VAN ECK U.S. GOVERNMENT MONEY FUND
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1996 SEMI-ANNUAL REPORT
Dear Fellow Shareholder:
The U.S. Government Money Fund continues to meet its objectives of a high
degree of safety and daily liquidity. It also serves to assist investors who
wish to use our exchange or checkwriting privileges. As of June 30, 1996, the
Fund's seven-day average yield was 4.02%*, the 30-day average yield was
4.05%* and the total net assets were $104,451,442.
On January 31, 1996, weaker economic data and a perceived lessening of
inflationary pressures prompted the Federal Reserve to lower the federal
funds rate to 5.25% from 5.50%, and the discount rate to 5.00% from 5.25%. As
1996 progressed, it became apparent that the Federal Reserve's continued
loose monetary policy, which began in 1995, was boosting economic activity as
economic growth indicators came in higher than expected. Reflecting this
strengthening economy during the first half of 1996, long-term treasury
yields began an uptrend with three-month treasury bill yields rising modestly
from 5.08% to 5.15%. During the first half of 1996, a larger portion of the
Fund's assets were invested in repurchase agreements to take advantage of the
higher yields that these instruments offered compared to Treasury bills.
The Fund's investment strategy continues to emphasize safety by investing in
short-term United States Treasury obligations and repurchase agreements
collateralized by United States Treasury obligations. These obligations are
the most conservative money market investments and offer the highest degree
of security since they are backed by the United States Government. Of course,
shares of the Fund are not guaranteed by the U.S. Government and there can be
no guarantee that the price of the Fund's shares will not fluctuate.**
Repurchase agreements allow us to take advantage of higher yields without
significantly increasing risk. The Fund's repurchase agreements are
collateralized 102% by United States Treasury obligations with maturities of
less than five years. In addition, your Fund has possession of the
collateral.
We plan to continue our current investment strategy, keeping an equal
weighting between U.S. Treasury bills and repurchase agreements over time.
The U.S. Government Money Fund offers daily liquidity and checkwriting
privileges, providing the kind of convenient access to cash not available in
many other types of investments. The Fund also provides an excellent base
from which investors may transfer money into or out of other members of the
Van Eck Family of Funds.***
We appreciate your participation in the U.S. Government Money Fund and look
forward to helping you meet your investment objectives in the future.
[photo of John C. van Eck]
[signature of John C. van Eck]
John C. van Eck
Chairman
[photo of Paul A. DiPerna]
[signature of Paul A. DiPerna]
Paul A. DiPerna
Portfolio Manager
July 15, 1996
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* Performance data represents past performance and is not indicative of
future results.
** There can be no assurance that the Fund will be able to maintain a stable
net asset value of $1.00 per share.
*** Currently, there is no charge imposed on exchanges or limits as to
frequency of exchanges for this Fund. However, shareholders are limited
to six exchanges per calendar year for other Funds in the Van Eck Family
of Funds, and reserve the right to modify or terminate the terms of the
Exchange Privilege.
<PAGE>
U.S. GOVERNMENT MONEY FUND
FINANCIAL STATEMENTS (UNAUDITED)
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Statement of Net Assets
June 30, 1996
Assets:
Investments at value:
Annualized
Yield at
Time of
Principal Date of Purchase Value
Amount Maturity or Coupon Rate (Note 1)
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U.S. Treasury Bills:
$ 5,000,000 8/08/96 4.860% $ 4,974,350
5,000,000 8/15/96 5.005% 4,968,719
5,000,000 8/29/96 5.045% 4,958,659
10,000,000 9/05/96 5.075% 9,906,958
17,970,000 9/12/96 5.045% 17,786,164
5,000,000 9/19/96 5.105% 4,943,278
5,000,000 9/19/96 5.115% 4,943,167
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52,481,295
Repurchase Agreements (Note 4):
Cost $26,000,000 purchased on
06/28/96; maturity value--
$26,011,267 (with HSBC
Securities Incorporated
collateralized by
$26,150,000
U.S. Treasury Note due
4/30/97 with an interest
rate of 6.50%) 7/01/96 5.20% 26,000,000
Cost $26,000,000 purchased on
6/28/96; maturity value--
$26,011,267 (with Merrill
Lynch, Pierce, Fenner &
Smith Incorporated
collateralized by
$24,905,000
U.S. Treasury Note due
7/15/97 with an interest
rate of 8.50%) 7/01/96 5.20% 26,000,000
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Total investments (amortized
cost $104,481,295)* 104,481,295
Cash 24,751
Receivables:
Capital shares sold 220,403
Interest 22,533
Other 2,990
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Total assets 104,751,972
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Liabilities:
Payables:
Capital shares repurchased 260,992
Accounts payable 39,538
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Total liabilities 300,530
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Net Assets $104,451,442
============
Shares of beneficial interest out-
standing (unlimited number
of $0.001 par value shares
authorized) 104,451,442
============
Net asset value, redemption
price and offering price per
share $1.00
=====
* The amortized cost is the same for federal income tax purposes.
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Statement of Operations
For the Six Months Ended June 30, 1996
Interest Income (Note 1) $1,852,115
Expenses:
Management (Note 2) $175,799
Distribution (Note 3) 87,900
Transfer agent 41,261
Administration (Note 2) 38,450
Registration 19,193
Custodian 15,143
Professional 12,068
Reports to shareholders 3,605
Other 13,109
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Total expenses 406,528
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Net investment income $1,445,587
==========
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Statements of Changes in Net Assets
Six Months Year Ended
Ended June December 31,
30, 1996 1995
--------------- --------------
Increase in Net Assets:
Operations:
Net investment income paid to
shareholders as dividends
(Note 1) $ 1,445,587 $ 2,551,046
=============== ==============
From capital share transactions
(at net asset value of $1.00
per share):
Net proceeds from sales of
shares $ 1,610,225,109 $2,471,670,939
Shares issued on reinvestment
of dividends from net
investment income 1,113,074 1,818,591
--------------- --------------
1,611,338,183 2,473,489,530
Cost of shares reacquired (1,577,016,755) (2,450,437,723)
--------------- --------------
Increase in net assets
resulting from capital share
transactions 34,321,428 23,051,807
Net Assets:
Beginning of period 70,130,014 47,078,207
--------------- --------------
End of period $ 104,451,442 $ 70,130,014
=============== ==============
See Notes to Financial Statements.
<PAGE>
U.S. GOVERNMENT MONEY FUND
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Financial Highlights
For a share outstanding throughout each period
<TABLE>
<CAPTION>
Six Months
Ended June Year Ended December 31,
30, 1996 ---------------------------------------------------
(unaudited) 1995 1994 1993 1992 1991
----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income .................. .0197 0.0456 0.0311 0.0183 0.0220 0.0456
Less Distributions:
Dividends from Net Investment Income ... (.0197) (0.0456) (0.0311) (0.0183) (0.0220) (0.0456)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period .......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= ======= =======
Total Return ............................ 3.97%* 4.56% 3.11% 1.83% 2.20% 4.56%
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Ratio/Supplementary Data
Net Assets, End of Period (000) $104,451 $70,130 $47,078 $31,109 $24,853 $35,287
Ratio of Expenses to Average Net Assets 1.16%* 1.25% 1.12% 1.24% 1.44% 1.30%
Ratio of Net Income to Average Net Assets 4.11%* 4.45% 3.07% 1.83% 2.25% 4.61%
*Annualized. See Notes to Financial Statements.
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</TABLE>
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 as an open- ended management
investment company. The following is a summary of significant accounting
policies consistently followed by the U.S. Government Money 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.
A. Security valuation--The Fund uses the amortized cost method to value
securities. The amortized cost method involves valuing a security at its
cost initially and, thereafter, a constant amortization to maturity of any
discount or premium. Generally, the amortized cost of the security
approximates the market value.
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. Dividend distributions--The Fund declares dividends from its net
investment income on each day the Fund is open for business and distributes
dividends on the last day of the month.
D. Other--Security transactions are accounted for on the date the
securities are purchased or sold. Interest income is recorded as earned.
Realized gains and losses from security transactions are recorded on a
specific identification basis.
Note 2--Van Eck Associates Corporation earned fees of $175,799 for the six
months ended June 30, 1996 for investment management and advisory services.
The fee is based on an annual rate of .50 of 1% of the first $500 million of
average daily net assets, .40 of 1% on the next $250 million and .375 of 1%
of the excess over $750 million. In accordance with the advisory agreement,
the Fund reimbursed Van Eck Associates Corporation $38,450 for costs incurred
in connection with certain administrative and operating functions for the six
months ended June 30, 1996. 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--Pursuant to a Plan of Distribution (Rule 12b-1) the Fund accrues fees
of .25 of 1% of the average daily net assets of the Fund. The fees are
intended to be used principally for payments to securities dealers who have
sold shares and service shareholder accounts of the Fund and the remainder
will be used for other actual promotion and distribution expenses incurred by
Van Eck Securities Corporation, the distributor. Fees accrued for the six
months ended June 30, 1996 were $87,900.
Note 4--Collateral for repurchase agreements, the value of which must be at
least 102% of the underlying debt obligation, is held by the Fund's
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 Fund would become exposed to market
fluctuation on the collateral.
<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 Gold and Money Funds
prospectus, which includes more complete information, such as charges and
expenses and the risks associated with international investing, including
currency fluctuations or controls, expropriation, nationalization and
confiscatory taxation. For a free Van Eck Global Funds prospectus, please
call the number listed below. Please read the prospectus before investing.
[VANECK LOGO]
Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016
http://www.vaneck.com
For account assistance please call (800) 544-4653
B96-0717-013
J U N E 3 0, 1 9 9 6
VAN ECK
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U.S. GOVERNMENT
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MONEY
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FUND
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SEMI-ANNUAL
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REPORT
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[VANECK LOGO]
