<PAGE>
Van Eck Global Income Fund
--------------------------------------
1996 Annual Report
Dear Fellow Shareholder:
Compared to the strong returns recorded in 1995, most major bond markets
registered modest gains last year, which were reduced in dollar terms due to
strength of the U.S. currency. Several "peripheral," higher risk European
markets fared well, but a rise in U.S. interest rates due to stronger-than-
expected economic growth dampened the performance of domestic bonds. In this
environment, the Global Income Fund had a total return of 2.3% for the year
ended December 31, 1996.
BOND MARKET REVIEW
During the first month of the year, bonds in most major markets were in a
relatively narrow trading range. Then, in February, U.S. interest rates
increased sharply due to a surprisingly strong January employment report. The
rise in U.S. rates and subsequent downturn in the U.S. bond market sparked a
sell-off in many major international markets during the first quarter. The
trend toward higher U.S. rates continued into the second quarter, aided by
higher-than-expected oil prices. By June 12, the yield on the 30-year U.S.
Treasury bond hit 7.19% (its high for 1996) after being as low as 5.95% on the
second trading day of the year, January 3.
To protect shareholder capital during the rise in rates, we employed a
defensive investment posture. In February, we reduced the Fund's average
duration to as low as three years. We also decreased the Fund's exposure to
domestic bonds and, later in the first half of the year, added substantially to
our positions in Canada and the United Kingdom, both of which witnessed solid
performance (which, for the UK market, unlike most others, was augmented by a
strong pound). Our rationale hinged on developments likely to have positive
implications for these markets: the Canadian market would benefit from solid
economic fundamentals and the government's commitment to eliminate the budget
deficit by the year 2000 and the UK market would benefit from an environment of
low inflation, a strong currency and improving consumer confidence.
Although the Federal Reserve did not raise short-term interest rates in 1996,
fears of a rate hike hung like a cloud over the U.S. and international bond
markets following the rise in long-term interest rates during the first half of
the year. Stronger-than-expected employment numbers in July and August added to
the concern, but the Federal Reserve maintained a neutral monetary policy as
other data showed inflation was still under control. (For example, in August,
the government reported that the unemployment rate plunged to 5.1%, its lowest
level in seven years.) The end result for a volatile U.S. bond market was a
lackluster return of 2.7% for the year. A substantial position in U.S. bonds,
although actively managed, had a net dampening effect on Fund performance.
Some of the Fund's best results came from its investments in peripheral
European bonds, such as those of Italy, Spain and Sweden. Sluggish economic
growth and low inflation led to lower interest rates in many countries on the
Continent. In turn, most European markets achieved moderately positive returns
in local currency terms. The European markets were further helped by increasing
optimism for economic union. Peripheral markets recorded the most impressive
gains. Yields in these markets converged toward those of the higher-
<PAGE>
quality, core European markets due to a growing belief among investors that
the peripheral countries will meet the Maastricht criteria for European Mone-
tary Union (EMU). At year end, the Fund had over 15% of its investments allo-
cated to these peripheral bond markets.
Early in the year, we liquidated the Fund's relatively small position in
Japanese bonds (which registered positive performance of 5%+ in yen terms, but
declined 6.5% in U.S. dollar terms) as the economy began to overheat. Later in
the year, we began purchasing Japanese bonds again based on signs of
continuing economic weakness, which leads to lower interest rates and higher
bond prices. However, given the extreme volatility in the Japanese market of
late, we intend to maintain a "wait-and-see" approach toward Japan before
committing new funds to this market.
CURRENCY REVIEW
In 1996, the U.S. dollar showed strength against most of the major currencies.
For example, the dollar was up 10.8% against the Japanese yen and 6.7% against
the German mark. The only major currencies in the G-7 to show consistent
strength against the dollar were the British pound and the Italian lira, which
advanced 10.5% and 4.5%, respectively, versus the greenback. The dollar's
relative strength against most major currencies dampened returns for U.S.
investors. The Fund's relatively high cash position on several occasions
throughout the year enabled us to limit losses due to currency fluctuations.
THE OUTLOOK
Looking ahead, our forecast for the global bond markets is encouraging. We
believe the slow growth, low inflation environment in Europe will continue to
bode well for bonds there. Hence, we intend to favor European issues. We
expect the U.S. bond market to remain somewhat volatile. While U.S. inflation
still appears to be under control, the general direction of the economy and
long-term interest rates is still uncertain. However, we also believe the
worst of the domestic bond market decline may be behind us.
We would like to thank you for your investment in the Global Income Fund. We
look forward to helping you meet your investment objectives in the future.
[PHOTO] [PHOTO]
/s/John C. van Eck /s/ Madis Senner
John C. van Eck Madis Senner
Chairman Portfolio Manager
January 23, 1997
- -------------------------------------------------------------------------------
Performance Record as of 12/31/96
- -------------------------------------------------------------------------------
<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) 7.9% 8.4%
- ----------------------------------------------------------
5 year 2.4% 3.4%
- ----------------------------------------------------------
1 year (2.5)% 2.3%
- ----------------------------------------------------------
</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, 1996
<TABLE>
<CAPTION>
COUPON OR MATURITY
BONDS AND NOTES PRINCIPAL AMOUNT INTEREST YIELD DATE VALUE (NOTE 1)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUSTRALIA: 5.9%
Australian
Government
Bond AUD 5,750,000 6.75% 11/15/06 $ 4,379,894
-----------
CANADA: 3.6%
Canadian
Government CAD 3,200,000 8.75% 12/01/05 2,716,878
-----------
GERMANY: 11.8%
Federal
Republic of
Germany DEM 5,100,000 7.50% 11/11/04 3,695,762
Federal
Republic of
Germany 4,500,000 7.375% 1/03/05 3,237,459
Federal
Republic of
Germany 3,000,000 6.25% 1/04/24 1,843,803
-----------
8,777,024
-----------
ITALY: 6.9%
Republic of
Italy ITL 1,100,000,000 10.50% 9/01/05 866,667
Republic of
Italy 3,850,000,000 8.50% 4/01/99 2,649,728
Republic of
Italy 2,300,000,000 8.25% 7/01/01 1,612,424
-----------
5,128,819
-----------
JAPAN: 7.9%
Japanese
Government
Bond #155 JPY 425,000,000 4.60% 3/20/03 4,185,092
Japanese
Government
Bond #182 200,000,000 3.00% 9/20/05 1,776,945
-----------
5,962,037
-----------
SPAIN: 5.7%
Kingdom of
Spain ESP 100,000,000 10.90% 8/30/03 950,343
Kingdom of
Spain 100,000,000 7.40% 7/30/99 801,871
Kingdom of
Spain 300,000,000 8.40% 4/30/01 2,525,483
-----------
4,277,697
-----------
SWEDEN: 4.2%
Swedish
Government
Bond SEK 12,000,000 13.00% 6/15/01 2,258,602
Swedish
Government
Bond 6,000,000 6.00% 2/09/05 849,836
-----------
3,108,438
-----------
UNITED KINGDOM:
5.1%
United Kingdom
Treasury Note GBP 2,200,000 7.75% 12/07/06 3,824,013
-----------
UNITED STATES:
40.2%
U.S. Treasury
Note USD 3,000,000 8.75% 8/15/20 3,697,032
U.S. Treasury
Note* 4,500,000 6.50% 8/15/05 4,530,233
U.S. Treasury
Note 4,100,000 6.50% 8/31/01 4,146,765
U.S. Treasury
Note 5,000,000 6.25% 4/30/01 5,012,500
U.S. Treasury
Note 2,000,000 6.00% 2/15/26 1,820,626
U.S. Treasury
Note* 4,850,000 5.75% 10/31/00 4,787,100
U.S. Treasury
Note* 4,000,000 5.625% 1/31/98 3,998,752
U.S. Treasury
Note* 2,000,000 5.50% 11/15/98 1,987,032
-----------
29,980,040
-----------
TOTAL BONDS AND NOTES: 91.3% (COST: $67,345,055) 68,154,840
-----------
<CAPTION>
INTEREST YIELD AT MATURITY
SHORT-TERM OBLIGATIONS: 8.7% PRINCIPAL AMOUNT TIME OF PURCHASE DATE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL
PAPER:
American
Express
Corporation due
1/02/97 Yield
of 6.64% USD 3,000,000 6.55% 1/02/97 2,999,454
General Electric Capital Corp.
due 1/02/97 Yield of 5.58% 3,489,000 5.50% 1/02/97 3,488,467
-----------
Total Short-Term Obligations:
(amortized cost: $6,487,921) 6,487,921
-----------
TOTAL INVESTMENTS: 100% (cost: $73,832,976) $74,642,761
===========
</TABLE>
- -------
* These securities are segregated for forward currency contracts.
See Notes to Financial Statements.
<PAGE>
Global Income Fund Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments at value (cost, $73,832,976) (Note 1) $74,642,761
Cash 3,927
Receivables:
Interest 1,654,465
Capital shares sold 189,529
Unrealized appreciation on forward currency contracts
(Note 6) 91,105
Other 38,003
-----------
Total assets 76,619,790
-----------
LIABILITIES:
Payables:
Capital shares redeemed 483,012
Dividends payable 98,081
Accounts payable 149,952
Unrealized depreciation on forward foreign currency
contracts (Note 6) 74,323
-----------
Total liabilities 805,368
-----------
NET ASSETS $75,814,422
===========
CLASS A
Shares of beneficial interest outstanding 8,630,417
===========
Net asset value and redemption price per share $8.78
($75,814,422/8,630,417) =====
Maximum offering price per share $9.22
(NAV/(1-maximum sales commission)) =====
Net assets consist of:
Aggregate paid in capital $79,959,300
Unrealized appreciation of investments
and foreign currency transactions 813,974
Undistributed net investment income 633,033
Cumulative realized losses (5,591,885)
-----------
$75,814,422
===========
- -------------------------------------------------------------------
STATEMENT OF OPERATIONS
</TABLE>
<TABLE>
For the Year Ended December 31, 1996
<S> <C> <C>
INCOME:
INTEREST INCOME $5,856,851
EXPENSES:
Management (Note 2) $ 685,015
Distribution Class A (Note 4) 228,338
Administration (Note 2) 119,615
Transfer agency 192,914
Custody 22,885
Professional 39,605
Reports to shareholders 21,915
Trustees fees 16,000
Other 2,301
---------
Total expenses 1,328,588
Expenses reduced by a custodian fee arrangement
(Note 2) (22,885)
---------
Net expenses 1,305,703
----------
Net investment income 4,551,148
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (
NOTE 3)
Realized gain from security transactions 1,329,029
Realized loss from options (56,000)
Realized loss from foreign currency transactions (3,269,178)
Change in unrealized depreciation of foreign denominated
receivables and payables 15,727
Change in unrealized appreciation of forward foreign currency
contracts 625,249
Change in unrealized appreciation of investments (1,731,589)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,464,386
==========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
DECREASE IN NET ASSETS:
Operations:
Net investment income $ 4,551,148 $ 6,820,689
Realized gain from security transactions 1,329,029 3,606,816
Realized loss from futures contracts -- (53,773)
Realized loss from options (56,000) (53,877)
Realized gain (loss) from foreign currency
transactions (3,269,178) 9,544,959
Change in unrealized appreciation of foreign
currency receivables and payables 15,727 (47,033)
Change in unrealized appreciation (depreciation)
of forward foreign currency contracts 625,249 (1,186,985)
Change in unrealized appreciation of investments (1,731,589) 2,741,950
Change in unrealized appreciation of futures
contracts -- (47,444)
------------ ------------
Increase in net assets resulting from operations 1,464,386 21,325,302
Dividends to shareholders from:
Net investment income
Class A Shares (4,296,487) (7,685,453)
Class B Shares -- (9,150)
------------ ------------
(4,296,487) (7,694,603)
------------ ------------
Capital share transactions:
Net proceeds from sales of shares:
Class A Shares 8,772,676 47,072,009
Class B Shares -- 540,515
------------ ------------
8,772,676 47,612,524
------------ ------------
Reinvestment of dividends:
Class A Shares 2,880,879 5,356,995
Class B Shares -- 4,731
------------ ------------
2,880,879 5,361,726
------------ ------------
Cost of shares reacquired:
Class A Shares (45,382,370) (90,865,479)
Class B Shares -- (1,007,412)
------------ ------------
(45,382,370) (91,872,891)
------------ ------------
Decrease in net assets resulting from capital
share transactions (33,728,815) (38,898,641)
------------ ------------
Total decrease in net assets (36,560,916) (25,267,942)
NET ASSETS:
Beginning of year 112,375,338 137,643,280
------------ ------------
End of year (including undistributed net
investment income of $633,033 and $734,732,
respectively) $ 75,814,422 $112,375,338
============ ============
</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
YEAR ENDED DECEMBER 31, ENDED APRIL 30,
------------------------------------ DECEMBER 31, -----------------
1996 1995 1994 1993 1992 1992 1991
------- -------- -------- ---- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, $9.00 $8.15 $8.96 $9.28 $9.91 $9.75 $9.44
Beginning of Period.... ----- ----- ----- ----- ----- ----- -----
Income from Investment
Operations:
Net Investment Income.. 0.47 0.47 0.55+ 0.75 0.51 0.770 0.99
Net Gain (Loss) on
Securities (both
realized and (0.27) 0.92 (0.80) (0.31) (0.50) 0.460 0.51
unrealized)........... ----- ---- ----- ----- ----- ------ -----
Total from Investment 0.20 1.39 (0.25) 0.44 0.01 1.230 1.50
Operations............. ---- ---- ----- ----- ---- ------ -----
Less Distributions:
Dividends from Net
Investment Income(b).. (0.42) (0.54) -- (0.05) (0.47) (0.853) (0.96)
Distributions from
Capital Gains......... -- -- -- (0.01) (0.17) (0.217) (0.23)
Distributions from
Aggregate Paid In -- -- (0.56) (0.70) -- -- --
Capital............... ----- ----- ----- ----- ----- ------ -----
Total Distributions..... (0.42) (0.54) (0.56) (0.76) (0.64) (1.070) (1.19)
----- ----- ----- ----- ----- ------ -----
Net Asset Value, End of $8.78 $9.00 $8.15 $8.96 $9.28 $9.91 $9.75
Period................. ===== ===== ===== ===== ===== ====== =====
Total Return (a)........ 2.33% 17.27% (2.79%) 4.90% (0.18%) 13.19% 16.49%
- ----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End of
Period (000)........... $75,814 $112,375 $137,242 $251,725 $290,961 $187,241 $84,016
Ratio of Gross Expenses
to Average Net Assets.. 1.46%* 1.60%* 1.56%* 1.93%* 1.32%++ 1.39% 1.61%
Ratio of Net Expenses to
Average Net Assets..... 1.43% 1.52% 1.39% 1.27% 1.32%++ 1.39% 1.61%
Ratio of Net Investment
Income to Average Net
Assets................. 4.98% 5.21% 6.55% 8.01% 7.58%++ 7.92% 10.00%
Portfolio Turnover Rate. 157.5% 269.5% 148.4% 108.6% 44.2% 108.9% 276.1%
</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.
* If expenses were not assumed by the Advisor or reduced by a custodian fee
arrangement.
+ 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 Fund Class B shares were
redeemed. 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 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 year.
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. 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 year ended
December 31, 1996, decreased undistributed net investment income by
$356,360, decreased cumulative realized loss by $335,029 and increased
aggregate paid in capital by $21,331.
<PAGE>
Global Income Fund
- -------------------------------------------------------------------------------
F. 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 $685,015 for the year
ended December 31, 1996 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 $9,869
for the year ended December 31, 1996 from commissions earned on sales of
shares of beneficial interest of the Fund after deducting $51,145 allowed to
other dealers. In accordance with the advisory agreement, the Fund reimbursed
Van Eck Associates Corporation $119,615 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 has a fee arrangement, based on cash balances left on deposit with
the custodian, which reduces the Fund's custody expenses. For the year ended
December 31, 1996 the Fund's custody expenses were reduced by $22,885 under
this arrangement. The Fund could have invested the assets used in connection
with the custodian fee arrangement in an income 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 $119,018,019 and $141,534,280, respectively, for
the year ended December 31, 1996. For federal income tax purposes the cost of
investments owned at December 31, 1996 was $73,832,976. As of December 31,
1996 net unrealized appreciation for federal income tax purposes aggregated
$809,785, of which $1,265,135 related to appreciated investments and $455,350
related to depreciated investments. As of December 31, 1996, the Fund had
capital loss carryforwards available to offset future capital gains of
$5,575,103 expiring December 31, 2002 and December 31, 2004, in the amounts of
$4,267,868 and $1,307,235, respectively.
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. Fees charged
for the year ended December 31, 1996 were $228,338 for Class A 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.
NOTE 5--Shares of beneficial interest issued and redeemed (unlimited number of
$.001 par value shares authorized):
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
CLASS A 1996 1995
- ------- ------------ ------------
<S> <C> <C>
Shares sold 997,824 5,291,672
Reinvestment of dividends 331,150 607,526
---------- -----------
1,328,974 5,899,198
Shares reacquired (5,187,947) (10,257,545)
---------- -----------
Net decrease (3,858,973) (4,358,347)
========== ===========
</TABLE>
<PAGE>
Global Income Fund
- -------------------------------------------------------------------------------
NOTE 6--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 loss from foreign currency transactions. At December
31, 1996, the Fund had the following outstanding forward currency contracts:
<TABLE>
<CAPTION>
VALUE AT UNREALIZED
SETTLEMENT CURRENT APPRECIATION
CONTRACTS DATE VALUE (DEPRECIATION)
- --------- ---------- ------- --------------
<S> <C> <C> <C>
FOREIGN CURRENCY PURCHASE CONTRACTS:
GPB 1,300,000
expiring 3/19/97 $ 2,162,810 $ 2,222,051 $59,241
JPY 357,976,130 expiring 3/19/97 3,184,841 3,119,400 (65,441)
FOREIGN CURRENCY SALE CONTRACTS:
AUD 3,636,525
expiring 3/19/97 2,887,401 2,888,055 (654)
DEM 1,405,994
expiring 3/19/97 908,851 917,079 (8,228)
JPY 185,538,000
expiring 3/19/97 1,648,640 1,616,776 31,864
-------
$16,782
=======
</TABLE>
The Fund may incur additional risk from investments in forward currency
contracts if the counterparty is unable to fulfill its obligation or there are
unanticipated movements of the foreign currency relative to the U.S. dollar.
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.
NOTE 8--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 $8,082.
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"),
(one of the series constituting the Van Eck Funds) as of December 31, 1996,
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 four 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, 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 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, 1996, 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 21, 1997
<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 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] 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
FR1997-0121-0014
December 31, 1996
Van Eck
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Global
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Income
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Fund
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Annual
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Report
[LOGO] VAN ECK GLOBAL
