WORLDWIDE
DOLLARVEST
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
May 31, 1999
<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.
<PAGE>
Worldwide DollarVest Fund, Inc., May 31, 1999
DEAR SHAREHOLDER
For the six months ended May 31, 1999, the total investment return on Worldwide
DollarVest Fund, Inc.'s Common Stock was -1.89%, based on a change in the per
share net asset value from $6.44 to $6.03, and assuming reinvestment of $0.256
per share income dividends. During the same period, the net annualized yield of
the Fund's Common Stock was 8.51%. Though performance strengthened as the period
progressed, early losses from residual positions in the weakest emerging markets
outweighed that improvement.
Market Overview
Financial market volatility moderated over the six months ended May 31, 1999.
However, there was a shift in investor concerns over the course of the period.
As the period began, investors focused on the prospects of global recession or
worldwide deflation. This view moderated to a level of comfort with world
economic stability, which by period-end was displaced by fears of an overheated
US economy. Interest rates have trended up during the six months ended May 31,
but renewed inflation worries accelerated that trend in April and May. The yield
on the ten-year US Treasury bond started the period at 4.73%, but had reached
5.62% by May month-end.
Emerging markets bonds rebounded strongly through April in reaction to
stabilization in a number of emerging economies and continuing solid economic
growth in the United States. The JP Morgan Emerging Markets Bond (EMBI+) Index
was up 3.2% in the six months ended May 31, 1999, despite losing 5.70% in May in
reaction to the negative outlook on US interest rates.
Bearish sentiment at the end of May magnified short-term adverse developments in
some of the economies in which we invest. However, we believe that the story of
recovering emerging markets fundamentals continues unchanged and that despite
near term volatility, emerging markets bonds as an asset class represent good
long-term value.
Events within our investment universe were generally favorable during the May
period. In Argentina, lower tax collection with the resulting negative effect on
the budget deficit and potential need for external financing has temporarily
raised the possibility of Argentina breaking the peso's parity with the dollar.
The potential for such a move has been strongly denied by both government and
presidential candidates alike. Brazil has generated good news in recent months
following fears of a major recession and initial discord on economic
stabilization measures. Continued progress on the inflation front is gradually
pushing down local interest rates, which in turn is accelerating a rebound of
the local economy. In Mexico, inflation is also in a declining trend. Foreign
currency flows remain healthy, though the Mexican peso has weakened from its
mid-May high, and fiscal budget results show Mexico in line to meet this year's
International Monetary Fund (IMF) target. The outlook for Venezuela improved
with rising oil prices.
High-yield debt also benefited during the six months ended May 31, 1999 from
strong cash inflows from a variety of investors, although that trend reversed in
May. The combination of cash outflows from mutual funds, falling prices on
Treasury bonds and an unsettled stock market created a more negative environment
for high-yield bonds by the end of May. Nevertheless, the spread, or incremental
yield required by investors to assume the additional risk of high-yield
investments relative to Treasury issues, tightened to 564 basis points (5.64%)
at May 31, 1999 from 624 basis points at November 30, 1998. This spread remains
wide relative to historic levels. Although there may be additional near-term
volatility, we believe that the high-yield market represents good long-term
value, supported by favorable economic growth trends and wide spreads relative
to US Treasury securities.
Leverage Strategy
The Fund was not leveraged for most of the six-month period ended May 31, 1999.
At the end of the period, we reestablished leverage positions and closed the
month with approximately 19% of the Fund's net assets leveraged. We intend to
continue to utilize leverage in a range of 15%-20% under current market
conditions and to adjust the amount of leverage with changes in our market
outlook. The use of leverage, while adding incrementally to current yield, will
also increase volatility of the Fund's net asset value and returns. Strong
returns will be improved with the use of leverage, while losses will be
magnified. (See page 1 for more complete information on the benefits and risks
of leveraging.)
Investment Strategy
Over the next few months, we believe that the market for bonds in the Fund's
investment universe will continue to be unsettled. There are many conflicting
forces that could push the market toward strength or weakness. Inflation
expectations and interest rates, equity market fluctuations and events in
emerging markets are all likely to take their turn influencing results.
Under this scenario, we expect to maintain our current asset mix, with
approximately two-thirds of our investments in emerging market government bonds
and the remainder in the high-yield market. However, depending upon market
conditions, weightings may fluctuate around these levels. For the emerging
markets portion of the portfolio, we have attempted to benchmark holdings
relative to the EMBI+ Index in order to remain broadly in line with overall
trends in emerging markets and to avoid large exposure in marginal markets. We
expect to modestly overweight certain countries where fundamentals appear
particularly favorable, in our view. Regarding high-yield bonds, we will
continue our focus on higher-quality issues in the near term, but will also seek
attractive total return opportunities where we believe good value exists. We
believe that maintaining the portfolio's high-yield component will provide a
measure of diversification to the Fund's holdings as well as offering attractive
long-term total return prospects.
Portfolio Characteristics
As of May 31, 1999, our largest country exposures among emerging markets were
Brazil (14.9% of total assets), Argentina (11.8%) and Mexico (11.8%). Relative
to the EMBI+ Index, Brazil and Mexico are slightly overweighted and Argentina is
slightly underweighted. US high-yield bonds made up nearly 27% of the portfolio
at the end of May, with another 7% in high-yield bonds of other countries. The
high-yield component of the Fund is weighted toward the higher end of the
rating spectrum, with 33.5% of high-yield holdings in better-quality BB-rated
names, 64.6% in B-rated names, and 1.9% in unrated bonds.
In Conclusion
We thank you for your investment in Worldwide DollarVest Fund, Inc., and we look
forward to reviewing our outlook and strategy with you again in our next report
to shareholders.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Vincent T. Lathbury III
Vincent T. Lathbury III
Senior Vice President and
Portfolio Manager
July 1, 1999
================================================================================
After more than 20 years of service, Arthur Zeikel recently retired as Chairman
of Merrill Lynch Asset Management, L.P. (MLAM). Mr. Zeikel served as President
of MLAM from 1977 to 1997 and as Chairman since December 1997. Mr. Zeikel is one
of the country's most respected leaders in asset management and presided over
the growth of Merrill Lynch's asset management business. During his tenure,
client assets under management grew from $300 million to over $500 billion. Mr.
Zeikel will remain on Worldwide DollarVest Fund, Inc.'s Board of Directors. We
are pleased to announce that Terry K. Glenn has been elected President and
Director of the Fund. Mr. Glenn has held the position of Executive Vice
President of MLAM since 1983.
Mr. Zeikel's colleagues at MLAM join the Fund's Board of Directors in wishing
him well in his retirement from Merrill Lynch and are pleased that he will
continue as a member of the Fund's Board of Directors.
================================================================================
2 & 3
<PAGE>
Worldwide DollarVest Fund, Inc., May 31, 1999
SCHEDULE OF INVESTMENTS (in US dollars)
<TABLE>
<CAPTION>
Face Maturity Value Percent of
COUNTRY Industry Amount Bonds Interest Date (Note 1a) Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Argentina Sovereign Government US$ 800,000 Republic of Argentina 9.75% 9/19/2027 $ 614,000 1.6%
Obligations
--------------------------------------------------------------------------------------------------------------------
Total Bonds in Argentina
(Cost--$524,000) 614,000 1.6
====================================================================================================================================
Brazil Sovereign Government 1,000,000 Republic of Brazil 10.125 5/15/2027 728,750 1.9
Obligations 1,000,000 Republic of Brazil 11.625 4/15/2004 922,000 2.3
--------------------------------------------------------------------------------------------------------------------
Total Bonds in Brazil
(Cost--$1,604,500) 1,650,750 4.2
====================================================================================================================================
Canada Computer Services-- 750,000 Celestica International 10.50 12/31/2006 817,500 2.1
Electronics
--------------------------------------------------------------------------------------------------------------------
Media-- 1,000,000 Call-Net Enterprises Inc. 8.00 8/15/2008 890,000 2.3
Communications
--------------------------------------------------------------------------------------------------------------------
Total Bonds in Canada
(Cost--$1,763,750) 1,707,500 4.4
====================================================================================================================================
Mexico Industrial 1,000,000 Petroleos Mexicanos 9.50 9/15/2027 860,000 2.2
--------------------------------------------------------------------------------------------------------------------
Sovereign Government 2,400,000 United Mexican States (c) 11.50 5/15/2026 2,637,000 6.7
Obligations
--------------------------------------------------------------------------------------------------------------------
Total Bonds in Mexico
(Cost--$3,628,850) 3,497,000 8.9
====================================================================================================================================
Netherlands Financial Services 850,000 TPSA Finance BV (a) 7.75 12/10/2008 837,398 2.1
--------------------------------------------------------------------------------------------------------------------
Total Bonds in the Netherlands
(Cost--$843,898) 837,398 2.1
====================================================================================================================================
Panama Sovereign Government 750,000 Republic of Panama 8.875 9/30/2027 648,750 1.7
Obligations
--------------------------------------------------------------------------------------------------------------------
Total Bonds in Panama
(Cost--$573,750) 648,750 1.7
====================================================================================================================================
Russia Sovereign Government 600,000 Russian Federation Bonds
Obligations (Regulation S) 11.00 7/24/2018 258,000 0.7
--------------------------------------------------------------------------------------------------------------------
Total Bonds in Russia
(Cost--$243,875) 258,000 0.7
====================================================================================================================================
South Korea Banking 700,000 Korea Development Bank 7.125 4/22/2004 685,125 1.7
--------------------------------------------------------------------------------------------------------------------
Sovereign Government 870,000 Republic of Korea 8.875 4/15/2008 919,465 2.3
Obligations
--------------------------------------------------------------------------------------------------------------------
Total Bonds in South Korea
(Cost--$1,554,037) 1,604,590 4.0
====================================================================================================================================
United Kingdom Cable--International 1,000,000 Telewest Communications
PLC (a) 9.117* 4/15/2009 651,250 1.7
--------------------------------------------------------------------------------------------------------------------
Total Bonds in the United
Kingdom (Cost--$651,871) 651,250 1.7
====================================================================================================================================
United States Airlines 500,000 USAir Inc. 9.625 2/01/2001 511,430 1.3
--------------------------------------------------------------------------------------------------------------------
Broadcasting-- 750,000 Cumulus Media, Inc. 10.375 7/01/2008 798,750 2.0
Radio & Television
--------------------------------------------------------------------------------------------------------------------
Chemicals 350,000 Lyondell Chemical Company 9.875 5/01/2007 350,875 0.9
650,000 Lyondell Chemical Company (a) 9.625 5/01/2007 656,500 1.7
---------- ----
1,007,375 2.6
--------------------------------------------------------------------------------------------------------------------
Consumer--Products 1,000,000 Chattem Inc., Series B 8.875 4/01/2008 990,000 2.5
--------------------------------------------------------------------------------------------------------------------
Energy 1,000,000 Ocean Energy Inc., Series B 7.625 7/01/2005 970,000 2.5
--------------------------------------------------------------------------------------------------------------------
Gaming 750,000 Venetian Casino/LV Sands 12.25 11/15/2004 770,625 2.0
--------------------------------------------------------------------------------------------------------------------
Health Services 1,250,000 Extendicare Health Services 9.35 12/15/2007 910,938 2.3
1,000,000 Fresenius Medical Capital
Trust II 7.875 2/01/2008 950,000 2.4
---------- ----
1,860,938 4.7
--------------------------------------------------------------------------------------------------------------------
Hotels 1,000,000 HMH Properties, Inc.,
Series B 7.875 8/01/2008 921,250 2.4
--------------------------------------------------------------------------------------------------------------------
Industrial 1,000,000 Metal Management Inc. 10.00 5/15/2008 800,000 2.0
--------------------------------------------------------------------------------------------------------------------
Metals & Mining 750,000 Kaiser Aluminum & Chemical
Corp. 12.75 2/01/2003 757,500 1.9
--------------------------------------------------------------------------------------------------------------------
Publishing & Printing 500,000 American Lawyer Media, Inc.,
Series B 9.75 12/15/2007 508,750 1.3
--------------------------------------------------------------------------------------------------------------------
Real Estate 500,000 Forest City Enterprises Inc. 8.50 3/15/2008 500,000 1.3
--------------------------------------------------------------------------------------------------------------------
Telecommunications 1,375,000 Nextel Communications,
Inc. (a) 11.477* 2/15/2008 914,375 2.3
1,000,000 PSINet, Inc., Series B 10.00 2/15/2005 995,000 2.6
500,000 Pinnacle Holdings Inc. 12.13* 3/15/2008 306,250 0.8
---------- ----
2,215,625 5.7
--------------------------------------------------------------------------------------------------------------------
Telephony-- 750,000 Nextlink Communications Inc. 9.00 3/15/2008 685,313 1.7
Competitive Local
Exchange Carriers
--------------------------------------------------------------------------------------------------------------------
Total Bonds in the United
States (Cost--$13,168,895) 13,297,556 33.9
====================================================================================================================================
Venezuela Sovereign Government 1,400,000 Republic of Venezuela 9.25 9/15/2027 901,250 2.3
Obligations 800,000 Republic of Venezuela 13.625 8/15/2018 732,000 1.9
--------------------------------------------------------------------------------------------------------------------
Total Bonds in Venezuela
(Cost--$1,621,000) 1,633,250 4.2
====================================================================================================================================
Total Investments in Bonds
(Cost--$26,178,426) 26,400,044 67.4
====================================================================================================================================
<CAPTION>
Brady Bonds**
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Argentina Sovereign Government 930,000 Republic of Argentina 5.938+ 3/31/2005 776,550 2.0
Obligations 7,900,000 Republic of Argentina,
Par 'L' (c) 6.00 3/31/2023 5,001,687 12.8
--------------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Argentina
(Cost--$6,117,730) 5,778,237 14.8
====================================================================================================================================
Brazil Sovereign Government 1,500,000 Brazil, DCB 5.938+ 4/15/2012 858,750 2.2
Obligations 6,466,465 Republic of Brazil 'C' (c) 8.00+ 4/15/2014 4,041,540 10.3
2,500,000 Republic of Brazil, Discount 5.875+ 4/15/2024 1,518,750 3.9
--------------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Brazil
(Cost--$6,253,659) 6,419,040 16.4
====================================================================================================================================
Bulgaria Sovereign Government 550,000 Republic of Bulgaria 'A',
Obligations Front-Loaded Interest Rate
Reduction Bonds 2.50+ 7/28/2012 316,937 0.8
550,000 Republic of Bulgaria,
Discount 'A' 5.875+ 7/28/2024 356,125 0.9
--------------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Bulgaria
(Cost--$701,204) 673,062 1.7
====================================================================================================================================
Ecuador Sovereign Government 850,000 Republic of Ecuador, Par 4.00 2/28/2025 324,063 0.8
Obligations
--------------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Ecuador
(Cost--$324,017) 324,063 0.8
====================================================================================================================================
</TABLE>
4 & 5
<PAGE>
Worldwide DollarVest Fund, Inc., May 31, 1999
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<TABLE>
<CAPTION>
Face Maturity Value Percent of
COUNTRY Industry Amount Brady Bonds** Interest Date (Note 1a) Net Assets
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Mexico Sovereign Government US$1,370,000 United Mexican States 'W-A' 6.25% 12/31/2019 $ 1,017,225 2.6%
Obligations 2,500,000 United Mexican States 'W-B' 6.25 12/31/2019 1,856,250 4.7
--------------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Mexico
(Cost--$2,981,373) 2,873,475 7.3
====================================================================================================================================
Nigeria Sovereign Government 500,000 Central Bank of Nigeria 'WW' 6.25+ 11/15/2020 305,000 0.8
Obligations
--------------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Nigeria
(Cost--$311,613) 305,000 0.8
====================================================================================================================================
Peru Sovereign Government 1,000,000 Republic of Peru, Front-Loaded
Obligations Interest Rate Reduction Bonds 3.75+ 3/07/2017 542,500 1.4
--------------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Peru
(Cost--$625,759) 542,500 1.4
====================================================================================================================================
Venezuela Sovereign Government 428,570 Republic of Venezuela, DCB 5.938+ 12/18/2007 314,999 0.8
Obligations
--------------------------------------------------------------------------------------------------------------------
Total Brady Bonds in Venezuela
(Cost--$289,285) 314,999 0.8
====================================================================================================================================
Total Investments in Brady Bonds
(Cost--$17,604,640) 17,230,376 44.0
====================================================================================================================================
<CAPTION>
Shares
Held Warrants
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Nigeria Sovereign Government 500 Central Bank of Nigeria (Nigeria Oil) (b) 0 0.0
Obligations
--------------------------------------------------------------------------------------------------------------------
Total Investments in Warrants (Cost--$0) 0 0.0
====================================================================================================================================
<CAPTION>
Face
Amount Short-Term Securities
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
United States Commercial US$ 837,000 General Motors Acceptance
Paper*** Corp. 4.94 6/01/1999 837,000 2.1
--------------------------------------------------------------------------------------------------------------------
Total Investments in Short-Term Securities
(Cost--$837,000) 837,000 2.1
====================================================================================================================================
Total Investments (Cost--$44,620,066) 44,467,420 113.5
Liabilities in Excess of Other Assets (5,280,423) (13.5)
----------- -----
Net Assets $39,186,997 100.0%
=========== =====
====================================================================================================================================
</TABLE>
+ Floating Rate Note.
* Represents a step bond; the interest rate shown reflects the effective
yield at the time of purchase by the Fund.
** 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.
*** Commercial Paper is traded on a discount basis; the interest rate shown
reflects 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) Warrants entitle the Fund to purchase a predetermined number of shares of
common stock and are non-income producing. The purchase price and number
of shares are subject to adjustment under certain conditions until the
expiration date.
(c) Security represents collateral in connection with reverse repurchase
agreements (Note 5).
See Notes to Financial Statements.
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of May 31, 1999
=================================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$44,620,066) (Note 1a) ................ $ 44,467,420
Cash .......................................................................... 16,633
Receivables:
Reverse repurchase agreements (Note 5) ...................................... $ 7,375,192
Interest .................................................................... 1,225,411
Securities sold ............................................................. 1,003,607 9,604,210
Deferred organization expenses (Note 1e) ...................................... ------------ 831
Prepaid expenses and other assets ............................................. 2,318
------------
Total assets .................................................................. 54,091,412
------------
=================================================================================================================================
Liabilities: Payables:
Securities purchased ........................................................ 7,431,161
Reverse repurchase agreements (Note 5) ...................................... 7,375,192
Dividends to shareholders (Note 1f) ......................................... 35,567
Investment adviser (Note 2) ................................................. 19,496 14,861,416
------------
Accrued expenses and other liabilities ........................................ 42,999
------------
Total liabilities ............................................................. 14,904,415
------------
=================================================================================================================================
Net Assets: Net assets .................................................................... $ 39,186,997
============
=================================================================================================================================
Capital: Common Stock, $.10 par value, 200,000,000 shares authorized ................... $ 649,414
Paid-in capital in excess of par .............................................. 90,432,850
Undistributed investment income--net .......................................... 300,527
Accumulated realized capital losses on investments--net (Note 6) .............. (39,860,237)
Accumulated distributions in excess of realized capital gains on
investments--net (Note 1f) .................................................. (12,182,911)
Unrealized depreciation on investments--net ................................... (152,646)
------------
Total--Equivalent to $6.03 per share based on 6,494,144 shares of
capital stock issued and outstanding (market price--$5.375) ................... $ 39,186,997
============
=================================================================================================================================
</TABLE>
See Notes to Financial Statements.
6 & 7
<PAGE>
Worldwide DollarVest Fund, Inc., May 31, 1999
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended May 31, 1999
=================================================================================================================================
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned.......... $ 1,556,111
(Note 1d):
=================================================================================================================================
Expenses: Investment advisory fees (Note 2)................................. $ 121,903
Accounting services (Note 2)...................................... 52,964
Interest on reverse repurchase agreements (Note 5)................ 26,695
Professional fees................................................. 26,257
Directors' fees and expenses...................................... 17,403
Printing and shareholder reports.................................. 16,175
Transfer agent fees............................................... 14,836
Listing fees...................................................... 7,978
Custodian fees.................................................... 7,221
Pricing services ................................................. 606
Amortization of organization expenses (Note 1e)................... 401
Other............................................................. 1,969
------------
Total expenses ................................................... 294,408
------------
Investment income--net............................................ 1,261,703
------------
=================================================================================================================================
Realized & Unrealized Realized loss on investments--net................................. (21,924,171)
Gain (Loss) on Change in unrealized depreciation on investments--net............. 19,707,954
Investment--Net ------------
(Note 1b,1d &3): Net Decrease in Net Assets Resulting from Operations ............. $ (954,514)
============
=================================================================================================================================
</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, 1999 Nov. 30, 1998
=================================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net............................................ $ 1,261,703 $ 7,686,189
Realized loss on investments--net................................. (21,924,171) (26,142,101)
Change in unrealized appreciation/depreciation
on investments--net............................................. 19,707,954 (18,452,841)
------------ ------------
Net decrease in net assets resulting from operations.............. (954,514) (36,908,753)
------------ ------------
=================================================================================================================================
Dividends & Investment income--net............................................ (1,664,969) (10,161,119)
Distributions to In excess of realized gain on investments--net.................... -- (12,182,921)
Shareholders ------------ ------------
(Note 1f): Net decrease in net assets resulting from dividends
and distributions to shareholders............................... (1,664,969) (22,344,040)
------------ ------------
=================================================================================================================================
Capital Stock Value of shares issued to Common Stock shareholders
Transactions in reinvestment of dividends and distributions.................. -- 885,633
(Note 4): ------------ ------------
=================================================================================================================================
Net Assets: Total decrease in net assets...................................... (2,619,483) (58,367,160)
Beginning of period............................................... 41,806,480 100,173,640
------------ ------------
End of period*.................................................... $ 39,186,997 $ 41,806,480
============ ============
=================================================================================================================================
*Undistributed investment income--net $ 300,527 $ 703,793
============ ============
=================================================================================================================================
</TABLE>
See Notes to Financial Statements.
8 & 9
<PAGE>
Worldwide DollarVest Fund, Inc., May 31, 1999
STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
For the Six Months Ended May 31, 1999
=================================================================================================================================
<S> <C> <C>
Cash Used for Net decrease in net assets resulting from operations............................ $ (954,514)
Operating Activities: Adjustments to reconcile net decrease in net assets resulting
from operations to net cash provided by operating activities:
Decrease in receivables....................................................... 1,078,178
Decrease in other liabilities................................................. 3,130,603)
Realized and unrealized loss on investments--net.............................. 2,216,217
Amortization of premium and discount.......................................... (167,592)
------------
Net cash used for operating activities.......................................... (958,314)
------------
=================================================================================================================================
Cash Provided by Proceeds from sales of long-term investments.................................... 34,623,505
Investing Activities: Purchases of long-term investments.............................................. (22,136,094)
Purchases of short-term investments............................................. (139,372,843)
Proceeds from sales and maturities of short-term investments.................... 138,564,000
------------
Net cash provided by investing activities....................................... 11,678,568
------------
=================================================================================================================================
Cash Used for Cash receipts from borrowings................................................... 1,973,844
Financing Activities: Cash payments on borrowings..................................................... (11,048,063)
Dividends and distributions paid to shareholders................................ (1,629,402)
------------
Net cash used for financing activities.......................................... (10,703,621)
------------
=================================================================================================================================
Cash: Net increase in cash............................................................ 16,633
Cash at beginning of period..................................................... --
------------
Cash at end of period........................................................... $ 16,633
============
=================================================================================================================================
Cash Flow Cash paid for interest.......................................................... $ 73,542
Information: ============
=================================================================================================================================
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended For the Year Ended November 30,
May 31, ---------------------------------------
Increase (Decrease) in Net Asset Value: 1999+ 1998+ 1997+ 1996 1995
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period...................... $ 6.44 $ 15.67 $ 18.01 $ 12.22 $ 11.90
Operating -------- -------- -------- -------- --------
Performance: Investment income--net.................................... .19 1.20 1.34 1.61 1.33
Realized and unrealized gain (loss) on investments--net... (.34) (6.93) (.32) 5.65 .24
-------- -------- -------- -------- --------
Total from investment operations.......................... (.15) (5.73) 1.02 7.26 1.57
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net.................................. (.26) (1.59) (1.19) (1.47) (1.25)
Realized gain on investments--net....................... -- -- (2.17) -- --
In excess of realized gain on investments--net.......... -- (1.91) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions......................... (.26) (3.50) (3.36) (1.47) (1.25)
-------- -------- -------- -------- --------
Net asset value, end of period............................ $ 6.03 $ 6.44 $ 15.67 $ 18.01 $ 12.22
======== ======== ======== ======== ========
Market price per share, end of period..................... $ 5.375 $ 6.50 $ 13.75 $ 14.75 $ 11.25
======== ======== ======== ======== ========
===================================================================================================================================
Total Investment Based on market price per share........................... (13.35%)++ (37.42%) 15.91% 45.94% 14.88%
Return:** ======== ======== ======== ======== ========
Based on net asset value per share........................ (1.89%)++ (45.59%) 8.19% 64.05% 15.35%
======== ======== ======== ======== ========
===================================================================================================================================
Ratios to Expenses, excluding interest expense...................... 1.34%* 1.15% .82% .80% .97%
Average ======== ======== ======== ======== ========
Net Assets: Expenses.................................................. 1.48%* 2.89% 1.47% 2.10% 1.83%
======== ======== ======== ======== ========
Investment income--net ................................... 6.33%* 10.63% 7.39% 8.54% 10.48%
======== ======== ======== ======== ========
===================================================================================================================================
Supplemental Net assets, end of period (in thousands).................. $ 39,187 $ 41,806 $100,174 $115,133 $ 78,139
Data: ======== ======== ======== ======== ========
Portfolio turnover........................................ 71.29% 626.23% 578.05% 342.06% 183.01%
======== ======== ======== ======== ========
===================================================================================================================================
Leverage: Amount of borrowings outstanding, end of period
(in thousands).......................................... -- $ 11,525 -- $ 53,706 $ 25,456
Average amount of borrowings outstanding
during the period (in thousands)........................ $ 835 $ 20,540 $ 11,427 $ 26,812 $ 10,829
======== ======== ======== ======== ========
Average amount of borrowings per share during
the period............................................. $ .13 $ 3.20 $ 1.79 $ 4.19 $ 1.69
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
+ 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.
See Notes to Financial Statements.
10 & 11
<PAGE>
Worldwide DollarVest Fund, Inc., May 31, 1999
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. The Fund's financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of management
accruals and estimates. 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
or purchased are valued at the last sale price in the case of exchange-traded
options. In the case of options traded in the over-the-counter market, valuation
is the last asked price (options written) or the last bid price (options
purchased). 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 amortized
on a straight-line basis over a period not exceeding five years. In accordance
with Statement of Position 98-5, any unamortized organization expenses will be
expensed on the first day of the next fiscal year beginning after December 15,
1998. This charge will not have any material impact on the operations of the
Fund.
(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. Distributions in excess of realized capital gains are due
primarily to differing tax treatments for futures transactions and post-October
losses.
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, 1999 were $29,060,699 and $34,270,637, respectively.
Net realized losses for the six months ended May 31, 1999 and net unrealized
losses as of May 31, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Losses Losses
- --------------------------------------------------------------------------------
Long-term investments ....................... $(21,924,171) $(152,646)
------------ ---------
Total ....................................... $(21,924,171) $(152,646)
============ =========
- --------------------------------------------------------------------------------
As of May 31, 1999, net unrealized depreciation for Federal income tax purposes
aggregated $152,646, of which $773,880 related to appreciated securities and
$926,526 related to depreciated securities. At May 31, 1999, the aggregate cost
of investments for Federal income tax purposes was $44,620,066.
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
12 & 13
<PAGE>
Worldwide DollarVest Fund, Inc., May 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
outstanding during the six months ended May 31, 1999 remained constant and
during the year ended November 30, 1998 increased by 101,182 as a result of
dividend reinvestment.
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. For the six months
ended May 31, 1999, the average amount outstanding was approximately $835,000
and the daily weighted average interest rate was 6.41%.
6. Capital Loss Carryforward:
At November 30, 1998, the Fund had a net capital loss carryforward of
approximately $25,858,000, all of which expires in 2006. This amount will be
available to offset like amounts of any future taxable gains.
7. Subsequent Events:
On June 9, 1999, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.046276 payable on June
30, 1999 to share holders of record as of June 23, 1999.
YEAR 2000 ISSUES
Many computer systems were designed using only two digits to designate years.
These systems may not be able to distinguish the Year 2000 from the Year 1900
(commonly known as the "Year 2000 Problem"). The Fund could be adversely
affected if the computer systems used by the Fund's management or other Fund
service providers do not properly address this problem before January 1, 2000.
The Fund's management expects to have addressed this problem before then, and
does not anticipate that the services it provides will be adversely affected.
The Fund's other service providers have told the Fund's management that they
also expect to resolve the Year 2000 Problem, and the Fund's management will
continue to monitor the situation as the Year 2000 approaches. However, if the
problem has not been fully addressed, the Fund could be negatively affected. The
Year 2000 Problem could also have a negative impact on the issuers of securities
in which the Fund invests. This negative impact may be greater for companies in
foreign markets, particularly emerging markets, since they may be less prepared
for the Year 2000 Problem than domestic companies and markets. If the companies
in which the Fund invests have Year 2000 Problems, the Fund's returns could be
adversely affected.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Donald Cecil, Director
Roland M. Machold, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Vincent T. Lathbury III, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Donald C. Burke, Vice President and Treasurer
Robert Harris, 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
- --------------------------------------------------------------------------------
Gerald M. Richard, Treasurer of Worldwide DollarVest Fund, Inc. has recently
retired. His colleagues at Merrill Lynch Asset Management, L.P. join the Fund's
Board of Directors in wishing Mr. Richard well in his retirement.
- --------------------------------------------------------------------------------
14 & 15
<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--5/99
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