VAN ECK ASIA DYNASTY FUND
-------------------------
1997 SEMI-ANNUAL REPORT
Dear Fellow Shareholder:
The Asian stock markets had mixed performance in the first half of 1997, with
Hong Kong, Indonesia, Korea and Taiwan showing strength, while Thailand,
Malaysia, the Philippines and Singapore witnessed negative returns. In this
environment, the Asia Dynasty Fund had a total return of 0.5% for the six months
ended June 30. The Morgan Stanley Capital International (MSCI) Far East Free
Ex-Japan Index gained 1.2% during this period. It is of note that Fund
performance has improved since the new portfolio manager took over in August of
1996, and since that time, the Fund (+10.4%) has outperformed the MSCI Index.
Performance in the first half of the year was strongly influenced by the
handover of Hong Kong to China - investor sentiment was positive toward the
Greater China markets (Hong Kong, China, Taiwan) at the expense of the other
Asian markets.
Throughout most of Southeast Asia, market performance contrasted sharply to that
of Hong Kong (with the exception of Indonesia). Investors generally reduced
portfolio weightings to Malaysia, the Philippines and Thailand over fears of
currency devaluation, and these markets had heavily negative returns.
In North Asia, Korea and Taiwan achieved good returns as fund flows gradually
moved into these cyclical markets.
HONG KONG
It has been commonly perceived, particularly on a local level, that Hong Kong
and China would mutually benefit from their new alliance. Since the beginning of
the year, positive news of acquisitions, successful company "spin-offs" and the
new listings of China-based "red chip" companies has been announced constantly.
Hong Kong's stock market ended June with gains of 9.8% year-to-date.
We maintained an overweight position (versus the MSCI Index) in Hong Kong
throughout the first half, which helped Fund performance. We decreased the
Fund's property allocation in favor of the banking and utilities sectors as
property stocks were held back over a possible change of real estate policy by
the new Special Administrative Region government. Both the banking and utilities
sectors are likely to see increasing equity participation by Chinese
corporations, thus being poised to benefit from future expansion in China.
Between January and May we allocated 25% of the Hong Kong weighting to "red
chip" Chinese companies. The performance of this group has been exceptional, but
as their valuations became lofty, we scaled back on the Fund's weighting in
early June.
INDONESIA
Indonesia continued to receive a steady inflow of capital from direct
investment, despite some instability during the election there in April, and the
Indonesian market rose 6.0% in the first half of the year. A slightly overweight
position in Indonesia and heavy weightings to banking and telecommunications
companies benefited Fund performance.
MALAYSIA
We reduced the portfolio's allocation to Malaysia during the first six months of
the year since the government was expected to maintain a tight monetary policy
as loan growth and money supply remained stubbornly high and stock valuations
reached relatively pricey levels. The Malaysian market declined 11.6% during
this period.
PHILIPPINES
Despite strong economic fundamentals in the Philippines, the risk of corporate
mismanagement was rising rapidly, particularly in the property sector as the
real estate market slumped. We maintained an underweight position in this market
which fell 11.7%.
<PAGE>
THAILAND
In Thailand, the biggest news was the government's devaluation of the Thai baht,
which had an immediate negative effect, and the market ended the first half down
over 33%. Longer term, however, this move has allowed the currency to "float"
versus the dollar, thus allowing interest rates to fall and, moreover,
demonstrating the government's resolve to rejuvenate the economy. While the
market appeared unattractive in the beginning of the year, after this move (and
subsequent declines in stock prices) we began to add slightly to the Thai
position as valuations there are very attractive and we expect relative
outperformance.
TAIWAN
Taiwan experienced a rising crime rate that put the government's abilities in
question and disturbed investors, resulting in currency outflows and a weakened
new Taiwan dollar. Despite these issues, the Taiwan stock market rallied
sharply, gaining 27.0% in the first half of the year, due to a large extent to
its "Greater China" affiliations with Hong Kong and China and to speculative
retail money. Our underweight position in this market hurt Fund performance, but
we maintain that stock valuations have risen far ahead of the economy.
KOREA & SINGAPORE
We maintained a neutral weighting to both Korea and Singapore (+11.6% and -6.7%,
respectively) whose economies were proxies for a global electronic recovery, but
which also experienced domestic issues and economic difficulties. In these
markets, we favored electronics stocks that would benefit from export growth
along with cyclical stocks in Korea and blue chip companies in Singapore.
In general, in terms of sector emphasis, we reduced Fund weightings in banking
and financial services due to the tightening monetary policy of most central
banks, and in real estate, where banks had high exposure, in favor of
conglomerates and utilities. Emphasis on cyclical industries, such as energy,
electronics and building materials, which do well in periods of economic
expansion and continued infrastructure development, remained unchanged.
THE OUTLOOK
Near term we anticipate further mixed results with continued steady performance
in several Asian markets, but with moderate consolidation in many others as
economic growth in general is likely to be subdued and export recovery has yet
to be seen. On a more positive note, there are an increasing number of Asian
companies that should be restructuring in this environment. We believe this will
set the stage for a more solid improvement of stock prices by the end of the
year. Given this scenario, there will be selective opportunities and stock
selection will be of primary importance.
In regard to country emphasis, we believe Hong Kong will provide steady returns,
though probably not as high as those of the last year. The macroeconomic
environment both in Hong Kong and in China is supportive of higher stock prices.
In particular, the Chinese economy is now due for a rebound. Moreover, the
period after the July hand-over will see further amalgamation of Hong Kong and
Chinese corporations. We will consider increasing the Fund's position to red
chips on weakness when valuations appear attractive.
The corrections of the Malaysian and Philippine stock markets over the last six
months indicate a slowing economy is ahead of us. Both countries would have to
consolidate further before we would consider adding to these positions.
Meanwhile, the downside risk in Singapore is receding after that market's
correction. Near term, earnings results in Singapore may be disappointing and
thus, a neutral weighting will be maintained. We will continue to maintain an
above-average weighting in Indonesia where a falling inflation rate should allow
for lower interest rates in the second half. In Thailand, if the authorities
show resolve in lifting the country out of its economic slump, we would consider
adding to this allocation since valuations remain attractive after the severe
decline.
In North Asia, the gradual appreciation of the Japanese yen will help boost
Korea's export competitiveness. The recovery of the semi-conductor industry in
the second half will also be a plus and we have recently added slightly to this
<PAGE>
position. The Taiwan market continues to rally ahead of a rising economy, but
valuations there are fairly expensive and we have not increased the Fund's
Taiwan allocation.
We may add a position in India where interest rates are currently heading lower.
The recently announced budget is pro-growth while the disappointing corporate
earnings results and political worries are now behind us. This should give the
market room to react positively to the cyclical upturn.
We appreciate your participation in the Asia Dynasty Fund and look forward to
helping you meet your investment goals in the future.
[PHOTO] [PHOTO]
JOHN C. VAN ECK TIMOTHY CHAN
CHAIRMAN PORTFOLIO MANAGER
July 23, 1997
Note: Market performance source: Morgan Stanley Capital International Indices.
All returns in U.S. dollar terms.
- --------------------------------------------------------------------------------
PERFORMANCE RECORD AS OF 6/30/97
- --------------------------------------------------------------------------------
AVERAGE ANNUAL AFTER MAXIMUM BEFORE
TOTAL RETURN SALES CHARGE+ SALES CHARGE
- --------------------------------------------------------------------------------
A shares-Life (since 3/22/93) 7.8% 9.0%
- --------------------------------------------------------------------------------
1 year (2.6)% 2.3%
- --------------------------------------------------------------------------------
B shares-Life (since 9/1/93) 4.0% 4.7%
- --------------------------------------------------------------------------------
1 year (4.4)% 1.6%
- --------------------------------------------------------------------------------
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 = 5.00%
(Prior to 4/30/97, the maximum CDSC was 6.00%)
<PAGE>
TOP 10 EQUITY HOLDINGS*
-----------------------
AS OF JUNE 30, 1997
HUTCHISON WHAMPOA LIMITED
(HONG KONG, 6.7%)
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.
THE HONG KONG SHANGHAI BANKING
CORPORATION, LTD. (HSBC HOLDINGS PLC)
(HONG KONG, 6.5%)
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.
HONG KONG TELECOMMUNICATIONS LTD.
(HONG KONG, 5.9%)
This utility holds the international telephone franchise in Hong Kong for most
sectors of telecommunications, including data, fax and voice transmission.
China-related businesses have become important growth components of Hong Kong
Telecommunications.
SWIRE PACIFIC LTD.
(HONG KONG, 4.5%)
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.
CHEUNG KONG (HOLDINGS) LTD.
(HONG KONG, 4.3%)
Cheung Kong 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.
CHINA LIGHT & POWER COMPANY, LTD.
(HONG KONG, 3.6%)
China Light & Power (CLP) has a monopoly on power distribution in Hong Kong's
New Territories and the Kowloon Peninsula. CITIC Pacific, a Hong Kong-listed
company controlled by the Chinese government, owns a 20% stake in CLP. CLP is
also involved in power projects in China, India and Taiwan.
HANG SENG BANK LIMITED
(HONG KONG, 3.5%)
Hang Seng Bank Limited offers commercial banking and related financial services.
The company has 145 branches in Hong Kong, the United States and China.
PACIFIC CONCORD HOLDINGS
(HONG KONG, 3.4%)
Pacific Concord Holdings and its subsidiaries have businesses in property
development and investment, telecommunications services and department store
operations. Its subsidiaries also manufacture watches and cosmetics.
SUN HUNG KAI PROPERTIES LTD.
(HONG KONG, 3.4%)
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.
TAIWAN INDEX FUND
(TAIWAN, 2.7%)
The Taiwan Index Fund was established in 1991 to provide investors with an
efficient way to gain exposure to Taiwan. The objective of the Fund is to track
the Taiwan Stock Exchange (TSE) Capitalization Weighted Stock Index.
* Portfolio is subject to change.
NOTE: Equities are listed as percentage of total net assets.
<PAGE>
ASIA DYNASTY FUND
STATEMENT OF NET ASSETS JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
NO. OF SHARES
OR PRINCIPAL
AMOUNT SECURITIES (A) VALUE (NOTE 1)
- --------------------------------------------------------------------------------
CHINA: 1.0%
729,800 Huaxin Cement Co. Ltd. "B" $ 134,283
624,500 Shanghai Posts & Telecom. "B"
Telecommunications Equipment Co.,
Ltd. 327,238
----------
461,521
----------
HONG KONG: 46.1%
205,000 Cheung Kong (Holdings) Ltd. 2,024,332
300,000 China Light & Power Co. Ltd. 1,700,013
80,000 CITIC Pacific Ltd. 499,806
1,000,000 Far East Hotels & Ent 448,561
116,000 Hang Seng Bank Ltd. 1,654,576
178,000 Hong Kong Electric Hldg 716,871
1,170,000 Hong Kong Telecommunications Ltd. 2,793,985
102,800 HSBC Holdings PLC 3,091,829
370,000 Hutchison Whampoa Ltd. 3,199,948
1,000,000 Oriental Press Group 409,836
2,920,000 Pacific Concord Holdings 1,630,179
135,000 Sun Hung Kai Properties Ltd. 1,624,984
238,000 Swire Pacific Ltd. "A" 2,142,829
-----------
21,937,749
-----------
INDONESIA: 7.6%
1,005,000 Bank Dagang Nasional "F" 712,839
215,000 Bank Dagang Nasional
(Warrants Expiring 2/14/00) 68,514
44,661 P.T. Bank Internasional Indonesia "F" 385,686
308,500 P.T. Bank Negara Indonesia "F" 196,618
100,000 P.T. Gudang Garam "F" 419,408
100,000 P.T. Medico Energy Corp. "F" 184,005
180,000 P.T. Semen Gresik "F " 403,372
30,000 P.T. Telekomunikasi 975,000
150,000 P.T. Telekomunikasi Indonesia (ADR) 245,169
----------
3,590,611
----------
MALAYSIA: 11.2%
50,000 Ammb Holdings Bhd 310,891
249,000 Arab Malaysian Corp. 926,970
100,000 Commerce Asset-Holding Bhd 263,366
20,000 Commerce Asset-Holding Bhd
(Rights Expiring 7/23/97) 713
12,500 Commerce Asset-Holding Bhd
(Warrants Expiring 5/30/02) 1,931
190,000 DCB Holdings Bhd 601,980
117,000 Malayan Banking Bhd 1,227,921
200,000 Sime Darby Bhd 665,347
100,000 Telekom Malaysia Bhd 467,327
116,000 United Engineers Bhd 836,119
-----------
5,302,565
-----------
PHILIPPINES: 4.1%
704,600 Fil-Estate Land Inc. 205,645
1,380,000 Filinvest Land Inc. 345,229
20,092 Metropolitan Bank & Trust Co. 426,477
15,200 Philippine Long Distance Telephone
Company 492,599
1,650,000 SM Prime Holdings Inc. 487,823
-----------
1,957,773
-----------
SINGAPORE: 11.2%
95,000 City Development Ltd. 930,265
30,000 DBS Bank "F " 377,702
305,000 DBS Land Ltd. 964,258
121,080 Oversea-Chinese Banking Corp., Ltd. "F" 1,253,399
75,000 Singapore Airlines "F" 671,470
55,400 Singapore Press Holdings 1,115,982
-----------
5,313,076
-----------
SOUTH KOREA: 8.9%
5,553 Chung Ho Computer Co. 181,348
6,272 Hyundai Engineering & Co. 161,038
5,100 Hyundai Marine & Fire Insurance 206,182
18,070 Korea Electric Power Corp. 539,251
55,590 Korea Exchange Bank "F" 366,218
298 Korea Mobile Telecommunications Corp. 220,842
4,436 Samsung Electronics 444,788
7,587 Samsung Electronics (GDR) 488,360
31,055 SK Telecom Co. Ltd. 312,491
1,276,690 Taiwan Index Fund-Liquidity Shares 1,294,819
-----------
4,215,337
-----------
TAIWAN: 2.5%
20,395 Macronix International Company Ltd.
(ADR) 583,807
USD200,000 Sincere Navigation Convertible Bond
3.75% due 5/26/2003 228,000
51,744 Tuntex Distinct (GDR) 388,080
-----------
1,199,887
-----------
THAILAND: 5.8%
20,000 Ban Pu Coal Co. Ltd. "F " 306,694
67,000 Bangkok Bank Public Co. "F " 483,813
25,000 BEC World Public Co. Ltd. 225,152
110,000 Electricity Gen Pub Co. 283,367
45,000 PTT Exploration & Production "F " 686,410
101,800 Thai Farmers Bank Ltd. "F " 454,280
60,000 Tipco Asphalt Public Co. 328,600
-----------
2,768,316
-----------
TOTAL INVESTMENTS: 98.4% (Cost $36,662,557) 46,746,835
OTHER ASSETS LESS LIABILITIES: 1.6% 770,271
-----------
NET ASSETS: 100.0% $47,517,106
===========
- --------------------
(a) Unless otherwise indicated, securities owned are shares of common stock.
Glossary:
ADR--American Depositary Receipt
"F "--Foreign registry
GDR--Global Depositary Receipt
See Notes to Financial Statements.
<PAGE>
ASIA DYNASTY FUND
STATEMENT OF NET ASSETS JUNE 30, 1997 (CONTINUED)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS BY INDUSTRY % OF PORTFOLIO
- --------------------------------------------------------------------------------
Airlines 1.4%
Banks 16.5%
Building Materials 0.7%
Cement 1.1%
Coal 0.7%
Computers 1.6%
Conglomerates 1.1%
Electronics 2.0%
Engineering & Construction 2.1%
Financial Services 11.9%
Foreign Government Bonds 2.8%
Holding Cos. 16.3%
Insurance 0.4%
Oil & Gas Exploration 1.9%
Publishing--Newspaper 3.3%
Real Estate 14.1%
Shipping 0.5%
Telecommunications 12.5%
Television 0.5%
Textile 0.8%
Tobacco 0.9%
Utilities 6.9%
------
100.0%
======
See Notes to Financial Statements.
<PAGE>
ASIA DYNASTY FUND FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
ASSETS:
Investments at value (cost, $36,662,557) (Note 1) $46,746,835
Cash 1,573,626
Receivables:
Securities sold 1,478,164
Capital shares sold 14,307
Dividends and interest 69,212
-----------
Total assets 49,882,144
-----------
LIABILITIES:
Payables:
Securities purchased 1,790,041
Capital shares repurchased 140,901
Accounts payable 434,096
-----------
Total liabilities 2,365,038
-----------
NET ASSETS $47,517,106
===========
CLASS A
Net asset value and redemption price
per share ($32,358,366/2,436,501) $13.28
======
Maximum offering price per share
(NAV/(1-maximum sales commission)) $13.94
======
CLASS B
Net asset value, offering price and
redemption price per share ($15,158,740/1,158,404)
(Redemptions may be subject to a contingent deferred
sales charge within the first six years of ownership) $13.09
======
Net assets consist of:
Aggregate paid in capital $32,548,873
Unrealized appreciation of investments and foreign currency 10,034,090
Distributions in excess of net investment income (1,062,640)
Undistributed realized gains 5,996,783
-----------
$47,517,106
===========
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1997
INVESTMENT INCOME:
INCOME:
Dividends (less foreign taxes withheld of $34,027) $363,450
Interest 20,887
--------
Total income 384,337
EXPENSES:
Management (Note 2) $210,738
Distribution - Class A (Note 4) 98,271
Distribution - Class B (Note 4) 84,413
Administrative (Note 2) 84,363
Custodian 151,493
Transfer agent 81,610
Professional 29,402
Reports to shareholders 20,510
Trustees fees 7,529
Amortization of organization costs 748
Other 28,247
--------
Total expenses 797,324
---------
Net investment loss (412,987)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 3)
Realized gain from security transactions 8,801,427
Realized loss from foreign currency transactions (21,863)
Change in unrealized appreciation
of investments (7,699,364)
Change in unrealized depreciation
of foreign currency denominated assets
and liabilities (47,682)
--------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $619,531
========
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31,
(UNAUDITED) 1996
-------------- -------------
DECREASE IN NET ASSETS:
Operations:
Net investment loss $ (412,987) $ (709,851)
Realized gain from
security transactions 8,801,427 3,091,974
Realized loss from foreign
currency transactions (21,863) (88,962)
Change in unrealized appreciation
of investments (7,699,364) 4,166,380
Change in unrealized depreciation
of foreign currency denominated
assets and liabilities (47,682) (1,672)
------------- -------------
Increase in net assets
resulting from operations 619,531 6,457,869
------------- -------------
CAPITAL SHARE TRANSACTIONS:*
Net proceeds from sales of shares:
Class A Shares 36,700,359 90,933,104
Class B Shares 82,736 830,989
------------- -------------
36,783,095 91,764,093
------------- -------------
Cost of shares reacquired:
Class A Shares (49,323,086) (115,835,457)
Class B Shares (5,209,894) (9,248,038)
------------- -------------
(54,532,980) (125,083,495)
------------- -------------
Decrease in net assets
resulting from capital share
transactions (17,749,885) (33,319,402)
------------- -------------
Total decrease in net assets (17,130,354) (26,861,533)
NET ASSETS:
Beginning of period 64,647,460 91,508,993
------------- -------------
End of period (including
distributions in excess of net
investment income of $1,062,640
and $627,790, respectively) $ 47,517,106 $ 64,647,460
============= =============
*SHARES OF BENEFICIAL INTEREST ISSUED
AND REDEEMED (UNLIMITED NUMBER
OF $.001 PAR VALUE SHARES AUTHORIZED)
CLASS A CLASS A
------------- -------------
Shares sold 2,873,441 7,042,544
Shares reacquired (3,794,214) (8,869,627)
------------- -------------
Net decrease (920,773) (1,827,083)
============= =============
CLASS B CLASS B
------------- -------------
Shares sold 6,391 64,372
Shares reacquired (399,419) (722,245)
------------- -------------
Net decrease (393,028) (657,873)
============= =============
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 FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS PERIOD
ENDED YEAR ENDED MARCH 22, ENDED YEAR ENDED SEPTEMBER 1,
JUNE 30, DECEMBER 31, 1993(A) TO JUNE 30, DECEMBER 31, 1993(A) TO
1997 ------------------------- DECEMBER 31, 1997 --------------------- DECEMBER 31,
(UNAUDITED) 1996 1995 1994 1993 (UNAUDITED) 1996 1995 1994 1993
----------- ------ ------ ------ ------ ----------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $13.21 $12.40 $12.13 $15.28 $9.53 $13.08 $12.33 $12.09 $15.25 $11.33
Income from Investment
Operations:
Net Investment Loss (0.15) (0.20) (0.02) -- (0.06)(b) (0.17) (0.24) (0.08) (0.06) (0.07)(b)
Net Gains (Loss) on
Securities (both realized
and unrealized) 0.22 1.01 0.40 (2.86) 5.88 0.18 .99 0.40 (2.86) 4.06
Total from Investment
Operations 0.07 0.81 0.38 (2.86) 5.82 0.01 0.75 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) (0.07) -- -- -- (0.22) (0.07)
Tax Return of Capital -- -- (0.02) -- -- -- -- (0.02) -- --
------- ------- ------- -------- ------- ------- ------- ------- -------- -------
Total Distributions -- -- (0.11) (0.29) (0.07) -- -- (0.08) (0.24) (0.07)
------- ------- ------- -------- ------- ------- ------- ------- -------- -------
Net Asset Value, End of Period $13.28 $13.21 $12.40 $12.13 $15.28 $13.09 $13.08 $12.33 $12.09 $15.25
======= ======= ======= ======== ======= ======= ======= ====== ======== =======
Total Return (c) 0.53% 6.53% 3.13% (18.72%) 61.16% 0.08% 6.08% 2.65% (19.15%) 35.22%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000) $32,358 $44,351 $64,275 $83,787 $108,661 $15,159 $20,296 $27,234 $35,024 $26,205
Ratio of Gross Expenses to
Average Net Assets 2.71%(d) 2.42% 2.03% 1.85% 2.09%* 3.14%(d) 2.86% 2.41% 2.38% 3.04%
Ratio of Net Expenses to
Average Net Assets 2.71%(d) 2.42% 2.03% 1.85% 1.92%(d) 3.14%(d) 2.86% 2.41% 2.38% 3.04%(d)
Ratio of Net Investment Loss
to Average Net Assets (1.34%)(d) (0.73%) (0.08%) --% (0.68%)(d) (1.78%)(d) (1.14%) (0.52%) (0.50%) (2.17%)(d)
Portfolio Turnover Rate 55.68% 52.97% 57.06% 51.08% 14.63% 55.68% 52.99% 57.06% 51.08% 14.63%
Average Commission
Rate Paid (e) $0.0026 $0.0049 $0.0026 $0.0049
</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) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades in which
commission is charged.
* Had the Advisor not agreed to assume a portion of expenses for Class A.
See Notes to Financial Statements.
<PAGE>
ASIA DYNASTY FUND
- --------------------------------------------------------------------------------
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 $210,738
for the six months ended June 30, 1997 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 $84,363 for
the six months ended June 30, 1997 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. Van Eck Securities Corporation received $2,473 for the six months ended
June 30, 1997 from commissions earned on sales of shares of beneficial interest
of the Fund after deducting $13,734 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 $29,444,626 and $48,177,057, respectively,
for the six months ended June 30, 1997. For federal income tax purposes, the
cost of investments owned at June 30, 1997 was $36,662,557. As of June 30, 1997,
net unrealized appreciation for federal income tax purposes aggregated
$10,084,278 of which $11,603,744 related to appreciated investments and
$1,519,466 related to depreciated investments. At December 31, 1996, the Fund
had capital loss carry forwards available to offset future capital gains
expiring December 31, 2003 of $2,742,855.
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 September 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 distribution expenses incurred over the Annual
Limitation as of June was $1,028,825 for Class A shares and $1,456,189 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>
ASIA DYNASTY FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 6 -- 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 June 30, 1997, the total value of the assets and corresponding liability
of the Fund's portion of the Plan is $9,878.
<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.
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.
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 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 and 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
www.vaneck.com
FOR ACCOUNT ASSISTANCE PLEASE CALL (800) 544-4653
FX1997-0724-0170
====================
JUNE 30, 1997
VAN ECK
--------------------
ASIA
--------------------
DYNASTY
FUND
SEMI-ANNUAL
REPORT
--------------------
====================
[LOGO]
VAN ECK GLOBAL
