UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
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
Date of reporting period: JUNE 30, 2005
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Item 1. REPORT TO SHAREHOLDERS.
VAN ECK GLOBAL
Worldwide Insurance Trust
SEMI-ANNUAL REPORT
JUNE 30, 2005
WORLDWIDE HARD ASSETS FUND
GLOBAL INVESTMENTS SINCE 1955
The information in the shareholder letter represents the personal opinions of
the investment team members 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 investment team members are as of June 30,
2005 and are subject to change.
WORLDWIDE HARD ASSETS FUND
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Dear Shareholder:
We are pleased to report that the Initial Class shares of the Van Eck Worldwide
Hard Assets Fund provided a total return of 16.40% for the year-to-date period
ended June 30, 2005. Developments in emerging markets, particularly China,
fueled the demand for commodities and pushed up the prices of oil and other
commodities globally. Hard asset securities outperformed the general stock
market during the last five calendar years, and the first six months of 2005 saw
a continuation of this trend. Indeed, the Goldman Sachs Natural Resources (GSR)
Index(1) rose 15.55% for the first half, while the Standard & Poor's (S&P) 500
Index(2) returned -0.81%. The Fund outperformed the GSR Index during the period
under review, and hard asset investments clearly offered investors
diversification benefits in the form of competitive returns and limited
correlation to traditional financial markets.
MARKET AND ECONOMIC REVIEW
The first half of 2005 saw a continuation of the positive trends seen in hard
asset sectors over the past five years. After reaching cyclical lows in the late
1990s, hard assets have rebounded to provide investors with attractive
returns--both on an absolute basis and on a relative basis as compared to more
traditional financial assets. Economic growth in the Far East, particularly
China and India, has fueled unprecedented demand for commodities. Thus far in
2005, the benefits of global development have been distributed across many hard
asset sectors, the most dramatic result being record pricing for oil. Overall,
commodities (as measured by the CRB Index(3)) experienced a 5.67% gain for the
year-to-date period, while commodity-related equities performed even better with
a 15.55% return, as measured by the GSR Index.
ENERGY
While inventory builds, dollar strength and hedge fund selling set the sectors
back earlier in the period, growing global demand and insecurity of supply
pushed the price of oil to $60 a barrel toward the end of June. Concerns over
peaking oil production also continued to weigh in as supply-side issues
involving political as well as serious technical challenges will need to be
resolved in order to meet global demand. Industry experts have noted that there
have been no new major oil discoveries since 1979. The market continued to focus
on the limited spare capacity in the crude oil market. Perception of a potential
distillate shortage was a key driver of the recent rise in crude prices (since
mid May). Fundamentals in distillate remain healthy with inventories below
normal levels, strong demand, talk of tankers taking distillate from the Gulf
Coast to China, and a tight gas and oil market in Europe.
Also of note was the aggressive move by China toward the end of June to
challenge U.S. dominance of the global energy market with an $18.5 billion bid
by state-run firm Cnooc for the American petrochemical company Unocal. This
takeover attempt underscored the rising demand for commodities coming from the
world's most populous nation. Demand in China has grown so fast that it has
overtaken Japan as the world's second biggest importer of crude after the U.S.
INDUSTRIAL METALS
2005 has been a challenging year so far for iron and steel companies and other
metal-related stocks. Once among the market's leading sectors, metals have now
become laggards. The cause is, in our view, the result of a basic pattern of
commodity cycles. For example, just as a shortage of steel in the latter half of
2004 triggered a price boom, increasing supplies have weighed prices back down.
While world economic growth has been steady, it has not been strong enough to
absorb the new supply flooding the market. Worldwide steel output increased
during the first six months of the year, with a significant increase of more
than 25% seen in Chinese output. Though the government appears committed to
slowing economic expansion, the mills continue to churn out more steel, and
China will likely be a net exporter this year. Consequently, prices have
softened, and several global steel producers have announced cutbacks and price
cuts in response.
PRECIOUS METALS
After a six-month downward trend of lower highs, the gold market made a strong
advance toward the end of the first half of 2005. The catalyst for the
turnaround was the defeat of two referendums to
1
WORLDWIDE HARD ASSETS FUND
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ratify the European Union (EU) Constitution, first in France on May 29, then in
the Netherlands in early June. Confidence in the European political and monetary
block was further damaged by the inability of EU officials to reach a consensus
on the 2007-2013 budget. For the past three years, the euro has been seen as a
refuge from a falling dollar weighed down by unprecedented current account
deficits and growing fiscal deficits. However, the markets have apparently come
to realize that the Eurozone is no oasis of economic stability. We believe that
the process of unification may perpetually risk failure so long as there are
rules inhibiting the free flow of people, goods and capital across political
boundaries. Importantly, gold made an all-time high in euros in June, breaking
above the EUR350 ceiling that has been in place for the past three years.
Given recent strength of the U.S. dollar, some analysts have expressed surprise
that gold was able to sustain levels above $400 this year. Strong physical
demand from India, Turkey and the Middle East have helped to underpin the gold
price. Economies in this region are booming due to growth in trade and the high
oil prices. These are major centers of gold jewelry and a region in which gold
plays a critical role as an investment vehicle. Also, early in the year, gold
was being pressured by the British who were proposing to use IMF gold sales to
eliminate $40 billion in poor country debt. As the year unfolded, this pressure
subsided as it became apparent that the U.S. would not allow such sales.
A disappointing (and rare) aspect of the recent gold market has been the
underperformance of the gold shares relative to gold. We have attributed the
poor returns in gold shares to a lack of earnings growth due to increasing
operating and capital costs, which in turn have been caused by strong
commodities prices and strong local currencies. Since 2003 cost drivers such as
diesel, copper and steel have increased by over 50% with the extraordinary
demand from China. Likewise, a rise in labor costs has resulted from strong
currencies in Australia, Canada and South Africa. Toward the end of the period,
however, gold shares saw a return to their historical gold share index leverage
to gold and advanced roughly double the gain in bullion in June.
REAL ESTATE
During the first six months of the year, real estate investments continued to
turn in stronger-than-expected returns. REITs (real estate investment trusts)
gained 6.35%, as measured by the Morgan Stanley REIT Index.(4) Overall, a tepid
stock market and attractive dividend yields held investor interest, and net
flows into the sector continued at a strong pace.
The first quarter of the year was somewhat challenging for the REIT markets.
Investor sentiment suffered as many feared the sector was overvalued after a
long period of outperformance. In addition, many believed that rising interest
rates would have a negative impact on the performance of real estate equities.
The second quarter, however, saw a recovery for most REITs and share prices
rose. While U.S. economic growth moderated somewhat, lower expectations
regarding inflation continued to pressure bond yields lower. This environment
created a positive backdrop for REIT shares. Investors bid up higher quality
REITs, and those with high earnings multiples and low dividend yields generally
outperformed those with higher yields and lower multiples (i.e., those companies
with higher quality balance sheets tended to outperform). The rise in REIT share
prices during the latter half of the period can be attributed, in large part, to
strong first quarter earnings reports that in most cases met or exceeded Wall
Street expectations. In addition, many commercial property companies took
advantage of growing acquisition opportunities and began to expand their
portfolios rapidly during the period.
FOREST PRODUCTS AND PAPER
During the first six months of 2005, forest product and paper companies reported
disappointing earnings, and the outlook for most paper grades continued to
deteriorate. Costs in the form of chemicals, energy and wood chips continued to
squeeze profit margins while operating rates remained low and demand remained
tepid. The one bright spot has been timberland. Prices in this sector escalated
as endowments and pensions sought out uncorrelated asset classes, resulting in
money flowing into this sector characterized by limited supply.
2
WORLDWIDE HARD ASSETS FUND
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FUND REVIEW
During the first half of the year, we continued to concentrate the Fund's assets
in the energy complex. We have found strong value opportunities in the equity
component of the energy universe, as we believe that energy company valuations
have not discounted nearly what the "crude forward curve" on the commodity side
suggests for long-term prices. The "crude forward curve" describes the
anticipated value of the future spot price of oil compared to the current price
and is influenced, among other factors, by current price and inventory levels,
transportation and storage costs and supply/demand balances. Given our view on
the maturity of North American oil and natural gas reserves, a critical
component of our investment consideration has been to obtain exposure to
discoveries of major emerging resources. In recent years, significant low-risk
resource plays have evolved in areas such as the Pinedale Anticline in Wyoming
and the Barnett Shale in the Fort Worth Basin, Texas. The shares of companies
developing these plays have shown strong outperformance. For example,
Southwestern Energy Co. (2.9% of Fund net assets as of June 30) may potentially
be uncovering a significant resource in the Fayetteville Shale trend in
Arkansas, and we have taken a meaningful stake in the company.
We have closely watched the industrial metal complex in search of compelling
value opportunities, which we believe reside on the equity side. There has been
quite a bit of consolidation activity in the space during the past twelve
months, and we look for additional acquisitions to take place. We have developed
a strong outlook for industrial metals such as nickel and zinc. We have been
less excited about copper, which we believe may have peaked. Therefore, we have
concentrated the Fund's industrial metals exposure into nickel and zinc stocks,
as well as the commodity in the case of zinc.
Over the course of the past six months, we have taken some capital out of the
precious metals arena. We preferred to allocate resources to other
commodity-related sectors, as we believed gold would underperform in light of a
strengthening dollar. We do, however, maintain a bullish longer-term view on
gold. As gold shares are currently trading at unprecedented valuation levels
compared with bullion, we see value in gold-mining companies and believe that
there will be more corporate acquisition activity at these price points.
The Fund's exposure to the overall real estate sector remained relatively
stable, changing from 5.5% at year-end 2004 to 4.6% at June 30, 2005. The Fund's
primary concentration within the sector remains in North American real estate
markets. In terms of property sectors, the Fund maintained its large allocation
to the hotel sector (1.6% of Fund net assets at June 30), as fundamentals for
luxury hotels in major urban areas continued to accelerate rapidly. We also
focused on the apartment sector, as we felt that the group may benefit from
continued talks of a housing bubble (the increase in housing activity had hurt
the apartment sector in recent years). Overall, we remain committed to real
estate equities as a means to offer portfolio stability and risk management, as
the correlation of REITs to other commodity universes is relatively low.
However, given real estate's deteriorating valuations and the attractiveness of
other hard asset sectors, we have focused the Fund's capital on attractive
investment opportunities elsewhere in the hard asset universe.
Exposure to the forest products and paper sector remained at a modest 6.5%
throughout the first half of the year. While Canadian producers appeared to be
in a structurally negative environment as a result of the strong Canadian dollar
and reduced fiber sources, there were investment opportunities in other areas of
the group as valuations remained reasonably attractive.
* * *
While we continue to believe there is significant growth potential in hard asset
sectors, we would like to stress to investors that careful due diligence should
be exercised when choosing the means of exposure to commodities. The Van Eck
Worldwide Hard Assets Fund distinguishes itself by investing in both
commodity-related equities and commodity derivatives. In addition, the Fund
invests in several different hard asset sectors across many geographic regions.
This investment style, in our view, offers a diversified approach to natural
resource investing and can potentially limit volatility when compared to funds
that invest in only one sector.
3
WORLDWIDE HARD ASSETS FUND
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The Fund is subject to risks associated with its investments in hard assets,
including real estate, precious metals and natural resources, and can be
significantly affected by events relating to these industries, including
international political and economic developments, inflation, and other factors.
The Fund's securities may experience substantial price fluctuations as a result
of these factors, and may move independently of the trends of industrialized
companies. The Fund is also subject to non-diversification risk, leverage risk,
illiquid securities risk, risks associated with investment in debt securities,
including credit risk and interest rate risk, inflation risk, and foreign
securities risks, including those related to adverse political and economic
developments unique to a country or a region, currency fluctuations or controls,
and the possibility of expropriation, nationalization or confiscatory taxation.
An investment in the Fund should be considered part of an overall investment
program, rather than a complete investment program.
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.
[DEREK S. VAN ECK PHOTO] [CHARLES T. CAMERON PHOTO]
[DEREK S. VAN ECK SIGNATURE] [CHARLES T. CAMERON SIGNATURE]
DEREK S. VAN ECK CHARLES T. CAMERON
INVESTMENT TEAM MEMBER INVESTMENT TEAM MEMBER
[JOSEPH M. FOSTER PHOTO] [SAMUEL R. HALPERT PHOTO]
[JOSEPH M. FOSTER SIGNATURE] [SAMUEL R. HALPERT SIGNATURE]
JOSEPH M. FOSTER SAMUEL R. HALPERT
INVESTMENT TEAM MEMBER INVESTMENT TEAM MEMBER
[GREGORY F. KRENZER PHOTO] [CHARL MALAN PHOTO]
[GREGORY F. KRENZER SIGNATURE] [CHARL MALAN SIGNATURE]
GREGORY F. KRENZER CHARL MALAN
INVESTMENT TEAM MEMBER INVESTMENT TEAM
[SHAWN REYNOLDS PHOTO]
[SHAWN REYNOLDS SIGNATURE]
SHAWN REYNOLDS
INVESTMENT TEAM MEMBER
July 11, 2005
4
WORLDWIDE HARD ASSETS FUND
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PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS; CURRENT PERFORMANCE MAY BE
LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. PERFORMANCE INFORMATION FOR
THE CLASS R1 SHARES REFLECTS CURRENT TEMPORARY WAIVERS OF EXPENSES AND/OR FEES.
HAD THE FUND INCURRED ALL EXPENSES, INVESTMENT RETURNS WOULD HAVE BEEN REDUCED.
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's charges, fees and expenses for these benefits 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 references to Fund assets refer to Total Net Assets.
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.
(1) 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.
(2) 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. Construction of the S&P 500 Index proceeds from industry group to the
whole. Since some industries are characterized by companies of relatively
small-stock capitalization, the Index is not comprised of the 500 largest
companies on the New York Stock Exchange. This Index, calculated by Standard &
Poor's, is a total return index with dividends reinvested.
(3) The CRB/Reuters Futures Prices (CRB) Index is an equal-weighted geometric
average of commodity price levels relative to the base year average price.
(4) The Morgan Stanley REIT (RMS) 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.
5
WORLDWIDE HARD ASSETS FUND
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GEOGRAPHICAL WEIGHTINGS*
AS OF JUNE 30, 2005 (UNAUDITED)
(THE DATA BELOW REPRESENTS A GRAPH IN THE PRINTED PIECE)
United States 60.7%
Canada 16.7%
Cash/Equivalents
less Other Assets
Less Liabilities 4.6%
United Kingdom 4.5%
Australia 3.7%
South Africa 3.2%
Brazil 3.0%
France 1.2%
Finland 0.6%
Norway 0.5%
Hong Kong 0.5%
Russia 0.4%
Peru 0.4%
--------------------------------------------
TOP TEN SECTORS*
AS OF JUNE 30, 2005 (UNAUDITED)
--------------------------------------------
Oil & Gas ........................... 48.3%
Mining .............................. 18.9%
Oil & Gas Services .................. 12.4%
Forest Products & Paper ............. 6.5%
Real Estate ......................... 2.2%
Engineering & Construction .......... 1.7%
Lodging ............................. 1.6%
Agriculture ......................... 1.3%
Electric ............................ 0.9%
REITs ............................... 0.6%
--------------------------------------------
- ---------------------------
* PERCENTAGE OF NET ASSETS.
PORTFOLIO IS SUBJECT TO CHANGE.
6
WORLDWIDE HARD ASSETS FUND
TOP TEN EQUITY HOLDINGS AS OF JUNE 30, 2005* (UNAUDITED)
- --------------------------------------------------------------------------------
GLOBALSANTAFE CORP.
(U.S., 3.7%)
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.
HALLIBURTON CO.
(U.S., 3.6%)
Halliburton provides energy services and engineering and construction services
and also 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.
BJ SERVICES CO.
(U.S., 3.4%)
BJ Services provides pressure pumping and other oilfield services for the
petroleum industry. The company's pressure pumping services consist of cementing
and stimulation services used in the completion of new oil and natural gas
wells, and in remedial work on existing wells, both onshore and offshore. Other
services include product and equipment sales and inspection.
NABORS INDUSTRIES LTD.
(U.S., 3.1%)
Nabors Industries is a land drilling contractor and also performs well servicing
and workovers. The company conducts oil, gas and geothermal land drilling
operations in the continental United States, Alaska and Canada as well as in
South and Central America and the Middle East. Nabors' well-site services
include oilfield management, well logging and other support services.
SOUTHWESTERN ENERGY CO.
(U.S., 2.9%)
Southwestern Energy is an integrated energy company primarily focused on natural
gas. The company explores for and produces natural gas and crude oil.
Southwestern Energy also conducts operations in natural gas gathering,
transmission and marketing as well as natural gas distribution.
TALISMAN ENERGY, INC.
(CANADA, 2.6%)
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.
NEWFIELD EXPLORATION CO.
(U.S., 2.3%)
Newfield Exploration is an independent oil and gas company, which explores,
develops and acquires oil and natural gas properties. The company operates in
the Gulf of Mexico, the onshore United States Gulf Coast, offshore Australia and
the Bohai Bay in China.
XTO ENERGY, INC.
(U.S., 2.2%)
XTO Energy is a natural gas producer that acquires, exploits and develops
long-lived oil and gas properties. The company's properties are all located in
the United States, concentrated in Texas, Oklahoma, Kansas, New Mexico,
Colorado, Arkansas, Wyoming, Louisiana and Alaska.
BOIS D'ARC ENERGY, INC.
(U.S., 2.1%)
Bois d'Arc Energy discovers and produces oil and natural gas in the Gulf of
Mexico shelf. The company's operations include the usage of seismic and drilling
technology.
RANDGOLD RESOURCES LTD.
(UK, 2.0%)
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.
COMPANY DESCRIPTIONS COURTESY OF BLOOMBERG.COM.
7
WORLDWIDE HARD ASSETS FUND
EXPLANATION OF EXPENSES (UNAUDITED)
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HYPOTHETICAL $1,000 INVESTMENT AT BEGINNING OF PERIOD
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including program fees on purchase payments; and (2) ongoing costs,
including management fees and other Fund expenses. This disclosure is intended
to help you understand your ongoing costs (in dollars) of investing in the Fund
and to compare these costs with the ongoing costs of investing in other mutual
funds.
The disclosure is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period, January 1, 2005 to June 30, 2005.
ACTUAL EXPENSES
The first line in the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over a
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line in the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as program
fees. Therefore, the second line of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
January 1, 2005 June 30, 2005 1/1/05-6/30/05
- -------------------------------------------------------------------------------------------------------------------------
Initial Class Actual $1,000.00 $1,164.00 $6.17
Hypothetical (5% return before expenses) $1,000.00 $1,019.09 $5.76
- -------------------------------------------------------------------------------------------------------------------------
Class R1 Actual $1,000.00 $1,164.00 $6.37
Hypothetical (5% return before expenses) $1,000.00 $1,018.91 $5.94
- -------------------------------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 1.15% on the
Initial Class shares and 1.19% on the Class R1 shares, multiplied by the average
account value over the period, multiplied by 181 divided by 365 (to reflect the
one-half year period)
8
WORLDWIDE HARD ASSETS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
NO. OF VALUE
COUNTRY SHARES SECURITIES (NOTE 1)
- ----------------------------------------------------------
COMMON STOCKS
AUSTRALIA: 3.7%
3,975,540 Aviva Corp. Ltd.+ $ 121,039
1,923,395 Cooper Energy Ltd.+ 373,318
302,606 Newcrest Mining Ltd.* 3,974,780
107,447 NGM Resources Ltd.+ 6,134
1,811,000 Oil Search Ltd. 4,231,819
334,500 Santos Ltd. 2,882,125
------------
11,589,215
------------
BRAZIL: 3.0%
199,300 Companhia Vale do Rio Doce
(ADR) 5,835,504
67,000 Petroleo Brasileiro S.A.
(ADR) 3,492,710
------------
9,328,214
------------
CANADA: 16.5%
738,500 Bema Gold Corp.+ 1,751,027
1,614,800 Brazilian Resources, Inc.+ 131,573
11,610 Brookfield Homes Corp.
(USD) 529,416
45,000 Brookfield Properties
Corp. 1,270,472
34,575 Brookfield Properties
Corp. (USD) 995,760
296,700 Domtar, Inc. 2,190,257
154,800 Domtar, Inc. (USD) 1,143,972
63,850 Ensign Resource Service
Group, Inc. 1,538,372
330,000 Find Energy Ltd.+ 1,099,731
83,000 First Capital Realty, Inc. 1,376,909
80,000 FNX Mining Co., Inc.+ 739,835
249,000 Gammon Lake Resources,
Inc.+ 1,673,796
192,500 Goldcorp, Inc. 3,056,975
808,000 Killam Properties, Inc.+ 1,790,728
561,000 LionOre Mining
International Ltd.+ 2,875,165
1,080,000 Miramar Mining Corp.+ 1,249,572
54,028 Noranda, Inc. 925,339
720,000 Northern Orion Resources,
Inc.+ 1,771,694
536,000 Northern Orion Resources,
Inc. Warrants (CAD 2.00,
expiring 5/29/08)+ 537,179
25,000 NQL Drilling Tools, Inc.
(Class A) +67,424
141,500 Parkbridge Lifestyles
Communities, Inc.+ 553,410
99,000 Penn West Petroleum Ltd.+ 2,337,668
51,600 Petro-Canada (USD)+ 3,361,224
148,000 Petrolifera Petroleum+* 79,589
74,000 Petrolifera Petroleum
Warrants+* --
90,000 SFK Pulp Fund 365,925
27,200 Suncor Energy, Inc. 1,283,650
48,800 Suncor Energy, Inc. (USD) 2,309,216
213,000 Talisman Energy, Inc.+ 7,966,023
363,000 TimberWest Forest Corp.
(Stapled Units) 4,356,710
65,400 Trican Well Service Ltd.+ 1,605,026
------------
50,933,637
------------
FINLAND: 0.6%
144,000 Stora Enso Oyj (R Shares) 1,841,783
------------
FRANCE: 1.2%
32,500 Total SA (Sponsored ADR) 3,797,625
------------
HONG KONG: 0.5%
145,600 Sun Hung Kai Properties
Ltd. 1,437,939
------------
NORWAY: 0.5%
298,000 Seadril Ltd.+ 1,696,650
------------
PERU: 0.4%
49,900 Compania de Minas
Buenaventura S.A. (ADR) 1,147,201
------------
SOUTH AFRICA: 3.2%
188,900 Gold Fields Ltd.
(Sponsored ADR) 2,144,015
65,000 Impala Platinum Holdings
Ltd. 5,815,661
177,300 Sappi Ltd. (Sponsored ADR) 1,918,386
------------
9,878,062
------------
UNITED KINGDOM: 4.5%
385,978 BHP Billiton PLC 4,923,337
445,600 Randgold Resources Ltd.
(ADR) +6,265,136
301,200 Vedanta Resources PLC 2,724,981
------------
13,913,454
------------
UNITED STATES: 60.7%
42,500 Agnico-Eagle Mines Ltd.
Warrants ($19.00,
expiring 11/07/07)+ 80,750
55,420 Alcoa, Inc. 1,448,125
26,000 AMB Property Corp. 1,129,180
24,600 American Commerical Lines,
Inc. +1,795,800
73,000 Apache Corp. 4,715,800
199,500 BJ Services Co. 10,469,760
430,500 Bois d'Arc Energy, Inc.+ 6,349,875
12,000 Boston Properties, Inc. 840,000
65,300 Bunge Ltd. 4,140,020
104,000 Chicago Bridge & Iron Co.
N.V. (NY Reg. Shares) 2,377,440
113,700 Comstock Resources, Inc.+ 2,875,473
44,000 ConocoPhillips 2,529,560
73,100 Cooper Cameron Corp.+ 4,535,855
374,264 Delta Petroleum Corp.+ 5,284,608
139,900 ENSCO International, Inc. 5,001,425
89,500 Exxon Mobil Corp. 5,143,565
55,500 FirstEnergy Corp. 2,670,105
31,000 FMC Technologies Inc.+ 991,070
66,400 Forest Oil Corp.+ 2,788,800
98,400 Frontier Oil Corp. 2,888,040
165,800 Glamis Gold Ltd.+ 2,853,418
277,000 GlobalSantaFe Corp. 11,301,600
90,000 Golden Star Resources
Ltd.+ 279,000
See Notes to Financial Statements
9
WORLDWIDE HARD ASSETS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2005 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
NO. OF VALUE
COUNTRY SHARES SECURITIES (a) (NOTE 1)
- ----------------------------------------------------------
UNITED STATES: (CONTINUED)
235,300 Halliburton Co. $ 11,252,046
143,700 Inco Ltd. 5,424,675
397,200 La Quinta Corp.
(Paired Certificate)+ 3,705,876
27,700 Longview Fibre Co. 569,235
132,000 McDermott International,
Inc.+ 2,772,000
195,100 Mercer International,
Inc.+ 1,422,279
86,000 Murphy Oil Corp. 4,491,780
156,000 Nabors Industries, Ltd.+ 9,456,720
126,472 National-Oilwell Varco,
Inc.+ 6,012,479
179,600 Newfield Exploration Co.+ 7,164,244
32,300 Oil States International,
Inc. +812,991
141,400 Plains Exploration &
Production Co.+ 5,023,942
91,000 Pope & Talbot, Inc. 1,010,100
230,000 Pride International, Inc.+ 5,911,000
28,500 Quicksilver Resources,
Inc.+ 1,822,005
193,200 Southwestern Energy Co.+ 9,076,536
20,000 Starwood Hotels & Resorts
Worldwide, Inc.
(Paired Certificate) 1,171,400
72,800 Stone Energy Corp.+ 3,559,920
144,200 Todco (Class A)+ 3,701,614
78,400 Valero Energy Corp. 6,202,224
47,000 Weatherford International
Ltd.+ 2,725,060
81,600 Weyerhaeuser Co. 5,193,840
197,400 XTO Energy, Inc. 6,709,626
------------
187,680,861
------------
TOTAL COMMON STOCKS AND
OTHER INVESTMENTS: 94.8%
(Cost: $216,450,245) 293,244,641
------------
PREFERRED STOCKS
CANADA: 0.2%
11,036 Noranda, Inc. (USD)
(Junior Preferred
Series 1) 280,866
11,036 Noranda, Inc. (USD)
(Junior Preferred
Series 2) 280,314
5,518 Noranda, Inc. (USD)
(Junior Preferred
Series 3) 140,047
------------
701,227
------------
RUSSIA: 0.4%
22,200 Surgutneftegaz, Inc.
(Sponsored ADR) 1,270,950
------------
TOTAL PREFERRED STOCKS: 0.6%
(Cost: $704,765) 1,972,177
------------
OPTIONS PURCHASED:
AUSTRALIA: 0.0%
39,755 Aviva Corp. Ltd.
Call Option-Strike AUD
0.10, expiring 12/31/05
(Premiums paid: $11,068) 7,565
------------
SHORT-TERM DATE OF VALUE
OBLIGATIONS: 5.0% MATURITY COUPON (NOTE 1)
- ----------------------------------------------------------
Repurchase Agreement
(Note 12): Purchased on
6/30/05; maturity value
$15,403,070 (with State
Street Bank & Trust Co.,
collateralized by
$15,820,000 Federal
National Mortgage Association
3.25% due 8/15/08
with a value of $15,711,238)
(Cost: $15,402,000) 7/1/05 2.50% $ 15,402,000
------------
TOTAL INVESTMENTS: 100.4%
(Cost: $232,568,078) 310,626,383
OTHER ASSETS LESS LIABILITIES: (0.4)% (1,386,290)
------------
NET ASSETS: 100% $309,240,093
============
Glossary:
ADR-American Depositary Receipt.
- --------
+ Non-income producing
* Indicates a fair valued security which has not been valued utilizing an
independent quote, but has been valued pursuant to guidelines established by
the Board of Trustees. The aggregate value of fair valued securities is
$4,054,369, which represented 1.3% of net assets.
SUMMARY OF % OF NET
INVESTMENTS BY INDUSTRY ASSETS
- ----------------------- ----------
Agriculture 1.3%
Electric 0.9%
Engineering & Construction 1.7%
Forest Products & Paper 6.5%
Healthcare Services 0.2%
Home Builders 0.2%
Lodging 1.6%
Mining 18.9%
Oil & Gas 48.3%
Oil & Gas Services 12.4%
Real Estate 2.2%
REITs 0.6%
Transportation 0.6%
Short-Term Obligations 5.0%
Other assets less liabilities (0.4%)
------------
100%
============
See Notes to Financial Statements
10
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2005 (UNAUDITED)
ASSETS:
Investments, at value (cost $232,568,078) (Note 1) ................................................... $310,626,383
Cash ................................................................................................. 52,239
Foreing currecny, at value (cost $1,130) ............................................................. 1,132
Receivables:
Due from broker -- variation margin ............................................................... 71,330
Securities sold ................................................................................... 364,610
Dividends and interest ............................................................................ 377,732
Capital shares sold ............................................................................... 235,599
Prepaid expenses ..................................................................................... 4,892
------------
Total assets ...................................................................................... 311,733,917
------------
LIABILITIES:
Payables:
Securities purchased .............................................................................. 1,842,239
Capital shares redeemed ........................................................................... 365,953
Due to Adviser .................................................................................... 241,844
Accounts payable .................................................................................. 43,788
------------
Total liabilities ................................................................................. 2,493,824
------------
Net assets ........................................................................................... $309,240,093
============
INITIAL CLASS SHARES:
Net assets ........................................................................................... $264,589,454
============
Shares outstanding ................................................................................... 12,426,809
============
Net asset value, redemption and offering price per share ............................................. $21.29
============
CLASS R1 SHARES:
Net assets ........................................................................................... $ 44,650,639
============
Shares outstanding ................................................................................... 2,097,121
============
Net asset value, redemption and offering price per share ............................................. $21.29
============
Net assets consist of:
Aggregate paid in capital ......................................................................... $221,679,934
Unrealized appreciation of investments, options, swaps and foreign currency transactions .......... 77,993,876
Undistributed net investment income ............................................................... 37,105
Accumulated realized gain ......................................................................... 9,529,178
------------
$309,240,093
============
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
INCOME (NOTE 1):
Dividends (less foreign taxes withheld of $94,562) ...................................... $ 1,478,772
Interest ................................................................................ 176,282
------------
Total income ........................................................................ 1,655,054
EXPENSES:
Management (Note 2) ..................................................................... $1,276,320
Professional ............................................................................ 47,358
Custodian ............................................................................... 29,656
Trustees' fees and expenses ............................................................. 27,042
Reports to shareholders ................................................................. 18,007
Transfer agency -- Initial Class Shares ................................................. 5,973
Transfer agency -- Class R1 Shares ...................................................... 5,973
Other ................................................................................... 64,264
----------
Total expenses ...................................................................... 1,474,593
------------
Net investment income ............................................................... 180,461
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS, OPTIONS, SWAPS, FUTURES AND FOREIGN
CURRENCY TRANSACTIONS (NOTE 3):
Realized gain from security transactions ................................................ 14,913,172
Realized loss from foreign currency transactions ........................................ (93,313)
Realized gain from futures .............................................................. 9,464
Change in unrealized appreciation of investments, options and futures ................... 23,745,283
Change in unrealized depreciation of foreign denominated assets and liabilities ......... (312)
------------
Net realized and unrealized gain on investments, options, futures and foreign
currency transactions ................................................................ 38,574,294
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................................... $ 38,754,755
============
See Notes to Financial Statements
11
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
2005 DECEMBER 31,
(UNAUDITED) 2004
------------ ------------
INCREASE IN NET ASSETS FROM:
OPERATIONS:
Net investment income .......................................................................... $ 180,461 $ 900,048
Realized gain from security transactions ....................................................... 14,913,172 22,854,172
Realized gain (loss) from foreign currency transactions ........................................ (93,313) 22,766
Realized gain on options ....................................................................... -- 71,485
Realized gain from futures ..................................................................... 9,464 302,883
Change in unrealized appreciation of investments; options, swaps and futures ................... 23,745,283 14,053,611
Change in unrealized appreciation/depreciation of foreign denominated assets and liabilities ... (312) 62
------------ ------------
Net increase in net assets resulting from operations ........................................... 38,754,755 38,205,027
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Initial Class Shares ......................................................................... (743,375) (634,060)
Class R1 Shares .............................................................................. (100,122) --
------------ ------------
Total dividends to shareholders ................................................................ (843,497) (634,060)
------------ ------------
CAPITAL SHARE TRANSACTIONS*:
Proceeds from sales of shares
Initial Class Shares ......................................................................... 78,500,929 79,270,231
Class R1 Shares .............................................................................. 20,667,723 26,795,429
Reimbursement from Adviser (Note 14) ......................................................... 33,678 --
------------ ------------
99,202,330 106,065,660
------------ ------------
Reinvestment of dividends
Initial Class Shares ......................................................................... 743,375 634,060
Class R1 Shares .............................................................................. 100,122 --
------------ ------------
843,497 634,060
------------ ------------
Cost of shares reacquired
Initial Class Shares ......................................................................... (38,028,103) (82,575,336)
Class R1 Shares .............................................................................. (6,866,512) (4,251,240)
Redemption fees .............................................................................. 19,910 30,266
------------ ------------
(44,874,705) (86,796,310)
------------ ------------
Increase in net assets resulting from capital share transactions ............................... 55,171,122 19,903,410
------------ ------------
Total increase in net assets ................................................................... 93,082,380 57,474,377
NET ASSETS:
Beginning of period ............................................................................... 216,157,713 158,683,336
------------ ------------
End of period (including undistributed net investment income of $37,105 and $793,454, respectively) $309,240,093 $216,157,713
============ ============
* SHARES OF BENEFICIAL INTEREST ISSUED AND REACQUIRED (UNLIMITED NUMBER OF $.001
PAR VALUE SHARES AUTHORIZED)
INITIAL CLASS SHARES:
Shares sold .................................................................................... 3,979,766 4,992,234
Reinvestment of dividends ...................................................................... 40,204 43,459
Shares reacquired .............................................................................. (1,954,213) (5,370,112)
------------ ------------
Net increase (decrease) ........................................................................ 2,065,757 (334,419)
============ ============
CLASS R1 SHARES:+
Shares sold .................................................................................... 1,036,408 1,670,698
Reinvestment of dividends ...................................................................... 5,412 --
Shares reacquired .............................................................................. (357,999) (257,398)
------------ ------------
Net increase ................................................................................... 683,821 1,413,300
============ ============
+ Inception date of Class R1 shares May 1, 2004
See Notes to Financial Statements
12
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
INITIAL CLASS SHARES CLASS R1 SHARES
------------------------------------------------------------- -------------------------
FOR THE
SIX SIX PERIOD
MONTHS MONTHS MAY 1,
ENDED ENDED 2004 (c)
JUNE 30, JUNE 30, THROUGH
2005 YEAR ENDED DECEMBER 31, 2005 DECEMBER 31,
(UNAUDITED) 2004 2003 2002 2001 2000 (UNAUDITED) 2004
----------- ------ ------ ------ ------ ------ ----------- ------------
Net Asset Value, Beginning of Period .... $18.36 $14.84 $10.30 $10.69 $12.07 $10.96 $18.36 $14.54
------ ------ ------ ------ ------ ------ ------ ------
Income from Investment Operations:
Net Investment Income ................ 0.01 0.08 0.05 0.08 0.14 0.16 0.01 0.03
Net Realized and Unrealized Gain
(Loss) on Investments, Options,
Swaps and Foreign Currency
Transactions ....................... 2.99 3.50 4.54 (0.38) (1.39) 1.07 2.99 3.79
------ ------ ------ ------ ------ ------ ------ ------
Total from Investment Operations ........ 3.00 3.58 4.59 (0.30) (1.25) 1.23 3.00 3.82
------ ------ ------ ------ ------ ------ ------ ------
Less:
Dividends from Net Investment Income . (0.07) (0.06) (0.05) (0.09) (0.13) (0.12) (0.07) --
------ ------ ------ ------ ------ ------ ------ ------
Reimbursement from Adviser (Note 14) .... --(d) -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Redemption fees ......................... --(d) --(d) -- -- -- -- --(d) --(d)
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period .......... $21.29 $18.36 $14.84 $10.30 $10.69 $12.07 $21.29 $18.36
====== ====== ====== ====== ====== ====== ====== ======
Total Return (a) ........................ 16.40% 24.23% 44.78% (2.85)% (10.45)% 11.41% 16.40% 26.27%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000) ......... $264,589 $190,206 $158,683 $97,978 $77,549 $98,728 $44,651 $25,952
Ratio of Gross Expenses to Average
Net Assets ........................... 1.15%(e) 1.20% 1.23% 1.23% 1.18% 1.16% 1.19%(e) 1.32%(e)
Ratio of Net Expenses to Average
Net Assets (b) ....................... 1.15%(e) 1.20% 1.23% 1.20% 1.15% 1.14% 1.19%(e) 1.24%(e)(f)
Ratio of Net Investment Income to Average
Net Assets ........................... 0.14%(e) 0.54% 0.59% 0.68% 1.13% 1.41% 0.14%(e) 0.39%(e)(f)
Portfolio Turnover Rate ................. 29% 60% 43% 63% 86% 110% 29% 60%
- ----------------
(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) Inception date of Class R1 shares.
(d) Amount represents less than $0.01 per share.
(e) Annualized.
(f) Net effect of expense waiver to average net assets for the period ended
December 31, 2004 was 0.08%.
See Notes to Financial Statements
13
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 Worldwide
Hard Assets Fund (the "Fund") is a diversified fund of the Trust and seeks
long-term capital appreciation by investing primarily in hard asset securities.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with U.S. generally accepted accounting principles.
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts in the financial statements. Actual
results could differ from those estimates. 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.
A. SECURITY VALUATION--Securities traded on national exchanges or traded on the
NASDAQ National Market System are valued at the last sales price as reported at
the close of each business day. As of June 23, 2003, the Fund 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 foreign markets. Securities for which quotations are not
available are stated at fair value as determined by a Pricing Committee of the
Adviser appointed by the Board of Trustees. Certain factors such as economic
conditions, political events, market trends and security specific information
are used to determine the fair value for these securities.
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 as of the close of each business day. 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 U.S. generally accepted accounting principles.
E. OTHER--Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the identified
cost basis. Interest income is accrued as earned.
Income, expenses (excluding class-specific expenses) and realized/unrealized
gains/losses are allocated proportionately to each class of shares based upon
the relative net asset value of outstanding shares of each class at the
beginning of the day (after adjusting for current capital share activity of the
respective classes). Class-specific expenses are charged directly to the
applicable class of shares.
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. 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.
14
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Transactions in call options written for the six months ended June 30, 2005 were
as follows:
NUMBER OF
CONTRACTS PREMIUMS
--------- --------
Options outstanding at beginning of year .. 39,755 $11,068
Options written ........................ .. -- --
Options exercised ...................... .. -- --
Options expired ........................ .. -- --
------- -------
Options outstanding at the end of period .. 39,755 $11,068
======= =======
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 the 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. At June 30, 2005, the Fund held 56 open futures contracts
in LMEZinc December, 2005 with a market value of $1,699,908 and an unrealized
loss of $65,016.
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, 2005.
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, the Distributor.
Effective December 13, 2004, the Adviser agreed to assume expenses so that the
expense ratio between classes does not diverge significantly.
NOTE 3--INVESTMENTS--Purchases and sales of securities other than U.S.
government securities and short-term obligations aggregated $126,820,715 and
$69,874,477, respectively, for the six months ended June 30, 2005.
The identified cost of investments owned at June 30, 2005 was $232,568,078 and
net unrealized appreciation aggregated $78,058,305 of which $82,856,175 related
to appreciated securities and $4,797,870 related to depreciated securities.
NOTE 4--INCOME TAXES--The tax character of distributions paid to shareholders
during the year ended December 31, 2004 consisted of ordinary income of
$634,060. The tax character of distributions made in 2005 will be determined at
year end.
At December 31, 2004, the Fund had a capital loss carryforward of $5,393,465
available, 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 transaction 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 two insurance companies own approximately
41% and 42% of the Initial Class shares and one insurance company owns
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 assets. Realized gains and losses from
forward foreign currency contracts are included in realized gain (loss) from
foreign currency transactions on the Statement of Operations. 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, 2005,
the Fund had the following outstanding forward foreign currency contract:
15
WORLDWIDE HARD ASSETS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
UNREALIZED
CONTRACT CURRENT APPRECIATION
CONTRACTS AMOUNT VALUE (DEPRECIATION)
- --------- ---------- --------- --------------
Buy Contract:
Norwegian Krone
4,294,710 expiring
7/01/05 $ 656,182 $ 656,423 $ 241
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, 2005, the net value of the asset
and corresponding liability of the Fund's portion of the Plan is $28,336.
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 (notional amount) 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 on the Statement of Assets
and Liabilities. At June 30, 2005, the Fund had no outstanding equity swaps.
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 on the Statement of Assets and Liabilities. At June 30, 2005, the
Fund had 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 $10 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. During the
six months ended June 30, 2005, there were no borrowings by the Fund under the
Facility.
NOTE 12--REPURCHASE AGREEMENT--Collateral for repurchase agreements, 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 ("NYAG") and the
United States Securities and Exchange Commission ("SEC") have requested and
received information from the Adviser. The investigations are ongoing, and the
Adviser is continuing to cooperate with such investigations. If it is determined
that the Adviser or its affiliates engaged in improper or wrongful activity that
caused a loss to a Fund, the Board of Trustees of the Funds will determine the
amount of restitution that should be made to a Fund or its shareholders. At the
present time, the amount of such restitution, if any, has not been determined.
In July 2004, the Adviser received a "Wells Notice" from the SEC in connection
with the SEC's investigation of market-timing activities. 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 the U.S.
securities laws against the Adviser and two of its senior officers.
There cannot be any assurance that if the SEC or NYAG were to assess sanctions
against the Adviser, such sanctions would not materially and adversely affect
the Adviser.
NOTE 14--REIMBURSEMENT FROM ADVISER--The Adviser reimbursed the Fund $33,678 in
connection with dividends paid in January 2003 to shareholders redeeming on the
day between record date and ex-dividend date.
16
VAN ECK WORLDWIDE INSURANCE TRUST
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APPROVAL OF ADVISORY AGREEMENTS
WORLDWIDE BOND FUND
WORLDWIDE EMERGING MARKETS FUND
WORLDWIDE HARD ASSETS FUND
WORLDWIDE REAL ESTATE FUND
In considering the renewal of the investment advisory agreements, the Board,
including the Independent Trustees, considered information that had been
provided throughout the year at regular Board meetings, as well as information
furnished for meetings of the Trustees held on April 19 and 20, 2005 to
specifically consider the renewal of each Fund's investment advisory agreement.
This information included, among other things, the following:
o The Adviser's response to a comprehensive questionnaire prepared by
independent legal counsel on behalf of the Independent Trustees;
o An independent report comparing the management fees and non-investment
management expenses of each Fund with those of comparable funds;
o An independent report comparing Fund investment performance to relevant
peer groups of funds and appropriate indices;
o Presentations by the Adviser's key investment personnel with respect to
the Adviser's investment strategies and general investment outlook in
relevant markets and the resources available to support the implementation
of such investment strategies;
o Reports with respect to the Adviser's brokerage practices, including the
benefits received by the Adviser from research acquired with soft dollars;
o The Adviser's financial statements and business plan with respect to its
mutual fund operations;
o A profitability analysis with respect to each Fund and the Van Eck complex
of mutual funds as a whole; and
o Reports on a variety of compliance-related issues.
The Board considered, among other things, the following factors in determining
whether to approve each Agreement: (1) the quality, nature, cost and character
of the investment management as well as the administrative and other
non-investment management services provided by the Adviser and its affiliates;
(2) the nature, quality and extent of the services performed by the Adviser in
interfacing and monitoring the services performed by third parties such as the
Funds' custodian, transfer agent, sub-accounting agent and independent auditors,
and the Adviser's commitment and efforts to review the quality and pricing of
third party service providers to the Funds with a view to reducing
non-management expenses of the Funds; (3) the terms of the advisory agreements
and the reasonableness and appropriateness of the particular fee paid by each
Fund for the services described therein; (4) the Adviser's willingness to
subsidize the operations of the Funds from time to time by means of waiving a
portion of its management fees or paying expenses of the Funds; (5) the
Adviser's development and use of proprietary fair valuation models with respect
to foreign securities; (6) the actions of the Adviser in response to recent
regulatory developments, including the development of written policies and
procedures reasonably designed to prevent violations of the federal securities
laws, and the implementation of recommendations of independent consultants with
respect to market timing and related compliance issues; (7) the responsiveness
of the Adviser to inquiries from regulatory agencies such as the SEC and the
office of the New York Attorney General ("NYAG"); (8) the resources devoted to
compliance efforts undertaken by the
17
VAN ECK WORLDWIDE INSURANCE TRUST
- --------------------------------------------------------------------------------
APPROVAL OF ADVISORY AGREEMENTS (CONTINUED)
Adviser on behalf of the Funds and the record of compliance with the investment
policies and restrictions and with policies on personal securities transactions;
and (9) the ability of the Adviser to attract and retain quality professional
personnel to perform investment advisory and administrative services for the
Funds.
The Trustees considered the fact that the Adviser has received a Wells Notice
from the SEC in connection with on-going investigations concerning market timing
and related matters. The Trustees determined that the Adviser is cooperating
with the SEC, the NYAG and the Independent Trustees in connection with these
matters and that the Adviser has taken appropriate steps to implement policies
and procedures reasonably designed to prevent harmful market timing activities
by investors in the Funds. In addition, the Trustees concluded that the Adviser
has acted in good faith in providing undertakings to the Board to make
restitution of damages, if any, that may have resulted from any prior wrongful
actions of the Adviser and that it would be appropriate to permit the SEC and
the NYAG to bring to conclusion their pending regulatory investigations prior to
the Board making any final determination of its own with respect to these same
matters.
The Board considered the fact that the Adviser is managing alternative
investment products, including hedge funds that invest in the same financial
markets and are managed by the same investment professionals as the Funds. The
Board concluded that the management of these products contributes to the
Adviser's financial stability and is helpful to the Adviser in attracting and
retaining quality portfolio management personnel for the Funds. In addition, the
Board concluded that the Adviser has established appropriate procedures to
monitor conflicts of interest involving the management of the Funds and these
alternative products and for resolving any such conflicts of interest in a fair
and equitable manner.
With respect to each Fund, the Board concluded that, in light of the services
rendered and the costs associated with providing such services, the profits, if
any, realized by the Adviser from managing the Fund are not unreasonable. In
this regard, the Board also considered the extent to which the Adviser may
realize economies of scale as each Fund grows and concluded that, with respect
to Worldwide Bond Fund and Worldwide Hard Assets Fund, the advisory fee
breakpoints in place will allow the Funds to share the benefits of economies of
scale as they grow in a fair and equitable manner. The Board also concluded that
neither of Worldwide Emerging Markets Fund nor the Worldwide Real Estate Fund
currently has sufficient assets, or in the foreseeable future is likely to have
sufficient assets, for the Adviser to realize material benefits from economies
of scale, and, therefore, the implementation of breakpoints would not be
warranted at this time for either Fund.
With respect to each Fund, the Board also considered additional specific factors
and related conclusions, as detailed below.
WORLDWIDE BOND FUND
In its renewal deliberations for the Fund, the Board noted that: (1) the Fund
outperformed its peer group average for the annualized three-year period ended
December 31, 2004, and was at or slightly below its peer group average for the
one-year, two-year, four-year and five-year periods ended December 31, 2004; and
(2) although the Fund's management fees and overall expense ratio are high
relative to its peer group, neither is unreasonable in view of the relatively
small size of the Fund, the size of the entire family of Van Eck mutual funds,
and the nature of the global investment strategy used to pursue the Fund's
objective.
18
VAN ECK WORLDWIDE INSURANCE TRUST
- --------------------------------------------------------------------------------
APPROVAL OF ADVISORY AGREEMENTS (CONTINUED)
WORLDWIDE EMERGING MARKETS FUND
In its renewal deliberations for the Fund, the Board noted that: (1) the Fund
outperformed its peer group average for the annualized one-year, two-year,
three-year and four-year periods ended December 31, 2004; (2) the Adviser has
taken action to improve investment results in the past two years by
strengthening the Fund's investment team; (3) the Adviser has agreed to waive
and will continue to waive through April 2006 a portion of its management fee
such that the overall management fee for the Fund during 2004, net of waivers,
was below average for its peer group; and (4) the Fund's overall expense ratio,
net of fee waivers, is below average for its peer group.
WORLDWIDE HARD ASSETS FUND
In its renewal deliberations for the Fund, the Board noted that: (1) the Fund
outperformed its peer group average for the one-year, two-year and three-year
periods ended December 31, 2004; (2) the Adviser has taken action to strengthen
the Fund's investment team by adding a key energy sector analyst; and (3) the
Fund's management fees and expense ratio are above average but within the range
of management fees and expense ratios, respectively, for its peer group.
WORLDWIDE REAL ESTATE FUND
In its renewal deliberations for the Fund, the Board noted that: (1) the Fund
outperformed its peer group average and was in the top quintile for the one-year
period ended December 31, 2004; (2) the Adviser has agreed to waive and will
continue to waive through April 2006 a portion of its management fee such that
the overall management fee for the Fund during 2004, net of fee waivers, was
below average for its peer group; and (3) the Fund's expense ratio, net of fee
waivers, is above average, but within the range of expense ratios for its peer
group.
The Board did not consider any single factor as controlling in determining
whether or not to renew the investment advisory agreement. Nor are the items
described herein all of the matters considered by the Board. Based on its
consideration of the foregoing factors and conclusions, and such other factors
and conclusions as it deemed relevant, and assisted by the advice of its
independent counsel, the Board concluded that the renewal of the investment
advisory agreements, including the fee structures (described herein) is in the
interests of shareholders, and accordingly, the Board, including all of the
Independent Trustees, approved the continuation of the advisory agreements for
an additional one-year period.
19
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[VAN ECK GLOBAL LOGO] [RETIRE ON YOUR TERMS LOGO]
Investment Adviser: Van Eck Associates Corporation
Distributor: Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016 www.vaneck.com
Account Assistance: (800) 544-4653
This report must be preceded or accompanied by a Van Eck Worldwide Insurance
Trust Prospectus, which includes more complete information. An investor should
consider the investment objective, risks, and charges and expenses of the Fund
carefully before investing. The prospectus contains this and other information
about the investment company. Please read the prospectus carefully before
investing.
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 and information regarding how the Fund voted proxies
relating to portfolio securities during the most recent twelve month period
ending June 30 is available, without charge, calling 1.800.826.2333, or by
visiting www.vaneck.com, or on the Commission's website at http://www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Form N-Qs are available on the Commission's website at http://www.sec.gov and
may be reviewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information on the operation of the Public Reference Room may
be obtained by calling 1.800.SEC.0330. The Fund's complete schedule of portfolio
holdings is also available by calling 1.800.826.2333 or by visiting
www.vaneck.com.
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.
Information included in Item 1.
Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
Item 8. PORTFOLIO MANAGER OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
Item 9. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
Item 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
Item 11. 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) There were no significant changes in the registrant's internal controls
over financial reporting or in other factors that could significantly
affect these controls over financial reporting subsequent to the date of
our evaluation.
Item 12. EXHIBITS.
(a)(1) Not applicable.
(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, SVP & CFO
-----------------------------
Date August 26, 2005
---------------
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 26, 2005
---------------
By (Signature and Title) /s/ Bruce J. Smith, CFO
---------------------------
Date August 26, 2005
---------------