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PROSPECTUS June 2, 1997
VAN ECK WORLDWIDE INSURANCE TRUST
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99 Park Avenue, New York, New York 10016
(212) 687-5200
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Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company consisting of five separate funds. This Prospectus relates
only to Van Eck Worldwide Real Estate Fund (the "Fund"). Shares of the Fund
are offered only to separate accounts of various insurance companies to fund
the benefits of variable life policies and variable annuity contracts (the
"Contracts").
WORLDWIDE REAL ESTATE FUND--seeks to maximize total return by investing
primarily in equity securities of domestic and foreign companies which are
principally engaged in the real estate industry or which own significant real
estate assets.
Van Eck Associates Corporation (the "Adviser"), 99 Park Avenue, New York, New
York 10016 serves as investment adviser to the Fund. See "Management." Van Eck
Securities Corporation (the "Distributor"), a wholly-owned subsidiary of the
Adviser, serves as Distributor of the Fund's shares.
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This Prospectus sets forth concisely information about the Trust and Fund that
you should know before investing. It should be read in conjunction with the
prospectus for the Contract which accompanies this Prospectus and should be
retained for future reference. For further information about the Fund, please
call the Fund or the Distributor at the above telephone number.
The Contracts involve certain expenses not described in this Prospectus and
also may involve certain restrictions or limitations on the allocation of
purchase payments or Contract values to the Fund. In particular, the Fund may
not be available in connection with a particular contract or in a particular
state. See the applicable Contract prospectus for information regarding
expenses of the Contract and any applicable restrictions or limitations with
respect to the Fund.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, a bank, and the shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
A Statement of Additional Information dated June 2, 1997, which further
discusses the Trust and Fund, has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. It is available without
charge upon request to the Fund, or the Distributor at the above address or by
calling the telephone number listed above.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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TABLE OF CONTENTS PAGE
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The Trust................................................................... 3
Investment Objectives and Policies of the Fund.............................. 3
Risk Factors................................................................ 4
Limiting Investment Risks................................................... 11
Management.................................................................. 11
How to Buy Shares........................................................... 12
Dividends and Distributions................................................. 13
How to Redeem Shares........................................................ 13
Federal Taxation............................................................ 13
Description of the Trust.................................................... 14
Additional Information...................................................... 15
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THE TRUST
Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company, organized as a "business trust" under the laws of the
Commonwealth of Massachusetts on January 7, 1987. Worldwide Real Estate Fund
is classified as a non-diversified fund under the Investment Company Act of
1940, as amended, (the "Act"). (See "Description of the Trust.")
INVESTMENT OBJECTIVES AND POLICIES OF THE FUND
A description of the investment objectives and policies of the Fund is set
forth below. The investment objective of the Fund may not be changed without
the affirmative vote of a majority of the outstanding voting securities of the
Fund, as defined in the Act. As a result of the market risk inherent in any
investment, there is no assurance that the Fund will achieve its objective.
For further information about the Fund's investment policies, see "Investment
Objectives and Policies" in the Statement of Additional Information.
WORLDWIDE REAL ESTATE FUND
OBJECTIVE:
The Fund seeks to maximize total return by investing primarily in equity
securities of domestic and foreign companies which are principally engaged in
the real estate industry or which own significant real estate assets.
POLICIES:
The Fund will, under normal conditions, invest at least 65% (and at times,
nearly all) of its total assets in equity securities of domestic and foreign
companies which are principally engaged in the real estate industry or which
own significant real estate assets ("Real Estate Companies"). Equity
securities include common stocks, rights or warrants to purchase common
stocks, securities convertible into common stocks, preferred shares and real
estate investment trusts ("REITs"), American Depositary Receipts (ADRs),
American Depositary Shares (ADSs), European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs), equity swaps, indexed securities and similar
instruments whose values are tied to one or more equity securities are
considered to be equity securities. These securities may be listed on
securities exchanges or traded over-the-counter. A Real Estate Company is one
that has at least 50% of its assets in, or derives at least 50% of its
revenues or net profits from, the ownership, construction, financing,
management or sale of residential, commercial, industrial or hospitality real
estate. Real Estate Companies may include, among others: equity REITs;
mortgage REITs; hybrid REITs; hotel companies; real estate brokers or
developers; and companies which own significant real estate assets.
A REIT's assets generally consist primarily of interest in real estate and
real estate loans. REITs are often classified as equity, mortgage or hybrids.
An equity REIT owns interests in property and realizes income from rents and
gain or loss from the sale of real estate interests. A mortgage REIT invests
in real estate mortgage loans and realizes income from interest payments on
the loans. A hybrid REIT invests in both equity and debt. An equity REIT may
be an operating or financing company. An operating company provides
operational and management expertise to and exercises control over, many if
not most operational aspects of the property.
The Fund pursues a flexible strategy of investing in diversified portfolio of
securities of companies throughout the world including the United States. The
percentage of the Fund's assets invested in particular geographic regions will
shift from time to time in accordance with the judgment of the Adviser. The
Fund will normally invest in at least three countries including the United
States. The Adviser anticipates that the Fund will give particular
consideration to investments in the United States, Canada, Hong Kong,
Singapore, Malaysia, Japan, Australia, France, the Netherlands and the United
Kingdom. The Fund may also invest in other non-U.S. markets, including
emerging markets in Asia, Latin America and Eastern Europe.
The Fund may invest up to 35% of its assets in debt securities of Real Estate
Companies and in equity and debt securities of non-Real Estate Companies,
which may include issuers whose products and services are related to the real
estate industry or which own real estate assets.
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To attempt to protect against uncertainties in the markets or in anticipation
of the need for cash to meet redemption requests or settlement of portfolio
transactions, the Fund may, for temporary defensive purposes, invest in short-
term debt securities and money market instruments in excess of 35% of its
total assets. There is no limit on the amount of foreign currencies or short-
term instruments denominated in a foreign currency the Fund may hold.
The Fund may invest more than 25% of its total assets in any one sector of the
real estate industry or any real estate related industry. Because the Fund
concentrates in a single industry, an investment in the Fund can be expected
to be more volatile than an investment in funds that invest in many
industries. Risks associated with investment in securities of companies in the
real estate industry include: declines in the value of real estate, risks
related to general and local economic conditions, overbuilding and increased
competition, increases in property taxes and operating expenses, changes in
zoning and other laws, casualty or condemnation losses, variations or
limitations in rental income, changes in neighborhood values, the appeal of
properties to tenants, governmental actions, the ability of borrowers and
tenants to make loan payments and rents, and increase in interest rates. In
addition, equity REITs may be affected by changes in the value of the
underlying property owned by the REITs, while mortgage REITs may be affected
by the quality of credit extended. Equity and mortgage REITs are dependent
upon management skills, may not be diversified and are subject to the risks of
financing projects. They are also subject to heavy cash flow dependency,
defaults by borrowers, self liquidation and the possibility of failing to
qualify for tax-free pass-through of income under the Internal Revenue Code of
1986, as amended (the "Code") and failing to maintain exemption from the Act.
The Fund currently intends to limit its investments in debt securities rated
lower than Baa by Moody's Investors Services Inc. ("Moody's") to 25% of its
total assets. Purchase of a debt security is consistent with the Fund's debt
quality policy if it is rated at or above the stated level by Moody's or rated
in the equivalent categories by Standard and Poor's Corporation ("S&P"), or
other rating agency or is unrated but judged to be of equivalent rating
quality by the Adviser. Up to 10% of total assets may be invested in unrated
debt securities of issuers secured by real estate assets where the Adviser
believes that the securities are trading at a discount and the underlying
collateral will ensure repayment of principal. In such situations, it is
conceivable the Fund could, in the event of default, end up holding the
underlying real estate directly. See "Risk Factors--Debt Securities" and "Risk
Factors--Low Rated or Unrated Debt Securities."
The Fund may, as described below in "Risk Factors," invest in derivatives.
Derivatives in which the Fund may invest include futures contracts, forward
contracts, options, swaps, indexed securities, currency exchange contracts and
other similar securities as may be available in the market. The Fund may also
invest up to 10% of its total assets in direct investments. For more
information, see "Risk Factors--Direct Investments."
PORTFOLIO TURNOVER AND BROKERAGE: It is anticipated that the annual portfolio
turnover rate for the Fund may exceed 100%. A portfolio turnover rate of 100%
would occur if all of the Fund's portfolio securities were replaced in one
year. The portfolio turnover rate experienced by the Fund directly affects
brokerage commissions and other transaction costs which the Fund bears
directly. A high rate of portfolio turnover will increase such costs. See the
Statement of Additional Information for further information regarding the
brokerage allocation practices of the Fund.
RISK FACTORS
Assets of the Fund are subject to market fluctuations and risks inherent in
all securities. In addition, assets of the Fund may be subject to other
special considerations, such as those listed below.
FOREIGN SECURITIES
The Fund may purchase securities of foreign issuers including foreign
investment companies. Investments in foreign securities may involve a greater
degree of risk than investments in domestic securities due to the possibility
of exchange rate fluctuations and exchange controls, less publicly available
information, more volatile or less liquid securities markets, and the
possibility of
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expropriation, confiscatory taxation or political, economic or social
instability. In addition, some foreign companies are not generally subject to
the same uniform accounting, auditing and financial reporting standards as are
American companies and there may be less government supervision and regulation
of foreign stock exchanges, brokers and companies.
Foreign securities may be subject to foreign taxes, higher custodian fees,
higher brokerage commissions and higher dividend collection fees which could
reduce the yield or return on such securities, although a shareholder of the
Fund may, subject to certain limitations, be entitled to claim a credit or
deduction for United States federal income tax purposes for his or her
proportionate share of such foreign taxes paid by the Fund. See "Foreign
Currency and Foreign Currency Transactions" below. See also "Taxes" in the
Prospectus and "Risks--Foreign Securities" in the Statement of Additional
Information.
In addition to investing directly in the securities of United States and
foreign issuers, the Fund may also invest in American Depositary Receipts
(ADRs), European Depositary Receipts (EDRs), American Depositary Shares
(ADSs), Global Depositary Shares (GDSs) and securities of foreign investment
funds or trusts (including passive foreign investment companies). See "Foreign
Securities" in the Statement of Additional information.
EMERGING MARKETS SECURITIES
Investments of the Fund may be made from time to time in companies in
developing countries as well as in developed countries. Shareholders should be
aware that investing in the markets of developing countries involves exposure
to potentially unstable governments, the risk of naturalization of businesses,
restrictions on foreign ownership, prohibitions on repatriation of assets and
a system of laws that may offer less protection of property rights. Emerging
market economies may be based on only a few industries, may be highly
vulnerable to change in local or global trade conditions, and may suffer from
extreme and volatile debt burdens or inflation rates.
Securities markets in these countries may trade a small number of securities,
may have a limited number of issuers and a high proportion of shares of many
issuers may be held by a relatively small number of persons or institutions.
Local securities markets may be unable to respond effectively to increases in
trading volume, potentially making prompt liquidation of substantial holdings
difficult or impossible at times. Securities of issuers located in developing
markets may have limited marketability and may be subject to more abrupt or
erratic price movements. Many of these stock markets are undergoing a period
of growth and change which may result in trading volatility, and in
difficulties in the settlement and recording of transactions and in
interpreting and applying the relevant law and regulations. In addition,
stockbrokers and other intermediaries in emerging markets may not perform in
the way their counterparts in the United States and other more developed
securities markets do. The prices at which the Fund may acquire investments
may be affected by trading by persons with material non-public information and
by securities transactions by brokers in anticipation of transactions by the
Fund in particular securities. Limited liquidity may impair the Fund's ability
to liquidate a position at the time and price it wishes to do so. In addition,
the Fund's ability to participate fully in the smaller, less liquid emerging
markets may be limited by the policy restricting its investments in illiquid
securities.
FOREIGN CURRENCY AND FOREIGN CURRENCY TRANSACTIONS
Changes in currency exchange rates may affect the Fund's net asset value and
performance. There can be no assurance that the Adviser will be able to
anticipate currency fluctuations in exchange rates accurately. The Fund may
invest in a variety of derivatives and enter into hedging transactions to
attempt to moderate the effect of currency fluctuations. The Fund may purchase
and sell put and call options on, or enter into futures contracts or forward
contracts to purchase or sell, foreign currencies. This may reduce the Fund's
losses on a security when a foreign currency's value changes. The Fund will
enter into forward contracts to duplicate a cash market transaction. The Fund
will not purchase or sell foreign currency as an investment except that
Worldwide Real Estate Fund may enter into currency swaps. See "Currency
Swaps," "Options," "Futures Contracts" and "Hedging and Other Investment
Techniques and Strategies" below and "Foreign Currency Transactions" and
"Futures and Options Transactions" in the Statement of Additional Information.
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CURRENCY SWAPS
The Fund may enter into currency swaps for hedging purposes. Currency swaps
involve the exchange of rights to make or receive payments of the entire
principal value in specified currencies. Since currency swaps are individually
negotiated, the Fund may expect to achieve an acceptable degree of correlation
between its portfolio investments and its currency swap positions. The entire
principal value of a currency swap is subject to the risk that the other party
to the swap will default on its contractual delivery obligations.
The use of swaps is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
transactions. If the Adviser is incorrect in its forecasts of market values
and currency exchange rates, the investment performance of the Fund would be
less favorable than it would have been if this investment technique were not
used. Swaps are generally considered illiquid and will be aggregated with
other illiquid positions for purposes of the limitation on illiquid
investments.
OPTIONS
For hedging and other purposes (such as creating synthetic positions), the
Fund may invest up to 5% of its total assets, taken at market value at the
time of investment, in premiums on call and put options on domestic and
foreign securities, foreign currencies, stock and bond indices, financial
futures contracts and commodity futures contracts. This policy may be changed
without shareholder approval. The Fund may write call or put options. An
options transaction involves the writer of the option, upon receipt of a
premium, giving the right to sell (call option) or buy (put option) an
underlying asset at an agreed-upon exercise price.
The holder of the option has the right to purchase (call option) or sell (put
option) the underlying asset at the exercise price. If the option is not
exercised or sold, it becomes worthless at its expiration date and the premium
payment is lost to the option holder. As the writer of an option, the Fund
receives a premium. The Fund keeps the premium whether or not the option is
exercised. The Fund may write only covered put and call options. A covered
call option, which is a call option with respect to which the Fund owns the
underlying asset, 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 asset or to possible continued holding of an underlying asset
which might otherwise have been sold to protect against depreciation in the
market price of the underlying asset. A covered put option written by the Fund
exposes it during the term of the option to a decline in price of the
underlying asset. 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. Covering a put option sold does
not reduce the risk of loss.
The Fund may invest in options which are either listed on a domestic
securities exchange or traded on a recognized foreign exchange. In addition,
the Fund may purchase or sell over-the-counter options from dealers or banks
to hedge securities or currencies as approved by the Board of Trustees. In
general, exchange traded options are third party contracts with standardized
prices and expiration dates. Over-the-counter options are two party contracts
with price and terms negotiated by the buyer and seller, are generally
considered illiquid and will be subject to the limitation on investments in
illiquid securities.
FUTURES CONTRACTS
The Fund may buy and sell financial futures contracts which may include
security and interest-rate futures, stock and bond index futures contracts and
foreign currency futures contracts. A security or interest-rate futures
contract is an agreement between two parties to buy or sell a specified
security at a set price on a future date. An index futures contract is an
agreement to take or make delivery of an amount of cash based on the
difference between the value of the index at the beginning and at the end of
the contract period. A foreign currency futures contract is an agreement to
buy or sell a specified amount of a currency for a set price on a future date.
A commodity futures contract is an agreement to take or make delivery of a
specified amount of a commodity, such as gold, at a set price on a future
date.
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The Fund will not commit more than 5% of its total assets to initial margin
deposits on futures contracts and premiums on options on futures contracts,
except that margin deposits for futures positions entered into for BONA FIDE
hedging purposes, as such term is defined in the Commodity Exchange Act, are
excluded from the 5% limitation. As the value of the underlying asset
fluctuates, either party to the contract is required to make additional margin
payments, known as "variation margin," to cover any additional obligation it
may have under the contract.
The Fund may write, purchase or sell put and call options on financial futures
contracts. The Fund may write only covered put and call options. An option on
a futures contract gives the purchaser the right, but not the obligation, in
return for the premium paid, to assume a position in a specified underlying
futures contract (which position may be a long or short position) at a
specified exercise price during the option exercise period. The writer of an
option is obligated to assume position in a specified futures contract if the
option is exercised.
In establishing a position in a futures contract, cash or high quality
securities equal in value to the current value of the underlying securities
less the margin requirement will be segregated, as may be required, with the
Fund's Custodian to ensure that the Fund's position is unleveraged. This
segregated account will be marked-to-market daily to reflect changes in the
value of the underlying futures contract. Trading in futures contracts traded
on foreign commodity exchanges may be subject to the same or similar risks as
trading in foreign securities. See "Risk Factors--Foreign Securities" above
and "Futures and Options Transactions" in the Statement of Additional
Information.
HEDGING AND OTHER INVESTMENT TECHNIQUES AND STRATEGIES
Options and futures contracts can be used by the Fund as part of various
hedging techniques and strategies.
When the Fund intends to acquire securities for its portfolio, it may use call
options or futures contracts as a means of fixing the price of the security
(or gold) it intends to purchase at the exercise price (in the case of an
option) or contract price (in the case of a futures contract). An increase in
the acquisition cost would be offset, in whole or part, by a gain on the
option or futures contract. Options and futures contracts requiring delivery
of a security may also be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
If the Fund holds a call option rather than the underlying security itself,
the Fund is partially protected from any unexpected decline in the market
price of the underlying security and in such event could allow the call option
to expire, incurring a loss only to the extent of the premium paid for the
option. Using a futures contract would not offer such partial protection
against market declines and the Fund would experience a loss as if it had
owned the underlying security.
To protect against anticipated declines in the value of the Fund's investment
holdings, the Fund may use options, forward and futures contracts, swaps,
structured notes, and similar investments (commonly referred to as
derivatives) as a defensive technique to protect the value of an asset the
Adviser deems desirable to hold for tax or other considerations or for
investment reasons. If the anticipated decline in the value of the asset
occurs, it would be offset, in whole or part, by a gain on the futures
contract, put option or swap. The premium paid for the put option would reduce
any capital gain otherwise available for distribution when the security is
eventually sold.
The Fund may hedge against changes in the value of one currency in relation to
another currency in which portfolio securities of the Fund may be denominated.
The Fund may employ hedging strategies with options and futures contracts on
foreign currencies before the Fund purchases a foreign security, during the
period the Fund holds the foreign security, or between the date the foreign
security is purchased or sold and the date on which payment therefor is made
or received. Hedging against a change in the value of a foreign currency in
the foregoing manner does not eliminate fluctuations in the prices of
portfolio securities or prevent losses if the prices of such securities
decline. Furthermore, such hedging transactions reduce or preclude the
opportunity for gain if the value of the hedged currency should change
relative to the other currency. Last, when the Fund uses options and futures
in anticipation of the purchase of a portfolio security to hedge against
adverse movements in the security's underlying currency, but the purchase of
such security is subsequently deemed undesirable, the Fund may incur a gain or
loss on the option or futures contract.
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In those situations where foreign currency options or futures contracts, or
options on futures contracts may not be readily purchased (or where such
options or contracts may be deemed illiquid) in the primary currency in which
the hedge is desired, the hedge may be obtained by purchasing or selling an
option, or futures contract or forward contract on a secondary currency. The
secondary currency will be selected based upon the Adviser's belief that there
exists a significant correlation between the exchange rate movements of the
primary and secondary currencies. This strategy may be employed with respect
to other securities and assets in which the Fund may invest. However, there
can be no assurances that, in the case of foreign currencies, the exchange
rate or the primary and secondary currencies will move as anticipated or, in
the case of other securities, or generally, that the relationship between the
hedged security and the hedging instrument will continue. If they do not move
as anticipated or the relationship does not continue, a loss may result to the
Fund on its investments in the hedging positions.
The Fund may also use futures contracts and options, forward contracts and
swaps as part of various investment techniques and strategies, such as
creating non-speculative "Synthetic" positions (covered by segregation of
liquid assets) or implementing "cross-hedging" strategies. A "synthetic
position" is the duplication of a cash market transaction when deemed
advantageous by the Adviser for cost, liquidity or transactional efficiency
reasons. A cash market transaction is the purchase or sale of a security or
other asset for cash. "Cross-hedging" involves the use of one currency to
hedge against the decline in the value of another currency. The use of such
instruments as described herein involves several risks. First, there can be no
assurance that the prices of such instruments and the hedged security or the
cash market position will move as anticipated. If prices do not move as
anticipated, the Fund may incur a loss on its investment, may not achieve the
hedging protection it anticipated and/or incur a loss greater than if it had
entered into a cash market position. Second, investments in such instruments
may reduce the gains which would otherwise be realized from the sale of the
underlying securities or assets which are being hedged. Third, positions in
such instruments can be closed out only on an exchange that provides a market
for those instruments. There can be no assurance that such a market will exist
for a particular futures contract or option. If the Fund cannot close out an
exchange traded futures contract or option which it holds, it would have to
perform its contract obligation or exercise its option to realize any profit
and would incur transaction costs on the sale of the underlying assets.
Over-the-counter options and other investments which do not have readily
available market quotations, are subject to the limitation on investments in
illiquid securities.
See "Futures and Options Transactions" in the Statement of Additional
Information for further information about futures contracts and options,
including tax effects and risks to the Fund.
SHORT SALES
Worldwide Real Estate Fund may make short sales of equity securities. A short
sale occurs when the Fund sells a security which it does not own by borrowing
it from a broker. In the event that the value of the security that the Fund
sold short declines, the Fund will gain as it repurchases the security in the
market at the lower price. If the price of the security increases, the Fund
will suffer a loss as it will have to repurchase the security at the higher
price. Short sales may incur higher transaction costs than regular securities
transactions.
Worldwide Real Estate Fund will establish a segregated account with respect to
its short sales and maintain in such account cash not available for
investment, U.S. Government securities or other liquid, high-quality
securities having a value equal to the difference between (i) the market value
of the securities sold short at the time they were sold short and (ii) any
cash, U.S. Government securities or other liquid, high-quality securities
required to be deposited as collateral with the broker in connection with the
short sale (not including the proceeds from the short sale). Such segregated
account will be marked to market daily, so that (i) the amount in the
segregated account plus the amount deposited with the broker as collateral
equals the current market value of the securities sold short and (ii) in no
event will the amount in the segregated account plus the amount deposited with
the broker as collateral fall below the original value of the securities at
the time they were sold short. The total value of the assets deposited as
collateral with the broker and deposited in the segregated account will not
exceed 25% of the Fund's net assets. The Fund's ability to engage in short
sales may be limited by the requirements of current U.S. tax law that the Fund
derive less than 30% of its gross income from the sale or other disposition of
securities held less than three months. Securities
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sold short and then repurchased, regardless of the actual time between the two
transactions, are considered to have been held for less than three months. See
"Short Sales" in the Statement of Additional Information.
REPURCHASE AGREEMENTS
In a repurchase agreement, the Fund acquires a security for a relatively short
period, and simultaneously agrees to sell it back at an agreed upon price and
time. The agreement results in a fixed rate of return that is not subject to
market fluctuations during the Fund's holding period. The Fund will enter into
repurchase agreements with respect to securities in which it may invest with
member banks of the Federal Reserve System or certain non-bank dealers. Under
each repurchase agreement the selling institution will be required to maintain
the value of the securities subject to the repurchase agreement at not less
than their repurchase price. Repurchase agreements could involve certain risks
in the event of default or insolvency of the other party. The Adviser, acting
under the supervision of the Board of Trustees, reviews the creditworthiness
of those non-bank dealers with which the Fund enters into repurchase
agreements to evaluate these risks. See "Repurchase Agreements" in the
Statement of Additional Information.
DEBT SECURITIES
The market value of debt securities generally varies in response to changes in
interest rates and the financial condition of each issuer. These changes in
market value will be reflected in the Fund's net asset value.
Debt securities with similar maturities may have different yields, depending
upon several factors, including the relative financial condition of the
issuers. A description of debt securities ratings is contained in the Appendix
to the Statement of Additional Information. High grade means a rating of A or
better by Moody's or S&P's, or of comparable quality in the judgment of the
Adviser if no rating has been given by either service. Many securities of
foreign issuers are not rated by these services. Therefore, the selection of
such issuers depends to a large extent on the credit analysis performed by the
Adviser.
New issues of certain debt securities are often offered on a when-issued
basis, that is, the payment obligation and the interest rate are fixed at the
time the buyer enters into the commitment, but delivery and payment for the
securities normally take place after the date of the commitment to purchase.
The value of when-issued securities may vary prior to and after delivery
depending on market conditions and changes in interest rate levels. However,
the Fund will not accrue any income on these securities prior to delivery. The
Fund will maintain in a segregated account with its Custodian an amount of
cash or high quality securities equal (on a daily marked-to-market basis) to
the amount of its commitment to purchase the when-issued securities. See "Debt
Securities" in the Statement of Additional Information.
LOW RATED OR UNRATED DEBT SECURITIES
Worldwide Real Estate Fund may invest in lower quality, high-yielding debt
securities, including high-yielding foreign debt securities (commonly referred
to as "junk bonds") which are (i) rated as low as Baa by Moody's or (ii)
unrated. Lower rated and unrated debt securities have some "equity"
characteristics and are considered speculative and involve greater risk of
loss than higher rated debt securities and are more sensitive to changes in
the financial condition of their issuers and to price fluctuations in response
to changes in interest rates. Lower rated debt securities present a
significantly greater risk of default than do higher rated securities and, in
times of poor business or economic conditions, the Fund may lose interest
and/or principal on such securities. Worldwide Real Estate Fund will not
invest more than 25% of its assets in debt securities rated below Baa by
Moody's.
ASSET-BACKED SECURITIES
The Fund may invest in asset-backed securities. Asset-backed securities
represent interests in pools of consumer loans (generally unrelated to
mortgage loans) and most often are structured as pass-through securities.
Interest and principal
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payments ultimately depend on payment of the underlying loans, although the
securities may be supported by letters of credit or other credit enhancements.
The value of asset-backed securities may also depend on the creditworthiness
of the servicing agent for the loan pool, the originator of the loans, or the
financial institution providing the credit enhancement.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS")
The Fund may invest in CMOs. CMOs are fixed-income securities which are
collateralized by pools of mortgage loans created by commercial banks, savings
and loan institutions, private mortgage insurance companies and mortgage
bankers. In effect, CMOs "pass through" the monthly payments made by
individual borrowers on their mortgage loans. Prepayments of the mortgages
included in the mortgage pool may influence the yield of the CMO. In addition,
prepayments usually increase when interest rates are decreasing, thereby
decreasing the life of the pool. As a result, reinvestment of prepayments may
be at a lower rate than that on the original CMO. Timely payment of interest
and principal (but not the market value) of these pools is supported by
various forms of insurance of guarantees. The Fund may buy CMOs without
insurance or guarantees if, in the opinion of the Adviser, the pooler is
creditworthy or if rated A or better by S&P or Moody's. S&P and Moody's assign
the same rating classifications to CMOs as they do to bonds. In the event that
any CMOs are determined to be investment companies, the Fund will be subject
to certain limitations under the Act.
LOANS OF PORTFOLIO SECURITIES
The Fund may lend to broker-dealers portfolio securities with an aggregate
market value of up to one-third of its total assets. Such loans must be
secured by collateral (consisting of any combination of cash, U.S. Government
securities or irrevocable letters of credit) in an amount at least equal (on a
daily marked-to-market basis) to the current market value of the securities
loaned. The Fund may terminate the loans at any time and obtain the return of
the securities loaned within one business day. The Fund will continue to
receive any interest or dividends paid on the loaned securities and will
continue to have voting rights with respect to the securities. The Fund might
experience risk of loss if the broker-dealer with which it has engaged in a
portfolio loan transaction breaches its agreement with the Fund.
BORROWING
The Fund may borrow up to one-third of the value of its net assets to increase
its holdings of portfolio securities. Under the Act, the Fund is required to
maintain continuous asset coverage of 300% with respect to such borrowings and
to sell (within three days) sufficient portfolio holdings to restore such
coverage if it should decline to less than 300% even if the sale would be
disadvantageous from an investment standpoint. Leveraging by means of
borrowing will exaggerate the effect of any increase or decrease in the value
of portfolio securities on the Fund's net asset value, and money borrowed will
be subject to interest and other costs which may or may not exceed the
investment return received from the securities purchased with borrowed funds.
It is anticipated that such borrowings would be pursuant to a negotiated loan
agreement with a commercial bank or other institutional lender.
COMMERCIAL PAPER
The Fund may invest in commercial paper which is indexed to certain specific
foreign currency exchange rates. See "Risk Factors--Commercial Paper" in the
Statement of Additional Information.
DIRECT INVESTMENTS
The Fund may invest up to 10% of its total assets in direct investments. For
more information, see "Risk Factors--Direct Investments" in the Statement of
Additional Information.
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LIMITING INVESTMENT RISKS
While an investment in the Fund is not without risk, the Fund follows certain
policies in managing its investments which may help to reduce risk. These
policies may not be changed without shareholder approval. The following are
some of the more significant investment limitations:
1. Worldwide Real Estate Fund will not invest more than 15% of the value of
its total net assets in securities which are "illiquid" (including
repurchase agreements which mature in more than seven days and over-the-
counter foreign currency options).
2. The Fund will not invest more than 10% of its total assets in securities
of other investment companies.
Further information regarding these and other of the Fund's investment
policies and restrictions is provided in the Statement of Additional
Information.
MANAGEMENT
TRUSTEES
The management of the Fund's business and affairs is the responsibility of the
Board of Trustees. For information on the Trustees and officers of the Fund,
see "Trustees and Officers" in the Statement of Additional Information.
INVESTMENT ADVISER, MANAGER AND ADMINISTRATOR
Van Eck Associates Corporation, located at 99 Park Avenue, New York, New York
10016, serves as investment adviser and manager to Worldwide Real Estate Fund
pursuant to an Advisory Agreement with the Trust. The Adviser is responsible
for managing the investment operations of the Fund and furnishing the Fund
with a continuous investment program which includes determining which
securities should be bought, sold or held.
Kevin L. Reid--Portfolio Manager of Worldwide Real Estate Fund. He is
responsible for managing the Fund's portfolio of investments. Mr Reid also
serves as Co-Portfolio Manager of Worldwide Hard Assets Fund. He is an officer
of the Trust and another mutual fund advised by the Adviser. Mr. Reid has over
ten years of experience in many facets of real estate including acquisitions,
financings, portfolio management and construction. Mr. Reid was previously
employed by Trammell Crow Co. and Merrill Lynch and Co., and was a principal
in a private contracting firm. He holds an M.B.A. from Harvard University and
a B.A. from Colgate University.
Other investment professionals who are expected to have significant input with
respect to the Fund's investments include:
Derek S. van Eck, CFA--Director of Global Investments and Executive Vice
President of the Adviser and Co-Portfolio Manager of Worldwide Hard Assets
Fund. He is also an officer of another mutual fund advised by the Adviser.
Prior to joining Van Eck, he was an analyst at CS First Boston. Mr. Van Eck
holds an M.B.A. from Northwestern University and a B.A. from Williams College.
Timothy Chan--Hong Kong based Director of Asian Equities and Portfolio Manager
of the Asia Dynasty Fund series of Van Eck Funds. Mr. Chan has 12 years of
investment management experience in Hong Kong and Tokyo. Prior to joining Van
Eck, Mr. Chan served as Portfolio Manager for BZW Investment Management.
Before that, he was with Sun Hun Kai Fund Management and Standard Chartered
Bank. Mr. Chan holds a B.A. from the University of Hong Kong.
Worldwide Real Estate Fund pays the Adviser a monthly fee at the annual rate
of 1.00% of average daily net assets which includes the fee paid to the
Adviser for accounting and administrative services. The advisory fees paid to
the Adviser with respect to the Fund are higher than the fees paid by most
investment companies because of the complexities of managing this type of fund
(such as following trends and companies in many different countries and stock
markets throughout the world) but are comparable to the fees charged to other
investment companies with similar objectives for comparable services.
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With respect to the Fund, the Adviser may from time to time, at its
discretion, waive the management fee and/or agree to pay some or all expenses
of the Fund. This has the effect of increasing the yield and total return of
the Fund during this period.
The Adviser, which has been an investment adviser since 1955, also acts as
investment adviser or sub-investment adviser to other mutual funds registered
with the SEC under the Act and manages or advises managers of portfolios of
pension plans and others.
John C. van Eck, Chairman and President of the Trust, and members of his
immediate family, own 100% of the voting stock of the Adviser. At May 31,
1997, total aggregate assets under the management of Van Eck Associates
Corporation were approximately $1.6 billion.
The Fund sells its shares to various insurance company variable annuity and
variable life insurance separate accounts as a funding vehicle for such
separate accounts. The Fund currently does not foresee any disadvantages to
variable annuity and variable life contract owners arising out of the fact
that the Fund offers its shares to separate accounts of various insurance
companies to serve as the investment medium for their variable products.
Nevertheless, the Board of Trustees intends to monitor events in order to
identify any material irreconcilable conflicts which may possibly arise, and
to determine what action, if any, should be taken in response to such
conflicts. If such a conflict were to occur, one or more insurance companies'
separate accounts might be required to withdraw its/their investments in the
Fund and shares of another fund may be substituted. This might force the Fund
to sell securities at disadvantageous prices. In addition, the Board of
Trustees may refuse to sell shares of the Fund to any separate account or may
suspend or terminate the offering of shares of the Fund if such action is
required by law or regulatory authority or is in the best interests of the
shareholders of the Fund.
EXPENSES
The Fund bears all expenses of its operation other than those incurred by the
Adviser under its Advisory Agreement with the Trust. In particular, the Fund
pays: investment advisory fees, custodian fees and expenses, legal, accounting
and auditing fees, brokerage fees, taxes, expenses of preparing prospectuses
and shareholder reports for existing shareholders, registration fees and
expenses (including compensation of the Adviser's employees in relation to the
time spent on such matters), expenses of the transfer and dividend disbursing
agent, the compensation and expenses of Trustees who are not otherwise
affiliated with the Trust, the Adviser or any of their affiliates, and any
extraordinary expenses. Expenses incurred jointly by the Fund and other funds
of the Trust are allocated among the Fund and such other funds in a manner
determined by the Trustees to be fair and equitable. Under the Advisory
Agreement, the Adviser provides the Fund with office space, facilities and
simple business equipment and provides the services of executive and clerical
personnel for administering the affairs of the Fund. The Adviser compensates
Trustees of the Trust if such persons are employees or affiliates of the
Adviser or its affiliates. The Adviser will, pursuant to the Advisory
Agreement, require the Fund to reimburse it for its costs for trading
portfolio securities and maintaining books and records of the Fund, including
general ledger and daily net asset value accounting.
The organizational expenses which were initially paid by the Adviser, were
reimbursed to the Adviser by the Fund and are being amortized by the Fund over
sixty successive equal monthly installments.
HOW TO BUY SHARES
Shares of the Fund are offered only for purchase by separate accounts of
insurance companies as an investment medium for Contracts.
Van Eck Securities Corporation (the "Distributor"), located at 99 Park Avenue,
New York, New York 10016, a wholly-owned subsidiary of Van Eck Associates
Corporation, has entered into a Distribution Agreement with the Trust. The
Distributor receives no compensation in connection with the sale of shares of
the Fund.
Shares of the Fund are sold at the public offering price which is net asset
value next computed after receipt of a purchase order, provided that the
purchase order is received by the Trust or the insurance company before 4:00
p.m. Eastern time. The
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net asset value for the Fund is computed as of the close of business on the
New York Stock Exchange which is normally 4:00 p.m. Monday through Friday,
exclusive of national business holidays. The assets of the Fund are valued at
market value or, if market value is not ascertainable, at fair market value as
determined in good faith by the Board of Trustees.
The Fund may invest in securities or futures contracts listed on foreign
exchanges which trade on Saturdays or other customary United States national
business holidays (i.e., days on which the Fund is not open for business).
Consequently, since the Fund will compute its net asset value only Monday
through Friday, exclusive of national business holidays, the net asset value
of shares of the Fund may be significantly affected on days when an investor
has no access to the Fund.
The sale of shares will be suspended during any period when the determination
of net asset value is suspended and may be suspended by the Board of Trustees
whenever the Board judges it in the Fund's best interest to do so.
Certificates for shares of the Fund will not be issued.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute its net investment income in July and January
and any net realized capital gains resulting from the investment activity
annually in January.
All dividends and capital gains distributions paid on shares of the Fund are
automatically reinvested in additional shares of the Fund on the dividend
payable date at the net asset value determined at the close of business on the
reinvestment price date. The Fund's fiscal year ends on December 31.
HOW TO REDEEM SHARES
Shares of the Fund are redeemed at their net asset value next determined after
receipt of the redemption request without the imposition of any sales
commission or redemption charge. However, certain deferred sales charges and
other charges may apply under the terms of the Contracts, which charges are
described in the Contract prospectus. Payment for the redemption of shares is
made by the Fund to the separate account in cash within seven days after
tender in proper form, except under unusual circumstances as determined by the
SEC. The redemption price will be the net asset value next determined after
the receipt by the Trust or insurance company of a request in proper form
provided the request is received prior to 4:00 p.m. Eastern time. The market
value of the securities in the Fund is subject to daily fluctuations and the
net asset value of the Fund's shares will fluctuate accordingly. Therefore,
the redemption value may be more or less than the original purchase price for
such shares.
FEDERAL TAXATION
The Fund intends to qualify as a "regulated investment company" ("RIC") under
the Internal Revenue Code (the "Code") and will not pay federal income tax to
the extent that it distributes its net taxable investment income and capital
gains.
Section 817(h) of the Code provides that certain variable contracts, based
upon one or more segregated asset accounts of a life insurance company, will
not be treated as annuity, endowment or life insurance contracts for any
period during which the investments made by such accounts are not adequately
diversified. The regulations promulgated under Section 817(h) of the Code
specify various investment diversification requirements. In addition, the
regulations provide that an investment by a segregated asset account of a life
insurance company in a qualifying RIC is not treated as a single investment.
Instead, a pro rata portion of each asset of the RIC is treated as an asset of
the segregated asset account. The Fund intends to invest so as to enable the
Contracts to satisfy the diversification requirements imposed by Section
817(h) of the Code and the applicable regulations.
The tax treatment of payments made by a separate account to a Contract holder
is described in the Contract prospectus.
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<PAGE>
DESCRIPTION OF THE TRUST
Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company organized as a "business trust" under the laws of the
Commonwealth of Massachusetts on January 7, 1987. The Trust commenced
operations on September 7, 1989. Effective April 12, 1995, Van Eck Investment
Trust changed its name to Van Eck Worldwide Insurance Trust.
The Trustees of the Trust have authority to issue an unlimited number of
shares of beneficial interest of the Fund, $.001 par value. Currently, five
Funds of the Trust are being offered, which shares constitute the interests in
Worldwide Balanced Fund, Worldwide Bond Fund, Worldwide Emerging Markets Fund,
Worldwide Hard Assets Fund and Worldwide Real Estate Fund.
Worldwide Real Estate Fund is classified as a non-diversified fund under the
Act. A diversified fund is a fund which meets the following requirements: At
least 75% of the value of its total assets is represented by cash and cash
items (including receivables), Government securities, securities of other
investment companies and other securities for the purpose of this calculation
limited in respect of any one issuer to an amount not greater than 5% of the
value of the fund's total assets and to not more than 10% of the outstanding
voting securities of such issuer. A non-diversified fund is any fund other
than a diversified fund. This means that the Fund at the close of each quarter
of its taxable year, must, in general, limit its investments in the securities
of a single issuer to (i) no more than 25% of its assets, (ii) with respect to
50% of the Fund's assets, no more than 5% of its assets and (iii) the Fund
will not own more than 10% of the outstanding voting securities. A fund is a
separate pool of assets of the Trust which is separately managed and which may
have different investment objectives from those of another fund. The Trustees
have the authority, without the necessity of a shareholder vote, to create any
number of new funds.
Each share of the Fund has equal dividend, redemption and liquidation rights
and when issued is fully paid and non-assessable by the Trust. Under the
Trust's Master Trust Agreement, no annual or regular meeting of shareholders
is required. Thus, there will ordinarily be no shareholder meetings unless
required by the Act. The Trust held an initial meeting of shareholders on
April 1, 1991, at which shareholders elected the Board of Trustees, approved
the Advisory Agreement and ratified the selection of the Trust's independent
accountants. The Trustees are a self-perpetuating body unless and until fewer
than 50% of the Trustees, then serving as Trustees, are Trustees who were
elected by shareholders. At that time another meeting of shareholders will be
called to elect additional Trustees. On any matter submitted to the
shareholders, the holder of each Trust share is entitled to one vote per share
(with proportionate voting for fractional shares). Under the Master Trust
Agreement, any Trustee may be removed by vote of two-thirds of the outstanding
Trust shares; and holders of ten percent or more of the outstanding shares of
the Trust can require Trustees to call a meeting of shareholders for purposes
of voting on the removal of one or more Trustees. Shareholders of all funds
are entitled to vote on matters affecting all of the funds (such as the
elections of Trustees and ratification of the selection of the Trust's
independent accountants). On matters affecting an individual fund, a separate
vote of that fund is required. Shareholders of the Fund are not entitled to
vote on any matter not affecting the Fund. In accordance with the Act, under
certain circumstances the Trust will assist shareholders in communicating with
other shareholders in connection with calling a special meeting of
shareholders. The insurance company separate accounts, as the sole
shareholders of the Fund, have the right to vote Fund shares at any meeting of
shareholders. However, the Contracts may provide that the separate accounts
will vote Fund shares in accordance with instructions received from Contract
holders. See the applicable Contract prospectus for information regarding
Contract holders' voting rights.
Under Massachusetts law, the shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Master Trust Agreement of the Trust disclaims shareholder
liability for acts or obligations of the Trust and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Trust or the Trustees. The Master Trust Agreement
provides for indemnification out of the Trust's property for all losses and
expenses of any shareholder held personally liable for the obligations of the
Trust. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations. The Adviser believes that, in view of
the above, the risk of personal liability to shareholders is remote.
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<PAGE>
ADDITIONAL INFORMATION
ADVERTISING
From time to time the Fund may use various media to advertise performance.
Past performance is not necessarily indicative of future performance.
The Fund may advertise performance in terms of average annual total return,
which is computed by finding the average annual compounded rates of return
over a period that would equate the initial amount invested to the ending
redeemable value. The calculation assumes the maximum sales charge (currently,
the Fund does not impose a sales charge on investments) is deducted from the
initial $1,000 payment and assumes all dividends and distributions by the Fund
are reinvested on the reinvestment dates during the period, and includes all
recurring fees that are charged to all shareholder accounts. In addition, the
Fund may advertise aggregate total return for a special period of time which
is determined by ascertaining the percentage change in the net asset value of
shares of the Fund initially purchased assuming reinvestment of dividends and
capital gains distribution on such shares without giving effect to the length
of time of the investment. Sales loads and other non-recurring expenses may be
excluded from the calculation of rates of return with the result that such
rates may be higher than if such expenses and sales loads were included. All
other fees will be included in the calculation of rates of return.
The Fund may quote performance results from recognized services and
publications which monitor the performance of mutual funds and the Fund may
compare its performance to various published historical indices. Micropal,
Ltd., a worldwide mutual fund performance evaluation service, is one such
rating agency. Lipper Analytical Services is another such rating agency. The
Lipper performance analysis assumes reinvestment of capital gains and
distributions, but does not give effect to sales charges or taxes. Worldwide
Real Estate Fund may be compared to the following indices: Solomon Brothers
World Property Index, Morgan Stanley Capital International Real Estate Index,
NAREIT Equity Index, Wilshire Real Estate Securities Index and Morgan Stanley
REIT Index, among others. For a further discussion of advertising see
"Performance" in the Statement of Additional Information.
For further information about the Fund, please call or write to your insurance
company or call toll free (800) 221-2220 (in New York call (212) 687-5200) or
write to the Fund at the cover page address.
CUSTODIAN
The Custodian of the assets of the Trust is The Chase Manhattan Bank, Chase
Metrotech Center, Brooklyn, New York 11245.
TRANSFER AGENT
Van Eck Associates Corporation, 99 Park Avenue, New York, New York 10016,
serves as the Fund's transfer agent.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New York, New York
10019, provides audit services, consultation and advice with respect to
financial information in the Trust's filings with the SEC, consults with the
Trust on accounting and financial report matters and prepares the Trust's tax
return.
COUNSEL
Goodwin, Procter & Hoar, One Exchange Place, Boston, Massachusetts 02109,
serves as Counsel for the Trust.
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VAN ECK WORLDWIDE INSURANCE TRUST
- ---------------------------------
Worldwide Real Estate Fund
Shares of the Fund are offered only to separate accounts of various insurance
companies to fund the benefits of variable life policies and variable annuity
policies. This Prospectus sets forth concisely information about the Trust and
Fund that you should know before investing. It should be read in conjunction
with the prospectus for the Contract which accompanies this Prospectus and
should be retained for future reference. The Contracts involve certain expenses
not described in this Prospectus and also may involve certain restrictions or
limitations on the allocation of purchase payments or Contract values to the
Fund. See the applicable Contract prospectus for information regarding expenses
of the Contract and any applicable restrictions or limitations with respect to
the Fund.
Van Eck Worldwide Insurance Trust
- ----------------------------------
99 Park Avenue, New York, NY 10016
[LOGO OF VAN ECK GLOBAL APPEARS HERE]
VAN ECK GLOBAL
THE UNUSUAL FUNDS(SM)
June 2, 1997
VAN ECK
WORLDWIDE
INSURANCE TRUST
PROSPECTUS
Worldwide Real Estate Fund
(Yen) Van Eck Worldwide Insurance Trust (Yen) Van Eck Worldwide Insurance
Trust(Yen) Van Eck Worldwide Insurance Trust (Yen) Van Eck Worldwide Insurance
Trust (Yen) Van Eck Worldwide Insurance Trust (Yen) Van Eck Worldwide Insurance
Trust (Yen) Van Eck Worldwide Insurance Trust (Yen) Van Eck World wide Insurance
Trust (Yen) Van Eck World Insurance Trust(Yen) Van Eck Worldwide Insurance Trust
(Yen) Van Eck Worldwide Insurance Trust (Yen) Van Eck Worldwide Insurance Trust
(Yen) Van Eck Worldwide Insurance Trust (Yen) Van Eck Worldwide Insurance Trust
[LOGO OF VAN ECK GLOBAL APPEARS HERE]
VAN ECK GLOBAL
THE UNUSUAL FUNDS(SM)
<PAGE>
VAN ECK WORLDWIDE INSURANCE TRUST
WORLDWIDE REAL ESTATE FUND
99 PARK AVENUE, NEW YORK, N.Y. 10016
(212) 687-5200
Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company currently consisting of five separate series. This Statement
of Additional Information relates only to Worldwide Real Estate Fund (the
"Fund"). Shares of the Fund are offered only to separate accounts of various
insurance companies to fund the benefits of variable life insurance and variable
annuity policies ("Contracts").
TABLE OF CONTENTS
General
Information............................................................. 2
Investment Objective and Policies of the Fund .......................... 2
Risk Factors............................................................ 3
Foreign Securities.................................................. 3
Foreign Currency Transactions....................................... 4
Futures and Options Transactions.................................... 5
Repurchase Agreements............................................... 6
Mortgage-Backed Securities.......................................... 6
Real Estate Securities.............................................. 6
Commercial Paper.................................................... 7
Debt Securities..................................................... 7
Short Sales......................................................... 8
Direct Investments.................................................. 8
Investment Restrictions................................................. 9
Investment Advisory Services............................................ 11
The Distributor......................................................... 12
Portfolio Transactions and Brokerage.................................... 12
Trustees and Officers................................................... 14
Principal Shareholders.................................................. 18
Valuation of Shares..................................................... 18
Taxes................................................................... 19
Redemptions in Kind..................................................... 19
Performance............................................................. 19
Additional Information.................................................. 20
Financial Statements.................................................... 21
Appendix................................................................ 22
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Fund's current Prospectus, dated June 2, 1997 (the
"Prospectus"), which is available at no charge upon written or telephone request
to the Trust at the address or telephone number set forth at the top of this
page.
Shareholders are advised to read and retain this Statement
of Additional Information for future reference
STATEMENT OF ADDITIONAL INFORMATION
JUNE 2, 1997
<PAGE>
GENERAL INFORMATION
Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company organized as a "business trust" under the laws of the
Commonwealth of Massachusetts on January 7, 1987 as Van Eck Variable Insurance
Products Trust. The Board of Trustees has authority to create additional series
or funds, each of which may issue a separate class of shares. There are
currently five series of the Trust: Worldwide Balanced Fund, Worldwide Bond
Fund, Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund and Worldwide
Real Estate Fund. Worldwide Real Estate Fund is classified as a non- diversified
fund under the Investment Company Act of 1940, as amended (the "1940 Act").
INVESTMENT OBJECTIVE AND POLICIES OF THE FUND
WORLDWIDE REAL ESTATE FUND
Worldwide Real Estate Fund seeks to maximize total return by investing primarily
in equity securities of domestic and foreign companies which are principally
engaged in the real estate industry or which own significant real estate assets.
The Fund will, under normal conditions, invest at least 65% (and at times nearly
all) of its total assets in equity securities of domestic and foreign companies
which are principally engaged in the real estate industry or which own
significant real estate assets ("Real Estate Companies").
The Fund may invest up to 35% of its assets in debt securities of Real Estate
Companies and in equity and debt securities of non-Real Estate Companies, which
may include issuers whose products and services are related to the real estate
industry or which own real estate assets.
The Fund may, for temporary defensive purposes, invest more than 35% of its
total assets in securities which are not emerging market securities, such as
high grade, liquid debt securities of foreign and United States companies,
foreign governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in money
market instruments denominated in U.S. dollars or a foreign currency. These
money market instruments include, but are not limited to, negotiable or
short-term deposits with domestic or foreign banks with total surplus and
undivided profits of at least $50 million; high quality commercial paper; and
repurchase agreements maturing within seven days with domestic or foreign
dealers, banks and other financial institutions deemed to be creditworthy under
guidelines approved by the Board of Trustees of the Trust. The commercial paper
in which the Fund may invest will, at the time of purchase, be rated P-1 or
better by Moody's Investors Service, Inc. ("Moody's"); A-1 or better by Standard
& Poor's Corporation ("S&P"); Fitch-1 by Fitch; Duff-1 by Duff & Phelps ("D&P"),
or if unrated, will be of comparable high qualify as determined by Van Eck
Associates Corporation (the "Adviser").
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RISK FACTORS
FOREIGN SECURITIES
Investors should recognize that investing in foreign securities involves certain
special considerations which are not typically associated with investing in
United States securities. Since investments in foreign companies will frequently
involve currencies of foreign countries, and since the Fund may hold securities
and funds in foreign currencies, the Fund may be affected favorably or
unfavorably by changes in currency rates and in exchange control regulations, if
any, and may incur costs in connection with conversions between various
currencies. Most foreign stock markets, while growing in volume of trading
activity, have less volume than the New York Stock Exchange ("NYSE"), and
securities of some foreign companies are less liquid and more volatile than
securities of comparable domestic companies. Similarly, volume and liquidity in
most foreign bond markets are less than in the United States and at times,
volatility of price can be greater than in the United States. Fixed commissions
on foreign securities exchanges are generally higher than negotiated commissions
on United States exchanges, although the Fund endeavors to achieve the most
favorable net results on its portfolio transactions. There is generally less
government supervision and regulation of securities exchanges, brokers and
listed companies in foreign countries than in the United States. In addition,
with respect to certain foreign countries, there is the possibility of exchange
control restrictions, expropriation or confiscatory taxation, political,
economic or social instability, which could affect investments in those
countries. Foreign securities such as those purchased by the Fund may be subject
to foreign government taxes, higher custodian fees and dividend collection fees
which could reduce the yield on such securities.
Investments may be made from time to time by Worldwide Real Estate Fund in
companies in developing countries as well as in developed countries. Although
there is no universally accepted definition, a developing country is generally
considered by the Adviser to be a country which is in the initial stages of
industrialization. Shareholders should be aware that investing in the markets of
developing countries involves exposure to unstable governments, economies based
on only a few industries, and securities markets which trade a small number of
securities. Securities markets of developing countries tend to be more volatile
than the markets of developed countries; however, such markets have in the past
provided the opportunity for higher rates of return to investors.
The value and liquidity of investments in developing countries may be affected
favorably or unfavorably by political, economic, fiscal, regulatory or other
developments in the particular countries or neighboring regions. The extent of
economic development, political stability and market depth of different
countries varies widely. Certain developing countries do not have comprehensive
systems of laws. Even where adequate law exists in such developing countries, it
may be impossible to obtain swift and equitable enforcement of such law, or to
obtain enforcement of the judgment by a court of another jurisdiction.
Investments typically involve greater potential for gain or loss than
investments in securities of issuers in developed countries.
The securities markets in developing countries are substantially smaller, less
liquid and more volatile than the major securities markets in the United States.
A high proportion of the shares of many issuers may be held by a limited number
of persons and financial institutions, which may limit the number of shares
available for investment by the portfolio. The limited liquidity of securities
markets in developing countries may also affect the Fund's ability to acquire or
dispose of securities at the price and time it
3
<PAGE>
wishes to do so. In addition, securities markets in developing countries are
susceptible to being influenced by large investors trading significant blocks of
securities.
Trading in futures contracts traded on foreign commodity exchanges may be
subject to the same or similar risks as trading in foreign securities.
FOREIGN CURRENCY TRANSACTIONS
Under normal circumstances, consideration of the prospects for currency exchange
rates will be incorporated into the long-term investment decisions made for the
Fund, with regard to overall diversification strategies. Although the Fund
values its assets daily in terms of U.S. dollars, it does not intend physically
to convert its holdings of foreign currencies into U.S. dollars on a daily
basis. The Fund will do so from time to time, and investors should be aware of
the costs of currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer. The Fund will use forward contracts, along
with futures contracts and put and call options, to "lock in" the U.S. dollar
price of a security bought or sold and as part of its overall hedging strategy.
The Fund will conduct its foreign currency exchange transactions, either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or through purchasing put and call options on, or entering into
futures contracts or forward contracts to purchase or sell foreign currencies.
See "Futures and Options Transactions."
A forward foreign currency contract, like a futures contract, involves an
obligation to purchase or sell a specific amount of currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. Unlike foreign
currency futures contracts which are standardized exchange-traded contracts,
forward currency contracts are usually traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for such trades.
The Adviser will not commit the Fund to deliver under forward contracts an
amount of foreign currency in excess of the value of the Fund's portfolio
securities or other assets or obligations denominated in that currency. The
Fund's Custodian will place the securities being hedged, cash or U.S. Government
securities or debt or equity securities into a segregated account of the Fund in
an amount equal to the value of the Fund's total assets committed to the
consummation of forward foreign currency contracts to ensure that the Fund is
not leveraged beyond applicable limits. If the value of the securities placed in
the segregated account declines, additional cash or securities will be placed in
the account on a daily basis so that the value of the account will equal the
amount of the Fund's commitments with respect to such contracts. At the maturity
of a forward contract, the Fund may either sell the portfolio security and make
delivery of the foreign currency, or they may retain the security and terminate
their contractual obligation to deliver the foreign currency prior to maturity
by purchasing an "offsetting" contract with the same currency trader obligating
it to purchase, on the same maturity date, the same amount of the foreign
currency. There can be no assurance, however, that the Fund will be able to
effect such a closing purchase transaction.
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It is impossible to forecast the market value of a particular portfolio security
at the expiration of the contract. Accordingly, it may be necessary for the Fund
to purchase additional foreign currency on the spot market (and bear the expense
of such purchase) if the market value of the security is less than the amount of
foreign currency that the Fund is obligated to deliver and if a decision is made
to sell the security and make delivery of the foreign currency.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. Additionally, although such contracts
tend to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time they tend to limit any potential gain which might
result should the value of such currency increase.
FUTURES AND OPTIONS TRANSACTIONS
The Fund may invest in options on futures contracts. Compared to the purchase or
sale of futures contracts, the purchase and sale of options on futures contracts
involves less potential risk to the Fund because the maximum exposure is the
amount of the premiums paid for the options.
The Fund's use of financial futures contracts, commodity futures contracts and
options on such futures contracts may reduce the Fund's exposure to fluctuations
in the prices of portfolio securities and may prevent losses if the prices of
such securities decline. Similarly, such investments may protect the Fund
against fluctuation in the value of securities in which the Fund is about to
invest. Because the financial markets in the developing countries are not as
developed in the United States, these financial investments may not be available
to the Fund and the Fund may be unable to hedge certain risks.
The use of financial futures and/or commodity futures contracts and options on
such futures contracts as hedging instruments involves several risks. First,
there can be no assurance that the prices of the futures contracts or options
and the hedged security or the cash market position will move as anticipated. If
prices do not move as anticipated, the Fund may incur a loss on its investment,
may not achieve the hedging protection anticipated and/or incur a loss greater
than if it had entered into a cash market position. Second, investments in
options, futures contracts and options on futures contracts may reduce the gains
which would otherwise be realized from the sale of the underlying securities or
assets which are being hedged. Third, positions in futures contracts and options
can be closed out only on an exchange that provides a market for those
instruments. There can be no assurances that such a market will exist for a
particular futures contract or option. If the Fund cannot close out an exchange
traded futures contract or option which it holds, it would have to perform its
contract obligation or exercise its option to realize any profit and would incur
transaction costs on the sale of the underlying assets.
It is the policy of the Fund to meet the requirements of the Internal Revenue
Code of 1986, as amended (the "Code"), to qualify as a regulated investment
company to prevent double taxation of the Fund and its shareholders. One of
these requirements is that less than 30% of the Fund's gross income must be
derived from gains from the sale or other disposition of securities held for
less than three months. Another test requires that at least 90% of the Fund's
gross income be derived from dividends, interest, payment with respect to
securities loans and gains from the sale or other disposition of stocks or other
securities. Gains from commodity futures contracts do not currently qualify as
income for purposes of the 90% test. The extent to which the Fund may engage in
options and futures contracts transactions may be materially limited by these
tests.
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REPURCHASE AGREEMENTS
The Fund will only enter into a repurchase agreement where (i) the underlying
securities are of the type which the Fund's investment policies would allow it
to purchase directly, (ii) the market value of the underlying security,
including accrued interest, will be at all times equal to or exceed the value of
the repurchase agreement, and (iii) payment for the underlying securities is
made only upon physical delivery or evidence of book-entry transfer to the
account of the custodian or a bank acting as agent.
MORTGAGE-BACKED SECURITIES
The Fund may invest in mortgage-backed securities. A mortgage-backed security
may be an obligation of the issuer backed by a mortgage or pool of mortgages or
a direct interest in an underlying pool of mortgages. The value of
mortgage-backed securities may change due to shifts in the market's perception
of issuers. In addition, regulatory or tax changes may adversely affect the
mortgage securities market as a whole. Stripped mortgage-backed securities are
created when a U.S. governmental agency or a financial institution separates the
interest and principal components of a mortgage-backed security and sells them
as individual securities. The holder of the "principal-only" security ("PO")
receives the principal payments made by the underlying mortgage-backed security,
while the holder of the "interest-only" security ("IO") receives interest
payments from the same underlying security. The prices of stripped
mortgage-backed securities may be particularly affected by change in interest
rates. As interest rates fall, prepayment rates tend to increase, which tends to
reduce the price of IOs and increase prices of POs. Rising interest rates can
have the opposite effect. Changes in interest rates may also affect the
liquidity of IOs and POs.
REAL ESTATE SECURITIES
The assets of real estate investment trusts ("REITs") consist primarily of
interest in real estate and real estate loans. REITs are often classified as
equity REITs, mortgage REITs or hybrid REITs. Equity REITs own interests in
property and realize income from the rents and gain or loss from the sale of
real estate interests. Mortgage REITs invest in real estate mortgage loans and
realize income from interest payments on the loans. Hybrid REITs invest in both
equity and debt. Equity REITs may be operating or financing companies. An
operating company provides operational and management expertise to and exercises
control over, many if not most operational aspects of the property.
REITs are not taxed on income distributed to shareholders provided they comply
with several requirements of the Internal Revenue Code of 1986, as amended (the
"Code").
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to the risks of financing projects. REITs are subject to heavy cash
flow dependency, default by borrowers, self-liquidation and the possibilities of
failing to qualify for the exemption from tax for distributed income under the
Code. REITs (especially mortgage REITs) are also subject to interest rate risk
(i.e., as interest rates rise, the value of the REIT may decline).
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COMMERCIAL PAPER
The Fund may invest in commercial paper which is indexed to certain specific
foreign currency exchange rates. The terms of such commercial paper provide that
its principal amount is adjusted upwards or downwards (but not below zero) at
maturity to reflect changes in the exchange rate between two currencies while
the obligation is outstanding. The Fund will purchase such commercial paper with
the currency in which it is denominated and, at maturity, will receive interest
and principal payments thereon in that currency, but the amount or principal
payable by the issuer at maturity will change in proportion to the change (if
any) in the exchange rate between two specified currencies between the date the
instrument is issued and the date the instrument matures. While such commercial
paper entails the risk of loss of principal, the potential for realizing gains
as a result of changes in foreign currency exchange rate enables the Fund to
hedge or cross-hedge against a decline in the U.S. dollar value of investments
denominated in foreign currencies while providing an attractive money market
rate of return. The Fund will purchase such commercial paper for hedging
purposes only, not for speculation. The staff of the Securities and Exchange
Commission has been considering whether the purchase of this type of commercial
paper would result in the issuance of a "senior security" within the meaning of
the 1940 Act. The Fund believes that such investments do not involve the
creation of such a senior security, but nevertheless will establish a segregated
account with respect to its investments in this type of commercial paper and to
maintain in such account cash not available for investment or U.S. Government
securities or other liquid high quality securities having a value equal to the
aggregate principal amount of outstanding commercial paper of this type.
DEBT SECURITIES
The Fund may invest in debt securities. The market value of debt securities
generally varies in response to changes in interest rates and the financial
condition of each issuer. During periods of declining interest rates, the value
of debt securities generally increases. Conversely, during periods of rising
interest rates, the value of such securities generally declines. These changes
in market value will be reflected in the Fund's net asset value. Debt securities
with similar maturities may have different yields, depending upon several
factors. including the relative financial condition of the issuers. For example,
higher yields are generally available from securities in the lower rating
categories of S&P or Moody's. However, the values of lower-rated securities
generally fluctuate more than those of high grade securities. Many securities of
foreign issuers are not rated by these services. Therefore the selection of such
issuers depends to a large extent on the credit analysis performed by the
Adviser.
New issues of certain debt securities are often offered on a when-issued basis,
that is, the payment obligation and the interest rate are fixed at the time the
buyer enters into the commitment, but delivery and payment for the securities
normally take place after the date of the commitment to purchase. The value of
when-issued securities may vary prior to and after delivery depending on market
conditions and changes in interest rate levels. However, the Fund does not
accrue any income on these securities prior to delivery. The Fund will maintain
in a segregated account with its Custodian an amount of cash or high quality
securities equal (on a daily marked-to-market-basis) to the amount of its
commitment to purchase the when-issued securities.
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SHORT SALES
Worldwide Real Estate Fund may make short sales of equity securities. The Fund
will establish a segregated account with respect to its short sales and maintain
in the account cash not available for investment or US Government securities or
other liquid, high-quality securities having a value equal to the difference
between (i) the market value of the securities sold short at the time they were
sold short and (ii) any cash, US Government securities or other liquid,
high-quality securities required to be deposited as collateral with the broker
in connection with the short sale (not including the proceeds from the short
sale). The segregated account will be marked to market daily, so that (i) the
amount in the segregated account plus the amount deposited with the broker as
collateral equals the current market value of the securities sold short and (ii)
in no event will the amount in the segregated account plus the amount deposited
with the broker as collateral fall below the original value of the securities at
the time they were sold short. The total value of the assets deposited as
collateral with the broker and deposited in the segregated account will not
exceed 50% of the Fund's net assets. The Fund's ability to engage in short sales
may be limited by the requirements of current US tax law that the Fund derive
less then 30% of its gross income from the sale or other disposition of
securities held less than three months. Securities sold short and then
repurchased, regardless of the actual time between the two transactions, are
considered to have been held for less than three months.
DIRECT INVESTMENTS
Worldwide Real Estate Fund may invest up to 10% of its total assets in direct
investments. Direct investments include the private purchase from an enterprise
or a principal investor in the enterprise of an equity interest in the
enterprise in the form of shares of common stock, rights or warrants to purchase
common stocks, securities convertible into common stock or equity interests in
trusts, partnerships, joint ventures or similar enterprises. In each case, the
Fund will, at the time of making the investment, enter into a shareholder or
similar agreement with the enterprise and one or more other holders of equity
interests in the enterprise. The Adviser anticipates that these agreements may,
in appropriate circumstances, provide for the Fund to appoint a representative
to the board of directors or similar body of the enterprise and for eventual
disposition of the Fund's investment in the enterprise. Such a representative of
the Fund would be expected to provide the Fund with the ability to monitor its
investment and protect its rights in the investment and would not be appointed
for the purpose of exercising management or control of the enterprise.
Certain of the Fund's direct investments will include investments in smaller,
less seasoned companies. These companies may have limited scope of operations,
markets or financial resources, or they may be dependent on a limited management
group. The Fund does not anticipate making direct investments in start-up
operations, although it is expected that in some cases the Fund's direct
investments will fund new operations for an enterprise which itself is engaged
in similar operations or is affiliated with an organization that is engaged in
similar operations.
Direct investments may involve a high degree of business and financial risk that
can result in substantial losses. Because of the absence of any public trading
market for these investments, the Fund may take longer to liquidate these
positions than would be the case for publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices on
these sales could be less than those originally paid by the Fund. Furthermore,
issuers whose securities are not publicly traded may not be subject to public
disclosure and other investor protection requirements applicable to publicly
traded securities. If such securities are required to be registered under the
securities laws of one or more
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jurisdictions before being resold, the Fund may be required to bear the expenses
of the registration. In addition, in the event the Fund sells unlisted foreign
securities, any capital gains realized on such transactions may be subject to
higher rates of taxation than taxes payable on the sale of listed securities.
Direct investments are generally considered illiquid and will be aggregated with
other illiquid investments for purposes of the limitation on illiquid
investments. Direct investments can be difficult to price and will be valued at
fair value as determined in good faith by the Board of Trustees. The pricing of
direct investments may not be reflective of the price at which these assets
could be liquidated.
INVESTMENT RESTRICTIONS
The following restrictions are fundamental policies which cannot be changed
without the approval of the holders of a majority of the Fund's outstanding
shares. Such majority is defined by the 1940 Act as the vote of the lesser of
(i) 67% or more of the outstanding shares present at a meeting, if the holders
of more than 50% of the outstanding shares are present in person or by proxy or
(ii) more than 50% of the Fund's outstanding shares.
The Fund may not:
1. Purchase or sell real estate, although the Fund may purchase securities
of companies which deal in real estate, including securities of real
estate investment trusts, and may purchase securities which are secured
by interests in real estate;
2. Purchase or sell commodities or commodity futures contracts (for the
purpose of this restriction, forward foreign exchange contracts are not
deemed to be a commodity or commodity contract) except that the
Worldwide Real Estate Fund may, for hedging only, buy and sell financial
futures contracts which may include stock and bond index futures
contracts and foreign currency futures contracts. The Worldwide Real
Estate Fund may, for hedging purposes only, buy and sell commodity
futures contracts on gold and other natural resources or on an index
thereon. The Fund may not commit more than 5% of its total assets to
initial margin deposits on futures contracts not used for hedging
purposes (except that with respect to Worldwide Real Estate Fund, margin
deposits for futures positions entered into for bona fide hedging
purposes are excluded from the 5% limitation). In addition, Worldwide
Real Estate Fund may invest in gold bullion and coins;
3. Make loans, except by (i) purchase of marketable bonds, debentures,
commercial paper and similar marketable evidences of indebtedness (such
as structured notes, indexed securities and swaps with respect to
Worldwide Real Estate Fund) and (ii) repurchase agreements. The Fund may
lend to broker-dealers portfolio securities with an aggregate market
value up to one-third of its total assets;
4. Underwrite any issue of securities (except to the extent that the Fund
may be deemed to be an underwriter within the meaning of the Securities
Act of 1933, as amended, in the disposition of restricted securities);
5. Borrow money, except that the Fund may borrow up to 30% of the value of
its net assets to increase its holding of portfolio securities;
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6. Issue senior securities except insofar as the Fund may be deemed to have
issued a senior security by reason of (i) borrowing money in accordance
with restrictions described above; (ii) entering into forward foreign
currency contracts; (iii) financial futures contracts purchased on
margin (iv) commodity futures contracts purchased on margin (Worldwide
Hard Assets Fund) and; (v) foreign currency swaps;
7 Make investments for the purpose of exercising control or management;
8. Invest in oil, gas or other mineral leases.
The following policies have been adopted by the Board of Trustees with respect
to the Fund and may be changed without shareholder approval.
The Fund may not:
9. (i) Purchase more than 3% of the total outstanding voting stock of any
investment company, (ii) invest more than 5% of any of the Fund's total
assets in securities of any one investment company or (iii) invest more
than 10% of such value in investment companies in general. In addition,
the Fund may not invest in the securities of closed-end investment
companies, except by purchase in the open market involving only
customary broker's commissions.
10. Invest in securities which are (i) subject to legal or contractual
restrictions on resale ("restricted securities"), or in securities for
which there is no readily available market quotation or engage in a
repurchase agreement maturing in more than seven days with respect to
any security, if as a result, more than 15% of its total net assets
would be invested in such securities and; (ii) "illiquid" securities,
including repurchase agreements maturing in more than 7 days and options
traded over-the-counter if the result is that more than 15% of its total
net assets would be invested in such securities;
11. Write, purchase or sell puts, calls, straddles, spreads or combinations
thereof, except that the Fund may purchase or sell puts and calls on
foreign currencies and on securities as described under "Futures and
Options Transactions" herein and in the Prospectus and that the Fund may
write, purchase or sell put and call options on financial futures
contracts, which include bond and stock index futures contracts and
Worldwide Real Estate Fund may write, purchase, or sell put and call
options on gold or other natural resources or an index thereon and on
commodity futures contracts on gold or other natural resources or an
index thereon;
12. Purchase participations or other interests (other than equity stock
interests) in oil, gas or other mineral exploration or development
programs;
13. Invest more than 5% of its total assets in warrants, whether or not the
warrants are listed on the New York or American Stock Exchanges.
Warrants acquired in units or attached to securities are not included in
this restriction;
14. Mortgage, pledge or otherwise encumber its assets except to secure
borrowings effected within the limitations set forth in restriction (5);
15. Purchase any security on margin, except that it may obtain such
short-term credits as are necessary for clearance of securities
transactions and, may make initial or maintenance margin
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payments in connection with options and futures contracts and related
options and borrowing effected within the limitations set forth in
restriction (5);
16. Participate on a joint or joint and several basis in any trading account
in securities, although transactions for the Fund and any other account
under common or affiliated management may be combined or allocated
between the Fund and such account;
17. Purchase or retain a security of any issuer if any of the officers,
directors or Trustees of the Fund or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer, or if
such persons taken together own more than 5% of the securities of such
issuer.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of net assets will not be considered a violation
of any of the foregoing restrictions.
INVESTMENT ADVISORY SERVICES
The investment adviser and manager of the Fund is Van Eck Associates Corporation
(the "Adviser"), a Delaware corporation, pursuant to an Advisory Agreement with
the Trust dated as of August 30, 1989. The Adviser furnishes an investment
program for the Fund and determines, subject to the overall supervision and
review of the Board of Trustees, what investments should be purchased, sold or
held.
The Adviser provides the Fund with office space, facilities and simple business
equipment and provides the services of consultants, executive and clerical
personnel for administering the affairs of the Fund. Except as provided for in
the Advisory Agreement, the Adviser compensates all executive and clerical
personnel and Trustees of the Trust if such persons are employees or affiliates
of the Adviser or its affiliates. The advisory fee is computed daily and paid
monthly.
The Advisory Agreement provides that it shall continue in effect from year to
year with respect to the Fund as long as it is approved at least annually both
(i) by a vote of a majority of the outstanding voting securities of the Fund (as
defined in the 1940 Act) or by the Trustees of the Trust, and (ii) in either
event a vote of a majority of the Trustees who are not parties to the Advisory
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement may be terminated on 60 days' written notice by either party and will
terminate automatically if it is assigned within the meaning of the 1940 Act.
The Advisory Agreement for the Fund was approved by the Board of Trustees on
April 22, 1997.
The expenses borne by the Fund include the charges and expenses of the transfer
and dividend disbursing agent, custodian fees and expenses, legal, auditors'
fees and expenses, brokerage commissions for portfolio transactions, taxes, (if
any), the advisory and administrative fees, extraordinary expenses (as
determined by the Trustees of the Trust), expenses of shareholder and Trustee
meetings and of preparing, printing and mailing proxy statements, reports and
other communications to shareholders, expenses of preparing and setting in type
prospectuses and periodic reports and expenses of mailing them to current
shareholders, legal and accounting expenses, expenses of registering and
qualifying shares for sale (including compensation of the Adviser's employees in
relation to the time spent on such matters), fees of Trustees who are not
"interested persons" of the Adviser, membership dues of the Investment Company
Institute, fidelity bond and errors and omissions insurance premiums, cost of
maintaining the
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books and records of the Fund, and any other charges and fees not specifically
enumerated as an obligation of the Distributor or Adviser.
The management fee for Worldwide Real Estate Fund is computed daily and paid
monthly at an annual rate of 1% of average daily net assets, which includes the
fee paid to the Adviser for accounting and administrative services.
Under the Advisory Agreement, the Adviser is responsible for determining the net
asset value per share and maintaining the accounting records of the Fund. For
these services the Agreement provides for reimbursement to the Adviser.
Mr. John C. van Eck is Chairman of the Board of Directors of the Adviser as well
as President and Trustee of the Trust.
THE DISTRIBUTOR
Shares of the Fund are offered on a continuous basis and are distributed through
Van Eck Securities Corporation, 99 Park Avenue, New York, New York (the
"Distributor"), a wholly-owned subsidiary of Van Eck Associates Corporation. The
Trustees of the Trust have approved a Distribution Agreement appointing the
Distributor as distributor of shares of the Fund. The Distribution Agreements
for the Fund was approved by action of the Trustees on April 22, 1997.
The Distribution Agreement provides that the Distributor will pay all fees and
expenses in connection with printing and distributing prospectuses and reports
for use in offering and selling shares of the Fund and preparing, printing and
distributing advertising or promotional materials. The Fund will pay all fees
and expenses in connection with registering and qualifying its shares under
federal and state securities laws.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser is responsible for decisions to buy and sell securities and other
investments for the Fund, the selection of brokers and dealers to effect the
transactions and the negotiation of brokerage commissions, if any. In
transactions on stock and commodity exchanges in the United States, these
commissions are negotiated, whereas on foreign stock and commodity exchanges
these commissions are generally fixed and are generally higher than brokerage
commissions in the United States. In the case of securities traded on the
over-the-counter markets, there is generally no stated commission, but the price
usually includes an undisclosed commission or markup. In underwritten offerings,
the price includes a disclosed, fixed commission or discount. Most short term
obligations are normally traded on a "principal" rather than agency basis. This
may be done through a dealer (e.g., securities firm or bank) who buys or sells
for its own account rather than as an agent for another client, or directly with
the issuer. A dealer's profit, if any, is the difference, or spread, between the
dealer's purchase and sale price for the obligation.
In purchasing and selling the Fund's portfolio investments, it is the Adviser's
policy to obtain quality execution at the most favorable prices through
responsible broker-dealers. In selecting broker-dealers, the Adviser will
consider various relevant factors, including, but not limited to, the size and
type of the transaction; the nature and character of the markets for the
security or asset to be purchased or sold; the
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execution efficiency, settlement capability, and financial condition of the
broker-dealer's firm; the broker-dealer's execution services rendered on a
continuing basis; and the reasonableness of any commissions.
The Adviser may cause the Fund to pay a broker-dealer who furnishes brokerage
and/or research services a commission that is in excess of the commission
another broker-dealer would have received for executing the transaction if it is
determined that such commission is reasonable in relation to the value of the
brokerage and/or research services as defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended, which have been provided. Such research
services may include, among other things, analyses and reports concerning
issuers, industries, securities, economic factors and trends and portfolio
strategy. Any such research and other information provided by brokers to the
Adviser is considered to be in addition to and not in lieu of services required
to be performed by the Adviser under its Advisory Agreement with the Trust. The
research services provided by broker-dealers can be useful to the Adviser in
serving its other clients or clients of the Adviser's affiliates.
The Trustees periodically review the Adviser's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Fund and review the commissions paid by the Fund over
representative periods of time to determine if they are reasonable in relation
to the benefits to the Fund.
Investment decisions for the Fund are made independently from those of the other
investment accounts managed by the Adviser or affiliated companies. Occasions
may arise, however, when the same investment decision is made for more than one
client's account. It is the practice of the Adviser to allocate such purchases
or sales insofar as feasible among its several clients or the clients of its
affiliates in a manner it deems equitable. The principal factors which the
Adviser considers in making such allocations are the relative investment
objectives of the clients, the relative size of the portfolio holdings of the
same or comparable securities and the then availability in the particular
account of funds for investment. Portfolio securities held by one client of the
Adviser may also be held by one or more of its other clients or by clients of
its affiliates. When two or more of its clients or clients of its affiliates are
engaged in the simultaneous sale or purchase of securities, transactions are
allocated as to amount in accordance with formulae deemed to be equitable as to
each client. There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on other clients.
While it is the policy of the Fund generally not to engage in trading for
short-term gains, the Fund will effect portfolio transactions without regard to
the holding period if, in the judgment of the Adviser, such transactions are
advisable in light of a change in circumstances of a particular company, within
a particular industry or country, or in general market, economic or political
conditions. The portfolio turnover rates of the Fund may vary greatly from year
to year. The annual portfolio turnover rate of the Worldwide Real Estate Fund
may exceed 100%. With a high rate of portfolio turnover, the Fund would pay a
greater amount in brokerage commissions than a similar size fund with a lower
turnover rate. In addition, since the Fund may have a high rate of portfolio
turnover, the Fund may realize capital gains or losses. Capital gains will be
distributed annually to the shareholders. Capital losses cannot be distributed
to shareholders but may be used to offset capital gains at the Fund level. See
"Taxes" in the Prospectus and the Statement of Additional Information.
The Adviser does not consider sales of shares of the Fund as a factor in the
selection of broker-dealers to execute portfolio transactions for the Fund.
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TRUSTEES AND OFFICERS
The Trustees and officers of the Trust, their address, position with the Trust,
age and principal occupations during the past five years are set forth below.
Trustees of the Trust:
@ * JOHN C. van ECK, CFA (81) - Chairman of the Board
- -------------------------
270 River Road, Briarcliff Manor, New York; President of the Asia
Dynasty Fund, Global Balanced Fund and Emerging Markets Growth Fund
series of Van Eck Funds and the Worldwide Balanced Fund and Worldwide
Emerging Markets Fund series of Van Eck Worldwide Insurance Trust;
Chairman of the Board and President of another investment company
advised by the Adviser; Chairman, Van Eck Associates Corporation
(investment adviser) and Van Eck Securities Corporation (broker-dealer);
Director, Eclipse Financial Asset Trust (mutual fund); Former President
of the Adviser and its affiliated companies; Former Director
(1992-1995), Abex Inc. (aerospace); Former Director (1983-1986), The
Signal Companies, Inc. (high technology and engineering); Former
Director (1982-1984), Pullman Transportation Co., Inc. (transportation
equipment); Former Director (1986-1992) The Henley Group, Inc.
(technology and health).
@ # + JEREMY H. BIGGS (61) - Trustee
- ---------------------
1220 Park Avenue, New York, NY 10128; Trustee of another investment
company advised by the adviser; Vice Chairman, Director and Chief
Investment Officer, Fiduciary Trust Company International (investment
manager), parent company of Fiduciary International, Inc., which has
entered into sub-advisory agreements with Van Eck Funds and Van Eck
Worldwide Insurance Trust as to the Global Balanced Fund and the
Worldwide Balanced Fund series, respectively; Chairman of the Board to
all funds of Davis Funds Group (mutual fund management company); Former
Director, International Investors Incorporated (1990-1991).
# + RICHARD C. COWELL (69) - Trustee
- ---------------------
240 El Vedado Way, Palm Beach, Florida 33480; Trustee of another
investment company advised by the Adviser; Private Investor; Director,
West Indies & Caribbean Development Ltd. (real estate); Former Director,
Compo Industries, Inc. (machinery manufacturer); Former Director,
International Investors Incorporated (1957-1991); Former Director
(1978-1981), American Eagle Petroleums, Ltd. (oil and gas exploration);
Former President and Director (1968-1976), Minerals and Industries, Inc.
(petroleum products); Former Director (1978-1983) Duncan Gold Resources,
Inc. (oil exploration and gold mining); Former Director (1981-1984),
Crested Butte Silver Mining Co.; Former Chairman and Member of Executive
Committee (1974-1981), Allerton Resources, Inc. (oil and gas
exploration); Former Director (1976-1982), Western World Insurance Co.
@* PHILIP D. DEFEO (51) - Trustee
- -------------------
99 Park Avenue, New York, NY 10016; Trustee of another investment
company advised by the Adviser; President, Chief Executive Officer and
Director of Van Eck Associates Corporation (investment adviser) and Van
Eck Securities Corporation (broker-dealer) since September 1996; Former
Executive Vice President and Director of Marketing and Customer Services
(June 1994 - August 1996), Cedel International (finance and
settlements); Former Managing Director (July 1992 - April 1994), Lehman
Brothers (investment bank and broker-dealer); Former Senior Vice
14
<PAGE>
President, Fidelity Investments and Former President, Fidelity Services
Company (financial services); (1987-1992).
# + WESLEY G. McCAIN (54) - Trustee
- --------------------
144 East 30th Street, New York, New York 10016; Trustee of other
affiliated investment companies advised by the Adviser; Chairman and
Owner, Towneley Capital Management, Inc., (investment adviser);
Chairman, Eclipse Financial Asset Trust (mutual fund); Chairman and
Owner, Eclipse Financial Services, Inc.; General Partner, Pharaoh
Partners, L.P.; Principal, Pharaoh Partners (Cayman) LDC; President,
Millbrook Associates, Inc. (investment adviser); Trustee, Libre Group
Trust; Former Director, International Investors Incorporated; Former
Chairman and Owner, Finacor, Inc. (financial services).
# DAVID J. OLDERMAN (61) - Trustee
- -------------------
40 East 52nd Street, New York, New York 10022; Trustee of another
investment company advised by the Adviser; Chairman of the Board, Chief
Executive Officer and Owner, Carret & Company, Inc. (since 1988);
Chairman of the Board, American Copy Equipment Co. (1991-present);
Chairman of the Board, Brighton Partners, Inc. (1993-present);
Principal, Olderman & Raborn, Inc., (investment advisers-1984-1988);
Chairman of the Board, Railoc, Inc., (farm equipment
manufacturing-1979-1984); Head of Corporate Finance, Halsey Stuart
(investment banking-1974-1975); Vice Chairman of the Board, Stone and
Webster Securities Corp. (investment banking, retail sales and
investment advisory divisions-1964 to 1974).
# * RALPH F. PETERS (68) - Trustee
- -------------------
66 Strimples Mill Road, Stockton, New Jersey 08559-1703; Trustee of
another investment company advised by the Adviser; Former Chairman of
the Board, Former Chairman of the Executive Committee and Chief
Executive Officer of Discount Corporation of New York (dealer in U.S.
Treasury and Federal Agency Securities) (1981-1988); Director, Sun Life
Insurance and Annuity Company of New York; Director, U.S. Life Income
Fund, Inc., New York; Former Director, International Investors
Incorporated.
# RICHARD D. STAMBERGER (38) - Trustee
- -----------------------
888 17th Street, N.W., Washington, D.C. 20006; Trustee of two other
investment companies advised or administered by the Adviser; Principal,
National Strategies, Inc., a public policy firm in Washington, D.C.;
Partner and Co-founder, Quest Partners, L.L.C. (management consulting
firm/since 1988); Executive Vice President, Chief Operating Officer, and
a Director of NuCable Resources Corporation (technology firm/since
1988); associated with Anderson Benjamin & Reed, a regulatory consulting
firm based in Washington, D.C. (1985-1986); White House Fellow-Office of
Vice President (1984-1985); Director of Special Projects, National Cable
Television Association (1983-1984).
@ ** FRED M. van ECK (78) - Trustee
- --------------------
99 Park Avenue, New York, New York; Trustee of another investment
company advised by the Adviser; Private Investor; Director, Van Eck
Associates Corporation; Director, Van Eck Securities Corporation; Former
General Partner (1950-1976), J. H. Whitney & Co. (venture capital).
15
<PAGE>
Officers of the Trust:
LUCILLE PALERMO (51) - Executive Vice President
- ---------------
99 Park Avenue, New York, New York 10016; President of Gold/Resources
Fund and International Investors Gold Fund; Officer of another
investment company advised by the Adviser; Associate Director, Mining
Research of the Adviser; Investment Strategist and Analyst with Drexel
Burnham Lambert (1979-1989).
MADIS SENNER (43) - Executive Vice President
- ------------
99 Park Avenue, New York, New York 10016; President of the Global Income
Fund series of Van Eck Funds and the Worldwide Bond Fund series of Van
Eck Worldwide Insurance Trust; Officer of another investment company
advised by the Adviser; Director, Global Fixed Income of Van Eck
Associates Corporation; Former Global Bond Manager, Chase Manhattan
Private Bank (1992-1994); Former President and founder, Sunray
Securities, Inc. (1989-1992).
DEREK van ECK (32) - Executive Vice President
- -------------
99 Park Avenue, New York, New York 10016; President of the Global Hard
Assets Fund series of Van Eck Funds and the Worldwide Hard Assets Fund
series of Van Eck Worldwide Insurance Trust; Officer of another
investment company adviser by the Adviser; Executive Vice President,
Director, Global Investments and Director of Van Eck Associates
Corporation and Executive Vice President and Director of Van Eck
Securities Corporation and other affiliated companies.
BRUCE J. SMITH (42) - Vice President and Treasurer
- --------------
99 Park Avenue, New York, New York 10016; Officer of other investment
companies advised or administered by the Adviser; Senior Managing
Director, Portfolio Accounting of Van Eck Associates Corporation and
Senior Managing Director of Van Eck Securities Corporation.
THADDEUS M. LESZCZYNSKI (50) - Vice President and Secretary
- -----------------------
99 Park Avenue, New York, New York 10016; Officer of other investment
companies advised or administered by the Adviser; Vice President,
Secretary and General Counsel of Van Eck Associates Corporation, Van Eck
Securities Corporation and other affiliated companies.
JOSEPH P. DiMAGGIO (40) - Controller
- ------------------
99 Park Avenue, New York, New York 10016; Officer of another investment
company advised by the Adviser; Director of Portfolio Accounting of Van
Eck Associates Corporation (since 1993); Former Accounting Manager,
Alliance Capital Management (1985-1993).
CHARLES CAMERON (37) - Vice President
- ---------------
99 Park Avenue, New York, New York 10016; Officer of another investment
company advised by the Adviser; Director of Trading of Van Eck
Securities Corporation
SUSAN C. LASHLEY (42) - Vice President
- ----------------
99 Park Avenue, New York, New York 10016; Officer of another investment
company advised by the Adviser; Managing Director, Mutual Fund
Operations of Van Eck Securities Corporation.
KEVIN REID (34) - Vice President
- ----------
99 Park Avenue, New York, New York 10016; President of the Global Real
Estate Fund series and Vice President of the Global Hard Assets Fund
series of
16
<PAGE>
Van Eck Funds and President of the Worldwide Real Estate Fund and Vice
President of the Worldwide Hard Assets Fund series of Van Eck Worldwide
Insurance Trust; Officer of another investment company advised by the
Adviser; Director, Real Estate Research of Van Eck Associates
Corporation.
BARBARA J. ALLEN (40) - Assistant Secretary
- ----------------
99 Park Avenue, New York, New York 10016; Officer of another investment
company advised by the Adviser; Compliance Officer of Van Eck Associates
Corporation and Van Eck Securities Corporation; Former Senior Counsel,
Arizona Corporation Commission, Securities Division (1990-1994).
SUSAN I. GRANT (44) - Assistant Secretary
- --------------
99 Park Avenue, New York, New York 10016; Officer of another investment
company advised by the Adviser; Senior Attorney of Van Eck Associates
Corporation; formerly employed by The Royce Funds (1994 to 1996) and
First Investors Corporation (1989 to 1994).
Gregory Krenzer (24) - President of Van Eck U.S. Government Money Fund
- ---------------
99 Park Avenue, New York, New York 10016; Research Analyst and Portfolio
Assistant (Global Fixed Income) of Van Eck Associates Corporation since
1994.
- ----------------
@ An "interested person" as defined in the 1940 Act.
* Member of Executive Committee -exercises general powers of Board of
Trustees between meetings of the Board.
** Brother of Mr. John C. van Eck.
o # Member of the Nominating Committee.
+ Member of the Audit Committee -reviews fees, services, procedures,
conclusions and recommendations of independent auditors
Compensation Table
------------------
<TABLE>
<CAPTION>
Van Eck Worldwide Van Eck Worldwide
Insurance Trust Insurance Trust Total Fund Complex
(Current Trustees Fees) (Deferred Compensation) Compensation (a)
<S> <C> <C> <C>
John C. van Eck $0 $0 $0
Jeremy H. Biggs $6,142 $2,821 $40,000
Richard C. Cowell $8,616 $0 $65,500
Philip D. DeFeo $0 $0 $0
Wesley G. McCain $0 $9,316 $44,000
David J. Olderman $0 $7,479 $35,000
Ralph F. Peters $6,592 $0 $31,000
Richard D. Stamberger $4,342 $4,567 $40,875
Fred M. van Eck $0 $0 $0
---------------------------------------------------------------------------------
</TABLE>
(a) The term "fund complex" refers to the Funds of the Trust and the series of
the Van Eck Funds, which are also managed by the Adviser. The Trustees are
paid a fee for their services to the Trust. No other compensation,
including pension or other retirement benefits, is paid to the Trustees by
the fund complex.
17
<PAGE>
PRINCIPAL SHAREHOLDERS
As of the date of this Statement of Additional Information, Van Eck Associates
Corporation, 99 Park Avenue, New York, New York 10016, owns 100% of the
outstanding shares of the Fund.
VALUATION OF SHARES
The net asset value per share of the Fund is computed by dividing the value of
all of the Fund's securities plus cash and other assets, less liabilities, by
the number of shares outstanding. The net asset value per share is computed as
of the close of the New York Stock Exchange, Monday through Friday, exclusive of
national business holidays. The Fund will be closed on the following national
business holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas (or the days on
which these holidays are observed).
Shares of the Fund are sold at the public offering price which is determined
once each day the Fund is open for business and is the net asset value per
share.
The net asset value need not be computed on a day in which no orders to
purchase, sell or redeem shares of the Fund have been received.
The value of a financial futures or commodity futures contract equals the
unrealized gain or loss on the contract that is determined by marking it to the
current settlement price for a like contract acquired on the day on which the
commodity futures contract is being valued. A settlement price may not be used
if the market makes a limit move with respect to a particular commodity.
Securities or futures contracts for which market quotations are readily
available are valued at market value, which is currently determined using the
last reported sale price. If no sales are reported as in the case of most
securities traded over-the-counter, securities are valued at the mean of their
bid and asked prices at the close of trading on the NYSE. In cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated by or under the authority of the Board of Trustees as
the primary market. Short-term investments having a maturity of 60 days or less
are valued at amortized cost, which approximates market. Options are valued at
the last sales price unless the last sales price does not fall within the bid
and ask prices at the close of the market, at which time the mean of the bid and
ask prices is used. All other securities are valued at their fair value as
determined in good faith by the Trustees. Foreign securities or futures
contracts quoted in foreign currencies are valued at appropriately translated
foreign market closing prices or as the Board of Trustees may prescribe.
Generally, trading in foreign securities and futures contracts, as well as
corporate bonds, United States Government securities and money market
instruments, is substantially completed each day at various times prior to the
close of the NYSE. The values of such securities used in determining the net
asset value of the shares of the Fund may be computed as of such times. Foreign
currency exchange rates are also generally determined prior to the close of the
NYSE. Occasionally, events affecting the value of such securities and such
exchange rates may occur between such times and the close of the NYSE which will
not be reflected in the computation of the Fund's net asset values. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by the Trustees.
18
<PAGE>
TAXES
The Fund intends to qualify and elect to be treated each taxable year as a
"regulated investment company" under Subchapter M of the Code. To so qualify,
the Fund must, among other things, (a) derive at least 90% of its gross income
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currencies, or
other income (including gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies; (b) derive less than 30% of its gross income from the sale or other
disposition of any of the following which was held less than three months (the
"30% test"): (i) stock or securities; (ii) options, futures or forward contracts
(other than on foreign currencies) or (iii) foreign currencies (or options,
futures or forward contracts on foreign currencies) but only if such currencies
(or options, futures or forward contracts) are not directly related to the
Fund's principal business of investing in stock or securities; and (c) satisfy
certain diversification requirements.
As a regulated investment company, the Fund will not be subject to federal
income tax on its net investment income and capital gain net income (capital
gains in excess of its capital losses) that it distributes to shareholders if at
least 90% of its investment company taxable income for the taxable year is
distributed. However, if for any taxable year the Fund does not satisfy the
requirements of Subchapter M of the Code, all of its taxable income will be
subject to tax at regular corporate rates without any deduction for distribution
to shareholders, and such distributions will be taxable to shareholders as
ordinary income to the extent of the Fund's current or accumulated earnings or
profits.
REDEMPTIONS IN KIND
The Trust has elected to have the ability to redeem its shares in kind,
committing itself to pay in cash all requests for redemption by any shareholder
of record limited in amount with respect to each shareholder of record during
any ninety-day period in the lesser of (i) $250,000 or (ii) 1% of the net asset
value of such company at the beginning of such period.
PERFORMANCE
The Fund may advertise performance in terms of average annual total return for
1, 5 and 10 year periods, or for such lesser periods as the Fund has been in
existence. Average annual total return is computed by finding the average annual
compounded rates of return over the periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1+T)/to the nth power/ = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5, or 10
year periods at the end of the year or period;
The calculation assumes the maximum sales load (or other charges deducted from
payments) is deducted from the initial $1,000 payment and assumes all dividends
and distributions by the Fund are reinvested at
19
<PAGE>
the price stated in the prospectus on the reinvestment dates during the period,
and includes all recurring fees that are charged to all shareholder accounts.
The Fund may advertise performance in terms of a 30-day yield quotation. The
30-day yield quotation is computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
YIELD = 2[(A-B/CD + 1)/to the sixth power/-1]
Where: A = dividends and interest earned during the period
B = expenses accrued for the period (net of reimbursement)
C = the average daily number of shares outstanding during the
period that were entitled to receive dividends
D = the maximum offering price per share on the last day of
the period after adjustment for payment of dividends
within 30 days thereafter
The Fund may also advertise performance in terms of aggregate total return.
Aggregate total return for a specified period of time is determined by
ascertaining the percentage change in the net asset value of shares of the Fund
initially acquired assuming reinvestment of dividends and distributions and
without giving effect to the length of time of the investment according to the
following formula:
[(B-A)/A](100)=ATR
Where: A = initial investment
B = value at end of period
ATR = aggregate total return
The calculation assumes the maximum sales charge is deducted from the initial
payment and assumes all distributions by the Fund are reinvested at the price
stated in the Prospectus on the reinvestment dates during the period, and
includes all recurring fees that are charged to all shareholder accounts.
Performance figures of the Fund are not useful for comparison purposes because
they do not reflect the charges and deductions at the separate account level.
ADDITIONAL INFORMATION
Custodian. The Chase Manhattan Bank, Chase Metrotech Center, Brooklyn, New York
- ---------
11245, serves as the custodian of the Trust's portfolio securities and cash. The
Custodian is authorized, upon the approval of the Trust, to establish credits or
debits in dollars or foreign currencies with, and to cause portfolio securities
of the Fund to be held by its overseas branches or subsidiaries, and foreign
banks and foreign securities depositories which qualify as eligible foreign
custodians under the rules adopted by the Securities and Exchange Commission.
Transfer Agent. Van Eck Associates Corporation, 99 Park Avenue, New York,
- --------------
New York 10016, serves as the Fund's transfer agent.
Independent Accountants. Coopers & Lybrand L.L.P., 1301 Avenue of the Americas,
- -----------------------
New York, New York 10019, serves as the Trust's independent accountants.
20
<PAGE>
Counsel. Goodwin, Procter & Hoar, Exchange Place, Boston, Massachusetts 02109,
- -------
serves as counsel to the Trust.
FINANCIAL STATEMENTS
As Worldwide Real Estate Fund is a newly created series of the Trust, the Fund
has no operating history and therefore does not yet have a financial statement.
21
<PAGE>
APPENDIX
CORPORATE BOND RATINGS
- -------------
Description of Moody's Investors Service, Inc. Corporate Bond Ratings:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt-edge".
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be greater or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors given security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements. Their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack the characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any long period of time may be small.
Caa-Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category.
22
<PAGE>
Description of Standard & Poor's Corporation Corporate Bond Ratings:
AAA -- Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong. AA
- -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB -- Bonds rated BBB are regarding as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB--Bonds rated BB have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
B--Bonds rated B have a greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating is also used for debt
subordinated to senior debt that is assigned an actual or implied BB rating.
CCC--Bonds rated CCC have a current identifiable vulnerability to default, and
are dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, they are not likely to have the
capacity to pay interest and repay principal.
The ratings from AA to CCC may be modified by the addition of a plus or minus to
show relative standing within the major rating categories.
PREFERRED STOCK RATINGS
- -----------------------
Description of Moody's Investors Service, Inc. Preferred Stock Ratings:
aaa - An issue which is rated aaa is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of convertible preferred stocks.
aa - An issue which is rated aa is considered a high-grade preferred stock. This
rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
a - An issue which is rated a is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the aaa
and aa classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
23
<PAGE>
baa - An issue which is rated baa is considered to be medium-grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
ba - An issue which is rated ba is considered to have speculative elements, and
its future cannot be considered well assured. Earnings and asset protection may
be very moderate and not well safe-guarded during adverse periods. Uncertainty
of position characterizes preferred stocks in this class.
b - An issue which is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of the
issue over any long period of time may be small.
caa - An issue which is rated caa is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future status
of payment.
ca - An issue which is rated ca is speculative in a high degree and is likely to
be in arrears on dividends with little likelihood of eventual payment.
c - This is the lowest rated class of preferred or preference stock. Issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Description of Standard & Poor's Corporation Preferred Stock Ratings:
AAA - This is the highest rating that may be assigned by Standard & Poor's to a
preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.
AA - A preferred stock issue rated AA also qualifies as a high-quality fixed
income security. The capacity to pay preferred stock obligations is very strong,
although not as overwhelming as for issues rated AAA.
A - An issue rated A is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effect of
changes in circumstances and economic conditions.
BBB - An issue rated BBB is regarded as backed by an adequate capacity to pay
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the A category.
BB, B, CCC - Preferred stocks rated BB, B and CCC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay preferred
stock obligations. BB indicates the lowest degree of speculation and CCC the
highest degree of speculation. While such issues will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
24
<PAGE>
SHORT TERM DEBT RATINGS
- ------------
Description of Moody's Investors Service, Inc. Short-Term Debt Ratings:
Prime-1--Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries, higher rates of return
of funds employed, conservative capitalization structure with moderate reliance
on debt and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation and well-established access
to range of financial markets and assured sources of alternate liquidity.
Prime-2--Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3--Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
G:\ALISON\VEITSAI\WREF9706.SAI
25
