---------------------------
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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BOND
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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 BOND FUND
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JUNE 30, 1996 SEMI-ANNUAL REPORT
Dear Shareholder:
After achieving exceptional returns in 1995, the U.S. bond market retreated
during the first half of 1996 as economic growth proved stronger than expected.
Most European bond markets achieved very moderate returns, but U.S. dollar
strength versus most currencies continued, lowering gains for U.S. investors.
The Worldwide Bond Fund had a total return of -2.1% for the first six months of
the year.
BOND MARKET REVIEW
After a final cut in the federal funds target rate in the first quarter, U.S.
economic growth indicators came in stronger than expected and interest rates
began to rise (while bond prices began to decline). Rates on long-term Treasury
bonds, for example, rose from 6.15% at the beginning of the year to a high of
over 7% in June, ending the second quarter at 6.87%. In anticipation of
continued growth and doubtful that the Federal Reserve would continue the
rate-cutting trend that began in 1995, we adopted a defensive position in the
beginning of the year, favoring short-term bonds and lowering the Fund's
duration to approximately 3.0 years. We also decreased the Fund's U.S. bond
position somewhat.
In Europe, sluggish economic growth and a low inflation scenario (an ideal
environment for bonds) prompted interest rate reductions, and most European
markets achieved moderately positive returns in local currency terms. The
peripheral markets, such as Italy, Spain and Sweden, outperformed the core
European bond markets for the first six months of the year, providing good
returns (in both local currency and dollar terms). These countries continued to
get their fiscal affairs in order as they attempt to meet the terms for European
Monetary Union (EMU) in 1997, and their bond yields converged further toward
those of their core neighbors. In anticipation of these moves, in the beginning
of the second quarter we began to reduce our core bond positions, while
increasing the Spanish bond position and adding an Italian bond allocation.
We added substantial Canadian and UK bond positions to the portfolio during the
first half of the year. Both bond markets have witnessed good performance
recently, although total gains for the first six months were slight. The
Canadian government remains on track to eliminate the budget deficit by the year
2000. The UK appears to have already discounted a probable Labour Party victory
in the upcoming elections and UK bonds have benefited from investor skepticism
regarding the success of EMU.
We liquidated the Fund's already slight position in Japanese bonds early in the
first quarter, given expectations for a strong economic recovery after a
long-lived recession. Although economic growth rates were indeed high in the
first half (at an extraordinary 12% on an annualized basis), bond buying by the
Bank of Japan has supported prices despite fears of interest rate hikes.
Japanese bonds showed flat performance for the first half in local currency
terms (with negative returns in dollar terms).
CURRENCY REVIEW
The U.S. dollar continued its climb against most major foreign currencies. This
strength rendered many positive bond returns negative for U.S. investors. As a
defensive measure, we have maintained a relatively large U.S. cash (and cash
equivalents) position in the Fund.
THE OUTLOOK
Going forward we expect a continued revival of global growth as Japanese
reflation and European monetary easing take hold. Given this outlook, in our
opinion it will continue to be a challenging year for bonds, and we remain
defensively positioned with a fairly high cash allocation and a low duration.
(Our perceptions of global growth, however, should be tempered by the fragility
of the global recovery, particularly to shocks such as stock market declines or
another EMU scare.) As for currencies, the dollar could come under pressure as
European and Asian economies gather steam relative to the U.S. and potential
pressures with EMU build. We are prepared to maximize exposure to foreign
currencies should their strength re-emerge.
Madis Senner
Portfolio Manager
July 18, 1996
Average annual returns on the Fund for the 1-year, 5-year and life
(9/1/89) periods ended 6/30/96 were 0.2%, 6.5% and 6.5%, respectively. These
returns do not take variable insurance/life fees and expenses into account.
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.
Van Eck Securities Corporation, 99 Park Avenue, New York, NY 10016
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<PAGE>
WORLDWIDE BOND FUND
INVESTMENT PORTFOLIO
JUNE 30, 1996 (UNAUDITED)
BONDS AND NOTES PRINCIPAL AMOUNT VALUE (NOTE 1)
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CANADA - 8.1%
Canadian Government Bonds
8.75% due 12/01/05 CAD 7,200,000 $ 5,682,196
7.50% due 3/01/01 3,800,000 2,843,070
------------
8,525,266
------------
GERMANY - 10.0%
Bundesrepublik Deutschland
7.50% due 11/11/04 DEM 9,000,000 6,317,753
7.375% due 1/03/05 6,000,000 4,177,372
------------
10,495,125
------------
ITALY - 5.5%
Italian Government Bonds
10.50% due 9/01/05 ITL 4,600,000,000 3,231,318
8.50% due 4/01/99 3,700,000,000 2,426,674
------------
5,657,992
------------
SPAIN - 5.0%
Spanish Government Bonds
10.90% due 8/30/03 ESP 300,000,000 2,622,733
7.40% due 7/30/99 335,000,000 2,596,919
------------
5,219,652
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UNITED KINGDOM - 11.5%
Great Britain Government Bond
7.50% due 12/07/06 GBP 4,000,000 6,037,481
7.00% due 11/06/01 4,000,000 6,109,284
------------
12,146,765
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UNITED STATES - 34.6%
U.S. Treasury Notes
*8.750% due 8/15/20 USD 4,000,000 4,788,752
*7.125% due 9/30/99 6,700,000 6,848,659
*6.50% due 8/15/05 2,520,000 2,483,382
*6.25% due 4/30/01 6,000,000 5,944,686
*5.75% due 10/31/00 4,650,000 4,530,844
*5.625% due 2/15/06 1,000,000 927,031
*5.50% due 11/15/98 11,400,000 11,220,101
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36,743,455
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Total Bonds and Notes: 74.7% (Cost: $78,561,379) 78,788,255
------------
See Notes to Financial Statements.
<PAGE>
WORLDWIDE BOND FUND
INVESTMENT PORTFOLIO (CONTINUED)
SHORT-TERM OBLIGATIONS PRINCIPAL AMOUNT VALUE (NOTE 1)
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UNITED STATES - 25.3%
G.E. Company Commercial Paper
Interest Yield 5.20% due 7/01/96 USD 5,350,000 $ 5,350,000
------------
U.S. Treasury Bills
Interest Yield 4.40% due 7/11/96 21,300,000 21,273,967
------------
Total Short-Term Obligations 25.3%: (Cost: $26,617,214) 26,623,967
------------
Total Investments: 100% (Cost $105,178,593) $105,412,222
============
* These securities are segregated for forward currency contracts.
See Notes to Financial Statements.
<PAGE>
WORLDWIDE BOND FUND
FINANCIAL STATEMENTS (UNAUDITED)
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STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
Assets:
Investments at value (identified cost,
$105,178,593) (Note 1) $105,412,222
Cash 693,853
Receivables:
Interest 1,681,729
Capital shares sold 75,675
------------
Total assets 107,863,479
------------
Liabilities:
Payables:
Capital stock redeemed 98,821
Open forward currency contracts (Note 4) 158,613
Accounts payable 39,391
------------
Total liabilities 296,825
------------
Net Assets (Equivalent to $10.60 per share on
10,145,620 shares of beneficial interest
outstanding with an unlimited number of
$.001 par value shares authorized) $107,566,654
============
Net assets consist of:
Aggregate paid in capital $112,278,000
Unrealized appreciation of investments,
forward contracts and foreign currency 55,077
Undistributed net investment income 855,814
Accumulated realized losses (5,622,237)
============
$107,566,654
============
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See Notes to Financial Statements.
<PAGE>
WORLDWIDE BOND FUND
STATEMENT OF OPERATIONS (UNAUDITED)
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FOR THE TWO MONTHS ENDED JUNE 30, 1996
Interest Income (Less foreign taxes withheld
of $56,531) (Note 1) $1,113,471
Expenses:
Management (Note 2) $178,334
Administrative (Note 2) 1,080
Professional 7,440
Custodian 5,220
Printing 4,020
Trustees fees and expenses 2,820
Other 7,878
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Total expenses 206,792
---------
Net investment income 906,679
Realized and Unrealized Gain (Loss)
on Investments (Note 3):
Realized loss from security transactions (244,807)
Realized loss from foreign currency transactions (1,134,535)
Unrealized appreciation (depreciation)
of investments:
Beginning of period (1,070,241)
End of period 226,660
---------
Change in unrealized appreciation
(depreciation) of investments 1,296,901
Unrealized depreciation of foreign currency
receivables and payables:
Beginning of period (32,940)
End of period (12,970)
---------
Change in unrealized depreciation
of foreign currency receivables and payables 19,970
Unrealized appreciation (depreciation) of forward
currency contracts:
Beginning of period 397,056
End of period (158,613)
---------
Change in unrealized appreciation
(depreciation) of forward currency
contracts (555,669)
---------
Net Increase in Net Assets Resulting from Operations $288,539
==========
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See Notes to Financial Statements.
<PAGE>
WORLDWIDE BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
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FOR THE TWO MONTHS YEAR ENDED
ENDED JUNE 30, 1996 APRIL 30, 1996
------------------- --------------
Increase (Decrease) in Net Assets:
Operations:
Net investment income $ 906,679 $5,770,316
Realized gain from futures
contracts and options 0 129,160
Realized gain (loss) from security
transactions (244,807) 1,311,357
Realized gain (loss) from foreign
currency transactions (1,134,535) 1,326,374
Change in unrealized appreciation
(depreciation)
of investments 1,296,901 (2,111,991)
Change in unrealized appreciation
(depreciation) of foreign currency
receivables and payables 19,970 59,383
Change in unrealized appreciation
(depreciation) of forward currency
contracts (555,669) (3,980,822)
Change in unrealized depreciation
of futures contracts 0 4,120
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Increase in net assets
resulting from operations 288,539 2,507,897
------------ ------------
Dividends to shareholders from:
Net investment income (3,020,904) (8,098,367)
------------ ------------
Capital share transactions*:
Net proceeds from sales of shares 3,099,186 56,024,013
Reinvestment of dividends 3,020,904 8,098,367
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6,120,090 64,122,380
Cost of shares reacquired (3,361,745) (64,457,152)
------------ ------------
Increase (decrease) in net assets
resulting from capital share
transactions 2,758,345 (334,772)
------------ ------------
Total increase (decrease) in net
assets 25,980 (5,925,242)
Net Assets:
Beginning of period 107,540,674 113,465,916
------------ ------------
End of period (including undistributed net
investment income of $855,814 and
$2,970,039 respectively) $107,566,654 $107,540,674
============ ============
*Shares of Beneficial Interest
Issued and Redeemed:
Shares sold 290,495 5,046,092
Reinvestment of dividends 286,885 731,260
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577,380 5,777,352
Shares reacquired (316,364) (5,794,591)
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Net increase (decrease) 261,016 (17,239)
============ ============
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See Notes to Financial Statements.
<PAGE>
WORLDWIDE BOND FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period
<TABLE>
<CAPTION>
FOR THE TWO
MONTHS ENDED YEAR ENDED APRIL 30,
JUNE 30, 1996 ------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.88 $11.46 $10.05 $10.62 $11.57 $10.82
------ ------ ------ ------ ------ ------
Income From Investment Operations:
Net Investment Income 0.09 0.58 0.68* 0.63 0.81 0.62
Net Gains (Losses) on Securities
(both realized and unrealized) (0.06) (0.34) 0.77 (0.37) (0.75) 0.67
------ ------ ------ ------ ------ ------
Total From Investment Operations 0.03 0.24 1.45 0.26 0.06 1.29
` ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income (0.31) (0.82) (0.04) (0.72) (0.83) (0.53)
Distributions from capital gains - - - (0.11) (0.18) (0.01)
------ ------ ------ ------ ------ ------
Total Distributions (0.31) (0.82) (0.04) (0.83) (1.01) (0.54)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $10.60 $10.88 $11.46 $10.05 $10.62 $11.57
====== ====== ====== ====== ====== ======
Total Return (a) (2.09%) 2.07% 14.51% 2.49% 0.38% 12.21%
- --------------------------------------------------------------------------------------------------------------------
Ratios/Supplementary Data
Net Assets, End of Period (000) $107,567 $107,541 $113,466 $80,908 $66,035 $40,930
Ratio of Expenses to Average Net Assets 1.16%** 1.08%(b) 0.98(b) 0.93% 1.01% 1.05%
Ratio of Net Income to Average Net Assets 5.07%** 5.26% 6.24% 6.47% 8.47% 8.55%
Portfolio Turnover Rate 34.59% 208.05% 265.87% 37.59% 248.21% 231.34%
</TABLE>
- --------------
(a) Total return is calculated assuming an initial investment made at the
net asset value at the beginning of the period, reinvestment of dividends
and distribution of capital gains at net asset value during the period and a
redemption on the last day of the period.
(b) Ratio would have been 1.10% and 0.99% respectively, had there not been
directed brokerage and custodian fee arrangements.
* Based on average shares outstanding.
** Annualized.
See Notes to Financial Statements.
<PAGE>
WORLDWIDE BOND 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 Bond Fund, a non-diversified series, (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 principals 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. Futures are valued using the closing price reported
at the close of the Chicago Board of Trade. 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. These differences are
primarily due to differing treatments for foreign currency transactions.
E. Other-Security transactions are accounted for on the date the securities are
purchased or sold. Interest income is accrued as earned.
<PAGE>
WORLDWIDE BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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NOTE 2-Van Eck Associates Corporation earned fees of $178,334 for the two months
ended June 30, 1996 for investment management and advisory services. The fee is
based on an annual rate of 1% of the first $500 million of average daily net
assets, .90 of 1% on the next $250 million and .70 of 1% on the excess over $750
million; this includes the fee paid to the Advisor for accounting and
administration services. In accordance with the advisory agreement, the Fund
reimbursed Van Eck Associates Corporation $1,080 for costs incurred in
connection with certain administrative and accounting functions. Certain of the
officers and trustees of the Trust are officers, directors or stockholders of
Van Eck Associates Corporation and Van Eck Securities Corporation.
The Fund directs certain portfolio trades to a broker that, in turn, pays a
portion of the Fund's operating expenses. The Fund also has a fee arrangement,
based on cash balances left on deposit with the custodian, which also reduces
the Fund's operating expenses.
NOTE 3-Purchases and proceeds from sales of securities, other than short-term
obligations, aggregated $28,322,824 and $29,545,829, respectively, for the two
months ended June 30, 1996. For federal income tax purposes the identified cost
of investments owned at June 30, 1996 was $105,178,593. As of June 30, 1996 net
unrealized appreciation for federal income tax purposes aggregated $233,629 of
which $1,337,305 related to appreciated securities and $1,103,676 related to
depreciated securities. At April 30, 1996, the Fund had a capital loss carry
forward available to offset future capital gains expiring June 30, 2003 in
amount of $1,233,873.
NOTE 4-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:
FOREIGN CURRENCY BUY CONTRACTS:
VALUE AT UNREALIZED
CONTRACTS SETTLEMENT DATE CURRENT VALUE DEPRECIATION
- --------- --------------- ------------- ------------
JPY 1,579,160,314
expiring 9/18/96 $14,707,650 $14,572,968 $(134,682)
DEM 4,789,826
expiring 9/18/96 3,161,601 3,144,272 (17,329)
---------
(152,011)
---------
FOREIGN CURRENCY SALE CONTRACT:
ITL 1,007,518,350
expiring 9/18/96 652,075 645,473 (6,602)
--------
(158,613)
========
<PAGE>
WORLDWIDE BOND FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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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.
NOTE 5-Option Contracts-The Fund may invest, for hedging and other purposes, in
call and put options on securities, currencies and commodities. Call and put
options give the Fund the right but not the obligation to buy (calls) or sell
(puts) the instrument underlying the option at a specified price. The premium
paid on the option, should it be exercised, will, on a call, increase the cost
of the instrument acquired and, on a put, reduce the proceeds received from the
sale of the instrument underlying the option. If the options are not exercised,
the premium paid will be recorded as a capital loss upon expiration. The Fund
may incur additional risk to the extent the value of the underlying instrument
does not correlate with the movement of the option value.
The Fund may also write call or put options. As the writer of an option, the
Fund receives a premium. The Fund keeps the premium whether or not the option is
exercised. The premium will be recorded, upon expiration of the option, as a
short-term capital gain. If the option is exercised, the Fund must sell, in the
case of a written call, or buy, in the case of a written put, the underlying
instrument at the exercise price. The Fund may write only covered puts and
calls. A covered call option is an option in which the Fund owns the instrument
underlying the call. A covered call sold by the Fund exposes it during the term
of the option to possible loss of opportunity to realize appreciation in the
market price of the underlying instrument or to possible continued holding of an
underlying instrument which might otherwise have been sold to protect against a
decline in the market price of the underlying instrument. A covered put exposes
the Fund during the term of the option to a decline in price of the underlying
instrument. A put option sold by the Fund is covered when, among other things,
cash or short-term liquid securities are placed in a segregated account to
fulfill the obligations undertaken. The Fund may incur additional risk from
investments in written currency options if there are unanticipated movements in
the underlying currencies.
NOTE 6-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. Foreign investments may also be
subject to foreign taxes and settlement delays. Since the Fund may have
significant investments in foreign debt securities it may be subject to greater
credit and interest risks and greater currency fluctuations than portfolios with
significant investments in domestic debt securities.
