-----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, N9OSzWw8a9PClDkdicdfnM4zLcbYDQdpaFAOK8dCb+OR5vjOkZZFtLh9VaqKNxCb ZZ4ARG76BMP3QC+xD2DIFA== 0000935069-98-000066.txt : 19980504 0000935069-98-000066.hdr.sgml : 19980504 ACCESSION NUMBER: 0000935069-98-000066 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980430 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: SEC FILE NUMBER: 811-09102 FILM NUMBER: 98604995 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 1998 SEMI-ANNUAL REPORT WORLD EQUITY BENCHMARK SHARES [GRAPHIC OMITTED] FEBRUARY 28, [GRAPHIC OMITTED] 1 9 9 8 SEMI-ANNUAL REPORT WEBS INDEX FUND, INC. WEBS INDEX FUND, INC. ================================================================================ Dear Shareholder, We are pleased to present this semi-annual report for WEBS Index Fund, Inc. for the period September 1, 1997 through February 28, 1998. It contains important information about the performance of your investment, a management's discussion and analysis from the Investment Adviser, Barclays Global Fund Advisors, and other financial information for your review. As you are aware, each of the 17 WEBS Index Series seeks to track the investment performance of a specific country's equity market, as measured by a Morgan Stanley Capital International (MSCI) country index. This report contains information about the tracking of each WEBS Index Series vis-a-vis its benchmark MSCI country index. INCREASED LEVEL OF INVESTOR ACCEPTANCE We are very pleased to advise that the use of WEBS as an efficient vehicle for investing in selected international equity markets is being recognized by an increasing number of investors. Assets of the seventeen WEBS Index Series, in the aggregate, have grown to $721.6 million as of February 28, 1998 -- an increase of 53.01% since August 31, 1997 and 126.6% from the level one year ago. The total number of shares outstanding for all seventeen WEBS Index Series has increased by 80.8% in the six month period ended February 28, 1998 (from 35.5 million shares at August 31, 1997 to 64.2 million shares). Similarly, for the one year period ended February 28, 1998 the number of shares outstanding has increased by 167.5% (24.0 million shares vs. 64.2 million shares). This increase in the number of outstanding shares is generally indicative of an enhancement in market liquidity (i.e., the ability for shareholders to purchase and sell shares when they desire to do so). The significant growth in assets and shares outstanding is confirmation that WEBS are rapidly becoming an international investment vehicle of choice for many investors. PRICE/VALUE STABILITY The unique structure of the WEBS Index Series continues to result in share prices that remain close to their 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 seventeen WEBS Index Series traded on the AMEX at an average end-of-day market price of only 5 cents per share over/under their underlying net asset values for the year ended February 28, 1998. The largest average end-of-day spread, for the Malaysia (Free) WEBS Index Series, was 1.71%. PERFORMANCE HIGHLIGHTS Many Asian markets suffered significant declines during the six month period ending February 28, 1998 and the performance of the Asian WEBS Index Series reflected the declines in their respective markets. However, there were a number of WEBS Index Series that produced very positive total NAV returns, in U.S. dollar terms, for the six month period ended February 28, 1998. Some examples: WEBS Index Series 6 months ----------------- -------- Spain ............................................ 35.7% Italy ............................................ 34.3% Switzerland ...................................... 26.3% United Kingdom ................................... 21.0% Netherlands ...................................... 18.1% Germany .......................................... 17.0% While past performance is not an indication of future performance, one can see that the past year has been rewarding for many investors who believe in international diversification. CONCLUSION WEBS continue to attract attention from the media and retail and institutional investors. For many, WEBS represent an easy, relatively inexpensive way to access any of 17 selected international equity markets. We hope you will continue to use the various WEBS Index Series in your portfolio and wish to thank you for your continued support and confidence in WEBS Index Fund, Inc. Sincerely, [/S/ Nathan Most] Nathan Most Chairman and President WEBS Index Fund, Inc. 1 ================================================================================ INTRODUCTION The Investment Adviser for each WEBS Index Series is Barclays Global Fund Advisors. Each WEBS Index Series generally holds a representative sample of the securities in a corresponding MSCI Index (using an analytic technique known as "portfolio sampling"), as opposed to a full replication of the corresponding MSCI Index. Certain WEBS Index Series may also invest to a limited extent in stocks that are not included in the relevant MSCI Index to permit them additional flexibility to comply with diversification and other regulatory requirements. Portfolio sampling is a highly disciplined approach to capturing index returns which 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 or market analysis. There are several important factors that should be kept in mind when reviewing the performance of each WEBS Index Series. First, the MSCI indices are unmanaged and, therefore, do not bear management, administration, distribution, transaction or other expenses, while the WEBS Index Series do incur such expenses, thereby impacting the performance of the WEBS Index Series. Second, because of the portfolio sampling approach discussed above, and the regulatory and other constraints imposed on its use (such as limits on investing in particular stocks imposed by the Internal Revenue Code ("IRC") and the need to comply with the Fund's concentration policy), the portfolio composition of each WEBS Index Series will vary from that of its benchmark MSCI Index. This may cause performance to vary positively or negatively from that of its corresponding MSCI Index during any period. For example, each WEBS Index Series must comply with the asset diversification tests of Subchapter M of the IRC at the end of each quarter of its taxable year. One of these tests generally requires that not more than 25% of the value of a WEBS Index Series' total assets may be invested in the securities of one single issuer (the "Single Issuer Rule"). Another test generally precludes a WEBS Index Series, with respect to 50% of the value of its total assets, from having more than 5% of the value of its total assets invested in the securities of any one issuer (the "5/50 Rule"). A third factor that causes performance of the WEBS Index Series to differ from that of their respective MSCI Indices is "revenue differential." The dividend revenues received by the WEBS Index Series differ from those of the MSCI Indices both in amount (principally as a result of the portfolio sampling techniques described above) and timing (the WEBS Index Series record dividend revenues on the "ex" dates of the underlying stocks while the MSCI Indices allocate annual dividend revenues evenly over a 12-month period). Also, the Australia, Austria and Germany WEBS Index Series are subject to withholding taxes at rates that are more favorable than the rates assumed by the benchmark MSCI Indices, and this factor may affect the relative performance of such WEBS Index Series. In addition, while the sole source of revenues for the MSCI Indices is dividends, the WEBS Index Series receive interest on uninvested cash and, in the case of most WEBS Index Series, revenues from the lending of portfolio securities. Another factor that affects the relative performance of the WEBS Index Series compared to their respective benchmark indices is known as "cash drag". "Cash drag" refers to the portion of a WEBS Index Series that is not invested in stocks. Cash and deferred organizational expenses are the principal "unequitized" assets of the WEBS Index Series. In contrast, the MSCI Indices are always invested in underlying stocks and thus do not reflect any "unequitized" assets. 2 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ AUSTRALIA PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Australia WEBS Index Series was (2.15)%. The corresponding MSCI Index total return for the period was (1.00)%. The Australia WEBS Index Series under-performed the MSCI Australia Index total return by 1.15% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE AUSTRALIA WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Australia WEBS Index Series under-performed the MSCI Australia Index principally due to portfolio sampling. As a result of the Fund's need to comply with the 5/50 Rule, the Australia WEBS Index Series was underweight in the broadcasting and publishing sectors, which significantly outperformed the benchmark with a combined return of approximately 44%. The impact of expenses, revenue differential, and cash drag had smaller, negative effects on performance. WHAT MARKET CONDITIONS AFFECTED THE AUSTRALIA WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Economic activity in Australia grew moderately in late 1997 and early 1998. The "Asian flu" has yet to leave its mark fully on the Australian economy. Consumer spending was strong, due to the current low interest rate environment and rising consumer confidence. Inflation remained in check, and interest-rate sensitive sectors, such as housing continued to benefit from favorable monetary policy developments. Despite the new right-of-center liberal national coalition elected to power in March of 1996, unemployment remains at 8.6% as growth remains below the 4% pace needed to cut the jobless rate. Full-time employment is up sharply. Resource companies that export commodities such as coal, natural gas, and minerals have suffered due to the weakened Australian dollar, which hit a 3 1/2-year low against the U.S. dollar in October of 1997. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE AUSTRALIA WEBS INDEX SERIES VS. THE MSCI AUSTRALIA INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Australia MSCI WEBS Index Australia Series Index 03/12/96 10,000 10,000 05/31/96 10,523 10,588 08/31/96 10,388 10,383 11/30/96 11,238 11,232 02/28/97 11,048 11,054 05/31/97 11,545 11,519 08/31/97 11,035 10,990 11/30/97 9,862 9,750 02/28/98 10,799 10,880 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Australia WEBS Index Series $10,799* MSCI Australia Index $10,880 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------- --------- Australia WEBS Index Series (2.26)% 3.98% MSCI Australia Index (1.58)% 4.37% - ------------------ * 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. 3 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ AUSTRIA PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Austria WEBS Index Series was 7.9%. The corresponding MSCI Index total return for the period was 15.97%. The Austria WEBS Index Series under-performed the MSCI Austria Index total return by 8.07% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE AUSTRIA WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Austria WEBS Index Series under-performed the MSCI Austria Index for several reasons, principally portfolio sampling, revenue differential, the impact of expenses and cash drag. The need to comply with the Single Issuer Rule caused the Austria WEBS Index Series to be underweight compared to the Index by 7.7% in the Bank of Austria, which posted a 50% return for the six month period. This difference in portfolio composition was the predominant reason for the underperformance of the Austria WEBS Index Series. WHAT MARKET CONDITIONS AFFECTED THE AUSTRIA WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Austria experienced a strong export-led recovery that helped offset the deflationary effects of recent budget cuts, made in large degree to comply with the Maastricht Treaty. The continued effort to privatize Austrian industry has also improved Austria's fiscal health. The export sector, strengthened by a favorable exchange rate and robust growth in both western and central Europe, stimulated increased business investment and, consequently, boosted consumer confidence. Accompanied by a stable price climate and a slow tightening of monetary conditions, the Austrian economy has been given ample room to grow. Inflation remains low at 1.2%, and the deficit in 1997 was around 3% of gross domestic product ("GDP"). Recent stability in the tourism and construction sectors has decreased their drag on the economy but these sectors are expected to continue, along with private consumption, to lag behind the rest of the economy. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE AUSTRIA WEBS INDEX SERIES VS. THE MSCI AUSTRIA INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Austria MSCI WEBS Index Austria Series Index 03/12/96 10,000 10,000 05/31/96 10,577 10,866 08/31/96 9,661 10,073 11/30/96 9,569 10,080 02/28/97 9,401 9,848 05/31/97 9,782 10,062 08/31/97 9,764 9,928 11/30/97 9,373 9,713 02/28/98 10,535 11,513 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Austria WEBS Index Series $10,535* MSCI Austria Index $11,513 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Austria WEBS Index Series 12.06% 2.68% MSCI Austria Index 16.92% 7.42% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Austria 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. 4 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ BELGIUM PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Belgium WEBS Index Series was 14.71%. The corresponding MSCI Belgium Index total return for the period was 18.05%. The Belgium WEBS Index Series under-performed the MSCI Belgium Index total return by 3.34% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE BELGIUM WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Belgium WEBS Index Series under-performed the MSCI Belgium Index principally because of portfolio sampling, revenue differential, and the impact of expenses. Portfolio sampling had a negative effect on performance as a result of industry weighting differences between the Belgium WEBS Index Series and the MSCI Belgium Index. Due to the need to comply with the 5/50 Rule, the Belgium WEBS Index Series was overweight in two sectors that posted negative returns, metals which had a return of (10.96%) and miscellaneous materials which returned (5.58%). WHAT MARKET CONDITIONS AFFECTED THE BELGIUM WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The Belgian economy grew at a rate of 2% during 1997, and the positive trend in the growth rate is expected to continue throughout 1998. Demand-driven growth is expected to continue as consumer spending increases, due to increased investment and a strengthening labor market. Steady economic growth in Germany, France, and the Netherlands contributed to a rise in Belgian exports of 6.2% in 1997. The budget deficit dropped to 2.4% last year, well within the 3% target mandated by the Maastricht Treaty. The ratio of debt to GDP, while still high, is on a steady downward trend. Inflation fell during 1997, reaching a low of 0.40% in January 1998. Unemployment still remains high, as in many other European Union member countries, at a rate of approximately 13.9% of the population as of the end of February 1998. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE BELGIUM WEBS INDEX SERIES VS. THE MSCI BELGIUM INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Belgium MSCI WEBS Index Belgium Series Index 03/12/96 10,000 10,000 05/31/96 10,288 10,237 08/31/96 10,501 10,496 11/30/96 10,915 11,107 02/28/97 11,204 11,595 05/31/97 11,877 12,172 08/31/97 11,474 11,662 11/30/97 12,002 12,385 02/28/98 13,161 13,768 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Belgium WEBS Index Series $13,161* MSCI Belgium Index $13,768 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Belgium WEBS Index Series 17.47% 14.96% MSCI Belgium Index 18.74% 17.62% - ------------------ * 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. 5 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ CANADA PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Canada WEBS Index Series was 6.45%. The corresponding MSCI Canada Index total return for the period was 6.79%. The Canada WEBS Index Series under-performed the MSCI Canada Index total return by 0.34% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE CANADA WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Canada WEBS Index Series under-performed the MSCI Canada Index for several reasons, principally the impact of expenses and cash drag. Portfolio sampling and revenue differential had an overall positive effect on performance, but only partially offset the negative effect of the other factors. WHAT MARKET CONDITIONS AFFECTED THE CANADA WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Canada's economy grew by 3.8% in 1997, continuing a trend in growth that has been sustained for five consecutive quarters. Expansion was supported by favorable monetary policy, healthy employment gains, low inflation, a strong fiscal position, and increased U.S. demand for exports. Both an increase in consumer spending and sharply higher business investment led to strong domestic demand. While the housing sector remained above its year-ago level, the trade sector showed a decline of 0.5% in the merchandise trade surplus, due to an increase in imports, restraining overall output growth in the third quarter. Domestic demand is driving, in large part, the growth in imports. Interest rates are expected to remain at current levels with tapered levels of growth and low inflation. Canada is once again in a position for continued economic growth and a budget surplus is projected for this year. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE CANADA WEBS INDEX SERIES VS. THE MSCI CANADA INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Canada MSCI WEBS Index Canada Series Index 03/12/96 10,000 10,000 05/31/96 10,639 10,682 08/31/96 10,463 10,521 11/30/96 12,546 12,652 02/28/97 12,569 12,713 05/31/97 13,183 13,389 08/31/97 13,445 13,745 11/30/97 13,165 13,438 02/28/98 14,312 14,679 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Canada WEBS Index Series $14,312* MSCI Canada Index $14,679 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Canada WEBS Index Series 13.86% 19.96% MSCI Canada Index 15.47% 21.51% - ------------------ * 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. 6 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ FRANCE PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the France WEBS Index Series was 21.59%. The corresponding MSCI France Index total return for the period was 22.46%. The France WEBS Index Series under-performed the MSCI France Index total return by 0.87% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FRANCE WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The France WEBS Index Series under-performed the MSCI France Index for several reasons, principally the impact of expenses, revenue differential and cash drag. The negative effect of these factors was reduced to a limited extent by the positive impact of portfolio sampling. WHAT MARKET CONDITIONS AFFECTED THE FRANCE WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The French GDP grew by 2.5% in 1997, while inflation was 1.2%, the lowest level seen since the 1950's. The government deficit was 3% of GDP in 1997. Unemployment, while still high, dropped significantly in December of 1997, indicating a downward trend. As employment numbers improved, consumer spending increased, which led to a significant rise in import consumption. However, foreign demand for French cars stimulated car exports to record levels. Consumer spending is expected to continue this trend, acting as the main catalyst for the French recovery. Additionally, corporate investment has increased dramatically. Due to record low inflation together with significant excess capacity, no change is anticipated in current monetary policy. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FRANCE WEBS INDEX SERIES VS. THE MSCI FRANCE INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: France MSCI WEBS Index France Series Index 03/12/96 10,000 10,000 05/31/96 10,668 10,701 08/31/96 10,495 10,371 11/30/96 11,855 11,766 02/28/97 12,177 12,210 05/31/97 11,921 11,975 08/31/97 12,237 12,194 11/30/97 12,878 12,848 02/28/98 14,880 14,933 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- France WEBS Index Series $14,880* MSCI France Index $14,933 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- France WEBS Index Series 22.19% 22.35% MSCI France Index 22.30% 22.58% - ------------------ * 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. 7 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ GERMANY PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Germany WEBS Index Series was 16.98%. The corresponding MSCI Germany Index total return for the period was 18.22%. The Germany WEBS Index Series under-performed the MSCI Germany Index total return by 1.24% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE GERMANY WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Germany WEBS Index Series under-performed the MSCI Germany Index because of the impact of expenses, revenue differential, cash drag, and portfolio sampling . WHAT MARKET CONDITIONS AFFECTED THE GERMANY WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The German economy continued to show signs of strength in 1997 despite continued labor problems. Unemployment rose to a new record high in January 1998, at 12.8%. There was continued unrest among the trade unions, with protest marches taking place throughout the country. Employment numbers showed signs of bottoming in November of 1997 suggesting that the unemployment situation is starting to respond, albeit slowly, to the economic recovery of 1997. Rising capacity utilization rates, together with a significant decline in unit labor costs over the past two years, should produce an increase in employment in 1998 - --the first in six years. Domestic demand, both capital and consumer, is expected to replace exports as the driving force in Germany's economic recovery. Capital spending has already surged in early 1998 in response to the high rate of capacity utilization and rising profits. Consumers have been driving a miniature consumption boom, accelerating purchases of consumer durables before a value added tax hike goes into effect on April 1, 1998. The Bundesbank clearly signaled that it would take a proactive role in monetary policy, announcing an M3 money supply target range of 3% to 6% for 1998. M3 money supply includes the money consumers use for ordinary purchases of goods and services (M1), time deposits, money market funds, overnight repurchase agreements (M2) and time deposits of more than $100,000 and repurchase agreements with terms longer than one day. It is expected that the Bundesbank will raise rates around the time of the European Monetary Union ("EMU") participants' meeting in May of 1998. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GERMANY WEBS INDEX SERIES VS. THE MSCI GERMANY INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Germany MSCI WEBS Index Germany Series Index 03/12/96 10,000 10,000 05/31/96 9,955 9,984 08/31/96 10,399 10,451 11/30/96 10,918 11,034 02/28/97 11,291 11,476 05/31/97 12,176 12,376 08/31/97 12,533 12,778 11/30/97 12,948 13,240 02/28/98 14,661 15,107 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Germany WEBS Index Series $14,661* MSCI Germany Index $15,107 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Germany WEBS Index Series 29.84% 21.44% MSCI Germany Index 31.64% 23.30% - ------------------ * 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. 8 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ HONG KONG PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Hong Kong WEBS Index Series was (24.36)%. The corresponding MSCI Hong Kong Index total return for the period was (21.94)%. The Hong Kong WEBS Index Series under-performed the MSCI Hong Kong Index total return by 2.42% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE HONG KONG WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Hong Kong WEBS Index Series under-performed the MSCI Hong Kong Index principally as a result of portfolio sampling. Due to the need to comply with the 5/50 Rule, the Hong Kong WEBS Index Series was overweight in the real estate sector, which posted a negative return of 29.72%. The impact of expenses, revenue differential, and cash drag had smaller, negative effects on performance. WHAT MARKET CONDITIONS AFFECTED THE HONG KONG WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Hong Kong made international headlines as China assumed control of the former British possession in July of 1997. While it is impossible to pinpoint the economic effects of this political change, the transition appeared to have little impact on the economy. During 1997, Hong Kong's economy felt the effects of its neighbors' woes. Tourism is suffering from weakened currencies in Southeast Asia, Korea, and Japan, which historically have accounted for 35% of Hong Kong's tourism revenue. Decreased tourism has also negatively affected Hong Kong's retail and hospitality industries. In November 1997, manufacturers saw a 9% decline in orders from the prior month, with the plastics, electronics and electrical industries being the hardest hit. At the same time, the printing and publishing industries recorded an increase in orders of 14%. Climbing unemployment indicated a slowing economy, edging up to 2.5% in late 1997 and inflation was also somewhat high at 5.8%. The government raised interest rates in late 1997 to defend the Hong Kong dollar's peg to the US dollar, as Hong Kong became a target of currency speculation. While GDP in 1997 grew by 5.5%, the highest growth since 1993, it is showing signs of slowing down in 1998. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE HONG KONG WEBS INDEX SERIES VS. THE MSCI HONG KONG INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Hong Kong MSCI WEBS Index Hong Kong Series Index 03/12/96 10,000 10,000 05/31/96 10,826 10,817 08/31/96 10,322 10,415 11/30/96 12,418 12,543 02/28/97 11,868 12,190 05/31/97 12,609 13,030 08/31/97 12,159 12,645 11/30/97 9,006 9,437 02/28/98 9,197 9,871 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Hong Hong WEBS Index Series $9,197* MSCI Hong Kong Index $9,871 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION -------- --------- Hong Kong WEBS Index Series (22.51)% (4.16)% MSCI Hong Kong Index (19.03)% (0.66)% - ------------------ * 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. 9 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ ITALY PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Italy WEBS Index Series was 34.29%. The corresponding MSCI Italy Index total return for the period was 34.48%. The Italy WEBS Index Series under-performed the MSCI Italy Index total return by 0.19% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE ITALY WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Italy WEBS Index Series slightly under-performed the MSCI Italy Index for several reasons, principally the impact of expenses, revenue differential and cash drag. Portfolio sampling had a net positive effect on performance. Due to the need to comply with the 5/50 Rule, the Italian WEBS Index Series was overweight in two sectors that posted positive returns, banking which had a return of 68.46% and automotive which returned 12.2%. WHAT MARKET CONDITIONS AFFECTED THE ITALY WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? As Italy makes its case to join the EMU, real growth in 1997 was 1.5%, with a strong fourth quarter rate of 2.8%. However, the growth was narrow, driven by the government's auto-replacement program, in which 10-year old cars are turned in for cash. As a result, new car sales were up dramatically, with car registrations up 75% in September. The budget deficit represented 2.7% of GDP, well within the Maastricht target. General government debt declined in 1997, due to significant privatization revenues and unexpected tax revenues. Short-run growth in the consumer price index ("CPI") has continued at an annual rate of approximately 2% for the last five months of 1997, with year on year inflation increasing to 1.6% in December. Industrial production figures showed growth at the end of 1997, with the year on year growth rate at 8.1%, up from 4.9% in November. Due to its growth rate being the slowest in the European Union, Italy's fiscal policy is expected to be less restrictive, with the Bank of Italy cutting interest rates and stimulating economic growth. The Italian lira is strong, stimulated by investor demand for high-yielding Italian bonds. Rising confidence and real wages are expected to boost consumer demand, with increased capital spending not far behind. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ITALY WEBS INDEX SERIES VS. THE MSCI ITALY INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Italy MSCI WEBS Index Italy Series Index 03/12/96 10,000 10,000 05/31/96 11,226 11,207 08/31/96 10,411 10,333 11/30/96 11,272 11,205 02/28/97 11,151 11,102 05/31/97 11,438 11,408 08/31/97 12,845 12,862 11/30/97 14,256 14,173 02/28/98 17,250 17,297 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Italy WEBS Index Series $17,250* MSCI Italy Index $17,297 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Italy WEBS Index Series 54.68% 31.88% MSCI Italy Index 55.81% 32.07% - ------------------ * 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. 10 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ JAPAN PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Japan WEBS Index Series was (13.63)%. The corresponding MSCI Japan Index total return for the period was (13.46)%. The Japan WEBS Index Series under-performed the MSCI Japan Index total return by 0.17% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE JAPAN WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Japan WEBS Index Series slightly under-performed the MSCI Japan Index due to the impact of expenses. Although portfolio sampling and cash drag had positive effects on performance, they only partially offset the negative impact of expenses. WHAT MARKET CONDITIONS AFFECTED THE JAPAN WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The Japanese economy found no relief in 1997 from the woes it has experienced for the last seven years. The benchmark Nikkei Stock Average sank 4.2% on November 7, falling below the 16,000-point level for the first time in more than two years, and it finished the year at a low not seen since 1985. The decline wiped out unrealized stock gains in the portfolios of seven of Japan's top 20 banks, fueling a pessimistic outlook on the financial crisis. By the end of 1997, three major financial institutions had collapsed amidst overwhelming debt: Sanyo Securities, Hokkaido Takushoku Bank, and Yamaichi Securities. The Fund held shares of Yamaichi, which it subsequently sold upon hearing the news of the bankruptcy. Yamaichi left behind $23 billion in debt, Japan's largest bankruptcy ever. Bankruptcies are no longer newsworthy as banks tighten credit and enforce tougher regulatory requirements. Consumers, anticipating a recession and reeling from increases in taxes and medical fees, have cut spending considerably. Retail sales in November of 1997 dropped 4.7% from a year earlier, the largest drop since 1955. Industrial production has also dropped. While Asia needs an economic leader to anchor any future recovery, Japan has been unable to take on that role, actually cutting new investment in Thailand, Malaysia, Indonesia and the Philippines by 29% over the summer. The economic trials of Japan's neighbors continue to raise concerns over profit levels for the big Japanese exporters. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE JAPAN WEBS INDEX SERIES VS. THE MSCI JAPAN INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Japan MSCI WEBS Index Japan Series Index 03/12/96 10,000 10,000 05/31/96 10,548 10,596 08/31/96 9,689 9,720 11/30/96 9,527 9,561 02/28/97 8,060 8,117 05/31/97 8,959 9,033 08/31/97 8,529 8,596 11/30/97 7,169 7,206 02/28/98 7,366 7,438 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Japan WEBS Index Series $7,366* MSCI Japan Index $7,438 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------- --------- Japan WEBS Index Series (8.60)% (14.37)% MSCI Japan Index (8.36)% (13.95)% - ------------------ * 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. 11 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ MALAYSIA (FREE) PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Malaysia (Free) WEBS Index Series was (21.79)%. The corresponding MSCI Malaysia (Free) Index total return for the period was (23.42)%. The Malaysia (Free) WEBS Index Series out-performed the MSCI Malaysia (Free) Index total return by 1.63% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE MALAYSIA (FREE) WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Malaysia (Free) WEBS Index Series out-performed the MSCI Malaysia (Free) Index due to portfolio sampling, and to a lesser extent because of cash drag and revenue differential. These factors more than offset the negative impact of expenses. As a result of the 5/50 Rule, the Malaysia (Free) WEBS Index Series was under-weighted in the multi-industry sector, which had a negative return of 44.85%. WHAT MARKET CONDITIONS AFFECTED THE MALAYSIA (FREE) WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Malaysia found itself squarely in the center of the Asian economic crisis of 1997. The Malaysian ringit suffered tremendously in the wake of the Thai baht crisis. During the third quarter, the ringit hit an all-time low, falling 28.43% against the US dollar, and the stock market nearly collapsed, losing (41.62)% during the same time period. With the banking sector debt at 165% of 1997 GDP, the Malaysian economy is in need of relief. Interest rates have moved steadily upward since the third quarter of 1997, and the economy has slowed considerably. The four factors of high leverage, slowing economic activity, rising interest rates and a weakening exchange rate have put a strain on the banking system. During the first quarter of 1998, the Malaysian government approached the International Monetary Fund for help in stabilizing its volatile economy and shoring up its weak financial system. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE MALAYSIA (FREE) WEBS INDEX SERIES VS. THE MSCI MALAYSIA (FREE) INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Malaysia (Free) MSCI WEBS Index Malaysia (Free) Series Index 03/12/96 10,000 10,000 05/31/96 10,498 10,562 08/31/96 10,428 10,512 11/30/96 11,237 11,365 02/28/97 11,834 12,172 05/31/97 10,141 10,411 08/31/97 6,237 6,385 11/30/97 3,713 3,687 02/28/98 4,877 4,890 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Malaysia (Free) WEBS Index Series $4,877* MSCI Malaysia (Free) Index $4,890 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION -------- --------- Malaysia (Free) WEBS Index Series (58.79)% (30.55)% MSCI Malaysia (Free) Index (59.83)% (30.45)% - ------------------ * The chart assumes a hypothetical $10,000 initial investment in the Malaysia (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. 12 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ MEXICO (FREE) PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Mexico (Free) WEBS Index Series was (2.32)%. The corresponding MSCI Mexico (Free) Index total return for the period was (1.13)%. The Mexico (Free) WEBS Index Series under-performed the MSCI Mexico Index total return by 1.19% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE MEXICO (FREE) WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Mexico (Free) WEBS Index Series under-performed the MSCI Mexico (Free) Index principally due to the impact of expenses and portfolio sampling. WHAT MARKET CONDITIONS AFFECTED THE MEXICO (FREE) WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Mexico continued on the recovery track it had begun in 1996. After its economic disaster of 1995, when the economy contracted by 6%, the Mexican economy is being held up as a model of recovery for those Asian economies now suffering similar difficulties. 1997 marked Mexico's highest annual growth rate in 16 years, exceeding 7%. The Mexican peso, depreciating about 6% during October, has since traded in a tight range to the US dollar. Private consumption grew 5% in 1997, and inflation fell for the 22nd consecutive month, to an annual rate of 16%. The current account deficit was at 1.60% last year. Privatization, which gained momentum in 1996, saw the selling off of the Northeast Railroad. Other assets targeted for sale include ports, airports and electrical energy, relieving the Mexican government of responsibility for these infrastructures. The Institutional Revolutionary Party ("IRP") lost their overall majority in the Lower House in the July elections, resulting in increased volatility in Congress. However, given the presidential elections in 2000, the opposition parties are finding common ground, illustrated by approval of the 1998 budget. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE MEXICO (FREE) WEBS INDEX SERIES VS. THE MSCI MEXICO (FREE) INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Mexico (Free) MSCI WEBS Index Mexico (Free) Series Index 03/12/96 10,000 10,000 05/31/96 11,618 11,617 08/31/96 11,592 11,736 11/30/96 11,311 11,489 02/28/97 12,820 13,254 05/31/97 13,283 13,818 08/31/97 15,675 16,321 11/30/97 15,892 16,774 02/28/98 15,311 16,136 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Mexico (Free) WEBS Index Series $15,311* MSCI Mexico (Free) Index $16,136 AVERAGE ANNUAL TOTAL RETURN ONE YEAR SINCE INCEPTION -------- --------------- Mexico (Free) WEBS Index Series 19.43% 24.14% MSCI Mexico (Free) Index 21.74% 27.49% - ------------------ * 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. 13 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ NETHERLANDS PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Netherlands WEBS Index Series was 18.08%. The corresponding MSCI Netherlands Index total return for the period was 17.66%. The Netherlands WEBS Index Series out-performed the MSCI Netherlands Index total return by 0.42% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE NETHERLANDS WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Netherlands WEBS Index Series out-performed the MSCI Netherlands Index principally because of differences in industry weightings, specifically in the energy sector, as a result of the Single Issuer Rule. This positive effect was partially offset by the impact of expenses, revenue differential, and cash drag. WHAT MARKET CONDITIONS AFFECTED THE NETHERLANDS WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Continuing the growth trend of the last seven years, the Dutch economy grew at a rate of 3.25% in 1997. The Netherlands' bid for membership in the EMU is very likely to be successful, since its economy is admired by its European counterparts due to its high growth, deficit reduction and low unemployment. The Netherlands' only significant weakness is its high debt ratio, which was over 60% in 1997, but has been trending down since 1995. The Netherlands' economic stability is due to the key role of agricultural produce in the export mix, particularly to Germany. Exports make up almost 55% of the Dutch GDP. However, 1997 saw a sharp increase in demand for imports and a decrease in the export trade balance due in part to higher domestic consumption and investment spending. Inflation was about 2.2% for 1997, 0.75% higher than the EU average. With output growth projected to remain strong, there is upward pressure on inflation. Moderate wage growth has resulted from cooperation between the government, trade unions, and employers. Unlike many other European countries, the Dutch labor market is remarkably flexible, using a deregulated labor market similar to that of the U.S. while still retaining a European-style social safety net. Current interest rates are low, but as interest rates in Germany are expected to climb, forecasts show a modest tightening of monetary policy in the Netherlands as well. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE NETHERLANDS WEBS INDEX SERIES VS. THE MSCI NETHERLANDS INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Netherlands MSCI WEBS Index Netherlands Series Index 03/12/96 10,000 10,000 05/31/96 11,113 10,941 08/31/96 11,118 10,974 11/30/96 12,259 12,255 02/28/97 12,934 12,949 05/31/97 13,825 13,960 08/31/97 14,237 14,680 11/30/97 14,728 15,146 02/28/98 16,811 17,273 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Netherlands WEBS Index Series $16,811* MSCI Netherlands Index $17,273 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Netherlands WEBS Index Series 29.97% 30.17% MSCI Netherlands Index 33.40% 31.98% - ------------------ * 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. 14 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ SINGAPORE (FREE) PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Singapore (Free) WEBS Index Series was (20.32)%. The corresponding MSCI Singapore (Free) Index total return for the period was (14.12)%. The Singapore (Free) WEBS Index Series under-performed the MSCI Singapore (Free) Index total return by 6.20% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE SINGAPORE (FREE) WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Singapore (Free) WEBS Index Series under-performed the MSCI Singapore (Free) Index primarily because of portfolio sampling. Due to compliance with the 5/50 Rule, the Singapore (Free) WEBS Index Series was under-weighted, as compared to the MSCI Singapore (Free) Index, in the telecommunications sector, which had a total return of 28% for the period. Expenses and revenue differential contributed to the under-performance to a much lesser extent than portfolio sampling, while cash drag exerted a modest positive influence on performance. WHAT MARKET CONDITIONS AFFECTED THE SINGAPORE (FREE) WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Surrounded by countries which succumbed to the so-called Asian "flu," Singapore held its own, finishing 1997 with a growth rate of 6.2%. While resistant, Singapore appears not to be totally immune. In the third quarter of 1997, the economy was showing signs of a slowdown, with retail sales falling three months in a row. Hardest hit were sales of motor vehicles and textiles/apparel. Since July 1, 1997, the Singapore dollar has fallen 16%, yet some feel that the Singapore dollar is still overvalued by 10% against the currencies of its neighbors, which threatens to dampen trade. The stock market slumped amid concerns about banks in Singapore and their exposure to Indonesia and Malaysia. More than 17% of Singapore bank loans are in the economies of Malaysia, Indonesia, Thailand, the Philippines and South Korea. Because Singapore's economy is so dependent on these other countries in its shipping, tourism, oil refinement and health care sectors, the economy is showing signs of stalling. Some 1998 forecasts for private-sector growth are actually at 0%. Even the finance sector, which accounted for 11% of GDP in 1997, is expected to see little growth. Singapore's economy is extremely open, with the import content of domestic expenditure at 60% and non-oil exports at 70%. Singapore is therefore particularly susceptible to large swings in exchange rates, such as those seen in late 1997. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SINGAPORE (FREE) WEBS INDEX SERIES VS. THE MSCI SINGAPORE (FREE) INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Singapore MSCI (Free) WEBS Singapore Index Series (Free)Index 03/12/96 10,000 10,000 05/31/96 9,714 9,692 08/31/96 9,327 9,196 11/30/96 9,548 9,358 02/28/97 9,720 9,670 05/31/97 9,073 8,986 08/31/97 7,137 6,961 11/30/97 6,066 6,223 02/28/98 5,687 5,978 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Singapore (Free) WEBS Index Series $5,687* MSCI Singapore (Free) Index $5,978 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION -------- --------- Singapore (Free) WEBS Index Series (41.50)% (24.92)% MSCI Singapore (Free) Index (38.18)% (22.99)% - ------------------ * 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. 15 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ SPAIN PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Spain WEBS Index Series was 35.68%. The corresponding MSCI Spain Index total return for the period was 36.90%. The Spain WEBS Index Series under-performed the MSCI Spain Index total return by 1.22% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE SPAIN WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Spain WEBS Index Series under-performed the MSCI Spain Index because of the impact of expenses, portfolio sampling and cash drag. WHAT MARKET CONDITIONS AFFECTED THE SPAIN WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Like many of its European neighbors trying to improve themselves for the EMU, Spain enjoyed a healthy growth rate of 3.4% in 1997, up from 2.3% in 1996. This strong showing is attributable to the private consumption component of the economy, with Spain being the first European country to achieve a demand-driven recovery. The combination of 3% employment growth, rising real disposable income, and lower interest rates were all factors in the increase in consumption. Low interest rates drove a spending boom on durable goods, and mortgage payments have decreased, giving homeowners more disposable income. On a quarter-by-quarter basis, however, consumption is decelerating, raising expectations that inflation will continue to be low. Unemployment is still the highest in Europe at 20%, yet consumer confidence is at its highest in years. The deficit has been reduced to 2.6% of GDP, down from 6.6% in 1995, due to economic growth and increased employment. Strong imports drove a negative net trade balance in the fourth quarter, although exports are still quite strong. Spain's greatest challenge will be to increase the flexibility of its labor markets. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SPAIN WEBS INDEX SERIES VS. THE MSCI SPAIN INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Spain MSCI WEBS Index Spain Series Index 03/12/96 10,000 10,000 05/31/96 10,640 10,747 08/31/96 10,845 10,917 11/30/96 12,361 12,508 02/28/97 12,893 13,066 05/31/97 15,229 15,497 08/31/97 15,092 15,379 11/30/97 16,471 16,845 02/28/98 20,478 21,053 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Spain WEBS Index Series $20,478* MSCI Spain Index $21,053 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Spain WEBS Index Series 58.82% 43.88% MSCI Spain Index 61.14% 45.93% - ------------------ * 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. 16 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ SWEDEN PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Sweden WEBS Index Series was 10.15%. The corresponding MSCI Sweden Index total return for the period was 11.72%. The Sweden WEBS Index Series under-performed the MSCI Sweden Index total return by 1.57% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE SWEDEN WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Sweden WEBS Index Series under-performed the MSCI Sweden Index primarily because of the impact of expenses and revenue differential. Portfolio sampling and cash drag also had smaller negative impacts on performance. WHAT MARKET CONDITIONS AFFECTED THE SWEDEN WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? Sweden is in the midst of a cyclical upturn, with a 1997 GDP growth rate of 2.3%, and a forecast of 3.1% growth in 1998. The 1997 growth was split evenly between domestic demand and net exports. The deficit, at 1.9% of GDP in 1997, is expected to revert to a balance in 1998. As the economy continues to improve, Sweden has seen an improvement in its unemployment rate, which is currently at 8.1%. Unemployment is expected to fall even further by the end of 1998, perhaps down to around 6.5%. Inflation was 1.9% for 1997, leading to expectations of tighter monetary policy by the Riksbank in 1998. Long yields are expected to absorb most of the prospective tightening of monetary policy. Overall, Sweden's fiscal situation continues to improve, with the deficit ratio equivalent to 1.6% of GDP in 1997, contrasted to a 1994 ratio of 10.3%. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SWEDEN WEBS INDEX SERIES VS. THE MSCI SWEDEN INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Sweden MSCI WEBS Index Sweden Series Index 03/12/96 10,000 10,000 05/31/96 10,976 10,805 08/31/96 11,413 11,200 11/30/96 13,163 12,989 02/28/97 13,357 13,344 05/31/97 13,840 13,806 08/31/97 14,847 14,856 11/30/97 15,236 15,310 02/28/98 16,353 16,596 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Sweden WEBS Index Series $16,353* MSCI Sweden Index $16,596 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Sweden WEBS Index Series 22.43% 28.37% MSCI Sweden Index 24.37% 29.33% - ------------------ * 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. 17 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ SWITZERLAND PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the Switzerland WEBS Index Series was 26.32%. The corresponding MSCI Switzerland Index total return for the period was 35.61%. The Switzerland WEBS Index Series under-performed the MSCI Switzerland Index total return by 9.29% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE SWITZERLAND WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The Switzerland WEBS Index Series under-performed the MSCI Switzerland Index largely due to portfolio sampling. The Switzerland WEBS Index Series is affected by many restrictive regulatory constraints on investing. Because of these restrictions, especially the 5/50 Rule, the Switzerland WEBS Index Series had substantially different weightings in many industry sectors when compared to the MSCI Switzerland Index. Some of the largest divergences are in the banking and the food and household sectors. These sectors were under-weighted compared to the MSCI Switzerland Index by approximately 7.27% and 8.32%, respectively. The banking sector returned 47.61% and the food and household sector returned 46.05% during the six-month period. This accounted for a substantial amount of the variance in performance to the corresponding MSCI Index. Expenses, revenue differential, and cash drag had less negative impacts to the performance. WHAT MARKET CONDITIONS AFFECTED THE SWITZERLAND WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? The falling Swiss franc helped Switzerland post the first real GDP growth since 1990, at 0.5% for 1997. The growth was driven by a strong demand for exports, which jumped 8.2% since the second quarter of the prior year period. This increased demand was due to similar economic recoveries in the rest of Europe, which consumes 62% of Switzerland's exports. Net exports made a small positive contribution to growth. Strong export sectors are chemicals, pharmaceuticals, and watchmakers. Although Asia accounts for 13% of its exports, Switzerland has not experienced much fallout from the Asian crisis to date. In contrast, domestic demand remains weak with a growth rate of 0.25%, and consumer confidence is continuing at low levels. Consumption growth was also slow at 1% for 1997. Capital investment declined in 1997, falling by 2.75%. Inflationary pressures remain low, with annual consumer price inflation in January 1998 at 0.1%, the lowest rate since 1986. The inflation rate for 1997 as a whole was 0.5%. The Organization of Economic Cooperation and Development ("OECD"), estimates that the output gap (i.e. the difference between peak capacity and actual output) in Switzerland was almost 5% of GDP in 1997, reflecting significant capacity in Switzerland at present. Nominal short-term interest rates have fallen to 1.25%. Once growth is established, the Swiss National Bank is expected to return to a neutral monetary policy. The biggest worry for the future is the success of monetary union in Europe. If the EMU does not go smoothly, a panic flight to the Swiss franc could result in significant appreciation, causing the economy to lapse into a recession. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SWITZERLAND WEBS INDEX SERIES VS. THE MSCI SWITZERLAND INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: Switzerland MSCI WEBS Index Switzerland Series Index 03/12/96 10,000 10,000 05/31/96 9,751 9,617 08/31/96 10,260 10,319 11/30/96 10,093 10,125 02/28/97 10,210 10,347 05/31/97 11,879 12,050 08/31/97 11,972 11,998 11/30/97 12,927 13,557 02/28/98 15,124 16,271 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- Switzerland WEBS Index Series $15,124* MSCI Switzerland Index $16,271 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Switzerland WEBS Index Series 48.13% 23.37% MSCI Switzerland Index 57.25% 28.03% - ------------------ * 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. 18 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ UNITED KINGDOM PERFORMANCE REVIEW For the six-month period ended February 28, 1998 the total return of the United Kingdom WEBS Index Series was 21.01%. The corresponding MSCI United Kingdom Index total return for the period was 22.25%. The United Kingdom WEBS Index Series under-performed the MSCI United Kingdom Index total return by 1.24% in this period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE UNITED KINGDOM WEBS INDEX SERIES' PERFORMANCE FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998? The United Kingdom WEBS Index Series under-performed the MSCI United Kingdom Index as a result of the impact of expenses, portfolio sampling and cash drag. Revenue differential had a positive effect on performance, but only partially offset the negative factors. WHAT MARKET CONDITIONS AFFECTED THE UNITED KINGDOM WEBS INDEX SERIES' PERFORMANCE DURING THE PERIOD? With a GDP growth rate of 3.5% for 1997, Britain sustained a fifth straight year of growth. Fortunately for consumers, the inflation rate was below that of economic growth. Britain's economy has sparked some fears of inflation, however, given the tightness of the labor market. The unemployment rate in 1997 was at 5.5%. Accordingly, the Bank of England raised interest rates in five quarter-point moves between May and November. The specter of inflation continued into early 1998, creating public debate over the necessity of further rate hikes. The consensus is that the economy is now slowing. Industrial production slowed in both November and December of 1997. Consumer spending was less robust than in 1996 and rising interest rates have increased mortgage payments as most mortgage-holders pay variable rates. The strength of sterling, which is about 25% higher than in mid-1996, is expected to lead to a surge of imports, which, along with the Asian crisis, is expected to have a dampening effect on British exports. Fiscal policy remained unchanged in early 1998, due to these slowdowns, and manufacturing output continued to fall in early 1998, putting off any imminent interest rate hikes. Consumer confidence could stimulate the economy since the aggregate household balance sheet is strong. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE UNITED KINGDOM WEBS INDEX SERIES VS. THE MSCI UNITED KINGDOM INDEX [GRAPHIC OMITTED] PLOT POINTS TO FOLLOW: United Kingdom MSCI WEBS Index United Kingdom Series Index 03/12/96 10,000 10,000 05/31/96 10,470 10,521 08/31/96 11,040 11,078 11/30/96 12,417 12,548 02/28/97 12,767 12,996 05/31/97 13,805 13,986 08/31/97 14,405 14,601 11/30/97 15,051 15,340 02/28/98 17,432 17,851 --------------------------------------------------------- Past performance is not predictive of future performance --------------------------------------------------------- Value February 28, 1998 ----------------- United Kingdom WEBS Index Series $17,432* MSCI United Kingdom Index $17,851 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- United Kingdom WEBS Index Series 36.54% 32.59% MSCI United Kingdom Index 37.36% 34.20% - ------------------ * 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. 19 FEBRUARY 28, 1998 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 0.64% 119,700 Email Limited $ 269,120 ---------- BANKING 20.41% 378,000 National Australia Bank Limited 5,227,887 483,000 Westpac Banking Corporation Limited 3,349,911 ---------- 8,577,798 ---------- BEVERAGES & TOBACCO 7.77% 216,300 Coca-Cola Amatil Limited 1,864,170 632,100 Foster's Brewing Group Limited 1,399,612 ---------- 3,263,782 ---------- BROADCASTING & PUBLISHING 11.60% 548,100 News Corporation Limited 3,491,482 252,000 News Corporation Limited - Preferred 1,382,085 ---------- 4,873,567 ---------- BUILDING MATERIALS & COMPONENTS 7.43% 350,700 Boral Limited 850,598 289,800 CSR Limited 961,536 136,500 James Hardie Industries Limited 424,068 306,600 Pioneer International Limited 887,768 ---------- 3,123,970 ---------- BUSINESS & PUBLIC SERVICES 3.25% 65,100 Brambles Industries Limited 1,366,061 ---------- CHEMICALS 1.40% 86,100 Orica Limited 586,599 ---------- CONSTRUCTION & HOUSING 0.35% 37,800 Leighton Holdings Limited 148,081 ---------- ENERGY SOURCES 13.72% 519,750 Broken Hill Proprietary Company Limited 5,134,532 163,800 Santos Limited 629,965 ---------- 5,764,497 ---------- FOOD & HOUSEHOLD PRODUCTS 1.54% 151,200 Burns Philp & Company Limited* 24,723 359,100 Goodman Fielder Limited 621,423 ---------- 646,146 ---------- FOREST PRODUCTS & PAPER 1.81% 174,300 Amcor Limited 761,191 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- GOLD MINES 1.64% 84,000 Newcrest Mining Limited* $ 112,742 378,000 Normandy Mining Limited 375,996 65,100 Plutonic Resources Limited 201,804 ---------- 690,542 ---------- LEISURE & TOURISM 0.23% 199,500 Crown Limited* 95,144 ---------- MERCHANDISING 3.94% 319,200 Coles Myer Limited 1,657,129 ---------- METALS - NON FERROUS 7.44% 449,400 Mount Isa Mines Holdings Limited 251,064 224,700 North Limited 610,515 58,800 RGC Limited 80,121 90,300 Rio Tinto Limited 1,186,132 294,000 WMC Limited 997,505 ---------- 3,125,337 ---------- METALS - STEEL 0.76% 375,900 Australian National Industries Limited 320,126 ---------- MULTI-INDUSTRY 4.72% 79,800 Howard Smith Limited 653,500 289,800 Pacific Dunlop Limited 513,346 220,500 Southcorp Limited 817,233 ---------- 1,984,079 ---------- REAL ESTATE 8.89% 270,900 General Property Trust** 531,545 69,300 Lend Lease Corporation Limited** 1,744,561 203,700 Stockland Trust Group 520,428 432,600 Westfield Trust** 937,243 ---------- 3,733,777 ---------- TELECOMMUNICATIONS 2.46% 387,744 Telstra Corporation Limited 1,032,905 ---------- TOTAL COMMON STOCK - BASKET (Cost $45,168,633) 42,019,851 ---------- COMMON STOCK - NON-BASKET 0.00% TELECOMMUNICATIONS 0.00% 12 Telstra Corporation Limited 32 ---------- TOTAL COMMON STOCK - NON-BASKET (Cost $17) 32 ---------- TOTAL INVESTMENTS (COST $45,168,650)(DAGGER) 100.00% $42,019,883 ======= =========== - ---------- * Non-income producing security. ** Passive foreign investment company. (DAGGER) Aggregate cost for Federal income tax purposes is $45,274,918. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 3,104,966 Excess of tax cost over value (6,360,001) ----------- $(3,255,035) =========== See accompanying notes to financial statements. 20 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ AUSTRIA WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 100.00% BANKING 17.67% 14,500 Bank Austria AG $ 982,323 ---------- BEVERAGES & TOBACCO 4.12% 3,905 Oesterreichische Brau Beteiligungs AG 228,767 ---------- BUILDING MATERIALS & COMPONENTS 4.34% 1,250 Wienerberger Baustoffindustrie AG 241,322 ---------- BUSINESS & PUBLIC SERVICES 3.63% 5,000 Flughafen Wien AG 201,673 ---------- CHEMICALS 2.65% 2,250 Lenzing AG* 147,143 ---------- CONSTRUCTION & HOUSING 6.87% 2,500 Bau Holding AG 147,241 2,000 Bau Holding AG Vorzug 95,237 4,000 Universale-Bau AG 139,409 ---------- 381,887 ---------- ELECTRONIC COMPONENTS, INSTRUMENTS 2.38% 2,000 Austria Mikro Systeme International AG 132,360 ---------- ENERGY SOURCES 11.20% 5,140 OMV AG 622,764 ---------- INSURANCE 5.86% 850 EA-Generali AG 278,403 250 EA-Generali AG Vorzug* 47,383 ---------- 325,786 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- MACHINERY & ENGINEERING 11.59% 1,500 BWT AG $ 269,615 5,000 Steyr Daimler Puch AG 133,143 1,750 VA Technologie AG 241,635 ---------- 644,393 ---------- METALS - STEEL 4.60% 4,000 Boehler-Uddeholm AG 255,917 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 8.28% 4,125 Mayr Melnhof Karton AG 239,071 5,500 RHI AG 220,979 ---------- 460,050 ---------- TRANSPORTATION - AIRLINES 4.52% 10,000 Austrian Airlines AG* 251,406 ---------- UTILITIES - ELECTRICAL & GAS 12.29% 6,500 Oesterreichische Elektrizitaetswirtschafts AG - Class A 683,436 ---------- TOTAL COMMON STOCK - BASKET (Cost $5,239,352) 5,559,227 ---------- TOTAL INVESTMENTS (COST $5,239,352)(DAGGER) 100.00% $5,559,227 ======= ========== - --------------- * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $5,268,438. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 463,554 Excess of tax cost over value (172,765) --------- $ 290,789 ========= See accompanying notes to financial statements. 21 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ BELGIUM WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 100.00% BANKING 8.96% 1,950 Generale de Banque SA $ 922,684 2,160 Kredietbank NV** 997,544 ---------- 1,920,228 ---------- BUILDING MATERIALS & COMPONENTS 4.00% 9,750 Cimenteries CBR Cementbedrijven 856,313 ---------- CHEMICALS 4.39% 15,000 Solvay SA 941,004 ---------- ELECTRONIC COMPONENTS, INSTRUMENTS 4.62% 4,650 Barco NV 990,577 ---------- ENERGY SOURCES 9.36% 5,880 Petrofina SA 2,005,259 ---------- HEALTH & PERSONAL CARE 3.38% 180 UCB SA 723,171 ---------- INDUSTRIAL COMPONENTS 3.98% 1,260 Bekaert NV 852,670 ---------- INSURANCE 17.20% 10,500 Fortis AG 2,685,264 3,150 Royale Belge** 998,565 ---------- 3,683,829 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- MERCHANDISING 6.21% 540 Colruyt NV $ 343,086 16,200 Delhaize-Le Lion SA 986,012 ---------- 1,329,098 ---------- METALS - NON FERROUS 4.40% 12,750 Union Miniere SA* 942,806 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 3.99% 6,300 Glaverbel SA 854,351 ---------- MULTI-INDUSTRY 4.61% 6,300 Groupe Bruxelles Lambert SA** 987,213 ---------- TRANSPORTATION - SHIPPING 0.66% 1,800 Compagnie Maritime Belge SA 141,511 ---------- UTILITIES - ELECTRICAL & GAS 24.24% 12,450 Electrabel SA 3,021,102 21,150 Tractebel 2,170,896 ---------- 5,191,998 ---------- TOTAL COMMON STOCK - BASKET (Cost $19,652,366) 21,420,028 ---------- TOTAL INVESTMENTS (COST $19,652,366)(DAGGER) 100.00% $21,420,028 ======= =========== - ---------------- * Non-income producing security. ** Passive foreign investment company. (DAGGER) Aggregate cost for Federal income tax purposes is $19,740,451. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $2,031,884 Excess of tax cost over value (352,307) ---------- $1,679,577 ========== See accompanying notes to financial statements. 22 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ CANADA WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 99.18% AEROSPACE & MILITARY TECHNOLOGY 2.60% 27,200 Bombardier Incorporated - Class B $ 584,823 ---------- BANKING 18.41% 17,600 Bank of Montreal 939,854 32,000 Bank of Nova Scotia 789,207 28,800 Canadian Imperial Bank of Commerce 916,695 11,200 National Bank of Canada 186,509 22,400 Royal Bank of Canada 1,311,074 ---------- 4,143,339 ---------- BEVERAGES & TOBACCO 5.10% 6,400 Molson Company Limited - Class A 114,896 27,200 Seagram Company Limited 1,032,041 ---------- 1,146,937 ---------- BROADCASTING & PUBLISHING 5.92% 4,800 Quebecor Incorporated - Class B 93,086 12,800 Rogers Communications Incorporated - Class B* 55,762 6,400 Southam Incorporated 129,286 35,200 Thomson Corporation 1,053,626 ---------- 1,331,760 ---------- BUSINESS & PUBLIC SERVICES 3.04% 6,400 Extendicare Incorporated - Class A* 68,803 25,600 Laidlaw Incorporated 373,243 4,800 Loewen Group Incorporated 118,044 8,000 Moore Corporation Limited 124,789 ---------- 684,879 ---------- CHEMICALS 2.36% 9,600 Agrium Incorporated 126,813 14,400 Methanex Corporation* 117,369 3,200 Potash Corporation of Saskatchewan Incorporated 286,116 ---------- 530,298 ---------- ELECTRICAL & ELECTRONICS 9.66% 12,800 Newbridge Networks Corporation* 299,944 35,200 Northern Telecom Limited 1,874,761 ---------- 2,174,705 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- ENERGY SOURCES 12.43% 8,000 Alberta Energy Company Limited $ 195,616 8,000 Anderson Exploration Limited* 94,435 6,400 Canadian Natural Resources Limited* 128,162 9,600 Canadian Occidental Petroleum Limited 191,568 16,000 Gulf Canada Resources Limited* 93,873 11,200 Imperial Oil Limited 660,652 3,200 IPL Energy Incorporated 144,238 20,800 Petro-Canada 385,835 9,600 Poco Petroleum Limited* 100,169 8,000 Ranger Oil Limited 51,433 8,000 Renaissance Energy Limited* 163,013 9,600 Suncor Energy Incorporated 352,445 8,000 Talisman Energy Incorporated* 236,931 ---------- 2,798,370 ---------- FINANCIAL SERVICES 1.05% 6,400 Power Corporation of Canada 237,437 ---------- FOREST PRODUCTS & PAPER 2.23% 14,400 Abitibi Consolidated Incorporated 205,396 4,800 Avenor Incorporated 101,686 9,600 Domtar Incorporated 73,187 9,600 MacMillan Bloedel Limited 121,079 ---------- 501,348 ---------- GOLD MINES 4.08% 33,600 Barrick Gold Corporation 644,519 4,800 Cambior Incorporated 30,185 19,200 Placer Dome Incorporated 243,508 ---------- 918,212 ---------- HEALTH & PERSONAL CARE 0.46% 4,800 MDS Incorporated - Class B 104,553 ---------- INDUSTRIAL COMPONENTS 1.28% 4,800 Magna International Incorporated - Class A 289,207 ---------- MACHINERY & ENGINEERING 0.41% 3,200 United Dominion Industries Limited 91,737 ---------- MERCHANDISING 2.29% 6,400 Canadian Tire Corporation - Class A 153,120 3,200 George Weston Limited 269,815 4,800 Hudson's Bay Company 92,749 ---------- 515,684 ---------- See accompanying notes to financial statements. 23 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ CANADA WEBS INDEX SERIES (CONCLUDED) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- METALS - NON FERROUS 6.84% 16,000 Alcan Aluminium Limited $ 495,222 4,800 Cameco Corporation 141,484 6,400 Cominco Limited 107,926 12,800 Inco Limited 222,597 19,200 Noranda Incorporated 367,622 4,800 Rio Algom Limited 89,207 8,000 Teck Corporation - Class B 114,952 ---------- 1,539,010 ---------- METALS - STEEL 0.50% 6,400 Dofasco Incorporated 112,198 ---------- MULTI-INDUSTRY 6.76% 24,000 Canadian Pacific Limited 685,497 12,000 Edperbrascan Corporation - Class A 226,813 16,000 Imasco Limited 608,769 ---------- 1,521,079 ---------- TELECOMMUNICATIONS 8.31% 44,800 BCE Incorporated 1,589,657 11,200 Telus Corporation 281,731 ---------- 1,871,388 ---------- UTILITIES - ELECTRICAL & GAS 5.45% 38,400 Nova Corporation 423,609 14,400 Transalta Corporation 242,327 16,000 Transcanada Pipelines Limited 359,191 8,000 Westcoast Energy Incorporated 202,361 ---------- 1,227,488 ---------- TOTAL COMMON STOCK - BASKET (Cost $17,835,325) 22,324,452 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - NON-BASKET 0.82% CHEMICALS 0.03% 450 Agrium Incorporated $ 5,944 ---------- ENERGY SOURCES 0.79% 12,800 Norcen Energy Resources Limited 177,628 ---------- FOREST PRODUCTS & PAPER 0.00% 56 Abitibi Consolidated Incorporated 799 ---------- TOTAL COMMON STOCK - NON-BASKET (Cost $131,861) 184,371 ---------- TOTAL INVESTMENTS (COST $17,967,186)(DAGGER) 100.00% $22,508,823 ======= =========== - --------------- * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $17,982,242. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 6,047,906 Excess of tax cost over value (1,521,325) ----------- $ 4,526,581 =========== See accompanying notes to financial statements. 24 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ FRANCE WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 99.88% AEROSPACE & MILITARY TECHNOLOGY 0.88% 5,298 Thomson CSF $ 182,711 ---------- APPLIANCES & HOUSEHOLD DURABLES 0.22% 1,800 Moulinex* 45,079 ---------- AUTOMOBILES 1.47% 2,136 PSA Peugeot Citroen 304,126 ---------- BANKING 8.47% 8,946 Banque Nationale de Paris 540,641 6,642 Compagnie Financiere de Paribas - Class A 631,553 660 Natexis 40,103 3,600 Societe Generale 542,723 ---------- 1,755,020 ---------- BEVERAGES & TOBACCO 1.40% 2,754 Pernod Ricard 180,003 2,502 Societe Nationale D'Exploitation 109,295 ---------- 289,298 ---------- BROADCASTING & PUBLISHING 1.39% 1,368 Canal Plus SA 288,234 ---------- BUILDING MATERIALS & COMPONENTS 3.95% 3,600 Compagnie de Saint Gobain 504,294 4,254 Lafarge SA 313,882 ---------- 818,176 ---------- BUSINESS & PUBLIC SERVICES 9.69% 5,484 Compagnie Generale des Eaux 862,771 3,426 Havas SA 267,191 318 Sodexho Alliance SA 204,922 5,100 Suez Lyonnaise des Eaux SA 672,540 ---------- 2,007,424 ---------- CHEMICALS 2.22% 2,850 L'Air Liquide 460,546 ---------- CONSTRUCTION & HOUSING 0.99% 1,110 Bouygues SA 155,673 750 Groupe GTM 48,651 ---------- 204,324 ---------- ELECTRICAL & ELECTRONICS 7.43% 5,850 Alcatel Alsthom 760,876 1,194 Legrand SA 275,691 210 Sagem SA 128,636 5,988 Schneider SA 372,695 ---------- 1,537,898 ---------- ENERGY EQUIPMENT & SERVICES 0.13% 240 Compagnie Generale de Geophysique SA* 26,446 ---------- ENERGY SOURCES 9.72% 9,600 Elf Acquitaine SA 1,092,539 8,400 Total SA - Class B 921,485 ---------- 2,014,024 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- FINANCIAL SERVICES 0.64% 666 CPR $ 51,842 174 Societe Eurafrance SA** 81,009 ---------- 132,851 ---------- FOOD & HOUSEHOLD PRODUCTS 3.76% 1,140 Eridania Beghin-Say SA 203,314 2,850 Groupe Danone 575,682 ---------- 778,996 ---------- HEALTH & PERSONAL CARE 11.66% 462 Essilor International SA 141,803 2,640 L'Oreal 1,188,787 13,200 Rhone-Poulenc - Class A 608,267 4,200 Sanofi SA 475,917 ---------- 2,414,774 ---------- INDUSTRIAL COMPONENTS 3.08% 5,400 Michelin - Class B 334,324 3,546 Valeo SA 303,395 ---------- 637,719 ---------- INSURANCE 5.53% 11,850 Axa-UAP SA 1,146,216 ---------- LEISURE & TOURISM 2.40% 1,650 Accor SA 380,980 618 Club Mediterranee SA* 45,873 360 Pathe SA 69,171 ---------- 496,024 ---------- MACHINERY & ENGINEERING 0.90% 798 Compagnie Francaise d'Etudes de Construction Technip 90,162 1,380 Sidel SA 95,637 ---------- 185,799 ---------- MERCHANDISING 9.70% 1,500 Carrefour SA 900,103 288 Comptoirs Modernes 156,550 870 Pinault-Printemps Redoute SA 570,351 858 Promodes 382,551 ---------- 2,009,555 ---------- METALS - STEEL 0.81% 11,250 Usinor SA 168,769 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 0.44% 726 Imetal SA 90,373 ---------- MULTI-INDUSTRY 0.81% 4,614 Lagardere S.C.A. 167,457 ---------- REAL ESTATE 0.60% 810 Simco SA** 64,382 558 Union du Credit-Bail Immobilier** 60,846 ---------- 125,228 ---------- RECREATION - OTHER CONSUMER GOODS 4.20% 3,300 LVMH (Moet - Hennessy Louis Vuitton) 663,328 2,616 Societe Bic SA 207,328 ---------- 870,656 ---------- See accompanying notes to financial statements. 25 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ FRANCE WEBS INDEX SERIES (CONCLUDED) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- TELECOMMUNICATIONS 7.01% 29,952 France Telecom SA* $ 1,451,536 ----------- UTILITIES - ELECTRICAL & GAS 0.38% 912 Primagaz Cie 78,180 ----------- TOTAL COMMON STOCK - BASKET (Cost $16,067,661) 20,687,439 ----------- COMMON STOCK - NON-BASKET 0.12% BANKING 0.00% 3 Compagnie Financiere de Paribas - Class A 285 ----------- LEISURE & TOURISM 0.00% 618 Club Mediterranee SA Rights (Expiration Date 03/11/98)* 898 ----------- REAL ESTATE 0.12% 390 Sefimeg 23,992 ----------- TELECOMMUNICATIONS 0.00% 1 France Telecom SA* 49 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $28,809) 25,224 ----------- TOTAL INVESTMENTS (COST $16,096,470)(DAGGER) 100.00% $20,712,663 ======= =========== - ---------------- * Non-income producing security. ** Passive foreign investment company. (DAGGER) Aggregate cost for Federal income tax purposes is $16,100,809. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $4,716,698 Excess of tax cost over value (104,844) ---------- $4,611,854 ========== See accompanying notes to financial statements. 26 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ GERMANY WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 100.00% AUTOMOBILES 10.21% 28,500 Daimler-Benz AG $ 2,333,646 1,500 Volkswagen AG 987,299 300 Volkswagen AG Vorzug 146,297 ----------- 3,467,242 ----------- BANKING 13.60% 15,000 Bayerische Hypotheken-Und Wechsel Bank AG 710,822 15,300 Bayerische Vereinsbank AG 954,353 24,600 Deutsche Bank AG 1,689,657 27,900 Dresdner Bank AG 1,265,247 ----------- 4,620,079 ----------- BUILDING MATERIALS & COMPONENTS 1.05% 300 Buderus AG 135,221 2,970 Heidelberger Zement AG 220,115 ----------- 355,336 ----------- BUSINESS & PUBLIC SERVICES 7.31% 3,600 SAP AG 1,368,746 2,700 SAP AG Vorzug 1,112,850 ----------- 2,481,596 ----------- CHEMICALS 9.35% 33,600 BASF AG 1,222,879 39,000 Bayer AG 1,643,983 6,000 Degussa AG 310,778 ----------- 3,177,640 ----------- CONSTRUCTION & HOUSING 0.56% 2,400 Bilfinger & Berger Bau AG 64,536 3,600 Hochtief AG 124,972 ----------- 189,508 ----------- ELECTRICAL & ELECTRONICS 5.71% 31,500 Siemens AG 1,937,941 ----------- HEALTH & PERSONAL CARE 2.93% 4,800 Beiersdorf AG 226,934 9,900 Merck KGAA 365,495 3,600 Schering AG 404,474 ----------- 996,903 ----------- INDUSTRIAL COMPONENTS 0.40% 5,700 Continental AG 136,941 ----------- INSURANCE 16.65% 12,000 Allianz AG 3,778,929 3,000 Amb Aachener & Muenchener Beteiligungs AG 334,748 1,500 Axa Colonia Konzern AG 182,665 3,000 Muenchener Rueckversicherung AG 1,360,480 ----------- 5,656,822 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- MACHINERY & ENGINEERING 1.91% 600 Linde AG $ 397,068 600 MAN AG 180,516 300 MAN AG Vorzug 70,223 ---------- 647,807 ---------- MERCHANDISING 2.36% 1,800 Douglas Holding AG 63,776 600 Karstadt AG 213,908 11,520 Metro AG 523,694 ---------- 801,378 ---------- METALS - STEEL 1.17% 1,800 Thyssen AG 396,242 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 0.42% 1,200 SGL Carbon AG 142,164 ---------- MULTI-INDUSTRY 0.86% 900 Preussag AG 291,850 ---------- RECREATION - OTHER CONSUMER GOODS 1.38% 3,000 Adidas-Salomon AG 469,473 ---------- TELECOMMUNICATIONS 11.29% 118,500 Deutsche Telekom AG 2,393,115 2,400 Mannesmann AG 1,441,481 ---------- 3,834,596 ---------- TRANSPORTATION - AIRLINES 1.31% 23,100 Deutsche Lufthansa AG 444,867 ---------- UTILITIES - ELECTRICAL & GAS 11.53% 17,100 Rwe AG 945,550 6,600 Rwe AG-Preferred 308,943 27,600 Veba AG 1,851,609 1,500 Viag AG 811,660 ---------- 3,917,762 ---------- TOTAL COMMON STOCK - BASKET (Cost $26,463,161) 33,966,147 ---------- TOTAL INVESTMENTS (COST $26,463,161)(DAGGER) 100.00% $33,966,147 ======= =========== - --------------- (DAGGER) Aggregate cost for Federal income tax purposes is $26,492,524. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $7,585,862 Excess of tax cost over value (112,239) ---------- $7,473,623 ========== See accompanying notes to financial statements. 27 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ HONG KONG WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 99.97% AEROSPACE & MILITARY TECHNOLOGY 0.21% 57,600 Hong Kong Aircraft Engineering Company Limited $ 123,123 ---------- BANKING 9.11% 950,400 Bank Of East Asia Limited 1,994,705 302,400 Hang Seng Bank Limited 2,860,936 129,600 Wing Lung Bank 569,119 ---------- 5,424,760 ---------- BROADCASTING & PUBLISHING 2.53% 576,000 Oriental Press Group 148,789 1,008,000 South China Morning Post Holdings Limited 729,067 216,000 Television Broadcasts Limited 627,704 ---------- 1,505,560 ---------- CONSTRUCTION & HOUSING 0.24% 216,000 Kumagai Gumi Limited 145,070 ---------- ELECTRICAL & ELECTRONICS 1.72% 288,000 Johnson Electric Holdings Limited 1,022,925 ---------- ELECTRONIC COMPONENTS, INSTRUMENTS 0.17% 360,000 Elec & Eltek International Holdings Limited 103,455 ---------- LEISURE & TOURISM 3.43% 864,000 Hong Kong & Shanghai Hotels Limited 742,086 1,728,000 Regal Hotels International 270,052 1,152,000 Shangri-La Asia Limited 1,034,085 ---------- 2,046,223 ---------- MERCHANDISING 1.01% 216,000 Dickson Concepts International Limited 373,833 720,000 Giordano International Limited 227,833 ---------- 601,666 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 0.51% 144,000 Varitronix International Limited 302,228 ---------- MULTI-INDUSTRY 20.55% 2,160,000 Hopewell Holdings Limited 477,055 1,296,000 Hutchison Whampoa Limited 9,164,482 432,000 Swire Pacific Limited - Class A 2,600,090 ---------- 12,241,627 ---------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- REAL ESTATE 34.25% 648,000 Cheung Kong Holdings Limited $ 4,540,394 864,000 Chinese Estates Holdings** 295,719 1,008,000 Hang Lung Development Company Limited** 1,477,662 648,000 Hysan Development Company Limited 1,234,485 576,000 Miramar Hotel & Investment Limited 792,302 720,000 New World Development Company Limited 2,654,956 1,728,000 Sino Land Company 825,780 792,000 Sun Hung Kai Properties Limited 5,932,967 288,000 Tai Cheung Holdings Limited 97,643 1,224,000 Wharf Holdings Limited 2,553,129 ---------- 20,405,037 ---------- TELECOMMUNICATIONS 14.45% 4,089,600 Hong Kong Telecommunications Limited 8,609,684 ---------- TRANSPORTATION - AIRLINES 2.59% 1,800,000 Cathay Pacific Airways Limited 1,546,012 ---------- TRANSPORTATION - SHIPPING 0.47% 1,152,000 Shun Tak Holdings Limited 279,724 ---------- UTILITIES - ELECTRICAL & GAS 8.73% 504,000 CLP Holdings Limited 2,616,829 1,440,000 Hong Kong & China Gas Company Limited 2,585,212 ---------- 5,202,041 ---------- TOTAL COMMON STOCK - BASKET (Cost $64,312,577) 59,559,135 ---------- COMMON STOCK - NON-BASKET 0.03% BANKING 0.03% 7,200 Bank of East Asia Limited 15,111 ---------- FINANCIAL SERVICES 0.00% 276,000 Peregrine Investment Holdings Limited*** 0 ---------- TOTAL COMMON STOCK - NON-BASKET (Cost $416,476) 15,111 ---------- TOTAL INVESTMENTS (COST $64,729,053)(DAGGER) 100.00% $59,574,246 ======= =========== - --------------- ** Passive foreign investment company. *** Fair valued security. (DAGGER) Aggregate cost for Federal income tax purposes is $65,403,938. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 447,444 Excess of tax cost over value (6,277,136) ----------- $(5,829,692) =========== See accompanying notes to financial statements. 28 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ ITALY WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 99.78% AUTOMOBILES 3.93% 710,600 Fiat SpA $ 2,498,586 ----------- BANKING 20.77% 446,500 Banca Commerciale Italiana SpA 2,045,050 133,000 Banca Popolare di Milano SpA 1,140,658 146,300 Banco Intesa SpA 667,954 222,300 Banco Intesa SpA Rnc 507,720 549,100 Credito Italiano SpA** 2,115,452 266,000 Istituto Bancario San Paolo de Torino SpA 3,113,900 171,000 Istituto Mobiliare Italiano SpA** 2,387,187 117,800 Mediobanca SpA*,** 1,215,688 ----------- 13,193,609 ----------- BROADCASTING & PUBLISHING 3.41% 45,600 Arnoldo Mondadori Editore SpA 489,573 298,300 Mediaset SpA 1,678,328 ----------- 2,167,901 ----------- CONSTRUCTION & HOUSING 0.68% 74,100 Sirti SpA 431,237 ----------- DATA PROCESSING & REPRODUCTION 0.92% 594,624 Olivetti Group SpA* 586,499 ----------- ENERGY SOURCES 15.92% 1,729,000 ENI SpA 10,115,343 ----------- FOOD & HOUSEHOLD PRODUCTS 1.20% 459,800 Parmalat Finanziaria SpA 760,573 ----------- INDUSTRIAL COMPONENTS 3.04% 693,500 Pirelli SpA 1,928,833 ----------- INSURANCE 14.01% 95,000 Assicurazioni Generali SpA 2,712,048 950,000 Istituto Nazionale delle Assicurazioni SpA 2,580,122 134,900 Riunione Adriatica di Sicurta SpA 1,580,775 106,400 Riunione Adriatica di Sicurta SpA Rnc 962,651 74,100 Societa Assicuratrice Industriale SpA 1,067,534 ----------- 8,903,130 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- MERCHANDISING 1.51% 104,500 La Rinascente SpA $ 960,236 ----------- METALS - STEEL 0.63% 57,000 Falck Acciaierie & Ferriere Lombarde SpA 401,671 ----------- MULTI-INDUSTRY 2.58% 1,233,100 Montedison SpA 1,276,892 480,700 Montedison SpA Rnc 362,113 ----------- 1,639,005 ----------- RECREATION - OTHER CONSUMER GOODS 0.97% 106,400 Bulgari SpA 616,002 ----------- TELECOMMUNICATIONS 23.76% 1,615,000 Telecom Italia Mobile SpA 7,434,893 380,000 Telecom Italia Mobile SpA Rnc 1,124,848 798,000 Telecom Italia SpA 5,430,298 228,000 Telecom Italia SpA Rnc 1,103,146 ----------- 15,093,185 ----------- TEXTILES & APPAREL 2.60% 55,328 Benetton Group SpA 1,030,345 47,500 Marzotto & Figli SpA 621,353 ----------- 1,651,698 ----------- UTILITIES - ELECTRICAL & GAS 3.85% 212,800 Edison SpA 1,449,388 260,300 Italgas SpA 995,844 ----------- 2,445,232 ----------- TOTAL COMMON STOCK - BASKET (Cost $45,672,382) 63,392,740 ----------- COMMON STOCK - NON-BASKET 0.22% INSURANCE 0.22% 66,500 Assicurazioni Generali SpA Rights (Expiration date 03/10/98) * 136,609 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $109,313) 136,609 ----------- TOTAL INVESTMENTS (COST $45,781,695)(DAGGER) 100.00% $63,529,349 ======= =========== - ------------ * Non-income producing security. ** Passive foreign investment company. (DAGGER) Aggregate cost for Federal income tax purposes is $46,558,339. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $16,992,035 Excess of tax cost over value (21,025) ----------- $16,971,010 =========== See accompanying notes to financial statements. 29 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ JAPAN WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 99.99% APPLIANCES & HOUSEHOLD DURABLES 6.03% 225,000 Matsushita Electric Industrial Company Limited $ 3,277,131 25,000 Pioneer Electronic Corporation 441,305 225,000 Sanyo Electric Company Limited 605,557 125,000 Sharp Corporation 977,598 50,000 Sony Corporation 4,511,992 ----------- 9,813,583 ----------- AUTOMOBILES 9.22% 100,000 Honda Motor Company Limited 3,459,194 275,000 Nissan Motor Company Limited 1,195,084 375,000 Toyota Motor Corporation 10,359,772 ----------- 15,014,050 ----------- BANKING 15.15% 225,000 Asahi Bank Limited 1,186,179 125,000 Ashikaga Bank Limited 244,400 450,000 Bank of Tokyo-Mitsubishi Limited 6,376,158 125,000 Bank of Yokohama Limited 387,873 100,000 Chiba Bank Limited 372,041 275,000 Fuji Bank Limited 2,131,125 50,000 Gunma Bank Limited 376,395 75,000 Hokuriku Bank Limited 135,360 275,000 Industrial Bank of Japan Limited 2,263,912 100,000 Joyo Bank 432,993 150,000 Mitsubishi Trust & Banking Corporation 1,769,176 125,000 Mitsui Trust & Banking Company Limited 416,568 350,000 Sakura Bank Limited 1,462,835 50,000 Seventy-Seven Bank Limited 455,157 100,000 Shizuoka Bank Limited 1,116,124 300,000 Sumitomo Bank Limited 3,562,099 200,000 Tokai Bank Limited 1,415,341 25,000 Yamaguchi Bank Limited 308,715 125,000 Yasuda Trust & Banking 252,315 ----------- 24,664,766 ----------- BEVERAGES & TOBACCO 1.22% 50,000 Asahi Breweries Limited 668,883 125,000 Kirin Brewery Company Limited 1,088,419 50,000 Sapporo Breweries Limited 225,600 ----------- 1,982,902 ----------- BUILDING MATERIALS & COMPONENTS 1.03% 125,000 Chichibu Onoda Cement Corporation 271,115 50,000 Inax Corporation 209,768 50,000 Sekisui Chemical Company Limited 317,818 25,000 Sumitomo Forestry Company Limited 146,046 25,000 Tostem Corporation 348,294 50,000 Toto Limited 375,999 ----------- 1,669,040 ----------- BUSINESS & PUBLIC SERVICES 1.91% 75,000 Dai Nippon Printing Company Limited 1,276,419 50,000 Kamigumi Company Limited 228,370 25,000 Kokuyo Company Limited 437,347 25,000 Mitsubishi Logistics Corporation 282,989 75,000 Toppan Printing Company Limited 884,588 ----------- 3,109,713 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- CHEMICALS 2.86% 150,000 Asahi Chemical Industry Company Limited $ 669,675 100,000 Dainippon Ink & Chemicals Incorporated 300,799 50,000 Kuraray Company Limited 439,326 250,000 Mitsubishi Chemical Corporation 467,031 75,000 Mitsubishi Rayon Company Limited 227,974 25,000 Shin-Etsu Chemical Company Limited 550,146 125,000 Showa Denko K.K. 168,210 175,000 Sumitomo Chemical Company Limited 541,637 100,000 Teijin Limited 306,341 150,000 Toray Industries Incorporated 807,409 75,000 Tosoh Corporation* 169,200 ----------- 4,647,748 ----------- CONSTRUCTION & HOUSING 2.38% 50,000 Daiwa House Industry Company Limited 391,039 175,000 Kajima Corporation 644,146 25,000 Kandenko Company Limited 174,147 25,000 Kinden Corporation 334,442 175,000 Kumagai Gumi Company Limited 193,937 50,000 Nishimatsu Construction Company Limited 257,659 75,000 Obayashi Corporation 407,860 75,000 Sekisui House Limited 590,715 125,000 Shimizu Corporation 496,715 125,000 Taisei Corporation 375,999 ----------- 3,866,659 ----------- DATA PROCESSING & REPRODUCTION 2.61% 100,000 Canon Incorporated 2,287,659 175,000 Fujitsu Limited 1,967,070 ----------- 4,254,729 ----------- ELECTRICAL & ELECTRONICS 3.49% 350,000 Hitachi Limited 2,626,455 25,000 Makita Corportion 288,926 225,000 Mitsubishi Electric Corporation 683,923 150,000 NEC Corporation 1,674,187 25,000 Omron Corporation 403,705 ----------- 5,677,196 ----------- ELECTRONIC COMPONENTS, INSTRUMENTS 3.06% 25,000 Fanuc Limited 910,314 25,000 Kyocera Corporation 1,345,682 25,000 Murata Manufacturing Company Limited 793,557 50,000 Nikon Corporation 486,820 50,000 Olympus Optical Company Limited 393,414 25,000 Tokyo Electron Limited 898,441 25,000 Yokogawa Electric Corporation 157,326 ----------- 4,985,554 ----------- ENERGY SOURCES 0.64% 75,000 Cosmo Oil Company Limited 172,168 125,000 Japan Energy Corporation 173,158 75,000 Mitsubishi Oil Company Limited 155,545 150,000 Nippon Oil Company Limited 541,439 ----------- 1,042,310 ----------- See accompanying notes to financial statements. 30 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ JAPAN WEBS INDEX SERIES (CONTINUED) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- FINANCIAL SERVICES 3.36% 25,000 Acom Company Limited** $ 1,397,134 25,000 Credit Saison Company Limited** 583,789 150,000 Daiwa Securities Company Limited 739,729 200,000 Nomura Securities Company Limited 2,754,690 ----------- 5,475,342 ----------- FOOD & HOUSEHOLD PRODUCTS 1.68% 75,000 Ajinomoto Company Incorporated 742,104 50,000 Kao Corporation 676,799 50,000 Meiji Seika 191,958 25,000 Nippon Meat Packers Incorporated 328,505 25,000 Nissin Food Products Company Limited 520,462 25,000 Yamazaki Baking Company Limited 281,010 ----------- 2,740,838 ----------- FOREST PRODUCTS & PAPER 0.73% 100,000 Nippon Paper Industries Company 508,984 125,000 Oji Paper Company Limited 672,841 ----------- 1,181,825 ----------- HEALTH & PERSONAL CARE 4.44% 25,000 Daiichi Pharmaceutical 342,357 25,000 Eisai Company Limited 437,347 50,000 Kyowa Hakko Kogyo Company Limited 244,993 50,000 Sankyo Company Limited 1,341,724 50,000 Shionogi & Company Limited 258,846 50,000 Shiseido Company Limited 629,304 25,000 Taisho Pharmaceutical Company Limited 587,746 100,000 Takeda Chemical Industries 2,770,522 25,000 Yamanouchi Pharmaceutical Company Limited 607,536 ----------- 7,220,375 ----------- INDUSTRIAL COMPONENTS 4.70% 75,000 Bridgestone Corporation 1,727,618 100,000 Denso Corporation 2,042,270 50,000 Fujikura Limited 351,856 75,000 Furukawa Electric Company Limited 331,275 50,000 Minebea Company Limited 554,104 50,000 NGK Insulators Limited 474,947 25,000 NGK Spark Plug Company Limited 180,678 75,000 NSK Limited 293,873 75,000 NTN Corporation 238,067 100,000 Sumitomo Electric Industries 1,456,503 ----------- 7,651,191 ----------- INSURANCE 2.49% 100,000 Mitsui Marine & Fire Insurance Company Limited 557,271 50,000 Nichido Marine & Fire Insurance Company 305,153 75,000 Nippon Fire & Marine Insurance Company 296,842 100,000 Sumitomo Marine & Fire Insurance Company 629,304 200,000 Tokio Marine & Fire Insurance Company 2,263,912 ----------- 4,052,482 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- LEISURE & TOURISM 0.13% 25,000 Tokyo Dome Corporation $ 203,831 ----------- MACHINERY & ENGINEERING 3.33% 50,000 Amada Company Limited 234,307 50,000 Daikin Industries Limited 251,326 25,000 Ebara Corporation 290,905 125,000 Hitachi Zosen Corporation 284,968 150,000 Kawasaki Heavy Industries Limited 389,456 125,000 Komatsu Limited 596,652 175,000 Kubota Corporation 504,235 25,000 Kurita Water Industries Limited 364,126 350,000 Mitsubishi Heavy Industries Limited 1,523,787 150,000 Mitsui Engineering & Shipbuilding Company Limited* 153,170 100,000 Sumitomo Heavy Industries Limited 356,210 25,000 Toyoda Automatic Loom Works Limited 465,052 ----------- 5,414,194 ----------- MERCHANDISING 3.51% 75,000 Daiei, Incorporated 353,242 25,000 Hankyu Department Stores 168,210 25,000 Isetan Company Limited 188,000 50,000 Ito Yokado Company Limited 2,730,943 25,000 Jusco Company Limited 405,684 50,000 Marui Company Limited 819,283 50,000 Mitsukoshi Limited 180,084 25,000 Mycal Corporation 193,739 25,000 Seiyu Limited 87,271 25,000 Takashimaya Company Limited 213,726 25,000 Uny Company Limited 381,936 ----------- 5,722,118 ----------- METALS - NON FERROUS 0.41% 125,000 Mitsubishi Materials Corporation 284,968 100,000 Nippon Light Metal Company Limited 159,899 50,000 Sumitomo Metal Mining Company 217,288 ----------- 662,155 ----------- METALS - STEEL 1.66% 225,000 Kawasaki Steel Corporation 377,583 650,000 Nippon Steel Corporation 1,219,425 350,000 NKK Corporation 412,808 325,000 Sumitomo Metal Industries 576,269 25,000 Tokyo Steel Manufacturing Company Limited 114,779 ----------- 2,700,864 ----------- MISCELLANEOUS MATERIALS & COMMODITIES 1.07% 125,000 Asahi Glass Company Limited 751,009 25,000 Nitto Denko Corporation 395,789 25,000 Toyo Seikan Kaisha Limited 409,641 100,000 Ube Industries Limited 178,897 ----------- 1,735,336 ----------- REAL ESTATE 1.52% 150,000 Mitsubishi Estate Company Limited 1,674,187 75,000 Mitsui Fudosan Company Limited 807,409 ----------- 2,481,596 ----------- See accompanying notes to financial statements. 31 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ JAPAN WEBS INDEX SERIES (CONCLUDED) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- RECREATION - OTHER CONSUMER GOODS 2.33% 50,000 Casio Computer Company Limited $ 411,620 50,000 Citizen Watch Company 362,147 50,000 Fuji Photo Film Company 1,959,155 50,000 Konica Corporation 261,616 25,000 Shimano Incorporated 514,525 25,000 Yamaha Corporation 277,052 ----------- 3,786,115 ----------- TELECOMMUNICATIONS 7.19% 1,275 Nippon Telegraph & Telephone Corporation 11,707,433 ----------- TEXTILES & APPAREL 0.27% 25,000 Nisshinbo Industries Incorporated 145,452 175,000 Toyobo Limited 293,675 ----------- 439,127 ----------- TRANSPORTATION - AIRLINES 0.47% 200,000 Japan Airlines Company Limited* 772,580 ----------- TRANSPORTATION - ROAD & RAIL 4.17% 400 East Japan Railway Company 1,890,287 125,000 Hankyu Corporation 582,799 50,000 Keihin Electric Express Railway Company Limited 178,105 150,000 Kinki Nippon Railway Company Limited 825,220 100,000 Nagoya Railroad Company Limited 351,460 75,000 Nankai Electric Railway Company 338,399 100,000 Nippon Express Company Limited 624,555 75,000 Odakyu Electric Railway Company 323,557 25,000 Seino Transportation Company 149,212 100,000 Tobu Railway Company Limited 353,044 125,000 Tokyu Corporation 550,146 50,000 Yamato Transport Company Limited 629,304 ----------- 6,796,088 ----------- TRANSPORTATION - SHIPPING 0.47% 150,000 Mitsui O.S.K. Lines Limited* 276,656 150,000 Nippon Yusen Kabushiki Kaisha 485,633 ----------- 762,289 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- UTILITIES - ELECTRICAL & GAS 4.02% 100,000 Kansai Electric Power Company Incorporated $ 1,717,723 275,000 Osaka Gas Company Limited 611,692 50,000 Tohoku Electric Power Company Incorporated 728,251 150,000 Tokyo Electric Power Company 2,825,932 300,000 Tokyo Gas Company Limited 660,176 ----------- 6,543,774 ----------- WHOLESALE & INTERNATIONAL TRADE 2.44% 150,000 Itochu Corporation 445,262 150,000 Marubeni Corporation 414,391 150,000 Mitsubishi Corporation 1,141,059 200,000 Mitsui & Company 1,283,939 100,000 Sumitomo Corporation 695,005 ----------- 3,979,656 ----------- TOTAL COMMON STOCK - BASKET (Cost $195,363,737) 162,757,459 ----------- COMMON STOCK - NON-BASKET 0.01% ELECTRONIC COMPONENTS, INSTRUMENTS 0.01% 352 Tokyo Electron Limited 12,650 ----------- FINANCIAL SERVICES 0.00% 400 Credit Saison Company Limited 9,341 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $19,139) 21,991 ----------- TOTAL INVESTMENTS (COST $195,382,876)(DAGGER) 100.00% $162,779,450 ======= ============ - --------------- * Non-income producing security. ** Passive foreign investment company. (DAGGER) Aggregate cost for Federal income tax purposes is $197,612,497. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $3,179,613 Excess of tax cost over value (38,012,660) ------------ $(34,833,047) ============ See accompanying notes to financial statements. 32 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ MALAYSIA (FREE) WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 99.57% AUTOMOBILES 3.52% 390,000 Edaran Otomobil Nasional BHD $ 848,980 780,000 Perusahaan Otomobil Nasional BHD 1,475,102 1,365,000 Tan Chong Motor Holdings BHD 969,429 ----------- 3,293,511 ----------- BANKING 10.61% 975,000 Commerce Asset Holdings BHD 843,674 1,560,000 Malayan Banking BHD 6,070,204 1,950,000 Public Bank BHD (Foreign) 1,167,347 1,950,000 RHB Capital BHD 1,846,531 ----------- 9,927,756 ----------- BEVERAGES & TOBACCO 7.21% 975,000 Guinness Anchor BHD 1,538,776 585,000 Rothmans of Pall Mall BHD 5,213,265 ----------- 6,752,041 ----------- BROADCASTING & PUBLISHING 0.65% 390,000 New Straits Times Press BHD 604,898 ----------- BUILDING MATERIALS & COMPONENTS 2.02% 585,000 Hume Industries (Malaysia) BHD 678,123 975,000 Malayan Cement BHD 570,408 1,755,000 Pan Malaysia Cement Works BHD 639,918 ----------- 1,888,449 ----------- CONSTRUCTION & HOUSING 1.16% 195,000 Ekran BHD* 78,000 585,000 YTL Corporation BHD 1,010,816 ----------- 1,088,816 ----------- ELECTRICAL & ELECTRONICS 0.48% 780,000 Time Engineering BHD 445,714 ----------- ELECTRONIC COMPONENTS, INSTRUMENTS 1.87% 585,000 Malaysian Pacific Industries BHD 1,751,020 ----------- ENERGY SOURCES 1.12% 585,000 Shell Refining Company BHD 1,050,612 ----------- FINANCIAL SERVICES 3.76% 780,000 AMMB Holdings BHD 963,592 1,365,000 Idris Hydraulic (Malaysia) BHD*,** 486,571 1,755,000 MBF Capital BHD 835,714 780,000 Rashid Hussain BHD 1,231,020 ----------- 3,516,897 ----------- FOOD & HOUSEHOLD PRODUCTS 3.28% 390,000 Nestle (Malaysia) BHD 2,101,225 585,000 Perlis Plantations BHD 971,020 ----------- 3,072,245 ----------- INDUSTRIAL COMPONENTS 0.52% 780,000 Leader Universal Holdings BHD 490,286 ----------- LEISURE & TOURISM 6.36% 2,535,000 Magnum Corporation BHD 2,138,367 1,755,000 Resorts World BHD 3,820,408 ----------- 5,958,775 ----------- MACHINERY & ENGINEERING 1.09% 780,000 UMW Holdings BHD 1,018,776 ----------- METALS - STEEL 0.70% 2,535,000 Amsteel Corporation BHD 655,306 ----------- MISCELLANEOUS MATERIALS & COMMODITIES 7.65% 1,950,000 Golden Hope Plantations BHD 2,600,000 1,365,000 Highlands & Lowlands BHD 1,508,000 390,000 Kian Joo Can Factory BHD 679,184 975,000 Kuala Lumpur Kepong BHD 2,374,490 ----------- 7,161,674 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- MULTI-INDUSTRY 9.16% 2,925,000 Berjaya Group BHD $ 1,098,367 780,000 Land and General BHD 318,367 1,560,000 Malaysia Mining Corporation BHD 976,327 1,365,000 Multi-Purpose Holdings BHD** 668,572 3,315,000 Sime Darby BHD 4,329,796 975,000 United Engineers (Malaysia) Limited BHD 1,183,265 ----------- 8,574,694 ----------- REAL ESTATE 1.36% 1,755,000 Hong Leong Properties BHD 616,041 975,000 Malaysian Resources Corporation BHD 660,612 ----------- 1,276,653 ----------- TELECOMMUNICATIONS 18.95% 1,755,000 Technology Resources Industries BHD 1,824,245 4,680,000 Telekom Malaysia BHD 15,918,367 ----------- 17,742,612 ----------- TRANSPORTATION - AIRLINES 1.44% 1,170,000 Malaysian Airline System BHD 1,349,878 ----------- TRANSPORTATION - SHIPPING 3.47% 1,755,000 Malaysia International Shipping BHD (Foreign) 3,247,347 ----------- UTILITIES - ELECTRICAL & GAS 13.19% 4,680,000 Tenaga Nasional BHD 12,352,653 ----------- TOTAL COMMON STOCK - BASKET ($85,841,306) 93,220,613 ----------- COMMON STOCK - NON-BASKET 0.43% BANKING 0.27% 109,000 Commerce Asset Holdings BHD 94,319 60,399 Public Bank BHD (Foreign) 36,157 132,000 RHB Capital BHD 124,996 ----------- 255,472 ----------- CONSTRUCTION & HOUSING 0.04% 62,000 Ekran BHD* 24,800 6,000 YTL Corporation BHD 10,367 ----------- 35,167 ----------- FOOD & HOUSEHOLD PRODUCTS 0.01% 5,250 Perlis Plantations BHD 8,714 ----------- METALS - STEEL 0.00% 35,944 Silverstone BHD* 0 ----------- MULTI-INDUSTRY 0.00% 1,600 Malaysia Mining Corporation BHD 1,001 ----------- REAL ESTATE 0.11% 156,666 Malaysian Resources Corporation BHD 106,149 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $437,664) 406,503 ----------- TOTAL INVESTMENTS (COST $86,278,970)(DAGGER) 100.00% $93,627,116 ======= =========== - ------------- * Non-income producing security. ** Passive foreign investment company. (DAGGER) Aggregate cost for Federal income tax purposes is $86,451,922. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 9,793,070 Excess of tax cost over value (2,617,876) ----------- $ 7,175,194 =========== See accompanying notes to financial statements. 33 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ MEXICO (FREE) WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 100.00% BANKING 4.58% 108,000 Grupo Financiero Banamex Accival SA de CV - Series B* $ 272,535 45,000 Grupo Financiero Banamex Accival SA de CV - Series L* 96,655 405,000 Grupo Financiero Bancomer SA de CV - Series B* 233,873 ----------- 603,063 ----------- BEVERAGES & TOBACCO 17.56% 99,000 Empresas La Moderna SA de CV - Series A* 497,324 81,000 Fomento Economico Mexicano SA de CV - Series B 603,697 54,000 Grupo Continental SA 173,662 126,000 Grupo Modelo SA de CV - Series C 1,035,211 ----------- 2,309,894 ----------- BROADCASTING & PUBLISHING 3.60% 27,000 Grupo Televisa SA - Series CPO* 473,768 ----------- BUILDING MATERIALS & COMPONENTS 5.88% 45,000 Apasco SA de CV 267,782 63,000 Cemex SA de CV - Series A* 247,711 54,000 Cemex SA de CV - Series B* 257,958 ----------- 773,451 ----------- CHEMICALS 0.44% 27,000 Cydsa SA - Series A 57,613 ----------- CONSTRUCTION & HOUSING 1.63% 108,000 Empresas ICA Sociedad Controladora SA de CV 214,732 ----------- ENERGY EQUIPMENT & SERVICES 1.19% 9,000 Tubos de Acero de Mexico SA* 156,972 ----------- FINANCIAL SERVICES 0.56% 333,000 Grupo Financiero Probursa SA de CV - Series B* 73,870 ----------- FOOD & HOUSEHOLD PRODUCTS 4.67% 54,000 Grupo Industrial Bimbo SA de CV - Series A 497,535 144,000 Grupo Industrial Maseca SA de CV - Series B 116,620 ----------- 614,155 ----------- HEALTH & PERSONAL CARE 7.77% 225,000 Kimberly-Clark de Mexico SA de CV - Series A 1,022,007 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- MACHINERY & ENGINEERING 0.44% 45,000 Consorcio Grupo Dina SA* $ 58,099 ----------- MERCHANDISING 8.25% 315,000 Cifra SA de CV - Series V 608,556 162,000 Controladora Comercial Mexicana SA de CV - Series UBC 186,718 180,000 El Puerto de Liverpool SA de CV - Series 1 247,183 36,000 El Puerto de Liverpool SA de CV - Series C1 42,254 ----------- 1,084,711 ----------- METALS - NON FERROUS 4.58% 99,000 Grupo Mexico SA - Series B 336,972 63,000 Industrias Penoles SA - Series CP* 266,197 ----------- 603,169 ----------- MISCELLANEOUS MATERIALS & COMMODITIES 1.98% 72,000 Empaques Ponderosa SA de CV - Series B* 56,113 54,000 Vitro SA 204,084 ----------- 260,197 ----------- MULTI-INDUSTRY 14.49% 90,000 Alfa SA de CV - Series A 512,324 72,000 Desc SA de CV - Series B 515,493 144,000 Grupo Carso SA de CV - Series A1 878,873 ----------- 1,906,690 ----------- TELECOMMUNICATIONS 22.38% 360,000 Telefonos de Mexico SA - Series A 910,563 810,000 Telefonos de Mexico SA - Series L 2,034,507 ----------- 2,945,070 ----------- TOTAL COMMON STOCK - BASKET (Cost $11,916,397) 13,157,461 ----------- TOTAL INVESTMENTS (COST $11,916,397)(DAGGER) 100.00% $13,157,461 ======= =========== - ------------- * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $11,916,397. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $1,613,718 Excess of tax cost over value (372,654) ---------- $1,241,064 ========== See accompanying notes to financial statements. 34 FEBRUARY 28, 1998 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 4.19% 8,100 Philips Electronics NV $ 629,195 ----------- BANKING 4.08% 27,600 ABN Amro Holding NV 612,165 ----------- BEVERAGES & TOBACCO 4.08% 3,300 Heineken NV 612,311 ----------- BROADCASTING & PUBLISHING 8.36% 34,704 Elsevier NV 652,745 3,900 Wolters Kluwer NV 602,272 ----------- 1,255,017 ----------- BUSINESS & PUBLIC SERVICES 1.58% 5,964 Getronics NV 236,882 ----------- CHEMICALS 4.62% 3,420 Akzo Nobel NV 693,891 ----------- CONSTRUCTION & HOUSING 2.54% 7,560 Hollandsche Beton Groep NV 153,645 3,924 IHC Caland NV 227,553 ----------- 381,198 ----------- DATA PROCESSING & REPRODUCTION 1.67% 1,860 Oce NV 250,526 ----------- ENERGY EQUIPMENT & SERVICES 1.04% 4,680 Koninklijke Pakhoed NV 155,931 ----------- ENERGY SOURCES 21.14% 58,032 Royal Dutch/Shell Group 3,172,495 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- FINANCIAL SERVICES 12.69% 36,000 Ing Groep NV $ 1,904,734 ----------- FOOD & HOUSEHOLD PRODUCTS 12.76% 29,760 Unilever NV - CVA 1,914,794 ----------- FOREST PRODUCTS & PAPER 1.49% 8,400 Koninklijke KNP BT NV 224,066 ----------- INSURANCE 4.56% 9,600 ASR Verzekeringsgroep NV 684,743 ----------- MACHINERY & ENGINEERING 1.22% 4,668 Stork NV 182,442 ----------- MERCHANDISING 4.64% 22,800 Koninklijke Ahold NV 697,289 ----------- METALS - STEEL 1.17% 3,600 Koninklijke Hoogovens NV 175,348 ----------- TELECOMMUNICATIONS 4.83% 14,400 Royal PTT Nederland NV 724,608 ----------- TRANSPORTATION - AIRLINES 2.60% 10,800 KLM - Konin Luchvaart Mij NV 390,972 ----------- TRANSPORTATION - ROAD & RAIL 0.74% 4,800 Koninklijke Nedlloyd Groep NV 111,857 ----------- TOTAL COMMON STOCK - BASKET (Cost $11,439,060) 15,010,464 ----------- TOTAL INVESTMENTS (COST $11,439,060)(DAGGER) 100.00% $15,010,464 ======= =========== - ----------------- (DAGGER) Aggregate cost for Federal income tax purposes is $11,441,527. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $3,618,105 Excess of tax cost over value (49,168) ---------- $3,568,937 ========== See accompanying notes to financial statements. 35 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ SINGAPORE (FREE) WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 99.98% AUTOMOBILES 4.96% 558,000 Cycle And Carriage Limited $ 2,478,470 465,000 Inchcape Motors Limited 702,807 ----------- 3,181,277 ----------- BANKING 25.82% 558,000 Development Bank of Singapore Limited (Foreign) 4,371,746 1,116,000 Oversea-Chinese Banking Corporation Limited 6,643,677 1,023,000 United Overseas Bank Limited (Foreign) 5,553,609 ----------- 16,569,032 ----------- BEVERAGES & TOBACCO 3.81% 558,000 Fraser & Neave Limited 2,444,047 ----------- BROADCASTING & PUBLISHING 4.15% 186,000 Singapore Press Holdings Limited (Foreign) 2,662,060 ----------- BUSINESS & PUBLIC SERVICES 0.75% 372,000 Sembawang Marine and Logistics Limited 479,630 ----------- DATA PROCESSING & REPRODUCTION 0.44% 2,139,000 IPC Corporation Limited 283,705 ----------- ELECTRONIC COMPONENTS, INSTRUMENTS 3.99% 93,000 Creative Technology Limited* 2,214,559 1,674,000 Goldtron Limited 345,953 ----------- 2,560,512 ----------- LEISURE & TOURISM 2.68% 1,116,000 Hotel Properties Limited 722,887 93,000 Overseas Union Enterprise Limited 227,193 465,000 Shangi-La Hotel 768,785 ----------- 1,718,865 ----------- MACHINERY & ENGINEERING 0.14% 186,000 Van Der Horst Limited 92,369 ----------- MERCHANDISING 0.59% 279,000 Metro Holdings Limited 382,097 ----------- METALS - NON FERROUS 1.11% 651,000 Straits Trading Company Limited 714,855 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- METALS - STEEL 1.40% 651,000 Natsteel Limited $ 899,593 ----------- MULTI-INDUSTRY 7.83% 744,000 Haw Par Corporation Limited** 853,695 1,023,000 Keppel Corporation Limited 2,940,888 1,395,000 Singapore Technologies Industrial Corporation** 1,230,629 ----------- 5,025,212 ----------- REAL ESTATE 18.97% 465,000 City Developments Limited 2,108,421 2,046,000 DBS Land Limited 3,168,081 651,000 First Capital Corporation Limited 658,630 1,209,000 Parkway Holdings Limited 2,595,509 3,906,000 United Industrial Corporation Limited 1,578,304 2,325,000 United Overseas Land Limited 2,065,392 ----------- 12,174,337 ----------- TELECOMMUNICATIONS 13.35% 4,185,000 Singapore Telecommunications Limited 8,571,376 ----------- TRANSPORTATION - AIRLINES 7.51% 651,000 Singapore Airlines Limited (Foreign) 4,819,247 ----------- TRANSPORTATION - ROAD & RAIL 1.05% 1,395,000 Comfort Group Limited 675,555 ----------- TRANSPORTATION - SHIPPING 1.43% 1,953,000 Neptune Orient Lines Limited 915,657 ----------- TOTAL COMMON STOCK - BASKET (Cost $64,229,437) 64,169,426 ----------- COMMON STOCK - NON-BASKET 0.02% ELECTRONIC COMPONENTS, INSTRUMENTS 0.02% 650 Creative Technology Limited* 15,478 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $8,489) 15,478 ----------- TOTAL INVESTMENTS (COST $64,237,926)(DAGGER) 100.00% $64,184,904 ======= =========== - ---------------- * Non-income producing security. ** Passive foreign investment company. (DAGGER) Aggregate cost for Federal income tax purposes is $65,720,691. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 1,580,056 Excess of tax cost over value (3,115,843) ----------- $(1,535,787) =========== See accompanying notes to financial statements. 36 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ SPAIN WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 100.00% BANKING 31.48% 49,194 Banco Bilbao Vizcaya SA $ 2,245,455 24,300 Banco Central Hispanoamericano SA 754,962 33,300 Banco Santander SA 1,539,434 9,900 Corporacion Bancaria de Espana SA 736,643 ----------- 5,276,494 ----------- BEVERAGES & TOBACCO 2.76% 10,026 El Aguila SA* 72,909 3,852 Tabacalera SA - Class A 388,914 ----------- 461,823 ----------- BUSINESS & PUBLIC SERVICES 5.00% 27,000 Autopistas Concesionaria Espanola SA 404,961 7,632 Prosegur Cia de Seguridad SA 84,984 7,560 Sociedade General de Aguas de Barcelona SA 348,512 ----------- 838,457 ----------- CHEMICALS 0.45% 60,147 Ercros SA* 75,372 ----------- CONSTRUCTION & HOUSING 3.31% 7,623 Dragados y Construcciones SA 207,880 8,100 Fomento de Construcciones y Contratas SA 347,109 ----------- 554,989 ----------- ENERGY SOURCES 4.31% 16,200 Repsol SA 721,566 ----------- FOOD & HOUSEHOLD PRODUCTS 1.40% 11,601 Ebro Agricolas SA 235,387 ----------- FOREST PRODUCTS & PAPER 0.86% 3,600 Empresa Nacional de Celulosas SA 50,255 21,816 Sarrio SA 94,196 ----------- 144,451 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- INSURANCE 1.74% 10,008 Mapfre (Corporacion) $ 291,763 ----------- MACHINERY & ENGINEERING 2.03% 12,240 Zardoya Otis 339,349 ----------- METALS - STEEL 1.41% 1,575 Acerinox SA 236,534 ----------- MISCELLANEOUS MATERIALS & COMMODITIES 0.61% 3,150 Viscofan Industria Navarra De Envolturas Celulosicas SA 101,854 ----------- MULTI-INDUSTRY 1.51% 1,953 Corporacion Financiera Alba SA 253,612 ----------- REAL ESTATE 4.72% 7,011 Inmobiliaria Metropolitana Vasco Central SA 338,680 10,971 Inmobiliaria Urbis SA* 141,398 9,828 Vallehermoso SA 311,402 ----------- 791,480 ----------- TELECOMMUNICATIONS 14.20% 69,300 Telefonica de Espana 2,380,268 ----------- UTILITIES - ELECTRICAL & GAS 24.21% 87,336 Endesa SA 1,928,010 13,500 Gas Natural SDG SA 599,552 49,500 Iberdrola SA 715,109 65,700 Union Electrica Fenosa SA 814,771 ----------- 4,057,442 ----------- TOTAL COMMON STOCK - BASKET (Cost $12,514,159) 16,760,841 ----------- TOTAL INVESTMENTS (COST $12,514,159)(DAGGER) 100.00% $16,760,841 ======= =========== - --------------- * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $12,520,661. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $4,342,921 Excess of tax cost over value (102,741) ---------- $4,240,180 ========== See accompanying notes to financial statements. 37 FEBRUARY 28, 1998 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 3.56% 5,600 Electrolux AB-B $ 426,659 ----------- AUTOMOBILES 4.48% 9,600 Volvo AB-A 255,396 10,400 Volvo AB-B 281,225 ----------- 536,621 ----------- BANKING 9.15% 38,400 Skandinaviska Enskilda Banken-A 549,161 12,800 Svenska Handelsbanken-A 547,562 ----------- 1,096,723 ----------- BEVERAGES & TOBACCO 1.93% 72,000 Swedish Match AB 231,115 ----------- BUSINESS & PUBLIC SERVICES 3.11% 5,600 Esselte AB-A 105,615 4,800 Esselte AB-B 98,022 5,600 Securitas AB-B 169,614 ----------- 373,251 ----------- CHEMICALS 2.29% 11,200 AGA AB-A 153,877 9,600 AGA AB-B 121,103 ----------- 274,980 ----------- CONSTRUCTION & HOUSING 3.32% 8,800 Skanska AB-B 397,882 ----------- ELECTRICAL & ELECTRONICS 27.74% 42,400 ABB AB - A 532,224 20,000 ABB AB - B 248,551 56,000 Ericsson LM-B 2,545,963 ----------- 3,326,738 ----------- FINANCIAL SERVICES 0.90% 2,400 Om Gruppen AB 108,513 ----------- FOREST PRODUCTS & PAPER 5.65% 18,400 Stora Kopparbergs-A 267,736 3,200 Stora Kopparbergs-B 46,163 16,000 Svenska Cellulosa AB-B 363,709 ----------- 677,608 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- HEALTH & PERSONAL CARE 18.56% 91,728 Astra AB-A $ 1,850,279 19,200 Astra AB-B 375,300 ----------- 2,225,579 ----------- INDUSTRIAL COMPONENTS 2.69% 8,000 SKF AB-A 156,874 8,000 SKF AB-B 165,368 ----------- 322,242 ----------- INSURANCE 4.52% 9,600 Skandia Forsakrings AB 541,966 ----------- MACHINERY & ENGINEERING 3.90% 10,400 Atlas Copco AB-A 289,668 6,400 Atlas Copco AB-B 177,858 ----------- 467,526 ----------- MERCHANDISING 4.09% 10,400 Hennes & Mauritz AB - B 491,007 ----------- METALS - NON FERROUS 0.57% 4,000 Granges AB 68,945 ----------- METALS - STEEL 1.62% 6,400 Svenskt Stal AB(SSAB) - A 119,904 4,000 Svenskt Stal AB(SSAB) - B 74,940 ----------- 194,844 ----------- MULTI-INDUSTRY 1.13% 9,600 Trelleborg AB-B 135,492 ----------- REAL ESTATE 0.79% 6,400 Diligentia AB 94,724 ----------- TOTAL COMMON STOCK - BASKET (Cost $10,347,885) 11,992,415 ----------- TOTAL INVESTMENTS (COST $10,347,885)(DAGGER) 100.00% $11,992,415 ======= =========== - ------------------ (DAGGER) Aggregate cost for Federal income tax purposes is $10,351,825. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $1,824,074 Excess of tax cost over value (183,484) ---------- $1,640,590 ========== See accompanying notes to financial statements. 38 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ SWITZERLAND WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 100.00% BANKING 16.63% 6,050 Credit Suisse Group $ 1,092,430 3,190 Schweizerischer Bankverein (Swiss Bank)* 1,067,246 1,144 UBS-Union Bank of Switzerland 1,781,946 ----------- 3,941,622 ----------- BUILDING MATERIALS & COMPONENTS 4.66% 1,133 Forbo Holding AG 514,158 1,210 Holderbank Financiere Glarus AG 236,624 363 Holderbank Financiere Glarus AG - Bearer 353,700 ----------- 1,104,482 ----------- BUSINESS & PUBLIC SERVICES 2.66% 1,122 Adecco SA 362,762 308 SGS Societe Generale de Surveillance Holding SA 107,032 88 SGS Societe Generale de Surveillance Holding SA - Bearer 161,897 ----------- 631,691 ----------- CHEMICALS 3.04% 110 EMS-Chemie Holding AG*,** 554,647 484 Sika Finanz AG 166,214 ----------- 720,861 ----------- ELECTRICAL & ELECTRONICS 2.21% 385 Abb AG - Bearer 524,666 ----------- FINANCIAL SERVICES 2.89% 297 Julius Baer Holding AG** 685,027 ----------- FOOD & HOUSEHOLD PRODUCTS 9.59% 1,298 Nestle SA 2,273,004 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- HEALTH & PERSONAL CARE 33.41% 330 Ares Serono Group** $ 494,685 2,376 Novartis AG 4,333,982 264 Roche Holding AG - Genussein 3,090,433 ----------- 7,919,100 ----------- INSURANCE 12.37% 594 Helvetia Patria Holding** 779,129 495 Schweizerische Rueckversicherungs (Swiss Re) 1,043,224 2,035 Zuerich Versicherungs 1,109,294 ----------- 2,931,647 ----------- LEISURE & TOURISM 0.52% 319 Mowenpick Holdings - Bearer 123,896 ----------- MACHINERY & ENGINEERING 2.38% 440 Schindler Holding AG 563,641 ----------- MERCHANDISING 0.67% 693 Valora Holding AG 158,895 ----------- MULTI-INDUSTRY 3.54% 726 Alusuisse-Lonza Holdings 838,491 ----------- RECREATION - OTHER CONSUMER GOODS 2.64% 6,127 Tag Heuer International SA*,** 626,227 ----------- TRANSPORTATION - AIRLINES 2.79% 495 Sairgroup* 661,079 ----------- TOTAL COMMON STOCK - BASKET (Cost $19,311,734) 23,704,329 ----------- TOTAL INVESTMENTS (COST $19,311,734)(DAGGER) 100.00% $23,704,329 ======= =========== - ---------------- * Non-income producing security. ** Non index security. (DAGGER) Aggregate cost for Federal income tax purposes is $19,335,732. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $4,418,104 Excess of tax cost over value (49,507) ---------- $4,368,597 ========== See accompanying notes to financial statements. 39 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ UNITED KINGDOM WEBS INDEX SERIES - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- COMMON STOCK - BASKET 100.00% AEROSPACE & MILITARY TECHNOLOGY 1.51% 15,660 British Aerospace Plc $ 491,962 56,520 Rolls-Royce Plc 216,365 ----------- 708,327 ----------- APPLIANCES & HOUSEHOLD DURABLES 0.07% 13,416 Thorn Plc 33,465 ----------- BANKING 15.23% 51,060 Barclays Plc 1,516,628 57,600 HSBC Holdings Plc ($HK10) 1,660,620 28,800 HSBC Holdings Plc (75p) 884,842 180,000 Lloyds TSB Group Plc 2,708,822 24,300 Royal Bank of Scotland Group Plc 376,094 ----------- 7,147,006 ----------- BEVERAGES & TOBACCO 3.88% 35,040 Cadbury Schweppes Plc 445,681 134,412 Diageo Plc 1,375,438 ----------- 1,821,119 ----------- BROADCASTING & PUBLISHING 2.62% 54,120 British Sky Broadcasting Group Plc 350,197 22,500 Pearson Plc 335,269 46,080 Reed International Plc 542,096 ----------- 1,227,562 ----------- BUILDING MATERIALS & COMPONENTS 1.75% 32,520 Blue Circle Industries Plc 190,216 18,120 BPB Plc 98,007 17,628 Caradon Plc 58,049 23,508 Hanson Plc 118,634 9,540 Hepworth Plc 35,342 10,140 RMC Group Plc 154,600 19,980 Wolseley Plc 164,485 ----------- 819,333 ----------- BUSINESS & PUBLIC SERVICES 3.33% 11,040 Anglian Water Plc 153,053 6,720 De La Rue Plc 32,142 14,400 Railtrack Group Plc 219,314 50,328 Reuters Group Plc 506,720 16,200 Thames Water Plc 235,792 20,580 United Utilities Plc 276,501 23,700 Williams Plc 137,358 ----------- 1,560,880 ----------- CHEMICALS 1.77% 16,440 BOC Group Plc 257,150 21,720 Courtaulds Plc 125,703 24,540 Imperial Chemical Industries Plc 447,891 ----------- 830,744 ----------- CONSTRUCTION & HOUSING 0.13% 18,660 Taylor Woodrow Plc 62,676 ----------- ELECTRICAL & ELECTRONICS 1.32% 94,560 General Electric Company Plc 618,101 ----------- ELECTRONIC COMPONENTS, INSTRUMENTS 0.13% 9,300 Bowthorpe Plc 61,326 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- ENERGY SOURCES 6.22% 188,580 British Petroleum Company Plc $ 2,601,965 7,740 Burmah Castrol Plc 133,556 40,560 LASMO Plc 184,485 ----------- 2,920,006 ----------- FINANCIAL SERVICES 2.55% 44,880 Abbey National Plc 921,470 7,320 Schroders Plc** 276,602 ----------- 1,198,072 ----------- FOOD & HOUSEHOLD PRODUCTS 3.28% 38,940 Associated British Foods Plc 406,487 117,120 Unilever Plc 1,060,609 15,900 United Biscuits Holdings Plc 70,881 ----------- 1,537,977 ----------- FOREST PRODUCTS & PAPER 0.17% 29,400 Arjo Wiggins Appleton Plc 80,114 ----------- HEALTH & PERSONAL CARE 14.46% 117,840 Glaxo Wellcome Plc 3,298,401 168,000 Smithkline Beecham Plc 2,102,251 31,860 Zeneca Group Plc 1,384,878 ----------- 6,785,530 ----------- INDUSTRIAL COMPONENTS 0.70% 21,660 BBA Group Plc 154,422 20,580 BICC Plc 44,220 33,720 Lucasvarity Plc 129,917 ----------- 328,559 ----------- INSURANCE 6.34% 30,120 Commercial Union Plc 544,527 48,000 Guardian Royal Exchange Plc 360,781 42,444 Legal & General Group Plc 475,910 60,000 Prudential Corporation Plc 896,519 51,600 Royal & Sun Alliance Insurance Group Plc 657,161 16,620 Sedgwick Group Plc 40,774 ----------- 2,975,672 ----------- LEISURE & TOURISM 2.64% 31,500 Bass Plc 527,983 9,900 Carlton Communications Plc 69,602 24,000 Ladbroke Group Plc 120,919 33,420 Rank Group Plc 183,237 23,340 Scottish & Newcastle Plc 335,872 ----------- 1,237,613 ----------- MACHINERY & ENGINEERING 0.94% 10,800 GKN Plc 261,220 12,000 Smith Industries Plc 179,600 ----------- 440,820 ----------- MERCHANDISING 8.45% 34,020 Boots Company Plc 511,127 36,660 Great Universal Stores Plc 467,795 26,100 Kingfisher Plc 450,149 104,100 Marks & Spencer Plc 994,981 18,540 Next Plc 252,909 42,720 Safeway Plc 251,812 48,000 Sainsbury Plc 372,241 78,180 Tesco Plc 664,856 ----------- 3,965,870 ----------- See accompanying notes to financial statements. 40 FEBRUARY 28, 1998 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ UNITED KINGDOM WEBS INDEX SERIES (CONCLUDED) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- METALS - NON FERROUS 1.01% 35,280 Rio Tinto Plc $ 476,326 ----------- METALS - STEEL 0.32% 63,120 British Steel Plc 151,474 ----------- MISCELLANEOUS MATERIALS & COMMODITIES 0.36% 42,480 Pilkington Plc 80,435 18,960 Rexam Plc 86,629 ----------- 167,064 ----------- MULTI-INDUSTRY 4.32% 108,300 B.A.T. Industries Plc 1,080,595 137,520 BTR Plc 365,113 20,400 Granada Group Plc 318,756 27,300 Lonrho Plc 42,028 25,320 TI Group Plc 221,996 ----------- 2,028,488 ----------- REAL ESTATE 1.81% 21,780 British Land Company Plc 263,577 22,980 Land Securities Plc** 430,391 15,780 MEPC Plc 155,891 ----------- 849,859 ----------- RECREATION - OTHER CONSUMER GOODS 0.51% 28,188 EMI Group Plc 240,412 ----------- - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----- TELECOMMUNICATIONS 8.52% 210,300 British Telecommunications Plc $ 2,124,299 80,700 Cable & Wireless Plc 882,274 111,540 Vodafone Group Plc 991,713 ----------- 3,998,286 ----------- TEXTILES & APPAREL 0.11% 38,340 Coats Viyella Plc 53,342 ----------- TRANSPORTATION - AIRLINES 0.73% 36,360 British Airways Plc 341,240 ----------- TRANSPORTATION - SHIPPING 0.62% 22,680 Peninsular & Oriental Steam Plc 292,206 ----------- UTILITIES - ELECTRICAL & GAS 4.20% 126,996 BG Plc 637,229 143,940 Centrica Plc* 255,957 49,824 National Grid Holdings Plc 280,560 39,780 National Power Plc 412,308 29,640 Scottish Power Plc 252,796 15,948 Southern Electric Plc 134,705 ----------- 1,973,555 ----------- TOTAL COMMON STOCK - BASKET (Cost $36,274,717) 46,933,024 ----------- TOTAL INVESTMENTS (COST $36,274,717)(DAGGER) 100.00% $46,933,024 ======= =========== - -------------- * Non-income producing security. ** Passive foreign investment company. (DAGGER) Aggregate cost for Federal income tax purposes is $36,388,133. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $11,291,642 Excess of tax cost over value (746,751) ----------- $10,544,891 =========== See accompanying notes to financial statements. 41 FEBRUARY 28, 1998 STATEMENTS OF ASSETS AND LIABILITIES (Unaudited) WEBS INDEX FUND, INC. ================================================================================
AUSTRALIA AUSTRIA BELGIUM CANADA FRANCE GERMANY HONG KONG WEBS WEBS WEBS WEBS WEBS WEBS WEBS INDEX INDEX INDEX INDEX INDEX INDEX INDEX SERIES SERIES SERIES SERIES SERIES SERIES SERIES ----------- ---------- ----------- ----------- ----------- ----------- ----------- ASSETS Investments, at value .................. $42,019,883 $5,559,227 $21,420,028 $22,508,823 $20,712,663 $33,966,147 $59,574,246 Cash and foreign currency .............. 70,225 55,670 88,822 161,519 148,249 271,233 11,698 Collateral for securities loaned ....... 6,469,604 710,818 4,422,166 1,552,992 497,691 7,137,577 5,765,256 Dividends receivable ................... 151,323 627 27,260 29,189 135,400 8,831 81,564 Interest receivable .................... 1,069 238 1,625 133 145 1,185 2,769 Receivable for securities sold ......... -- -- 706,467 108,597 -- -- 65,436 Receivable for Fund shares sold ........ -- -- -- -- -- -- -- Deferred organization cost ............. 86,643 64,432 28,143 61,201 167,977 159,586 44,483 Prepaid expenses ....................... 8,386 902 4,993 3,986 3,846 6,231 6,519 ----------- ---------- ----------- ----------- ----------- ----------- ----------- Total assets ....................... 48,807,133 6,391,914 26,699,504 24,426,440 21,665,971 41,550,790 65,551,971 ----------- ---------- ----------- ----------- ----------- ----------- ----------- LIABILITIES Payable for securities purchased ....... -- -- -- 70,920 -- -- -- Payable for Fund shares redeemed ....... -- -- 708,328 -- -- -- -- Liability for in-kind subscriptions .... -- -- -- -- -- -- -- Payable for securities loaned .......... 6,469,604 710,818 4,422,166 1,552,992 497,691 7,137,577 5,765,256 Advisory fee payable ................... 18,697 1,924 10,632 9,315 8,443 13,316 17,793 Administration fee payable ............. 15,235 1,568 8,663 7,590 6,880 10,850 14,498 Distribution fee payable ............... 13,850 1,425 7,876 6,900 6,254 9,863 13,180 Due to custodian ....................... 6,191 3,184 4,969 1,610 1,675 2,524 46,431 Accrued expenses ....................... 33,034 4,248 6,619 17,241 8,083 12,865 41,582 ----------- ---------- ----------- ----------- ----------- ----------- ----------- Total liabilities .................. 6,556,611 723,167 5,169,253 1,666,568 529,026 7,186,995 5,898,740 ----------- ---------- ----------- ----------- ----------- ----------- ----------- NET ASSETS Capital stock, $0.001 par value ........ 4,200 500 1,200 1,600 1,201 1,801 5,401 Paid-in capital ........................ 45,402,570 5,334,800 18,981,115 17,527,955 16,421,090 26,968,603 65,048,447 Accumulated net investment income/(loss) 102,683 (19,907) (480,421) 58,216 (69,608) (81,652) 110,056 Accumulated net realized gain/(loss) on investments ....................... (113,635) 33,559 1,262,510 629,797 177,798 (24,237) (355,906) Net unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ................... (3,145,296) 319,795 1,765,847 4,542,304 4,606,464 7,499,280 (5,154,767) ----------- ---------- ----------- ----------- ----------- ----------- ----------- Net Assets ............................. $42,250,522 $5,668,747 $21,530,251 $22,759,872 $21,136,945 $34,363,795 $59,653,231 =========== ========== =========== =========== =========== =========== =========== Shares of common stock issued and outstanding .......................... 4,200,030 500,030 1,200,030 1,600,030 1,201,000 1,801,000 5,401,000 =========== ========== =========== =========== =========== =========== =========== Net Asset Value Per Share .............. $ 10.06 $ 11.34 $ 17.94 $ 14.22 $ 17.60 $ 19.08 $ 11.04 =========== ========== =========== =========== =========== =========== ===========
MALAYSIA MEXICO SINGAPORE ITALY JAPAN (FREE) (FREE) NETHERLANDS (FREE) WEBS WEBS WEBS WEBS WEBS WEBS INDEX INDEX INDEX INDEX INDEX INDEX SERIES SERIES SERIES SERIES SERIES SERIES ----------- ------------ ------------ ----------- ----------- ----------- ASSETS Investments, at value .................. $63,529,349 $162,779,450 $93,627,116 $13,157,461 $15,010,464 $64,184,904 Cash and foreign currency .............. 138,083 426,374 -- 94,766 87,412 6,766,715 Collateral for securities loaned ....... 15,078,715 32,537,038 16,559,498 3,027,560 2,439,292 9,532,677 Dividends receivable ................... -- 48,724 61,322 -- 1,270 -- Interest receivable .................... 3,918 9,569 15,412 2,649 216 3,137 Receivable for securities sold ......... -- -- 163,265 -- -- -- Receivable for Fund shares sold ........ -- -- -- -- -- 1,358,695 Deferred organization cost ............. 84,801 352,171 47,149 47,634 39,893 56,615 Prepaid expenses ....................... 11,041 27,673 9,185 2,561 2,367 6,914 ----------- ------------ ------------ ----------- ----------- ----------- Total assets ....................... 78,845,907 196,180,999 110,482,947 16,332,631 17,580,914 81,909,657 ----------- ------------ ------------ ----------- ----------- ----------- LIABILITIES Payable for securities purchased ....... -- -- -- -- -- 6,734,337 Payable for Fund shares redeemed ....... -- -- -- -- -- -- Liability for in-kind subscriptions .... -- -- -- -- -- 1,352,745 Payable for securities loaned .......... 15,078,715 32,537,038 16,559,498 3,027,560 2,439,292 9,532,677 Advisory fee payable ................... 26,274 61,663 23,225 6,323 5,615 17,417 Administration fee payable ............. 21,408 50,244 20,710 5,152 4,575 14,191 Distribution fee payable ............... 19,462 45,676 18,827 4,684 4,159 12,901 Due to custodian ....................... 3,781 16,336 89,842 6,831 3,855 38,353 Accrued expenses ....................... 27,380 38,987 38,596 6,294 12,689 25,877 ----------- ------------ ------------ ----------- ----------- ----------- Total liabilities .................. 15,177,020 32,749,944 16,750,698 3,056,844 2,470,185 17,728,498 ----------- ------------ ------------ ----------- ----------- ----------- NET ASSETS Capital stock, $0.001 par value ........ 2,850 15,001 14,625 900 601 9,300 Paid-in capital ........................ 46,080,688 202,237,707 87,731,749 10,834,440 11,117,309 66,870,046 Accumulated net investment income/(loss) (817,373) (388,025) (1,487) (8,251) (16,909) (35,568) Accumulated net realized gain/(loss) on investments ....................... 655,130 (5,834,735) (1,364,014) 1,207,252 438,597 (2,488,252) Net unrealized appreciation/(depreciation on investments and translation of other assets and liabilities denominated in foreign currencies ................... 17,747,592 (32,598,893) 7,351,376 1,241,446 3,571,131 (174,367) ----------- ------------ ------------ ----------- ----------- ----------- Net Assets ............................. $63,668,887 $163,431,055 $93,732,249 $13,275,787 $15,110,729 $64,181,159 =========== ============ =========== =========== =========== =========== Shares of common stock issued and outstanding .......................... 2,850,030 15,001,000 14,625,030 900,030 601,000 9,300,030 =========== ============ =========== =========== =========== =========== Net Asset Value Per Share .............. $ 22.34 $ 10.89 $ 6.41 $ 14.75 $ 25.14 $ 6.90 =========== ============ =========== =========== =========== ===========
UNITED SPAIN SWEDEN SWITZERLAND KINGDOM WEBS WEBS WEBS WEBS INDEX INDEX INDEX INDEX SERIES SERIES SERIES SERIES ----------- ----------- ----------- ----------- ASSETS Investments, at value .................. $16,760,841 $11,992,415 $23,704,329 $46,933,024 Cash and foreign currency .............. 106,441 66,070 171,955 289,311 Collateral for securities loaned ....... 802,064 2,460,127 2,544,855 -- Dividends receivable ................... 10,556 -- 17,863 244,412 Interest receivable .................... 102 417 776 54 Receivable for securities sold ......... 148,642 -- -- 415,851 Receivable for Fund shares sold ........ -- -- -- Deferred organization cost ............. 69,942 45,533 107,506 101,491 Prepaid expenses ....................... 2,909 2,146 4,195 8,378 ----------- ----------- ----------- ----------- Total assets ....................... 17,901,497 14,566,708 26,551,479 47,992,521 ----------- ----------- ----------- ----------- LIABILITIES Payable for securities purchased ....... 154,223 -- -- -- Payable for Fund shares redeemed ....... -- -- -- -- Liability for in-kind subscriptions .... -- -- -- -- Payable for securities loaned .......... 802,064 2,460,127 2,544,855 -- Advisory fee payable ................... 5,254 4,867 9,543 19,333 Administration fee payable ............. 5,310 3,966 7,776 15,752 Distribution fee payable ............... 4,827 3,605 7,069 14,320 Due to custodian ....................... 1,869 1,869 1,712 2,756 Accrued expenses ....................... 13,461 13,553 12,600 34,671 ----------- ----------- ----------- ----------- Total liabilities .................. 987,008 2,487,987 2,583,555 86,832 ----------- ----------- ----------- ----------- NET ASSETS Capital stock, $0.001 par value ........ 675 600 1,376 2,401 Paid-in capital ........................ 12,406,341 10,120,742 18,285,607 36,863,433 Accumulated net investment income/(loss) 45,618 (81,737) (99,430) 178,080 Accumulated net realized gain/(loss) on investments ....................... 215,755 394,586 1,388,728 201,146 Net unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ................... 4,246,100 1,644,530 4,391,643 10,660,629 ----------- ----------- ----------- ----------- Net Assets ............................. $16,914,489 $12,078,721 $23,967,924 $47,905,689 =========== =========== =========== =========== Shares of common stock issued and outstanding .......................... 675,030 600,030 1,376,000 2,401,000 =========== =========== =========== =========== Net Asset Value Per Share .............. $ 25.06 $ 20.13 $ 17.42 $ 19.95 =========== =========== =========== ===========
See accompanying notes to financial statements. 42-43 FOR THE SIX MONTH PERIOD ENDING FEBRUARY 28, 1998 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) .......... $ 797,513 $ 2,736 $ 72,228 $ 186,232 $ 19,690 $ 53,556 Interest .............................................. 10,382 2,325 12,507 2,467 1,846 8,270 ----------- -------- ---------- ---------- ---------- ---------- Total investment income ............................. 807,895 5,061 84,735 188,699 21,536 61,826 ----------- -------- ---------- ---------- ---------- ---------- EXPENSES: Advisory fees ......................................... 58,063 5,818 41,012 30,958 22,814 36,370 Administration fees ................................... 43,857 4,391 30,539 23,213 17,352 27,584 Distribution fees ..................................... 46,463 4,660 33,257 24,944 18,138 28,992 Custodian fees and expenses ........................... 21,685 4,155 18,150 8,386 9,850 13,530 Transfer agent fees ................................... 4,097 3,130 4,422 3,705 5,901 4,226 Directors' fees ....................................... 8,823 881 6,288 4,708 3,438 5,465 Legal fees ............................................ 26,794 1,279 9,012 16,798 5,030 7,987 Audit fees ............................................ 12,152 1,213 8,660 6,484 4,735 7,527 Federal and state registration fees ................... 1,116 768 -- -- 1,359 1,949 Amortization of deferred organization costs ........... 7,124 5,298 2,315 5,034 13,814 13,124 Insurance ............................................. 2,378 373 699 4,295 2,167 3,231 Printing .............................................. 3,967 396 2,827 2,117 1,546 2,457 Licensing fees ........................................ 6,451 647 4,557 3,440 2,535 4,041 Amex listing fee ...................................... 310 60 71 594 331 369 Miscellaneous expenses ................................ 3,283 2,586 1,294 6,619 2,703 3,228 ----------- -------- ---------- ---------- ---------- ---------- Total expenses ...................................... 246,563 35,655 163,103 141,295 111,713 160,080 ----------- -------- ---------- ---------- ---------- ---------- Net investment income/(loss) .......................... 561,332 (30,594) (78,368) 47,404 (90,177) (98,254) ----------- -------- ---------- ---------- ---------- ---------- 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 ............... 149,999 64,527 426,750 219,497 212,938 10,989 Net realized gain/(loss) on investments on in-kind redemptions ................................. (237,322) -- 866,304 538,741 -- -- Net realized gain/(loss) on foreign currency related transactions ................................ (26,312) (111) 14,622 (1,862) (2,953) (5,863) ----------- -------- ---------- ---------- ---------- ---------- (113,635) 64,416 1,307,676 756,376 209,985 5,126 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ....... (1,583,131) 341,153 2,358,547 577,403 3,439,107 4,880,546 ----------- -------- ---------- ---------- ---------- ---------- Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies ................... (1,696,766) 405,569 3,666,223 1,333,779 3,649,092 4,885,672 ----------- -------- ---------- ---------- ---------- ---------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................................... $(1,135,434) $374,975 $3,587,855 $1,381,183 $3,558,915 $4,787,418 =========== ======== ========== ========== ========== ==========
MALAYSIA MEXICO HONG KONG ITALY JAPAN (FREE) (FREE) WEBS WEBS WEBS WEBS WEBS INDEX INDEX INDEX INDEX INDEX SERIES SERIES SERIES SERIES SERIES ----------- ----------- ------------ ----------- --------- INVESTMENT INCOME: Dividends (net of foreign withholding taxes) .......... $ 599,766 $ 11,151 $ 460,982 $ 286,430 $ 80,386 Interest .............................................. 17,326 22,186 50,792 30,425 15,149 ----------- ----------- ------------ ----------- --------- Total investment income ............................. 617,092 33,337 511,774 316,855 95,535 ----------- ----------- ------------ ----------- --------- EXPENSES: Advisory fees ......................................... 46,092 67,803 188,092 45,791 21,150 Administration fees ................................... 35,038 51,969 140,945 35,637 15,805 Distribution fees ..................................... 36,660 53,502 151,641 35,595 17,094 Custodian fees and expenses ........................... 23,605 23,321 41,843 21,012 20,143 Transfer agent fees ................................... 5,575 3,569 8,485 6,248 4,121 Directors' fees ....................................... 6,856 10,188 28,370 6,522 3,223 Legal fees ............................................ 25,050 14,956 41,152 9,867 4,653 Audit fees ............................................ 9,443 14,032 39,073 8,983 4,438 Federal and state registration fees ................... 12,059 5,466 8,272 20,067 -- Amortization of deferred organization costs ........... 3,658 6,956 28,962 3,877 3,917 Insurance ............................................. 2,702 5,683 15,906 3,712 1,689 Printing .............................................. 3,083 4,581 12,755 2,932 1,449 Licensing fees ........................................ 5,121 7,534 20,899 5,088 2,350 Amex listing fee ...................................... 299 831 2,241 512 228 Miscellaneous expenses ................................ 1,100 4,218 10,869 1,702 3,466 ----------- ----------- ------------ ----------- --------- Total expenses ...................................... 216,341 274,609 739,505 207,545 103,726 ----------- ----------- ------------ ----------- --------- Net investment income/(loss) .......................... 400,751 (241,272) (227,731) 109,310 (8,191) ----------- ----------- ------------ ----------- --------- 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 ............... (563,127) 969,386 (724,010) (160,785) 164,930 Net realized gain/(loss) on investments on in-kind redemptions ................................. 227,263 -- (3,172,392) (1,124,764) 1,041,984 Net realized gain/(loss) on foreign currency related transactions ................................ (129) 3,810 (69,112) (64,544) 338 ----------- ----------- ------------ ----------- --------- (335,993) 973,196 (3,965,514) (1,350,093) 1,207,252 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ....... (4,896,884) 13,505,479 (17,848,867) 16,234,976 (1,371,378) ----------- ----------- ------------ ----------- --------- Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies ................... (5,232,877) 14,478,675 (21,814,381) 14,884,883 (164,126) ----------- ----------- ------------ ----------- --------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................................... $(4,832,126) $14,237,403 $(22,042,112) $14,994,193 $(172,317) =========== =========== ============ =========== =========
SINGAPORE UNITED NETHERLANDS (FREE) SPAIN SWEDEN SWITZERLAND KINGDOM 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) .......... $ 69,429 $ 105,468 $ 111,270 $ -- $ -- $ 492,659 Interest .............................................. 2,154 11,520 2,792 2,020 4,465 9,211 ---------- ---------- ---------- -------- ---------- ---------- Total investment income ............................. 71,583 116,988 114,062 2,020 4,465 501,870 ---------- ---------- ---------- -------- ---------- ---------- EXPENSES: Advisory fees ......................................... 16,456 36,233 16,746 14,645 26,883 51,975 Administration fees ................................... 12,452 27,830 12,798 12,684 20,419 39,640 Distribution fees ..................................... 13,145 28,532 13,251 10,098 21,399 41,210 Custodian fees and expenses ........................... 7,055 14,780 7,322 6,864 13,477 14,075 Transfer agent fees ................................... 3,471 5,420 3,520 3,497 3,403 3,807 Directors' fees ....................................... 2,483 5,250 2,510 2,215 4,051 7,824 Legal fees ............................................ 9,212 7,830 6,686 9,218 5,910 21,450 Audit fees ............................................ 3,420 7,231 3,458 3,051 5,580 10,775 Federal and state registration fees ................... 1,454 14,138 1,833 1,352 2,061 3,510 Amortization of deferred organization costs ........... 3,280 4,655 5,752 3,745 8,840 8,346 Insurance ............................................. 1,504 2,510 715 959 1,426 4,462 Printing .............................................. 1,116 2,361 1,129 996 1,821 3,518 Licensing fees ........................................ 1,828 4,026 1,861 1,627 2,987 5,775 Amex listing fee ...................................... 223 304 112 145 129 432 Miscellaneous expenses ................................ 2,829 1,042 3,556 3,949 5,862 8,614 ---------- ---------- ---------- -------- ---------- ---------- Total expenses ...................................... 79,928 162,142 81,249 75,045 124,248 225,413 ---------- ---------- ---------- -------- ---------- ---------- Net investment income/(loss) .......................... (8,345) (45,154) 32,813 (73,025) (119,783) 276,457 ---------- ---------- ---------- -------- ---------- ---------- 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 ............... 207,454 (1,244,482) 235,869 428,739 972,212 192,126 Net realized gain/(loss) on investments on in-kind redemptions ................................. 304,916 (1,246,364) -- -- 446,121 -- Net realized gain/(loss) on foreign currency related transactions ................................ (4,322) 94,017 (50) (4,831) (411) 9,020 ---------- ---------- ---------- -------- ---------- ---------- 508,048 (2,396,829) 235,819 423,908 1,417,922 201,146 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ....... 1,645,554 4,800,338 3,641,434 442,322 3,394,266 7,357,890 ---------- ---------- ---------- -------- ---------- ---------- Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies ................... 2,153,602 2,403,509 3,877,253 866,230 4,812,188 7,559,036 ---------- ---------- ---------- -------- ---------- ---------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ..................................... $2,145,257 $2,358,355 $3,910,066 $793,205 $4,692,405 $7,835,493 ========== ========== ========== ======== ========== ==========
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 For the For the six months For the six months For the six months For the ending year ending year ending year 02/28/98 ended 02/28/98 ended 02/28/98 ended (Unaudited) 08/31/97 (Unaudited) 08/31/97 (Unaudited) 08/31/97 ----------- ----------- ----------- ----------- ----------- ----------- OPERATIONS: Net investment income/(loss) ..................... $ 561,332 $ 287,423 $ (30,594) $ (6,855) $ (78,368) $ 668,880 Net realized gain/(loss) on investments and foreign currency related transactions .......... (113,635) 168,792 64,416 (1,197,601) 1,307,676 357,522 Net change in unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies .............. (1,583,131) (1,840,776) 341,153 1,155,714 2,358,547 (623,667) ----------- ----------- ---------- ----------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations ................................ (1,135,434) (1,384,561) 374,975 (48,742) 3,587,855 402,735 ----------- ----------- ---------- ----------- ----------- ----------- DISTRIBUTIONS: Net investment income. ........................... (288,422) (287,423) -- -- -- (668,880) In excess of net investment income ............... -- (160,198) -- -- -- (587,754) Net realized gains ............................... -- (187,118) -- -- -- (230,479) In excess of net realized gains .................. -- -- -- -- -- -- Return of capital ................................ -- (796,674) -- -- -- (24,077) ----------- ----------- ---------- ----------- ----------- ----------- Net decrease in net assets from distributions .... (288,422) (1,431,413) -- -- -- (1,511,190) ----------- ----------- ---------- ----------- ----------- ----------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares ............. 8,036,412 34,012,042 1,088,983 2,076,237 5,255,582 31,836,329 Cost of shares redeemed .......................... (5,767,765) (1,967,117) -- (11,342,765) (19,840,847) -- ----------- ----------- ---------- ----------- ----------- ----------- Net increase/(decrease) in net assets derived from capital share transactions ................ 2,268,647 32,044,925 1,088,983 (9,266,528) (14,585,265) 31,836,329 ----------- ----------- ---------- ----------- ----------- ----------- Total increase/(decrease) in net assets .......... 844,791 29,228,951 1,463,958 (9,315,270) (10,997,410) 30,727,874 NET ASSETS: Beginning of period .............................. 41,405,731 12,176,780 4,204,789 13,520,059 32,527,661 1,799,787 ----------- ----------- ---------- ----------- ----------- ----------- End of period .................................... $42,250,522 $41,405,731 $5,668,747 $ 4,204,789 $21,530,251 $32,527,661 =========== =========== ========== =========== =========== =========== Capital Share Transactions: Shares sold ...................................... 800,000 3,000,000 100,000 200,000 320,000 1,960,000 Shares redeemed .................................. (600,000) (200,000) -- (1,100,000) (1,200,000) -- ----------- ----------- ---------- ----------- ----------- ----------- Net increase/(decrease) in shares .............. 200,000 2,800,000 100,000 (900,000) (880,000) 1,960,000 =========== =========== ========== =========== =========== ===========
CANADA FRANCE GERMANY WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ------------------------ ------------------------ ------------------------- For the For the For the six months For the six months For the six months For the ending year ending year ending year 02/28/98 ended 02/28/98 ended 02/28/98 ended (Unaudited) 08/31/97 (Unaudited) 08/31/97 (Unaudited) 08/31/97 ----------- ----------- ----------- ----------- ----------- ----------- OPERATIONS: Net investment income/(loss) ..................... $ 47,404 $ 86,380 $ (90,177) $ 154,485 $ (98,254) $ 41,384 Net realized gain/(loss) on investments and foreign currency related transactions .......... 756,376 629,622 209,985 571,535 5,126 727,681 Net change in unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies .............. 577,403 3,938,920 3,439,107 1,283,516 4,880,546 2,325,587 ----------- ----------- ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations ................................ 1,381,183 4,654,922 3,558,915 2,009,536 4,787,418 3,094,652 ----------- ----------- ----------- ----------- ----------- ----------- DISTRIBUTIONS: Net investment income. ........................... -- (86,380) -- (154,485) -- (41,384) In excess of net investment income ............... -- (4,605) -- -- -- (19,425) Net realized gains ............................... (111,522) (251,961) (32,187) (198,868) -- (99,278) In excess of net realized gains .................. -- -- -- -- -- -- Return of capital ................................ -- -- -- -- -- (37,144) ----------- ----------- ----------- ----------- ----------- ----------- Net decrease in net assets from distributions .... (111,522) (342,946) (32,187) (353,353) -- (197,231) ----------- ----------- ----------- ----------- ----------- ----------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares ............. -- 9,629,687 3,091,493 5,656,482 5,090,512 13,746,949 Cost of shares redeemed .......................... (2,677,609) (3,550,242) -- (15,723,875) -- (20,822,544) ----------- ----------- ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets derived from capital share transactions ................ (2,677,609) 6,079,445 3,091,493 (10,067,393) 5,090,512 (7,075,595) ----------- ----------- ----------- ----------- ----------- ----------- Total increase/(decrease) in net assets .......... (1,407,948) 10,391,421 6,618,221 (8,411,210) 9,877,930 (4,178,174) NET ASSETS: Beginning of period .............................. 24,167,820 13,776,399 14,518,724 22,929,934 24,485,865 28,664,039 ----------- ----------- ----------- ----------- ----------- ----------- End of period .................................... $22,759,872 $24,167,820 $21,136,945 $14,518,724 $34,363,795 $24,485,865 =========== =========== =========== =========== =========== =========== Capital Share Transactions: Shares sold ...................................... -- 800,000 200,000 400,000 300,000 900,000 Shares redeemed .................................. (200,000) (300,000) -- (1,200,000) -- (1,500,000) ----------- ----------- ----------- ----------- ----------- ----------- Net increase/(decrease) in shares .............. (200,000) 500,000 200,000 (800,000) 300,000 (600,000) =========== =========== =========== =========== =========== ===========
HONG KONG ITALY WEBS WEBS INDEX INDEX SERIES SERIES ------------------------ ------------------------- For the For the six months For the six months For the ending year ending year 02/28/98 ended 02/28/98 ended (Unaudited) 08/31/97 (Unaudited) 08/31/97 ----------- ----------- ----------- ----------- OPERATIONS: Net investment income/(loss) ..................... $ 400,751 $ 258,683 $ (241,272) $ 221,768 Net realized gain/(loss) on investments and foreign currency related transactions .......... (335,993) 821,392 973,196 (570,558) Net change in unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies .............. (4,896,884) (209,522) 13,505,479 5,911,350 ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations ................................ (4,832,126) 870,553 14,237,403 5,562,560 ----------- ----------- ----------- ----------- DISTRIBUTIONS: Net investment income. ........................... (294,988) (258,683) -- (221,768) In excess of net investment income ............... -- (12,817) (76,411) (469,323) Net realized gains ............................... -- (581,360) -- -- In excess of net realized gains .................. -- (3,851) -- -- Return of capital ................................ -- (236,349) -- -- ----------- ----------- ----------- ----------- Net decrease in net assets from distributions .... (294,988) (1,093,060) (76,411) (691,091) ----------- ----------- ----------- ----------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares ............. 43,571,712 19,035,945 17,013,223 11,652,066 Cost of shares redeemed .......................... (4,207,981) (1,242,282) -- (19,198,572) ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets derived from capital share transactions ................ 39,363,731 17,793,663 17,013,223 (7,546,506) ----------- ----------- ----------- ----------- Total increase/(decrease) in net assets .......... 34,236,617 17,571,156 31,174,215 (2,675,037) NET ASSETS: Beginning of period .............................. 25,416,614 7,845,458 32,494,672 35,169,709 ----------- ----------- ----------- ----------- End of period .................................... $59,653,231 $25,416,614 $63,668,887 $32,494,672 =========== =========== =========== =========== Capital Share Transactions: Shares sold ...................................... 3,975,000 1,200,000 900,000 750,000 Shares redeemed .................................. (300,000) (75,000) -- (1,350,000) ----------- ----------- ----------- ----------- Net increase/(decrease) in shares .............. 3,675,000 1,125,000 900,000 (600,000) =========== =========== =========== ===========
See accompanying notes to financial statements. 46-47 STATEMENTS OF CHANGES IN NET ASSETS (continued) WEBS INDEX FUND, INC. ================================================================================
JAPAN MALAYSIA (FREE) MEXICO (FREE) WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ------------------------- ----------------------- ------------------------- For the For the For the six months For the six months For the six months For the ending year ending year ending year 02/28/98 ended 02/28/98 ended 02/28/98 ended (Unaudited) 08/31/97 (Unaudited) 08/31/97 (Unaudited) 08/31/97 ------------ ----------- ----------- ----------- ------------ ----------- OPERATIONS: Net investment income/(loss) ......... $ (227,731) $ (566,842) $ 109,310 $ 6,540 $ (8,191) $ 13,244 Net realized gain/(loss) on investments and foreign currency related transactions ............... (3,965,514) (3,695,529) (1,350,093) (17,452) 1,207,252 717,222 Net change in unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ......................... (17,848,867) (6,001,060) 16,234,976 (8,968,575) (1,371,378) 2,056,611 ------------ ----------- ----------- ----------- ------------ ----------- Net increase/(decrease) in net assets resulting from operations .......... (22,042,112) (10,263,431) 14,994,193 (8,979,487) (172,317) 2,787,077 ------------ ----------- ----------- ----------- ------------ ----------- DISTRIBUTIONS: Net investment income. ............... -- -- (109,310) (6,540) -- (13,244) In excess of net investment income ... -- -- (5,043) (7,611) (10,100) (6,992) Net realized gains ................... -- -- -- -- -- (480,039) In excess of net realized gains ...... (8,401) (59,225) -- -- -- -- Return of capital .................... -- -- -- (25,600) -- (50,400) ------------ ----------- ----------- ----------- ------------ ----------- Net decrease in net assets from distributions ...................... (8,401) (59,225) (114,353) (39,751) (10,100) (550,675) ------------ ----------- ----------- ----------- ------------ ----------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares .......................... 32,635,708 91,183,410 67,365,828 12,040,298 -- 9,898,729 Cost of shares redeemed .............. (6,110,956) (25,067,882) (852,399) -- (3,168,304) (1,267,357) ------------ ----------- ----------- ----------- ------------ ----------- Net increase/(decrease) in net assets derived from capital share transactions ....................... 26,524,752 66,115,528 66,513,429 12,040,298 (3,168,304) 8,631,372 ------------ ----------- ----------- ----------- ------------ ----------- Total increase/(decrease) in net assets ......................... 4,474,239 55,792,872 81,393,269 3,021,060 (3,350,721) 10,867,774 NET ASSETS: Beginning of period .................. 158,956,816 103,163,944 12,338,980 9,317,920 16,626,508 5,758,734 ------------ ----------- ----------- ----------- ------------ ----------- End of period ........................ $163,431,055 $158,956,816 $93,732,249 $12,338,980 $ 13,275,787 $16,626,508 ============ =========== =========== =========== ============ =========== Capital Share Transactions: Shares sold .......................... 3,000,000 7,200,000 13,275,000 825,000 -- 700,000 Shares redeemed ...................... (600,000) (1,800,000) (150,000) -- (200,000) (100,000) ------------ ----------- ----------- ----------- ------------ ----------- Net increase/(decrease) in shares .... 2,400,000 5,400,000 13,125,000 825,000 (200,000) 600,000 ============ =========== =========== =========== ============ ===========
NETHERLANDS SINGAPORE (FREE) SPAIN WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ---------------------------- -------------------------- ---------------------------- For the For the For the six months For the six months For the six months For the ending year ending year ending year 02/28/98 ended 02/28/98 ended 02/28/98 ended (Unaudited) 08/31/97 (Unaudited) 08/31/97 (Unaudited) 08/31/97 ----------- ------------ ----------- ----------- ----------- ----------- OPERATIONS: Net investment income/(loss) ......... $ (8,345) $ 44,855 $ (45,154) $ 3,681 $ 32,813 $ 54,300 Net realized gain/(loss) on investments and foreign currency related transactions ............... 508,048 303,600 (2,396,829) (90,177) 235,819 583,153 Net change in unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ......................... 1,645,554 1,559,687 4,800,338 (4,451,395) 3,641,434 460,457 ----------- ------------ ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations .......... 2,145,257 1,908,142 2,358,355 (4,537,891) 3,910,066 1,097,910 ----------- ------------ ----------- ----------- ----------- ----------- DISTRIBUTIONS: Net investment income. ............... -- (44,855) -- (3,681) -- (54,300) In excess of net investment income ... -- (4,630) -- (13,239) -- (24,069) Net realized gains ................... (66,984) (320,639) -- (37,220) (13,561) (379,744) In excess of net realized gains ...... -- -- -- -- -- -- Return of capital .................... -- (8,873) -- (37,832) -- (39,171) ----------- ------------ ----------- ----------- ----------- ----------- Net decrease in net assets from distributions ...................... (66,984) (378,997) -- (91,972) (13,561) (497,284) ----------- ------------ ----------- ----------- ----------- ----------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares .......................... 4,479,510 1,170,170 49,462,444 11,351,615 4,696,616 4,683,798 Cost of shares redeemed .............. (1,108,188) -- (2,361,202) (1,107,208) -- (1,190,432) ----------- ------------ ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets derived from capital share transactions ....................... 3,371,322 1,170,170 47,101,242 10,244,407 4,696,616 3,493,366 ----------- ------------ ----------- ----------- ----------- ----------- Total increase/(decrease) in net assets ......................... 5,449,595 2,699,315 49,459,597 5,614,544 8,593,121 4,093,992 NET ASSETS: Beginning of period .................. 9,661,134 6,961,819 14,721,562 9,107,018 8,321,368 4,227,376 ----------- ------------ ----------- ----------- ----------- ----------- End of period ........................ $15,110,729 $ 9,661,134 $64,181,159 $14,721,562 $16,914,489 $ 8,321,368 =========== ============ =========== =========== =========== =========== Capital Share Transactions: Shares sold .......................... 200,000 50,000 7,900,000 1,000,000 225,000 225,000 Shares redeemed ...................... (50,000) -- (300,000) (100,000) -- (75,000) ----------- ------------ ----------- ----------- ----------- ----------- Net increase/(decrease) in shares .... 150,000 50,000 7,600,000 900,000 225,000 150,000 =========== ============ =========== =========== =========== ===========
SWEDEN SWITZERLAND UNITED KINGDOM WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ----------------------- -------------------------- -------------------------- For the For the For the six months For the six months For the six months For the ending year ending year ending year 02/28/98 ended 02/28/98 ended 02/28/98 ended (Unaudited) 08/31/97 (Unaudited) 08/31/97 (Unaudited) 08/31/97 ---------- --------- ----------- ----------- ----------- ----------- OPERATIONS: Net investment income/(loss) ......... $ (73,025) $ (10,481) $ (119,783) $ (26,117) $ 276,457 $ 524,938 Net realized gain/(loss) on investments and foreign currency related transactions ............... 423,908 340,558 1,417,922 561,884 201,146 1,949,688 Net change in unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ......................... 442,322 912,384 3,394,266 910,641 7,357,890 2,438,474 ---------- --------- ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations .......... 793,205 1,242,461 4,692,405 1,446,408 7,835,493 4,913,100 ---------- --------- ----------- ----------- ----------- ----------- DISTRIBUTIONS: Net investment income. ............... -- -- -- -- (33,235) (524,938) In excess of net investment income ... -- -- -- -- -- (102,415) Net realized gains ................... (25,381) (345,698) -- (568,979) -- (304,957) In excess of net realized gains ...... -- -- -- -- -- -- Return of capital .................... -- -- -- (1,191) -- (176,359) ---------- --------- ----------- ----------- ----------- ----------- Net decrease in net assets from distributions ...................... (25,381) (345,698) -- (570,170) (33,235) (1,108,669) ---------- --------- ----------- ----------- ----------- ----------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares .......................... 3,067,485 2,946,675 7,371,489 8,262,901 10,382,077 19,063,646 Cost of shares redeemed .............. -- -- (1,901,034) (1,492,280) -- (8,936,965) ---------- --------- ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets derived from capital share transactions ....................... 3,067,485 2,946,675 5,470,455 6,770,621 10,382,077 10,126,681 ---------- --------- ----------- ----------- ----------- ----------- Total increase/(decrease) in net assets ......................... 3,835,309 3,843,438 10,162,860 7,646,859 18,184,335 13,931,112 NET ASSETS: Beginning of period .................. 8,243,412 4,399,974 13,805,064 6,158,205 29,721,354 15,790,242 ---------- --------- ----------- ----------- ----------- ----------- End of period ........................ $12,078,721 $8,243,412 $23,967,924 $13,805,064 $47,905,689 $29,721,354 ========== ========= =========== =========== =========== =========== Capital Share Transactions: Shares sold .......................... 150,000 150,000 500,000 625,000 600,000 1,200,000 Shares redeemed ...................... -- -- (125,000) (125,000) -- (600,000) ---------- --------- ----------- ----------- ----------- ----------- Net increase/(decrease) in shares .... 150,000 150,000 375,000 500,000 600,000 600,000 ========== ========= =========== =========== =========== ===========
See accompanying notes to financial statements. 48-49 FINANCIAL HIGHLIGHTS WEBS INDEX FUND, INC. ================================================================================ (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
AUSTRALIA AUSTRIA WEBS WEBS INDEX INDEX SERIES SERIES ---------------------------------- ---------------------------------- For the For the six months For the For the six months For the For the ended year period ended year period 02/28/98 ended 03/12/96*- 02/28/98 ended 03/12/96*- (Unaudited) 08/31/97 08/31/96 (Unaudited) 08/31/97 08/31/96 ----------- -------- ---------- ----------- -------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ................... $ 10.35 $ 10.15 $ 9.95(1) $ 10.51 $ 10.40 $ 10.91(1) ------- ------- ------- ------- ------- ------- Net investment income/(loss)(DAGGER) ................... 0.13 0.17 0.10 (0.08) (0.02) 0.04 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies .................... (0.36) 0.47 0.29 0.91 0.13 (0.41) ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations .................................. (0.23) 0.64 0.39 0.83 0.11 (0.37) ------- ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ................... (0.06) (0.16) (0.08) -- -- (0.02) Dividends in excess of net investment income ........... -- (0.04) (0.05) -- -- (0.01) Distributions from net realized gains .................. -- (0.04) (0.02) -- -- (0.03) Distributions in excess of net realized gains .......... -- -- -- -- -- -- Return of capital ...................................... -- (0.20) (0.04) -- -- (0.08) ------- ------- ------- ------- ------- ------- Total dividends and distributions .................. (0.06) (0.44) (0.19) -- -- (0.14) ------- ------- ------- ------- ------- ------- Net asset value, end of period ......................... $ 10.06 $ 10.35 $ 10.15 $ 11.34 $ 10.51 $ 10.40 ======= ======= ======= ======= ======= ======= TOTAL INVESTMENT RETURN (2) .............................. (2.15)%(4) 6.23% 3.88%(4) 7.90%(4) 1.06% (3.39)%(4 RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ................... $42,251 $41,406 $12,177 $ 5,669 $ 4,205 $13,520 Ratios of expenses to average net assets (5) ........... 1.15%(3) 1.33% 1.59%(3) 1.65%(3) 1.68% 1.56%(3) Ratios of net investment income/(loss) to average net assets (5) ....................................... 2.61%(3) 1.57% 2.18%(3) (1.42)%(3) (0.22)% 0.87%(3) Portfolio turnover (6) ................................. 1.14%(4) 5.30% 8.84%(4) 17.25%(4) 28.47% 9.60%(4) Average commission rate paid ........................... $0.0253 $0.0182 $0.0085 $0.1852 $0.1719 $0.2986 * Commencement of operations. ** Less than one cent per share. (DAGGER) 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 through December 31, 1996. 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 ................................... -- 1.33% 1.60%(3) -- 1.69% 1.57%(3) Ratios of net investment income/(loss) to average net assets before waivers ........................ -- 1.57% 2.17%(3) -- (0.22)% 0.86%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
BELGIUM WEBS INDEX SERIES --------------------------------------- For the six months For the For the ended year period 02/28/98 ended 03/12/96*- (Unaudited) 08/31/97 08/31/96 ----------- -------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ................... $ 15.64 $ 14.99 $ 14.92(1) ------- ------- ------- Net investment income/(loss)(DAGGER) ................... (0.04) 0.77 0.40 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies .................... 2.34 0.62 0.36 ------- ------- ------- Net increase/(decrease) in net assets resulting from operations .................................. 2.30 1.39 0.76 ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ................... -- (0.33) (0.54) Dividends in excess of net investment income ........... -- (0.28) (0.09) Distributions from net realized gains .................. -- (0.12) (0.06) Distributions in excess of net realized gains .......... -- -- -- Return of capital ...................................... -- (0.01) -- ------- ------- ------- Total dividends and distributions .................. -- (0.74) (0.69) ------- ------- ------- Net asset value, end of period ......................... $ 17.94 $ 15.64 $ 14.99 ======= ======= ======= TOTAL INVESTMENT RETURN (2) .............................. 14.71%(4) 9.26% 5.01%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ................... $21,530 $32,528 $ 1,800 Ratios of expenses to average net assets (5) ........... 1.07%(3) 1.24% 2.29%(3) Ratios of net investment income/(loss) to average net assets (5) ....................................... (0.52)%(3) 4.63% 5.67%(3) Portfolio turnover (6) ................................. 18.98%(4) 16.83% 6.25%(4) Average commission rate paid ........................... $0.3552 $0.3379 $0.4327 * Commencement of operations. ** Less than one cent per share. (DAGGER) 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 through December 31, 1996. 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 ................................... -- 1.24% 2.30%(3) Ratios of net investment income/(loss) to average net assets before waivers ........................ -- 4.63% 5.66%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
CANADA FRANCE WEBS WEBS INDEX INDEX SERIES SERIES --------------------------------- ---------------------------------- For the For the six months For the For the six months For the For the ended year period ended year period 02/28/98 ended 3/12/96*- 02/28/98 ended 03/12/96*- (Unaudited) 08/31/97 08/31/96 (Unaudited) 08/31/97 08/31/96 ----------- -------- --------- ----------- -------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ................... $ 13.43 $ 10.60 $ 10.17(1) $ 14.50 $ 12.73 $ 12.42(1) ------- ------- ------- ------- ------- ------- Net investment income/(loss)(DAGGER) ................... 0.03 0.05 0.04 (0.08) 0.17 0.17 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies .................... 0.83 2.97 0.43 3.21 1.95 0.45 ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations .................................. 0.86 3.02 0.47 3.13 2.12 0.62 ------- ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ................... -- (0.05) (0.03) -- (0.15) (0.09) Dividends in excess of net investment income ........... -- (0.00)** (0.01) -- -- (0.01) Distributions from net realized gains .................. (0.07) (0.14) -- (0.03) (0.20) 0.00** Distributions in excess of net realized gains .......... -- -- 0.00** -- -- -- Return of capital ...................................... -- -- 0.00** -- -- (0.21) ------- ------- ------- ------- ------- ------- Total dividends and distributions .................. (0.07) (0.19) (0.04) (0.03) (0.35) (0.31) ------- ------- ------- ------- ------- ------- Net asset value, end of period ......................... $ 14.22 $ 13.43 $ 10.60 $ 17.60 $ 14.50 $ 12.73 ======= ======= ======= ======= ======= ======= TOTAL INVESTMENT RETURN (2) .............................. 6.45%(4) 28.50% 4.63%(4) 21.59%(4) 16.60% 4.95%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ................... $22,760 $24,168 $13,776 $21,137 $14,519 $22,930 Ratios of expenses to average net assets (5) ........... 1.23%(3) 1.35% 1.44%(3) 1.32%(3) 1.52% 1.84%(3) Ratios of net investment income/(loss) to average net assets (5) ....................................... 0.41%(3) 0.39% 0.79%(3) (1.07)%(3 1.17% 2.72%(3) Portfolio turnover (6) ................................. 0.31%(4) 11.02% 0.00%(4) 5.86%(4) 7.13% 0.00%(4) Average commission rate paid ........................... $0.0212 $0.0217 -- $0.0304 $0.0137 $0.3956 * Commencement of operations. ** Less than one cent per share. (DAGGER) 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 through December 31, 1996. 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 ................................... -- 1.36% 1.45%(3) -- 1.52% 1.85%(3) Ratios of net investment income/(loss) to average net assets before waivers ........................ -- 0.39% 0.78%(3) -- 1.17% 2.71%(3) (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 (continued) WEBS INDEX FUND, INC. ================================================================================ (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
GERMANY HONG KONG WEBS WEBS INDEX INDEX SERIES SERIES ------------------------------- ----------------------------------- For the For the six months For the For the six months For the For the ended year period ended year period 02/28/98 ended 03/12/96*- 02/28/98 ended 03/12/96*- Unaudited) 08/31/97 08/31/96 (Unaudited) 08/31/97 08/31/96 ---------- -------- ---------- ----------- -------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ....................... $ 16.31 $ 13.64 $ 13.23(1) $ 14.73 $ 13.05 $ 12.83(1) ------- ------- ------- ------- ------- ------- Net investment income/(loss)(DAGGER) ....................... (0.06) 0.03 0.06 0.13 0.26 0.15 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies ....................................... 2.83 2.77 0.47 (3.72) 2.12 0.27 ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ........................................... 2.77 2.80 0.53 (3.59) 2.38 0.42 ------- ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ....................... -- (0.03) (0.03) (0.10) (0.21) (0.13) Dividends in excess of net investment income ............... -- (0.01) (0.01) -- (0.01) (0.02) Distributions from net realized gains ...................... -- (0.07) -- -- (0.34) (0.01) Distributions in excess of net realized gains .............. -- -- (0.01) -- 0.00** -- Return of capital .......................................... -- (0.02) (0.07) -- (0.14) (0.04) ------- ------- ------- ------- ------- ------- Total dividends and distributions ...................... -- (0.13) (0.12) (0.10) (0.70) (0.20) ------- ------- ------- ------- ------- ------- Net asset value, end of period ............................. $ 19.08 $ 16.31 $ 13.64 $ 11.04 $ 14.73 $ 13.05 ======= ======= ======= ======= ======= ======= TOTAL INVESTMENT RETURN (2) .................................. 16.98%(4) 20.51% 4.00%(4) (24.36)%(4) 17.80% 3.22%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ....................... $34,364 $24,486 $28,664 $59,653 $25,417 $ 7,845 Ratios of expenses to average net assets (5) ............... 1.19%(3) 1.37% 1.68%(3) 1.27%(3) 1.43% 1.52%(3) Ratios of net investment income/(loss) to average net assets (5) ........................................... (0.73)%(3) 0.23% 1.00%(3) 2.35%(3) 1.71% 2.37%(3) Portfolio turnover (6) ..................................... 0.00%(4) 9.04% 0.00%(4) 7.55%(4) 22.90% 0.00%(4) Average commission rate paid ............................... $0.1526 0.0236 -- $0.0051 $0.0058 $0.0007 * Commencement of operations. ** Less than one cent per share. (DAGGER) 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 through December 31, 1996. 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 .............................................. -- 1.37% 1.69%(3) -- 1.43% 1.53%(3) Ratios of net investment income/(loss) to average net assets before waivers ............................ -- 0.22% 0.99%(3) -- 1.71% 2.36%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
ITALY WEBS INDEX SERIES --------------------------------------- For the six months For the For the ended year period 02/28/98 ended 03/12/96*- (Unaudited) 08/31/97 08/31/96 ----------- -------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ....................... $ 16.66 $ 13.79 $ 13.62(1) ------- ------- ------- Net investment income/(loss)(DAGGER) ....................... (0.09) 0.12 0.25 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies ....................................... 5.80 3.10 0.31 ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ........................................... 5.71 3.22 0.56 ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ....................... -- (0.11) (0.14) Dividends in excess of net investment income ............... (0.03) (0.24) (0.03) Distributions from net realized gains ...................... -- -- (0.14) Distributions in excess of net realized gains .............. -- -- -- Return of capital .......................................... -- -- (0.08) ------- ------- ------- Total dividends and distributions ...................... (0.03) (0.35) (0.39) ------- ------- ------- Net asset value, end of period ............................. $ 22.34 $ 16.66 $ 13.79 ======= ======= ======= TOTAL INVESTMENT RETURN (2) .................................. 34.29%(4) 23.37% 4.11%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ....................... $63,669 $32,495 $35,170 Ratios of expenses to average net assets (5) ............... 1.09%(3) 1.33% 1.43%(3) Ratios of net investment income/(loss) to average net assets (5) ........................................... (0.96)%(3) 0.76% 3.69%(3) Portfolio turnover (6) ..................................... 4.72%(4) 13.70% 19.80%(4) Average commission rate paid ............................... $0.0075 $0.0045 $0.0046 * Commencement of operations. ** Less than one cent per share. (DAGGER) 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 through December 31, 1996. 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 .............................................. -- 1.33% 1.44%(3) Ratios of net investment income/(loss) to average net assets before waivers ............................ -- 0.76% 3.68%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
JAPAN WEBS INDEX SERIES ------------------------------------ For the six months For the For the ended year period 02/28/98 ended 03/12/96*- (Unaudited) 08/31/97 08/31/96 ----------- -------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ....................... $ 12.61 $ 14.33 $ 14.79(1) -------- -------- -------- Net investment income/(loss)(DAGGER) ....................... (0.02) (0.06) (0.07) Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies ....................................... (1.69) (1.65) (0.39) -------- -------- -------- Net increase/(decrease) in net assets resulting from operations ........................................... (1.71) (1.71) (0.46) -------- -------- -------- LESS DISTRIBUTIONS Dividends from net investment income ....................... -- -- -- Dividends in excess of net investment income ............... -- -- -- Distributions from net realized gains ...................... -- -- -- Distributions in excess of net realized gains .............. (0.01) (0.01) -- Return of capital .......................................... -- -- -- -------- -------- -------- Total dividends and distributions ...................... (0.01) (0.01) -- -------- -------- -------- Net asset value, end of period ............................. $ 10.89 $ 12.61 $ 14.33 ======== ======== ======== TOTAL INVESTMENT RETURN (2) .................................. (13.63)%(4) (11.97)% (3.11)%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ....................... $163,431 $158,957 $103,164 Ratios of expenses to average net assets (5) ............... 1.06%(3) 1.19% 1.37%(3) Ratios of net investment income/(loss) to average net assets (5) ........................................... (0.33)%(3) (0.48)% (1.01)%(3) Portfolio turnover (6) ..................................... 0.00%(4) 12.90% 21.54%(4) Average commission rate paid ............................... $ 0.0016 $ 0.0162 $ 0.0152 * Commencement of operations. ** Less than one cent per share. (DAGGER) 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 through December 31, 1996. 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 .............................................. -- 1.19% 1.38%(3) Ratios of net investment income/(loss) to average net assets before waivers ............................ -- (0.48)% (1.02)%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
MALAYSIA (FREE) WEBS INDEX SERIES --------------------------------- For the six months For the For the ended year period 02/28/98 ended 03/12/96*- (Unaudited) 08/31/97 08/31/96 ----------- -------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ....................... $ 8.23 $ 13.80 $13.24(1) ------- ------- ------ Net investment income/(loss)(DAGGER) ....................... 0.02 0.01 (0.02) Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies ....................................... (1.82) (5.55) 0.59 ------- ------- ------ Net increase/(decrease) in net assets resulting from operations ........................................... (1.80) (5.54) 0.57 ------- ------- ------ LESS DISTRIBUTIONS Dividends from net investment income ....................... (0.02) 0.00** -- Dividends in excess of net investment income ............... 0.00** (0.01) -- Distributions from net realized gains ...................... -- -- -- Distributions in excess of net realized gains .............. -- -- -- Return of capital .......................................... -- (0.02) (0.01) ------- ------- ------ Total dividends and distributions ...................... (0.02) (0.03) (0.01) ------- ------- ------ Net asset value, end of period ............................. $ 6.41 $ 8.23 $13.80 ======= ======= ====== TOTAL INVESTMENT RETURN (2) .................................. (21.79)%(4) (40.20)% 4.28%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ....................... $93,732 $12,339 $9,318 Ratios of expenses to average net assets (5) ............... 1.22%(3) 1.46% 1.58%(3) Ratios of net investment income/(loss) to average net assets (5) ........................................... 0.64%(3) 0.04% (0.35)%(3) Portfolio turnover (6) ..................................... 0.71%(4) 0.00% 0.00%(4) Average commission rate paid ............................... $0.0028 $ -- $ -- * Commencement of operations. ** Less than one cent per share. (DAGGER) 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 through December 31, 1996. 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 .............................................. -- 1.47% 1.59%(3) Ratios of net investment income/(loss) to average net assets before waivers ............................ -- 0.04% (0.36)%(3) (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 FINANCIAL HIGHLIGHTS (continued) WEBS INDEX FUND, INC. ================================================================================ (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
MEXICO (FREE) NETHERLANDS WEBS WEBS INDEX INDEX SERIES SERIES --------------------------------- ---------------------------------- For the For the six months For the For the six months For the For the ended year period ended year period 02/28/98 ended 03/12/96*- 02/28/98 ended 03/12/96*- (Unaudited) 08/31/97 08/31/96 (Unaudited) 08/31/97 08/31/96 ----------- -------- --------- ----------- -------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ...................... $ 15.11 $ 11.52 $ 9.95(1) $ 21.42 $ 17.36 $ 15.91(1) ------- ------- ------ ------- ------- ------- Net investment income/(loss)(DAGGER) ...................... (0.01) 0.02 0.00** (0.02) 0.11 0.24 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies ....................... (0.34) 4.07 1.59 3.87 4.79 1.54 ------- ------- ------ ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ..................................... (0.35) 4.09 1.59 3.85 4.90 1.78 ------- ------- ------ ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ...................... -- (0.01) -- -- (0.10) (0.14) Dividends in excess of net investment income .............. (0.01) (0.01) (0.01) -- (0.01) (0.01) Distributions from net realized gains ..................... -- (0.44) -- (0.13) (0.71) (0.08) Distributions in excess of net realized gains ............. -- -- -- -- -- (0.01) Return of capital ......................................... -- (0.04) (0.01) -- (0.02) (0.09) ------- ------- ------ ------- ------- ------- Total dividends and distributions ..................... (0.01) (0.50) (0.02) (0.13) (0.84) (0.33) ------- ------- ------ ------- ------- ------- Net asset value, end of period ............................ $ 14.75 $ 15.11 $11.52 $ 25.14 $ 21.42 $ 17.36 ======= ======= ====== ======= ======= ======= TOTAL INVESTMENT RETURN (2) ................................. (2.32)%(4) 35.21% 15.93%(4) 18.08%(4) 28.04% 11.19%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ...................... $13,276 $16,627 $5,759 $15,111 $ 9,661 $ 6,962 Ratios of expenses to average net assets (5) .............. 1.32%(3) 1.63% 1.75%(3) 1.31%(3) 1.46% 1.63%(3) Ratios of net investment income/(loss) to average net assets (5) .......................................... (0.10)%(3) 0.14% 0.01%(3) (0.14)%(3) 0.54% 2.93%(3) Portfolio turnover (6) .................................... 2.64%(4) 22.80% 0.00%(4) 1.64%(4) 12.68% 4.32%(4) Average commission rate paid .............................. $0.0058 $0.0066 $ -- $0.0536 $0.0354 $0.0651 * Commencement of operations. ** Less than one cent per share. (DAGGER) 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 through December 31, 1996. 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 -- 1.63% 1.76%(3) -- 1.46% 1.64%(3) Ratios of net investment income/(loss) to average net assets before waivers ........................... -- 0.13% 0.00%(3) -- 0.53% 2.92%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
SINGAPORE (FREE) SPAIN WEBS WEBS INDEX INDEX SERIES SERIES ----------------------------------- ------------------------------------ For the For the six months For the For the six months For the For the ended year period ended year period 02/28/98 ended 03/12/96*- 02/28/98 ended 03/12/96*- (Unaudited) 08/31/97 08/31/96 (Unaudited) 08/31/97 08/31/96 ----------- -------- ---------- ----------- -------- ------------ PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period .................. $ 8.66 $ 11.38 $ 12.24(1) $ 18.49 $ 14.09 $ 13.28(1) ------- ------- ------- ------- ------- ------- Net investment income/(loss)(DAGGER) .................. (0.01) 0.00** 0.04 0.05 0.19 0.14 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies ................... (1.75) (2.67) (0.86) 6.54 5.33 0.98 ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ................................. (1.76) (2.67) (0.82) 6.59 5.52 1.12 ------- ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income .................. -- 0.00** (0.03) -- (0.12) (0.18) Dividends in excess of net investment income .......... -- (0.01) (0.01) -- (0.05) -- Distributions from net realized gains ................. -- (0.02) -- (0.02) (0.86) (0.13) Distributions in excess of net realized gains ......... -- -- -- -- -- -- Return of capital ..................................... -- (0.02) -- -- (0.09) -- ------- ------- ------- ------- ------- ------- Total dividends and distributions ................. -- (0.05) (0.04) (0.02) (1.12) (0.31) ------- ------- ------- ------- ------- ------- Net asset value, end of period ........................ $ 6.90 $ 8.66 $ 11.38 $ 25.06 $ 18.49 $ 14.09 ======= ======= ======= ======= ======= ======= TOTAL INVESTMENT RETURN (2) ............................. (20.32)%(4) (23.48)% (6.73)%(4) 35.68%(4) 39.15% 8.45%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) .................. $64,181 $14,722 $ 9,107 $16,914 $ 8,321 $ 4,227 Ratios of expenses to average net assets (5) .......... 1.21%(3) 1.43% 1.56%(3) 1.31%(3) 1.67% 1.76%(3) Ratios of net investment income/(loss) to average net assets (5) ...................................... (0.34)%(3) 0.03% 0.69%(3) 0.53%(3) 1.04% 2.04%(3) Portfolio turnover (6) ................................ 24.00%(4) 13.40% 26.29%(4) 2.25%(4) 19.21% 4.73%(4) Average commission rate paid .......................... $0.0074 $0.0076 $0.0118 $0.0436 $0.0344 $0.0723 * Commencement of operations. ** Less than one cent per share. (DAGGER) 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 through December 31, 1996. 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 -- 1.43% 1.57%(3) -- 1.67% 1.77%(3) Ratios of net investment income/(loss) to average net assets before waivers ....................... -- 0.03% 0.68%(3) -- 1.04% 2.03%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
SWEDEN WEBS INDEX SERIES -------------------------------------- For the six months For the For the ended year period 02/28/98 ended 03/12/96*- (Unaudited) 08/31/97 08/31/96 ----------- -------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ...................... $ 18.32 $ 14.67 $ 13.22(1) ------- ------- ------- Net investment income/(loss)(DAGGER) ...................... (0.13) (0.03) 0.20 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies ....................... 1.98 4.45 1.67 ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ..................................... 1.85 4.42 1.87 ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ...................... -- -- (0.23) Dividends in excess of net investment income .............. -- -- (0.07) Distributions from net realized gains ..................... (0.04) (0.77) (0.12) Distributions in excess of net realized gains ............. -- -- -- Return of capital ......................................... -- -- -- ------- ------- ------- Total dividends and distributions ..................... (0.04) (0.77) (0.42) ------- ------- ------- Net asset value, end of period ............................ $ 20.13 $ 18.32 $ 14.67 ======= ======= ======= TOTAL INVESTMENT RETURN (2) ................................. 10.15%(4) 30.10% 14.13%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ...................... $12,079 $ 8,243 $ 4,400 Ratios of expenses to average net assets (5) .............. 1.38%(3) 1.64% 1.75%(3) Ratios of net investment income/(loss) to average net assets (5) .......................................... (1.35)%(3) (0.19)% 3.05%(3) Portfolio turnover (6) .................................... 4.91%(4) 13.71% 5.87%(4) Average commission rate paid .............................. $0.0402 $0.0229 $0.0561 * Commencement of operations. ** Less than one cent per share. (DAGGER) 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 through December 31, 1996. 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 -- 1.64% 1.76%(3) Ratios of net investment income/(loss) to average net assets before waivers ........................... -- (0.19)% 3.04%(3) (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. 54-55 FINANCIAL HIGHLIGHTS (concluded) WEBS INDEX FUND, INC. ================================================================================ (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
SWITZERLAND UNITED KINGDOM WEBS WEBS INDEX INDEX SERIES SERIES ---------------------------------- ---------------------------------- For the For the six months For the For the six months For the For the ended year period ended year period 02/28/98 ended 03/12/96*- 02/28/98 ended 03/12/96*- (Unaudited) 08/31/97 08/31/96 (Unaudited) 08/31/97 08/31/96 ----------- -------- ----------- ----------- -------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ................ $ 13.79 $ 12.29 $ 12.07(1) $ 16.50 $ 13.15 $ 12.14(1) ------- ------- ------- ------- ------- ------- Net investment income/(loss)(DAGGER) ................ (0.09) (0.04) 0.08 0.13 0.38 0.21 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies ........................................ 3.72 2.11 0.24 3.34 3.62 1.06 ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ..................... 3.63 2.07 0.32 3.47 4.00 1.27 ------- ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ................ -- -- (0.10) (0.02) (0.32) (0.20) Dividends in excess of net investment income ........ -- -- -- -- (0.06) (0.03) Distributions from net realized gains ............... -- (0.57) -- -- (0.17) 0.00** Distributions in excess of net realized gains ....... -- -- -- -- -- -- Return of capital ................................... -- 0.00** -- -- (0.10) (0.03) ------- ------- ------- ------- ------- ------- Total dividends and distributions ............... -- (0.57) (0.10) (0.02) (0.65) (0.26) ------- ------- ------- ------- ------- ------- Net asset value, end of period ...................... $ 17.42 $ 13.79 $ 12.29 $ 19.95 $ 16.50 $ 13.15 ======= ======= ======= ======= ======= ======= TOTAL INVESTMENT RETURN (2) ........................... 26.32%(4) 16.69% 2.60%(4) 21.01%(4) 30.48% 10.41%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ................ $23,968 $13,805 $ 6,158 $47,906 $29,721 $15,790 Ratios of expenses to average net assets (5) ........ 1.25%(3) 1.52% 1.82%(3) 1.17%(3) 1.38% 1.61%(3) Ratios of net investment income/(loss) to average net assets (5) .................................... (1.20)%(3) (0.29)% 1.39%(3) 1.44%(3) 2.47% 3.62%(3) Portfolio turnover (6) .............................. 34.39%(4) 48.05% 17.06%(4) 1.97%(4) 1.84% 0.00%(4) Average commission rate paid ........................ $0.6544 $0.8788 $0.7852 $0.0270 $0.0314 $ -- * Commencement of operations. ** Less than one cent per share. (DAGGER) 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 through December 31, 1996. 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 ............................... -- 1.53% 1.83%(3) -- 1.38% 1.62%(3) Ratios of net investment income/(loss) to average net assets before waivers ..................... -- (0.29)% 1.38%(3) -- 2.47% 3.61%(3) (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. 56 NOTES TO FINANCIAL STATEMENTS (Unaudited) WEBS INDEX FUND, INC. ================================================================================ 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 (Free) 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). On June 2, 1997 the Malaysia WEBS Index Series commenced using the MSCI Malaysia (Free) Index as its Benchmark and changed its name to the Malaysia (Free) WEBS Index Series. 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 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. On October 29, 1997, the France WEBS Index Series changed its status from a diversified to a non-diversified investment company. 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 (Free) 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. 57 NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) ================================================================================ SIGNIFICANT ACCOUNTING POLICIES 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 Barclays Global Fund Advisors (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 continue 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. If so elected, each WEBS Index Series' realized net foreign exchange losses and realized net capital losses incurred since October 31, 1996 will be treated for tax purposes as arising on September 1, 1997. Each WEBS Index Series incurred and will elect to defer such losses as follows: FOREIGN EXCHANGE NET REALIZED CAPITAL WEBS INDEX SERIES LOSSES LOSSES ------------------- ----------------- -------------------- Australia WEBS Index Series $ 7,013 $ -- Austria WEBS Index Series $ 2,857 $ 10,937 Belgium WEBS Index Series $ 3,025 $ -- Canada WEBS Index Series $ 2,060 $ -- France WEBS Index Series $13,967 $ -- Germany WEBS Index Series $16,934 $ -- Hong Kong WEBS Index Series $ 169 $ -- Italy WEBS Index Series $35,296 $309,363 Japan WEBS Index Series $ -- $ -- Malaysia (Free) WEBS Index Series $ 5,358 $ 13,921 Mexico (Free) WEBS Index Series $ -- $ -- Netherlands WEBS Index Series $16,958 $ -- Singapore (Free) WEBS Index Series $ 1,858 $ -- Spain WEBS Index Series $ 1,901 $ -- Sweden WEBS Index Series $ 2,374 $ -- Switzerland WEBS Index Series $ 1,804 $ -- United Kingdom WEBS Index Series $ -- $ -- In addition, the Italy WEBS Index Series had a $5,714 capital loss carryover which will expire in 2005. 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 each 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. 58 WEBS INDEX FUND, INC. ================================================================================ 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. For the year ended August 31, 1997, each Index Series reclassified certain amounts from accumulated net realized gain (loss) on investments and foreign currency transactions and accumulated net investment income (loss), respectively, as a result of permanent book and tax differences primarily attributed to net investment loss, return of capital, passive foreign investment companies, realized foreign currency gains and losses and gains and losses on in-kind redemptions. ORGANIZATION COSTS Organization costs were originally allocated to each WEBS Index Series based on the expected future 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. 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 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. Prior to June 30, 1997, PFPC was 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. 59 NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) ================================================================================ PFPC charged the Fund 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 capped 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% were to be recouped as the WEBS Index Series' asset levels reach the threshold to permit such recovery of fees.For the period March 12, 1996 through June 30, 1997, the deferred administration fee amounted to $648,802. On July 1, 1997, PFPC waived all deferred fees. Effective July 1, 1997 the Administration and Accounting Services Agreement was amended to provide for aggregate fees to PFPC equal to each WEBS Index Series' allocable portion of .17% per annum of the aggregate average daily net assets less than $1.5 billion, plus .10% per annum of the aggregate net assets between $1.5 billion and $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. Effective October 29, 1997, the Administration and Accounting Services Agreement was amended to provide for aggregate fees to PFPC equal to each WEBS Index Series' allocable portion of: .22% per annum of the aggregate average daily net assets of the Fund up to $1.5 billion; plus .15% per annum of the aggregate average daily net assets of the Fund between $1.5 billon and $3 billion, plus .14% per annum of the aggregate average daily net assets of the Fund between $3 billion and $5 billion, plus .13% per annum of the aggregate average daily net assets of the Fund between $5 billon and $7.5 billion, plus .115% per annum of the aggregate average daily net assets of the Fund between $7.5 billion and $10 billion, plus .10% per annum of the aggregate average daily net assets of the Fund in excess of $10 billion. On October 29, 1997 PFPC entered into a Sub-Administration Agreement with Morgan Stanley Trust Company ("MSTC"). The Administrator pays MSTC a fee of .05% of the average daily net assets of the Fund for its sub-administration services. 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 of up to .25% of the average daily net assets of each WEBS Index Series 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. Prior to October 29, 1997 the Distributor was paid a fee at an annual rate of .25% of the average daily net assets of such WEBS Index Series. Effective October 29, 1997 the fee payable to the Distributor under the 12b-1 Plan was reduced to .20% of the average daily net assets of each 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 (.10%); Germany WEBS Index Series (.10%); Hong Kong WEBS Index Series (.12%); Italy WEBS Index Series (.09%); Japan WEBS Index Series (.06%); Malaysia (Free) WEBS Index Series (.12%); 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 (.07%). Effective April 1, 1998, the fees payable under the Custody Agreement were revised. For its custody services to each WEBS Index Series, MSTC is now paid per annum fees based on the aggregate net assets of the WEBS Index Series as follows: Australia WEBS Index Series (.09%); Austria WEBS Index Series (.09%); Belgium WEBS Index Series (.09%); Canada WEBS Index Series (.065%); France WEBS Index Series (.09%); Germany WEBS Index Series (.09%); Hong Kong WEBS Index Series (.11%); Italy WEBS Index Series (.08%); Japan WEBS Index Series (.055%); Malaysia (Free) WEBS Index Series (.11%); Mexico (Free) WEBS Index Series (.23%); Netherlands WEBS Index Series (.09%); Singapore (Free) WEBS Index Series (.09%); Spain WEBS Index Series (.09%); Sweden WEBS Index Series (.09%); Switzerland WEBS Index Series (.09%); and United Kingdom WEBS Index Series (.065%). MSTC also receives certain fees for each transaction of the WEBS Index Series and is reimbursed for certain out-of-pocket expenses. 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. Effective October 29, 1997 the Chairman of the Board receives an annual fee of $30,000 plus $7,500 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. 60 WEBS INDEX FUND, INC. ================================================================================ FOREIGN CURRENCY At February 28, 1998, each WEBS Index Series' cash balance included the following amount of foreign currency: VALUE COST ---------- ---------- Australia WEBS Index Series $ 35,972 $ 34,203 Austria WEBS Index Series $ 16,541 $ 16,569 Belgium WEBS Index Series $ 42,093 $ 42,143 Canada WEBS Index Series $ 122,366 $ 121,741 France WEBS Index Series $ 93,294 $ 92,685 Germany WEBS Index Series $ 170,069 $ 173,573 Hong Kong WEBS Index Series $ 15,556 $ 15,550 Italy WEBS Index Series $ 77,063 $ 77,125 Japan WEBS Index Series $ 160,752 $ 156,893 Malaysia (Free) WEBS Index Series $ 3,931 $ 3,931 Mexico (Free) WEBS Index Series $ 65,482 $ 65,100 Netherlands WEBS Index Series $ 46,957 $ 47,042 Singapore (Free) WEBS Index Series $6,752,163 $6,743,840 Spain WEBS Index Series $ 66,287 $ 66,494 Sweden WEBS Index Series $ 30,709 $ 30,709 Switzerland WEBS Index Series $ 123,115 $ 122,872 United Kingdom WEBS Index Series $ 246,457 $ 245,583 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, 1998, and the collateral received with respect to such loans were as follows: CASH MARKET VALUE OF COLLATERAL WEBS INDEX SERIES LOANED SECURITIES RECEIVED ----------------- ----------------- ------------- Australia WEBS Index Series $ 6,077,343 $ 6,469,604 Austria WEBS Index Series $ 657,496 $ 710,818 Belgium WEBS Index Series $ 4,175,454 $ 4,422,166 Canada WEBS Index Series $ 1,464,177 $ 1,552,992 France WEBS Index Series $ 480,983 $ 497,691 Germany WEBS Index Series $ 6,747,684 $ 7,137,577 Hong Kong WEBS Index Series $ 4,983,502 $ 5,765,256 Italy WEBS Index Series $13,998,393 $15,078,715 Japan WEBS Index Series $30,576,890 $32,537,038 Malaysia (Free) WEBS Index Series $15,410,988 $16,559,498 Mexico (Free) WEBS Index Series $ 2,789,355 $ 3,027,560 Netherlands WEBS Index Series $ 2,355,911 $ 2,439,292 Singapore (Free) WEBS Index Series $ 8,915,059 $ 9,532,677 Spain WEBS Index Series $ 791,038 $ 802,064 Sweden WEBS Index Series $ 2,342,545 $ 2,460,127 Switzerland WEBS Index Series $ 2,420,255 $ 2,544,855 United Kingdom WEBS Index Series $ -- $ -- 61 NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) ================================================================================ CAPITAL SHARES The Fund currently is authorized to issue 6 billion shares of common stock, with the following number of shares allocated to each WEBS 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 (Free) 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"). Non-Basket Securities may be held by a WEBS 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 at 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 except that residents of Australia and New Zealand are paid redemption proceeds in cash only. Shares of each WEBS Index Series may also be redeemed in the specified aggregations for cash by other persons at the sole discretion of the Fund. LOAN AGREEMENT 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 bear interest at a rate per annum equal to the sum of the Federal Funds Rate plus 1%. None of the WEBS Index Series had advances on the Line of Credit outstanding at February 28, 1998. Average borrowings under the line of credit did not exceed 10% of net assets of any WEBS Index Series during the six months ended February 28, 1998. 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 six months ended February 28, 1998: PURCHASES OF SALES OF WEBS INDEX SERIES SECURITIES SECURITIES ----------------- ------------- ----------- Australia WEBS Index Series $ 619,077 $ 489,467 Austria WEBS Index Series $1,066,635 $ 754,511 Belgium WEBS Index Series $5,633,218 $5,606,538 Canada WEBS Index Series $ 70,920 $ 457,261 France WEBS Index Series $ 985,431 $1,146,501 Germany WEBS Index Series $ -- $ 53,438 Hong Kong WEBS Index Series $3,018,382 $2,658,260 Italy WEBS Index Series $2,352,582 $2,739,226 Japan WEBS Index Series $ -- $ 128,724 Malaysia (Free) WEBS Index Series $1,125,845 $ 255,443 Mexico (Free) WEBS Index Series $ 411,228 $ 654,538 Netherlands WEBS Index Series $ 199,290 $ 499,074 Singapore (Free) WEBS Index Series $7,632,361 $6,782,094 Spain WEBS Index Series $ 282,971 $ 454,610 Sweden WEBS Index Series $ 536,501 $ 931,311 Switzerland WEBS Index Series $6,865,580 $7,399,570 United Kingdom WEBS Index Series $ 833,676 $ 747,635 62 WEBS INDEX FUND, INC. ================================================================================ For the six months ended February 28, 1998, each WEBS Index Series' net foreign withholding taxes deducted from foreign dividends received were as follows: FOREIGN WITHOLDING WEBS INDEX SERIES TAX ----------------- ---------- Australia WEBS Index Series $17,752 Austria WEBS Index Series $ 391 Belgium WEBS Index Series $12,746 Canada WEBS Index Series $32,865 France WEBS Index Series $ 1,434 Germany WEBS Index Series $ 5,951 Hong Kong WEBS Index Series $ -- Italy WEBS Index Series $ 1,968 Japan WEBS Index Series $81,372 Malaysia (Free) WEBS Index Series $12,393 Mexico (Free) WEBS Index Series $ -- Netherlands WEBS Index Series $12,252 Singapore (Free) WEBS Index Series $ -- Spain WEBS Index Series $19,502 Sweden WEBS Index Series $ -- Switzerland WEBS Index Series $ -- United Kingdom WEBS Index Series $74,897 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 performance of such WEBS Index Series or subject such WEBS Index Series to greater price volatility than that experienced by more diversified investment companies. 63 [GRAPHIC OMITTED] WEBS INDEX FUND, INC. INVESTMENT ADVISER BARCLAYS GLOBAL FUND ADVISORS ADMINISTRATOR PFPC INC. DISTRIBUTOR FUNDS DISTRIBUTOR INC. TRANSFER AGENT PNC BANK, N.A. CUSTODIAN, SECURITIES LENDING AGENT, AND SUB-ADMINISTRATOR MORGAN STANLEY TRUST COMPANY 400 BELLEVUE PARKWAY WILMINGTON, DE 19809 -----END PRIVACY-ENHANCED MESSAGE-----