-----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, LW3qxuX9EW2BFpuxCrqa/d/k7K+TEokhgGxlbirjXw57ECRDK1rZpCCeEoHdSfYR 1GVY5FPt6czl8k8IFzAozQ== 0000935069-98-000203.txt : 19981110 0000935069-98-000203.hdr.sgml : 19981110 ACCESSION NUMBER: 0000935069-98-000203 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980831 FILED AS OF DATE: 19981109 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: 98740162 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 ANNUAL REPORT WORLD EQUITY BENCHMARK SHARES WEBS (LOGO) [GRAPHIC OMITTED] AUGUST 31, 1 9 9 8 ANNUAL REPORT WEBS INDEX FUND, INC. WEBS INDEX FUND, INC. ================================================================================ Dear Shareholder: We are pleased to present the Annual Report for WEBS Index Fund, Inc. covering the period September 1, 1997 through August 31, 1998. It contains important information about the performance of your investment, a management's discussion and analysis for each WEBS Index Series from the Fund's adviser, Barclays Global Fund Advisors, and important financial information. Each of the WEBS Index Series seeks to track the investment performance of a specific country's stock market, as measured by a Morgan Stanley Capital International (MSCI) country index. The Investment Advisor's discussion contains information about performance and tracking for each of the WEBS Index Series. GROWTH ACTIVITY WEBS continue to gain favor with investors as an efficient way to invest in selected foreign equity markets. As of August 31, 1998 net assets of the seventeen WEBS Index Series have grown to $747.2 million -- a 58.4% increase over the same time period a year ago. As you know, the value of total net assets will fluctuate with the levels of the respective foreign equity markets. A better indicator of the attractiveness of WEBS is the number of shares outstanding. As of August 31, 1998 total shares outstanding were 87.9 million, representing a 147.6% increase over the number outstanding on August 31, 1997 (35.5 million). This increase indicates that, in spite of the turmoil that has taken place in many foreign equity markets this year, investors continue to invest in those markets through WEBS. We look forward to this trend continuing in the months ahead. INTERNATIONAL PERFORMANCE Investor concerns about high US equity valuations and reduced corporate earnings, combined with fears that the economic woes in Asia and Russia will have a serious impact on the US economy, caused US share prices to experience a great deal of volatility this year. Foreign equity markets experienced volatility as well, and a number of WEBS Index Series produced negative returns generally in line with their benchmark indices. However, five of the WEBS Index Series produced total returns in excess of 25% for the year ended August 31, 1998: WEBS Italy +47.7%, WEBS Belgium +39.4%, WEBS France +34.8%, WEBS Spain +32.6% and WEBS Germany +25.7%. Returns such as these support the premise that investing internationally can potentially enhance the overall return of one's portfolio. SPECIAL NOTE WITH RESPECT TO MALAYSIA As you may be aware, on September 1, 1998 the Malaysian government imposed capital restrictions that impact the operations of non-Malaysian investors such as the Malaysia (Free) WEBS Index Series in certain respects. Due to the restrictions on the free movement of securities and Malaysian currency, the Fund temporarily suspended new creations of Creation Units of WEBS of its Malaysia Series and expressed concern about its ability to process requests for redemptions of Creation Units of WEBS of the Malaysia Series. To review details of a Supplement to the Prospectus, dated September 15, 1998 as well as a number of Press Releases which have been issued, please access the Fund's website at WWW.WEBSONTHEWEB.COM. The pertinent information is under the heading "What's New". Alternatively, please call 1-800-810-9327 to speak to a Fund representative. CONCLUSION The popularity of the seventeen WEBS Index Series continues to grow because investors like you understand that WEBS represent an easy, relatively inexpensive way to access any of seventeen different foreign stock markets. We thank you for your continued support and confidence in WEBS Index Fund, Inc. and hope you will continue to use the various WEBS Index Series in your portfolio. Sincerely, /s/ NATHAN MOST Nathan Most Chairman and President WEBS Index Fund, Inc. 1 ================================================================================ INTRODUCTION The Investment Advisor for each WEBS Index Series is Barclays Global Fund Advisors. Each WEBS Index Series holds a representative sample of the underlying securities in a corresponding MSCI Index (using the analytic technique known as "portfolio sampling" discussed below), as opposed to full replication of the corresponding MSCI Index. In addition, certain WEBS Index Series may invest to a limited extent in securities that are not in the relevant benchmark index. When examining the performance review numbers of each WEBS Index Series, remember that expenses are incurred by the WEBS Index Series, and that such expenses impact performance. Expenses affect every WEBS Index Series. This is in contrast to the corresponding MSCI Indices that do not bear any expenses. Although the key market conditions summaries for each WEBS Index Series address certain specific issues affecting economic performance in the various national markets, there are some broad worldwide events affecting performance that should be considered at the outset. The recession that began in Asia last October began to erode performance in economies all over the world during 1998. In addition, mounting troubles in Russia erupted this July and August, weakening world markets even further. The Russian currency devaluation created widespread concern, and accordingly, both major U.S. benchmark indices (the Dow Jones Industrial Average and the Standard & Poor's 500 Index) saw near record one-day point declines on August 31, 1998--the WEBS Index Series year end. The significant declines in global equity markets in August had a significant impact on the performance of the WEBS Index Series for fiscal 1998. In addition, the performance of each WEBS Index Series may also vary positively or negatively from that of its corresponding MSCI Index during any period due to portfolio sampling, regulatory constraints, revenue differential and the impact of uninvested assets. Portfolio sampling is a highly disciplined approach to creating a portfolio which is designed to capture index returns. The portfolios of the WEBS Index Series are also designed to reflect accurately the market's size and industry profiles. No attempt is made to actively manage the WEBS Index Series using economic or market analysis or to hedge foreign exchange risk. A number of regulatory constraints adversely impact the Investment Advisor's ability to "optimize" the portfolios of certain WEBS Index Series through the use of portfolio sampling. The three principal regulatory constraints that affect Fund performance are referred to as the Single Issuer Rule, the 5/50 Rule and the Industry Concentration Rule. The Single Issuer Rule and the 50/50 Rule are Internal Revenue Service Regulations, while the Industry Concentration Rule results from the need to comply with a provision in the Investment Company Act of 1940. The Single Issuer Rule provides that no issuer in a portfolio can have a weight of greater than 25%. This constraint applies to all share classes of an issuer. In Austria, for example, the Bank of Austria has three share classes (Stamm, Vorzug and PSC) which have a collective weighting in the MSCI Austria Index of 33%. As a result of the Single Issuer Rule, the portfolio cannot hold any combination of the three share classes above 25%. The 5/50 Rule 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. If an issuer has more than one share class, then all of the share classes of that issuer must be considered as one security for 5/50 Rule purposes. Prior to October 1998, the Fund had a policy that required each WEBS Index Series to "concentrate" in an industry (invest at least 25% of its net assets in the industry) to the extent its benchmark index was concentrated, except that if the benchmark's concentration was the result of a single issuer, the WEBS 2 WEBS INDEX FUND, INC. ================================================================================ Index Series was required to invest up to 25% of its assets in the relevant industry, and to invest the balance of its assets in other industries. The "Industry Concentration Rule" severely limited the Investment Advisor's flexibility in managing the portfolios of several WEBS Index Series throughout the period covered by this report. In October 1998 the shareholders of the Fund approved a new concentration policy that results in greater flexibility to the Investment Advisor with respect to industry concentration. Another factor that causes performance of WEBS Index Series to differ from that of their respective benchmarks is called "revenue differential." The dividend revenues received by the WEBS Index Series differ from those of the benchmark MSCI Indices in both 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 assume the monthly dividend revenue is equal to 1/12th of the previous 12 month's dividends. In addition, unlike the MSCI Indices, 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. Finally, uninvested cash held in a WEBS Index Series affects performance relative to the MSCI benchmark index. Cash and deferred organizational expenses are the principal "unequitized" assets of the WEBS Index Series. In contrast, the MSCI Indices assume a 100% investment in the underlying stocks and thus do not reflect any "unequitized" assets. The effect of uninvested assets (referred to herein as "cash drag") will tend to cause each WEBS Index Series to outperform its benchmark in falling markets and underperform the benchmark in rising markets. 3 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ AUSTRALIA PERFORMANCE REVIEW The total return of the Australia WEBS Index Series was -23.11% for the year ended August 31, 1998, while the corresponding MSCI Index returned -20.62% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Australia WEBS Index Series underperformed the benchmark by 2.49% during this period for two principal reasons: portfolio sampling and expenses. Of the two factors, portfolio sampling had the greater impact. The positive effects of revenue differential and cash drag were more than offset by the negative impact of portfolio sampling and expenses. As noted in the Introduction, regulatory restrictions adversely affect the Investment Advisor's ability to optimize a WEBS Index Series' portfolio. In the case of the Australia WEBS Index Series, the 5/50 Rule caused difficulties with many industries. It led to a significant underweighting of the best performing stocks in Australia's broadcasting/ publishing sector, which returned 39%. Also there was an overweighting of such poorly performing commodity sectors as building materials, non-ferrous metals and steel, which had negative returns of 47%, 48% and 66% respectively for the year. KEY MARKET CONDITIONS As of August 1998, the Australian government has run a budget surplus of $12.8 billion. Australia's economy, dependent on Asia for 65% of its exports, was weakened in the beginning of the year by the region's financial turmoil. Redirecting exports to the Americas, Europe and Africa helped cut the trade deficit by 11% in the second quarter of 1998 as compared to the second quarter of 1997. The Australian dollar lost more than 20% of its value as compared to the U.S. dollar during the year, yet the Australian government did not raise interest rates to support the currency for fear of causing a recession. In fact, bonds soared as the Central Bank actually cut interest rates twice, leaving benchmark bond yields for July at the lowest levels since the government began regular bond auctions in 1982. Record low inflation (holding at an annual rate of 1.6% in August 1998), sluggish growth and lingering expectations of another interest rate cut underpinned the bonds rally. Commonwealth Bank of Australia's Commodity Price Index, which tracks 15 key commodities, was reported in the second quarter of 1998 as the lowest since October 1993. The fall in the Australian dollar versus the U.S. dollar was viewed as an appropriate and necessary adjustment to the commodity price weakness. Home loan interest rates declined to a 30-year low of 5%, and unemployment remained steady for the year at 8.3%. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE AUSTRALIA WEBS INDEX SERIES VS. THE MSCI AUSTRALIA INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Australia WEBS Index Series MSCI Australia 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 05/31/98 $10,058 $10,132 08/31/98 $8,486 $8,724 Past performance is not predictive of future performance Value August 31, 1998 --------------- Australia WEBS Index Series $8,485* MSCI Australia Index $8,724 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION -------- --------- Australia Webs Index Series (23.11)% (6.42)% MSCI Australia Index (20.62)% (5.37)% - ------------------ * 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. 4 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ AUSTRIA PERFORMANCE REVIEW The total return of the Austria WEBS Index Series was 2.16% for the year ended August 31, 1998, while the corresponding MSCI Index returned 8.48% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Austria WEBS Index Series underperformed the benchmark MSCI Austria Index by 6.32% during this period for two principal reasons: portfolio sampling and expenses. Of those two, portfolio sampling had the more significant impact. As stated in the Introduction, regulatory restrictions can adversely affect the Investment Advisor's ability to optimize a WEBS Index Series. In the case of Austria, the Industry Concentration and Single Issuer Rules led to a significant underweighting of the best performing stocks in the banking and utilities sectors. The banking industry represents 29% of the benchmark index and the Bank of Austria is the only banking issuer in the Austrian benchmark. This security could not be held at greater than 25% of the total assets of the Austria WEBS Index Series. As a result, the banking sector, which returned 17% for the fiscal year was underweighted. The remaining weight had to be reallocated to other industries, resulting in an overweighting of the poorly performing electronic components (-53%) and metal (-40%) sectors. KEY MARKET CONDITIONS In the first quarter of 1998, Austrian exports to Germany soared by 10.4% to 65.1 billion schillings, rising faster over the same period than Austrian exports generally (+9.9%). Accounting for 35% of total Austrian exports in 1997, Germany remained a vital trading partner. Austrian wholesale prices fell greater than expected 0.7% in August 1998, as seasonal food prices and a continuing decline in the price of oil kept Austrian inflation well under control. Wholesale prices fell 0.9% in August 1998, from those of a year earlier, reflective of further deflation. The decline indicated that inflation is a non-issue in Austria, whose economy accounts for about 3.3% of the 11-nation euro currency region. The strong Austrian currency kept interest rates steady. Austrian consumer prices rose 0.9% from July 1997 to July 1998. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE AUSTRIA WEBS INDEX SERIES VS. THE MSCI AUSTRIA INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Austria WEBS Index Series MSCI Austria 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 05/31/98 $12,532 $13,875 08/31/98 $9,975 $10,770 Past performance is not predictive of future performance Value August 31, 1998 --------------- Austria WEBS Index Series $ 9,975* MSCI Austria Index $10,770 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ----- --------- Austria Webs Index Series 2.16% (0.10)% MSCI Austria Index 8.48% 3.04% - ------------------ * 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. 5 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ BELGIUM PERFORMANCE REVIEW The total return of the Belgium WEBS Index Series was 39.42% for the year ended August 31, 1998, while the corresponding MSCI Index return was 51.20% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Belgium WEBS Index Series underperformed the benchmark by 11.78% during this period for three reasons: portfolio sampling, the impact of expenses and cash drag. Of those three factors, portfolio sampling had by far the greatest impact, accounting for more than 10% of the underperformance. As stated in the Introduction, regulatory restrictions can adversely affect the Investment Advisor's ability to optimize a WEBS Index Series. In the case of Belgium, there are five companies, which each have a weighting of over 5% of the benchmark index, with a total benchmark weight of 77%. In these circumstances, the 5/50 Rule led to significant underweighting of the top-performing banking and utilities sectors, which returned 117% and 75%, respectively. As a result, some poorly performing industries became overweighted, including metals and miscellaneous components, with returns of (41%) and (16%), respectively. In addition, several corporate actions in June 1998 negatively affected performance of the Belgium WEBS Index Series. These included the General Banque/Fortis merger; an increase in KBC shares outstanding; and a tender offer from the French company AXA for Royal Belge. The negative performance was caused by the benchmark's timing in factoring the merger and share increase as well as the fact that the tendered shares were eliminated from the Belgium WEBS Index Series for liquidity reasons. KEY MARKET CONDITIONS The National Bank of Belgium said in late August that the country's debt would decline to 117.3% of gross domestic product in 1998, down from highs of 122.1% in 1997 and 131.3% in 1996. This decline would move the country closer to the long-term goal of 60% for countries using the euro currency. The Central Bank left its forecast for the government's annual deficit unchanged at 1.3% of GDP (from 2% in 1997), well within the 3% limit for countries adopting the euro next year. Citing slowing exports, the government has forecasted economic growth at 2.7% for 1998, down from 5.6% in the previous year. But the trend through August showed consumer expenditures expanding at a strong pace. The annual growth in new passenger car registrations increased sharply in the second quarter of 1998 and retail sales volume growth was also strong. The growth from these sources outweighed the cash balances on activity from a decline in business investment and lower inventories. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE BELGIUM WEBS INDEX SERIES VS. THE MSCI BELGIUM INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Belgium WEBS Index Series MSCI Belgium 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 05/31/98 $15,831 $16,912 08/31/98 $15,996 $17,633 Past performance is not predictive of future performance Value August 31, 1998 --------------- Belgium WEBS Index Series $15,997* MSCI BELGIUM INDEX $17,633 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Belgium Webs Index Series 39.42% 20.91% MSCI Belgium Index 51.20% 25.77% - ------------------ * 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. 6 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ CANADA PERFORMANCE REVIEW The total return of the Canada WEBS Index Series was -21.69% for the year ended August 31, 1998, while the corresponding MSCI Index return was -20.55% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Canada WEBS Index Series underperformed the benchmark MSCI Index by 1.14% during this period for two principal reasons: expenses and cash drag. Of the two, expenses had the main impact. Revenue differential and portfolio sampling had modest positive impacts on performance, but they more than offset the effect of expenses and cash drag. KEY MARKET CONDITIONS In the largest increase in almost six years, the Canadian Central Bank raised interest rates from 5% to 6% in August 1998 in an effort to stabilize the sliding Canadian dollar. This, the second 1998 rate increase, was an effort to offset the effects of the Asian and Russian crises, falling commodity prices and investment flight to U.S. dollars and bonds. Financial markets suffered following the rate increase as investors questioned the move in an environment of economic turmoil and plummeting raw materials prices, the mainstay of Canada's exports. The rate increase was expected to hurt corporate profits and choke the already slowing economy. interest rate sensitive stocks such as banks, industrial producers and retailers suffered the worst. Retailers in particular were concerned that higher interest rates would cut consumer spending as consumers would incur larger loan and mortgage payments. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE CANADA WEBS INDEX SERIES VS. THE MSCI CANADA INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Canada WEBS Index Series MSCI Canada 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 $14,322 $14,679 05/31/98 $15,157 $15,668 08/31/98 $10,545 $10,921 Past performance is not predictive of future performance Value August 31, 1998 --------------- Canada WEBS Index Series $10,529* MSCI Canada Index $10,921 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION -------- --------- Canada Webs Index Series (21.69)% 2.11% MSCI Canada Index (20.55)% 3.63% - ------------------ * 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. 7 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ FRANCE PERFORMANCE REVIEW The total return of the France WEBS Index Series was 34.77% for the year ended August 31, 1998, while the corresponding MSCI Index return was 35.31% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The France WEBS Index Series underperformed the benchmark MSCI Index by 0.54% during this period for two reasons: the impact of expenses and cash drag. Of the two, the main impact was created by expenses. Revenue differential and portfolio sampling had positive impacts on performance, but these effects were more than offset by the negative impact of expenses and cash drag. KEY MARKET CONDITIONS World Cup visitors were a principal cause of price increases in many service sectors--including a sharp rise in hotel and restaurant charges. With machinery and transport equipment, agriculture products and chemical products leading the way, exports caused the gross domestic product to increase by 0.4% in the first seven months of 1998 compared to the same period in 1997. France is expected to have a trade surplus of about 170 billion francs in 1998, which is approximately the same as the record surplus of 1997. This has forced companies to hire more workers, cutting the unemployment rate from a postwar record of 12.6% in 1997 to 11.8% in 1998. Strong economic growth performance for 1998 (expected to show a 3% increase over growth in 1997) led to ambitious government plans to cut the deficit to levels acceptable for adopting the euro. With the Asian and Russian crisis already affecting exports, it is estimated that economic growth will slow to 2.5% in 1999. In late August, the Central Bank said it would focus on spending cuts for the remainder of the year. French government spending represents more than 54% of GDP, whereas the European Union average is 50% and the average for the Group of Seven nations is below 40%. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FRANCE WEBS INDEX SERIES VS. THE MSCI FRANCE INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC France WEBS Index Series MSCI France 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 05/31/98 $17,881 $18,027 08/31/98 $16,492 $16,500 Past performance is not predictive of future performance Value August 31, 1998 --------------- France WEBS Index Series $16,492* MSCI France Index $16,500 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- France Webs Index Series 34.77% 22.41% MSCI France Index 35.31% 22.44% - ------------------ * 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. 8 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ GERMANY PERFORMANCE REVIEW The total return of the Germany WEBS Index Series was 25.69% for the year ended August 31, 1998, while the corresponding MSCI Index return was 26.01% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Germany WEBS Index Series underperformed the benchmark MSCI Index by 0.32% during this period principally because of the effect of expenses and, to a lesser extent, cash drag and portfolio sampling. The positive effect of revenue differential was more than offset by the three other factors. KEY MARKET CONDITIONS After a three-year slump, Germany's construction industry has begun to stabilize in the first part of 1998. As of August 31, 1998, construction industry output year-to-date was still below the level achieved in the comparable 1997 period, but new orders and building permits figures show positive signs. Retail sales climbed 1% in the first half of 1998, which extracted the industry from its six-year slump. Nevertheless, the country's unemployment rate dropped to a 20-month low of 10.9% in July (and held steady through August). Also helping the job market was enormous export volume in the telecommunications and auto industries. The Central Bank has not changed the money market rate since October 1997, nor has it changed the discount rate since April 1996. German export growth in the first part of 1998 was strong, increasing by 2% from the first quarter to the second quarter of 1998. Rapid growth in exports to the 15 countries in the European Union and North America offset export decreases to Southeast Asia. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE GERMANY WEBS INDEX SERIES VS. THE MSCI GERMANY INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Germany WEBS Index Series MSCI Germany 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 05/31/98 $17,635 $17,924 08/31/98 $15,752 $16,102 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE Value August 31, 1998 --------------- Germany WEBS Index Series $15,752* MSCI Germany Index $16,102 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Germany Webs Index Series 25.69% 20.16% MSCI Germany Index 26.01% 21.24% - ------------------ * 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. 9 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ HONG KONG PERFORMANCE REVIEW The total return of the Hong Kong WEBS Index Series was -54.22% for the year ended August 31, 1998, while the corresponding MSCI Index return was -51.70% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Hong Kong WEBS Index Series underperformed the benchmark MSCI Index by 2.52% during this period for two principal reasons: portfolio sampling and expenses. Of the two, portfolio sampling created the main impact. These factors more than offset the positive contributions to performance of cash drag and revenue differential. As stated in the Introduction, regulatory restrictions can adversely affect the Investment Advisor's ability to optimize a WEBS Index Series' portfolio. In the case of Hong Kong, the 5/50 Rule led to significant underweighting of the best performing stocks in the banking sector. This caused an overweighting of the poorly performing merchandising sector that returned -85%. In addition, the real estate industry moved frequently over the 25% "concentrated" line, necessitating frequent rebalancing to comply with the Industry Concentration Rule, resulting in the Hong Kong WEBS Index Series incurring additional trading expenses which negatively affected performance. KEY MARKET CONDITIONS In Hong Kong, the gross domestic product for 1998 was expected to contract by about 4% because of relaxed employment conditions, tight local credit and high interest costs, all of which continued to hurt consumer and investment demand. Economic instability in the surrounding region (especially in Japan) continued to hamper Hong Kong's export performance. Exports to Mainland China decelerated as import demand moderated. Slight growth in exports to the U.S. and Europe helped offset trade weakness with East Asia, with total exports for the first half of 1998 virtually unchanged in real terms from those in the first half of 1997. Total imports and retained imports in the first half of 1998 fell by about 2% and 7%, respectively, in real terms over a year earlier. The stock market contracted from April through June as markets were hurt by social unrest in Indonesia, protracted economic and financial problems in Japan, and the weak Japanese yen. The Hang Seng Index closed the second quarter of 1998 down 26% from its level three months earlier, and down 20% from its level at the end of 1997. The Hang Seng sank to a record low in mid-August, but recovered somewhat in late August after the government took action to stabilize the exchange rate of the Hong Kong dollar. Amid the volatility in the region, the Hong Kong dollar's exchange rate versus the U.S. dollar was stable in 1998, moving between 7.735 and 7.750. Higher interest rates kept demand for loans low, and banks were cautious in lending. During the second quarter of 1998, loans to financial concerns, stockbrokers, wholesale and retail trades, and the manufacturing sector all declined as residential and property development/investment loans increased. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE HONG KONG WEBS INDEX SERIES VS. THE MSCI HONG KONG INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Hong Kong WEBS Index Series MSCI Hong Kong Index 03/12/96 $10,000 $10,000 05/31/96 $1,0826 $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 05/31/98 $6,881 $7,465 08/31/98 $5,567 $6,108 Past performance is not predictive of future performance Value August 31, 1998 --------------- Hong Kong WEBS Index Series $5,566* MSCI Hong Kong Index $6,108 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION -------- --------- Hong Kong Webs Index Series (54.22)% (21.09)% MSCI Hong Kong Index (51.70)% (18.07)% - ------------------ * 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. 10 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ ITALY PERFORMANCE REVIEW The total return of the Italy WEBS Index Series was 47.66% for the year ended August 31, 1998, while the corresponding MSCI Index return was 48.73% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Italy WEBS Index Series underperformed the benchmark MSCI Index by 1.07% during this period because of the impact of expenses and cash drag, which more than offset the positive contribution to performance of revenue differential and portfolio sampling. As stated in the Introduction, regulatory restrictions adversely affect the Investment Advisor's ability to optimize a WEBS Index Series' portfolio. The telecommunications industry represented slightly more or slightly less than 25% of the benchmark index in fiscal 1998, resulting in extensive trading activity to comply with the Industry Concentration Rule. Despite the extra transaction costs, portfolio sampling was still a positive factor in Italy throughout the past fiscal year. KEY MARKET CONDITIONS Italy's consumer prices rose at an annual pace of 1.9% in the first half of 1998, in line with preliminary figures released by a sample of 11 major cities last month, which reported growth of 0.05% in August 1998 and 1.9% for the year. Producer prices dropped for three consecutive months through July 1998, indicating that final prices set by retailers would likewise remain under pressure. Consumer prices increased somewhat over the last three year period because of the rising cost of transportation and running water. These late August figures showed inflation to be almost non-existent in Europe's fourth-largest economy. Output for manufacturers of metal-based goods, including cars, computers and household appliances, fell 0.5% in the first quarter of 1998 and 1% in the following quarter. This decline was five times as large as the drop in Italy's overall industrial production, which slowed by 0.2% in the first half of 1998 as Asia's demand for Italian imports dropped. However, Italian exports to Russia rose 32% to 1.7 trillion lira in the first half of 1998 over the comparable period in 1997, while imports fell 4.8% to 1.842 trillion lira, slimming Italy's trade deficit with Russia to 141 billion lira in the period. The top three exports to Russia were machinery and industrial equipment, furniture and shoes. Though these exports represent only 2% of total exports, it is a positive sign that Italy has limited Russian exposure. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ITALY WEBS INDEX SERIES VS. THE MSCI ITALY INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Italy WEBS Index Series MSCI Italy 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 05/31/98 $21,242 $21,319 08/31/98 $18,968 $19,129 Past performance is not predictive of future performance Value August 31, 1998 -------------- Italy WEBS Index Series $18,966* MSCI Italy Index $19,129 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Italy Webs Index Series 47.66% 29.53% MSCI Italy Index 48.73% 29.98% - ------------------ * 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. 11 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ JAPAN PERFORMANCE REVIEW The total return of the Japan WEBS Index Series was -33.38% for the year ended August 31, 1998, while the corresponding MSCI Index return was -32.70% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Japan WEBS Index Series underperformed the benchmark MSCI Index by 0.68% during this period principally because of the impact of expenses, which more than offset the positive effect on performance of cash drag and revenue differential. KEY MARKET CONDITIONS Japan is experiencing its worst recession since World War II, resulting in shaken consumer confidence, corporate cost cutting and volatile financial markets. The government said in a late August 1998 report that the economy was in "a very severe situation." That report dampened demand for the yen even further. Through August 31, 1998, the country's banking industry was working with the government to resolve the problem of an estimated 77 trillion yen of bad loans. One proposed solution was to pass legislation to close a number of weak banks. However, a comprehensive solution to the banking problems continues to elude Japanese politicians. The Nikkei 225 Index, on August 28, plunged through the 14,000 mark, its lowest point in more than 12 years. The current recession began in October 1997, when consumer spending slowed following a sales tax increase in April from 3% to 5%. Subsequent high profile bankruptcies began to erode consumer confidence further as job security was a concern. Wages have dropped every month since that time. Major steps to get the economy back in order, including consumer and corporate tax cuts and public fund allocations for bad bank loans, were the government's eleventh hour effort to restore confidence. Many analysts have expressed concern that the financial weakness in Japan may affect world markets for the next two to three years. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE JAPAN WEBS INDEX SERIES VS. THE MSCI JAPAN INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Japan WEBS Index Series MSCI Japan 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 05/31/98 $6,453 $6,525 08/31/98 $5,682 $5,785 Past performance is not predictive of future performance Value August 31, 1998 --------------- Japan WEBS Index Series $5,682* MSCI Japan Index $5,785 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION -------- -------- Japan Webs Index Series (33.38)% (20.42)% MSCI Japan Index (32.70)% (19.85)% - ------------------ * 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. 12 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ MALAYSIA (FREE) PERFORMANCE REVIEW The total return of the Malaysia (Free) WEBS Index Series was -73.57% for the year ended August 31, 1998, while the corresponding MSCI Index return was - -74.05% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Malaysia WEBS Index Series slightly outperformed the benchmark MSCI Index by 0.48% during this period principally because of the effect of cash drag and, to a significantly lesser extent, revenue differential. These positive influences on performance more than offset the negative impact of expenses. Portfolio sampling had a very minor adverse effect on the performance of the Malaysia (Free) WEBS Index Series. KEY MARKET CONDITIONS The ongoing Asian financial crisis has had an overwhelmingly negative impact on Malaysia's economy and stock market in recent times. In the second quarter of 1998, gross domestic product contracted by 6.8%, well ahead of estimates. In fact, GDP contracted for the first two quarters of 1998, leading to the country's first recession in 13 years. After being one of the best performing Asian Tigers, with annual growth rates of around 8%, Malaysia's economy is now expected to contract by 3.5% annually for perhaps the next several years. Contributing to this contraction is growing inflation and the weakening ringgit, Malaysia's embattled currency. Inflation is on its way to a doubling of 1997 levels and the ringgit declined 33% over the 12 months ending August 31, 1998. These factors led to a crisis among Malaysia's banks, with some seeking protection from creditors. Due to falling demand internationally, the weak ringgit has decreased exports. In fact, manufacturing has been a significant victim of the region's prevailing economic troubles. As a result of all of this bad news, the stock market was the world's fourth worst performing market through August 1998. Politically, there were several issues in Malaysia that affected the markets in the twelve month period ended August 31, 1998. Among them were an August 31, 1998 decision to limit foreign trading in its equity markets; the resignation of Central Bank governor Ahmad Mohd Don in protest over governmental pressure to decrease interest rates and discussion about controlling the flow of capital from the country. Subsequent to August 31, the Malaysian government instituted strict capital restrictions on the ringgit, Malaysia's Finance Minister was fired and later arrested, and the country has experienced political unrest. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE MALAYSIA (FREE) WEBS INDEX SERIES VS. THE MSCI MALAYSIA (FREE) INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Malaysia (Free) WEBS Index Series MSCI Malaysia (Free) 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 05/31/98 $3,340 $3,313 08/31/98 $1,648 $1,657 Past performance is not predictive of future performance Value August 31, 1998 --------------- Malaysia (Free) WEBS Index Series $1,648* MSCI Malaysia (Free) Index $1,657 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------- --------- Malaysia (Free) Webs Index Series (73.57)% (51.75)% MSCI Malaysia (Free) Index (74.05)% (51.64)% - ------------------ * 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. 13 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ MEXICO (FREE) PERFORMANCE REVIEW The total return of the Mexico (Free) WEBS Index Series was -44.18% for the year ended August 31, 1998, while the corresponding MSCI Index return was - -43.88% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Mexico (Free) WEBS Index Series underperformed the benchmark MSCI Index by 0.30% during this period as a result of expenses. Revenue differential, portfolio sampling and cash drag all had positive effects on performance in the period, but these effects were more than offset by the impact of expenses. KEY MARKET CONDITIONS Uncertainty about the Russian situation in July and August of 1998 led to an uncertainty about Mexico's economy, as well as with other Latin American economies. The Russian financial crisis had a significant negative impact on both Mexico's economy and stock market. It led to a late August 1998 fall in the stock market to its lowest intraday level in two years. In addition, it caused a dramatic rise in Mexico's interest rates, from 20% to 27% in August alone. This combination of factors, along with a corresponding weakness in the peso, has led to major concern about the country's banking sector, a group of stocks that had only just begun to recover from the peso devaluation of 1994. On the bright side, reforms enacted to keep banking institutions from gambling with reserves should better position banks to withstand interest rate fluctuations than before. On general domestic economic trends, news was better. There were 3.9% more manufacturing jobs in June 1998 than a year before and unemployment fell to 3.2% by July 1998. And while Russia's impact was dramatic, the possible impact of the Asian crisis on Mexico's export activity will likely be limited as an overwhelming percentage of exports are destined for the United States. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE MEXICO (FREE) WEBS INDEX SERIES VS. THE MSCI MEXICO (FREE) INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Mexico (Free) WEBS Index Series MSCI Mexico (Free) 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 05/31/98 $14,107 $15,033 08/31/98 $8,750 $9,159 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE Value August 31, 1998 --------------- Mexico (Free) WEBS Index Series $8,749* MSCI Mexico (Free) Index $9,159 AVERAGE ANNUAL TOTAL RETURN ONE YEAR SINCE INCEPTION -------- --------------- Mexico (Free) Webs Index Series (44.18)% (5.26)% MSCI Mexico (Free) Index (43.88)% (3.49)% - ------------------ * 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. 14 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ NETHERLANDS PERFORMANCE REVIEW The total return of the Netherlands WEBS Index Series was 17.41% for the year ended August 31, 1998, while the corresponding MSCI Index return was 14.61% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Netherlands WEBS Index Series outperformed the benchmark MSCI Index by 2.80% during this period: primarily as a result of portfolio sampling. Revenue differential also made a modest positive contribution to performance. The negative effects of expenses and cash drag were more than offset by the effects of the two other factors. As stated in the Introduction, regulatory restrictions can adversely affect the Investment Advisor's ability to optimize WEBS Index Series' portfolio. In the case of the Netherlands WEBS Index Series, the Single Issuer Rule caused Royal Dutch, the only company represented in the underperforming energy sector, to be held below its 28% weighting in the benchmark index. As a result, the Netherlands WEBS Index Series overweighted some better performing sectors such as the insurance industry, which returned 86% for the year. KEY MARKET CONDITIONS To date, the financial crises in Asia and Russia have had less impact on the Netherlands than on many other European countries. Neither such crises nor the tightest job market in over 17 years did anything to slow growth in the first half of 1998. At a 4% annualized rate, the Netherlands enjoyed the second-fastest growing economy in the 11-member European currency bloc. The fifth-largest economy in the bloc overall, the Netherlands enjoyed fast growth, low inflation and low unemployment. In fact, the country has come to be looked upon as a barometer of the bloc's overall economic strength. The country's economy continued to experience rising consumer spending and exports. While there was a slight decrease in consumer confidence in the first half of 1998, likely as a result of the Asian and Russian crises, there is no indication that spending will decrease to a substantial degree to negatively impact the domestic economy. In fact, many analysts expect consumer spending to be strong enough to keep the Netherlands gross domestic product on track for a 4% increase in 1998. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE NETHERLANDS WEBS INDEX SERIES VS. THE MSCI NETHERLANDS INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Netherlands Webs Index Series MSCI Netherlands 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 05/31/98 $18,985 $19,399 08/31/98 $16,716 $16,824 Past performance is not predictive of future performance Value AUGUST 31, 1998 --------------- Netherlands WEBS Index Series $16,715* MSCI Netherlands Index $16,824 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Netherlands Webs Index Series 17.41% 23.08% MSCI Netherlands Index 14.61% 23.40% - ------------------ * 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 The total return of the Singapore (Free) WEBS Index Series was -61.29% for the year ended August 31, 1998, while the corresponding MSCI Index return was - -55.36% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Singapore (Free) WEBS Index Series underperformed the benchmark MSCI Index by 5.93% principally as a result of portfolio sampling. The impact of expenses also adversely affected performance, but to a much lesser extent than portfolio sampling. Cash drag and revenue differential had positive effects on performance. As stated in the Introduction, regulatory restrictions can adversely affect the Investment Advisor's ability to optimize WEBS Index Series. In the case of Singapore, two regulations adversely impacted tracking: the Single Issuer Rule and the 5/50 Rule. These led to significant underweighting of better performing sectors, notably banking and telecommunications. This resulted in an overweighting of the poorly performing multi-industry sector, which returned - -75%. KEY MARKET CONDITIONS As a result of the deepened Asian financial crisis, the growth of Singapore's economy slowed markedly in the second quarter of 1998 and through the Index Series' fiscal year ending August 31, 1998. It was especially hard hit by the trouble in Malaysia and Indonesia, two of its closest trading partners. Two of the most affected sectors in terms of negative quarter on quarter growth were manufacturing, with two consecutive declining quarters and commerce, with three declining quarters. While the telecommunications and banking sectors grew through the second quarter of 1998, it was at a pace generally well below that of the prior quarter. Businesses saw costs increase in the same quarter after declines in the previous four quarters. International trade, long a positive for Singapore's economy, proved to be negative as demand declined among many Asian countries. A global surplus of electronic products led to overstocked inventories and decreasing orders. On a more positive note, Singapore's consumer price index moderated in the second quarter of 1998 in large part due to falling commodity prices and a relatively stable domestic currency compared to its Asian neighbors. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SINGAPORE (FREE) WEBS INDEX SERIES VS. THE MSCI SINGAPORE (FREE) INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Singapore (Free) WEBS Index Series MSCI Singapore (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 05/31/98 $4,154 $4,382 08/31/98 $2,763 $3,108 Past performance is not predictive of future performance Value August 31, 1998 --------------- Singapore (Free) WEBS Index Series $2,763* MSCI Singapore (Free) Index $3,108 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION -------- --------- Singapore (Free) Webs Index Series (61.29)% (40.54)% MSCI Singapore (Free) Index (55.36)% (37.65)% - ------------------ * 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. 16 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ SPAIN PERFORMANCE REVIEW The total return of the Spain WEBS Index Series was 32.58% for the year ended August 31, 1998, while the corresponding MSCI Index return was 33.87% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Spain WEBS Index Series underperformed the benchmark MSCI Index by 1.29% during this period as a result of the effect of expenses and cash drag, which more than offset the modest positive impact of security sampling and revenue differential. KEY MARKET CONDITIONS Spain has been one of the true stars among European economies in recent times growing at an annualized rate of 3.8% in the second quarter of 1998. Spain was little affected by the Asian and Russian crises because trade with Asia represents less than 3% of its exports. Spain's low interest rates, rising employment and minimal producer price index increases played large roles in increased construction and business spending. In May 1998 the Spanish interest rate was lowered to 4.25% and unemployment fell for the sixteenth consecutive month. These factors helped cause domestic demand to grow 4.7% from that at the end of May 1997. However, there were still areas of concern. Spain's broadest measure of money supply (M4) increased 1.3% in July 1998 from the same month one year ago. This was a concern because growth in M4 can lead to higher consumer prices and a resulting slowdown of the economy overall. In fact, it appeared that some increases occurred as the consumer price index rose 2.2% in July from the previous year, the largest rise since March 1997. Finally, although unemployment continued to fall, it was still nearly twice that of the European Union average. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SPAIN WEBS INDEX SERIES VS. THE MSCI SPAIN INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Spain WEBS Index Series MSCI Spain 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 05/31/98 23,918 24,762 08/31/98 20,009 20,589 Past performance is not predictive of future performance Value August 31, 1998 --------------- Spain WEBS Index Series $20,008* MSCI Spain Index $20,589 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Spain Webs Index Series 32.58% 32.36% MSCI Spain Index 33.87% 33.90% - ------------------ * 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. 17 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ SWEDEN PERFORMANCE REVIEW The total return of the Sweden WEBS Index Series was 5.48% for the year ended August 31, 1998, while the corresponding MSCI Index return was 8.33% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Sweden WEBS Index Series underperformed the benchmark MSCI Index by 2.85% during this period for two reasons: portfolio sampling and revenue differential both of which more than offset the negative impacts of expenses and cash drag. KEY MARKET CONDITIONS When considering the growing Swedish economy, inflation is the main theme. The Swedish government has declared that its number one priority is securing a low inflation environment, which it hoped would eventually lead to a strengthened krona. These efforts paid off in the Index Series' fiscal year ending August 31, 1998. Even as the economy showed great strength, rising 4.1% in the second quarter of 1998, inflation remained virtually nonexistent. In July 1998, consumer prices rose only 0.6% from the prior year, well under the country's target rate of 2%. This is due to the Asian difficulties (which decreased import prices), lower interest rates, lower taxes and moderate wage increases. As a result, there were calls, unheeded by the Central Bank, to lower the interest rate. The krona fell by late August 1998 to a two-and-a-half year low against the U.S. dollar, and the fear in Sweden was that this fall could see a permanent revaluation by the market. Should that be the case, the domestic economy would further expand through increased exports and imports would become more expensive, both of which could cause domestic inflation to trend upward. The recent weakening of the krona will make an interest rate cut unlikely in the near term. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SWEDEN WEBS INDEX SERIES VS. THE MSCI SWEDEN INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Sweden WEBS Index Series MSCI Sweden 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 05/31/98 $19,050 $19,206 08/31/98 $15,659 $16,093 Past performance is not predictive of future performance Value August 31, 1998 --------------- Sweden WEBS Index Series $15,661* MSCI Sweden Index $16,093 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ----- --------- Sweden Webs Index Series 5.48% 19.88% MSCI Sweden Index 8.33% 21.21% - ------------------ * 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. 18 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ SWITZERLAND PERFORMANCE REVIEW The total return of the Switzerland WEBS Index Series was 21.24% for the year ended August 31, 1998, while the corresponding MSCI Index return was 30.10% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The Switzerland WEBS Index Series underperformed the benchmark MSCI Index by 8.86% during this period primarily as a result of portfolio sampling. Expenses were a much less important negative influence on performance, while revenue differential had a small positive effect. As stated in the Introduction, regulatory restrictions may adversely affect the Investment Advisor's ability to optimize a WEBS Index Series' portfolio. Of all of the WEBS countries, the Switzerland WEBS Index Series is the most difficult WEBS Index Series to manage within applicable regulatory requirements. The 5/50 regulations required underweighting of two of the country's top performing sectors in fiscal 1998, most notably the food/household and insurance sectors, which had excellent returns of 60% and 66%, respectively. That led to a corresponding overweighting of the poorly performing recreation sector, which had returns of just 2.26% on the year. KEY MARKET CONDITIONS Over the last several years, Switzerland has been considered Europe's underperformer in economic growth, although in recent months its economy showed signs of improving. However, the Asian crisis was expected to have a greater impact on Switzerland's economy than other European countries due to the fact that roughly 15% of the country's exports are sold in Asia. Switzerland was little affected as improved trade with other expanding European economies largely counteracted the Asian problems. While Switzerland's gross domestic product grew at roughly half the rate of its leading trade partners, France and Germany, its GDP for 1998 looks a good deal higher than for 1997. In many ways, Switzerland has now become one of Europe's more prosperous countries. Unemployment fell to 3.5% by July 1998, nearly a six-year low. Borrowing costs have not been as low in the last 20 years. Consumer prices rose an almost negligible 0.3% through August 1998. Other signs of economic strength during this same time period were factors in offsetting much of the Asian crisis' impact: construction was revitalized; retail sales were up after many years of stagnation; consumer confidence was on the upswing; real salaries increased; and manufacturing as a whole was strong. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE SWITZERLAND WEBS INDEX SERIES VS. THE MSCI SWITZERLAND INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Switzerland WEBS Index Series MSCI Switzerland 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 05/31/98 $16,530 $17,244 08/31/98 $14,515 $15,609 Past performance is not predictive of future performance Value August 31, 1998 --------------- Switzerland WEBS Index Series $14,515* MSCI Switzerland Index $15,609 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- Switzerland Webs Index Series 21.24% 16.25% MSCI Switzerland Index 30.10% 19.72% - ------------------ * 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. 19 PERFORMANCE REVIEW WEBS INDEX FUND, INC. ================================================================================ UNITED KINGDOM PERFORMANCE REVIEW The total return of the United Kingdom WEBS Index Series was 14.98% for the year ended August 31, 1998, while the corresponding MSCI Index return was 14.66% for the same time period. SIGNIFICANT PERFORMANCE FACTORS The United Kingdom WEBS Index Series outperformed the benchmark MSCI Index by 0.32% during this period for two reasons: portfolio sampling and revenue differential both of which more than offset the negative impacts of expenses and cash drag. KEY MARKET CONDITIONS Events in Asia and Russia have had little negative effect in the United Kingdom. In fact, uncertainty in these areas brought some vigor to the United Kingdom market as it was seen to be a safe haven for investors. However, the United Kingdom's domestic economy showed some signs of slowing in both the service and manufacturing industries as growth in gross domestic product was at an annualized rate of 2.6% in the second quarter of 1998, well below estimates of 3%. Interest rates, more than double those of Germany, were seen as the main cause. The rate hike in June 1998, the seventh since May 1997, was felt by many to be the reason for the slowdown of manufacturing, also hurt by lower export demand, which fell to its weakest point in five and a half years. As business confidence waned, leading manufacturers laid off thousands of workers. However, through all of this negative news, consumer spending was extremely robust and wages grew faster than expected. In such circumstances, the Central Bank resisted calls to lower rates due to fears of inflationary pressures. It was notable that in the second quarter of 1998 inflation rose 2.6% over the prior year. COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE UNITED KINGDOM WEBS INDEX SERIES VS. THE MSCI UNITED KINGDOM INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC United Kingdom WEBS Index Series MSCI United Kingdom 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 05/31/98 $17,659 $18,139 08/31/98 $16,564 $16,742 Past performance is not predictive of future performance VALUE August 31, 1998 --------------- United Kingdom WEBS Index Series $16,564* MSCI United Kingdom Index $16,742 AVERAGE ANNUAL TOTAL RETURN ONE SINCE YEAR INCEPTION ------ --------- United Kingdom Webs Index Series 14.98% 22.63% MSCI United Kingdom Index 14.66% 23.16% - ------------------ * 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. 20 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ AUSTRALIA WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- COMMON STOCK - BASKET 99.39% APPLIANCES & HOUSEHOLD DURABLES 0.52% 125,400 Email Limited $ 173,675 ----------- BANKING 22.61% 396,000 National Australia Bank Limited 4,900,438 506,000 Westpac Banking Corporation Limited 2,693,129 ----------- 7,593,567 ----------- BEVERAGES & TOBACCO 5.61% 226,600 Coca Cola Amatil Limited 518,733 662,200 Foster's Brewing Group Limited 1,364,317 ----------- 1,883,050 ----------- BROADCASTING & PUBLISHING 14.75% 574,200 News Corporation Limited 3,512,891 264,000 News Corporation Limited - Preferred 1,439,861 ----------- 4,952,752 ----------- BUILDING MATERIALS & COMPONENTS 5.90% 367,400 Boral Limited 494,118 303,600 CSR Limited 616,814 143,000 James Hardie Industries Limited 283,163 321,200 Pioneer International Limited 588,233 ----------- 1,982,328 ----------- BUSINESS & PUBLIC SERVICES 4.02% 68,200 Brambles Industries Limited 1,350,468 ----------- CHEMICALS 1.23% 90,200 Orica Limited 412,972 ----------- CONSTRUCTION & HOUSING 0.36% 39,600 Leighton Holdings Limited 121,247 ----------- ENERGY SOURCES 12.34% 544,500 Broken Hill Proprietary Company Limited 3,758,105 171,600 Santos Limited 387,916 ----------- 4,146,021 ----------- FOOD & HOUSEHOLD PRODUCTS 1.36% 158,400 Burns Philp & Company Limited* 15,864 376,200 Goodman Fielder Limited 441,364 ----------- 457,228 ----------- FOREST PRODUCTS & PAPER 1.95% 182,600 Amcor Limited 654,182 ----------- GOLD MINES 0.89% 88,000 Newcrest Mining Limited* 71,515 396,000 Normandy Mining Limited 228,897 ----------- 300,412 ----------- LEISURE & TOURISM 0.13% 209,000 Crown Limited 43,060 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- MERCHANDISING 3.65% 334,400 Coles Myer Limited $ 1,224,814 ----------- METALS - NON FERROUS 6.99% 470,800 Mount Isa Mines Holdings Limited 188,607 235,400 North Limited 408,469 61,600 RGC Limited 75,972 94,600 Rio Tinto Limited 918,207 308,000 WMC Limited 756,191 ----------- 2,347,446 ----------- METALS - STEEL 0.47% 393,800 Australian National Industries Limited 157,760 ----------- MULTI-INDUSTRY 4.47% 83,600 Howard Smith Limited 418,637 303,600 Pacific Dunlop Limited 529,243 231,000 Southcorp Limited 552,601 ----------- 1,500,481 ----------- REAL ESTATE 9.01% 283,800 General Property Trust 415,792 72,600 Lend Lease Corporation Limited 1,373,194 213,400 Stockland Trust Group 433,557 453,200 Westfield Trust 804,036 ----------- 3,026,579 ----------- TELECOMMUNICATIONS 3.13% 406,208 Telstra Corporation Limited 1,053,102 ----------- TOTAL COMMON STOCK - BASKET (Cost $46,000,857) 33,381,144 ----------- COMMON STOCK - NON-BASKET 0.61% GOLD MINES 0.61% 23,188 Homestake Mining Company 205,693 ----------- TELECOMMUNICATIONS 0.00% 12 Telstra Corporation Limited 31 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $215,334) 205,724 ----------- TOTAL INVESTMENTS (COST $46,216,191)(DAGGER) 100.00% $33,586,868 ======= =========== - ------------------ * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $46,320,479. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 1,358,288 Excess of tax cost over value (14,091,899) ------------- $ (12,733,611) ============= See accompanying notes to financial statements. 21 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ AUSTRIA WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- COMMON STOCK - BASKET 100.00% BANKING 19.72% 29,920 Bank Austria AG $1,639,611 ---------- BEVERAGES & TOBACCO 4.73% 7,200 BBAG Oesterreichische Brau Beteiligungs AG 393,398 ---------- BUILDING MATERIALS & COMPONENTS 4.87% 2,080 Wienerberger Baustoffindustrie AG 404,809 ---------- BUSINESS & PUBLIC SERVICES 4.54% 9,848 Flughafen Wien AG 376,974 ---------- CHEMICALS 1.73% 2,848 Lenzing AG* 144,250 ---------- CONSTRUCTION & HOUSING 8.81% 4,208 Bau Holding AG 220,424 1,416 Bau Holding AG Vorzug 68,468 14,144 Universale-Bau AG 443,396 ---------- 732,288 ---------- ELECTRONIC COMPONENTS, INSTRUMENTS 1.02% 2,192 Austria Mikro Systeme International AG 84,968 ---------- ENERGY SOURCES 9.00% 7,256 OMV AG 748,534 ---------- INSURANCE 4.43% 1,672 EA-Generali AG 350,332 112 EA-Generali AG Vorzug 17,691 ---------- 368,023 ---------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- MACHINERY & ENGINEERING 6.96% 1,168 BWT AG $ 188,253 4,000 VA Technologie AG 390,046 ---------- 578,299 ---------- METALS - STEEL 3.49% 6,072 Boehler-Uddeholm AG 289,757 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 8.92% 7,272 Mayr Melnhof Karton AG 370,961 10,128 RHI AG 370,552 ---------- 741,513 ---------- TRANSPORTATION - AIRLINES 3.89% 9,248 Austrian Airlines AG 323,078 ---------- UTILITIES - ELECTRICAL & GAS 17.89% 8,832 Oesterreichische Elektrizitaetswirtschafts AG - Class A 1,487,564 ---------- TOTAL COMMON STOCK - BASKET (Cost $9,256,816) 8,313,066 ---------- TOTAL INVESTMENTS (COST $9,256,816)(DAGGER) 100.00% $8,313,066 ======= ========== - -------------------- * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $9,284,548. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 685,114 Excess of tax cost over value (1,656,596) ----------- $ (971,482) =========== See accompanying notes to financial statements. 22 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ BELGIUM WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- COMMON STOCK - BASKET 100.00% AUTOMOBILES 3.04% 2,170 D'Ieteren SA $ 903,868 ----------- BANKING 18.04% 67,725 KBC Bancassurance Holdings 5,362,587 ----------- BUILDING MATERIALS & COMPONENTS 4.65% 14,840 Cimenteries CBR Cementbedrijven 1,383,141 ----------- CHEMICALS 4.39% 20,650 Solvay SA 1,305,812 ----------- ELECTRONIC COMPONENTS, INSTRUMENTS 4.59% 5,635 Barco NV 1,363,356 ----------- ENERGY SOURCES 5.09% 4,025 PetroFina SA 1,513,303 ----------- HEALTH & PERSONAL CARE 4.29% 245 UCB SA 1,273,768 ----------- INDUSTRIAL COMPONENTS 3.27% 1,505 Bekaert NV 972,383 ----------- INSURANCE 13.10% 14,420 Fortis AG 3,893,226 ----------- MERCHANDISING 9.78% 2,135 Colruyt NV* 1,482,150 18,270 Delhaize-Le Lion SA 1,426,559 ----------- 2,908,709 ----------- METALS - NON FERROUS 2.82% 17,010 Union Miniere SA 837,125 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- MISCELLANEOUS MATERIALS & COMMODITIES 3.10% 7,770 Glaverbel SA $ 922,864 ----------- MULTI-INDUSTRY 4.87% 7,805 Groupe Bruxelles Lambert SA 1,446,324 ----------- TRANSPORTATION - SHIPPING 2.46% 12,075 Compagnie Maritime Belge SA (CMB) 730,369 ----------- UTILITIES - ELECTRICAL & GAS 16.51% 8,785 Electrabel SA 2,862,154 13,510 Tractebel 2,046,632 ----------- 4,908,786 ----------- TOTAL COMMON STOCK - BASKET (Cost $26,630,132) 29,725,621 ----------- TOTAL INVESTMENTS (COST $26,630,132)(DAGGER) 100.00% $29,725,621 ======= =========== - --------------------- * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $27,464,697 The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $3,188,287 Excess of tax cost over value (927,363) ---------- $2,260,924 ========== See accompanying notes to financial statements. 23 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ CANADA WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- COMMON STOCK - BASKET 99.49% AEROSPACE & MILITARY TECHNOLOGY 3.50% 23,800 Bombardier Incorporated - Class B $ 254,098 ---------- BANKING 15.55% 8,400 Bank of Montreal 296,164 14,000 Bank of Nova Scotia 230,917 12,600 Canadian Imperial Bank of Commerce 237,227 5,600 National Bank of Canada 72,676 7,700 Royal Bank of Canada 291,174 ---------- 1,128,158 ---------- BEVERAGES & TOBACCO 5.35% 2,800 Molson Company Limited - Class A 37,681 11,200 Seagram Company Limited 350,850 ---------- 388,531 ---------- BROADCASTING & PUBLISHING 6.16% 2,100 Quebecor Incorporated - Class B 38,934 5,600 Rogers Communications Incorporated - Class B* 34,906 2,800 Southam Incorporated 47,436 15,400 Thomson Corporation 325,387 ---------- 446,663 ---------- BUSINESS & PUBLIC SERVICES 2.38% 2,800 Extendicare Incorporated - Class A* 17,184 11,200 Laidlaw Incorporated 97,379 2,100 Loewen Group Incorporated 24,166 3,500 Moore Corporation Limited 33,787 ---------- 172,516 ---------- CHEMICALS 2.48% 4,200 Agrium Incorporated 35,711 6,300 Methanex Corporation* 36,853 2,100 Potash Corporation of Saskatchewan Incorporated 107,403 ---------- 179,967 ---------- ELECTRICAL & ELECTRONICS 11.66% 5,600 Newbridge Networks Corporation* 105,434 15,400 Northern Telecom Limited 740,858 ---------- 846,292 ---------- ENERGY SOURCES 11.78% 3,500 Alberta Energy Company Limited 63,323 3,500 Anderson Exploration Limited* 30,766 2,800 Canadian Natural Resources Limited* 33,116 4,200 Canadian Occidental Petroleum Limited 50,345 7,000 Gulf Canada Resources Limited* 21,033 14,700 Imperial Oil Limited 206,751 2,800 IPL Energy Incorporated 103,823 9,100 Petro-Canada 87,265 4,200 Poco Petroleum Limited* 31,684 3,500 Ranger Oil Limited* 19,467 3,500 Renaissance Energy Limited* 38,262 4,200 Suncor Energy Incorporated 117,741 3,500 Talisman Energy Incorporated* 51,688 ---------- 855,264 ---------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- FINANCIAL SERVICES 2.07% 8,400 Power Corporation of Canada $ 150,364 ---------- FOREST PRODUCTS & PAPER 1.38% 6,300 Abitibi Consolidated Incorporated 49,338 4,200 Domtar Incorporated 18,795 4,200 MacMillan Bloedel Limited 32,221 ---------- 100,354 ---------- GOLD MINES 3.68% 14,700 Barrick Gold Corporation 191,245 2,100 Cambior Incorporated 8,861 8,400 Placer Dome Incorporated 66,858 ---------- 266,964 ---------- HEALTH & PERSONAL CARE 0.51% 2,100 MDS Incorporated - Class B 36,920 ---------- INDUSTRIAL COMPONENTS 2.31% 2,800 Magna International Incorporated - Class A 167,907 ---------- MACHINERY & ENGINEERING 0.47% 1,400 United Dominion Industries Limited 34,235 ---------- MERCHANDISING 2.87% 2,800 Canadian Tire Corporation - Class A 57,282 4,200 George Weston Limited 122,037 2,100 Hudson's Bay Company 28,865 ---------- 208,184 ---------- METALS - NON FERROUS 5.25% 7,000 Alcan Aluminium Limited 132,240 2,100 Cameco Corporation 37,927 2,800 Cominco Limited 25,956 5,600 Inco Limited 47,436 8,400 Noranda Incorporated 92,635 2,100 Rio Algom Limited 24,233 3,500 Teck Corporation - Class B 20,697 ---------- 381,124 ---------- METALS - STEEL 0.38% 2,800 Dofasco Incorporated 27,746 ---------- MULTI-INDUSTRY 6.78% 10,500 Canadian Pacific Limited 199,703 5,250 EdperBrascan Corporation - Class A 66,456 14,000 Imasco Limited 225,547 ---------- 491,706 ---------- TELECOMMUNICATIONS 10.07% 19,600 BCE Incorporated 634,036 4,900 Telus Corporation 97,110 ---------- 731,146 ---------- UTILITIES - ELECTRICAL & GAS 4.86% 6,300 Transalta Corporation 76,525 15,736 Transcanada Pipelines Limited 214,280 3,500 Westcoast Energy Incorporated 61,981 ---------- 352,786 ---------- TOTAL COMMON STOCK - BASKET (Cost $8,493,531) 7,220,925 ---------- See accompanying notes to financial statements. 24 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ CANADA WEBS INDEX SERIES (CONCLUDED) - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- COMMON STOCK - NON-BASKET 0.51% CHEMICALS 0.51% 3,147 Nova Corporation $ 36,717 ---------- TOTAL COMMON STOCK - NON-BASKET (Cost $49,794) 36,717 ---------- TOTAL INVESTMENTS (COST $8,543,325)(DAGGER) 100.00% $7,257,642 ======= ========== - ---------------------- * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $8,558,381. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 685,962 Excess of tax cost over value (1,986,701) ----------- $(1,300,739) =========== See accompanying notes to financial statements. 25 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ FRANCE WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- COMMON STOCK - BASKET 99.84% AEROSPACE & MILITARY TECHNOLOGY 0.78% 10,596 Thomson CSF $ 356,786 ----------- AUTOMOBILES 1.55% 4,272 PSA Peugeot Citroen 712,000 ----------- BANKING 7.77% 17,892 Banque Nationale de Paris 1,182,204 13,284 Paribas SA 1,118,239 7,200 Societe Generale 1,267,005 ----------- 3,567,448 ----------- BEVERAGES & TOBACCO 1.31% 5,508 Pernod Ricard 389,568 5,004 Societe Nationale D'Exploitation 213,369 ----------- 602,937 ----------- BROADCASTING & PUBLISHING 1.20% 2,736 Canal Plus 552,292 ----------- BUILDING MATERIALS & COMPONENTS 3.83% 7,200 Compagnie de Saint Gobain 1,033,096 8,508 Lafarge SA 725,555 ----------- 1,758,651 ----------- BUSINESS & PUBLIC SERVICES 12.44% 5,400 Cap Gemini SA 849,746 2,544 Sodexho Alliance SA 451,980 10,200 Suez Lyonnaise des Eaux 1,677,563 13,704 Vivendi 2,731,525 ----------- 5,710,814 ----------- CHEMICALS 1.65% 5,700 Air Liquide 757,107 ----------- CONSTRUCTION & HOUSING 1.22% 2,220 Bouygues SA 424,467 1,500 Groupe GTM 135,025 ----------- 559,492 ----------- ELECTRICAL & ELECTRONICS 7.46% 11,700 Alcatel Alsthom 1,890,609 2,388 Legrand SA 525,683 420 Sagem SA 303,096 11,976 Schneider SA 703,970 ----------- 3,423,358 ----------- ENERGY EQUIPMENT & SERVICES 0.08% 480 Compagnie Generale de Geophysique SA* 34,680 ----------- ENERGY SOURCES 7.70% 19,200 Elf Acquitaine SA 1,900,508 16,800 Total SA - Class B 1,631,675 ----------- 3,532,183 ----------- FINANCIAL SERVICES 0.66% 1,332 CPR 101,421 348 Societe Eurafrance SA 199,025 ----------- 300,446 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- FOOD & HOUSEHOLD PRODUCTS 4.21% 2,280 Eridania Beghin-Say SA $ 422,822 5,700 Groupe Danone 1,508,426 ----------- 1,931,248 ----------- HEALTH & PERSONAL CARE 11.84% 924 Essilor International SA 373,665 5,280 L'Oreal 2,846,376 26,400 Rhone-Poulenc SA 1,269,076 8,400 Sanofi SA 943,756 ----------- 5,432,873 ----------- INDUSTRIAL COMPONENTS 2.16% 10,800 Michelin - Class B 458,680 7,092 Valeo SA 532,800 ----------- 991,480 ----------- INSURANCE 5.27% 21,000 AXA 2,416,244 ----------- LEISURE & TOURISM 2.17% 3,300 Accor SA 760,508 1,236 Club Mediterranee SA* 92,229 720 Pathe SA 141,320 ----------- 994,057 ----------- MACHINERY & ENGINEERING 0.73% 1,596 Compagnie Francaise d'Etudes de Construction Technip 145,827 2,760 Sidel SA 189,137 ----------- 334,964 ----------- MERCHANDISING 10.72% 3,000 Carrefour SA 1,756,345 3,600 Casino Guichard Perrachon SA 341,117 624 Comptoirs Modernes 346,843 8,700 Pinault-Printemps-Redoute SA 1,360,203 1,716 Promodes 1,114,674 ----------- 4,919,182 ----------- METALS - STEEL 0.52% 22,500 Usinor SA 237,563 ----------- MISCELLANEOUS MATERIALS & COMMODITIES 0.36% 1,452 Imetal SA 164,609 ----------- MULTI-INDUSTRY 0.75% 9,228 Lagardere S.C.A. 346,636 ----------- REAL ESTATE 0.56% 1,620 Simco SA 121,980 1,116 Union du Credit-Bail Immobilier 134,826 ----------- 256,806 ----------- RECREATION - OTHER CONSUMER GOODS 3.02% 6,600 LVMH (Louis Vuitton Moet Hennessy) 1,087,716 5,232 Societe BIC SA 296,480 ----------- 1,384,196 ----------- See accompanying notes to financial statements. 26 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ FRANCE WEBS INDEX SERIES (CONCLUDED) - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- TELECOMMUNICATIONS 9.57% 59,904 France Telecom SA $ 4,393,974 ----------- UTILITIES - ELECTRICAL & GAS 0.31% 1,824 Primagaz Cie 143,081 ----------- TOTAL COMMON STOCK - BASKET (Cost $40,707,244) 45,815,107 ----------- COMMON STOCK - NON-BASKET 0.16% BANKING 0.00% 3 Paribas SA 253 ----------- BUSINESS & PUBLIC SERVICES 0.00% 2 Vivendi 399 ----------- CHEMICALS 0.15% 534 Air Liquide 70,929 ----------- MERCHANDISING 0.01% 7 Comptoirs Modernes 3,891 ----------- TELECOMMUNICATIONS 0.00% 1 France Telecom SA 73 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $81,525) 75,545 ----------- TOTAL INVESTMENTS (COST $40,788,769)(DAGGER) 100.00% $45,890,652 ======= =========== - ---------------------- * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $40,835,603. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 6,376,775 Excess of tax cost over value (1,321,726) ----------- $ 5,055,049 =========== See accompanying notes to financial statements. 27 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ GERMANY WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- COMMON STOCK - BASKET 100.00% AUTOMOBILES 10.62% 57,000 Daimler-Benz AG $ 5,139,212 30,000 Volkswagen AG 2,157,074 10,200 Volkswagen AG Preferred 507,831 ----------- 7,804,117 ----------- BANKING 13.07% 30,000 Bayerische Hypotheken-und Wechsel Bank AG 1,704,565 30,600 Bayerische Vereinsbank AG 2,333,825 49,200 Deutsche Bank AG 3,060,527 55,800 Dresdner Bank AG 2,509,181 ----------- 9,608,098 ----------- BUILDING MATERIALS & COMPONENTS 1.03% 600 Buderus AG 272,186 5,940 Heidelberger Zement AG 486,720 ----------- 758,906 ----------- BUSINESS & PUBLIC SERVICES 9.25% 7,200 SAP AG 3,735,753 5,400 SAP AG Vorzug 3,062,092 ----------- 6,797,845 ----------- CHEMICALS 8.45% 67,200 BASF AG 2,686,476 78,000 Bayer AG 2,928,041 12,000 Degussa AG 595,407 ----------- 6,209,924 ----------- CONSTRUCTION & HOUSING 0.53% 4,800 Bilfinger & Berger Bau AG 112,141 7,200 Hochtief AG 275,588 ----------- 387,729 ----------- ELECTRICAL & ELECTRONICS 5.56% 63,000 Siemens AG 4,090,445 ----------- HEALTH & PERSONAL CARE 2.68% 9,600 Beiersdorf AG 511,710 19,800 Merck KGAA 761,236 7,200 Schering AG 694,074 ----------- 1,967,020 ----------- INDUSTRIAL COMPONENTS 0.41% 11,400 Continental AG 305,120 ----------- INSURANCE 15.75% 26,400 Allianz AG 7,574,936 6,000 Amb Aachener & Muenchener Beteiligungs AG 864,191 3,000 Axa Colonia Konzern AG 340,232 7,200 Muenchener Rueckversicherung AG 2,796,711 ----------- 11,576,070 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- MACHINERY & ENGINEERING 1.61% 1,200 Linde AG $ 700,879 1,200 MAN AG 353,502 600 MAN AG Vorzug 126,226 ----------- 1,180,607 ----------- MERCHANDISING 2.73% 3,600 Douglas Holding AG 176,172 1,200 Karstadt AG 530,763 23,040 Metro AG 1,299,960 ----------- 2,006,895 ----------- METALS - STEEL 0.92% 3,600 Thyssen AG 675,702 ----------- MISCELLANEOUS MATERIALS & COMMODITIES 0.29% 2,400 SGL Carbon AG 212,305 ----------- MULTI-INDUSTRY 0.83% 1,800 Preussag AG 607,315 ----------- RECREATION - OTHER CONSUMER GOODS 0.96% 6,000 Adidas-Salomon AG 707,684 ----------- TELECOMMUNICATIONS 14.42% 237,000 Deutsche Telekom AG 6,276,099 48,000 Mannesmann AG 4,327,757 ----------- 10,603,856 ----------- TRANSPORTATION - AIRLINES 1.55% 46,200 Deutsche Lufthansa AG 1,139,609 ----------- UTILITIES - ELECTRICAL & GAS 9.34% 34,200 RWE AG 1,638,730 17,100 RWE AG-Preferred 568,222 55,200 VEBA AG 2,782,067 3,000 Viag AG 1,879,784 ----------- 6,868,803 ----------- TOTAL COMMON STOCK - BASKET (Cost $68,266,287) 73,508,050 ----------- TOTAL INVESTMENTS (COST $68,266,287)(DAGGER) 100.00% $73,508,050 ======= =========== - --------------------- (DAGGER) Aggregate cost for Federal income tax purposes is $68,295,650. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 7,310,670 Excess of tax cost over value (2,098,270) ----------- $ 5,212,400 =========== See accompanying notes to financial statements. 28 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ HONG KONG WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- COMMON STOCK - BASKET 100.00% AEROSPACE & MILITARY TECHNOLOGY 0.17% 83,200 Hong Kong Aircraft Engineering Company Limited $ 86,966 ----------- BANKING 8.27% 1,372,800 Bank Of East Asia Limited 1,426,088 416,000 Hang Seng Bank Limited 2,238,579 312,000 Wing Lung Bank 579,776 ----------- 4,244,443 ----------- BROADCASTING & PUBLISHING 2.39% 832,000 Oriental Press Group 73,009 1,456,000 South China Morning Post Holdings Limited 479,120 312,000 Television Broadcasts Limited 672,379 ----------- 1,224,508 ----------- CONSTRUCTION & HOUSING 0.13% 312,000 Kumagai Gumi Limited 68,446 ----------- ELECTRICAL & ELECTRONICS 2.74% 832,000 Johnson Electric Holdings 1,406,494 ----------- ELECTRONIC COMPONENTS, INSTRUMENTS 0.15% 520,000 Elec & Eltek International Holdings Limited 75,156 ----------- LEISURE & TOURISM 3.50% 1,248,000 Hong Kong & Shanghai Hotels Limited 616,012 2,496,000 Regal Hotels International 238,352 1,664,000 Shangri-La Asia Limited 944,820 ----------- 1,799,184 ----------- MERCHANDISING 0.58% 312,000 Dickson Concepts International Limited 188,226 1,040,000 Giordano International Limited* 107,366 ----------- 295,592 ----------- MISCELLANEOUS MATERIALS & COMMODITIES 0.75% 208,000 Varitronix International Limited 383,833 ----------- MULTI-INDUSTRY 19.63% 3,120,000 Hopewell Holdings Limited 314,045 1,664,000 Hutchison Whampoa Limited 7,214,990 884,000 Swire Pacific Limited - Class A 2,549,605 ----------- 10,078,640 ----------- REAL ESTATE 22.46% 520,000 Cheung Kong Holdings Limited 2,013,111 1,248,000 Chinese Estates Holdings 161,049 1,456,000 Hang Lung Development Company Limited 1,127,342 936,000 Hysan Development Company Limited 628,091 832,000 Miramar Hotel & Investment Limited 628,091 - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- REAL ESTATE (CONTINUED) 2,080,000 New World Development Company Limited $ 2,241,264 2,496,000 Sino Land Company 708,615 728,000 Sun Hung Kai Properties Limited 2,235,895 416,000 Tai Cheung Holdings Limited 95,556 1,768,000 Wharf Holdings Limited 1,688,329 ----------- 11,527,343 ----------- TELECOMMUNICATIONS 21.13% 6,136,000 Hong Kong Telecommunications Limited 10,847,984 ----------- TRANSPORTATION - AIRLINES 3.40% 2,392,000 Cathay Pacific Airways Limited 1,744,025 ----------- TRANSPORTATION - SHIPPING 0.24% 1,664,000 Shun Tak Holdings Limited 124,545 ----------- UTILITIES - ELECTRICAL & GAS 14.46% 1,248,000 CLP Holdings Limited 5,250,194 2,080,000 Hong Kong & China Gas Company Limited 2,174,160 ----------- 7,424,354 ----------- TOTAL COMMON STOCK - BASKET (Cost $76,874,354) 51,331,513 ----------- COMMON STOCK - NON-BASKET 0.00% FINANCIAL SERVICES 0.00% 276,000 Peregrine Investment Holdings Limited** 0 ----------- REAL ESTATE 0.00% 76,500 Wharf Holdings Limited Warrants (Expiration Date 12/31/99)* 839 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $397,590) 839 ----------- TOTAL INVESTMENTS (COST $77,271,944)(DAGGER) 100.00% $51,332,352 ======= =========== - ----------------------- * Non-income producing security. ** Fair valued security. (DAGGER) Aggregate cost for Federal income tax purposes is $80,880,470. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 839 Excess of tax cost over value (29,548,957) ------------ $(29,548,118) ============ See accompanying notes to financial statements. 29 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ ITALY WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- COMMON STOCK - BASKET 100.00% AUTOMOBILES 3.13% 635,800 Fiat SpA $ 1,971,040 ----------- BANKING 22.11% 399,500 Banca Commerciale Italiana SpA 2,695,195 119,000 Banca Popolare di Milano SpA 870,215 221,000 Banco Intesa SpA 1,039,791 198,900 Banco Intesa SpA Rnc 488,220 491,300 Credito Italiano SpA 2,356,075 204,000 Istituto Bancario San Paolo de Torino SpA 2,981,372 153,000 Istituto Mobiliare Italiano SpA 2,330,664 105,400 Mediobanca SpA 1,143,413 ----------- 13,904,945 ----------- BROADCASTING & PUBLISHING 3.02% 40,800 Arnoldo Mondadori Editore SpA 390,735 266,900 Mediaset SpA 1,510,726 ----------- 1,901,461 ----------- CONSTRUCTION & HOUSING 0.52% 66,300 Sirti SpA 324,605 ----------- ENERGY SOURCES 13.00% 1,564,000 ENI SpA 8,174,241 ----------- FOOD & HOUSEHOLD PRODUCTS 0.96% 411,400 Parmalat Finanziaria SpA 604,052 ----------- INDUSTRIAL COMPONENTS 2.31% 527,000 Pirelli SpA 1,452,625 ----------- INSURANCE 15.73% 136,000 Assicurazioni Generali SpA 4,609,416 850,000 Istituto Nazionale delle Assicurazioni SpA 2,248,329 120,700 Riunione Adriatica di Sicurta SpA 1,493,194 95,200 Riunione Adriatica di Sicurta SpA Rnc 819,566 66,300 Societa Assicuratrice Industriale SpA 722,553 ----------- 9,893,058 ----------- MERCHANDISING 1.27% 93,500 La Rinascente SpA 797,152 ----------- METALS - STEEL 0.57% 51,000 Falck Acciaierie & Ferriere Lombarde SpA 359,723 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- MULTI-INDUSTRY 2.30% 1,103,300 Montedison SpA $ 1,125,551 430,100 Montedison SpA Rnc 322,294 ----------- 1,447,845 ----------- RECREATION - OTHER CONSUMER GOODS 0.68% 95,200 Bulgari SpA 424,313 ----------- TELECOMMUNICATIONS 28.30% 532,032 Olivetti Group SpA* 1,191,451 1,360,000 Telecom Italia Mobile SpA 8,862,220 340,000 Telecom Italia Mobile SpA Rnc 1,227,461 714,000 Telecom Italia SpA 5,511,342 204,000 Telecom Italia SpA Rnc 1,011,075 ----------- 17,803,549 ----------- TEXTILES & APPAREL 1.92% 495,040 Benetton Group SpA 734,245 42,500 Marzotto & Figli SpA 474,905 ----------- 1,209,150 ----------- UTILITIES - ELECTRICAL & GAS 4.18% 190,400 Edison SpA 1,636,620 232,900 Italgas SpA 993,819 ----------- 2,630,439 ----------- TOTAL COMMON STOCK - BASKET (Cost $46,719,005) 62,898,198 ----------- TOTAL INVESTMENTS (COST $46,719,005)(DAGGER) 100.00% $62,898,198 ======= =========== - --------------------- * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $49,271,480. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $14,605,549 Excess of tax cost over value (978,831) ----------- $13,626,718 =========== See accompanying notes to financial statements. 30 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ JAPAN WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- COMMON STOCK - BASKET 99.99% APPLIANCES & HOUSEHOLD DURABLES 6.87% 360,000 Matsushita Electric Industrial Company Limited $ 5,176,004 40,000 Pioneer Electronic Corporation 658,687 360,000 Sanyo Electric Company Limited 943,410 200,000 Sharp Corporation 1,181,387 80,000 Sony Corporation 5,841,773 ------------ 13,801,261 ------------ AUTOMOBILES 9.70% 160,000 Honda Motor Company Limited 5,507,472 440,000 Nissan Motor Company Limited 1,171,754 600,000 Toyota Motor Corporation 12,791,274 ------------ 19,470,500 ------------ BANKING 10.44% 360,000 Asahi Bank Limited 1,114,243 200,000 Ashikaga Bank Limited 257,809 720,000 Bank of Tokyo-Mitsubishi Limited 5,089,312 200,000 Bank of Yokohama Limited 355,549 160,000 Chiba Bank Limited 462,356 440,000 Fuji Bank Limited 1,243,431 80,000 Gunma Bank Limited 533,182 120,000 Hokuriku Bank Limited 141,086 440,000 Industrial Bank of Japan Limited 1,586,231 160,000 Joyo Bank 543,948 240,000 Mitsubishi Trust & Banking Corporation 1,189,886 200,000 Mitsui Trust & Banking Company Limited 254,976 560,000 Sakura Bank Limited 983,639 80,000 Seventy-Seven Bank Limited 660,103 160,000 Shizuoka Bank Limited 1,395,000 480,000 Sumitomo Bank Limited 3,426,872 320,000 Tokai Bank Limited 1,194,419 40,000 Yamaguchi Bank Limited 409,944 200,000 Yasuda Trust & Banking* 127,488 ------------ 20,969,474 ------------ BEVERAGES & TOBACCO 1.43% 80,000 Asahi Breweries Limited 944,543 200,000 Kirin Brewery Company Limited 1,671,506 80,000 Sapporo Breweries Limited 246,476 ------------ 2,862,525 ------------ BUILDING MATERIALS & COMPONENTS 1.10% 200,000 Chichibu Onoda Cement Corporation 371,131 80,000 Inax Corporation 300,305 80,000 Sekisui Chemical Company Limited 367,731 40,000 Sumitomo Forestry Company Limited 189,815 40,000 Tostem Corporation 541,115 80,000 Toto Limited 430,625 ------------ 2,200,722 ------------ - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- BUSINESS & PUBLIC SERVICES 2.02% 120,000 Dai Nippon Printing Company Limited $ 1,675,189 80,000 Kamigumi Company Limited 298,605 40,000 Kokuyo Company Limited 586,444 40,000 Mitsubishi Logistics Corporation 299,171 120,000 Toppan Printing Company Limited 1,189,886 ------------ 4,049,295 ------------ CHEMICALS 2.95% 240,000 Asahi Chemical Industry Company Limited 715,631 160,000 Dainippon Ink & Chemicals Incorporated 387,563 80,000 Kuraray Company Limited 700,333 400,000 Mitsubishi Chemical Corporation 733,763 120,000 Mitsubishi Rayon Company Limited 299,171 40,000 Shin-Etsu Chemical Company Limited 565,196 200,000 Showa Denko K.K. 168,567 280,000 Sumitomo Chemical Company Limited 783,342 160,000 Teijin Limited 396,629 240,000 Toray Industries Incorporated 1,014,803 120,000 Tosoh Corporation 166,584 ------------ 5,931,582 ------------ CONSTRUCTION & HOUSING 2.34% 80,000 Daiwa House Industry Company Limited 640,272 280,000 Kajima Corporation 674,269 40,000 Kandenko Company Limited 209,647 40,000 Kinden Corporation 467,455 280,000 Kumagai Gumi Company Limited* 166,584 80,000 Nishimatsu Construction Company Limited 368,298 120,000 Obayashi Corporation 416,460 120,000 Sekisui House Limited 908,563 200,000 Shimizu Corporation 524,116 200,000 Taisei Corporation 327,219 ------------ 4,702,883 ------------ DATA PROCESSING & REPRODUCTION 3.03% 160,000 Canon Incorporated 3,246,689 280,000 Fujitsu Limited 2,835,895 ------------ 6,082,584 ------------ ELECTRICAL & ELECTRONICS 3.07% 560,000 Hitachi Limited 2,804,165 40,000 Makita Corportion 465,189 360,000 Mitsubishi Electric Corporation 685,884 240,000 NEC Corporation 1,769,530 40,000 Omron Corporation 436,292 ------------ 6,161,060 ------------ ELECTRONIC COMPONENTS, INSTRUMENTS 3.41% 40,000 Fanuc Limited 1,289,043 40,000 Kyocera Corporation 1,815,993 40,000 Murata Manufacturing Company Limited 1,320,207 80,000 Nikon Corporation 454,423 80,000 Olympus Optical Company Limited 861,251 40,000 Tokyo Electron Limited 920,745 40,000 Yokogawa Electric Corporation 185,566 ------------ 6,847,228 ------------ See accompanying notes to financial statements. 31 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ JAPAN WEBS INDEX SERIES (CONTINUED) - ---------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- ENERGY SOURCES 0.56% 120,000 Cosmo Oil Company Limited $ 152,985 200,000 Japan Energy Corporation 202,564 120,000 Mitsubishi Oil Company Limited* 139,387 240,000 Nippon Oil Company Limited 623,840 ------------ 1,118,776 ------------ FINANCIAL SERVICES 3.32% 40,000 Acom Company Limited 1,983,143 40,000 Credit Saison Company Limited 784,758 240,000 Daiwa Securities Company Limited 793,824 320,000 Nomura Securities Company Limited 3,105,036 ------------ 6,666,761 ------------ FOOD & HOUSEHOLD PRODUCTS 1.85% 120,000 Ajinomoto Company Incorporated 883,915 80,000 Kao Corporation 1,232,382 80,000 Meiji Seika Incorporated 217,579 40,000 Nippon Meat Packers Incorporated 436,858 40,000 Nissin Food Products Company Limited 600,609 40,000 Yamazaki Baking Company Limited 348,467 ------------ 3,719,810 ------------ FOREST PRODUCTS & PAPER 0.61% 160,000 Nippon Paper Industries Company 519,017 200,000 Oji Paper Company Limited 706,849 ------------ 1,225,866 ------------ HEALTH & PERSONAL CARE 5.01% 40,000 Daiichi Pharmaceutical 495,786 40,000 Eisai Company Limited 475,954 80,000 Kyowa Hakko Kogyo Company Limited 287,839 80,000 Sankyo Company Limited 1,739,500 80,000 Shionogi & Company Limited 435,725 80,000 Shiseido Company Limited 764,360 40,000 Taisho Pharmaceutical Company Limited 814,505 160,000 Takeda Chemical Industries 4,181,599 40,000 Yamanouchi Pharmaceutical Company Limited 866,917 ------------ 10,062,185 ------------ INDUSTRIAL COMPONENTS 4.79% 120,000 Bridgestone Corporation 2,643,247 160,000 Denso Corporation 2,396,770 80,000 Fujikura Limited 274,807 120,000 Furukawa Electric Company Limited 329,768 80,000 Minebea Company Limited 811,389 80,000 NGK Insulators Limited 705,432 40,000 NGK Spark Plug Company Limited 345,634 120,000 NSK Limited 435,158 120,000 NTN Corporation 332,318 160,000 Sumitomo Electric Industries 1,342,871 ------------ 9,617,394 ------------ INSURANCE 2.42% 160,000 Mitsui Marine & Fire Insurance Company Limited 636,872 80,000 Nichido Marine & Fire Insurance 389,829 120,000 Nippon Fire & Marine Insurance 403,711 160,000 Sumitomo Marine & Fire Insurance 804,590 320,000 Tokio Marine & Fire Insurance Company 2,633,614 ------------ 4,868,616 ------------ - --------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- LEISURE & TOURISM 0.09% 40,000 Tokyo Dome Corporation $ 175,083 ------------ MACHINERY & ENGINEERING 3.40% 80,000 Amada Company Limited 395,495 80,000 Daikin Industries Limited 481,621 40,000 Ebara Corporation 306,254 200,000 Hitachi Zosen Corporation 247,893 240,000 Kawasaki Heavy Industries Limited 455,556 200,000 Komatsu Limited 882,499 280,000 Kubota Corporation 535,449 40,000 Kurita Water Industries Limited 422,126 560,000 Mitsubishi Heavy Industries Limited 2,038,671 240,000 Mitsui Engineering & Shipbuilding Company Limited* 175,083 160,000 Sumitomo Heavy Industries Limited 254,976 40,000 Toyoda Automatic Loom Works Limited 637,439 ------------ 6,833,062 ------------ MERCHANDISING 3.84% 120,000 Daiei, Incorporated 317,870 40,000 Hankyu Department Stores 209,647 40,000 Isetan Company Limited 321,269 80,000 Ito Yokado Company Limited 3,722,643 40,000 Jusco Company Limited 647,355 80,000 Marui Company Limited 1,127,559 80,000 Mitsukoshi Limited 179,049 40,000 Mycal Corporation 249,026 40,000 Seiyu Limited* 100,007 40,000 Takashimaya Company Limited 273,390 40,000 Uny Company Limited 565,762 ------------ 7,713,577 ------------ METALS - NON FERROUS 0.37% 200,000 Mitsubishi Materials Corporation 339,967 160,000 Nippon Light Metal Company Limited 141,653 80,000 Sumitomo Metal Mining Company 252,709 ------------ 734,329 ------------ METALS - STEEL 1.77% 360,000 Kawasaki Steel Corporation 550,747 1,040,000 Nippon Steel Corporation 1,701,537 560,000 NKK Corporation 468,022 520,000 Sumitomo Metal Industries 659,253 40,000 Tokyo Steel Manufacturing Company Limited 167,717 ------------ 3,547,276 ------------ MISCELLANEOUS MATERIALS & COMMODITIES 1.09% 200,000 Asahi Glass Company Limited 957,575 40,000 Nitto Denko Corporation 537,432 40,000 Toyo Seikan Kaisha Limited 502,585 160,000 Ube Industries Limited 189,249 ------------ 2,186,841 ------------ REAL ESTATE 1.27% 240,000 Mitsubishi Estate Company Limited 1,767,831 120,000 Mitsui Fudosan Company Limited 773,426 ------------ 2,541,257 ------------ See accompanying notes to financial statements. 32 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ JAPAN WEBS INDEX SERIES (CONCLUDED) - --------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- RECREATION - OTHER CONSUMER GOODS 2.61% 80,000 Casio Computer Company Limited $ 560,946 80,000 Citizen Watch Company 569,445 80,000 Fuji Photo Film Company 2,578,086 80,000 Konica Corporation 308,804 40,000 Shimano Incorporated 900,914 40,000 Yamaha Corporation 317,586 ------------ 5,235,781 ------------ TELECOMMUNICATIONS 7.70% 2,040 Nippon Telegraph & Telephone Corporation 15,460,018 ------------ TEXTILES & APPAREL 0.20% 40,000 Nisshinbo Industries Incorporated 125,221 280,000 Toyobo Limited 287,556 ------------ 412,777 ------------ TRANSPORTATION - AIRLINES 0.40% 320,000 Japan Airlines Company Limited* 815,922 ------------ TRANSPORTATION - ROAD & RAIL 4.43% 640 East Japan Railway Company 3,068,773 200,000 Hankyu Corporation 722,431 80,000 Keihin Electric Express Railway Company Limited 198,881 240,000 Kinki Nippon Railway Company Limited 1,026,702 160,000 Nagoya Railroad Company Limited 452,157 120,000 Nankai Electric Railway Company 477,654 160,000 Nippon Express Company Limited 732,063 120,000 Odakyu Electric Railway Company 322,969 40,000 Seino Transportation Company 201,147 160,000 Tobu Railway Company Limited 369,431 200,000 Tokyu Corporation 464,622 80,000 Yamato Transport Company Limited 866,917 ------------ 8,903,747 ------------ TRANSPORTATION - SHIPPING 0.51% 240,000 Mitsui O.S.K. Lines Limited 334,868 240,000 Nippon Yusen Kabushiki Kaisha 693,534 ------------ 1,028,402 ------------ - --------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- UTILITIES - ELECTRICAL & GAS 5.16% 160,000 Kansai Electric Power Company Incorporated $ 2,634,749 440,000 Osaka Gas Company Limited 1,115,660 80,000 Tohoku Electric Power Company Incorporated 1,153,056 240,000 Tokyo Electric Power Company 4,462,072 480,000 Tokyo Gas Company Limited 992,705 ------------ 10,358,242 ------------ WHOLESALE & INTERNATIONAL TRADE 2.23% 240,000 Itochu Corporation 411,361 240,000 Marubeni Corporation 396,062 240,000 Mitsubishi Corporation 1,296,976 320,000 Mitsui & Company 1,720,235 160,000 Sumitomo Corporation 658,404 ------------ 4,483,038 ------------ TOTAL COMMON STOCK - BASKET (Cost $283,937,972) 200,787,874 ------------ COMMON STOCK - NON-BASKET 0.01% ELECTRONIC COMPONENTS, INSTRUMENTS 0.01% 352 Tokyo Electron Limited 8,102 ------------ FINANCIAL SERVICES 0.00% 400 Credit Saison Company Limited 7,848 ------------ TOTAL COMMON STOCK - NON-BASKET (Cost $19,139) 15,950 ------------ TOTAL INVESTMENTS (COST $283,957,111)(DAGGER) 100.00% $200,803,824 ======= ============ - ---------------------- * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $286,211,254. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 1,197,683 Excess of tax cost over value (86,605,113) ------------ $(85,407,430) ============ See accompanying notes to financial statements. 33 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ MALAYSIA (FREE) WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- COMMON STOCK - BASKET 93.24% AUTOMOBILES 2.89% 454,000 Edaran Otomobil Nasional BHD $ 390,510 908,000 Perusahaan Otomobil Nasional BHD 438,239 1,589,000 Tan Chong Motor Holdings BHD 203,119 ----------- 1,031,868 ----------- BANKING 3.42% 1,135,000 Commerce Asset Holdings BHD 273,899 2,270,000 Public Bank BHD (Foreign) 452,883 2,270,000 RHB Capital BHD 493,561 ----------- 1,220,343 ----------- BEVERAGES & TOBACCO 10.56% 1,135,000 Guinness Anchor BHD 675,256 681,000 Rothmans of Pall Mall BHD 3,091,535 ----------- 3,766,791 ----------- BROADCASTING & PUBLISHING 0.37% 454,000 New Straits Times Press BHD 130,170 ----------- BUILDING MATERIALS & COMPONENTS 2.76% 681,000 Hume Industries (Malaysia) BHD 361,221 1,135,000 Malayan Cement BHD 317,289 2,043,000 Pan Malaysia Cement Works BHD 307,526 ----------- 986,036 ----------- CONSTRUCTION & HOUSING 1.20% 227,000 Ekran BHD* 20,068 681,000 YTL Corporation BHD 406,781 ----------- 426,849 ----------- ELECTRONIC COMPONENTS, INSTRUMENTS 1.78% 681,000 Malaysian Pacific Industries BHD 634,578 ----------- ENERGY SOURCES 1.62% 681,000 Shell Refining Company BHD 579,256 ----------- FINANCIAL SERVICES 2.58% 908,000 AMMB Holdings BHD 314,577 1,589,000 Idris Hydraulic (Malaysia) BHD* 117,695 2,043,000 MBF Capital BHD 178,170 908,000 Rashid Hussain BHD 308,069 ----------- 918,511 ----------- FOOD & HOUSEHOLD PRODUCTS 5.54% 454,000 Nestle (Malaysia) BHD 1,410,174 681,000 Perlis Plantations BHD 566,239 ----------- 1,976,413 ----------- INDUSTRIAL COMPONENTS 0.25% 908,000 Leader Universal Holdings BHD 90,034 ----------- LEISURE & TOURISM 6.02% 2,951,000 Magnum Corporation BHD 578,171 2,043,000 Resorts World BHD 1,571,801 ----------- 2,149,972 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- MACHINERY & ENGINEERING 0.61% 908,000 UMW Holdings BHD $ 219,119 ----------- METALS - STEEL 0.49% 2,951,000 Amsteel Corporation BHD* 176,272 ----------- MISCELLANEOUS MATERIALS & COMMODITIES 9.74% 2,270,000 Golden Hope Plantations BHD 1,301,699 1,589,000 Highlands & Lowlands BHD 725,155 454,000 Kian Joo Can Factory BHD 322,170 1,135,000 Kuala Lumpur Kepong BHD 1,128,139 ----------- 3,477,163 ----------- MULTI-INDUSTRY 7.06% 3,405,000 Berjaya Group BHD 219,662 908,000 Land & General BHD 58,576 1,816,000 Malaysia Mining Corporation BHD 260,340 1,589,000 Multi-Purpose Holdings BHD* 174,645 3,859,000 Sime Darby BHD 1,567,462 1,135,000 United Engineers (Malaysia) BHD* 238,645 ----------- 2,519,330 ----------- REAL ESTATE 0.86% 2,043,000 Hong Leong Properties BHD 153,763 1,135,000 Malaysian Resources Corporation BHD 151,865 ----------- 305,628 ----------- TELECOMMUNICATIONS 20.50% 2,043,000 Technology Resources Industries BHD 288,001 5,448,000 Telekom Malaysia BHD 7,029,174 ----------- 7,317,175 ----------- TRANSPORTATION - AIRLINES 1.40% 1,362,000 Malaysian Airline System BHD 501,154 ----------- TRANSPORTATION - SHIPPING 5.64% 2,043,000 Malaysia International Shipping BHD (Foreign) 2,011,125 ----------- UTILITIES - ELECTRICAL & GAS 7.95% 5,448,000 Tenaga Nasional BHD 2,837,703 ----------- TOTAL COMMON STOCK - BASKET (Cost $84,512,314) 33,275,490 ----------- COMMON STOCK - NON-BASKET 6.76% BANKING 6.49% 109,000 Commerce Asset Holdings BHD 26,304 963,400 Malayan Banking BHD 679,051 2,386,600 Malayan Banking BHD - A Shares 1,568,143 60,399 Public Bank BHD (Foreign) 12,050 132,000 RHB Capital BHD 28,701 ----------- 2,314,249 ----------- CONSTRUCTION & HOUSING 0.03% 62,000 Ekran BHD 5,481 6,000 YTL Corporation BHD 3,584 ----------- 9,065 ----------- See accompanying notes to financial statements. 34 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ MALAYSIA (FREE) WEBS INDEX SERIES (CONCLUDED) - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- ELECTRICAL & ELECTRONICS 0.15% 800,000 Time Engineering BHD* $ 54,476 ----------- FOOD & HOUSEHOLD PRODUCTS 0.01% 5,250 Perlis Plantations BHD 4,365 ----------- METALS - STEEL 0.02% 35,944 Silverstone BHD*,** 8,588 ----------- MULTI-INDUSTRY 0.00% 1,600 Malaysia Mining Corporation BHD 229 ----------- REAL ESTATE 0.06% 156,666 Malaysian Resources Corporation BHD 20,962 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $4,984,857) 2,411,934 ----------- TOTAL INVESTMENTS (COST $89,497,171)(DAGGER) 100.00% $35,687,424 ======= =========== - ------------------------ * Non-income producing security. ** Fair valued security. (DAGGER) Aggregate cost for Federal income tax purposes is $90,467,650. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 8,588 Excess of tax cost over value (54,788,814) ------------ $(54,780,226) ============ See accompanying notes to financial statements. 35 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ MEXICO (FREE) WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- COMMON STOCK - BASKET 100.00% BANKING 2.27% 108,000 Grupo Financiero Banamex Accival SA de CV - Series B* $ 90,125 45,000 Grupo Financiero Banamex Accival SA de CV - Series L* 32,111 405,000 Grupo Financiero Bancomer SA de CV - Series B 49,772 ---------- 172,008 ---------- BEVERAGES & TOBACCO 22.54% 72,000 Empresas La Moderna SA de CV - Series A 427,433 162,000 Fomento Economico Mexicana - Series UBD 269,732 54,000 Grupo Continental SA 120,416 126,000 Grupo Modelo SA de CV - Series C 889,118 ---------- 1,706,699 ---------- BROADCASTING & PUBLISHING 3.01% 27,000 Grupo Televisa SA - Series CPO* 227,453 ---------- BUILDING MATERIALS & COMPONENTS 8.53% 45,000 Apasco SA de CV 136,026 108,000 Cemex SA de CV - Series A 236,551 90,000 Cemex SA de CV - Series B 218,533 27,000 Cemex SA de CV - Series CPO 54,856 ---------- 645,966 ---------- CHEMICALS 0.36% 27,000 Cydsa SA - Series A 27,562 ---------- CONSTRUCTION & HOUSING 1.87% 18,000 Corporacion GEO SA - Series B* 45,490 108,000 Empresas ICA Sociedad Controladora SA de CV* 96,333 ---------- 141,823 ---------- ENERGY EQUIPMENT & SERVICES 0.55% 9,000 Tubos de Acero de Mexico SA 41,923 ---------- FINANCIAL SERVICES 0.39% 333,000 Grupo Financiero Probursa SA de CV - Series B* 29,373 ---------- FOOD & HOUSEHOLD PRODUCTS 5.22% 216,000 Grupo Industrial Bimbo SA de CV - Series A 336,095 144,000 Grupo Industrial Maseca SA de CV - Series B 59,227 ---------- 395,322 ---------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- HEALTH & PERSONAL CARE 4.64% 162,000 Kimberly-Clark de Mexico SA de CV -Series A $ 351,616 ---------- MACHINERY & ENGINEERING 0.22% 45,000 Consorcio Grupo Dina SA* 16,412 ---------- MERCHANDISING 10.75% 558,000 Cifra SA de CV - Series V* 597,265 162,000 Controladora Comercial Mexicana SA de CV - Series UBC 86,700 315,000 Grupo Elektra S.A. de C.V. - Series CPO 129,871 ---------- 813,836 ---------- METALS - NON FERROUS 4.29% 99,000 Grupo Mexico SA - Series B 175,629 63,000 Industrias Penoles SA - Series CP 149,227 ---------- 324,856 ---------- MISCELLANEOUS MATERIALS & COMMODITIES 1.38% 72,000 Empaques Ponderosa SA de CV - Series B* 37,106 54,000 Vitro SA - Series A 67,005 ---------- 104,111 ---------- MULTI-INDUSTRY 11.36% 135,000 Alfa SA de CV - Series A 301,041 72,000 Desc SA de CV - Series B 253,320 126,000 Grupo Carso SA de CV - Series A1 305,947 ---------- 860,308 ---------- TELECOMMUNICATIONS 22.62% 207,000 Telefonos de Mexico SA - Series A 386,509 756,000 Telefonos de Mexico SA - Series L 1,326,184 ---------- 1,712,693 ---------- TOTAL COMMON STOCK - BASKET (Cost $12,501,984) 7,571,961 ---------- TOTAL INVESTMENTS (COST $12,501,984)(DAGGER) 100.00% $7,571,961 ======= ========== - ----------------------- * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $12,501,984. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 80,143 Excess of tax cost over value (5,010,166) ----------- $(4,930,023) =========== See accompanying notes to financial statements. 36 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ NETHERLANDS WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- COMMON STOCK - BASKET 100.00% APPLIANCES & HOUSEHOLD DURABLES 3.95% 14,250 Royal Philips Electronics NV $ 929,426 ----------- BANKING 4.57% 47,500 ABN Amro Holding NV 1,074,067 ----------- BEVERAGES & TOBACCO 3.90% 20,900 Heineken NV 917,873 ----------- BROADCASTING & PUBLISHING 7.21% 54,948 Elsevier NV 676,461 6,175 Wolters Kluwer NV 1,019,600 ----------- 1,696,061 ----------- BUSINESS & PUBLIC SERVICES 5.10% 9,443 Getronics NV 481,616 34,200 TNT Post Group NV* 718,336 ----------- 1,199,952 ----------- CHEMICALS 3.78% 21,660 Akzo Nobel NV 889,213 ----------- CONSTRUCTION & HOUSING 2.09% 11,970 Hollandsche Beton Groep NV 194,277 6,213 IHC Caland NV 297,834 ----------- 492,111 ----------- DATA PROCESSING & REPRODUCTION 1.75% 11,780 Oce NV 411,983 ----------- ENERGY EQUIPMENT & SERVICES 0.93% 7,410 Koninklijke Pakhoed NV 218,193 ----------- ENERGY SOURCES 23.27% 123,500 Royal Dutch/Shell Group 5,473,444 ----------- FINANCIAL SERVICES 12.37% 49,400 Ing Groep NV 2,909,241 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- FOOD & HOUSEHOLD PRODUCTS 10.60% 36,100 Unilever NV - CVA $ 2,492,407 ----------- FOREST PRODUCTS & PAPER 1.02% 10,640 Buhrmann NV 240,591 ----------- INSURANCE 5.06% 13,300 ASR Verzekeringsgroep NV 1,189,588 ----------- MACHINERY & ENGINEERING 0.88% 7,391 Stork NV 207,978 ----------- MERCHANDISING 4.51% 36,100 Koninklijke Ahold NV 1,061,178 ----------- METALS - STEEL 0.91% 5,700 Koninklijke Hoogovens NV 213,954 ----------- TELECOMMUNICATIONS 5.11% 26,600 Koninklijke KPN NV 1,201,618 ----------- TRANSPORTATION - AIRLINES 2.48% 17,100 KLM - Konin Luchvaart Mij NV 584,292 ----------- TRANSPORTATION - ROAD & RAIL 0.51% 7,600 Koninklijke Nedlloyd NV 120,295 ----------- TOTAL COMMON STOCK - BASKET (Cost $22,438,583) 23,523,465 ----------- TOTAL INVESTMENTS (COST $22,438,583) 100.00% $23,523,465 ======= =========== - ------------------------ * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $22,441,050. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 2,102,578 Excess of tax cost over value (1,020,163) ----------- $ 1,082,415 =========== See accompanying notes to financial statements. 37 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ SINGAPORE (FREE) WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- COMMON STOCK - BASKET 99.77% BANKING 21.24% 572,000 Development Bank of Singapore Limited (Foreign) $ 1,980,743 1,573,000 Oversea-Chinese Banking Corporation Limited 4,056,498 572,000 Overseas Union Bank Limited 756,869 1,287,000 United Overseas Bank Limited (Foreign) 3,043,581 ----------- 9,837,691 ----------- BEVERAGES & TOBACCO 2.46% 715,000 Fraser & Neave Limited 1,139,330 ----------- BROADCASTING & PUBLISHING 4.35% 286,000 Singapore Press Holdings Limited (Foreign) 2,012,950 ----------- BUSINESS & PUBLIC SERVICES 1.26% 572,000 Parkway Holdings Limited 544,302 143,000 Sembawang Marine and Logistics Limited 39,051 ----------- 583,353 ----------- ELECTRONIC COMPONENTS, INSTRUMENTS 3.01% 143,000 Creative Technology Limited* 1,392,962 ----------- ENERGY EQUIPMENT & SERVICES 0.96% 2,431,000 Chuan Hup Holdings Limited** 444,862 ----------- FOOD & HOUSEHOLD PRODUCTS 0.76% 429,000 Prima Limited** 350,253 ----------- LEISURE & TOURISM 1.57% 143,000 Hotel Properties Limited 25,363 858,000 Shangri-La Hotel Limited 700,507 ----------- 725,870 ----------- MACHINERY & ENGINEERING 0.37% 143,000 Sembawang Corporation Limited 172,309 ----------- MERCHANDISING 0.70% 143,000 Robinson & Company Limited 322,072 ----------- METALS - NON FERROUS 2.36% 2,860,000 Straits Trading Company Limited 1,095,045 ----------- METALS - STEEL 0.38% 286,000 Natsteel Limited 177,140 ----------- MULTI-INDUSTRY 6.27% 572,000 Haw Par Corporation Limited 383,266 2,002,000 Keppel Corporation Limited 1,634,516 2,717,000 Lum Chang Holdings Limited** 198,879 1,001,000 Singapore Technologies Industrial Corporation 687,624 ----------- 2,904,285 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- REAL ESTATE 12.18% 1,144,000 City Developments Limited $ 2,009,730 2,002,000 DBS Land Limited 1,138,525 143,000 First Capital Corporation Limited 26,168 5,291,000 United Industrial Corporation Limited 1,206,562 4,004,000 United Overseas Land Limited 1,262,522 ----------- 5,643,507 ----------- TELECOMMUNICATIONS 24.76% 7,865,000 Singapore Telecommunications Limited 11,469,792 ----------- TRANSPORTATION - AIRLINES 13.21% 1,430,000 Singapore Airlines Limited (Foreign) 6,119,369 ----------- TRANSPORTATION - ROAD & RAIL 1.67% 5,291,000 Comfort Group Limited 774,583 ----------- TRANSPORTATION - SHIPPING 2.26% 3,718,000 Hai Sun Hup Group Limited** 418,694 3,146,000 Neptune Orient Lines Limited* 628,846 ----------- 1,047,540 ----------- TOTAL COMMON STOCK - BASKET (Cost $76,194,502) 46,212,913 ----------- COMMON STOCK - NON-BASKET 0.23% FOOD & HOUSEHOLD PRODUCTS 0.04% 24,000 Prima Limited** 19,595 ----------- MERCHANDISING 0.16% 34,000 Robinson & Company Limited 76,577 ----------- MULTI-INDUSTRY 0.02% 96,000 Lum Chang Holdings Limited** 7,027 ----------- TRANSPORTATION - SHIPPING 0.01% 38,000 Hai Sun Hup Group Limited** 4,279 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $150,592) 107,478 ----------- TOTAL INVESTMENTS (COST $76,345,094)(DAGGER) 100.00% $46,320,391 ======= =========== - ---------------------- * Non-income producing security. ** Non index security. (DAGGER) Aggregate cost for Federal income tax purposes is $81,113,651. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ -- Excess of tax cost over value (34,793,260) ------------ $(34,793,260) ============ See accompanying notes to financial statements. 38 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ SPAIN WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- COMMON STOCK - BASKET 100.00% BANKING 28.09% 57,400 Argentaria Corporacion Bancaria $ 1,099,977 229,572 Banco Bibao Vizcaya SA 3,035,105 116,200 Banco Central Hispanoamericano SA 1,090,115 105,672 Banco Santander SA 1,975,639 ----------- 7,200,836 ----------- BEVERAGES & TOBACCO 4.36% 15,596 El Aguila SA* 133,815 49,000 Tabacalera SA 984,810 ----------- 1,118,625 ----------- BUSINESS & PUBLIC SERVICES 6.49% 70,000 Autopistas Concesionaria Espanola SA 974,527 11,872 Prosegur Cia de Seguridad SA 147,444 11,760 Sociedade General de Aguas de Barcelona SA 541,024 ----------- 1,662,995 ----------- CHEMICALS 0.42% 93,562 Ercros SA* 108,077 ----------- CONSTRUCTION & HOUSING 3.29% 11,858 Dragados y Construcciones SA 287,018 12,600 Fomento de Construcciones y Contratas SA 556,953 ----------- 843,971 ----------- ENERGY SOURCES 4.43% 25,200 Repsol SA 1,135,779 ----------- FOOD & HOUSEHOLD PRODUCTS 2.07% 18,046 Azucarera Ebro Agricolas SA 530,180 ----------- FOREST PRODUCTS & PAPER 0.83% 5,600 Empresa Nacional de Celulosas SA 86,936 33,936 Sarrio SA* 124,627 ----------- 211,563 ----------- INSURANCE 1.49% 15,568 Corporacion Mapfre 382,534 ----------- MACHINERY & ENGINEERING 2.23% 22,204 Zardoya Otis 570,797 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- METALS - STEEL 0.93% 12,250 Acerinox SA $ 238,432 ----------- MISCELLANEOUS MATERIALS & COMMODITIES 0.70% 4,900 Viscofan Industria Navarra De Envolturas Celulosicas SA 178,640 ----------- MULTI-INDUSTRY 1.36% 3,038 Corporacion Financiera Alba SA 348,904 ----------- REAL ESTATE 4.70% 17,066 Inmobiliaria Urbis SA 189,730 22,890 Metrovacesa SA 565,506 45,864 Vallehermoso SA 450,172 ----------- 1,205,408 ----------- TELECOMMUNICATIONS 17.34% 116,200 Telefonica SA 4,445,805 ----------- UTILITIES - ELECTRICAL & GAS 21.27% 98,000 Endesa SA 1,861,650 18,200 Gas Natural SDG SA 1,068,193 89,600 Iberdrola SA 1,319,187 102,200 Union Electrica Fenosa SA 1,204,440 ----------- 5,453,470 ----------- TOTAL COMMON STOCK - BASKET (Cost $25,096,569) 25,636,016 ----------- COMMON STOCK - NON-BASKET 0.00% BANKING 0.00% 103,600 Banco Santander SA Rights (Expiration date September 30, 1998) 692 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $20,193) 692 ----------- TOTAL INVESTMENTS (COST $25,116,762)(DAGGER) 100.00% $25,636,708 ======= =========== - ------------------------ * Non-income producing security. (DAGGER) Aggregate cost for Federal income tax purposes is $25,123,264. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $1,324,442 Excess of tax cost over value (810,998) ---------- $ 513,444 ========== See accompanying notes to financial statements. 39 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ SWEDEN WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- COMMON STOCK - BASKET 100.00% APPLIANCES & HOUSEHOLD DURABLES 3.89% 35,000 Electrolux AB Series B $ 558,214 ----------- AUTOMOBILES 4.74% 12,000 Volvo AB-A 320,463 13,000 Volvo AB-B 358,419 ----------- 678,882 ----------- BANKING 12.36% 27,000 Foreningsbanken AB 610,882 43,000 Skandinaviska Enskilda Banken-A 539,607 16,000 Svenska Handelsbanken-A 621,144 ----------- 1,771,633 ----------- BEVERAGES & TOBACCO 1.96% 90,000 Swedish Match AB 281,518 ----------- BUSINESS & PUBLIC SERVICES 4.06% 7,000 Esselte AB-A 116,835 6,000 Esselte AB-B 106,821 7,000 Securitas AB-B 358,295 ----------- 581,951 ----------- CHEMICALS 2.50% 14,000 AGA AB-A 194,726 12,000 AGA AB-B 163,941 ----------- 358,667 ----------- CONSTRUCTION & HOUSING 3.10% 11,000 Skanska AB-B 444,716 ----------- ELECTRICAL & ELECTRONICS 28.00% 48,000 ABB AB - A 534,105 20,000 ABB AB - B 217,598 140,000 Ericsson LM-B 3,262,738 ----------- 4,014,441 ----------- FINANCIAL SERVICES 1.08% 9,000 Om Gruppen AB 154,668 ----------- FOREST PRODUCTS & PAPER 5.25% 23,000 Stora Kopparbergs-A 278,674 4,000 Stora Kopparbergs-B 48,465 20,000 Svenska Cellulosa AB-B 425,306 ----------- 752,445 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- HEALTH & PERSONAL CARE 13.71% 98,000 Astra AB-A $ 1,641,754 20,000 Astra AB-B 323,925 ----------- 1,965,679 ----------- INDUSTRIAL COMPONENTS 2.15% 10,000 SKF AB-A 154,544 10,000 SKF AB-B 153,308 ----------- 307,852 ----------- INSURANCE 4.89% 50,000 Skandia Forsakring AB 701,631 ----------- MACHINERY & ENGINEERING 2.89% 13,000 Atlas Copco AB-A 255,554 8,000 Atlas Copco AB-B 158,253 ----------- 413,807 ----------- MERCHANDISING 6.29% 13,000 Hennes & Mauritz AB - B 901,673 ----------- METALS - NON FERROUS 0.47% 5,000 Granges AB 67,381 ----------- METALS - STEEL 0.98% 8,000 Svenskt Stal AB(SSAB) - A 87,039 5,000 Svenskt Stal AB(SSAB) - B 53,163 ----------- 140,202 ----------- MULTI-INDUSTRY 0.76% 12,000 Trelleborg AB-B 108,305 ----------- REAL ESTATE 0.39% 8,000 Diligentia AB 56,378 ----------- TELECOMMUNICATIONS 0.53% 2,000 NetCom Systems AB-B 76,159 ----------- TOTAL COMMON STOCK - BASKET (Cost $13,994,473) 14,336,202 ----------- TOTAL INVESTMENTS (COST $13,994,473)(DAGGER) 100.00% $14,336,202 ======= =========== - ------------------------ (DAGGER) Aggregate cost for Federal income tax purposes is $13,998,413. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 1,592,712 Excess of tax cost over value (1,254,923) ----------- $ 337,789 =========== See accompanying notes to financial statements. 40 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ SWITZERLAND WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- COMMON STOCK - BASKET 99.99% BANKING 23.07% 825 Banca del Gottardo - B $ 581,829 975 Banque Cantonale Vaudoise 346,505 13,500 Credit Suisse Group 2,366,210 10,740 UBS AG 3,467,870 150 Vontobel Holdings AG 190,832 ----------- 6,953,246 ----------- BUILDING MATERIALS & COMPONENTS 5.11% 1,545 Forbo Holding AG 694,358 1,650 Holderbank Financiere Glarus AG 340,541 495 Holderbank Financiere Glarus AG - Bearer 504,480 ----------- 1,539,379 ----------- BUSINESS & PUBLIC SERVICES 3.16% 1,530 Adecco SA 713,006 420 SGS Societe Generale de Surveillance Holding SA 105,704 120 SGS Societe Generale de Surveillance Holding SA - Bearer 133,582 ----------- 952,292 ----------- CHEMICALS 3.52% 150 EMS-Chemie Holding AG*,** 850,964 660 Sika Finanz AG 209,002 ----------- 1,059,966 ----------- ELECTRICAL & ELECTRONICS 2.03% 525 Abb AG 611,647 ----------- FINANCIAL SERVICES 3.72% 405 Julius Baer Holding AG** 1,120,100 ----------- FOOD & HOUSEHOLD PRODUCTS 4.89% 795 Nestle SA 1,474,238 ----------- HEALTH & PERSONAL CARE 29.77% 3,375 Novartis AG 5,248,133 360 Roche Holding AG - Genussein 3,724,953 ----------- 8,973,086 ----------- INSURANCE 11.76% 810 Helvetia Patria Holding** 840,075 630 Schweizerische Rueckversicherungs (Swiss Re) 1,394,337 2,190 Zurich Allied AG 1,311,305 ----------- 3,545,717 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - -------- -------- ----- LEISURE & TOURISM 0.70% 435 Moevenpick Holdings AG $ 210,537 ----------- MACHINERY & ENGINEERING 2.55% 600 Schindler Holding AG 767,476 ----------- MERCHANDISING 0.85% 945 Valora Holding AG 258,090 ----------- MULTI-INDUSTRY 3.78% 1,125 Alusuisse Lonza Group AG* 1,139,546 ----------- RECREATION - OTHER CONSUMER GOODS 2.30% 8,355 Tag Heuer International SA** 693,217 ----------- TRANSPORTATION - AIRLINES 2.78% 3,375 SAirGroup 838,908 ----------- TOTAL COMMON STOCK - BASKET (Cost $29,258,082) 30,137,445 ----------- COMMON STOCK - NON-BASKET 0.01% BANKING 0.00% 3 UBS AG 969 ----------- INSURANCE 0.01% 2 Zurich Allied AG 1,198 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $1,534) 2,167 ----------- TOTAL INVESTMENTS (COST $29,259,616)(DAGGER) 100.00% $30,139,612 ======= =========== - -------------------------- * Non-income producing security. ** Non Index Security. (DAGGER) Aggregate cost for Federal income tax purposes is $29,283,576. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 2,001,153 Excess of tax cost over value (1,145,117) ----------- $ 856,036 =========== See accompanying notes to financial statements. 41 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ UNITED KINGDOM WEBS INDEX SERIES - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- COMMON STOCK - BASKET 99.56% AEROSPACE & MILITARY TECHNOLOGY 1.31% 88,740 British Aerospace Plc $ 567,633 80,070 Rolls-Royce Plc 259,775 ----------- 827,408 ----------- BANKING 11.67% 72,335 Barclays Plc 1,713,918 81,600 HSBC Holdings Plc ($HK10) 1,673,830 40,800 HSBC Holdings Plc (75p) 846,480 221,000 Lloyds TSB Group Plc 2,638,560 34,425 Royal Bank of Scotland Group Plc 488,827 ----------- 7,361,615 ----------- BEVERAGES & TOBACCO 4.21% 49,640 Cadbury Schweppes Plc 727,319 190,417 Diageo Plc 1,929,062 ----------- 2,656,381 ----------- BROADCASTING & PUBLISHING 2.56% 76,670 British Sky Broadcasting Group Plc 601,158 31,875 Pearson Plc 532,146 65,280 Reed International Plc 480,970 ----------- 1,614,274 ----------- BUILDING MATERIALS & COMPONENTS 1.49% 46,070 Blue Circle Industries Plc 218,318 25,670 BPB Plc 123,795 24,973 Caradon Plc 57,917 33,303 Hanson Plc 173,571 13,515 Hepworth Plc 34,286 14,365 RMC Group Plc 191,471 28,305 Wolseley Plc 141,242 ----------- 940,600 ----------- BUSINESS & PUBLIC SERVICES 3.69% 15,640 Anglian Water Plc 226,405 9,520 De La Rue Plc 34,114 20,400 Railtrack Group Plc 483,361 71,298 Reuters Group Plc 595,749 21,029 Thames Water Plc 377,484 29,155 United Utilities Plc 429,616 30,991 Williams Plc 181,631 ----------- 2,328,360 ----------- CHEMICALS 1.10% 23,290 BOC Group Plc 315,113 34,765 Imperial Chemical Industries Plc 380,137 ----------- 695,250 ----------- CONSTRUCTION & HOUSING 0.10% 26,435 Taylor Woodrow Plc 60,865 ----------- ELECTRICAL & ELECTRONICS 1.39% 133,960 General Electric Company Plc 879,319 ----------- ELECTRONIC COMPONENTS, INSTRUMENTS 0.14% 13,175 Bowthorpe Plc 91,004 ----------- ENERGY SOURCES 5.87% 267,155 British Petroleum Company Plc 3,370,790 10,965 Burmah Castrol Plc 173,143 57,460 LASMO Plc 157,795 ----------- 3,701,728 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- FINANCIAL SERVICES 2.91% 63,580 Abbey National Plc $ 1,192,405 16,388 Provident Financial Plc 249,033 15,555 Schroders Plc 390,703 ----------- 1,832,141 ----------- FOOD & HOUSEHOLD PRODUCTS 3.31% 55,165 Associated British Foods Plc 475,725 165,920 Unilever Plc 1,547,530 20,009 United Biscuits Holdings Plc 65,502 ----------- 2,088,757 ----------- FOREST PRODUCTS & PAPER 0.15% 41,650 Arjo Wiggins Appleton Plc 92,409 ----------- GOLD MINES 0.06% 9,656 Lonrho Plc 36,542 ----------- HEALTH & PERSONAL CARE 15.23% 166,940 Glaxo Wellcome Plc 5,031,739 238,000 Smithkline Beecham Plc 2,809,644 45,135 Zeneca Group Plc 1,764,759 ----------- 9,606,142 ----------- INDUSTRIAL COMPONENTS 0.65% 30,685 BBA Group Plc 193,967 29,155 BICC Plc 43,206 47,770 Lucasvarity Plc 169,581 ----------- 406,754 ----------- INSURANCE 6.33% 42,670 CGU Plc 623,052 64,753 Guardian Royal Exchange Plc 278,662 60,129 Legal & General Group Plc 706,816 119,000 Prudential Corporation Plc 1,685,786 73,100 Royal & Sun Alliance Insurance Group Plc 614,478 23,545 Sedgwick Group Plc 83,189 ----------- 3,991,983 ----------- LEISURE & TOURISM 3.47% 44,625 Bass Plc 599,291 27,200 Carlton Communications Plc 199,949 42,500 Granada Group Plc 547,980 51,000 Ladbroke Group Plc 204,959 47,345 Rank Group Plc 223,567 33,065 Scottish & Newcastle Plc 412,210 ----------- 2,187,956 ----------- MACHINERY & ENGINEERING 0.83% 30,600 GKN Plc 340,744 17,000 Smith Industries Plc 184,463 ----------- 525,207 ----------- MERCHANDISING 8.92% 48,195 Boots Company Plc 801,376 51,935 Great Universal Stores Plc 624,410 73,950 Kingfisher Plc Ord 25p 606,763 147,475 Marks & Spencer Plc 1,271,776 26,265 Next Plc 197,254 60,520 Safeway Plc 313,143 102,000 Sainsbury Plc 879,615 332,265 Tesco Plc 934,715 ----------- 5,629,052 ----------- See accompanying notes to financial statements. 42 AUGUST 31, 1998 PORTFOLIO OF INVESTMENTS WEBS INDEX FUND, INC. ================================================================================ UNITED KINGDOM WEBS INDEX SERIES (CONCLUDED) - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- METALS - NON FERROUS 0.78% 49,980 Rio Tinto Plc $ 488,758 ----------- METALS - STEEL 0.25% 89,420 British Steel Plc 160,215 ----------- MISCELLANEOUS MATERIALS & COMMODITIES 0.27% 60,180 Pilkington Plc 78,602 26,860 Rexam Plc 90,854 ----------- 169,456 ----------- MULTI-INDUSTRY 3.32% 153,425 B.A.T. Industries Plc 1,508,063 158,287 BTR Plc 342,579 35,870 TI Group Plc 240,558 ----------- 2,091,200 ----------- REAL ESTATE 1.38% 30,855 British Land Company Plc 265,050 32,555 Land Securities Plc 456,822 18,462 Mepc PLC 147,617 ----------- 869,489 ----------- RECREATION - OTHER CONSUMER GOODS 0.44% 39,933 EMI Group Plc 279,507 ----------- TELECOMMUNICATIONS 11.66% 297,925 British Telecommunications Plc 4,040,891 114,325 Cable & Wireless Plc 1,110,336 158,015 Vodafone Group Plc 2,204,086 ----------- 7,355,313 ----------- TEXTILES & APPAREL 0.08% 54,315 Coats Viyella Plc 52,751 ----------- TRANSPORTATION - AIRLINES 0.61% 51,510 British Airways Plc 387,278 ----------- TRANSPORTATION - SHIPPING 0.59% 32,130 Peninsular & Oriental Steam Navigation Company Plc 370,694 ----------- UTILITIES - ELECTRICAL & GAS 4.79% 179,911 BG Plc 1,114,666 203,915 Centrica Plc* 315,846 70,584 National Grid Holdings Plc 508,229 56,355 National Power Plc 468,058 41,990 Scottish Power Plc 406,053 22,593 Southern Electric Plc 210,725 ----------- 3,023,577 ----------- TOTAL COMMON STOCK - BASKET (Cost $57,512,645) 62,801,985 ----------- COMMON STOCK - NON-BASKET 0.44% APPLIANCES & HOUSEHOLD DURABLES 0.12% 19,006 Thorn Plc 77,813 ----------- BUSINESS & PUBLIC SERVICES 0.05% 8 Thames Water Plc 143 22,950 Thames Water Plc B Shares 29,591 1 Williams Plc 6 1,975 Williams Plc B Shares 1,108 ----------- 30,848 ----------- - -------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - --------- -------- ----- FINANCIAL SERVICES 0.00% 13 Provident Financial Plc $ 198 ----------- FOOD & HOUSEHOLD PRODUCTS 0.02% 13 United Biscuits Holdings Plc 43 22,525 United Biscuits Holdings Plc B Shares 10,561 ----------- 10,604 ----------- GOLD MINES 0.01% 8,531 Lonrho Africa Plc 7,285 11 Lonrho Plc 42 ----------- 7,327 ----------- INSURANCE 0.02% 7 Guardian Royal Exchange Plc 30 60,000 Guardian Royal Exchange Plc B Shares 15,071 ----------- 15,101 ----------- MULTI-INDUSTRY 0.16% 3 BTR Plc 6 171,900 BTR Plc B Shares 97,868 ----------- 97,874 ----------- REAL ESTATE 0.06% 5 Mepc Plc 40 22,355 Mepc Plc B Shares 36,123 ----------- 36,163 ----------- TOTAL COMMON STOCK - NON-BASKET (Cost $286,190) 275,928 ----------- TOTAL INVESTMENTS (COST $57,798,835)(DAGGER) 100.00% $63,077,913 ======= =========== - -------------------------- * Non-income producing security. (DAGGER) Aggregate cost for federal income tax purposes is $57,978,454. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 8,953,242 Excess of tax cost over value (3,853,783) ----------- $ 5,099,459 =========== See accompanying notes to financial statements. 43 AUGUST 31, 1998 STATEMENTS OF ASSETS AND LIABILITIES 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 .................. $33,586,868 $8,313,066 $29,725,621 $ 7,257,642 $45,890,652 $73,508,050 $ 51,332,352 Cash and foreign currency .............. 388,653 4,264 32,939 2,837 6,150 6,590 5,001 Cash collateral for securities loaned .. 2,929,366 895,577 4,357,385 813,890 44,531 7,834,252 23,011,726 Dividends receivable ................... 86,661 15,246 40,273 22,217 253,067 32,814 136,229 Interest receivable .................... 901 371 909 347 229 16,828 6,538 Receivable for securities sold ......... -- -- 48,136 -- -- -- -- Asset for in-kind redemptions .......... -- -- -- -- -- -- 1,484,217 Deferred organization cost ............. 75,994 56,514 24,684 53,679 147,332 139,973 39,015 Prepaid expenses ....................... 4,271 501 2,537 1,976 2,056 3,231 3,282 ----------- ---------- ----------- ----------- ----------- ----------- ------------ Total assets ....................... 37,072,714 9,285,539 34,232,484 8,152,588 46,344,017 81,541,738 76,018,360 ----------- ---------- ----------- ----------- ----------- ----------- ------------ LIABILITIES Payable for securities purchased ....... -- -- 56,934 -- -- -- -- Payable for Fund shares redeemed ....... -- -- -- -- -- -- 1,441,138 Payable for securities loaned .......... 2,929,366 895,577 4,357,385 813,890 44,531 7,834,252 23,011,726 Advisory fee payable ................... 8,672 2,172 7,215 1,957 11,282 11,867 12,802 Administration fee payable ............. 7,066 1,770 5,879 1,594 9,193 14,936 10,431 Distribution fee payable ............... 6,424 1,609 5,344 1,449 8,357 13,578 9,483 Custody fee payable .................... 8,583 2,870 6,650 1,206 14,602 19,432 25,868 Accrued expenses ....................... 13,403 6,375 8,543 5,932 19,370 33,798 34,042 Advances under loan arrangement ........ -- 290,000 4,020,000 395,000 315,000 680,000 1,500,000 ----------- ---------- ----------- ----------- ----------- ----------- ------------ Total liabilities .................. 2,973,514 1,200,373 8,467,950 1,221,028 422,335 8,607,863 26,045,490 ----------- ---------- ----------- ----------- ----------- ----------- ------------ NET ASSETS Capital stock, $0.001 par value 4,400 800 1,400 700 2,401 3,601 7,801 Paid-in capital ........................ 47,121,586 9,044,685 23,512,252 8,219,452 40,828,317 67,686,604 83,421,056 Accumulated net investment income/(loss) (185,840) 11,031 (828,296) 12,867 (13,939) 31,011 6,862 Accumulated net realized gain/(loss) on investments ....................... (197,727) (27,731) (17,693) (15,056) -- (29,363) (7,523,243) Net unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ................... (12,643,219) (943,619) 3,096,871 (1,286,403) 5,104,903 5,242,022 (25,939,606) ----------- ---------- ----------- ----------- ----------- ----------- ------------ Net Assets ............................. $34,099,200 $8,085,166 $25,764,534 $ 6,931,560 $45,921,682 $72,933,875 $ 49,972,870 =========== ========== =========== =========== =========== =========== ============ Shares of common stock issued and outstanding .......................... 4,400,030 800,030 1,400,030 700,030 2,401,000 3,601,000 7,801,000 =========== ========== =========== =========== =========== =========== ============ Net Asset Value Per Share .............. $ 7.75 $ 10.11 $ 18.40 $ 9.90 $ 19.13 $ 20.25 $ 6.41 =========== ========== =========== =========== =========== =========== ============
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 .................. $62,898,198 $200,803,824 $35,687,424 $ 7,571,961 $23,523,465 $ 46,320,391 Cash and foreign currency .............. 8,873 547,763 70,755 1,558 22,516 1,373,112 Cash collateral for securities loaned .. 11,912,029 40,291,615 10,934,021 1,326,425 9,227,003 17,806,456 Dividends receivable ................... 25,618 42,623 148,572 14 129,795 103,716 Interest receivable .................... 3,814 22,064 15,504 1,101 1,790 10,925 Receivable for securities sold ......... -- -- 148,545 -- -- -- Asset for in-kind redemptions .......... -- -- -- -- -- -- Deferred organization cost ............. 74,193 308,890 41,354 41,780 34,989 49,658 Prepaid expenses ....................... 5,647 14,005 4,610 1,240 1,196 3,494 ----------- ------------ ----------- ----------- ----------- ------------ Total assets ....................... 74,928,372 242,030,784 47,050,785 8,944,079 32,940,754 65,667,752 ----------- ------------ ----------- ----------- ----------- ------------ LIABILITIES Payable for securities purchased ....... -- -- 142,807 -- -- 502,100 Payable for Fund shares redeemed ....... -- -- -- -- -- -- Payable for securities loaned .......... 11,912,029 40,291,615 10,934,021 1,326,426 9,227,003 17,806,456 Advisory fee payable ................... 15,696 48,467 9,462 2,213 5,701 12,983 Administration fee payable ............. 12,789 39,492 7,710 1,803 4,646 10,578 Distribution fee payable ............... 11,627 35,902 7,009 1,639 4,223 9,617 Custody fee payable .................... 10,009 50,722 43,980 4,984 7,898 42,607 Accrued expenses ....................... 22,983 79,308 39,093 6,178 11,980 35,293 Advances under loan arrangement ........ 4,575,000 -- -- 305,000 1,330,000 -- ----------- ------------ ----------- ----------- ----------- ------------ Total liabilities .................. 16,560,133 40,545,506 11,184,082 1,648,243 10,591,451 18,419,634 ----------- ------------ ----------- ----------- ----------- ------------ NET ASSETS Capital stock, $0.001 par value 2,550 24,001 17,025 900 951 14,300 Paid-in capital ........................ 44,638,787 287,660,152 91,606,121 12,219,995 21,258,090 91,228,980 Accumulated net investment income/(loss) (2,452,620) (453,977) (92,013) 4,968 7,198 (63,830) Accumulated net realized gain/(loss) on investments ....................... -- (2,593,213) (1,854,484) -- (2,467) (13,902,207) Net unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ................... 16,179,522 (83,151,685) (53,809,946) (4,930,027) 1,085,531 (30,029,125) ----------- ------------ ----------- ----------- ----------- ------------ Net Assets ............................. $58,368,239 $201,485,278 $35,866,703 $ 7,295,836 $22,349,303 $ 47,248,118 =========== ============ =========== =========== =========== ============ Shares of common stock issued and outstanding .......................... 2,550,030 24,001,000 17,025,030 900,030 951,000 14,300,030 =========== ============ =========== =========== =========== ============ Net Asset Value Per Share .............. $ 22.89 $ 8.39 $ 2.11 $ 8.11 $ 23.50 $ 3.30 =========== ============ =========== =========== =========== ============
UNITED SPAIN SWEDEN SWITZERLAND KINGDOM WEBS WEBS WEBS WEBS INDEX INDEX INDEX INDEX SERIES SERIES SERIES SERIES ----------- ----------- ----------- ----------- ASSETS Investments, at value .................. $25,636,708 $14,336,202 $30,139,612 $63,077,913 Cash and foreign currency .............. 4,792 91,067 4,196 33,685 Cash collateral for securities loaned .. 4,279,600 292,500 432,582 -- Dividends receivable ................... 16,714 -- 34,365 488,739 Interest receivable .................... 880 127 1,002 515 Receivable for securities sold ......... -- -- -- -- Asset for in-kind redemptions .......... -- -- -- -- Deferred organization cost ............. 61,345 39,937 94,293 89,018 Prepaid expenses ....................... 1,518 1,115 2,187 4,265 ----------- ----------- ----------- ----------- Total assets ....................... 30,001,557 14,760,948 30,708,237 63,694,135 ----------- ----------- ----------- ----------- LIABILITIES Payable for securities purchased ....... -- 88,990 -- -- Payable for Fund shares redeemed ....... -- -- -- -- Payable for securities loaned .......... 4,279,600 292,500 432,582 -- Advisory fee payable ................... 6,839 3,583 7,616 15,103 Administration fee payable ............. 5,572 2,919 6,206 12,307 Distribution fee payable ............... 5,066 2,654 5,641 11,188 Custody fee payable .................... 7,536 5,053 9,212 12,938 Accrued expenses ....................... 12,590 8,928 14,001 27,066 Advances under loan arrangement ........ 655,000 565,000 1,070,000 770,000 ----------- ----------- ----------- ----------- Total liabilities .................. 4,972,203 969,627 1,545,258 848,602 ----------- ----------- ----------- ----------- NET ASSETS Capital stock, $0.001 par value 1,050 750 1,876 3,401 Paid-in capital ........................ 24,499,534 13,447,144 28,290,610 57,705,230 Accumulated net investment income/(loss) 15,165 3,770 14,620 (155,570) Accumulated net realized gain/(loss) on investments ....................... (6,502) (3,940) (23,959) -- Net unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ................... 520,107 343,597 879,832 5,292,472 ----------- ----------- ----------- ----------- Net Assets ............................. $25,029,354 $13,791,321 $29,162,979 $62,845,533 =========== =========== =========== =========== Shares of common stock issued and outstanding .......................... 1,050,030 750,030 1,876,000 3,401,000 =========== =========== =========== =========== Net Asset Value Per Share .............. $ 23.84 $ 18.39 $ 15.55 $ 18.48 =========== =========== =========== ===========
See accompanying notes to financial statements. 44 & 45 FOR THE YEAR ENDED AUGUST 31, 1998 STATEMENTS OF OPERATIONS 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) ........... $ 1,426,742 $ 120,791 $ 674,541 $ 331,845 $ 754,597 $1,000,189 Interest ............................................... 20,034 5,800 20,794 4,808 7,294 99,658 ------------ --------- ---------- ----------- ---------- ---------- Total investment income .............................. 1,446,776 126,591 695,335 336,653 761,891 1,099,847 ------------ --------- ---------- ----------- ---------- ---------- EXPENSES: Advisory fees .......................................... 113,929 17,769 80,997 56,716 74,578 118,054 Administration fees .................................... 89,377 14,128 63,121 44,201 59,529 94,141 Distribution fees ...................................... 87,845 13,513 62,876 44,024 56,481 89,498 Custodian fees and expenses ............................ 40,696 10,634 33,940 14,508 28,832 42,310 Transfer agent fees .................................... 9,130 6,980 10,280 8,380 10,180 8,780 Directors' fees ........................................ 15,370 1,102 10,679 8,547 7,708 11,822 Legal fees ............................................. 19,780 2,506 14,199 10,359 9,774 15,518 Audit fees ............................................. 14,268 2,295 11,194 15,187 10,044 14,218 Federal and state registration fees .................... 2,761 2,823 -- -- 9,479 14,813 Amortization of deferred organization costs ............ 17,773 13,216 5,774 12,555 34,458 32,737 Insurance .............................................. 6,494 774 3,155 6,305 3,957 6,231 Printing ............................................... 2,501 445 1,266 1,326 3,365 3,042 Licensing fees ......................................... 12,659 1,974 9,000 6,302 8,286 13,117 Amex listing fee ....................................... 1,021 120 544 786 604 748 Miscellaneous expenses ................................. 8,723 4,659 5,271 10,127 9,444 8,715 ------------ --------- ---------- ----------- ---------- ---------- Total expenses ....................................... 442,327 92,938 312,296 239,323 326,719 473,744 ------------ --------- ---------- ----------- ---------- ---------- Net investment income/(loss) ........................... 1,004,449 33,653 383,039 97,330 435,172 626,103 ------------ --------- ---------- ----------- ---------- ---------- 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 ................ (197,727) 488,636 3,805,031 468,666 326,222 51,979 Net realized gain/(loss) on investments on in-kind redemptions .................................. (509,674) -- 1,068,037 3,645,299 -- -- Net realized gain/(loss) on foreign currency related transactions ................................. (106,144) (5,356) (6,139) (2,928) (13,548) (12,490) ------------ --------- ---------- ----------- ---------- ---------- (813,545) 483,280 4,866,929 4,111,037 312,674 39,489 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ........ (11,081,054) (922,261) 3,689,571 (5,251,304) 3,937,546 2,623,288 ------------ --------- ---------- ----------- ---------- ---------- Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies .................... (11,894,599) (438,981) 8,556,500 (1,140,267) 4,250,220 2,662,777 ------------ --------- ---------- ----------- ---------- ---------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................................... $(10,890,150) $(405,328) $8,939,539 $(1,042,937) $4,685,392 $3,288,880 ============ ========= ========== =========== ========== ==========
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) ........... $ 2,184,594 $ 1,004,281 $ 1,173,588 $ 1,080,728 $ 248,605 Interest ............................................... 50,293 63,101 150,524 147,704 24,856 ------------ ----------- ------------ ------------ ----------- Total investment income .............................. 2,234,887 1,067,382 1,324,112 1,228,432 273,461 ------------ ----------- ------------ ------------ ----------- EXPENSES: Advisory fees .......................................... 124,506 162,294 433,508 132,902 38,055 Administration fees .................................... 98,932 128,961 340,915 106,617 29,580 Distribution fees ...................................... 94,745 123,496 333,432 100,121 29,617 Custodian fees and expenses ............................ 60,848 53,064 93,829 61,207 36,117 Transfer agent fees .................................... 14,680 8,330 22,330 16,080 9,030 Directors' fees ........................................ 14,519 19,095 55,347 16,161 5,415 Legal fees ............................................. 19,428 26,461 70,357 20,364 7,144 Audit fees ............................................. 12,098 21,801 85,761 12,932 7,138 Federal and state registration fees .................... 19,612 3,888 34,599 22,924 385 Amortization of deferred organization costs ............ 9,126 17,352 72,244 9,671 9,770 Insurance .............................................. 5,939 11,288 29,574 8,287 3,009 Printing ............................................... 3,258 3,795 9,430 3,896 632 Licensing fees ......................................... 13,834 18,033 48,168 14,767 4,228 Amex listing fee ....................................... 815 1,559 3,771 926 463 Miscellaneous expenses ................................. 9,068 12,712 34,199 10,501 7,742 ------------ ----------- ------------ ------------ ----------- Total expenses ....................................... 501,408 612,129 1,667,464 537,356 188,325 ------------ ----------- ------------ ------------ ----------- Net investment income/(loss) ........................... 1,733,479 455,253 (343,352) 691,076 85,136 ------------ ----------- ------------ ------------ ----------- 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 ................ (7,503,329) 2,081,484 (724,010) (1,840,563) 261,068 Net realized gain/(loss) on investments on in-kind redemptions .................................. (1,552,376) 7,591,079 (3,172,392) (2,450,970) 1,323,152 Net realized gain/(loss) on foreign currency related transactions ................................. (320) (8,092) (148,251) (109,570) (7,178) ------------ ----------- ------------ ------------ ----------- (9,056,025) 9,664,471 (4,044,653) (4,401,103) 1,577,042 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ........ (25,681,723) 11,937,409 (68,401,659) (44,926,346) (7,542,851) ------------ ----------- ------------ ------------ ----------- Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies .................... (34,737,748) 21,601,880 (72,446,312) (49,327,449) (5,965,809) ------------ ----------- ------------ ------------ ----------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................................... $(33,004,269) $22,057,133 $(72,789,664) $(48,636,373) $(5,880,673) ============ =========== ============ ============ ===========
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) ........... $ 345,937 $ 940,360 $ 333,479 $ 212,867 $ 254,328 $1,466,011 Interest ............................................... 5,714 54,841 7,772 6,546 13,768 20,595 ---------- ------------ ---------- --------- ---------- ---------- Total investment income .............................. 351,651 995,201 341,251 219,413 268,096 1,486,606 ---------- ------------ ---------- --------- ---------- ---------- EXPENSES: Advisory fees .......................................... 44,756 119,392 53,561 35,809 64,666 137,019 Administration fees .................................... 35,512 95,590 42,795 29,928 51,205 108,935 Distribution fees ...................................... 34,109 90,132 40,521 25,775 49,386 104,206 Custodian fees and expenses ............................ 17,640 51,180 21,072 15,306 28,158 35,909 Transfer agent fees .................................... 7,630 14,230 7,780 7,630 7,380 8,330 Directors' fees ........................................ 4,974 13,205 5,470 4,209 7,567 15,433 Legal fees ............................................. 6,210 16,522 7,474 5,917 10,324 20,349 Audit fees ............................................. 6,202 10,313 4,286 4,339 6,904 16,271 Federal and state registration fees .................... 5,234 23,033 5,958 3,200 5,609 10,583 Amortization of deferred organization costs ............ 8,183 11,613 14,349 9,341 22,053 20,820 Insurance .............................................. 2,675 5,930 2,106 1,990 3,434 8,574 Printing ............................................... 1,116 3,407 1,419 796 1,410 3,434 Licensing fees ......................................... 4,973 13,266 5,951 3,979 7,185 15,224 Amex listing fee ....................................... 384 615 293 301 408 998 Miscellaneous expenses ................................. 6,581 7,200 6,906 6,845 9,316 17,097 ---------- ------------ ---------- --------- ---------- ---------- Total expenses ....................................... 186,179 475,628 219,941 155,365 275,005 523,182 ---------- ------------ ---------- --------- ---------- ---------- Net investment income/(loss) ........................... 165,472 519,573 121,310 64,048 (6,909) 963,424 ---------- ------------ ---------- --------- ---------- ---------- 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 ................ 1,331,940 (13,766,450) 573,744 649,417 2,277,266 438,728 Net realized gain/(loss) on investments on in-kind redemptions .................................. 304,916 (1,928,512) 1,089,684 -- 446,121 -- Net realized gain/(loss) on foreign currency related transactions ................................. (4,765) (85,347) (2,155) (9,750) (11,999) (335) ---------- ------------ ---------- --------- ---------- ---------- 1,632,091 (15,780,309) 1,661,273 639,667 2,711,388 438,393 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ........ (840,046) (25,054,420) (84,559) (858,611) (117,545) 1,989,733 ---------- ------------ ---------- --------- ---------- ---------- Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies .................... 792,045 (40,834,729) 1,576,714 (218,944) 2,593,843 2,428,126 ---------- ------------ ---------- --------- ---------- ---------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ...................................... $ 957,517 $(40,315,156) $1,698,024 $(154,896) $2,586,934 $3,391,550 ========== ============ ========== ========= ========== ==========
See accompanying notes to financial statements. 46 & 47 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 For the For the For the year year year year year year ended ended ended ended ended ended 08/31/98 08/31/97 08/31/98 08/31/97 08/31/98 08/31/97 ------------ ----------- ---------- ------------ ----------- ----------- OPERATIONS: Net investment income/(loss) ................ $ 1,004,449 $ 287,423 $ 33,653 $ (6,855) $ 383,039 $ 668,880 ------------ ----------- ---------- ------------ ----------- ----------- Net realized gain/(loss) on investments and foreign currency related transactions . (813,545) 168,792 483,280 (1,197,601) 4,866,929 357,522 Net change in unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ........................ (11,081,054) (1,840,776) (922,261) 1,155,714 3,689,571 (623,667) ------------ ----------- ---------- ------------ ----------- ----------- Net increase/(decrease) in net assets resulting from operations ................. (10,890,150) (1,384,561) (405,328) (48,742) 8,939,539 402,735 ------------ ----------- ---------- ------------ ----------- ----------- DISTRIBUTIONS: Net investment income ....................... (1,004,449) (287,423) (33,653) -- (383,039) (668,880) In excess of net investment income .......... (19,218) (160,198) (10,327) -- (1,697,275) (587,754) Net realized gains .......................... -- (187,118) (483,280) -- (2,779,100) (230,479) In excess of net realized gains ............. -- -- (2,230) -- -- -- Return of capital ........................... -- (796,674) (1,490) -- (139,253) (24,077) ------------ ----------- ---------- ------------ ----------- ----------- Net decrease in net assets from distributions ............................ (1,023,667) (1,431,413) (530,980) -- (4,998,667) (1,511,190) ------------ ----------- ---------- ------------ ----------- ----------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares ........ 14,115,736 34,012,042 4,816,685 2,076,237 9,993,974 31,836,329 Cost of shares redeemed ..................... (9,508,450) (1,967,117) -- (11,342,765) (20,697,973) -- ------------ ----------- ---------- ------------ ----------- ----------- Net increase/(decrease) in net assets derived from capital share transactions ... 4,607,286 32,044,925 4,816,685 (9,266,528) (10,703,999) 31,836,329 ------------ ----------- ---------- ------------ ----------- ----------- Total increase/(decrease) in net assets ..... (7,306,531) 29,228,951 3,880,377 (9,315,270) (6,763,127) 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 ............................... $ 34,099,200 $41,405,731 $8,085,166 $ 4,204,789 $25,764,534 $32,527,661 ============ =========== ========== ============ =========== =========== Capital Share Transactions: Shares sold ................................. 1,400,000 3,000,000 400,000 200,000 560,000 1,960,000 Shares redeemed ............................. (1,000,000) (200,000) -- (1,100,000) (1,240,000) -- ------------ ----------- ---------- ------------ ----------- ----------- Net increase/(decrease) in shares ........... 400,000 2,800,000 400,000 (900,000) (680,000) 1,960,000 ============ =========== ========== ============ =========== ===========
CANADA FRANCE GERMANY WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES -------------------------- ------------------------- -------------------------- For the For the For the For the For the For the year year year year year year ended ended ended ended ended ended 08/31/98 08/31/97 08/31/98 08/31/97 08/31/98 08/31/97 ------------ ----------- ----------- ------------ ----------- ------------ OPERATIONS: Net investment income/(loss) ................ $ 97,330 $ 86,380 $ 435,172 $ 154,485 $ 626,103 $ 41,384 ------------ ----------- ----------- ------------ ----------- ------------ Net realized gain/(loss) on investments and foreign currency related transactions . 4,111,037 629,622 312,674 571,535 39,489 727,681 Net change in unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ........................ (5,251,304) 3,938,920 3,937,546 1,283,516 2,623,288 2,325,587 ------------ ----------- ----------- ------------ ----------- ------------ Net increase/(decrease) in net assets resulting from operations ................. (1,042,937) 4,654,922 4,685,392 2,009,536 3,288,880 3,094,652 ------------ ----------- ----------- ------------ ----------- ------------ DISTRIBUTIONS: Net investment income ....................... (92,345) (86,380) (435,172) (154,485) (626,103) (41,384) In excess of net investment income .......... -- (4,605) (62,742) -- (12,798) (19,425) Net realized gains .......................... (468,666) (251,961) (312,674) (198,868) (39,489) (99,278) In excess of net realized gains ............. -- -- (13,549) -- (12,490) -- Return of capital ........................... -- -- (178,534) -- (290,393) (37,144) ------------ ----------- ----------- ------------ ----------- ------------ Net decrease in net assets from distributions ............................ (561,011) (342,946) (1,002,671) (353,353) (981,273) (197,231) ------------ ----------- ----------- ------------ ----------- ------------ CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares ........ -- 9,629,687 27,720,237 5,656,482 46,140,403 13,746,949 Cost of shares redeemed ..................... (15,632,312) (3,550,242) -- (15,723,875) -- (20,822,544) ------------ ----------- ----------- ------------ ----------- ------------ Net increase/(decrease) in net assets derived from capital share transactions ... (15,632,312) 6,079,445 27,720,237 (10,067,393) 46,140,403 (7,075,595) ------------ ----------- ----------- ------------ ----------- ------------ Total increase/(decrease) in net assets ..... (17,236,260) 10,391,421 31,402,958 (8,411,210) 48,448,010 (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 ............................... $ 6,931,560 $24,167,820 $45,921,682 $ 14,518,724 $72,933,875 $ 24,485,865 ============ =========== =========== ============ =========== ============ Capital Share Transactions: Shares sold ................................. -- 800,000 1,400,000 400,000 2,100,000 900,000 Shares redeemed ............................. (1,100,000) (300,000) -- (1,200,000) -- (1,500,000) ------------ ----------- ----------- ------------ ----------- ------------ Net increase/(decrease) in shares ........... (1,100,000) 500,000 1,400,000 (800,000) 2,100,000 (600,000) ============ =========== =========== ============ =========== ============
HONG KONG ITALY WEBS WEBS INDEX INDEX SERIES SERIES --------------------------- --------------------------- For the For the For the For the year year year year ended ended ended ended 08/31/98 08/31/97 08/31/98 08/31/97 ----------- ----------- ------------ ------------ OPERATIONS: Net investment income/(loss) ................ $ 1,733,479 $ 258,683 $ 455,253 $ 221,768 ----------- ----------- ------------ ------------ Net realized gain/(loss) on investments and foreign currency related transactions . (9,056,025) 821,392 9,664,471 (570,558) Net change in unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ........................ (25,681,723) (209,522) 11,937,409 5,911,350 ----------- ----------- ------------ ------------ Net increase/(decrease) in net assets resulting from operations ................. (33,004,269) 870,553 22,057,133 5,562,560 ----------- ----------- ------------ ------------ DISTRIBUTIONS: Net investment income ....................... (1,733,479) (258,683) (455,253) (221,768) In excess of net investment income .......... (12,675) (12,817) (2,610,741) (469,323) Net realized gains .......................... -- (581,360) (1,763,418) -- In excess of net realized gains ............. -- (3,851) -- -- Return of capital ........................... (983,923) (236,349) -- -- ----------- ----------- ------------ ------------ Net decrease in net assets from distributions ............................ (2,730,077) (1,093,060) (4,829,412) (691,091) ----------- ----------- ------------ ------------ CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares ........ 65,939,721 19,035,945 24,566,181 11,652,066 Cost of shares redeemed ..................... (5,649,119) (1,242,282) (15,920,335) (19,198,572) ----------- ----------- ------------ ------------ Net increase/(decrease) in net assets derived from capital share transactions ... 60,290,602 17,793,663 8,645,846 (7,546,506) ----------- ----------- ------------ ------------ Total increase/(decrease) in net assets ..... 24,556,256 17,571,156 25,873,567 (2,675,037) NET ASSETS: Beginning of period ......................... 25,416,614 7,845,458 32,494,672 35,169,709 ----------- ----------- ------------ ------------ End of period ............................... $49,972,870 $25,416,614 $ 58,368,239 $ 32,494,672 =========== =========== ============ ============ Capital Share Transactions: Shares sold ................................. 6,600,000 1,200,000 1,200,000 750,000 Shares redeemed ............................. (525,000) (75,000) (600,000) (1,350,000) ----------- ----------- ------------ ------------ Net increase/(decrease) in shares ........... 6,075,000 1,125,000 600,000 (600,000) =========== =========== ============ ============
See accompanying notes to financial statements. 48 & 49 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 For the For the For the year year year year year year ended ended ended ended ended ended 08/31/98 08/31/97 08/31/98 08/31/97 08/31/98 08/31/97 ------------ ------------ ----------- ----------- ----------- ----------- OPERATIONS: Net investment income/(loss) ............$ (343,352) $ (566,842) $ 691,076 $ 6,540 $ 85,136 $ 13,244 Net realized gain/(loss) on investments and foreign currency related transactions .................. (4,044,653) (3,695,529) (4,401,103) (17,452) 1,577,042 717,222 Net change in unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ............................ (68,401,659) (6,001,060) (44,926,346) (8,968,575) (7,542,851) 2,056,611 ------------ ------------ ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations ............. (72,789,664) (10,263,431) (48,636,373) (8,979,487) (5,880,673) 2,787,077 ------------ ------------ ----------- ----------- ----------- ----------- DISTRIBUTIONS: Net investment income. .................. -- -- (688,802) (6,540) (83,213) (13,244) In excess of net investment income ...... -- -- -- (7,611) -- (6,992) Net realized gains ...................... (8,383) -- -- -- (261,068) (480,039) In excess of net realized gains ......... -- (59,225) -- -- -- -- Return of capital ....................... (259,229) -- (450,458) (25,600) -- (50,400) ------------ ------------ ----------- ----------- ----------- ----------- Net decrease in net assets from distributions ......................... (267,612) (59,225) (1,139,260) (39,751) (344,281) (550,675) ------------ ------------ ----------- ----------- ----------- ----------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares ............................. 121,696,694 91,183,410 74,873,951 12,040,298 1,486,432 9,898,729 Cost of shares redeemed ................. (6,110,956) (25,067,882) (1,570,595) -- (4,592,150) (1,267,357) ------------ ------------ ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets derived from capital share transactions .......................... 115,585,738 66,115,528 73,303,356 12,040,298 (3,105,718) 8,631,372 ------------ ------------ ----------- ----------- ----------- ----------- Total increase/(decrease) in net assets ............................ 42,528,462 55,792,872 23,527,723 3,021,060 (9,330,672) 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 ...........................$201,485,278 $158,956,816 $35,866,703 $12,338,980 $ 7,295,836 $16,626,508 ============ ============ =========== =========== =========== =========== Capital Share Transactions: Shares sold ............................. 12,000,000 7,200,000 15,825,000 825,000 100,000 700,000 Shares redeemed ......................... (600,000) (1,800,000) (300,000) -- (300,000) (100,000) ------------ ------------ ----------- ----------- ----------- ----------- Net increase/(decrease) in shares ....... 11,400,000 5,400,000 15,525,000 825,000 (200,000) 600,000 ============ ============ =========== =========== =========== ===========
NETHERLANDS SINGAPORE (FREE) SPAIN WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ------------------------ ------------------------- ------------------------ For the For the For the For the For the For the year year year year year year ended ended ended ended ended ended 08/31/98 08/31/97 08/31/98 08/31/97 08/31/98 08/31/97 ----------- ---------- ----------- ----------- ----------- ---------- OPERATIONS: Net investment income/(loss) ............ $ 165,472 $ 44,855 $ 519,573 $ 3,681 $ 121,310 $ 54,300 Net realized gain/(loss) on investments and foreign currency related transactions .................. 1,632,091 303,600 (15,780,309) (90,177) 1,661,273 583,153 Net change in unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ............................ (840,046) 1,559,687 (25,054,420) (4,451,395) (84,559) 460,457 ----------- ---------- ----------- ----------- ----------- ---------- Net increase/(decrease) in net assets resulting from operations ............. 957,517 1,908,142 (40,315,156) (4,537,891) 1,698,024 1,097,910 ----------- ---------- ----------- ----------- ----------- ---------- DISTRIBUTIONS: Net investment income. .................. (154,868) (44,855) (519,573) (3,681) (121,310) (54,300) In excess of net investment income ...... -- (4,630) (92,309) (13,239) (12,880) (24,069) Net realized gains ...................... (1,331,940) (320,639) -- (37,220) (573,744) (379,744) In excess of net realized gains ......... -- -- -- -- -- -- Return of capital ....................... (68,776) (8,873) (211,720) (37,832) (67,213) (39,171) ----------- ---------- ----------- ----------- ----------- ---------- Net decrease in net assets from distributions ......................... (1,555,584) (378,997) (823,602) (91,972) (775,147) (497,284) ----------- ---------- ----------- ----------- ----------- ---------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares ............................. 14,394,424 1,170,170 76,731,080 11,351,615 17,901,806 4,683,798 Cost of shares redeemed ................. (1,108,188) -- (3,065,766) (1,107,208) (2,116,697) (1,190,432) ----------- ---------- ----------- ----------- ----------- ---------- Net increase/(decrease) in net assets derived from capital share transactions .......................... 13,286,236 1,170,170 73,665,314 10,244,407 15,785,109 3,493,366 ----------- ---------- ----------- ----------- ----------- ---------- Total increase/(decrease) in net assets ............................ 12,688,169 2,699,315 32,526,556 5,614,544 16,707,986 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 ........................... $22,349,303 $9,661,134 $47,248,118 $14,721,562 $25,029,354 $8,321,368 =========== ========== =========== =========== =========== ========== Capital Share Transactions: Shares sold ............................. 550,000 50,000 13,100,000 1,000,000 675,000 225,000 Shares redeemed ......................... (50,000) -- (500,000) (100,000) (75,000) (75,000) ----------- ---------- ----------- ----------- ----------- ---------- Net increase/(decrease) in shares ....... 500,000 50,000 12,600,000 900,000 600,000 150,000 =========== ========== =========== =========== =========== ==========
SWEDEN SWITZERLAND UNITED KINGDOM WEBS WEBS WEBS INDEX INDEX INDEX SERIES SERIES SERIES ------------------------ ------------------------- ------------------------- For the For the For the For the For the For the year year year year year year ended ended ended ended ended ended 08/31/98 08/31/97 08/31/98 08/31/97 08/31/98 08/31/97 ----------- ---------- ----------- ----------- ----------- ----------- OPERATIONS: Net investment income/(loss) ............ $ 64,048 $ (10,481) $ (6,909) $ (26,117) $ 963,424 $ 524,938 Net realized gain/(loss) on investments and foreign currency related transactions .................. 639,667 340,558 2,711,388 561,884 438,393 1,949,688 Net change in unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ............................ (858,611) 912,384 (117,545) 910,641 1,989,733 2,438,474 ----------- ---------- ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations ............. (154,896) 1,242,461 2,586,934 1,446,408 3,391,550 4,913,100 ----------- ---------- ----------- ----------- ----------- ----------- DISTRIBUTIONS: Net investment income. .................. (64,048) -- -- -- (963,424) (524,938) In excess of net investment income ...... (5,006) -- (13,567) -- (151,877) (102,415) Net realized gains ...................... (639,667) (345,698) (2,272,030) (568,979) (387,328) (304,957) In excess of net realized gains ......... (9,750) -- -- -- -- -- Return of capital ....................... (13,138) -- (53,400) (1,191) (228,725) (176,359) ----------- ---------- ----------- ----------- ----------- ----------- Net decrease in net assets from distributions ......................... (731,609) (345,698) (2,338,997) (570,170) (1,731,354) (1,108,669) ----------- ---------- ----------- ----------- ----------- ----------- CAPITAL STOCK TRANSACTIONS: Net proceeds from the sale of shares ............................. 6,434,414 2,946,675 17,011,012 8,262,901 31,463,983 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 .......................... 6,434,414 2,946,675 15,109,978 6,770,621 31,463,983 10,126,681 ----------- ---------- ----------- ----------- ----------- ----------- Total increase/(decrease) in net assets ............................ 5,547,909 3,843,438 15,357,915 7,646,859 33,124,179 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 ........................... $13,791,321 $8,243,412 $29,162,979 $13,805,064 $62,845,533 $29,721,354 =========== ========== =========== =========== =========== =========== Capital Share Transactions: Shares sold ............................. 300,000 150,000 1,000,000 625,000 1,600,000 1,200,000 Shares redeemed ......................... -- -- (125,000) (125,000) -- (600,000) ----------- ---------- ----------- ----------- ----------- ----------- Net increase/(decrease) in shares ....... 300,000 150,000 875,000 500,000 1,600,000 600,000 =========== ========== =========== =========== =========== ===========
See accompanying notes to financial statements. 50 & 51 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 For the For the For the For the year year period year year period ended ended 03/12/96*- ended ended 03/12/96*- 08/31/98 08/31/97 08/31/96 08/31/98 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)) ......... 0.23 0.17 0.10 0.06 (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 ......................... (2.60) 0.47 0.29 0.20 0.13 (0.41) ------- ------- ------ ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ................. (2.37) 0.64 0.39 0.26 0.11 (0.37) ------- ------- ------ ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ............ (0.23) (0.16) (0.08) (0.04) -- (0.02) Dividends in excess of net investment income .... 0.00** (0.04) (0.05) (0.01) -- (0.01) Distributions from net realized gains ........... -- (0.04) (0.02) (0.61) -- (0.03) Distributions in excess of net realized gains ... -- -- -- 0.00** -- -- Return of capital ............................... -- (0.20) (0.04) 0.00** -- (0.08) ------- ------- ------ ------- ------- ------- Total dividends and distributions ........... (0.23) (0.44) (0.19) (0.66) -- (0.14) ------- ------- ------ ------- ------- ------- Net asset value, end of period .................. $ 7.75 $ 10.35 $ 10.15 $ 10.11 $ 10.51 $ 10.40 ======= ======= ======= ======= ======= ======= TOTAL INVESTMENT RETURN (2) ....................... (23.11)% 6.23% 3.88%(4) 2.16% 1.06% (3.39)%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ............ $34,099 $41,406 $12,177 $ 8,085 $ 4,205 $13,520 Ratios of expenses to average net assets (5) .... 1.05% 1.33% 1.59%(3) 1.41% 1.68% 1.56%(3) Ratios of net investment income/(loss) to average net assets (5) ........................ 2.38% 1.57% 2.18%(3) 0.51% (0.22)% 0.87%(3) Portfolio turnover (6) .......................... 1.49% 5.30% 8.84%(4) 36.14% 28.47% 9.60%(4) * 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 CANADA WEBS WEBS INDEX INDEX SERIES SERIES ------------------------------------ ------------------------------------ For the For the For the For the For the For the year year period year year period ended ended 03/12/96*- ended ended 03/12/96*- 08/31/98 08/31/97 08/31/96 08/31/98 08/31/97 08/31/96 -------- -------- --------- -------- -------- --------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ............ $ 15.64 $ 14.99 $ 14.92(1) $ 13.43 $ 10.60 $ 10.17(1) ------- ------- ------- ------- ------- ------- Net investment income/(loss) ((DAGGER)) ......... 0.24 0.77 0.40 0.07 0.05 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 ......................... 6.09 0.62 0.36 (2.89) 2.97 0.43 ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ................. 6.33 1.39 0.76 (2.82) 3.02 0.47 ------- ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ............ (0.27) (0.33) (0.54) (0.13) (0.05) (0.03) Dividends in excess of net investment income .... (1.21) (0.28) (0.09) (0.00)** (0.00)** (0.01) Distributions from net realized gains ........... (1.99) (0.12) (0.06) (0.58) (0.14) -- Distributions in excess of net realized gains ... -- -- -- -- -- 0.00** Return of capital ............................... (0.10) (0.01) -- -- -- 0.00** ------- ------- ------- ------- ------- ------- Total dividends and distributions ........... (3.57) (0.74) (0.69) (0.71) (0.19) (0.04) ------- ------- ------- ------- ------- ------- Net asset value, end of period .................. $ 18.40 $ 15.64 $ 14.99 $ 9.90 $ 13.43 $ 10.60 ======= ======= ======= ======= ======= ======= TOTAL INVESTMENT RETURN (2) ....................... 39.42% 9.26% 5.01%(4) (21.69)% 28.50% 4.63%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ............ $25,765 $32,528 $ 1,800 $ 6,932 $24,168 $13,776 Ratios of expenses to average net assets (5) .... 1.04% 1.24% 2.29%(3) 1.14% 1.35% 1.44%(3) Ratios of net investment income/(loss) to average net assets (5) ........................ 1.28% 4.63% 5.67%(3) 0.46% 0.39% 0.79%(3) Portfolio turnover (6) .......................... 50.46% 16.83% 6.25%(4) 3.70% 11.02% 0.00%(4) * 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) -- 1.36% 1.45%(3) Ratios of net investment income/(loss) to average net assets before waivers ......... -- 4.63% 5.66%(3) -- 0.39% 0.78%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
FRANCE WEBS INDEX SERIES ------------------------------------ For the For the For the year year period ended ended 03/12/96*- 08/31/98 08/31/97 08/31/96 -------- -------- --------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ............ $ 14.50 $ 12.73 $ 12.42(1) ------- ------- ------- Net investment income/(loss) ((DAGGER)) ......... 0.30 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 ......................... 4.76 1.95 0.45 ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ................. 5.06 2.12 0.62 ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ............ (0.19) (0.15) (0.09) Dividends in excess of net investment income .... (0.03) -- (0.01) Distributions from net realized gains ........... (0.13) (0.20) 0.00** Distributions in excess of net realized gains ... (0.01) -- -- Return of capital ............................... (0.07) -- (0.21) ------- ------- ------- Total dividends and distributions ........... (0.43) (0.35) (0.31) ------- ------- ------- Net asset value, end of period .................. $ 19.13 $ 14.50 $ 12.73 ======= ======= ======= TOTAL INVESTMENT RETURN (2) ....................... 34.77% 16.60% 4.95%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ............ $45,922 $14,519 $22,930 Ratios of expenses to average net assets (5) .... 1.18% 1.52% 1.84%(3) Ratios of net investment income/(loss) to average net assets (5) ........................ 1.58% 1.17% 2.72%(3) Portfolio turnover (6) .......................... 5.65% 7.13% 0.00%(4) * 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 ............................ -- 1.52% 1.85%(3) Ratios of net investment income/(loss) to average net assets before waivers ......... -- 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. 52 & 53 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 For the For the For the For the year year period year year period ended ended 03/12/96*- ended ended 03/12/96*- 08/31/98 08/31/97 08/31/96 08/31/98 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)) ................... 0.29 0.03 0.06 0.35 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 ...................................... 3.92 2.77 0.47 (8.27) 2.12 0.27 ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ........................... 4.21 2.80 0.53 (7.92) 2.38 0.42 ------- ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ...................... (0.17) (0.03) (0.03) (0.28) (0.21) (0.13) Dividends in excess of net investment income .............. (0.01) (0.01) (0.01) 0.00** (0.01) (0.02) Distributions from net realized gains ..................... (0.01) (0.07) -- -- (0.34) (0.01) Distributions in excess of net realized gains ............. 0.00** -- (0.01) -- 0.00** -- Return of capital ......................................... (0.08) (0.02) (0.07) (0.12) (0.14) (0.04) ------- ------- ------- ------- ------- ------- Total dividends and distributions ..................... (0.27) (0.13) (0.12) (0.40) (0.70) (0.20) ------- ------- ------- ------- ------- ------- Net asset value, end of period ............................ $ 20.25 $ 16.31 $ 13.64 $ 6.41 $ 14.73 $ 13.05 ======= ======= ======= ======= ======= ======= TOTAL INVESTMENT RETURN (2) ................................. 25.69% 20.51% 4.00%(4) (54.22)% 17.80% 3.22%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ...................... $72,934 $24,486 $28,664 $49,973 $25,417 $ 7,845 Ratios of expenses to average net assets (5) .............. 1.08% 1.37% 1.68%(3) 1.09% 1.43% 1.52%(3) Ratios of net investment income/(loss) to average net assets (5) .......................................... 1.43% 0.23% 1.00%(3) 3.76% 1.71% 2.37%(3) Portfolio turnover (6) .................................... 0.64% 9.04% 0.00%(4) 21.50% 22.90% 0.00%(4) * 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 JAPAN WEBS WEBS INDEX INDEX SERIES SERIES ----------------------------- -------------------------------- For the For the For the For the For the For the year year period year year period ended ended 03/12/96*- ended ended 03/12/96*- 08/31/98 08/31/97 08/31/96 08/31/98 08/31/97 08/31/96 -------- -------- --------- -------- -------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ...................... $ 16.66 $ 13.79 $ 13.62(1) $ 12.61 $ 14.33 $ 14.79(1) ------- ------- ------- -------- -------- -------- Net investment income/(loss) ((DAGGER)) ................... 0.18 0.12 0.25 (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 ...................................... 7.94 3.10 0.31 (4.19) (1.65) (0.39) ------- ------- ------- -------- -------- -------- Net increase/(decrease) in net assets resulting from operations ........................... 8.12 3.22 0.56 (4.21) (1.71) (0.46) ------- ------- ------- -------- -------- -------- LESS DISTRIBUTIONS Dividends from net investment income ...................... (0.18) (0.11) (0.14) -- -- -- Dividends in excess of net investment income .............. (1.02) (0.24) (0.03) -- -- -- Distributions from net realized gains ..................... (0.69) -- (0.14) 0.00** -- -- Distributions in excess of net realized gains ............. -- -- -- -- (0.01) -- Return of capital ......................................... -- -- (0.08) (0.01) -- -- ------- ------- ------- -------- -------- -------- Total dividends and distributions ..................... (1.89) (0.35) (0.39) (0.01) (0.01) -- ------- ------- ------- -------- -------- -------- Net asset value, end of period ............................ $ 22.89 $ 16.66 $ 13.79 $ 8.39 $ 12.61 $ 14.33 ======= ======= ======= ======== ======== ======== TOTAL INVESTMENT RETURN (2) ................................. 47.66% 23.37% 4.11%(4) (33.38)% (11.97)% (3.11)%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ...................... $58,368 $32,495 $35,170 $201,485 $158,957 $103,164 Ratios of expenses to average net assets (5) .............. 1.02% 1.33% 1.43%(3) 1.04% 1.19% 1.37%(3) Ratios of net investment income/(loss) to average net assets (5) .......................................... 0.76% 0.76% 3.69%(3) (0.21)% (0.48)% (1.01)%(3) Portfolio turnover (6) .................................... 8.16% 13.70% 19.80%(4) 0.00% 12.90% 21.54%(4) * 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) -- 1.19% 1.38%(3) Ratios of net investment income/(loss) to average net assets before waivers ........................... -- 0.76% 3.68%(3) -- (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 For the For the year year period ended ended 03/12/96*- 08/31/98 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)) ................... 0.06 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 ...................................... (6.10) (5.55) 0.59 ------- ------- ------ Net increase/(decrease) in net assets resulting from operations ........................... (6.04) (5.54) 0.57 ------- ------- ------ LESS DISTRIBUTIONS Dividends from net investment income ...................... (0.05) 0.00** -- Dividends in excess of net investment income .............. -- (0.01) -- Distributions from net realized gains ..................... -- -- -- Distributions in excess of net realized gains ............. -- -- -- Return of capital ......................................... (0.03) (0.02) (0.01) ------- ------- ------ Total dividends and distributions ..................... (0.08) (0.03) (0.01) ------- ------- ------ Net asset value, end of period ............................ $ 2.11 $ 8.23 $13.80 ======= ======= ====== TOTAL INVESTMENT RETURN (2) ................................. (73.57)% (40.20)% 4.28%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ...................... $35,867 $12,339 $9,318 Ratios of expenses to average net assets (5) .............. 1.09% 1.46% 1.58%(3) Ratios of net investment income/(loss) to average net assets (5) .......................................... 1.40% 0.04% (0.35)%(3) Portfolio turnover (6) .................................... 2.11% 0.00% 0.00%(4) * 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. 54 & 55 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 For the For the For the For the year year period year year period ended ended 03/12/96*- ended ended 03/12/96*- 08/31/98 08/31/97 08/31/96 08/31/98 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)) .................. 0.09 0.02 0.00** 0.25 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 ............................................. (6.71) 4.07 1.59 3.53 4.79 1.54 ------- ------- ------ ------- ------- ------- Net increase/(decrease) in net assets resulting from operations .......................... (6.62) 4.09 1.59 3.78 4.90 1.78 ------- ------- ------ ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ..................... (0.09) (0.01) -- (0.16) (0.10) (0.14) Dividends in excess of net investment income ............. -- (0.01) (0.01) -- (0.01) (0.01) Distributions from net realized gains .................... (0.29) (0.44) -- (1.47) (0.71) (0.08) Distributions in excess of net realized gains ............ -- -- -- -- -- (0.01) Return of capital ........................................ -- (0.04) (0.01) (0.07) (0.02) (0.09) ------- ------- ------ ------- ------- ------- Total dividends and distributions .................... (0.38) (0.50) (0.02) (1.70) (0.84) (0.33) ------- ------- ------ ------- ------- ------- Net asset value, end of period ........................... $ 8.11 $ 15.11 $11.52 $ 23.50 $ 21.42 $ 17.36 ======= ======= ====== ======= ======= ======= TOTAL INVESTMENT RETURN (2) ................................ (44.18)% 35.21% 15.93%(4) 17.41% 28.04% 11.19%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ..................... $ 7,296 $16,627 $5,759 $22,349 $ 9,661 $ 6,962 Ratios of expenses to average net assets (5) ............. 1.34% 1.63% 1.75%(3) 1.12% 1.46% 1.63%(3) Ratios of net investment income/(loss) to average net assets (5) ................................. 0.60% 0.14% 0.01%(3) 1.00% 0.54% 2.93%(3) Portfolio turnover (6) ................................... 14.05% 22.80% 0.00%(4) 15.81% 12.68% 4.32%(4) * 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% Ratios of net investment income/(loss) to average net assets before waivers .......................... -- 0.13% 0.00%(3) -- 0.53% 2.92% (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 For the For the For the For the year year period year year period ended ended 03/12/96*- ended ended 03/12/96*- 08/31/98 08/31/97 08/31/96 08/31/98 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)) .................. 0.07 0.00** 0.04 0.16 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 ............................................. (5.37) (2.67) (0.86) 5.94 5.33 0.98 ------ ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations .......................... (5.30) (2.67) (0.82) 6.10 5.52 1.12 ------ ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ..................... (0.04) 0.00** (0.03) (0.12) (0.12) (0.18) Dividends in excess of net investment income ............. (0.01) (0.01) (0.01) (0.02) (0.05) -- Distributions from net realized gains .................... -- (0.02) -- (0.55) (0.86) (0.13) Distributions in excess of net realized gains ............ -- -- -- -- -- -- Return of capital ........................................ (0.01) (0.02) -- (0.06) (0.09) -- ------ ------- ------- ------- ------- ------- Total dividends and distributions .................... (0.06) (0.05) (0.04) (0.75) (1.12) (0.31) ------ ------- ------- ------- ------- ------- Net asset value, end of period ........................... $ 3.30 $ 8.66 $ 11.38 $ 23.84 $ 18.49 $ 14.09 ====== ======= ======= ======= ======= ======= TOTAL INVESTMENT RETURN (2) ................................ (61.29)% (23.48)% (6.73)%(4) 32.58% 39.15% 8.45%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ..................... $47,248 $14,722 $ 9,107 $25,029 $ 8,321 $ 4,227 Ratios of expenses to average net assets (5) ............. 1.08% 1.43% 1.56%(3) 1.11% 1.67% 1.76%(3) Ratios of net investment income/(loss) to average net assets (5) ................................. 1.17% 0.03% 0.69%(3) 0.61% 1.04% 2.04%(3) Portfolio turnover (6) ................................... 67.17% 13.40% 26.29%(4) 9.10% 19.21% 4.73%(4) * 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 For the For the year year period ended ended 03/12/96*- 08/31/98 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)) .................. 0.10 (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 ............................................. 0.95 4.45 1.67 ------- ------- ------- Net increase/(decrease) in net assets resulting from operations .......................... 1.05 4.42 1.87 ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income ..................... (0.08) -- (0.23) Dividends in excess of net investment income ............. (0.01) -- (0.07) Distributions from net realized gains .................... (0.86) (0.77) (0.12) Distributions in excess of net realized gains ............ (0.01) -- -- Return of capital ........................................ (0.02) -- -- ------- ------- ------- Total dividends and distributions .................... (0.98) (0.77) (0.42) ------- ------- ------- Net asset value, end of period ........................... $ 18.39 $ 18.32 $ 14.67 ======= ======= ======= TOTAL INVESTMENT RETURN (2) ................................ 5.48% 30.10% 14.13%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) ..................... $13,791 $ 8,243 $ 4,400 Ratios of expenses to average net assets (5) ............. 1.17% 1.64% 1.75%(3) Ratios of net investment income/(loss) to average net assets (5) ................................. 0.48% (0.19)% 3.05%(3) Portfolio turnover (6) ................................... 10.88% 13.71% 5.87%(4) * 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. 56 & 57 FINANCIAL HIGHLIGHTS (concluded) ================================================================================ (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
SWITZERLAND UNITED KINGDOM WEBS WEBS INDEX INDEX SERIES SERIES ------------------------------- ---------------------------------- For the For the For the For the For the For the year year period year year period ended ended 03/12/96*- ended ended 03/12/96*- 08/31/98 08/31/97 08/31/96 08/31/98 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)) ................. (0.00)** (0.04) 0.08 0.37 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 .................................... 3.01 2.11 0.24 2.12 3.62 1.06 ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ......................... 3.01 2.07 0.32 2.49 4.00 1.27 ------- ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income .................... -- -- (0.10) (0.29) (0.32) (0.20) Dividends in excess of net investment income ............ (0.01) -- -- (0.04) (0.06) (0.03) Distributions from net realized gains ................... (1.21) (0.57) -- (0.11) (0.17) 0.00** Distributions in excess of net realized gains -- -- -- -- -- -- Return of capital ....................................... (0.03) 0.00** -- (0.07) (0.10) (0.03) ------- ------- ------- ------- ------- ------- Total dividends and distributions ................... (1.25) (0.57) (0.10) (0.51) (0.65) (0.26) ------- ------- ------- ------- ------- ------- Net asset value, end of period .......................... $ 15.55 $ 13.79 $ 12.29 $ 18.48 $ 16.50 $ 13.15 ======= ======= ======= ======= ======= ======= TOTAL INVESTMENT RETURN (2) ............................... 21.24% 16.69% 2.60%(4) 14.98% 30.48% 10.41%(4) RATIOS/ SUPPLEMENTAL DATA Net assets, end of period (in 000's) .................... $29,163 $13,805 $ 6,158 $62,846 $29,721 $15,790 Ratios of expenses to average net assets (5) ............ 1.15% 1.52% 1.82%(3) 1.03% 1.38% 1.61%(3) Ratios of net investment income/(loss) to average net assets (5) ................................ (0.03)% (0.29)% 1.39%(3) 1.90% 2.47% 3.62%(3) Portfolio turnover (6) .................................. 43.09% 48.05% 17.06%(4) 2.83% 1.84% 0.00%(4) * 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. 58 NOTES TO FINANCIAL STATEMENTS 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. 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. 59 NOTES TO FINANCIAL STATEMENTS (continued) ================================================================================ 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, 1997 will be treated for tax purposes as arising on September 1, 1998. 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 $103,316 $ 197,727 Austria WEBS Index Series $ 5,323 $ -- Belgium WEBS Index Series $ 18,568 $ -- Canada WEBS Index Series $ 3,884 $ -- France WEBS Index Series $ 9,731 $ -- Germany WEBS Index Series $ 9,486 $ -- Hong Kong WEBS Index Series $ 180 $3,919,056 Italy WEBS Index Series $ 8,912 $ -- Japan WEBS Index Series $132,921 $ 584,399 Malaysia (Free) WEBS Index Series $102,105 $ 872,070 Mexico (Free) WEBS Index Series $ 7,149 $ -- Netherlands WEBS Index Series $ 2,936 $ -- Singapore (Free) WEBS Index Series $ 77,834 $9,133,649 Spain WEBS Index Series $ 2,589 $ -- Sweden WEBS Index Series $ 7,790 $ -- Switzerland WEBS Index Series $ 12,227 $ -- United Kingdom WEBS Index Series $ 877 $ -- In addition, each of the following WEBS Index Series has a capital loss carryover which will expire in 2006: Japan WEBS Index Series $174,602 Malaysia (Free)WEBS Index Series 13,817 Singapore (Free) WEBS Index Series 46,119 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. 60 WEBS INDEX FUND, INC. ================================================================================ Foreign currency and assets and liabilities denominated in foreign currency are generally 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). However, the Fund may use a different exchange rate from the rate used by MSCI in the event that the Adviser concludes that such rate is more appropriate. 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, 1998, 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. 61 NOTES TO FINANCIAL STATEMENTS (continued) ================================================================================ Prior to October 29, 1997, PFPC was paid aggregate fees 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. Effective October 1, 1998 the Sub-Administration Agreement was assigned to Morgan Stanley &Co. Incorporated. 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 average daily 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. MSTC serves as custodian as well as the Securities Lending Agent to each of the WEBS Index Series. Prior to April 1, 1998, for its custody services to each WEBS Index Series, MSTC was 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. On May 7, 1998, a definitive agreement between Morgan Stanley Dean Witter & Co. and The Chase Manhattan Bank ("Chase Manhattan") was announced, pursuant to which Chase Manhattan acquired the global custody business of Morgan Stanley Trust Company on October 1, 1998. 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. 62 WEBS INDEX FUND, INC. ================================================================================ FOREIGN CURRENCY At August 31, 1998, each WEBS Index Series' cash balance included the following amount of foreign currency: VALUE COST ---------- ----------- Australia WEBS Index Series $ 314,543 $ 326,388 Austria WEBS Index Series $ 109 $ 108 Belgium WEBS Index Series $ -- $ -- Canada WEBS Index Series $ 1,349 $ 1,375 France WEBS Index Series $ $ 553 $ $ 553 Germany WEBS Index Series $ 436 $ 430 Hong Kong WEBS Index Series $ 961 $ 961 Italy WEBS Index Series $ 338 $ 335 Japan WEBS Index Series $ 409,762 $ 408,613 Malaysia (Free) WEBS Index Series $ 47,554 $ 47,331 Mexico (Free) WEBS Index Series $ 52 $ 55 Netherlands WEBS Index Series $ 19,721 $ 19,345 Singapore (Free) WEBS Index Series $1,310,946 $1,317,932 Spain WEBS Index Series $ 1,848 $ 1,806 Sweden WEBS Index Series $ 89,123 $ 86,709 Switzerland WEBS Index Series $ 528 $ 508 United Kingdom WEBS Index Series $ 28,417 $ 27,879 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 receive cash collateral and may invest such collateral in short-term investments, and bear 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 August 31, 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 $ 2,511,355 $ 2,929,366 Austria WEBS Index Series $ 824,021 $ 895,577 Belgium WEBS Index Series $ 4,196,760 $ 4,357,385 Canada WEBS Index Series $ 742,615 $ 813,890 France WEBS Index Series $ 42,218 $ 44,531 Germany WEBS Index Series $ 7,435,184 $ 7,834,252 Hong Kong WEBS Index Series $19,399,059 $23,011,726 Italy WEBS Index Series $11,079,246 $11,912,029 Japan WEBS Index Series $36,084,273 $40,291,615 Malaysia (Free) WEBS Index Series $ 8,835,969 $10,934,021 Mexico (Free) WEBS Index Series $ 1,142,258 $ 1,326,425 Netherlands WEBS Index Series $ 8,882,474 $ 9,227,003 Singapore (Free) WEBS Index Series $16,186,284 $17,806,456 Spain WEBS Index Series $ 2,662,082 $ 4,279,600 Sweden WEBS Index Series $ 284,160 $ 292,500 Switzerland WEBS Index Series $ 402,848 $ 432,582 United Kingdom WEBS Index Series $ -- $ -- 63 NOTES TO FINANCIAL STATEMENTS (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 $20,000,000 line of credit; provided, however, that: (i) Total outstanding advances to all WEBS Index Series under the line of credit may not exceed $20,000,000 and (ii) The aggregate amount outstanding under the line of credit to any one WEBS Index Series may not exceed the lowest of (a) $20,000,000 (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%. The interest rate at August 31, 1998 is 6.88%. The maximum amount of advances outstanding during the year ended August 31, 1998 was as follows: WEBS INDEX SERIES ADVANCES ----------------- ---------- Australia Webs Index Series $ 80,000 Austria Webs Index Series $ 290,000 Belgium Webs Index Series $4,020,000 Canada Webs Index Series $ 395,000 France Webs Index Series $ 315,000 Germany Webs Index Series $ 680,000 Hong Kong Webs Index Series $1,500,000 Italy Webs Index Series $4,575,000 Mexico (Free) Webs Index Series $ 305,000 Netherlands Webs Index Series $1,330,000 Spain Webs Index Series $ 655,000 Sweden Webs Index Series $ 565,000 Switzerland Webs Index Series $1,070,000 United Kingdom Webs Index Series $ 770,000 Average borrowings under the line of credit did not exceed 10% of net assets of any WEBS Index Series during the year ended August 31, 1998. 64 WEB INDEX FUND, INC. ================================================================================ 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 year ended August 31, 1998: PURCHASES OF SALES OF WEBS INDEX SERIES SECURITIES SECURITIES ----------------- ------------ ------------ Australia WEBS Index Series $ 619,077 $ 1,107,090 Austria WEBS Index Series $ 2,308,139 $ 2,384,996 Belgium WEBS Index Series $14,864,692 $17,792,136 Canada WEBS Index Series $ 739,396 $ 1,152,359 France WEBS Index Series $ 1,814,416 $ 1,534,485 Germany WEBS Index Series $ 1,274,922 $ 272,698 Hong Kong WEBS Index Series $10,667,957 $ 9,703,063 Italy WEBS Index Series $ 4,898,322 $ 4,692,866 Japan WEBS Index Series $ -- $ 128,724 Malaysia (Free) WEBS Index Series $ 1,686,216 $ 996,949 Mexico (Free) WEBS Index Series $ 1,935,826 $ 2,030,910 Netherlands WEBS Index Series $ 2,591,194 $ 2,799,861 Singapore (Free) WEBS Index Series $28,778,176 $29,230,109 Spain WEBS Index Series $ 1,776,604 $ 1,748,050 Sweden WEBS Index Series $ 1,410,980 $ 1,719,483 Switzerland WEBS Index Series $10,105,923 $11,403,446 United Kingdom WEBS Index Series $ 1,926,683 $ 1,386,877 FOREIGN INCOME TAXES For the year ended August 31, 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 $ 22,646 Austria Webs Index Series $ 17,256 Belgium Webs Index Series $119,036 Canada Webs Index Series $ 58,555 France Webs Index Series $120,000 Germany Webs Index Series $107,472 Hong Kong Webs Index Series $ -- Italy Webs Index Series $172,773 Japan Webs Index Series $207,126 Malaysia (Free) Webs Index Series $ 12,393 Mexico (Free) Webs Index Series $ -- Netherlands Webs Index Series $ 61,048 Singapore (Free) Webs Index Series $ -- Spain Webs Index Series $ 58,715 Sweden Webs Index Series $ 37,565 Switzerland Webs Index Series $ 43,992 United Kingdom Webs Index Series $288,945 65 NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ 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. Prior to October 16, 1998 each WEBS Index Series had 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 would maintain at least 25% of the value of its assets in securities of issuers in each industry for which its benchmark index had a concentration of more than 25% (except where the concentration of the index was the result of a single stock). See "Results of Special Shareholder Meeting" for a description of recent changes to the Fund's concentration policy. 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. SUBSEQUENT EVENTS Bank Negara Malaysia, the central bank of Malaysia, announced measures on September 1, 1998 that significantly restrict the rights of non-residents (such as the Fund) with respect to transactions in Malaysian securities. The "Measures to Regain Monetary Independence" are intended to insulate Malaysia from the problems confronting the international financial markets and the current escalation of regional contagion effects. The measures affect a number of areas in addition to trading in securities, including dealings in foreign currency, general payments, exports of goods, credit facilities and investments abroad. Important details of the capital controls and of their implementation are not yet available. However, (BULLET) Ringgit-denominated securities must be deposited with authorized depositories and any transactions in ringgit-denominated securities held by non-residents must be transacted through an authorized depository for good delivery; (BULLET) All payments by non-residents for any security registered in Malaysia must be made (a) in a foreign currency or (b) in ringgit from an "external account"; (BULLET) All proceeds in ringgit received by a non-resident from the sale of any security registered in Malaysia must be retained in an external account, unless the security was held for more than one year (in which case proceeds from the sale of the security either can be immediately converted to a foreign currency or credited to the external account); and (BULLET) The use of funds in an external account is limited to the purchase of ringgit assets in Malaysia. On September 3, 1998 the Malaysia (Free) WEBS Index Series announced that it is unable to exchange Creation Units of WEBSprincipally on an in-kind basis. In such circumstances, the Fund temporarily suspended new creations of Creation Units ofWEBS of its Malaysia Series. In light of the Malaysian capital restrictions, the Fund is concerned about its ability to honor redemptions of Creation Units ofWEBS of the Malaysia Series.To the extent the Fund is presented with requests for the redemption of Creation Units of Malaysia Series WEBS, the Fund will seek to honor such requests consistent with the Malaysian capital restrictions. Based on the information available to date, theFund believes that (i) it cannot currently make in-kind redemptions of Malaysia (Free) WEBS Index Series and (ii) it may only be able to honor redemption requests through the delivery of Malaysian ringgits in Malaysia, subject to receipt of Malaysian Central Bank approval on a case by case basis. The Fund understands that a non-Malaysian investor cannot freely exchange holdings of Malaysian ringgits for other currencies at this time and cannot freely transfer ringgits outside or inside Malaysia. There can be no assurance that the Malaysian Central Bank would issue such approval and, if an approval is not received, the Fund would not be able to 66 WEBS INDEX FUND, INC. ================================================================================ effect the redemption. In the circumstances, the Fund suggests that requests for the redemption of Creation Units of Malaysia (Free) WEBS Index Series should not be made and urges investors contemplating such redemptions to consult with Malaysian counsel. As a result of the suspension of creations of Malaysia (Free) WEBS Index Series and the Fund's belief that it cannot make in kind redemptions in Malaysia Series WEBS, the Fund believes that WEBS of the Malaysia (Free) WEBS Index Series are likely to trade at larger discounts or premiums to their net asset value than in the past and that such discounts or premiums may be material.Although WEBS of the Malaysia (Free) WEBS Index Series are expected to continue trading on the American Stock Exchange, there can be no assurance that an active trading market will be maintained for Malaysia (Free) WEBS Index Series. On October 20, 1998 the Fund's Board of Directors declared a dividend of $.1763 per share of the Malaysia Series payable on November 13, 1998 to shareholders of record on November 10, 1998. The dividend will be a return of capital, assuming all other current year and accumulated earnings and profits will be distributed for Federal income tax purposes. The dividend will be paid from cash that the Malaysia Series obtained when settling outstanding loans of its portfolio securities following the imposition of the Malaysian capital controls. The "official" exchange rate of 3.8 ringgits per U.S. dollar was fixed by Malaysian regulatory authorities on September 2, 1998 in connection with the capital controls imposed by the Malaysian government. The Malaysia (Free) WEBS Index Series converted ringgits to U.S.dollars in computing its net asset value as follows: September 2 through September 4, 1998, 3.8; September 8 to October 1, 1998, 4.0; October 1 to October 7 at 4.47. Effective October 7, 1998 the Malaysia (Free) WEBS Index Series converted ringgits to U.S. dollars at an exchange rate of 5.07%. These rates were determined in good faith in accordance with procedures established by the Board of Directors. The Malaysia (Free) WEBS Index Series may use different exchange rates for computing its net asset value in the future. RESULTS OF SPECIAL SHAREHOLDERS MEETING (UNAUDITED) A special meeting of the shareholders of WEBS Index Fund, Inc. was held on October 16, 1998. At the meeting the shareholders voted to approve a change in each of the WEBS Index Series' concentration policy. Each WEBS Index Series has adopted the following policy with respect to industry concentration: With respect to the two most heavily weighted industries or groups of industries in the benchmark index of the WEBS Index Series, the WEBS Index Series will invest in portfolio securities (consistent with its investment objective and other investment policies) such that the weighting of each such industry or group of industries in the WEBS Index Series does not diverge by more than 10 percentage points from the respective weightings of such industry or group of industries in the benchmark index. An exception to the general policy stated in the previous sentence is that if investment in the stock of a single issuer would account for more than 25% of the WEBS Index Series, the WEBS Index Series will invest less than 25% of its net assets in such stock and will reallocate the excess to stock(s) in the same industry or group of industries, and/or to stock(s) in another industry or group of industries, in the benchmark index. The following table provides information concerning the matter voted on at the meeting: I. Approval of a change in each Series' concentration policy.
WEBS INDEX SERIES VOTES FOR VOTES AGAINST VOTES ABSTAINED -------------------- ----------- ------------- --------------- Australia WEBS Index Series 4,012,435 8,300 3,209 Austria WEBS Index Series 640,352 -- 1,850 Belgium WEBS Index Series 1,026,259 375 962 Canada WEBS Index Series 527,303 800 2,184 France WEBS Index Series 1,719,089 40,700 2,966 Germany WEBS Index Series 2,724,761 985 2,405 Hong Kong WEBS Index Series 7,572,614 44,100 33,440 Italy WEBS Index Series 1,631,433 94,053 2,490 Japan WEBS Index Series 16,383,925 166,478 70,784 Malaysia (Free) WEBS Index Series 15,087,863 50,180 62,710 Mexico (Free) WEBS Index Series 731,858 3,465 1,695 Netherlands WEBS Index Series 595,978 200 860 Singapore (Free) WEBS Index Series 13,080,283 46,650 95,453 Spain WEBS Index Series 641,098 175 1,097 Sweden WEBS Index Series 379,511 100 1,165 Switzerland WEBS Index Series 1,140,380 4,600 4,270 United Kingdom WEBS Index Series 2,502,687 780 1,405
67 NOTES TO FINANCIAL STATEMENTS (CONTINUED) ================================================================================ FEDERAL TAXATION NOTICE (UNAUDITED) The WEBS Index Series paid the following foreign taxes during the year ended August 31, 1998 which they intend to pass through to their shareholders pursuant to Section 853 of the Internal Revenue Code. In addition, each of the WEBS Index Series earned the following foreign source income and is designating the following distributions as long-term capital gain distributions:
FOREIGN SOURCE LONG-TERM WEBS INDEX SERIES INCOME FOREIGN TAXES CAPITAL GAINS DISTRIBUTIONS ----------------- -------------- ------------- --------------------------- Australia WEBS Index Series $1,486,026 $ 22,646 $ -- Austria WEBS Index Series $ 138,174 $ 17,256 $ 400,293 Belgium WEBS Index Series $2,433,396 $119,036 $1,338,984 Canada WEBS Index Series $ 391,440 $ 58,555 $ 468,666 France WEBS Index Series $ 920,414 $120,000 $ 295,491 Germany WEBS Index Series $1,109,675 $107,472 $ 7,697 Hong Kong WEBS Index Series $2,189,508 $ -- $ -- Italy WEBS Index Series $4,050,820 $172,773 $1,363,513 Japan WEBS Index Series $1,407,049 $207,126 $ 8,383 Malaysia WEBS Index Series $1,095,649 $ 12,393 $ -- Mexico (Free) WEBS Index Series $ 248,605 $ -- $ 261,068 Netherlands WEBS Index Series $ 407,524 $ 61,048 $1,330,882 Singapore (Free) WEBS Index Series $1,031,167 $ -- $ -- Spain WEBS Index Series $ 393,337 $ 58,715 $ 573,744 Sweden WEBS Index Series $ 251,161 $ 37,565 $ 642,156 Switzerland WEBS Index Series $ 298,556 $ 43,992 $1,746,318 United Kingdom WEBS Index Series $1,861,972 $288,945 $ 331,706
Shareholders will receive more detailed information along with Form 1099-DIV in January 1999. 68 REPORT OF INDEPENDENT AUDITORS ================================================================================ Shareholders and Board of Directors WEBS Index Fund, Inc. We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of WEBS Index Fund, Inc. (comprised of the Australia WEBS Index Series, the Austria WEBS Index Series, the Belgium WEBS Index Series, the Canada WEBS Index Series, the France WEBS Index Series, the Germany WEBS Index Series, the Hong Kong WEBS Index Series, the Italy WEBS Index Series, the Japan WEBS Index Series, the Malaysia (Free) WEBS Index Series, the Mexico (Free) WEBS Index Series, the Netherlands WEBS Index Series, the Singapore (Free) WEBS Index Series, the Spain WEBS Index Series, the Sweden WEBS Index Series, the Switzerland WEBS Index Series, and the United Kingdom WEBS Index Series) (collectively, the "Fund") as of August 31, 1998, and the related statements of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the years indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of August 31, 1998 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the WEBS Index Series comprising WEBS Index Fund, Inc. at August 31, 1998, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated years, in conformity with generally accepted accounting principles. New York, New York October 23, 1998 69 (THIS PAGE INTENTIONALLY LEFT BLANK.) (THIS PAGE INTENTIONALLY LEFT BLANK.) [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 AND SECURITIES LENDING AGENT MORGAN STANLEY TRUST COMPANY 400 BELLEVUE PARKWAY WILMINGTON, DE 19809 -----END PRIVACY-ENHANCED MESSAGE-----