VAN ECK U.S. GOVERNMENT MONEY FUND
----------------------------------
1996 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 employ our exchange privileges or to use our checkwriting privileges.
The Fund's seven-day average yield was 3.79%* and the 30-day average yield was
3.60%* on December 31, 1996. The total net assets were $107,697,508 as of
December 31, 1996.
The January 31 reduction in the federal funds target rate from 5.50% to 5.25%
was the first and only significant change initiated by the Federal Reserve
during 1996. With inflation and economic growth perceived to be modest by the
money markets, 1996 turned out to be a year noted for its relatively stable
interest rate environment. This is evidenced by the fact that 3-month Treasury
bill yields rose from 5.15% at the beginning of the year to just 5.33% at year
end. During 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 United States Government and there
can be no guarantee that the price of the Fund's shares will not fluctuate.**
Repurchase agreements allow us to take advantage of higher yields without
significantly increasing risk. The Fund's repurchase agreements are
collateralized 102% by United States Treasury obligations with maturities of
less than five years. In addition, your Fund has possession of the collateral.
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] John C. van Eck [PHOTO] Paul A. DiPerna
/s/ John C. van Eck /s/ Paul A. DiPerna
- --------------------- ---------------------
John C. van Eck Paul A. DiPerna
Chairman Portfolio Manager
January 15, 1997
- --------------
* Performance data represents past performance and is not indicative of
future results. Yields will fluctuate.
** 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 the Funds reserve the right to modify or terminate the terms of
the Exchange Privilege.
<PAGE>
U.S. GOVERNMENT MONEY FUND
FINANCIAL STATEMENT
- --------------------------------------------------------------------------------
Statement of Net Assets
December 31, 1996
Assets:
Investments at value:
Annualized Yield at
Principal Maturity Time of Purchase Value
Amount Date or Coupon Rate (Note 1)
- --------------------------------------------------------------------------------
U.S. Treasury Bills:
$5,000,000 2/6/97 4.949% $4,976,448
5,000,000 2/6/97 4.964% 4,976,375
5,000,000 2/20/97 4.899% 4,967,333
5,000,000 2/27/97 4.996% 4,961,967
5,000,000 3/6/97 4.908% 4,958,000
5,000,000 3/6/97 5.145% 4,955,988
5,000,000 3/13/97 4.975% 4,952,750
5,000,000 3/13/97 5.057% 4,951,972
5,000,000 3/20/97 5.010% 4,947,704
Repurchase Agreements (Note 4):
Cost $20,746,433 purchased on
12/31/96; maturity value--
$20,753,060 (with HSBC
Securities Incorporated
collateralized by $21,185,000
U.S. Treasury Note due
11/15/98 with an interest
rate of 5.50% and a value
of $21,203,782) 1/2/97 5.75% 20,746,433
Cost $20,700,000 purchased on
12/31/96; maturity value-
$20,706,613 (with Merrill
Lynch, Pierce, Fenner &
Smith Incorporated
collateralized by $20,525,000
U.S. Treasury Note due
7/31/00 with an interest
rate of 6.1254% and a
value of $21,076,958) 1/2/97 5.75% 20,700,000
------------
Total investments (amortized
cost $86,094,970*) 86,094,970
Receivables:
Capital shares sold 21,733,663
Interest 13,240
Other 2,926
------------
Total assets 107,844,799
------------
Liabilities:
Payables:
Capital shares repurchased 26,452
Dividend Payable 29,282
Accounts Payable 91,557
------------
Total liabilities 147,291
------------
Net Assets: $107,697,508
============
Shares of beneficial interest out-
standing (unlimited number
of $0.001 par value shares
authorized)................. 107,697,508
===========
Net asset value, redemption
price and offering price per
share ...................... $1.00
=====
* The amortized cost is the same for federal income tax purposes.
- --------------------------------------------------------------------------------
Statement of Operations
For the Year Ended December 31, 1996
Interest Income (Note 1): $4,017,260
Expenses:
Management (Note 2) $382,786
Distribution (Note 3) 194,400
Transfer agent 81,474
Administration (Note 2) 90,419
Registration 37,989
Custodian 45,649
Professional 28,400
Reports to shareholders 25,702
Trustees fees 15,939
Other 40,184
--------
Total expenses 942,942
Net investment income $3,074,318
==========
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
For the Years Ended December 31, 1996 and 1995
1996 1995
---- ----
Increase in Net Assets:
Operations:
Net investment income paid to
shareholders as dividends
(Note 1) $ 3,074,318 $ 2,551,046
============== ==============
From capital share
transactions
(at net asset value of $1.00
per share):
Net proceeds from sales of
shares $3,402,354,646 $2,471,670,939
Shares issued on reinvestment
of dividends from net
investment income 2,046,708 1,818,591
-------------- --------------
3,404,401,354 2,473,489,530
Cost of shares reacquired (3,366,833,860) (2,450,437,723)
Increase in net assets resulting
from capital share
transactions 37,567,494 23,051,807
Net Assets:
Beginning of year 70,130,014 47,078,207
-------------- --------------
End of year $ 107,697,508 $ 70,130,014
============== ==============
See Notes to Financial Statements.
<PAGE>
U.S. GOVERNMENT MONEY FUND
- --------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each year
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year...................... $1.00 $1.00 $1.00 $1.00 $1.00
----- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income................................. .0385 0.0456 0.0311 0.0183 0.0220
Less Distributions:
Dividends from Net Investment Income.................. (.0385) (0.0456) (0.0311) (0.0183) (0.0220)
----- ------- ------- ------- -------
Net Asset Value, End of Year............................ $1.00 $1.00 $1.00 $1.00 $1.00
===== ======= ======= ======= =======
Total Return............................................ 3.85% 4.56% 3.11% 1.83% 2.20%
- ---------------------------------------------------------------------------------------------------------------------
Ratio/Supplementary Data
Net Assets, End of Year (000)........................... $107,698 $70,130 $47,078 $31,109 $24,853
Ratio of Expenses to Average Net Assets................. 1.23% 1.25% 1.12% 1.24% 1.44%
Ratio of Net Income to Average Net Assets............... 4.02% 4.45% 3.07% 1.83% 2.25%
See Notes to Financial Statements.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes to Financial Statements
Note 1 -- Significant Accounting Policies--Van Eck Funds (the "Trust"),
organized as a Massachusetts business trust on April 3, 1985, is registered
under the Investment Company Act of 1940 as 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.
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--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 $382,786 for the year
ended December 31, 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 $90,419 for costs incurred in
connection with certain administrative and operating functions for the year
ended December 31, 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 year ended December 31, 1996
were $194,400.
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.
Note 5--Trustee Deferred Compensation Plan--The Trust established a Deferred
Compensation Plan (the "Plan") for trustees. Commencing January 1, 1996, the
Trustees can elect to defer receipt of their trustee fees until retirement,
disability or termination from the board. The Fund's contributions to the Plan
are limited to the amount of fees earned by the participating trustees. The fees
otherwise payable to the participating trustees are invested in shares of the
Van Eck Funds as directed by the trustees. The Plan has been approved by the
Internal Revenue Service.
As of December 31, 1996, the total value of the assets and corresponding
liability of the Fund's portion of the Plan is $8,237.
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of
Trustees of Van Eck Funds:
We have audited the accompanying statement of net assets of the U.S. Government
Money Fund (the "Fund") (one of the series constituting the Van Eck Funds), as
of December 31, 1996, 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 five years in
the period then ended. 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, 1996, by correspondence with the custodian. 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 U.S.
Government Money Fund of the Van Eck Funds as of December 31, 1996, 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 five years in the period then ended, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 18, 1997
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<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.
Emerging Markets Growth Fund
This Fund seeks long-term capital appreciation by investing primarily in equity
securities in emerging markets around the world.
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.
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 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.
[LOGO] Van Eck Global
Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016
http://www.vaneck.com
For account asistance please call (800) 544-4653
FR1997-0113-0075
================================================================================
DECEMBER 31, 1996
VAN ECK
U.S. GOVERNMENT
MONEY
FUND
ANNUAL
REPORT
================================================================================
[LOGO] Van Eck Global
