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WORLDWIDE
INSURANCE TRUST
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JUNE 30, 1996
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VAN ECK
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WORLDWIDE
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HARD
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ASSETS
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FUND
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SEMI-ANNUAL
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REPORT
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[LOGO]
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VAN ECK WORLDWIDE HARD ASSETS FUND
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JUNE 30, 1996 SEMI-ANNUAL REPORT
Dear Shareholder:
We are pleased to report that the Van Eck Worldwide Hard Assets Fund is up 19.3%
year-to-date as of June 30, as many hard asset sectors performed well on strong
global economic growth during the first half of the year. In addition, the Fund
has outperformed the S&P 500, which rose 10.1%, and the Ibbotson Hard Assets
Index*, which rose 5.8% over this period.
ECONOMIC REVIEW AND OUTLOOK
During the first six months of the year, economic growth in the U.S. surprised
market participants with its vigor and investors continually increased
projections for GDP growth and inflation. Thus, rather than expecting cuts in
the federal funds rate, investors began to anticipate rate increases by the end
of December. Economic growth was also stronger than anticipated in Japan where
first quarter GDP growth increased over 12% on an annualized basis. In Europe,
however, economic growth was lower than anticipated, at only modest levels,
while strong economic growth continued in the emerging countries of Asia and
Latin America.
Going forward, we continue to believe that the economic environment is favorable
for hard asset performance. Global economic growth should continue to accelerate
modestly. We broadly agree with the recently-released IMF estimates of an
acceleration of global growth from 3.5% last year to 3.8% this year and 4.3% in
1997 (despite differences in regional economic growth, with the U.S. and Japan
at a healthy 2.5% estimated rate compared with 0.8% in Germany). Signs of
healthy growth include strength in leading economic indicators, positively
sloped yield curves in major industrial economies and a stimulative monetary
policy as measured by 25% annual growth rates in G7 monetary reserves. These
growth estimates are consistent with our view that the inflation rate in the
U.S. has troughed and will rise modestly in the coming year. In Japan and
Germany, although inflation rates are presently rising, they are likely to be
muted in the coming year. We expect growth rates to continue to be exceptionally
strong in the developing economies of Asia and to strengthen further in Latin
America.
SECTOR REVIEW AND OUTLOOK
Energy, the largest allocation in your Fund throughout the first half of the
year, performed well during this period and we expect good performance to
continue, albeit in selected energy sectors. While some investors anticipate oil
price declines over the remainder of the year, we believe prices will remain
strong and may in fact rise. Consensus forecasts have consistently
underestimated demand and, in our view, the commodity markets will not see Iraqi
oil until September at the earliest. This suggests that any supply disruptions
could cause significant upward movements in oil prices. An example of this
occurred this past spring as low oil inventories, caused by the adoption of
"just-in-time" inventory practices, combined with strong demand, stemming from
an unexpectedly cold winter in the Northeast, led crude oil prices to rise above
$25 per barrel. The market fell from those levels but stabilized at $20 per
barrel despite news of renewed Iraqi supply. Commodity fundamentals for natural
gas also remain strong but we continue to believe that the natural gas producers
are better investments. Almost half the energy holdings of the Fund are
allocated to exploration and production companies which will benefit from this
strong pricing environment. Our top holdings include Louisiana Land &
Exploration and United Meridian Corporation. Your portfolio also continues to
hold deep-water offshore drilling companies as supply/demand fundamentals remain
strong and offshore rig-leasing rates continue to climb. Our top holding in this
sector is Reading & Bates (R&B), a leading deep-water drilling company. We
believe R&B's earnings will be much stronger than anticipated and that valuation
multiples will expand.
In the base metals markets, the primary focus has been the Sumitomo copper
scandal. The Fund sidestepped the scandal and the associated copper price crash
since it had no exposure to the underlying asset nor to any copper-related
equities. Our fundamental view on copper had been bearish for some time, with
supply growing at nearly four times demand. We found much better value in other
base metals investments, such as aluminum and tin equities. We believe recent
weakness in many base metals prices stems, at least in part, from "knock-on"
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<PAGE>
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impacts from the copper scandal and that current levels represent good value.
This value, combined with our view that demand should increase during the second
half of 1996 and in 1997, should result in higher prices. Therefore, base metals
may be an important driver of the Fund during the second half of the year. One
of our top holdings in this sector is Alcoa, the largest aluminum producer in
the world.
Gold shares completed a round trip during the first six months of the year. The
year started with a bang as gold jumped to over $415 per ounce in early February
and gold shares rose over 25%. That ascent was retraced with most of the decline
occurring during June, when gold shares turned in their worst performance in 18
months. The Fund ended the second quarter with a 10% allocation to gold.
Fundamentally, we believe gold is attractive based on its commercial
supply/demand gap. In addition, investment demand should increase over the next
year as central banks engage in aggressive monetary "reflation" (or "easy"
monetary policy). On the supply side, central bank sales and mining company
hedging programs have put pressure on the gold price. It is virtually impossible
to predict when these sales will end, but recently some mining companies have
announced reversals of hedging programs, which should be a bullish indicator.
Our strategy for gold shares is to buy on weakness as support levels are
reached.
False start. Those two words describe the recent action in paper shares. The
equity market had begun to anticipate price increases in many paper grades over
the past several months. However, during June information was released
suggesting that commodity price increases were going to be postponed until 1997,
and paper shares declined. While valuations are extremely cheap in the paper
sector, we continue to position the Fund defensively. Our allocation has been at
or below 10% of total assets so far this year. In addition, we have concentrated
the portfolio in defensive holdings, such as tissue company Fort Howard,
timberland owner Rayonier, and cellulose pulp producer Buckeye Cellulose.
In the real estate arena, market fundamentals in the U.S. continue to improve,
particularly in the hotel, suburban office and industrial sectors, where
occupancy levels and rate growth are strong. Apartment markets nationwide are at
supply/demand equilibrium, but select markets are experiencing imbalances due to
development restrictions, which are preventing supply from keeping up with job
growth. Retail real estate continues to suffer as the nation is still
"over-stored." Internationally, strong GDP growth is driving record development
activity in China and South East Asia. The Hong Kong market is showing signs of
strength as the colony prepares for 1997, while Singapore's recently enacted
anti-speculation moves have cooled the markets. Europe continues to be sluggish,
reflecting the overall economy. We believe that real estate can continue to
provide consistent returns and acts as a portfolio stabilizer to other sectors
in the Fund. Our allocation of 20% reflects this view.
We continue to emphasize the role of hard assets as an excellent portfolio
diversifier and complement to traditional investments. We believe the outlook
for the sector overall is very favorable, particularly given strong global
growth and increasing demand for hard assets.
We appreciate your participation in the Worldwide Hard Assets Fund and look
forward to helping you meet your investment objectives in the future.
Derek S. van Eck
Portfolio Manager
June 25, 1996
Total returns on the Fund for the year-to-date and life (8/21/95) periods ended
6/30/96 were 19.3% and 26.2%, respectively. These returns do not take variable
insurance/life fees and expenses into account.
The performance data represents past performance and is not indicative of future
results. Investment return and principal value of an investment in the Fund will
vary so that shares, when redeemed, may be worth more or less than their
original cost.
This report must be accompanied or preceded by a Van Eck Worldwide Insurance
Trust Prospectus which includes more complete information, such as charges and
expenses and the risks associated with international investing, including
currency fluctuations or controls, expropriation, nationalization and
confiscatory taxation. Please read the prospectus before investing.
*The Ibbotson Hard Assets Index is 75% equities of global companies whose
primary business is linked to hard assets and 25% commodity futures. The equity
component consists of equal weightings of the MSCI Gold Mines, Non-Ferrous
Metals, Energy Sources, and Forest Products and Paper Indices, and the National
Association of Real Estate Investment Trusts Equity Index. The commodity
component consists of equal weightings of the Goldman Sachs Energy, Precious
Metals and Industrial Metals Indices.
Van Eck Securities Corporation
99 Park Avenue, New York, NY 10016
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<PAGE>
WORLDWIDE HARD ASSETS FUND
INVESTMENT PORTFOLIO (UNAUDITED)
JUNE 30, 1996
COUNTRY/INDUSTRY NO. OF SHARES COMMON STOCK VALUE (NOTE 1)
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AUSTRALIA: 5.1%
BASE METALS: 2.1%
14,200 Queensland Nickel
Industry Ltd $31,748
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GOLD MINiNG: 3.0%
7,000 Acacia Resources Ltd. 16,532
760 Emperor Mines Ltd. 1,795
8,401 Herald Resources Ltd. 10,780
2,400 Sons of Gwalia N.L. 17,005
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46,112
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77,860
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CANADA: 5.7%
BASE METALS: 0.9%
300 Cameco Corp. 14,142
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ENERGY: 0.8%
3,500 Pacalta Resources Ltd. 12,701
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GOLD MINING: 2.3%
1,000 Barrick Gold Corp. 27,125
9,200 El Callao Mining Corp. 7,756
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34,881
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PAPER & FOREST PRODUCTS: 1.7%
2,000 MacMillan Bloedel Ltd. 26,538
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88,262
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FRANCE: 2.1%
ENERGY: 2.1%
6,000 Forasol-Foramer N.V. 32,825
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INDONESIA: 1.9%
BASE METALS: 1.9%
1,600 P.T. Tambang Timah (GDR 144A) 29,000
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NETHERLANDS: 0.7%
REAL ESTATE: 0.7%
500 Renaissance Hotel Group N.V. 10,750
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NORWAY: 2.0%
ENERGY: 2.0%
1,200 Transocean AS 31,088
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See Notes to Financial Statements.
<PAGE>
WORLDWIDE HARD ASSETS FUND
INVESTMENT PORTFOLIO (CONTINUED)
COUNTRY/INDUSTRY NO. OF SHARES COMMON STOCK VALUE (NOTE 1)
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UNITED KINGDOM: 1.4%
ENERGY: 1.4%
200 British Petroleum PLC (ADR) $21,375
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UNITED STATES: 81.1%
BASE METALS: 8.8%
600 Aluminum Company of America 34,425
2,000 Century Aluminum Co. 31,500
800 Freeport McMoRan
Copper & Gold 'A' 23,900
800 Kaiser Aluminum Corp. 8,800
900 Northwestern Steel And Wire Co. 4,837
1250 Titanium Metals Corp. 32,344
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135,806
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ENERGY: 40.3%
300 Anadarko Petroleum Corp. 17,400
400 Baker Hughes Inc. 13,150
1,500 Cairn Energy USA, Inc. 21,563
2,400 Dawson Production Services, Inc. 27,600
900 Devon Energy USA, Inc. 22,050
400 Diamond Offshore Drilling Inc. 22,900
1,000 Ensco International Inc. 32,500
1,000 Flores & Rucks, Inc. 34,500
900 Global Industries Ltd. 26,775
500 KCS Energy, Inc. 14,375
850 Louisiana Land & Exploration Co. 48,981
1,400 Marine Drilling Co., Inc. 14,175
500 Noble Affiliates, Inc. 18,875
600 Nuevo Energy Co. 19,350
2,500 Pride Petroleum Services, Inc. 35,625
3,200 Reading & Bates Corp. 70,800
2,700 SGI International, Inc. 15,525
250 Sonat Offshore Drilling Inc. 12,625
600 Tidewater, Inc. 26,325
750 Triton Energy Ltd. 36,469
200 Union Pacific Resources Group Inc. 5,350
1,200 United Meridian Corp. 43,200
600 Vastar Resources Inc. 22,425
600 Weatherford Enterra, Inc. 18,000
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620,538
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See Notes to Financial Statements.
<PAGE>
WORLDWIDE HARD ASSETS FUND
INVESTMENT PORTFOLIO (CONTINUED)
COUNTRY/INDUSTRY NO. OF SHARES COMMON STOCK VALUE (NOTE 1)
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GOLD MINING: 4.9%
950 Getchell Gold Corp. $31,350
1,100 Homestake Mining Corp. 18,837
500 Newmont Mining Corp. 24,688
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74,875
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PAPER & FOREST PRODUCTS: 7.7%
1,300 Buckeye Cellulose Corp. 35,912
500 Consolidated Papers Inc. 26,000
1,500 Fort Howard Corp. 29,813
700 Rayonier Inc. 26,600
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118,325
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REAL ESTATE: 19.4%
1,000 Avalon Properties Inc. 21,750
2,000 Bedford Property Corp. 27,000
2,000 Dayton Superior Corp. 26,250
1,000 Equity Residential
Properties Trust 32,875
1,000 First Industrial
Realty Trust, Inc. 23,500
250 HFS, Inc. 17,500
1,250 Highwoods Properties, Inc. 34,531
500 Interstate Hotels Co. 11,125
2,500 Pacific Greystone Corp. 31,563
1,000 Public Storage, Inc. 20,625
1,000 Red Roof Inn, Inc. 14,125
1,200 Security Capital Industrial Trust 21,150
500 Storage USA, Inc. 16,125
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298,119
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1,247,663
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TOTAL COMMON STOCKS: 100% (COST, $1,410,651) $1,538,823
==========
Glossary:
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
SUMMARY OF INVESTMENTS BY INDUSTRY
---------------------------------------------
Aluminum 4.9%
Building Materials 1.7%
Copper 1.6%
Gold Mining 10.1%
Home Building 2.1%
Hotels & Motels 2.8%
Metals - Miscellaneous 3.0%
Mining 3.9%
Oil & Gas Exploration 19.4%
Oil Integrated - International 1.4%
Oil Refining 1.0%
Oil\Gas Domestic 1.2%
Oil\Gas Equipment & Services 23.7%
Paper & Forest Products 9.4%
Real Estate 0.7%
Real Estate Investment Trust 12.8%
Steel & Iron 0.3%
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100.0%
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See Notes to Financial Statements.
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WORLDWIDE HARD ASSETS FUND
FINANCIAL STATEMENTS
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STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
Assets:
Investments at value (identified cost,
$1,410,651) (Note 1) $1,538,823
Cash 274,359
Receivables:
Capital shares sold 31,895
Dividends 2,872
Receivable from Advisor 16,954
Open forward currency contracts (Note 5) 408
Deferred organization expenses 3,868
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Total assets 1,869,179
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Liabilities:
Payables:
Securities purchased 103,341
Accounts payable 12,176
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Total liabilities 115,517
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Net Assets (Equivalent to $11.93 per share on
146,960 shares of beneficial interest
outstanding with an unlimited number of
$.001 par value shares authorized) $1,753,662
==========
Net assets consist of:
Aggregate paid in capital $1,588,544
Unrealized appreciation of investments,
forward currency contracts and foreign currency 128,539
Overdistributed net investment income (75,055)
Cumulative realized gains 111,634
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$1,753,662
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See Notes to Financial Statements.
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WORLDWIDE HARD ASSETS FUND
FINANCIAL STATEMENTS
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STATEMENT OF OPERATIONS
FOR THE TWO MONTHS ENDED JUNE 30, 1996
INCOME:
Dividends (less foreign taxes withheld of $137) $ 4,418
EXPENSES:
Management (Note 2) $ 2,684
Professional 2,500
Amortization of organizational expenses (Note 1) 156
Other 200
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Total expenses 5,540
Expenses assumed by the Advisor (Note 2) (5,540)
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Net expenses
Net investment income --
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4,418
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 3)
Realized gain from security transactions 34,518
Realized loss from foreign currency transactions (795)
Change in unrealized depreciation of foreign currency
receivables and payables (80)
Change in unrealized appreciation of forward currency
contracts 554
Change in unrealized depreciation of investments (12,710)
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 25,905
========
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See Notes to Financial Statements.
<PAGE>
WORLDWIDE HARD ASSETS FUND
FINANCIAL STATEMENTS
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE TWO
MONTHS ENDED FOR THE PERIOD
JUNE 30, 1996 AUGUST 21, 1995+
(UNAUDITED) TO APRIL 30, 1996
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<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 4,418 $ 8,039
Realized gain from security transactions 34,518 77,671
Realized gain (loss) from foreign
currency transactions (795) 31
Change in unrealized appreciation (depreciation)
of foreign currency receivables and
payables and forward currency contracts 474 (108)
Change in unrealized appreciation (depreciation)
of investments (12,710) 140,883
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Increase in net assets
resulting from operations 25,905 226,516
Dividends paid to shareholders: (87,303) --
----------- -----------
(61,398) 226,516
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Capital share transactions*:
Net proceeds from sales of shares 178,517 1,331,768
Reinvestment of dividends 87,303 --
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265,820 1,331,768
Cost of shares reacquired (1,921) (7,123)
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Increase in net assets resulting
from capital share transactions 263,899 1,324,645
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Total increase in net assets 202,501 1,551,161
NET ASSETS:
Beginning of period 1,551,161 --
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End of period (including overdistributed net investment
income and undistributed net investment income of
$75,055 and $8,625,respectively) $ 1,753,662 $ 1,551,161
=========== ===========
*SHARES OF BENEFICIAL INTEREST
ISSUED AND REDEEMED:
Shares sold 15,080 125,343
Shares reinvested 7,312 --
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22,392 125,343
Shares reacquired (159) (616)
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Net increase 22,233 124,727
=========== ===========
+Commencement of operations.
</TABLE>
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See Notes to Financial Statements.
<PAGE>
WORLDWIDE HARD ASSETS FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE TWO FOR THE PERIOD
MONTHS ENDED AUGUST 21, 1995(a)
JUNE 30, 1996 TO
(UNAUDITED) APRIL 30,1996
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Net Asset Value, Beginning of Period $12.44 $ 10.00
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Income From Investment Operations:
Net Investment Income 0.12 0.11(b)
Net Gains (Losses) on Securities
(both realized and unrealized) (0.56) 2.33
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Total From Investment Operations (0.44) 2.44
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Less Distributions:
Dividends from Net Investment Income (0.07) --
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Net Asset Value, End of Period $11.93 $12.44
========= =========
Total Return (c) (4.10%) 24.40%
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Ratios/Supplementary Data
Net Assets, End of Period (000) $1,754 $1,551
Ratio of Expenses to Average Net Assets (d) 0.00% 0.00%
Ratio of Net Income to Average Net Assets (e) 3.00% 1.45%
Portfolio Turnover Rate 44.34% 119.54%
Average Commission Rate Paid $0.0107 $0.0385
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(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends at the net
asset value during the period and a redemption on the last day of the period.
Total return for a period less than one year is not annualized.
(d) Had the Advisor not reimbursed expenses and had there been no custodian fee
arrangement, the expenses ratios would have been 2.06% and 2.51%, respectively.
(e) Annualized.
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See Notes to Financial Statements.
<PAGE>
WORLDWIDE HARD ASSETS FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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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. The following is a summary of significant accounting policies
consistently followed by the Worldwide Hard Assets Fund series, a diversified
fund (the "Fund"), of the Trust in the preparation of its financial statements.
The policies are in conformity with generally accepted accounting principles.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of management's estimates and the actual
results could differ.
A. Security valuation-Securities traded on national exchanges and traded in the
NASDAQ National Market System are valued at the last sales prices reported at
the close of business on the last business day of the period. 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
asked prices. Short-term obligations purchased with more than sixty days
remaining to maturity are valued at market. Short-term obligations purchased
with sixty days or less to maturity are valued at cost which with accrued
interest approximates value. Forward currency contracts are valued at the spot
currency rate plus an amount ("points") which reflects the differences in
interest rates between the U.S. and the foreign markets. Securities for which
quotations are not available are stated at fair value as determined by the Board
of Trustees.
B. Federal income taxes-It is the Fund's policy to comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no federal
income tax provision is required.
C. Currency Translation-Assets and liabilities denominated in foreign currencies
and commitments under forward currency contracts are translated into U.S.
Dollars at the mean of the quoted bid and asked prices of such currencies on the
last business day of the period. Purchases and sales of investments are
translated at the exchange rates prevailing when such investments were acquired
or sold. Income and expenses are translated at the exchange rates prevailing
when accrued. The portion of realized and unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange rates is
not separately disclosed. Recognized gains or losses attributable to foreign
currency fluctuations on foreign currency denominated assets 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. Income distributions and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles.
<PAGE>
WORLDWIDE HARD ASSETS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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E. Other-Security transactions are accounted for on the date the securities are
purchased or sold. Interest income is accrued as earned. Deferred organization
costs will be amortized over a period not exceeding five years.
NOTE 2-Van Eck Associates Corporation earns fees for investment management and
advisory services. The fee is based on an annual rate of 1% of the average daily
net assets, which includes the fee paid to the Advisor for accounting and
administrative services. For the period ended June 30, 1996, Van Eck Associates
Corporation agreed to waive its management fees and assume all expenses of the
Fund. Certain of the officers and trustees of the Trust are officers, directors
or stockholders of Van Eck Associates Corporation and Van Eck Securities
Corporation. As of June 30, 1996, Van Eck Associates Corporation owned 36.00% of
the outstanding shares of the Fund.
NOTE 3-Purchases and sales of securities, other than short-term obligations,
aggregated $599,080 and $359,665, respectively, for the period ended June 30,
1996. For federal income tax purposes the identified cost of investments owned
at June 30, 1996 was $1,410,651. As of June 30, 1996 net unrealized appreciation
for federal income tax purposes aggregated $128,173 of which $161,120 related to
appreciated securities and $32,947 related to depreciated securities.
NOTE 4-The Fund invests in foreign securities. Investments in foreign securities
may involve a greater degree of risk than investments in domestic securities due
to political, economic or social instability. In addition, some foreign
companies are not generally subject to the same uniform accounting, auditing and
financial rules as are American companies, and there may be less government
supervision and regulation. Foreign investments may also be subject to foreign
taxes, dividend collection fees and settlement delays.
The Fund may concentrate its investments in companies which are significantly
engaged in the exploration, development, production or distribution of precious
metals, ferrous and non-ferrous metals, gas, petroleum, petrochemicals or other
hydrocarbons, forest products, real estate, and other basic non-agricultural
commodities . 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.
<PAGE>
WORLDWIDE HARD ASSETS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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NOTE 5-Forward Currency Contracts-The Fund may buy and sell forward currency
contracts to settle purchases and sales of foreign denominated securities. In
addition, the Fund may enter into forward currency contracts to hedge foreign
denominated assets. Realized gains and losses from forward currency contracts
are included in realized loss from foreign currency transactions. At June 30,
1996, the Fund had the following outstanding forward currency contracts:
Value at
Settlement Current Unrealized
Date Value Appreciation
---------- ------- ------------
Contracts
- ---------
Foreign Currency Sales Contract:
AUD 100,000 expiring
7/19/96 $79,035 $78,627 $ 408
The Fund may incur additional risk from investments in forward 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.
