<PAGE>
Van Eck Gold Opportunity Fund
--------------------------------------
1996 Annual Report
Dear Fellow Shareholder:
Despite a 5% decline in the price of gold bullion during 1996 to $367.70 an
ounce, your Fund gained 5.3% for the year, aided by investor appetite for the
shares of gold-mining companies that were announcing attractive exploration
results in Latin America, Indonesia and other prospective geological regions.
Two key factors contributed to the downturn in gold's price in the first half
of the year: fears of continued central bank selling after Belgium's sale of
200 tonnes in the first quarter and a proposal that the International Monetary
Fund (IMF) sell gold reserves to finance loans to third-world countries.
In the second half of the year, concerns over renewed producer selling and lack
of investment demand due to the strong run by financial assets also put
pressure on gold's price. More importantly, data from the New York Commodity
Exchange (COMEX) on open interest in gold futures contracts and the Commitment
of Traders Report appeared to indicate that speculators were shorting huge
volumes of gold futures to capitalize on negative investment sentiment. This
strategy enabled speculators to override--at least temporarily--gold's
fundamental strength, such as the large deficit in the physical market between
annual mine production and scrap on the supply side, and fabrication use
(mostly jewelry) on the demand side.
In this environment, gold shares worldwide recorded mixed investment results.
In North America, the Toronto Gold and Silver Index rose 8.1% in U.S. dollars,
while the XAU Index, which includes U.S. and Canadian stocks, fell 3.0%. The
Australian Gold Index was up about 5% in U.S. dollars thanks to a 7% gain in
the Australian dollar. However, the Johannesburg Gold Share Index fell over 12%
in U.S. dollars because the South African rand declined more than 20%.
On December 31, 1996, your Fund had nearly half of its investments in North
America (34.8% of total assets in Canada and 11.8% in the United States). The
Fund also had a substantial position in Australia (30.3%). Australian stocks
recorded the best investment results, gaining 5.2% for the year. Since
Australian stocks generally do not have as much price leverage to bullion as
North American gold stocks, they tend to hold up better during downtrends, such
as the sharp decline in share prices following their peak at the end of May. It
is worth noting that the Fund added three Australian names in the fourth
quarter--Goldstream Minerals, Equinox Resources and Helix Resources--all
beneficiaries of interest in the Gawlor Craton exploration play. Believing
South African shares would come under pressure from the country's currency woes
and from poor earnings performance resulting from labor disputes and declining
grades, the Fund maintained a below market exposure to that area (11.5% of
assets at year end).
In North America, intermediate- and small-capitalization producers registered
good performance. Exploration companies also fared well as investors bid up
prices on good drilling results in successive hot prospecting areas such as
Peru, West Africa and Indonesia. (While the Fund is invested mostly in large
companies, it has over 15% in small-cap and exploration companies and nearly
20% in shares of intermediate-sized producers.) Specifically, the
<PAGE>
Fund benefited from positions in Arizona Star (in which the Fund realized
substantial gains by the time we sold the shares in August), Dayton Mining (up
57%), Getchell Gold (up 73%), Goldcorp (up 45%) and Tombstone (up 43%). Some
senior producers, many of which have consistently disappointed on production
and cost results, suffered sharp setbacks during the year, bringing the
averages down.
Consolidation within the gold-mining industry has become a reality and
corporate activity has led to gains in share prices of several target
companies. Small companies are merging with other small companies to reach
critical mass or to merge cash flow of one with the development prospects of
another (examples include Viceroy with Loki and Granges with Da Capo).
Furthermore, senior producers are taking over junior producers to enhance their
reserve and production profiles (Barrick's acquisition of Arequipa being the
prime example); and senior producers are merging with other senior producers to
create economies of scale or to consolidate specific areas of operation (Santa
Fe Pacific Gold with either Newmont or Homestake).
This corporate activity has created considerable interest in the industry
around the world, not just in North America. In Australia, for example, Sons of
Gwalia is consolidating the Yilgarn area, having bought out Burmine and having
gained control of Gascoyne. Normandy has brought its Gold Mines of Kalgoorlie
and Posgold subsidiaries into the parent company, while Homestake and Pegasus
bought out the minority interests in their Australian subsidiaries. Finally, in
addition to buying in its Placer Pacific minorities, Placer Dome is trying to
acquire Highlands Gold, one of its joint venture partners at Porgera in Papua
New Guinea.
The continued globalization of the industry is also providing opportunities for
investment gains. For many North American companies in particular, the
environmental scene and extensive exploration already conducted on the
continent mean that most of their growth prospects lie in finding and
developing properties offshore. Though cognizant of the risk inherent in
working in unfamiliar or untested political and social arenas, companies will
likely be casting their nets farther in the drive to replace reserves and
increase production. We believe the exploration success of recent years in
Latin America, West Africa and Indonesia will be repeated into the next century
(albeit not always with the spectacular success of a Bre-X Minerals, for
example). This will also create opportunities for profits, regardless of
movements in the price of gold. Some areas that appear attractive today are the
Gawlor Craton region in South Australia; Mexico, where the geology would appear
to be similar to, or even an extension of, the Southwest U.S.; and areas in
Africa like Mali and Ghana. Additionally, once the current uncertainty
surrounding Indonesia is cleared up we would expect a revival of interest in
shares with exposure in that country.
Our short-term caution on bullion is tempered by the prospects of many
companies in the industry, which we believe will enable gold shares to
outperform bullion for a while longer. This positive view on shares is a key
reason we had only 7.4% in cash and equivalents at year end. Significant
weakness in bullion since the start of 1997 has led us to raise the cash
position to as high as 30% at times.
<PAGE>
THE OUTLOOK
Recent economic data suggests a strong economy and an increasingly tight labor
market in the U.S. Additionally, some commodity prices, such as energy,
aluminum and zinc, are showing strength. These factors have not yet been
reflected in actual inflation figures or perceived inflationary pressures, but
we believe they will be. We therefore believe the long-term outlook for gold is
attractive, especially considering today's relatively high valuations for
financial assets. Near term, fears of further central bank sales and/or
stepped-up producer hedging may continue to weigh on the market.
We expect the Fund's cash position to stay in the 15%-30% range until the
metal's price appears to stabilize. In this environment, we intend to rely
heavily on stock selection to enhance performance, focusing mainly on smaller
companies. In our judgment, they have the greatest potential for above-average
returns going forward.
We appreciate your participation in the Gold Opportunity Fund and look forward
to helping you meet your investment objectives in the future.
[PHOTO] [PHOTO]
John C. van Eck Lucille Palermo
Chairman Portfolio Manager
January 29, 1997
- --------------------------------------------------------------------------------
Performance Record as of 12/31/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual After Maximum Before Sales
Total Return Sales Charge* Charge
- ------------------------------------------------------------
<S> <C> <C>
A shares--Life (since 1/5/95) 1.7 % 4.8 %
- ------------------------------------------------------------
1 year (0.8)% 5.3 %
- ------------------------------------------------------------
B shares--Life (since 4/24/96)** (19.2)% (15.0)%
- ------------------------------------------------------------
C shares--Life (since 1/5/95) 4.8 % 4.8 %
- ------------------------------------------------------------
1 year 4.3 % 5.3 %
- ------------------------------------------------------------
</TABLE>
The performance data reflects 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 Advisor 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 = 5.75%
B shares: maximum contingent deferred sales charge = 5.00%
C shares: 1% redemption charge, 1st year
**Not annualized
<PAGE>
Gold Opportunity Fund
Statement of Net Assets December 31, 1996
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<TABLE>
<CAPTION>
NO. OF SHARES SECURITIES(a) VALUE (NOTE 1)
- -------------------------------------------------------------------------------
<C> <S> <C>
GOLD PRODUCTION & EXPLORATION: 91.7%
AUSTRALIA: 30.3%
150,000 Acacia Resources Ltd.+ $ 292,107
300,000 Australian Resources Ltd. 171,688
363,497 Consolidated Gold N.L.+ 135,795
350,000 Croesus Mining N.L. 228,121
120,000 Eagle Mining Corp.+ 261,346
400,000 Egerton Gold N.L.+ 76,305
99,100 Emperor Mines Ltd.+ 192,985
100,000 Equinox Resources N.L.+ 81,869
275,875 Ghana Gold Mines Ltd.+ 43,855
176,167 Giralia Resources N.L.+ 28,005
350,000 Goldstream Minerals N.L.+ 203,084
31,000 Helix Resources N.L.+ 92,401
150,200 Herald Resources Ltd. 111,029
1,016 Homestake Mining Co. 12,032
170,000 Menzies Gold N.L.+ 77,020
100,000 M.I.M. Holdings Ltd. 139,893
100,000 Mount Leyshon Gold Mines Ltd. 219,378
75,000 Newcrest Mining Ltd. 298,068
196,600 Normandy Mining Ltd. 271,905
70,000 Resolute Ltd. 145,775
----------
3,082,661
----------
CANADA: 34.8%
10,000 Bre-X Minerals Ltd.+ 158,307
10,000 Cambior Inc. 147,364
30,000 Dayton Mining Corp.+ 199,161
20,000 Echo Bay Mines Ltd. 132,500
88,450 El Callao Mining Corp.+ 84,530
33,000 Geomaque Exploration Ltd.+ 79,445
10,000 Getchell Gold Corp.+ 383,769
20,000 Goldcorp Inc. (Class A)+ 170,000
10,000 Iamgold International African Mining Ltd.+ 48,513
8,500 Indochina Goldfields Ltd.+ 99,835
100,000 International Roraima Goldfields
(Special Warrant expiring 10/18/97)+(b)* 76,790
30,000 Kinross Gold Corp.+ 212,292
45,000 Meridian Gold Inc.+ 106,693
50,000 Metallica Resources Inc.+ 167,791
13,500 Miramar Mining Corp.+ 59,091
20,000 Nevsun Resources Ltd.+ 113,806
19,000 Nevsun Resources Ltd. (Special Warrant expiring
9/24/97)+(b)* 90,838
50,000 Northern Crown Mines (Special Warrant
expiring 11/28/97)+(b)* 39,770
20,000 Pangea Goldfields Units+(b) 93,379
40,000 Pegasus Gold Inc.+ 302,500
100,000 Rift Resources Ltd.+ 99,215
30,000 Royal Oak Mines Ltd.+ 97,500
20,000 Tombstone Exploration Co. Ltd.+(b) 31,369
50,000 Tombstone Exploration Co. Ltd. Warrants (first
exercise date 5/23/97)+(b)* 5,471
30,000 TVX Gold Inc.+ 232,500
24,700 Viceroy Resources Corp.+ 109,917
80,000 Vista Gold Corp.+ 107,969
150,000 X-Cal Resources Ltd.+ 93,014
----------
3,543,329
----------
</TABLE>
<TABLE>
<CAPTION>
NO. OF SHARES SECURITIES(A) VALUE (NOTE 1)
- ------------------------------------------------------------------------------
<C> <S> <C>
GHANA: 2.4%
20,000 Ashanti Goldfields Co. Ltd.(GDR) $ 247,500
-----------
PERU: 0.9%
5,300 Co. de Minas Buenaventura S.A. (ADR) 90,431
-----------
SOUTH AFRICA: 11.5%
26,617 Avgold Ltd. (ADR)+ 68,208
31,666 Blyvooruitzicht Gold Mining Ltd. (ADR) 93,019
20,000 Driefontein Consolidated Ltd. (ADR) 200,000
50,000 Eastvaal Gold Holdings Ltd.+ 68,750
20,000 Elandsrand Gold Mines Co.
Ltd. (ADR) 97,500
10,000 Freestate Consolidated Gold Mines Ltd.
(ADR) 71,875
10,000 Harmony Gold Mining Co.+ 78,750
10,000 Harmony Gold Mining Co. (ADR)+ 78,750
15,000 Kloof Gold Mining Ltd. (ADR) 117,188
10,000 Western Deep Levels Ltd. (ADR) 300,000
-----------
1,174,040
-----------
UNITED STATES: 11.8%
8,600 Amax Gold+ 54,825
15,000 Crown Resources Corp.+ 92,813
32,078 Homestake Mining Co. 457,112
10,000 Newmont Mining Corp. 447,500
10,000 Sante Fe Pacific Corp. 153,750
-----------
1,206,000
-----------
TOTAL STOCKS & OTHER SECURITIES: 91.7%
(cost: $10,407,251) 9,343,961
-----------
<CAPTION>
PRINCIPAL AMOUNT SHORT-TERM OBLIGATIONS
- ----------------------------------------------------
<C> <S> <C>
$349,000 American Express Corp. C.P. due 1/02/97
Yield of 6.64% 348,937
$400,000 General Electric Capital Corp.
C.P. due 1/02/97 Yield of 5.58% 399,939
-----------
TOTAL SHORT-TERM OBLIGATIONS: 7.4%
(Amortized Cost: $748,876) 748,876
-----------
TOTAL INVESTMENTS: 99.1%
(cost: $11,156,127) 10,092,837
Other Assets Less Liabilities: 0.9% 91,962
-----------
NET ASSETS: 100% $10,184,799
===========
</TABLE>
- -------
(a) Unless otherwise indicated, securities owned are shares of common stock.
(b) Restricted security. See Note 6.
+ Non-income producing.
* Fair value as determined by the Board of Trustees.
GLOSSARY:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
C.P.--Commercial Paper
<PAGE>
See Notes to Financial Statements.
Gold Opportunity Fund Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments at value (cost $11,156,127) (Note 1) $10,092,837
Receivables:
Securities sold 96,078
Capital shares sold 49,318
From Advisor 11,160
Dividends 16,018
Deferred organization costs and other assets (Note 1) 11,987
-----------
Total assets 10,277,398
-----------
LIABILITIES:
Payables:
Due to custodian 949
Capital shares redeemed 29,170
Securities purchased 11,013
Dividends payable 9,835
Accounts payable 41,632
-----------
Total liabilities 92,599
-----------
NET ASSETS $10,184,799
===========
CLASS A
Net asset value and redemption price per share
($8,446,079/835,263) $10.11
===========
Maximum offering price per share (NAV/(1-maximum sales
commission)) $10.73
===========
CLASS B
Net asset value, offering price and redemption price per share
($498,020/49,305) (Redemption may be subject to a contingent
deferred sales charge within the first six years of ownership) $10.10
===========
CLASS C
Net asset value, offering price and redemption price per share
($1,240,700/122,544) (Redemption may be subject to a contingent
deferred sales charge within the first year of ownership) $10.12
===========
Net assets consist of:
Aggregate paid in capital 11,445,874
Unrealized depreciation of investments, futures and foreign
denominated assets and liabilities (1,065,797)
Overdistributed realized gains (195,278)
===========
$10,184,799
===========
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
<S> <C> <C>
INCOME:
Dividends
(less foreign taxes withheld of $4,542) $ 70,280
Interest 42,064
---------
Total income $ 112,344
EXPENSES:
Management (Note 2) 85,839
Distribution Class A (Note 4) 39,243
Distribution Class B (Note 4) 1,186
Distribution Class C (Note 4) 1,609
Administration (Note 2) 5,335
Transfer agency 60,681
Professional 13,463
Reports to shareholders 19,477
Registration 25,240
Custody 24,876
Trustee fees and expenses 2,026
Amortization of deferred organization costs 919
Other 4,876
---------
Total expenses 284,770
Expenses assumed by the Advisor and reduced by a
custodian fee arrangement (Note 2) (185,228)
---------
Net expenses 99,542
-----------
Net investment income 12,802
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTE 3):
Realized loss from security transactions (74,101)
Realized loss from futures contracts (38,901)
Realized loss from options (25,235)
Realized gain from foreign currency transactions 3,500
Change in unrealized depreciation of investments, futures and
foreign denominated assets and liabilities (1,042,260)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,164,195)
===========
</TABLE>
<PAGE>
See Notes to Financial Statements.
Gold Opportunity Fund Financial Statements
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED JANUARY 5, 1995+
DECEMBER 31, TO
1996 DECEMBER 31, 1995
------------ -----------------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 12,802 $ 8,906
Realized gain (loss) from security
transactions (74,101) 31,862
Realized loss from futures contracts (38,901) (2,600)
Realized loss from options (25,235) (9,962)
Realized gain from foreign currency
transactions 3,500 359
Change in unrealized depreciation of
investments, futures and foreign denominated
assets and liabilities (1,042,260) (23,537)
----------- -----------
Increase (decrease) in net assets resulting
from operations (1,164,195) 5,028
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME:
Class A Shares (16,550) (31,261)
Class B Shares (1,842) --
Class C Shares (1,219) (1,865)
----------- -----------
(19,611) (33,126)
----------- -----------
NET REALIZED GAIN:
Class A Shares (41,374) --
Class B Shares (2,303) --
Class C Shares (6,094) --
----------- -----------
(49,771) --
----------- -----------
(1,233,577) (28,098)
----------- -----------
CAPITAL SHARE TRANSACTIONS*:
Net proceeds from sales of shares:
Class A Shares 14,039,314 3,583,107
Class B Shares 527,413 --
Class C Shares 1,477,409 237,042
----------- -----------
16,044,136 3,820,149
----------- -----------
Reinvestment of dividends:
Class A Shares 49,656 29,788
Class B Shares 3,219 --
Class C Shares 6,671 1,777
----------- -----------
59,546 31,565
----------- -----------
Cost of shares reacquired:
Class A Shares (6,439,454) (1,693,121)
Class C Shares (257,489) (118,858)
----------- -----------
(6,696,943) (1,811,979)
----------- -----------
Increase in net assets resulting from capital
share transactions 9,406,739 2,039,735
----------- -----------
Total increase in net assets 8,173,162 2,011,637
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED JANUARY 5, 1995+
DECEMBER 31, TO
1996 DECEMBER 31, 1995
------------ -----------------
<S> <C> <C>
NET ASSETS:
Beginning of period 2,011,637 --
----------- ----------
End of period $10,184,799 $2,011,637
=========== ==========
</TABLE>
- -------
+ Commencement of operations.
* SHARES OF BENEFICIAL INTEREST ISSUED AND REDEEMED (UNLIMITED NUMBER OF $.001
PAR VALUE SHARES AUTHORIZED):
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED JANUARY 5, 1995+
DECEMBER 31, TO
1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
CLASS A
Shares sold 1,224,295 363,031
Reinvestment of dividends 4,912 3,080
Shares reacquired (591,022) (169,033)
--------- --------
Net increase 638,185 197,078
========= ========
<CAPTION>
FOR THE PERIOD
APRIL 24, 1996+
TO
DECEMBER 31, 1996
-----------------
<S> <C> <C>
CLASS B
Shares sold 48,987
Reinvestment of dividends 318
---------
Net increase 49,305
=========
<CAPTION>
FOR THE PERIOD
YEAR ENDED JANUARY 5, 1995+
DECEMBER 31, TO
1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
CLASS C
Shares sold 133,587 22,841
Reinvestment of dividends 659 184
Shares reacquired (22,596) (12,131)
--------- --------
Net increase 111,650 10,894
========= ========
</TABLE>
- -------
+ Commencement of operations.
<PAGE>
Gold Opportunity Fund
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------------------- ----------------- -------------------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
YEAR ENDED JANUARY 5, 1995(a) APRIL 24, 1996(A) YEAR ENDED JANUARY 5, 1995(a)
DECEMBER 31, TO TO DECEMBER 31, TO
1996 DECEMBER 31, 1995 DECEMBER 31, 1996 1996 DECEMBER 31, 1995
------------ ------------------ ----------------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, $ 9.67 $ 9.43 $11.99 $ 9.67 $ 9.43
Beginning of Period.... ------- ------ ------- ------- ------
Income from Investment
Operations:
Net Investment Income.. 0.02 0.06+ 0.00 0.00 0.07+
Net Gains (Loss) on
Investments
(both realized and 0.49 0.35 (1.80) 0.51 0.34
unrealized)........... ------- ------ ------- ------- ------
Total from Investment 0.51 0.41 (1.80) 0.51 0.41
Operations............. ------- ------ ------- ------- ------
Less Distributions:
From net investment
income................ (0.02) (0.17) (0.04) (0.01) (0.17)
From realized gains.... (0.05) -- (0.05) (0.05) --
------- ------ ------- ------- ------
Total Distributions..... (0.07) (0.17) (0.09) (0.06) (0.17)
------- ------ ------- ------- ------
Net Asset Value, End of $10.11 $ 9.67 $10.10 $10.12 $ 9.67
Period................. ======= ====== ======= ======= ======
Total Return (b)........ 5.27% 4.35% (15.01)% 5.27% 4.35%
- -----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End of
Period (000)........... $8,446 $1,906 $498 $1,241 $105
Ratio of Gross Expenses
to Average Net
Assets(c).............. 3.07% 6.73%(d) 7.04%(d) 5.81% 24.34%(d)
Ratio of Net Expenses to
Average Net Assets..... 1.14% 0%(d) 1.68%(d) 1.25% 0%(d)
Ratio of Net Investment
Income (Loss)
to Average Net Assets.. 0.16% 0.63%(d) (.35)%(d) .07% 0.68%(d)
Portfolio Turnover Rate. 249.64% 184.76% 249.64 % 249.64% 184.76%
Average Commission Rate
Paid(e) ............... $0.0210 $0.0210 $0.0210
</TABLE>
- -----------
(a) Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period and a redemption on the last
day of the period. A sales charge is not reflected in the calculation of
total return. Total return for a period of less than one year is not
annualized.
(c) If the expenses had not been assumed by the Advisor or reduced by a
custodian fee arrangement.
(d) Annualized.
(e) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades in
which a commission is charged.
+ Based on average shares outstanding.
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 Gold Opportunity Fund series, a non-diversified fund (the
"Fund") of the Trust in the preparation of its financial statements. 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 amounts could differ.
A. SECURITY VALUATION--Securities traded on national or foreign exchanges are
valued at the last sales prices reported at the close of business on the
last business day of the year. Over-the-counter securities 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. 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. The portion of
<PAGE>
Gold Opportunity Fund
- -------------------------------------------------------------------------------
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 other foreign denominated assets and liabilities are
recorded as net realized gains and losses from foreign currency.
D.OTHER--Security transactions are accounted for on the date the securities
are purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned.
E. 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, wash sales and post October losses. The effect of
those differences for the year ended December 31, 1996 decreased
overdistributed net investment income and decreased cumulative realized
losses by $6,809.
F. 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. Realized gains and losses from forward currency
contracts are included in realized gain from foreign currency transactions.
At December 31, 1996, the Fund had the following outstanding forward foreign
currency contracts:
<TABLE>
<CAPTION>
VALUE AT
SETTLEMENT CURRENT UNREALIZED
CONTRACTS DATE VALUE DEPRECIATION
--------- ---------- ------- ------------
<S> <C> <C> <C>
FOREIGN CURRENCY
BUY CONTRACTS
Aud 1,568.39 expiring 12/20/96* $1,243 $1,247 $ 3
Aud 8,998.20 expiring 1/03/97 7,159 7,152 (7)
---
$(4)
===
</TABLE>
* This contract settled in early 1997.
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.
dollars.
G. DEFERRED ORGANIZATION COSTS--Deferred organization costs are being
amortized over a period of five years beginning on January 5, 1995
(commencement of operations).
H. USE OF DERIVATIVE 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 the value of the underlying instrument does not correlate with the
movement of the option value.
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. The Fund may incur additional
risk from investments in written currency options if there are unanticipated
movements in the underlying currencies.
NOTE 2--Van Eck Associates Corporation (the "Advisor") earned fees of $85,839
for investment management and advisory services. The fee is based on an annual
rate of 1% of the Fund's average daily net assets. The Advisor agreed to
assume all expenses for the period January 1, 1996 to March 31, 1996 and for
the period April 1, 1996 to October 31, 1996 assumed all such expenses
exceeding 1% of average daily net assets. For the period November 1, 1996 to
December 31, 1996, the Advisor agreed to assume expenses exceeding 2% of
average daily net assets. For the year ended December 31, 1996, the Fund's
expenses were reduced by $173,787 under this agreement. Van Eck Securities
Corporation (the "Distributor") received $28,650 for the year ended December
31, 1996 from commissions earned on sales of Class A shares after
<PAGE>
Gold Opportunity Fund
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deducting $175,537 allowed to other dealers. 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 has a fee arrangement, based on cash balances left on deposit with
the custodian, which reduces the Fund's operating expenses. For the year ended
December 31, 1996, the Fund's expenses were reduced by $11,441 under this
arrangement. The Fund could have invested the assets used in connection with
custodian fee arrangement in an incoming producing asset if it had not entered
into such an arrangement.
NOTE 3--Purchases and proceeds from sales of investments, other than short-
term obligations, aggregated $27,153,455 and $18,251,261, respectively, for
the year ended December 31, 1996. For federal income tax purposes, the cost of
investments owned at December 31, 1996 was $11,313,223. As of December 31,
1996, net unrealized depreciation for federal income tax purposes aggregated
$1,220,386 of which $434,362 related to appreciated investments and $1,654,748
related to depreciated investments.
NOTE 4--Pursuant to a Rule 12b-1 Plan of Distribution (the "Plan"), the Fund
is authorized to incur distribution expenses which will principally be
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. The amount paid
under the Plan in any one year is limited to .50% of average daily net assets
for Class A shares and 1.00% of average daily net assets for Classes B and C
shares (the "Annual Limitations"). For Class C shares, the Fund will pay to
the selling broker at the time of sale 1% of the amount of the purchase. Such
12b-1 advanced fees will be expensed by the Fund over the course of the first
twelve months from the time of purchase. Should the payments to the brokers
made by the Fund exceed, on an annual basis, 1% of average daily net assets,
VESC will reimburse the Fund for any excess. Shareholders redeeming within one
year of purchase will be subject to a 1% redemption charge which will be
retained by the Fund. After the first year, the 1% 12b-1 fee will be paid to
VESC which will retain a portion of the fee for distribution services and pay
the remainder to brokers.
All distribution fees and contingent deferred sales charges had been waived by
VESC and the Fund for Class C shares until November 1, 1996 and VESC had
agreed to assume the Fund's obligation to pay the selling broker.
Distribution expenses incurred under the Plan that have not been paid because
they exceed the Annual Limitation may be carried forward to future years and
paid by the Fund within the Annual Limitation. VESC has waived its right to
reimbursement of the carried forward amounts incurred for the period January
5, 1995 through April 30, 1997 in the event the Plan is terminated, unless the
Board of Trustees determines that reimbursement of the carried forward amounts
is appropriate. The cumulative amount of excess distribution expenses incurred
over the Annual Limitation at December 31, 1996 was $163,312 for Class A
shares, $5,084 for Class B shares and $56,465 for Class C shares.
NOTE 5--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
governmental supervision and regulation. Foreign investments may also be
subject to foreign taxes, dividend collection fees and settlement delays.
The Fund has significant investments in South African securities. South
African securities may be subject to greater political, social and economic
risks than investments in more developed foreign markets. Emerging market
countries, such as South Africa, may present the risk of nationalization of
businesses, or prohibitions of repatriation of assets, and may have less
protection of property rights than more developed countries.
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 resources securities may be cyclical in nature.
NOTE 6--RESTRICTED SECURITIES
The following securities are restricted as to sale:
<TABLE>
<CAPTION>
PERCENT OF
DATE NET ASSETS
ACQUIRED COST VALUE AT 12/31/96
-------- -------- -------- -----------
<S> <C> <C> <C> <C>
*International Roraima Goldfields
(Special Warrant) 10/22/96 $ 59,180 $ 76,790 0.75%
*Nevsun Resources Ltd. (Special
Warrant) 9/24/96 139,041 90,838 0.89
*Northern Crown Mines Special Warrant 11/28/96 48,442 39,770 0.39
Pangea Goldfields Units 6/05/96 82,030 93,379 0.92
Tombstone Exploration Co. Ltd. 5/23/96 21,833 31,369 0.31
*Tombstone Exploration Co. Ltd.
Warrants 10/03/96 -- 5,471 0.05
*Vista Gold Corp. Warrants 4/25/96 -- -- --
*Rift Resources Ltd. Warrants 11/13/96 -- -- --
</TABLE>
*Fair value as determined by the Board of Trustees.
At December 31, 1996, 30,000 shares of Vista Gold Corp. Warrants and 50,000
shares of Rift Warrants were out of the money and had no value to the Fund.
<PAGE>
Gold Opportunity Fund
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NOTE 7--TRUSTEE DEFERRED COMPENSATION PLAN
The Trust established a Deferred Compensation Plan (the "Plan") for trustees.
Commencing January 1, 1996, the Trustees can elect
to defer receipt of their trustee fees until retirement, disability or
termination from the board. The Fund's contributions to the Plan are limited to
the amount of fees earned by the participating trustees. The fees otherwise
payable to the participating trustees are invested in shares of the Van Eck
Funds as directed by the trustees. If a trustee has directed all or a portion
of his fee to be invested in the Fund, the unfunded liability remains
outstanding in the Fund's records since the Fund cannot invest in itself. The
Plan has been approved by the Internal Revenue Service.
As of December 31, 1996, the total value of the assets and corresponding
liability of the Fund's portion of the Plan is $747.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of the Van Eck Funds:
We have audited the accompanying statement of assets and liabilities and
statement of net assets, including the investment portfolio of the Gold
Opportunity Fund (the "Fund") (one of the series constituting the Van Eck
Funds) as of December 31, 1996, and the related statement of operations for the
year ended, the statements of changes in net assets and the financial
highlights for the year then ended and the period January 5, 1995 (commencement
of operations) to December 31, 1995. 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 based on our audit.
We conducted our audit 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, 1996, 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 audit provides 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 Opportunity Fund series of the Van Eck Funds as of December 31, 1996, and
the results of its operations for the year then ended, the changes in its net
assets, and the financial highlights for the year then ended and the period
January 5, 1995 (commencement of operations) to December 31, 1995, in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
February 21, 1997
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Van Eck Family of Funds
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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.
Emerging Markets Growth Fund
This Fund seeks long-term capital appreciation by investing primarily in equity
securities in emerging markets around the world.
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.
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.
Global Balanced Fund
This Fund seeks long-term capital appreciation together with current income by
investing in stocks, bonds and money market instruments worldwide.
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.
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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.
[LOGO] VAN ECK GLOBAL
Van Eck Securities Corporation
99 Park Avenue, New York, N.Y. 10016
http://www.vaneck.com
For account assistance please call (800) 544-4653
FR1997-0130-0040
December 31, 1996
Van Eck
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Gold
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Opportunity
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Fund
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Annual
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Report
[LOGO] VAN ECK GLOBAL
