<PAGE>
1933 ACT REGISTRATION NO. 33-14737
1940 ACT REGISTRATION NO. 811-5155
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 13
-AND-
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 14
VAN ECK/CHUBB FUNDS, INC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
99 PARK AVENUE, NEW YORK, NEW YORK 10016
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
212-687-5200
(REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)
THADDEUS LESZCZYNSKI, ESQ. - VAN ECK ASSOCIATES CORPORATION
99 PARK AVENUE, NEW YORK, NEW YORK 10016
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO: PHILIP NEWMAN, ESQ., GOODWIN PROCTER & HOAR LLP
EXCHANGE PLACE, BOSTON, MASSACHUSETTS 02109
__________________________________________________________________
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX):
[ ] IMMEDIATELY UPON FILING PURSUANT [ ] ON (DATE) PURSUANT TO
TO PARAGRAPH (B) PARAGRAPH (B)
[ ] 60 DAYS AFTER FILING PURSUANT TO [X] ON MAY 1, 1998 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: Common Stock, $.01 par value, of Van
Eck/Chubb Capital Appreciation Fund, Van Eck/Chubb Global Income Fund, Van
Eck/Chubb Government Securities Fund, Van Eck/Chubb Growth and Income Fund, Van
Eck/Chubb Money Market Fund, Van Eck/Chubb Tax-Exempt Fund and Van Eck/Chubb
Total Return Fund.
___________________________________________
<PAGE>
VAN ECK/CHUBB FUNDS, INC.
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 Company; Investment Objectives and
Policies; Risk Factors; Description of
the Company
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 Company; 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 of
the Funds; Investment Restrictions;
Portfolio Transactions and Brokerage
14. Management of the Fund Directors and Officers
15. Control Persons and Principal Directors and Officers
Holders of Securities
<PAGE>
PART B LOCATION IN STATEMENT
ITEM NO. ADDITIONAL INFORMATION
- -------- ----------------------
16. Investment Advisory and Other Investment Advisory Services;The
Services Distributor; Directors and Officers;
Additional Information
17. Brokerage Allocation and Other Portfolio Transactions and Brokerage
Practices
18. Capital Stock and Other Securities General Information
19. Purchase, Redemption and Pricing Valuation of Shares; Exchange
of Securities Being Offered Privilege; Tax-Sheltered Retirement
Plans; Investment Programs;
Redemptions in Kind
20. Tax Status Taxes
21. Underwriters The Distributor
22. Calculation of Performance Data Performance
23. Financial Statements Financial Statements
<PAGE>
[LOGO]
Chubb
Investment
Funds
Prospectus
May 1, 1998
[GRAPHIC]
Capital Appreciation Fund
Global Income Fund
Government Securities Fund
Growth and Income Fund
Tax-Exempt Fund
Total Return Fund
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
- --------------------------------------------------------------------------------
<S> <C>
Transaction Data........................................................... 2
Financial Highlights.......................................................
The Company................................................................ 9
Investment Objectives and Policies......................................... 9
Risk Factors............................................................... 15
Limiting Investment Risks..................................................
Purchase of Shares......................................................... 21
Exchange Privilege......................................................... 27
Tax-Sheltered Retirement Plans............................................. 29
Investment Programs........................................................ 30
Redemption of Shares....................................................... 30
Dividends and Distributions................................................ 32
Management................................................................. 32
Plan of Distribution....................................................... 34
Advertising................................................................ 35
Taxes...................................................................... 36
Description of the Trust...................................................
Additional Information..................................................... 37
</TABLE>
<PAGE>
PROSPECTUS MAY 1, 1998
VAN ECK GLOBAL FUNDS
- -------------------------------------------------------------------------------
99 Park Avenue, New York, New York 10016
Account Assistance: (800) 544-4653
- -------------------------------------------------------------------------------
Van Eck/Chubb Funds, Inc. (the "Company") is an open-end management investment
company which is composed of six separate funds, each of which has a separate
investment objectives. (Class A and Class B)
CHUBB GOVERNMENT SECURITIES FUND (CLASS A AND CLASS B)--seeks to earn as high
a level of income as is consistent with maintaining safety of principal by
investing exclusively in debt obligations issued, guaranteed or collateralized
by the United States Government, its agencies or its instrumentalities.
CHUBB TOTAL RETURN FUND (CLASS A AND CLASS B)--seeks to produce the highest
total return through a combination of income and capital appreciation as is
consistent with reasonable risk by investing in a portfolio of income-
producing debt and equity securities.
CHUBB TAX-EXEMPT FUND (CLASS A AND CLASS B)--seeks to provide a stable level
of current income which is exempt from Federal income taxes, consistent with
the preservation of capital, by investing primarily in investment-grade tax-
exempt securities.
CHUBB GROWTH AND INCOME FUND (CLASS A AND CLASS B)--seeks long-term growth by
investing primarily in a wide range of equity issues that the Investment
Manager believes will offer possibilities of capital appreciation and,
secondarily, to seek a reasonable level of current income.
CHUBB CAPITAL APPRECIATION FUND (CLASS A AND CLASS B)--seeks long term capital
appreciation by investing primarily in equity securities.
CHUBB GLOBAL INCOME FUND (CLASS A AND CLASS B)--seeks high current income and
capital appreciation by investing primarily in debt securities of domestic and
foreign issuers. CERTAIN OF THE FUND'S INVESTMENTS MAY HAVE SPECULATIVE
CHARACTERISTICS.
Chubb Asset Managers, Inc., (the "Adviser"), 15 Mountain View Road, Warren,
New Jersey 07061, serves as investment adviser to the Funds. See "Management."
Van Eck Associates Corporation (the "Administrator"), 99 Park Avenue, New
York, New York 10016, serves as administrator of the Funds. Van Eck Securities
Corporation, a wholly-owned subsidiary of the Administrator, serves as
Distributor of the Funds' shares. See "Purchase of Shares-Alternative Purchase
Arrangements" on page to determine your purchase options for the Funds.
---------------
This Prospectus sets forth concisely the information about the Company 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
Company 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>
TRANSACTION DATA
The following table is intended to assist an investor in understanding the
various direct and indirect costs and expenses borne by an investor in a Fund.
The sales charges are the maximum sales charges an investor would incur. Sales
charges decline depending on the amount of the purchase, the number of shares
an investor already owns or use of various investment programs. See "How to
Buy Shares of the Funds." The Administrator may from time to time waive fees
and/or reimburse certain expenses of a Fund.
<TABLE>
<CAPTION>
GROWTH
GOVERNMENT TOTAL TAX AND CAPITAL GLOBAL
SECURITIES RETURN EXEMPT INCOME APPRECIATION INCOME
FUND FUND FUND FUND FUND FUND
--------------- --------------- --------------- --------------- --------------- ---------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
--------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES
Maximum Sales
Charge imposed on
Purchases (as a
percent of
offering price)... 4.75% 0% 4.75% 0% 4.75% 0% 4.75% 0% 4.75% 0% 4.75% 0.%
+Contingent
Deferred Sales
Charge............ 0.% 5.0% 0% 5.0% 0% 5.0% 0% 5.0% 0% 5.0% 0% 5.0%
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
ANNUAL FUND
OPERATING
EXPENSES: (as a
percent
of average net
assets)
Management Fee..... 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
12b-1
Fees/Shareholder
Servicing Fees*... 0.50% 1.00% 0.50% 1.00% 0.50% 1.00% 0.50% 1.00% 0.50% 1.00% 0.50% 1.00%
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Administration Fee. 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45%
Other Expenses..... 0.26% 0.19% 0.29% 0.22% 0.27% 0.20% 0.29% 0.22% 0.22% 1.18% 0.22% 0.17%
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Fund
Operating Expenses
(after fee
waiver)........... 1.41% 1.84% 1.44% 1.87% 1.42% 1.85% 1.44% 1.87% 1.37% 1.83% 1.37% 1.82%
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
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............ $ 61.17 $ 68.69 $ 61.46 $ 68.99 $ 61.27 $ 68.79 $ 61.46 $ 68.99 $ 60.79 $ 68.59 $ 60.79 $ 68.49
3 years........... $ 90.00 $ 97.86 $ 90.89 $ 98.78 $ 90.30 $ 98.17 $ 90.89 $ 98.78 $ 88.82 $ 97.56 $ 88.82 $ 97.25
5 years........... $120.94 $119.55 $122.45 $121.10 $121.45 $120.07 $122.45 $121.10 $118.93 $119.03 $118.93 $118.52
10 years........... $208.55 $215.85 $211.73 $219.04 $209.61 $216.92 $211.73 $219.04 $204.30 $214.79 $204.30 $213.73
</TABLE>
- --------
* Long-term shareholders in Funds may pay more than the economic equivalent
of the maximum front-end sales charge permitted by the NASD. The
shareholder servicing fee will not exceed .25%.
** The Adviser and/or the Administrator may temporarily reimburse and or waive
certain operating expenses of the Funds 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.
Total Fund Operating Expenses for Class A of each Fund are the actual
operating expenses, before fee waivers or expense reimbursements, if any, for
the period ended December 31, 1997. Operating Expenses for Class B of each
Fund are estimates and assume $30 million in net assets.
The above examples should not be considered a representation of past or future
expenses or investment return. Actual fees and expenses for any Fund may be
greater or less than those shown. Information regarding management fees,
administration fees and 12b-1 fees can be found under "Management" and "Plan
of Distribution."
2
<PAGE>
FINANCIAL HIGHLIGHTS
The Financial Highlights below give selected information for a share of each
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Ernst & Young LLP, independent auditors, whose
report thereon appears in the Company's Annual Report, which is incorporated
by reference in the Company's Statement of Additional Information. This
information should be read in conjunction with the financial statements and
related notes that also appear in the Company's Annual Report. The Annual
Report also contains additional performance information and is available upon
request and without charge.
<TABLE>
<CAPTION>
Van Eck / Chubb Government Securities Fund
-----------------------------------------------------------------------------------------------------
For the Year Ended December 31,
-----------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For a share
outstanding
throughout each
year:
Net asset value,
beginning of
year............. $ 10.480 $ 10.780 $ 9.750 $ 10.710 $ 10.700 $ 11.160 $ 10.360 $ 10.330
----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------
Income from
Investment
Operations
Net investment
income.......... 0.616 .623 .636 .607 .770 .766 .750 .815
Net gains and
losses on
securities
(both realized
and unrealized). 0.340 (.300) 1.030 (.960) .199 .021 .838 .049
----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------
Total from
investment
operations....... 0.956 .323 1.666 (.353) .969 .787 1.588 .864
----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------
Less
Distributions to
Shareholders
Dividends from
net investment
income.......... (.616) (.623) (.636) (.607) (.770) (.766) (.750) (.815)
Dividends in
excess of net
investment
income.......... -- -- -- -- -- -- -- --
Distributions
from capital
gains........... -- -- -- -- (.170) (.481) (.038) (.019)
Distributions in
excess of
capital gains... -- -- -- -- (.019) -- -- --
Returns of
capital......... -- -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------
Total
distributions.... (0.616) (.623) (.636) (.607) (.959) (1.247) (.788) (.834)
----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------
Net asset value,
end of year...... $ 10.820 $ 10.480 $ 10.780 $ 9.750 $ 10.710 $ 10.700 $ 11.160 $ 10.360
=========== =========== =========== =========== =========== ========== ========== ==========
Total Return (a). 9.44% 3.19% 17.50% (3.34)% 9.29% 7.44% 15.97% 8.90%
<CAPTION>
1989 1988
----------- -----------
<S> <C> <C>
For a share
outstanding
throughout each
year:
Net asset value,
beginning of
year............. $ 9.890 $ 10.000
----------- -----------
Income from
Investment
Operations
Net investment
income.......... .914 .916
Net gains and
losses on
securities
(both realized
and unrealized). .463 (.071)
----------- -----------
Total from
investment
operations....... 1.377 .845
----------- -----------
Less
Distributions to
Shareholders
Dividends from
net investment
income.......... (.914) (.916)
Dividends in
excess of net
investment
income.......... -- --
Distributions
from capital
gains........... (.006) (0.039)
Distributions in
excess of
capital gains... -- --
Returns of
capital......... (.017) --
----------- -----------
Total
distributions.... (.937) (.955)
----------- -----------
Net asset value,
end of year...... $ 10.330 $ 9.890
=========== ===========
Total Return (a). 14.52% 8.68%
- -------------------------------------------------------------------------------
Ratios to Average
Net Assets:
Expenses (b)..... 1.00% .93% 1.00% 1.00% 1.00% 1.00% 1.00% 1.05%
Net investments
income........... 5.79% 5.94% 6.16% 5.96% 7.04% 6.94% 7.12% 8.05%
Portfolio
Turnover Rate.... 39.86% 140.94% 276.56% 113.36% 197.08% 310.29% 26.96% 24.78%
Net Assets, At
End of Year...... $31,738,990 $12,818,450 $13,886,478 $12,534,640 $14,679,255 $7,392,150 $4,080,963 $2,109,061
Ratios to Average
Net Assets:
Expenses (b)..... -- --
Net investments
income........... 9.06% 9.07%
Portfolio
Turnover Rate.... 5.93% 42.63%
Net Assets, At
End of Year...... $1,612,229 $1,279,499
</TABLE>
- ----
(a) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of sales charge. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
(b) Certain fees and expenses have been subsidized during each of the periods.
Had the fees not been waived and expenses not been assumed, the ratios of
expenses to average net assets would have been 1.55% in 1997, 1.60% in
1996, 1.70% in 1995, 1.71% in 1994, 1.89% in 1993, and 2.50% in 1992,
1991, 1990 and 1989, and 1988.
See Notes to Financial Statements.
3
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout each year:
<TABLE>
<CAPTION>
VAN ECK / CHUBB TOTAL RETURN FUND
------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
year............. $ 17.410 $ 15.960 $ 13.230 $ 15.010 $ 13.890 $ 13.850 $ 11.270 $ 12.090
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income.......... 0.365 .370 .373 .373 .405 .382 .387 .437
Net gains and
losses (both
realized and
unrealized)..... 3.778 2.321 3.586 (.994) 1.529 .577 2.870 (.493)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Total from
investment
operations...... 4.143 2.691 3.959 (.621) 1.934 .959 3.257 (.056)
LESS
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from
net investment
income.......... (0.369) (.370) (.373) (.373) (.405) (.382) (.387) (.437)
Dividends in
excess of net
investment
income.......... --
Distributions
from capital
gains........... (0.964) (.871) (.692) (.786) (.409) (.537) (.290) (.327)
Distributions in
excess of
capital gains... -- (.164)
Returns of
capital......... --
----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Total
distributions... (1.333) (1.241) (1.229) (1.159) (.814) (.919) (.677) (.764)
----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------
Net asset value,
end of year...... $ 20.220 $ 17.410 $ 15.960 $ 13.230 $ 15.010 $ 13.890 $ 13.850 $ 11.270
=========== =========== =========== =========== =========== =========== ========== ==========
Total Return
(a)............. 24.09% 17.04% 30.13% (4.21%) 14.03% 7.11% 29.23% (.51%)
Ratios to Average
Net Assets:
Expenses (b).... 1.25% 1.08% 1.08% 1.00% 1.00% 1.00% 1.00% 1.02%
Net investment
income.......... 1.92% 2.26% 2.45% 2.66% 2.83% 2.97% 3.26% 3.93%
Portfolio
Turnover Rate.... 15.80% 27.01% 57.62% 37.53% 66.15% 73.89% 106.90% 110.09%
Average
Commission Rate
Paid (c)......... $ -- $0.0700
Net Assets, At
End of Year...... $49,933,635 $31,064,099 $22,171,326 $16,431,195 $14,360,086 $10,000,441 $5,259,055 $1,963,120
<CAPTION>
1989 1988
----------- ---------
<S> <C> <C>
Net asset value,
beginning of
year............. $ 10.510 $ 10.210
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income.......... .592 .535
Net gains and
losses (both
realized and
unrealized)..... 2.020 .308
----------- ---------
Total from
investment
operations...... 2.612 .843
LESS
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from
net investment
income.......... (.607) (.523)
Dividends in
excess of net
investment
income..........
Distributions
from capital
gains........... (.425) (.020)
Distributions in
excess of
capital gains...
Returns of
capital.........
----------- ---------
Total
distributions... (1.032) (.543)
----------- ---------
Net asset value,
end of year...... $ 12.090 $ 10.510
=========== =========
Total Return
(a)............. 25.48% 8.31%
Ratios to Average
Net Assets: -- --
Expenses (b).... 5.25% 6.22%
Net investment
income.......... 105.49% 121.60%
Portfolio
Turnover Rate....
Average
Commission Rate
Paid (c).........
Net Assets, At
End of Year...... $1,237,868 $797,447
</TABLE>
- ----
(a) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of sales charge. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
(b) Certain fees and expenses had been subsidized during each of the
periods. Had the fees not been waived and expenses not been assumed, the
ratios of expenses to average net assets would have been 1.52% in 1997,
1.59% in 1996, 1.70% in 1995, 1.73% in 1994, 1.93% in 1993, 2.41% in 1992,
2.50% in 1991, 1990 and 1989, and 2.00% in 1988.
(c) Effective in 1996, the Fund is required to disclose the average commission
rate paid per share of equity securities purchased or sold.
See Notes To Financial Statements.
4
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout each year:
<TABLE>
<CAPTION>
VAN ECK/CHUBB TAX-EXEMPT FUND
----------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
year............. $ 12.150 $ 12.330 $ 11.220 $ 12.580 $ 11.740 $ 11.380 $ 10.880 $ 11.010
Income from
Investment
Operations
Net investment
income.......... .581 .611 .621 .618 .583 .619 .634 .653
Net gains and
losses on
securities (both
realized and
unrealized)..... .450 (.137) 1.132 (1.360) .850 .401 .500 (.115)
----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------
Total from
investment
operations....... 1.031 .474 1.753 (.742) 1.433 1.020 1.134 .538
Less
Distributions to
Shareholders
Dividends from
net investment
income.......... (.581) (.611) (.621) (.618) (.583) (.619) (.634) (.653)
Dividends in
excess of net
investment
income.......... --
Distributions
from capital
gains........... (.040) (.043) (.010) (.004) (.041) (.015)
Distributions in
excess of
capital gains... -- (.012) (.006)
Returns of
capital......... --
Total
distributions.... (.621) (.654) (.643) (.618) (.593) (.660) (.634) (.668)
----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------
Net asset value,
end of year...... $ 12.560 $ 12.150 $ 12.330 $ 11.220 $ 12.580 $ 11.740 $ 11.380 $ 10.880
=========== =========== =========== =========== =========== ========== ========== ==========
Total Return (A). 8.73% 4.00% 15.88% (5.97%) 12.42% 9.19% 10.71% 5.10%
<CAPTION>
1989 1988
----------- -----------
<S> <C> <C>
Net asset value,
beginning of
year............. $ 10.680 $ 10.110
Income from
Investment
Operations
Net investment
income.......... .773 .792
Net gains and
losses on
securities (both
realized and
unrealized)..... .426 .571
----------- -----------
Total from
investment
operations....... 1.199 1.363
Less
Distributions to
Shareholders
Dividends from
net investment
income.......... (.773) (.792)
Dividends in
excess of net
investment
income..........
Distributions
from capital
gains........... (.096) (.001)
Distributions in
excess of
capital gains...
Returns of
capital.........
Total
distributions.... (.869) (.793)
----------- -----------
Net asset value,
end of year...... $ 11.010 $ 10.680
=========== ===========
Total Return (A). 11.58% 14.06%
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE
NET ASSETS:
Expenses (B)..... 1.00% .98% 1.00% 1.00% 1.00% 1.00% 1.00% 1.05%
Net investment
income........... 4.75% 5.00% 5.20% 5.21% 4.81% 5.40% 5.80% 6.15%
Portfolio
Turnover Rate.... 12.78% 16.29% 7.39% 8.37% 1.55% 17.11% 4.41% 26.13% )
Net Assets, At
End of Year...... $31,288,493 $15,061,382 $15,259,349 $13,973,939 $16,406,372 $9,250,893 $6,734,020 $4,326,788
RATIOS TO AVERAGE
NET ASSETS:
Expenses (B)..... -- --
Net investment
income........... 7.32% 7.70%
Portfolio
Turnover Rate.... 14.14% 13.06%
Net Assets, At
End of Year...... $3,004,074 $1,569,279
</TABLE>
- ----
(a) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of sales charge. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
(b) Certain fees and expenses have been subsidized during each of the periods.
Had the fees not been waived and expenses not been assumed, the ratios of
expenses to average net assets would have been 1.56% in 1997, 1.65% in
1996, 1.79% in 1995, 1.80% in 1994, 1.97% in 1993, 2.42% in 1992, 2.50% in
1991, 1990 and 1989, and 2.00% in 1988.
See Notes to Financial Statements.
5
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout each year:
<TABLE>
<CAPTION>
VAN ECK/CHUBB GROWTH AND INCOME FUND
--------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- ----------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
year............. $ 21.040 $ 18.580 $ 14.770 $ 16.700 $ 15.140 $ 14.830 $ 11.950 $ 13.040 $ 10.830
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income.......... 0.096 .250 .204 .247 .277 .214 .243 .244 .385
Net gains and
losses on
securities (both
realized and
unrealized)..... 5.286 3.931 5.042 (.954) 2.039 .794 3.756 (.664) 3.080
----------- ----------- ----------- ----------- ----------- ---------- ---------- ---------- --------
Total from
investment
operations...... 5.382 4.181 5.246 (.707) 2.316 1.008 3.999 (.420) 3.465
LESS
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from
net investment
income........... (0.100) (.250) (.204) (.247) (.277) (.214) (.243) (.244) (.414)
Dividends in
excess of net
investment
income........... -- (.426) (.841)
Distributions
from capital
gains............ (1.762) (1.471) (.885) (.976) (.479) (.484) (.876) (.426) (.841)
Distributions in
excess of capital
gains............ -- (.346)
Returns of
capital.......... -- (.001)
----------- ----------- ----------- ----------- ----------- ---------- ---------- ---------- --------
Total
distributions... (1.862) (1.721) (1.436) (1.223) (.756) (.698) (1.119) (.670) (1.225)
----------- ----------- ----------- ----------- ----------- ---------- ---------- ---------- --------
Net asset value,
end of year...... $ 24.560 $ 21.040 $ 18.580 $ 14.770 $ 16.700 $ 15.140 $ 14.830 $ 11.950 $ 13.040
=========== =========== =========== =========== =========== ========== ========== ========== ========
Total Return
(a)............. 25.85% 22.50% 35.52% (4.26%) 15.29% 6.84% 33.48% (3.36%) 32.08%
RATIOS TO AVERAGE
NET ASSETS:
Expenses (b).... 1.25% 1.06% 1.08% 1.00% 1.00% 1.00% 1.00% 1.04% --
Net investment
income.......... 0.49% 1.29% 1.20% 1.66% 2.04% 1.82% 2.34% 2.78% 3.35%
Portfolio
Turnover Rate.... 21.02% 44.50% 37.59% 46.17% 81.96% 87.87% 152.56% 152.93% 135.04%
Average
Commission Rate
Paid (c)......... $ 0.0700 $ 0.0700
Net Assets, At
End of Year...... $66,762,320 $40,281,849 $29,144,161 $18,679,228 $14,885,337 $9,457,836 $4,445,996 $1,758,808 $961,395
<CAPTION>
1988
---------
<S> <C>
Net asset value,
beginning of
year............. $ 10.580
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income.......... .246
Net gains and
losses on
securities (both
realized and
unrealized)..... .229
---------
Total from
investment
operations...... .475
LESS
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from
net investment
income........... (.225)
Dividends in
excess of net
investment
income...........
Distributions
from capital
gains............
Distributions in
excess of capital
gains............
Returns of
capital..........
---------
Total
distributions... (.225)
---------
Net asset value,
end of year...... $ 10.830
=========
Total Return
(a)............. 4.43%
RATIOS TO AVERAGE
NET ASSETS:
Expenses (b).... --
Net investment
income.......... 3.72%
Portfolio
Turnover Rate.... 86.62%
Average
Commission Rate
Paid (c).........
Net Assets, At
End of Year...... $655,146
</TABLE>
- ----
(a) Total return assumes reinvestment of all dividents during the period and
does not reflect deduction of sales charge. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
(b) Certain fees and expenses have been subsidized during each of the periods.
Had the fees not been waived and expenses not been assumed, the ratios of
expenses to average net assets would have been 1.49% in 1997, 1.58% in
1996, 1.69% in 1995, 1.71% in 1994, 1.92% in 1993, 2.50% in 1992, 1991,
1990 and 1989, and 2.00% in 1988.
(c) Effective in 1996, the Fund is required to disclose the average commission
rate paid per share of equity securities purchased or sold.
See Notes To Financial Statements.
6
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
VAN ECK/CHUBB CAPITAL APPRECIATION FUND
--------------------------------------------
PERIOD FROM
SEPTEMBER 1,
YEAR ENDED YEAR ENDED 1995 THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Net Asset Value, Beginning of
Year.......................... $ 12.990 $ 10.400 $ 10.000
INCOME FROM INVESTMENT OPERA-
TIONS
Net investment income......... 0.005 0.067 0.037
Net gains and losses on secu-
rities (both realized and
unrealized).................. 3.565 2.796 0.422
------------- ------------ ------------
Total from investment opera-
tions......................... 3.570 2.863 0.459
LESS DISTRIBUTIONS TO SHARE-
HOLDERS
Dividends from net investment
income....................... (0.010) (.067) (0.037)
Dividends in excess of net in-
vestment income..............
Distributions from capital
gains........................ (0.960) (.206) (0.022)
Distributions in excess of
capital gains................
Returns of capital.............
Total distributions............ (0.970) (.273) (0.059)
Net asset value, end of period. $ 15.590 $ 12.990 $ 10.400
------------- ------------ ------------
Total Return (a)............... 27.79% 27.53% 4.60%
============= ============ ============
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NEW ASSETS:
Expenses (b)................... 1.25% 1.13% 1.25%(d)
Net investment income.......... 0.08% 0.86% 1.38%(d)
Portfolio Turnover Rate........ 50.67% 41.97% 2.73%
Average Commission Rate Paid
(c)........................... $ 0.0681 $ 0.0700
Net Assets, At End of Period... $41,482,081 $6,440,571 $1,596,254
</TABLE>
- --------
(a) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of sales charge. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
(b) Certain fees and expenses had been subsidized during each of the periods.
Had the fees not been waived and expenses not been assumed, the ratios of
expenses to average net assets would have been 1.52% in 1997, 1.81% in
1996 and 2.50% in 1995.
(c) Effective in 1996, the Fund is required to disclose the avarage commission
rate paid per share of equity securities purchased or sold.
(d) Annualized.
See Notes to Financial Statements.
7
<PAGE>
FINANCIAL HIGHLIGHTS--(CONTINUED)
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
VAN ECK/CHUBB GLOBAL INCOME FUND
-----------------------------------
PERIOD FROM
SEPTEMBER 1,
YEAR ENDED YEAR ENDED 1995 THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
---------------- ---------------- ------------
<S> <C> <C> <C>
Net asset value, beginning
of year................... $ 10.240 $ 10.210 $ 10.000
INCOME FROM INVESTMENT OP-
ERATIONS
Net investment income..... 0.471 0.551 0.116
Net gains and losses on
securities (both realized
and unrealized).......... (0.477) 0.030 0.210
---------------- ---------------- -----------
Total from investment oper-
ations.................... (0.006) 0.581 0.326
LESS DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net invest-
ment income.............. (0.398) (0.485) (0.116)
Dividends in excess of net
investment income........ (0.073) (0.066)
Distributions from capital
gains.................... (0.123)
Distributions in excess of
capital gains............ --
Returns of capital........ --
Total distributions....... (0.594) (0.551) (0.116)
---------------- ---------------- -----------
Net asset value, end of pe-
riod...................... $ 9.64 $ 10.240 $ 10.210
================ ================ ===========
Total Return (a)........... 0.02% 5.95% 3.27%
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET AS-
SETS:
Expenses (b)............... 1.35% 1.23% 1.75%(c)
Net investment income...... 4.63% 5.49% 4.48%(c)
Portfolio Turnover Rate.... 185.95% 80.70% 14.16%
Net Assets, At End of Peri-
od........................ $52,087,567 $12,226,878 $10,705,562
</TABLE>
- --------
(a) Total return assumes reinvestment of all dividends during the period and
does not reflect deduction of sales charge. Investment returns and
principal values will fluctuate and shares, when redeemed, may be worth
more or less than the original cost.
(b) Certain fees and expenses had been subsidized during each of the periods.
Had the fees not been waived and expenses not been assumed, the ratios of
expenses to average net assets would have been 1.57% in 1997, 1.68% in
1996 and 2.14% in 1995.
(c) Annualized.
See Notes to Financial Statements.
8
<PAGE>
THE COMPANY
Each of the Funds is a separate series (fund) of the Company, which was
incorporated in Maryland on April 27, 1987. Class A shares are denoted with
the suffix A, and Class B shares with the suffix B.
Van Eck/Chubb Capital Appreciation Fund, Van Eck/Chubb Government Securities
Fund, Van Eck/Chubb Growth and Income Fund, Van Eck/Chubb Tax-Exempt Fund and
Van Eck/Chubb Total Return Fund are classified as diversified as defined in
the Investment Company Act of 1940, as amended (the "Act"). This means that
with respect to 75% of each Fund's assets, the Fund may not invest more than
5% of its total assets in any issuer or invest in more than 10% of the
outstanding voting securities of any issuer. Van Eck/Chubb Global Income Fund
is classified as non-diversified, which means that the proportion of the
Fund's assets that may be invested in the securities of a single issuer is not
limited by the Act. However, to meet other requirements, the Fund at the close
of each quarter of its taxable year must, in general, limit its investments so
that (i) no more than 25% of its assets are invested in the securities of a
single issuer, (ii) with respect to 50% of the Fund's assets, no more than 5%
of its assets at the time of purchase are invested in a single issuer and (ii)
the Fund will not own more than 10% of the outstanding voting securities of
any one issuer.
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. For
further information about a Fund's investment policies, see "Investment
Objectives and Policies of the Funds" in the Statement of Additional
Information.
[VAN ECK/CHUBB GOVERNMENT SECURITIES FUND]
OBJECTIVES:
The objective of the Government Securities Fund is to earn as high a level of
income as is consistent with maintaining safety of principal by investing
exclusively in debt obligations issued, guaranteed or collateralized by the
United States Government, its agencies or instrumentalities.
POLICIES:
The Government Securities Fund invests in a variety of U.S. Treasury
obligations, which may differ in their interest rate, maturities and time of
issuance, including U.S. Treasury bills with a maturity of 1 year or less,
U.S. Treasury notes with a maturity of 1 to 10 years and U.S. Treasury bonds
with a maturity in excess of 10 years.
The Government Securities Fund also invests in debt obligations which are
issued, collateralized or guaranteed by the United States Government, its
agencies or instrumentalities, such as: (1) Government National Mortgage
Association ("GNMA") mortgage-backed pass-through certificates ("Ginnie Maes")
that are guaranteed as to timely payment of interest and principal by GNMA and
backed by the full faith and credit of the United States Treasury; (2)
mortgage-backed pass-through securities guaranteed as to the timely payment of
interest and the full return of principal by the Federal Home Loan Mortgage
Corporation ("FHLMC"), a corporate instrumentality of the United States
Government; (3) debt of each of the Federal Home Loan Banks, instrumentalities
of the United States Government which have the right to borrow a specific
amount from the United States Treasury; and (4) pass-through debt certificates
("Fannie Maes") issued and guaranteed as to timely payment of principal and
interest by the Federal National Mortgage Association ("FNMA"), a government-
sponsored corporation owned by private stockholders and supported by FNMA's
right to borrow from the U.S. Treasury, at the discretion of the U.S.
Treasury, and (5) other types of mortage-backed securities issued by
governmental entities, such as FHLMC and FNMA, including collateralized
9
<PAGE>
mortgage obligations ("CMOs") and real estate mortgage investment conduits
("REMICs"). CMOs are bond-like securities collateralized by conventional
mortgages, issued in multiple classes, thus providing investors with either
short, intermediate or long maturities. REMICs, created under the Tax Reform
Act of 1986, are similar in structure to CMOs and are used as conduits for
holding fixed pool of mortgages secured by real property. REMICs may issue
multiple classes of interests. The Government Securities Fund will not invest
in residual interests of REMICs and CMOs due to the volatile nature of such
investments. Obligations of FHLMC and FNMA are not backed by the full faith
and credit of the United States Treasury. While the United States Government
provides financial support to government-sponsored agencies and
instrumentalities, there can be no assurance that it will continue to do so
since it is not obligated to by law. The Government Securities Fund may also
enter into repurchase agreements collateralized by the securities listed
above. See "RISK FACTORS" below.
The Government Securities Fund may enter into agreements with certain broker-
dealers, with respect to no more than 10% of the Fund's total assets, to buy
United States Government securities for future delivery. When such
transactions are negotiated, the price is fixed at the time of commitment, but
delivery and payment for the securities can take place a month or more after
the date of the commitment to purchase. Contracts that provide for the future
delivery of securities on a "forward commitment," "when-issued" or a "delayed
delivery basis" are usually purchased at a price lower than the current market
price for similar mortgage instruments having the same interest rate. The
securities are subject to market fluctuation and no interest accrues to the
purchaser during this period. At the time of delivery of the securities, their
value may be more or less than the purchase price. The Fund will normally
receive a fee for entering into forward commitment contracts. See " " in
the Statement of Additional Information.
In order to enhance current income or reduce market interest rate risks, the
Government Securities Fund may engage in a variety of hedging strategies
involving the use of exchange-traded options and futures transactions. The
Government Securities Fund may, at times, write covered call options or
purchase put options with respect to certain of its portfolio securities, and
will purchase or write such options on interest rate futures contracts and
appropriate securities indexes. The Government Securities Fund may also
purchase or sell interest rate futures contracts. In addition, the Government
Securities Fund may also enter into closing purchase and sale transactions
with respect to such options and futures. See "Risk Factors" below regarding
the Fund's use of options and futures contracts and risk considerations
involving such instruments.
The Adviser anticipates that the Fund's average portfolio maturity will not
exceed 15 years, with the precise term to maturity dependent upon general
market and economic conditions.
The value of the debt securities held by the Government Securities Fund will
change as interest rates fluctuate. An increase in market interest rates or
prior payment of mortgage-backed securities will generally reduce the value of
this Fund's investments, and a decline in market interest rates will generally
increase the value of this Fund's investments. GNMA securities and other
mortgage-backed securities in which the Fund invests, may not be an effective
means of "locking in" long-term interest rates as the Fund must reinvest
scheduled and unscheduled principal payments. At the time principal payments
or prepayments are received by the Fund and reinvested, prevailing interest
rates may be higher or lower than the Fund's current yield. As a result, the
income or yield of the Government Securities Fund under such circumstances may
vary significantly.
[VAN ECK/CHUBB TOTAL RETURN FUND]
OBJECTIVES:
The objective of the Total Return Fund is to produce the highest total return
through a combination of income and capital appreciation as is consistent with
reasonable risk by investing in a portfolio of income-producing debt and
equity securities.
POLICIES:
To achieve its objective, the Total Return Fund intends to invest between 30%
and 70% of its assets in equity securities and bonds, notes, warrants or
preferred stocks that can be exchanged for or converted into common stocks,
depending upon market and economic conditions. The Fund will not restrict its
investments in equity securities of companies to any particular
10
<PAGE>
capitalization. In its equity investments, the Fund will emphasize issues with
relatively low price to earnings ratios, above average dividend yields, and
relatively low price to book value ratios, as compared to such ratios and
yields for the market in general. The balance of the Total Return Fund, except
assets invested for defensive or hedging purposes, will be invested in rated
or unrated fixed income securities, including obligations of the United States
Government, and its agencies or instrumentalities, and corporate debt
obligations which are rated Baa or BBB or higher by Moody's, Investors
Services, Inc. ("Moody's") Standard & Poor's Corporation ("S&P") or other
nationally recognized statistical rating organizations (NRSRO's) or other or,
if not rated, are of equivalent quality as determined by the Fund's Adviser.
Debt securities rated Baa or BBB by Moody's or S&P are considered by these
rating agencies to be investment-grade obligations and are regarded as having
adequate capacity to pay interest and repay principal, although adverse
economic conditions or changing circumstances are more likely to lead to a
weakening of such capacity than would be the case for higher-grade bonds. Such
bonds may be considered to have certain speculative characteristics. In the
event that the ratings of securities held by the Fund fall below investment
grade, the Fund will not be obligated to dispose of such securities and may
continue to hold such securities if, in the opinion of the Adviser, such
investment is considered appropriate under the circumstances. The Adviser
anticipates that the average portfolio maturity of the Fund's fixed income
securities will not exceed 15 years, with the precise term to maturity
dependent upon general market and economic conditions.
The Total Return Fund will invest primarily in equity and debt securities of
domestic issuers, as described above. However, when deemed appropriate by the
Adviser, the Fund may invest in and hold up to 20% of its total assets in
equity and debt securities of foreign issuers. Such securities may include
exchange-traded and over-the-counter securities of foreign issuers and
Depositary Receipts. Such securities may be traded in the United States or in
foreign markets. For purposes hereof, securities of foreign issuers means
securities of issuers organized or whose principal place of business is
outside the United States, or whose securities are principally traded in
securities markets outside the United States. The Fund's investments in
foreign securities primarily will be in equity securities but also may include
investment grade debt obligations of foreign companies and governments. See
"Risk Factors" below and " " and " " in the Statement of Additional
Information.
For hedging purposes, the Total Return Fund may write covered call options and
purchase put options with respect to certain of its portfolio securities, and
will purchase and write such options on interest rate futures contracts, stock
index futures contracts and appropriate securities indexes. The Total Return
Fund may also purchase or sell futures contracts, including stock index
futures contracts or interest rate futures contracts. The Fund may also enter
into closing transactions with respect to such options and futures contracts.
See "Risk Factors" below regarding the Fund's use of options and futures
contracts and risk considerations involving such instruments.
For temporary or defensive purposes, the Fund may hold a portion of its assets
in cash, high-grade money market instruments or U.S. Treasury bills, or in
repurchase agreements. See "Risk Fators" below.
The price of the equity securities in which the Total Return Fund invests will
fluctuate day to day and, as a result, the value of an investment in the Total
Return Fund will vary based upon such market conditions. The value of the
Total Return Fund's investment in fixed income securities will vary depending
on such factors as prevailing interest rates. Moreover, in the case of debt
securities, investments are subject to the ability of the issuer to make
payments of principal and interest when due. Although the Total Return Fund
seeks to reduce both financial and market risks associated with any one
investment medium, performance of the Fund will depend on such additional
factors as timing the mix of investments and the ability of the Adviser to
react to changing market conditions.
[VAN ECK/CHUBB TAX-EXEMPT FUND]
OBJECTIVES:
The objective of the Tax-Exempt Fund is to provide a stable level of current
income which is exempt from Federal income taxes, consistent with the
preservation of capital, by investing primarily in investment-grade tax-exempt
securities.
11
<PAGE>
POLICIES:
It is a fundamental policy of the Tax-Exempt Fund to invest, under normal
market conditions, at least 80% of its assets in tax-exempt securities. As
part of this policy, in determining whether the Fund has invested at least 80%
of its assets in tax-exempt securities, obligations on which the interest is
treated as an item of tax preference for purposes of the alternative minimum
tax are not counted as tax-exempt securities.
To achieve its investment objective, the Fund will invest primarily in: (1)
municipal bonds or notes, which, on the date of investment, have received one
of the four highest ratings issued by Moody's (Aaa, Aa, A and Baa), S&P (AAA,
AA, A and BBB), or other NRSROs or, if not rated, are of comparable quality to
obligations so rated in the judgment of the Adviser; and (2) short-term tax-
exempt instruments, having a maturity of 13 months or less, which have
received one of the three highest possible ratings issued by either Moody's or
S&P (MIG 1, MIG 2, MIG 3 or SP-1, SP-2, SP-3), or, if not rated, are of
comparable quality to obligations so rated in the judgment of the Adviser.
Securities rated Baa or BBB by Moody's or S&P are considered to be investment-
grade obligations and are regarded as having adequate capacity to pay interest
and repay principal, although adverse economic conditions or changing
circumstances are more likely to lead to a weakening of such capacity than for
higher-grade bonds. Such securities may be considered to have certain
speculative characteristics. In the event that the ratings of securities held
by the Fund fall below investment grade, the Fund will not be obligated to
dispose of such securities and may continue to hold such securities if, in the
opinion of the Adviser, such investment is considered appropriate under the
circumstances. The Adviser anticipates that, over time, the average portfolio
maturity will approximate 20 years, with the precise time to maturity
dependent upon general market and economic conditions.
Of the amount of the Fund's assets invested in tax-exempt securities, the
Adviser expects that under normal market and economic conditions at least 65%
of such assets will be invested in high-grade tax-exempt bonds which have
received one of the three highest ratings by Moody's, S&P or other NRSROs or,
if not rated, will be of comparable quality to obligations so rated in the
judgment of the Adviser.
The Fund may enter into agreements with banks or broker-dealers to purchase
some securities on a "forward commitment," "when issued" or on a "delayed
delivery" basis. Such agreements involve a commitment to purchase securities
at a price that is fixed at the time of commitment for delivery at a future
date, which may be up to three months in the future. The Fund will not pay for
the securities or begin earning interest on them until the securities are
received. The securities so purchased are subject to market fluctuations so
that at the time of delivery, the value of such securities may be more or less
than the purchase price.
The Tax-Exempt Fund may endeavor to reduce risks to the Fund's assets
resulting from interest rate fluctuations and market volatility by writing
covered call options and purchasing put options with respect to certain of its
portfolio securities and appropriate securities indexes and interest rate
futures contracts. The Tax-Exempt Fund may also purchase and sell municipal
bond futures contracts, including Municipal Bond Index Futures, which involves
an investment in an index composed of the average prices of 40 selected
municipal bonds. The Fund may also enter into closing transactions with
respect to such options and futures contracts. See "Risk Factors" below
regarding the Fund's use of options and futures contracts and risk
considerations involving such instruments. The Tax-Exempt Fund may invest up
to 20% of its assets in taxable securities for liquidity or for temporary
defensive purposes, although at least 80% of the Fund's income during each
year will be derived from tax-exempt securities. Taxable investments may
consist of United States Government securities, securities of United States
Government agencies and instrumentalities, bank certificates of deposit and
banker's acceptances, short-term corporate debt securities such as commercial
paper, and repurchase agreements. See " " in the Statement of Additional
Information.
Although dividends to shareholders from the Tax-Exempt Fund will generally be
exempt from Federal income taxes, distributions of income from investments in
taxable securities and capital gains, if any, realized by the Tax-Exempt Fund
would be taxable to the shareholder. Moreover, distributions paid to
shareholders of the Tax-Exempt Fund may be subject to state and local
taxation. The value of the Tax-Exempt Fund's investments will vary inversely
with prevailing interest rates and may vary according to such factors as the
credit quality and maturity of the portfolio.
12
<PAGE>
[VAN ECK/CHUBB GROWTH AND INCOME FUND]
OBJECTIVES:
The objective of the Growth and Income Fund is to seek long-term growth by
investing primarily in a wide range of equity issues that the Adviser believes
will offer possibilities of capital appreciation and, secondarily, to seek a
reasonable level of current income.
POLICIES:
The Growth and Income Fund intends to invest at least 80% of its assets in
common stocks and other equity securities such as preferred stocks and
securities convertible into common stock which are either listed on the New
York Stock Exchange, traded over-the-counter or, to a lesser extent, listed on
other national securities exchanges. Securities are selected principally for
potential appreciation, based upon such criteria as relatively low price to
earnings ratio and relatively low price to book value ratio, as compared to
such ratios for the market in general and, secondarily, for current income and
increasing future dividends. While the Growth and Income Fund intends to
invest at least 60% of its assets in securities which have paid dividends or
interest within the preceding 12 months, the Fund may invest in securities not
currently paying dividends where the Adviser anticipates that they will
increase in value.
The Growth and Income Fund may also invest for temporary or defensive purposes
in high-grade debt securities and money market securities, including United
States Government securities, commercial paper and bank obligations, and
repurchase agreements.
The Growth and Income Fund will invest primarily in equity securities issued
by United States companies. However, when deemed appropriate by the Adviser,
the Fund may invest in and hold up to 20% of its total assets in equity and
debt securities of foreign issuers. Such securities may include exchange-
traded and over-the-counter securities of foreign issuers, American Depositary
Receipts ("ADRs") European Depositary Receipts ("EDRs") and Global Depositary
Receipts ("GDRs") (collectively "Depositary Receipts"). Such securities may be
traded in the United States or in foreign markets. For purposes hereof,
securities of foreign issuers means securities of issuers organized or whose
principal place of business is outside the United States, or whose securities
are principally traded in securities markets outside the United States. The
Fund's investments in foreign securities primarily will be in equity
securities issued by companies organized or located outside the United States,
but may also include investment grade debt obligations issued by foreign
companies and governments. See "Risk Factors" below and " " in the
Statement of Additional Information.
The Growth and Income Fund may write covered call options or purchase put
options with respect to certain of its portfolio securities or purchase stock
index options for hedging purposes or to enhance income. The Growth and Income
Fund may also purchase or write futures contracts, including stock index
futures contracts. The Fund may also enter into closing transactions with
respect to such options and futures contracts. See "Risk Factors" below
regarding the Fund's use of options and futures contracts and risk
considerations involving such instruments.
The prices of the securities purchased for the Growth and Income Fund will
tend to fluctuate more than the prices of securities purchased for the other
Funds. As a result, the net asset value of the Growth and Income Fund may
experience greater short-term and long-term variations than the other
Funds.
[VAN ECK/CHUBB CAPITAL APPRECIATION FUND]
OBJECTIVES:
The objective of the Capital Appreciation Fund is to seek long-term
appreciation by investing primarily in equity securities of companies that the
Adviser believes will offer possibilities of capital appreciation.
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POLICIES:
The Capital Appreciation Fund intends to invest at least 80% of its assets in
common stocks and other equity securities such as preferred stocks and
securities convertible into common stock. The Capital Appreciation Fund will
only invest in convertible debt securities rated in the three highest rating
categories by any NRSRO or comparable unrated securities. The Capital
Appreciation Fund intends to invest at least 65% of its total assets in
securities of companies that at the time of purchase have total market
capitalizations between $500 million and $2.5 billion. In selecting the Fund's
investments, the Adviser seeks to identify attractive investment opportunities
that have not become widely recognized by other analysts or the financial
press. Securities are selected principally for their capital appreciation
potential, based upon such criteria as relatively low price to earnings ratio
and relatively low price to book value, as compared to the market in general.
Current income and increasing future dividends are only incidental or
secondary considerations in seeking portfolio securities.
The Capital Appreciation Fund will invest primarily in equity securities
issued by domestic companies. However, when deemed appropriate by the Adviser,
the Fund may invest in and hold up to 20% of its total assets in equity and
debt securities of foreign issuers. Such securities may include exchange-
traded and over-the-counter securities of foreign issuers and Depositary
Receipts. Such securities may be traded in the United States or in foreign
markets. For purposes hereof, securities of foreign issuers means securities
of issuers organized or whose principal place of business is outside the
United States, or whose securities are principally traded in securities
markets outside the United States. The Fund's investments in foreign
securities primarily will be in equity securities issued by companies
organized or located outside the United States, but may also include
investment grade debt obligations issued by foreign companies and governments.
See "Risk Factors" below and " " in the Statement of Additional
Information.
The Capital Appreciation Fund may write covered call options and purchase put
options with respect to certain of its portfolio securities and purchase stock
index options for hedging purposes only and not for speculation. The Capital
Appreciation Fund may also purchase or write futures contracts, including
stock index futures contracts. The Fund may also enter into closing
transactions with respect to such options and futures contracts. These
investment techniques are considered derivative investing. See "Risk Factors"
below regarding the Fund's use of derivatives such as options and futures
contracts and risk considerations involving such instruments.
The Capital Appreciation Fund may also invest for temporary defensive purposes
in high-grade debt securities and money market securities, including United
States Government securities, commercial paper and bank obligations, and
repurchase agreements. For more information regarding the Fund's investments
and risks see "DESCRIPTION OF CERTAIN INVESTMENTS" in the Statement of
Additional Information.
The prices of the securities purchased for the Capital Appreciation Fund will
tend to fluctuate more than the prices of securities purchased for certain of
the other Funds, including in particular the Government Fund and Tax-Exempt
Fund. As a result, the net asset value of the Capital Appreciation Fund may
experience greater short-term and long-term variations than these other Funds.
Derivative securities can be volatile investments and involve certain risks
which may reduce the Fund's returns.
[VAN ECK CHUBB GLOBAL INCOME FUND]
OBJECTIVES:
The objective of the Global Income Fund is to seek high current income and
capital appreciation by investing primarily in debt securities of domestic and
foreign issuers.
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POLICIES:
In pursuit of its investment objective, the Global Income Fund will invest at
least 65% of its assets in bonds and debentures. The Fund may invest in debt
securities issued by: (i) domestic and foreign governments and their agencies
and political subdivisions; (ii) corporations and financial institutions, and
(iii) supranational entities such as the International Bank for Reconstruction
and Development ("World Bank"), the Asian Development Bank, the European
Development Bank, and the European Community. At least 75% of the Fund's debt
securities will be rated investment grade by S & P or Moody's, or if unrated,
deemed to be of comparable quality in the judgment of the Adviser. No more
than 25% of the Fund's total assets may be invested in debt that is rated
lower than investment grade (junk bonds). The Fund will allocate its assets
among debt securities of issuers in three separate investment areas: (1) the
United States, (2) developed foreign countries, and (3) emerging markets. The
Fund considers emerging markets to include all countries except the United
States, Canada, Japan, Australia, New Zealand and most countries in Western
Europe. See "Risk Factors" below. The Fund will select particular debt
securities in each investment area based upon their relative investment merit.
Under normal conditions, the Fund will have at least 65% of its total assets
in at least three different countries (one of which may be the United States).
For temporary or defensive purposes, the Fund may invest substantially all its
assets in one or two countries. Certain of the Fund's investments may have
speculative characteristics. See "Risk Factors" and below and " " in the
Statement of Additional Information.
The average maturity of debt securities in the Global Income Fund's portfolio
will fluctuate depending on the Adviser's judgment as to future interest rates
and market conditions.
The Global Income Fund may buy and sell derivatives such as financial futures
contracts, bond index futures contracts, and foreign currency futures
contracts. In addition, the Global Income Fund may invest in options on
foreign currency exchange contracts, and options on foreign currencies,
including cross currency hedges. The Global Income Fund may purchase and sell
any of these futures or options contracts for hedging purposes and for Global
Income Fund may also invest in "when issued" securities and collateralized
mortgage obligations, and lend up to 30% of its portfolio securities. For more
information, see "Risk Factors" below.
For temporary or defensive purposes, the Fund may invest high quality domestic
money market instruments, high quality domestic short-term debt securities or
may hold the Fund's assets in cash or cash equivalents without limitation.
The Global Income Fund normally invests in a substantial number of issues;
however, the Fund is classified as "non-diversified" under the Act, so a
relatively high percentage of the Fund's assets could be invested in the
obligations of a limited number of issuers. Therefore, the value of the Fund's
shares may be more susceptible to any single economic, political or regulatory
event and may fluctuate more than the shares of a diversified fund. (For more
information, see "Risk Factors").
RISK FACTORS
The risks associated with investing in equity securities and fixed income
securities include the risk that stock values tend to fluctuate with general
market and economic conditions and fixed income and short-term instrument
values tend to fluctuate with interest rates and the credit rating of the
issuer. Since shares of the Funds represent an investment in securities with
fluctuating market prices, shareholders should understand that the value of
shares of the Funds will vary as the aggregate value of the Funds' portfolio
securities increases or decreases. Moreover, any dividends paid by the Funds
will increase or decrease in relation to the income received by the Funds from
their investments. In addition, assets of the Funds may be subject to other
special considerations, such as those listed below.
Unless otherwise specified, each of the investment practices described in this
section is not deemed to be a fundamental objective and may be changed by the
Company's Board of Directors without approval of a majority of the Company's
outstanding shares. For a further explanation of each Fund's investment
practices and restrictions, including the types of such investments and the
risks associated with such investments, see " " in the Statement of
Additional Information.
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EQUITY SECURITIES
The Total Return Fund, Growth and Income Fund, Capital Appreciation Fund, and
Global Income Fund each may invest in equity securities of companies having
various capitalizations, including small capitalization companies (i.e.,
average market capitalizations between $500 million), mid-capitalization
companies (i.e., average market capitalizations between $500 million to $2.5
billion), and large capitalization companies (i.e., above $2.5 billion),
although the Capital Appreciation Fund will be invested primarily in
securities of mid-capitalization companies. The Adviser believes that equity
securities of small and mid- capitalization companies may provide greater
growth potential than stocks of large capitalization companies. Nevertheless,
small and mid-capitalization companies often have limited product lines, fewer
market or financial resources, and may be more dependent upon one person or a
few key people for management. In addition, the stocks of such small and mid-
capitalization companies may be subject to greater price volatility than large
capitalization stocks both because such stocks typically trade in lower volume
and because such companies may be more vulnerable to changing economic
conditions than large capitalization companies.
REPURCHASE AGREEMENTS
All the Funds may enter into repurchase agreements, whereby an investor, such
as one of the Funds, purchases securities (referred to as "underlying
securities") from well-established securities broker-dealers or banks, subject
to agreement by the seller to repurchase the securities at a stated price on a
specified date. Repurchase agreements involve certain risks not associated
with direct investment in securities, including the risk that the original
seller will default on its obligations to repurchase, as a result of
bankruptcy or otherwise. To minimize this risk, a Fund will enter into a
repurchase agreement only if the repurchase agreement is structured in a
manner reasonably designed to collateralize fully the value of a Fund's
investment during the entire term of the agreement and in accordance with
guidelines regarding the creditworthiness of the seller determined by the
Board of Directors of the Company. Currently, these guidelines require sellers
who are broker-dealers to have a net worth of at least $25,000,000, although
this requirement may be waived by the Board of Directors of the Company on the
recommendation of the Adviser, and banks to have assets of at least
$1,000,000,000. The underlying security, held as collateral, will be marked to
market on a daily basis, and must be of high-quality. In the event that the
other party to the agreement fails to repurchase the securities subject to the
agreement, a Fund could suffer a loss to the extent proceeds from the sale of
the underlying securities held as collateral were less than the price
specified in the repurchase agreement.
REVERSE REPURCHASE AGREEMENTS
The Global Income Fund may enter into reverse repurchase agreements with the
same parties with which it enters into repurchase agreements. Under a reverse
repurchase agreement, the Fund would sell portfolio securities and agree to
repurchase them at a particular price at a future date. At the time the Fund
enters into the reverse repurchase agreement it will establish and maintain a
segregated amount with the custodian containing cash or liquid securities
having a value not less than the repurchase price, including interest. Reverse
repurchase agreements involve risk that the market value of the securities
retained in lieu of the sale may decline below the price of the securities the
Fund has sold but is obligated to repurchase. In the event the buyer of
securities files for bankruptcy or becomes insolvent, such buyer or its
trustee or receiver may receive an extension of time to determine whether to
enforce the Fund's obligation to repurchase the securities and the Fund's use
of the proceeds of the reverse repurchase agreement may effectively be
restricted pending such decision. Reverse repurchase agreements will be
treated as borrowings for purpose of calculating the Fund's borrowing
limitations.
FOREIGN SECURITIES, DEPOSITARY RECEIPTS
Subject to the investment objectives and policies of each Fund, the Total
Return Fund, Growth and Income Fund, Capital Appreciation Fund and Global
Income Fund may invest in foreign securities. Although investment in foreign
securities by the Total Return Fund, Growth and Income Fund and Capital
Appreciation Fund are intended to reduce risk by providing further
diversification, such investments, as well as those of the Global Income Fund,
involve certain additional risks, including the possibility of: (1) adverse
foreign political and economic developments, (2) less publicly available
information about foreign issuers, (3) less comprehensive accounting,
reporting and disclosure requirements, (4) less government regulation and
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supervision of foreign stock exchanges, brokers and listed companies, (5)
expropriation or confiscatory taxation that could affect investments, (6)
currency blockages which would prevent cash from being brought back in the
United States, (7) generally higher brokerage and custodial costs than those
of domestic securities, (8) with respect to foreign securities denominated in
foreign currencies, the costs associated with the exchange of currencies and
the possibility of unfavorable changes in currency rates and exchange rate
regulations and (9) settlement of transactions being delayed beyond periods
customary in the United States.
The Total Return Fund, Growth and Income Fund, Capital Appreciation Fund and
Global Income Fund may also invest in Depositary Receipts, (ADRs, GDRs and
EDRs.) ADRs are certificates issued by a United States bank representing the
right to receive securities of a foreign issuer deposited in a foreign branch
of a United States bank and traded on a United States exchange or over-the-
counter. European Depositary Receipts ("EDRs") and Global Depositary Receipts
("GDRs") are typically issued by foreign banks or trust companies, although
they may be issued by US banks or trust companies, and also evidence ownership
of underlying securities issued by a foreign or U.S. securities market.
Generally, Depositary Receipts in registered form are designed for use in the
U.S. securities market and Depositary Receipts in bearer form are designed for
use in securities markets outside the United States. Depositary Receipts may
not necessarily be denominated in the same currency as the underlying
securities in to which they may be converted. Brokerage commissions will be
incurred if ADRs are purchased through brokers on the U.S. stock exchanges.
Depositary Receipts also involve the risks of other investment in foreign
securities. For purposes of each Fund's investment policies, a Fund's
investment in Depositary Receipts will be deemed to be an investment in the
underlying securities.
LENDING OF PORTFOLIO SECURITIES
The Global Income Fund may seek to increase its income by lending portfolio
securities. Under present regulatory policies such loans may be made to
institutions such as broker dealers, and are required to be secured
continuously by collateral in cash, cash equivalents or U.S. Government
securities maintained on a current basis in an amount at least equal to the
market value of the securities loaned. It is intended that the value of
securities loaned would not exceed 30% of the value of the total assets of the
Fund.
RESTRICTED SECURITIES
All of the Funds may also purchase securities that are not registered under
the Securities Act of 1933, as amended (the "1933 Act") ("restricted
securities"), including those that can be offered and sold to "qualified
institutional buyers" under Rule 144A under the 1933 Act ("Rule 144A
securities"). Subject to a Fund's limitations on investments in illiquid
investments, a Fund may also invest in restricted securities that may not be
sold under Rule 144A, which presents certain risks. As a result, a Fund might
not be able to sell these securities when the Adviser wishes to do so, or
might have to sell them at less than fair value. In addition, market
quotations are less readily available. Therefore, judgment may at times play a
greater role in valuing these securities than in the case of unrestricted
securities.
LOW RATED OR UNRATED DEBT SECURITIES
The Global Income Fund may invest up to 25% of its total assets in high yield
or "junk bonds" and may invest in debt instruments issued by foreign issuers,
including those in emerging market countries. Although such securities may
offer higher yields than do higher rated securities, such low rated and
unrated securities and investments in emerging market debt securities
generally involve greater volatility of price and risk of principal and
income, including the possibility of default by, or bankruptcy of, the issuers
of the securities. The existence of limited markets for particular high yield
bonds or low rated securities may diminish a Fund's ability to sell the such
securities at fair value either to meet redemption requests or to respond to a
specific economic event such as a deterioration in creditworthiness of the
issuer. Reduced secondary market liquidity for certain low rated or unrated
debt securities may also make it more difficult for a Fund to obtain accurate
market quotations for the purpose
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of valuing the Fund's portfolio. Market quotations are generally available on
many low rated or unrated securities only from a limited number of dealers and
may not necessarily represent firm bids of such dealers or prices for actual
sales.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of low rated
securities, especially in a thinly traded market. Analysis of the
creditworthiness of issuers of debt securities that are low rated securities
may be more complex than for issuers of higher rated securities, and the
ability of the Fund to achieve its investment objective may, to the extent of
investment in low rated securities, be more dependent upon such
creditworthiness analysis than would be the case if the Fund were investing in
higher rated securities.
Low rated securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment grade securities.
The prices of low rated securities have been found to be less sensitive to
interest rate changes than higher rated investments, but more sensitive to
adverse economic downturns or individual corporate developments. If the issuer
of low rated securities defaults, the Fund may incur additional expenses to
seek recovery. The low rated bond market is relatively new, and many of the
outstanding low rated bonds have not endured a major business recession. See "
" in the Statement of Additional Information.
Certain Funds may invest in debt obligations issued or guaranteed by foreign
governments or their agencies, instrumentalities or political subdivisions, or
by supranational issuers (collectively, "sovereign debt"). Investing in
sovereign debt involves special risks. Certain foreign countries, particularly
developing countries, have experienced and may continue to experience, high
rates of inflations and high interest rates; exchange rate fluctuations; large
amounts of external debt, balance of payments and trade difficulties; and
extreme poverty and unemployment. The issuer of the debt or the governmental
authorities that control the repayment of the debt may be unwilling or unable
to repay principal or interest when due in accordance with the terms of such
debt, and the Funds may have limited legal recourse in the event of
default.
The Global Income Fund's participation in the currency, option and futures
markets involves certain risks and transaction costs which are generally
greater for investments in emerging markets; because of the special risks
associated with investing in emerging markets and investment in debt
securities rated below investment grade, certain of the Global Income Fund's
investments should be considered speculative and the Global Income Fund is
designed for investors who wish to accept the risks entailed in such
investments which are different from those associated with a portfolio
consisting entirely of U.S. issuers denominated in U.S. dollars.
DERIVATIVES
A "derivative" is a financial contract whose value depends upon the value of
an underlying instrument or asset--a commodity, bond, mortgage, equity or
currency or a combination of these.
The Government Securities Fund, Total Return Fund, Growth and Income Fund,
Capital Appreciation Fund and Global Income Fund may utilize derivatives in
seeking to meet their investment objectives. Certain risks of derivative
investing are set forth below.
FOREIGN CURRENCY TRANSACTIONS
The Total Return Fund, Growth and Income Fund, Capital Appreciation Fund and
the Global Income Fund may enter into forward foreign currency exchange
contracts to attempt to minimize the risk to the Fund from adverse changes in
the relationship between the U.S. dollar and foreign currencies. A foreign
currency contract is an obligation to purchase or sell a specific currency for
an agreed price at a future date which is individually negotiated and
privately traded by currency traders and their customers. The Total Return
Fund, Growth and Income Fund and Global Income Fund may enter into a forward
exchange contract when, for example, the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency in order to
lock in the U.S. dollar price of the security or the U.S. dollar equivalent of
interest and dividends to be paid on such securities, or to hedge against the
possibility that the currency of a foreign country in which a Fund has
investments may suffer a decline against the U.S. dollar.
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Alternatively, the Fund might sell a particular security on either a spot
(cash) basis at the rate then prevailing in the currency exchange market or on
a forward basis by entering into a forward contract to purchase or sell
currency, to hedge against an anticipated decline in the U.S. dollar value of
securities it intends or has contracted to sell. This method of attempting to
hedge the value of the Fund's portfolio securities against a decline in the
value of a currency does not eliminate fluctuations in the underlying prices
of the securities. None of the Funds is obligated to engage in any such
currency hedging operations, and there can be no assurance as to the success
of any hedging operations which a Fund may implement. Although the strategy of
engaging in foreign currency transactions could reduce the risk of loss due to
a decline in the value of the hedged currency, it could also limit the
potential gain from an increase in the value of the currency. When effecting
currency exchange transactions, some price spread (to cover service charges)
will be incurred. No Fund, except the Global Income Fund, intends to maintain
a net exposure to such contracts where the fulfillment of the Fund's
obligations under the contracts would obligate the Fund to deliver an amount
of foreign currency in excess of the value of the Fund's portfolio securities
or other assets denominated in that currency. The Global Income Fund may enter
into forward contracts to duplicate a cash market transaction.
The Global Income Fund may also enter into a form of foreign currency option
transaction known as cross hedges of currencies by entering into transactions
to purchase or sell one or more currencies that are expected to increase or
decline in value relative to other currencies in which the Fund has or which
the Fund expects to have exposure.
OPTIONS
In order to earn additional income or to protect partially against declines in
the value of its securities, all the Funds may write (sell) covered call
options and purchase call options to the extent necessary to close out option
positions previously written by the Fund. A call option gives the holder
(purchaser) the right to buy and obligates the writer (seller) to sell, in
return for a premium paid, the underlying security at the exercise price
during the option period. The Funds, in keeping with their individual
investment objectives and policies, may write call options with respect to
individual equity securities and bonds, and stock and bond indexes which
correlate with the Fund's particular portfolio securities. The Funds will
write only covered call options which are listed on exchanges, and will not
write a covered call option if, as a result, the aggregate market value of all
portfolio securities covering all call options or subject to put options
exceeds 25% of the value of the Fund's total assets. The Funds cover options
they have sold for example, by holding the underlying securities or (the usual
practice in the case of a call) or by other means which would permit timely
satisfaction of the Fund's obligations as writer or the option, such as by
depositing in a separate account liquid high grade securities, or cash, equal
in value to the exercise price of the option (the usual practice in the case
of a put.)
All Funds may also purchase put options with respect to equity securities and
bonds, and stock and bond indexes which correlate with their portfolio
securities, limited to no more than 5% of the Fund's total assets. As the
holder of a put option, the Fund has the right to sell the underlying security
at the exercise price at any time during the option period.
The Global Income Fund may also purchase and write put and call options,
including options on foreign currencies for the purpose of protecting against
declines in the dollar value of foreign portfolio securities and against the
U.S. dollar cost of foreign securities to be acquired.
FUTURES CONTRACTS
All the Funds may purchase and sell futures contracts on debt securities and
interest rate futures contracts as a hedge against or to minimize adverse
principal fluctuations resulting from anticipated interest rate changes. The
Funds may also, where appropriate, enter into stock index futures contracts to
provide a hedge for a portion of the Fund's equity holdings. Stock index
futures contracts may be used as a way to implement either an increase or
decrease in portfolio exposure to the equity markets in response to changing
market conditions. Each Fund may also write covered call options and purchase
put options on futures contracts of the type which that Fund is permitted to
purchase. The Global Income Fund may buy and sell foreign currency futures
contracts and bond index futures contracts. The Global Income Fund may buy and
sell futures contracts, including commodity futures contracts, and options
thereon, for hedging and other purposes, such as creating "synthetic"
positions. An
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index futures contract is an agreement to take or make delivery of an amount
of cash based upon the difference between the value of the index at the
beginning and the end of the contract period. A futures contract on a foreign
currency is an agreement to buy or sell a specified amount of a currency at a
set price on a specified future date. The Funds will not enter into futures
contracts for speculation and will only enter into futures contracts that are
traded on national futures exchanges. The Global Income Fund 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 Directors. 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. No Fund
will enter into futures contracts or options thereon if immediately thereafter
the sum of the amounts of initial margin deposits on the Fund's existing
futures contracts and premiums paid for options on unexpired futures contracts
would exceed 5% of the value of the Fund's total assets.
When a Fund enters into a futures contract it must make an initial deposit
known as initial margin as a partial guarantee of its performance under the
contract, as the value of the contract 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, the Fund must deposit in a segregated account additional cash or
high quality securities to ensure the futures contract are unleveraged. The
value of assets held in the segregated account must be equal to the daily
market value of all outstanding futures contracts less any amounts deposited
as margin.
SWAPS, CAPS, FLOORS AND COLLARS
The Global Income Fund may enter into interest rate, currency and index swaps
and purchase or sell related caps, floors and collars. The Fund expects to
enter into these transactions primarily to protect against currency
fluctuations, as a technique for managing the portfolio's duration (i.e., the
price sensitivity to changes in interest rates) or to protect against any
increase in the price of securities the Fund anticipates purchasing in the
future. The Fund intends to use these transactions as hedges, and neither will
sell interest rate caps or floors if it does not own the securities or other
instruments providing an income stream roughly equivalent to what the Fund may
be obligated to pay.
Interest rate swaps involve an agreement between the Global Income Fund and
another party to exchange their respective commitments to pay or receive
interest with respect to specified (notional) amount of principal (i.e. an
exchange of floating rate payments by one party for fixed rate payments by the
other. A currency swap is an agreement to exchange cash flows on a notional
amount based on changes in the values of the specified indices.
The purchase of an interest rate cap entitles the purchaser in exchange for
the premium paid to receive payments on a notional amount from the party
selling the cap to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and
a floor that preserves a certain return within a predetermined range of
interest rates or values.
GENERAL
Use of forward currency contracts, options and futures involve certain risks
and transaction costs which it might not otherwise be subject, including
dependence on the Adviser's ability to predict movements in the prices of
currency markets. If the Adviser incorrectly forecasts the currency exchange
rates or interest rates in utilizing a strategy for the Fund it would be in a
better position if it had never hedged at all. In addition certain provisions
of the Internal Revenue Code of 1986 have the effect of limiting the extent to
which the Fund may enter into forward contracts or futures contracts or engage
in options transactions.
Although these investment practices will be used to generate additional income
or to attempt to reduce the effect of any price decline in the security
subject to the option, they do involve certain risks that are different, in
some respects, from investment risks associated with similar funds which do
not engage in such activities. These risks include the following: writing
covered call
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options--the inability to effect closing transactions at favorable prices and
the inability to participate in the appreciation of the underlying securities
above the exercise price; and purchasing put options--possible loss of the
entire premium paid. In addition, the effectiveness of hedging through the
purchase of securities index options will depend upon the extent to which
price movement in the portion of the securities portfolios being hedged
correlate with price movements in the selected securities index. Perfect
correlation may not be possible because (i) the securities held or to be
acquired by a Fund may not exactly match the composition of the securities
indexes on which options are written or (ii) the price movements of the
securities underlying the option may not follow the price movements of the
portfolio securities being hedged. If the Adviser's forecasts regarding
movements in securities prices or interest rates or currency prices or other
economic factors are incorrect, the Fund's investment results may have been
better without the hedge. A more thorough description of these investment
practices and their associated risks is contained in the Company's Statement
of Additional Information.
The Global Income Fund may use futures contracts, options and forward
contracts 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 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, the Fund may incur a loss on its investment, may not achieve the
hedging protection it anticipated and/or incur a loss greater than if it had
entered into a cash market position. Second, investments in such instruments
may reduce the gains which would otherwise be realized from the sale of the
underlying securities or assets which are being hedged. Third, positions in
such instruments can be closed out only on an exchange that provides a market
for those instruments. There can be no assurance that such a market will exist
for a particular futures contract or option. If the Fund cannot close out an
exchange traded futures contract or option which it holds, it would have to
perform its contract obligation or exercise its option to realize any profit
and would incur transaction costs on the sale of the underlying assets.
Over-the-counter options and other investments which do not have readily
available market quotations, are subject to the limitation on investments in
illiquid securities.
PORTFOLIO TURNOVER
Portfolio turnover for each Fund may vary from year to year or within a year
depending upon economic, market and business conditions. A Fund having a
higher portfolio turnover rate may realize larger amounts of gains or losses
and more brokerage commissions or other transaction related costs than it
would with a lower portfolio turnover rate. If there are gains, they are
passed through to the shareholders as long-term capital gain distributions
and, as such, are taxable to the shareholders. See "Taxes" below and " "
in the Statement of Additional Information for further information.
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/Chubb 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
21
<PAGE>
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 or
other authorized trading system 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 are valued at market or,
if market value is not ascertainable, at fair value as determined in good
faith by the Board of Trustees. The Funds may invest in securities or futures
contracts listed or traded on foreign exchanges which trade on Saturdays or
other customary United States national business holidays (i.e., days on which
the Funds are not open for business), and consequently, the net asset values
of shares of the Funds may be significantly affected on days when an investor
has no access to the Funds.
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, a series of Van Eck
Funds, 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 shareholders.
Van Eck Securities Corporation, 99 Park Avenue, New York, New York 10016,
which is a wholly-owned subsidiary of the Administrator, serves as distributor
of the Funds' shares and for shares of the Van Eck Funds, 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 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") ALL FUNDS; or
(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") ALL FUNDS.
With respect to each class of shares, an ongoing asset-based fee for
distribution and services (12b-1 fee) is charged. The distribution services
fee applicable to Class B shares will be higher than that applicable to Class
A shares.
22
<PAGE>
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
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 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 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 shares may exceed the initial sales charge on Class A shares during
the life of the investment.
Class B shares do not incur a sales charge when they are purchased, but are
subject to a sales charge if they are redeemed within six years of purchase.
Class B shares are subject to an ongoing distribution and services fee at an
annual rate of up to 1% of the Fund's aggregate average daily net assets
attributable to that Class of shares (see "Plan of Distribution"). Class B
shares enjoy the benefit of permitting all of the investor's dollars to work
from the time the investment is made. The higher ongoing distribution and
services fee paid by Class B shares will cause such shares to have a higher
expense ratio, pay lower dividends and have a lower return than those of Class
A shares. Class B shares will automatically convert to Class A shares eight
years after the end of the calendar month in which the shareholder's order to
purchase was accepted, in the circumstances and subject to the qualifications
described in this Prospectus. The purpose of the conversion feature is to
relieve the holder of the Class B shares that have been outstanding for a
period of time sufficient for the Distributor to have been compensated for
distribution expenses from the continuing burden of such distribution-related
expenses over an open-ended period of time. See "Conversion Feature," below.
Some investors might determine that it would be more advantageous to purchase
Class B shares in order to have all their money invested initially, although
remaining subject to higher distribution charges and, for a six-year period
being subject to a contingent deferred sales charge.
The distribution expenses incurred by a Fund or its Distributor in connection
with the sale of Fund shares will be paid, in the case of Class B shares, from
the proceeds of the ongoing distribution and services fee and the contingent
deferred sales charge incurred upon redemption within applicable time periods.
(See tables of sales charges on pages and .) Sales personnel of Brokers
and Agents distributing the Fund's shares may receive differing compensation
from selling Class A or Class B shares. Investors should understand that the
purpose and function of the contingent deferred sales charge and ongoing
distribution and services fees with respect to the Class B shares 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 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 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.
23
<PAGE>
For purposes of conversion to Class A shares, shares purchased through the
reinvestment of dividends and distributions paid in respect to Class B shares
in a shareholder's Fund account will convert in a proportionate amount to the
non-reinvestment shares converted.
The conversion of Class B 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 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 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 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 imposes a 12b-1 distribution and services fee. Each
Fund's Class A shares have a 12b-1 fee of .50% 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 shares 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 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. See "Plan of
Distribution".
CLASS A
(GROWTH AND INCOME FUND, TAX-EXEMPT FUND, TOTAL RETURN FUND, GOVERNMENT
SECURITIES FUND, CAPITAL APPRECIATION FUND & GLOBAL INCOME FUND)
<TABLE>
<CAPTION>
DISCOUNT TO
BROKERS OR AGENTS
AS A PERCENTAGE
SALES CHARGE AS A OF THE
DOLLAR AMOUNT OF PURCHASE PERCENTAGE OF OFFERING PRICE*
- ------------------------- ------------------- -----------------
OFFERING NET AMOUNT
PRICE INVESTED
-------- ----------
<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>
24
<PAGE>
CLASS B***
(GROWTH AND INCOME FUND, TAX-EXEMPT FUND, TOTAL RETURN FUND, GOVERNMENT
SECURITIES FUND, CAPITAL APPRECIATION FUND AND GLOBAL INCOME 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>
* 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 (see "Plan
of Distribution"). The Distributor may alter these amounts.
- --------
Brokers and Agents may receive different compensation for selling Class A or
Class B shares.
The Class A initial sales charges vary depending on the amount of the
purchase, the number of shares of the Van Eck Global Group of Funds which are
eligible for the Right of Accumulation that an investor already owns, a Letter
of Intent to purchase additional shares during a 13-month period, or other
special purchase programs. See "Group Purchases," "Combined Purchases,"
"Letter of Intent" and "Right of Accumulation" below.
The contingent deferred sales charge on Class B is waived on redemptions of
shares following the death or disability of a Class B 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
25
<PAGE>
distributions from IRAs or other qualified retirement plans not specifically
described above. A shareholder, or the Broker or Agent, must notify DST at the
time the redemption instructions are provided whenever a waiver of the
contingent deferred sales charge or redemption charge applies.
Shares of the Funds may be purchased without a sales charge by (i) present and
retired Directors, officers and full-time employees (and their parents,
grandparents, siblings, spouses, children and dependents) and agents of the
Funds, the Adviser, Administrator 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 Administrator 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
Administrator or any of its affiliates) on which a sales charge was paid
(including Fund shares purchased by means of an exchange from the Van Eck 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
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.
26
<PAGE>
GROUP PURCHASES
An individual who is a member of a qualified group may purchase shares of the
Funds at the reduced commission applicable to the group taken as a whole. The
commission is based upon the aggregate dollar value, at the current offering
price, of shares owned by the group, plus the securities currently being
purchased. For example, if members of the group held $80,000, calculated at
current offering price, of Global Income Fund-A's shares and now were
investing $25,000, the sales charge would be 3.75%. Information concerning the
current sales charge applicable to a group may be obtained by contacting the
Distributor.
A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring a Fund's shares at a discount
and (iii) satisfies uniform criteria which enables the Distributor to realize
economies of scale in its costs of distributing shares. A qualified group must
have more than 10 members, must be available to arrange for group meetings
between representatives of the Distributor and the members of the group, must
agree to include sales and other materials related to the Funds in its
publications and mailings to members at reduced or no cost to the Distributor,
and must seek to arrange the use of the Automatic Investment Plan. See
"Investment Programs" for information concerning the Automatic Investment
Plan.
COMBINED PURCHASES
Shares of funds in the Van Eck Global Group of Funds (except the Van Eck U.S.
Government Money Fund series of Van Eck Funds) 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 the Van Eck U.S. Government Money 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 the Van Eck 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,
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.
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
Management discourages trading in the Van Eck Global Group of Funds in
response to short-term market fluctuations. Such activity may hinder the
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
27
<PAGE>
shareholders in either the Fund being exchanged from or into or both.
Shareholders are limited to six exchanges per calendar year; however,
exchanges from the Van Eck International Investors Gold Fund series of Van Eck
Funds may be excluded from this limitation if the 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 the Van Eck U.S. Government Money Fund.
Management 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 Van Eck 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.
Each Fund has the ability to redeem its shares in kind. Each Fund will pay in
cash all requests for redemption by any shareholder of record limited in
amount with respect to each shareholder of record during any ninety-day period
to the lesser of (i) $250,000 or (ii) 1% of the net asset value of such Fund
at the beginning of such period. See "Exchange Privilege" and "Redemption in
Kind" in the Statement of Additional Information.
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 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/Chubb 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.
28
<PAGE>
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.
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.
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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 in shares of the Funds will occur on a date selected by
the Board of Directors.
In addition, dividends and capital gains distributions paid by the Funds
(except Class B 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.
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 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 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 is subject to
daily fluctuations and the net asset value of the Funds' shares will fluctuate
accordingly. 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 Company 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" ON
PAGE )
BROKER/AGENT CONFIRMED REDEMPTION
For the convenience of shareholders, the Funds have authorized the Distributor
as agent to accept confirmed orders only from Brokers and Agents for the
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 or other authorized trading system 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 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.
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REDEMPTION BY CHECK
Shareholders of Tax-Exempt Fund-A, Government Securities Fund-A, and Global
Income Fund-A may, upon completion of the "Redemption by Check" portion of the
Application, elect to redeem by check shares of the Fund which are on deposit
with DST. These checks, which are drawn on The United Missouri Bank of Kansas
City (the "Bank") may be made payable to the order of any person and may not
be drawn for less than $250 or more than $5,000,000. The amount of the check
may not be in excess of 90% of the net asset value of the shares in the
shareholder's account (excluding for this purpose the current month's
accumulated dividends and shares for which certificates have been issued).
When such a check is presented to the Bank for payment, the Bank as the
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 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 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.
DIVIDENDS AND DISTRIBUTIONS
Growth and Income Fund and Capital Appreciation Fund intend to make annual
distributions from net investment income in December and distribute any net
realized capital gains resulting from the Funds' investment activity annually
in December. Total Return Fund intends to make distributions from net
investment income on a quarterly basis in March, June, September and December
and distribute any net realized capital gains resulting from investment
activity annually in December. Tax-Exempt Fund and Global Income Fund intend
to declare and pay dividends monthly and distribute any net realized capital
gains resulting from investment activity annually in December. Government
Securities Fund intends to declare dividends daily and distribute them monthly
and distribute any net realized capital gains resulting from investment
activity annually in December. 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. No
interest will accrue on uncashed distribution checks. The fiscal year of each
of the Funds ends on December 31.
MANAGEMENT
DIRECTORS
The Board of Directors of the Company is responsible for the administration of
the affairs of the Company pursuant to the applicable laws of the state of
Maryland. The Company, pursuant to Maryland's indemnification statute,
provides that neither its officers nor directors will be liable to the Company
or its shareholders for monetary damage for breach of fiduciary duty, except
for willful misfeasance, bad faith, gross negligence or reckless disregard of
duties in the conduct of his or her office.
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INVESTMENT ADVISER
The investment adviser to each Fund is Chubb Asset Managers, Inc., a wholly-
owned subsidiary of The Chubb Corporation. The Chubb Corporation, organized in
1967 as a New Jersey corporation, is a holding company engaged through
subsidiaries in the business of property and casualty insurance on a worldwide
basis, as well as life and health insurance and real estate development. The
Chubb Corporation traces its history back to the formation of Chubb & Son in
1882 and the founding of its principal property and casualty subsidiary,
Federal Insurance Company, in 1901. Today, the Chubb Corporation, a Fortune
500 Company with assets exceeding $ billion, ranks among the nation's top
Stock/Insurance companies by assets and offers insurance and financial
planning tools to clients around the world from branch offices throughout
North and South America, Europe and the Pacific Rim.
The Adviser's principal place of business is 15 Mountain View Road, Warren,
New Jersey 07061. The Adviser is subject to the overall authority of the Board
of Directors of the Company, responsible for the overall investment of each
Fund's portfolio, consistent with each Fund's investment objectives, policies
and restrictions. The Adviser was organized in August 1986 as an investment
adviser and is registered with the Securities and Exchange Commission as such
under the Investment Advisers Act of 1940. The Adviser has served as the
Company's investment adviser since December 1987 and also serves as the sub-
investment manager for the Money Market Portfolio, the Bond Portfolio and the
Growth and Income Portfolio of Chubb America Fund, Inc., an open-end
management investment company organized in 1984. In addition, the principals
of the Adviser, who are also investment personnel of Chubb & Son, Inc.,
currently provide investment advice to and supervision and monitoring of
investment portfolios for The Chubb Corporation and its affiliates, including
general accounts of the insurance affiliates of The Chubb Corporation totaling
$ billion, of which $ billion is invested internationally. In addition,
certain investment personnel employed by the Investment Manager currently
provide advice to other investment portfolios of entities not affiliated with
The Chubb Corporation or its affiliates in their capacity as officers or
directors of certain registered investment advisers not related to the
Adviser.
The following persons are primarily responsible for the day-to-day management
and implementation of the Adviser's investment process for the respective
Funds, (the inception date of each person's responsibility for a Fund and
their business experience for the past five years are indicated
parenthetically): Van Eck/Chubb Government Securities Fund--Ned I. Gerstman,
Senior Vice President; (since December 1989/employed by the Adviser more than
5 years) and Paul Geyer, Assistant Portfolio Manager, Vice President (since
1992/employed by the Adviser more than 5 years); Van Eck/Chubb Growth and
Income Fund and Van Eck/Chubb Total Return Fund--Michael O'Reilly, President
(since December 1987/employed by the Adviser more than 5 years) and Robert
Witkoff, Senior Vice President (since 1988/employed by the Adviser since
1988); Van Eck/Chubb Tax-Exempt Fund--Frederick W. Gaertner, Senior Vice-
President (since December 1987/employed by the Adviser since November 1989,
formerly Vice-President of Salomon Brothers, Inc.); Van Eck/Chubb Capital
Appreciation Fund--Robert Witkoff, Senior Vice President; Van Eck/Chubb Global
Income Fund--Marjorie Raines, Senior Vice President (since /employed by
the Adviser since before 1987), Roger Brookhouse, Senior Vice President (since
/employed by the Adviser since 1995 and President and Chief Investment
Officer, Chubb Investment Services Limited, a subsidiary of Chubb Corporation,
since 1993, previously Managing Director of Credit Suisse Asset Management
Ltd. London 1990) and Emma Fishwick, Director Chubb Investment Services
Limited, since 1997 (employed by the Adviser since 1997).
Each Fund pays a monthly advisory fee at the annual rate of 0.20% of the first
$200 million of the average daily net assets of each Fund, 0.19% of the next
$1.1 billion of the average daily net assets of each Fund and 0.18% of the
average daily net assets of each Fund in excess of $1.3 billion.
ADMINISTRATOR
Van Eck Associates Corporation, 99 Park Avenue, New York, New York 10016,
serves as administrator to each of the Funds pursuant to an Administration
Agreement with the Company. The Administrator is responsible for providing
administrative and accounting functions to the Funds, including certain legal,
accounting, regulatory and compliance services, state registration services,
corporate secretary and board of directors administration, tax compliance
services and reporting. Each Fund pays the Administrator a monthly fee at the
annual rate of 0.45% of the first $200 million of the average daily net assets
of each Fund,
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0.41% of the next $1.1 billion of the average daily net asset of each Fund and
0.37% of the average daily net assets of each Fund in excess of $1.3
billion.
The Administrator acts as investment adviser or sub-investment adviser to
other registered investment companies and manages or advises managers of
portfolios of pension plans and others. Total assets under management of Van
Eck Associates Corporation at December 31, 1997 were approximately $1.5
billion. John C. van Eck, Chairman and a director of the Company, and members
of this immediate family, own 100% of the voting stock of Van Eck Associates
Corporation.
EXPENSES
In addition to the fees described above, the Company is responsible for
certain expenses relating to the Company's operations which are not expressly
assumed by the Adviser, the Administrator or the Distributor, including:
legal, accounting, transfer agent, custodian and auditing fees; taxes;
portfolio valuation expenses; and preparing, printing, and distributing
Prospectuses, Statements of Additional Information, and shareholder
communications and reports, and other expenses. The Company's expenses are
deducted from total income before dividends are paid.
Pursuant to an agreement dated as of January 25, 1991 ("Expense Limitation
Agreement") between the Company, Chubb Life, the Adviser, Chubb Investment
Advisory Corporation, the Funds' investment administrator until September 30,
1997 ("CIAC") and Chubb Securities Corporation, the Funds' distributor until
September 30, 1997 ("CSC"), one or more of these entities has waived fees or
assumed expenses for one or more Funds. For the fiscal year ended December 31,
1996 CIAC accepted a reduced fee of 0.25% of the average daily net assets of
the Government Securities Fund, Tax-Exempt Fund, and Capital Appreciation
Fund; a reduced fee of 0.35% of the average daily net assets of the Total
Return and the Growth and Income Fund and a fee of 0.45% of the average daily
net assets of the Global Income Fund. For the period from January 1, 1995 to
August 31, 1995, CSC waived any amount of its Rule 12b-1 Plan fees in excess
of 0.20% of the average daily net asset value of the Total Return Fund, the
Growth and Income Fund, the Government Securities Fund and the Tax-Exempt Fund
and 0.15%. For the period September 1, 1995 through December 31, 1996, CSC
waived its 12b-1 fees in excess 0.25% of the average daily net assets of the
Total Return Fund; Growth and Income Fund; Capital Appreciation Fund; and
Global Income Fund; and 0.20% of the average daily net assets of the
Government Securities Fund and Tax-Exempt Fund. For the fiscal year ended
December 31, 1996, pursuant to the Expense Limitation Agreement, Chubb Life
assumed a portion of certain additional expenses of the Company. For the year
ending December 31, 1997, the rates of net expenses borne by the Funds were
limited to 1.35% of the average daily net assets of the Global Income Fund;
1.25% of the average daily net assets of the Total Return Fund, the Growth and
Income Fund, and the Capital Appreciation Fund; and 1.00% of the average daily
net assets of the Government Securities Fund and the Tax Exempt Fund. For that
period, the Adviser, the Administrator, the Distributor, CIAC and CSC waived
all or a portion of their fees. In addition, Chubb Life and the Administrator
assumed a portion of all other expenses.
PLAN OF DISTRIBUTION
The Company may pay directly for a portion of the distribution expense of the
Company pursuant to the Plans of Distribution adopted for the Funds pursuant
to Rule 12b-1 (the "Plan") under the Act. Under the Plan, the Company will pay
the lesser of actual distribution expenses incurred under the Plan, as
determined by the Board of Directors of the Company, or 0.50% per annum of the
net asset value of each Fund. The Rule 12b-1 expense is accrued daily and paid
quarterly in arrears. These Rule 12b-1 expenses include (i) payments to the
Distributor and to securities dealers and others engaged in the sale of
shares, (ii) payments of compensation to and expenses of personnel who engage
in or support distribution of shares or who render shareholder support
services not otherwise provided by the Company's transfer agent, including
responding to inquiries regarding the Company, (iii) formulation and
implementation of marketing and promotional activities, (iv) preparation,
printing and distribution of sales literature, prospectuses, and statements of
additional information for recipients other than existing shareholders, and
(v) obtaining such information, analyses and reports with respect to marketing
and promotional activities as the Company may, from time to time, deem
advisable.
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The Board of Directors has determined that the maximum amount payable under
the Plan should be allocated so that (1) 0.25% per annum of the net assets of
each Fund will be used to finance sales or promotional activities and will be
considered to be an asset-based sales charge and (2) 0.25% per annum of the
net assets of each Fund will be paid to securities dealers and others as a
service fee. No payment of service fees under the Plan will be made to a
securities dealer unless that dealer has sold shares of the Company that are
then outstanding for a minimum of 12 months and that are valued in excess of
$1,000,000. The National Association of Securities Dealers Inc. rules may
limit the amount payable under the Plan.
For the fiscal year ended December 31, 1997, the Company paid $ in Rule
12b-1 expenses under the terms of the Plan then in effect covering Class A
Shares. The Distributor waived payment of distribution fees for the fiscal
year ended December 31, 1997 in excess of 0. % of the average daily net assets
of the Total Return Fund, the Growth and Income Fund, the Capital Appreciation
Fund, and Global Income Fund; and 0. % of the average daily net assets of the
Government Securities Fund and the Tax-Exempt Fund.
As required under Rule 12b-1, the Plans were approved by the Company's Board
of Directors, including a majority of the directors who are not interested
persons of the Company and who have no direct or indirect financial interest
in the operation of the Plan or any agreement relating thereto, and the Plan
for the Class A shares was approved by the shareholders of the respective
Funds. The Board of Directors has determined that there is a reasonable
likelihood that the Plan will benefit each Fund and its shareholders, although
it is possible that the Rule 12b-1 expenses paid by one Fund may, to a certain
extent, benefit another Fund.
ADVERTISING
From time to time, the Funds may use various media to advertise performance.
Past performance is not necessarily indicative of future performance.
Global Income Fund may advertise performance in terms of 30-day yield, which
is computed by dividing the net investment income per share earned during the
30 days by the maximum offering price per share on the last day of the period.
Yield of the Fund is a function of the kind and quality of the instruments in
the Fund's portfolio, portfolio maturity, operating expenses and market
conditions.
All Funds may advertise performance in terms of average annual total return,
which is computed by finding the average annual compounded rates of return
over a period that would equate the initial amount invested to the ending
redeemable value. The calculation assumes the maximum sales charge is deducted
from the initial $1,000 payment and assumes all dividends and distributions by
the Funds are reinvested on the reinvestment dates during the period, and
includes all recurring fees that are charged to all shareholder accounts. In
addition, these Funds may advertise aggregate total return for a specified
period of time which is determined by ascertaining the percentage change in
the net asset value of shares of a Fund initially purchased assuming
reinvestment of dividends and capital gains distributions on such shares
without giving effect to the length of time of the investment. Sales loads and
other non-recurring expenses may be excluded from the calculation of rates of
return with the result that such rates may be higher than if such expenses and
sales loads were included. All other fees will be included in the calculation
of rates of return. Performance of the Funds is computed separately for each
Class.
The Funds may quote performance results from recognized services and
publications which monitor the performance of mutual funds and the Funds may
compare their performance to various published historical indices. These
include market, economic and performance data and indices. For example, the
Funds may quote Morningstar ratings; market performance of the S&P 500; the
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. Capital Appreciation Fund is rated in
the category; Global Income Fund is rated in the category;
Government Securities Fund is rated in the category;
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Growth and Income Fund is rated in the category; Tax-Exempt Fund is rated
in the category; and Total Return Fund is rated in the category.
Capital Appreciation Fund may be compared to the S&P 500 Index or the Lipper
Mid Cap Fund Index. Global Income Fund may be compared to Salomon Smith Barney
World Government Bond Index. Government Securities Fund may be compared to the
Lehman Brothers Government Bond Index or the Lipper General US Government Bond
Index. Growth and Income Fund may be compared to the S&P 500 Index and the
Lipper Growth & Income Fund Index. The Tax-Exempt Fund may be compared to the
Lehman Brothers Municipal Bond Index and the Lipper General Municipal Debt
Fund Index. The Total Return Fund may be compared to the S&P 500 Index and the
Lipper Balanced Fund Index. See the Appendix in the Statement of Additional
Information.
TAXES
Each Fund has qualified and intends to continue to qualify as a "regulated
investment company" under the Code and will not pay 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 is likely to qualify for the 70% dividends
received deduction allowable to corporations. If the Funds fulfill certain
requirements, shareholders of these Funds may be able to claim a foreign tax
credit or deduction with respect to certain foreign withholding or other taxes
paid to foreign governments during the year.
It is expected that any dividends paid to shareholders from the Tax-Exempt
Fund will be exempt from Federal income tax to the extent such dividends are
derived from interest earned on municipal securities. Distributions of income
from investments in taxable securities and of capital gains realized by the
Tax- Exempt Fund would be taxable to the shareholder. Income derived from
certain non-essential government issues of tax-exempt securities issued after
August 7, 1986, which securities the Tax-Exempt Fund may purchase from time to
time, may subject certain investors to the alternative minimum tax liability.
In addition, certain social security recipients that receive tax-exempt income
may be required to pay taxes on a portion of their social security benefits.
The Company will inform shareholders of the Tax-Exempt Fund of the character
of their dividends and distributions at the time they are paid, and will
advise such shareholders of the tax status of such distributions and dividends
promptly after the close of each calendar year. The Company anticipates that
substantially all of the dividends paid by the Tax-Exempt Fund will be exempt
from Federal income taxes. Dividends and distributions may be subject to state
and local taxes.
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 US source income.
Currently, the Funds are not required to withhold tax from long-term or
medium-term capital gains distributions paid to non-resident aliens.
The foregoing discussion relates only to generally applicable federal income
tax provisions. Shareholders should consult their own tax advisors regarding
taxes, including state and local taxes, applicable to dividends,
distributions, exchanges and redemptions.
DESCRIPTION OF THE COMPANY
The Company is composed of six funds, five are open-end diversified management
investment companies and one is a non-diversified company. The Company was
incorporated in Maryland on April 27, 1987. The Company issues a separate
series of capital stock for each Fund. In the future, the Company may
establish additional funds. Each share of capital stock when issued will be
fully paid and non-assessable. Each share of capital stock issued with respect
to a Fund has a pro rata interest in the
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assets of that Fund and is entitled to such dividends and distributions of
income belonging to that Fund as are declared by the Board of Directors. Each
share of capital stock is entitled to one vote on all matters submitted to a
vote of all shareholders of the Company, and fractional shares are entitled to
a corresponding fractional vote. Shares of a particular Fund will be voted
separately from shares of the other Funds on matters affecting only that Fund,
including approval of the investment management agreements and changes in the
fundamental investment objectives or restrictions of that Fund. The underlying
assets of each Fund are required to be segregated on the books of account, and
are charged with the liabilities of that particular Fund and a proportionate
share of the general liabilities of the Company based on the average net asset
value of the respective Funds for each quarter. Shareholders of the Company
will not be entitled to preemptive rights or cumulative voting rights. All
shares may be redeemed at any time by the Company.
As a Maryland corporate entity, the Company is not required to hold regular
annual shareholder meetings and, in the normal course, does not expect to hold
such meetings. The Company is, however, required to hold shareholder meetings
for such purposes as, for example: (i) approving certain agreements as
required by the Act; (ii) changing fundamental investment objectives and
restrictions of the Funds; and (iii) filling vacancies on the Board of
Directors in the event that less than a majority of the directors were elected
by shareholders. The Company expects that there will be no meetings of
shareholders for the purpose of electing directors unless and until such time
as less than a majority of the directors holding office have been elected by
shareholders. At such time, the directors then in office will call a
shareholder meeting for the election of directors. In addition, holders of
record of not less than two-thirds of the outstanding shares of the Company
may remove a director from office by a vote cast in person or by proxy at a
shareholder meeting called for that purpose at the request of holders of 10%
or more of the outstanding shares of the Company. The Company has the
obligation to assist in such shareholder communications. Except as set forth
above, directors will continue in office and may appoint successor
directors.
ADDITIONAL INFORMATION
CUSTODIAN
The Custodian of the assets of the Trust is Citibank, .
TRANSFER AGENT
DST Systems, Inc., 210 W. 10th St., 8th Floor, Kansas City, Missouri 64105,
serves as the Funds' transfer agent.
INDEPENDENT ACCOUNTANTS
Ernst & Young L.L.P., 787 Seventh Avenue, New York, New York 10019, provides
audit services, consultation and advice with respect to financial information
in the Company's filings with the Securities and Exchange Commission, consults
with the Company on accounting and financial reporting matters and prepares
the Company's tax returns.
COUNSEL
Goodwin, Procter & Hoar LLP, One Exchange Place, Boston, Massachusetts 02109,
serves as counsel for the Company.
37
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=============================================================================
VAN ECK/CHUBB FUNDS, INC.
99 Park Avenue, New York, New York 10016
Shareholder Services: Toll Free (800) 544-4653
=============================================================================
Van Eck/Chubb Funds, Inc. (the "Company") is a mutual fund consisting of
six series: Van Eck/Chubb Capital Appreciation Fund (Class A and Class B), Van
Eck/Chubb Global Income Fund (Class A and Class B), Van Eck/Chubb Government
Securities Fund (Class A and Class B), Van Eck/Chubb Growth and Income Fund
(Class A and Class B), Van Eck/Chubb Tax-Exempt Fund (Class A and Class B) and
Van Eck/Chubb Total Return Fund (Class A and Class B).
This Statement of Additional Information is not a prospectus but supplements and
should be read in conjunction with the Company's prospectus dated May 1, 1998
(the "Prospectus"). This Statement of Additional Information is incorporated by
reference into the Prospectus. A copy of the Prospectus is available at no
charge upon written or telephone request to the Company at the address or
telephone number above. Shareholders are advised to read and retain this
Statement of Additional Information for future reference.
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
General Information........................................................................2
Investment Objective And Policies Of The Funds.............................................2
Bank Obligations...................................................................2
Commercial Paper...................................................................2
Repurchase Agreements..............................................................2
Reverse Repurchase Agreements......................................................3
Loan Participations and Other Direct Indebtedness..................................3
Options and Futures................................................................4
When-Issued and Delayed Delivery Securities & Forward Commitments 8
Foreign Securities ................................................................9
Depositary Receipts................................................................9
Mortgage-Related Securities .......................................................9
Warrants..........................................................................11
Investment Companies..............................................................11
Investment Restrictions...................................................................11
Investment Advisory Services..............................................................13
The Distributor...........................................................................14
Portfolio Transactions And Brokerage......................................................15
Directors And Officers....................................................................17
Valuation Of Shares.......................................................................19
Exchange Privilege........................................................................20
Tax-Sheltered Retirement Plans............................................................21
Investment Programs.......................................................................23
Taxes.....................................................................................24
Redemptions In Kind.......................................................................26
Performance ..............................................................................27
Additional Information....................................................................28
Financial Statements......................................................................30
Appendix..................................................................................31
</TABLE>
Statement of Additional Information - May 1, 1998
<PAGE>
GENERAL INFORMATION
Van Eck/Chubb Funds, Inc., (the "Company") is comprised of six separate
portfolios (the "Funds"). Five portfolios of the Company are open-end,
diversified management investment companies and one portfolio, Van Eck/Chubb
Global Income Fund, is an open-end non-diversified investment company under the
Investment Company Act of 1940 (the "Act").The Company was incorporated on April
27, 1987 and had no business history prior to its formation. Until September 30,
1997, the name of the Company was Chubb Investment Funds, Inc.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
The investment objectives and policies of each Fund are described in the
Company's Prospectus under the heading "Investment Objectives and Policies" with
each Fund's policies being described specifically under its own sub-heading.
The following information supplements the discussion of investment objectives
and policies for each Fund contained in the Company's Prospectus. Unless
otherwise specified, the investment policies and restrictions of each Fund are
not fundamental policies and may be changed by the Company's Board of Directors
without shareholder approval. Shareholders will be notified prior to any
material change. The investment objectives of each Fund are fundamental policies
and may be changed only with shareholder approval.
BANK OBLIGATIONS
All of the Funds may acquire obligations of banks with total assets of at least
$500,000,000. These include certificates of deposit, bankers' acceptances, and
time deposits, all of which are normally limited to $100,000 per Fund from any
one bank. Certificates of deposit are generally short-term, interest-bearing
negotiable certificates issued by commercial banks or savings and loan
associations against funds deposited in the issuing institution. Bankers'
acceptances are time drafts drawn on a commercial bank by a borrower, usually in
connection with an international commercial transaction (to finance the import,
export, transfer or storage of goods). With a bankers' acceptance, the borrower
is liable for payment as is the bank, which unconditionally guarantees to pay
the draft at its face amount on the maturity date. Most bankers' acceptances
have maturities of six months or less and are traded in secondary markets prior
to maturity. Time deposits are generally short-term, interest-bearing negotiable
obligations issued by commercial banks against funds deposited in the issuing
institutions. None of the Funds will invest in time deposits maturing in more
than seven days.
COMMERCIAL PAPER
All the Funds may invest in commercial paper. Commercial paper involves an
unsecured promissory note issued by a corporation. It is usually sold on a
discount basis and has a maturity at the time of issuance of 9 months or less.
The Funds may invest in commercial paper rated within the three highest
categories by Moody's Investors Services, Inc. ("Moody's"), Standard & Poor's
Corporation ("Standard & Poor's") or other nationally recognized statistical
rating organizations ("NRSROs") or, if not rated, which are of equivalent
investment quality in the judgment of the Adviser.
REPURCHASE AGREEMENTS
All of the Funds may invest in repurchase agreements. A repurchase agreement
customarily obligates the seller, at the time it sells securities to a Fund, to
repurchase the securities at a mutually agreed upon time and price. The total
amount received on repurchase would be calculated to exceed the price paid by
the Fund, reflecting an agreed upon market rate of interest for the period from
the time of the repurchase agreement to the settlement date, and would not
necessarily be related to the interest rate on the underlying securities. The
differences between the total amount to be received upon repurchase of the
securities and the price which was paid by the Fund upon their acquisition is
accrued as interest and is included in the Fund's net income declared as
dividends. The underlying securities will consist of high-quality liquid
securities. The Fund has the right to sell securities subject to repurchase
agreements but would be required to deliver identical securities upon maturity
of the repurchase agreements unless the seller fails to pay the repurchase
price. It is each Fund's intention not to sell securities subject to repurchase
agreements prior to the agreement's maturity.
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<PAGE>
During the holding period of a repurchase agreement, the seller must "mark to
market" the collateral on a daily basis and must provide additional collateral
if the market value of the obligation falls below the repurchase price. If a
Fund acquires a repurchase agreement and then the seller defaults at a time when
the value of the underlying securities is less than the obligation of the
seller, the Company could incur a loss. If the seller defaults or becomes
insolvent, a Fund could realize delays, costs, or a loss in asserting its rights
to the collateral in satisfaction of the seller's repurchase agreement. The Fund
will enter into repurchase agreements only with sellers who are believed by the
Adviser to present minimal credit risks and whose creditworthiness has been
evaluated by the Adviser in accordance with certain guidelines and is subject to
periodic review by the Board of Directors of the Company. Currently, these
guidelines require sellers who are broker-dealers to have a net worth of at
least $25,000,000, although this requirement may be waived by the Board of
Directors of the Company on the recommendation of the Adviser, and sellers who
are banks to have assets of at least $1,000,000,000. The seller also must be
considered by the Adviser to be an institution of impeccable reputation and
integrity, and the Adviser must be acquainted with and satisfied with the
individuals at the seller with whom it deals.
REVERSE REPURCHASE AGREEMENTS
In order to generate additional income the Global Income Fund may engage in
reverse repurchase agreement transactions with banks, broker-dealers and other
financial intermediaries. Reverse repurchase agreements are the same as
repurchase agreements except that the Fund assumes the role of seller/borrower
in the transaction. The Fund will maintain segregated accounts at the custodian
containing liquid, high grade, securities that at all times are equal to its
obligations under the repurchase agreements. The Fund will invest the proceeds
in other money market instruments or repurchase agreements maturing not later
than the expiration of the reverse repurchase agreement. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the repurchase price of the securities.
LOAN PARTICIPATIONS AND OTHER DIRECT INDEBTEDNESS
The Funds may purchase loan participations and other direct indebtedness. In
purchasing a loan participation, the Fund acquires some or all of the interest
of a bank or other lending institution in a loan to a corporate borrower. Many
such loans are secured, although some may be unsecured. Such loans may be in
default at the time of purchase. Loans and other direct indebtedness that are
fully secured offer the Fund more protection than an unsecured loan in the event
non-payment of scheduled interest or principal. However, there is no assurance
that liquidation of collateral from a secured loan or other direct indebtedness
would satisfy the corporate borrower's obligation, or that collateral can be
liquidated.
These loans and other direct indebtedness are made generally to finance internal
growth, mergers, acquisitions, stock repurchases, leveraged buy-outs and other
corporate activities. Such loans and other direct indebtedness loans are
generally made by a syndicate of lending institutions, represented by an agent
lending institution, which has negotiated and structured the loan and is
responsible for collecting interest, principal and other amounts due on its own
behalf and on behalf of the others in the syndicate, and for enforcing its and
their other rights against the borrower. Alternatively such loans and other
direct indebtedness may be structured as a novation, pursuant to which the Fund
would assume all of the rights of the lending institution in a loan, or as an
assignment, pursuant to which the Fund would purchase an assignment of a portion
of a lender's interest in a loan or other direct indebtedness either directly
from the lender or through an intermediary. The Fund may also purchase trade or
other claims against companies, which generally represent money owed by the
company to a supplier of goods or services. These claims may also be purchased
at a time when the company is in default.
Certain of the loan participations and other direct indebtedness acquired by the
Fund may involve revolving credit facilities or other standby financing
commitments which obligate the Fund to pay additional cash on a certain date or
on demand. These commitments may have the effect of requiring the Fund to
increase its investment in a company when the Fund might not otherwise decide to
do so (including at a time when the company's financial condition makes it
unlikely that such amounts will be repaid). To the extent that the Fund is
committed to advance additional funds, it will at all times hold and maintain in
a segregated account cash of high grade debt obligations in an amount sufficient
to meet such commitments.
3
<PAGE>
The Fund's ability to receive payment of principal, interest and other amounts
due in connection with these investments will depend primarily on the financial
condition of the borrower. In selecting the loan participations and other direct
indebtedness which the Fund will purchase, the Adviser will rely upon its own
(and not upon the original lending institution's) credit analysis of the
borrower. As the Fund may be required to rely upon another institution to
collect and pass on to the Fund amounts payable with respect to the loan and
other direct indebtedness, an insolvency, bankruptcy or reorganization of the
lending institution may delay or prevent the Fund from receiving such amounts.
In such cases the Fund will evaluate as well the creditworthiness of the lending
institution and will treat both the borrower and the lending institution as an
"issuer" of the loan participation for purposes of the certain investment
restrictions pertaining to the diversification of the Fund's portfolio
investments. The highly leveraged nature of many such loans and other direct
indebtedness may make such loans especially vulnerable to adverse changes in
economic or market conditions. Investments in such loans and other direct
indebtedness may involve additional risk to the Fund. For example, if a loan or
other direct indebtedness is foreclosed, the Fund could become part owner of any
collateral, and would bear the costs and liabilities associated with owning and
disposing of the collateral. In addition, it is conceivable that under emerging
legal theories of lender liability, the Fund could be held liable as a co-
lender. It is unclear whether loans and other forms of direct indebtedness offer
securities law protections against fraud and misrepresentation. In the absence
of definitive regulatory guidance, the Fund relies on the Adviser's research in
an attempt to avoid situations where fraud and misrepresentation could adversely
affect the Fund. In addition, loan participations and other direct investments
may not be in the form of securities or may be subject to restrictions on
transfer, and only limited opportunities may exist to resell such investments.
As a result, the Fund may be unable to sell such investments at an opportune
time or may have to resell them at less than fair market value. To the extent
that the Adviser determines that such investments are illiquid, the Fund will
include them in the investment limitations above.
OPTIONS AND FUTURES
CALL OPTIONS. All the Funds may write (sell) covered call options which are
traded on national and international securities exchanges to enhance investment
performance or for hedging purposes. A call option is a contract that gives the
holder (buyer) of the option the right to buy (in return for a premium paid),
and the writer of the option (in return for a premium received) the obligation
to sell, the underlying security at a specified price (the exercise price) at
any time before the option expires. A covered call option is a call in which the
writer of the option, for example, owns the underlying security throughout the
option period or has deposited in a separate account with the Company's
custodian liquid high-grade obligations or cash equal in value to the exercise
price of the option.
A Fund will write covered call options both to reduce the risks associated with
certain of its investments and to increase total investment return through the
receipt of premiums. In return for the premium income, the Fund will give up the
opportunity to profit from an increase in the market price of the underlying
security above the exercise price so long as its obligations under the contract
continue, except insofar as the premium represents a profit. Moreover, in
writing the call option, the Fund will retain the risk of loss should the price
of the security decline. The premium is intended to offset that loss in whole or
in part. Unlike the situation in which the Fund owns securities not subject to a
call option, the Fund, in writing call options, must assume that the call may be
exercised at any time prior to the expiration of its obligation as a seller, and
that in such circumstances the net proceeds realized from the sale of the
underlying securities pursuant to the call may be substantially below the
prevailing market price, although it must be at the previously agreed to
exercise price.
A Fund may protect itself from loss due to a decline in value of the underlying
security or from the loss of appreciation due to its rise in value by buying an
identical option, in which case the purchase cost of such option may offset the
premium received for the option previously written. In order to do this, the
Fund makes a "closing purchase transaction" on the purchase of a call option on
the same security with the same exercise price and expiration date as the
covered call option that it has previously written. The Fund will realize a gain
or loss from a closing purchase transaction if the amount paid to purchase a
call option is less or more than the amount received from the sale of the
corresponding call option. Also, because increases in the market price of a call
option will generally reflect increases in the market price of the underlying
security, any loss resulting from the exercise or closing out of a call option
is likely to be offset in whole or in part by unrealized appreciation of the
underlying security owned by the Fund.
4
<PAGE>
There is no assurance that a liquid market will exist for any particular option,
at any particular time, and for some options no market may exist. If a Fund is
unable to effect a closing purchase transaction, a Fund will not sell the
underlying security until the option expires or the Fund delivers the underlying
security upon exercise.
PUT OPTIONS. All the Funds may purchase put options and the Global Income Fund
may also sell covered put options. A Fund may purchase put options on securities
to protect its holdings in an underlying or related security against an
anticipated decline in market value. Such hedge protection is provided only
during the life of the put option. Securities are considered related if their
price movements generally correlate with one another. The purchase of put
options on securities held by a Fund or related to such securities will enable a
Fund to preserve, at least partially, unrealized gains in an appreciated
security in its portfolio without actually selling the security. In addition, a
Fund will continue to receive interest or dividend income on the security. A
Fund may also sell put options it has previously purchased, which could result
in a net gain or loss depending on whether the amount received on the sale is
more or less than the premium and other transaction costs paid on the put option
which was bought.
OPTIONS ON INDEXES. All the Funds may write covered call options and may
purchase put options on appropriate securities indexes for the purpose of
hedging against the risk of unfavorable price movements adversely affecting the
value of a Fund's securities or to enhance income. Unlike a stock option, which
gives the holder the right to purchase or sell a specified stock at a specified
price, an option on a securities index gives the holder the right to receive a
cash settlement amount based upon price movements in the stock market generally
(or in a particular industry or segment of the market represented by the index)
rather than the price movements in individual stocks.
The value of a securities index fluctuates with changes in the market values of
the securities which are contained in the index. For example, some securities
index options are based on a broad market index such as the Standard & Poor's
500 or the NYSE Composite Index, or a narrower market index such as the Standard
& Poor's 100. Indexes may also be based on an industry or market segment such as
the AMEX Oil and Gas Index or the Computer and Business Equipment Index. Options
on stock indexes are traded on exchanges or traded over-the-counter ("OTC
options"). Listed options are third-party contracts (i.e., performance of the
obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates.
The effectiveness of hedging through the purchase or sale of securities index
options will depend upon the extent to which price movements in the portion of
the securities portfolio being hedged correlate with price movements in the
selected securities index. Perfect correlation is not possible because the
securities held or to be acquired by a Fund will not exactly match the
composition of the securities indexes on which options are purchased or written.
In the purchase of securities index options, the principal risk is that the
premium and transaction costs paid by a Fund in purchasing an option will be
lost as a result of unanticipated movements in the price of the securities
comprising the securities index for which the option has been purchased. In
writing securities index options, the principal risks are the inability to
effect closing transactions at favorable prices and the inability to participate
in the appreciation of the underlying securities.
FUTURES TRANSACTIONS. A futures contract is an agreement to buy or sell a
security (or deliver a final cash settlement price, in the case of a contract
relating to an index or otherwise not calling for physical delivery at the end
of trading in the contracts) for a set price in the future. Futures exchanges
and trading in futures is regulated under the Commodity Exchange Act by the
Commodity Futures Trading Commission ("CFTC").
Positions taken in the futures markets are not normally held until delivery or
cash settlement is required, but are instead liquidated through offsetting
transactions which may result in a gain or a loss. A clearing organization
associated with the exchange on which futures are traded assumes responsibility
for closing-out transactions and guarantees that, as between the clearing
members of an exchange, the sale and purchase obligations will be performed with
regard to all positions that remain open at the termination of the contract.
Upon entering into a futures contract, a Fund will be required to deposit with a
futures commission merchant a certain percentage (usually 1% to 5%) of the
futures contracts market value as initial
5
<PAGE>
margin. As a general matter, a Fund may not commit in the aggregate more than 5%
of the market value of its total assets to initial margin deposits on the Fund's
existing futures contracts and premium paid for options on unexpired futures
contracts. Initial margin is in the nature of a performance bond or good faith
deposit on the contract which is returned upon termination of the futures
contract if all contractual obligations have been satisfied. The initial margin
in most cases will consist of cash or United States Government securities.
Subsequent payments, called variation margin, may be made with the futures
commission merchant as a result of marking the contracts to market on a daily
basis as the contract value fluctuates.
FUTURES ON DEBT SECURITIES. A futures contract on a debt security is a binding
contractual commitment which, if held to maturity, will result in an obligation
to make or accept delivery, during a particular future month, of securities
having a standardized face value and rate of return. All of the Funds may buy
and sell futures contracts on debt securities. By purchasing futures on debt
securities -assuming a "long" position - a Fund will legally obligate itself to
accept the future delivery of the underlying security and pay the agreed price.
By selling futures on debt securities - assuming a "short" position - it will
legally obligate itself to make the future delivery of the security against
payment of the agreed price. Open future positions on debt securities will be
valued at the most recent settlement price, unless such price does not appear to
the Adviser to reflect the fair value of the contract, in which case the
positions will be valued by, or under the direction of, the Board of
Directors.
The Funds by hedging through the use of futures on debt securities seek to
establish more certainty with respect to the effective rate of return on their
portfolio securities. A Fund may, for example, take a "short" position in the
futures market by selling contracts for the future delivery of debt securities
held by the Fund (or securities having characteristics similar to those held by
the Fund) in order to hedge against an anticipated rise in interest rates that
would adversely affect the value of the Fund's portfolio securities. When
hedging of this character is successful, any depreciation in the value of
portfolio securities will be substantially offset by appreciation in the value
of the futures position.
On other occasions, a Fund may take a "long" position by purchasing futures on
debt securities. This would be done, for example, when the Fund intends to
purchase particular debt securities, but expects the rate of return available in
the bond market at that time to be less favorable than rates currently available
in the futures markets. If the anticipated rise in the price of the debt
securities contracts should occur (with its concomitant reduction in yield), the
increased cost to the Fund of purchasing the debt securities will be offset, at
least to some extent, by the rise in the value of the futures position in debt
securities taken in anticipation of the subsequent purchase of such debt
securities.
The Fund could accomplish similar results by selling debt securities with long
maturities and investing in debt securities with short maturities when interest
rates are expected to increase or by buying debt securities with long maturities
and selling debt securities with short maturities when interest rates are
expected to decline. However, by using futures contracts as a risk management
technique (to reduce a Fund's exposure to interest rate fluctuations), given the
greater liquidity in the futures market than in the bond market, it might be
possible to accomplish the same result more effectively and perhaps at a lower
cost. See "Limitations on Purchase and Sale of Futures Contracts and Options on
Futures Contracts" below.
INTEREST RATE AND CURRENCY FUTURES CONTRACTS. The Funds may enter into interest
rate or currency futures contracts, including futures contracts on indices of
debt securities, as a hedge against changes in prevailing levels of interest
rates or currency exchange rates in order to establish more definitely the
effective rate of return on securities or currencies held or intended to be
acquired. Hedging may include sales of futures as a hedge against the effect or
expected increases in interest rates or decreases in currency exchange rates,
and purchases of futures as an offset against the effect of expected declines in
interest rates or increases in currency exchange rates.
STOCK INDEX FUTURES CONTRACTS. A stock index futures contract does not require
the physical delivery of securities, but merely provides for profits and losses
resulting from changes in the market value of the futures contract to be
credited or debited at the close of each trading day to the respective accounts
of the parties to the contract. On the contract's expiration date, a final cash
settlement occurs and the futures positions are simply closed out. Changes in
the market value of a particular stock index futures contract reflect changes in
the specified index of equity securities on which the futures contract is based.
The Total Return Fund, the Growth and Income Fund, the Capital Appreciation Fund
and the Global Income Fund may buy and sell stock index futures contracts.
6
<PAGE>
Stock index futures may be used to hedge the equity portion of a Fund's
securities portfolio with regard to market risk (involving the market's
assessment of over-all economic prospects), as distinguished from stock-specific
risk (involving the market's evaluation of the merits of the issuer of a
particular security). By establishing an appropriate "short" position in stock
index futures contracts, a Fund may seek to protect the value of its portfolio
against an overall decline in the market for equity securities. Alternatively,
in anticipation of a generally rising market, a Fund can seek to avoid losing
the benefit of apparently low current prices by establishing a "long" position
in stock index futures contracts and later liquidating that position as
particular equity securities are in fact acquired. To the extent that these
hedging strategies are successful, a Fund will be affected to a lesser degree by
adverse overall market price movements, unrelated to the merits of specific
portfolio equity securities, than would otherwise be the case. See "Limitations
on Purchase and Sale of Futures Contracts and Options on Futures Contracts"
below.
OPTIONS ON FUTURES CONTRACTS. For bona fide hedging purposes, all the Funds may
purchase and the Global Income Fund may sell put options and write call options
on futures contracts. These options are traded on exchanges that are licensed
and regulated by the CFTC for the purpose of options trading. A call option on a
futures contract gives the purchaser the right, in return for the premium paid,
to purchase a futures contract (assume a "long" position) at a specified
exercise price at any time before the option expires. A put option gives the
purchaser the right, in return for the premium paid, to sell a futures contract
(assume a "short" position) at a specified exercise price at any time before the
option expires. Upon the exercise of a call, the writer of the option is
obligated to sell the futures contract (to deliver a "long" position to the
option holder) at the option exercise price, which presumably will be lower than
the current market price of the contract in the futures market. Upon exercise of
a put, the writer of the option is obligated to purchase the futures contract
(to deliver a "short" position to the option holder) at the option exercise
price which presumably will be higher than the current market price of the
contract in the futures market.
When a Fund, as a purchaser of a put option on a futures contract, exercises
such option and assumes a short futures position, its gain will be credited to
its futures variation margin account. Any loss suffered by the writer of the
option of a futures contract will be debited to its futures variation margin
account. However, as with the trading of futures, most participants in the
options markets do not seek to realize their gains or losses by exercise of
their option rights. Instead, the holder of an option usually will realize a
gain or loss by buying or selling an offsetting option at a market price that
will reflect an increase or a decrease from the premium originally paid as
purchaser or required as a writer.
Options on futures contracts can be used by a Fund to hedge the same risks as
might be addressed by the direct purchase or sale of the underlying futures
contracts themselves. Depending on the pricing of the option, compared to either
the futures contract upon which it is based or upon the price of the underlying
securities themselves, it may or may not be less risky than direct ownership of
the futures contract or the underlying securities.
In contrast to a futures transaction, in which only transaction costs are
involved, benefits received by a Fund as a purchaser in an option transaction
will be reduced by the amount of the premium paid as well as by transaction
costs. In the event of an adverse market movement, however, a Fund which
purchased an option will not be subject to a risk of loss on the option
transaction beyond the price of the premium it paid plus its transaction costs,
and may consequently benefit from a favorable movement in the value of its
portfolio securities that would have been more completely offset if the hedge
had been effected through the use of futures contracts.
If a Fund writes call options on futures contracts, the Fund will receive a
premium but will assume a risk of adverse movement in the price of the
underlying futures contract comparable to that involved in holding a futures
position. If the option is not exercised, the Fund will realize a gain in the
amount of the premium, which may partially offset unfavorable changes in the
value of securities held by, or to be acquired for, the Fund. If the option is
exercised, the Fund will incur a loss in the option transaction, which will be
reduced by the amount of the premium it has received, but which may be partially
offset by favorable changes in the value of its portfolio securities.
While the purchaser or writer of an option on a futures contract may normally
terminate its position by selling or purchasing an offsetting option of the same
series, a Fund's ability to establish and close out options positions at fairly
established prices will be subject to the existence of a liquid market. The
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<PAGE>
Funds will not purchase or write options on futures contracts unless, in the
Adviser's opinion, the market for such options has sufficient liquidity that the
risks associated with such options transactions are not at unacceptable levels.
FOREIGN CURRENCY EXCHANGE CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES. In order
to hedge against foreign currency exchange rate risks, the Funds may enter into
forward currency exchange contracts ("forward currency contracts"), as well as
purchase put or call options on foreign currencies. A forward currency contract
is an obligation to purchase or sell a specific currency for an agreed price at
a future date which is individually negotiated and privately traded by currency
traders and their customers. In addition, for hedging purposes and to duplicate
a cash market transaction, the Global Income Fund may enter into foreign
currency futures contracts. The Global Income Fund may also conduct their
foreign currency exchange transactions on a spot (i.e., cash) basis at the spot
rate prevailing in the currency exchange market.
LIMITATIONS ON PURCHASE AND SALE OF FUTURES CONTRACTS AND OPTIONS ON FUTURES
CONTRACTS. The Funds will engage in transactions in futures contracts and
related options for bona fide hedging purposes and not for speculation. The
Global Income Fund may engage in futures, options and currency transactions for
investment purposes. The Funds may not purchase or sell futures contracts or
related options if immediately thereafter the sum of the amounts of initial
margin deposits on a Fund's existing futures contracts and premiums paid for
unexpired options on futures contracts would exceed 5% of the value of the
Fund's total assets; provided, however, that in the case of an option that is
"in-money" at the time of purchase, the "in-money" amount may be excluded in
calculating the 5% limitation. In instances involving the purchase or sale of
futures contracts or the writing of covered call options thereon by a Fund, such
positions will always be "covered", as appropriate, by, for example, (i) an
amount of cash and cash equivalents, equal to the market value of the futures
contracts purchased or sold and options written thereon (less any related margin
deposits), deposited in a segregated account with its custodian or (ii) by
owning the instruments underlying the futures contract sold (i.e., short futures
positions) or option written thereon or by holding a separate option permitting
the Fund to purchase or sell the same futures contract or option at the same
strike price or better.
Positions in futures contracts may be closed but only on an exchange or a board
of trade which provides the market for such futures. Although the Funds intend
to purchase or sell futures only on exchanges or boards of trade where there
appears to be an active market, there is no guarantee that such will exist for
any particular contract or at any particular time. If there is not a liquid
market at a particular time, it may not be possible to close a futures position
at such time, and, in the event of adverse price movements, a Fund would
continue to be required to make daily cash payments of variation margin.
Consequently, where a liquid secondary market does not exist, the Fund will be
unable to control losses from such futures contracts by closing out its
positions.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS
The Funds may make contracts to buy securities for a fixed price at a future
date beyond customary settlement time. When such transactions are negotiated,
the price is fixed at the time of commitment but delivery and payment for the
securities can take place up to three months after the date of commitment to
purchase. Such agreements involve a risk of loss if the value of the security to
be purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Government Securities Fund, Tax-Exempt Fund
or Global Income Fund's other assets. Where such purchases are made through
dealers, the Fund relies on the dealer to consummate the sale. The dealer's
failure to do so may result in the loss to the Fund of an advantageous yield or
price. Although the Fund will generally enter into forward commitments with the
intention of acquiring securities for its portfolio or for delivery pursuant to
options contracts it has entered into, the Fund may dispose of a commitment
prior to settlement if the Adviser deems it appropriate to do so. The Fund
holds, and maintains until the settlement date in a segregated account, cash or
high-grade obligations in an amount sufficient to meet the purchase price of its
total commitments for forward commitment securities. The Fund may realize short-
term profits or losses upon the sale of such forward commitment contracts.
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FOREIGN SECURITIES
The Growth and Income Fund, the Total Return Fund and the Capital Appreciation
Fund may invest in and hold securities of foreign issuers in an amount, which
together with investments in Depositary Receipts, American Depositary Receipts
("ADRs") European Depositary Receipts ("EDRs") and Global Depositary Receipts
("GDRs") will not exceed 20% of the Fund's total assets. The Global Income Fund
has an unlimited right to invest and hold foreign securities. For purposes
hereof, securities of foreign issuers means securities of issuers organized or
whose principal place of business is outside the United States, or whose
securities are principally traded in securities markets outside the United
States.
Investment in foreign securities may involve the following special
considerations: with respect to foreign denominated securities, the risk of
fluctuating exchange rates; restrictions on and costs associated with the
exchange of currencies; the fact that foreign securities and markets are not as
liquid as their domestic counterparts; the imposition of exchange control
restrictions; and the possibility of economic or political instability. Also,
issuers of foreign securities are subject to different and, in some cases, less
comprehensive and non-uniform accounting, reporting and disclosure requirements
than domestic issuers, and settlement of transactions with respect to foreign
securities may be sometimes delayed beyond periods customary in the United
States. Foreign securities also generally have higher brokerage and custodial
costs than those of domestic securities. As a result, the selection of
investments in foreign issues may be more difficult and subject to greater risks
than investments in domestic issues. Since the Growth and Income Fund, the Total
Return Fund, the Capital Appreciation Fund and the Global Income Fund may invest
in businesses located in foreign nations, there is the possibility of
expropriation or confiscatory taxation, political or social instability or
diplomatic developments which could affect investments in those nations and
there may be more difficulty in obtaining and enforcing a court judgment abroad.
The Adviser will consider these and other factors before investing in particular
securities of foreign issuers and will not make such investments unless, in its
opinion, such investments will comply with the policies and meet the objectives
of the Growth and Income Fund, the Total Return Fund, the Capital Appreciation
Fund and the Global Income Fund. Also, the Board of Directors will monitor all
foreign custody arrangements to ensure compliance with the Act and the rules
thereunder, and will review and approve, at least annually, the continuance of
such arrangements as is consistent with the best interests of the Company and
its shareholders.
DEPOSITARY RECEIPTS
The Growth and Income Fund, the Total Return Fund, the Capital Appreciation Fund
and the Global Income Fund may invest in "ADRs," "GDRs," and EDRs",(collectively
"Depositary Receipts") which, with the exception of the Global Income Fund,
together with investment in securities of foreign issuers, will not exceed 20%
of the Fund's total assets. ADRs are certificates issued by a United States bank
representing the right to receive securities of a foreign issuer deposited in a
foreign branch of a United States bank and traded on a United States exchange or
over-the-counter. There are no fees imposed on the purchase or sale of ADRs when
purchased from the issuing bank in the initial underwriting, although the
issuing bank may impose charges for the collection of dividends and the
conversion of ADRs into the underlying ordinary shares. Brokerage commissions
will be incurred if ADRs are purchased through brokers on the domestic stock
exchanges. Investments in ADRs have advantages over direct investments in the
underlying foreign securities, including the following: they are more liquid
investments, they are United States dollar-denominated, they are easily
transferable, and market quotations for such securities are readily available.
The risks associated with ownership of Depositary Receipts are the same as those
associated with investments in foreign securities except there is no currency
risk.
MORTGAGE-RELATED SECURITIES
Government National Mortgage Association ("GNMA") certificates are mortgage
pass-through securities representing part ownership of a pool of mortgage loans.
These loans, issued by lenders such as mortgage bankers, commercial banks, and
savings and loan associations, are either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration. A "pool" or group
of such mortgages is assembled and, after being approved by GNMA, is offered to
investors through securities dealers. Once approved by GNMA, the timely payment
of interest and principal on each
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mortgage is guaranteed by GNMA and backed by the full faith and credit of the
United States Treasury. GNMA certificates differ from bonds in that principal is
paid back monthly by the borrower over the term of the loan rather than returned
in a lump sum at maturity. GNMA certificates are called "pass-through"
securities because both interest and principal payments (including prepayments)
are passed through to the holder of the certificate.
In addition to GNMA certificates, the Government Securities Fund and Global
Income Fund may invest in mortgage pass-through securities issued by Federal
National Mortgage Association ("FNMA") and by Federal Home Loan Mortgage
Corporation ("FHLMC"). FNMA, a federally chartered and privately-owned
corporation, issues mortgage-backed pass-through securities which are guaranteed
as to timely payment of principal and interest by FNMA. FHLMC, a corporate
instrumentality of the United States whose stock is owned by the Federal Home
Loan Banks, issues two types of pass-through securities: mortgage participation
certificates ("PCs") and guaranteed mortgage certificates ("GMCs"). Both PCs and
GMCs represent an undivided interest in a pool of conventional mortgages from
FHLMC's portfolio. With respect to PCs, FHLMC guarantees the timely payment of
interest and the ultimate collection of principal. With respect to GMCs, FHLMC
guarantees that these securities will pay interest semi-annually and return
principal annually in a guaranteed minimum amount. Securities guaranteed by FNMA
and FHLMC are not backed by the full faith and credit of the United States
Treasury. If either fixed or variable rate pass-through securities issued by the
United States Government or its agencies or instrumentalities are developed in
the future, the Funds reserve the right to invest in them.
The Government Securities Fund and the Global Income Fund may also invest in
other types of mortgage-related securities issued by governmental entities.
These other instruments include collateralized mortgage obligations
("CMOs"),mortgage-backed bonds and real estate mortgage investment conduits
("REMICs"). However, the Government Securities Fund and the Global Income Fund
will not invest in residual interests of REMICs or CMOs due to the volatile
nature of such instruments. CMOs are obligations fully collateralized directly
or indirectly by a pool of mortgages on which payment of principal and interest
are passed through to the holders of CMOs on the same schedule as they are
received, although not necessarily on a pro rata basis.
Mortgage-backed bonds are direct obligations of their issuers, payable out of
the issuers' general funds and fully collateralized directly or indirectly by a
pool of mortgage loans. The mortgages serve as collateral for the issuer's
payment obligations on the mortgage-backed bonds, but interest and principal
payments on the mortgages are not passed through directly (as with GNMA
certificates and FNMA and FHLMC pass-through securities) or on a modified basis
(as with CMOs). Accordingly, a change in the rate of prepayments on the pool of
mortgages could change the effective maturity of a CMO but not the effective
maturity of a mortgage-backed bond (although, like many bonds, mortgage-backed
bonds may be callable by the issuer prior to maturity).
REMICs were created through provisions in the Tax Reform Act of 1986 in order to
clarify certain ambiguities concerning the tax treatment of mortgage related
securities. A REMIC is an entity that holds a fixed pool of mortgages and issues
multiple classes of interests. If an issuer elects to come under the REMIC
provisions, its sale of "REMIC securities" will be treated as the sale of the
mortgages for tax purposes, regardless of whether such securities are issued in
the form of pass-throughs or collateralized debt and regardless of the financial
accounting treatment used. Investors in REMICs may purchase two types of REMIC
securities: (i) "regular interests", which have the characteristics of pass-
throughs or CMOs (i.e., fixed interest and principal), or (ii) "residual
interests", the value of which are affected by mortgage prepayments or other
contingencies. Again, the Government Securities Fund and Global Income Fund will
not invest in any residual interests of REMICs or CMOs.
In reliance on an SEC interpretation of the Act, the Company's investments in
certain qualifying CMOs, including CMOs that have elected to be treated as
REMICs, are not subject to the Act's limitation on acquiring interests in other
investment companies. In order to be able to rely on the SEC's interpretation,
the CMOs and REMICs must be unmanaged, fixed-asset issuers that (i) invest
primarily in mortgage-related securities, (ii) do not issue redeemable
securities, (iii) operate under general exemptive orders exempting them from all
provisions of the Act, and (iv) are not registered or regulated under the Act as
investment companies. To the extent that a Fund selects CMOs or REMICs that do
not meet the above requirements, the Fund may not invest more than 10% of its
assets in all such entities and may not acquire more than 3% of the voting
securities of any single such entity.
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Prepayment of mortgages underlying mortgage-backed securities may reduce their
current yield and total return. Mortgage-related securities may not be an
effective means of "locking-in" long-term interest rates because of the need to
invest and reinvest scheduled and unscheduled principal payments. At the time
principal payments or prepayments are received by the Fund and reinvested,
prevailing interest rates may be higher or lower than the Fund's current yield.
However, the Investment Manager intends to invest in these securities only when
the potential benefits to a Fund are deemed to outweigh the risks. Like other
bond investments, the value of mortgage-related securities will tend to rise
when interest rates fall, and fall when rates rise. Their value may also change
because of changes in the market's perception of the creditworthiness of the
organization that issued or guaranteed them or changes in the value of the
underlying mortgages. In addition, the mortgage securities market in general may
be adversely affected by changes in governmental regulation or tax policies.
WARRANTS
All the Funds may invest in warrants, which are rights to buy certain securities
at set prices during specified time periods. If, prior to the expiration date,
the Fund is not able to exercise a warrant at a cost lower than the underlying
securities, the Fund will suffer a loss of its entire investment in the warrant.
See investment restriction 18 for additional limitations on the use of warrants.
INVESTMENT COMPANIES
All the Funds may, subject to their respective investment restrictions, under
certain circumstances acquire the securities of other open-end and closed-end
investment companies. Such investments often result in duplicate fees and
expenses.
INVESTMENT RESTRICTIONS
Each Fund has adopted the following restrictions relating to the investments of
each Fund. The investment restrictions numbered 1 through 7, 10 and 13 are
fundamental policies of each Fund and may not be changed without approval of a
majority of the outstanding shares of each affected Fund. Each restriction
applies to each Fund of the Company, unless otherwise indicated. A change in
policy affecting only one Fund may be effected with the approval of a majority
of the outstanding shares of that Fund only. (As used in the Prospectus and this
Statement of Additional Information, the term "majority of the outstanding
voting shares" means the lesser of (1) 67% of the shares represented at a
meeting of which more than 50% of the outstanding share are represented or (2)
more than 50% of the outstanding shares.) All other investment restrictions are
operating policies and are subject to change by the Company's Board of Directors
without shareholder approval. No investment restriction which involves a maximum
percentage of securities or assets will be considered to be violated unless the
excess over the percentage occurs immediately after and is caused by an
acquisition or borrowing of securities or assets by the Fund. A Fund will not:
1. Issue securities senior to its common stock, except to the extent that
permissible borrowings may be so construed. For purposes hereof, writing covered
call options and entering into futures contracts, to the extent permitted by
restrictions 8 and 10 below, shall not involve the issuance of senior securities
or borrowings.
2. Buy securities on margin, except that it may: (a) obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities, and (b) make margin deposits in connection with futures contracts,
subject to restrictions 10 and 11 below.
3 Borrow money, except each Fund may, as a temporary measure for extraordinary
or emergency purposes, including to cover net redemptions, and not for
investment purposes, borrow from banks and then only in amounts not exceeding 5%
of its total assets. In addition, no Fund may pledge, mortgage or hypothecate
its assets except in connection with permissible borrowings and then only in
amounts not exceeding 10% of the value of its total assets. A Fund will not
pledge, mortgage or hypothecate its assets to the extent that at any time the
percentage of pledged assets plus the sales commission will exceed 10% of the
value of its total assets. This restriction will not prevent a Fund from (a)
purchasing securities on a "forward commitment", "delayed delivery" or "when-
issued" basis or (b) entering into futures contracts as set forth below in
restriction 10 or as regards the Global Income Fund entering into reverse
repurchase agreements, provided that a segregated account consisting of cash or
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liquid high grade debt securities in an amount equal to the total value of the
securities underlying such agreement is established and maintained.
4. Act as an underwriter of securities of other issuers except to the
extent that it may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 (a) in reselling securities, such as restricted
securities, acquired in private transactions and subsequently registered under
the Securities Act of 1933, and (b) in connection with the purchase of
government securities directly from the issuer, or (c) with respect to the
Capital Appreciation Fund and Global Income Fund, except to the extent that the
disposition of a security may technically cause it to be considered an
underwriter as that term is defined under the Securities Act of 1933.
5. Invest 25% or more of the value of the total assets of any Fund, except
the Global Income Fund, in securities of issuers having their principal business
activities in the same industry. This restriction also shall not apply to: (i)
securities issued or guaranteed by the United States Government, its agents or
instrumentalities and (ii) tax-exempt securities issued by governments or
political subdivisions of governments. For purposes of this restriction
industrial development bonds issued by non-governmental issuers will not be
considered to be tax-exempt securities.
6. Invest in real estate, although the Funds may buy securities of companies
which deal in real estate, and securities which are secured by readily
marketable interests in real estate, including interests in real estate
investment trusts, real estate limited partnerships, real estate investment
conduits or mortgage related instruments issued or backed by the United States
Government, its agencies or its instrumentalities.
7. Make loans, except the Funds may: (a) purchase bonds, debentures, notes
and other debt obligations customarily either publicly distributed or
distributed privately to institutional investors and within the limits imposed
on the acquisition of restricted securities set forth in restriction 11, and (b)
enter into repurchase agreements with respect to its portfolio securities.
8. Write options, except that all the Funds may write covered call options,
and the Global Income Fund may write put options, provided that as a result of
such sale, a Fund's securities covering all call options or subject to put
options would not exceed 25% of the value of the Fund's total assets.
9. Purchase options, except that all the Funds may purchase put options and
the Global Income Fund may purchase put and call options provided that the
total premiums paid for such outstanding options owned by a Fund does not exceed
5% of its total assets. No Fund, except the Global Income Fund, may write put
options on securities other than to close out previously purchased put options.
10. Enter into commodity contracts, except that all the Funds may enter into
financial futures contracts and the Global Income Fund may also enter into
foreign currency hedging contracts and stock index futures contracts if,
immediately thereafter: (a) the total of the initial margin deposits required
with respect to all open futures positions at the time such positions were
established, plus the sum of the premiums paid for all unexpired options on
futures contracts would not exceed 5% of the value of a Fund's total assets, and
(b) a segregate account consisting of cash or liquid high-grade debt securities
in an amount equal to the total market value of any futures contract purchased
by a Fund, less the amount of any initial margin, is established.
11. Invest more than 10%, or in the case of the Global Income Fund and Capital
Appreciation Fund 15%, of the net asset value of any Fund in securities which
are not readily marketable, such as repurchase agreements having a maturity of
more than 7 days, restricted securities, time deposits with maturities of more
than 7 days, and other securities which are not otherwise readily marketable,
provided, however, that the Global Income Fund and Capital Appreciation Fund may
invest without limitation in restricted securities issued under Rule 144A of the
Securities Act of 1933 provided the Board of Directors or the Adviser under the
direction of the Board of Directors has determined that each such security is
liquid.
12. Investe more than 10% of the value of its total assets in securities of
other open-end and closed end investment companies, except by purchases in the
open market involving only customary broker's commissions or as part of a
merger, consolidation, or acquisition, or as otherwise permitted by the Act and
rules thereunder.
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13. Except with respect to the Global Income Fund, make an investment unless,
when considering all its other investments, 75% of the value of the Fund's total
assets would consist of cash, cash items, United States Government securities,
securities of other investment companies, and other securities. For purposes of
this restriction, the purchase of "other securities" is limited so that (a) no
more than 5% of the value of the Fund's total assets would be invested in any
one issuer and (b) no more than 10% of the issuer's outstanding voting
securities would be held by the Company. As a matter of operating policy, the
Company will not consider repurchase agreements to be subject to this 5%
limitation if all the collateral underlying the repurchase agreements are United
States Government Securities.
14. Enter into a repurchase agreement with Chubb Life Insurance Company of
America ("Chubb Life"), The Chubb Corporation, or a subsidiary of either such
corporation.
15. 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 management may be combined or allocated between the Fund and such
account.
16. Invest in companies for the sole purpose of exercising control or
management.
17. Invest in interests, other than debentures or equity stock interests, in
oil and gas or other mineral exploration or development programs.
18. Invest more than 5% of the value of the total assets of the Fund in
warrants, whether or not the warrants are listed on the New York or American
Stock Exchanges. Warrants acquired in units or attached to securities are not
included in this restriction.
19. Invest in securities of foreign issuers, except that the Total Return
Fund, the Growth and Income Fund and the Capital Appreciation Fund may invest up
to 20% of the value of their total assets in securities of foreign issuers
including ADRs. The Global Income Fund may invest an unlimited percentage of its
assets in securities of foreign issuers, developed or undeveloped, or whether
listed on an exchange or unlisted.
20. Invest in securities of any issuer if the officers and directors of the
Company or the Adviser or Administrator own individually more than 1/2 of 1% of
such issuer's securities or together own more than 5% of such issuer's
securities.
21. Effect short sales of securities, except short sales against the
box.
INVESTMENT ADVISORY SERVICES
Investment Management And Administration
The Company has entered into an Investment Management Agreement with respect to
each Fund with Chubb Asset Managers, Inc. (the "Adviser") and Chubb Investment
Advisory Corporation, the investment administrator to the Funds prior to October
1, 1997 ("CIAC"), pursuant to which the Adviser serves as investment adviser to
the Funds. Under the terms of the agreements, the Adviser, subject to review by
the Company's Board of Directors, has the day-to-day responsibility for making
decisions to buy, sell, or hold any particular security for all the Funds. See
"MANAGEMENT" in the Prospectus.
The agreements for the Government Securities Fund, Growth and Income Fund, Tax-
Exempt Fund and Total Return Fund were approved by a majority of the
shareholders of the appropriate Fund at the meeting of shareholders held April
21, 1988. The agreements for the Capital Appreciation Fund and Global Income
Fund were approved by the appropriate Fund at a meeting of shareholders held
August 31, 1995. The term of each agreement is one year, but it will continue in
effect from year to year if approved at least annually by a vote of a majority
of the Board of Directors of the Company (including a majority of the directors
who are not parties to the contract or interested persons of any such parties)
cast in person at a meeting called for the purpose of voting on such renewal, or
by the vote of a majority of the outstanding shares of a Fund. The agreements
may be terminated, without the payment of any penalty, by any party, by the vote
of the Board of Directors, or by vote of a majority of the outstanding shares of
a Fund, on 60 days written notice to the Adviser, or automatically in the event
of an assignment.
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The Company has entered into an Administration Agreement dated October 1, 1997
with respect to all of the Funds with Van Eck Associates Corporation (the
"Administrator"), pursuant to which the Administrator, subject to review by the
Company's Board of Directors, is responsible for providing administrative and
accounting functions to the Funds, including certain legal, accounting,
regulatory and compliance services, state registration services, corporate
secretary and board of directors administration, tax compliance services and
reporting. The agreement may be terminated, without the payment of any penalty,
by any party, by the vote of the Board of Directors, or by vote of a majority of
the outstanding shares of a Fund, on 60 days written notice to the
Administrator, or automatically in the event of an assignment.
For providing investment advisory, management, and administrative services to
the Fund, the Adviser and the Administrator are, and until September 30, 1997
CIAC was, entitled to receive monthly compensation based on a percentage of the
average net asset value of each Fund as described more fully under "MANAGEMENT"
in the Prospectus. For the years ended December 31, 1995 and 1996, no such fees
were paid to the Adviser. For the year ended December 31, 1997, ___________.
For the year ended December 31, 1995, the Company paid $33,954, $49,091,
$36,807, $61,946, $1,021 and $12,003 to CIAC for the Government Securities Fund,
the Total Return Fund, the Tax-Exempt Fund, the Growth and Income Fund, Capital
Appreciation Fund and Global Income Fund, respectively. For the year ended
December 31, 1996 the Company paid $33,818, $92,989, $38,966, $120,560, $9,401,
and $51,455 to CIAC for the Government Securities Fund, the Total Return Fund,
the Tax Exempt Fund, the Growth and Income Fund, the Capital Appreciation Fund
and the Global Income Fund, respectively. For the period January 1 to September
30, 1997, the Company paid $_______________ to CIAC. For the period October 1 to
December 31, 1997, the Company paid $___________________ to the
Administrator.
THE DISTRIBUTOR
Van Eck Securities Corporation (the "Distributor"), a wholly-owned subsidiary of
the Administrator, serves as distributor of the shares of each of the Funds
pursuant to a Distribution Agreement dated October 1, 1997, approved by action
of the Board of Directors at a meeting held on October 1, 1997. Prior to that
date, Chubb Securities Corporation ("CSC") was the distributor of the Funds'
shares.
Under the terms of the Distribution Agreement, the Distributor will use its best
efforts to distribute the Company's shares among investors and broker-dealers
with which it has contracted to sell the Company's shares. The shares are sold
only at the public offering price in effect at the time of the sale ("Offering
Price"), which is determined in the manner set forth in the Prospectus under
"PURCHASE OF SHARES". The Company will receive not less than the full net asset
value of the shares of each Fund sold, which amount is determined in the manner
set forth in this Statement of Additional Information under "DETERMINATION OF
NET ASSET VALUE." The amount between the Offering Price and the net asset value
of each Fund may be retained by the Distributor or it may be reallowed in whole
or in part to broker-dealers effecting sales of the Company's shares. See
"PURCHASE OF SHARES" in the Prospectus.
For the years ended December 31, 1996 and 1995, CSC retained $192,057 and
$102,066, respectively, of sales commissions after reallowance to authorized
persons of $741,540 and $348,575, respectively. For the year ended December 31,
1997, CSC and the Distributor retained $52,474 after reallowance to authorized
persons of $410,124.
The Company pays the costs and expenses incident to registering and qualifying
its shares for sale under the Federal securities laws and under the applicable
state Blue Sky laws of the jurisdictions in which the Distributor desires to
distribute such shares and, pursuant to the Distribution Plan, the costs of
preparing, printing, and distributing prospectuses, reports and other marketing
materials to prospective investors.
The Company has adopted a plan of distribution pursuant to Rule 12b-1 under the
Act as to each Class of its shares ("Distribution Plans"), which provide that
the Company may, directly or indirectly, engage in activities primarily intended
to result in the sale of the Company's shares.
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The maximum expenditure the Company may make under the Distribution Plans will
be the lesser of the actual expenses incurred in distribution related activities
permissible under the Distribution Plans ("Rule 12b-1 activities"), as
determined by the Board of Directors of the Company, or 0.50% per annum of the
net asset value of each Fund. Payments under the Distribution Plan will be
accrued daily and paid quarterly in arrears.
The National Association of Securities Dealers, Inc. ("NASD") adopted amendments
to Article III, Section 26 of its Rules of Fair Practice which, among other
things, (i) impose certain limits on "asset based sales charges" paid to finance
sales or sales promotion expenses) in order to regulate such charges under the
maximum sales load limitations applicable to investment companies and (ii) treat
"service fees"; payments made for personal shareholder services and/or
maintenance of shareholder accounts) as distinguishable from asset based sales
charges and, therefore, outside the scope of the maximum sales load limitations.
The Company's Distribution Plans contemplate that activities to both (i) finance
the sale of Company shares and (ii) compensate persons who render shareholder
support services are Rule 12b-1 activities within the meaning of the
Distribution Plans.
In light of the NASD rule amendments, the Board of Directors, and separately a
majority of the non-interested directors, determined it would be appropriate and
in the best interest of the Company and its shareholders to clearly identify
that portion of the maximum expenditure under the Distribution Plan that should
be considered to be asset based sales charges and that portion should be
considered to be service fees. Consequently, it was determined that 0.25% per
annum of the average daily net asset value of each Fund be considered to be
asset based sales charges, as defined by Article III, Section 26 of the NASD's
Rules of Fair Practice, and 0.25% per annum of the average daily net asset value
of each Fund be considered to be service fees, as defined by Article III,
Section 26 of the NASD's Rules of Fair Practice. No payment of a service fee
will be made to a securities dealer unless that dealer has sold shares of the
Company that are then outstanding for a minimum of 12 months and that are valued
in excess of $1,000.
The Distribution Plans do not provide for any charges to the Company for excess
amounts expended by the Distributor and, if the Distribution Plans are
terminated in accordance with their terms, the obligation of the Company to make
payments to the Distributor pursuant to the Distribution Plans will cease. The
Distribution Plans do not provide for the reimbursement of the Distributor for
any expenses of the Distributor attributable to the Distributor's
"overhead".
For the years ended December 31, 1997, 1996 and 1995, $______, $261,904 and
$186,402 was paid by the Company to the Distributor and/or CSC, as the case
maybe, under the Plan of Distribution.
The Distribution Plan as to the Class A shares was approved on September 4, 1987
by the Board of Directors, and separately by all directors who are not
interested persons of the Company and who have no direct or indirect interest in
the Distribution Plan or related arrangements (the "Rule 12b-1 Directors"). That
Distribution Plan was approved by the shareholders of each Fund at the meeting
of shareholders held April 21, 1988. The Distribution Plan as to the Class B
shares was approved on October 1, 1997 by the Rule 12b-1 Directors. The
Distribution Plans will continue in effect from year to year if approved by the
votes of a majority of the Company's Board of Directors and the Rule 12b-1
Directors, cast in person at a meeting called for the purpose of voting on such
approval. All material amendments to the Distribution Plans must be likewise
approved by the Board of Directors and the Rule 12b-1 Directors. The
Distribution Plans may be terminated, without penalty, at any time by vote of a
majority of the Rule 12b-1 Directors or by vote of a majority of the outstanding
shares of the Company, on 60 days written notice. The Distribution Plans may not
be amended to increase materially the amount of expenditures under the
Distribution Plans unless such amendment is approved by a vote of the voting
securities of each Fund. 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 Directors who are not "interested persons" of the
Company shall be committed to the discretion of the Directors who are not
"interested persons." The Directors have determined that, in their judgment,
there is a reasonable likelihood that the Plans will benefit the Funds and their
shareholders. The Company will preserve copies of the Plans 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.
15
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Under the Investment Management Agreement, the Adviser has the day-to-day
responsibility for selecting broker-dealers through which securities are to be
purchased and sold.
The money market securities and other debt securities purchased by the
Government Securities Fund and the Tax-Exempt Fund usually will be purchased on
a principal basis directly from issuers, underwriters, or dealers. Accordingly,
no brokerage charges are expected to be paid on such transactions. However,
purchases from an underwriter on a principal basis generally include a
concession paid to the underwriter, and transactions with a dealer usually
include the dealer's "mark-up" or "mark-down".
Insofar as known to management, no director or officer of the Company, or of the
Adviser or any person affiliated with them has any material direct or indirect
interest in any broker employed by or on behalf of the Company except as
officers or directors of the Distributor.
In selecting broker-dealers to execute transactions with respect to each Fund,
the Adviser is obligated to use its best efforts to obtain for each Fund the
most favorable overall price and execution available, considering all the
circumstances. Such circumstances include the price of the security, the size of
the broker-dealer's "spread" or commission, the willingness of the broker-dealer
to position the trade, the reliability, financial strength and stability and
operational capabilities of the broker-dealer, the ability to effect the
transaction at all where a large block is involved, availability of the broker-
dealer to stand ready to execute possibly difficult transactions in the future,
and past experience as to qualified broker-dealers. Such considerations are
judgmental and are weighed by the Adviser in seeking the most favorable overall
economic result to the Company.
Subject to the foregoing standards, the Adviser has been authorized by the
Company's Board of Directors to allocate brokerage to broker-dealers who have
provided brokerage and research services, as such services are defined in
Section 28(e) of the Securities Exchange Act of 1934. Pursuant to that
authorization, the Adviser may cause each Fund to pay any broker- dealer a
commission in excess of the amount another broker-dealer would have charged for
effecting the same transaction if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage an
research services provided by such broker-dealer to the Adviser, viewed in terms
of either that particular transaction or the Adviser's overall responsibilities
with respect to the Company and other accounts as to which it exercises
investment discretion. Such brokerage and research services may include, among
other things, analyses and reports concerning issuers, industries, securities,
economic factors and trends, and strategies for the Funds. Such research
services may be used by the Adviser in connection with any other advisory
accounts managed by it. Conversely, research services to any other advisory
accounts may be used by the Adviser in managing the investments of the Company.
During the year ended December 31, 1997, the Fund paid no commissions to an
affiliated broker/dealer and no commissions were contingent upon the sale of
Fund shares. As of December 31, 1997, the Funds held the following shares of
their regular brokers: _______________.
The Adviser will use its best efforts to recapture all available tender offer
solicitation fees and similar payments in connection with tenders of the
securities of the Company and to advise the Company of any fees or payments of
whatever type which it may be possible to obtain for the Company's benefit in
connection with the purchase or sale of the Company's securities.
The Adviser and its affiliates may provide investment advice to other clients,
including, but not limited to, mutual funds, individuals, pension funds and
institutional investors. In addition, persons employed by the Adviser, who are
also investment personnel of Chubb & Son, Inc., currently provide investment
advice to and supervision and monitoring of investment portfolios for The Chubb
Corporation and its affiliates, including general accounts of the insurance
affiliates of The Chubb Corporation. In addition, certain investment personnel
employed by the Adviser currently provide advice to other investment portfolios
of entities not affiliated with The Chubb Corporation or its affiliates in their
capacity as officers or directors of certain registered investment advisers not
related to the Adviser. Some of these investment portfolios, as well as the
portfolios of other clients, may have investment objectives and investment
programs similar to the Funds. Accordingly, occasions may arise when the Adviser
and investment personnel of Chubb & Son, Inc. may select securities for purchase
or sale by a Fund that
16
<PAGE>
are also held by other advisory accounts, or that are currently being purchased
or sold for other advisory accounts. It is the practice of the Adviser and its
investment personnel, its affiliates, and the investment personnel of Chubb &
Son, Inc. to allocate such purchases or sales insofar as feasible, among their
advisory clients in a manner they deem equitable. It is the policy of the
Adviser, its affiliates and the investment personnel of Chubb & Son, Inc. not to
favor any one account over the other.
On those occasions when such simultaneous investment decisions are made, the
Adviser, its affiliates, and the investment personnel of Chubb & Son, Inc. will
allocate purchase and sale transactions in an equitable manner according to
written procedures approved by the Company's Board of Directors. Specifically,
such written procedures provide that, in allocating purchase and sale
transactions made on a combined basis, the Adviser, its affiliates, and the
investment personnel of Chubb & Son, Inc. will seek to achieve the same average
unit price of securities for each advisory account and will seek to allocate, as
nearly as practicable, such transactions on a pro-rata basis substantially in
proportion to the amounts ordered to be purchased or sold by each advisory
account. Such procedures may, in certain instances, either advantageous or
disadvantageous to the Funds. While it is conceivable that in certain instances
this procedure could adversely affect the price or number of shares involved in
the Company's transaction, it is believed that the procedure generally
contributes to better overall execution of the Company's portfolio transactions.
For the year ended December 31, 1995, it paid $83,044, $59,792 of which was paid
for research services received. For the year ended December 31, 1996, it paid
$123,856, $89,176 of which was paid for research services received. For the year
ended December 31, 1997, the Company paid $_______, $_______ which was paid for
research services received.
Portfolio turnover for each Fund can vary significantly from year to year or
within a year. The Global Income Fund's turnover rate was 80.70% for 1996,
compared to 185.95% for 1997. This increase is due to _______________.
DIRECTORS AND OFFICERS
The directors and officers of the Company, their addresses, their positions with
the Company, and their principal occupations for the past five years are set
forth below:
@ * JOHN C. van ECK, CFA (82) - Chairman of the Board and Director
-------------------------
270 River Road, Briarcliff Manor, New York; Chairman of the Board and
President of other investment companies advised by the Administrator;
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).
@ * MICHAEL O'REILLY (54) - President and Director
---------------------
15 Mountain View Road, Warren, New Jersey 07061; Senior Vice President
and Chief Investment Officer of The Chubb Corporation; Director,
President and Chief Operating Officer of the Adviser; and Senior Vice
President and Director of Chubb Investment Advisory Corporation.
# + JEREMY H. BIGGS (62) - Director
--------------------
1220 Park Avenue, New York, NY 10128; Trustee of other investment
companies advised by the Administrator; 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 Finance Committee of Saint James School, St. James,
Maryland; Former Director, International Investors Incorporated (1990-
1991).
17
<PAGE>
*# + WESLEY G. McCAIN (55) - DIrector
---------------------
144 East 30th Street, New York, New York 10016; Trustee of other
investment companies advised by the Administrator; Chairman and Owner,
Towneley Capital Management, Inc., (investment adviser, since 1971);
Chairman, Eclipse Funds (mutual funds, since 1986); Chairman and Owner,
Eclipse Financial Services, Inc. (since 1986); President and Owner,
Millbrook Associates, Inc. (economic and marketing consulting, since
1989); General Partner, Pharaoh Partners, L.P. (since 1992); Principal,
Pharaoh Partners (Cayman) LDC (since 1996); Trustee, Libre Group Trust
(since 1994); Director, Libre Investments (Cayman) Ltd. (since 1996);
Former Director, International Investors Incorporated.
# + DAVID J. OLDERMAN (62) - Director
----------------------
40 East 52nd Street, New York, New York 10022; Trustee of other
investment companies advised by the Administrator; 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).
Officers of the Company:
BRUCE J. SMITH (43) - Vice President and Treasurer
- --------------
99 Park Avenue, New York, New York 10016; Officer of other investment
companies advised or administered by the Administrator; Senior Managing
Director, Portfolio Accounting of Van Eck Associates Corporation and
Senior Managing Director of Van Eck Securities Corporation.
THADDEUS M. LESZCZYNSKI (51) - Vice President and Secretary
- ----------------------------
99 Park Avenue, New York, New York 10016; Officer of other investment
companies advised or administered by the Administrator; Vice President,
Secretary and General Counsel of Van Eck Associates Corporation, Van Eck
Securities Corporation and other affiliated companies.
JOSEPH P. DiMAGGIO (41) - Controller
- -----------------------
99 Park Avenue, New York, New York 10016; Officer of another investment
company advised by the Administrator; Director of Portfolio Accounting
of Van Eck Associates Corporation (since 1993); Former Accounting
Manager, Alliance Capital Management (1985-1993).
SUSAN C. LASHLEY (43) - Vice President
- ---------------------
99 Park Avenue, New York, New York 10016; Officer of another investment
company advised by the Administrator; Managing Director, Mutual Fund
Operations of Van Eck Securities Corporation.
BARBARA J. ALLEN (41) - Assistant Secretary
- ---------------------
99 Park Avenue, New York, New York 10016; Officer of another investment
company advised by the Administrator; 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; Officer of another investment
company advised by the Administrator; Senior Attorney of Van Eck
Associates Corporation; formerly employed by The Royce Funds (1994 to
1996) and First Investors Corporation (1989 to 1994).
- --------------------
@ An "interested person" as defined in the Act.
* Member of Executive Committee - exercises general powers of Board of
Directors 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.
18
<PAGE>
The Company pays no salaries or compensation to any of its officers, all of whom
are officers or employees of Chubb Life, the Adviser or the Administrator. The
Company pays to each director who is not affiliated with the Adviser or the
Administrator or their affiliates an annual director's retainer of $2,000 and a
payment of $750 plus expenses per Board and Committee meeting attended.
1997 Compensation Table
<TABLE>
<CAPTION>
Van Eck/Chubb Funds Van Eck/Chubb Funds Total Fund Complex
(Current Directors Fees) (Deferred Compensation) Compensation (a)
------------------------ ----------------------- -----------------------
<S> <C> <C> <C>
John C. van Eck $0 $0 $0
Michael O'Reilly $0 $0 $0
Jeremy H. Biggs $0 $1250 $______
Wesley G. McCain $0 $1250 $______
David J. Olderman $0 $1250 $______
</TABLE>
- ---------------------
(a) The term "fund complex" refers to the funds of the Company, and of Van Eck
Funds and Van Eck Worldwide Insurance Trust, which are managed by the
Administrator. The directors are paid a fee for their services to the
Company. No other compensation, including pension or other retirement
benefits, is paid to the directors by the fund complex.
As of _______, 1998, the directors and officers of the Company, as a group,
owned ___% of the outstanding shares of the Company and [less than 1%] of any of
the Funds individually.
VALUATION OF SHARES
The net asset value of the shares of each Fund of the Company is normally
determined immediately as of the close of trading on the New York Stock Exchange
(usually 4:00 p.m. New York Time) on each day during which the New York Stock
Exchange is open for trading and at such other times when both the degree of
trading in a Fund's portfolio securities would materially affect the net asset
value of that Fund's shares and shares of that Fund were tendered for redemption
or a repurchase order was received. The New York Stock Exchange is open from
Monday through Friday except on the following national holidays: New Years Day,
Martin Luther King's Birthday, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Dividends paid by the Fund with respect to Class A and Class B 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 shares will be borne
exclusively by that Class. The directors have determined that currently no
conflict of interest exists between the Class A and Class B shares. On an
ongoing basis, the Board of Directors, pursuant to their fiduciary duties under
the Act and state laws, will seek to ensure that no such conflict arises.
Class A shares of the Funds are sold at the public offering price which is
determined once each day the Funds are open for business, which is the net asset
value per share plus a sales charge in accordance with the schedule set forth in
the Prospectus. Class B shares are sold with a contingent deferred sales
charge.
In determining whether a contingent deferred sales charge is applicable to a
redemption of Class B 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 or shares attributable
to appreciation or shares acquired pursuant to reinvestment, and third of any
Class B held longest during the applicable period.
To provide an example, assume an investor purchased 100 Class B shares of Global
Income 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
19
<PAGE>
reinvestment. If at such time the investor makes his or her 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
Portfolio securities which are traded on national securities exchanges are
valued at the last quoted sale price as of the close of business of the New York
Stock Exchange or, lacking any quoted sales, at the mean between the closing bid
and asked prices.
Securities traded in the over-the-counter market as part of the NASDAQ National
Market system are valued at the last quoted sale price (at the close of the New
York Stock Exchange) obtained from a readily available market quotation system
or securities pricing services. If no sale took place, such securities are
valued at the mean between the bid and asked prices.
Long-term U.S. Treasury securities and other obligations issued or guaranteed by
the United States Government, its agencies or instrumentalities are valued at
representative quoted prices from bond pricing services.
Long-term publicly traded corporate bonds are valued at prices obtained from a
bond pricing service when such prices are available or, when appropriate, from
over-the-counter exchange quotations or from broker-dealers who make a market in
that security.
Foreign securities denominated in foreign currencies are valued at
representative quoted prices on the principal exchange of the country of origin
and are converted to United States dollar equivalents using that day's current
exchange rate (New York closing spot). Occasionally, events affecting the values
of such securities may occur between the times at which they are determined and
the close of the New York Stock Exchange, which events may not be reflected in
the computation of a Fund's net asset value. If, during such periods, events
occur which materially affect the value of the securities of a Fund, and during
such periods either shares are tendered for redemption or a purchase or sale
order is received by the Company, such securities will be valued at fair value
as determined in good faith by the Board.
All non-U.S. securities traded in the over-the-counter securities market are
valued at the last sale quote, if market quotations are available, or at the
mean between the closing bid and asked prices, if there is no active trading in
a particular security for a given day. Where market quotations are not readily
available for such non-U.S. over-the-counter securities, then such securities
will be valued in good faith by a method that the Board of Directors, or its
delegates, believes accurately reflects fair value.
Options and convertible preferred stocks listed on national securities exchanges
are valued as of their last sale price or, if there is no sale, at the mean
between the closing bid and asked prices.
Futures contracts are valued as of their last sale price or, if there is no
sale, at the mean between the closing bid and asked prices.
Securities and assets for which market quotations are not readily available are
valued at fair value as determined in good faith by the Board of Directors of
the Company using its best judgment.
EXCHANGE PRIVILEGE
Class A, and Class B shareholders of the Funds may exchange their shares for
shares of the same class of other of the funds in the Van Eck Global 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 the Fund accompany a written exchange request, such
shares will be deposited into an account with the same registration as the
certificates upon receipt by DST.
20
<PAGE>
The Fund reserves the right to (i) charge a fee of not more than $5.00 per
exchange payable to the Fund or charge a fee reasonably intended to cover the
costs incurred in connection with the exchange; (ii) establish a limit on the
number and amount of exchanges made pursuant to the Exchange Privilege and (iii)
terminate the Exchange Privilege without written notice. In the event of such
termination, shareholders who have acquired their shares pursuant to the
Exchange Privilege will be afforded the opportunity to re-exchange such shares
for shares of the fund originally purchased without sales charge, for a period
of not less than three (3) months.
By exercising the Exchange Privilege each shareholder whose shares are
subject to the Exchange Privilege will be deemed to have agreed to indemnify and
hold harmless the Trust and each of its funds, their investment adviser, sub-
investment adviser (if any), distributor, transfer agent, IFTC and the officers,
directors, employees and agents thereof against any liability, damage, claim or
loss, including reasonable costs and attorneys' fees, resulting from acceptance
of, or acting or failure to act upon, or acceptance of unauthorized instructions
or non-authentic telephone instructions given in connection with, the Exchange
Privilege, so long as reasonable procedures are employed to confirm the
authenticity of such communications. (For more information on the Exchange
Privilege, see the Prospectus).
TAX-SHELTERED RETIREMENT PLANS
The Company offers several prototype tax-sheltered retirement plans through
which shares of the Funds 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 Trust. Persons who wish to establish a tax-sheltered retirement plan should
consult their own tax advisors 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 Company is not
responsible for compliance with such laws. Further information regarding the
retirement plans, including applications and fee schedules, may be obtained upon
request to the Fund.
Individual Retirement Account and Spousal Individual Retirement Account. The
IRA is available to all individuals, including self-employed individuals, who
receive compensation for services rendered 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.
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 or her 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,
21
<PAGE>
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 the Fund and accumulate
tax-free until distribution. Distributions from either an IRA or SPIRA prior to
age 59-1/2, unless made as a result of disability or death, may result in
adverse tax consequences and penalties. In addition, there is a penalty on
contributions in excess of the contribution limits and other penalties are
imposed on insufficient payouts after age 70-1/2.
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, 1996, contributions under a salary reduction
arrangement are permitted only into SEP plans in existence on December 31,
1996.
Contributions by employers under a SEP arrangement up to the maximum permissible
amounts are deductible for federal income tax purposes. Contributions up to the
maximum permissible amounts are not includible in the gross income of the
employee. Dividends and capital gains on amounts invested in SEP-IRAs are
automatically reinvested by the Trustee in shares of the mutual fund that paid
such amounts and accumulate tax-free until distribution. Contributions in
excess of the maximum permissible amounts may be withdrawn by the employee from
the SEP-IRA no later than April 15 of the calendar year following the year in
which the contribution is made without tax penalties. Such amounts will,
however, be included in the employee's gross income. Withdrawals of such
amounts after April 15 of the year next following the year in which the excess
contributions is made and withdrawals of any other amounts prior to age 59 1/2,
unless made as a result of disability or death, may result in adverse tax
consequences.
Qualified Pension Plans. The Qualified Pension Plan can be utilized by self-
employed individuals, partnerships and corporations (for this purpose called
"Employers") and their employees who wish to purchase shares of the Fund under a
retirement program.
The maximum contribution which may be made to a Qualified Pension Plan in any
one year on behalf of a participant is, depending on the benefit formula
selected by the Employer, up to the lesser of $30,000 or 25 percent of
compensation (net earned income in the case of a self-employed individual).
Contributions by Employers to Qualified Pension Plans up to the maximum
permissible amounts are deductible for federal income tax purposes.
Contributions in excess of permissible amounts will result in adverse tax
consequences and penalties to the Employer. Dividends and capital gains earned
on amounts invested in Qualified Pension Plans are automatically reinvested by
the Trustee in shares of the Fund and accumulate tax-free until distribution.
Withdrawals of contributions prior to age 59-1/2,
22
<PAGE>
unless made as a result of disability, death or early retirement, may result in
adverse tax consequences and penalties. 403(b)(7) Program. The Tax-Deferred
Annuity Program and Custodial Account offered by the Fund (the "403(b)(7)
Program") allows employees of certain tax exempt organizations and schools to
have a portion of their compensation set aside for their retirement years in
shares held in an investment company custodial account.
In general, the maximum limit on annual contributions for each employee is the
lesser of $30,000 per year (as adjusted by the IRS for cost-of-living
increases), 25% of the employee's compensation or the employee's exclusion
allowance specified in Section 403(b) of the Code. However, an employee's
salary reduction contributions to a 403(b)(7) Program may not exceed $9,500 a
year (as adjusted for cost of living expenses). Contributions in excess of
permissible amounts may result in adverse tax consequences and penalties.
Dividends and capital gains on amounts invested in the 403(b)(7) Program are
automatically reinvested in shares of the Funds. 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 will occur
on a date selected by the Board of Directors.
Automatic Exchange Plan. Investors may arrange under the Exchange Plan to have
DST collect a specified amount once a month or quarter from the investor's
account in one of the funds and purchase full and fractional shares of another
fund at the public offering price next computed after receipt of the proceeds.
Further details of the Automatic Exchange Plan are given in the application
which is available from DST or the Funds. This does not apply to Class B
shares.
An investor should realize that the Funds' securities are subject to market
fluctuations, and accordingly the Automatic Exchange Plan does not assure a
profit or protect against depreciation in declining markets. The Automatic
Exchange Plan contemplates the systematic purchase of securities at regular
intervals regardless of price levels.
The expenses of the Automatic Exchange Plan are general expenses of the Funds
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 the Funds
at the public offering price next computed after receipt of the proceeds.
Further details of the Automatic Investment Plan are given in the application
which is available from DST or the Fund.
An investor should realize that the Funds' securities are subject to market
fluctuations, and accordingly the Automatic Investment Plan does not assure a
profit or protect against depreciation in declining markets. The Automatic
Investment Plan contemplates the systematic purchase of securities at regular
intervals regardless of price levels.
The expenses of the Automatic Investment Plan are general expenses of the Funds
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.
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Automatic Withdrawal Plan. The Automatic Withdrawal Plan is designed to provide
a convenient method of receiving fixed redemption proceeds at regular intervals
from shares of the Funds deposited by the investor under this Plan. This Plan is
not available to Class B 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 Funds 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 the investor, monthly or quarterly (January, April, July
and October). The Funds will bear the cost of administering the Automatic
Withdrawal Plan.
Redemption of shares of the Funds 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 the investment since part of such payments may be a return of
capital. The redemption of shares under the Automatic Withdrawal Plan may give
rise to a taxable event.
The maintenance of an Automatic Withdrawal Plan concurrently with purchases of
additional shares of the Funds 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 or her duly appointed legal
representatives.
TAXES
Taxation of the Fund - In General
The Funds intend to qualify and elect to be treated each taxable year as a
"regulated investment company" under Subchapter M of the Code. To so qualify,
the Funds 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; and (b) satisfy certain diversification requirements.
As regulated investment companies, the Funds will not be subject to federal
income tax on their net investment income and capital gain net income (capital
gains in excess of its capital losses) that it distributes to shareholders if at
least 90% of its net investment income and short-term capital gains for the
taxable year are distributed. However, if for any taxable year the Funds do not
satisfy the requirements of Subchapter M of the Code, all of their 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 Funds' current or
accumulated earnings or profits.
The Funds will be liable for a nondeductible 4% excise tax on amounts not
distributed on a timely basis in accordance with a calendar year distribution
requirement. To avoid the tax, during each calendar year the Funds must
distribute (i) at least 98% of its ordinary income (not taking into account
any
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capital gains or losses) for the calendar year, (ii) at least 98% of its capital
gain net income for the twelve month period ending on October 31 (or December
31, if the Fund so elects), and (iii) any portion (not taxed to the Fund) of the
2% balance from the prior year. The Funds intend 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 the Funds may be treated as having an original issue discount.
Original issue discount represents interest for federal income tax purposes and
can generally be defined as the excess of the stated redemption price at
maturity of a debt obligation over the issue price. Original issue discount is
treated for federal income tax purposes as income earned by the Funds, whether
or not any income is actually received, and therefore is subject to the
distribution requirements of the Code. Generally, the amount of original issue
discount included in the income of the Funds each year is determined on the
basis of a constant yield to maturity which takes into account the compounding
of accrued interest.
Debt securities may be purchased by the Funds at a discount which exceeds the
original issue discount remaining on the securities, if any, at the time the
Funds 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 Funds elect to include such accrued market discount
in income in the tax year to which it is attributable). Generally, market
discount is accrued on a daily basis. The Funds may be required to capitalize,
rather than deduct currently, part or all of any direct interest expense
incurred or continued to purchase or carry any debt security having market
discount, unless the it makes the election to include market discount currently.
Because the Funds must include original issue discount in income, it will be
more difficult for the Funds to make the distributions required for them to
maintain their 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 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.
The Funds may elect to have foreign currency-related regulated futures contracts
and listed options subject to ordinary income or loss treatment under Section
988. In addition, in certain circumstances, the Funds may elect capital gain or
loss for foreign currency transactions. The rules under Section 988 may also
affect the timing of income recognized by the Funds.
Taxation of the Shareholders
Distributions of net investment income and the excess of net short-term capital
gain over net long-term capital loss are taxable as ordinary income to
shareholders. Distributions of net capital gain (the excess of net long-term
capital gain over net short-term capital loss) are taxable to shareholders as
long-term capital gain, regardless of the length of time the shares of the Fund
have been held by such shareholders. Any loss realized upon a taxable
disposition of shares within six months from the date of their purchase will be
treated as a long-term capital loss to the extent of any long-term capital gain
distributions received by shareholders during such period.
Distributions of net investment income and capital gain net income will be
taxable as described above whether received in cash or reinvested in additional
shares. When distributions are received in the form of shares issued by the
Funds, 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
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cash which would otherwise have been received. In such case, participating
shareholders will have a basis for federal income tax purposes in each share
received from the Funds equal to the fair market value of such share on the
payment date.
Distributions by the Funds result in a reduction in the net asset value of the
Funds' shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable to the
shareholder as ordinary income or long-term capital gain as described above,
even though, from an investment standpoint, it may constitute a partial return
of capital. In particular, investors should be careful to consider the tax
implications of buying shares just prior to a distribution. The price of shares
purchased at that time includes the amount of any forthcoming distribution.
Those investors purchasing shares just prior to a distribution will then receive
a return of their investment upon distribution which will nevertheless be
taxable to them.
If a shareholder (i) incurs a sales load in acquiring shares in the Funds, and
(ii) by reason of incurring such charge or making such acquisition acquires the
right to acquire shares of one or more regulated investment companies without
the payment of a load or with the payment of a reduced load ("reinvestment
right"), and (iii) disposes of the shares before the 91st day after the date on
which the shares were acquired, and (iv) subsequently acquires shares in that
regulated investment company or in another regulated investment company and the
otherwise applicable load charge is reduced pursuant to the reinvestment right,
then the load charge will not be taken into account for purposes of determining
the shareholder's gain or loss. To the extent such charge is not taken into
account in determining the amount of gain or loss, the charge will be treated as
incurred in connection with the subsequently acquired shares and will have a
corresponding effect on the shareholder's basis in such shares.
Income received by the Funds may give rise to withholding and other taxes
imposed by foreign countries. If more than 50% of the value of the Funds'
assets at the close of a taxable year consists of securities of foreign
corporations, the Funds may make an election that will permit an investor to
take a credit (or, if more advantageous, a deduction) for foreign income taxes
paid by the Funds, subject to limitations contained in the Code. As an investor,
you would then include in gross income both dividends paid to you and the
foreign taxes paid by the Funds on their 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.
The Funds 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 or she is exempt
from such withholding or who the Internal Revenue Service notifies the Funds as
having provided the Funds 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 Funds, 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 Funds.
REDEMPTIONS IN KIND
The Company 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 to the lesser of (i) $250,000 or (ii) 1% of the net asset
value of such company at the beginning of such period.
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PERFORMANCE
From time to time, in reports and sale literature: (1) each Fund's performance
or P/E ratio may be compared to: (i) the Standard & Poor's 500 Composite Stock
Price Index ("S&P 500 Index") and Dow Jones Industrial Average so that the
investor may compare that Fund's results with those of a group of unmanaged
securities widely regarded by investors as representative of the United States
stock market in general; (ii) other groups of mutual funds tracked by: (A)
Lipper Analytical Services, Inc., a widely-used independent research firm which
ranks mutual funds by overall performance, investment objectives, and asset
size; (B) Forbes Magazine's Annual Mutual Funds Survey and Mutual Fund Honor
Roll; or (C) other financial or business publications, such as the Wall Street
Journal, Business Week, Money Magazine, and Barron's, which provide similar
information; (iii) indices of stocks comparable to those in which the particular
Fund invests; (2) the Consumer Price Index (measure for inflation) may be used
to assess the real rate of return from an investment in each Fund; (3) other
government statistics such as Gross Domestic Product, and net import and export
figures derived from governmental publications, e.g., The Survey of Current
Business, may be used to illustrate investment attributes of each Fund or the
general economic, business, investment, or financial environment in which each
Fund operates; and (4) the effect of tax-deferred compounding on the particular
Fund's investment returns, or on returns in general, may be illustrated by
graphs, charts, etc. where such graphs or charts would compare, at various
points in time, the return from an investment in the particular Fund (or returns
in general) on a tax-deferred basis (assuming reinvestment of capital gains and
dividends and assuming one or more tax rates) with the return on a taxable
basis.
From time to time advertisements and sales literature may refer to rankings and
ratings of the Adviser and/or Jefferson-Pilot Corporation, Chubb Corporation,
Chubb & Sons and Chubb Life Insurance Company of America and Chubb Service
Corporation related to their size, performance, management and/or service as
prepared by various trade publications, such as Dalbar, Pensions and
Investments, SEI, CDA, Bests, and others.
Each Fund's performance may also be compared to the performance of other mutual
funds by Morningstar, Inc., which ranks mutual funds on the basis of historical
risk and total return. Morningstar rankings are calculated using the mutual
fund's average annual returns for certain periods and a risk factor that
reflects the mutual fund's performance relative to three-month Treasury bill
monthly returns. Morningstar's rankings range from five stars (highest) to one
star (lowest) and represent Morningstar's assessment of the historical risk
level and total return of a mutual fund as a weighted average for 3, 5, and 10-
year periods. In each category, Morningstar limits its five star rankings to 10%
of the funds it follows and its four star rankings to 22.5% of the funds it
follows. Rankings are not absolute or necessarily predictive of future
performance.
When Lipper's rankings or performance results are used, a Fund will be compared
to Lipper's appropriate fund category by fund objective and portfolio holdings.
For instance, the Growth and Income Fund will be compared to funds within
Lipper's growth and income fund category; the Government Securities Fund will be
compared to funds within Lipper's income fund category; and so on. Rankings may
be listed among one or more of the asset-size classes as determined by Lipper.
Since the assets in the Funds may change, a Fund may be ranked within one Lipper
asset-sized class at one time and in another Lipper asset-size class at some
other time. The Lipper rankings and performance analysis ranks funds on the
basis of total return, assuming reinvestment of distribution, but does not take
sales charges or redemption fees into consideration and is prepared without
regard to tax consequences. Lipper also issues a monthly yield analysis for
fixed-income funds. Footnotes in advertisements and other marketing literature
will include the time period and Lipper asset-size class, as applicable, for the
ranking in question.
As noted above, the performance of a Fund may be compared, for example, to the
record of the S&P 500 Index, as well as the Russell 2000 Index, the S&P MidCap
400 Index, the Bear Stearns Foreign Bond Index, the NASDAQ Composite Index and
the Morgan Stanley Capital International's Europe Australia, Far Eastern
("EAFE") Index. The S&P 500 Index is a well known measure of the price
performance of 500 leading larger domestic stocks which represent approximately
80% of the market capitalization of the United States equity market. The Russell
2000 Index, the S&P MidCap 400 Index, the Bear Stearns Foreign Bond Index are
unmanaged indices, the NASDAQ Composite Index and the Morgan Stanley Capital
International's Euro. The NASDAQ Composite Index is comprised of all stocks on
NASDAQ's National Market Systems, as well as other NASDAQ domestic equity
securities. The NASDAQ Composite Index has typically included smaller, less
mature companies representing 10% or
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15% of the capitalization of the entire domestic equity market. The EAFE Index
is comprised of more than 900 companies in Europe, Australia and the Far East.
All of these indices are unmanaged and capitalization weighted. In general, the
securities comprising the NASDAQ Composite Index are more growth oriented and
have a somewhat higher beta and P/E ratio than those in the S&P 500 Index.
The total returns of all indices noted above will show the changes in prices for
the stocks in each index. However, only the performance data for the S&P 500
Index assumes reinvestment of all capital gains distributions and dividends paid
by the stocks in each data base. Tax consequences will not be included in such
illustration, nor will brokerage or other fees or expenses of investing be
reflected in the NASDAQ Composite, S&P 500, EAFE Index.
The yield for the 30-day period ended December 31, 1997 for Tax-Exempt Fund,
Government Securities Fund and the Global Income Fund was 4.01%, 5.45% and
3.60%, respectively. The tax equivalent yield for the Tax-Exempt Fund for the
same period assuming federal tax brackets of 36%, and 39.6% was ___%, and ___%,
respectively. These figures reflect a portion of fees and other expenses of the
Company which were waived or assumed during the stated period. Absent any waiver
or assumption of fees and expenses, the yields the Tax-Exempt Fund, Government
Securities Fund and the Global Income Fund would have been ____%, ____% and
____%, respectively, and the tax equivalent yields for the Tax-Exempt Fund of
36% and 39.6% tax brackets would have been ____%, and ____%, respectively.
This yield figure represents the net annualized yield based on a specified 30-
day (or one month) period assuming a reinvestment and semiannual compounding of
income. Yield is calculated by dividing the average daily net investment income
per share earned during the specified period by the maximum offering price per
share on the last day of the period, according to the following
formula:
ADVANCE = 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
A tax equivalent yield is calculated by dividing that portion of the 30-day
yield figure which is tax-exempt by one minus the effective federal income tax
rate and adding the product to that portion, if any, of the yield of the Fund
that is not tax-exempt.
The average annual total return quotations for the Government Securities Fund,
the Total Return Fund, the Tax-Exempt Fund, the Growth and Income Fund, the
Capital Appreciation Fund and the Global Income Fund for the 12 months ended
December 31, 1997 were 6.19%, 17.87%, 5.43%, 19.55%, 21.44% and 3.01%,
respectively. The average annual total return quotations for the Government
Securities Fund, the Total Return Fund, the Tax-Exempt Fund and the Growth &
Income Fund for the 3 years ended December 31, 1997 were 8.78%, 21.53%, 8.32%,
and 25.67%, respectively. The average annual total return quotations for the
Government Securities Fund, the Total Return Fund, the Tax-Exempt Fund and the
Growth & Income Fund for the 5 years ended December 31, 1997 were 6.34%, 14.40%,
6.09%, and 16.95%, respectively. The average annual total return quotations for
these Funds since the Company's inception on December 1, 1987 through December
31, 1997 were 8.63%, 14.03%, 8.14% and 15.86%, respectively. Additionally the
Capital Appreciation Fund and the Global Income Fund's average total return
since inception on September 1, 1995 through December 31, 1997 were 22.86% and
2.58%, respectively. These figures reflect a portion of fees and other expenses
of the Company which were waived or assumed during the stated period.
These average annual total return figures represent the average annual compound
rate of return for the stated period. Average annual total return quotations
reflect the percentage change between the beginning value of a static account in
the specified Fund at the maximum public offering price and the ending value of
that account measured by the then current net asset value of that Fund assuming
that
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all dividends and capital gains distributions during the stated period were
reinvested in shares of the Fund when paid. Total return is calculated by
finding the average annual compound rates of return of a hypothetical investment
that would compare the initial amount to the ending redeemable value of such
investment 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
The Funds also may advertise non-standardized total return quotations,
calculated in the same manner as the quotations stated above, except that the
initial value used is the net asset value. Under this total return calculation,
the average annual total return quotations for the Government Securities Fund,
the Total Return Fund, the Tax-Exempt Fund, the Growth and Income Fund, the
Capital Appreciation Fund and the Global Income Fund for the 12 months ended
December 31, 1997 were ___%, ____%, ____%, ____%, _____% and ____%,
respectively. Under this same calculation, the average annual total return
quotations for the Government Securities Fund, the Total Return Fund, the Tax-
Exempt Fund and the Growth & Income Fund for the 5 years ended December 31, 1997
were ____%, ____%, ____%, and ____%, respectively. Under this same calculation,
the average annual total return quotations for these Funds since the Company's
inception on December 1, 1987 through December 31, 1997 are ____%, ____%, ____%,
and ____%, respectively. In addition under the same calculation the average
annual total return for the Capital Appreciation Fund and the Global Income Fund
since their inception September 1, 1995 through December 31, 1997 are ____% and
____%, respectively.
ADDITIONAL INFORMATION
Custodian. Citibank, N.A., 111 Wall Street, New York City, New York 10043, acts
as custodian of the Company's assets. Citibank is responsible for holding all
securities and cash of each Fund, receiving and paying for securities purchased,
delivering against payment securities sold, receiving and collecting income from
investments, making all payments covering expenses of the Company and performing
other administrative duties, all as directed by persons authorized by the
Company. Citibank does not exercise any supervisory function in such matters as
the purchase and sale of portfolio securities, payment of dividends, or payment
of expenses of the Company. The Company, with respect to each Fund, may also
appoint from time to time, with the approval of the Company's Board of
Directors, qualified domestic sub-custodians for all the Funds and foreign sub-
custodians qualified under Rule 17f-5 of the Act with respect to certain foreign
securities which may be purchased by the Funds.
Independent Auditors. Ernst & Young LLP, 787 Seventh Avenue, New York, New York
10019, has been selected as the independent auditors of the Company.
Counsel. Goodwin, Procter & Hoar, LLP, Exchange Place, Boston, Massachusetts
02109, serves as counsel to the Company.
Transfer Agent. The Company has contracted with DST Systems, Inc. ("DST"), 210
W. 10th St., 8th Floor, Kansas City, Missouri 64105, to act as its transfer
agent, registrar, and dividend disbursing agent. DST will service shareholder
accounts, and its duties will include: (i) effecting sales redemptions and
exchanges of Company shares; (ii) distributing dividends and capital gains
associated with Company accounts; and (iii) maintaining account records and
responding to shareholder inquiries.
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Name And Service Mark. The Chubb Corporation has in conjunction with its sale of
Chubb Life to Jefferson-Pilot Corporation granted the Company the right to use
the "Chubb" name and service mark.
Capital Stock
The authorized capital stock of the Company consists of 1,000,000,000 shares of
common stock, par value $.01, which are divided into six series: Van Eck/Chubb
Government Securities Fund, Van Eck/Chubb Total Return Fund, Van Eck/Chubb Tax-
Exempt Fund, Van Eck/Chubb Growth and Income Fund, Van Eck/Chubb Capital
Appreciation Fund and Van Eck/Chubb Global Income Fund. Each Fund currently
consists of 100,000,000 authorized shares. The Company has the right to issue
additional shares without the consent of the shareholders, and may allocate its
issued and reissued shares to new Funds or to one or more of the six existing
Funds.
The assets received by the Company for the issuance or sale of shares of each
Fund and all income, earnings, profits and proceeds thereof are specifically
allocated to each Fund. They constitute the underlying assets of each Fund, are
required to be segregated on the books of account, and are to be charged with
the expense of such Fund. Any assets which are not clearly allocable to a
particular Fund are allocated among the Funds in proportion to their relative
net assets before adjustment for such unallocated liabilities. Each issued and
outstanding share in a Fund is entitled to participate equally in dividends and
distributions declared with respect to such Fund and in the net assets of such
Fund upon liquidation or dissolution remaining after satisfaction of outstanding
liabilities.
Chubb Life Insurance Company of New Hampshire, a wholly-owned subsidiary of the
Jefferson-Pilot Corporation a North Carolina Corporation, provided the initial
capital for the Company by purchasing shares of each of the original five Funds
valued at $100,000 prior to the date shares of the Company were offered to the
public. On July 1, 1991, Chubb Life Insurance Company of New Hampshire and Chubb
Life Insurance Company of America were merged into an affiliate, The Volunteer
State Life Insurance Company ("Volunteer"), which simultaneously changed its
name to Chubb Life Insurance Company of America ("Chubb Life"). Chubb Life
provided the initial investment for the Capital Appreciation Fund and the Global
Income Fund by purchasing 10,000 shares of each Fund at a cost of $10.00 per
share. Chubb Life intends to withdraw such investment from time to time. As of
__________, 1998, Chubb Life (a New Hampshire corporation), The Chubb
Corporation (a New Jersey corporation), and its wholly-owned subsidiary, Federal
Insurance Company ("Federal Insurance"), together owned ___% of the outstanding
shares of the Company.
FINANCIAL STATEMENTS
The financial statements contained in the Company's December 31, 1997 Annual
Report to shareholders are incorporated herein by reference. The Annual Report
is available at no charge upon written or telephone request to the Company at
the address or telephone numbers set forth on the first page of this Statement
of Additional Information.
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APPENDIX
DESCRIPTION OF INVESTMENT RATINGS
MOODY'S - BOND RATINGS
Aaa - Bonds which are rated Aaa are judged to be of 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 not likely 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, fluctuation of protective
elements may be of greater amplitude, 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 giving 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.
RATING REFINEMENTS. Moody's may apply numerical modifiers, 1, 2 and 3, in each
generic rating classification from Aa through B in its municipal bond rating
system. The modifier 1 indicates that the security ranks in the higher end of
its generic category; the modifier 2 indicates a mid-range ranking; and a
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.
SHORT-TERM NOTES. The four ratings of Moody's for short-term notes are MIG 1,
MIG 2, MIG 3 and MIG 4. MIG 1 denotes "best quality, enjoying strong protection
from established cash flows." MIG 2 denotes "high quality" with "ample margins
of protection." MIG 3 notes are of "favorable quality...but lacking the
undeniable strength of the preceding grades." MIG 4 notes are of "adequate
quality, carrying specific risk but having protection...and not distinctly or
predominantly speculative."
MOODY'S COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of 9
months. Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment capacity of rated issuers:
Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short term promissory obligations.
Issuers rated Prime-3 (or related supporting institutions) have an acceptable
capacity for repayment of short-term promissory obligations.
Issuers rated Not Prime do not fall within any of the Prime rating categories.
31
<PAGE>
STANDARD & POOR'S - BOND RATINGS
A Standard & Poor's municipal debt rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers or
lessees.
The debt rating is not a recommendation to purchase, sell or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer or obtained
by Standard & Poor's from sources Standard & Poor's considers reliable. Standard
& Poor's does not perform an audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended, or withdrawn as a result of changes in, or unavailability of, such
information, or for other reasons.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default-capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligations.
II. Nature of and provisions of the obligations.
III. Protection afforded by, and relative position of, the obligations in the
event of bankruptcy, reorganization, or other arrangement under the laws of
bankruptcy and other laws affecting creditor's rights.
AAA. Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA. Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest-rated issues only in small degree.
A. Debt rated "A" has 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 debt in higher-rated categories.
BBB. Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits 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
debt in this category than for debt in higher-rated categories.
Plus (+) or Minus (-): The ratings from "AA" to "BBB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
STANDARD & POOR'S COMMERCIAL PAPER RATINGS
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Ratings are graded into four categories, ranging from "A" for the
highest quality obligations to "D" for the lowest. Ratings are applicable to
both taxable and tax-exempt commercial paper. The four categories are as
follows:
A. Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designation 1, 2, and 3 to indicate the relative degree of safety.
A-1. This designation indicates that the degree of safety regarding timely
payment is very strong.
A-2. Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as overwhelming as for issues
designated "A-1."
32
<PAGE>
A-3 Issues carrying this designation have a satisfactory capacity or timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
The Commercial Paper Rating is not a recommendation to purchase or sell a
security. The ratings are based on current information furnished to Standard &
Poor's by the issuer and obtained by Standard & Poor's from other sources it
considers reliable. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information.
Standard & Poor's rating categories with respect to certain municipal note
issues with a maturity of less than 3 years are as follows:
SP-1. A very strong, or strong, capacity to pay principal and interest. Issues
that possess overwhelming safety characteristics will be given a "+"
designation.
SP-2. A satisfactory capacity to pay principal and interest.
SP-3. A speculative capacity to pay principal and interest. Standard & Poor's
may continue to rate note issues with a maturity greater than 3 years in
accordance with the same rating scale currently employed for municipal bond
ratings.
33
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
Filed as part of this Prospectus:
Financial Highlights
(a) Financial Statements
The financial statements contained in the Company's December 31,
1997
Annual Report to shareholders are incorporated by reference in
the Company's Statement Of Additional Information./9/
(b) Exhibits
1. a. Amended and Restated Articles of Incorporation./2/
b. Articles Supplementary to the Amended and Restated Articles of
Incorporation./6/
c. Articles Supplementary to the Amended and Restated Articles of
Incorporation./8/
d. Articles Supplementary to the Amended and Restated Articles of
Incorporation.*
2. Amended and Restated By-Laws./4/
3. Not applicable.
4. a. Specimen of Certificate of Stock of the Chubb Money
Market Fund./1/
b. Specimen of Certificate of Stock of the Chubb Government
Securities Fund./1/
c. Specimen of Certificate of Stock of the Chubb Total Return
Fund./1/
d. Specimen of Certificate of Stock of the Chubb Tax-Exempt Fund./1/
e. Specimen of Certificate of Stock of the Chubb Growth and Income
Fund./5/
f. Specimen of Certificate of Stock of the Chubb Capital
Appreciation Fund./8/
g. Specimen of Certificate of Stock of the Chubb Global Income
Fund./8/
5. a. Investment Management Agreement between Chubb Investment Funds, Inc.,
Chubb Investment Advisory Corporation and Chubb Asset Managers, Inc. with
respect to Chubb Money Market Fund./1/
b. Technical Amendment to Investment Management Agreement between
Chubb Investment Funds, Inc., Chubb Investment Advisory Corporation
and Chubb Asset Managers, Inc. with respect to Chubb Money Market
C-1
<PAGE>
Fund./3/
c. Investment Management Agreement between Chubb Investment Funds,
Inc., Chubb Investment Advisory Corporation and Chubb Asset Managers,
Inc. with respect to Chubb Government Securities Fund./l/
d. Technical Amendment to Investment Management Agreement between
Chubb Investment Funds, Inc., Chubb Investment Advisory Corporation
and Chubb Asset Managers, Inc. with respect to Chubb Government
Securities Fund./3/
e. Investment Management Agreement between Chubb Investment Funds,
Inc., Chubb Investment Advisory Corporation and Chubb Asset Managers,
Inc. with respect to Chubb Total Return Fund./l/
f. Technical Amendment to Investment Management Agreement between
Chubb Investment Funds, Inc., Chubb Investment Advisory Corporation
and Chubb Asset Managers, Inc. with respect to Chubb Total Return
Fund./3/
g. Investment Management Agreement between Chubb Investment Funds,
Inc., Chubb Investment Advisory Corporation and Chubb Asset Managers,
Inc. with respect to Chubb Tax-Exempt Fund./l/
h. Technical Amendment to Investment Management Agreement between
Chubb Investment Funds, Inc., Chubb Investment Advisory Corporation
and Chubb Asset Managers, Inc. with respect to Chubb Tax-Exempt Fund./3/
i. Investment Management Agreement between Chubb Investment Funds,
Inc., Chubb Investment Advisory Corporation and Chubb Asset Managers,
Inc. with respect to Chubb Growth Fund, (now known as the Chubb Growth
and Income Fund)./l/
j. Technical Amendment to Investment Management Agreement between
Chubb Investment Funds, Inc., Chubb Investment Advisory Corporation
and Chubb Asset Managers, Inc. with respect to Chubb Growth and Income
Fund./3/
k. Investment Management Agreement between Chubb Investment Funds,
Inc., Chubb Investment Advisory Corporation and Chubb Asset Managers,
Inc. with respect to Chubb Capital Appreciation Fund./8/
1. Investment Management Agreement between Chubb Investment Funds,
Inc., Chubb Investment Advisory Corporation and Chubb Asset Managers,
Inc. with respect to Chubb Global Income Fund./8/
C-2
<PAGE>
6. a. Fund Distribution Agreement between Van Eck/Chubb Funds, Inc. and
Van Eck Securities Corporation.*
b. Specimen Copy of Selling Group Agreement.*
7. Not applicable.
8. Custodial Services Agreement between Chubb Investment Funds, Inc. and
Citibank, N.A./l/
9. a. Shareholder Services Agreement between Chubb Investment Funds, Inc.
and Firstar Trust Company./7/
C-3
<PAGE>
b. Agreement for Waiver of Fees and Assumption of Expenses between Chubb
Investment Funds, Inc., Chubb Investment Advisory Corporation, Chubb Asset
Managers, Inc., Chubb Securities Corporation, and Chubb Life Insurance
Company of New Hampshire./4/
10. Opinion and Consent of Counsel as to legality of the securities being
registered./1/
a. Opinion and Consent of Counsel as to legality of the securities
being registered./8/
b. Opinion and Consent of Counsel as to legality of the securities
being registered - Class B Shares to be filed by amendment.
11. Consent of Ernst & Young LLP.*
12. Not applicable.
13. Stock Subscription Agreement between Chubb Investment Funds, Inc. and Chubb
Life Insurance Company of America./1/
15. a. Rule 12b-1 Plan./1/
b. Rule 12b-1 Plans for Class B Shares.*
16. Performance Calculation.
17. Financial Data Schedules.*
19. Consent of Freedman, Levy, Kroll & Simonds./1/
99.2 Stock Subscription Agreement between Chubb Investment Funds, Inc. and
Chubb Life Insurance Company of America./10/
99.4 Diagram of Subsidiaries of The Chubb Corporation./10/
99.5 Price Make-up Sheet./10/
C-4
<PAGE>
/1/ Incorporated by reference to earlier filing on September 17, 1987, SEC File
No. 33-147367, to the exhibit number indicated on that Form N-lA Registration
Statement.
/2/ Incorporated by reference to earlier filing on April 28, 1988, SEC File No.
33-147367, to the exhibit number indicated on that Form N-lA Registration
Statement.
/3/ Incorporated by reference to earlier filing on April 17, 1989, SEC File No.
33-147367, to the exhibit number indicated on that Form N-lA Registration
Statement.
/4/ Incorporated by reference to earlier filing on April 15, 1991, SEC File No.
33-14737, to the exhibit number indicated on that Form N-lA Registration
Statement.
/5/ Incorporated by reference to earlier filing on April 22, 1992, SEC File No.
33-14737, to the exhibit number indicated on that Form N-1A Registration
Statement.
/6/ Incorporated by reference to earlier filing on April 23, 1994, SEC File No.
33-14737, to the exhibit number indicated on that Form N1-A Registration
Statement.
/7/ Incorporated by reference to earlier filing on April 17, 1995, SEC File No.
33-14737, to the exhibit number indicated on that Form N-lA Registration
Statement.
/8/ Incorporated by reference to earlier filing on June 16, 1995, SEC File No.
33-14737, to the exhibit number indicated on that Form N-lA Registration
Statement.
/9/ Incorporated by reference to Annual Report to Shareholders filed on
March 2, 1998, SEC File No. 33-14737.
/10/ Incorporated by reference to earlier filing on April 23, 1997, SEC File
No. 33-14737, to the exhibit number indicated on that Form N-1A Registration
Statement.
*Filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant
No person is directly or indirectly controlled by Registrant.
The information in the Registrant's Statement of Additional Information dated
April 1, 1996 relating to ownership by Chubb Life Insurance Company of America
("Chubb Life") and its affiliated companies of outstanding shares of the Company
is incorporated herein by reference.
Chubb Life is a wholly-owned subsidiary of The Chubb Corporation, a New Jersey
corporation. Chubb Asset Managers, Inc. ("Chubb Asset"), a Delaware corporation,
which is the
C-5
<PAGE>
Investment adviser to the Registrant, is a wholly-owned subsidiary of The
Chubb Corporation. A diagram of the subsidiaries of The Chubb Corporation as
previously filed is incorporated herein by reference.
Item 26. Number of Holders of Securities
As of January 30, 1998.
<TABLE>
<CAPTION>
(2)
(1) Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
Van Eck/Chubb Money Market Fund; $.01 par value 663
Van Eck/Chubb Government Securities Fund; $.01 par value 537
Van Eck/Chubb Total Return Fund; $.01 par value 2077
Van Eck/Chubb Tax-Exempt Fund; $.01 par value 576
Van Eck/Chubb Growth and Income Fund; $.01 par value 2803
Van Eck/Chubb Capital Appreciation Fund; $.01 par value 815
Van Eck/Chubb Global Income Fund; $.01 par value 99
</TABLE>
Chubb Life is the successor-in-interest to Chubb Life Insurance Company of
New Hampshire, which had provided the initial capital to the Company by
purchasing 100,000 shares of the Money Market Fund and 10,000 shares each of the
Government Securities Fund, the Total Return Fund, the Tax-Exempt Fund, the
Growth and Income Fund, the Capital Appreciation Fund and the Global Income
Fund, respectively.
Item 27. Indemnification
Reference is made to Article VII, Section 10 of the Registrant's Amended and
Restated Articles of Incorporation filed herein as Exhibit 1 to this
Registration Statement and to Article V of the Registrant's By-Laws filed herein
as Exhibit 2 to this Registration Statement. The Articles of Incorporation
provide that neither an officer nor director of the Registrant will be liable to
the Registrant or its shareholders for monetary damages for breach of fiduciary
duty as an officer or director, except to the extent such limitation of
liability is not otherwise permitted by law. The By-Laws provide that the
Registrant will indemnify its directors and officers to the extent permitted or
required by Maryland law. A resolution of the Board of Directors specifically
approving payment or advancement of expenses to an officer is required by the
By-Laws. Indemnification may not be made if the director or officer has
incurred liability by reason or willful misfeasance, bad faith, gross negligence
or reckless disregard of duties in the conduct of his/her office ("Disabling
Conduct"). The means of determining whether indemnification shall be made are
(1) a final decision by a court or other-body before
C-6
<PAGE>
whom the proceeding is brought that the director or officer was not liable by
reason of Disabling Conduct, or (2) in the absence of such a decision, a
reasonable determination, based on a review of the facts, that the director or
officer was not liable by reason of Disabling Conduct. Such latter
determination may be made either by (a) vote of a majority of directors who are
neither interested persons (as defined in the Investment Company Act of 1940)
nor parties to the proceeding or (b) independent legal counsel in a written
opinion. The advancement of legal expenses may not occur unless the director or
officer agrees to repay the advance (if it is determined that he/she is not
entitled to the indemnification) and one of three other conditions is satisfied:
(1) the director or officer provides security for his/her agreement to repay,
(2) the Registrant is insured against loss by reason of lawful advances, or '(3)
the directors who are not interested persons and are not parties to the
proceedings, or independent counsel in a written opinion, determine that there
is reason to believe that the director or officer will be found entitled to
indemnification.
The directors and officers are currently covered for liabilities incurred
in their capacities as such directors and officers under the terms of a joint
liability insurance policy. This policy also covers the directors and officers
of Chubb Asset, Chubb Investment Advisory Corporation and Chubb America Fund,
Inc. The policy also insures the Registrant, Chubb Asset, Chubb Investment
Advisory Corporation and Chubb America Fund, Inc. for errors and omissions
liabilities.
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers 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 Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, 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 whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
C-7
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Chubb Asset was formed in 1986 and was not previously engaged in any
business. It also serves as sub-investment manager for the Bond Portfolio, the
Money Market Portfolio, and the Growth and Income Portfolio of Chubb America
Fund, Inc.
Reference is made to Form ADV of Chubb Asset (File No. 801 - 28901) 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 Advisery Services" and "Directors and Officers" in the
Registrant's Statement of Additional Information.
C-8
<PAGE>
ITEM 29. Principal underwriter
(a) Van Eck Securities Corporation, principal underwriter for the Registrant,
also distributes shares of Van Eck Worldwide Insurance Trust and Van Eck Funds.
(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 Direcor Chairman and Director
99 Park Avenue
New York, NY 10016
Philip De Feo President, Chief Executive Officer and Director None
99 Park Avenue
New York, NY 10016
Jan van Eck Executive Vice President and Director None
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 Vice President
99 Park Avenue
New York, NY 10016
Thaddeus Leszczynski Vice President, General Counsel and Secretary Vice President and Secretary
99 Park Avenue
New York, NY 10016
Bruce J. Smith Vice President and Chief Financial Officer, Treasurer, Controller Vice President and Treasurer
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
Robin Kunhardt Director, Product Management None
99 Park Avenue
New York, NY 10016
</TABLE>
(c) Not Applicable
C-9
<PAGE>
Item 30. Location of Accounts and Records
The following entities prepare, maintain and preserve the records required by
Section 31(a) of the Investment Company Act for the Registrant. These records
include records relating to activities of these entities required to be
maintained under Rules 31a-1 and 31a-2 of the Investment Company Act, records
relating to applicable federal and state tax laws, and records under any other
law or administrative rules or procedures applicable to the Registrant. The
services are provided to the Registrant through written agreements between the
parties to the effect that such services will be provided to the Registrant for
such periods prescribed by the Rules and Regulations of the Securities and
Exchange Commission under the
C-10
<PAGE>
Investment Company Act and such records will be surrendered promptly on request:
Citibank, N.A., 111 Wall Street, New York, New York 10043 (records relating to
activities of the custodian and any subcustodian); Chubb Asset Managers, Inc.,
15 Mountain View Road, Warren, New Jersey 07061 (records relating to activities
of the investment adviser); Van Eck Securities Corporation, 99 Park Avenue, New
York, New York 10016 (records relating to activities of the Distributor);
Firstar Trust Company 615 East Michigan Street, Milwaukee, Wisconsin 53202-5207
(records relating to the activities of the Transfer Agent), Van Eck Associates
Corporation, 99 Park Avenue, New York, New York 10016 (records relating to
activities of the Administrator); and Chubb Investment Advisory Corporation, One
Granite Place, Concord, New Hampshire 03301 (certain books and records not
maintained by the Company's Custodian, investment adviser, Distributor, Transfer
Agent or Administrator).
Item 31. Management Services
Not applicable
Item 32. Undertakings
Not applicable.
C-11
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Amendment to
the Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 24th day of February, 1998.
VAN ECK/CHUBB FUNDS, INC.
By: /s/ Michael O' Reilly
----------------------------------
Michael O' Reilly
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/ Michael O' Reilly
_____________________ President, Director 2/24/98
Michael O' Reilly
/s/ John C. Van Eck Chairman and 2/24/98
_____________________ Director
John C. Van Eck
/s/ Bruce J. Smith
___________________ Chief Financial Officer 2/24/98
Bruce J. Smith
/s/ Jeremy Biggs
__________________ Director 2/24/98
Jeremy Biggs
/s/ Wesley G. McCain
___________________ Director 2/24/98
Wesley G. McCain
/s/ David J. Olderman
___________________ Director 2/24/98
David J. Olderman
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Item
- ----------- ----
<S> <C>
Exhibit 1d Articles Supplementary
Exhibit 6a Distribution Agreement
Exhibit 6b Form of Selling Group Agreement
Exhibit 11 Consent of Coopers & Lybrand L.L.P.
Exhibit 15 Plan of Distribution (Class B Shares)
Exhibit 16 Performance Calculation
Exhibit 17 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> GOVERNMENT SECURITIES FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 30,486,916
<INVESTMENTS-AT-VALUE> 31,095,312
<RECEIVABLES> 450,711
<ASSETS-OTHER> 240,999
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,787,022
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48,032
<TOTAL-LIABILITIES> 48,032
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,543,263
<SHARES-COMMON-STOCK> 2,933,808
<SHARES-COMMON-PRIOR> 1,222,744
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (412,669)
<ACCUM-APPREC-OR-DEPREC> 608,396
<NET-ASSETS> 31,738,990
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,108,024
<OTHER-INCOME> 0
<EXPENSES-NET> 163,527
<NET-INVESTMENT-INCOME> 944,497
<REALIZED-GAINS-CURRENT> 7,015
<APPREC-INCREASE-CURRENT> (569,084)
<NET-CHANGE-FROM-OPS> 576,099
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 944,497
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,006,126
<NUMBER-OF-SHARES-REDEEMED> 373,997
<SHARES-REINVESTED> 78,935
<NET-CHANGE-IN-ASSETS> 18,920,540
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (419,684)
<GROSS-ADVISORY-FEES> 32,706
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 253,499
<AVERAGE-NET-ASSETS> 16,353,000
<PER-SHARE-NAV-BEGIN> 10.48
<PER-SHARE-NII> 0.62
<PER-SHARE-GAIN-APPREC> 0.34
<PER-SHARE-DIVIDEND> 0.62
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.82
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> TOTAL RETURN
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 39,823,179
<INVESTMENTS-AT-VALUE> 49,183,270
<RECEIVABLES> 369,843
<ASSETS-OTHER> 2,386,533
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51,939,646
<PAYABLE-FOR-SECURITIES> 1,920,160
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 85,851
<TOTAL-LIABILITIES> 2,006,011
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 40,585,602
<SHARES-COMMON-STOCK> 2,470,042
<SHARES-COMMON-PRIOR> 1,784,176
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 4,588
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 7,470
<ACCUM-APPREC-OR-DEPREC> 9,360,091
<NET-ASSETS> 49,933,635
<DIVIDEND-INCOME> 466,762
<INTEREST-INCOME> 672,658
<OTHER-INCOME> 0
<EXPENSES-NET> 449,944
<NET-INVESTMENT-INCOME> 689,476
<REALIZED-GAINS-CURRENT> 2,025,968
<APPREC-INCREASE-CURRENT> 4,260,078
<NET-CHANGE-FROM-OPS> 6,975,522
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 700,327
<DISTRIBUTIONS-OF-GAINS> 2,208,188
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 971,037
<NUMBER-OF-SHARES-REDEEMED> 430,994
<SHARES-REINVESTED> 145,823
<NET-CHANGE-IN-ASSETS> 18,869,536
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 181,013
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 71,991
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 543,874
<AVERAGE-NET-ASSETS> 35,995,530
<PER-SHARE-NAV-BEGIN> 17.41
<PER-SHARE-NII> 0.37
<PER-SHARE-GAIN-APPREC> 3.78
<PER-SHARE-DIVIDEND> 0.37
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.97
<PER-SHARE-NAV-END> 20.22
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> TAX-EXEMPT FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 29,102,434
<INVESTMENTS-AT-VALUE> 30,582,839
<RECEIVABLES> 438,862
<ASSETS-OTHER> 312,025
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,333,726
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45,233
<TOTAL-LIABILITIES> 45,233
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,818,764
<SHARES-COMMON-STOCK> 2,490,289
<SHARES-COMMON-PRIOR> 1,239,556
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 10,660
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 16
<ACCUM-APPREC-OR-DEPREC> 1,480,405
<NET-ASSETS> 31,288,493
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 999,445
<OTHER-INCOME> 0
<EXPENSES-NET> 174,256
<NET-INVESTMENT-INCOME> 825,189
<REALIZED-GAINS-CURRENT> 88,323
<APPREC-INCREASE-CURRENT> 731,502
<NET-CHANGE-FROM-OPS> 1,645,014
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 825,189
<DISTRIBUTIONS-OF-GAINS> 98,961
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,618,059
<NUMBER-OF-SHARES-REDEEMED> 441,704
<SHARES-REINVESTED> 74,378
<NET-CHANGE-IN-ASSETS> 16,227,111
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 748,903
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 37
<GROSS-ADVISORY-FEES> 34,851
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 271,124
<AVERAGE-NET-ASSETS> 17,425,580
<PER-SHARE-NAV-BEGIN> 12.15
<PER-SHARE-NII> 0.58
<PER-SHARE-GAIN-APPREC> 0.45
<PER-SHARE-DIVIDEND> 0.58
<PER-SHARE-DISTRIBUTIONS> 0.04
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.56
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> GROWTH & INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 52,984,534
<INVESTMENTS-AT-VALUE> 67,464,259
<RECEIVABLES> 107,496
<ASSETS-OTHER> 2,500,548
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 70,072,303
<PAYABLE-FOR-SECURITIES> 2,237,425
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 982,558
<TOTAL-LIABILITIES> 3,309,983
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,293,114
<SHARES-COMMON-STOCK> 2,718,500
<SHARES-COMMON-PRIOR> 1,914,289
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 5,904
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 4,615
<ACCUM-APPREC-OR-DEPREC> 14,479,725
<NET-ASSETS> 66,762,320
<DIVIDEND-INCOME> 841,356
<INTEREST-INCOME> 34,235
<OTHER-INCOME> 0
<EXPENSES-NET> 628,972
<NET-INVESTMENT-INCOME> 246,619
<REALIZED-GAINS-CURRENT> 3,953,219
<APPREC-INCREASE-CURRENT> 6,037,252
<NET-CHANGE-FROM-OPS> 10,237,090
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 258,304
<DISTRIBUTIONS-OF-GAINS> 4,401,950
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,017,154
<NUMBER-OF-SHARES-REDEEMED> 401,518
<SHARES-REINVESTED> 188,575
<NET-CHANGE-IN-ASSETS> 26,480,471
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 449,897
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 100,635
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 748,803
<AVERAGE-NET-ASSETS> 50,317,315
<PER-SHARE-NAV-BEGIN> 21.04
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 5.29
<PER-SHARE-DIVIDEND> 0.10
<PER-SHARE-DISTRIBUTIONS> 1.76
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 24.56
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> CAPITAL APPRECIATION
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 39,217,304
<INVESTMENTS-AT-VALUE> 39,963,176
<RECEIVABLES> 805,204
<ASSETS-OTHER> 941,533
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 41,709,913
<PAYABLE-FOR-SECURITIES> 165,336
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62,496
<TOTAL-LIABILITIES> 227,832
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 40,741,423
<SHARES-COMMON-STOCK> 2,661,350
<SHARES-COMMON-PRIOR> 495,668
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 82
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 5,132
<ACCUM-APPREC-OR-DEPREC> 745,872
<NET-ASSETS> 41,482,081
<DIVIDEND-INCOME> 181,626
<INTEREST-INCOME> 26,675
<OTHER-INCOME> 0
<EXPENSES-NET> 195,844
<NET-INVESTMENT-INCOME> 12,457
<REALIZED-GAINS-CURRENT> 2,023,906
<APPREC-INCREASE-CURRENT> (118,155)
<NET-CHANGE-FROM-OPS> 1,918,208
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 25,300
<DISTRIBUTIONS-OF-GAINS> 2,129,529
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,137,853
<NUMBER-OF-SHARES-REDEEMED> 111,756
<SHARES-REINVESTED> 139,585
<NET-CHANGE-IN-ASSETS> 35,041,510
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 105,557
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31,335
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 237,723
<AVERAGE-NET-ASSETS> 15,667,550
<PER-SHARE-NAV-BEGIN> 12.99
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 3.57
<PER-SHARE-DIVIDEND> 0.01
<PER-SHARE-DISTRIBUTIONS> 0.97
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.59
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> GLOBAL INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 49,731,200
<INVESTMENTS-AT-VALUE> 49,398,837
<RECEIVABLES> 1,139,430
<ASSETS-OTHER> 1,596,536
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 52,134,803
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 47,236
<TOTAL-LIABILITIES> 47,236
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,555,384
<SHARES-COMMON-STOCK> 5,404,248
<SHARES-COMMON-PRIOR> 1,193,895
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 118,123
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 150,670
<ACCUM-APPREC-OR-DEPREC> (199,024)
<NET-ASSETS> 52,087,567
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 872,782
<OTHER-INCOME> 0
<EXPENSES-NET> 197,424
<NET-INVESTMENT-INCOME> 675,358
<REALIZED-GAINS-CURRENT> 8,476
<APPREC-INCREASE-CURRENT> (538,981)
<NET-CHANGE-FROM-OPS> 144,853
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 548,912
<DISTRIBUTIONS-OF-GAINS> 401,993
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41,153,429
<NUMBER-OF-SHARES-REDEEMED> 53,640
<SHARES-REINVESTED> 110,564
<NET-CHANGE-IN-ASSETS> 39,860,689
<ACCUMULATED-NII-PRIOR> 969
<ACCUMULATED-GAINS-PRIOR> 10,017
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29,248
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 228,516
<AVERAGE-NET-ASSETS> 14,624,015
<PER-SHARE-NAV-BEGIN> 10.24
<PER-SHARE-NII> 0.47
<PER-SHARE-GAIN-APPREC> 0.48
<PER-SHARE-DIVIDEND> 0.40
<PER-SHARE-DISTRIBUTIONS> 0.12
<RETURNS-OF-CAPITAL> 0.07
<PER-SHARE-NAV-END> 9.64
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Auditors" and to the use of our report dated
February 20, 1998, which is incorporated by reference, in this Registration
Statement (Form N-1A No. 33-14737) of Van Eck/Chubb Funds, Inc.
ERNST & YOUNG LLP
New York, New York
March 2, 1998
<PAGE>
Exhibit 15
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
(Class B Shares)
WHEREAS, VAN ECK/CHUBB FUNDS, INC., a company organized under the laws
of the state of Maryland (hereinafter called the "Company"), is engaged in
business as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, the Company is authorized to issue shares in separate series, with
each such series representing the interests in a separate portfolio of
securities and other assets (any series, currently existing or hereafter
established by the Company offering two or more classes of its shares adopting
this plan, as set forth in Exhibit A hereto as it may be amended from time to
time, being referred to hereafter, individually or collectively as the context
may require, as "Series");
WHEREAS, shares of Series of the Company may be divided into two or more
classes;
WHEREAS, the class of shares of a Series offered to the public at the
public offering price per share and subject to a contingent deferred sales
charge ("CDSC") on the terms and conditions set forth in the Company's then-
current prospectus shall be designated as Class B shares (the "Shares");
WHEREAS, Van Eck Securities Corporation (the "Underwriter") serves as
principal underwriter of Shares of each Series pursuant to a written agreement;
WHEREAS, the Company hereby intends to act as a distributor of Shares in
accordance with Rule 12b-1 under the Act, as it may from time to time be amended
("Rule 12b-1"), and desires to adopt a Plan of Distribution pursuant to such
Rule on the terms and conditions as hereinafter set forth, in respect of the
Shares (the "Plan");
WHEREAS, the Directors as a whole, and the Directors who are not
"interested persons" of the Company (as defined in the Act) and who have no
direct or indirect financial interest in the operation of the Plan and any
agreements relating to it (the "Qualified Directors"), having determined, in the
exercise of their reasonable business judgment and in light of their fiduciary
duties under state law and under Sections 36(a) and (b) of the Act, that there
is a reasonable likelihood that the Plan will benefit the Series and the holders
of the Shares of such Series, have approved the Plan by vote cast in person at a
meeting called for the purpose of voting on the Plan and agreements related
thereto; and
NOW, THEREFORE, the Company hereby adopts the Plan in accordance with Rule
12b-1:
Section 1. Distribution Activities
-----------------------
Subject to the supervision of the Directors, the Company or the Underwriter
on behalf of the Company for the compensation set forth herein may, directly or
indirectly, engage in any activities primarily intended to result in the sale of
Shares, which activities may include, but are not limited to, one or more of the
<PAGE>
following: (1) advancing commissions to securities dealers in respect of sales
of Shares ("Advanced Commissions"); (2) making payments to securities dealers
and others engaged in the sale of Shares, including making payments of fees to
the broker of record for servicing shareholder accounts ("Maintenance Fees");
(3) paying compensation to and expenses of personnel (including personnel of the
Underwriter and organizations with which the Company or the Underwriter has
entered into agreements pursuant to this Plan) who engage in or support
distribution of Shares or who render shareholder support services, including but
not limited to, office space and equipment, telephone facilities and expenses,
answering routine inquiries regarding the Company, processing shareholder
transactions and providing such other shareholder services, other than those
provided by the transfer agent and other agents of the Company, as the Company
may reasonably request; (4) formulating and implementing marketing and
promotional activities, including but not limited to, direct mail promotions and
television, radio, newspaper, magazine and other mass media advertising; (5)
preparing, printing and distributing sales literature; (6) preparing, printing
and distributing prospectuses of the Company and reports for recipients other
than existing shareholders of the Company; (7) obtaining such information,
analyses and reports with respect to marketing and promotional activities as the
Company may, from time to time, deem advisable and; (8) paying, or reimbursing
the Underwriter for, interest on unrecouped Carry Forward Commissions (as
hereafter defined) at the rate paid by the Underwriter, or, if such amounts are
funded by the Underwriter or an affiliate, at the Broker Call Loan Rate as
reported in the Wall Street Journal, as such rates may vary from day to day. The
Underwriter on behalf of the Company is authorized to engage in the activities
listed above, and in any other activities primarily intended to result in the
sale of Shares, either directly or through other persons with which the Company
or the Underwriter has entered into agreements pursuant to the Plan (all such
activities hereafter "Distribution Activities"). The Underwriter is not
obligated to perform all of the Distribution Activities enumerated above or
maintain any level of services or expenditures, but shall in its sole discretion
determine which Distribution Activities to engage in and the resources to be
committed to such activities.
Section 2. Fees, Maximum Expenditures
--------------------------
(a) Payment for Distribution Activities - The Company is authorized to pay
-----------------------------------
the Underwriter for the Distribution Activities performed under the Plan, a fee
at the annual rate set forth in Exhibit A ("Annual Fee"). Such Series shall
calculate daily amounts payable by it in respect of Shares hereunder and shall
pay such amounts monthly or at such other intervals as the Directors may
determine. In the event the Plan is terminated, the Underwriter shall be
entitled to recoup amounts expended on Distribution Activities on behalf of the
Series in excess of the Annual Fees, CDSC and any other compensation received in
connection with the distribution of the Shares ("Unrecouped Amounts"). The
payment of Unrecouped Amounts in the case of a Series shall not exceed, on an
annual basis, the Annual Fee ("Annual Limitation"). Unrecouped Amounts payable
under the Plan that are not paid because they exceed the Annual Fee ("Carry
Forward Amounts") shall be carried forward by a Series and shall be paid within
the Annual Limitation in accordance with this Plan. Carry Forward Amounts
attributable to commissions advanced by, or on behalf of, the Underwriter in
respect of Shares pursuant to Section 1(1) hereof are "Carry Forward
Commissions."
(b) Application of Proceeds - The excess of amounts received by the
-----------------------
Underwriter under Section 2(a) hereof over amounts paid by it as Maintenance
Fees to third parties which are not "affiliated persons" (as defined in the Act)
of the Company and the proceeds received by the Underwriter from CDSC payments
shall be applied first toward interest on unreimbursed Carry Forward
Commissions, then to reduce any unreimbursed Carry Forward Commissions and then
to reduce the costs incurred by the Underwriter in performing Distribution
Activities.
2
<PAGE>
(c) Any unreimbursed Carry Forward Amounts under Section 2(a) attributable
to a fiscal year of a Series shall be paid by the Company in respect of Shares
in a subsequent year within the limitations set forth herein. Expenditures made
by one class under the Plan may not be used to subsidize the sale of shares of
another class of a Series.
Section 3. Term and Termination
--------------------
(a) Series. The Plan shall become effective on May 1, 1998 with with
------
respect to the Series then listed in Schedule A hereto.
(b) Additional Series. As additional Series are established, the Plan
-----------------
shall become effective with respect to each such Series listed in Exhibit A at
the Annual Fee set forth in such Exhibit upon the initial public offering of
such new Series, provided that the Plan has previously been approved for
continuation, together with any related agreements, by votes of a majority of
both (a) the Directors of the Company and (b) the Qualified Directors of the
Company, cast in person at a meeting held before the initial public offering of
such new Series and called for the purpose of voting on such approval.
(c) Continuation of the Plan. The Plan and any related agreements shall
------------------------
continue in effect with respect to a Series for so long as such continuance is
specifically approved at least annually by votes of a majority of both (a) the
Directors of the Company and (b) the Qualified Directors of the Company, cast in
person at a meeting called for the purpose of voting on this Plan and any
related agreements.
(d) Termination of the Plan. The Plan may be terminated at any time with
-----------------------
respect to any Series by vote of a majority of the Qualified Directors of the
Company, or by vote of a majority of the outstanding Shares of that Series. The
Underwriter shall not be entitled to payments or reimbursement in respect of
costs incurred in performing Distribution Activities which occur after
termination of the Plan. However, the Underwriter shall be entitled to
reimbursement of all Carry Forward Amounts and other costs properly incurred in
respect of Shares prior to termination, and the Company shall continue to make
any required payments to the Underwriter pursuant to Section 2 subject to the
Annual Limitation until such time as all such amounts have been reimbursed. The
Underwriter shall also be entitled to receive all CDSC's paid or payable with
respect to Shares purchased before the termination of the Plan that are redeemed
or repurchased by the Company subsequent to termination of the Plan. The Plan
may remain in effect with respect to a Series even if it has been terminated in
accordance with this Section 3(d) with respect to one or more other Series.
Section 4. Amendments
----------
The Plan may not be amended to increase materially the amount of
distribution expenditures provided for in Section 2 hereof unless such amendment
is approved by a vote of the majority of the outstanding voting securities of
each of the affected classes of a Series and no material amendment to the Plan
shall be made unless approved in the manner provided for annual continuation in
Section 3(c) hereof.
Section 5. Independent Directors
---------------------
While the Plan is in effect, the selection and nomination of Directors who
are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not interested persons.
3
<PAGE>
Section 6. Quarterly Reports; Annual Reports
---------------------------------
The Treasurer of the Company shall provide to the Directors and the
Directors shall review, at least quarterly, a written report of the amounts
expended for Distribution Activities and the purpose for which such expenditures
were made. The Treasurer shall review, at least annually the revenues received
and expenses incurred by the Underwriter pursuant to the Plan.
Section 7. Recordkeeping
-------------
The Company shall preserve copies of the Plan and any related agreements
and all reports made pursuant to Section 6 hereof, for a period of not less than
six years from the date of the Plan, or the agreements and such report, as the
case may be, the first two years in an easily accessible place.
IN WITNESS WHEREOF, the Company has executed this Plan of Distribution on
the day and year set forth below in New York, New York.
Date: May 1, 1998
VAN ECK/CHUBB FUNDS, INC.
/s/ Michael O'Reilly
------------------------------
President
ATTEST:
/s/ Thaddeus Leszczynski
- -----------------------------
Secretary
4
<PAGE>
VAN ECK/CHUBB FUNDS, INC.
PLANS OF DISTRIBUTION PURSUANT TO RULE 12b-1
(Class B Shares)
EXHIBIT A
Name of Series Maximum 12b-1 Fees/Annual Limitation
(Annually as a % of average daily net assets)
Capital Appreciation Fund - Class B 1.00%
Global Income Fund - Class B 1.00%
Government Securities Fund - Class B 1.00%
Growth and Income Fund - Class B 1.00%
Tax-Exempt Fund - Class B 1.00%
Total Return Fund - Class B 1.00%
5
<PAGE>
Exhibit 1d
CHUBB INVESTMENT FUNDS, INC.
ARTICLES OF AMENDMENT
CHUBB INVESTMENT FUNDS, INC., a Maryland Corporation having its principal
office in Baltimore City, Maryland, and a registered open-end investment company
under the Investment Company Act of 1940 (hereinafter called the "Fund"), hereby
certifies to the State Department of Assessment and Taxation of Maryland, that:
FIRST: The charter of the Fund is hereby amended by striking out Article II
and inserting in lieu of the following:
"The name of the Corporation is VAN ECK/CHUBB FUNDS, INC."
SECOND: The Board of Directors of the Fund, at a meeting held on September 30,
1997, duly adopted the following resolution pursuant to Section 2-605
of the Corporations and Associations Article of the Annotated Code of
Maryland, which does not require shareholder approval, and declared
that the said amendment of the charter as proposed was advisable:
The Board of Directors of the Fund hereby approves a change in the name
of the Fund to VAN ECK/CHUBB FUNDS, INC and authorizes the officers of
the Fund, and each of them, to amend the Fund's Articles of
Incorporation and to take any other actions that are necessary or
appropriate to effectuate the purpose of this resolution.
THIRD: The Articles of Amendment shall become effective on the 1st day of
October, 1997.
IN WITNESS WHEREOF, CHUBB INVESTMENT FUNDS, INC. has caused these
present to be signed in its name and on its behalf by its Vice
President and witnessed by its Assistant Secretary on September 30,
1997.
CHUBB INVESTMENT FUNDS, INC.
/s/ Thaddeus M. Leszczynski
---------------------------------------
Thaddeus M. Leszczynski, Vice President
Witness: (attest)
/s/ Susan I. Grant
- ------------------------------------
Susan I. Grant, Assistant Secretary
THE UNDERSIGNED, Thaddeus M. Leszczynski, Vice President of Chubb Investment
Funds, Inc., who executed on behalf of said Fund the foregoing Articles of
Amendment, of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said Fund, the foregoing Articles of Amendment to be the
Corporate act of said Fund and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
/s/ Thaddeus M. Leszczynski
---------------------------------------
Thaddeus M. Leszczynski, Vice President
<PAGE>
Exhibit 6a
DISTRIBUTION AGREEMENT
----------------------
THIS AGREEMENT made as of the 1st day of October, 1997 by and between VAN
ECK/CHUBB FUNDS, INC. (the "Fund"), a business corporation established and
existing under the laws of the State of Maryland and engaged in the business of
an open-end management investment company and VAN ECK SECURITIES CORPORATION
(the "Distributor"), a corporation organized and existing under the laws of the
State of Delaware.
WHEREAS, the Fund proposes to offer shares of beneficial interest in the
seven separate series representing interests in different portfolio of assets of
the Fund and such other series as may from time to time hereafter established
(each series being referred to herein as a "Series" or collectively as the
"Series").
NOW, THEREFORE, in consideration of the mutual convenants hereinafter
contained, the parties hereto agree as follows:
Section 1. Appointment of the Distributor. The Fund hereby appoints the
------------------------------
Distributor as its exclusive agent to sell and distribute shares of each Series
then in existence (the "Shares") for the account and risk of the Fund during the
continuous offering of such Shares, on the terms and for the period set forth in
this Agreement, and the Distributor hereby accepts such appointment and agrees
to act hereunder. It is understood that purchases of Shares of any Series may
be made through other broker-dealers who are members in good standing of the
National Association of Securities Dealers, Inc. ("NASD") in connection with the
offering and sale of the Shares, in which case the Distributor shall enter into
Dealer Agreements ("Dealer Agreements") or amend existing Dealer Agreements with
such broker-dealers, through persons who are not required or permitted to become
NASD members by entering into Selling Agency Agreements or other agreements
("Agency Agreements") (collectively, "Agreements") and directly through the
Fund's Transfer Agent in the manner set forth in a Series' Prospectus.
Section 2. Services and Duties of the Distributor.
--------------------------------------
(a) The Distributor agrees to arrange to sell, as exclusive agent for
the Fund, from time to time during the term of this Agreement, Shares of any
Series upon the terms described in such Series' Prospectus. As used in this
Agreement, the term "Prospectus" shall mean a prospectus and the term "Statement
of Additional Information" shall mean the statement of additional information
included in the Fund's Registration Statement and the term "Registration
Statement" shall mean the Registration Statement, including exhibits and
financial statements, most recently filed by the Fund with the Securities and
Exchange Commission and effective under the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act
<PAGE>
of 1940, as amended (the "1940 Act"), as such Registration Statement is amended
by any amendments thereto at the time in effect.
(b) Upon commencement of the continuous public offering of Shares of
any Series, the Distributor will hold itself available to receive orders,
satisfactory to the Distributor, for the purchase of Shares of such Series and
will accept such orders on behalf of the Series as of the time of receipt of
such orders and will transmit such orders as are so accepted to the Fund's
Transfer Agent as promptly as practicable. Purchase orders shall be deemed
effective at the time and in the manner set forth in a Series' Prospectus.
(c) The Distributor may enter into Dealer Agreements (or amend
existing Dealer Agreements to conform therewith) with such registered and
qualified retail broker-dealers as it may select pursuant to which such broker-
dealers may also arrange for the sale or sell Shares of any Series or enter into
Agency Agreements (or amend existing Agency Agreements to conform therewith)
pursuant to which such persons may also arrange for the sale or sell shares of
any Series.
(d) The offering price of the Shares of a Series shall be the net
asset value (as described in the Articles of Incorporation of the Fund, as
amended from time to time and determined as set forth in the Prospectus and the
Statement of Additional Information of such Series) per Share for the Series
next determined following receipt of an order plus the applicable sales charge,
if any, calculated in the manner set forth in the Series' Prospectus. The
Distributor shall receive the entire amount of the sales charge, if any, as
compensation for its services under this Agreement; however, the Distributor may
reallow all or any portion of such sales charge to persons entering into
Agreements (or amending existing Dealer Agreements) with the Distributor to sell
Shares of such Series. Shares of a Series may be sold at prices that reflect
scheduled variations in, or elimination of, the sales charge to particular
classes of investors or transactions in accordance with a Series' Prospectus and
Statement of Additional Information. The Fund shall furnish the Distributor,
with all possible promptness, advice of each computation of the net asset value
of a Series. The Distributor shall also be entitled, subject to the terms and
conditions of the Fund's Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act of 1940, to amounts payable by a Fund thereunder.
(e) The Distributor shall use its best efforts to obtain from
investors unconditional orders for Shares and shall not be obligated to arrange
for sales of any certain number of Shares of a Series and the services of the
Distributor to the Fund hereunder shall not be deemed to be exclusive, and the
Distributor shall be free to (i) render similar services to, and act as
underwriter or distributor in connection with the distribution of shares of
other investment companies, and (ii) engage in any other businesses and
activities from time to time.
(f) The Distributor is authorized on behalf of the Fund to repurchase
Shares of the Series presented to it by dealers at the price determined in
accordance with, and in the manner set for in, the Prospectus of such Series.
2
<PAGE>
(g) Unless otherwise notified by the Fund, any right granted to the
Distributor to accept orders for Shares or to make sales on behalf of the Fund
or to purchase Shares for resale will not apply to (i) Shares issued in
connection with the merger or consolidation of any other investment company with
the Fund or its acquisition, by purchase or otherwise, of all or substantially
all of the assets of any investment company or substantially all the outstanding
Shares of any such company and (ii) Shares that may be offered by the Fund to
shareholders of the Fund by virtue of their being such shareholders.
(h) If and whenever the determination of net asset value is suspended
and until such suspension be terminated, no further order for Shares shall be
accepted by the Distributor after it has received advance written notice of such
suspension except unconditional orders placed with the Distributor before its
receipt of notice. In addition, the Fund reserves the right to suspend sales and
the Distributor's authority to accept orders for Shares on behalf of the Fund
if, in the judgment of a majority of the Board of Directors or a majority of the
Executive Committee of such Board, if such body exists, it is in the best
interests of the Fund to do so, such suspension to continue for such period as
may be determined by such majority; and in that event, no Shares will be sold by
the Distributor on behalf of the Fund after the Distributor has received advance
written notice while such suspension remains in effect except for Shares
necessary to cover unconditional orders accepted by the Distributor before it
had knowledge of the suspension.
Section 3. Duties of the Fund.
------------------
(a) The Fund agrees to sell Shares of its constituent Series so long
as it has Shares available for sale and to cause its Transfer Agent to issue, if
requested by the Purchaser, certificates for Shares of its Series, registered in
such names and amounts as promptly as practicable after receipt by the Fund of
the net asset value thereof.
(b) The Fund shall keep the Distributor fully informed with regard to
its affairs and shall furnish to the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of Shares of the Series.
This shall include, without limitation, one certified copy of all financial
statements of each of the Series prepared by independent accountants and such
reasonable number of copies of a Series' most current Prospectus, the Statement
of Additional Information and annual and interim reports as the Distributor may
request. The Fund shall cooperate fully in the efforts of the Distributor to
arrange for the sale of Shares of the Series and in the performance of the
Distributor under this Agreement.
(c) The Fund shall take, from time to time, all necessary action to
register the Shares of the Series under the 1933 Act, including payments of the
related filing fees, so that there will be available for sale such number of
Shares of the Series as the Distributor may be expected to sell. The Fund agrees
to file from time to time such
3
<PAGE>
amendments, reports and other documents as may be necessary in order that there
may be no untrue statement of a material fact in the Registration Statement or
Prospectus of a Series, or necessary in order that there may be no omission to
state a material fact in the Registration Statement or Prospectus of a Series,
which omission would make the statements therein, in light of the circumstances
under which they were made, misleading.
(d) The Fund shall use its best efforts to notify the Distributor of
the states and jurisdictions in which its shares are qualified for sale and
represents and warrants that it shall continue to qualify and maintain the
registration and qualification of an appropriate number of Shares of the Series
and the Fund for sale under the securities laws of such states as the
Distributor and the Fund shall mutually agree, and, if necessary or appropriate
in connection therewith, to qualify and maintain the qualification of the Fund
as a broker-dealer in such states. The Distributor shall furnish such
information and other material relating to its affairs and activities as may be
requested by the Fund in connection with such qualifications.
Section 4. Expenses
--------
(a) The Fund shall bear all costs and expenses of the continuous
offering the Shares of the Fund in connection with: (i) fees and disbursements
of its counsel and auditors, (ii) the preparation, filing and printing of any
Registration Statements and/or Prospectuses and Statements of Additional
Information required by and under federal and state securities laws, (iii) the
preparation and mailing of annual and interim reports and proxy materials, if
any, to shareholders (iv) the qualification of the Shares of the Series for sale
and of the Fund as a broker-dealer under the securities laws of such states or
other jurisdictions as shall be selected by the Distributor pursuant to Section
3(d) hereof and the cost and expenses payable to each such state or jurisdiction
for continuing qualification therein, and (v) the costs associated in
transmitting orders to, and processing by the Fund's transfer agent, charges of
clearing corporation and sender costs.
(b) The Distributor shall bear (i) the costs and expenses of
preparing, printing and distributing any materials not prepared by the Fund and
other materials used by the Distributor in connection with its offering of
Shares of the Series for sale to the public (including the additional costs of
printing copies of the Prospectus and of annual and interim reports) to
shareholders other than copies thereof required for distribution to existing
shareholders or for filing with any federal and state securities authorities,
(ii) any expenses of advertising incurred by the Distributor in connection with
such offering and (iii) the expenses of registration or qualification of the
Distributor as a broker-dealer under federal or state laws, if necessary, and
the expenses of continuing such registration or qualification. It is understood
and agreed that so long as any Plan of Distribution as to a Series of the Fund
pursuant to Rule 12b-1 under the 1940 Act continues in effect, any expenses
incurred by the Distributor hereunder may be paid from amounts received by it
from a Series under such Plan.
4
<PAGE>
Section 5. Indemnification.
---------------
(a) The Fund agrees to indemnify, defend and hold the Distributor, its
officers, directors, employees and agents and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act or Section 20 of
the Securities Exchange Act of 1934, as amended ( the "1934 Act"), free and
harmless from and against any and all losses, claims, damages, liabilities and
expenses (including the cost of investigating or defending such claims, damages
or liabilities and any counsel fees incurred in connection therewith) which the
Distributor, its officers, directors, employees and agents or any such
controlling person may incur under the 1933 Act, the 1934 Act, or under common
law or otherwise, which (i) may be based upon any wrongful act by the Fund or
any or its employees or representatives, or (ii) which may arise out of or may
be based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, Prospectus, or Statement of
Additional Information of the Fund or a Series or arising out of or based upon
the omission or any alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such claims, damages, liabilities or expenses arise out of or
are based upon any such untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with information furnished
in writing by the Distributor to the Fund for use in the Registration Statement,
Prospectus or Statement of Additional Information; provided, however, that in no
------------------
case is the Fund's indemnity deemed to protect the Distributor, its officers,
directors, employees, agents or any person who controls the Distributor within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of his
duties or by reason of his reckless disregard of obligations and duties under
this Agreement. The Distributor agrees to promptly notify the Fund of any event
giving rise to a right of indemnification hereunder, including any action
brought against the Distributor, its officers, directors, employees and agents
or any such controlling person, such notification to be given by letter or
telegram addressed to the Fund at its principal business office, but the
Distributor's failure so to notify the Fund shall not relieve the Fund from any
obligation it may have to indemnify the Distributor hereunder or otherwise. The
Fund will be entitled to participate at its own expense in the defense, or, if
it so elects, to assume the defense of any suit brought to enforce any such
liability, but if the Fund elects to assume the defense, such defense shall be
conducted by counsel chosen by it and satisfactory to the Distributor, its
officers, directors or controlling person or persons, defendant or defendants in
the suit. In the event that the Fund elects to assume the defense of any such
suit and retain such counsel, the Distributor, its officers, directors or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, but, in case
the Fund does not elect to assume the defense of any such suit, it will
reimburse the Distributor or such, officers, directors or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Fund agrees promptly to notify the
Distributor of the commencement of any
5
<PAGE>
litigation or proceedings against it or any of its officers or Directors in
connection with the issuance or sale of any Shares.
The Distributor agrees to indemnify, defend and hold the Fund, its
Directors and officers and any person who controls the Fund, if any, within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, free and
harmless from and against any and all losses, claims, damages, liabilities and
expenses (including the cost of investigating or defending such claims, damages
or liabilities and any counsel fees incurred in connection therewith) which the
Fund, its Directors or officers or any such controlling person may incur under
the 1933 Act, the 1934 Act, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its Directors or
officers or such controlling person arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in
information furnished in writing by the Distributor to the Fund for use in the
Registration Statement, Prospectus or Statement of Additional Information of the
Fund or a Series; provided, however, that in no case is the Distributor's
-------- -------
indemnity deemed to protect a Director or officer or any person who controls the
Fund within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act against any liability to which any such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of his duties or by reason of his reckless disregard of obligations and duties
under this Agreement. The Fund agrees to promptly notify the Distributor of any
event giving rise to a right of indemnification hereunder, including any action
brought against the Fund, its Directors or officers or any such controlling
persons, such notification being given to the Distributor at its principal
business office, but the Fund's failure so to notify the Distributor shall not
relieve the Distributor from any obligation it may have to indemnify the Fund
hereunder or otherwise. The Distributor shall be entitled to participate, at its
own expense, in the defense, or if it so elects, to assume the defense of any
suit brought to enforce any such liability, but if the Distributor elects to
assume the defense, such defense shall be conducted by counsel chosen by the
Distributor and satisfactory to the Fund, to its officers and Directors, or to
any controlling person or persons, defendant or defendants in the suit. In the
event that the Distributor elects to assume the defense of any such suit and
retain such counsel, the Fund, such officers and Directors or controlling person
or persons, defendant or defendants in the suit shall bear the fees and expenses
of any additional counsel retained by them, but, in case the Distributor does
not elect to assume the defense of any such suit, the Distributor will reimburse
the Fund, such officers and Directors or controlling person or persons,
defendant or defendants in such suit for the reasonable fees and expenses of any
counsel retained by them. The Distributor agrees promptly to notify the Fund of
the commencement of any litigation or proceedings against it in connection with
the issue and sale of any of Shares.
Section 6. Contribution. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnification provided for in the
first paragraph of Section 5 is for any reason held to be unavailable from the
Fund, the Fund and the Distributor shall contribute to the aggregate losses,
claims, damages, liabilities or expenses (including the reasonable costs of
investigating or defending such claims, damages or liabilities but after
deducting any contribution received by the Fund from persons other than the
Distributor who may also be liable for contribution, such as
6
<PAGE>
persons who control the Fund within the meaning of the 1933 Act, officers of the
Fund who signed the applicable Registration Statement and Directors) to which
the Fund and the Distributor may be subject in such proportion so that the
Distributor is responsible for that portion represented by the percentage the
sales charge appearing in the Prospectus of the Fund bears to the public
offering price appearing therein and the Fund is responsible for the balance;
provided, however, that (i) in no case shall the Distributor be responsible for
any amount in excess of the portion of the sales charge received and retained by
it in respect of the Shares of a Series purchased through it hereunder and (ii)
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section 6,
each person, if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Distributor. Each party who may seek contribution under this
Section 6 shall, promptly after receipt of notice of commencement of any action,
suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 6,
give written notice of the commencement of such action, suit or proceeding to
the party or parties from whom such contribution may be sought, but the omission
so to notify such contributing party or parties shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or
they may have otherwise than on account of this Section 6.
Section 7. Compliance with Securities Laws. The Fund represents that it
-------------------------------
is registered as an open-end management investment company under the 1940 Act,
and agrees that it will comply with all of the provisions of the 1940 Act and of
the rules and regulations thereunder. The Fund and the Distributor each agree
to comply with all of the applicable terms and provisions of the 1940 Act, the
1933 Act and, subject to the provisions of Section 3(d), all applicable state
"Blue Sky" laws. The Distributor agrees to comply with all of the applicable
terms and provisions of the 1934 Act and to the rules and regulations of the
National Association of Securities Dealers, Inc., of which it is a member.
Section 8. Terms of Contract. This Agreement shall go into effect on the
-----------------
date hereof and shall continue in effect until September 30, 1998 and thereafter
for successive periods of one year each if such continuance is approved at least
annually thereafter (i) either by an affirmative vote of a majority of the
outstanding shares of the Fund or by the Board of Directors of the Fund, and
(ii) in either case, by a majority of the Directors of the Fund who are not
interested persons of the Distributor or (otherwise than as Directors) of the
Fund (the "12b-1 Directors"), cast in person at a meeting called for the purpose
of voting on such approval. This Agreement may be terminated at any time
without the payment of a penalty, by a majority of the 12b-1 Directors, by the
vote of a majority of the outstanding shares of the Fund, or by the Distributor
on sixty (60) days' written notice to the other party.
Section 9. Assignment. This Agreement may not be assigned by the
----------
Distributor and shall automatically terminate in the event of an attempted
assignment by the Distributor; provided, however, that the Distributor may
employ or enter into
7
<PAGE>
agreements with such other person, persons, company, or companies, as it shall
determine in order to assist it in carrying out this Agreement.
Section 10. Amendment. This Agreement may be amended or modified at any
---------
time by mutual agreement in writing of the parties hereto, provided that any
such amendment is approved by a majority of the Directors of the Fund who are
not interested persons of the Distributor or by the holders of a majority of the
outstanding Shares of the Fund. If the Fund should at any time deem it necessary
or advisable in the best interests of the Fund that any amendment of this
Agreement be made in order to comply with the recommendations or requirements of
the SEC or other governmental authority or to obtain any advantage under state
or federal tax laws and should notify the Distributor of the form of such
amendment, and the reasons therefor, and if the Distributor should decline to
assent forthwith. If the Distributor should at any time request that a change be
made in the Fund's Master Fund Agreement or By-Laws or in its methods of doing
business, in order to comply with any requirements of federal law or regulations
of the SEC or of a national securities association of which the Distributor is
or may be a member relating to the sale of Shares of the Funds, and the Fund
should not make such necessary change within a reasonable time, the Distributor
may terminate this Agreement forthwith.
Section 11. Governing Law. This Agreement shall be governed and construed
-------------
in accordance with the laws of the State of New York without regard for choice
of laws principles thereunder.
Section 12. Authorized Representations.
--------------------------
(a) The Fund is not authorized to give any information or to make any
representations on behalf of the Distributor other than the information and
representations contained in a Registration statement (including a Prospectus or
Statement of Additional Information) covering Shares, as such Registration
Statement and Prospectus may be amended or supplemented from time to time.
(b) The Distributor is not authorized to give any information or to
make any representations on behalf of the Fund or in connection with the sale of
Shares other than the information and representations contained in a
Registration statement (including a Prospectus or Statement of Additional
Information) covering Shares, as such Registration Statement may be amended or
supplemented from time to time. No person other than the Distributor is
authorized to act as principal underwriter (as such term is defined in the 1940
Act) for the Fund.
Section 13. Prior Agreement Superseded. This Agreement supersedes any
--------------------------
prior agreement relating to the subject matter hereof between the parties.
Section 14. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8
<PAGE>
Section 15. Miscellaneous.
-------------
(a) The captions in this Agreement are included for ease of reference
only, and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
(b) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
(c) The provisions of Section 5 hereof shall survive the termination
of this Agreement .
Section 16. Use of Name. It is understood that the name "Van Eck" or any
------------
derivative thereof or logo associated with that name is the valuable property of
the Distributor and its affiliates, and that the Fund and Series have the right
to use such name (or derivative or logo) only with the approval of the
Distributor only so long as the Distributor is Distributor of the Fund. Upon
termination of this Agreement, the Fund and Series shall forthwith cease to use
such name (or derivative or logo).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
VAN ECK/CHUBB FUNDS, INC.
(SEAL)
Attest: Thaddeus Leszczynski Name: /s/Michael O'Reilly
-------------------- ---------------------------
Title: President
---------------------------
VAN ECK SECURITIES CORPORATION
(SEAL)
Attest: Thaddeus Leszczynski Name: /s/ Philip DeFeo
-------------------- -----------------------------
Title: President and CEO
----------------------------
9
<PAGE>
Exhibit 6B
VAN ECK SECURITIES CORPORATION
99 Park Avenue - 8th Floor
New York, New York 10016
(212) 687-5200 - Toll Free (800) 221-2220
SELLING GROUP AGREEMENT
For the sale of shares of
VAN ECK FUNDS
Date
Company
Address
Suite
City, State, zip code
Attn:
Ladies/Gentlemen:
As national and international distributor or principal underwriter of
shares for, and as agent of, each of the series currently or hereafter
established under the Van Eck Funds Amended and Restated Master Trust Agreement
and such other funds and each series thereof as may hereafter be established for
which we serve as principal underwriter or distributor which are set forth in
Exhibit A, as it may, from time to time, be amended by us upon notice to you
(collectively, the "Funds"), we enclose a copy of the current prospectuses of
the Funds and invite you to become a member of the Funds' Selling Group to offer
shares in the Funds (the "Shares") upon the following terms:
1. In all sales of Shares through us we shall act as the Funds' agent.
In all sales of Shares by you to your customers you shall act as
dealer for your own account, and in no transaction shall you have any
authority to act as agent of the Funds or as our agent.
2. The public offering price at which you may offer the Shares is the net
asset value thereof, as computed from time to time, plus a selling
commission, if any, as described in the prospectus currently in effect
with respect to each of the Shares at the time of your offer. As
compensation for each sale of Shares to you, you will be allowed the
discount, if any, on such Shares as described in the then current
prospectus of the Fund whose Shares are sold. The current public
offering prices of the Shares, commissions and discounts are set forth
in Exhibit A hereto which exhibit may be amended from time to time by
us upon notice to you.
<PAGE>
To the extent you provide distribution and marketing services in the
promotion of Shares of each series of Van Eck Funds with a Plan of
Distribution pursuant to Rule 12b-1 of the Investment Company Act of
1940 (the "Van Eck Funds") or such other funds or series thereof as
hereafter may be established with a Plan of Distribution pursuant to
Rule 12b-1 of the Investment Company Act of 1940 ("12b-1 Funds"), we
shall pay you an annual fee at the rate set forth in Exhibit A, as
amended by us from time to time, of the net asset value of Shares of
each such 12b-1 Fund owned by those customers of your firm whose
records, as maintained by Van Eck Funds, 12b-1 Funds or its agent,
designate your firm as the customer's dealer of record. The 12b-1
compensation will be calculated by taking the average daily balance in
each shareholder account during the year, for which your firm is
designated as the dealer of record and multiplying it by the
compensation factor set forth Exhibit A. Distribution and marketing
services include but are not limited to furnishing services and
assistance to your customers who invest in and own Shares of such
Funds, answering routine inquiries, assisting in changing distribution
options, account designations and addresses. No such fee will be paid
to you with respect to Shares of such Funds purchased by you and
redeemed or repurchased by a Fund or by us as agent within (7) seven
business days after the date of our confirmation of such purchase. No
such fee will be paid to you if the total amount of such fees based
upon the value of your customers' Shares of the Funds will be less
than $50.00. You shall furnish us with such information as we may
reasonably request with respect to the fees paid to you. The
provisions of this Paragraph may be terminated as to any of the Funds
by the vote of a majority of the Trustees or Directors of a Fund who
are non-interested Trustees or Directors or by a vote of a majority of
the outstanding shares of a Fund on sixty (60) days written notice,
without payment of any penalty. These provisions will also be
terminated by any act which terminates either the Distribution
Agreement between the Funds and Van Eck Securities Corporation or this
Selling Group Agreement.
The public offering prices, commissions and discounts may be revised
by us at any time, but any change will not affect selling commissions
and discounts on sales for which orders have been accepted by us.
The Initial Offering of Shares of a Fund as defined in the prospectus
for the Shares shall be on such terms as described in the then current
prospectus of the Fund whose Shares are being sold. In addition to
the discounts, if any, allowed pursuant to the foregoing provisions of
this Section 2, we may, if permitted by the rules of the NASD then in
effect, from time to time provide additional concessions to dealers
which employ registered representatives who sell, during a specific
period, a minimum dollar amount of the Shares of a Fund. Such
additional concessions may take the form of merchandise or payment for
travel expenses incurred in connection with trips taken by dealer
designated persons. If non-cash concessions are provided, each dealer
earning such a concession may elect to receive a cash amount
equivalent to our cost of providing such concessions. Notice of
availability of concessions will be given to you by us and if any
concessions are earned by you, the value thereof is includable in your
income for NASD assessment purposes.
3. You agree to purchase the Shares only through us or from your
customers. In the case of purchases of Shares through us you agree
that all such purchases shall be made only to cover purchase orders
already received by you from your customers or for your own bona fide
investment. In the case of purchases from customers you agree to pay
not less than the repurchase price currently being quoted by the
Funds.
2
<PAGE>
4. You agree to sell Shares of a Fund only to customers and to us as
agent of such Fund. In the case of sales to customers you agree to
sell only at the public offering price then in effect with respect to
such Shares and all such sales shall be in accordance with the then
current prospectus for such Shares; to transmit promptly upon receipt
any and all orders received by you (such orders must be received by us
no later than 5:00 PM New York time); not to withhold placing
customers' orders with us in order thereby to make a profit for
yourself; you will take up and pay for Shares confirmed to you. In
the case of sales to us you may act either as principal for your own
account or as agent for your customer. If you act as principal for
your own account in purchasing shares for resale to us, you agree to
pay to your customer not less than you receive from us. If you act as
agent for your customer in selling shares to us, you agree not to
charge your customer more than a fair commission for handling the
transaction. Orders received for Shares of a Fund from you will be
accepted by us for such Fund only at the public offering price
applicable to each order, as established in accordance with the
provisions of such Fund's then current prospectus. The procedure
stated herein relating to the pricing and handling of orders shall be
subject to instructions which we may forward from time to time to all
members of the Selling Group.
5. If any shares of a Fund confirmed to you under this agreement are
repurchased by us as agent of a Fund, or are tendered for redemption,
within seven business days after confirmation by us of the original
purchase order or the Closing Date, as defined in a prospectus for a
Fund, you shall forthwith refund to us for the account of such Fund
the full discount allowed to you on the sale. We are obligated to pay
to such Fund our share of the selling commission on such Shares and
upon receipt by us of your discount to pay the same to such Fund. We
shall notify you of such repurchase within ten days after the date on
which each certificate or appropriate redemption or repurchase request
is delivered to us or to such Fund.
6. You shall make all sales subject to our confirmation. All orders so
placed shall be firm orders. All orders are subject to acceptance or
rejection by us in our sole discretion, and by the Funds in their sole
discretion. Please telephone "wire-orders" to Van Eck Securities
Corporation, (212) 687-5200. "Direct-mail" orders should be sent to
ATTN: "NAME OF FUND," DST Systems, Inc., 21 West Tenth Street, Kansas
City, MO 64105.
7. Payment of the public offering price, less your dealer's discount, if
any, for Shares ordered from us during a Continuous Offering of Shares
of a Fund shall be made by check payable to "NAME OF FUND" in New York
Clearing House funds, which check should be sent to ATTN: "NAME OF
FUND," DST Systems, Inc., 21 West Tenth Street, Kansas City, MO 64105,
within (3) three business days after our acceptance of your order or
such lesser period as then may be permitted by law or regulation. If
such payment is not received within said time period, interest at the
prime rate in effect at Citibank N.A., may be added to the amount due
us and we reserve the right without notice to cancel the sale or at
our option to return the Shares to the issuer for redemption or
repurchase. In the latter case we shall have the right to hold you
responsible for any loss, including loss of profit, resulting to us.
Should payment be made by check, delivery of certificates may be
delayed pending clearance of your check. Upon receipt of payment in
conformity with the above, Shares so ordered will be issued in or
transferred into such names as you may designate and forwarded as
promptly as possible in accordance with your instructions.
3
<PAGE>
Payment for Shares purchased by you during an Initial Offering of
Shares of a Fund shall be made on such date and in accordance with
such terms as described in the then current prospectus of the Fund
whose Shares are sold or as we may advise.
8. All sales through us shall be subject to the issuance of Shares to us
by the Funds. We and the Funds reserve the right to suspend sales
without notice, or to withdraw the offering of Shares entirely.
9. The Funds have authorized us as their agent and subject to their
direction to repurchase Shares at the repurchase price currently being
quoted by the Funds. This authority is supplementary to the
obligation of the Funds to redeem Shares tendered them for redemption
as described in the Funds' current prospectuses. No commissions are
payable to us or by us in respect of any such repurchase by us as such
agent. Please telephone "wire-order" liquidation requests to Van Eck
Securities Corporation, (212) 687-5200 (such orders must be received
by us no later than 5:00 PM New York time to obtain the redemption
price for such day). "Direct-mail" liquidation requests should be
sent to ATTN: "NAME OF FUND," DST Systems, Inc., 1004 Baltimore
Avenue, 4th Floor, Kansas City, MO 64105.
10. We will notify you of each series of Van Eck Funds and each fund or
series thereof hereafter established, including the applicable
discounts and commissions, which fund and/or series shall thereupon be
deemed one of the Funds and supply to you in reasonable quantities
additional copies of any current prospectuses and such sales
literature for the Funds as may from time to time be issued. You are
not authorized to give any information other than that, or to make any
representations other than those contained in the then currently
effective registration statements or prospectuses or supplemental
information thereto or in any sales literature then currently issued
or approved by the Funds.
11. We represent that we are members of the National Association of
Securities Dealers, Inc. Your acceptance of this agreement constitutes
a representation to us that you are either (i) a properly registered
or licensed broker or dealer under federal and state securities laws
and regulations and a member of the National Association of Securities
Dealers, Inc. and agree to be bound by the rules of such Association
or (ii) a foreign dealer, that if registered under the Securities
Exchange Act of 1934, you will conform to the Rules of Fair Practice
of said Association in making sales of Shares in the United States or,
if not so registered, you will not sell or deliver Shares in the
United States or to persons who you have reason to believe are
citizens or residents of the United States.
12. You are not employed or retained for any purpose as broker, agent or
employee by us or by the Funds, and you are not authorized in any
manner to act for, or to make any representations on behalf of, us or
the Funds. Nothing herein shall constitute you, other persons signing
this agreement or the undersigned as partners; however, you agree to
bear your proportionate share, if any, of any claim, demand or
liability for transfer taxes asserted against you, such other persons
or us based on the theory that you, such other persons and we or any
two or more of us, constitute an association, unincorporated business
or other entity, and your proportionate share of any expenses
defending any such claim, demand or liability.
4
<PAGE>
13. From time to time or upon application we will inform you as to the
states in which the Funds' Shares have been qualified for sale.
14. You will indemnify, defend and hold us and our subsidiaries,
affiliates, directors, officers, agents and employees free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims
and any counsel fees incurred in connection therewith) which we or
such subsidiaries, affiliates, directors, officers, agents and
employees may incur arising out of or based upon (i) any breach of any
representation, warranty or covenant made by you herein, or (ii) any
failure by you to perform your obligations as set forth herein. This
section shall survive termination of this Agreement.
15. We will indemnify, defend and hold you and your subsidiaries,
affiliates, directors, officers, agents and employees free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims
and any counsel fees incurred in connection therewith) which you or
such subsidiaries, affiliates, directors, officers, agents or
employees may incur arising out of or based upon (i) any breach of any
representation, warranty or covenant made by us herein, (ii) any
failure by us to perform our obligations as set forth herein, or (iii)
any alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or Statement of Additional
Information (or supplement thereto) relating to any of the Funds or in
any other written information or sales material relating to the Shares
authorized or furnished by us in connection with the offer and sale of
the Shares, or any alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. This section shall survive termination of this Agreement.
16. All communication should be sent to us at the above address. Any
notice to you shall be duly given if mailed or telegraphed to you at
the address specified by you below.
17. This agreement may be terminated by either of us at any time by
written notice to the other and shall terminate automatically if
either of us ceases to be a member of the National Association of
Securities Dealers, Inc.
18. This agreement shall be governed by and interpreted in accordance with
the laws of the state of New York.
Very truly yours,
VAN ECK SECURITIES CORPORATION
By: _______________ Date: _______________
Title: _______________
5
<PAGE>
We accept and agree to the terms and conditions set forth in this agreement
and acknowledge receipt of the prospectuses enclosed herewith. Furthermore, we
certify the corporate or non-corporate tax status as referenced below.
Firm: _________________________________
Address: _________________________________
_________________________________
_________________________________
_________________________________
Member SIPC_________ Non-Member SIPC__________
____________ Corporate ____________ Non-corporate (sole owner, partnership,
etc.) Under penalties of perjury, I certify that the number shown on this form
is my correct taxpayer identification number to be used for 1099-MISC tax
reporting.
TIN/SS# ______________________________
By: ______________________________ Date:__________________
Title: ______________________________
6
<PAGE>
REVISED AS OF 10/15/97
EXHIBIT A
I. VAN ECK FUNDS
ASIA DYNASTY FUND-A
EMERGING MARKETS GROWTH FUND-A
GLOBAL BALANCED FUND-A
GLOBAL HARD ASSETS FUND-A
GLOBAL INCOME FUND-A
GLOBAL REAL ESTATE FUND-A
<TABLE>
<CAPTION>
Discount to
Sales Charge as Sales Charge as Broker-Dealers
a Percentage a Percentage of as a Percentage
of Offering Net Amount of the Public
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 -0- -0- -0-**
</TABLE>
GOLD/RESOURCES FUND-A
INTERNATIONAL INVESTORS GOLD FUND-A
<TABLE>
<CAPTION>
Discount to
Sales Charge as Sales Charge as Broker-Dealers
a Percentage a Percentage of as a Percentage
of Offering Net Amount of the Public
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 -0- -0- -0-**
</TABLE>
7
<PAGE>
ASIA DYNASTY FUND-B
EMERGING MARKETS GROWTH FUND-B
GLOBAL BALANCED FUND-B
GLOBAL HARD ASSETS FUND-B
GLOBAL REAL ESTATE FUND-B
Contingent Deferred Sales Charge:
Redemption % of Lesser
Within of NAV or
Year Purchase Price
---- --------------
1 5.0%
2 4.0%
3 4.0%
4 3.0%
5 2.0%
6 1.0%
Thereafter -0-
4.0% up-front commission paid to Broker or Agent by Distributor out of own
assets.
EMERGING MARKETS GROWTH FUND-C
GLOBAL HARD ASSETS FUND-C
GLOBAL REAL ESTATE FUND-C
No Front end Sales Charge.
Contingent Deferred Redemption Charge:
Redemption % of Lesser
Within of NAV or
Year Purchase Price
---- --------------
1 1.0%
Thereafter -0-
1% up-front Servicing & Distribution fee paid to Broker or Agent at time of sale
by Fund out of own assets.
U.S. GOVERNMENT MONEY FUND
No Sales Charge.
8
<PAGE>
II. VAN ECK/CHUBB FUNDS
CAPITAL APPRECIATION FUND
GROWTH AND INCOME FUND
TOTAL RETURN FUND
<TABLE>
<CAPTION>
As a Percentage As a Percentage Dealer Concession
of Offering of Net Asset as a Percentage of
Size of Transaction Price Value Offering Price*
- ------------------- ----- ----- ---------------
<S> <C> <C> <C>
Less than $100,000 5.00% 5.26% 4.50%
$100,000 but less than $250,000 4.00% 4.17% 3.50%
$250,000 but less than $500,000 3.00% 3.09% 2.50%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 but less than $2,000,000 1.00% 1.01% 0.90%
$2,000,000 but less than $5,000,000 0.50% 0.50% 0.45%
$5,000,000 and over 0.00% 0.00% 0.00%
</TABLE>
GLOBAL INCOME FUND
GOVERNMENT SECURITIES FUND
TAX-EXEMPT FUND
<TABLE>
<CAPTION>
As a Percentage As a Percentage Dealer Concession
of Offering of Net Asset as a Percentage of
Size of Transaction Price Value Offering Price*
- ------------------- ----- ----- ---------------
<S> <C> <C> <C>
Less than $100,000 3.00% 3.09% 2.50%
$100,000 but less than $250,000 2.50% 2.56% 2.00%
$250,000 but less than $500,000 2.00% 2.04% 1.50%
$500,000 but less than $1,000,000 1.50% 1.52% 1.00%
$1,000,000 but less than $2,000,000 1.00% 1.01% 0.90%
$2,000,000 but less than $5,000,000 0.50% 0.50% 0.45%
$5,000,000 and over 0.00% 0.00% 0.00%
</TABLE>
MONEY MARKET FUND
No sales charge.
9
<PAGE>
III. TRAILS
(VAN ECK FUNDS AND VAN ECK/CHUBB FUNDS)
VAN ECK FUNDS
Trail to broker payable quarterly: .25% annually on all Funds, except
International Investors Gold Fund-A which does not have a 12b-1 fee and Emerging
Markets Growth Fund-C, Global Hard Assets Fund-C, and Global Real Estate Fund-C
which, beginning the thirteenth month following purchase, each pays 1% annually
(.75% distribution fee and .25% servicing fee) on average daily net assets owned
by those customers of your firm who have designated your firm as the dealer of
record, as set forth on the books and records maintained by Van Eck Securities
Corporation, the Funds or their agent.
VAN ECK/CHUBB FUNDS
Trail to broker payable quarterly: .25% annually on all Funds, except the Money
Market Fund which is .175% annually, if assets are held over 12 months and total
over $1 million per dealer per Fund.
_______________________
* Brokers or Agents who receive substantially all of the sales charge for shares
they sell may be deemed to be statutory underwriters.
**FINDERS FEE FOR VAN ECK FUNDS: 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 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.
10
