<PAGE>
Van Eck Global Income Fund
--------------------------------------
1997 Annual Report
Dear Fellow Shareholder:
In local currency terms, 1997 was a year of strong performances among the
world's fixed income markets outside of Asia, with the UK bond market winning
top honors. In general, markets were buoyed by persistent low inflation,
moderate economic growth and supportive monetary policies from central banks.
For investors in U.S. dollars, however, the formidable strength of the
greenback managed to wipe out most of these local positive results. For the
year, the benchmark Salomon Smith Barney World Government Bond Index (WGBI)
posted a 9.0% return in local currency terms, contrasted to 0.2% in U.S. dollar
terms. By comparison, the Global Income Fund returned 1.5%* for the period,
slightly ahead of the Index in U.S. dollar terms.
BOND MARKET REVIEW
Although supported throughout 1997 by low inflation and a strong U.S. economy,
fixed income markets were affected by two major events this past year.
The first half of the year was dominated by the impact of Europe's steady march
toward European Monetary Union (EMU), slated by the Maastricht treaty to begin
in January 1999. This event has forced a continuing convergence of European
interest rates in anticipation of a single currency, the "euro." In order to
meet core European rates, higher rates in the peripheral riskier European
countries declined steadily, with Italy the region's top performer.
In the second half of 1997, the EMU story was dramatically eclipsed by Asia's
debt and currency crisis, which began to unfold in early July. Thailand's
decision to permit its currency (the baht) to float sent shockwaves through
Asia's economies; currencies plunged against the U.S. dollar and stock markets
were decimated. By October, the crisis had gathered enough momentum to batter
both Hong Kong and South Korea and to cause a global sell-off of equities. A
flight-to-quality ensued among bond investors eager to trade high-risk, high-
yielding issues for the relative safety of low-risk, high-quality government
bonds, particularly U.S. Treasury bonds. This helped the bellwether 30-year
U.S. Treasury bond reach record lows by year end. In addition, the U.S. dollar
gained strength as it became the currency-of-choice among beleaguered Asian
investors who were anxious to pay off short-term foreign debt. The dollar was
further helped by the shrinking U.S. federal budget deficit.
In contrast to Asia, the U.S. economy continued its historic expansion, with
the end of 1997 marking the seventh consecutive year of growth and the longest
period of peacetime prosperity since World War II. Despite this robust growth,
inflation fell below 2% by year end, a new low in this economic cycle. This is
due in part to the disinflationary impact of Asia's troubles that has forced
many U.S. companies to keep a lid on prices in order to remain competitive with
less expensive Asian imports. Thus far, this has offset any upward pressure on
inflation coming from what is the highest level of U.S. employment in 24 years.
Although the Federal Reserve did increase rates once in 1997 (by 0.25% in March
on fears of wage inflation), we do not expect the Fed to raise rates any time
in the near future--good news for fixed income markets. In addition, while
yields have fallen in the U.S., real interest rates (nominal rates minus the
inflation rate) remain high and have room to fall.
FUND REVIEW
Reviewing last year's events in terms of your Fund, the strength of the U.S.
bond market benefited the Fund's overweighting (relative to the Salomon Smith
Barney WGBI) in dollar bloc countries, including the U.S., Canada, Australia,
New Zealand and, in particular, the UK. As mentioned in the Fund's mid-year
report, we substantially increased its weighting in UK bonds from 5% of assets
in the beginning of the year to 16% by June 30; it currently stands at
approximately 23%. With the UK's sterling keeping
<PAGE>
step with the dollar for most of 1997, your Fund was able to benefit from the
UK bond market's stellar 14.8% rise in local terms. In addition, your Fund
profited from its holdings in Italy, Spain, France, Germany and Sweden, which
are being sustained by moderate economic growth and tighter fiscal policy
throughout the Continent.
CURRENCY AND DURATION
In 1997, we emphasized the U.S. dollar and maintained exposure to the European
currencies while moving away from Japan's weakening yen. By year end, we had
fully eliminated our yen exposure due to the persistent bleakness of Japan's
fiscal and economic landscape and the country's proximity to Asia's crisis.
The U.S. dollar surged versus most currencies in 1997 and was particularly
strong in the second half due to Asia's meltdown. Therefore, any exposure the
Fund had to foreign currencies in 1997 hampered its performance. At December
31, 1997, the Fund's exposure to the U.S. dollar stood at 58%, and its
European exposure at 38%. In addition, we increased the portfolio's duration
in the second half of the year to take advantage of the attractive price
appreciation potential of long-term bonds.
THE OUTLOOK
We are optimistic about the prospects for your Fund in 1998. Bond markets
should continue to benefit from a global environment of low inflation and
slowing economic growth, spurred in part by Asia's ills and a solid U.S.
dollar. The tremendous bond market gains of 1997 are not likely to be repeated
in 1998; rather, we expect that interest rates will remain in a relatively
narrow trading range. In the near term, however, the dampening impact of
Asia's crisis should continue to be felt through midyear, providing a boost
for fixed income markets. We will continue to monitor events closely and to
remain flexible in our positioning of Fund assets in order to reach our goal
of enhancing shareholder value through total return.
We would like to thank you for your investment in the Global Income Fund and
look forward to helping you meet your investment objectives in the future.
[PICTURE APPEARS HERE] [PICTURE APPEARS HERE] [PICTURE APPEARS HERE]
/s/ John C. van Eck /s/ Charles T. Cameron /s/ Gregory F. Krenzer
John C. van Eck Charles T. Cameron Gregory F. Krenzer
Chairman Co-Portfolio Manager Co-Portfolio Manager
January 15, 1998
- -------------------------------------------------------------------------------
*Performance Record as of 12/31/97
- -------------------------------------------------------------------------------
After Maximum
Average Annual Sales Charge Before Sales
Total Return of 4.75% Charge
- ------------------------------------------------
Life (since 4/30/87) 7.3% 7.8%
- ------------------------------------------------
10 year 7.0% 7.6%
- ------------------------------------------------
5 year 3.4% 4.4%
- ------------------------------------------------
1 year (3.4)% 1.5%
- ------------------------------------------------
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
Schedule of Portfolio Investments December 31, 1997
<TABLE>
<CAPTION>
COUPON OR MATURITY
BONDS AND NOTES PRINCIPAL AMOUNT INTEREST YIELD DATE VALUE (NOTE 1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CANADA: 4.3%
Canadian Government Bond CAD 2,000,000 8.00% 6/01/27 $ 1,793,432
-----------
FRANCE: 6.5%
French Government Bond
BTNS* FRF 16,000,000 5.50% 10/12/01 2,734,118
-----------
GERMANY: 6.7%
Federal Republic of Germany* DEM 4,500,000 7.375% 1/03/05 2,816,122
-----------
IRELAND: 2.6%
Irish Government Bond IEP 650,000 8.00% 8/18/06 1,082,063
-----------
ITALY: 2.5%
Republic of Italy Bond ITL1,800,000,000 7.50% 10/01/99 1,062,062
-----------
NEW ZEALAND: 7.2%
New Zealand Government Bonds NZD 3,300,000 10.00% 3/15/02 2,100,694
1,500,000 8.00% 11/15/06 927,127
-----------
3,027,821
-----------
SPAIN: 1.6%
Kingdom of Spain Bond ESP 100,000,000 7.40% 7/30/99 683,746
-----------
SWEDEN: 6.5%
Swedish Government Bonds SEK 8,000,000 10.25% 5/05/03 1,215,552
12,000,000 6.00% 2/09/05 1,526,141
-----------
2,741,693
-----------
UNITED KINGDOM: 23.3%
J.P. Morgan GBP 1,000,000 7.75% 12/30/03 1,714,687
United Kingdom Treasury Notes 2,800,000 7.75% 9/08/06 5,031,411
1,700,000 7.50% 12/07/06 3,019,733
-----------
9,765,831
-----------
UNITED STATES: 37.1%
U.S. Treasury Notes* USD 1,000,000 5.625% 1/31/98 1,000,313
3,700,000 6.50% 8/15/05 3,861,879
2,000,000 6.25% 2/15/07 2,065,002
4,750,000 6.00% 8/15/00 4,785,630
U.S. Treasury Bonds* 800,000 8.75% 8/15/20 1,067,001
1,500,000 6.625% 2/15/27 1,628,438
1,000,000 6.75% 8/15/26 1,101,251
-----------
15,509,514
-----------
TOTAL BONDS AND NOTES: 98.3%
(Cost: $41,874,254) 41,216,402
<CAPTION>
SHORT-TERM OBLIGATION
- ---------------------
<S> <C> <C> <C> <C> <C>
UNITED STATES: 1.0%
G.E. Capital Corp.
(Amortized Cost: $424,933) USD 425,000 5.65% 1/02/98 424,933
-----------
TOTAL INVESTMENTS: 99.3%
(Cost: $42,299,187+) 41,641,335
OTHER ASSETS LESS LIABILITIES: 0.7% 283,417
-----------
NET ASSETS: 100% $41,924,752
===========
</TABLE>
- -------
* These securities are segregated for forward foreign currency contracts.
+ The cost is the same for federal income tax purposes.
See Notes to Financial Statements.
<PAGE>
Global Income Fund Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments at value (cost, $42,299,187) (Note 1) $41,641,335
Receivables:
Interest 1,042,831
Capital shares sold 2,504
Unrealized appreciation on forward foreign currency
contracts (Note 6) 80,183
-----------
Total assets 42,766,853
-----------
LIABILITIES:
Payables:
Due to custodian for bank overdraft 134,738
Capital shares redeemed 358,344
Dividends payable 56,076
Accounts payable 112,249
Unrealized depreciation on forward foreign currency
contracts (Note 6) 180,694
-----------
Total liabilities 842,101
-----------
NET ASSETS $41,924,752
===========
Shares of beneficial interest outstanding 4,936,240
===========
Net asset value and redemption price per share $8.49
($41,924,752/4,936,240) =====
Maximum offering price per share $8.91
(NAV/(1-maximum sales commission)) =====
Net assets consist of:
Aggregate paid in capital $46,813,661
Unrealized depreciation of investments and
foreign currency transactions (776,473)
Accumulated realized loss (4,112,436)
-----------
$41,924,752
===========
- -----------------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
Year Ended December 31, 1997
<TABLE>
<S> <C> <C>
INTEREST INCOME $ 3,416,453
EXPENSES:
Management (Note 2) $ 419,471
Distribution (Note 4) 139,815
Administration (Note 2) 115,620
Transfer agency 119,157
Professional 38,715
Reports to shareholders 30,129
Registration 18,867
Custody 9,897
Trustees fees 1,437
Other 33,155
---------
Total expenses 926,263
-----------
Net investment income 2,490,190
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTE 3)
Realized gain from security transactions 444,917
Realized loss from foreign currency transactions (1,268,288)
Change in unrealized depreciation of foreign currency
denominated receivables and payables (5,517)
Change in unrealized appreciation of investments (1,467,637)
Change in unrealized depreciation of forward foreign currency
contracts (117,293)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 76,372
===========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
DECREASE IN NET ASSETS:
Operations:
Net investment income $ 2,490,190 $ 4,551,148
Realized gain from security transactions 444,917 1,329,029
Realized loss from options -- (56,000)
Realized loss from foreign currency transactions (1,268,288) (3,269,178)
Change in unrealized appreciation (depreciation) of
foreign currency denominated receivables and
payables (5,517) 15,727
Change in unrealized depreciation of investments (1,467,637) (1,731,589)
Change in unrealized appreciation (depreciation) of
forward foreign currency contracts (117,293) 625,249
------------ ------------
Increase in net assets resulting from operations 76,372 1,464,386
------------ ------------
Dividends to shareholders from:
Net investment income (820,403) (4,296,487)
Distributions in excess of net investment income (1,536,511)
Tax return of capital (264,750) --
------------ ------------
(2,621,664) (4,296,487)
------------ ------------
CAPITAL SHARE TRANSACTIONS: (Note 5)
Net proceeds from sales of shares 7,421,552 8,772,676
Reinvestment of dividends 1,775,764 2,880,879
------------ ------------
9,197,316 11,653,555
Cost of shares reacquired (40,541,694) (45,382,370)
------------ ------------
Decrease in net assets resulting from capital share
transactions (31,344,378) (33,728,815)
------------ ------------
Total decrease in net assets (33,889,670) (36,560,916)
NET ASSETS:
Beginning of year 75,814,422 112,375,338
------------ ------------
End of year (including undistributed net investment
income of $0 and $633,033, respectively) $ 41,924,752 $ 75,814,422
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
Global Income Fund Financial Statements
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each year
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1997 1996 1995 1994 1993
---- ---- -------- -------- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of $8.78 $9.00 $8.15 $8.96 $9.28
Year............................ ----- ----- ----- ----- -----
Income from Investment
Operations:
Net Investment Income........... 0.39 0.47 0.47 0.55+ 0.75
Net Gain (Loss) on Securities (0.27) (0.27) 0.92 (0.80) (0.31)
(both realized and unrealized). ------ ------ ----- ----- -----
Total from Investment Operations. 0.12 0.20 1.39 (0.25) 0.44
----- ----- ----- ----- -----
Less Distributions:
Dividends from Net Investment
Income......................... (0.13) (0.42) (0.54) -- (0.05)
Distributions in Excess of Net
Investment Income.............. (0.24) -- -- -- --
Distributions from Capital
Gains.......................... -- -- -- -- (0.01)
Distributions from Tax Return of (0.04) -- -- (0.56) (0.70)
Capital........................ ------ ----- ---- ----- -----
Total Distributions.............. (0.41) (0.42) (0.54) (0.56) (0.76)
----- ------ ----- ----- -----
Net Asset Value, End of Year..... $8.49 $8.78 $9.00 $8.15 $8.96
===== ===== ===== ===== =====
Total Return (a)................. 1.46% 2.33% 17.27% (2.79%) 4.90%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Year (000).... $41,925 $75,814 $112,375 $137,242 $251,725
Ratio of Gross Expenses to
Average Net Assets.............. 1.66% 1.46%* 1.60%* 1.56%* 1.93%*
Ratio of Net Expenses to Average
Net Assets...................... 1.66% 1.43% 1.52% 1.39% 1.27%
Ratio of Net Investment Income to
Average Net Assets.............. 4.46% 4.98% 5.21% 6.55% 8.01%
Portfolio Turnover Rate.......... 129.8% 157.5% 269.5% 148.4% 108.6%
</TABLE>
- -----------
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the year, reinvestment of dividends and
distributions at net asset value during the year and a redemption on the
last day of the year. A sales charge is not reflected in the calculation
of total return.
* If expenses were not assumed by the Adviser or reduced by a custodian fee
arrangement.
+ 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 Income 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 exchanges and traded on
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 on 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
amortized 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 foreign 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, 1997 decreased undistributed net investment income by
$501,559, decreased accumulated realized loss by $2,302,820 and decreased
aggregate paid in capital by $1,801,261.
<PAGE>
Global Income Fund
- -------------------------------------------------------------------------------
F. 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 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 FOREIGN CURRENCY CONTRACTS--The Fund may buy and sell forward foreign
currency contracts to settle purchases and sales of foreign denominated
securities. In addition, the Fund may enter into forward foreign 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 foreign currency contracts are included in realized
and unrealized gain (loss) from foreign currency transactions.
NOTE 2--Van Eck Associates Corporation earned fees of $419,471 for the year
ended December 31, 1997, 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 $3,002
for the year ended December 31, 1997, from commissions earned on sales of
shares of beneficial interest of the Fund after deducting $14,708 allowed to
other dealers. In accordance with the advisory agreement, the Fund reimbursed
Van Eck Associates Corporation $115,620 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, 1997, the Fund had no net earnings credits.
NOTE 3--Purchases and proceeds from sales of investments, other than short-
term obligations, aggregated $60,768,300 and $86,211,583, respectively, for
the year ended December 31, 1997. As of December 31, 1997, the Fund had
capital loss carryforwards available to offset future capital gains of
$4,212,408 expiring December 31, 2002, and December 31, 2004, in the amounts
of $2,731,357 and $1,481,051 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. Fees charged for the year ended
December 31, 1997 were $139,815. 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,
1997 1996
------------ ------------
<S> <C> <C>
Shares sold 860,021 997,824
Reinvestment of dividends 209,699 331,150
---------- ----------
1,069,720 1,328,974
Shares reacquired (4,763,897) (5,187,947)
---------- ----------
Net decrease (3,694,177) (3,858,973)
========== ==========
</TABLE>
<PAGE>
Global Income Fund
- -------------------------------------------------------------------------------
NOTE 6--FORWARD FOREIGN CURRENCY CONTRACTS--The Fund may buy and sell forward
foreign currency contracts to settle purchases and sales of foreign
denominated securities. In addition, the Fund may enter into forward foreign
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, 1997, the Fund had the
following outstanding forward foreign currency contracts:
<TABLE>
<CAPTION>
VALUE AT UNREALIZED
SETTLEMENT CURRENT APPRECIATION
CONTRACTS DATE VALUE (DEPRECIATION)
- --------- ---------- ------- --------------
<S> <C> <C> <C>
FORWARD FOREIGN CURRENCY PURCHASE CONTRACTS:
DEM 8,841,168
expiring 3/18/98 $5,011,275 $4,937,792 $ (73,483)
ITL 2,193,592,500
expiring 3/18/98 1,262,136 1,239,563 (22,573)
---------
(96,056)
---------
FORWARD FOREIGN CURRENCY SELL CONTRACTS:
DEM 3,290,855
expiring 3/18/98 1,846,513 1,837,942 8,571
GBP 4,853,825
expiring 3/18/98 7,893,174 7,977,812 (84,638)
IEP 710,000
expiring 3/18/98 1,030,920 1,012,602 18,318
ITL 1,200,000,000
expiring 3/18/98 681,817 678,100 3,717
NZD 5,250,000
expiring 3/18/98 3,081,750 3,032,173 49,577
---------
(4,455)
---------
$(100,511)
=========
</TABLE>
The Fund may incur additional risk from investments in forward foreign
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, 1997 the liability of the Fund's portion of the Plan is
$12,340.
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 schedule of portfolio investments of the Global Income Fund (the
"Fund"), (one of the series constituting the Van Eck Funds) as of December 31,
1997, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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, 1997, by correspondence with the custodian. 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, 1997, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated above, in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
February 23, 1998
<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.
Global Real Estate Fund
This Fund seeks long-term capital appreciation by investing in equity securities
of domestic and foreign companies which are principally engaged in the real
estate industry or which own significant real estate assets.
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.
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.
VAN ECK/CHUBB FUNDS
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Capital Appreciation Fund
Global Income Fund
Government Securities Fund
Growth and Income Fund
Tax-Exempt Fund
Total Return Fund
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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 or Van Eck/Chubb 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
www.vaneck.com
For account assistance please call (800) 544-4653
FR1998-0121-0122
DECEMBER 31, 1997
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
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[LOGO] VAN ECK GLOBAL
