N-CSR 1 c30378_n-csr.txt ============================= OMB APPROVAL ============================= OMB Number: 3235-0570 Expires: Nov. 30, 2005 Estimated average burden hours per response: 5.0 ============================= UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-04297 VAN ECK FUNDS (Exact name of registrant as specified in charter) 99 Park Avenue, New York, NY 10016 (Address of principal executive offices) (Zip code) Van Eck Associates Corporation 99 PARK AVENUE, NEW YORK, NY 10016 (Name and address of agent for service) Registrant's telephone number, including area code: (212) 687-5200 Date of fiscal year end: DECEMBER 31 Date of reporting period: DECEMBER 31, 2003 ITEM 1. REPORT TO SHAREHOLDERS. VAN ECK GLOBAL -------------------------------------------------------------------------------- ANNUAL REPORT December 31, 2003 VAN ECK FUNDS VAN ECK FUNDS, INC. Emerging Markets Fund Mid Cap Value Fund Global Hard Assets Fund International Investors Gold Fund U.S. Government Money Fund GLOBAL INVESTMENTS SINCE 1955 The information in the shareholder letters represents the personal opinions of the individual portfolio manager(s) and may differ from those of other portfolio managers or of the firm as a whole. This information is not intended to be a forecast of future events, a guarantee of future results or investment advice. Also, please note that any discussion of the Funds' holdings, the Funds' performance, and the views of the portfolio manager(s) are as of December 31, 2003, and are subject to change. EMERGING MARKETS FUND -------------------------------------------------------------------------------- Dear Shareholder: We are pleased to report that the Van Eck Emerging Markets Fund provided a total return of 75.05% for the year 2003. This compares favorably to emerging markets in general, as measured by the Morgan Stanley Capital International (MSCI) Emerging Markets Free Index,1 which rose 56.28% for the same period. It is worth noting that 2003 was a year in which risk aversion abated and asset classes that are perceived as risky, such as emerging markets, performed well. While it was an excellent year for global equity investors, 2003's heady returns were, in many cases, not enough to erase the losses sustained in the bear market of the previous three years. Although we do not want to detract from the Fund's 2003 results, we hope that prudent investors recognize that this performance was extraordinary, and that it is not realistic to expect that this level of return can be sustained, or even repeated, in years to come. For a review of your Fund's results dating back ten years, please see the table that follows this letter. The Van Eck Emerging Markets Fund applies a "focused" approach to emerging markets by investing in our best 30-40 issues in the sector. We maintained a bias toward cyclical stocks in 2003 and, in particular, those stocks that were exposed to better global economies. In terms of overall regional weightings, we continued to favor Asia at the expense of Latin America, Emerging Europe and Africa. The Fund benefited from its Asia weighting last year as the region, on the back of strong economic growth, produced some of the world's best performing markets in 2003. MARKET REVIEW For investors in global emerging markets, 2003 proved to be a year of plenty. Looking back to the beginning of the year, however, optimism was in short supply. There was much focus on the perils of deflation, and many concerns that fiscal and monetary stimulus in the developed economies would fail to work as well as they had in the past, possibly due to excesses from the so-called bubble period. As if that were not enough, the war with Iraq and the emergence of a new and mysterious disease, SARS (severe acute respiratory syndrome), combined to depress markets. However, in the face of these serious headwinds, emerging markets performed creditably in the first quarter. Thereafter, with the lifting of these worries, emerging markets rallied hard. Increasing evidence that global economics were improving spurred buying in emerging markets as investors sought to play these markets' traditional role as early cycle beneficiaries. Risk aversion and volatility declined in most markets. Corporate earnings upgrades were significant. Many non-dedicated institutional investors and hedge funds increased their exposure to emerging markets, seeking to play the strong secular and cyclical story. REGIONAL FUND REVIEW In line with the Fund's benchmark, the MSCI Emerging Markets Free Index, the Fund's four largest allocations at year end were in South Korea, Taiwan, Brazil and South Africa (representing 25.3%, 15.7%, 9.2% and 8.0% of Fund net assets, respectively, as of December 31, 2003). These markets rose 28%, 35%, 142% and 44%2 in U.S. dollar terms, respectively, in 2003. The following is a review of the top-performing emerging markets in 2003 in order of performance. BRAZILIAN stocks were among the most significant outperformers in 2003, and contributed substantially to the Fund's performance. At year end, Brazilian stocks represented 9.2% of Fund net assets and were the Fund's third largest weighting. In U.S. dollar terms, the benchmark Bospeva Index (IBOV) rose 142% for the year. Much of this is being attributed to the fiscal austerity and investor-friendly reforms instituted by President Luiz Inacio Lula da Silva, who was elected in late 2002. Brazil's strong showing was a major turnaround from the beginning of the year. Lula's statements prior to election had raised substantial fears about his policy direction, and consequently the market started off 2003 at deeply oversold levels. Since then, actual policy and regulatory measures have been substantially better than expected. The fiscal situation and the debt burden have improved as well. 1 EMERGING MARKETS FUND -------------------------------------------------------------------------------- Building on its outperformance in 2002, Thailand (5.4% of Fund net assets) rose 136% in U.S. dollar terms in 2003. It was Asia's number one performer and the world's second best market. Falling interest rates, strong investment growth, robust domestic consumption and further government deregulation all combined to boost the Stock Exchange of Thailand (SET). Unlike certain other markets in the region, for example Korea, local Emerging Markets Fund investors were very active in the market. The Thai economy is booming and-apart from the infuriating road traffic-we see little sign of overheating. TURKEY (1.6% of Fund net assets) performed admirably during 2003, climbing 111% in U.S. dollar terms, although it remains one of the most volatile markets among emerging economies. Politics generally play a large role in this market's direction, and there were a number of setbacks on this front during the year. Nevertheless, Turkey's economic fundamentals have been improving, with ever-lower inflation and a relatively buoyant industrial sector. INDIAN stocks (5.2% of Fund net assets) had one of their best relative years since the market became investable to foreign investors in the early 1990s. The benchmark Sensex Index of the Mumbai Stock Exchange gained 82% in U.S. dollar terms for the year. This market has shown much promise in the past, but that potential was wrecked on the shoals of political ruction or market scam. In the last few years, however, Indian corporate leaders have been quietly adjusting their business models and have helped create some of the most efficient companies in the region. Given the relative lack of extraneous disruptions to the Indian market in 2003, this enhanced corporate quality was allowed to shine through. Signs of a rapprochement toward Pakistan, including a cease-fire, also helped support the market. Despite the overall good news in 2003, there were some disappointments, including the performance of domestic Chinese and Malaysian shares. Hong Kong shares also underperformed their Asian counterparts on a relative basis. Both the China A shares (previously reserved for domestic investors) and China B shares (previously reserved for foreign investors) were exceptionally poor performers in 2003. This is in stark contrast to the performance of their H share counterparts (Chinese companies listed in Hong Kong). Clearly, the performance of the Chinese economy, which is now the second largest in the world as measured by purchasing power parity, was a key factor behind the rise in H shares. The underperformance of the domestic shares relates to high valuations of A shares, relative lack of liquidity in B shares, and the increasing ability of mainland money to access the cheaper H shares. At year end, your Fund had 2.5% of net assets in China-related shares. The HONG KONG market (7.2% of Fund net assets) was hard hit by the SARS outbreak in early 2003. Despite signs of a decent rebound in the most affected sectors, Hong Kong still underperformed the rest of the region, returning 36% in U.S. dollar terms in 2003. MALAYSIAN shares (3.7% of Fund net assets) were also a disappointment in 2003. Although the political transition from Prime Minister Mahathir, who was in the job for some 22 years, to his successor, Abdullah Badawi, was very smooth and monetary conditions remained benign, stocks disappointed. Consumption indicators were mixed, and there was concern over the loss of competitiveness in some of Malaysia's export industries. Overall, 2003 restored a fair degree of confidence in emerging markets. We still believe that emerging market equities are one of the best ways to position a portfolio for an upturn in global markets. As was the case in 2003, they have historically benefited from a weak U.S. dollar due to real or quasi-dollar pegs in Asia and high dollar-denominated debt in Latin America. Over the last 25 years, a weak U.S. trade-weighted dollar has typically been followed by strong emerging markets equity performance. During the period under review, emerging markets investors benefited from relatively cheap equities, superior growth prospects (due to favorable demographics and productivity growth), and generally undervalued currencies. We maintain that 2 EMERGING MARKETS FUND -------------------------------------------------------------------------------- portfolio diversification is a key element to successful investing, particularly in the volatile investment environment of the past few years. We appreciate your participation in the Van Eck Emerging Markets Fund and look forward to helping you meet your investment goals in the future. [GRAPHIC OMMITTED] /s/ David A. Semple DAVID A. SEMPLE PORTFOLIO MANAGER January 14, 2004 All references to Fund assets refer to Total Net Assets. Investors should be aware that emerging markets can be extremely volatile. Because of this, they should be viewed as a complement to a broad-based portfolio. Shareholders should be aware that investing in the equity and fixed income markets of developing countries involves exposure to potentially unstable governments, economies based on only a few industries and securities markets that trade a small number of securities and may therefore at times be illiquid. Settlement and clearance practices may be less efficient than more developed markets. All indices listed are unmanaged indices and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. An index's performance is not illustrative of the Fund's performance. Indices are not securities in which investments can be made. 1 The Morgan Stanley Capital International (MSCI) Emerging Markets Free Index is a market capitalization-weighted index that captures 60% of the publicly traded equities in each industry for approximately 25 emerging markets. "Free" indicates that the Index includes only those securities available to foreign (e.g., U.S.) investors. 2 All regional and market returns are in U.S. dollar terms (unless otherwise specified) and are based on country-specific stock market indices; for example, the South Korean market is measured by the Korean Composite Index (Kospi). -------------------------------------------------------------------------------- PERFORMANCE RECORD** AS OF 12/31/03 (UNAUDITED) -------------------------------------------------------------------------------- AVERAGE ANNUAL AFTER MAXIMUM BEFORE SALES TOTAL RETURN SALES CHARGE* CHARGE -------------------------------------------------------------------------------- A shares- -------------------------------------------------------------------------------- 1 year 64.86% 75.05% -------------------------------------------------------------------------------- 5 year (1.39)% (0.21)% -------------------------------------------------------------------------------- 10 year 4.86% 5.48% -------------------------------------------------------------------------------- Life (since 12/20/93) 4.84% 5.46% -------------------------------------------------------------------------------- C shares-Life (since 10/3/03) 13.25% 14.25% -------------------------------------------------------------------------------- PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. Performance information reflects waivers of expenses and/or fees. Investment return and value of shares of the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. The Adviser is currently waiving certain or all expenses on the Fund. Had the Fund incurred all expenses, investments would have been reduced. * A shares: maximum sales charge is 5.75% C shares: 1.00% redemption charge, first year ** Although the Fund has been in existence since December 20, 1993, prior to December 18, 2002, the Fund operated with a substantially different investment strategy. Prior to December 18, 2002, the Fund invested primarily in common stocks and other equity securities of large cap global growth companies and could not invest more than 10% of its assets in emerging markets securities, and performance for those periods is not indicative of the performance of the Fund under its current investment strategy. 3 EMERGING MARKETS FUND -------------------------------------------------------------------------------- GEOGRAPHICAL WEIGHTINGS* AS OF DECEMBER 31, 2003 (UNAUDITED) Brazil 9.2% China 2.5% Hong Kong 7.2% India 5.2% Indonesia 3.4% Malaysia 3.7% Other 4.8% Mexico 4.3% Singapore 3.1% Other Assets Less Liabilities 2.2% South Africa 8.0% South Korea 25.3% Taiwan 15.7% Thailand 5.4% ------------------- *Percentage of net assets. 4 EMERGING MARKETS FUND TOP TEN EQUITY HOLDINGS AS OF DECEMBER 31, 2003* -------------------------------------------------------------------------------- SAMSUNG ELECTRONICS CO. LTD. (SOUTH KOREA, 5.2%) Samsung Electronics manufactures and exports a wide range of consumer and industrial electronic equipment such as memory chips, semiconductors, personal computers, telecommunications equipment and televisions. HANJIN SHIPPING (SOUTH KOREA, 3.8%) Hanjin Shipping is a marine transport company operating cargo vessels, including container ships, specialized gas tankers, and bulk carriers. The company operates a network that covers 70 major ports in 35 countries on six continents, as well as inland transport capabilities. HYUNDAI MOTOR CO. LTD. (SOUTH KOREA, 3.7%) Hyundai Motor manufactures, sells, and exports passenger cars, trucks, and commercial vehicles. The company also sells various auto parts and operates auto repair service centers throughout South Korea; it also provides financial services through its subsidiaries. SHINSEGAE CO. LTD. (SOUTH KOREA, 2.9%) Shinsegae operates department stores and E-Mart discount stores in South Korea. The company retails food, clothing, household goods, electronics and other items through several branch stores. KING YUAN ELECTRONICS (TAIWAN, 2.8%) King Yuan is a service provider in mixed, logic and memory testing and assembly, with back-end capabilities for integrated circuit test services, and package and assembly for CMOS (complementary metal oxide semiconductor) image sensors. SFA ENGINEERING CORP. (SOUTH KOREA, 2.6%) SFA Engineering manufactures machinery for factory automation and logistics systems. The company's products include manufacturing systems used for producing picture tubes, stacker cranes, sorters, conveyors, and loader systems for automated distribution centers. MEDIATEK, INC. (TAIWAN, 2.5%) MediaTek is an integrated circuit design firm providing optical storage solutions. The company dedicates substantial resources to the research and development of comprehensive IC optical storage drives which include CD-ROM, DVD-ROM, and DVD players as well as related chipsets. GLOBAL BIO-CHEM TECHNOLOGY GROUP (CHINA, 2.5%) Global Bio-Chem Technology is principally engaged in the manufacturing of corn-based biochemical products and corn refined products in the People's Republic of China. The group's products are marketed and sold in the PRC, as well as throughout Asia, Europe and Africa. TELE NORTE LESTE PARTICIPACOES SA (BRAZIL, 2.4%) Tele Norte Leste Participacoes is one of three regional fixed-line phone companies in Brazil that emerged from the breakup of former monopoly Telebras. It is the country's largest telecom operator in terms of installed lines, covering approximately 65% of the territory and over half of the population. TNL also provides wireless services through its subsidiary TNL PCS. CHEIL COMMUNICATIONS, INC. (SOUTH KOREA, 2.4%) Cheil Communications is the largest advertising agency in South Korea. An affiliate of Samsung Electronics, the company provides advertising, strategy and consulting, creative media promotion and sports marketing. --------------------- *Portfolio subject to change. 5 EMERGING MARKETS FUND PERFORMANCE COMPARISON (UNAUDITED) -------------------------------------------------------------------------------- These graphs compare a hypothetical $10,000 investment in the Van Eck Emerging Markets Fund made ten years ago (Class A) and at inception (Class C) with a similar investment in the Morgan Stanley Capital International (MSCI) Emerging Markets Free Index. VAN ECK EMERGING MARKETS FUND (CLASS A) vs. MSCI Emerging Markets Free Index [The table below represents a graph in the printed piece.] Emerging Markets Fund-A MSCI Emerging Markets Date (with sales charge) (2) Free Index ------ ----------------------- --------------------- Dec-93 9426 10000 Mar-94 9110 9096 Jun-94 9080 8965 Sep-94 9357 10826 Dec-94 9059 9268 Mar-95 9368 8121 Jun-95 9938 8963 Sep-95 10248 8906 Dec-95 10444 8786 Mar-96 10626 9333 Jun-96 10890 9723 Sep-96 11103 9371 Dec-96 11727 9315 Mar-97 11716 10104 Jun-97 13142 10969 Sep-97 13630 9986 Dec-97 13459 8236 Mar-98 14990 8746 Jun-98 15484 6682 Sep-98 14468 5212 Dec-98 16239 6149 Mar-99 16419 6914 Jun-99 16691 8601 Sep-99 16903 8158 Dec-99 21570 10233 Mar-00 22002 10481 Jun-00 20427 9415 Sep-00 19311 8191 Dec-00 16850 7101 Mar-01 13510 6714 Jun-01 13885 6984 Sep-01 10997 5475 Dec-01 12246 6932 Mar-02 12000 7723 Jun-02 10769 7075 Sep-02 8915 5922 Dec-02 9180 6516 Mar-03 8706 6134 Jun-03 11167 7568 Sep-03 13533 8644 Dec-03 16069 10183 -------------------------------------------------------------------------------- Average Annual Total Return 12/31/03 1 Year 5 Year 10 Year -------------------------------------------------------------------------------- VE Emerging Markets Fund-A (w/o sales charge) 75.05% (0.21)% 5.48% -------------------------------------------------------------------------------- VE Emerging Markets Fund-A (with sales charge)(2) 64.86% (1.39)% 4.86% -------------------------------------------------------------------------------- MSCI Emerging Markets Free Index 56.28% 10.64% 0.18% -------------------------------------------------------------------------------- VAN ECK EMERGING MARKETS FUND (CLASS C) vs. MSCI Emerging Markets Free Index Emerging Markets Fund-C MSCI Emerging Markets Date (with sales charge) (3) Free Index -------- ----------------------- --------------------- Oct-3-03 10000 10000 Oct-03 10403 10851 Nov-03 10605 10984 Dec-03 11325 11781 -------------------------------------------------------------------------------- Total Return 12/31/03 Since Inception(1) -------------------------------------------------------------------------------- VE Emerging Markets Fund-C (w/o sales charge) 14.25% -------------------------------------------------------------------------------- VE Emerging Markets Fund-C (with sales charge)(3) 13.25% -------------------------------------------------------------------------------- MSCI Emerging Markets Free Index 17.81% -------------------------------------------------------------------------------- 1 Inception date for the Van Eck Emerging Markets Fund was 12/20/93 (Class A) and 10/3/03 (Class C). Index returns for Class C are calculated as of nearest month end (9/30/03). 2 The maximum sales charge is 5.75%. 3 1.00% redemption charge taken into account on total return for one-year time period. Although the Fund has been in existence since December 20, 1993, prior to December 18, 2002, the Fund operated with a substantially different strategy. Prior to December 18, 2002, the Fund invested primarily in common stocks and other equity securities of large cap global growth companies and could not invest more than 10% of its assets in emerging markets securities. Returns for the Van Eck Emerging Markets Fund (Classes A 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. The Morgan Stanley Capital International (MSCI) Emerging Markets Free 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. An index's performance is not illustrative of the Fund's performance. Indices are not securities in which investments can be made. The MSCI Emerging Markets Free Index is a market capitalization-weighted index that captures 60% of the publicly traded equities in each industry for approximately 25 emerging markets. "Free" indicates that the Index includes only those securities available to foreign (e.g., U.S.) investors. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. Performance information reflects waivers of expenses and/or fees. Investment return and value of shares of the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. 6 GLOBAL HARD ASSETS FUND -------------------------------------------------------------------------------- Dear Shareholder: We are pleased to report that the Van Eck Global Hard Assets Fund provided a total return of 42.44% for the year 2003. This was the fourth consecutive year in which the Fund outpaced the general U.S. equity market, as measured by the Standard & Poor's (S&P) 500 Index,1 which was up 28.67% for the year. The Fund's performance also compares favorably to the return of the Goldman Sachs Natural Resources Index,2 which rose 31.50% for the year. (2003 was also the Fund's second best year since its inception in 1994; in 1996 the Fund returned 45.61%.) It is worth noting that 2003 was a year in which risky, highly speculative investments were rewarded. While it was an excellent year for global equity investors, 2003's heady returns were, in most cases, not enough to erase the losses sustained in the bear market of the previous three years. Throughout this trying period, we are pleased that your Fund continued to offer strong relative performance with limited correlation to traditional asset classes. Although we do not want to detract from the Fund's 2003 results, we hope that prudent investors recognize that this performance was extraordinary, and that it is not realistic to expect that this level of return can be sustained, or even repeated, in years to come. For a review of your Fund's results dating back to its inception in 1994, please see the table that follows this letter. MARKET AND ECONOMIC REVIEW Hard asset sectors were very strong in 2003, with major commodity markets rising for the second straight year. The continuation of low interest rates and low inflation created an ideal environment for hard assets, particularly in the second half. In addition, the weakening U.S. dollar, which lost ground against all the major currencies (20% against the euro and 11% against the Japanese yen), helped to make raw materials priced in dollars inexpensive for overseas buyers. Finally, many global economies strengthened over the course of the year, and this growth provided a strong catalyst for the demand for hard assets. It benefited your Fund in 2003, particularly in the second half. As a point of reference, your Fund gained 5.56% in the first half of 2003, compared to 34.94% in the second half. The mood was very different when we last reported to you in July 2003. At that time, global economic activity remained lackluster, and most investors were skeptical about the sustainability of growth, especially here in the U.S. The quick resolution of the U.S.-led war in Iraq in April, however, combined with the stimulus of 45-year low interest rates and new tax cuts, helped the U.S. equity market soar in the second quarter. A potent economic and market rebound followed in the second half, resulting in a dramatic shift in investor confidence by year end. While economic growth had been expected to pick up in the second half, the U.S. economy grew at a strong pace of 8.2% in the third quarter and approximately 4.0% in the fourth quarter. For the year, GDP is likely to be in the 3.1% range, compared to 2.4% in 2002. Outside the U.S., most central banks assisted the global expansion by maintaining accommodative monetary policies throughout 2003. Many economies and stock markets had outstanding performance, particularly several countries in Asia and Latin America. Europe also experienced strong equity performance, but m ore tepid economic growth and weakening export markets as the euro strengthened. The appetite for raw materials exploded in 2003 as economies in the developed world recovered and less-developed economies gained strength and continued to build basic infrastructure. This is especially true of China, which, with a GDP of 9.1%, was the world's top grower last year. China's seemingly insatiable demand for raw materials was a key driver in many sectors, including energy, metals, and paper and forest products-all components of your Fund. Just three years after its entry into the World Trade Organization, China is rapidly emerging as a major market economy. With a burgeoning consumer class that could potentially become the world's largest, we believe that China is playing an increasingly important role in the global economy, and is serving as the growth engine for commodities and many other markets. 7 GLOBAL HARD ASSETS FUND -------------------------------------------------------------------------------- SECTOR/FUND REVIEW As of December 31, 2003, the assets of the Van Eck Global Hard Assets Fund were invested primarily in five sectors: energy, precious metals, industrial metals, paper and forest products, and real estate. ENERGY Fund investments in the energy sector represented 44.2% of the Fund's net assets as of December 31, compared with 34.8% a year ago, and contributed substantially to the Fund's success in 2003. Prices in the energy sector generally trended upward throughout the year, in large part due to increased demand, falling stockpiles, and concerns early in the year over the situation in Iraq. Domestic demand for energy commodities rose sharply in 2003, further depleting already low oil and gas inventories, due to below normal temperatures and repeated snowstorms in the Northeast U.S. at the beginning of the year, and again in November and December. Demand also increased from the Far East, given colder temperatures across Asia, as well as the shutdown of nuclear plants in Japan. As in many natural resource sectors, increased demand from China also played a significant role. At the beginning of the year, the main focus in energy markets was the war in Iraq, specifically the speed with which Iraqi oil production could be restored, along with anticipation of OPEC's (Organization of Petroleum Exporting Countries) response. Prior to the war, energy prices rose sharply in anticipation of a possible interruption of crude oil from the Middle East. However, once the war began, coalition forces were able to secure the Iraqi oil supply, and the feared collapse of the market did not come to pass. As a result, the crude oil and natural gas markets rallied in the second quarter, and moved generally upward for the rest of the year. Additional support was provided throughout the year, as OPEC continued to hold petroleum supply tight and prices high. PRECIOUS METALS As of December 31, 15.7% of the Fund's net assets were invested in the precious metals sector, which contributed to the Fund's success. Over the last three years, gold has experienced a renaissance. After rejecting this sector and selling gold in the 1990s, investors are increasingly seeing the merits of owning a sound currency to hedge against financial and political unrest. After posting a gain of 24.8% in 2002 (its best since 1987), gold bullion enjoyed another prosperous year in 2003, with prices climbing 19.4%. Gold bullion approached the $400 level early in the year as the invasion of Iraq got underway. Prices corrected sharply as the war proved to be short-lived, but then moved steadily higher again to close at $415.45 by year end, nearly an eight-year high. The primary driver behind higher gold prices was the weak U.S. dollar. Gold prices have historically demonstrated an inverse correlation to the dollar. Overall, gold-mining shares gained 42.80%, as measured by the Financial Times Gold Mines Index.3 However, regional performance of gold stocks varied widely. In South Africa, for example, the rand exchange rate had a dramatic impact on the profitability of African companies due to the labor-intensive nature of South African mining. The rand gained 28% on the U.S. dollar in 2003, which followed a 40% rise in 2002. According to Gold Fields Minerals Services,4 U.S. dollar cash production costs for the second quarter rose 65% in South Africa, compared with 22% in Australia and 13% in Canada where more mechanized mining keeps labor costs down. INDUSTRIAL METALS Fund investments in the industrial metals sector represented 15.1% of Fund net assets, and contributed substantially to the Fund's performance in 2003. At December 31, the Fund's industrial metals investments included holdings in aluminum, nickel, copper, nonferrous metals and steel, all of which provide the basic raw materials for manufacturing. While all the industrial metals were in demand last year, the increased appetite for steel was one of the most interesting stories. Steel is manufactured from recycled scrap or extracted iron ore, and prices of both rose steadily in 2003-as did the price of steel and products made from steel. As China's manufacturing-based economy absorbs more steel, scrap and iron ore have grown scarcer, particularly scrap. While a tremendous glut of scrap was created by the fall of the Iron Curtain in 1989, that supply has been depleted. Of course, in our view, this 8 GLOBAL HARD ASSETS FUND -------------------------------------------------------------------------------- bodes well for the U.S., which is the world's biggest supplier of scrap, providing 15% of the world's supply. Given the soaring demand for steel, President Bush's rollback on tariffs in December is expected to have a minor impact. PAPER AND FOREST PRODUCTS Fund investments in the paper and forest products sector represented 10.9% of Fund net assets at year end. This sector underperformed other cyclicals in 2003, a year in which the paper and forest products industries continued to be characterized by reduced capacity and relatively attractive stock prices. Significant production cutbacks kept capacity low. Industry consolidation proved to be a positive factor, further supporting prices. REAL ESTATE Fund investments in the real estate sector represented 6.4% of Fund net assets at year end. The real estate industry performed well for investors again this year. Real Estate Investment Trusts (REITs) returned 36.74% to investors in 2003, according to the Morgan Stanley REIT Index,5 marking the fourth straight year REITs have outperformed the S&P 500 (up 28.67%). Our focus in the real estate sector continued to be in the U.S. and Canadian markets. Two key issues supported these markets: property values continued to climb given the attractive financing terms available with low interest rates, and demand for real estate as an alternative investment remained high. Throughout the year, both retail malls and outlets were strong performing sectors. The hotel sector showed marked improvement as occupancy rates for both tourism and business travel improved along with the U.S. and Canadian economies. On the other hand, apartments and office space have not done as well, with vacancy rates at their highest levels in years. We continue to believe that a portfolio that contains exposure to hard assets can provide diversification benefits for investors. We appreciate your continued investment in the Van Eck Global Hard Assets Fund, and we look forward to helping you meet your investment goals in the future. [GRAPHIC OMMITTED] /s/ Derek S. van Eck DEREK S. VAN ECK PORTFOLIO MANAGER [GRAPHIC OMMITTED] [GRAPHIC OMMITTED] /s/ Samuel R. Halpert /s/ Joseph M. Foster SAMUEL R. HALPERT JOSEPH M. FOSTER MANAGEMENT TEAM MEMBER MANAGEMENT TEAM MEMBER January 14, 2004 9 GLOBAL HARD ASSETS FUND -------------------------------------------------------------------------------- All references to Fund assets refer to Total Net Assets. All indices listed are unmanaged indices and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. An index's performance is not illustrative of the Fund's performance. Indices are not securities in which investments can be made. 1 The Standard & Poor's (S&P) 500 Index consists of 500 widely held common stocks, covering four broad sectors (industrials, utilities, financial and transportation). It is a market value-weighted index (stock price times shares outstanding), with each stock affecting the Index in proportion to its market value. Construction of the S&P 500 Index proceeds from industry group to the whole. Since some industries are characterized by companies of relatively small-stock capitalization, the Index is not comprised of the 500 largest companies on the New York Stock Exchange. This Index, calculated by Standard & Poor's, is a total return index with dividends reinvested. 2 The Goldman Sachs Natural Resources (GSR) Index is a modified capitalization-weighted index which includes companies involved in the following categories: extractive industries, energy companies, owners and operators of timber tracts, forestry services, producers of pulp and paper, and owners of plantations. 3 The Financial Times Gold Mines Index is a market capitalization-weighted global index of gold-mining shares. 4 Gold Fields Mineral Services (GFMS) is a London-based research company, focused on the gold, silver and PGM markets, and best known for its flagship publication, the Gold Survey, published in April each year. 5 The Morgan Stanley REIT Index is a total return index of the most actively traded real estate investment trusts and is designed to be a measure of real estate equity performance. -------------------------------------------------------------------------------- PERFORMANCE RECORD AS OF 12/31/03 (UNAUDITED) AVERAGE ANNUAL AFTER MAXIMUM BEFORE SALES TOTAL RETURN SALES CHARGE* CHARGE -------------------------------------------------------------------------------- A shares- -------------------------------------------------------------------------------- 1 year 34.24% 42.44% -------------------------------------------------------------------------------- 5 year 10.74% 12.05% -------------------------------------------------------------------------------- Life (since 11/2/94) 9.15% 9.86% -------------------------------------------------------------------------------- C shares- -------------------------------------------------------------------------------- 1 year 39.72% 40.72% -------------------------------------------------------------------------------- 5 year 11.17% 11.17% -------------------------------------------------------------------------------- Life (since 11/2/94) 9.31% 9.31% -------------------------------------------------------------------------------- PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. Performance information reflects waivers of expenses and/or fees. Investment return and value of shares of the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. At certain times in the past, the Adviser waived certain or all expenses of the Fund. Had the Fund incurred all expenses, investment returns would have been reduced. * A shares: maximum sales charge is 5.75% C shares: 1.00% redemption charge, first year 10 GLOBAL HARD ASSETS FUND -------------------------------------------------------------------------------- GEOGRAPHICAL WEIGHTINGS*+ AS OF DECEMBER 31, 2003 (UNAUDITED) Australia 6.7% Brazil 1.2% Canada 25.3% Finland 1.2% France 3.2% Other 1.4% Russia 2.0% Short-Term Obligation 10.4% South Africa 6.3% South Korea 2.1% United Kingdom 3.0% United States 43.2% Sector Weightings*+ as of December 31, 2003 (unaudited) Agriculture 1.5% Energy 44.2% Industrial Metals 15.1% Paper & Forest Products 10.9% Precious Metals 15.7% Real Estate 6.4% Short-Term Obligation 10.4% Utilities 1.8% ------------------- * Percentage of net assets. + Geographical and sector weightings add up to more than 100% due to a negative "Other assets less liabilities" position (-6.0%; see page 29) that is not shown on these pie charts. 11 GLOBAL HARD ASSETS FUND TOP TEN EQUITY HOLDINGS AS OF DECEMBER 31, 2003* -------------------------------------------------------------------------------- HALLIBURTON CO. (U.S., 4.0%) Halliburton provides a variety of services (equipment, maintenance and engineering, and construction) to energy, industrial and governmental customers. TOTAL FINA ELF SA (FRANCE, 3.1%) Total Fina Elf is an integrated oil and gas specialty chemical company with operations in 120 countries. The company engages in all areas of the petroleum industry, from exploration and production to refining and shipping. BP PLC (UK, 3.0%) BP is a leading oil, gas and energy company. The company produces and markets crude oil and petroleum products worldwide, and is engaged in exploration and field development throughout the world. BP also manufactures and sells petroleum-based chemical products. TALISMAN ENERGY, INC. (CANADA, 2.8%) Talisman Energy is a Canadian-based international upstream oil and gas producer with operations in Canada, the North Sea and Indonesia. The company also conducts exploration in Algeria, Trinidad and Colombia. OCCIDENTAL PETROLEUM CORP. (U.S., 2.6%) Occidental Petroleum explores for, develops, produces and markets crude oil and natural gas. The company also manufactures and markets a variety of basic and specialty chemicals. GLOBALSANTAFE CORP. (U.S., 2.3%) GlobalSantaFe is an international offshore and land contract driller, and provides drilling-related services including third party rig operators, incentive drilling and drilling engineering, and project management services. NOBLE CORP. (U.S., 2.1%) Noble provides diversified services for the oil and gas industry, including offshore drilling services, turnkey drilling services, and engineering and asset management services. RANDGOLD RESOURCES LTD. (SOUTH AFRICA, 2.1%) Randgold Resources explores for and develops mines and mineral interests in sub-Saharan Africa. The company also acquires and rehabilitates existing under-performing gold mines, as well as mature exploration programs and bulk tonnage shallow deposits with gold producing potential. Randgold has interests in C(TM)te d'Ivoire, Mali, Tanzania and Senegal. POSCO (SOUTH KOREA, 2.1%) POSCO is a fully integrated steel producer. The company manufactures and sells a broad line of steel products in the domestic and overseas markets, including hot- and cold-rolled and stainless steel products. MIRAMAR MINING CORP. (CANADA, 2.0%) Miramar Mining is a mid-sized gold-mining company involved in the discovery, acquisition, exploration, development and operation of gold mines in Canada. ---------------------- *Portfolio is subject to change. 12 GLOBAL HARD ASSETS FUND PERFORMANCE COMPARISON (UNAUDITED) -------------------------------------------------------------------------------- These graphs compare a hypothetical $10,000 investment in the Van Eck Global Hard Assets Fund (Classes A and C) made at inception with a similar investment in the Standard & Poor's 500 Index. VAN ECK GLOBAL HARD ASSETS FUND (CLASS A) vs. Standard & Poor's 500 Index [The table below represents a graph in the printed piece.] Global Hard Assets Fund-A Name (with sales charge)(2) S&P 500 Index -------- -------------------------- ------------- Nov-2-94 9426 10000 Dec-94 9322 9779 Mar-95 9838 10728 Jun-95 10313 11749 Sep-95 10670 12680 Dec-95 11195 13441 Mar-96 12537 14161 Jun-96 13459 14795 Sep-96 14135 15249 Dec-96 16301 16519 Mar-97 16323 16965 Jun-97 17680 19920 Sep-97 21064 21410 Dec-97 18631 22022 Mar-98 18174 25088 Jun-98 15794 25913 Sep-98 12671 23341 Dec-98 12623 28303 Mar-99 12794 29711 Jun-99 14625 31802 Sep-99 14490 29820 Dec-99 14723 34251 Mar-00 14858 35030 Jun-00 15152 34098 Sep-00 15729 33770 Dec-00 16035 31131 Mar-01 14821 27449 Jun-01 15385 29055 Sep-01 13326 24800 Dec-01 14662 27447 Mar-02 17237 27521 Jun-02 17469 23841 Sep-02 14564 19731 Dec-02 15655 21396 Mar-03 14785 20722 Jun-03 16525 23908 Sep-03 18781 24540 Dec-03 22300 27522 -------------------------------------------------------------------------------- Since Average Annual Total Return 12/31/03 1 Year 5 Year Inception(1) -------------------------------------------------------------------------------- VE Global Hard Assets Fund-A (w/o sales charge) 42.44% 12.05% 9.86% -------------------------------------------------------------------------------- VE Global Hard Assets Fund-A (with sales charge)(2) 34.24% 10.74% 9.15% -------------------------------------------------------------------------------- Standard & Poor's 500 Index 28.67% (0.57)% 11.68% -------------------------------------------------------------------------------- VAN ECK GLOBAL HARD ASSETS FUND (CLASS C) vs. Standard & Poor's 500 Index [The table below represents a graph in the printed piece.] Global Hard Assets Fund-C Name (with sales charge)(3) S&P 500 Index -------- -------------------------- ------------- Nov-2-94 9426 10000 Dec-94 9322 9779 Mar-95 9838 10728 Jun-95 10313 11749 Sep-95 10670 12680 Dec-95 11195 13441 Mar-96 12537 14161 Jun-96 13459 14795 Sep-96 14135 15249 Dec-96 16301 16519 Mar-97 16323 16965 Jun-97 17680 19920 Sep-97 21064 21410 Dec-97 18631 22022 Mar-98 18174 25088 Jun-98 15794 25913 Sep-98 12671 23341 Dec-98 12623 28303 Mar-99 12794 29711 Jun-99 14625 31802 Sep-99 14490 29820 Dec-99 14723 34251 Mar-00 14858 35030 Jun-00 15152 34098 Sep-00 15729 33770 Dec-00 16035 31131 Mar-01 14821 27449 Jun-01 15385 29055 Sep-01 13326 24800 Dec-01 14662 27447 Mar-02 17237 27521 Jun-02 17469 23841 Sep-02 14564 19731 Dec-02 15655 21396 Mar-03 14785 20722 Jun-03 16525 23908 Sep-03 18781 24540 Dec-03 22300 27522 -------------------------------------------------------------------------------- Since Average Annual Total Return 12/31/03 1 Year 5 Year Inception(1) -------------------------------------------------------------------------------- VE Global Hard Assets Fund-C (w/o sales charge) 40.72% 11.17% 9.31% -------------------------------------------------------------------------------- VE Global Hard Assets Fund-C (with sales charge)(3) 39.72% 11.17% 9.31% -------------------------------------------------------------------------------- Standard & Poor's 500 Index 28.67% (0.57)% 11.68% -------------------------------------------------------------------------------- 1 INCEPTION DATE FOR THEVAN ECK GLOBAL HARD ASSETS FUND WAS 11/2/94 (CLASS A AND CLASS C). Index returns are calculated as of nearest month end (10/31/94). 2 The maximum sales charge is 5.75%. 3 1.00% redemption charge taken into account on total return for one-year time period. Returns for the Van Eck Global Hard Assets Fund (Classes A 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. The Standard & Poor's 500 Index is an unmanaged index and includes the reinvestment of all dividends and distributions, but does not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. An index's performance is not illustrative of the Fund's performance. Indices are not securities in which investments can be made. The S&P 500 Index consists of 500 widely held common stocks, covering four broad sectors (industrials, utilities, financial and transportation). It is a market value-weighted index (stock price times shares outstanding), with each stock affecting the index in proportion to its market value. Construction of the S&P 500 Index proceeds from industry group to the whole. Since some industries are characterized by companies of relatively small stock capitalization, the Index is not comprised of the 500 largest companies on the New York Stock Exchange. This Index, calculated by Standard & Poor's, is a total return index with dividends reinvested. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. Performance information reflects waivers of expenses and/or fees. Investment return and value of shares of the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. 13 INTERNATIONAL INVESTORS GOLD FUND -------------------------------------------------------------------------------- Dear Shareholder: We are pleased to report that the Van Eck International Investors Gold Fund provided a return of 44.25% for the twelve months ended December 31, 2003. This compares favorably with the Philadelphia Stock Exchange Gold and Silver (XAU) Index,1 which climbed 43.96% for the year. Technically, in our opinion, gold-mining shares broke out of their 1997-2003 "bottom formation" at the end of 2003 (please see the accompanying chart). Gold-mining shares have become increasingly popular as investment diversifiers. Last year, they outperformed the broad stock market as measured by Standard & Poor's (S&P) 500 Index,2 which was up 28.67%, as well as many other asset classes. For a review of your Fund's results dating back to its inception in 1956, please see the table that follows this letter. Gold bullion had another good year last year-its third, after its secular dollar "bottom" in 2001. The price of gold rose 19.4% from $348.05 an ounce at year end 2002 to $415.45 an ounce at year end 2003. While early in the year the price of gold was propelled upward by increased investment and speculative demand arising from the uncertainties of the Iraq invasion, its big move to a nearly eight-year high in the second half of 2003 mainly reflected the weakness of the U.S. dollar. The dollar fell approximately 20% against the euro last year. In addition, the developing economies of India and China, as well as the reduction of mine forward sales, provided additional sources of growing demand for gold. You should be aware that recent market conditions resulting in extremely high performance for the gold sector may not continue. [The table below represents a graph in the printed piece.] XAU Index January 1996 - December 2003 Date Px Last -------- ------- 1/31/96 141.05 2/29/96 144.06 3/29/96 143.83 4/30/96 143.42 5/31/96 148.89 6/28/96 123.76 7/31/96 124.35 8/30/96 124.55 9/30/96 115.18 10/31/96 115.6 11/29/96 120.19 12/31/96 116.75 1/31/97 110.2 2/28/97 122.46 3/31/97 104.12 4/30/97 93.86 5/30/97 104.31 6/30/97 95.6 7/31/97 97.92 8/29/97 98.87 9/30/97 109.5 10/31/97 87.91 11/28/97 70.82 12/31/97 74.19 1/30/98 74.97 2/27/98 75.45 3/31/98 81.67 4/30/98 87.93 5/29/98 74.71 6/30/98 71.72 7/31/98 62.92 8/31/98 48.89 9/30/98 74.99 10/30/98 75.39 11/30/98 70.96 12/31/98 64.97 1/29/99 63.26 2/26/99 60.56 3/31/99 59.76 4/30/99 73.42 5/31/99 60.87 6/30/99 66.93 7/30/99 62.87 8/31/99 67.34 9/30/99 80.26 10/29/99 69.55 11/30/99 67.04 12/31/99 67.97 1/31/00 59.98 2/29/00 59.76 3/31/00 56.5 4/28/00 54.75 5/31/00 56.28 6/30/00 57.81 7/31/00 50.85 8/31/00 52.34 9/29/00 49.92 10/31/00 43.87 11/30/00 47.08 12/29/00 51.41 1/31/01 48.86 2/28/01 52.51 3/30/01 47.57 4/30/01 55.13 5/31/01 57.13 6/29/01 53.25 7/31/01 53.06 8/31/01 56.56 9/28/01 57.79 10/31/01 54.53 11/30/01 52.57 12/31/01 54.43 1/31/02 61.33 2/28/02 65.16 3/29/02 70.89 4/30/02 73.96 5/31/02 84.24 6/28/02 71.46 7/31/02 60.54 8/30/02 69.46 9/30/02 69.74 10/31/02 63.44 11/29/02 63.38 12/31/02 76.76 1/31/03 77 2/28/03 71.99 3/31/03 66.92 4/30/03 65.3 5/30/03 73.46 6/30/03 78.65 7/31/03 81.12 8/29/03 91 9/30/03 91.12 10/31/03 98.08 11/28/03 109.66 12/31/03 108.84 GOLD-MINING SHARES Gold-mining shares gained 42.80% in 2003, as measured by the Financial Times (FTSE) Gold Mines Index,3 with regional performance varying widely (as reflected by the Index Series). The FTSE South Africa Series lagged other regions, gaining only 14.7%. The rand exchange rate had a dramatic impact on the profitability of South African companies due to the labor-intensive nature of South African mining. After a 40% rise against the U.S. dollar in 2002, the rand gained 28% in 2003. According to Gold Fields Minerals Services,4 year-on-year production costs for the second quarter rose 65% for South African producers. By comparison, production costs increased 22% in Australia and 13% in Canada, where more mechanized mining keeps labor costs down. In contrast to South Africa, the FTSE North American Series gained 52.1%. One of the best performers was Canada's Wheaton River Minerals Ltd. (5.7% of the Fund's total net assets as of December 31). The company was reborn in 2002 when new management stepped in with a strategy of acquiring producing mines from the private sector and from large mining companies. Recently, Wheaton has moved on to acquire development properties in Mexico and Brazil, which should add future growth. Many of the Canadian Juniors also performed well, as the equity markets provided funding for them to advance projects. On the other hand, a couple of Canadian companies performed poorly. Development of Meridian Gold's (3.5% of Fund net assets) promising Esquel property in Argentina was abruptly halted when Greenpeace organized local resistance. Another disappointment was operating problems due to a rock fall at Agnico-Eagle's (0.9% of Fund net assets) deep underground mine in Quebec. The FTSE Australasia Series advanced 101.0% in 2003. This spectacular performance is due mainly to the high index weighting allocated to Newcrest Mining Ltd. (4.1% of Fund net assets). Sentiment turned positive for Newcrest as the strong Aussie dollar dramatically improved the value of their once-toxic hedge book. The company is also constructing the Telfer mine, which, in our opinion, has developed into a world-class project. 14 INTERNATIONAL INVESTORS GOLD FUND -------------------------------------------------------------------------------- Current Economic Conditions The following section outlines current financial and economic conditions that we feel may justify portfolio diversification in general, and a small allocation to gold-oriented investments in particular. At year end, investor expectations for the performance of the economy and markets was strong given 2003's impressive showing. In our minds, however, an inordinate amount of confidence was being placed on massive monetary and fiscal stimulation. Questions remain as to whether the recovery is truly sustainable, and we believe that long-term investors may wish to consider the following potential economic and financial risks. Total outstanding business and household debt rose from $757 million (91% of GDP) in 1967 to a record $16.5 trillion (150% of GDP) at the end of the year. This explosion in debt has been spurred primarily by lower-than-natural interest rates due to the policy of general rapid monetization of government debt that has been in place since the 1960s. Steadily falling interest rates have offset the steadily rising household debt-servicing burden. However, the latter is already at an historically high level, even though interest rates are close to historic lows. Any rise in interest rates is likely to make debt servicing more difficult. By year end, real housing price increases were growing more slowly, which may indicate that the housing boom may be slowing. Mortgage refinancing and equity cash-outs may have peaked. An International Monetary Fund study published last April concluded that, in the past, housing busts have been associated with far greater economic damage and output losses than equity busts. Business confidence rebounded strongly in 2003. Cost-cutting and productivity increases raised non-financial corporate profits sharply from their lowest levels since World War II. However, it is difficult to predict future profit growth. Stock prices seemed overvalued at year end, given that the S&P 500 Index was selling at an approximate 29 price-earnings multiple. The declining U.S. dollar will continue to put pressure on interest rates. While foreigners have been financing the U.S. balance of payments deficits, this has become less attractive as the dollar declines and interest rates remain low, and net foreign portfolio inflows (stocks and bonds) have declined. Finally, a very easy monetary policy, a high federal budget deficit, and surging commodity prices could signal a resurgence in consumer inflation, as they did in the 1970s. Inflation is the traditional way governments have eliminated the burden of high consumer and corporate debt, as the U.S. did in the 1970s. In conclusion, it is our view that there are three primary reasons to consider diversifying an investment portfolio with gold or gold-mining shares. First, gold's price generally has a negative or zero correlation with stock market averages (except in 2003), which means it is prudent diversification by reducing risk. Second, it is a debt-free monetary asset which risk-averse investors seek in periods of financial distress. Third, it is an historic "store of value" which, in our opinion, makes it (and other tangible assets) attractive in the current period of negative real returns on short-term financial assets which impair wealth. For years we have recommended allocating a small portion of an investment portfolio into gold-related assets as good portfolio diversification and as a hedge against rising economic and financial risks. Our stance on gold has been maintained even through periods of declining gold prices. We continue to believe that it is a prudent strategy to preserve real wealth and to improve portfolio performance. We appreciate your participation in the Van Eck International Investors Gold Fund and we look forward to working with you in the future. [GRAPHIC OMMITTED] [GRAPHIC OMMITTED] /s/ Joseph M. Foster /s/ John C. van Eck JOSEPH M. FOSTER JOHN C. VAN ECK PORTFOLIO MANAGER FOUNDER January 26, 2004 15 INTERNATIONAL INVESTORS GOLD FUND -------------------------------------------------------------------------------- All references to Fund assets refer to Total Net Assets. Please note that precious metals prices can swing sharply in response to cyclical economic conditions, political events or the monetary policies of various countries. Investors should be aware that market conditions resulting in the extremely high performance of the gold sector in the recent past may not continue. Please read the current prospectus for more complete information, such as charges, expenses and the risks associated with international investing, including currency fluctuation or controls, expropriation, nationalization and confiscatory taxation. All indices listed are unmanaged indices and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. An Index's performance is not illustrative of the Fund's performance. Indices are not securities in which investments can be made. 1 The Philadelphia Stock Exchange Gold and Silver (XAU) Index is a capitalization-weighted index which includes the leading companies involved in the mining of gold and silver. 2 The Standard & Poor's (S&P) 500 Index consists of 500 widely held common stocks, covering four broad sectors (industrials, utilities, financial and transportation). It is a market value-weighted index (stock price times shares outstanding), with each stock affecting the Index in proportion to its market value. Construction of the S&P 500 Index proceeds from industry group to the whole. Since some industries are characterized by companies of relatively small stock capitalization, the Index is not comprised of the 500 largest companies on the New York Stock Exchange. This Index, calculated by Standard & Poor's, is a total return index with dividends reinvested. 3 The Financial Times Gold Mines Index is a market capitalization-weighted global index of gold-mining shares. 4 Gold Fields Mineral Services Ltd. (GFMS) is a London-based research company, focused on the gold, silver and PGM markets, and best known for its flagship publication, the Gold Survey, published in April of each year. -------------------------------------------------------------------------------- PERFORMANCE RECORD AS OF 12/31/03 (UNAUDITED) -------------------------------------------------------------------------------- AVERAGE ANNUAL AFTER MAXIMUM BEFORE SALES TOTAL RETURN SALES CHARGE* CHARGE -------------------------------------------------------------------------------- A Shares- -------------------------------------------------------------------------------- 1 year 35.90% 44.25% -------------------------------------------------------------------------------- 5 year 16.36% 17.74% -------------------------------------------------------------------------------- 10 year (0.18)% 0.42% -------------------------------------------------------------------------------- 15 year 3.53% 3.94% -------------------------------------------------------------------------------- 20 year 2.95% 3.26% -------------------------------------------------------------------------------- Life (since 2/10/56) 9.97% 10.10% -------------------------------------------------------------------------------- C Shares- -------------------------------------------------------------------------------- Life (since 10/3/03) 24.11% 25.11% -------------------------------------------------------------------------------- PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. Performance information reflects waivers of expenses and/or fees. Investment return and value of shares of the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. * A shares: maximum sales charge is 5.75% C shares: 1.00% redemption charge, first year 16 INTERNATIONAL INVESTORS GOLD FUND -------------------------------------------------------------------------------- GEOGRAPHICAL WEIGHTINGS* AS OF DECEMBER 31, 2003 (UNAUDITED) Australia 8.5% Canada 48.6% Ghana 3.1% Norway 1.3% Short-Term Obligation 7.3% South Africa 19.7% Sweden 0.2% United States 11.3% ------------------- *Percentage of net assets. 17 INTERNATIONAL INVESTORS GOLD FUND PERFORMANCE COMPARISON (UNAUDITED) -------------------------------------------------------------------------------- These graphs compare a hypothetical $10,000 investment in the Van Eck International Investors Gold Fund made ten years ago (Class A) and at inception (Class C) with a similar investment in the Philadelphia Stock Exchange Gold and Silver (XAU) Index. VAN ECK INTERNATIONAL INVESTORS GOLD FUND (CLASS A) vs. the Philadelphia Stock Exchange Gold and Silver (XAU) Index [The table below represents a graph in the printed piece.] International Investors Gold Fund-A Philadelphia Stock Exchange Date (with sales charge)(2) Gold & Silver Index ------ ----------------------------------- --------------------------- Dec-93 9426 10000 Mar-94 8540 10155 Jun-94 8506 8784 Sep-94 10537 10094 Dec-94 9327 8374 Mar-95 8511 9358 Jun-95 8223 9246 Sep-95 8961 9571 Dec-95 8494 9305 Mar-96 9907 11130 Jun-96 8868 9603 Sep-96 8204 8952 Dec-96 7699 9098 Mar-97 7252 8128 Jun-97 6371 7487 Sep-97 6566 8589 Dec-97 4927 5839 Mar-98 5221 6435 Jun-98 4422 5663 Sep-98 4625 5930 Dec-98 4342 5152 Mar-99 4059 4748 Jun-99 3993 5336 Sep-99 4536 6456 Dec-99 3805 5478 Mar-00 3234 4593 Jun-00 3327 4719 Sep-00 2941 4105 Dec-00 2961 4245 Mar-01 2775 3954 Jun-01 3295 4436 Sep-01 3556 4836 Dec-01 3576 4568 Mar-02 5183 5973 Jun-02 6131 6042 Sep-02 5917 5942 Dec-02 6811 6550 Mar-03 5736 5755 Jun-03 6491 6777 Sep-03 8095 7885 Dec-03 9825 9432 -------------------------------------------------------------------------------- Average Annual Total Return 12/31/03 1 Year 5 Year 10 Year -------------------------------------------------------------------------------- VE International Investors Gold Fund-A (w/o sales charge) 44.25% 17.74% 0.42% -------------------------------------------------------------------------------- VE International Investors Gold Fund-A (with sales charge)(2) 35.90% 16.36% (0.18)% -------------------------------------------------------------------------------- Philadelphia Stock Exchange Gold & Silver (XAU) Index 43.96% 12.86% (0.58)% -------------------------------------------------------------------------------- VAN ECK INTERNATIONAL INVESTORS GOLD FUND (CLASS C) vs. the Philadelphia Stock Exchange Gold and Silver (XAU) Index [The table below represents a graph in the printed piece.] International Investors Gold Fund-C Philadelphia Stock Exchange Date (with sales charge)(3) Gold & Silver Index ------ ----------------------------------- --------------------------- Oct-3-03 10000 10000 Oct-03 11347 10767 Nov-03 12812 12048 Dec-03 12411 11961 -------------------------------------------------------------------------------- Total Return 12/31/03 Since Inception(1) -------------------------------------------------------------------------------- VE International Investors Gold Fund-C (w/o sales charge) 25.11% -------------------------------------------------------------------------------- VE International Investors Gold Fund-C (with sales charge)(3) 24.11% -------------------------------------------------------------------------------- Philadelphia Stock Exchange Gold & Silver (XAU) Index 19.61% -------------------------------------------------------------------------------- 1 INCEPTION DATE FOR THE VAN ECK INTERNATIONAL INVESTORS GOLD FUND WAS 2/10/56 (CLASS A) AND 10/3/03 (CLASS C). Index returns for Class C are calculated as of nearest month end (9/30/03). 2 The maximum sales charge is 5.75%. 3 1.00% redemption charge taken into account on total return for one-year time period. Returns for the Van Eck International Investors Gold Fund (Classes A & C) reflect all recurring expenses and include the reinvestment of all dividends and distributions. The Philadelphia Stock Exchange Gold and Silver (XAU) 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. An index's performance is not illustrative of the Fund's performance. Indices are not securities in which investments can be made. The Philadelphia Stock Exchange Gold and Silver (XAU) Index is a capitalization-weighted index which includes the leading companies involved in the mining of gold and silver. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. Performance information reflects waivers of expenses and/or fees. Investment return and value of shares of the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. 18 U.S. GOVERNMENT MONEY FUND -------------------------------------------------------------------------------- Dear Shareholder: The Van Eck U.S. Government Money Fund seeks to provide a high degree of safety and daily liquidity. It also serves to assist investors who wish to use our exchange or our check-writing privileges. The Fund's seven-day average yield was 4.55%* and its 30-day average yield was 1.06% on December 31, 2003. Please note, however, that the Fund's net expenses exceeded its income yield in 2003, and therefore a nominal dividend income was paid to shareholders (please see the Financial Highlights on page 43 for more details). During 2003, the yield on three-month Treasury bills averaged 1.02%, reflecting the historically low interest rates. Treasury bill rates remained low throughout the second half as the Federal Reserve maintained a fed funds target rate of 1.00% following its 0.25% rate cut in early June, representing its lowest level since 1958. Although the economy gained significant momentum in the second half, a lack of inflationary pressures allowed the Fed to maintain its accommodative monetary policy. Three-month T-bill rates began the year at a high of 1.22% and ended the year lower at 0.92%. While the economic recovery has gained momentum with GDP growth estimated at 3.1% for the year (versus 2.4% in 2002), money market rates are not likely to rise until the Fed begins to see indications of sustained tightening in the labor market. The Fund's investment strategy continues to emphasize safety, liquidity and preservation of capital by focusing its investments in short-term U.S. Treasury obligations and repurchase agreements collateralized by U.S. Treasury obligations. Treasury bills and repurchase agreements represent the most conservative money market investments available and offer the highest degree of security given that they are backed by the United States 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 slightly 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 convenient access to cash. The Fund also provides an excellent base from which investors may exchange money into or out of other members of the Van Eck Family of Funds.+ Investors should be aware than an investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. There can be no assurance that the Fund will be able to maintain a stable net asset value of $1.00 per share. It is possible to lose money by investing in the Fund. We appreciate your participation in the Van Eck U.S. Government Money Fund and look forward to helping you meet your investment objectives in the future. [GRAPHIC OMMITTED] /s/ Gregory F. Krenzer Gregory F. Krenzer Portfolio Manager January 23, 2004 ------------------------ * Performance data represents past performance and is not indicative of future results. An investor's shares, when redeemed, may be worth more or less than their original cost. + 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 Funds, except for the International Investors Gold Fund. The Funds reserve the right to modify or terminate the terms of the Exchange Privilege. The Adviser is currently waiving certain or all expenses on the Fund. Had the Fund incurred all expenses, investment returns would have been reduced. 19 MID CAP VALUE FUND -------------------------------------------------------------------------------- Dear Shareholder: EFFECTIVE JUNE 1, 2003, NEW YORK LIFE INVESTMENT MANAGEMENT LLC (NYLIM) BECAME THE SUB-ADVISER TO THE VAN ECK MID CAP VALUE FUND, REPLACING JOHN A. LEVIN & CO. THE VALUATION METRICS DIVISION OF NYLIM IS RESPONSIBLE FOR THE DAY-TO-DAY PORTFOLIO MANAGEMENT DECISIONS THAT AFFECT THE FUND. We are pleased to report to you that the Van Eck Mid Cap Value Fund gained 43.10% for the twelve months ended December 31, 2003. Your Fund outpaced the performance of the broader stock market, which advanced 28.67% as measured by Standard & Poor's (S&P) 500 Index.1 The Fund also had a respectable showing relative to its benchmark index, the Russell Midcap Index,2 which rose 40.06% for the year. The Standard & Poor's Midcap 400 Index,3 another measure of mid-cap stock performance, gained 35.59% for the year. For a review of your Fund's results dating back to its inception in 2002, please see the table that follows this letter. While investor sentiment was somewhat negative at the outset of 2003, the mood changed dramatically over the course of the year. A significant recovery in a broad range of equities unfolded, with all the broadly watched indices ending 2003 with positive performance. Small-capitalization stocks performed relatively better, followed by mid- and then large-capitalization stocks. It was a period in which risk aversion abated and asset classes that are perceived as risky, including higher valuation and more speculative stocks, performed well. The market also favored growth over value for small- and mid-capitalization stocks, while both investment styles performed similarly for large-cap stocks. MARKET & ECONOMIC REVIEW In the first quarter of 2003, the market reflected much uncertainty due to the political conflicts in the Middle East. However, the relatively quick resolution of the Iraq war in early April, combined with 45-year low interest rates and the new tax stimulus package, helped set the stage for a potent economic rebound that took hold as the year progressed. In June, the Federal Reserve lowered its fed funds target a quarter-percentage point, to 1%, its lowest level since 1958. While growth had been expected to pick up in the second half, the U.S. economy grew at an astounding annualized pace of 8.2% in the third quarter and approximately 4.0% is expected in the fourth quarter. For the year, U.S. GDP growth is likely to be in the 3.1% range, compared to 2.4% in 2002. While a broad-based conviction seems to be taking hold that economic growth is indeed sustainable, concerns persist given that the unemployment rate remains at a relatively high 5.7% (as of December 31). Thus far, this recovery bears little resemblance to the hiring-led upturns of the past. In addition, the U.S. is burdened with a large federal budget and current account deficits, which continue to make investors nervous about our ability to attract foreign capital to help finance our debt. The economic rebound and increased geopolitical stability helped provide positive support for equity markets in 2003. All the major market indices rebounded sharply-especially in the second and fourth quarters-taking many by surprise. The large-cap S&P 500 Index climbed 28.67%; the tech-heavy Nasdaq Composite Index4 was up 50.77%; the small-cap Russell 2000 Index5 gained 47.25%; and the Russell Midcap Index climbed 40.06% as mentioned above. Although technology companies (including some of the most downtrodden companies of the bear market) were the leaders of this strong advance, many industries posted gains. What is notable, however, is that in many cases, higher-quality, larger-capitalization, dividend-paying companies lagged the market last year. While we would agree that 2003 was an excellent year for most equity investors, in many cases, the heady returns were not enough to erase the losses sustained in the bear market of the previous three years. FUND REVIEW Since taking over responsibilities as sub-adviser to the Van Eck Mid Cap Value Fund on June 1, 2003, we at NYLIM have repositioned the Fund's portfolio. We have focused on selecting mid-capitalization stocks that we believe have an attractive combination of operating, valuation and price characteristics. We employ a bottom-up, relative value-oriented, quantitative approach to selecting stocks, while seeking to achieve strong risk-adjusted returns. Many changes were made to your Fund's portfolio in 2003, especially given the change in investment managers in June. At mid-year, we explained that the Fund's portfolio was broadened and diversified in 20 MID CAP VALUE FUND -------------------------------------------------------------------------------- the first half. This strategy continued in the second half, with the number of holdings climbing from 63 at June 30 to 78 by December 31. A review of the Fund's top holdings at June 30 shows that eight of the top ten were sold in the second half. These were Seagate Technology, Level 3 Communications, Tyson Foods, Archer-Daniels-Midland, Torch Offshore, UNUMProvident, United States Steel, and Unocal. Together, these companies accounted for 24.0% of your Fund's net assets at June 30, and 0% at December 31. A review of your Fund's top ten holdings at year end shows that Universal Health Services was the Fund's largest holding (through capital appreciation) and that several first-half holdings assumed top-ten positions given the large sales just outlined. These included Lear, Max Re Capital, Williams Companies, Watson Pharmaceuticals, InFocus, Maytag and Black & Decker. In addition, two new purchases were added to the top ten: R.J. Reynolds Tobacco Holdings and Sanmina-SCI. [THE PERCENTAGE OF THE FUND'S TOTAL NET ASSETS ALLOCATED TO THE ABOVE MENTIONED HOLDINGS AS OF DECEMBER 31, 2003: LEAR, 2.6%; MAX RE CAPITAL, 2.4%; WILLIAMS COMPANIES, 2.2%; WATSON PHARMACEUTICALS, 2.2%; INFOCUS, 2.2%; MAYTAG, 2.1%; BLACK & DECKER, 2.0%; R.J. REYNOLDS TOBACCO HOLDINGS, 1.9%; AND SANMINA-SCI, 1.9%.] Although we employ a bottom-up approach in constructing the Fund's portfolio, major contributions to the Fund's strong performance in the second half (in which your Fund gained 22.30%) came from specific industry sectors. These were information technology, healthcare, and financial services. All three groups benefited from strong momentum in the equity market and favorable reports of improving business conditions. At year end, your Fund had 18.7%, 15.3%, and 20.8% invested in these sectors, respectively. Within the technology group, notable contributors to performance included Maxtor, a manufacturer of hard disk drive storage products; InFocus, a maker of data/video multimedia projection products; and Sanmina-SCI, the electronics contract manufacturer. Notable healthcare performers included PacifiCare Health Systems, a managed healthcare services company; Coventry Health Care, a managed healthcare company; and Manor Care, an owner and operator of long-term care centers. Finally, the strongest insurance contributor was Max Re Capital, a Bermuda-based multi-line reinsurance company for both the life and annuity and property and casualty insurance markets. [THE PERCENTAGE OF THE FUND'S TOTAL NET ASSETS ALLOCATED TO THE ABOVE MENTIONED HOLDINGS AS OF DECEMBER 31, 2003: MAXTOR, 1.3%; INFOCUS, 2.2%; SANMINA-SCI, 1.9%; PACIFICARE HEALTH SYSTEMS, 1.5%; COVENTRY HEALTH CARE, 1.4%; MANOR CARE, 1.4%; AND MAX RE CAPITAL, 2.4%.] During the period, the energy and tele-communications services were weak contributors in the market as well as for your Fund. Although your Fund's combined allocation to these two sectors stood at 9.3% as of June 30, 2003, we substantially reduced the Fund's exposure in the second half and the allocation had declined to 0.9% at year end. We thank you for your investment in the Van Eck Mid Cap Value Fund, and we look forward to continuing to work with you in the future. [GRAPHIC OMMITTED] [GRAPHIC OMMITTED] /s/ Wesley G. McCain /s/ Kathy O'Connor WESLEY G. MCCAIN KATHY O'CONNOR SENIOR PORTFOLIO MANAGER SENIOR PORTFOLIO MANAGER NEW YORK LIFE INVESTMENT NEW YORK LIFE INVESTMENT MANAGEMENT LLC (NYLIM) MANAGEMENT LLC (NYLIM) January 26, 2004 21 MID CAP VALUE FUND -------------------------------------------------------------------------------- All references to Fund assets refer to Total Net Assets. All indices listed are unmanaged indices and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. An index's performance is not illustrative of the Fund's performance. Indices are not securities in which investments can be made. 1 The Standard & Poor's (S&P) 500 Index consists of 500 widely held common stocks, covering four broad sectors (industrials, utilities, financial and transportation). It is a market value weighted index (stock price times shares outstanding), with each stock affecting the index in proportion to its market value. Construction of the S&P 500 Index proceeds from industry group to the whole. Since some industries are characterized by companies of relatively small stock capitalization, the Index is not comprised of the 500 largest companies on the New York Stock Exchange. This Index, calculated by Standard & Poor's, is a total return index with dividends reinvested. 2 The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, representing approximately 26% of the total market capitalization of the Russell 1000 Index. As of the latest reconstitution, the average market capitalization was approximately $3.6 billion; the median market capitalization was approximately $2.8 billion. The index had a total market capitalization range of approximately $10.8 billion to $1.3 billion. 3 The Standard & Poor's (S&P) Midcap 400 Index is a capitalization-weighted index which measures the performance of the mid-range sector of the U.S. stock market. 4 The Nasdaq Composite Index is a broad-based capitalization weighted index of all Nasdaq national market and small-cap stocks. 5 The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, representing approximately 8% of the total market capitalization of the Russell 3000 Index. As of the latest reconstitution, the average market capitalization was approximately $580 million; the median market capitalization was approximately $466 million. The largest company in the Index has an approximate market capitalization of $1.5 billion. -------------------------------------------------------------------------------- PERFORMANCE RECORD AS OF 12/31/03 (UNAUDITED) -------------------------------------------------------------------------------- AVERAGE ANNUAL AFTER MAXIMUM BEFORE SALES TOTAL RETURN SALES CHARGE* CHARGE -------------------------------------------------------------------------------- A shares- -------------------------------------------------------------------------------- 1 year 34.86% 43.10% -------------------------------------------------------------------------------- Life (since 1/1/02) (2.61)% 0.33% -------------------------------------------------------------------------------- PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. Performance information reflects waivers of expenses and/or fees. Investment return and value of shares of the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. 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 is 5.75% 22 MID CAP VALUE FUND -------------------------------------------------------------------------------- SECTOR WEIGHTINGS* AS OF DECEMBER 31, 2003 (UNAUDITED) Consumer Discretionary 25.4% Utilities 4.9% Transportation 1.6% Industrials 4.1% Consumer Staples 5.7% Other Assets Less Liabilities 1.0% Financial Services 20.8% Healthcare 15.3% Information Technology 18.7% Materials 1.6% Telecommunications Services 0.9% ------------------- *Percentage of net assets. 23 MID CAP VALUE FUND TOP TEN EQUITY HOLDINGS AS OF DECEMBER 31, 2003* -------------------------------------------------------------------------------- UNIVERSAL HEALTH SERVICES, INC. (3.3%) Universal Health Services owns and operates acute care hospitals, behavioral health centers, ambulatory surgery centers, radiation oncology centers, and women's centers in the U.S. The company provides services such as general surgery, internal medicine, obstetrics, radiology, pediatric services and behavioral health services. LEAR CORP. (2.6%) Lear designs and manufactures interior systems and components for automobiles and light trucks. Lear has in-house capabilities in seat systems, floor and acoustic systems, door panels, headliners and instrument panels. MAX RE CAPITAL LTD. (2.4%) Max Re Capital, through its principal operating subsidiaries, Max Re Ltd., Max Re Europe Ltd. and Max Insurance Europe Ltd., provides reinsurance to property and casualty insurers, life and health insurers, and large corporations. WILLIAMS COMPANIES, INC. (2.2%) Williams Companies moves, manages and markets a variety of energy products, including natural gas, liquid hydrocarbons, petroleum and electricity. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, the Rocky Mountains, the Gulf Coast and the Eastern Seaboard of the United States. WATSON PHARMACEUTICALS, INC. (2.2%) Watson Pharmaceuticals is a specialty pharmaceutical company engaged in the development, production, marketing and distribution of both branded and off-patent pharmaceutical products, using various drug delivery technologies. INFOCUS CORP. (2.2%) InFocus specializes in digital projection technology and services for both home and business. The company develops, manufactures and markets multimedia projection products to present video, audio, graphics and data from personal computers, workstations, VCRs, PDAs and laser disc players. MAYTAG CORP. (2.1%) Maytag manufactures, distributes and services a broad line of home appliances. Maytag also manufactures bottle and can vending equipment and glass front merchandisers. BLACK & DECKER CORP. (2.0%) Black & Decker manufactures, markets and services power tools and accessories, residential security hardware, household appliances and metal and plastic fasteners/fastening systems for commercial applications. R.J. REYNOLDS TOBACCO HOLDINGS, INC. (1.9%) R.J. Reynolds Tobacco Holdings is a holding company for Reynolds Tobacco, a cigarette manufacturer in the U.S., whose major brands include Doral, Winston, Camel, Salem and Vantage. SANMINA-SCI CORP. (1.9%) Sanmina provides customized integrated electronic manufacturing services, including turnkey electronic assembly and manufacturing management services to original equipment manufacturers. --------------------- *Portfolio subject to change. 24 MID CAP VALUE FUND PERFORMANCE COMPARISON (UNAUDITED) -------------------------------------------------------------------------------- This graph compares a hypothetical $10,000 investment in the Van Eck Mid Cap Value Fund made at its inception with a similar investment in the Russell Midcap Index and the Russell 2500 Value Index. VAN ECK MID CAP VALUE FUND (CLASS A) vs.Russell Midcap Index and the Russell 2500 Value Index [The table below represents a graph in the printed piece.] Mid Cap Value Fund-A Russel Midcap Russell 2500 Date (with sales charge)(2) Index Value Index ------ ---------------------- ------------- ------------ 1/1/02 9423 10000 10000 Jan-02 9184 9940 10092 Feb-02 9065 9835 10218 Mar-02 9901 10425 10851 Apr-02 9345 10222 11036 May-02 8623 10107 10855 Jun-02 8119 9429 10472 Jul-02 6987 8509 9260 Aug-02 7257 8556 9310 Sep-02 6244 7766 8548 Oct-02 6317 8159 8670 Nov-02 6909 8725 9303 Dec-02 6629 8381 9013 Jan-03 6748 8212 8741 Feb-03 6374 8103 8526 Mar-03 6213 8183 8583 Apr-03 6888 8778 9360 May-03 7688 9581 10226 Jun-03 7756 9678 10410 Jul-03 7979 9997 10862 Aug-03 8291 10431 11299 Sep-03 8239 10300 11219 Oct-03 8909 11086 12076 Nov-03 9252 11397 12568 Dec-03 9486 11739 13062 -------------------------------------------------------------------------------- Since Average Annual Total Return 12/31/03 One Year Inception(1) -------------------------------------------------------------------------------- VE Mid Cap Value Fund-A (w/o sales charge) 43.10% 0.33% -------------------------------------------------------------------------------- VE Mid Cap Value Fund-A (with sales charge)(2) 34.86% (2.61)% -------------------------------------------------------------------------------- Russell Midcap Index 40.06% 8.35% -------------------------------------------------------------------------------- Russell 2500 Value Index 44.93% 14.29% -------------------------------------------------------------------------------- 1 INCEPTION DATE FOR THE VAN ECK MID CAP VALUE FUND WAS 1/1/02. Index returns are calculated as of nearest month end (12/31/01). 2 The maximum sales charge is 5.75%. Returns for the Van Eck Mid Cap Value Fund (Class A) 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. Effective June 1, 2003, New York Life Investment Management LLC (NYLIM) became investment sub-adviser to the Fund. Prior to January 1, 2002 ("inception date"), the Fund operated under a different name with a different investment sub-adviser. Going forward, the Fund will be compared to the Russell Midcap Index as the Sub-Adviser believes it is a more appropriate benchmark and better reflects the Fund's holdings. The Russell Midcap Index and the Russell 2500 Value Index are unmanaged indices and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. An index's performance is not illustrative of the Fund's performance. Indices are not securities in which investments can be made. The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 26% of the total market capitalization of the Russell 1000 Index. As of the latest reconstitution, the average market capitalization was approximately $3.6 billion; the median market capitalization was approximately $2.8 billion. The Index had a total market capitalization range of approximately $10.8 billion to $1.3 billion. The Russell 2500 Value Index measures the performance of those companies in the Russell 2500 Index with lower price/book ratios and lower forecasted growth values. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. Performance information reflects waivers of expenses and/or fees. Investment return and value of shares of the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. 25 EMERGING MARKETS FUND SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 2003 NO. OF SHARES SECURITIES (A) VALUE (NOTE 1) -------------------------------------------------------------------------------- BRAZIL: 9.2% 9,900 Cia Vale do Rio Doce (ADR) $ 509,949 18,000 Gerdau S.A. (Preferred Stock) 378,177 287,000 Itausa Investimentos Itau S.A. 340,450 250,000 Klabin 326,388 14,600 Petroleo Brasileiro S.A. (ADR) 426,904 50,000 Tele Norte Leste Participacoes S.A. (ADR) 771,500 5,000 Votorantim Celulose (Sponsored ADR) 156,750 ------------- 2,910,118 ------------- CHINA: 2.5% 1,270,000 Global Bio-Chem Technology Group 785,213 ------------- CZECH REPUBLIC: 0.9% 9,000 Komercni Banka AS (GDR) 278,820 ------------- HONG KONG: 7.2% 2,740,000 Asia Aluminium Holdings Ltd. 543,518 730,000 Chen Hsong Holdings Ltd. 573,582 395,000 Hopewell Holdings Ltd. 608,005 1,200,000 Kin Yat Holdings Ltd. 225,671 4,636,000 Media Partners International Holdings, Inc.+ 328,434 ------------- 2,279,210 ------------- INDIA: 5.2% 40,000 Bharat Electronics Ltd. 535,341 125,000 Gail India Ltd. 715,247 35,000 State Bank of India 414,231 ------------- 1,664,819 ------------- INDONESIA: 3.4% 850,000 Dynaplast Tbk 141,288 5,250,000 Enseval Putera Megatrading Tbk 230,632 870,000 PT Telekomunikasi Indonesia 697,240 ------------- 1,069,160 ------------- ISRAEL: 1.4% 8,000 Teva Pharmaceutical Industries Ltd. 453,680 ------------- MALAYSIA: 3.7% 1,570,000 Multi-Purpose Holdings Berhad+ 462,737 157,000 Multi-Purpose Holdings Berhad Rights (MYR 0.105, expiring 1/19/04)+* 620 535,000 Transmile Group Berhad 698,316 ------------- 1,161,673 ------------- MEXICO: 4.3% 186,500 Grupo Financiero Banorte S.A. de C.V. 647,757 80,000 TV Azteca, S.A. de C.V. (Sponsored ADR) 728,000 ------------- 1,375,757 ------------- RUSSIA: 0.9% 3,000 Lukoil (Sponsored ADR) $ 279,000 ------------- SINGAPORE: 3.1% 800,000 First Engineering Ltd. 504,033 1,000,000 Goodpack Ltd. 479,892 ------------- 983,925 ------------- SOUTH AFRICA: 8.0% 520,704 African Bank Investments Ltd. 734,498 390,000 Alexander Forbes Ltd. 684,747 110,000 MTN Group Ltd. 467,630 480,000 Sanlam Ltd. 631,178 ------------- 2,518,053 ------------- SOUTH KOREA: 25.3% 5,300 Cheil Communications, Inc. 769,534 64,000 Hanjin Shipping 1,187,075 27,300 Hyundai Motor Co. Ltd. 1,157,071 41,500 Kangwon Land Inc. 494,587 5,000 POSCO 684,012 4,376 Samsung Electronics Co. Ltd. 1,656,379 60,000 SFA Engineering Corp. 810,743 3,800 Shinsegae Co. Ltd. 924,885 1,850 SK Telecom Co. Ltd. 308,980 ------------- 7,993,266 ------------- TAIWAN: 15.7% 336,219 Advantech Co. Ltd. 579,346 9,414 Eva Airways Corp. 3,840 865,000 King Yuan Electronics+ 873,918 83,700 MediaTek, Inc. 786,460 988,640 Mega Financial Holding Co. Ltd. 594,058 192,100 Pihsiang Machinery Mfg. Co. Ltd. 667,682 750,000 Test-Rite International Co. Ltd. 466,127 170,000 TYC Brother Industrial Co. Ltd. 238,851 400,900 Wan Hai Lines Ltd. 362,522 390,000 Yang Ming Marine Transport 387,128 ------------- 4,959,932 ------------- THAILAND: 5.4% 4,500,000 Asian Property Development Public Co. Ltd. 653,038 400,000 C.P. Seven Eleven Public Co. Ltd.+ 565,335 700,000 Major Cineplex Group Public Co. Ltd. 282,668 175,000 Major Cineplex Group Public Co. Ltd. Warrants (THB 13.00, expiring 1/01/06)+* 13,250 40,000 Quality Houses Public Co. Ltd. Warrants (THB 6.00, expiring 5/20/08) 10,741 424,700 Royal Garden Resort Public Co. Ltd. 186,505 ------------- 1,711,537 ------------- TURKEY: 1.6% 123,200,000 Turkiye Is Bankasi+ 499,993 ------------- See Notes to Financial Statements 26 EMERGING MARKETS FUND SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) DECEMBER 31, 2003 VALUE (NOTE 1) -------------------------------------------------------------------------------- TOTAL STOCKS AND OTHER INVESTMENTS: 97.8% (Cost: $23,833,019) $ 30,924,156 OTHER ASSETS LESS LIABILITIES: 2.2% 697,756 ------------- NET ASSETS: 100% $ 31,621,912 ============= (a) Unless otherwise indicated, securities owned are shares of common stock. + Non-income producing * Fair value as determined by a valuation committee under the direction of the Board of Trustees. GLOSSARY: ADR - American Depositary Receipt GDR - Global Depositary Receipt SUMMARY OF % OF INVESTMENTS NET BY INDUSTRY ASSETS ------------ ------ Auto 4.40% Banks 6.90% Biotechnology 2.50% Capital Goods 3.50% Consumer Products 1.50% Diversified Financial 8.40% Energy 4.50% Entertainment 0.90% Manufacturing 9.20% Materials 5.00% Media 5.80% Multi Industries 1.40% Pharmaceutical 2.10% Pulp and Paper 1.50% Real Estate 6.20% Retail 4.70% Shipping 6.50% Technology Hardware 12.30% Telecomunications 7.10% Transportation 3.40% Other assets less liabilities 2.20% -------- 100.00% ======== See Notes to Financial Statements 27 GLOBAL HARD ASSETS FUND SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 2003 NO. OF SHARES SECURITIES (A) VALUE (NOTE 1) -------------------------------------------------------------------------------- AUSTRALIA: 6.6% 80,000 Alumina Ltd. $ 395,225 26,846 BHP Billiton Ltd. 246,078 37,462 BHP Billiton PLC (GBP) 326,050 5,369 BHP Steel Ltd. 22,608 650,000 Cooper Energy NL+ 129,523 129,215 Newcrest Mining Ltd. 1,258,264 542,500 Oil Search Ltd. 416,092 247,000 Portman Ltd. 267,454 41,000 Rio Tinto Ltd. 1,146,874 160,500 Santos Ltd. 829,126 942,857 Southern Pacific Petroleum NL*+ (b) 0 ------------- 5,037,294 ------------- BERMUDA: 0.1% 6,400 Knightsbridge Tankers Ltd. 80,320 ------------- BRAZIL: 1.2% 32,000 Petroleo Brasileiro S.A. (ADR)+ 935,680 ------------- CANADA: 25.3% 15,000 Aber Diamond Corp.+ 544,980 87,000 Abitibi-Consolidated, Inc. 705,570 123,700 Bema Gold Corp.+ 460,804 205,000 Bema Gold Corp. Warrants (USD 2.00, expiring 6/02/04)*+ 446,789 707,700 Brazilian Resources, Inc.+ 80,675 5,720 Brookfield Homes Corp.+ 147,404 10,600 Brookfield Properties Corp. 304,220 18,000 Brookfield Properties Corp. (USD) 518,896 26,000 CHC Helicopter Corp. (Class A) 663,112 100,000 Cumberland Resources Ltd.+ 333,874 35,000 Domtar, Inc. 439,563 111,600 Domtar, Inc. Warrants (CAD 17.55, expiring 12/23/04)+ 1,393,884 24,450 Ensign Resources Service Group, Inc. 389,265 249,900 Esprit Exploration Ltd.+ 536,921 37,000 First Capital Realty, Inc.+ 454,386 30,000 FNX Mining Co., Inc.+ 202,179 243,000 Killam Properties, Inc.+ 326,780 39,865 Meridian Gold, Inc.+ 583,232 575,000 Miramar Mining Corp.+ 1,488,716 603,000 Northern Orion Resources, Inc.+ 1,435,381 301,500 Northern Orion Resources, Inc. Warrants (CAD 2.00, expiring 5/29/08)+ 377,487 7,800 NQL Drilling Tools, Inc. (Class A)+ 19,291 35,000 PetroKazakhstan, Inc. (Class A)+ 787,850 31,800 Placer Dome, Inc. 569,538 70,000 SFK Pulp Fund 411,160 11,400 Suncor Energy, Inc. 286,344 22,600 Suncor Energy, Inc. (USD) 566,356 4,600 SunOpta, Inc.+ 42,458 37,000 Talisman Energy, Inc.+ 2,102,357 127,000 TimberWest Forest Corp. 1,246,541 9,000 Westport Innovations, Inc.+ 10,434 455,000 Wheaton River Minerals Ltd.+ 1,360,886 ------------- 19,237,333 ------------- CHINA: 0.8% 295,000 CNOOC Ltd. $ 577,575 ------------- FINLAND: 1.2% 67,500 Storo Enso Oyj (R Shares) 910,450 ------------- FRANCE: 3.2% 25,700 Total Fina Elf SA (Sponsored ADR)+ 2,377,507 3,000 Unibail S.A. Warrants (EUR 43.33, expiring 5/11/04)+ 75,423 ------------- 2,452,930 ------------- HONG KONG: 0.5% 44,400 Sun Hung Kai Properties Ltd. 367,450 ------------- RUSSIA: 2.0% 8,750 JSC MMC Norilsk Nickel (ADR) 581,875 7,800 Surgutneftegaz, Inc. Preferred Stock (Sponsored ADR) 301,470 62,149 YUKOS 656,293 ------------- 1,539,638 ------------- SOUTH AFRICA: 6.3% 13,200 Anglo American PLC 284,155 45,000 Gold Fields Ltd.+ 642,161 15,300 Impala Platinum Holdings Ltd. 1,326,011 58,000 Randgold Resources Ltd. (ADR)+ 1,583,400 72,500 Sappi Ltd. (ADR) 991,075 ------------- 4,826,802 ------------- SOUTH KOREA: 2.1% 46,000 POSCO (ADR) 1,562,620 ------------- UNITED KINGDOM: 3.0% 46,500 BP PLC (Sponsored ADR) 2,294,775 ------------- UNITED STATES: 43.2% 20,000 Agnico-Eagle Ltd. Warrants 56,000 (USD 19.00, expiring 11/14/07)+ 90,600 AK Steel Holding Corp.+ 462,060 30,900 Alcoa, Inc. (c) 1,174,200 15,000 AMB Property Corp. 493,200 14,200 Anadarko Petroleum Corp. 724,342 16,500 Baker Hughes, Inc. 530,640 7,000 Boston Properties, Inc. (c) 337,330 33,700 Bunge Ltd. 1,109,404 16,000 ConocoPhillips 1,049,120 60,000 Crescent Real Estate Equities Co. 1,027,800 22,000 Devon Energy Corp. 1,259,720 23,300 Ensco International Corp. 633,061 19,500 Firstenergy Corp. 686,400 18,000 FMC Technologies, Inc.+ 419,400 15,000 Forest Oil Corp.+ 428,550 71,000 GlobalSantaFe Corp. 1,762,930 88,000 Golden Star Resources Ltd.+ 613,360 42,000 Golden Star Resources Ltd. Warrants (USD 1.50, expiring 12/11/04)*+ 229,740 See Notes to Financial Statements 28 GLOBAL HARD ASSETS FUND SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) DECEMBER 31, 2003 NO. OF SHARES/ PRINCIPAL AMOUNT SECURITIES (A) VALUE (NOTE 1) -------------------------------------------------------------------------------- UNITED STATES: (CONTINUED) 116,700 Halliburton Co. $ 3,034,200 105,000 Hecla Mining Co.+ 870,450 34,500 Inco Ltd.+ 1,373,790 73,400 La Quinta Corp.+ 470,494 59,500 McDermott International, Inc.+ 711,025 16,500 Murphy Oil Corp. (c) 1,077,615 45,200 Noble Corp.+ (c) 1,617,256 46,600 Occidental Petroleum Corp. 1,968,384 94,000 Parker Drilling Co.+ 239,700 24,000 Pioneer Natural Resources, Inc.+ 766,320 44,000 Pope & Talbot, Inc. 774,840 23,000 Remington Oil & Gas Corp.+ 452,870 46,500 Rowan Companies, Inc.+ 1,077,405 29,000 Smith International, Inc.+ 1,204,080 10,000 Starwood Hotels & Resorts Worldwide, Inc. 359,700 13,000 United States Steel Corp. 455,260 9,000 Valero Energy Corp. 417,060 22,000 Weatherford International Ltd.+ 792,000 16,600 Westport Resources Corp.+ 495,676 21,600 Weyerhaeuser Co. 1,382,400 20,000 Worthington Industries, Inc. 360,600 ------------- 32,898,382 ------------- TOTAL STOCKS AND OTHER INVESTMENTS: 95.5% (Cost: $53,026,375) 72,721,249 ------------- CORPORATE NOTE AUSTRALIA: 0.1% 100,000 Cooper Energy NL Convertible Note 10.00%, 9/30/06* (Cost: $65,460) 75,195 ------------- OPTIONS PURCHASED: AUSTRALIA: 0.0% 942,857 Southern Pacific Petroleum NL (Call Option-Strike AUD 0.55, expiring 11/19/04)*+ (b) -- ------------- TOTAL OPTIONS PURCHASED: 0.0% (Premium paid: $0) -- ------------- SHORT-TERM OBLIGATION: 10.4% Interest Maturity Rate Date ------------------------------------------------------------------- $7,939,000 Repurchase Agreement (Note 10): Purchased on 12/31/03; maturity value $7,939,000 (with State Street Bank & Trust Co., collateralized by $8,130,000 Federal Home Loan Bank 1.40% due 6/17/05 with a value of $8,164,603) (Cost: $7,939,000) 0.75% 1/2/04 7,939,000 ------------- TOTAL INVESTMENTS: 106.0% (Cost: $61,030,835) 80,735,444 ------------- NOTIONAL AMOUNT SECURITIES (A) VALUE (NOTE 1) -------------------------------------------------------------------------------- OPTIONS SOLD: UNITED STATES: 0.0% (16,000) Noble Corp. (Call Option-Strike USD 37.50, expiring 1/17/04)+ $ (4,000) ------------ TOTAL OPTIONS SOLD: 0.0% (Premiums received: $15,601) (4,000) ------------ OTHER ASSETS LESS LIABILITIES: (6.0%) (4,579,551) ------------ Net Assets: 100% $76,151,893 ============ (a) Unless otherwise indicated, securities owned are shares of common stock. (b) Restricted security (Note 9) (c) Securities segregated for futures contracts and option written. + Non-income producing * Fair value as determined by a valuation committee under the direction of the Board of Trustees. GLOSSARY: ADR - American Depositary Receipt SUMMARY OF % OF INVESTMENTS NET BY INDUSTRY ASSETS ----------- ------- Agriculture 1.50% Energy 44.20% Industrial Metals 15.10% Paper & Forest Products 10.90% Precious Metals 15.70% Real Estate 6.40% Utilities 1.80% Short-Term Obligation 10.40% Other assets less liabilities -6.00% --------- 100.00% ========= See Notes to Financial Statements 29 INTERNATIONAL INVESTORS GOLD FUND SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 2003 NO. OF SHARES SECURITIES (A) VALUE (NOTE 1) -------------------------------------------------------------------------------- AUSTRALIA: 8.5% 1,825,000 Adamus Resources Ltd.+ $ 1,701,663 360,000 Kingsgate Consolidated Ltd. 1,039,496 6,533,788 Lihir Gold Ltd. 7,123,969 1,309,685 Newcrest Mining Ltd. 12,753,388 2,300,000 Oxiana Resources NL+ 1,815,959 1,666,666 Red Back Mining NL+ 927,405 422,000 Sino Gold Ltd.+ 920,236 ------------- 26,282,116 ------------- CANADA: 48.6% 230,800 Agnico-Eagle Mines Ltd. 2,785,756 1,310,000 Apollo Gold Corp.+ 2,996,831 187,500 Apollo Gold Corp. Warrants ($1.60, expiring 7/03/05)+* 128,217 650,000 Aurelian Resources, Inc.+ 1,145,374 650,000 Aurelian Resources, Inc. Warrants (CAD 0.60 year 1, CAD 0.75 year 2, CAD 0.85 year 3, CAD 1.00 year 4, expiring 4/09/07)+* 843,960 3,550,000 Aurizon Mines Ltd.+ 5,404,977 1,000,000 AXMIN, Inc.+ 966,072 500,000 Bema Gold Corp. Warrants (CAD 1.90, expiring 10/27/07)+ 1,263,622 1,078,600 Central Fund of Canada Ltd. (Class A) 5,662,650 1,800,000 Claude Resources, Inc.+ 3,004,869 1,400,000 Cumberland Resources Ltd.+ 4,674,241 2,000,000 Eldorado Gold Corp.+ 6,260,144 245,000 DRC Resources Corp+ 1,524,268 150,000 Gabriel Resources Ltd.+ 568,050 295,000 Gammon Lake Resources Inc.+ 1,436,355 298,800 Goldcorp, Inc. (Class A) 4,765,860 340,000 Golden Star Resources Ltd.+ 2,380,709 484,000 Golden Star Resources L 3,373,480 275,000 Golden Star Resources Ltd. Warrants (CAD 2.28, expiring 7/23/04)+ 1,492,001 83,500 Golden Star Resources Ltd. Warrants ($1.50, expiring 12/11/04)+* 456,745 750,000 Great Basin Gold Ltd.+ 1,970,786 1,488,200 IAMGOLD Corp. 10,374,499 450,000 Ivanhoe Mines Ltd.+ 3,582,193 25,005 Kinross Gold Corp.+ 199,437 929,490 Kinross Gold Corp.+ (USD) 7,426,625 750,660 Meridian Gold, Inc.+ 10,982,297 700,000 Minefinders Corp. Ltd.+ 5,734,601 2,497,300 Miramar Mining Corp.+ 6,465,689 360,000 Nevsun Resources Ltd.+ 1,869,696 1,072,000 Northern Orion Resources, Inc.+ 2,551,789 536,000 Northern Orion Resources, Inc. Warrants (CAD 2.00, expiring 5/29/08)+ 671,087 1,670,000 Northgate Exploration Ltd.+ 3,446,093 166,666 Northgate Exploration Ltd. Warrants (CAD 3.00, expiring 12/28/06)+ 99,827 3,000,000 Orezone Resources, Inc.+ 2,944,586 236,759 Pan American Silver Corp.+ 3,377,828 118,380 Pan American Silver Corp. Warrants (CAD 12.00, expiring 2/20/08)+ 849,035 659,875 Placer Dome, Inc. 11,818,361 NO. OF SHARES/ PRINCIPAL AMOUNT SECURITIES (A) VALUE (NOTE 1) -------------------------------------------------------------------------------- CANADA: (CONTINUED) 400,000 River Gold Mines Ltd.+ $ 1,267,486 685,000 Virginia Gold Mines Ltd 762,346 5,850,000 Wheaton River Minerals Ltd.+ 17,497,102 1,750,000 Wheaton River Minerals Ltd. Warrants (CAD 1.65, expiring 5/30/07)+ 3,110,750 475,000 Wolfden Resources Inc.+ 2,081,498 ------------- 150,217,792 ------------- GHANA: 3.1% 730,000 Ashanti Goldfield Co Ltd.+ 9,519,200 ------------- NORWAY: 1.3% 5,310,810 Kenor ASA+ 3,961,391 ------------- SOUTH AFRICA: 18.7% 142,449 AngloGold Ltd. (Sponsored ADR) 6,652,368 6,295,855 Avgold Ltd.+ 10,160,295 829,162 Gold Fields Ltd. (Sponsored ADR) 11,558,518 660,368 Harmony Gold Mining Co. Ltd. (Sponsored ADR) 10,717,773 46,000 Impala Platinum Holdings Ltd. (Sponsored ADR) 1,998,502 620,000 Randgold Resources Ltd. (ADR) 16,926,000 ------------- 58,013,456 ------------- SWEDEN: 0.2% 650,000 Riddarhyttan Resources AB+ 595,122 ------------- UNITED STATES: 11.3% 1,275,300 Glamis Gold Ltd.+ 21,833,136 912,400 Hecla Mining Co.+ 7,563,796 100,000 Metallica Resources, Inc.+ 174,000 1,610,000 Metallica Resources, Inc.+ (CAD) 2,749,903 255,000 Metallica Resources, Inc. Warrants (CAD 3.10, expiring 12/11/08)+* 0 475,000 Metallica Resources, Inc. Warrants (CAD 2.00, expiring 3/15/05)+* 77,093 119,100 Royal Gold, Inc. 2,492,766 ------------- 34,890,694 ------------- TOTAL STOCK AND OTHER INVESTMENTS: 91.7% (Cost: $110,704,698) 283,479,771 ------------- CORPORATE NOTE SOUTH AFRICA: 1.0% 3,000,000 Durban Roodeport Deep Ltd. 6.00% 11/12/06 Senior Convertible Note (Cost: $3,000,000) 3,225,000 ------------- See Notes to Financial Statements 30 INTERNATIONAL INVESTORS GOLD FUND SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) DECEMBER 31, 2003 PRINCIPAL MATURITY INTEREST AMOUNT DATE RATE VALUE (NOTE 1) -------------------------------------------------------------------------------- SHORT-TERM OBLIGATION: 7.3% $22,545,000 Repurchase Agreement Purchased on 12/31/03; maturity value $22,545,000 (with State Street Bank & Trust Co., collateralized by $22,680,000 Federal Home Loan Bank 2.375% due 10/1/04 with a value of $23,049,416) (Cost: $22,545,000) 1/2/04 0.75% $ 22,545,000 ------------- TOTAL INVESTMENTS: 100.0% (Cost: $136,249,698) 309,249,771 OTHER ASSETS LESS LIABILITIES: 0.0% 148,803 ------------- NET ASSETS: 100% $309,398,574 ============= ---------------------- (a) Unless otherwise indicated, securities owned are shares of common stock. + Non-income producing * Fair value as determined by a valuation committee under the direction of the Board of Trustees. GLOSSARY: ADR - American Depositary Receipt Summary of % of Investments Net by Industry Assets ------------- --------- Platinum 0.70% Precious Metals 92.00% Short-Term Obligation 7.30% --------- 100.00% ========= See Notes to Financial Statements 31 U.S. GOVERNMENT MONEY FUND SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 2003 ANNUALIZED YIELD AT TIME OF PRINCIPAL PURCHASE OR MATURITY VALUE AMOUNT COUPON RATE DATE (NOTE 1) -------------------------------------------------------------------------------- U.S. TREASURY BILLS: 82.0% $ 4,000,000 0.73% 1/15/04 $ 3,998,946 10,000,000 0.82% 3/11/04 9,984,283 ----------- TOTAL U.S. TREASURY BILLS: 82.0% (Amortized Cost: $13,983,229) 13,983,229 ----------- PRINCIPAL INTEREST MATURITY AMOUNT RATE DATE SHORT-TERM OBLIGATION: 22.3% $3,810,000 Repurchase Agreement (Note 10): Purchased on 12/31/03; maturity value $3,810,000 (with State Street Bank and Trust Co., collateralized by $3,850,000 U.S. Treasury Note 1.875% due 9/30/04 with a value of $3,907,092) (Cost: $3,810,000) 0.75% 1/2/04 3,810,000 ----------- TOTAL INVESTMENTS: 104.3% (Cost: $17,793,229) 17,793,229 OTHER ASSETS LESS LIABILITIES: (4.3)% (740,043) ------------ Net Assets: 100% $17,053,186 ============ See Notes to Financial Statements 32 [This page intentionally left blank.] 33 VAN ECK FUNDS STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2003
EMERGING GLOBAL HARD MARKETS FUND ASSETS FUND ------------ ----------- ASSETS: Investments at cost ........................................................................ $23,833,019 $61,030,835 =========== =========== Investments at value (including $7,939,000, $22,545,000 and repurchase agreements of $0, $3,810,000) (Note 1) ...................................... $30,924,156 $80,735,444 Cash ....................................................................................... 15,134 1,055,280 Foreign currency (Cost: $1,497,498, $376, $0 and $0 ....................................... 1,496,023 374 Cash--initial margin for swap (Note 11) .................................................... -- 38,990 Cash--initial margin for futures contracts (Note 1) ........................................ -- 63,278 Receivables: Securities sold ........................................................................ -- -- Due from Adviser ....................................................................... 8,721 -- Dividends and interest ................................................................. 60,284 117,113 Capital shares sold .................................................................... 1,808 809,990 Due from broker--swap (Note 11) ........................................................ -- 276,058 Due from broker--variation margin (Note 1) ............................................. -- 10,089 Prepaid expense ........................................................................ 5,498 1,082 Other assets ............................................................................... -- 14,270 ----------- ----------- Total assets ..................................................................... 32,511,624 83,121,968 ----------- ----------- LIABILITIES: Payables: Bank line of credit (Note 13) .......................................................... 532,155 -- Securities purchased ................................................................... 175,425 6,627,844 Dividends payable ...................................................................... -- -- Capital shares redeemed ................................................................ 89,377 150,541 Accounts payable ....................................................................... 71,326 84,717 Due to Trustees (Note 8) ............................................................... 1,623 8,980 Due to Distributor (Note 5) ............................................................ 19,004 28,038 Due to Adviser (Note 2) ................................................................ -- 65,955 Unrealized depreciation on forward foreign currency contracts (Note 7) 802 -- Options written (Premiums received $0, $15,601, $0 and $0) (Note 1) ........................ -- 4,000 ----------- ----------- Total liabilities ..................................................................... 889,712 6,970,075 ----------- ----------- Net Assets ................................................................................. $31,621,912 $76,151,893 =========== =========== CLASS A SHARES+: Net assets ................................................................................. $28,956,418 $64,661,449 =========== =========== Shares outstanding ......................................................................... 3,408,746 3,554,902 =========== =========== Net asset value and redemption price per share ............................................. $8.49 $18.19 =========== =========== Maximum offering price per share ........................................................... $9.01 $19.30 =========== =========== CLASS C SHARES: Net assets ................................................................................. $ 2,665,494 $11,490,444 =========== =========== Shares outstanding ......................................................................... 313,742 650,509 =========== =========== 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) ........................................................... $8.50 $17.66 =========== =========== Net assets consist of: Aggregate paid in capital .............................................................. $30,643,295 $95,458,464 Unrealized appreciation of investments, swaps, foreign currency, forward foreign currency contracts, and other assets and liabilities denominated in foreign currencies ..................................................................... 7,080,888 20,066,563 Overdistributed/underdistributed net investment loss ................................... (62,996) (27,122) Accumulated realized loss .............................................................. (6,039,275) (39,346,012) ----------- ----------- Net Assets ................................................................................. $31,621,912 $76,151,893 =========== ===========
--------------- + The U.S. Government Money Fund does not have a designated class of shares. See Notes to Financial Statements 34
INTERNATIONAL INVESTORS U.S. GOVERNMENT GOLD FUND MONEY FUND --------- ---------- ASSETS: Investments at cost ...................................................................... $136,249,698 $17,793,229 ============ =========== Investments at value (including $7,939,000, $22,545,000 and repurchase agreements of $0, $3,810,000) (Note 1) .................................... $309,249,771 $17,793,229 Cash ..................................................................................... 127 3,619 Foreign currency (Cost: $1,497,498, $376, $0 and $0 ..................................... -- -- Cash--initial margin for swap (Note 11) .................................................. -- -- Cash--initial margin for futures contracts (Note 1) ...................................... -- -- Receivables: Securities sold ...................................................................... 1,436,323 -- Due from Adviser ..................................................................... -- 43,182 Dividends and interest ............................................................... 87,650 159 Capital shares sold .................................................................. 494,036 12,676 Due from broker--swap (Note 11) ...................................................... -- -- Due from broker--variation margin (Note 1) ........................................... -- -- Prepaid expense ...................................................................... 14,812 2,138 Other assets ............................................................................. -- -- ------------ ----------- Total assets ................................................................... 311,282,719 17,855,003 ------------ ----------- LIABILITIES: Payables: Bank line of credit (Note 13) ........................................................ -- -- Securities purchased ................................................................. -- -- Dividends payable .................................................................... -- 811 Capital shares redeemed .............................................................. 1,370,062 730,124 Accounts payable ..................................................................... 164,372 42,314 Due to Trustees (Note 8) ............................................................. 11,203 1,018 Due to Distributor (Note 5) .......................................................... 67,758 12,352 Due to Adviser (Note 2) .............................................................. 270,750 15,198 Unrealized depreciation on forward foreign currency contracts (Note 7) -- -- Options written (Premiums received $0, $15,601, $0 and $0) (Note 1) ...................... ------------ ----------- 1,884,145 801,817 Total liabilities ................................................................... ------------ ----------- Net Assets ............................................................................... $309,398,574 $17,053,186 ============ =========== CLASS A SHARES+: Net assets ............................................................................... $305,863,346 $17,053,186 ============ =========== Shares outstanding ....................................................................... 26,281,365 17,123,467 ============ =========== Net asset value and redemption price per share ........................................... $11.64 $1.00 ============ =========== Maximum offering price per share ......................................................... $12.35 -- ============ =========== CLASS C SHARES: Net assets ............................................................................... $ 3,535,229 -- ============ =========== Shares outstanding ....................................................................... 304,506 -- ============ =========== 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) ......................................................... $11.61 -- ============ =========== Net assets consist of: Aggregate paid in capital ............................................................ $142,038,038 $17,159,470 Unrealized appreciation of investments, swaps, foreign currency, forward foreign currency contracts, and other assets and liabilities denominated in foreign currencies ................................................................... 173,039,702 -- Overdistributed/underdistributed net investment loss ................................. (130,435) (32,439) Accumulated realized loss ............................................................ (5,548,731) (73,845) ------------ ----------- Net Assets ............................................................................... $309,398,574 $17,053,186 ============ ===========
See Notes to Financial Statements 35 VAN ECK FUNDS STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2003
EMERGING GLOBAL HARD MARKETS FUND ASSETS FUND ------------ ----------- INCOME: Dividends .................................................................................. $ 410,522 $ 876,177 Interest ................................................................................... 1,374 67,402 Foreign taxes withheld ..................................................................... (28,226) (44,517) ----------- ----------- Total income ............................................................................... 383,670 899,062 ----------- ----------- EXPENSES: Management (Note 2) ........................................................................ 105,761 512,736 Distribution Class A (Note 5) .............................................................. 68,369 226,588 Distribution Class B (Note 5) .............................................................. -- 24,453 Distribution Class C (Note 5) .............................................................. 4,088 35,106 Administration (Note 2) .................................................................... 50,455 56,558 Reports to shareholders .................................................................... 39,430 48,455 Trustees' fees and expenses (Note 8) ....................................................... 3,266 12,516 Transfer agent (Class A) ................................................................... 62,558 207,500 Transfer agent (Class B) ................................................................... -- 27,320 Transfer agent (Class C) ................................................................... -- 32,200 Custodian .................................................................................. 24,124 17,191 Registration ............................................................................... 8,038 40,293 Professional ............................................................................... 57,706 50,399 Insurance .................................................................................. -- -- Interest expense (Note 14) ................................................................. 981 748 Other ...................................................................................... 8,132 19,035 ----------- ----------- Total expenses ............................................................................. 432,908 1,311,098 Expense reduction (Note 2) ................................................................. (147,852) -- ----------- ----------- Net expenses ............................................................................... 285,056 1,311,098 ----------- ----------- Net investment income (loss) ............................................................... 98,614 (412,036) ----------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3): Realized gain (loss) from investments (net of foreign taxes of $50,916, $0, $0, and $0) ... 3,704,997 1,826,884 Realized gain (loss) from forward foreign currency contracts and foreign currency transactionS (60,364) 33,544 Realized loss from swaps ................................................................... -- 170,333 Change in unrealized appreciation (depreciation) of foreign currency, forward foreign currency contracts and other assets and liabilities denominated in foreign currencies ... 12,823 4,980 Change in unrealized appreciation (depreciation) of investments and swaps (Funds are shown net of foreign taxes of $13,870, $0, $0, and $0) ...................... 7,376,303 18,221,378 ----------- ----------- Net gain (loss) on investments and foreign currency transactions............................ 11,033,759 20,257,119 ----------- ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................................... $11,132,373 $19,845,083 =========== ===========
See Notes to Financial Statements 36
INTERNATIONAL U.S. INVESTORS GOVERNMENT GOLD FUND MONEY FUND ----------- ----------- INCOME: Dividends .................................................................................. $ 1,641,742 $ -- Interest ................................................................................... 384,301 332,050 Foreign taxes withheld ..................................................................... (49,233) -- ------------ -------- Total income ............................................................................... 1,976,810 332,050 ------------ -------- EXPENSES: Management (Note 2) ........................................................................ 1,803,089 160,936 Distribution Class A (Note 5) .............................................................. 599,985 80,468 Distribution Class B (Note 5) .............................................................. -- -- Distribution Class C (Note 5) .............................................................. 4,178 -- Administration (Note 2) .................................................................... 782,268 69,507 Reports to shareholders .................................................................... 175,289 36,383 Trustees' fees and expenses (Note 8) ....................................................... 68,664 8,825 Transfer agent (Class A) ................................................................... 756,328 66,600 Transfer agent (Class B) ................................................................... -- -- Transfer agent (Class C) ................................................................... -- -- Custodian .................................................................................. 47,870 4,142 Registration ............................................................................... 59,000 18,044 Professional ............................................................................... 103,085 49,805 Insurance .................................................................................. 20,757 -- Interest expense (Note 14) ................................................................. 36,500 7 Other ...................................................................................... 33,388 9,255 ------------ -------- Total expenses ............................................................................. 4,490,401 503,972 Expense reduction (Note 2) ................................................................. -- (195,057) ------------ -------- Net expenses ............................................................................... 4,490,401 308,915 ------------ -------- Net investment income (loss) ............................................................... (2,513,591) 23,135 ------------ -------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3): Realized gain (loss) from investments (net of foreign taxes of $50,916, $0, $0, and $0) ... 17,787,944 (2,128) Realized gain (loss) from forward foreign currency contracts and foreign currency transactions (224,522) -- Realized loss from swaps ................................................................... -- -- Change in unrealized appreciation (depreciation) of foreign currency, forward foreign currency contracts and other assets and liabilities denominated in foreign currencies ... 39,779 -- Change in unrealized appreciation (depreciation) of investments and swaps (Funds are shown net of foreign taxes of $13,870, $0, $0, and $0) ...................... 84,204,578 -- ------------ -------- Net gain (loss) on investments and foreign currency transactions............................ 101,807,779 (2,128) ------------ -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................................... $ 99,294,188 $ 21,007 ============ ========
See Notes to Financial Statements 37 VAN ECK FUNDS STATEMENTS OF CHANGES IN NET ASSETS
Emerging Markets Global Hard Assets Fund Fund --------------------------- --------------------------- Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 2003 2002 2003 2002 ----------- ----------- ------------ ------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income (loss) .................................. $ 98,614 $ (45,048) $ (412,036) $ (192,475) Realized gain (loss) from investments ......................... 3,704,997 (2,978,260) 1,826,884 3,249,938 Realized gain (loss) from forward foreign currency contracts and foreign currency transactions ........................... (60,364) 8,098 33,544 (32,724) Realized gain (loss) from swaps ............................... -- -- 170,333 (70,000) Change in unrealized appreciation (depreciation) of foreign currency, forward foreign currency contracts and other 44,171,258 and liabilities denominated in foreign currencies ................................................ 12,823 (72,016) 4,980 (7,465) Change in unrealized appreciation (depreciation) of investments and swaps .................................................. 7,376,303 (490,486) 18,221,378 62,687 ----------- ----------- ------------ ------------ Increase (decrease) in net assets resulting from operations ....... 11,132,373 (3,577,712) 19,845,083 3,009,961 ----------- ----------- ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income+: Class A Shares ............................................. -- -- -- -- Class B Shares ............................................. -- -- -- -- Class C Shares ............................................. -- -- -- -- Realized gain: Class A Shares ............................................. -- -- -- -- Class B Shares ............................................. -- -- -- -- Class C Shares ............................................. -- -- -- -- ----------- ----------- ------------ ------------ Total dividends and distributions ............................. -- -- -- -- ----------- ----------- ------------ ------------ CAPITAL SHARE TRANSACTIONS (NOTE 6): Net proceeds from sales of shares+: Class A Shares ............................................. 280,273 2,496,514 179,375,633 111,030,410 Shares issued in connection with the merger involving Asia Dynasty Class A (Note 14) ......................... 12,377,530 -- -- -- Class B Shares ............................................. -- 10,184 301,630 818,291 Shares converted from Class B to Class C (Note 6) - Global Hard -- -- 3,293,328 -- Class C Shares* ............................................ 90,235 -- 5,240,169 856,093 Shares issued in connection with the merger involving Asia Dynasty Class C (Note 14) ......................... 2,403,885 -- -- -- ----------- ----------- ------------ ------------ 15,151,923 2,506,698 188,210,760 112,704,794 ----------- ----------- ------------ ------------ Reinvestment of dividends+: Class A Shares ................................................. -- -- -- -- Class B Shares ................................................. -- -- -- -- Class C Shares ................................................. -- -- -- -- ----------- ----------- ------------ ------------ -- -- -- -- ----------- ----------- ------------ ------------ Cost of shares reacquired+: Class A Shares ................................................. (4,172,590) (2,835,030) (171,346,247) (123,984,676) Class B Shares ................................................. -- (1,958,489) (3,858,750) (746,067) Class C Shares ................................................. (67,364) -- (870,211) (791,364) ----------- ----------- ------------ ------------ (4,239,954) (4,793,519) (176,075,208) (125,522,107) ----------- ----------- ------------ ------------ Increase (decrease) in net assets resulting from capital share transactions ............................................. 10,911,969 (2,286,821) 12,135,552 (12,817,313) Capital Contribution from Advisor (Note 2) ........................ -- -- -- -- Total increase (decrease) in net assets ........................... 22,044,342 (5,864,533) 31,980,635 (9,807,352) ----------- ----------- ------------ ------------ NET ASSETS: Beginning of year ............................................. 9,577,570 15,442,103 44,171,258 53,978,610 ----------- ----------- ------------ ------------ End of year ................................................... $31,621,912 $ 9,577,570 $ 76,151,893 $ 44,171,258 =========== =========== ============ ============ Undistributed/overdistributed net investment income (loss) $ (62,996) $ (36,269) $ (27,122) $ (85,537) =========== =========== ============ ============
--------------- + The U.S. Government Money Fund does not have a designated class of shares; as a result, all activity is shown on the Class A shares line. * For Emerging Markets Fund and International Investors Gold Fund, Class C shares began October 3, 2003. See Notes to Financial Statements 38
International Investors Gold U.S. Government Money Fund Fund --------------------------- --------------------------- Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 2003 2002 2003 2002 ----------- ----------- ------------ ------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income (loss) .................................. $(2,513,591) $ (258,683) $ 23,135 $ 184,666 Realized gain (loss) from investments ......................... 17,787,944 30,378,490 (2,128) (1,210) Realized gain (loss) from forward foreign currency contracts and foreign currency transactions ........................... (224,522) 27,440 -- -- Realized gain (loss) from swaps ............................... -- -- -- -- Change in unrealized appreciation (depreciation) of foreign currency, forward foreign currency contracts and other 44,171,258 and liabilities denominated in foreign currencies ................................................ 39,779 (2,489) -- -- Change in unrealized appreciation (depreciation) of investments and swaps .................................................. 84,204,578 83,493,691 -- -- ----------- ------------- ------------ -------------- Increase (decrease) in net assets resulting from operations ....... 99,294,188 113,638,449 21,007 183,456 ----------- ------------- ------------ -------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income+: Class A Shares ............................................. -- -- (28,125) (212,116) Class B Shares ............................................. -- -- -- -- Class C Shares ............................................. -- -- -- -- Realized gain: Class A Shares ............................................. (5,961,389) (39,278,397) -- -- Class B Shares ............................................. -- -- -- -- Class C Shares ............................................. -- -- -- -- ----------- -------------- ------------ --------------- Total dividends and distributions ............................. (5,961,389) (39,278,397) (28,125) (212,116) ----------- -------------- ------------ --------------- CAPITAL SHARE TRANSACTIONS (NOTE 6): Net proceeds from sales of shares+: Class A Shares ............................................. 846,301,085 1,963,773,861 952,357,199 2,085,538,597 Shares issued in connection with the merger involving Asia Dynasty Class A (Note 14) ......................... -- -- -- -- Class B Shares ............................................. -- -- -- -- Shares converted from Class B to Class C (Note 6) - Global Hard -- -- -- -- Class C Shares* ............................................ 3,357,938 -- -- -- Shares issued in connection with the merger involving Asia Dynasty Class C (Note 14) ......................... -- -- -- -- ----------- -------------- ------------ --------------- 849,659,023 1,963,773,861 952,357,199 2,085,538,597 ------------ -------------- ------------ --------------- Reinvestment of dividends+: Class A Shares ................................................. 4,450,316 29,803,403 20,116 106,547 Class B Shares ................................................. -- -- -- -- Class C Shares ................................................. -- -- -- -- ------------ -------------- ------------ --------------- 4,450,316 29,803,403 20,116 106,547 ------------ -------------- ------------ --------------- Cost of shares reacquired+: Class A Shares ................................................. (842,499,427) (1,985,237,044) (982,848,075) (2,084,174,651) Class B Shares ................................................. -- -- -- -- Class C Shares ................................................. (11,908) -- -- -- ------------ -------------- ------------ --------------- (842,511,335) (1,985,237,044) (982,848,075 (2,084,174,651) ------------ -------------- ------------ --------------- Increase (decrease) in net assets resulting from capital share transactions ............................................. 11,598,004 8,340,220 (30,470,760) 1,470,493 Capital Contribution from Advisor (Note 2) ........................ -- -- 20,000 -- Total increase (decrease) in net assets ........................... ------------ -------------- ------------ --------------- 104,930,803 82,700,272 (30,457,878) 1,441,833 NET ASSETS: Beginning of year ............................................. 204,467,771 121,767,499 47,511,064 46,069,231 ------------ -------------- ------------ --------------- End of year ................................................... $309,398,574 $ 204,467,771 $ 17,053,186 $ 47,511,064 ============ ============== ============ ============== Undistributed/overdistributed net investment income (loss)..... (130,435) (88,832) (32,439) (27,450) ============ ============== ============ ==============
See Notes to Financial Statements 39 EMERGING MARKETS FUND Financial Highlights For a share outstanding throughout each period:
CLASS C CLASS A --------------- FOR THE PERIOD --------------------------------------------------------------------- OCTOBER 3 YEAR ENDED DECEMBER 31, 2003(a) THROUGH --------------------------------------------------------------------- DECEMBER 31, 2003 2002 2001 2000 1999 2003 ------ ------ ------ ------ ------ --------------- Net Asset Value, Beginning of Period... $ 4.85 $ 6.47 $ 8.98 $13.49 $10.78 $ 7.44 ------ ------ ------ ------ ------ ------ Income from Investment Operatons: Net Investment Income (Loss)........ 0.05 (0.02) (0.09) (0.16) (0.06) 0.01 Net Gain (Loss) on Investments (both Realized and Unrealized)... 3.59 (1.60) (2.37) (2.73) 3.59 1.05 ------ ------ ------ ------ ------ ------ Total from Investment Operations ...... 3.64 (1.62) (2.46) (2.89) 3.53 1.06 ------ ------ ------ ------ ------ ------ Less Dividends and Distributions: Dividends from Net Investment Income -- -- --(e) --(e) -- -- Distribution from Capital Gains .... -- -- (0.05) (1.62) (0.82) -- ------ ------ ------ ------ ------ ------ Total Dividends and Distributions ..... -- -- (0.05) (1.62) (0.82) -- ------ ------ ------ ------ ------ ------ Net Asset Value, End of Period ........ $ 8.49 $ 4.85 $ 6.47 $ 8.98 $13.49 $ 8.50 ====== ====== ====== ====== ====== ====== Total Return (a) ...................... 75.05% (25.04)% (27.32)% (21.88)% 32.83% 14.25% -------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA: Net Assets, End of Period (000) ....... $28,956 $9,578 $13,032 $23,990 $33,070 $2,665 Ratio of Gross Expenses to Average Net Assets ................. 3.08% 2.91% 2.45% 2.15% 2.20% 2.76%(f) Ratio of Net Expenses to Average Net Assets (b) .......... 2. 00%(c) 2.00%(c) 2.00%(c) 2. 00%(c) 2.00% 2.50%(f) Ratio of Net Investment Income (Loss) to Average Net Assets (d) ... 0.71% (0.30)% (0.95)% (1.35)% (0.48)% 0.67%(f) Portfolio Turnover Rate ............... 128% 120% 56% 98% 86% 128%
--------------- (a) Total return is calculated assuming an initial investment of $ 10,000 made at the net asset value at the beginning of the period, reinvestment of dividends and distributions at net asset value on the dividend payment date and a redemption on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. Returns for periods less than a year are not annualized. (b) After expenses reduced by a custodian fee, directed brokerage and/or Advisory expense reimbursement arrangement. (c) Net of interest expense. (d) For the years ended 2003, 2002, 2001, 2000 and 1999, the net effect of the reductions due to a custodian fee, directed brokerage and/or Advisory expense reimbursement arrangement, for each of the years, for Class A are 1.05%, 0.90%, 0.42%, 0.12% and 0.20% and the period October 3, 2003 through December 31, 2003 for Class C is 0.25%, respectively. (e) Amount represents less than $0.005 per share. (f) Annualized. * Inception date of Class C shares. See Notes to Financial Statements 40 GLOBAL HARD ASSETS FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS For a share outstanding throughout each year:
CLASS A ------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999 ----- ------ ------ ------ ------ Net Asset Value, Beginning of Year ................ $12.77 $11.96 $13.08 $12.01 $10.34 Income from Investment Operations: Net Invest Income (Loss) ...................... (0.08) (0.05) (0.03) 0.08 0.07 Net Gain (Loss) on Investments (both Realizand and Unrealized ............. 5.50 0.86 (1.09) 0.99 1.65 ------ ------ ------ ------ ------ Operations .................. 5.42 0.81 (1.12) 1.07 1.72 ------ ------ ------ ------ ------ Less Dividends and Distributions: Dividends from Investment Income ............... -- -- -- -- (0.01) Tax Return of Capital .......................... -- -- -- -- (0.04) ------ ------ ------ ------ ------ Total Dividends and Distributions ................. -- -- -- -- (0.05) ------ ------ ------ ------ ------ Net Asset Value, End of Year ...................... $18.19 $12.77 $11.96 $13.08 $12.01 ====== ====== ====== ====== ====== Total Return (a) .................................. 42.44% 6.77% (8.56)% 8.91% 16.64% ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTARY DATA Net Asset End of Year (000) ....................... $64,661 $39,106 $49,244 $13,581 $17,757 Ratio of Gross Expenses to Average Net Assets ............................. 2.43% 2.64% 2.76% 2.52% 2.89% Ratio of Net Expenses to Average Net Assets (d) ..................... 2.43% 2.61% 2.58%(b) 2.00%(b) 2.00%(b) Ratio of Net Investment Income (Loss) to Average Net Assets .......................... (0.68)% (0.31)% (0.51)%(c) 0.49%(c) 0.49%(c) Portfolio Turnover Rate ........................... 40% 177% 265% 92% 195% CLASS C ------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 2003 2002 2001 2000 1999 ----- ------ ------ ------ ------ Net Asset Value, Beginning of Year ................ $12.55 $11.87 $13.01 $12.04 $10.40 Income from Investment Operations: Net Invest Income (Loss) ...................... (0.05) (0.19) (0.14) (0.02) (0.03) Net Gain (Loss) on Investments (both Realizand and Unrealized ............. 5.16 0.87 (1.00) 0.99 1.67 ------ ------ ------ ------ ------ Operations .................. 5.11 0.68 (1.14) 0.97 1.64 ------ ------ ------ ------ ------ Less Dividends and Distributions: Dividends from Investment Income ............... -- -- -- -- -- Tax Return of Capital .......................... -- -- -- -- -- ------ ------ ------ ------ ------ Total Dividends and Distributions ................. -- -- -- -- -- ------ ------ ------ ------ ------ Net Asset Value, End of Year ...................... $17.66 $12.55 $11.87 $13.01 $12.04 ====== ====== ====== ====== ====== Total Return (a) .................................. 40.72% 5.73% (8.83)% 8.06% 15.77% ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTARY DATA Net Asset End of Year (000) ....................... $11,490 $ 2,202 $ 2,066 $ 2,697 $ 3,223 Ratio of Gross Expenses to Average Net Assets ............................. 3.76% 3.72% 3.20% 3.82% 4.15% Ratio of Net Expenses to Average Net Assets (d) ..................... 3.76% 3.70% 3.08%(b) 2.75%(b) 2.71%(b) Ratio of Net Investment Income (Loss) to Average Net Assets .......................... (0.75)% (1.36)% (0.73)%(c) (0.23)%(c) (0.22)%(c) Portfolio Turnover Rate ........................... 40% 177% 265% 92% 195%
--------------- (a) Total return is calculated assuming an initial investment of $ 10,000 made at the net asset value at the beginning of the period, reinvestment of dividends and distributions at net asset value on the dividend payment date and a redemption on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. (b) After expenses reduced by a custodian fee, directed brokerage and/or Advisory expense reimbursement arrangement. (c) For the years ended 2001, 2000 and 1999, the net effect of reductions due to a custodian fee, directed brokerage and/or Advisory expense reimbursement arrangement, for each of the three years, for Class A are 0.08%, 0.43% and 0.84%, respectively; and Class C are 0.00%, 0.98% and 1.39%, respectively. (d) Net of interest expense. SEE NOTES TO FINANCIAL STATEMENTS 41 INTERNATIONAL INVESTORS GOLD FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS For a share outstanding throughout each period:
CLASS C CLASS A --------------- FOR THE PERIOD --------------------------------------------------------------------- OCTOBER 3 YEAR ENDED DECEMBER 31, 2003(a) THROUGH --------------------------------------------------------------------- DECEMBER 31, 2003 2002 2001 2000 1999 2003 ------ ------ ------ ------ ------ --------------- Net Asset Value, Beginning of Period... $ 8.30 $ 5.36 $ 4.45 $ 5.73 $ 6.59 $ 9.28 ------ ------ ------ ------ ------ ------ Income from Investment Operatons: Net Investment Income (Loss)........ (0.10) (0.01) 0.01 0.00(d) 0.03 (0.03) Net Gain (Loss) on Investments (both Realized and Unrealized)... 3.66 4.86 0.91 (1.27) (0.84) 2.36 ------ ------ ------ ------ ------ ------ Total from Investment Operations ...... 3.56 4.85 0.92 (1.27) (0.81) 2.33 ------ ------ ------ ------ ------ ------ Less Dividends and Distributions: Dividends from Net Investment Income -- -- (0.01) -- (0.05) -- Distribution from Capital Gains .... (0.22) (1.91) -- -- -- -- Total return of capital ............ -- -- -- (0.01) -- -- ------ ------ ------ ------ ------ ------ Total Dividends and Distributions ..... (0.22) (1.91) (0.01) (0.01) (0.05) -- ------ ------ ------ ------ ------ ------ Net Asset Value, End of Period ........ $11.64 $ 8.30 $ 5.36 $ 4.45 $ 5.73 $11.61 ====== ====== ====== ======= ====== ====== Total Return (a) ...................... 44.25% 90.48% 20.74% (22.18)% (12.37)% 25.11% ----------------------------------------- RATIOS/SUPPLEMENTARY DATA: Net Assets, End of Period (000) ....... $305,863 $204,468 $121,767 $116,513 $169,045 $3,535 Ratio of Gross Expenses to Average Net Assets ................. 1.87% 2.02% 2.25% 2.30% 2.09% 2.46%(e) Ratio of Net Expenses to Average Net Assets (b) .......... 1.85% 1.96% 2.17% 2.17% 2.08% 2.46%(e) Ratio of Net Investment Income (Loss) to Average Net Assets (d) ... (1.04)% (0.14)% 0.09%(c) 0. 08%(c) 0. 46%(c) (1.99)%(e) Portfolio Turnover Rate ............... 244% 720% 109% 65% 95% 244%
--------------- (a) Total return is calculated assuming an initial investment of $ 10,000 made at the net asset value at the beginning of the period, reinvestment of dividends and distributions at net asset value on the dividend payment date and a redemption on the last day of the period. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. Returns for periods less than a year are not annualized. (b) Net of interest expense. (c) For the years ended 2001, 2000 and 1999, the net effect of the reductions due to a custodian fee or directed brokerage arrangement, for each of the years, are 0.00%, 0.02% and 0.01%, respectively. (d) Amount represents less than $0.01 per share. (e) Annualized. * Inception date of Class C shares. See Notes to Financial Statements 42 U.S. GOVERNMENT MONEY FUND -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS For a share outstanding throughout each year:
YEAR ENDED DECEMBER 31, ----------------------------------------------------------------------------------- 2003 2002 2001 2000 1999 ------- ------- ------- ------- Net Asset Value, Beginning of Period ........ $1.00 $1.00 $1.00 $1.00 $1.00 ------- ------- ------- ------- ------- Income from Investment Operations: Net Investment Income (Loss) ............. 0.00(d) 0.00(d) 0.02 0.05 0.03 ------- ------- ------- ------- ------- Less Dividends to Shareholders: Dividends from Net Investment Income...... 0.00(d) 0.00(d) (0.02) (0.05) (0.03) ------- ------- ------- ------- ------- Net Asset Value, End of Year................. $1.00 $1.00 $1.00 $1.00 $1.00 ======= ======= ======= ======= ======= Total Return(s).............................. 0.22% 0.43% 2.21% 4.77% 3.43% ------------------------------------------------------------------------------------------------------------------------------------ RATIO/SUPPLEMENTARY DATA Net Assets, End of Year (000)................ $17,053 $47,511 $46,069 $73,797 $97,443 Ratio of Gross Expenses to Average Net Assets 1.57% 1.35% 1.23% 1.10% 1.15% Ratio of Net Expenses to Average Net Assets.. 0.90%(b) 1.15%(b) 1.21%(b) -- -- Ratio of Net Investment Income to Average Net Assets............................... 0.15%(c) 0.46%(c) 2.71%(c) 4.80% 3.68%
--------------- (a) Total return is calculated assuming an initial investment of $ 10,000 made at the net asset value at the beginning of the year, reinvestment of dividends and distributions at net asset value on the dividend payment date and a redemption on the last day of the year. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. In 2003, approximately 0.06% of total return relates to amounts contributed by the Adviser. (b) After expenses reduced by an Advisory fee waiver arrangement. (c) Net effect of expense reimbursement by Adviser to average net assets for the periods ended Decmeber 31, 2003, December 31, 2002 and December 31, 2001 were 0.67%, 0.20% and 0.02%, respectively. (d) Amount represents less than $0.01 per share. See Notes to Financial Statements 43 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, as amended. The Trust operates as a series fund currently comprised of four portfolios: Emerging Markets Fund Global Hard Assets Fund, International Investors Gold Fund and U.S. Government Money Fund collectively (the "Funds"). The U.S. Government Money Fund is classified as a diversified fund under the Investment Company Act of 1940, as amended. Emerging Markets Fund, Global Hard Assets Fund, and International Investors Gold Fund are classified as 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 accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect 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. As of June 23, 2003, the portfolios began pricing securities traded on the NASDAQ stock market using the NASDAQ official closing price. Over-the-counter securities and listed securities for which no sale was reported are valued at the mean of the bid and ask prices. Securities in which the Funds invest are traded in markets that close before 4:00 p.m. Eastern Time. Normally, developments that occur between the close of the foreign markets and 4:00 p.m. Eastern Time will not be reflected in the Fund's NAV. However, if Emerging Markets Fund, Global Hard Assets Fund and International Investors Gold Fund determine that such developments are so significant that they will materially affect the value of the Fund's securities, the Fund may adjust the previous closing prices to reflect what the Valuation Committee under the direction of the Board of Trustees believes to be the fair value of these securities as of 4:00 p.m. Eastern Time. The Funds may also fair value securities in other situations, for example, when a particular foreign market is closed but the Fund is open. Short-term obligations are valued at amortized cost, which, with accrued interest, approximates market 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. B. FEDERAL INCOME TAXES--It is each Fund's policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. C. CURRENCY TRANSLATION--Assets and liabilities denominated in foreign currencies and commitments under forward foreign currency contracts are translated into U.S. dollars at the mean of the quoted bid and ask prices of such currencies. Purchases and sales of investments are translated at the exchange rates prevailing when such investments are 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 or 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 trade date. Dividend income is recorded on the ex-dividend date. Dividends on foreign securities are recorded when the Funds are informed of such dividends. Interest income is accrued as earned. Estimated foreign taxes that are expected to be withheld from proceeds at sale of certain foreign investments are accrued by the Funds and decrease the unrealized gain on investments. For the Emerging Markets Fund and International Investors Gold Fund, Global Hard Assets Fund, income, expenses (excluding class-specific expenses) and realized/unrealized gains/losses are allocated proportionately to each class of shares based upon the relative net asset value of outstanding shares (or the value of dividend-eligible shares, as appropriate) of each class at the beginning of the day (after adjusting for current capital share activity of the respective classes). Class-specific expenses are charged directly to the applicable class of shares. 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 accounting principles generally accepted in the United States. F. 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 realized 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 realized 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. 44 VAN ECK FUNDS NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------------------------------------------------- Transactions in call options written for the year ended December 31, 2003 were as follows: GLOBAL HARD ASSETS FUND NUMBER OF CONTRACTS PREMIUMS ------------ -------- Options outstanding at beginning of year .......................... -- $ -- Options written ................................ 235 37,208 Options exercised .............................. (75) (21,607) Options outstanding at end of year ............. 160 $15,601 G. 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. The Global Hard Assets Fund did not have any short sales for the year ended December 31, 2003. Cash is deposited in a segregated account with brokers, maintained by the Fund, for its open short sales. 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. H. 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 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 at 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. Realized gains and losses from futures contracts are reported separately. GLOBAL HARD ASSETS FUND CONTRACTS EXPIRATION NUMBER OF CONTRACT CURRENT UNREALIZED LONG DATE CONTRACTS VALUE VALUE APPRECIATION --------- ----------- --------- -------- ------- ------------- Zinc 3/04 59 $1,425,588 $1,500,075 $ 74,487 I. STRUCTURED NOTES--The Funds may invest in indexed securities whose value is linked to one or more currencies, interest rates, commodities or financial 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 Corporation 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, 2003, there were no structured notes outstanding. NOTE 2--MANAGEMENT--Van Eck Associates Corporation (the "Adviser") earns fees for investment management and advisory services for each of the Funds. The Emerging Markets Fund pays the Adviser a monthly fee at the annual rate of 0.75% 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. The International Investors Gold Fund pays the Adviser a monthly fee at the annual rate of 0.75 of 1% of the first $500 million of average daily net assets of the Fund, 0.65 of 1% of the next $250 million of average daily net assets and 0.50 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 0.50 of 1% of the first $500 million of average daily net assets, 0.40 of 1% of the next $250 million of average daily net assets and 0.375 of 1% of average daily net assets in excess of $750 million. In accordance with the advisory agreement, the Funds paid Van Eck Associates Corporation for costs incurred in connection with certain administrative and operating functions. The Funds paid costs in the following amounts for the year ended December 31, 2003: $15,201 Emerging Markets Fund, $56,558 Global Hard Assets Fund, $181,238 International Investors Gold Fund and $69,507 U.S. Government Money Fund. For the year ended December 31, 2003, the Adviser agreed to assume expenses exceeding 2% of average daily net assets for Class A shares and 2.50% for Class C shares for the Emerging Markets Fund. Expenses were reduced by $195,057 under this agreement. When necessary, the Adviser has agreed to waive a portion of the advisory fee for the U.S. Government Money Fund in order to preserve a positive daily yield and avoid a net operating loss. Expenses were reduced by $215,057 under this agreement. Van Eck Associates Corporation also performs accounting and administrative services for Emerging Markets Fund and International Investors Gold Fund. The Adviser is paid a monthly fee at a rate of 0.25% of the average daily net assets on the first $500 million for Emerging Markets Fund, and at the rate of 0.25% per year on the first $750 million in International Investors Gold Fund, and 0.20% per year of the average daily net assets in excess of $750 million in International Investors Gold Fund. During the year ended December 31, 2003, the International Investors Gold Fund paid $305,496 in brokerage commissions to Van Eck Associates Corporation and its affiliated broker-dealer for transactions executed on behalf of the International Investors Gold Fund. For the year ended December 31, 2003, Van Eck Securities Corporation (the "Distributor"), an affiliate of the Adviser, received a total of $1,696,786 in sales loads of which $1,438,722 was reallowed to broker/dealers and the remaining $258,064 was retained by the Distributor. 45 VAN ECK FUNDS NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------------------------------------------------- Certain of the officers and trustees of the Trust are officers, directors or stockholders of Van Eck Associates Corporation and Van Eck Securities Corporation. During the year ending December 31, 2003, the Adviser made a capital contribution of $20,000 to the U.S. Government Money Fund, in order to maintain a constant net asset value of $1.00 per share. NOTE 3--INCOME TAXES--For federal income tax purposes, the identified cost of investments owned at December 31, 2003 is $23,834,577, $61,012,135 and $147,208,550 for the Emerging Markets Fund, Global Hard Assets 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, 2003, gross unrealized appreciation and depreciation of investments were on a tax basis as follows: GROSS GROSS NET UNREALIZED UNREALIZED UNREALIZED FUND APPRECIATION DEPRECIATION APPRECIATION ---- ------------ ------------ ------------ Emerging Markets Fund ....... $7,478,484 $388,905 $7,089,579 Global Hard Assets Fund ..... 20,625,049 901,740 19,723,309 International Investors Gold Fund ............... 162,041,983 762 162,041,221 At December 31, 2003, the components of accumulated earnings on a tax basis, for each Fund, were as follows: ACCUMULATED UNDISTRIBUTED UNDISTRIBUTED CAPITAL UNREALIZED ORDINARY LT CAPITAL AND OTHER APPRECIATION FUND INCOME GAINS LOSSES (DEPRECIATION) ---- ------------- ------------ ---------- -------------- Emerging Markets Fund ................ -- -- (6,073,297) 7,080,145 Global Hard Assets Fund ................ -- -- (39,327,519) 20,085,263 International Investors Gold Fund .......... 4,735,190 674,931 (22,899) 162,080,851 U.S. Government Money Fund ......... 9,833 -- (73,846) -- The tax character of distributions paid to shareholders during the years ended December 31, 2003 and December 31, 2002, for each Fund, were as follows: GLOBAL HARD ASSETS FUND EMERGING MARKETS FUND -------------------------- -------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Ordinary Income* ..........$ -- $ -- $ -- $ -- Long Term Capital Gains ............ -- -- -- -- INTERNATIONAL INVESTORS GOLD FUND U.S. GOVERNMENT MONEY FUND -------------------------- -------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Ordinary Income* .........$ -- $10,897,992 $ 28,125 $212,116 Long Term Capital Gains$ 5,961,389 28,380,405 $ -- $ -- * Includes Short Term Capital Gains Net capital and net currency losses incurred after October 31, and within the taxable year, are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2003, the Funds' intend to defer to January 1, 2004 for U.S. federal income tax purposes post-October capital and net currency losses were as follows: POST-OCTOBER CAPITAL FUND AND NET CURRENCY LOSSES ------------------------------------- ORDINARY INCOME CAPITAL GAINS --------------- ------------- Emerging Markets Fund ...................... $35,580 -- Global Hard Assets Fund ......... -- $ 9,189 International Investors Gold Fund 22,899 -- At December 31, 2003 the Funds had the following capital loss carry forward available to offset capital gains in the amounts as follows: EXPIRING IN THE YEAR ENDED FUND DECEMBER 31, ---- ------------------------------- Emerging Markets Fund 2008 $2,919,680 2009 1,371,498 2010 1,746,539 ----------- TOTAL $6,037,717 =========== Global Hard Assets Fund 2005 $12,392,158 2006 18,829,076 2007 7,346,169 2009 750,927 ----------- TOTAL $39,318,330 =========== U.S. Government Money Fund 2007 $ 9,832 2008 45,945 2009 14,730 2010 1,207 2011 2,132 ----------- TOTAL $ 73,846 =========== For Emerging Markets Fund, $3,745,837 of the capital loss carry-forward is related to the acquisition of the Asia Dynasty Fund on October 31, 2003. This amount is subject to an annual limitation of $700,639 under tax rules. For Global Hard Assets Fund, $13,684,792 of the capital loss carry forward is subject to an annual limitation of $841,231 under tax rules. Included in the amount is $25,236,472 of capital loss carry forward related to the acquisition of Natural Resources Fund on June 22, 2001. During the year ended December 31, 2003, as a result of permanent book to tax differences, the Funds' incurred differences that affected undistributed net investment income (loss), accumulated net realized income (loss) on investments and aggregate paid in capital by the amounts in the table that follows. Net assets were not affected by these reclassifications. (DECREASE) INCREASE INCREASE OVERDISTRIBUTED/ DECREASE) (DECREASE) UNDERDISTRIBUTED ACCUMULATED AGGREGATE NET INVESTMENT REALIZED PAID IN FUND INCOME (LOSS) GAIN (LOSS) CAPITAL ---- ----------------- ------------- ------------ Emerging Markets Fund ........... $ (125,341) $ (3,751,650) $ 3,876,991 Global Hard Assets Fund ......... 470,451 (65,143) 405,308 International Investors Gold Fund 2,471,988 224,522 (2,696,510) U.S. Government Money Fund ...... -- -- -- NOTE 4--INVESTMENTS--Purchases and sales of investment securities other than U.S. government obligations and short-term obligations for the year ended December 31, 2003, were as follows: COST OF FROM INVESTMENT INVESTMENT SECURITIES SECURITIES PURCHASED SOLD ------------ ------------ Emerging Markets Fund ...................... $ 28,972,679 $ 17,614,274 Global Hard Assets Fund .................... 30,380,259 18,567,406 International Investors Gold Fund .......... 576,925,749 597,723,112 46 VAN ECK FUNDS NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------------------------------------------------- NOTE 5--12B-1 PLANS OF DISTRIBUTION--Pursuant to Rule 12b-1 Plans of Distribution (the "Plans"), all of the Funds 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 the distributor, Van Eck Securities Corporation (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 0.50% of average daily net assets (except for International Investors Gold 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"). 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. The Distributor has waived its right to reimbursement of the carried forward amounts incurred through December 31, 2003 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, 2003, were as follows: Emerging Markets Fund--Class A ............................ $1,198,123 Emerging Markets Fund--Class C ............................ 10,711 Global Hard Assets Fund--Class A .......................... 1,422,856 Global Hard Assets Fund--Class C .......................... 392,750 NOTE 6--SHAREHOLDER TRANSACTIONS--Shares of beneficial interest issued and redeemed (unlimited number of $.001 par value shares authorized): EMERGING MARKETS FUND ----------------------------- YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ CLASS A Shares sold .................................. 517,296 467,954 Shares issued in connection with the merger (Note 14) ......................... 1,601,259 -- Shares reacquired ............................ (686,373) (506,310) --------- -------- Net increase (decrease) ...................... 1,432,182 (38,356) ========= ======== CLASS B* Shares sold .................................. -- 1,709 Shares reacquired ............................ -- (384,775) --------- -------- Net decrease ................................. -- (383,066) ========= ======== FOR THE PERIOD OCTOBER 3, 2003+ THROUGH DECEMBER 31, 2003 --------------- CLASS C Shares sold 11,596 Shares issued in connection with the merger (Note 14) 310,410 Shares reacquired (8,264) --------- Net increase 313,742 ========= * Class B liquidated on October 9, 2002. + Inception date of Class C shares. ++ Class B shares automatically converted to Class C shares October 31, 2003. GLOBAL HARD ASSETS FUND YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ CLASS A Shares sold .............................. 13,541,745 8,906,041 Shares reacquired ........................ (13,047,991) (9,963,846) ------------ ------------ Net increase (decrease) .................. 493,754 (1,057,805) ============ ============ CLASS B++ Shares sold .............................. 23,655 62,780 Shares converted to Class C .............. (209,633) -- Shares reacquired ........................ (43,130) (59,841) ------------ ------------ Net increase (decrease) .................. (229,108) 2,939 ============ ============ CLASS C Shares sold .............................. 319,592 62,656 Shares converted from Class B ............ 209,100 -- Shares reacquired ........................ (60,019) (61,294) ------------ ------------ Net increase ............................. 468,673 1,362 ============ ============ INTERNATIONAL INVESTORS GOLD FUND --------------------------------- YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ CLASS A Shares sold .............................. 105,541,211 246,092,394 Shares reinvested ........................ 578,715 3,590,771 Shares reacquired ........................ (104,472,118) (247,772,637) ------------ ------------ Net increase ............................. 1,647,808 1,910,528 ============ ============ FOR THE PERIOD OCTOBER 3, 2003+ THROUGH DECEMBER 31, 2003 ---------------- CLASS C Shares sold .............................. 305,539 Shares reacquired ........................ (1,033) ------------ Net increase ............................. 304,506 ============ U.S. GOVERNMENT MONEY FUND -------------------------------- YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 2003 2002 ------------ ------------ CLASS A Shares sold .............................. 952,341,194 2,085,538,597 Shares reinvested ........................ 20,116 106,547 Shares reacquired ........................ (982,848,075) (2,084,174,651) ------------ ------------ Net increase (decrease) .................. (30,486,765) 1,470,493 ============ ============ 47 VAN ECK FUNDS NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------------------------------------------------- NOTE 7--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 foreign currency contracts to hedge foreign denominated assets. Realized gains and losses from forward foreign currency contracts are included in realized gain (loss) from foreign currency transactions. At December 31, 2003, the following forward foreign currency contracts were outstanding: UNREALIZED CONTRACT CURRENT APPRECIATION CONTRACTS AMOUNT VALUE (DEPRECIATION) --------- -------- ------- -------------- EMERGING MARKETS FUND: Forward Foreign Currency Buy Contracts: HKD 434,281 expiring 1/02/04 ........... $55,942 $55,938 $ (4) THB 895,195 expiring 1/05/04 ........... 22,577 22,593 16 ZAR 648,433 expiring 1/06/04 ........... 96,893 97,707 (814) ------ $ (802) ====== NOTE 8--TRUSTEE DEFERRED COMPENSATION PLAN--The Trust has Deferred Compensation Plan (the "Plan") for its Trustees. Commencing January 1, 1996, the Trustees can elect to defer receipt of trustee fees until retirement, disability or termination from the Board of Trustees. The Funds' contributions to the Plan are limited to amount of fees earned by the participating Trustees. The fees oth erwise payable to the participating Trustees are invested in shares of the Van Eck Funds as directed by the Trustees. The Funds elected to show this deferred liability net of corresponding assets fair market value for financial statement purposes. As of December 31, 2003, the total fair market value of the liability portion of the Plan is as follows: Emerging Markets Fund--$37,523, Global Hard Assets Fund $83,064, International Investors Gold Fund--$153,535 and U. Government Money Fund--$63,321. NOTE 9--RESTRICTED SECURITIES--The following securities are restricted as to sale and are deemed to be illiquid: PERCENT OF DATE NET ASSETS FUND ACQUIRED COST VALUE AT 12/31/03 ---- --------- --------- ----- ----------- GLOBAL HARD ASSETS FUND Southern Pacific Petroleum NL .......... 11/27/02 $186,780 $ 0 0% NOTE 10--REPURCHASE AGREEMENTS--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--EQUITY SWAPS--The Funds (except U.S. Government Money Fund) may enter into equity swaps to gain investment expo sure to the relevant market of the underlying security. A swap is agreement that obligates the parties to exchange cash flows specified intervals. The Fund is obligated to pay the counterparty trade date an amount based upon the value of the underlying instru ment and, at termination date, final payment is settled based on value of the underlying security on trade date versus the value termination date plus accrued dividends. Risks may arise as a of the failure of the counterparty to the contract to comply with terms of the swap contract. The Fund bears the risk of loss of amount expected to be received under a swap agreement in the of the default of the counterparty. Therefore, the Fund considers creditworthiness of each counterparty to a swap contract in evalu ating potential credit risk. Additionally, risks may arise from unan ticipated movements in the value of the swap relative to the underlying securities. The Fund records a net receivable or payable daily, based on change in the value of the underlying securities. The net receivable or payable for financial statement purposes is shown as due to from broker. The Fund has collateralized 100% of the notional amount of the swap. Such amounts are reflected in the Statement of Assets and Liabilities as Cash-initial margin. At December 31, the following swap was outstanding (stated in U.S. dollars): GLOBAL HARD ASSETS FUND UNDERLYING NUMBER OF NOTIONAL TERMINATION UNREALIZED SECURITY SHARES AMOUNT DATE APPRECIATION ---------- --------- -------- ----------- ------------ Gazprom Oil Co. 239,200 $38,990 Open $276,058 NOTE 12--COMMODITY SWAPS--The Funds (except U.S. Government Money Fund) may enter into a commodity swap to gain investment exposure to the relevant spread of the commodity reference prices. A swap is an agreement that obligates the parties to exchange cash flows at specified intervals. At termination date, a final payment is made based on the swap's notional amount on trade date versus the value on termination date. Risks may arise as a result of the failure of the counterparty to the contract to comply with the terms of the swap contract. The Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default of the counterparty. Therefore, the Fund considers the creditworthiness of each counterparty to a swap contract in evaluating potential credit risk. Additionally, risks may arise from unanticipated movements in the value of the swap relative to the underlying reference prices. The Fund records a net receivable or payable daily, based on the change in the value of the swap. The net receivable or payable for financial statement purposes is shown as due to or from broker. At December 31, 2003, there were no outstanding commodity swaps. 48 VAN ECK FUNDS -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (continued) NOTE 13--BANK LINE OF CREDIT--The Trust participates with other funds managed by Van Eck Associates Corporation in a $45 million committed credit facility (the "Facility") to be utilized for temporary financing until the settlement of sales or purchases of portfolio securities, the repurchase or redemption of shares of the Funds at the request of the shareholders and other temporary or emergency purposes. In connection therewith, the Funds have agreed to pay commitment fees, pro rata, based on the unused but available balance. Interest is charged to the Fund at rates based on prevailing market rates in effect at the time of borrowings. For the year ended December 31, 2003, the Funds made the following borrowings: AVERAGE AMOUNT AVERAGE INTEREST FUND BORROWED RATE ---- -------------- ---------------- Emerging Markets Fund ...................... $ 84,508 1.64% Global Hard Assets Fund .................... 24,389 1.69 International Investors Gold Fund .......... 1,912,047 1.81 U.S. Government Money Fund ................. 330 1.85 At December 31, 2003 the Funds' outstanding borrowings under the line of credit were as follows: AMOUNT INTEREST FUND BORROWED RATE ---- -------- -------- Emerging Markets Fund ....................... $532,155 1.60% NOTE 14--FUND MERGER--As of the close of business on October 31, 2003, the Emerging Markets Fund acquired all the net assets of the Asia Dynasty Fund pursuant to a plan of reorganization approved by the Asia Dynasty Fund shareholders on October 30, 2003. The acquisition was accomplished by a tax-free exchange of 1,601,259 shares of Class A and 310,410 shares of Class B of the Asia Dynasty Fund to the Emerging Markets Fund, Class A and Class C. Asia Dynasty Fund's net assets at that date, including $5,836,709 of unrealized appreciation, were combined with those of the Emerging Markets Fund. The aggregate net assets of the Emerging Markets Fund and Asia Dynasty Fund before the acquisition were $14,802,607 and $14,781,415 respectively. NOTE 15--REGULATORY MATTERS--In connection with their investigations of practices identified as "market timing" and "late trading" of mutual fund shares, the Office of the New York State Attorney General and the United States Securities and Exchange Commission have requested and received information from the Adviser. The investigations are ongoing. If it is determined that the Adviser or its affiliates engaged in improper or wrongful activity that caused a loss to a Fund, the Board of Trustees of the Funds will determine the amount of restitution that should be made to a Fund or its shareholders. At the present time, the amount of such restitution, if any, cannot be estimated. 49 VAN ECK FUNDS, INC.--MID CAP VALUE SCHEDULE OF PORTFOLIO INVESTMENTS DECEMBER 31, 2003
NO. OF SHARES SECURITIES (A) VALUE (NOTE 1) ---------------------------------------------------------------------------------------- COMMON STOCKS: 98.8% CONSUMER DISCRETIONARY: 25.2% 8,600 Black & Decker Corp. $ 424,152 8,900 Callaway Golf Co. 318,465 7,000 CBRL Group, Inc. 267,820 1,300 Centex Corp. 139,945 4,000 Choice Hotels International, Inc.+ 141,000 4,400 Federated Department Stores, Inc. 207,372 3,000 GTECH Holdings Corp. 148,470 4,800 Hasbro, Inc. 314,944 3,400 Home Depot, Inc., The 120,666 3,665 Hughes Electronics Corp.+ 226,156 5,300 Kmart Holding Corp.+ 126,935 8,700 La-Z-Boy, Inc. 182,526 8,900 Lear Corp. 545,837 1,900 M.D.C. Holdings, Inc. 122,550 5,300 Mattel, Inc. 294,831 5,800 Maytag Corp. 440,030 7,400 Outback Steakhouse, Inc. 327,154 2,300 Ryland Group, Inc. 203,872 4,500 Sears, Roebuck and Co. 204,705 6,500 Toll Brothers, Inc.+ 258,440 3,800 Zale Corp.+ 202,160 ----------- 5,218,030 ----------- CONSUMER STAPLES: 5.7% 6,700 Estee Lauder Companies, Inc. (Class A) 263,042 3,200 Hershey Foods Corp. 246,368 10,000 Hormel Foods Corp. 258,100 6,900 R.J. Reynolds Tobacco Holdings, Inc. 401,235 ----------- 1,168,745 ----------- FINANCIAL SERVICES: 20.8% 17,100 AmeriCredit Corp.+ 272,403 4,200 Astoria Financial Corp. 156,240 6,000 CIT Group, Inc. 215,700 6,900 Cousins Properties, Inc. 211,140 3,450 Doral Financial Corp. 111,366 7,200 Equity Office Properties Trust 206,280 6,500 GreenPoint Financial Corp 229,580 21,400 HRPT Properties Trust 215,926 5,500 Independence Community Bank Corp. 197,835 8,100 IndyMac Bancorp, Inc. 241,299 4,100 International Bancshares Corp. 193,315 3,200 LNR Property Corp. 158,432 22,600 Max Re Capital Ltd. 507,144 4,100 MBIA, Inc. 242,843 4,100 MGIC Investment Corp. 233,454 17,200 Phoenix Companies, Inc. 207,088 5,200 Radian Group, Inc. 253,500 7,200 Silicon Valley Bancshares+ 259,704 4,700 WFS Financial, Inc.+ 199,562 ----------- 4,312,811 ----------- NO. OF SHARES SECURITIES (A) VALUE (NOTE 1) ---------------------------------------------------------------------------------------- HEALTHCARE: 15.3% 5,200 AdvancePCS+ $ 273,832 4,600 Coventry Health Care, Inc.+ 296,654 13,600 Humana, Inc.+ 310,760 8,100 Manor Care, Inc. 280,017 3,700 Medicis Pharmaceutical Corp. 263,810 11,100 Mylan Laboratories, Inc. 280,386 4,700 Pacificare Health Systems, Inc.+ 317,720 12,800 Universal Health Services, Inc. 687,616 9,900 Watson Pharmaceuticals, Inc.+ 455,400 ----------- 3,166,195 ----------- INDUSTRIALS: 4.1% 4,700 American Power Conversion Corp.+ 114,915 12,100 Cendant Corp.+ 269,467 8,400 J.B. Hunt Transport Services, Inc.+ 226,884 33,600 Quanta Services, Inc.+ 245,280 ----------- 856,546 ----------- INFORMATION TECHNOLOGY: 18.7% 16,600 Activision, Inc.+ 302,120 8,200 Ascential Software Corp.+ 212,626 13,200 Autodesk, Inc. 324,456 14,000 Avnet, Inc.+ 303,240 20,400 Cadence Design Systems, Inc.+ 366,792 9,100 Citrix Systems, Inc.+ 193,011 46,100 InFocus Corp.+ 446,248 65,400 JDS Uniphase Corp.+ 238,710 24,900 Maxtor Corp.+ 276,390 30,900 Sanmina-SCI Corp.+ 389,649 40,000 Solectron Corp.+ 236,400 48,000 Sun Microsystems, Inc.+ 215,520 11,800 Tektronix, Inc. 372,880 ----------- 3,878,042 ----------- MATERIALS: 1.6% 11,300 Monsanto Co. 325,214 ----------- ELECOMMUNICATIONS SERVICES: 0.9% 17,600 Crown Castle International Corp.+ 194,128 ----------- TRANSPORTATION: 1.6% 9,800 Overseas Shipholding Group, Inc. 333,690 ----------- UTILITIES: 4.9% 32,600 Calpine Corp.+ 156,806 14,600 Edison International+ 320,178 47,300 Williams Companies, Inc., The 464,486 4,500 Xcel Energy, Inc. 76,410 ----------- 1,017,880 ----------- TOTAL COMMON STOCKS: 98.8% (COST: $16,460,153) 20,471,281 -----------
See Notes to Financial Statements 50 VAN ECK FUNDS, INC.--MID CAP VALUE SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED) DECEMBER 31, 2003
NO. OF SHARES SECURITIES (A) VALUE (NOTE 1) ---------------------------------------------------------------------------------------- PREFERRED STOCK: 0.2% CONSUMER DISCRETIONARY: 0.2% 1,528 The News Corp. Ltd. (ADR) $ 46,222 ----------- TOTAL PREFERRED STOCKS: 0.2% (Cost: 31,098) 46,222 ----------- TOTAL INVESTMENTS: 99.0% (COST: $16,491,251) 20,517,503 OTHER ASSETS LESS LIABILITIES: 1.0% 195,203 ----------- NET ASSETS: 100% $20,712,706 ===========
--------------- (a) Unless otherwise indicated, securities owned are shares of common stock. + Non-income producing GLOSSARY: ADR - American Depositary Receipt See Notes to Financial Statements 51 VAN ECK FUNDS, INC.--MID CAP VALUE FUND STATEMENT OF ASSETS AND LIABILITIES December 31, 2003 ASSETS: Investments, at value (cost $16,491,251) (Note 1) ............. $ 20,517,503 Cash .......................................................... 196,503 Receivables: Capital shares sold ....................................... 28,278 Dividends ................................................. 16,384 Due from Adviser .......................................... 4,167 Prepaid expense ........................................... 5,374 ----------- Total assets ........................................... 20,768,209 ----------- LIABILITIES: Payables: Due to Distributor (Note 2) ............................... 9,813 Due to Directors (Note 5) ................................. 3,843 Capital shares redeemed ................................... 1,878 Accounts payable .......................................... 39,969 ----------- Total liabilities ...................................... 55,503 ----------- Net Assets .................................................... $20,712,706 =========== Shares outstanding ............................................ 1,134,563 =========== Net asset value, redemption and offering price per share ..... $ 18.26 =========== Maximum offering price per share .............................. $ 19.37 =========== Net assets consist of: Aggregate paid in capital ................................. $43,187,798 Unrealized appreciation of investments .................... 4,026,252 Accumulated realized loss ................................. (26,493,605) Accumulated net investment loss ........................... (7,739) ----------- $20,712,706 =========== See Notes to Financial Statements 52 VAN ECK FUNDS, INC.--MID CAP VALUE FUND STATEMENT OF OPERATIONS Year ended December 31, 2003
INCOME (NOTE 1): Dividends (net of foreign taxes withheld of $806) .............................. $ 286,226 Interest ....................................................................... 1,539 ----------- Total income ............................................................ 287,765 EXPENSES: Advisory fee (Note 2) .......................................................... $ 143,277 Administration (Note 2) ........................................................ 50,742 Distribution (Note 2) .......................................................... 95,518 Shareholder reports ............................................................ 97,031 Transfer agency ................................................................ 81,280 Professional ................................................................... 53,482 Registration ................................................................... 22,241 Proxy .......................................................................... 17,268 Custodian ...................................................................... 7,682 Trustees' fees and expenses .................................................... 288 Other .......................................................................... 12,243 ----------- Total expenses ................................................................. 581,052 Expenses assumed by the Adviser (Note 2) ....................................... (179,042) ----------- Net expenses ................................................................... 402,010 ----------- Net investment loss ............................................................ (114,245) ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3): Change in unrealized appreciation of investments ............................... 8,439,031 Realized loss from security transactions ....................................... (1,373,431) ----------- Net gain on investments ........................................................ 7,065,600 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... $ 6,951,355 ===========
See Notes to Financial Statements 53 VAN ECK FUNDS, INC.--MID CAP VALUE FUND STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 2003 2002+ ------------ ------------- DECREASE IN NET ASSETS: OPERATIONS: Net investment loss ..................................................................... $ (114,245) $ (109,643) Realized loss from security transactions ................................................ (1,373,431) (9,483,167) Change in unrealized appreciation of investments ........................................ 8,439,031 1,729,433 ------------ ------------- Net increase (decrease) in net assets resulting from operations ......................... 6,951,355 (7,863,377) ------------ ------------- CAPITAL SHARE TRANSACTIONS:* Proceeds from sale of shares ............................................................ 4,987,127 3,073,095 Shares issues in connection with a merger (Note 6) ...................................... -- 10,303,370 Cost of shares reacquired ............................................................... (10,283,880) (40,851,279) ------------ ------------- Decrease in net assets resulting from capital share transactions ........................ (5,296,753) (27,474,814) ------------ ------------- Total increase (decrease) in net assets ................................................. 1,654,602 (35,338,191) NET ASSETS: Beginning of year .......................................................................... 19,058,104 54,396,295 ------------ ------------- End of year ................................................................................ 20,712,706 19,058,104 ============ ============ Accumulated net investment loss ............................................................ $ (7,739) $ (10,387) ============ ============ *SHARES OF COMMON STOCK ISSUED (800,000,000 SHARES AUTHORIZED OF $0.001 PAR VALUE) Shares sold ............................................................................. 337,553 179,032 Shares issues in connection with a merger (Note 6) ...................................... -- 642,758 Shares reacquired ....................................................................... (696,731) (2,326,174) ------------ ------------- Net decrease ............................................................................ (359,178) (1,504,384) ============ ============
+ Includes the operations of the Van Eck Funds I, Inc. Mid Cap Value Fund from January 1, 2002 through June 7, 2002. See Notes to Financial Statements 54 VAN ECK FUNDS, INC.--MID CAP VALUE FUND FINANCIAL HIGHLIGHTS For a share outstanding throughout the year:
YEAR ENDED DECEMBER 31,* ---------------------------------------------------------------- 2003(e) 2002(d) 2001 2000 1999 -------- -------- -------- -------- -------- Net Asset Value, Beginning of Year ................. $ 12.76 $ 18.14 $ 21.17 $ 27.73 $ 23.96 -------- -------- -------- -------- -------- Income From Investment Operations: Net Investment Loss ............................ (0.10) (0.08) (0.05) (0.12) (0.03) Net Realized and Unrealized Gain (Loss) on Investments .............................. 5.60 (5.30) (2.98) (5.38) 7.08 -------- -------- -------- -------- -------- Total from Investment Operations ............... 5.50 (5.38) (3.03) (5.50) 7.05 -------- -------- -------- -------- -------- Less Distributions: Distributions from Realized Capital Gains ...... -- -- -- (1.06) (3.28) -------- -------- -------- -------- -------- Total Dividends and Distributions .............. -- -- -- (1.06) (3.28) -------- -------- -------- -------- -------- Net Asset Value, End of Year ....................... $ 18.26 $ 12.76 $ 18.14 $ 21.17 $ 27.73 ======== ======== ======== ======== ======== Total Return (a) ................................... 43.10% (29.66)% (14.31)% (19.83)% 29.42% ------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTARY DATA Net Assets, End of Year (000's) .................... $ 20,713 $ 19,058 $ 54,396 $ 69,091 $ 94,840 Ratio of Gross Expenses to Average Net Assets (b) ................................. 3.04% 3.07% 1.44% 1.38% 1.50% Ratio of Net Expenses to Average Net Assets ........ 2.10% 1.79% 1.35% 1.35% 1.32% Ratio of Net Investment Loss to Average Net Assets (c) ...................... (0.60)% (0.52)% (0.25)% (0.46)% (0.16)% Portfolio Turnover Rate ............................ 143% 335% 63% 125% 134%
--------------- (a) Total return is calculated assuming an initial investment of $10,000 made at the net asset value at the beginning of the year, reinvestment of dividends and distributionsat net asset value on the dividend payment date and a redemption on the last day of the year. The return does not reflect the deduction of taxes that a shareholder would pay on Fund dividends and distributions or the redemption of Fund shares. (b) Had fees not been waived and expenses not been assumed. (c) Ratios would have been (1.54)%, (1.80)%, (0.34)%, (0.49)% and (0.34)%, respectively, had the Adviser not waived fees and had expenses not been assumed. (d) Includes the operations of the Van Eck Funds I, Inc. Mid Cap Value Fund from January 1, 2002 through June 7, 2002. The new advisory agreement dated January 1, 2002 names Van Eck Associates Corporation as the Adviser to the Fund. At January 1, 2002 John A. Levin & Co. Inc. was named sub-adviser to the Fund. (e) John A. Levin & Co. resigned as sub-adviser to the Fund effective June 1, 2003. New York Life Management LLC began to operate as the sub-adviser to the Fund effective June 1, 2003. * The financial highlights table for the three years preceding 2002 is that of Van Eck Funds I, Inc. Mid Cap Value Fund (formerly Van Eck/Chubb Growth & Income Fund). See Note 1 for details. The investment returns prior to January 1, 2002 of the Van Eck Funds I, Inc. Mid Cap Value Fund (formerly Van Eck/Chubb Growth & Income Fund) were reflective of the previous investment adviser. See Notes to Financial Statements 55 VAN ECK FUNDS, INC.--MID CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS NOTE 1--SIGNIFICANT ACCOUNTING POLICIES--At a meeting of Directors held on December 11, 2001, the Board approved the name change of the Van Eck/Chubb Funds, Inc. to Van Eck Funds I, Inc. effective January 1, 2002. At a shareholder meeting held on June 6, 2002, approval was given to merge the assets of the Van Eck Funds I Inc., which consisted of two funds in the series, Mid Cap Value Fund (formerly Growth and Income Fund) and Total Return Fund into the Van Eck Funds II, Inc. Mid Cap Value Fund, effective June 7, 2002. Upon completion of the merger, Van Eck Funds II, Inc. began operating under the name Van Eck Funds, Inc. The Van Eck Funds, Inc. (the "Company"), was incorporated under the laws of the State of Maryland on January 30, 2002 and is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end series management investment company. The Company consists of one fund in the series, Van Eck Mid Cap Value Fund (the "Fund"). The following is a summary of significant accounting policies consistently followed by Fund, in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 exchanges or traded on the NASDAQ National Market System are valued at the last sales prices reported at the close of business on the last business day of the year. As of June 23, 2003, the portfolios began pricing securities traded on the NASDAQ stock market using the NASDAQ official closing price. Over-the-counter securities not included in the NASDAQ National Market System and listed securities for which no sale was reported are valued at the mean of the bid and ask prices. Short-term obligations purchased with more than sixty days remaining to maturity are valued at market value. Short-term obligations purchased with sixty days or less to maturity are valued at amortized cost, which with accrued interest approximates market value. Securities for which quotations are not available are stated at fair value as determined by the Board of Trustees. B. FEDERAL INCOME TAXES--It is the Fund's policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. C. DIVIDENDS AND DISTRIBUTIONS--Dividend income and distributions to shareholders are recorded on the ex-dividend date. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from such amounts reported in accordance with accounting principles generally accepted in the United States. D. OTHER--Security transactions are accounted for on the date the securities are purchased or sold. Interest income is accrued as earned. NOTE 2--AGREEMENTS AND AFFILIATES--Van Eck Associates Corporation ("VEAC", the "Adviser") earns a fee at an annual rate of 0.75% of the Fund's average net assets for investment management and advisory services. For the year ended December 31, 2003, the Adviser agreed to assume expenses exceeding 2.10% of the average daily net assets of the Fund. Expenses were reduced by $179,042 under this agreement. Under the Sub-Advisory Agreement, Van Eck Associates has paid John A. Levin Co., Inc. a sub-advisory fee at an annual rate of 0.20% of the first $200 million of the average daily net assets, 0.19% of the next billion of average daily net assets and 0.18% of the assets in excess of $1.3 billion. John A. Levin Co. resigned as sub-adviser to the Fund effective June 1, 2003. At a meeting of the Board of Directors held on April 23, 2003, the Board of Directors approved a sub-advisory agreement with New York Life Investment Management LLC ("NYLIM") on an interim basis. Under this agreement, the Adviser pays NYLIM a fee, payable monthly, at an annual rate of 0.50% of the Fund's average daily net assets, reduced by 0.01% on an annual basis for each $1 million of such assets under $50 million. At a meeting of shareholders held on October 15, 2003 the current Sub-Advisory Agreement was approved. Certain officers and trustees of the Trust are officers of the Adviser. The Fund entered into an Administration Agreement dated June 7, 2002 with Van Eck Associates Corp. (the "Administrator") which details responsibility for performing certain accounting and administrative services. In accordance with an accounting and administration agreement, the Administrator earns a fee of 0.15% of the Fund's average daily net assets. Van Eck Securities Corporation (the "Distributor"), a wholly owned subsidiary of the Investment Adviser, for the year ended December 31, 2003, received a total of $13,103 in sales loads of which $11,253 was reallowed to broker-dealers and the remaining $1,850 was retained by the Distributor. Also, the Company has a plan of distribution pursuant to Rule 12b-1 that provides that the Company may, directly or indirectly, engage in activities primarily intended to result in the sale of the Company's shares. The maximum expenditure the Company may make under the plan is 0.50% per annum. In accordance with the Advisory Agreement, the Fund reimbursed Van Eck Associates Corporation for costs incurred in connection with certain operating functions. The Fund reimbursed costs in the amount $26,656. NOTE 3--INVESTMENTS--Purchases and sales of securities other than U.S. government securities and short-term obligations aggregated $26,086,695 and $31,078,849, respectively, for the year ended December 31, 2003. NOTE 4--INCOME TAXES-- For federal income tax purposes, the identified cost of investments owned at December 31, 2003 was $16,547,232. As of December 31, 2003, net unrealized appreciation for federal income tax purposes aggregated $3,970,271 of which $4,296,332 related to appreciated securities and $326,061 related to depreciated securities. At December 31, 2003, the components of accumulated earnings on a tax basis were as follows: accumulated capital and other losses of $26,434,976 and unrealized appreciation of $3,970,271. There were no distributions paid to shareholders during the years ended December 31, 2003 and December 31, 2002. 56 VAN ECK FUNDS, INC.--MID CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------------------------------------------------- As of December 31, 2003, the Fund had a capital loss carryfoward of $26,428,258 available, $8,215,559 expiring December 31, 2005, which are limited under tax rules, $1,273,029 expiring December 31, 2008 and $11,962,435 expiring December 31, 2009 of which a portion is limited under tax rules, $2,910,558 expiring December 31, 2010, and $2,066,677 expiring December 31, 2011. Some of the Fund's losses were acquired as a result of Fund mergers and are limited with respect to utilization under the tax rules: $8,215,559 of the capital loss carryforward is related to the acquisition of Van Eck/Chubb Capital Appreciation Fund on November 10, 1999. This amount is subject to an annual limitation of $1,520,870 under the tax rules; $2,719,386 of the capital loss carryforward is related to the acquisition of the Van Eck Total Return Fund (Note 6) on June 7, 2002. The amount is subject to an annual limitation of $516,199 under the tax rules. Net capital losses incurred after October 31, and within the taxable year are deemed to arise on the first day of the Fund's next taxable year. For the year ended December 31, 2003 the Fund intends to defer to January 1, 2004 for U.S. Federal income tax purpose, post-October capital losses of $6,718. During the period ending December 31, 2003, as a result of permanent book to tax differences, the Fund incurred differences that affected undistributed net investment income and accumulated net realized gain on investments by the following amounts in the table that follows. Net assets were not affected by these reclassifications. Increase in Increase in Accumulated Net Investment Income Realized Gain on Investment --------------------- --------------------------- $116,893 $8,299 NOTE 5--DIRECTOR DEFERRED COMPENSATION PLAN--The Van Funds, Inc. Mid Cap Value Fund established a Deferred Compensation Plan (the "Plan") for Directors. The Directors can elect to defer receipt of their director meeting fees and retainers until retirement, disability or termination from the board. The Fund contributions to the Plan are limited to the amount of fees earned by the participating Directors. The fees otherwise payable to the participating Directors are invested in shares of the Fund as directed by the Directors. The Fund has elected to show this deferred liability net of the corresponding asset for financial statement purposes. As of December 31, 2003, the net assets and corresponding liability of the Fund's portion of the Plan was $9,707. NOTE 6--FUND MERGER--As of the close of business on June 7, 2002, the Van Eck Funds, Inc.- Mid Cap Value Fund acquired all the net assets of Van Eck Total Return Fund pursuant to a plan of reorganization approved by the Van Eck Mid Cap Value Fund and Van Eck Total Return Fund shareholders on June 6, 2002. The acquisition was accomplished by a tax-free exchange of 642,757 shares of Van Eck Mid Cap Value Fund (valued at $10,732,259) for the 797,477 shares of Van Eck Total Return Fund's net assets at that date, $10,303,370, including $428,889 of unrealized depreciation, were combined with those of the Van Eck Mid Cap Value Fund. The aggregate net assets of Van Eck Mid Cap Value Fund and Van Eck Total Return Fund before the acquisition were $17,950,112 and $10,303,370, respectively. NOTE 7--REGULATORY MATTERS--In connection with their investigations of practices identified as "market timing" and "late trading" of mutual fund shares, the Office of the New York State Attorney General and the United States Securities and Exchange Commission have requested and received information from the Adviser. The investigations are ongoing. If it is determined that the Adviser or its affiliates engaged in improper or wrongful activity that caused a loss to a Fund, the Board of Directors of the Fund will determine the amount of restitution that should be made to a Fund or its shareholders. At the present time, the amount of such restitution, if any, cannot be estimated. 57 Report of Ernst & Young LLP, Independent Auditors To the Board of Trustees/Directors and Shareholders Van Eck Funds Van Eck Funds, Inc. We have audited the accompanying statements of assets and liabilities, including the schedules of portfolio investments, of the Van Eck Funds (comprising Emerging Markets Fund, Global Hard Assets Fund, International Investors Gold Fund and U.S. Government Money Fund) and Van Eck Funds, Inc. (comprising Mid Cap Value Fund) (collectively the "Funds") as of December 31, 2003, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and financial highlights for each of the five years in the period then ended. These financial statements and the financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2003, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds constituting the Van Eck Funds and Van Eck Funds, Inc. at December 31, 2003, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for the five years in the period then ended, in conformity with accounting principles generally accepted in the United States. /s/ Ernest & Young LLP New York, New York February 24, 2004 58 -------------------------------------------------------------------------------- BOARD OF TRUSTEES/DIRECTORS/OFFICERS (UNAUDITED)
TRUSTEE'S/DIRECTOR'S/ OFFICER'S NAME, ADDRESS(1), DATE OF BIRTH, NUMBER OF POSITION(S) HELD WITH PRINCIPAL PORTFOLIOS IN FUND AND LENGTH OF OCCUPATION(S) FUND COMPLEX SERVICE AS A VAN ECK DURING PAST OVERSEEN OTHER DIRECTORSHIPS TRUSTEE(2)/DIRECTOR(2): FIVE YEARS: BY TRUSTEE/DIRECTOR HELD: -------------------------- ------------- ------------------- ------------------- INTERESTED TRUSTEES/DIRECTORS: ------------------------------ John C. van Eck, CFA+ Chairman, Van Eck Associates 10 Chairman of the Board and (9/15/15) Corporation; and former Director of President of two other Chairman and Trustee Van Eck Securities Corporation companies advised by the since 2000 Jan F. van Eck Director, Van Eck Associates 10 Trustee of two other investment (9/26/63)+* Corporation; President and Director, companies advised by the Trustee since 2000 Van Eck Securities Corporation and other affiliated companies; President and Director, Van Eck Capital, Inc.; President and Director, Van Eck Absolute Return Advisers Corporation; Director, Greylock Capital Associates LLC Derek S. van Eck(3) President of Worldwide Hard Assets 10 Trustee of two other investment (9/16/64)+* Fund series and the Worldwide Real companies advised by the Trustee since 1999 Estate Fund series of Van Eck Worldwide Insurance Trust and the Global Hard Assets Fund series of Van Eck Funds; Executive Vice President, Director, Global Investments and President and Director of Van Eck Associates Corporation and Executive Vice President and Director of Van Eck Securities Corporation and other affiliated companies;Director, Greylock Capital Associates LLC
59 BOARD OF TRUSTEES/DIRECTORS/OFFICERS (UNAUDITED) (CONTINUED)
TRUSTEE'S/DIRECTOR'S/ OFFICER'S NAME, ADDRESS(1), DATE OF BIRTH, NUMBER OF POSITION(S) HELD WITH PRINCIPAL PORTFOLIOS IN FUND AND LENGTH OF OCCUPATION(S) FUND COMPLEX SERVICE AS A VAN ECK DURING PAST OVERSEEN OTHER DIRECTORSHIPS TRUSTEE(2)/DIRECTOR(2): FIVE YEARS: BY TRUSTEE/DIRECTOR HELD: -------------------------- ------------- ------------------- ------------------- INDEPENDENT TRUSTEES/DIRECTORS: ------------------------------ Jeremy H. Biggs+ Vice Chairman, Director 10 Trustee of two investment (68) and Chief Investment Officer, companies advised by the Trustee since 1990 Fiduciary Trust Company Adviser; Chairman, Davis Funds International Group; Treasurer and Director, Union Settlement Association; First Vice President, Trustee and Chairman, Finance Committee, St. James School Richard C. Cowell Private investor 10 Director, West Indies & (6/13/27)P.++ Caribbean Development Ltd.; Trustee since 1985 Trustee of two other investment companies advised by the Adviser Philip D. DeFeo+ Chairman, Pacific 10 Trustee of another investment (58) Stock Exchange company advised by the Adviser Trustee since 1998 David J. Olderman Private investor 10 Trustee of two other investment (8/19/35)P.++ companies advised by the Adviser Trustee since 1994 Director since 2002 Ralph F. Peters Private investor 10 Trustee of two other investment (3/21/29)P.++ companies advised by the Adviser Trustee since 1987 Richard D. Stamberger President and CEO, SmartBrief.com 10 Partner and Co-founder, Quest (5/29/59)P.++ Partners, LLC; Executive Vice Trustee since 1994 President, Chief Operating Officer Director since 2002 and Director of NuCable Resources Corporation; Trustee of two other investment companies advised by the Adviser
60 -------------------------------------------------------------------------------- BOARD OF TRUSTEES/DIRECTORS/OFFICERS (UNAUDITED) (CONTINUED)
TRUSTEE'S/DIRECTOR'S/ OFFICER'S NAME, ADDRESS(1), DATE OF BIRTH, POSITION(S) HELD WITH PRINCIPAL FUND AND LENGTH OF OCCUPATION(S) SERVICE AS A VAN ECK DURING PAST OTHER DIRECTORSHIPS TRUSTEE(2)/DIRECTOR(2): FIVE YEARS: HELD: -------------------------- ------------- ------------------- OFFICERS: Alex W. Bogaenko Director of Portfolio Administration, Officer of two other (4/13/63) Van Eck Associates Corporation and investment companies Officer since 1997 Van Eck Securities Corporation advised by the Adviser Charles T. Cameron Director of Trading, Van Eck Officer of another (3/30/62) Associates Corporation; Co-Portfolio investment company Officer since 1996 Manager, Worldwide Bond Fund Series advised by the Adviser Thomas H. Elwood+ Vice President, Secretary and General Officer of two other (8/11/47) Counsel, Van Eck Associates Corporation, investment companies Officer since 1998 Van Eck Securities Corporation and advised by the Adviser other affiliated companies Gregory F. Krenzer President, Van Eck U.S. Government (7/6/72) Money Fund; Portfolio Manager Officer since 1998 U.S. Government Money Fund; Co-Portfolio Manager, Worldwide Bond Fund series Susan C. Lashley Vice President, Mutual Fund Operations, Officer of another (1/21/55) Van Eck Securities Corporation and investment company Officer since 1988 Van Eck Associates Corporation advised by the Adviser Bruce J. Smith Senior Vice President and Chief Officer of two other (3/15/55) Financial Officer, Van Eck Associates investment companies Officer since 1985 Corporation, Van Eck Securities Corporation advised by the Adviser and other affiliated companies
--------------- (1) The address for each Trustee/Director/Officer is 99 Park Avenue, 8th Floor, New York, NY 10016. (2) Each trustee/director serves for an indefinite term, until his resignation, death or removal. Officers are elected yearly by the Trustees/Directors. (3) Brother of Mr. Jan F. van Eck. + An "interested person" as defined in the 1940 Act. Jan van Eck and Derek van Eck are interested trustees/directors as they own shares and are on the Board of Trustees/Directors of the investment adviser. * Member of Executive Committee--exercises general powers of Board of Trustees/Directors between meetings of the Board. ++ Member of the Corporate Governance Committee. p. Member of Audit Committee--reviews fees, services, procedures, conclusions and recommendations of independent auditors. + The following Board members/officer have resigned: Mr. Biggs, as of October 17, 2003; Mr. DeFeo, as of November 17, 2003, Mr. John C. van Eck, as of December 31, 2003; and Mr. Elwood, as of January 29, 2004. 61 This report must be accompanied or preceded by a Van Eck Funds or Van Eck Funds, Inc. 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. Additional information about the Fund's Board of Trustees/Directors/Officers and the Fund's Proxy Voting Policies is provided in the "Statement of Additional Information" that is available by calling 1-800-826-2333 or by visiting www.vaneck.com. [Graphic Appears Here] 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 Item 2. Code of Ethics a) The Registrant has adopted a code of ethics (the "Code of Ethics") that applies to the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. b) Not applicable. c) The Registrant has not amended its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto. d) The Registrant has not granted a waiver or an implicit waiver from a provision of its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto. e) Not applicable. f) The Registrant's Code of Ethics is attached as an Exhibit hereto. Item 3. Audit Committee Financial Expert The Registrant's Board of Trustees has determined that David Olderman, a member of the Audit and Governance Committees, is an "audit committee financial expert" and "independent" as such terms are defined in the instructions to Form N-CSR Item 3(a)(2). Item 4. Principal Accountant Fees and Services a) Audit Fees Ernst & Young, as principal accountant for the Van Eck Funds, billed audit fees of $155,599 for 2003 and $190,111 for 2002. b) Audit-Related Fees Ernst & Young billed audit-related fees of $8.426 for 2003 and 6,212 for 2002. c) Tax Fees Ernst & Young billed tax fees of $10,200 for 2003 and $15,100 for 2002. d) All Other Fees None. e) The Audit Committee pre-approves all audit and non-audit services, to be provided to the Fund, by the independent accountants as required by `Section 10A of the Securities Exchange Act of 1934. The Audit Committee has authorized the Chairman of the Audit Committee to approve, between meeting dates, appropriate non-audit services. The Audit Committee after considering all factors, including a review of independence issues, will recommend to the Board of Trustees the independent auditors to be selected to audit the financial statements of the Funds. f) Not applicable. g) Ernst & Young does not provide services to the Registrant's investment adviser or any entity controlling, controlled by, or under common control with the adviser. h) Not applicable. Item 5. Audit Committee of Listed Registrants Not applicable. Item 6. Reserved Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies Not applicable. Item 8. Reserved Item 9. Submission of Matters to a Vote of Security Holders Not applicable for Annual Reports for the period ended December 31, 2003. Item 10. Controls and Procedures. (a) The Chief Executive Officer and the Chief Financial Officer have concluded that the Van Eck Funds, Inc. disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the Van Eck Funds, Inc. is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. (b) There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of our evaluation. Item 11. Exhibits. (a)(1) The Code of Ethics is attached as Ex-99.code ETH (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached as Exhibit 99.CERT. (b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is furnished as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) VAN ECK FUNDS By (Signature and Title) /s/ Bruce J. Smith, VP & Treasurer ---------------------------------- Date March 8, 2004 ------------------ Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title) /s/ Jan F. van Eck, CEO ------------------------ Date March 8, 2004 ------------------ By (Signature and Title) /s/ Bruce J. Smith, CFO --------------------------- Date March 8, 2004 ------------------