VAN ECK ASIA DYNASTY FUND
-------------------------
1996 SEMI-ANNUAL REPORT
Dear Fellow Shareholder:
International money flows continued to dictate the direction of the Asian stock
markets during the first half of 1996, and although results were mixed, many of
the Asian markets registered strong returns. The Asia Dynasty Fund (the "Fund")
had a total return of 4.7% for the first six months of the year.
HONG KONG
The Hong Kong market started the year with a very strong rally, due in part to
frenetic foreign buying, before consolidating in the second quarter. The Hong
Kong market ended the first six months of 1996 with a gain of 12.7%*. Locally,
the improved property market and the expectation of credit relaxation in China
helped investor sentiment. In terms of relative performance, property stocks led
the market, followed by conglomerates, particularly China-related companies. The
banking sector, affected by a mortgage-rate price war, did not fare as well,
while utilities failed to attract investors due to their unexciting earnings
outlook.
During the first half of the year, the Fund invested selectively in property,
conglomerate and bank stocks. Exposure to these stocks contributed positively to
the performance in Hong Kong, particularly the heavy weighting in key property
stocks. In our opinion, the Hong Kong market should continue to take its cues
from U.S. interest rate trends and foreign fund flows. After a relatively
lackluster second quarter, we believe the Hong Kong market should be set for
better performance in the second half if interest rates remain steady and
corporate earnings growth shows positive results in the coming months.
SINGAPORE
The year started off with foreign funds returning to the Singapore stock market,
boosting the OCBC 30 Index to a two-year high amid high volume. However,
concerns over the possibility of rising U.S. interest rates and a sell-down in
the U.S. market led to weakness in the region, including the Singapore market.
Despite strong first quarter GDP (Gross Domestic Product) growth of 10.7% (on an
annualized basis), sentiment was further weakened in mid-March due to a series
of disappointing corporate results. Government measures to curb property
speculation in the island-state did not help matters. The Singapore stock market
ended the first half of the year down 3.2%.
Over the first six months of the year, our strategy was to focus on "blue
chips," particularly banking and property stocks. Going forward, trading volume
is likely to remain low, reflecting weak interest in this market and
disappointing interim results. Investors are likely to remain sidelined, waiting
for the next reporting season.
MALAYSIA
Malaysia had a strong first half, registering a 15.7% rise, fueled largely by
strong growth in money supply. Concerns over economic overheating were partially
allayed by preliminary signs that consumer inflation and the trade deficit
problems were being contained. Nevertheless, interest rates were kept high to
curb strong credit growth.
During the first six months of 1996, the Fund concentrated on
infrastructure-related stocks given the strong development needs of Malaysia,
and on defensive stocks, such as media, leisure and insurance, that would
benefit or be less adversely affected by high interest rates. In the second
half, investors may see opportunities for the inclusion of interest-rate
sensitive stocks should conditions prove ready for an interest rate cut.
THAILAND
The Thai stock market had a poor first half, losing 1.7%. The early rally in
January fizzled out due to a series of negative developments. The macroeconomic
environment worsened, with inflation rising to 7.4% and the current account
deficit proved to be stubbornly high. Frequent political wrangling also
contributed to the poor climate, as did the generally poor results from the
finance and securities, telecommunications and building materials sectors. Our
investment strategy for the period was to overweight bank and energy stocks,
while underweighting the telecommunications, building materials and property
sectors.
The factors that determined our sector allocation should remain intact through
the second half of the year. Although there are concerns over the asset quality
of some of the smaller banks in Thailand, the larger banks are sufficiently
<PAGE>
capitalized and remain good proxies for the strong economic growth of the
country. Energy stocks provide good exposure to the developmental needs of
Thailand. Within the other major sectors, we remain selective as the operating
environment continues to be difficult.
INDONESIA
Strong foreign buying and increased local participation helped the Indonesian
market to a 16% rise in the first half of the year. Although the appreciation
was broad-based, the exceptional performance of heavyweight PT Telkom had a
significant impact. Even with the market's substantial rise, Indonesia remains
fundamentally attractive on a growth-to-price ratio.
However, over the past couple of months, investors have taken the opportunity to
realize profits amid fears of an overheating economy and an inconsistent policy
of deregulation. Favoritism shown to some of the politically-connected
companies, particularly those related to the presidential family, has caused
consternation among some of Indonesia's largest foreign direct investors and
lenders.
Going forward, one of the leading factors that will determine the stability of
the market is the political uncertainty surrounding the succession issue. The
current president has ruled the country for 30 years, and with legislative and
presidential elections in 1997 and 1998, respectively, investors are justifiably
concerned. Without a clear successor, and with opposition parties forming, the
chances of a smooth transition are gradually decreasing.
Although we expect market volatility to increase over the next twelve months
leading up to the elections, we maintain a positive view that political
instability will subside and that the economy should continue on its course of
strong sustainable economic growth. The Fund remains largely invested in
consumer- and infrastructure-related stocks.
KOREA
Contrary to expectations for a liquidity-driven market, the Korean market
remained weak throughout the first half of 1996, falling 14.9%. Slower economic
growth coupled with weak export commodity prices drove market sentiment and
corporate earnings lower. With GDP growth expected to slow to 7.0% (down from
9.0% in 1995) and a rising current account deficit, local investors were
hesitant to enter the market until signs of an economic recovery emerged. Even
an increased weighting of the index in the Morgan Stanley Capital International
(MSCI) indices had little effect on the market. Despite all of this, foreign
investors remain positive on Korea, as evidenced by the expanding premiums paid
in over-the-counter trading. Although we have strategically underweighted this
market over the last few months, valuations are beginning to attract attention.
Furthermore, highly leveraged corporates should benefit from a looser monetary
environment that we foresee in a visibly slower economy.
Going forward, we believe the market should continue to drift downward until the
economy shows signs of recovery. Although 1996 earnings should be depressed,
they are expected to recover in 1997, led primarily by the financial and
non-manufacturing sectors. We look to maintain a neutral weighting in Korea
until the foreign investment limit increases in the third quarter.
PHILIPPINES
The Philippines market rose 23.3% in the first half of 1996, a result of strong
corporate earnings and an inflow of foreign funds. The Fund was largely invested
in sectors that are expected to be beneficiaries of the economic reform package,
including property, building materials and construction.
We intend to remain neutral to the index in terms of the Fund's Philippines
allocation for the remainder of the year, although we may become defensive if
market valuations surpass our expectations.
TAIWAN
Buoyed by the success of the first-ever direct presidential election, a reduced
military threat from China and Morgan Stanley's announcement that it would
include Taiwan in its regional stock market indices in September, the Taiwan
stock market recovered strongly from last year's doldrums. The first half rally,
which resulted in gains of 36.3%, was led by banking and financial stocks.
Looking toward the second half of 1996, we believe the Taiwan market is likely
to stay firm, underpinned by soft domestic interest rates and a continuous
inflow of foreign funds on the back of asset reallocation by regional portfolio
managers. Although the Fund is not a qualified foreign institutional investor,
and hence is not eligible to invest directly in the Taiwan market, it has
exposure through GDR (global depositary receipt) issues, primarily in the steel
and computer sectors.
<PAGE>
CHINA
Plagued by disappointing corporate results and poor market liquidity, the China
"B" share market (the shares available to foreign investors) remained subdued
for the first four months of the year. Subsequently, the People's Bank of
China's decision in May to lower interest rates and remove interest subsidies on
bank deposits helped to reverse investor sentiment. While sentiment seems to be
improving toward the "B" share market, lax information disclosure and generally
poor corporate earnings remain drawbacks for investment in these shares.
The Fund retains a fairly low exposure to the China "B" share market, composed
of stocks in the retail, cement, consumer durable and power generation sectors,
which should benefit from further credit easing in China. Following the pick-up
in market activity, more IPOs (Initial Public Offerings) should be issued in the
second half. We anticipate adding to this position if higher quality issues
become available.
THE OUTLOOK
With the Dow Jones Industrial Average likely to consolidate and a mediocre
outlook for the global fixed income markets, we may see increased volatility in
the Asian markets. However, as both Japan and China reflate their respective
economies and as earlier fears of an overheating regional economy continue to
dissipate, we expect to see a gradual decoupling of the correlation of Asian
markets to the Dow. Thus, we believe the long-term outlook remains promising for
investors in Asia.
We appreciate your participation in the Asia Dynasty Fund and we look forward to
helping you meet your investment objectives in the future.
- ----------------- -----------------
[PICTURE] [PICTURE]
- ----------------- -----------------
JOHN C. VAN ECK PETER SOO
CHAIRMAN PORTFOLIO MANAGER
July 12, 1996
Note: As discussed in a notice sent to shareholders in July, Timothy Chan, who
has twelve years' experience in the financial markets, with ten years of
experience investing in the Asian markets, will become Portfolio Manager of the
Asia Dynasty Fund, effective August 1, 1996. Mr. Chan will work with a team of
research analysts in the recently-opened Van Eck offices in Hong Kong. Please
see the prospectus supplement dated May 28, 1996 or call us at 1-800-826-1115
for further information.
*Market performance source: Morgan Stanley Capital International Indices. All
returns in U.S. dollar terms.
- --------------------------------------------------------------------------------
PERFORMANCE RECORD AS OF 6/30/96
- --------------------------------------------------------------------------------
AVERAGE ANNUAL AFTER MAXIMUM BEFORE
TOTAL RETURN SALES CHARGE+ SALES CHARGE
- --------------------------------------------------------------------------------
A shares-Life (since 3/22/93) 9.5% 11.1%
- --------------------------------------------------------------------------------
1 year 0.5% 5.5%
- --------------------------------------------------------------------------------
B shares-Life (since 9/1/93) 4.5% 5.8%
- --------------------------------------------------------------------------------
1 year (0.9%) 5.1%
- --------------------------------------------------------------------------------
The performance data represents past performance and is not indicative of future
results. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
At certain times in the past the Advisor waived certain or all expenses on the
Fund. Had the Fund incurred all expenses, investment returns would have been
reduced.
+ A shares: maximum sales charge = 4.75%
B shares: maximum contingent deferred sales charge = 6.00%
<PAGE>
TOP 10 EQUITY HOLDINGS*
-----------------------
AS OF JUNE 30, 1996
THE HONG KONG SHANGHAI BANKING CORPORATION, LTD. (HSBC HOLDINGS PLC)
(HONG KONG, 4.8%)
HSBC is the largest international bank listed on the Hong Kong stock exchange
and one of the largest banking and financial services organizations in the
world. Regionally, the bank holds 61% of the largest local bank in Hong Kong,
the Hang Seng Bank, and also lists other major banks in Singapore and Malaysia
among its subsidiaries.
YTL CORPORATION BHD
(MALAYSIA, 4.8%)
YTL is a leading Asian construction company and a major beneficiary of continued
infrastructure spending in Malaysia. In addition to property development, the
company is engaged in furniture manufacturing for the export market, the
operation and management of hotel resorts and power generation.
HUTCHISON WHAMPOA LTD.
(HONG KONG, 4.3%)
Hutchison Whampoa is a major diversified international corporation involved in
property development, shipping, container terminals, retailing,
telecommunications and media, energy and hotels. The company is committed to
both the growth of its existing businesses in Hong Kong and overseas, and to
long-term investment opportunities presented by the economic growth taking place
in the region.
SUN HUNG KAI PROPERTIES LTD.
(HONG KONG, 3.2%)
Principally a property development and investment company, Sun Hung Kai has
broadened its businesses to include hotel, construction, finance, insurance,
cinema, public transportation, telecommunications and trading. The company is
developing the fourth digital cellular phone network in Hong Kong.
OVERSEA-CHINESE BANKING CORP., LTD. (OCBC)
(SINGAPORE, 2.8%)
Quality land bank and large investment holdings make OCBC an excellent proxy for
the performance of the Singapore economy. The bank is conservatively managed
with particular strength in banking and finance, financial services, investment
holding, securities brokerage and real estate. It is one of the largest local
commercial banks in Singapore with branches and offices throughout Asia.
MALAYAN BANKING BHD
(MALAYSIA, 2.7%)
Malayan Banking is principally engaged in all aspects of banking. The primary
activities of the subsidiary companies are merchant banking, offshore banking,
finance, trustee services, insurance, venture capital, brokerage, property trust
fund management and unit trust fund management.
SWIRE PACIFIC LTD.
(HONG KONG, 2.6%)
One of the original and best known trading companies in Hong Kong, Swire
Pacific's principal activities and investments encompass aviation, real estate,
shipping, trading, insurance and hotels.
DCB HOLDINGS BHD
(MALAYSIA, 2.5%)
DCB Holdings was established as an investment holding company. Its subsidiary
companies are principally engaged in commercial banking, merchant banking, unit
trust management, finance, insurance and offshore banking.
PETRONAS GAS BHD (WARRANT)
(MALAYSIA, 2.4%)
The principal activities of Petronas Gas are the processing of natural gas
produced from offshore gas fields and the transmission of the processed gas to
end-users throughout peninsular Malaysia and Singapore.
CHEUNG KONG (HOLDINGS) LTD.
(HONG KONG, 2.1%)
The company is one of the largest property developers in Hong Kong and has
diverse interests in other commercial areas through its substantial ownership of
Hutchison Whampoa and other listed companies. Regional growth will benefit the
company, particularly in China where Cheung Kong has interests in property
development and infrastructure projects.
* Portfolio is subject to change.
NOTE: Equities are listed as percentage of total investments held.
<PAGE>
ASIA DYNASTY FUND
INVESTMENT PORTFOLIO JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NO. OF SHARES
OR PRINCIPAL
AMOUNT SECURITIES (A) VALUE (NOTE 1)
- --------------------------------------------------------------------------------
CHINA: 4.6%
1,329,800 Huaxin Cement Co. Ltd. "B" $ 327,131
2,565,000 Jilin Chemical Industrial Co. Ltd. "H" 453,971
1,721,500 Shanghai Narcissus Elec. App. "B" 292,655
1,349,600 Shanghai New Asia Group "B" 709,890
924,500 Shanghai Posts & Telecom. Equip. 453,005
297,840 Shanghai Shangling Elec. App. "B" 157,260
706,000 Shenzhen Guangdong Elect. "B" 451,471
200,000 Shenzhen North Jianshe Motorcycle "B" 69,761
2,400,000 Zhenhai Refining & Chemical 682,109
----------
3,597,253
----------
HONG KONG: 28.3%
$1,000,000 Amoy Properties Convertible Bond
5.50% due 12/29/2049 932,500
233,000 Cheung Kong (Holdings) Ltd. 1,678,111
350,000 China Light & Power Co., Ltd. 1,587,076
290,000 Citic Pacific Ltd. 1,172,633
1,000,000 First Pacific Co. Ltd. 1,537,329
50,000 Hang Seng Bank Ltd. 503,830
111,500 Henderson China Holding Ltd. 249,196
600,000 Hopewell Holdings 325,552
251,600 HSBC Holdings PLC 3,802,912
540,000 Hutchison Whampoa Ltd. 3,397,367
1,750,000 Innovative International Holdings, Ltd. 621,714
300,000 New World Development Co. 1,391,347
250,000 Sun Hung Kai Properties Ltd. 2,527,226
240,000 Swire Pacific Ltd. "A" 2,054,078
250,000 Wheelock & Company Ltd. 494,141
-----------
22,275,012
-----------
INDONESIA: 5.2%
130,000 Hanjaya Mandala Sampoerna "F " 1,480,765
8,400 P.T. Indonesia Satellite (ADR) 281,400
250,000 P.T. Asahimas Flat Glass "F " 263,271
215,000 P.T. Bukaka Teknik Utama "F " 205,620
180,000 P.T. Semen Gresik "F " 524,178
45,000 P.T. Telekomunikasi Indonesia (ADR) 1,338,750
----------
4,093,984
----------
MALAYSIA: 20.8%
340,000 Affin Holdings BHD 797,354
249,000 Arab Malaysian Corp. 978,232
51,000 Arab Malaysian Finance BHD "F " 222,850
570,000 DCB Holdings BHD 1,953,698
150,600 FCW Holdings BHD 332,051
220,000 Malayan Banking BHD 2,116,657
850,000 Petronas Gas BHD
(Warrants Expiring 8/17/2020) 1,874,123
200,000 Renong BHD 319,102
25,000 Renong BHD
(Warrants Expiring 11/21/2000) 11,325
$40,000 Renong ICULS
4.00% 05/21/2001 15,073
100,000 SP Setia BHD 228,503
184,000 Telekom Malaysia BHD 1,637,523
100,000 Time Engineering
(Rights Expiring 7/24/1996) 96,212
200,000 Time Engineering BHD 545,199
210,000 United Engineers BHD 1,456,404
12,000 Westmont Industries "A" 19,916
728,100 YTL Corporation BHD 3,794,468
----------
16,398,690
----------
NEW ZEALAND: 1.0%
95,000 Fletcher Challenge Ltd.
Building Division 185,694
95,000 Fletcher Challenge Ltd.
Energy Division 209,801
190,000 Fletcher Challenge Ltd.
Paper Division 367,479
----------
762,974
----------
PHILIPPINES: 5.1%
885,000 Bankard Inc. 371,494
702,300 Fil-Estate Land Inc. 897,808
1,380,000 Filinvest Land Inc. 566,113
40,000 Ionics Circuit Inc. 74,795
$600,000 J.G. Summit Holdings Inc.
Convertible Bond
3.50% due 12/23/2003 549,000
6,873 Metropolitan Bank & Trust Co. 192,774
184,135 Philippine Savings Bank 453,223
6,890,000 Southeast Asia Cement Holdings Inc. 893,952
290,000 Swift Foods, Inc. 23,683
900 Union Bank of the Philippines 1,288
----------
4,024,130
----------
SINGAPORE: 14.9%
3,000 Acer Computer
(Rights Expiring 7/18/1996)* 1,254
376,800 Acma Electrical Industries Ltd. 1,100,224
95,000 City Development Ltd. 740,610
119,357 City Development
(Warrants Expiring 7/18/1998) 693,641
30,000 DBS Bank "F " 374,203
405,000 DBS Land Ltd. 1,389,228
50,000 Far East Levinston & Shipping 276,400
151,000 Keppel Corporation Ltd. 1,262,792
17,900 Oversea-Chinese Banking Corp., Ltd. "F"
(Rights Expiring 7/10/1996) 143,352
179,000 Oversea-Chinese Banking Corp., Ltd. "F" 2,093,196
82,200 Pentex Schweizer Circuit 138,651
$100,000 Sebawang Maritime CULS
1.50% 10/25/1998 94,968
75,000 Singapore Airlines "F" 791,992
79,400 Singapore Press Holdings 1,558,738
130,000 Singapore Telecommunications 347,342
70,450 United Overseas Bank Ltd. 674,043
130,000 Uraco Holdings Ltd. 74,167
----------
11,754,801
----------
SOUTH KOREA: 5.0%
5,553 Chung Ho Computer Co. 376,498
7,140 Daewood Securities Co. 166,354
5,816 Hyundai Engineering & Co. 241,616
5,100 Hyundai Marine & Fire Insurance 352,071
201 Kookmin Bank 3,717
See Notes to Financial Statements.
<PAGE>
ASIA DYNASTY FUND
INVESTMENT PORTFOLIO JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
NO. OF SHARES
OR PRINCIPAL
AMOUNT SECURITIES (A) VALUE (NOTE 1)
- --------------------------------------------------------------------------------
18,070 Korea Electric Power Corp. $ 623,718
55,590 Korea Exchange Bank "F" 637,311
290 Korea Mobile Telecommunications Corp. 228,797
30,150 Korea Mobile Telecommunications Corp. (ADR) 516,319
2,520 Samsung Electronics 211,553
1,844 Samsung Electronics (New Line) 146,657
5,207 Samsung Electronics (GDR) 262,953
2,338 Samsung Electronics (GDR) (New Line)* 110,974
$100,000 Ssangyong Oil Convertible Bond
3.75% due 12/31/2008 103,250
----------
3,981,788
----------
TAIWAN: 1.1%
13,800 Macronix International Company Ltd. (ADR) 224,250
$200,000 Sincere Navigation Convertible Bond
3.75% due 5/26/2003 218,000
45,200 Tuntex Distinct (GDR) 401,150
----------
843,400
----------
THAILAND: 14.0%
30,000 Advanced Info. Services "F " 470,190
20,000 Ban Pu Coal Co. Ltd. "F " 576,514
95,000 Bangkok Bank Public Co. "F " 1,286,918
165,000 Electricity Gen. Pub. Co. "F " 575,037
50,000 Finance One Ltd. "F " 322,911
150,000 Industrial Finance Corp.
(Warrant Expiring 11/07/1997) 342,601
270,000 Krung Thai Bank Ltd. "F " 1,265,260
35,000 Land & House Co. Ltd. "F " 441,049
60,000 Lanna Lignite Public "F " 524,533
300,000 MDX Public Co. Ltd.
Convertible Bond
4.75% due 9/17/2003 141,000
160,000 National Finance & Securities "F " 711,979
36,300 Phatra Thanakit Co. Ltd. "F " 253,016
$125,000 Phatra Thanakit Co. Ltd.
Convertible Bond
3.50% due 12/13/2003 160,625
45,000 PTT Exploration & Production "F " 659,211
11,000 Siam Cement Public Co. "F " 539,734
82,500 Siam Commercial Bank "F " 1,195,558
108,800 Thai Farmers Bank Ltd. "F " 1,191,085
100,000 Thai Military Bank "F " 393,794
----------
11,051,015
----------
TOTAL INVESTMENTS: 100% (Cost $59,644,174) $78,783,047
===========
SUMMARY OF INVESTMENTS BY INDUSTRY % OF PORTFOLIO
- --------------------------------------------------------------
Airlines 1.0%
Auto Parts 0.8%
Banks 13.1%
Broadcast Media 0.4%
Building & Construction 5.4%
Building Materials 0.2%
Cement 2.9%
Chemicals 0.6%
Coal 1.4%
Communications--Equipment & Software 0.3%
Computers & Peripherals 0.5%
Conglomerates 0.7%
Distilling/Tobacco 1.9%
Electric Utilities 1.4%
Electrical Equipment & Electronics 2.7%
Engineering & Construction 2.7%
Financial Services 14.3%
Holding Co.--Diversified 10.9%
Household Products 0.4%
Insurance 0.5%
Machinery 1.7%
Manufacturing--Consumer & Industrial 0.4%
Metals--Miscellaneous 0.1%
Natural Gas 3.0%
Oil & Gas Exploration 0.3%
Oil & Gas Equipment Services 0.1%
Oil--Domestic 0.4%
Oil/Gas--International 0.9%
Paper & Forest Products 0.9%
Printing 2.0%
Publishing--Newspaper 0.6%
Real Estate 14.6%
Restaurants 0.9%
Telecommunications 5.8%
Textile 0.5%
Transportation 3.0%
Utilities 2.7%
------
100.0%
======
- ----------
(a) Unless otherwise indicated, securities owned are shares of common stock.
Glossary:
ADR--American Depositary Receipt
"F "--Foreign registry
GDR--Global Depositary Receipt
*Fair value as determined by the Board of Trustees.
See Notes to Financial Statements.
<PAGE>
ASIA DYNASTY FUND FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
ASSETS:
Investments at value (cost, $59,644,174) (Note 1) $78,783,047
Cash 2,390,538
Receivables:
Securities sold 591,465
Capital shares sold 348,297
Dividends and interest 217,924
Other 64,251
-----------
Total assets 82,395,522
-----------
LIABILITIES:
Payables:
Securities purchased 339,050
Capital shares repurchased 940,775
Accounts payable 423,882
-----------
Total liabilities 1,703,707
-----------
NET ASSETS $80,691,815
===========
CLASS A
Net asset value and redemption price
per share ($55,114,621/4,246,292) $12.98
======
Maximum offering price per share
(NAV/(1-maximum sales commission)) $13.63
======
CLASS B
Net asset value, offering price and redemption
price per share ($25,577,194/1,985,717)
(Redemptions may be subject to a contingent
deferred sales charge within the first six
years of ownership) $12.88
======
Net assets consist of:
Aggregate paid in capital $67,914,564
Unrealized appreciation of investments and
foreign currency 19,125,312
Distributions in excess of net investment
income (1,470,373)
Cumulative realized losses (4,877,688)
-----------
$80,691,815
===========
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1996
INVESTMENT INCOME:
INCOME:
Dividends (less foreign taxes
withheld of $90,019) $ 763,815
Interest 53,696
-----------
Total income 817,511
EXPENSES:
Management (Note 2) $ 351,836
Distribution - Class A (Note 4) 164,901
Distribution - Class B (Note 4) 139,312
Administrative (Note 2) 117,278
Custodian 215,030
Transfer agent 73,735
Professional 66,374
Reports to shareholders 33,706
Other 83,249
----------
Total expenses 1,245,421
----------
Net investment loss (427,910)
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
(NOTE 3)
Realized gain from security
transactions 514,081
Realized loss from foreign currency
transactions (44,712)
Change in unrealized appreciation
of investments 5,521,609
Change in unrealized depreciation
of foreign denominated assets
and liabilities (12,725)
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $5,550,343
==========
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR
JUNE 30, ENDED
1996 DECEMBER 31,
(UNAUDITED) 1995
----------- -----------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss $ (427,910) $ (219,968)
Realized gain (loss) from
security transactions 514,081 (5,164,514)
Realized loss from foreign
currency transactions (44,712) (88,975)
Change in unrealized appreciation
of investments 5,521,609 12,877,009
Change in unrealized depreciation
of foreign denominated assets
and liabilities (12,725) (832)
------------ ------------
Increase in net assets
resulting from operations 5,550,343 7,402,720
Dividends and Distributions:
Net investment income:
Class A Shares -- (479,840)
Class B Shares -- (142,902)
------------ ------------
-- (622,742)
------------ ------------
Tax return of capital:
Class A Shares -- (95,400)
Class B Shares -- (39,843)
------------ ------------
-- (135,243)
------------ ------------
CAPITAL SHARE TRANSACTIONS:*
Net proceeds from sales of shares:
Class A Shares 56,669,894 309,941,833
Class B Shares 588,074 833,129
----------- ------------
57,257,968 310,774,962
----------- ------------
Reinvestment of dividends:
Class A Shares -- 1,695,815
Class B Shares -- 274,877
----------- ------------
-- 1,970,692
----------- ------------
Cost of shares reacquired:
Class A Shares (70,097,915) (337,345,392)
Class B Shares (3,527,574) (9,346,965)
----------- ------------
(73,625,489) (346,692,357)
----------- ------------
Decrease in net assets
resulting from capital share
transactions (16,367,521) (33,946,703)
----------- ------------
Total decrease in net assets (10,817,178) (27,301,968)
NET ASSETS:
Beginning of period 91,508,993 118,810,961
----------- ------------
End of period (including
distributions in excess of net
investment income of $1,470,373
and $997,751, respectively) $80,691,815 $ 91,508,993
=========== ============
*SHARES OF BENEFICIAL INTEREST ISSUED AND REDEEMED
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES AUTHORIZED)
CLASS A CLASS A
----------- -----------
Shares sold 4,313,160 26,778,800
Reinvestment of dividends -- 139,080
----------- -----------
4,313,160 26,917,880
Shares reacquired (5,251,224) (28,642,223)
----------- -----------
Net decrease (938,064) (1,724,343)
=========== ===========
CLASS B CLASS B
------------ -----------
Shares sold 45,189 74,382
Reinvestment of dividends -- 22,627
----------- -----------
45,189 97,009
Shares reacquired (268,778) (785,368)
----------- -----------
Net decrease (223,589) (688,359)
=========== ===========
See Notes to Financial Statements.
<PAGE>
ASIA DYNASTY FUND
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FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
<TABLE>
<CAPTION>
CLASS A CLASS B
-----------------------------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED FOR THE PERIOD SIX MONTHS YEAR ENDED FOR THE PERIOD
ENDED DECEMBER 31, MARCH 22, 1993(A) ENDED DECEMBER 31, SEPTEMBER 1, 1993(A)
JUNE 30, 1996 TO JUNE 30, 1996 TO
(UNAUDITED) 1995 1994 DECEMBER 31, 1993 (UNAUDITED) 1995 1994 DECEMBER 31, 1993
------------ ------ ---- ----------------- ------------ ----- ----- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period......... $12.40 $12.13 $15.28 $9.525 $12.33 $12.09 $15.25 $11.33
------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Loss....... (0.10) (0.02) -- (0.062)(b) (0.10) (0.08) (0.06) (0.07)(b)
Net Gains (Loss) on
Securities (both realized
and unrealized)....... 0.68 0.40 (2.86) 5.887 0.65 0.40 (2.86) 4.06
------- ------- ------- ------- ------- ------- ------- -------
Total from Investment Operations 0.58 0.38 (2.86) 5.825 0.55 0.32 (2.92) 3.99
------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from Net
Investment Income......... -- (0.09) (0.07) -- -- (0.06) (0.02) --
Distributions from
Capital Gains ............ -- -- (0.22) (0.070) -- -- (0.22) (0.07)
Tax Return of Capital....... -- (0.02) -- -- -- (0.02) -- --
------- ------- ------- ------- ------- ------- ------- -------
Total Distributions........... -- (0.11) (0.29) (0.070) -- (0.08) (0.24) (0.07)
------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $12.98 $12.40 $12.13 $15.28 $12.88 $12.33 $12.09 $15.25
======= ======= ======= ======= ======= ======= ======= =======
Total Return (c).............. 4.68% 3.13% (18.72%) 61.16% 4.46% 2.65% (19.15%) 35.22%
Average Brokerage
Commissions Paid............ $0.0061 $0.0061
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000) $55,115 $64,275 $83,787 $108,661 $25,577 $27,234 $35,024 $26,205
Ratio of Expenses to Average
Net Assets.................. 2.53%(d) 2.03% 1.85% 1.92%(d)(e) 2.94%(d) 2.41% 2.38% 3.04%(d)
Ratio of Net Investment Loss
to Average Net Assets....... (0.79%)(d) (0.08%) -- % (0.68%)(d) (1.20%)(d) (0.52%) (0.50%) (2.17%)(d)
Portfolio Turnover Rate....... 23.48% 57.06% 51.08% 14.63% 23.48% 57.06% 51.08% 14.63%
</TABLE>
- ----------
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and capital gains at net asset value during the period and a redemption on
the last day of the period. A sales charge is not reflected in the
calculation of total dividends and return. Total return for the period of
less than one year is not annualized.
(d) Annualized.
(e) The expense ratio for Class A shares would have been 2.09% if expenses had
not been assumed by the Advisor.
See Notes to Financial Statements.
<PAGE>
ASIA DYNASTY FUND
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES:
Van Eck Funds (the "Trust"), organized as a Massachusetts business trust on
April 3, 1985, is registered under the Investment Company Act of 1940. The
following is a summary of significant accounting policies consistently followed
by the Asia Dynasty Fund series, a diversified fund (the "Fund") of the Trust in
the preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles. The preparation of financial
statements in conformity with generally accepted accounting principles requires
the use of management's estimates and the actual results could differ.
A. SECURITY VALUATION -- Securities traded on national or foreign exchanges are
valued at the last sales prices reported at the close of business on the last
business day of the period. Over-the-counter securities and listed securities
for which no sale was reported are valued at the mean of the bid and asked
prices. Short-term obligations are valued at cost which with accrued interest
approximates value. Securities for which quotations are not available are
stated at fair value as determined by the Board of Trustees.
B. FEDERAL INCOME TAXES -- It is the Fund's policy to comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income to its shareholders. Therefore, no
federal income tax provision is required.
C. CURRENCY TRANSLATION-- Assets and liabilities denominated in foreign
currencies and commitments under forward currency contracts are translated
into U.S. dollars at the mean of the bid and asked prices of such currencies.
Purchases and sales of investments are translated at the exchange rates
prevailing when such investments were acquired or sold. Income and expenses
are translated at the exchange rates prevailing when accrued. The portion of
realized and unrealized gains and losses on investments that result from
fluctuations in foreign currency exchange rates are not separately disclosed.
Recognized gains or losses and the appreciation (depreciation) attributable
to foreign currency fluctuations on other foreign denominated assets and
liabilities are recorded as net realized and unrealized gains and losses from
foreign currency transactions and foreign denominated assets and liabilities,
respectively.
D. OTHER -- Security transactions are accounted for on the date the securities
are purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned.
E. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income and
realized gains, if any, are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
F. Deferred organization costs are being amortized over a period of five years
beginning March 22, 1993 (commencement of operations).
NOTE 2 -- Van Eck Associates Corporation (the "Advisor") earned fees of $351,836
for the six months ended June 30, 1996 for investment management and advisory
services. The fee is based on an annual rate of .75 of 1% of the Fund's average
daily net assets. Van Eck Associates Corporation also earned fees of $117,278
for the six months ended June 30, 1996 for administrative and operating
services. The fee is based on an annual rate of .25 of 1% of the Fund's average
daily net assets. AIG Global Investment Corp., the sub-investment advisor,
earned fees of $234,697 for the six months ended June 30, 1996 for investment
management services. The fee is based on an annual rate of .50 of 1% of the
Fund's average daily net assets and is paid by the Advisor from the advisory
fees it receives from the Fund. On July 31, 1996, the Fund terminated AIG Global
Investment Corp. as its sub-investment advisor. On August 1, 1996, the Advisor
assumed the management of the portfolio of investments. Van Eck Securities
Corporation received $19,717 for the six months ended June 30, 1996 from
commissions earned on sales of shares of beneficial interest of the Fund after
deducting $97,592 allowed to other dealers. Certain of the officers and trustees
of the Trust are officers, directors or stockholders of Van Eck Associates
Corporation and Van Eck Securities Corporation.
NOTE 3 -- Purchases and proceeds from sales of investments, other than
short-term obligations, aggregated $21,693,099 and $36,116,685, respectively,
for the six months ended June 30, 1996. For federal income tax purposes the cost
of investments owned at June 30, 1996 was $59,644,174. As of June 30, 1996, net
unrealized appreciation for federal income tax purposes aggregated $19,138,873
of which $21,536,998 related to appreciated investments and $2,398,125 related
to depreciated investments. At December 31, 1995, the Fund had capital loss
carry forwards available to offset future capital gains expiring December 31,
2003 of $5,308,561.
NOTE 4 -- Pursuant to a Rule 12b-1 Plan of Distribution (the "Plan"), the Fund
is authorized to incur distribution expenses which will principally be payments
to securities dealers who have sold shares and service shareholder accounts and
payments to Van Eck Securities Corporation ("VESC"), the distributor, for
reimbursement of other actual promotion and distribution expenses incurred by
the distributor on behalf of the Fund. The amount paid under the Plan in any one
year is limited to .50% of average daily net assets for Class A shares and 1% of
average daily net assets for Class B shares (the "Annual Limitation").
Distribution expenses incurred under the Plan that have not been paid because
they exceed the Annual Limitation may be carried forward to future years and
paid by the Fund within the Annual Limitation. VESC has waived its right to
reimbursement for the carried forward amounts incurred through April 30, 1997 in
the event the Plan is terminated, unless the Board of Trustees determines that
reimbursement of carried forward amounts is appropriate. The cumulative amount
of excess of distribution expenses incurred over the Annual Limitation as of
June 30, 1996 was $544,356 for Class A shares and $1,244,032 for Class B shares.
NOTE 5 -- The Fund invests in foreign securities. Investments in foreign
securities may involve a greater degree of risk than investments in domestic
securities due to political, economic or social instability. In addition, some
foreign companies are not generally subject to the same uniform accounting,
auditing and financial rules as are American companies, and there may be less
governmental supervision and regulation. Foreign investments may also be subject
to foreign taxes, dividend collection fees and settlement delays.
The Fund may concentrate its investments in companies which are located in, or
expect to benefit from the growth of the economies of countries located in Asia.
The Fund may, but generally does not invest in Japan, Australia, or New Zealand.
The emerging market countries in Asia may present the risk of nationalization of
businesses or prohibitions of repatriation of assets and may have less
protection of property rights than more developed countries. Since the Fund may
so concentrate, it may be subject to even greater economic, social and political
risks and greater market fluctuations than other more diversified domestic and
foreign portfolios.
<PAGE>
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<PAGE>
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<PAGE>
VAN ECK FAMILY OF FUNDS
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GLOBAL HARD ASSETS FUND
Seeks long-term capital appreciation by investing globally, primarily in "Hard
Asset Securities." Income is a secondary consideration.
INTERNATIONAL INVESTORS GOLD FUND
Founded in 1955, this Fund is the oldest gold-oriented mutual fund in the U.S.
It invests in gold-mining shares globally and seeks long-term capital
appreciation, moderate yield and protection against monetary uncertainties.
GOLD/RESOURCES FUND
Seeking a long-term global hedge against inflation and other risks, this Fund
invests in gold-mining and natural resources companies outside South Africa.
GOLD OPPORTUNITY FUND
Seeks capital appreciation by investing globally in equity securities of
companies engaged in the exploration, development, production and distribution
of gold and other precious metals, and through active asset allocation between
gold-related assets and cash instruments.
ASIA DYNASTY FUND
This Fund seeks long-term capital appreciation by investing in the equity
securities of companies that are expected to benefit from the development and
growth of the economies in the Asia Region.
ASIA INFRASTRUCTURE FUND
Seeks long-term capital appreciation by investing in the equity securities of
infrastructure companies that are expected to benefit from the development and
growth of the economies in the Asia Region.
GLOBAL BALANCED FUND
This Fund seeks long-term capital appreciation together with current income by
investing in stocks, bonds and money market instruments worldwide. Fiduciary
International, Inc. serves as sub-investment advisor to this Fund.
GLOBAL INCOME FUND
This Fund seeks high total return through a flexible policy of investing
globally, primarily in debt securities.
U.S. GOVERNMENT MONEY FUND
This Fund seeks the highest safety of principal and daily liquidity by investing
in U.S. Treasury bills and repurchase agreements collateralized by U.S.
Government obligations.
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This report must be accompanied or preceded by a Van Eck Global Funds
prospectus, which includes more complete information, such as charges and
expenses and the risks associated with international investing, including
currency fluctuations or controls, expropriation, nationalization and
confiscatory taxation. For a free Van Eck Gold & Money Funds prospectus, please
call the number listed below. Please read the prospectus before investing.
- --------------------------------------------------------------------------------
[LOGO]
Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016
http://www.vaneck.com
FOR ACCOUNT ASSISTANCE PLEASE CALL (800) 544-4653
B96-0726-003
JUNE 30, 1996
VAN ECK
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ASIA
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DYNASTY
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FUND
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SEMI-ANNUAL
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REPORT
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o o o
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