance with the schedule set forth in the Prospectus.
Shares of the U.S. Government Money Fund are sold without a sales charge.
Shares of Asia Dynasty Fund-B, Global Balanced Fund-B, Emerging Markets Growth
Fund-A, Emerging Markets Growth Fund-B, Global Emerging Markets-C and Global
Hard Assets Fund-B are sold with a contingent deferred sales charge. Shares of
Emerging Markets Growth Fund and Global Hard Assets Fund-C are sold with a
redemption fee.
Set forth below is an example of the computation of the public offering
price for shares of the Emerging Markets Growth FundA, Global Real Estate Fund-
A, International Investors Gold Fund-A, Gold/Resources Fund-A, Asia Dynasty
Fund-A, Global Hard Assets Fund-A and Global Balanced Fund-A on December 31,
1997 under the then-current maximum sales charge:
36
<PAGE>
<TABLE>
<CAPTION>
Gold/ Global International Asia Global Global Emerging
Resources Hard Investors Dynasty Balanced Real Estate Markets Growth
Fund-A Assets Gold Fund-A Fund-A Fund-A Fund-A Fund-A
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value and repurchase $3.47 $15.50 $7.54 $7.82 $10.38 $10.64 $8.13
price per share on $.001 par
value capital shares
outstanding
Maximum sales charge (as .21 .77 .46 .39 .52 .53 .41
described in the Prospectus)
Maximum offering price
per share $3.68 $16.27 $8.00 $8.21 $10.90 $11.17 $8.54
</TABLE>
As the Emerging Markets Growth Fund will be a newly created series of the
Van Eck Global Funds, the Emerging Markets Growth Fund has no operating history,
therefore, it does not appear on the above chart.
In determining whether a contingent deferred sales charge is applicable to
a redemption of Class B shares or a redemption charge is applicable to Class C
shares, the calculation will be determined in the manner that results in the
lowest possible rate being charged. Therefore, it will be assumed that the
redemption is first of any Class A shares in the shareholder's Fund account
(unless a specific request is made to redeem a specific class of shares), second
of Class B shares held for over six years, Class C shares held for over one
year, shares attributable to appreciation or shares acquired pursuant to
reinvestment, and third of any Class C shares or Class B held longest during the
applicable period.
To provide two examples, assume an investor purchased 100 Class B shares of
Global Hard Assets Fund at $10 per share (at a cost of $1,000) and in the second
year after purchase, the net asset value per share is $12 and, during such time,
the investor has acquired 10 additional shares upon dividend reinvestment. If
at such time the investor makes his first redemption of 50 shares (proceeds
$600), 10 shares or $120 will not be subject to charge because of dividend
reinvestment. With respect to the remaining 40 shares, the charge is not
applied to the $80 attributable to appreciation but is applied only to the
original cost of $10 per share and not to the increase in net asset value of $2
per share. Therefore, $200 of the $600 redemption proceeds will be charged at a
rate of 4% (the applicable rate in the second year after purchase). Instead,
assume an investor purchased 100 Class C shares of Global Hard Assets Fund at
$10 per share (at a cost of $1,000) and six months after purchase, the net asset
value per share is $12 and, during such time, the investor has acquired 10
additional shares upon dividend reinvestment. If at such time the investor makes
his first redemption of 50 shares (proceeds $600), 10 shares or $120 will not be
subject to charge because of dividend reinvestment. With respect to the
remaining 40 shares, the charge is not applied to the $80 attributable to
appreciation but is applied only to the original cost of $10 per share and not
to the increase in net asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds will be charged at a rate of 1%.
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
37
<PAGE>
market. Short-term investments having a maturity of 60 days or less are valued
at amortized cost, which approximates market. Options are valued at the last
sales price unless the last sales price does not fall within the bid and ask
prices at the close of the market, in which case the mean of the bid and ask
prices is used. All other securities are valued at their fair value as
determined in good faith by the Trustees. Foreign securities or futures
contracts quoted in foreign currencies are valued at appropriately translated
foreign market closing prices or as the Board of Trustees may prescribe.
Generally, trading in foreign securities and futures contracts, as well as
corporate bonds, United States government securities and money market
instruments, is substantially completed each day at various times prior to the
close of the Exchange. The values of such securities used in determining the
net asset value of the shares of the Funds may be computed as of such times.
Foreign currency exchange rates are also generally determined prior to the close
of the Exchange. Occasionally, events affecting the value of such securities
and such exchange rates may occur between such times and the close of the
Exchange which will not be reflected in the computation of the Fund's net asset
values. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value as
determined in good faith by the Trustees.
U.S. Government Money Fund
- --------------------------
It is the policy of the U.S. Government Money Fund to use its best efforts
to maintain a constant per share price equal to $1.00.
The portfolio instruments of the U.S. Government Money Fund are valued on
the basis of amortized cost. This involves valuing an instrument at its cost
initially and, thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides certainty in
valuation, it may result in periods during which the value, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the instrument.
The valuation of the Fund's portfolio instruments based upon their
amortized cost and simultaneous maintenance of the Fund's per share net asset
value at $1.00 are permitted by a rule adopted by the Securities and Exchange
Commission. Under this rule, the Fund must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of thirteen months or less, and invest only in securities
determined by the Trustees to be of high quality with minimal credit risks. In
accordance with the rule, the Trustees have established procedures designed to
stabilize, to the extent reasonably practicable, the Fund's price per share as
computed for the purpose of sales and redemptions at $1.00. Such procedures
include review of the Fund's portfolio holdings by the Trustees, at such
intervals as they may deem appropriate, to determine whether the net asset value
of the Fund calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. The rule
also provides that the extent of any deviation between the Fund's net asset
value based upon available market quotations or market equivalents and $1.00 per
share net asset value based on amortized cost must be examined by the Trustees.
In the event the Trustees determine that a deviation exists which may result in
material dilution or is otherwise unfair to investors or existing shareholders,
they must cause the Fund to take such corrective action as they regard as
necessary and appropriate, including: selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends or paying distributions from capital or capital
gains; redeeming shares in kind; or establishing a net asset value per share by
using available market quotations.
38
<PAGE>
EXCHANGE PRIVILEGE
------------------
Class A, Class B and Class C shareholders of a Fund may exchange their
shares for shares of the same class of other of the funds in the Van Eck Group
of Funds. The Exchange Privilege will not be available if the proceeds from a
redemption of shares of a Fund whose shares qualify are paid directly to the
shareholder. The Exchange Privilege is not available for shares which are not
on deposit with DST or Investors Fiduciary Trust Company ("IFTC"), or shares
which are held in escrow pursuant to a Letter of Intent. If certificates
representing shares of a Fund accompany a written exchange request, such shares
will be deposited into an account with the same registration as the certificates
upon receipt by DST.
The Funds each reserve the right to (i) charge a fee of not more than $5.00
per exchange payable to a Fund or charge a fee reasonably intended to cover the
costs incurred in connection with the exchange; (ii) establish a limit on the
number and amount of exchanges made pursuant to the Exchange Privilege and (iii)
terminate the Exchange Privilege without written notice. In the event of such
termination, shareholders who have acquired their shares pursuant to the
Exchange Privilege will be afforded the opportunity to re-exchange such shares
for shares of the Fund originally purchased without sales charge, for a period
of not less than three (3) months.
By exercising the Exchange Privilege each shareholder whose shares are
subject to the Exchange Privilege will be deemed to have agreed to indemnify and
hold harmless the Trust and each of its series, their investment adviser, sub-
investment adviser (if any), distributor, transfer agent, IFTC and the officers,
directors, employees and agents thereof against any liability, damage, claim or
loss, including reasonable costs and attorneys' fees, resulting from acceptance
of, or acting or failure to act upon, or acceptance of unauthorized instructions
or non-authentic telephone instructions given in connection with, the Exchange
Privilege, so long as reasonable procedures are employed to confirm the
authenticity of such communications. (For more information on the Exchange
Privilege, see the Prospectuses).
TAX-SHELTERED RETIREMENT PLANS-
-------------------------------
The Trust offers several prototype tax-sheltered retirement plans through
which shares of a Fund may be purchased. These plans are more fully described
below. IFTC, P.O. Box 418407, Kansas City, Missouri acts as the trustee and/or
custodian (the "Trustee") under the retirement plans offered by the Trusts.
Persons who wish to establish a tax-sheltered retirement plan should consult
their own tax advisers or attorneys regarding their eligibility to do so and the
laws applicable thereto, such as the fiduciary responsibility provisions and
diversification requirements and the reporting and disclosure obligations under
the Employee Retirement Income Security Act of 1974. The Trusts are not
responsible for compliance with such laws. Further information regarding the
retirement plans, including applications and fee schedules, may be obtained upon
request to the Funds.
Individual Retirement Account and Spousal Individual Retirement Account.
-----------------------------------------------------------------------
The IRA is available to all individuals, including self-employed individuals,
who receive compensation for services rendered and wish to purchase shares of a
Fund. An IRA may also be established pursuant to a SEP. Spousal Individual
Retirement Accounts ("SPIRA") are available to individuals who are otherwise
eligible to establish an IRA for themselves and whose spouses are treated as
having no compensation of their own.
In general, the maximum deductible contribution to an IRA which may be made
for any one year is $2,000 or 100% of annual compensation includible in gross
income, whichever is less. If an individual establishes a SPIRA, after tax
years ending on December 31, 1996, the maximum deductible amount that the
individual may contribute annually is the lesser of $4000 or 100% of such
individual's compensation includible in his/her 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.
39
<PAGE>
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 $4000 IRA
deduction is reduced by $400 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
$4,000 in the case of contributions (deductible and nondeductible) to an IRA and
SPIRA and the income upon all such contributions will accumulate tax free until
distribution.
In addition, a separate IRA may be established by a "rollover"
contribution, which may permit the tax-free transfer of assets from qualified
retirement plans under specified circumstances. A "rollover contribution"
includes a lump sum distribution received by an individual, because of severance
of employment, from a qualified plan and paid into an individual retirement
account within 60 days after receipt.
Dividends and capital gains earned on amounts invested in either an IRA or
SPIRA are automatically reinvested by the Trustee in shares of a Fund and
accumulate tax-free until distribution. Distributions from either an IRA or
SPIRA prior to age 59-1/2, unless made as a result of disability or death, may
result in adverse tax consequences and penalties. In addition, there is a
penalty on contributions in excess of the contribution limits and other
penalties are imposed on insufficient payouts after age 70-1/2.
Simplified Employee Pension Plan. A SEP may be utilized by employers to
--------------------------------
provide retirement income to employees by making contributions to employee SEP
IRAs. Owners and partners may qualify as employees. The employee is always
100% vested in contributions made under a SEP. The maximum contribution to a
SEP-IRA (an IRA established to receive SEP contributions) is the lesser of
$30,000 or 15% of compensation, excluding contributions made pursuant to a
salary reduction arrangement. Subject to certain limitations, an employer may
also make contributions to a SEP-IRA under a salary reduction arrangement by
which the employee elects contributions to a SEP-IRA in lieu of immediate cash
compensation. After December 31, 1997, contributions under a salary reduction
arrangement are permitted only into SEP plans in existence on December 31, 1997.
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
40
<PAGE>
and accumulate tax-free until distribution. Contributions in excess of the
maximum permissible amounts may be withdrawn by the employee from the SEP-IRA no
later than April 15 of the calendar year following the year in which the
contribution is made without tax penalties. Such amounts will, however, be
included in the employee's gross income. Withdrawals of such amounts after April
15 of the year next following the year in which the excess contributions is made
and withdrawals of any other amounts prior to age 59 1/2, unless made as a
result of disability or death, may result in adverse tax consequences.
Qualified Pension Plans. The Qualified Pension Plan can be utilized by
------------------------
self-employed individuals, partnerships and corporations (for this purpose
called "Employers") and their employees who wish to purchase shares of a Fund
under a retirement program.
The maximum contribution which may be made to a Qualified Pension Plan in
any one year on behalf of a participant is, depending on the benefit formula
selected by the Employer, up to the lesser of $30,000 or 25 percent of
compensation (net earned income in the case of a self-employed individual).
Contributions by Employers to Qualified Pension Plans up to the maximum
permissible amounts are deductible for Federal income tax purposes.
Contributions in excess of permissible amounts will result in adverse tax
consequences and penalties to the Employer. Dividends and capital gains earned
on amounts invested in Qualified Pension Plans are automatically reinvested by
the Trustee in shares of a Fund and accumulate tax-free until distribution.
Withdrawals of contributions prior to age 59-1/2, unless made as a result of
disability, death or early retirement, may result in adverse tax consequences
and penalties.
403(b)(7) Program. The Tax-Deferred Annuity Program and Custodial Account
-----------------
offered by the Fund (the "403(b)(7) Program") allows employees of certain tax
exempt organizations and schools to have a portion of their compensation set
aside for their retirement years in shares held in an investment company
custodial account.
In general, the maximum limit on annual contributions for each employee is
the lesser of $30,000 per year (as adjusted by the IRS for cost-of-living
increases), 25% of the employee's compensation or the employee's exclusion
allowance specified in Section 403(b) of the Code. However, an employee's
salary reduction contributions to a 403(b)(7) Program may not exceed $9,500 a
year (as adjusted for cost of living expenses). Contributions in excess of
permissible amounts may result in adverse tax consequences and penalties.
Dividends and capital gains on amounts invested in the 403(b)(7) Program are
automatically reinvested in shares of a Fund. It is intended that dividends and
capital gains on amounts invested in the 403(b)(7) Program will accumulate tax-
free until distribution.
Employees will receive distributions from their accounts under the
403(b)(7) Program following termination of employment by retirement or at such
other time as the employer shall designate, but in no case later than an
employee's reaching age 65. Withdrawals of contributions prior to age 59-1/2,
unless made as a result of disability, death or early retirement, may result in
adverse tax consequences and penalties. Employees will also receive
distributions from their accounts under the 403(b)(7) Program in the event they
become disabled.
INVESTMENT PROGRAMS
-------------------
Dividend Reinvestment Plan. Reinvestments of dividends of the Funds,
--------------------------
except for U.S. Government Money Fund, will occur on a date selected by the
Board of Trustees. Reinvestment of U.S. Government Money Fund will occur on the
last day of the month.
Automatic Exchange Plan. Investors may arrange under the Exchange Plan to
-----------------------
have DST collect a specified amount once a month or quarter from the investor's
account in one of the Funds and purchase full and fractional shares of another
Fund at the public offering price next computed after receipt of the
41
<PAGE>
proceeds. Further details of the Automatic Exchange Plan are given in the
application which is available from DST or the Funds. This does not apply to
Class B or Class C shares.
An investor should realize that he is investing his funds in securities
subject to market fluctuations, and accordingly the Automatic Exchange Plan does
not assure a profit or protect against depreciation in declining markets. The
Automatic Exchange Plan contemplates the systematic purchase of securities at
regular intervals regardless of price levels.
The expenses of the Automatic Exchange Plan are general expenses of a Fund
and will not involve any direct charge to the participating shareholder. The
Automatic Exchange Plan is completely voluntary and may be terminated on fifteen
days notice to DST.
Automatic Investment Plan. Investors may arrange under the Automatic
-------------------------
Investment Plan to have DST collect a specified amount once a month or quarter
from the investor's checking account and purchase full and fractional shares of
a Fund at the public offering price next computed after receipt of the proceeds.
Further details of the Automatic Investment Plan are given in the application
which is available from DST or the Funds.
An investor should realize that he is investing his funds in securities
subject to market fluctuations, and accordingly the Automatic Investment Plan
does not assure a profit or protect against depreciation in declining markets.
The Automatic Investment Plan contemplates the systematic purchase of securities
at regular intervals regardless of price levels.
The expenses of the Automatic Investment Plan are general expenses of a
Fund and will not involve any direct charge to the participating shareholder.
The Automatic Investment Plan is completely voluntary. The Automatic Investment
Plan may be terminated on thirty days notice to DST.
Automatic Withdrawal Plan. The Automatic Withdrawal Plan is designed to
-------------------------
provide a convenient method of receiving fixed redemption proceeds at regular
intervals from shares of a Fund deposited by the investor under this Plan. This
Plan is not available to Class B or Class C shareholders. Further details of the
Automatic Withdrawal Plan are given in the application which is available from
DST or the Funds.
In order to open an Automatic Withdrawal Plan, the investor must complete
the Application and deposit, or purchase for deposit, with DST, agent for the
Automatic Withdrawal Plan, shares of a Fund having a total value of not less
than $10,000 based on the offering price on the date the Application is
accepted.
Income dividends and capital gains distributions on shares under an
Automatic Withdrawal Plan will be credited to the investor's Automatic
Withdrawal Plan account in full and fractional shares at the net asset value in
effect on the reinvestment date.
Periodic checks for a specified amount will be sent to the investor, or any
person designated by him, monthly or quarterly (January, April, July and
October). A Fund will bear the cost of administering the Automatic Withdrawal
Plan.
Redemption of shares of a Fund deposited under the Automatic Withdrawal
Plan may deplete or possibly use up the initial investment plus income dividends
and distributions reinvested, particularly in the event of a market decline. In
addition, the amounts received by an investor cannot be considered as an actual
yield or income on his investment since part of such payments may be a return of
his capital. The redemption of shares under the Automatic Withdrawal Plan may
give rise to a taxable event.
42
<PAGE>
The maintenance of an Automatic Withdrawal Plan concurrently with purchases
of additional shares of a Fund would be disadvantageous because of the sales
charge payable with respect to such purchases. An investor may not have an
Automatic Withdrawal Plan in effect and at the same time have in effect an
Automatic Investment Plan or an Automatic Exchange Plan. If an investor has an
Automatic Investment Plan or an Automatic Exchange Plan, such service must be
terminated before an Automatic Withdrawal Plan may take effect.
The Automatic Withdrawal Plan may be terminated at any time (1) on 30 days
notice to DST or from DST to the investor, (2) upon receipt by DST of
appropriate evidence of the investor's death or (3) when all shares under the
Automatic Withdrawal Plan have been redeemed. Upon termination, unless
otherwise requested, certificates representing remaining full shares, if any,
will be delivered to the investor or his duly appointed legal representatives.
TAXES
-----
Taxation of the Funds -- In General
- -----------------------------------
Each Fund has qualified and intends to qualify and elect to be treated each
taxable year as a "regulated investment company" under Subchapter M of the Code.
To so qualify, a Fund must, among other things, (a) derive at least 90% of its
gross income from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stock, securities or foreign
currencies, or other income (including gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies; (b) derive less than 30% of its gross income from the
sale or other disposition of any of the following which was held less than three
months (the "30% test"): (i) short sales of securities; (ii) stock or
securities; (iii) options, futures or forward contracts (other than on foreign
currencies) or (iv) foreign currencies (or options, futures or forward contracts
on foreign currencies) but only if such currencies (or options, futures or
forward contracts) are not directly related to the Fund's principal business of
investing in stock or securities; and (c) satisfy certain diversification
requirements.
As a regulated investment company, a Fund will not be subject to federal
income tax on its net investment income and capital gain net income (capital
gains in excess of its capital losses) that it distributes to shareholders if at
least 90% of its net investment income and short-term capital gains for the
taxable year are distributed. However, if for any taxable year a Fund does not
satisfy the requirements of Subchapter M of the Code, all of its taxable income
will be subject to tax at regular corporate rates without any deduction for
distribution to shareholders, and such distributions will be taxable to
shareholders as ordinary income to the extent of the Fund's current or
accumulated earnings or profits.
Each Fund will be liable for a nondeductible 4% excise tax on amounts not
distributed on a timely basis in accordance with a calendar year distribution
-------------
requirement. To avoid the tax, during each calendar year a Fund must distribute
(i) at least 98% of its ordinary income (not taking into account any capital
gains or losses) for the calendar year, (ii) at least 98% of its capital gain
net income for the twelve month period ending on October 31 (or December 31, if
the Fund so elects), and (iii) any portion (not taxed to the Fund) of the 2%
balance from the prior year. Each Fund intends to make sufficient distributions
to avoid this 4% excise tax.
Taxation of the Funds' Investments
- ----------------------------------
Original issue discount. For federal income tax purposes, debt securities
-----------------------
purchased by a Fund may be treated as having an original issue discount.
Original issue discount represents interest for federal income tax purposes and
can generally be defined as the excess of the stated redemption price at
maturity of a debt obligation over the issue price. Original issue discount is
treated for federal income tax purposes as income earned by a Fund, whether or
not any income is actually received, and therefore is subject to the
43
<PAGE>
distribution requirements of the Code. Generally, the amount of original issue
discount included in the income of a Fund each year is determined on the basis
of a constant yield to maturity which takes into account the compounding of
accrued interest.
Debt securities may be purchased by a Fund at a discount which exceeds the
original issue discount remaining on the securities, if any, at the time the
Fund purchased the securities. This additional discount represents market
discount for income tax purposes. In the case of any debt security issued after
July 18, 1984, having a fixed maturity date of more than one year from the date
of issue and having market discount, the gain realized on disposition will be
treated as interest to the extent it does not exceed the accrued market discount
on the security (unless the Fund elects to include such accrued market discount
in income in the tax year to which it is attributable). Generally, market
discount is accrued on a daily basis. A Fund may be required to capitalize,
rather than deduct currently, part or all of any direct interest expense
incurred or continued to purchase or carry any debt security having market
discount, unless the it makes the election to include market discount currently.
Because a Fund must include original issue discount in income, it will be more
difficult for the Fund to make the distributions required for it to maintain its
status as a regulated investment company under Subchapter M of the Code or to
avoid the 4% excise tax described above.
Options and Futures Transactions Certain of the Funds' investments may be
--------------------------------
subject to provisions of the Code that (i) require inclusion of unrealized gains
or losses in the Funds' income for purposes of the 90% test, the 30% test, the
excise tax and the distribution requirements applicable to regulated investment
companies, (ii) defer recognition of realized losses, and (iii) characterize
both realized and unrealized gain or loss as short-term or long-term gain or
loss. Such provisions generally apply to options and futures contracts. The
extent to which the Funds make such investments may be materially limited by
these provisions of the Code.
Foreign Currency Transactions Under section 988 of the Code, special rules
-----------------------------
are provided for certain foreign currency transactions. Foreign currency gains
or losses from foreign currency contracts (whether or not traded in the
interbank market), from futures contracts that are not "regulated futures
contracts," and from unlisted options are treated as ordinary income or loss
under section 988. A Fund may elect to have foreign currency-related regulated
futures contracts and listed options subject to ordinary income or loss
treatment under section 988. In addition, in certain circumstances, a Fund may
elect capital gain or loss for foreign currency transactions. The rules under
section 988 may also affect the timing of income recognized by a Fund.
Taxation of the Shareholders
- ----------------------------
Distributions of net investment income and the excess of net short-term
capital gain over net long-term capital loss are taxable as ordinary income to
shareholders. Distributions of net capital gain (the excess of net long-term
capital gain over net short-term capital loss) are taxable to shareholders as
long-term capital gain, regardless of the length of time the shares of the Fund
have been held by such shareholders. Any loss realized upon a taxable
disposition of shares within six months from the date of their purchase will be
treated as a long-term capital loss to the extent of any long-term capital gain
distributions received by shareholders during such period.
Distributions of net investment income and capital gain net income will be
taxable as described above whether received in cash or reinvested in additional
shares. When distributions are received in the form of shares issued by a Fund,
the amount of the distribution deemed to have been received by participating
shareholders is the fair market value of the shares received rather than the
amount of cash which would otherwise have been received. In such case,
participating shareholders will have a basis for federal income tax purposes in
each share received from a Fund equal to the fair market value of such share on
the payment date.
44
<PAGE>
Except in the case of the U.S. Government Money Fund, distributions by a
Fund result in a reduction in the net asset value of the Fund's shares. Should a
distribution reduce the net asset value below a shareholder's cost basis, such
distribution nevertheless would be taxable to the shareholder as ordinary income
or long-term capital gain as described above, even though, from an investment
standpoint, it may constitute a partial return of capital. In particular,
investors should be careful to consider the tax implications of buying shares
just prior to a distribution. The price of shares purchased at that time
includes the amount of any forthcoming distribution. Those investors purchasing
shares just prior to a distribution will then receive a return of their
investment upon distribution which will nevertheless be taxable to them.
If a shareholder (i) incurs a sales load in acquiring shares in a Fund, and
(ii) by reason of incurring such charge or making such acquisition acquires the
right to acquire shares of one or more regulated investment companies without
the payment of a load or with the payment of a reduced load ("reinvestment
right"), and (iii) disposes of the shares before the 91st day after the date on
which the shares were acquired, and (iv) subsequently acquires shares in that
regulated investment company or in another regulated investment company and the
otherwise applicable load charge is reduced pursuant to the reinvestment right,
then the load charge will not be taken into account for purposes of determining
the shareholder's gain or loss. To the extent such charge is not taken into
account in determining the amount of gain or loss, the charge will be treated as
incurred in connection with the subsequently acquired shares and will have a
corresponding effect on the shareholder's basis in such shares.
Income received by a Fund may give rise to withholding and other taxes
imposed by foreign countries. If more than 50% of the value of a Fund's assets
at the close of a taxable year consists of securities of foreign corporations,
the Fund may make an election that will permit an investor to take a credit (or,
if more advantageous, a deduction) for foreign income taxes paid by that Fund,
subject to limitations contained in the Code. When any of Global Balanced Fund,
Global Hard Assets Fund, Asia Dynasty Fund, International Investors Gold Fund,
Gold/Resources Fund, Emerging Markets Growth Fund or Global Income Fund
satisfies this requirement, the Fund will make such an election. As an investor,
you would then include in gross income both dividends paid to you and the
foreign taxes paid by the Fund on its foreign investments.
The Funds cannot assure investors that they will be eligible for the
foreign tax credit. The Funds will advise shareholders annually of your share
of any creditable foreign taxes paid by the Funds.
A Fund may be required to withhold federal income tax at a rate of 31% from
dividends made to any shareholder who fails to furnish a certified taxpayer
identification number ("TIN") or who fails to certify that he is exempt from
such withholding or who the Internal Revenue Service notifies the Fund as having
provided the Fund with an incorrect TIN or failed to properly report for federal
income tax purposes. Any such withheld amount will be fully creditable on each
shareholder's individual Federal income tax return.
The foregoing discussion is a general summary of certain of the current
federal income tax laws affecting the Funds and investors in the shares. The
discussion does not purport to deal with all of the federal income tax
consequences applicable to the Fund, or to all categories of investors, some of
which may be subject to special rules. Investors should consult their own
advisors regarding the tax consequences, including state and local tax
consequences, to them of investment in the Fund.
REDEMPTIONS IN KIND
-------------------
Each Fund elects to have the ability to redeem its shares in kind,
committing itself to pay in cash all requests for redemption by any shareholder
of record limited in amount with respect to each shareholder of record during
any ninety-day period to the lesser of (i) $250,000 or (ii) 1% of the net asset
value of such company at the beginning of such period.
45
<PAGE>
PERFORMANCE
-----------
U.S. Government Money Fund
- --------------------------
The U.S. Government Money Fund may advertise performance in terms of yield
based on a seven day yield or an effective yield.
Seven-day yield is computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then multiplying the base period return by
(365/7) with the resulting yield figure carried to at least the nearest
hundredth of one percent.
Effective yield quotation is based on the seven days ended on the date of
the calculation and is computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting
1 from the result, according to the following formula: EFFECTIVE YIELD = [(BASE
PERIOD RETURN + 1)365/7]-1 with the resulting yield figure carried to at least
the nearest hundredth of one percent.
In calculating yield or effective yield quotations, the net change in an
account value includes: (a) the value of additional shares purchased with
dividends from the original share and dividends declared on both the original
share and any such additional shares; (b) all fees, other than nonrecurring
account or sales charges, that are charged to all shareholder accounts in
proportion to the length of the base period. The calculation excludes realized
gains and losses from the sale of securities and unrealized appreciation and
depreciation.
The seven day yield and seven day effective yield for the U.S. Government
Money Fund at December 31, 1997 were 3.58% and 3.64%, respectively.
GLOBAL BALANCED FUND, GLOBAL HARD ASSETS FUND, ASIA DYNASTY FUND,
GOLD/RESOURCES FUND, INTERNATIONAL INVESTORS GOLD FUND AND GLOBAL REAL ESTATE
FUND.
The above Funds may advertise performance in terms of average annual total
return for 1, 5 and 10 year periods, or for such lesser periods as any of such
Funds have been in existence. Average annual total return is computed by
finding the average annual compounded rates of return over the periods that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
- --------------------------------------------------------------------------------
P(1+T)n = ERV
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;
================================================================================
46
<PAGE>
The calculation assumes the maximum sales load (or other charges deducted
from payments) is deducted from the initial $1,000 payment and assumes all
dividends and distributions by the Fund are reinvested at the price stated in
the prospectus on the reinvestment dates during the period, and includes all
recurring fees that are charged to all shareholder accounts.
Average Annual Total Return for the Period ended December 31, 1997 (after
maximum sales charge).
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years Life
<S> <C> <C> <C> <C>
International Investors
Gold Fund (Class A) 39.70% 1.00% (34.16)% 9.65%
Gold/Resources Fund (Class A) 42.83% (1.70)% (5.31)% 0.64%
Global Real Estate Fund (Class A) -- -- -- 25.75%
Global Real Estate Fund (Class B) -- -- -- (24.05)%
Global Real Estate Fund (Class C) -- -- -- (9.73)%
Asia Dynasty Fund (Class A) (35.33)% -- -- (1.49)%
Asia Dynasty Fund (Class B) (35.79)% -- -- (5.42)%
Global Balanced Fund (Class A) (9.29)% -- -- 7.92%
Global Balanced Fund (Class B) (9.26)% -- -- 8.10%
Global Hard Assets Fund (Class A) 8.86% -- -- 22.15%
Global Hard Assets Fund (Class B) 8.73% -- -- 20.81%
Global Hard Assets Fund (Class C) 12.71% -- -- 24.00%
Emerging Markets Growth Fund (Class A) (16.35)% -- -- (16.35)%
Emerging Markets Growth Fun d(Class B) (16.28)% -- -- (15.43)%
Emerging Markets Growth Fund (Class C) (13.07)% -- -- (12.22)%
</TABLE>
The Global Balanced Fund, Asia Dynasty Fund, Gold/Resources Fund,
Global Real Estate Fund, Global Hard Assets Fund, Emerging Markets Growth Fund,
and International Investors Gold Fund may advertise performance in terms of
a 30-day yield quotation. The 30-day yield quotation is computed by dividing the
net investment income per share earned during the period by the maximum offering
price per share on the last day of the period, according to the following
formula:
- --------------------------------------------------------------------------------
YIELD = 2[(A-B/CD + 1)6-1]
Where: A = dividends and interest earned during the period
B = expenses accrued for the period (net of reimbursement)
C = the average daily number of shares outstanding during
the period that were entitled to receive dividends
D = the maximum offering price per share on the last day
of the period after adjustment for payment of dividends
within 30 days thereafter
================================================================================
The Global Balanced Fund, Global Hard Assets Fund, Asia Dynasty Fund,
Gold/Resources Fund, Global Real Estate Fund, Emerging Markets Growth Fund, and
International Investors Gold Fund may also advertise performance in terms of
aggregate total return. Aggregate total return for a specified period of time
is determined by ascertaining the percentage change in the net asset value of
shares of the Fund initially acquired assuming reinvestment of dividends and
distributions and without giving effect to the length of time of the investment
according to the following formula:
47
<PAGE>
- --------------------------------------------------------------------------------
[(B-A)/A](100)=ATR
Where: A=initial investment
B=value at end of period
ATR=aggregate total return
===============================================================================
The calculation assumes the maximum sales charge is deducted from the initial
payment and assumes all distributions by the Funds are reinvested at the price
stated in the Prospectus on the reinvestment dates during the period, and
includes all recurring fees that are charged to all shareholder accounts.
Aggregate Total Return for the period ended December 31, 1997 (after maximum
sales charge).
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years Life
<S> <C> <C> <C> <C>
International Investors
Gold Fund (Class A) 39.70% 5.10% (34.16)% 4,694.49%
Gold/Resources Fund (Class A) 42.83% (8.20)% (42.05)% 7.90%
Global Real Estate Fund (Class A) -- -- -- 12.91%
Global Real Estate Fund (Class B) -- -- -- (6.13)%
Global Real Estate Fund (Class C) -- -- -- (2.33)%
Asia Dynasty Fund (Class A) (35.33)% -- -- (6.92)%
Asia Dynasty Fund (Class B) (35.79)% -- -- (21.44)%
Global Balanced Fund (Class A) 9.29% -- -- 35.94%
Global Balanced Fund (Class B) 9.26% -- -- 36.85%
Global Hard Assets Fund (Class A) 8.86% -- -- 88.17%
Global Hard Assets Fund (Class B) 8.73% -- -- 37.64%
Global Hard Assets Fund (Class C) 12.71)% -- -- 97.32%
Emerging Markets Growth Fund (Class A) (16.35)% -- -- (16.35)%
Emerging Markets Growth Fun d(Class B) (16.28)% -- -- (15.43)%
Emerging Markets Growth Fund (Class C) (13.07)% -- -- (12.22)%
</TABLE>
Advertising Performance
- -----------------------
As discussed in the Funds' Prospectus, the Funds may quote performance
results from recognized publications which monitor the performance of mutual
funds, and the Funds may compare their performance to various published
historical indices. These publications are listed in Part B of the Appendix. In
addition, the Funds may quote and compare their performance to the performance
of various economic and market indices and indicators, such as the S&P 500,
Financial Times Index, Morgan Stanley Capital International Europe, Australia,
Far East Index, Saloman Brothers World Property Index, Morgan Stanley Capital
International World Index, Morgan Stanley Capital International Real Estate
Index, NAREIT Equity Index, Wilshire Real Estate Securities Index, Morgan
Stanley REIT Index, Saloman Brothers World Property 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, 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 a Fund to be held by its overseas branches or
subsidiaries, and foreign banks and foreign securities depositories which
qualify as eligible foreign custodians under the rules adopted by the Securities
and Exchange Commission.
48
<PAGE>
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, LLP Exchange Place, Boston,
-------
Massachusetts 02109 serves as counsel to the Trust.
FINANCIAL STATEMENTS
--------------------
The financial statements of Asia Dynasty Fund, Emerging Markets Growth Fund,
Global Hard Assets Fund, Global Balanced Fund, International Investors Gold
Fund, Global Real Estate Fund, Gold/Resources Fund and U.S. Government Money
Fund for the fiscal year ended December 31, 1997, are hereby incorporated by
reference from the Funds' Annual Reports to Shareholders, which have been
delivered with this Statement of Additional Information and are available at no
charge upon written or telephone request to the Trust at the address or
telephone numbers set forth on the first page of this Statement of Additional
Information.
49
<PAGE>
APPENDIX
--------
PART A.
Corporate Bond Ratings
- ----------------------
Description of Moody's Investors Service, Inc. corporate bond ratings:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors given security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category.
Description of Standard & Poor's Corporation corporate bond ratings;
AAA --Bonds rated AAA have the highest rating assigned by S&P to a debt
obligations. Capacity to pay interest and repay principal is extremely strong.
AA --Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A --Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB --Bonds rated BBB are regarding as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
50
<PAGE>
Preferred Stock Ratings
- -----------------------
Moody's Investors Service, Inc. describes its preferred stock ratings as:
aaa -An issue which is rated aaa is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of convertible preferred stocks.
aa -An issue which is rated aa is considered a high-grade preferred stock.
This rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
a -An issue which is rated a is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the aaa
and aa classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
baa -An issue which is rated baa is considered to be medium-grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
ba -An issue which is rated ba is considered to have speculative elements,
and its future cannot be considered well assured. Earnings and asset protection
may be very moderate and not well safe-guarded during adverse periods.
Uncertainty of position characterizes preferred stocks in this class.
b -An Issue which is rated b generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of other
terms of the issue over any long period of time may be small.
caa -An issue which is rated caa is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future
status of payment.
ca -An issue which is rated ca is speculative in a high degree and is
likely to be in arrears on dividends with little likelihood of eventual payment.
c -This is the lowest rated class of preferred or preference stock. Issues
so rated can be regarded as having extremely poor prospects of every attaining
any real investment standing.
Standard & Poor's Corporation describes its preferred stock ratings as:
AAA -This is the highest rating that may be assigned by Standard & Poor's
to a preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.
AA -A preferred stock issue rated AA also qualifies as a high-quality fixed
income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated AAA.
A -An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the adverse
effect of changes in circumstances and economic conditions.
51
<PAGE>
BBB -An issue rated BBB is regarded as backed by an adequate capacity to
play the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the A category.
BB,B,CCC -Preferred stocks rated BB,B, and CCC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay preferred
stock obligations. BB indicates the lowest degree of speculation and CCC the
highest degree of speculation. While such issues will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
Short-Term Debt Ratings
- -----------------------
Description of Moody's short-term debt ratings:
Prime-1--Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by may of the following characteristics:
leading market positions in well-established industries, higher rates of return
of funds employed, conservative capitalization structure with moderate reliance
on debt and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation and well-established access
to a range of financial markets and assured sources of alternate liquidity.
Prime-2--Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected be external conditions. Ample alternate liquidity is maintained.
Prime-3--Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
Not Prime--Issuers rated Not Prime do not fall within any of the Prime
rating categories.
Description of Standard & Poor's short-term debt ratings:
A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated `A-1'.
A-3--Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes
in circumstances than obligations carrying the higher designations.
B--Issues rated B are regarded as having only speculative capacity for
timely payment.
C--This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
52
<PAGE>
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
PART B
- ------
The publications and services from which the Funds will quote performance
are: Micropal, Ltd. (an international investment fund information service),
Fortune, Changing Times, Money, U.S. News & World Report, Money Fund Scorecard,
Morningstar, Inc., Business Week, Institutional Investor, The Wall Street
Journal, Wall Street Transcripts, New York Post, Investment Company Institute
publications, The New York Times, Barron's, Forbes magazine, Research magazine,
Donaghues Money Fund Report, Donaghue's Money Letter, The Economist, FACS, FACS
of the Week, Financial Planning, Investment Daily, Johnson's Charts, Mutual Fund
Profiles (S&P), Powell Monetary Analysis, Sales & Marketing Management Magazine,
Life magazine, Black Enterprise, Fund Action, Speculators Magazine, Time,
NewsWeek, U.S.A Today, Wiesenberger Investment Service, Mining Journal
Quarterly, Mining Journal Weekly, Northern Miner, Gold Gazette, George Cross
Newsletter, Engineering and Mining Journal, Weekly Stock Charts-Canadian
Resources, Jeweler's Circular Keystone, Financial Times, Journal of Commerce,
Mikuni's Credit Ratings, Money Market Directory of Pension Funds, Oil and Gas
Journal, Pension Funds and Their Advisers, Investment Company Data, Inc., Mutual
Funds Almanac, Callan Associates, Inc., Media General Financial Services,
Financial World, Pensions & Investment Age, Registered Investment Advisors, Aden
Analysis, Baxter Weekly, Congressional Yellow Book, Crain's New York Business,
Survey of Current Business, Treasury Bulletin, U.S. Industrial Outlook, Value
Line Survey, Bank Credit Analyst, S&P Corporation Records, Euromoney, Moody's,
Investment Dealer's Digest, Financial Mail, Financial Post, Futures, Grant's
Interest Rate Observer, Institutional Investor, International Currency Review,
International Bank Credit Analyst, Investor's Daily, German Business Weekly,
GATT Trade Annual Report, and Dimensional Fund Advisers, Inc.
53
<PAGE>
PERFORMANCE CHARTS
Best Performing World Government Bond Markets*
1986 THROUGH DECEMBER, 1997
1986 JAPAN 47.4%
1987 U.K. 46.6%
1988 AUSTRALIA 28.8%
1989 CANADA 16.2%
1990 U.K. 30.9%
1991 AUSTRALIA 23.5%
1992 JAPAN 10.8%
1993 JAPAN 27.6%
1994 BELGIUM 12.2%
1995 SWEDEN 34.8%
1996 ITALY 27.2%
1997 U.K. 10.3%
*in U.S. dollar terms
Source: Salomon Smith Barney World Government Bond Index, a market
capitalization weighted total return index of developed world government
bonds with remaining maturities of one year or more.
_________________________
ANNUAL REAL (INFLATION-ADJUSTED) GDP GROWTH
(IN LOCAL CURRENCY TERMS)
1989 1990 1991 1992 1993 1994 1995 1996
----- ----- ----- ----- ------------ ------ ----- -----
HONG KONG 2.6% 3.4% 5.1% 6.3% 6.4% 5.4% 4.7% 7.9%
SINGAPORE 9.4% 8.1% 7.3% 6.2% 10.4% 10. 8% 7.0%
THAILAND 12.2% 11.6% 8.4% 7.8% 8.3% 8.8% 8.6% -0.4%
MALAYSIA 9.2% 9.7% 8.4% 7.8% 8.3% 9.2% 9.5% 8.6%
INDONESIA 7.5% 7.2% 7.0% 6.5% 6.5% 7.7% 8.2% 8.0%
PHILIPPINES 6.2% 3.0% -0.5% 0.3% 2.1% 4.4% 4.8% 5.7%
SOUTH KOREA 6.4% 9.5% 9.1% 5.1% 5.8% 8.6% 9.0% 7.1%
CHINA 4.3% 3.9% 9.2% 14.2% 13.5% 12.7% 10.6% N/A
Source: All Countries except Hong Kong: International Financial Statistics
(International Monetary Fund) - 2/96 and 4/98
Hong Kong: Datastream 1989-1995
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.
54
<PAGE>
ASIAN STOCK MARKET TOTAL RETURNS**
The chart below provides returns for the key developing Asian stock markets
for the given periods. While these markets can be volatile, the long-term
returns may be greater than those achieved by more mature equity markets.
<TABLE>
<CAPTION>
5YR. COMPOUNDED 10YR. COMPOUNDED
avg. annual return avg. annual return
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 (1992- 1996) 12/31/97
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----------- --------
Hong Kong 28.1% 8.4% 9.2% 49.5% 32.3% 116.7% -28.9% 22.6% 33.1% -23.3% 14.0% 21.5%
INDONESIA 258.1% 81.9% 6.4% -44.5% -0.2% 105.7% -25.9% 9.2% 27.5% -74.1% -11.3% 8.7%
MALAYSIA 26.5% 55.8% -7.9% 4.9% 17.8% 110.0% -19.9% 5.2% 25.9% -68.1% -6.6% 5.3%
PHILIPPINES 43.1% 65.0% -45.6% 85.5% 39.0% 122.3% -7.9% -11.5% -17.8% -62.6% -11.0% 7.0%
SINGAPORE 34.2% 44.9% -14.6% 43.6% 4.5% 73.4% 5.8% 12.2% 0.3% -40.5% 4.2% 13.2%
SO. KOREA 96.6% 1.7% -27.3% -15.5% 1.6% 31.4% 23.7% -3.3% -38.1% -66.7% -20.2% -9.6%
TAIWAN 119.7% 84.9% -55.2% 12.7% -23.7% 84.6% 20.8% -29.3% 40.3% -6.3% 15.7% 14.0%
THAILAND 47.3% 114.4% -27.3% 22.7% 35.4% 103.6% -9.0% -3.8% -36.6% -73.4% -21.4% 1.5%
</TABLE>
Source: Morgan Stanley & Co. Incorporated
Performance provided in U.S. dollar terms and includes reinvestment of gross
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.
<TABLE>
<CAPTION>
- ----------------------------
MORGAN STANLEY CAPITAL INTERNATIONAL STOCK MARKET INFORMATION
(IN US CURRENCY WITH NET DIVIDENDS REINVESTED)
AS OF DECEMBER 31, 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
----- ----- ---- ----- ----- ----- ----- ----- ----- ----
AUSTRALIA -10.4% 16.5% 11.2% 5.4% 35.2% -10.8% 33.6% -17.5% 9.3% 36.4%
AUSTRIA 1.6% 4.5% -4.7% -6.3% 28.1% -10.7% -12.2% 6.3% 103.9% 0.6%
BELGIUM 13.6% 12.0% 25.9% 8.2% 23.5% -1.5% 13.8% -11.0% 17.3% 53.6%
CANADA 12.8% 28.5% 18.3% -3.0% 17.6% -12.2% 11.1% -13.0% 24.3% 17.1%
DENMARK 34.5% 21.8% 18.8% 3.8% 32.8% -28.3% 16.6% -0.9% 43.9% 52.7%
FINLAND 17.3% 33.9% 4.6% 52.2% 82.7% -13.0% -18.1% -31.7% -9.6% 13.7%
FRANCE 11.9% 21.2% 14.1% -5.2% 20.9% 2.8% 17.8% -13.8% 36.2% 37.9%
GERMANY 24.6% 13.6% 16.4% 4.7% 35.6% -10.3% 8.2% -9.4% 46.3% 20.6%
HONG KONG -23.3% 33.1% 22.6% -28.9% 116.7% 32.3% 49.5% 9.2% 8.4% 28.1%
IRELAND 15.8% 32.0% 22.4% 14.5% 42.4% -21.2% 12.2% -16.7% 41.2% 25.1%
ITALY 35.5% 12.6% 1.0% 11.6% 28.5% -22.2% -1.8% -19.2% 19.4% 11.5%
JAPAN -23.7% -15.5% 0.7% 21.4% 25.5% -21.5% 8.9% -36.1% 1.7% 35.4%
MALAYSIA -68.1% 25.9% 5.2% -19.9% 110.0% 17.8% 5.0% -7.9% 55.8% 26.5%
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------ ----- ----- ----- ----- ------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Netherlands 23.8% 27.5% 27.7% 11.7% 35.3% 2.3% 17.8% -3.2% 35.8% 14.2%
NEW ZEALAND -14.2% 17.2% 20.9% 8.9% 67.7% -1.4% 18.3% -37.7% 11.4% -13.8%
NORWAY 6.2% 28.6% 6.0% 23.6% 42.0% -22.3% -15.5% 0.7% 45.5% 42.4%
SINGAPORE -40.5% -6.9% 6.5% 6.7% 68.0% 6.3% 25.0% -11.7% 42.3% 33.3%
SPAIN 25.4% 40.1% 29.8% -4.8% 29.8% -21.9% 15.6% -13.7% 9.8% 13.5%
SWEDEN 17.9% 37.2% 33.4% 18.3% 37.0% -14.4% 14.4% -21.0% 31.8% 48.3%
SWITZERLAND 44.3% 2.3% 44.1% 3.5% 45.8% 17.2% 15.8% -6.2% 26.2% 6.2%
UNITED KINGDOM 22.6% 27.4% 21.3% -1.6% 24.4% -3.7% 16.0% 10.3% 21.9% 6.0%
US 33.4% 23.2% 37.1% 1.1% 9.1% 6.4% 30.1% -3.2% 30.0% 14.6%
</TABLE>
Morgan Stanley Capital International Index
(IN US CURRENCY WITH NET DIVIDENDS REINVESTED)
AS OF DECEMBER 31, 1997
10 year annual total return
---------------------------
Australia 9.3%
AUSTRIA 7.6%
BELGIUM 14.4%
CANADA 9.2%
DENMARK 17.2%
FINLAND 8.6%
FRANCE 13.3%
GERMANY 13.8%
HONG KONG 19.2%
IRELAND 14.8%
ITALY 6.1%
JAPAN -2.9%
MALAYSIA 4.8%
NETHERLANDS 18.6%
NEW ZEALAND 4.5%
NORWAY 13.3%
SINGAPORE 8.9%
SPAIN 10.6%
SWEDEN 17.6%
SWITZERLAND 18.5%
UNITED KINGDOM 14.0%
USA 17.4%
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 REAL ESTATE INDEX: An arithmetic,
market value-weighted average of the performance of property shares worldwide.
MORGAN STANLEY REIT INDEX: A capitalization-/weighted index with dividends
reinvested of most actively traded real estate invest trusts.
56
<PAGE>
NAREIT EQUITY INDEX: A capitalization-weighted index comprised of publicly
traded equity real estate investment trusts excluding mortgages REITS.
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).
SALOMON BROTHERS WORLD PROPERTY EQUITY INDEX: A top-down, float
capitalization-weighted index that includes shares of approximately 380
companies in 19 countries.
WILSHIRE REIT SECURITIES INDEX: A capitalization-weighted index comprised
of publicly traded equity real estate investment trusts excluding mortages
REITS.
GPR LIFE GLOBAL REAL ESTATE SECURITIES INDED: A market capitalization-
weighted index of property companies in 33 countries.
57
<PAGE>
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.
58
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
a.) Financial Statements included in Prospectus (Part A):
Financial Highlights or Selected per Share Data and Ratios of Asia
Dynasty Fund for the fiscal period ended December 31, 1993, and for
the years ended December 31, 1994, 1995 and 1996 and for the year
ended December 31, 1997 (audited); of Global Balanced Fund for the
fiscal period ended December 31, 1993 and for the years ended
December 31, 1994, 1995 and 1996 and for the year ended December 31,
1997 (audited); of Global Hard Assets Fund for the fiscal period
ended December 31, 1994 and for the years ended December 31, 1995 and
1996 and for the year ended December 31, 1997 (audited); for
Gold/Resources Fund for the years ended December 31, 1987, 1988, 1989
and 1990 (not audited by Coopers & Lybrand LLP, the Fund's current
auditors), and for the years ended December 31, 1991, 1992, 1993,
1994, 1995 and 1996 and for the year ended December 31, 1997; for
International Investors Gold Fund for the years ended December 31,
1992 and 1993, for the fiscal period or year ended December 31, 1994
and for the years ended December 31, 1995 and 1996 and for the year
ended December 31, 1997; and for U.S. Government Money Fund for the
years ended December 31, 1992, 1993, 1994, 1995 and 1996 and for the
year ended December 31, 1997; Emerging Markets Growth Fund for the
year ended December 31, 1997 (audited) and Global Real Estate Fund
for the period from June 23, 1997 to December 31, 1997 (audited).
The audited financial statements of the Registrant are included in
Registrant's Annual Reports to Shareholders for the fiscal year or period ended
December 31, 1997, filed with the Securities and Exchange Commission under
Section 30(b)(1) of the Investment Company Act of 1940, and have been
incorporated in Part B hereof by reference:
Asia Dynasty Fund - Investment Portfolio at December 31, 1997;
Asia Dynasty Fund - Statement of Assets and Liabilities at December 31, 1997;
Asia Dynasty Fund - Statement of Operations for the year ended December 31,
1997;
Asia Dynasty Fund - Statement of Change in Net Assets for the year ended
December 31, 1996 and for the year ended December 31, 1997;
Asia Dynasty Fund - Financial Highlights for the period September 1, 1993 to
December 31, 1993, for the period March 22, 1993 to
December 31, 1993, the year ended December 31, 1994, 1995,
1996 and 1997;
Asia Dynasty Fund - Notes to Financial Statements Report of Independent
Accountants February 25, 1998.
Global Balanced Fund - Investment Portfolio at December 31, 1997;
Global Balanced Fund - Statement of Assets and Liabilities at December 31, 1997;
Global Balanced Fund - Statement of Operations for the year ended December 31,
1997;
Global Balanced Fund - Statement of Change in Net Assets for the year ended
December 31, 1996 and for the year ended December 31,
1997;
Global Balanced Fund - Financial Highlights for the period December 20, 1993 to
December 31, 1993, the year ended December 31, 1994,
1995, 1996 and 1997;
Global Balanced Fund - Notes to Financial Statements Report of Independent
Accountants February 23, 1998.
Emerging Markets Growth Fund - Investment Portfolio at December 31, 1997;
Emerging Markets Growth Fund - Statement of Assets and Liabilities at December
31, 1997;
Emerging Markets Growth Fund - Statement of Operations for the year ended
December 31, 1997;
Emerging Markets Growth Fund - Statement of Change in Net Assets for the year
ended December 31, 1997;
Emerging Markets Growth Fund - Financial Highlights for the year ended December
31, 1997;
Emerging Markets Growth Fund - Notes to Financial Statements Report of
Independent Accountants February 24, 1998.
Global Hard Assets Fund - Investment Portfolio at December 31, 1997;
Global Hard Assets Fund - Statement of Assets and Liabilities at December 31,
1997;
Global Hard Assets Fund - Statement of Operations for the year ended December
31, 1997;
Global Hard Assets Fund - Statement of Change in Net Assets for the year ended
December 31, 1996 and for the year ended December 31,
1997;
Global Hard Assets Fund - Financial Highlights for the period from November 2,
1994 to December 31, 1994, for the period from April
24, 1996 to December 31, 1996, the year ended
December 31, 1995, 1996 and 1997;
Global Hard Assets Fund - Notes to Financial Statements Report of Independent
Accountants February 24, 1998.
Global Real Estate Fund - Investment Portfolio at December 31, 1997;
Global Real Estate Fund - Statement of Assets and Liabilities at December 31,
1997;
Global Real Estate Fund - Statement of Operations for the period from June 23,
1997 to December 31, 1997;
Global Real Estate Fund - Statement of Change in Net Assets for the period
from June 23, 1997 to December 31, 1997;
Global Real Estate Fund - Financial Highlights for the period from June 23, 1997
to December 31, 1997, from the period from October 9,
1997 to December 31, 1997;
Global Real Estate Fund - Notes to Financial Statements Report of Independent
Accountants February 24, 1998.
Gold/Resources Fund - Investment Portfolio at December 31, 1997;
Gold/Resources Fund - Statement of Assets and Liabilities at December 31, 1997;
Gold/Resources Fund - Statement of Operations for the year ended December 31,
1997;
Gold/Resources Fund - Statement of Change in Net Assets for the year ended
December 31, 1996 and for the year ended December 31,
1997;
Gold/Resources Fund - Financial Highlights for the year ended December 31, 1997;
Gold/Resources Fund - Notes to Financial Statements Report of Independent
Accountants February 26, 1998.
International Investors Gold Fund - Investment Portfolio at December 31, 1997;
International Investors Gold Fund - Statement of Assets and Liabilities at
December 31, 1997;
International Investors Gold Fund - Statement of Operations for year ended
December 31, 1997;
International Investors Gold Fund - Statement of Change in Net Assets for the
year ended December 31, 1996 and for the
year ended December 31, 1997;
International Investors Gold Fund - Financial Highlights for the year ended
December 31, 1997;
International Investors Gold Fund - Notes to Financial Statements Report of
Independent Accountants February 26, 1998.
U.S. Government Money Fund - Investment Portfolio at December 31, 1997;
U.S. Government Money Fund - Statement of Assets and Liabilities at December 31,
1997;
U.S. Government Money Fund - Statement of Operations for year ended December 31,
1997;
U.S. Government Money Fund - Statement of Change in Net Assets for the year
ended December 31, 1996 and for the year ended
December 31, 1997;
U.S. Government Money Fund - Financial Highlights for the year ended December
31, 1997;
U.S. Government Money Fund - Notes to Financial Statements Report of Independent
Accountants February 25, 1998.
b) Exhibits (An * denotes inclusion in this filing)
(1)(a) Master Trust Agreement (incorporated by reference to Registration
Statement No. 2-97596); Form of First Amendment to Master Trust
Agreement (incorporated by reference to Registration Statement No. 2-
97596). Form of Second Amendment to Master Trust Agreement
(incorporated by reference to Pre-Effective Amendment No. 1). Form of
Third Amendment to Master Trust Agreement (incorporated by reference to
Post-Effective Amendment No. 1). Form of Fourth Amendment to Master
Trust Agreement (incorporated by reference to Post-Effective Amendment
No. 3). Form of Fifth Amendment to the Master Trust Agreement, adding
World Income Fund as a series to the trust (incorporated by reference
to Post-Effective Amendment No. 7). Form of Sixth Amendment to Master
Trust Agreement, adding International Investors Fund as a series of the
Trust and establishing investment limitations therefore, respectively,
(incorporated by reference to Post-Effective Amendment No. 17). Form of
Seventh Amendment to the Master Trust Agreement, adding Short-Term
World Income Fund and International Equities Fund as series of the
Trust (incorporated by reference to Post-Effective Amendment No. 19).
(1)(b) Form of Amended and Restated Master Trust Agreement (incorporated by
reference to Post-Effective Amendment No. 20); Form of Amendment to the
Master Trust Agreement changing the name of Short-Term World Income
Fund to Short-Term World Income Fund-C and changing the name of
International Equities Fund to International Growth Fund (incorporated
by reference to Post-Effective Amendment No. 20); Form of Second
Amendment to the Amended and Restated Master Trust Agreement adding
Asia Dynasty Fund as a series of the Trust (incorporated by reference
to Post-Effective Amendment No. 23); Third Amendment to the Amended and
Restated Master Trust Agreement adding Global Balanced Fund as a series
of the Trust and changing the name of International Investors Fund to
International Investors Gold Fund (incorporated by reference to Post-
Effective Amendment No. 29); Fourth Amendment to the Amended and
Restated Master Trust Agreement adding Global SmallCap Fund and Asia
Infrastructure Fund as series of the Trust (incorporated by reference
to Post-Effective Amendment No. 30); Form of Fifth Amendment to the
Amended and Restated Master Trust Agreement (incorporated by reference
to Post-Effective Amendment No. 35); Form of Sixth Amendment to the
Amended and Restated Master Trust Agreement (incorporated by reference
to Post-Effective Amendment No. 35); Seventh Amendment to Amended and
Restated Master Trust Agreement adding Global Hard Assets Fund as a
series of the Trust (incorporated by reference to Post-Effective
Amendment No. 36); Eighth Amendment to Amended and Restated Master
Trust Agreement adding Gold Opportunity Fund as a series of the Trust
(incorporated by reference to Post-Effective Amendment No. 37); Ninth
Amendment to the Amended and Restated Master Trust Agreement adding
Class B shares to Asia Infrastructure Fund, Global Hard Assets Fund and
Gold Opportunity Fund series of the Trust (incorporated by reference to
Post-Effective Amendment No. 39).
(1)(c) Tenth Amendment to Amended and Restated Master Trust Agreement adding
Emerging Markets Growth Fund (to be filed by Amendment).
(2) By-laws of Registrant (incorporated by reference to Registration
Statement No. 2-97596).
(3) Not Applicable.
(4)(a) Form of certificate of shares of beneficial interest of the World Trend
Fund (incorporated by reference to Pre-Effective Amendment No. 1).
Forms of certificates of shares of beneficial interest of
Gold/Resources Fund and
<PAGE>
U.S. Government Money Fund (incorporated by reference to Post-Effective
Amendment No. 1); Form of certificate of shares of beneficial interest
of the World Income Fund (incorporated by reference to Post-Effective
Amendment No. 6); Forms of certificates of shares of beneficial
interest of the Short-Term World Income Fund-C and International Growth
Fund (incorporated by reference to Post-Effective Amendment No. 23);
Form of certificate of shares of beneficial interest of Asia Dynasty
Fund (incorporated by reference to Post-Effective Amendment No. 23);
Form of certificate of Class B shares of beneficial interest of Asia
Dynasty Fund (incorporated by reference to Post-Effective Amendment No.
26); Form of certificate of Class A and Class B shares of beneficial
interest of Global Balanced Fund (incorporated by reference to Post-
Effective Amendment No. 26); Form of certificate of Class B shares of
beneficial interest of the World Income Fund (incorporated by reference
to Post-Effective Amendment No. 29); Certificate of Class A shares of
beneficial interest of the World Income Fund; Form of certificate of
Class A and Class B shares of beneficial interest of Global SmallCap
Fund and Asia Infrastructure Fund (incorporated by reference to Post-
Effective Amendment No. 30); Form of certificate of Class A and Class C
shares of beneficial interest of Global Hard Assets Fund (incorporated
by reference to Post-Effective Amendment No. 33); Form of certificate
of Class A and Class C shares of beneficial interest of Gold
Opportunity Fund (incorporated by reference to Post-Effective Amendment
No. 35); Form of certificate of Class B shares of beneficial interest
of Asia Infrastructure Fund, Global Hard Assets Fund and Gold
Opportunity Fund (incorporated by reference to Post-Effective Amendment
No. 39.
(4)(b) Instruments defining rights of security holders (See Exhibits (1) and
(2) above).
(5)(a) Advisory Agreement (incorporated by reference to Post-Effective
Amendment No. 1).
(5)(b) Letter Agreement to add Gold/Resources Fund and U.S. Government Money
Fund (incorporated by reference to Post-Effective Amendment No. 1);
Letter Agreement to add World Income Fund (incorporated by reference to
Post-Effective Amendment No. 6)
(5)(c) Form of Advisory Agreement between Van Eck Associates Corporation and
Van Eck Funds with respect to Asia Dynasty Fund (incorporated by
reference to Post-Effective Amendment No. 23).
(5)(d) Advisory Agreement between Van Eck Associates Corporation and Van Eck
Funds with respect to Global Balanced Fund (incorporated by reference
to Post-Effective Amendment No. 31).
(5)(e) Letter Agreement to add Global SmallCap Fund and Asia Infrastructure
Fund (incorporated by reference to Post-Effective Amendment No. 31);
and. Letter Agreement to add Gold/Resources Fund and International
Investors Gold Fund (incorporated by reference to Post-Effective
Amendment No. 34)
(5)(f) Advisory Agreement between Van Eck Associates Corporation and Global
Hard Assets Fund (incorporated by reference to Post-Effective Amendment
No. 36).
(5)(g) Form of Letter Agreement to add Gold Opportunity Fund (incorporated by
reference to Post-Effective Amendment No. 37).
(5)(h) Sub-Advisory Agreement among Fiduciary International, Inc., Van Eck
Associates Corporation and Van Eck Funds with respect to Global
Balanced Fund (incorporated by reference to Post-Effective Amendment
No. 27).
(5)(i) Form of Advisory Agreement between Van Eck Associates Corporation and
Van Eck Funds with respect to Emerging Markets Growth Fund (originally
called Global Emerging Markets Fund) (incorporated by reference to
Post-Effective Amendment No. 36).
(5)(k) Form of Sub-Advisory Agreement among Peregrine Asset Management (Hong
Kong) Limited, Van Eck Associates Corporation and Van Eck Funds with
respect to Emerging Markets Growth Fund (originally called Global
Emerging Markets Fund) (incorporated by reference to Post-Effective
Amendment No.46).
2
<PAGE>
(6)(a) Distribution Agreement (incorporated by reference to Post-Effective
Amendment No. 1).
(6)(b) Letter Agreement to add Gold/Resources Fund and U.S. Government Money
Fund (incorporated by reference to Post-Effective Amendment No. 1);
Letter Agreement to add World Income Fund (incorporated by reference
to Post-Effective Amendment No. 6); and Letter Agreement to add Asia
Dynasty Fund (incorporated by reference to Post-Effective Amendment
No. 23)
(6)(c) Letter Agreement to add Global SmallCap Fund and Asia Infrastructure
Fund (incorporated by reference to Post-Effective Amendment No. 31);
Letter Agreement to add Gold/Resources Fund-C, International
Investors Gold Fund-C, Global SmallCap Fund-C and Asia Infrastructure
Fund-C (incorporated by reference to Post-Effective Amendment No.
34); Letter Agreement to add Global Hard Assets Fund (incorporated by
reference to Post-Effective Amendment No. 36); Form of Letter
Agreement to add Gold Opportunity Fund (incorporated by reference to
Post-Effective Amendment No. 37); Form of Letter Agreement adding
Asia Select Portfolios (incorporated by reference to Post-Effective
Amendment No. 41); and Form of Letter Agreement adding Core
International Index Fund (incorporated by reference to Post-Effective
Amendment No. 42)
(6)(d) Amendment to Form of Selling Group Agreement (incorporated by
reference to Post-Effective Amendment No. 9).
(6)(e) Selling Group Agreement (incorporated by reference to Post-Effective
Amendment No. 12).
(6)(f) Letter Agreement to add Emerging Markets Growth Fund (to be filed by
amendment).
(7) Form of Deferred Compensation Plan (incorporated by reference to
Post-Effective Amendment No. 40).
(8) Global Custody Agreement, as amended (to be filed by amendment).
(9)(a) Forms of Procedural Agreement, Customer Agreement and Safekeeping
Agreement with Merrill Lynch Futures Inc. utilized by World Income
Fund, and Forms of Procedural Agreement, Customer Agreement and Safe
Keeping Agreement with Morgan Stanley & Co. utilized by World Income
Fund (incorporated by reference to Post-Effective Amendment No. 9).
(9)(b) Commodity Customer's Agreement between World Income Fund and Morgan
Stanley & Co. (incorporated by reference to Post-Effective Amendment
No. 10 ).
(9)(c) Agreement and Plan of Redomicile and Reorganization between the Trust
and International Investors Incorporated respecting the
reorganization of International Investors Incorporated into the Trust
as its fifth series, International Investors. (incorporated by
reference to Post-Effective Amendment No. 17).
(9)(d) Form of Accounting and Administrative Services Agreement with respect
to Asia Dynasty Fund (Incorporated by reference to Post-effective
Amendment No. 23).
(9)(e) Accounting and Administrative Services Agreement with respect to
Global Balanced Fund (incorporated by reference to Post-effective
Amendment No. 31).
(9)(f) Letter Agreement to add Global SmallCap Fund and Asia Infrastructure
Fund (incorporated by reference to Post-effective Amendment No. 31)
and Letter Agreement to add Gold/Resources Fund and International
Investors Gold Fund (incorporated by reference to Post-effective
Amendment No. 34). Letter Agreement to add Global Hard Assets
3
<PAGE>
Fund (incorporated by reference to Post-effective Amendment No. 36).
Letter Agreement to add Gold Opportunity Fund (incorporated by
reference to Post-effective Amendment No. 37).
(9)(g) Form of Accounting and Administrative Services Agreement with respect
to Global Emerging Markets Fund (incorporated by reference to Post-
Effective Amendment No. 36).
(9)(h) Letter Agreement to add Emerging Markets Growth Fund (to be filed by
amendment).
(10) Opinion of Goodwin, Procter & Hoar, including consent, with regard to
World Trends Fund (incorporated by reference to Pre-Effective
Amendment No. 1); Opinion Of Fund (incorporated by reference to Post-
Effective Amendment No. 1); Opinion of Goodwin, Procter & Hoar with
regard to World Income Fund (incorporated by reference to Post-
Effective Amendment No. 7); Opinion of Goodwin, Procter & Hoar and
consent with regard to International Investors (incorporated by
reference to Post-Effective Amendment No. 17); Opinion of Goodwin,
Procter and Hoar with regard to Asia Dynasty Fund (incorporated by
reference to Post-effective Amendment No. 24); Opinion of Goodwin,
Procter & Hoar with respect to the issuance of Class B shares of Asia
Dynasty Fund and with respect to the issuance of Class A and Class B
shares of Global Balanced Fund (incorporated by reference to Post-
effective Amendment No. 27); Opinion of Goodwin, Procter & Hoar with
respect to the issuance of Class A and Class B shares of Asia
Infrastructure Fund and Global SmallCap Fund (incorporated by
reference to Post-effective Amendment No. 31) and Opinion of Goodwin,
Procter & Hoar, including consent, with regard to the issuance of
Class A and Class C shares of Global Hard Assets Fund (incorporated
by reference to Post-effective Amendment No. 36). Opinion of Goodwin,
Procter & Hoar, including consent, with regard to the issuance of
Class A and Class C shares of Gold Opportunity Fund (incorporated by
reference to Post-Effective Amendment No. 37). Opinion of Goodwin,
Proctor & Hoar including consent, with regard to the issuance of
Class B shares of Asia Infrastructure Fund, Gold Opportunity Fund and
Global Hard Assets Fund (incorporated by reference to Post-Effective
Amendment No. 40).
(10)(b) Opinion of Goodwin, Procter & Hoar, with respect to issuance of Class
A, Class B and Class C shares of Emerging Markets Growth Fund (to be
filed by amendment).
(11)* Consent of Independent Accountants
(12) Not Applicable.
(13) Not Applicable.
(14)(a) Forms of prototype "Keogh" and 403(b)(7) Plans utilized by registrant
(incorporated by reference to Post-Effective Amendment No. 10).
(14)(b) Registrant's revised form of IRA Plan (incorporated by reference to
Post-Effective Amendment No. 10).
(14)(c) Registrant's form of Simplified Employee Plan (incorporated by
reference to Post-Effective Amendment No. 10).
(14)(d) Amendments to the Retirement Plan for Self-Employed Individuals,
Partnerships and Corporation using shares of Van Eck Funds and
International Investors Incorporated; Profit Sharing Plan Adoption
Agreement. (incorporated by reference to Post-Effective Amendment No.
14).
(15)(a) Plan of Distribution with respect to International Growth Fund and
Asia Dynasty Fund Incorporated by reference to Post-Effective
Amendment No. 23). Form of Plan of Distribution with respect to Class
B shares of Asia Dynasty Fund (Incorporated by reference to Post-
Effective Amendment No. 25). Form of Plan of Distribution with
respect to Global Balanced Fund (Class A and B) and World Income Fund
(Class B) (incorporated by reference to Post-Effective Amendment No.
26). Letter Agreement to add Global SmallCap Fund (Class A) and Asia
Infrastructure Fund (Class A) (incorporated by reference to
Gold/Resources Fund (Class C), International Investors Gold Fund
(Class C), Global (Class A) (incorporated by reference to Post-
Effective Amendment No. 36). Form of Letter Agreement to add Gold
Opportunity Fund (Class A and Class C) and Letter Agreement to add
Global Hard Assets Fund (Class C) (incorporated by reference to Post-
Effective Amendment No. 37. Form of Plan of Distribution with respect
to Asia Infrastructure Fund (Class B), Global Hard Assets Fund (Class
B) and Gold Opportunity Fund
4
<PAGE>
(Class B) (incorporated by reference to Post-Effective Amendment No.
39).
(15)(b) Letter Agreement to add Emerging Markets Growth Fund (Class A/Class
B/Class C).
(16)* Computation of Performance Quotation.
(17) * Financial Data Schedule.
(18) Powers of Attorney (incorporated by reference from Post-Effective
Amendment No. 5).
(19) Not Applicable.
ITEM 25. Persons controlled by or under common control with Registrant
Not Applicable.
ITEM 26. Number of Holders of Securities
Set forth below are the number of Record Holders as of April 17, 1998 of
each series of the Registrant:
<TABLE>
<CAPTION> FUND
NAME NUMBER OF RECORD HOLDERS
---- ------------------------
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C>
Global Balanced Fund..... 2,320 302
Asia Dynasty Fund........ 2,046 676
International Investors
Gold Fund............... 39,052
Gold/Resources Fund...... 13,354
Global Hard Assets Fund.. 3,330 661 525
U.S. Government Money
Fund.................... 2,083
Emerging Growth Markets
Fund.................... 322 19 22
Global Real Estate Fund.. 98 29 12
</TABLE>
ITEM 27. Indemnification
Reference is made to Article VI of the Master Trust Agreement of the
Registrant, as amended, previously filed as Exhibit (1) to the Registration
Statement.
Insofar as indemnification by the Registrant for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers, underwriters
and controlling persons of the Registrant, pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification is against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a trustee,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted against the Registrant by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
ITEM 28. Business and other Connections of Investment Adviser
Reference is made to Form ADV of Van Eck Associates Corporation (File No. 801-
21340), as currently on file with the Securities and Exchange Commission, and
to the caption "Management" in the Registrant's Prospectus and to the captions
"The Distributor", "Investment Advisory Services" and "Trustees and Officers"
in the Registrant's Statement of Additional Information.
5
<PAGE>
ITEM 29. Principal Underwriters
(a) Van Eck Securities Corporation, principal underwriter for the Registrant,
also distributes shares of Van Eck Worldwide Insurance Trust and Van Eck/Chubb
Funds, Inc.
(b) The following table presents certain information with respect to each
director and officer of Van Eck Securities Corporation:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES POSITION AND OFFICE
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
- ------------------ -------------------- -------------------
<S> <C> <C>
John C. van Eck Chairman and Director Chairman and President
99 Park Avenue
New York, NY 10016
Philip De Feo President, Chief Executive Officer and Director Trustee
99 Park Avenue
New York, NY 10016
Jan van Eck Executive Vice President and Director Trustee
99 Park Avenue
New York, NY 10016
Sigrid S. van Eck Vice President and Assistant Treasurer and Director None
270 River Road
Briarcliff Manor,
NY
Fred M. van Eck Director None
99 Park Avenue
New York, NY 10016
Derek van Eck Director Trustee and Executive Vice President
99 Park Avenue
New York, NY 10016
Bruce J. Smith Vice President, Chief Financial Officer, Treasurer and Controller Vice President and Treasurer
99 Park Avenue
New York, NY 10016
Thomas Elwood Vice President, General Counsel and Secretary Vice President and Secretary
99 Park Avenue
New York, NY 10016
Susan C. Lashley Managing Director, Operations Vice President
99 Park Avenue
New York, NY 10016
Keith Fletcher Senior Managing Director None
99 Park Avenue
New York, NY 10016
</TABLE>
(c) Not Applicable
6
<PAGE>
ITEM 30. Location of Accounts and Records
The following table sets forth information as to the location of accounts,
books and other documents required to be maintained pursuant to Section 31(a)
of the Investment Company Act of 1940, as amended, and the Rules promulgated
thereunder.
<TABLE>
<CAPTION>
ACCOUNTS, BOOKS AND DOCUMENTS LISTED BY
REFERENCE TO SPECIFIC SUBSECTION OF
17 CFR 270 31A-1 TO 31A-3 PERSON IN POSSESSION AND ADDRESS
--------------------------------------- --------------------------------
<S> <C>
31a-1(b)(1) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(2)(i) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(2)(ii) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(2)(iii) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(2)(iv) DST Systems, Inc.
21 West Tenth Street
Kansas City, Missouri 64105
31a-1(b)(3) Not Applicable
31a-1(b)(4) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(5) Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(6) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(7) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(8) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
ACCOUNTS, BOOKS AND DOCUMENTS LISTED BY
REFERENCE TO SPECIFIC SUBSECTION OF
17 CFR 270 31A-1 TO 31A-3 PERSON IN POSSESSION AND ADDRESS
--------------------------------------- --------------------------------
<S> <C>
31a-1(b)(9) Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(10) Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(11) Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(b)(12) Fiduciary International, Inc.
Two World Trade Center
New York, New York 10048
Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(c) Not Applicable
31a-1(d) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-1(e) Not Applicable
31a-1(f) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-2(a)(1) Van Eck Associate's Corporation
99 Park Avenue
New York, NY 10016
DST Systems, Inc.
21 West Tenth Street
Kansas City, MO 64105
Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
Fiduciary International, Inc.
Two World Trade Center
New York, NY 10048
31a-2(b) Not Applicable
31a-2(c) Van Eck Securities Corporation
99 Park Avenue
New York, NY 10016
31a-2(d) Not Applicable
31a-2(e) Van Eck Associates Corporation
99 Park Avenue
New York, NY 10016
31a-3 Not Applicable
All Other Records Van Eck Funds
pursuant to the Rule 99 Park Avenue
New York, NY 10016
</TABLE>
ITEM 31. Management Services
- ----------------------------
None
ITEM 32. Undertakings
------------
Registrant undertakes to file a post-effective amendment using
financial statements which need not be certified within four to six months from
the effective date of Global Real Estate Fund.
8
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to the Registration Statement on Form N-1A to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on the 22nd day of April, 1998.
VAN ECK FUNDS
By: /s/ John C. van Eck
----------------------------------
John C. van Eck, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities and on the date indicated:
Signature Title Date
/s/ John C. van Eck
___________________ Chairman and President 4/22/98
John C. van Eck
/s/ Bruce J. Smith
___________________ Chief Financial Officer 4/22/98
Bruce J. Smith
/s/ Jeremy Biggs*
___________________ Trustee 4/22/98
Jeremy Biggs
/s/ Richard Cowell*
___________________ Trustee 4/22/98
Richard Cowell
/s/ Philip DeFeo Trustee 4/22/98
- -------------------
Philip DeFeo
/s/ Wesley G. McCain*
___________________ Trustee 4/22/98
Wesley G. McCain
/s/ David J. Olderman*
___________________ Trustee 4/22/98
David J. Olderman
/s/ Ralph F. Peters*
___________________ Trustee 4/22/98
Ralph F. Peters
<PAGE>
/s/ Richard Stamberger*
_______________________ Trustee 4/22/98
Richard Stamberger
/s/ Derek S. van Eck
_______________________ Trustee 4/22/98
Derek S. van Eck
/s/ Jan F. van ECK
_______________________ Trustee 4/22/98
Jan F. van Eck
/s/ John C. van Eck
_________________________
*Executed on behalf of Trustee by John C. van Eck, as attorney-in-fact.
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Item
- ----------- ----
<S> <C>
Exhibit 11 Consent of Independent Accountants.
Exhibit 16 Computation of Performance Quotations.
Exhibit 17 Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> International Investors Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 235,097,946
<INVESTMENTS-AT-VALUE> 253,269,409
<RECEIVABLES> 42,735,211
<ASSETS-OTHER> 58,535
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 296,063,155
<PAYABLE-FOR-SECURITIES> 431,396
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62,687,433
<TOTAL-LIABILITIES> 63,118,829
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 217,861,759
<SHARES-COMMON-STOCK> 30,903,581
<SHARES-COMMON-PRIOR> 34,534,411
<ACCUMULATED-NII-CURRENT> 162
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 3,034,075
<ACCUM-APPREC-OR-DEPREC> 18,116,480
<NET-ASSETS> 232,944,326
<DIVIDEND-INCOME> 5,734,059
<INTEREST-INCOME> 2,572,134
<OTHER-INCOME> 0
<EXPENSES-NET> 5,149,184
<NET-INVESTMENT-INCOME> 3,157,009
<REALIZED-GAINS-CURRENT> (3,164,930)
<APPREC-INCREASE-CURRENT> (132,640,502)
<NET-CHANGE-FROM-OPS> (132,648,423)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,043,229
<DISTRIBUTIONS-OF-GAINS> 112,073
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,627,900,847
<NUMBER-OF-SHARES-REDEEMED> 3,668,605,639
<SHARES-REINVESTED> (1,588,222)
<NET-CHANGE-IN-ASSETS> (178,096,739)
<ACCUMULATED-NII-PRIOR> 9,159
<ACCUMULATED-GAINS-PRIOR> 107,240
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,619,794
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,299,485
<AVERAGE-NET-ASSETS> 349,356,280
<PER-SHARE-NAV-BEGIN> 11.90
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> (4.36)
<PER-SHARE-DIVIDEND> 0.09
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 7.54
<EXPENSE-RATIO> 1.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Gold Resources Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 68,593,616
<INVESTMENTS-AT-VALUE> 64,313,775
<RECEIVABLES> 1,358,210
<ASSETS-OTHER> 1,151,317
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 66,823,302
<PAYABLE-FOR-SECURITIES> 485,140
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 689,944
<TOTAL-LIABILITIES> 1,175,084
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 155,056,868
<SHARES-COMMON-STOCK> 20,689,007
<SHARES-COMMON-PRIOR> 23,115,766
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 971,144
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 64,450,802
<ACCUM-APPREC-OR-DEPREC> 6,996,405
<NET-ASSETS> 65,648,218
<DIVIDEND-INCOME> 665,284
<INTEREST-INCOME> 92,301
<OTHER-INCOME> 0
<EXPENSES-NET> 1,071,442
<NET-INVESTMENT-INCOME> (313,857)
<REALIZED-GAINS-CURRENT> 5,822,735
<APPREC-INCREASE-CURRENT> 28,750,166
<NET-CHANGE-FROM-OPS> (23,241,288)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,891,390
<NUMBER-OF-SHARES-REDEEMED> 6,318,149
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (35,667,048)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 656,109
<OVERDIST-NET-GAINS-PRIOR> 70,274,715
<GROSS-ADVISORY-FEES> 435,293
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,071,442
<AVERAGE-NET-ASSETS> 117,040,019
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 1.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> Asia Dynasty Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 15,741,255
<INVESTMENTS-AT-VALUE> 16,211,298
<RECEIVABLES> 3,897,048
<ASSETS-OTHER> 2,284,937
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 22,393,283
<PAYABLE-FOR-SECURITIES> 1,174,813
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,432,231
<TOTAL-LIABILITIES> 2,607,044
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,378,291
<SHARES-COMMON-STOCK> 2,552,296
<SHARES-COMMON-PRIOR> 4,908,706
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 84,265
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 492,213
<NET-ASSETS> 19,786,239
<DIVIDEND-INCOME> 677,180
<INTEREST-INCOME> 58,995
<OTHER-INCOME> 0
<EXPENSES-NET> 1,162,928
<NET-INVESTMENT-INCOME> (426,753)
<REALIZED-GAINS-CURRENT> 5,776,880
<APPREC-INCREASE-CURRENT> (17,288,923)
<NET-CHANGE-FROM-OPS> (11,938,796)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 2,600,962
<DISTRIBUTIONS-OTHER> 305,500
<NUMBER-OF-SHARES-SOLD> 42,139,220
<NUMBER-OF-SHARES-REDEEMED> 74,062,180
<SHARES-REINVESTED> 1,906,997
<NET-CHANGE-IN-ASSETS> (44,861,221)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 627,790
<OVERDIST-NET-GAINS-PRIOR> 2,804,644
<GROSS-ADVISORY-FEES> 339,096
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 797,324
<AVERAGE-NET-ASSETS> 48,862,521
<PER-SHARE-NAV-BEGIN> 13.21
<PER-SHARE-NII> (0.28)
<PER-SHARE-GAIN-APPREC> (3.82)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.15
<RETURNS-OF-CAPITAL> 0.14
<PER-SHARE-NAV-END> 7.82
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> Global Balanced Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 20,598,884
<INVESTMENTS-AT-VALUE> 28,061,802
<RECEIVABLES> 927,916
<ASSETS-OTHER> 2,585,978
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,575,696
<PAYABLE-FOR-SECURITIES> 1,179,313
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 711,291
<TOTAL-LIABILITIES> 1,890,604
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,401,246
<SHARES-COMMON-STOCK> 2,862,816
<SHARES-COMMON-PRIOR> 2,831,713
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 226,027
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 45,102
<ACCUM-APPREC-OR-DEPREC> 7,554,975
<NET-ASSETS> 29,685,092
<DIVIDEND-INCOME> 230,840
<INTEREST-INCOME> 604,647
<OTHER-INCOME> 0
<EXPENSES-NET> 610,716
<NET-INVESTMENT-INCOME> 224,771
<REALIZED-GAINS-CURRENT> 3,335,923
<APPREC-INCREASE-CURRENT> 397,402
<NET-CHANGE-FROM-OPS> 3,958,096
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 205,017
<DISTRIBUTIONS-OF-GAINS> 3,635,446
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,559,581
<NUMBER-OF-SHARES-REDEEMED> 6,682,455
<SHARES-REINVESTED> 3,359,302
<NET-CHANGE-IN-ASSETS> 354,061
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,528
<OVERDISTRIB-NII-PRIOR> 14,809
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 219,469
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 720,338
<AVERAGE-NET-ASSETS> 30,535,800
<PER-SHARE-NAV-BEGIN> 10.37
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 1.43
<PER-SHARE-DIVIDEND> 0.08
<PER-SHARE-DISTRIBUTIONS> 1.43
<RETURNS-OF-CAPITAL> 0.01
<PER-SHARE-NAV-END> 10.38
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> Global Hard Assets Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 75,937,317
<INVESTMENTS-AT-VALUE> 80,980,167
<RECEIVABLES> 6,430,696
<ASSETS-OTHER> 3,341,192
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 90,752,055
<PAYABLE-FOR-SECURITIES> 5,569,329
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,602,088
<TOTAL-LIABILITIES> 10,171,417
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 75,294,055
<SHARES-COMMON-STOCK> 5,189,946
<SHARES-COMMON-PRIOR> 2,146,339
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 455
<ACCUMULATED-NET-GAINS> 66,856
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,220,182
<NET-ASSETS> 80,580,638
<DIVIDEND-INCOME> 1,023,956
<INTEREST-INCOME> 513,542
<OTHER-INCOME> 0
<EXPENSES-NET> 1,366,844
<NET-INVESTMENT-INCOME> 170,654
<REALIZED-GAINS-CURRENT> 4,458,604
<APPREC-INCREASE-CURRENT> 1,822,842
<NET-CHANGE-FROM-OPS> 6,452,100
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 69,565
<DISTRIBUTIONS-OF-GAINS> 4,421,817
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,368,849
<NUMBER-OF-SHARES-REDEEMED> 2,557,579
<SHARES-REINVESTED> 232,337
<NET-CHANGE-IN-ASSETS> 49,614,042
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 11,027
<OVERDIST-NET-GAINS-PRIOR> 60,448
<GROSS-ADVISORY-FEES> 660,306
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,429,460
<AVERAGE-NET-ASSETS> 33,518,071
<PER-SHARE-NAV-BEGIN> 14.42
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 2.01
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.98
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.50
<EXPENSE-RATIO> 1.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> U.S. Government Money Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 51,980,850
<INVESTMENTS-AT-VALUE> 51,980,850
<RECEIVABLES> 37,115,218
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 89,096,068
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,446,120
<TOTAL-LIABILITIES> 12,446,120
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 76,649,948
<SHARES-COMMON-PRIOR> 107,697,508
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 76,649,948
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,018,173
<OTHER-INCOME> 0
<EXPENSES-NET> 985,917
<NET-INVESTMENT-INCOME> 3,032,256
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3,032,256
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,032,256
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,630,786,246
<NUMBER-OF-SHARES-REDEEMED> 3,663,391,147
<SHARES-REINVESTED> 1,557,341
<NET-CHANGE-IN-ASSETS> (31,047,560)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 386,515
<GROSS-EXPENSE> 985,917
<AVERAGE-NET-ASSETS> 77,024,766
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.28
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> Emerging Markets Growth Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 2,930,066
<INVESTMENTS-AT-VALUE> 2,502,600
<RECEIVABLES> 161,619
<ASSETS-OTHER> 68,074
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,732,293
<PAYABLE-FOR-SECURITIES> 25,287
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 46,019
<TOTAL-LIABILITIES> 71,306
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,391,198
<SHARES-COMMON-STOCK> 327,288
<SHARES-COMMON-PRIOR> 3,151
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 6,155
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 295,894
<ACCUM-APPREC-OR-DEPREC> (428,162)
<NET-ASSETS> 2,660,987
<DIVIDEND-INCOME> 47,786
<INTEREST-INCOME> 294
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 48,080
<REALIZED-GAINS-CURRENT> (276,571)
<APPREC-INCREASE-CURRENT> (428,162)
<NET-CHANGE-FROM-OPS> (656,653)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 26,872
<DISTRIBUTIONS-OF-GAINS> 47,808
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 424,728
<NUMBER-OF-SHARES-REDEEMED> 108,657
<SHARES-REINVESTED> 8,067
<NET-CHANGE-IN-ASSETS> 2,630,987
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 24,075
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 168,772
<AVERAGE-NET-ASSETS> 2,184,063
<PER-SHARE-NAV-BEGIN> 9.52
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> (1.31)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.24
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 8.13
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> Global Real Estate
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,509,397
<INVESTMENTS-AT-VALUE> 1,571,743
<RECEIVABLES> 74,860
<ASSETS-OTHER> 304,432
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,951,035
<PAYABLE-FOR-SECURITIES> 236,457
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32,081
<TOTAL-LIABILITIES> 268,538
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,618,915
<SHARES-COMMON-STOCK> 158,122
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 39
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 967
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 62,576
<NET-ASSETS> 1,682,497
<DIVIDEND-INCOME> 21,753
<INTEREST-INCOME> 2,149
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 23,902
<REALIZED-GAINS-CURRENT> 63,337
<APPREC-INCREASE-CURRENT> 62,576
<NET-CHANGE-FROM-OPS> 149,815
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 22,156
<DISTRIBUTIONS-OF-GAINS> 64,077
<DISTRIBUTIONS-OTHER> 94,533
<NUMBER-OF-SHARES-SOLD> 1,618,480
<NUMBER-OF-SHARES-REDEEMED> 84,756
<SHARES-REINVESTED> 93,491
<NET-CHANGE-IN-ASSETS> 1,682,497
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,082
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 75,454
<AVERAGE-NET-ASSETS> 1,088,816
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 1.12
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.64
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.64
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 11
[LETTERHEAD OF COOPERS & LYBRAND LLP]
CONSENT OF INDEPENDENT ACCOUNTANTS
_______________________________________________________________
We consent to the incorporation by reference in Post-Effective Amendment No. 50
to the Registration Statement of Van Eck Funds on Form N-1A (File No. 2-97596)
of our reports dated February 25, 1998 for U.S. Government Money Fund and Asia
Dynasty Fund, February 23, 1998 for Global Balanced Fund, February 24, 1998 for
Global Hard Assets Fund, Emerging Markets Growth Fund, and Global Real Estate
Fund, February 26, 1998 for Gold/Resources Fund and International Investors Gold
Fund on our audits of the financial statements and financial highlights of the
above entities which reports are included in their respective Annual Reports to
Shareholders which are also incorporated by reference in this Post-Effective
Amendment to the Registration Statement.
We also consent to the references of our Firm in the Prospectus under the
caption "Financial Highlights" and in the Statement of Additional Information
under the caption "Independent Accountants".
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
New York, New York
April 29, 1998
<PAGE>
Exhibit 16
(page 1)
HYPO/R/ Illustration
AVERAGE ANNUAL RETURN CALCULATIONS
For Periods Ending 12/31/97 - With Maximum Sales Charge
1 Year Since 12/31/96 - 3 Years Since 12/31/94 - 5 Years Since 12/31/92 -
10 Years Since 12/31/87
<TABLE>
<CAPTION>
Month- Year-
Inception to-Date to-Date 1-Year 3-Year 3-Year
Description Date Total Total Return Total Annual
----------- --------- ------- ------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Van Eck Global Hard Assets - A 11/2/94 -5.35% 8.86% 8.86% 90.34% 23.93%
Van Eck Global Hard Assets - B 4/24/96 -5.36 8.73 8.73 - -
Van Eck Global Hard Assets - C 11/2/94 -1.60 12.71 12.71 99.63 25.91
Van Eck Global Real Estate Fund - A 6/23/97 -3.18 12.91 - - -
Van Eck Global Real Estate Fund - B 10/9/97 -3.26 -6.13 - - -
Van Eck Global Real Estate Fund - C 10/9/97 0.66% -2.33% - - -
Van Eck Asia Dynasty Fund-A 3/22/93 -7.24 -35.33 -35.33 -28.91 -10.75
Van Eck Asia Dynasty Fund-B 9/1/93 -7.40 -35.79 -35.79 -29.43 -10.97
Van Eck Emerging Markets Growth Fd-A 12/30/96 -5.35 -16.35 -16.35 - -
Van Eck Emerging Markets Growth Fd-B 12/30/96 -5.33 -16.28 -16.28 - -
Van Eck Emerging Markets Growth Fd-C 12/30/96 -1.57% -13.07% -13.07% - -
International Investors Gold Fund A 1/1/56 -2.04 -39.70 -39.70 -50.22 -20.74
Van Eck Gold/Resources Fund - A 2/15/86 -1.14 -42.83 -42.83 -38.91 -15.15
Van Eck Global Balanced Fund - A 12/20/93 -3.36 9.29 9.29 41.56 12.28
Van Eck Global Balanced Fund - B 12/20/93 -2.98 9.26 9.26 41.91 12.37
</TABLE>
<TABLE>
<CAPTION>
5-Year 5-Year 10-Year 10-Year Inception Inception
Description Total Annual Total Annual Total Annual
----------- --------- ------- ------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Van Eck Global Hard Assets - A - - - - 88.17% 22.15
Van Eck Global Hard Assets - B - - - - 37.64 20.81
Van Eck Global Hard Assets - C - - - - 97.32 24.00
Van Eck Global Real Estate Fund - A - - - - 12.91 25.75
Van Eck Global Real Estate Fund - B - - - - -6.13 -24.05
Van Eck Global Real Estate Fund - C - - - - -2.33% -9.73
Van Eck Asia Dynasty Fund-A - - - - -6.92 -1.49
Van Eck Asia Dynasty Fund-B - - - - -21.44 -5.42
Van Eck Emerging Markets Growth Fd-A - - - - -16.35 -16.35
Van Eck Emerging Markets Growth Fd-B - - - - -15.43 -15.43
Van Eck Emerging Markets Growth Fd-C - - - - -12.22% -12.22
International Investors Gold Fund A 5.10 1.00 -34.16 -4.09 4,694.49 9.65
Van Eck Gold/Resources Fund - A -8.20 -1.70 -42.05 -5.31 7.90 0.64
Van Eck Global Balanced Fund - A - - - - 35.94 7.92
Van Eck Global Balanced Fund - B - - - - 36.85 8.10
</TABLE>
This illustration is supplied in response to your specific request and is for
your use only. It may not be reproduced and must be preceded or accompanied by
the Fund's current prospectus. The period covered was selected by you for your
own purposes and is not necessarily representative of the Fund's results during
different market periods. Past results are no guarantee of future results.
Return calculations produced by Hypo/R/ 2/26/98 14:30:35 Copyright/C/ 1998
TowersData.
<PAGE>
Exhibit 16
(page 2)
HYPO/R/ Illustration
AVERAGE ANNUAL RETURN CALCULATIONS
For Periods Ending 12/31/97 - With No Sales Charge
1 Year Since 12/31/96 - 3 Years Since 12/31/94 - 5 Years Since 12/31/92 -
10 Years Since 12/31/87
<TABLE>
<CAPTION>
Month- Year-
Inception to-Date to-Date 1-Year 3-Year 3-year
Description Date Total Total Return Total Annual
----------- --------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Van Eck Global Hard Assets - A 11/2/94 -0.60% 14.29% 14.29% 99.85% 25.96%
Van Eck Global Hard Assets - B 4/24/96 -0.66 13.73 13.73 - -
Van Eck Global Hard Assets - C 11/2/94 -0.66 13.71 13.71 99.63 25.91
Van Eck Global Real Estate Fund - A 6/23/97 1.62 18.49 - - -
Van Eck Global Real Estate Fund - B 10/9/97 1.53 -1.49 - - -
Van Eck Global Real Estate Fund - C 10/9/97 1.62% -1.40% - - -
Van Eck Asia Dynasty Fund-A 3/22/93 -2.61 -32.10 -32.10 -25.40 -9.30
Van Eck Asia Dynasty Fund-B 9/1/93 -3.20 -32.87 -32.87 -26.91 -9.92
Van Eck Emerging Markets Growth Fd-A 12/30/96 -0.60 -12.22 -12.22 - -
Van Eck Emerging Markets Growth Fd-B 12/30/96 -0.48 -12.01 - - -
Van Eck Emerging Markets Growth Fd-C 12/30/96 -0.60% -12.22% -12.22% - -
International Investors Gold Fund A 1/1/56 3.87 -36.00 -36.00 -47.17 -19.16
Van Eck Gold/Resources Fund - A 2/15/86 4.83 -39.34 -39.34 -35.14 -13.44
Van Eck Global Balanced Fund - A 12/20/93 1.46 14.77 14.77 48.58 14.11
Van Eck Global Balanced Fund - B 12/20/93 1.47 14.26 14.26 45.91 13.42
</TABLE>
<TABLE>
<CAPTION>
5-Year 5-Year 10-Year 10-Year Inception Inception
Description Total Annual Total Annual Total Annual
----------- --------- ------- ------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Van Eck Global Hard Assets - A - - - - 97.65% 24.06
Van Eck Global Hard Assets - B - - - - 41.64 22.87
Van Eck Global Hard Assets - C - - - - 97.32 24.00
Van Eck Global Real Estate Fund - A - - - - 18.49 37.72
Van Eck Global Real Estate Fund - B - - - - -1.49 -6.30
Van Eck Global Real Estate Fund - C - - - - -1.40% -5.94
Van Eck Asia Dynasty Fund-A - - - - -2.27 -0.48
Van Eck Asia Dynasty Fund-B - - - - -20.09 -5.05
Van Eck Emerging Markets Growth Fd-A - - - - -12.22 -12.22
Van Eck Emerging Markets Growth Fd-B - - - - -12.01 -12.01
Van Eck Emerging Markets Growth Fd-C - - - - -12.22% -12.22
International Investors Gold Fund A 11.56 2.21 -30.15 -3.53 4,990.99 9.81
Van Eck Gold/Resources Fund - A -2.53 -0.51 -38.50 -4.75 14.43 1.14
Van Eck Global Balanced Fund - A - - - - 42.78 9.24
Van Eck Global Balanced Fund - B - - - - 38.85 8.49
</TABLE>
This illustration is supplied in response to your specific request and is for
your use only. It may not be reproduced and must be preceded or accompanied by
the Fund's current prospectus. The period covered was selected by you for your
own purposes and is not necessarily representative of the Fund's results during
different market periods. Past results are no guarantee of future results.
Return calculations produced by Hypo/R/ 2/26/98 14:30:33 Copyright/C/ 1998
TowersData.
