WORLDWIDE
DOLLARVEST
FUND, INC.
Semi-Annual Report May 31, 1994
The Fund is leveraged to provide shareholders with a potentially
higher rate of return. However, leveraging may exaggerate changes in
the net asset value of the Fund's shares and in the yield on the
Fund's portfolio.
Investing in emerging market securities involves a number of risk
factors and special considerations, including restrictions on
foreign investments and on repatriation of capital invested in
emerging markets, currency fluctuations, and potential price
volatility and less liquidity of securities traded in emerging
markets. In addition, there may be less publicly available
information about the issuers of securities, and such issuers may
not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those to which US companies
are subject. Therefore, the Fund is designed as a long-term
investment for investors capable of assuming the risks of investing
in emerging markets. The Fund should be considered as a vehicle for
diversification and not as a complete investment program. Please
refer to the prospectus for details.
This report, including the financial information herein, is
transmitted to the shareholders of Worldwide DollarVest Fund, Inc.
for their information. It is not a prospectus, circular or
representation intended for use in the purchase of shares of the
Fund or any securities mentioned in the report. Past performance
results shown in this report should not be considered a
representation of future performance.
<PAGE>
Worldwide DollarVest Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
WORLDWIDE DOLLARVEST FUND, INC.
The Benefits and
Risks of
Leveraging
The Fund is authorized to utilize leverage in an amount between 20%
and 33 1/3% of the Fund's total assets (including the amount
obtained from the leverage).
The concept of leveraging is based on the premise that the cost of
assets to be obtained from leverage will be based on short-term
interest rates, which normally will be lower than the return earned
by the Fund on its longer-term portfolio investments. Since the
total assets of the Fund (including the assets obtained from
leverage) will be invested in the higher-yielding portfolio
investments, the Fund's Common Stock shareholders are the
beneficiaries of the incremental yield. Should the differential
between the underlying interest rates narrow, the incremental yield
"pick up" will be reduced. Furthermore, if long-term interest rates
rise, the Common Stock net asset value will reflect the full decline
in the entire portfolio holdings therefrom since the assets obtained
from leverage do not fluctuate.
Leverage creates risks for holders of Common Stock including the
likelihood of greater net asset value and market price volatility.
In addition, there is the risk that fluctuations in interest rates
on borrowings (or in the dividend rates on any Preferred Stock, if
the Fund were to issue Preferred Stock) may reduce the Common
Stock's yield and negatively impact its market price. If the income
derived from securities purchased with assets received from leverage
exceeds the cost of leverage, the Fund's net income will be greater
than if leverage had not been used, and therefore the amount
available for distribution to Common Stock shareholders will be
reduced. In this case, the Fund may nevertheless decide to maintain
its leveraged position in order to avoid capital losses on
securities purchased with leverage. However, the Fund will not
generally utilize leverage if it anticipates that its leveraged
capital structure would result in a lower rate of return for its
Common Stock than would be obtained if the Common Stock were
unleveraged for any significant amount of time.
<PAGE>
DEAR SHAREHOLDER
We are pleased to provide you with this first semi-annual report for
Worldwide DollarVest Fund, Inc. In this and future shareholder
reports, we will highlight the Fund's performance, describe recent
investment activities, and examine some of the important market
developments that helped shape our investment strategy during the
period under review.
Worldwide DollarVest Fund, Inc. seeks to provide shareholders with a
high level of current income. In addition, the Fund seeks capital
appreciation. The Fund invests exclusively in US dollar-denominated
securities, substantially all of which will be debt securities or
obligations of government and government-related issuers located in
foreign countries and high-yield, high risk corporate debt
securities of non-US issuers.
Investment Results
Since inception (February 4, 1994) through May 31, 1994, the total
investment return of Worldwide DollarVest Fund, Inc. was -10.35%,
based on a change in per share net asset value from $14.18 to
$12.48, and assuming reinvestment of $0.231 per share income
dividends. During the same period, the Fund earned $0.331 per share
income dividends, representing a net annualized yield of 8.26%,
based on a month-end per share net asset value of $12.48.
Global Investment Environment
During the May period, the global financial markets suffered a
significant reversal from the bullish trends experienced throughout
1993. This year there has been no safe place for fixed-income
investors. Emerging debt markets, as measured by the unmanaged J.P.
Morgan Brady Bond Index, declined 13.2% for the period under review.
Several factors affected these markets but the reversal was
primarily triggered by the US Federal Reserve Board's change in
monetary policy. The increase in the Federal Funds rate upset the US
bond market as well as bond markets around the world. In emerging
markets, heavy selling by speculative investors and Japanese banks
into markets with limited liquidity helped fuel the crisis. As fixed-
income prices declined, smaller investors in emerging markets were
forced to liquidate positions in order to meet margin calls, which
accelerated price declines. Finally, the amount of unsettling news
worldwide contributed to investor nervousness regarding emerging
markets, primarily the events in Mexico.
During the sell-off, emerging markets' debt underperformed relative
to bonds in more developed countries as reflected in the significant
widening of yield spreads between emerging markets' debt and US
Treasury securities. This widening occurred in fixed-rate as well as
floating-rate instruments. This anomaly suggests that this market
sell-off was the result of higher interest rates in addition to
panic selling on the part of investors.
<PAGE>
In our opinion, the long-term economic fundamentals of the Latin
American countries and some other emerging countries (such as the
Philippines, Poland and Morocco) remain generally positive. During
the second half of 1994, we expect to reach price stability in the
US Treasury markets. It is our opinion that this is a necessary
event to improve investor sentiment in emerging markets. The second
half of 1994 will also be dominated by two key political events in
Latin America, the presidential elections in Mexico and Brazil.
Investment Activities
During the period under review, our investment activities were
slowed by the timing of the global financial crisis. During the
first two months of the period, we maintained on average 29% of the
Fund's assets in cash. By the end of May, the Fund was fully
invested and a small leverage position (8.9% of net assets) was
added. (For a complete description of the benefits and risks of
leveraging, please see page 1 of this report to shareholders).
As of May 31, 1994, our geographical asset allocation was as
follows: Argentina, 19.7% of net assets; Brazil, 11.6%; Costa Rica,
1.6%; Ecuador, 1.0%; Mexico, 28.7%; Philippines, 7.5%; United
States, 17.8%; and Venezuela, 19.2%.
We invested 16% of total assets in US high-yield securities,
enabling us to diversify outside of emerging markets. These
investments provide attractive current returns and in some cases,
capital appreciation potential. As the US economy continues to
advance, improved credit-worthiness and credit rating upgrades may
benefit some of these holdings.
Argentinean Investment
Environment
Argentina continued to post strong economic growth and decreasing
inflation in the first five months of the year on the back of
structural economic reform and fiscal responsibility. The continued
opening of the economy, deregulation and mainly the strong
investment in capital goods has increased Argentina's
competitiveness, production and exports. Sizable capital goods
imports have also increased the trade deficit for the first quarter.
The government is committed to increasing competitiveness through
productivity gains rather than through foreign exchange policy. At
the same time, the constitutional reform to allow for President
Menem's May 1995 reelection bid seems to be well on track.
<PAGE>
Industrial production grew 6.4% in the first quarter of 1994
following the 1993 gross national product (GNP) expansion.
Performance on the inflation front is equally impressive. Consumer
prices rose only 3.3% for the 12 months ended May 31, 1994, down
from 7.4% for 1993. Economy Minister Cavallo expects inflation to be
3% in 1994 and GNP to grow 6%.
The current strength and modernization efforts of Argentina's
industry spurred the trade deficit for the first four months of
1994, which grew to $2.34 billion, about three times the level of
the same period in 1993. This translates into a projected current
account deficit of around 3.5% of gross domestic product (GDP).
Brazilian Investment Environment
As we move closer to the October presidential election, Brazil
becomes increasingly focused on recent electoral polls which favor a
victory by the leftist candidate, Luiz Inacio da Silva (Lula). At
the same time, the current administration is moving ahead with the
implementation of former Minister Cardoso's economic program. The
strategy seems to be to try to obtain gains on the inflation and
growth fronts so that Cardoso, who is now running as a presidential
candidate behind Lula, can garner enough public support to at least
deny Lula a first round victory in October, giving Cardoso time to
develop alliances with other political parties to win the second
round in November. If elected, Cardoso is expected to tackle the
fiscal deficit, spur privatization monopolies and deregulate the
economy. At this time, it is too early to predict the outcome of the
election.
Earlier this year Congress passed the administration's proposed
Emergency Social Plan into law and approved a tax increase to reduce
the fiscal deficit in 1994. Later Congress failed to reform the
constitution and its tax code, civil service and government monopoly
provisions, limiting the improvement of the fiscal deficit beyond
1994. As part of the economic plan, a new currency, the real, will
be introduced on July 1 and will be linked to the US dollar at par,
thus attempting to minimize inflationary expectations. Although the
new currency will not be fully convertible, it will be backed by the
estimated $39 billion in foreign reserves. On the external accounts,
Brazil showed a continuation of large monthly trade surpluses. In
1994, the cumulative figure for the first four months was $4.27
billion.
<PAGE>
Mexican Investment Environment
Political events surpassed economic fundamentals as the driving
force behind the Mexican financial markets in 1994. The peasant
uprising in Chiapas, the assassination of Luis Colosio and the hotly
contested presidential election all added to the political
uncertainty and perceived risk surrounding Mexican investment. The
Bolsa, Mexican Brady bonds and Eurobonds all fell sharply, while
interest rates in the local cetes market climbed substantially.
During this tumultuous period, it was easy to lose sight of the
generally positive economic fundamentals which exist in Mexico.
Mexico appears to be slowly emerging from recession with GDP growth
of 0.5% in the first quarter. During the same period, the benefits
of the historic North American Free Trade Agreement began to be felt
as trade surged between the United States and Mexico. Inflation has
been dropping steadily since 1988 when it was 114.2%. It currently
is below 7%. The government's budget continues to be in balance, and
the central bank, despite massive intervention to support the peso,
has large foreign exchange reserves which are estimated at close to
$20 billion.
The period leading up to the August 21 presidential election could
prove volatile. Mexico is going through a political transformation
in addition to an economic one. This period of change, which may
make the country unstable in the short term, will be likely to lead
to a more prosperous and stable country in the long term.
Venezuelan Investment
Environment
The campaign rhetoric is over, and closer ties with the Inter-
national Monetary Fund are possible. President Caldera recently
reshuffled his Cabinet, including the President of the Venezuelan
Investment Fund. These changes indicate a major commitment to the
privatization process and the continuation of market reforms.
Contrary to initial official statements, the extent of the banking
system crisis is not yet clear. Nine financial institutions have
intervened and President Caldera has expressed his determination to
end the crisis. The government's aid to the troubled banks will be
refinanced through bolivar-denominated treasury bonds with
maturities of up to five years.
Initial economic forecasts have been restated, inflation is projected
at 60% (45% in 1993), and GDP growth is at -1.5% (-1.0% in 1993).
The decline in international reserves has slowed, and reserves are
estimated at US$9 billion, or an imports-coverage ratio of ten months.
<PAGE>
A tax reform program is underway. A temporary tax on banking
transactions and a sales tax at the wholesale level are in place.
The need to raise gasoline prices by year-end is gaining strength.
Additionally, Venezuela signed a free trade pact with Colombia and
Mexico, opening a market with a population of over 145 million and
over US$462 billion in GDP to their export sector.
The aforementioned, combined with the improvement in and expected
stability of oil prices, allows us to reiterate our belief that
Venezuelan Brady bonds and Eurobonds are trading below their
fundamental value and debt servicing capacity.
We thank you for your investment in Worldwide DollarVest Fund, Inc.,
and we look forward to reviewing our outlook and strategy with you
in our upcoming annual report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Paolo Valle)
Paolo Valle
Vice President and
Portfolio Manager
(Vincent T. Lathbury III)
Vincent T. Lathbury III
Vice President and
Portfolio Manager
July 12, 1994
<PAGE>
Officers and
Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
N. John Hewitt, Senior Vice President
Joseph T. Monagle, Senior Vice President
Donald C. Burke, Vice President
Vincent T. Lathbury III, Vice President
Paolo H. Valle, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Bank of New York
One Wall Street
New York, New York 10286
Transfer Agent
The Bank of New York
101 Barclay Street
New York, New York 10286
NYSE Symbol
WDV
<TABLE>
PER SHARE INFORMATION
<CAPTION>
Per Share
Selected Quarterly
Financial Data*
Net Dividends/Distributions
Investment Realized Unrealized Net Investment Capital
For the Period Income Losses Losses Income Gains
<S> <C> <C> <C> <C> <C>
February 4, 1994++ to May 31, 1994 $.33 $(.20) $(1.60) $.23 --
<CAPTION>
Net Asset Value Market Price**
For the Period High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
February 4, 1994++ to May 31, 1994 $14.12 $11.78 $15.00 $11.125 1,240
<PAGE>
<FN>
++Commencement of Operations.
*Calculations are based upon shares of Common Stock outstanding at the end of the period.
**As reported in the consolidated transaction reporting system.
***In thousands.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Interest Maturity Value Percent of
COUNTRY Face Amount Issue Rate Date (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C> <C>
Argentina
Bonds $ 2,000,000 Banco de Galicia y Buenos Aires S.A.--Yankee (2) 9.00 % 11/01/2003 $ 1,815,000 2.3%
4,000,000 Banco Del Rio de la Plata S.A.--Yankee (2) 8.75 12/15/2003 3,570,000 4.5
2,000,000 Republic of Argentina--Global (1) 8.375 12/20/2003 1,785,000 2.2
2,000,000 Telecom Argentina Stet S.A. (4) 8.375 10/18/2000 1,865,000 2 3
Brady Bonds 12,000,000 Argentina Par Series "L" (1) 4.25 3/31/2023 6,675,000 8.4
Total Investments in Argentina (Cost--$17,586,525) 15,710,000 19.7
Brazil
Eurobonds 3,000,000 Brazil Exit Bonds (1) 5.187 4/15/2006 1,687,500 2.1
3,000,000 Brazil Exit Bonds (1) 6.00 9/15/2013 1,485,000 1.9
1,000,000 Celulose Nipo-Brasileira S.A.(CENIBRA) (3) 9.375 12/21/2003 917,500 1.2
1,000,000 ++Compania Brasileira de Petroleo Ipiranga (3) 8.625 2/25/2002 907,500 1.1
1,000,000 Klabin Fabricadora Papel (3) 10.00 12/20/2001 907,500 1.1
3,000,000 Republic of Brazil (1) 5.25 4/15/2009 1,582,500 2.0
3,500,000 Republic of Brazil (1) 5.25 4/15/2012 1,741,250 2.2
Total Investments in Brazil (Cost--$9,526,427) 9,228,750 11.6
Costa Rica
Brady Bonds 2,000,000 Banco Central Costa Rica (2) 6.25 5/21/2015 1,300,000 1.6
Total Investments in Costa Rica (Cost--$1,322,500) 1,300,000 1.6
Ecuador
Loan Agreement 1,500,000 Banco Central de Equador Consolidated
Agreement (18) 10.00 3/09/2024 772,500 1.0
Total Investments in Ecuador (Cost--$981,250) 772,500 1.0
<PAGE>
Mexico
Bonds 1,000,000 Cementos Mexicanos, S.A. de C.V., Nom 'B'
(Cemex) (7) 8.875 6/10/1998 988,750 1.2
1,500,000 Corporacion Industrial San Luis (3) 9.125 11/16/1998 1,410,000 1.8
1,000,000 Fomento Economico Mexicano, S.A. de C.V.
(Femsa) (14) 9.50 7/22/1997 1,007,500 1.3
1,500,000 Gruma, S.A. de C.V. (3) 9.75 3/09/1998 1,522,500 1.9
1,000,000 Grupo Simec, S.A. de C.V., guaranteed by
Grupo Sidek, S.A. (5) 8.875 12/15/1998 940,000 1.2
1,000,000 Grupo Situr, S.A. de C.V., guaranteed by
Grupo Sidek, S.A. (6) 8.75 9/14/1998 940,000 1.2
1,500,000 Nacional Financiera S.A. (17) 9.375 7/15/2002 1,453,125 1.8
2,000,000 Tolmex, S.A. de C.V. (15) 8.375 11/01/2003 1,790,200 2.2
Brady Bonds 20,000,000 United Mexican States Par 'A' (1)* 6.25 12/31/2019 6,762,500 8.5
18,000,000 United Mexican States Par 'B' (1)* 6.25 12/31/2019 6,086,250 7.6
Total Investments in Mexico (Cost--$25,499,858) 22,900,825 28.7
Philippines
Bonds 2,000,000 Philippine Long Distance Telephone Co. (4) 10.625 6/02/2004 2,015,000 2.5
Brady Bonds 6,000,000 Philippine Par Bond 'B' (2)* 5.25 12/01/2017 4,020,000 5.0
Total Investments in the Philippines (Cost--
$5,869,700) 6,035,000 7.5
United States
High Yield Bonds 1,000,000 ADT Operations Inc. (3) 9.25 8/01/2003 945,000 1.2
1,000,000 Fort Howard Corporation (13) 9.00 2/01/2006 847,500 1.1
1,950,000 Fresh Del Monte Produce (14) 10.00 5/01/2003 1,774,500 2.2
1,000,000 Gulf Canada Resources Ltd. (3) 9.25 1/15/2004 915,000 1.1
1,600,000 Nextel Communications Inc. (9) 10.77+++ 8/15/2004 936,000 1.2
1,000,000 Owens-Illinois, Inc. (11) 10.00 8/01/2002 1,007,500 1.3
925,000 Panamsat L.P. (9) 9.75 8/01/2000 906,500 1.1
1,500,000 Reliance Group Holdings, Inc. (17) 9.75 11/15/2003 1,372,500 1.7
1,000,000 Sequa Corp. (8) 9.375 12/15/2003 930,000 1.2
500,000 Sherritt Gordon Ltd. (10) 9.75 4/01/2003 488,750 0.6
1,242,000 Silgan Holdings Inc. (11) 13.17+++ 6/15/1996 960,998 1.2
1,000,000 Stone Container Corp. (13) 9.875 2/01/2001 950,000 1.2
500,000 Trump Plaza Funding, Inc. (12) 10.875 6/15/2001 432,500 0.5
1,000,000 Webb (Del E.) Corp. (15) 9.00 2/15/2006 870,000 1.1
1,000,000 Westpoint Stevens, Inc. (16) 9.375 12/15/2005 895,000 1.1
Commercial Paper** 1,844,000 General Electric Capital Corp. (17) 4.22 6/01/1994 1,844,000 2.3
Total Investments in the United States (Cost--
$17,015,040) 16,075,748 20.1
<PAGE>
Venezuela
Bonds 2,000,000 Venezolana de Cementos S.A.C.A. (VENCEMOS) (7) 9.25 11/22/1996 1,900,000 2.4
Brady Bonds 10,000,000 Republic of Venezuela Par 'A' (1) 7.00 3/31/2007 5,650,000 7.1
14,070,000 Republic of Venezuela Par 'B' (1) 6.75 3/31/2020 7,700,000 9.7
Total Investments in Venezuela (Cost--$19,237,900) 15,250,000 19.2
Total Investments (Cost--$97,039,200) 87,272,823 109.4
Liabilities in Excess of Other Assets (7,500,909) (9.4)
----------- ------
Net Assets $79,771,914 100.0%
=========== ======
<FN>
*Security represents collateral in connection with
reverse repurchase agreements (Note 5).
**Commercial Paper is traded on a discount basis; the
interest rate shown is the discount rate paid at the
time of purchase by the Fund.
++Restricted security pursuant to Rule 144A. The value
of the Fund's investment in restricted securities was
approximately $908,000, representing 1.1% of net assets.
+++Represents the approximate yield to maturity.
Corresponding industry groups for securities (percent
of net assets):
(1) Sovereign Government
Obligations--51.7%
(2) Banking--13.4%
(3) Industrial--11.9%
(4) Telecommunications--4.8%
(5) Steel--1.2%
(6) Tourism--1.2%
(7) Cement--3.6%
(8) Capital Goods--1.2%
(9) Communications--2.3%
(10) Conglomerates--0.6%
(11) Containers--1.2%
(12) Hotels & Casinos--0.5%
(13) Paper--1.1%
(14) Food & Beverage--3.5%
(15) Home Builders--3.3%
(16) Textiles--1.1%
(17) Finance--5.8%
(18) Loan Agreement--1.0%
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of May 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$97,039,200) (Note 1a) $ 87,272,823
Cash 912
Receivables:
Securities sold $ 7,975,413
Reverse repurchase agreement (Note 5) 7,106,400
Interest 1,787,025
Investment adviser (Note 2) 70,299 16,939,137
------------
Deferred organization expenses (Note 1g) 23,212
Prepaid expenses and other assets 3,743
------------
Total assets 104,239,827
------------
Liabilities: Payables:
Securities purchased 17,044,667
Reverse repurchase agreements (Note 5) 7,106,400 24,151,067
------------
Accrued expenses and other liabilities 316,846
------------
Total liabilities 24,467,913
------------
Net Assets: Net assets $ 79,771,914
============
Net Assets Common Stock $.10 par value, 200,000,000 shares authorized $ 639,296
Consist of: Paid-in capital in excess of par 89,514,833
Undistributed investment income--net 633,768
Accumulated realized capital losses on investments--net (1,249,606)
Unrealized appreciation/depreciation on investments--net (9,766,377)
------------
Net assets--Equivalent to $12.48 per share based on 6,392,962 shares of
capital stock outstanding (market price--$12.875) $ 79,771,914
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Period February 4, 1994++ to May 31, 1994
<S> <S> <C>
Investment Income Interest and amortization of premium and discount earned $ 2,104,295
(Note 1f):
Expenses: Investment advisory fees (Note 2) 157,121
Accounting services (Note 2) 18,722
Custodian fees 15,597
Professional fees 9,752
Directors' fees and expenses 9,575
Registration fees (Note 1g) 5,506
Transfer agent fees 4,990
Printing and shareholder reports 3,509
Amortization of organization expenses (Note 1g) 1,813
Other 4,246
------------
Total expenses before reimbursement 230,831
Reimbursement of expenses (Note 2) (227,420)
------------
Total expenses after reimbursement 3,411
------------
Investment income--net 2,100,884
------------
Realized & Realized loss on investments--net (1,249,606)
Unrealized Loss on Unrealized depreciation on investments--net (9,766,377)
Investments ------------
(Notes 1f & 3): Net Decrease in Net Assets Resulting from Operations $ (8,915,099)
============
<FN>
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
February 4, 1994++
Increase (Decrease) in Net Assets: to May 31, 1994
<S> <S> <C>
Operations: Investment income--net $ 2,100,884
Realized loss on investments--net (1,249,606)
Unrealized depreciation on investments--net (9,766,377)
------------
Net decrease in net assets resulting from operations (8,915,099)
<PAGE>
Dividends to Investment income--net (1,467,116)
Shareholders ------------
(Note 1h): Net decrease in net assets resulting from dividends to shareholders (1,467,116)
------------
Capital Share Proceeds from issuance of Common Stock 89,774,995
Transactions Offering costs resulting from issuance of Common Stock (391,545)
(Notes 1g & 4): Value of shares issued for reinvestment of dividends 670,674
------------
Net increase in net assets derived from capital share transactions 90,054,124
------------
Net Assets: Total increase in net assets 79,671,909
Beginning of period 100,005
------------
End of period* $ 79,771,914
============
<FN>
*Undistributed investment income--net $ 633,768
============
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF CASH FLOWS
<CAPTION>
For the Period
February 4, 1994++
to May 31, 1994
<S> <S> <C>
Cash Used for Net decrease in net assets resulting from operations $ (8,915,099)
Operating Adjustments to reconcile net decrease in net assets resulting from operations
Activities: to net cash used for operating activities:
Increase in receivables (1,857,324)
Decrease in other assets 391,545
Decrease in other liabilities (352,964)
Realized and unrealized loss on investments--net 11,015,983
Amortization of premium and discount (307,125)
------------
Net cash used for operating activities (24,984)
============
<PAGE>
Cash Used for Proceeds from sales of long-term securities 11,342,712
Investing Activities: Purchases of long-term securities (98,638,406)
Purchases of short-term investments--net (364,953,942)
Sales of short-term investments 363,337,209
------------
Net cash used for investing activities (88,912,427)
------------
Cash Provided by Cash receipts from issuance of Common Stock 89,383,450
Financing Cash receipts from borrowings 251,310
Activities: Dividends paid to shareholders (796,442)
------------
Net cash provided by financing activities 88,838,318
------------
Cash: Net decrease in cash (99,093)
Cash at beginning of period 100,005
------------
Cash at end of period $ 912
============
Noncash Financing Capital shares issued in reinvestment of dividends paid to shareholders $ 670,674
Activities: ============
<FN>
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Period
February 4, 1994++
Increase (Decrease) in Net Asset Value: to May 31, 1994
<S> <S> <C>
Per Share Net asset value, beginning of period $ 4.18
Operating ------------
Performance: Investment income--net .33
Realized and unrealized loss on investments and foreign currency transactions--net (1.80)
------------
Total from investment operations (1.47)
------------
Less dividends:
Investment income--net (.23)
------------
Net asset value, end of period $ 12.48
============
Market price per share, end of period $ 12.875
============
Total Investment Based on net asset value per share (10.35%)+++
Return:** ============
Based on market value per share (12.60%)+++
============
Ratios to Expenses, net of reimbursement .01%*
Average ============
Net Assets: Expenses .88%*
============
Investment income--net 8.02%*
============
Supplemental Net assets, end of period (in thousands) $ 79,772
Data: ============
Portfolio turnover 31.20%
============
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads. Total
investment returns based on market value, which can be significantly
greater or lesser than the net asset value, result in substantially
different returns.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Worldwide DollarVest Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end
management investment company. Prior to commencement of operations
on February 4, 1994, the Fund had no operations other than those
relating to organizational matters and the issue of 7,055 capital
shares of the Fund to Fund Asset Management, L.P. ("FAM") for
$100,005. The Fund determines and makes available for publication
the net asset value of its Common Stock on a weekly basis. The
Fund's Common Stock is listed on the New York Stock Exchange under
the symbol WDV.
(a) Valuation of investments--Portfolio securities (other than
short-term obligations but including listed issues) may be valued on
the basis of prices furnished by one or more pricing services which
determine prices for normal, institutional-size trading units of
such securities using market information, transactions for
comparable securities and various relationships between securities
which are generally recognized by institutional traders. In certain
circumstances, portfolio securities are valued at the last sale
price on the exchange that is the primary market for such
securities, or the last quoted bid price for those securities for
which the over-the-counter market is the primary market or for
listed securities in which there were no sales during the day. The
value of interest rate swaps, caps and floors is determined in
accordance with a formula and then confirmed periodically by
obtaining a bank quotation. Positions in options are valued at the
last sale price on the market where any such option is principally
traded. Obligations with remaining maturities of sixty days or less
are valued at amortized cost unless the method no longer produces
fair valuations. Repurchase agreements are valued at cost plus
accrued interest. Rights or warrants to acquire stock, or stock
acquired pursuant to the exercise of a right or warrant, may be
valued taking into account various factors such as original cost to
the Fund, earnings and net worth of the issuer, market prices for
securities of similar issuers, assessment of the issuer's future
prosperity, liquidation value or third party transactions involving
the issuer's securities. Securities for which there exist no price
quotations or valuations and all other assets are valued at fair
value as determined in good faith by or on behalf of the Board of
Directors of the Fund.
<PAGE>
(b) Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
(c) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing when
recognized. Assets and liabilities denominated in foreign currencies
are valued at the exchange rate at the end of the period. Foreign
currency transactions are the result of settling (realized) or
valuing (unrealized) assets or liabilities expressed in foreign
currencies into US dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange rates on
investments.
The Fund is authorized to enter into forward foreign exchange
contracts as a hedge against either specific transactions or
portfolio positions. Such contracts are not entered on the Fund's
records. However, the effect on operations is recorded from the date
the Fund enters into such contracts. Premium or discount is
amortized over the life of the contracts.
(d)Options--When the Fund writes an option, an amount equal to
the premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to reflect the current market value of the option written.
When a security is purchased or sold through an exercise of an option,
the related premium (or received) is added to (or deducted from)
the basis of the security aquired or deducted from (or added to)
the proceeds of the security sold. When an option expires (or the
Fund enters into a closing transaction), the Fund realizes a gain
or loss to the extent of the premiums received or paid (or gain or
loss to the extent the cost of the closing transaction is less than
or exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
<PAGE>
(e) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, a
withholding tax may be imposed on interest and capital gains at
various rates.
(f) Security transactions and investment income--Security transactions
are recorded on the dates the transactions are entered into (the trade
dates). Interest income (including amortization of discount) is
recognized on the accrual basis. Realized gains and losses on security
transactions are determined on the identified cost basis.
(g) Deferred organization expenses and offering costs--Deferred
organization expenses are charged to expense on a straight-line
basis over a five-year period. Direct expenses relating to the
public offering of the capital stock were charged to capital at the
time of issuance.
(h) Dividends and distributions--Dividends from net investment
income are declared daily and paid monthly. Distribution of capital
gains are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with FAM.
Effective January 1, 1994, the investment advisory business of FAM
was reorganized from a corporation to a limited partnership. Both
prior to and after the reorganization, ultimate control of FAM was
vested with Merrill Lynch & Co., Inc. ("ML & Co."). The general
partner of FAM is Princeton Services, Inc., an indirect wholly-owned
subsidiary of ML & Co. The limited partners are ML & Co. and Merrill
Lynch Investment Management, Inc. ("MLIM"), which is also an
indirect wholly-owned subsidiary of ML & Co.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.60% of
the Fund's average weekly net assets. For the period February 4,
1994 to May 31, 1994, FAM earned fees of $157,121, all of which was
voluntarily waived. FAM also voluntarily reimbursed the Fund for
$70,299 in additional expenses.
<PAGE>
Accounting services are provided to the Fund by FAM at cost.
During the period May 25, 1994 to May 31, 1994, Merrill Lynch
Security Pricing Service, an affiliate of Merrill Lynch, Pierce,
Fenner & Smith Inc. ("MLPF&S") provided security price quotations to
compute the net asset value of the Fund.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, MLIM, MLPF&S, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended May 31, 1994 were $115,683,073 and
$19,318,125, respectively.
Net realized and unrealized losses as of May 31, 1994 were as
follows:
Realized Unrealized
Losses Losses
Long-term investments $(1,247,669) $(9,766,377)
Short-term investments (1,937) --
----------- -----------
Total $(1,249,606) $(9,766,377)
=========== ===========
As of May 31, 1994, net unrealized depreciation for Federal income
tax purposes aggregated $9,766,377, of which $372,594 related to
appreciated securities and $10,138,971 related to depreciated
securities. At May 31, 1994, the aggregate cost of investments for
Federal income tax purposes was $97,039,200.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock,
par value $.10 per share. For the period ended May 31, 1994, shares
sold were 6,333,333 and increased by 52,574 to 6,392,962 as a result
of dividend reinvestment. At May 31, 1994, total paid-in capital
amounted to $90,154,129.
5. Reverse Repurchase Agreements:
Under a reverse repurchase agreement, the Fund sells securities and
agrees to repurchase them at a mutually agreed upon date and price.
At the time the Fund enters into a reverse repurchase agreement, it
may establish a segregated account with the custodian containing
cash, cash equivalents or liquid high grade debt securities having a
value at least equal to the repurchase price.
<PAGE>
As of May 31, 1994, the Fund had entered into reverse repurchase
agreements in the amount of $7,357,710. For the period February 4,
1994 to May 31, 1994, the maximum amount entered into was
$7,106,400, the average outstanding was $4,923,893 and the daily
weighted average interest rate was 5.61%.
6. Subsequent Event:
On June 10, 1994, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$0.099135 payable on June 30, 1994 to shareholders of record as of
June 20, 1994.
