<PAGE>
VAN ECK GLOBAL HARD ASSETS FUND
-------------------------------
1996 ANNUAL REPORT
Dear Fellow Shareholder:
We are pleased to report that the Van Eck Global Hard Assets Fund was the top
performing global equity fund among 162 funds in 1996 with a 45.6% return, and
finished the year as the 18th best performing mutual fund among all mutual funds
(over 5,000) in the United States, according to Lipper Analytical Services,
Inc.* The Fund also outpaced the market while assuming less risk-its net asset
value fluctuated more than 1% in value on only 16 days in 1996, compared to 38
days for the Standard & Poor's 500 Index. The S&P 500 advanced 23.0% for the
year.
Fund Review
The Fund's exceptional performance was fueled by strong supply and demand
fundamentals in the energy and real estate sectors. Energy was the Fund's
largest and best performing sector. In 1996, we maintained an average weighting
of approximately 35% in the energy sector. Returns were driven by stronger
commodity prices, successful application of technology to exploration efforts
and the cost reduction that this application of technology brought to
exploration and development efforts.
In 1996, crude oil prices averaged more than $4 per barrel higher than in 1995.
The reasons include a combination of stronger demand brought on by economic
growth in Asia and a cold winter in the U.S. and Europe, as well as production
delays in the non-OPEC countries and a lack of Iraqi exports for most of the
year. Natural gas prices were also sharply higher due primarily to a cold winter
in the Northeast and Midwest, which depleted inventories. Moreover, ongoing
advancements in technology continued to improve efficiencies and exploration
results. One estimate shows drilling success rates doubling in the past ten
years due to technological changes.
The Fund's energy holdings benefited from these trends. The share price of
Flores & Rucks, a Louisiana-based exploration and production
company, soared over 200% as the company enjoyed a 70% success rate on its
exploration activities. United Meridian, a U.S.-based company with properties
off the African coast, also saw its stock price soar almost 200%. On the
service side, drilling stocks, such as Marine Drilling, UTI Energy and Falcon
Drilling, were standout investments as well.
Real estate securities in the U.S. contributed significantly to performance,
particularly late in the year. In the fourth quarter, we raised the allocation
to this sector from roughly 17% to 26%. U.S. real estate investment trusts, or
REITs, gained approximately 35% in 1996. Moreover, REITs finished the year on a
strong note, with fund flows into U.S. REITs accelerating significantly during
the fourth quarter. Mutual funds and institutional REIT sector funds were the
most notable buyers, the former seeking a relatively safe haven and the latter
replacing direct property investments with REIT stock investments.
The outlook for REITs is favorable as fundamentals in the U.S. commercial
property markets are attractive. The overall vacancy rate for North American
office properties is about 12%, down from 20% in 1992. Vacancy rates in certain
sub-markets, especially suburban areas, are less than 10%. Full service hotel
occupancy rates have surged from the low 60% range to the high 60's on average,
with many cities enjoying occupancies well above 70%. New supply in both of
these sectors is still relatively minimal, with annual construction levels at
about one-fourth previous peak levels.
During 1996, the Fund's largest real estate holding was Patriot American
Hospitality (PAH), a dynamic acquirer of full service (business class, luxury
and resort) U.S. hotels. The company has a strategic alliance with several of
the premier lodging companies in the U.S., including Hilton, Doubletree and
Wyndham. Since going public in October 1995, PAH has more than tripled the size
of its portfolio.
Disappointing sectors included industrial metals, forest products and paper, and
precious metals.
<PAGE>
Industrial metals and paper shares underperformed the S&P 500 as the primary
performance driver, underlying asset prices, declined. Prices of industrial
metals fell almost 9%, while pulp prices dropped nearly 50% from the highs set
late in 1995. In both industries, supply growth outstripped demand. In addition,
both sectors endured severe inventory corrections on both the producer and
consumer levels. These two factors resulted in a loss of pricing power, causing
earnings to decline significantly.
Fortunately, our allocations to these sectors were low, with approximately 6% of
total investments in each. The investments that we did hold in these sectors
were stocks of companies that held up well in this environment, namely low-cost
producers and companies with undervalued assets. These included Aluminum Company
of America (Alcoa) and Willamette and Rayonier, both forest products and paper
companies. Fort Howard, the lowest-cost commercial tissue producer, was our
biggest winner in the paper sector. Titanium stocks were the best performing
metal sector. During the year, we held Titanium Metals and RMI Titanium.
Gold started the year on a strong note, jumping to over $418 per ounce in the
first quarter, but it gradually fell in price throughout 1996, finishing the
year at $367.70, down 5%. Several factors contributed to the sell-off in gold.
With low inflation dominating the monetary picture, investment demand, a primary
price driver, was weak. Real short-term interest rates were positive, putting a
high opportunity cost on holding gold, and currency stability reigned. Further,
an increasing number of central banks, particularly in Europe, sold large
amounts of their gold reserves. A significant portion of the sales took place
during the second half of the year. Finally, after two years of declines, mine
production rose despite lower output from the world's largest supplier, South
Africa, where production dropped by 30 tonnes. Our cautious outlook for precious
metals led us to keep the portfolio's weighting to the sector at a low level
throughout the year.
The Outlook
In 1997, we believe hard assets will again outperform financial assets, although
we do not expect a repeat of the exceptional returns that we enjoyed in 1996.
The supply and demand fundamentals that helped the Fund register solid
investment results are still firmly in place.
We believe global growth will be healthy. The monetary environment is extremely
stimulative and central banks around the world are cutting interest rates
(German and Japanese short-term rates are at historical lows). Increased
liquidity has been finding its way into financial assets, but over the next year
we expect to see much of that money going into the real economy, pushing
economic growth higher. The emerging market countries are showing considerable
strength: China is likely to grow by 10% next year, growth in developing Latin
America should accelerate from 0.9% in 1995 to 4% in 1997 and Eastern Europe
should grow at 4%, up from 0.4% this year. Raw materials are essential to the
building of developing economies. Therefore, strong economic growth leads to
increasing demand and higher prices for hard assets.
Our strategy will be to maintain a significant energy weighting due to the
sector's healthy fundamentals. We remain optimistic about our best performing
sector of 1996, oil services and drilling, and we believe there is significant
upside potential for this group. On the exploration side, our focus remains on
companies with good exploration success probabilities and away from companies
with high commodity exposure.
Expecting strong returns on real estate investments, we intend to maintain a
substantial weighting of Fund assets in this sector. The U.S. market remains
the most attractive on a risk-adjusted basis. Thus, we will continue to
overweight the Fund in the U.S., with an emphasis on the office/lodging sectors.
We also intend to increase the Fund's exposure to selected Asian property
companies to take advantage of high growth rates in the region.
We plan to increase exposure to industrial metals producers as the environment
for these companies appears to be improving and we will use weakness as buying
opportunities. Since we fail to see signs of improvement in the paper sector, we
intend to take a "wait-and-see" approach before increasing the Fund's
allocation. Finally, we plan to maintain a neutral stance on precious metals,
which currently represent about 10% of the portfolio.
<PAGE>
We would like to thank you for your investment in the Global Hard Assets Fund.
We look forward to helping you meet your investment objectives in the future.
[PHOTO]
John C. van Eck
Chairman
[PHOTO]
Derek S. van Eck
Portfolio Manager
January 25, 1997
*Since its inception (11/2/94), the fund ranked third out of 123 global equity
funds, according to Lipper. Rankings are calculated before sales charges.
- ---------------------------------------------------------------------
Performance Record as of 12/31/96
- ---------------------------------------------------------------------
Average Annual After Maximum Before
Total Return Sales Charge+ Sales Charge
- ---------------------------------------------------------------------
A shares-Life (since 11/2/94) 25.8% 28.7%
- ---------------------------------------------------------------------
1 year 38.7% 45.6%
- ---------------------------------------------------------------------
B shares-Life (since 4/24/96)** 19.6% 24.6%
- ---------------------------------------------------------------------
C shares-Life (since 11/2/94) 28.9% 28.9%
- ---------------------------------------------------------------------
1 year 44.2% 45.2%
- ---------------------------------------------------------------------
The performance data represents past performance and is not indicative of future
results. Investment return and principal value of an investment in the Fund
will vary so that shares, when redeemed, may be worth more or less than their
original cost.
The Advisor is currently waiving certain or all expenses on the Fund. Had the
Fund incurred all expenses, investment returns would have been reduced.
+ A shares: maximum sales charge = 4.75%
B shares: maximum contingent deferred sales charge = 5.0%
C shares: 1% redemption charge, 1st year
** Not annualized.
Van Eck Global Hard Assets Fund* vs. the S&P 500
1996 Performance
Global Hard Assets Fund S&P 500
----------------------- -------
12/31/95 10,000 10,000
Jan 10,524 10,326
Feb 10,684 10,398
Mar 11,199 10,536
Apr 11,798 10,678
May 11,976 10,922
Jun 12,022 11,008
Jul 11,607 10,504
Aug 12,306 10,702
Sep 12,626 13,346
Oct 13,325 11,642
Nov 14,014 12,545
Dec 14,566 12,296
*Before sales charges, assumes a $10,000 investment made on December 31, 1995.
<PAGE>
REPRESENTATIVE EQUITY HOLDINGS*
------------------------------
AS OF DECEMBER 31, 1996
Norsk Hydro AS
(Norway, 1.6%)
Norsk Hydro is the largest listed Norwegian company and is involved in oil and
gas operations, aluminum production and fertilizer production. The company is
the western world's largest producer of fertilizers, the fifteenth-largest oil
company in the world in terms of reserves and production, the world's fifth-
largest primary aluminum producer and the world's largest producer of processed
aluminum products. Norsk Hydro is also a major petrochemical producer.
Rayonier Inc.
(U.S., 1.4%)
Rayonier is a forest products company that produces and sells timber, wood
products and specialty pulp. The company owns approximately 1.5 million
acres of timber resources in the United States and New Zealand and operates
pulp and lumber mills in the United States.
Alumax Inc.
(U.S., 1.8%)
Alumax produces and markets primary aluminum and is a major fabricator of value-
added aluminum products for the building and construction, transportation,
containers and packaging and consumer durables industries. It is the third
largest aluminum producer in the United States.
Patriot American Hospitality Inc.
(U.S., 1.8%)
Patriot American Hospitality (PAH) is one of the fastest growing hotel REITs in
the U.S. The Dallas-based company focuses on acquiring, redeveloping and
repositioning hotels for long-term growth through a combination of improved
operating performance and appreciation in value. As of December 31, 1996, PAH
owned 46 hotels throughout the U.S.
Cali Realty Corp.
(U.S., 1.5%)
Cali Realty is a New Jersey-based REIT that owns approximately 7.5 million
square feet of suburban office space in the New York metropolitan area. The
company provides leasing, management, acquisition, development, construction and
tenant-related services for its portfolio.
Hong Kong Land Holdings Ltd.
(Hong Kong, 1.0%)
Hong Kong Land is one of the dominant office landlords in central Hong Kong. The
company is also active in Manila and Singapore (where it is listed on the
Singapore stock exchange).
Flores & Rucks, Inc.
(U.S., 1.6%)
Flores & Rucks is a mid-sized Gulf coast exploration company. The company has
benefited from successful application of new oilfield technologies and achieved
excellent drilling success rates during 1996. The company has a large acreage
position and should continue to grow production, reserves and cash flow during
1997 and beyond.
ENSCO International Inc.
(U.S., 1.3%)
ENSCO is one of the world's largest operators of premium "jack-up" drilling
rigs. Utilization of jack-up rigs is nearly 100% worldwide and leasing rates
have risen dramatically over the past two years. In addition, ENSCO operates a
fleet of supply vessels in the Gulf of Mexico which is running at full capacity.
Pacalta Resources Ltd.
(Canada, 1.4%)
Pacalta is an intermediate-sized Canadian exploration and production company.
The company's main producing properties are in Ecuador and the company has
additional properties in Canada and Latin America. Pacalta's success exemplifies
the opportunities available as countries around the world allow increased
activity by foreign oil companies.
Note: Equities are listed as percentage of total investments held.
* Portfolio is subject to change.
<PAGE>
Global Hard Assets Fund Investment Portfolio December 31, 1996
See Notes to Financial Statements.
<TABLE>
<CAPTION>
NO. OF SHARES SECURITIES(a) VALUE (NOTE 1)
<C> <S> <C>
- ------------------------------------------------
AUSTRALIA: 5.5%
ENERGY: 1.7%
5,100 Petroleum
Securities
Australia+ $ 116,025
203,570 Portman Mining
Ltd. 381,866
----------
497,891
----------
INDUSTRIAL METALS: 0.8%
150,000 Pasminco Ltd.+ 236,071
----------
PRECIOUS METALS: 3.0%
825,045 Consolidated
Gold N.L. 308,220
89,000 Newcrest Mining
Ltd. 353,708
750,000 Tanganyika Gold
NL+ 205,667
----------
867,595
----------
1,601,557
----------
CANADA: 14.8%
ENERGY: 7.3%
30,000 Abacan Resources
Corp.+ 260,625
65,000 Canadian 88
Energy Corp.+ 284,515
18,000 Ensign Resource
Service Group,
Inc. 331,570
39,000 Morrison
Petroleum Ltd. 233,302
67,500 Pacalta
Resources Ltd.+ 398,869
60,000 Plains Energy
(Special Warrant
expiring
3/31/97)*+ 218,858
5,500 Talisman Energy
Inc.+ 182,965
74,000 Windsor Energy
Corp.+ 215,940
----------
2,126,644
----------
FERTILIZER: 1.6%
5,400 Potash
Corporation of
Saskatchewan 459,000
----------
INDUSTRIAL METALS: 0.9%
6,200 Cameco Corp. 248,317
----------
PRECIOUS METALS: 5.0%
10,800 Barrick Gold
Corp. 310,500
25,000 Bre-X Minerals
Ltd. 395,769
26,800 Cambior Inc. 394,937
16,000 Placer Dome Inc. 348,000
----------
1,449,206
----------
4,283,167
----------
FRANCE: 1.7%
ENERGY: 1.7%
29,000 Bouygues
Offshore SA
(ADR)+ 373,375
5,600 Forasol-Foramer
NV+ 109,900
----------
483,275
----------
HONG KONG: 2.0%
REAL ESTATE: 2.0%
100,000 Hong Kong Land
Holdings Ltd. 278,000
250,000 Sino Land Co. 305,449
----------
583,449
----------
INDONESIA: 1.1%
FOREST PRODUCTS AND PAPER: 0.6%
15,200 Asia Pulp &
Paper-Spons
(ADR)+ 172,900
----------
INDUSTRIAL METALS: 0.5%
8,200 P.T. Tambang
Timah 144A (GDR) 148,625
----------
321,525
----------
ITALY: 1.2%
ENERGY: 1.2%
6,500 Ente Nationale
Idrocaburi
S.p.A. 335,563
----------
NETHERLANDS: 1.2%
REAL ESTATE: 1.2%
15,000 Renaissance
Hotel Group NV+ 352,500
----------
NORWAY: 2.9%
ENERGY: 1.3%
27,000 Alvern Norway
AS+ 360,181
----------
FERTILIZER: 1.6%
8,600 Norsk Hydro AS
(ADR) 461,175
----------
821,356
----------
UNITED KINGDOM: 0.7%
ENERGY: 0.7%
1,500 British
Petroleum PLC
(ADR)(b) 212,063
----------
</TABLE>
<TABLE>
<CAPTION>
NO. OF SHARES SECURITIES(a) VALUE (NOTE 1)
<C> <S> <C>
- ------------------------------------------------
UNITED STATES: 58.2%
ENERGY: 24.6%
8,000 BJ Services
Company+ $ 408,000
3,000 Diamond Offshore
Drilling Inc.+ 171,000
7,500 ENSCO
International
Inc.+ 363,750
9,000 Falcon Drilling
Co., Inc.+ 353,250
8,700 Flores & Rucks,
Inc.+ 463,275
30,000 FX Energy Inc.+ 277,500
35,000 Harcor Energy
Inc.+ 170,625
20,000 Input/Output
Inc. 370,000
12,000 KCS Energy, Inc. 429,000
5,500 Louisiana Land &
Exploration Co. 294,938
21,000 Marine Drilling
Co., Inc.+ 413,438
1,200 Mobil Corp.(b) 146,700
15,000 Nabors
Industries Inc.+ 288,750
8,500 Nuevo Energy
Co.+(b) 442,000
23,000 Pendaries
Petroleum Ltd.+ 197,154
36,000 SGI
International,
Inc.+ 145,125
16,000 Snyder Oil Corp. 278,000
12,500 Stone Energy
Corp.+ 373,438
8,000 Trico Marine
Services Inc.+ 384,000
3,800 Triton Energy
Ltd.+ 184,300
8,000 United Meridian
Corp.+ 414,000
15,000 UTI Energy
Corp.+ 530,625
-----------
7,098,868
-----------
FOREST PRODUCTS AND PAPER: 5.1%
16,950 Buckeye
Cellulose Corp.+ 451,294
12,000 Fort Howard
Corp.+(b) 332,250
10,400 Rayonier Inc. 399,100
3,900 Willamette
Industries,
Inc.(b) 271,538
-----------
1,454,182
-----------
INDUSTRIAL METALS: 3.6%
15,300 Alumax Inc.+ 510,638
6,400 Aluminum Company
of America(b) 408,000
3,800 Titanium Metals
Corporation+ 124,925
-----------
1,043,563
-----------
PRECIOUS METALS: 2.0%
10,000 Getchell Gold
Corp.+ 383,750
4,200 Newmont Mining
Corp.(b) 187,950
-----------
571,700
-----------
REAL ESTATE: 22.9%
9,000 Amerco+ 315,000
10,000 Arden Realty
Group, Inc. 277,500
18,000 Boykin Lodging
Co. 432,000
20,000 Brandywine
Realty Trust 390,000
14,000 Cali Realty
Corp. 432,250
8,000 Capstar Hotel
Co. 157,000
6,500 Carramerica
Realty Corp. 190,125
11,000 Dayton Superior
Corp.+ 144,375
8,000 Developers
Diversified
Realty Corp. 297,000
5,200 Equity
Residential
Properties Trust 214,500
6,500 HFS, Inc. 388,375
7,500 Highwoods
Properties, Inc. 253,125
15,000 Interstate
Hotels Co.+ 423,750
10,000 Macerich Co.
(The) 261,250
18,000 Meridian
Industrial Trust
Inc. 378,000
18,000 Excel Realty
Trust Inc. 456,750
12,000 Patriot American
Hospitality Inc. 517,500
15,000 Prentiss
Properties Trust 375,000
8,500 Federal-Realty
Investment Trust 230,563
12,000 Studio Plus
Hotels, Inc. 189,000
10,000 Urban Shopping
Centers Inc. 290,000
-----------
6,613,063
-----------
16,781,376
-----------
TOTAL STOCKS AND OTHER
SECURITIES: 89.3%
(cost: $22,377,451) $25,775,831
-----------
</TABLE>
<PAGE>
Global Hard Assets Fund Investment Portfolio December 31, 1996 (continued)
<TABLE>
<CAPTION>
SHORT- VALUE (NOTE 1)
PRINCIPAL AMOUNT TERM OBLIGATIONS
<C> <S> <C>
- ---------------------------------------------------
$1,700,000 U.S. Treasury
Bill due 1/02/97
Interest
Yield 4.32% $ 1,699,799
700,000 General Electric
Capital Corp.
Commercial Paper
due 1/02/97
Interest Yield
5.58% 699,893
675,000 American Express
Company
Commercial
Paper due
1/02/97
Interest Yield
6.64% 674,877
-----------
TOTAL SHORT-TERM OBLIGATIONS:
10.7%
(amortized cost: $3,074,570) 3,074,569
-----------
TOTAL INVESTMENTS: 100% (cost
$25,452,021) $28,850,400
===========
</TABLE>
(a)Unless otherwise indicated, securities owned are shares of common stock.
*Fair value as determined by Board of Trustees.
+Non-income producing.
(b) Securities segregated for futures contracts.
Glossary:
ADR--American Depositary Receipts
GDR--Global Depositary Receipts
<TABLE>
<CAPTION>
SUMMARY OF INVESTMENTS BY % OF
INDUSTRY PORTFOLIO
- ------------------------- ---------
<S> <C>
Energy 38.5%
Fertilizers 3.2%
Forest Products and Paper 5.7%
Industrial Metals 5.8%
Precious Metals 10.0%
Real Estate 26.1%
U.S. Govt. 5.9%
Commercial Paper 4.8%
------
100.0%
======
</TABLE>
See Notes to Financial Statements.
<PAGE>
Global Hard Assets Fund Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments at value (cost, $25,452,021) (Note 1) $28,850,400
Cash--initial margin for futures (Note 6) 72,467
Receivables:
Securities sold 2,099,727
Capital shares sold 1,529,771
From Advisor 4,752
Dividends 45,459
Deferred organization costs and other assets 24,261
-----------
Total assets 32,626,837
-----------
LIABILITIES:
Payables:
Due to custodian 222,407
Capital shares redeemed 1,169
Securities purchased 1,094,592
Dividends payable 265,409
Due to broker-variation margin (Note 6) 30,452
Unrealized depreciation on open forward currency contracts
(Note 7) 70
Accounts payable 46,142
-----------
Total
liabilities 1,660,241
-----------
NET ASSETS $30,966,596
===========
CLASS A
Net asset value and redemption price per share
($27,226,101/1,888,529) $14.42
======
Maximum offering price per share (NAV/(1-maximum sales
commission)) $15.14
======
CLASS B
Net asset value, offering price, and redemption price per share
($1,805,589/124,548) (Redemption may be subject to a contingent
deferred sales charge within the first six years of ownership) $14.50
======
CLASS C
Net asset value, offering price and redemption price per share
($1,934,906/133,262) (Redemption may be subject to a contingent
deferred sales charge within the first year of ownership) $14.52
======
Net assets consist of:
Aggregate paid in capital $27,640,731
Unrealized appreciation of investments, futures and foreign
denominated assets, liabilities and foreign forward exchange
contracts 3,397,340
Overdistributed net investment income (11,027)
Overdistributed realized gains (60,448)
-----------
$30,966,596
===========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
<TABLE>
<S> <C> <C>
INCOME:
Dividends (less foreign taxes withheld of $3,686) $172,479
Interest 91,969
--------
Total income 264,448
EXPENSES:
Management (Note 2) 121,846
Distribution Class A (Note 4) 55,061
Distribution Class B (Note 4) 4,615
Distribution Class C (Note 4) 2,694
Administration (Note 2) 1,422
Transfer agency 69,074
Custody 22,260
Professional 14,291
Reports to shareholders 14,403
Registration 24,078
Amortization of organization costs 7,917
Other 9,854
--------
Total expenses 347,515
Expenses assumed by the Advisor and reduced by custodian
and directed brokerage arrangements
(Note 2) (250,941)
--------
Net expenses 96,574
--------
Net investment income 167,874
</TABLE>
<TABLE>
<S> <C> <C>
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTE 3):
Realized gain from security transactions $1,802,548
Realized loss from futures contracts (6,413)
Realized loss from options (6,085)
Realized loss from foreign currency transactions (18,109)
Change in unrealized appreciation of foreign denominated
assets, liabilities and foreign forward exchange contracts (806)
Change in unrealized appreciation of investments and futures 3,072,207
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $5,011,216
==========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 167,874 $ 92,284
Realized gain from security transactions 1,802,548 110,229
Realized loss from futures contracts (6,413) (8,549)
Realized loss from options (6,085) (3,178)
Realized gain (loss) from foreign currency
transactions (18,109) 26,126
Change in unrealized appreciation
(depreciation) of foreign denominated
assets, liabilities and foreign forward
exchange contracts (806) 163
Change in unrealized appreciation of
investments and futures 3,072,207 338,597
----------- -----------
Increase in net assets resulting from
operations 5,011,216 555,672
----------- -----------
Dividends to shareholders from:
Net investment income:
Class A Shares (138,261) (208,703)
Class B Shares (6,619) --
Class C Shares (5,498) (8,428)
----------- -----------
(150,378) (217,131)
----------- -----------
Tax return of capital:
Class A Shares (24,349) --
Class B Shares (1,685) --
Class C Shares (1,736) --
----------- -----------
(27,770) --
----------- -----------
Realized gains:
Class A Shares (1,624,532) --
Class B Shares (112,412) --
Class C Shares (115,843) --
----------- -----------
(1,852,787) --
----------- -----------
2,980,281 338,541
----------- -----------
CAPITAL SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sales of shares:
Class A Shares 23,268,676 3,672,872
Class B Shares 1,647,285 --
Class C Shares 1,618,492 161,154
----------- -----------
26,534,453 3,834,026
----------- -----------
Reinvestment of dividends:
Class A Shares 1,573,761 186,116
Class B Shares 68,637 --
Class C Shares 115,442 8,422
----------- -----------
1,757,840 194,538
----------- -----------
Cost of shares reacquired:
Class A Shares (4,153,693) (1,792,934)
Class B Shares (29) --
Class C Shares (152,978) (609)
----------- -----------
(4,306,700) (1,793,543)
----------- -----------
Increase in net assets resulting from
capital share transactions 23,985,593 2,235,021
----------- -----------
Total increase in net assets 26,965,874 2,573,562
NET ASSETS:
Beginning of year 4,000,722 1,427,160
----------- -----------
End of year $30,966,596 $ 4,000,722
=========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
Global Hard Assets 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 NOVEMBER 2, APRIL 24, YEAR ENDED NOVEMBER 2,
DECEMBER 31, 1994(a) TO 1996(a) TO DECEMBER 31, 1994(a) TO
---------------- DECEMBER 31, DECEMBER 31, ---------------- DECEMBER 31,
1996 1995 1994 1996 1996 1995 1994
------- ------- -------------- -------------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 10.68 $ 9.41 $ 9.53 $ 12.55 $ 10.76 $ 9.41 $ 9.53
------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Income.. 0.15 0.32+ 0.010+ 0.11 0.11 0.34+ 0.01+
Net Gain (Loss) on
Investments (both
realized and
unrealized)........... 4.70 1.57 (0.115) 2.95 4.73 1.63 (0.12)
------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations............. 4.85 1.89 (0.105) 3.06 4.84 1.97 (0.11)
------- ------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from Net
Investment Income..... (0.14) (0.62) (0.015) (0.14) (0.11) (0.62) (0.01)
Distributions from
Capital Gains......... (0.95) -- -- (0.95) (0.95) -- --
Tax Return of Capital.. (0.02) -- -- (0.02) (0.02) -- --
------- ------- ------- ------- ------- ------- -------
(1.11) (0.62) (0.015) (1.11) (1.08) (0.62) (0.01)
------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 14.42 $ 10.68 $ 9.41 $ 14.50 $ 14.52 $ 10.76 $ 9.41
======= ======= ======= ======= ======= ======= =======
Total Return (b)........ 45.61% 20.09% (1.10%) 24.55% 45.18% 20.94% (1.20%)
- ----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY
DATA
Net Assets, End of
Period (000)........... $27,226 $ 3,820 $ 1,419 $ 1,806 $ 1,935 $181 $8
Ratio of Gross Expenses
to Average Net Assets
(c).................... 2.63% 4.05% 3.40% 3.27% 6.02% 37.88% 39.49%
Ratio of Net Expenses to
Average Net Assets..... 0.72% 0% 0.15%* 1.64%* 1.31% 0% 0.56%*
Ratio of Net Investment
Income to Average Net
Assets................. 1.45% 3.08% 0.84%* .53%* .84% 3.30% 0.53%*
Portfolio Turnover Rate. 163.91% 179.33% 0% 163.91% 163.91% 179.33% 0%
Average Commission Rate
Paid (d)............... $0.0178 $0.0178 $0.0178
</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, 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 for a period of less than one year is not annualized.
(c) Had the Advisor not assumed expenses or had expenses not been reduced by
custodian fee and directed brokerage arrangements.
(d) 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 commission is charged.
* Annualized.
+ 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 Global Hard Assets 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 results 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. 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 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. The portion of realized and unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange
rates is not separately disclosed. Recognized gains or losses and the
appreciation (depreciation) attributable to foreign currency fluctuations
on other foreign denominated assets and liabilities are recorded as net
realized and unrealized gains and losses from foreign currency
transactions, respectively.
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--Dividends to shareholders from net
investment income and realized gains, if any, are recorded on the ex-
dividend date. Income and capital gains distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to the
differing treatment of foreign currency transactions, short-term capital
gains, real estate investment trusts, post-October losses and return of
capital dividends paid. The effect of these differences for the year ended
December 31, 1996 decreased undistributed net investment income by $28,523,
decreased overdistributed realized gains by $20,483 and increased aggregate
paid in capital by $8,040.
F. DEFERRED ORGANIZATION COSTS--Deferred organization costs are being
amortized over a period of five years beginning on November 2, 1994
(commencement of operations).
<PAGE>
Global Hard Assets Fund
- -------------------------------------------------------------------------------
G. 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 $121,846
for investment management and advisory services. The fee was 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 June 30, 1996. The
Advisor also agreed to assume expenses exceeding 1% of average daily net
assets for the period July 1, 1996 to December 31, 1996 for Class A shares.
For Class B and C shares the Advisor agreed to assume expenses in excess of 1%
of average daily net assets for the period July 1, 1996 to October 31, 1996
and in excess of 2% for the period November 1, 1996 to December 31, 1996.
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 custodian expenses were reduced by $2,382 under
this arrangement. The Fund had some of its portfolio trades directed to a
broker-dealer who, in return, agreed to pay a portion of the Fund's expenses.
For the year ended December 31, 1996 the portion of the Fund's expenses
reduced by this directed brokerage arrangement amounted to $1,086.
In accordance with the advisory agreement, the Fund reimbursed Van Eck
Associates Corporation $1,422 for costs incurred in connection with certain
administrative and operating functions. Van Eck Securities Corporation (the
"Distributor") received $53,056 for the year ended December 31, 1996 from
commissions earned on sales of Class A shares after deducting $273,203 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. As of December 31, 1996, Van Eck Associates
Corporation owned 6.32% of the outstanding Class A shares of beneficial
interest.
NOTE 3--Purchases and proceeds from sales of investments, other than short-
term obligations, aggregated $35,406,296 and $17,666,696, respectively, for
the year ended December 31, 1996. For federal income tax purposes the cost of
investments owned at December 31, 1996 was $25,514,876. As of December 31,
1996 net unrealized appreciation for federal income tax purposes aggregated
$3,335,524 of which $3,593,554 related to appreciated investments and $258,030
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 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. Class C 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
the Fund for Class C shares until November 1, 1996 and VESC has agreed to
assume the Fund's obligation to pay the selling brokers.
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 November
2, 1994 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 accumulated amount of excess distribution expenses
incurred over the Annual Limitations as of December 31, 1996, was $312,162 for
Class A shares, $32,733 for Class B shares, and $126,888 for Class C shares.
<PAGE>
Global Hard Assets Fund
- -------------------------------------------------------------------------------
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, 1996 1995
------------------ ------------
CLASS A
<S> <C> <C>
Shares sold 1,743,237 360,738
Shares reinvested 109,716 17,425
--------- --------
1,852,953 378,163
Shares reacquired (321,972) (171,459)
--------- --------
Net increase 1,530,981 206,704
========= ========
<CAPTION>
FOR THE PERIOD
APRIL 24, 1996+ TO
DECEMBER 31, 1996
------------------
CLASS B
<S> <C>
Shares sold 119,806
Shares reinvested 4,744
---------
124,550
Shares reacquired (2)
---------
Net increase 124,548
=========
<CAPTION>
YEAR ENDED
YEAR ENDED DECEMBER 31,
DECEMBER 31, 1996 1995
------------------ ------------
<S> <C> <C>
CLASS C
Shares sold 119,532 15,208
Shares reinvested 8,772 783
--------- --------
---------
128,304 15,991
Shares reacquired (11,865) (61)
--------- --------
Net increase 116,439 15,930
========= ========
</TABLE>
- -------
+ Commencement of operations.
NOTE 6--FUTURES CONTRACTS:
As of December 31, 1996 the Fund was long and short commodity futures
contracts. The long copper and zinc contracts were acquired in lieu of a
direct acquisition of the commodities. The long unleaded gasoline and short
crude oil contracts were acquired in lieu of direct acquisitions of refining
companies. The Advisor believes these synthetic positions are a duplication of
the purchases of the commodities and refining companies and believes the
futures contracts are more advantageous for operational and liquidity reasons
than a direct acquisition of the commodities and refining companies. In the
remote chance the broker cannot fulfill its obligation, the Fund could lose
any variation margin due it. Subsequent payments are made or received each day
dependent upon the daily fluctuations in the value of the underlying
commodity. Risks may be caused by an imperfect correlation between the
movements in the price of the futures contract and the price of the underlying
commodity. Realized gains and losses from futures contracts are reported
separately.
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF CONTRACT CURRENT UNREALIZED
LONG DATE CONTRACTS VALUE VALUE GAIN (LOSS)
CONTRACTS: ---------------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Copper March 26, 1997 15 $375,563 $375,938 $ 375
Copper March 26, 1997 5 125,000 125,313 313
Gasoline NY Unleaded January 31, 1997 5 145,950 148,743 2,793
Gasoline NY Unleaded January 31, 1997 5 146,790 148,743 1,953
Gasoline NY Unleaded January 31, 1997 5 147,000 148,743 1,743
Gasoline NY Unleaded April 30, 1997 5 139,650 148,953 9,303
Gasoline NY Unleaded April 30, 1997 10 280,140 297,906 17,766
Zinc March 27, 1997 15 402,000 397,110 (4,890)
Zinc March 27, 1997 15 396,375 395,745 (630)
-------
28,726
-------
</TABLE>
<TABLE>
<CAPTION>
EXPIRATION NUMBER OF CONTRACT CURRENT UNREALIZED
SHORT DATE CONTRACTS VALUE VALUE GAIN (LOSS)
CONTRACTS: ----------------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Crude Oil January 21, 1997 5 $126,200 $129,600 $ (3,400)
Crude Oil January 21, 1997 5 126,750 129,600 (2,850)
Crude Oil January 21, 1997 5 126,650 129,600 (2,950)
Crude Oil February 20, 1997 15 368,850 388,800 (19,950)
--------
(29,150)
--------
Net unrealized depreciation $ (424)
========
</TABLE>
NOTE 7--FORWARD CURRENCY CONTRACTS:
The Fund bought and sold forward foreign currency contracts to settle
purchases and sales of foreign denominated securities. The Fund may incur
additional risk from investments in forward foreign 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 foreign currency contracts are
included in realized and unrealized gain (loss) 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
CONTRACT DATE VALUE DEPRECIATION
- -------- ---------- ------- ------------
<S> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACT
AUD 13,409 expiring 1/02/97 $10,711 $10,658 $(53)
FOREIGN CURRENCY SALES CONTRACT
AUD 114,143 expiring 1/06/97 90,710 90,727 (17)
----
$(70)
====
</TABLE>
NOTE 8--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 may concentrate its investments in companies which are significantly
engaged in the exploration, development, production or distribution of
precious metals, ferrous and non-ferrous metals, oil and gas, forest products,
real estate and other non-agricultural commodities. Since the Fund may so
concentrate, it may be subject to greater risks and market fluctuations than
other more diversified portfolios.
NOTE 9--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 can not 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 $1,087.
<PAGE>
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, including
the investment portfolio, of the Global Hard Assets 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 two years in the period then ended and
for the period November 2, 1994 (commencement of operations) to December 31,
1994. 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 Hard Assets 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 two years in the period then ended and for the
period November 2, 1994 (commencement of operations) to December 31, 1994, 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
- -------------------------
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.
This report must be accompanied or preceded by a prospectus, which includes more
complete information, such as charges and expenses and the risks associated with
international investing, including currency fluctuations or controls,
expropriation, nationalization and confiscatory taxation. Please read the
prospectus 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
----------------------
GLOBAL
----------------------
HARD
----------------------
ASSETS
----------------------
FUND
----------------------
ANNUAL
----------------------
REPORT
----------------------
[LOGO] VAN ECK GLOBAL
