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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-05083
WORLDWIDE INSURANCE TRUST - WORLDWIDE HARD ASSETS FUND
(Exact name of registrant as specified in charter)
99 Park Avenue, New York, NY 10016
(Address of principal executive offices) (Zip code)
Van Eck Associates Corporation
99 PARK AVENUE, NEW YORK, NY 10016
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 687-5200
Date of fiscal year end: DECEMBER 31, 2004
Date of reporting period: JUNE 30, 2004
Item 1. Report to Shareholders
- --------------------------------------------------------------------------------
VAN ECK GLOBAL
- --------------------------------------------------------------------------------
Worldwide Insurance Trust
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 2004
WORLDWIDE HARD ASSETS FUND
GLOBAL INVESTMENTS SINCE 1955
The information in the shareholder letter represents the personal opinions of
the individual portfolio manager(s) and may differ from those of other portfolio
managers or of the firm as a whole. This information is not intended to be a
forecast of future events, a guarantee of future results or investment advice.
Also, please note that any discussion of the Fund's holdings, the Fund's
performance, and the views of the portfolio manager(s) are as of June 30, 2004,
and are subject to change.
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
Dear Shareholder:
The Van Eck Worldwide Hard Assets Fund delivered a total return of 3.12% for the
six months ended June 30, 2004. During this time period, hard assets continued
to offer investors diversification benefits in the form of competitive returns
and limited correlation to the general stock market. After a long period of
outperforming the general U.S. equity markets (the Fund had outpaced the
Standard & Poor's 500 Index(1) for four consecutive calendar years as of
December 2003), the Fund slightly lagged the S&P 500 (+3.44%) and outpaced the
Dow Jones Industrial Average(2) (+0.80%) during the first half of 2004. The
Goldman Sachs Natural Resources Index(3) rose 7.27% for the same period.
During the first six months of 2004, the growing uncertainty in Iraq combined
with the threat of rising interest rates and inflation set a sober tone on Wall
Street. These issues, as well as an overheating energy market and concerns
regarding the possibility of a slowdown in the Chinese economy were all factors
that weighed on the minds of investors. While many key commodities, particularly
base metals, experienced a sell-off this Spring, the main investment themes
driving natural resources over the past several years remained intact. Hard
assets continued to enjoy the conjunction of acute capacity shortages and strong
demand. Recovering global economies, the continuation of strong demand from
China and India and relatively low supplies across the commodities spectrum were
all trends that, while closely watched, continued through the first six months
of the year. In general, demand for most commodities continued to soar as
developed economies recovered from the recession and emerging markets displayed
a hunger for raw materials to fuel their growth. Rising inflation threats around
the world also helped buoy the group, as inflationary pressures historically
have increased the value of hard assets.
Chinese government efforts to slow its booming economy set commodities back in
April. High growth rates in China had led to significant bottlenecks,
infrastructure shortages and massive rises in energy and raw material costs. The
tightening measures were designed to reduce the rate of growth in certain
sectors, particularly steel, aluminum and real estate. Many feared a "hard
landing" scenario, one in which China's economy would slow substantially. These
fears, in turn, sparked a severe sell-off in many commodities whose value had
been closely tied to China. Throughout the period, we felt confident that China
would achieve its objective of a "soft landing" scenario, I.E., a moderate
slowdown. During a recent research trip to the region, we observed the
continuation of strong demand trends and economic indicators throughout the
period have supported that view. It is our opinion that China, historically a
growth engine for commodities and other markets, has continued to play an
increasingly important role in the global economy. Overall, we believe that the
China demand story remains a compelling one.
SECTOR/FUND REVIEW
Assets of the Van Eck Worldwide Hard Assets Fund are invested primarily in five
sectors: energy, industrial metals, precious metals, paper and forest products,
and real estate.
ENERGY
Energy prices have remained durably strong throughout the first half despite
climbing stockpiles and rising pricing premiums. Energy equities were strong as
a result of rising commodity prices and announcements by exploration and
commodity companies of increased capital spending budgets. A
colder-than-anticipated winter, unrest in Saudi Arabia, ongoing speculative
interest resulting from the situation in Iraq, and surprise results from OPEC's
early February meeting kept prices high through the first quarter. As the year
progressed, the inventory build was greater than normal. Iraqi production
increased, OPEC agreement breaches remained endemic, imports were strong, and
tanker shipment data suggested more crude oil was in transit. However, while
inventories of crude and unleaded gasoline grew, pricing remained significantly
above norms, suggesting that oil markets were pricing in a terrorist risk
premium.
While increased inventories and an overheating market gave us reason to proceed
with caution, we believe that the underlying supply issues lend support to the
longer-term outlook for the sector. Environmental and geopolitical concerns
continue to restrict new drilling and accessible reserves are being depleted.
Concerns about the maturity of the world's largest oil and natural gas basins
remain. For example, a very public debate is raging regarding the decline curves
and potential production of Saudi Arabia, owner of the largest oil reserves
(approximately 25% of the world's
1
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
total). In addition, the IEA (International Energy Agency) warns that unless
producers step up spending, supplies will run short. The Agency estimates that
exploration and production spending in the world is running as much as 15%
behind what is needed.
The Fund's exposure to the energy markets was increased during the period at the
expense of industrial metals. At June 30, the energy sector represented 51.0% of
the Fund's net assets, up from 45.0% at year-end 2003. During the period,
we carefully combed the market to find compelling value among energy companies.
Early in the year, fourth quarter earnings misses allowed for good entry points
for holdings such as Cooper Cameron, Halliburton and Pride International
(representing 2.3%, 3.3% and 1.6% of Fund net assets at June 30, respectively).
Halliburton, based on inexpensive valuation and an improving asbestos liability
situation, was a primary performance contributor in this sector. The Fund
benefited from its positions in exploration and production companies such as
Apache, Pioneer Natural Resources, and Talisman (2.1%, 1.5% and 3.0% of Fund net
assets). Notably, consolidation continued during the period with M&A activity in
the first six months of 2004 already exceeding that of 2003. In addition,
capital discipline continued with more announcements of stock buybacks and
dividend increases. The Fund's holdings in the oil service sector also
contributed to performance.
INDUSTRIAL METALS
Fund investments in the industrial metals sector represented 8.3% of Fund net
assets at June 30, down from 14.5% in December 2003. The Fund's base metals
investments included holdings in aluminum, nickel, copper, non-ferrous metals
and steel, all essential raw materials for manufacturing.
Strong demand and supply-side concerns drove the copper market's strong start to
the year. Operational problems and labor strikes at some of the world's largest
copper mines exacerbated an already tight supply. However, the copper market,
like many other base metals markets, experienced a sharp decline later in the
period. Coming off a year in which metals prices achieved a most dramatic rally
(copper prices hit a nine-year high and nickel prices were up nearly five fold
from their 1993 lows), many investors sold their positions fearing a cyclical
downturn. More importantly, tightening of monetary policy in China led to
significant pricing volatility in industrial metals, particularly copper and
nickel.
Speculative influences were most evident in the nickel market, with prices
dropping over 20% in April alone. In our view, the nickel market remains a
compelling investment as there has been limited capital expenditure from
producers. Additionally, we expect Chinese demand to remain strong due to the
expansion of stainless steel capacity, since nickel is a primary component of
steel production. The steel market--one that is typically driven by Chinese
consumption and supply-side constraints, particularly in coke, scrap and
iron--saw a new catalyst emerge in recent months. Indications from our sources
at large private steel companies were that steel demand was finally starting to
pick up in the U.S.
PRECIOUS METALS
As of June 30, 16.7% of the Fund's net assets were invested in the precious
metals sector. Historically, gold prices have risen when the value of the U.S.
dollar has declined and vice-versa. We attribute recent weakness of the price of
gold to the rising strength in the dollar. After reaching multi-year highs
during the period, the price of gold experienced a correction in April with the
abrupt change in the market's interest rate outlook. Higher rate expectations
caused the U.S. dollar to reach new highs for the year while gold continued to
fall into May. The severity of the downturn in bullion was magnified in the gold
equity market. South African shares were hit particularly hard due to the added
impact of continuing strength in the rand currency, which has caused labor costs
to rise dramatically in U.S. dollar terms. Among North American companies, the
stocks showing the best performance were those with exploration success. The
year so far has been disappointing for a number of small-cap, or "junior" gold
companies. Many of these companies are developing properties around the world,
and some have encountered problems with permitting, capital expenditure
overruns, or changes in tax structure, resulting in underperformance in share
prices. All of these Juniors are working to mitigate or reverse the impact of
these adverse events.
2
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
By the end of the first half, gold began to recover some of its losses as mixed
economic results in June created uncertainty in the market outlook for interest
rates and currencies. We believe that economic imbalances lend themselves to a
longer-term downward trend for the U.S. dollar. In addition, early signs of
inflation may be revealing themselves and instability in the geopolitical
environment continues to increase. In our view, many conditions are present
today that support investment interest in gold-related securities.
PAPER AND FOREST PRODUCTS
Fund investments in the paper and forest products sector represented 10.3% of
Fund net assets at mid year. In general, paper and forest products held up
better than most cyclicals during the March/April sell-off, with every grade of
paper showing improvement during the period. The paper and forest products
industries continued to be characterized by reduced capacity and relatively
attractive stock prices. Significant production cutbacks kept capacity low.
Industry consolidation proved to be a positive factor, further supporting
prices.
REAL ESTATE
The real estate sector represented 6.6% of Fund net assets at June 30 and
benefited the Fund's performance during the period. REITs (Real Estate
Investment Trusts), as measured by the Morgan Stanley REIT Index(4), returned
5.19% to investors during the first half of 2004. Driving the REIT markets was
the high demand for real estate as an alternative investment with the potential
for current income. Retail malls and outlets continued to provide strong
performance throughout the period. The hotel sector showed marked improvement as
occupancy rates for both tourism and business travel improved along with
domestic and global economies. Recovering economies also resulted in increased
demand for space and the stabilization of rents. Office and apartment companies
observed improved leasing activity and supply/demand dynamics in most real
estate markets began to turn more positive. While REITs had a decidedly negative
response to the strong March labor report, attractive financing terms continued
to buoy property values in these markets. Although the Fund's focus in the real
estate sector continued to be heavily concentrated in the U.S. and Canadian
markets, exposure to the Japanese real estate market during the period proved to
be the most beneficial for the Fund.
Investors should be aware that the Fund is subject to certain risks associated
with hard asset investments. The production and marketing of hard assets may be
affected by actions and changes in governments. In addition, hard assets and
hard asset securities may be cyclical in nature. During periods of economic or
financial instability, hard asset securities may be subject to broad price
fluctuations, reflecting volatility of energy and basic material prices and
possible instability of supply of various hard assets.
We continue to believe that exposure to hard assets may provide diversification
benefits for investors. We appreciate your continued investment in the Van Eck
Worldwide Hard Assets Fund, and we look forward to helping you meet your
investment goals in the future.
[PHOTO OMITTED] [PHOTO OMITTED]
/s/ DEREK S. VAN ECK /s/ SAMUEL R. HALPERT
DEREK S. VAN ECK SAMUEL R. HALPERT
MANAGEMENT TEAM MEMBER MANAGEMENT TEAM MEMBER
[PHOTO OMITTED]
/s/ JOSEPH M. FOSTER
JOSEPH M. FOSTER
MANAGEMENT TEAM MEMBER
July 14, 2004
3
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE
LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. Performance information
reflects waivers of expenses and/or fees. Investment return and value of shares
of the Fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. These returns do not reflect the
deduction of taxes that a shareholder would pay on Fund dividends and
distributions or the redemption of Fund shares. THESE RETURNS DO NOT TAKE
VARIABLE ANNUITY/LIFE FEES AND EXPENSES INTO ACCOUNT. Performance information
current to the most recent month end is available by calling 1-800-826-2333.
The Fund is only available to life insurance and annuity companies to fund their
variable annuity and variable life insurance products. These contracts offer
life insurance and tax benefits to the beneficial owners of the Fund. Your
insurance or annuity company charges fees and expenses for these benefits which
are not reflected in this report or in the Fund's performance, since they are
not direct expenses of the Fund. Had these fees been included, returns would
have been lower. For insurance products, performance figures do not reflect the
cost for insurance and if they did, the performance shown would be significantly
lower. A review of your particular life and/or annuity contract will provide you
with much greater detail regarding these costs and benefits.
All indices listed are unmanaged indices and include the reinvestment of all
dividends where available, but do not reflect the payment of transaction costs,
advisory fees or expenses that are associated with an investment in the Fund. An
index's performance is not illustrative of the Fund's performance. Indices are
not securities in which investments can be made.
(1) The S&P (Standard & Poor's) 500 Index consists of 500 widely held common
stocks, covering four broad sectors (industrials, utilities, financial and
transportation). It is a market value-weighted index (stock price times shares
outstanding), with each stock affecting the Index in proportion to its market
value. This Index, calculated by Standard & Poor's, is a total return index with
dividends reinvested.
(2) The Dow Jones Industrial Average is a price weighted average of 30 blue-chip
stocks that are generally the leaders in their industry. It has been a widely
followed indicator of the stock market since October 1, 1928.
(3) The Goldman Sachs Natural Resources (GSR) Index is a modified
capitalization-weighted index which includes companies involved in the following
categories: extractive industries, energy companies, owners and operators of
timber tracts, forestry services, producers of pulp and paper, and owners of
plantations.
(4) The Morgan Stanley REIT Index is a total return index of the most actively
traded real estate investment trusts and is designed to be a measure of real
estate equity performance.
4
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
[The tables below represent pie charts in the printed report.]
SECTOR WEIGHTINGS*
AS OF JUNE 30, 2004 (UNAUDITED)
Energy 51.0%
Cash/Equivalents plus Other Assets Less Liabilities 4.4%
Precious Metals 16.7%
Paper & Forest Products 10.3%
Industrial Metals 8.3%
Real Estate 6.6%
Agriculture 1.7%
Other 1.0%
GEOGRAPHICAL WEIGHTINGS*
AS OF JUNE 30, 2004 (UNAUDITED)
United States 47.7%
Cash/Equivalents plus Other Assets Less Liabilities 4.4%
Canada 21.5%
United Kingdom 3.6%
Australia 5.8%
South Africa 6.6%
France 3.0%
Russia 1.3%
South Korea 2.1%
Finland 1.3%
Other 2.7%
- ----------
* Percentage of net assets.
5
WORLDWIDE HARD ASSETS FUND
TOP TEN EQUITY HOLDINGS AS OF JUNE 30, 2004*
- --------------------------------------------------------------------------------
HALLIBURTON CO.
(U.S., 3.3%)
Halliburton provides energy services and engineering and construction services,
as well as manufactures products for the energy industry. The company offers
discrete services and products and integrated solutions to customers in the
exploration, development, and production of oil and natural gas.
BP PLC
(UK, 3.0%)
BP is a leading oil, gas and energy company. The company produces and markets
crude oil and petroleum products worldwide, and is engaged in exploration and
field development throughout the world. BP also manufactures and sells
petroleum-based chemical products.
TOTAL FINA ELF SA
(FRANCE, 3.0%)
Total Fina Elf is an integrated oil and gas specialty chemical company with
operations in 120 countries. The company engages in all areas of the petroleum
industry, from exploration and production to refining and shipping.
TALISMAN ENERGY, INC.
(CANADA, 3.0%)
Talisman Energy is a Canadian-based international upstream oil and gas producer
with operations in Canada, the North Sea and Indonesia. The company also
conducts exploration in Algeria, Trinidad and Colombia.
OCCIDENTAL PETROLEUM CORP.
(U.S., 2.8%)
Occidental Petroleum explores for, develops, produces and markets crude oil and
natural gas. The company also manufactures and markets a variety of basic and
specialty chemicals.
VARCO INTERNATIONAL, INC.
(U.S., 2.5%)
Varco International designs and manufactures drilling equipment, machinery and
rig instrumentation for oil and gas well drilling. The company also provides
internal tubular coating, inspection services, solids control equipment
services, coil tubing and pressure control equipment to the petroleum industry.
Varco has operations worldwide.
COOPER CAMERON CORP.
(U.S., 2.3%)
Cooper Cameron manufactures oil and gas pressure control equipment, including
valves, wellheads, chokes, blowout preventers, and assembled systems. The
company's equipment is used for oil and gas drilling, production, and
transmission in onshore, offshore, and subsea applications. Cooper also produces
gas turbines, centrifugal gas and air compressors and other products.
TIMBERWEST FOREST CORP.
(CANADA, 2.3%)
TimberWest is uniquely positioned as the largest owner of private forest lands
in western Canada. The company's 334,000 hectares are located on Vancouver
Island. TimberWest also owns renewable Crown harvest rights and operates a
lumber mill located near Campbell River, British Columbia.
GLOBALSANTAFE CORP.
(U.S., 2.3%)
GlobalSantaFe is an international offshore and land contract driller, and
provides drilling-related services including third-party rig operators,
incentive drilling and drilling engineering and project management services.
RANDGOLD RESOURCES LTD.
(SOUTH AFRICA, 2.1%)
Randgold Resources explores for and develops mines and mineral interests in
sub-Saharan Africa. The company also acquires and rehabilitates existing
under-performing gold mines, as well as mature exploration programs and bulk
tonnage shallow deposits with gold producing potential. Randgold has interests
in Cote d'Ivoire, Mali, Tanzania and Senegal.
- ----------
* Portfolio is subject to change.
6
WORLDWIDE HARD ASSETS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
NO. OF VALUE
COUNTRY SHARES SECURITIES (a) (NOTE 1)
- --------------------------------------------------------------------------------
AUSTRALIA: 5.8%
56,700 Alumina Ltd. $ 207,842
3,975,540 Aviva Corp. Ltd. 88,321
1,923,395 Cooper Energy NL 227,004
302,606 Newcrest Mining Ltd. 2,894,960
1,811,000 Oil Search Ltd. 1,659,619
532,000 Portman Ltd. 650,040
334,500 Santos Ltd. 1,609,331
461,450 WMC Resources Ltd. 1,576,179
------------
8,913,296
------------
BRAZIL: 1.2%
67,000 Petroleo Brasileiro S.A. (ADR) 1,880,690
------------
CANADA: 21.5%
161,500 Abitibi-Consolidated, Inc. 1,111,120
738,500 Bema Gold Corp. 2,008,473
1,614,800 Brazilian Resources, Inc. 138,749
11,610 Brookfield Homes Corp. 304,066
30,000 Brookfield Properties Corp. 856,695
23,050 Brookfield Properties Corp. USD 662,688
70,000 Domtar, Inc. 900,105
138,900 Domtar, Inc. Warrants
(CAD 17.55, expiring 12/23/04) 1,797,366
63,850 Ensign Resources
Service Group, Inc. 1,010,895
483,300 Esprit Exploration Ltd. 1,260,249
83,000 First Capital Realty, Inc. 1,007,733
80,000 FNX Mining Co., Inc. 376,569
725,000 Killam Properties, Inc. 1,121,302
94,300 Meridian Gold, Inc. 1,216,092
1,080,000 Miramar Mining Corp. 1,242,678
1,072,000 Northern Orion
Resources, Inc. 2,458,936
536,000 Northern Orion Resources, Inc.
Warrants (CAD 2.00, expiring 05/29/08) 600,717
25,000 NQL Drilling Tools, Inc.
(Class A) 42,028
68,600 Placer Dome, Inc. 1,141,504
100,000 SFK Pulp Fund 680,663
48,800 Suncor Energy, Inc. USD 1,249,768
27,200 Suncor Energy, Inc. 691,178
10,600 SunOpta, Inc. 90,524
213,000 Talisman Energy, Inc. 4,631,127
350,000 TimberWest Forest Corp. 3,509,414
24,700 Trican Well Service Ltd. 775,105
900,000 Wheaton River Minerals Ltd. 2,514,943
------------
33,400,687
------------
FINLAND: 1.3%
144,000 Storo Enso Oyj (R Shares) $ 1,952,972
------------
FRANCE: 3.0%
49,000 Total Fina Elf SA (Sponsored ADR) 4,707,920
------------
HONG KONG: 0.8%
145,600 Sun Hung Kai Properties Ltd. 1,194,697
------------
PERU: 0.7%
49,900 Compania de Minas Buenaventura S.A. (ADR) 1,102,790
------------
RUSSIA: 1.3%
18,750 JSC MMC Norilsk Nickel (ADR) 1,027,500
22,200 Surgutneftegaz, Inc. Preferred
Stock (Sponsored ADR) 954,600
------------
1,982,100
------------
SOUTH AFRICA: 6.6%
39,100 Anglo American PLC 800,215
28,500 AngloGold Ltd. (Sponsored ADR) 916,560
100,000 Gold Fields Ltd. (Sponsored ADR) 1,051,000
28,000 Impala Platinum Holdings Ltd. 2,116,005
127,350 Sappi Ltd. (ADR) 1,954,823
377,600 Randgold Resources Ltd. (ADR) 3,330,432
------------
10,169,035
------------
SOUTH KOREA: 2.1%
99,000 POSCO (ADR) 3,317,490
------------
UNITED KINGDOM: 3.6%
100,978 BHP Billiton PLC 876,657
88,000 BP PLC (Sponsored ADR) 4,714,160
------------
5,590,817
------------
UNITED STATES: 47.7%
42,500 Agnico-Eagle Mines Ltd.
Warrants (USD 19.00, expiring 11/14/07) 121,975
55,420 Alcoa, Inc. 1,830,523
26,000 AMB Property Corp. 900,380
28,000 Anadarko Petroleum Corp. 1,640,800
73,000 Apache Corp. 3,179,150
12,000 Boston Properties, Inc. 600,960
65,300 Bunge Ltd. 2,542,782
52,000 Chicago Bridge & Iron Corp. 1,448,200
22,000 ConocoPhillips 1,678,380
73,100 Cooper Cameron Corp. 3,559,970
69,400 Crescent Real Estate Equities Co. 1,118,728
52,700 Ensco International, Inc. 1,533,570
See Notes to Financial Statements
7
WORLDWIDE HARD ASSETS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2004 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
NO. OF VALUE
COUNTRY SHARES SECURITIES (a) (NOTE 1)
- --------------------------------------------------------------------------------
UNITED STATES: (CONTINUED)
42,500 Firstenergy Corp. $ 1,589,925
31,000 FMC Technologies, Inc. 892,800
24,000 Forest Oil Corp. 655,680
49,200 Frontier Oil Corp. 1,042,548
90,800 Glamis Gold Ltd. 1,591,724
132,000 GlobalSantaFe Corp. 3,498,000
90,000 Golden Star Resources Ltd.
Warrants ($1.50, expiring 12/12/04)* 282,600
171,000 Halliburton Co. 5,174,460
199,200 Hecla Mining Co. 1,135,440
13,500 Kerr-McGee Corp. 725,895
39,600 Key Energy Group 373,824
181,200 La Quinta Corp. 1,522,080
174,700 McDermott International, Inc. 1,774,952
31,000 Murphy Oil Corp.(b) 2,284,700
65,400 Nabors Intustries Ltd. 2,957,388
89,000 Occidental Petroleum Corp. 4,308,490
101,850 Parker Drilling Co. 389,067
26,500 Peabody Energy Co. 1,483,735
70,000 PetroKazakhstan, Inc.--(Class A) 1,905,400
66,100 Pioneer Natural Resources Co. 2,318,788
13,200 Plains Exploration & Production Co. 242,220
91,000 Pope & Talbot, Inc. 1,799,070
141,000 Pride International, Inc. 2,412,510
53,000 Remington Oil & Gas Corp. 1,250,800
53,100 Smith International, Inc. 2,960,856
20,000 Starwood Hotels & Resorts Worldwide, Inc. 897,000
179,000 Varco International, Inc. 3,918,310
47,000 Weatherford International Ltd. 2,114,060
37,000 Weyerhaeuser Co. 2,335,436
------------
73,993,176
------------
TOTAL STOCKS AND OTHER INVESTMENTS: 95.6%
(Cost: $116,032,729) 148,205,670
------------
PRINCIPAL
AMOUNT/
NOTIONAL VALUE
COUNTRY AMOUNT SECURITIES (a) (NOTE 1)
- --------------------------------------------------------------------------------
CORPORATE NOTES
UNITED STATES: 0.0%
52,000 Broookfield Homes Corp.
12.00%, 6/30/20
(Cost: $52,000) $ 53,820
------------
OPTIONS PURCHASED:
AUSTRALIA: 0.0%
39,755 Aviva Corp. Ltd.
(Call Option-Strike
AUD 0.10, expiring 12/31/05)*
TOTAL OPTIONS PURCHASED: 0.0%
(Premiums paid: $11,068) 16,560
------------
See Notes to Financial Statements
8
WORLDWIDE HARD ASSETS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2004 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
SHORT-TERM DATE OF VALUE
OBLIGATION: 5.4% MATURITY COUPON (NOTE 1)
- --------------------------------------------------------------------------------
Repurchase Agreement
(Note 12): Purchased on
6/30/04; maturity value
$8,381,000 (with State
Street Bank & Trust Co.,
collateralized by
$7,925,000 Federal
National Mortgage Association
4.000% due 7/15/05
with a value of $8,550,742
(Cost: $8,381,000) 7/01/04 1.35% $ 8,381,000
------------
TOTAL INVESTMENTS:
(Cost: $124,424,797) 156,657,050
------------
NO. OF
COUNTRY SHARES
- -------------------------------------------------
OPTIONS WRITTEN:
UNITED STATES: 0.0%
(280) McDermott International, Inc.
(Call Option-Strike
USD 10.00, expiring
7/17/04) (16,800)
------------
TOTAL OPTIONS WRITTEN: 0.0%
(Premiums received: $28,418) (16,800)
------------
TOTAL INVESTMENTS NET OF
OPTIONS WRITTEN: 101.0%
(Cost: $124,396,379) 156,640,250
OTHER ASSETS LESS LIABILITIES: (1.0%) (1,639,805)
------------
NET ASSETS: 100% $155,000,445
============
- --------------------------------------------------------------------------------
SUMMARY OF % OF
INVESTMENTS NET
BY INDUSTRY ASSETS
- ----------------------------- ---------
Agriculture 1.7%
Energy 51.0%
Industrial Metals 8.3%
Paper & Forest Products 10.3%
Precious Metals 16.7%
Real Estate 6.6%
Other 1.0%
Short-Term Obligation 5.4%
Other assets less liabilities (1.0%)
---------
100.0%
=========
- ----------
(a) Unless otherwise indicated, securities owned are shares of common stock.
(b) Securities segregated for options written.
Glossary:
ADR-American Depositary Receipt.
* Fair value as determined by a valuation committee under the direction of the
Board of Trustees.
See Notes to Financial Statements
9
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (unaudited)
ASSETS:
Investments, at value (cost $124,424,797) (Note 1) .............. $156,657,050
Cash ............................................................ 32,691
Foreign currency, at value (cost $3,008) ........................ 2,991
Cash--initial margin for swap (Note 9) .......................... 110,970
Receivables:
Due from broker -- swap (Note 9) ............................. 1,313,420
Securities sold .............................................. 581,418
Dividends and interest ....................................... 205,727
Capital shares sold .......................................... 518,119
Prepaid expenses ............................................. 82,245
------------
Total assets ................................................. 159,504,631
------------
LIABILITIES:
Payables:
Securities purchased ......................................... 3,702,373
Capital shares redeemed ...................................... 580,727
Due to Adviser ............................................... 124,861
Options written (premiums received $28,418) .................. 16,800
Accounts payable ............................................. 79,425
------------
Total liabilities ............................................ 4,504,186
============
Net assets ...................................................... $155,000,445
============
INITIAL CLASS SHARES:
Net assets ...................................................... $148,991,813
============
Shares outstanding .............................................. 9,773,495
============
Net asset value, redemption and offering price per share ........ $15.24
============
CLASS R1 SHARES:
Net assets ...................................................... $ 6,008,632
============
Shares outstanding .............................................. 394,013
============
Net asset value, redemption and offering price per share ........ $15.25
============
Net assets consist of:
Aggregate paid in capital .................................... $139,498,677
Unrealized appreciation of investments, options,
swaps and foreign currency transactions .................... 33,558,473
Undistributed net investment income .......................... 725,543
Accumulated realized loss .................................... (18,782,248)
------------
$155,000,445
============
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2004 (unaudited)
INCOME (NOTE 1):
Dividends (less foreign taxes withheld of $110,296) ............. $ 1,486,217
Interest ........................................................ 30,448
------------
Total income .................................................. 1,516,665
EXPENSES:
Management (Note 2) ............................... $778,509
Administration (Note 2) ........................... 1,389
Reports to shareholders ........................... 26,241
Professional ...................................... 31,699
Custodian ......................................... 26,073
Trustees' fees and expenses ....................... 15,186
Transfer agency -- Initial Class Shares ........... 6,017
Transfer agency -- Class R1 Shares ................ 2,013
Interest (Note 11) ................................ 3,610
Other ............................................. 23,138
------------
Total expenses .................................. 913,875
------------
Net investment income ........................... 602,790
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS,
OPTIONS, SWAPS, FUTURES AND FOREIGN
CURRENCY TRANSACTIONS (NOTE 4):
Realized gain from security transactions .......... 9,762,563
Realized loss from foreign currency transactions .. (9,075)
Realized gain from options ........................ 35,492
Realized gain from futures or swaps ............... 302,883
Change in unrealized appreciation of investments,
options, swaps and futures ...................... (6,637,105)
Change in unrealized depreciation of foreign
denominated assets and liabilities .............. 346
------------
Net realized and unrealized gain on investments,
options, swaps, futures and foreign currency
transactions .................................... 3,455,104
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ...................................... $ 4,057,894
============
See Notes to Financial Statements
10
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 2004 DECEMBER 31,
(UNAUDITED) 2003
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS:
Net investment income ......................... $ 602,790 $ 635,255
Realized gain from security transactions ...... 9,762,563 3,689,879
Realized gain (loss) from foreign
currency transactions ....................... (9,075) 73,204
Realized gain on options ...................... 35,492 --
Realized gain from futures .................... 302,883 378,197
Change in unrealized appreciation of
investments; options, swaps and futures ..... (6,637,105) 38,410,040
Change in unrealized appreciation/depreciation
of foreign denominated assets and liabilities 346 4,437
------------ ------------
Net increase in net assets resulting
from operations ............................. 4,057,894 43,191,012
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Initial Class Shares ........................ (634,060) (515,801)
Class R1 Shares ............................. -- --
------------ ------------
(634,060) (515,801)
------------ ------------
CAPITAL SHARE TRANSACTIONS*:
Proceeds from sales of shares
Initial Class Shares ........................ 43,931,018 279,914,258
Class R1 Shares ............................. 6,470,360 --
------------ ------------
50,401,378 279,914,258
------------ ------------
Reinvestment of dividends
Initial Class Shares ........................ 634,060 515,801
Class R1 Shares ............................. -- --
------------ ------------
634,060 515,801
------------ ------------
Cost of shares reacquired
Initial Class Shares ........................ (57,420,313) (262,399,721)
Class R1 Shares ............................. (729,423) --
Redemption fees ............................. 7,573
------------ ------------
(58,142,163) (262,399,721)
------------ ------------
Increase (decrease) in net assets resulting
from capital share transactions ............. (7,106,725) 18,030,338
------------ ------------
Total increase (decrease) in net assets ....... (3,682,891) 60,705,549
NET ASSETS:
Beginning of period ............................. 158,683,336 97,977,787
------------ ------------
End of period (including undistributed net
investment income of $725,543 and $765,888,
respectively) ................................. $155,000,445 $158,683,336
============ ============
* SHARES OF BENEFICIAL INTEREST ISSUED AND
REACQUIRED (UNLIMITED NUMBER OF $.001 PAR
VALUE SHARES AUTHORIZED) INITIAL CLASS SHARES:
Shares sold ................................... 2,905,748 25,367,899
Reinvestment of dividends ..................... 43,459 50,668
Shares reacquired ............................. (3,871,184) (24,234,768)
------------ ------------
Net increase (decrease) ....................... (921,977) 1,183,799
============ ============
Class R1 Shares:+
Shares sold ................................... 445,487
Shares reacquired ............................. (51,474)
------------
Net increase .................................. 394,013
============
+ Inception date of Class R1 shares May 1, 2004
See Notes to Financial Statements
11
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
INITIAL CLASS SHARES CLASS R1 SHARES
--------------------------------------------------------------------- ---------------
FOR THE PERIOD
SIX MONTHS MAY 1, 2004(d)
ENDED THROUGH
JUNE 30, YEAR ENDED DECEMBER 31, JUNE 30,
2004 -------------------------------------------------------- 2004
(UNAUDITED) 2003 2002 2001 2000 1999 (UNAUDITED)
-------- -------- ------- ------- ------- ------- ------
Net Asset Value, Beginning of Period ..... $ 14.84 $ 10.30 $ 10.69 $ 12.07 $ 10.96 $ 9.20 $14.54
-------- -------- ------- ------- ------- ------- ------
Income from Investment Operations:
Net Investment Income .................. 0.06 0.05 0.08 0.14 0.16 0.15 (0.07)
Net Realized and Unrealized
Gain (Loss) on Investments,
Options, Swaps and Foreign
Currency Transactions ................ 0.40 4.54 (0.38) (1.39) 1.07 1.75 0.78
-------- -------- ------- ------- ------- ------- ------
Total from Investment Operations ......... 0.46 4.59 (0.30) (1.25) 1.23 1.90 0.71
-------- -------- ------- ------- ------- ------- ------
Less Dividends and Distributions:
Dividends from Net Investment Income ... (0.06) (0.05) (0.09) (0.13) (0.12) (0.14) --
-------- -------- ------- ------- ------- ------- ------
Redemption fees ........................ --(c) -- -- -- -- -- --(c)
-------- -------- ------- ------- ------- ------- ------
Net Asset Value, End of Period ........... 15.24 14.84 $ 10.30 $ 10.69 $ 12.07 $ 10.96 $15.25
======== ======== ======= ======= ======= ======= ======
Total Return (a) ......................... 3.12% 44.78% (2.85)% (10.45)% 11.41% 21.00% 4.88%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000) .......... $148,992 $158,683 $97,978 $77,549 $98,728 $98,911 $6,009
Ratio of Gross Expenses to Average
Net Assets ............................. 1.17%(e) 1.23% 1.23% 1.18% 1.16% 1.26% 1.54%(e)
Ratio of Net Expenses to Average
Net Assets ............................. 1.17%(b)(e) 1.23%(b) 1.20%(b) 1.15%(b) 1.14%(b) 1.26% 1.54%(b)(e)
Ratio of Net Investment Income to
Average Net Assets ....................... 0.78%(e) 0.59% 0.68% 1.13% 1.41% 1.39% 0.30%(e)
Portfolio Turnover Rate .................. 32% 43% 63% 86% 110% 199% 32%
- ----------
(a) Total return is calculated assuming an initial investment of $10,000 made at
the net asset value at the beginning of the period, reinvestment of
dividends and distributions at net asset value on the dividend payment date
and a redemption on the last day of the period. The return does not reflect
the deduction of taxes that a shareholder would pay on Fund dividends and
distributions or the redemption of Fund shares.
(b) Excluding interest expense.
(c) Amount represents less than $0.01 per share.
(d) Inception date of Class R1 shares.
(e) Annualized
See Notes to Financial Statements
12
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES--Van Eck Worldwide Insurance Trust (the
"Trust"), organized as a Massachusetts business trust on January 7, 1987, is
registered under the Investment Company Act of 1940, as amended. The Fund offers
two classes of shares: shares that have been continuously offered since the
inception of the Fund, the Initial Class and Class R1 shares that became
available for purchase on May 1, 2004. The two classes are identical except
Class R1 shares are, under certain circumstances subject to a redemption fee on
redemptions within 60 days. The following is a summary of significant accounting
policies consistently followed by the Worldwide Hard Assets Fund (the "Fund"), a
diversified fund of the Trust, in the preparation of its financial statements.
The policies are in conformity with accounting principles generally accepted in
the United States. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that effect the reported amounts in
the financial statements. Actual results could differ from those estimates.
A. SECURITY VALUATION--Securities traded on national exchanges or traded on the
NASDAQ National Market System are valued at the last sales prices reported at
the close of business on the last business day of the period. As of June 23,
2003, the portfolio began pricing securities traded on the NASDAQ stock market
using the NASDAQ official closing price. Over-the-counter securities not
included in the NASDAQ National Market System and listed securities for which no
sale was reported are valued at the mean of the bid and ask prices. Short-term
obligations purchased with more than sixty days remaining to maturity are valued
at market value. Short-term obligations purchased with sixty days or less to
maturity are valued at amortized cost, which with accrued interest approximates
market value. Futures are valued using the closing price reported at the close
of the respective exchange. Forward foreign currency contracts are valued at the
spot currency rate plus an amount ("points"), which reflects the differences in
interest rates between the U.S. and the foreign markets. 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 foreign currency contracts are
translated into U.S. dollars at the mean of the quoted bid and ask prices of
such currencies on the last business day of the year. 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 results from fluctuations in foreign
currency exchange rates is not separately disclosed. Recognized gains or losses
attributable to foreign currency fluctuations on foreign currency denominated
assets, other than investments, and liabilities are recorded as net realized
gains and losses from foreign currency transactions.
D. DIVIDENDS AND DISTRIBUTIONS--Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Dividends on foreign
securities are recorded when the Fund is informed of such dividends.
Income distributions and capital gain distributions are determined in accordance
with income tax regulations, which may differ from such amounts reported in
accordance with accounting principles generally accepted in the United States.
E. OTHER--Security transactions are accounted for on the date the securities are
purchased or sold. Interest income is accrued as earned.
F. USE OF DERIVATIVE INSTRUMENTS
OPTION CONTRACTS--The Fund may invest, for hedging and other purposes, in call
and put options on securities, currencies and commodities. Call and put options
give the Fund the right but not the obligation to buy (calls) or sell (puts) the
instrument underlying the option at a specified price. The premium paid on the
option, should it be exercised, will, on a call, increase the cost of the
instrument acquired and, on a put, reduce the proceeds received from the sale of
the instrument underlying the option. If the options are not exercised, the
premium paid will be recorded as a realized loss upon expiration. The Fund may
incur additional risk to the extent the value of the underlying instrument does
not correlate with the movement of the option value.
The Fund may also write call or put options. As the writer of an option, the
Fund receives a premium. The Fund keeps the premium whether or not the option is
exercised. The premium will be recorded, upon expiration of the option, as a
short-term realized gain. If the option is exercised, the Fund must sell, in the
case of a written call, or buy, in the case of a written put, the underlying
instrument at the exercise price. The Fund may write only covered puts and
calls. A covered call option is an option in which the Fund owns the instrument
underlying the call. A covered call sold by the Fund exposes it during the term
of the option to possible loss of opportunity to realize appreciation in the
market price of the underlying instrument or to possible continued holding of an
underlying instrument which might otherwise have been sold to protect against a
decline in the market price of the underlying instrument. A covered put exposes
the Fund during the term of the option to a decline in price of the underlying
instrument. A put option sold by the Fund is covered when, among other things,
cash or short-term liquid securities are placed in a segregated account to
fulfill the obligations undertaken. The Fund may incur additional risk from
investments in written currency options if there are unanticipated movements in
the underlying currencies.
Transactions in call options written for the year ended June 30, 2004 were as
follows:
13
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
NUMBER OF
CONTRACTS PREMIUMS
--------- --------
Options outstanding at beginning of period ......... 364 $ 35,492
Options written .................................... 280 28,418
Options exercised .................................. (364) (35,492)
-------- --------
Options outstanding at end of period ............... 280 $ 28,418
======== ========
FUTURES CONTRACTS--The Fund may buy and sell financial futures contracts for
hedging purposes. When a fund enters into a futures contract, it must make an
initial deposit ("initial margin") as a partial guarantee of its performance
under the contract. As the value of the futures contract fluctuates, the Fund is
required to make additional margin payments ("variation margin") to cover any
additional obligation it may have under the contract. In the remote chance that
a broker cannot fulfill its obligation, the Fund could lose the variation margin
due to it. Risks may be caused by an imperfect correlation between the movements
in price of the futures contract and the price of the underlying instrument and
interest rates. Realized gains and losses from futures contracts are reported
separately. The Fund had no futures contracts outstanding at June 30, 2004.
STRUCTURED NOTES--The Fund may invest in indexed securities whose value is
linked to one or more currencies, interest rates, commodities or financial
commodity indices. When the Fund purchases a structured note (a non-publicly
traded indexed security entered into directly between two parties) it will make
a payment of principal to the counterparty. The Fund will purchase structured
notes only from counterparties rated A or better by S&P, Moody's or another
nationally recognized statistical rating organization. Van Eck Associates
Corporation will monitor the liquidity of structured notes under the supervision
of the Board of Trustees and structured notes determined to be illiquid will be
aggregated with other illiquid securities limited to 15% of the net assets of
the Fund. Indexed securities may be more volatile than the underlying instrument
itself, and present many of the same risks as investing in futures and options.
Indexed securities are also subject to credit risks associated with the
counterparty of the security with respect to both principal and interest. The
Fund had no outstanding structured notes at June 30, 2004.
NOTE 2--MANAGEMENT AGREEMENT--Van Eck Associates Corporation (the "Adviser")
earns fees for investment management and advisory services provided to the Fund.
This fee is based on an annual rate of 1% of the average daily net assets.
Certain of the officers and trustees of the Trust are officers, directors or
stockholders of the Adviser and Van Eck Securities Corporation. In accordance
with the advisory agreement, the Fund paid the Adviser for costs incurred in
connection with certain administrative functions.
NOTE 3--INVESTMENTS--Purchases and sales of securities other than U.S.
government securities and short-term obligations aggregated $36,858,037 and
$44,603,134, respectively, for the six months ended June 30, 2004.
NOTE 4--INCOME TAXES--For federal income tax purposes, the identified cost of
investments owned at December 31, 2003 was $124,424,797. As of June 30, 2004,
net unrealized appreciation for federal income tax purposes aggregated
$32,232,253 of which $34,963,557 related to appreciated securities and
$2,731,304 related to depreciated securities.
Because federal income tax regulations differ from accounting principals
generally accepted in the United States of America, income and capital gains
distributions determined in accordance with tax regulations may differ from net
investment income and realized gains recognized for finical reporting purposes.
Accordingly, the character of distributions and composition of net assets for
tax purposes differs from those reflected in the accompanying financial
statements.
The Fund intends to retain realized capital gains that may be offset against
available capital loss carryforwards for federal income tax purpose.
At December 31, 2003, the Fund had a capital loss carryforward of $28,702,735
available, $2,317,010 expiring December 31, 2006; $15,975,158 expiring December
31,2007; $1,519,845 expiring December 31,2009 and $8,890,722 expiring December
31,2010.
NOTE 5--CONCENTRATION OF RISK--The Fund may purchase securities on foreign
exchanges. Securities of foreign issuers involve special risks and
considerations not typically associated with investing in U.S. issuers. These
risks include devaluation of currencies, less reliable information about
issuers, different securities transactions clearance and settlement practices,
and future adverse political and economic developments. These risks are
heightened for investments in emerging market countries. Moreover, securities of
many foreign issuers and their markets may be less liquid and their prices more
volatile than those of comparable U.S. issuers.
The Fund may concentrate its investments in companies which are significantly
engaged in the exploration, development, production and distribution of gold and
other natural resources such as strategic and other metals, minerals, forest
products, oil, natural gas and coal and by investing in gold bullion and coins.
Since the Fund may so concentrate, it may be subject to greater risks and market
fluctuations than other more diversified portfolios. The production and
marketing of gold and other natural resources may be affected by actions and
changes in governments. In addition, gold and natural resources may be cyclical
in nature.
The aggregate shareholder accounts of a single insurance company own
approximately 65% of the Initial Class shares and approximately 99% of the Class
R1 shares.
NOTE 6--WARRANTS--The Fund invests in warrants whose values are linked to
indices or underlying instruments. The Fund uses these warrants to gain exposure
to markets that might be difficult to invest in through conventional securities.
Warrants may be more volatile than their linked indices or underlying
instruments. Potential losses are limited to the amount of the original
investment.
NOTE 7--FORWARD FOREIGN CURRENCY CONTRACTS--The Fund may buy and sell forward
foreign currency contracts to settle purchases and sales of foreign denominated
securities. In addition, the Fund may enter into forward foreign currency
contracts to hedge foreign denominated
14
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
assets. Realized gains and losses from forward foreign currency contracts are
included in realized gain (loss) from foreign currency transactions. The Fund
may incur additional risk from investments in forward foreign currency contracts
if the counterparty is unable to fulfill its obligation or there are
unanticipated movements of the foreign currency relative to the U.S. dollar. At
June 30, 2004, the Fund had no outstanding forward foreign currency contracts.
NOTE 8--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 of Trustees. 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 Fund has elected to show the deferred liability net of the asset for
financial statement purposes. As of June 30, 2004, the net value of the assets
and corresponding liability of the Fund's portion of the Plan is $64,539.
NOTE 9--EQUITY SWAP--The Fund may enter into an equity swap to gain investment
exposure to the relevant market of the underlying security. A swap is an
agreement that obligates the parties to exchange cash flows at specified
intervals. The Fund is obligated to pay the counterparty on trade date an amount
based upon the value of the underlying instrument and, at termination date,
final payment is settled based on the value of the underlying security on trade
date versus the value on termination date plus accrued dividends. Risks may
arise as a result of the failure of the counterparty to the contract to comply
with the terms of the swap contract. The Fund bears the risk of loss of the
amount expected to be received under a swap agreement in the event of the
default of the counterparty. Therefore, the Fund considers the credit worthiness
of each counterparty to a swap contract in evaluating potential credit risk.
Additionally, risks may arise from unanticipated movements in the value of the
swap relative to the underlying securities. The Fund records a net receivable or
payable daily, based on the change in the value of the underlying securities.
The net receivable or payable for financial statement purposes is shown as due
to or from broker. At June 30, 2004, the Fund had the following outstanding
equity swap (stated in U.S. dollars):
NUMBER TERMI-
UNDERLYING OF NOTIONAL NATION UNREALIZED
SECURITY SHARES AMOUNT DATE APPRECIATION
- ------------ -------- -------- ------ -----------
Gazprom Oil Co. 680,800 $110,970 Open $1,313,420
NOTE 10--COMMODITY SWAP--The Fund may enter into a commodity swap to gain
investment exposure to the relevant spread of the commodity reference prices. A
swap is an agreement that obligates the parties to exchange cash flows at
specified intervals. At termination date, a final payment is made based on the
swap's notional amount on trade date versus the value on termination date. Risks
may arise as a result of the failure of the counterparty to the contract to
comply with the terms of the swap contract. The Fund bears the risk of loss of
the amount expected to be received under a swap agreement in the event of the
default of the counterparty. Therefore, the Fund considers the credit worthiness
of each counterparty to a swap contract in evaluating potential credit risk.
Additionally, risks may arise from unanticipated movements in the value of the
swap relative to the underlying reference prices. The Fund records a net
receivable or payable daily, based on the change in the value of the swap. The
net receivable or payable for financial statement purposes is shown as due to or
from broker. At June 30, 2004, the Fund has no outstanding commodity swaps.
NOTE 11--BANK LINE OF CREDIT--The Trust may participate with other funds managed
by the Adviser (the "Van Eck Funds") in a $45 million committed credit facility
("Facility") to be utilized for temporary financing until the settlement of
sales or purchases of portfolio securities, the repurchase or redemption of
shares of the Van Eck Funds, including the Fund, at the request of the
shareholders and other temporary or emergency purposes. In connection therewith,
the Van Eck Funds have agreed to pay commitment fees, pro rata, based on the
unused but available balance. Interest is charged to the Van Eck Funds at rates
based on prevailing market rates in effect at the time of borrowings. For the
six months ended June 30, 2004, the Fund borrowed an average daily amount of
$446,691 at a weighted average interest rate of 1.65% under the Facility. At
June 30, 2004, there were no outstanding borrowings under the Facility.
NOTE 12--REPURCHASE AGREEMENT--Collateral for the repurchase agreement, in the
form of U.S. government obligations, 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 fluctuations on the collateral.
NOTE 13--REGULATORY MATTERS--In connection with their investigations of
practices identified as "market timing" and "late trading" of mutual fund
shares, the Office of the New York State Attorney General and the United States
Securities and Exchange Commission have requested and received information from
the Adviser. The investigations are ongoing. At the present time, the Adviser is
unable to estimate the impact, if any, that the outcome of these investigations
may have on the Fund's results of operations or financial condition.
The Adviser has received a so-called "Wells Notice" from the Securities and
Exchange Commission ("SEC") in connection with the SEC's investigation of
market-timing activities in the securities industry as described in the Funds'
prospectus and prospectus supplements. This Wells Notice informed the Adviser
that the SEC staff is considering recommending that the SEC bring a civil or
administrative action alleging violations of U.S. securities laws against the
Adviser and two of its senior officers. Under SEC procedures, the Adviser has an
opportunity to respond to the SEC staff before the staff makes a formal
recommendation. The Adviser is currently considering whether to provide such a
response, while continuing to cooperate fully with the SEC investigation.
Costs associated with the investigations have been and will continue to be paid
by the Adviser.
15
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
Investment Adviser: Van Eck Associates Corporation
Distributor: Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016 www.vaneck.com
This report must be preceded or accompanied by a Van Eck Worldwide Insurance
Trust Prospectus, which includes more complete information, such as charges and
expenses and the risks associated with international investing, including
currency fluctuation or controls, expropriation, nationalization and
confiscatory taxation. Investors should consider the investment objectives,
risks and charges and expenses of the Fund. Please read the prospectus carefully
before you invest. Additional information about the Fund's Board of
Trustees/Officers and a description of the policies and procedures the Fund uses
to determine how to vote proxies relating to portfolio securities are provided
in the Statement of Additional Information. The Statement of Additional
Information and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12 month period ending June 30 is
available, without charge, by calling 1-800-826-2333, or by visiting
www.vaneck.com, or on the Securities and Exchange Commission's website at
http://www.sec.gov.
Item 2. Code of Ethics
Not applicable
Item 3. Audit Committee Financial Expert
Not applicable
Item 4. Principal Accountant Fees and Services
Not applicable
Item 5. Audit Committee of Listed Registrants
Not applicable
Item 6. Schedule of Investments
Not applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End
Management Investment Companies
Not applicable
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Companies and Affiliated Purchases
Not applicable
Item 9. Submission of Matters to a Vote of Security Holders
Not applicable
Item 10. Controls and Procedures.
(a) The Chief Executive Officer and the Chief Financial Officer have concluded
that the Worldwide Hard Assets Fund disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act) provide
reasonable assurances that material information relating to the Worldwide
Hard Assets Fund is made known to them by the appropriate persons, based on
their evaluation of these controls and procedures as of a date within 90
days of the filing date of this report.
(b) For the period ending June 30, 2004, the Chief Executive Officer and the
Chief Financial Officer are aware of no significant changes in the
registrant's internal controls over financial reporting that has materially
affected or is reasonably likely to materially affect internal controls
over financial reporting.
Item 11. Exhibits.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Act (17 CFR 270.30a-2) is attached as Exhibit 99.CERT.
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is
furnished as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) WORLDWIDE INSURANCE TRUST - WORLDWIDE HARD ASSETS FUND
By (Signature and Title) /s/ Bruce J. Smith, VP & Treasurer
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Date August 27, 2004
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Keith J. Carlson, CEO
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Date August 27, 2004
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By (Signature and Title) /s/ Bruce J. Smith, CFO
---------------------------
Date August 27, 2004
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