-----------------------
-----------------
DECEMBER 31, 1997
-----------------
VAN ECK
-----------------
GOLD/
-----------------
RESOURCES
-----------------
FUND
-----------------
ANNUAL
-----------------
REPORT
-----------------
-----------------------
Van Eck Global [Logo]
<PAGE>
VAN ECK GOLD/RESOURCES 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 the strong U.S. dollar. Gold investors in
Thailand and Malaysia were rewarded by soaring domestic gold prices 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
Gold/Resources Fund lost 39.3%*, less than the 43.9% average decline posted by
its peer group of 40 gold funds as measured by the Lipper Gold Fund Index.
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 hard hit 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 16%.
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.
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 development 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 15%-20% invested in the juniors and
escaped the worst of the carnage. Additionally, in late spring, when we grew
concerned about the psychological impact of central bank gold sales on 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 the shares of
those companies declined dramatically. Canadian shares represented 36% of your
Fund at year end.
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 34% of your Fund. Finally, reflecting our cautious stance
on gold and gold shares, the Fund was nearly 10% in cash at year end.
The Outlook
Looking ahead, three key themes may affect gold prices:
<PAGE>
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 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 rose to only $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 the world's
economy to continue to expand. 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 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
Exhibit 1
- --------------------------------------------------------------------------------
Mean Trends of Stock and Gold Valuations
1970 -1997
Equities (S&P 500 Index)
[Graphic Omitted]
Source: World Gold Council
Gold
[Graphic Omitted]
Source: World Gold Council
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 2
- --------------------------------------------------------------------------------
Household Mortgage & Consumer Debt as
a Percentage of Disposable Personal Income
1959 - 1997
[Graphic Omitted]
Source: Federal Reserve Bulletin
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% from about 5% during the last three months. With
global monetary re-expansion, 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 crisis 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 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 undervalued. 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 Gold/Resources Fund and look forward to
helping you meet your investment objectives in the future.
[Photograph] [Photograph]
/s/ John C. van Eck /s/ Lucille Palermo
John C. van Eck Lucille Palermo
Chairman Portfolio Manager
January 20, 1998
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*PERFORMANCE RECORD AS OF 12/31/97
- --------------------------------------------------------------------------------
Average Annual After Maximum Before
Total Return Sales Charge of 5.75% Sales Charge
- --------------------------------------------------------------------------------
Life (since 2/15/86) 0.6% 1.1%
- --------------------------------------------------------------------------------
10 year (5.3)% (4.8)%
5 year (1.7)% (0.5)%
1 year (42.8)% (39.3)%
- --------------------------------------------------------------------------------
The performance data reflects past performance and is not indicative of future
results. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
Note: Class C shares are no longer publicly offered.
<PAGE>
GOLD/RESOURCES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 1997
No. of Shares Securities(a) Value (Note 1)
- ------------------------------------------------------------------------------
Australia: 16.0%
475,000 Acacia Resources Ltd.+ $ 432,915
2,300,000 Australian Resources Ltd.+ 344,379
1,353,497 Consolidated Gold N.L.+ 70,490
700,000 Croesus Mining N.L.+ 113,925
245,422 Delta Gold N.L. 258,188
179,154 Emperor Mines Ltd.+ 52,483
808,750 Ghana Gold Mines Ltd.+ 36,854
990,000 Goldstream Mining N.L.+ 128,898
2,250,000 Gullewa Gold N.L.+ 19,042
146,530 Herald Resources Ltd.+ 22,417
150,000 Lihir Gold Ltd.+ 156,240
570,000 Menzies Gold N.L. 66,793
650,000 Mount Burgess Gold Mining Co. N.L.+ 27,505
500,000 Mount Leyshon Gold Mines Ltd. 553,350
1,219,633 Normandy Mining Ltd. 1,183,032
1,806,894 Plutonic Resources Ltd. 5,034,513
588,272 Resolute Samantha Gold N.L. 428,920
737,964 Sons of Gwalia N.L. 1,681,451
-----------
10,611,395
-----------
Canada: 36.1%
225,000 Barrick Gold Corp. 4,190,625
20,000 Black Sea Energy Ltd.+ 26,442
43,600 Boliden Limited (Installment Receipt)+ 111,322
50,000 Cambior, Inc. 295,548
13,000 Canadian Natural Resources Ltd.+ 278,269
686,900 Dayton Mining Corp.+ 1,297,352
584,800 El Callao Mining Corp.+ 147,269
100,000 Denison Mines Ltd.+ 25,882
70,000 Exall Resources Ltd.+ 20,566
106,900 Fletcher Challenge Canada Ltd. 1,458,186
35,000 Glimmer Resources Inc.+ 25,707
100,000 Greenstone Resources Ltd. 475,674
135,000 Kinross Gold Corp.+ 458,011
40,000 Iamgold International African Mining Gold Corp.+ 125,914
385,000 International Roraima Gold Corp.
(Warrants expiring 4/30/98) (b)+ 43,090
50,000 Macmillan Bloedel Ltd. 519,394
219,600 Meridian Gold Inc.+ 614,459
299,300 Miramar Mining Corp.+ 596,695
40,800 Nevsun Resources Ltd. + 103,887
47,800 NQL Drilling Tools Inc.+ 409,604
107,100 Oliver Gold Corp.+ 26,222
38,500 Pacific Rim Mining Corp.
(Warrants Expiring 4/04/98)(b)+ 46,052
244,200 Placer Dome Inc. 3,098,288
285,000 Prime Resources Group Inc. 1,893,953
102,000 Prudential Steel Ltd. 998,916
416,200 Richmont Mines Inc.+ 960,764
400,000 Rift Resources Ltd.+ 83,943
8,600 Rio Narcea Gold Mines Ltd. 25,567
195,000 Solitario Resources Corp.+ 426,953
60,000 St. Andrew Gold Fields Corp. 90,237
21,300 Sutton Resources Ltd.+ 143,783
240,000 Teck Corporation (Class B) 3,617,922
153,000 TVX Gold Inc.+ 516,375
334,800 Viceroy Resource Corp.+ 620,629
444,500 Vista Gold Corp.+ 102,609
-----------
23,876,109
-----------
Ghana: 1.6%
30,191 Ashanti Goldfields Co. Ltd.+ 226,432
104,000 Ashanti Goldfields Co. Ltd. (GDR) 780,000
30,191 Ashanti Goldfields Co. Ltd. Preference Shares+ 60,382
-----------
1,066,814
-----------
Mexico: 0.7%
150,000 Grupo Mexico S.A. Series 474,154
-----------
Peru: 0.9%
37,300 Co. de Minas Buenaventura S.A. (ADR) 596,800
-----------
United Kingdom: 1.7%
455,000 Billiton PLC+ 1,131,413
-----------
United States: 33.7%
645,872 Battle Mountain Canada Inc. (Exchangable Shares) 3,794,497
250,000 Battle Mountain Gold Co. (Class A) 1,468,750
328,700 Crown Resources Corp.+ 1,376,431
264,000 Freeport McMoran Copper & Gold (Class A) 4,042,500
121,600 Getchell Gold Corp.+ 2,918,400
100,000 Hecla Mining Co.+ 493,750
349,658 Homestake Mining Co. 3,103,217
50,000 Newmont Gold Co. 1,490,625
102,505 Newmont Mining Corp. 3,011,084
1,000,000 Piedmont Mining Co. Inc.(c)+ 125,000
15,000 Santa Fe Energy Resources, Inc.+ 168,750
10,000 Triton Energy Ltd. 291,875
-----------
22,284,879
-----------
Total Stocks and Other Investments: 90.7%
(Cost: $68,593,616) 60,041,564
-----------
Principal
Amount Short-Term Obligations--6.5%
- -----------------------------------------------------
$1,780,000 G.E. Capital Commercial Paper 1/02/98
Interest Yield of 5.73% 1,779,721
2,500,000 U.S. Treasury Bill 1/22/98
Interest Yield of 5.15% 2,492,490
-----------
Total Short Term Obligations: 6.5%
(Amortized Cost: $4,272,211) 4,272,211
-----------
Total Investments: 97.2%
(Cost: $72,865,827) 64,313,775
Other Assets Less Liabilities: 2.8% 1,836,940
-----------
Net Assets: 100% $66,150,715
===========
- ----------
(a) Unless otherwise indicated, securities owned are shares of common stock.
(b) Restricted security, see Note 6.
(c) Affiliated company, see Schedule of Affiliated Company Transactions.
* Fair value as determined by the Board of Trustees.
+ Non-income producing
Glossary:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
Summary of
Investments % of
by Industry Net Assets
- ---------- ---------
Gold Mining 75.7%
Diversified Mining 7.0%
U.S. Treasury Bill 3.8%
Paper and Forest Products 3.0%
Commercial Paper 2.7%
Oil and Gas Equipment
& Service 2.1%
Industrial Metals 1.7%
Oil & Gas Exploration 1.2%
Other Assets Less Liabilities 2.8%
------
100.0%
======
See Notes To Financial Statements.
<PAGE>
GOLD/RESOURCES FUND FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
December 31, 1997
Assets:
Investments at value (cost, $72,865,827) (Note 1) $ 64,313,775
Foreign cash (cost $1,343,766) 1,303,551
Receivables:
Securities sold 866,906
Capital shares sold 382,392
Dividends 23,019
From Advisor 79,483
Unrealized appreciation on open forward foreign currency
contracts (Note 7) 6,406
Other assets 4,899
-------------
Total assets 66,980,431
-------------
Liabilities:
Payables:
Due to Custodian 157,134
Capital shares redeemed 465,347
Accounts payable 141,318
Dividends payable 65,917
-------------
Total liabilities 829,716
-------------
Net Assets $ 66,150,715
=============
Shares outstanding 19,065,919
=============
Net asset value and redemption price per share
($66,150,715/19,065,919) $ 3.47
=============
Maximum offering price per share
(NAV/(1-maximum sales commission)) $ 3.68
=============
Net assets consist of:
Aggregate paid in capital $ 119,621,208
Unrealized depreciation of investments,
foreign currency and foreign denominated
receivables and payables (8,588,784)
Accumulated net investment loss (703,399)
Accumulated realized loss (44,178,310)
-------------
$ 66,150,715
=============
- --------------------------------------------------------------------------------
Statement of Operations
Year Ended December 31, 1997
Income:
Dividends (less foreign taxes withheld of $95,927) $ 1,085,662
Interest 219,183
------------
Total income 1,304,845
Expenses:
Management (Note 2) $752,214
Administration (Note 2) 322,926
Distribution (Note 4) 250,723
Transfer agent 368,830
Reports to shareholders 52,052
Professional 51,409
Custodian 34,675
Trustees fees 15,440
Registration 14,487
Other 13,590
--------
Total expenses 1,876,346
------------
Net investment loss (571,501)
Realized and Unrealized Loss
on Investments (Note 3)
Realized loss from security transactions (4,658,071)
Realized loss from foreign currency transactions (80,566)
Change in unrealized depreciation of foreign
denominated receivables and payables (35,415)
Change in unrealized depreciation of investments (44,299,940)
------------
Net Decrease in Net Assets Resulting from Operations $(49,645,493)
============
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
Year Ended Year Ended
December 31, December 31,
1997 1996
------------ ------------
Decrease in Net Assets:
Operations:
Net investment loss $ (571,501) $ (1,197,834)
Realized gain (loss) from
security transactions (4,658,071) 11,608,917
Realized loss from foreign
currency transactions (80,566) (1,760)
Change in unrealized
depreciation of foreign
denominated receivables
and payables (35,415) (1,558)
Change in unrealized depreciation
of investments (44,299,940) (3,340,865)
------------- -------------
Increase (decrease) in net assets
resulting from operations (49,645,493) 7,066,900
------------- -------------
Capital share transactions:*
Net proceeds from sales of shares 33,264,688 98,482,977
Capital shares issued
in connection with acquisition--
(Note 9) 3,020,329 --
------------- -------------
36,285,017 98,482,977
Cost of shares reacquired (52,787,184) (129,225,878)
------------- -------------
Decrease in net assets
resulting from capital share
transactions (16,502,167) (30,742,901)
------------- -------------
Total decrease in net assets (66,147,660) (23,676,001)
Net Assets:
Beginning of year 132,298,375 155,974,376
------------- -------------
End of year (including accumulated
net investment loss of
($703,399) and ($656,109),
respectively) $ 66,150,715 $ 132,298,375
============= =============
*Shares of Beneficial Interest
Issued and Redeemed
(unlimited number of $.001
par value shares authorized)
Shares sold 6,851,960 15,679,748
Shares issued in connection with an
acquisition (Note 9) 747,606 --
Shares reacquired (11,649,413) (20,524,479)
------------- -------------
Net decrease (4,049,847) (4,844,731)
============= =============
See Notes To Financial Statements.
<PAGE>
GOLD/RESOURCES FUND
- --------------------------------------------------------------------------------
Schedule of Affiliated Company Transactions
- --Transactions with affiliates (as defined in the Investment Company Act of
1940) for the year ended December 31, 1997 of the Fund are listed below:
<TABLE>
<CAPTION>
12/31/96 Purchases Sales 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. 1,000,000 -- -- -- -- -- 1,000,000 $125,000 --
</TABLE>
- --------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each year
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 5.72 $ 5.58 $ 5.35 $ 6.34 $ 3.56
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net Investment Loss (0.04) (0.06) (0.03) (0.02) (0.014)
Net Gains (Losses) on Securities
(both realized and unrealized) (2.21) 0.20 0.26 (0.97) 2.794
---------- ---------- ---------- ---------- ----------
Total from Investment Operations (2.25) 0.14 0.23 (0.99) 2.780
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year $ 3.47 $ 5.72 $ 5.58 $ 5.35 $ 6.34
========== ========== ========== ========== ==========
Total Return (a) (39.34%) 2.51% 4.3% (15.6%) 78.09%
- ----------------------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Year (000) $ 66,151 $ 132,298 $ 155,974 $ 186,091 $ 211,450
Ratio of Expenses to Average Net Assets 1.87% 1.71% 1.81% 1.52% 1.39%
Ratio of Net Loss to Average Net Assets (0.57%) (0.75%) (0.44%) (0.30%) (0.29%)
Portfolio Turnover Rate 32.46% 12.95% 6.16% 13.75% 7.79%
Average Commission Rate Paid (b) $ 0.0185 $ 0.0186
</TABLE>
- -------------
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the year, reinvestment of dividends 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.
(b) For the 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>
GOLD/RESOURCES 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. The
following is a summary of significant accounting policies consistently followed
by the Gold/Resources Fund series, a diversified fund (the "Fund") of the Trust
in the preparation of its financial statements. The policies are in conformity
with generally accepted accounting principles. The preparation of financial
statements in conformity with generally accepted accounting principles requires
the use of management's estimates and the actual results could differ.
A. Security Valuation -- Securities traded on national exchanges and traded
on the NASDAQ National Market System are valued at the last sales prices
reported at the close of business on the last business day of the year.
Over-the-counter securities not included on the NASDAQ National Market
System and listed securities for which no sale was reported are valued at
the mean of the bid and asked prices. Direct investments in gold bullion
if any are valued at the mean of the bid and asked price 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 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 are not separately disclosed. Recognized gains or losses
attributable to foreign currency fluctuations on foreign denominated
assets and liabilities are recorded as net realized gains and losses from
foreign currency transactions.
D. Distribution to Shareholders -- Distributions from net investment income
and realized gains, if any, are recorded on the ex-dividend date. Income
distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatment of foreign currency transactions and expiration of capital loss
carryforwards. The effect of these differences for the year ended December
31, 1997 decreased accumulated net investment loss by $524,211, decreased
accumulated realized loss by $30,835,041 and decreased aggregate paid in
capital by $31,359,252.
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 net of withholding taxes. Interest income is accrued as
earned.
F. Option Contracts -- The Fund may invest, for hedging purposes only, in
call and put options on securities, foreign currencies and commodities.
Call and put options give the Fund the right but not the obligation to buy
(calls) or sell (puts) the instrument underlying the option at a specified
price. The premium paid on the option, should it be exercised, will, on a
call, increase the cost of the instrument acquired and, on a put, reduce
the proceeds received from the sale of the instrument underlying the
option. If the options are not exercised, the premium paid will be
recorded as a capital loss upon expiration. The Fund may incur additional
risk to the extent the value of the underlying instrument does not
correlate with the anticipated movements of the option values.
Note 2 -- Van Eck Associates Corporation earned fees of $752,214 for the year
ended December 31, 1997 for investment management and advisory services. The fee
is based on an annual rate of .75 of 1% of the first $500 million of average
daily net assets, .65 of 1% on the next $250 million and .50 of 1% of the excess
over $750 million. Van Eck Securities Corporation received $38,280 for the year
ended December 31, 1997 from commissions earned on sales of Class A shares of
beneficial interest of the Fund after deducting $156,899 allowed to other
dealers. Van Eck Associates Corporation earned a fee of $250,738 for costs
incurred in connection with certain administrative and operational functions.
The fee is based on an annual rate of .25 of 1% on the first $750 million of
average net assets and .20 of 1% of the excess over $750 million. In accordance
with the advisory agreement, the Fund reimbursed Van Eck Associates Corporation
$72,188 for costs incurred in connection with certain administrative and
operating functions. Certain of the officers and trustees of the Trust are
officers, directors or stockholders of Van Eck Associates Corporation and Van
Eck Securities Corporation.
Note 3 -- Purchases and proceeds from sales of investments other than short-term
obligations aggregated $31,285,235 and $51,990,623, respectively, for the year
ended December 31, 1997. For federal income tax purposes the cost of investments
owned at December 31, 1997 was $73,492,811. As of December 31, 1997 net
unrealized depreciation for federal income tax purposes aggregated $9,179,036 of
which $13,221,847 related to appreciated investments and $22,400,883 related to
depreciated investments. At December 31, 1997 the Fund had capital loss
carryforwards of $43,586,369 available to offset future capital gains expiring
December 31, 1999, 2000, 2005 of $31,737,707, $7,559,429 and $4,289,233,
respectively.
Note 4 -- Pursuant to a Rule 12b-1 Plan of Distribution (the "Plan"), the Fund
accrues fees of .25 of 1% of average daily net assets of the Fund. The fees are
intended to be used principally for 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.
<PAGE>
GOLD/RESOURCES FUND
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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 may concentrate its investments in companies which are significantly
engaged in the exploration, development, production or distribution of gold and
other metals, minerals, oil, natural gas and coal and by investing in gold
bullion and coins. Since the Fund may so concentrate, it may be subject to
greater risks and market fluctuations than other more diversified portfolios.
The production and marketing of gold and other natural resources may be affected
by actions and changes in governments. In addition, gold and natural resources
securities may be cyclical in nature.
Note 6 -- Restricted Securities
The following securities are restricted as to sale:
Percent of
Date Net Assets
Acquired Cost Value at 12/31/97
-------- ---- ----- -----------
Dayton Mining
Warrant............. 1/31/96 -- -- --
International
Roraima Gold
Special Warrant..... 10/22/96 $207,131 $43,090 0.07%
Pacific Rim Mining
Corp. Special
Warrant............. 4/02//97 160,637 46,052 0.07%
Rift Resources Ltd.
Warrants............ 11/13/96 -- -- --
Tombstone
Exploration Co. Wt 10/03/96 -- -- --
Vista Gold Corp.
Warrants............ 4/25/96 -- -- --
Note 7 -- 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:
Forward Foreign Currency Sale Contracts:
Value at Unrealized
Contracts Settlement Date Current Value Appreciation
- --------- --------------- ------------- ------------
AUD 935,940
expires
through
1/08/98 615,247 608,841 $6,406
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 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 can not 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 $20,587.
Note 9 -- As of the close of business on October 28, 1997, the Fund acquired all
the net assets of Gold Opportunity Fund pursuant to a plan of reorganization
approved by Gold Opportunity Fund shareholders on October 1, 1997. The
acquisition was accomplished by a tax-free exchange of 747,606 shares of
Gold/Resources Fund (valued at $3,020,329) for the 479,753 shares of Gold
Opportunity Fund outstanding on October 28, 1997. Gold Opportunity Fund's net
assets at that date, $3,020,329, including $2,555,763 of unrealized
depreciation, were combined with those of the Gold/Resources Fund. The aggregate
net assets of Gold/Resources Fund and Gold Opportunity Fund before the
acquisition were $77,923,306 and $3,020,329, respectively.
<PAGE>
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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 Gold/ Resources Fund (the "Fund")
(one of the series constituting the Van Eck Funds) as of December 31, 1997, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Gold/Resources Fund 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
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<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
FR1998-0127-0086
