Van Eck Global
ANNUAL REPORT
December 31, 1998
VAN ECK FUNDS
ASIA DYNASTY FUND
GLOBAL BALANCED FUND
GLOBAL HARD ASSETS FUND
GOLD/RESOURCES FUND
INTERNATIONAL INVESTORS GOLD FUND
U.S. GOVERNMENT MONEY FUND
[GRAPHIC]
GLOBAL INVESTMENTS SINCE 1955
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Van Eck Asia Dynasty Fund
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Dear Fellow Shareholder:
The Asian markets were volatile in 1998. As a result of serious interest rate
and exchange rate shocks in 1997, Asian markets posted large declines in the
first nine months of this year, but rebounded in the fourth quarter. The Van Eck
Asia Dynasty Fund had a total return of -0.26% for the year ended December 31,
1998 and ranked second among 66 Asia ex-Japan equity funds* according to
Standard & Poor's Micropal, a mutual fund evaluation service. The average return
among these funds was -12.5% for the year. Your Fund also compared favorably to
the Morgan Stanley Capital International (MSCI) Far East Free ex-Japan Index,
which declined 4.8% for the year. Defensive positioning in the first nine months
of the year and timely buying of undervalued companies in August and September
helped the Asia Dynasty Fund outperform the averages.
Review
The Asian economic crisis had its roots in poor quality lending by local,
Japanese and European banks. On the other side, Asian corporations indulged in
overborrowing and overinvestment. The environment worsened following the
devaluation of several Asian currencies, beginning with the Thai baht on July 1,
1997. This led to a major withdrawal of capital that caused the erosion of the
deposit base of local banks, a loss of liquidity and further corporate
casualties. This financial crisis gained momentum in the first few days of 1998.
A panic sell-off was followed by a strong rally in January and February.
Adjusting to deep recessions, most Asian stock markets weakened in early summer
and declined further through the end of August, as Russia's default spread the
crisis to emerging markets worldwide.
During the crisis, Asian exports weakened, especially those depending on demand
from other Asian countries. However, imports declined even further, rapidly
turning current account deficits into large surpluses. This generated
significant capital inflow. The turnaround in current accounts and a pick-up in
corporate investment by multinational companies marked a resumption of capital
flows into the worst affected countries, and allowed currencies to strengthen in
the second half of the year.
This inflow of money together with limited demand for bank lending has allowed
interest rates to decline, particularly in Korea, Singapore and Thailand. The
reduction in rates was helped significantly by the U.S. Federal Reserve easing,
which was followed by interest rate cuts in many other developed and emerging
markets.
The decline in the price of capital was an important ingredient in the initial
recovery of the many capital-starved nations in Asia. Consequently, the last
quarter of the year saw a remarkable rally fueled by increased liquidity against
a background of cheap valuations and the first signs of corporate restructuring.
In the first part of the year, your Fund was defensively positioned in the face
of market uncertainty. The portfolio had a high cash position, an overweighting
of the strongest, first-tier Asian markets, such as Hong Kong and Singapore, and
an emphasis on large blue chip companies with strong balance sheets, and
defensive sectors, such as utilities. However, as the currencies began to
stabilize, interest rates declined and liquidity improved, we started to
reposition the portfolio to take advantage of a recovery. In September, we began
to increase weightings in Thailand and Korea, since these markets appeared to
have stabilized and offered exceptional values on a selective basis. Throughout
the year, we added positions in a number of technology stocks in India, such as
Satyam Computers and NIIT, which also showed substantial gains.
Review by Market
The first half of the year saw outflows of money from Hong Kong, causing
interest rates to rise sharply due to the currency's peg to the dollar. Higher
interest rates brought about a sharp correction in the price of real estate. On
top of this, a slowdown in the growth of the Chinese economy resulted in lighter
trade and capital flows from the mainland. Stock prices quickly declined. This
weakened Hong Kong's economy further.
Two related events sparked the recovery of this market. The first was the
unexpected and, so far, highly successful intervention in the money and stock
market by the Hong Kong Monetary Authority. Interbank rates declined from a high
of 16% to 5.4% at year end. A decline in residential property prices of about
40-50% from mid-1997 to mid-1998 sharply increased the affordability of housing.
The second event was a decline in mortgage rates, which led physical market
prices to stage a recovery in October coincident with an even more dramatic
recovery in the prices of real estate stocks. Despite a rise in unemployment,
demand for housing remained strong. This improved outlook for real estate, along
with the successful intervention of the Hong Kong Monetary Authority to squeeze
speculators from the currency and the stock markets, allowed the Hong Kong
market to rebound 51% from its lows (ending the year down 2.9%).
China's economy grew by 7.8% in 1998, a slight slowdown from the previous year.
The second half of the year saw the government aggressively boost infrastructure
spending to compensate for weakening export growth and lackluster consumer
demand. Intense speculation during the first half of the year about the
devaluation of the Chinese currency
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Van Eck Asia Dynasty Fund
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threatened to set off another round of devaluations in other Asian countries.
The currency remained stable throughout the year, however. The Chinese economy
is expected by many observers, including the Finance Ministry itself, to face
significant challenges in 1999 in light of a weak export outlook, higher levels
of urban unemployment, and stalled progress on economic and political reform.
Singapore rallied significantly in the fourth quarter, despite the fact that the
economy was still suffering from the economic problems of its neighboring
countries. Deposit rates sank below the dividend yield of the stock market,
drawing institutional and retail money into the market. In addition,
restructuring among corporations made significant progress. The government
itself announced an across-the-board national pay cut to enhance
competitiveness, and several Singaporean companies returned cash to
shareholders, enhancing shareholder value. Singapore's banks remained well
capitalized and are in good condition to resume lending when loan demand picks
up in the region.
Weak demand and pricing pressure for some electronic products weighed down the
Taiwanese market. On the other hand, the dominance of domestic investors meant
that the market did not suffer as much from the withdrawal of foreign capital.
Taiwan's export engine will be affected by Asia's slowdown but structurally the
companies are competitive and should be long-term survivors.
Korea was the star market for 1998, rising over 100% in U.S. dollar terms. This
recovery reflected in part the tangible success of the government's efforts in
reshaping corporate Korea. Historically, heavily leveraged conglomerates, whose
unfocused strategy included pursuing market share without regard for
profitability or shareholder value, dominated Korean industry and monopolized
the credit created by Korea's banks. The government has taken the initiative in
forcing these companies to concentrate on fewer activities and reduce their
level of indebtedness.
One of the most dramatic changes in a turbulent year was the decision by the
Malaysian authorities to fix the exchange rate and restrict capital flows. The
authorities were faced with the need to lower interest rates to help heavily
indebted companies and also prevent a collapse in the value of the ringgit.
Thus, interest rates were brought down and banks were ordered to support both
the stock market and a number of government connected conglomerates. Luckily,
few complied. To prevent the capital outflows that might have taken place,
strict restrictions on capital flows were imposed. Adding to investors' sense of
uncertainty was the persecution of former Finance Minister Anwar Ibrahim by
Prime Minister Mahathir.
For India, 1998 should have been a year to attract investor attention and
capital due to its relative isolation from problems elsewhere in Asia. Instead,
the voters' desire for a fresh approach to economics was disappointed by a
budget that did little to promote liberalization. Nuclear weapon tests brought
sanctions and serious damage to investor sentiment. The largest institutional
investor in India, the Unit Trust of India, found itself in the position of
potentially being a forced seller of equities, depressing the market even
further. At the company level, however, the environment was considerably
brighter. Results from the software and consumer products companies have been
very encouraging, with software companies reporting high double and, in many
cases, triple digit growth. Companies more exposed to the cyclical parts of the
economy had a harder time. The market remains cheap, however, and largely
unaffected by the Asian contagion.
By way of contrast, the socioeconomic consequences of the Asian crisis were most
apparent in Indonesia. An outburst of popular discontent at poor economic
conditions and "crony capitalism" culminated in the ousting of President Suharto
after more than 30 years in office. The corporate sector has been savaged and
many companies have no hope of paying their existing debts. Restructuring of
credit is taking place but the pace has been slow. Nevertheless, the currency
appears to have stabilized and the rural economy has remained healthy. Elections
this year will provide an important signpost for Indonesia's future.
Political change also took place during the year in the Philippines.
Vice-President (former movie star and Marcos crony) Estrada became President.
Concerns about rising bad debts of the banking system, as well as fears of a
return to the era of political favors weighed heavily on the market. In economic
terms, the Philippines is better placed than its regional peers. Since they did
not have the long period of growth that other Asian countries enjoyed, they
consequently did not build up the same amount of debt.
The Outlook
The Asian region has undergone a wrenching change. Several economies broke down
but the social fabric remained intact, with the exception of Indonesia. The
region now faces a period of convalescence as over-investment and over-leverage
is worked out. Nevertheless, such periods contain substantial opportunities for
investors, as witnessed in the late 1980s and early 1990s in the U.S. and
Europe. The restructuring of corporate Asia may unlock many of the same
reservoirs of value. Over time, the recapitalization of economies through trade
surpluses
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Van Eck Asia Dynasty Fund
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and multinational investment will take place. These factors, coupled with the
region's traditional strengths, which include young populations, a high savings
rate, and a strong work ethic, make us positive on the outlook for Asian stocks
over the medium and long term.
We would like to thank you for your participation in the Asia Dynasty Fund and
look forward to working with you in the future.
[PHOTO] Gary Greenberg [PHOTO] David A. Semple
/S/ Gary Greenberg /s/ David A. Semple
Gary Greenberg David A. Semple
Co-Portfolio Manager Co-Portfolio Manager
January 27, 1999
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* The Fund ranked fourth among 17 funds for the 5-year period ended 12/31/98,
and fourth among 11 since its inception on 3/22/93.
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Performance Record as of 12/31/98
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Average Annual After Maximum Before Sales
Total Return Sales Charge+ Charge
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A shares--Life (since 3/22/93) (1.3)% (0.4)%
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5 years (10.4)% (9.6)%
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1 year (5.0)% (0.3)%
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B shares--Life (since 9/1/93) (4.5)% (4.3)%
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5 years (10.5)% (10.2)%
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1 year (6.1)% (1.2)%
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The performance data represents past performance and is not indicative of future
results. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
At certain times in the past, the Adviser waived certain or all expenses on the
Fund. Had the Fund incurred all expenses, investment returns would have been
reduced.
+ A shares: maximum sales charge = 4.75%
B shares: maximum contingent deferred sales charge = 5.00%
(Prior to 4/30/97, the maximum CDSC was 6.00%)
Geographical Weightings
December 31, 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Singapore 16.6%
Taiwan 11.4%
South Korea 11.8%
Thailand 5.5%
China 1.5%
Hong Kong 33.3%
India 9.0%
Philippines 3.8%
Indonesia 7.1%
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Van Eck Asia Dynasty Fund
Top Ten Equity Holdings as of December 31, 1998*
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Cheung Kong (Holdings) Ltd.
(Hong Kong, 5.4%)
Cheung Kong is involved in property development and, through its subsidiaries,
telecommunications, infrastructure and electric utilities, real estate
management and ports.
HSBC Holdings plc
(Hong Kong, 4.7%)
HSBC Holdings is the holding company for the HSBC Group. The Group is an
international banking and financial services organization with operations in the
Asia-Pacific region, Europe, the Middle East and the Americas. Services provided
include retail and corporate banking, trade, trustee, securities, custody,
capital markets and treasury services, private and investment banking and
insurance.
Sun Hung Kai Properties Ltd.
(Hong Kong, 4.0%)
Sun Hung Kai is an investment holding company. The principal activities of its
subsidiaries are property development and investment, hotel operations,
construction, transport and car park management, financial services, insurance,
toll road operations, air freight forwarding and telecommunication services.
Development Bank of Singapore Limited
(DBS Bank)
(Singapore, 3.9%)
DBS Bank provides a comprehensive range of financial services including
corporate banking, investment banking, individual and private banking as well as
securities, asset management, and custody services. Their international network
is comprised of 18 overseas branches and offices located in the major financial
centers of the Asia-Pacific region and around the world.
Singapore Airlines Ltd.
(Singapore, 3.5%)
Singapore Airlines provides air transportation, engineering, airport terminal,
pilot training, air charter, and tour wholesaling services. Their airline
operation covers Asia, Europe, the Americas, the southwest Pacific and Africa.
China Telecom (Hong Kong) Limited
(Hong Kong, 3.5%)
China Telecom provides cellular telecommunications services in the Guangdong and
Zhejiang provinces in the People's Republic of China.
New World Development Company Ltd.
(Hong Kong, 3.4%)
New World Development is an investment holding company whose subsidiaries are
involved in property development and investment. They have hotel operations,
construction and civil engineering activities, telecommunication services and
insurance, as well as transportation and infrastructure investments.
PT Pabrik Kertas Tjiwi Kimia
(Indonesia, 3.3%)
Tjiwi Kimia operates a pulp and paper factory in East Java which manufactures
pulp, paper and paper products.
Housing & Commercial Bank, Korea
(South Korea, 2.8%)
Housing & Commercial Bank, Korea, formerly known
as Korea Housing Bank, has a full range of commercial banking and housing
finance services. It also deals with international banking, trusts, securities
and credit cards.
Medison Co. Limited
(South Korea, 2.5%)
Medison is a medical equipment company that provides ultrasonic diagnosis
equipment using in-house technology. The company is also involved in the medical
rental business.
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* Portfolio is subject to change.
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Van Eck Asia Dynasty Fund
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Van Eck Asia Dynasty Fund (Class A)
vs. MSCI Far East Free ex-Japan Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL]
Asia Dynasty Fund - Class A MSCI Far East Free
(with sales charge) ex-Japan Index
3/93 $ 9,525 $10,000
6/93 $10,500 $11,226
9/93 $11,580 $12,718
12/93 $15,350 $18,596
3/94 $12,527 $14,554
6/94 $12,567 $15,183
9/94 $13,863 $17,058
12/94 $12,477 $15,344
3/95 $11,798 $15,156
6/95 $12,765 $16,588
9/95 $12,693 $16,327
12/95 $12,868 $16,701
3/96 $13,729 $18,316
6/96 $13,470 $18,269
9/96 $13,293 $18,009
12/96 $13,708 $18,561
3/97 $13,158 $17,868
6/97 $13,781 $18,785
9/97 $12,027 $15,286
12/97 $ 9,308 $10,337
3/98 $ 9,439 $11,355
6/98 $ 7,178 $ 7,671
9/98 $ 6,975 $ 6,985
12/98 $ 9,285 $ 9,839
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Average Annual Total Return 12/31/98 1 Year 5 Years Since Inception(1)
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VE Asia Dynasty Fund-A (w/o sales charge) (0.3)% (9.6)% (0.4)%
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VE Asia Dynasty Fund-A (w/ sales charge)(2) (5.0)% (10.4)% (1.3)%
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MSCI Far East Free ex-Japan Index (4.8)% (12.0)% (0.3)%
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Van Eck Asia Dynasty Fund (Class B)
vs. MSCI Far East Free ex-Japan Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL]
Asia Dynasty Fund - Class B MSCI Far East Free
(with sales charge) ex-Japan Index
9/93 $10,221 $10,386
12/93 $13,522 $15,186
3/94 $11,012 $11,886
6/94 $11,039 $12,399
9/94 $12,165 $13,930
12/94 $10,933 $12,531
3/95 $10,318 $12,377
6/95 $11,150 $13,546
9/95 $11,059 $13,333
12/95 $11,222 $13,639
3/96 $11,959 $14,957
6/96 $11,723 $14,920
9/96 $11,568 $14,707
12/96 $11,905 $15,158
3/97 $11,386 $14,592
6/97 $11,914 $15,341
9/97 $10,385 $12,483
12/97 $ 7,991 $ 8,442
3/98 $ 8,096 $ 9,273
6/98 $ 6,148 $ 6,264
9/98 $ 5,959 $ 5,704
12/98 $ 7,818 $ 8,035
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Average Annual Total Return 12/31/98 1 Year 5 Years Since Inception(1)
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VE Asia Dynasty Fund-B (w/o sales charge) (1.2)% (10.2)% (4.3)%
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VE Asia Dynasty Fund-B (w/ sales charge)(3) (6.1)% (10.5)% (4.5)%
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MSCI Far East Free ex-Japan Index (4.8)% (12.0)% (4.0)%
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These graphs compare an initial $10,000 investment in the Van Eck Asia Dynasty
Fund (Classes A and B) made at its inception with a similar investment in the
Morgan Stanley Capital International Far East Free ex-Japan Index.
(1) Inception date for the Van Eck Asia Dynasty Fund was 3/22/93 (Class A) and
9/1/93 (Class B). Index returns are calculated as of nearest month end.
(2) The maximum sales charge is 4.75%.
(3) Applicable contingent deferred sales charge taken into account.
Returns for the Van Eck Asia Dynasty Fund (Classes A and B) reflect all
recurring expenses and include the reinvestment of all dividends and
distributions. Performance does not fully reflect the impact of the Fund's
expenses, as they have been fully or partially reimbursed by the Fund's Adviser
at certain times since the Fund's inception.
The MSCI Far East Free ex-Japan Index is an unmanaged index and includes the
reinvestment of all dividends, but does not reflect the payment of transaction
costs, advisory fees or expenses that are associated with an investment in the
Fund.
We will no longer compare the Fund to the S&P 500 Index since the S&P 500 is not
an Asian markets index. A $10,000 investment in the S&P 500 Index in 1998 would
have grown to $12,852 by 12/31/98 versus the same investment in the Fund, which
would have declined to the following amounts by year end: $9,501 (A shares,
after maximum sales charge) and $9,388 (B shares, after maximum contingent
deferred sales charge).
Past performance is not indicative of future results. Performance data quoted
represents past performance; the 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 the original cost.
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Van Eck Global Balanced Fund
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Dear Fellow Shareholder:
Global equity markets once again registered strong gains in 1998, with Western
markets significantly outperforming their Asian counterparts. Global bond
markets benefited from reduced global growth expectations in the wake of
continued economic upheaval in emerging market economies. We are pleased to
report that the Global Balanced Fund achieved a total return of 20.7% for the
year ended December 31, 1998, with the Fund's limited exposure to Japanese and
emerging market bonds and equities contributing to the strong performance. The
Fund's performance compared favorably with its peer group, finishing the year
ranked fourth among 72 global "flexible" funds*, according to Standard & Poor's
Micropal, a mutual fund evaluation service.
World Equity Markets
The 24.3% return for global equities for 1998 masks the extreme volatility that
was a constant feature in global financial markets during the period. Equity
markets were actors in a three-act play over the past twelve months. Act I,
lasting until the end of June, saw Western equity markets register strong gains
- -- the U.S. boosted by a favorable investment environment and Europe fueled by
the acceleration of the economic and earnings recovery that began in 1997.
Russia's devaluation and debt default, the unprecedented turnaround in the
Japanese yen, hedge fund collapses, a potential Brazilian devaluation, and lack
of U.S. leadership from a scandal-plagued President stole the show in Act II,
leading to massive selling by global investors during the third quarter. Act III
began on an ominous note; however, the global uncertainty was apparently lifted
after the U.S. Federal Reserve cut interest rates, paving the way for a
coordinated effort by central bankers to counter a panic-driven credit crunch
which threatened all economies and financial markets.
Unfathomable as it may seem, U.S. equities delivered 20%+ returns for the fourth
year in succession, ending the year with a 30.1% return. Though earnings growth
was unexceptional, low inflation and interest rates, record mergers and
acquisitions activity, and favorable supply/demand factors continued to support
the U.S. market. U.S. equities were, of course, not immune to the global turmoil
that surfaced during the third quarter. However, rapid response by the Federal
Reserve, along with an unflappable retail ownership base, paved the way for the
fourth quarter's dramatic rebound. It was not surprising that in the low growth
environment of the past year, investors flocked to the strong earnings growth of
technology, telecommunications and drug companies. What internet stocks lacked
in terms of immediately deliverable earnings growth, they made up for in ".com"
hype, leaving 1998 as the "year of the net" in most retail investors' minds.
While we were invested in few of the headline internet plays, the portfolio
benefited through its holdings in Cisco Systems and MCI Worldcom, architects and
owners of the net, respectively.
European equities delivered an average gain of 28.5% during 1998. Looking
through the peaks and valleys of the global problems highlighted above, several
themes were constant in Europe during 1998. Interest rate convergence in
preparation for European Monetary Union, relatively strong earnings growth and
the move to an Anglo-Saxon equity culture were the principal drivers of equity
performance for European shares. Though economic growth was relatively weak in
Italy and Spain, both countries were prime beneficiaries of lower interest rates
and increased equity ownership by retail investors, resulting in gains of 52.5%
and 49.9%, respectively, in those markets. French equities (+41.5%) benefited
from a pick-up in consumer spending, while German equities (+29.4%) turned in
solid performance despite the market's global economic exposure via German
financials and exporters.
While cyclical stocks outperformed in the glory days of Act I, defensive sectors
emerged as the star performers as more realistic growth assumptions crept into
the markets during Acts II and III. During the year, the portfolio was
consistently exposed to service, technology, pharmaceutical and domestic
financial companies, which performed relatively well. Additionally, our
overweighting of European shares in the first half of the year contributed to
strong outperformance for the Fund. After having had 45% of the equity
portfolio's assets in UK and European equities during the third quarter, we have
scaled back the exposure to approximately 35%. Our principal worry at this
juncture is that earnings growth expectations across Europe are still too high,
and may lead to earnings disappointments in the first half of 1999. It is not
surprising that in such an environment, we have positioned the portfolio
defensively, focusing on pharmaceuticals (Novartis, Glaxo Wellcome), technology
(Nokia, Misys), publishing (Wolters Kluwer) and domestic financials (Bank of
Ireland, Bayerische HypoVereinsbank).
A false dawn occurred for Japanese equities during the beginning of the year as
investors naively marked up Japanese shares in line with rallies taking place
elsewhere in the world's equity markets. As investors quickly tuned in to the
severity of Japan's economic problems and the country's desperate need for a
bailout of its banking system, the Japanese market underperformed, increasing
only 5.1% over the past twelve months. For the past year, the Japanese economy
has been in the middle of the worst economic decline since official government
statistics began to be compiled in 1955. The country's problems have been
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Van Eck Global Balanced Fund
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well documented: tax hikes in 1997, a credit crunch due to a severely
undercapitalized banking system, loss of competitiveness with neighboring Asian
trading partners, and political inaction. Though the equities market fell in
harmony with other global markets during the volatile third quarter, declining
17.1%, the yen's dramatic turnaround during the quarter set the stage for
Japanese outperformance toward the end of the year. We have noted several times
in the past that the Japanese government habitually promises less than the
market (and economy) needs, then delivers less than it promises. We do not think
that the present government has suddenly found religion; however, what does seem
apparent this time is that with the economy performing as poorly as it is, they
seem to be grasping the severity of the problem. The (Y)24 trillion stimulus
package and a (Y)60 trillion bank bailout are steps in the right direction.
Partly as a result of diminished prospects in Europe and the UK, and partly due
to improving prospects in Japan, we have increased the equity portfolio's
exposure to Japan from a low of 5% earlier in 1998 to its present 8% level.
While we maintain our traditional holdings in export and technology plays
(Canon), the focus of the increased exposure is in more defensive areas such as
pharmaceuticals (Takeda Chemical Industries) and cellular telephony (NTT
DoCoMo), as well as in corporate restructuring candidates (Hitachi).
Asian Pacific equities' participation in Act I lasted about six weeks before
investors realized that any hopes for a "V"-style economic recovery after 1997's
turmoil were unrealistic. As reality crept back into the markets, Asian equities
registered a decline of 17.0% during the first half of the year. Though emerging
markets were the initial source of much of the pain felt by international
investors during the third quarter, on a relative basis, Asian Pacific equities
were the surprising stars, declining only 8.9%. The second-half strength
exhibited by Asian Pacific markets was due to several factors: 1) a weakening
dollar versus the yen gave Asian currencies an effective devaluation versus
Japan; 2) U.S. interest rate cuts took pressure off Asian currencies, paving the
way for interest rate reductions across the region; and 3) with a sense of calm
restored, investors saw the 44% to 60% decline in the Hong Kong property market
as the bottom and thus a buying opportunity, triggering a rally in the
property-sensitive Hong Kong equity market. The portfolio benefited from minimal
exposure to the region during 1998 as Asian Pacific equities registered a
decline of 4.4%. Looking forward, we continue to expect the economies to have a
rough 1999. However, with the sense of panic removed and a more favorable
interest rate and currency environment, we have recently begun to build exposure
to the region (Cheung Kong, HSBC).
Though growth prospects were relatively attractive in certain Latin American
countries, Latin American equities were weak over the past twelve months,
declining 35.1%. Investors continued to overlook respectable growth in Mexico,
focusing instead on a likely Brazilian devaluation. President Cardoso's
re-election, the subsequent $42 billion IMF rescue package, an announced fiscal
austerity plan, and progress with social security reform kept investor worries
at bay during October and November, leading to a gain of 16.0% during those
months. Looking at Latin America's relative growth prospects versus historically
low valuations for the region's equity markets, it is clear that investors
continued to expect a Brazilian devaluation in 1999 (which has since occurred).
While we see continued problems in Brazil in the wake of a floating real
(Brazil's currency), we are comfortable taking a relatively defensive position
in a Mexican beverage company (FEMSA), which should experience little
operational impact from the Brazilian devaluation.
World Bond Markets
1998 was a tumultuous, though profitable year for world bond markets, which
posted a gain of 15.3%, largely due to a low inflation, slowing growth
environment. A "flight to quality" theme was evident throughout the year as the
emerging market crisis claimed another victim in Russia and threatened to drag
Brazil down with it; the near collapse of a hedge fund prompted the evaporation
of liquidity in all but the most liquid bond markets. Conditions in foreign
exchange markets in the second half of the year were the most turbulent in the
history of floating exchange rates. In Japan, bond yields fell to the lowest
level of any major market in centuries. In Europe, preparations were completed
for the single European currency, the euro, which was born on January 1, 1999.
To finish a remarkable year, the President of the United States was impeached by
Congress, even as the stock market reached new highs. In this turbulent
environment, an emphasis on high-quality government bonds, such as U.S.
Treasuries, boosted Fund performance.
As the year began, market participants and central bankers alike were openly
speculating on the impact of the Asian crisis on the developed economies. Yet
consumer spending continued to accelerate even as falling exports to Asia were
depressing manufacturing activity, a trend that was to continue throughout the
year. Falling Asian demand pushed down commodity prices and intensified
deflationary pressures, giving a boost to bond prices. Throughout the year, we
increased U.S. bond weightings, as well as the average maturity of those
holdings, expecting that growth and inflation would continue to slow and that
the Federal Reserve would cut interest rates in response.
During the second quarter, the Japanese economy stumbled once more as the latest
in a series of government spending initiatives did little to stimulate
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Van Eck Global Balanced Fund
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growth. The yen fell sharply against the dollar and the German mark, prompting
fears that China and/or Hong Kong would be forced to devalue their currencies in
order to regain the competitiveness they had lost to Japan and the rest of Asia.
This fear overshadowed the successful restructuring of Korea's debt, and led to
further capital flight out of emerging markets and into the developed bond
markets. This proved deadly for the Russian federation, which defaulted on its
domestic government debt obligations and then devalued its currency, producing
widespread losses among leveraged investors, including investment banks and
hedge funds. These events precipitated a still larger "flight to quality" as
investors rushed to buy U.S. Treasuries, German bonds and UK gilts. As losses
increased, liquidity decreased and the Federal Reserve announced a widely
anticipated cut in interest rates at the end of September in a move that was
seen as a direct reaction to the global turmoil in financial markets.
Two further interest-rate cuts followed in October and November. The liquidation
of leveraged positions (hedge funds and other leveraged investors were forced to
sell corporate bonds to meet margin calls) also had a large impact on the
foreign exchange markets, sending the dollar tumbling to its lowest levels in
more than a year. The dollar fell nearly 10% in one day against the Japanese
yen, the largest move during the era of floating exchange rates that began in
1973. For the first half of the year, the Fund benefited from having minimal
exposure to yen assets. As the yen registered its remarkable turnaround during
the third quarter, our underweight position in Japanese yen (for both the equity
and bond portfolios) hurt performance. The negative currency impact, however,
was recaptured when our significant underweighting of Japanese bonds (JGBs)
helped us to avoid the pain felt when yields rose at the end of the year.
By May 1998, it became apparent that eleven countries would join together to
form the European Monetary Union in 1999. Bond yields and interest rates in
Europe continued to converge during the year, although during the volatile
market conditions that followed the Russian default, yields on Italian and
Spanish bonds rose to their widest levels for more than a year. We grasped this
last opportunity to "play the convergence game," increasing exposure to both
markets, which rallied strongly in the fourth quarter as global market
conditions settled down. The EMU countries cut short-term interest rates to 3.0%
in December as growth slowed, and inflation fell below 1.0%. Elsewhere in
Europe, UK government bonds, which we had consistently overweighted throughout
the year, performed strongly, as growth slowed sharply and the Bank of England
cut interest rates several times.
The Outlook
With only 57% of the total portfolio in equities, we maintain a relatively
defensive investment posture at the beginning of the new year. Regarding
equities, our current investment outlook is focused on managing expectations. We
acknowledge that Europe has some of the best growth prospects for 1999. However,
with some earnings growth estimates at an inflated 12%-14% growth, we feel there
is potential for European companies to disappoint investors in the first half of
next year. Accordingly, the portfolio's UK and European exposure is primarily
focused on defensive companies with more predictable earnings streams. The U.S.
remains a significant weighting for us as low interest rates and inflation,
along with a favorable supply/demand outlook, should offset the fairly flat
earnings prospects.
The portfolio's other significant exposure is in Japanese equities. Here too, we
are focusing on expectations. The bad news is that the Japanese government will
most likely fail to deliver on this year's announced fiscal stimulus packages
and bank rescue plans. The good news is that no one is expecting them to do so,
and equally important, the Nikkei does not appear to have already priced in any
kind of significant economic recovery. What the Japanese equity market does
offer is: 1) the potential to outperform if the government recognizes the
severity of the problems facing the Japanese economy and delivers most of what
they promised and 2) low correlation to global markets (i.e., Japan is a
relatively good hedge on any potential correction in global markets due to a
Brazilian devaluation or from Western growth estimates being significantly
reduced).
Overall, the low inflation, slowing growth environment for global bond markets
should remain positive going forward. At this time, emerging markets are once
again a major focus for all investors following the decision by the Brazilian
government to devalue the real. If the government takes steps to meaningfully
reduce a large fiscal deficit, conditions may stabilize and the crisis will be
contained to that country. Failing such action, the currency may fall sharply,
prompting a new round of contagion and leading to a further "flight to quality"
into developed bond markets.
In Japan, the large increases in government spending and near-zero interest
rates have failed to produce a sustainable economic recovery. It seems
increasingly likely that the Bank of Japan will engage in monetization (i.e.,
print money) to stimulate growth. Such a move will drive down interest rates. In
Europe, inflation in the European Monetary Union economies is likely to fall
further. With high unemployment in the EMU block, the European Central Bank is
likely to cut short-term interest rates further, prompting further
9
<PAGE>
Van Eck Global Balanced Fund
- --------------------------------------------------------------------------------
bond rallies. In the U.S., even if economic growth holds up in the face of
weaker growth elsewhere, falling commodity prices and still uncertain conditions
in some emerging economies should benefit the bond market.
We appreciate your participation in the Global Balanced Fund and look forward to
helping you meet your investment goals in the future.
[PHOTO] [PHOTO] [PHOTO]
Anne M. Tatlock Steven J. Miller Anthony S. Gould
/s/ Anne M. Tatlock /s/ Steven J. Miller /s/ Anthony S. Gould
Global Strategist Global Equity Global Bond
Manager Manager
January 27, 1999
* The Fund ranked sixth among 23 funds for the 5-year period ended 12/31/98,
and fifth among 23 funds since its inception on 12/20/93.
All stock market returns are Morgan Stanley Capital International (MSCI)
Indices, measured in U.S. dollar terms, and reflect the reinvestment of net
dividends (or gross, if net unavailable).
- --------------------------------------------------------------------------------
Performance Record as of 12/31/98
- --------------------------------------------------------------------------------
Average Annual After Maximum Before Sales
Total Return Sales Charge+ Charge
- --------------------------------------------------------------------------------
A shares--Life (since 12/20/93) 10.3% 11.4%
- --------------------------------------------------------------------------------
5 years 10.4% 11.5%
- --------------------------------------------------------------------------------
1 year 14.9% 20.7%
- --------------------------------------------------------------------------------
B shares--Life (since 12/20/93) 10.6% 10.7%
- --------------------------------------------------------------------------------
5 years 10.5% 10.8%
- --------------------------------------------------------------------------------
1 year 15.1% 20.1%
- --------------------------------------------------------------------------------
The performance data represents past performance and is not indicative of future
results. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
The Adviser is currently waiving certain expenses on the Fund. Had the Fund
incurred all expenses, investment returns would have been reduced.
+ A shares: maximum sales charge = 4.75%
B shares: maximum contingent deferred sales charge = 5.00%
Geographical Weightings
December 31, 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Cash/Equiv. 0.7%
Other 9.1%
France 2.6%
Germany 6.3%
Italy 7.6%
Japan 7.9%
Netherlands 2.1%
Sweden 2.4%
United Kingdom 8.6%
United States 52.7%
10
<PAGE>
Van Eck Global Balanced Fund
Representative Equity Holdings as of December 31, 1998*
- --------------------------------------------------------------------------------
Bank of Ireland
(Ireland, 0.9%)
Bank of Ireland is Ireland's largest bank. The bank has remained one of our core
positions as it continues to provide excellent exposure to Europe's strongest
economy. Ireland continues to experience rapid growth driven mainly by large
amounts of foreign direct investment. Foreign investors are attracted to Ireland
for its low tax rates and its young, well-educated work force. As our outlook
for the Irish economy remains very positive, we expect strong profit growth and
high returns on equity to continue.
MCI WorldCom, Inc.
(U.S., 0.5%)
MCI WorldCom (formed from the September 1998 merger of WorldCom and MCI) is a
global telecommunications company with established operations in over 50
countries encompassing Europe, the Asia-Pacific regions and the Americas. The
company is a premier provider of local, long distance, international and
Internet services. MCI WorldCom will be the first local-to-global company
capable of delivering advanced voice and data communications services entirely
over its own facilities and networks worldwide. Most of MCI WorldCom's revenues
come from business customers. Despite its large size, MCI WorldCom should remain
an aggressive growth company via future acquisitions, and by virtue of its
strong position in business data transmission and the Internet.
Merck & Co., Inc.
(U.S., 1.8%)
Merck & Co. is the nation's leading pharmaceuticals producer and one of the
world's top three drug companies. Merck develops products for both humans and
animals. More than one-third of the company's sales come from drugs designed to
treat high cholesterol, hypertension and heart failure. Merck's Zocor and
Mevacor control 40% of the world market for anti-cholesterol medications. Merck
also makes Vasotec, the top selling drug for combating high blood pressure, as
well as promising new drugs such as Crixivan for treating AIDS. We think the
company can register annual earnings growth improvement over the next few years
of 12-15% supporting continued share price strength going forward.
Nokia Oyj
(Finland, 0.4%)
Nokia is a global leader in the manufacturing and development of wireless
telecommunications equipment. We expect the company to continue to grow revenue
and earnings at a rapid rate well into the next century. The main driver of
growth for Nokia will be the expected continued explosive growth in the use of
wireless technology. Wireless growth should lead to increased demand for both
Nokia's cellular phones and cellular infrastructure equipment. We also believe
that Nokia will grow more rapidly than the overall wireless market as its
product offering strength will drive further market share gains.
Novartis AG
(Switzerland, 0.7%)
Novartis, the largest pharmaceutical company in Europe by market cap, generated
56% of its revenues from healthcare, 26% from agri-business and 18% from
consumer health in 1998. The company is in a position to deliver earnings growth
faster than the European industry average over the next three to five years
based on a solid portfolio of high growth pharmaceutical products combined with
two new products to be launched by the end of 1999. The company remains cautious
in its agri-business, which is one of the largest players globally, but upbeat
about a turnaround in its consumer health segment. The company has approximately
$14 billion in cash, supporting future earnings enhancing acquisitions. Novartis
is expected to list on a U.S. stock exchange by year end, increasing the
attractiveness of the stock to U.S. shareholders.
NTT Mobile Communications Network, Inc.
(NTT DoCoMo)
(Japan, 0.6%)
NTT DoCoMo is the world's largest single-market provider of cellular services
with a customer base of more than 20 million subscribers that provides the
company with stable growth in cash flow. Despite Japan's economic problems,
subscriber growth continues to be strong and pricing is relatively stable.
Earnings growth is expected to average greater than 10% over the next five
years. The stock's size, earnings stability, and growth prospects should
continue to support the valuation in an otherwise difficult marketplace.
- ----------
* Portfolio is subject to change.
11
<PAGE>
Van Eck Global Balanced Fund
- --------------------------------------------------------------------------------
Van Eck Global Balanced Fund (Class A)
vs. Global Balanced Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTER MATERIAL]
Global Balanced Fund -
Class A (with sales charge) Global Balanced Index
12/20/93 $ 9,520 $10,000
3/94 $ 9,201 $10,043
6/94 $ 9,171 $10,251
9/94 $ 9,451 $10,434
12/94 $ 9,149 $10,409
3/95 $ 9,462 $11,154
6/95 $10,037 $11,679
9/95 $10,351 $12,018
12/95 $10,548 $12,504
3/96 $10,732 $12,713
6/96 $10,998 $12,955
9/96 $11,214 $13,207
12/96 $11,844 $13,697
3/97 $11,833 $13,494
6/97 $13,273 $14,862
9/97 $13,767 $15,208
12/97 $13,594 $15,008
3/98 $15,139 $16,325
6/98 $15,638 $16,656
9/98 $14,612 $15,987
12/98 $16,401 $18,207
- --------------------------------------------------------------------------------
Average Annual Total Return 12/31/98(1) 1 Year 5 Years Since Inception(1)
- --------------------------------------------------------------------------------
VE Global Balanced Fund-A (w/o sales charge) 20.7% 11.5% 11.4%
- --------------------------------------------------------------------------------
VE Global Balanced Fund-A (w/ sales charge)(2) 14.9% 10.4% 10.3%
- --------------------------------------------------------------------------------
Global Balanced Index4 21.3% 12.7% 12.7%
- --------------------------------------------------------------------------------
Van Eck Global Balanced Fund (Class B)
vs. Global Balanced Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTER MATERIAL]
Global Balanced Fund -
Class B (with sales charge) Global Balanced Index
12/20/93 $10,000 $10,000
3/94 $ 9,654 $10,043
6/94 $ 9,591 $10,251
9/94 $ 9,864 $10,434
12/94 $ 9,516 $10,409
3/95 $ 9,833 $11,154
6/95 $10,424 $11,679
9/95 $10,741 $12,018
12/95 $10,899 $12,504
3/96 $10,069 $12,713
6/96 $11,323 $12,955
9/96 $11,524 $13,207
12/96 $12,152 $13,697
3/97 $12,128 $13,494
6/97 $13,590 $14,862
9/97 $14,074 $15,208
12/97 $13,885 $15,008
3/98 $15,447 $16,325
6/98 $15,932 $16,656
9/98 $14,879 $15,987
12/98 $16,571 $18,207
- --------------------------------------------------------------------------------
Average Annual Total Return 12/31/98 1 Year 5 Years Since Inception(1)
- --------------------------------------------------------------------------------
VE Global Balanced Fund-B (w/o sales charge) 20.1% 10.8% 10.7%
- --------------------------------------------------------------------------------
VE Global Balanced Fund-B (w/ sales charge(3) 15.1% 10.5% 10.6%
- --------------------------------------------------------------------------------
Global Balanced Index4 21.3% 12.7% 12.7%
- --------------------------------------------------------------------------------
These graphs compare an initial $10,000 investment in the Van Eck Global
Balanced Fund (Classes A and B) made at its inception with a similar investment
in a Global Balanced Index.
(1) Inception date for the Van Eck Global Balanced Fund was 12/20/93 (Classes A
and B). Index returns are calculated as of nearest month end.
(2) The maximum sales charge is 4.75%.
(3) Applicable contingent deferred sales charge taken into account.
(4) The Global Balanced Index is an unmanaged index and includes the
reinvestment of all dividends, but does not reflect the payment of
transaction costs, advisory fees or expenses that are associated with an
investment in the Fund.
The Global Balanced Index is a composite index made up of 60% Morgan Stanley
Capital International World Stock Index (with net dividends reinvested) and 40%
Salomon Smith Barney World Government Bond Index, rebalanced monthly.
Returns for the Van Eck Global Balanced Fund (Classes A and B) reflect all
recurring expenses and include the reinvestment of all dividends and
distributions. Performance does not fully reflect the impact of the Fund's
expenses, as they have been fully or partially reimbursed by the Fund's Adviser
at certain times since the Fund's inception.
We will no longer compare the Fund to the S&P 500 Index since the S&P 500 is not
a balanced index. A $10,000 investment in the S&P 500 Index in 1998 would have
grown to $12,852 by 12/31/98 versus the same investment in the Fund, which would
have grown to the following amounts by year end: $11,489 (A shares, after
maximum sales charge) and $11,507 (B shares, after maximum contingent deferred
sales charge).
Past performance is not indicative of future results. Performance data quoted
represents past performance; the 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 the original cost.
12
<PAGE>
Van Eck Global Hard Assets Fund
- --------------------------------------------------------------------------------
Dear Fellow Shareholder:
Hard assets endured an exceptionally difficult year in 1998 as global economic
conditions, oversupplied commodity markets, and trying real estate finance
markets all conspired to pull hard asset prices lower. As was true in the
general equity markets, value investments provided little support despite
relative valuations (prices in terms of underlying fundamentals) that were at
30-year lows in some sectors. In this environment, the Global Hard Assets Fund
had a total return of -32.3%, erasing some of the strong positive returns from
the previous three years. We are certainly disappointed with 1998 results.
However, looking forward, the seeds of favorable conditions in hard assets are
being sown and value is exceptional. We believe the multiple shocks that
resulted in difficult conditions are priced into current valuations. As we go
forward, we see multiple opportunities in cheap and underowned hard asset
stocks. We expect that these contrarian opportunities will be recognized by the
marketplace in time.
Review
Almost every hard asset market declined during 1998. The confluence of events
that led to these declines has not been seen in decades. In fact, policymakers
called last year's world financial crisis the worst in 50 years. Among the key
events of this scenario were country debt defaults in the emerging markets
(notably in Russia and Latin America), disastrous hedge fund performance that
rocked the financial markets, legislative changes that negatively impacted the
valuation and structure of real estate securities and the warmest year in
decades (or centuries, in fact), which affected energy prices. Even presidential
impeachment was thrown into the mix toward the end of the year.
The most significant factor behind the decline in hard assets was the difficult
economic conditions that prevailed throughout the year. Markets witnessed an
economic earthquake caused by massive credit creation over a multi-year period.
This credit creation eventually led to overcapacity and a large debt burden and
what economists have called deflationary conditions. More practically, 1997 saw
the beginnings of the Asian economic crisis that spread geographically in 1998
to other developing markets such as Russia and Latin America, and affected
developed markets such as U.S. markets during the third quarter. In addition,
European economies finished the year with downward momentum. The net result was
a slowdown in global growth from the 3.7% rate the global economy enjoyed in
1997 to a significantly slower 1.8% rate in 1998. Many markets were affected by
this slowdown, but commodity markets and the manufacturing sectors were
especially hard hit as industrial production slowed throughout the world.
However, central bankers and politicians recognized this slowdown and started
easing monetary policy dramatically in the fourth quarter, which should be
positive for hard assets.
Commodities and Resource Equities
The significant slowdown in global growth negatively impacted commodity prices,
in turn curtailing earnings and the values of hard asset producers. In addition
to this "demand shock," other factors affected demand, including the warmest
year in decades. In fact, according to the National Oceanic and Atmosphere
Administration, 1998 was the warmest year in the Northern Hemisphere in the last
1,200 years. This reduced the demand for oil and other energy products and
helped cause the 33% decline in oil prices to the lowest prices in real terms
since 1986. This decline in demand, combined with a significant build-up in
supply in the last several years, led to a drop of 35%, the largest decline in
commodity prices recorded by the Goldman Sachs Commodity Index. This negatively
impacted earnings of all commodity producers and share prices fell as a result.
The worst damage occurred in the oil service sector, where share prices declined
over 40%. In addition, exploration shares declined approximately 35%. (In
Canada, where the Fund held a number of these companies, currency weakness
further exacerbated the situation.) Unfortunately, the Fund had significant
weightings in both sectors as we took the view that equity multiples of these
companies were trading at huge discounts relative to history and that these
stocks represented value investments. Instead, earnings projections were
continuously lowered as the oil price continued down its path to $10 per barrel.
We did not foresee these prices and held on to investments too long. In other
commodity markets, industrial metals prices declined 20% while shares of metals
producers declined nearly 30%. The Fund avoided the carnage in these markets by
keeping allocations low.
It appears to us that commodity markets have priced in the difficult economic
conditions that exist in the world and the surprise of 1999 could be that
commodity markets perform well. Asian economies appear to be beginning the
recovery process and economic growth continues to surprise on the upside here in
the U.S. In addition, valuations on commodity companies are cheap with relative
price/sales ratios at 30-year lows. Little buying is necessary to move these
companies significantly higher. We expect more consolidation activity in coming
years and think this will buoy the sector, particularly over the long term. One
of our
13
<PAGE>
Van Eck Global Hard Assets Fund
- --------------------------------------------------------------------------------
favorite groups is the forest products group, which should benefit from
improving supply/demand balances and the minimal capital spending in recent
years. These markets will be choppy, but we believe opportunities are
exceptional.
Gold
Gold, the best performing major hard asset in 1998, ended the year unchanged
while gold shares fell 12%. An average 10% weighting to gold during the year
helped Fund performance, although a higher weighting would have been in order
given relative performance in 1998. Perceptions of gold bounced throughout the
year between negative and positive influences. Negative influences included
reduced demand from Asia, concerns of gold sales by European central banks, and
low inflation. Positive influences included potential reflation and gold's role
as a safe-haven asset in times of turmoil.
We are becoming more positive on gold and believe the metal is likely to trade
in a higher range, surpassing 1998's high of $315. First, gold is cheap. At its
August lows, gold was at the lowest prices in real terms since 1973. In real
terms, gold is back to levels existing in the 1950s-1960s when paper currencies
and the global economy were relatively sound. Second, we are concerned that the
dollar may come under additional pressure as it faces what appears to be a
strong euro, a large current account deficit and less attractive interest rate
differentials. The dollar is already significantly below its highs. Generally,
the dollar and gold move inversely. Third, the significant global monetary
easing we saw in the fourth quarter is likely to continue and is sowing the
seeds of reflation and possible renewed investment interest in gold. Our
strategy is to keep assets in both bullion and high-quality shares. Bullion
represents a defensive allocation while the shares represent the traditional
leveraged play on bullion.
Real Estate
Despite a benign interest rate environment, healthy underlying fundamentals, and
attractive yields, real estate securities declined 17% in 1998. Real estate was
the largest weighting in the Fund during much of the year, averaging over 30%,
and thus, the decline was a significant contributor to negative performance. At
the beginning of the year, our assumptions had been for healthy cash flow growth
in the low teens and stable multiples. While cash flow growth came in as
expected, multiples declined nearly 30%. This significant multiple contraction
arose primarily from concern over property values and overbuilding during the
first half of the year, and lack of financing and slower demand in the second
half of the year.
We remain positive on real estate going into the new year as acquisition prices
have come down, new supply has slowed and demand has remained strong. Multiples
on real estate securities are exceptionally low by historical standards, and the
stocks are trading at or below their underlying real estate value. With cash
flow growth of approximately 10%, yields of 7%, and a relatively constant
multiple, the group should produce attractive returns in 1999.
The Outlook
Global monetary easing should be positive for hard assets. The fourth quarter of
1998 saw approximately 75 interest rate cuts by more than 37 central banks.
These extensive rate cuts, which we believe will continue during 1999, are
sowing the seeds for eventual reflation, a very positive development for hard
assets. In the meantime, hard asset markets have to continue to battle against
the forces of deflation and overcapacity that dogged them this year. We think
that reflationary forces will dominate this battle in the long term, but that
deflationary influences may hold sway in the short-term. On a selective basis,
as discussed above, we expect certain hard asset sectors to offer investment
opportunities during the first half of the year.
We appreciate your participation in the Global Hard Assets Fund and look forward
to helping you meet your investment goals in the future.
[PHOTO] [PHOTO] [PHOTO]
John C. van Eck Derek S. van Eck Kevin L. Reid
/s/ John C. van Eck /s/ Derek S. van Eck /s/ Kevin L. Reid
Chairman Co-Portfolio Co-Portfolio
Manager Manager
January 27, 1999
14
<PAGE>
Van Eck Global Hard Assets Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Performance Record as of 12/31/98
- --------------------------------------------------------------------------------
Average Annual After Maximum Before Sales
Total Return Sales Charge* Charge
- --------------------------------------------------------------------------------
A shares--Life (since 11/2/94) 6.0% 7.3%
- --------------------------------------------------------------------------------
1 year (35.5)% (32.3)%
- --------------------------------------------------------------------------------
B shares--Life (since 4/24/96) (3.0)% (1.7)%
- --------------------------------------------------------------------------------
1 year (35.9)% (32.6)%
- --------------------------------------------------------------------------------
C shares--Life (since 11/2/94) 7.1% 7.1%
- --------------------------------------------------------------------------------
1 year (33.2)% (32.5)%
- --------------------------------------------------------------------------------
The performance data represents past performance and is not indicative of future
results. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
The Adviser is currently waiving certain or all expenses on the Fund. Had the
Fund incurred all expenses, investment returns would have been reduced.
* A shares: maximum sales charge = 4.75%
B shares: maximum contingent deferred sales charge = 5.0%
C shares: 1% redemption charge, 1st year
[THE FOLLOWING TABLES WERE REPRESENTED AS
PIE CHARTS IN THE PRINTED MATERIAL.]
Geographical Weightings+
December 31, 1998
Cash/Equiv 8.9%
Austrialia 5.1%
Canada 22.6%
United Kingdom 1.0%
South Africa 1.6%
Russia 2.0%
Italy 1.4%
France 2.4%
United States 55.0%
Sector Weightings+
December 31, 1998
Cash/Equiv 8.9%
Energy 23.4%
Industrial Metals 8.4%
Precious Metals 20.3%
Forest Products and Paper 8.6%
Real Estate 30.4%
+ Weightings take "short" positions into account.
(See "Schedule of Portfolio Investments" p. 33)
15
<PAGE>
Van Eck Global Hard Assets Fund
Top Ten Equity Holdings as of December 31, 1998*
- --------------------------------------------------------------------------------
Barrick Gold Corporation
(Canada, 3.5%)
Barrick Gold explores for and produces gold. The company operates four mines in
North and South America.
Aluminum Company of America (Alcoa Inc.)
(U.S., 3.3%)
Alcoa is an integrated aluminum company. The company produces aluminum and
alumina. It is involved in mining, refining, smelting, fabricating and
recycling. Alcoa serves customers worldwide in the packaging, automotive,
aerospace, construction and other markets with a variety of fabricated and
finished projects.
Plum Creek Timber Company, L.P.
(U.S., 3.0%)
Plum Creek Timber is an integrated forest products company. The company's
timberlands and mills are located in the Pacific Northwest and the southeast and
northeast United States.
TrizecHahn Corporation
(Canada, 2.2%)
TrizecHahn is a real estate development and operating company. The company,
through its wholly owned subsidiaries, acquires, develops, manages and owns
income-producing commercial real estate comprised primarily of office buildings
in the United States and Canada.
Pasminco Limited
(Australia, 2.2%)
Pasminco's activities include exploration and integrated mining, smelting and
marketing to produce zinc and lead concentrates, and zinc, lead and silver
metals together with a variety of alloys and byproducts. The company's smelting
operations include Cockle Creek, Port Pirie and ARA. Pasminco operations are
located in Australia, Europe and Asia.
Exxon Corporation
(U.S., 2.1%)
Exxon explores for and produces crude oil and natural gas, manufactures
petroleum products, and transports and sells crude oil, natural gas, and
petroleum products. The company also manufactures and markets basic
petro-chemicals, including olefins and aromatics, as well as supplying specialty
rubbers and additives for fuels and lubricants.
Cornerstone Properties, Inc.
(U.S., 2.1%)
Cornerstone Properties is a self-advised equity real estate investment trust.
The company invests in Class A office properties in prime central business
district locations and major suburban office markets in the United States.
Stillwater Mining Company
(U.S., 2.1%)
Stillwater Mining explores for, develops, extracts, processes and refines
platinum, palladium and associated metals from the J-M Reef, located in
Stillwater and Sweet Grass Counties, Montana. The company's current mining
operations consist of the Stillwater Mine, an underground mine located in Nye,
Montana.
Cadillac Fairview Corporation
(Canada, 2.1%)
Cadillac Fairview owns, manages and develops commercial real estate in North
America, focusing on high quality retail centers in Canada and the United
States. The company also focuses on office properties in major Canadian cities.
Cadillac owns interests in or manages 92 properties amounting to approximately
48 million square feet.
Khanty Mansiysk Oil Corporation (KMOC)
(Russia, 2.0%)
KMOC, formerly Ural Petroleum Corp., is a U.S.- registered, privately-held oil
exploration and production company focused exclusively on the Western Siberian
region of the Russian Federation. Through controlled subsidiaries, KMOC holds
production licenses in eleven fields to total proven, probable and possible
reserves estimated to be in excess of 2 billion barrels.
- ----------
* Portfolio is subject to change.
16
<PAGE>
Van Eck Global Hard Assets Fund
- --------------------------------------------------------------------------------
Van Eck Global Hard Assets Fund (Class A)
vs. Ibbotson Hard Assets Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTER MATERIAL]
Global Hard Assets Fund -
Class A (with sales charge) Ibbotson Hard Assets Index
11/2/94 $ 9,520 $10,000
12/94 $ 9,416 $ 9,720
3/95 $ 9,936 $ 9,880
6/95 $10,416 $10,120
9/95 $10,776 $10,446
12/95 $11,307 $10,689
3/96 $12,662 $11,457
6/96 $13,593 $11,288
9/96 $14,276 $11,315
12/96 $16,464 $11,994
3/97 $16,487 $11,730
6/97 $17,857 $12,106
9/97 $21,275 $12,805
12/97 $18,817 $10,759
3/98 $18,356 $11,304
6/98 $15,952 $10,373
9/98 $12,798 $ 9,941
12/98 $12,749 $ 9,563
- --------------------------------------------------------------------------------
Average Annual Total Return 12/31/98 1 Year Since Inception(1)
- --------------------------------------------------------------------------------
VE Global Hard Assets Fund-A (w/o sales charge) (32.3)% 7.3%
- -------------------------------------------------------------------------------
VE Global Hard Assets Fund-A (w/ sales charge)(2) (35.5)% 6.0%
- --------------------------------------------------------------------------------
Ibbotson Hard Assets Index(4) (11.1)% (1.1)%
- --------------------------------------------------------------------------------
Van Eck Global Hard Assets Fund (Class B)
vs. Ibbotson Hard Assets Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTER MATERIAL]
Global Hard Assets Fund -
Class B (with sales charge) Ibbotson Hard Assets Index
4/24/96 $10,000 $10,000
9/96 $10,825 $ 9,637
12/96 $12,455 $10,216
3/97 $12,455 $ 9,991
6/97 $13,477 $10,312
9/97 $16,037 $10,906
12/97 $14,164 $ 9,164
3/98 $13,801 $ 9,628
6/98 $11,976 $ 8,835
9/98 $ 9,599 $ 8,467
12/98 $ 9,171 $ 8,145
- --------------------------------------------------------------------------------
Average Annual Total Return 12/31/98 1 Year Since Inception(1)
- --------------------------------------------------------------------------------
VE Global Hard Assets Fund-B (w/o sales charge) (32.6)% (1.7)%
- --------------------------------------------------------------------------------
VE Global Hard Assets Fund-B (w/ sales charge)(3) (35.9)% (3.0)%
- --------------------------------------------------------------------------------
Ibbotson Hard Assets Index(4) (11.1)% (7.4)%
- --------------------------------------------------------------------------------
Van Eck Global Hard Assets Fund (Class C)
vs. Ibbotson Hard Assets Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTER MATERIAL]
Global Hard Assets Fund -
Class C (with sales charge) Ibbotson Hard Assets Index
11/2/94 $10,000 $10,000
12/94 $ 9,885 $ 9,720
3/95 $10,420 $ 9,880
6/95 $10,914 $10,120
9/95 $11,292 $10,446
12/95 $11,954 $10,689
3/96 $13,387 $11,457
6/96 $14,365 $11,288
9/96 $15,092 $11,315
12/96 $17,354 $11,994
3/97 $17,354 $11,730
6/97 $18,776 $12,106
9/97 $22,338 $12,805
12/97 $19,733 $10,759
3/98 $19,228 $11,304
6/98 $16,692 $10,373
9/98 $13,376 $ 9,941
12/98 $13,313 $ 9,563
- --------------------------------------------------------------------------------
Average Annual Total Return 12/31/98 1 Year Since Inception(1)
- --------------------------------------------------------------------------------
VE Global Hard Assets Fund-C (w/o sales charge) (32.5)% 7.1%
- --------------------------------------------------------------------------------
VE Global Hard Assets Fund-C (w/ sales charge)(3) (33.2)% 7.1%
- --------------------------------------------------------------------------------
Ibbotson Hard Assets Index(4) (11.1)% (1.1)%
- --------------------------------------------------------------------------------
These graphs compare an initial $10,000 investment in the Van Eck Global Hard
Assets Fund (Classes A, B and C) made at its inception with a similar investment
in the Ibbotson Hard Assets Index.
(1) Inception date for the Van Eck Global Hard Assets Fund was 11/2/94 (Class
A), 4/24/96 (Class B), and 11/2/94 (Class C). Index returns are calculated
as of nearest month end.
(2) The maximum sales charge is 4.75%.
(3) Applicable contingent deferred sales charge taken into account.
(4) The Ibbotson Hard Assets Index is an unmanaged index and includes the
reinvestment of all dividends, but does not reflect the payment of
transaction costs, advisory fees or expenses that are associated with an
investment in the Fund.
The Ibbotson Hard Assets Index is 75% equities of global companies whose primary
business is linked to hard assets and 25% commodity futures. The equity
component consists of equal weightings of the MSCI Gold Mines, Non-Ferrous
Metals, Energy Sources, and Forest Products and Paper Indices, and the National
Association of Real Estate Investment Trusts Equity Index. The commodity
component consists of equal weightings of the Goldman Sachs Energy, Precious
Metals and Industrial Metals Indices.
Returns for the Van Eck Global Hard Assets Fund (Classes A, B and C) reflect all
recurring expenses and include the reinvestment of all dividends and
distributions. Performance does not fully reflect the impact of the Fund's
expenses, as they have been fully or partially reimbursed by the Fund's Adviser
at certain times since the Fund's inception.
We will no longer compare the Fund to the S&P 500 Index since the S&P 500 is not
a hard assets index. A $10,000 investment in the S&P 500 Index in 1998 would
have grown to $12,852 by 12/31/98 versus the same investment in the Fund, which
would have declined to the following amounts by year end: $6,455 (A shares,
after maximum sales charge), $6,407 (B shares, after maximum contingent deferred
sales charge), and $6,680 (C shares, after first year redemption fee).
Past performance is not indicative of future results. Performance data quoted
represents past performance; the 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 the original cost.
17
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18
<PAGE>
Van Eck Gold/Resources Fund
- --------------------------------------------------------------------------------
Dear Fellow Shareholder:
The year 1998 saw a continuation of the record eight-year bull market in stocks
as well as what we believe to be the secular bottom of the long bear market in
gold (and gold-mining shares) that began in 1980 at $850 an ounce. The price of
gold closed the year at $288.10 an ounce, compared to $289.20 an ounce at the
end of 1997. It twice made lows of approximately $275 an ounce, once in January
and again at the end of August. This was due largely to a dramatic rise in
distress sales from East Asia, a slower inflation psychology, and exaggerated
fears of Russian central bank sales when Russia defaulted on its debts in
August. In real terms, gold's price is back to levels existing in the
1950s-1960s when paper currencies and the global economy were relatively sound.
The most significant development last year in the gold market, in our opinion,
was an increase in the demand for gold as an investment. There was a growing
appreciation of the value of gold in helping to diversify investment portfolios.
World investment demand was estimated by Gold Fields Mineral Services Ltd. to
have risen over three-fold last year over the previous year. Sales of U.S. Eagle
gold coins more than doubled in 1998 over 1997 and were at record levels. During
the market turmoil last summer, when the Dow Jones Industrial Average fell
approximately 20%, the prices of gold and gold-mining shares rose sharply and
were proven a safe haven. Fears over the potential chaos that could be caused by
the millennium computer bug has been and is another factor in the growing
investment demand for gold. There is simply not enough time left to correct all
the billions of lines of computer codes worldwide that could be harboring
so-called "millennium bombs" (the inability of computer systems to distinguish
between the present and the next century).
Commodity prices suffered major losses in 1998 as global aggregate demand
weakened. The CRB Commodity Index fell 26%, from a high of 255 in 1997 to 188 in
December 1998, a 21-year low. However, gold performed relatively better, and the
ratio of gold to the CRB Index rose from 1.2 in December 1997 to 1.5 a year
later. Gold, of course, is more than just another commodity. Historically, and
to many people in the world today, it is real money as well as a cash reserve
monetary asset or store of value in times of international monetary disorder. It
does not carry a default risk.
Your Fund's net asset value per share was volatile last year. Its net asset
value high was $4.26 per share in April and its bottom was $2.24 per share in
August. The Fund had a negative return of 12.4%, compared to a negative 10.9%
average return among gold funds for the year, according to Lipper.
Gold-Mining Shares
The flat year-on-year gold price translated into generally subdued performance
for gold-mining shares. However, superior gains were achieved by a number of
companies as a result of new discoveries or acquisitions. In order to cope with
the low gold prices, companies have been reducing operating costs and shutting
down high cost operations. Industrywide operating costs were down approximately
18% year-on-year, enabling the stronger producers to post positive earnings.
Gold/Resources entered 1998 with a defensive investment posture brought on by
the two-year decline in the gold price that culminated with an 18-year low on
January 12, 1998. The lackluster performance of the gold shares in 1998 provided
opportunities to add to existing positions and bring new companies into the Fund
that have the potential to grow their low-cost ounce production. The Fund is now
favorably positioned to take advantage of upward moves in the gold price.
In 1998, the Australian producers led the other regions with a gain of 2.3%, as
measured by the Australian Stock Exchange Gold and Silver Index (in U.S. dollar
terms). The gains in Australia are due in part to a strong Aussie dollar gold
price that enabled the companies to exceed profit expectations. Additionally,
Delta Gold (up 44%) and Acacia (up 62%) made significant new discoveries in and
around the Sunrise Dam operation in Western Australia. We anticipate that these
discoveries, named Wallaby and Cleo, respectively, will provide additional
upside, as the limits to the gold mineralization have yet to be determined.
Also, Gold/Resources took a position in Newcrest Mining, which has achieved a
successful start-up of the Cadia Hill mine. The Newcrest shares have gained 8.9%
since our purchase. These companies, along with Normandy, Lihir Gold, and Sons
of Gwalia, form the core of our Aussie position, which totaled 20.4% of the Fund
as of December 31, 1998.
North American shares, as measured by the Toronto Stock Exchange Gold Index and
the Philadelphia Gold and Silver Index (XAU), declined 13.7% and 12.4%,
respectively. The decline in 1998 reflects disaffection on the part of many of
the general equity funds towards gold, which has not offered the glitzy returns
found in other sectors. Nonetheless, there was ample excitement in the gold
shares and several of the best performers were among the largest holdings in
Gold/Resources. Meridian Gold, with the discovery of a bonanza vein at their El
Penon project in Chile, was up 110% in 1998. In December, Placer Dome acquired
Getchell Gold at a 116% premium to market, sending the Getchell shares to a
13.5% gain for the year. The Fund also established a significant position in
Euro-Nevada, a royalty and operating company that owns the Ken Snyder Mine in
19
<PAGE>
Van Eck Gold/Resources Fund
- --------------------------------------------------------------------------------
Nevada, which will be the lowest cost gold producer in North America.
Euro-Nevada has gained 21.2% since the shares were acquired. Also new to the
Fund is Goldcorp (up 68% since purchased), which received financing in January
1999 to develop the Red Lake Mine in Canada. In addition to these companies,
Homestake, Barrick and Battle Mountain Gold make up the core of the North
American holdings, which totaled 65.4% of the Fund at year end.
The Outlook
A. Investment Sentiment May Be Turning Positive
Beginning in 1996 when the average gold price was approximately $385 an ounce,
net sales, loans, swaps and deposits of gold by mainly European central banks
almost doubled, market sentiment turned negative and the price fell. This trend
escalated in 1997 and leveled off in 1998. Then, after a meeting of the
Governing Council of the European Central Bank on January 7, 1999, the President
and Vice President announced that the Bank and the euro zone's national central
banks, for the moment and for the foreseeable future, would not sell gold. This
indicated to us that the pro-gold forces in Europe may have prevailed and that
European central bank net sales will most likely not occur for a long period of
time. Investors' confidence in gold should thus improve as their fears are
removed.
B. Financial, Economic and Monetary Risks and Uncertainties Continue to Mount
1. The level of stock prices is growing more risky as it continues to rise and
bullishness increases. Recent action by the Federal Reserve in cutting interest
rates and market momentum supported the recent upward move. The Standard &
Poor's 500 Index, up 28.6% in 1998 to another record high, is trading at a
price- earnings multiple of more than 31, an historic high. Earnings forecasts
may be reduced as time goes on. The fear that stock prices are too high, and
could therefore snap, produces the risk that the U.S. could experience a serious
downturn rather than a benign slowdown.
Eight years of booming stock and bond prices may have inevitably been
accompanied by excessive speculation and financial risks. Bond market leverage
has climbed sharply as total repos as a percentage of outstanding Treasury debt
has risen from approximately 24% in 1995 to 45% at present. Security loans as a
percentage of total bank loans have gone up from 2.75% in 1996 to 4.8%
currently. The total value of derivatives has soared to over $82 trillion. The
danger is a sharp unexpected move causing counterparty and other defaults. The
potential default of Long-Term Capital Management last September was a warning
of how easily havoc could have been wreaked on the entire U.S. financial system.
2. The risk is growing that a slowdown in U.S. growth from approximately 3.9% in
1998 to a forecast of approximately 1.5% in 1999 may lead to problems of excess
capacity and an eventual recession. Declining inflationary expectations can
eventually turn into rising deflationary expectations. There is a probability
that private debt has already become excessive in a downturn. Since 1995, the
growth of total U.S. debt as a percentage of GDP has grown 2% faster than the
economy. In the second quarter of 1998, it grew 4% faster than the economy
(Exhibit I). The Fed lowered interest rates last November to fight global
deflation and to stimulate demand by encouraging businesses and households to go
further into debt. We believe there is an eventual natural limit to this
process. The experience in Japan shows that interest rates became so low in an
accelerating deflationary environment that investors preferred absolute
liquidity, cash over bonds, which Japan issued to finance increased deficit
spending. Investors became afraid that interest rates would eventually rise.
3. The risks of further long-term U.S. dollar weakness and another dollar crisis
may be rising. Since the 1950s, when the dollar became the world's primary
reserve currency, it suffered several crises. From 1971 to its low in 1995, it
fell approximately 63% in terms of the Deutschemark and 78% in terms of the yen.
Then it rallied. From its high in August 1998 to the end of 1998, the dollar
fell 23% in terms of the yen and 8% in terms of the Deutschemark (Exhibit II).
In the beginning of 1999 the euro became the second key currency in the
international monetary system overnight. It may well gain a substantial share
from the dollar as a reserve currency and portfolio diversifier just as the
external financial position of the United States is worsening.
- --------------------------------------------------------------------------------
Exhibit I
Total Credit Market Debt as a % of GDP
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTER MATERIAL]
Name Code Currency Total Credit Market Debt as a % of GDP
Q1 70 148.90
Q2 70 149.41
Q3 70 149.25
Q4 70 152.40
Q1 71 147.81
Q2 71 148.48
Q3 71 149.52
Q4 71 152.46
Q1 72 149.85
Q2 72 149.02
Q3 72 149.56
Q4 72 150.56
Q1 73 148.99
Q2 73 150.14
Q3 73 151.85
Q4 73 151.87
Q1 74 153.12
Q2 74 154.20
Q3 74 155.50
Q4 74 155.93
Q1 75 156.35
Q2 75 155.75
Q3 75 153.25
Q4 75 153.56
Q1 76 151.33
Q2 76 152.79
Q3 76 153.93
Q4 76 154.72
Q1 77 153.84
Q2 77 153.12
Q3 77 153.77
Q4 77 156.69
Q1 78 157.87
Q2 78 154.72
Q3 78 155.72
Q4 78 157.07
Q1 79 157.40
Q2 79 158.99
Q3 79 160.19
Q4 79 161.69
Q1 80 161.56
Q2 80 164.51
Q3 80 164.93
Q4 80 162.58
Q1 81 159.11
Q2 81 162.17
Q3 81 162.08
Q4 81 165.42
Q1 82 168.22
Q2 82 169.62
Q3 82 172.39
Q4 82 175.10
Q1 83 175.36
Q2 83 175.12
Q3 83 175.83
Q4 83 176.70
Q1 84 175.69
Q2 84 178.46
Q3 84 181.48
Q4 84 186.13
Q1 85 187.72
Q2 85 191.57
Q3 85 194.16
Q4 85 201.33
Q1 86 201.96
Q2 86 208.09
Q3 86 212.36
Q4 86 217.81
Q1 87 219.03
Q2 87 221.57
Q3 87 223.15
Q4 87 223.67
Q1 88 224.84
Q2 88 225.76
Q3 88 226.34
Q4 88 227.76
Q1 89 227.84
Q2 89 227.82
Q3 89 228.53
Q4 89 231.54
Q1 90 230.64
Q2 90 230.84
Q3 90 233.28
Q4 90 237.73
Q1 91 237.88
Q2 91 237.68
Q3 91 238.24
Q4 91 239.84
Q1 92 237.85
Q2 92 238.07
Q3 92 238.96
Q4 92 238.06
Q1 93 237.86
Q2 93 239.19
Q3 93 241.17
Q4 93 241.16
Q1 94 241.41
Q2 94 240.41
Q3 94 241.46
Q4 94 242.50
Q1 95 243.57
Q2 95 246.74
Q3 95 247.55
Q4 95 249.42
Q1 96 249.93
Q2 96 250.16
Q3 96 251.99
Q4 96 253.21
Q1 97 252.03
Q2 97 252.39
Q3 97 253.27
Q4 97 257.16
Q1 98 258.56
Q2 98 262.47
Q3 98 265.05
Q4 98 265.05
Source: DATASTREAM
- --------------------------------------------------------------------------------
20
<PAGE>
Van Eck Gold/Resources Fund
- --------------------------------------------------------------------------------
The U.S. current account deficit has widened from $148 billion in 1996 to $166
billion in 1997 and a probable $240 billion in 1998. It also had a net capital
outflow of about $60 billion in 1998. If the U.S. economy slows down and U.S.
interest rates fall in relation to those in Japan and Europe, it may become more
difficult to finance the U.S. current account deficit. If investors were
suddenly to question the sustainability of this imbalance, the consequences for
financial markets and the world economy could be alarming.
- --------------------------------------------------------------------------------
Exhibit II
The U.S. Dollar Track Record (1969 - Present)
Four Major Declines
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTER MATERIAL]
Name Code Currency US GERMAN MARKS TO US$ US JAPANESE YEN TO US$
1/69 4.00 358.20
Feb 28, 69 4.02 358.20
Mar 31, 69 4.02 358.20
Apr 30, 69 4.01 358.20
May 30, 69 3.99 357.45
Jun 30, 69 4.00 358.15
Jul 31, 69 4.00 358.15
Aug 29, 69 3.99 359.65
Sep 30, 69 3.97 359.80
Oct 31, 69 3.74 356.98
Nov 28, 69 3.69 356.80
Dec 31, 69 3.69 356.80
Jan 30, 70 3.69 357.68
Feb 27, 70 3.69 357.62
Mar 31, 70 3.67 357.48
Apr 30, 70 3.64 357.99
May 29, 70 3.63 358.75
Jun 30, 70 3.63 358.78
Jul 31, 70 3.63 359.29
Aug 31, 70 3.63 358.13
Sep 30, 70 3.63 357.86
Oct 30, 70 3.63 357.70
Nov 30, 70 3.63 357.61
Dec 31, 70 3.60 357.48
1/71 3.64 357.86
Feb 26, 71 3.63 357.33
Mar 31, 71 3.63 357.34
Apr 30, 71 3.63 357.35
May 31, 71 3.60 357.31
Jun 30, 71 3.51 357.35
Jul 30, 71 3.48 357.36
Aug 31, 71 3.43 345.90
Sep 30, 71 3.36 336.31
Oct 29, 71 3.33 329.97
Nov 30, 71 3.33 328.19
Dec 31, 71 3.26 321.14
Jan 31, 72 3.23 312.38
Feb 29, 72 3.18 304.78
Mar 31, 72 3.17 302.22
Apr 28, 72 3.18 303.28
May 31, 72 3.18 304.21
Jun 30, 72 3.17 300.21
Jul 31, 72 3.16 300.62
Aug 31, 72 3.19 301.03
Sep 29, 72 3.19 301.08
Oct 31, 72 3.21 300.89
Nov 30, 72 3.20 300.74
Dec 29, 72 3.20 301.13
1/73 3.20 301.55
Feb 28, 73 3.15 281.91
Mar 30, 73 2.81 261.48
Apr 30, 73 2.84 265.26
May 31, 73 2.79 264.44
Jun 29, 73 2.58 264.26
Jul 31, 73 2.34 264.27
Aug 31, 73 2.42 265.11
Sep 28, 73 2.43 265.41
Oct 31, 73 2.41 266.28
Nov 30, 73 2.58 278.29
Dec 31, 73 2.66 280.11
Jan 31, 74 2.81 297.51
Feb 28, 74 2.71 291.18
Mar 29, 74 2.62 281.79
Apr 30, 74 2.52 277.44
May 31, 74 2.46 278.78
Jun 28, 74 2.52 282.85
Jul 31, 74 2.55 290.64
Aug 30, 74 2.62 302.08
Sep 30, 74 2.66 299.13
Oct 31, 74 2.59 299.33
Nov 29, 74 2.51 299.97
Dec 31, 74 2.45 300.25
1/75 2.36 299.57
Feb 28, 75 2.33 291.60
Mar 31, 75 2.32 287.31
Apr 30, 75 2.37 291.96
May 30, 75 2.35 291.32
Jun 30, 75 2.34 293.34
Jul 31, 75 2.47 296.25
Aug 29, 75 2.57 297.91
Sep 30, 75 2.62 299.70
Oct 31, 75 2.58 302.27
Nov 28, 75 2.59 302.49
Dec 31, 75 2.62 305.53
Jan 30, 76 2.60 304.55
Feb 27, 76 2.56 301.53
Mar 31, 76 2.56 300.47
Apr 30, 76 2.54 299.01
May 31, 76 2.56 298.91
Jun 30, 76 2.58 299.12
Jul 30, 76 2.57 294.67
Aug 31, 76 2.53 290.81
Sep 30, 76 2.49 287.34
Oct 29, 76 2.43 291.04
Nov 30, 76 2.41 295.13
Dec 31, 76 2.39 294.62
1/77 2.40 290.88
Feb 28, 77 2.40 284.87
Mar 31, 77 2.39 280.45
Apr 29, 77 2.37 275.42
May 31, 77 2.36 277.37
Jun 30, 77 2.35 272.53
Jul 29, 77 2.28 264.81
Aug 31, 77 2.32 266.59
Sep 30, 77 2.32 266.85
Oct 31, 77 2.28 254.65
Nov 30, 77 2.24 244.73
Dec 30, 77 2.15 240.93
Jan 31, 78 2.12 240.92
Feb 28, 78 2.08 240.66
Mar 31, 78 2.03 231.79
Apr 28, 78 2.04 221.69
May 31, 78 2.11 226.04
Jun 30, 78 2.08 214.00
Jul 31, 78 2.05 200.08
Aug 31, 78 1.99 188.32
Sep 29, 78 1.97 189.94
Oct 31, 78 1.84 183.69
Nov 30, 78 1.90 191.73
Dec 29, 78 1.88 195.92
1/79 1.85 197.68
Feb 28, 79 1.86 200.45
Mar 30, 79 1.86 206.29
Apr 30, 79 1.89 216.06
May 31, 79 1.91 218.48
Jun 29, 79 1.88 218.44
Jul 31, 79 1.82 218.45
Aug 31, 79 1.83 217.76
Sep 28, 79 1.80 222.40
Oct 31, 79 1.79 230.00
Nov 30, 79 1.77 244.98
Dec 31, 79 1.73 239.95
Jan 31, 80 1.72 237.77
Feb 29, 80 1.75 244.10
Mar 31, 80 1.85 248.47
Apr 30, 80 1.87 249.15
May 30, 80 1.79 228.03
Jun 30, 80 1.77 217.99
Jul 31, 80 1.75 220.96
Aug 29, 80 1.79 223.91
Sep 30, 80 1.79 214.52
Oct 31, 80 1.84 209.18
Nov 28, 80 1.92 212.87
Dec 31, 80 1.97 209.35
1/81 2.01 202.05
Feb 27, 81 2.15 205.68
Mar 31, 81 2.11 208.97
Apr 30, 81 2.16 214.75
May 29, 81 2.29 220.62
Jun 30, 81 2.38 224.09
Jul 31, 81 2.44 231.91
Aug 31, 81 2.50 233.50
Sep 30, 81 2.36 229.38
Oct 30, 81 2.25 231.39
Nov 30, 81 2.23 223.13
Dec 31, 81 2.26 218.60
Jan 29, 82 2.29 224.53
Feb 26, 82 2.37 235.57
Mar 31, 82 2.38 241.04
Apr 30, 82 2.39 243.72
May 31, 82 2.31 236.69
Jun 30, 82 2.43 251.01
Jul 30, 82 2.47 254.83
Aug 31, 82 2.48 258.65
Sep 30, 82 2.50 262.78
Oct 29, 82 2.53 270.99
Nov 30, 82 2.56 264.51
Dec 31, 82 2.42 242.44
1/83 2.39 232.64
Feb 28, 83 2.43 235.86
Mar 31, 83 2.41 238.08
Apr 29, 83 2.44 237.60
May 31, 83 2.47 234.67
Jun 30, 83 2.55 240.03
Jul 29, 83 2.59 240.32
Aug 31, 83 2.67 244.36
Sep 30, 83 2.67 242.45
Oct 31, 83 2.60 232.82
Nov 30, 83 2.68 235.01
Dec 30, 83 2.75 234.33
Jan 31, 84 2.81 233.74
Feb 29, 84 2.70 233.57
Mar 30, 84 2.60 225.08
Apr 30, 84 2.64 224.97
May 31, 84 2.75 230.53
Jun 29, 84 2.74 233.37
Jul 31, 84 2.85 242.83
Aug 31, 84 2.89 242.24
Sep 28, 84 3.03 245.23
Oct 31, 84 3.07 246.74
Nov 30, 84 2.99 243.37
Dec 31, 84 3.10 247.94
1/85 3.17 254.14
Feb 28, 85 3.30 260.46
Mar 29, 85 3.30 258.11
Apr 30, 85 3.08 251.37
May 31, 85 3.11 251.59
Jun 28, 85 3.06 248.74
Jul 31, 85 2.91 241.32
Aug 30, 85 2.79 237.41
Sep 30, 85 2.84 236.44
Oct 31, 85 2.64 214.56
Nov 29, 85 2.59 203.87
Dec 31, 85 2.51 202.73
Jan 31, 86 2.44 200.04
Feb 28, 86 2.33 184.48
Mar 31, 86 2.27 178.64
Apr 30, 86 2.27 174.94
May 30, 86 2.23 166.93
Jun 30, 86 2.23 167.53
Jul 31, 86 2.15 158.75
Aug 29, 86 2.06 154.15
Sep 30, 86 2.04 154.70
Oct 31, 86 2.00 156.31
Nov 28, 86 2.02 162.77
Dec 31, 86 1.99 162.15
1/87 1.86 154.56
Feb 27, 87 1.82 153.34
Mar 31, 87 1.84 151.44
Apr 30, 87 1.81 142.87
May 29, 87 1.79 140.56
Jun 30, 87 1.82 144.42
Jul 31, 87 1.85 150.21
Aug 31, 87 1.86 147.54
Sep 30, 87 1.81 143.09
Oct 30, 87 1.80 143.22
Nov 30, 87 1.68 135.37
Dec 31, 87 1.64 128.42
Jan 29, 88 1.66 127.86
Feb 29, 88 1.70 129.12
Mar 31, 88 1.68 127.12
Apr 29, 88 1.67 124.93
May 31, 88 1.69 124.75
Jun 30, 88 1.76 127.33
Jul 29, 88 1.85 133.12
Aug 31, 88 1.89 133.72
Sep 30, 88 1.87 134.44
Oct 31, 88 1.82 128.80
Nov 30, 88 1.75 123.11
Dec 30, 88 1.75 123.46
1/89 1.84 127.21
Feb 28, 89 1.85 127.64
Mar 31, 89 1.87 130.31
Apr 28, 89 1.87 131.99
May 31, 89 1.95 137.89
Jun 30, 89 1.98 143.94
Jul 31, 89 1.89 140.52
Aug 31, 89 1.93 141.27
Sep 29, 89 1.95 145.05
Oct 31, 89 1.87 142.11
Nov 30, 89 1.83 143.50
Dec 29, 89 1.74 143.70
Jan 31, 90 1.69 144.94
Feb 28, 90 1.68 145.61
Mar 30, 90 1.70 153.18
Apr 30, 90 1.69 158.30
May 31, 90 1.66 153.77
Jun 29, 90 1.68 153.75
Jul 31, 90 1.64 149.04
Aug 31, 90 1.57 147.45
Sep 28, 90 1.57 138.66
Oct 31, 90 1.52 129.70
Nov 30, 90 1.49 129.02
Dec 31, 90 1.50 133.67
1/91 1.51 133.66
Feb 28, 91 1.48 130.40
Mar 29, 91 1.61 137.29
Apr 30, 91 1.70 137.12
May 31, 91 1.72 138.21
Jun 28, 91 1.78 139.53
Jul 31, 91 1.78 137.75
Aug 30, 91 1.75 136.82
Sep 30, 91 1.70 134.48
Oct 31, 91 1.69 130.58
Nov 29, 91 1.62 129.69
Dec 31, 91 1.56 128.05
Jan 31, 92 1.58 125.21
Feb 28, 92 1.62 127.58
Mar 31, 92 1.66 132.92
Apr 30, 92 1.65 133.42
May 29, 92 1.62 130.61
Jun 30, 92 1.57 126.79
Jul 31, 92 1.49 125.77
Aug 31, 92 1.45 126.38
Sep 30, 92 1.45 122.63
Oct 30, 92 1.48 121.07
Nov 30, 92 1.59 123.84
Dec 31, 92 1.58 123.94
1/93 1.62 125.01
Feb 26, 93 1.64 120.68
Mar 31, 93 1.65 117.58
Apr 30, 93 1.60 112.31
May 31, 93 1.61 110.31
Jun 30, 93 1.65 107.31
Jul 30, 93 1.72 107.71
Aug 31, 93 1.70 103.80
Sep 30, 93 1.62 105.42
Oct 29, 93 1.64 106.95
Nov 30, 93 1.70 107.83
Dec 31, 93 1.71 109.79
Jan 31, 94 1.74 111.35
Feb 28, 94 1.73 106.20
Mar 31, 94 1.69 105.21
Apr 29, 94 1.70 103.46
May 31, 94 1.66 103.83
Jun 30, 94 1.63 102.53
Jul 29, 94 1.57 98.46
Aug 31, 94 1.56 99.91
Sep 30, 94 1.55 98.75
Oct 31, 94 1.52 98.41
Nov 30, 94 1.54 97.99
Dec 30, 94 1.57 100.15
1/95 1.53 99.66
Feb 28, 95 1.50 98.17
Mar 31, 95 1.41 90.48
Apr 28, 95 1.38 83.77
May 31, 95 1.41 85.16
Jun 30, 95 1.40 84.53
Jul 31, 95 1.39 87.27
Aug 31, 95 1.44 94.58
Sep 29, 95 1.46 100.37
Oct 31, 95 1.42 100.78
Nov 30, 95 1.42 101.88
Dec 29, 95 1.44 101.77
Jan 31, 96 1.46 105.61
Feb 29, 96 1.47 105.69
Mar 29, 96 1.48 105.93
Apr 30, 96 1.51 107.17
May 31, 96 1.53 106.40
Jun 28, 96 1.53 108.95
Jul 31, 96 1.50 109.22
Aug 30, 96 1.48 107.85
Sep 30, 96 1.51 109.82
Oct 31, 96 1.53 112.39
Nov 29, 96 1.51 112.26
Dec 31, 96 1.55 113.93
1/97 1.60 117.83
Feb 28, 97 1.68 123.00
Mar 31, 97 1.70 122.57
Apr 30, 97 1.71 125.62
May 30, 97 1.70 118.77
Jun 30, 97 1.73 114.31
Jul 31, 97 1.79 115.20
Aug 29, 97 1.84 117.80
Sep 30, 97 1.79 120.82
Oct 31, 97 1.76 120.95
Nov 28, 97 1.73 125.39
Dec 31, 97 1.78 129.63
Jan 30, 98 1.82 129.49
Feb 27, 98 1.81 125.79
Mar 31, 98 1.83 129.10
Apr 30, 98 1.81 131.92
May 29, 98 1.77 134.94
Jun 30, 98 1.79 140.26
Jul 31, 98 1.80 140.69
Aug 31, 98 1.79 144.82
Sep 30, 98 1.70 134.46
Oct 30, 98 1.64 120.94
Nov 30, 98 1.68 120.32
Dec 31, 98 1.67 117.04
Source: DATASTREAM
- --------------------------------------------------------------------------------
Investment Policy
Whereas economic and market conditions favored switching investment portfolios
from cash into growth equities during the past few years, it is our opinion that
this trend may soon be reversed. We believe that the risks of a major correction
in stock prices, an eventual global recession, further long-term dollar weakness
and the millennium computer bug problem are growing. Another period of
turbulence cannot be ruled out. Accordingly, conservative investors may seek to
preserve wealth and to reduce risk by diversifying a portion of their portfolios
more and more into safer securities and cash. Some investors have already used
gold for this purpose. In our judgment, the investment demand for gold will
grow. Gold is one of the only assets that is negatively correlated to stocks and
bonds. Its price has been driven down to oversold levels. A relatively small
shift of funds into gold by forward-looking cautious investors may well lead to
another upward gold cycle, and the price of gold may again outperform stocks and
bonds. Accordingly, we continue to recommend that from 5% to 10% of investment
portfolios be diversified into gold-mining shares.
We appreciate your participation in the Gold/Resources Fund and look forward to
helping you meet your investment needs in the future.
[PHOTO] [PHOTO] [PHOTO]
John C. van Eck Joseph M. Foster Samuel S. Hewitt
/s/ John C. van Eck /s/ Joseph M. Foster /s/Samuel S. Hewitt
Chairman Management Team Management Team
Member Member
January 29, 1999
- --------------------------------------------------------------------------------
Performance Record as of 12/31/98
- --------------------------------------------------------------------------------
After Maximum
Average Annual Sales Charge Before Sales
Total Return of 5.75% Charge
- --------------------------------------------------------------------------------
A shares--Life (since 2/15/86) (0.4)% 0.0%
- --------------------------------------------------------------------------------
10 years (4.3)% (3.7)%
- --------------------------------------------------------------------------------
5 years (14.7)% (13.7)%
- --------------------------------------------------------------------------------
1 year (17.4)% (12.4)%
- --------------------------------------------------------------------------------
The performance data represents past performance and is not indicative of future
results. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
21
<PAGE>
Van Eck Gold/Resources Fund
- --------------------------------------------------------------------------------
Geographical Weightings
December 31, 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A
PIE CHART IN THE PRINTED MATERIAL.]
Cash/Equiv. 11.9%
Austrialia 20.4%
Canada 35.8%
Ghana 2.3%
United States 29.6%
Van Eck Gold/Resources Fund
vs. MSCI Gold Mines Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTER MATERIAL]
Gold/Resources Fund
(with sales charge) MSCI Gold Mines Index
2/15/86 $ 9,429 $10,000
3/86 $ 9,195 $ 8,779
6/86 $ 8,705 $ 6,799
9/86 $10,938 $ 9,567
12/86 $11,916 $ 9,167
3/87 $19,633 $14,916
6/87 $19,694 $13,750
9/87 $24,282 $16,677
12/87 $17,546 $13,067
3/88 $15,889 $11,303
6/88 $16,104 $10,060
9/88 $13,865 $ 8,658
12/88 $13,803 $ 8,692
3/89 $14,418 $ 9,590
6/89 $13,557 $ 9,237
9/89 $14,664 $10,374
12/89 $16,410 $13,001
3/90 $14,717 $11,773
6/90 $12,900 $ 9,745
9/90 $14,040 $11,097
12/90 $12,084 $ 9,631
3/91 $11,403 $ 8,202
6/91 $11,837 $ 9,627
9/91 $11,093 $ 8,418
12/91 $11,592 $ 8,847
3/92 $11,219 $ 7,915
6/92 $11,965 $ 7,893
9/92 $12,058 $ 7,320
12/92 $11,070 $ 6,417
3/93 $13,340 $ 8,664
6/93 $18,128 $12,597
9/93 $16,231 $11,086
12/93 $19,714 $14,782
3/94 $19,372 $13,589
6/94 $17,537 $12,834
9/94 $19,465 $15,560
12/94 $16,636 $13,132
3/95 $16,760 $13,628
6/95 $16,760 $13,729
9/95 $17,848 $14,073
12/95 $17,351 $13,909
3/96 $21,082 $16,584
6/96 $18,843 $14,553
9/96 $17,786 $13,434
12/96 $17,786 $13,521
3/97 $16,387 $11,813
6/97 $14,521 $10,698
9/97 $15,081 $11,854
12/97 $10,790 $ 8,142
3/98 $11,692 $ 9,097
6/98 $10,012 $ 7,812
9/98 $10,075 $ 8,388
12/98 $ 9,453 $ 7,351
- --------------------------------------------------------------------------------
Average Annual Total Return 12/31/98 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
VE Gold/Resources Fund (w/o sales charge) (12.4)% (13.7)% (3.7)%
- --------------------------------------------------------------------------------
VE Gold/Resources Fund (w/ sales charge)(2) (17.4)% (14.7)% (4.3)%
- --------------------------------------------------------------------------------
MSCI Gold Mines Index (9.7)% (13.0)% (1.7)%
- --------------------------------------------------------------------------------
This graph compares an initial $10,000 investment in the Van Eck Gold/Resources
Fund made at its inception with a similar investment in the Morgan Stanley
Capital International (MSCI) Gold Mines Index.
(1) Inception date for the Van Eck Gold/Resources Fund was 2/15/86; index
returns are calculated as of nearest month end (2/28/86).
(2) The maximum sales charge is 5.75%.
Returns for the Van Eck Gold/Resources Fund reflect all recurring expenses and
include the reinvestment of all dividends and distributions.
The MSCI Gold Mines Index is an unmanaged index and includes the reinvestment of
all dividends, but does not reflect the payment of transaction costs, advisory
fees or expenses that are associated with an investment in the Fund.
We will no longer compare the Fund to the S&P 500 Index since the S&P 500 is not
a gold index. A $10,000 investment in the S&P 500 Index in 1998 would have grown
to $12,852 by 12/31/98 versus the same investment in the Fund, which would have
declined to $8,261 by year end (after sales charge).
Past performance is not indicative of future results. Performance data quoted
represents past performance; the 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 the original cost.
22
<PAGE>
Van Eck International Investors Gold Fund
- --------------------------------------------------------------------------------
Dear Fellow Shareholder:
The year 1998 saw a continuation of the record eight-year bull market in stocks
as well as what we believe to be the secular bottom of the long bear market in
gold (and gold-mining shares) that began in 1980 at $850 an ounce. The price of
gold closed the year at $288.10 an ounce, compared to $289.20 an ounce at the
end of 1997. It twice made lows of approximately $275 an ounce, once in January
and again at the end of August. This was due largely to a dramatic rise in
distress sales from East Asia, a slower inflation psychology, and exaggerated
fears of Russian central bank sales when Russia defaulted on its debts in
August. In real terms, gold's price is back to levels existing in the
1950s-1960s when paper currencies and the global economy were relatively sound.
The most significant development last year in the gold market, in our opinion,
was an increase in the demand for gold as an investment. There was a growing
appreciation of the value of gold in helping to diversify investment portfolios.
World investment demand was estimated by Gold Fields Mineral Services Ltd. to
have risen over three-fold last year over the previous year. Sales of U.S. Eagle
gold coins more than doubled in 1998 over 1997 and were at record levels. During
the market turmoil last summer, when the Dow Jones Industrial Average fell
approximately 20%, the prices of gold and gold-mining shares rose sharply and
were proven a safe haven. Fears over the potential chaos that could be caused by
the millennium computer bug has been and is another factor in the growing
investment demand for gold. There is simply not enough time left to correct all
the billions of lines of computer codes worldwide that could be harboring
so-called "millennium bombs" (the inability of computer systems to distinguish
between the present and the next century).
Commodity prices suffered major losses in 1998 as global aggregate demand
weakened. The CRB Commodity Index fell 26%, from a high of 255 in 1997 to 188 in
December 1998, a 21-year low. However, gold performed relatively better, and the
ratio of gold to the CRB Index rose from 1.2 in December 1997 to 1.5 a year
later. Gold, of course, is more than just another commodity. Historically, and
to many people in the world today, it is real money as well as a cash reserve
monetary asset or store of value in times of international monetary disorder. It
does not carry a default risk.
Your Fund's net asset value per share was volatile last year. Its net asset
value high was $9.13 per share in April and its bottom was $5.06 per share in
August. The Fund had a negative return of 11.9%, compared to a negative 10.9%
average return among gold funds for the year, according to Lipper.
Dividend News
A quarterly dividend of $.01 per share on Class A shares was paid on December
31, 1998 to shareholders of record on December 29, 1998. You should have already
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, 1998.
Gold-Mining Shares
The flat year-on-year gold price translated into gene-rally subdued performance
for gold-mining shares. However, superior gains were achieved by a number of
companies as a result of new discoveries or acquisitions. In order to cope with
the low gold prices, companies have been reducing operating costs and shutting
down high cost operations. Industrywide operating costs were down approximately
18% year-on-year, enabling the stronger producers to post positive earnings.
International Investors entered 1998 with a defensive investment posture brought
on by the two-year decline in the gold price that culminated with an 18-year low
on January 12, 1998. The lackluster performance of the gold shares in 1998
provided opportunities to add to existing positions and bring new companies into
the Fund that have the potential to grow their low-cost ounce production. The
Fund is now favorably positioned to take advantage of upward moves in the gold
price.
In 1998, the Australian producers led the other regions with a gain of 2.3%, as
measured by the Australian Stock Exchange Gold and Silver Index (in U.S. dollar
terms). The gains in Australia are due in part to a strong Aussie dollar gold
price that enabled the companies to exceed profit expectations. Additionally,
Delta Gold (up 44%) and Acacia (up 62%) made significant new discoveries in and
around the Sunrise Dam operation in Western Australia. We anticipate that these
discoveries, named Wallaby and Cleo, respectively, will provide additional
upside as the limits to the gold mineralization have yet to be determined. Also,
International Investors took a position in Newcrest Mining, which has achieved a
successful start-up of the Cadia Hill mine. The Newcrest shares have gained
15.7% since our purchase. These companies, along with Normandy and Lihir Gold,
form the core of our Aussie position, which totaled 7.9% of the Fund as of
December 31, 1998.
North American shares, as measured by the Toronto Stock Exchange Gold Index and
the Philadelphia Gold and Silver Index (XAU), declined 13.7% and 12.4%,
respectively. The decline in 1998 reflects disaffection on
23
<PAGE>
Van Eck International Investors Gold Fund
- --------------------------------------------------------------------------------
the part of many of the general equity funds towards gold, which has not offered
the glitzy returns found in other sectors. Nonetheless, there was ample
excitement in the gold shares and several of the best performers were among the
largest holdings in International Investors. Meridian Gold, with the discovery
of a bonanza vein at their El Penon project in Chile, was up 110% in 1998. In
December, Placer Dome acquired Getchell Gold at a 116% premium to market,
sending the Getchell shares to a 13.5% gain for the year. The Fund also
established a significant position in Euro-Nevada, a royalty and operating
company that owns the Ken Snyder Mine in Nevada, which will be the lowest cost
gold producer in North America. Euro-Nevada has gained 9.5% since the shares
were acquired. North American shares accounted for 41.4% of the Fund at year
end, with core holdings in Barrick, Homestake and Placer Dome.
South African gold shares declined 9.8% (in U.S. dollars) as gauged by the
Johannesburg Stock Exchange Gold Index. The combination of an industry-wide
restructuring, cost cutting and a major rand devaluation resulted in higher
gains in profitability than their North American counterparts. Particularly
notable was the acquisition of a 50% interest and operatorship of Western Areas'
South Deep Project by Canadian Placer Dome. This marks a milestone in the
integration of the South African gold industry with the global mining community.
The acquisition cost is valued at only $8 per reserve ounce. However, Placer
must overcome a number of challenges to achieve full value, the most difficult
of which is deep-level mining in an unfamiliar region. South African shares
accounted for 16.7% of International Investors at year end. Core holdings
include Anglogold, Goldfields Limited and Impala Platinum.
The Outlook
A. Investment Sentiment May Be Turning Positive
Beginning in 1996 when the average gold price was approximately $385 an ounce,
net sales, loans, swaps and deposits of gold by mainly European central banks
almost doubled, market sentiment turned negative and the price fell. This trend
escalated in 1997 and leveled off in 1998. Then, after a meeting of the
Governing Council of the European Central Bank on January 7, 1999, the President
and Vice President announced that the Bank and the euro zone's national central
banks, for the moment and for the foreseeable future, would not sell gold. This
indicated to us that the pro-gold forces in Europe may have prevailed and that
European central bank net sales will most likely not occur for a long period of
time. Investors' confidence in gold should thus improve as their fears are
removed.
B. Financial, Economic and Monetary Risks and Uncertainties Continue to Mount
1. The level of stock prices is growing more risky as it continues to rise and
bullishness increases. Recent action by the Fed in cutting interest rates and
market momentum supported the recent upward move. The Standard & Poor's 500
Index, up 28.6% in 1998 to another record high, is trading at a price-earnings
multiple of more than 31, an historic high. Earnings forecasts may be reduced as
time goes on. The fear that stock prices are too high, and could therefore snap,
produces the risk that the U.S. could experience a serious downturn rather than
a benign slowdown.
Eight years of booming stock and bond prices may have inevitably been
accompanied by excessive speculation and financial risks. Bond market leverage
has climbed sharply as total repos as a percentage of outstanding Treasury debt
has risen from approximately 24% in 1995 to 45% at present. Security loans as a
percentage of total bank loans have gone up from 2.75% in 1996 to 4.8%
currently. The total value of derivatives has soared to over $82 trillion. The
danger is a sharp unexpected move causing counterparty and other defaults. The
potential default of Long-Term Capital Management last September was a warning
of how easily havoc could have been wreaked on the entire U.S. financial system.
2. The risk is growing that a slowdown in U.S. growth from approximately 3.9% in
1998 to a forecast of approximately 1.5% in 1999 may lead to problems of excess
capacity and an eventual recession. Declining inflationary expectations can
eventually turn into rising deflationary expectations. There is a probability
that private debt has already become excessive in a downturn. Since 1995, the
growth of total U.S. debt as a percentage of GDP has grown 2% faster than the
economy. In the second quarter of 1998, it grew 4% faster than the economy
(Exhibit I). The Federal Reserve
- --------------------------------------------------------------------------------
Exhibit I
Total Credit Market Debt as a % of GDP
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTER MATERIAL]
Name Code Currency Total Credit Market Debt as a % of GDP
Q1 70 148.90
Q2 70 149.41
Q3 70 149.25
Q4 70 152.40
Q1 71 147.81
Q2 71 148.48
Q3 71 149.52
Q4 71 152.46
Q1 72 149.85
Q2 72 149.02
Q3 72 149.56
Q4 72 150.56
Q1 73 148.99
Q2 73 150.14
Q3 73 151.85
Q4 73 151.87
Q1 74 153.12
Q2 74 154.20
Q3 74 155.50
Q4 74 155.93
Q1 75 156.35
Q2 75 155.75
Q3 75 153.25
Q4 75 153.56
Q1 76 151.33
Q2 76 152.79
Q3 76 153.93
Q4 76 154.72
Q1 77 153.84
Q2 77 153.12
Q3 77 153.77
Q4 77 156.69
Q1 78 157.87
Q2 78 154.72
Q3 78 155.72
Q4 78 157.07
Q1 79 157.40
Q2 79 158.99
Q3 79 160.19
Q4 79 161.69
Q1 80 161.56
Q2 80 164.51
Q3 80 164.93
Q4 80 162.58
Q1 81 159.11
Q2 81 162.17
Q3 81 162.08
Q4 81 165.42
Q1 82 168.22
Q2 82 169.62
Q3 82 172.39
Q4 82 175.10
Q1 83 175.36
Q2 83 175.12
Q3 83 175.83
Q4 83 176.70
Q1 84 175.69
Q2 84 178.46
Q3 84 181.48
Q4 84 186.13
Q1 85 187.72
Q2 85 191.57
Q3 85 194.16
Q4 85 201.33
Q1 86 201.96
Q2 86 208.09
Q3 86 212.36
Q4 86 217.81
Q1 87 219.03
Q2 87 221.57
Q3 87 223.15
Q4 87 223.67
Q1 88 224.84
Q2 88 225.76
Q3 88 226.34
Q4 88 227.76
Q1 89 227.84
Q2 89 227.82
Q3 89 228.53
Q4 89 231.54
Q1 90 230.64
Q2 90 230.84
Q3 90 233.28
Q4 90 237.73
Q1 91 237.88
Q2 91 237.68
Q3 91 238.24
Q4 91 239.84
Q1 92 237.85
Q2 92 238.07
Q3 92 238.96
Q4 92 238.06
Q1 93 237.86
Q2 93 239.19
Q3 93 241.17
Q4 93 241.16
Q1 94 241.41
Q2 94 240.41
Q3 94 241.46
Q4 94 242.50
Q1 95 243.57
Q2 95 246.74
Q3 95 247.55
Q4 95 249.42
Q1 96 249.93
Q2 96 250.16
Q3 96 251.99
Q4 96 253.21
Q1 97 252.03
Q2 97 252.39
Q3 97 253.27
Q4 97 257.16
Q1 98 258.56
Q2 98 262.47
Q3 98 265.05
Q4 98 265.05
Source: DATASTREAM
- --------------------------------------------------------------------------------
24
<PAGE>
Van Eck International Investors Gold Fund
- --------------------------------------------------------------------------------
lowered interest rates last November to fight global deflation and to stimulate
demand by encouraging businesses and households to go further into debt. We
believe there is an eventual natural limit to this process. The experience in
Japan shows that interest rates became so low in an accelerating deflationary
environment that investors preferred absolute liquidity, cash over bonds, which
Japan issued to finance increased deficit spending. Investors became afraid that
interest rates would eventually rise.
3. The risks of further long-term U.S. dollar weakness and another dollar crisis
may be rising. Since the 1950s, when the dollar became the world's primary
reserve currency, it suffered several crises. From 1971 to its low in 1995, it
fell approximately 63% in terms of the Deutschemark and 78% in terms of the yen.
Then it rallied. From its high in August 1998 to the end of 1998 the dollar fell
23% in terms of the yen and 8% in terms of the Deutschemark (Exhibit II). In the
beginning of 1999 the euro became the second key currency in the international
monetary system overnight. It may well gain a substantial share from the dollar
as a reserve currency and portfolio diversifier just as the external financial
position of the United States is worsening. The U.S. current account deficit has
widened from $148 billion in 1996 to $166 billion in 1997 and a probable $240
billion in 1998. It also had a net capital outflow of about $60 billion in 1998.
If the U.S. economy slows down and U.S. interest rates fall in relation to those
in Japan and Europe, it may become more difficult to
- --------------------------------------------------------------------------------
Exhibit II
The U.S. Dollar Track Record (1969 - Present)
Four Major Declines
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTER MATERIAL]
Name Code Currency US GERMAN MARKS TO US$ US JAPANESE YEN TO US$
1/69 4.00 358.20
Feb 28, 69 4.02 358.20
Mar 31, 69 4.02 358.20
Apr 30, 69 4.01 358.20
May 30, 69 3.99 357.45
Jun 30, 69 4.00 358.15
Jul 31, 69 4.00 358.15
Aug 29, 69 3.99 359.65
Sep 30, 69 3.97 359.80
Oct 31, 69 3.74 356.98
Nov 28, 69 3.69 356.80
Dec 31, 69 3.69 356.80
Jan 30, 70 3.69 357.68
Feb 27, 70 3.69 357.62
Mar 31, 70 3.67 357.48
Apr 30, 70 3.64 357.99
May 29, 70 3.63 358.75
Jun 30, 70 3.63 358.78
Jul 31, 70 3.63 359.29
Aug 31, 70 3.63 358.13
Sep 30, 70 3.63 357.86
Oct 30, 70 3.63 357.70
Nov 30, 70 3.63 357.61
Dec 31, 70 3.60 357.48
1/71 3.64 357.86
Feb 26, 71 3.63 357.33
Mar 31, 71 3.63 357.34
Apr 30, 71 3.63 357.35
May 31, 71 3.60 357.31
Jun 30, 71 3.51 357.35
Jul 30, 71 3.48 357.36
Aug 31, 71 3.43 345.90
Sep 30, 71 3.36 336.31
Oct 29, 71 3.33 329.97
Nov 30, 71 3.33 328.19
Dec 31, 71 3.26 321.14
Jan 31, 72 3.23 312.38
Feb 29, 72 3.18 304.78
Mar 31, 72 3.17 302.22
Apr 28, 72 3.18 303.28
May 31, 72 3.18 304.21
Jun 30, 72 3.17 300.21
Jul 31, 72 3.16 300.62
Aug 31, 72 3.19 301.03
Sep 29, 72 3.19 301.08
Oct 31, 72 3.21 300.89
Nov 30, 72 3.20 300.74
Dec 29, 72 3.20 301.13
1/73 3.20 301.55
Feb 28, 73 3.15 281.91
Mar 30, 73 2.81 261.48
Apr 30, 73 2.84 265.26
May 31, 73 2.79 264.44
Jun 29, 73 2.58 264.26
Jul 31, 73 2.34 264.27
Aug 31, 73 2.42 265.11
Sep 28, 73 2.43 265.41
Oct 31, 73 2.41 266.28
Nov 30, 73 2.58 278.29
Dec 31, 73 2.66 280.11
Jan 31, 74 2.81 297.51
Feb 28, 74 2.71 291.18
Mar 29, 74 2.62 281.79
Apr 30, 74 2.52 277.44
May 31, 74 2.46 278.78
Jun 28, 74 2.52 282.85
Jul 31, 74 2.55 290.64
Aug 30, 74 2.62 302.08
Sep 30, 74 2.66 299.13
Oct 31, 74 2.59 299.33
Nov 29, 74 2.51 299.97
Dec 31, 74 2.45 300.25
1/75 2.36 299.57
Feb 28, 75 2.33 291.60
Mar 31, 75 2.32 287.31
Apr 30, 75 2.37 291.96
May 30, 75 2.35 291.32
Jun 30, 75 2.34 293.34
Jul 31, 75 2.47 296.25
Aug 29, 75 2.57 297.91
Sep 30, 75 2.62 299.70
Oct 31, 75 2.58 302.27
Nov 28, 75 2.59 302.49
Dec 31, 75 2.62 305.53
Jan 30, 76 2.60 304.55
Feb 27, 76 2.56 301.53
Mar 31, 76 2.56 300.47
Apr 30, 76 2.54 299.01
May 31, 76 2.56 298.91
Jun 30, 76 2.58 299.12
Jul 30, 76 2.57 294.67
Aug 31, 76 2.53 290.81
Sep 30, 76 2.49 287.34
Oct 29, 76 2.43 291.04
Nov 30, 76 2.41 295.13
Dec 31, 76 2.39 294.62
1/77 2.40 290.88
Feb 28, 77 2.40 284.87
Mar 31, 77 2.39 280.45
Apr 29, 77 2.37 275.42
May 31, 77 2.36 277.37
Jun 30, 77 2.35 272.53
Jul 29, 77 2.28 264.81
Aug 31, 77 2.32 266.59
Sep 30, 77 2.32 266.85
Oct 31, 77 2.28 254.65
Nov 30, 77 2.24 244.73
Dec 30, 77 2.15 240.93
Jan 31, 78 2.12 240.92
Feb 28, 78 2.08 240.66
Mar 31, 78 2.03 231.79
Apr 28, 78 2.04 221.69
May 31, 78 2.11 226.04
Jun 30, 78 2.08 214.00
Jul 31, 78 2.05 200.08
Aug 31, 78 1.99 188.32
Sep 29, 78 1.97 189.94
Oct 31, 78 1.84 183.69
Nov 30, 78 1.90 191.73
Dec 29, 78 1.88 195.92
1/79 1.85 197.68
Feb 28, 79 1.86 200.45
Mar 30, 79 1.86 206.29
Apr 30, 79 1.89 216.06
May 31, 79 1.91 218.48
Jun 29, 79 1.88 218.44
Jul 31, 79 1.82 218.45
Aug 31, 79 1.83 217.76
Sep 28, 79 1.80 222.40
Oct 31, 79 1.79 230.00
Nov 30, 79 1.77 244.98
Dec 31, 79 1.73 239.95
Jan 31, 80 1.72 237.77
Feb 29, 80 1.75 244.10
Mar 31, 80 1.85 248.47
Apr 30, 80 1.87 249.15
May 30, 80 1.79 228.03
Jun 30, 80 1.77 217.99
Jul 31, 80 1.75 220.96
Aug 29, 80 1.79 223.91
Sep 30, 80 1.79 214.52
Oct 31, 80 1.84 209.18
Nov 28, 80 1.92 212.87
Dec 31, 80 1.97 209.35
1/81 2.01 202.05
Feb 27, 81 2.15 205.68
Mar 31, 81 2.11 208.97
Apr 30, 81 2.16 214.75
May 29, 81 2.29 220.62
Jun 30, 81 2.38 224.09
Jul 31, 81 2.44 231.91
Aug 31, 81 2.50 233.50
Sep 30, 81 2.36 229.38
Oct 30, 81 2.25 231.39
Nov 30, 81 2.23 223.13
Dec 31, 81 2.26 218.60
Jan 29, 82 2.29 224.53
Feb 26, 82 2.37 235.57
Mar 31, 82 2.38 241.04
Apr 30, 82 2.39 243.72
May 31, 82 2.31 236.69
Jun 30, 82 2.43 251.01
Jul 30, 82 2.47 254.83
Aug 31, 82 2.48 258.65
Sep 30, 82 2.50 262.78
Oct 29, 82 2.53 270.99
Nov 30, 82 2.56 264.51
Dec 31, 82 2.42 242.44
1/83 2.39 232.64
Feb 28, 83 2.43 235.86
Mar 31, 83 2.41 238.08
Apr 29, 83 2.44 237.60
May 31, 83 2.47 234.67
Jun 30, 83 2.55 240.03
Jul 29, 83 2.59 240.32
Aug 31, 83 2.67 244.36
Sep 30, 83 2.67 242.45
Oct 31, 83 2.60 232.82
Nov 30, 83 2.68 235.01
Dec 30, 83 2.75 234.33
Jan 31, 84 2.81 233.74
Feb 29, 84 2.70 233.57
Mar 30, 84 2.60 225.08
Apr 30, 84 2.64 224.97
May 31, 84 2.75 230.53
Jun 29, 84 2.74 233.37
Jul 31, 84 2.85 242.83
Aug 31, 84 2.89 242.24
Sep 28, 84 3.03 245.23
Oct 31, 84 3.07 246.74
Nov 30, 84 2.99 243.37
Dec 31, 84 3.10 247.94
1/85 3.17 254.14
Feb 28, 85 3.30 260.46
Mar 29, 85 3.30 258.11
Apr 30, 85 3.08 251.37
May 31, 85 3.11 251.59
Jun 28, 85 3.06 248.74
Jul 31, 85 2.91 241.32
Aug 30, 85 2.79 237.41
Sep 30, 85 2.84 236.44
Oct 31, 85 2.64 214.56
Nov 29, 85 2.59 203.87
Dec 31, 85 2.51 202.73
Jan 31, 86 2.44 200.04
Feb 28, 86 2.33 184.48
Mar 31, 86 2.27 178.64
Apr 30, 86 2.27 174.94
May 30, 86 2.23 166.93
Jun 30, 86 2.23 167.53
Jul 31, 86 2.15 158.75
Aug 29, 86 2.06 154.15
Sep 30, 86 2.04 154.70
Oct 31, 86 2.00 156.31
Nov 28, 86 2.02 162.77
Dec 31, 86 1.99 162.15
1/87 1.86 154.56
Feb 27, 87 1.82 153.34
Mar 31, 87 1.84 151.44
Apr 30, 87 1.81 142.87
May 29, 87 1.79 140.56
Jun 30, 87 1.82 144.42
Jul 31, 87 1.85 150.21
Aug 31, 87 1.86 147.54
Sep 30, 87 1.81 143.09
Oct 30, 87 1.80 143.22
Nov 30, 87 1.68 135.37
Dec 31, 87 1.64 128.42
Jan 29, 88 1.66 127.86
Feb 29, 88 1.70 129.12
Mar 31, 88 1.68 127.12
Apr 29, 88 1.67 124.93
May 31, 88 1.69 124.75
Jun 30, 88 1.76 127.33
Jul 29, 88 1.85 133.12
Aug 31, 88 1.89 133.72
Sep 30, 88 1.87 134.44
Oct 31, 88 1.82 128.80
Nov 30, 88 1.75 123.11
Dec 30, 88 1.75 123.46
1/89 1.84 127.21
Feb 28, 89 1.85 127.64
Mar 31, 89 1.87 130.31
Apr 28, 89 1.87 131.99
May 31, 89 1.95 137.89
Jun 30, 89 1.98 143.94
Jul 31, 89 1.89 140.52
Aug 31, 89 1.93 141.27
Sep 29, 89 1.95 145.05
Oct 31, 89 1.87 142.11
Nov 30, 89 1.83 143.50
Dec 29, 89 1.74 143.70
Jan 31, 90 1.69 144.94
Feb 28, 90 1.68 145.61
Mar 30, 90 1.70 153.18
Apr 30, 90 1.69 158.30
May 31, 90 1.66 153.77
Jun 29, 90 1.68 153.75
Jul 31, 90 1.64 149.04
Aug 31, 90 1.57 147.45
Sep 28, 90 1.57 138.66
Oct 31, 90 1.52 129.70
Nov 30, 90 1.49 129.02
Dec 31, 90 1.50 133.67
1/91 1.51 133.66
Feb 28, 91 1.48 130.40
Mar 29, 91 1.61 137.29
Apr 30, 91 1.70 137.12
May 31, 91 1.72 138.21
Jun 28, 91 1.78 139.53
Jul 31, 91 1.78 137.75
Aug 30, 91 1.75 136.82
Sep 30, 91 1.70 134.48
Oct 31, 91 1.69 130.58
Nov 29, 91 1.62 129.69
Dec 31, 91 1.56 128.05
Jan 31, 92 1.58 125.21
Feb 28, 92 1.62 127.58
Mar 31, 92 1.66 132.92
Apr 30, 92 1.65 133.42
May 29, 92 1.62 130.61
Jun 30, 92 1.57 126.79
Jul 31, 92 1.49 125.77
Aug 31, 92 1.45 126.38
Sep 30, 92 1.45 122.63
Oct 30, 92 1.48 121.07
Nov 30, 92 1.59 123.84
Dec 31, 92 1.58 123.94
1/93 1.62 125.01
Feb 26, 93 1.64 120.68
Mar 31, 93 1.65 117.58
Apr 30, 93 1.60 112.31
May 31, 93 1.61 110.31
Jun 30, 93 1.65 107.31
Jul 30, 93 1.72 107.71
Aug 31, 93 1.70 103.80
Sep 30, 93 1.62 105.42
Oct 29, 93 1.64 106.95
Nov 30, 93 1.70 107.83
Dec 31, 93 1.71 109.79
Jan 31, 94 1.74 111.35
Feb 28, 94 1.73 106.20
Mar 31, 94 1.69 105.21
Apr 29, 94 1.70 103.46
May 31, 94 1.66 103.83
Jun 30, 94 1.63 102.53
Jul 29, 94 1.57 98.46
Aug 31, 94 1.56 99.91
Sep 30, 94 1.55 98.75
Oct 31, 94 1.52 98.41
Nov 30, 94 1.54 97.99
Dec 30, 94 1.57 100.15
1/95 1.53 99.66
Feb 28, 95 1.50 98.17
Mar 31, 95 1.41 90.48
Apr 28, 95 1.38 83.77
May 31, 95 1.41 85.16
Jun 30, 95 1.40 84.53
Jul 31, 95 1.39 87.27
Aug 31, 95 1.44 94.58
Sep 29, 95 1.46 100.37
Oct 31, 95 1.42 100.78
Nov 30, 95 1.42 101.88
Dec 29, 95 1.44 101.77
Jan 31, 96 1.46 105.61
Feb 29, 96 1.47 105.69
Mar 29, 96 1.48 105.93
Apr 30, 96 1.51 107.17
May 31, 96 1.53 106.40
Jun 28, 96 1.53 108.95
Jul 31, 96 1.50 109.22
Aug 30, 96 1.48 107.85
Sep 30, 96 1.51 109.82
Oct 31, 96 1.53 112.39
Nov 29, 96 1.51 112.26
Dec 31, 96 1.55 113.93
1/97 1.60 117.83
Feb 28, 97 1.68 123.00
Mar 31, 97 1.70 122.57
Apr 30, 97 1.71 125.62
May 30, 97 1.70 118.77
Jun 30, 97 1.73 114.31
Jul 31, 97 1.79 115.20
Aug 29, 97 1.84 117.80
Sep 30, 97 1.79 120.82
Oct 31, 97 1.76 120.95
Nov 28, 97 1.73 125.39
Dec 31, 97 1.78 129.63
Jan 30, 98 1.82 129.49
Feb 27, 98 1.81 125.79
Mar 31, 98 1.83 129.10
Apr 30, 98 1.81 131.92
May 29, 98 1.77 134.94
Jun 30, 98 1.79 140.26
Jul 31, 98 1.80 140.69
Aug 31, 98 1.79 144.82
Sep 30, 98 1.70 134.46
Oct 30, 98 1.64 120.94
Nov 30, 98 1.68 120.32
Dec 31, 98 1.67 117.04
Source: DATASTREAM
- --------------------------------------------------------------------------------
finance the U.S. current account deficit. If investors were suddenly to question
the sustainability of this imbalance, the consequences for financial markets and
the world economy could be alarming.
Investment Policy
Whereas economic and market conditions favored switching investment portfolios
from cash into growth equities during the past few years, it is our opinion that
this trend may soon be reversed. We believe that the risks of a major correction
in stock prices, an eventual global recession, further long-term dollar weakness
and the millennium computer bug problem are growing. Another period of
turbulence cannot be ruled out. Accordingly, conservative investors may seek to
preserve wealth and to reduce risk by diversifying a portion of their portfolios
more and more into safer securities and cash. Some investors have already used
gold for this purpose. In our judgment, the investment demand for gold will
grow. Gold is one of the only assets that is negatively correlated to stocks and
bonds. Its price has been driven down to oversold levels. A relatively small
shift of funds into gold by forward-looking cautious investors may well lead to
another upward gold cycle, and the price of gold may again outperform stocks and
bonds. Accordingly, we continue to recommend that from 5% to 10% of investment
portfolios be diversified into gold-mining shares.
We appreciate your participation in the International Investors Gold Fund and
look forward to helping you meet your investment needs in the future.
[PHOTO] [PHOTO] [PHOTO]
John C. van Eck Joseph M. Foster Samuel S. Hewitt
/s/ John C. van Eck /s/ Joseph M. Foster /s/ Samuel S. Hewitt
John C. van Eck Joseph M. Foster Samuel S. Hewitt
Chairman Management Team Management Team
Member Member
January 28, 1999
25
<PAGE>
Van Eck International Investors Gold Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Performance Record as of 12/31/98
- --------------------------------------------------------------------------------
After Maximum
Average Annual Sales Charge Before Sales
Total Return of 5.75% Charge
- --------------------------------------------------------------------------------
A shares--Life (since 2/10/56) 9.1% 9.3%
- --------------------------------------------------------------------------------
20 years 8.1% 8.5%
- --------------------------------------------------------------------------------
15 years (1.6)% (1.2)%
- --------------------------------------------------------------------------------
10 years (2.9)% (2.3)%
- --------------------------------------------------------------------------------
5 years (15.4)% (14.4)%
- --------------------------------------------------------------------------------
1 year (16.9)% (11.9)%
- --------------------------------------------------------------------------------
The performance data represents past performance and is not indicative of future
results. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
Geographical Weightings
December 31, 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A
PIE CHART IN THE PRINTED MATERIAL.]
Cash/Equiv. 32.3%
Australia 7.9%
Canada 20.3%
South Africa 16.7%
United Kingdom 0.4%
Ghana 1.3%
United States 21.1%
Van Eck International Investors Gold Fund
vs. FT Gold Mines Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTER MATERIAL]
International Investors Gold Fund
(with sales charge) FT Gold Mines Index
12/88 $ 9,425 $10,000
3/89 $10,133 $10,887
6/89 $10,114 $10,275
9/89 $11,444 $11,667
12/89 $14,259 $16,926
3/90 $12,727 $15,374
6/90 $11,227 $10,501
9/90 $11,566 $12,805
12/90 $10,407 $10,133
3/91 $ 9,791 $ 8,230
6/91 $11,378 $11,397
9/91 $10,387 $ 9,252
12/91 $10,673 $ 8,900
3/92 $ 9,775 $ 7,129
6/92 $ 9,738 $ 5,958
9/92 $ 8,750 $ 4,478
12/92 $ 7,569 $ 3,278
3/93 $ 9,962 $ 6,540
6/93 $13,854 $ 9,643
9/93 $12,479 $ 8,522
12/93 $16,153 $11,166
3/94 $14,636 $10,258
6/94 $14,576 $10,016
9/94 $18,058 $12,451
12/94 $15,984 $10,499
3/95 $14,586 $10,627
6/95 $14,091 $10,443
9/95 $15,357 $10,687
12/95 $14,557 $10,069
3/96 $16,977 $12,100
6/96 $15,197 $10,639
9/96 $14,059 $ 9,837
12/96 $13,193 $10,622
3/97 $12,428 $ 9,146
6/97 $10,918 $ 7,879
9/97 $11,252 $ 8,360
12/97 $ 8,444 $ 5,922
3/98 $ 8,948 $ 6,510
6/98 $ 7,578 $ 5,637
9/98 $ 7,927 $ 6,345
12/98 $ 7,442 $ 5,266
- --------------------------------------------------------------------------------
Average Annual Total Return 12/31/98 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
VE International Investors Gold Fund
(w/o sales charge) (11.9)% (14.4)% (2.3)%
- --------------------------------------------------------------------------------
VE International Investors Gold Fund
(w/sales charge)1 (16.9)% (15.4)% (2.9)%
- --------------------------------------------------------------------------------
FT Gold Mines Index (11.1)% (13.9)% (6.2)%
- --------------------------------------------------------------------------------
This graph compares an initial $10,000 investment in the Van Eck International
Investors Gold Fund made ten years ago with a similar investment in the
Financial Times (FT) Gold Mines Index.
(1) The maximum sales charge is 5.75%.
Returns for the Van Eck International Investors Gold Fund reflect all recurring
expenses and include the reinvestment of all dividends and distributions.
The FT Gold Mines Index is an unmanaged index and includes the reinvestment of
all dividends, but does not reflect the payment of transaction costs, advisory
fees or expenses that are associated with an investment in the Fund.
We will no longer compare the Fund to the S&P 500 Index since the S&P 500 is not
a gold index. A $10,000 investment in the S&P 500 Index in 1998 would have grown
to $12,852 by 12/31/98 versus the same investment in the Fund, which would have
declined to $8,307 by year end (after sales charge).
Past performance is not indicative of future results. Performance data quoted
represents past performance; the 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 the original cost.
26
<PAGE>
Van Eck Government Money Fund
- --------------------------------------------------------------------------------
Dear Fellow Shareholder:
The U.S. Government Money Fund continues to meet its objectives as an investment
that provides a high degree of safety and daily liquidity. The Fund's seven-day
average yield was 2.49%* and its 30-day average yield was 2.52% on December 31,
1998. The Fund's total net assets were $47.2 million as of December 31, 1998.
During 1998, the yield on three-month Treasury bills averaged 4.88%, starting
the year near its high of 5.35%. For the first half of the year, Treasury bill
rates traded in a narrow range of 5.00% and 5.25%. The second half of 1998 was
far more eventful. As the stock market began to stumble in late July and concern
began to mount over the spread of financial turmoil from Asia to Russia and
Latin America, Treasury bill ("T-bill") rates decisively broke through the 5.00%
level. T-bill rates plummeted to a low yield of 3.61% on October 16, 1998,
marking the culmination of investor panic and ensuing "flight to quality." In
order to quell the endemic panic in the financial markets, the Federal Reserve
cut rates three times, for a total 75 basis point (0.75%) rate easing during the
final four months of 1998. The Federal Funds target rate is now set at 4.75%. A
rebounding stock market and continued signs of robust economic growth resulted
in three-month T-bill rates settling into an end of year range of 4.40% - 4.60%.
The Fund's investment strategy continues to emphasize safety by investing in
short-term U.S. Treasury obligations and repurchase agreements collateralized by
U.S. Treasury obligations. These obligations are the most conservative money
market investments and offer the highest degree of security since they are
backed by the government. Of course, shares of the Fund are not guaranteed by
the United States Government and there can be no guarantee that the price of the
Fund's shares will not fluctuate.** Repurchase agreements allow us to take
advantage of higher yields without significantly increasing risk. The Fund's
repurchase agreements are collateralized 102% by United States Treasury
obligations with maturities of less than five years. In addition, your Fund has
possession of the collateral.
The U.S. Government Money Fund offers daily liquidity and checkwriting
privileges, providing the kind of convenient access to cash not available in
many other types of investments. The Fund also provides an excellent base from
which investors may transfer money into or out of other members of the Van Eck
Family of Funds.***
We appreciate your participation in the U.S. Government Money Fund and look
forward to helping you meet your investment objectives in the future.
[PHOTO] [PHOTO]
John C. van Eck Gregory F. Krenzer
/s/ John C. van Eck /s/ Gregory F. Krenzer
Chairman Portfolio Manager
January 19, 1999
- ----------
* Performance data represents past performance and is not indicative of
future results.
** There can be no assurance that the Fund will be able to maintain a stable
net asset value of $1.00 per share.
*** Currently, there is no charge imposed on exchanges or limits as to
frequency of exchanges for this Fund. However, shareholders are limited to
six exchanges per calendar year for other Van Eck and Van Eck/Chubb Funds.
The Funds reserve the right to modify or terminate the terms of the
Exchange Privilege.
27
<PAGE>
Asia Dynasty Fund
Schedule of Portfolio Investments December 31, 1998
No. of Shares
or Principal
Amount Securities (a) Value (Note 1)
- --------------------------------------------------------------------------------
China: 1.5%
650,000 Hengan International Group Co. Ltd.+ $ 237,012
-----------
Hong Kong: 33.3%
117,000 Cheung Kong (Holdings) Ltd. 841,916
315,000 China Telecom (Hong Kong) Ltd.+ 544,821
30,000 CLP Holdings Ltd. 149,468
655,000 First Tractor Company Ltd. 149,642
29,400 HSBC Holdings plc 732,391
23,000 Huaneng Power International, Inc.+ 333,500
39,000 Hutchison Whampoa Ltd. 275,605
100,000 Johnson Electric Holdings Ltd. 256,857
300,000 National Mutual Asia Ltd. 224,589
210,000 New World Development
Company Ltd. 528,558
245,000 Ng Fung Hong Ltd. 219,781
779,500 Qingling Motors Co. 136,834
86,000 Sun Hung Kai Properties Ltd. 627,170
78,000 Wing Hang Bank Ltd. 194,308
-----------
5,215,440
-----------
India: 9.0%
7,000 Dr. Reedy's Laboratories Ltd. 80,021
3,000 Hindustan Lever Ltd. 117,506
4,000 Housing Development Finance
Corporation Ltd. 205,180
6,000 ITC Ltd. 105,957
34,000 Mahanagar Telephone Nigam Ltd. 146,664
2,500 NIIT Ltd. 95,585
5,000 Pentafour Software & Exports Ltd. 83,176
8,000 Satyam Computer Services Ltd. 137,038
20,000 Siemens India Ltd.+ 106,004
5,000 Tata Infotech Ltd. 165,411
9,000 Videsh Sanchar Nigam Ltd. 156,181
-----------
1,398,723
-----------
Indonesia: 7.1%
USD 620,000 PT Astra Overseas Finance Bond
8.75% 8/07/03 (b)+ 173,600
3,000,000 PT Bimantara Citra 196,875
23,200 PT Gudang Garam Tbk 33,785
2,000,000 PT Pabrik Kertas Tjiwi Kimia+ 518,750
800,000 PT Ramayana Lestari Sentosa Tbk 192,500
-----------
1,115,510
-----------
Philippines: 3.8%
1,000,000 Ayala Corp. 353,470
4,200 Benpres Holdings Corp. (GDR)+ 13,125
3,190,000 DMCI Holdings Inc.+ 134,488
474,000 SM Prime Holdings Inc. 90,170
-----------
591,253
-----------
Singapore: 16.6%
63,000 City Development Limited (Class A) 272,835
67,500 DBS Bank "F" 609,175
190,000 DBS Land Ltd. 279,649
39,080 Overseas-Chinese Banking
Corp., Ltd. "F" 265,110
75,000 Singapore Airlines Ltd. "F" 549,667
25,723 Singapore Press Holdings Ltd. 280,445
1,500,000 Tan Chong International Ltd. 147,144
50,000 Venture Manufacturing
(Singapore) Ltd. 190,793
-----------
2,594,818
-----------
South Korea: 11.8%
16,000 Hanjin Heavy Industries 122,361
35,000 Housing & Commercial Bank, Korea 433,500
6,200 Korea Electric Power Corp. 153,583
32,899 Medison Co. Ltd. 382,865
1,000 SK Telecom Company Ltd.
(Warrants expiring 12/07/99)+ 200,146
1,155 S1 Corporation 216,022
770 Samsung Fire & Marine Insurance 288,030
222 Samsung Fire & Marine Insurance
(Rights expiring 1/04/99)+ 42,665
-----------
1,839,172
-----------
Taiwan: 11.4%
USD 500,000 A.D.I. Corp. Bond 7.00% 3/09/01 375,000
42,547 Taiwan Index Fund
(Index Shares)+ 417,641
87,669 Taiwan Index Fund
(Liquidity Shares)+ 994,691
-----------
1,787,332
-----------
Thailand: 5.5%
40,000 Ban Pu Coal Co. Ltd. "F"+ 81,431
115,000 Bangkok Bank Public Co. Ltd.+ 164,512
40,100 Grammy Entertainment Public
Company Ltd. 191,950
197,000 Thai Farmers Bank Public Co. Ltd.+ 289,945
6,000 The Pizza Public Company Ltd. 20,138
65,000 Tipco Asphalt Public Company Ltd.+ 104,608
-----------
852,584
-----------
Total Stocks and Other Investments: 100.0%
(Cost: $13,024,006) 15,631,844
Other assets less liabilities: (0.0)% (5,037)
-----------
Net Assets: 100% $15,626,807
===========
- ----------
(a) Unless otherwise indicated, securities owned are shares of common stock.
(b) Security is in default on interest payments.
+ -- Non-income producing
Glossary:
"F" -- Foreign Registry
GDR -- Global Depositary Receipt
See Notes to Financial Statements
28
<PAGE>
Asia Dynasty Fund
Schedule of Portfolio Investments December 31, 1998
Summary of % of
Investments Net
By Industry Assets
- ------------- -------
Air Transportation 3.5%
Banking 18.5%
Coal 0.5%
Conglomerates 4.8%
Consumer Services 3.7%
Electronics 2.9%
Energy 2.1%
Engineering & Construction 1.5%
Entertainment & Leisure Time 1.2%
Foods & Beverages 1.4%
Foreign Government Bonds 9.0%
Forest Products 3.3%
Industrials 0.8%
Information Systems 3.1%
Insurance 3.6%
Machinery 0.7%
Medical Products and Supplies 3.0%
Publishing 1.8%
Real Estate 16.9%
Restaurants 0.1%
Retail 1.2%
Semiconductors 2.4%
Telecommunications 8.0%
Tobacco 0.2%
Transportation 3.9%
Utilities 1.9%
-----
100.0%
=====
See Notes to Financial Statements
29
<PAGE>
Global Balanced Fund
Schedule of Portfolio Investments December 31, 1998
No. of Shares
or Principal
Amount Securities (a) Value (Note 1)
- --------------------------------------------------------------------------------
Australia: 1.3%
AUD 600,000 Government of Australia Bond
7.50% 9/15/09 $ 441,727
-----------
Austria: 0.8%
ATS 3,200,000 Republic of Austria Bond
7.00% 9/20/99 280,029
-----------
Denmark: 0.5%
2,800 ISS International Service System A.S. 182,142
-----------
Finland: 0.4%
1,000 Nokia Oyj (Class A) 121,594
-----------
France: 2.6%
DEM 410,000 Caisse D'Amort Dett Societe Bond
5.125% 1/25/28 266,077
800 Castorama Dubois Investissements
S.A.+ 182,477
500 Groupe Danone 143,119
700 Havas Advertising S.A. 117,089
1,500 Total S.A. (Class B) 151,885
-----------
860,647
-----------
Germany: 6.3%
2,400 Bayerische HypoVereinsbank AG 188,114
460 Buderus AG 167,705
DEM 1,898,000 Deutschland Republic Bond
6.50% 7/04/27 1,425,044
2,200 Douglas Holdings AG 133,457
910 Fresenius AG (Pfd.) 191,844
-----------
2,106,164
-----------
Hong Kong: 0.6%
18,000 Cheung Kong (Holdings) Ltd. 129,526
3,200 HSBC Holdings PLC 79,716
-----------
209,242
-----------
Ireland: 0.9%
13,888 Bank of Ireland 304,799
-----------
Italy: 7.6%
BTPS Bonds
ITL 600,000,000 9.50% 2/01/01 404,496
ITL 130,000,000 6.50% 11/01/27 98,345
ITL 640,000,000 6.25% 3/01/02 419,450
ITL1,440,000,000 4.50% 4/15/01 895,812
33,000 Credito Italiano S.p.A 195,700
31,000 Eni S.p.A. 202,702
14,000 Telecom Italia Mobile S.p.A. 103,410
25,000 Telecom Italia S.p.A. 213,418
-----------
2,533,333
-----------
Japan: 7.9%
8,000 Bank of Tokyo Mitsubishi Bank+ 82,485
7,000 Canon Inc. 148,976
3,400 Circle K Japan Co. Ltd. 148,914
JPY 30,000,000 Export-Import Japan Bond
2.875% 7/28/05 281,084
15,000 Hitachi Ltd. 92,531
Japanese Government Bonds
JPY 2,900,000 2.30% 9/20/18 23,903
JPY 87,200,000 1.80% 6/20/08 755,633
1,000 Keyence Corp. 122,494
20,000 NGK Spark Plug Co., Ltd. 202,864
500 NTT Mobile Communications
Network, Inc. 204,891
1,000 Rohm Co. 90,681
1,600 Sony Corp.(ADR) 114,800
5,000 Takeda Chemical Industries+ 191,672
7,000 Tokyo Electric Power Company Inc. 172,108
-----------
2,633,036
-----------
Mexico: 0.5%
73,000 Cifra S.A. de C.V.+ 88,440
3,300 Formentco Economico
Mexicano S.A. de C.V (ADR) 87,863
-----------
176,303
-----------
Netherlands: 2.1%
4,400 Akzo Nobel N.V. 200,128
5,800 Nutreco Holdings N.V. 228,322
2,100 Royal Dutch Petroleum Co.
(New York Registry Shares) (ADR)* 100,538
800 Wolters Kluwer N.V. 170,997
-----------
699,985
-----------
Philippines: 0.7%
National Power Bonds
USD 150,000 8.40% 12/15/16 116,188
USD 150,000 7.875% 12/15/06 131,754
-----------
247,942
-----------
Portugal: 1.2%
5,733 Banco Comercial Portugese 175,959
1,140 Telecel-Comunicacoes Pessoasis S.A. 232,639
-----------
408,598
-----------
Spain: 0.9%
228 Banco de Santander S.A. 4,530
4,100 Sol Melia S.A. 142,988
ESP 22,500,000 Spanish Government Bond
5.15% 7/30/09 169,382
-----------
316,900
-----------
Sweden: 2.4%
2,500 Assa Abloy AB (Class B) 95,388
7,000 Ericsson LM (Class B) 166,282
7,000 ForeningsSparbanken AB (Class A) 180,929
SEK 2,700,000 Swedish Government Bond
10.25% 5/05/00 360,598
-----------
803,197
-----------
Switzerland: 1.3%
198 Adecco S.A. 90,354
120 Novartis AG 235,808
280 Swisscom AG+ 117,176
-----------
443,338
-----------
See Notes to Financial Statements
30
<PAGE>
Global Balanced Fund
Schedule of Portfolio Investments December 31, 1998
No. of Shares
or Principal
Amount Securities (a) Value (Note 1)
- --------------------------------------------------------------------------------
United Kingdom: 8.6%
14,000 Alliance Unich PLC $ 131,284
17,000 Amvescap PLC 134,608
190 British Aerospace PLC 1,608
10,434 British Petroleum Co. PLC 155,201
18,200 Compass Group PLC 205,225
6,052 Glaxo Wellcome PLC 206,836
30,000 Hays PLC 256,200
16,506 Lloyds TSB Group PLC 232,791
27,075 Misys PLC 198,445
5,000 Select Appointments Holdings PLC 107,500
United Kingdom Treasury Notes
GBP 26,000 8.00% 12/07/15 61,718
GBP 230,000 8.00% 12/07/00 403,079
GBP 189,000 7.50% 12/07/06 376,918
16,000 Vodafone Group PLC 258,422
24,923 Williams PLC 139,484
-----------
2,869,319
-----------
United States: 52.7%
5,000 ADC Telecommunications Inc. 173,750
3,500 American Express Co.* 357,875
8,000 American International Group, Inc.* 773,000
4,600 Associates First Capital Corp. 194,925
8,000 Bank of New York Co. Inc.* 322,000
2,600 Bestfoods 138,450
3,000 Burlington Northern Santa Fe Corp.* 101,250
3,000 Cardinal Health Inc. 227,625
5,000 CBS Corp. 163,750
9,000 Cisco Systems, Inc.+ 835,313
USD 130,000 CNA Financial Corp. Note
6.50% 4/15/05 130,957
7,600 Coastal Corp. 265,525
11,000 Federal Home Loan Mortgage Corp. 708,813
USD 335,000 Federal Home Loan Mortgage Corp.
Bond 6.22% 6/24/08 342,140
8,500 Federal National Mortgage Association 629,000
GBP 440,000 Federal National Mortgage
Association Bond
6.875% 6/07/02 775,836
3,200 Federated Department Stores, Inc.*+ 139,400
4,000 Fort James Corp. 160,000
3,000 Fox Entertainment Corp. 75,563
3,000 General Electric Co. 306,188
USD 205,785 Government National Mortgage
Association Bond
7.00% 6/15/27 210,607
8,000 Home Depot Inc. 489,500
2,500 Intel Corp. 296,406
1,400 International Business Machines Corp. 258,650
4,000 Jacor Communications Inc.+ 257,500
6,000 Lucent Technologies Inc. 660,000
4,000 Masco Corp. 115,000
2,487 MCI WorldCom, Inc.+ 178,442
4,000 Merck & Co., Inc. 590,750
600 Microsoft Corp.+ 83,213
4,500 Network Associates Inc. 298,125
4,000 Pfizer Inc. 501,750
2,000 Procter & Gamble Co.* 182,625
USD 200,000 Residential Asset Securitization
Trust Bond
6.75% 6/25/28 201,730
4,000 Royal Caribbean Cruise Line Inc. 148,000
2,300 Staples Inc.+ 100,481
3,000 Tyco International Ltd. 226,313
U.S. Treasury Bonds
USD 110,000 7.875% 2/15/21* 144,994
USD 20,000 7.25% 5/15/16 24,269
USD 200,000 6.375% 8/15/27 230,063
USD 725,000 6.25% 8/15/23* 811,321
USD 426,323 U.S. Treasury Inflation Index Note
3.625% 1/15/08 418,063
U.S. Treasury Notes
USD 495,000 7.00% 7/15/06* 563,836
USD 1,030,000 6.50% 10/15/06 1,143,622
USD 280,000 6.25% 6/30/02 293,913
USD 350,000 5.75% 11/15/00 356,891
USD 645,000 5.50% 2/28/03 664,350
USD 169,000 4.75% 11/15/08 170,373
USD 1,200,000 4.00% 10/31/00 1,187,622
-----------
17,629,769
-----------
Total Stocks and Other Investments: 99.3%
(Cost: $24,199,186) 33,268,064
Other assets less liabilities: 0.7% 232,092
-----------
Net Assets: 100% $33,500,156
===========
- ----------
(a) Unless otherwise indicated, securities owned are shares of common stock.
* These securities are segregated for forward foreign currency contracts.
+ Non-income producing.
Glossary:
ADR -- American Depositary Receipt
Summary of % of
Investments Net
By Industry Assets
- ------------- -------
Advertising 0.3%
Auto Parts 0.6%
Banks 4.2%
Broadcast Media 0.8%
Chemicals 0.6%
Commercial Services 0.5%
Computer Software 1.1%
Corporate Bonds 1.0%
Diversified 0.8%
Domestic Oil & Gas 0.3%
Drug & Healthcare 6.1%
Durables 0.3%
Electronics & Electrical
Equipment 0.9%
Electronic Data Processing,
Entertainment & Leisure 0.4%
Financial Services 7.2%
Food & Household Products 2.9%
Foreign Government Bonds 19.9%
Housing & Construction 0.3%
Insurance 2.3%
International Oil 1.5%
Machinery 0.5%
Manufacturing 1.4%
Natural Gas-Pipelines 0.8%
Office Equipment & Supplies 3.6%
Paper & Forest Products-
Diversified 0.5%
Pharmaceuticals 0.7%
Publishing & Broadcasting 1.2%
Real Estate 0.8%
Retail 3.8%
Science & Technology 2.5%
Telecommunications 7.3%
Temporary Services 0.6%
Transportation 0.3%
U.S. Government
Agencies & Obligations 21.9%
Utilities 1.4%
Other assets
less liabilities 0.7%
-----
100.0%
=====
See Notes to Financial Statements
31
<PAGE>
Global Hard Assets Fund
Schedule of Portfolio Investments December 31, 1998
No. of Shares
or Principal
Amount Securities (a) Value (Note 1)
- --------------------------------------------------------------------------------
Australia: 5.1%
Energy: 0.4%
236,935 Portman Mining Ltd. $ 126,051
-----------
Industrial Metals: 2.2%
930,000 Pasminco Ltd. 705,182
-----------
Precious Metals: 2.5%
380,620 Acacia Resources Ltd. 562,089
341,545 Consolidated Gold NL+ 6,475
111,500 Delta Gold NL 169,092
2,250,000 Gullewa Gold NL+ 89,432
-----------
827,088
-----------
1,658,321
-----------
Canada: 25.2%
Energy: 8.5%
41,000 AltaGas Service Inc. (Special
Warrants expiring 1/24/99)+*(b) 234,324
26,100 Berkley Petroleum Corp.+ 197,753
150,000 Cypress Energy Inc.+ 377,204
85,000 Edge Energy Inc.+ 131,858
60,000 Interoil Corp.+ 66,000
89,000 NQL Drilling Tools Inc.+ 232,528
87,000 Pacalta Resources Ltd.+ 247,191
CAD 375,000 Pacalta Resources Ltd. Sr. Notes
Series B 10.75% 6/15/04+ 301,875
125,000 Plains Energy Services Ltd.+ 255,144
25,000 Poco Petroleums Ltd.+ 209,014
77,500 Startech Energy, Inc.+ 189,827
144,500 Stellarton Energy Corp.+ 132,136
300,000 Volterra Resources Inc. 92,097
333,000 Windsor Energy Corp.+ 84,827
-----------
2,751,778
-----------
Forest Products and Paper: 1.8%
85,700 St. Laurent Paperboard Inc.+ 601,747
-----------
Precious Metals: 7.0%
58,500 Barrick Gold Corp. 1,140,745
707,700 Brazilian Resources Inc.+ 69,337
19,900 Euro-Nevada Mining Corp. 324,951
30,500 Meridian Gold Inc. 179,295
47,200 Placer Dome Inc. 542,800
-----------
2,257,128
-----------
Real Estate: 7.9%
22,000 Bentall Corp. 229,915
40,000 Boardwalk Equities, Inc.+ 441,541
30,000 Brookfield Properties Corp. 368,387
36,000 Cadillac Fairview Corp.+ 672,750
30,700 Legacy Hotels REIT 128,334
35,000 TrizecHahn Corp. 717,500
-----------
2,558,427
-----------
8,169,080
-----------
France: 2.4%
Real Estate: 2.4%
1,000 Accor S.A. 216,468
3,500 Societe Fonciere Lyonnaise+ 549,756
3,500 Societe Fonciere Lyonnaise
(Warrants expiring 7/30/02)+* 3,694
-----------
769,918
-----------
Italy: 1.4%
Energy: 1.4%
6,500 Ente Nazionale Idrocaburi S.p.A. (ADR) 440,375
-----------
Russia: 2.0%
Energy: 2.0%
1,650 Khanty Mansiysk Oil Corp.+* (b) 660,000
-----------
South Africa: 1.6%
Precious Metals: 1.6%
25,900 AngloGold Ltd. (ADR) 506,669
-----------
United Kingdom: 1.0%
Industrial Metals: 1.0%
163,100 Billiton PLC 323,200
-----------
United States: 60.8%
Energy: 18.0%
13,000 Anadarko Petroleum Corp. 401,375
21,600 Apache Corp. 546,750
36,200 Denali Inc.+ 506,800
9,500 Exxon Corp. 694,688
74,500 Forcenergy Inc.+ 195,563
25,200 Gulf Island Fabrication, Inc.+ 195,300
12,000 J. Ray McDermott, S.A.+ 293,250
53,000 KCS Energy, Inc. 162,313
8,700 Kerr-McGee Corp. 332,775
4,700 Marine Drilling Companies, Inc.+ 36,131
37,000 Miller Exploration Co.+ 166,500
2,100 Mobil Corp. 182,963
35,000 Occidental Petroleum Corp. 590,625
32,000 Pogo Producing Co. 416,000
21,000 Pride International, Inc.+ 148,313
12,000 Santa Fe International Corp. 175,500
15,600 Stone Energy Corp.+ 448,500
36,000 Swift Energy Co.+ 265,500
13,500 UNIFAB International, Inc.+ 108,000
-----------
5,866,846
-----------
Forest Products and Paper: 6.8%
13,600 Bowater Inc. 563,550
9,187 Fort James Corp. 367,480
37,500 Plum Creek Timber Company, L.P. 977,344
6,600 Weyerhaeuser Co. 335,363
-----------
2,243,737
-----------
See Notes to Financial Statements
32
<PAGE>
Global Hard Assets Fund
Schedule of Portfolio Investments December 31, 1998
No. of Shares
or Principal
Amount Securities (a) Value (Note 1)
- --------------------------------------------------------------------------------
United States (continued)
Industrial Metals: 5.2%
14,300 Aluminum Co. of America (Alcoa Inc.) $ 1,066,244
6,700 Nucor Corp. 289,775
27,550 Steel Dynamics, Inc.+ 323,713
-----------
1,679,732
-----------
Precious Metals: 9.2%
USD 1,100,000 Business Development Bank of Canada
Yen/Gold Linked Note 4.85% 9/30/99 928,730
USD 1,400,000 Morgan Guaranty Trust Co.
Gold/Silver Ratio Indexed Note
2.61% 6/18/99 1,374,660
16,500 Stillwater Mining Co. 676,500
-----------
2,979,890
-----------
Real Estate: 21.6%
13,000 AMB Property Corp. 286,000
5,000 Arden Realty, Inc. 115,938
20,000 Bedford Property Investors, Inc. 337,500
2,700 Boston Properties, Inc. 82,350
21,000 Brandywine Realty Trust 375,375
20,000 CarrAmerica Realty Corp. 480,000
44,000 Cornerstone Properties, Inc. 687,500
15,000 Equity Office Properties Trust 360,000
10,000 Equity Residential Properties Trust 404,375
20,000 Excel Legacy Corp.+ 80,000
20,050 Kilroy Realty Corp. 461,150
10,400 Macerich Co. (The) 266,500
12,000 Mack-Cali Realty Corp. 370,500
20,400 New Plan Excel Realty Trust 452,625
15,000 Pan Pacific Retail Properties, Inc. 299,063
80,000 Patriot American Hospitality, Inc. 480,000
21,000 Philips International Realty 322,875
16,500 Prentiss Properties Trust 368,156
15,000 ProLogis Trust 311,250
14,000 Starwood Hotels & Resorts 317,625
4,000 United Dominion Realty Trust, Inc. 41,250
12,000 Westfield America, Inc. 207,000
-----------
7,107,032
-----------
19,877,237
-----------
Total Stocks and Other Investments: 99.5%
(Cost: $39,547,481) 32,404,800
-----------
Securities Sold Short: (8.4%)
Canada: (2.6%)
Energy: (2.6%)
16,800 Suncor Energy Inc. (501,900)
18,000 Westcoast Energy Inc. (357,750)
-----------
(859,650)
-----------
United States: (5.8%)
Energy: (4.3%)
20,000 Barret Resources Corp.+ (480,000)
10,900 Carbo Ceramics Inc. (190,750)
10,000 Core Laboratories N.V.+ (187,500)
20,000 Tidewater Inc. (463,750)
15,000 Trico Marine Services Inc.+ (73,125)
-----------
(1,395,125)
-----------
Real Estate: (1.5%)
10,000 Lasalle Partners Inc. (294,375)
5,500 Vornado Realty Trust (185,625)
-----------
(480,000)
-----------
(1,875,125)
Total Securities Sold Short:
(Proceeds received: $3,012,062) (2,734,775)
-----------
Total Investments Net of Securities
Sold Short: 91.1% 29,670,025
Other assets less liabilities: 8.9% 2,889,646
-----------
Net Assets: 100% $32,559,671
===========
- ----------
(a) Unless otherwise indicated, securities owned are shares of common stock.
(b) Restricted security, see Note 8.
* Fair value as determined by Board of Trustees.
+ Non-income producing.
Glossary:
ADR - American Depositary Receipt
Summary of % of
Investments Net
By Industry Assets
- ------------- -------
Energy 23.4%
Forest Products and Paper 8.6%
Industrial Metals 8.4%
Precious Metals 20.3%
Real Estate 30.4%
Other assets less liabilities 8.9%
-----
100.0%
=====
See Notes to Financial Statements
33
<PAGE>
Gold/Resources Fund
Schedule of Portfolio Investments December 31, 1998
No. of Shares Securities (a) Value (Note 1)
- --------------------------------------------------------------------------------
Australia: 20.4%
1,500,000 Acacia Resources Ltd. $ 2,215,158
711,198 Delta Gold NL 1,078,545
114,903 Great Central Mines Ltd. 82,207
1,055,681 Lihir Gold Ltd.+ 1,181,354
1,258,215 Newcrest Mining Ltd.+ 1,740,379
375,000 Niugini Mining Ltd. 522,832
2,419,133 Normandy Mining Ltd. 2,233,742
637,964 Sons of Gwalia Ltd. 1,810,133
142,239 Zimbabwe Platinum Mines Ltd.+ 27,838
-----------
10,892,188
-----------
Canada: 35.8%
136,800 Agnico-Eagle Mines Ltd. 564,300
125,000 Barrick Gold Corp. 2,437,500
93,600 Boliden Ltd. (Installment Receipt)+ 235,375
143,150 Cambior, Inc. 705,932
140,000 Central Fund of Canada Ltd. (Class A) 490,000
100,000 Claude Resources, Inc.+ 94,709
74,700 Cumberland Resources Ltd.+ 92,704
172,000 Euro-Nevada Mining Corp. 2,808,621
69,000 Franco Nevada Mining Co.+ 1,322,762
291,600 Geomaque Explorations Ltd.+ 285,695
1,205,000 Greenstone Resources Ltd.+ 1,078,282
132,000 IAMGOLD, International
African Mining Gold Corp. 344,872
255,000 International Roraima Gold Corp.+ 4,996
582,000 Meridian Gold Inc.+ 3,421,293
134,200 Placer Dome Inc. 1,543,300
30,000 Rayrock Yellowknife Resources, Inc.+ 122,468
416,200 Richmont Mines, Inc.+ 1,067,005
322,500 Romarco Minerals, Inc.+ 315,969
195,000 Solitario Resources Corp.+ 146,472
99,800 Sutton Resources Ltd.+ 430,228
140,000 Teck Corp. (Class B) 1,024,167
303,200 TVX Gold Inc.+ 549,558
-----------
19,086,208
-----------
Ghana: 2.3%
30,191 Ashanti Goldfields Co. Ltd. 64,156
126,000 Ashanti Goldfields Co. Ltd.
(Sponsored GDR) 1,181,250
-----------
1,245,406
-----------
United States: 29.6%
645,872 Battle Mountain Canada Inc. 2,664,222
(Exchangeable Shares)
221,300 Battle Mountain Gold Co. (Class A) 912,863
328,700 Crown Resources Corp.+ 667,672
137,100 Getchell Gold Corp.+ 3,735,975
140,000 Glamis Gold Ltd.+ 262,500
152,600 GoldCorp Inc. (Class A)+ 877,450
360,601 Homestake Mining Co. 3,313,022
115,405 Newmont Mining Corp. 2,084,503
1,000,000 Piedmont Mining Co., Inc. (b)+ 37,500
30,500 Stillwater Mining Co. 1,250,500
-----------
15,806,207
-----------
Total Stocks and Other Investments: 88.1%
(Cost: $47,981,190) 47,030,009
-----------
No. of
Contracts Securities (a) Value (Note 1)
- --------------------------------------------------------------------------------
875 Philadephia Gold & Silver Index
(strike price @ $50.00
expiring 3/20/99) $ 207,812
375 Philadephia Gold & Silver Index
(strike price @ $55.00
expiring 1/16/99) 18,750
-----------
Total Put Options Purchased
(Cost: $213,906) 226,562
-----------
Principal
Amount Short-Term Obligations: 8.2%
- --------------------------------------------------------------------------------
$ 400,000 American Express Co.
Commercial Paper due 1/04/99
Interest Yield 4.06% 399,867
2,500,000 General Electric Co.
Commercial Paper due 1/04/99
Interest Yield 4.77% 2,499,021
1,500,000 U.S. Treasury Bill due 1/21/99
Interest Yield 4.42% 1,496,392
-----------
Total Short-Term Obligations
(Amortized Cost: $4,395,280) 4,395,280
-----------
Total Investments: 96.7%
(Cost: $52,590,376) 51,651,851
Other assets less liabilities: 3.3% 1,745,152
-----------
Net Assets: 100% $53,397,003
===========
- ----------
(a) Unless otherwise indicated, securities owned are shares of common stock.
(b) Affiliated company, see Schedule of Affiliated Company Transactions (Note
9).
+ Non-income producing.
Glossary:
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
Summary of % of
Investments Net
By Industry Assets
- ------------- -------
Gold Mining 85.2%
Industrial Metals-Diversified 0.6%
Platinum/Palladium/Rhodium 2.3%
Put Options Purchased 0.4%
Commercial Paper 5.4%
U.S. Treasury Bill 2.8%
Other assets less liabilities 3.3%
-----
100.0%
=====
See Notes to Financial Statements
34
<PAGE>
International Investors Gold Fund
Schedule of Portfolio Investments December 31, 1998
No. of Shares Securities (a) Value (Note 1)
- --------------------------------------------------------------------------------
Australia: 7.9%
2,070,000 Acacia Resources Ltd. $ 3,056,919
1,500,000 Delta Gold N.L. 2,274,780
464,903 Great Central Mines Ltd. 332,616
2,333,654 Lihir Gold Ltd. 2,611,464
700,000 Menzies Gold N.L.+ 53,506
1,967,000 Newcrest Mining Ltd.+ 2,720,780
6,955,808 Normandy Mining Ltd. 6,422,750
425,000 Sons of Gwalia Ltd. 1,205,878
220,000 Zimbabwe Platinum Mines Ltd.+ 43,050
------------
18,721,743
------------
Canada: 20.3%
192,300 Agnico-Eagle Mines Ltd. 793,238
540,000 Barrick Gold Corp. 10,530,000
93,600 Boliden Ltd. (Installment Receipt)+ 235,375
118,700 Cambior, Inc. 585,359
100,000 Claude Resources, Inc.+ 94,709
397,400 Euro-Nevada Mining Corp. 6,489,223
149,000 Franco Nevada Mining Corp.+ 2,856,401
250,000 Geomaque Explorations Ltd.+ 244,938
254,300 GoldCorp. Inc. (Class A)+ 1,462,225
3,485,000 Greenstone Resources Ltd.+ 3,118,517
1,503,400 Meridian Gold Inc.+ 8,837,753
776,900 Placer Dome Inc. 8,934,350
350,000 Richmont Mines, Inc.+ 897,289
150,000 Romarco Minerals, Inc.+ 146,963
258,500 Sutton Resources Ltd.+ 1,114,370
80,000 Teck Corp. (Class B) 585,238
819,500 TVX Gold Inc.+ 1,485,344
------------
48,411,292
------------
Ghana: 1.3%
318,000 Ashanti Goldfields Co. Ltd.
(Sponsored GDR) 2,981,250
------------
South Africa: 16.7%
445,266 Anglo American Platinum
Corporation Ltd. (b) 6,094,578
365,509 Anglogold Ltd. 9,612,406
4,630,755 AvGold Ltd.(b)+ 2,639,531
682,500 Driefontein Consolidated Ltd. (b) 2,730,000
1,069,930 Gold Fields Ltd. (b)+ 5,884,615
182,900 Gold Fields of South Africa Ltd. (b) 320,075
801,140 Harmony Gold Mining Co. Ltd. (b)+ 3,805,415
645,000 Impala Platinum Holdings Ltd. (ADR) 8,747,813
7,249 Western Area Gold
Mining Co. Ltd. (ADR) 23,197
------------
39,857,630
------------
United Kingdom: 0.4%
513,333 Billiton PLC 1,017,225
------------
United States: 21.1%
222,000 Battle Mountain Canada, Inc.
(Exchangeable Shares) 915,750
1,772,700 Battle Mountain Gold Co. 7,312,388
USD 6,000,000 Business Development Bank of
Canada Yen/Gold Linked Note
4.50% 11/17/99 5,854,800
100,000 Crown Resources Corp.+ 203,125
596,500 Getchell Gold Corp.+ 16,254,625
400,000 Glamis Gold Ltd.+ 750,000
1,324,939 Homestake Mining Co. 12,172,877
339,600 Newmont Mining Corp. 6,134,025
1,270,000 Piedmont Mining Co., Inc. (c)+ 47,625
20,000 Stillwater Mining Co. 820,000
------------
50,465,215
------------
Total Stock and Other Investments: 67.7%
(Cost: $136,054,788) 161,454,355
------------
No. of
Contracts Put Options Purchased: 0.3%
- --------------------------------------------------------------------------------
2,625 Philadephia Gold & Silver Index
(strike price @ $50.00
expiring 3/20/99) 623,438
1,125 Philadephia Gold & Silver Index
(strike price @ $55.00
expiring 1/16/99) 56,250
------------
Total Put Options Purchased
(Cost: $641,719) 679,688
------------
Principal
Amount Short-Term Obligations: 18.3%
- --------------------------------------------------------------------------------
$15,000,000 U.S. Treasury Bill due 1/21/99
Interest Yield 4.37% 14,963,583
28,000,000 U.S. Treasury Bill due1/21/99
Interest Yield 4.39% 27,931,711
800,000 General Electric Capital
Commercial Paper due 1/04/99
Interest Yield 4.70% 799,687
------------
Total Short-Term Obligations
(Amortized Cost: $43,694,981) 43,694,981
------------
Total Investments: 86.3% (Cost: $180,391,488) 205,829,024
Other assets less liabilities: 13.7% 32,809,645
------------
Net Assets: 100% $238,638,669
============
(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) Affiliated company, see Schedule of Affiliated Company Transactions (Note
9).
+ Non-income producing.
Glossary:
ADR -- American Depositary Receipt
Summary of % of
Investments Net
By Industry Assets
- ------------- -------
Aluminum 0.4%
Gold & Silver 60.5%
Platinum/Palladium/
Rhodium 4.1%
Precious Metals-Finance 2.7%
Treasury Bills 18.0%
Put Options Purchased 0.3%
Commercial Paper 0.3%
Other assets
less liabilities 13.7%
-----
100.0%
=====
See Notes to Financial Statements
35
<PAGE>
U.S. Government Money Fund Fund
Schedule of Portfolio Investments December 31, 1998
Annualized Yield
at Time of
Principal Maturity Purchase or Value
Amount Date Coupon Rate (Note 1)
- --------------------------------------------------------------------------------
U.S. Treasury Bills: 133.2%
$ 17,000,000 1/21/99 4.41% $16,959,200
16,350,000 1/21/99 4.45% 16,310,215
4,125,000 1/21/99 4.49% 4,114,894
25,575,000 1/21/99 4.49% 25,512,341
-----------
Total U.S. Treasury Bills
(Amortized Cost: $62,896,650) 62,896,650
-----------
Repurchase Agreements: 22.5% (Note 12):
$5,335,000
(Cost: $5,335,000)
Purchased on 12/31/98;
maturity value--
$5,337,608 (with
Merrill Lynch & Co., Inc.
collateralized by
$5,260,000 U.S. Treasury
Note due 10/31/99 with
an interest rate of
7.50% with a value
of $5,450,020) 1/04/99 4.40% 5,335,000
$5,300,000
(Cost: $5,300,000)
Purchased on 12/31/98;
maturity value---
$5,302,591 (with
Paine Webber Group Inc.
collateralized by
$5,210,000 U.S. Treasury
Note due 4/30/00 with
an interest rate of
6.75% with a value
of $5,409,903) 1/04/99 4.40% 5,300,000
-----------
Total Repurchase Agreements (Cost: $10,635,000) 10,635,000
-----------
Total Investments: 155.7% (Cost: $73,531,650) 73,531,650
Other assets less liabilities: (55.7%) (26,309,478)
-----------
Net Assets: 100% $47,222,172
===========
See Note to Financial Statements
36
<PAGE>
This page intentionally left blank.
37
<PAGE>
Van Eck Funds
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
Asia Dynasty Global Balanced
Fund Fund
------------- -------------
<S> <C> <C>
Assets:
Investments at cost .......................................................... $13,024,006 $24,199,186
============= =============
Investments at value (Note 1) ................................................ $15,631,844 $33,268,064
Cash ......................................................................... -- 86,730
Segregated cash for short sales (Note 1) ..................................... -- --
Receivables:
Securities sold ............................................................ 439,379 --
Receivables for securities sold short ...................................... -- --
Capital shares sold ........................................................ 31,320 13,014
Interest and dividends ..................................................... 32,021 236,284
Unrealized appreciation on open forward foreign currency contracts (Note 6) .. -- 54,807
Deferred organization costs and other assets (Note 1) ........................ -- --
------------- -------------
Total assets ........................................................... 16,134,564 33,658,899
------------- -------------
Liabilities:
Payables:
Due to custodian ........................................................... 276,969 --
Securities purchased ....................................................... -- --
Dividends payable .......................................................... -- --
Capital shares redeemed .................................................... 160,375 25,132
Accounts payable ........................................................... 70,413 67,914
Securities sold short, at value (proceeds $3,012,062) (Note 1) ............... -- --
Unrealized depreciation on open forward foreign currency contracts (Note 6) .. -- 65,697
------------- -------------
Total liabilities ...................................................... 507,757 158,743
------------- -------------
Net Assets ................................................................... $15,626,807 $33,500,156
============= =============
Class A Shares+:
Net assets ................................................................... $10,684,887 $27,461,279
============= =============
Shares outstanding ........................................................... 1,370,232 2,548,265
============= =============
Net asset value and redemption price per share ............................... $7.80 $10.78
============= =============
Maximum offering price per share (NAV/(1-maximum sales commission)) .......... $8.19 $11.32
============= =============
Class B Shares:
Net assets ................................................................... $4,941,920 $6,038,877
Shares outstanding ........................................................... 655,246 566,010
Net asset value, maximum offering and redemption price per share
(Redemption may be subject to a contingent deferred sales charge
within the first six years of ownership) ................................... $7.54 $10.67
============= =============
Class C Shares:
Net assets ................................................................... -- --
Shares outstanding ........................................................... -- --
Net asset value, maximum offering and redemption price per share
(Redemption may be subject to a contingent deferred sales charge
within the first year of ownership) ........................................ -- --
Net assets consist of:
Aggregate paid in capital .................................................. $15,391,343 $24,565,005
Unrealized appreciation (depreciation) of investments, options, short sales,
futures, foreign forward currency contracts and foreign currencies ....... 2,581,722 9,058,978
Accumulated net investment income (loss) ................................... (79,734) (171,441)
Accumulated realized gain (loss) ........................................... (2,266,524) 47,614
------------- -------------
$15,626,807 $33,500,156
============= =============
</TABLE>
- ----------
+The U.S. Government Money Fund does not have a designated class of shares.
See Notes to Financial Statements
38
<PAGE>
<TABLE>
<CAPTION>
Global Hard Gold/Resources
Assets Fund Fund
------------- -------------
<S> <C> <C>
Assets:
Investments at cost .......................................................... $39,547,481 $52,590,376
============= =============
Investments at value (Note 1) ................................................ $32,404,800 $51,651,851
Cash ......................................................................... -- 116,426
Segregated cash for short sales (Note 1) ..................................... 1,105,198 --
Receivables:
Securities sold ............................................................ 1,103,149 1,513,213
Receivables for securities sold short ...................................... 3,012,062 --
Capital shares sold ........................................................ 137,437 1,124,594
Interest and dividends ..................................................... 178,224 1,042
Unrealized appreciation on open forward foreign currency contracts (Note 6) .. -- --
Deferred organization costs and other assets (Note 1) ........................ 15,648 --
------------- -------------
Total assets ........................................................... 37,956,518 54,407,126
------------- -------------
Liabilities:
Payables:
Due to custodian ........................................................... 1,603,751 --
Securities purchased ....................................................... 495,235 788,388
Dividends payable .......................................................... 75,511 --
Capital shares redeemed .................................................... 404,979 125,983
Accounts payable ........................................................... 80,063 95,752
Securities sold short, at value (proceeds $3,012,062) (Note 1) ............... 2,734,775 --
Unrealized depreciation on open forward foreign currency contracts (Note 6) .. 2,533 --
------------- -------------
Total liabilities ...................................................... 5,396,847 1,010,123
------------- -------------
Net Assets ................................................................... $32,559,671 $53,397,003
============= =============
Class A Shares+:
Net assets ................................................................... $22,968,552 $53,397,003
============= =============
Shares outstanding ........................................................... 2,220,601 17,550,582
============= =============
Net asset value and redemption price per share ............................... $10.34 $3.04
============= =============
Maximum offering price per share (NAV/(1-maximum sales commission)) .......... $10.86 $3.23
============= =============
Class B Shares:
Net assets ................................................................... $5,579,734 --
=============
Shares outstanding ........................................................... 538,104 --
=============
Net asset value, maximum offering and redemption price per share
(Redemption may be subject to a contingent deferred sales charge
within the first six years of ownership) ................................... $10.37 --
=============
Class C Shares:
Net assets ................................................................... $4,011,385 --
=============
Shares outstanding ........................................................... 385,780 --
=============
Net asset value, maximum offering and redemption price per share
(Redemption may be subject to a contingent deferred sales charge
within the first year of ownership) ........................................ $10.40 --
=============
Net assets consist of:
Aggregate paid in capital .................................................. $50,256,926 $113,842,981
Unrealized appreciation (depreciation) of investments, options, short sales,
futures, foreign forward currency contracts and foreign currencies ....... (6,864,873) (931,631)
Accumulated net investment income (loss) ................................... 6,744 (640,056)
Accumulated realized gain (loss) ........................................... (10,839,126) (58,874,291)
------------- -------------
$32,559,671 $53,397,003
============= =============
<CAPTION>
International
Investors U.S. Government
Gold Fund Money Fund
------------- -------------
<S> <C> <C>
Assets:
Investments at cost .......................................................... $180,391,488 $73,531,650
============= =============
Investments at value (Note 1) ................................................ $205,829,024 $73,531,650
Cash ......................................................................... 3,023,594 1,346
Segregated cash for short sales (Note 1) ..................................... -- --
Receivables:
Securities sold ............................................................ 6,070,865 --
Receivables for securities sold short ...................................... -- --
Capital shares sold ........................................................ 28,139,920 1,201,756
Interest and dividends ..................................................... 34,911 1,300
Unrealized appreciation on open forward foreign currency contracts (Note 6) .. -- --
Deferred organization costs and other assets (Note 1) ........................ -- --
------------- -------------
Total assets ........................................................... 243,098,314 74,736,052
------------- -------------
Liabilities:
Payables:
Due to custodian ........................................................... -- --
Securities purchased ....................................................... 2,946,748 --
Dividends payable .......................................................... 72,447 19,699
Capital shares redeemed .................................................... 1,253,231 27,439,501
Accounts payable ........................................................... 185,577 54,680
Securities sold short, at value (proceeds $3,012,062) (Note 1) ............... -- --
Unrealized depreciation on open forward foreign currency contracts (Note 6) .. 1,642 --
------------- -------------
Total liabilities ...................................................... 4,459,645 27,513,880
------------- -------------
Net Assets ................................................................... $238,638,669 $47,222,172
============= =============
Class A Shares+:
Net assets ................................................................... $238,638,669 $47,222,172
============= =============
Shares outstanding ........................................................... 36,194,281 47,222,172
============= =============
Net asset value and redemption price per share ............................... $6.59 $1.00
============= =============
Maximum offering price per share (NAV/(1-maximum sales commission)) .......... $6.99 $1.00
============= =============
Class B Shares:
Net assets ................................................................... -- --
Shares outstanding ........................................................... -- --
Net asset value, maximum offering and redemption price per share
(Redemption may be subject to a contingent deferred sales charge
within the first six years of ownership) ................................... -- --
Class C Shares:
Net assets ................................................................... -- --
Shares outstanding ........................................................... -- --
Net asset value, maximum offering and redemption price per share
(Redemption may be subject to a contingent deferred sales charge
within the first year of ownership) ........................................ -- --
Net assets consist of:
Aggregate paid in capital .................................................. $233,515,705 $47,222,172
Unrealized appreciation (depreciation) of investments, options, short sales,
futures, foreign forward currency contracts and foreign currencies ....... 25,380,360 --
Accumulated net investment income (loss) ................................... -- --
Accumulated realized gain (loss) ........................................... (20,257,396) --
------------- -------------
$238,638,669 $47,222,172
============= =============
</TABLE>
See Notes to Financial Statements
39
<PAGE>
Van Eck Funds
Statement of Operations
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Asia Dynasty Global Balanced
Fund Fund
------------ -----------------
<S> <C> <C>
Income:
Dividends ................................................................ $ 310,556 $ 201,295
Interest ................................................................. 65,152 705,527
Foreign taxes withheld ................................................... (11,694) (13,903)
---------- ----------
Total income ............................................................. 364,014 892,919
---------- ----------
Expenses:
Management (Note 2) ...................................................... 116,529 234,574
Distribution Class A (Note 4) ............................................ 51,818 128,556
Distribution Class B (Note 4) ............................................ 51,735 55,654
Distribution Class C (Note 4) ............................................ -- --
Administration (Note 2) .................................................. 53,901 92,891
Transfer agent ........................................................... 111,842 117,772
Professional ............................................................. 59,467 38,558
Reports to shareholders .................................................. 21,438 36,731
Registration ............................................................. 11,959 28,821
Custodian ................................................................ 32,989 22,331
Trustees' fees and expenses .............................................. 3,125 7,399
Amortization of deferred organization costs .............................. 289 6,888
Other .................................................................... 6,935 6,816
---------- ----------
Total expenses ........................................................... 522,027 776,991
Expenses assumed by the Adviser and reduced by directed
brokerage and or custody fee arrangement (Note 2) ...................... (107,754) (123,632)
---------- ----------
Net expenses ............................................................. 414,273 653,359
---------- ----------
Net investment income (loss) ............................................. (50,259) 239,560
Realized and Unrealized Gain (Loss) on Investments (Note 3):
Realized gain (loss) from security transactions .......................... (2,143,295) 4,374,568
Realized gain (loss) from futures contracts and short sales .............. (84,091) --
Realized gain (loss) from options ........................................ (150,000) (5,335)
Realized gain (loss) from foreign currency transactions .................. (160,175) (163,137)
Change in unrealized appreciation (depreciation) of foreign currencies and
forward foreign currency contracts ..................................... (48,286) (101,957)
Change in unrealized appreciation (depreciation) of investments, futures,
short sales and options ................................................ 2,137,795 1,605,960
---------- ----------
Net Increase (Decrease) in Net Assets Resulting from Operations .......... $ (498,311) $5,949,659
========== ==========
</TABLE>
See Notes to Financial Statements
40
<PAGE>
<TABLE>
<CAPTION>
Global Hard Gold/Resources
Assets Fund Fund
------------- ----------------
<S> <C> <C>
Income:
Dividends ................................................................ $ 1,268,161 $ 486,566
Interest ................................................................. 216,117 280,650
Foreign taxes withheld ................................................... (35,954) (27,057)
------------ ----------
Total income ............................................................. 1,448,324 740,159
------------ ----------
Expenses:
Management (Note 2) ...................................................... 559,994 449,221
Distribution Class A (Note 4) ............................................ 206,458 149,740
Distribution Class B (Note 4) ............................................ 82,087 --
Distribution Class C (Note 4) ............................................ 64,991 --
Administration (Note 2) .................................................. 21,170 206,722
Transfer agent ........................................................... 167,572 342,350
Professional ............................................................. 31,187 47,045
Reports to shareholders .................................................. 53,993 56,853
Registration ............................................................. 27,451 18,558
Custodian ................................................................ 36,505 31,313
Trustees' fees and expenses .............................................. 15,113 14,046
Amortization of deferred organization costs .............................. 7,895 --
Other .................................................................... 20,614 28,189
------------ ----------
Total expenses ........................................................... 1,295,030 1,344,037
Expenses assumed by the Adviser and reduced by directed
brokerage and or custody fee arrangement (Note 2) ...................... (101,502) (18,172)
------------ ----------
Net expenses ............................................................. 1,193,528 1,325,865
------------ ----------
Net investment income (loss) ............................................. 254,796 (585,706)
Realized and Unrealized Gain (Loss) on Investments (Note 3):
Realized gain (loss) from security transactions .......................... (11,838,909) (13,823,751)
Realized gain (loss) from futures contracts and short sales .............. 981,114 --
Realized gain (loss) from options ........................................ 29,667 (872,230)
Realized gain (loss) from foreign currency transactions .................. 259,365 (68,135)
Change in unrealized appreciation (depreciation) of foreign currencies
and forward foreign currency contracts ................................. (10,926) 43,626
Change in unrealized appreciation (depreciation) of investments, futures,
short sales and options ................................................ (12,074,129) 7,613,527
------------ ----------
Net Increase (Decrease) in Net Assets Resulting from Operations .......... $(22,399,022) $(7,692,669)
============ ==========
<CAPTION>
International Investors U.S. Government
Gold Fund Money Fund
------------------------ ---------------
<S> <C> <C>
Income:
Dividends ................................................................ $ 4,697,920 --
Interest ................................................................. 1,736,508 $3,794,671
Foreign taxes withheld ................................................... (163,640) --
---------- ----------
Total income ............................................................. 6,270,788 3,794,671
---------- ----------
Expenses:
Management (Note 2) ...................................................... 1,710,779 373,387
Distribution Class A (Note 4) -- 186,693
Distribution Class B (Note 4) -- --
Distribution Class C (Note 4) -- --
Administration (Note 2) .................................................. 733,846 76,194
Transfer agent ........................................................... 1,056,308 81,341
Professional ............................................................. 88,179 25,532
Reports to shareholders .................................................. 239,508 41,958
Registration ............................................................. 31,459 26,429
Custodian ................................................................ 66,878 35,816
Trustees' fees and expenses .............................................. 51,757 21,947
Amortization of deferred organization costs .............................. -- --
Other .................................................................... 77,720 23,265
---------- ----------
Total expenses ........................................................... 4,056,434 892,562
Expenses assumed by the Adviser and reduced by directed
brokerage and or custody fee arrangement (Note 2) ...................... (35,795) --
---------- ----------
Net expenses ............................................................. 4,020,639 892,562
---------- ----------
Net investment income (loss) ............................................. 2,250,149 2,902,109
Realized and Unrealized Gain (Loss) on Investments (Note 3):
Realized gain (loss) from security transactions .......................... (14,423,140) 35,613
Realized gain (loss) from futures contracts and short sales .............. -- --
Realized gain (loss) from options ........................................ (2,818,392) --
Realized gain (loss) from foreign currency transactions .................. (235,689) --
Change in unrealized appreciation (depreciation) of foreign currencies
and forward foreign currency contracts ................................ (2,193) --
Change in unrealized appreciation (depreciation) of investments, futures,
short sales and options ................................................ 7,266,073 --
---------- ----------
Net Increase (Decrease) in Net Assets Resulting from Operations .......... $(7,963,192) $2,937,722
========== ==========
</TABLE>
See Notes to Financial Statements
41
<PAGE>
Van Eck Funds
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Asia Dynasty Global Balanced
Fund Fund
---------------------------- ----------------------------
Year Ended Year Ended Year Ended Year Ended
Decmeber 31, Decmeber 31, Decmeber 31, Decmeber 31,
1998 1997 1998 1997
-------------- ------------- ----------------------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss) ............................. $ (50,259) $(426,753) $ 239,560 $ 224,771
Realized gain (loss) from security transactions .......... (2,143,295) 6,040,708 4,374,568 3,653,554
Realized gain (loss) from futures contracts and short sales (84,091) -- -- --
Realized gain (loss) from options ........................ (150,000) -- (5,335) 9,621
Realized gain (loss) from foreign currency transactions .. (160,175) (263,828) (163,137) (327,252)
Change in unrealized appreciation (depreciation)
of foreign currencies and forward
foreign currency contracts ............................. (48,286) (17,313,597) (101,957) 320,862
Change in unrealized appreciation (depreciation) of
investments, futures, short sales and options .......... 2,137,795 24,674 1,605,960 76,540
---------- ----------- ----------- ---------
Increase (decrease) in net assets
resulting from operations ................................ (498,311) (11,938,796) 5,949,659 3,958,096
---------- ----------- ----------- ---------
Dividends and distributions to shareholders from:
Net investment income:
Class A Shares+ ........................................ -- -- -- (176,328)
Class B Shares ......................................... -- -- -- (12,007)
Class C Shares ......................................... -- -- -- --
Realized gain:
Class A Shares+ ........................................ -- (1,662,423) (3,600,593) (3,002,402)
Class B Shares ......................................... -- (938,539) (787,314) (628,805)
Class C Shares ......................................... -- -- -- --
Tax return of capital:
Class A Shares ......................................... -- (195,520) (179,959) (19,123)
Class B Shares ......................................... -- (109,980) (24,623) (1,798)
Class C Shares ......................................... -- -- -- --
---------- ----------- ----------- ---------
Total dividends and distributions ....................... -- (2,906,462) (4,592,489) (3,840,463)
---------- ----------- ----------- ---------
Capital share transactions (Note 5):
Net proceeds from sales of shares:
Class A Shares+ ........................................ 12,813,182 41,432,873 3,878,822 2,863,588
Class B Shares ......................................... 574,435 706,347 1,319,201 695,993
Class C Shares ......................................... -- -- -- --
---------- ----------- ----------- ---------
13,387,617 42,139,220 5,198,023 3,559,581
---------- ----------- ----------- ---------
Capital shares issued
in connection with an acquisition (Note 13) ............ -- -- -- --
---------- ----------- ----------- ---------
Reinvestment of dividends:
Class A Shares+ ........................................ -- 1,419,527 3,416,709 2,878,160
Class B Shares ......................................... -- 487,470 619,243 481,142
Class C Shares ......................................... -- -- -- --
---------- ----------- ----------- ---------
-- 1,906,997 4,035,952 3,359,302
---------- ----------- ----------- ---------
Cost of shares reacquired:
Class A Shares+ ........................................ (14,805,663) (64,685,031) (5,624,160) (5,622,810)
Class B Shares ......................................... (2,243,075) (9,377,149) (1,151,921) (1,059,645)
Class C Shares ......................................... -- -- -- --
----------- ----------- ----------- ---------
(17,048,738) (74,062,180) (6,776,081) (6,682,455)
----------- ----------- ----------- ---------
Increase (decrease) in net assets resulting from capital
share transactions ..................................... (3,661,121) (30,015,963) 2,457,894 236,428
---------- ----------- ----------- ---------
Total increase (decrease) in net assets .................. (4,159,432) (44,861,221) 3,815,064 354,061
Net Assets:
Beginning of year ........................................ 19,786,239 64,647,460 29,685,092 29,331,031
---------- ----------- ----------- ---------
End of year .............................................. $15,626,807 $19,786,239 $33,500,156 $29,685,092
========== =========== =========== =========
Undistributed net investment income or
accumulated net investment loss ......................... $ (79,734) $ (84,265) $ (171,441) $ (226,027)
========== =========== =========== =========
</TABLE>
+ The U.S. Government Money Fund does not have a designated class of shares.
See Notes to Financial Statements
42
<PAGE>
<TABLE>
<CAPTION>
Global Hard Assets Gold/Resources
Fund Fund
--------------------------- ------------------------------
Year Ended Year Ended Year Ended Year Ended
Decmeber 31, December 31, Decmeber 31, December 31,
1998 1997 1998 1997
--------------------------- ------------------------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss) ............................. $ 254,796 $ 170,654 $ (585,706) $ (571,501)
Realized gain (loss) from security transactions .......... (11,838,909) 3,621,165 (13,823,751) (4,658,071)
Realized gain (loss) from futures contracts and short sales 981,114 287,872 -- --
Realized gain (loss) from options ........................ 29,667 564,720 (872,230) --
Realized gain (loss) from foreign currency transactions .. 259,365 (15,153) (68,135) (80,566)
Change in unrealized appreciation (depreciation)
of foreign currencies and forward foreign currency
contracts (10,926) (5,442) 43,626 (35,415)
Change in unrealized appreciation (depreciation) of
investments, futures, short sales and options .......... (12,074,129) 1,828,284 7,613,527 (44,299,940)
----------- ------------ ----------- -----------
Increase (decrease) in net assets
resulting from operations ................................ (22,399,022) 6,452,100 (7,692,669) (49,645,493)
----------- ------------ ----------- -----------
Dividends and distributions to shareholders from:
Net investment income:
Class A Shares+ ........................................ (351,353) (69,565) -- --
Class B Shares ......................................... (78,071) -- -- --
Class C Shares ......................................... (57,310) -- -- --
Realized gain:
Class A Shares+ ........................................ (65,219) (3,392,877) -- --
Class B Shares ......................................... (13,433) (569,869) -- --
Class C Shares ......................................... (10,454) (459,071) -- --
Tax return of capital:
Class A Shares ......................................... -- -- -- --
Class B Shares ......................................... -- -- -- --
Class C Shares ......................................... -- -- -- --
----------- ------------ ----------- -----------
Total dividends and distributions ....................... (575,840) (4,491,382) -- --
----------- ------------ ----------- -----------
Capital share transactions (Note 5):
Net proceeds from sales of shares:
Class A Shares+ ........................................ 10,330,661 67,488,031 20,425,854 33,264,688
Class B Shares ......................................... 2,521,220 9,516,900 -- --
Class C Shares ......................................... 2,088,807 8,365,075 -- --
----------- ------------ ----------- -----------
14,940,688 85,370,006 20,425,854 33,264,688
----------- ------------ ----------- -----------
Capital shares issued
in connection with an acquisition (Note 13) ............ -- -- -- 3,020,329
----------- ------------ ----------- -----------
Reinvestment of dividends:
Class A Shares+ ........................................ 348,855 2,913,441 -- --
Class B Shares ......................................... 67,976 385,304 -- --
Class C Shares ......................................... 48,859 308,161 -- --
----------- ------------ ----------- -----------
465,690 3,606,906 -- --
----------- ------------ ----------- -----------
Cost of shares reacquired:
Class A Shares+ ........................................ (32,246,447) (38,433,482) (25,486,897) (52,787,184)
Class B Shares ......................................... (4,073,105) (913,311) -- --
Class C Shares ......................................... (4,132,931) (1,976,795) -- --
----------- ------------ ----------- -----------
(40,452,483) (41,323,588) (25,486,897) (52,787,184)
----------- ------------ ----------- -----------
Increase (decrease) in net assets resulting from capital
share transactions ..................................... (25,046,105) 47,653,324 (5,061,043) (16,502,167)
----------- ------------ ----------- -----------
Total increase (decrease) in net assets .................. (48,020,967) 49,614,042 (12,753,712) (66,147,660)
Net Assets:
Beginning of year ........................................ 80,580,638 30,966,596 66,150,715 132,298,375
----------- ------------ ----------- -----------
End of year .............................................. $32,559,671 $80,580,638 $53,397,003 $66,150,715
=========== ============ =========== ===========
Undistributed net investment income or
accumulated net investment loss ......................... $ 6,744 $ (455) $ (640,056) $ (703,399)
=========== ============ =========== ===========
<CAPTION>
International Investors Gold U.S. Government Money
Fund Fund
------------------------------ --------------------------------
Year Ended Year Ended Year Ended Year Ended
Decmeber 31, December 31, Decmeber 31, December 31,
1998 1997 1998 1997
------------------------------ ------------- ------------------
<S> <C> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss) ............................. $ 2,250,149 $ 3,157,009 $ 2,902,109 $ 3,032,256
Realized gain (loss) from security transactions .......... (14,423,140) (3,087,132) 35,613 --
Realized gain (loss) from futures contracts and short sales -- -- -- --
Realized gain (loss) from options ........................ (2,818,392) -- -- --
Realized gain (loss) from foreign currency transactions .. (235,689) (77,798) -- --
Change in unrealized appreciation (depreciation)
of foreign currencies and forward foreign currency
contracts (2,193) (38,150) -- --
Change in unrealized appreciation (depreciation) of
investments, futures, short sales and options .......... 7,266,073 (132,602,352) -- --
------------- -------------- ------------- -------------
Increase (decrease) in net assets
resulting from operations ................................ (7,963,192) (132,648,423) 2,937,722 3,032,256
------------- -------------- ------------- -------------
Dividends and distributions to shareholders from:
Net investment income:
Class A Shares+ ........................................ (2,107,262) (3,043,229) (2,902,109) (3,032,256)
Class B Shares ......................................... -- -- --
Class C Shares ......................................... -- -- --
Realized gain:
Class A Shares+ ........................................ -- (99,162) (35,613) --
Class B Shares ......................................... -- -- -- --
Class C Shares ......................................... -- -- -- --
Tax return of capital:
Class A Shares ......................................... -- (12,911) -- --
Class B Shares ......................................... -- -- -- --
Class C Shares ......................................... -- -- -- --
------------- -------------- ------------- -------------
Total dividends and distributions ....................... (2,107,262) (3,155,302) (2,937,722) (3,032,256)
------------- -------------- ------------- -------------
Capital share transactions (Note 5):
Net proceeds from sales of shares:
Class A Shares+ ........................................ 3,725,426,622 3,623,884,733 3,670,980,599 3,630,786,246
Class B Shares ......................................... -- -- -- --
Class C Shares ......................................... -- 118,370 -- --
------------- -------------- ------------- -------------
3,725,426,622 3,624,003,103 3,670,980,599 3,630,786,246
------------- -------------- ------------- -------------
Capital shares issued
in connection with an acquisition (Note 13) ............ -- -- 7,517,642 --
------------- -------------- ------------- -------------
Reinvestment of dividends:
Class A Shares+ ........................................ 1,512,309 2,309,522 1,495,988 1,557,341
Class B Shares ......................................... -- -- -- --
Class C Shares ......................................... -- -- -- --
------------- -------------- ------------- -------------
1,512,309 2,309,522 1,495,988 1,557,341
------------- -------------- ------------- -------------
Cost of shares reacquired:
Class A Shares+ ........................................ 3,711,174,134) (3,666,968,333) (3,709,422,005) (3,663,391,147)
Class B Shares ......................................... -- -- -- --
Class C Shares ......................................... -- (1,637,306) -- --
------------- -------------- ------------- -------------
(3,711,174,134) (3,668,605,639) (3,709,422,005) (3,663,391,147)
------------- -------------- ------------- -------------
Increase (decrease) in net assets resulting from capital
share transactions ..................................... 15,764,797 (42,293,014) (29,427,776) (31,047,560)
------------- -------------- ------------- -------------
Total increase (decrease) in net assets .................. 5,694,343 (178,096,739) (29,427,776) (31,047,560)
Net Assets:
Beginning of year ........................................ 232,944,326 411,041,065 76,649,948 107,697,508
------------- -------------- ------------- -------------
End of year .............................................. $ 238,638,669 $ 232,944,326 $ 47,222,172 $ 76,649,948
============= ============== ============= =============
Undistributed net investment income or
accumulated net investment loss ......................... $ -- $ 162 -- --
============= ============== ============= =============
</TABLE>
See Notes to Financial Statements
43
<PAGE>
This page intentionally left blank.
44
<PAGE>
<TABLE>
<CAPTION>
Asia Dynasty Fund
- -------------------------------------------------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each year:
Class A
-------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year .......... $7.82 $13.21 $12.40 $12.13 $15.28
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net Investment Loss ....................... (0.01) (0.28) (0.20) (0.02) --
Net Gain (Loss) on Investments
(both Realized and Unrealized) .......... (0.01) (3.82) 1.01 0.40 (2.86)
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ............ (0.02) (4.10) 0.81 0.38 (2.86)
---------- ---------- ---------- ---------- ----------
Less Dividends and Distributions:
From Dividends from Net Investment Income . -- -- -- (0.09) (0.07)
From Distributions from Capital Gains ..... -- (1.15) -- -- (0.22)
From Tax Return of Capital ................ -- (0.14) -- (0.02) --
---------- ---------- ---------- ---------- ----------
Total Dividends and Distributions ........... -- (1.29) -- (0.11) (0.29)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year ................ $7.80 $7.82 $13.21 $12.40 $12.13
========== ========== ========== ========== ==========
Total Return (a) ............................ (0.26%) (32.10%) 6.53% 3.13% (18.72%)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Period (000) ............. $10,685 $12,873 $44,351 $64,275 $83,787
Ratio of Gross Expenses to Average Net Assets 3.13% 2.38% 2.42% 2.03% 1.85%
Ratio of Net Expenses to Average Net Assets . 2.43%(b) 2.38% 2.42% 2.03% 1.85%
Ratio of Net Investment Loss to
Average Net Assets ........................ (0.09%) (0.76%) (0.73%) (0.08%) --%
Portfolio Turnover Rate ..................... 121.96% 200.45% 52.99% 57.06% 51.08%
<CAPTION>
Class B
-------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year .......... $7.63 $13.08 $12.33 $12.09 $15.25
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net Investment Loss ....................... (0.07) (0.30) (0.24) (0.08) (0.06)
Net Gain (Loss) on Investments
(both Realized and Unrealized) .......... (0.02) (3.86) 0.99 0.40 (2.86)
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ............ (0.09) (4.16) 0.75 0.32 (2.92)
---------- ---------- ---------- ---------- ----------
Less Dividends and Distributions:
From Dividends from Net Investment Income . -- -- -- (0.06) (0.02)
From Distributions from Capital Gains ..... -- (1.15) -- -- (0.22)
From Tax Return of Capital ................ -- (0.14) -- (0.02) --
---------- ---------- ---------- ---------- ----------
Total Dividends and Distributions ........... -- (1.29) -- (0.08) (0.24)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year ................ $7.54 $7.63 $13.08 $12.33 $12.09
========== ========== ========== ========== ==========
Total Return (a) ............................ (1.18%) (32.87%) 6.08% 2.65% (19.15%)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Period (000) ............. $4,942 $6,914 $20,296 $27,234 $35,024
Ratio of Gross Expenses to Average Net Assets 3.83% 3.00% 2.86% 2.41% 2.38%
Ratio of Net Expenses to Average Net Assets . 3.14%(b) 3.00% 2.86% 2.41% 2.38%
Ratio of Net Investment Loss to
Average Net Assets ........................ (0.79%) (1.36%) (1.14%) (0.52%) (0.50%)
Portfolio Turnover Rate ..................... 121.96% 200.45% 52.99% 57.06% 51.08%
</TABLE>
- ----------
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the year, reinvestment of dividends and
distributions at net asset value during the year and a redemption on the
last day of the year. A sales charge is not reflected in the calculation of
total dividends and return.
(b) After expenses reduced by a custodian fee arrangement.
See Notes to Financial Statements
45
<PAGE>
<TABLE>
<CAPTION>
Global Balanced Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each year:
Class A
-------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------------
1998 1997 1996 1995 1994
--------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ................. $10.38 $10.37 $10.31 $9.07 $9.53
--------- ---------- --------- ---------- ----------
Income from Investment Operations:
Net Investment Income ............................ 0.02 0.10 0.12 0.07 (a) 0.19 (a)
Net Gain (Loss) on Investments
(both Realized and Unrealized) ................. 2.07 1.43 1.15 1.31 (0.56)
--------- ---------- --------- ---------- ----------
Total from Investment Operations ................... 2.09 1.53 1.27 1.38 (0.37)
--------- ---------- --------- ---------- ----------
Less Dividends and Distributions:
From Dividends from Net Investment Income (d) .... 0.00 (0.08) (0.11) (0.14) (0.09)
From Distribution from Capital Gains ............. (1.61) (1.43) (1.10) -- --
From Tax Return of Capital ....................... (0.08) (0.01) -- -- --
--------- ---------- --------- ---------- ----------
Total Dividends and Distributions .................. (1.69) (1.52) (1.21) (0.14) (0.09)
--------- ---------- --------- ---------- ----------
Net Asset Value, End of Year ....................... $10.78 $10.38 $10.37 $10.31 $9.07
========= ========== ========= ========== ==========
Total Return (b) ................................... 20.65% 14.77% 12.28% 15.30% (3.90%)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Year (000) ...................... $27,461 $24,630 $29,331 $30,632 $13,986
Ratio of Gross Expenses To Average Net Assets ...... 2.32% 2.45% 2.54% 2.69% 2.59%
Ratio of Net Expenses to Average Net Assets ........ 2.00%(c) 2.00%(c) 2.17%(c) 2.69% 1.06%(c)
Ratio of Net Investment Income to Average Net Assets 0.85% 0.85% 1.05% 0.68% 1.99%
Portfolio Turnover Rate ............................ 87.79% 78.07% 114.30% 196.69% 174.76%
Class B
-------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------------
1998 1997 1996 1995 1994
--------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ................. $10.31 $10.32 $10.28 $9.02 $9.53
--------- ---------- --------- ---------- ----------
Income from Investment Operations:
Net Investment Income ............................ 0.00 0.04 0.06 0.01 0.11 (a)
Net Gain (Loss) on Investments
(both Realized and Unrealized) ................. 2.02 1.43 1.14 1.28 (0.57)
--------- ---------- --------- ---------- ----------
Total from Investment Operations ................... 2.02 1.47 1.20 1.29 (0.46)
--------- ---------- --------- ---------- ----------
Less Dividends and Distributions:
From Dividends from Net Investment Income (d) .... 0.00 (0.03) (0.06) (0.03) (0.05)
From Distribution from Capital Gains ............. (1.61) (1.45) (1.10) -- --
From Tax Return of Capital ....................... (0.05) -- -- -- --
--------- ---------- --------- ---------- ----------
Total Dividends and Distributions .................. (1.66) (1.48) (1.16) (0.03) (0.05)
--------- ---------- --------- ---------- ----------
Net Asset Value, End of Year ....................... $10.67 $10.31 $10.32 $10.28 $9.02
========= ========== ========= ========== ==========
Total Return (b) ................................... 20.07% 14.26% 11.49% 14.54% (4.84%)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Year (000) ...................... $6,039 $5,055 $4,932 $6,151 $5,628
Ratio of Gross Expenses To Average Net Assets ...... 3.25% 2.51% 3.19% 3.20% 3.21%
Ratio of Net Expenses to Average Net Assets ........ 2.50%(c) 2.50%(c) 2.71%(c) 3.20% 1.88%(c)
Ratio of Net Investment Income to Average Net Assets 0.36% 0.36% 0.51% 0.14% 1.14%
Portfolio Turnover Rate ............................ 87.79% 78.07% 114.30% 196.69% 174.76%
</TABLE>
- ----------
(a) Based on average shares outstanding.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the year, reinvestment of dividends and
distributions at net asset value during the year and a redemption on the
last day of the year. A sales charge is not reflected in the calculation of
total return.
(c) After expenses reduced by a custodian fee, directed brokerage or Advisory
fee waiver arrangement.
(d) Net of foreign taxes withheld (to be included in income and claimed as a
tax credit on deduction by the shareholder for federal income tax purposes)
of $0.01 for 1997.
See Notes to Financial Statements
46
<PAGE>
<TABLE>
<CAPTION>
Global Hard Assets Fund
- ------------------------------------------------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each period:
Class A
-----------------------------------------------------------------------
For the Period
November 2,
1994(a) to
Year Ended December 31, December 31,
------------------------------------------------------- ------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ... $15.50 $14.42 $10.68 $9.41 $9.53
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net Investment Income (Loss) ......... 0.10 0.05 0.15 0.32 (e) 0.010(e)
Net Gain (Loss) on Investments
(both Realized and Unrealized) ..... (5.09) 2.01 4.70 1.57 (0.115)
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ....... (4.99) 2.06 4.85 1.89 (0.105)
---------- ---------- ---------- ---------- ----------
Less Dividends and Distributions:
From Dividends from
Net Investment Income .............. (0.15) (0.02) (0.14) (0.62) (0.015)
From Distributions from Capital Gains (0.02) (0.96) (0.95) -- --
From Tax Return of Capital ........... -- -- (0.02) -- --
---------- ---------- ---------- ---------- ----------
Total Dividends and Distributions ...... (0.17) (0.98) (1.11) (0.62) (0.015)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period ......... $10.34 $15.50 $14.42 $10.68 $9.41
========== ========== ========== ========== ==========
Total Return (b) ....................... (32.25%) 14.29% 45.61% 20.09% (1.10%)
- ------------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Period (000) ........ $22,969 $61,341 $27,226 $3,820 $1,419
Ratio of Gross Expenses to
Average Net Assets (c) ................. 2.11% 2.00% 2.63% 4.05% 3.40%(d)
Ratio of Net Expenses to
Average Net Assets ..................... 2.00% 1.97% 0.72% 0.00% 0.15%(d)
Ratio of Net Investment Income (Loss) to
Average Net Assets ..................... 0.58% 0.36% 1.45% 3.08% 0.84%(d)
Portfolio Turnover Rate ................ 167.79% 118.10% 163.91% 179.33% 0.00%
<CAPTION>
Class B
------------------------------------------
For the Period
April 24,
Year Ended 1996(a) to
December 31, December 31,
------------------------- ------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ... $15.60 $14.50 $12.55
---------- ---------- ----------
Income from Investment Operations:
Net Investment Income (Loss) ......... 0.01 (0.01) 0.11
Net Gain (Loss) on Investments
(both Realized and Unrealized) ..... (5.08) 2.00 2.95
---------- ---------- ----------
Total from Investment Operations ....... (5.07) 1.99 3.06
---------- ---------- ----------
Less Dividends and Distributions:
From Dividends from
Net Investment Income .............. (0.14) -- (0.14)
From Distributions from Capital Gains (0.02) (0.89) (0.95)
From Tax Return of Capital ........... -- -- (0.02)
---------- ---------- ----------
Total Dividends and Distributions ...... (0.16) (0.89) (1.11)
---------- ---------- ----------
Net Asset Value, End of Period ......... $10.37 $15.60 $14.50
========== ========== ==========
Total Return (b) ....................... (32.55%) 13.72% 24.55%
- ------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Period (000) ........ $5,580 $10,541 $1,806
Ratio of Gross Expenses to
Average Net Assets (c) ................. 2.81% 2.73% 3.27%
Ratio of Net Expenses to
Average Net Assets ..................... 2.50% 2.50% 1.64%(d)
Ratio of Net Investment Income (Loss) to
Average Net Assets ..................... 0.12% (0.13%) 0.53%(d)
Portfolio Turnover Rate ................ 167.79% 118.10% 163.91%
<CAPTION>
Class C
-----------------------------------------------------------------------
For the Period
November 2,
1994(a) to
Year Ended December 31, December 31,
------------------------------------------------------- ------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ... $15.64 $14.52 $10.76 $9.41 $9.53
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net Investment Income (Loss) ......... 0.01 (0.01) 0.11 0.34 0.01(e)
Net Gain (Loss) on Investments
(both Realized and Unrealized) ..... (5.09) 2.00 4.73 1.63 (0.12)
---------- ---------- ---------- ---------- ----------
Total from Investment Operations ....... (5.08) 1.99 4.84 1.97 (0.11)
---------- ---------- ---------- ---------- ----------
Less Dividends and Distributions:
From Dividends from
Net Investment Income .............. (0.14) -- (0.11) (0.62) (0.01)
From Distributions from Capital Gains (0.02) (0.87) (0.95) -- --
From Tax Return of Capital ........... -- -- (0.02) -- --
---------- ---------- ---------- ---------- ----------
Total Dividends and Distributions ...... (0.16) (0.87) (1.08) (0.62) (0.01)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period ......... $10.40 $15.64 $14.52 $10.76 $9.41
========== ========== ========== ========== ==========
Total Return (b) ....................... (32.53%) 13.71% 45.18% 20.94% (1.20%)
- ------------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Period (000) ........ $4,011 $8,698 $1,935 $181 $8
Ratio of Gross Expenses to
Average Net Assets (c) ................. 3.00% 2.94% 6.02% 37.88% 39.49%(d)
Ratio of Net Expenses to
Average Net Assets ..................... 2.50% 2.50% 1.31% 0.00% 0.56%(d)
Ratio of Net Investment Income (Loss) to
Average Net Assets ..................... 0.11% (0.15)% 0.84% 3.30% 0.53%(d)
Portfolio Turnover Rate ................ 167.79% 118.10% 163.91% 179.33% 0.00%
</TABLE>
- ----------
(a) Commencement of operations.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of 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 for periods of less than one year are not
annualized.
(c) Had the Adviser not assumed expenses or had expenses not been reduced by
custodian fee and directed brokerage arrangements.
(d) Annualized.
(e) Based on average shares outstanding.
See Notes to Financial Statements
47
<PAGE>
<TABLE>
<CAPTION>
Gold/Resources Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each year:
Class A
----------------------------------------------------------------------------
Year Ended December 31,
----------------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ................ $3.47 $5.72 $5.58 $5.35 $6.34
----------- ----------- ----------- ----------- -----------
Income from Investment Operations:
Net Investment Loss ............................. (0.04) (0.04) (0.06) (0.03) (0.02)
Net Gain (Loss) on Investments
(both Realized and Unrealized) ................ (0.39) (2.21) 0.20 0.26 (0.97)
----------- ----------- ----------- ----------- -----------
Total from Investment Operations .................. (0.43) (2.25) 0.14 0.23 (0.99)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Year ...................... $3.04 $3.47 $5.72 $5.58 $5.35
=========== =========== =========== =========== ===========
Total Return (a) .................................. (12.39%) (39.34%) 2.51% 4.30% (15.60%)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Year (000) ..................... $53,397 $66,151 $132,298 $155,974 $186,091
Ratio of Gross Expenses to Average Net Assets ..... 2.24% 1.87% 1.71% 1.81% 1.52%
Ratio of Net Expenses to Average Net Assets ....... 2.21%(b) 1.87% 1.71% 1.81% 1.52%
Ratio of Net Investment Loss to
Average Net Assets .............................. (0.98%) (0.57%) (0.75%) (0.44%) (0.30%)
Portfolio Turnover Rate ........................... 79.99% 32.46% 12.95% 6.16% 13.75%
</TABLE>
- ----------
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the year, reinvestment of dividends and
distributions at net asset value during the year and a redemption on the
last day of the year. A sales charge is not reflected in the calculation of
total return.
(b) After expenses reduced by a custodian fee and directed brokerage
arrangement.
See Notes to Financial Statements
48
<PAGE>
<TABLE>
<CAPTION>
International Investors Gold Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each year:
Class A
---------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ............ $7.54 $11.90 $13.35 $15.21 $16.08
----------- ----------- ----------- ----------- -----------
Income from Investment Operations:
Net Investment Income ....................... 0.06 0.09 0.05 0.08 0.19
Net Gain (Loss) on Investments
(both Realized and Unrealized) ............ (0.95) (4.36) (1.29) (1.44) (0.36)
----------- ----------- ----------- ----------- -----------
Total from Investment Operations .............. (0.89) (4.27) (1.24) (1.36) (0.17)
----------- ----------- ----------- ----------- -----------
Less Dividends and Distributions:
From Dividends from Net Investment Income (a) (0.06) (0.09) (0.07) (0.10) (0.18)
From Distributions from Capital Gains ....... -- -- (0.14) (0.38) (0.52)
From Tax Return of Capital .................. -- -- -- (0.02) --
----------- ----------- ----------- ----------- -----------
Total Dividends and Distributions ............. (0.06) (0.09) (0.21) (0.50) (0.70)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Year .................. $6.59 $7.54 $11.90 $13.35 $15.21
=========== =========== =========== =========== ===========
Total Return (b) .............................. (11.87%) (36.00%) (9.37%) (8.93%) (1.04%)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Year (000) ................. $238,639 $232,944 $409,331 $519,795 $634,808
Ratio of Gross Expenses to Average Net Assets . 1.78% 1.52% 1.43% 1.42% 1.15%
Ratio of Net Expenses to Average Net Assets ... 1.76%(c) 1.47%(c) 1.43% 1.42% 1.15%
Ratio of Net Investment Income to
Average Net Assets ........................ 0.99% 0.90% 0.36% 0.55% 1.23%
Portfolio Turnover Rate ....................... 86.65% 19.99% 12.45% 4.10% 7.08%
</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 1998 and 1997, $0.01 for 1996, $0.03 for 1995 and $0.07 for 1994.
(b) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the year, reinvestment of dividends and
distributions at net asset value during the year and a redemption on the
last day of the year. A sales charge is not reflected in the calculation of
total return.
(c) After expenses reduced by a custodian fee and directed brokerage
arrangement.
See Notes to Financial Statements
49
<PAGE>
<TABLE>
<CAPTION>
U.S. Government Money Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each year:
Year Ended December 31,
----------------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ........... $1.00 $1.00 $1.00 $1.00 $1.00
------------- ------------- ------------- ------------- -------------
Income from Investment Operations:
Net Investment Income ...................... 0.0388 0.0377 0.0385 0.0456 0.0311
Less Distributions:
From Net Investment Income ................. (0.0388) (0.0377) (0.0385) (0.0456) (0.0311)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Year ................. $1.00 $1.00 $1.00 $1.00 $1.00
============= ============= ============= ============= =============
Total Return ................................. 3.88% 3.77% 3.85% 4.56% 3.11%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Year (000) ................ $47,222 $76,650 $107,698 $70,130 $47,078
Ratio of Gross Expenses to Average Net Assets 1.20% 1.28% 1.23% 1.25% 1.12%
Ratio of Net Investment Income to
Average Net Assets ......................... 3.89% 3.91% 4.02% 4.45% 3.07%
</TABLE>
See Notes to Financial Statements
50
<PAGE>
This page intentionally left blank.
51
<PAGE>
Van Eck Funds
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 Trust
operates as a series fund currently comprised of six portfolios: Asia Dynasty
Fund, Global Balanced Fund, Global Hard Assets Fund, Gold/Resources Fund,
International Investors Gold Fund and U.S. Government Money Fund (the "Funds").
Asia Dynasty Fund, Gold/Resources Fund, International Investors Gold Fund and
U.S. Government Money Fund are classified as diversified funds under the
Investment Company Act of 1940, as amended. Global Balanced Fund and Global Hard
Assets Fund are non-diversified funds. The following is a summary of significant
accounting policies consistently followed by the Funds in the preparation of
their 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 management to
make estimates and assumptions that effect the reported amounts in the financial
statements. Actual results could differ from those estimates.
A. Security Valuation--Securities traded on national or foreign exchanges are
valued at the last sales prices reported at the close of business on the
last business day of the year. Over-the-counter securities and listed
securities for which no sale was reported are valued at the mean of the bid
and asked prices. Short-term obligations are valued at amortized cost which
with accrued interest approximates value. Forward foreign currency
contracts are valued at the spot currency rate plus an amount ("points")
which reflects the differences in interest rates between the U.S. and
foreign markets. Securities for which quotations are not available are
stated at fair value as determined by the Board of Trustees.
B. Federal Income Taxes--It is each Funds' policy to comply with the
provisions of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of their taxable income to their
shareholders. Therefore, no federal income tax provision is required.
C. Currency Translation--Assets and liabilities denominated in foreign
currencies and commitments under forward foreign currency contracts are
translated into U.S. dollars at the mean of the quoted bid and asked prices
of such currencies. Purchases and sales of investments are translated at
the exchange rates prevailing when such investments were acquired or sold.
Income and expenses are translated at the exchange rates prevailing when
accrued. The portion of realized and unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange
rates is not separately disclosed. Realized gains or losses and the
appreciation (depreciation) attributable to foreign currency fluctuations
on other foreign currency denominated assets and liabilities are recorded
as net realized or unrealized gains and losses from foreign currency
transactions, respectively.
D. Other--Security transactions are accounted for on the date the securities
are purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned.
E. Distributions to Shareholders--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 such amounts
determined in accordance with generally accepted accounting principles.
For the year ended December 31, 1998, the effect of these differences,
which were primarily due to different treatment of net operating losses and
foreign currency transactions as follows:
<TABLE>
<CAPTION>
Accumulated
Aggregate Net Accumulated
Paid in Investment Realized
Fund Capital Income Gain/Loss
- ----- ------------ ----------- ----------
<S> <C> <C> <C>
Asia Dynasty Fund............................. $(325,827) $ 54,790 $271,037
Global Balanced Fund.......................... (294,135) 19,608 274,527
Global Hard Assets Fund....................... 8,976 239,137 (248,113)
Gold/Resources Fund........................... (717,184) 649,049 68,135
International Investors Gold Fund............. (110,851) (143,049) 253,900
</TABLE>
F. Deferred Organization Costs--Deferred organization costs are being
amortized over a period of five years.
Use of Derivative Instruments
G. Option Contracts--The Funds (except U.S. Government Money Fund) may invest,
for hedging and other purposes, in call and put options on securities,
currencies and commodities. Call and put options give the Funds 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 Funds may incur additional risk to the extent the value of
the underlying instrument does not correlate with the movement of the
option value.
The Funds (except U.S. Government Money Fund) may also write call or put
options. As the writer of an option, the Funds receive a premium. The Funds
keep the premium whether or not the option is exercised. The premium will
be recorded, upon expiration of the option, as a short-term capital gain.
If the option is exercised, the Funds must sell, in the case of a written
call, or buy, in the case of a written put, the underlying instrument at
the exercise price. The Funds may write only covered puts and calls. A
covered call option is an option in which the Funds own the instrument
underlying the call. A covered call sold by the Funds expose them during
the term of the option to possible loss of opportunity to realize
appreciation in the market price of the underlying instrument or to
possible continued holding of an underlying instrument which might
otherwise have been sold to protect against a decline in the market price
of the underlying instrument. A covered put exposes the Funds during the
term of the option to a decline in price of the underlying instrument. A
put option sold by the Funds is covered when, among other things, cash or
short-term liquid securities are placed in a segregated account to fulfill
the obligations undertaken. The Funds may incur additional risk from
investments in written currency options if there are unanticipated
movements in the underlying currencies.
52
<PAGE>
Van Eck Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
H. Short Sales--The Global Hard Assets Fund may make short sales of equity
securities. A short sale occurs when the Fund sells a security which it
does not own by borrowing it from a broker. In the event that the value of
the security that the Fund sold short declines, the Fund will gain as it
repurchases the security in the market at the lower price. If the price of
the security increases, the Fund will suffer a loss as it will have to
repurchase the security at the higher price. Short sales may incur higher
transaction costs than regular securities transactions.
Cash is deposited in a segregated account with brokers, maintained by the
Fund, for its short sales. At December 31, 1998, amounts deposited in the
segregated accounts amounted to $1,105,198. Proceeds from securities sold
short are reported as liabilities and are marked to market. Gains and
losses are classified as realized when short positions are closed. At
December 31, 1998, the Fund had realized gain of $795,350 and unrealized
depreciation of $277,287 on short sales of securities.
I. Futures--The Funds (except U.S. Government Money Fund) may buy and sell
financial futures contracts which may include security and interest-rate
futures, stock and bond index futures contracts and foreign currency
futures contracts. The Funds may engage in these transactions for hedging
purposes and (except for Gold/Resources Fund) for other purposes. Global
Hard Assets Fund may also buy and sell commodity futures contracts, which
may include futures on natural resources and natural resource indices. A
security or interest-rate futures contract is an agreement between two
parties to buy or sell a specified security at a set price on a future
date. An index futures contract is an agreement to take or make delivery
of an amount of cash based on the difference between the value of the
index at the beginning and at the end of the contract period. A foreign
currency futures contract is an agreement to buy or sell a specified
amount of currency for a set price on a future date. A commodity futures
contract is an agreement to take or make delivery of a specified amount of
a commodity, such as gold, at a set price on a future date.
J. Structured Notes--The Funds may invest in indexed securities whose value
is linked to one or more currencies, interest rates, commodities, or
financial or commodity indices. When the Fund purchases a structured note
(a non-publicly traded indexed security entered into directly between two
parties) it will make a payment of principal to the counterparty. The Fund
will purchase structured notes only from counterparties rated A or better
by S&P, Moody's or another nationally recognized statistical rating
organization. Van Eck Associates Corp. will monitor the liquidity of
structured notes under supervision of the Board of Trustees and structured
notes determined to be illiquid will be aggregated with other illiquid
securities and limited to 15% of the net assets of the Fund.
Indexed securities may be more volatile than the underlying instrument
itself, and present many of the same risks as investing in futures and
options. Indexed securities are also subject to credit risks associated
with the issuer of the security with respect to both principal and
interest. At December 31, 1998, there were the following index securities:
<TABLE>
<CAPTION>
% of Net
Value Assets
----------- -----------
<S> <C> <C>
Global Hard Assets Fund:
Business Development Bank of Canada
Yen/Gold............................................ $ 928,730 2.9%
Morgan Guaranty Trust Co. Gold Silver
Ratio Index Note.................................... 1,374,660 4.2%
International Investors Gold Fund:
Business Development Bank of Canada
Yen/Gold............................................ 5,854,800 2.5%
</TABLE>
Note 2--Van Eck Associates Corporation (the "Adviser") earns fees for investment
management and advisory services. The Asia Dynasty Fund and Global Balanced Fund
each pay the Adviser a monthly fee at the annual rate of .75% of average daily
net assets. The Global Hard Assets Fund pays the Adviser a monthly fee at the
annual rate of 1% of average daily net assets, a portion of which is paid to the
Adviser for accounting and administrative services it provides to the Fund. The
Gold/Resources and International Investors Gold Funds each pay the Adviser a
monthly fee at the annual rate of .75 of 1% of the first $500 million of average
daily net assets of the Fund, .65 of 1% of the next $250 million of average
daily net assets and .50 of 1% of average daily net assets in excess of $750
million. The U.S. Government Money Fund pays the Adviser a monthly fee at the
annual rate of .50 of 1% of the first $500 million of average daily net assets,
.40 of 1% of the next $250 million of average daily net assets and .375 of 1% of
average daily net assets in excess of $750 million.
In accordance with the advisory agreement, the Funds reimbursed Van Eck
Associates Corporation for costs incurred in connection with certain
administrative and operating functions.
For the year ended December 31, 1998, the Adviser agreed to assume expenses
exceeding 2% of average daily net assets for Class A shares and 2.5% of average
daily net assets for Class B shares for the Global Balanced Fund. Expenses were
reduced by $70,747 under this agreement. For the year ended December 31, 1998,
the Adviser agreed to assume expenses exceeding 2% of average daily net assets
for Class A shares and 2.5% of average daily net assets for Class B and C
shares, for the Global Hard Assets Fund. Expenses were reduced by $101,502 under
this agreement.
Van Eck Associates Corporation also performs accounting and administrative
services for Asia Dynasty Fund, Global Balanced Fund, Gold/Resources Fund and
International Investors Gold Fund and is paid at an annual rate of .25 of 1% of
average daily net assets (Asia Dynasty Fund and Global Balanced Fund) or at an
annual rate of .25 of 1% of the first $750 million of each Fund's average daily
net assets and .20 of 1% of average daily net assets in excess of $750 million
(Gold/Resources Fund and International Investors Gold Fund).
The Funds have a fee arrangement based on cash balances left on deposit with the
custodian which reduces operating expenses. For the year ended December 31,
1998, the portion of expenses reduced under this arrangement amounted to
$107,754 for the Asia Dynasty Fund, $52,885 for the Global Balanced Fund,
$15,919 for the Gold Resources Fund, $13,083 for the International Investors
Gold Fund.
The Funds (except the U.S. Government Money Fund) had some of the portfolio
trades directed to a broker-dealer who, in return, agreed to pay a portion of
the Funds' expenses. For the year
53
<PAGE>
Van Eck Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
ended December 31, 1998, the portion of expenses reduced by this directed
brokerage arrangement amounted to $2,253 for the Gold/Resources Fund and $22,712
for the International Investors Gold Fund.
For the year ended December 31, 1998, Van Eck Securities Corporation (the
Distributor) received commissions on sales of Class A shares and paid
commissions to other dealers as follows: Asia Dynasty Fund- $5,621 and $787,
respectively; Global Balanced Fund- $5,608 and $1.470, respectively; Global Hard
Assets Fund- $162,148 and $26,039, respectively; Gold/Resources Fund- $97,646
and $24,848, respectively and International Investors Gold Fund- $195,989 and
$60,882, respectively. 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--Investments
For federal income tax purposes, the identified cost of investments owned at
December 31, 1998 is $13,177,794, $24,307,429, $40,348,662, $55,187,744 and
$186,896,518 for the Asia Dynasty Fund, Global Balanced Fund, Global Hard Assets
Fund, Gold/Resources Fund and International Investors Gold Fund, respectively.
The U.S. Government Money Fund's identified cost for federal income taxes is the
same for financial reporting purposes. As of December 31, 1998, gross unrealized
gains and losses were as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Unrealized Unrealized Unrealized
Gains Losses Gain (Loss)
------------ ----------- -----------
<S> <C> <C> <C>
Asia Dynasty Fund............................. $ 3,185,896 $ 731,846 $ 2,454,050
Global Balanced Fund.......................... 9,330,918 370,283 8,960,635
Global Hard Assets Fund....................... 1,294,318 8,960,892 (7,666,574)
Gold/Resources Fund........................... 6,705,185 10,241,078 (3,535,893)
International Investors Gold Fund............. 46,662,990 27,730,484 18,932,506
</TABLE>
At December 31, 1998 the Funds had the following capital loss carryforward
available to offset future capital gains; Asia Dynasty Fund $2,192,520 expiring
December 31, 2006; Global Hard Assets Fund $10,038,525 expiring December 31,
2006; Gold/Resources Fund $56,893,160 expiring between December 31, 1999 through
December 31, 2006; International Investors Gold Fund $13,754,006 expiring
between December 31, 2005 through December 31, 2006.
Purchases and sales of investment securities for the year ended December 31,
1998, other than short-term obligations, were as follows:
<TABLE>
<CAPTION>
Proceeds
Cost of from
Investment Investment
Securities Securities
Purchased Sold
------------ ------------
<S> <C> <C>
Asia Dynasty Fund..................................... $ 17,288,976 $ 16,173,118
Global Balanced Fund.................................. 26,214,149 26,727,432
Global Hard Assets Fund............................... 84,774,343 97,626,075
Gold/Resources Fund................................... 42,623,483 49,413,647
International Investors Gold Fund..................... 158,694,753 175,906,919
</TABLE>
Transactions in call and put options written for the year ended December 31,
1998 were as follows:
Number of
Contracts Premiums
--------- ---------
Global Balanced Fund:
Options outstanding at beginning of year ......... -- $ --
Options written .................................. 33,800 14,495
Options expired .................................. (33,800) (14,495)
--------- ---------
Options outstanding at end of year ............... -- $ --
========= =========
Global Hard Assets Fund:
Options outstanding at beginning of year ......... 180 $ 52,646
Options written .................................. 1,054 162,997
Options exercised ................................ (555) (75,414)
Options closed ................................... (480) (81,470)
Options expired .................................. (199) (58,759)
--------- ---------
Options outstanding at end of year ............... -- $ --
========= =========
Note 4--Pursuant to Rule 12b-1 Plans of Distribution (the Plans) all of the
Funds (except International Investors Gold Fund) are authorized to incur
distribution expenses which will principally be payments to securities dealers
who have sold shares and serviced 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 Funds. The amount paid under the Plans in any one year is limited to .50%
of average daily net assets (except for Gold Resources Fund and U.S. Government
Money Fund which is 0.25%) for Class A shares and 1% of average daily net assets
for Classes B and C shares (the Annual Limitations). For Class C shares, the
Funds will pay to the selling broker at the time of sale 1% of the amount of the
purchase. Such Class C 12b-1 fees will be expensed by the Funds over the course
of the first twelve months from the time of purchase. Should the payments to the
brokers made by the Funds exceed, on an annual basis, 1% of average daily net
assets, VESC will reimburse the Funds for any excess. Class C shareholders
redeeming within one year of purchase will be subject to a 1% redemption charge
which will be retained by the Funds. After the first year, the 1% 12b-1 fee will
be paid to VESC which will retain a portion of the fee for distribution services
and pay the remainder to brokers.
Distribution expenses incurred under the Plans that have not been paid because
they exceed the Annual Limitation may be carried forward to future years and
paid by the Funds within the Annual Limitation.
VESC has waived its right to reimbursement of the carried forward amounts
incurred through December 31, 1999 in the event the Plans are terminated, unless
the Board of Trustees determines that reimbursement of the carried forward
amounts is appropriate.
The accumulated amount of excess distribution expenses incurred over the Annual
Limitations as of December 31, 1998, were as follows: Asia Dynasty Fund-
$1,191,382 for Class A shares and $1,484,459 for Class B shares; Global Balanced
Fund- $858,265 for Class A shares and $413,473 for Class B shares; Global Hard
Assets Fund- $857,103 for Class A shares, $93,443 for Class B shares and
$277,152 for Class C shares.
54
<PAGE>
Van Eck Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Note 5--Shares of Beneficial Interest Issued and Redeemed (unlimited number of
$.001 par value shares authorized):
Asia Dynasty Fund
----------------------------------
Year Ended Year Ended
December 31, December 31,
1998 1997
-------------- --------------
Class A
Shares sold 1,999,713 3,318,502
Shares reinvested -- 181,760
-------------- --------------
1,999,713 3,500,262
Shares reacquired (2,275,305) (5,211,712)
-------------- --------------
Net decrease (275,592) (1,711,450)
============== ==============
Class B
Shares sold 84,734 77,616
Shares reinvested -- 63,889
-------------- --------------
84,734 141,505
Shares reacquired (335,960) (786,465)
-------------- --------------
Net decrease (251,226) (644,960)
============== ==============
Global Balanced Fund
----------------------------------
Year Ended Year Ended
December 31, December 31,
1998 1997
-------------- --------------
Class A
Shares sold 346,394 254,371
Reinvestment of dividends 324,735 275,587
-------------- --------------
671,129 529,958
Shares reacquired (495,431) (511,329)
-------------- --------------
Net increase 175,698 18,629
============== ==============
Class B
Shares sold 117,857 62,268
Reinvestment of dividends 59,495 46,594
-------------- --------------
177,352 108,862
Shares reacquired (101,591) (96,388)
-------------- --------------
Net increase 75,761 12,474
============== ==============
Global Hard Assets Fund
----------------------------------
Year Ended Year Ended
December 31, December 31,
1998 1997
-------------- --------------
Class A
Shares sold 738,118 4,256,903
Shares reinvested 31,509 187,935
-------------- --------------
769,627 4,444,838
Shares reacquired (2,507,005) (2,375,388)
-------------- --------------
Net increase (decrease) (1,737,378) 2,069,450
============== ==============
Class B
Shares sold 182,498 581,566
Shares reinvested 6,161 24,699
-------------- --------------
188,659 606,265
Shares reacquired (326,389) (54,979)
-------------- --------------
Net increase (decrease) (137,730) 551,286
============== ==============
Class C
Shares sold 149,229 530,380
Shares reinvested 4,414 19,703
-------------- --------------
153,643 550,083
Shares reacquired (323,996) (127,212)
-------------- --------------
Net increase (decrease) (170,353) 422,871
============== ==============
Gold/Resources Fund
----------------------------------
Year Ended Year Ended
December 31, December 31,
1998 1997
-------------- --------------
Class A
Shares sold 6,268,313 6,851,960
Shares issued in connection with
an acquisition -- 747,606
-------------- --------------
6,268,313 7,599,566
Shares reacquired (7,783,650) (11,649,413)
-------------- --------------
Net decrease (1,515,337) (4,049,847)
============== ==============
International Investors Gold Fund
----------------------------------
Year Ended Year Ended
December 31, December 31,
1998 1997
-------------- --------------
Class A
Shares sold 521,796,216 363,779,256
Shares reinvested 211,708 249,835
-------------- --------------
522,007,924 364,029,091
Shares reacquired (516,717,224) (367,513,556)
-------------- --------------
Net increase (decrease) 5,290,700 (3,484,465)
============== ==============
U.S. Government Money Market Fund
----------------------------------
Year Ended Year Ended
December 31, December 31,
1998 1997
-------------- --------------
Shares sold 3,670,980,599 3,630,786,246
Shares issued in connection with
an acquisition 7,517,642 --
Shares reinvested 1,495,988 1,557,341
-------------- --------------
3,679,994,229 3,632,343,587
Shares reacquired (3,709,422,005) (3,663,391,147)
-------------- --------------
Net decrease (29,427,776) (31,047,560)
============== ==============
Note 6--Forward Foreign Currency Contracts--The Funds (except U.S. Government
Money Fund) may buy and sell forward foreign currency contracts to settle
purchases and sales of foreign denominated securities. In addition, the Funds
(except U.S. Government Money Fund) may enter into forward 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, 1998, the Funds had the following outstanding
forward foreign currency contracts.
<TABLE>
<CAPTION>
Value at Unrealized
Settlement Current Appreciation
Contracts Date Value (Depreciation)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asia Dynasty
Foreign Currency Purchase Contract:
IDR 667,735 expiring 1/04/99 $ 8,000 $ 8,000 $ 0
==========
Global Balanced Fund
Foreign Currency Purchase Contracts:
CAD 696,000 expiring 1/25/99 $ 454,506 $ 450,195 $ 4,311
DEM 1,073,385 expiring 1/22/99 645,091 645,084 7
ESP 66,292,000 expiring 1/22/99 467,593 458,283 9,310
FIM 1,690,000 expiring 1/22/99 331,817 326,886 4,931
FRF 896,000 expiring 1/22/99 160,468 160,723 (255)
GBP 32,000 expiring 1/13/99 53,034 53,872 (838)
JPY 431,000 expiring 1/13/99 3,808 3,754 54
NLG 174,000 expiring 1/22/99 92,664 92,845 (181)
----------
17,339
----------
</TABLE>
55
<PAGE>
Van Eck Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Forward Foreign Currency Contracts (continued)
<TABLE>
<CAPTION>
Value at Unrealized
Settlement Current Appreciation
Contracts Date Value (Depreciation)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Foreign Currency Sale Contracts:
ATS 3,352,000 expiring 1/22/99 $ 286,417 $ 286,496 $ 79
AUD 588,000 expiring 1/20/99 360,030 372,204 12,174
DEM 603,000 expiring 1/22/99 362,395 362,286 (109)
ESP 72,242 expiring 1/04/99 509 508 (1)
FRF 896,000 expiring 1/22/99 160,468 160,602 134
GBP 423,000 expiring 1/13/99 701,049 701,757 708
ITL 1,349,798,000 expiring 1/22/99 818,116 824,314 6,198
JPY 213,355,275 expiring 1/04/99- 1/19/99 1,885,721 1,821,727 (63,994)
NLG 174,000 expiring 1/22/99 92,664 92,345 (319)
SEK 3,020,000 expiring 1/13/99 372,272 389,173 16,901
----------
(28,229)
----------
$ (10,890)
==========
Global Hard Assets
Foreign Currency Purchase Contracts:
AUD 241,543 expiring 1/04/99-1/08/99 $ 162,930 $ 163,331 $ (401)
GBP 45,273 expiring 1/08/99 75,074 75,254 (180)
----------
(581)
Foreign Currency Sale Contract:
SEK 4,275,135 expiring 1/07/99 $ 526,187 $ 524,235 (1,952)
----------
$ (2,533)
==========
International Investors Gold Fund
Foreign Currency Purchase Contracts:
AUD 1,136,095 expiring 1/04/99 -1/08/99 $ 696,365 $ 694,723 $ (1,642)
==========
</TABLE>
Note 7--Trustee Deferred Compensation Plan
The Trust established a Deferred Compensation Plan (the Plan) for Trustees.
Commencing January 1, 1996, the Trustees can elect to defer receipt of their
trustee fees until retirement, disability or termination from the board. The
Funds 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. The
Funds have elected to show this deferred liability net of the corresponding
asset for financial statement purposes. The Plan has been approved by the
Internal Revenue Service.
As of December 31, 1998 the total liability portion of the Plan is as follows:
Asia Dynasty Fund-$10,154, Global Balanced Fund-$8,063, Global Hard Assets
Fund-$11,822, Gold/Resources Fund-$23,520, International Investors Gold
Fund-$80,338 and U.S. Government Money Fund-$23,813.
Note 8--Restricted Securities
The following securities are restricted as to sale and deemed to be illiquid:
<TABLE>
<CAPTION>
Percent of
Dates Net Assets
Acquired Cost Value at 12/31/98
-------- ---- ----- -----------
<S> <C> <C> <C> <C>
Global Hard Assets Fund
AltaGas Service Inc.
(Special Warrants
expiring 6/30/99) 4/23/98 $250,480 $234,324 0.7%
Khanty-Mansiysk Oil
Co. 1/31/97 549,995 660,000 1.7%
</TABLE>
Note 9--Schedule of Affiliated Company Transactions:
Transactions with affiliates (as defined by the Investment Company Act of 1940)
for the year ended December 31, 1998:
Gold/ International
Resources Investors
Fund Gold Fund
--------- -------------
Piedmont Mining Co.
12/31/97 Share Balance 1,000,000 1,270,000
Purchases:
Shares -- --
Cost -- --
Sales:
Shares -- --
Cost -- --
Realized Gain (Loss)
12/31/98 Share Balance 1,000,000 1,270,000
Market Value $ 37,500 $ 47,625
Dividend Income -- --
Note 10--Collateral for repurchase agreements, the value of which must be at
least 102% of the underlying debt obligation, plus accrued interest, is held by
the Funds' custodian. In the remote chance the counterparty should fail to
complete the repurchase agreement, realization and retention of the collateral
may be subject to legal proceedings and the Funds would become exposed to market
fluctuation on the collateral.
Note 11--Acquisitions
Gold/ Resources Fund:
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 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.
U.S. Government Money Fund:
As of the close of business on April 24, 1998, the Fund acquired all the net
assets of the Van Eck/Chubb Money Market Fund pursuant to a plan of
reorganization approved by the Van Eck/Chubb Money Market Fund shareholders on
April 16, 1998. The acquisition was accomplished by a tax-free exchange of
7,517,642 shares of U.S. Government Money Fund (valued at $7,517,642) for the
7,517,642 shares of Van Eck/Chubb Money Market Fund outstanding on April 24,
1998. Van Eck/Chubb Money Market Fund's net assets at that date, $7,517,642,
were combined with those of U.S. Government Money Fund. The aggregate net assets
of U.S. Government Money Fund and Van Eck/Chubb Money Market Fund before the
acquisition were $32,921,989 and $7,517,642, respectively.
56
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Van Eck Funds
Report of Independent Accountants
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To the Shareholders and Board of Trustees of the Van Eck Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Van Eck Funds (comprising of
the Asia Dynasty Fund, Global Balanced Fund, Global Hard Assets Fund,
Gold/Resources Fund, International Investors Gold Fund and the U.S. Government
Money Fund) (hereafter referred to as the "Funds") at December 31, 1998, and the
results of their operations, the changes in their net assets and the financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
New York, New York
February 19, 1999
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[GRAPHIC]
Investment Adviser: Van Eck Associates Corporation
Distributor: Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016 www.vaneck.com
Account Assistance: (800) 544-4653
This report must be accompanied or preceded by a Van Eck Global Prospectus,
which includes more complete information such as charges and expenses and the
risks associated with international investing, including currency fluctuations
or controls, expropriation, nationalization and confiscatory taxation. Please
read the prospectus carefully before you invest.
