<PAGE>
Van Eck Global Income Fund
--------------------------------------------------
1995 Annual Report
Dear Fellow Shareholder:
We are pleased to report that 1995 was an outstanding year for bond markets
worldwide. Sluggish growth, declining interest rates, disinflation and neutral
to restrictive fiscal policy is the ideal environment for bonds, and these are
the conditions that prevailed throughout much of the world in 1995. The Global
Income Fund had a total return of 17.3% for the year ended December 31, 1995.
BOND REVIEW
As the year began, investors were cautious on the outlook for bonds after
rising short-term U.S. interest rates and the Mexican peso debacle had resulted
in a tumultuous 1994. During the first quarter, your portfolio was weighted
toward the strengthening U.S. bond market (on a duration basis), with lesser
exposures to Europe and Japan, and durations overall were temporarily lowered
as a defensive strategy. Holdings in the peripheral European bond markets such
as Spain, which tend to be the most volatile (outperforming in bull markets and
underperforming in weak markets), were liquidated at that time.
Toward the end of the first quarter, however, it appeared that economic growth
in both the U.S. and Europe was faltering and that inflation was not a threat.
The German discount rate was cut in March and as expectations of further rate
cuts rose, the bond market rally went into full swing and our positioning
became less defensive. We again added Spanish and Italian bonds during the
second quarter and increased the average duration of the portfolio to almost
five years. While we maintained a fairly heavy weighting toward the U.S.
throughout the year, we decreased the position somewhat (again, on a duration
basis), taking profits, cautious after the first quarter U.S. rally.
Bond markets overall continued to perform exceptionally well as interest rate
trends reversed--the federal funds target rate was reduced from 6% to 5.75% in
the beginning of July while the German Lombard rate was lowered from 6% to 5.5%
in August. Both rates were again decreased in December and the German discount
rate continued to come down throughout the year. Further boosting bonds (U.S.
bonds in particular) and helping spur confidence in all the global financial
markets, the Bank of Japan had begun aggressively purchasing Treasury bonds
with the proceeds from the Bank's intervention to support the dollar and stem
the yen's rise in the first quarter.
Your portfolio has remained very underweighted in Japanese bonds throughout the
year. The Japanese position, accounting for only 6.2% of the portfolio at the
start of the year, was increased to almost 12% by midyear after a spectacular
first half, and declined to 3.5% during the third quarter after we sold into
the strong first-half rally. Despite an auspicious start to the year, sustained
very low interest rates and credit risk due to the continuing Japanese
financial and real estate crisis continue to make Japanese bonds unattractive
relative to other markets. The Japanese market substantially underperformed
other bond markets for the year, despite a return of 9.6% in U.S. dollar terms.
Most bond markets, however, ended the year with gains that rivaled, and in many
cases even beat, the global stock markets. The German bond market (12.2% of
portfolio holdings by year end), for example, posted gains of 25.9% in U.S.
dollar
<PAGE>
terms, while the U.S. bond market (over 40% of the portfolio at December 31)
was up 18.3%.
CURRENCY REVIEW
World currencies, which are a key component of global bond returns, also had a
dramatic year. The U.S. dollar witnessed a historic decline in the beginning
of the year, beleaguered by uncertainty over U.S. fiscal policy, rising
deficits and the U.S.'s $20 billion support package for the Mexican peso. The
greenback rapidly declined against most foreign currencies, hitting post-World
War II lows against both the German mark and the Japanese yen in April. Your
portfolio was effectively over 80% in stronger foreign currencies during the
first months of the year as we hedged the dollar, a strategy that greatly
benefited performance. In the end of April, after the dollar had hit its low,
we began to add to the dollar position, increasing exposure to about 70% (and
reducing foreign currency exposure to 30%) by July 31 as the dollar bounced
back. However, we were not convinced that dollar strength would be sustained
and we sold dollars into the rally in August. Since that time, we have
maintained a foreign currency position of approximately 50-55% of the
portfolio, expecting the dollar to retreat again. This position has dampened
Fund returns somewhat since the dollar ended the year with a sharp rebound
against the yen and mild strength against the mark. Given the double-digit
returns of the bond markets, a fairly high cash and short-term bond position
also negatively impacted returns.
THE OUTLOOK
While the spectacular bond returns of 1995 will probably not be repeated in
the near future, we believe there are several reasons for optimism in the year
ahead. We expect continued economic weakness and further easing of interest
rates, particularly in Europe, which of course, would be positive for European
bonds. While our expectations of another dollar decline were early, we believe
a strengthening of foreign currencies versus the dollar remains on the
horizon. Your portfolio is positioned to take advantage of these moves. In our
opinion, 1996 will be a year of selective opportunities--it will be necessary
to reassess the markets and reallocate positions quickly, and, as always, we
will remain flexible in our outlook as economic circumstances shift.
We appreciate your participation in the Global Income Fund and look forward to
helping you meet your investment objectives in the future.
(ART)
John C. van Eck Madis Senner
Chairman Portfolio Manager
January 16, 1996
- -------------------------------------------------------------------------------
Performance Record as of 12/31/95
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
After Maximum
Average Annual Sales Charge Before Sales
Total Return of 4.75% Charge
- ----------------------------------------------------------
<S> <C> <C>
A shares--Life (since 4/30/87) 8.6% 9.2%
- ----------------------------------------------------------
5 year 5.7% 6.7%
- ----------------------------------------------------------
1 year 11.7% 17.3%
- ----------------------------------------------------------
</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.
<PAGE>
Global Income Fund
Investment Portfolio December 31, 1995
<TABLE>
<CAPTION>
COUPON OR
INTEREST MATURITY
BONDS AND NOTES PRINCIPAL AMOUNT YIELD DATE VALUE (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DENMARK-6.6%
Kingdom of Denmark DKK 22,000,000 7.00% 11/10/24 $ 3,533,379
Kingdom of Denmark 20,000,000 7.00% 12/15/04 3,570,107
------------
7,103,486
------------
GERMANY-12.2%
Federal Republic
of Germany DEM 5,000,000 6.25% 1/4/24 3,238,761
Federal Republic
of Germany 5,100,000 7.50% 11/11/04 3,906,081
Federal Republic
of Germany 8,000,000 7.375% 1/3/05 6,079,900
------------
13,224,742
------------
IRELAND-1.9%
Irish Government
Treasury Note IEP 1,420,000 6.25% 10/18/04 2,100,765
------------
ITALY-4.3%
Republic of Italy ITL 3,700,000,000 10.50% 9/1/05 2,318,441
Republic of Italy 3,850,000,000 8.50% 4/1/99 2,321,516
------------
4,639,957
------------
JAPAN-3.9%
Japanese
Government #29 JPY 406,500,000 4.20% 9/21/15 4,200,592
------------
NETHERLANDS-6.7%
Netherlands
Government NLG 11,000,000 6.75% 2/15/99 7,282,027
------------
SPAIN-7.7%
Kingdom of Spain ESP 580,000,000 10.15% 1/31/06 4,858,551
Kingdom of Spain 455,000,000 7.40% 7/30/99 3,537,788
------------
8,396,339
------------
UNITED STATES-
40.5%
J.P. Morgan USD 5,000,000 6.50% 6/30/97 5,075,005
U.S. Treasury
Bond* 3,000,000 6.875% 8/15/25 3,384,843
U.S. Treasury
Note* 10,000,000 5.625% 1/31/98 10,084,380
U.S. Treasury
Note* 2,600,000 5.75% 10/31/00 2,639,814
U.S. Treasury
Note* 13,000,000 5.875% 8/15/98 13,209,222
U.S. Treasury
Note* 9,000,000 6.50% 8/15/05 9,599,068
------------
43,992,332
------------
Total Bonds and Notes: 83.8% (cost:
$88,342,946) 90,940,240
------------
<CAPTION>
INTEREST
YIELD
SHORT-TERM AT TIME MATURITY
OBLIGATIONS PRINCIPAL AMOUNT OF PURCHASE DATE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bill USD 14,000,000 5.00% 1/11/96 13,980,555
General Electric
Capital Corp.
C.P. 3,619,000 5.55% 1/2/96 3,618,442
------------
Total Short-Term Obligations: 16.2%
(amortized cost: $17,598,997) 17,598,997
------------
<CAPTION>
CALL OPTIONS EXPIRATION
PURCHASED NOTIONAL AMOUNT DATE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Japanese Yen;
strike price @
JPY 98 (cost:
$56,000) JPY 784,000,000 1/4/96 80
------------
TOTAL INVESTMENTS: 100% (cost:
$105,997,943) $108,539,317
============
</TABLE>
- -------
* These securities are segregated for foreign currency forward contracts.
See Notes to Financial Statements.
<PAGE>
Global Income Fund Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments at value (cost, $105,997,943) (Note 1) $108,539,317
Cash 2,685,757
Receivables:
Interest 2,519,847
Capital shares sold 87,481
Tax reclaims 2,814
Miscellaneous 99,808
------------
Total assets 113,935,024
------------
LIABILITIES:
Payables:
Capital shares redeemed 211,326
Dividends payable 449,559
Accounts payable 290,866
Unrealized depreciation on forward foreign currency
contracts 607,935
------------
Total liabilities 1,559,686
------------
NET ASSETS $112,375,338
============
CLASS A
Net asset value and redemption price per share
($112,375,338/12,489,390) $9.00
============
Maximum offering price per share
(NAV/(1-maximum sales commission)) $9.45
============
Net assets consist of:
Aggregate paid in capital $113,666,784
Unrealized appreciation of investments,
options and foreign currency transactions 1,904,587
Undistributed net investment income 734,732
Cumulative realized losses (3,930,765)
------------
$112,375,338
============
- ------------------------------------------------------------------
STATEMENT OF OPERATIONS
</TABLE>
<TABLE>
For the Year Ended December 31, 1995
<S> <C> <C>
INCOME:
INTEREST INCOME $ 8,805,818
EXPENSES:
Management (Note 2) $ 984,254
Distribution Class A (Note 4) 325,122
Distribution Class B (Note 4) 1,701
Administration (Note 2) 102,648
Transfer agency 264,177
Custody 85,592
Professional 77,688
Reports to shareholders 49,429
Trustees fees 16,767
Other 86,846
-----------
Total expenses 1,994,224
Expenses reduced by a directed brokerage
arrangement (9,095)
-----------
Net expenses 1,985,129
------------
Net investment income 6,820,689
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS ( NOTE 3)
Realized gain from security transactions
(excluding short-term securities):
Proceeds from sales 242,369,726
Cost of securities sold 238,762,910
-----------
Realized gain 3,606,816
Realized loss from futures contracts (53,773)
Realized loss from options (53,877)
Realized gains from foreign currency transactions 9,544,959
Change in unrealized appreciation of foreign
denominated receivables and payables (47,033)
Change in unrealized appreciation of forward foreign
currency contracts (1,186,985)
Change in unrealized depreciation of investments 2,741,950
Change in unrealized appreciation of futures
contracts (47,444)
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 21,325,302
============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
DECREASE IN NET ASSETS:
Operations:
Net investment income $ 6,820,689 $ 11,456,448
Realized gain (loss) from security transactions 3,606,816 (8,818,178)
Realized loss from futures contracts (53,773) (1,594,067)
Realized loss from options (53,877) --
Realized gain (loss) from foreign currency
transactions 9,544,959 (14,761,463)
Change in unrealized appreciation of foreign
currency receivables and payables (47,033) 18,181
Change in unrealized appreciation of forward
foreign currency contracts (1,186,985) 95,561
Change in unrealized depreciation of investments 2,741,950 5,780,372
Change in unrealized appreciation of futures
contracts (47,444) 47,444
------------ ------------
Increase (decrease) in net assets resulting from
operations 21,325,302 (7,775,702)
Undistributed net investment income included in
price of shares sold and redeemed (Note 1) -- (1,353,116)
------------ ------------
21,325,302 (9,128,818)
------------ ------------
Dividends to shareholders from:
Net investment income
Class A (7,685,453) --
Class B (9,150) --
------------ ------------
(7,694,603) --
------------ ------------
Aggregate paid in capital:
Class A -- (11,366,445)
Class B -- (4,897)
------------ ------------
-- (11,371,342)
------------ ------------
13,630,699 (20,500,160)
------------ ------------
Capital share transactions:
Net proceeds from sales of shares:
Class A Shares 47,072,009 21,923,273
Class B Shares 540,515 423,506
------------ ------------
47,612,524 22,346,779
------------ ------------
Reinvestment of dividends:
Class A Shares 5,356,995 7,229,311
Class B Shares 4,731 842
------------ ------------
5,361,726 7,230,153
------------ ------------
Cost of shares reacquired:
Class A Shares (90,865,479) (124,491,597)
Class B Shares (1,007,412) (19,613)
------------ ------------
(91,872,891) (124,511,210)
------------ ------------
Increase in additional paid in capital for
reversal of amounts previously allocated to
undistributed net investment income (Note 1) -- 1,353,116
------------ ------------
Decrease in net assets resulting from capital
share transactions (38,898,641) (93,581,162)
------------ ------------
Total decrease in net assets (25,267,942) (114,081,322)
NET ASSETS:
Beginning of year 137,643,280 251,724,602
------------ ------------
End of year (including undistributed net
investment income of $734,732 and $0,
respectively) $112,375,338 $137,643,280
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
Global Income Fund Financial Statements
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------------------
EIGHT MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED APRIL 30,
--------------------------- DECEMBER 31, ------------------------------------------------
1995 1994 1993 1992 1992 1991 1990(c) 1989(c) 1988(c)
-------- -------- ---- ---- -------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, $8.15 $8.96 $9.28 $9.91 $9.75 $9.44 $9.10 $10.09 $ 9.25
Beginning of Period.... ----- ----- ----- ----- ----- ----- ----- ------ ------
Income from Investment
Operations:
Net Investment Income.. 0.47 0.55+ 0.75 0.51 0.770 0.99 0.953 0.86 0.67
Net Gain (Loss) on
Securities (both
realized and 0.92 (0.80) (0.31) (0.50) 0.460 0.51 0.347 (0.47) 0.53
unrealized)........... ---- ----- ----- ----- ------ ----- ----- ------ ------
Total from Investment 1.39 (0.25) 0.44 0.01 1.230 1.50 1.300 0.39 1.20
Operations............. ---- ----- ----- ---- ------ ----- ----- ------ ------
Less Distributions:
Dividends from Net
Investment Income(b).. (0.54) -- (0.05) (0.47) (0.853) (0.96) (0.944) (1.11) (0.35)
Distributions from
Capital Gains......... -- -- (0.01) (0.17) (0.217) (0.23) (0.016) (0.27) (0.01)
Distributions from
Aggregate Paid In -- (0.56) (0.70) -- -- -- -- -- --
Capital............... ----- ----- ----- ----- ------ ----- ----- ------ ------
Total Distributions..... (0.54) (0.56) (0.76) (0.64) (1.070) (1.19) (0.960) (1.38) (0.36)
----- ----- ----- ----- ------ ----- ------ ------ ------
Net Asset Value, End of $9.00 $8.15 $8.96 $9.28 $9.91 $9.75 $9.44 $ 9.10 $10.09
Period................. ===== ===== ===== ===== ====== ===== ===== ====== ======
Total Return (a)........ 17.27% (2.79%) 4.90% (0.18%) 13.19% 16.49% 15.00% 4.17% 13.30%
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End of
Period (000)........... $112,375 $137,242 $251,725 $290,961 $187,241 $84,016 $39,592 $36,383 $27,646
Ratio of Expenses to
Average Net Assets..... 1.52% 1.39% 1.27% 1.32%++ 1.39% 1.61% 1.42%* 0.40%* 0.00%*
Ratio of Net Investment
Income to Average Net
Assets................. 5.21% 6.55% 8.01% 7.58%++ 7.92% 10.00% 10.27% 9.10% 9.20%
Portfolio Turnover Rate. 269.5% 148.4% 108.6% 44.2% 108.9% 276.1% 289.7% 386.3% 306.0%
</TABLE>
- -----------
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends and
distributions at net asset value during the period and a redemption on the
last day of the period. A sales charge is not reflected in the calculation
of total return. Total returns calculated for a period of less than one
year are not annualized.
(b) Due to a change in the dividend declaration policy, thirteen monthly
dividends were recorded in the fiscal year ended April 30, 1992.
(c) Not covered by Report of Independent Accountants.
* The expense ratios would have been 1.60%, 1.56% and 1.93%, respectively, if
expenses were not assumed by the investment advisor.
+ Based on average shares outstanding.
++ Annualized.
See Notes to Financial Statements.
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Van Eck Funds (the "Trust"), organized as a Massachusetts business trust on
April 3, 1985, is registered under the Investment Company Act of 1940. The
following is a summary of significant accounting policies consistently
followed by the Global Income Fund series (formerly World Income Fund), a non-
diversified fund (the "Fund") of the Trust in the preparation of its financial
statements. On April 25, 1995 all of Global Income Class B shares were
redeemed. The policies are in conformity with generally accepted accounting
principles.
A. SECURITY VALUATION--Securities traded on national exchanges and traded in
the NASDAQ National Market System are valued at the last sales prices
reported at the close of business on the last business day of the period.
Over-the-counter securities not included in the NASDAQ National Market
System and listed securities for which no sale was reported are valued at
the mean of the bid and asked prices. Short-term obligations are valued at
cost which with accrued interest approximates value. Forward foreign
currency contracts are valued at the spot currency rate plus an amount
("points") which reflects the differences in interest rates between the
U.S. and the foreign markets. Securities for which quotations are not
available are stated at fair value as determined by the Board of Trustees.
B. FEDERAL INCOME TAXES--It is the Fund's policy to comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore,
no federal income tax provision is required.
C. CURRENCY TRANSLATION--Assets and liabilities denominated in foreign
currencies and commitments under forward currency contracts are translated
into U.S. dollars at the mean of the quoted bid and asked prices of such
currencies. Purchases and sales of investments are translated at the
exchange rates prevailing when such investments were acquired or sold.
Income and expenses are translated at the exchange rates prevailing when
accrued. Recognized gains or losses attributable to foreign currency
fluctuations on security transactions and other foreign denominated assets
and liabilities are recorded as net realized gains and losses from foreign
currency transactions. The portion of unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange
rates are not separately disclosed.
D.OTHER--Security transactions are accounted for on the date the securities
are purchased or sold. Interest income is accrued as earned.
E.ACCOUNTING CHANGE--Prior to January 1, 1994, the Fund used equalization
accounting to keep a continuing shareholder's per share interest in
undistributed net investment income unaffected by shareholder activity.
This was accomplished by allocating a per share portion of the proceeds
from sales and the cost of redemptions of Fund shares to undistributed net
investment income. As of January 1, 1994, the Fund discontinued using
equalization. This change has no effect on the Fund's net assets, net asset
value per share, or its net decrease in net assets resulting from
operations. Discontinuing the use of book equalization results in simpler
financial statements.
<PAGE>
Global Income Fund
- --------------------------------------------------------------------------------
The cumulative effect of the change was to decrease undistributed net
investment income and increase paid in capital previously reported through
December 31, 1994 by $1,353,116.
F. DISTRIBUTIONS TO SHAREHOLDERS--Distributions from net investment income and
realized gains, if any, are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign
currency transactions. The effect of these differences for the period ended
December 31, 1995, increased undistributed net investment income and
increased cumulative realized losses by $1,608,646.
G. USE OF DERIVATIVES INSTRUMENTS
OPTION CONTRACTS--The Fund may invest, for hedging and other purposes, in call
and put options on securities, currencies and commodities. Call and put options
give the Fund the right but not the obligation to buy (calls) or sell (puts)
the instrument underlying the option at a specified price. The premium paid on
the option, should it be exercised, will, on a call, increase the cost of the
instrument acquired and, on a put, reduce the proceeds received from the sale
of the instrument underlying the option. If the options are not exercised, the
premium paid will be recorded as a capital loss upon expiration. The Fund may
incur additional risk to the extent that the value of the option contract does
not correlate with the movements of the underlying instrument.
The Fund may also write call or put options. As the writer of an option, the
Fund receives a premium. The Fund keeps the premium whether or not the option
is exercised. The premium will be recorded, upon expiration of the option, as a
short-term capital gain. If the option is exercised, the Fund must sell, in the
case of a written call, or buy, in the case of a written put, the underlying
instrument at the exercise price. The Fund may write only covered puts and
calls. A covered call option is an option in which the Fund owns the instrument
underlying the call. A covered call sold by the Fund exposes it during the term
of the option to possible loss of opportunity to realize appreciation in the
market price of the underlying instrument or to possible continued holding of
an underlying instrument which might otherwise have been sold to protect
against a decline in the market price of the underlying instrument. A covered
put exposes the Fund during the term of the option to a decline in price of the
underlying instrument. A put option sold by the Fund is covered when, among
other things, cash or short-term liquid securities are placed in a segregated
account to fulfill the obligations undertaken.
FUTURES CONTRACTS--The Fund may buy and sell financial futures contracts for
hedging purposes. When a Fund enters into a futures contract, it must make an
initial deposit ("initial margin") as a partial guarantee of its performance
under the contract. As the value of the futures contract fluctuates, the Fund
is required to make additional margin payments ("variation margin") to cover
any additional obligation it may have under the contract. In the remote chance
a broker cannot fulfill its obligation, the Fund could lose the variation
margin due to it. Risks may be caused by an imperfect correlation between the
movements in the price of the futures contract and the price of the underlying
instrument and interest rates. Gains and losses on futures contracts are
separately disclosed.
FORWARD CURRENCY CONTRACTS--The Fund may buy and sell forward currency
contracts to settle purchases and sales of foreign denominated securities. In
addition, the Fund may enter into forward currency contracts to hedge foreign
denominated assets. The Fund may incur additional risk from investments in
forward currency contracts if the counterparty is unable to fulfill its
obligations or there are unanticipated movements of the foreign currency
relative to the U.S. dollar. Realized and unrealized gains and losses from
forward currency contracts are included in realized and unrealized gain (loss)
from foreign currency transactions.
NOTE 2--Van Eck Associates Corporation earned fees of $984,254 for the year
ended December 31, 1995 for investment management and advisory services. The
fee is based on an annual rate of .75 of 1% of the first $500 million of
average daily net assets, .65 of 1% on the next $250 million and .50 of 1% of
the excess over $750 million. Van Eck Securities Corporation received $19,771
for the year ended December 31, 1995 from commissions earned on sales of shares
of beneficial interest of the Fund after deducting $98,774 allowed to other
dealers. In accordance with the advisory agreement, the Fund reimbursed Van Eck
Associates Corporation $102,648 for costs incurred in connection with certain
administrative and operating functions. Certain of the officers and trustees of
the Trust are officers, directors or stockholders of Van Eck Associates
Corporation and Van Eck Securities Corporation.
The Fund had some of its portfolio trades directed to a broker-dealer who, in
return, agreed to pay a portion of the Fund's expenses. For the year ended
December 31, 1995, the portion of the Fund's expenses reduced by this directed
brokerage arrangement amounted to $9,095.
NOTE 3--Purchases of investments other than short-term obligations aggregated
$238,228,998 for the year ended December 31, 1995. For federal income tax
purposes the cost of investments owned at December 31, 1995 was $105,997,943.
As of December 31, 1995 net unrealized appreciation for federal income tax
purposes aggregated $2,541,374 of which $2,825,264 related to appreciated
investments and $283,890 related to depreciated investments. As of December 31,
1995, the Fund had capital loss carryforwards available to offset future
capital gains expiring December 31, 2002 of $4,497,043.
NOTE 4--Pursuant to a Plan of Distribution (Rule 12b-1) the Fund accrues fees
of .25 of 1% of the average daily net assets for Class A shares and 1.00% of
average daily net assets for Class B shares. Fees charged for the year ended
December 31, 1995 were $325,122 for Class A Shares and $1,701 for Class B
Shares. The fees are intended to be used principally for payments to securities
dealers who have sold shares and service shareholder accounts of the Fund and
the remainder will be used for other actual promotion and distribution expenses
incurred by Van Eck Securities Corporation, the distributor.
<PAGE>
Global Income Fund
- --------------------------------------------------------------------------------
NOTE 5--Shares of beneficial interest issued and redeemed:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
CLASS A 1995 1994
- ------- ------------ ---------------
<S> <C> <C>
Shares sold 5,291,672 2,665,250
Reinvestment of dividends 607,526 820,165
----------- -----------
5,899,198 3,485,415
Shares reacquired (10,257,545) (14,716,459)
----------- -----------
Net decrease (4,358,347) (11,231,044)
=========== ===========
<CAPTION>
FOR THE
PERIOD
YEAR ENDED MAY 4, 1994* TO
DECEMBER 31, DECEMBER 31,
CLASS B 1995 1994
- ------- ------------ ---------------
<S> <C> <C>
Shares sold 66,146 51,844
Reinvestment of dividends 572 103
----------- -----------
66,718 51,947
Shares reacquired (116,235) (2,430)
----------- -----------
Net increase (decrease) (49,517) 49,517
=========== ===========
</TABLE>
- -------
* Commencement of operations.
NOTE 6--At December 31, 1995 the Fund had the following outstanding forward
foreign currency contracts:
<TABLE>
<CAPTION>
VALUE AT UNREALIZED
SETTLEMENT CURRENT APPRECIATION
CONTRACTS DATE VALUE (DEPRECIATION)
- -------------------------------------- ---------- ---------- --------------
<S> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS:
AUD 3,492,373 expiring 3/20/96 $2,590,992 $2,584,426 $ (6,566)
CHF 11,518,259 expiring 3/20/96 10,129,504 10,062,867 (66,637)
DEM 6,186,388 expiring 3/20/96 4,303,822 4,315,282 11,460
JPY 2,184,587,578 expiring 3/21/96 21,820,128 21,374,166 (445,962)
FOREIGN CURRENCY SALE CONTRACTS:
AUD 7,105,682 expiring 1/02/96-3/20/96 5,268,708 5,268,211 497
DKK 19,653,944 expiring 3/20/96 3,519,059 3,536,542 (17,483)
ESP 568,400,000 expiring 3/20/96 4,579,070 4,633,759 (54,689)
IEP 1,203,324 expiring 3/20/96 1,917,015 1,924,007 (6,992)
NLG 11,310,612 expiring 3/20/96 7,044,301 7,065,864 (21,563)
---------
$(607,935)
=========
</TABLE>
NOTE 7--Under normal market conditions, the Fund expects to invest at least 65%
of its assets in debt securities. There is no limit on the amount the Fund can
invest in any one country or securities denominated in the currency of any one
country. Normally, the Fund will invest in at least three countries besides the
United States. Investments in foreign securities may involve a greater degree
of risk than investments in domestic securities due to political, economic or
social instability. Foreign investments may also be subject to foreign taxes
and settlement delays.
The market value of debt securities generally varies in response to interest
rates and the financial condition of the issuer. Generally, the value of debt
securities will increase when interest rates decline and decrease when interest
rates rise.
Since the Fund may concentrate its investments in foreign debt securities, it
may be subject to greater credit risks and greater market and currency
fluctuations than portfolios invested solely in domestic debt securities.
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of
Trustees of the Van Eck Funds:
We have audited the accompanying statement of assets and liabilities, including
the investment portfolio, of the Global Income Fund (the "Fund") (formerly the
World Income Fund), (one of the series constituting the Van Eck Funds) as of
December 31, 1995, 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 each of the three years in
the period then ended, the eight-month period ended December 31, 1992 and the
periods ended April 30, 1992 and 1991. These financial statements and financial
highlights are the responsibility of the Fund's 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. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. 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 the
Global Income Fund series of the Van Eck Funds as of December 31, 1995, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated above, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 23, 1996
<PAGE>
DECEMBER 31, 1995
Van Eck
- --------------------
Global
- --------------------
Income
- --------------------
Fund
- --------------------
Annual
- --------------------
Report
- --------------------
[LOGO OF VAN ECK GLOBAL]
Van Eck Global
THE UNUSUAL FUNDS/sm/
Van Eck Family of Funds
- --------------------------------------------------------------------------------
Global Hard Assets Fund
Seeks long-term capital appreciation by investing globally, primarily in "Hard
Asset Securities". Income is a secondary consideration.
International Investors Gold Fund
Founded in 1955, this Fund is the oldest gold-oriented mutual fund in the U.S.
It invests in gold-mining shares globally and seeks long-term capital
appreciation, moderate yield and protection against monetary uncertainties.
Gold/Resources Fund
Seeking a long-term global hedge against inflation and other risks, this Fund
invests in gold-mining and natural resources companies outside South Africa.
Gold Opportunity Fund
Seeks capital appreciation by investing globally in equity securities of
companies engaged in the exploration, development, production and distribution
of gold and other precious metals, and through active asset allocation between
gold-related assets and cash instruments.
Asia Dynasty Fund
This Fund seeks long-term capital appreciation by investing in the equity
securities of companies that are expected to benefit from the development and
growth of the economies in the Asia Region. AIG Global Investment Corp. serves
as sub-investment advisor to this Fund.
Asia Infrastructure Fund
Seeks long-term capital appreciation by investing in the equity securities of
infrastructure companies that are expected to benefit from the development and
growth of the economies in the Asia Region. AIG Global Investment Corp. serves
as sub-investment advisor to this Fund.
Global Balanced Fund
This Fund seeks long-term capital appreciation together with current income by
investing in stocks, bonds and money market instruments worldwide. Fiduciary
International, Inc. serves as sub-investment advisor to this Fund.
Global Income Fund
This Fund seeks high total return through a flexible policy of investing
globally, primarily in debt securities.
U.S. Government Money Fund
This Fund seeks the highest safety of principal and daily liquidity by investing
in U.S. Treasury bills and repurchase agreements collateralized by U.S.
Government obligations.
- --------------------------------------------------------------------------------
This report must be accompanied or preceded by a Van Eck Global 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. For a free
Van Eck Gold & Money Funds prospectus, please call the number listed below.
Please read the prospectus before investing.
[LOGO OF VAN ECK GLOBAL]
Van Eck Global
THE UNUSUAL FUNDS/sm/
Van Eck Securities Corporation
99 Park Avenue, New York, N.Y. 10016
For account assistance please call (800) 544-4653
B96-0117-012
