VAN ECK ASIA DYNASTY FUND
-------------------------
1995 ANNUAL REPORT
Dear Fellow Shareholder:
The Asian stock markets proved volatile during 1995, turning in mixed results
for the year. Several factors played important roles in the performance of the
Asian markets, including the decline in U.S. interest rates, which positively
affected the Hong Kong market. At the same time, however, the Mexican peso
crisis, the collapse of Barings PLC and the economic overheating of the region
as a whole had a negative impact. Given market conditions during the year, we
increased portfolio holdings in Hong Kong, the region's most established and
liquid market, and focused on high quality, large-capitalization, highly liquid
stocks. The Van Eck Asia Dynasty Fund (the "Fund") gained 3.1% for the 12 months
ended December 31, 1995.
HONG KONG
The Hong Kong market gained over 18% in U.S. dollar terms after a difficult
1994. The market rebounded strongly in the first half of the year after a
sell-off in January. During the second half, stock prices consolidated as public
sentiment soured somewhat due to strained Sino-U.S. relations over Taiwan, human
rights issues and a slowing domestic economy. In the last weeks of 1995,
however, investors began to refocus on Hong Kong, where the currency is pegged
to the U.S. dollar, as the Federal Reserve continued to lower interest rates (it
had first lowered the federal funds target rate in July). The strong finish for
the year reflects the opportunistic outlook of investors positioning their
portfolios for 1996 and an improving Chinese economy.
We have maintained an overweighted position in Hong Kong throughout the year,
which has contributed positively to fund performance. Sector emphasis in Hong
Kong includes property companies and diversified conglomerates. Fundamentally,
we believe the market is fairly valued at current levels and, on a selected
basis, certain companies continue to offer tremendous opportunities. The Fund
should continue to maintain a substantial position in the Hong Kong stock market
due to the diversification of companies and the liquidity available there.
SINGAPORE
Strong year-end performance helped the Singapore market close with a gain of 5%.
Despite strong GDP growth throughout the year, the property sector languished on
fears of peaking real estate prices. The finance sector underperformed because
of high exposure to the property market and the resulting concerns of lower
profit margins. Later in the year, the market was boosted by U.S. interest rate
cuts and increased activities in mergers and acquisitions.
During 1996, we plan to increase our holdings in this market, primarily because
of projected economic growth of 7.6%. Lower inflationary pressures, declining
interest rates, expectations for high corporate earnings and the expansion of
the trading board for foreign companies will also be contributing factors for
economic growth in Singapore. The recent expansion of the trading board should
result in improved liquidity, increased trading volumes and greater
participation in the market. Portfolio emphasis is on selected established banks
and conglomerates, which should benefit from the softening interest rate
environment.
MALAYSIA
The Malaysian stock market ended the year with a positive return of 4%. Although
GDP growth was at a strong 9%, concerns of economic overheating, a widening
account deficit, rising interest rates and disappointing corporate earnings held
back performance. In such an environment, we adopted a defensive strategy,
investing primarily in companies with visible earnings growth (including
utilities, infrastructure and banking companies) while reducing positions in the
smaller, more volatile stocks. Our outlook for 1996 sees a more manageable
growth level, with interest rates peaking by midyear. For this reason, we
anticipate increasing Fund positions further in the banking, infrastructure and
telecommunications sectors.
THAILAND
1995 was a difficult year for the Thai market, which was down 5.7% at year end,
and the Fund remained underweighted there. Concerns of economic overheating and
political infighting negatively impacted the performance of the market. In
addition, a booming investment climate caused Thailand's current account deficit
to expand by over 30% during the year. This resulted in nervousness among
<PAGE>
institutional investors and uncertainty over how the government, known for its
expansionary policies, would tackle the mounting economic problems. We believe
that signs of monetary easing, positive political reshuffling and increased
interest on the part of foreign investors will result in an improving market in
1996. Valuations are attractive, and we are currently focusing on stable,
large-capitalization stocks, specifically in the banking and energy sectors,
which benefit from lower interest rates.
INDONESIA
The Indonesian market was up 7.5% for the year despite high volatility. Your
Fund was underweighted in Indonesia throughout 1995, primarily because, in the
face of volatility, this market has been less liquid than the more established
Asian markets. The liquidity issue has improved, largely due to the successful
completion of the public offering of P.T. Telecom, a large domestic telephone
company. Economic growth looks strong, which should increase the level of
foreign direct investment. Although there are concerns of economic overheating,
we believe that the recent policies and deregulation packages put in place will
result in sustainable growth. Because of these market improvements, we
anticipate increasing our allocation to infrastructure-related and consumer
companies.
PHILIPPINES
The Philippine market closed the year down 11.8%, primarily because of
disappointing corporate earnings and a sharp rise in inflation. Our allocation
to this market remains fairly low, at about 3% of the Fund. In the coming year,
economic growth should be on the upswing due to improving export business. We
expect to increase the weighting in this market given its attractive valuations
and healthy corporate earnings, with an emphasis on the infrastructure and
manufacturing sectors.
SOUTH KOREA
1995 was a difficult year for the South Korean market, which was down 4.6% as a
result of local political instability and external economic shocks. The
so-called "slush fund" scandal, which threatened to engulf many senior
executives of the top conglomerates who were accused of paying bribes to the
country's former presidents, was one of the key contributors to this. Thus, we
maintained a low weighting to this market and our holdings here were focused on
companies that should have benefited from the Japanese yen's strength, such as
electronics companies and banks. Both the electronics and banking sectors
outperformed the overall market. It is our belief that the downside to this
market is limited as Korea continues its economic and financial reforms in its
bid to join the OECD.
THE OUTLOOK
In our judgment, the Asian markets should improve in 1996, particularly in light
of the current high levels of the U.S. market. We believe that investors will
look increasingly toward Asia as the sustainability of current U.S. market
valuations comes into question. The down market of 1994 and the mixed results of
1995 lead us to look forward to an environment of reasonable valuations in the
Asian markets. With long-term growth rates in the region estimated at between
6-8%, we believe these markets will be beneficiaries of a positive global equity
outlook in 1996.
We appreciate your participation in the Asia Dynasty Fund and look forward to
helping you meet your investment objectives in the future.
- ------------- -------------
[PHOTO] {PHOTO]
- ------------- -------------
JOHN C. VAN ECK PETER SOO
CHAIRMAN PORTFOLIO MANAGER
January 25, 1996
- --------------------------------------------------------------------------------
PERFORMANCE RECORD AS OF 12/31/95
- --------------------------------------------------------------------------------
AVERAGE ANNUAL AFTER MAXIMUM BEFORE
TOTAL RETURN SALES CHARGE+ SALES CHARGE
- --------------------------------------------------------------------------------
A shares-Life (since 3/22/93) 9.5% 11.4%
- --------------------------------------------------------------------------------
1 year (1.7%) 3.1%
- --------------------------------------------------------------------------------
B shares-Life (since 9/1/93) 3.5% 5.1%
- --------------------------------------------------------------------------------
1 year (3.4%) 2.7%
- --------------------------------------------------------------------------------
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 DECEMBER 31, 1995
THE HONG KONG SHANGHAI BANKING
CORPORATION, LTD. (HSBC HOLDINGS PLC)
(HONG KONG, 4.7%)
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.
HUTCHISON WHAMPOA LTD.
(HONG KONG, 3.8%)
A major diversified international corporation involved in property development,
shipping container terminals, retailing, telecommunications, 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.
OVERSEA-CHINESE BANKING CORP., LTD.
(SINGAPORE, 2.8%)
This bank is conservatively managed with particular strength in finance,
financial services, investing, stockbroking and real estate. It is one of the
largest local commercial banks in Singapore with branches and offices throughout
Asia. In addition, its quality land bank and investment holdings make OCBC an
excellent proxy for the performance of the Singapore economy.
YTL CORPORATION BHD.
(MALAYSIA, 2.6%)
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.
KEPPEL CORPORATION, LTD.
(SINGAPORE, 2.2%)
The principal businesses of this conglomerate consist of ship repairing and
building, marine-related construction, integrated property-related activities
and banking and financial services. Keppel is also a proxy for the performance
of Singapore's economy.
CHEUNG KONG (HOLDINGS) LTD.
(HONG KONG, 2.2%)
This 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.
HANJAYA MANDALA SAMPOERNA
(INDONESIA, 2.1%)
The company is one of the largest producers of clove cigarettes in Indonesia.
Commanding several of the top brand names in cigarettes, it is a major
beneficiary of the rising disposable income of a large population.
SWIRE PACIFIC LTD.
(HONG KONG, 2.1%)
One of the best known companies in Hong Kong, Swire Pacific's principal
activities and investments encompass aviation, real estate, shipping, trading,
insurance, hotels and cable television.
MALAYAN BANKING BHD.
(MALAYSIA, 2.1%)
The bank, while primarily commercial, is engaged in many aspects of finance,
including merchant banking, consumer finances, insurance and investment
management. The bank operates and has branches in Asia, Europe and the U.S.
DBS LAND, LTD.
(SINGAPORE, 2.0%)
This "blue chip" property company has five major areas of business, the largest
being the property division, which holds residential and commercial properties
for investment and trading. DBS Land also owns hotel and leisure properties,
provides property management and engineering services and holds equity
investments.
* Portfolio is subject to change.
NOTE: Equities are listed as percentage of total investments held.
<PAGE>
ASIA DYNASTY FUND
INVESTMENT PORTFOLIO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
No. of Shares
or Principal
Amount Securities(a) Value(Note 1)
- --------------------------------------------------------------------------------
CHINA: 4.3%
1,329,800 Huaxin Cement Co. Ltd. `B'+ $ 356,386
4,843,000 Jilin Chemical Industrial Co. Ltd. `H'+ 1,002,108
1,565,000 Shanghai Narcissus Elec. App. `B' 266,050
1,349,600 Shanghai New Asia Group `B'+ 712,589
924,500 Shanghai Posts & Telecom. Equip.+ 367,951
248,200 Shanghai Shangling Elec. App. `B' 151,898
706,000 Shenzhen Guangdong Elect.+ 337,821
200,000 Shenzhen North Jianshe Motorcycle `B'+ 82,768
2,400,000 Zhenhai Refining & Chemical 450,049
----------
3,727,620
----------
HONG KONG: 28.6%
$1,000,000 Amoy Properties Conv. Bonds
5.50% Due 12/29/2049 780,000
1,598,000 Benelux International Ltd. 73,364
1,000,000 CDL Hotels International Ltd. 504,365
312,000 Cheung Kong (Holdings) Ltd. 1,900,446
176,000 China Light & Power Co., Ltd. 810,294
290,000 CITIC Pacific Ltd. 991,982
450,000 Consolidated Electric Power Asia Ltd. 817,653
1,000,000 First Pacific Co. Ltd. 1,112,189
$1,000,000 Guangdong Investment Conv. Bond
4.50% Due 10/07/1998 1,222,500
100,000 Hang Seng Bank Limited 895,571
100,000 Hong Kong Building & Loan Agency Ltd. 215,972
600,200 Hong Kong Telecommunications Ltd. 1,071,162
2,200,000 Hopewell Holdings Ltd. Ord. 1,266,085
271,600 HSBC Holdings PLC 4,109,564
540,000 Hutchison Whampoa Ltd. 3,289,234
1,750,000 Innovative International Holdings, Ltd. 514,872
8,000,000 Interform Ceramics Technology, Ltd. 662,140
300,000 New World Development Co. 1,307,468
2,650,000 S. Megga International Holdings Ltd. 99,386
193,000 Sun Hung Kai Properties Ltd. 1,578,694
240,000 Swire Pacific Ltd. (A) 1,862,270
----------
25,085,211
----------
INDIA: 1.3%
5,000 Hindalco Industries Ltd.+ 168,750
11,000 Larsen & Toubro Ltd. GDR.+ 199,320
40,000 TATA Engineering & Loc. "G" 525,500
$300,000 TATA Iron and Steel Convertible Bonds
2.25% Due 04/01/1999 264,750
----------
1,158,320
----------
INDONESIA: 6.0%
180,000 Hanjaya Mandala Sampoerna "F" 1,873,606
70,000 Indofood "F" 336,759
26,400 P.T. Indonesia Satelitte (ADR.) 963,600
102,500 P.T. Jaya Real Property "F" 284,660
180,000 P.T. Semen Gresik "F" 503,827
45,000 P.T. Telekomunikasi Indonesia (ADR.)+ 1,136,250
75,000 Tempo Scan Pacific "F" 203,368
----------
5,302,070
----------
LUXEMBOURG: 0.4%
15,000 Grasim Industries GDR.+ 307,500
----------
MALAYSIA: 17.9%
249,000 Arab Malaysian Corp. 902,245
181,000 Arab Malaysian Finance BHD. "F" 769,909
470,000 DCB Holdings Berhad 1,369,831
<PAGE>
No. of Shares
or Principal
Amount Securities(a) Value(Note 1)
- --------------------------------------------------------------------------------
399,600 FCW Holdings BHD. $ 730,265
40,000 Gamuda BHD. 196,928
80,500 Genting Berhad 672,154
9,600 Kejora Harta BHD.+ 8,999
220,000 Malayan Banking BHD. 1,854,273
100,000 MTD Capital BHD. 535,644
850,000 Petronas Gas BHD.+
(Warrants Expiring 8/17/2000) 1,379,283
316,000 R. J. Reynolds BHD. 728,082
480,000 Renong BHD. 710,831
150,000 Telekom Malaysia Berhad 1,169,752
30,000 Tenaga Nasional Berhad 118,157
210,000 United Engineers (Malaysia) Berhad 1,339,898
30,000 Westmont Industries BHD. 103,978
200,000 Wing Tiek Holdings BHD. 834,974
355,400 YTL Corporation BHD. 2,239,622
----------
15,664,825
----------
NEW ZEALAND: 1.0%
380,000 Fletcher Challenge Ltd. 876,270
----------
PHILIPPINES: 3.2%
476,400 Aboitiz Equity Ventures+ 90,864
1,000,000 Alaska Milk Corp.+ 144,955
326,500 Bacnotan Cement Corporation 224,185
885,000 Bankard Incorporated+ 324,089
880,000 Fil-Estate Land Inc.+ 662,979
40,000 Ionics Circuit Inc.+ 54,167
$600,000 J.G. Summit Holdings, Inc. Conv. Bonds
3.50% Due 12/23/2003 445,500
3,693 Metropolitan Bank &Trust Co. 71,846
686,250 Petron Corporation Ordinary 353,400
183,123 Philippine Savings Bank 321,330
500,000 Southeast Asia Cement Holdings Inc.+ 64,848
12,499 Steniel Manufacturing Corp. 2,003
300,000 Swift Foods, Incorporated 37,192
900 Union Bank of the Philippines+ 961
----------
2,798,319
----------
SINGAPORE: 15.2%
15,000 Acer Computer Intl. Ltd.+ 28,650
376,800 ACMA Electrical Industries Ltd. 1,252,181
119,357 City Development Ltd.+
(Warrants Expiring 07/18/1998) 624,508
66,000 DBS Bank Foreign 821,325
514,000 DBS Land, Ltd. 1,737,199
221,000 Keppel Corporation, Ltd. 1,968,889
199,000 Oversea-Chinese Banking Corp., Ltd. "F" 2,490,490
27,000 Overseas Union Bank Ltd. "F" 186,134
157,200 Pentex Schweizer Circuits Ltd. 256,757
SGD 100,000 Sembawang Maritime CULS.
1.50% Due 10/25/1998 110,302
105,000 Singapore Airlines Ltd. "F" 979,990
79,400 Singapore Press Holdings Ltd. "F" 1,403,521
150,450 United Overseas Bank Ltd. "F" 1,446,737
----------
13,306,683
----------
SOUTH KOREA: 6.2%
5,190 Chung Ho Computer Co. 521,843
7,000 Daewoo Securities Co. 182,275
9,000 Hyundai Motor Co. Ltd. (GDR.)+ 135,000
6,600 Kookmin Bank 121,663
1,814 Kookmin Bank New+ 32,270
See Notes to Financial Statements.
<PAGE>
ASIA DYNASTY FUND
INVESTMENT PORTFOLIO DECEMBER 31, 1995
- --------------------------------------------------------------------------------
No. of Shares
or Principal
Amount Securities(a) Value(Note 1)
- --------------------------------------------------------------------------------
20,070 Korea Electric Power Corp. "F" $ 796,850
14,000 Korea Exchange Bank "F" 156,107
41,590 Korea Exchange Bank "F" New+ 455,707
9,200 Korea Mobile Comm. (GDS.)+ 404,800
5,500 Pohang Iron & Steel Company Ltd. 359,459
1,484 Samsung Electric Ltd. (GDR.)*+ 83,000
7,400 Samsung Electronics (GDR.)+ 725,200
4,971 Samsung Electronics 903,527
88 Samsung (GDS.)*+ 6,899
17,200 Shinhan Bank 337,016
$100,000 Ssangyong Oil Convertible Bonds
3.75% Due 12/31/2008 106,750
3,000 Yukong Limited 103,642
359 Yukong Limited New+ 12,373
----------
5,444,381
----------
TAIWAN: 0.2%
$200,000 Sincere Navigation Convertible Bonds
` 3.75% Due 05/26/2003 212,000
----------
THAILAND: 15.7%
63,000 Advanced Info. Services "F" 1,115,443
30,000 Ban Pu Coal Co. Ltd. F 652,640
95,000 Bangkok Bank Public Co., Ltd. "F" 1,154,029
75,000 Cogeneration Public Co. *F 172,688
24,000 Dhana Siam Finance & Securities "F" 137,197
154,000 Electricity Gen. Pub. Co. "F"+ 525,764
50,000 Finance One Ltd. "F" 332,473
78,320 Krung Thai Bank Public Co. "F" 323,354
195,680 Krung Thai Bank Ltd.-Ord 807,889
50,000 Land & House Co. Ltd. "F" 821,755
$300,000 MDX Public Co., Ltd. Conv. Bonds
4.75% Due 09/17/2003 145,500
208,600 National Finance & Securities "F" 1,117,944
40,000 National Finance & Securities "F"*+
(Warrants Expiring 11/16/1999) 176,400
36,300 Phatra Thanakit Co., Ltd. F 311,266
$125,000 Phatra Thanakit Co., Ltd. Conv. Bonds
3.50% Due 12/13/2003 163,750
45,000 PTT Exploration & Production 471,616
29,500 Siam Cement Public Co. Ltd. "F" 1,634,855
280,000 Siam City Bank Public Co. Ltd. "F" 322,350
50,000 Siam City Cement Public Co. Ltd. "F" 782,056
82,500 Siam Commercial Bank Ltd. "F" 1,087,336
108,800 Thai Farmers Bank, Ltd. (The) "F" 1,097,070
18,000 Thai Telephone & Telecommunications Co.+ 97,896
15,000 Total Access Communication+ 97,500
20,300 United Communication Industry "F" 259,490
----------
13,808,261
----------
TOTAL INVESTMENTS: 100% (Cost $74,074,200) $87,691,460
==========
- ----------
(a) Unless otherwise indicated, securities owned are shares of common stock.
"F"--Foreign registry.
*Fair value as determined by the Board of Trustees.
+Non-income producing security.
<PAGE>
SUMMARY OF INVESTMENTS BY INDUSTRY % OF PORTFOLIO
- --------------------------------------------------------------------------------
Airlines 1.1%
Aluminum 0.2%
Auto Parts 0.6%
Auto Trucks & Parts 0.6%
Automotive 0.2%
Banks 11.7%
Broadcast Media 1.1%
Building & Construction 4.5%
Building Materials 1.7%
Cement 4.1%
Chemicals 1.2%
Coal 0.8%
Communications--Equipment & Software 0.5%
Computers and Peripherals 0.6%
Conglomerates 0.6%
Distilling/Tobacco 2.1%
Drugs 0.2%
Electric Utilities 1.6%
Electrical Equipment 0.2%
Electronics & Electrical Equipment 3.8%
Engineering Construction 2.4%
Entertainment & Leisure Time 0.8%
Financial Services 14.7%
Food Processing 0.6%
Holding Co.--Diversified 9.5%
Hotels/Motels 0.6%
Household Products 0.3%
Machinery 2.4%
Manufacturer--Consumer & Industrial 0.8%
Natural Gas 2.1%
Oil & Gas Drilling 0.1%
Oil & Gas Exploration 0.1%
Oil Refining 0.1%
Oil--Domestic 0.4%
Oil/Gas--International 0.5%
Paper & Forest Products 1.0%
Printing 1.6%
Publishing--Newspaper 0.4%
Real Estate 11.1%
Restaurants 0.8%
Steel 0.4%
Steel & Iron 0.3%
Telecommunications 5.6%
Tire and Rubber Goods 0.1%
Tobacco 0.8%
Transportation 2.4%
Transportation--Misc. 0.1%
Other 0.1%
Utilities 2.5%
------
100.0%
======
See Notes to Financial Statements.
<PAGE>
ASIA DYNASTY FUND FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
ASSETS:
Investments at value (cost, $74,074,200) (Note 1) $87,691,460
Cash 2,710,192
Receivables:
Securities sold 3,028,080
Capital shares sold 250,095
Dividends and interest 155,656
Other 48,896
----------
Total assets 93,884,379
----------
LIABILITIES:
Payables:
Securities purchased 1,566,449
Capital shares repurchased 278,712
Dividends payable 287,266
Accounts payable 242,959
----------
Total liabilities 2,375,386
----------
NET ASSETS $91,508,993
==========
CLASS A
Net asset value and redemption price
per share ($64,274,984/5,184,357) $12.40
======
Maximum offering price per share
(NAV/(1-maximum sales commission)) $13.02
======
CLASS B
Net asset value, offering price and redemption price per share
($27,234,009/2,209,305) (Redemptions may be subject to a
contingent deferred sales charge within the first six years
of ownership) $12.33
======
Net assets consist of:
Aggregate paid in capital $84,282,085
Unrealized appreciation of investments and foreign currency 13,616,428
Distributions in excess of net investment income (997,751)
Cumulative realized losses (5,391,769)
----------
$91,508,993
==========
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
INVESTMENT INCOME:
INCOME:
Dividends (less foreign taxes withheld of $169,618) $ 1,960,000
Interest 148,376
----------
Total income 2,108,376
EXPENSES:
Management (Note 2) $ 818,148
Distribution - Class A (Note 4) 390,813
Distribution - Class B (Note 4) 310,204
Administrative (Note 2) 296,455
Transfer agent 191,001
Custodian 136,462
Professional 67,074
Reports to shareholders 34,061
Other 84,126
----------
Total expenses 2,328,344
----------
Net investment loss (219,968)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 3)
Realized loss from security transactions (excluding short-term securities):
Proceeds from sales 97,489,386
Cost of securities sold 102,653,900
----------
Realized loss (5,164,514)
Realized loss from foreign currency transactions (88,975)
Unrealized appreciation of investments:
Beginning of year 740,251
End of year 13,617,260
----------
Change in unrealized appreciation
of investments 12,877,009
Change in unrealized depreciation
of foreign denominated assets
and liabilities (832)
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 7,402,720
==========
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1995 and 1994
1995 1994
----------- -----------
INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment loss $ (219,968) $ (181,625)
Realized gain (loss) from
security transactions (5,164,514) 2,592,278
Realized gain (loss) from foreign
currency transactions (88,975) 128,678
Change in unrealized appreciation/
(depreciation) of investments 12,877,009 (27,412,213)
Change in unrealized depreciation
of foreign denominated assets
and liabilities (832) --
----------- -----------
Increase (decrease) in net
assets resulting from operations 7,402,720 (24,872,882)
Dividends and Distributions:
Net investment income:
Class A Shares (479,840) (468,634)
Class B Shares (142,902) (57,388)
----------- -----------
(622,742) (526,022)
----------- -----------
Tax Return of Capital:
Class A Shares (95,400) --
Class B Shares (39,843) --
----------- -----------
(135,243) --
----------- -----------
Realized gains:
Class A Shares -- (1,472,941)
Class B Shares -- (631,265)
----------- -----------
-- (2,104,206)
----------- -----------
Capital share transactions*
Net proceeds from sales of shares:
Class A Shares 309,941,833 327,601,188
Class B Shares 833,129 21,696,938
----------- -----------
310,774,962 349,298,126
----------- -----------
Reinvestment of dividends:
Class A Shares 1,695,815 353,377
Class B Shares 274,877 52,490
----------- -----------
1,970,692 405,867
----------- -----------
Cost of shares reacquired
Class A Shares (337,345,392) (333,150,480)
Class B Shares (9,346,965) (5,105,262)
----------- -----------
(346,692,357) (338,255,742)
----------- -----------
Increase (decrease) in net assets
resulting from capital share
transactions (33,946,703) 11,448,251
----------- -----------
Total decrease in net assets (27,301,968) (16,054,859)
NET ASSETS:
Beginning of year 118,810,961 134,865,820
----------- -----------
End of period (including
distributions in excess of net
investment income of $977,751
and $293,321, respectively) $ 91,508,993 $118,810,961
=========== ===========
*SHARES OF BENEFICIAL INTEREST ISSUED AND REDEEMED
(UNLIMITED NUMBER OF $.001 PAR VALUE SHARES AUTHORIZED)
CLASS A CLASS A
----------- -----------
Shares sold 26,778,800 24,551,270
Reinvestment of dividends 139,080 23,112
----------- -----------
26,917,880 24,574,382
Shares reacquired (28,642,223) (24,776,332)
----------- -----------
Net decrease (1,724,343) (201,950)
=========== ===========
CLASS B CLASS B
----------- -----------
Shares sold 74,382 1,553,312
Reinvestment of dividends 22,627 3,442
----------- -----------
97,009 1,556,754
Shares reacquired (785,368) (377,818)
----------- -----------
Net increase (decrease) (688,359) 1,178,936
=========== ===========
See Notes to Financial Statements.
<PAGE>
ASIA DYNASTY FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------------------------------------------
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED DECEMBER 31, MARCH 22, 1993(A) YEAR ENDED DECEMBER 31, SEPTEMBER 1, 1993(A)
TO TO
1995 1994 DECEMBER 31, 1993 1995 1994 DECEMBER 31, 1993
------- ------- ---------------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period......... $12.13 $15.28 $9.525 $12.09 $15.25 $11.33
------ ------ ------ ------ ------ ------
Income from Investment
Operations:
Net Investment Loss....... (0.02) -- (0.062)(b) (0.08) (0.06) (0.07)(b)
Net Gains (Loss) on
Securities (both realized
and unrealized)....... 0.40 (2.86) 5.887 0.40 (2.86) 4.06
------ ------ ------ ------ ------ ------
Total from Investment Operations 0.38 (2.86) 5.825 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 $12.40 $12.13 $15.28 $12.33 $12.09 $15.25
====== ====== ====== ====== ====== ======
Total Return (c).............. 3.13% (18.72%) 61.16% 2.65% (19.15%) 35.22%
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000) $64,275 $83,787 $108,661 $27,234 $35,024 $26,205
Ratio of Expenses to Average
Net Assets.................. 2.03% 1.85% 1.92%(d)(e) 2.41% 2.38% 3.04%(d)
Ratio of Net Investment Loss
to Average Net Assets....... (0.08%) -- % (0.68%)(d) (0.52%) (0.50%) (2.17%)(d)
Portfolio Turnover Rate....... 57.06% 51.08% 14.63% 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 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 were
not assumed by the advisor.
See Notes to Financial Statements.
<PAGE>
ASIA DYNASTY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES:
Van Eck Funds (the "Trust"), organized as a Massachusetts business trust on
April 3, 1985, is registered under the Investment Company Act of 1940. The
following is a summary of significant accounting policies consistently followed
by the 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.
These differences are primarily due to differing treatments for foreign
currency transactions, post-October losses and passive foreign investment
companies. The effect of these differences for the period ended December 31,
1995 decreased accumulated distributions in excess of net investment income
by $273,523, increased cumulative realized losses by $138,280 and decreased
aggregate paid in capital by $135,243.
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 $818,148
for the year ended December 31, 1995 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 $296,455
for the year ended December 31, 1995 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
$545,432 for the year ended December 31, 1995 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. Van Eck Securities Corporation received $25,162 for the year
ended December 31, 1995 from commissions earned on sales of shares of beneficial
interest of the Fund after deducting $119,247 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 of investments other than short-term obligations aggregated
$60,761,258 for the year ended December 31, 1995. For federal income tax
purposes the cost of investments owned at December 31, 1995 was $75,133,904. As
of December 31, 1995, net unrealized appreciation for federal income tax
purposes aggregated $12,557,720 of which $17,284,490 related to appreciated
investments and $4,726,770 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 May 1, 1996 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
December 31, 1995 was $497,148 for Class A shares and $1,285,308 for Class B
shares.
<PAGE>
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
excluding Japan. The Fund may, but generally does not invest in Australia and
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>
ASIA DYNASTY FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of
Trustees of the Van Eck Funds:
We have audited the accompanying statement of assets and liabilities, including
the investment portfolio, of the Asia Dynasty Fund (the "Fund") (one of the
series constituting the Van Eck Funds) as of December 31, 1995, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the two years in the period then ended and the period
March 22, 1993 (commencement of operations) to December 31, 1993. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, 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 the
Asia Dynasty Fund series of the Van Eck Funds as of December 31, 1995, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and the financial highlights
for each of the two years in the period then ended and the period March 22, 1993
(commencement of operations) to December 31, 1993, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 19, 1996
<PAGE>
VAN ECK FAMILY OF FUNDS
- --------------------------------------------------------------------------------
GLOBAL HARD ASSETS FUND
Seeks long-term capital appreciation by investing globally, primarily in "Hard
Asset Securities". Income is a secondary consideration.
INTERNATIONAL INVESTORS GOLD FUND
Founded in 1955, this Fund is the oldest gold-oriented mutual fund in the U.S.
It invests in gold-mining shares globally and seeks long-term capital
appreciation, moderate yield and protection against monetary uncertainties.
GOLD/RESOURCES FUND
Seeking a long-term global hedge against inflation and other risks, this Fund
invests in gold-mining and natural resources companies outside South Africa.
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. AIG Global Investment Corp. serves
as sub-investment advisor to this Fund.
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. AIG Global Investment Corp. serves
as sub-investment advisor to this Fund.
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.
- --------------------------------------------------------------------------------
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
FOR ACCOUNT ASSISTANCE PLEASE CALL (800) 544-4653
DECEMBER 31, 1995
VAN ECK
ASIA
DYNASTY
FUND
ANNUAL
REPORT
X96-0208-013
