Officers and Directors
Charles J. Swindells--Chairman
A. John W. Campbell--Director
Edmund J. Cashman, Jr.--Director [Worldwide Value Fund Logo]
Henri Deegenaar--Director Report to Shareholders
Walter A. Eberstadt--Director For the year ended
Ian F. H. Grant--Director December 31, 1995
Lawrence W. Harris, III--Director Lombard Odier International
Robert H. C. Van Maasdijk--Director Portfolio Management Limited
Prinz Wolfgang E. Ysenburg--Director Investment Adviser
Peter E. F. Newbald--President Legg Mason Fund Adviser, Inc.
William H. Miller, III--Vice President Investment Consultant
Edward A. Taber, III--Vice President and Administrator
Marie K. Karpinski--Vice President, Secretary
and Treasurer
Andrew Roberts--Assistant Vice President
James N. H. Bennett--Assistant Vice President
Brian J. Pierce--Assistant Vice President
Custodian and Transfer Agent
State Street Bank & Trust Company
P.O. Box 1713
Boston, Massachusetts 02105
Sub-Custodian
The Chase Manhattan Bank, N.A.
1 Chaseside
Bournemouth, Dorset BH7 7DB
England
Worldwide Value Fund, Inc.
P.O. Box 1476
7 East Redwood Street, 10th floor
Baltimore, MD 21203-1476
<PAGE>
To Our Shareholders,
Worldwide Value Fund enjoyed good performance during 1995. Including
reinvestment of the $0.06/share ordinary income dividend payable to shareholders
of record December 29, 1995, total return on net asset value for the year was
19.9% and total return on market price was an equally respectable 18.8%,
compared to our benchmark's return of 21.5% (the Morgan Stanley European Index).
Market performance thus far in 1996 has been good, as the Fund's share price is
up 8.9% and the discount to net asset value has narrowed.
On the following pages, Ronnie Armist and Mark Lloyd-Price, the Fund's
portfolio managers, discuss the portfolio's structure and the investment
outlook.
We continued the share repurchase program which began during the second
quarter of 1995. At December 31, 1995, approximately 59,000 shares had been
repurchased and retired as Treasury stock. The Board of Directors has authorized
the repurchase of up to 5% of all outstanding shares. As the discount has
narrowed and the Fund's performance has improved, we will reassess continuance
of the share repurchase program.
On February 23, 1996, in an effort to address the discount to net asset
value at which shares of the Fund have been trading, while taking into account
the Fund's improving performance, the Fund's Board of Directors adopted a policy
regarding the possible conversion of the Fund from a closed-end investment
company to an open-end investment company. Under this policy, if the discount
remains above 12% and the Fund's performance has not, by December 31, 1996,
either exceeded the performance of the Morgan Stanley European Index,
excluding any dividends, for the 5-year period January 1, 1992 to December 31,
1996 or placed the Fund in the top half of a peer group of funds as measured
by Micropal for the same period, either of which the Board believes would
justify continuing to operate the Fund as a closed-end fund, the Board would
commence action necessary to convert the Fund, which would include
presenting for shareholder approval the transaction to accomplish such
conversion by the time of the Fund's 1997 shareholder meeting. However, if
the discount decreases to below 12% on average for the month of December 1996,
or if the Fund's performance either exceeds the specified index as set forth
above or places the Fund in the top half of its peers, the Board would not
initiate, at that time, any actions to convert the Fund. In such case, of
course, the shareholders should realize the benefits of a reduced discount and
strong performance.
As always, we appreciate your support and welcome your suggestions.
Sincerely,
/s/ Charles J. Swindells
Charles J. Swindells
Chairman of the Board
February 26, 1996
<PAGE>
Investment Advisers' Comments
During the fourth quarter of 1995 the European markets rose by nearly 3%,
against a background of relative currency stability. Most of the markets moved
in line, with the exceptions being Switzerland, Sweden, Finland and, as usual,
Italy.
Fourth Quarter 1995
MSCI European Index +2.8%
Worldwide Value Fund +2.9%
Mention must be made about the Swiss market which was the strongest market
in the quarter, and indeed, after a 41% increase in dollar terms in 1995, was
the strongest performing market throughout the year. The impressive performance
was due not only to perception of a weakening DM, on the advent of European
Monetary Union ("EMU"), and investors' search for a strong currency, but also
due to the high weighting of the strongly performing pharmaceutical stocks,
including Roche, which is now Europe's largest company.
The weakness in Sweden and Finland merely reflected the sectoral rotation
throughout Europe during the quarter, as technology and cyclical stocks fell
from favour. A profit downgrade in Nokia, a star stock earlier in the year, was
singlehandedly the reason for the nearly 22% fall of the Finnish index. In
Sweden, Ericsson suffered, but the index was also depressed by the preponderance
of forestry stocks and concerns about the effect of a stronger krone on 1996
earnings. Conversely, European financial stocks all performed well, for the most
part, recovering from oversold situations.
The political scene was also eventful, but other than in Italy, did not
unduly influence investor sentiment. In the UK, the Conservative party suffered
another blow with the defection to the Liberal Democrats of one of its MP's,
thus reducing the working majority in Parliament to 3. In Spain, Gonzalez
finally agreed to a General Election in March 1996, and the opinion polls
started to point to growing support for the opposition party, Partido Popular.
Investors in the French market were encouraged by a speech by Chirac reaffirming
the commitment of the French government to fulfill Maastricht criteria and be a
founding member of the EMU. The news was not welcomed by the population, and the
measures introduced to reduce the French social security deficit and increase
fiscal revenues prompted a series of strikes which affected French public
services throughout November and December. Needless to say, the Italian market
continued to be affected by political uncertainty initiated by the loss of
Parliamentary support for the technocrat government.
Nevertheless, despite political tensions, the 1996 Italian budget law was
eventually passed and was the reason for Italy being the strongest market in
December. The reason for the strength was the improving economic fundamentals,
and for the first time in several years, the budget deficit was broadly on
target. In Sweden as well, perceptions that public finances were improving
beyond expectations were the cause of a strong rally in both the bond market and
the currency.
On the corporate front things were less optimistic. Management forecasts
from the automobile sector all over Europe were increasingly bearish, and the
chemical sector suffered from downgrades due to pricing pressures in their
products. Contractors also have been forced to look overseas at more risky
business in the light of extremely low infrastructure investment in Europe.
Against this background, investors and analysts alike are reviewing their profit
forecasts for 1996 and 1997, and questioning the possibility of when and at what
level, peak earnings will materialise.
By the end of the year, the markets more than recovered all that was lost
in October, and the driving theme was the potential for lower interest rates
with the financials putting in particularly strong performances, and the large
defensive blue chips recovering. The reason for the renewed focus on interest
rates was precisely the publication of disappointing economic statistics. In
Germany there was increasing confirmation of corporate con-
2
<PAGE>
cerns about a slowdown in industrial orders, weak consumer consumption,
and downgrades of GDP forecasts. At the start of 1995, German GDP growth
was forecast to be 3%, in October, it was officially put at only 2%.
On the back of the disappointing growth indicators in Germany, in December
the Bundesbank finally yielded to pressure to cut the Discount and Lombard
rates, which sparked a series of interest rate cuts across most of Europe. As
December came to a close, investors were generally in an optimistic frame of
mind, and looking forward to further monetary easing in the New Year.
MARKET OUTLOOK
We continue to expect good performance from the European equity markets and
believe that there is still room for further interest rate cuts. The European
inflation outlook continues to improve, and we believe that it will be kept
under control precisely because the European consumer insists on more for less.
Although an impressive amount of restructuring has already taken place,
there may be room for more as private sector management consolidates its hold on
State companies that have been recently privatised.
The question on everyone's mind is whether the cyclical stocks have had
their day. Pricing was very weak in the second half of 1995, but appears to be
recovering, and although consumer sentiment is weak, there is a chance that,
just as analysts were over-optimistic for the recovery, the pessimism prevailing
towards the end of the year with regard to corporate earnings may have been
overdone. Investors will be watching closely at the figures emerging over the
next few months for clues as to the direction for earnings in 1996.
In terms of stock selection we believe that those companies that can
produce a good product or service at a competitive price will outperform. We
believe that it is right to avoid those companies where pricing is currently
protected by regulation and which may suffer from European Commission rulings in
favour of more open markets. Companies in sectors where pricing pressure still
prevails, will only do well if they can continue the drive to cut costs and
improve efficiency.
As we highlighted in the previous quarterly report, our geographical asset
allocation is purely a reflection of our bottom-up stock selection. We moved up
to a neutral weighting in France during the last quarter taking advantage of an
oversold situation. We maintain an overweight position in Holland because of the
good quality management teams in Dutch companies. In Sweden we are still
overweight, but have recently switched some of the industrials into the lowly
valued financial sector, and although we are underweight in Germany, our
investments there are also concentrated on quality industrial situations. We
maintain an underweight position in Italy, but could change this stance as the
year progresses, and the undercurrent of change in corporate mentality gathers
momentum. In Switzerland we have taken profits and reduced our weighting in
pharmaceuticals, and in the process have adopted a more neutral position with
regard to the banking sector.
In general we will continue to concentrate on stock selection and intend to
emphasize those companies where management has a good track record, or where we
see evidence of strategies that will increase free cash flow and create value
for shareholders. This, combined with the general expectation of monetary easing
in Europe, lead us to believe that 1996 will be a good year for equities, and
that your fund will continue to outperform.
Ronnie Armist
Mark Lloyd-Price
February 20, 1996
3
<PAGE>
================================================================================
INDUSTRY DIVERSIFICATION
Worldwide Value Fund, Inc. / December 31, 1995
================================================================================
% of Net Market
Assets Value
(000)
Pharmaceuticals and Health Care 12.1% $ 7,512
Retail Sales 10.4 6,467
Oil and Gas 7.2 4,506
Banking 7.0 4,328
Chemicals 6.3 3,946
Leisure 5.7 3,539
Manufacturing 5.4 3,344
Multi-Industry 5.2 3,234
Utilities 4.8 2,974
Transportation 4.7 2,925
Automotive 4.4 2,759
Consumer Durable Goods 4.2 2,620
Insurance 4.1 2,556
Publishing 3.6 2,244
Finance 3.3 2,057
Telecommunications 2.8 1,767
Consumer Non-Durable Goods 2.7 1,680
Machinery 1.8 1,129
Miscellaneous Services 0.9 575
Metals 0.8 475
Investment Holding Companies 0.7 407
Electrical Equipment 0.6 387
Computer Systems and Services 0.6 380
Construction Materials 0.5 327
Total Investment Portfolio 99.8 62,138
Other Assets Less Liabilities 0.2 111
Net Assets 100.0% $62,249
4
<PAGE>
================================================================================
STATEMENT OF NET ASSETS
Worldwide Value Fund, Inc. / December 31, 1995 / Amounts in Thousands
================================================================================
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS AND EQUITY INTERESTS -- 98.7%
Austria--1.7%
Flughafen Wien AG--operates Vienna International Airport 9 $ 584
Voest-Alpine Stahl AG--produces and distributes steel products 17 475
1,059
Belgium--0.6%
Kredietbank NV--full service bank with branches throughout the world 1 407
Finland--0.7%
Nokia AB--manufactures telecommunication services and equipment 11 438
France--12.2%
Castorama Dubois Investissements--chain of stores specializing in
do-it-yourself home repair supplies 4 645
Christian Dior SA--manufactures wine and spirits, perfumes, cosmetics and luggage 8 825
Compagnie Generale des Eaux--provides water and waste management services 7 714
Ecco SA--active in international business contracting 4 575
Guilbert SA--distributes office and business-machine supplies and furniture 4 423
Industrielle de Transports Automobiles SA--provides cleaning, recycling
and waste treatment services 3 500
Lyonnaise des Eaux--operations include water distribution and environmental
management 7 714
Michelin (CGDE)-Class B--manufactures auto products and tourist information 15 614
Peugeot SA--manufactures automobiles and light commercial vehicles 3 442
Pinault-Printemps SA--distributes household products and other consumer goods 2 399
Roussel-Uclaf--develops and manufactures specialty pharmaceuticals 4 644
Total Compagnie Francaise des Petroles--produces and markets oil and gas 16 1,101
7,596
Germany--10.5%
Adidas AG--manufactures and markets sportswear and equipment worldwide 19 979
Altana AG--produces and markets pharmaceuticals and chemical products 1 710
Bayer AG--major chemical company operating in over 150 countries 3 676
Hoechst AG--produces chemicals, fibers and polymers 3 835
Mannesmann AG--manufactures plant equipment, automotive technology
and electronic engineering 1 341
Siemens AG--provides a variety of industrial products and services 2 914
SKW Trostberg AG--produces fertilizer and other farming-related products 21 449
Veba AG--provides electrical energy services throughout Germany 25 1,070
Volkswagen AG--manufactures cars and other vehicles for sale worldwide 2 585
6,559
Italy--1.0%
Fiat SpA--manufactures vehicles, farm and construction equipment 136 444
Telecom Italia S.p.A.--provides telephone services throughout Italy 107 188
632
</TABLE>
5
<PAGE>
================================================================================
STATEMENT OF NET ASSETS--Continued
Worldwide Value Fund, Inc. / December 31, 1995 / Amounts in Thousands
================================================================================
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Netherlands--14.5%
ABN Amro Holding N.V.--provides worldwide banking operations 14 $ 647
Aegon N.V.--offers insurance, financial, leasing and other services 17 762
Elsevier NV--holding company for international publishing group 46 611
Fortis Amev NV--holding company for financial services group 13 888
Gucci Group NV--produces and distributes luxury apparel and accessories 9 348
Hagemeyer N.V.--imports and distributes brand name products 13 679
ING Groep NV--offers a wide range of financial services worldwide 17 1,169
KLM Royal Dutch Airlines NV--full service airline serving 77 countries 18 623
Koninklijke Ahold NV--international food retailing organization 13 527
Koninklijke PTT Nederland NV--provides postal and telecommunication services 11 391
Nutricia Vereenigde Bedrijven--produces specialized food products 5 432
Oce-Van Der Grinten N.V.--manufactures copiers and other office equipment 7 444
Philips Electronics N.V.--holding company for manufacturer of electronic and
electrical products 11 387
Ver. Ned. Uitgevbedri Verigd Bezit--diversified media company 5 662
Wegener NV--publishes newspapers in the Netherlands 5 444
9,014
Norway--1.2%
Christiania Bank OG Kreditkasse--provides banking services for retail and
corporate markets 187 436
Sensonor A.S.--manufactures electronic airbag sensors for automobiles 39 311
747
Spain--2.9%
Autopistas Concesionaria Espanola SA--operates and maintains motorways
in Spain 68 774
Banco Santander SA--commercial bank operating throughout Spain 7 377
Empresa Nacional de Electricidad SA--provides electricity to other utilities
in Spain 12 680
1,831
Sweden--7.2%
AGA AB-Series B--produces and distributes industrial and medical gases 29 402
Asea AB-Class B--holding company active in engineering and construction industries 3 321
Astra AB-Class A--manufactures and markets pharmaceuticals 28 1,128
Atlas Copco AB-Series B--produces compressors, air dryers and related products 52 788
Hennes & Mauritz AB--clothing retailer operating throughout Europe 3 167
Svedala Industrier AB--manufactures products for engineering and
construction industries 13 327
Telefonaktienbolaget LM Ericsson--produces and installs telecommunication systems 37 719
Trygg-Hansa AB--parent company of multi-line insurance company 38 622
4,474
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Switzerland--13.5%
Alusuisse-Lonza Holding AG--holding company with diverse industrial subsidiaries 1 $ 460
BBC Brown Boveri AG--holding company with subsidiaries in energy, electronics,
transportation and financial sectors 1 813
Ciba-Geigy AG--produces pharmaceuticals and biological products 2 1,584
Publicitas Holding S.A.--subsidiaries process national and international advertising 1 527
Roche Holding AG--manufactures chemical and pharmaceutical products N.M. 1,638
Sandoz AG--produces pharmaceuticals and chemicals 2 1,739
Swiss Reinsurance Group--international multi-line insurance company N.M. 454
Swissair AG--operates an international airline 1 444
Zurich Versicherungsgesellschaft--offers a variety of insurance products 2 718
8,377
United Kingdom--32.5%
Allied Irish Banks plc--provides full range of banking services in the UK
and Ireland 270 1,476
Asda Group plc--food, apparel and home furnishings retailer 944 1,627
British Petroleum Company plc--produces and retails petroleum products
and chemicals 266 2,220
Compass Group plc--international catering group 199 1,511
Fairey Group plc--manufactures electronics, aerospace and industrial products 59 492
Glaxo Wellcome plc--produces and markets pharmaceuticals 73 1,037
Granada Group plc--provides television, leisure and computer maintenance services 202 2,028
Henlys Group plc--manufactures buses and operates auto dealerships 168 1,288
Lloyds TSB Group plc--provides a wide range of banking services 270 1,392
Medeva plc--produces various pharmaceutical products 147 616
Next plc--upscale retail, home shopping and financial services company 346 2,454
Storehouse PLC--clothing and housewares retailer with three retail brands 125 648
Vickers PLC--manufactures and sells automotive, defense and medical products 300 1,183
Vodafone Group plc--provides telecommunications services 170 610
Wassall PLC--holding company whose subsidiaries manufacture a variety
of consumer products 391 1,640
20,222
United States of America--0.2%
Britmar Corporation--holding company for distribution activities 46 115(A)
Total Common Stocks and Equity Interests
(Identified Cost - $51,313) 61,471
</TABLE>
7
<PAGE>
================================================================================
STATEMENT OF NET ASSETS--Continued
Worldwide Value Fund, Inc. / December 31, 1995 / Amounts in Thousands
================================================================================
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
PREFERRED STOCKS--1.1%
Germany--0.6%
SAP AG--computer software developer and consultant 3 $ 380
Italy--0.5%
Telecom Italia S.p.A.-Savings Shares--provides telephone services throughout Italy 273 287
Total Preferred Stocks
(Identified Cost - $703) 667
Total Investments--99.8%
(Identified Cost - $52,016) 62,138
Other Assets Less Liabilities--0.2% 111
Net Assets Consisting of:
Common stock at par value $.001 per share, authorized 50,000 shares,
issued 3,005 shares, outstanding 2,946 shares $ 3
Accumulated paid-in capital 52,947
Accumulated net investment loss (243)
Accumulated net realized loss on investments and currency transactions (631)
Unrealized appreciation of investments and currency transactions 10,173
Net assets - 100.0% $62,249
Net asset value per share $21.13
</TABLE>
(A) Non-income producing
N.M. Not meaningful
See notes to financial statements.
8
<PAGE>
===============================================================================
STATEMENT OF OPERATIONS
Worldwide Value Fund, Inc. / For the Year Ended December 31, 1995 /
Amounts in Thousands
===============================================================================
Investment Income:
Dividends $1,378
Interest 21
Less foreign income tax expense (151)
Total investment income $ 1,248
Expenses:
Investment advisory fee 580
Administration fee 116
Custodian fees 148
Directors' fees and expenses 110
Legal and audit fees 110
Reports to shareholders 50
Transfer agent and shareholder servicing expense 18
Registration expense 17
Other expenses 56
Total expenses 1,205
Net Investment Income 43
Net Realized and Unrealized Gain on
Investments, Options and Currency Transactions:
Realized gain (loss) from:
Sale of investments 3,463
Options and currency transactions (864)
Change in unrealized appreciation of:
Investments 7,646
Options and currency transactions (72)
Net Realized and Unrealized Gain on
Investments, Options and Currency Transactions 10,173
Increase in Net Assets Resulting from Operations $10,216
================================================================================
STATEMENT OF CHANGES IN NET ASSETS
Worldwide Value Fund, Inc. / Amounts in Thousands
================================================================================
<TABLE>
<CAPTION>
For the Years Ended December 31,
1995 1994
<S> <C> <C>
Change in Net Assets:
Operations:
Net investment income (loss) $ 43 $ (97)
Net realized gain on investments, options and currency transactions 2,599 2,732
Change in unrealized appreciation of investments, options
and currency transactions 7,574 (4,986)
Change in net assets resulting from operations 10,216 (2,351)
Distributions to shareholders:
Net investment income (43) --
In excess of net investment income (134) --
Change in net assets from Fund stock repurchase* (925) --
Change in net assets 9,114 (2,351)
Net Assets:
Beginning of year 53,135 55,486
End of year (including overdistributions of net investment income
of $243 and $0, respectively) $62,249 $53,135
</TABLE>
* As of December 31, 1995, 58,982 shares of Fund common stock were purchased
at market prices which averaged a 21.4% discount to net asset value.
See notes to financial statements.
9
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS
Worldwide Value Fund, Inc.
================================================================================
Contained below is per share operating performance data for a share of
common stock outstanding, total investment return, ratios to average net assets
and other supplemental data. This information has been derived from information
provided in the financial statements and market price data for the Fund's
shares.
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value beginning of year $17.68 $18.46 $14.29 $15.44 $14.65
Net investment income (loss) .01 (.03) .14 .08 .08
Net realized and unrealized gain
(loss) on investments, options
and currency transactions 3.50 (.75) 4.13 (1.19) .92
Total from investment operations 3.51 (.78) 4.27 (1.11) 1.00
Dividends and distributions paid:
Net investment income (.06) -- (.05) (.04) (.21)
In excess of net investment income -- -- (.05) -- --
Total dividends and distributions (.06) -- (.10) (.04) (.21)
Net asset value, end of year $21.13 $17.68 $18.46 $14.29 $15.44
Market value per share, end of year $16.88 $14.25 $16.625 $12.00 $12.50
TOTAL INVESTMENT RETURN:
Based on market value per share 18.8% (14.3%) 39.3% (3.7%) 4.7%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Expenses 2.1% 2.1% 2.1% 2.2% 2.3%
Net investment income 0.1% -- 0.9% 0.5% 0.5%
Portfolio turnover rate 147.7% 75.0% 66.8% 148.4% 91.9%
Net assets at end of year (in thousands) $62,249 $53,135 $55,486 $42,930 $46,405
</TABLE>
See notes to financial statements.
10
<PAGE>
===============================================================================
NOTES TO FINANCIAL STATEMENTS
Worldwide Value Fund, Inc. / Amounts in Thousands
===============================================================================
1. Significant Accounting Policies:
Worldwide Value Fund, Inc. ("Fund") is registered under the Investment Company
Act of 1940, as amended, as a closed-end, diversified investment company. The
following accounting policies are in conformity with generally accepted
accounting principles for investment companies. Such policies are consistently
followed by the Fund in the preparation of its financial statements.
Security Valuation
All securities for which market quotations are readily available are valued at
the last sales price, or if no sales price is available at that time, at the
mean between the latest bid and asked prices. Securities that are traded
over-the-counter are valued at the mean between the latest bid and asked prices.
If market or bid and asked quotations are not available, securities will be
valued as determined in good faith by the Board of Directors.
Currency Translation
The books and records of the Fund are maintained in US dollars. Foreign currency
amounts are translated into US dollars on the following basis:
(i) market value of investment securities, options, assets and
liabilities are translated at the closing daily rate of exchange, and
(ii)purchases and sales of investment securities, options, dividend and
interest income and expenses are translated at the rate of exchange
prevailing on the respective date of such transactions.
The effect of changes in foreign exchange rates on realized and unrealized
security gains or losses is reflected as a component of such gains or losses.
Security Transactions and
Investment Income
Security transactions are recorded on the trade date. Realized gains and losses
from security transactions are reported on an identified cost basis. Dividend
income is recorded on the ex-dividend date. Interest income and expenses are
recorded on the accrual basis.
Federal Income Tax
No provision for federal income or excise taxes is required, since the Fund
intends to continue to qualify as a regulated investment company and distribute
all of its taxable income to its shareholders.
Distributions to Shareholders
Distributions to shareholders are recorded on the ex-dividend date. The Fund
expects to distribute annually to shareholders all of its net investment income
and net realized short-term and long-term capital gain.
2. Investment Transactions:
Investment transactions for the year ended December 31, 1995 (excluding
short-term securities) were as follows:
Purchases $75,178
Proceeds from sales 76,911
At December 31, 1995, the cost of securities for federal income tax
purposes was $52,264. Aggregate gross unrealized appreciation for all securities
in which there was an excess of value over tax cost was $10,540 and aggregate
gross unrealized depreciation for all securities in which there was an excess of
tax cost over value was $666. The Fund has unused capital loss carryforwards for
federal income tax purposes of $400 which expire in 2000.
3. Transactions with Affiliates:
The Fund has an investment advisory agreement with Lombard Odier International
Portfolio Management Limited ("Adviser") for which the Adviser receives a
monthly fee at an annual rate of 1% of the Fund's net assets, based on the net
assets on the last business day of each month. This rate is reduced on net asset
values in excess of $100 million. The Adviser has managed the Fund's portfolio
since its inception in 1986.
11
<PAGE>
===============================================================================
NOTES TO FINANCIAL STATEMENTS--Continued
Worldwide Value Fund, Inc. / Amounts in Thousands
===============================================================================
The Fund has an administration contract with Legg Mason Fund Adviser, Inc.
("Administrator") for which the Administrator receives from the Fund a monthly
fee at an annual rate of .20% of the Fund's net assets, based on the net assets
on the last business day of each month. This rate is reduced on net asset values
in excess of $100 million.
The Administrator also serves as Investment Consultant ("Consultant") to
the Adviser pursuant to an Investment Consultant Contract with the Adviser and
the Fund. Under the Investment Consultant Contract, the Consultant provides the
Adviser with investment advice, research and assistance, primarily regarding
United States securities. For its services, the Consultant receives from the
Adviser a monthly fee at the same rate and basis as in the Administration
Contract discussed in the preceding paragraph.
4. Financial Instruments:
As part of the Fund's investment program, the Fund may utilize repurchase
agreements, forward currency contracts, options and futures. The nature and risk
of these financial instruments and the reason for using them are set forth more
fully in the Fund's Prospectus.
Repurchase Agreements
All repurchase agreements are fully collateralized by obligations issued by the
US government or its agencies and such collateral is in the possession of the
Fund's custodian. The value of such collateral includes accrued interest. Risks
arise from the possible delay in recovery or potential loss of rights in the
collateral should the issuer of the repurchase agreement fail financially.
Forward Currency Contracts
The Fund may enter into foreign forward currency contracts to hedge against
adverse changes in the relationship of the US dollar to foreign currencies.
Risks arise from the possible inability of counterparties to meet the terms of
their contracts and from movements in currency values. Forward currency
contracts are valued using the forward rate.
As of December 31, 1995 the Fund had entered into the following currency
contract:
Settlement Unrealized
Date Gain (US$)
Contract to Sell
5,217 Deutschmarks 2/13/96 $55
Option Transactions
A call option written gives the option holder the right to purchase the
underlying security at a specified price until a specified date. A put option
written gives the option holder the right to sell the underlying security at a
specified price until a specified date. Risks arise from the possible
illiquidity of the options market and from movements in security values. Call
options written by the Fund and related premiums received during the period were
as follows:
Contracts Premiums
Options outstanding
January 1, 1995 165 $ 69
Options written 743 369
Options closed (908) (438)
Options outstanding
December 31, 1995 -- $ --
12
<PAGE>
================================================================================
DIVIDEND REINVESTMENT PLAN
Worldwide Value Fund, Inc.
================================================================================
Worldwide Value Fund, Inc. ("Fund") offers an Automatic Dividend Reinvestment
Plan ("Plan"). All shareholders of the Fund are automatically participants in
the Plan, unless they elect to receive their dividends and distributions in
cash. State Street Bank and Trust Company ("State Street"), as Plan Agent, will
automatically invest your dividends and distributions in shares of the Fund for
your account. If you own shares in your own name, you participate directly in
the Plan. If you own shares that are held in the name of a brokerage firm, bank,
or other nominee, you should contact your nominee to see if it will participate
on your behalf. If you wish to participate in the Plan, but your brokerage firm,
bank or other nominee is unable to participate on your behalf, you should
request your nominee to re-register your shares in your own name which will
enable you to participate in the Plan. Currently, the Plan does not have a cash
purchase plan option.
As a Plan participant, your dividends and distributions will be promptly
invested for you, automatically increasing your holdings in the Fund. If the
Fund declares a dividend or distribution payable at the option of the
shareholder either in cash or in stock of the Fund, as a Plan participant you
will automatically receive stock valued at the lower of market price or net
asset value. If the market price of shares on the valuation date equals or
exceeds the net asset value, the Fund will issue new shares to you at net asset
value, provided that the Fund will not issue new shares at a discount of more
than 5% from the then current market price. If the market price is lower than
the net asset value, or if dividends or distributions are payable only in cash,
then you will receive shares purchased by State Street on the New York Stock
Exchange ("NYSE") or otherwise on the open market. If the market price exceeds
net asset value before State Street has completed its purchases, the average
purchase price may exceed net asset value resulting in fewer shares being
acquired than if the dividend or distribution had been paid in newly issued
shares. All reinvestments are in full and fractional shares, carried to three
decimal places. However, if your shares are held by a broker, bank or nominee,
who participates in the Plan on your behalf, any amounts not sufficient to
purchase a whole share may be credited to your account in cash in lieu of the
fractional share interest. Your reinvestments will begin with the next dividend
or distribution payable by the Fund unless you elect to withdraw from the Plan,
provided that State Street receives your authorization to withdraw prior to the
record date. Should your authorization arrive after the record date, your
withdrawal from the Plan will begin with the following dividend or distribution.
There is no charge to participants for reinvesting dividends and
distributions (except for certain brokerage commissions, as described below),
since State Street's fees are paid by the Fund. There are no brokerage charges
for shares issued directly by the Fund. Whenever shares are purchased by State
Street on the NYSE or otherwise on the open market, each participant will pay a
pro rata portion of brokerage commissions. Brokerage charges for purchasing
shares through the Plan are expected to be less than the usual brokerage charges
for individual transactions, because State Street will purchase stock for all
participants in blocks, resulting in lower commissions for each individual
participant. Brokerage commissions will be averaged and added to the purchase
prices.
You will receive information annually, concerning the U.S. federal income tax
status of dividends and distributions you receive, for your personal records and
to help you prepare your federal income tax return. The automatic reinvestment
of dividends and distributions does not relieve you of any income tax which may
be payable on such reinvested dividends or distributions.
You may elect to withdraw from the Plan without penalty at any time by
written notice to State Street. If you are a shareholder of record and decide to
withdraw, you will receive, without charge, stock certificates issued in your
name for all full shares; or, if you wish, State Street will sell your shares
and send you the proceeds, less a service fee of $2.50 and less brokerage
commissions. State Street will convert any fractional shares you hold at the
time of your withdrawal to cash at the current market price and send you a check
for the proceeds.
Further information about the Plan may be obtained by writing to State Street
Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-8200.
13
<PAGE>
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QUARTERLY RESULTS OF INVESTMENT OPERATIONS/Unaudited
Worldwide Value Fund, Inc.
================================================================================
Shown in thousands of dollars and per common share:
<TABLE>
<CAPTION>
First Second Third Fourth
1995 Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income $ 199 $0.07 $ 631 $0.21 $ 265 $0.09 $ 153 $0.05
Net investment income (loss) (65) (0.02) 337 0.11 (37) (0.01) (192) (0.07)
Net realized and unrealized gain
(loss) on investments
and currency transactions 1,237 0.41 3,811 1.30 3,023 1.05 2,102 0.74
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
1994 Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income $ 156 $0.05 $ 540 $0.18 $ 267 $0.09 $ 86 $0.03
Net investment income (loss) (115) (0.04) 258 0.09 (18) (0.01) (222) (0.07)
Net realized and unrealized gain
(loss) on investments
and currency transactions (1,318) (0.44) (2,406) (0.80) 1,618 0.54 (149) (0.05)
</TABLE>
Shareholder Account Information
Shareholders whose accounts are held in their own name may contact the
Fund's Transfer Agent, State Street Bank & Trust Company at (800) 426-5523 for
information concerning their accounts.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase, from time to time, up to
150,000 of the outstanding shares of its common stock at market prices.
14
<PAGE>
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REPORT OF INDEPENDENT ACCOUNTANTS
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To the Shareholders and Directors
of Worldwide Value Fund, Inc.:
We have audited the accompanying statement of net assets of Worldwide Value
Fund, Inc., including the portfolio of investments, as of December 31, 1995, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and
financial highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financing highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Worldwide Value Fund, Inc. as of December 31, 1995, and the results of its
operations, changes in its net assets, and financial highlights for each of the
respective periods stated in the first paragraph, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
February 1, 1996
Baltimore, Maryland
