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[VAN ECK CHUBB FUNDS LOGO]
ANNUAL REPORT
December 31, 1998
Capital Appreciation Fund
Global Income Fund
Government Securities Fund
Growth and Income Fund
Tax-Exempt Fund
Total Return Fund
THE VAN ECK PARTNERSHIP SERIES
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VAN ECK/CHUBB FUNDS
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Dear Fellow Shareholder:
When we last reported to you in the Funds' June 30 semi-annual report, world
financial markets had experienced a relatively uneventful first half of the
year. As had been expected, the impact of Asia's fiscal and financial turmoil
that began in mid-1997 continued to filter through other economies, most notably
dampening global growth and pushing down world commodity prices. Even so, the
equity and fixed income markets of the developed nations, particularly Europe
and the U.S., were relatively strong as they continued to benefit from benign
inflation, low interest rates, and moderate economic growth. In mid-summer,
however, the climate changed dramatically as several events had a precipitous
impact on markets and helped make 1998 one of the decade's most volatile years
for global financial markets.
It was a year of mixed results for investors, many of whom experienced both
spectacular and very disappointing returns depending on the specific asset
class. For example, investors in U.S. blue chip large-capitalization stocks and
long-term U.S. Treasury bonds did particularly well, while those in emerging
markets securities and high-yielding U.S. corporate bonds did poorly. Reflecting
last year's varied performance, the Van Eck/Chubb Funds posted mixed results;
our fixed income funds did well, while our equity funds did not meet our
expectations. Please consult the pages that follow for a more detailed look at
each individual Fund, including a discussion of performance.
THE YEAR IN REVIEW
The 1998 chapter of history books is likely to mark two major events as the most
critical to financial markets: 1) Russia's economic and financial crisis and 2)
the disintegration and subsequent rescue of hedge fund Long-Term Capital
Management (LTCM). In August, Russia's economy, plagued by corruption and
incompetence, unraveled as its central government defaulted on its debt
obligations and devalued the ruble, creating a financial crisis that hurt
emerging markets around the world. As in Southeast Asia in 1997, fear of
devaluation and contagion spread, and by year end, Brazil, the world's ninth
largest economy and Latin America's leader, had succumbed. In the early fall,
losses in Russian investments helped create a brutal reality check for highly
leveraged hedge funds, with the biggest spotlight on Greenwich, Connecticut-
based LTCM, which lost most of its $4.7 billion value by late September.
Honorable mention in the 1998 chapter goes to the U.S. Federal Reserve Bank.
Under the aegis of chairman Alan Greenspan, the Fed assisted in the rescue of
beleaguered LTCM and at the same time helped stave off a global financial
meltdown by easing short-term interest rates. In three quick successive moves,
the Fed lowered the federal funds rate from 5.50% to 4.75%, thereby increasing
liquidity and improving confidence. This initiated similar moves by European
central banks.
U.S. HIGHLIGHTS
Amid the global turmoil, the U.S. remained an island of prosperity, buoyed by an
economy that continued to grow at a moderate pace and was fueled by the
unflagging support of the American consumer. We have enjoyed eight consecutive
years of economic expansion and our unemployment rate is at its lowest in 30
years. Both federal and state budgets are in surplus, and we are in the enviable
position of being the primary developer and exporter of the technological
advances that are heralding in the new global communications age.
For a record-setting fourth year in a row, the strong U.S. economy helped the
stock market post double-
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VAN ECK/CHUBB FUNDS
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digit returns, albeit from a very narrow segment of companies and with increased
volatility across the board. The large-cap benchmarks of the Dow Jones
Industrial Average (DJIA) and the S&P 500 Index gained 18.2% and 28.6%,
respectively, while the technology-laden Nasdaq Composite Index soared 39.6%. By
contrast, the S&P 400 Midcap Index rose 19.1% and the small-cap Russell 2000
Stock Index declined 2.6% for the year. It was a year in which large companies
outperformed small; growth investing outperformed value; and strong revenues
helped the technology, pharmaceutical and telecommunications sectors take top
honors. It was a year of corporate mega-mergers, both in the U.S. and abroad,
heralding in behemoth alliances such as Daimler-Benz AG and Chrysler, Travelers
Group and Citicorp, Exxon and Mobil. This trend reflects the prevailing strategy
that bigger is better in the new highly competitive global economy. Finally, it
was the year of Internet mania, as investors, eager to participate in the heady
beginnings of e-commerce, bid up ".com" companies despite their lack of
earnings.
As did many other professional asset managers, we underestimated the overriding
strength of the U.S. stock market's large-cap segment in 1998; it represents a
phenomenon that began in 1997 and grew stronger this past year. This was
especially true in the fourth quarter, when the large-cap market rebounded
strongly, led by technology shares.
U.S. bond markets were led by the strong performance of Treasury securities. The
third-quarter debacle created a "flight to quality" that increased demand and
helped push the yield of the 30-year bellwether bond to a low of 4.65% in early
October -- its lowest level since 1967.
GLOBAL HIGHLIGHTS
As in the U.S., global markets experienced extreme volatility this past year.
European stock markets were impacted by the third-quarter selloff, but most
posted robust returns for the full year (gaining on average 28.5%). Interest
rate convergence in anticipation of the euro helped European bond markets post
another solid year. Once again, the UK bond market led the pack, gaining more
than 20%. Asia continued to muddle along, with signs of recovery emerging. For
example, South Korea and Thailand both took painful steps to clean house and
implement many of the structural financial reforms recommended by the
International Monetary Fund. Japan continued to suffer from economic recession
and its well-publicized ills, including a shaky, undercapitalized banking
system, the loss of its competitive position in Asia, and political inaction.
OUTLOOK FOR 1999
We continue to believe that moderate growth and low inflation will prevail both
in the U.S. and Europe in the coming year. The global disinflationary trend will
continue, reflecting efficiency gains, the deployment of productivity-enhancing
technology, and the increased competition that is the byproduct of free markets.
Also, excess capacity in many commodities, particularly oil, continues to exert
downward pressure on prices. In the past 18 months, the full impact of Asia's
crisis has been factored in and markets are slowly recovering. We are confident
that the outlook for long-term investments in the financial markets is positive.
With the U.S. stock market in particular, Americans continue to invest record
amounts of assets in retirement plan equity investments; as long as interest
rates remain low, this trend should show no sign of abating. As in 1998, this
phenomenon should continue to help
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VAN ECK/CHUBB FUNDS
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buoy the U.S. stock market, shielding it from global crisis.
We remain cautiously optimistic on Japan and believe that its prospects will
improve in the second half of 1999. Latin America had a difficult year in 1998
and the region will continue to stagger along in the coming months. Although
Venezuela and Brazil are in recession, both Chile and Argentina have done a good
job of restructuring their economic and political landscapes, hopefully setting
the stage for a healthier Latin America.
We are pleased to announce that October 1, 1998 marked the first year
anniversary of our strategic partnership with Van Eck Global; thus far, this
alliance has proved successful and benefited both the marketing and sales of
your Funds. All of us at Van Eck/Chubb Funds wish you a healthy and prosperous
1999, and we look forward to continuing to meet your investment objectives in
the coming months.
[PHOTO]
Michael O'Reilly Signature
Michael O'Reilly
President
Van Eck/Chubb Funds
President and Chief Operating Officer
Chubb Asset Managers, Inc.
January 25, 1999
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VAN ECK/CHUBB CAPITAL APPRECIATION FUND
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The Van Eck/Chubb Capital Appreciation Fund seeks long-term capital appreciation
by investing primarily in equity securities of small- and medium-capitalization
U.S. companies that offer sound value. At least 65% of the Fund's assets are
invested in companies with market capitalizations between $500 million and $2.5
billion. These are stocks that sell at a discount to the market in terms of
several valuation measures, including price-earnings multiples, and that have
solid future prospects (primarily defined as future earnings growth potential
above the S&P 500 Index). Qualifying companies may also possess one or more of
the following characteristics: a strong balance sheet, new products or markets,
streamlined or re-engineered operations, and/or improved management.
As we will discuss below, 1998 was a difficult year for value-oriented equity
managers such as ourselves. Unfortunately, this fact was reflected in the Van
Eck/Chubb Capital Appreciation Fund's performance for the year. Although your
Fund had posted relatively strong results in the first, second and fourth
quarters, the downturn of the third quarter proved destructive. While the Fund
was up 6.4% for the six months ended June 30, it fell a precipitous 31.8% in the
third quarter. The Fund's fourth-quarter gain of 20.3% helped recoup some of
these losses, but the Fund remained in negative territory for the year. All
told, your Fund declined 12.8% in 1998; this compares to a positive 13.9% posted
by its peer mutual funds as measured by the Lipper Mid Cap Fund Index. In large
part, the superior performance of the Index reflects last year's bias toward
growth-style investing, which we will address.
U.S. EQUITY MARKET OVERVIEW
Although the U.S. economy remained strong in 1998, there were a number of
distressing factors that shook investor confidence in equities: 1) countries
beaten up by the continued fallout from the Asian crisis, 2) excessive leverage
in the bond markets due to hedge funds, 3) the Clinton impeachment scandal, and
4) the first signs of weakness in U.S. corporate profitability. These factors
converged in the third quarter as Russia floundered and several hedge funds blew
up, most notably Long-Term Capital Management. Both events ignited a selloff in
the equity and fixed income markets. While markets tumbled, investors shifted
their investments to the traditional safe havens, including U.S. Treasury bonds.
Investors also shunned small- and mid-capitalization companies in favor of the
perceived stability and greater liquidity of America's largest companies.
Excessive fear and the resulting liquidity crunch drove small- and medium-cap
stocks to ridiculous valuation disparities versus their large capitalization
counterparts. Investors, for the most part, sold first and asked questions
later, disregarding fundamentals, prices or future outlook. Any signs of trouble
within one company was likely to affect an entire industry sector, as was the
case with financial services.
FUND REVIEW
There are several factors that contributed to your Fund's difficult year and,
hence, its disappointing results. As mentioned above, one of the most critical
influences was the trend of the past several years in which investors continued
to favor large-capitalization companies. Although the general stock market
marked its fourth year of double-digit returns, with the S&P 500 Index returning
28.6%, the bulk of this return came from a very narrow list of companies. The
Index's 25 largest companies accounted for 66% of the Index's return
(approximately 19 percentage points), while the remaining 475 companies
contributed just 34% of the return. Unfortunately for professional money
managers, most of us (more than 85%) underperformed the S&P 500 Index last year.
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VAN ECK/CHUBB CAPITAL APPRECIATION FUND
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A closer look at the S&P 500 Index clearly reveals that capitalization made a
tremendous difference in 1998, and that the market was unkind to the
smaller-sized companies your Fund favors. The Index's smallest 100 companies
returned a meager 0.3% for the year. This is in line with the performance of the
Russell 2000 Index, a benchmark measure of small-cap stocks, which was off 2.6%
for the year. Disregarding both small- and mid-cap companies, investors sought
out very large, brand name consumer and technology companies such as Microsoft,
General Electric, Wal-Mart Stores, Dell Computers, Intel and Coca-Cola, looking
for security in what was a very shaky year for markets.
A second factor affecting the performance of your Fund was the tremendous
outperformance experienced by traditional growth companies versus value
companies in 1998. Traditional growth companies are those that experience
earnings increases over time. These companies tend to be more expensive than
traditional value companies, reflecting investors' high expectations. Your Fund,
on the other hand, seeks to invest in value companies--those companies that may
be out-of-favor or have gone undiscovered by the marketplace. In essence, the
Fund attempts to invest in companies that the market is pricing at less than
their inherent worth. Last year was a difficult year for value managers; it was
not a year in which the market discovered many discounted companies, or
acknowledged turn-around situations. Rather, the market rewarded investments in
high revenue-generating companies. Despite its underperformance last year, we do
expect value investing to provide good opportunities over the long term. Keep in
mind that since 1979, value has outperformed growth-style investing in 12 out of
20 years, as measured by the Frank Russell Company.
The third factor that impeded your Fund's performance was its heavy weightings
in the U.S. economy's lackluster sectors. The Fund's largest holdings were in
basic materials, consumer cyclicals and capital goods. These sectors continued
to get battered by the falloff in demand from Asia and their inability to
compete against very low foreign production costs. The stock market was
particularly hard on those sectors and stocks that were either economically
sensitive, exposed to foreign markets or financially driven. The market's best
performing sectors were technology, pharmaceuticals and telecommunications,
which held up well in the market downturn.
OUTLOOK
Going forward, we will continue to employ our disciplined long-term approach by
investing in those companies that meet our investment standards and value
criteria. However, we have begun to ease our stock selection screening
parameters in order to include companies with higher growth possibilities. We
are seeking out those companies that deliver a consistent, visible earnings
progression. Over the course of the year, we reduced or sold underperforming
core holdings, including Old Republic, Lafarge, Polaroid, Storage Technologies,
Nine West and Tektronix. We have added such holdings as Total Renal Care, a
company that specializes in kidney dialysis, and Newmark Homes, which should
benefit from the continued housing boom. As the year progresses, we will look to
rotate into stocks at the higher end of our investment capitalization
parameters.
Although it was a disappointing year, we continue to believe that small- and
mid-cap stocks offer many attractive characteristics versus large-cap issues,
including higher potential return, less international exposure, and better
valuation levels. We still believe a disciplined long-term value approach will
be rewarding to our shareholders over time.
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VAN ECK/CHUBB CAPITAL APPRECIATION FUND
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Thank you for your investment in the Van Eck/Chubb Capital Appreciation Fund. We
look forward to helping you meet your investment objectives in the future.
[PHOTO]
Robert Witkoff Signature
Robert Witkoff
Senior Vice President
Chubb Asset Managers, Inc.
January 25, 1999
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PERFORMANCE RECORD AS OF 12/31/98
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<TABLE>
<CAPTION>
AFTER
MAXIMUM BEFORE
AVERAGE ANNUAL SALES SALES
TOTAL RETURN CHARGE* CHARGE
- -------------------------------------------------
<S> <C> <C>
A shares--Life (since 9/1/95) 11.0 % 12.7 %
- -------------------------------------------------
1 year (16.9)% (12.8)%
- -------------------------------------------------
B shares--Life (since
4/29/98)** (27.2)% (23.3)%
- -------------------------------------------------
</TABLE>
THE PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
The Adviser is currently waiving certain expenses of the Fund. Had the Fund
incurred all expenses, investment returns would have been reduced.
* A shares: maximum sales charge = 4.75%
B shares: maximum contingent deferred sales charge = 5.0%
** Not annualized.
[Cap. App. Fund % of Portfolio CHART]
<TABLE>
<CAPTION>
% OF
PORTFOLIO(1)
<S> <C>
Common Stocks 95.1%
Other Net Assets 4.9%
</TABLE>
<TABLE>
<CAPTION>
TOP TEN EQUITIES % OF
PORTFOLIO(1)
<S> <C>
Champion Enterprises, Inc. 5.6%
Storage Technology Corporation 4.6%
Lafarge Corporation 4.3%
Reynolds and Reynolds Company (Class A) 4.1%
Total Renal Care Holdings, Inc. 3.6%
Bard (C.R.), Inc. 3.5%
Commerce Group, Inc. 3.3%
Cooper Tire & Rubber Company 3.3%
American Standard Companies Inc. 3.2%
Ametek, Inc. 3.2%
</TABLE>
<TABLE>
<CAPTION>
TOP TEN INDUSTRIES % OF
PORTFOLIO(1)
<S> <C>
Computer Products & Services 10.3%
Medical Supplies & Services 9.6%
Industrial Metals 9.5%
Building Materials & Tools 7.4%
Building & Construction 5.6%
Electronics 5.4%
Insurance 4.1%
Chemicals/Fertilizers 3.4%
Tires & Rubber Goods 3.3%
Housing & Home Furnishings 3.3%
</TABLE>
(1) As a percentage of total net assets at December 31, 1998.
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VAN ECK/CHUBB CAPITAL APPRECIATION FUND
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VAN ECK/CHUBB CAPITAL APPRECIATION FUND CLASS A
Performance Comparison
<TABLE>
<CAPTION>
Van
Eck/Chubb
Capital
Appreciation
Fund-A LIPPER
Class MID
S&P CAP
(w/sales 500 FUND
charge) INDEX INDEX
<S> <C> <C> <C>
Sep-1-95 9524.00 10000.00 10000.00
Sep 1995 9638.00 10422.00 10313.00
Oct 1995 9552.00 10391.00 10066.00
Nov 1995 9867.00 10839.00 10389.00
Dec 1995 9962.00 11049.00 10494.00
Jan 1996 10115.00 11430.00 10528.00
Feb 1996 10125.00 11530.00 10963.00
Mar 1996 10268.00 11642.00 11181.00
Apr 1996 10556.00 11821.00 11803.00
May 1996 10795.00 12114.00 12187.00
Jun-96 10977.00 12164.00 11781.00
Jul-96 10469.00 11631.00 10736.00
Aug-96 10833.00 11873.00 11364.00
Sep-96 11169.00 12540.00 12073.00
Oct-96 11667.00 12891.00 11817.00
Nov-96 12347.00 13860.00 12270.00
Dec-96 12704.00 13585.00 12205.00
Jan-97 12939.00 14440.00 12593.00
Feb-97 13467.00 14547.00 12116.00
Mar-97 13007.00 13950.00 11387.00
Apr-97 13383.00 14788.00 11597.00
May-97 14522.00 15678.00 12760.00
Jun-97 15076.00 16383.00 13190.00
Jul-97 15888.00 17688.00 14234.00
Aug-97 15868.00 16697.00 14144.00
Sep-97 16591.00 17610.00 15049.00
Oct-97 15977.00 17027.00 14264.00
Nov-97 15898.00 17811.00 14223.00
Dec-97 16234.00 18116.00 14336.00
Jan-98 16109.00 18323.00 14148.00
Feb-98 17713.00 19637.00 15444.00
Mar-98 18452.00 20641.00 16161.00
Apr-98 18702.00 20855.00 16307.00
May-98 17817.00 20488.00 15478.00
Jun-98 17276.00 21323.00 16085.00
Jul-98 15651.00 21102.00 15341.00
Aug-98 12132.00 18052.00 12242.00
Sep-98 11777.00 19205.00 13198.00
Oct-98 13402.00 20766.00 13848.00
Nov-98 13850.00 22024.00 14747.00
Dec-98 14162.00 23292.00 16331.00
Average Annual Total Return 12/31/98 1 Year Since Inception(1)
VE/C Capital Appreciation Fund (w/o sales
charge) -12.80% 12.70%
VE/C Capital Appreciation Fund (w/sales
charge)(2) -16.90% 11.00%
S&P 500 Index 28.60% 28.80%
Lipper Mid Cap Fund Index 13.90% 15.80%
</TABLE>
VAN ECK/CHUBB CAPITAL APPRECIATION FUND CLASS B
Performance Comparison
<TABLE>
<CAPTION>
VAN ECK/CHUBB CAPITAL S&P 500 INDEX
APPRECIATION FUND - CLASS ------------- LIPPER MID CAP FUND
B (W/ SALES CHARGE) INDEX
------------------------- -------------------
<S> <C> <C> <C>
5/1/98 10000.00 10000.00 10000.00
5/98 9500.00 9824.00 9491.00
6/98 9212.00 10224.00 9864.00
7/98 8340.00 10118.00 9407.00
8/98 6463.00 8656.00 7507.00
9/98 6269.00 9209.00 8094.00
10/98 7135.00 9957.00 8492.00
11/98 7363.00 10560.00 9043.00
12/98 7285.00 11169.00 10015.00
Average Annual Total Return 12/31/98 Since Inception(1)
VE/C Capital Appreciation Fund (w/o sales
charge) -23.3%
VE/C Capital Appreciation Fund (w/ sales
charge)(3) -27.2%
S&P 500 Index 11.70%
Lipper Mid Cap Fund Index 0.20%
</TABLE>
These graphs compare an initial $10,000 investment in the Van Eck/Chubb Capital
Appreciation Fund (Classes A and B) made at inception with a similar investment
in the S&P 500 Index and the Lipper Mid Cap Fund Index.
(1) INCEPTION DATE FOR THE VAN ECK/CHUBB CAPITAL APPRECIATION FUND IS 9/1/95
(CLASS A) AND 4/29/98 (CLASS B); index returns are calculated as of nearest
month end.
(2) The maximum sales charge is 4.75%.
(3) Applicable contingent deferred sales charge taken into account.
Returns for the Van Eck/Chubb Capital Appreciation Fund (Classes A and B)
reflect all recurring expenses and include the reinvestment of all dividends and
distributions. Performance does not fully reflect the impact of the Fund's
expenses, as they have been partially reimbursed by the Adviser at certain times
since the Fund's inception.
The S&P 500 Index is an unmanaged index and includes the reinvestment of all
dividends, but does not reflect the payment of transaction costs, advisory fees
or expenses that are associated with an investment in the Fund.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance; the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
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VAN ECK/CHUBB GLOBAL INCOME FUND
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The Van Eck/Chubb Global Income Fund seeks capital appreciation and a steady
flow of dividend income by investing primarily in high-grade U.S. and
international debt securities. The Fund maintains at least 75 percent of its
portfolio in investment grade securities, which are often found in the more
mature investment markets of developed nations.
We are pleased to report that the Van Eck/Chubb Global Income Fund posted a
total return of 15.0% for the year, reflecting both the reinvestment of monthly
dividends and share price appreciation. This performance compares very favorably
to the Fund's peer group of mutual funds as measured by the Lipper Global Income
Fund Index, which returned 6.3% (your Fund ranked sixth for the year among the
144 funds within the Lipper category). For the same period, the benchmark
Salomon Smith Barney World Government Bond Index (WGBI) returned 15.3% in U.S.
dollar terms.
GLOBAL BOND MARKETS OVERVIEW
For the second year in a row, the world's fixed income markets enjoyed solid
performance, although against a background of increased volatility and turmoil.
Government bonds throughout the developed world continued to be buoyed by
persistent low inflation and supportive monetary policies from central banks. On
the other hand, emerging market debt and corporate debt suffered as the result
of problems in Russia and Latin America. Once again the UK bond market showed
the most strength, rising more than 20% in U.S. dollar terms, while the U.S.
Treasury bond market posted a solid 10% return.
There were several critical events that impacted bond markets last year, as
mentioned earlier in the President's letter. These included: 1) the continuation
of the global disinflation trend that we identified in last year's report, 2)
problems in Russia and other emerging markets, 3) unwinding of hedge fund
positions, 4) the precipitous fall of commodity prices, 5) continued economic
weakness in Japan, and finally 6) the approach of the single European currency,
the euro. The Asian crisis that began in mid-summer 1997 continued to have a
positive influence on the world's bond markets in 1998, further reducing
inflation expectations. Commodity prices declined substantially, particularly
oil prices, which dropped below $10 a barrel for the first time in 12 years. In
August, Russia defaulted on its debt obligations, put a moratorium on foreign
debt servicing, and devalued the ruble. Shortly thereafter, highly leveraged
funds, including Long-Term Capital Management, were forced to deleverage. These
events rocked financial markets and created a flight to quality to government
bonds, particularly U.S. Treasury bonds, German bonds and UK bonds. As investors
shunned riskier bond issues in favor of safe havens, fixed income markets
experienced a dramatic widening of credit spreads, particularly on weaker
credits such as high-yielding U.S. corporate debt and emerging market debt.
The global economic environment was broadly supportive of the bond markets in
1998. While the U.S. continued to experience robust growth, this was achieved
without rising inflation, which remained steady through the year at
approximately 1.5%. In Japan, the economy continued to deteriorate despite a
change in prime ministers, a succession of stimulus packages, and measures to
restructure the banking sector. Unemployment reached an unprecedented level of
4.4% and the economy shrank in each quarter of 1998. Japanese bond yields
reached the lowest levels ever recorded in any country, with 10-year bonds
yielding 0.73%. However, concerns of increased supply to finance the stimulus
measures caused a marked reversal, with 10-year yields ending the year at 2.2%.
European growth remained moderate, with lower expectations for growth in 1999.
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VAN ECK/CHUBB GLOBAL INCOME FUND
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Supportive monetary policies by the world's central banks also contributed to
the bond markets' strong performance in 1998. Following the financial crisis in
late summer, the U.S. Federal Reserve Bank took aggressive steps to infuse
much-needed liquidity into the world's financial system, easing the federal
funds rate from 5.50% to 4.75% between late-September and mid-November. European
interest rates continued to converge lower toward German rates throughout the
year in anticipation of the monetary union of 11 countries via the euro at the
start of January 1999. The Bundesbank cut rates in early December, a move
followed by other European central banks. In the UK, growth slowed sharply with
the country heading toward a possible recession in 1999. Following an unexpected
rise in interest rates in June, the Bank of England reversed direction and cut
interest rates several times last year, contributing to the bond market's
superior performance.
FUND REVIEW
We attribute your Fund's strong performance to several successful strategies in
1998. We kept a rather long portfolio duration throughout the year, longer than
that of the WGBI. This allowed the portfolio to benefit from price improvement
as long-term bond yields fell. We continued to concentrate the Fund's
investments in the high-quality end of the market, favoring the government bonds
of the major developed countries. At year end our largest regional allocations
were in the U.S., the UK, the German and French bond markets. A conservative
approach was taken in the management of the non-government (primarily, emerging
market debt and corporate debt) portion of the Fund's portfolio, thus avoiding
most of the fallout from Russia and LTCM. In the fourth quarter, the Fund took a
limited position in better-valued Latin American debt.
Our currency strategy also proved advantageous. We were neutral on the U.S.
dollar for the better part of the year, although at year end we were overweight
relative to the WGBI. We were also underweight in the commodity-related
currencies. Beginning in the second quarter, we overweighted the Deutschemark on
expectations that it would benefit from the launch of the euro. We were
underweight the yen relative to the WGBI throughout the year; this hurt us
slightly in the fall when the yen strengthened against the dollar. Finally,
after the first quarter, we hedged the currency exposure of our UK bond
holdings.
With its introduction in January 1999, the euro joins the U.S. dollar and the
Japanese yen as a predominant currency of global financial markets. This single
currency has eliminated currency risk among individual European countries and
created a unified trading bloc. While all government bonds issued by the 11
participating countries will be denominated in euros, there will still be
differential yields depending on the liquidity of the issue and the perceived
credit quality of the sovereign issuer.
OUTLOOK
Going forward, we are optimistic about the performance of global bond markets,
although we doubt that interest rates will fall as dramatically in the coming
year. The U.S. economy should remain resilient, with global influences
benefiting the inflationary outlook. Growth in Europe is likely to moderate.
Japan's economy remains in recession with, as yet, limited evidence of any
impact from the government stimulus packages.
We will continue to selectively invest in corporate and non-core government
bonds taking advantage of wider spread levels. Outside the major economies, we
are beginning to see positive signs in Eastern Europe, which is benefiting from
Continental Europe's strength. Pockets of Asia also
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VAN ECK/CHUBB GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
look more attractive, particularly in those countries that have taken steps to
improve economic health. The possibility of a continued slowdown in China,
however, remains a potential drag on the region.
In general, we expect bonds to continue to be supported by low inflation and
moderate economic growth throughout the world.
Thank you for your investment in the Van Eck/ Chubb Global Income Fund. We will
continue to strive to meet your investment objectives in the months ahead.
<TABLE>
<S> <C>
[PHOTO] [PHOTO]
Roger C.P. Brookhouse Signature Marjorie D. Raines Signature
Roger C.P. Brookhouse Marjorie D. Raines
Senior Vice President Senior Vice President
Chubb Asset Managers, Inc. Chubb Asset Managers, Inc.
[PHOTO]
Emma C. Fishwick Signature
Emma C. Fishwick
Vice President
Chubb Asset Managers, Inc.
January 25, 1999
</TABLE>
- ---------------------------------------------------------
PERFORMANCE RECORD AS OF 12/31/98
- ---------------------------------------------------------
<TABLE>
<CAPTION>
AFTER
MAXIMUM BEFORE
AVERAGE ANNUAL SALES SALES
TOTAL RETURN CHARGE* CHARGE
- -------------------------------------------------
<S> <C> <C>
A shares--Life (since 9/1/95) 5.6% 7.2%
- -------------------------------------------------
1 year 9.5% 15.0%
- -------------------------------------------------
B shares--Life (since
4/29/98)** 6.0% 11.0%
- -------------------------------------------------
</TABLE>
THE PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. Investment return and principal value of an investment in the Fund
will vary so that shares, when redeemed, may be worth more or less than their
original cost.
The Adviser is currently waiving certain or all expenses of the Fund. Had the
Fund incurred all expenses, investment returns would have been reduced.
* A shares: maximum sales charge = 4.75%
B shares: maximum contingent deferred sales charge = 5.0%
** Not annualized.
[Global Income Fund % of Portfolio CHART]
<TABLE>
<S> <C>
% OF PORTFOLIO(1)
Government and Agency Obligations: 78.4%
Corporate Bonds: 11.4%
Short-Term Obligations: 6.4%
Other Net Assets: 3.8%
TOP COUNTRIES
United States
Frances
Germany
United Kingdom
Italy
DOLLAR WEIGHTED AVERAGE MATURITY
13.1 Years
PORTFOLIO DURATION
7.9 Years
</TABLE>
(1) As a percentage of total net assets at December 31, 1998.
10
<PAGE> 12
VAN ECK/CHUBB GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
VAN ECK/CHUBB GLOBAL INCOME FUND
CLASS A
Performance Comparison
<TABLE>
<CAPTION>
VAN
ECK/CHUBB
GLOBAL SALOMON
INCOME SMITH
FUND - BARNEY LIPPER
CLASS A WORLD GLOBAL
(W/ GOVT INCOME
SALES BOND FUND
CHARGE) INDEX INDEX
<S> <C> <C> <C>
Sep-1-95 9524.00 10000.00 10000.00
Sep 1995 9048.00 10223.00 10167.00
Oct 1995 9571.00 10299.00 10261.00
Nov 1995 9685.00 10415.00 10436.00
Dec 1995 9834.00 10524.00 10650.00
Jan 1996 9767.00 10395.00 10774.00
Feb 1996 9649.00 10342.00 10586.00
Mar 1996 9617.00 10327.00 10594.00
Apr 1996 9655.00 10286.00 10685.00
May 1996 9667.00 10288.00 10716.00
Jun 1996 9712.00 10369.00 10820.00
Jul 1996 9879.00 10569.00 10931.00
Aug 1996 9924.00 10610.00 11030.00
Sep 1996 10018.00 10653.00 11240.00
Oct 1996 10201.00 10852.00 11468.00
Nov 1996 10434.00 10996.00 11747.00
Dec 1996 10421.00 10907.00 11717.00
Jan 1997 10205.00 10615.00 11617.00
Feb 1997 10242.00 10536.00 11626.00
Mar 1997 10082.00 10456.00 11481.00
Apr 1997 10040.00 10364.00 11514.00
May 1997 10261.00 10646.00 11679.00
Jun 1997 10398.00 10773.00 11822.00
Jul 1997 10361.00 10689.00 11921.00
Aug 1997 10345.00 10682.00 11860.00
Sep 1997 10640.00 10910.00 12113.00
Oct 1997 10514.00 11136.00 12100.00
Nov 1997 10310.00 10965.00 12101.00
Dec 1997 10422.00 10932.00 12141.00
Jan 1998 10542.00 11038.00 12225.00
Feb 1998 10649.00 11128.00 12327.00
Mar 1998 10718.00 11018.00 12377.00
Apr 1998 10833.00 11194.00 12475.00
May 1998 10864.00 11220.00 12471.00
Jun 1998 10849.00 11237.00 12434.00
Jul 1998 10945.00 11252.00 12488.00
Aug 1998 11118.00 11558.00 12040.00
Sep 1998 11754.00 12173.00 12533.00
Oct 1998 11782.00 12533.00 12640.00
Nov 1998 11754.00 12356.00 12774.00
Dec 1998 11985.00 12605.00 12909.00
Average Annual Total Return 12/31/98 1 Year Since Inception(1)
VE/C Global Income Fund (w/o sales charge) 15.0% 7.2%
VE/C Global Income Fund (w/ sales charge)(2) 9.5% 5.6%
Salomon Smith Barney World Gov't Bond Index 15.3% 7.2%
Lipper Global IncomeFund Index 6.3% 7.9%
</TABLE>
VAN ECK/CHUBB GLOBAL INCOME FUND
CLASS B
Performance Comparison
<TABLE>
<CAPTION>
VAN ECK/CHUBB GLOBAL
INCOME FUND -CLASS B (W/ SALOMON SMITH BARNEY LIPPER GLOBAL INCOME
SALES CHARGE) WORLD GOVT BOND INDEX FUND INDEX
------------------------ --------------------- --------------------
<S> <C> <C> <C>
5/1/98 10000 10000 10000
5/98 9964 10023 9997
6/98 9946 10038 9967
7/98 10070 10052 10010
8/98 10214 10325 9651
9/98 10803 10874 10047
10/98 10825 11196 10133
11/98 10795 11038 10240
12/98 10596 11261 10348
Average Annual Total Return 12/31/98 Since Inception(1)
VE/C Global Income Fund (w/o sales charge) 11.0%
VE/C Global Income Fund (w/ sales charge)(3) 6.0%
Salomon Smith Barney World Gov't Bond Index 12.6%
Lipper Global Income Fund Index 3.5%
</TABLE>
These graphs compare an initial $10,000 investment in the Van Eck/Chubb Global
Income Fund (Classes A and B) made at inception with a similar investment in the
Salomon Smith Barney World Government Bond Index and the Lipper Global Income
Fund Index.
(1) INCEPTION DATE FOR THE VAN ECK/CHUBB GLOBAL INCOME FUND IS 9/1/95 (CLASS A)
AND 4/29/98 (CLASS B). Index returns are calculated as of nearest month end.
(2) The maximum sales charge is 4.75%.
(3) Applicable contingent deferred sales charge taken into account.
Returns for the Van Eck/Chubb Global Income Fund (Classes A and B) reflect all
recurring expenses and include the reinvestment of all dividends and
distributions. Performance does not fully reflect the impact of the Fund's
expenses, as they have been partially reimbursed by the Adviser at certain times
since the Fund's inception.
The Salomon Smith Barney World Government Bond Index is an unmanaged index and
includes the reinvestment of all dividends, but does not reflect the payment of
transaction costs, advisory fees or expenses that are associated with an
investment in the Fund.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance; the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
11
<PAGE> 13
VAN ECK/CHUBB GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
The Van Eck/Chubb Government Securities Fund seeks to earn a high level of
income consistent with the preservation of capital value. The Fund invests only
in debt instruments that are issued, guaranteed or collateralized by the U.S.
Government, its agencies or instrumentalities. The Fund will typically be
invested in a combination of U.S. Treasury notes and bonds, government agency
debentures and/or government agency mortgage-backed securities, such as those
issued by "Fannie Mae" or "Freddie Mac."
For the year 1998, the Van Eck/Chubb Government Securities Fund achieved a total
return of 7.4%, reflecting the reinvestment of monthly dividends and share price
appreciation. Your Fund slightly underperformed the 7.9% posted by its peer
group of mutual funds as measured by the Lipper General U.S. Government Fund
Index.
We attribute your Fund's slight lag to the dramatic events of the third quarter,
most notably the crisis in Russia and the problems associated with the collapse
of many highly leveraged hedge funds. These events increased the volatility
among all fixed income securities, dramatically widening credit spreads (or
yield differentials), and favoring investments in safe-haven U.S. Treasury
securities. For the year, U.S. Treasury securities, particularly long-term
bonds, dramatically outperformed. Other government-related fixed income
securities were less robust; for example, returns on mortgage-backed securities
were hard pressed to keep up with Treasuries. As market conditions stabilize and
securities relationships return to historic norms, we expect to recoup much of
the slight underperformance that the Fund experienced in 1998.
U.S. TREASURY MARKET OVERVIEW
Volatility in the financial markets, which had accelerated in 1997 following
Asia's economic crisis, spiked much higher in this year's third quarter after
Russia shocked the system by defaulting on its debt. This caused a chain
reaction in markets around the world due to bank and hedge fund exposure to
Russian debt securities. Because of the global financial crisis, most U.S. and
foreign bond investors shunned the risk associated with non-government "spread"
product. The net result was a flight to quality to U.S. Treasury securities and
a dramatic increase in all credit spreads, from triple-A rated securities down
to below investment grade securities. The increased demand for Treasuries,
coupled with a limited new-issue supply due to the federal budget surplus,
helped them deliver double-digit returns as yields fell to their lowest levels
since the 1960s.
The turbulence in the financial markets put the U.S. economic expansion at risk
and encouraged the Federal Reserve to lower the federal funds rate three times
in just seven weeks, from 5.50% to 4.75%. The Fed's quick and decisive action
brought calm back to the world's financial markets. The U.S. stock market
rebounded to near pre-crisis levels and credit spreads in the fixed income
markets recovered some but not all of their lost ground. In the fourth quarter,
the U.S. economy, which some thought might falter, resumed its amazingly strong
performance.
Many of the fundamental trends that we have discussed over the past couple of
years continue to positively impact fixed income markets. One of these long-term
secular forces, increased global competition, continues to exert downward
pressure on prices and is, perhaps, even moving us closer toward a deflationary
environment. This trend has been intensified by falling Asian demand, which has
helped push down commodity prices. As long as inflation remains low and economic
growth is moderate, fixed income markets should continue to perform well. The
Federal Reserve should also help keep future expectations of inflation in check
by continuing its pro-active monetary policy.
12
<PAGE> 14
VAN ECK/CHUBB GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
FUND REVIEW
As always, we strive to structure your Fund's portfolio so that it experiences
good relative performance to its peer group category in both rising and falling
interest rate environments. The unusual volatility during 1998 prevented us from
achieving that objective for the first time since the Fund's inception in 1987.
We are confident that as spread relationships return to normal, we will again
provide superior relative results.
At December 31, 1998, your Fund was approximately 45% invested in putable agency
debentures, 38% in mortgage-backed securities, 16% in Treasury securities, with
the remainder in cash equivalents.
OUTLOOK
The U.S. fixed income markets came a long way during 1998 and have moved into
the zone of fair to moderate value. Real interest rates on 30-year Treasury
bonds stood at 4.2% in the beginning of 1998 and were 3.5% at year end (nominal
rates of 5.00% minus an inflation rate of 1.5%). Prior to 1980, real interest
rates rarely topped 3.0%. Those earlier periods included many cycles with either
balanced or surplus federal budgets such as we have now. Given the backdrop of
stable monetary policy, lower inflation and above-average historical real rates,
an investment in a conservatively managed bond fund continues to make sense.
In closing, we thank you for your investment in the Van Eck/Chubb Government
Securities Fund. We look forward to helping you meet your investment objectives
in the future.
<TABLE>
<S> <C>
[PHOTO] [PHOTO]
Ned I. Gerstman Signature Paul R. Geyer Signature
Ned I. Gerstman Paul R. Geyer
Senior Vice President Vice President
Chubb Asset Managers, Inc. Chubb Asset Managers, Inc.
January 25, 1999
</TABLE>
13
<PAGE> 15
VAN ECK/CHUBB GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
- ---------------------------------------------------------
PERFORMANCE RECORD AS OF 12/31/98
- ---------------------------------------------------------
<TABLE>
<CAPTION>
AFTER
MAXIMUM BEFORE
AVERAGE ANNUAL SALES SALES
TOTAL RETURN CHARGE* CHARGE
- -------------------------------------------------
<S> <C> <C>
A shares--Life (since 12/1/87) 8.3% 8.8%
- -------------------------------------------------
10 years 8.3% 8.9%
- -------------------------------------------------
5 years 5.6% 6.6%
- -------------------------------------------------
1 year 2.3% 7.4%
- -------------------------------------------------
B shares--Life (since
4/29/98)** 0.6% 5.6%
- -------------------------------------------------
</TABLE>
THE PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
The Adviser is currently waiving certain expenses of the Fund. Had the Fund
incurred all expenses, investment returns would have been reduced.
* A shares: maximum sales charge = 4.75%
B shares: maximum contingent deferred sales charge = 5.0%
** Not annualized.
<TABLE>
<S> <C>
% OF PORTFOLIO(1)
U.S. Government and Agency Obligations: 97.8%
Other Net Assets: 2.2%
PORTFOLIO COMPOSITION % OF
PORTFOLIO(1)
Tennesse Valley Authority
Putable Debentures 44.7%
Federal National Mortgage
Association Securities 30.2%
U.S. Treasury Securities 15.5%
Government National Mortgage
Association Securities 6.0%
Federal Home Loan Mortgage
Association Securities 1.4%
</TABLE>
DOLLAR WEIGHTED AVERAGE MATURITY
10.3 Years
PORTFOLIO DURATION
5.1 Years
30-DAY SEC YIELD
4.94.%(2)
(1) As a percentage of total net assets at December 31, 1998.
(2) A Shares only.
14
<PAGE> 16
VAN ECK/CHUBB GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
VAN ECK/CHUBB GOVERNMENT SECURITIES FUND CLASS A
Performance Comparison
<TABLE>
<CAPTION>
VAN
ECK/CHUBB
GOVERNMENT
SECURITIES LIPPER
FUND - LEHMAN GENERAL
CLASS A BROTHERS U.S.
(W/ GOVT GOVT
SALES BOND FUND
CHARGE) INDEX INDEX
<S> <C> <C> <C>
Dec-1-87 9524.00 10000.00 10000.00
Dec 1987 9569.00 10119.00 10133.00
Mar 1988 9956.00 10453.00 10472.00
Jun 1988 10105.00 10552.00 10571.00
Sep 1988 10360.00 10730.00 10745.00
Dec 1988 10399.00 10831.00 10808.00
Mar 1989 10537.00 10945.00 10893.00
Jun 1989 11327.00 11826.00 11665.00
Sep 1989 11443.00 11923.00 11741.00
Dec 1989 11904.00 12372.00 12149.00
Mar 1990 11768.00 12219.00 11995.00
Jun 1990 12195.00 12646.00 12376.00
Sep 1990 12276.00 12751.00 12448.00
Dec 1990 12963.00 13452.00 13122.00
Mar 1991 13206.00 13743.00 13406.00
Jun 1991 13337.00 13929.00 13551.00
Sep 1991 14195.00 14725.00 14325.00
Dec 1991 15034.00 15515.00 15043.00
Mar 1992 14547.00 15243.00 14774.00
Jun 1992 15261.00 15843.00 15317.00
Sep 1992 16170.00 16625.00 15917.00
Dec 1992 16152.00 16632.00 15961.00
Mar 1993 16695.00 17383.00 16526.00
Jun 1993 17186.00 17887.00 16943.00
Sep 1993 17370.00 18467.00 17342.00
Dec 1993 17652.00 18405.00 17289.00
Mar 1994 17171.00 17850.00 16749.00
Jun 1994 16985.00 17646.00 16423.00
Sep 1994 17038.00 17720.00 16446.00
Dec 1994 17062.00 17784.00 16469.00
Mar 1995 17964.00 18621.00 17213.00
Jun 1995 18958.00 19776.00 18167.00
Sep 1995 19259.00 20125.00 18485.00
Dec 1995 20048.00 21044.00 19259.00
Mar 1996 19700.00 20568.00 18801.00
Jun 1996 19731.00 20665.00 18818.00
Sep 1996 20077.00 21014.00 19121.00
Dec 1996 20687.00 21628.00 19675.00
Mar 1997 20519.00 21452.00 19525.00
Jun 1997 21294.00 22196.00 20215.00
Sep 1997 21997.00 22940.00 20870.00
Dec 1997 22639.00 23701.00 21468.00
Mar 1998 22993.00 24059.00 21650.00
Jun 1998 23437.00 24693.00 22228.00
Sep 1998 24269.00 26058.00 23210.00
Dec 1998 24315.00 26036.00 23153.00
Average Annual Total
Return 12/31/98 1 Year 5 Years 10 Years
VE/C Gov't Securities
Fund (w/o sales
charge)(1) 7.4% 6.6% 8.8%
VE/C Gov't Securities
Fund (w/ sales
charge)(1),(2) 2.3% 5.6% 8.3%
Lehman Brothers Gov't
Bond Index 9.9% 7.2% 9.2%
Lipper General U.S.
Gov't Fund Index 7.9% 6.0% 7.9%
</TABLE>
VAN ECK/CHUBB GOVERNMENT SECURITIES FUND CLASS B
Performance Comparison
<TABLE>
<CAPTION>
VAN ECK/CHUBB LEHMAN BROTHERS GOV'T LIPPER GENERAL U.S. GOV'T
GOVERNMENT SECURITIES BOND INDEX FUND INDEX
FUND - CLASS B (W/ SALES --------------------- -------------------------
CHARGE)
------------------------
<S> <C> <C> <C>
5/1/98 10000.00 10000.00 10000.00
5/98 10094.00 10103.00 10142.00
6/98 10154.00 10218.00 10228.00
7/98 10152.00 10233.00 10243.00
8/98 10296.00 10500.00 10444.00
9/98 10497.00 10783.00 10680.00
10/98 10613.00 10746.00 10601.00
11/98 10577.00 10750.00 10624.00
12/98 10062.00 10774.00 10654.00
Average Annual Total Return 12/31/98 Since Inception(1)
VE/C Global Income Fund (w/o sales charge) 5.6%
VE/C Global Income Fund (w/ sales charge)(3) 0.6%
Lehman Brothers Gov't Bond Index 5.7%
Lipper General U.S. Gov't Fund Index 6.5%
</TABLE>
These graphs compare an initial $10,000 investment in the Van Eck/Chubb
Government Securities Fund (Classes A and B) made at inception with a similar
investment in the Lehman Brothers Government Bond Index and the Lipper General
U.S. Government Fund Index.
(1) INCEPTION DATE FOR THE VAN ECK/CHUBB GOVERNMENT SECURITIES FUND IS 12/1/87
(CLASS A) AND 4/29/98 (CLASS B). Index returns are calculated as of nearest
month end.
(2) The maximum sales charge is 4.75%.
(3) Applicable contingent deferred sales charge taken into account.
Returns for the Van Eck/Chubb Government Securities Fund (Classes A and B)
reflect all recurring expenses and include the reinvestment of all dividends and
distributions. Performance does not fully reflect the impact of the Fund's
expenses, as they have been partially reimbursed by the Adviser at certain times
since the Fund's inception.
The Lehman Brothers Government Bond Index is an unmanaged index and includes the
reinvestment of all dividends, but does not reflect the payment of transaction
costs, advisory fees or expenses that are associated with an investment in the
Fund.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance; the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
15
<PAGE> 17
VAN ECK/CHUBB GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
The Van Eck/Chubb Growth and Income Fund primarily seeks long-term capital
appreciation by investing in stocks of leading large- and medium-capitalization
U.S. companies. The Fund's manager looks for value by investing in established
companies that are selling at a discount to the market in terms of several
measures, including price-earnings ratios, and that have solid future prospects
(primarily defined as future growth potential above the S&P 500 Index). This
strategy helps keep the Fund's volatility below that of the U.S. stock market in
general. As a secondary objective, the Fund also seeks a reasonable level of
current income through stock dividends.
Nineteen ninety-eight proved to be a difficult year for the Van Eck/Chubb Growth
and Income Fund. For the twelve months ended December 31, 1998, your Fund had a
negative total return of 0.2%. Although your Fund had posted a solid 11.7% gain
through midyear, its third-quarter loss of 24.8% dampened performance.
Fourth-quarter performance improved dramatically with the Fund rising 18.7%, but
not quite enough to hoist the Fund out of net negative territory for the year.
In comparison, the Fund's peer group of mutual funds returned 13.6% as measured
by the Lipper Growth & Income Fund Index.
U.S. EQUITY MARKET OVERVIEW
The dramatic swing in the Fund's quarter-by-quarter results last year were a
reflection of the extreme volatility in equity markets in 1998. As mentioned in
the President's letter, the U.S. stock market, as measured by the S&P 500 Index,
returned 28.6% for the year, even after plunging nearly 20% in the third
quarter. As the summer came to a close, several critical events converged and
precipitated the third-quarter selloff, including earnings disappointments in
some of America's highest-profile corporations (e.g., Coca-Cola, Procter &
Gamble, Intel and IBM), new global financial problems ignited by Russia, hedge
fund disasters in the bond markets, and Clinton's weakened leadership. Investors
reacted to these confidence-shaking events by flocking to the most liquid and
most expensive large-capitalization stocks, and favoring the technology,
pharmaceutical and telecommunications industries. The treacherous third quarter
was thought by many to be the long overdue correction to what has become a very
over-priced market. But what ensued was a further narrowing of the nearly
decade-long bull market. A closer look at the components of the S&P 500 Index
reveals that the 25 largest companies were responsible for 66% of the Index's
return in 1998 (approximately 19 percentage points). Microsoft, now America's
largest company, was up 115% for the year and it alone accounted for almost one-
tenth of the Index's 28.6% performance (2.4 percentage points). By all
historical standards, performance was extremely narrow last year and most active
investment managers underperformed.
FUND REVIEW
Your Fund was influenced by three factors last year: 1) capitalization, 2)
sector allocation and 3) investment style. First, the Fund had little exposure
to the expensive, large-capitalization stocks that would have buffered
performance and which helped both the DJIA and the S&P 500 Index soar to new
heights. Clearly, we had underestimated the momentum of investor preference,
regardless of valuations, for mega-capitalization companies, in particular
high-growth technology and global consumer companies. This trend is being
supported by the $1 trillion now invested in 401(k) retirement plans. Equities
have gained the lion's share of these investments, particularly
large-capitalization stocks and indexed mutual funds. Furthermore, direct
on-line trading now accounts for one in every four retail trades,
16
<PAGE> 18
VAN ECK/CHUBB GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
and is also lending support to America's best-known names. A second factor that
impacted your Fund was its over-exposure to the financial services and
economically cyclical stocks, both of which bore the brunt of the market's
punishment. Financials had been 1997's top performers and we were confident that
their strength would continue last year. However, investment and brokerage firms
(including your Fund's holdings in Merrill Lynch, Citigroup, Chase Manhattan and
PaineWebber) were particularly hurt by losses brought on by exposure to Russia
and to hedge funds. Also, the Fund's positions in economically sensitive
cyclical companies, including those in basic goods and manufacturing, were hurt
by the global downturn. Finally, value investing as an investment style was
particularly out of favor last year; there was little reward to investing in the
companies we seek as a value manager--the marketplace continued to disregard
solid, healthy companies selling at a discount.
OUTLOOK
In response to last year's disappointing performance, we have taken dramatic
steps to augment the character of your Fund and to address the three areas that
impeded performance. It is our belief that the trend supporting
mega-capitalization stocks is not going to end anytime soon, and we have made
the decision to participate in it more actively. Beginning in December, we
initiated a dramatic repositioning of the portfolio by broadening the screening
parameters we use for individual stock selection. Our goal was to move as much
as 50% of the Fund's portfolio by the end of this month into those
larger-capitalization stocks that have been propelling the stock market. We are
doing this carefully and swiftly by culling the S&P 500's top 25 names for those
companies that look the most reasonably priced to us. Thus far we have added
Wal-Mart Stores, Bristol-Myers Squibb, Merck & Co., Lucent Technologies,
Microsoft, Cisco Systems and Intel. These seven companies represent highly
liquid positions that are easier to trade during times of crisis, unlike the
traditional lesser-known names typically held in the Fund's portfolio. In
addition, in the second half of 1998, we added two household names in the
telecommunications industry, AT&T and Bell Atlantic. (Keep in mind that not all
of these new names appear in your Fund's list of portfolio holdings at December
31, 1998.) At the same time, we lightened the Fund's positions in IMC Global,
United Technologies, Northrop Grumman, Black & Decker and PMI Group. All of
these companies underperformed last year, hurt by the fallout from Asia.
When our new positioning is complete, we expect to own 20 to 25 companies that
reflect the brand name large-cap bias of the market and an additional 20 to 25
names that represent our traditional approach--investing in undervalued
companies that have yet to be recognized by the market. We remain committed to
our core holdings in undervalued companies despite their lackluster performance
in 1998. Many, such as the packaging company Owens-Illinois and the
manufacturing company Ingersoll-Rand, continue to have healthy positive earnings
and solid businesses, but were avoided by investors last year because of their
linkage to Asia.
17
<PAGE> 19
VAN ECK/CHUBB GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
We are confident that our revised strategy will help improve performance in the
months ahead. We appreciate your investment in the Van Eck/Chubb Growth and
Income Fund, and we look forward to continuing to meet your investment
objectives.
[PHOTO]
Robert Witkoff Signature
Robert Witkoff
Senior Vice President
Chubb Asset Managers, Inc.
January 25, 1999
- ---------------------------------------------------------
PERFORMANCE RECORD AS OF 12/31/98
- ---------------------------------------------------------
<TABLE>
<CAPTION>
AFTER
MAXIMUM BEFORE
AVERAGE ANNUAL SALES SALES
TOTAL RETURN CHARGE* CHARGE
- -------------------------------------------------
<S> <C> <C>
A shares--Life (since 12/1/87) 14.3 % 14.9 %
- -------------------------------------------------
10 years 14.9 % 15.4 %
- -------------------------------------------------
5 years 13.7 % 14.8 %
- -------------------------------------------------
1 year (4.9)% (0.2)%
- -------------------------------------------------
B shares--Life (since
4/29/98)** (16.9)% (12.5)%
- -------------------------------------------------
</TABLE>
THE PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
The Adviser is currently waiving certain expenses of the Fund. Had the Fund
incurred all expenses, investment returns would have been reduced.
* A shares: maximum sales charge = 4.75%
B shares: maximum contingent deferred sales charge = 5.0%
** Not annualized.
<TABLE>
<S> <C>
% OF PORTFOLIO(1)
Common Stocks: 90.4%
Other Net Assets: 9.6%
TOP TEN EQUITIES % OF
PORTFOLIO(1)
Banc One Corporation 6.0%
Healthsouth Corporation 3.9%
Baxter International Inc. 3.8%
Electronic Data Systems Corporation 3.7%
United Technologies Corporation 3.5%
Hasbro, Inc. 3.4%
Lafarge Corporation 3.4%
Bell Atlantic Corporation 3.3%
Ingersoll-Rand Company 3.1%
Burlington Northern Santa Fe Corp. 3.1%
TOP TEN INDUSTRIES % OF
PORTFOLIO(1)
Banking 13.6%
Medical-Healthcare Services 12.0%
Electronics 7.5%
Manufacturing 6.6%
Financial Services 6.2%
Building Materials & Tools 5.9%
Transportation & Shipping 5.8%
Telecommunications 5.6%
Autos, Trucks & Parts 4.5%
Toys 3.4%
</TABLE>
(1) As a percentage of total net assets at December 31, 1998.
18
<PAGE> 20
VAN ECK/CHUBB GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
VAN ECK/CHUBB GROWTH AND INCOME FUND CLASS A
Performance Comparison
<TABLE>
<CAPTION>
VAN
ECK/CHUBB
GROWTH
AND
INCOME LIPPER
FUND - GROWTH
CLASS A &
(W/ INCOME
SALES S&P 500 FUND
CHARGE) INDEX INDEX
<S> <C> <C> <C>
Dec-1-87 9524 10000 10000
Dec 1987 10096 10761 10661
Mar 1988 10248 11372 11489
Jun 1988 11011 12129 12246
Sep 1988 10277 12170 12348
Dec 1988 10549 12542 12618
Mar 1989 11253 13430 13478
Jun 1989 12062 14614 14462
Sep 1989 13518 16177 15665
Dec 1989 13924 16509 15613
Mar 1990 14078 16013 15211
Jun 1990 14786 17020 15782
Sep 1990 13071 14683 13660
Dec 1990 13501 15998 14677
Mar 1991 14901 18319 16771
Jun 1991 15671 18276 16712
Sep 1991 16474 19252 17697
Dec 1991 18031 20863 18751
Mar 1992 18302 20337 18731
Jun 1992 17857 20723 18953
Sep 1992 17992 21376 19489
Dec 1992 19236 22450 20556
Mar 1993 20164 23431 21773
Jun 1993 20329 23544 22053
Sep 1993 21231 24151 23033
Dec 1993 22178 24710 23562
Mar 1994 21533 23775 22799
Jun 1994 21289 23874 22918
Sep 1994 22034 25040 23865
Dec 1994 21224 25036 23464
Mar 1995 22984 27471 25305
Jun 1995 25912 30091 27382
Sep 1995 28152 32480 29422
Dec 1995 28734 34435 30771
Mar 1996 29523 36283 32538
Jun 1996 30915 37910 33375
Sep 1996 31549 39082 34451
Dec 1996 35200 42338 37133
Mar 1997 35555 43475 37757
Jun 1997 41577 51060 43054
Sep 1997 46364 54883 46658
Dec 1997 44300 56459 47113
Mar 1998 50162 64331 52524
Jun 1998 49495 66454 52585
Sep 1998 37247 59854 46028
Dec 1998 44217 72592 53510
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return 12/31/98 1 Year 5 Years 10 Years
<S> <C> <C> <C>
VE/C Growth and Income Fund (w/o sales charge)(1) -0.2% 14.8% 15.4%
VE/C Growth and Income Fund (w/ sales Charge)(1)(2) -4.9% 13.7% 14.9%
S&P 500 Index 28.6% 24.1% 19.2%
Lipper Growth & Income Fund Index 13.6% 17.8% 15.5%
</TABLE>
VAN ECK/CHUBB GROWTH AND INCOME FUND CLASS B
Performance Comparison
<TABLE>
<CAPTION>
VAN ECK/CHUBB GROWTH S&P 500 INDEX
AND INCOME FUND - CLASS ------------- LIPPER GROWTH & INCOME
B (W/ SALES CHARGE) FUND INDEX
----------------------- ----------------------
<S> <C> <C> <C>
5/1/98 10000.00 10000.00 10000.00
5/98 9790.00 9824.00 9840.00
6/98 9591.00 10224.00 9958.00
7/98 9269.00 10118.00 9714.00
8/98 7344.00 8656.00 8342.00
9/98 7211.00 9209.00 8716.00
10/98 7994.00 9957.00 9350.00
11/98 8424.00 10560.00 9800.00
12/98 8312.00 11169.00 10133.00
Average Annual Total Return 12/31/98 Since Inception(1)
VE/C Tax-Exempt Fund (w/o sales charge) -12.5%
VE/C Tax-Exempt Fund (w/ sales charge)(3) -16.9%
S&P 500 Index 11.70%
Lipper Growth & Income Fund Index 1.30%
</TABLE>
These graphs compare an initial $10,000 investment in the Van Eck/Chubb Growth
and Income Fund (Classes A and B) made at inception with a similar investment in
the S&P 500 Index and the Lipper Growth & Income Fund Index.
(1) INCEPTION DATE FOR THE VAN ECK/CHUBB GROWTH AND INCOME FUND IS 12/1/87
(CLASS A) AND 4/29/98 (CLASS B). Index returns are calculated as of nearest
month end.
(2) The maximum sales charge is 4.75%.
(3) Applicable contingent deferred sales charge taken into account.
Returns for the Van Eck/Chubb Growth and Income Fund (Classes A and B) reflect
all recurring expenses and include the reinvestment of all dividends and
distributions. Performance does not fully reflect the impact of the Fund's
expenses, as they have been partially reimbursed by the Adviser at certain times
since the Fund's inception.
The S&P 500 Index is an unmanaged index and includes the reinvestment of all
dividends, but does not reflect the payment of transaction costs, advisory fees
or expenses that are associated with an investment in the Fund.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance; the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
19
<PAGE> 21
VAN ECK/CHUBB TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
The Van Eck/Chubb Tax-Exempt Fund seeks a high level of current income that is
exempt from federal income taxes, consistent with the preservation of capital.
The Fund's managers perform rigorous credit analysis in selecting tax-exempt
bonds from across the U.S. The Fund emphasizes investment-grade securities,
including general obligation and revenue-backed bonds.
We are pleased to report that the Van Eck/Chubb Tax-Exempt Fund posted positive
results for the year, gaining 6.0%. This performance reflects both the
reinvestment of monthly dividends and share price appreciation. The Fund
outperformed its peer group of mutual funds as measured by Lipper General
Municipal Debt Fund Index, which gained 5.6%; for the same period, the benchmark
Lehman Brothers Municipal Bond Index rose 6.5%.
U.S. MUNICIPAL MARKET OVERVIEW
As in 1997, last year was a good one for most fixed income markets; all
categories posted positive results, except for emerging market debt and high-
yielding U.S. corporate bonds (so called "junk bonds"). The greatest
beneficiaries in 1998 were investors who purchased U.S. Treasury bonds. As
mentioned in the President's letter, the flight to quality that ensued in the
third quarter, following Russia's debt default and the breakdown of several
hedge funds, ignited a rally in long-term U.S. Treasury bonds that pushed yields
below the 5% threshold in October. Investors jettisoned riskier bonds and
purchased Treasuries as a refuge amid the growing global financial
uncertainties. To counteract financial panic, the Federal Reserve initiated
three successive short-term interest rate cuts and confidence was restored.
During the fourth quarter, investors once again began to venture beyond the
traditional safe havens. Corporations took advantage of the year-end recovery
and the historically low interest rates by issuing a record volume of debt in
December, either through new issues or the refinancing of older high-yielding
debt.
While the decline in yields on long-term Treasuries was quite spectacular last
year--a total of 83 basis points as the bellwether 30-year bond fell from 5.92%
to 5.09%--the drop in yields on municipal securities was less dramatic. The
yield of the Bond Buyer 20-Bond General Obligation Index, the benchmark we use
to monitor municipal yields, fell just 15 basis points over the entire year,
from 5.15% in January to 5.00% by year end. For much of the year, municipals
were trading at very high ratios to Treasuries, in excess of 100% briefly in
early October and closer to 95% for the bulk of the year. In the past, municipal
yields have only matched Treasury yields when confronted with tax reform
concerns, such as the flat-tax proposals of 1996 and the Tax Reform Act of 1986.
By contrast, there were no such tax issues overhanging the municipal market last
year.
There were several reasons why demand for municipals was rather tepid and yield
ratios remained high in 1998, despite the fact that municipals continue to offer
decent returns and less volatility than other fixed income securities. First,
new supply totaled $284 billion in 1998. This represented the second highest
level of municipal issuance in history, second only to the 1993 record of $292
billion. At the same time, the global financial turmoil of the third quarter
favored Treasuries at a time when Treasury supply had declined as a result of
the federal budget surplus. During times of international crisis, municipals
don't command the attention of foreign buyers, as they provide tax-exemption for
U.S. investors only. Finally, U.S. retail investors, suffering from sticker
shock, have historically tended to shy away from
20
<PAGE> 22
VAN ECK/CHUBB TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
municipals when long-term yields fall close to 5%, even though on an after-tax
basis these yields are still attractive.
Despite softer demand, municipal credit rating trends were quite favorable
during 1998. Most state and local governments have built large surpluses, having
done an excellent job of putting their fiscal houses in order; many used very
conservative budgetary assumptions and, therefore, greatly underestimated
revenues. The overall economic strength of the country and the tremendous
revenues that have come from capital gains tax receipts have helped. Credit
quality improved across the board in 1998, with Standard & Poor's having
upgraded five municipal credits for every one that it downgraded; in dollar
terms, this equated to $92.2 billion in upgrades versus $6.8 billion in
downgrades.
FUND REVIEW
The barbell maturity strategy that we employed in late 1997 benefited your Fund
in 1998. The Fund's income stream was enhanced through its holdings in
higher-yielding bonds of shorter maturity and, at the same time, total return
was boosted by its positions in high-grade bonds of longer maturity. This
strategy was particularly helpful during the choppy fourth quarter. Credit
quality remained extremely high; at year end, 68.5% of the Fund was rated in the
two highest categories, triple- and double-A rated paper. With credit-quality
yield spreads so narrow, we saw no benefit in lowering the Fund's quality in
order to increase its yield, and throughout the year, we remained committed to
investing primarily in top-rated bonds.
Geographically, as we stated at midyear, we continued to favor New York,
Washington and Indiana. At year end, your Fund was 14.9%, 13.2% and 12.2%
invested in these states, respectively. New York City was upgraded in 1998 (as
was New York State in 1997) and both the city and state continue to issue a
healthy supply of bonds. Washington's economy was among the top ten performing
state economies in the nation last year. Indiana has one of the largest
surpluses in the nation; it enjoys a low tax burden and has created a favorable
environment for new businesses. In terms of sectors, we continued to emphasize
the transportation sector. Owing to long-delayed infrastructure needs, new bond
issues for airports and toll roads continued to be plentiful and offered
attractive investment opportunities. In addition, our positions in electric
utilities should continue to perform well as supply becomes limited with little
need for new power plant construction.
OUTLOOK
During 1999, we may well see renewed interest in municipal bonds. Municipal
yields remain attractive relative to taxable Treasury yields. As investors
increasingly adapt to a disinflationary environment, demand for municipals may
increase despite relatively low nominal yields. Municipals remain one of the few
tax havens left for high income earners. A current tax-free municipal yield of
5.00% translates into an 8.28% yield for taxpayers in the maximum 39.6% federal
income tax bracket. Economic fundamentals point to a continuation of moderate
economic growth with low inflation; this, coupled with improving credit trends
and attractive after-tax returns, bodes well for the municipal market. Finally,
in the past, Congress has threatened to chip away at the tax-exempt status of
municipal bonds in order to generate revenues; the current federal surplus has
helped relieve any such pressure.
21
<PAGE> 23
VAN ECK/CHUBB TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
We thank you for your investment in the Van Eck/ Chubb Tax-Exempt Fund and look
forward to helping you meet your investment goals in the months ahead.
<TABLE>
<S> <C>
[PHOTO] [PHOTO]
Frederick W. Gaertner Thomas J. Swartz, III
Signature Signature
Frederick W. Gaertner Thomas J. Swartz, III
Senior Vice President Vice President
Chubb Asset Managers, Inc. Chubb Asset Managers, Inc.
January 25, 1999
</TABLE>
- ---------------------------------------------------------
PERFORMANCE RECORD AS OF 12/31/98
- ---------------------------------------------------------
<TABLE>
<CAPTION>
AFTER
MAXIMUM BEFORE
AVERAGE ANNUAL SALES SALES
TOTAL RETURN CHARGE* CHARGE
- --------------------------------------------------
<S> <C> <C>
A shares--Life (since 12/1/87) 7.8 % 8.2%
- --------------------------------------------------
10 years 7.1 % 7.6%
- --------------------------------------------------
5 years 4.5 % 5.5%
- --------------------------------------------------
1 year 0.9 % 6.0%
- --------------------------------------------------
B shares--Life (since 4/29/98)** (0.1)% 5.1%
- --------------------------------------------------
</TABLE>
THE PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
The Adviser is currently waiving certain expenses of the Fund. Had the Fund
incurred all expenses, investment returns would have been reduced.
* A shares: maximum sales charge = 4.75%
B shares: maximum contingent deferred sales charge = 5.0%
** Not annualized.
% OF PORTFOLIO(1)
<TABLE>
<S> <C>
Muncipal Bonds: 97.3%
Other Net Assets: 2.7%
PORTFOLIO QUALITY
% OF
RATING(2) PORTFOLIO(1)
Aaa 48.5%
Aa 20.0%
A 16.5%
Baa 8.7%
Ba 2.7%
Not Rated 3.6%
% OF
TOP TEN STATES PORTFOLIO(1)
New York 14.9%
Washington 13.2%
Indiana 12.2%
New Jersey 7.9%
Texas 6.1%
Tennesse 5.9%
Massachusetts 5.6%
Illinois 5.6%
Florida 4.8%
Utah 4.1%
</TABLE>
DOLLAR WEIGHTED AVERAGE MATURITY
14.8 Years
PORTFOLIO DURATION
6.8 Years
30-DAY SEC YIELD
3.51%(3)
(1) As a percentage of total net assets at December 31, 1998.
(2) Predominately Moody's Investors Service ratings.
(3) A Shares only.
22
<PAGE> 24
VAN ECK/CHUBB TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
VAN ECK/CHUBB TAX-EXEMPT FUND
CLASS A
Performance Comparison
<TABLE>
<CAPTION>
VAN ECK/CHUBB TAX
EXEMPT FUND - CLASS A LEHMAN BROTHERS LIPPER GENERAL MUNICIPAL
(W/ SALES CHARGE) MUNICIPAL BOND INDEX DEBT FUND INDEX
--------------------- -------------------- ------------------------
<S> <C> <C> <C>
Dec-1-87* 9524.00 10000.00 10000.00
Dec 1987 9664.00 10145.00 10194.00
Mar 1988 9918.00 10494.00 10505.00
Jun 1988 10245.00 10697.00 10769.00
Sep 1988 10641.00 10972.00 11087.00
Dec 1988 11011.00 11176.00 11383.00
Mar 1989 11019.00 11250.00 11449.00
Jun 1989 11931.00 11916.00 12137.00
Sep 1989 11787.00 11924.00 12081.00
Dec 1989 12286.00 12382.00 12517.00
Mar 1990 12120.00 12437.00 12491.00
Jun 1990 12451.00 12728.00 12775.00
Sep 1990 12293.00 12735.00 12716.00
Dec 1990 12913.00 13284.00 13268.00
Mar 1991 13173.00 13585.00 13541.00
Jun 1991 13374.00 13875.00 13818.00
Sep 1991 13891.00 14414.00 14365.00
Dec 1991 14296.00 14897.00 14866.00
Mar 1992 14385.00 14942.00 14885.00
Jun 1992 14950.00 15508.00 15520.00
Sep 1992 15328.00 15920.00 15872.00
Dec 1992 15609.00 16210.00 16189.00
Mar 1993 16285.00 16811.00 16840.00
Jun 1993 16764.00 17361.00 17409.00
Sep 1993 17356.00 17948.00 17996.00
Dec 1993 17548.00 18200.00 18201.00
Mar 1994 16689.00 17201.00 17201.00
Jun 1994 16734.00 17391.00 17300.00
Sep 1994 16770.00 17510.00 17381.00
Dec 1994 16501.00 17259.00 17103.00
Mar 1995 17602.00 18479.00 18316.00
Jun 1995 17996.00 18925.00 18689.00
Sep 1995 18317.00 19470.00 19145.00
Dec 1995 19120.00 20273.00 20064.00
Mar 1996 18920.00 20028.00 19707.00
Jun 1996 19001.00 20182.00 19819.00
Sep 1996 19424.00 20646.00 20283.00
Dec 1996 19886.00 21172.00 20781.00
Mar 1997 19904.00 21122.00 20702.00
Jun 1997 20476.00 21849.00 21431.00
Sep 1997 21016.00 22508.00 22097.00
Dec 1997 21623.00 23119.00 22733.00
Mar 1998 21888.00 23385.00 22823.00
Jun 1998 22177.00 23741.00 23290.00
Sep 1998 22767.00 24469.00 23980.00
Dec 1998 22921.00 24616.00 24015.00
Average Annual Total Return 12/31/98 1 Year 5 Years 10 Years
VE/C Tax-Exempt Fund (w/o sales charge)(1) 6.0% 5.5% 7.6%
VE/C Tax-Exempt Fund (w/ sales charge)(1),(2) 0.9% 4.5% 7.1%
Lehman Brothers Municipal Bond Index 6.5% 6.2% 8.2%
Lipper General Municipal Debt Fund Index 5.6% 5.7% 7.8%
</TABLE>
VAN ECK/CHUBB TAX-EXEMPT FUND
CLASS B
Performance Comparison
<TABLE>
<CAPTION>
VAN ECK/CHUBB TAX-
EXEMPT FUND -CLASS B (W/ LEHMAN BROTHERS LIPPER GENERAL MUNICIPAL
SALES CHARGE) MUNICIPAL BOND INDEX DEBT FUND INDEX
------------------------ -------------------- ------------------------
<S> <C> <C> <C>
5/1/98 10000.00 10000.00 10000.00
5/98 10105.00 10158.00 10233.00
6/98 10144.00 10198.00 10270.00
7/98 10177.00 10224.00 10290.00
8/98 10282.00 10382.00 10451.00
9/98 10402.00 10511.00 10575.00
10/98 10418.00 10511.00 10536.00
11/98 10433.00 10548.00 10572.00
12/98 10010.00 10574.00 10590.00
Average Annual Total Return 12/31/98 Since Inception(1)
VE/C Tax-Exempt Fund (w/o sales charge) 5.1%
VE/C Tax-Exempt Fund (w/ sales charge)(3) 0.1%
Lehman Brothers Municipal Bond Index 5.7%
Lipper General Municipal Debt Fund Index 5.9%
</TABLE>
These graphs compare an initial $10,000 investment in the Van Eck/Chubb
Tax-Exempt Fund (Classes A and B) made at inception with a similar investment in
the Lehman Brothers Municipal Bond Index and the Lipper General Municipal Debt
Fund Index.
(1) INCEPTION DATE FOR THE VAN ECK/CHUBB TAX-EXEMPT FUND IS 12/1/87 (CLASS A)
AND 4/29/98 (CLASS B). Index returns are calculated as of nearest month end.
(2) The maximum sales charge is 4.75%.
(3) Applicable contingent deferred sales charge taken into account.
Returns for the Van Eck/Chubb Tax-Exempt Fund (Classes A and B) reflect all
recurring expenses and include the reinvestment of all dividends and
distributions. Performance does not fully reflect the impact of the Fund's
expenses, as they have been partially reimbursed by the Adviser at certain times
since the Fund's inception.
The Lehman Brothers Municipal Bond Index is an unmanaged index and includes the
reinvestment of all dividends, but does not reflect the payment of transaction
costs, advisory fees or expenses that are associated with an investment in the
Fund.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance; the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
23
<PAGE> 25
VAN ECK/CHUBB TOTAL RETURN FUND
- --------------------------------------------------------------------------------
The Van Eck/Chubb Total Return Fund seeks to provide both income and capital
appreciation by investing in a strategic combination of high-quality bonds and
the common stocks of both large- and medium-capitalization companies, selected
with a value approach. The Fund's managers monitor and adjust the asset mix
based on analysis of the financial markets. In ordinary markets, about 60% to
70% of the Fund's assets will be invested in common stocks.
The Van Eck/Chubb Total Return Fund had a somewhat disappointing twelve months,
gaining 2.7%; this return reflects the reinvestment of quarterly dividends and
share price appreciation. Although your Fund had returned 7.8% for the six
months ending June 30, 1998, the third quarter, as discussed below, proved
difficult and the Fund declined 14.1%. Positive fourth-quarter results of 11.0%
helped the Fund end the year on an upbeat note. In comparison, the Fund's peer
group of mutual funds rose 15.1% in 1998 as measured by the Lipper Balanced Fund
Index.
U.S. EQUITY AND FIXED
INCOME MARKETS OVERVIEW
The President's letter discusses the problems of the third quarter, most notably
Russia's inability to pay its debts and the subsequent devaluation of its
currency. Coupled with Japanese banking system problems and President Clinton's
impaled leadership, Russia's problems ignited a global financial crisis that
rippled through the world's economies and caused stock and bond prices to plunge
both in the developing world and in the emerging markets. U.S. investors
responded by flocking to the most liquid and expensive large-capitalization
stocks, redirecting and concentrating their equity investments in an extremely
narrow list of companies. Concurrently, both U.S. and foreign bond investors
favored safe-haven U.S. Treasury securities. The third-quarter crisis was
exacerbated by over-leveraged hedge funds, many of which were forced to
deleverage and sell securities at distressed prices to meet margin calls.
Although Long-Term Capital Management drew the most media attention, there were
many speculative hedge funds that contributed to the panic; this led to a
congressional hearing and calls for increased regulation. The Federal Reserve
helped quell the panic-driven global credit crunch by assisting in the LTCM
bailout and aggressively cutting interest rates, thus paving the way for
coordinated rate cuts by central banks around the world. In the fourth quarter,
both the U.S. stock and bond markets rebounded strongly, reflecting our
country's continued strong economic growth and the absence of inflationary
pressures.
FUND REVIEW
Despite the robust returns of the benchmark indices in 1998, the good news was
only experienced by narrow segments of the financial markets. Among stocks, it
was the largest American companies in the technology, telecommunications and
pharmaceutical industries that propelled stock market returns. Among bonds, it
was predominately high-quality Treasury securities. While the Fund's
high-quality fixed income investments helped buoy performance, its equity
investments proved to be less rewarding.
Last year, the market was particularly hard on the companies that meet our
traditional value criteria -- solid, healthy companies selling at a discount to
their inherent value and which, because of their promising underlying
fundamentals, have the potential to appreciate greatly with time. As reflected
by the narrowness of markets, the confidence-shaking events of last year gave
investors no tolerance for investments that did not promise an immediate pay
off. Demand for safety,
24
<PAGE> 26
VAN ECK/CHUBB TOTAL RETURN FUND
- --------------------------------------------------------------------------------
liquidity, brand name glamour and short-term performance overrode the common
sense of investing in undervalued companies that promised longer-term positive
results.
OUTLOOK
We began 1998 with approximately 64% of the Fund's net assets invested in common
stocks, 26% in U.S. Government obligations and 9% in high-grade corporate bonds.
Reflecting the third-quarter selloff, the Fund's stock allocation had declined
to 56% at year end, while 25% was invested in U.S. Government bonds and 15% in
high-grade corporate bonds.
Although we remain committed to our core equity value strategy, we have begun to
augment the Fund's list of common stock holdings by adding several
large-capitalization companies. By broadening the screening parameters of our
individual stock selection process, we added such well-known companies as
Wal-Mart Stores, Bristol-Myers Squibb, Merck & Co., Lucent Technologies,
Microsoft, Cisco Systems and Intel. Culled from the largest holdings in the S&P
500 Index, these companies represent reasonable value relative to their
large-capitalization brethren (i.e., on average, they are selling at 30 times
earnings rather than 50 times, as are some Index high flyers). While we have not
abandoned our value orientation, it is our hope that the addition of these names
will help your Fund benefit from the large-cap bias that has propelled stock
market returns in the past few years. (Keep in mind that many of these new names
do not appear in your Fund's list of portfolio holdings at December 31, 1998.)
Even though we've expanded our criteria, we remain dedicated to some of the
Fund's core holdings in undervalued companies despite their lackluster
performance in 1998. Many of the Fund's positions, such as the packaging company
Owens-Illinois and the manufacturing company Ingersoll-Rand, continue to have
healthy positive earnings and solid businesses, but were avoided by investors
because of their linkage to Asia. As confidence is restored and market
performance broadens, the solid companies we tend to prefer are likely to
outperform the overall market.
The Fund's fixed income investments will continue to be concentrated in
high-quality government and corporate bonds, those securities that offer
superior credit quality and attractive yields. Although we do not expect bond
markets to appreciate as much as they did in 1998 given that yields have less
room to fall, these securities should continue to help your Fund meet its goal
of providing consistent, long-term performance with less volatility than a fund
that is invested only in common stocks.
In closing, we thank you for your investment in the Van Eck/Chubb Total Return
Fund. We look forward to helping you meet your investment objectives in the
future.
<TABLE>
<S> <C>
[PHOTO] [PHOTO]
Robert O'Reilly Signature Robert Witkoff Signature
Michael O'Reilly Robert Witkoff
President Senior Vice President
Van Eck/Chubb Funds Chubb Asset Managers, Inc.
President and
Chief Operating Officer
Chubb Asset Managers, Inc.
January 25, 1999
</TABLE>
25
<PAGE> 27
VAN ECK/CHUBB TOTAL RETURN FUND
- --------------------------------------------------------------------------------
- ---------------------------------------------------------
PERFORMANCE RECORD AS OF 12/31/98
- ---------------------------------------------------------
<TABLE>
<CAPTION>
AFTER
MAXIMUM BEFORE
AVERAGE ANNUAL SALES SALES
TOTAL RETURN CHARGE* CHARGE
- -------------------------------------------------
<S> <C> <C>
A shares--Life (since 12/1/87) 13.0 % 13.5 %
- -------------------------------------------------
10 years 13.3 % 13.9 %
- -------------------------------------------------
5 years 12.1 % 13.2 %
- -------------------------------------------------
1 year (2.2)% 2.7 %
- -------------------------------------------------
B shares--Life (since
4/29/98)** (10.7)% (6.0)%
- -------------------------------------------------
</TABLE>
THE PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
The Adviser is currently waiving certain expenses of the Fund. Had the Fund
incurred all expenses, investment returns would have been reduced.
* A shares: maximum sales charge = 4.75%
B shares: maximum contingent deferred sales charge = 5.0%
** Not annualized.
<TABLE>
<CAPTION>
% OF PORTFOLIO(1)
<S> <C>
U.S. Government Obligations: 24.9%
Corporate Bonds: 15.0%
Other Net Assets: 3.9%
Common Stocks: 56.2%
% OF
TOP TEN EQUITIES PORTFOLIO(1)
Banc One Corporation 4.7%
Progressive Corporation 3.2%
Lafarge Corporation 3.1%
United Technologies Corp. 3.0%
Hasbro, Inc. 3.0%
AlliedSignal Inc. 2.8%
Borg-Warner Automotive, Inc. 2.5%
FDX Corp. 2.5%
Tenet Healthcare Corporation 2.5%
Burlington Northern Sante Fe Corp. 2.3%
% OF
TOP TEN INDUSTRIES PORTFOLIO(2)
Banking 7.4%
Transportation & Shipping 6.5%
Autos, Trucks & Parts 5.9%
manufacturing 5.8%
Pharmaceuticals 3.9%
Insurance 3.2%
Electronics 3.1%
Building Materials & Tools 3.1%
Toys 3.0%
Financial Services 2.5%
</TABLE>
(1) As a percentage of total net assets at December 31,1998.
26
<PAGE> 28
VAN ECK/CHUBB TOTAL RETURN FUND
- --------------------------------------------------------------------------------
VAN ECK/CHUBB TOTAL RETURN FUND
CLASS A
Performance Comparison
<TABLE>
<CAPTION>
VAN
ECK/CHUBB
TOTAL
RETURN
FUND -
CLASS A LIPPER
(W/ BALANCED
SALES S&P 500 FUND
CHARGE) INDEX INDEX
<S> <C> <C> <C>
Dec-1-87 9524.00 10000.00 10000.00
Dec 1987 9762.00 10761.00 10567.00
Mar 1988 10018.00 11372.00 11021.00
Jun 1988 10637.00 12129.00 11459.00
Sep 1988 10382.00 12170.00 11523.00
Dec 1988 10576.00 12542.00 11748.00
Mar 1989 10981.00 13430.00 12223.00
Jun 1989 11772.00 14614.00 13088.00
Sep 1989 12834.00 16177.00 13861.00
Dec 1989 13266.00 16509.00 14062.00
Mar 1990 13275.00 16013.00 13733.00
Jun 1990 13908.00 17020.00 14367.00
Sep 1990 12735.00 14683.00 13205.00
Dec 1990 13216.00 15998.00 14154.00
Mar 1991 14387.00 18319.00 15628.00
Jun 1991 14932.00 18276.00 15670.00
Sep 1991 15654.00 19252.00 16661.00
Dec 1991 17083.00 20863.00 17810.00
Mar 1992 17038.00 20337.00 17600.00
Jun 1992 17039.00 20723.00 17882.00
Sep 1992 17413.00 21376.00 18445.00
Dec 1992 18292.00 22450.00 19138.00
Mar 1993 19156.00 23431.00 20039.00
Jun 1993 19437.00 23544.00 20449.00
Sep 1993 20240.00 24151.00 21197.00
Dec 1993 20859.00 24710.00 21426.00
Mar 1994 20279.00 23775.00 20772.00
Jun 1994 20114.00 23874.00 20615.00
Sep 1994 20536.00 25040.00 21218.00
Dec 1994 19975.00 25036.00 20988.00
Mar 1995 21471.00 27471.00 22254.00
Jun 1995 23648.00 30091.00 23812.00
Sep 1995 25176.00 32480.00 25090.00
Dec 1995 25978.00 34435.00 26211.00
Mar 1996 26452.00 36283.00 26797.00
Jun 1996 27288.00 37910.00 27341.00
Sep 1996 27753.00 39082.00 28062.00
Dec 1996 30405.00 42338.00 29632.00
Mar 1997 30567.00 43475.00 29770.00
Jun 1997 34628.00 51060.00 32979.00
Sep 1997 38283.00 54883.00 35098.00
Dec 1997 37731.00 56459.00 35646.00
Mar 1998 41165.00 64331.00 38369.00
Jun 1998 40678.00 66454.00 39040.00
Sep 1998 34937.00 59854.00 36791.00
Dec 1998 38761.00 72592.00 41024.00
Average Annual Total
Return 12/31/98 1 Year 5 Years 10 Years
VE/C Total Return
Fund (w/o sales
charge)(1) 2.7% 13.2% 13.9%
'VE/C Total Return
Fund (w/ sales
charge)(1),(2) -2.2% 12.1% 13.3%
S&P 500 Index 28.6% 24.1% 19.2%
Lipper Balanced Fund
Index 15.1% 13.9% 13.3%
</TABLE>
VAN ECK/CHUBB TOTAL RETURN FUND
CLASS B
Performance Comparison
<TABLE>
<CAPTION>
VAN ECK/CHUBB TOTAL S&P 500 INDEX
RETURN FUND -CLASS B (W/ ------------- LIPPER BALANCED FUND
SALES CHARGE) INDEX
------------------------ --------------------
<S> <C> <C> <C>
5/1/98 10000.00 10000.00 10000.00
5/98 9857.00 9824.00 9925.00
6/98 9727.00 10224.00 10105.00
7/98 9461.00 10118.00 9989.00
8/98 8270.00 8656.00 9129.00
9/98 8342.00 9209.00 9523.00
10/98 8735.00 9957.00 9879.00
11/98 9110.00 10560.00 10240.00
12/98 8934.00 11169.00 10618.00
Average Annual Total Return 12/31/98 Since Inception(1)
VE/C Total Return Fund (w/o sales charge) -6.0%
VE/C Total Return Fund (w/ sales charge)(3) -10.7%
S&P 500 Index 11.7%
Lipper Balanced Fund Index 6.2%
</TABLE>
These graphs compare an initial $10,000 investment in the Van Eck/Chubb Total
Return Fund (Classes A and B) made at inception with a similar investment in the
S&P 500 Index and the Lipper Balanced Fund Index.
(1) INCEPTION DATE FOR THE VAN ECK/CHUBB TOTAL RETURN FUND IS 12/1/87 (CLASS A)
AND 4/29/98 (CLASS B). Index returns are calculated as of nearest month end.
(2) The maximum sales charge is 4.75%.
(3) Applicable contingent deferred sales charge taken into account.
Returns for the Van Eck/Chubb Total Return Fund (Classes A and B) reflect all
recurring expenses and include the reinvestment of all dividends and
distributions. Performance does not fully reflect the impact of the Fund's
expenses, as they have been partially reimbursed by the Adviser at certain times
since the Fund's inception.
The S&P 500 Index is an unmanaged index and includes the reinvestment of all
dividends, but does not reflect the payment of transaction costs, advisory fees
or expenses that are associated with an investment in the Fund.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Performance data quoted
represents past performance; the investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
27
<PAGE> 29
VAN ECK/CHUBB CAPITAL APPRECIATION FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER MARKET
OF VALUE
COMPANY SHARES (NOTE B)
------- --------- ------------
<S> <C> <C>
COMMON STOCK-95.11%
APPAREL-2.31%
Nine West Group Inc.+................ 50,000 $ 778,125
-----------
AUTOS, TRUCKS & PARTS-2.96%
Borg-Warner Automotive, Inc. ........ 3,000 167,437
OEA, Inc. ........................... 65,000 767,813
United Road Services, Inc.+.......... 3,500 64,313
-----------
999,563
-----------
BUILDING & CONSTRUCTION-5.63%
Champion Enterprises, Inc.+.......... 69,300 1,897,087
-----------
BUILDING MATERIALS & TOOLS-7.37%
Lafarge Corp. ....................... 36,200 1,466,100
YORK International Corp. ............ 25,000 1,020,313
-----------
2,486,413
-----------
CHEMICALS/FERTILIZER-3.39%
Agrium Inc. ......................... 70,000 608,125
Cabot Corp. ......................... 19,100 533,606
-----------
1,141,731
-----------
COMPUTER PRODUCTS & SERVICES-10.28%
BancTec, Inc.+....................... 41,800 525,113
Reynolds and Reynolds Co. (Class
A)................................. 60,000 1,376,250
Storage Technology Corp.+............ 44,000 1,564,750
-----------
3,466,113
-----------
ELECTRICAL EQUIPMENT-3.14%
MagneTek, Inc.+...................... 70,000 809,375
UCAR International Inc.+............. 14,000 249,375
-----------
1,058,750
-----------
ELECTRONICS-5.35%
Ametek, Inc. ........................ 48,100 1,073,231
Tektronix, Inc. ..................... 24,300 730,519
-----------
1,803,750
-----------
FOOD PROCESSING-0.01%
Archer-Daniels-Midland Co. .......... 132 2,269
-----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER MARKET
OF VALUE
COMPANY SHARES (NOTE B)
------- --------- ------------
<S> <C> <C>
HOUSEHOLD PRODUCTS-2.05%
Tupperware Corp. .................... 42,000 $ 690,375
-----------
HOUSING & HOME FURNISHINGS-3.30%
American Standard Companies Inc.+.... 30,000 1,078,125
Newmark Homes Corp. ................. 5,000 35,000
-----------
1,113,125
-----------
INDUSTRIAL METALS-9.49%
Bethlehem Steel Corp.+............... 110,000 921,250
Cleveland-Cliffs Inc. ............... 26,000 1,048,125
Cyprus Amax Minerals Co. ............ 41,400 414,000
Intermet Corp. ...................... 62,500 816,406
-----------
3,199,781
-----------
INDUSTRIALS-2.53%
Harsco Corp. ........................ 28,000 852,250
-----------
INSTRUMENTS-2.92%
Elsag Bailey Process Automation
N.V.+.............................. 25,200 985,950
-----------
INSURANCE-4.09%
Commerce Group, Inc. ................ 31,800 1,126,913
Old Republic International Corp. .... 11,175 251,437
-----------
1,378,350
-----------
MACHINERY & TOOLS-2.36%
AGCO Corp. .......................... 40,000 315,000
Brown & Sharpe Manufacturing Co.+
(Class A).......................... 60,000 480,000
-----------
795,000
-----------
MEDICAL SUPPLIES & SERVICES-9.61%
Bard (C.R.), Inc. ................... 24,000 1,188,000
St. Jude Medical, Inc. .............. 30,000 830,625
Total Renal Care Holdings, Inc.+..... 41,400 1,223,888
-----------
3,242,513
-----------
OIL & GAS EQUIPMENT & SERVICES-2.21%
Wolverine Tube, Inc.+................ 35,500 745,500
-----------
PACKAGING & CONTAINERS-2.65%
Owens-Illinois, Inc. ................ 29,200 894,250
-----------
</TABLE>
See Notes to Financial Statements
28
<PAGE> 30
VAN ECK/CHUBB CAPITAL APPRECIATION FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1998 (continued)
<TABLE>
<CAPTION>
NUMBER MARKET
OF VALUE
COMPANY SHARES (NOTE B)
------- --------- ------------
<S> <C> <C>
PHOTOGRAPHY-1.38%
Polaroid Corp. ...................... 25,000 $ 467,187
-----------
RESTAURANTS-2.49%
Brinker International, Inc.+......... 10,000 288,750
Lone Star Steakhouse & Saloon,
Inc.+.............................. 60,000 551,250
-----------
840,000
-----------
RETAIL STORES-2.97%
Great Atlantic & Pacific Tea Co.,
Inc. .............................. 33,800 1,001,325
-----------
TECHNOLOGY-1.82%
Wyman-Gordon Co.+.................... 60,000 615,000
-----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER MARKET
OF VALUE
COMPANY SHARES (NOTE B)
------- --------- ------------
<S> <C> <C>
TIRES & RUBBER GOODS-3.33%
Cooper Tire & Rubber Co. ............ 55,000 1,124,062
-----------
VISION CARE-1.39%
BMC Industries Inc. ................. 75,000 $ 468,750
-----------
WATER TREATMENT SYSTEMS-0.08%
United States Filter Corp. .......... 1,200 27,450
-----------
TOTAL INVESTMENTS
(Cost: $38,022,340*)...... 95.11% 32,074,669
Other assets less
liabilities................ 4.89% 1,648,418
-------- ------------
TOTAL NET ASSETS.......... 100.00% $33,723,087
======== ============
</TABLE>
- ------------
* Aggregate cost for Federal income tax purposes.
+ Non-income producing.
See Notes to Financial Statements
29
<PAGE> 31
VAN ECK/CHUBB GLOBAL INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
CURRENCY AMOUNT (NOTE B)
-------- ------------- -----------
<S> <C> <C> <C>
GOVERNMENT AND AGENCY
OBLIGATIONS-78.39%
ARGENTINA-1.11%
Republic of Argentina
11.00%, due 12/04/05.... USD 1,000,000 $ 1,012,500
-----------
AUSTRALIA-0.68%
Australian Government
Bond 9.50%, due
8/15/03................. AUD 650,000 475,006
New South Wales Treasury
9.25%, due 6/20/05...... AUD 200,000 145,690
-----------
620,696
-----------
CANADA-0.99%
Government of Canada
9.50%, due 6/01/10...... CAD 1,000,000 907,733
-----------
DENMARK-0.96%
Denmark Government Bond
7.00%, due 11/15/07..... DKK 1,160,000 218,868
Kingdom of Denmark 7.00%,
due 12/15/04............ DKK 3,600,000 653,485
-----------
872,353
-----------
FRANCE-17.23%
BTNS 5.50%, due
10/12/01................ FRF 16,000,000 3,034,010
France O.A.T.
6.50%, due 10/25/06..... FRF 12,250,000 2,597,576
6.50%, due 4/25/11...... FRF 12,750,000 2,814,114
5.50%, due 4/25/07...... FRF 13,500,000 2,699,661
5.25%, due 4/25/08...... FRF 8,000,000 1,580,120
Government of France
Caisse Centrale 5.768%,
due 6/27/04............. USD 3,000,000 2,987,850
-----------
15,713,331
-----------
GERMANY-16.59%
Bundesobligation
6.00%, due 7/04/07...... DEM 1,900,000 1,311,746
5.625%, due 1/04/28..... DEM 4,300,000 2,915,229
Deutschland 7.375%, due
1/03/05................. DEM 4,500,000 3,244,654
Eurofima 6.25%, due
2/16/99(a).............. DEM 560,000 337,648
</TABLE>
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
CURRENCY AMOUNT (NOTE B)
-------- ------------- -----------
<S> <C> <C> <C>
Germany Treasury Bill
Interest yield 3.20%,
due 1/15/99(a).......... DEM 3,000,000 $ 1,800,686
International Bank for
Reconstruction &
Development
5.875%, due 11/10/03.... DEM 1,050,000 693,273
Treuhand Obligation
5.75%, due 4/29/99(a)... DEM 4,000,000 2,422,528
5.00%, due 1/14/99(a)... DEM 4,000,000 2,403,398
-----------
15,129,162
-----------
ITALY-4.28%
Buoni Poliennali Del Tes
Government National
6.75%, due 7/01/07...... ITL 2,500,000,000 1,810,985
5.00%, due 5/01/08...... ITL 3,200,000,000 2,091,454
-----------
3,902,439
-----------
MEXICO-0.43%
United Mexican State
6.25%, due 12/31/19..... USD 500,000 391,250
-----------
NETHERLANDS-3.17%
Government of Netherlands
8.25%, due 9/15/07...... NLG 550,000 382,613
6.00%, due 1/15/06...... NLG 3,500,000 2,111,209
5.50%, due 1/15/28...... NLG 675,000 398,199
-----------
2,892,021
-----------
SPAIN-1.85%
Government of Spain Bonds
8.80%, due 4/30/06...... ESP 77,000,000 715,291
6.15%, due 1/31/13...... ESP 76,000,000 635,341
5.25%, due 1/31/03...... ESP 45,000,000 340,255
-----------
1,690,887
-----------
UNITED KINGDOM-15.92%
U.K. Gilt
8.00%, due 6/10/03...... GBP 1,045,000 1,979,890
7.50%, due 12/07/06..... GBP 1,687,000 3,364,341
U.K. Treasury
9.00%, due 8/06/12...... GBP 1,125,000 2,733,660
8.00%, due 6/07/21...... GBP 2,050,000 5,154,040
6.00%, due 12/07/28..... GBP 600,000 1,289,944
-----------
14,521,875
-----------
</TABLE>
See Notes to Financial Statements
30
<PAGE> 32
VAN ECK/CHUBB GLOBAL INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1998 (continued)
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
CURRENCY AMOUNT (NOTE B)
-------- ------------- -----------
<S> <C> <C> <C>
UNITED STATES-15.18%
U.S. Treasury Bonds
6.75%, due 8/15/26...... USD 3,000,000 $ 3,596,251
6.125%, due 11/15/27.... USD 5,700,000 6,385,784
U.S. Treasury Note
8.75%, due 8/15/20...... USD 800,000 1,140,500
4.75%, due 11/15/08..... USD 2,700,000 2,721,939
-----------
13,844,474
-----------
TOTAL GOVERNMENT AND
AGENCY OBLIGATIONS
(Cost: $67,147,002).... 71,498,721
-----------
CORPORATE BONDS-11.38%
CANADA-0.74%
Shaw Communications Inc.
8.54%, due 9/30/27...... CAD 1,000,000 675,722
-----------
BELGIUM-0.90%
Hermes Euro Rail 11.50%,
due 8/15/07............. USD 750,000 823,125
-----------
GERMANY-0.37%
Geberit International AG
10.125%, due 4/15/07.... DEM 500,000 340,851
-----------
JAPAN-3.74%
Fuji JGB Carrier
Preferred 9.87%, due
12/31/49+............... USD 1,000,000 731,179
IBJ Preferred Capital Co.
LLC 8.79%, due
12/29/49+............... USD 1,000,000 861,559
SB Treasury Co. LLC
9.40%, due 12/29/49+.... USD 1,000,000 951,735
Tokai Preferred Capital
Co. LLC 9.98%, due
12/29/49+............... USD 1,000,000 862,505
-----------
3,406,978
-----------
MEXICO-1.00%
Panamerican Beverages,
Inc. 7.25%, due
7/01/09................. USD 500,000 459,375
VICAP S.A. 11.375%, due
5/15/07................. USD 500,000 452,500
-----------
911,875
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
CURRENCY AMOUNT (NOTE B)
-------- ------------- -----------
<S> <C> <C> <C>
MAURITIUS-0.18%
APP Finance VII Mauritius
3.50%, due 4/30/03+..... USD 250,000 $ 165,625
-----------
UNITED KINGDOM-0.57%
Colt Telecom Group PLC
8.875%, due 11/30/07.... DEM 350,000 220,486
7.625%, due 7/31/08..... DEM 500,000 295,414
-----------
515,900
-----------
UNITED STATES-3.88%
Associates Corp. 5.75%,
due 11/01/03............ USD 500,000 507,031
Entex Information Service
12.50%, due 8/01/06+.... USD 1,000,000 705,000
C.S. First Boston
Commercial Mortgage
97-C1 7.46%, due
5/20/09+................ USD 2,000,000 2,040,625
Global Ocean Corp. 10.25%
due 7/15/07............. USD 500,000 289,375
-----------
3,542,031
-----------
TOTAL CORPORATE BONDS
(Cost: $11,336,154).... 10,382,107
-----------
SHORT-TERM OBLIGATIONS-6.41%
UNITED STATES-6.41%
American Express
Commercial Paper
Interest Yield
5.07%, due 3/12/99(a)... USD 3,125,000 3,094,618
Ford Motor Credit
Commercial Paper
Interest Yield
5.07%, due 3/12/99(a)... USD 1,025,000 1,015,035
</TABLE>
See Notes to Financial Statements
31
<PAGE> 33
VAN ECK/CHUBB GLOBAL INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1998 (continued)
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
CURRENCY AMOUNT (NOTE B)
-------- ------------- -----------
<S> <C> <C> <C>
GE Capital Commercial
Paper
Interest Yield 5.19%,
due 1/05/99(a)......... USD 1,240,000 $ 1,239,295
Interest Yield 5.14%,
due 2/16/99............ USD 500,000 496,761
-----------
TOTAL SHORT-TERM
OBLIGATIONS (Cost:
$5,845,709)............. 5,845,709
-----------
TOTAL INVESTMENTS
(Cost: $84,328,865*).................... 96.18% 87,726,537
Other assets less liabilities............ 3.82% 3,486,714
------- ----------
TOTAL NET ASSETS.........................100.00% $91,213,251
======= ==========
</TABLE>
- ------------
* Aggregate cost for Federal income tax purposes.
+ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities, which amount to 6.93% of the Fund's net assets, may be
resold in transactions exempt from registration, normally to qualified
institutional buyers.
(a) These securities are segregated as collateral for futures contracts.
See Notes to Financial Statements
32
<PAGE> 34
VAN ECK/CHUBB GOVERNMENT SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE B)
----------- -----------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS- 97.84%
Federal Home Loan Mortgage
Association
Series 1058 H 8.00%, due
4/15/21....................... $ 451,571 $ 464,545
Federal National Mortgage
Association
Pool #29429, 9.00%, due
7/01/01......................... 12,669 13,140
Pool #306175, 7.00%, due
1/01/25......................... 2,040,552 2,086,872
Pool #282883, 7.00%, due
5/01/24......................... 161,203 164,773
Pool #251286, 7.00%, due
11/1/27......................... 7,517,615 7,680,120
Government National Mortgage
Association
Pool #166009, 9.50%, due
6/15/16......................... 69,098 74,500
Pool #780339, 8.00%, due
12/15/23........................ 876,555 913,772
Pool #402760, 8.00%, due
8/15/25......................... 947,438 984,806
</TABLE>
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE B)
----------- -----------
<S> <C> <C>
Tennessee Valley Authority
6.235%, due 7/15/45............. $10,000,000 $10,492,830
5.98%, due 4/01/36.............. 4,000,000 4,200,540
U.S. Treasury Bond
10.375%, due 11/15/12........... 1,000,000 1,382,813
U.S. Treasury Notes
6.50%, due 10/15/06............. 525,000 582,914
6.25%, due 10/31/01............. 100,000 104,188
5.50%, due 2/28/03.............. 1,880,000 1,936,400
5.50%, due 3/31/03.............. 1,060,000 1,092,132
-----------
TOTAL INVESTMENTS
(Cost: $31,172,659*)........... 97.84% 32,174,345
Other assets less liabilities... 2.16% 709,583
-------- -----------
TOTAL NET ASSETS................ 100.00% $32,883,928
======== ===========
</TABLE>
- ------------
* Aggregate cost for Federal income tax purposes.
See Notes to Financial Statements
33
<PAGE> 35
VAN ECK/CHUBB GROWTH AND INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER MARKET
OF VALUE
COMPANY SHARES (NOTE B)
------- --------- ------------
<S> <C> <C>
COMMON STOCK-90.38%
AEROSPACE & DEFENSE-2.29%
Northrop Grumman Corp. .............. 20,000 $ 1,462,500
Raytheon Co. (Class A)............... 1,913 98,878
-----------
1,561,378
-----------
AUTOS, TRUCKS & PARTS-4.48%
Borg-Warner Automotive, Inc. ........ 26,600 1,484,613
Ford Motor Co. ...................... 26,600 1,561,087
-----------
3,045,700
-----------
BANKING-13.55%
Banc One Corp. ...................... 79,479 4,058,396
Chase Manhattan Corp. ............... 27,200 1,851,300
First Union Corp. ................... 30,000 1,824,375
KeyCorp.............................. 46,622 1,491,904
-----------
9,225,975
-----------
BUILDING MATERIALS & TOOLS-5.86%
Black & Decker Corp. ................ 30,000 1,681,875
Lafarge Corp. ....................... 57,000 2,308,500
-----------
3,990,375
-----------
CHEMICALS/FERTILIZER-1.87%
IMC Global Inc. ..................... 55,000 1,175,625
Millennium Chemicals Inc. ........... 4,857 96,533
-----------
1,272,158
-----------
CONTAINERS-METAL & GLASS-2.08%
Crown Cork & Seal Company, Inc. ..... 46,000 1,417,375
-----------
ELECTRONICS-7.47%
Electronic Data Systems Corp. ....... 50,000 2,512,500
Philips Electronics N.V. ............ 24,500 1,658,344
Tektronix, Inc. ..................... 30,450 915,403
-----------
5,086,247
-----------
FINANCIAL SERVICES-6.23%
Merrill Lynch & Co., Inc. ........... 19,100 1,274,925
PaineWebber Group Inc. .............. 32,275 1,246,622
Washington Mutual Inc. .............. 45,000 1,718,437
-----------
4,239,984
-----------
HOSPITAL MANAGEMENT-2.70%
Tenet Healthcare Corp.+.............. 70,000 1,837,500
-----------
INSURANCE-2.78%
LaSalle Re Holdings Ltd. ............ 10,500 228,375
Old Republic International Corp. .... 25,500 573,750
The PMI Group, Inc. ................. 22,000 1,086,250
-----------
1,888,375
-----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER MARKET
OF VALUE
COMPANY SHARES (NOTE B)
------- --------- ------------
<S> <C> <C>
MANUFACTURING-6.62%
Ingersoll-Rand Co. .................. 45,000 $ 2,112,187
United Technologies Corp. ........... 22,000 2,392,500
-----------
4,504,687
-----------
MEDICAL-HEALTHCARE SERVICES-11.97%
Baxter International Inc. ........... 40,000 2,572,500
Bristol-Myers Squibb Co. ............ 11,000 1,471,938
Healthcare Services Corp.+........... 96 876
Healthsouth Corp.+................... 170,000 2,624,375
Merck & Co. ......................... 10,000 1,476,875
-----------
8,146,564
-----------
MINING & METALS-0.74%
Carpenter Technology Corp. .......... 14,900 505,669
-----------
OIL & GAS-INTEGRATED-2.63%
Phillips Petroleum Co. .............. 42,000 1,790,250
-----------
PACKAGING & CONTAINERS-2.41%
Owens-Illinois, Inc. ................ 53,600 1,641,500
-----------
RETAIL STORES-1.92%
Federated Department Stores, Inc.+... 30,000 1,306,875
-----------
TELECOMMUNICATIONS-5.55%
AT&T Corp. .......................... 20,000 1,505,000
Bell Atlantic Corp. ................. 40,000 2,272,500
-----------
3,777,500
-----------
TOYS-3.42%
Hasbro, Inc. ........................ 64,500 2,330,063
-----------
TRANSPORTATION & SHIPPING-5.81%
Burlington Northern Santa Fe
Corp. ............................. 62,400 2,106,000
FDX Corp.+........................... 20,800 1,851,200
-----------
3,957,200
-----------
TOTAL INVESTMENTS
(Cost: $49,846,539*).............. 90.38% 61,525,375
Other assets less liabilities...... 9.62% 6,546,938
------- -----------
TOTAL NET ASSETS................... 100.00% $68,072,313
======= ===========
</TABLE>
- ------------
* Aggregate cost for Federal income tax purposes.
+ Non-income producing.
See Notes to Financial Statements
34
<PAGE> 36
VAN ECK/CHUBB TAX-EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE B)
---------- -----------
<S> <C> <C>
MUNICIPAL OBLIGATIONS-97.34%
ALASKA-1.91%
Anchorage, Alaska, Hospital
Revenue, (Sisters of Providence
Project), Series 1991, 6.75%, due
10/01/02......................... $ 150,000 $ 163,114
North Slope Borough, Alaska,
General Obligation, Series A,
Zero Coupon, MBIA Insured, due
6/30/04.......................... 550,000 442,393
-----------
605,507
-----------
CONNECTICUT-0.54%
Connecticut State, General
Obligation, Series C, 7.00%,
Prerefunded to 9/15/00 at 102+... 160,000 172,616
-----------
DISTRICT OF COLUMBIA-3.62%
District of Columbia, Certificate
of Participation, 7.30%, due
1/01/13+......................... 300,000 337,223
District of Columbia, Series 93A,
5.875%, due 6/01/05.............. 465,000 494,552
District of Columbia, Series 93A,
5.875%, due 6/01/05, ETM......... 35,000 38,587
Metropolitan Washington D.C.
Airport Authority, General
Airport Revenue, Series A , AMT,
MBIA Insured, 6.50%, due
10/01/07+........................ 250,000 274,934
-----------
1,145,296
-----------
FLORIDA-4.75%
Dade County, Florida, Aviation
Revenue, Miami International
Airport, FSA Insured, 5.125%, due
10/01/27......................... 1,500,000 1,504,803
-----------
GEORGIA-0.86%
Cartersville, Georgia Development
Authority, Water & Wastewater
Facilities, Anheuser Busch, AMT,
6.75%, due 2/01/12+.............. 250,000 272,499
-----------
ILLINOIS-5.58%
Cook County, Illinois, General
Obligation, MBIA Insured, Series
1990, 7.00%, due 11/01/99........ 150,000 154,868
</TABLE>
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE B)
---------- -----------
<S> <C> <C>
Illinois State Toll Highway, Series
92A, 6.375%, due 1/01/15+........ $1,100,000 $ 1,222,049
Metropolitan Pier & Exposition
Authority, Illinois, 6.50%,
Prerefunded to 6/15/03 at 102+... 345,000 388,071
Metropolitan Pier & Exposition
Authority, Illinois, 6.50%, due
6/15/27+......................... 5,000 5,550
-----------
1,770,538
-----------
INDIANA-12.21%
Indiana Bond Bank, Revenue, State
Revolving Fund, 6.00%, due
2/01/15+......................... 500,000 537,758
Indiana Health Facilities Financing
Authority, Charity Obligated
Group, 5.00%, due 11/1/26,
Mandatory Put on 11/01/07 at
100.............................. 1,315,000 1,384,241
Indiana Health Facilities Financing
Authority, Holy Cross Health
System Corp, MBIA Insured 5.375%,
due 12/01/12..................... 500,000 527,290
Indiana Municipal Power Supply,
MBIA Insured 5.50%, due
1/01/16.......................... 1,200,000 1,296,866
Indiana State Housing Finance
Authority, Single Family Mortgage
1990, Series C, AMT, 7.80%, due
1/01/22+......................... 120,000 126,366
-----------
3,872,521
-----------
IOWA-4.02%
Iowa Finance Authority, Single
Family Revenue, AMT, 4.95%, due
1/01/21.......................... 1,250,000 1,273,590
-----------
LOUISIANA-0.69%
Jefferson, Louisiana, Sales Tax
Revenue, Refunding, FGIC Insured,
Series A, 6.75%, Prerefunded to
12/01/02 at 100+................. 60,000 66,521
Jefferson, Louisiana, Sales Tax
Revenue, Refunding, FGIC Insured,
Series A, 6.75%, due 12/01/06+... 140,000 153,417
-----------
219,938
-----------
</TABLE>
See Notes to Financial Statements
35
<PAGE> 37
VAN ECK/CHUBB TAX-EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1998 (continued)
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE B)
---------- -----------
<S> <C> <C>
MAINE-0.60%
Maine Educational Loan Authority,
Series 92A, AMT, 6.95%, due
12/01/07+........................ $ 175,000 $ 190,138
-----------
MASSACHUSETTS-5.60%
Massachusetts State Construction
Loan, Series A, 6.00%,
Prerefunded to 6/01/01 at 100+... 300,000 316,583
Massachusetts State Turnpike
Authority, MBIA Insured, Series
A, 5.00%, due 1/01/37............ 1,500,000 1,460,199
-----------
1,776,782
-----------
MINNESOTA-0.32%
Northern Municipal Power Agency,
Minnesota, Electric System
Revenue, Series A, 7.25%, due
1/01/16+......................... 100,000 102,000
-----------
MISSOURI-0.52%
Missouri Health & Educational
Facilities Authority, St. Luke's
Hospital, MBIA Insured, 7.00%,
Prerefunded to 11/15/01 at
102+............................. 150,000 166,323
-----------
NEW HAMPSHIRE-0.73%
New Hampshire Turnpike System,
Series A, FGIC Insured, 6.75%,
due 11/01/11+.................... 200,000 232,961
-----------
NEW JERSEY-7.92%
New Jersey Economic Development
Authority, The Seeing Eye, Inc.
Project, 7.30%, due 4/01/11+..... 1,000,000 1,082,440
New Jersey Wastewater Treatment
Trust, 6.875%, Prerefunded to
6/15/00 at 101.75+............... 165,000 175,834
New Jersey Wastewater Treatment
Trust, 6.875%, due 6/15/07+,..... 15,000 15,812
Salem County, New Jersey, Pollution
Control Financing Authority,
Waste Disposal Revenue, E.I.
DuPont Project, AMT, 6.50%, due
11/15/21+........................ 1,150,000 1,236,335
-----------
2,510,421
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE B)
---------- -----------
<S> <C> <C>
NEW YORK-14.94%
Metropolitan Transportation
Authority, New York, Transit
Facilities, Service Contract,
Series 8, 5.00%, due 7/01/02..... $1,000,000 $ 1,036,990
New York City, New York, General
Obligation, Series H, 6.875%, due
2/01/02, ETM..................... 220,000 239,735
New York City, New York, General
Obligation, Series H, Subseries
H-1, 5.80%, due 8/01/04.......... 250,000 272,700
New York City, New York, General
Obligation, Series D, 5.25%, due
8/01/03.......................... 1,000,000 1,055,267
New York City, Series H, 6.875%,
due 2/01/02...................... 30,000 32,564
New York State Dormitory Authority,
City University System, Series I,
5.125%, due 7/01/13+............. 1,325,000 1,358,631
New York State Local Government
Assistance Corporation, Series B,
5.50%, due 4/01/21+.............. 450,000 471,748
New York State Thruway Authority,
Highway and Bridge Trust Fund,
Series A, MBIA Insured, 5.60%,
due 4/01/10+..................... 250,000 270,028
-----------
4,737,663
-----------
OKLAHOMA-1.92%
Oklahoma Industrial Development
Authority, Sisters of Mercy,
Series A, 5.00%, due 6/01/13+.... 600,000 610,180
-----------
PENNSYLVANIA-1.08%
Philadelphia, Pennsylvania,
Hospital & Higher Education
Facility Authority, (Children's
Hospital), 5.00%, due 2/15/21+... 350,000 341,741
-----------
TENNESSEE-5.85%
Memphis-Shelby County, Tennessee
Airport Authority, (Federal
Express Corp.), AMT, 6.75%, due
9/01/12+......................... 250,000 273,046
Shelby County, Tennessee, General
Obligation, Series B, Zero
Coupon, due 12/01/12............. 2,000,000 1,057,758
Tennessee Housing Development
Agency, 1993 Series A, 5.90%, due
7/01/18+......................... 500,000 524,712
-----------
1,855,516
-----------
</TABLE>
See Notes to Financial Statements
36
<PAGE> 38
VAN ECK/CHUBB TAX-EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1998 (continued)
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE B)
---------- -----------
<S> <C> <C>
TEXAS-6.08%
Austin, Texas, Independent School
District, Permanent School Fund,
Zero Coupon, due 8/01/13......... $ 500,000 $ 249,642
Austin, Texas, Utility System
Revenue, Series C, 7.30%,
Prerefunded to 11/15/01 at
100+............................. 60,000 65,934
Houston, Texas, Independent School
District, Permanent School Fund,
Zero Coupon, due 8/15/13......... 1,150,000 577,221
Waxahachie, Texas, Independent
School District, Permanent School
Fund, Zero Coupon, due 8/15/13... 2,060,000 1,033,978
-----------
1,926,775
-----------
UTAH-4.12%
Utah State Board of Regents,
Student Loan Revenue,Series F,
AMT, 5.00%, due 5/01/06.......... 1,250,000 1,305,263
-----------
VIRGINIA-0.32%
Virginia State Housing Development
Authority, Commonwealth Mortgage,
6.70%, due 7/01/08+.............. 100,000 100,000
-----------
WASHINGTON-13.16%
Lewis County, Washington, Public
Utility District #1, Revenue
Series 91, 7.00%, Prerefunded to
10/01/01 at 102+................. 250,000 276,302
Washington Health Care Facilities
Authority, Catholic Health
Initiatives, MBIA Insured,
5.125%, due 12/01/17+............ 1,300,000 1,307,508
</TABLE>
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
AMOUNT (NOTE B)
---------- -----------
<S> <C> <C>
Washington Health Care Facilities
Authority, Revenue, MBIA Insured,
(Group Health Co-Op), 6.75%, due
12/01/11+........................ $ 300,000 $ 320,394
Washington Health Care Facilities
Authority, Revenue, Series 93,
(Sisters of Providence), 6.25%,
due 10/01/13+.................... 500,000 544,650
Washington Housing Finance
Commission, GNMA/FNMA MBS
Programs, 7.10%, due 7/01/22+.... 145,000 151,912
Washington State Public Power
Supply System, Nuclear Project
Number 1, FSA Insured, 5.75%, due
7/01/11.......................... 1,200,000 1,327,675
Washington State Public Power
Supply System, Nuclear Project
Number 2, Revenue, Series 90C,
7.625%, Prerefunded to 1/01/01 at
102+............................. 100,000 109,471
Washington State Public Power
Supply System, Nuclear Project
Number 3, Revenue, 7.50%,
Prerefunded to 7/01/00 at 102+... 125,000 134,827
-----------
4,172,739
-----------
TOTAL INVESTMENTS:
(Cost: $28,939,116*)................. 97.34% 30,865,810
Other assets less liabilities......... 2.66% 842,938
-------- -----------
TOTAL NET ASSETS......................100.00% $31,708,748
-------- -----------
-------- -----------
</TABLE>
- ------------
* Aggregate cost for Federal income tax purposes.
+ Issued with call provisions.
Abbreviations:
AMT--Alternative Minimum Tax
ETM--Escrowed To Maturity
FGIC--Financial Guaranty Insurance Company
FSA--Financial Security Assurance
MBIA--Municipal Bond Investors Assurance Corporation
See Notes to Financial Statements
37
<PAGE> 39
VAN ECK/CHUBB TOTAL RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER MARKET
OF VALUE
COMPANY SHARES (NOTE B)
------- ---------- -----------
<S> <C> <C>
COMMON STOCK-56.20%
AEROSPACE & DEFENSE-0.41%
Raytheon Co. (Class A)............. 3,430 $ 177,288
-----------
AUTOS, TRUCKS & PARTS-5.88%
Borg-Warner Automotive, Inc. ...... 18,900 1,054,856
DaimlerChrysler AG................. 9,477 910,384
Ford Motor Co. .................... 9,400 551,663
-----------
2,516,903
-----------
BANKING-7.44%
Banc One Corp. .................... 39,593 2,021,718
KeyCorp............................ 22,654 724,928
Mellon Bank Corp. ................. 6,400 440,000
-----------
3,186,646
-----------
BUILDING & CONSTRUCTION-0.15%
Hanson PLC (ADR)................... 1,687 65,793
-----------
BUILDING MATERIALS & TOOLS-3.07%
Lafarge Corp. ..................... 32,500 1,316,250
-----------
CHEMICALS/FERTILIZER-0.79%
IMC Global Inc. ................... 15,000 320,625
Millennium Chemicals Inc. ......... 964 19,160
-----------
339,785
-----------
CONTAINERS-METAL & GLASS-1.58%
Crown Cork & Seal Company, Inc. ... 22,000 677,875
-----------
ELECTRONICS-3.10%
Philips Electronics N.V. .......... 10,200 690,413
Tektronix, Inc. ................... 21,150 635,822
-----------
1,326,235
-----------
FINANCIAL SERVICES-2.46%
Associates First Capital Corp. .... 7,548 319,847
Merrill Lynch & Co., Inc. ......... 11,000 734,250
-----------
1,054,097
-----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER MARKET
OF VALUE
COMPANY SHARES (NOTE B)
------- ---------- -----------
<S> <C> <C>
HOSPITAL MANAGEMENT-2.45%
Healthcare Services Group+......... 96 $ 875
Tenet Healthcare Corp.+............ 40,000 1,050,000
-----------
1,050,875
-----------
INSURANCE-3.16%
Progressive Corp. ................. 8,000 1,355,000
-----------
MANUFACTURING-5.84%
AlliedSignal Inc. ................. 27,000 1,196,438
United Technologies Corp. ......... 12,000 1,305,000
-----------
2,501,438
-----------
MINING & METALS-0.40%
Carpenter Technology Corp. ........ 5,100 173,080
-----------
OIL & GAS-INTEGRATED-2.09%
Phillips Petroleum Co. ............ 21,000 895,125
-----------
PACKAGING & CONTAINERS-1.74%
Owens-Illinois, Inc. .............. 24,400 747,250
-----------
PHARMACEUTICALS-3.94%
Bristol-Myers Squibb Co. .......... 6000 802,875
Merck & Co., Inc. ................. 6000 886,125
-----------
1,689,000
-----------
RETAIL-2.24%
Federated Department Stores,
Inc.+............................ 22,000 958,375
-----------
TOYS-2.95%
Hasbro, Inc. ...................... 35,000 1,264,375
-----------
TRANSPORTATION & SHIPPING-6.51%
Burlington Northern Santa Fe
Corp. ........................... 29,400 992,250
CSX Corp. ......................... 18,000 747,000
FDX Corp.+......................... 11,800 1,050,200
-----------
2,789,450
-----------
TOTAL COMMON STOCK
(Cost: $17,407,213)......................... 24,084,840
-----------
</TABLE>
See Notes to Financial Statements
38
<PAGE> 40
VAN ECK/CHUBB TOTAL RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1998 (continued)
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE
ISSUER AMOUNT (NOTE B)
------ ---------- -----------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS-24.93%
U.S. Treasury Notes
7.25%, due 8/15/04............... $2,900,000 $ 3,262,500
6.875%, due 5/15/06.............. 5,200,000 5,879,250
6.50%, due 10/15/06.............. 200,000 222,062
6.25%, due 2/15/03............... 1,250,000 1,321,485
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost: $9,895,540).............. 10,685,297
-----------
CORPORATE BONDS-15.00%
Credit Suisse First Boston Mortgage
Securities Corp. 7.46%, due
5/20/09.......................... 2,000,000 2,040,625
First Union Banc 7.50%, due
4/15/35.......................... 2,000,000 2,243,536
Tennessee Gas Pipeline 7.00%, due
3/15/27.......................... 2,000,000 2,142,398
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
(NOTE B)
-----------
<S> <C> <C>
TOTAL CORPORATE BONDS (Cost:
$6,227,251)..................... $ 6,426,559
-----------
TOTAL INVESTMENTS
(Cost: $33,530,004*)............ 96.13% 41,196,696
Other assets less liabilities.... 3.87% 1,657,877
---------- -----------
TOTAL NET ASSETS................. 100.00% $42,854,573
-------- -----------
-------- -----------
</TABLE>
- ------------
* Aggregate cost for Federal income tax purposes.
+ Non-income producing.
ADR-American Depositary Receipt
See Notes to Financial Statements
39
<PAGE> 41
VAN ECK/CHUBB FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<CAPTION>
VAN ECK/CHUBB VAN ECK/CHUBB
CAPITAL GLOBAL
APPRECIATION INCOME
FUND FUND
-------------- --------------
<S> <C> <C>
ASSETS
Investments at cost - see schedules of investments........ $38,022,340 $84,328,865
=========== ===========
Investments at market value (Notes B & C)................. $32,074,669 $87,726,537
Cash and foreign currencies............................... 1,675,746 1,772,030
Cash - initial margin (Note F)............................ -- 201,600
Receivable for interest and dividends..................... 24,185 1,811,624
Due from broker - variation margin (Note F)............... -- 131,459
Gross unrealized gain on foreign forward contracts (Note
B)...................................................... -- 76,096
Receivable for Fund shares sold........................... 24,877 1,442
Deferred organization costs (Note B)...................... 4,428 4,428
----------- -----------
Total Assets........................................ 33,803,905 91,725,216
----------- -----------
LIABILITIES
Dividends payable......................................... 7,497 301,260
Payable for Fund shares redeemed.......................... 26,766 70,577
Gross unrealized loss on foreign forward contracts (Note
B)...................................................... -- 52,208
Accounts payable.......................................... 46,555 87,920
----------- -----------
Total Liabilities................................... 80,818 511,965
----------- -----------
NET ASSETS.................................................. $33,723,087 $91,213,251
=========== ===========
NET ASSETS CONSIST OF:
Par value................................................. $ 26,128 $ 88,421
Capital paid in excess of par............................. 39,651,789 90,182,123
Undistributed (overdistributed) net investment income..... -- (23,888)
Accumulated net realized gain (loss) from investments..... (7,159) (2,266,814)
Net unrealized gain (loss) from investments............... (5,947,671) 3,397,672
Net unrealized gain on futures and foreign denominated
assets, liabilities and forward foreign exchange
contracts................................................ -- (164,263)
----------- -----------
Net Assets.......................................... $33,723,087 $91,213,251
=========== ===========
CLASS A SHARES
Net Assets.................................................. $33,712,563 $91,209,649
=========== ===========
Shares Outstanding ($.01 par value, 100,000,000 shares per
Fund authorized)........................................... 2,611,950 8,841,763
========== ==========
Net Asset Value Per Share................................... $12.91 $10.32
======== ========
Maximum Offering Price Per Share (Net asset value divided by
0.9525).................................................... $13.55 $10.83
======== ========
CLASS B SHARES
Net Assets.................................................. $10,524 $3,602
========= ========
Shares Outstanding ($.01 par value, 100,000,000 shares per
Fund authorized)........................................... 818 348
===== =====
Net asset value, offering and redemption price per share
(redemption may be subject to a contingent deferred sales
charge within the first six years of ownership)............ $12.87 $10.35
======== ========
</TABLE>
See Notes to Financial Statements
40
<PAGE> 42
<TABLE>
<CAPTION>
VAN ECK/CHUBB VAN ECK/CHUBB
GOVERNMENT GROWTH AND VAN ECK/CHUBB VAN ECK/CHUBB
SECURITIES INCOME TAX-EXEMPT TOTAL RETURN
FUND FUND FUND FUND
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
$31,172,659 $49,846,539 $28,939,116 $33,530,004
=========== =========== =========== ===========
$32,174,345 $61,525,375 $30,865,810 $41,196,696
92,231 6,829,543 423,960 1,499,604
-- -- -- --
493,082 80,656 472,123 266,970
-- -- -- --
169,307 55,895 544 20,107
-- -- -- --
----------- ----------- ----------- -----------
32,928,965 68,491,469 31,762,437 42,983,377
----------- ----------- ----------- -----------
6,617 74,751 12,570 56,766
930 274,575 3,506 22,510
-- -- -- --
37,490 69,830 37,613 49,528
----------- ----------- ----------- -----------
45,037 419,156 53,689 128,804
----------- ----------- ----------- -----------
$32,883,928 $68,072,313 $31,708,748 $42,854,573
=========== =========== =========== ===========
$ 29,847 $ 28,413 $ 24,886 $ 22,235
32,073,244 56,378,407 29,769,766 35,171,069
16,625 (13,343) (12,570) (5,423)
(237,474) -- (28) --
1,001,686 11,678,836 1,926,694 7,666,692
-- -- -- --
----------- ----------- ----------- -----------
$32,883,928 $68,072,313 $31,708,748 $42,854,573
=========== =========== =========== ===========
$32,729,708 $67,477,768 $31,679,540 $42,524,175
=========== =========== =========== ===========
2,970,713 2,816,412 2,486,350 2,206,331
========== ========== ========== ==========
$11.02 $23.96 $12.74 $19.27
======== ======== ======== ========
$11.57 $25.15 $13.38 $20.23
======== ======== ======== ========
$154,220 $594,545 $29,208 $330,398
========== ========== ========= ==========
13,999 24,882 2,291 17,174
======== ======== ======= ========
$11.02 $23.89 $12.75 $19.24
======== ======== ======== ========
</TABLE>
See Notes to Financial Statements
41
<PAGE> 43
VAN ECK/CHUBB FUNDS, INC.
STATEMENT OF OPERATIONS
Year Ended December 31, 1998
<TABLE>
<CAPTION>
VAN ECK/ VAN ECK/
CHUBB CHUBB
CAPITAL GLOBAL
APPRECIATION INCOME
FUND FUND
------------ -----------
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest.................................................. $ 36,232 $ 4,377,810
Dividends................................................. 370,353 --
Foreign taxes withheld.................................... (1,419) (10,067)
----------- -----------
Total investment income............................... 405,166 4,367,743
----------- -----------
Expenses:
Administrative fees (Note D).............................. 184,976 366,005
Advisory fees (Note D).................................... 78,902 156,395
Distribution fees Class A and B (Note D).................. 197,272 390,992
Shareholder servicing costs............................... 66,232 109,762
Registration fees......................................... 33,694 45,542
Shareholder reports....................................... 28,200 51,479
Professional fees......................................... 21,085 29,741
Directors' fees and expenses.............................. 2,162 4,014
Custodian fees............................................ 2,702 21,268
Organization expenses..................................... 2,690 2,690
Miscellaneous expenses.................................... 21,658 38,977
----------- -----------
Total expenses........................................ 639,573 1,216,865
Fees waived and expenses assumed by affiliates (Note D)... (146,419) (161,192)
----------- -----------
Net expenses.......................................... 493,154 1,055,673
----------- -----------
Net investment income (loss).......................... (87,988) 3,312,070
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCIES
Net realized gain on investments, futures and options...... 1,789,461 4,312,629
Net realized gain from foreign currency transactions....... -- 362,788
Net change in unrealized gain (loss) on investments........ (6,693,543) 3,730,035
Net change in unrealized loss on futures, foreign
denominated assets, liabilities and forward foreign
exchange contracts....................................... -- (297,602)
----------- -----------
Net gain (loss) on investments and foreign currencies...... (4,904,082) 8,107,850
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................... $(4,992,070) $11,419,920
=========== ===========
</TABLE>
See Notes to Financial Statements
42
<PAGE> 44
<TABLE>
<CAPTION>
VAN ECK/ VAN ECK/ VAN ECK/
CHUBB CHUBB CHUBB VAN ECK/
GOVERNMENT GROWTH TAX- CHUBB
SECURITIES AND INCOME EXEMPT TOTAL RETURN
FUND FUND FUND FUND
---------- ----------- ---------- ------------
<S> <C> <C> <C>
$2,048,961 $ 89,201 $1,642,119 $ 1,015,258
-- 1,099,006 -- 461,892
-- (4,006) -- (2,734)
---------- ----------- ---------- -----------
2,048,961 1,184,201 1,642,119 1,474,416
---------- ----------- ---------- -----------
149,905 335,159 146,718 224,891
64,275 140,378 62,837 94,561
160,903 351,850 157,096 236,928
56,262 134,744 57,481 91,919
28,494 34,460 28,180 28,852
19,811 39,624 19,305 33,327
19,807 23,754 19,188 21,183
1,822 3,798 1,811 2,675
1,175 2,769 3,230 2,749
-- -- -- --
17,020 36,722 15,583 25,261
---------- ----------- ---------- -----------
519,474 1,103,258 511,429 762,346
(197,883) (224,990) (197,241) (170,813)
---------- ----------- ---------- -----------
321,591 878,268 314,188 591,533
---------- ----------- ---------- -----------
1,727,370 305,933 1,327,931 882,883
---------- ----------- ---------- -----------
175,195 1,235,023 52,555 2,328,681
-- -- -- --
393,290 (2,800,889) 446,289 (1,693,399)
-- -- -- --
---------- ----------- ---------- -----------
568,485 (1,565,866) 498,844 635,282
---------- ----------- ---------- -----------
$2,295,855 $(1,259,933) $1,826,775 $ 1,518,165
========== =========== ========== ===========
</TABLE>
See Notes to Financial Statements
43
<PAGE> 45
VAN ECK/CHUBB FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
VAN ECK/CHUBB VAN ECK/CHUBB
CAPITAL GLOBAL
APPRECIATION INCOME
FUND FUND
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<CAPTION>
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss).............................. $ (87,988) $ 12,457 $ 3,312,070 $ 675,358
Net realized gain on investments and options.............. 1,789,461 2,023,906 3,387,264 192,757
Net realized gain (loss) from foreign currency
transactions............................................. -- -- 362,788 (184,281)
Net realized gain on futures.............................. -- -- 925,365 --
Net change in unrealized gain (loss) on investments,
futures, options and translation of assets and
liabilities in foreign currency.......................... (6,693,543) (118,155) 3,432,433 (538,981)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................... (4,992,070) 1,918,208 11,419,920 144,853
DIVIDENDS AND DISTRIBUTIONS:
From net investment income:
Class A................................................... -- (12,457) (3,596,717) (548,912)
Class B................................................... -- -- (40) --
From excess of net investment income Class A................ -- (12,843) -- --
From net realized gains:
Class A................................................... (1,711,100) (2,129,463) (2,485,897) (273,339)
Class B................................................... (535) -- (98) --
From excess of net realized gains Class A................... -- (66) -- (128,654)
Tax return of Capital Class A............................... -- -- -- (125,999)
INCREASE (DECREASE) IN NET ASSETS DERIVED FROM SHAREHOLDER
TRANSACTIONS (NOTE E)...................................... (1,055,289) 35,278,131 33,788,516 40,792,740
----------- ----------- ----------- -----------
Net increase (decrease) in net assets..................... (7,758,994) 35,041,510 39,125,684 39,860,689
Net Assets:
Beginning of year......................................... 41,482,081 6,440,571 52,087,567 12,226,878
----------- ----------- ----------- -----------
End of year............................................... $33,723,087 $41,482,081 $91,213,251 $52,087,567
=========== =========== =========== ===========
UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME....... -- $ (82) $ (23,888) $ (118,123)
=========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
44
<PAGE> 46
<TABLE>
<CAPTION>
VAN ECK/CHUBB
VAN ECK/CHUBB GROWTH
GOVERNMENT AND VAN ECK/CHUBB
SECURITIES INCOME VAN ECK/CHUBB TOTAL RETURN
FUND FUND TAX-EXEMPT FUND FUND
--------------------------- --------------------------- --------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997 1998 1997 1998 1997
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,727,370 $ 944,497 $ 305,933 $ 246,619 $ 1,327,931 $ 825,189 $ 882,883 $ 689,476
175,195 7,015 1,235,023 3,953,219 52,555 88,323 2,328,681 2,025,968
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
393,290 569,084 (2,800,889) 6,037,252 446,289 731,502 (1,693,399) 4,260,078
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
2,295,855 1,520,596 (1,259,933) 10,237,090 1,826,775 1,645,014 1,518,165 6,975,522
(1,708,754) (944,497) (306,732) (246,619) (1,333,269) (825,189) (874,966) (689,476)
(1,991) -- (2,706) -- (100) -- (2,589) --
-- -- -- (11,685) -- (88,323) -- (10,851)
-- -- (1,223,543) (4,401,950) (49,501) (10,638) (2,309,377) (2,206,980)
-- -- (10,799) -- (46) -- (17,997) --
-- -- -- -- -- -- -- (1,208)
-- -- -- -- -- -- -- --
559,828 18,344,441 4,113,706 20,903,635 (23,604) 15,506,247 (5,392,298) 14,802,529
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
1,144,938 18,920,540 1,309,993 26,480,471 420,255 16,227,111 (7,079,062) 18,869,536
31,738,990 12,818,450 66,762,320 40,281,849 31,288,493 15,061,382 49,933,635 31,064,099
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$32,883,928 $31,738,990 $68,072,313 $66,762,320 $31,708,748 $31,288,493 $42,854,573 $49,933,635
=========== =========== =========== =========== =========== =========== =========== ===========
$ 16,625 $ -- $ (13,343) $ (5,904) $ (12,570) $ (10,660) $ (5,423) $ (4,588)
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
45
<PAGE> 47
VAN ECK/CHUBB FUNDS, INC.
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
VAN ECK/CHUBB CAPITAL APPRECIATION FUND
--------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------------------------- ------------
PERIOD FROM
PERIOD FROM APRIL 29,
SEPTEMBER 1, 1998(D)
YEAR ENDED DECEMBER 31, 1995(D) THROUGH THROUGH
----------------------------------------- DECEMBER 31, DECEMBER 31,
1998 1997 1996 1995 1998
----------- ------------ ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............... $ 15.59 $ 12.99 $ 10.40 $ 10.00 $ 17.68
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss)..................... (0.034) 0.005 0.067 0.037 (0.026)
Net Gains (Losses) on Securities (both Realized
and Unrealized)................................. (1.956) 3.565 2.796 0.422 (4.094)
------- ------- ------- ------- -------
Total from Investment Operations................. (1.990) 3.570 2.863 0.459 (4.120)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from Net Investment Income............. -- (0.005) (0.067) (0.037) --
Dividends in Excess of Net Investment Income..... -- (0.005) -- -- --
Distributions from Net Realized Gains............ (0.690) (0.960) (0.206) (0.022) (0.690)
Distributions in Excess of Net Realized Gains.... -- -- -- -- --
------- ------- ------- ------- -------
Total Distributions.............................. (0.690) (0.970) (0.273) (0.059) (0.690)
------- ------- ------- ------- -------
Net Asset Value, End of Period..................... $ 12.91 $ 15.59 $ 12.99 $ 10.40 $ 12.87
======= ======= ======= ======= =======
Total Return(A).................................... (12.76%) 27.79% 27.53% 4.60% (23.32%)
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(B)................................ 1.62% 1.52% 1.81% 2.50%(C) 20.69%(C)
Net Expenses..................................... 1.25% 1.25% 1.13% 1.25%(C) 1.75%(C)
Net Investment Income (Loss)..................... (0.22%) 0.08% 0.86% 1.38%(C) (0.60%)(C)
Portfolio Turnover Rate............................ 20.94% 50.67% 41.97% 2.73% 20.94%
Net Assets, At End of Period....................... $33,712,563 $41,482,081 $6,440,571 $1,596,254 $10,524
</TABLE>
- ------------
(A) Total return assumes reinvestment of all distributions 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. Total returns for periods of less than one year are
not annualized.
(B) Had fees not been waived and expenses not been assumed.
(C) Annualized.
(D) Commencement of operations.
See Notes to Financial Statements
46
<PAGE> 48
VAN ECK/CHUBB FUNDS, INC.
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
VAN ECK/CHUBB GLOBAL INCOME FUND
---------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------------ ------------
PERIOD FROM
PERIOD FROM APRIL 29,
SEPTEMBER 1, 1998(C)
YEAR ENDED DECEMBER 31, 1995(C) THROUGH THROUGH
------------------------------------------ DECEMBER 31, DECEMBER 31,
1998 1997 1996 1995 1998
----------- ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 9.64 $10.24 $ 10.21 $ 10.00 $ 9.87
------- ------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income........................... 0.421 0.471 0.551 0.116 0.254
Net Gains Losses on Securities (both Realized
and Unrealized)................................ 0.994 (0.476) 0.030 0.210 0.810
------- ------- -------- ------- -------
Total from Investment Operations................ 1.415 (0.005) 0.581 0.326 1.064
------- ------- -------- ------- -------
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from Net Investment Income............ (0.445) (0.398) (0.485) (0.116) (0.294)
Dividends in Excess of Net Investment Income.... -- -- (0.066) -- --
Distributions from Net Realized Gains........... (0.290) (0.084) -- -- (0.290)
Distributions in Excess of Net Realized Gains... -- (0.040) -- -- --
Tax Returns of Capital.......................... -- (0.073) -- -- --
------- ------- -------- ------- -------
Total Distributions............................. (0.735) (0.595) (0.551) (0.116) (0.584)
------- ------- -------- ------- -------
Net Asset Value, End of Period.................... $ 10.32 $9.64 $10.24 $ 10.21 $ 10.35
======= ======= ======== ======= =======
Total Return(A)................................... 15.00% 0.02% 5.95% 3.27% 10.96%
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(D)............................... 1.56% 1.56% 1.68% 2.14%(B) 129.09%(B)
Net Expenses.................................... 1.35% 1.35% 1.23% 1.75%(B) 1.85%(B)
Net Investment Income........................... 4.24% 4.62% 5.49% 4.48%(B) 4.00%(B)
Portfolio Turnover Rate........................... 99.31% 185.95% 80.70% 14.16% 99.31%
Net Assets, At End of Period...................... $91,209,649 $52,087,567 $12,226,878 $10,705,562 $3,602
</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. Total returns for periods of less than one year are
not annualized.
(B) Annualized.
(C) Commencement of operations.
(D) Had fees not been waived and expenses not been assumed.
See Notes to Financial Statements
47
<PAGE> 49
VAN ECK/CHUBB FUNDS, INC.
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period:
[CAPTION]
<TABLE>
<CAPTION>
VAN ECK/CHUBB GOVERNMENT SECURITIES FUND
---------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------------------------ ------------
PERIOD FROM
APRIL 29,
1998(B)
YEAR ENDED DECEMBER 31, THROUGH
------------------------------------------------------------------------ DECEMBER 31,
1998 1997 1996 1995 1994 1998
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 10.82 $ 10.48 $ 10.78 $ 9.75 $ 10.71 $10.79
------- ------- ------- ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................. 0.583 0.616 0.623 0.636 0.607 0.372
Net Gains (Losses) on Securities (both
Realized and Unrealized).............. 0.200 0.340 (0.300) 1.030 (0.960) 0.230
------- ------- ------- ------- ------- --------
Total from Investment Operations....... 0.783 0.956 0.323 1.666 (0.353) 0.602
------- ------- ------- ------- ------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from Net Investment Income... (0.583) (0.616) (0.623) (0.636) (0.607) (0.372)
Distributions from Net Realized
Gains................................. -- -- -- -- -- --
Distributions in Excess of Net Realized
Gains................................. -- -- -- -- -- --
------- ------- ------- ------- ------- --------
Total Distributions.................... (0.583) (0.616) (0.623) (0.636) (0.607) (0.372)
------- ------- ------- ------- ------- --------
Net Asset Value, End of Period.......... $ 11.02 $ 10.82 $ 10.48 $ 10.78 $ 9.75 $ 11.02
======= ======= ======= ======= ======= ========
Total Return(A)......................... 7.40% 9.44% 3.19% 17.50% (3.34%) 5.62%
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(D)...................... 1.61% 1.55% 1.60% 1.70% 1.71% 4.05%(C)
Net Expenses........................... 1.00% 1.00% 0.93% 1.00% 1.00% 1.50%(C)
Net Investment Income.................. 5.32% 5.78% 5.94% 6.16% 5.96% 4.63%(C)
Portfolio Turnover Rate................. 14.10% 39.86% 140.94% 276.56% 113.36% 14.10%
Net Assets, At End of Period............ $32,729,708 $31,738,990 $12,818,450 $13,886,478 $12,534,640 $154,220
</TABLE>
- ------------
(A) Total return assumes reinvestment of all distributions 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. Total returns for periods of less than one year are
not annualized.
(B) Commencement of operations.
(C) Annualized.
(D) Had fees not been waived and expenses not been assumed.
See Notes to Financial Statements
48
<PAGE> 50
VAN ECK/CHUBB FUNDS, INC.
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
VAN ECK/CHUBB GROWTH AND INCOME FUND
---------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------------------------ ------------
PERIOD FROM
APRIL 29,
1998(C)
YEAR ENDED DECEMBER 31, THROUGH
------------------------------------------------------------------------ DECEMBER 31,
1998 1997 1996 1995 1994 1998
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 24.56 $ 21.04 $ 18.58 $ 14.77 $ 16.70 $ 27.94
------- ------- ------- ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................. 0.110 0.096 0.250 0.204 0.247 0.021
Net Gains (Losses) on Securities (both
Realized and Unrealized).............. (0.156) 5.286 3.931 5.042 (0.954) (3.517)
------- ------- ------- ------- ------- --------
Total from Investment Operations....... (0.046) 5.382 4.181 5.246 (0.707) (3.496)
------- ------- ------- ------- ------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from Net Investment Income... (0.111) (0.096) (0.250) (0.204) (0.247) (0.111)
Dividends in Excess of Net Investment
Income................................ -- (0.004) -- -- -- --
Distributions from Net Realized
Gains................................. (0.443) (1.762) (1.471) (0.885) (0.976) (0.443)
Distributions in Excess of Net Realized
Gains................................. -- -- -- (0.346) -- --
Tax Return of Capital.................. -- -- -- (0.001) -- --
------- ------- ------- ------- ------- --------
Total Distributions.................... (0.554) (1.862) (1.721) (1.436) (1.223) (0.554)
------- ------- ------- ------- ------- --------
Net Asset Value, End of Period.......... $ 23.96 $ 24.56 $ 21.04 $ 18.58 $ 14.77 $23.89
======= ======= ======= ======= ======= ========
Total Return(A)......................... (0.18%) 25.85% 22.50% 35.52% (4.26%) (12.51%)
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(B)...................... 1.57% 1.49% 1.58% 1.69% 1.71% 2.48%(D)
Net Expenses........................... 1.25% 1.25% 1.06% 1.08% 1.00% 1.75%(D)
Net Investment Income.................. 0.44% 0.49% 1.29% 1.20% 1.66% 0.27%(D)
Portfolio Turnover Rate................. 43.42% 21.02% 44.50% 37.59% 46.17% 43.42%
Net Assets, At End of Period............ $67,477,768 $66,762,320 $40,281,849 $29,144,161 $18,679,228 $594,545
</TABLE>
- ------------
(A) Total return assumes reinvestment of all distributions 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. Total returns for periods of less than one year are
not annualized.
(B) Had fees not been waived and expenses not been assumed.
(C) Commencement of operations.
(D) Annualized.
See Notes to Financial Statements
49
<PAGE> 51
VAN ECK/CHUBB FUNDS, INC.
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
VAN ECK/CHUBB TAX-EXEMPT FUND
---------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------------------------ ------------
PERIOD FROM
APRIL 29,
1998(C)
YEAR ENDED DECEMBER 31, THROUGH
------------------------------------------------------------------------ DECEMBER 31,
1998 1997 1996 1995 1994 1998
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 12.56 $ 12.15 $ 12.33 $ 11.22 $ 12.58 $ 12.46
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................. 0.537 0.581 0.611 0.621 0.618 0.289
Net Gains (Losses) on Securities (both
Realized and Unrealized).............. 0.202 0.450 (0.137) 1.132 (1.360) 0.341
------- ------- ------- ------- ------- -------
Total from Investment Operations....... 0.739 1.031 0.474 1.753 (0.742) 0.630
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from Net Investment Income... (0.539) (0.581) (0.611) (0.621) (0.618) (0.320)
Distributions from Net Realized
Gains................................. (0.020) (0.036) (0.043) (0.010) -- (0.020)
Distributions in Excess of Net Realized
Gains................................. -- (0.004) -- (0.012) -- --
------- ------- ------- ------- ------- -------
Total Distributions.................... (0.559) (0.621) (0.654) (0.643) (0.618) (0.340)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period.......... $ 12.74 $ 12.56 $ 12.15 $ 12.33 $ 11.22 $ 12.75
======= ======= ======= ======= ======= =======
Total Return(A)......................... 6.01% 8.73% 4.00% 15.88% (5.97%) 5.10%
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(D)...................... 1.63% 1.56% 1.65% 1.79% 1.80% 117.84%(B)
Net Expenses........................... 1.00% 1.00% 0.98% 1.00% 1.00% 1.50%(B)
Net Investment Income.................. 4.23% 4.74% 5.00% 5.20% 5.21% 4.30%(B)
Portfolio Turnover Rate................. 2.50% 12.78% 16.29% 7.39% 8.37% 2.50%
Net Assets, At End of Period............ $31,679,540 $31,288,493 $15,061,382 $15,259,349 $13,973,939 $29,208
</TABLE>
- ------------
(A) Total return assumes reinvestment of all distributions 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. Total returns for periods of less than one year are
not annualized.
(B) Annualized.
(C) Commencement of operations.
(D) Had fees not been waived and expenses not been assumed.
See Notes to Financial Statements
50
<PAGE> 52
VAN ECK/CHUBB FUNDS, INC.
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period:
<TABLE>
<CAPTION>
VAN ECK/CHUBB TOTAL RETURN FUND
--------------------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------------------------------------- ------------
PERIOD FROM
APRIL 29,
1998(C)
YEAR ENDED DECEMBER 31, THROUGH
----------------------------------------------------------------------- DECEMBER 31,
1998 1997 1996 1995 1994 1998
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 20.22 $ 17.41 $ 15.96 $ 13.23 $ 15.01 $ 21.94
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income................... 0.393 0.365 0.370 0.373 0.373 0.215
Net Gains (Losses) on Securities (both
Realized and Unrealized)............... 0.158 3.778 2.321 3.586 (0.994) (1.534)
------- ------- ------- ------- ------- -------
Total from Investment Operations........ 0.551 4.143 2.691 3.959 (0.621) (1.319)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS TO SHAREHOLDERS
Dividends from Net Investment Income.... (0.390) (0.365) (0.370) (0.373) (0.373) (0.270)
Dividends in Excess of Net Investment
Income................................. -- (0.004) -- -- -- --
Distributions from Capital Gains........ (1.111) (0.964) (0.871) (0.692) (0.786) (1.111)
Tax Returns of Capital.................. -- -- -- (0.164) -- --
------- ------- ------- ------- ------- -------
Total Distributions..................... (1.501) (1.333) (1.241) (1.229) (1.159) (1.381)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period........... $ 19.27 $ 20.22 $ 17.41 $ 15.96 $ 13.23 $ 19.24
======= ======= ======= ======= ======= =======
Total Return(A).......................... 2.73% 24.09% 17.04% 30.13% (4.21%) (5.96%)
RATIOS TO AVERAGE NET ASSETS:
Gross Expenses(B)....................... 1.61% 1.51% 1.59% 1.70% 1.73% 2.96%(D)
Net Expenses............................ 1.25% 1.25% 1.08% 1.08% 1.00% 1.75%(D)
Net Investment Income................... 1.87% 1.92% 2.26% 2.45% 2.66% 1.57%(D)
Portfolio Turnover Rate.................. 15.78% 15.80% 27.01% 57.62% 37.53% 15.78%
Net Assets, At End of Period............. $42,524,175 $49,933,635 $31,064,099 $22,171,326 $16,431,195 $330,398
</TABLE>
- ------------
(A) Total return assumes reinvestment of all distributions 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. Total returns for periods of less than one year are
not annualized.
(B) Had fees not been waived and expenses not been assumed.
(C) Commencement of operations.
(D) Annualized.
See Notes to Financial Statements
51
<PAGE> 53
VAN ECK/CHUBB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998
- --------------------------------------------------------------------------------
NOTE A--ORGANIZATION
Van Eck/Chubb Funds, Inc. (the "Company"), formerly known as Chubb Investment
Funds, Inc., was incorporated under the laws of the State of Maryland on April
27, 1987, and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end series management investment company. The
Company consists of six funds (the "Funds"): 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 Tax-Exempt Fund, and
Van Eck/Chubb Total Return Fund.
At December 31, 1998 Chubb Life Insurance Company of America ("Chubb Life") and
its affiliates and Van Eck Associates Corporation owned the following shares of
each Fund:
<TABLE>
<CAPTION>
SHARES % OF
OWNED SHARES
------ ------
<S> <C> <C>
Van Eck/Chubb Capital Appreciation Fund
Class A shares......................... 2,111,197 80.83%
Van Eck/Chubb Global Income Fund Class A
shares................................. 5,700,187 64.47%
Van Eck/Chubb Government Securities Fund
Class A shares......................... 2,235,367 75.25%
Van Eck/Chubb Growth and Income Fund
Class A shares......................... 740,253 26.28%
Van Eck/Chubb Tax-Exempt Fund Class A
shares................................. 1,686,394 67.83%
Van Eck/Chubb Total Return Fund Class A
shares................................. 843,197 38.22%
</TABLE>
NOTE B--SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires the Company's management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is a
summary of significant accounting policies:
Valuation of Investments: Equity securities are valued at the closing sales
price on the exchange on which such securities are principally traded; or, if
traded in the over-the-counter market or on a national exchange for which no
sales took place on the day of valuation, at the mean of the bid and asked
prices at the close of trading. Quotations of foreign securities denominated in
foreign currencies are converted into U.S. dollars using the prevailing foreign
exchange rates. Securities listed on a foreign exchange are valued at the last
quoted sale price available before the time when net assets are valued.
Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by the Board
of Directors. Debt instruments are valued on the basis of quotes provided by a
pricing service that determines the current value for institutional size trading
units of securities, without exclusive reliance upon quoted prices. These
valuations are believed to reflect fair market value more accurately. Short-term
debt instruments with a remaining maturity of less than 60 days are valued by
the amortized cost method, which approximates market value, unless the Board of
Directors determines that this does not represent fair value.
Trading in securities on most foreign exchanges and over-the-counter markets is
normally completed before the close of the domestic market and may also take
place on days on which the domestic market is closed.
Foreign Currency Translation: The books and records of the Funds are maintained
in U.S. dollars. The market values of investments, other assets and liabilities,
and forward contracts stated in foreign currencies are translated at the
prevailing exchange rates at the end of the year. Purchases, sales, income and
expenses are translated at the exchange rate prevailing on the respective dates
of such transactions.
Since the net assets of the Funds are presented at the exchange rates and market
value prevailing at the end of the year, the Funds generally do not isolate the
portion of the results of operations arising as a result of changes in foreign
exchange rates on securities from the fluctuations arising from changes in the
market prices of securities held during the year. Such fluctuations are included
with the net realized and unrealized gain or loss from investments. However, the
Global Income Fund does isolate the effect of fluctuations in foreign exchange
rates when determining the gain or loss upon the sale or maturity of foreign
currency-denominated debt obligations pursuant to federal income tax
regulations; such fluctuations are included in net realized gain or loss from
foreign currency transactions.
Reported net realized gain or loss from foreign currency transactions (including
foreign currency forward contracts) arises from sales of foreign currencies,
currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest and foreign withholding taxes recorded on the Funds' books, and the
U.S. dollar equivalent of the amounts actually received or paid and for the
Global Income Fund, the fluctuations in exchange rates on sales or maturities of
foreign currency-denominated debt obligations. Net unrealized gain or loss from
foreign currency transactions arises from changes in the value of assets and
liabilities, other than investments in securities, resulting from fluctuations
in exchange rates.
Forward Foreign Currency Contracts: Certain Funds may enter into forward
foreign currency contracts to protect securities and related receivables and
payables against fluctuations in future foreign currency rates. The Van
Eck/Chubb Global Income Fund may also enter into cross currency hedges by
entering into transactions to purchase or sell one or more currencies that are
expected to increase or decrease relative to other currencies in which the Fund
has or expects to have exposure. A forward contract is an agreement to buy or
sell currencies of different countries on a specified future date at a specified
rate. Risk may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts and is
generally limited to the amount of unrealized gain on the contracts, if any, at
the date of default. Risk may also arise from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar. Contracts are marked to
market daily and the change in market value is recorded as unrealized
appreciation or depreciation. Realized gains or losses arising from such
transactions are included in net realized gains or losses from foreign currency
52
<PAGE> 54
VAN ECK/CHUBB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 (continued)
- --------------------------------------------------------------------------------
transactions. At December 31, 1998, the Van Eck/Chubb Global Income Fund had the
following open forward currency contracts:
<TABLE>
<CAPTION>
VALUE AT UNREALIZED
SETTLEMENT CURRENT APPRECIATION
CONTRACTS DATE VALUE (DEPRECIATION)
- --------- ---------- ------- --------------
<S> <C> <C> <C> <C> <C>
FOREIGN CURRENCY SELL CONTRACT:
DEM 24,037,894 expiring 3/08/99........ $14,398,691 $14,474,787 $ 76,096
FOREIGN CURRENCY PURCHASE CONTRACT:
GBP 8,734,700 expiring 3/08/99........ 14,398,691 14,450,899 (52,208)
---------
$ 23,888
=========
</TABLE>
Security Transactions and Investment Income: Security transactions are recorded
on a trade date basis. Realized gains and losses on investments sold are
recorded on the basis of the specific identification method. Interest income,
including, where applicable, amortization of discount on investments, is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date, except for certain dividends from foreign securities, which are recorded
as soon after the ex-dividend date as the respective Funds, using reasonable
diligence, become aware of such dividends.
Dividends to Shareholders: Dividends to shareholders from net investment income
are declared daily and distributed monthly for the Van Eck/Chubb Government
Securities Fund; declared and distributed monthly for the Van Eck/Chubb
Tax-Exempt Fund and the Van Eck/Chubb Global Income Fund; declared and
distributed quarterly for the Van Eck/Chubb Total Return Fund; and declared and
distributed annually for the Van Eck/Chubb Growth and Income Fund and Van
Eck/Chubb Capital Appreciation Fund. Dividends from net realized capital gains
are declared and distributed at least once annually. Dividends distributed to
shareholders are recorded on the ex-dividend date.
The Company distinguishes between dividends on a tax basis and a financial
reporting basis and only dividends in excess of tax basis earnings and profits
are reported in the financial statements as a return of capital. Differences in
the recognition or classification of tax income between the financial statements
and tax earnings and profits which result in over-distributions for financial
statement purposes are classified as distributions in excess of net investment
income or accumulated realized gains. To the extent that these differences are
permanent in nature, such amounts are reclassified within the capital accounts
based on their tax basis treatment; temporary differences do not require
reclassification. At December 31, 1998 certain Funds reclassified permanent
differences within the capital accounts based on their tax basis treatment. Net
assets were not affected by these reclassifications.
At December 31, 1998, the Van Eck/Chubb Government Securities Fund had $237,474
of accumulated realized losses expiring in 2002 and the Van Eck/Chubb Global
Income Fund had $2,544,272 of accumulated realized losses, of which $1,063,221
expires in 2002 and $1,481,051 expires in 2004. These losses are available to be
used to offset future realized capital gains.
Organization Costs: Costs incurred in connection with the initial organization
of the Van Eck/Chubb Capital Appreciation Fund and the Van Eck/Chubb Global
Income Fund are being amortized on the straight-line basis over a period of five
years.
NOTE C--INVESTMENTS
As of December 31, 1998 gross unrealized gains and losses were as follows:
<TABLE>
<CAPTION>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
GAINS LOSSES GAINS(LOSSES)
----------- ----------- -------------
<S> <C> <C> <C>
Van Eck/Chubb Capital
Appreciation Fund.......... $ 4,087,619 $10,035,290 $(5,947,671)
Van Eck/Chubb Global Income
Fund....................... 4,762,363 1,364,691 3,397,672
Van Eck/Chubb Government
Securities Fund............ 1,003,982 2,296 1,001,686
Van Eck/Chubb Growth and
Income Fund................ 14,739,774 3,060,938 11,678,836
Van Eck/Chubb Tax-Exempt
Fund....................... 1,929,163 2,469 1,926,694
Van Eck/Chubb Total Return
Fund....................... 8,822,160 1,155,468 7,666,692
</TABLE>
Purchases and sales of investment securities for the year ended December 31,
1998, other than short-term obligations, were as follows:
<TABLE>
<CAPTION>
PROCEEDS
COST OF FROM
INVESTMENT INVESTMENT
SECURITIES SECURITIES
PURCHASED SOLD
----------- -----------
<S> <C> <C>
Van Eck/Chubb Capital Appreciation
Fund.................................... $ 7,999,126 $10,983,552
Van Eck/Chubb Global Income Fund......... 98,023,452 69,727,048
Van Eck/Chubb Government Securities
Fund.................................... 8,024,578 4,417,249
Van Eck/Chubb Growth and Income Fund..... 29,060,922 33,433,939
Van Eck/Chubb Tax-Exempt Fund............ 763,865 1,091,391
Van Eck/Chubb Total Return Fund.......... 7,229,464 15,789,393
</TABLE>
NOTE D--MANAGEMENT AGREEMENTS AND EXPENSES
Chubb Asset Managers, Inc. ("Investment Manager"), a wholly-owned subsidiary of
The Chubb Corporation, is responsible for the overall investment management of
each Fund's portfolio, consistent with each Fund's investment objectives,
policies and restrictions. Van Eck Associates Corporation ("Investment
Administrator") provides certain administrative services and facilities for the
Company.
Van Eck Securities Corporation (the "Distributor"), a wholly owned subsidiary of
the Investment Administrator, for the year ended December 31, 1998, received
$339,298 in sales loads of which $46,920 was reallowed to broker-dealers. Also,
the Company has a plan of distribution pursuant to Rule 12b-1 that provides that
the Company may, directly or indirectly, engage in activities primarily intended
to result in the sale of the Company's shares. The maximum expenditure the
Company may make under the plan is 0.50% per annum on Class A shares and 1.00%
per annum on Class B shares of the average daily net assets of each Fund.
Investment management fees, which compensate both the Investment Manager and the
Investment Administrator, are
53
<PAGE> 55
VAN ECK/CHUBB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 (continued)
- --------------------------------------------------------------------------------
computed at the following annual percentages for each of the Funds:
<TABLE>
<CAPTION>
AVERAGE DAILY INVESTMENT INVESTMENT
NET ASSETS MANAGER ADMINISTRATOR
------------- ---------- -------------
<S> <C> <C>
First $200 Million................. 0.20% 0.45%
Next $1.1 Billion.................. 0.19% 0.41%
Over $1.3 Billion.................. 0.18% 0.37%
</TABLE>
Pursuant to an expense limitation agreement for the year ended December 31, 1998
for Class A shares and the period April 29, 1998 through December 31, 1998 for
Class B shares, the rate of expenses borne by the Funds, based on average net
assets, were limited to the amounts listed below:
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Van Eck/Chubb Capital Appreciation Fund.... 1.25% 1.75%
Van Eck/Chubb Global Income Fund........... 1.35% 1.85%
Van Eck/Chubb Government Securities Fund... 1.00% 1.50%
Van Eck/Chubb Growth and Income Fund....... 1.25% 1.75%
Van Eck/Chubb Tax-Exempt Fund.............. 1.00% 1.50%
Van Eck/Chubb Total Return Fund............ 1.25% 1.75%
</TABLE>
NOTE E--SHAREHOLDERS' TRANSACTIONS
Following is a summary of transactions with shareholders for each Fund.
<TABLE>
<CAPTION>
VAN ECK/CHUBB CAPITAL APPRECIATION FUND
---------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------------ ------------------------
SHARES DOLLARS SHARES DOLLARS
CLASS A ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold............ 2,979,400 $ 5,222,315 2,137,853 $34,941,115
Shares issued as
reinvestment of
dividends and
distributions......... 131,957 1,703,560 139,585 2,040,444
Shares redeemed........ (3,160,757) (7,993,680) (111,756) (1,703,428)
---------- ----------- ---------- -----------
Net increase
(decrease)......... (49,400) $(1,067,805) 2,165,682 $35,278,131
========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 29, 1998+
THROUGH
DECEMBER 31, 1998
-------------------
SHARES DOLLARS
CLASS B ------ -------
<S> <C> <C>
Shares sold......................................... 777 $11,982
Shares issued as reinvestment of dividends and
distributions...................................... 41 534
Shares redeemed..................................... -- --
--- -------
Net increase....................................... 818 $12,516
=== =======
</TABLE>
- ------------
+ Commencement of operations.
<TABLE>
<CAPTION>
VAN ECK/CHUBB GLOBAL INCOME FUND
-------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS
CLASS A --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold............... 108,585 $ 786,154 4,153,429 $40,249,318
Share issued in connection
with an acquisition (Note
G)....................... 3,707,367 36,851,229 -- --
Shares issued as
reinvestment of dividends
and distributions........ 581,772 5,902,596 110,564 1,070,720
Shares redeemed........... (960,209) (9,755,118) (53,640) (527,298)
--------- ----------- --------- -----------
Net increase............. 3,437,515 $33,784,861 4,210,353 $40,792,740
========= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 29, 1998+
THROUGH
DECEMBER 31, 1998
-------------------
SHARES DOLLARS
CLASS B ------ -------
<S> <C> <C>
Shares sold......................................... 902 $ 9,151
Shares issued as reinvestment of dividends and
distributions...................................... 13 130
Shares redeemed..................................... (567) (5,626)
----- -------
Net increase....................................... 348 $ 3,655
===== =======
</TABLE>
<TABLE>
<CAPTION>
VAN ECK/CHUBB GOVERNMENT SECURITIES FUND
-------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
---------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS
CLASS A -------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold.............. 226,772 $ 2,494,818 2,006,126 $21,384,810
Shares issued as
reinvestment of
dividends............... 147,737 1,619,400 78,935 888,170
Shares redeemed.......... (337,604) (3,708,941) (373,997) (3,928,539)
-------- ----------- --------- -----------
Net increase............ 36,905 $ 405,277 1,711,064 $18,344,441
======== =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 29, 1998+
THROUGH
DECEMBER 31, 1998
---------------------
SHARES DOLLARS
CLASS B ------- --------
<S> <C> <C>
Shares sold....................................... 13,841 $152,798
Shares issued as reinvestment of dividends........ 158 1,753
Shares redeemed................................... -- --
------- --------
Net increase..................................... 13,999 $154,551
======= ========
</TABLE>
54
<PAGE> 56
VAN ECK/CHUBB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VAN ECK/CHUBB GROWTH AND INCOME FUND
--------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS
CLASS A -------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Shares sold............. 811,345 $ 21,768,228 1,017,154 $26,246,838
Shares issued as
reinvestment of
dividends and
distributions.......... 61,002 1,459,118 188,575 4,334,132
Shares redeemed......... (774,435) (19,734,223) (401,518) (9,677,335)
-------- ------------ --------- -----------
Net increase........... 97,912 $ 3,493,123 804,211 $20,903,635
======== ============ ========= ===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 29, 1998+
THROUGH
DECEMBER 31, 1998
--------------------
SHARES DOLLARS
CLASS B ------ --------
<S> <C> <C>
Shares sold........................................ 25,220 $627,467
Shares issued as reinvestment of dividends and
distributions..................................... 486 11,619
Shares redeemed.................................... (824) (18,503)
------ --------
Net increase.................................... 24,882 $620,583
====== ========
</TABLE>
<TABLE>
<CAPTION>
VAN ECK/CHUBB TAX-EXEMPT FUND
-------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
---------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS
CLASS A -------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold.............. 318,054 $ 4,025,056 1,618,059 $20,040,183
Shares issued as
reinvestment of
dividends and
distributions........... 100,164 1,267,929 74,378 875,229
Shares redeemed.......... (422,157) (5,345,855) (441,704) (5,409,165)
-------- ----------- --------- -----------
Net increase
(decrease)............ (3,939) $ (52,870) 1,250,733 $15,506,247
======== =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 29, 1998+
THROUGH
DECEMBER 31, 1998
----------------------
SHARES DOLLARS
CLASS B ------- -------
<S> <C> <C>
Shares sold...................................... 2,280 $29,122
Shares issued as reinvestment of dividends and
distributions................................... 11 144
Shares redeemed.................................. -- --
------- -------
Net increase.................................... 2,291 $29,266
======= =======
</TABLE>
<TABLE>
<CAPTION>
VAN ECK/CHUBB TOTAL RETURN FUND
------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
---------------------- ----------------------
SHARES DOLLARS SHARES DOLLARS
CLASS A -------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold............... 144,665 $ 4,826,003 971,037 $20,382,124
Shares issued as
reinvestment of dividends
and distributions........ 158,797 3,099,318 145,823 2,792,442
Shares redeemed........... (567,173) (13,653,344) (430,994) (8,372,037)
-------- ----------- -------- -----------
Net increase
(decrease)............. (263,711) $(5,728,023) 685,866 $14,802,529
======== =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 29, 1998+
THROUGH
DECEMBER 31, 1998
---------------------
SHARES DOLLARS
CLASS B ------- --------
<S> <C> <C>
Shares sold....................................... 16,211 $317,258
Shares issued as reinvestment of dividends and
distributions.................................... 1,029 19,796
Shares redeemed................................... (66) (1,329)
------- --------
Net increase...................................... 17,174 $335,725
======= ========
</TABLE>
- ---------------
+ Commencement of operations.
55
<PAGE> 57
VAN ECK/CHUBB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 (continued)
- --------------------------------------------------------------------------------
NOTE F--FUTURES CONTRACTS
As of December 31, 1998 the Van Eck/Chubb Global Income Fund had open futures
contracts. These contracts were acquired in lieu of a direct purchase of the
securities. Using futures contracts involves various market risks. The maximum
amount at risk from the purchase of a futures contract is the contract value.
Risks may also be caused by imperfect correlations between the movements in the
price of the futures contract and the price of the underlying security.
Upon entering into a futures contract, the Fund is required to pledge to a
broker cash in an amount equal to a certain percentage of the contract amount.
This amount is known as the "initial margin." Subsequent payments, known as
variation margin, are made or received by the Fund each day, depending on the
daily fluctuations in the value of the underlying futures contracts. Such
variation margin is recorded for financial statement purposes on a daily basis
as an unrealized gain or loss until the futures contract is closed, at which
time the net gain or loss is reclassified to realized.
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF CONTRACT CURRENT UNREALIZED
LONG CONTRACTS: DATE CONTRACTS VALUE VALUE DEPRECIATION
- --------------- ---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
20 Year U.S. Treasury Bond 8%........................ 3/31/99 63 $8,198,367 $8,050,219 $(148,148)
10 Year U.S. Treasury Note 8%........................ 3/31/99 63 7,594,242 7,506,844 (87,398)
---------
$(235,546)
=========
</TABLE>
NOTE G--ACQUISITION
As of the close of business on April 24, 1998, Van Eck/Chubb Global Income Fund
acquired all the net assets of Van Eck Global Income Fund pursuant to a plan of
reorganization approved by Van Eck Global Income Fund shareholders on April 16,
1998. The acquisition was accomplished by a tax-free exchange of 4,292,666
shares of Van Eck Global Income Fund (valued at $36,851,229) for 3,707,367
shares of Van Eck/Chubb Global Income Fund outstanding on April 24, 1998. Van
Eck Global Income Fund's net assets at that date, $36,851,229, including
$405,616 of unrealized appreciation were combined with those of the Van Eck
/Chubb Global Income. The aggregate net assets of Van Eck/Chubb Global Income
Fund and Van Eck Global Income Fund before the acquisition were $54,462,808 and
$36,851,229, respectively. In connection with the merger, the Van Eck/Chubb
Global Income Fund acquired accumulated net realized losses of $3,907,263, of
which $1,362,991 was utilized during the current year. The balance is available
for carryforward to future years (see Note B). In accordance with income tax
rules the utilization of such carryforward is limited to $1,989,966 annually.
56
<PAGE> 58
VAN ECK/CHUBB FUNDS, INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders
Van Eck/Chubb Funds, Inc.
We have audited the accompanying statement of assets and liabilities of Van
Eck/Chubb Funds, Inc. (the "Funds," comprising Capital Appreciation Fund, Global
Income Fund, Government Securities Fund, Growth and Income Fund, Tax-Exempt
Fund, and Total Return Fund), including the related schedules of portfolio
investments, as of December 31, 1998, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and the financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1998, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds constituting Van Eck/Chubb Funds, Inc. at December 31,
1998, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and the
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.
Ernst & Young LLP signature
New York, New York
February 16, 1999
57
<PAGE> 59
[VAN ECK GLOBAL LOGO]
Investment Adviser: Chubb Asset Managers, Inc.
Distributor: Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016 www.vaneck.com
Account Assistance: (800) 544-4653
This report must be accompanied or preceded by a Van Eck/Chubb Funds prospectus,
which includes more complete information such as charges and expenses and the
risks associated with international investing, including currency fluctuations
or controls, expropriation, nationalization and confiscatory taxation. Please
read the prospectus carefully before you invest.
