VAN ECK INTERNATIONAL INVESTORS GOLD FUND
-----------------------------------------
1997 SEMI-ANNUAL REPORT
Dear Fellow Shareholder:
Although the physical demand for gold grew faster than, and 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 (Exhibit 1). Booming global stock markets, prolonged low inflation
growth rates and the strong dollar compared to European currencies meant that
the demand for gold asset diversification was minimized. Global private
investment portfolios hold an estimated $260 billion of gold as preferred cash
reserves. It is the swings in these holdings that cause the big market moves in
the gold price when confidence in paper currencies, financial markets, fiscal
budgets, central bank management, bank solvency and the international monetary
system either rises or falls.
It was the fear of large-scale official sector sales, which hung over the gold
market for most of last year, that dominated the market for the first half of
this year. The big uncertainty is the gold reserve policy of the new European
Central Bank if the European Monetary Union commences operations. Until that
time, prospective members are allowed to sell gold. Political pressures to
reduce fiscal deficits have caused some central banks to maximize earnings by
reducing the gold portion of their monetary reserves and investing the proceeds
in government securities. Other central banks have bought gold. Last year, 19
countries increased their gold reserves, three more than the number of sellers.
Net reported sales of 239 tonnes reflected gross sales of 588 tonnes against
gross purchases of 349 tonnes. Among last year's purchasers, China and Russia
were prominent.
The climax of this year's central bank selling was the unexpected announcement
on July 3 of the sale of 167 tonnes of gold by the Reserve Bank of Australia
over the past six months. The gold portion of Australia's monetary reserves thus
was reduced from about 15% to 5%. In contrast, the Bank of Canada also reduced
the gold content of its monetary reserves to approximately 5%, but this was done
openly and over a period of twelve years at prices that were profitable for the
Canadian gold miners. The Australian sales were mostly done at prices below the
cost of mining in Australia. Confidence was, of course, shaken by this action,
which demoralized the mining industry. The Prime Minister of Australia, John
Howard, publicly tried to justify the action, and accordingly demonstrated how
political forces dominate the so-called independence of the Reserve Bank of
Australia.
Speculators have exploited this fear and uncertainty by selling large amounts of
gold short. One estimate puts the short interest at over 2,000 tonnes. They
presumably hope to cover their shorts by buying from other central banks if they
make further sales. This pressure has driven the price of gold down from $368.30
an ounce at the end of 1996 to $334.80 an ounce at the end of June 1997. This
decline was part of an intermediate downtrend that began in February 1996 at
$415.50 an ounce and finally reached a closing low of $318.00 an ounce on July
16, 1997.
<TABLE>
<CAPTION>
EXHIBIT 1 WORLD GOLD DEMAND AND SUPPLY
(TONNES)
1990 1991 1992 1993 1994 1995 1996
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DEMAND
Commercial (fabrication) ............ 2,559 2,723 3,112 2,917 2,994 3,182 3,227
Investment (1) ...................... 535 93 403 543 156 424 82
-----------------------------------------------------------------------
Total 3,094 2,816 3,515 3,460 3,150 3,606 3,309
SUPPLY
Mine production, old gold scrap ..... 2,663 2,639 2,719 2,863 2,893 2,894 2,990
Shortage (2) ........................ 431 177 796 597 257 712 319
Notes: (1) Ingots, coins, bars and "bank" investment
(2) Met by net central bank sales and loans for mine forward sales and option hedging
Source: Gold Fields Mineral Services Ltd. "Gold 1997"
</TABLE>
<PAGE>
EVALUATION OF GOLD CONCENTRATION POLICY
The decline of the gold price to 1993 lows has, of course, been disappointing to
us. We accordingly have seriously reexamined the reasoning behind our gold
concentration policy. Our conclusion, briefly, is that our Fund should remain
concentrated in gold mining as we believe that conditions suggest the
possibility of strong upside potential for the following reasons:
1. GOLD IS UNDERVALUED
The price of gold is undervalued compared to the cost of living and stock
valuations. Since 1990 the U.S. Consumer Price Index has risen 20% from 130.7
to 156.9 last year. If the price of gold was at theoretical equilibrium in
1990 at $384 an ounce (Exhibit 2), its theoretical value today would be
approximately $460 an ounce. It accordingly is selling at a discount of about
30%. Historically, over long periods of time, the price of gold has
maintained its purchasing power compared to the decline in the purchasing
power of currencies, but it moves in cycles.
EXHIBIT 2
The Price of Gold and Its Mean Trend
January 1970- June 1997
[GRAPH]
The ratio of the Dow Jones Industrial Average to the price of gold reached a
peak of 25.28 on July 16. It was below one in 1980. Historically, markets
have often reverted to their mean averages. In our opinion, there is a good
probability that the Dow/gold ratio will move to its mean and gold will again
outperform the Dow when stock markets correct their recent moves.
American investors are taking advantage of the low gold prices by buying more
American Eagle coins so far this year than the totals for each of the
previous three years.
2. A STRONGER GLOBAL BUSINESS CYCLE
Global monetary policies are still stimulating demand. Although foreign
central bank holdings of U.S. Treasuries held at the Federal Reserve have
declined slightly since April, total global holdings of U.S. Treasuries held
by official institutions, including the Federal Reserve's outright holdings,
continue to rise at over a 10% annual rate as they have since 1992. Yield
curves have become steeper since 1995. In Japan, negative real short-term
yields prevail as a result of a nominal annual interest rate of about 1/2 of
1% and an inflation rate of over 1%. In continental Europe, real short-term
interest rates are approximately 1 1/2% with 3% nominal annual interest rates
and 1 1/2% inflation. With unemployment rates at record levels in France and
Germany, we expect political pressures will continue to be stimulative.
Growth in Japan and Europe is slowly responding. Continental consumers have
been underspending in recent years and pent-up demand is high. When it is
unleashed, production will accelerate. In Russia, the five-year decline in
production has stopped and growth is beginning. A broadbased economic upturn
in Asia is expected by the first half of 1998. As the global economy gathers
momentum and excess capacity is absorbed, money supply growth rates and
cyclical inflationary pressures may well accelerate.
3. EUROPEAN MONETARY UNION -- WEAKER DOLLAR
Although the dollar has been strong since 1995, its long-term trend has been
down. The creation of a single European currency will be a very important
development in the international monetary system. The dollar will have its
first real competition since the 1920's when it surpassed the pound sterling.
Mr. C. Fred Bergsten, Director of the Institute for International Economics,
in a FOREIGN AFFAIRS July/August 1997 article, "The Dollar and the Euro,"
estimates that the shift from dollars into euros could amount to between $500
billion and $1 trillion. This could drive down the dollar substantially. The
euro's rough parity with the dollar is probably inevitable. Volatility
between the world's key currencies will increase significantly. In addition,
America's external economic position will continue to raise doubts about the
future stability and value of the dollar. The United States has run current
account deficits for the last 15 years. Its net foreign debt exceeds $1
trillion and is rising annually by 15 to 20%. The European Union, in
contrast, has a roughly balanced international asset position and has run
modest surpluses in its international accounts in recent years. Gold has
often been a hedge against a weak dollar.
4. RISING ECONOMIC AND FINANCIAL RISKS
Central bank easy money policies have been and still are contributing to
further debt and asset build-ups and speculation. Low interest rates in Japan
and Switzerland have encouraged vast speculative positions in U.S. debt
securities. Consumer sentiment in the United States is high and is resulting
in growing debt burdens as consumers go further into debt. Eventually they
become excessive as faster growing debt service costs squeeze slow-growing
consumer income. Stock market valuations are high. The rapid growth from an
estimated $50 trillion notional amounts outstanding of finan-
<PAGE>
cial derivatives two years ago to approximately $70 trillion today and their
increasing complexity has multiplied the potential for a shock to the
financial system. The bullish globalized marketplace in which confidence is
now so high will be faced with heightened risks if and when business activity
picks up outside the United States, liquidity shrinks and credit conditions
tighten. When market conditions turn less favorable, there is a real danger
of a market meltdown, a generalized credit contraction, although corrective
mechanisms are supposed to be in place. Including this bull market,
historically there have been six great inflationary periods in financial
assets since the South Sea Bubble of 1720. In each case, once security
speculation was over, investors increased their gold holdings and the real
prices of gold rose for an average of three years. Gold is an owned monetary
asset, not someone else's liability.
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, International Investors had 29% 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 20% 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. Less than 10% of your Fund is in Australian shares. Rising costs due to
the aging mines and to 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 reduced the South African exposure of your Fund
from 38% at year-end 1996 to 28% by the end of June.
Many mining companies have sold gold forward for periods of three years or more
and thus have protected their earnings and cash positions during this period of
extreme gold price weakness. Other companies may find it difficult to secure
financing for their current exploration or development programs. We accordingly
reviewed our holdings and have placed emphasis on what we believe to be the
better valued mines and prospects and companies that are restructuring and
aiming at enhancing shareholder values. We have sold the "high-cost" producers
in the Fund, such as Echo Bay and Royal Oak. We also have increased the cash
position to 10%.
DIVIDEND NEWS
A quarterly dividend of $.02 a share on Class A shares was paid on June 30, 1997
to shareholders of record on June 26, 1997. You should have already received
either a check or, if you participate in the dividend reinvestment plan, a
statement showing the number of shares purchased for your account at net asset
value on the dividend reinvestment date, June 30, 1997.
CONCLUSION
No one, including ourselves, knows when the next bull market in gold and gold
shares will begin, if ever. However, we believe the gold market is discounting
more net central bank gold sales than are likely to appear. A Bank of France
senior officer recently said, "There is no advantage to sell gold. Maximum
return was not an objective of monetary management." The Bundesbank annual
report stated that gold reserves are intended to ensure financial integrity and
to give it the necessary backing under difficult underlying conditions. The
German Minister of Finance said Germany would not sell gold. For the reasons
listed above, we expect Western investment demand to increase gradually over the
next few years. Since the price of gold is now at unusually low levels and the
equity markets are at record high levels, we believe that gold share investing
currently represents both a prudent diversification vehicle as well as an asset
with significant long-term upside potential.
We appreciate your participation in the International Investors Gold Fund and we
look forward to helping you meet your investment objectives in the future.
[PHOTO] [PHOTO]
JOHN C. VAN ECK LUCILLE PALERMO
CHAIRMAN PORTFOLIO MANAGER
July 22, 1997
<PAGE>
GOLD SHARES AND
YOUR INCOME PORTFOLIO
JUNE 30, 1977 - June 30, 1997
[GRAPH]
THIS EXAMPLE ILLUSTRATES THE SUPERIOR PERFORMANCE OF A PORTFOLIO (ORIGINAL TOTAL
INVESTMENT OF $1,000) INVESTED FOR 20 YEARS (PERIOD ENDED 6/30/97), 80% IN THE
UNMANAGED LEHMAN BROTHERS GOVERNMENT BOND INDEX* AND 20% IN INTERNATIONAL
INVESTORS GOLD FUND (II) OVER A PORTFOLIO INVESTED 100% IN THE SAME BOND INDEX.
** THE PORTFOLIO THAT INCLUDED GOLD SHARES (II) PROVIDED AN AVERAGE ANNUAL RATE
OF RETURN OF 11.0% COMPARED TO 9.5% ON THE BONDS-ONLY PORTFOLIO, RESULTING IN
THE SUBSTANTIAL DIFFERENCE IN THE FINAL VALUES OF THE PORTFOLIOS
GOLD SHARES AND
YOUR GROWTH PORTFOLIO
JUNE 30, 1977 - June 30, 1997
[GRAPH]
THIS EXAMPLE ILLUSTRATES HOW GOLD SHARES MIGHT HAVE AFFECTED THE PERFORMANCE OF
A STOCK PORTFOLIO INVESTED IN THE S&P 500 INDEX, AN UNMANAGED STOCK INDEX, OVER
A 20-YEAR PERIOD. THE PORTFOLIO THAT INCLUDED 20% INTERNATIONAL INVESTORS GOLD
FUND WOULD HAVE ACHIEVED AN AVERAGE ANNUAL RATE OF RETURN OF 16.1% VERSUS 15.9%
FOR THE STOCK-ONLY PORTFOLIO.** THE ABOVE CHART ILLUSTRATES THE PERFORMANCE OF
BOTH PORTFOLIOS FOR AN ORIGINAL $1,000 INVESTMENT.
* U.S. Treasury Securities, which comprise the Lehman Brothers Government Bond
Index, are backed by the U.S. Government for payment of principal and
interest. Shares of International Investors Gold Fund are not so backed.
** The portfolios with 20% held in International Investors were rebalanced
monthly.
The S&P 500 and the Lehman Brothers Government Bond Index are unmanaged
indexes. Past performance is not indicative of future results. Investment
return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
++ Source: U.S. Department of Labor
HOW A $10,000 INVESTMENT IN
INTERNATIONAL INVESTORS GOLD FUND-CLASS A GREW TO $619,937
AS OF JUNE 30, 1997 THE AVERAGE ANNUAL TOTAL RETURNS WERE..
Before Sales After Maximum
Charge Sales Charge of
5.75%
- --------------------------------------------------------------------------------
A shares-Life (since 2/10/56) 10.6% 10.5%
- --------------------------------------------------------------------------------
Past twenty years 12.3% 12.0%
- --------------------------------------------------------------------------------
Past fifteen years 6.8% 6.4%
- --------------------------------------------------------------------------------
Past ten years (1.6)% (2.2)%
- --------------------------------------------------------------------------------
Past five years 2.3% 1.1%
- --------------------------------------------------------------------------------
Past one year (28.2)% (32.3)%
- --------------------------------------------------------------------------------
Past performance is not indicative of future results.
C shares are no longer publicly offered.
[CHART]
Note: International Investors Gold Fund became a gold-oriented fund in 1968.
<PAGE>
THE CHART BELOW ILLUSTRATES HOW A $10,000 INVESTMENT IN INTERNATIONAL INVESTORS
GOLD FUND-CLASS A WITH INCOME, DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
REINVESTED WOULD HAVE GROWN TO $619,937 OVER THE LIFE OF THE FUND. IN THE OTHER
CHARTS TO THE LEFT, YOU WILL ALSO SEE EXAMPLES OF HOW INTERNATIONAL INVESTORS
GOLD FUND-CLASS A SHARES MIGHT ENHANCE THE RETURNS OF TWO PORTFOLIOS, ONE
GROWTH, THE OTHER INCOME-ORIENTED. THIS INFORMATION IS PROVIDED STRICTLY FOR
ILLUSTRATIVE PURPOSES AND IS NOT TO BE CONSTRUED AS A GUARANTEE OF FUTURE
RETURNS IN INTERNATIONAL INVESTORS GOLD FUND OR ANY VAN ECK FUND. PAST
PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
[CHART]
<PAGE>
INTERNATIONAL INVESTORS GOLD FUND
STATEMENT OF NET ASSETS JUNE 30, 1997 (unaudited)
NO. OF SHARES SECURITIES(a) VALUE (NOTE 1)
- ------------- ------------- --------------
AUSTRALIA: 9.80%
1,100,000 Acacia Resources Ltd. ...................... $ 1,442,295
2,400,000 Australian Resources Ltd. .................. 976,600
278,686 Consolidated Gold N.L ...................... 60,901
818,100 Eagle Mining Corp. ......................... 1,559,693
500,000 Emperor Mines Ltd. ......................... 697,034
1,668,210 Ghana Gold Mines Ltd. ...................... 326,841
609,800 Great Central Mines N.L .................... 1,158,896
4,000,000 Gullewa Gold N.L ........................... 105,497
100,000 Herald Resources Ltd. ...................... 50,488
1,200,000 Menzies Gold N.L ........................... 361,704
700,000 Mt. Leyshon Gold Mines Ltd. ................ 938,923
123,357 Newcrest Mining Ltd. ....................... 340,125
3,176,890 Normandy Mining Ltd. ....................... 3,566,979
4,344,233 Plutonic Resources Ltd. .................... 13,552,690
500,000 Resolute Samantha Gold N.L ................. 889,189
404,400 Wiluna Mines Ltd. .......................... 143,225
700,000 WMC Ltd. ................................... 4,484,375
-----------
30,655,455
-----------
CANADA: 20.14%
98,500 Alamos Minerals Ltd. ....................... 87,759
920,000 Barrick Gold Corp. ......................... 20,240,000
220,000 Bema Gold Corp. ............................ 1,330,629
43,600 Boliden Ltd. (Installment Receipt) ......... 232,125
200,000 Cambior Inc. ............................... 2,274,456
281,600 Canarc Resources Corp. ..................... 191,738
250,000 Dakota Mining Corp. ........................ 250,000
400,000 El Callao Mining Corp. ..................... 333,201
320,000 Goldcorp Inc. (Class A) .................... 2,280,000
160,000 Golden Knight Resources Ltd. ............... 326,826
100,000 Greenstone Resources Ltd. .................. 876,462
150,000 Meridian Gold Inc. ......................... 407,446
157,900 Minefinders Corp. Ltd. ..................... 352,274
800,000 Miramar Mining Corp. ....................... 2,897,396
75,000 Nevsun Resources Ltd. ...................... 225,454
268,400 Northern Crown Mines Ltd. .................. 200,247
65,000 Pacific Rim Mining Corp.
(Special Warrant Expiring 4/04/98) (c)*.. 156,602
140,000 Pangea Goldfields Inc. ..................... 405,635
910,000 Placer Dome Inc. ........................... 14,901,250
80,000 Prudential Steel Ltd. ...................... 2,202,021
324,900 Queenstake Resources Ltd. .................. 477,742
250,000 Richmont Mines Inc. ........................ 914,491
14,400 Rio Narcea Gold Mines Ltd. ................. 43,287
120,000 Teck Corp. (Class B) ....................... 2,429,467
50,000 TrizecHahn Corporation ..................... 1,068,750
1,400,000 TVX Gold Inc. .............................. 7,437,500
500,000 Vista Gold Corp. ........................... 449,096
-----------
62,991,854
-----------
GHANA: 0.59%
157,500 Ashanti Goldfields Co. Ltd. (GDR) .......... 1,840,781
-----------
NETHERLANDS: 1.39%
80,000 Royal Dutch Petroleum Co.
(N.Y. Registry Shares) ................... 4,350,000
-----------
PERU: 0.28%
44,500 Co. de Minas Buenaventura S.A. (ADR) ....... 876,094
-----------
SOUTH AFRICA: 28.46%
66,000 Anglo American Corp. of South Africa (b)$ .. 3,984,750
3,024,160 Avgold Ltd. (b) ............................ 2,910,755
2,405,000 Avmin Ltd. ................................. 8,522,719
1,000,000 Beatrix Mines Ltd. ......................... 4,550,000
267,569 Blyvooruitzicht Gold Mining Co. Ltd. (b) ... 391,327
1,687,200 Deelkraal Gold Mining Co. Ltd. (b) ......... 1,164,168
712,500 Driefontein Consolidated ................... 4,809,376
126,050 Durban Roodeport Deep Ltd. (b) ............. 512,078
83,924 Durban Roodeport Deep, Ltd. 8% Preferred ... 350,724
1,846,700 Elandsrand Gold Mining Co. Ltd. (b) ........ 6,636,638
541,327 Evander Gold Mines Ltd. (b) ................ 2,317,579
940,649 Free State Consolidated Gold Mines Ltd. (b) 4,703,245
82,000 Gold Fields of South Africa Ltd. (ADR) ..... 1,927,000
739,430 Harmony Gold Mining Co. Ltd. (ADR) ......... 3,419,864
645,000 Impala Platinum Holdings Ltd. (ADR) ........ 7,155,501
1,248,657 Kloof Gold Mining Ltd. (ADR) ............... 7,413,901
439,780 Potgietersrust Platinum Ltd. ............... 3,270,864
1,315,000 Randfontein Estate Gold .................... 2,769,550
292,792 Rustenburg Platinum Holdings Ltd. (ADR) .... 5,343,452
151,100 Vaal Reef Exploration ...................... 7,271,688
775,009 Western Area Gold Mining Co. Ltd. (ADR) .... 5,182,873
183,365 Western Deep Levels Ltd. (ADR) ............. 4,377,839
----------
88,985,891
----------
UNITED KINGDOM: 0.27%
500,000 Reunion Mining PLC ......................... 832,425
----------
UNITED STATES: 28.69%
100,000 Amax Gold, Inc. ............................ 612,500
20,000 Amerco Co. ................................. 602,500
222,000 Battle Mountain Canada, Inc. ............... 1,262,623
1,500,000 Battle Mountain Gold Co. ................... 8,531,250
27,000 Bedford Property Investors Inc. ............ 543,375
35,000 Cali Realty Corp. .......................... 1,190,000
45,000 Capstar Hotel Co. .......................... 1,440,000
45,750 Carramerica Realty Corp. ................... 1,315,313
15,000 Cross Timbers Oil Co. ...................... 288,750
100,000 Crown Resources Corp. ...................... 637,500
22,300 Ensco International Inc. ................... 1,176,325
40,000 Excel Realty Trust Inc. .................... 1,055,000
440,000 Freeport-McMoran Copper & Gold Inc.
(Class A) ................................ 12,870,000
200,000 Getchell Gold Corp. ........................ 7,050,000
1,360,000 Homestake Mining Corp. ..................... 17,765,000
20,000 Macerich Co. (The) ......................... 555,000
81,400 Meridian Gold Inc. ......................... 356,125
260,000 Newmont Gold Co. ........................... 10,383,750
424,900 Newmont Mining Corp. ....................... 16,571,100
10,000 Nuevo Energy Co. ........................... 410,000
25,000 Patriot American Hospitality Inc. .......... 637,500
1,270,000 Piedmont Mining Co., Inc. (d) .............. 381,000
60,000 Prentiss Properties Trust .................. 1,537,500
50,000 Public Storage Inc. ........................ 1,462,500
20,200 Security Capital Industrial Trust .......... 434,300
24,500 Stillwater Mining Co. ...................... 525,219
3,000 Triton Energy Ltd. ......................... 137,438
----------
89,731,568
----------
TOTAL STOCKS & OTHER INVESTMENTS: 89.62%
(Cost $220,837,063) .......................................... 280,264,068
-----------
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL INVESTORS GOLD FUND
STATEMENT OF NET ASSETS JUNE 30, 1997 (continued)
NUMBER OF
CONTRACTS CALL OPTIONS PURCHASED VALUE (NOTE 1)
- --------------------------------------------------------------------------------
47,249 Blyvooruitzicht Gold Mining Co. Ltd.
Strike Price @ ZAR 6 Expiring 12/31/2000 $ 9,482
83,924 Durban Roodeport Deep Ltd.
Strike Price @ ZAR 30 Expiring 12/31/1999 101,793
------------
TOTAL CALL OPTIONS PURCHASED: 0.03% (Cost $147,239) 111,275
------------
PRINC. AMT. SHORT-TERM OBLIGATIONS: 9.53%
- -----------------------------------------
$30,000,000 U.S. Treasury Bill 8/21/97
Interest Yield of 4.96%
(Amortized Cost: $29,789,200) ................ 29,789,200
------------
TOTAL INVESTMENTS: 99.18% (Cost: $250,773,502) .............. 310,164,543
OTHER ASSETS LESS LIABILITIES: 0.82% ........................ 2,565,846
------------
NET ASSETS: 100.0% .......................................... $312,730,389
============
(a) Unless otherwise indicated, securities owned are shares of common stock.
(b) Includes securities in the form of American Depositary Receipts (ADR). ADR's
are traded at prices substantially equivalent to those quoted for ordinary
shares.
(c) Restricted securities, see Note 7.
(d) Affiliated company, see Schedule of Affiliated Company Transactions.
* Fair value as determined by Board of Trustees.
GLOSSARY:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
SUMMARY OF
INVESTMENTS % OF
BY INDUSTRY PORTFOLIO
- ----------- --------
Precious Metals ............................. 74.1%
Mining--Finance House ....................... 4.7%
Industrial Metals ........................... 4.1%
Real Estate ................................. 3.3%
Oil Integrated--International ............... 1.4%
Diversified Mining .......................... 0.9%
Oil Drilling & Services ..................... 0.7%
Hotels/Motels ............................... 0.5%
Oil/Gas Equipment & Service ................. 0.4%
Oil & Gas Exploration ....................... 0.3%
U.S. Treasury Obligations ................... 9.6%
------
100.0%
======
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL INVESTORS GOLD FUND
FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
ASSETS:
Investments at value
(cost, $250,773,502) (Note 1) .......................... $310,164,543
Receivables:
Securities sold ........................................ 4,719,618
Capital shares sold .................................... 190,017
Dividends .............................................. 500,414
From Advisor (Note 3) .................................. 14,232
Other assets ............................................. 32,085
------------
Total assets ....................................... 315,620,909
------------
LIABILITIES:
Payables:
Due to custodian ....................................... 1,152,245
Capital shares redeemed ................................ 494,423
Dividends payable ...................................... 204,279
Securities purchased ................................... 337,013
Unrealized depreciation on forward
currency contracts (Note 6) .......................... 7,640
Accounts payable ....................................... 694,920
------------
Total liabilities .................................. 2,890,520
------------
NET ASSETS ............................................... $312,730,389
============
CLASS A
Net asset value and redemption price
per share ($312,730,389/31,868,394) ................... $ 9.81
============
Maximum offering price per share (NAV/
(1-maximum sales commission)) ............................ $ 10.41
============
Net assets consist of:
Aggregate paid in capital .............................. $230,058,479
Unrealized appreciation of investments
and foreign currency ................................. 59,383,541
Undistributed net investment income .................... 75,828
Undistributed realized gains ........................... 23,212,541
------------
$312,730,389
============
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1997
INCOME:
Dividends (less foreign taxes withheld
of $105,159) ........................................... $ 3,295,260
Interest ................................................. 1,459,040
------------
Total income ....................................... 4,754,300
EXPENSES:
Management (Note 3) ................... $ 1,497,388
Administration (Note 3) ................ 599,475
Distribution-Class C (Note 4) .......... 4,695
Transfer agent ......................... 634,513
Professional ........................... 105,963
Custody ................................ 81,041
Reports to shareholders ................ 70,209
Trustees fees .......................... 47,529
Registration ........................... 26,834
Other .................................. 128,966
------------
Total expenses ................... 3,196,613
Expenses assumed by Advisor and
reduced by directed brokerage
arrangement (Note 3) ................. (8,919)
------------
Net expenses ........................................... 3,187,694
------------
Net investment income .................................... 1,566,606
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2)
Realized gain from security transactions ................. 23,105,301
Realized gain from foreign currency
transactions ........................................... 19,384
Change in unrealized depreciation of foreign
denominated receivables, payables and
forward currency contracts ............................. 9,333
Change in unrealized appreciation of investments ......... (91,382,774)
------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................................ ($66,682,150)
============
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
---------------------------------
<S> <C> <C>
DECREASE IN NET ASSETS:
Operations:
Net investment income ................ $ 1,566,606 $ 1,985,421
Realized gain from
security transactions .............. 23,105,301 6,837,538
Realized loss from gold bullion ...... -- (600,769)
Realized gain (loss) from foreign
currency transactions .............. 19,384 (76,831)
Change in unrealized depreciation
of foreign currency receivables,
payables and forward currency
contracts .......................... 9,333 (14,859)
Change in unrealized appreciation
(depreciation) of investments ...... (91,382,774) (30,501,802)
--------------- ---------------
Decrease in net assets
resulting from operations .......... (66,682,150) (22,371,302)
Dividends to shareholders from:
Net investment income
Class A shares ..................... (1,519,321) (2,651,039)
--------------- ---------------
Net realized gain
Class A shares ..................... -- (4,917,152)
Class C shares ..................... -- (20,308)
--------------- ---------------
-- (4,937,460)
--------------- ---------------
(68,201,471) (29,959,801)
--------------- ---------------
Capital share transactions*
Net proceeds from sales of shares:
Class A shares ..................... 1,896,943,228 3,349,573,323
Class C shares ..................... 118,369 2,250,614
--------------- ---------------
1,897,061,597 3,351,823,937
--------------- ---------------
Reinvestment of dividends:
Class A shares ..................... 1,018,070 5,963,797
Class C shares ..................... -- 12,843
--------------- ---------------
1,018,070 5,976,640
--------------- ---------------
Cost of shares reacquired:
Class A shares ..................... (1,926,548,808) (3,436,494,219)
Class C shares ..................... (1,640,064) (820,601)
--------------- ---------------
(1,928,188,872) (3,437,314,820)
--------------- ---------------
Decrease in net assets resulting
from capital share transactions .... (30,109,205) (79,514,243)
--------------- ---------------
Total decrease in net assets ....... (98,310,676) (109,474,044)
NET ASSETS:
Beginning of period .................... 411,041,065 520,515,109
--------------- ---------------
End of period (including undistributed
net investment income of $75,828
and $9,159, respectively) ............ $ 312,730,389 $ 411,041,065
=============== ===============
*SHARES OF BENEFICIAL INTEREST ISSUED AND
REDEEMED (UNLIMITED NUMBER OF $.001
PAR VALUE SHARES AUTHORIZED)
CLASS A CLASS A
--------------- ---------------
Shares sold .......................... 170,372,654 235,630,762
Reinvestment of dividends ............ 97,493 472,499
--------------- ---------------
170,470,147 236,103,261
Shares reacquired .................... (172,989,799)
--------------- ---------------
Net decrease ......................... (2,519,652) (4,550,577)
=============== ===============
CLASS C CLASS C
--------------- ---------------
Shares sold .......................... 10,292 147,390
Reinvestment of dividends ........... -- 1,100
--------------- ---------------
10,292 148,490
Shares reacquired .................... (156,657) (56,586)
--------------- ---------------
Net increase (decrease) .............. (146,365) 91,904
=============== ===============
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL INVESTORS GOLD FUND
- ------------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF AFFILIATED COMPANY TRANSACTIONS
Transactions with affiliates for the six months ended June 30, 1997 (as defined
by the Investment Company Act of 1940) of the Fund are listed below:
PURCHASES SALES
12/31/96 ------------------ ---------------- 6/30/97
SHARE REALIZED SHARE MARKET DIVIDEND
ISSUER BALANCE SHARES COST SHARES COST GAIN (LOSS) BALANCE VALUE INCOME
- ----- -------- ------- ---- ------ ---- ----------- -------- ----- -------
Piedmont
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mining Co., Inc. 1,270,000 -- $ -- -- $ -- $ -- 1,270,000 $381,000 --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
<TABLE>
<CAPTION>
FOR THE CLASS A
SIX MONTHS _______________________________________________________
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1997 _______________________________________________________
(UNAUDITED) 1996 1995 1994 1993 1992
------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.......................... $11.90 $13.35 $15.21 $16.08 $ 7.81 $11.29
------ ------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income ....................... 0.04 0.05 0.08 0.19 0.14 0.17
Net Gain (Loss) on Securities
(both realized and unrealized)............. (2.09) (1.29) (1.44) (0.36) 8.70 (3.44)
------ ------ ------ ------ ------ ------
Total from Investment Operations............... (2.05) (1.24) (1.36) (0.17) 8.84 (3.27)
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment Income (a)..... (.04) (0.07) (0.10) (0.18) (0.13) (0.12)
Distributions from Capital Gains............. -- (0.14) (0.38) (0.52) (0.44) (0.09)
Tax Return of Capital........................ -- -- (0.02) -- -- --
------ ------ ------ ------ ------ ------
Total Distributions............................ (.04) (0.21) (0.50) (0.70) (0.57) (0.21)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period................. $ 9.81 $11.90 $13.35 $15.21 $16.08 $ 7.81
====== ====== ====== ====== ====== ======
Total Return (b)............................... (17.25%) (9.37%) (8.93%) (1.04%) 113.41% (29.09%)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000)............... $312,730 $409,331 $519,795 $634,808 $706,171 $360,177
Ratio of Net Expenses to Average Net Assets.... 1.61%+ 1.43% 1.42% 1.15% 1.12% 1.18%
Ratio of Net Income to Average Net Assets...... 0.19%+ 0.36% 0.55% 1.23% 1.13% 1.72%
Portfolio Turnover Rate........................ 5.94% 12.45% 4.10% 7.08% 7.20% 2.30%
Average Commission Rate Paid (d)............... $0.0278 $0.0197
- -----------
(a) Net of foreign taxes withheld (to be included in income and claimed as a tax credit or deduction by the shareholder for federal
income tax purposes) of $0.01 for 1996, $0.03 for 1995, $0.07 for 1994, $0.05 for 1993, and $0.04 for 1992.
(b) Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions at net asset value during the period and a redemption on the last day of the
period. A sales charge is not reflected in the calculation of total return. Total return calculated for a period of less than
one year is not annualized.
(c) Based on average shares outstanding.
(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.
See Notes to Financial Statements.
</TABLE>
<PAGE>
INTERNATIONAL INVESTORS GOLD FUND
- --------------------------------------------------------------------------------
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 International Investors Gold Fund series, a fund (the "Fund") of the
Trust in the preparation of its financial statements. On April 29, 1997, all of
International Investors Gold Fund Class C shares were redeemed. The policies are
in conformity with generally accepted accounting principles. The preparation of
financial statements in conformity with generally accepted accounting principles
requires the use of management's estimates and the actual amounts could differ.
A. SECURITY VALUATION -- Securities traded on national exchanges and traded in
the NASDAQ National Market System are valued at the last sales prices
reported at the close of business on the last business day of the period.
Over-the-counter securities not included in the NASDAQ National Market
System and listed securities for which no sale was reported are valued at
the mean of the bid and asked prices. Direct investments in gold bullion are
valued at the mean of the bid and asked prices quoted by a major commodity
dealer. 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 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 on other foreign
denominated assets and liabilities attributable to foreign currency
fluctuations are recorded as net realized gains and losses from foreign
currency transactions.
D. DISTRIBUTIONS -- 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.
E. 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.
NOTE 2 -- Purchases and proceeds from sales of investments other than short-term
obligations aggregated $20,258,706 and $73,713,701, respectively, for the six
months ended June 30, 1997. For federal income tax purposes the cost of
investments owned at June 30, 1997 was $250,773,502. As of June 30, 1997, net
unrealized appreciation for federal income tax purposes aggregated $59,391,041,
of which $108,540,321 related to appreciated investments and $49,149,280 related
to depreciated investments.
NOTE 3 -- Van Eck Associates Corporation (the "Advisor") earned fees of
$1,497,388 for the six months ended June 30, 1997 for investment management and
advisory services. The fee was 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 Corp. received
$75,498 for the six months ended June 30, 1997 from commissions earned on sales
of shares of beneficial interest of the Fund after deducting $194,847 allowed to
other dealers. In accordance with the administration agreement, the Fund
reimbursed the Advisor $599,475 for costs incurred in connection with certain
administrative and operational 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 Advisor agreed to assume $7,558 of Class C transfer agency's expenses for
the six months ended June 30, 1997. In addition, the Fund had some of its
portfolio trades directed to a broker-dealer who, in return, agreed to pay
$1,361 of the Fund's expenses.
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 1.00% of average daily net assets for Class C shares (the
"Annual Limitation").
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 October 14,
1994 through April 30, 1997. The cumulative excess of distribution expenses
incurred over the Annual Limitation at April 30, 1997, was $78,990 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
government 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
may be cyclical in nature.
<PAGE>
INTERNATIONAL INVESTORS GOLD FUND
- --------------------------------------------------------------------------------
NOTE 6 -- The Fund may buy and sell forward currency contracts to settle
purchases and sales of foreign denominated securities. In addition, the Fund may
enter into forward currency contracts to hedge foreign denominated assets.
Realized gains and losses from forward currency contracts are included in
realized gain from foreign currency transactions. At June 30, 1997, the Fund had
the following outstanding forward currency contracts:
VALUE AT UNREALIZED
SETTLEMENT CURRENT APPRECIATION
CONTRACTS DATE VALUE (DEPRECIATION)
---------- ------- ------------
FOREIGN CURRENCY SALE
CONTRACTS:
AUD 1,294,167 expiring
07/03/97.................... $970,626 $975,220 $(4,594)
AUD 365,608 expiring
07/07/97.................... 272,458 275,504 (3,046)
-------
$(7,640)
========
The Fund may incur additional risk from investments in forward currency
contracts if the counterparty is unable to fulfill its obligation or there are
unanticipated movements of the foreign currency relative to the U.S. dollar.
NOTE 7 -- RESTRICTED SECURITY
The following security is restricted as to sale:
PERCENT OF
DATE NET ASSETS
ACQUIRED COST VALUE AT 6/30/97
--------- ----- ------ ---------
Pacific Rim
Mining Corp.
(Special
Warrant) 04/04/97 $298,326 $156,602 0.05%
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 June 30, 1997, the total value of the assets and corresponding liability
of the Fund's portion of the Plan is $62,604.
<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.
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 Van Eck Gold and Money Funds
prospectus, which includes more complete information, such as charges and
expenses and the risks associated with international investing, including
currency fluctuations or controls, expropriation, nationalization and
confiscatory taxation. For a free Van Eck Global Funds prospectus, please call
the number listed below. Please read the prospectus before investing.
[LOGO]
Van Eck Global
Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016
www.vaneck.com
FOR ACCOUNT ASSISTANCE PLEASE CALL (800) 544-4653
FR1997-0728-0052
J U N E 3 0 , 1 9 9 7
VAN ECK
----------------------------------------
INTERNATIONAL
----------------------------------------
INVESTORS
----------------------------------------
GOLD
----------------------------------------
FUND
----------------------------------------
SEMI-ANNUAL
----------------------------------------
REPORT
----------------------------------------
[LOGO]
Van Eck Global
