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DECEMBER 31, 1997
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VAN ECK
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INTERNATIONAL
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INVESTORS
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GOLD
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FUND
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ANNUAL
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REPORT
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> > >
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Van Eck Global [Logo]
<PAGE>
VAN ECK INTERNATIONAL INVESTORS GOLD FUND
-----------------------------------------
1997 ANNUAL REPORT
Dear Fellow Shareholder:
The year 1997 was an extraordinary and difficult one for the gold market.
Unexpected sales of more than 1,000 metric tons depressed prices. Net central
bank sales were more than double the average of the preceding ten years and
dominated market psychology. Net mine forward selling and speculative sales
increased dramatically. Investment demand fell as investors focused on capital
growth and were attracted by a strong U.S. stock market (the Dow Jones
Industrial Average up 25.0%) and a strong U.S. dollar. Gold investors in
Thailand and Malaysia were rewarded by soaring domestic gold as their currencies
fell, but many had to sell in the world market in order to pay short-term dollar
debts. As a consequence, the price of gold fell to $289.05 an ounce at the end
of 1997, down 21% from the previous year. For the year, the International
Investors Gold Fund lost 36.0%*, less than the 43.9% average decline posted by
its peer group of 40 gold funds as measured by the Lipper Gold Fund Index.
Dividend News
A quarterly dividend of $.032 a share was paid on December 31, 1997, to
shareholders of record on December 29, 1997. You should have received 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, December 31, 1997.
Gold-Mining Shares
Gold's poor performance in 1997 weighed heavily on gold-mining shares around the
world. The worst affected region was Australia, as its currency was hurt by its
export exposure to Asia. The Australian Stock Exchange Gold Index declined 44%
in local currency terms and 55% in U.S. dollar terms. Virtually no company was
left unscathed, although Normandy Mining held up relatively well as its move
toward control of Great Central Mines, its extensive hedge position and quality
asset base (Super Pit, Vera/Nancy), and its listing in Toronto drew investors'
attention to Normandy's position as Australia's premier gold producer. In
addition, Homestake Mining of the U.S. offered 34 of its shares for every 100
Plutonic Resources shares just prior to year end, representing an 86% premium to
the Plutonic price before the bid was announced. This highlighted the attractive
valuations Down Under and drove up the prices of other gold-mining companies
considered for possible takeover. During the year, we reduced the Fund's
Australian exposure to 8%.
The Johannesburg Gold Index was the second-worst performer in 1997, registering
a decline of 49% in U.S. dollar terms (47% in rand terms). As the highest-cost
producers, South African gold-mining shares came under selling pressure from
foreign investors and from local investors favoring a buoyant South African
industrial share market. We reduced the Fund's South African exposure to 26% by
year end (from 38% at year end 1996) in anticipation of relative
underperformance. With the industry undergoing substantial restructuring at both
the operating level (Avgold, Gencor, Randgold) and, recently, the corporate
level (Anglo, Gold Fields), some buying opportunities may exist and we are
considering adding to our South African holdings on a selective basis.
The Toronto Gold & Silver Index fell 46% last year in U.S. dollar terms (44% in
Canadian dollars), making Canada the second-best performer. Of the seniors,
Barrick Gold contained its slide to just 35%, supported by its low-cost profile
and strong hedge position, as well as management's decision to close some
high-cost operations and endure the pain of write-downs. At the same time,
Barrick announced the accelerated develop-
<PAGE>
ment of two large, low-cost projects and production increases in the state of
Nevada that should increase cash flow. The Canadian junior sector was especially
hard hit after the Bre-X Minerals scandal, with some exploration shares falling
up to 90% by year end (we owned no Bre-X shares). Your Fund was never more than
6%-7% invested in the juniors and escaped relatively unharmed by the carnage.
Additionally, in late spring when we grew concerned about the psychological
impact of central bank gold sales on gold prices, we sold the shares of
high-cost, financially questionable companies in the Fund; for example, we did
not own Echo Bay Mines or Pegasus Gold when their shares declined dramatically.
In 1997, the U.S. was clearly the place to be. The Philadelphia Gold & Silver
Index (XAU) slid 37%, helped by a relatively mild decline of under 15% for
Battle Mountain, a low-cost, financially sound producer. At year end, U.S.
companies represented 24% of your Fund, including some 7% in non-gold
investments (primarily energy and real estate). Finally, reflecting our cautious
stance on gold and gold shares, the Fund was 20% in cash at year end.
The Outlook
Looking ahead, three key themes may affect gold prices:
1. Possible Reduction in Net Central Bank and Mine Forward Sales
The actions of the central banks and market perceptions about their
attitudes are important factors in setting gold prices. Recent reports
seem to indicate that European central bankers believe that the bear
market sentiment in gold has gone far enough. In December, the President
of the Bundesbank repeated earlier statements that European central
bankers agreed that a future European Central Bank (ECB) should hold some
gold and that Germany had no plans to sell gold from its reserves. This
supports previous statements by the Governor of the Bank of France that
gold will definitely have a place in the reserves of the planned ECB and
by the Vice Chairman of the Swiss National Bank that he is convinced gold
will continue to play a role as a currency reserve, especially in times of
crisis. He stated, "Those who expect massive gold sales from us will be
disappointed."
In November, the Chairman of the European Monetary Institute (EMI)
indicated that the debate about the new ECB gold reserves was unimportant
and that the question of ownership of the official gold was not of
monetary relevance. The big issue is the future gold policy for member
banks after the ECB is in operation, not the amount of gold the Bank
holds. The ECB will then control the gold reserves of its members. The EMI
is expected to provide guidelines for the ECB Governing Council between
early May and July 1 of this year. Because gold reserves are about 50% of
the Bank of France's monetary reserves, 30% of the Bundesbank's, and 35%
of the Bank of Italy's, and these banks will control ECB monetary policy,
we are optimistic that future European gold policy will be friendly for
gold prices. Based on past monetary history, European public opinion is
pro-gold. An improved ECB attitude might well cause the mines to take a
more positive view on gold. There is an overall short position of more
than 4,000 metric tons which could be bought back if confidence were
regained that future gold prices could rise at a rate exceeding the
current annual forward premium of about 4%. For example, if the price of
gold rises to $400 an ounce in four years time, this would represent an
annual growth rate of 8%.
2. New Central Bank Reflation
Asia's current financial crisis may lead to a new global monetary
inflationary cycle, as global central bank policy is moving from a focus
on price stability to stimulating demand in order to provide enough
liquidity to enable further expansion the world's economy. This also
happened in the 1970s in response to higher oil prices. International
Monetary Fund (IMF) resources have been severely depleted in the last six
months and need to be replenished. Accordingly, individual central banks
and banking systems
<PAGE>
will need to intercede to save the international banking system. Japan's
Prime Minister has said, "We will do everything to prevent a world
recession or global crisis." Japan has taken a series of cautious steps to
stimulate faster growth, such as tax cuts and new public spending. The
Bank of Japan has dramatically expanded its monetary base growth rates,
and its assets have increased by more than 40% since October.
In a special report in December, the IMF recommended that monetary
authorities in North America and Europe should delay rises in interest
rates and be prepared to relax rates if the situation worsened. It
forecast that the politically sensitive U.S. trade deficit will expand by
more than $50 billion to $230 billion. The Federal Reserve has been
concerned about "very rapid asset price declines," a "cascading sequence
of defaults" and a systemic crisis. In early January, Mr. Laurence Meyer,
traditionally a hawkish Fed governor, said the turmoil in Asia introduced
a downside risk and that it was time for the bias toward tightening
monetary policy to change. The Fed--the "engine of inflation" according
to a former chairman--has already increased the annual growth rate of its
monetization of debt to approximately 10% during the last three months.
With global monetary reexpansion, a tight labor market, and faster
consumer spending, there is always a possibility of a rise in inflationary
expectations and demand for gold.
3. Deflationary Scenario
There is a risk that Asia's problems will spread globally and that
financial authorities will be unable to maintain growth, resulting in a
period of global credit contraction and crisis. 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 sought to protect their wealth by increasing their cash and gold
holdings, thus propelling the real prices of gold higher for an average of
three years. (Gold is an owned monetary asset, not subject to credit
risks.)
Conclusion
For many years global profits and stock markets have risen and gold prices have
been lackluster (Exhibit 1). However, the stock market's current behavior
suggests a pause for the greatest bull
Exhibit 1
- --------------------------------------------------------------------------------
Mean Trends of Stock and Gold Valuations
1970 - 1997
Equities (S&P 500 Index)
[Line chart omitted]
Source: World Gold Council
Gold
[Line chart omitted]
Source: World Gold Council
- --------------------------------------------------------------------------------
market of this century. Asia's competitive devaluations, overcapacity and
private sector debt contraction may lead to a global economic slowdown, profit
margin pressures and earnings disappointments. American households are
struggling under the weight of record debt and debt-service burdens (Exhibit 2).
Consumer spending could weaken. Under these conditions, the returns on stocks
may stagnate for a period. On the other hand, we believe the price of gold is
very under-
<PAGE>
Exhibit 2
- --------------------------------------------------------------------------------
Household Mortgage & Consumer Debt as
a Percentage of Disposable Personal Income
1959 - 1997
[Line chart omitted]
Source: Federal Reserve Bulletin
- --------------------------------------------------------------------------------
valued. In our opinion, the weight of net central bank sales and mine forward
selling will gradually be lifted and investment demand will increase, leading to
an attractive return on gold investments. Markets could revert to their means,
and gold prices could resume their long-term upward trend.
We appreciate your participation in the International Investors Gold Fund and
look forward to helping you meet your investment objectives in the future.
[Photo omitted] [Photo omitted]
/s/ John C. van Eck /s/ Lucille Palermo
John C. van Eck Lucille Palermo
Chairman Portfolio Manager
January 20, 1998
* How a $10,000 Investment in
International Investors Gold Fund Grew
to $479,457
As of December 31, 1997, the average annual total returns were:
After Maximum
Sales Charge of Before
5.75% Sales Charge
- --------------------------------------------------------------------------------
A shares-Life (since 2/10/56) 9.7% 9.8%
- --------------------------------------------------------------------------------
Past twenty years 9.3% 9.6%
- --------------------------------------------------------------------------------
Past fifteen years (0.2)% 0.2%
- --------------------------------------------------------------------------------
Past ten years (4.1)% (3.5)%
- --------------------------------------------------------------------------------
Past five years 1.0% 2.2%
- --------------------------------------------------------------------------------
Past one year (39.7)% (36.0)%
- --------------------------------------------------------------------------------
Past performance is not indicative of future results. Investment return and
principal value of an investment in the Fund may vary so that shares, when
redeemed, may be worth more or less than their original cost. C shares are no
longer publicly offered.
<PAGE>
[Line chart omitted]
The chart below illustrates how a $10,000 investment in International Investors
Gold Fund-Class A shares with income, dividends and capital gains distributions
reinvested would have grown to $479,457 over the life of the Fund. 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.
Note: International Investors Gold Fund became a gold-oriented fund in 1968.
++ Source: U.S. Department of labor
<PAGE>
INTERNATIONAL INVESTORS GOLD FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
No. of Shares Securities(a) Value (Note 1)
- --------------------------------------------------------------------------------
Australia: 8.07%
900,000 Acacia Resources Ltd.+ $ 820,260
2,500,000 Australian Resources Ltd.+ 374,325
278,686 Consolidated Gold N.L.+ 14,514
100,000 Delta Gold N.L. 105,202
275,584 Emperor Mines Ltd.+ 80,732
1,668,210 Ghana Gold Mines Ltd.+ 76,020
4,000,000 Gullewa Gold N.L.+ 33,852
50,177 Herald Resources Ltd.+ 7,676
150,000 Lihir Gold Ltd.+ 156,240
1,200,000 Menzies Gold N.L. 140,616
700,000 Normandy Mt. Leyshon Ltd. 774,690
3,036,890 Normandy Mining Ltd. 2,945,753
4,294,233 Plutonic Resources Ltd. 11,964,936
335,156 Resolute Ltd. 244,369
300,000 WMC Ltd. 1,044,855
------------
18,784,040
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Canada: 17.80%
840,000 Barrick Gold Corp. 15,645,000
43,600 Boliden Ltd. (Installment Receipt)+ 111,322
150,000 Cambior Inc. 886,643
36,000 Canadian Natural Resources Ltd.+ 770,592
197,400 Dayton Mining Corp.+ 372,831
100,000 Denison Mines Ltd.+ 25,882
400,000 El Callao Mining Corp.+ 100,731
50,000 Exall Resources Ltd.+ 14,690
300,000 Greenstone Resources Ltd.+ 1,427,022
225,000 Kinross Gold Corp.+ 763,352
231,400 Meridian Gold Inc.+ 647,476
735,000 Miramar Mining Corp.+ 1,465,321
88,900 Oliver Gold Corp.+ 21,766
71,500 Pacific Rim Mining Corp.
(Special Warrants expiring 4/4/98) (c) +* 85,527
760,900 Placer Dome Inc. 9,653,919
2,700 Prime Resources Group, Inc. 17,943
201,000 Prudential Steel Ltd. 1,968,452
250,000 Richmont Mines Inc.+ 577,105
14,400 Rio Narcea Gold Mines Ltd.+ 42,811
50,000 St. Andrew Goldfields Ltd.+ 75,198
30,000 Sutton Resources Ltd.+ 202,511
120,000 Teck Corp. (Class B) 1,808,961
50,000 TrizecHahn Corp. 1,159,375
1,063,700 TVX Gold, Inc.+ 3,589,988
168,000 Vista Gold Corp.+ 38,781
------------
41,473,199
------------
Mexico: 0.61%
450,000 Grupo Mexico S.A. (Ser 'L') 1,422,462
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Netherlands: 1.86%
80,000 Royal Dutch Petroleum Co.
(New York Registry Shares) 4,335,000
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Peru: 0.31%
44,500 Companhia de Minas Buenaventura S.A.
(Sponsored ADR) 712,000
------------
South Africa: 25.71%
66,000 Anglo American Corp. of South Africa Ltd. (b) 2,656,500
473,101 Anglo American Platinum Corporation Ltd. 6,275,683
2,830,755 Avgold Ltd.+ 2,094,759
2,405,000 Avmin Ltd. (ADR) 2,940,112
749,000 Beatrix Mines Ltd. (ADR) 2,582,178
100,000 Consolidated African Mines Ltd. 29,250
562,500 Driefontein Consolidated Ltd. (b)
(Sponsored ADR) 3,726,562
295,304 Durban Roodepoort Deep Ltd. (b)
(Sponsored ADR) 442,956
83,924 Durban Roodepoort Deep, Convertible (Pfd) 137,962
2,184,140 Elandsrand Gold Mining Co. Ltd. (b) 5,564,097
551,327 Evander Gold Mines Ltd. (b) (ADR) 1,046,143
95,000 Gold Fields of South Africa Ltd. (b)
(Sponsored ADR) 1,472,500
439,430 Harmony Gold Mining Co. Ltd.
(Sponsored ADR)+ 988,718
645,000 Impala Platinum Holdings Ltd. (ADR) 6,022,688
1,098,657 Kloof Gold Mining Ltd. (Sponsored ADR) 3,639,301
1,301,000 Randfontein Estate Gold Mining Co. (ADR)+ 1,948,248
11,000 Randgold & Exploration Company Ltd.+ 14,245
841,000 Vaal Reefs Exploration & Mining Co. Ltd. (b)
(ADR) 8,114,156
975,009 Western Area Gold Mining Co. Ltd. (b) (ADR)+ 5,104,172
273,365 Western Deep Levels Ltd. (ADR) 5,091,423
------------
59,891,653
------------
United Kingdom: 1.28%
920,000 Billiton PLC+ 2,287,692
500,000 Reunion Mining PLC+ 688,666
------------
2,976,358
------------
United States: 24.11%
222,000 Battle Mountain Canada, Inc. 1,304,250
1,400,000 Battle Mountain Gold Co. 8,225,000
27,000 Bedford Property Investors Inc. 590,625
65,000 CapStar Hotel Co.+ 2,230,313
45,750 Carramerica Realty Corp. 1,449,703
15,000 Cross Timbers Oil Co. 374,063
100,000 Crown Resources Corp.+ 418,750
50,000 Excel Realty Trust Inc. 1,575,000
440,000 Freeport-McMoran Copper & Gold Inc. (Class A) 6,737,500
247,700 Getchell Gold Corp.+ 5,944,800
100,000 Hecla Mining Co.+ 493,750
990,000 Homestake Mining Co. 8,786,250
20,000 Macerich Co. (The) 570,000
70,000 Mack-Cali Realty Corp. 2,870,000
299,900 Newmont Mining Corp. 8,809,563
49,498 Patriot American Hospitality Inc. 1,426,161
1,270,000 Piedmont Mining Co., Inc. (d)+ 158,750
75,000 Prentiss Properties Trust 2,095,313
50,000 Public Storage Inc. 1,468,750
22,036 Security Capital Industrial Trust 548,146
3,000 Triton Energy Ltd.+ 87,563
1,025 Security Capital Industrial Trust (Class B)
(Warrant exp. 9/19/98) + 4,992
------------
56,169,242
------------
Total Stocks & Other Investments: 79.75%
(Cost: $167,501,403) 185,763,954
------------
Call Options Purchased: 0.02%
83,924 Durban Roodepoort Deep, Ltd.
Strike price @ ZAR 30 expiring 12/31/1999+ 45,269
51,411 Durban Roodepoort Deep, Ltd.
Strike price @ ZAR 60 expiring 6/30/2002+ 10,881
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Total Call Options Purchased: 0.02%
(Cost: $147,238) 56,150
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See Notes to Financial Statements.
<PAGE>
INTERNATIONAL INVESTORS GOLD FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997 (continued)
Principal
Amount Short-Term Obligations: 28.96% Value (Note 1)
- --------------------------------------------------------------------------------
$10,500,000 American Express
Commercial Paper
Due 1/02/98
Interest Yield 6.45% $ 10,498,119
10,500,000 General Electric Capital
Commercial Paper Due
1/02/98 Interest Yield 5.65% 10,498,352
20,000,000 U.S. Treasury Bill Due 2/26/98
Interest Yield 5.18% 19,838,222
7,700,000 U.S. Treasury Bill Due 2/05/98
Interest Yield 5.04% 7,662,270
19,000,000 U.S. Treasury Bill Due 1/22/98
Interest Yield 4.30% 18,952,342
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Total Short-Term Obligations: 28.96%
(Amortized Cost: $67,449,305) 67,449,305
------------
Total Investments: 108.73% (Cost: $235,097,946) 253,269,409
Other Assets Less Liabilities: (8.73)% (20,325,083)
------------
Net Assets: 100.0% $232,944,326
============
(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 security, see Note 7.
(d) Affiliated company, see Schedule of Affiliated Company Transactions.
* Fair value as determined by Board of Trustees.
+ Non-income producing.
Glossary:
ADR--American Depositary Receipt
- --------------------------------------------------------------------------------
Summary of
Investments % of
By Industry Net Assets
- ----------- ----------
Precious Metals 64.81%
Industrial Metals 4.84%
Real Estate 6.86%
Oil Integrated--International 1.86%
Oil/Gas Equipment & Service 0.85%
Oil & Gas Exploration 0.53%
Call Options Purchased 0.02%
Short-Term Obligations 28.96%
Other Assets less liabilities (8.73)%
------
100.0%
======
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL INVESTORS GOLD FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
December 31, 1997
Assets:
Investments at value (cost, $235,097,946) (Note 1) $ 253,269,409
Receivables:
Capital shares sold 40,225,818
Securities sold 2,184,537
Dividends 316,769
Unrealized appreciation on forward foreign currency
contracts (Note 6) 8,087
Other assets 58,535
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Total assets 296,063,155
-------------
Liabilities:
Payables:
Due to custodian 12,350,897
Capital shares redeemed 49,954,177
Dividends payable 182,281
Securities purchased 431,396
Accounts payable 200,078
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Total liabilities 63,118,829
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Net Assets $ 232,944,326
=============
Shares Outstanding 30,903,581
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Class A
Net asset value and redemption price per share
($232,944,326/30,903,581) $ 7.54
======
Maximum offering price per share (NAV/(1-maximum sales
commission)) $ 8.00
======
Net assets consist of:
Aggregate paid in capital $ 217,861,759
Unrealized appreciation of investments and
foreign currency 18,116,480
Undistributed net investment income 162
Accumulated realized loss (3,034,075)
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$ 232,944,326
=============
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Statement of Operations
For the Year Ended December 31, 1997
Income:
Dividends (less foreign taxes withheld of $234,789) $ 5,734,059
Interest 2,572,134
-------------
Total income 8,306,193
Expenses:
Management (Note 3) $ 2,619,794
Distribution (Note 4) 4,565
Administration (Note 3) 1,070,974
Reports to shareholders 130,691
Transfer agent 1,020,124
Professional 90,031
Trustees fees 67,042
Custodian 88,191
Registration 32,190
Other 175,883
-----------
Total expenses 5,299,485
Expenses assumed by Adviser and reduced by
directed brokerage and custody fee
arrangement (Note 3) (150,301)
-----------
Net expenses 5,149,184
-------------
Net investment income 3,157,009
Realized and Unrealized Loss
on Investments (Note 2)
Realized loss from security transactions (3,087,132)
Realized loss from foreign currency
transactions (77,798)
Change in unrealized depreciation of foreign
denominated receivables, payables and
forward foreign currency contracts (38,150)
Change in unrealized depreciation of investments (132,602,352)
-------------
Net Decrease in Net Assets Resulting
from Operations ($132,648,423)
=============
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the For the
Year Ended Year Ended
December 31, December 31,
1997 1996
-------------- --------------
<S> <C> <C>
Decrease in Net Assets from:
Operations:
Net investment income $ 3,157,009 $ 1,985,421
Realized gain (loss) from
security transactions (3,087,132) 6,837,538
Realized loss from gold bullion -- (600,769)
Realized loss from foreign
currency transactions (77,798) (76,831)
Change in unrealized depreciation
of foreign currency receivables,
payables and forward foreign currency
contracts (38,150) (14,859)
Change in unrealized
depreciation of investments (132,602,352) (30,501,802)
-------------- --------------
Decrease in net assets
resulting from operations (132,648,423) (22,371,302)
Dividends and distributions to shareholders from:
Net investment income
Class A shares (3,043,229) (2,651,039)
-------------- --------------
Net realized gain
Class A shares (99,162) (4,917,152)
Class C shares -- (20,308)
-------------- --------------
(99,162) (4,937,460)
-------------- --------------
Tax return of capital
Class A shares (12,911) --
-------------- --------------
Total dividends and distributions (3,155,302) (7,588,499)
-------------- --------------
(135,803,725) (29,959,801)
-------------- --------------
Capital share transactions*
Net proceeds from sales of shares:
Class A shares 3,627,782,477 3,349,573,323
Class C shares 118,370 2,250,614
-------------- --------------
3,627,900,847 3,351,823,937
-------------- --------------
Reinvestment of dividends:
Class A shares (1,588,222) 5,963,797
Class C shares -- 12,843
-------------- --------------
(1,588,222) 5,976,640
-------------- --------------
Cost of shares reacquired: (Note 1)
Class A shares (3,666,968,333) (3,436,494,219)
Class C shares (1,637,306) (820,601)
-------------- --------------
(3,668,605,639) (3,437,314,820)
-------------- --------------
Decrease in net assets resulting
from capital share transactions (42,293,014) (79,514,243)
-------------- --------------
Total decrease in net assets (178,096,739) (109,474,044)
Net Assets:
Beginning of year 411,041,065 520,515,109
-------------- --------------
End of year (including undistributed
net investment income of $162 and
$9,159, respectively) $ 232,944,326 $ 411,041,065
============== ==============
* Shares of Beneficial Interest Issued and
Redeemed (Unlimited number of $.001
par value shares authorized)
Class A Class A
-------------- --------------
Shares sold 364,106,797 235,630,762
Reinvestment of dividends (77,706) 472,499
-------------- --------------
364,029,091 236,103,261
Shares reacquired (367,513,556) (240,653,838)
-------------- --------------
Net decrease (3,484,465) (4,550,577)
============== ==============
Class C Class C
-------------- --------------
Shares sold 10,291 147,390
Reinvestment of dividends -- 1,100
-------------- --------------
10,291 148,490
Shares reacquired (Note 1) (156,656) (56,586)
-------------- --------------
Net increase (decrease) (146,365) 91,904
============== ==============
</TABLE>
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL INVESTORS GOLD FUND
- --------------------------------------------------------------------------------
Schedule of Affiliated Company Transactions
Transactions with affiliates (as defined by the Investment Company Act of 1940)
for the year ended December 31, 1997 of the Fund are listed below:
<TABLE>
<CAPTION>
Purchases Sales
12/31/96 -------------- ------------- 12/31/97
Share Realized Share Market Dividend
Issuer Balance Shares Cost Shares Cost Gain (Loss) Balance Value Income
- ------ -------- ------- ---- ------ ---- ----------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Piedmont Mining Co., Inc.......... 1,270,000 -- $ -- -- $ -- $-- 1,270,000 $158,750 --
</TABLE>
- --------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each year
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------
For Year Ended December 31
------------------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year ........................... $ 11.90 $ 13.35 $ 15.21 $ 16.08 $ 7.81
-------- -------- -------- -------- --------
Income from Investment Operations:
Net Investment Income ....................... 0.09 0.05 0.08 0.19 0.14
Net Gain (Loss) on Securities
(both realized and unrealized) ............ (4.36) (1.29) (1.44) (0.36) 8.70
-------- -------- -------- -------- --------
Total from Investment Operations .............. (4.27) (1.24) (1.36) (0.17) 8.84
-------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income (a) .... (0.09) (0.07) (0.10) (0.18) (0.13)
Distributions from Capital Gains ............ (0.00) (0.14) (0.38) (0.52) (0.44)
Tax Return of Capital ....................... (0.00) -- (0.02) -- --
-------- -------- -------- -------- --------
Total Distributions ........................... (0.09) (0.21) (0.50) (0.70) (0.57)
-------- -------- -------- -------- --------
Net Asset Value, End of Year .................. $ 7.54 $ 11.90 $ 13.35 $ 15.21 $ 16.08
======== ======== ======== ======== ========
Total Return (b) .............................. (36.00%) (9.37%) (8.93%) (1.04%) 113.41%
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Year (000) ................ $232,944 $409,331 $519,795 $634,808 $706,171
Ratio of Gross Expense to Average Net Assets 1.52% 1.43% 1.42% 1.15% 1.12%
Ratio of Net Expenses to Average Net Assets 1.47% 1.43% 1.42% 1.15% 1.12%
Ratio of Net Income to Average Net Assets ..... 0.90% 0.36% 0.55% 1.23% 1.13%
Portfolio Turnover Rate ....................... 19.99% 12.45% 4.10% 7.08% 7.20%
Average Commission Rate Paid (c) .............. $ 0.0145 $ 0.0197
</TABLE>
- ----------
(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 for 1997, $0.01 for 1996, $0.03 for 1995, $0.07 for 1994
and $0.05 for 1993.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the year, reinvestment of all 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.
(c) 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.
See Notes to Financial Statements.
<PAGE>
INTERNATIONAL INVESTORS GOLD FUND
- --------------------------------------------------------------------------------
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. On April
29, 1997, all of International Investors Gold Fund Class C shares were redeemed.
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. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements in conformity with generally accepted accounting principles
requires the use of management's estimates and the actual amounts could differ.
A. Security Valuation -- Securities traded on national exchanges and traded
in the NASDAQ National Market System are valued at the last sales prices
reported at the close of business on the last business day of the year.
Over-the-counter securities not included 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. 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 amortized 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 foreign 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. These differences are primarily due to the differing treatment
of foreign currency transactions. The effect of these differences for the
year ended December 31, 1997 decreased undistributed net investment income
by $10,704, decreased accumulated realized loss by $23,615 and decreased
aggregate paid in capital by $12,911.
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 $61,914,514 and $142,534,168, respectively, for the year
ended December 31, 1997. For federal income tax purposes the cost of investments
owned at December 31, 1997 was $237,676,026. As of December 31, 1997, net
unrealized appreciation for federal income tax purposes aggregated $15,593,383,
of which $61,971,248 related to appreciated investments and $46,377,865 related
to depreciated investments. At December 31, 1997, the Fund had capital loss
carryforwards of $455,994 available to offset future capital gains expiring
Dcember 31, 2005.
Note 3 -- Van Eck Associates Corporation (the "Adviser") earned fees of
$2,619,794 for the year ended December 31, 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 Associates Corporation also
earned fees of $873,299 for the year ended December 31,1997 for administrative
and operating services. The fee is based on an annual rate of .25 of 1% of the
Fund's average daily net assets. In accordance with the administration
agreement, the Fund reimbursed the Adviser $197,675 for costs incurred in
connection with certain administrative and operational functions. Van Eck
Securities Corp. received $122,745 for the year ended December 31, 1997 from
commissions earned on sales of shares of beneficial interest of the Fund after
deducting $401,483 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 which
reduced the Fund's operating expenses by $141,878 for the year ended December
31, 1997.
The Advisor agreed to assume $7,062 of Class C transfer agency's expenses for
the year ended December 31, 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. The Fund has a fee arrangement based on cash
balances left on deposit with the custodian which reduces the Fund's operating
expenses by $141,878 at the year ended December 31, 1997.
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 $4,565 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
<PAGE>
INTERNATIONAL INVESTORS GOLD FUND
- --------------------------------------------------------------------------------
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.
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 foreign 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:
Value at
Settlement Current Unrealized
Contracts Date Value Appreciation
- --------- ---------- ------- ------------
Forward Foreign Currency Sale
Contracts:
AUD (1,074,439) expiring
through 1/08/98.............. $707,385 $699,460 $7,925
ZAR 816,943 expiring
through 1/06/98.............. 167,750 167,588 162
------
$8,087
======
The Fund may incur additional risk from investments in forward foreign currency
contracts if the counterparty is unable to fulfill its obligations or there are
unanticipated movements in 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 12/31/97
-------- ------- ------- -----------
Pacific Rim Mining Corp.
(Special Warrants) 04/02/97 $298,326 $85,527 0.04%
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 Fund has elected to show this liability net of the corresponding
asset for financial statement purposes. The Plan has been approved by the
Internal Revenue Service.
As of December 31, 1997, the total value of the liability of the Fund's portion
of the plan is $70,548.
- --------------------------------------------------------------------------------
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 International Investors Gold 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 and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
International Investors Gold 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 five years in the period then ended, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 26, 1998
<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.
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
- --------------------------------------------------------------------------------
Capital Appreciation Fund
Global Income Fund
Government Securities Fund
Growth and Income Fund
Tax-Exempt Fund
Total Return Fund
- --------------------------------------------------------------------------------
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 or Van Eck/Chubb Funds
prospectus, please call the number listed below. Please read the prospectus
before investing.
Van Eck Global [Logo]
Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016
www.vaneck.com
For account assistance please call (800) 544-4653
FR19980123-0057
