VAN ECK GOLD/RESOURCES FUND
---------------------------
1995 ANNUAL REPORT
Dear Fellow Shareholder:
During 1995, your Fund's net asset value rose 4.3% compared to the sector
average of 2.5%*. During the same period, the price of gold bullion rose just
1%, reflecting the low volatility in the gold price that characterized most of
the year. However, that low price volatility masked a great deal of activity in
a very healthy market supported on the downside by strong physical demand,
particularly from emerging markets, but capped on the upside by very heavy
forward sales from mining companies and by central bank selling. These two
factors kept the gold price in an ever-narrowing trading range. This seeming
quietude, in turn, discouraged investment buying in the West, where soaring
financial assets were the major attraction.
By November, the producer forward selling led to such demand for bullion by
dealers [who need to borrow gold to cover their (long) exposure as counterparty
to the producers' forward (short) sales] that overnight gold lease rates charged
on borrowed gold rose to 12% from their more normal 2-3%, which sent gold into
backwardation (i.e., when forward prices are lower than the spot price) for the
first time in 20 years. The surge in lease rates drew attention not only to the
short-term shortage of bullion, but also to its longer-term healthy fundamentals
- -- declining mine production, growing fabrication demand (jewelry, coins, etc.),
and the greatly reduced benefits of forward selling to producers now that the
forward premium for a one-year contract is about 3% versus about 6% a year ago.
Since forward selling has been probably the single most negative weight on the
market, any let-up in these supplies would likely be very positive for the gold
price. Gold shares put in very mixed performances in 1995, declining on average
26% in South Africa and 7% in Australia, but rising about 10% in North America.
The weakness in the Australian gold-mining index last year belied a very robust
performance by the shares of several companies whose managements succeeded in
adding to reserves either by acquisition (e.g., Sons of Gwalia Ltd.) or by
exploration (Plutonic Resources Limited) or who were the subject of takeovers
(Zapopan N.L., Homestake Gold of Australia Limited, Gold Mines of Kalgoorlie
Ltd.). The laggards typically were those companies suffering the lingering
effects of Cyclone Bobbie last spring or other operating disappointments. We
continue to believe Australia offers some of the best exploration potential
worldwide, particularly from those companies beginning to venture into West
Africa and Indonesia. In addition, the Australian industry is in a consolidation
phase and the potential for shareholder gains from corporate activity has added
a further positive dimension to investment there. At year-end 1995, your Fund
was 23% invested in Australian gold shares.
In the U.S., the investment climate continued to be dominated by environmental
concerns and permitting delays on the negative side and additions to reserves on
the positive. Newmont Mining Corp. shares were among the best performers as
management has plotted an aggressive course for growing production and proving
up reserves. Your Fund was 32% invested in U.S. gold shares at year end.
Last year saw a number of "turnaround" situations in Canada regain favor among
investors (Echo Bay Mines Ltd., Pegasus Gold Inc.) among the large-cap
companies, while a few smaller names (Dayton Mining Corp., Bema Gold Corp.)
benefited from anticipation of the start-up of new mines. Companies with
positions in Venezuela suffered from the ongoing reluctance of that government
to propose a new mining code that would give clear title and make the economics
of investing there attractive. It is hoped the situation will be resolved this
year. At year-end 1995, Canadian shares made up 41% of your Fund.
GOLD IS UNDERVALUED
Since 1989, there has been a fundamental shortage of gold caused by a much
greater private demand for gold from fabricators and investors than supply from
newly-mined gold and scrap recovery. This shortage has been met by direct sales
of gold from central banks, sales of gold originating from mine forward sales
and option hedging. These sales were large and have put pressure on the gold
price.
The price of gold averaged $384 an ounce in 1995 and it traded in an unusually
narrow range from $371.50 to $395.20 an ounce. It thus continued its lackluster
performance which began in 1989. With 1989 as a base, the gold price is
<PAGE>
- --------------------------------------------------------------------------------
Global Gold Supply, Demand and Price
(metric tons)
1990 1991 1992 1993 1994 1995
- --------------------------------------------------------------------------------
FUNDAMENTAL
Demand (fabrication,
Asiatic bar investment and 3087 2860 3488 3461 3104 3618
net Western investment)
Supply (mine production, 2671 2631 2714 2853 2885 2858
old gold scrap) -----------------------------------------
Supply Shortage 416 229 774 608 219 760
=========================================
WHICH WAS MET BY:
CENTRAL BANKS
Net Additional Mine
Forward Sales, Option
Hedging and Gold Loans 229 111 172 110 133 621
(largely through central
bank loans)
Net Sales 187 118 602 498 86 139
-----------------------------------------
Net Central Bank Supply 416 229 774 608 219 760
=========================================
Average Gold Price $384 $362 $344 $360 $384 $384
U.S. Consumer Price Index 130.7 136.2 140.3 144.5 148.2 152.5
Sources: "Gold 1995," Gold Fields Mineral Services, Ltd.
Department of Commerce
- --------------------------------------------------------------------------------
undervalued compared to the U.S. Consumer Price Index. The latter has risen 23%
since 1989 while the price of gold was flat through the end of the year.
As indicated in the chart above, the demand for gold rose approximately 17% in
1995 and mine production remained flat. Demand is estimated to be about 27%
greater than supply. This increase in demand was partially met by the over
four-fold increase in mine forward sales and option hedging. These factors more
or less offset each other so there was little change in the spot price. However,
the growing demand for leased gold from the mine selling programs pushed up the
central bank lease rate in November to a peak and almost crisis level as shown
in the adjacent graph. This was accompanied by a decline in the annual contango
premium from about 6% in December 1994 to approximately 3% at present, which
lowered related forward prices. For instance, the December 1998 gold contract,
which was priced at $505 in December 1994 is now selling at about $434.50 an
ounce (at January 25). The lower relative forward prices reduce the
attractiveness of forward sales to the mines.
GOLD MINE FORWARD SALES
Many gold mines sell a portion of their gold to bullion banks at future prices,
which carry a premium (called a contango) over current (spot) prices, so that
they can lock in the higher prices for future sales. The bullion banks purchase
the forward contracts from the mines over long periods ahead and pay for the
transaction by leasing the gold (usually for a three-month period) from central
banks, by selling the leased gold on the spot market and by investing the
proceeds at an interest rate to cover the cost of the lease rate and the
contango premium. The bullion banks usually have to roll over their three-month
leased gold with the central banks to meet the longer terms of their contracts
with the mines. The transaction is concluded when the mine delivers the mined
gold to the bullion bank, which in turn settles its lease with the central
banks.
LONG-RUN INFLATIONARY CYCLE
The monetary seeds of the next inflation cycle are being sown. In spite of
relatively tight money policies in the United States (high real interest rates
and reduced monetization of government debt), total global cash outstanding last
year grew by approximately 26%, largely caused by Japanese purchases of U.S.
Government debt. The political drive to reduce government deficits in the United
States, and in Europe to achieve European Monetary Union fiscal objectives,
means that these deflationary forces must be balanced by more expansive monetary
policies. Such policies will also be required to offset a period of global
economic weakness. The Federal Reserve has already reversed its tight policy by
quarter-point federal funds cuts in July and December and by reversing its tight
open market operations. Eleven European nations lowered interest rates in
- --------------------------------------------------------------------------------
<PAGE>
Gold 3-Month Lease Rates
1/1 to 12/31/95
1/1/95 1.0675 1/31/95 1.3
1.0075 1.31
0.9575 1.3225
1.0075 1.25
0.965 1.32
0.975 1.31
1.125 1.26
1 1.22
0.8975 1.21
0.8775 1.1175
0.895 1.16
0.905 1.19
0.908 1.25
1.033 1.1975
1.003 1.1875
0.99 1.1875
1.04 1.1575
1.25 1.185
1.303 1.215
1.283 1.3175
1.32
2/28/95 1.8475 3/31/95 1.4975
1.4675 1.47
1.5475 1.36
1.5975 1.3175
1.6075 1.2575
1.57 1.2175
1.52 1.1075
1.52 1.0475
1.55 1.0075
1.61 0.9275
1.5875 0.9275
1.6175 0.9275
1.6475 0.9175
1.6175 0.8975
1.9275 0.8975
1.7775 0.9775
1.6675 0.955
1.6975 0.975
1.6875 0.985
1.6775 0.985
1.6775
1.73
1.68
4/28/95 0.965 5/31/95 0.89
0.985 0.88
0.965 0.8175
0.935 0.8125
0.955 0.845
0.955 0.815
0.955 0.83
0.9425 0.79
0.98 0.79
0.99 0.78
1.01 0.82
1.0525 0.7575
1.0625 0.81
1.0325 0.8
1.0725 0.7675
1.0425 0.8375
1.0225 0.9175
0.9825 1.015
0.9725 1.035
1.0125 1.0775
0.97 1.1775
0.97 1.1375
0.95
6/30/95 1.0675 7/31/95 1.22
1.0975 1.3
1.1075 1.3
1.1775 1.38
1.2875 1.6025
1.4675 1.5625
1.3575 1.4125
1.2125 1.4125
1.0875 1.4025
1.13 1.4125
1.03 1.515
1.0925 1.475
1.0825 1.455
1.0725 1.465
1.175 1.475
1.175 1.425
1.155 1.5175
1.205 1.425
1.2925 1.5375
1.2925 1.4425
1.21 1.4425
1.42
1.5125
8/31/95 1.5125 9/29/95 1.7925
1.5225 1.8025
1.5225 1.7825
1.52 1.825
1.6125 1.845
1.5925 1.8525
1.5725 1.8625
1.5425 1.9238
1.44 1.8738
1.5025 1.9025
1.42 1.8025
1.44 1.9625
1.45 1.9938
1.4144 2.1438
1.45 2.225
1.3775 2.2938
1.45 2.3238
1.5175 2.2713
1.5375 2.2313
1.68 2.325
1.75 2.375
2.265
10/31/95 2.2438 11/30/95 4.0913
2.2938 4.1488
2.23 3.5588
2.2813 3.2088
2.25 2.7931
2.25 2.8675
2.5 2.8788
2.7913 2.88
3.0113 2.8688
3.0213 2.8075
3.0013 2.8588
2.85 3.0188
3.3813 3.0688
3.5313 3.3975
3.28 3.0625
3.1813 3.0725
3.0813 3.0538
3.5175 3.0538
3.64 3.0538
4.2113 3.0938
5.5213 2.6613
5.2913
12/29/95 2.5413
Source: Bloomberg
- --------------------------------------------------------------------------------
<PAGE>
December. We expect these trends, as well as Japanese easy money, to continue
this year. In our opinion, increased monetary liquidity will eventually be
followed by higher inflation.
Already, there are signs of an incipient build-up of inflationary forces. In the
United States, money supply (M3) has already turned up. Commodity prices, which
have apparently gone through a "mid-cycle" correction owing to the effects of
central bank tightening in 1994, have broken out on the upside. The Boeing labor
settlement may be the forerunner of climbing labor costs. It raises wages 6 1/2%
a year on average for the next four years. As the business cycle resumes its
growth, labor costs and consumer prices normally start to grow.
DEFLATIONARY SCENARIO
Even though we believe that the probabilities favor an inflationary scenario
over the near future, there is always the possibility that serious deflationary
pressures may prevail. The speculation in stocks and bonds may be peaking.
Households may be dragged down by excessive debt. Growing competition may drive
down corporate profits. The huge and rapidly growing amount of financial
derivatives, which has recently doubled to over $40 trillion, highlights the
possible risk of systemic failure in the economy. Investors may become concerned
about financial risks and seek to reduce debt and to liquefy their portfolios.
Historically, as paper assets lose value, gold becomes the dominant store of
value. In four out of the last five long periods of financial and economic
contraction, the purchasing power of gold rose for at least three years after
the bust, and in some cases much longer.
CONCLUSION
In our opinion, the shock of the November 1995 peak in the gold lease rates,
together with the reduced attractiveness to the mines of forward sales, will
lead to lower and even eventual zero growth in mine forward selling. With this
pressure gradually removed from the market, the fundamental supply shortage will
be met through higher prices driving down elastic fabrication demand. Thus,
gold's undervaluation compared to consumer prices should be corrected.
Renewed easing global monetary policies will, in our opinion, restimulate the
world's economy to reverse its current slowdown and to resume its longer-term
upward path. An unexpected resurgence of demand could again put commodity and
consumer prices and labor costs on an upward path. An eventual inflationary
outcome cannot be excluded as the business cycle progresses.
We initially expect a decline in mine forward sales and net central bank direct
sales to start the next upward gold price trend. This may have begun with the
move in the spot price from $387.60 an ounce at the end of 1995 to $406.60 an
ounce in late January 1996. Subsequently, rising inflationary expectations (or
an unexpected deflationary outcome) may cause substantial investment
diversification into gold, causing a typical exponential upward move in gold
prices lasting several years, such as has been experienced in earlier gold
cycles. Gold is an asset class that tends to move contrarily to other asset
classes. This makes diversification of an investment portfolio into gold or
gold-mining shares prudent and even optimal at times, in our opinion.
We appreciate your participation in the Gold/Resources Fund and we look forward
to helping you meet your investment objectives in the future.
- --------------- ---------------
[PHOTO OF] [PHOTO OF]
- --------------- ---------------
JOHN C. VAN ECK LUCILLE PALERMO
CHAIRMAN PRESIDENT
January 25, 1996
- --------------------------------------------------------------------------------
PERFORMANCE RECORD AS OF 12/31/95
- --------------------------------------------------------------------------------
AVERAGE ANNUAL AFTER MAXIMUM BEFORE
TOTAL RETURN SALES CHARGE OF 5.75% SALES CHARGE
- --------------------------------------------------------------------------------
Life (since 2/15/86) 5.7% 6.4%
- --------------------------------------------------------------------------------
5 year 6.2% 7.5%
- --------------------------------------------------------------------------------
1 year (1.8)% 4.3%
- --------------------------------------------------------------------------------
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.
Note:C shares are no longer publicly offered.
* For the 33 precious metals funds monitored by Micropal Inc., a mutual fund
evaluation service.
<PAGE>
GOLD / RESOURCES FUND
INVESTMENT PORTFOLIO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
NO. OF SHARES SECURITIES(B) VALUE (NOTE 1)
- --------------------------------------------------------------------------------
AUSTRALIA: 22.9%
215,000 Acacia Resources Ltd.+ $ 386,453
550,000 Australian Resources Ltd. 559,662
763,500 Delta Gold N.L.+ 1,848,712
363,600 Dominion Mining Ltd. 189,045
200,000 Emperor Mines Ltd.+ 319,382
300,000 Ghana Gold Mines Ltd.+ 91,358
400,000 Ghana Gold Mines Ltd
(Call Option Expiring 6/30/97)+ 81,702
378,300 Gold Mines of Kalgoorlie Ltd. 351,228
1,000,000 Golden Shamrock Mines Ltd.+ 616,482
825,000 Great Central Mines N.L.+ 1,593,199
184,500 Herald Resources Ltd. 182,945
407,733 Jason Mining Ltd.+ 31,799
662,700 Macraes Mining Company Ltd. 910,608
650,000 Mount Burgess Gold Mining Company N.L.+ 125,525
1,065,000 Newcrest Mining Ltd. 4,477,223
1,383,400 Placer Pacific Ltd. 2,856,506
3,246,000 Plutonic Resources Ltd. 15,430,186
321,428 Resolute Samantha Gold N.L. (c) 680,411
789,400 Sons of Gwalia Ltd. 4,338,819
599,000 St. Barbara Mines Ltd. 369,273
400,000 Wiluna Mines Ltd.+ 412,969
-----------
35,853,487
-----------
CANADA: 40.5%
50,000 Agnico-Eagle Mines Ltd. 631,250
725,000 Barrick Gold Corp. 19,121,875
83,400 Bema Gold Corp.+ 161,882
92,000 Bolivar Goldfields Ltd.+ 50,540
90,000 Cathedral Gold Corp.+ 98,883
111,141 Dakota Mining Corp.+ 166,712
682,100 Dayton Mining Corp.+ 2,872,789
390,000 Echo Bay Mines Ltd. 4,046,250
493,100 El Callao Mining Corp.+ 216,708
50,000 Golden Star Resources Ltd.+ 265,519
100,000 Granges Inc.+ 164,805
636,400 Hemlo Gold Mines Inc. 5,966,250
150,000 International Gold Resources Corp.+ 395,532
320,800 Miramar Mining Corp.+ 1,586,083
330,000 Pegasus Gold Inc.+ 4,578,750
250,000 Placer Dome Inc. 6,031,250
335,000 Prime Resource Group Inc.+ 2,300,403
112,530 Queenstake Resources Ltd.+ 41,212
95,000 Rayrock Yellowknife Resources, Inc.+ 713,239
415,000 Richmont Mines Inc.+ 1,094,305
200,000 Royal Oak Mines Inc.+ 712,500
270,000 Solitario Resources Corp.+ 395,532
240,000 Teck Corporation (Class B) 4,680,461
135,000 Texas Star Resources Corp.+ 29,665
200,000 Texas Star Resources Corp. Cv Bond
8.0%, 11/16/96* 102,205
498,800 Treminco Resources Ltd. (a)+ 255,748
745,000 TVX Gold Inc.+ 5,308,125
320,100 Viceroy Resource Corp.+ 1,406,775
-----------
63,395,248
-----------
<PAGE>
NO. OF SHARES SECURITIES(B) VALUE (NOTE 1)
- ------------------------------------------------------------------------------
GHANA: 1.1%
84,000 Ashanti Goldfields Company Ltd. (GDR) $ 1,690,500
-----------
NETHERLANDS: 1.0%
10,000 Royal Dutch Petroleum Co. 1,411,250
-----------
UNITED STATES: 31.7%
550,000 Battle Mountain Gold Co. (Class A) 4,606,250
380,000 Canyon Resources Corp.+ 926,250
100,000 Canyon Resources Corp.
(Warrants Expiring 3/31/96)+ 15,630
152,000 Coeur D'Alene Mines Corp. 2,603,000
303,700 Crown Resources Corp.+ 1,499,519
152,900 FMC Gold Co. 630,713
359,000 Freeport- McMoran Copper & Gold Inc. (Class A) 10,052,000
675,000 Homestake Mining Corp. 10,546,875
200,000 Newmont Gold Co. 8,750,000
128,569 Newmont Mining Corp. 5,817,747
1,000,000 Piedmont Mining Co., Inc. (a)+ 406,300
120,200 Santa Fe Pacific Gold Corp. 1,457,425
22,200 Stillwater Mining Co.+ 427,350
895,000 USMX, Inc. (a)+ 1,762,076
-----------
49,501,135
-----------
TOTAL STOCKS & OTHER INVESTMENTS: 97.2%
(Cost $112,762,867) 151,851,620
-----------
PRINC. AMT. SHORT-TERM OBLIGATIONS - 2.8%
- -------------------------------------------------------
$4,390,000 General Electric Capital Corp. Commercial Paper
Due 1/2/96
Interest Yield of 5.55%
(Amortized Cost $4,389,323) 4,389,323
-----------
TOTAL INVESTMENTS: 100% (Cost: $117,152,190) $156,240,943
===========
- ----------
* Fair value as determined by the Board of Trustees.
a Investment in companies of 5% or more whose outstanding voting securities
are held by the Fund (such are defined as "Affiliated Companies" in the
Investment Company Act of 1940) (Note 2).
b Unless otherwise indicated, securities owned are shares of common stock.
c Formerly Samantha Gold N.L.
+ Non-income producing.
SUMMARY OF
INVESTMENTS % OF
BY INDUSTRY PORTFOLIO
- ---------- --------
Gold and Silver 86.5%
Diversified Metals 9.4%
Oil Integrated - International 0.9%
Platinum 0.3%
Diamonds 0.1%
Commercial Paper 2.8%
------
100.0%
======
See Notes to Financial Statements.
<PAGE>
GOLD/RESOURCES FUND FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
ASSETS:
Investments at value (cost, $117,152,190) (Note 1) $156,240,943
Cash 208,270
Receivables:
Dividends 367,067
Securities sold 51,168
Capital shares sold 36,530
Interest 13,196
Other assets 2,755
-----------
Total assets 156,919,929
-----------
LIABILITIES:
Payables:
Capital shares redeemed 588,289
Accounts payable 357,264
-----------
Total liabilities 945,553
-----------
NET ASSETS $155,974,376
===========
CLASS A
Net asset value and redemption price per share
($155,974,376/27,960,497) $5.58
=====
Maximum offering price per share
(NAV/(1-maximum sales commission)) $5.92
=====
Net assets consist of:
Aggregate paid in capital $199,426,911
Unrealized appreciation of investments
and foreign currency 39,088,994
Distributions in excess of net
investment income (671,349)
Cumulative realized losses (81,870,180)
-----------
$155,974,376
===========
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995 INCOME:
Dividends (less foreign taxes withheld of $138,934) $ 2,022,377
Interest income 383,575
-----------
Total income $ 2,405,952
EXPENSES:
Management (Note 3) $1,317,580
Distribution Class A (Note 5) 439,817
Distribution Class C (Note 5) 128
Administrative (Note 3) 513,763
Transfer agent 488,515
Custody 107,455
Registration 24,984
Professional 84,114
Reports to shareholders 37,653
Trustees fees 29,711
Other 139,032
-----------
Total expenses 3,182,752
-----------
Net investment loss (776,800)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 4)
Realized gain from security transactions (excluding short-term securities):
Proceeds from sales 40,717,041
Cost of securities sold 31,642,719
-----------
Realized gain 9,074,322
Realized loss from options (65,625)
Realized gain from foreign currency transactions 622
Change in unrealized appreciation of foreign
denominated receivables and payables 241
Change in unrealized appreciation of investments 1,142,851
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 9,375,611
===========
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS For the Years Ended December 31, 1995 and
1994
1995 1994
----- -----
INCREASE IN NET ASSETS:
Operations:
Net investment loss $ (776,800) $ (620,843)
Realized gain from
security transactions 9,074,322 2,799,408
Realized loss from options (65,625) --
Realized gain from foreign
currency transactions 622 699
Change in unrealized
appreciation of foreign
denominated receivables
and payables 241 --
Change in unrealized appreciation of
investments 1,142,851 (37,317,543)
----------- -----------
Increase (decrease)
in net assets resulting
from operations 9,375,611 (35,138,279)
----------- -----------
Capital share transactions:*
Net proceeds from sales of shares
Class A Shares 172,364,530 365,914,741
Class C Shares 47,982 28,235
----------- -----------
172,412,512 365,942,976
----------- -----------
Cost of shares reacquired
Class A Shares (211,854,936) (356,135,757)
Class C Shares (77,390) --
----------- -----------
(211,932,326) (356,135,757)
----------- -----------
Increase (decrease) in net assets
resulting from capital share
transactions (39,519,814) 9,807,219
----------- -----------
Total decrease
in net assets (30,144,203) (25,331,060)
NET ASSETS:
Beginning of year 186,118,579 211,449,639
----------- -----------
End of year (including distributions
in excess of net investment income
of $671,349) $155,974,376 $186,118,579
=========== ===========
*SHARES OF BENEFICIAL INTEREST
ISSUED AND REDEEMED
(UNLIMITED NUMBER OF $.001
PAR VALUE SHARES AUTHORIZED)
CLASS A CLASS A
----------- -----------
Shares sold 33,182,418 61,176,069
Shares reacquired (40,012,589) (59,739,368)
----------- -----------
Net increase (decrease) (6,830,171) 1,436,701
=========== ===========
CLASS C CLASS C
----------- -----------
Shares sold 9,917 5,080
Shares reacquired (14,997) --
----------- -----------
Net increase (decrease) (5,080) 5,080
=========== ===========
See Notes to Financial Statements.
<PAGE>
GOLD / RESOURCES FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period ....................... $5.35 $6.34 $3.56 $3.73 $3.90
----- ----- ----- ----- -----
Income from Investment
Operations:
Net Investment Income (Loss) (0.03) (0.02) (0.014) 0.002 0.010
Net Gains (Loss) on
Securities (both realized
and unrealized) ............... 0.26 (0.97) 2.794 (0.170) (0.169)
----- ----- ----- ----- -----
Total from Investment
Operations ...................... 0.23 (0.99) 2.780 (0.168) (0.159)
----- ----- ----- ----- -----
Less Distributions:
Dividends from Net
Investment Income (a).......... -- -- -- (0.002) (0.011)
----- ----- ----- ----- -----
Net Asset Value, End of Period .... $5.58 $5.35 $6.34 $3.56 $3.73
===== ===== ===== ===== =====
Total Return (b)................... 4.3% (15.6%) 78.09% (4.50%) (4.07%)
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTARY DATA
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period (000) ... $155,974 $186,091 $211,450 $114,257 $136,288
Ratio of Expenses to
Average Net Assets (c) .......... 1.81% 1.52% 1.39% 1.57% 1.62%
Ratio of Net Income (Loss) to
Average Net Assets .............. (0.44) (0.30%) (0.29%) 0.07% 0.27%
Portfolio Turnover Rate ........... 6.16% 13.75% 7.79% 0.93% 7.89%
</TABLE>
FINANCIAL HIGHLIGHTS (cont'd)
For a share outstanding throughout each period
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1990(D) 1989(D) 1988(D) 1987(D) 1986+(D)
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period ....................... $5.33 $4.49 $5.72 $3.90 $3.08
----- ----- ----- ----- ---------
Income from Investment
Operations:
Net Investment Income (Loss) 0.025 0.002 0.01 0.02 --
Net Gains (Loss) on
Securities (both realized
and unrealized) ............... (1.430) 0.846 (1.23) 1.82 0.82
----- ----- ----- ----- ---------
Total from Investment
Operations ...................... (1.405) 0.848 (1.22) 1.84 0.82
----- ----- ----- ----- ---------
Less Distributions:
Dividends from Net
Investment Income (a).......... (0.025) (0.008) (0.01) (0.02) --
----- ----- ----- ----- ---------
Net Asset Value, End of Period .... $3.90 $5.33 $4.49 $5.72 $3.90
===== ===== ===== ===== =========
Total Return (b)................... (26.36%) 18.90% (21.30%) 47.30% 26.38%
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTARY DATA
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period (000) ... $175,171 $252,860 $228,558 $252,717 $38,691
Ratio of Expenses to
Average Net Assets (c) .......... 1.44% 1.48% 1.39% 1.27% 1.52%*
Ratio of Net Income (Loss) to
Average Net Assets .............. 0.57% 0.04% 0.23% 0.39% (0.02%)*
Portfolio Turnover Rate ........... 12.12% 4.17% 1.59% 1.99% --
</TABLE>
- ----------
(a) Net of foreign taxes withheld (to be included in income and claimed as a
tax credit or deduction by the shareholder for federal income tax purposes)
of $.0060 for 1992, $.0080 for 1991, $.0083 for 1990, $.0070 for 1989,
$.0051 for 1988 and $.0237 for 1987.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends at
net asset value during the period and a redemption on the last day of the
period. A sales charge is not reflected in the calculation of total
return. Total return calculated for a period of less than one year is not
annualized.
(c) Had the advisor not reimbursed expenses, the 1986 expense ratio would have
been 1.55%.
(d) Not covered by Report of Independent Accountants.
* Annualized.
+ From February 15, 1986 (commencement of operations) to December 31, 1986.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
<PAGE>
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 Gold/Resources Fund series, a diversified fund (the "Fund") of the Trust
in the preparation of its financial statements. All of Gold/Resources Fund Class
C shares were redeemed on May 4, 1995. The policies are in conformity with
generally accepted accounting principles. The preparation of financial
statements in conformity with generally accepted accounting principles requires
the use of management's estimates and the actual results could differ.
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. Direct investments in gold bullion
are valued at the mean of the bid and asked price quoted by a major
commodity dealer. Short-term obligations are valued at cost which with
accrued interest approximates value. 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. ACCOUNTING CHANGE--Prior to July 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 July 1, 1994, the Fund discontinued using
equalization. This change has no effect on the Fund's net assets, net asset
value per share, its net decrease in net assets resulting from operations,
undistributed net investment income or paid in capital. Discontinuing the
use of equalization results in simpler financial statements.
D. 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 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. The portion of realized and unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange
rates are not separately disclosed. Recognized gains or losses attributable
to foreign currency fluctuations on foreign denominated assets and
liabilities are recorded as net realized gains and losses from foreign
currency transactions.
E. DISTRIBUTION TO SHAREHOLDERS -- Distributions from net investment income
and realized gains, if any, are recorded on the ex-dividend date. Income
distributions 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, net operating losses, and
unrealized income from passive foreign investment companies. The effect of
these differences for the year ended December 31, 1995 decreased
distributions in excess of net investment income by $105,451, decreased
cumulative realized losses by $27,424 and decreased aggregate paid in
capital by $132,875.
F. OTHER -- Security transactions are accounted for on the date the
securities are purchased or sold. Dividend income is recorded on the
ex-dividend date net of withholding taxes. Interest income is accrued as
earned.
G. OPTION CONTRACTS -- The Fund may invest, for hedging purposes only, in call
and put options on securities, foreign 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 the value of the underlying instrument does not correlate with the
anticipated movements of the option values.
<PAGE>
NOTE 2 -- The market value of investments in affiliates (as defined in the
Investment Company Act of 1940) at December 31, 1995 aggregated $2,424,124. The
Fund did not earn any dividend income from its investments in affiliates.
NOTE 3 -- Van Eck Associates Corporation earned fees of $1,317,580 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 $64,047 for the year
ended December 31, 1995 from commissions earned on sales of Class A shares of
beneficial interest of the Fund after deducting $274,644 allowed to other
dealers. Van Eck Associates Corp. earned a fee of $513,763 for costs incurred in
connection with certain administrative and operational functions. The fee is
based on an annual rate of .25 of 1% on the first $750 million of average net
assets and .20 of 1% of the excess over $750 million. Certain of the officers
and trustees of the Trust are officers, directors or stockholders of Van Eck
Associates Corporation and Van Eck Securities Corporation.
NOTE 4 -- Purchases of investments other than short-term obligations aggregated
$10,115,841 for the year ended December 31, 1995. For federal income tax
purposes the cost of investments owned at December 31, 1995 was $117,823,539. As
of December 31, 1995 net unrealized appreciation for federal income tax purposes
aggregated $38,417,404 of which $59,934,264 related to appreciated investments
and $21,516,860 related to depreciated investments. At December 31, 1995 the
Fund had capital loss carryforwards available to offset future capital gains
expiring December 31, 1997, 1998, 1999, 2000 of $7,318,699, $35,251,632,
$31,737,707 and $7,559,449, respectively.
NOTE 5 -- Pursuant to a Rule 12b-1 Plan of Distribution (the "Plan"), the Fund
accrues fees of .25 of 1% of average daily net assets of the Fund. The fees are
intended to be used principally for payments to securities dealers who have sold
shares and service shareholder accounts and payments to Van Eck Securities
Corporation ("VESC"), the distributor, for reimbursement of other actual
promotion and distribution expenses incurred by the distributor on behalf of the
Fund.
NOTE 6 -- The Fund invests in foreign securities. Investments in foreign
securities may involve a greater degree of risk than investments in domestic
securities due to political, economic or social instability. In addition, some
foreign companies are not generally subject to the same uniform accounting,
auditing and financial rules as are American companies, and there may be less
government supervision and regulation. Foreign investments may also be subject
to foreign taxes, dividend collection fees and settlement delays.
The Fund may concentrate its investments in companies which are significantly
engaged in the exploration, development, production or distribution of gold and
other metals, minerals, oil, natural gas and coal and by investing in gold
bullion and coins. Since the Fund may so concentrate, it may be subject to
greater risks and market fluctuations than other more diversified portfolios.
The production and marketing of gold and other natural resources may be affected
by actions and changes in governments. In addition, gold and natural reources
securities may be cyclical in nature.
- --------------------------------------------------------------------------------
<PAGE>
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 Gold/Resources Fund (the "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 five years in the period then ended. 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 audits 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 Gold/Resources 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 five years in
the period then ended, in conformity with generally accepted accounting
principles.
New York, New York COOPERS & LYBRAND L.L.P.
February 14, 1996
<PAGE>
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 Gold and Money 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 Global Funds prospectus, please call the number
listed below. Please read the prospectus before investing.
Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016
FOR ACCOUNT ASSISTANCE PLEASE CALL (800) 544-4653
DECEMBER 31, 1995
VAN ECK
GOLD/
RESOURCES
FUND
ANNUAL
REPORT
[LOGO]
X96-0130-006
