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 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
Date of reporting period: JUNE 30, 2005
Item 1. REPORT TO SHAREHOLDERS.
VAN ECK GLOBAL
Worldwide Insurance Trust
[GRAPHIC OMITTED]
SEMI-ANNUAL REPORT
JUNE 30, 2005
WORLDWIDE ABSOLUTE RETURN FUND
GLOBAL INVESTMENTS SINCE 1955
The information in the shareholder letter represents the personal opinions of
the management 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 management team members are as of June 30,
2005 and are subject to change.
WORLDWIDE ABSOLUTE RETURN FUND
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Dear Shareholder:
The Initial Class shares of the Van Eck Worldwide Absolute Return Fund produced
a total return of 0.71% for the six months ended June 30, 2005. In comparison,
the Fund's benchmark, the Citigroup Three-Month U.S. Treasury Bill Index,(1)
returned 1.26% for the same period.
The U.S. convertibles market produced a particularly challenging investing
environment during the semi-annual period, while the U.S. equity market provided
a somewhat more favorable one for the Fund's sub-advisers' efforts to exploit
pricing disparities, market inefficiencies, anticipated securities price
movements and/or cyclical relationships. During the first half of 2005, many
convertible arbitrage indices were down between 5% and 7%, while several equity
market neutral indices returned between 1% and 2%. The Fund's decision to
overweight assets to the equity market neutral strategy proved prudent, as the
positive returns generated by this strategy were only partially offset by the
negative returns from the convertible arbitrage strategy. Thus, the Fund's
overall performance for the six months was modest but positive.
MARKET AND ECONOMIC REVIEW
The Fund's major allocations are to U.S. convertible arbitrage and U.S. equity
market neutral strategies. This section discusses market conditions for these
investment areas.
CONVERTIBLE ARBITRAGE The first half of 2005 turned out to be one of the worst
periods in history for higher-quality investment grade convertibles. While the
convertible arbitrage market recovered somewhat in the last six weeks or so of
the period, it suffered through mid May from lackluster equity volatility,
widening fixed income credit spread assumptions and massive redemptions from the
strategy. For the better part of three years, the convertible arbitrage strategy
had been priced at fair value. However, with absolute returns declining,
investors started redeeming in the second half of 2004. This redemption trend
accelerated during the first half of 2005 and roiled the market significantly.
With only sellers of convertibles and with brokers not providing liquidity, the
asset class was re-priced violently in April and May. Many convertible arbitrage
funds have since shut down, leaving only the larger, better-capitalized players
to take advantage of the pricing decline. Indeed, in mid May, it was reported
that multi-strategy funds stepped up their buying of convertibles as they viewed
the asset class as inexpensive.
EQUITY MARKET NEUTRAL
During the first six months of 2005, long positions established based on
predicted earnings-to-price ratios, return-on-assets and analyst recommendations
generated positive returns. Taking short positions based on observed negative
trends, such as individual stocks' 3-month total returns, trading volume and
leverage ratios, also proved successful overall. Positions taken based on a
company's dividend yield generated rather neutral results during the six-month
period.
FUND REVIEW
As of June 30, 2005, assets were allocated to two of our six qualified
sub-advisers, namely Gartmore Mutual Fund Capital Trust (formerly known as Coda
Capital) and Analytic Investors.
GARTMORE MUTUAL FUND CAPITAL TRUST
As it has done since starting to manage a portion of the Fund's assets in July
2003, Gartmore continued during this semi-annual period to seek to identify and
capitalize on opportunities in the market for convertible securities. Gartmore
has traditionally focused on higher quality investment grade issues, maintaining
a 60% investment grade portfolio weighting. Recently, Gartmore's mandate was
revised, based on our view that there may be profitable investment opportunities
in issuers with improving earnings and cash flow. The sub-adviser is no longer
required to hold 60% in investment grade issues and will employ leverage when
deemed appropriate. While Gartmore intends to maintain its focus on strong
credits, such changes enable the sub-adviser to seek value regardless of agency
rating. Gartmore may also employ a strategy of shaping market hedges based on
fundamental analysis, although the sub-adviser will not utilize leverage within
this strategy.
1
WORLDWIDE ABSOLUTE RETURN FUND
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With this revised mandate, Gartmore's portion of the Fund performed well on a
relative basis, though absolute performance was held back by the overall
contraction in the convertibles market. While credit spreads were a headwind
during the six months, Gartmore's competitive performance relative to its peers
was due primarily to the sub-adviser's focus on strong credits producing cash
flow and its fundamental analysis of each name.
Since the convertibles market's low point in mid-May 2005, Gartmore believes
convertible arbitrage valuations have put in a floor, as evidenced by the
market's gradual recovery. Indeed, Gartmore expects valuations to be stable and
appreciate commensurate with increases in volatility or credit tightening going
forward. On a macro level, should the Federal Reserve Board increase interest
rates more vigorously in the months ahead than the market currently anticipates
in order to ward off inflationary pressures and asset bubbles, Gartmore
anticipates there may be a healthy increase in equity market volatility. At the
same time, Gartmore believes that credit spread widening would likely be modest
given the health of company balance sheets in general.
ANALYTIC INVESTORS
Analytic Investors has been managing a portion of Fund assets since early
September 2003. Analytic stayed true during the first half of 2005 to its
long/short equity market-neutral strategy. Analytic's process is based on the
fundamental belief that there is persistency in the types of stock
characteristics investors prefer, and it believes that portfolios that reflect
these biases will add value in the long run. Investor behavior observed during
the first six months of 2005 was quite consistent with that seen over recent
years. As a result, Analytic's investment process was effective, benefiting
particularly from an emphasis on companies with above-average predicted
earnings-to-price ratios. These companies generally performed well, as investors
paid increased attention to future earnings in light of the economic recovery.
Analytic's portion of the Fund was also effectively positioned in companies with
above-average profitability, which helped performance, as investors favored
quality companies over riskier ones. Finally, an emphasis on stocks exhibiting
price momentum helped, as these companies outperformed as well.
For the semi-annual period, Analytic had strong stock selection within the
majority of economic areas, with health care and business equipment and services
being the strongest. Among the best performing stocks for this portion of the
Fund was a short position in Biogen (0.2% of Fund net assets as of June 30),
whose share price declined after it suspended marketing and clinical trial use
of its multiple sclerosis treatment Tysabri and alerted doctors to stop using
the drug. Also benefiting the Fund was a long position in oil refiner Valero
Energy (0.0% of Fund net assets as of June 30), whose share price rallied after
it reported strong fourth-quarter profits that exceeded analysts' estimates. A
long position in business services company Equifax (0.8% of Fund net assets as
of June 30) also helped Fund performance, as its shares rallied after posting
strong first quarter earnings. A short position in eBay (0.3% of Fund net assets
as of June 30) also proved effective when its stock fell after providing
weaker-than-expected profit forecasts. Detracting from this portion of the
Fund's position was a short position in healthcare firm Caremark Rx (0.5% of
Fund net assets as of June 30), whose share price rallied after reporting strong
first quarter earnings and raising its profit outlook for 2005.
Analytic intends to continue to emphasize high quality companies with strong
profit margins and return-on-equity as well as certain companies with attractive
forecasted earnings and sales-to-price ratios. If interest rates rise in a
modest but steady fashion during the second half of 2005, Analytic further
anticipates maintaining its emphasis on companies with higher-than-average
leverage.
* * *
Going forward, our management team intends to continue implementing strategies
that may enhance the performance of the Fund while carefully examining current
market cycles. For example, the Fund may engineer directional light hedges
during those times when the market appears to be experiencing steady recovery.
Given our goal of capital preservation in the short term and
2
WORLDWIDE ABSOLUTE RETURN FUND
- --------------------------------------------------------------------------------
appreciation over the long term, we will likely adjust our investment style
toward the more aggressive end of the absolute return spectrum when market
conditions are favorable and toward the conservative end when conditions are
otherwise. As the Fund grows, we expect to diversify Fund assets further among
sub-advisers and to include more directional/tactical strategies if appropriate.
Since the sub-advisers will employ aggressive investment strategies and
techniques that may each be considered inherently risky and may employ
techniques, strategies and analyses based on historic relationships,
correlations, assumptions or the occurrence of certain events that may be
disrupted, fail to exist or materialize, the Fund and you may lose money. In
addition, a sub-adviser may incorrectly assess relative values or the relative
values of securities may be affected by factors or events the sub-adviser failed
to consider or anticipate.
Although the Fund believes that its policy of using multiple investment
sub-advisers (rather than a single firm) that employ various absolute return
strategies may mitigate losses in generally declining markets, there can be no
assurance that losses will be avoided. Further, because of minimum investment
amounts imposed by sub-advisers, the assets of the Fund may be managed by as few
as one sub-adviser employing a single investment strategy. At this time, assets
are allocated to two of our six qualified sub-advisers, Gartmore and Analytic
Investors. Investment strategies and sub-advisers whose performance has
historically been non-correlated or demonstrated low correlations to one another
or to major world financial market indices may become correlated at certain
times, such as during a liquidity crisis in global financial markets. During
these periods, certain absolute return investment and hedging strategies may
cease to function as anticipated.
The Fund is classified as a non-diversified fund under the Investment Company
Act of 1940 (the "1940 Act") to enable it to concentrate its assets in a
narrower group of stocks than a diversified fund, and is thus also subject to
the non-diversification risk. Thus, a large loss in an individual stock may
cause a much larger loss in a non-diversified fund's value.
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 Absolute Return
Fund, and we look forward to helping you meet your investment goals in the
future.
[PHOTOS OMITTED]
DAVID A. SEMPLE SAMUEL R. HALPERT JAN F. VAN ECK
MANAGEMENT MANAGEMENT MANAGEMENT
TEAM MEMBER TEAM MEMBER TEAM MEMBER
July 19, 2005
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS; CURRENT PERFORMANCE MAY BE
LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED. PERFORMANCE INFORMATION
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.
3
WORLDWIDE ABSOLUTE RETURN FUND
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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 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.
Basic Materials -4.4
Capital Goods 6.0
Conglomerates -1.5
Consumer Cyclical 0.3
Consumer Non-Cyclical 0.9
Energy 1.5
Financial 10.1
Healthcare 0
Services 3.5
Technology 3.9
Transportation 0.6
Utilities -1.2
- --------------------------------------------------------------------------------
* PERCENTAGE OF NET ASSETS.
NET EXPOSURE WAS CALCULATED BY ADDING LONG AND SHORT POSITIONS.
PORTFOLIO IS SUBJECT TO CHANGE.
4
WORLDWIDE ABSOLUTE RETURN FUND
EXPLANATION OF EXPENSES (UNAUDITED)
- --------------------------------------------------------------------------------
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 $1,007.10 $12.44
Hypothetical (5% return before expenses) $1,000.00 $1,012.40 $12.47
- -----------------------------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 2.50%, multiplied
by the average account value over the period, multiplied by 181 divided by 365
(to reflect the one-half year period)
5
WORLDWIDE ABSOLUTE RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
NO. OF VALUE
SECTOR SHARES SECURITIES (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS:
BASIC MATERIALS: 5.9%
153 Allegheny Technologies, Inc. $ 3,375
393 Ball Corp. 14,132
1,169 Bemis Company, Inc. 31,025
1,774 Dow Chemical Co. 78,996
1,442 Eastman Chemical Co. 79,526
923 Fortune Brands, Inc. 81,961
1,361 Georgia Pacific Corp. 43,280
84 Gilead Sciences, Inc. + 3,695
495 Pactiv Corporation + 10,682
80 United States Steel Corp. 2,750
----------
349,422
----------
CAPITAL GOODS: 7.8%
461 Advanced Micro Devices, Inc. + 7,994
100 Avon Products, Inc. 3,785
324 Black & Decker Corp. 29,111
563 Centex Corp. 39,787
464 Cummins, Inc. 34,619
570 Dell, Inc. + 22,521
823 Eaton Corp. 49,298
105 General Dynamics Corp. 11,502
310 Goodrich Corp. 12,698
2,053 Goodyear Tire & Rubber Co. + 30,590
240 Hewlett-Packard Co. 5,642
98 Intel Corp. 2,554
264 KB Home 20,125
171 L-3 Communications
Holdings, Inc. 13,095
157 Lockheed Martin Corp. 10,185
3,504 Lucent Technologies Inc. + 10,197
1,096 Maytag Corp. 17,163
3,026 Micron Technology, Inc. + 30,895
553 Motorola, Inc. 10,098
1,210 National Semiconductor Corp. 26,656
686 NVIDIA Corp. + 18,330
249 Parker Hannifin Corp. 15,440
934 Sanmina-SCI Corp. + 5,109
562 Solectron Corp.+ 2,130
593 Stanley Works 27,005
192 Texas Instruments, Inc. 5,389
---------
461,918
---------
CONSUMER CYCLICAL: 1.3%
54 Johnson Controls, Inc. 3,042
241 Liz Claiborne, Inc. 9,582
329 Masco Corp. 10,449
550 Navistar International Corp.+ 17,600
150 NIKE, Inc. (Class B) 12,990
125 PACCAR, Inc. 8,500
273 Tyco International Ltd. 7,972
92 VF Corp. 5,264
---------
75,399
---------
CONSUMER NON-CYCLICAL: 2.2%
1,072 ArcherDanielsMidland Co. $ 22,919
3,112 Hercules, Inc. + 44,035
1,573 Pepsi Bottling Group, Inc. 45,004
24 Reynolds American, Inc. 1,891
532 SUPERVALU, Inc. 17,349
---------
131,198
---------
ENERGY: 5.3%
452 Amerada Hess Corp. 48,143
1,277 Baker Hughes, Inc. 65,330
33 Burlington Resources, Inc. 1,823
679 Chevron Corp. 37,970
1,594 ConocoPhillips 91,638
268 Exxon Mobil Corp. 15,402
549 Occidental Petroleum Corp. 42,235
282 XTO Energy, Inc. 9,585
---------
312,126
---------
FINANCIAL: 6.5%
933 ACE Ltd. 41,845
429 AmSouth Bancorporation 11,154
606 Bank of America Corp. 27,640
720 Bear Stearns Companies, Inc. 74,836
389 Brunswick Corp. 16,851
168 CIGNA Corp. 17,981
978 Countrywide Financial Corp. 37,761
1,000 First Horizon National Corp. 42,200
460 National City Corp. 15,695
71 PNC Financial Services
Group, Inc. 3,867
1,206 Providian Financial Corp. + 21,262
861 Wachovia Corp. 42,706
203 Washington Mutual, Inc. 8,260
325 XL Capital Ltd. (Class A) 24,187
---------
386,245
---------
HEALTHCARE: 4.5%
535 AmerisourceBergen Corp. 36,995
771 Cardinal Health, Inc. 44,394
312 Forest Laboratories, Inc. + 12,121
38 Genzyme Corp. + 2,283
658 HCA, Inc. 37,289
505 Hospira, Inc. + 19,695
366 Humana, Inc. + 14,545
718 Johnson & Johnson 46,670
1,111 McKesson Corp. 49,762
---------
263,754
---------
SERVICES: 11.1%
623 Affiliated Computer Services, Inc.
(Class A)+ 31,835
1,022 Apartment Investment &
Management Co. (Class A) 41,820
322 Autodesk, Inc. 11,067
140 Autonation, Inc. + 2,873
See Notes to Financial Statements
6
WORLDWIDE ABSOLUTE RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2005 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
NO. OF VALUE
SECTOR SHARES SECURITIES (NOTE 1)
- --------------------------------------------------------------------------------
SERVICES: (CONTINUED)
127 Autozone, Inc. + $ 11,742
80 Cendant Corp. 1,790
766 Convergys Corp. + 10,893
1,217 Darden Restaurants, Inc. 40,137
1,298 Equifax, Inc. 46,352
126 Fluor Corp. 7,256
669 H&R Block, Inc. 39,036
458 Home Depot, Inc. 17,816
350 IMS Health, Inc. 8,670
353 Intuit, Inc. + 15,924
951 J.C. Penny Co., Inc. 50,004
196 Meredith Corp. 9,616
348 NCR Corp. + 12,222
340 Oracle Corp. + 4,488
1,873 Parametric Technology Corp. + 11,950
550 Plum Creek Timber Co., Inc. 19,965
398 Robert Half
International, Inc. 9,938
279 Ryder System, Inc. 10,211
558 Sherwin-Williams Co. 26,276
1,308 Simon Property Group, Inc. 94,816
95 Time Warner, Inc. + 1,587
1,694 Unisys Corp. + 10,723
3,066 Walt Disney Co. 77,202
569 Yum! Brands, Inc. 29,634
--------
655,843
--------
TECHNOLOGY: 2.8%
75 Agilent Technologies, Inc. + 1,727
1,578 AT&T Corp. 30,045
227 Bard (C.R.), Inc. 15,098
200 Becton, Dickinson & Co. 10,494
220 Biomet, Inc. 7,621
172 Comcast Corp. (Class A) + 5,280
570 Daneher Corp. 29,834
1,503 Freescale Semiconductor, Inc.
(Class B) + 31,834
216 Nextel Communications, Inc.
(Class A) + 6,979
2,861 Qwest Communications
International, Inc. + 10,614
309 Raytheon Co. 12,088
505 Xerox Corp. + 6,964
--------
168,578
--------
TRANSPORTATION: 1.7%
540 Carnival Corp. 29,457
632 CSX Corp. 26,961
626 Delta Airlines, Inc. + 2,354
1,253 Norfolk Southern Corp. 38,793
--------
97,565
--------
UTILITIES: 4.6%
2,073 AES Corp. + $ 33,956
785 Allegheny Energy, Inc. + 19,798
1,742 Allied Waste Industries,
Inc. + 13,814
4,568 CenterPoint Energy, Inc. 60,343
2,924 CMS Energy Corp + 44,035
600 Constellation Energy
Group, Inc. 34,614
545 Edison International 22,100
292 El Paso Corp. 3,364
43 KeySpan Corp. 1,750
456 TXU Corp. 37,889
--------
271,663
--------
TOTAL COMMON STOCKS: 53.7%
(Cost: $2,874,430) 3,173,711
---------
CONVERTIBLE NOTES:
CAPITAL GOODS: 6.8%
100,000 ADC Telecommunications, Inc.
FRN 3.996% 6/15/13 100,625
100,000 Lucent Technologies, Inc
8.00% 8/1/31 103,250
100,000 Oak Industries
4.875% 3/1/08 107,500
90,000 Sealed Air Corp.
3.00% 6/30/33 (144A) 89,438
--------
400,813
--------
FINANCIAL: 2.8%
90,000 BankUnited Capital Trust
3.125% 3/1/34 (144A) 85,050
80,000 Leucadia National Corp.
3.75% 4/15/14 81,400
---------
166,450
---------
SERVICES: 6.8%
100,000 Bell Microproducts,
Inc.-Series B
3.75% 3/5/24 105,750
100,000 Charming Shoppes, Inc.
4.75% 6/1/12 112,125
100,000 EMC Corp.
4.5% 4/1/07 106,000
150,000 Open Solutions, Inc.
SCN 1.467% 2/2/35 (144A 76,125
--------
400,000
--------
TECHNOLOGY: 3.6%
100,000 Eastman Kodak Co.
3.375% 10/15/33 107,750
100,000 EDO Corp.
5.250% 4/15/07 103,500
--------
211,250
--------
See Notes to Financial Statements
7
WORLDWIDE ABSOLUTE RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2005 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
NO. OF VALUE
SECTOR SHARES SECURITIES (NOTE 1)
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE NOTES: 19.9%
(Cost: $1,205,700) $1,178,513
----------
PREFERRED STOCK:
FINANCIAL: 9.9%
2,000 Coltec Capital Trust
5.25% 4/15/28 98,000
2,000 Omnicare Capital Trust II -
Series B 4.00% 6/15/09 116,000
1,500 Reinsurance Group of
America, Inc.
5.75% 12/15/50 90,375
1 Federal National Mortgage
Association 5.375% 1/5/08 97,105
1,900 Sovereign Capital Trust
4.375% 3/1/34 84,075
2,000 TXI Capital Trust
5.5% 6/30/28 97,500
----------
TOTAL PREFERRED STOCKS: 9.9%
(Cost: $567,454) 583,055
----------
TOTAL INVESTMENTS: 83.5%
(Cost: $4,647,584) (a) 4,935,279
OTHER ASSETS LESS LIABILITIES: 16.5% 976,987
----------
NET ASSETS: 100% $5,912,266
==========
SECURITIES SOLD SHORT
BASIC MATERIALS: (10.3)%
(395) Air Products
and Chemicals, Inc. (23,819)
(1,551) Alcoa, Inc. (40,528)
(1,314) Avery Dennison Corp. (69,589)
(350) Biogen Idec, Inc. + (12,058)
(449) Chiron Corp. + (15,666)
(3,945) Corning, Inc. + (65,566)
(641) Du Pont (E.I.)
de Nemours & Co. (27,569)
(1,406) Ecolab, Inc. (45,498)
(223) Freeport-McMoRan
Copper & Gold, Inc. (8,349)
(485) Kimberly-Clark Corp. (30,356)
(405) MeadWestvaco Corp (11,356)
(1,589) MedImmune, Inc. + (42,458)
(261) Monsanto Co. (16,409)
(481) Newmont Mining Corp. (18,773)
(265) Snap-on, Inc. (9,090)
(466) Temple-Inland, Inc. (17,312)
(500) Texas Industries, Inc. (28,115)
(444) Vulcan Materials Co. (28,856)
(1,506) Weyerhaeuser Co. (95,857)
---------
(607,224)
---------
CAPITAL GOODS: (8.6)%
(26) 3M Co. $ (1,880)
(2,400) ADC Telecommunications,
Inc. + (52,248)
(211) American Power
Conversion Corp. (4,977)
(392) Andrew Corp. + (5,002)
(951) Applied Micro Circuits
Corp. + (2,435)
(166) Broadcom Corp. (Class A) + (5,895)
(2,470) Ciena Corp. + (5,162)
(1,040) Comverse Technology, Inc. + (24,596)
(462) Cooper Industries Ltd.
(Class A) (29,522)
(711) Cooper Tire & Rubber Co. (13,203)
(700) EMC Corp. + (9,597)
(400) Goodrich Corp. (16,384)
(178) Honeywell International, Inc. (6,520)
(1,277) JDS Uniphase Corp. + (1,941)
(1,182) Linear Technology Corp. (43,368)
(2,310) Maxim Integrated Products,
Inc. (88,265)
(74) Molex, Inc. (1,927)
(405) National-Oilwell Varco,
Inc. + (19,254)
(1,159) Pall Corp. (35,187)
(856) PMC-Sierra, Inc. + (7,986)
(991) Sealed Air Corp. + (49,342)
(319) Tellabs, Inc. + (2,775)
(1,336) United Technologies Corp. (68,604)
(2,093) Visteon Corp. (12,621)
---------
(508,691)
---------
CONGLOMERATES: (1.5)%
(2,627) General Electric Co. (91,026)
---------
CONSUMER CYCLICAL: (1.0)%
(341) Ford Motor Co. (3,492)
(418) Genuine Parts Co. (17,176)
(1,614) Newell Rubbermaid, Inc. (38,478)
---------
(59,146)
---------
CONSUMER NON-CYCLICAL: (1.3)%
(172) Altria Group, Inc. (11,122)
(251) Coca-Cola Co. (10,479)
(42) PepsiCo, Inc. (2,265)
(764) Wrigley (Wm.) Jr. Co. (52,594)
---------
(76,460)
---------
ENERGY: (3.8)%
(767) Ashland, Inc. + (55,124)
(1,135) EOG Resources, Inc. (64,468)
(311) Noble Corp. (19,130)
(1,137) Rowan Companies, Inc. (33,780)
(438) Schlumberger Ltd. (33,262)
(402) Transocean, Inc. + (21,696)
---------
(227,460)
---------
See Notes to Financial Statements
8
WORLDWIDE ABSOLUTE RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2005 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
NO. OF VALUE
SECTOR SHARES SECURITIES (NOTE 1)
- --------------------------------------------------------------------------------
FINANCIAL: (9.1)%
(632) Ambac Financial Group, Inc. $(44,088)
(435) American International
Group, Inc. (25,274)
(1,300) BankUnited Financial Corp.
(Class A) (35,152)
(2,720) Charles Schwab Corp. (30,682)
(560) Cincinnati Financial Corp. (22,154)
(343) Fannie Mae (20,031)
(939) Fifth Third Bancorp (38,696)
(169) Freddie Mac (11,024)
(2,603) Janus Capital Group, Inc. (39,149)
(34) Jefferson-Pilot Corp. (1,714)
(1,300) Leucadia National Corp. (50,219)
(132) M&T Bank Corp. (13,881)
(1,392) Northern Trust Corp. (63,461)
(67) Regions Financial Corp. (2,270)
(900) Reinsurance Group of
America, Inc. (41,859)
(973) SLM Corp. (49,428)
(1,000) Sovereign Bancorp, Inc. (22,340)
(355) Zions Bancorporation (26,103)
---------
(537,525)
---------
HEALTHCARE: (4.5)%
(1,041) Bristol-Myers Squibb Co. (26,004)
(677) Caremark Rx, Inc. + (30,140)
(861) Eli Lilly & Co. (47,966)
(2,000) Omnicare, Inc. (84,860)
(1,891) Schering-Plough Corp. (36,042)
(1,087) Tenet Healthcare Corp. + (13,305)
(853) Watson Pharmaceuticals,
Inc. + (25,215)
---------
(263,532)
---------
SERVICES: (14.4)%
(365) Apollo Group, Inc.
(Class A) + (28,550)
(2,004) Archstone-Smith Trust (77,394)
(6,900) Bell Microproducts, Inc. + (64,860)
(6,800) Charming Shoppes, Inc. + (63,444)
(783) Cintas Corp. (30,224)
(778) Computer Associates
International, Inc. (21,379)
(459) eBay, Inc. + (15,152)
(346) Equity Residential (12,740)
(843) International Game Technology(23,730)
(28) Knight-Ridder, Inc. (1,718)
(724) Kroger Co. + (13,778)
(527) Mercury Interactive Corp. + (20,216)
(505) Monster Worldwide, Inc. + (14,483)
(958) Moody's Corp. (43,072)
(1,548) New York Times Co.
(Class A) (48,220)
SERVICES: (CONTINUED)
(1,641) Novell, Inc. + $ (10,174)
(285) Office Depot, Inc. + (6,509)
(2,000) Open Solutions, Inc. + (40,620)
(653) Paychex, Inc. (21,249)
(42) Sears Holdings Corp. + (6,295)
(3,046) Siebel Systems, Inc. (27,109)
(2,480) Sun Microsystems, Inc. + (9,250)
(2,261) Tiffany & Co. (74,070)
(803) Tribune Co. (28,250)
(2,139) Viacom, Inc. (Class B) (68,491)
(449) Walgreen Co. (20,650)
(1,293) Wendy's International, Inc. (61,611)
----------
(853,238)
----------
TECHNOLOGY: (2.5)%
(671) CenturyTel, Inc. (23,237)
(2,200) Eastman Kodak Co. (59,070)
(696) KLA-Tencor Corp. (30,415)
(431) Medtronic, Inc. (22,321)
(169) PerkinElmer, Inc. (3,194)
(327) Univision Communications, Inc.
(Class A) + (9,009)
----------
(147,246)
----------
TRANSPORTATION: (1.1)%
(4,423) Southwest Airlines Co. (61,612)
(25) Union Pacific Corp. (1,620)
----------
(63,232)
----------
UTILITIES: (5.8%)
(1,129) Ameren Corp. (62,434)
(1,004) Consolidated Edison, Inc. (47,027)
(256) Dominion Resources, Inc. (18,788)
(1,752) FPL Group, Inc. (73,689)
(1,224) Kinder Morgan, Inc. (101,836)
(385) Peoples Energy Corp. (16,732)
(418) Pinnacle West Capital Corp. (18,580)
(329) TECO Energy, Inc. (6,221)
-----------
(345,307)
-----------
TOTAL SECURITIES SOLD SHORT: (63.9)%
(Proceeds: $3,697,152) $(3,780,087)
===========
Glossary:
FRN- Floating Rate Note
SCN- Step Coupon Note
+ Non-income Producing
(a) Securities segregated for securities sold short with a market value of
$4,935,274.
See Notes to Financial Statements
9
WORLDWIDE ABSOLUTE RETURN FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2005 (UNAUDITED)
ASSETS:
Investments at value (cost: $4,647,584) (Note 1) ................ $ 4,935,279
Cash 997,696
Receivables:
Securities sold short ........................................ 3,697,153
Securities sold .............................................. 94,547
Capital shares sold .......................................... 667
Dividends and interest ....................................... 16,974
-------------
Total assets ................................................. 9,742,316
-------------
Liabilities:
Payables:
Securities sold short (Proceeds $3,697,152) .................. 3,780,087
Dividends payable on secuirites sold short ................... 4,219
Capital shares redeemed ...................................... 12
Due to adviser ............................................... 9,356
Accounts payable ............................................. 36,376
-------------
Total liabilities ............................................ 3,830,050
-------------
Net assets ....................................................... $ 5,912,266
=============
Shares outstanding ............................................... 596,503
=============
Net asset value, redemption price and offering price per share ... $ 9.91
=============
Net assets consist of:
Aggregate paid in capital .................................... 5,820,303
Unrealized appreciation of investments ....................... 204,760
Undistributed net investment loss ............................ (3,997)
Accumulated realized loss .................................... (108,800)
-------------
$ 5,912,266
=============
See Notes to Financial Statements
10
WORLDWIDE ABSOLUTE RETURN FUND
- -----------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
INCOME (NOTE 1):
Dividends ......................................................... $ 36,152
Interest .......................................................... 55,003
------------
91,155
EXPENSES:
Management (Note 2) ............................................... $ 68,644
Dividends on securities sold short ................................ 26,436
Professional ...................................................... 14,031
Transfer agency ................................................... 5,973
Reports to shareholders ........................................... 5,701
Custodian ......................................................... 5,431
Trustees' fees and expenses ....................................... 597
Other ............................................................. 1,718
-----------
Total expenses .................................................... 128,531
Expenses assumed by Adviser (Note 2) .............................. (33,451)
------------
Net expenses ...................................................... 95,080
------------
Net investment loss ............................................... (3,925)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3):
Realized gain from security transactions .......................... 212,893
Realized loss from securities sold short .......................... (251,256)
Change in unrealized appreciation of investments .................. 82,911
------------
Net realized and unrealized gain on investments ................... 44,548
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .............. $ 40,623
============
See Notes to Financial Statements
11
WORLDWIDE ABSOLUTE RETURN FUND
- -----------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
---------------- ------------------
INCREASE IN NET ASSETS FROM:
OPERATIONS:
Net investment loss ........................................................... $ (3,925) $ (79,141)
Realized gain from security transactions ...................................... 212,893 459,258
Realized loss from short sales ................................................ (251,256) (515,670)
Change in unrealized appreciation of investments .............................. 82,911 112,950
--------- ----------
Net increase (decrease) in net assets resulting from operations .................. 40,623 (22,603)
--------- ----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net realized gains ............................................................ -- (80,072)
---------- ----------
CAPITAL SHARE TRANSACTIONS*:
Proceeds from sales of shares ................................................. 1,833,163 1,464,840
Reinvestment of distributions -- 80,072
Cost of shares reacquired ..................................................... (1,430,182) (1,895,741)
---------- ----------
Net increase (decrease) in net assets resulting from capital share transactions 402,981 (350,829)
---------- ----------
Total increase (decrease) in net assets ....................................... 443,604 (453,504)
NET ASSETS:
Beginning of period ........................................................... 5,468,662 5,922,166
---------- ----------
End of period (including undistributed net investment loss of $3,997 and $72
respectively) ...............................................................$ 5,912,266 $ 5,468,662
========== ==========
*SHARES OF BENEFICIAL INTEREST ISSUED AND REDEEMED (UNLIMITED NUMBER OF
$.001 PAR VALUE SHARES AUTHORIZED)
Shares sold ................................................................... 185,657 149,033
Reinvestment of dividends ..................................................... -- 8,154
Shares reacquired ............................................................. (145,103) (192,236)
---------- ----------
Net increase (decrease) ....................................................... 40,554 (35,049)
========== ==========
See Notes to Financial Statements
12
WORLDWIDE ABSOLUTE RETURN FUND
- -----------------------------------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net investment loss ........................................................................... $ (3,925)
Adjustments to reconcile net investment loss to net cash used in operating activities:
Increase in investments at value .......................................................... (77,394)
Increase in receivable for securities sold short .......................................... (299,453)
Increase in receivable for securities sold ................................................ (94,547)
Decrease in receivable for capital shares sold ............................................ 40,565
Increase in dividends and interest receivable ............................................. (1,004)
Decrease in prepaid expenses .............................................................. 2,763
Decrease in securities sold short ......................................................... (9,378)
Decrease in payable for capital shares redeemed ........................................... (7)
Decrease in dividends payable on securities sold short .................................... (556,357)
Increase in other payables ................................................................ 7,724
Unrealized appreciation of investments .................................................... 82,911
Net realized loss from investments ........................................................ (38,363)
----------
Net cash used in operating activities ......................................................... (946,465)
----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sales of shares ................................................................. 1,833,163
Cost of shares reacquired ..................................................................... (1,430,182)
----------
Net cash provided by financing activities ..................................................... 402,981
----------
Net decrease in cash .......................................................................... (543,484)
Cash, beginning of period ..................................................................... 1,541,180
----------
Cash, end of period .......................................................................... $ 997,696
==========
Supplemental disclosure of cash flow information:
Short sale dividends paid during period .................................................. $ 582,793
==========
See Notes to Financial Statements
13
WORLDWIDE ABSOLUTE RETURN FUND
- ---------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
SIX MONTHS YEAR
ENDED ENDED MAY 1, 2003 (A)
JUNE 30, 2005 DECEMBER 31, TO DECEMBER 31,
(UNAUDITED) 2004 2003
------------- ------------- -------------
Net Asset Value, Beginning of Period $9.84 $10.02 $10.00
----- ------ ------
Income From Investment Operations:
Net Investment Loss (0.01) (0.14) (0.03)
Net Realized and Unrealized
Gain on Investments 0.08 0.11 0.05
----- ------ ------
Total from Investment Operations 0.07 (0.03) 0.02
----- ------ ------
Less:
Distributions from Net Realized Gains -- (0.15) --
----- ------ ------
Net Asset Value, End of Period $9.91 $9.84 $10.02
===== ====== ======
Total Return (b) 0.71% (0.30)% 0.20%
- -------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000) $5,912 $5,469 $5,922
Ratio of Gross Expenses to Average Net Assets 4.73%(c) 5.00% 7.06%(c)
Ratio of Net Expenses to Average Net Assets (e) 2.50%(c) 2.50% 2.23%(c)
RATIO OF NET INVESTMENT INCOME TO AVERAGE
Net Assets (d) (0.14)%(c) (1.45)% (0.57)%(c)
Portfolio Turnover Rate 73% 126% 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 expense reimbursement by Adviser to average net assets was
1.23%, 1.50% and 3.97%, respectively.
(e) Net of short sale dividend expense.
See Notes to Financial Statements
14
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 Worldwide
Absolute Return Fund (the "Fund") is a non-diversified series of the Trust and
seeks to achieve consistent absolute (positive) returns in various market
cycles. 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 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 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 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 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 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 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. 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 U.S. generally accepted accounting principles.
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 the
ex-dividend date. Securities sold short at June 30, 2005 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
commissions and extraordinary expenses for the period January 1, 2004 through
April 30, 2006. For the six months ended June 30, 2005, the Adviser assumed
expenses in the amount of $33,451.
Certain of the officers of the trust are officers, directors or stockholders of
the Adviser and Van Eck Securities Corporation, the Distributor.
As of June 30, 2005, the Fund had two sub-advisers, Analytic Investors Inc.
("Analytic") and Gartmore Mutual Fund Capital Trust ("Gartmore", formerly known
as Coda Capital). The Adviser directly paid sub-advisory fees to Analytic at a
rate 1.00% of the portion of the average daily net assets of the Fund managed by
Analytic and to Gartmore at a rate of 0.75% of the portion of the average daily
net assets of the Fund managed by Gartmore.
NOTE 3--INVESTMENTS--Purchases and sales of securities other than U.S.
government securities and short-term obligations aggregated $3,785,911 and
$3,693,448, respectively, for the six months ended June 30, 2005. Proceeds of
short sales and purchases of short sale covers aggregated $2,841,129 and
$2,541,677, respectively, for the six months ended June 30, 2005.
The identified cost of investments owned at June 30, 2005 was $4,647,584 and net
unrealized appreciation aggregated $287,695 of which $406,308 related to
appreciated securities and $118,613 related to depreciated securities.
NOTE 4--CONCENTRATION OF RISK--As of June 30, 2005, Van Eck Securities Corp.
owned 30% of the outstanding shares of beneficial interest of the Fund.
Additionally, the aggregate shareholder accounts of three insurance companies
own approximately 23%, 20% and 18% of the outstanding shares of beneficial
interest of the Fund.
NOTE 5--INCOME TAXES--The tax character of distributions paid to shareholders
during the year ended December 31, 2004 consisted of ordinary income of $80,072.
15
WORLDWIDE ABSOLUTE RETURN FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
At December 31, 2004, the Fund had a capital loss carryforward of $32,870
available expiring December 31, 2012.
NOTE 6--TRUSTEE DEFERRED COMPENSATION PLAN--The Trust established a Deferred
Compensation Plan (the "Plan") for Trustees. Commencing January 1, 1996, the
Trustees can elect to defer receipt of their Trustee fees until retirement,
disability or termination from the board. The Fund's contributions to the Plan
are limited to the amount of fees earned by the participating Trustees. The fees
otherwise payable to the participating Trustees are invested in shares of the
Van Eck Funds as directed by the Trustees.
The 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 was $176.
NOTE 7--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 8--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.
16
VAN ECK WORLDWIDE INSURANCE TRUST
- --------------------------------------------------------------------------------
WORLDWIDE ABSOLUTE RETURN FUND
APPROVAL OF ADVISORY AND SUB-ADVISORY AGREEMENTS
In considering the renewal of the investment advisory and sub-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 the Fund's
investment advisory and sub-advisory agreements. Such information included,
among other things, the following:
o The Adviser's and Sub-Advisers' responses to a comprehensive questionnaire
prepared by independent legal counsel on behalf of the Independent
Trustees;
o The Adviser's financial statements and business plan with respect to its
mutual fund operations;
o Copies of the ADV of each Sub-Adviser;
o Information regarding each Sub-Advisers' organization, personnel and
investment strategies;
o Profitability analysis for the Adviser with respect to the 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 services provided by the Sub-Advisers; (2) the
capabilities and background of the Sub-Advisers' investment personnel, and the
overall capabilities, experience, resources and strengths of each Sub-Adviser
and its affiliates in managing investment companies and other accounts utilizing
similar investment strategies; (3) the quality, nature, cost and character of
the administrative and other services provided by the Adviser and its
affiliates, including its services in overseeing the services provided by each
Sub-Adviser; (4) 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 Fund's 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 Fund with a view to
reducing non-management expenses of the Fund; (5) the terms of the advisory and
sub-advisory agreements and the reasonableness and appropriateness of the
particular fee paid by the Fund for the services described therein; (6) the
Adviser's willingness to subsidize the operations of the Fund from time to time
by means of waiving a portion of its management fees or paying expenses of the
Fund; (7) 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; (8) the responsiveness of the
Adviser to inquiries from regulatory agencies such as the SEC and the office of
the New York Attorney General ("NYAG"); (9) the resources devoted to compliance
efforts undertaken by the Adviser on behalf of the Fund and the record of
compliance with the investment policies and restrictions and with policies on
personal securities transactions; and (10) the ability of the Adviser and each
Sub-Adviser to attract and retain quality professional personnel to perform a
variety of investment advisory and administrative services for the Fund.
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
17
VAN ECK WORLDWIDE INSURANCE TRUST
- --------------------------------------------------------------------------------
APPROVAL OF ADVISORY AND SUB-ADVISORY AGREEMENTS (CONTINUED)
and procedures reasonable designed to prevent harmful market timing activities
by investors in the Fund. 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 noted that the Fund commenced its operations on May 1, 2003, and that
the Adviser has not realized any profits with respect to the Fund since its
commencement and does not expect to realize profits in the coming year. In view
of the small size of the Fund and the fact that none of the Sub-Advisers is
affiliated with the Adviser, the Board concluded that profitability of a
Sub-Adviser was not a relevant factor in its renewal deliberations regarding the
Sub-Adviser. Similarly, the Board concluded that the Fund does not have
sufficient assets for the Adviser or any Sub-Adviser to realize economies of
scale for the foreseeable future, and, therefore, that the implementation of
breakpoints would not be warranted at this time.
In its renewal deliberations for the Fund, the Board further noted that the Fund
is unique in its structure and investment strategy. The Board also noted that
the Adviser has agreed to waive and will continue to waive through April 2006 a
portion of its management fee to limit the total expenses of the Fund. The Board
concluded that it would be appropriate to allow the Adviser a reasonable period
of time to evaluate the effectiveness of the Fund's structure and investment
strategy.
The Board considered additional factors with respect to Analytic Investors,
Inc., AXA Rosenberg Investment Management LLC, Gartmore Mutual Fund Capital
Trust, Gotham Advisors, Inc., Martingale Asset Management, L.P., and PanAgora
Asset Management, Inc., the Fund's Sub-Advisers. The Board noted that only
Analytic and Gartmore are currently managing a portion of the Fund's assets. The
Board concluded that each of the Sub-Advisers is qualified to manage the Fund's
assets in accordance with its respective investment objectives and policies,
that each Sub-Adviser's investment strategy is appropriate for pursuing the
Fund's investment objectives, and that the respective strategies of all the
Sub-Advisers would be complementary in pursuing the Fund's investment objective.
The Board further concluded that it would be appropriate to allow the
Sub-Advisers a reasonable period of time to evaluate the effectiveness of their
investment strategies.
The Board did not consider any single factor as controlling in determining
whether or not to renew the investment advisory and sub-advisory agreements. Nor
are the items described herein all encompassing 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 and sub-advisory agreements is in the interests of
shareholders, and accordingly, the Board, including all of the Independent
Trustees, approved the continuation of the advisory and sub-advisory agreements
for an additional one-year period.
18
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[LOGO]
Investment Adviser: Van Eck Associates Corporation
Distributor: Van Eck Securities Corporation [LOGO]
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. PURCHASES 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 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) 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 ABSOLUTE RETURN 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
-----------------