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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 ABSOLUTE RETURN 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
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Worldwide Insurance Trust
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 2004
WORLDWIDE ABSOLUTE RETURN 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 ABSOLUTE RETURN FUND
- --------------------------------------------------------------------------------
Dear Shareholder:
The Van Eck Worldwide Absolute Return Fund produced a total return of -1.31% for
the six months ended June 30, 2004. In comparison, the Fund's benchmark, the
Citigroup Three-Month U.S. Treasury Bill Index,* returned 0.47% for the same
period.
FUND REVIEW
Using a "multi-manager" investment approach, Van Eck Associates Corporation has
qualified eight sub-advisers to manage the Fund's assets and remains in the
process of adding managers. As of June 30, 2004, assets were allocated to two of
our eight qualified sub-advisers, Coda Capital and Analytic Investors.
As it has done since it began managing a portion of the Fund's assets in July
2003, Coda Capital continued to seek to identify and capitalize on opportunities
in the market for convertible securities. The improvement in credit spreads
drove the majority of returns during the first half of 2004, with the primary
beneficiary being the high-yield convertible universe. Coda and other managers
who focus on higher-quality investment grade convertibles faced some headwinds
during the first half of the year, as interest rates rose, equity markets
produced lackluster returns, and fixed income spreads were historically tight.
Convertibles are correlated to the equity market. As such, rising interest rates
are not necessarily a negative for the convertibles market, because higher
interest rates often mean a robust economy, a positive equity market, and an
increase in implied volatility. Higher volatility usually means greater call
option premiums. During the semi-annual period ended June 30, however, equity
market volatility was at an eight-year low.
Analytic Investors has been managing a portion of Fund assets since early
September 2003. During the semi-annual period, Analytic stayed true to its
long/short equity market-neutral strategy. Analytic's process is based on the
fundamental belief that there are persistencies in the types of stock
characteristics investors prefer, and it believes that portfolios that reflect
these biases will add value in the long run. However, in what we believe to be
an exception to the norm, investor preferences shifted rather frequently during
the semi-annual period. Analytic emphasized quality companies during the first
half of 2004, such as those with higher-than-average return-on-equity and
return-on-assets ratios, strong profit margins, and positive earnings estimate
revisions. Investors generally favored these quality stocks during the six-month
period. Also, Analytic overweighted companies with strong sales and cash flow
relative to price, which produced mixed results for the Fund. Finally, Analytic
overweighted companies with higher-than-average debt-to-equity ratios, which
detracted from the portfolio's relative performance, as investors began
anticipating the negative effect of rising interest rates on highly leveraged
companies.
As the Fund grows, we expect to further diversify Fund assets among the
sub-advisers and to include more directional/tactical strategies as appropriate.
We are also investigating hedge fund index products to access a larger number of
strategies and managers.
ECONOMIC AND MARKET REVIEW
The general global economy and financial markets served as a backdrop to the
sub-advisers' efforts to exploit pricing disparities, market inefficiencies,
anticipated securities price movements, and/or cyclical relationships. During
the period, macroeconomic conditions and geopolitical concerns produced a
particularly challenging environment for absolute return managers.
In the U.S., business investment increased, especially in equipment and software
spending, during the first quarter of 2004. Inflation remained low. Industrial
production rose, propelled by recession-streamlined businesses increasing
purchases to meet rising demand. Retail sales, excluding autos, remained
healthy. However, consumer confidence suffered as employment remained slow to
pick up, presidential campaign rhetoric heightened, energy prices soared, and
concerns over terrorist attacks grew. The macroeconomic picture remained
generally positive during the second quarter. First quarter Gross Domestic
Product (GDP) growth came in at a healthy 4.5% annualized rate. Both the
manufacturing and services side of the
1
WORLDWIDE ABSOLUTE RETURN FUND
- --------------------------------------------------------------------------------
economy continued to grow and U.S. job growth finally saw a jump. On the other
hand, concerns over inflation, potential interest rate increases, and the
end-of-June turnover of government control from the U.S. to Iraq dominated the
financial markets. After much anticipation, the Federal Reserve Board raised the
targeted federal funds rate on June 30, 2004 by a quarter-percentage point, to
1.25%, stating that its monetary policy remained accommodative, even after this
action.
For the six months ended June 30, 2004, all broadly watched U.S. equity indices
provided positive but modest single-digit returns. The international equity
markets overall performed in line with the U.S. equity markets, as international
economies embraced the signs of improvement shown in the U.S. economy. The
international equity markets were also bolstered by the weakness of the U.S.
dollar.
Overall, on a duration-adjusted basis, the non-Treasury sectors of the fixed
income market outperformed U.S. Treasury securities for the six months ended
June 30, 2004. U.S. Treasury yields stayed in a relatively tight range until the
beginning of March 2004. In early March, fixed income investors grew concerned
over disappointing employment reports and questioned the sustainability of the
economic recovery. In response, the Treasury market rallied. Then, the March
employment report showed that non-farm payrolls increased by 353,000 and made
upward revisions for the two prior months. This, along with an unexpectedly high
reading on the Consumer Price Index (CPI), contributed to bond yields rising
sharply in April and May. In June, U.S. Treasury yields stayed in a relatively
tight range, increasing modestly at the shorter end of the yield curve and
declining slightly at the longer end of the yield curve.
Please note that the Fund employs aggressive investment strategies and
techniques and concentrates its investments such that each may be considered
risky, and may not be suitable for all investors. Under normal market
conditions, there will be at least three sub-advisers and from time to time
there may be as few as one. There can be no assurances that these strategies
will achieve the Fund's objectives since the Fund will employ investment
strategies and techniques that may be considered risky and are based upon
historic assumptions and relationships that may be disrupted, or fail to
materialize. Although these strategies and techniques have historically had no
or low correlation to major world indices, events may occur which may cause them
to become correlated. During these times, certain of the Fund's strategies may
cease to function as anticipated. Please refer to the Fund's prospectus for a
discussion on these and other risks.
Thank you for your investment in the Van Eck Worldwide Absolute Return Fund. We
look forward to helping you meet your investment goals.
[PHOTO OMITTED] [PHOTO OMITTED] [PHOTO OMITTED]
DAVID A. SEMPLE SAMUEL R. HALPERT JAN F. VAN ECK
MANAGEMENT TEAM MEMBER MANAGEMENT TEAM MEMBER MANAGEMENT TEAM MEMBER
2
WORLDWIDE ABSOLUTE RETURN FUND
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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 Adviser is currently waiving certain or all expenses on the Fund. Had the
Fund incurred all expenses, investment returns would have been reduced.
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, 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.
*The Citigroup Three-Month U.S. Treasury Bill Index measures monthly return
equivalents of yield averages that are not marked to the market. The Index
represents an average of the last three three-month Treasury Bill issues, and
returns are calculated on a monthly basis.
3
WORLDWIDE ABSOLUTE RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
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NO. OF VALUE
SECTOR SHARES SECURITIES (A) (NOTE 1)
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COMMON STOCKS
BASIC INDUSTRY: 5.3%
105 Ball Corp. $ 7,565
225 Crane Co. 7,063
1,992 Dow Chemical Co. 81,074
1,066 Georgia Pacific Corp. 39,421
1,135 Hercules, Inc. 13,836
371 International Paper Co. 16,584
349 Louisiana Pacific Corp. 8,254
1,719 Pactiv Corp. 42,872
281 Phelps Dodge Corp. 21,780
577 PPG Industries, Inc. 36,057
354 Weyerhaeuser Co. 22,344
------------
296,850
------------
CAPITAL GOODS: 3.2%
272 Ashland, Inc. 14,364
364 Caterpillar, Inc. 28,916
454 Centex Corp. 20,771
91 Deere & Co. 6,383
774 Eaton Corp. 50,109
404 General Dynamics Corp. 40,117
513 Goodrich Corp. 16,585
------------
177,245
------------
CONGLOMERATES: 0.9%
266 Fortune Brands, Inc. 20,064
773 Raytheon Co. 27,650
------------
47,714
------------
CONSUMER CYCLICAL: 2.2%
1,740 Ford Motor Co. 27,231
649 Genuine Parts Co. 25,752
582 Hasbro, Inc. 11,058
1,701 Reebok International Ltd. 61,202
------------
125,243
------------
CONSUMER NON-CYCLICAL: 1.6%
587 Altria Group, Inc. 29,379
2,021 Archer-Daniels-Midland Co. 33,912
511 Deluxe Corp. 22,229
234 Sara Lee Corp. 5,380
----------
90,900
----------
ENERGY: 5.6%
884 Baker Hughes, Inc. 33,283
691 BJ Services Co. 31,675
213 Chevron Texaco Corp. 20,045
189 ConocoPhillips 14,419
355 EOG Resources, Inc. 21,197
873 Exxon Mobil Corp. 38,770
574 Noble Corp. 21,749
192 Occidental Petroleum Corp. 9,295
1,248 Sunoco, Inc. 79,398
568 Valero Energy Corp. 41,896
------------
311,727
------------
FINANCE: 7.9%
462 Ace, Ltd. 19,533
50 Aetna, Inc. 4,250
119 Bank of America Corp. 10,070
44 Capital One Financial Corp. 3,009
195 Countrywide Financial Corp. 13,699
1,281 Federated Investors, Inc. (Class B) 38,866
1,369 First Horizon National Corp. 62,248
710 Hartford Financial
Services Group, Inc. 48,805
2,776 Humana, Inc. 46,914
786 MGIC Investment Corp. 59,626
71 PNC Financial Corp. 3,769
1,550 U.S. Bancorp 42,718
1,945 Wachovia Corp. 86,553
------------
440,060
------------
HEALTHCARE: 2.6%
59 Baxter International, Inc. 2,036
388 Becton Dickinson & Co. 20,098
256 C.R. Bard, Inc. 14,502
438 Forest Laboratories, Inc. 24,804
80 Johnson & Johnson 4,456
378 Merck & Co., Inc. 17,955
1,347 Mylan Laboratories, Inc. 27,277
570 Watson Pharmaceuticals, Inc. 15,333
488 Wyeth 17,646
------------
144,107
------------
SERVICES: 10.1%
1,594 Allied Waste Industries, Inc. 21,009
375 Autonation, Inc. 6,413
980 Autozone, Inc. 78,498
1,329 Cendant Corp. 32,534
159 CenturyTel, Inc. 4,776
2,221 Citizens Communications Co. 26,874
114 Clear Channel Communications, Inc. 4,212
161 Computer Sciences Corp. 7,475
848 Darden Restaurants, Inc. 17,426
1,004 Equifax, Inc. 24,849
498 H&R Block, Inc. 23,745
585 Hilton Hotels Corp. 10,916
278 Home Depot, Inc., The 9,786
42 Lowe's Cos., Inc. 2,207
173 Moody's Corp. 11,186
1,291 Nextel Communications, Inc.
(Class A) 34,418
738 Office Depot, Inc. 13,218
593 R.R. Donnelley & Sons Co. 19,581
563 Sears, Roebuck and Co. 21,259
785 Sherwin-Williams Co. 32,617
See Notes to Financial Statements
4
WORLDWIDE ABSOLUTE RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
NO. OF VALUE
SECTOR SHARES SECURITIES (A) (NOTE 1)
- --------------------------------------------------------------------------------
SERVICES: (CONTINUED)
1,644 Supervalu, Inc. $ 50,323
3,838 Walt Disney Co., The 97,831
2,158 Winn-Dixie Stores, Inc. 15,538
------------
566,691
------------
TECHNOLOGY: 8.8%
83 Adobe Systems, Inc. 3,860
3,436 Advanced Micro Devices, Inc. 54,632
99 Affiliated Computer
Services, Inc. (Class A) 5,241
967 Agilent Technologies, Inc. 28,314
853 Altera Corp. 18,954
1,604 Applera Corp. 34,887
300 Citrix Systems, Inc. 6,108
486 Convergys Corp. 7,484
570 Dell, Inc. 20,417
199 Electronic Arts, Inc. 10,855
173 Fiserv, Inc. 6,728
809 IMS Health, Inc. 18,963
448 Intel Corp. 12,365
216 Lexmark International, Inc.
(Class A) 20,850
3,504 Lucent Technologies, Inc. 13,245
2,996 Micron Technology, Inc. 45,869
139 Millipore Corp. 7,835
401 Molex, Inc. 12,864
147 Motorola, Inc. 2,683
2,034 National Semiconductor Corp. 44,728
2,812 Sanmina-SCI Corp. 25,589
274 Scientific-Atlanta, Inc. 9,453
665 Solectron Corp. 4,303
1,498 Sungard Data Systems, Inc. 38,948
1,796 Unisys Corp. 24,928
296 Xilinx, Inc. 9,860
------------
489,963
------------
TRANSPORTATION: 1.0%
235 Burlington Northern Santa Fe Corp. 8,241
1,837 Norfolk Southern Corp. 48,717
------------
56,958
------------
UTILITIES: 4.9%
485 American Electric Power Co., Inc. 15,520
3,050 Centerpoint Energy, Inc. 35,075
2,084 CMS Energy Corp. 19,027
3,148 Edison International 80,494
721 Nisource, Inc. 14,867
2,520 Southern Co. 73,458
924 TXU Corp. 37,431
------------
275,872
------------
TOTAL COMMON STOCKS: 54.1%
(Cost: $2,838,811)(b)
3,023,330
------------
CONVERTIBLE PREFERRED STOCKS
1,800 McKesson Financing Trust 94,050
1,900 Sovereign Capital Trust 90,250
1,900 Unocal Capital Trust 98,800
------------
TOTAL CONVERTIBLE PREFERRED STOCK: 5.0%
(Cost: $282,567)(b) 283,100
------------
NON-CONVERTIBLE PREFERRED STOCKS
1,500 Reinsurance Group 89,063
------------
TOTAL NON-CONVERTIBLE PREFERRED STOCK: 1.6%
(Cost: $82,600)(b) 89,063
------------
CONVERTIBLE NOTES
BASIC MATERIALS: 1.7%
90,000 Sealed Air Corp. 3.00%
6/30/33 (144A) 92,363
------------
CAPITAL GOODS: 1.9%
100,000 Regal Beloit Corp. 2.75%
3/15/24 (144A) 108,000
------------
CONGLOMERATES: 1.8%
100,000 Leucadia National Corp.
3.75% 4/15/14 (144A) 99,250
------------
ENERGY: 3.4%
90,000 Halliburton 3.125%
7/15/23 (144A) 96,750
90,000 Pride International, Inc.
3.25% 5/01/33 (144A) 90,675
------------
187,425
------------
FINANCE: 6.7%
90,000 Bankunited Capital Trust
3.125% 3/01/34 (144A) 86,063
100,000 Ohio Casualty 5.00% 3/19/22 105,750
80,000 ProAssurance Corp.
3.90% 6/30/23 (144A) 88,500
95,000 Radian Group, Inc.
2.25% 1/01/22 97,138
------------
377,451
------------
HEALTHCARE: 3.8%
90,000 Amerisource-Bergen Corp.
5.00% 12/01/07 106,425
100,000 Lifepoint Hospitals, Inc.
4.50% 6/01/09 103,875
------------
210,300
------------
See Notes to Financial Statements
5
WORLDWIDE ABSOLUTE RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
NO. OF
SHARES/
PRINCIPAL VALUE
SECTOR AMOUNT SECURITIES (A) (NOTE 1)
- --------------------------------------------------------------------------------
SERVICES: 5.1%
90,000 Cendant Corp. 3.875%
11/27/11 $ 97,538
80,000 CenturyTel, Inc. 4.75%
8/01/32 (Series K) 88,900
90,000 Walt Disney Co., The 2.125%
4/15/23 96,975
------------
283,413
------------
TECHNOLOGY: 1.7%
100,000 EDS 3.875% 7/15/23 (144A) 96,500
------------
TRANSPORTATION: 1.7%
85,000 Yellow Roadway Corp.
3.375% 11/25/23 (144A) 99,554
------------
TOTAL CONVERTIBLE NOTES: 27.8%
(Cost: $1,556,216)(b) 1,554,256
------------
TOTAL INVESTMENTS: 88.5%
(Cost: $4,760,194) 4,949,749
OTHER ASSETS LESS LIABILITIES: 11.5% 643,513
------------
NET ASSETS: 100% $ 5,593,262
============
SECURITIES SOLD SHORT
BASIC MATERIALS: (4.5)%
(651) Allegheny Technologies, Inc. (11,751)
(701) Avery Dennison Co. (44,871)
(65) Bemis Co. (1,836)
(143) Great Lakes Chemical Corp. (3,870)
(1,999) Monsanto Co. (76,962)
(441) Nucor Corp. (33,851)
(1,447) Sealed Air Corp. (77,082)
------------
(250,223)
------------
CAPITAL GOODS: (1.8)%
(622) Boeing Co. (31,778)
(139) Cummins Engine Co. (8,688)
(2,700) Regal Beloit Corp. (60,102)
------------
(100,568)
------------
CONGLOMERATE: (1.6)%
(465) General Electric Co. (15,066)
(215) Textron, Inc. (12,760)
(702) United Technologies Corp. (64,219)
------------
(92,045)
------------
CONSUMER CYCLICAL: (2.8)%
(809) Cooper Tire & Rubber Co. (18,607)
(946) Dana Corp. (18,542)
(338) Goodyear Tire & Rubber Co. (3,072)
(623) Jones Apparel Group, Inc. (24,596)
(2,201) Leggett & Platt, Inc. (58,789)
(463) Nike, Inc. (35,072)
------------
(158,678)
------------
CONSUMER NON-CYCLICAL: (4.7)%
(60) Brown Forman Distillers Corp. (2,896)
(44) Coors Co., Adolph (3,183)
(1,375) Ecolab, Inc. (43,588)
(1,699) General Mills, Inc. (80,753)
(500) McKesson Corp. (17,165)
(632) Newell Rubbermaid, Inc. (14,852)
(770) R.J. Reynolds Tobacco Holdings, Inc. (52,044)
(884) Proctor & Gamble Co. (48,125)
------------
(262,606)
------------
ENERGY: (4.8)%
(1,092) Devon Energy Corp. (72,072)
(1,100) Halliburton Co. (33,286)
(1,500) Pride International, Inc. (25,665)
(1,401) Rowan Companies, Inc. (34,086)
(925) Schlumberger Ltd. (58,747)
(402) Transocean, Inc. (11,634)
(800) Unocal Corp. (30,400)
------------
(265,890)
------------
FINANCIAL: (11.3)%
(997) Ambac Financial Group Ltd. (73,220)
(590) American International Group, Inc. (42,055)
(337) Anthem, Inc. (30,182)
(1,500) BankUnited Financial Corp. (38,700)
(1,801) Charles Schwab Co. (17,308)
(460) Chubb Corp. (31,363)
(155) Cincinnati Financial Corp. (6,746)
(1,027) Fifth Third Bancorp (55,232)
(199) Golden West Financial Corp. (21,164)
(3,456) Janus Capital Group (56,989)
(41) Jefferson-Pilot Corp. (2,083)
(189) Loews Corp. (11,332)
(240) Marsh & McLennan Co., Inc. (10,891)
(771) Mellon Financial Corp. (22,613)
(291) Metlife, Inc. (10,432)
(1,392) Northern Trust Corp. (58,854)
(1,500) Ohio Casualty Corp. (30,195)
(1,100) ProAssurance Corp. (37,521)
(400) Radian Group, Inc. (19,160)
(800) Reinsurance Group of America, Inc. (32,520)
(1,000) Sovereign Bancorp, Inc. (22,100)
(35) Zions Bancorp (2,152)
------------
(632,812)
------------
See Notes to Financial Statements
6
WORLDWIDE ABSOLUTE RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
NO. OF VALUE
SECTOR SHARES SECURITIES (A) (NOTE 1)
- --------------------------------------------------------------------------------
HEALTHCARE: (5.3)%
(702) Allergan, Inc. $ (62,843)
(900) AmerisourceBergen Corp (53,802)
(462) Amgen, Inc. (25,211)
(631) Biogen Idec, Inc. (39,911)
(308) Boston Scientific Corp. (13,182)
(42) Chiron Corp. (1,875)
(191) Genzyme Corp. (9,040)
(429) HCA, Inc. (17,842)
(800) Lifepoint Hospitals, Inc. (29,776)
(1,090) Medimmune, Inc. (25,506)
(236) Schering-Plough Corp. (4,361)
(152) St. Jude Medical, Inc. (11,499)
------------
(294,848)
------------
SERVICES: (12.3)%
(3,595) AT&T Corp. (52,595)
(159) Alltel Corp. (8,049)
(271) Bed Bath & Beyond, Inc. (10,420)
(1,200) Cendant Corp. (29,376)
(700) Centurytel, Inc. (21,028)
(205) Cintas Corp. (9,772)
(1,083) Circuit City Stores, Inc. (14,025)
(58) Costco Wholesale Corp. (2,382)
(458) CVS Corp. (19,245)
(398) Ebay, Inc. (36,596)
(1,295) Equity Residential Properties Trust (38,500)
(221) Express Scripts, Inc. (17,510)
(590) Interpublic Group of Companies, Inc. (8,101)
(513) Knight Ridder, Inc. (36,936)
(855) Kohl's Corp. (36,149)
(173) Marriot International, Inc. (8,629)
(322) Monster Worldwide, Inc. (8,282)
(1,111) Robert Half International, Inc. (33,074)
(1,157) Safeway, Inc. (29,318)
(1,529) Staples, Inc. (44,815)
(1,057) Starbucks Corp. (45,958)
(57) Tiffany & Co. (2,100)
(225) Tribune Co. (10,247)
(706) Verizon Communications, Inc. (25,550)
(1,951) Viacom, Inc. (Class B) (69,690)
(960) Walgreen Co. (34,762)
(29) Wal-Mart Stores, Inc. (1,530)
(1,300) Walt Disney Co., The (33,137)
------------
(687,776)
------------
TECHNOLOGY: (8.2)%
(2,780) ADC Telecommunications, Inc. (7,895)
(345) American Power Conversion Corp. (6,779)
(951) Applied Micro Circuits Corp. (5,059)
(1,012) Broadcom Corp. (47,331)
(2,470) Ciena Corp. (9,188)
(1,006) Comverse Technology, Inc. (20,060)
(309) Corning, Inc. (4,036)
(1,000) Electronic Data Systems Corp. (19,150)
(1,243) First Data Corp. (55,338)
(1,277) JDS Uniphase Corp. (4,840)
(946) Mercury Interactive Corp. (47,139)
(1,641) Novell, Inc. (13,768)
(1,721) Pall Corp. (45,073)
(1,138) Perkinelmer, Inc. (22,806)
(1,410) PMC-Sierra, Inc. (20,234)
(1,214) Power-One, Inc. (13,330)
(429) QLogic Corp. (11,407)
(429) Qualcomm, Inc. (31,308)
(551) Siebel Systems, Inc. (5,885)
(2,480) Sun Microsystems, Inc. (10,763)
(2,593) Teradyne, Inc. (58,861)
------------
(460,250)
------------
TRANSPORTATION: (2.4)%
(858) Fedex Corp. (70,090)
(1,232) Southwest Airlines, Inc. (20,661)
(1,100) Yellow Roadway Corp. (43,846)
------------
(134,597)
------------
UTILITIES: (5.9)%
(1,323) Allegheny Energy, Inc. (20,387)
(1,129) Ameren Corp. (48,502)
(78) Dominion Resources, Inc. (4,920)
(370) DTE Energy Co. (15,000)
(532) Duke Energy Corp. (10,794)
(3,203) El Paso Corp. (25,240)
(744) FPL Group, Inc. (47,579)
(405) Keyspan Corp. (14,864)
(1,407) Kinder Morgan, Inc. (83,421)
(475) Peoples Energy Corp. (20,021)
(520) Pinnacle West Capital Corp. (21,003)
(678) Teco Energy, Inc. (8,129)
(913) Williams Companies, Inc., The (10,863)
------------
(330,723)
------------
TOTAL SECURITIES SOLD SHORT: (65.6)%
(Proceeds: $3,458,399) $(3,671,016)
------------
- ----------
(a) Unless otherwise indicated, securities owned are shares of common stock.
(b) Securities segregated for Securities Sold Short with a market value of
$4,949,749
See Notes to Financial Statements
7
WORLDWIDE ABSOLUTE RETURN FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
ASSETS:
Investments at value (cost: $4,760,194) (Note 1) ................. $ 4,949,749
Cash ............................................................. 838,776
Receivables:
Securities sold short ........................................ 3,458,399
Securities sold .............................................. 29,459
Capital shares sold .......................................... 19,113
Dividends and interest ....................................... 15,892
Prepaid expense .................................................. 4,309
-----------
Total assets ................................................. 9,315,697
===========
LIABILITIES:
Payables:
Securities sold short (Proceeds $3,458,399) .................. 3,671,016
Dividends payable on securities sold short ................... 5,149
Securities purchased ......................................... 14,750
Due to adviser ............................................... 6,465
Accounts payable ............................................. 25,055
-----------
Total liabilities ............................................ 3,722,435
-----------
Net assets ....................................................... $ 5,593,262
===========
Shares outstanding ............................................... 574,331
===========
Net asset value, redemption price and offering price per share ... $ 9.74
===========
Net assets consist of:
Aggregate paid in capital .................................... 5,676,209
Unrealized deppreciation of investments ...................... (23,062)
Undistributed net investment loss ............................ (59,030)
Accumulated realized loss .................................... (855)
-----------
$ 5,593,262
===========
See Notes to Financial Statements
8
WORLDWIDE ABSOLUTE RETURN FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED)
INCOME: (NOTE 1)
Dividends ........................................... $ 34,905
Interest ............................................ 998
---------
35,903
---------
EXPENSES:
Management (Note 2) ................................. $ 67,816
Administration (Note 2) ............................. 645
Dividends on securities sold short .................. 26,988
Professional ........................................ 18,120
Reports to shareholders ............................. 10,380
Transfer agency ..................................... 5,973
Custodian ........................................... 1,195
Trustees' fees and expenses ......................... 456
Other ............................................... 2,108
---------
Total expenses ...................................... 133,681
Expenses assumed by Adviser (Note 2) ................ (38,877)
---------
Net expense ......................................... 94,804
---------
Net investment loss ................................. (58,901)
---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 3):
Realized gain from security transactions ............ 291,574
Realized loss from short sales ...................... (276,082)
Change in unrealized appreciation of investments .... (31,961)
---------
Net realized and unrealized loss on investments ..... (16,469)
---------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................... $ (75,370)
=========
See Notes to Financial Statements
9
WORLDWIDE ABSOLUTE RETURN FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS FOR THE PERIOD
ENDED MAY 1, 2003+
JUNE 30, 2004 TO DECEMBER 31,
(UNAUDITED) 2003
------------- --------------
INCREASE IN NET ASSETS FROM:
OPERATIONS:
Net investment loss ......................... $ (58,901) $ (15,114)
Realized gain from security transactions .... 15,492 78,710
Change in unrealized appreciation
of investments ............................ (31,961) 8,899
----------- -----------
Net increase (decrease) in net assets
resulting from operations ................. (75,370) 72,495
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net realized gains .......................... (80,072) --
----------- -----------
CAPITAL SHARE TRANSACTIONS*:
Proceeds from sales of shares ............... 627,165 8,084,221
Reinvestment of distributions ............... 80,072 --
Cost of shares reacquired ................... (880,699) (2,234,550)
----------- -----------
Net increase (decrease) in net assets
resulting from capital transactions ........ (173,462) 5,849,671
----------- -----------
Total increase (decrease) in net assets ..... (328,904) 5,922,166
NET ASSETS:
Beginning of period ......................... 5,922,166 --
----------- -----------
End of period (including undistributed
net investment loss of $59,030 and
$129 respectively) ........................ $ 5,593,262 $ 5,922,166
=========== ===========
*SHARES OF BENEFICIAL INTEREST ISSUED
AND REDEEMED (UNLIMITED NUMBER OF
$.001 PAR VALUE SHARES AUTHORIZED)
Shares sold ................................. 63,512 816,469
Reinvestment of distributions ............... 8,154 --
Shares reacquired ........................... (88,333) (225,471)
----------- -----------
Net increase (decrease) ..................... (16,667) 590,998
=========== ===========
- ----------
+ Inception date.
See Notes to Financial Statements
10
WORLDWIDE ABSOLUTE RETURN FUND
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
SIX MONTHS
ENDED
JUNE 30, 2004
(UNAUDITED)
-----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Investments loss: ............................................ $ (58,901)
Adjustments to reconcile net investment loss to net cash
used in operating activities:
Decrease in investments at value ............................. 194,189
Increase in receivable for securities sold short ............. (227,511)
Increase in securities sold .................................. (5,626)
Increase in capital shares sold .............................. (19,113)
Increase in dividends and interest receivable ................ (2,180)
Decrease in due from adviser ................................. 25,894
Increase in prepaid expense .................................. (2,249)
Increase in securities sold short ............................ 159,063
Increase in securities purchased ............................. 13,159
Decrease in capital shares redeemed .......................... (49)
Decrease in dividends payable on securities sold short ....... (95,808)
Increase in accrued expenses ................................. 8,091
Increase in due to adviser ................................... 6,465
Unrealized appreciation of investments ....................... (31,961)
Net realized gain from investments ........................... 15,492
-----------
Net cash used in operating activities ............................ (21,045)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash distributions paid .......................................... (80,072)
Proceeds from sales of shares .................................... 707,236
Cost of shares reacquired ........................................ (880,699)
-----------
Net cash provided by financing activities ........................ (253,535)
-----------
Net decrease in cash ............................................. (274,580)
Cash, beginning of period ........................................ 1,113,356
-----------
Cash, end of period .............................................. 838,776
===========
Supplemental disclosure of cash flow information:
Short sale dividends paid during period .................... $ 28,473
===========
See Notes to Financial Statements
11
WORLDWIDE ABSOLUTE RETURN FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
SIX MONTHS MAY 1, 2003(A)
ENDED TO
JUNE 30, 2004 DECEMBER 31,
(UNAUDITED) 2003
------------- ------------
Net Asset Value, Beginning of Period ................ $ 10.02 $ 10.00
--------- ---------
Income From Investment Operations:
Net Investment Loss ............................... (0.10) (0.03)
Net Realized and Unrealized
Gain (Loss) on Investments ...................... (0.03) 0.05
--------- ---------
(0.13) 0.02
--------- ---------
Less Dividends and Distributions
Distributions from Realized Captial Gains ......... (0.15) --
--------- ---------
Net Asset Value, End of Period ...................... $ 9.74 $ 10.02
========= =========
Total Return (b) .................................... (1.31)% 0.20%
================================================================================
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000) ..................... $ 5,593 $ 5,922
Ratio of Gross Expenses to Average Net Assets (c) ... 4.93% 7.06%
Ratio of Net Expenses to Average Net
Assets (c)(e) ..................................... 2.50% 2.23%
Ratio of Net Investment Income to Average
Net Assets (c)(d) ................................. (2.17)% (0.57)%
Portfolio Turnover Rate ............................. 73% 63%
- ----------
(a) Commencement of operations
(b) 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.
(c) Annualized
(d) Net effect of expenses reimbursement by Adviser to average net assets was
1.43% and 3.97%, respectively.
(e) Net of short sale dividend expense
See Notes to Financial Statements
12
WORLDWIDE ABSOLUTE RETURN 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 following
is a summary of significant accounting policies consistently followed by the
Worldwide Absolute Return Fund (the "Fund"), a non-diversified series 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 affect the reported amounts in the financial statements.
Actual results could differ from those estimates.
A. SECURITY VALUATION--Securities traded on national exchanges or 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 including
short sales 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. Short-term obligations purchased with sixty days or less
to maturity are valued at amortized cost, which with accrued interest
approximates value. Futures contracts 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. DIVIDEND AND DISTRIBUTIONS--Dividend income and distributions to shareholders
are recorded on the ex-dividend date.
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.
D. SECURITIES SOLD SHORT--A short sale involves selling a security, which the
Fund does not own. The proceeds received for the short sales are recorded as
liabilities and the Fund records an unrealized gain or loss to the extent of the
difference between the proceeds received and the value of the open short
position on the day of determination. The Fund records a realized gain or loss
when the short position is closed out. By entering into a short sale, the Fund
bears the market risk of an increase in the price of the security sold short.
Dividends on short sales are recorded as an expense by the Fund on dividend
date. Securities sold short at June 30, 2004 are reflected in the Schedule of
Portfolio Investments. Short-selling obligates the fund to replace the security
borrowed by purchasing the security at current market value. Until the Fund
replaces the borrowed security, the Fund maintains a segregated account with a
broker or custodian, or permissible liquid assets sufficient to cover its short
positions.
OTHER--Securities transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated based on the
identified cost basis. Interest income, including amortization on premiums and
discounts, is accrued as earned.
NOTE 2--MANAGEMENT AGREEMENT--Van Eck Associates Corporation (the "Adviser")
earned fees for investment management and advisory services provided to the
Fund. The fee is based on an annual rate of 2.50% on the average daily net
assets. The Adviser agreed to assume expenses exceeding 2.50% of average daily
net assets except interest, taxes, dividends on securites sold short, brokerage
commission and extraordinary expenses for the period January 1, 2004 through
April 30, 2004. For the six months ended June 30, 2004, the Adviser assumed
expenses in the amount of $38,877. Certain of the officers 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.
As of June 30, 2004, the Fund had two sub-advisers, Analytic Investors Inc. and
Coda Capital Management LLC. The Adviser directly paid sub-advisory fees to
Analytic Investors Inc. at a rate 1.00% of the portion of the average daily net
assets of the Fund managed by Analytic and Coda Capital Management at a rate of
0.75% of the portion of the average daily net assets managed of the Fund managed
by Coda. As of June 30, 2004 Van Eck Securities Corp. owned 28.3% of the
outstanding shares of beneficial interest of the Fund. Additionally, the
aggregate shareholder accounts of four insurance companies own approximately 72%
of the outstanding shares of the beneficial interest of the Fund.
NOTE 3--INVESTMENTS--Purchases and sales of securities other than U.S.
government securities and short-term obligations aggregated $6,512,723 and
$6,045,354, respectively, for the six months ended June 30, 2004. Proceeds of
short sales and purchases of short sale covers aggregated $4,059,285 and
$3,831,774, 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 June 30, 2004 was $4,760,194. As of June 30, 2004, net
unrealized appreciation for federal income tax purposes aggregated $23,062 of
which $360,309 related to appreciated securities and $383,371 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 financial 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.
NOTE 5--TRUSTEE DEFERRED COMPENSATION PLAN--The Trust established a Deferred
Compensation Plan (the "Plan") for Trustees. Commencing January 1, 1996, the
Trustees can elect to defer receipt
13
WORLDWIDE ABSOLUTE RETURN FUND
- --------------------------------------------------------------------------------
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 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 $174.
NOTE 6--REPURCHASE AGREEMENT--Collateral for a 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 7--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.
14
[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 Absolute Return 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
Absolute Return 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 ABSOLUTE RETURN FUND
By (Signature and Title) /s/ Bruce J. Smith, VP & Treasurer
----------------------------------
Date August 27, 2004
----------------
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
--------------------------
Date August 27, 2004
----------------
By (Signature and Title) /s/ Bruce J. Smith, CFO
---------------------------
Date August 27, 2004
----------------