<PAGE>
PROSPECTUS_______________________________________________________April 30, 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 four separate funds (the "Funds"), each of
which has a specific investment objective. Shares of the Funds 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 BALANCED FUND--seeks long term capital appreciation together with
current income. Fiduciary International, Inc. ("Fll" or "Sub-Adviser") has
signed an agreement to serve as sub-investment adviser to this Fund.
WORLDWIDE BOND FUND--seeks high total return through a flexible policy of
investing globally, primarily in debt securities.
WORLDWIDE EMERGING MARKETS FUND--seeks long-term capital appreciation by
investing primarily in equity securities in emerging markets around the world.
Peregrine Asset Management (Hong Kong) Limited ("PAM" or "Sub-Adviser") serves
as sub-investment adviser to this Fund.
WORLDWIDE HARD ASSETS FUND (FORMERLY, GOLD AND NATURAL RESOURCES FUND)--seeks
long-term capital appreciation by investing globally, primarily in "Hard Asset
Securities." Income is a secondary consideration.
Van Eck Associates Corporation (the "Adviser"), 99 Park Avenue, New York, New
York 10016, serves as investment adviser to each of the Funds. See
"Management." Van Eck Securities Corporation (the "Distributor"), a wholly-
owned subsidiary of the Adviser, serves as Distributor of the Funds' shares.
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This Prospectus sets forth concisely information about the Trust and Funds
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 Funds,
please call the Funds 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 one or more Funds. In particular,
certain Funds 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 Funds.
Shares of the Funds 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 April 30, 1997, which further
discusses the Trust and Funds, has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. It is available without
charge upon request to the Funds, 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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<TABLE>
<S> <C>
The Trust................................................................... 3
Financial Highlights........................................................ 3
Investment Objectives and Policies of the Funds............................. 5
Risk Factors................................................................ 11
Limiting Investment Risks................................................... 19
Management.................................................................. 19
How to Buy Shares........................................................... 22
Dividends and Distributions................................................. 22
How to Redeem Shares........................................................ 22
Federal Taxation............................................................ 23
Description of the Trust.................................................... 23
Additional Information...................................................... 24
</TABLE>
2
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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 Emerging Markets
Fund and Worldwide Hard Assets Fund are classified as diversified funds under
the Investment Company Act of 1940, as amended, (the "Act"). Worldwide
Balanced Fund and Worldwide Bond Fund are non-diversified funds. (See
"Description of the Trust.")
FINANCIAL HIGHLIGHTS
The Financial Highlights below give selected information for a share of each
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Deloitte & Touche LLP, independent accountants,
for all years from commencement of operations through April 30, 1992. For all
other periods, the Financial Highlights presented have been audited by Coopers
& Lybrand L.L.P., independent accountants, whose reports thereon appear in the
Funds' Annual Reports, which are incorporated by reference into the Trust's
Statement of Additional Information. This information should be read in
conjunction with the financial statements and related notes that also appear
in the Funds' Annual Reports. The Annual Reports also contain additional
performance information and are available upon request and without charge.
WORLDWIDE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
FOR THE EIGHT FOR THE PERIOD
MONTHS ENDED DECEMBER 21, 1995(A)
DECEMBER 31, 1996 TO APRIL 30, 1996
----------------- --------------------
<S> <C> <C>
Net Asset Value, Beginning of Period.... $ 10.95 $ 10.00
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Income From Investment Operations:
Net Investment Income (b)........... .01 0.07
Net Gains on Securities (both real-
ized and unrealized)............... 1.59 0.88
------- -------
Total From Investment Operations.... 1.60 0.95
------- -------
Less Distributions:
Distributions from net investment
income............................. (0.06) --
------- -------
Net Asset Value, End of Period.......... $ 12.49 $ 10.95
======= =======
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Total Return (c)........................ 14.66% 9.50%
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RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000)......... $15,355 $ 597
Ratio of Gross Expenses to Average Net
Assets (d)............................. 2.64% 2.06%
Ratio of Net Expenses to Average Net As-
sets................................... 0.00% 0.00%
Ratio of Net Income to Average Net As-
sets (d)............................... 0.74% 1.89%
Portfolio Turnover Rate................. 29.53% 45.89%
Average Commission Rate Paid............ $0.0029 $0.0124
</TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
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(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends at
net asset value during the period and a redemption on the last day of the
period. Total returns for the periods of less than one year ended were not
annualized.
(d) Annualized.
3
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<TABLE>
<CAPTION>
WORLDWIDE HARD ASSETS FUND
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FOR THE
FOR A SHARE EIGHT
OUTSTANDING MONTHS
THROUGHOUT EACH ENDED YEAR ENDED APRIL 30,
PERIOD DECEMBER 31, --------------------------------------------------------------
1996 1996 1995 1994 1993 1992 1991 1990+
------------ -------- -------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period.......... $16.92 $ 13.49 $ 13.11 $ 10.61 $ 8.25 $ 8.85 $ 9.51 $10.00
-------- -------- -------- ------- ------- ------ ------ ------
INCOME FROM
INVESTMENT
OPERATIONS:
Net Investment
Income.......... 0.02 0.12 0.08 0.07 0.01 0.04 0.16 0.08
Net Gains
(Losses) on
Securities (both
realized and
unrealized)..... 0.09 3.44 0.37 2.47 2.39 (0.53) (0.69) (0.57)
-------- -------- -------- ------- ------- ------ ------ ------
Total From
Investment
Operations...... 0.11 3.56 0.45 2.54 2.40 (0.49) (0.53) (0.49)
-------- -------- -------- ------- ------- ------ ------ ------
LESS
DISTRIBUTIONS:
Dividends/Distributions
from net
investment
income.......... (0.16) (0.13) (0.07) (0.04) (0.04) (0.11) (0.13) --
Dividends from
net realized
gains/Distributions
(from capital
gains).......... (0.15) -- -- -- -- -- -- --
-------- -------- -------- ------- ------- ------ ------ ------
Total
Distributions... (0.31) (0.13) (0.07) (0.04) (0.04) (0.11) (0.13) 0.00
-------- -------- -------- ------- ------- ------ ------ ------
Net Asset Value,
End of Period... $16.72 $ 16.92 $ 13.49 $ 13.11 $ 10.61 $ 8.25 $ 8.85 $ 9.51
======== ======== ======== ======= ======= ====== ====== ======
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Total Return(a). 0.60% 26.66% 3.43% 23.96% 29.19% (5.62%) (5.67%) (4.90%)
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Ratios/Supplementary
Data:
Net Assets, End
of Period (000). $167,417 $186,370 $127,320 $81,248 $30,896 $9,836 $6,936 $3,660
Ratio of Gross
Expenses to
Average Net
Assets(b)....... 1.24%* 1.08% -- -- -- -- 1.21% 1.87%
Ratio of Net
Expenses to
Average Net
Assets.......... 1.23%* 1.08% 0.96% 0.96% 1.61% 1.32% 0.52% --
Ratio of Net
Income to
Average Net
Assets.......... .10%* 0.81% 0.71% 0.64% 0.25% 0.60% 2.10% 2.46%*
Portfolio
Turnover Rate... 46.14% 26.37% 23.30% 15.84% 14.61% 0.48% 21.86% 5.09%*
Average
Commission Rate
Paid(d)......... $.0305 $0.0310
<CAPTION>
WORLDWIDE BOND FUND
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FOR THE
FOR A SHARE EIGHT
OUTSTANDING MONTHS
THROUGHOUT EACH ENDED YEAR ENDED APRIL 30,
PERIOD DECEMBER 31, ------------------------------------------------------------------
1996 1996 1995 1994 1993 1992 1991 1990+
------------ --------- ----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period.......... $10.88 $ 11.46 $ 10.05 $ 10.62 $ 11.57 $ 10.82 $ 10.10 $10.00
------------ --------- ----------- -------- -------- -------- -------- --------
INCOME FROM
INVESTMENT
OPERATIONS:
Net Investment
Income.......... 0.36 0.58 0.68(c) 0.63 0.81 0.62 1.03 0.26
Net Gains
(Losses) on
Securities (both
realized and
unrealized)..... 0.17 (0.34) 0.77 (0.37) (0.75) 0.67 0.19 (0.16)
------------ --------- ----------- -------- -------- -------- -------- --------
Total From
Investment
Operations...... 0.53 0.24 1.45 0.26 0.06 1.29 1.22 0.10
------------ --------- ----------- -------- -------- -------- -------- --------
LESS
DISTRIBUTIONS:
Dividends/Distributions
from net
investment
income.......... (0.31) (0.82) (0.04) (0.72) (0.83) (0.53) (0.50) --
Dividends from
net realized
gains/Distributions
(from capital
gains).......... -- -- -- (0.11) (0.18) (0.01) -- --
------------ --------- ----------- -------- -------- -------- -------- --------
Total
Distributions... (0.31) (0.82) (0.04) (0.83) (1.01) (0.54) (0.50) 0.00
------------ --------- ----------- -------- -------- -------- -------- --------
Net Asset Value,
End of Period... $11.10 $ 10.88 $ 11.46 $ 10.05 $ 10.62 $ 11.57 $ 10.82 $10.10
============ ========= =========== ======== ======== ======== ======== ========
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Total Return(a). 4.98% 2.07% 14.51% 2.49% 0.38% 12.21% 12.37% 1.00%
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Ratios/Supplementary
Data:
Net Assets, End
of Period (000). $118,676 $107,541 $113,466 $80,908 $66,035 $40,930 $15,046 $2,237
Ratio of Gross
Expenses to
Average Net
Assets(b)....... 1.17%* 1.10% 0.99% -- -- -- 1.14% 2.80%
Ratio of Net
Expenses to
Average Net
Assets.......... 1.16%* 1.08% 0.98% 0.93% 1.01% 1.05% 0.50% --
Ratio of Net
Income to
Average Net
Assets.......... 4.99%* 5.26% 6.24% 6.47% 8.47% 8.55% 9.75% 9.22%*
Portfolio
Turnover Rate... 73.95% 208.05% 265.87% 37.59% 248.21% 231.34% 341.01% 12.23%*
Average
Commission Rate
Paid(d).........
<CAPTION>
WORLDWIDE BALANCED FUND
-----------------------------------------
FOR THE FOR THE
FOR A SHARE EIGHT PERIOD FROM
OUTSTANDING MONTHS YEAR DECEMBER 23,
THROUGHOUT EACH ENDED ENDED 1994/#/ TO
PERIOD DECEMBER 31, APRIL 30, APRIL 30,
1996 1996 1995
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<S> <C> <C> <C>
Net Asset Value,
Beginning of
Period.......... $10.29 $10.00 $10.00
------------ ----------- ----------------
INCOME FROM
INVESTMENT
OPERATIONS:
Net Investment
Income.......... 0.25 0.04(c) --
Net Gains
(Losses) on
Securities (both
realized and
unrealized)..... 0.61 0.25 --
------------ ----------- ----------------
Total From
Investment
Operations...... 0.86 0.29 0.00
------------ ----------- ----------------
LESS
DISTRIBUTIONS:
Dividends/Distributions
from net
investment
income.......... (0.01) -- --
Dividends from
net realized
gains/Distributions
(from capital
gains).......... -- -- --
------------ ----------- ----------------
Total
Distributions... (0.01) 0.00 0.00
------------ ----------- ----------------
Net Asset Value,
End of Period... $11.14 $ 10.29 $10.00
============ =========== ================
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Total Return(a). 8.38% 2.90% 0.00%
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Ratios/Supplementary
Data:
Net Assets, End
of Period (000). $1,766 $ 608 $ 14
Ratio of Gross
Expenses to
Average Net
Assets(b)....... 2.49%* 12.61% 78.40%*
Ratio of Net
Expenses to
Average Net
Assets.......... 0.00% 0.00% 0.00%
Ratio of Net
Income to
Average Net
Assets.......... 4.27%* 0.42% 0.00%*
Portfolio
Turnover Rate... 0.76% 0.00% 0.00%
Average
Commission Rate
Paid(d)......... $0.0790 $0.0422
</TABLE>
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(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends and
distributions of capital gains at net asset value during the period and a
redemption on the last day of the period. Total returns for the periods of
less than one year were not annualized.
(b) With respect to Worldwide Hard Assets Fund and Worldwide Bond Fund, as of
September 29, 1995 the effective rate of the Adviser's management fee is
1.0%. Prior to September 29, 1995, the effective rate of the management
fee was 0.75%.
(c) Based on average shares outstanding.
(d) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades in
which a commission is charged.
# Commencement of operations
* Annualized
+ From September 1, 1989 (commencement of operations) to April 30, 1990.
4
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
A description of the investment objectives and policies of the Funds is set
forth below. The investment objective of a Fund may not be changed without the
affirmative vote of a majority of the outstanding voting securities of that
Fund, as defined in the Act. As a result of the market risk inherent in any
investment, there is no assurance that the Funds will achieve their
objectives. For further information about a Fund's investment policies, see
"Investment Objectives and Policies" in the Statement of Additional
Information.
WORLDWIDE BALANCED FUND
OBJECTIVE:
Worldwide Balanced Fund seeks long-term capital appreciation together with
current income.
POLICIES:
The Fund intends to achieve its investment objective by investing its assets
in the United States and other countries throughout the world, and by
allocating its assets among equity securities, fixed-income securities and
short-term instruments.
The Adviser believes that allocation of assets into many countries and across
asset classes can, over the long-term, provide higher returns than portfolios
invested solely in bonds with lower risk or volatility or than portfolios
invested entirely in stocks. Thus, the "risk-adjusted return" of a diversified
portfolio has the potential to be more attractive than some other, more
concentrated portfolios. In addition, the balanced approach reduces the risk
where events in any one country may adversely affect the entire portfolio.
Investors should be aware that although the Fund diversifies across more
investment types than most mutual funds, no one mutual fund can provide a
complete investment program for all investors. There can be no assurance that
allocation of assets both globally and across asset classes will reduce these
risks or that the Fund will achieve its investment objective.
The Fund seeks investment opportunities in the world's major stock, bond and
money markets. Under normal conditions, the Fund will invest its assets in at
least three countries including the United States. There is no limitation or
restriction on the amount of assets to be invested in any one asset class or
country. Over the long-term, the Fund will attempt to invest a minimum of 25%
of its assets in the United States, with the balance outside the United
States, and the Fund will attempt to maintain an asset allocation of 60% in
equity securities and 40% in fixed-income securities and short-term
instruments. However, subsequent to the initial investment period, at least
25% of the Fund's total assets will always be invested in fixed-income senior
securities and at least 25% of the Fund's total assets will always be invested
in equities. The Fund may also allocate a portion of its assets to gold.
The Fund will not invest more than 10% of its assets in the securities of
developing countries with emerging economies or securities markets. The Fund
may invest in asset-backed securities such as collateralized mortgage
obligations and other mortgage and non-mortgage asset-backed securities.
The average maturity of the debt securities in the Fund's portfolio will be
based on the judgment of the Adviser or FII as to future interest rate
changes. The assets of the Fund invested in fixed income securities will
consist of securities which are believed by the Adviser or FII to be high
grade, that is, rated A or better by Standard & Poor's Corporation ("S&P") or
Moody's Investors Service, Inc. ("Moody's), Fitch-1 by Fitch or Duff-1 by Duff
& Phelps ("D&P") or if unrated, to be of comparable high quality in the
judgment of the Adviser or FII, subject to the supervision of the Board of
Trustees and/or the Adviser. The assets of the Fund invested in short-term
instruments will consist primarily of securities rated in the highest category
(for example, commercial paper rated "Prime-1" or "A-1" by Moody's and S&P,
respectively) or if unrated, in instruments that are determined to be of
comparable quality or are insured by foreign or U.S. governments, their
agencies or instrumentalities as to payment of principal and interest. See
"Risk Factors--Debt Securities."
5
<PAGE>
During periods of adverse or unusual economic and/or market conditions, the
Fund may, for temporary defensive purposes, make substantial investments in
obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, bankers' acceptances, high grade
commercial paper and repurchase agreements. For temporary defensive purposes,
the Fund can have all of its assets invested in any one country or currency.
The Fund may invest up to 5% of its net assets in options on equity securities
and up to 5% of its net assets in warrants, including options and warrants
traded in over-the-counter markets. The Fund may buy and sell financial
futures contracts and options on financial futures contracts. The Fund may
write, purchase or sell puts and calls on foreign currencies and securities,
and invest in "when-issued" securities, "partly paid" securities (securities
paid for over a period of time), and securities of foreign issuers. The Fund
may lend its portfolio securities and borrow money for investment purposes
(i.e., leverage its portfolio). For a further discussion of these investments,
see "Risk Factors."
While FII does not currently serve as sub-investment adviser to the Fund, it
is expected to do so when the Fund's assets reach a level at which it is
appropriate to utilize the sub investment adviser's services. FII is a wholly-
owned subsidiary of Fiduciary Investment Corporation, which, in turn, is a
wholly-owned subsidiary of Fiduciary Trust Company International. Fiduciary
Trust Company International has more than 30 years of experience in managing
funds that invest in international markets.
WORLDWIDE BOND FUND
OBJECTIVE:
Worldwide Bond Fund seeks high total return through a flexible policy of
investing globally, primarily in debt securities.
POLICIES:
Total return is comprised of current income and capital appreciation. The Fund
attempts to achieve its investment objective by taking advantage of investment
opportunities throughout the world. The Fund may emphasize either component of
total return. Capital appreciation will result during times of declining
interest rates and, with respect to investing globally, as a result of foreign
currency fluctuations relative to a declining dollar. Normally, the Fund will
have at least 65% of its total assets invested in bonds of varying maturities.
The Adviser believes that diversification of assets on an international basis
may reduce the risk that events in any one country, including the United
States, may adversely affect the entire portfolio. However, there can be no
assurance that diversification of assets will reduce this risk. The Adviser
will determine the amount of the Fund's assets to be invested in corporate and
government securities based on its assessment of where opportunities for total
return are expected to be most attractive. When making this determination, the
Adviser will evaluate the political and economic risks of the principal
countries of the world, prospects for the relationship of their currencies to
the U.S. dollar, the outlook for their interest rates, credit quality and
other factors. The long-term assets of the Fund will consist of debt
securities rated B or better by S&P or Moody's or if unrated, of comparable
quality in the judgment of the Adviser. Debt securities rated BBB (investment
grade), BB or B will not exceed 25% of total net assets. Debt rated BB or B is
lower quality debt (commonly referred to as "junk bonds"). Lower rated debt
may offer higher returns, but also presents a greater risk of default than do
higher rated securities. As to debt securities rated BBB, BB or B, it is the
Adviser's intention to invest only in debt issued by a government or one of
its agencies, instrumentalities, political subdivisions or authorities. For a
further discussion of debt securities see "Risk Factors."
During normal market conditions, the Fund expects to invest in debt
securities, such as obligations issued or guaranteed by a government or any of
its political subdivisions, agencies or instrumentalities, or by a
supranational organization chartered to promote economic development such as
the World Bank or European Economic Community, bonds, debentures, notes,
commercial paper, time deposits, certificates of deposit and repurchase
agreements, as well as debt obligations which may have a call on a common
stock or commodity by means of a conversion privilege or attached warrants.
The Fund may invest in debt instruments of the U.S. Government and its
agencies having varied maturities, consisting of obligations issued or
guaranteed as to both principal and interest by the U.S. Government or backed
by the "full faith and credit" of the United
6
<PAGE>
States. In addition to direct obligations of the U.S. Treasury such as
Treasury bonds, notes and bills, these include securities issued or guaranteed
by different agencies such as the Federal Housing Administration, the
Government National Mortgage Association and the Small Business
Administration.
The average maturity of the debt securities in the Fund's portfolio will be
based on the Adviser's judgment as to future interest rate changes. The
Adviser expects the average maturity to be between three and ten years. In
addition, when the Adviser determines that a temporary defensive strategy is
warranted, the Fund may invest in securities maturing in 13 months or less,
and most or all of its investments may be in the United States or another
country.
The Fund may invest up to 5% of its assets at the time of purchase in
warrants. The Fund may invest up to 5% of its assets at the time of purchase
in preferred stocks and preferred stocks which may be convertible into common
stock. The Fund may invest in collateralized mortgage obligations. The Fund
may buy and sell financial futures contracts and options on financial futures
contracts and may write, purchase or sell puts and calls on foreign currencies
and securities. The Fund may invest in "when-issued" securities and securities
of foreign issuers. In addition, the Fund may lend its portfolio securities
and borrow money for investment purposes (i.e., leverage its portfolio). For a
further discussion of these investments, see "Risk Factors."
There is no limit on the amount the Fund may invest in any one country or in
securities denominated in the currency of any one country. Normally the Fund
will invest in three countries besides the United States. However, the Fund
may invest solely in the securities of one country such as the United States
when economic conditions warrant, such as an extreme undervaluation of the
currency and exceptionally high returns of that country's currency relative to
other currencies.
WORLDWIDE EMERGING MARKETS FUND
OBJECTIVE:
Worldwide Emerging Markets Fund seeks long-term capital appreciation by
investing primarily in equity securities in emerging markets around the world.
POLICIES:
In pursuit of its investment objective, the Fund emphasizes investment in
countries that, compared to the world's major economies, exhibit relatively
low gross national product per capita as well as the potential for rapid
economic growth. Specifically, an "emerging market" or "Emerging Country" is
any country that the World Bank, the International Finance Corporation, the
United Nations or its authorities has determined to have a low or middle
income economy. Emerging Countries can be found in regions such as Asia, Latin
America, Eastern Europe and Africa. The countries that will not be considered
Emerging Countries include the United States, Australia, Canada, Japan, New
Zealand and most countries located in Western Europe such as Austria, Belgium,
Denmark, Finland, France, Germany, Great Britain, Ireland, Italy, the
Netherlands, Norway, Spain, Sweden and Switzerland.
The Adviser expects that the Fund will normally invest in at least three
different countries. The Fund emphasizes equity securities, but may also
invest in other types of instruments, including debt securities of any quality
(other than commercial paper as described herein). Debt securities may include
fixed or floating rate bonds, notes, debentures, commercial paper, loans,
convertible securities and other debt securities issued or guaranteed by
governmental, banking and private entities. See "Risk Factors--Debt
Securities" and "Risk Factors--Low Rated or Unrated Debt Securities".
The Adviser believes that the economies of emerging markets will continue to
have among the world's fastest rates of growth over the next decade. In many
instances, the growth in these countries is brought on by a move away from
governmental intervention in the marketplace and an aggressive move towards
free market capitalism. While many emerging markets are experiencing rapid
growth by U.S. standards, such markets are still developing and considerably
less liquid. Investors can expect there will be periods of volatility and
reduced liquidity in these markets. The Fund involves above-average risk, and
as such, is designed as a long-term investment. There can be no assurance that
the Fund will achieve its investment objective. See "Risk Factors--Foreign
Securities" and "Risk Factors--Emerging Markets Securities" below.
7
<PAGE>
Under normal conditions, at least 65% of the Fund's total assets will be
invested in Emerging Countries and emerging market equity securities. The Fund
considers emerging market securities to include securities that (i)
principally trade in the capital markets of an emerging market country; (ii)
are of companies that derive at least 50% of total revenues from either goods
produced or services performed in emerging market countries or from sales made
in Emerging Countries, regardless of where the securities of such companies
are principally traded; (iii) are of companies organized under the laws of,
and with a principal office in, an Emerging Country; (iv) are of investment
companies (such as country funds) that principally invest in emerging market
securities; and (v) are American Depositary Receipts (ADRs), American
Depositary Shares (ADSs), European Depositary Receipts (EDRs) and Global
Depositary Receipts (GDRs) with respect to the securities of such companies.
Equity securities in which the Fund may invest include common stocks;
preferred stocks (either convertible or non-convertible); rights; warrants;
direct equity interests in trusts, partnerships, joint ventures and other
unincorporated entities or enterprises; convertible debt instruments; and
special classes of shares available only to foreign persons in those markets
that restrict ownership of certain classes of equity to nationals or residents
of that country. These securities may be listed on securities exchanges or
traded over-the-counter. Direct investments are generally considered illiquid
and will be aggregated with other illiquid investments for purposes of the
limitation on illiquid investments. See "Risk Factors--Emerging Market
Securities".
The Fund may invest indirectly in emerging markets by investing in other
investment companies. Due to restrictions on direct investment by foreign
entities in certain emerging market countries, investment in other investment
companies may be the most practical or the only manner in which the Fund can
invest in the securities markets of certain emerging market countries. Such
investments may involve the payment of premiums above the net asset value of
such issuers' portfolio securities; are subject to limitations under the Act;
are constrained by market availability; and may constitute passive foreign
investment companies for Federal income tax purposes. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. The
Adviser and Sub-Adviser have agreed to waive their management fees with
respect to the portion of the Fund's assets invested in shares of other open-
end investment companies. The Fund would continue to pay its own management
fees and other expenses with respect to its investments in shares of closed-
end investment companies.
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, structured notes and other similar securities as
may become available in the market. These instruments offer certain
opportunities and additional risks that are described below.
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; A-1 or better by S&P; Fitch-1 by Fitch; Duff-1 by D&P or if unrated,
will be of comparable high quality as determined by the Adviser or Sub-
Adviser.
PAM serves as sub-adviser to the Fund. PAM has been registered with the
Securities and Exchange Commission ("SEC") as an investment adviser since
April 17, 1995. PAM was incorporated in Hong Kong in 1991 and is a 100% owned
subsidiary of Peregrine Asset Management Holdings Limited, which, in turn, is
a 75% owned subsidiary of Peregrine Investments Holdings Limited
("Peregrine"). Peregrine and its affiliates comprise one of the largest
independent Asian based investment banks located outside Japan. Established in
1988, Peregrine and its affiliates have offices in fifteen Asian countries as
well as in Europe and the United States. Investment professionals at PAM
collectively have over forty years experience in managing funds which invest
in emerging markets. The Adviser believes PAM has unique knowledge and
experience in global emerging market investing. PAM will select investments
for the Fund based on its assessment of where emerging market opportunities
for long-term capital appreciation are most attractive. When making investment
decisions, PAM will evaluate characteristics of various Emerging
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Countries such as the outlook for economic growth and inflation and government
monetary and fiscal policies. In selecting specific companies for investment,
PAM will analyze such factors as growth potential, financial strength and
management experience. See "Management".
There is no limitation on the amount the Fund can invest in emerging markets.
Investors should consider carefully the substantial risks involved in
investing in securities issued by companies and governments of foreign
nations. Global investing involves economic and political considerations,
which may favorably or unfavorably affect the Fund's performance. See "Risk
Factors--Foreign Securities" and "Risk Factors--Emerging Markets Securities"
below.
WORLDWIDE HARD ASSETS FUND (FORMERLY, GOLD AND NATURAL RESOURCES FUND)
OBJECTIVE:
The Fund seeks long-term capital appreciation by investing primarily in "Hard
Asset Securities." Income is a secondary consideration.
POLICIES:
The Adviser believes "Hard Asset Securities" (as defined below) offer an
opportunity to achieve long-term capital appreciation and to protect wealth
against eroding monetary values during periods of cyclical economic
expansions. Since the market action of Hard Asset Securities may move against
or independently of the market trend of industrial shares, the addition of
such securities to an overall portfolio may increase the return and reduce the
price fluctuations of such a portfolio. There can be no assurance that an
increased rate of return or a reduction in price fluctuations of a portfolio
will be achieved. An investment in the Fund's shares should be considered part
of an overall investment program rather than a complete investment program.
Hard Asset Securities include equity securities of "Hard Asset Companies" and
securities, including structured notes, whose value is linked to the price of
a Hard Asset commodity or a commodity index. See "Risk Factors--Indexed
Securities and Structured Notes." "Hard Asset Companies" includes companies
that are directly or indirectly (whether through supplier relationships,
servicing agreements or otherwise) engaged to a significant extent in the
exploration, development, production or distribution of one or more of the
following (together "Hard Assets"): (i) precious metals, (ii) ferrous and non-
ferrous metals, (iii) gas, petroleum, petrochemicals or other hydrocarbons,
(iv) forest products, (v) real estate and (vi) other basic non-agricultural
commodities.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in "Hard Asset Securities" and the Fund will invest at least 5% of its
assets in each of the first five sectors listed above. The Fund has a
fundamental policy of concentrating in such industries and may invest up to
50% of its assets in any one of the above sectors. Therefore, it may be
subject to greater risks and market fluctuations than other investment
companies with more diversified portfolios. Some of these risks include:
volatility of energy and basic materials prices; possible instability of the
supply of various Hard Assets; the risks generally associated with extraction
of natural resources; actions and changes in government which could affect the
production and marketing of Hard Assets; and Hard Asset Securities may also
experience greater price fluctuations than the relevant Hard Asset.
The Fund seeks investment opportunities worldwide. Under normal conditions,
the Fund will invest its assets in at least three countries including the
United States. There is no limitation or restriction on the amount of assets
to be invested in any one country, developed or underdeveloped. Global
investing involves economic and political considerations not typically
applicable to the U.S. markets. See "Risk Factors--Foreign Securities" and
"Risk Factors--Emerging Market Securities" below.
The Fund may invest in common stocks; preferred stocks (either convertible or
non-convertible); rights; warrants; direct equity interests in trusts,
partnerships, joint ventures and other incorporated entities or enterprises;
and special classes of shares available only to foreign persons in those
markets that restrict ownership of certain classes of equity to nationals or
residents of that country. Direct investments are generally considered
illiquid and will be aggregated with other illiquid investments for purposes
of the limitation on illiquid investments. The Fund may invest up to 10% of
its net assets, taken at market value at the time of investment, in precious
metals, whether in bullion or coins.
The Fund may invest in derivatives, see "Risk Factors" below. Derivatives in
which the Fund may invest include futures contracts, forward contracts,
options, swaps and structured notes and other similar securities as may become
available in the
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market. The Fund may invest in indexed securities whose value is linked to one
or more currencies, interest rates, commodities, or financial or commodity
indices. An indexed security enables the investor to purchase a note whose
coupons and/or principal redemption are linked to the performance of an
underlying asset. Indexed securities may be publicly traded or may be two-
party contracts (such two-party agreements are structured notes). When the
Fund purchases a structured note it will make a payment of principal to the
counterparty. The Fund will purchase structured notes only from counterparties
rated A or better by S&P, Moody's or another nationally recognized statistical
rating organization. The Adviser will monitor the liquidity of structured
notes under the supervision of the Board of Trustees and structured notes
determined to be illiquid will be aggregated with other illiquid securities
and limited to 15% of the net assets of the Fund. Indexed securities may be
more volatile than the underlying instrument itself, and present many of the
same risks as investing in futures and options. Indexed securities are also
subject to credit risks associated with the issuer of the security with
respect to both principal and interest. In addition, the Fund may invest in
futures and forward contracts and options on precious metals and other Hard
Assets.
The Fund may invest up to 5% of its net assets in premiums for options on
equity securities and equity indexes and up to 5% of its net assets in
warrants, including options and warrants traded in over-the-counter markets.
Warrants received as dividends on securities held by the Fund and warrants
acquired in units or attached to securities are not included in this
restriction. The Fund may buy and sell financial futures contracts and options
in financial futures contracts. The Fund may purchase or sell puts and calls
on foreign currencies and securities; invest in "when-issued" securities,
"partly paid" securities (securities paid for over a period of time) and
securities of foreign issuers; and may lend its portfolio securities and
borrow money for investment purposes.
The Fund may invest up to 35% of its total assets in debt securities whose
value is not linked to the value of a Hard Asset or a Hard Asset Company and
in other securities of companies which are not Hard Asset Companies. Non-Hard
Asset debt securities include high grade, liquid debt securities of foreign
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.
The Adviser believes the Fund may offer a hedge against inflation,
particularly commodity price driven inflation. However, there is no assurance
that rising commodity (or other hard asset) prices will result in higher
earnings or share prices for the Hard Asset Companies in the Fund. Hard Asset
Company equities are affected by many factors, including movements in the
overall stock market. Inflation may cause a decline in the overall stock
market, including the stocks of Hard Asset Companies.
The assets of the Fund invested in fixed income securities, excluding fixed
income securities whose value is linked to the value of a Hard Asset and of
Hard Asset Companies, will consist of securities which are believed by the
Adviser to be high grade, that is rated A or better by S&P or Moody's, Fitch-1
by Fitch or Duff-1 by D&P or if unrated, of comparable quality in the judgment
of the Adviser, subject to the supervision of the Board of Trustees. The
assets of the Fund invested in short-term instruments will consist primarily
of securities rated in the highest category (for example, commercial paper
rated "Prime-1" or "A-1" by Moody's and S&P, respectively) or if unrated, in
instruments that are determined to be of comparable quality in the judgment of
the Adviser, subject to the supervision of the Board of Trustees, or are
insured by foreign or U.S. governments, their agencies or instrumentalities as
to payment of principal and interest. The Fund may invest up to 10% of its
assets in asset-backed securities such as collateralized mortgage obligations
and other mortgage and non-mortgage asset-backed securities. Asset-backed
securities backed by Hard Assets and whose value is expected to be linked to
underlying Hard Assets are excluded from the 10% limitation. See "Risk
Factors--Debt Securities".
Although the Fund will not invest in real estate directly, it may invest up to
50% of its assets in equity securities of real estate investment trusts
("REIT's") and other real estate industry companies or companies with
substantial real estate investments. REITs are pooled investment vehicles
which invest primarily in income producing real estate or real estate related
loans or interests. REIT's and other real estate investments of the Fund are
subject to certain risks. See "Risk Factors--Real Estate Securities."
The Fund may, for temporary defensive purposes, make substantial investments
in obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, bankers' acceptances, high grade
commercial paper and repurchase agreements.
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RISK FACTORS
Assets of the Funds are subject to market fluctuations and risks inherent in
all securities. In addition, assets of the Funds may be subject to other
special considerations, such as those listed below.
FOREIGN SECURITIES
The Funds 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 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 a
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.
The Funds may invest in South African issuers. Political and social conditions
in South Africa and its neighboring countries may pose certain risks to the
Funds' investments, and, under certain conditions, on the liquidity of the
Funds' portfolios and their ability to meet shareholder redemption requests.
The ability of the Funds to invest or hold their investments in South African
companies may be further affected by changes in United States or South African
laws or regulations.
Worldwide Emerging Markets Fund may invest in Russian issuers. Investments in
Russia involve the risks associated with other foreign emerging markets. In
particular, settlement, clearing and registration of securities in Russia is
in an underdeveloped state. Ownership of shares (except those held through
depositories that meet the requirements of the Act) is defined according to
entries in the issuer's share register and normally evidenced by extracts from
that register, which have no legal enforceability. Furthermore, share
registration is carried out either by the issuer or registrars located
throughout Russia, which are not necessarily subject to effective government
supervision. As a result, it is possible for the Fund to lose its registration
and thus its ownership of these securities due to fraud, illegal amendment,
negligence or even mere oversight. This system also may cause a delay in the
Fund's sale of Russian securities to a potential purchaser and subject the
Fund to the risk of loss in connection with the insolvency of a registrar. In
addition, while applicable Russian regulations impose liability on registrars
for losses resulting from their errors, it may be difficult for the Fund to
enforce any rights it may have against the registrar or issuer in the event of
the loss of share registration.
To reasonably ensure that its interest continues to be appropriately recorded,
the Fund will invest only in those Russian companies whose registrars have
entered into a contract with the Fund's Russian sub-custodian, which gives the
sub-custodian the right, among others, to inspect the share register and to
obtain extracts of share registers through regular audits. While these
procedures reduce the risk of loss, there can be no assurance that they will
be effective. This limitation may prevent the Fund from investing in the
securities of certain Russian issuers otherwise deemed suitable by the Adviser
or Sub-Adviser.
In addition to investing directly in the securities of United States and
foreign issuers, the Funds 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 Funds 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 equity and fixed income markets of developing
countries involves
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exposure to potentially unstable governments, economies based on only a few
industries and securities markets which trade a small number of securities and
may therefore at times be illiquid. Securities markets of developing countries
tend to be more volatile than the markets of developed countries. Countries
with developing markets may present the risk of nationalization of businesses,
restrictions on foreign ownership, or prohibitions of repatriation of assets,
and may have less protection of property rights than more developed countries.
The economies of countries with developing markets may be highly vulnerable to
changes in local or global trade conditions, and may suffer from extreme and
volatile debt burdens or inflation rates. 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.
However, such markets have in the past provided the opportunity for higher
rates of return to investors. There is no assurance that these markets will
offer such opportunity in the future. The ability of a Fund to invest or hold
its investments in companies situated in developing countries may be further
affected by changes in United States or such countries' laws or regulations.
Many of these emerging markets limit the percentage of their domestic issuers
that foreign investors, such as the Funds, may own by requiring that such
issuers issue two classes of shares--"local" and "foreign" shares. Foreign
shares may be held only by investors that are not considered nationals or
residents of that country and generally are convertible into local shares.
Local shares are intended for ownership by nationals or residents of the
country. Foreign shares may be subject to various restrictions, including
restrictions on the right to receive dividends and other distributions and on
the right to vote. The market for foreign shares is generally less liquid than
the market for local shares, although in most cases foreign shares may be
converted into local shares. In addition, foreign shares often trade at a
premium to local shares. If the Funds were to own local shares and could not
participate in a stock, warrant or other distribution, the Funds could suffer
material dilution of their interest in that issuer and the value of their
holdings could decline dramatically, causing a loss on their investment.
Generally, it is expected that the Funds will hold foreign shares. The Funds
will only purchase local shares where foreign shares are not available for
purchase. Where permitted, the Funds will attempt to convert local shares to
foreign shares promptly.
A high proportion of the shares of many emerging market issuers may be held by
a limited number of persons and financial institutions. A limited number of
issuers may represent a disproportionately large percentage of market
capitalization and trading value and cause the securities markets to be
susceptible to influence by large investors trading significant blocks of
securities. A 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. In addition, limited liquidity may impair a Fund's
ability to liquidate a position at the time and price it wishes to do so. 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. Certain developing countries do not have a comprehensive
system of laws, although substantial changes have occurred in this regard in
recent years. Even where adequate law exists in certain 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.
In addition, stockbrokers and other intermediaries in emerging markets may not
perform as well as their counterparts in the United States and other more
developed securities markets. The prices at which a 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 a Fund in particular securities.
PRECIOUS METALS
Worldwide Hard Assets Fund may invest in precious metal coins, which have no
numismatic value, and bullion. The value of such coins and bullion is based
primarily on their precious metal content. Since such investments do not
generate any investment income, the sole source of return from such
investments would be from gains or losses realized on their sale. The Fund
incurs additional costs in storing gold bullion and coins. These storage costs
are generally higher than custodial costs for
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securities. Although subject to substantial fluctuations in value, management
believes such investments could be beneficial to the investment performance of
the Fund and could be a potential hedge against inflation, as well as an
investment with possible growth potential. In addition, at the appropriate
time, investments in precious metal coins or bullion could help to moderate
fluctuations in the Fund's portfolio value, as at times the prices of precious
metals have tended not to fluctuate as widely as shares of issuers engaged in
the mining of such precious metals. In view of the established world market
for precious metals, the daily value of such coins is readily ascertainable
and their liquidity is assured. The Fund will maintain its precious metal
coins and bullion with Wilmington Trust Company.
Precious metal trading is a speculative activity and its markets at times
volatile. Prices of precious metals are affected by factors such as cyclical
economic conditions, political events and monetary policies of various
countries. Markets are, therefore, volatile at times and there may be sharp
fluctuations in prices, even during periods of rising prices. Under current
U.S. tax law, the Fund may not receive more than 10% of its yearly income from
gains resulting from the sale of precious metals or any other physical
commodity. The Fund may be required, therefore, to hold its precious metals or
sell them at a loss, or to sell its portfolio securities at a gain, when it
would not otherwise do so for investment reasons.
FOREIGN CURRENCY AND FOREIGN CURRENCY TRANSACTIONS
Changes in currency exchange rates may affect the Funds' 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 Funds may
invest in a variety of derivatives and enter into hedging transactions to
attempt to moderate the effect of currency fluctuations. The Funds 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 a
Fund's losses on a security when a foreign currency's value changes. The Funds
will enter into forward contracts to duplicate a cash market transaction. The
Funds will not purchase or sell foreign currency as an investment except that
Worldwide Balanced Fund, Worldwide Emerging Markets Fund and Worldwide Hard
Assets 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.
CURRENCY SWAPS
Except for Worldwide Bond Fund, the Funds 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, a 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. Worldwide Hard Assets may also enter into
other asset swaps. Asset swaps are similar to currency swaps in that the
performance of a Hard Asset (e.g., gold) may be "swapped" for another (e.g.,
energy).
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 or Sub-Adviser is incorrect in its forecasts of
market values and currency exchange rates and Hard Assets values, 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), each
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 Funds 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.
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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 Funds may invest in options which are either listed on a domestic
securities exchange or traded on a recognized foreign exchange. In addition,
the Funds 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 Funds 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. Worldwide Hard Assets Fund may also buy
and sell commodity futures contracts, which may include futures on natural
resources and natural resource indices. 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.
Worldwide Hard Assets Fund may invest in commodity futures contracts and in
options on commodity futures contracts (collectively, "commodity interests").
Trading in commodity interests involves numerous risks such as leverage, high
volatility illiquidity, governmental intervention designed to influence
commodity prices and the possibility of delivery of the commodity interests'
underlying commodities. In the event that the Fund is required to take
delivery of a commodity, such commodity will be deemed to be illiquid and the
Fund will bear the cost of storing the commodity until such commodity is sold
and may incur substantial costs in its disposition. The Fund will not use
commodity futures contracts for leveraging purposes in excess of applicable
limitations.
A 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 with respect to Worldwide Balanced Fund, Worldwide Emerging
Markets Fund and Worldwide Hard Assets Fund, 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 Funds may write, purchase or sell put and call options on financial
futures contracts and, in addition, Worldwide Hard Assets Fund may write,
purchase or sell put and call options on commodity futures contracts. The
Funds 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 a position in a specified futures contract if the option
is exercised.
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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. Certain exchanges do not permit
trading in particular commodities at prices in excess of daily price
fluctuation limits set by the exchange, and thus Worldwide Hard Assets Fund
could be prevented from liquidating its positions and thus be subjected to
losses. 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 Funds as part of various
hedging techniques and strategies.
When the Funds intend to acquire securities (or gold bullion or coins in the
case of Worldwide Hard Assets Fund) for their portfolios, they may use call
options or futures contracts as a means of fixing the price of the security
(or gold) they intend 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 Funds in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
If the Funds hold a call option rather than the underlying security itself,
the Funds are 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 Funds would experience a loss as if they had
owned the underlying security.
To protect against anticipated declines in the value of the Funds' investment
holdings, the Funds may use options, forward and futures contracts, swaps,
structured notes (Worldwide Emerging Markets Fund and Worldwide Hard Assets
Fund), and similar investments (commonly referred to as derivatives) as a
defensive technique to protect the value of an asset the Adviser (or Sub-
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 Funds may hedge against changes in the value of one currency in relation
to another currency in which portfolio securities of the Funds may be
denominated. A 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 Funds use 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.
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 (or Sub-
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 Funds
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 Funds on their investments in the hedging
positions.
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The Funds 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 (or Sub-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, a 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 Funds.
SHORT SALES
Worldwide Emerging Markets Fund and Worldwide Hard Assets 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 Emerging Markets Fund and Worldwide Hard Assets 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 50% of the Funds' net assets. The Funds' ability to
engage in short sales may be limited by the requirements of current U.S. tax
law that the Funds derive less than 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. See
"Short Sales" in the Statement of Additional Information.
REPURCHASE AGREEMENTS
In a repurchase agreement, a 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 Funds will enter
into repurchase agreements with respect to securities in which they 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.
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The Adviser (or Sub-Adviser), acting under the supervision of the Board of
Trustees, reviews the creditworthiness of those non-bank dealers with which
the Funds enter 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, the financial condition of each issuer and the value of a Hard
Asset if linked to the value of a Hard Asset. 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 (or Sub-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 (or Sub-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 Funds will not accrue any income on these securities prior to delivery.
The Funds will maintain in a segregated account with their 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 Bond Fund, Worldwide Emerging Markets Fund and Worldwide Hard Assets
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 B by S&P and Moody's (Worldwide Bond Fund) or
CCC by S&P or Caa 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 Bond
Fund will not invest more than 25% of its assets in debt securities rated
below B by S&P and Moody's. Worldwide Emerging Markets Fund and Worldwide Hard
Assets Fund will not invest more than 25% of its assets in debt securities
rated below BBB by S&P or Baa by Moody's.
REAL ESTATE SECURITIES
Although Worldwide Hard Assets Fund will not invest in real estate directly,
the Fund may invest up to 50% of its assets in equity securities of Real
Estate Investment Trusts ("REITs") and other real estate industry companies or
companies with substantial real estate investments. The Fund is therefore
subject to certain risks associated with the real estate industry in general
and REITs in particular. REITs are subject to interest rate risk, 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. See "Real Estate Securities" in the Statement of Additional
Information.
ASSET-BACKED SECURITIES
The Funds 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 payments ultimately depend on payment of the underlying
loans, although the securities may be supported by letters of credit
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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 Funds 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 or guarantees. The Funds may buy CMOs without
insurance or guarantees if, in the opinion of the Adviser or Sub-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 Funds
will be subject to certain limitations under the Act.
LOANS OF PORTFOLIO SECURITIES
The Funds 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 Funds may terminate the loans at any time and obtain the return of
the securities loaned within one business day. The Funds 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 Funds might
experience risk of loss if the broker-dealer with which they have engaged in a
portfolio loan transaction breaches its agreement with the Funds.
BORROWING
The Funds may borrow up to 30% of the value of their net assets to increase
their holdings of portfolio securities. Under the Act, each 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 a 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
Except for Worldwide Bond Fund, the Funds 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
Except for Worldwide Bond Fund, the Funds may invest up to 10% of their total
assets in direct investments; however, the Funds do not currently intend to
invest more than 5% of their total net assets in direct investments. For more
information, see "Risk Factors--Direct Investments" in the Statement of
Additional Information.
TEMPORARY DEFENSIVE STRATEGIES
During periods of less favorable economic and/or market conditions, the Funds
may make substantial investments for temporary defensive purposes in
obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, time deposits, bankers' acceptances,
high grade commercial paper and repurchase agreements.
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LIMITING INVESTMENT RISKS
While an investment in any of the Funds is not without risk, each Fund follows
certain policies in managing its investments which may help to reduce risk.
Except as noted, these policies may not be changed without shareholder
approval. The following are some of the more significant investment
limitations:
1. Worldwide Bond Fund will not invest more than 10% 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). Worldwide Balanced Fund and Worldwide
Emerging Markets Fund will not invest more than 15% of the value of
their total net assets in such securities. It is a non-fundamental
policy (i.e., it may be changed by action of the Board of Trustees) of
Worldwide Hard Assets Fund that it will invest in illiquid securities to
the extent permitted at any time by the Securities and Exchange
Commission (currently 15% of total net assets).
2. A Fund will not purchase more than 10% of any class of securities of any
issuer, including more than 10% of its outstanding voting securities,
except that Worldwide Balanced Fund and Worldwide Emerging Markets Fund
may purchase more than 10% of any non-voting class of securities and
Worldwide Balanced Fund and Worldwide Bond Fund will not invest more
than 25% of the value of their total assets in securities of any one
industry.
3. A 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 Funds' investment
policies and restrictions is provided in the Statement of Additional
Information.
MANAGEMENT
TRUSTEES
The management of the Funds' business and affairs is the responsibility of the
Board of Trustees. For information on the Trustees and officers of the Trust,
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 Balanced Fund,
Worldwide Bond Fund, Worldwide Emerging Markets Fund and Worldwide Hard Assets
Fund pursuant to an Advisory Agreement with the Trust. The Adviser is
responsible for managing the investment operations of the Funds and furnishing
the Funds with a continuous investment program which includes determining
which securities should be bought, sold or held.
Derek S. van Eck--Portfolio Manager of Worldwide Balanced Fund and Worldwide
Hard Assets Fund. He is responsible for managing each Fund's portfolio of
investments. He is Director of Global Investments and Executive Vice President
of the Adviser and an officer and/or portfolio manager of other mutual funds
advised by the Adviser.
Madis Senner--Portfolio Manager of Worldwide Bond Fund. He is responsible for
managing the Fund's portfolio of investments. Before joining Van Eck, Mr.
Senner was a global bond manager with Chase Manhattan Private Bank. Prior to
that, he was President of Sunray Securities, Inc., an investment management
firm that he founded, and, before that, he was a global fixed income manager
with Clemente Capital, Inc. in New York City. Mr. Senner has over 10 years
experience in the investment business.
Peregrine Asset Management (Hong Kong) Limited ("PAM"), located at 11/F, New
World Tower II, 16-18 Queen's Road, Central, Hong Kong, serves as sub-
investment adviser to Worldwide Emerging Markets Fund pursuant to a Sub-
Investment Advisory Agreement with the Adviser. PAM manages the investment
operations of Worldwide Emerging Markets Fund and furnishes the Fund with a
continuous investment program that includes which securities should be bought,
sold or held. The Adviser manages and administers the business and affairs of
the Fund. As compensation for its services, PAM is paid a monthly fee at an
annual rate of .50% of average daily net assets by the Adviser from the
advisory fees it receives from the Fund. In addition to advising foreign
funds, PAM serves as an investment adviser to one U.S. registered investment
company and as sub-investment adviser of the Fund and another registered
investment company. PAM is a 100% owned subsidiary of Peregrine Asset
Management Holdings Limited which, in turn, is a 75% owned subsidiary of
Peregrine Investments Holdings Limited ("Peregrine") which was founded in 1988
and is, along with its affiliates, one of the largest independent Asian based
investment bank outside Japan. Peregrine and its affiliates have offices in
fifteen Asian countries as well as in Europe and the United States. As of
March 31, 1997, total assets under management and advice by Peregrine exceeded
$700 million.
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The primary portfolio manager responsible for the day-to-day management of the
Worldwide Emerging Markets Fund is listed below:
Gary Greenberg, C.F.A.--Portfolio Manager of the Fund. He has been serving in
such capacity since the Fund commenced operations. Mr. Greenberg, Chief
Investment Officer and Deputy Managing Director of PAM, joined PAM in July
1994 and is responsible for PAM's investment strategy in various regions of
the world. He is also portfolio manager of another U.S. fund investing in
emerging markets, a U.S. fund investing in Asia and an offshore fund which
invests in smaller companies in India. Prior to joining PAM, Mr. Greenberg
served as co-manager of the Acorn International Fund from 1992 to 1994. During
that time period he was principal and portfolio manager of Wanger Asset
Management, which managed over $4 billion, including approximately $2 billion
in non-U.S. companies. Mr. Greenberg was employed by Harris Associates L.P. as
an international securities analyst from 1989 until 1992.
Other investment professionals at PAM who are expected to have significant
input with respect to the Fund's investments include:
Bruce Seton--Mr. Seton serves as Chief Executive Officer of PAM. Prior to
joining PAM in 1994, Mr. Seton spent twenty-two years at Gartmore Investment
Limited managing funds emphasizing Asian emerging market investments.
Aureole Foong--Senior Fund Manager of the Fund. He has been serving in this
capacity since the Fund commenced operations. Mr. Foong is a Director of PAM,
having joined PAM in 1994 as a fund manager. His responsibilities at PAM
include managing a fund which invests in equities and derivatives in the Asia
region. Prior to joining PAM, Mr. Foong worked from 1990 to 1994 at Unifund
S.A., a Geneva based private investment company, where he served as a Senior
Vice President.
Fiduciary International Inc. ("FII"), located at Two World Trade Center, New
York, New York 10048, is expected to serve as sub-investment adviser to the
Worldwide Balanced Fund pursuant to a Sub-Investment Advisory Agreement with
the Trust, when the Fund's assets reach a level at which it is appropriate to
utilize the sub-investment adviser's services. FII will then be expected to
manage the investment operations of the Worldwide Balanced Fund and furnish
the Fund with a continuous investment program including which securities
should be bought, sold or held. At that time, the Adviser would manage and
administer the business and affairs of the Fund. As compensation for its
services, FII will be paid a monthly fee at an annual rate of .50% of average
daily net assets by the Adviser from the advisory fee it receives from the
Fund. FII serves as an investment adviser to other registered investment
companies.
FII is an indirect subsidiary of Fiduciary Trust Company International
("FTCI"). FTCI is a New York State chartered bank specializing in investment
and administration of assets for pensions and other institutional accounts
including individuals and families. FII has access to all of FTCI's investment
infrastructure. FTCI began investing globally in the 1960's and serves its
worldwide investment management and custody clients from offices in New York,
Los Angeles, Miami, Washington, D.C., London, Geneva and Hong Kong. FTCI has
over 60 investment professionals. FTCI has over 30 years of experience in
global management with over $11 billion managed under the global balanced
discipline. As of December 31, 1996, total assets under management by FII, its
parent organization FTCI and its subsidiaries, on behalf of all clients,
amounted to over $33 billion.
FII is expected to assign a team of managers led by a global strategist, which
includes a global equity manager and a global fixed-income manager, to manage
the Fund's portfolio of investments. The team is expected to consult with the
FTCI research department, which includes international analysts who specialize
in the equity markets of Japan, Europe, the Pacific Basin and Latin America,
when making investment decisions. FII's two primary portfolio managers, who
are expected to serve the Worldwide Balanced Fund, are listed below:
Anne M. Tatlock--FII's Global Strategist of the Fund. Ms. Tatlock joined FTCI
in 1984 and is currently President of the company where she is responsible for
managing institutional investment management. Ms. Tatlock is head of the
Institutional Investment Department and a member of the Board of Directors,
the Global Investment Committee and the Investment Policy Committee at FTCI.
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Steven J. Miller--FII's Portfolio Manager of the Fund. Mr. Miller joined FTCI
in 1994 after working for seven years with Vital Forsikring and Heller
Financial, Inc. Mr. Miller is responsible for managing institutional and
international portfolios. He is a Senior Vice President of FTCI as well as a
member of the Global Investment Committee and the Investment Policy Committee
at FTCI.
Worldwide Balanced Fund pays the Adviser a monthly fee at the annual rate of
.75 of 1% of average daily net assets. Worldwide Bond Fund and Worldwide Hard
Assets Fund each pays the Adviser a monthly fee at the annual rate of 1% of
the first $500 million of the average daily net assets of the Fund, .90 of 1%
of the next $250 million of the average daily net assets and .70 of 1% of the
average daily net assets in excess of $750 million. Worldwide Emerging Markets
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. Van Eck Associates Corporation also performs
accounting and administrative services for Worldwide Balanced Fund and is paid
a fee at an annual rate of .25 of 1% of the Fund's average daily net assets.
The advisory fees paid to the Adviser with respect to the Funds are higher
than the fees paid by most investment companies because of the complexities of
managing these types of funds (such as following trends, industries and
companies in many different countries and stock and bond markets throughout
the world) but are comparable to the fees charged to other investment
companies with similar objectives for comparable services.
With respect to the Funds, the Adviser and/or Sub-Adviser may from time to
time, at its discretion, waive the management fee and/or agree to pay some or
all expenses of the Funds. This has the effect of increasing the yield and
total return of the Funds during this period.
The Adviser 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 March 31,
1997, total aggregate assets under the management of Van Eck Associates
Corporation were approximately $1.6 billion.
The Funds sell their shares to various insurance company variable annuity and
variable life insurance separate accounts as a funding vehicle for such
separate accounts. The Funds currently do not foresee any disadvantages to
variable annuity and variable life contract owners arising out of the fact
that the Funds offer their 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 one
or more Funds and shares of another fund may be substituted. This might force
a Fund to sell securities at disadvantageous prices. In addition, the Board of
Trustees may refuse to sell shares of a Fund to any separate account or may
suspend or terminate the offering of shares of a Fund if such action is
required by law or regulatory authority or is in the best interests of the
shareholders of a Fund.
EXPENSES
Each Fund bears all expenses of its operation other than those incurred by the
Adviser under its Advisory Agreement with the Trust. In particular, the Funds
pay: 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 Sub-Adviser or any of their
affiliates, and any extraordinary expenses. Expenses incurred jointly by the
Funds are allocated among the Funds in a manner determined by the Trustees to
be fair and equitable. Under the Advisory Agreement, the Adviser provides the
Funds with office space, facilities and simple business equipment and provides
the services of executive and clerical personnel for administering the affairs
of the Funds. The Adviser or Sub-Adviser compensates Trustees of the Trust if
such persons are employees or affiliates of the Adviser or Sub-Adviser or
their affiliates. The Adviser will, pursuant to the Advisory Agreement,
require each Fund to reimburse it for its costs for trading portfolio
securities and maintaining books and records of each Fund, including general
ledger and daily net asset value accounting.
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The organizational expenses which were initially paid by the Adviser, were
reimbursed to the Adviser by the Funds and are being amortized by the Funds
over sixty successive equal monthly installments.
HOW TO BUY SHARES
Shares of the Funds 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
any Fund.
Shares of the Funds 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 net asset value for each 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 Funds 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 Funds 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 Funds are not open for business).
Consequently, since the Funds will compute their net asset values only Monday
through Friday, exclusive of national business holidays, the net asset values
of shares of the Funds may be significantly affected on days when an investor
has no access to the Funds.
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 a Fund's best interest to do so. Certificates
for shares of the Funds will not be issued.
DIVIDENDS AND DISTRIBUTIONS
The Funds intend to distribute their 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 Funds are
automatically reinvested in additional shares of that Fund on the dividend
payable date at the net asset value determined at the close of business on the
reinvestment price date. The fiscal year of each of the Funds previously ended
on April 30; however, in August 1996 the Board of Trustees changed the Funds'
fiscal year to December 31 beginning with December 31, 1996.
HOW TO REDEEM SHARES
Shares of the Funds 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 Funds is subject to daily fluctuations and the
net asset value of the Funds' shares will fluctuate accordingly. Therefore,
the redemption value may be more or less than the original purchase price for
such shares.
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FEDERAL TAXATION
Each Fund has qualified and intends to continue 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. Each 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.
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 each Fund, $.001 par value. Currently, four
Funds of the Trust are being offered, which shares constitute the interests in
Worldwide Balanced Fund, Worldwide Bond Fund, Worldwide Emerging Markets Fund
and Worldwide Hard Assets Fund, described herein.
Worldwide Emerging Markets Fund and Worldwide Hard Assets Fund are classified
as diversified funds and Worldwide Bond Fund and Worldwide Balanced Fund are
classified as non-diversified funds 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. 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 a 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. On April 9, 1997, shareholders of Gold and Natural Resources Fund
approved changes in the Fund's investment objective, policies and restrictions
which, together with changes approved by the Board of Trustees, resulted in
the Worldwide Hard Assets Fund as described in this Prospectus. 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
23
<PAGE>
affecting an individual Fund, a separate vote of that Fund is required.
Shareholders of a Fund are not entitled to vote on any matter not affecting
that 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 Funds, 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.
ADDITIONAL INFORMATION
ADVERTISING
From time to time the Funds may use various media to advertise performance.
Past performance is not necessarily indicative of future performance.
Worldwide Bond Fund may advertise performance in terms of 30-day yield, which
is computed by dividing the net investment income per share earned during the
30 days by the offering price per share on the last day of the period. Yield
of the Fund is a function of the kind and quality of the instruments in the
Fund's portfolio, maturity, operating expenses and market conditions.
The Funds 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 Funds do not impose a sales charge on investments) is deducted from the
initial $1,000 payment and assumes all dividends and distributions by the
Funds are reinvested on the reinvestment dates during the period, and includes
all recurring fees that are charged to all shareholder accounts. In addition,
the Funds 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 a 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 Funds may quote performance results from recognized services and
publications which monitor the performance of mutual funds and the Funds may
compare their 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
Balanced Fund is rated in the "Balanced Funds" category. Worldwide Bond Fund
is rated in the "World Income Funds" category. Worldwide Emerging Markets Fund
may be compared to indices such as I.F.C. Investable Index and the following
Morgan Stanley Capital International Indices: World Index, World Index Free,
Kokusai Index, Emerging Markets Global Index and Emerging Markets Free Index.
The Morgan Stanley Capital International Indices and the Salomon Brothers
World Government Bond Index are two such indices to which Worldwide Balanced
Fund and Worldwide Bond Fund may be compared, and Worldwide Hard Assets Fund
may be compared to indices such as the Ibbotson Hard Assets Index, the
Standard & Poor's 500 or Morgan Stanley natural resource indices. For a
further discussion of advertising, see "Performance" in the Statement of
Additional Information.
24
<PAGE>
For further information about the Funds, 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 Funds 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 Funds' 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 LLP, One Exchange Place, Boston, Massachusetts 02109,
serves as Counsel for the Trust.
25
<PAGE>
Worldwide Balanced Fund
- -------------------------------
Worldwide Bond Fund
- -------------------------------
Worldwide Emerging Markets Fund
- -------------------------------
Worldwide Hard Assets Fund
Shares of the Funds 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
Funds 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 one or
more Funds. In particular, certain Funds 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 Funds.
Van Eck Worldwide Insurance Trust
- ----------------------------------
99 Park Avenue, New York, NY 10016
[LOGO] VAN ECK GLOBAL
April 30, 1997
VAN ECK
WORLDWIDE
INSURANCE TRUST
PROSPECTUS
Worldwide Balanced Fund
Worldwide Bond Fund
Worldwide Emerging Markets Fund
Worldwide Hard Assets Fund
. Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust. Van Eck
Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust . Van Eck
Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust . Van Eck
Worldwide Insurance Trust . Van Eck World wide Insurance Trust . Van Eck World
Insurance Trust. Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance
Trust . Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust .
Van Eck Worldwide Insurance Trust
[LOGO] VAN ECK GLOBAL
<PAGE>
PROSPECTUS April 30, 1997
VAN ECK WORLDWIDE EMERGING MARKETS FUND
- -------------------------------------------------------------------------------
99 Park Avenue, New York, New York 10016
(212) 687-5200
- -------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company consisting of four separate funds. This Prospectus relates
only to Van Eck Worldwide Emerging Markets 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 EMERGING MARKETS FUND--seeks long-term capital appreciation by
investing primarily in equity securities in emerging markets around the world.
Peregrine Asset Management (Hong Kong) Limited ("PAM" or "Sub-Adviser") serves
as sub-investment adviser to this Fund.
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.
---------------
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 April 30, 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.
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS PAGE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
The Trust................................................................... 3
Financial Highlights........................................................ 3
Investment Objectives and Policies of the Fund.............................. 4
Risk Factors................................................................ 6
Limiting Investment Risks................................................... 13
Management.................................................................. 13
How to Buy Shares........................................................... 15
Dividends and Distributions................................................. 15
How to Redeem Shares........................................................ 16
Federal Taxation............................................................ 16
Description of the Trust.................................................... 16
Additional Information...................................................... 17
</TABLE>
2
<PAGE>
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 Emerging Markets
Fund is classified as a diversified fund under the Investment Company Act of
1940, as amended, (the "Act"). (See "Description of the Trust.")
FINANCIAL HIGHLIGHTS
The Financial Highlights below give selected information for a share of the
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Coopers & Lybrand L.L.P., independent
accountants, whose reports thereon appear in the Fund's Annual Reports, which
are incorporated by reference into the Trust's Statement of Additional
Information. This information should be read in conjunction with the financial
statements and related notes that also appear in the Fund's Annual Reports.
The Annual Reports also contain additional performance information and are
available upon request and without charge.
WORLDWIDE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
FOR THE EIGHT FOR THE PERIOD
MONTHS ENDED DECEMBER 21, 1995(A)
DECEMBER 31, 1996 TO APRIL 30, 1996
----------------- --------------------
<S> <C> <C>
Net Asset Value, Beginning of Period.... $ 10.95 $ 10.00
------- -------
Income From Investment Operations:
Net Investment Income (b)........... .01 0.07
Net Gains on Securities (both real-
ized and unrealized)............... 1.59 0.88
------- -------
Total From Investment Operations.... 1.60 0.95
------- -------
Less Distributions:
Distributions from net investment
income............................. (0.06) --
------- -------
Net Asset Value, End of Period.......... $ 12.49 $ 10.95
======= =======
- --------------------------------------------------------------------------------
Total Return (c)........................ 14.66% 9.50%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000)......... $15,355 $ 597
Ratio of Gross Expenses to Average Net
Assets (d)............................. 2.64% 2.06%
Ratio of Net Expenses to Average Net As-
sets................................... 0.00% 0.00%
Ratio of Net Income to Average Net As-
sets (d)............................... 0.74% 1.89%
Portfolio Turnover Rate................. 29.53% 45.89%
Average Commission Rate Paid............ $0.0029 $0.0124
</TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- -------
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends at
net asset value during the period and a redemption on the last day of the
period. Total returns for the periods of less than one year ended were not
annualized.
(d) Annualized.
3
<PAGE>
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 EMERGING MARKETS FUND
OBJECTIVE:
Worldwide Emerging Markets Fund seeks long-term capital appreciation by
investing primarily in equity securities in emerging markets around the world.
POLICIES:
In pursuit of its investment objective, the Fund emphasizes investment in
countries that, compared to the world's major economies, exhibit relatively
low gross national product per capita as well as the potential for rapid
economic growth. Specifically, an "emerging market" or "Emerging Country" is
any country that the World Bank, the International Finance Corporation, the
United Nations or its authorities has determined to have a low or middle
income economy. Emerging Countries can be found in regions such as Asia, Latin
America, Eastern Europe and Africa. The countries that will not be considered
Emerging Countries include the United States, Australia, Canada, Japan, New
Zealand and most countries located in Western Europe such as Austria, Belgium,
Denmark, Finland, France, Germany, Great Britain, Ireland, Italy, the
Netherlands, Norway, Spain, Sweden and Switzerland.
The Adviser expects that the Fund will normally invest in at least three
different countries. The Fund emphasizes equity securities, but may also
invest in other types of instruments, including debt securities of any quality
(other than commercial paper as described herein). Debt securities may include
fixed or floating rate bonds, notes, debentures, commercial paper, loans,
convertible securities and other debt securities issued or guaranteed by
governmental, banking and private entities. See "Risk Factors--Debt
Securities" and "Risk Factors--Low Rated or Unrated Debt Securities".
The Adviser believes that the economies of emerging markets will continue to
have among the world's fastest rates of growth over the next decade. In many
instances, the growth in these countries is brought on by a move away from
governmental intervention in the marketplace and an aggressive move towards
free market capitalism. While many emerging markets are experiencing rapid
growth by U.S. standards, such markets are still developing and considerably
less liquid. Investors can expect there will be periods of volatility and
reduced liquidity in these markets. The Fund involves above-average risk, and
as such, is designed as a long-term investment. There can be no assurance that
the Fund will achieve its investment objective. See "Risk Factors--Foreign
Securities" and "Risk Factors--Emerging Markets Securities" below.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in Emerging Countries and emerging market equity securities. The Fund
considers emerging market securities to include securities that (i)
principally trade in the capital markets of an emerging market country; (ii)
are of companies that derive at least 50% of total revenues from either goods
produced or services performed in emerging market countries or from sales made
in Emerging Countries, regardless of where the securities of such companies
are principally traded; (iii) are of companies organized under the laws of,
and with a principal office in, an Emerging Country; (iv) are of investment
companies (such as country funds) that principally invest in emerging market
securities; and (v) are American Depositary Receipts (ADRs), American
Depositary Shares (ADSs), European Depositary Receipts (EDRs) and Global
Depositary Receipts (GDRs) with respect to the securities of such companies.
Equity securities in which the Fund may invest include common stocks;
preferred stocks (either convertible or non-convertible); rights; warrants;
direct equity interests in trusts, partnerships, joint ventures and other
unincorporated entities or enterprises;
4
<PAGE>
convertible debt instruments; and special classes of shares available only to
foreign persons in those markets that restrict ownership of certain classes of
equity to nationals or residents of that country. These securities may be
listed on securities exchanges or traded over-the-counter. Direct investments
are generally considered illiquid and will be aggregated with other illiquid
investments for purposes of the limitation on illiquid investments. See "Risk
Factors--Emerging Market Securities".
The Fund may invest indirectly in emerging markets by investing in other
investment companies. Due to restrictions on direct investment by foreign
entities in certain emerging market countries, investment in other investment
companies may be the most practical or the only manner in which the Fund can
invest in the securities markets of certain emerging market countries. Such
investments may involve the payment of premiums above the net asset value of
such issuers' portfolio securities; are subject to limitations under the Act;
are constrained by market availability; and may constitute passive foreign
investment companies for Federal income tax purposes. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. The
Adviser and Sub-Adviser have agreed to waive their management fees with
respect to the portion of the Fund's assets invested in shares of other open-
end investment companies. The Fund would continue to pay its own management
fees and other expenses with respect to its investments in shares of closed-
end investment companies.
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, structured notes and other similar securities as
may become available in the market. These instruments offer certain
opportunities and additional risks that are described below.
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 quality as determined by the Adviser
or Sub-Adviser.
PAM serves as sub-adviser to the Fund. PAM has been registered with the
Securities and Exchange Commission ("SEC") as an investment adviser since
April 17, 1995. PAM was incorporated in Hong Kong in 1991 and is a 100% owned
subsidiary of Peregrine Asset Management Holdings Limited, which, in turn, is
a 75% owned subsidiary of Peregrine Investments Holdings Limited
("Peregrine"). Peregrine and its affiliates comprise one of the largest
independent Asian based investment banks located outside Japan. Established in
1988, Peregrine and its affiliates have offices in fifteen Asian countries as
well as in Europe and the United States. Investment professionals at PAM
collectively have over forty years experience in managing funds which invest
in emerging markets. The Adviser believes PAM has unique knowledge and
experience in global emerging market investing. PAM will select investments
for the Fund based on its assessment of where emerging market opportunities
for long-term capital appreciation are most attractive. When making investment
decisions, PAM will evaluate characteristics of various Emerging Countries
such as the outlook for economic growth and inflation and government monetary
and fiscal policies. In selecting specific companies for investment, PAM will
analyze such factors as growth potential, financial strength and management
experience. See "Management".
There is no limitation on the amount the Fund can invest in emerging markets.
Investors should consider carefully the substantial risks involved in
investing in securities issued by companies and governments of foreign
nations. Global investing involves economic and political considerations,
which may favorably or unfavorably affect the Fund's performance. See "Risk
Factors--Foreign Securities" and "Risk Factors--Emerging Markets Securities"
below.
5
<PAGE>
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 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.
The Fund may invest in South African issuers. Political and social conditions
in South Africa and its neighboring countries may pose certain risks to the
Fund's investments, and, under certain conditions, on the liquidity of the
Fund's portfolios and its ability to meet shareholder redemption requests. The
ability of the Fund to invest or hold its investments in South African
companies may be further affected by changes in United States or South African
laws or regulations.
Worldwide Emerging Markets Fund may invest in Russian issuers. Investments in
Russia involve the risks associated with other foreign emerging markets. In
particular, settlement, clearing and registration of securities in Russia is
in an underdeveloped state. Ownership of shares (except those held through
depositories that meet the requirements of the Act) is defined according to
entries in the issuer's share register and normally evidenced by extracts from
that register, which have no legal enforceability. Furthermore, share
registration is carried out either by the issuer or registrars located
throughout Russia, which are not necessarily subject to effective government
supervision. As a result, it is possible for the Fund to lose its registration
and thus its ownership of these securities due to fraud, illegal amendment,
negligence or even mere oversight. This system also may cause a delay in the
Fund's sale of Russian securities to a potential purchaser and subject the
Fund to the risk of loss in connection with the insolvency of a registrar. In
addition, while applicable Russian regulations impose liability on registrars
for losses resulting from their errors, it may be difficult for the Fund to
enforce any rights it may have against the registrar or issuer in the event of
the loss of share registration.
To reasonably ensure that its interest continues to be appropriately recorded,
the Fund will invest only in those Russian companies whose registrars have
entered into a contract with the Fund's Russian sub-custodian, which gives the
sub-custodian the right, among others, to inspect the share register and to
obtain extracts of share registers through regular audits. While these
procedures reduce the risk of loss, there can be no assurance that they will
be effective. This limitation may prevent the Fund from investing in the
securities of certain Russian issuers otherwise deemed suitable by the Adviser
or Sub-Adviser.
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 equity and fixed income markets of developing
countries involves
6
<PAGE>
exposure to potentially unstable governments, economies based on only a few
industries and securities markets which trade a small number of securities and
may therefore at times be illiquid. Securities markets of developing countries
tend to be more volatile than the markets of developed countries. Countries
with developing markets may present the risk of nationalization of businesses,
restrictions on foreign ownership, or prohibitions of repatriation of assets,
and may have less protection of property rights than more developed countries.
The economies of countries with developing markets may be highly vulnerable to
changes in local or global trade conditions, and may suffer from extreme and
volatile debt burdens or inflation rates. 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.
However, such markets have in the past provided the opportunity for higher
rates of return to investors. There is no assurance that these markets will
offer such opportunity in the future. The ability of the Fund to invest or
hold its investments in companies situated in developing countries may be
further affected by changes in United States or such countries' laws or
regulations.
Many of these emerging markets limit the percentage of their domestic issuers
that foreign investors, such as the Fund, may own by requiring that such
issuers issue two classes of shares--"local" and "foreign" shares. Foreign
shares may be held only by investors that are not considered nationals or
residents of that country and generally are convertible into local shares.
Local shares are intended for ownership by nationals or residents of the
country. Foreign shares may be subject to various restrictions, including
restrictions on the right to receive dividends and other distributions and on
the right to vote. The market for foreign shares is generally less liquid than
the market for local shares, although in most cases foreign shares may be
converted into local shares. In addition, foreign shares often trade at a
premium to local shares. If the Fund were to own local shares and could not
participate in a stock, warrant or other distribution, the Fund could suffer
material dilution of its interest in that issuer and the value of its holdings
could decline dramatically, causing a loss on its investment. Generally, it is
expected that the Fund will hold foreign shares. The Fund will only purchase
local shares where foreign shares are not available for purchase. Where
permitted, the Fund will attempt to convert local shares to foreign shares
promptly.
A high proportion of the shares of many emerging market issuers may be held by
a limited number of persons and financial institutions. A limited number of
issuers may represent a disproportionately large percentage of market
capitalization and trading value and cause the securities markets to be
susceptible to influence by large investors trading significant blocks of
securities. 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. In addition, limited liquidity may impair
the Fund's ability to liquidate a position at the time and price it wishes to
do so. 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. Certain developing countries do not have a
comprehensive system of laws, although substantial changes have occurred in
this regard in recent years. Even where adequate law exists in certain
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.
In addition, stockbrokers and other intermediaries in emerging markets may not
perform as well as their counterparts in the United States and other more
developed securities markets. 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.
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
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forward contracts to duplicate a cash market transaction. The Fund will not
purchase or sell foreign currency as an investment except that the 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.
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 or Sub-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.
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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 a 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 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 (or Sub-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 use 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 (or Sub-
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 (or Sub-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
The 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.
The 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 50% 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
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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. 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 (or Sub-
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 (or Sub-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 (or Sub-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
The 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 CCC by S&P or Caa 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. The Fund will not invest more than 25% of its assets in debt
securities rated below BBB by S&P or 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 or guarantees. The Fund may buy CMOs without
insurance or guarantees if, in the opinion of the Adviser or Sub-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 30% of the value of its net assets to increase
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;
however, the Fund does not currently intend to invest more than 5% of its
total net assets in direct investments. For more information, see "Risk
Factors--Direct Investments" in the Statement of Additional Information.
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TEMPORARY DEFENSIVE STRATEGIES
During periods of less favorable economic and/or market conditions, the Fund
may make substantial investments for temporary defensive purposes in
obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, time deposits, bankers' acceptances,
high grade commercial paper and repurchase agreements.
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. Except as
noted, these policies may not be changed without shareholder approval. The
following are some of the more significant investment limitations:
1. Worldwide Emerging Markets 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 purchase more than 10% of any class of outstanding
voting securities of any issuer.
3. 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 Trust,
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 Emerging Markets
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.
Peregrine Asset Management (Hong Kong) Limited ("PAM"), located at 11/F, New
World Tower II, 16-18 Queen's Road, Central, Hong Kong, serves as sub-
investment adviser to Worldwide Emerging Markets Fund pursuant to a Sub-
Investment Advisory Agreement with the Adviser. PAM manages the investment
operations of Worldwide Emerging Markets Fund and furnishes the Fund with a
continuous investment program that includes which securities should be bought,
sold or held. The Adviser manages and administers the business and affairs of
the Fund. As compensation for its services, PAM is paid a monthly fee at an
annual rate of .50% of average daily net assets by the Adviser from the
advisory fees it receives from the Fund. In addition to advising foreign
funds, PAM serves as an investment adviser to one U.S. registered investment
company and as sub-investment adviser of the Fund and another registered
investment company. PAM is a 100% owned subsidiary of Peregrine Asset
Management Holdings Limited which, in turn, is a 75% owned subsidiary of
Peregrine Investments Holdings Limited ("Peregrine") which was founded in 1988
and is, along with its affiliates, one of the largest independent Asian based
investment bank outside Japan. Peregrine and its affiliates have offices in
fifteen Asian countries as well as in Europe and the United States. As of
March 31, 1997, total assets under management and advice by Peregrine exceeded
$700 million.
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The primary portfolio manager responsible for the day-to-day management of the
Worldwide Emerging Markets Fund is listed below:
Gary Greenberg, C.F.A.--Portfolio Manager of the Fund. He has been serving in
such capacity since the Fund commenced operations. Mr. Greenberg, Chief
Investment Officer and Deputy Managing Director of PAM, joined PAM in July
1994 and is responsible for PAM's investment strategy in various regions of
the world. He is also portfolio manager of another U.S. fund investing in
emerging markets, a U.S. fund investing in Asia and an offshore fund which
invests in smaller companies in India. Prior to joining PAM, Mr. Greenberg
served as co-manager of the Acorn International Fund from 1992 to 1994. During
that time period he was principal and portfolio manager of Wanger Asset
Management, which managed over $4 billion, including approximately $2 billion
in non-U.S. companies. Mr. Greenberg was employed by Harris Associates L.P. as
an international securities analyst from 1989 until 1992.
Other investment professionals at PAM who are expected to have significant
input with respect to the Fund's investments include:
Bruce Seton--Mr. Seton serves as Chief Executive Officer of PAM. Prior to
joining PAM in 1994, Mr. Seton spent twenty-two years at Gartmore Investment
Limited managing funds emphasizing Asian emerging market investments.
Aureole Foong--Senior Fund Manager of the Fund. He has been serving in this
capacity since the Fund commenced operations. Mr. Foong is a Director of PAM,
having joined PAM in 1994 as a fund manager. His responsibilities at PAM
include managing a fund which invests in equities and derivatives in the Asia
region. Prior to joining PAM, Mr. Foong worked from 1990 to 1994 at Unifund
S.A., a Geneva based private investment company, where he served as a Senior
Vice President.
Worldwide Emerging Markets 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, industries and companies in many different
countries and stock and bond markets throughout the world) but are comparable
to the fees charged to other investment companies with similar objectives for
comparable services.
With respect to the Fund, the Adviser and/or Sub-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 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 March 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.
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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 Sub-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 or Sub-Adviser compensates Trustees of the Trust if such persons
are employees or affiliates of the Adviser or Sub-Adviser or their 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 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 fiscal year of the Fund previously ended on April
30; however, in August 1996 the Board of Trustees changed the Fund's fiscal
year to December 31 beginning with December 31, 1996.
15
<PAGE>
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 has qualified and intends to continue 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.
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, four
Funds of the Trust are being offered, which shares constitute the interests in
Worldwide Balanced Fund, Worldwide Bond Fund, Worldwide Emerging Markets Fund
and Worldwide Hard Assets Fund.
Worldwide Emerging Markets Fund is classified as a 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 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
16
<PAGE>
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.
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
Emerging Markets Fund may be compared to indices such as I.F.C. Investable
Index and the following
17
<PAGE>
Morgan Stanley Capital International Indices: World Index, World Index Free,
Kokusai Index, Emerging Markets Global Index and Emerging Markets Free Index.
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 LLP, One Exchange Place, Boston, Massachusetts 02109,
serves as Counsel for the Trust.
18
<PAGE>
Van Eck Worldwide
Insurance Trust
- -------------------------------
Worldwide Emerging Markets Fund
- -------------------------------
Shares of the Funds 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
Funds 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 one or
more Funds. In particular, certain Funds 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 Funds.
Van Eck Worldwide Insurance Trust
- ----------------------------------
99 Park Avenue, New York, NY 10016
[LOGO] VAN ECK GLOBAL
April 30, 1997
VAN ECK
WORLDWIDE
INSURANCE TRUST
PROSPECTUS
Worldwide Emerging Markets Fund
. Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust. Van Eck
Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust . Van Eck
Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust . Van Eck
Worldwide Insurance Trust . Van Eck World wide Insurance Trust . Van Eck World
Insurance Trust. Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance
Trust . Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust .
Van Eck Worldwide Insurance Trust
[LOGO] VAN ECK GLOBAL
<PAGE>
PROSPECTUS_______________________________________________________April 30, 1997
VAN ECK WORLDWIDE BALANCED FUND
- -------------------------------------------------------------------------------
99 Park Avenue, New York, New York 10016
(212) 687-5200
- -------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company consisting of four separate funds. This Prospectus relates
only to Van Eck Worldwide Balanced 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 BALANCED FUND--seeks long term capital appreciation together with
current income. Fiduciary International, Inc. ("Fll" or "Sub-Adviser") has
signed an agreement to serve as sub-investment adviser to this Fund.
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.
---------------
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 April 30, 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.
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS PAGE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
The Trust................................................................... 3
Financial Highlights........................................................ 3
Investment Objectives and Policies of the Fund.............................. 4
Risk Factors................................................................ 5
Limiting Investment Risks................................................... 11
Management.................................................................. 11
How to Buy Shares........................................................... 13
Dividends and Distributions................................................. 14
How to Redeem Shares........................................................ 14
Federal Taxation............................................................ 14
Description of the Trust.................................................... 14
Additional Information...................................................... 15
</TABLE>
2
<PAGE>
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 Balanced Fund is
classified as a non-diversified fund under the Investment Company Act of 1940,
as amended, (the "Act"). (See "Description of the Trust.")
FINANCIAL HIGHLIGHTS
The Financial Highlights below give selected information for a share of the
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Coopers & Lybrand L.L.P., independent
accountants, whose reports thereon appear in the Fund's Annual Reports, which
are incorporated by reference into the Trust's Statement of Additional
Information. This information should be read in conjunction with the financial
statements and related notes that also appear in the Fund's Annual Reports.
The Annual Reports also contain additional performance information and are
available upon request and without charge.
<TABLE>
<CAPTION>
WORLDWIDE BALANCED FUND
-----------------------------------------------------
FOR THE
FOR THE EIGHT PERIOD FROM
MONTHS ENDED YEAR ENDED DECEMBER 23, 1994(degrees)
DECEMBER 31, APRIL 30, TO APRIL 30,
1996 1996 1995
------------- ---------- --------------------------
<S> <C> <C> <C> --- --- ---
Net Asset Value,
Beginning of Period.... $ 10.29 $ 10.00 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income... 0.25 0.04(b) --
Net Gains on Securities
(both realized and
unrealized)............ 0.61 0.25 --
------- ------- -------
Total From Investment
Operations............. 0.86 0.29 0.00
------- ------- -------
Less: Distributions from
Net Investment Income.. (0.01) -- --
------- ------- -------
Net Asset Value, End of
Period................. $ 11.14 $ 10.29 $ 10.00
======= ======= =======
- ---------------------------------------------------------------------------------------------
Total Return(a)......... 8.38% 2.90% 0.00%
- ---------------------------------------------------------------------------------------------
Ratios/Supplementary
Data:
Net Assets, End of
Period (000)........... $ 1,766 $ 608 $ 14
Ratio of Gross Expenses
to Average Net Assets.. 2.49%* 12.61%* 78.40%*
Ratio of Net Expenses to
Average Net Assets..... 0.00% 0.00% 0.00%
Ratio of Net Income to
Average Net Assets..... 4.27%* 0.42% 0.00%*
Portfolio Turnover Rate. 0.76% 0.00% 0.00%
Average Commission Rate
Paid(c)................ $0.0790 $0.0422
</TABLE>
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- -------
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends at
net asset value during the period and a redemption on the last day of the
period. Total returns for the periods of less than one year were not
annualized.
(b) Based on average shares outstanding.
(c) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades in
which a commission is charged.
(dCommencementeofgoperations.rees)
* Annualized
3
<PAGE>
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 BALANCED FUND
OBJECTIVE:
Worldwide Balanced Fund seeks long-term capital appreciation together with
current income.
POLICIES:
The Fund intends to achieve its investment objective by investing its assets
in the United States and other countries throughout the world, and by
allocating its assets among equity securities, fixed-income securities and
short-term instruments.
The Adviser believes that allocation of assets into many countries and across
asset classes can, over the long-term, provide higher returns than portfolios
invested solely in bonds with lower risk or volatility or than portfolios
invested entirely in stocks. Thus, the "risk-adjusted return" of a diversified
portfolio has the potential to be more attractive than some other, more
concentrated portfolios. In addition, the balanced approach reduces the risk
where events in any one country may adversely affect the entire portfolio.
Investors should be aware that although the Fund diversifies across more
investment types than most mutual funds, no one mutual fund can provide a
complete investment program for all investors. There can be no assurance that
allocation of assets both globally and across asset classes will reduce these
risks or that the Fund will achieve its investment objective.
The Fund seeks investment opportunities in the world's major stock, bond and
money markets. Under normal conditions, the Fund will invest its assets in at
least three countries including the United States. There is no limitation or
restriction on the amount of assets to be invested in any one asset class or
country. Over the long-term, the Fund will attempt to invest a minimum of 25%
of its assets in the United States, with the balance outside the United
States, and the Fund will attempt to maintain an asset allocation of 60% in
equity securities and 40% in fixed-income securities and short-term
instruments. However, subsequent to the initial investment period, at least
25% of the Fund's total assets will always be invested in fixed-income senior
securities and at least 25% of the Fund's total assets will always be invested
in equities. The Fund may also allocate a portion of its assets to gold.
The Fund will not invest more than 10% of its assets in the securities of
developing countries with emerging economies or securities markets. The Fund
may invest in asset-backed securities such as collateralized mortgage
obligations and other mortgage and non-mortgage asset-backed securities.
The average maturity of the debt securities in the Fund's portfolio will be
based on the judgment of the Adviser or FII as to future interest rate
changes. The assets of the Fund invested in fixed income securities will
consist of securities which are believed by the Adviser or FII to be high
grade, that is, rated A or better by Standard & Poor's Corporation ("S&P") or
Moody's Investors Service, Inc. ("Moody's"), Fitch-1 by Fitch or Duff-1 by
Duff & Phelps ("D&P") or if unrated, to be of comparable high quality in the
judgment of the Adviser or FII, subject to the supervision of the Board of
Trustees and/or the Adviser. The assets of the Fund invested in short-term
instruments will consist primarily of securities rated in the highest category
(for example, commercial paper rated "Prime-1" or "A-1" by Moody's and S&P,
respectively) or if unrated, in instruments that are determined to be of
comparable quality or are insured by foreign or U.S. governments, their
agencies or instrumentalities as to payment of principal and interest. See
"Risk Factors--Debt Securities."
4
<PAGE>
During periods of adverse or unusual economic and/or market conditions, the
Fund may, for temporary defensive purposes, make substantial investments in
obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, bankers' acceptances, high grade
commercial paper and repurchase agreements. For temporary defensive purposes,
the Fund can have all of its assets invested in any one country or currency.
The Fund may invest up to 5% of its net assets in options on equity securities
and up to 5% of its net assets in warrants, including options and warrants
traded in over-the-counter markets. The Fund may buy and sell financial
futures contracts and options on financial futures contracts. The Fund may
write, purchase or sell puts and calls on foreign currencies and securities,
and invest in "when-issued" securities, "partly paid" securities (securities
paid for over a period of time), and securities of foreign issuers. The Fund
may lend its portfolio securities and borrow money for investment purposes
(i.e., leverage its portfolio). For a further discussion of these investments,
see "Risk Factors."
While FII does not currently serve as sub-investment adviser to the Fund, it
is expected to do so when the Fund's assets reach a level at which it is
appropriate to utilize the sub investment adviser's services. FII is a wholly-
owned subsidiary of Fiduciary Investment Corporation, which, in turn, is a
wholly-owned subsidiary of Fiduciary Trust Company International. Fiduciary
Trust Company International has more than 30 years of experience in managing
funds that invest in international markets.
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 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.
The Fund may invest in South African issuers. Political and social conditions
in South Africa and its neighboring countries may pose certain risks to the
Fund's investments, and, under certain conditions, on the liquidity of the
Fund's portfolios and its ability to meet shareholder redemption requests. The
ability of the Fund to invest or hold its investments in South African
companies may be further affected by changes in United States or South African
laws or regulations.
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.
5
<PAGE>
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 equity and fixed income markets of developing
countries involves exposure to potentially unstable governments, economies
based on only a few industries and securities markets which trade a small
number of securities and may therefore at times be illiquid. Securities
markets of developing countries tend to be more volatile than the markets of
developed countries. Countries with developing markets may present the risk of
nationalization of businesses, restrictions on foreign ownership, or
prohibitions of repatriation of assets, and may have less protection of
property rights than more developed countries. The economies of countries with
developing markets may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt burdens or
inflation rates. 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. However, such markets have
in the past provided the opportunity for higher rates of return to investors.
There is no assurance that these markets will offer such opportunity in the
future. The ability of the Fund to invest or hold its investments in companies
situated in developing countries may be further affected by changes in United
States or such countries' laws or regulations.
Many of these emerging markets limit the percentage of their domestic issuers
that foreign investors, such as the Fund, may own by requiring that such
issuers issue two classes of shares--"local" and "foreign" shares. Foreign
shares may be held only by investors that are not considered nationals or
residents of that country and generally are convertible into local shares.
Local shares are intended for ownership by nationals or residents of the
country. Foreign shares may be subject to various restrictions, including
restrictions on the right to receive dividends and other distributions and on
the right to vote. The market for foreign shares is generally less liquid than
the market for local shares, although in most cases foreign shares may be
converted into local shares. In addition, foreign shares often trade at a
premium to local shares. If the Fund were to own local shares and could not
participate in a stock, warrant or other distribution, the Fund could suffer
material dilution of its interest in that issuer and the value of its holdings
could decline dramatically, causing a loss on its investment. Generally, it is
expected that the Fund will hold foreign shares. The Fund will only purchase
local shares where foreign shares are not available for purchase. Where
permitted, the Fund will attempt to convert local shares to foreign shares
promptly.
A high proportion of the shares of many emerging market issuers may be held by
a limited number of persons and financial institutions. A limited number of
issuers may represent a disproportionately large percentage of market
capitalization and trading value and cause the securities markets to be
susceptible to influence by large investors trading significant blocks of
securities. 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. In addition, limited liquidity may impair
the Fund's ability to liquidate a position at the time and price it wishes to
do so. 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. Certain developing countries do not have a
comprehensive system of laws, although substantial changes have occurred in
this regard in recent years. Even where adequate law exists in certain
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.
In addition, stockbrokers and other intermediaries in emerging markets may not
perform as well as their counterparts in the United States and other more
developed securities markets. 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.
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
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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 the 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.
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 or Sub-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.
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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 a 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 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, and
similar investments (commonly referred to as derivatives) as a defensive
technique to protect the value of an asset the Adviser (or Sub-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 use 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 (or Sub-
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 (or Sub-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.
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 (or Sub-
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 (or Sub-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 (or Sub-Adviser).
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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.
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 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 or guarantees. The Fund may buy CMOs without
insurance or guarantees if, in the opinion of the Adviser or Sub-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 30% 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.
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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;
however, the Fund does not currently intend to invest more than 5% of its
total net assets in direct investments. For more information, see "Risk
Factors--Direct Investments" in the Statement of Additional Information.
TEMPORARY DEFENSIVE STRATEGIES
During periods of less favorable economic and/or market conditions, the Fund
may make substantial investments for temporary defensive purposes in
obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, time deposits, bankers' acceptances,
high grade commercial paper and repurchase agreements.
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. Except as
noted, these policies may not be changed without shareholder approval. The
following are some of the more significant investment limitations:
1. Worldwide Balanced 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 purchase more than 10% of any class of outstanding
voting securities of any issuer and the Fund will not invest more than
25% of the value of its total assets in securities of any one industry.
3. 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 Trust,
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 Balanced 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.
Derek S. van Eck--Portfolio Manager of Worldwide Balanced Fund. He is
responsible for managing the Fund's portfolio of investments. He is Director
of Global Investments and Executive Vice President of the Adviser and an
officer and/or portfolio manager of other mutual funds advised by the Adviser.
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Fiduciary International Inc. ("FII"), located at Two World Trade Center, New
York, New York 10048, is expected to serve as sub-investment adviser to the
Worldwide Balanced Fund pursuant to a Sub-Investment Advisory Agreement with
the Trust, when the Fund's assets reach a level at which it is appropriate to
utilize the sub-investment adviser's services. FII will then be expected to
manage the investment operations of the Worldwide Balanced Fund and furnish
the Fund with a continuous investment program including which securities
should be bought, sold or held. At that time, the Adviser would manage and
administer the business and affairs of the Fund. As compensation for its
services, FII will be paid a monthly fee at an annual rate of .50% of average
daily net assets by the Adviser from the advisory fee it receives from the
Fund. FII serves as an investment adviser to other registered investment
companies.
FII is an indirect subsidiary of Fiduciary Trust Company International
("FTCI"). FTCI is a New York State chartered bank specializing in investment
and administration of assets for pensions and other institutional accounts
including individuals and families. FII has access to all of FTCI's investment
infrastructure. FTCI began investing globally in the 1960's and serves its
worldwide investment management and custody clients from offices in New York,
Los Angeles, Miami, Washington, D.C., London, Geneva and Hong Kong. FTCI has
over 60 investment professionals. FTCI has over 30 years of experience in
global management with over $11 billion managed under the global balanced
discipline. As of December 31, 1996, total assets under management by FII, its
parent organization FTCI and its subsidiaries, on behalf of all clients,
amounted to over $33 billion.
FII is expected to assign a team of managers led by a global strategist, which
includes a global equity manager and a global fixed-income manager, to manage
the Fund's portfolio of investments. The team is expected to consult with the
FTCI research department, which includes international analysts who specialize
in the equity markets of Japan, Europe, the Pacific Basin and Latin America,
when making investment decisions. FII's two primary portfolio managers, who
are expected to serve the Worldwide Balanced Fund, are listed below:
Anne M. Tatlock--FII's Global Strategist of the Fund. Ms. Tatlock joined FTCI
in 1984 and is currently President of the company where she is responsible for
managing institutional investment management. Ms. Tatlock is head of the
Institutional Investment Department and a member of the Board of Directors,
the Global Investment Committee and the Investment Policy Committee at FTCI.
Steven J. Miller--FII's Portfolio Manager of the Fund. Mr. Miller joined FTCI
in 1994 after working for seven years with Vital Forsikring and Heller
Financial, Inc. Mr. Miller is responsible for managing institutional and
international portfolios. He is a Senior Vice President of FTCI as well as a
member of the Global Investment Committee and the Investment Policy Committee
at FTCI.
Worldwide Balanced Fund pays the Adviser a monthly fee at the annual rate of
.75 of 1% of average daily net assets. Van Eck Associates Corporation also
performs accounting and administrative services for the Fund and is paid a fee
at an annual rate of .25 of 1% of the Fund's average daily net assets. 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, industries and companies in many
different countries and stock and bond markets throughout the world) but are
comparable to the fees charged to other investment companies with similar
objectives for comparable services.
With respect to the Fund, the Adviser and/or Sub-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 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 March 31,
1997, total aggregate assets under the management of Van Eck Associates
Corporation were approximately $1.6 billion.
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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 Sub-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 or Sub-Adviser compensates Trustees of the Trust if such persons
are employees or affiliates of the Adviser or Sub-Adviser or their 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 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.
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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 fiscal year of the Fund previously ended on April
30; however, in August 1996 the Board of Trustees changed the Fund's fiscal
year to December 31 beginning with December 31, 1996.
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 has qualified and intends to continue 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.
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.
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<PAGE>
The Trustees of the Trust have authority to issue an unlimited number of
shares of beneficial interest of the Fund, $.001 par value. Currently, four
Funds of the Trust are being offered, which shares constitute the interests in
Worldwide Balanced Fund, Worldwide Bond Fund, Worldwide Emerging Markets Fund
and Worldwide Hard Assets Fund.
Worldwide Balanced 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. 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.
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
15
<PAGE>
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
Balanced Fund is rated in the "Balanced Funds" category. The Morgan Stanley
Capital International Indices and the Salomon Brothers World Government Bond
Index are two indices to which Worldwide Balanced Fund may be compared. 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 LLP, One Exchange Place, Boston, Massachusetts 02199,
serves as Counsel for the Trust.
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Van Eck Worldwide
Insurance Trust
- -------------------------------
Worldwide Balanced Fund
- -------------------------------
Shares of the Funds 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
Funds 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 one or
more Funds. In particular, certain Funds 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 Funds.
Van Eck Worldwide Insurance Trust
- ----------------------------------
99 Park Avenue, New York, NY 10016
[LOGO] VAN ECK GLOBAL
April 30, 1997
VAN ECK
WORLDWIDE
INSURANCE TRUST
PROSPECTUS
Worldwide Balanced Fund
. Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust. Van Eck
Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust . Van Eck
Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust . Van Eck
Worldwide Insurance Trust . Van Eck World wide Insurance Trust . Van Eck World
Insurance Trust. Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance
Trust . Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust .
Van Eck Worldwide Insurance Trust
[LOGO] VAN ECK GLOBAL
<PAGE>
PROSPECTUS April 30, 1997
VAN ECK WORLDWIDE BOND FUND
- -------------------------------------------------------------------------------
99 Park Avenue, New York, New York 10016
(212) 687-5200
- -------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company consisting of four separate funds. This Prospectus relates
only to Van Eck Worldwide Bond 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 BOND FUND--seeks high total return through a flexible policy of
investing globally, primarily in debt securities.
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.
---------------
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 April 30, 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.
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS PAGE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
The Trust................................................................... 3
Financial Highlights........................................................ 3
Investment Objectives and Policies of the Fund.............................. 4
Risk Factors................................................................ 5
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
</TABLE>
2
<PAGE>
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 Bond Fund is
classified as a non-diversified fund under the Investment Company Act of 1940,
as amended, (the "Act"). (See "Description of the Trust.")
FINANCIAL HIGHLIGHTS
The Financial Highlights below give selected information for a share of the
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Deloitte & Touche LLP, independent accountants,
for all years from commencement of operations through April 30, 1992. For all
other periods, the Financial Highlights presented have been audited by Coopers
& Lybrand L.L.P., independent accountants, whose reports thereon appear in the
Fund's Annual Reports, which are incorporated by reference into the Trust's
Statement of Additional Information. This information should be read in
conjunction with the financial statements and related notes that also appear
in the Fund's Annual Reports. The Annual Reports also contain additional
performance information and are available upon request and without charge.
<TABLE>
<CAPTION>
WORLDWIDE BOND FUND
-----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING FOR THE
THROUGHOUT EACH PERIOD EIGHT
MONTHS
ENDED YEAR ENDED APRIL 30,
DECEMBER 31, ----------------------------------------------------------------
1996 1996 1995 1994 1993 1992 1991 1990+
------------ -------- -------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 10.88 $ 11.46 $ 10.05 $ 10.62 $ 11.57 $ 10.82 $ 10.10 $10.00
-------- -------- -------- ------- ------- ------- ------- ------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income... 0.36 0.58 0.68(b) 0.63 0.81 0.62 1.03 0.26
Net Gains (Losses) on
Securities (both
realized and
unrealized)............ 0.17 (0.34) 0.77 (0.37) (0.75) 0.67 0.19 (0.16)
-------- -------- -------- ------- ------- ------- ------- ------
Total From Investment
Operations............. 0.53 0.24 1.45 0.26 0.06 1.29 1.22 0.10
-------- -------- -------- ------- ------- ------- ------- ------
LESS DISTRIBUTIONS:
Dividends from net
investment income...... (0.31) (0.82) (0.04) (0.72) (0.83) (0.53) (0.50) --
Distributions from
capital gains.......... -- -- -- (0.11) (0.18) (0.01) -- --
-------- -------- -------- ------- ------- ------- ------- ------
Total Distributions..... (0.31) (0.82) (0.04) (0.83) (1.01) (0.54) (0.50) 0.00
-------- -------- -------- ------- ------- ------- ------- ------
Net Asset Value, End of
Period................. $ 11.10 $ 10.88 $ 11.46 $ 10.05 $ 10.62 $ 11.57 $ 10.82 $10.10
======== ======== ======== ======= ======= ======= ======= ======
- -----------------------------------------------------------------------------------------------------------
Total Return(a)......... 4.98% 2.07% 14.51% 2.49% 0.38% 12.21% 12.37% 1.00%
- -----------------------------------------------------------------------------------------------------------
Ratios/Supplementary
Data:
Net Assets, End of
Period (000)........... $118,676 $107,541 $113,466 $80,908 $66,035 $40,930 $15,046 $2,237
Ratio of Gross Expenses
to Average Net Assets.. 1.17%* 1.10% 0.99% -- -- -- 1.14% 2.80%
Ratio of Net Expenses to
Average Net Assets..... 1.16%* 1.08% 0.98% 0.93% 1.01% 1.05% 0.50% --
Ratio of Net Income to
Average Net Assets..... 4.99%* 5.26% 6.24% 6.47% 8.47% 8.55% 9.75% 9.22%*
Portfolio Turnover Rate. 73.95% 208.05% 265.87% 37.59% 248.21% 231.34% 341.01% 12.23%*
</TABLE>
- -------
(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends and
distributions of capital gains at net asset value during the year and a
redemption on the last day of the period. Total returns for the periods of
less than one year were not annualized.
(b) Based on average shares outstanding.
* Annualized
+ From September 1, 1989 (commencement of operations) to April 30, 1990.
3
<PAGE>
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 BOND FUND
OBJECTIVE:
Worldwide Bond Fund seeks high total return through a flexible policy of
investing globally, primarily in debt securities.
POLICIES:
Total return is comprised of current income and capital appreciation. The Fund
attempts to achieve its investment objective by taking advantage of investment
opportunities throughout the world. The Fund may emphasize either component of
total return. Capital appreciation will result during times of declining
interest rates and, with respect to investing globally, as a result of foreign
currency fluctuations relative to a declining dollar. Normally, the Fund will
have at least 65% of its total assets invested in bonds of varying maturities.
The Adviser believes that diversification of assets on an international basis
may reduce the risk that events in any one country, including the United
States, may adversely affect the entire portfolio. However, there can be no
assurance that diversification of assets will reduce this risk. The Adviser
will determine the amount of the Fund's assets to be invested in corporate and
government securities based on its assessment of where opportunities for total
return are expected to be most attractive. When making this determination, the
Adviser will evaluate the political and economic risks of the principal
countries of the world, prospects for the relationship of their currencies to
the U.S. dollar, the outlook for their interest rates, credit quality and
other factors. The long-term assets of the Fund will consist of debt
securities rated B or better by Standard & Poor's Corporation ("S&P") or
Moody's Investors Service, Inc. ("Moody's") or if unrated, of comparable
quality in the judgment of the Adviser. Debt securities rated BBB (investment
grade), BB or B will not exceed 25% of total net assets. Debt rated BB or B is
lower quality debt (commonly referred to as "junk bonds"). Lower rated debt
may offer higher returns, but also presents a greater risk of default than do
higher rated securities. As to debt securities rated BBB, BB or B, it is the
Adviser's intention to invest only in debt issued by a government or one of
its agencies, instrumentalities, political subdivisions or authorities. For a
further discussion of debt securities see "Risk Factors."
During normal market conditions, the Fund expects to invest in debt
securities, such as obligations issued or guaranteed by a government or any of
its political subdivisions, agencies or instrumentalities, or by a
supranational organization chartered to promote economic development such as
the World Bank or European Economic Community, bonds, debentures, notes,
commercial paper, time deposits, certificates of deposit and repurchase
agreements, as well as debt obligations which may have a call on a common
stock or commodity by means of a conversion privilege or attached warrants.
The Fund may invest in debt instruments of the U.S. Government and its
agencies having varied maturities, consisting of obligations issued or
guaranteed as to both principal and interest by the U.S. Government or backed
by the "full faith and credit" of the United States. In addition to direct
obligations of the U.S. Treasury such as Treasury bonds, notes and bills,
these include securities issued or guaranteed by different agencies such as
the Federal Housing Administration, the Government National Mortgage
Association and the Small Business Administration.
The average maturity of the debt securities in the Fund's portfolio will be
based on the Adviser's judgment as to future interest rate changes. The
Adviser expects the average maturity to be between three and ten years. In
addition, when the Adviser determines that a temporary defensive strategy is
warranted, the Fund may invest in securities maturing in 13 months or less,
and most or all of its investments may be in the United States or another
country.
4
<PAGE>
The Fund may invest up to 5% of its assets at the time of purchase in
warrants. The Fund may invest up to 5% of its assets at the time of purchase
in preferred stocks and preferred stocks which may be convertible into common
stock. The Fund may invest in collateralized mortgage obligations. The Fund
may buy and sell financial futures contracts and options on financial futures
contracts and may write, purchase or sell puts and calls on foreign currencies
and securities. The Fund may invest in "when-issued" securities and securities
of foreign issuers. In addition, the Fund may lend its portfolio securities
and borrow money for investment purposes (i.e., leverage its portfolio). For a
further discussion of these investments, see "Risk Factors."
There is no limit on the amount the Fund may invest in any one country or in
securities denominated in the currency of any one country. Normally the Fund
will invest in three countries besides the United States. However, the Fund
may invest solely in the securities of one country such as the United States
when economic conditions warrant, such as an extreme undervaluation of the
currency and exceptionally high returns of that country's currency relative to
other currencies.
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 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.
The Fund may invest in South African issuers. Political and social conditions
in South Africa and its neighboring countries may pose certain risks to the
Fund's investments, and, under certain conditions, on the liquidity of the
Fund's portfolios and its ability to meet shareholder redemption requests. The
ability of the Fund to invest or hold its investments in South African
companies may be further affected by changes in United States or South African
laws or regulations.
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 equity and fixed income markets of developing
countries involves exposure to potentially unstable governments, economies
based on only a few industries and securities markets which trade a small
number of securities and may therefore at times be illiquid. Securities
markets of developing countries tend to be more volatile than the markets of
developed countries. Countries with developing markets may present the risk of
nationalization of
5
<PAGE>
businesses, restrictions on foreign ownership, or prohibitions of repatriation
of assets, and may have less protection of property rights than more developed
countries. The economies of countries with developing markets may be highly
vulnerable to changes in local or global trade conditions, and may suffer from
extreme and volatile debt burdens or inflation rates. 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. However, such markets have in the past provided the opportunity for
higher rates of return to investors. There is no assurance that these markets
will offer such opportunity in the future. The ability of the Fund to invest
or hold its investments in companies situated in developing countries may be
further affected by changes in United States or such countries' laws or
regulations.
Many of these emerging markets limit the percentage of their domestic issuers
that foreign investors, such as the Fund, may own by requiring that such
issuers issue two classes of shares--"local" and "foreign" shares. Foreign
shares may be held only by investors that are not considered nationals or
residents of that country and generally are convertible into local shares.
Local shares are intended for ownership by nationals or residents of the
country. Foreign shares may be subject to various restrictions, including
restrictions on the right to receive dividends and other distributions and on
the right to vote. The market for foreign shares is generally less liquid than
the market for local shares, although in most cases foreign shares may be
converted into local shares. In addition, foreign shares often trade at a
premium to local shares. If the Fund were to own local shares and could not
participate in a stock, warrant or other distribution, the Fund could suffer
material dilution of its interest in that issuer and the value of its holdings
could decline dramatically, causing a loss on its investment. Generally, it is
expected that the Fund will hold foreign shares. The Fund will only purchase
local shares where foreign shares are not available for purchase. Where
permitted, the Fund will attempt to convert local shares to foreign shares
promptly.
A high proportion of the shares of many emerging market issuers may be held by
a limited number of persons and financial institutions. A limited number of
issuers may represent a disproportionately large percentage of market
capitalization and trading value and cause the securities markets to be
susceptible to influence by large investors trading significant blocks of
securities. 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. In addition, limited liquidity may impair
the Fund's ability to liquidate a position at the time and price it wishes to
do so. 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. Certain developing countries do not have a
comprehensive system of laws, although substantial changes have occurred in
this regard in recent years. Even where adequate law exists in certain
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.
In addition, stockbrokers and other intermediaries in emerging markets may not
perform as well as their counterparts in the United States and other more
developed securities markets. 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.
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. See "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.
6
<PAGE>
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.
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. 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 a 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.
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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 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, 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 or put option. 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 use 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.
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
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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.
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
The 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 B by S&P and 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
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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. The Fund will not invest more than 25% of
its assets in debt securities rated below B by S&P and 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 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 or 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 30% 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.
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TEMPORARY DEFENSIVE STRATEGIES
During periods of less favorable economic and/or market conditions, the Fund
may make substantial investments for temporary defensive purposes in
obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, time deposits, bankers' acceptances,
high grade commercial paper and repurchase agreements.
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. Except as
noted, these policies may not be changed without shareholder approval. The
following are some of the more significant investment limitations:
1. Worldwide Bond Fund will not invest more than 10% 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 purchase more than 10% of any class of securities of
any issuer, including more than 10% of its outstanding voting
securities, and the Fund will not invest more than 25% of the value of
its total assets in securities of any one industry.
3. 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 Trust,
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 Bond 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.
Madis Senner--Portfolio Manager of Worldwide Bond Fund. He is responsible for
managing the Fund's portfolio of investments. Before joining Van Eck, Mr.
Senner was a global bond manager with Chase Manhattan Private Bank. Prior to
that, he was President of Sunray Securities, Inc., an investment management
firm that he founded, and, before that, he was a global fixed income manager
with Clemente Capital, Inc. in New York City. Mr. Senner has over 10 years
experience in the investment business.
Worldwide Bond Fund pays the Adviser a monthly fee at the annual rate of 1% of
the first $500 million of the average daily net assets of the Fund, .90 of 1%
of the next $250 million of the average daily net assets and .70 of 1% of the
average daily net assets in excess of $750 million. 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, industries and companies in many different
countries and stock and bond 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 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 March 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 fiscal year of the Fund previously ended on April
30; however, in August 1996 the Board of Trustees changed the Fund's fiscal
year to December 31 beginning with December 31, 1996.
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 has qualified and intends to continue 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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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, four
Funds of the Trust are being offered, which shares constitute the interests in
Worldwide Balanced Fund, Worldwide Bond Fund, Worldwide Emerging Markets Fund
and Worldwide Hard Assets Fund.
Worldwide Bond 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. 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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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.
Worldwide Bond Fund may advertise performance in terms of 30-day yield, which
is computed by dividing the net investment income per share earned during the
30 days by the offering price per share on the last day of the period. Yield
of the Fund is a function of the kind and quality of the instruments in the
Fund's portfolio, maturity, operating expenses and market conditions.
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
Bond Fund is rated in the "World Income Funds" category. The Morgan Stanley
Capital International Indices and the Salomon Brothers World Government Bond
Index are two indices to which Worldwide Bond Fund may be compared. 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 LLP, One Exchange Place, Boston, Massachusetts 02109,
serves as Counsel for the Trust.
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Van Eck Worldwide
Insurance Trust
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Worldwide Bond Fund
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Shares of the Funds 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
Funds 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 one or
more Funds. In particular, certain Funds 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 Funds.
Van Eck Worldwide Insurance Trust
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99 Park Avenue, New York, NY 10016
[LOGO] VAN ECK GLOBAL
April 30, 1997
VAN ECK
WORLDWIDE
INSURANCE TRUST
PROSPECTUS
Worldwide Bond Fund
. Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust. Van Eck
Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust . Van Eck
Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust . Van Eck
Worldwide Insurance Trust . Van Eck World wide Insurance Trust . Van Eck World
Insurance Trust. Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance
Trust . Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust .
Van Eck Worldwide Insurance Trust
[LOGO] VAN ECK GLOBAL
<PAGE>
PROSPECTUS_______________________________________________________April 30, 1997
VAN ECK WORLDWIDE HARD ASSETS FUND
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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 four separate funds. This Prospectus relates
only to Van Eck Worldwide Hard Assets 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 HARD ASSETS FUND (FORMERLY, GOLD AND NATURAL RESOURCES FUND)--seeks
long-term capital appreciation by investing globally, primarily in "Hard Asset
Securities." Income is a secondary consideration.
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.
---------------
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 April 30, 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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<PAGE>
TABLE OF CONTENTS PAGE
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<TABLE>
<S> <C>
The Trust................................................................... 3
Financial Highlights........................................................ 3
Investment Objectives and Policies of the Fund.............................. 4
Risk Factors................................................................ 6
Limiting Investment Risks................................................... 13
Management.................................................................. 13
How to Buy Shares........................................................... 15
Dividends and Distributions................................................. 15
How to Redeem Shares........................................................ 15
Federal Taxation............................................................ 16
Description of the Trust.................................................... 16
Additional Information...................................................... 17
</TABLE>
2
<PAGE>
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 Hard Assets Fund
is classified as a diversified fund under the Investment Company Act of 1940,
as amended, (the "Act"). (See "Description of the Trust.")
FINANCIAL HIGHLIGHTS
The Financial Highlights below give selected information for a share of the
Fund outstanding for the year or period indicated. The Financial Highlights
presented have been audited by Deloitte & Touche LLP, independent accountants,
for all years from commencement of operations through April 30, 1992. For all
other periods, the Financial Highlights presented have been audited by Coopers
& Lybrand L.L.P., independent accountants, whose reports thereon appear in the
Fund's Annual Reports, which are incorporated by reference into the Trust's
Statement of Additional Information. This information should be read in
conjunction with the financial statements and related notes that also appear
in the Fund's Annual Reports. The Annual Reports also contain additional
performance information and are available upon request and without charge.
<TABLE>
<CAPTION>
WORLDWIDE HARD ASSETS FUND
---------------------------------------------------------------------------
For a share outstanding throughout each period
FOR THE
EIGHT
MONTHS
ENDED YEAR ENDED APRIL 30,
DECEMBER 31, --------------------------------------------------------------
1996 1996 1995 1994 1993 1992 1991 1990+
------------ -------- -------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 16.92 $ 13.49 $ 13.11 $ 10.61 $ 8.25 $ 8.85 $ 9.51 $10.00
-------- -------- -------- ------- ------- ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income... 0.02 0.12 0.08 0.07 0.01 0.04 0.16 0.08
Net Gains (Losses) on
Securities (both
realized and
unrealized)............ 0.09 3.44 0.37 2.47 2.39 (0.53) (0.69) (0.57)
-------- -------- -------- ------- ------- ------ ------ ------
Total From Investment
Operations............. 0.11 3.56 0.45 2.54 2.40 (0.49) (0.53) (0.49)
-------- -------- -------- ------- ------- ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income...... (0.16) (0.13) (0.07) (0.04) (0.04) (0.11) (0.13) --
Dividends from net
realized gains......... (0.15) -- -- -- -- -- -- --
-------- -------- -------- ------- ------- ------ ------ ------
Total Distributions..... (0.31) (0.13) (0.07) (0.04) (0.04) (0.11) (0.13) 0.00
-------- -------- -------- ------- ------- ------ ------ ------
Net Asset Value, End of
Period................. $ 16.72 $ 16.92 $ 13.49 $ 13.11 $ 10.61 $ 8.25 $ 8.85 $ 9.51
======== ======== ======== ======= ======= ====== ====== ======
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Total Return(a)......... 0.60% 26.66% 3.43% 23.96% 29.19% (5.62%) (5.67%) (4.90%)
- ---------------------------------------------------------------------------------------------------------
Ratios/Supplementary
Data:
Net Assets, End of
Period (000)........... $167,417 $186,370 $127,320 $81,248 $30,896 $9,836 $6,936 $3,660
Ratio of Gross Expenses
to Average Net
Assets(b).............. 1.24%* 1.08% -- -- -- -- 1.21% 1.87%
Ratio of Net Expenses to
Average Net Assets..... 1.23%* 1.08% 0.96% 0.96% 1.61% 1.32% 0.52% --
Ratio of Net Income to
Average Net Assets..... .10%* 0.81% 0.71% 0.64% 0.25% 0.60% 2.10% 2.46%*
Portfolio Turnover Rate. 46.14% 26.37% 23.30% 15.84% 14.61% 0.48% 21.86% 5.09%*
Average Commission Rate
Paid(c)................ $.0305 $0.0310
</TABLE>
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(a) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of dividends at
net asset value during the period and a redemption on the last day of the
period. Total returns for the periods of less than one year were not
annualized.
(b) With respect to Worldwide Hard Assets Fund, as of September 29, 1995 the
effective rate of the Adviser's management fee is 1.0%. Prior to September
29, 1995, the effective rate of the management fee was 0.75%.
(c) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades in
which a commission is charged.
* Annualized
+ From September 1, 1989 (commencement of operations) to April 30, 1990.
3
<PAGE>
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 HARD ASSETS FUND (FORMERLY, GOLD AND NATURAL RESOURCES FUND)
OBJECTIVE:
The Fund seeks long-term capital appreciation by investing primarily in "Hard
Asset Securities." Income is a secondary consideration.
POLICIES:
The Adviser believes "Hard Asset Securities" (as defined below) offer an
opportunity to achieve long-term capital appreciation and to protect wealth
against eroding monetary values during periods of cyclical economic
expansions. Since the market action of Hard Asset Securities may move against
or independently of the market trend of industrial shares, the addition of
such securities to an overall portfolio may increase the return and reduce the
price fluctuations of such a portfolio. There can be no assurance that an
increased rate of return or a reduction in price fluctuations of a portfolio
will be achieved. An investment in the Fund's shares should be considered part
of an overall investment program rather than a complete investment program.
Hard Asset Securities include equity securities of "Hard Asset Companies" and
securities, including structured notes, whose value is linked to the price of
a Hard Asset commodity or a commodity index. See "Risk Factors--Indexed
Securities and Structured Notes." "Hard Asset Companies" includes companies
that are directly or indirectly (whether through supplier relationships,
servicing agreements or otherwise) engaged to a significant extent in the
exploration, development, production or distribution of one or more of the
following (together "Hard Assets"): (i) precious metals, (ii) ferrous and non-
ferrous metals, (iii) gas, petroleum, petrochemicals or other hydrocarbons,
(iv) forest products, (v) real estate and (vi) other basic non-agricultural
commodities.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in "Hard Asset Securities" and the Fund will invest at least 5% of its
assets in each of the first five sectors listed above. The Fund has a
fundamental policy of concentrating in such industries and may invest up to
50% of its assets in any one of the above sectors. Therefore, it may be
subject to greater risks and market fluctuations than other investment
companies with more diversified portfolios. Some of these risks include:
volatility of energy and basic materials prices; possible instability of the
supply of various Hard Assets; the risks generally associated with extraction
of natural resources; actions and changes in government which could affect the
production and marketing of Hard Assets; and Hard Asset Securities may also
experience greater price fluctuations than the relevant Hard Asset.
The Fund seeks investment opportunities worldwide. Under normal conditions,
the Fund will invest its assets in at least three countries including the
United States. There is no limitation or restriction on the amount of assets
to be invested in any one country, developed or underdeveloped. Global
investing involves economic and political considerations not typically
applicable to the U.S. markets. See "Risk Factors--Foreign Securities" and
"Risk Factors--Emerging Market Securities" below.
The Fund may invest in common stocks; preferred stocks (either convertible or
non-convertible); rights; warrants; direct equity interests in trusts,
partnerships, joint ventures and other incorporated entities or enterprises;
and special classes of shares available only to foreign persons in those
markets that restrict ownership of certain classes of equity to nationals or
residents of that country. Direct investments are generally considered
illiquid and will be aggregated with other illiquid investments for purposes
of the limitation on illiquid investments. The Fund may invest up to 10% of
its net assets, taken at market value at the time of investment, in precious
metals, whether in bullion or coins.
4
<PAGE>
The Fund may invest in derivatives, see "Risk Factors" below. Derivatives in
which the Fund may invest include futures contracts, forward contracts,
options, swaps and structured notes and other similar securities as may become
available in the market. The Fund may invest in indexed securities whose value
is linked to one or more currencies, interest rates, commodities, or financial
or commodity indices. An indexed security enables the investor to purchase a
note whose coupons and/or principal redemption are linked to the performance
of an underlying asset. Indexed securities may be publicly traded or may be
two-party contracts (such two-party agreements are structured notes). When the
Fund purchases a structured note it will make a payment of principal to the
counterparty. The Fund will purchase structured notes only from counterparties
rated A or better by S&P, Moody's or another nationally recognized statistical
rating organization. The Adviser will monitor the liquidity of structured
notes under the supervision of the Board of Trustees and structured notes
determined to be illiquid will be aggregated with other illiquid securities
and limited to 15% of the net assets of the Fund. Indexed securities may be
more volatile than the underlying instrument itself, and present many of the
same risks as investing in futures and options. Indexed securities are also
subject to credit risks associated with the issuer of the security with
respect to both principal and interest. In addition, the Fund may invest in
futures and forward contracts and options on precious metals and other Hard
Assets.
The Fund may invest up to 5% of its net assets in premiums for options on
equity securities and equity indexes and up to 5% of its net assets in
warrants, including options and warrants traded in over-the-counter markets.
Warrants received as dividends on securities held by the Fund and warrants
acquired in units or attached to securities are not included in this
restriction. The Fund may buy and sell financial futures contracts and options
in financial futures contracts. The Fund may purchase or sell puts and calls
on foreign currencies and securities; invest in "when-issued" securities,
"partly paid" securities (securities paid for over a period of time) and
securities of foreign issuers; and may lend its portfolio securities and
borrow money for investment purposes.
The Fund may invest up to 35% of its total assets in debt securities whose
value is not linked to the value of a Hard Asset or a Hard Asset Company and
in other securities of companies which are not Hard Asset Companies. Non-Hard
Asset debt securities include high grade, liquid debt securities of foreign
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.
The Adviser believes the Fund may offer a hedge against inflation,
particularly commodity price driven inflation. However, there is no assurance
that rising commodity (or other hard asset) prices will result in higher
earnings or share prices for the Hard Asset Companies in the Fund. Hard Asset
Company equities are affected by many factors, including movements in the
overall stock market. Inflation may cause a decline in the overall stock
market, including the stocks of Hard Asset Companies.
The assets of the Fund invested in fixed income securities, excluding fixed
income securities whose value is linked to the value of a Hard Asset and of
Hard Asset Companies, will consist of securities which are believed by the
Adviser to be high grade, that is rated A or better by Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's), Fitch-1 by
Fitch or Duff-1 by Duff & Phelps ("D&P") or if unrated, of comparable quality
in the judgment of the Adviser, subject to the supervision of the Board of
Trustees. The assets of the Fund invested in short-term instruments will
consist primarily of securities rated in the highest category (for example,
commercial paper rated "Prime-1" or "A-1" by Moody's and S&P, respectively) or
if unrated, in instruments that are determined to be of comparable quality in
the judgment of the Adviser, subject to the supervision of the Board of
Trustees, or are insured by foreign or U.S. governments, their agencies or
instrumentalities as to payment of principal and interest. The Fund may invest
up to 10% of its assets in asset-backed securities such as collateralized
mortgage obligations and other mortgage and non-mortgage asset-backed
securities. Asset-backed securities backed by Hard Assets and whose value is
expected to be linked to underlying Hard Assets are excluded from the 10%
limitation. See "Risk Factors--Debt Securities".
Although the Fund will not invest in real estate directly, it may invest up to
50% of its assets in equity securities of real estate investment trusts
("REIT's") and other real estate industry companies or companies with
substantial real estate investments. REITs are pooled investment vehicles
which invest primarily in income producing real estate or real estate related
loans or interests. REIT's and other real estate investments of the Fund are
subject to certain risks. See "Risk Factors--Real Estate Securities."
5
<PAGE>
The Fund may, for temporary defensive purposes, make substantial investments
in obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, bankers' acceptances, high grade
commercial paper and repurchase agreements.
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 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.
The Fund may invest in South African issuers. Political and social conditions
in South Africa and its neighboring countries may pose certain risks to the
Fund's investments, and, under certain conditions, on the liquidity of the
Fund's portfolios and its ability to meet shareholder redemption requests. The
ability of the Fund to invest or hold its investments in South African
companies may be further affected by changes in United States or South African
laws or regulations.
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 equity and fixed income markets of developing
countries involves exposure to potentially unstable governments, economies
based on only a few industries and securities markets which trade a small
number of securities and may therefore at times be illiquid. Securities
markets of developing countries tend to be more volatile than the markets of
developed countries. Countries with developing markets may present the risk of
nationalization of businesses, restrictions on foreign ownership, or
prohibitions of repatriation of assets, and may have less protection of
property rights than more developed countries. The economies of countries with
developing markets may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt burdens or
inflation rates. 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. However, such markets have
in the past provided the opportunity for higher rates of return to investors.
There is no assurance that these markets will offer such opportunity in the
future. The ability of the Fund to invest or hold its investments in companies
situated in developing countries may be further affected by changes in United
States or such countries' laws or regulations.
6
<PAGE>
Many of these emerging markets limit the percentage of their domestic issuers
that foreign investors, such as the Fund, may own by requiring that such
issuers issue two classes of shares--"local" and "foreign" shares. Foreign
shares may be held only by investors that are not considered nationals or
residents of that country and generally are convertible into local shares.
Local shares are intended for ownership by nationals or residents of the
country. Foreign shares may be subject to various restrictions, including
restrictions on the right to receive dividends and other distributions and on
the right to vote. The market for foreign shares is generally less liquid than
the market for local shares, although in most cases foreign shares may be
converted into local shares. In addition, foreign shares often trade at a
premium to local shares. If the Fund were to own local shares and could not
participate in a stock, warrant or other distribution, the Fund could suffer
material dilution of its interest in that issuer and the value of its holdings
could decline dramatically, causing a loss on its investment. Generally, it is
expected that the Fund will hold foreign shares. The Fund will only purchase
local shares where foreign shares are not available for purchase. Where
permitted, the Fund will attempt to convert local shares to foreign shares
promptly.
A high proportion of the shares of many emerging market issuers may be held by
a limited number of persons and financial institutions. A limited number of
issuers may represent a disproportionately large percentage of market
capitalization and trading value and cause the securities markets to be
susceptible to influence by large investors trading significant blocks of
securities. 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. In addition, limited liquidity may impair
the Fund's ability to liquidate a position at the time and price it wishes to
do so. 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. Certain developing countries do not have a
comprehensive system of laws, although substantial changes have occurred in
this regard in recent years. Even where adequate law exists in certain
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.
In addition, stockbrokers and other intermediaries in emerging markets may not
perform as well as their counterparts in the United States and other more
developed securities markets. 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.
PRECIOUS METALS
The Fund may invest in precious metal coins, which have no numismatic value,
and bullion. The value of such coins and bullion is based primarily on their
precious metal content. Since such investments do not generate any investment
income, the sole source of return from such investments would be from gains or
losses realized on their sale. The Fund incurs additional costs in storing
gold bullion and coins. These storage costs are generally higher than
custodial costs for securities. Although subject to substantial fluctuations
in value, management believes such investments could be beneficial to the
investment performance of the Fund and could be a potential hedge against
inflation, as well as an investment with possible growth potential. In
addition, at the appropriate time, investments in precious metal coins or
bullion could help to moderate fluctuations in the Fund's portfolio value, as
at times the prices of precious metals have tended not to fluctuate as widely
as shares of issuers engaged in the mining of such precious metals. In view of
the established world market for precious metals, the daily value of such
coins is readily ascertainable and their liquidity is assured. The Fund will
maintain its precious metal coins and bullion with Wilmington Trust Company.
Precious metal trading is a speculative activity and its markets at times
volatile. Prices of precious metals are affected by factors such as cyclical
economic conditions, political events and monetary policies of various
countries. Markets are, therefore, volatile at times and there may be sharp
fluctuations in prices, even during periods of rising prices. Under current
U.S. tax law, the Fund may not receive more than 10% of its yearly income from
gains resulting from the sale of precious metals or any other physical
commodity. The Fund may be required, therefore, to hold its precious metals or
sell them at a loss, or to sell its portfolio securities at a gain, when it
would not otherwise do so for investment reasons.
7
<PAGE>
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 the
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.
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 Fund may
also enter into other asset swaps. Asset swaps are similar to currency swaps
in that the performance of a Hard Asset (e.g., gold) may be "swapped" for
another (e.g., energy).
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 and Hard Assets values, 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. The Fund may also buy and sell commodity
futures contracts,
8
<PAGE>
which may include futures on natural resources and natural resource indices. 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.
The Fund may invest in commodity futures contracts and in options on commodity
futures contracts (collectively, "commodity interests"). Trading in commodity
interests involves numerous risks such as leverage, high volatility
illiquidity, governmental intervention designed to influence commodity prices
and the possibility of delivery of the commodity interests' underlying
commodities. In the event that the Fund is required to take delivery of a
commodity, such commodity will be deemed to be illiquid and the Fund will bear
the cost of storing the commodity until such commodity is sold and may incur
substantial costs in its disposition. The Fund will not use commodity futures
contracts for leveraging purposes in excess of applicable limitations.
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 and, in addition, the Fund may write, purchase or sell put and call
options on commodity 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 a 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. Certain exchanges do not permit
trading in particular commodities at prices in excess of daily price
fluctuation limits set by the exchange, and thus the Fund could be prevented
from liquidating its positions and thus be subjected to losses. 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 or gold bullion or coins 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.
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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 use 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.
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.
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SHORT SALES
The 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.
The 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 50% 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 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, the financial condition of each issuer and the value of a Hard
Asset if linked to the value of a Hard Asset. 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.
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LOW RATED OR UNRATED DEBT SECURITIES
The 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 CCC by S&P or Caa 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. The Fund will not invest more than 25% of its assets in debt
securities rated below BBB by S&P or Baa by Moody's.
REAL ESTATE SECURITIES
Although the Fund will not invest in real estate directly, it may invest up to
50% of its assets in equity securities of Real Estate Investment Trusts
("REITs") and other real estate industry companies or companies with
substantial real estate investments. The Fund is therefore subject to certain
risks associated with the real estate industry in general and REITs in
particular. REITs are subject to interest rate risk, 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. See "Real Estate Securities" in the Statement of Additional Information.
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 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 or 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.
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BORROWING
The Fund may borrow up to 30% 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;
however, the Fund does not currently intend to invest more than 5% of its
total net assets in direct investments. For more information, see "Risk
Factors--Direct Investments" in the Statement of Additional Information.
TEMPORARY DEFENSIVE STRATEGIES
During periods of less favorable economic and/or market conditions, the Fund
may make substantial investments for temporary defensive purposes in
obligations of the U.S. Government, debt obligations of one or more foreign
governments, certificates of deposit, time deposits, bankers' acceptances,
high grade commercial paper and repurchase agreements.
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. Except as
noted, these policies may not be changed without shareholder approval. The
following are some of the more significant investment limitations:
1. It is a non-fundamental policy (i.e., it may be changed by action of the
Board of Trustees) of Worldwide Hard Assets Fund that it will invest in
illiquid securities to the extent permitted at any time by the
Securities and Exchange Commission (currently 15% of total net assets).
2. The Fund will not purchase more than 10% of any class of securities of
any issuer, including more than 10% of its outstanding voting
securities.
3. 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 Trust,
see "Trustees and Officers" in the Statement of Additional Information.
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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 Hard Assets 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.
Derek S. van Eck--Portfolio Manager of Worldwide Hard Assets Fund. He is
responsible for managing the Fund's portfolio of investments. He is Director
of Global Investments and Executive Vice President of the Adviser and an
officer and/or portfolio manager of other mutual funds advised by the Adviser.
Worldwide Hard Assets Fund pays the Adviser a monthly fee at the annual rate
of 1% of the first $500 million of the average daily net assets of the Fund,
.90 of 1% of the next $250 million of the average daily net assets and .70 of
1% of the average daily net assets in excess of $750 million. 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, industries and companies in many
different countries and stock and bond markets throughout the world) but are
comparable to the fees charged to other investment companies with similar
objectives for comparable services.
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 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 March 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,
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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 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 fiscal year of the Fund previously ended on April
30; however, in August 1996 the Board of Trustees changed the Fund's fiscal
year to December 31 beginning with December 31, 1996.
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.
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FEDERAL TAXATION
The Fund has qualified and intends to continue 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.
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, four
Funds of the Trust are being offered, which shares constitute the interests in
Worldwide Balanced Fund, Worldwide Bond Fund, Worldwide Emerging Markets Fund
and Worldwide Hard Assets Fund, described herein.
Worldwide Hard Assets Fund is classified as a 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 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. On April 9, 1997, shareholders of Gold and Natural Resources Fund
approved changes in the Fund's investment objective, policies and restrictions
which, together with changes approved by the Board of Trustees, resulted in
the Worldwide Hard Assets Fund as described in this Prospectus. 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
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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.
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
Hard Assets Fund may be compared to indices such as the Ibbotson Hard Assets
Index, the Standard & Poor's 500 or Morgan Stanley natural resource indices.
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.
17
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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 LLP, One Exchange Place, Boston, Massachusetts 02109,
serves as Counsel for the Trust.
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Van Eck Worldwide
Insurance Trust
- -------------------------------
Worldwide Hard Assets Fund
- -------------------------------
Shares of the Funds 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
Funds 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 one or
more Funds. In particular, certain Funds 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 Funds.
Van Eck Worldwide Insurance Trust
- ----------------------------------
99 Park Avenue, New York, NY 10016
[LOGO] VAN ECK GLOBAL
April 30, 1997
VAN ECK
WORLDWIDE
INSURANCE TRUST
PROSPECTUS
Worldwide Hard Assets Fund
. Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust. Van Eck
Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust . Van Eck
Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust . Van Eck
Worldwide Insurance Trust . Van Eck World wide Insurance Trust . Van Eck World
Insurance Trust. Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance
Trust . Van Eck Worldwide Insurance Trust . Van Eck Worldwide Insurance Trust .
Van Eck Worldwide Insurance Trust
[LOGO] VAN ECK GLOBAL
