J U N E 30, 1997
Van Eck
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Gold
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Opportunity
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Fund
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Semi-Annual
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Report
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[LOGO]
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VAN ECK GOLD OPPORTUNITY FUND
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1997 SEMI-ANNUAL REPORT
Dear Fellow Shareholder:
Although the physical demand for gold substantially exceeded the supply of
newly-mined gold and old scrap, bearish sentiment grew dramatically during the
first half of this year. Commercial gold demand, according to the World Gold
Council, rose 17% during the first quarter to the highest quarterly demand ever
recorded in monitored markets. However, investment demand, which fell from 424
tonnes in 1995 to 82 tonnes in 1996 continues to languish. Booming global stock
markets, prolonged low inflation rates and the strong dollar compared to
European currencies meant that the demand for gold asset diversification was
minimized. Additionally, actual central bank sales have been the prominent
forces in the gold market this year. Confidence has been severely shaken not
only by the actual sales, but even more so by the rhetoric surrounding possible
mobilization of the gold portion of reserves at central banks in Europe as each
country seeks to meet the budget and debt criteria for entry into the European
Monetary Union. Indeed, the July 3 announcement that the Reserve Bank of
Australia has sold a large portion of its monetary gold exacerbated these
concerns, presumably because the market seems to be inferring that the list of
potential official sellers is much longer than previously believed. These fears
enabled speculators to drive gold prices down to 12 1/2-year closing lows of
about $318 an ounce as open interest on the New York Commodities Exchange rose
to a near-record level of over 222,000 contracts on July 16.
GOLD SHARES
The weakness in the gold price, combined with continued fallout in the junior
exploration sector following the uncovering of the fraud at Bre-X Minerals,
contributed to significant declines in the price of gold shares around the world
since year-end 1996.
In North America, the Philadelphia Gold and Silver Index fell 18% during the
first half of 1997, making it the best performer among the regional gold share
indexes, helped by relatively good performances from Battle Mountain, Newmont
and Homestake - companies with low or declining costs, solid reserve bases and
growth potential. On June 30, Gold Opportunity had 19% of its assets in the
United States. The Toronto Gold and Silver Index, more than half of which is
made up by Barrick Gold and Placer Dome, fared less well, declining 27% in U.S.
dollar terms. Your Fund was 33% invested in Canadian shares on June 30. In
Australia, a 5% decline in the currency translated into a 24% decline in the
Australian Stock Exchange Gold Index through the end of June. The decline was
compounded by poor operating results at several mines due to record-breaking
rains in Western Australia and, in some cases, start-up problems at new or
expanding operations or those making the transition from open-pit to underground
mining. At June 30, 34% of your Fund was in Australian shares. Rising costs due
to the aging mines and continued labor unrest, compounded by an increased number
of holidays, contributed to poor operating results at many mines and a 34%
decline in the Johannesburg Gold Index in South Africa. Recognizing the problems
facing the industry there, we have remained significantly underweighted in this
sector, with just 3% of Gold Opportunity's assets in South Africa at June 30.
The continued pressure on the gold price and the Bre-X debacle have made it very
difficult for gold-mining companies to secure financing. We therefore reviewed
our holdings at the beginning of the quarter and sold shares of companies that
we believe will not be able to fund current exploration or development programs
and will thus have to come to the market to raise money. We have also sold the
"high-cost" producers in the Fund, such as Echo Bay, Pegasus Gold and Royal Oak.
Most of the pure gold shares we have kept in the portfolio are considered
defensive because of either their low-cost and solid reserve structure, or
because they have appreciable hedging positions in place (for example, Barrick,
Newmont, Eagle Mining). Others, selling at or below the net present value of
their assets, represent good value and are possible takeover candidates by
senior producers seeking growth through acquisition now that prices have come
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down. Several Australian companies fall into this category, such as Herald
Resources, Acacia Resources and Wiluna Mines.
The junior exploration companies we have kept have attractive properties with
sound geological potential and are adequately financed to complete current
drilling programs. On June 30, these "junior" explorers represented
approximately 30% of your Fund.
THE OUTLOOK*
We believe gold bullion is showing signs of a typically oversold
market--record-low sentiment, record-high speculative shorts, increased
volatility, companies shutting down high-cost mines and prices close to the
industry's average cost of production. Therefore, we have reduced the cash
portion of the Fund from 18% at March 31, to 6% at the end of the second
quarter.
While we believe the gold and gold-share markets are close to a bottom, we are
uncertain of the timing of any recovery. We have therefore positioned the equity
exposure of the Fund defensively by eliminating high-cost producers or those
with questionable balance sheets. We are maintaining a relatively high weighting
in Australia because many companies there are selling at discounts to their net
present values and therefore offer attractive valuations even without a higher
gold price. We expect their values to be realized either in the marketplace or
via takeovers by other companies seeking reserve growth. We expect the South
African industry to recover only slowly with a significant boost in the gold
price and will likely continue to be very underweighted in that area. We will
maintain a relatively high exposure to the junior sector where the inherent
growth potential far exceeds the industry average regardless of the gold price.
Finally, we do not expect to be raising cash at these prices and will probably
even add to those positions we favor now that prices have come down.
We appreciate your participation in the Gold Opportunity Fund and we look
forward to helping you meet your investment objectives in the future.
JOHN C. VAN ECK LUCILLE PALERMO
CHAIRMAN PORTFOLIO MANAGER
July 22, 1997
*AS YOU KNOW, THE GOLD OPPORTUNITY FUND HAS BEEN CLOSED TO NEW PURCHASES SINCE
APRIL 30, 1997. YOU HAVE BEEN SENT A PROXY ASKING YOU TO VOTE FOR A MERGER OF
THE FUND INTO THE VAN ECK GOLD/RESOURCES FUND. THE MERGER IS BEING PROPOSED IN
PART BECAUSE THE FUND'S INVESTMENT ADVISOR WILL SOON DISCONTINUE ITS VOLUNTARY
ABSORPTION OF A SUBSTANTIAL PORTION OF FUND EXPENSES. BECAUSE OF THE FUND'S
SMALL SIZE, THIS WOULD HAVE AN ADVERSE EFFECT ON PERFORMANCE, WHICH IN TURN
COULD REDUCE ASSETS AND FURTHER INCREASE THE FUND'S EXPENSE RATIO. PLEASE BE
AWARE, HOWEVER, THAT YOU MAY ALSO EXCHANGE INTO ANY ONE OF OUR OTHER FUNDS,
INCLUDING THE VAN ECK GLOBAL HARD ASSETS FUND AND THE VAN ECK INTERNATIONAL
INVESTORS GOLD FUND, WITHOUT INCURRING AN ADDITIONAL SALES CHARGE. TO MAKE AN
EXCHANGE, CALL 1-800-345-8506. PLEASE SEE THE BACK COVER OF THIS REPORT FOR A
LISTING OF ALL THE VAN ECK FUNDS AND THEIR OBJECTIVES OR CALL 1-800-826-2333 TO
SPEAK WITH A MARKETING REPRESENTATIVE TO DISCUSS YOUR OPTIONS.
--AUGUST 8, 1997
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PERFORMANCE RECORD AS OF 6/30/97
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AVERAGE ANNUAL AFTER MAXIMUM BEFORE SALES
TOTAL RETURN SALES CHARGE* CHARGE
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A shares--Life (since 1/5/95) (8.6)% (6.4)%
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1 year (32.2)% (28.1)%
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B shares--Life (since 4/24/96) (32.2)% (29.8)%
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1 year (31.7)% (28.1)%
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C shares--Life (since 1/5/95) (6.4)% (6.4)%
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1 year (28.9)% (28.2)%
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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 = 5.75%
B shares: maximum contingent deferred sales charge = 5.00%
C shares: 1% redemption charge, 1st year
This report must be accompanied or preceded by a Van Eck Gold & Money Funds
prospectus, which includes more complete information, such as charges and
expenses and the risks associated with international investing, including
currency fluctuations or controls, expropriation, nationalization and
confiscatory taxation. Please read the prospectus carefully before investing.
Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016
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GOLD OPPORTUNITY FUND
STATEMENT OF NET ASSETS JUNE 30, 1997 (UNAUDITED)
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NO. OF SHARES SECURITIES(A) VALUE (NOTE 1)
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GOLD PRODUCTION & EXPLORATION: 94.1%
AUSTRALIA: 33.5%
150,000 Acacia Resources Ltd. $ 196,677
36,201 Alkane Exploration 12,548
400,000 Australian Resources Ltd. 162,767
433 Coeur D'Alene 5,602
363,497 Consolidated Gold N.L. 79,435
350,000 Croesus Mining N.L. 118,684
120,000 Eagle Mining Corp. 228,778
400,000 Egerton Gold N.L. 46,720
99,100 Emperor Mines Ltd. 138,152
128,375 Ghana Gold Mines Ltd. 25,152
176,167 Giralia Resources N.L. 14,603
281,700 Goldstream Minerals N.L. 97,647
1,000,000 Gullewa Gold N.L. 26,374
150,200 Herald Resources Ltd. 75,833
15,080 Homestake Mining Co. 196,983
170,000 Menzies Gold N.L. 51,241
100,000 Mount Leyshon Gold Mines Ltd. 134,132
196,600 Normandy Mining Ltd. 220,740
10,000 Plutonic Resources Ltd. 31,197
50,000 Resolute Ltd. 88,919
161,780 Wiluna Mines Ltd. 57,296
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2,009,480
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CANADA: 32.6%
39,500 Alamos Minerals Ltd. 35,193
50,000 Aurizon Mines Ltd. 63,381
16,000 Barrick Gold Corp. 352,000
10,000 Bema Gold Corp. 60,483
20,000 Dayton Mining Corp. 69,538
94,450 El Callao Mining Corp. 78,677
10,000 Goldcorp Inc. (Class A) 71,250
35,000 Golden Night Resources Corp. 71,493
10,000 Greenstone Resources Ltd. 87,646
100,000 International Roraima Goldfields
(Special Warrant
expiring 10/18/97)(b)* 21,042
78,200 Meridian Gold Inc. 213,158
50,000 Metallica Resources Inc. 110,463
39,500 Minefinders Corp. 88,124
13,500 Miramar Mining Corp. 48,894
39,000 Nevsun Resources Ltd. 117,236
54,500 Northern Crown Mines 40,661
10,000 Pangea Goldfields Units(b) 28,974
10,000 Pacific Rim Mining Corp. (Special
Warrant expiring 4/03/98)(b)* 24,093
5,000 Placer Dome 81,875
32,500 Queenstake Resources Ltd. 47,789
1,200 Richmont Mines Ltd. 4,390
100,000 Rift Resources Ltd. 55,775
1,500 Rio Narcea Gold Mines Ltd. 4,507
24,700 Viceroy Resources Corp. 80,511
110,000 Vista Gold Corp. 98,802
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1,955,955
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GHANA: 3.9%
20,000 Ashanti Goldfields Co. Ltd.(GDR) 233,750
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PERU: 1.7%
5,300 Co. de Minas Buenaventura S.A.
(ADR) 104,344
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SOUTH AFRICA: 3.4%
15,866 Blyvooruitzicht Gold Mining Ltd.
(ADR) 24,791
50,000 Eastvaal Gold Holdings Ltd. 52,000
2,700 Vaal Reefs Exploration 129,938
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206,729
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UNITED STATES: 19.0%
33,600 Amax Gold 205,800
30,000 Battle Mountain Gold 170,625
25,000 Crown Resources Corp. 159,375
10,000 Getchell Gold Corp. 352,500
2,078 Homestake Mining Co. 27,143
5,750 Newmont Mining Corp. 224,250
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1,139,693
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TOTAL STOCKS & OTHER SECURITIES: 94.1%
(cost: $8,020,917) 5,649,951
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PRINCIPAL
AMOUNT SHORT-TERM OBLIGATION: 4.8%
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$290,000 General Electric Co. C.P. due 7/01/97
Yield of 5.90% (Amortized Cost:
$290,000) 290,000
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TOTAL INVESTMENTS: 98.9%
(cost: $8,310,917) 5,939,951
Other Assets Less Liabilities: 1.1% 67,563
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NET ASSETS: 100% $ 6,007,514
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(a) Unless otherwise indicated, securities owned are shares of common stock.
(b) Restricted security. See Note 6.
* Fair value as determined by the Board of Trustees.
GLOSSARY:
ADR--American Depositary Receipt
C.P.--Commercial Paper
GDR--Global Depositary Receipt
See Notes to Financial Statements.
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GOLD OPPORTUNITY FUND FINANCIAL STATEMENTS
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STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
ASSETS:
Investments at value (cost $8,310,917) (Note 1) $ 5,939,951
Receivables:
Securities sold 158,395
From Advisor 8,886
Dividends 453
Deferred organization costs and other assets (Note 1) 11,537
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Total assets 6,119,222
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LIABILITIES:
Payables:
Due to custodian 59,743
Capital shares redeemed 17,270
Accounts payable 34,695
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Total liabilities 111,708
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NET ASSETS $ 6,007,514
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CLASS A
Net asset value and redemption price per share
($4,540,359/581,093) $7.81
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Maximum offering price per share (NAV/(1-maximum sales
Commission)) $8.29
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CLASS B
Netasset value, offering price and redemption price per share
($775,552/99,394)(Redemption may be subject to a
contingent deferred sales charge within the first six
years of ownership) $7.80
=====
CLASS C
Net asset value, offering price and redemption price per share
($691,603/88,403) (Redemption may be subject to a
contingent deferred sales charge within the first year of
ownership) $7.82
=====
Net assets consist of:
Aggregate paid in capital $9,305,124
Unrealized depreciation of investments and foreign
denominated assets and liabilities (2,369,653)
Net investment loss (19,324)
Overdistributed realized gains (908,633)
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$ 6,007,514
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STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1997
INCOME:
Dividends
(less foreign taxes withheld of $3,205) $ 34,954
Interest 31,212
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Total income $ 66,166
EXPENSES:
Management (Note 2) 43,036
Distribution Class A (Note 4) 17,041
Distribution Class B (Note 4) 4,160
Distribution Class C (Note 4) 4,794
Administration (Note 2) 2,668
Transfer agency 39,111
Professional 9,750
Reports to shareholders 1,976
Registration 7,669
Custody 6,717
Trustee fees and expenses 1,012
Amortization of deferred organization costs 539
Other 3,824
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Total expenses 142,297
Expenses assumed by the Advisor (Note 2) (55,409)
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Net expenses 86,888
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Net investment loss (20,722)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 3):
Realized loss from security transactions (713,355)
Realized gain from foreign currency transactions 1,398
Change in unrealized depreciation of investments and
foreign denominated assets and liabilities (1,303,856)
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NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ (2,036,535)
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See Notes to Financial Statements.
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GOLD OPPORTUNITY FUND FINANCIAL STATEMENTS
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STATEMENTS OF CHANGES IN NET ASSETS
FOR THE
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
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INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ (20,722) $ 12,802
Realized loss from security
Transactions (713,355) (74,101)
Realized loss from futures contracts -- (38,901)
Realized loss from options -- (25,235)
Realized gain from foreign currency
Transactions 1,398 3,500
Change in unrealized depreciation of
investments, futures and foreign
denominated assets and liabilities (1,303,856) (1,042,260)
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Decrease in net assets
resulting from operations (2,036,535) (1,164,195)
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DIVIDENDS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME:
Class A Shares -- (16,550)
Class B Shares -- (1,842)
Class C Shares -- (1,219)
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-- (19,611)
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NET REALIZED GAIN:
Class A Shares -- (41,374)
Class B Shares -- (2,303)
Class C Shares -- (6,094)
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-- (49,771)
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(2,036,535) (1,233,577)
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CAPITAL SHARE TRANSACTIONS*:
Net proceeds from sales of shares:
Class A Shares 1,076,056 14,039,314
Class B Shares 668,516 527,413
Class C Shares 291,765 1,477,409
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2,036,337 16,044,136
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Reinvestment of dividends:
Class A Shares -- 49,656
Class B Shares -- 3,219
Class C Shares -- 6,671
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-- 59,546
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Cost of shares reacquired:
Class A Shares (3,414,510) (6,439,454)
Class B Shares (165,072) --
Class C Shares (597,505) (257,489)
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(4,177,087) (6,696,943)
Increase (decrease) in net assets
resulting from capital share transactions (2,140,750) 9,406,739
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Total increase in net assets (4,177,285) 8,173,162
Net Assets:
Beginning of period 10,184,799 2,011,637
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End of period $ 6,007,514 $ 10,184,799
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* SHARES OF BENEFICIAL INTEREST ISSUED AND REDEEMED (UNLIMITED NUMBER OF $.001
PAR VALUE SHARES AUTHORIZED):
FOR THE
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
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CLASS A
Shares sold 108,862 1,224,295
Reinvestment of dividends -- 4,912
Shares reacquired (363,032) (591,022)
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Net increase (decrease) (254,170) 638,185
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FOR THE PERIOD
FOR THE APRIL 24, 1996+
SIX MONTHS ENDED TO
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
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CLASS B
Shares sold 68,652 48,987
Reinvestment of dividends -- 318
Shares reacquired (18,563) --
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Net increase 50,089 49,305
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FOR THE
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
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CLASS C
Shares sold 28,991 133,587
Reinvestment of dividends -- 659
Shares reacquired (63,132) (22,596)
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Net increase (decrease) (34,141) 111,650
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+ Commencement of operations.
See Notes to Financial Statements
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GOLD OPPORTUNITY FUND
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FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
<TABLE>
<CAPTION>
CLASS A
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FOR THE FOR THE PERIOD
SIX MONTHS ENDED YEAR ENDED JANUARY 5, 1995(A)
JUNE 30, 1997 DECEMBER 31, TO
(UNAUDITED) 1996 DECEMBER 31, 1995
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<S> <C> <C> <C>
Net Asset Value, Beginning of Period................... $10.11 $ 9.67 $ 9.43
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Income from Investment Operations:
Net Investment Income (Loss)........................ (0.03) 0.02 0.06+
Net Gains (Loss) on Investments
(both realized and unrealized)................... (2.27) 0.49 0.35
------ ------ -----
Total from Investment Operations....................... (2.30) 0.51 0.41
------ ------ -----
Less Distributions:
From net investment income.......................... (0.02) (0.17)
--
From realized gains................................. (0.05) --
-- ------- --
Total Distributions.................................... (0.07) (0.17)
-- ------- ------
Net Asset Value, End of Period......................... $ 7.81 $10.11 $9.67
====== ======= ======
Total Return (b)....................................... (22.75%) 5.27% 4.35%
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RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000)........................ $4,540 $8,446 $1,906
Ratio of Gross Expenses to Average Net Assets(c)....... 2.79%(d) 3.07% 6.73%(d)
Ratio of Net Expenses to Average Net Assets............ 2.00%(d) 1.14% 0%(d)
Ratio of Net Investment Income (Loss)
to Average Net Assets............................... (0.45%)(d) 0.16% 0.63%(d)
Portfolio Turnover Rate................................ 90.44% 249.64% 184.76%
Average Commission Rate Paid(e) ....................... $0.0260 $0.0210
</TABLE>
<TABLE>
<CAPTION>
CLASS B
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FOR THE FOR THE PERIOD
SIX MONTHS ENDED APRIL 24, 1996(A)
JUNE 30, 1997 TO
(UNAUDITED) DECEMBER 31, 1996
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<S> <C> <C>
Net Asset Value, Beginning of Period................... $10.10 $11.99
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Income from Investment Operations:
Net Investment Income (Loss)........................ (0.03) 0.00
Net Gains (Loss) on Investments
(both realized and unrealized)................... (2.27) (1.80)
------ ------
Total from Investment Operations....................... (2.30) (1.80)
------ ------
Less Distributions:
From net investment income.......................... -- (0.04)
From realized gains................................. -- (0.05)
------ ------
Total Distributions.................................... -- (0.09)
------ ------
Net Asset Value, End of Period......................... $7.80 $10.10
======= ======
Total Return (b)....................................... (22.77)% (15.01)%
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RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000)........................ $776 $498
Ratio of Gross Expenses to Average Net Assets(c)....... 5.54%(d) 7.04%(d)
Ratio of Net Expenses to Average Net Assets............ 2.00%(d) 1.68%(d)
Ratio of Net Investment Income (Loss)
to Average Net Assets............................... (0.65%)(d) (0.35)%(d)
Portfolio Turnover Rate................................ 90.44% 249.64 %
Average Commission Rate Paid(e) ....................... $0.0260 $0.0210
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GOLD OPPORTUNITY FUND
---------------------
CLASS C
-------
FOR THE FOR THE PERIOD
SIX MONTHS ENDED YEAR ENDED JANUARY 5, 1995(A)
JUNE 30, 1997 DECEMBER 31, TO
(UNAUDITED) 1996 DECEMBER 31, 1995
----------- ---- -----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period................... $10.12 $ 9.67 $ 9.43
------- ------ ------
Income from Investment Operations:
Net Investment Income (Loss)........................ (0.03) 0.00 0.07+
Net Gains (Loss) on Investments
(both realized and unrealized)................... (2.27) 0.51 0.34
------ ------ -----
Total from Investment Operations....................... (2.30) 0.51 0.41
------ ------ ------
Less Distributions:
From net investment income.......................... -- (0.01) (0.17)
From realized gains................................. -- (0.05) --
------- ------- --
--
Total Distributions.................................... (0.06) (0.17)
------- ------- ------
--
Net Asset Value, End of Period......................... $7.82 $10.12 $9.67
===== ======= =====
Total Return (b)....................................... (22.73%) 5.27% 4.35%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000)........................ $692 $1,241 $105
Ratio of Gross Expenses to Average Net Assets(c)....... 5.03%(d) 5.81% 24.34%(d)
Ratio of Net Expenses to Average Net Assets............ 2.00%(d) 1.25% 0%(d)
Ratio of Net Investment Income (Loss)
To Average Net Assets............................... (0.52%)(d) 0.07%(d) 0.68%(d)
Portfolio Turnover Rate................................ 90.44% 249.64% 184.76%
Average Commission Rate Paid(e) ....................... $0.0260 $0.0210
</TABLE>
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(a) Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period and a redemption on the last
day of the period. A sales charge is not reflected in the calculation of
total return. Total return for a period of less than one year is not
annualized.
(c) If the expenses had not been assumed by the Advisor or reduced by a
custodian fee arrangement.
(d) Annualized.
(e) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades
in which a commission is charged.
+ Based on average shares outstanding.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Van Eck Funds (the "Trust"), organized as a Massachusetts business trust on
April 3, 1985, is registered under the Investment Company Act of 1940. The
following is a summary of significant accounting policies consistently followed
by the Gold Opportunity Fund series, a non-diversified fund (the "Fund") of the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements in conformity with generally accepted accounting principles
requires the use of management's estimates, and the actual amounts could differ.
A. SECURITY VALUATION--Securities traded on national or foreign exchanges are
valued at the last sales prices reported at the close of business on the
last business day of the period. Over-the-counter securities and listed
securities for which no sale was reported are valued at the mean of the bid
and asked prices. Short-term obligations are valued at cost which with
accrued interest approximates value. Securities for which quotations are
not available are stated at fair value as determined by the Board of
Trustees.
B. FEDERAL INCOME TAXES--It is the Fund's policy to comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore,
no federal income tax provision is required.
C. CURRENCY TRANSLATION--Assets and liabilities denominated in foreign
currencies and commitments under forward currency contracts are translated
into U.S. dollars at the mean of the quoted bid and asked prices of such
currencies. Purchases and sales of investments are translated at the
exchange rates prevailing when such investments were acquired or sold.
Income and expenses are translated at the exchange rates prevailing when
accrued.
<PAGE>
GOLD OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
The portion of realized and unrealized gains and losses on investments that
result from fluctuations in foreign currency exchange rates are not
separately disclosed. Recognized gains or losses attributable to foreign
currency fluctuations on other foreign denominated assets and liabilities
are recorded as net realized gains and losses from foreign currency.
D. OTHER--Security transactions are accounted for on the date the securities
are purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned.
E. DISTRIBUTIONS TO SHAREHOLDERS--Distributions from net investment income and
realized gains, if any, are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
F. FORWARD CURRENCY CONTRACTS--The Fund may buy and sell forward currency
contracts to settle purchases and sales of foreign denominated securities.
In addition, the Fund may enter into forward currency contracts to hedge
foreign denominated assets. Realized gains and losses from forward currency
contracts are included in realized gain from foreign currency transactions.
The Fund may incur additional risk from investments in forward currency
contracts if the counterparty is unable to fulfill its obligations or there are
unanticipated movements of the foreign currency relative to the U.S. dollars.
G. DEFERRED ORGANIZATION COSTS--Deferred organization costs are being
amortized over a period of five years beginning on January 5, 1995
(commencement of operations).
H. USE OF DERIVATIVE INSTRUMENTS
OPTION CONTRACTS--The Fund may invest, for hedging and other purposes, in
call and put options on securities, currencies and commodities. Call and
put options give the Fund the right but not the obligation to buy (calls)
or sell (puts) the instrument underlying the option at a specified price.
The premium paid on the option, should it be exercised, will, on a call,
increase the cost of the instrument acquired and, on a put, reduce the
proceeds received from the sale of the instrument underlying the option. If
the options are not exercised, the premium paid will be recorded as a
capital loss upon expiration. The Fund may incur additional risk to the
extent the value of the underlying instrument does not correlate with the
movement of the option value.
The Fund may also write call or put options. As the writer of an option,
the Fund receives a premium. The Fund keeps the premium whether or not the
option is exercised. The premium will be recorded, upon expiration of the
option, as a short-term capital gain. If the option is exercised, the Fund
must sell, in the case of a written call, or buy, in the case of a written
put, the underlying instrument at the exercise price. The Fund may write
only covered puts and calls. A covered call option is an option in which
the Fund owns the instrument underlying the call. A covered call sold by
the Fund exposes it during the term of the option to possible loss of
opportunity to realize appreciation in the market price of the underlying
instrument or to possible continued holding of an underlying instrument
which might otherwise have been sold to protect against a decline in the
market price of the underlying instrument. A covered put exposes the Fund
during the term of the option to a decline in price of the underlying
instrument. A put option sold by the Fund is covered when, among other
things, cash or short-term liquid securities are placed in a segregated
account to fulfill the obligations undertaken. The Fund may incur
additional risk from investments in written currency options if there are
unanticipated movements in the underlying currencies.
NOTE 2--Van Eck Associates Corporation (the "Advisor") earned fees of $43,036
for investment management and advisory services. The fee is based on an annual
rate of 1% of the Fund's average daily net assets. The Advisor agreed to assume
all expenses for the six months ended June 30, 1997, exceeding 2% of average
daily net assets. For the six months ended June 30, 1997, the Fund's expenses
were reduced by $55,409 under this agreement. Van Eck Securities Corporation
(the "Distributor") received $3,087 for the six months ended June 30, 1997 from
commissions earned on sales of Class A shares
<PAGE>
GOLD OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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after deducting $12,661 allowed to other dealers. Certain of the officers and
trustees of the Trust are officers, directors or stockholders of Van Eck
Associates Corporation and Van Eck Securities Corporation.
The Fund has a fee arrangement, based on cash balances left on deposit with the
custodian, that will reduce the Fund's operating expenses.
NOTE 3--Purchases and proceeds from sales of investments, other than short-term
obligations, aggregated $6,626,428 and $8,299,407, respectively, for the six
months ended June 30, 1997. For federal income tax purposes, the cost of
investments owned at June 30, 1997, was $8,310,917. As of June 30, 1997, net
unrealized depreciation for federal income tax purposes aggregated $2,370,965 of
which $104,784 related to appreciated investments and $2,475,749 related to
depreciated investments.
NOTE 4--Pursuant to a Rule 12b-1 Plan of Distribution (the "Plan"), the Fund is
authorized to incur distribution expenses which will principally be payments to
securities dealers who have sold shares and service shareholder accounts and
payments to Van Eck Securities Corporation ("VESC"), the distributor, for
reimbursement of other actual promotion and distribution expenses incurred by
the distributor on behalf of the Fund. The amount paid under the Plan in any one
year is limited to .50% of average daily net assets for Class A shares and 1.00%
of average daily net assets for Classes B and C shares (the "Annual
Limitations"). For Class C shares, the Fund will pay to the selling broker at
the time of sale 1% of the amount of the purchase. Such 12b-1 advanced fees will
be expensed by the Fund over the course of the first twelve months from the time
of purchase. Should the payments to the brokers made by the Fund exceed, on an
annual basis, 1% of average daily net assets, VESC will reimburse the Fund for
any excess. Shareholders redeeming within one year of purchase will be subject
to a 1% redemption charge which will be retained by the Fund. After the first
year, the 1% 12b-1 fee will be paid to VESC which will retain a portion of the
fee for distribution services and pay the remainder to brokers.
Distribution expenses incurred under the Plan that have not been paid because
they exceed the Annual Limitation may be carried forward to future years and
paid by the Fund within the Annual Limitation. VESC has waived its right to
reimbursement of the carried forward amounts incurred for the period January 5,
1995 through September 30, 1997 in the event the Plan is terminated, unless the
Board of Trustees determines that reimbursement of the carried forward amounts
is appropriate. The cumulative amount of excess distribution expenses incurred
over the Annual Limitation at June 30, 1997 was $61,548 for Class A shares,
$183,533 for Class B shares and $10,254 for Class C shares.
NOTE 5--The Fund invests in foreign securities. Investments in foreign
securities may involve a greater degree of risk than investments in domestic
securities due to political, economic or social instability. In addition, some
foreign companies are not generally subject to the same uniform accounting,
auditing and financial rules as are American companies, and there may be less
governmental supervision and regulation. Foreign investments may also be subject
to foreign taxes, dividend collection fees and settlement delays.
The Fund has significant investments in South African securities. South African
securities may be subject to greater political, social and economic risks than
investments in more developed foreign markets. Emerging market countries, such
as South Africa, may present the risk of nationalization of businesses, or
prohibitions of repatriation of assets, and may have less protection of property
rights than more developed countries.
The Fund may concentrate its investments in companies which are significantly
engaged in the exploration, development, production or distribution of gold and
other metals, minerals, oil, natural gas and coal, and by investing in gold
bullion and coins. Since the Fund may so concentrate, it may be subject to
greater risks and market fluctuations than other more diversified portfolios.
The production and marketing of gold and other natural resources may be affected
by actions and changes in governments. In addition, gold and natural resources
securities may be cyclical in nature.
NOTE 6--RESTRICTED SECURITIES
The following securities are restricted as to sale:
PERCENT OF
DATE NET ASSETS
ACQUIRED COST VALUE AT 6/30/97
-------- ---- ----- ----------
International Roraima
Goldfields (Special
Warrant) 10/22/96 $ 59,180 $ 21,042 0.35%
Nevsun (Warrant) 1/24 /97 -- -- --
Northern Crown Mines
(Warrant) 3/24 /97 -- -- --
Pacific Rim Mining Corp.
(Special Warrant) 4/02/97 45,896 24,093 0.40%
Tombstone Exploration Co.
Ltd. (Warrants) 10/03/96 -- -- --
Vista Gold Corp. (Warrants) 4/25/96 -- -- --
Rift Resources Ltd.
(Warrants) 11/13/96 -- -- --
<PAGE>
GOLD OPPORTUNITY FUND
- --------------------------------------------------------------------------------
NOTE 7--TRUSTEE DEFERRED COMPENSATION PLAN
The Trust established a Deferred Compensation Plan (the "Plan") for trustees.
Commencing January 1, 1996, the Trustees can elect to defer receipt of their
trustee fees until retirement, disability or termination from the board. The
Fund's contributions to the Plan are limited to the amount of fees earned by the
participating trustees. The fees otherwise payable to the participating trustees
are invested in shares of the Van Eck Funds as directed by the trustees. If a
trustee has directed all or a portion of his fee to be invested in the Fund, the
unfunded liability remains outstanding in the Fund's records since the Fund
cannot invest in itself. The Plan has been approved by the Internal Revenue
Service.
As of June 30, 1997, the total value of the assets and corresponding liability
of the Fund's portion of the Plan is $1,150.
<PAGE>
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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.
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.
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. For a free Van Eck
Gold and Money Funds or Van Eck Global Funds prospectus, please call the number
below. Please read the prospectus before investing.
FR1997-0804-0020
[LOGO]
Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016
www.vaneck.com
For account assistance please call (800) 544-4653
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