WORLDWIDE
DOLLARVEST
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
May 31, 1998
<PAGE>
WORLDWIDE DOLLARVEST FUND, INC.
The Benefits and
Risks of
Leveraging
The Fund is authorized to utilize leverage in an amount up to 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. Conversely, if the income from the securities purchased is not
sufficient to cover the cost of leverage, the Fund's net income will be less
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.
Officers and
Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Joseph T. Monagle Jr., Senior Vice President
Paolo H. Valle, Senior Vice President
Donald C. Burke, Vice President
Vincent T. Lathbury III, Vice President
Gerald M. Richard, Treasurer
Lawrence A. Rogers, Secretary
Custodian
The Bank of New York
One Wall Street
New York, NY 10286
Transfer Agent
The Bank of New York
101 Barclay Street
New York, NY 10286
NYSE Symbol
WDV
<PAGE>
Worldwide DollarVest Fund, Inc., May 31, 1998
DEAR SHAREHOLDER
Investment Results
For the six-month period ended May 31, 1998, total investment return for
Worldwide DollarVest Fund, Inc. was +1.82%, based on a change in per share net
asset value from $15.67 to $12.92, and assuming reinvestment of $2.767 per share
income dividends and $0.154 per share capital gains distributions. During the
same period, the Fund earned $0.674 per share income dividends, representing a
net annualized yield of 10.46%, based on a month-end per share net asset value
of $12.92.
Investment Environment
The unmanaged J.P. Morgan Emerging Markets Bond Index spread over US Treasury
bonds tightened approximately 150 basis points (1.50%) between January 1998 and
mid-May 1998, only to reverse course by mid-June as several events impacted the
market in succession. These events included: the Indonesian crisis, riots and
the fall of the Suharto regime; Korean labor unrest; the weakness in Asia's
economic growth, currencies and banks; marked declines in world commodity
prices; and a crisis of confidence in Russia. Japanese yen weakness led to
additional spread widening, as the perceived risks of another round of currency
devaluations and economic turmoil increased, this time involving Hong Kong and
China.
Russia and Brazil, which seemed to be the countries most exposed to the Asian
contagion, once again became the object of investor focus. Brazil's fiscal and
monetary response to the October 1997 crisis had helped the country regain some
investor confidence, bringing foreign reserves to all-time record levels. The
high reserves have lowered the country's currency vulnerability during this
period of market turbulence, as we had expected. Thus, while liquid Brazilian
debt was reportedly being utilized as a hedging vehicle by leveraged investors
and was subsequently sold-off, volatility of the Real and of domestic interest
rates was lower. The reform and privatization processes have continued but
fiscal accounts have deteriorated in response to higher local interest rates and
higher election-year spending. Externally, the country has markedly improved its
performance as a result of the fiscal and monetary policy-induced slowdown in
economic growth. Lately, President Cardoso has strengthened his initiative, and
opinion polls show him with almost enough support to win in the first round of
the election.
Russia, on the other hand, experienced loss of investor confidence as the
central bank had to rescue a second-tier bank that had exposure to foreign banks
and investors. At the same time, investor uncertainty about the adequacy of the
ratio of foreign reserves to local currency foreign investment grew. In
addition, low commodity prices and the Asian currency weakness highlighted
Russian fiscal and foreign reserve vulnerabilities and put pressure on emerging
market bond spreads as marginal and highly leveraged investors hedged against
devaluation risk in Russia by selling external debt. Local interest rates were
allowed to increase dramatically to protect the ensuing currency pressures, an
aggressive fiscal effort was announced and Group of Seven Industrialized Nations
(G-7) and multilateral organizations became heavily involved in advising the
Russian government as to alternatives to defend its economic program. Given
Russia's geopolitical importance, many investors expected a package sponsored by
the International Monetary Fund (IMF) and G-7 direct assistance. Remarkably,
Wall Street investment firms also became involved, providing a number of
financing alternatives. Russia was able to tap the international markets by
eliminating existing debt through issuance of new debt at higher spreads.
Significant questions are still lingering about the ability of the Russian
government to be able to pass its aggressive tax package through the Duma and
implement these laws in time to obtain the necessary multilateral assistance,
despite some recent progress.
Portfolio Matters
We remained cautiously constructive in emerging market bonds, attentive to both
the risks as well as economic progress in individual countries. Emerging market
countries have shown fast policy responses under market-sensitive deadlines, and
we believe these policies remain conducive to further credit improvements. Some
benchmark countries such as Mexico and Argentina now seem less vulnerable since
they have made preemptive adjustments in their economic policies. Russia is
showing a positive policy response to investor pressures. Because of the
geopolitical importance of Russia, it seems likely that the G-7 countries and
multilateral organizations will assist the country financially to avoid
destabilization. In China and Hong Kong, the stability of their currencies
appears to be in their own economic interest. This seems also to be true in view
of China's desired political leadership role in the region. In addition, there
is a strong argument for the view that competitiveness gains through
devaluations are short-lived since the subsequent inflation, interest costs and
lack of investor credibility might quickly erode the benefits of devaluation, or
might encourage regional competitors to follow.
During the second half of the six-month period ended May 31, 1998, we liquidated
our US Treasury positions, which represented 9.0% of net assets at February 28,
1998. We subsequently increased the Fund's leverage from 32.9% of net assets at
February 28, 1998 to 48.3% at May 31, 1998. (For a complete explanation of the
benefits and risks of leveraging, see page 1 of this report to shareholders.) We
also sold-off our small allocations to Costa Rica, Indonesia and Ecuador, and
decreased our positions in Mexico from 14.8% of net assets to 14.3% of net
assets. We increased our allocations to top Brazilian corporate bonds (from 2.5%
of net assets to 52.1%), to Korean sovereign bonds and to Argentina, all in the
ten-year sector. We invested 2.3% of net assets in Chinese infrastructure
project bonds. We also marginally increased our position in Venezuela from 17.2%
of net assets to 27.6%. As a consequence, the Fund's net annualized yield
increased from 7.45% for the six-month period ended November 30, 1997 to 10.46%
for the six-month period ended May 31, 1998. The Fund's duration increased from
4.6 years at November 30, 1997 to 6.1 years at May 31, 1998.
In Conclusion
We thank you for your investment in Worldwide DollarVest Fund, Inc., and we look
forward to updating our outlook and strategy with you in our upcoming annual
report to shareholders.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Paolo Valle
Paolo Valle
Senior Vice President and
Portfolio Manager
July 9, 1998
2 & 3
<PAGE>
Worldwide DollarVest Fund, Inc., May 31, 1998
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Interest Maturity Value Percent of
COUNTRY Industry Face Amount Eurobonds Rate Date (Note 1a) Net Assets
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Argentina Banking-- US$ 1,000,000 Banco Hipotecario Nacional
International S.A. (a) 10.00% 4/17/2003 $ 992,500 1.2%
-------------------------------------------------------------------------------------------------------------
Industrial 3,000,000 Acindar Industria Argentina
de Aceros S.A. 11.656 11/12/1998 3,026,250 3.7
-------------------------------------------------------------------------------------------------------------
Total Eurobonds in
Argentina (Cost--$4,114,820) 4,018,750 4.9
==========================================================================================================================
Brazil Banking-- 5,000,000 Banco do Brasil S.A. (Cayman) 9.375 6/15/2007 4,668,750 5.7
International 5,000,000 Banco Nacional de
Desenvolvimento
Economico e Social 9.00 9/24/2007 4,568,750 5.5
------------ -----
9,237,500 11.2
-------------------------------------------------------------------------------------------------------------
Communications 5,000,000 Globo Comunicacoes e
Participacoes 10.625 12/05/2008 4,837,500 5.9
-------------------------------------------------------------------------------------------------------------
Industrial 5,000,000 CSN Iron S.A. 9.125 6/01/2007 4,318,750 5.2
-------------------------------------------------------------------------------------------------------------
Utilities--Electric 2,500,000 Espirito Santo Centrais 10.00 7/15/2007 2,237,500 2.7
-------------------------------------------------------------------------------------------------------------
Total Eurobonds in Brazil
(Cost--$20,743,750) 20,631,250 25.0
==========================================================================================================================
China Transportation 2,000,000 Cathay International Ltd. (a) 13.00 4/15/2008 1,900,000 2.3
-------------------------------------------------------------------------------------------------------------
Total Eurobonds in China
(Cost--$2,000,000) 1,900,000 2.3
==========================================================================================================================
Mexico Financial Services 1,000,000 Sanluis Corporation S.A. (a) 8.875 3/18/2008 961,250 1.2
-------------------------------------------------------------------------------------------------------------
Industrial 4,050,000 Grupo Industrial Durango, S.A.
de C.V. (a) 12.625 8/01/2003 4,525,875 5.5
3,000,000 Petroleos Mexicanos 9.50 9/15/2027 2,902,500 3.5
------------ -----
7,428,375 9.0
-------------------------------------------------------------------------------------------------------------
Total Eurobonds in Mexico
(Cost--$8,468,925) 8,389,625 10.2
==========================================================================================================================
Philippines Sovereign Government 2,000,000 Bangko Sentral Pilipinas 8.60 6/15/2027 1,775,000 2.1
Obligations
-------------------------------------------------------------------------------------------------------------
Telecommunications 2,000,000 Philippine Long Distance
Telephone Co. 8.35 3/06/2017 1,720,000 2.1
-------------------------------------------------------------------------------------------------------------
Total Eurobonds in the
Philippines
(Cost--$3,752,140) 3,495,000 4.2
==========================================================================================================================
Russia Financial Services 4,500,000 Unexim International
Finance BV 9.875 8/01/2000 3,757,500 4.5
-------------------------------------------------------------------------------------------------------------
Total Eurobonds in Russia
(Cost--$4,534,750) 3,757,500 4.5
==========================================================================================================================
Total Investments in Eurobonds
(Cost--$43,614,385) 42,192,125 51.1
==========================================================================================================================
Brady Bonds*
==========================================================================================================================
Argentina Sovereign Government 4,000,000 Republic of Argentina, Global
Obligations Bonds (b) 9.75 9/19/2027 3,712,000 4.5
-------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Argentina
(Cost--$3,998,000) 3,712,000 4.5
==========================================================================================================================
Brazil Sovereign Government 29,005,250 Republic of Brazil, C Bonds(b) 7.34 4/15/2014 22,406,556 27.1
Obligations
-------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Brazil
(Cost--$23,837,919) 22,406,556 27.1
==========================================================================================================================
Mexico Sovereign Government 4,000,000 United Mexican States, Par
Obligations 'B' Bonds 6.25 12/31/2019 3,335,000 4.0
-------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Mexico
(Cost--$3,345,000) 3,335,000 4.0
==========================================================================================================================
Peru Sovereign Government 2,000,000 Republic of Peru, Floating
Obligations Rate Reduction Bonds 3.25 3/07/2017 1,200,000 1.5
-------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Peru
(Cost--$1,233,435) 1,200,000 1.5
==========================================================================================================================
Russia Sovereign Government 552,617 Vnesheconom Bank, IAN (a) 6.718 12/15/2015 361,964 0.4
Obligations 31,500,000 Vnesheconom Bank, Principal
Loan (c) 5.61 12/15/2020 17,470,496 21.2
-------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Russia
(Cost--$19,358,958) 17,832,460 21.6
==========================================================================================================================
South Korea Sovereign Government 6,000,000 Republic of Korea 8.875 4/15/2008 5,542,758 6.7
Obligations
-------------------------------------------------------------------------------------------------------------
Total Brady Bonds in South
Korea (Cost--$5,765,500) 5,542,758 6.7
==========================================================================================================================
Venezuela Sovereign Government 27,000,000 Republic of Venezuela (b) 9.25 9/15/2027 22,747,500 27.6
Obligations
-------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Venezuela
(Cost--$23,403,500) 22,747,500 27.6
==========================================================================================================================
Total Investments in Brady
Bonds (Cost--$80,942,312) 76,776,274 93.0
==========================================================================================================================
Shares Held Trusts
==========================================================================================================================
Mexico Conglomerates 1,242,000 Sidek Credito Trust
Certificates (a) -- -- 122,647 0.1
-------------------------------------------------------------------------------------------------------------
Total Investments in Trusts
(Cost--$124,976) 122,647 0.1
==========================================================================================================================
Face Amount Short-Term Securities
==========================================================================================================================
Commercial Paper** US$ 917,000 General Motors Acceptance
Corp. 5.69 6/01/1998 917,000 1.1
-------------------------------------------------------------------------------------------------------------
Total Investments in
Short-Term Securities
(Cost--$917,000) 917,000 1.1
==========================================================================================================================
Total Investments (Cost-- $125,598,673) 120,008,046 145.3
Liabilities in Excess of Other Assets (37,417,175) (45.3)
------------ -----
Net Assets $ 82,590,871 100.0%
============ =====
==========================================================================================================================
</TABLE>
* Brady Bonds are securities which have been issued to refinance commercial
bank loans and other debt. The risk associated with these instruments is
the amount of any uncollateralized principal or interest payments since
there is a high default rate of commercial bank loans by countries issuing
these securities.
See Notes to Financial Statements.
** 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.
(a) The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
(b) Security represents collateral in connection with reverse repurchase
agreements (Note 5).
(c) Represents a pay-in-kind security which may pay interest in additional
shares/face.
4 & 5
<PAGE>
Worldwide DollarVest Fund, Inc., May 31, 1998
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of May 31, 1998
==================================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$125,598,673) (Note 1a) .......... $120,008,046
Cash ..................................................................... 157,186
Receivables:
Securities sold ........................................................ $ 35,259,551
Interest ............................................................... 3,001,910 38,261,461
------------
Deferred organization expenses (Note 1e) ................................. 5,762
Prepaid expenses and other assets ........................................ 2,687
------------
Total assets ............................................................. 158,435,142
------------
==================================================================================================================================
Liabilities: Payables:
Reverse repurchase agreements (Note 5) ................................. 39,879,025
Securities purchased ................................................... 35,538,390
Dividends to shareholders (Note 1f) .................................... 156,245
Interest on short sales (Note 1g) ...................................... 129,421
Investment adviser (Note 2) ............................................ 65,740
Short sales (Note 1g) .................................................. 43,500 75,812,321
------------
Accrued expenses and other liabilities ................................... 31,950
------------
Total liabilities ........................................................ 75,844,271
------------
==================================================================================================================================
Net Assets: Net assets ............................................................... $ 82,590,871
============
==================================================================================================================================
Capital: Common Stock, $.10 par value, 200,000,000 shares authorized .............. $ 639,296
Paid-in capital in excess of par ......................................... 89,557,341
Undistributed investment income--net ..................................... 1,170,474
Accumulated realized capital losses on investments--net .................. (3,185,613)
Unrealized depreciation on investments--net .............................. (5,590,627)
------------
Total--Equivalent to $12.92 per share based on 6,392,962 shares of
capital stock issued and outstanding (market price--$13.0625) ............ $ 82,590,871
============
==================================================================================================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended May 31, 1998
==================================================================================================================================
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned ................. $ 5,665,388
(Note 1d):
==================================================================================================================================
Expenses: Interest on reverse repurchase agreements (Note 5) ....................... $ 687,242
Investment advisory fees (Note 2) ........................................ 339,997
Accounting services (Note 2) ............................................. 30,982
Professional fees ........................................................ 27,336
Custodian fees ........................................................... 21,172
Printing and shareholder reports ......................................... 17,379
Interest on short sales .................................................. 15,856
Transfer agent fees ...................................................... 14,045
Directors' fees and expenses ............................................. 13,191
Listing fees ............................................................. 7,510
Amortization of organization expenses (Note 1e) .......................... 2,290
Pricing services ......................................................... 310
Other .................................................................... 7,009
------------
Total expenses ........................................................... 1,184,319
------------
Investment income--net ................................................... 4,481,069
------------
==================================================================================================================================
Realized & Unrealized Realized gain on investments--net ........................................ 792,153
Gain (Loss) on Change in unrealized depreciation on investments--net .................... (4,182,868)
Investments--Net ------------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations ..................... $ 1,090,354
============
==================================================================================================================================
</TABLE>
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: May 31, 1998 Nov. 30, 1997
===================================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net ................................................... $ 4,481,069 $ 8,589,688
Realized gain on investments--net ........................................ 792,153 8,410,892
Change in unrealized appreciation/depreciation on investments--net ....... (4,182,868) (10,513,250)
------------ ------------
Net increase in net assets resulting from operations ..................... 1,090,354 6,487,330
------------ ------------
==================================================================================================================================
Dividends & Investment income--net ................................................... (6,490,203) (7,604,323)
Distributions to Realized gain on investments--net ........................................ (12,182,920) (13,842,809)
Shareholders ------------ ------------
(Note 1f): Net decrease in net assets resulting from dividends and distributions
to shareholders .......................................................... (18,673,123) (21,447,132)
------------ ------------
==================================================================================================================================
Net Assets: Total decrease in net assets ............................................. (17,582,769) (14,959,802)
Beginning of period ...................................................... 100,173,640 115,133,442
------------ ------------
End of period* ........................................................... $ 82,590,871 $100,173,640
============ ============
==================================================================================================================================
* Undistributed investment income--net ..................................... $ 1,170,474 $ 3,179,608
============ ============
==================================================================================================================================
</TABLE>
See Notes to Financial Statements.
6 & 7
<PAGE>
Worldwide DollarVest Fund, Inc., May 31, 1998
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months Ended May 31, 1998
==================================================================================================================
<S> <C> <C>
Cash Provided by Net increase in net assets resulting from operations ..................... $ 1,090,354
Operating Activities: Adjustments to reconcile net increase in net assets resulting
from operations to net cash provided by operating activities:
Increase in receivables ................................................ (1,005,264)
Decrease in other assets ............................................... 2,596,500
Increase in other liabilities .......................................... 124,791
Realized and unrealized loss on investments--net ....................... 3,390,715
Amortization of premium and discount ................................... (554,723)
------------
Net cash provided by operating activities ................................ 5,642,373
------------
==================================================================================================================
Cash Used for Proceeds from sales of long-term investments ............................. 275,769,811
Investing Activities: Purchases of long-term investments ....................................... (321,482,270)
Purchases of short-term investments ...................................... (758,540,961)
Proceeds from sales and maturities of short-term investments ............. 775,495,968
------------
Net cash used for investing activities ................................... (28,757,452)
------------
==================================================================================================================
Cash Provided by Cash receipts from borrowings ............................................ 55,140,417
Financing Activities: Cash payments on borrowings .............................................. (15,261,392)
Dividends and distributions paid to shareholders ......................... (18,642,680)
------------
Net cash provided by financing activities ................................ 21,236,345
------------
==================================================================================================================
Cash: Net decrease in cash ..................................................... (1,878,734)
Cash at beginning of period .............................................. 2,035,920
------------
Cash at end of period .................................................... $ 157,186
============
==================================================================================================================
Cash Flow Cash paid for interest ................................................... $ 587,177
Information: ============
==================================================================================================================
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the
For the Period
The following per share data and ratios have been derived Six Months Feb. 4,
from information provided in the financial statements. Ended For the Year Ended November 30, 1994+ to
May 31, ------------------------------- Nov. 30,
Increase (Decrease) in Net Asset Value: 1998++ 1997++ 1996 1995 1994
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ................... $ 15.67 $ 18.01 $ 12.22 $ 11.90 $ 14.18
Operating -------- -------- -------- ------- -------
Performance: Investment income--net ................................. .70 1.34 1.61 1.33 .97
Realized and unrealized gain (loss) on
investments--net ..................................... (.52) (.32) 5.65 .24 (2.39)
-------- -------- -------- ------- -------
Total from investment operations ....................... .18 1.02 7.26 1.57 (1.42)
-------- -------- -------- ------- -------
Less dividends and distributions:
Investment income--net ................................ (1.02) (1.19) (1.47) (1.25) (.86)
Realized gain on investments--net ..................... (1.91) (2.17) -- -- --
-------- -------- -------- ------- -------
Total dividends and distributions ...................... (2.93) (3.36) (1.47) (1.25) (.86)
-------- -------- -------- ------- -------
Net asset value, end of period ......................... $ 12.92 $ 15.67 $ 18.01 $ 12.22 $ 11.90
======== ======== ======== ======= =======
Market price per share, end of period .................. $13.0625 $ 13.75 $ 14.75 $ 11.25 $ 11.00
======== ======== ======== ======= =======
==============================================================================================================================
Total Based on market price per share ........................ 17.32%++ 15.91% 45.94% 14.88% (21.13%)++
Investment ======== ======== ======== ======= =======
Return:** Based on net asset value per share ..................... 1.82%++ 8.19% 64.05% 15.35% (9.71%)++
======== ======== ======== ======= =======
==============================================================================================================================
Ratios to Expenses, net of reimbursement and excluding interest
Average expense .............................................. .85%* .82% .80% .97% .18%*
Net Assets: ======== ======== ======== ======= =======
Expenses, net of reimbursement ......................... 2.09%* 1.47% 2.10% 1.83% .59%*
======== ======== ======== ======= =======
Expenses ............................................... 2.09%* 1.47% 2.10% 1.83% 1.26%*
======== ======== ======== ======= =======
Investment income--net ................................. 7.92%* 7.39% 8.54% 10.48% 8.84%*
======== ======== ======== ======= =======
==============================================================================================================================
Supplemental Net assets, end of period (in thousands) ............... $ 82,591 $100,174 $115,133 $78,139 $76,052
Data: ======== ======== ======== ======= =======
Portfolio turnover ..................................... 256.51% 578.05% 342.06% 183.01% 68.31%
======== ======== ======== ======= =======
==============================================================================================================================
Leverage: Amount of borrowings outstanding, end of period (in
thousands) ........................................... $ 39,879 -- $ 53,706 $25,456 $ 8,761
======== ======== ======== ======= =======
Average amount of borrowings outstanding during the
period (in thousands) ................................ $ 23,831 $ 11,427 $ 26,812 $10,829 $ 9,853
======== ======== ======== ======= =======
Average amount of borrowings per share during the
period ............................................... $ 3.73 $ 1.79 $ 4.19 $ 1.69 $ 1.54
======== ======== ======== ======= =======
==============================================================================================================================
</TABLE>
+ Commencement of operations.
++ Based on average shares outstanding.
++ Aggregate total investment return.
* Annualized.
** Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may
result in substantially different returns. Total investment
returns exclude the effects of sales loads.
See Notes to Financial Statements.
8 & 9
<PAGE>
Worldwide DollarVest Fund, Inc., May 31, 1998
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. These unaudited financial statements reflect all adjustments which are,
in the opinion of management, necessary to a fair statement of the results for
the interim period presented. All such adjustments are of a normal recurring
nature. 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 which are traded on stock
exchanges are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. Securities
traded in the over-the-counter market are valued at the last available bid price
prior to the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange designated by or
under the authority of the Board of Directors as the primary market. Securities
which are traded both in the over-the-counter market and on a stock exchange are
valued according to the broadest and most representative market. Options written
are valued at the last sale price in the case of exchange-traded options or, in
the case of options traded in the over-counter-market, the last asked price.
Options purchased are valued at the last sale price in the case of
exchange-traded options or, in the case of options traded in the
over-the-counter market, the last bid price. Short-term securities are valued at
amortized cost, which approximates market value. Other investments, including
futures contracts and related options, are stated at market value. Securities
and assets for which market value quotations are not available are valued at
their fair value as determined in good faith by or under the direction of the
Fund's Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various portfolio
strategies to seek to increase its return by hedging its portfolio against
adverse movements in the debt markets. Losses may arise due to changes in the
value of the contract or if the counterparty does not perform under the
contract.
o Options--The Fund is authorized to purchase and write call and put 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 market 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 paid (or received) is added to (or deducted from) the basis of
the security acquired 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 on the option to the extent of
the premiums received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
o Financial futures contracts--The Fund may purchase or sell financial 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.
o Interest rate transactions--The Fund is authorized to enter into interest rate
swaps and purchase or sell interest rate caps and floors. In an interest rate
swap, the Fund exchanges with another party their respective commitments to pay
or receive interest on a specified notional principal amount. The purchase of an
interest rate cap (or floor) entitles the purchaser, to the extent that a
specified index exceeds (or falls below) a predetermined interest rate, to
receive payments of interest equal to the difference between the index and the
predetermined rate on a notional principal amount from the party selling such
interest rate cap (or floor).
(c) 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.
(d) 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.
(e) Deferred organization expenses--Deferred organization expenses are charged
expense on a straight-line basis over a five-year period.
(f) Dividends and distributions--Dividends from net investment income are
declared and paid monthly. Distribution of capital gains are recorded on the
ex-dividend dates.
(g) Short sales--When the Fund engages in a short sale, an amount equal to the
proceeds received by the Fund is reflected as an asset and an equivalent
liability. The amount of the liability is subsequently marked to market to
reflect the market value of the short sale. The Fund maintains a segregated
account of securities as collateral for the short sales. The Fund is exposed to
market risk based on the amount, if any, that the market value of the stock
exceeds the market value of the securities in the segregated account.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
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, plus the
proceeds of any outstanding borrowings used for leverage.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended May 31, 1998 were $322,108,860 and $272,279,333, respectively.
Net realized gains (losses) for the six months ended May 31, 1998 and net
unrealized losses as of May 31, 1998 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Losses
- --------------------------------------------------------------------------------
Long-term investments .......... $ 905,567 $(5,590,627)
Short-term investments ......... (7,839) --
Short sales .................... (171,470) --
Options written ................ 51,000 --
Financial futures contracts .... 14,895 --
---------- -----------
Total .......................... $ 792,153 $(5,590,627)
========== ===========
- --------------------------------------------------------------------------------
Transactions in call options written for the six months ended May 31, 1998
were as follows:
- --------------------------------------------------------------------------------
Nominal Value
Covered by Premiums
Written Options Received
- --------------------------------------------------------------------------------
Outstanding call options written at
beginning of period ................... -- --
Options written ....................... 13,000,000 $ 51,000
Options expired ....................... (13,000,000) (51,000)
----------- ---------
Outstanding call options written at
end of period ......................... -- --
=========== =========
- --------------------------------------------------------------------------------
As of May 31, 1998, net unrealized depreciation for Federal income tax purposes
aggregated $5,590,627, of which $15,340 related to appreciated securities and
$5,605,967 related to depreciated securities. At May 31, 1998, the aggregate
cost of investments for Federal income tax purposes was $125,598,673.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock, par value
$.10 per share. Shares issued and outstanding during the six months ended May
31, 1998 and the year ended November 30, 1997 remained constant.
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. As of May 31, 1998,
the Fund had entered into reverse repurchase agreements in the amount of
$39,879,025. For the six months ended May 31, 1998, the average amount
outstanding was approximately $23,831,000 and the daily weighted average
interest rate was 5.78%.
6. Subsequent Event:
On June 8, 1998, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.125573 payable on June
30, 1998 to shareholders of record as of June 22, 1998.
10 & 11
<PAGE>
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. Statements and other information herein are as dated and are
subject to change.
Worldwide DollarVest
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #16971--5/98
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