-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q0xDMEfDgReJMpNGYxVdLjUkglDMZRxzEe6UvHzp9Kcqc7Z0r2t1tc925xj20N9c 3H02y7+eouJj1ky5biRGLQ== 0000930413-96-000329.txt : 19960906 0000930413-96-000329.hdr.sgml : 19960906 ACCESSION NUMBER: 0000930413-96-000329 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960905 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VAN ECK FUNDS CENTRAL INDEX KEY: 0000768847 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04297 FILM NUMBER: 96626121 BUSINESS ADDRESS: STREET 1: 99 PARK AVE STREET 2: 8TH FL CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2126875200 MAIL ADDRESS: STREET 1: 99 PARK AVE STREET 2: 8TH FL CITY: NEW YORK STATE: NY ZIP: 10016 N-30D 1 WORLDWIDE BOND FUND --------------------------- WORLDWIDE INSURANCE TRUST --------------------------- JUNE 30, 1996 --------------------------- VAN ECK --------------------------- WORLDWIDE --------------------------- BOND --------------------------- FUND --------------------------- SEMI-ANNUAL --------------------------- REPORT --------------------------- [LOGO] --------------------------- - -------------------------------------------------------------------------------- VAN ECK WORLDWIDE BOND FUND ---------------------------------- JUNE 30, 1996 SEMI-ANNUAL REPORT Dear Shareholder: After achieving exceptional returns in 1995, the U.S. bond market retreated during the first half of 1996 as economic growth proved stronger than expected. Most European bond markets achieved very moderate returns, but U.S. dollar strength versus most currencies continued, lowering gains for U.S. investors. The Worldwide Bond Fund had a total return of -2.1% for the first six months of the year. BOND MARKET REVIEW After a final cut in the federal funds target rate in the first quarter, U.S. economic growth indicators came in stronger than expected and interest rates began to rise (while bond prices began to decline). Rates on long-term Treasury bonds, for example, rose from 6.15% at the beginning of the year to a high of over 7% in June, ending the second quarter at 6.87%. In anticipation of continued growth and doubtful that the Federal Reserve would continue the rate-cutting trend that began in 1995, we adopted a defensive position in the beginning of the year, favoring short-term bonds and lowering the Fund's duration to approximately 3.0 years. We also decreased the Fund's U.S. bond position somewhat. In Europe, sluggish economic growth and a low inflation scenario (an ideal environment for bonds) prompted interest rate reductions, and most European markets achieved moderately positive returns in local currency terms. The peripheral markets, such as Italy, Spain and Sweden, outperformed the core European bond markets for the first six months of the year, providing good returns (in both local currency and dollar terms). These countries continued to get their fiscal affairs in order as they attempt to meet the terms for European Monetary Union (EMU) in 1997, and their bond yields converged further toward those of their core neighbors. In anticipation of these moves, in the beginning of the second quarter we began to reduce our core bond positions, while increasing the Spanish bond position and adding an Italian bond allocation. We added substantial Canadian and UK bond positions to the portfolio during the first half of the year. Both bond markets have witnessed good performance recently, although total gains for the first six months were slight. The Canadian government remains on track to eliminate the budget deficit by the year 2000. The UK appears to have already discounted a probable Labour Party victory in the upcoming elections and UK bonds have benefited from investor skepticism regarding the success of EMU. We liquidated the Fund's already slight position in Japanese bonds early in the first quarter, given expectations for a strong economic recovery after a long-lived recession. Although economic growth rates were indeed high in the first half (at an extraordinary 12% on an annualized basis), bond buying by the Bank of Japan has supported prices despite fears of interest rate hikes. Japanese bonds showed flat performance for the first half in local currency terms (with negative returns in dollar terms). CURRENCY REVIEW The U.S. dollar continued its climb against most major foreign currencies. This strength rendered many positive bond returns negative for U.S. investors. As a defensive measure, we have maintained a relatively large U.S. cash (and cash equivalents) position in the Fund. THE OUTLOOK Going forward we expect a continued revival of global growth as Japanese reflation and European monetary easing take hold. Given this outlook, in our opinion it will continue to be a challenging year for bonds, and we remain defensively positioned with a fairly high cash allocation and a low duration. (Our perceptions of global growth, however, should be tempered by the fragility of the global recovery, particularly to shocks such as stock market declines or another EMU scare.) As for currencies, the dollar could come under pressure as European and Asian economies gather steam relative to the U.S. and potential pressures with EMU build. We are prepared to maximize exposure to foreign currencies should their strength re-emerge. Madis Senner Portfolio Manager July 18, 1996 Average annual returns on the Fund for the 1-year, 5-year and life (9/1/89) periods ended 6/30/96 were 0.2%, 6.5% and 6.5%, respectively. These returns do not take variable insurance/life fees and expenses into account. This report must be accompanied or preceded by a Van Eck Worldwide Insurance Trust Prospectus which includes more complete information, such as charges and expenses and the risks associated with international investing, including currency fluctuations or controls, expropriation, nationalization and confiscatory taxation. Please read the prospectus before investing. Van Eck Securities Corporation, 99 Park Avenue, New York, NY 10016 - -------------------------------------------------------------------------------- WORLDWIDE BOND FUND INVESTMENT PORTFOLIO JUNE 30, 1996 (UNAUDITED) BONDS AND NOTES PRINCIPAL AMOUNT VALUE (NOTE 1) - -------------------------------------------------------------------------------- CANADA - 8.1% Canadian Government Bonds 8.75% due 12/01/05 CAD 7,200,000 $ 5,682,196 7.50% due 3/01/01 3,800,000 2,843,070 ------------ 8,525,266 ------------ GERMANY - 10.0% Bundesrepublik Deutschland 7.50% due 11/11/04 DEM 9,000,000 6,317,753 7.375% due 1/03/05 6,000,000 4,177,372 ------------ 10,495,125 ------------ ITALY - 5.5% Italian Government Bonds 10.50% due 9/01/05 ITL 4,600,000,000 3,231,318 8.50% due 4/01/99 3,700,000,000 2,426,674 ------------ 5,657,992 ------------ SPAIN - 5.0% Spanish Government Bonds 10.90% due 8/30/03 ESP 300,000,000 2,622,733 7.40% due 7/30/99 335,000,000 2,596,919 ------------ 5,219,652 ------------ UNITED KINGDOM - 11.5% Great Britain Government Bond 7.50% due 12/07/06 GBP 4,000,000 6,037,481 7.00% due 11/06/01 4,000,000 6,109,284 ------------ 12,146,765 ------------ UNITED STATES - 34.6% U.S. Treasury Notes *8.750% due 8/15/20 USD 4,000,000 4,788,752 *7.125% due 9/30/99 6,700,000 6,848,659 *6.50% due 8/15/05 2,520,000 2,483,382 *6.25% due 4/30/01 6,000,000 5,944,686 *5.75% due 10/31/00 4,650,000 4,530,844 *5.625% due 2/15/06 1,000,000 927,031 *5.50% due 11/15/98 11,400,000 11,220,101 ------------ 36,743,455 ------------ Total Bonds and Notes: 74.7% (Cost: $78,561,379) 78,788,255 ------------ See Notes to Financial Statements. WORLDWIDE BOND FUND INVESTMENT PORTFOLIO (CONTINUED) SHORT-TERM OBLIGATIONS PRINCIPAL AMOUNT VALUE (NOTE 1) - -------------------------------------------------------------------------------- UNITED STATES - 25.3% G.E. Company Commercial Paper Interest Yield 5.20% due 7/01/96 USD 5,350,000 $ 5,350,000 ------------ U.S. Treasury Bills Interest Yield 4.40% due 7/11/96 21,300,000 21,273,967 ------------ Total Short-Term Obligations 25.3%: (Cost: $26,617,214) 26,623,967 ------------ Total Investments: 100% (Cost $105,178,593) $105,412,222 ============ * These securities are segregated for forward currency contracts. See Notes to Financial Statements. WORLDWIDE BOND FUND FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1996 Assets: Investments at value (identified cost, $105,178,593) (Note 1) $105,412,222 Cash 693,853 Receivables: Interest 1,681,729 Capital shares sold 75,675 ------------ Total assets 107,863,479 ------------ Liabilities: Payables: Capital stock redeemed 98,821 Open forward currency contracts (Note 4) 158,613 Accounts payable 39,391 ------------ Total liabilities 296,825 ------------ Net Assets (Equivalent to $10.60 per share on 10,145,620 shares of beneficial interest outstanding with an unlimited number of $.001 par value shares authorized) $107,566,654 ============ Net assets consist of: Aggregate paid in capital $112,278,000 Unrealized appreciation of investments, forward contracts and foreign currency 55,077 Undistributed net investment income 855,814 Accumulated realized losses (5,622,237) ============ $107,566,654 ============ - -------------------------------------------------------------------------------- See Notes to Financial Statements. WORLDWIDE BOND FUND STATEMENT OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------- FOR THE TWO MONTHS ENDED JUNE 30, 1996 Interest Income (Less foreign taxes withheld of $56,531) (Note 1) $1,113,471 Expenses: Management (Note 2) $178,334 Administrative (Note 2) 1,080 Professional 7,440 Custodian 5,220 Printing 4,020 Trustees fees and expenses 2,820 Other 7,878 -------- Total expenses 206,792 --------- Net investment income 906,679 Realized and Unrealized Gain (Loss) on Investments (Note 3): Realized loss from security transactions (244,807) Realized loss from foreign currency transactions (1,134,535) Unrealized appreciation (depreciation) of investments: Beginning of period (1,070,241) End of period 226,660 --------- Change in unrealized appreciation (depreciation) of investments 1,296,901 Unrealized depreciation of foreign currency receivables and payables: Beginning of period (32,940) End of period (12,970) --------- Change in unrealized depreciation of foreign currency receivables and payables 19,970 Unrealized appreciation (depreciation) of forward currency contracts: Beginning of period 397,056 End of period (158,613) --------- Change in unrealized appreciation (depreciation) of forward currency contracts (555,669) --------- Net Increase in Net Assets Resulting from Operations $288,539 ========== - -------------------------------------------------------------------------------- See Notes to Financial Statements. WORLDWIDE BOND FUND STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) - -------------------------------------------------------------------------------- FOR THE TWO MONTHS YEAR ENDED ENDED JUNE 30, 1996 APRIL 30, 1996 ------------------- -------------- Increase (Decrease) in Net Assets: Operations: Net investment income $ 906,679 $5,770,316 Realized gain from futures contracts and options 0 129,160 Realized gain (loss) from security transactions (244,807) 1,311,357 Realized gain (loss) from foreign currency transactions (1,134,535) 1,326,374 Change in unrealized appreciation (depreciation) of investments 1,296,901 (2,111,991) Change in unrealized appreciation (depreciation) of foreign currency receivables and payables 19,970 59,383 Change in unrealized appreciation (depreciation) of forward currency contracts (555,669) (3,980,822) Change in unrealized depreciation of futures contracts 0 4,120 ------------ ------------ Increase in net assets resulting from operations 288,539 2,507,897 ------------ ------------ Dividends to shareholders from: Net investment income (3,020,904) (8,098,367) ------------ ------------ Capital share transactions*: Net proceeds from sales of shares 3,099,186 56,024,013 Reinvestment of dividends 3,020,904 8,098,367 ------------ ------------ 6,120,090 64,122,380 Cost of shares reacquired (3,361,745) (64,457,152) ------------ ------------ Increase (decrease) in net assets resulting from capital share transactions 2,758,345 (334,772) ------------ ------------ Total increase (decrease) in net assets 25,980 (5,925,242) Net Assets: Beginning of period 107,540,674 113,465,916 ------------ ------------ End of period (including undistributed net investment income of $855,814 and $2,970,039 respectively) $107,566,654 $107,540,674 ============ ============ *Shares of Beneficial Interest Issued and Redeemed: Shares sold 290,495 5,046,092 Reinvestment of dividends 286,885 731,260 ------------ ------------ 577,380 5,777,352 Shares reacquired (316,364) (5,794,591) ------------ ------------ Net increase (decrease) 261,016 (17,239) ============ ============ - -------------------------------------------------------------------------------- See Notes to Financial Statements. WORLDWIDE BOND FUND FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
FOR THE TWO MONTHS ENDED YEAR ENDED APRIL 30, JUNE 30, 1996 ------------------------------------------------------ (UNAUDITED) 1996 1995 1994 1993 1992 ----------- ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period $10.88 $11.46 $10.05 $10.62 $11.57 $10.82 ------ ------ ------ ------ ------ ------ Income From Investment Operations: Net Investment Income 0.09 0.58 0.68* 0.63 0.81 0.62 Net Gains (Losses) on Securities (both realized and unrealized) (0.06) (0.34) 0.77 (0.37) (0.75) 0.67 ------ ------ ------ ------ ------ ------ Total From Investment Operations 0.03 0.24 1.45 0.26 0.06 1.29 ` ------ ------ ------ ------ ------ ------ Less Distributions: Dividends from net investment income (0.31) (0.82) (0.04) (0.72) (0.83) (0.53) Distributions from capital gains - - - (0.11) (0.18) (0.01) ------ ------ ------ ------ ------ ------ Total Distributions (0.31) (0.82) (0.04) (0.83) (1.01) (0.54) ------ ------ ------ ------ ------ ------ Net Asset Value, End of Period $10.60 $10.88 $11.46 $10.05 $10.62 $11.57 ====== ====== ====== ====== ====== ====== Total Return (a) (2.09%) 2.07% 14.51% 2.49% 0.38% 12.21% - -------------------------------------------------------------------------------------------------------------------- Ratios/Supplementary Data Net Assets, End of Period (000) $107,567 $107,541 $113,466 $80,908 $66,035 $40,930 Ratio of Expenses to Average Net Assets 1.16%** 1.08%(b) 0.98(b) 0.93% 1.01% 1.05% Ratio of Net Income to Average Net Assets 5.07%** 5.26% 6.24% 6.47% 8.47% 8.55% Portfolio Turnover Rate 34.59% 208.05% 265.87% 37.59% 248.21% 231.34%
- -------------- (a) Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of dividends and distribution of capital gains at net asset value during the period and a redemption on the last day of the period. (b) Ratio would have been 1.10% and 0.99% respectively, had there not been directed brokerage and custodian fee arrangements. * Based on average shares outstanding. ** Annualized. See Notes to Financial Statements. WORLDWIDE BOND FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 1-Significant Accounting Policies: Van Eck Worldwide Insurance Trust (the "Trust"), organized as a Massachusetts business trust on January 7, 1987, is registered under the Investment Company Act of 1940. The following is a summary of significant accounting policies consistently followed by the Worldwide Bond Fund, a non-diversified series, (the "Fund") of the Trust in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principals requires the use of management's estimates and the actual results could differ. A. Security valuation-Securities traded on national exchanges and traded in the NASDAQ National Market System are valued at the last sales prices reported at the close of business on the last business day of the period. Over-the-counter securities not included in the NASDAQ National Market System and listed securities for which no sale was reported are valued at the mean of the bid and asked prices. Short-term obligations purchased with more than sixty days remaining to maturity are valued at market. Short-term obligations purchased with sixty days or less to maturity are valued at cost which with accrued interest approximates value. Futures are valued using the closing price reported at the close of the Chicago Board of Trade. Forward currency contracts are valued at the spot currency rate plus an amount ("points") which reflects the differences in interest rates between the U.S. and the foreign markets. Securities for which quotations are not available are stated at fair value as determined by the Board of Trustees. B. Federal income taxes-It is the Fund's policy to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. C. Currency Translation-Assets and liabilities denominated in foreign currencies and commitments under forward currency contracts are translated into U.S. Dollars at the mean of the quoted bid and asked prices of such currencies on the last business day of the period. Purchases and sales of investments are translated at the exchange rates prevailing when such investments were acquired or sold. Income and expenses are translated at the exchange rates prevailing when accrued. The portion of realized and unrealized gains and losses on investments that result from fluctuations in foreign currency exchange rates is not separately disclosed. Recognized gains or losses attributable to foreign currency fluctuations on foreign currency denominated assets and liabilities are recorded as net realized gains and losses from foreign currency transactions. D. Dividends and Distributions-Dividend income and distributions to shareholders are recorded on the ex-dividend date. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments for foreign currency transactions. E. Other-Security transactions are accounted for on the date the securities are purchased or sold. Interest income is accrued as earned. WORLDWIDE BOND FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- NOTE 2-Van Eck Associates Corporation earned fees of $178,334 for the two months ended June 30, 1996 for investment management and advisory services. The fee is based on an annual rate of 1% of the first $500 million of average daily net assets, .90 of 1% on the next $250 million and .70 of 1% on the excess over $750 million; this includes the fee paid to the Advisor for accounting and administration services. In accordance with the advisory agreement, the Fund reimbursed Van Eck Associates Corporation $1,080 for costs incurred in connection with certain administrative and accounting functions. Certain of the officers and trustees of the Trust are officers, directors or stockholders of Van Eck Associates Corporation and Van Eck Securities Corporation. The Fund directs certain portfolio trades to a broker that, in turn, pays a portion of the Fund's operating expenses. The Fund also has a fee arrangement, based on cash balances left on deposit with the custodian, which also reduces the Fund's operating expenses. NOTE 3-Purchases and proceeds from sales of securities, other than short-term obligations, aggregated $28,322,824 and $29,545,829, respectively, for the two months ended June 30, 1996. For federal income tax purposes the identified cost of investments owned at June 30, 1996 was $105,178,593. As of June 30, 1996 net unrealized appreciation for federal income tax purposes aggregated $233,629 of which $1,337,305 related to appreciated securities and $1,103,676 related to depreciated securities. At April 30, 1996, the Fund had a capital loss carry forward available to offset future capital gains expiring June 30, 2003 in amount of $1,233,873. NOTE 4-Forward Currency Contracts - The Fund may buy and sell forward currency contracts to settle purchases and sales of foreign denominated securities. In addition, the Fund may enter into forward currency contracts to hedge foreign denominated assets. Realized gains and losses from forward currency contracts are included in realized loss from foreign currency transactions. At June 30, 1996, the Fund had the following outstanding forward currency contracts: FOREIGN CURRENCY BUY CONTRACTS: VALUE AT UNREALIZED CONTRACTS SETTLEMENT DATE CURRENT VALUE DEPRECIATION - --------- --------------- ------------- ------------ JPY 1,579,160,314 expiring 9/18/96 $14,707,650 $14,572,968 $(134,682) DEM 4,789,826 expiring 9/18/96 3,161,601 3,144,272 (17,329) --------- (152,011) --------- FOREIGN CURRENCY SALE CONTRACT: ITL 1,007,518,350 expiring 9/18/96 652,075 645,473 (6,602) -------- (158,613) ======== WORLDWIDE BOND FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- The Fund may incur additional risk from investments in forward currency contracts if the counterparty is unable to fulfill its obligation or there are unanticipated movements of the foreign currency relative to the U.S. dollar. NOTE 5-Option Contracts-The Fund may invest, for hedging and other purposes, in call and put options on securities, currencies and commodities. Call and put options give the Fund the right but not the obligation to buy (calls) or sell (puts) the instrument underlying the option at a specified price. The premium paid on the option, should it be exercised, will, on a call, increase the cost of the instrument acquired and, on a put, reduce the proceeds received from the sale of the instrument underlying the option. If the options are not exercised, the premium paid will be recorded as a capital loss upon expiration. The Fund may incur additional risk to the extent the value of the underlying instrument does not correlate with the movement of the option value. The Fund may also write call or put options. As the writer of an option, the Fund receives a premium. The Fund keeps the premium whether or not the option is exercised. The premium will be recorded, upon expiration of the option, as a short-term capital gain. If the option is exercised, the Fund must sell, in the case of a written call, or buy, in the case of a written put, the underlying instrument at the exercise price. The Fund may write only covered puts and calls. A covered call option is an option in which the Fund owns the instrument underlying the call. A covered call sold by the Fund exposes it during the term of the option to possible loss of opportunity to realize appreciation in the market price of the underlying instrument or to possible continued holding of an underlying instrument which might otherwise have been sold to protect against a decline in the market price of the underlying instrument. A covered put exposes the Fund during the term of the option to a decline in price of the underlying instrument. A put option sold by the Fund is covered when, among other things, cash or short-term liquid securities are placed in a segregated account to fulfill the obligations undertaken. The Fund may incur additional risk from investments in written currency options if there are unanticipated movements in the underlying currencies. NOTE 6-The Fund invests in foreign securities. Investments in foreign securities may involve a greater degree of risk than investments in domestic securities due to political, economic or social instability. Foreign investments may also be subject to foreign taxes and settlement delays. Since the Fund may have significant investments in foreign debt securities it may be subject to greater credit and interest risks and greater currency fluctuations than portfolios with significant investments in domestic debt securities. -----END PRIVACY-ENHANCED MESSAGE-----