-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PYQG9wKKVv2J68OvV308GqUDRWE+mFA/ndp2pOeWS8WHZ866fkaYdh+OfxJc//mg B31vZ8DU76KHbygi+ZEFFA== 0000935069-97-000052.txt : 19970430 0000935069-97-000052.hdr.sgml : 19970430 ACCESSION NUMBER: 0000935069-97-000052 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970429 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEBS INDEX FUND INC CENTRAL INDEX KEY: 0000930667 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-09102 FILM NUMBER: 97589601 BUSINESS ADDRESS: STREET 1: 400 BELLEVUE PARKWAY CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027912919 FORMER COMPANY: FORMER CONFORMED NAME: WFBS INDEX FUND INC DATE OF NAME CHANGE: 19961226 FORMER COMPANY: FORMER CONFORMED NAME: FOREIGN FUND INC DATE OF NAME CHANGE: 19950524 N-30D 1 WEBS INDEX FUND, INC. WEBS INDEX FUND, INC. ================================================================================ Dear Shareholder, We are pleased to present this semi-annual report for WEBS Index Fund, Inc. (formerly named Foreign Fund, Inc.) for the period September 1, 1996 through February 28, 1997. It contains information about the performance of your investment, a management discussion and analysis from Barclays Global Fund Advisors, the Investment Adviser for each WEBS Index Series, and important financial information. As you know, each of the 17 WEBS Index Series seeks to track the investment performance of a specific country's stock market, as measured by a Morgan Stanley Capital International (MSCI) country index. This report contains information about the tracking of each WEBS Index Series compared to its benchmark MSCI country index for the period ended February 28, 1997. PRICE/VALUE STABILITY CONTINUES The unique structure of the WEBS Index Series has continued to result in share prices that are very close to net asset value. While the relationship between market price and net asset value varies from moment to moment and from index series to index series, the WEBS Index Series traded on the American Stock Exchange at an average end-of-day market price only 5 cents per share -- about one-third of 1% -- over/under their underlying net asset values. The largest average end-of-day spread, for the Malaysia WEBS Index Series, was only 1.11%. In contrast, shares in closed-end international funds frequently trade at substantial discounts or premiums to their net asset values. GROWTH The WEBS Index Series were launched on March 12, 1996 with aggregate net assets of $79 million. As of February 28, 1997, the WEBS Index Series aggregate net assets had increased by over 300% to $318.5 million. This growth of WEBS Index Fund, Inc., together with the increasing importance of international equities to US investors, the attractiveness of index investing, and the ease of investing in the WEBS Index Series makes us optimistic about the prospects for continued strong investor interest in WEBS Index Fund, Inc. during the balance of 1997 and beyond. The uniqueness and success of WEBS Index Fund, Inc. continues to attract increasing attention from both institutional and retail investors, as well as from the financial press. We hope that you have noted this, and will increasingly utilize the WEBS Index Series in your investment program as you gain confidence in them and continue to diversify your investment portfolio. In the meantime, we wish to thank you for your support of and confidence in WEBS Index Fund, Inc. Sincerely, /S/ SIGNATURE /S/ SIGNATURE Nathan Most Nic Stuchfield Chairman and President Chief Investment WEBS Index Fund, Inc. Officer Index Investments Barclays Global Fund Advisors 1 ================================================================================ INTRODUCTION The Investment Adviser for each WEBS Index Series is Barclays Global Fund Advisors. Each WEBS Index Series is managed to hold a representative sample of the securities held in the corresponding MSCI Index (using an analytic technique known as "portfolio sampling"), in contrast to a full replication of the Index. Portfolio sampling is a highly disciplined approach to capturing index returns that involves maximizing float and liquidity, reflecting accurately the market's size and industry profiles and minimizing cross-ownership. No attempt is made to manage the WEBS Index Series using economic, financial or market analysis. There are several factors that should be kept in mind when reviewing the performance of the Fund's various WEBS Index Series. First, because of the portfolio sampling approach discussed above, as well as regulatory and other constraints imposed on its use (such as limits on investing in particular stocks imposed by the Internal Revenue Code and the need to comply with the Fund's concentration policy), the resulting performance of a WEBS Index Series may vary positively or negatively from that of the relevant MSCI Index during any period. Second, the MSCI Indices are unmanaged and, therefore, do not bear management, administration, distribution, transaction or other expenses. However, the WEBS Index Series do incur such expenses, which impacts their performance. Another factor to be considered is the method by which dividend income is reflected in the MSCI Indices. The compiler of the MSCI Indices calculates total dividends received in a year and allocates that total pro rata over a twelve-month period (i.e., the dividend payments are "smoothed" throughout the year) and all dividends received are deemed to be reinvested at the end of each month. Each WEBS Index Series records dividend income on its portfolio securities on their specific ex-dividend dates and must wait until the cash is actually received before the dividends can be invested, which results in uneven flows of dividend income during the year. Also, due to use of the portfolio sampling technique described above, a WEBS Index Series will not hold exactly the same securities, or in the same proportion, as the corresponding MSCI Index. This causes the performance of a WEBS Index Series to deviate positively or negatively from the corresponding MSCI Index, depending on individual security dividend streams. 2 PERFORMANCE REVIEW WEBS INDEX FUND, INC. =============================================================================== AUSTRALIA For the period ended February 28, 1997 the total return of the Australia WEBS Index Series was 6.36%. The corresponding MSCI Index total return for the period was 6.47%. The Australia WEBS Index Series under-performed the MSCI Australia Index total return by 0.11% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE AUSTRALIA WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Australia WEBS Index Series under-performed the MSCI Index for several reasons, including dividend smoothing and the impact of expenses. Portfolio sampling had a positive effect on performance due to industry weighting differences between the Index Series and the benchmark. WHAT MARKET CONDITIONS AFFECTED THE AUSTRALIA WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Economic activity in Australia slowed considerably throughout 1996 and early 1997. Consumer spending declined due to falling levels of consumer confidence and the tightening of fiscal policy by the government. Interest rate sensitive sectors, such as housing, should benefit from monetary policy developments. Governmental reforms (which have been implemented since the 1980s) have allowed Australia to avoid the boom-bust economic cycle it has experienced in the past. The reform package included unilateral tariff reductions, financial market deregulation and tax incentives to promote work, savings and investment. A right of center Liberal-National coalition was elected to power in March of 1996 after thirteen years of Labour party rule. This new government has focused on fiscal consolidation with an emphasis on spending restraint rather than raising taxes. To promote growth, business activities have been largely deregulated and the stance on foreign investment has been relaxed. Improved performance from the export sector and greater links to the Asian economies have also contributed to economic growth. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE AUSTRALIA WEBS INDEX SERIES VS. THE MSCI AUSTRALIA INDEX [LINE GRAPH] AUSTRALIA WEBS INDEX SERIES MSCI AUSTRALIA INDEX 3/12/96 10,000 10,000 3/31/96 10,161 10,171 4/30/96 10,633 10,670 5/31/96 10,523 10,588 6/30/96 10,261 10,238 7/31/96 9,769 9,758 8/31/96 10,388 10,383 9/30/96 10,378 10,393 10/31/96 10,787 10,791 11/30/96 11,238 11,232 12/31/96 11,235 11,200 1/31/97 10,769 10,744 2/28/97 11,048 11,054 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Australia WEBS Index Series $11,048* MSCI Australia Index $11,054 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Australia WEBS Index Series 10.48% MSCI Australia Index 10.54% - -------------------- * The chart assumes a hypothetical $10,000 initial investment in the Australia WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 3 PERFORMANCE REVIEW WEBS INDEX FUND, INC. =============================================================================== AUSTRIA For the period ended February 28, 1997 the total return of the Austria WEBS Index Series was (2.69)%. The corresponding MSCI Index total return for the period was (2.23)%. The Austria WEBS Index Series under-performed the MSCI Austria Index total return by 0.46% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE AUSTRIA WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Austria WEBS Index Series under-performed the MSCI Index due to dividend smoothing and the impact of expenses. Subchapter M of the Internal Revenue Code states that no more than 25% of the index can be made up of one individual security, which affects the composition of the Index Series. This resulted in a re-weighting of the remaining securities in the portfolio which had a positive effect on performance, but only partially offset the negative impact of expenses and dividend smoothing. WHAT MARKET CONDITIONS AFFECTED THE AUSTRIA WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Austria experienced a substantial slowdown in the growth of the economy during the second half of 1996. Domestic demand has been flat due to continued government fiscal constraint felt throughout Western Europe. This poor demand has adversely affected various sectors of the economy including construction output, traditional consumer goods and building materials. A number of fiscal consolidation measures, including higher energy taxes, overtime taxes and cuts in nursing care and unemployment benefits were introduced mid-1996 and restrained consumer spending overall. The demand for imports has continued to be low, while export growth has begun to rise due to favorable exchange rate movements and buoyant growth in East-Central Europe and overseas markets. This recent increase in exports has positively affected industrial output, specifically technical manufacturing and the production of semi-finished goods. These sectors are also the ones planning the largest investments in 1997. In general, firms have postponed, rather than canceled, their investment projects in reaction to 1996's cyclical downturn. The realization of these investment projects may help fuel economic growth in 1997. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE AUSTRIA WEBS INDEX SERIES VS. THE MSCI AUSTRIA INDEX Austria WEBS Index Series MSCI Austria Index 3/12/96 10,000 10,000 3/31/96 10,101 10,237 4/30/96 10,009 10,304 5/31/96 10,577 10,866 6/30/96 9,881 10,202 7/31/96 9,698 9,978 8/31/96 9,661 10,073 9/30/96 9,420 9,780 10/31/96 9,457 9,848 11/30/96 9,569 10,080 12/31/96 9,726 10,235 1/31/97 9,420 9,821 2/28/97 9,401 9,848 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Austria WEBS Index Series $9,401* MSCI Austria Index $9,848 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Austria WEBS Index Series (5.99)% MSCI Austria Index (1.52)% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Canada WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 4 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ BELGIUM For the period ended February 28, 1997 the total return of the Belgium WEBS Index Series was 6.69%. The corresponding MSCI Index total return for the period was 10.47%. The Belgium WEBS Index Series under-performed the MSCI Belgium Index total return by 3.78% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE BELGIUM WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Belgium WEBS Index Series under-performed the MSCI Index for several reasons, including dividend smoothing, portfolio sampling and expenses. Portfolio sampling had a negative effect on performance due to industry weighting differences between the Index Series and the benchmark. The need for compliance with Subchapter M of the Internal Revenue Code resulted in a re-weighting of the remaining securities in the portfolio which negatively impacted the Index Series. WHAT MARKET CONDITIONS AFFECTED THE BELGIUM WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Economic growth has been on the rise in Belgium with GDP growth likely to increase further in 1997, although the strains of trying to comply with the Maastricht Treaty have slowed an already struggling economy. Efforts to comply with the Treaty's requirements, which have caused an economic slowdown throughout Western Europe, have adversely affected export activity to European trading partners. The intermediate goods sector has suffered particular losses due to this reduced trading activity. The government continues to work on its deficit reduction plan. One way the government aims to reduce its debt is the partial privatization of Credit Communal, the municipally-owned bank, and a number of other financial institutions. The budget also outlines cuts in federal spending, including cuts in subsidies to public companies, international aid and military spending, increased petrol taxes and changes in the tax implications of certain savings instruments. This emphasis on fiscal restraint should continue to restrain growth, although a modest recovery is widely expected in 1997. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE BELGIUM WEBS INDEX SERIES VS. THE MSCI BELGIUM INDEX Belgium WEBS Index Series MSCI Belgium Index 3/12/96 10,000 10,000 3/31/96 9,759 9,823 4/30/96 9,966 10,076 5/31/96 10,288 10,237 6/30/96 10,322 10,284 7/31/96 10,456 10,399 8/31/96 10,501 10,496 9/30/96 10,543 10,630 10/31/96 10,676 10,786 11/30/96 10,915 11,107 12/31/96 10,895 11,152 1/31/97 11,070 11,420 2/28/97 11,204 11,595 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Belgium WEBS Index Series $11,204* MSCI Belgium Index $11,595 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Belgium WEBS Index Series 12.04% MSCI Belgium Index 15.95% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Belgium WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 5 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ CANADA For the period ended February 28, 1997 the total return of the Canada WEBS Index Series was 20.13%. The corresponding MSCI Index total return for the period was 20.83%. The Canada WEBS Index Series under-performed the MSCI Canada Index total return by 0.70% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE CANADA WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Canada Index Series under-performed the MSCI Index for several reasons, including dividend smoothing and the impact of expenses. Portfolio sampling had an overall positive effect on performance due to industry weighting differences between the Index Series and the benchmark. WHAT MARKET CONDITIONS AFFECTED THE CANADA WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Canada has experienced another year of healthy economic growth in 1996, partially due to the government's interest rate cuts during the year. The lower interest rates have had a positive ripple effect throughout Canada's economy. Approximately 300,000 new jobs were added during the past year, but the unemployment rate remained at about 10% for 1996. The Canadian dollar has strengthened since the beginning of 1996. Improved levels of consumer confidence have led to increased consumer spending, particularly on housing and durable goods. Exports have also been strong, due to the strength of the United States' economy. Canada has seen improved performance in its current account balance which has shown the first surplus since the early 1980s. With record low interest rates, a healthy world economy, low and stable inflation and much improved government finances, Canada is in an excellent position for continued economic growth. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE CANADA WEBS INDEX SERIES VS. THE MSCI CANADA INDEX Canada WEBS Index Series MSCI Canada Index 3/12/96 10,000 10,000 3/31/96 10,088 10,100 4/30/96 10,462 10,516 5/31/96 10,639 10,682 6/30/96 10,344 10,389 7/31/96 10,029 10,071 8/31/96 10,463 10,521 9/30/96 10,877 10,938 10/31/96 11,726 11,794 11/30/96 12,546 12,652 12/31/96 12,115 12,215 1/31/97 12,678 12,815 2/28/97 12,569 12,713 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Canada WEBS Index Series $12,569* MSCI Canada Index $12,713 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Canada WEBS Index Series 25.69% MSCI Canada Index 27.13% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Canada WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 6 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ FRANCE For the period ended February 28, 1997 the total return of the France WEBS Index Series was 16.03%. The corresponding MSCI Index total return for the period was 17.74%. The France WEBS Index Series under-performed the MSCI France Index total return by 1.71% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FRANCE WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The France Index Series under-performed the MSCI Index for several reasons, including dividend smoothing and the impact of expenses. Portfolio sampling had a positive effect on performance due to industry weighting differences between the Index Series and the benchmark. WHAT MARKET CONDITIONS AFFECTED THE FRANCE WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The recent economic growth in France has been due, in part, to lowered interest rates by the Bank of France. Interest rates were reduced in October from 3.7% to their current level of 3.2% (as of February 1997). Rates are expected to remain low with further cuts possible in the future. Another positive economic factor has been the continued low inflation rate. Inflation fell from 2.3% in July to 1.6% by September. This decline partly reflects last year's increase in the VAT rate. The low inflation rate has benefited various sectors of the economy, including lowered prices for public sector services and manufactured products and falling prices for fresh food (which fell 10% in late 1996). Unemployment is a continued problem, with the unemployment rate at 12.6% in late 1996 and expected to continue to rise. The unemployment problem is partly due to the government down-sizing its employment policy with cuts in the public sector and reductions in employment subsidies to the private sector. The government is still trying to comply with budget constraints imposed by the Maastrict Treaty and plans to offset some of the fiscal measures by implementing tax cuts aimed at pacifying the unions and enhancing consumer confidence. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FRANCE WEBS INDEX SERIES VS. THE MSCI FRANCE INDEX France WEBS Index Series MSCI France Index 3/12/96 10,000 10,000 3/31/96 10,596 10,629 4/30/96 10,765 10,821 5/31/96 10,668 10,701 6/30/96 10,998 10,893 7/31/96 10,757 10,589 8/31/96 10,495 10,371 9/30/96 11,072 10,942 10/31/96 11,278 11,174 11/30/96 11,855 11,766 12/31/96 11,938 11,882 1/31/97 12,160 12,149 2/28/97 12,177 12,210 Past performance is not predictive of future performance Value February 28, 1997 ----------------- France WEBS Index Series $12,177* MSCI France Index $12,210 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- France WEBS Index Series 21.77% MSCI France Index 22.10% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the France WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 7 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ GERMANY For the period ended February 28, 1997 the total return of the Germany WEBS Index Series was 8.58%. The corresponding MSCI Index total return for the period was 9.81%. The Germany WEBS Index Series under-performed the MSCI Germany Index total return by 1.23% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE GERMANY WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Germany WEBS Index Series under-performed the MSCI Index due to dividend smoothing and the impact of expenses. Although portfolio sampling had a positive effect on performance, due to industry weighting differences between the Index Series and the benchmark, it only partially offset the negative impact of dividend smoothing and expenses. WHAT MARKET CONDITIONS AFFECTED THE GERMANY WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The German economy, long envied by other countries, is experiencing its share of hardships. High wages, record high levels of unemployment and militant unions have combined to make a number of German products un-competitive in today's cost-cutting global business environment. The rigidity of Germany's economic structure has made it difficult to effect changes to promote economic growth. The unemployment rate for 1996 was approximately 11% -- the highest level in the post-War era. Inflation, however, has remained under control, ending the year at (roughly) 1.5%. The government has tried to help stimulate investment and jobs by announcing tax reforms, specifically planning future cuts in the solidarity surcharge added to income and corporate tax rates as well as cutting the top rate of business tax. While consumer spending, government spending and construction investment were down for the year, equipment investments and exports showed strong growth. Fourth quarter GDP data showed positive growth, compared to a relatively flat GDP figure for the third quarter. The economy will be strongly affected by world trade, which is expanding as the economic climate of Germany's trading partners continues to improve. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GERMANY WEBS INDEX SERIES VS. THE MSCI GERMANY INDEX Germany WEBS Index Series MSCI Germany Index 3/12/96 10,000 10,000 3/31/96 10,181 10,216 4/30/96 9,781 9,843 5/31/96 9,955 9,984 6/30/96 10,144 10,187 7/31/96 10,197 10,216 8/31/96 10,399 10,451 9/30/96 10,468 10,518 10/31/96 10,560 10,614 11/30/96 10,918 11,034 12/31/96 10,948 11,068 1/31/97 10,880 11,020 2/28/97 11,291 11,476 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Germany WEBS Index Series $11,291* MSCI Germany Index $11,476 TOTAL RETURN SINCE INCEPTION (DAGGER) ---------- Germany WEBS Index Series 12.91% MSCI Germany Index 14.76% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Germany WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGER) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 8 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ HONG KONG For the period ended February 28, 1997 the total return of the Hong Kong WEBS Index Series was 14.98%. The corresponding MSCI Index total return for the period was 17.05%. The Hong Kong WEBS Index Series under-performed the MSCI Hong Kong Index total return by 2.07% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE HONG KONG WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Hong Kong WEBS Index Series under-performed the MSCI Index due to portfolio sampling, the impact of expenses and dividend smoothing. In addition, the need for compliance with Subchapter M of the Internal Revenue Code resulted in a re-weighting of the remaining securities in the portfolio which negatively impacted the Index Series performance. WHAT MARKET CONDITIONS AFFECTED THE HONG KONG WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Growth in Hong Kong has been moderate during 1996 and to date in 1997. Economic growth, as measured by GDP, was approximately 4.4% for 1996 (down from 4.7% in 1995) due to export weakness and poor domestic demand. Private consumption is on the rise, as are investment levels. Property values have continued to increase and will have a beneficial impact on consumer confidence. Inflation has been subdued, reaching a nine year low of 4.9% in the third quarter of 1996. The weakness in consumer activity, moderate prices in the Chinese market, monetary policy and the currency peg (to the U.S. dollar) have all helped contain inflationary pressures. The issue first and foremost is China's assumption of control over Hong Kong on July 1, 1997. China has decided to dissolve the current legislative council and replace it with a hand picked provisional legislature. In a dramatic move, Beijing has declared current British Governor Chris Patten's Bill of Rights unconstitutional. This has led to general uncertainty on China's economic stance, although Hong Kong acts as a major conduit for foreign direct investment into mainland China (it is estimated that 60% of foreign direct investment comes from or through Hong Kong). While Hong Kong's democratic experience may be short-lived and civil rights will likely be eroded, the Chinese are not expected to do anything which would threaten the economic vibrancy of the territory. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE HONG KONG WEBS INDEX SERIES VS. THE MSCI HONG KONG INDEX Hong Kong WEBS Index Series MSCI Hong Kong Index 3/12/96 10,000 10,000 3/31/96 10,429 10,477 4/30/96 10,468 10,501 5/31/96 10,826 10,817 6/30/96 10,569 10,566 7/31/96 10,031 10,085 8/31/96 10,322 10,415 9/30/96 10,979 11,126 10/31/96 11,414 11,594 11/30/96 12,418 12,543 12/31/96 12,315 12,478 1/31/97 11,948 12,210 2/28/97 11,868 12,190 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Hong Kong WEBS Index Series $11,868* MSCI Hong Kong Index $12,190 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Hong Kong WEBS Index Series 18.68% MSCI Hong Kong Index 21.90% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Hong Kong WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 9 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ ITALY For the period ended February 28, 1997 the total return of the Italy WEBS Index Series was 7.11%. The corresponding MSCI Index total return for the period was 7.44%. The Italy WEBS Index Series under-performed the MSCI Italy Index total return by 0.33% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE ITALY WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Italy WEBS Index Series under-performed the MSCI Index for several reasons, including dividend smoothing and the impact of expenses. Although portfolio sampling had a positive effect on performance, due to industry weighting differences between the Index Series and the benchmark, it only partially offset the negative impact of dividend smoothing and expenses. WHAT MARKET CONDITIONS AFFECTED THE ITALY WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? A new Italian government was formed in April of 1996 and has proved to be remarkably stable. The market's reaction has been very positive. The inflationary environment has improved considerably, with the national inflation rate falling to 3.4% in the third quarter of 1996. The drop was due to a decline in food prices, entertainment and transportation costs. This improvement prompted the Bank of Italy to ease monetary policy and lower the discount rate to 7.5% in the fourth quarter. The government has put forward an ambitious plan in an attempt to reach the Maastricht Treaty deficit target of 3%. The fiscal contraction will introduce an additional "Euro-tax" on households and businesses, as well as cuts in healthcare and pension expenditures. The relative political stability and credible fiscal policy has benefited the Italian currency. The current account surplus has increased as a result of the competitive position of the currency and is the strongest the surplus has been in twenty years. The Italian Lira rejoined the European Exchange Rate Mechanism at the end of November, following a long period of speculation due to the appreciation of the Lira since the beginning of the year, the improved outlook for public finances and the stable political environment. Unemployment has remained fairly stable, although still very high at 12%, due to the large increase in the labor supply compared to slower creation of employment. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ITALY WEBS INDEX SERIES VS. THE MSCI ITALY INDEX Italy WEBS Index Series MSCI Italy Index 3/12/96 10,000 10,000 3/31/96 9,875 9,918 4/30/96 11,197 11,272 5/31/96 11,226 11,207 6/30/96 11,300 11,233 7/31/96 10,514 10,416 8/31/96 10,411 10,333 9/30/96 11,083 10,994 10/31/96 10,479 10,386 11/30/96 11,272 11,205 12/31/96 11,295 11,229 1/31/97 12,450 12,418 2/28/97 11,151 11,102 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Italy WEBS Index Series $11,151* MSCI Italy Index $11,102 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Italy WEBS Index Series 11.51% MSCI Italy Index 11.02% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Italy WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 10 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ JAPAN For the period ended February 28, 1997 the total return of the Japan WEBS Index Series was (16.82)%. The corresponding MSCI Index total return for the period was (16.50)%. The Japan WEBS Index Series under-performed the MSCI Japan Index total return by 0.32% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE JAPAN WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Japan WEBS Index Series under-performed the MSCI Index for several reasons, including the impact of expenses and dividend smoothing. The overall poor performance in most industries included in the MSCI Index (particularly in the banking and financial services sectors which returned -30.33% and -31.45%, respectively) had a negative effect on the Index Series. WHAT MARKET CONDITIONS AFFECTED THE JAPAN WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The major news in Japan over the last year has been the depreciation of the yen and the dramatic fall of the Nikkei stock average. Japanese blue-chip stocks have fallen to half of their all time highs and the yen has plunged 50% against the U.S. dollar since the Spring of 1995. The Liberal Democratic Party was re-elected to office in October and announced sweeping reforms in the form of deregulation of Japan's financial system. The slow pace of financial reform in Japan has strangled the country's economic recovery and hurt its prospects to become an international financial center. Tokyo faces strong competition from Hong Kong and Singapore, both of which are vying to become Asia's main financial hub and offer a lighter regulatory environment. Japan's economy has a long road to recovery, with banks still working off bad loans made in the early 1980s and real estate prices falling. The government does not have many monetary or fiscal options with the discount rate at a rock bottom 0.5%. As a result, the government is constraining public spending, imposing an increase in consumption tax from 3% to 5% (effective April 1997) and letting an income tax rebate program, started in 1994, expire in April 1997. Other economic indicators are positive, with unemployment at 3% and inflation at 0.1%. The weakness of the yen may be the key to economic growth in the future by fueling exports with its stronger international trading partners. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE JAPAN WEBS INDEX SERIES VS. THE MSCI JAPAN INDEX Japan WEBS Index Series MSCI Japan Index 3/12/96 10,000 10,000 3/31/96 10,548 10,570 4/30/96 11,116 11,171 5/31/96 10,548 10,596 6/30/96 10,629 10,652 7/31/96 10,149 10,175 8/31/96 9,689 9,720 9/30/96 10,027 10,057 10/31/96 9,344 9,382 11/30/96 9,527 9,561 12/31/96 8,857 8,900 1/31/97 7,890 7,932 2/28/97 8,060 8,117 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Japan WEBS Index Series $8,060* MSCI Japan Index $8,117 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Japan WEBS Index Series (19.40)% MSCI Japan Index (18.83)% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Japan WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 11 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ MALAYSIA For the period ended February 28, 1997 the total return of the Malaysia WEBS Index Series was 13.48%. The corresponding MSCI Index total return for the period was 15.79%. The Malaysia WEBS Index Series under-performed the MSCI Malaysia Index total return by 2.31% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE MALAYSIA WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Malaysia WEBS Index Series under-performed the MSCI Index due to the impact of expenses, dividend smoothing and portfolio sampling. In addition, the need for compliance with Subchapter M of the Internal Revenue Code resulted in a re-weighting of the remaining securities in the portfolio which negatively impacted the Index Series. WHAT MARKET CONDITIONS AFFECTED THE MALAYSIA WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The Malaysian government has been following a high growth strategy and maintaining high growth rates will remain a key priority until the end of the decade. The growth rate is high, even by international standards, at about 8%, and has been driven mainly by strong investment. The continued progress of the government's large infrastructure and utilities projects will ensure that public investment continues to support growth. Employment growth has surpassed growth of the labor market and has resulted in wage rates increasing over productivity gains. The unemployment rate has been decreasing in recent years, falling from a high of 5.1% in 1990 to about 2.8% in 1996. Inflation has remained subdued, considering the fast pace of growth, declining from 3.4% in 1995 to about 3.3% in 1996. Monetary policy has been closely maintained by the Bank of Malaysia in order to keep inflationary pressure at bay. Selective measures, such as credit card limits and additional financing caps on purchases of investment properties have been introduced, and similar measures are expected to continue. The most pressing current economic problem is the position of the current account, which continues to post a deficit. The deficit was 8.8% of GDP in 1995, but has narrowed to 6.3% for 1996. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE MALAYSIA WEBS INDEX SERIES VS. THE MSCI MALAYSIA INDEX Malaysia WEBS Index Series MSCI Malaysia Index 3/12/96 10,000 10,000 3/31/96 10,438 10,450 4/30/96 10,899 11,007 5/31/96 10,498 10,562 6/30/96 10,551 10,612 7/31/96 9,894 9,966 8/31/96 10,428 10,512 9/30/96 10,542 10,689 10/31/96 10,783 10,910 11/30/96 11,237 11,365 12/31/96 11,320 11,484 1/31/97 11,418 11,655 2/28/97 11,834 12,172 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Malaysia WEBS Index Series $11,834* MSCI Malaysia Index $12,172 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Malaysia WEBS Index Series 18.34% MSCI Malaysia Index 21.72% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Malaysia WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 12 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ MEXICO For the period ended February 28, 1997 the total return of the Mexico (Free) WEBS Index Series was 10.59%. The corresponding MSCI Index total return for the period was 12.94%. The Mexico (Free) WEBS Index Series under-performed the MSCI Mexico (Free) Index total return by 2.35% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE MEXICO (FREE) WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Mexico (Free) WEBS Index Series under-performed the MSCI Index due to the impact of expenses, dividend smoothing and portfolio sampling. In addition, the need for compliance with Subchapter M of the Internal Revenue Code resulted in a re-weighting of the remaining securities in the portfolio which negatively impacted the Index Series. WHAT MARKET CONDITIONS AFFECTED THE MEXICO (FREE) WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? After a few years of economic instability, Mexico is making an economic recovery. The main objective of economic policy since the devaluation of the currency has been to restore credibility and regain investor confidence. The government has been following an austere fiscal policy that is expected to continue. Expenditure on infrastructure is being increased while tax exemptions are being provided to businesses to stimulate investment and job creation. A major area of focus is balancing the budget, which should be feasible based on higher revenues associated with the increase in international oil prices. Inflation peaked at 52% back in December of 1995 and the effects of tight fiscal and monetary policies have reduced inflation to about 27% as of February 1997. Inflation is expected to continue its decline throughout 1997, although the current drought has put upward pressure on food prices, and fuel and electricity prices have increased by about 7%. The government also raised the minimum wage by 12% in early 1996. These factors have limited progress. The Peso has been relatively stable as the government has set a target for the currency -- the target is that the Peso should average 7.7 to one U.S. dollar. The North American Free Trade Agreement (NAFTA) has boosted Mexico's trade. Almost 80% of Mexico's trade is with the United States and main exports are petroleum, vehicles, chemicals and consumer electronics. The strength of the U.S. economy should sustain the growth of exports and, therefore, help Mexico's economic growth into 1997. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE MEXICO (FREE) WEBS INDEX SERIES VS. THE MSCI MEXICO (FREE) INDEX Mexico (Free) WEBS Index Series MSCI Mexico (Free) Index 3/12/96 10,000 10,000 3/31/96 10,864 10,913 4/30/96 11,437 11,540 5/31/96 11,618 11,617 6/30/96 11,427 11,486 7/31/96 10,683 10,743 8/31/96 11,592 11,736 9/30/96 11,683 11,719 10/31/96 10,828 11,017 11/30/96 11,311 11,489 12/31/96 11,552 11,783 1/31/97 12,408 12,798 2/28/97 12,820 13,254 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Mexico (Free) WEBS Index Series $12,820* MSCI Mexico (Free) Index $13,254 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Mexico (Free) WEBS Index Series 28.20% MSCI Mexico (Free) Index 32.54% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Mexico (Free) WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 13 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ NETHERLANDS For the period ended February 28, 1997 the total return of the Netherlands WEBS Index Series was 16.33%. The corresponding MSCI Index total return for the period was 18.00%. The Netherlands WEBS Index Series under-performed the MSCI Netherlands Index total return by 1.67% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE NETHERLANDS WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Netherlands Index Series under-performed the MSCI Index for several reasons, including the effect of dividend smoothing and the need for compliance with Subchapter M of the Internal Revenue Code, which imposes restrictions on the composition of the Index Series. In keeping with this tax provision, holdings of Royal Dutch Petroleum have been restricted to 25% which adversely affected the performance of the Index Series. WHAT MARKET CONDITIONS AFFECTED THE NETHERLANDS WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The Netherlands have successfully weathered Europe's economic sluggishness brought on by the constraints imposed by the Maastricht Treaty. The government has adopted a moderate fiscal stance and coupled with the economic growth seen over the last year, should result in the budget deficit being below the Maastricht Treaty limit of 3%. Unemployment has been decreasing due to the creation of 110,000 jobs in 1996. Private consumption has been the main driving force behind the economic expansion. This increased level of consumer spending may lead to a slight increase in inflation during 1997 although, inflation has remained restrained and finished 1996 and was about 2% in 1996. The focus of Dutch monetary policy is the maintenance of currency stability, as determined by the Guilder's exchange rate against the Deutschmark. The Dutch Central Bank had raised the repo rate by 10 basis points, but then in reaction to the German Bundesbank's rate cut of 30 basis points, cut the repo rate by 20 basis points in the third quarter. Rates will continue to move in tandem with Bundesbank decisions. Progress in fiscal policy will arise from planned curbs on government spending, increased efficiency in the public service and robust growth levels. With unemployment falling, low interest rates and no significant fiscal tightening, the economic outlook is positive for 1997. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE NETHERLANDS WEBS INDEX SERIES VS. THE MSCI NETHERLANDS INDEX Netherlands WEBS Index Series MSCI Netherlands Index 3/12/96 10,000 10,000 3/31/96 10,434 10,412 4/30/96 10,471 10,457 5/31/96 11,113 10,941 6/30/96 11,094 10,966 7/31/96 10,911 10,792 8/31/96 11,118 10,974 9/30/96 11,394 11,253 10/31/96 11,548 11,534 11/30/96 12,259 12,255 12/31/96 12,498 12,544 1/31/97 12,421 12,444 2/28/97 12,934 12,949 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Netherlands WEBS Index Series $12,934* MSCI Netherlands Index $12,949 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Netherlands WEBS Index Series 29.34% MSCI Netherlands Index 29.49% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Netherlands WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 14 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ SINGAPORE For the period ended February 28, 1997 the total return of the Singapore (Free) WEBS Index Series was 4.22%. The corresponding MSCI Index total return for the period was 5.16%. The Singapore (Free) Index Series under-performed the MSCI Singapore (Free) Index total return by 0.94% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE SINGAPORE (FREE) WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Singapore (Free) WEBS Index Series under-performed the MSCI Index due to dividend smoothing and the impact of expenses. Portfolio sampling had a slightly positive effect on performance, due to industry weighting differences between the Index Series and the benchmark, which only partially offset the negative impact of dividend smoothing and expenses. WHAT MARKET CONDITIONS AFFECTED THE SINGAPORE (FREE) WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? After enjoying highly successful economic growth for a number of years, GDP growth has been gradually slowing since the second quarter of 1996 due to an international downturn in the electronics industry. Singapore has a highly industrialized economy and sees much of its growth from the large and strong manufacturing sector. Leading industries include electronics, oil refining, chemicals and pharmaceuticals. Financial and business services have become more important in recent years and now contribute almost 30% of the economy's output. The industrial structure is heavily skewed towards multinationals, with small and medium-sized companies making a relatively small contribution. Singapore is heavily dependent on international trade. The government has liberal attitudes on international trade and offers incentives to local firms that seek to expand abroad within the Asia-Pacific region. The government follows cautious monetary and fiscal policies. The budget finances have been in a healthy condition, with a surplus of about 7% for 1996. The Central Bank uses the exchange rate to restrain inflationary pressures. Despite the effects of a very tight labor market and limited land resources, inflation for 1996 was approximately 2%. The economy's sound structure and an improved global environment should allow Singapore to continue to experience economic growth, albeit at a slower pace, during 1997. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SINGAPORE (FREE) WEBS INDEX SERIES VS. THE MSCI SINGAPORE (FREE) INDEX Singapore (Free) WEBS Index Series MSCI Singapore (Free) Index 3/12/96 10,000 10,000 3/31/96 10,278 10,308 4/30/96 10,302 10,284 5/31/96 9,714 9,692 6/30/96 9,722 9,571 7/31/96 8,979 8,828 8/31/96 9,327 9,196 9/30/96 9,352 9,207 10/31/96 8,934 8,775 11/30/96 9,548 9,358 12/31/96 9,720 9,582 1/31/97 9,999 9,939 2/28/97 9,720 9,670 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Signapore (Free) WEBS Index Series $9,720* MSCI Signapore (Free) Index $9,670 TOTAL RETURN SINCE INCEPTION(DAGGAR) ---------- Singapore (Free) WEBS Index Series (2.80)% MSCI Singapore (Free) Index (3.30)% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Singapore (Free) WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 15 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ SPAIN For the period ended February 28, 1997 the total return of the Spain WEBS Index Series was 18.88%. The corresponding MSCI Index total return for the period was 19.69%. The Spain WEBS Index Series under-performed the MSCI Spain Index total return by 0.81% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE SPAIN WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Spain WEBS Index Series under-performed the MSCI Index for several reasons, including the impact of expenses and dividend smoothing. The need for compliance with Subchapter M of the Internal Revenue Code resulted in a re-weighting of the remaining securities in the portfolio which positively impacted the Index Series. WHAT MARKET CONDITIONS AFFECTED THE SPAIN WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The rate of economic growth in Spain continues to show signs of a moderate increase due to the strength of foreign consumption and the capital goods sector. The service sector has seen relative improvement over the last year, specifically in telecommunications, wholesale and retail trade. Private consumption rose last year as evidenced by the increase in the level of imported goods (principally in non-food items). Recovery in economic activity has allowed job creation to remain strong. The unemployment rate was about 23% for 1996, a full 6% decrease over 1995's unemployment rate of 29%. This improved labor market was reflected in the wage increase of 3.8%. Inflation has been kept under control, ending 1996 at 3.2% -- the lowest rate since 1968. The Bank of Spain continued to reduce interest rates with further cuts in January 1997, putting the Bank rate at 6.0%. This cut was the ninth in the downward cycle and has resulted in a total drop of 3.25 points since December 1995. After recording spectacular rises in 1996, stock market indices continued their climb and recorded new all-time highs in the early weeks of January. The downward pressure on interest rates has had a positive impact on the stock market. Overall economic results in 1996 were very positive, not only in terms of growth but also with regard to correction and control of the traditional imbalances in Spain's economy. In 1997, inflation is expected to remain low with a focus on reducing the public deficit and continued moderate growth of economic activity. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SPAIN WEBS INDEX SERIES VS. THE MSCI SPAIN INDEX Spain WEBS Index Series MSCI Spain Index 3/12/96 10,000 10,000 3/31/96 10,399 10,428 4/30/96 10,715 10,824 5/31/96 10,640 10,747 6/30/96 11,069 11,199 7/31/96 10,663 10,688 8/31/96 10,845 10,917 9/30/96 11,130 11,185 10/31/96 11,484 11,535 11/30/96 12,361 12,508 12/31/96 13,571 13,776 1/31/97 13,363 13,545 2/28/97 12,893 13,066 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Spain WEBS Index Series $12,893* MSCI Spain Index $13,066 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Spain WEBS Index Series 28.93% MSCI Spain Index 30.66% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Spain WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 16 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ SWEDEN For the period ended February 28, 1997 the total return of the Sweden WEBS Index Series was 17.04%. The corresponding MSCI Index total return for the period was 19.15%. The Sweden WEBS Index Series under-performed the MSCI Sweden Index total return by 2.11% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE SWEDEN WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Sweden WEBS Index Series under-performed the MSCI Index for several reasons, including the impact of expenses and dividend smoothing. Industry weighting differences between the Index Series and the benchmark also had a slight negative effect on the deviation of returns. WHAT MARKET CONDITIONS AFFECTED THE SWEDEN WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The Swedish economy has had a healthy year mainly due to the performance of the export sector. The economy is showing signs of a broad based recovery and demand has been rising. Export orders increased in the last half of 1996, while domestic orders also showed signs of an upswing. After a mostly flat performance in 1996, retail sales have been rising in recent months fueled by wage growth and improved consumer confidence. Industrial orders also continue to climb, ending 1996 up about 10% over the past year. Inflation has been declining steadily, as the Swedish Krona has continued to appreciate since early 1995, has restrained import prices. With producer prices remaining subdued and the government intent on completing a program of significant fiscal tightening, inflation should remain below 2% in 1997. Measured against the Deutschemark, the Krona has appreciated by over 20% since April 1995. The move has been driven mainly by the improved economic outlook, and Germany's economic sluggishness as reflected in the value of their currency. Since the beginning of 1996, the Central Bank of Sweden, the Riksbank, has cut interest rates almost every two weeks and the repo rate which was at 4.85% in late 1996, after having opened the year at 8.91%. The government has imposed a strict monetary and fiscal policy to try to lower the budget deficit. Budgetary policy should be sufficient to prevent dramatic rises in activity levels and therefore, inflationary pressures. One consequence of this strict budgetary policy has been relatively high unemployment. Sweden has had a history of very low unemployment rates and is finding it hard to cope with unemployment levels in excess of 8%. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SWEDEN WEBS INDEX SERIES VS. THE MSCI SWEDEN INDEX Sweden WEBS Index Series MSCI Sweden Index 3/12/96 10,000 10,000 3/31/96 10,424 10,459 4/30/96 10,446 10,345 5/31/96 10,976 10,805 6/30/96 11,127 10,949 7/31/96 10,651 10,499 8/31/96 11,413 11,200 9/30/96 11,856 11,664 10/31/96 12,354 12,172 11/30/96 13,163 12,989 12/31/96 13,233 13,096 1/31/97 13,474 13,400 2/28/97 13,357 13,344 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Sweden WEBS Index Series $13,357* MSCI Sweden Index $13,344 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Sweden WEBS Index Series 33.57% MSCI Sweden Index 33.44% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Sweden WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 17 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ SWITZERLAND For the period ended February 28, 1997 the total return of the Switzerland WEBS Index Series was (0.49)%. The corresponding MSCI Index total return for the period was 0.27%. The Switzerland WEBS Index Series under-performed the MSCI Switzerland Index total return by 0.76% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE SWITZERLAND WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The Switzerland WEBS Index Series under-performed the MSCI Index due to the impact of expenses and dividend smoothing. Portfolio sampling had a slightly positive effect on performance due to industry weighting differences between the Index Series and the benchmark. WHAT MARKET CONDITIONS AFFECTED THE SWITZERLAND WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Economic growth in the Swiss economy was very slow throughout 1996. Private consumption remained fairly stagnant during the year and capital investment has also slowed. The main driver of this modest economic growth has been exports. The uncertainty of the Swiss citizens regarding wages and job security has had a negative effect on consumer expenditure. Wage cuts in the public sector and job losses as a result of company mergers and cost cutting measures have contributed to the general uneasiness. Real incomes rose only about 1% in 1996, the benefit of which was partially eliminated by higher health insurance premiums. Unemployment is high by historical standards, ending 1996 at about 4%. The Swiss economy is dominated by small and medium sized companies, which have not been able to keep up with the multi-national companies in restructuring their activities to take advantage of the strength of the Swiss Franc. The strength of the Franc, along with a general slowdown across Europe, have been the main factors in the slow economic growth experienced by Switzerland. The Franc has appreciated by 15% over the last three years and has reached record highs against the United States dollar and other currencies, although interest rates have remained very low, with the discount rate at 1%. The slow economy has also had a negative impact on the banking sector. There have been considerable losses taken on loans in the real estate market, which had expanded aggressively in the early 1990's. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SWITZERLAND WEBS INDEX SERIES VS. THE MSCI SWITZERLAND INDEX Switzerland WEBS Index Series MSCI Switzerland Index 3/12/96 10,000 10,000 3/31/96 10,298 10,357 4/30/96 10,025 9,951 5/31/96 9,751 9,617 6/30/96 10,207 10,095 7/31/96 9,876 9,891 8/31/96 10,260 10,319 9/30/96 9,959 10,070 10/31/96 9,909 10,040 11/30/96 10,093 10,125 12/31/96 9,951 9,924 1/31/97 10,159 10,220 2/28/97 10,210 10,347 Past performance is not predictive of future performance Value February 28, 1997 ----------------- Switzerland WEBS Index Series $10,210* MSCI Switzerland Index $10,347 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- Switzerland WEBS Index Series 2.10% MSCI Switzerland Index 3.47% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Switzerland WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 18 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ UNITED KINGDOM For the period ended February 28, 1997 the total return of the United Kingdom WEBS Index Series was 15.64%. The corresponding MSCI Index total return for the period was 17.31%. The United Kingdom WEBS Index Series under-performed the MSCI United Kingdom Index total return by 1.67% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE UNITED KINGDOM WEBS INDEX SERIES' PERFORMANCE FOR THE PERIOD ENDED FEBRUARY 28, 1997? The United Kingdom WEBS Index Series under-performed the MSCI Index due to several factors including dividend smoothing and the impact of expenses. Portfolio sampling had a positive effect on performance due to industry weighting differences between the Index Series and the benchmark. WHAT MARKET CONDITIONS AFFECTED THE UNITED KINGDOM WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The United Kingdom experienced very strong economic growth in 1996. Over the last four years, Britain has created more jobs than all of the other major countries of Europe combined. For the first time in five years, job vacancies for top graduates are increasing at a faster rate than the number of students graduated. This brought the unemployment rate down to about 7% for 1996. Housing prices rose dramatically (8.4%) in 1996, but this was more of a recovery than a boom. This recovery has been led by lower unemployment, growth of real income, tax cuts and low interest rates. Consumer confidence can, in part, be measured by the continuing increase in sales of life insurance and pension products--up 41% over 1995. The services industries have seen an upturn in in growth, specifically in transportation, communications and financial and business services. Makers of consumer goods have seen the largest rise in orders, while orders for investment goods, such as machinery and components were more sluggish. Interest rates reached a historical low, even with the Chancellor increasing the base rate to 6% in late 1996. The rate increase was intended to gain control of any upward pressures on prices, although inflation has remained steady at about 2.5%. The rise of Sterling has had a negative effect on export trade, although any fall in overseas demand offset by the healthy state of the domestic markets. The United Kingdom is one of the most successful economies in Europe and the rapid economic growth, fueled by the decline of unemployment, no serious inflationary problems and consumer demand growth, should continue into 1997. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE UNITED KINGDOM WEBS INDEX SERIES VS. THE MSCI UNITED KINGDOM INDEX United Kingdom WEBS Index Series MSCI United Kingdom Index 3/12/96 10,000 10,000 3/31/96 10,206 10,200 4/30/96 10,371 10,399 5/31/96 10,470 10,521 6/30/96 10,412 10,459 7/31/96 10,478 10,532 8/31/96 11,040 11,078 9/30/96 11,284 11,334 10/31/96 11,788 11,871 11/30/96 12,417 12,548 12/31/96 12,826 12,983 1/31/97 12,413 12,601 2/28/97 12,767 12,996 Past performance is not predictive of future performance Value February 28, 1997 ----------------- United Kingdom WEBS Index Series $12,767* MSCI United Kingdom Index $12,996 TOTAL RETURN SINCE INCEPTION (DAGGAR) ---------- United Kingdom WEBS Index Series 27.67% MSCI United Kingdom Index 29.96% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the United Kingdom WEBS Index Series and reflects all expenses of the Index Series. Investors should note that the Index Series is professionally managed while the relevant MSCI Index is unmanaged, does not incur expenses and is not available for investment. (DAGGAR) For the period March 12, 1996 (commencement of operations) through February 28, 1997 (unannualized). 19 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ AUSTRALIA WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE -------- ----------- ----- COMMON STOCK - BASKET 100.00% APPLIANCES & HOUSEHOLD DURABLES 0.86% 34,200 Email Limited $ 108,042 ---------- BANKING 19.76% 121,200 National Australia Bank Limited 1,525,904 169,200 Westpac Banking Corporation 958,731 ---------- 2,484,635 ---------- BEVERAGES & TOBACCO 5.97% 40,800 Coca - Cola Amatil Limited 373,694 180,600 Foster's Brewing Group Limited 377,089 ---------- 750,783 ---------- BROADCASTING & PUBLISHING 9.22% 156,600 News Corporation Limited 833,853 72,000 News Corporation Limited - Preferred 325,259 ---------- 1,159,112 ---------- BUILDING MATERIALS & COMPONENTS 5.13% 100,200 Boral Limited 272,213 39,000 James Hardie Industries Limited 112,006 87,600 Pioneer International Limited 260,421 ---------- 644,640 ---------- BUSINESS & PUBLIC SERVICES 2.49% 18,600 Brambles Industries Limited 313,290 ---------- CHEMICALS 1.85% 24,600 ICI Australia Limited 232,953 ---------- ENERGY SOURCES 17.88% 157,200 Broken Hill Proprietary Company 2,080,418 46,800 Santos Limited 168,553 ---------- 2,248,971 ---------- FOOD & HOUSEHOLD PRODUCTS 1.52% 43,200 Burns Phillip & Company Limited 67,064 102,600 Goodman Fielder Limited 124,235 ---------- 191,299 ---------- FOREST PRODUCTS & PAPER 2.61% 49,800 Amcor Limited 327,792 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE -------- ----------- ----- GOLD MINES 2.50% 24,000 Newcrest Mining Limited $ 91,281 108,000 Normandy Mining Limited 149,217 18,600 Plutonic Resources Limited 73,775 ---------- 314,273 ---------- LEISURE & TOURISM 0.83% 57,000 Crown Limited* 104,016 ---------- MERCHANDISING 3.19% 91,200 Coles Myer Limited 401,376 ---------- METALS - NON FERROUS 10.88% 25,800 CRA Limited 386,341 128,400 Mount Isa Mines Holdings Limited 178,399 64,200 North Limited 207,800 16,800 Renison Goldfields Consolidated Limited 66,766 84,000 WMC Limited 529,496 ---------- 1,368,802 ---------- METALS - STEEL 0.95% 107,400 Australia National Industries Limited 119,210 ---------- MULTI-INDUSTRY 7.20% 82,800 CSR Limited 292,425 22,800 Howard Smith Limited 191,255 82,800 Pacific Dunlop Limited 199,235 63,000 Southcorp Holdings Limited 222,987 ---------- 905,902 ---------- REAL ESTATE 7.16% 77,400 General Property Trust 150,795 19,800 Lend Lease Corporation Limited 362,088 58,200 Stockland Trust Group 149,529 123,600 Westfield Trust 237,927 ---------- 900,339 ---------- TOTAL COMMON STOCK - BASKET (Cost $11,782,646) 12,575,435 ---------- TOTAL INVESTMENTS (Cost $11,782,646)(DAGGAR) 100.00% $12,575,435 ======= =========== - ------------- * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $11,866,099. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 1,003,207 Excess of tax cost over value (293,871) ------------- $ 709,336 ============= See accompanying notes to financial statements. 20 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ AUSTRIA WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE -------- ----------- ----- COMMON STOCK - BASKET 100.00% BANKING 26.48% 4,782 Bank Austria AG $ 327,220 2,300 Creditanstalt Bankverein 141,316 1,172 Creditanstalt Bankverein Vorzug 44,873 ---------- 513,409 ---------- BEVERAGES & TOBACCO 4.88% 1,540 Oesterreichische Brau Beteiligungs AG 94,620 ---------- BUILDING MATERIALS & COMPONENTS 4.80% 512 Wienerberger Baustoffindustrie AG 92,952 ---------- BUSINESS & PUBLIC SERVICES 4.94% 1,914 Flughafen Wien AG 95,851 ---------- CHEMICALS 2.54% 1,022 Lenzing 49,202 ---------- CONSTRUCTION & HOUSING 6.77% 1,272 Bau Holdings AG 69,803 762 Bau Holdings AG Vorzug 36,557 628 Universale-Bau 24,843 ---------- 131,203 ---------- ELECTRONIC COMPONENTS, INSTRUMENTS 1.80% 372 Austria Mikro Systeme International AG 34,973 ---------- ENERGY SOURCES 10.10% 1,662 OMV AG 195,839 ---------- INSURANCE 4.61% 322 EA-Generali AG 89,435 ---------- MACHINERY & ENGINEERING 9.32% 442 BWT 46,316 2,282 Steyr Daimler Puch* 40,334 624 Va Technologie AG 94,121 ---------- 180,771 ---------- - ------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- METALS - STEEL 4.72% 1,324 Boehler-Uddeholm $ 91,434 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 8.35% 1,286 Mayr Melnhof Karton* 65,809 2,648 Radex-Heraklith Industries 96,047 ---------- 161,856 ---------- TRANSPORTATION - AIRLINES 3.77% 490 Austrian Airlines* 72,998 ---------- UTILITIES - ELECTRICAL & GAS 6.92% 1,848 Oesterreichische Elektrizitaetswirtschafts AG - Class A 134,231 ---------- TOTAL COMMON STOCK - BASKET (Cost $2,033,012) 1,938,774 ---------- TOTAL INVESTMENTS (Cost $2,033,012)(DAGGAR) 100.00% $1,938,774 ======= =========== - ------------ * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $ 2,033,231. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 78,569 Excess of tax cost over value (173,026) ----------- $ (94,457) =========== See accompanying notes to financial statements. 21 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ BELGIUM WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- COMMON STOCK - BASKET 100.00% BANKING 12.80% 792 Generale De Banque SA $ 292,799 522 Kredietbank NV 188,859 ---------- 481,658 ---------- BUILDING MATERIALS & COMPONENTS 4.63% 1,842 Cimenteries CBR Cementbedrij 174,278 ---------- CHEMICALS 4.60% 282 Solvay SA 173,082 ---------- ELECTRONIC COMPONENTS, INSTRUMENTS 4.73% 1,044 Barco NV 178,067 ---------- ENERGY SOURCES 11.88% 1,248 Petrofina SA 447,045 ---------- INDUSTRIAL COMPONENTS 2.93% 180 Bekaert SA 110,219 ---------- INSURANCE 15.66% 2,364 Fortis AG 412,033 762 Royal Belge 177,230 ---------- 589,263 ---------- MERCHANDISING 4.69% 3,006 Delhaize-Le Lion SA 176,514 ---------- METALS - NON FERROUS 4.55% 2,316 Union Miniere Group SA* 171,243 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- MISCELLANEOUS MATERIALS & COMMODITIES 2.09% 666 Glaverbel $ 78,694 --------- MULTI-INDUSTRY 14.05% 2,430 Gevaert NV 175,834 1,278 Groupe Bruxelles Lambert SA 175,777 408 Tractebel 176,902 --------- 528,513 --------- UTILITIES - ELECTRICAL & GAS 17.39% 2,838 Electrabel SA 654,371 --------- TOTAL COMMON STOCK - BASKET (Cost $3,551,728) 3,762,947 --------- TOTAL INVESTMENTS (Cost $3,551,728)(DAGGAR) 100.00% $3,762,947 ======= ========== - ------------- * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $3,634,379. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 160,673 Excess of tax cost over value (32,105) ----------- $ 128,568 ============ See accompanying notes to financial statements. 22 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. =============================================================================== CANADA WEBS INDEX SERIES - ------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- COMMON STOCK - BASKET 99.97% AEROSPACE & MILITARY TECHNOLOGY 2.58% 30,600 Bombardier Incorporated - Class B $ 587,644 ---------- BANKING 14.69% 19,800 Bank Of Montreal 707,608 18,000 Bank Of Nova Scotia 686,078 16,200 Canadian Imperial Bank Of Commerce 785,763 12,600 National Bank Of Canada 145,643 25,200 Royal Bank Of Canada 1,016,739 ---------- 3,341,831 ---------- BEVERAGES & TOBACCO 6.11% 7,200 Molson Company Limited - Class A 125,364 32,400 Seagram Company Limited 1,264,570 ---------- 1,389,934 ---------- BROADCASTING & PUBLISHING 6.08% 5,400 Quebecor Incorporated - Class B 99,159 14,400 Rogers Communications Incorporated - Class B* 98,500 7,200 Southam Incorporated 111,142 52,200 Thomson Corporation 1,075,009 ---------- 1,383,810 ---------- BUSINESS & PUBLIC SERVICES 3.07% 23,400 Laidlaw Incorporated - Class B 324,406 5,400 Loewen Group Incorporated 174,812 9,000 Moore Corporation Limited 198,844 ---------- 698,062 ---------- CHEMICALS 1.35% 10,800 Agrium Incorporated 148,145 16,200 Methanex Corporation* 158,812 ---------- 306,957 ---------- ELECTRICAL & ELECTRONICS 6.83% 21,600 Northern Telecommunications Limited 1,554,144 ---------- ELECTRONIC COMPONENTS, INSTRUMENTS 2.01% 14,400 Newbridge Networks Corporation* 457,737 ---------- ENERGY SOURCES 12.74% 9,000 Alberta Energy Company Limited 189,297 9,000 Anderson Exploration Limited* 106,994 7,200 Canadian Natural Resources* 171,717 10,800 Canadian Occidental Petroleum 182,515 18,000 Gulf Canada Resources Limited* 126,417 12,600 Imperial Oil Limited 553,076 3,600 IPL Energy Incorporated 105,216 7,200 Norcen Energy Resources Incorporated 154,071 23,400 Petro-Canada 338,957 10,800 Poco Petroleum Limited* 100,739 9,000 Ranger Oil Limited* 81,315 9,000 Renaissance Energy Limited* 255,139 5,400 Suncor Incorporated 240,588 9,000 Talisman Energy Incorporated* 292,670 ---------- 2,898,711 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- FINANCIAL SERVICES 0.67% 7,200 Power Corporation of Canada Limited $ 152,754 ---------- FOREST PRODUCTS & PAPER 2.66% 7,200 Abitibi-Price Incorporated 118,780 5,400 Avenor Incorporated 93,035 10,800 Domtar Incorporated 98,369 10,800 Macmillan Bloedel Limited 149,331 9,000 Stone-Consolidated Corporation* 146,499 ---------- 606,014 ---------- GOLD MINES 7.12% 37,800 Barrick Gold Corporation 1,070,203 5,400 Cambior Incorporated 86,517 21,600 Placer Dome Incorporated 463,794 ---------- 1,620,514 ---------- HEALTH & PERSONAL CARE 0.48% 5,400 MDS Incorporated - Class B 109,628 ---------- INDUSTRIAL COMPONENTS 1.25% 5,400 Magna International Incorporated - Class A 284,637 ---------- MACHINERY & ENGINEERING 0.43% 3,600 United Dominion Industries Limited 97,315 ---------- MERCHANDISING 1.92% 7,200 Canadian Tire Corporation - Class A 131,158 3,600 George Weston Limited 197,264 5,400 Hudson's Bay Company 108,047 ---------- 436,469 ---------- METALS - NON FERROUS 10.11% 18,000 Alcan Aluminium Limited 645,256 5,400 Cameco Corporation 201,280 7,200 Cominco Limited 205,428 14,400 Inco Limited 507,250 21,600 Noranda Incorporated 520,682 9,000 Teck Corporation - Class B 219,914 ---------- 2,299,810 ---------- METALS - STEEL 0.57% 7,200 Dofasco Incorporated 130,368 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 1.85% 3,600 Potash Corporation of Saskatchewan 283,517 5,400 Rio Algom Limited 137,281 ---------- 420,798 ---------- MULTI-INDUSTRY 6.45% 9,000 Brascan Limited - Class A 215,634 27,000 Canadian Pacific Limited 663,692 7,200 Extendicare Incorporated - Class A* 95,077 18,000 Imasco Limited 493,818 ---------- 1,468,221 ---------- See accompanying notes to financial statements. 23 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ CANADA WEBS INDEX SERIES (CONCLUDED) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- TELECOMMUNICATIONS 6.22% 25,200 BCE Incorporated $ 1,224,142 12,600 Telus Corporation 190,811 ----------- 1,414,953 ----------- UTILITIES - ELECTRICAL & GAS 4.78% 43,200 Nova Corporation 396,635 16,200 Transalta Corporation 192,589 18,000 Transcanada Pipelines Limited 333,821 9,000 Westcoast Energy Incorporated 163,618 ----------- 1,086,663 ----------- TOTAL COMMON STOCK - BASKET (Cost $20,347,638) 22,746,974 ----------- COMMON STOCK - NON-BASKET 0.03% CHEMICALS 0.03% 450 Agrium Incorporated 6,173 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $5,191) 6,173 ----------- TOTAL INVESTMENTS (Cost $20,352,829)(DAGGAR) 100.00% $22,753,147 ======= =========== - ---------------- * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $20,363,903. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 2,658,078 Excess of tax cost over value (268,834) ------------ $ 2,389,244 ============ See accompanying notes to financial statements. 24 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ FRANCE WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- COMMON STOCK - BASKET 100.00% AEROSPACE & MILITARY TECHNOLOGY 0.96% 3,508 Thomson CSF $ 111,139 ---------- AUTOMOBILES 1.41% 1,476 PSA Peugeot Citroen 163,214 ---------- BANKING 9.47% 6,056 Banque National de Paris 274,775 3,640 Cie Financiere de Paribas-Class A 247,829 4,768 Compagnie Financiere de Suez 232,990 424 Credit National 27,908 2,696 Societe Generale de Paris 312,316 ---------- 1,095,818 ---------- BEVERAGES & TOBACCO 6.45% 2,536 LVMH (Moet - Hennessy Louis Vuitton) 593,349 1,684 Pernod Ricard 91,925 1,584 Societe Nationale D'exploration 60,610 ---------- 745,884 ---------- BROADCASTING & PUBLISHING 1.17% 724 Canal Plus SA 135,719 ---------- BUILDING MATERIALS & COMPONENTS 1.52% 2,812 Lafarge SA 176,203 ---------- BUSINESS & PUBLIC SERVICES 6.59% 3,536 Compagnie Generale des Eaux 492,171 1,872 Havas SA 147,859 220 Sodexho SA 122,409 ---------- 762,439 ---------- CHEMICALS 5.81% 2,148 L'Air Liquide 337,811 9,536 Rhone-Poulenc -Class A 334,755 ---------- 672,566 ---------- CONSTRUCTION & HOUSING 0.59% 716 Bouygues 68,366 ---------- ELECTRICAL & ELECTRONICS 7.90% 4,664 Alcatel Alsthom 478,901 844 Legrand SA 148,140 144 Sagem SA 79,364 3,944 Schneider SA 207,747 ---------- 914,152 ---------- ENERGY SOURCES 11.34% 7,876 Elf Acquitaine SA 753,413 6,996 Total SA-Class B 558,103 ---------- 1,311,516 ---------- FINANCIAL SERVICES 1.34% 824 Compagnie Bancaire 99,939 116 Societe Eurafrance SA 54,770 ---------- 154,709 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- FOOD & HOUSEHOLD PRODUCTS 3.93% 788 Eridania Beghin-Say SA $ 127,385 2,160 Groupe Danone 327,566 ---------- 454,951 ---------- HEALTH & PERSONAL CARE 9.03% 280 Essilor International 76,864 1,964 L'Oreal 665,663 3,048 Sanofi SA 301,734 ---------- 1,044,261 ---------- INDUSTRIAL COMPONENTS 3.12% 3,544 Michelin-Class B 221,947 2,060 Valeo SA 138,845 ---------- 360,792 ---------- INSURANCE 5.04% 8,764 AXA-UAP SA 583,467 ---------- LEISURE & TOURISM 1.66% 988 Accor SA 135,958 224 Pathe SA* 56,144 ---------- 192,102 ---------- MACHINERY & ENGINEERING 0.96% 508 Compagnie Francaise d'Etudes de Construction Technip 51,359 816 Sidel SA 59,725 ---------- 111,084 ---------- MERCHANDISING 11.24% 1,120 Carrefour SA 690,208 1,964 Casino Guichard Perrachon 89,628 160 Comptoirs Modernes 79,167 648 Pinault-Printemps Redoute SA 274,223 564 Promodes 166,805 ---------- 1,300,031 ---------- METALS - NON FERROUS 0.58% 468 Imetal 67,358 ---------- METALS - STEEL 0.95% 7,144 Usinor Sacilor 110,346 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 3.23% 2,532 Compagnie de Saint Gobain 373,314 ---------- MULTI-INDUSTRY 2.81% 244 Groupe Saint Louis Bouchon 64,070 2,860 Lagardere S.C.A. 84,335 1,732 Lyonnaise des Eaux SA 176,930 ---------- 325,335 ---------- REAL ESTATE 0.92% 592 Sefimeg 48,993 592 Simco SA 57,358 ---------- 106,351 ---------- See accompanying notes to financial statements. 25 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ FRANCE WEBS INDEX SERIES (CONCLUDED) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- RECREATION, OTHER CONSUMER GOODS 1.42% 816 Bic $ 132,341 468 Salomon SA 32,143 ---------- 164,484 ---------- UTILITIES - ELECTRICAL & GAS 0.56% 628 Primagaz CIE 64,483 ---------- TOTAL COMMON STOCK - BASKET (Cost $10,148,330) 11,570,084 ---------- TOTAL INVESTMENTS (Cost $10,148,330)(DAGGAR) 100.00% $11,570,084 ======= =========== - -------------- * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $10,164,009. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 1,476,775 Excess of tax cost over value (70,700) ----------- $ 1,406,075 =========== See accompanying notes to financial statements. 26 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. =============================================================================== GERMANY WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- COMMON STOCK - BASKET 100.00% AUTOMOBILES 11.14% 19,000 Daimler-Benz AG* $ 1,378,126 1,000 Volkswagen AG 484,540 200 Volkswagen AG Preferred 76,176 ---------- 1,938,842 ---------- BANKING 12.28% 10,000 Bayer Hypothenken-Und Wechsel Bank AG 295,581 10,200 Bayerische Vereinsbank AG 374,298 16,400 Deutsche Bank AG 850,989 18,600 Dresdner Bank AG 616,988 ---------- 2,137,856 ---------- BUILDING MATERIALS & COMPONENTS 1.38% 200 Buderus AG 91,221 1,800 Heidelberger Zement AG 148,205 ---------- 239,426 ---------- BUSINESS & PUBLIC SERVICES 3.71% 2,400 SAP AG 368,914 1,800 SAP AG-Preferred 277,751 ---------- 646,665 ---------- CHEMICALS 11.05% 22,400 BASF AG 825,968 26,000 Bayer AG 1,097,323 ---------- 1,923,291 ---------- CONSTRUCTION & HOUSING 0.97% 1,600 Bilfinger & Berger AG 64,447 2,400 Hochtief AG 104,490 ---------- 168,937 ---------- ELECTRICAL & ELECTRONICS 6.10% 21,000 Siemens AG 1,061,693 ---------- FOREST PRODUCTS & PAPER 0.17% 200 PWA-Papierwerke Waldhof- Aschaffenburg AG 28,907 ---------- HEALTH & PERSONAL CARE 3.70% 3,200 Beiersdorf AG 174,008 6,600 Merck KGAA 252,553 2,400 Schering AG 217,652 ---------- 644,213 ---------- INDUSTRIAL COMPONENTS 0.42% 3,800 Continental AG 74,055 ---------- INSURANCE 13.13% 800 Allianz AG Holdings 1,556,688 200 AMB Aachener & Muench Beteiligungs AG 137,424 1,000 CKAG Colonia Konzern 90,629 200 Muenchener Rueckversicherung AG 501,125 ---------- 2,285,866 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- MACHINERY & ENGINEERING 5.96% 400 Linde AG $ 260,633 400 MAN AG 102,239 200 MAN AG Vorzug 42,590 1,600 Mannesmann AG 631,679 ---------- 1,037,141 ---------- MERCHANDISING 2.60% 1,200 Douglas Holding AG 42,294 400 Karstadt AG 130,790 3,200 Metro AG* 280,535 ---------- 453,619 ---------- METALS - STEEL 1.46% 1,200 Thyssen AG 254,543 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 0.98% 400 Degussa 170,596 ---------- MULTI-INDUSTRY 3.42% 600 Preussag AG 154,069 1,000 Viag AG 441,595 ---------- 595,664 ---------- RECREATION, OTHER CONSUMER GOODS 1.10% 2,000 Adidas AG 191,328 ---------- TELECOMMUNICATIONS 8.73% 79,000 Deutsche Telecom* 1,520,851 ---------- TRANSPORTATION - AIRLINES 1.17% 15,400 Deutsche Lufthansa 204,336 ---------- TRANSPORTATION - ROAD & RAIL 0.63% 800 SGL Carbon 108,992 ---------- UTILITIES - ELECTRICAL & GAS 9.90% 11,400 Rwe AG 511,183 4,400 Rwe AG-Preferred 159,898 18,400 Veba AG 1,052,861 ---------- 1,723,942 ---------- TOTAL COMMON STOCK - BASKET (Cost $16,301,343) 17,410,763 ---------- TOTAL INVESTMENTS (Cost $16,301,343)(DAGGAR) 100.00% $17,410,763 ======= =========== - ------------------------------------------------------------------------------- * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $16,322,942. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 1,236,272 Excess of tax cost over value (148,451) ------------ $ 1,087,821 ============ See accompanying notes to financial statements. 27 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ HONG KONG WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- COMMON STOCK - BASKET 100.00% BANKING 11.74% 168,000 Bank Of East Asia Limited $ 612,862 105,000 Hang Seng Bank Limited 1,213,520 ---------- 1,826,382 ---------- BROADCASTING & PUBLISHING 2.07% 224,000 South China Morning Post 202,479 28,000 Television Broadcast Limited 119,318 ---------- 321,797 ---------- ELECTRICAL & ELECTRONICS 0.25% 14,000 Johnson Electric Holdings 38,688 ---------- FINANCIAL SERVICES 1.58% 134,400 Peregrine Investment Holdings 245,579 ---------- LEISURE & TOURISM 5.07% 203,000 Hong Kong & Shanghai Hotels Limited 357,819 308,000 Regal Hotels International 91,477 260,400 Shangri-La Asia Limited 339,623 ---------- 788,919 ---------- MERCHANDISING 0.66% 28,000 Dickson Concepts International 102,325 ---------- MULTI-INDUSTRY 16.97% 252,000 Hutchison Whampoa Limited 1,919,938 84,000 Swire Pacific Limited 'A' 721,333 ---------- 2,641,271 ---------- REAL ESTATE 39.49% 126,000 Cheung Kong Holdings Limited 1,204,029 224,000 Chinese Estates Holdings 238,636 280,000 Hang Lung Development Company 564,050 420,000 Hopewell Holdings Limited 250,839 140,000 Hysan Development Company Limited 482,696 98,000 Miramar Hotel & Investment 185,395 112,000 New World Development Company Limited 694,215 154,000 Sun Hung Kai Properties Limited 1,779,830 168,000 Wharf Holdings Limited 746,281 ---------- 6,145,971 ---------- - ------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- TELECOMMUNICATIONS 8.93% 806,400 Hong Kong Telecommunications Limited $ 1,390,165 ---------- TRANSPORTATION - AIRLINES 2.80% 280,000 Cathay Pacific Airways Limited 435,692 ---------- TRANSPORTATION - SHIPPING 1.39% 308,000 Shun Tak Holdings 216,761 ---------- UTILITIES - ELECTRICAL & GAS 9.05% 161,000 China Light & Power Company Limited 744,292 350,000 Hong Kong & China Gas Company Limited 664,385 ---------- 1,408,677 ---------- TOTAL COMMON STOCK - BASKET (Cost $14,958,837) 15,562,227 ---------- TOTAL INVESTMENTS (Cost $14,958,837)(DAGGAR) 100.00% $15,562,227 ======= =========== - ------------- (DAGGAR) Aggregate cost for Federal income tax purposes is $15,030,851. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 727,760 Excess of tax cost over value (196,384) ------------- $ 531,376 ============= See accompanying notes to financial statements. 28 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ ITALY WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- COMMON STOCK - BASKET 100.00% AUTOMOBILES 4.75% 442,000 Fiat SPA $ 1,356,077 ---------- BANKING 17.99% 305,500 Banca Commerciale Italiana 621,846 91,000 Banca Popolare di Milano 501,308 100,100 Banco Ambrosiano Veneto SPA 256,825 152,100 Banco Ambrosiano Veneto SPA Rnc 280,890 375,700 Credito Italiano 515,087 201,500 Istituto Bancario San Paolo de Torino 1,422,065 117,000 Istituto Mobiliare Italiano 1,013,331 80,600 Mediobanca 525,331 ---------- 5,136,683 ---------- BROADCASTING & PUBLISHING 3.73% 31,200 Arnoldo Mondadori Editore 205,274 204,100 Mediaset SPA* 859,394 ---------- 1,064,668 ---------- CONSTRUCTION & HOUSING 1.09% 50,700 Sitri SPA 312,450 ---------- DATA PROCESSING & REPRODUCTION 0.82% 635,700 Olivetti Group* 232,802 ---------- ENERGY SOURCES 20.92% 1,211,600 Ente Nazionale Idrocarburi SPA 5,974,120 ---------- FOOD & HOUSEHOLD PRODUCTS 1.51% 314,600 Parmalat Finanziaria SPA 430,760 ---------- INDUSTRIAL COMPONENTS 3.28% 474,500 Pirelli SPA 938,050 ---------- INSURANCE 11.73% 23,400 Assicurazioni Generali 422,917 977,600 Istituto Nazionale delle Assicurazioni 1,278,978 92,300 Riunione Adriatica di Sicurta SPA 829,444 72,800 Riunione Adriatica di Sicurta SPA Rnc 394,283 50,700 Societa Assicuratrice Industriale 425,100 ---------- 3,350,722 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- MERCHANDISING 1.26% 71,500 Rinascente $ 359,108 ---------- METALS - STEEL 0.60% 39,000 Falck Acciaierie & Ferriere Lombarde 172,915 ---------- MULTI-INDUSTRY 2.92% 843,700 Montedison SPA* 611,558 328,900 Montedison SPA Rnc* 222,640 ---------- 834,198 ---------- RECREATION - OTHER CONSUMER GOODS 1.09% 18,200 Bulgari SPA 310,466 ---------- TELECOMMUNICATIONS 20.96% 1,069,900 Telecom Italia Mobile SPA 2,793,768 231,400 Telecom Italia Mobile SPA Rnc 351,345 1,032,200 Telecom Italia SPA 2,416,203 210,600 Telecom Italia SPA Rnc 424,315 ---------- 5,985,631 ---------- TEXTILES & APPAREL 2.33% 36,400 Benetton Group SPA 415,822 32,500 Marzotto & Figli SPA 249,865 ---------- 665,687 ---------- UTILITIES - ELECTRICAL & GAS 5.02% 145,600 Edison SPA 800,455 178,100 Italgas 634,626 ---------- 1,435,081 ---------- TOTAL COMMON STOCK - BASKET (Cost $27,584,773) 28,559,418 ---------- TOTAL INVESTMENTS (Cost $27,584,773)(DAGGAR) 100.00% $28,559,418 ======= =========== - -------------------- * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $27,819,426. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 1,503,395 Excess of tax cost over value (763,403) ------------ $ 739,992 ============ See accompanying notes to financial statements. 29 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ JAPAN WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- COMMON STOCK - BASKET 100.00% APPLIANCES & HOUSEHOLD DURABLES 5.66% 135,000 Matsushita Electric Industrial $ 2,080,538 15,000 Pioneer Electronic Corporation 289,585 135,000 Sanyo Electric 562,640 75,000 Sharp Corporation 938,354 30,000 Sony Corporation 2,165,051 ---------- 6,036,168 ---------- AUTOMOBILES 8.42% 60,000 Honda Motor Company 1,854,338 165,000 Nissan Motor Corporation 973,403 240,000 Toyota Motor Corporation 6,144,668 ---------- 8,972,409 ---------- BANKING 17.61% 150,000 Asahi Bank Limited 1,098,683 45,000 Ashikaga Bank Limited 150,261 300,000 Bank Of Tokyo-Mitsubishi 4,921,700 75,000 Bank Of Yokohama Limited 359,185 45,000 Chiba Bank Limited 266,219 180,000 Fuji Bank 2,102,908 15,000 Gunma Bank Limited 116,083 45,000 Hokuriku Bank 154,735 150,000 Industrial Bank Of Japan 1,789,709 45,000 Joyo Bank 224,086 90,000 Mitsubishi Trust & Banking 991,797 75,000 Mitsui Trust & Banking 463,584 225,000 Sakura Bank 1,437,360 30,000 Seventy-Seven Bank 244,842 60,000 Shizuoka Bank 512,056 195,000 Sumitomo Bank Limited 2,455,879 135,000 Tokai Bank 1,091,723 15,000 Yamaguchi Bank 183,942 75,000 Yasuda Trust & Banking 203,828 ---------- 18,768,580 ---------- BEVERAGES & TOBACCO 1.08% 30,000 Asahi Breweries Limited 290,828 75,000 Kirin Brewery Company Limited 640,070 30,000 Sapporo Breweries Limited 221,974 ---------- 1,152,872 ---------- BUILDING MATERIALS & COMPONENTS 1.68% 45,000 Chichibu Onoda Cement Corporation 158,091 30,000 Inax Corporation 197,614 30,000 Nihon Cement 142,928 45,000 Sekisui Chemical 466,070 15,000 Sumitomo Forestry Company 171,514 15,000 Tostem Company 347,999 30,000 Toto Limited 305,742 ---------- 1,789,958 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- BUSINESS & PUBLIC SERVICES 2.92% 60,000 Dai Nippon Printing Limited $ 999,254 15,000 Kamigumi Company 79,045 15,000 Kokuyo Company 320,656 15,000 Mitsubishi Logistics Corporation 173,999 15,000 Secom Company 845,140 60,000 Toppan Printing Company 691,027 ---------- 3,109,121 ---------- CHEMICALS 3.95% 105,000 Asahi Chemical Industries Company Limited 568,108 90,000 Dai Nippon Ink & Chemical Corporation 284,116 15,000 Kuraray Company Limited 124,285 180,000 Mitsubishi Chemical Corporation 499,627 45,000 Mitsubishi Rayon Company 163,311 75,000 Mitsui Toatsu Chemicals Incorporated 201,342 30,000 Shin-Etsu Chemical 579,170 105,000 Showa Denko K.K.* 230,549 135,000 Sumitomo Chemical Company Limited 514,541 75,000 Teijin Limited 298,285 105,000 Toray Industries 607,258 45,000 Tosoh Corporation* 138,702 ---------- 4,209,294 ---------- CONSTRUCTION & HOUSING 3.53% 45,000 Daiwa House Industry Company Limited 499,627 75,000 Fujita Corporation 133,607 75,000 Kajima Corporation 410,142 15,000 Kandenko Company Limited 126,771 30,000 Kinden Corporation 390,256 75,000 Kumagai Gumi Company Limited 118,071 15,000 Nishimatsu Construction Company Limited 111,857 75,000 Obayashi Corporation 462,963 30,000 Penta-Ocean Construction 107,134 60,000 Sekisui House 556,798 75,000 Shimizu Corporation 452,399 90,000 Taisei Corporation 387,770 ---------- 3,757,395 ---------- DATA PROCESSING & REPRODUCTION 2.29% 60,000 Canon Incorporated 1,252,796 120,000 Fujitsu Limited 1,183,197 ---------- 2,435,993 ---------- ELECTRICAL & ELECTRONICS 3.97% 210,000 Hitachi Limited 1,809,595 15,000 Makita Corportion 206,314 135,000 Mitsubishi Electric Corporation 758,389 105,000 NEC Corporation 1,217,997 15,000 Omron Corporation 236,142 ---------- 4,228,437 ---------- See accompanying notes to financial statements. 30 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ JAPAN WEBS INDEX SERIES (CONTINUED) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- ELECTRONIC COMPONENTS, INSTRUMENTS 2.78% 15,000 Fanuc Company Limited $ 466,070 15,000 Kyocera Corporation 888,640 15,000 Murata Manufacturing Company 525,727 30,000 Nikon Corporation 439,970 15,000 Tokyo Electron 524,484 15,000 Yokogwa Wokushin Electric Corporation 114,964 ---------- 2,959,855 ---------- ENERGY SOURCES 0.84% 45,000 Cosmo Oil Company Limited 175,242 90,000 Japan Energy Corporation 211,782 30,000 Mitsubishi Oil Company Limited 124,782 90,000 Nippon Oil Company Limited 379,567 ---------- 891,373 ---------- FINANCIAL SERVICES 3.49% 15,000 Acom Company Limited 584,141 15,000 Credit Saison Company 319,413 90,000 Daiwa Securities Company 706,935 135,000 Nomura Securities Company 1,800,895 90,000 Yamaichi Securities Company 311,708 ---------- 3,723,092 ---------- FOOD & HOUSEHOLD PRODUCTS 1.67% 45,000 Ajinomoto Company Incorporated 406,413 45,000 Kao Corporation 492,170 45,000 Meiji Seika Kaisha 217,002 15,000 Nippon Meat Packers Incorporated 150,385 15,000 Nissin Food Products Company 287,099 15,000 Yamazaki Baking Company Limited 224,956 ---------- 1,778,025 ---------- FOREST PRODUCTS & PAPER 0.50% 45,000 New Oji Paper Company Limited 250,559 60,000 Nippon Paper Industries Company 281,382 ---------- 531,941 ---------- HEALTH & PERSONAL CARE 3.97% 15,000 Daiichi Pharmaceutical 244,842 15,000 Eisai Company Limited 280,885 45,000 Kyowa Hakko Kogyo Company Limited 298,658 30,000 Sankyo Company Limited 835,198 30,000 Shionogi & Company 186,677 15,000 Shiseido Company Limited 175,242 30,000 Taisho Pharmaceutical 691,027 60,000 Takeda Chemical Industries 1,203,082 15,000 Yamanouchi Pharmaceutical 313,199 ---------- 4,228,810 ---------- - ------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- INDUSTRIAL COMPONENTS 4.19% 45,000 Bridgestone Corporation $ 805,369 30,000 Fujikura Limited 235,148 60,000 Furukawa Electric Company 278,896 30,000 Minebea Company Limited 248,074 30,000 NGK Insulators Limited 273,428 15,000 NGK Spark Plug Company 154,114 60,000 Nippondenso Company Limited 1,153,368 60,000 NSK Limited 344,022 30,000 NTN Corporation 147,154 60,000 Sumitomo Electric Industries 830,226 ---------- 4,469,799 ---------- INSURANCE 2.11% 60,000 Mitsui Marine & Fire Insurance 318,171 30,000 Nichido Marine & Fire Insurance 167,040 30,000 Nippon Fire & Marine Insurance 127,517 60,000 Sumitomo Marine & Fire Insurance 347,005 135,000 Tokio Marine & Fire Insurance 1,286,353 ---------- 2,246,086 ---------- LEISURE & TOURISM 0.35% 15,000 Fujita Kanko 165,300 15,000 Tokyo Dome Corporation 206,314 ---------- 371,614 ---------- MACHINERY & ENGINEERING 4.79% 30,000 Amada Company Limited 218,991 30,000 Daikin Kogyo Industries 235,148 30,000 Ebara Corporation 377,827 90,000 Hitachi Zosen Corporation 360,179 90,000 Kawasaki Heavy Industries 372,856 60,000 Komatsu Limited 447,427 105,000 Kubota Corporation 477,629 15,000 Kurita Water Industries 316,928 105,000 Mitsui Engineering & Shipping* 197,489 225,000 Mitsubishi Heavy Industries 1,620,060 75,000 Sumitomo Heavy Industries 226,199 15,000 Toyoda Automatic Loom Works 259,756 ---------- 5,110,489 ---------- MERCHANDISING 4.10% 45,000 Daiei, Incorporated 297,539 15,000 Hankyu Department Stores 134,228 15,000 Isetan Company 164,057 30,000 Ito Yokado Company 1,362,168 30,000 Jusco Company Limited 850,112 30,000 Marui Company 430,027 30,000 Mitsukoshi 183,445 30,000 Mycal Corporation 385,285 15,000 Seiyu 129,257 15,000 Takashimaya Company 165,300 15,000 Uny Company Limited 264,728 ---------- 4,366,146 ---------- See accompanying notes to financial statements. 31 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ JAPAN WEBS INDEX SERIES (CONCLUDED) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- METALS - NON FERROUS 0.85% 90,000 Mitsubishi Materials Corporation $ 334,079 45,000 Nippon Light Metal Company 159,955 60,000 Sumitomo Metal Mining 415,113 ---------- 909,147 ---------- METALS - STEEL 3.22% 225,000 Kawasaki Steel Corporation 602,163 570,000 Nippon Steel Corporation 1,516,033 285,000 NKK Corporation* 611,608 225,000 Sumitomo Metal Industries 536,913 15,000 Tokyo Steel Manufacturing Company 165,300 ---------- 3,432,017 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 1.30% 75,000 Asahi Glass Company Limited 664,927 15,000 Nitto Denko Corporation 200,099 15,000 Toyo Seikan Kaisha Limited 351,728 60,000 Ube Industries Limited 167,537 ---------- 1,384,291 ---------- REAL ESTATE 1.28% 75,000 Mitsubishi Estate Company 882,426 45,000 Mitsui Fudosan Company 488,441 ---------- 1,370,867 ---------- RECREATION, OTHER CONSUMER GOODS 2.16% 30,000 Casio Computer Company Limited 231,171 30,000 Citizen Watch Company 213,771 30,000 Fuji Photo Film Limited 1,004,226 30,000 Konica Corporation 180,462 15,000 Olympus Optical Corporation 125,528 15,000 Shimano Corporation 258,514 15,000 Yahama Corporation 285,856 ---------- 2,299,528 ---------- TEXTILES & APPAREL 0.38% 30,000 Nisshinbo Industries 216,257 75,000 Toyobo Company Limited 188,292 ---------- 404,549 ---------- TRANSPORTATION - AIRLINES 0.47% 120,000 Japan Air Lines* 498,136 ---------- - ------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- TRANSPORTATION - ROAD & RAIL 3.43% 75,000 Hankyu Corporation $ 359,806 30,000 Keihin Electric Express 129,505 105,000 Kinki Nippon Railway Company 630,748 90,000 Nagoya Railroad 332,588 45,000 Nankai Electric Railway Company 219,985 75,000 Nippon Express Company 482,849 45,000 Odakyu Electric Railway Company 231,544 15,000 Seino Transportation Company 149,142 75,000 Tobu Railway Company 335,570 105,000 Tokyu Corporation 491,549 30,000 Yamato Transport Company 295,799 ---------- 3,659,085 ---------- TRANSPORTATION - SHIPPING 0.52% 105,000 Mitsui Osk Lines* 208,799 90,000 Nippon Yusen K.K. 350,485 ---------- 559,284 ---------- UTILITIES - ELECTRICAL & GAS 3.50% 45,000 Kansai Electric Power Incorporated 816,555 210,000 Osaka Gas Company 516,779 30,000 Tohoku Electric Power Company 514,541 75,000 Tokyo Electric Power Company Incorporated 1,391,996 195,000 Tokyo Gas Limited 496,023 ---------- 3,735,894 ---------- WHOLESALE & INTERNATIONAL TRADE 2.99% 105,000 Itochu Corporation 516,779 90,000 Marubeni Corporation 351,976 105,000 Mitsubishi Corporation 974,397 105,000 Mitsui & Company 777,778 75,000 Sumitomo Corporation 563,634 ---------- 3,184,564 ---------- TOTAL COMMON STOCK - BASKET (Cost $128,614,540) 106,574,819 ---------- TOTAL INVESTMENTS (Cost $128,614,540)(DAGGAR) 100.00% $106,574,819 ======= ============ - ----------------- * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $128,616,917. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 1,484,916 Excess of tax cost over value (23,527,014) ------------- $ (22,042,098) ============= See accompanying notes to financial statements. 32 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ MALAYSIA WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- COMMON STOCK - BASKET 99.89% AUTOMOBILES 5.23% 38,000 Edaran Otomobil Nasional BHD $ 390,254 76,000 Perusahaan Otomobil Nasional BHD 501,973 133,000 Tan Chong Motor Holdings BHD 270,499 ---------- 1,162,726 ---------- BANKING 13.29% 38,000 Commerce Asset Holdings BHD 292,308 114,000 DCB Holdings BHD 456,826 152,000 Malayan Banking BHD 1,805,880 171,000 Public Bank BHD (Foreign) 399,436 ---------- 2,954,450 ---------- BEVERAGES & TOBACCO 3.76% 95,000 Guinness Anchor BHD 244,865 57,000 Rothmans Of Pall Mall BHD 591,120 ---------- 835,985 ---------- BROADCASTING & PUBLISHING 1.09% 38,000 New Straits Times Press BHD 241,804 ---------- BUILDING MATERIALS & COMPONENTS 3.43% 57,000 Hume Industries - Malaysia BHD 360,411 76,000 Malayan Cement BHD 198,953 171,000 Pan Malaysia Cement Works BHD 203,850 ---------- 763,214 ---------- CONSTRUCTION & HOUSING 2.71% 76,000 Ekran BHD 272,412 57,000 YTL Corporation BHD 330,568 ---------- 602,980 ---------- ELECTRICAL & ELECTRONICS 0.77% 76,000 Time Engineering BHD 171,406 ---------- ELECTRONIC COMPONENTS, INSTRUMENTS 1.06% 57,000 Malaysian Pacific Industries BHD 236,448 ---------- ENERGY SOURCES 0.83% 57,000 Shell Refining Company BHD 183,649 ---------- FINANCIAL SERVICES 7.57% 76,000 AMMB Holdings BHD 716,230 171,000 MBF Capital BHD 351,228 76,000 Rashid Hussain BHD 615,224 ---------- 1,682,682 ---------- FOOD & HOUSEHOLD PRODUCTS 1.30% 38,000 Nestle (Malaysia) BHD 289,247 ---------- INDUSTRIAL COMPONENTS 0.73% 76,000 Leader Universal Holdings BHD 162,223 ---------- INSURANCE 0.92% 133,000 Idris Hydraulic (Malaysia) BHD* 204,615 ---------- LEISURE & TOURISM 5.90% 247,000 Magnum Corporation BHD 512,304 171,000 Resorts World BHD 798,872 ---------- 1,311,176 ---------- MACHINERY & ENGINEERING 5.75% 76,000 UMW Holdings BHD 400,967 95,000 United Engineers (Malaysia) Limited 876,158 ---------- 1,277,125 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- ----------- ----- METALS - NON FERROUS 0.95% 152,000 Malaysian Mining Corporation BHD $ 210,584 ---------- METALS - STEEL 0.99% 247,000 Amsteel Corporation BHD 218,848 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 5.25% 190,000 Golden Hope Plantations BHD 342,811 133,000 Highlands & Lowlands BHD 237,825 38,000 Kian Joo Can Factory BHD 179,058 76,000 Kuala Lumpur Kepong BHD 229,561 57,000 Perlis Plantations BHD 176,762 ---------- 1,166,017 ---------- MULTI-INDUSTRY 9.40% 285,000 Berjaya Group BHD 397,141 76,000 Land And General Holdings BHD 154,571 133,000 Multi-Purpose Holdings BHD 316,029 323,000 Sime Darby BHD 1,222,795 ---------- 2,090,536 ---------- REAL ESTATE 2.87% 171,000 Hong Leong Properties BHD 316,794 76,000 Malaysian Resource Corporation BHD 321,385 ---------- 638,179 ---------- TELECOMMUNICATIONS 12.87% 171,000 Technology Resources Industries BHD 399,436 304,000 Telekom Malaysia BHD 2,460,894 ---------- 2,860,330 ---------- TRANSPORTATION - AIRLINES 1.36% 114,000 Malaysian Airlines System BHD 303,021 ---------- TRANSPORTATION - SHIPPING 2.03% 171,000 Malaysia International Shipping BHD (Foreign) 451,087 ---------- UTILITIES - ELECTRICAL & GAS 9.83% 456,000 Tenaga Nasional BHD 2,185,421 ---------- TOTAL COMMON STOCK - BASKET (Cost $20,237,271) 22,203,753 ---------- COMMON STOCK - NON-BASKET 0.11% BANKING 0.03% 2,333 Public Bank BHD (Foreign) 5,449 ---------- METALS - NON FERROUS 0.01% 1,600 Malaysian Mining Corporation BHD 2,217 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 0.07% 5,250 Perlis Plantations BHD 16,281 ---------- TOTAL COMMON STOCK - NON-BASKET (Cost $22,815) 23,947 ---------- TOTAL INVESTMENTS (Cost $20,260,086)(DAGGAR) 100.00% $22,227,700 ======= =========== - ------------- * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $ 20,365,769. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 2,427,364 Excess of tax cost over value (565,433) ------------ $ 1,861,931 ============= See accompanying notes to financial statements. 33 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ MEXICO (FREE) WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 100.00% BANKING 4.48% 84,000 Grupo Financiero Banamex - Series B* $ 197,909 35,000 Grupo Financiero Banamex - Series L* 73,889 315,000 Grupo Financiero Bancomer - Series B* 122,898 ---------- 394,696 ---------- BEVERAGES & TOBACCO 14.25% 56,000 Empresas La Moderna - Series A 293,788 63,000 Fomento Economico Mexicano - Series B 269,659 14,000 Grupo Continental S.A. - Series CP 77,778 98,000 Grupo Modelo S.A. - Series C 613,737 ---------- 1,254,962 ---------- BROADCASTING & PUBLISHING 3.86% 28,000 Grupo Televisa S.A. - Series CPO* 339,747 ---------- BUILDING MATERIALS & COMPONENTS 7.23% 35,000 Apasco S.A. 254,987 49,000 Cemex S.A. - Series A 197,361 42,000 Cemex S.A. - Series B 184,280 ---------- 636,628 ---------- CHEMICALS 0.40% 14,000 Cydsa S.A. - Series A 35,000 ---------- CONSTRUCTION & HOUSING 2.64% 14,000 Empresas ICA S.A.* 232,096 ---------- ENERGY EQUIPMENT & SERVICES 1.31% 7,000 Tubos de Acero de Mexico S.A.* 115,341 ---------- FINANCIAL SERVICES 0.73% 1,162,000 Grupo Financiero BBV - Probursa* 64,556 ---------- FOOD & HOUSEHOLD PRODUCTS 4.46% 42,000 Grupo Industrial Bimbo - Series A 257,197 112,000 Grupo Industrial Maseca - Series B 135,192 ---------- 392,389 ---------- HEALTH & PERSONAL CARE 8.59% 35,000 Kimberly-Clark de Mexico - Series A 756,566 ---------- MACHINERY & ENGINEERING 0.33% 35,000 Consorcio G Grupo Dina S.A.* 28,990 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- MERCHANDISING 7.73% 266,000 Cifra S.A. de C.V. - Series B* $ 413,106 126,000 Controladora Comercial Mexicana - Series UC* 105,000 140,000 El Puerto de Liverpool SA de C.V. - Series 1* 137,879 28,000 El Puerto de Liverpool SA de CV - Series C1* 24,747 ---------- 680,732 ---------- METALS - NON FERROUS 5.45% 77,000 Grupo Mexico S.A. - Series B* 254,722 49,000 Industrias Penoles S.A. - Series CP 225,511 ---------- 480,233 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 1.63% 42,000 Empaques Ponderosa S.A. - Series B* 26,515 42,000 Vitro S.A. 117,197 ---------- 143,712 ---------- MULTI-INDUSTRY 14.32% 70,000 Alfa S.A. - Series A 399,495 35,000 Desc S.A. - Series B* 224,053 112,000 Grupo Carso S.A. - Series A1 637,778 ---------- 1,261,326 ---------- TELECOMMUNICATIONS 22.59% 280,000 Telefonos de Mexico - Series A 546,566 742,000 Telefonos de Mexico - Series L 1,442,778 ---------- 1,989,344 ---------- TOTAL COMMON STOCK - BASKET (Cost $7,629,463) 8,806,318 --------- TOTAL INVESTMENTS (Cost $7,629,463)(DAGGAR) 100.00% $8,806,318 ======= ========== - -------------------------------------------------------------------------------- * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $ 7,629,463. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $1,300,831 Excess of tax cost over value (123,976) ---------- $1,176,855 ========== See accompanying notes to financial statements. 34 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ NETHERLANDS WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 100.00% APPLIANCES & HOUSEHOLD DURABLES 4.72% 8,200 Philips Electronics Nv $ 370,097 ---------- BANKING 4.76% 5,200 ABN Amro Holdings Nv 373,267 ---------- BEVERAGES & TOBACCO 2.90% 1,280 Heineken Nv 226,905 ---------- BROADCASTING & PUBLISHING 8.09% 18,800 Elsevier Nv 300,990 2,600 Wolters Kluwer - CVA 333,558 ---------- 634,548 ---------- CHEMICALS 4.56% 2,480 AKZO Nobel 357,215 ---------- CONSTRUCTION & HOUSING 4.11% 672 Hollandsche Beton Groep Nv 147,863 3,136 IHC Caland Nv 174,406 ---------- 322,269 ---------- DATA PROCESSING & REPRODUCTION 3.77% 4,224 Getronics Nv 137,923 1,264 Oce Van Der Grinten Nv 157,834 ---------- 295,757 ---------- ENERGY SOURCES 23.31% 10,560 Royal Dutch Petroleum Company 1,827,478 ---------- - -------------------------------------------------------------------------------- SHARES SECURITY VALUE ------ -------- ----- FINANCIAL SERVICES 12.93% 26,200 Ing Groep Nv $1,014,167 ---------- FOOD & HOUSEHOLD PRODUCTS 13.12% 5,400 Unilever Nv - CVA 1,028,924 ---------- FOREST PRODUCTS & PAPER 1.21% 4,144 Koninklijke KNP Bt Nv 94,717 ---------- INSURANCE 4.67% 8,400 Stad Rotterdam 365,852 ---------- MERCHANDISING 4.48% 5,440 Koninklijke Ahold Nv 351,531 ---------- METALS - STEEL 1.15% 2,008 Koninklijke Nederlandsche Hoogovens Nv 90,523 ---------- TELECOMMUNICATIONS 3.73% 8,160 Koninklijke Ptt Nederland Nv 292,227 ---------- TRANSPORTATION - AIRLINES 2.49% 6,376 KLM - Konin Luchvaart Mij Nv 195,430 ---------- TOTAL COMMON STOCK - BASKET (Cost $6,338,515) 7,840,907 ---------- TOTAL INVESTMENTS (Cost $6,338,515)(DAGGAR) 100.00% $7,840,907 ======= ========== - -------------------------------------------------------------------------------- (DAGGAR) Aggregate cost for Federal income tax purposes is $6,340,982. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $1,577,981 Excess of tax cost over value (78,056) ========== $1,499,925 ========== See accompanying notes to financial statements. 35 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ SINGAPORE (FREE) WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 100.00% AUTOMOBILES 2.68% 39,000 Cycle And Carriage $ 410,239 ---------- BANKING 27.69% 91,000 Developmental Bank Singapore (Foreign) 1,206,101 117,000 Oversea-Chinese Banking Corporation Limited 1,550,701 130,000 United Overseas Bank Limited (Foreign) 1,476,858 ---------- 4,233,660 ---------- BEVERAGES & TOBACCO 3.82% 65,000 Fraser & Neave Limited 583,450 ---------- BROADCASTING & PUBLISHING 3.32% 26,000 Singapore Press Holdings Limited (Foreign) 506,872 ---------- DATA PROCESSING & REPRODUCTION 0.72% 299,000 IPC Corporation Limited 110,081 ---------- ELECTRONIC COMPONENTS, INSTRUMENTS 2.21% 13,650 Creative Technology Limited* 175,172 234,000 Goldtron Limited 163,275 ---------- 338,447 ---------- LEISURE & TOURISM 3.58% 156,000 Hotel Properties 275,680 13,000 Overseas Union Enterprises Limited 66,094 65,000 Shangri-La Hotel 205,119 ---------- 546,893 ---------- MACHINERY & ENGINEERING 1.51% 26,000 Jurong Shipyard Limited 123,983 26,000 Van Der Horst Limited 107,574 ---------- 231,557 ---------- MERCHANDISING 0.83% 39,000 Metro Holdings Limited 127,447 ---------- METALS - NON FERROUS 1.47% 91,000 Straits Trading Company Limited 224,628 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- METALS - STEEL 1.46% 91,000 Natsteel Limited $ 223,352 --------- MULTI-INDUSTRY 10.78% 104,000 Haw Par Brothers International 242,132 65,000 Inchcape Berhad 226,999 91,000 Keppel Corporation 657,293 195,000 Singapore Technologies 522,370 --------- 1,648,794 --------- REAL ESTATE 17.95% 65,000 City Developments 642,707 182,000 DBS Land 708,345 91,000 First Capital Corporation Limited 273,128 52,000 Parkway Holdings 218,794 442,000 United Industrial Corporation Limited 381,248 325,000 United Overseas Land 519,635 --------- 2,743,857 --------- TELECOMMUNICATIONS 9.56% 624,000 Singapore Telecommunications 1,461,543 --------- TRANSPORTATION - AIRLINES 9.77% 169,000 Singapore Airlines Limited (Foreign) 1,493,268 --------- TRANSPORTATION - ROAD & RAIL 1.11% 195,000 Comfort Group Limited 169,565 --------- TRANSPORTATION - SHIPPING 1.54% 273,000 Neptune Orient Lines Limited 235,477 --------- TOTAL COMMON STOCK - BASKET (Cost $15,282,258) 15,289,130 --------- COMMON STOCK - NON-BASKET 0.00% APPLIANCES & HOUSEHOLD DURABLES 0.00% 35,000 Amcol Holdings** 246 --------- TOTAL COMMON STOCK - NON-BASKET (Cost $95,756) 246 --------- TOTAL INVESTMENTS (Cost $15,378,014)(DAGGAR) 100.00% $15,289,376 ======= =========== - ---------------------- * Non-Income producing security. ** Fair valued security. (DAGGAR) Aggregate cost for Federal income tax purposes is $ 15,499,554. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 508,033 Excess of tax cost over value (718,211) ============ $ (210,178) ============ See accompanying notes to financial statements. 36 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ SPAIN WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 100.00% BANKING 29.27% 6,522 Banco Bilbao Vizcaya $ 384,450 6,807 Banco Central Hispanoamer SA 180,444 4,782 Banco Santander SA 323,581 4,440 Corporacion Bancaria de Espana SA 177,786 ------------- 1,066,261 ------------- BEVERAGES & TOBACCO 1.91% 2,214 El Aguila SA* 10,039 1,314 Tabacalera SA-A 59,490 ------------- 69,529 ------------- BUSINESS & PUBLIC SERVICES 6.23% 9,669 Autopistas Concesionaria ESP 107,920 2,208 General de Aguas D' Barcelona 84,716 3,195 Prosegur Comp Seguridad 34,324 ------------- 226,960 ------------- CHEMICALS 0.44% 24,876 Ercros SA* 16,139 ------------- CONSTRUCTION & HOUSING 2.41% 2,148 Dragados y Construcciones SA 32,516 639 Fomento de Construcion & Contratas SA 55,230 ------------- 87,746 ------------- ENERGY SOURCES 4.72% 4,527 Repsol SA 172,111 ------------- FOOD & HOUSEHOLD PRODUCTS 1.59% 3,306 Ebro Agricolas 57,887 ------------- FOREST PRODUCTS & PAPER 0.69% 6,876 Sarrio SA 24,990 ------------- INSURANCE 2.10% 1,446 Corporacion Mapfre 76,461 ------------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- MACHINERY & ENGINEERING 1.62% 564 Zardoya-Otis SA $ 59,056 --------- METALS - STEEL 1.30% 342 Acerinox SA 47,548 --------- MISCELLANEOUS MATERIALS & COMMODITIES 0.42% 876 Viscofan Industria Navarra De Envolturas Celulosicas SA 15,277 --------- MULTI-INDUSTRY 1.65% 627 Corporacion Financiera Alba 60,141 --------- REAL ESTATE 4.13% 1,893 Inmobilaria Metropolitana Vasco Central SA 63,650 5,004 Inmobilaria Urbis SA* 23,737 3,009 Vallehermoso SA 62,972 --------- 150,359 --------- TELECOMMUNICATIONS 14.24% 22,542 Telefonica de Espana 518,930 --------- UTILITIES - ELECTRICAL & GAS 27.28% 8,694 Empresa Nacional de Electridad SA (Endesa) 530,677 774 Gas Natural SDG-E 167,434 15,645 Iberdrola SA 170,802 15,780 Union Electrica Fenosa SA 124,941 --------- 993,854 --------- TOTAL COMMON STOCK - BASKET (Cost $3,094,210) 3,643,249 --------- TOTAL INVESTMENTS (Cost $3,094,210)(DAGGAR) 100.00% $3,643,249 ======= ========== - -------------------------------------------------------------------------------- * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $ 3,100,712. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 551,273 Excess of tax cost over value (8,736) --------- $ 542,537 ========== See accompanying notes to financial statements. 37 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ SWEDEN WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 100.00% APPLIANCES & HOUSEHOLD DURABLES 3.54% 2,800 Electrolux AB-B $ 175,138 ---------- AUTOMOBILES 4.05% 2,400 Volvo AB-A 59,695 5,600 Volvo AB-B 140,409 ---------- 200,104 ---------- BANKING 8.94% 19,600 Skandinaviska Enskilda Banken-A 206,506 8,400 Svenska Handelsbanken-A 235,260 ---------- 441,766 ---------- BEVERAGES & TOBACCO 0.81% 11,284 Swedish Match* 40,181 ---------- BUILDING MATERIALS & COMPONENTS 1.81% 2,400 Scancem AB-A 89,303 ---------- BUSINESS & PUBLIC SERVICES 3.42% 2,144 Esselte AB-A 51,898 1,992 Esselte AB-B 48,351 2,400 Securitas AB-B 68,817 ---------- 169,066 ---------- CHEMICALS 3.04% 5,660 Aga AB-A 83,034 4,656 Aga AB-B 67,063 ---------- 150,097 ---------- CONSTRUCTION & HOUSING 4.29% 4,800 Skanska AB-B 211,894 ---------- ELECTRICAL & ELECTRONICS 28.14% 2,080 ABB AB-A 234,406 1,120 ABB AB-B 125,322 32,400 Ericsson LM-B 1,030,581 ---------- 1,390,309 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- FOREST PRODUCTS & PAPER 5.73% 8,400 Stora Kopparbergs-A $ 114,829 1,936 Stora Kopparbergs-B 26,207 6,400 Svenska Cellulosa AB-B 142,116 ---------- 283,152 ---------- HEALTH & PERSONAL CARE 19.26% 16,400 Astra AB-A 787,399 3,504 Astra AB-B 164,029 ---------- 951,428 ---------- INDUSTRIAL COMPONENTS 4.62% 2,388 Autoliv AB 108,602 2,244 S. K. F. AB-A 52,972 2,800 S. K. F. AB-B 66,844 ---------- 228,418 ---------- INSURANCE 2.31% 3,756 Skandia Forsakring AB 114,211 ---------- MACHINERY & ENGINEERING 4.18% 6,400 Atlas Copco AB-A 148,091 2,520 Atlas Copco AB-B 58,479 ---------- 206,570 ---------- MERCHANDISING 4.41% 1,532 Hennes & Mauritz AB-B 217,803 ---------- MULTI-INDUSTRY 1.45% 4,580 Trelleborg AB-B 71,772 ---------- TOTAL COMMON STOCK - BASKET (Cost $3,909,266) 4,941,212 ---------- TOTAL INVESTMENTS (Cost $3,909,266)(DAGGAR) 100.00% $4,941,212 ======= ========== - -------------------------------------------------------------------------------- * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $ 3,913,206. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $1,030,142 Excess of tax cost over value (2,136) ----------- $1,028,006 ========== See accompanying notes to financial statements. 38 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ SWITZERLAND WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 98.69% BANKING 14.58% 3,415 CS Holding - Registered $ 364,074 415 Schweiz Bankgesellscraft - Bearer 373,078 1,875 Schweizerischer Bankverein - Bearer 355,932 ---------- 1,093,084 ---------- BUILDING MATERIALS & COMPONENTS 6.85% 365 Forbo Holding AG 147,732 2,445 Holderbank Finance Glaris - Registered 366,336 ---------- 514,068 ---------- BUSINESS & PUBLIC SERVICES 3.28% 445 Adecco SA 144,210 95 Danzas Namen 101,763 ---------- 245,973 ---------- ELECTRICAL & ELECTRONICS 4.17% 275 ABB AG - Bearer 312,474 ---------- FOOD & HOUSEHOLD PRODUCTS 4.72% 325 Nestle SA - Registered 353,864 ---------- HEALTH & PERSONAL CARE 46.31% 1,550 Novartis Namen 1,771,729 30 Roche Holding AG - Inhaber 354,915 160 Roche Holding AG - Genussein 1,346,712 ---------- 3,473,356 ---------- INSURANCE 9.68% 350 Schweizerische Rueckversicherungs - Gesellschaft 358,068 1,235 Zuerich Versicherungs - Registered 367,569 ---------- 725,637 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- LEISURE & TOURISM 1.05% 30 Kuoni Reisen Holding AG Namen - Series B $ 78,915 --------- MACHINERY & ENGINEERING 4.42% 120 Georg Fischer - Bearer 122,441 110 Schindler Namen 117,085 60 Sulzer AG - Bearer 35,797 90 Sulzer AG - Registered 56,136 --------- 331,459 --------- MERCHANDISING 0.91% 325 Valora Holding AG - Registered 68,525 --------- RECREATION, OTHER CONSUMER GOODS 1.70% 495 S.M.H. AG - Bearer 65,189 110 S.M.H. AG - Registered 62,644 --------- 127,833 --------- TRANSPORTATION - AIRLINES 1.02% 90 Swissair - Registered 76,698 --------- TOTAL COMMON STOCK - BASKET (Cost $7,178,600) 7,401,886 --------- COMMON STOCK - NON-BASKET 1.31% HEALTH & PERSONAL CARE 1.31% 1,550 Novartis Rights (Expiration date 3/12/97)* 98,097 --------- TOTAL COMMON STOCK - NON-BASKET (Cost $95,148) 98,097 --------- TOTAL INVESTMENTS (Cost $7,273,748)(DAGGAR) 100.00% $7,499,983 ======= ========== - ------------------ * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $ 7,310,929. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 304,071 Excess of tax cost over value (115,017) ----------- $ 189,054 =========== See accompanying notes to financial statements. 39 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ UNITED KINGDOM WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 99.36% AEROSPACE & MILITARY TECHNOLOGY 1.51% 10,440 British Aerospace Plc $ 217,595 37,680 Rolls-Royce Plc 143,237 ---------- 360,832 ---------- BANKING 15.41% 29,920 Abbey National Plc 368,793 34,040 Barclays Plc 615,897 41,120 HSBC Holdings Plc ($HK10) 1,029,454 20,560 HSBC Holdings Plc (75p) 530,660 119,160 Lloyds Bank TSB Group Plc 988,573 16,200 Royal Bank of Scotland Plc 152,635 ---------- 3,686,012 ---------- BEVERAGES & TOBACCO 2.31% 50,880 Guinness Plc 380,604 15,560 Scottish & Newcastle Plc 172,118 ---------- 552,722 ---------- BROADCASTING & PUBLISHING 3.45% 36,080 British Sky Broadcasting Plc 351,715 15,000 Pearson Plc 188,194 15,360 Reed International Plc 286,559 ---------- 826,468 ---------- BUILDING MATERIALS & COMPONENTS 2.50% 21,680 Blue Circle Industries Plc 140,599 12,080 BPB Industries Plc 67,305 6,360 Hepworth Plc 26,927 12,960 Redland Plc 74,005 6,760 RMC Group Plc 104,830 15,800 Williams Holdings Plc 82,360 13,320 Wolseley British Plc 102,682 ---------- 598,708 ---------- BUSINESS & PUBLIC SERVICES 3.38% 7,360 Anglian Water Plc 78,231 4,480 De La Rue Plc 45,572 38,720 Reuters Holdings Plc 415,038 10,800 Thames Water Plc 121,227 13,720 United Utilities Plc 149,414 ---------- 809,482 ---------- CHEMICALS 1.95% 10,960 BOC Group Plc 176,845 14,480 Courtaulds Plc 86,346 16,360 Imperial Chemical Industries Plc 202,187 ---------- 465,378 ---------- CONSTRUCTION & HOUSING 0.16% 12,440 Taylor Woodrow Plc 39,070 ---------- ELECTRICAL & ELECTRONICS 1.60% 63,040 General Electric Company Plc 383,115 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- ELECTRONIC COMPONENTS, INSTRUMENTS 0.16% 6,200 Bowthorpe Plc $ 38,084 --------- ENERGY SOURCES 6.64% 125,720 British Petroleum Company Plc 1,393,737 5,160 Burmah Castrol Plc 87,006 27,040 LASMO Plc 106,540 --------- 1,587,283 --------- FINANCIAL SERVICES 0.98% 4,560 Mercury Asset Management Group Plc 99,952 4,880 Schroder Plc 134,513 --------- 234,465 --------- FOOD & HOUSEHOLD PRODUCTS 5.58% 25,960 Associated British Foods Plc 206,263 23,360 Cadbury Schweppes Plc 193,608 52,840 Grand Metropolitan Plc 390,955 19,520 Unilever Plc 502,066 10,600 United Biscuits Holdings Plc 41,678 --------- 1,334,570 --------- FOREST PRODUCTS & PAPER 0.50% 19,600 Arjo Wiggins Appleton Plc 52,283 12,640 Rexam Plc 67,538 --------- 119,821 --------- HEALTH & PERSONAL CARE 12.00% 78,560 Glaxo Wellcome Plc 1,332,975 60,888 SmithKline Beecham Plc 912,923 21,240 Zeneca Plc 625,488 --------- 2,871,386 --------- INDUSTRIAL COMPONENTS 0.91% 14,440 BBA Group Plc 81,160 13,720 BICC Plc 62,116 22,480 Lucasvarity Plc 74,819 --------- 218,095 --------- INSURANCE 3.80% 20,080 Commercial Union Plc 223,754 28,296 Legal & General Group Plc 180,736 52,080 Prudential Corporation Plc 482,621 11,080 Sedgwick Group Plc 22,958 --------- 910,069 --------- LEISURE & TOURISM 3.56% 23,520 Bass 328,088 6,600 Carlton Communications Plc 56,478 13,600 Granada Group Plc 201,637 29,920 Ladbroke Group Plc 113,250 22,280 Rank Organisation Plc 152,306 --------- 851,759 --------- See accompanying notes to financial statements. 40 FEBRUARY 28, 1997 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ UNITED KINGDOM WEBS INDEX SERIES (CONCLUDED) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- MACHINERY & ENGINEERING 0.88% 13,680 GKN Plc $ 209,463 ---------- MERCHANDISING 8.61% 22,680 Boots Company Plc 251,061 24,440 Great Universal Stores Plc 260,576 17,400 Kingfisher Plc 192,187 69,400 Marks & Spencer Plc 561,601 12,360 Next Plc 119,984 28,480 Safeway Plc 168,668 43,320 Sainsbury Plc 217,684 52,120 Tesco Plc 288,265 ---------- 2,060,026 ---------- METALS - NON FERROUS 1.50% 23,520 RTZ Corporation Plc 359,746 ---------- METALS - STEEL 0.43% 42,080 British Steel Plc 103,324 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 0.56% 15,240 Caradon Plc 67,879 28,320 Pilkington Plc 66,534 ---------- 134,413 ---------- MULTI-INDUSTRY 5.22% 72,200 B.A.T. Industries Plc 632,555 91,680 BTR Plc 356,739 15,672 Hanson Plc 70,698 18,200 Lonrho Plc 42,610 16,880 TI Group Plc 145,823 ---------- 1,248,425 ---------- REAL ESTATE 1.69% 14,520 British Land Corporation Plc 126,146 15,320 Land Securities Plc 197,457 10,520 MEPC Plc 79,896 ---------- 403,499 ---------- RECREATION, OTHER CONSUMER GOODS 0.96% 10,440 EMI Group Plc 196,559 10,440 Thorn Plc 32,448 ---------- 229,007 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- TELECOMMUNICATIONS 7.38% 140,200 British Telecommunications Plc $ 973,273 53,800 Cable & Wireless Plc 437,557 74,360 Vodafone Group Plc 353,643 ---------- 1,764,473 ---------- TEXTILES & APPAREL 0.23% 25,560 Coats Viyella Plc 54,211 ---------- TRANSPORTATION - AIRLINES 1.04% 24,240 British Airways Plc 249,347 ---------- TRANSPORTATION - SHIPPING 0.69% 15,120 Peninsular & Oriental Steam Plc 164,537 ---------- UTILITIES - ELECTRICAL & GAS 3.77% 95,960 BG Plc 266,933 95,960 Centrica Plc* 102,937 39,080 National Grid Plc 132,300 26,520 National Power Group Plc 211,577 19,760 Scottish Power Plc 113,157 5,760 Southern Electricity Plc 74,569 ---------- 901,473 ---------- TOTAL COMMON STOCK - BASKET (Cost $21,105,516) 23,769,263 ---------- COMMON STOCK - NON-BASKET 0.64% ENERGY SOURCES 0.45% 12,540 Energy Group Plc 107,103 ---------- HEALTH & PERSONAL CARE 0.00% 13 SmithKline Beecham Plc 195 ---------- INSURANCE 0.00% 3 Legal & General Group Plc 19 ---------- MULTI-INDUSTRY 0.00% 3 Hanson Plc 13 ---------- UTILITIES - ELECTRICAL & GAS 0.19% 4,200 East Midlands Electric Plc 45,910 ---------- TOTAL COMMON STOCK - NON-BASKET (Cost $160,984) 153,240 ---------- TOTAL INVESTMENTS (Cost $21,266,500)(DAGGAR) 100.00% $23,922,503 ======= =========== - ---------------- * Non-Income producing security. (DAGGAR) Aggregate cost for Federal income tax purposes is $ 21,349,010. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 2,930,098 Excess of tax cost over value (356,605) ------------ $ 2,573,493 ============ See accompanying notes to financial statements. 41 FEBRUARY 28, 1997 STATEMENT OF ASSETS AND LIABILITIES (Unaudited) WEBS INDEX FUNDS, INC.
==================================================================================================================================== AUSTRALIA AUSTRIA BELGIUM CANADA FRANCE GERMANY WEBS WEBS WEBS WEBS WEBS WEBS INDEX INDEX INDEX INDEX INDEX INDEX SERIES SERIES SERIES SERIES SERIES SERIES ------- ------- ------- ------ ------ ------- ASSETS Investments, at value $12,575,435 $1,938,774 $3,762,947 $22,753,147 $11,570,084 $17,410,763 Cash and foreign currency 115,306 63,530 39,110 24,488 11,800 196,073 Collateral for securities loaned, at value 3,926,419 -- 859,554 -- 2,985,689 5,557,125 Dividends receivable 28,703 926 3,584 33,778 68,633 5,687 Interest receivable 669 96 254 61 724 1,045 Receivable for securities sold -- -- 2,776 -- -- -- Receivable for shares sold -- -- -- -- -- -- Deferred organization cost 99,722 74,125 32,419 70,465 193,157 183,498 Prepaid expenses 4,943 859 1,452 8,762 4,680 6,809 ----------- ---------- ---------- ----------- ----------- ---------- Total assets 16,751,197 2,078,310 4,702,096 22,890,701 14,834,767 23,361,000 ----------- ---------- ---------- ----------- ----------- ---------- LIABILITIES Payable for securities purchased -- -- -- -- -- -- Liability for in-kind subscriptions -- -- -- -- -- -- Payable upon return of securities loaned 3,926,419 -- 859,554 -- 2,985,689 5,557,125 Advisory fee payable 2,453 419 783 4,736 2,452 3,625 Administration fee payable 1,545 264 493 2,982 1,544 2,282 Distribution fee payable 2,272 388 725 4,386 2,271 3,356 Accrued expenses 3,872 2,716 4,268 2,917 8,017 9,721 Deferred organization cost payable 1,249 50,183 846 1,074 1,862 1,808 ----------- ---------- ---------- ----------- ----------- ---------- Total liabilities 3,937,810 53,970 866,669 16,095 3,001,835 5,577,917 ----------- ---------- ---------- ----------- ----------- ---------- NET ASSETS Capital stock, $0.001 par value 1,200 200 240 1,800 801 1,201 Paid-in capital 12,055,978 3,355,113 3,635,747 19,822,897 10,050,411 15,978,421 Accumulated net investment income/(loss) (11,427) (15,031) (29,058) 18,757 (61,950) (42,192) Accumulated net realized gain/(loss) on investments (25,332) (1,221,603) 17,672 630,978 428,866 740,687 Net unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies 792,968 (94,339) 210,826 2,400,174 1,414,804 1,104,966 ----------- ---------- ---------- ----------- ----------- ---------- Net Assets $12,813,387 $2,024,340 $3,835,427 $22,874,606 $11,832,932 $17,783,083 =========== ========== ========== =========== =========== =========== Shares of common stock issued and outstanding 1,200,030 200,030 240,030 1,800,030 801,000 1,201,000 =========== ========== ========== =========== =========== =========== Net Asset Value Per Share $10.68 $10.12 $15.98 $12.71 $14.77 $14.81 =========== ========== ========== =========== =========== =========== MEXICO HONG KONG ITALY JAPAN MALAYSIA (FREE) NETHERLANDS WEBS WEBS WEBS WEBS WEBS WEBS INDEX INDEX INDEX INDEX INDEX INDEX SERIES SERIES SERIES SERIES SERIES SERIES ------- ------ ------ ------ ------ ------- ASSETS Investments, at value $15,562,227 $28,559,418 $106,574,819 $22,227,700 $8,806,318 $7,840,907 Cash and foreign currency 48,028 153,767 342,117 45,257 64,392 207,165 Collateral for securities loaned, at value 3,599,438 10,549,283 20,037,812 6,327,950 1,244,700 2,541,820 Dividends receivable 14,990 -- 30,039 10,803 -- 931 Interest receivable 459 2,185 2,532 3,067 573 732 Receivable for securities sold -- -- -- -- -- -- Receivable for shares sold -- -- 7,229,805 -- -- -- Deferred organization cost 51,229 97,318 404,889 54,312 54,868 45,971 Prepaid expenses 5,526 13,065 32,746 7,560 3,482 3,091 ------------ ----------- ------------ ----------- ---------- ---------- Total assets 19,281,897 39,375,036 134,654,759 28,676,649 10,174,333 10,640,617 ------------ ----------- ------------ ----------- ---------- ---------- LIABILITIES Payable for securities purchased -- -- -- -- -- -- Liability for in-kind subscriptions -- -- 7,170,760 -- -- -- Payable upon return of securities loaned 3,599,438 10,549,283 20,037,812 6,327,950 1,244,700 2,541,820 Advisory fee payable 2,987 6,494 15,829 3,937 1,848 1,654 Administration fee payable 1,881 4,089 9,966 2,479 1,163 1,042 Distribution fee payable 2,766 6,013 14,656 3,645 1,711 1,532 Accrued expenses 15,773 -- 70,436 15,850 5,377 553 Deferred organization cost payable 964 1,266 2,856 973 1,034 989 ------------ ----------- ------------ ----------- ---------- ---------- Total liabilities 3,623,809 10,567,145 27,322,315 6,354,834 1,255,833 2,547,590 ------------ ----------- ------------ ----------- ---------- ---------- NET ASSETS Capital stock, $0.001 par value 1,051 1,950 9,001 1,425 700 401 Paid-in capital 14,863,286 28,900,868 130,361,935 20,365,421 7,441,000 6,594,813 Accumulated net investment income/(loss) (31,016) (197,777) (265,441) (14,765) (26,487) (9,423) Accumulated net realized gain/(loss) on investments 221,375 (857,705) (733,054) 2,105 326,525 13,249 Net unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies 603,392 960,555 (22,039,997) 1,967,629 1,176,762 1,493,987 ------------ ----------- ------------ ----------- ---------- ---------- Net Assets $15,658,088 $28,807,891 $107,332,444 $22,321,815 $8,918,500 $8,093,027 ============ =========== ============ =========== ========== ========== Shares of common stock issued and outstanding 1,051,000 1,950,030 9,001,000 1,425,030 700,030 401,000 ============ =========== ============ =========== ========== ========== Net Asset Value Per Share $14.90 $14.77 $11.92 $15.66 $12.74 $20.18 ============ =========== ============ =========== ========== ========== SINGAPORE UNITED (FREE) SPAIN SWEDEN SWITZERLAND KINGDOM WEBS WEBS WEBS WEBS WEBS INDEX INDEX INDEX INDEX INDEX SERIES SERIES SERIES SERIES SERIES ------- ------ ------ ------ ------ ASSETS Investments, at value $15,289,376 $3,643,249 $4,941,212 $7,499,983 $23,922,503 Cash and foreign currency 102,593 475,195 152,195 35,739 106,298 Collateral for securities loaned, at value 2,021,350 785,844 1,314,625 1,388,754 -- Dividends receivable -- 1,675 -- 12,255 94,866 Interest receivable 717 255 413 270 298 Receivable for securities sold -- 7,281 -- -- -- Receivable for shares sold -- -- -- -- -- Deferred organization cost 64,489 80,469 52,416 119,564 115,252 Prepaid expenses 5,153 1,563 2,650 3,062 9,236 ----------- ---------- ---------- ---------- ----------- Total assets 17,483,678 4,995,531 6,463,511 9,059,627 24,248,453 ----------- ---------- ---------- ---------- ----------- LIABILITIES Payable for securities purchased -- 435,296 -- -- -- Liability for in-kind subscriptions -- -- -- -- -- Payable upon return of securities loaned 2,021,350 785,844 1,314,625 1,388,754 -- Advisory fee payable 2,770 803 1,070 1,592 4,973 Administration fee payable 1,744 506 674 1,003 3,131 Distribution fee payable 2,565 744 991 1,474 4,605 Accrued expenses 38,480 9,775 -- 11,701 7,647 Deferred organization cost payable 2,920 1,158 981 1,405 -- ----------- ---------- ---------- ---------- ----------- Total liabilities 2,069,829 1,234,126 1,318,341 1,405,929 20,356 ----------- ---------- ---------- ---------- ----------- NET ASSETS Capital stock, $0.001 par value 1,300 225 300 626 1,601 Paid-in capital 15,667,287 2,886,265 4,125,250 7,565,062 21,205,973 Accumulated net investment income/(loss) (43,816) 24,550 (53,344) (37,958) (9,134) Accumulated net realized gain/(loss) on investments (122,132) 297,211 41,541 (98,032) 373,265 Net unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies (88,790) 553,154 1,031,423 224,000 2,656,392 ----------- ---------- ---------- ---------- ----------- Net Assets $15,413,849 $3,761,405 $5,145,170 $7,653,698 $24,228,097 =========== ========== ========== ========== =========== Shares of common stock issued and outstanding 1,300,030 225,030 300,030 626,000 1,601,000 =========== ========== ========== ========== =========== Net Asset Value Per Share $11.86 $16.72 $17.15 $12.23 $15.13 =========== ========== ========== ========== ===========
See accompanying notes to financial statements. 42 & 43
FOR THE SIX MONTH PERIOD ENDING FEBRUARY 28, 1997 STATEMENTS OF OPERATIONS (Unaudited) WEBS INDEX FUND, INC. ==================================================================================================================================== AUSTRALIA AUSTRIA BELGIUM CANADA FRANCE GERMANY WEBS WEBS WEBS WEBS WEBS WEBS INDEX INDEX INDEX INDEX INDEX INDEX SERIES SERIES SERIES SERIES SERIES SERIES --------- ------- ------- ------ ------- ------- INVESTMENT INCOME: Dividends (net of foreign withholding taxes) $209,579 $ 1,890 $ 1,258 $ 186,296 $ 15,425 $ 47,047 Interest 6,281 974 850 1,369 3,897 10,614 -------- -------- ------- ---------- ---------- --------- Total investment income 215,860 2,864 2,108 187,665 19,322 57,661 -------- -------- ------- ---------- ---------- --------- EXPENSES: Advisory fees 14,680 3,818 3,489 26,722 15,515 21,379 Administration fees (1) 9,243 2,404 2,197 16,825 9,769 13,461 Distribution fees 13,592 3,536 3,231 24,742 14,366 19,795 Custodian fees and expenses 5,497 4,774 3,852 10,108 9,667 10,858 Transfer agent fees 3,160 3,160 3,160 3,160 3,160 3,160 Directors' fees 4,078 1,050 968 7,443 4,286 5,903 Legal fees 7,356 1,653 1,900 14,015 7,663 10,083 Audit fees 6,117 625 1,452 11,164 6,429 8,855 Federal and state registration fees (331) (4,020) 521 1,510 (4,751) (4,754) Amortization of deferred organization costs 3,524 2,619 1,146 2,490 6,826 6,485 Insurance 3,432 2,471 972 2,311 7,269 6,838 Printing 2,549 (294) 605 4,652 2,679 3,690 Licensing fees 1,631 424 388 2,969 1,724 2,375 Amex listing fee 367 95 87 670 386 531 Miscellaneous expenses 3,551 893 964 6,626 4,067 5,018 -------- -------- ------- ---------- ---------- --------- Total expenses before waiver 78,446 23,208 24,932 135,407 89,055 113,677 Less: Fees waived (247) (73) (50) (433) (261) (371) -------- -------- ------- ---------- ---------- --------- Total expenses after waiver 78,199 23,135 24,882 134,974 88,794 113,306 -------- -------- ------- ---------- ---------- --------- Net investment income/(loss) 137,661 (20,271) (22,774) 52,691 (69,472) (55,645) -------- -------- ------- ---------- ---------- --------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY RELATED TRANSACTIONS AND TRANSLATION OF OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES: Net realized gain/(loss) on investments (12,351) (42,355) 23,260 236,904 63,790 70,225 Net realized gain/(loss) on investments on in-kind redemptions (11,300) (1,170,090) -- 394,403 369,184 674,889 Net realized gain/(loss) on foreign currency related transactions (1,681) (2,971) (3,125) (329) (4,108) (4,427) -------- -------- ------- ---------- ---------- --------- (25,332) (1,215,416) 20,135 630,978 428,866 740,687 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies 514,357 1,082,733 179,859 2,374,193 1,530,963 811,819 -------- -------- ------- ---------- ---------- --------- Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies 489,025 (132,683) 199,994 3,005,171 1,959,829 1,552,506 -------- -------- ------- ---------- ---------- --------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $626,686 $(152,954) $177,220 $3,057,862 $1,890,357 $1,496,861 ======== ========== ======== ========== ========== ========== - ------------------------ (1) Without the administration fee deferral the administration fees for the six months ended February 28, 1997 would have been as follows: $17,328 $4,497 $4,112 $31,609 $18,284 $25,135 ======= ====== ====== ======= ======= ======= MEXICO HONG KONG ITALY JAPAN MALAYSIA (FREE) NETHERLANDS WEBS WEBS WEBS WEBS WEBS WEBS INDEX INDEX INDEX INDEX INDEX INDEX SERIES SERIES SERIES SERIES SERIES SERIES -------- ------- ------- -------- ------- ----------- INVESTMENT INCOME: Dividends (net of foreign withholding taxes) $121,507 $ 13,866 $ 276,348 $ 77,846 $ 31,049 $ 41,719 Interest 3,266 21,653 25,527 7,256 3,835 4,227 -------- --------- ---------- --------- -------- --------- Total investment income 124,773 35,519 301,875 85,102 34,884 45,946 -------- --------- ---------- --------- -------- --------- EXPENSES: Advisory fees 13,895 39,474 120,004 19,428 10,429 10,048 Administration fees (1) 8,749 24,854 75,558 12,233 6,566 6,327 Distribution fees 12,866 36,550 111,115 17,989 9,656 9,181 Custodian fees and expenses 9,056 15,438 26,758 8,635 12,936 3,882 Transfer agent fees 3,160 3,160 3,160 3,160 3,160 3,160 Directors' fees 3,858 10,971 33,372 5,410 2,903 2,797 Legal fees 7,496 19,852 56,064 10,704 5,391 5,071 Audit fees 5,788 16,457 50,057 8,115 4,355 4,195 Federal and state registration fees 1,906 (3,612) 1,984 3,162 556 (187) Amortization of deferred organization costs 1,810 3,439 14,308 1,919 1,939 1,624 Insurance 1,712 3,312 15,627 1,745 1,803 1,390 Printing 2,411 6,857 20,857 3,381 1,815 1,748 Licensing fees 1,544 4,386 13,334 2,159 1,159 1,240 Amex listing fee 347 988 3,004 487 261 252 Miscellaneous expenses 3,280 9,326 28,365 4,598 2,468 2,377 -------- --------- ---------- --------- -------- --------- Total expenses before waiver 77,878 191,452 573,567 103,125 65,397 53,105 Less: Fees waived (205) (651) (2,204) (288) (168) (168) -------- --------- ---------- --------- -------- --------- Total expenses after waiver 77,673 190,801 571,363 102,837 65,229 52,937 -------- --------- ---------- --------- -------- --------- Net investment income/(loss) 47,100 (155,282) (269,488) (17,735) (30,345) (6,991) -------- --------- ---------- --------- -------- --------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY RELATED TRANSACTIONS AND TRANSLATION OF OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES: Net realized gain/(loss) on investments 221,412 (306,693) (73,711) 1,977 326,660 16,974 Net realized gain/(loss) on investments on in-kind redemptions -- (549,069) (645,583) -- -- -- Net realized gain/(loss) on foreign currency related transactions (37) 1,403 (13,760) 128 (135) (1,258) -------- --------- ---------- --------- -------- --------- 221,375 (854,359) (733,054) 2,105 326,525 15,716 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies 651,753 2,629,792 (13,291,031) 1,882,654 620,549 1,128,097 -------- --------- ---------- --------- -------- --------- Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies 873,128 1,775,433 (14,024,085) 1,884,759 947,074 1,143,813 -------- --------- ---------- --------- -------- --------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $920,228 $1,620,151 $(14,293,573) $1,867,024 $916,729 $1,136,822 ======== ========== ============= ========== ======== ========== - --------------------- (1) Without the administration fee deferral the administration fees for the six months ended February 28, 1997 would have been as follows: $16,388 $46,640 $141,803 $22,975 $12,322 $11,876 ======= ======= ======== ======= ======= ======= SINGAPORE UNITED (FREE) SPAIN SWEDEN SWITZERLAND KINGDOM WEBS WEBS WEBS WEBS WEBS INDEX INDEX INDEX INDEX INDEX SERIES SERIES SERIES SERIES SERIES --------- ------- ------ ----------- ------- INVESTMENT INCOME: Dividends (net of foreign withholding taxes) $ 26,333 $ 50,855 $ -- $ 3,912 $ 198,190 Interest 2,018 2,997 2,320 1,739 1,724 -------- -------- ------ ------- ---------- Total investment income 28,351 53,852 2,320 5,651 199,914 -------- -------- ------ ------- ---------- EXPENSES: Advisory fees 13,805 5,487 6,558 8,154 24,123 Administration fees (1) 8,692 3,455 4,129 5,134 15,189 Distribution fees 12,783 5,080 6,072 7,550 22,336 Custodian fees and expenses 7,273 4,272 2,829 5,260 6,374 Transfer agent fees 3,160 3,160 3,160 3,160 3,160 Directors' fees 3,835 1,027 1,826 1,459 6,692 Legal fees 7,339 2,651 3,316 4,095 12,715 Audit fees 5,752 1,790 2,739 3,389 10,038 Federal and state registration fees 1,523 (473) (111) 259 1,492 Amortization of deferred organization costs 2,279 2,844 1,852 4,225 4,073 Insurance 2,118 2,876 2,355 4,366 5,490 Printing 2,397 954 1,141 1,212 4,182 Licensing fees 1,534 610 729 906 2,680 Amex listing fee 345 137 164 203 602 Miscellaneous expenses 3,260 1,298 1,722 1,919 6,245 -------- -------- ------ ------- ---------- Total expenses before waiver 76,095 35,168 38,481 51,291 125,391 Less: Fees waived (212) (95) (109) (130) (353) -------- -------- ------ ------- ---------- Total expenses after waiver 75,883 35,073 38,372 51,161 125,038 -------- -------- ------ ------- ---------- Net investment income/(loss) (47,532) 18,779 (36,052) (45,510) 74,876 -------- -------- ------ ------- ---------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY RELATED TRANSACTIONS AND TRANSLATION OF OTHER ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES: Net realized gain/(loss) on investments 74,208 105,231 45,963 (43,895) (8,079) Net realized gain/(loss) on investments on in-kind redemptions (117,575) 205,282 -- (13,406) 381,027 Net realized gain/(loss) on foreign currency related transactions (794) (6,800) (613) (4,622) 8,467 -------- -------- ------ ------- ---------- (44,161) 303,713 45,350 (61,923) 381,415 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies 434,520 408,945 741,599 137,264 1,792,127 -------- -------- ------ ------- ---------- Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies 390,359 712,658 786,949 75,341 2,173,542 -------- -------- ------ ------- ---------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $342,827 $731,437 $750,897 $29,831 $2,248,418 ======== ======== ======== ======= ========== - --------------------- (1) Without the administration fee deferral the administration fees for the six months ended February 28, 1997 would have been as follows: $16,286 $6,483 $7,754 $9,597 $28,417 ======= ====== ====== ====== =======
See accompanying notes to financial statements. 44 & 45
STATEMENTS OF CHANGES IN NET ASSETS WEBS INDEX FUND, INC. ==================================================================================================================================== AUSTRALIA AUSTRIA BELGIUM WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES --------------- -------------- ---------------- For the six For the For the six For the For the six For the months period months period months period ending 03/12/96*- ending 03/12/96*- ending 03/12/96*- 02/28/97 08/31/96 02/28/97 08/31/96 02/28/97 08/31/96 (Unaudited) (Unaudited) (Unaudited) --------- --------- --------- --------- --------- --------- OPERATIONS: Net investment income/(loss) $ 137,661 $ 83,647 $ (20,271) $ 31,488 $ (22,774) $ 42,944 Net realized gain/(loss) on investments and foreign currency related transactions (25,332) 23,767 (1,215,416) 85,287 20,135 18,047 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies 514,357 278,611 1,082,733 (1,177,072) 179,859 30,967 ----------- ----------- ---------- ----------- ---------- ---------- Net increase/(decrease) in net assets resulting from operations 626,686 386,025 (152,954) (1,060,297) 177,220 91,958 ----------- ----------- ---------- ----------- ---------- ---------- DISTRIBUTIONS: Net investment income. (115,003) (83,647) -- (26,054) (400) (42,944) In excess of net investment income -- (47,153) -- (7,923) -- (7,116) Net realized gains -- (21,359) -- (33,980) (1,520) (5,241) In excess of net realized gains -- -- -- -- -- -- Return of capital -- (34,847) -- (100,047) -- -- ----------- ----------- ---------- ----------- ---------- ---------- Net decrease in net assets from distributions (115,003) (187,006) -- (168,004) (1,920) (55,301) ----------- ----------- ---------- ----------- ---------- ---------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares 2,092,041 11,977,456 -- 19,180,869 1,860,340 2,982,750 Cost of shares redeemed (1,967,117) -- (11,342,765) (4,432,844) -- (1,220,075) ----------- ----------- ---------- ----------- ---------- ---------- Net increase/(decrease) in net assets derived from capital share transactions 124,924 11,977,456 (11,342,765) 14,748,025 1,860,340 1,762,675 ----------- ----------- ---------- ----------- ---------- ---------- Total increase/(decrease) in net assets 636,607 12,176,475 (11,495,719) 13,519,724 2,035,640 1,799,332 NET ASSETS: Beginning of period 12,176,780 305 13,520,059 335 1,799,787 455 ----------- ----------- ---------- ----------- ---------- ---------- End of period $12,813,387 $12,176,780 $2,024,340 $13,520,059 $3,835,427 $1,799,787 =========== =========== ========== =========== ========== ========== - -------- *Commencement of operations. Capital Share Transactions: Shares sold 200,000 1,200,000 -- 1,700,000 120,000 200,000 Shares redeemed (200,000) -- (1,100,000) (400,000) -- (80,000) ----------- ----------- ---------- ----------- ---------- ---------- Net increase/(decrease) in shares -- 1,200,000 (1,100,000) 1,300,000 120,000 120,000 =========== =========== ========== =========== ========== ========== CANADA FRANCE GERMANY WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ---------------- ---------------- -------------- For the six For the For the six For the For the six For the months period months period months period ending 03/12/96*- ending 03/12/96*- ending 03/12/96*- 02/28/97 08/31/96 02/28/97 08/31/96 02/28/97 08/31/96 (Unaudited) (Unaudited) (Unaudited) --------- --------- ----------- --------- --------- --------- OPERATIONS: Net investment income/(loss) $ 52,691 $ 40,304 $ (69,472) $ 146,220 $ (55,645) $ 60,634 Net realized gain/(loss) on investments and foreign currency related transactions 630,978 71,510 428,866 583,565 740,687 (40,272) Net change in unrealized appreciation/ (depreciation)on investments and translation of other assets and liabilities denominated in foreign currencies 2,374,193 25,981 1,530,963 (116,159) 811,819 293,147 ----------- ----------- ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations 3,057,862 137,795 1,890,357 613,626 1,496,861 313,509 ----------- ----------- ----------- ----------- ----------- ----------- DISTRIBUTIONS: Net investment income. (39,101) (35,145) -- (140,840) -- (48,171) In excess of net investment income -- (7,532) -- (20,645) -- (19,615) Net realized gains -- (3,392) -- (8,421) -- -- In excess of net realized gains -- -- -- -- -- (14,044) Return of capital -- (3,132) -- (329,606) -- (132,489) ----------- ----------- ----------- ----------- ----------- ----------- Net decrease in net assets from distributions (39,101) (49,201) -- (499,512) -- (214,319) ----------- ----------- ----------- ----------- ----------- ----------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares 9,629,688 15,788,335 2,736,516 30,831,940 8,444,727 32,463,206 Cost of shares redeemed (3,550,242) (2,100,833) (15,723,875) (8,028,940) (20,822,544) (3,911,977) ----------- ----------- ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets derived from capital share transactions 6,079,446 13,687,502 (12,987,359) 22,803,000 (12,377,817) 28,551,229 ----------- ----------- ----------- ----------- ----------- ----------- Total increase/(decrease) in net assets 9,098,207 13,776,096 (11,097,002) 22,917,114 (10,880,956) 28,650,419 NET ASSETS: Beginning of period 13,776,399 303 22,929,934 12,820 28,664,039 13,620 ----------- ----------- ----------- ----------- ----------- ----------- End of period $22,874,606 $13,776,399 $11,832,932 $22,929,934 $17,783,083 $28,664,039 =========== =========== =========== =========== =========== =========== - -------- *Commencement of operations. Capital Share Transactions: Shares sold 800,000 1,500,000 200,000 2,400,000 600,000 2,400,000 Shares redeemed (300,000) (200,000) (1,200,000) (600,000) (1,500,000) (300,000) ----------- ----------- ----------- ----------- ----------- ----------- Net increase/(decrease) in shares 500,000 1,300,000 (1,000,000) 1,800,000 (900,000) 2,100,000 =========== =========== =========== =========== =========== =========== HONG KONG ITALY WEBS WEBS INDEX INDEX SERIES SERIES -------------- --------------- For the six For the For the six For the months period months period ending 03/12/96*- ending 03/12/96*- 02/28/97 08/31/96 02/28/97 08/31/96 (Unaudited) (Unaudited) --------- --------- --------- --------- OPERATIONS: Net investment income/(loss) $ 47,100 $ 66,748 $ (155,282) $ 346,291 Net realized gain/(loss) on investments and foreign currency related transactions 221,375 43,430 (854,359) 411,113 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies 651,753 (48,361) 2,629,792 (1,669,237) ----------- ---------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations 920,228 61,817 1,620,151 (911,833) ----------- ---------- ----------- ----------- DISTRIBUTIONS: Net investment income. (73,684) (66,748) -- (346,291) In excess of net investment income -- (9,901) -- (78,413) Net realized gains -- (3,153) -- (325,362) In excess of net realized gains -- -- -- -- Return of capital -- (24,346) -- (195,546) ----------- ---------- ----------- ----------- Net decrease in net assets from distributions (73,684) (104,148) -- (945,612) ----------- ---------- ----------- ----------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares 6,966,086 8,886,964 4,356,097 39,202,785 Cost of shares redeemed -- (1,012,585) (12,338,066) (2,176,057) ----------- ---------- ----------- ----------- Net increase/(decrease) in net assets derived from capital share transactions 6,966,086 7,874,379 (7,981,969) 37,026,728 ----------- ---------- ----------- ----------- Total increase/(decrease) in net assets 7,812,630 7,832,048 (6,361,818) 35,169,283 NET ASSETS: Beginning of period 7,845,458 13,410 35,169,709 426 ----------- ---------- ----------- ----------- End of period $15,658,088 $7,845,458 $28,807,891 $35,169,709 =========== ========== =========== =========== - -------- *Commencement of operations. Capital Share Transactions: Shares sold 450,000 675,000 300,000 2,700,000 Shares redeemed -- (75,000) (900,000) (150,000) ----------- ---------- ----------- ----------- Net increase/(decrease) in shares 450,000 600,000 (600,000) 2,550,000 =========== ========== =========== ===========
See accompanying notes to financial statements. 46 & 47
STATEMENTS OF CHANGES IN NET ASSETS WEBS INDEX FUND, INC. ==================================================================================================================================== JAPAN MALAYSIA MEXICO (FREE) WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ------------------------- ---------------------- ---------------------- For the six For the For the six For the For the six For the months period months period months period ending 03/12/96*- ending 03/12/96*- ending 03/12/96*- 02/28/97 08/31/96 02/28/97 08/31/96 02/28/97 08/31/96 (Unaudited) (Unaudited) (Unaudited) ----------- ---------- ----------- ---------- ----------- ---------- OPERATIONS: Net investment income/(loss) $ (269,488) $ (395,549) $ (17,735) $ (9,877) $ (30,345) $ 162 Net realized gain/(loss) on investments and foreign currency related transactions (733,054) 167,831 2,105 3,867 326,525 (165) Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies (13,291,031) (8,748,966) 1,882,654 84,975 620,549 556,213 ------------ ------------ ----------- ---------- ---------- ---------- Net increase/(decrease) in net assets resulting from operations (14,293,573) (8,976,684) 1,867,024 78,965 916,729 556,210 ------------ ------------ ----------- ---------- ---------- ---------- DISTRIBUTIONS: Net investment income. -- -- -- -- -- -- In excess of net investment income -- -- -- -- -- (2,004) Net realized gains -- -- -- -- -- -- In excess of net realized gains -- -- -- -- -- -- Return of capital -- -- -- (4,200) -- (5,496) ------------ ------------ ----------- ---------- ---------- ---------- Net decrease in net assets from distributions -- -- -- (4,200) -- (7,500) ------------ ------------ ----------- ---------- ---------- ---------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares 35,642,215 112,125,708 11,136,871 9,242,755 2,243,037 5,209,737 Cost of shares redeemed (17,180,142) -- -- -- -- -- ------------ ------------ ----------- ---------- ---------- ---------- Net increase/(decrease) in net assets derived from capital share transactions 18,462,073 112,125,708 11,136,871 9,242,755 2,243,037 5,209,737 ------------ ------------ ----------- ---------- ---------- ---------- Total increase/(decrease) in net assets 4,168,500 103,149,024 13,003,895 9,317,520 3,159,766 5,758,447 NET ASSETS: Beginning of period 103,163,944 14,920 9,317,920 400 5,758,734 287 ------------ ------------ ----------- ---------- ---------- ---------- End of period $107,332,444 $103,163,944 $22,321,815 $9,317,920 $8,918,500 $5,758,734 ============ ============ =========== ========== ========== ========== *Commencement of operations. Capital Share Transactions: Shares sold 3,000,000 7,200,000 750,000 675,000 200,000 500,000 Shares redeemed (1,200,000) -- -- -- -- -- ----------- ---------- ---------- --------- ---------- -------- Net increase/(decrease) in shares 1,800,000 7,200,000 750,000 675,000 200,000 500,000 ============ ============ =========== ========== ========== ==========
NETHERLANDS SINGAPORE (FREE) SPAIN WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ------------------------- ---------------------- ---------------------- - For the six For the For the six For the For the six For the months period months period months period ending 03/12/96*- ending 03/12/96*- ending 03/12/96*- 02/28/97 08/31/96 02/28/97 08/31/96 02/28/97 08/31/96 (Unaudited) (Unaudited) (Unaudited) ----------- ---------- ----------- ---------- ----------- ---------- OPERATIONS: Net investment income/(loss) $ (6,991) $ 59,698 $ (47,532) $ 21,999 $ 18,779 $ 46,585 Net realized gain/(loss) on investments and foreign currency related transactions 15,716 31,842 (44,161) (120,662) 303,713 238,394 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies 1,128,097 365,890 434,520 (523,310) 408,945 144,209 ---------- ---------- ----------- ---------- ---------- ---------- Net increase/(decrease) in net assets resulting from operations 1,136,822 457,430 342,827 (621,973) 731,437 429,188 ---------- ---------- ----------- ---------- ---------- ---------- DISTRIBUTIONS: Net investment income. (5,614) (56,328) -- (19,081) (318) (41,405) In excess of net investment income -- (4,914) -- (6,120) -- -- Net realized gains -- (31,842) -- -- (6,658) (29,254) In excess of net realized gains -- (2,655) -- -- -- -- Return of capital -- (37,393) -- -- -- -- ---------- ---------- ----------- ---------- ---------- ---------- Net decrease in net assets from distributions (5,614) (133,132) -- (25,201) (6,976) (70,659) ---------- ---------- ----------- ---------- ---------- ---------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares -- 6,621,571 7,071,212 10,940,175 -- 7,091,661 Cost of shares redeemed -- -- (1,107,208)(1,186,369) (1,190,432) (3,223,243) ---------- ---------- ----------- ---------- ---------- ---------- Net increase/(decrease) in net assets derived from capital share transactions -- 6,621,571 5,964,004 9,753,806 (1,190,432) 3,868,418 ---------- ---------- ----------- ---------- ---------- ---------- Total increase/(decrease) in net assets 1,131,208 6,945,869 6,306,831 9,106,632 (465,971) 4,226,947 NET ASSETS: Beginning of period 6,961,819 15,950 9,107,018 386 4,227,376 429 ---------- ---------- ----------- ---------- ---------- ---------- End of period $8,093,027 $6,961,819 $15,413,849 $9,107,018 $3,761,405 $4,227,376 ========== ========== =========== ========== ========== ========== *Commencement of operations. Capital Share Transactions: Shares sold -- 400,000 600,000 900,000 -- 525,000 Shares redeemed -- -- (100,000) (100,000) (75,000) (225,000) ---------- ---------- ----------- ---------- ---------- ---------- Net increase/(decrease) in shares -- 400,000 500,000 800,000 (75,000) 300,000 ========== ========== =========== ========== ========== ==========
SWEDEN SWITZERLAND UNITED KINGDOM WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ------------------------- ---------------------- ---------------------- For the six For the For the six For the For the six For the months period months period months period ending 03/12/96*- ending 03/12/96*- ending 03/12/96*- 02/28/97 08/31/96 02/28/97 08/31/96 02/28/97 08/31/96 (Unaudited) (Unaudited) (Unaudited) ----------- ---------- ----------- ---------- ----------- ---------- OPERATIONS: Net investment income/(loss) $ (36,052) $ 51,107 $ (45,510) $ 43,339 $ 74,876 $ 195,730 Net realized gain/(loss) on investments and foreign currency related transactions 45,350 94,837 (61,923) (107,039) 381,415 106,646 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies 741,599 289,824 137,264 86,736 1,792,127 864,265 ---------- ---------- ----------- ---------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations 750,897 435,768 29,831 23,036 2,248,418 1,166,641 ---------- ---------- ----------- ---------- ----------- ----------- DISTRIBUTIONS: Net investment income. (1,892) (51,107) -- (35,720) (66,925) (195,730) In excess of net investment income -- (16,685) -- -- -- (31,721) Net realized gains (3,809) (26,271) -- -- (8,150) (987) In excess of net realized gains -- -- -- -- -- -- Return of capital -- -- -- -- -- (26,817) ---------- ---------- ----------- ---------- ----------- ----------- Net decrease in net assets from distributions (5,701) (94,063) -- (35,720) (75,075) (255,255) ---------- ---------- ----------- ---------- ----------- ----------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares -- 5,130,382 2,957,942 10,622,671 9,068,672 17,417,928 Cost of shares redeemed -- (1,072,542) (1,492,280) (4,464,972) (2,804,160) (2,551,512) ---------- ---------- ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets derived from capital share transactions -- 4,057,840 1,465,662 6,157,699 6,264,512 14,866,416 ---------- ---------- ----------- ----------- ----------- ----------- Total increase/(decrease) in net assets 745,196 4,399,545 1,495,493 6,145,015 8,437,855 15,777,802 NET ASSETS: Beginning of period 4,399,974 429 6,158,205 13,190 15,790,242 12,440 ---------- ---------- ----------- ----------- ----------- ----------- End of period $5,145,170 $4,399,974 $7,653,698 $ 6,158,205 $24,228,097 $15,790,242 ========== ========== =========== =========== =========== =========== *Commencement of operations. Capital Share Transactions: Shares sold -- 375,000 250,000 875,000 600,000 1,400,000 Shares redeemed -- (75,000) (125,000) (375,000) (200,000) (200,000) ---------- ---------- ----------- ----------- ----------- ----------- Net increase/(decrease) in shares -- 300,000 125,000 500,000 400,000 1,200,000 ========== ========== =========== =========== =========== =========== See accompanying notes to financial statements. 48 &49
FINANCIAL HIGHLIGHTS WEBS INDEX FUND, INC. ==================================================================================================================================== (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) AUSTRALIA AUSTRIA BELGIUM WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ---------------------- ---------------------- ---------------------- For the six For the For the six For the For the six For the months period months period months period ending 03/12/96*- ending 03/12/96*- ending 03/12/96*- 02/28/97 08/31/96 02/28/97 08/31/96 02/28/97 08/31/96 (Unaudited) (Unaudited) (Unaudited) --------- --------- --------- --------- --------- --------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.15 $9.95(1) $10.40 $10.91(1) $14.99 $14.92(1) ------- ------- ------- ------- ------- ------- Net investment income/(loss) (DAGGAR) 0.13 0.10 (0.07) 0.04 (0.13) 0.40 Net realized and unrealized gain/(loss) on investments, foreign currency related transactions, and translation of other assets and liabilities denominated in foreign currencies 0.52 0.29 (0.21) (0.41) 1.13 0.36 ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations 0.65 0.39 (0.28) (0.37) 1.00 0.76 ------- ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income (0.12) (0.08) -- (0.02) 0.00** (0.54) Dividends in excess of net investment income -- (0.05) -- (0.01) -- (0.09) Distributions from net realized gains -- (0.02) -- (0.03) (0.01) (0.06) Distributions in excess of net realized gains -- -- -- -- -- -- Return of capital -- (0.04) -- (0.08) -- -- ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.12) (0.19) -- (0.14) (0.01) (0.69) ------- ------- ------- ------- ------- ------- Net asset value, end of period $10.68 $10.15 $10.12 $10.40 $15.98 $14.99 ------- ------- ------- ------- ------- ------- TOTAL INVESTMENT RETURN (2) (4) 6.36% 3.88% (2.69)% (3.39)% 6.69% 5.01% RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) $12,813 $12,177 $2,024 $13,520 $3,835 $1,800 Ratios of expenses to average net assets (3) (5) 1.44% 1.59% 1.64% 1.56% 1.93% 2.29% Ratios of net investment income/(loss) to average net assets (3) (5) 2.53% 2.18% (1.43)% 0.87% (1.76)% 5.67% Portfolio turnover (4)(6) 0.00% 8.84% 14.50% 9.60% 10.47% 6.25% Average commission rate paid $0.0034 $0.0085 $0.1857 $0.2986 $0.3494 $0.4327 *Commencement of operations. **Less than one cent per share. (DAGGAR) Based on average shares outstanding throughout the period. (1)Net asset value per share on march 12, 1996 (commencement of operations. (2)Total investment return is calculated assuming a purchase of capital stock at net asset value per share on the first day and a sale at the net asset value per share on the last day of the period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at the net asset value per share on the ex-dividend date. (3)Annualized (4)Not Annualized (5)Includes voluntary waivers by the American Stock Exchange. If such waivers had not been made the ratios of expenses to average net assets and ratios of net investment income/(loss) to average net assets would have been as follows: Ratios of expenses to average net assets before waivers (3) 1.44% 1.60% 1.64% 1.57% 1.93% 2.30% Ratios of net investment income/(loss) to average net assets before waivers (3) 2.53% 2.17% (1.44%) 0.86% (1.77%) 5.66% (6)Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
CANADA FRANCE GERMANY WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ---------------------- ---------------------- ---------------------- For the six For the For the six For the For the six For the months period months period months period ending 03/12/96*- ending 03/12/96*- ending 03/12/96*- 02/28/97 08/31/96 02/28/97 08/31/96 02/28/97 08/31/96 (Unaudited) (Unaudited) (Unaudited) --------- --------- --------- --------- --------- --------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $10.60 $10.17(1) $12.73 $12.42(1) $13.64 $13.23(1) ------- ------- ------- ------- ------- ------- Net investment income/(loss) (DAGGAR) 0.03 0.04 (0.05) 0.17 (0.05) 0.06 Net realized and unrealized gain/(loss) on investments, foreign currency related transactions, and translation of other assets and liabilities denominated in foreign currencies 2.10 0.43 2.09 0.45 1.22 0.47 ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations 2.13 0.47 2.04 0.62 1.17 0.53 ------- ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income (0.02) (0.03) -- (0.09) -- (0.03) Dividends in excess of net investment income -- (0.01) -- (0.01) -- (0.01) Distributions from net realized gains -- -- -- 0.00** -- -- Distributions in excess of net realized gains -- 0.00** -- -- -- (0.01) Return of capital -- 0.00** -- (0.21) -- (0.07) ------- ------- ------- ------- ------- ------- Total dividends and distributions (0.02) (0.04) -- (0.31) -- (0.12) ------- ------- ------- ------- ------- ------- Net asset value, end of period $12.71 $10.60 $14.77 $12.73 $14.81 $13.64 ------- ------- ------- ------- ------- ------- TOTAL INVESTMENT RETURN (2) (4) 20.13% 4.63% 16.03% 4.95% 8.58% 4.00% RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) $22,875 $13,776 $11,833 $22,930 $17,783 $28,664 Ratios of expenses to average net assets (3) (5) 1.36% 1.44% 1.55% 1.84% 1.43% 1.68% Ratios of net investment income/(loss) to average net assets (3) (5) 0.53% 0.79% (1.21)% 2.72% (0.70)% 1.00% Portfolio turnover (4)(6) 12.00% 0.00% 2.07% 0.00% 9.92% 0.00% Average commission rate paid $0.0217 -- $0.0126 $0.3956 $0.0236 -- *Commencement of operations. **Less than one cent per share. (DAGGAR) Based on average shares outstanding throughout the period. (1)Net asset value per share on march 12, 1996 (commencement of operations. (2)Total investment return is calculated assuming a purchase of capital stock at net asset value per share on the first day and a sale at the net asset value per share on the last day of the period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at the net asset value per share on the ex-dividend date. (3)Annualized (4)Not Annualized (5)Includes voluntary waivers by the American Stock Exchange. If such waivers had not been made the ratios of expenses to average net assets and ratios of net investment income/(loss) to average net assets would have been as follows: Ratios of expenses to average net assets before waivers (3) 1.37% 1.45% 1.55% 1.85% 1.44% 1.69% Ratios of net investment income/(loss) to average net assets before waivers (3) 0.53% 0.78% (1.21%) 2.71% (0.71)% 0.99% (6)Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
HONG KONG ITALY WEBS WEBS INDEX INDEX SERIES SERIES ---------------------- ---------------------- For the six For the For the six For the months period months period ending 03/12/96*- ending 03/12/96*- 02/28/97 08/31/96 02/28/97 08/31/96 (Unaudited) (Unaudited) --------- --------- --------- --------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $13.05 $12.83(1) $13.79 $13.62(1) ------- ------- ------- ------- Net investment income/(loss) (DAGGAR) 0.09 0.15 (0.08) 0.25 Net realized and unrealized gain/(loss) on investments, foreign currency related transactions, and translation of other assets and liabilities denominated in foreign currencies 1.87 0.27 1.06 0.31 ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations 1.96 0.42 0.98 0.56 ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income (0.11) (0.13) -- (0.14) Dividends in excess of net investment income -- (0.02) -- (0.03) Distributions from net realized gains -- (0.01) -- (0.14) Distributions in excess of net realized gains -- -- -- -- Return of capital -- (0.04) -- (0.08) ------- ------- ------- ------- Total dividends and distributions (0.11) (0.20) -- (0.39) ------- ------- ------- ------- Net asset value, end of period $14.90 $13.05 $14.77 $13.79 ------- ------- ------- ------- TOTAL INVESTMENT RETURN (2) (4) 14.98% 3.22% 7.11% 4.11% RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) $15,658 $7,845 $28,808 $35,170 Ratios of expenses to average net assets (3) (5) 1.51% 1.52% 1.31% 1.43% Ratios of net investment income/(loss) to average net assets (3) (5) 0.92% 2.37% (1.06)% 3.69% Portfolio turnover (4)(6) 14.58% 0.00% 13.46% 19.80% Average commission rate paid $0.0048 $0.0007 $0.0045 $0.0046 *Commencement of operations. **Less than one cent per share. (DAGGAR) Based on average shares outstanding throughout the period. (1)Net asset value per share on march 12, 1996 (commencement of operations. (2)Total investment return is calculated assuming a purchase of capital stock at net asset value per share on the first day and a sale at the net asset value per share on the last day of the period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at the net asset value per share on the ex-dividend date. (3)Annualized (4)Not Annualized (5)Includes voluntary waivers by the American Stock Exchange. If such waivers had not been made the ratios of expenses to average net assets and ratios of net investment income/(loss) to average net assets would have been as follows: Ratios of expenses to average net assets before waivers (3) 1.51% 1.53% 1.31% 1.44% Ratios of net investment income/(loss) to average net assets before waivers (3) 0.91% 2.36% (1.07%) 3.86% (6)Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s). See accompanying notes to financial statements. 50 & 51
FINANCIAL HIGHLIGHTS WEBS INDEX FUND,INC. =================================================================================================================================== (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) JAPAN MALAYSIA MEXICO (FREE) WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ---------------------- ---------------------- ---------------------- For the six For the For the six For the For the six For the months period months period months period ending 03/12/96*- ending 03/12/96*- ending 03/12/96*- 02/28/97 08/31/96 02/28/97 08/31/96 02/28/97 08/31/96 (Unaudited) (Unaudited) (Unaudited) --------- --------- --------- --------- --------- --------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $14.33 $14.79(1) $13.80 $13.24(1) $11.52 $9.95(1) -------- -------- ------- ------ ------ ----- Net investment income/(loss) (DAGGAR) (0.04) (0.07) (0.01) (0.02) (0.05) 0.00** Net realized and unrealized gain/(loss) on investments, foreign currency related transactions, and translation of other assets and liabilities denominated in foreign currencies (2.37) (0.39) 1.87 0.59 1.27 1.59 -------- -------- ------- ------ ------ ----- Net increase/(decrease) in net assets resulting from operations (2.41) (0.46) 1.86 0.57 1.22 1.59 -------- -------- ------- ------ ------ ----- LESS DISTRIBUTIONS Dividends from net investment income -- -- -- -- -- -- Dividends in excess of net investment income -- -- -- -- -- (0.01) Distributions from net realized gains -- -- -- -- -- -- Distributions in excess of net realized gains -- -- -- -- -- -- Return of capital -- -- -- (0.01) -- (0.01) -------- -------- ------- ------ ------ ----- Total dividends and distributions -- -- -- (0.01) -- (0.02) -------- -------- ------- ------ ------ ----- Net asset value, end of period $11.92 $14.33 $15.66 $13.80 $12.74 $11.52 -------- -------- ------- ------ ------ ----- TOTAL INVESTMENT RETURN (2) (4) (16.82)% (3.11)% 13.48% 4.28% 10.59% 15.93% RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) $107,332 $103,164 $22,322 $9,318 $8,919 $5,759 Ratios of expenses to average net assets (3) (5) 1.29% 1.37% 1.43% 1.58% 1.69% 1.75% Ratios of net investment income/(loss) to average net assets (3) (5) (0.61)% (1.01)% (0.25)% (0.35)% (0.79)% 0.01% Portfolio turnover (4) (6) 0.00% 21.54% 0.00% 0.00% 26.39% 0.00% Average commission rate paid $0.0252 $0.0152 -- -- $0.0063 -- *Commencement of operations. **Less than one cent per share. (DAGGAR) Based on average shares outstanding throughout the period. (1)Net asset value per share on march 12, 1996 (commencement of operations. (2)Total investment return is calculated assuming a purchase of capital stock at net asset value per share on the first day and a sale at the net asset value per share on the last day of the period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at the net asset value per share on the ex-dividend date. (3)Annualized (4)Not Annualized (5)Includes voluntary waivers by the American Stock Exchange. If such waivers had not been made the ratios of expenses to average net assets and ratios of net investment income/(loss) to average net assets would have been as follows: Ratios of expenses to average net assets before waivers (3) 1.29% 1.38% 1.43% 1.59% 1.69% 1.76% Ratios of net investment income/(loss) to average net assets before waivers (3) (0.61)% (1.02)% (0.25%) (0.36)% (0.79)% 0.00% (6)Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
NETHERLANDS SINGAPORE (FREE) SPAIN WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ---------------------- ---------------------- ---------------------- For the six For the For the six For the For the six For the months period months period months period ending 03/12/96*- ending 03/12/96*- ending 03/12/96*- 02/28/97 08/31/96 02/28/97 08/31/96 02/28/97 08/31/96 (Unaudited) (Unaudited) (Unaudited) --------- --------- --------- --------- --------- --------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $17.36 $15.91(1) $11.38 $12.24(1) $14.09 $13.28(1) -------- -------- ------- ------ ------ ----- Net investment income/(loss) (DAGGAR) (0.02) 0.24 (0.05) 0.04 0.09 0.14 Net realized and unrealized gain/(loss) on investments, foreign currency related transactions, and translation of other assets and liabilities denominated in foreign currencies 2.85 1.54 0.53 (0.86) 2.57 0.98 -------- -------- ------- ------ ------ ----- Net increase/(decrease) in net assets resulting from operations 2.83 1.78 0.48 (0.82) 2.66 1.12 -------- -------- ------- ------ ------ ----- LESS DISTRIBUTIONS Dividends from net investment income (0.01) (0.14) -- (0.03) 0.00** (0.18) Dividends in excess of net investment income -- (0.01) -- (0.01) -- -- Distributions from net realized gains -- (0.08) -- -- (0.03) (0.13) Distributions in excess of net realized gains -- (0.01) -- -- -- -- Return of capital -- (0.09) -- -- -- -- -------- -------- ------- ------ ------ ----- Total dividends and distributions (0.01) (0.33) -- (0.04) (0.03) (0.31) -------- -------- ------- ------ ------ ----- Net asset value, end of period $20.18 $17.36 $11.86 $11.38 $16.72 $14.09 -------- -------- ------- ------ ------ ----- TOTAL INVESTMENT RETURN (2) (4) 16.33% 11.19% 4.22% (6.73)% 18.88% 8.45% RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) $8,093 $6,962 $15,414 $9,107 $3,761 $4,227 Ratios of expenses to average net assets (3) (5) 1.42% 1.63% 1.48% 1.56% 1.73% 1.76% Ratios of net investment income/(loss) to average net assets (3) (5) (0.19)% 2.93% (0.93)% 0.69% 0.92% 2.04% Portfolio turnover (4) (6) 0.00% 4.32% 15.21% 26.29% 11.15% 4.73% Average commission rate paid $0.0362 $0.0651 $0.0078 $0.0118 $0.0279 $0.0723 *Commencement of operations. **Less than one cent per share. (DAGGAR) Based on average shares outstanding throughout the period. (1)Net asset value per share on march 12, 1996 (commencement of operations. (2)Total investment return is calculated assuming a purchase of capital stock at net asset value per share on the first day and a sale at the net asset value per share on the last day of the period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at the net asset value per share on the ex-dividend date. (3)Annualized (4)Not Annualized (5)Includes voluntary waivers by the American Stock Exchange. If such waivers had not been made the ratios of expenses to average net assets and ratios of net investment income/(loss) to average net assets would have been as follows: Ratios of expenses to average net assets before waivers (3) 1.43% 1.64% 1.49% 1.57% 1.73% 1.77% Ratios of net investment income/(loss) to average net assets before waivers (3) (0.19)% 2.92% (0.93%) 0.68% 0.92% 2.03% (6)Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
SWEDEN SWITZERLAND UNITED KINGDOM WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ---------------------- ---------------------- ---------------------- For the six For the For the six For the For the six For the months period months period months period ending 03/12/96*- ending 03/12/96*- ending 03/12/96*- 02/28/97 08/31/96 02/28/97 08/31/96 02/28/97 08/31/96 (Unaudited) (Unaudited) (Unaudited) --------- --------- --------- --------- --------- --------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $14.67 $13.22(1) $12.29 $12.07(1) $13.15 $12.14(1) -------- -------- ------- ------ ------ ----- Net investment income/(loss) (DAGGAR) (0.12) 0.20 (0.09) 0.08 0.07 0.21 Net realized and unrealized gain/(loss) on investments, foreign currency related transactions, and translation of other assets and liabilities denominated in foreign currencies 2.62 1.67 0.03 0.24 1.99 1.06 -------- -------- ------- ------ ------ ----- Net increase/(decrease) in net assets resulting from operations 2.50 1.87 (0.06) 0.32 2.06 1.27 -------- -------- ------- ------ ------ ----- LESS DISTRIBUTIONS Dividends from net investment income (0.01) (0.23) -- (0.10) (0.07) (0.20) Dividends in excess of net investment income -- (0.07) -- -- -- (0.03) Distributions from net realized gains (0.01) (0.12) -- -- (0.01) 0.00** Distributions in excess of net realized gains -- -- -- -- -- -- Return of capital -- -- -- -- -- (0.03) -------- -------- ------- ------ ------ ----- Total dividends and distributions (0.02) (0.42) -- (0.10) (0.08) (0.26) -------- -------- ------- ------ ------ ----- Net asset value, end of period $17.15 $14.67 $12.23 $12.29 $15.13 $13.15 -------- -------- ------- ------ ------ ----- TOTAL INVESTMENT RETURN (2) (4) 17.04% 14.13% (0.49)% 2.60% 15.64% 10.41% RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) $5,145 $4,400 $7,654 $6,158 $24,228 $15,790 Ratios of expenses to average net assets (3) (5) 1.58% 1.75% 1.69% 1.82% 1.40% 1.61% Ratios of net investment income/(loss) to average net assets (3) (5) (1.48)% 3.05% (1.51)% 1.39% 0.84% 3.62% Portfolio turnover (4) (6) 0.00% 5.87% 24.13% 17.06% 0.00% 0.00% Average commission rate paid $0.0544 $0.0561 $0.7702 $0.7852 $0.0091 -- *Commencement of operations. **Less than one cent per share. (DAGGAR) Based on average shares outstanding throughout the period. (1)Net asset value per share on march 12, 1996 (commencement of operations. (2)Total investment return is calculated assuming a purchase of capital stock at net asset value per share on the first day and a sale at the net asset value per share on the last day of the period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at the net asset value per share on the ex-dividend date. (3)Annualized (4)Not Annualized (5)Includes voluntary waivers by the American Stock Exchange. If such waivers had not been made the ratios of expenses to average net assets and ratios of net investment income/(loss) to average net assets would have been as follows: Ratios of expenses to average net assets before waivers (3) 1.58% 1.76% 1.70% 1.83% 1.40% 1.62% Ratios of net investment income/(loss) to average net assets before waivers (3) (1.49)% 3.04% (1.51%) 1.38% 0.83% 3.61% (6)Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
See accompanying notes to financial statements. 52 & 53 NOTES TO FINANCIAL STATEMENTS (Unaudited) ================================================================================ GENERAL WEBS Index Fund, Inc. (the "Fund") was incorporated under the laws of the State of Maryland on September 1, 1994, and commenced operations on March 12, 1996. The Fund is registered under the Investment Company Act of 1940, as amended, (the "Act") as an open end management investment company. On January 2, 1997, the name of the Fund was changed from Foreign Fund, Inc. to WEBS Index Fund, Inc. The shares of common stock of each WEBS Index Series are referred to as "World Equity Benchmark Shares" or "WEBS" and are traded on the American Stock Exchange, Inc. (the "AMEX") under the following symbols: WEBS INDEX SERIES SYMBOL ---------------------- -------- Australia WEBS Index Series EWA Austria WEBS Index Series EWO Belgium WEBS Index Series EWK Canada WEBS Index Series EWC France WEBS Index Series EWQ Germany WEBS Index Series EWG Hong Kong WEBS Index Series EWH Italy WEBS Index Series EWI Japan WEBS Index Series EWJ Malaysia WEBS Index Series EWM Mexico (Free) WEBS Index Series EWW Netherlands WEBS Index Series EWN Singapore (Free) WEBS Index Series EWS Spain WEBS Index Series EWP Sweden WEBS Index Series EWD Switzerland WEBS Index Series EWL United Kingdom WEBS Index Series EWU The investment objective of each of the WEBS Index Series is to seek to provide investment results that correspond generally to the price and yield performance of publicly traded securities in the aggregate in particular markets, as represented by a particular foreign equity securities index compiled by Morgan Stanley Capital International ("MSCI"). The MSCI Indices utilized by the Fund reflect the reinvestment of net dividends (except for the MSCI Mexico (Free) Index utilized by the Mexico (Free) WEBS Index Series, which reflects the reinvestment of gross dividends). Effective June 2, 1997 the Malaysia WEBS Index Series will be renamed the Malaysia (Free) Webs Index Series and will seek to track the performance of the MSCI Malaysia (Free) Index, which becomes available on that date. Each WEBS Index Series of the Fund utilizes a "passive" or indexing investment approach in an effort to approximate the investment performance of its benchmark index through the use of quantitative analytical procedures. The Fund issues and redeems WEBS of each WEBS Index Series only in aggregations of a specified number of shares (each, a "Creation Unit") at net asset value. Except when aggregated in Creation Units, WEBS are not redeemable securities of a WEBS Index Series. It is expected that the non-redeemable WEBS will trade on the AMEX during the day at prices that differ to some degree from their net asset value. The Depository Trust Company ("DTC") acts as the securities depository for the WEBS. WEBS are represented by global securities, registered in the name of DTC or its nominee and deposited with, or on behalf of, DTC. Each of the Canada WEBS Index Series, the France WEBS Index Series, the Japan WEBS Index Series and the United Kingdom WEBS Index Series is classified as a "diversified" investment company under the Act. Each of the other WEBS Index Series is classified as a "non-diversified" investment company under the Act. The WEBS Index Series had no operations prior to their commencement of operations on March 12, 1996, other than the sale of the following WEBS Index Series shares to Funds Distributor, Inc. (the "Distributor") for the noted amounts: Australia WEBS Index Series - 30 shares for proceeds of $305; Austria WEBS Index Series - 30 shares for proceeds of $335; Belgium WEBS Index Series - 30 shares for proceeds of $455; Canada WEBS Index Series - 30 shares for proceeds of $303; France WEBS Index Series - 1,000 shares for proceeds of $12,820; Germany WEBS Index Series - 1,000 shares for proceeds of $13,620; Hong Kong WEBS Index Series - 1,000 shares for proceeds of $13,410; Italy WEBS Index Series - 30 shares for proceeds of $426; Japan WEBS Index Series - 1,000 shares for proceeds of $14,920; Malaysia WEBS Index Series - 30 shares for proceeds of $400; Mexico (Free) WEBS Index Series - 30 shares for proceeds of $287; Netherlands WEBS Index Series - 1,000 shares for proceeds of $15,950; Singapore (Free) WEBS Index Series - 30 shares for proceeds of $386; Spain WEBS Index Series - 30 shares for proceeds of $429; Sweden WEBS Index Series - 30 shares for proceeds of $429; Switzerland WEBS Index Series - 1,000 shares for proceeds of $13,190 and United Kingdom WEBS Index Series - 1,000 shares for proceeds of $12,440. 54 WEBS INDEX FUNDS, INC. ================================================================================ SIGNIFICANT ACCOUNTING POLICIES Each WEBS Index Series' financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management estimates and assumptions. Actual results could differ from those estimates. PORTFOLIO VALUATION Investments are stated at value. All securities for which market quotations are readily available are valued at (i) the last sales price prior to the time of determination, if there was a sale on the date of determination, (ii) at the mean between the last current bid and asked prices if there was no sales price on such date and bid and asked quotations are available, or (iii) at the bid price if there was no sales price on such date and only bid quotations are available. Securities that are traded over-the-counter are valued at the last quoted bid price. Securities for which market values are not readily available are carried at fair value as determined in good faith by the Adviser in accordance with procedures adopted by the Fund's Board of Directors. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME Investment transactions are accounted for on trade date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. Interest income is recorded on the accrual basis; dividend income is recorded on the ex-dividend date. TAX STATUS No provision is made for U.S. Federal income or excise taxes as it is each WEBS Index Series' intention to qualify as a regulated investment company and to make the requisite distributions to its shareholders which will be sufficient to relieve it from all or substantially all Federal income and excise taxes. Each WEBS Index Series' realized net foreign exchange losses and realized net capital losses incurred since the commencement of operations through August 31, 1996 will be deemed to arise on the first business day of Fiscal 1997. Each WEBS Index Series incurred and will elect to defer such losses as follows:
FOREIGN EXCHANGE NET REALIZED CAPITAL INDEX SERIES LOSSES LOSSES ------------ ------------------ -------------------- Australia WEBS Index Series $1,056 -- Austria WEBS Index Series $ 194 -- Belgium WEBS Index Series -- -- Canada WEBS Index Series -- -- France WEBS Index Series -- -- Germany WEBS Index Series -- -- Hong Kong WEBS Index Series $ 8 -- Italy WEBS Index Series -- -- Japan WEBS Index Series $6,564 -- Malaysia WEBS Index Series $ 7 -- Mexico (Free) WEBS Index Series $ 165 -- Netherlands WEBS Index Series $ 188 -- Singapore (Free) WEBS Index Series -- $11,989 Spain WEBS Index Series -- -- Sweden WEBS Index Series -- -- Switzerland WEBS Index Series $ 67 $15,017 United Kingdom WEBS Index Series -- --
If any WEBS Index Series owns shares in certain foreign investment entities, referred to, under U.S. tax law principles, as "passive foreign investment companies", the WEBS Index Series may elect to mark-to-market annually the shares of the passive foreign investment company, and would be required to distribute to shareholders any such mark-to-market gains. FOREIGN CURRENCY TRANSLATION The books and records of the WEBS Index Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis: (i) Market value of investment securities, assets and liabilities at the prevailing rates of exchange on the valuation date; and (ii) Purchases and sales of investment securities and investment income at the relevant rates of exchange prevailing on the respective dates of such transactions. 55 NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) ================================================================================ Foreign currency and assets and liabilities denominated in foreign currency are converted into U.S. dollars using the same exchange rates utilized by MSCI in the calculation of the relevant MSCI Indices (currently, exchange rates as of 4:00 p.m. London time, except that the exchange rate for the MSCI Mexico (Free) WEBS Index is that as of 3:00 p.m. New York City time). The WEBS Index Series generally do not isolate the effect of fluctuations in foreign exchange rates from the effect of fluctuations in the market prices of securities. The WEBS Index Series report certain foreign exchange realized gains and losses on foreign currency related transactions as components of realized gains and losses for financial reporting purposes, whereas such components are treated as ordinary income for Federal income tax purposes. Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the level of governmental supervision and regulation of foreign securities markets and the possibility of political or economic instability, and the fact that foreign securities markets may be smaller, less developed and have less reliable settlement and share registration procedures. DISTRIBUTION OF INCOME AND GAINS Each WEBS Index Series intends to distribute, at least annually, to shareholders, substantially all of its net investment income, including net foreign currency gains, if any, and any realized net capital gains after the utilization of available capital loss carryovers. An additional distribution may be made to the extent necessary to avoid payment of a 4% Federal excise tax. In addition, each WEBS Index Series intends to distribute at least annually amounts representing the dividend yield on the underlying portfolio securities of each WEBS Index Series, net of expenses, as if such WEBS Index Series owned such underlying portfolio securities for the entire dividend period. As a result, some portion of each distribution may result in a return of capital. Dividends and distributions are paid in U.S. dollars and cannot be automatically reinvested in additional WEBS. Distributions to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized gains are determined in accordance with U.S. tax law principles, which may differ from generally accepted accounting principles. These book/tax differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within each WEBS Index Series' capital accounts based on their Federal tax treatment. Dividends and distributions which exceed net investment income and realized net capital gains for financial reporting purposes but not for tax purposes are reported as distributions in excess of net investment income and realized net capital gains. To the extent they exceed net investment income and net realized gains for tax purposes, they are reported as return of capital distributions. ORGANIZATION COSTS A portion of the costs of organizing the Fund and registering its shares were paid by Morgan Stanley & Co. Incorporated ("Morgan Stanley") and will be reimbursed by each WEBS Index Series. These organization costs were allocated to each WEBS Index Series based on the net assets of each WEBS Index Series. Such organization costs have been deferred and are amortized ratably on the reverse sum of the years digits method over a period of sixty months from the commencement of operations. The amounts of deferred organization costs payable to Morgan Stanley at February 28, 1997 are as follows: INDEX SERIES ------------- Austria WEBS Index Series $49,058 If any of the shares initially issued to the Distributor are redeemed before the end of the amortization period, the proceeds of the redemption will be reduced by their pro rata share of the unamortized organization costs. The pro rata share by which the proceeds are reduced is derived by dividing the number of original shares redeemed by the total number of original shares outstanding at the time of redemption. FEE ARRANGEMENTS The Fund has an Investment Management Agreement (the "Management Agreement") with Barclays Global Fund Advisors (the "Adviser"). The Adviser manages the investments of each of the WEBS Index Series. For its services to each WEBS Index Series, the Adviser receives fees based on the Fund's aggregate average daily net assets equal to .27% per annum up to aggregate net assets of $1.7 billion; plus .15% per annum of the aggregate net assets between $1.7 billion and $7 billion; plus .12% per annum of the aggregate net assets between $7 billion and $10 billion; plus .08% per annum of the aggregate net assets in excess of $10 billion. The Fund has an Administration and Accounting Services Agreement with PFPC Inc. ("PFPC" or the "Administrator"). Under the Administration and Accounting Services Agreement, PFPC assists in supervising the operations of each WEBS Index Series. For its administrative services and Fund accounting services, PFPC is paid aggregate fees equal to each WEBS Index Series' allocable portion of: .10% per annum of the aggregate average daily net assets less than $3 billion, plus .09% per annum of the aggregate net assets between $3 billion and $5 billion, plus .08% per annum of the aggregate net assets between $5 billion and $7.5 billion, plus .065% per annum of the aggregate net assets between $7.5 billion and $10 billion, plus .05% per annum of the aggregate net assets in excess of $10 billion ("Standard Fee Schedule"). 56 WEBS INDEX FUNDS, INC. ================================================================================ Pursuant to a revised fee schedule with the Fund, PFPC will charge an annual minimum fee of $850,000 for year one, $1,275,000 for year two, and $1,700,000 for year three and thereafter (based on an annual minimum of $50,000, $75,000 and $100,000 per WEBS Index Series, respectively). PFPC caps its minimum fees at the annual rate of .17% of average daily net assets. Any resulting shortfall between the above required minimums and the asset based fee of .17% will be recouped as the WEBS Index Series' asset levels reach the threshold to permit such recovery of fees. Once the aggregate minimum fees are recouped, the Standard Fee Schedule, including minimum fee rates, would apply, subject to the maximum charge of .17% of average daily net assets and future recoupment of any future deferred minimum fees. For the period from March 12, 1996 through February 28, 1997, the deferred PFPC administration fee amounted to $429,749. Such amount is a contingent liability of the Fund, which will be accrued as an expense of the Fund at such time (if ever) when net assets reach such a level that repayment of the deferred amount or a portion there of is both probable and reasonably estimatable. PNC Bank, N.A., an affiliate of the Administrator, serves as each WEBS Index Series' Transfer Agent and Dividend Disbursement Agent. The Fund has a Licensing Agreement with MSCI for the use of the relevant MSCI Indices. Each WEBS Index Series pays a license fee equal to .03% per annum of the aggregate net assets of each of such WEBS Index Series. The Fund has adopted a Distribution Plan, pursuant to Rule 12b-1 under the Act ("Rule 12b-1 Plan") with respect to each WEBS Index Series. Under the Rule 12b-1 Plan, the Distributor is paid an annual fee as compensation in connection with the offering and sale of shares of each WEBS Index Series. The fee paid to the Distributor under the Rule 12b-1 Plan is accrued daily and paid monthly with respect to each WEBS Index Series at an annual rate of up to .25% of the average daily net assets of such WEBS Index Series. From time to time the Distributor may waive all or a portion of the fee. Morgan Stanley Trust Company ("MSTC") serves as custodian as well as the Securities Lending Agent to each of the WEBS Index Series. For its custody services to each WEBS Index Series, MSTC is paid per annum fees based on the aggregate net assets of the WEBS Index Series as follows: Australia WEBS Index Series (.10%); Austria WEBS Index Series (.10%); Belgium WEBS Index Series (.10%); Canada WEBS Index Series (.07%); France WEBS Index Series (.11%); Germany WEBS Index Series (.10%); Hong Kong WEBS Index Series (.12%); Italy WEBS Index Series (.09%); Japan WEBS Index Series (.07%); Malaysia WEBS Index Series (.13%); Mexico (Free) WEBS Index Series (.25%); Netherlands WEBS Index Series (.10%); Singapore (Free) WEBS Index Series (.10%); Spain WEBS Index Series (.10%); Sweden WEBS Index Series (.10%); Switzerland WEBS Index Series (.10%); and United Kingdom WEBS Index Series (.08%). MSTC also receives certain fees for each transaction of the WEBS Index Series. The AMEX has agreed to voluntarily waive its annual listing fee through December 31,1996. The Fund pays each director who is not a director, officer or employee of the Adviser, Administrator, Distributor or any affiliate thereof, an annual fee of $20,000 plus $5,000 for each Board of Directors meeting attended. In addition, the Fund reimburses the directors for travel and out-of-pocket expenses incurred in connection with the Board of Directors meetings. FOREIGN CURRENCY At February 28, 1997, each WEBS Index Series' cash balance included the following amount of foreign currency: VALUE COST ------ ------ Australia WEBS Index Series $ 69,383 $ 69,297 Austria WEBS Index Series $ 1,177 $ 1,177 Belgium WEBS Index Series $ 5,576 $ 5,572 Canada WEBS Index Series $ 17,496 $ 17,600 France WEBS Index Series $ 655 $ 661 Germany WEBS Index Series $117,836 $122,041 Hong Kong WEBS Index Series $ 5,352 $ 5,352 Italy WEBS Index Series $134,748 $148,838 Japan WEBS Index Series $ 2,283 $ 2,331 Malaysia WEBS Index Series $ 12,988 $ 12,987 Mexico (Free) WEBS Index Series $ 7,704 $ 7,797 Netherlands WEBS Index Series $121,440 $129,717 Singapore (Free) WEBS Index Series $ 9,702 $ 9,854 Spain WEBS Index Series $447,671 $447,671 Sweden WEBS Index Series $140,004 $140,527 Switzerland WEBS Index Series $ 313 $ 312 United Kingdom WEBS Index Series $ 69,965 $ 70,429 57 NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONTINUED) ================================================================================ STOCK LOAN Each WEBS Index Series may lend securities from its portfolio to brokers, dealers and other financial institutions. Because the collateral pledged to each WEBS Index Series in connection with these loans generates income, securities lending enables a WEBS Index Series to earn income that may partially offset the expenses of the WEBS Index Series. Each WEBS Index Series receives collateral equal to at least 100% of the current market value of the loaned securities. The WEBS Index Series invests collateral in short-term investments, and bears the risk of loss of the invested collateral. In addition, a WEBS Index Series is exposed to the risk of loss should a borrower default on its obligation to return the borrowed securities. For its services as the securities lending agent, the Fund pays MSTC, in respect of each WEBS Index Series, 50% of the net investment income earned on the collateral for securities loaned. The market values of securities on loan to broker/dealers at February 28, 1997, and the collateral received with respect to such loans were as follows: MARKET VALUE OF COLLATERAL WEBS INDEX SERIES LOANED SECURITIES RECEIVED ------------------ ------------------ ------------- Australia WEBS Index Series $ 3,686,064 $ 3,926,419 Austria WEBS Index Series $ -- $ -- Belgium WEBS Index Series $ 815,436 $ 859,554 Canada WEBS Index Series $ -- $ -- France WEBS Index Series $ 2,816,729 $ 2,985,689 Germany WEBS Index Series $ 5,251,041 $ 5,557,125 Hong Kong WEBS Index Series $ 3,160,233 $ 3,599,438 Italy WEBS Index Series $ 9,520,151 $10,549,283 Japan WEBS Index Series $18,767,860 $20,037,812 Malaysia WEBS Index Series $ 5,842,876 $ 6,327,950 Mexico (Free) WEBS Index Series $ 1,153,250 $ 1,244,700 Netherlands WEBS Index Series $ 2,393,999 $ 2,541,820 Singapore (Free) WEBS Index Series $ 1,805,621 $ 2,021,350 Spain WEBS Index Series $ 739,602 $ 785,844 Sweden WEBS Index Series $ 1,244,699 $ 1,314,625 Switzerland WEBS Index Series $ 1,315,107 $ 1,388,754 United Kingdom WEBS Index Series $ -- $ -- CAPITAL SHARES The Fund currently is authorized to issue 6 billion shares of common stock, with the following number of shares allocated to each Index Series: Australia WEBS Index Series (127.8 million shares); Austria WEBS Index Series (19.8 million shares); Belgium WEBS Index Series (136.2 million shares); Canada WEBS Index Series (340.2 million shares); France WEBS Index Series (340.2 million shares); Germany WEBS Index Series (382.2 million shares); Hong Kong WEBS Index Series (191.4 million shares); Italy WEBS Index Series (63.6 million shares); Japan WEBS Index Series (2,124.6 million shares); Malaysia WEBS Index Series (127.8 million shares); Mexico (Free) WEBS Index Series (255 million shares); Netherlands WEBS Index Series (255 million shares); Singapore (Free) WEBS Index Series (191.4 million shares); Spain WEBS Index Series (127.8 million shares); Sweden WEBS Index Series (63.6 million shares); Switzerland WEBS Index Series (318.625 million shares); and United Kingdom WEBS Index Series (943.2 million shares). The shares will not be issued or redeemed individually, but only in specified aggregations of shares. The consideration for purchase of a Creation Unit of a WEBS Index Series is the in-kind deposit of a designated portfolio of equity securities constituting an optimized representation of the corresponding MSCI Index (the "Basket Securities") and an amount of cash (the "Cash Component"). Such in-kind deposit is designated as the "liability for in-kind subscriptions" on the Statements of Assets and Liabilities. Non-Basket Securities may be held by an Index Series as a result of corporate actions, odd share lots, or as a result of rebalancing of the Basket Securities. Shares of each WEBS Index Series are offered in Creation Units at net asset value without an initial sales load, in exchange for an in-kind deposit of a designated portfolio of securities specified by the Distributor each day, plus a specified amount of cash and a purchase transaction fee. Shares of each WEBS Index Series may also be issued in the specified aggregations for cash in the sole discretion of the Fund. Redemptions of the shares of each WEBS Index Series in the specified aggregations are made in portfolio securities, plus or minus a specified amount of cash, and minus a specified redemption transaction fee. Shares of each WEBS Index Series may also be redeemed in the specified aggregations for cash in the sole discretion of the Fund. 58 WEBS INDEX FUNDS, INC. ================================================================================ LOAN AGREEMENT Effective August 26, 1996, each of the WEBS Index Series has entered into a Line of Credit Agreement ("Agreement") with PNC Bank, N.A., an affiliate of the Administrator. Under the terms of the Agreement, any of the WEBS Index Series may request an advance of the full amount of the $5,000,000 line of credit; provided, however, that: (i) Total outstanding advances to all WEBS Index Series under the line of credit may not exceed $5,000,000 and (ii) The aggregate amount outstanding under the line of credit to any one WEBS Index Series may not exceed the lowest of (a) $5,000,000 (b) one-quarter of that WEBS Index Series' net assets, (c) any lower leverage limit set forth in the Fund's prospectus or (d) the maximum amount permitted to be borrowed by such WEBS Index Series under the Act. Each WEBS Index Series shall be severally, and not jointly, liable for its particular advances under the line. Advances made under the line of credit are due and payable on demand and will bear interest at a rate per annum equal to the sum of the Federal Funds Rate plus 1%. The WEBS Index Series had no amount outstanding under the Agreement at February 28, 1997. Average borrowings under the line of credit did not exceed 10% of net assets of any of the above WEBS Index Series during the period ended February 28, 1997. PORTFOLIO ACTIVITY The WEBS Index Series' purchases and sales of securities (excluding in-kind transactions), other than short-term obligations, were as follows, for the period ended February 28, 1997: PURCHASES OF SALES OF WEBS INDEX SERIES SECURITIES SECURITIES -------------------- ------------- ---------- Australia WEBS Index Series $ -- $ 106,645 Austria WEBS Index Series $ 585,240 $ 674,613 Belgium WEBS Index Series $ 274,552 $ 373,672 Canada WEBS Index Series $2,433,980 $2,372,526 France WEBS Index Series $ 250,733 $ 496,892 Germany WEBS Index Series $1,716,629 $2,022,777 Hong Kong WEBS Index Series $1,532,715 $1,603,249 Italy WEBS Index Series $3,959,792 $4,092,756 Japan WEBS Index Series $ -- $ 404,757 Malaysia WEBS Index Series $ -- $ 1,977 Mexico (Free) WEBS Index Series $2,058,689 $1,940,255 Netherlands WEBS Index Series $ -- $ 48,286 Singapore (Free) WEBS Index Series $1,732,752 $1,613,496 Spain WEBS Index Series $ 439,636 $ 470,555 Sweden WEBS Index Series $ -- $ 304,462 Switzerland WEBS Index Series $1,494,215 $1,606,306 United Kingdom WEBS Index Series $ -- $ 184,831 59 NOTES TO FINANCIAL STATEMENTS (Unaudited) (CONCLUDED) ================================================================================ FOREIGN INCOME TAXES For the period ended February 28, 1997, each WEBS Index Series' net foreign withholding taxes deducted from foreign dividends received were as follows: FOREIGN WITHOLDING INDEX SERIES TAX ------------- ------------ Australia WEBS Index Series $ 7,464 Austria WEBS Index Series $ 270 Belgium WEBS Index Series $ 222 Canada WEBS Index Series $34,223 France WEBS Index Series $ 2,722 Germany WEBS Index Series $ 5,227 Hong Kong WEBS Index Series $ -- Italy WEBS Index Series $ 2,447 Japan WEBS Index Series $48,767 Malaysia WEBS Index Series $31,361 Mexico (Free) WEBS Index Series $ -- Netherlands WEBS Index Series $ 7,544 Singapore (Free) WEBS Index Series $ -- Spain WEBS Index Series $ 8,974 Sweden WEBS Index Series $ -- Switzerland WEBS Index Series $ 690 United Kingdom WEBS Index Series $32,376 MARKET AND PORTFOLIO RISKS An investment in the WEBS of a WEBS Index Series involves risks similar to those of investing in a broadly-based portfolio of equity securities traded on exchanges in the relevant foreign securities market, such as market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in stock prices. Investing in WEBS generally involves certain risks and considerations not typically associated with investing in a fund that invests in the securities of U.S. issuers. These risks could include less liquid and less efficient securities markets; greater price volatility; exchange rate fluctuations and exchange controls; less publicly available information about issuers; the imposition of withholding or other taxes; restrictions on the expatriation of funds or other assets of a WEBS Index Series; higher transaction and custody costs; delays in settlement; difficulties in enforcing contractual obligations; less liquidity and smaller market capitalization of most non-U.S. securities markets; lower levels of regulation of the securities markets; different accounting, disclosure and reporting requirements; more substantial government involvement in the economy; higher rates of inflation; greater social, economic, and political uncertainty and the risk of nationalization or expropriation of assets and risk of war. Each WEBS Index Series has a policy to concentrate its investments in an industry or industries if, and to the extent that, its benchmark index concentrates in such industry or industries, except where the concentration of the relevant index is the result of a single stock. As a result of this policy, a WEBS Index Series will maintain at least 25% of the value of its assets in securities of issuers in each industry for which its benchmark index has a concentration of more than 25% (except where the concentration of the index is the result of a single stock). The stocks of particular issuers, or of issuers in particular industries, may dominate the benchmark indices of certain WEBS Index Series and, consequently, the investment portfolios of such WEBS Index Series may adversely affect the peformance of such WEBS Index Series or subject such WEBS Index Series to greater price volatility than that experienced by more diversified investment companies. -----END PRIVACY-ENHANCED MESSAGE-----