<PAGE>
Van Eck Global
Worldwide Insurance Trust
PROSPECTUS
May 1, 1999
[GRAPHIC]
Worldwide Bond Fund
These securities have not been approved or disapproved either by the Securities
and Exchange Commission (SEC) or by any State Securities Commission. Neither the
SEC nor any State Commission has endorsed the accuracy or adequacy of this
prospectus. Any claim to the contrary is against the law.
GLOBAL INVESTMENTS SINCE 1955
YOUR INVESTMENT DEALER IS:
For more detailed information, see the Statement of Additional Information
(SAI), which is incorporated by reference into this prospectus.
For free copies of SAIs, annual or semi-annual reports or other inquiries...
* Call Van Eck at 1-800-826-2333, or visit the Van Eck website at
www.vaneck.com.
* Go to the Public Reference Room of the Securities
and Exchange Commission.
* Call the SEC at 1-800-SEC-0330, or write to
them at the Public Reference Room, Washington,
D.C. 20549-6009, and ask them to send you a
copy. There is a duplicating fee for this service.
* Download documents from the SEC's website at
http://www.sec.gov
* The Fund's annual report includes a discussion of market conditions and
investment strategies that significantly affected the Fund's performance last
year.
Transfer Agent: DST Systems, Inc.
P.O. Box 418407
Kansas City, Missouri 64141
1-800-544-4653
SEC REGISTRATION NUMBER: 811-05083
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
I. WORLDWIDE BOND FUND 2
INCLUDES A PROFILE OF THE FUND, ITS INVESTMENT STYLE AND
PRINCIPAL RISKS; HISTORIC PERFORMANCE; PERFORMANCE MEASURED
AGAINST A RELEVANT BENCHMARK; HIGHEST AND LOWEST
PERFORMING QUARTERS; AND EXPENSES.
II. ADDITIONAL INVESTMENT STRATEGIES 5
OTHER INVESTMENTS, INVESTMENT POLICIES, INVESTMENT
TECHNIQUES AND RISKS.
III. HOW THE FUND IS MANAGED 12
MANAGEMENT OF THE FUND; FUND EXPENSES; TAXES; AND
SHAREHOLDER INQUIRIES.
IV. FINANCIAL HIGHLIGHTS 15
THE FINANCIAL HIGHLIGHTS TABLE WILL HELP YOU UNDERSTAND
THE FUND'S FINANCIAL PERFORMANCE FOR THE PAST FIVE YEARS,
OR FOR THE SHORTER LIFE OF THE FUND.
<PAGE>
- --------------------------------------------------------------------------------
I. Worldwide Bond Fund
- --------------------------------------------------------------------------------
OBJECTIVE
The Worldwide Bond Fund seeks high total return--income plus capital
appreciation--by investing globally, primarily in a variety of debt securities.
PRINCIPAL STRATEGIES
The Fund's long-term assets will consist of debt securities rated B or better by
Standard & Poor's (S&P) or Moody's Investor's Service (Moody's). The Fund may
also invest in unrated securities of comparable quality in the Adviser's
opinion. The Fund intends to invest no more than 25% of assets in lower-rated
debt ("junk bonds"), and then only in lower-rated debt issued by governments or
government agencies.
During normal economic conditions, the Fund intends to invest in debt issued by
domestic and foreign governments (and their agencies and subdivisions),
multinational entities like the World Bank, the Asian Development Bank, the
European Investment Bank, and the European Community. The Fund will also invest
in corporate bonds, debentures, notes, commercial paper, time deposits,
certiocates 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 Adviser expects the Fund's average maturity to range between three and 10
years. The Adviser seeks bonds with a high relative value. There is no limit on
the amount the Fund may invest in one country or in securities denominated in
one currency. Normally, the Fund will be invested in at least three countries
besides the United States.
PRINCIPAL RISKS
The Fund's share value will tend to fall when interest rates go up and to rise
when interest rates fall. Foreign investments may be subject to volatility from
political or economic factors or from changing currency values. An investment in
the Fund involves the risk of losing money. The Fund may engage in active and
frequent trading to achieve its investment objectives. The Fund may suffer
adverse tax consequences and increased transaction costs may affect performance.
The Fund may borrow up to 30% of its net assets to buy more securities. Long
term investment entails greater risk of loss than short term investments.
2 VAN ECK WORLDWIDE BOND FUND PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
Worldwide Bond Fund Performance
- --------------------------------------------------------------------------------
This chart shows the historic annual total return of Van Eck Worldwide Bond Fund
since Fund inception on 9/1/89. This information provides an indication of the
risks of investing in the Fund by showing the changes in the Fund from year to
year and by showing how the Fund's average annual return compares to a broad
based index. This chart describes past performance only, and should not be
understood as a prediction for future results. These returns do not reflect
charges at the separate account level and if those charges were reflected, the
returns would be lower.
During the period covered, the Fund's highest performing quarter (ended 3/31/95)
was 11.07%. The lowest performing quarter (ended 12/31/92) was -6.74%.
- --------------------------------------------------------------------------------
Worldwide Bond Fund
Annual Total Returns (%)
As of December 31, 1998
12.75 2.38 2.53 17.30 -1.32 7.79 -5.25 18.39 11.25
98 97 96 95 94 93 92 91 90
- --------------------------------------------------------------------------------
Fund and Index performance are shown with dividends reinvested. Past performance
does not guarantee or predict future results.
- --------------------------------------------------------------------------------
Worldwide Bond Fund
1-, 5-Year and Life-of-Fund Performance
Plus a Comparison to the SSB World Government Bond Index/*/
As of December 31, 1998
1 Year 5 Years Life-of-Fund
Fund 12.75% 6.50% 6.85%
Index 15.31% 7.85% 9.71%
- --------------------------------------------------------------------------------
/*/The Salomon Smith Barney (SSB) World Government Bond Index is a market
capitalization-weighted benchmark that tracks the performance of 18 world
government bond markets. Each has a total market capitalization of eligible
issues of at least US$20 billion and Euro15 billion. The issues are fixed rate,
greater than one-year maturity and subject to a minimum amount outstanding that
varies by local currency. Bonds must be sovereign debt issued in the domestic
market in local currency.
VAN ECK WORLDWIDE BOND FUND PROSPECTUS 3
<PAGE>
- --------------------------------------------------------------------------------
Worldwide Bond Fund Expenses
- --------------------------------------------------------------------------------
This table shows certain expenses you will incur as a Fund investor, either
directly or indirectly. The Adviser may sometimes waive fees and/or reimburse
certain expenses of the Fund.
- ----------------------------------------------------------------
Worldwide Bond Fund
Shareholder Transaction Expenses
Annual Fund Operating Expense (%of net assets)
Management/Administration Fees 1.00%
Other Expenses .15%
Total Fund Operating Expenses 1.15%
- ----------------------------------------------------------------
The adjacent table shows the expenses you would pay on a hypothetical $10,000
investment. The example presumes an average annual return of 5% with redemption
at the end of each time period. This illustration is hypothetical. For a real
investment, your actual expenses may be higher or lower than those shown.
- ----------------------------------------------------------------
Expense Example
What a $10,000 investment would actually cost
1 year $ 117
3 year $ 365
5 year $ 633
10 year $1,398
- ----------------------------------------------------------------
4 VAN ECK WORLDWIDE BOND FUND PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
II. Additional Investment Strategies
- --------------------------------------------------------------------------------
OTHER INVESTMENTS, INVESTMENT POLICIES, INVESTMENT
TECHNIQUES AND RISKS.
MARKET RISK
An investment in the Fund involves "market risk"--the risk that securities
prices may go up or down.
OTHER INVESTMENT TECHNIQUES AND RISK
ASSET-BACKED SECURITIES
Definition Represent pools of consumer loans unrelated to mortgages.
Risk Principal and interest payments depend on payment of the
underlying loans, though issuers may support
creditworthiness via letters of credit or other instruments.
BORROWING
Definition Borrowing to invest more is called "leverage." The Fund may
borrow up to 30% of its net assets to buy more securities.
The Fund must maintain assets equal to 300% of its
borrowings, and must sell securities to maintain that
margin, even if the sale hurts the Fund's investment
positions.
Risk Leverage exaggerates the effect of rises or falls in prices
of securities bought with borrowed money. Borrowing also
costs money, including fees and interest. The Fund expects
only to borrow via negotiated loan agreements with
commercial banks or other institutional lenders.
VAN ECK WORLDWIDE BOND FUND PROSPECTUS 5
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOs)
Definition Asset-backed securities backed by pools of mortgages. CMOs are
fixed-income securities, rated by agencies like other fixed-
income securities. The Fund invests in CMOs rated A or better by
S&P and Moody's. CMOs "pass through" payments made by individual
mortgage holders.
Risk Mortgage holders often refinance when interest rates fall;
reinvestment of prepayments at lower rates can reduce the yield
of the CMO. Issuers of CMOs may support interest and principal
payments with insurance or guarantees. The Fund may buy
uninsured or non-guaranteed CMOs equal in creditworthiness to
insured or guaranteed CMOs.
DEBT SECURITIES
Definition Debt securities are usually thought of as bonds, but debt may be
issued in other forms of debentures or obligations. When an
issuer sells debt securities, it sells them for a certain price,
and for a certain term. Over the term of the security, the
issuer promises to pay the buyer a certain rate of interest,
then to repay the principal at maturity. Debt securities are
also bought and sold in the "secondary market" -- that is, they
are traded by people other than their original issuers.
Risk The market value of debt securities tends to go up when interest
rates fall, and go down when the rates rise. Debt securities
come in different qualities, as established by ratings agencies
such as S&P or Moody's. Any debt security may default (fail to
pay interest) or fail (fail to repay principal at maturity).
Low-quality issues are considered more likely to default or fail
than high-quality issues. Some debt securities are unrated.
Their likely performance has to be evaluated by a Fund Adviser.
6 VAN ECK WORLDWIDE BOND FUND PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DEFENSIVE INVESTING
Definition A deliberate, temporary shift in portfolio strategy which may be
undertaken when markets start behaving in volatile or unusual
ways. A Fund may, for temporary defensive purposes, invest a
substantial part of its assets in bonds of U.S. or foreign
governments, certificates of deposit, bankers' acceptances, high
grade commercial paper, and repurchase agreements. At such
times, a Fund may have all of its assets invested in a single
country or currency.
Risk Opportunity cost -- i.e., when a Fund has invested defensively
in low risk, low return securities. It may not achieve its
investment objectives.
DERIVATIVES
Definition A derivative is a security that derives its present value from
the current value of another security. It can also derive its
value from a commodity, a currency, or a securities index. The
Fund uses derivatives, either on their own, or in combination
with other derivatives, to offset other investments with the aim
of reducing risk--called "hedging." The Fund also invests in
derivatives for their investment value.
Kinds of derivatives include (but are not limited to): forward
contracts, futures contracts, options and swaps. The Fund will
not commit more than 5% of its assets to initial margin deposits
on futures contracts and premiums on options for futures
contracts (leverage). Hedging, as defined by the Commodity
Exchange Act, is excluded from this 5% limit.
Risk Derivatives bear special risks, by their very nature. First, the
Fund Advisers must correctly predict the price movements, during
the life of a derivative, of the underlying asset in order to
realize the desired results from the investment. Then price
swings of an underlying security tend to be magnified in the
price swing of its derivative. If a Fund invests in a derivative
with "leverage" (by borrowing), an unanticipated price move
might result in the Fund losing more than its original
investment.
For a complete discussion of the kinds of derivatives the Fund
uses, and of their risks, please see the SAI.
VAN ECK WORLDWIDE BOND FUND PROSPECTUS 7
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fund Policies:
Basic Risk Management
Rules
1.Illiquid securities rules: Worldwide Bond Fund will not invest more than 10%
of its assets in illiquid securities, included repurchase agreements which
mature in more than seven days and in over-the-counter foreign currency options.
2.Concentration and diversification rules: The Fund is not allowed to buy more
than 10% of any class of securities of any single issuer. That includes
outstanding voting securities.
3. Other investment companies: The Fund will not invest more than 10% of its
assets in securities of other investment companies.
EMERGING MARKETS SECURITIES
Definition Securities of companies which are primarily in developing
countries. (See "Foreign Securities," below, for basic
information on foreign investing risks.)
Risk Investments in emerging markets securities are exposed to a
number of risks that may make these investments volatile in
price, or difficult to trade. Political risks may include
unstable governments, nationalization, restrictions on foreign
ownership, laws that prevent investors from getting their money
out of a country and legal systems that do not protect property
rights as well as the laws of the U.S. Market risks may include
economies that only concentrate in a few industries, securities
issues that are held by a few investors, limited trading
capacity in local exchanges, and the possibility that markets or
issues may be manipulated by foreign nationals who have inside
information.
FOREIGN CURRENCY TRANSACTIONS
Definition The money issued by foreign governments; the contracts involved
in buying and selling foreign money in order to buy and sell
foreign securities denominated in that money.
Risk Foreign currencies shift in value against U.S. currency. These
relative price swings can make the return on an investment go up
or down, entirely apart from the quality or performance of the
investment itself. The Fund enters into various hedging
contracts to buy and sell foreign currency, including futures
contracts (see "Derivatives," above).
8 VAN ECK WORLDWIDE BOND FUND PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOREIGN SECURITIES
Definition Securities issued by foreign companies, traded in foreign
currencies, or issued by companies with most of their business
interests in foreign countries.
Risk Foreign investing involves greater risks than investing in U.S.
securities. These risks include: 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. Foreign accounting can be different--and
less revealing--than American accounting practice. Foreign
regulation of stock exchanges may be inadequate or irregular.
Some of these risks may be reduced when the Fund invests
indirectly in foreign issues via 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. These vehicles are traded on larger,
recognized exchanges and in stronger, more recognized
currencies.
Russia: The Fund invests only in those Russian companies whose
registrars have contracted to allow the Fund's Russian sub-
custodian to inspect share registers and to obtain extracts of
share registers through regular audits. These procedures may
reduce the risk of loss, but there can be no assurance that they
will be effective.
INDEXED COMMERCIAL PAPER
Definition The Fund, for hedging purposes only, invests in commercial paper
with the principal amount indexed to the difference, up or down,
in value between two foreign currencies. The Fund segregates
asset accounts with an equivalent amount of cash, U.S.
government securities, or other highly liquid securities equal
in value to this commercial paper.
VAN ECK WORLDWIDE BOND FUND PROSPECTUS 9
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Risk Principal may be lost, but the potential for gains in principal
and interest may help the Fund cushion against the potential
decline of the U.S. dollar value of foreign-denominated
investments. At the same time, this commercial paper provides an
attractive money market rate of return.
LOANS OF PORTFOLIO SECURITIES
Definition The Fund may lend its securities, up to one-third of the value
of its portfolio, to broker/dealers. Broker/dealers must
collateralize (secure) these borrowings in full with cash, U.S.
Government securities, or high-quality letters of credit.
Risk If a broker/dealer breaches its agreement either to pay for the
loan, to pay for the securities, or to return the securities,
the Fund may lose money.
LOW RATED DEBT SECURITIES
Definition Debt securities, foreign and domestic, rated "below investment
grade" by ratings services.
Risk These securities are also called "junk bonds." In the market,
they can behave somewhat like stocks, with prices that can swing
widely in response to the health of their issuers and to changes
in interest rates. By definition, they involve more risk of
default than do higher-rated issues.
PARTLY-PAID SECURITIES
Definition Securities paid for on an installment basis. A partly-paid
security trades net of outstanding installment payments. The
buyer "takes over payments," as it were.
Risk The buyer's rights are typically restricted until the security
is fully paid. If the value of a partly-paid security declines
before a Fund finishes paying for it, the Fund will still owe
the payments, but may find it hard to sell.
10 VAN ECK WORLDWIDE BOND FUND PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
Definition In a repurchase agreement, a Fund acquires a security for a
short time while agreeing to sell it back at a designated price
and time. The agreement creates a fixed rate of return not
subject to market fluctuations. The Funds enter into these
agreements generally with member banks of the Federal Reserve
System or certain non-bank dealers; these counterparties
collateralize the transaction.
Risk There is a risk of a counterparty defaulting on a "repo," but it
is generally small.
WHEN-ISSUED DEBT SECURITIES
Definition Debt securities issued at a fixed price and interest rate, but
delivered and paid for some time later.
Risk Principal and interest of a when-issued security may vary during
the waiting period so that its value, when the Fund takes
possession of it, may be different than when the Fund committed
to buy it. The Funds maintains reserves of cash or high quality
securities to offset purchases of when-issued securities.
Year 2000
The Fund could be adversely affected if the Adviser's computer system or the
systems of other service providers do not properly process and calculate
date-related information from and after January 1, 2000. This is commonly known
as the "Year 2000 Problem." The Adviser is taking steps that it believes are
reasonably designed to address the problem in its own computers and to obtain
assurances that comparable steps are being taken by its service providers.
However, there can be no assurance that these steps will avoid any adverse
impact on the Fund's performance. In addition, the Fund is subject to the Year
2000 problems with its foreign and domestic portfolio securities and markets.
VAN ECK WORLDWIDE BOND FUND PROSPECTUS 11
<PAGE>
- --------------------------------------------------------------------------------
III. How The Fund Is Managed
- --------------------------------------------------------------------------------
FUND MANAGEMENT, INCLUDING A DESCRIPTION OF THE ADVISER, THE PORTFOLIO
MANAGERS, THE CUSTODIAN, AND THE TRANSFER AGENT. HOW THE FUND SELLS
SHARES TO INSURANCE COMPANY SEPARATE ACCOUNTS. FUND EXPENSES AND TAX
TREATMENT OF THE FUND.
1. MANAGEMENT OF THE FUND
DISTRIBUTOR
Van Eck Securities Corporation,99 Park Avenue, New York, NY 10016 (the
"Distributor"), a wholly-owned subsidiary of Van Eck Associates Corporation, has
entered into a Distribution Agreement with the Trust. The Distributor receives
no compensation for share sales of the Fund. In addition, the Distributor may,
from time to time, pay additional cash compensation or other promotional
incentives to authorized dealers or agents that sell shares of the Fund. In some
instances, such cash compensation or other incentives may be offered only to
certain dealers or agents who employ registered representatives who have sold or
may sell significant amounts of shares of the Fund and/or the other Van Eck
Worldwide Insurance Trust Funds managed by the Adviser during a specified period
of time.
INVESTMENT ADVISER
Van Eck Associates Corporation,99 Park Avenue, New York, NY 10016 (the
"Adviser") serves as investment adviser to the Fund. Van Eck has been an
investment adviser since 1955 and also acts as adviser or sub-adviser to other
mutual funds registered with the SEC as well as managing and advising other
accounts and pension plans.
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. As of March 31,
1999, total aggregate assets under the management of the Adviser were
approximately $1.1 billion.
THE ADVISER, THE FUND, AND INSURANCE COMPANY SEPARATE ACCOUNTS
The Fund sells shares to various insurance company variable annuity and variable
life insurance separate accounts as a funding vehicle for those accounts. The
Fund does not foresee any disadvantages to shareholders from their offering the
Fund to various companies. However, the Board of Trustees will monitor any
potential conflicts of interest. If conflicts arise, the Board may require an
insurance company to withdraw its investments in one Fund, and place them in
another. This might force a Fund to sell securities at a disadvantageous price.
The Board of Trustees may refuse to sell shares of a Fund to any separate
accounts. It may also suspend or terminate the offering of shares of a Fund if
required to do so by law or regulatory authority, or if such an action is in the
best interests of Fund shareholders.
FEES PAID TO THE ADVISER
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, and .70 of the assets in excess of $750 million.
12 VAN ECK WORLDWIDE BOND FUND PROSPECTUS
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
Charles Cameron, Gregory Krenzer Mr. Cameron serves as chief trader for the
Adviser, and is an officer of the Trust and of another of the Adviser's mutual
funds. Mr. Cameron joined Van Eck in 1995, and has 15 years of experience in
trading and investing. Mr. Krenzer serves as a research analyst for the Adviser
specializing in global fixed income securities and is the co-portfolio manager
of the Worldwide Bond Fund series of Van Eck Worldwide Insurance Trust. He
joined Van Eck in 1993 and has 6 years of experience in the investment business.
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 started operations
on September 7, 1989. On April 12, 1995, Van Eck Investment Trust changed its
name to Van Eck Worldwide Insurance Trust.
THE CUSTODIAN
Chase Manhattan Bank,
Chase Metrotech Center
Brooklyn, New York 11245
THE TRANSFER AGENT
The Trust, 99 Park Avenue
New York, New York 10016
acts as its own transfer agent.
INDEPENDENT ACCOUNTANTS
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
COUNSEL
Goodwin, Procter & Hoar LLP
One Exchange Place
Boston, Massachusetts 02109
VAN ECK WORLDWIDE BOND FUND PROSPECTUS 13
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. FUND EXPENSES
The Fund bears all expenses of its own operations, other than those incurred by
the Adviser or its affiliate under its Advisory Agreement with the Trust. The
Adviser paid organizational expenses for the Fund at its inception; these fees
are being reimbursed to the Adviser by the Fund over sixty equal monthly
installments. The Adviser may, from time to time, 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.
3. TAXES
The Fund qualifies, and intends to continue to qualify, as a "regulated
investment company" under the Internal Revenue Code (the Code). As such, the
Fund will not pay federal income tax to the extent that it distributes its
income and capital gains.
The Code requires funds used by insurance company variable annuity and life
insurance contracts to be adequately diversified, because annuities and life
insurance enjoy special tax privileges. The Fund intends to invest so as to
qualify for this proviso.
Tax matters for insurance contract holders are described in the Contract
prospectus.
4. HOW THE FUND SHARES ARE PRICED
Shares are bought or sold at net asset value. When an order is received at the
Fund before 4:00 p.m. Eastern time on any day when the New York Stock Exchange
is open for business, the trade will be effective that day. When an order is
received after 4:00 p.m. the trade will be effective at the net asset values
which are calculated on the next business day. The Fund is only priced on days
when the New York Stock Exchange is open. The Fund has shares which trade on
foreign exchanges and the net asset value of the Fund may change on days that
shareholders are unable able to purchase or sell their shares.
5. SHAREHOLDER INQUIRIES
For further information about the Fund, please call or write your insurance
company, or call (800) 221-2220 (in New York, (212) 687-5200), or write to the
Fund at the address on the cover page.
14 VAN ECK WORLDWIDE BOND FUND PROSPECTUS
<PAGE>
FINANCIAL HIGHLIGHTS
IV. Financial Highlights
The financial highlights table will help you understand a Fund's
financial performance for the past five years, or for a shorter
period if the Fund is newer. Some parts of the table show
financial results for a single Fund share. The "total return" line
on the table shows the rate an investor would have earned or lost
on an investment in the Fund, assuming reinvestment of all
dividends and distributions. This information has been audited by
PricewaterhouseCoopers LLP whose report, along with the Fund's
financial statements, is included in the annual report
incorporated by reference (available on request).
VAN ECK WORLDWIDE BOND FUND
Financial Highlights
For a share outstanding throughout each period
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED DEC. 31, EIGHT MONTHS YEAR ENDED APR. 30,
ENDED DEC. 31
1998 1997 1996 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.99 $11.10 $10.88 $11.46 $10.05 $10.62
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.57 0.48 0.36 0.58 0.68(*) 0.63
Net Gains (Loss) on Investments
(both realized and unrealized) 0.82 (0.23) 0.17 (0.34) 0.77 (0.37)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.39 0.25 0.53 0.24 1.45 0.26
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS
Dividends from Net
Investment Income (0.10) (0.36) (0.31) (0.82) (0.04) (0.72)
Distributions from
Capital Gains -- -- -- -- -- (0.11)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Dividends and Distribution (0.10) (0.36) (0.31) (0.82) (0.04) (0.83)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period 12.28 $10.99 $11.10 $10.88 $11.46 $10.05
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 12.75% 2.38% 4.98% 2.07% 14.51% 2.49%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA
Net Assets, End of Period (000) $119,283 $112,461 $118,676 $107,541 $113,466 $ 80,908
Ratios of Gross Expenses
to Average Net Assets (b) 1.15% 1.12% 1.17% (b) 1.10% 0.99% --
Ratio of Net Expenses
to Average Net Assets 1.15% 1.12% 1.16% (b) 1.08% 0.98% 0.93%
Ratio of Net Investment Income
to Average Net Assets 4.72% 4.31% 4.99% (b) 5.26% 6.24% 6.47%
Portfolio Turnover Rate 30.59% 135.36% 73.95% 208.05% 265.87% 37.59%
</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 at net asset value during the period and a redemption on the last
day of the period. Total return for periods of less than one year is not
annualized.
(b) Annualized.
(*) Based on average shares outstanding.
VAN ECK WORLDWIDE BOND FUND PROSPECTUS 15
<PAGE>
VAN ECK WORLDWIDE INSURANCE TRUST
99 PARK AVENUE, NEW YORK, N.Y. 10016
(212) 687-5200
Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company currently consisting of four separate series: Worldwide Bond
Fund, Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund and Worldwide
Real Estate Fund (the "Funds"). Shares of the Funds are offered only to
separate accounts of various insurance companies to fund the benefits of
variable life insurance and variable annuity policies ("Contracts"). Each Fund
has specific investment objectives.
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information.......................................................................................... 2
Investment Objectives and Policies........................................................................... 2
Risk Factors................................................................................................. 7
Asset Backed Securities.................................................................................. 7
Borrowing................................................................................................ 7
Collateralized Mortgage Obligation ...................................................................... 8
Foreign Securities....................................................................................... 8
Emerging Markets Securities.............................................................................. 10
Foreign Currency Transactions............................................................................ 10
Futures and Options Transactions......................................................................... 12
Repurchase Agreements.................................................................................... 14
Mortgage-Backed Securities............................................................................... 14
Real Estate Securities................................................................................... 14
Commercial Paper......................................................................................... 15
Debt Securities.......................................................................................... 15
Derivatives.............................................................................................. 16
Short Sales.............................................................................................. 17
Direct Investments....................................................................................... 17
Loan on Portfolio Securities............................................................................. 18
Precious Metals.......................................................................................... 18
Investment Restrictions...................................................................................... 18
Investment Advisory Services................................................................................. 21
The Distributor.............................................................................................. 23
Portfolio Transactions and Brokerage......................................................................... 23
Trustees and Officers........................................................................................ 25
Principal Shareholders....................................................................................... 29
Purchase of Shares........................................................................................... 29
Valuation of Shares.......................................................................................... 30
Taxes........................................................................................................ 30
Redemptions in Kind.......................................................................................... 31
Performance.................................................................................................. 31
Description of the Trust..................................................................................... 33
Additional Information....................................................................................... 34
Financial Statements......................................................................................... 34
Appendix..................................................................................................... 35
</TABLE>
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Trust's current Prospectus, dated May 1, 1999 (the
"Prospectus"), which is available at no charge upon written or telephone request
to the Trust at the address or telephone number set forth at the top of this
page.
Shareholders are advised to read and retain this Statement
of Additional Information for future reference
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1999
<PAGE>
GENERAL INFORMATION
Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company organized as a "business trust" under the laws of the
Commonwealth of Massachusetts on January 7, 1987 as Van Eck Variable Insurance
Products Trust. The Board of Trustees has authority to create additional series
or funds, each of which may issue a separate class of shares. There are
currently four series of the Trust: Worldwide Bond Fund, Worldwide Emerging
Markets Fund, Worldwide Hard Assets Fund and Worldwide Real Estate Fund (the
"Funds"). Worldwide Emerging Markets Fund and Worldwide Hard Assets Fund are
classified as diversified funds and Worldwide Bond Fund and Worldwide Real
Estate Fund are classified as non-diversified funds under the Investment Company
Act of 1940, as amended (the "1940 Act").
INVESTMENT OBJECTIVES AND POLICIES
WORLDWIDE BOND FUND
Worldwide Bond Fund seeks high total return through a flexible policy of
investing globally, primarily in debt securities.
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 Association.
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. 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.
Total return is comprised of current income and capital appreciation. The Fund
attempts to achieve its objective by taking advantage of investment
opportunities in the United States as well as in other countries throughout the
world where opportunities may be more rewarding and may emphasize either
component of total return. Normally, the Fund will have at least 65% of its
total assets invested in bonds of varying maturities.
The Fund may invest in any type of security including, but not limited to,
common stocks and equivalents (such as convertible debt securities and
warrants), preferred stocks and bonds and debt obligations of domestic and
foreign companies, governments (including their political subdivisions) and
international organizations. The Fund may buy and sell financial futures
contracts and options on financial futures contracts, which may include bond and
stock index futures contracts and foreign currency futures contracts. The Fund
may write, purchase or sell put or call options on securities and foreign
currencies.
2
<PAGE>
In addition, the Fund may lend its portfolio securities and borrow money for
investment purposes (i.e. leverage its portfolio).
The Fund may invest in "when-issued" securities and collateralized mortgage
obligations. The Appendix to this Statement of Additional Information contains
an explanation of the rating categories of Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Corporation ("S&P") relating to the fixed-
income securities and preferred stocks in which the Fund may invest, including a
description of the risks associated with each category.
In addition, the Fund may invest solely in the securities of one country such as
the United States when economic conditions warrants, such as an extreme
undervaluation of the currency and exceptionally high returns of that country's
currency relative to other currencies. 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.
WORLDWIDE EMERGING MARKETS FUND
Worldwide Emerging Markets Fund seeks long-term capital appreciation by
investing primarily in equity securities in emerging markets around the world.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in Emerging Country and emerging market equity securities. An
"emerging market" or "Emerging Country" is any country that the World Bank, the
International Finance Corporation or 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, Africa and Eastern Europe. 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 Fund considers emerging market securities to include securities which are
(i) principally traded in the capital markets of an emerging market country;
(ii) securities of companies that derive at least 50% of their total revenues
from either goods produced or services performed in Emerging Countries or from
sales made in Emerging Countries, regardless of where the securities of such
companies are principally traded; (iii) securities of companies organized under
the laws of, and with a principal office in an Emerging Country; (iv) securities
of investment companies (such as country funds) that principally invest in
emerging market securities; and (v) 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.
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. Such investments may involve the
payment of premiums above the net asset value of the companies' portfolio
securities; are subject to limitations under the Act and the Internal Revenue
code; are constrained by market availability; and would have the Fund bearing
its ratable share of that investment company's expenses, including its advisory
and administration fees. The Fund's investment adviser has agreed to waive its
management fee 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 any investments in
shares of closed-end investment companies.
3
<PAGE>
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.
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 governments,
agencies or instrumentalities, central banks or private issuers.
The Fund may 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 Duff & Phelps
("D&P"), or if unrated, will be of comparable high quality as determined by the
Adviser.
WORLDWIDE HARD ASSETS FUND
(Formerly, Gold and Natural Resources Fund)
The Fund will, under normal market conditions, invest at least 65% of its total
assets in "Hard Asset Securities." Hard Assets Securities include equity
securities of "Hard Asset Companies" and securities, including structured notes,
whose value is linked to the price of a commodity or a commodity index. The
term "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: (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 which, historically, have been produced and marketed
profitably during periods of significant inflation. Under normal market
conditions, 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 up to 50% of the Fund's assets may be invested 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
greater price
4
<PAGE>
fluctuations that may be experienced by Hard Asset Securities than the
underlying Hard Asset. Precious metal and natural resource securities are at
times volatile and there may be sharp fluctuations in prices even during periods
of rising prices. 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. Hard Asset Securities are affected by many factors, including
movement in the stock market. Inflation may cause a decline in the market,
include Hard Asset Securities. An investment in the Fund's shares should be
considered part of an overall investment program rather than a complete
investment program.
The Fund may invest in equity securities. Equity securities include common and
preferred stocks; equity and equity index swap agreements; direct equity
interests in trusts, partnerships, joint ventures and other unincorporated
entities or enterprises; special classes of shares available only to foreign
persons in such markets that restrict the ownership of certain classes of equity
to nationals or residents of the country; convertible preferred stocks and
convertible debt instruments. The Fund may also invest in fixed-income
securities which include obligations issued or guaranteed by a government or any
political subdivisions, agencies, instrumentalities, or by a supranational
organization such as the World Bank or European Economic Community (or other
organizations which are chartered to promote economic development and are
supported by various governments and government entities), adjustable-rate
preferred stock, interest rate swaps, corporate bonds, debentures, notes,
commercial paper, certificates of deposit, time deposits, repurchase agreements,
and 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.
High grade debt securities are those that are rated A or better by S&P or
Moody's, Fitch-1 by Fitch or Duff-1 by Duff and 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 determed 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 purchase securities, including structured notes, whose value is
linked to the price of a commodity or a commodity index. When the Fund
purchases a structured note (a non-publicly traded indexed security entered into
directly between two parties) 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. The Fund may purchase and sell financial futures and commodity
futures contracts and may also write, purchase or sell put or call options on
securities, foreign currencies, commodities and commodity indices. The Fund may
invest in asset-backed securities such as collateralized mortgage obligations
and other mortgage and non-mortgage asset-backed securities. The Fund may also
lend its portfolio securities and borrow money for investment purposes (i.e.
leverage its portfolio).
5
<PAGE>
The Fund may also invest in "when-issued" securities and "partly paid"
securities. The Appendix to this Statement of Additional Information contains
an explanation of the rating categories of Moody's and S&P relating to the
fixed-income securities and preferred stocks in which the Funds may invest,
including a description of the risks associated with each category. 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. REITs are pooled investment vehicles whose assets generally
consist primarily of interest in real estate and real estate loans. REITs and
other real estate investments of the Fund are subject to certain risks. The
Fund may therefore be subject to certain risks associated with direct ownership
of real estate and with the real estate industry in general.
The Fund may invest up to 10% of its assets in asset-backed securities such as
collaterilized mortgage obligation sand 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.
WORLDWIDE REAL ESTATE FUND
Worldwide Real Estate Fund seeks to maximize total return by investing primarily
in equity securities of domestic and foreign companies which are principally
engaged in the real estate industry or which own significant real estate assets.
The Fund will, under normal conditions, invest at least 65% (and at times nearly
all) of its total assets in equity securities of domestic and foreign companies
which are principally engaged in the real estate industry or which own
significant real estate assets ("Real Estate Companies"). Equity securities
include common stocks, rights or warrants to purchase common stocks, securities
convertible into common stocks, preferred shares and real estate investment
trusts ("REITs"), American Depositary Receipts (ADRs), American Depositary
Shares (ADSs), European Depositary Receipts (EDRs), Global Depositary Receipts
(GDRs), equity swaps, indexed securities and similar instruments whose values
are tied to one or more equity securities are considered to be equity
securities. These securities may be listed on securities exchanges or traded
over-the-counter. A Real Estate Company is one that has at least 50% of its
assets in, or derives at least 50% of its revenues or net profits from, the
ownership, construction, financing, management or sale of residential,
commercial, industrial or hospitality real estate. Real Estate Companies may
include, among others: equity REITs; mortgage REITs; hybrid REITs; hotel
companies; real estate brokers or developers; and companies which own
significant real estate assets.
A REITs assets generally consist primarily of interest in real estate and real
estate loans. REITs are often classified as equity, mortgage or hybrids. An
equity REIT owns interests in property and realizes income from rents and gain
or loss from the sale of real estate interest. A mortgage REIT invests in real
estate mortgage loans and realizes income from interests payments on the loans.
A hybrid REIT invest in both equity and debt. An equity REIT may be an
operating or financing company. An operating company provides operational and
management expertise to and exercises control over, many if not most operational
aspects of the property.
The Fund may invest up to 35% of its assets in debt securities of Real Estate
Companies and in equity and debt securities of non-Real Estate Companies, which
may include issuers whose products and services are related to the real estate
industry or which own real estate assets.
The Fund may, for temporary defensive purposes, invest more than 35% of its
total assets in securities which are not emerging market securities, such as
high grade, liquid debt securities of foreign and United States companies,
foreign governments and the U.S. Government, and their respective agencies,
6
<PAGE>
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 qualify as determined by the Adviser.
The Fund may invest more then 25% of its total assets in any one sector of the
real estate industry or any real estate related industry. Because the Fund
concentrates in a single industry, an investment in the Fund can be expected to
more volatile than an investment in funds that invest in many industries. Risk
associates with investment in securities of companies in the real estate
industry include: declines in the value of the real estate, risks related to
general and local economic conditions, overbuilding and increased competition,
increases in property taxes and operating expenses, changes in zoning and other
laws, casualty or condemnation losses, variations or limitations in rental
income, changes in neighborhood values, the appeal of properties to tenants,
governmental actions, the ability of borrowers and tenants to make loan payments
to rents, and increase in interest rates. In addition, equity REITs may be
affected by changes in the value of the underlying property owned by the REITs,
while mortgage REITs may be affected by the quality of credit extended. Equity
and mortgage REITs are dependent upon management skills, may not be diversified
and are subject to the risks of financing projects. They are also subject to
heavy cash flow dependency, defaults by borrowers self liquidation and the
possibility of failing to qualify for tax-free pass-through of income under the
Internal Revenue Code of 1986, as amended (the "Code") and failing to maintain
exemption from the Act.
The Fund may also invest in derivatives. Derivatives in which the Fund may
invest include futures contracts, forward contracts, options, swaps, indexed
securities, currency exchange contracts and other similar securities as may be
available in the market. The Fund may also invest up to 10% of its total assets
in direct investments. For more information, see "Risk Factors Direct
Investments."
RISK FACTORS
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.
BORROWING
The Funds may borrow up to 30% of the value of its net assets to increase their
holding of portfolio securities. Under the Act, each Fund is required to
maintain continuous asset coverage of 300% with respect to these borrowings and
to sell (within three days) sufficient portfolio holdings to restore this asset
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
7
<PAGE>
securities purchased with borrowed funds. It is anticipated that any borrowings
would be pursuant to a negotiated loan agreement with a commercial bank or other
institutional lender.
COLLATERILIZED MORTGAGE OBLIGATIONS
The Funds may invest in collaterilized mortgage obligations ("CMOs"). CMOs are
fixed-income securities which are collaterilized 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,
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.
FOREIGN SECURITIES
Investors should recognize that investing in foreign securities involves certain
special considerations which are not typically associated with investing in
United States securities. Since investments in foreign companies will
frequently involve currencies of foreign countries, and since the Funds may hold
securities and funds in foreign currencies, the Funds may be affected favorably
or unfavorably by changes in currency rates and in exchange control regulations,
if any, and may incur costs in connection with conversions between various
currencies. Most foreign stock markets, while growing in volume of trading
activity, have less volume than the New York Stock Exchange ("NYSE"), and
securities of some foreign companies are less liquid and more volatile than
securities of comparable domestic companies. Similarly, volume and liquidity in
most foreign bond markets are less than in the United States and at times,
volatility of price can be greater than in the United States. Fixed commissions
on foreign securities exchanges are generally higher than negotiated commissions
on United States exchanges, although the Funds endeavor to achieve the most
favorable net results on their portfolio transactions. There is generally less
government supervision and regulation of securities exchanges, brokers and
listed companies in foreign countries than in the United States. In addition,
with respect to certain foreign countries, there is the possibility of exchange
control restrictions, expropriation or confiscatory taxation, political,
economic or social instability, which could affect investments in those
countries. Foreign securities such as those purchased by the Funds may be
subject to foreign government taxes, higher custodian fees, higher brokerage
commissions and dividend collection fees which could reduce the yield 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.
The Fund may invest in South Africa issuers. Political and social conditions in
South Africa and its neighboring countries, as well as changes in United States
or South Africa laws or regulations, 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. Worldwide
Emerging Markets Fund may invest in Russian issuers. 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
8
<PAGE>
necessarily subject to effective government supervision. To reasonably ensure
that its ownership 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 Fund's investment 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).
Investments may be made from time to time by Worldwide Emerging Markets Fund,
Worldwide Hard Assets Fund and Worldwide Real Estate Fund in companies in
developing countries as well as in developed countries. Worldwide Emerging
Markets Fund and Worldwide Hard Assets Fund may have a substantial portion of
their assets in developing countries. Although there is no universally accepted
definition, a developing country is generally considered by the Adviser to be a
country which is in the initial stages of industrialization. Shareholders
should be aware that investing in the equity and fixed income markets of
developing countries involves exposure to unstable governments, economies based
on only a few industries, and securities markets which trade a small number of
securities. Securities markets of developing countries tend to be more volatile
than the markets of developed countries; however, such markets have in the past
provided the opportunity for higher rates of return to investors.
The value and liquidity of investments in developing countries may be affected
favorably or unfavorably by political, economic, fiscal, regulatory or other
developments in the particular countries or neighboring regions. The extent of
economic development, political stability and market depth of different
countries varies widely. Certain developing countries do not have comprehensive
systems of law. Even where adequate law exists in such developing countries, it
may be impossible to obtain swift and equitable enforcement of such law, or to
obtain enforcement of the judgment by a court of another jurisdiction. Certain
countries in the Asia region, including Cambodia, China, Laos, Indonesia,
Malaysia, the Philippines, Thailand and Vietnam are either comparatively
underdeveloped or are in the process of becoming developed. Investments
typically involve greater potential for gain or loss than investments in
securities of issuers in developed countries.
The securities markets in developing countries are substantially smaller, less
liquid and more volatile than the major securities markets in the United States.
A high proportion of the shares of many issuers may be held by a limited number
of persons and financial institutions, which may limit the number of shares
available for investment by the portfolio. Similarly, volume and liquidity in
the bond markets in developing countries are less than in the United States and,
at times, price volatility can be greater than in the United States. A limited
number of issuers in developing countries' securities markets may represent a
disproportionately large percentage of market capitalization and trading value.
The limited liquidity of securities markets in developing countries may also
affect the Fund's ability to acquire or dispose of securities at the price and
time it wishes to do so. Accordingly, during periods of rising securities
prices in the more illiquid securities markets, the Fund's ability to
participate fully in such price increases may be limited by its investment
policy regarding illiquid securities. Conversely, the Fund's inability to
dispose fully and promptly of positions in declining markets will cause the
Fund's net asset value to decline as the value of the unsold positions is marked
to lower prices. In addition, securities markets in developing countries are
susceptible to being influenced by large investors trading significant blocks of
securities.
9
<PAGE>
Political and economic structures in many of such countries may be undergoing
significant evolution and rapid development, and such countries may lack the
social, political and economic stability characteristic of the United States.
Certain of such countries have in the past failed to recognize private property
rights and have at times nationalized or expropriated the assets of private
companies. As a result, the risks described above, including the risks of
nationalization or expropriation of assets, may be heightened. In addition,
unanticipated political or social developments may affect the value of the
Funds' investments in those countries and the availability to the Funds of
additional investments in those countries.
Economies of developing countries may differ favorably or unfavorably from the
United States economy in such respects as rate of growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. As export-driven economies, the economies of
countries in the Asia Region are affected by developments in the economies of
their principal trading partners. Hong Kong, Japan and Taiwan have limited
natural resources, resulting in dependence on foreign sources for certain raw
materials and economic vulnerability to global fluctuations of price and supply.
Certain developing countries do not have comprehensive systems of laws, although
substantial changes have occurred in many such countries in this regard in
recent years. Laws regarding fiduciary duties of officers and directors and the
protection of shareholders may not be well developed. Even where adequate law
exists in such developing countries, it may be impossible to obtain swift and
equitable enforcement of such law, or to obtain enforcement of the judgment by a
court of another jurisdiction.
Trading in futures contracts traded on foreign commodity exchanges may be
subject to the same or similar risks as trading in foreign securities.
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 exposure to potentially unstable governments, the risk of
nationalization of businesses, restrictions on foreign ownership, prohibitions
on repatriation of assets and a system if laws that may offer less protection of
property rights. Emerging market economies may be based on only a few
industries, may be highly vulnerable to changes in local or global trade
conditions, and may suffer from extreme and volatile debt burdens or inflation
rates.
FOREIGN CURRENCY TRANSACTIONS
Under normal circumstances, consideration of the prospects for currency exchange
rates will be incorporated into the long-term investment decisions made for the
Funds, with regard to overall diversification strategies. Although the Funds
value their assets daily in terms of U.S. dollars, they do not intend physically
to convert their holdings of foreign currencies into U.S. dollars on a daily
basis. The Funds will do so from time to time, and investors should be aware of
the costs of currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Funds at
one rate, while offering a lesser rate of exchange should the Funds desire to
resell that currency to the dealer. The Funds will use forward contracts, along
with futures contracts and put and call options, to "lock in" the U.S. dollar
price of a security bought or sold and as part of their overall hedging
strategy. The Funds will conduct their foreign currency exchange transactions,
either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through purchasing put and call options on, or
entering into futures
10
<PAGE>
contracts or forward contracts to purchase or sell foreign currencies. See
"Futures and Options Transactions."
A forward foreign currency contract, like a futures contract, involves an
obligation to purchase or sell a specific amount of currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. Unlike foreign
currency futures contracts which are standardized exchange-traded contracts,
forward currency contracts are usually traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for such trades.
The Adviser will not commit any Fund to deliver under forward contracts an
amount of foreign currency in excess of the value of the Fund's portfolio
securities or other assets or obligations denominated in that currency. The
Funds' Custodian will place the securities being hedged, cash or U.S. Government
securities or debt or equity securities into a segregated account of the Fund in
an amount equal to the value of the Fund's total assets committed to the
consummation of forward foreign currency contracts to ensure that the Fund is
not leveraged beyond applicable limits. If the value of the securities placed
in the segregated account declines, additional cash or securities will be placed
in the account on a daily basis so that the value of the account will equal the
amount of the Funds' commitments with respect to such contracts. At the
maturity of a forward contract, the Funds may either sell the portfolio security
and make delivery of the foreign currency, or they may retain the security and
terminate their contractual obligation to deliver the foreign currency prior to
maturity by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. There can be no assurance, however, that the Funds will be
able to effect such a closing purchase transaction.
It is impossible to forecast the market value of a particular portfolio security
at the expiration of the contract. Accordingly, it may be necessary for the
Funds to purchase additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency that the Funds are obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign currency.
Changes in currency exchange rates may affect the Funds' net asset value and
performance. There can be no assurance that the Funds' investment 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. Hedging
against a change in the value of a foreign currency 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.
The Fund will enter into forward contracts to duplicate a cash market
transaction. Worldwide Bond Fund will not purchase or sell foreign currency as
an investment. Worldwide Emerging Markets Fund, Worldwide Hard Asset Fund and
Worldwide Real Estate Fund may enter into currency swaps. See also "Foreign
Currency Transactions" and "Futures and Options Transactions".
11
<PAGE>
In those situations where foreign currency options of futures contracts, or
options on futures contracts may not be readily purchased (or where they 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 investment adviser's belief that there exists a
significant correlation between the exchange rate movements of the two
currencies. However, there can be no assurances that the exchange rate or the
primary and secondary currencies will move as anticipated or that the
relationship between the hedged security and the hedging instrument will
continue. If the 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.
If the Funds retain the portfolio security and engage in an offsetting
transaction, the Funds will incur a gain or a loss to the extent that there has
been movement in forward contract prices. Additionally, although such contracts
tend to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time they tend to limit any potential gain which might
result should the value of such currency increase.
FUTURES AND OPTIONS TRANSACTIONS
The 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 commodities 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 in 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 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.
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 margin deposits for futures positions entered into for bona fide
hedging purposes, as that 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. In addition, 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.
Worldwide Hard Assets Fund may invest in commodity futures contracts and in
options on commodity futures contracts, which involves numerous risks such as
leverage, high volatility illiquidity, governmental intervention designed to
influence commodity prices and the possibility of delivery of the underlying
commodities. If the Fund were required to take delivery of a commodity, it
would be deemed illiquid and the Fund would bear the cost of storage and might
incur substantial costs in its disposition. The Fund will not use commodity
futures contracts for leveraging purposes in excess of applicable limitations.
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 position and thus be
subject 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".
12
<PAGE>
The Funds may also invest in options on futures contracts. Compared to the
purchase or sale of futures contracts, the purchase and sale of options on
futures contracts involves less potential risk to the Funds because the maximum
exposure is the amount of the premiums paid for the options.
The Funds' use of financial futures contracts and options on such futures
contracts, and Worldwide Hard Assets Fund and Worldwide Real Estate Fund's use
of commodity futures contracts and options on such futures contracts may reduce
a Fund's exposure to fluctuations in the prices of portfolio securities and may
prevent losses if the prices of such securities decline. Similarly, such
investments may protect a Fund against fluctuation in the value of securities in
which a Fund is about to invest. Because the financial markets in the
developing countries are not as developed in the United States, these financial
investments may not be available to the Funds and the Funds may be unable to
hedge certain risks.
The use of financial futures and/or commodity futures contracts and options on
such futures contracts as hedging instruments involves several risks. First,
there can be no assurance that the prices of the futures contracts or options
and the hedged security or the cash market position will move as anticipated.
If prices do not move as anticipated, the Funds may incur a loss on their
investment, may not achieve the hedging protection anticipated and/or incur a
loss greater than if it had entered into a cash market position. Second,
investments in options, futures contracts and options on futures contracts may
reduce the gains which would otherwise be realized from the sale of the
underlying securities or assets which are being hedged. Third, positions in
futures contracts and options can be closed out only on an exchange that
provides a market for those instruments. There can be no assurances that such a
market will exist for a particular futures contract or option. If the Fund
cannot close out an exchange traded futures contract or option which it holds,
it would have to perform its contract obligation or exercise its option to
realize any profit and would incur transaction costs on the sale of the
underlying assets.
It is the policy of the Funds to meet the requirements of the Internal Revenue
Code of 1986, as amended (the "Code"), to qualify as a regulated investment
company to prevent double taxation of the Funds and their shareholders. One of
these requirements is that at least 90% of a Fund's gross income be derived from
dividends, interest, payment with respect to securities loans and gains from the
sale or other disposition of stocks or other securities. Gains from commodity
futures contracts do not currently qualify as income for purposes of the 90%
test. The extent to which the Funds may engage in options and futures contracts
transactions may be materially limited by this test.
The Funds may write, purchase or sell covered call or put options. Any 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 assets 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 keeps the premium whether or not the option is exercised. When
a Fund sells a covered call option, which is a call option with respect to which
the Fund owns the underlying asset, the Fund may lose the opportunity to realize
appreciation in the market price of the underlying asset or may have to hold the
underlying asset, which might otherwise have been sold to protect against
depreciation. A covered put option written by the Fund exposes it during the
term of the option to a decline in the 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-
13
<PAGE>
counter options are two party contracts with price and terms negotiated by the
buyer and seller, are generally considered illiquid securities.
REPURCHASE AGREEMENTS
A Fund will only enter into a repurchase agreement where (i) the underlying
securities are of the type which the Fund's investment policies would allow it
to purchase directly, (ii) the market value of the underlying security,
including accrued interest, will be at all times equal to or exceed the value of
the repurchase agreement, and (iii) payment for the underlying securities is
made only upon physical delivery or evidence of book-entry transfer to the
account of the custodian or a bank acting as agent.
MORTGAGE-BACKED SECURITIES
The Funds may invest in mortgage-backed securities. A mortgage-backed security
may be an obligation of the issuer backed by a mortgage or pool of mortgages or
a direct interest in an underlying pool of mortgages. The value of mortgage-
backed securities may change due to shifts in the market's perception of
issuers. In addition, regulatory or tax changes may adversely affect the
mortgage securities market as a whole. Stripped mortgage-backed securities are
created when a U.S. governmental agency or a financial institution separates the
interest and principal components of a mortgage-backed security and sells them
as individual securities. The holder of the "principal-only" security ("PO")
receives the principal payments made by the underlying mortgage-backed security,
while the holder of the "interest-only" security ("IO") receives interest
payments from the same underlying security. The prices of stripped mortgage-
backed securities may be particularly affected by change in interest rates. As
interest rates fall, prepayment rates tend to increase, which tends to reduce
the price of IOs and increase prices of POs. Rising interest rates can have the
opposite effect. Changes in interest rates may also affect the liquidity of IOs
and POs.
REAL ESTATE SECURITIES
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 REITs and other
real estate industry companies or companies with substantial real estate
investments. Worldwide Hard Assets Fund and Worldwide Real Estate Fund are
therefore subject to certain risks associated with ownership of real estate and
with the real estate industry in general. These risks include, among others:
possible declines in the value of real estate; possible lack of availability of
mortgage funds; extended vacancies of properties; risks related to general and
local economic conditions; overbuilding; increases in competition, property
taxes and operating expenses; changes in zoning laws; costs resulting from the
clean-up of, and liability to third parties for damages resulting from,
environmental problems; casualty or condemnation losses; uninsured damages from
floods, earthquakes or other natural disasters; limitations on and variations in
rents; and changes in interest rates.
REITs are pooled investment vehicles whose assets consist primarily of interest
in real estate and real estate loans. REITs are generally classified as equity
REITs, mortgage REITs or hybrid REITs. Equity REITs own interest in property
and realize income from the rents and gain or loss from the sale of real estate
interests. Mortgage REITs invest in real estate mortgage loans and realize
income from interest payments on the loans. Hybrid REITs invest in both equity
and debt. Equity REITs may be operating or financing companies. An operating
company provides operational and management expertise to and exercises control
over, many if not most operational aspects of the property.
REITs are not taxed on income distributed to shareholders provided they comply
with several requirements of the Code.
14
<PAGE>
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to the risks of financing projects. REITs are subject to heavy cash
flow dependency, default by borrowers, self-liquidation and the possibilities of
failing to qualify for the exemption from tax for distributed income under the
Code. REITs (especially mortgage REITs) are also subject to interest rate risk
(i.e., as interest rates rise, the value of the REIT may decline).
COMMERCIAL PAPER
The Funds may invest in commercial paper which is indexed to certain specific
foreign currency exchange rates. The terms of such commercial paper provide
that its principal amount is adjusted upwards or downwards (but not below zero)
at maturity to reflect changes in the exchange rate between two currencies while
the obligation is outstanding. The Funds will purchase such commercial paper
with the currency in which it is denominated and, at maturity, will receive
interest and principal payments thereon in that currency, but the amount or
principal payable by the issuer at maturity will change in proportion to the
change (if any) in the exchange rate between two specified currencies between
the date the instrument is issued and the date the instrument matures. While
such commercial paper entails the risk of loss of principal, the potential for
realizing gains as a result of changes in foreign currency exchange rate enables
the Funds to hedge or cross-hedge against a decline in the U.S. dollar value of
investments denominated in foreign currencies while providing an attractive
money market rate of return. The Funds will purchase such commercial paper for
hedging purposes only, not for speculation. The staff of the Securities and
Exchange Commission has been considering whether the purchase of this type of
commercial paper would result in the issuance of a "senior security" within the
meaning of the 1940 Act. The Funds believe that such investments do not involve
the creation of such a senior security, but nevertheless will establish a
segregated account with respect to its investments in this type of commercial
paper and to maintain in such account cash not available for investment or U.S.
Government securities or other liquid high quality securities having a value
equal to the aggregate principal amount of outstanding commercial paper of this
type.
DEBT SECURITIES
The Funds may invest in 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. Debt securities with similar maturities may have different
yields, depending upon several factors, including the relative financial
condition of the issuers. 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. During periods of
declining interest rates, the value of debt securities generally increases.
Conversely, during periods of rising interest rates, the value of such
securities generally declines. These changes in market value will be reflected
in the Fund's net asset value. Debt securities with similar maturities may have
different yields, depending upon several factors. including the relative
financial condition of the issuers. For example, higher yields are generally
available from securities in the lower rating categories of S&P or Moody's.
However, the values of lower-rated securities generally fluctuate more than
those of high grade securities. Many securities of foreign issuers are not
rated by these services. Therefore the selection of such issuers depends to a
large extent on the credit analysis performed by the Adviser.
15
<PAGE>
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 do 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.
The Fund may also invest in low rated or unrated debt securities. Low rated
debt securities present a significantly greater risk of default than do higher
rated securities, in times of poor business or economic conditions, the Funds
may lose interest and/or principal on such securities.
DERIVATIVES
To protect against anticipated declines in the value of the Funds; investment
holdings, the Funds may use options, forward and futures contracts, swaps and
structured notes (Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund
and Worldwide Real Estate Fund), and similar investments (commonly referred to
as derivatives) as a defensive technique to protect the value of an asset the
Funds' investment adviser deems it 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 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 cash market transaction when deemed advantageous by the Funds'
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
may 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.
When the Funds intend to acquire securities (or gold bullion or coins in the
case of Worldwide Hard Assets Fund) for the 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 contract 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
16
<PAGE>
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.
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 currency. 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 one 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 Funds' investment advise is incorrect in its forecast of
market values and currency exchange rates and/or 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.
SHORT SALES
Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund and Worldwide Real
Estate Fund may make short sales of equity securities. The Funds will establish
a segregated account with respect to their short sales and maintain in the
account cash not available for investment or US Government securities or other
liquid, high-quality securities having a value equal to the difference between
(i) the market value of the securities sold short at the time they were sold
short and (ii) any cash, US Government securities or other liquid, high-quality
securities required to be deposited as collateral with the broker in connection
with the short sale (not including the proceeds from the short sale). The
segregated account will be marked to market daily, so that (i) the amount in the
segregated account plus the amount deposited with the broker as collateral
equals the current market value of the securities sold short and (ii) in no
event will the amount in the segregated account plus the amount deposited with
the broker as collateral fall below the original value of the securities at the
time they were sold short. The total value of the assets deposited as
collateral with the broker and deposited in the segregated account will not
exceed 50% of the Fund's net assets.
DIRECT INVESTMENTS
Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund and Worldwide Real
Estate Fund may invest up to 10% of their total assets in direct investments.
Direct investments include (i) the private purchase from an enterprise of an
equity interest in the enterprise in the form of shares of common stock or
equity interests in trusts, partnerships, joint ventures or similar enterprises,
and (ii) the purchase of such an equity interest in an enterprise from a
principal investor in the enterprise. In each case, the Funds will, at the time
of making the investment, enter into a shareholder or similar agreement with the
enterprise and one or more other holders of equity interests in the enterprise.
The Adviser anticipates that these agreements will, in appropriate
circumstances, provide the Funds with the ability to appoint a representative to
the board of directors or similar body of the enterprise and for eventual
disposition of the Funds' investment in the enterprise. Such a representative
of the Funds will be expected to provide the
17
<PAGE>
Funds with the ability to monitor its investment and protect its rights in the
investment and will not be appointed for the purpose of exercising management or
control of the enterprise.
Certain of the Funds' direct investments will include investments in smaller,
less seasoned companies. These companies may have limited product lines,
markets or financial resources, or they may be dependent on a limited management
group. The Funds do not anticipate making direct investments in start-up
operations, although it is expected that in some cases the Funds' direct
investments will fund new operations for an enterprise which itself is engaged
in similar operations or is affiliated with an organization that is engaged in
similar operations.
Direct investments may involve a high degree of business and financial risk that
can result in substantial losses. Because of the absence of any public trading
market for these investments, the Funds may take longer to liquidate these
positions than would be the case for publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices on
these sales could be less than those originally paid by the Funds. Furthermore,
issuers whose securities are not publicly traded may not be subject to public
disclosure and other investor protection requirements applicable to publicly
traded securities. If such securities are required to be registered under the
securities laws of one or more jurisdictions before being resold, the Funds may
be required to bear the expense of the registration. In addition, in the event
the Funds sell unlisted foreign securities, any capital gains realized on such
transactions may be subject to higher rates of taxation than taxes payable on
the sale of listed securities. Direct investments are generally considered
illiquid and will be aggregated with other illiquid investments for purposes of
the limitation on illiquid investments. Direct investments can be difficult to
price and will be valued at fair value as determined in good faith by the Board
of Trustees. The pricing of direct investments may not be reflective of the
price at which these assets could be liquidated.
LOANS OF PORTFOLIO SECURITIES
The Funds may lend to broker-dealers portfolio securities with an aggregate
market value of up to one-third of their total assets. These 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 a loss if the borrowing broker-dealer breaches its agreement with the
Funds.
PRECIOUS METALS
Precious metal trading is a speculative activity and its markets at times
volatile. There may be sharp fluctuations in prices, even during periods of
rising prices. Prices of precious metals are affected by factors such as
cyclical economic conditions, political events and monetary policies of various
countries. 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. The Fund incurs
additional costs in storing gold bullion and coins, which are generally higher
than custodian costs for securities.
INVESTMENT RESTRICTIONS
The following restrictions are fundamental policies which cannot be changed
without the approval of the holders of a majority of a Fund's outstanding
shares. Such majority is defined by the 1940 Act as the
18
<PAGE>
vote of the lesser of (i) 67% or more of the outstanding shares present at a
meeting, if the holders of more than 50% of the outstanding shares are present
in person or by proxy or (ii) more than 50% of a Fund's outstanding shares.
A Fund may not:
1. Purchase or sell real estate, although the Funds may purchase securities of
companies which deal in real estate, including securities of real estate
investment trusts, and may purchase securities which are secured by
interests in real estate;
2. Purchase or sell commodities or commodity futures contracts (for the
purpose of this restriction, forward foreign exchange contracts are not
deemed to be a commodity or commodity contract) except that the Worldwide
Emerging Markets Fund may, for hedging and other purposes, and the
Worldwide Hard Assets Fund, Worldwide Bond Fund and Worldwide Real Estate
Fund may, for hedging purposes only, buy and sell financial futures
contracts which may include stock and bond index futures contracts and
foreign currency futures contracts. The Worldwide Hard Assets Fund and
Worldwide Real Estate Fund may, for hedging purposes only, buy and sell
commodity futures contracts on gold and other natural resources or on an
index thereon. A Fund may not commit more than 5% of its total assets to
initial margin deposits on futures contracts not used for hedging purposes
(except that with respect to Worldwide Emerging Markets Fund, Worldwide
Hard Assets Fund and Worldwide Real Estate Fund margin deposits for futures
positions entered into for bona fide hedging purposes are excluded from the
5% limitation). In addition, Worldwide Hard Assets Fund and Worldwide Real
Estate Fund may invest in gold bullion and coins;
3. Make loans, except by (i) purchase of marketable bonds, debentures,
commercial paper and similar marketable evidences of indebtedness (such as
structured notes, indexed securities and swaps with respect to Worldwide
Hard Assets Fund and Worldwide Real Estate Fund) and (ii) repurchase
agreements. The Funds may lend to broker-dealers portfolio securities with
an aggregate market value up to one-third of its total assets;
4. As to 75% of the total assets of the Worldwide Hard Assets Fund and
Worldwide Emerging Markets Fund purchase securities of any issuer, if
immediately thereafter (i) more than 5% of a Fund's total assets (taken at
market value) would be invested in the securities of such issuer, or (ii)
with respect to the Worldwide Hard Assets Fund, more than 10% of the
outstanding securities of any class of such issuer would be held by a Fund;
and in the case of Worldwide Emerging Markets Fund more than 10% of the
outstanding voting securities of such issuer would be held by a Fund
(provided that these limitations do not apply to obligations of the United
States Government, its agencies or instrumentalities). This limitation does
not apply to the Worldwide Bond Fund and Worldwide Real Estate Fund;
5. Underwrite any issue of securities (except to the extent that a Fund may be
deemed to be an underwriter within the meaning of the Securities Act of
1933, as amended, in the disposition of restricted securities);
6. Borrow money, except that each of the Funds may borrow up to 30% of the
value of its net assets to increase its holding of portfolio securities;
7. Issue senior securities except insofar as a Fund may be deemed to have
issued a senior security by reason of (i) borrowing money in accordance
with restrictions described above; (ii) entering into forward foreign
currency contracts; (iii) financial futures contracts purchased on margin
(iv)
19
<PAGE>
commodity futures contracts purchased on margin (Worldwide Hard Assets
Fund) and; (v) foreign currency swaps (Worldwide Emerging Markets Fund,
Worldwide Hard Assets Fund and Worldwide Real Estate Fund);
8. Invest more than 25 percent of the value of a Fund's total assets in the
securities of issuers having their principal business activities in the
same industry, except the Worldwide Emerging Markets Fund, Worldwide Hard
Assets Fund and Worldwide Real Estate Fund, and provided that this
limitation does not apply to obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities;
9. Make investments for the purpose of exercising control or management;
10. Invest in real estate limited partnerships (except Worldwide Real Estate
Fund) or in oil, gas or other mineral leases.
The following policies have been adopted by the Board of Trustees with respect
to each Fund and may be changed without shareholder approval.
A Fund may not:
11. Exclusive of Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund
and Worldwide Real Estate Fund, purchase securities of other open-end
investment companies except as part of a merger, consolidation,
reorganization or acquisition of assets; (i) purchase more than 3% of the
total outstanding voting stock of any investment company, (ii) invest more
than 5% of any of the Fund's total assets in securities of any one
investment company or (iii) invest more than 10% of such value in
investment companies in general. In addition, the Fund may not invest in
the securities of closed-end investment companies, except by purchase in
the open market involving only customary broker's commissions.
12. Invest in securities which are (i) subject to legal or contractual
restrictions on resale ("restricted securities"), or in securities for
which there is no readily available market quotation or engage in a
repurchase agreement maturing in more than seven days with respect to any
security, if as a result, more than 10% of its total net assets would be
invested in such securities, except that Worldwide Emerging Markets Fund,
Worldwide Hard Assets Fund and Worldwide Real Estate Fund will not invest
more than 15% of the value of their total net assets in such securities
and; (ii) with respect to Worldwide Emerging Markets Fund, Worldwide Hard
Assets Fund and Worldwide Real Estate Fund "illiquid" securities, including
repurchase agreements maturing in more than 7 days and options traded over-
the-counter if the result is that more than 15% of its total net assets
would be invested in such securities;
13. Invest more than 5 percent of the value of its total assets in securities
of companies having together with their predecessors, a record of less than
three years of continuous operation (this restriction does not apply to the
Worldwide Emerging Markets Fund, and Worldwide Real Estate Fund);
14. Write, purchase or sell puts, calls, straddles, spreads or combinations
thereof, except that the Funds may purchase or sell puts and calls on
foreign currencies and on securities as described under "Futures and
Options Transactions" herein and in the Prospectus and that these Funds may
write, purchase or sell put and call options on financial futures
contracts, which include bond and stock index futures contracts and
Worldwide Hard Assets Fund and Worldwide Real Estate Fund may write,
purchase, or sell put and call options on gold or other natural resources
or an index
20
<PAGE>
thereon and on commodity futures contracts on gold or other natural
resources or an index thereon;
15. Purchase participations or other interests (other than equity stock
interests) in oil, gas or other mineral exploration or development
programs;
16. Invest more than 5% of its total assets in warrants, whether or not the
warrants are listed on the New York or American Stock Exchanges or more
than 2% of the value of the assets of a Fund (except Worldwide Emerging
Markets Fund and Worldwide Real Estate Fund) in warrants which are not
listed. Warrants acquired in units or attached to securities are not
included in this restriction;
17. Mortgage, pledge or otherwise encumber its assets except to secure
borrowings effected within the limitations set forth in restriction (6);
18. Except for Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund and
Worldwide Real Estate Fund, make short sales of securities, except that the
Worldwide Bond Fund may engage in the transactions specified in
restrictions (1), (2) and (14);
19. Purchase any security on margin, except that it may obtain such short-term
credits as are necessary for clearance of securities transactions and, may
make initial or maintenance margin payments in connection with options and
futures contracts and related options and borrowing effected within the
limitations set forth in restriction (6);
20. Participate on a joint or joint and several basis in any trading account in
securities, although transactions for the Funds and any other account under
common or affiliated management may be combined or allocated between the
Funds and such account;
21. Purchase or retain a security of any issuer if any of the officers,
directors or Trustees of a Fund or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer, or if such persons
taken together own more than 5% of the securities of such issuer.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of net assets will not be considered a violation
of any of the foregoing restrictions.
INVESTMENT ADVISORY SERVICES
The investment adviser and manager of the Funds is Van Eck Associates
Corporation (the "Adviser"), a Delaware corporation, pursuant to an Advisory
Agreement with the Trust dated as of August 30, 1989. The Adviser furnishes an
investment program for the Funds and determines, subject to the overall
supervision and review of the Board of Trustees, what investments should be
purchased, sold or held. The Adviser, which has been an investment adviser
since 1955, also acts as investment adviser or sub-investment adviser to other
mutual funds registered with the SEC under the Act and manager or advises
managers of portfolios of pension plans and others.
The Adviser or its affiliates provides the Funds with office space, facilities
and simple business equipment and provides the services of consultants,
executive and clerical personnel for administering the affairs of the Funds.
Except as provided for in the Advisory Agreements, the Adviser or its affiliate
compensates all executive and clerical personnel and Trustees of the Trust if
such persons are employees or affiliates of the Adviser or its affiliates. The
advisory fee is computed daily and paid monthly.
21
<PAGE>
The Advisory Agreements provide that they shall each continue in effect from
year to year with respect to a Fund as long as it is approved at least annually
both (i) by a vote of a majority of the outstanding voting securities of the
Fund (as defined in the 1940 Act) or by the Trustees of the Trust, and (ii) in
either event a vote of a majority of the Trustees who are not parties to the
Advisory Agreement or "interested persons" of any party thereto, cast in person
at a meeting called for the purpose of voting on such approval. The Advisory
Agreements may be terminated on 60 days' written notice by either party and will
terminate automatically if they are assigned within the meaning of the 1940 Act.
The Advisory Agreements for each of the Funds were last reapproved by the Board
of Trustees on April 22, 1998.
The expenses borne by each of the Funds include the charges and expenses of the
transfer and dividend disbursing agent, custodian fees and expenses, legal,
auditors' fees and expenses, brokerage commissions for portfolio transactions,
taxes, (if any), the advisory and administrative fees, extraordinary expenses
(as determined by the Trustees of the Trust), expenses of shareholder and
Trustee meetings and of preparing, printing and mailing proxy statements,
reports and other communications to shareholders, expenses of preparing and
setting in type prospectuses and periodic reports and expenses of mailing them
to current shareholders, legal and accounting expenses, expenses of registering
and qualifying shares for sale (including compensation of the employees of the
Adviser or its affiliate in relation to the time spent on such matters), fees of
Trustees who are not "interested persons" of the Adviser, membership dues of the
Investment Company Institute, fidelity bond and errors and omissions insurance
premiums, cost of maintaining the books and records of each Fund, and any other
charges and fees not specifically enumerated as an obligation of the Distributor
or Adviser.
The management fee for each of Worldwide Bond Fund and Worldwide Hard Assets
Fund is based on an annual rate of 1% of the first $500 million of average daily
net assets, .90 of 1% on the next $250 million and .70 of 1% in excess of $750
million. Prior to September 29, 1995, the management fee for each of Worldwide
Bond Fund and Worldwide Hard Assets Fund was based on an annual rate of .75 of
1% of the first $500 million of average daily net assets, .65 of 1% on the next
$250 million and .50 of 1% in excess of $750 million. The management fee for
Worldwide Emerging Markets Fund and Worldwide Real Estate Fund are computed
daily and paid monthly at an annual rate of 1% of average daily net assets,
which includes the fee paid to the Adviser for accounting and administrative
services.
For the fiscal years ended April 30, 1995, April 30, 1996, the eight months
ended December 31, 1996, for the full year ended December 31, 1997 and December
31, 1998, the Adviser earned fees with respect to Worldwide Bond Fund of
$641,065, $985,741, $755,274, $1,117,119 and $1,180,505, respectively. The
Adviser earned fees for the same period with respect to Worldwide Hard Assets
Fund, of $837,780, $1,251,773, $1,127,303, $1,736,208 and $1,185,714,
respectively. There were no fee waivers or expense reimbursements with respect
to these two Funds for this period. The Adviser of Worldwide Emerging Markets
Fund waived advisory fees from the date of the Fund's commencement of operations
(December 21, 1995) to December 31, 1996. For the year ended December 31, 1997
and December 31, 1998, the Adviser earned fees for Worldwide Emerging Markets
Fund in the amount of $1,062,413 and $683,102, respectively. In addition,
during the same time period the Adviser assumed the operating expenses of
Worldwide Emerging Markets Fund. Commencing January 11, 1997 through February
3, 1997, the Adviser waived and assumed all fees and expenses, to the extent
they exceeded 1% of Worldwide Emerging Markets Fund's average daily net assets.
From February 4 to December 31, 1997, the Adviser agreed to limit all expenses
to 1.5% of the average daily net assets. For the year ended December 31, 1997,
the Adviser waived expenses in the amount of $18,137. The Adviser of Worldwide
Real Estate Fund waived advisory fees from the date of the Fund's commencement
of operations (June 23, 1997) to February 28, 1998; in addition, during the same
time period, the Adviser assumed the operating expenses of Worldwide Real Estate
Fund. From March 1, 1998 to December 31, 1998, the Adviser agreed to limit all
expenses to 1% of average daily net assets. For the year ended December 31,
1998, the Adviser earned fees with respect to Worldwide Real Estate Fund of
$12,340.
22
<PAGE>
Under the Advisory Agreements, the Adviser is responsible for determining the
net asset value per share and maintaining the accounting records of the Funds.
For these services the agreements provide for reimbursement to the Adviser.
Mr. John C. van Eck is Chairman of the Board of Directors of the Adviser as well
as President and Trustee of the Trust.
THE DISTRIBUTOR
Shares of the Funds are offered on a continuous basis and are distributed
through Van Eck Securities Corporation, 99 Park Avenue, New York, New York (the
"Distributor"), a wholly-owned subsidiary of Van Eck Associates Corporation. The
Trustees of the Trust have approved a Distribution Agreement appointing the
Distributor as distributor of shares of the Funds. The Distribution Agreements
for each of the Funds were last reapproved by action of the Trustees on April
22, 1998.
The Distribution Agreement provides that the Distributor will pay all fees and
expenses in connection with printing and distributing prospectuses and reports
for use in offering and selling shares of the Funds and preparing, printing and
distributing advertising or promotional materials. The Funds will pay all fees
and expenses in connection with registering and qualifying their shares under
federal and state securities laws.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser is responsible for decisions to buy and sell securities and other
investments for the Funds, the selection of brokers and dealers to effect the
transactions and the negotiation of brokerage commissions, if any. In
transactions on stock and commodity exchanges in the United States, these
commissions are negotiated, whereas on foreign stock and commodity exchanges
these commissions are generally fixed and are generally higher than brokerage
commissions in the United States. In the case of securities traded on the over-
the-counter markets, there is generally no stated commission, but the price
usually includes an undisclosed commission or markup. In underwritten
offerings, the price includes a disclosed, fixed commission or discount. Most
short term obligations are normally traded on a "principal" rather than agency
basis. This may be done through a dealer (e.g., securities firm or bank) who
buys or sells for its own account rather than as an agent for another client, or
directly with the issuer. A dealer's profit, if any, is the difference, or
spread, between the dealer's purchase and sale price for the obligation.
In purchasing and selling the Funds' portfolio investments, it is the Adviser's
policy to obtain quality execution at the most favorable prices through
responsible broker-dealers. In selecting broker-dealers, the Adviser will
consider various relevant factors, including, but not limited to, the size and
type of the transaction; the nature and character of the markets for the
security or asset to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer's firm; the broker-
dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions.
The Adviser may cause the Funds to pay a broker-dealer who furnishes brokerage
and/or research services a commission that is in excess of the commission
another broker-dealer would have received for executing the transaction if it is
determined that such commission is reasonable in relation to the value of the
brokerage and/or research services as defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended, which have been provided. Such research
services may include, among other things, analyses and reports concerning
issuers, industries, securities, economic factors and trends and portfolio
23
<PAGE>
strategy. Any such research and other information provided by brokers to the
Adviser is considered to be in addition to and not in lieu of services required
to be performed by the Adviser under its Advisory Agreement with the Trust. The
research services provided by broker-dealers can be useful to the Adviser in
serving its other clients or clients of the Adviser's affiliates.
The Trustees periodically review the Adviser's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Funds and review the commissions paid by the Funds over
representative periods of time to determine if they are reasonable in relation
to the benefits to the Funds.
Investment decisions for the Funds are made independently from those of the
other investment accounts managed by the Adviser or affiliated companies.
Occasions may arise, however, when the same investment decision is made for more
than one client's account. It is the practice of the Adviser to allocate such
purchases or sales insofar as feasible among its several clients or the clients
of its affiliates in a manner it deems equitable. The principal factors which
the Adviser considers in making such allocations are the relative investment
objectives of the clients, the relative size of the portfolio holdings of the
same or comparable securities and the then availability in the particular
account of funds for investment. Portfolio securities held by one client of the
Adviser may also be held by one or more of its other clients or by clients of
its affiliates. When two or more of its clients or clients of its affiliates
are engaged in the simultaneous sale or purchase of securities, transactions are
allocated as to amount in accordance with formulae deemed to be equitable as to
each client. There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on other clients.
While it is the policy of the Funds generally not to engage in trading for
short-term gains, the Funds will effect portfolio transactions without regard to
the holding period if, in the judgment of the Adviser, such transactions are
advisable in light of a change in circumstances of a particular company, within
a particular industry or country, or in general market, economic or political
conditions. The portfolio turnover rates of all the Funds may vary greatly from
year to year.
Worldwide Emerging Markets Fund and Worldwide Hard Assets Fund anticipate that
their annual portfolio turnover rates will not exceed 100%. For the period from
commencement of operations (December 21, 1995) to April 30, 1996, the eight
months ended December 31, 1996 and the full year ended December 31 1997 and
December 31, 1998, the portfolio turnover rates for Worldwide Emerging Markets
Fund were 45.89%, 29.53%, 142.39%,* and 117.16%* respectively. For fiscal years
ended April 30, 1995, April 30, 1996, the eight months ended December 31, 1996
and the full year ended December 31, 1997 and December 31, 1998, the portfolio
turnover rates for Worldwide Hard Assets Fund were 23.30%, 26.37%, 46.14%,
102.82% and 153.25%*, respectively.
The annual portfolio turnover rate of the Worldwide Bond Fund and Worldwide Real
Estate Fund may exceed 100%. For fiscal years ended April 30, 1995, April 30,
1996, the eight months ended December 31, 1996, the full year ended December 31,
1997 and December 31, 1998, the portfolio turnover rates for Worldwide Bond Fund
were 265.87%, 208.05%, 73.95%, 135.36% and 30.59%, respectively, and the Adviser
anticipates the turnover rate for the current fiscal year will also exceed 100%.
For the period from June 23 to December 31, 1997 and December 31, 1998, the
portfolio turnover rate of Worldwide
_______________________
* The portfolio turnover rate normally does not exceed 100%. Extraordinary
volatile conditions do, however, occasionally require high levels of turnover in
order to preserve capital. These conditions were in evidence during the third
and fourth quarters of 1997 and the first three quarters of 1998 while the
Emerging markets were in crisis. This crisis resulted in high levels of
volatility throughout global emerging markets. The high level of turnover
reflected a switch to more defensive issues with the goal of preserving
shareholder capital. It is not anticipated that future yeas will show a repeat
of this level of volatility or turnover.
24
<PAGE>
Real Estate Fund was 123% and 107%. Due to the high rate of turnover, the Fund
will pay a greater amount in brokerage commissions than a similar size fund with
a lower turnover rate, though commissions are not generally charged in fixed-
income transactions. In addition, since the Fund may have a high rate of
portfolio turnover, the Fund may realize capital gains or losses. Capital gains
will be distributed annually to the shareholders. Capital losses cannot be
distributed to shareholders but may be used to offset capital gains at the Fund
level. See "Taxes" in the Prospectus and the Statement of Additional
Information.
The Adviser does not consider sales of shares of the Funds as a factor in the
selection of broker-dealers to execute portfolio transactions for the Funds. For
the fiscal year or period ended April 30, 1995, Worldwide Bond Fund paid $24,354
and Worldwide Hard Assets Fund paid $250,357 in brokerage commissions. For the
fiscal year or period ended December 31, 1996, Worldwide Bond Fund paid $7,340,
Worldwide Emerging Markets Fund paid $39,037 and Worldwide Hard Assets Fund paid
$457,007 in brokerage commissions. For the fiscal period or year ended December
31, 1997, Worldwide Real Estate Fund paid $4,317, Worldwide Emerging Markets
Fund paid $1,000,327 and Worldwide Hard Assets Fund paid $663,946 in brokerage
commissions. For the fiscal year or period ended December 31, 1998, Worldwide
Hard Assets Fund paid $889,272, Worldwide Emerging Markets Fund paid $681,222
and Worldwide Real Estate Fund paid $8,836.
For the fiscal year or period ended December 31, 1998, Worldwide Hard Assets
Fund paid $137,867.48, Worldwide Real Estate Fund paid $1,222.50 and Worldwide
Emerging Markets Fund paid $45,247.46 in commissions to broker-dealers providing
research and certain other services, representing 15.5%, 13.8% and 6.6%,
respectively, of total commissions paid by such Funds.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust, their address, position with the Trust,
age and principal occupations during the past five years are set forth below.
Trustees of the Trust:
@*JOHN C. van ECK, C.F.A. (83) - Chairman of the Board and President
- -------------------------
575 Park Avenue, New York, New York 10021; Chairman of the Board and President
of another investment company advised by the Adviser; Chairman, Van Eck
Associates Corporation (investment adviser) and Van Eck Securities Corporation
(broker-dealer); Director, Eclipse Financial Asset Trust (mutual fund); Former
President of the Adviser and its affiliated companies; Former Director (1992-
1995), Abex Inc. (aerospace); Former Director (1983-1986), The Signal
Companies, Inc. (high technology and engineering); Former Director (1982-
1984), Pullman Transportation Co., Inc. (transportation equipment); Former
Director (1986-1992) The Henley Group, Inc. (technology and health).
@#+JEREMY H. BIGGS (63) - Trustee
- ------------------
1220 Park Avenue, New York, New York 10128; Trustee of another investment
company advised by the Adviser; Vice Chairman, Director and Chief Investment
Officer, Fiduciary Trust Company International (investment manager), parent
company of Fiduciary International, Inc.; Chairman of Davis Funds Group
(mutual fund management company); Treasurer and Director of the Royal Oak
Foundation (the UK National Trust); Director and former chairman of the Union
Settlement Association (the community service organization); First Vice
President, Trustee and Chairman of the
25
<PAGE>
Finance Committee of Saint James School, St. James, Maryland; Former Director,
International Investors Incorporated (1990-1991).
#+RICHARD C. COWELL (71) - Trustee
- -------------------
240 El Vedado Way, Palm Beach, Florida 33480; Trustee of another investment
company advised by the Adviser; Private Investor; Director, West Indies &
Caribbean Development Ltd. (real estate); Former Director, Compo Industries,
Inc. (machinery manufacturer); Former Director, International Investors
Incorporated (1957-1991); Former Director (1978-1981), American Eagle
Petroleums, Ltd. (oil and gas exploration); Former President and Director
(1968-1976), Minerals and Industries, Inc. (petroleum products); Former
Director (1978-1983), Duncan Gold Resources Inc. (oil exploration and gold
mining); Former Director (1981-1984), Crested Butte Silver Mining Co.; Former
Chairman and Member of Executive Committee (1974-1981), Allerton Resources,
Inc. (oil and gas exploration); Former Director (1976-1982), Western World
Insurance Co.
@PHILIP D. DEFEO (53) Trustee
----------------
99 Park Avenue, New York, NY 10016; Trustee of another investment company
advised by the Adviser; Former President, Chief Executive Officer and Director
of Van Eck Associates Corporation (invest-ment adviser) and Van Eck Securities
Corporation (broker-dealer) (September 1996 to September 1998); Former
Executive Vice President and Director of Marketing and Customer Services (June
1994 - August 1996), Cedel International (finance and settlements); Former
Managing Director (July 1992 - April 1994); Lehman Brothers (investment bank
and broker-dealer); Former Senior Vice President, Fidelity Investments and
Former President, Fidelity Services Company (financial services) (1987 -
1992).
#+WESLEY G. McCAIN (56) - Trustee
- ------------------
144 East 30th Street, New York, New York 10016; Trustee of two other
investment companies advised or administered by the Adviser; Chairman and
Owner, Towneley Capital Management, Inc., (investment adviser, since 1971);
Chairman, Eclipse Funds (mutual fund, since 1986); Chairman and Owner, Eclipse
Financial Services, Inc. (since 1986); General Partner, Pharaoh Partners, L.P.
(since 1992); Principal, Pharaoh Partners (Cayman) LDC (since 1996); President
and Owner, Millbrook Associates, Inc. (economic and marketing consulting,
since 1989); Trustee, Libre Group Trust (since 1994); Director, Libre
Investments (Cayman) Ltd. (since 1996); Former Director, International
Investors Incorporated.
#DAVID J. OLDERMAN (63) - Trustee
- -----------------
40 East 52nd Street, New York, New York 10022; Trustee of another investment
company advised by the Adviser; Chairman of the Board, Chief Executive Officer
and Owner, Carret & Company, Inc. (since 1988); Chairman of the Board,
American Copy Equipment Co. (1991-present); Chairman of the Board, Brighton
Partners, Inc. (1993-present); Principal, Olderman & Raborn, Inc., (investment
advisers-1984-1988); Chairman of the Board, Railoc, Inc., (farm equipment
manufacturing-1979- 1984); Head of Corporate Finance, Halsey Stuart
(investment banking-1974-1975); Vice Chairman of the Board, Stone and Webster
Securities Corp. (investment banking, retail sales and investment advisory
divisions-1964 to 1974).
#*RALPH F. PETERS (70) - Trustee
- -----------------
66 Strimples Mill Road, Stockton, New Jersey 08559-1703; Trustee of another
investment company advised by the Adviser; Former Chairman of the Board,
Former Chairman of the Executive
26
<PAGE>
Committee and Chief Executive Officer of Discount Corporation of New York
(dealer in U.S. Treasury and Federal Agency Securities) (1981-1988); Director,
Sun Life Insurance and Annuity Company of New York; Director, U.S. Life Income
Fund Inc., New York; Former Director, International Investors Incorporated.
#RICHARD D. STAMBERGER (39) - Trustee
- ------------------
888 17th Street, N.W., Washington, D.C. 20006; Trustee of two other investment
companies advised or administered by the Adviser; Principal, National
Strategies, Inc., a public policy firm in Washington, D.C.; Partner and Co-
founder, Quest Partners, L.L.C. (management consulting firm/since 1988);
Executive Vice President, Chief Operating Officer, and a Director of NuCable
Resources Corporation (technology firm/since 1988); associated with Anderson
Benjamin & Reed, a regulatory consulting firm based in Washington, D.C. (1985-
1986); White House Fellow-Office of Vice President (1984-1985); Director of
Special Projects, National Cable Television Association (1983-1984).
@**JAN F. van ECK (35) Trustee
- ------------------
99 Park Avenue, New York, New York 10016; Director of Van Eck Associates
Corporation; President and Director of Van Eck Securities Corporation and
other affiliated companies; President and Director of Van Eck Capital Inc.;
President and Director of Van Eck Absolute Return Advisers Corporation; Co-
President and Director of Shenyin Wanguo Van Eck Asset Management (Asia)
Limited.
@**DEREK S. van ECK (33) Trustee and Executive Vice President
- ----------------
99 Park Avenue, New York, New York 10016; President of the Worldwide Hard
Assets Fund series of Van Eck Worldwide Insurance Trust and the Global Hard
Assets Fund series of Van Eck Funds; Vice President of another investment
company advised by the Adviser; Executive Vice President, Director, Global
Investments President and Director of Van Eck Associates Corporation and
Executive Vice President and Director of Van Eck Securities Corporation and
other affiliated companies.
Officers of the Trust:
BRUCE J. SMITH (44) - Vice President and Treasurer
- --------------
99 Park Avenue, New York, New York 10016; Officer of two other investment
companies advised or administered by the Adviser; Senior Managing Director,
Portfolio Accounting of Van Eck Associates Corporation and Senior Managing
Director of Van Eck Securities Corporation.
THOMAS H. ELWOOD (51)- Vice President and Secretary
- -------------------
99 Park Avenue, New York, New York 10016; Officer of three other investment
companies advised or administered by the Adviser; Vice President, Secretary
and General Counsel of Van Eck Associates Corporation, Van Eck Securities
Corporation and other affiliated companies. Former Assistant Counsel of
Jefferson Pilot Insurance Company and officer of other investment companies
distributed by Jefferson Pilot and its affiliates. Former Associate Counsel
of New York Life Insurance Company.
27
<PAGE>
JOSEPH P. DiMAGGIO (42) - Controller
- ------------------
99 Park Avenue, New York, New York 10016; Controller of another investment
company advised by the Adviser; Director of Portfolio Accounting of Van Eck
Associates Corporation (since 1993); Former Accounting Manager with Alliance
Capital Management (1985-1993).
CHARLES CAMERON (39) - Vice President
- ------------------
99 Park Avenue, New York, New York 10016; Vice President of another investment
company advised by the Adviser; Director of Trading of Van Eck Securities
Corporation; currently, is co-Portfolio Manager of the Worldwide Bond Fund
series of the Trust.
SUSAN C. LASHLEY (44) - Vice President
- ------------------
99 Park Avenue, New York, New York 10016; Vice President of another investment
company advised by the Adviser; Managing Director, Mutual Fund Operations of
Van Eck Securities Corporation.
KEVIN REID (36) - Vice President
- ------------------
99 Park Avenue, New York, New York 10016; President of the Global Real Estate
Fund series and Vice President of the Global Hard Assets Fund series of Van
Eck Funds and President of Worldwide Real Estate Fund and Vice President of
the Worldwide Hard Assets Fund series of Van Eck Worldwide Insurance Trust;
officer of another investment company advised by the Adviser; Director, Real
Estate Research, of Van Eck Associates Corporation; Former Chief Financial
Officer of E.P. Reid, Inc. (construction-1993 to 1994); Former Chief Financial
Officer and Chief Operating Officer (1991 - 1993) and Former Vice President
and portfolio manager (1988 - 1991) of Trammell Crow Company (real estate).
GREGORY KRENZER (26) President of Van Eck U.S. Government Money Fund
- ------------------
99 Park Avenue, New York, New York 10016; Research Analyst and Portfolio
Assistant (Global Fixed Income) of Van Eck Associates Corporation since 1994.
He is co-Portfolio Manager of the Worldwide Bond Fund.
SUSAN MIN (27) Assistant Secretary
- ----------------------------------
99 Park Avenue, New York, New York 10016; Assistant Secretary of other
investment companies advised or administrated by the Adviser; Staff Attorney
of Van Eck Associates Corporation.
_______________________
@ An "interested person" as defined in the 1940 Act.
* Member of Executive Committee - exercises general powers of Board of
Trustees between meetings of the Board.
** Son of Mr. John C. van Eck.
# Member of the Nominating Committee.
+ Member of the Audit Committee - reviews fees, services, procedures,
conclusions and recommendations of independent auditors.
28
<PAGE>
1998
Compensation Table
------------------
<TABLE>
<CAPTION>
Van Eck Worldwide Van Eck Worldwide
Insurance Trust Insurance Trust Total Fund Complex
(Current Trustees Fees) (Deferred Compensation) Compensation (a)
<S> <C> <C> <C>
John C. van Eck $ 0 $ 0 $ 0
Jeremy H. Biggs $ 0 $13,033 $39,250
Richard C. Cowell $13,033 $ 0 $33,500
Philip D. DeFeo $ 0 $ 0 $ 0
Wesley G. McCain $ 0 $13,033 $39,250
David J. Olderman $ 0 $10,504 $31,250
Ralph F. Peters $12,060 $ 0 $31,000
Richard D. Stamberger $ 6,030 $ 6,030 $15,500
Derek S. van Eck N/A N/A N/A
Jan F. van Eck N/A N/A N/A
</TABLE>
___________________________________________________________________________
(a) The term "fund complex" refers to the Funds of the Trust, the series of the
Van Eck Funds, which are also managed by the Adviser and the series of Van
Eck/Chubb Funds, Inc., which are administered by the Adviser. The Trustees
are paid a fee for their services to the Trust. No other compensation,
including pension or other retirement benefits, is paid to the Trustees by
the fund complex.
PRINCIPAL SHAREHOLDERS
As of December 31, 1998, shareholders of record of 5% or more of the
outstanding shares of the Funds were as follows: Approximately 89.12% of
Worldwide Bond Fund, approximately 78.99 % of Worldwide Emerging Markets Fund
and approximately 86.22% of Worldwide Hard Assets, respectively, was owned by
Nationwide Life Insurance Company, One Nationwide Plaza, Columbus, Ohio 43216 to
fund the benefits of the separate account's variable annuity contractowners.
Approximately 15.68% of Worldwide Emerging Markets Fund, approximately 6.79% of
Worldwide Bond Fund and 42.85% of Worldwide Real Estate Fund, respectively, was
owned by Provident Mutual Life and Annuity Company, 1050 Westlake Drive, Brewyn,
Pennsylvania 19312. Approximately, 13.46% of Worldwide Real Estate Fund was
owned by Conseco Variable Insurance Company, 11815 N. Pennsylvania Street,
Carmel, IN 46032. Approximately, 39.63% of Worldwide Real Estate Fund was owned
by Van Eck Associates Corporation, the Adviser.
PURCHASE OF SHARES
The Funds may invest in securities or futures contracts listed on foreign
exchanges which trade on Saturdays or other customary United States notional
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.
29
<PAGE>
VALUATION OF SHARES
The net asset value per share of each of the Funds is computed by dividing the
value of all of a Fund's securities plus cash and other assets, less
liabilities, by the number of shares outstanding. The net asset value per share
is computed as of the close of the New York Stock Exchange, Monday through
Friday, exclusive of national business holidays. The Funds will be closed on
the following national business holidays: New Year's Day, Martin Luther King
Jr.'s birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas (or the days on which these holidays
are observed).
Shares of the Funds are sold at the public offering price which is determined
once each day the Funds are open for business and is the net asset value per
share.
The net asset values need not be computed on a day in which no orders to
purchase, sell or redeem shares of the Funds have been received.
The value of a financial futures or commodity futures contract equals the
unrealized gain or loss on the contract that is determined by marking it to the
current settlement price for a like contract acquired on the day on which the
commodity futures contract is being valued. A settlement price may not be used
if the market makes a limit move with respect to a particular commodity.
Securities or futures contracts for which market quotations are readily
available are valued at market value, which is currently determined using the
last reported sale price. If no sales are reported as in the case of most
securities traded over-the-counter, securities are valued at the mean of their
bid and asked prices at the close of trading on the NYSE. In cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated by or under the authority of the Board of Trustees as
the primary market. Short-term investments having a maturity of 60 days or less
are valued at amortized cost, which approximates market. Options are valued at
the last sales price unless the last sales price does not fall within the bid
and ask prices at the close of the market, at which time the mean of the bid and
ask prices is used. All other securities are valued at their fair value as
determined in good faith by the Trustees. Foreign securities or futures
contracts quoted in foreign currencies are valued at appropriately translated
foreign market closing prices or as the Board of Trustees may prescribe.
Generally, trading in foreign securities and futures contracts, as well as
corporate bonds, United States Government securities and money market
instruments, is substantially completed each day at various times prior to the
close of the NYSE. The values of such securities used in determining the net
asset value of the shares of the Funds may be computed as of such times.
Foreign currency exchange rates are also generally determined prior to the close
of the NYSE. Occasionally, events affecting the value of such securities and
such exchange rates may occur between such times and the close of the NYSE which
will not be reflected in the computation of the Fund's net asset values. If
events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value as determined
in good faith by the Trustees.
TAXES
Each Fund intends to qualify and elect to be treated each taxable year as a
"regulated investment company" under Subchapter M of the Code. To so qualify, a
Fund must, among other things, (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income (including gains from options, futures or forward contracts) derived with
respect to its business of investing in such stock, securities or currencies and
(b) satisfy certain diversification requirements.
30
<PAGE>
As a regulated investment company, a Fund will not be subject to federal income
tax on its net investment income and capital gain net income (capital gains in
excess of its capital losses) that it distributes to shareholders if at least
90% of its investment company taxable income for the taxable year is
distributed. However, if for any taxable year a Fund does not satisfy the
requirements of Subchapter M of the Code, all of its taxable income will be
subject to tax at regular corporate rates without any deduction for distribution
to shareholders, and such distributions will be taxable to shareholders as
ordinary income to the extent of the Fund's current or accumulated earnings or
profits.
REDEMPTIONS IN KIND
The Trust has elected to have the ability to redeem its shares in kind,
committing itself to pay in cash all requests for redemption by any shareholder
of record limited in amount with respect to each shareholder of record during
any ninety-day period in the lesser of (i) $250,000 or (ii) 1% of the net asset
value of such company at the beginning of such period.
PERFORMANCE
The Funds may advertise performance in terms of average annual total return for
1, 5 and 10 year periods, or for such lesser periods as any of such Funds have
been in existence. Average annual total return is computed by finding the
average annual compounded rates of return over the periods that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P(1+T)/to the nth power/ = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5, or 10 year periods at
the end of the year or period;
The calculation assumes the maximum sales load (or other charges deducted from
payments) is deducted from the initial $1,000 payment and assumes all dividends
and distributions by the fund are reinvested at the price stated in the
prospectus on the reinvestment dates during the period, and includes all
recurring fees that are charged to all shareholder accounts.
Average annual total returns for the Funds for various periods ended December
31, 1998 are as follows:
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years Life
<S> <C> <C> <C> <C>
Worldwide Bond Fund 12.75% 6.50% -- 6.85%
Worldwide Emerging
Markets Fund (34.15)% -- -- (9.89)%
Worldwide Hard Assets
Fund (30.93)% (3.26)% -- 2.10%
Worldwide Real Estate
Fund (11.35)% -- -- 3.92%
</TABLE>
31
<PAGE>
The Funds may advertise performance in terms of a 30-day yield quotation. The
30-day yield quotation is computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
YIELD = 2[(A-B/CD + 1)/to the sixth power/-1]
Where: A = dividends and interest earned during the period
B = expenses accrued for the period (net of reimbursement)
C = the average daily number of shares outstanding during the
period that were entitled to receive dividends
D = the maximum offering price per share on the last day of the
period after adjustment for payment of dividends within 30
days thereafter
The Funds may also advertise performance in terms of aggregate total return.
Aggregate total return for a specified period of time is determined by
ascertaining the percentage change in the net asset value of shares of the Fund
initially acquired assuming reinvestment of dividends and distributions and
without giving effect to the length of time of the investment according to the
following formula:
[(B-A)/A](100)=ATR
Where: A = initial investment
B = value at end of period
ATR = aggregate total return
The calculation assumes the maximum sales charge is deducted from the initial
payment and assumes all distributions by the Funds are reinvested at the price
stated in the Prospectus on the reinvestment dates during the period, and
includes all recurring fees that are charged to all shareholder accounts.
Aggregate Total Return for the period ended December 31, 1998 (after maximum
sales charge).
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years Life
<S> <C> <C> <C> <C>
Worldwide Bond Fund 12.75% 37.01% -- 85.58%
Worldwide Emerging
Markets Fund (35.15)% -- -- (26.91)%
Worldwide Hard Assets
Fund (30.93)% (15.27)% -- 21.38%
Worldwide Real Estate
Fund (11.35)% -- -- 6.02%
</TABLE>
Performance figures of a Fund are not useful for comparison purposes because
they do not reflect the charges and deductions at the separate account level.
32
<PAGE>
DESCRIPTION OF THE TRUST
Van Eck Worldwide Insurance Trust (the "Trust") is an open-end management
investment company organized as a "business trust" under the laws of the
Commonwealth of Massachusetts on January 7, 1987. The Trust commenced
operations on September 7, 1989. On 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
Bond Funds, Worldwide Emerging Markets Fund, Worldwide Hard Assets Fund and
Worldwide Real Estate Fund, described herein.
Worldwide Emerging Markets Fund and Worldwide Hard Assets Fund are classified as
diversified funds and Worldwide Bond Fund and Worldwide Real Estate 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. This means that the
Fund at the close of each quarter of its taxable year, must, in general, limit
its investment in the securities of a single issuer to (i) no more than 25% of
its assets, (ii) with respect to 50% of the Fund's asset, no more than 5% of its
assets, and (iii) the Fund will not own more then 10% of outstanding voting
securities. A Fund is a separate pool of assets of the Trust which is
separately managed and which may have different investment objectives from those
of another Fund. The Trustees have the authority, without the necessity of a
shareholder vote, to create any number of new Funds.
Each share of 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 the Prospectus. The Trustees are a
self-perpetuating body unless and until fewer that 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 matters
affecting all of the Funds (such as the election 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 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 shareholder 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 Funds shares in accordance with instructions received from
Contract holders.
33
<PAGE>
Under Massachusetts law, the shareholders of the Trust could, under certain
circumstances, be held personally liability for the obligations of the Trust.
However, the Master Trust Agreement of the Trust disclaims shareholder liable
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 of 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
Custodian. The Chase Manhattan Bank, Chase Metrotech Center, Brooklyn, New York
- ---------
11245, serves as the custodian of the Trust's portfolio securities and cash.
The Custodian is authorized, upon the approval of the Trust, to establish
credits or debits in dollars or foreign currencies with, and to cause portfolio
securities of a Fund to be held by its overseas branches or subsidiaries, and
foreign banks and foreign securities depositories which qualify as eligible
foreign custodians under the rules adopted by the Securities and Exchange
Commission.
Transfer Agent. Van Eck Associates Corporation, 99 Park Avenue, New York, New
- ---------------
York 10016, serves as the Funds' transfer agent.
Independent Accountants. Ernst & Young LLP, 787 South Avenue New York, New York
- -----------------------
10019, serves as the Trust's independent accountants.
Counsel. Goodwin, Procter & Hoar, Exchange Place, Boston, Massachusetts 02109,
- -------
serves as counsel to the Trust.
FINANCIAL STATEMENTS
The financial statements of Worldwide Bond Fund, Worldwide Emerging Markets
Fund, Worldwide Hard Assets Fund and Worldwide Real Estate Fund for the fiscal
year or period ended December 31, 1998, are incorporated by reference from the
Funds' Annual Reports to Shareholders which are available at no charge upon
written or telephone request to the Trust at the address or telephone number set
forth on the first page of this Statement of Additional Information.
34
<PAGE>
APPENDIX
CORPORATE BOND RATINGS
- -----------------------
Description of Moody's Investors Service, Inc. Corporate Bond Ratings:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt-
edge". Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be greater or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors given security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements. Their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack the characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
Caa-Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category.
Description of Standard & Poor's Corporation Corporate Bond Ratings:
AAA -- Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
35
<PAGE>
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB -- Bonds rated BBB are regarding as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB--Bonds rated BB have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
B--Bonds rated B have a greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating is also used for debt
subordinated to senior debt that is assigned an actual or implied BB rating.
CCC--Bonds rated CCC have a current identifiable vulnerability to default, and
are dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, they are not likely to have the
capacity to pay interest and repay principal.
The ratings from AA to CCC may be modified by the addition of a plus or minus to
show relative standing within the major rating categories.
PREFERRED STOCK RATINGS
- -----------------------
Description of Moody's Investors Service, Inc. Preferred Stock Ratings:
aaa - An issue which is rated aaa is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of convertible preferred stocks.
aa - An issue which is rated aa is considered a high-grade preferred stock. This
rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
a - An issue which is rated a is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the aaa
and aa classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
baa - An issue which is rated baa is considered to be medium-grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
36
<PAGE>
ba - An issue which is rated ba is considered to have speculative elements, and
its future cannot be considered well assured. Earnings and asset protection may
be very moderate and not well safe-guarded during adverse periods. Uncertainty
of position characterizes preferred stocks in this class.
b - An issue which is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of
the issue over any long period of time may be small.
caa - An issue which is rated caa is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future
status of payment.
ca - An issue which is rated ca is speculative in a high degree and is likely to
be in arrears on dividends with little likelihood of eventual payment.
c - This is the lowest rated class of preferred or preference stock. Issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Description of Standard & Poor's Corporation Preferred Stock Ratings:
AAA - This is the highest rating that may be assigned by Standard & Poor's to a
preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.
AA - A preferred stock issue rated AA also qualifies as a high-quality fixed
income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated AAA.
A - An issue rated A is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effect of
changes in circumstances and economic conditions.
BBB - An issue rated BBB is regarded as backed by an adequate capacity to pay
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the A category.
BB, B, CCC - Preferred stocks rated BB, B and CCC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay preferred
stock obligations. BB indicates the lowest degree of speculation and CCC the
highest degree of speculation. While such issues will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
SHORT TERM DEBT RATINGS
- -----------------------
Description of Moody's Investors Service, Inc. Short-Term Debt Ratings:
Prime-1--Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries, higher rates of return
of funds employed, conservative capitalization structure with moderate reliance
on debt and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation and well-established access
to range of financial markets and assured sources of alternate liquidity.
37
<PAGE>
Prime-2--Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3--Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
38
