-----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, JESXgXmbQsxBC/Cx+ZrXLjLtb5YE+pF3WKm26vKMhDtkFrqPi/2u/jwjrzJwQEZX OMbT1eF7LXBl94r9pdsZPQ== 0000950115-99-000675.txt : 19990506 0000950115-99-000675.hdr.sgml : 19990506 ACCESSION NUMBER: 0000950115-99-000675 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990228 FILED AS OF DATE: 19990505 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: 99610797 BUSINESS ADDRESS: STREET 1: 400 BELLEVUE PARKWAY CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 800-810-9327 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 SEMI-ANNUAL REPORT World Equity Benchmark Shares [LOGO] FEBRUARY 28, [LOGO] 1 9 9 9 SEMI-ANNUAL REPORT WEBS INDEX FUND, INC. WEBS INDEX FUND, INC. INVESTMENT ADVISER BARCLAYS GLOBAL FUND ADVISORS ADMINISTRATOR PFPC INC. DISTRIBUTOR FUNDS DISTRIBUTOR INC. TRANSFER AGENT PFPC INC. CUSTODIAN AND SECURITIES LENDING AGENT THE CHASE MANHATTAN BANK WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Dear Shareholder: We are pleased to present the semi-annual report for WEBS Index Fund, Inc. covering the six month period September 1, 1998 through February 28, 1999. 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 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 February 28, 1999 net assets of the seventeen WEBS Index Series have grown to $1.038 billion, representing a 39% increase since August 31, 1998 and a 44% increase from one 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. The total number of shares outstanding for all seventeen WEBS Index Series has increased by 13.5% in the six month period ended February 28, 1999 (from 87.9 million to 99.8 million). For the one year period ended February 28, 1999, the number of shares outstanding has increased by 55% (64.2 million shares vs. 99.8 million shares). The significant growth in assets and shares outstanding is confirmation that WEBS have become an international investment vehicle of choice for many investors. INTERNATIONAL PERFORMANCE Many Asian markets suffered declines during early 1998. However, since August 1998, some of these Asian markets have experienced an upward trend. The performance of the Asian WEBS Index Series in the six month period ended February 28, 1999 reflected the increases in their respective markets. European markets experienced less robust appreciation during the six month period, and some declined, as the impact of the Asian recession and Russia's problems were realized. On the other hand, the Canadian and Mexican markets appreciated significantly over the six month period. There were a number of WEBS Index Series that produced positive total NAV returns, in U.S. dollar terms, for the six month period ended February 28, 1999. Some examples: Six Months Ended WEBS Index Series February 28, 1999 ----------------- ----------------- Singapore (Free) 77.8% Malaysia (Free) 47.3% Hong Kong 37.1% Australia 25.0% France 9.2% Germany 2.3% Only the Austria WEBS Index Series had a negative return (5.7%) for the six month period. While past performance is not an indication of future performance, one can see that the six month period was rewarding for many investors. SPECIAL NOTE WITH RESPECT TO MALAYSIA As you may know, on September 1, 1998, the Malaysian government imposed capital restrictions that prompted the Malaysia Series to suspend sales, and to discourage redemptions, of Creation Units. Since the imposition of these capital restrictions, the Fund has applied for, and received, regulatory relief from Bank Negara Malaysia, the Malaysian Central Bank. As a result of this relief, the Fund will honor requests, in proper form, for the redemption of Creation Units of the Malaysia Series only through the delivery of Malaysian ringgits to a redeeming investor's account at a duly licensed Malaysian financial institution. However, the Fund is continuing to suspend sales of Creation Units of the Malaysia Series until further notice. To review details of a Supplement to the Prospectus, dated February 17, 1999, as well as a number of press releases on this topic, 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 Barclays Global Fund Advisors is the Investment Advisor for WEBS Index Fund, Inc. 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. Key market conditions 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 in October 1997 continued to exert a negative presence in global economies throughout 1998 and into 1999. Additionally, severe economic problems in Russia in July and August of 1998 precipitated considerable volatility in global markets. The Brazilian currency devaluation followed in January, adding further worry about the state of a number of emerging market economies and the implications for global growth. And finally, fears over inflation and interest rates in the U.S. took center stage in February and fueled bearish sentiment throughout global markets. At the same time, a number of positive factors such as declining interest rates in Europe, overall stabilization in emerging market economies, and continued confidence in the U.S. had a positive influence on securities markets, with the result that many achieved healthy gains over the course of the six-month period ending February 28, 1999. Performance factors When examining the performance numbers of each WEBS Index Series, remember that expenses are incurred by the WEBS Index Series, and that such expenses impact performance. This is in contrast to the corresponding MSCI Indices that do not bear any expenses. 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, revenue differential and the impact of uninvested assets. Portfolio sampling is a highly disciplined approach to creating a portfolio. Its goal is to capture index returns through investment in a subset of the stocks in an index. The portfolios are designed to reflect the market's size and industry profiles accurately. No attempt is made to actively manage the WEBS Index Series using economic or market analysis or to hedge foreign exchange risk. Because of portfolio sampling, the composition of each WEBS Index Series varies from that of its benchmark index. This will normally cause a WEBS Index Series' performance to vary positively or negatively from that of its benchmark during any period. A number of regulatory constraints adversely impact the Investment Advisor's ability to create optimal portfolios of certain WEBS Index Series through the use of portfolio sampling. As a result, portfolio returns can vary significantly from what they would have been but for the constraints. The principal regulatory constraints that affect Fund performance are tax-related, and are referred to as the Single Issuer Rule and the 5/50 Rule. The Single Issuer Rule, which is a quarterly test, generally requires 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 Mexico, for example, Telefonos de Mexico has two share classes (A and L shares) which have a collective weighting in the MSCI Mexico Index of 31.30%. As a result of the Single Issuer Rule, the portfolio cannot hold any combination of the two share classes above 25%. The 5/50 Rule, which is also a quarterly test, generally prohibits 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 a security has more than one share class, then all of the share classes must be considered as one security for 5/50 Rule purposes. Many of the benchmark MSCI Indices have a greater than 50% weighting of securities that account for more than 5% of the respective index. For example, the sum of all of the stocks with weightings of 5% or greater in the MSCI Switzerland Index is 2 - -------------------------------------------------------------------------------- 89%. In such situations, a WEBS Index Series must be underweight in some stocks relative to the benchmark, and therefore overweight in others, in order to comply with the Rule. Another factor that causes performance of WEBS Index Series to differ from that of their respective benchmarks is "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 months' dividends. In addition, unlike the MSCI Indices, each of the WEBS Index Series receives interest on the cash which is invested in short-term investment vehicles but is not invested in the benchmark securities and, in the case of most WEBS Index Series, revenues from the lending of portfolio securities. Finally, uninvested assets of a WEBS Index Series affects performance relative to the benchmark MSCI Indices. 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 (the "Australia Series") was 24.99% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 26.02% over the same time period. Significant Performance Factors The Australia Series underperformed the benchmark by 1.03% during this period as a result of portfolio sampling, revenue differential and expenses. Of those three factors, expenses had the most significant impact on performance, accounting for almost half of the under-performance. Underperformance as a result of portfolio sampling was largely the result of compliance with the 5/50 Rule. 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 the Australia Series, the 5/50 Rule made it difficult to achieve index exposure to several key industries. On February 28, 1999, the sum of all the weightings of 5% or greater in the MSCI Australia Index was 56%. As a result, the Australia Series was overweighted in several of the poorly performing sectors such as insurance (-12.51% for the period) and underweighted in the telecommunications sector, one of the market's top performers (40.48% for the period). Key Market Conditions The Australian stock market was finally able to shake off some of the fallout from the Asian turmoil to enjoy solid returns in the six months ended February 28, 1999. Following several months of volatility early in the period, the market commenced its strongly upward path in mid-October, largely reflecting a steadily improving world economic outlook and solid performances in many global equity markets. The local market was also boosted by positive economic data such as a strong economic growth rate, falling unemployment and low inflation figures. Corporate earnings continued to improve, culminating in a positive business confidence level not seen in nearly a decade. Within the market, there was a wide spectrum of returns. Health and personal care, telecommunications and tourism were among the strongest performers. Notable underperformers included insurance and food and household products. Meanwhile, the slump in the resources sector has now lasted nearly three years. Comparison of Change in Value of a $10,000 Investment in the Australia WEBS Index Series vs. the MSCI Australia Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS Index MSCI Index 03/12/96 10000 10000 05/31/96 10523 10588 08/31/96 10388 10383 11/30/96 11238 11232 02/28/97 11048 11054 05/31/97 11545 11519 08/31/97 11035 10990 11/30/97 9862 9750 02/28/98 10799 10880 05/31/98 10058 10132 08/31/98 8486 8724 11/30/98 10435 10722 02/28/99 10607 10994 Average Annual Total Return One Since Year Inception ---------- --------- Australia WEBS Index Series (1.78)% 2.00% MSCI Australia Index 1.05% 3.24% - ------------------ * 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 (the "Austria Series") was -5.74% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned -3.87% over the same time period. Significant Performance Factors The Austria Series underperformed the benchmark by 1.87% during this period primarily as a result of portfolio sampling. The effect of expenses also had a negative impact on performance. As stated in the introduction, regulatory restrictions can adversely affect the Investment Advisor's ability to optimize the portfolio of a WEBS Index Series. In the case of the Austria Series, the 5/50 Rule made it difficult to achieve index exposure to several key industries, and resulted in other industries being overweight. It is important to note that the sum of the weightings of 5% or greater in the MSCI Austria Index at February 28, 1999 was 76%. As a result, the Austria Series was underweighted in beverages and tobacco, which returned 13.84% for the six-month period. The remaining weight had to be reallocated to other industries, resulting in an overweighting of the poorly performing construction and housing sector (which lost 20.86% during the period) and miscellaneous materials sector (down 13.95%). Key Market Conditions The Austrian stockmarket experienced comparatively dismal performance over the six-month period relative to other European markets. At the crux of the disappointment lies Austria's ill-fated attempt at positioning itself as the gateway to Eastern Europe. As a result, many investors sold Austrian shares in favor of those of more Western-like markets. Among the Austrian industries most impacted by Russia's financial turmoil were industrial and banking stocks. Bank of Austria's losses in the Russian T-bill and forwards markets, in particular, caused a heavy blow to the most heavily weighted stock in the Index. More recently, however, the Bank of Austria has seen its share price soar on the back of Goldman Sachs' decision to include it in their model bank portfolio. Despite an uptick in the market since its early October trough, performance appears to have been driven by external developments rather than domestic events. U.S. gross domestic product (GDP) data, European rate cuts, and merger activity in the European financial sector contributed to positive sentiment, while concerns over financial conditions in Brazil and China inflicted further volatility. Comparison of Change in Value of a $10,000 Investment in the Austria Webs Index Series vs. the MSCI Austria Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 10577 10866 08/31/96 9661 10073 11/30/96 9569 10080 02/28/97 9401 9848 05/31/97 9782 10062 08/31/97 9764 9928 11/03/97 9373 9713 02/28/98 10535 11513 05/31/98 12532 13875 08/31/98 9975 10770 11/30/98 9442 10268 02/28/99 9403 10353 Average Annual Total Return One Since Year Inception ---------- --------- Austria Webs Index Series (10.75)% (2.05)% MSCI Austria Index (10.08)% 1.17% - ------------------ * 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 (the "Belgium Series") was 4.73% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 11.36% over the same time period. Significant Performance Factors The Belgium Series underperformed the benchmark by 6.63% during this period for three reasons: portfolio sampling, the impact of expenses and cash drag. Of those three factors, portfolio sampling had the most significant impact on performance, accounting for almost 90% of the underperformance. 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 the Belgium Series, the 5/50 Rule made it difficult to achieve index exposure to several key industries. It is important to note that the sum of weightings of 5% or greater in the MSCI Belgium Index at February 28, 1999 was 79%. In such circumstances, a number of large-cap stocks in the Belgium Series' portfolio were significantly underweighted relative to the benchmark. This resulted in the Belgium Series being overweighted in several of the poorly performing sectors of the market such as electronic components (down 30.20% for the six-month period), industrial components (down 37.14%), metals-non ferrous (down 35.28%), miscellaneous materials (down 17.53%) and transportation (down 43.03%). While these sectors contributed to the divergence in returns relative to the benchmark index, their combined weight as represented in the Index is only 6%. On the large-cap side, the Belgium Series was forced to underweight a number of industries, including utilities and insurance, which enjoyed returns of 22.46% and 23.69%, respectively, for the period. Key Market Conditions Fueled by merger and acquisition activity, the Belgian market rallied to end the six-month period with healthy gains. Several large companies led the way, including foreign takeover candidate Petrofina, Belgium's largest industrial stock and Generale de Banque, the country's largest bank, which is currently merging with Fortis, the Belgian-Dutch financial services group. Meanwhile, improving consumer confidence levels supported economic growth of 2.9% in 1998. Growth was attributed to an expansion in domestic demand rather than exports, which contributed negatively to growth for the first time in five years. Inflation remained low at around 1% per annum. Comparison of Change in Value of a $10,000 Investment in the Belgium WEBS Index Series vs. the MSCI Belgium Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 10288 10237 08/31/96 10501 10496 11/30/96 10915 11107 02/28/97 11204 11595 05/31/97 11877 12172 08/31/97 11474 11662 11/30/97 12002 12385 02/28/98 13161 13768 05/31/98 15831 16912 08/31/98 15996 17633 11/30/98 16952 19087 02/28/99 16752 19637 Average Annual Total Return One Since Year Inception ---------- --------- Belgium WEBS Index Series 27.29% 18.98% MSCI Belgium Index 42.63% 25.51% - ------------------ * 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 (the "Canada Series") was 20.78% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 20.91% over the same time period. Significant Performance Factors The Canada Series underperformed the benchmark by 0.13% as the positive effects of portfolio sampling and revenue differential were more than offset by the impact of expenses and cash drag. The difference in returns as a result of security sampling was attributed to the Canada Series' underweighted position in telecommunications, which underperformed on a relative basis in the six-month period, returning 12.35%. Key Market Conditions For the past year and a half, the Canadian economy has been the victim of a series of external shocks. External balances were weakened directly through weaker export demand and indirectly through a marked fall in export prices as a result of the pronounced decline in commodity markets. With the bottoming out of commodity prices and improving trade activity, market sentiment gained strength in the fourth quarter of 1998 to finish the year with a strong rally, albeit off a low base. Evidence of economic strengthening, rising employment and a low rate of inflation provided additional support. Although the New Year rang in on renewed vigor, the market demonstrated that it is not free from events in emerging markets. The January devaluation of the Brazilian real, against the backdrop of a potential crisis in Latin America, garnered considerable market attention. And, as the implications for global growth were weighed, a temporary cloud was cast over the steadily stabilizing commodity markets. While direct effects from loss of trade with Latin American countries are limited, market concern centered on the implications of potentially weaker economic growth in the U.S., Canada's largest trading partner. Once initial fears had subsided, the market recovered somewhat only to end the six-month period on a down note, largely as a result of a change in investor sentiment toward interest rates in the U.S.. The outlook for corporate earnings weakened in February. It was reinforced by a dip in the competitiveness of Canadian companies, reflecting a recovery in the value of the Canadian dollar in January after the steep decline of last year. With inflation falling faster than nominal interest rates, real cash yields have also risen, implying another drag on future market performance. Comparison of Change in Value of a $10,000 Investment in the Canada WEBS Index Series vs. the MSCI Canada Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 10639 10682 08/31/96 10463 10521 11/30/96 12546 12652 02/28/97 12569 12713 05/31/97 13183 13389 08/31/97 13445 13745 11/30/97 13165 13438 02/28/98 14322 14679 05/31/98 15157 15668 08/31/98 10529 10921 11/30/98 12454 12790 02/28/99 12717 13205 Average Annual Total Return One Since Year Inception ---------- --------- Canada WEBS Index Series (11.14)% 8.43% MSCI Canada Index (10.04)% 9.81% - ------------------ * 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 (the "France Series") was 9.20% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 9.72% over the same time period. Significant Performance Factors The France Series underperformed the benchmark by .52% during this period as a result of expenses and security sampling, while revenue differential contributed positively to performance. Key Market Conditions Paradoxically, while European Economic and Monetary Union (EMU) has brought member countries closer together economically and monetarily, their markets have rarely been as divergent as they are now. Equally interesting is the influence Wall Street continues to exert on the European markets, particularly noticeable in February's return to market volatility. In the midst of this, France, for one, has performed better than many analysts had expected. France has had several things going for it. Consumer confidence remains very strong, as does consumer demand; French household consumption grew by nearly 4.5% in 1998, GDP grew to 3.2% -- its highest rate this decade. This strong growth rate persuaded companies to hire employees, pushing the unemployment rate lower and boosting spending rates. Moreover, the liquidity effect that was created by lower interest rates made necessary by the introduction of the euro has directed cash flow into equities. Additionally, fourth-quarter 1998 reported earnings, particularly by banks, were stronger than expected. In fact, the French banking sector achieved the best one-year performance relative to the MSCI Europe Index among European banks, with the exception of Ireland and Spain. An improving domestic economy and regulatory environment, which has facilitated merger activity, appear to be the basis of this outperformance. Comparison of Change in Value of a $10,000 Investment in the France WEBS Index Series vs. the MSCI France Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 10668 10701 08/31/96 10495 10371 11/30/96 11855 11766 02/28/97 12177 12210 05/31/97 11921 11975 08/31/97 12237 12194 11/30/97 12878 12848 02/28/98 14880 14933 05/31/98 17881 18027 08/31/98 16492 16500 11/30/98 18001 18079 02/28/99 18010 18103 Average Annual Total Return One Since Year Inception ---------- --------- France WEBS Index Series 21.04% 21.91% MSCI France Index 21.23% 22.12% - ------------------ * 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 (the "Germany Series") was 2.31% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 3.36% over the same time period. Significant Performance Factors The Germany Series underperformed the benchmark by 1.05% during this period as a result of portfolio sampling and expenses, which more than offset the positive effect of revenue differential. Of those factors, portfolio sampling was by far the most significant cause of the underperformance. In particular, the Germany Series' overweighted position in the poorly performing building and materials sector (down 36.28% for the six-month period) caused returns to lag the Index. Additionally, the Germany Series' overweighted position in insurance (up 1.83%) contributed to the divergence. In this case, the disparity in weightings as compared to the MSCI Index was not due to regulatory constraints on optimization, but rather the result of the specific securities selected by the Investment Advisor's optimizer. Key Market Conditions Caught between conflict and uncertainty, the German market lagged behind most of Europe through most of the six-month period. While other European Economic and Monetary Union (EMU) members benefited from the narrowing of the spread between their respective interest rates and German rates in the approach to EMU, the already relatively lower German rates prevented Germany from enjoying the same gains. Moreover, the underlying situation in Germany has been far from ideal with high wage settlements, political disputes, deflationary concerns in Europe, and rising fears over inflation and interest rates in the U.S. taking center stage. Germany is also more export dependant than the other EMU members, which has exerted a negative drag on the economy during the recent weakness in European trade. Anxieties were highlighted by a 0.4% decline in Germany's economy in the fourth quarter, double-digit unemployment and a slump in industrial production across EMU countries. On the other hand, in spite of considerable market volatility, 1998 was a year of record liquidity as healthy market activity was driven by increased investor appetite for stocks. Both domestic and foreign investors invested a higher volume in equity funds. For German households, accustomed to investing in bond markets, stocks became a more significant investment vehicle. Meanwhile foreign investors invested nearly five times as much in German equities in 1998 as in 1997. Against this background, the number of new issues broke a new record. Comparison of Change in Value of a $10,000 Investment in the Germany WEBS Index Series vs. the MSCI Germany Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 9955 9984 08/31/96 10399 10451 11/30/96 10918 11034 02/28/97 11291 11476 05/31/97 12176 12376 08/31/97 12533 12778 11/30/97 12948 13240 02/28/98 14661 15107 05/31/98 17635 17924 08/31/98 15752 16102 11/30/98 16888 17413 02/28/99 16117 16643 Average Annual Total Return One Since Year Inception ---------- --------- Germany WEBS Index Series 9.93% 17.43% MSCI Germany Index 10.17% 18.71% - ------------------ * 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 (the "Hong Kong Series") was 37.06% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 43.44% over the same time period. Significant Performance Factors The Hong Kong Series underperformed the benchmark by 6.38% during this period as a result of portfolio sampling, revenue differential and expenses. Of those three factors, portfolio sampling had by far the most significant impact on performance. As stated in the introduction, regulatory restrictions can adversely affect the Investment Advisor's ability to optimize the portfolio of a WEBS Index Series. In the case of the Hong Kong Series, the 5/50 Rule made it difficult to achieve index exposure to several key industries. It is important to note that the sum of all of the weightings of over 5% in the MSCI Hong Kong Index was 74% at February 28, 1999. As a result, the Series was overweighted in several of the poorly performing sectors such as miscellaneous materials (down 2.14% for the six-month period) and underweighted in the multi-industry sector, which enjoyed strong gains in the period (up 39.02%). On the other hand, several sectors in which the Hong Kong Series was overweighted relative to the benchmark such as real estate (up 66.14%) contributed positively to its performance. Key Market Conditions The Hong Kong government invested U.S. $15 billion into stocks in August and made itself the largest or second largest minority shareholder in every one of the Hang Seng Index's 33 stocks. Combined with five consecutive cuts in interest rates since September, the market rallied its way to the New Year. As the euphoria that accompanied the rate cuts began to fade and investor caution set in, the Hong Kong market began 1999 on a down note. The market wanted deeper interest rate cuts to help turn around an economy that shrank 7.1% in the third quarter. At that point, the Brazilian crisis commenced, resulting in renewed concerns that China would devalue its currency. Fears focused on the state of China's banking sector and bad debt, estimated at approximately 25% of outstanding loans. A devaluation of China's currency would put pressure on the Hong Kong-U.S. dollar peg and thus limit the scope for interest rate cuts. Moreover, perceptions of China are clearly worsening among international investors. This is likely to impact Hong Kong via the earnings impact of companies exposed to China, and through the weakness in China-related shares in the Hong Kong markets The underlying reality has been that rising unemployment (which set a record high of 5.8% in December), lackluster domestic consumption and poor investment have yet to reverse. Banking stocks, which had previously performed well, led the decline in the equity market in January on interest rate fears and negative sentiment following the bankruptcy of China's second largest finance company, the Guangdong International Trust & Investment Corp. Comparison of Change in Value of a $10,000 Investment in the Hong Kong WEBS Index Series vs. the MSCI Hong Kong Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 10826 10817 08/31/96 10322 10415 11/30/96 12418 12543 02/28/97 11868 12190 05/31/97 12609 13030 08/31/97 12159 12645 11/30/97 9006 9437 02/28/98 9197 9871 05/31/98 6881 7465 08/31/98 5567 6108 11/30/98 8398 9459 02/28/99 7630 8761 Average Annual Total Return One Since Year Inception ---------- --------- Hong Kong WEBS Index Series (17.05)% (8.71)% MSCI Hong Kong Index (11.24)% (4.36)% - ------------------ * 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 (the "Italy Series") was 12.44% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 13.26% over the same time period. Significant Performance Factors The Italy Series underperformed the benchmark by .82% during this period for three reasons: security sampling, the impact of expenses and revenue differential. Of those three factors, security sampling had the most significant impact on performance. In particular, the disparity in returns was a result of performance of specific securities in the insurance sector selected by the Investment Advisor's optimizer. Key Market Conditions Driven by euphoria in the run up to European Economic and Monetary Union and the narrowing of Italian interest rates to core German levels, the Italian market turned in a respectable performance for the six-month period -- but not without volatility. From late August to mid-October, a downward slide took hold largely as a reaction to the financial difficulties in Russia. Then, a modest recovery in the market was fueled by enthusiasm over gains in the telecommunications sector, merger activity in financial services, deregulation in the utilities industry and a spate of initial placement offers (IPOs) coming to market, only to lose ground again in February. The February correction was precipitated by concerns over a strengthening U.S. economy and the potential for an uptick in inflation. Toward the end of the month, the market resumed its advance, boosted by the euro's weakness, which has bode well for earnings upgrades. On the economic front, hopes of a strengthening economy have been put on hold. After years of fiscal tightening and lower interest rates, the stabilization of public finances that was to spur economic growth is not yet imminent -- a decline in world trade is viewed as the main culprit. Estimates indicate real 1998 GDP growth was 1.3% -- a rate below its projected level and down slightly from 1.5% in 1997. Comparison of Change in Value of a $10,000 Investment in the Italy WEBS Index Series vs. the MSCI Italy Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 11226 11207 08/31/96 10411 10333 11/30/96 11272 11205 02/28/97 11151 11102 05/31/97 11438 11408 08/31/97 12845 12862 11/30/97 14256 14173 02/28/98 17250 17297 05/31/98 21242 21319 08/31/98 18968 19129 11/30/98 21255 21444 02/28/99 21328 21666 Average Annual Total Return One Since Year Inception ---------- --------- Italy WEBS Index Series 23.63% 29.05% MSCI Italy Index 25.26% 29.74% - ------------------ * 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 (the "Japan Series") was 20.86% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 21.54% over the same time period. Significant Performance Factors The Japan Series underperformed the benchmark by .68% during this period primarily as a result of the impact of expenses and revenue differential. Expenses accounted for .47% of the underperformance. Key Market Conditions Japan has been trying to inflate its economy for the last five years with a series of fiscal spending programs and a policy of monetary ease that has taken interest rates down close to zero. Because of a conflict between its long and short-term fiscal objectives, budgetary policy has been ambivalent and has not had the effect of boosting overall spending in a sustained way. More recently, the Government's attempts at spending its way out of recession prompted fears that the prospect of a massive issuance of debt would not be absorbed by the market, driving interest rates to double to more than 2%. This doubling in bond yields together with a tremendous appreciation in the yen against the U.S. dollar since the autumn effectively tightened monetary policy and prompted fears that corporate profits, particularly in the financial sector, would suffer. Interest rates retrenched in mid-February as the central bank lowered its short-term rates, providing some renewed support for equity values and a basis for possible economic strengthening if the economy advances from the low levels it reached at the end of last year. Against this background, the market demonstrated significant volatility over the six-month period as bad news vied with good for investor attention. Company announcements that painted a dreary picture of the economy were often accompanied by announcements of restructuring plans. And news that firms were unwinding cross-holdings cheered the market until concerns about the effects of an increase in equity supply took hold. Meanwhile banking stocks were some of the better performers over the period, driven by substantial merger activity. Comparison of Change in Value of a $10,000 Investment in the Japan WEBS Index Series vs. the MSCI Japan Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 10548 10596 08/31/96 9689 9720 11/30/96 9527 9561 02/28/97 8060 8117 05/31/97 8959 9033 08/31/97 8529 8596 11/30/97 7169 7206 02/28/98 7366 7438 05/31/98 6453 6525 08/31/98 5682 5785 11/30/98 6752 6871 02/28/99 6867 7031 Average Annual Total Return One Since Year Inception ---------- --------- Japan WEBS Index Series (6.77)% (11.89)% MSCI Japan Index (5.48)% (11.19)% - ------------------ * 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 (the "Malaysia Series") was 47.30% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 72.07% over the same time period. Significant Performance Factors In a difficult environment, the Malaysia Series underperformed the benchmark by a considerable 24.77%. The underperformance was principally the result of the Malaysia Series using a different exchange rate in computing its net asset value than MSCI used in computing the benchmark index. Portfolio sampling and, to a much lesser extent, the impact of expenses and cash drag also contributed to the underperformance. The challenges and issues confronting the Malaysia Series included the Malaysian Government's imposition, on September 1, 1998, of comprehensive capital controls and the use by the Malaysia Series of a significantly different exchange rate than that used by MSCI in computing the MSCI Malaysia (Free) Index. The Malaysia Series and MSCI used the same exchange rates to value the Malaysian ringgit (4.19 ringgits per U.S. dollar) at August 31, 1998. However, on February 26, 1999, MSCI changed the value it uses to calculate index returns to 4.47 ringgits per U.S. dollar, while the Malaysia Series used 5.07. This difference in exchange rates resulted in the Malaysia Series underperforming the benchmark by approximately 18% in the period. Most of the remaining underperformance resulted from portfolio sampling. One of the effects of the Malaysian capital controls was to eliminate securities lending. At the time the controls were imposed, the Malaysia Series had a considerable portion of its portfolio on loan. In many cases, the U.S. dollar value of loaned securities was paid to the Malaysia Series in lieu of delivery of the securities themselves. In light of the environment, it was determined that it would be prudent to maintain a significant cash reserve so that the Malaysia Series would be able to pay future expenses and to make distributions to shareholders, including the special distribution of $.1763 per share paid on November 13, 1998. This led to a significant underweighting of certain large-cap stocks during part of the six-month period. As a result, at a critical time the Malaysia Series was severely underweighted in a number of stocks that performed well during the period, and overweighted in several sectors that underperformed such as the food and household industry, which appreciated by only 12.62% during the period, adversely affecting performance against the benchmark. Although the Malaysia Series had a significant cash position for most of the six-month period, (cash accounted for 5.63% of net assets at February 28, 1999), cash drag had only a minor (-0.18%) effect on performance in the period. Key Market Conditions Following a one-and-a half year descent, the market turned around in September to enjoy exceptionally strong gains up to the last few weeks of January. Since the implementation of capital controls in September 1998 that were to lock in foreign investors until September 1999, liquidity increased dramatically and provided considerable support to the market. Additionally, the government slashed interest rates over the last four months of the year, providing further stimulus. These actions, coupled with exchange rate stability and stepped-up fiscal spending, led to a slight revival of consumer confidence. More recently, however, some weakness prevailed in the market as uncertainty set in over recent elections and the introduction of a new exit tax that superseded the lock-in capital controls in place since September 1, 1998 and prompted foreign selling. In general, the market has seen relatively low volumes of trading activity since September 1998. Meanwhile, the real economy remains weak. The large current-account surplus (estimated at 13% of GDP in 1998) reflects falling domestic demand rather than rising exports, despite modest real export growth over the last several months of 1998. Restructuring continues to proceed slowly, with controls delaying structural reform. Only in the banking sector have reforms moved ahead. Another critical factor underpinning investor sentiment was Malaysia's loss of benchmark status. In September, Malaysia was removed from the MSCI Europe, Australasia and Far East (EAFE) Index and in November it was removed from the MSCI Emerging Markets Index. Comparison of Change in Value of a $10,000 Investment in the Malaysia (Free) WEBS Index Series vs. the MSCI Malaysia (Free) Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 10548 10596 08/31/96 9689 9720 11/30/96 9527 9561 02/28/97 8060 8117 05/31/97 8959 9033 08/31/97 8529 8596 11/30/97 7169 7206 02/28/98 7366 7438 05/31/98 6453 6525 08/31/98 5682 5785 11/30/98 6752 6871 02/28/99 6867 7031 Average Annual Total Return One Since Year Inception ---------- --------- Malaysia (Free) WEBS Index Series (50.22)% (37.91)% MSCI Malaysia (Free) Index (41.68)% (34.46)% - ------------------ * 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 (the "Mexico Series") was 38.38% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 42.71% over the same time period. Significant Performance Factors The Mexico Series underperformed the benchmark by 4.33% during this period as a result of portfolio sampling, expenses and cash drag. Of those three factors, portfolio sampling had the most significant impact on performance, accounting for most of the underperformance. 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 the Mexico Series, both the 5/50 and the Single Issuer rules constrain the Investment Advisor's ability to optimize the portfolio. It is important to note that the sum of all the weightings of 5% or greater in the MSCI Mexico (Free) Index at February 28, 1999 was 79%. In addition, Telefonos de Mexico A and L shares combined had a 31.30% weighting in the benchmark on such date. The Investment Advisor must, therefore, underweight the Telefonos de Mexico securities because of the Single Issuer Rule. As a result of the Single Issuer and 5/50 rules, the Investment Advisor had to reallocate the Mexico Series' weight in favor of smaller-cap stocks, causing it to be overweighted in several of the poorer-performing sectors such as construction and housing (down 13.21% in the period). The Mexico Series' underperformance due to exposure to beverages & tobacco (up 19.40%) and multi-industry (up 20.13%), however, was a result of specific issues held by the Mexico Series in those sectors rather than the sectors themselves. On the large-cap side, the Mexico Series was forced by the Single Issuer Rule to underweight telecommunications, which enjoyed returns of 50.36% for the period. Key Market Conditions The Mexican market, the clear leader in Latin America during the six-month period, has soared since the Brazilian devaluation in January, and has now surpassed Brazil as the largest market in the region. Mexico has succeeded in decoupling itself from the regional turmoil given its strong ties to the U.S. and improving Mexican fundamentals following the market's nearly 40% collapse in 1998. The rebound in the Mexican market reflects renewed confidence in Mexico's growth prospects combined with positive news on inflation. Improved inflationary expectations have allowed interest rates to decline and the peso to stabilize. Mexico is also only one of two countries in the region, the other being Colombia, which has seen earnings expectations increase in the last several months. A robust U.S. economy has largely supported Mexican corporate earnings through increased trade activity; Mexico's exports to the U.S. account for around 85% of its total exports. More recently, a turnaround in oil prices in response to supply cuts, a re-evaluation of global demand and inventories for 1998, and a surging U.S. economy has provided additional support to the market via improved government fiscal accounts. Comparison of Change in Value of a $10,000 Investment in the Mexico (Free) WEBS Index Series vs. the MSCI Mexico (Free) Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 11618 11617 08/31/96 11592 11736 11/30/96 11311 11489 02/28/97 12820 13254 05/31/97 13283 13818 08/31/97 15675 16321 11/30/97 15892 16774 02/28/98 15311 16136 05/31/98 14107 15033 08/31/98 8750 9159 11/30/98 10724 11469 02/28/99 12108 13071 Average Annual Total Return One Year Since Inception ---------- --------------- Mexico (Free) WEBS Index Series (20.93)% 6.65% MSCI Mexico (Free) Index (18.99)% 9.44% - ------------------ * 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 (the "Netherlands Series") was 1.45% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 4.45% over the same time period. Significant Performance Factors The Netherlands Series underperformed the benchmark by 3.00% during this period as a result of portfolio sampling, revenue differential and expenses. Of those three factors, portfolio sampling had the most significant impact on performance, accounting for approximately two-thirds of the underperformance. 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 the Netherlands Series, the 5/50 Rule made it difficult to achieve index exposure to several key industries. It is important to note that the sum of all of the weightings of 5% or greater in the MSCI Netherlands Index at February 28, 1999, was 82%. As a result, the Investment Advisor had to reallocate the weight of several large-cap stocks in the benchmark in favor of smaller-cap stocks, causing the Netherlands Series to be overweighted in several of the poorly performing sectors such as construction (down 34.77% for the period) and data processing and reproduction (down 25.22%). Additionally, certain securities held by the Netherlands Series, notably in the business and public services sectors, underperformed the securities in the same industry in the benchmark, and this contributed to relative underperformance. Key Market Conditions The Dutch economy, dragged down by weaker export demand and slowing investment growth, could no longer maintain its distinction as being stronger than the European average in the six-month period. Weak corporate earnings were the key focus in the Dutch market over the period, reflecting the slowdown in economic activity and the challenges presented by exposure to emerging markets, the slowdown in European demand and a difficult pricing environment. Some stability in corporate earnings expectations, however, is becoming apparent as a result of a weak euro, providing some improvement in investor sentiment. Growth and defensive sectors outperformed in this difficult economic environment, with telecommunications and technology enjoying strong gains. Similarly, the insurance and retail sectors have been buoyed by the recent wave of merger and acquisition speculation. While cross-border mergers have been relatively few in numbers, the potential for further consolidation is believed to exist. Comparison of Change in Value of a $10,000 Investment in the Netherlands WEBS Index Series vs. the MSCI Netherlands Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 11113 10941 08/31/96 11118 10974 11/30/96 12259 12255 02/28/97 12934 12949 05/31/97 13825 13960 08/31/97 14237 14680 11/30/97 14728 15146 02/28/98 16811 17273 05/31/98 18985 19399 08/31/98 16716 16824 11/30/98 17306 17619 02/28/99 16952 17573 Average Annual Total Return One Since Year Inception ---------- --------- Netherlands Webs Index Series 0.88% 19.46% MSCI Netherlands Index 1.74% 20.91% - ------------------ * 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. 15 PERFORMANCE REVIEW WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Singapore (Free) Performance Review The total return of the Singapore (Free) WEBS Index Series (the "Singapore Series") was 77.84% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 68.81% over the same time period. Significant Performance Factors The Singapore Series outperformed the benchmark by 9.03% during this period as a result of portfolio sampling. While the impact of expenses and cash drag mitigated returns, portfolio sampling accounted for 10.04% of the outperformance. As stated in the introduction, regulatory restrictions can adversely affect the Investment Advisor's ability to track the MSCI Index. In the case of the Singapore Series, the 5/50 rule made it difficult to achieve index exposure to several key industries. It is important to note that sum of the weightings of 5% or greater in the MSCI Singapore (Free) Index at February 28, 1999 was 72%. As a result, the Investment Advisor had to reallocate the weight of several large-cap stocks in favor of smaller-cap stocks. The performance differential between the Singapore Series and the benchmark index was essentially driven by security-specific issues and not sector-related concerns. When viewed in the context of a very robust market, the total of the small misweights in the portfolio accounted for the wide divergence between the Singapore Series and benchmark index returns. Key Market Conditions After hitting a ten-year low in early September, the Singapore market began a powerful recovery that continued through mid-January. At this point the market readjusted to reflect the potential implications of Brazil's currency devaluation and a meltdown of the Latin American markets. The market's rebound since its September low can be attributed largely to a supportive interest rate environment; interest rates have been cut six times since September, falling from 7.5% to 5.0%. Against this background, banks and real estate companies performed exceptionally well and lifted the overall market higher because of their heavy representation in the Index. Positive changes on the regulatory front also contributed to higher ratings in the banking sector. Meanwhile, the property sector received a boost as demand increased due to sharp price cuts and falling interest rates. On the other hand, another index heavyweight -- the telecommunications sector -- performed poorly largely as a result of a slowdown in international traffic growth. International telecommunications traffic growth is highly correlated with GDP growth and has consequently suffered from the economic slowdown. The threat of increased competition in basic services also had a negative impact on companies' share prices. Comparison of Change in Value of a $10,000 Investment in the Singapore (Free) WEBS Index Series vs. the MSCI Singapore (Free) Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 9714 9692 08/31/96 9327 9196 11/30/96 9548 9358 02/28/97 9720 9670 05/31/97 9073 8986 08/31/97 7137 6961 11/30/97 6066 6223 02/28/98 5687 5978 05/31/98 4154 4382 08/31/98 2763 3108 11/30/98 5191 5517 02/28/99 4914 5246 Average Annual Total Return One Since Year Inception ---------- --------- Singapore (Free) WEBS Index Series (13.59)% (21.28)% MSCI Singapore (Free) Index (12.24)% (19.52)% - ------------------ * 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 (the "Spain Series") was 21.89% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 21.28% over the same time period. Significant Performance Factors The Spain Series outperformed the benchmark by .61% during this period primarily as a result of portfolio sampling and revenue differential. These factors more than offset the negative effect of expenses on performance. In general, Spanish companies tend to pay dividends in the second half of the Spain Series' fiscal year. As stated in the introduction, regulatory restrictions can adversely affect the Investment Advisor's ability to optimize the portfolio of a WEBS Index Series. In the case of the Spain Series, the 5/50 Rule made it difficult to achieve index levels of exposure to several key industries, forcing the portfolio to underweight certain stocks and to overweight other stocks in different industries. It is important to note that, if all the benchmark index-stock weightings of over 5% were summed, their total weight would equal 72%. Although the industry weighting of the Spain Series differed from those of the benchmark in several respects, its overweighted position in insurance, which returned 51.72% over the six-month period, was the principal cause of the outperformance from portfolio sampling. Key Market Conditions The performance of the Spanish market exceeded European averages in the six-month period as key variables surpassed expectations. Among the factors fueling market optimism were a sharp reduction in interest rates, earnings upgrades and a focus on the creation of shareholder value. Spain's entry into the European Economic and Monetary Union demanded certain economic and fiscal targets be met. As a result, a steady drop in inflation caused a sharp reduction in Spanish interest rates toward German levels. Favorable effects have been manifested through lower financing charges for companies, and increased investment and consumption. Consumers, encouraged by low interest rates in addition to rising employment, continued to spend throughout the six-month period. As company profits advanced, earnings forecasts were upgraded. In fact, healthy consumption figures drove GDP up by 3.8% last year -- the highest growth rate of the 1990s. We should, however, also note that worsening export growth prevented economic growth rates from increasing any further, mainly as a result of the deteriorating situation in Latin America, which is a major trading region for Spain. On a related note, many of Spain's largest companies are heavily invested in Latin America -- a factor that prompted a selloff in the Spanish market last autumn as fears of a meltdown in Latin America's economy were reignited. An increased focus on value creation, specifically growing shareholder return on equity, also had an impact on company earnings and investor optimism. The main vehicles used to create shareholder value were mergers and takeovers, corporate restructuring and diversification, and share buybacks. Comparison of Change in Value of a $10,000 Investment in the Spain WEBS Index Series vs. the MSCI Spain Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 10640 10747 08/31/96 10845 10917 11/30/96 12361 12508 02/28/97 12893 13066 05/31/97 15229 15497 08/31/97 15092 15379 11/30/97 16471 16845 02/28/98 20478 21053 05/31/98 23918 24762 08/31/98 20009 20589 11/30/98 24448 25084 02/28/99 24389 24970 Average Annual Total Return One Since Year Inception ---------- --------- Spain WEBS Index Series 19.10% 35.01% MSCI Spain Index 18.60% 36.09% - ------------------ * 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 (the "Sweden Series") was 6.95% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 8.23% over the same time period. Significant Performance Factors The Sweden Series underperformed the benchmark by 1.28% during this period primarily as a result of the impact of expenses and revenue differential. Key Market Conditions Sweden's stock market continued to demonstrate significant volatility throughout the period, reflecting among other things, investor focus on both negative and positive factors. On one side: deteriorating European economic activity, intensifying price pressure and recent global bond market weakness. On the other: increasing optimism about the U.S. economic outlook, heightened European merger activity, further monetary easing and several positive earnings developments for Swedish companies. Earnings surprises came mainly from companies in the consumer goods, real estate, media and defense industries -- Electrolux, Skandia and Astra were some of the notable companies that announced results that exceeded expectations. Results in the cyclical sectors --engineering, paper & pulp, metals & minerals and chemicals -- were generally weaker than expected. While Swedish cyclicals were hard hit in 1998, a renewed interest in cyclical exporters has taken root more recently as these companies stand to benefit from the strong U.S. dollar and economy, contributing to the market's overall solid performance this year. Among the best performing sectors were the heavy machinery and forestry sectors. The cyclical sectors are heavily represented in the MSCI Sweden Index, accounting for a large part of its outperformance relative to many other European markets so far in 1999. Swedish consumer sentiment has remained mostly strong, boosted by the loosening of monetary policy since 1996, the rapid pace of employment growth and relatively strong gains in real incomes which accompanied the export boom. As a result, we have seen a shift in GDP growth away from export-dependent industries to those that rely principally on domestic demand. Comparison of Change in Value of a $10,000 Investment in the Sweden WEBS Index Series vs. the MSCI Sweden Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS Index 03/12/96 10000 10000 05/31/96 10976 10805 08/31/96 11413 11200 11/30/96 13163 12989 02/28/97 13357 13344 05/31/97 13840 13806 08/31/97 14847 14856 11/30/97 15236 15310 02/28/98 16353 16596 05/31/98 19050 19206 08/31/98 15659 16093 11/30/98 16477 17114 02/28/99 16748 17416 Average Annual Total Return One Since Year Inception ---------- --------- Sweden WEBS Index Series 2.42% 18.97% MSCI Sweden Index 4.94% 20.54% - ------------------ * 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 (the "Switzerland Series") was 3.47% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 7.03% over the same time period. Significant Performance Factors The Switzerland Series underperformed the benchmark by 3.56% during this period as a result of portfolio sampling, expenses and cash drag. Of those three factors, portfolio sampling had by far the most significant negative impact on performance. 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 the Switzerland Series, the 5/50 Rule makes it difficult to optimize the portfolio. It is important to note that the sum of all of the weightings of 5% or greater in the MSCI Switzerland Index is 89%. In fact, five companies in the healthcare, banking, and food and household sectors represent nearly 80% of the benchmark. As a result, the Investment Advisor had to reallocate part of the weight of several large-cap stocks in favor of smaller-cap stocks in different industries, causing the Switzerland Series to be overweighted in several sectors that performed poorly in the six-month period such as chemicals (down 21.21%) and merchandising (down 27.43%). On the large-cap side, the Switzerland Series was forced to underweight health and personal care, which enjoyed returns of 14.32% for the period. Key Market Conditions Like other countries in Europe, Switzerland's main economic indicators have been pointing to a swift and sharp slowdown in the economy. Yet, as was the case in most of Europe, consumer sentiment remained positive and was the driving force behind economic expansion in the six-month period. Strengthening domestic demand partially offset the slowdown in export growth, which resulted from the financial crisis in Asia and other emerging markets; retail sales grew faster in 1998 than at any time in the past decade. Despite the fact that Switzerland is not a member of the European Union, the performance of its market mirrored much of Europe, continuing downward from mid-July into October, then up again on "euro-euphoria" with rallies across euroland markets. Shortly after the start of the year, the optimism dissipated with the advent of the Brazilian currency devaluation and the release of the first key data from leading industrial companies, which fell short of analyst expectations. By the end of February 1999, the rally staged by many cyclical stocks has somewhat pulled the market back upwards. Comparison of Change in Value of a $10,000 Investment in the Switzerland WEBS Index Series vs. the MSCI Switzerland Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 9751 9617 08/31/96 10260 10319 11/30/96 10093 10125 02/28/97 10210 10347 05/31/97 11879 12050 08/31/97 11972 11998 11/30/97 12927 13557 02/28/98 15124 16271 05/31/98 16530 17244 08/31/98 14515 15609 11/30/98 15570 17129 02/28/99 15019 16706 Average Annual Total Return One Since Year Inception ---------- --------- Switzerland WEBS Index Series (0.69)% 14.68% MSCI Switzerland Index 2.68% 18.86% - ------------------ * 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 (the "United Kingdom Series") was 12.18% for the six-month period ended February 28, 1999, while the corresponding MSCI Index returned 13.31% over the same time period. Significant Performance Factors The United Kingdom Series underperformed the benchmark by 1.13% during this period as a result of the impact of expenses, portfolio sampling and cash drag. While the most significant contributor to the underperformance was expenses, the United Kingdom Series' underweighted position in the business and public services sector, which returned 21.13% over the period, also caused returns to lag the benchmark index. Key Market Conditions The UK market, the largest in the MSCI Europe Australasia and Far East (EAFE) Index, rose 4.82% in February to end at its highest level ever. Shares soared on a combination of encouraging corporate results and optimism on interest rate cuts. The heavyweight banking sector, in particular, was helped by strong earnings and expectations of further consolidation. Also helping improve sentiment was the decision by the government to step up its campaign to join the European Economic and Monetary Union (EMU). In the period leading up to February's new high, interest rate cuts at home and in the U.S., an important trading partner, boosted the market, especially interest-sensitive stocks such as banks. Sentiment was also improved by a wave of mergers, which reached a record level -- almost 7% of the small-and mid-cap sectors were bid for in 1998. Additionally, companies continued to focus on the creation of shareholder value through share buy-back programs, effectively pumping more money back into the market. Meanwhile, the defensive qualities of the market were demonstrated in the autumn correction as the UK market fell 25% versus 35% for the rest of Europe. Much discussion has also centered on the role the strong pound has and will play in depressing economic activity. But so far, the UK economy has proved more resilient than expected by many, with buoyancy evidenced in several important areas such as business, services and finance (which accounts for nearly 25% of its GDP) and transport, storage and communication (which accounts for almost 10% of its GDP). Comparison of Change in Value of a $10,000 Investment in the United Kingdom WEBS Index Series vs. the MSCI United Kingdom Index [GRAPHIC] In the printed version of the document, a line graph appears which depicts the following plot points: WEBS MSCI 03/12/96 10000 10000 05/31/96 9751 9617 08/31/96 10260 10319 11/30/96 10093 10125 02/28/97 10210 10347 05/31/97 11879 12050 08/31/97 11972 11998 11/30/97 12927 13557 02/28/98 15124 16271 05/31/98 16530 17244 08/31/98 14515 15609 11/30/98 15570 17129 02/28/99 15019 16706 Average Annual Total Return One Since Year Inception ---------- --------- United Kingdom WEBS Index Series 6.59% 23.20% MSCI United Kingdom Index 6.28% 24.06% - ------------------ * 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 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Australia WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- COMMON STOCK - Basket 99.78% Appliances & Household Durables 0.50% 153,900 Email Limited $ 258,044 ------------- Bank 16.13% 351,000 National Australia Bank Limited 5,852,521 378,000 Westpac Banking Corporation Limited 2,499,255 ------------- 8,351,776 ------------- Beverages & Tobacco 5.87% 278,100 Coca-Cola Amatil Limited 1,095,264 677,700 Foster's Brewing Group Limited 1,944,335 ------------- 3,039,599 ------------- Broadcasting & Publishing 11.45% 542,700 News Corporation Limited 3,808,289 324,000 News Corporation Limited - Preferred 2,120,690 ------------- 5,928,979 ------------- Building Materials & Components 5.27% 450,900 Boral Limited 649,621 372,600 CSR Limited 897,772 175,500 James Hardie Industries Limited 386,898 394,200 Pioneer International Limited 794,370 ------------- 2,728,661 ------------- Business & Public Services 4.12% 83,700 Brambles Industries Limited 2,131,086 ------------- Chemicals 1.15% 110,700 Orica Limited 594,642 ------------- Construction & Housing 0.31% 48,600 Leighton Holdings Limited 159,957 ------------- Energy Sources 8.18% 486,000 Broken Hill Proprietary Company Limited 3,648,835 210,600 Santos Limited 583,290 ------------- 4,232,125 ------------- Food & Household Products 0.87% 194,400 Burns Philp & Company Limited* 25,352 461,700 Goodman Fielder Limited 427,206 ------------- 452,558 ------------- Forest Products & Paper 2.15% 224,100 Amcor Limited 1,114,999 ------------- Gold Mines 1.12% 108,000 Newcrest Mining Limited* 161,634 486,000 Normandy Mining Limited 416,492 ------------- 578,126 ------------- Insurance 7.49% 297,000 AMP Limited* 3,363,024 189,000 GIO Australia Holdings Limited 513,372 ------------- 3,876,396 ------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Leisure & Tourism 2.07% 256,500 Crown Limited* $ 125,836 135,000 TABCORP Holdings Limited 947,335 ------------- 1,073,171 ------------- Merchandising 3.87% 375,300 Coles Myer Limited 2,004,327 ------------- Metals - Non Ferrous 6.06% 577,800 Mount Isa Mines Holdings Limited 251,170 288,900 North Limited 430,577 102,600 Rio Tinto Limited 1,282,830 378,000 WMC Limited 1,173,690 ------------- 3,138,267 ------------- Multi-Industry 4.84% 102,600 Howard Smith Limited 764,575 372,600 Pacific Dunlop Limited 650,191 283,500 Southcorp Limited 1,091,532 ------------- 2,506,298 ------------- Real Estate 8.15% 348,300 General Property Trust 583,995 151,200 Lend Lease Corporation Limited 1,877,904 261,900 Stockland Trust Group 618,032 556,200 Westfield Trust 1,139,821 ------------- 4,219,752 ------------- Telecommunications 9.15% 927,828 Telstra Corporation Limited 4,733,905 ------------- Utilities - Electrical & Gas 1.03% 81,000 Australian Gas Light Company Limited 531,128 ------------- TOTAL COMMON STOCK - BASKET (Cost $55,368,196) 51,653,796 ------------- COMMON STOCK - NON-BASKET 0.22% Gold Mines 0.00% 64,400 RGC Gold Unsecured Notes (Guns)* 0 ------------- Miscellaneous Materials & Components 0.22% 42,222 Westralian Sands Limited 112,745 ------------- TOTAL COMMON STOCK - NON-BASKET (Cost $193,210) 112,745 ------------- To al Investments (Cost $55,561,406)+ 100.00% $51,766,541 ============= - -------------------------------------------------------------------------------- * Non-income producing security. + Aggregate cost for Federal income tax purposes is $55,701,426. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 4,965,926 Excess of tax cost over value (8,900,811) ------------ $(3,934,885) ============= See accompanying notes to financial statements. 21 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Austria WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----------- COMMON STOCK - BASKET 100.00% Banking 21.97% 37,700 Bank Austria AG $ 2,027,972 ----------- Beverages & Tobacco 6.28% 5,680 Austria Tabakwerke AG 419,588 3,350 BBAG Oesterreichische Brau Beteiligungs AG 159,646 ----------- 579,234 ----------- Building Materials & Components 4.90% 2,290 Wienerberger Baustoffindustrie AG 452,515 ----------- Business & Public Services 4.66% 10,050 Flughafen Wien AG 430,284 ----------- Chemicals 2.68% 3,961 Lenzing AG* 247,424 ----------- Constructionction & Housing 4.64% 3,607 Bau Holding AG 137,602 1,080 Bau Holding AG Vorzug 27,862 8,430 Universale-Bau AG 263,105 ----------- 428,569 ----------- Electronic Components, Instruments 0.61% 1,720 Austria Mikro Systeme International AG 56,552 ----------- Energy Sources 8.74% 8,750 OMV AG 806,886 ----------- Insurance 4.93% 1,880 Generali Holding Vienna AG 415,870 260 Generali Holding Vienna AG Vorzug 39,386 ----------- 455,256 ----------- NO. OF SHARES SECURITY VALUE - ------ -------- ----------- Machinery & Engineering 8.19% 1,530 BWT AG $ 319,971 5,630 VA Technologie AG 435,735 ----------- 755,706 ----------- Metals - Steel 3.21% 6,180 Boehler-Uddeholm AG 296,208 ----------- Miscellaneous Materials & Commodities 6.48% 8,250 Mayr-Melnhof Karton AG 392,978 7,440 RHI AG 205,580 ----------- 598,558 ----------- Transportation - Airlines 4.78% 13,410 Austrian Airlines AG 441,646 ----------- Utilities - Electrical & Gas 17.93% 10,330 Oesterreichische Elektrizitaetswirtschafts AG - Class A 1,655,685 ----------- TOTAL COMMON STOCK - BASKET (Cost $9,956,426) 9,232,495 ----------- Total Investments+ (Cost $9,956,426) 100.00% 9,232,495 ======= =========== - ---------- * Non-income producing security. + Aggregate cost for Federal income tax purposes is $10,450,921. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 428,544 Excess of tax cost over value (1,646,970) ----------- $(1,218,426) =========== See accompanying notes to financial statements. 22 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Belgium WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------ -------- ----------- COMMON STOCK - BASKET 100.00% Automobiles 3.96% 1,300 D'Ieteren SA $ 605,109 ----------- Banking 13.50% 26,860 KBC Bancassurance Holding 2,065,564 ----------- Building Materials & Components 3.86% 6,720 Cimenteries CBR Cementbedrijven 591,286 ----------- Chemicals 4.45% 9,900 Solvay SA 680,353 ----------- Electronic Components, Instruments 2.93% 2,580 Barco NV 448,925 ----------- Energy Sources 9.17% 5,500 Electrafina SA* 654,510 1,620 PetroFina SA 749,079 ----------- 1,403,589 ----------- Health & Personal Care 4.75% 14,000 UCB SA 726,965 ----------- Industrial Components 2.09% 780 Bekaert NV 320,251 ----------- Insurance 16.65% 70,000 Fortis B 2,547,453 ----------- Merchandising 8.67% 820 Colruyt NV 615,286 7,400 Delhaize-Le Lion SA 711,640 ----------- 1,326,926 ----------- NO. OF SHARES SECURITY VALUE ------ -------- ----------- Metals - Non Ferrous 2.04% 9,580 Union Miniere SA $ 312,143 ----------- Miscellaneous Materials & Commodities 2.76% 4,180 Glaverbel SA 422,171 ----------- Multi-Industry 4.76% 3,900 Groupe Bruxelles Lambert SA 727,844 ----------- Transportation - Shipping 1.48% 6,560 Compagnie Maritime Belge SA (CMB) 225,770 ----------- Utilities - Electrical & Gas 18.93% 4,260 Electrabel SA 1,777,124 6,360 Tractebel 1,119,219 ----------- 2,896,343 ----------- TOTAL COMMON STOCK - BASKET (Cost $14,748,459) 15,300,692 ----------- Total Investments (Cost $14,748,459)+ 100.00% $15,300,692 ======= =========== - ---------- * Non-index security. + Aggregate cost for Federal income tax purposes is $14,957,063. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 1,643,040 Excess of tax cost over value (1,299,411) ----------- $ 343,629 =========== See accompanying notes to financial statements. 23 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Canada WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Common Stock - Basket 100.00% Aerospace & Military Technology 3.47% 36,400 Bombardier Incorporated - Class B $ 534,124 ------------- Banking 16.85% 15,600 Bank Of Montreal 643,326 27,300 Bank Of Nova Scotia 563,362 23,400 Canadian Imperial Bank of Commerce 551,090 10,400 National Bank Of Canada 144,684 14,300 Royal Bank Of Canada 691,553 ------------- 2,594,015 ------------- Beverages & Tobacco 4.78% 5,200 Molson Company Limited - Class A 74,064 14,300 Seagram Company Limited 662,186 ------------- 736,250 ------------- Broadcasting & Publishing 6.50% 3,900 Quebecor Incorporated - Class B 85,260 10,400 Rogers Communications Incorporated - Class B* 163,975 29,900 Thomson Corporation 751,709 ------------- 1,000,944 ------------- Business & Public Services 1.65% 5,200 Extendicare Incorporated - Class A* 17,913 20,800 Laidlaw Incorporated 159,841 3,900 Loewen Group Incorporated 7,363 6,500 Moore Corporation Limited 68,251 ------------- 253,368 ------------- Chemicals 2.17% 7,800 Agrium Incorporated 62,007 11,700 Methanex Corporation* 49,993 3,900 Potash Corporation Of Saskatchewan Incorporated 221,289 ------------- 333,289 ------------- Electrical & Electronics 14.62% 11,700 Newbridge Networks Corporation* 284,071 33,800 Northern Telecom Limited 1,965,975 ------------- 2,250,046 ------------- Energy Sources 10.35% 6,500 Alberta Energy Company Limited 139,301 6,500 Anderson Exploration Limited* 52,534 5,200 Canadian Natural Resources Limited* 71,825 7,800 Canadian Occidental Petroleum Limited 73,634 5,200 Enbridge Incorporated 244,584 13,000 Gulf Canada Resources Limited* 30,918 27,300 Imperial Oil Limited 421,391 16,900 Petro-Canada 181,371 7,800 Poco Petroleums Limited* 48,314 6,500 Ranger Oil Limited* 18,172 6,500 Renaissance Energy Limited* 57,271 5,200 Suncor Energy Incorporated 152,090 6,500 Talisman Energy Incorporated* 102,054 ------------- 1,593,459 ------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Financial Services 1.32% 10,400 Power Corporation of Canada $ 203,935 ------------- Forest Products & Paper 1.42% 11,700 Abitibi Consolidated Incorporated 93,398 7,800 Domtar Incorporated 46,505 7,800 MacMillan Bloedel Limited 78,026 ------------- 217,929 ------------- Gold Mines 3.44% 19,500 Barrick Gold Corporation 344,270 3,900 Cambior Incorporated 15,373 15,600 Placer Dome Incorporated 170,520 ------------- 530,163 ------------- Health & Personal Care 0.56% 3,900 MDS Incorporated - Class B 85,777 ------------- Industrial Components 1.51% 3,900 Magna International Incorporated - Class A 232,527 ------------- Insurance 0.59% 260 Fairfax Financial Holdings Limited* 91,297 ------------- Machinery & Engineering 0.33% 2,600 United Dominion Industries Limited 50,209 ------------- Merchandising 3.15% 5,200 Canadian Tire Corporation - Class A 132,282 7,800 George Weston Limited 315,204 3,900 Hudson's Bay Company 37,721 ------------- 485,207 ------------- Metals - Non Ferrous 5.55% 13,000 Alcan Aluminium Limited 315,204 3,900 Cameco Corporation 83,064 5,200 Cominco Limited 71,481 10,400 Inco Limited 130,215 15,600 Noranda Incorporated 167,936 3,900 Rio Algom Limited 40,563 6,500 Teck Corporation - Class B 45,860 ------------- 854,323 ------------- Metals - Steel 0.42% 5,200 Dofasco Incorporated 65,452 ------------- Multi-Industry 6.81% 19,500 Canadian Pacific Limited 360,417 9,750 EdperBrascan Corporation - Class A 117,878 26,000 Imasco Limited 570,123 ------------- 1,048,418 ------------- Telecommunications 10.31% 33,800 BCE Incorporated 1,368,122 6,240 BCT Telus Communications Incorporated 173,207 1,768 BCT Telus Communications Incorporated - Class A * 46,147 ------------- 1,587,476 ------------- See accompanying notes to financial statements. 24 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Canada WEBS Index Series (concluded) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Utilities - Electrical & Gas 4.20% 11,700 Transalta Corporation $ 189,510 24,024 Transcanada Pipelines Limited 329,445 6,500 Westcoast Energy Incorporated 127,459 ------------- 646,414 ------------- TOTAL COMMON STOCK - BASKET (Cost $15,341,594) 15,394,622 ------------- Total Investments (Cost $15,341,594)+ 100.00% $ 15,394,622 ======= ============= - ------------ * Non-income producing security. + Aggregate cost for Federal income tax purposes is $15,356,650. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 1,966,256 Excess of tax cost over value (1,928,284) ------------- $ 37,972 ============= See accompanying notes to financial statements. 25 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- France WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- COMMON STOCK - BASKET 99.98% Aerospace & Military Technology 0.63% 10,596 Thomson CSF $ 314,073 ------------- Automobiles 1.15% 4,272 PSA Peugeot Citroen 569,813 ------------- Banking 7.29% 17,892 Banque Nationale de Paris 1,427,966 13,284 Compagnie Financiere de Paribas 1,144,783 7,200 Societe Generale - Class A 1,056,789 ------------- 3,629,538 ------------- Beverages & Tobacco 1.25% 5,508 Pernod Ricard 325,917 5,004 Societe Nationale D'Exploitation 296,644 ------------- 622,561 ------------- Broadcasting & Publishing 1.72% 2,736 Canal Plus 854,822 ------------- Building Materials & Components 3.87% 7,200 Compagnie de Saint Gobain 1,119,232 8,508 Lafarge SA 807,919 ------------- 1,927,151 ------------- Business & Public Services 13.74% 5,400 Cap Gemini SA 933,682 2,544 Sodexho Alliance SA 416,687 10,200 Suez Lyonnaise des Eaux 2,039,082 13,224 Vivendi 3,447,871 ------------- 6,837,322 ------------- Chemicals 1.71% 5,700 Air Liquide 849,766 ------------- Construction & Housing 1.38% 2,220 Bouygues SA 552,008 1,500 Groupe GTM 135,030 ------------- 687,038 ------------- Electrical & Electronics 5.42% 11,700 Alcatel 1,258,741 2,388 Legrand SA 490,493 420 Sagem SA 242,527 11,976 Schneider SA 703,380 ------------- 2,695,141 ------------- Energy Equipment & Services 0.04% 480 Compagnie Generale de Geophysique SA* 19,128 ------------- Energy Sources 7.54% 19,200 Elf Aquitaine SA 2,002,393 16,800 Total SA - Class B 1,752,094 ------------- 3,754,487 ------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Financial Services 0.45% 1,332 CPR SA $ 53,095 348 Societe Eurafrance SA 172,489 ------------- 225,584 ------------- Food & Household Products 3.52% 2,280 Eridania Beghin-Say SA 330,395 5,700 Groupe Danone 1,419,822 ------------- 1,750,217 ------------- Health & Personal Care 12.63% 924 Essilor International SA 353,001 5,280 L'OREAL 3,245,985 26,400 Rhone-Poulenc SA 1,209,999 8,400 Sanofi SA 1,478,214 ------------- 6,287,199 ------------- Industrial Components 2.16% 10,800 Michelin - Class B 481,365 7,092 Valeo SA 592,875 ------------- 1,074,240 ------------- Insurance 5.50% 21,000 AXA 2,738,800 ------------- Leisure & Tourism 2.16% 3,300 Accor SA 768,023 1,236 Club Mediterranee SA* 118,185 720 Pathe SA 188,910 ------------- 1,075,118 ------------- Machinery & Engineering 0.68% 1,596 Compagnie Francaise d'Etudes de Construction Technip 143,672 2,760 Sidel SA 194,219 ------------- 337,891 ------------- Merchandising 10.05% 3,000 Carrefour SA 2,137,423 3,600 Casino Guichard Perrachon SA 330,790 8,700 Pinault-Printemps-Redoute SA 1,443,139 1,716 Promodes 1,093,564 ------------- 5,004,916 ------------- Metals - Steel 0.55% 22,500 Usinor SA 276,152 ------------- Miscellaneous Materials & Commodities 0.35% 1,452 Imetal SA 172,153 ------------- Multi-Industry 0.71% 9,228 Lagardere S.C.A. 354,568 ------------- Real Estate 0.56% 1,620 Simco SA 144,232 1,116 Union du Credit-Bail Immobilier 137,217 ------------- 281,449 ------------- See accompanying notes to financial statements. 26 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- France WEBS Index Series (concluded) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Recreation - Other Consumer Goods 3.37% 6,600 LVMH (Louis Vuitton Moet Hennessy) $ 1,405,627 5,232 Societe BIC SA 269,954 ------------- 1,675,581 ------------- Telecommunications 11.26% 59,904 France Telecom SA 5,606,278 ------------- Utilities - Electrical & Gas 0.29% 1,824 Primagaz Cie 146,175 ------------- TOTAL COMMON STOCK - BASKET (Cost $44,976,139) 49,767,161 ------------- COMMON STOCK - NON-BASKET 0.02% Financial Services 0.02% 17 Societe Eurafrance SA 8,426 ------------- TOTAL COMMON STOCK - NON-BASKET (Cost $8,941) 8,426 ------------- Total Investments (Cost $44,985,080)+ 100.00% $ 49,775,587 ======= ============= - ------------ * Non-income producing security. + Aggregate cost for Federal income tax purposes is $45,011,587. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 6,991,474 Excess of tax cost over value (2,227,474) ------------- $ 4,764,000 ============= See accompanying notes to financial statements. 27 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Germany WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- COMMON STOCK - BASKET 100.00% Automobiles 11.90% 81,200 DaimlerChrysler AG* $ 7,590,410 35,000 Volkswagen AG 2,263,121 11,900 Volkswagen AG Preferred 467,686 ------------- 10,321,217 ------------- Banking 9.48% 52,150 Bayerische HypoVereinsbank AG 2,954,123 57,400 Deutsche Bank AG 2,996,311 65,100 Dresdner Bank AG 2,265,504 ------------- 8,215,938 ------------- Building Materials & Components 0.83% 700 Buderus AG 243,603 6,930 Heidelberger Zement AG 471,682 ------------- 715,285 ------------- Business & Public Services 6.04% 8,400 SAP AG 2,858,680 6,300 SAP AG Vorzug 2,379,159 ------------- 5,237,839 ------------- Chemicals 6.85% 78,400 BASF AG 2,715,438 91,000 Bayer AG 3,221,778 ------------- 5,937,216 ------------- Construction & Housing 0.44% 5,600 Bilfinger & Berger Bau AG 105,126 8,400 Hochtief AG 277,569 ------------- 382,695 ------------- Electrical & Electronics 4.38% 60,200 Siemens AG 3,800,046 ------------- Health & Personal Care 3.14% 11,200 Beiersdorf AG 829,939 23,100 Merck KGAA 811,496 8,400 Schering AG 1,079,843 ------------- 2,721,278 ------------- Industrial Components 0.38% 13,300 Continental AG 331,438 ------------- Insurance 16.09% 30,800 Allianz AG 9,335,587 7,000 Amb Aachener & Muenchener Beteiligungs AG 929,839 3,500 Axa Colonia Konzern AG 311,227 8,400 Muenchener Rueckversicherung AG 1,694,920 8,400 Muenchener Rueckversicherung AG (NEW)* 1,675,555 ------------- 13,947,128 ------------- Machinery & Engineering 1.51% 1,400 Linde AG 786,905 1,400 MAN AG 381,772 700 MAN AG Vorzug 136,018 ------------- 1,304,695 ------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Merchandising 3.03% 4,200 Douglas Holding AG $ 200,108 1,400 Karstadt AG 527,934 26,880 Metro AG 1,900,377 ------------- 2,628,419 ------------- Metals - Steel 0.98% 4,200 Thyssen AG 850,688 ------------- Miscellaneous Materials & Commodities 0.15% 2,800 SGL Carbon AG 132,176 ------------- Multi-Industry 1.17% 2,100 Preussag AG 1,016,676 ------------- Recreation - Other Consumer Goods 0.77% 7,000 Adidas-Salomon AG 670,099 ------------- Telecommunications 22.70% 273,266 Deutsche Telekom AG 12,539,679 53,200 Mannesmann AG 7,142,703 ------------- 19,682,382 ------------- Transportation - Airlines 1.37% 53,900 Deutsche Lufthansa AG 1,186,391 ------------- Utilities - Electrical & Gas 8.79% 39,900 RWE AG 1,738,953 19,950 RWE AG-Preferred 580,381 64,400 VEBA AG 3,435,949 3,500 Viag AG 1,868,516 ------------- 7,623,799 ------------- TOTAL COMMON STOCK - BASKET (Cost $86,823,578) 86,705,405 ------------- COMMON STOCK - NON-BASKET 0.00% Telecommunications 0.00% 3 Deutsche Telekom AG 138 ------------- TOTAL COMMON STOCK - NON-BASKET (Cost $131) 138 ------------- Total Investments (Cost $86,823,709)+ 100.00% $ 86,705,543 ======= ============= - ------------------ * Non-income producing security. + Aggregate cost for Federal income tax purposes is $86,823,709. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 8,295,387 Excess of tax cost over value (8,413,553) ------------- $ (118,166) ============== See accompanying notes to financial statements. 28 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Hong Kong WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- COMMON STOCK - BASKET 100.00% Aerospace & Military Technology 1.19% 489,600 Hong Kong Aircraft Engineering Company Limited $ 789,902 ------------- Banking 12.25% 1,468,800 Bank Of East Asia Limited 2,066,383 489,600 Hang Seng Bank Limited 3,981,104 714,000 Wing Lung Bank 2,101,138 ------------- 8,148,625 ------------- Broadcasting & Publishing 5.84% 5,304,000 Oriental Press Group 527,128 4,284,000 South China Morning Post Holdings Limited 1,838,496 510,000 Television Broadcasts Limited 1,517,269 ------------- 3,882,893 ------------- Electrical & Electronics 2.23% 561,000 Johnson Electric Holdings Limited 1,484,357 ------------- Electronic Components, Instruments 1.03% 3,570,000 Elec & Eltek International Holdings Limited 681,948 ------------- Leisure & Tourism 3.76% 2,448,000 HongKong & Shanghai Hotels Limited 1,658,793 1,020,000 Regal Hotels International 109,270 1,020,000 Shangri-La Asia Limited 730,659 ------------- 2,498,722 ------------- Merchandising 0.83% 306,000 Dickson Concepts International Limited 233,021 1,326,000 Giordano International Limited 321,753 ------------- 554,774 ------------- Miscellaneous Materials & Commodities 1.09% 408,000 Varitronix International Limited 721,444 ------------- Multi-Industry 19.94% 510,000 Hopewell Holdings Limited 223,806 1,428,000 Hutchison Whampoa Limited 9,906,683 765,000 Swire Pacific Limited - Class A 3,129,985 ------------- 13,260,474 ------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Real Estate 28.04% 612,000 Cheung Kong Holdings Limited $ 4,166,731 4,896,000 Chinese Estates Holdings 745,667 2,346,000 Hang Lung Development Company Limited 2,255,828 1,224,000 Hysan Development Company Limited 1,469,217 714,000 Miramar Hotel & Investment Limited 718,811 1,632,000 New World Development Company Limited 3,001,626 612,000 Sun Hung Kai Properties Limited 4,166,731 1,836,000 Wharf Holdings Limited 2,120,886 ------------- 18,645,497 ------------- Telecommunications 10.71% 4,243,200 Hong Kong Telecommunications Limited 7,119,647 ------------- Transportation - Airlines 3.42% 2,040,000 Cathay Pacific Airways Limited 2,277,550 ------------- Transportation - Shipping 0.89% 3,672,000 Shun Tak Holdings Limited 592,426 ------------- Utilities - Electrical & Gas 8.78% 561,000 CLP Holdings Limited 2,642,879 2,754,000 Hong Kong & China Gas Company Limited 3,199,102 ------------- 5,841,981 ------------- TOTAL COMMON STOCK - BASKET (Cost $67,119,356) 66,500,240 ------------- COMMON STOCK - NON-BASKET 0.00% Financial Services 0.00% 276,000 Peregrine Investment Holdings Limited*,** 0 ------------- TOTAL COMMON STOCK - NON-BASKET (Cost $397,590) 0 ------------- Total Investments (Cost $67,516,946)+ 100.00% $ 66,500,240 ======= ============= - ------------ * Non-income producing security. ** Fair valued security. + Aggregate cost for Federal income tax purposes is $71,323,046. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 2,080,749 Excess of tax cost over value (6,903,555) ------------- $ (4,822,806) ============= See accompanying notes to financial statements. 29 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Italy WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- COMMON STOCK - BASKET 100.00% Automobiles 4.27% 768,320 Fiat SpA $ 2,323,744 600,000 Fiat SpA - Preferred 916,227 ------------- 3,239,971 ------------- Banking 19.70% 380,580 Banca Commerciale Italiana SpA 2,384,396 93,060 Banca Popolare di Milano SpA 782,762 436,160 Banco Intesa SpA 2,392,653 198,480 Banco Intesa SpA Rnc 523,594 214,260 Istituto Bancario San Paolo di Torino SpA 3,715,932 148,320 Mediobanca SpA 1,697,951 663,600 Unicredito Italiano SpA 3,441,445 ------------- 14,938,733 ------------- Broadcasting & Publishing 4.48% 51,700 Arnoldo Mondadori Editore SpA 794,079 275,620 Mediaset SpA 2,606,697 ------------- 3,400,776 ------------- Building Materials & Components 1.49% 100,000 Italcementi SpA 1,131,176 ------------- Construction & Housing 0.75% 95,080 Sirti SpA 565,735 ------------- Energy Sources 12.77% 1,658,160 ENI SpA 9,685,995 ------------- Food & Household Products 0.79% 424,780 Parmalat Finanziaria SpA 598,761 ------------- Industrial Components 1.91% 497,820 Pirelli SpA 1,448,794 ------------- Insurance 14.75% 157,800 Assicurazioni Generali SpA 6,135,926 1,001,460 Istituto Nazionale delle Assicurazioni SpA 2,413,196 135,920 Riunione Adriatica di Sicurta SpA 1,429,315 76,040 Riunione Adriatica di Sicurta SpA Rnc 551,031 59,920 Societa Assicuratrice Industriale SpA 657,606 ------------- 11,187,074 ------------- Merchandising 0.70% 60,080 La Rinascente SpA 530,946 ------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Multi-Industry 2.66% 1,347,020 Montedison SpA $ 1,344,639 311,740 Montedison SpA Rnc 252,839 300,000 SNIA BPD SpA 422,874 ------------- 2,020,352 ------------- Real Estate 0.71% 980,620 Unione Immobiliare SpA * 538,372 ------------- Recreation - Other Consumer Goods 0.51% 77,160 Bulgari SpA 385,160 ------------- Telecommunications 28.46% 627,560 Olivetti SpA* 1,929,025 1,386,760 Telecom Italia Mobile SpA 9,382,488 277,120 Telecom Italia Mobile SpA Rnc 1,115,891 758,300 Telecom Italia SpA 8,036,610 165,400 Telecom Italia SpA Rnc 1,121,417 ------------- 21,585,431 ------------- Textiles & Apparel 1.53% 572,860 Benetton Group SpA 933,898 26,220 Marzotto SpA 227,195 ------------- 1,161,093 ------------- Transportation - Airlines 0.86% 173,540 Alitalia SpA 648,887 ------------- Utilities - Electrical & Gas 3.66% 154,300 Edison SpA 1,420,852 48,760 Falck Acciaierie & Ferriere Lombarde SpA 398,416 189,260 Italgas SpA 961,353 ------------- 2,780,621 ------------- TOTAL COMMON STOCK - BASKET (Cost $58,530,456) 75,847,877 ------------- Total Investments (Cost $58,530,456)+ 100.00% $ 75,847,877 ======= ============= - ---------------- * Non-income producing security. + Aggregate cost for Federal income tax purposes is $60,020,669. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 16,316,430 Excess of tax cost over value (489,222) ------------- $ 15,827,208 ============= See accompanying notes to financial statements. 30 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Japan WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- COMMON STOCK - BASKET 99.99% Appliances & Household Durables 6.49% 450,000 Matsushita Electric Industrial Company Limited $ 7,528,445 50,000 Pioneer Electronic Corporation 891,277 450,000 Sanyo Electric Company Limited 1,270,544 250,000 Sharp Corporation 2,439,949 100,000 Sony Corporation 7,568,479 ------------- 19,698,694 ------------- Automobiles 9.70% 200,000 Honda Motor Company Limited 7,703,329 550,000 Nissan Motor Company Limited 2,146,228 750,000 Toyota Motor Corporation 19,595,449 ------------- 29,445,006 ------------- Banking 12.74% 450,000 Asahi Bank Limited 1,972,187 250,000 Ashikaga Bank Limited 419,300 900,000 Bank Of Tokyo-Mitsubishi Limited 10,847,029 250,000 Bank Of Yokohama Limited 495,154 200,000 Chiba Bank Limited 741,677 550,000 Fuji Bank Limited 2,164,770 100,000 Gunma Bank Limited 750,105 150,000 Hokuriku Bank Limited 262,958 550,000 Industrial Bank Of Japan Limited 2,748,841 200,000 Joyo Bank Limited 706,279 300,000 Mitsubishi Trust & Banking Corporation 2,548,673 250,000 Mitsui Trust & Banking Company Limited 246,523 700,000 Sakura Bank Limited 1,522,124 100,000 Seventy-Seven Bank Limited 892,541 200,000 Shizuoka Bank Limited 2,408,765 600,000 Sumitomo Bank Limited 7,236,410 400,000 Tokai Bank Limited 1,958,702 50,000 Yamaguchi Bank Limited 493,047 250,000 Yasuda Trust & Banking Company Limited* 233,881 ------------- 38,648,966 ------------- Beverages & Tobacco 1.55% 100,000 Asahi Breweries Limited 1,324,905 250,000 Kirin Brewery Company Limited 2,960,388 100,000 Sapporo Breweries Limited 415,508 ------------- 4,700,801 ------------- Building Materials & Components 1.25% 100,000 Inax Corporation 642,225 100,000 Sekisui Chemical Company Limited 632,111 50,000 Sumitomo Forestry Company Limited 337,126 250,000 Taiheiyo Cement Corporation 663,717 50,000 Tostem Corporation 800,674 100,000 Toto Limited 717,236 ------------- 3,793,089 ------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Business & Public Services 1.84% 150,000 Dai Nippon Printing Company Limited $ 2,087,231 100,000 Kamigumi Company Limited 439,949 50,000 Kokuyo Company Limited 743,784 50,000 Mitsubishi Logistics Corporation 565,107 150,000 Toppan Printing Company Limited 1,756,005 ------------- 5,592,076 ------------- Chemicals 3.13% 300,000 Asahi Chemical Industry Company Limited 1,438,685 200,000 Dainippon Ink & Chemicals Incorporated 595,027 100,000 Kuraray Company Limited 983,565 500,000 Mitsubishi Chemical Corporation 1,222,082 150,000 Mitsubishi Rayon Company Limited 355,246 50,000 Shin-Etsu Chemical Company Limited 1,171,513 250,000 Showa Denko K.K. 210,704 350,000 Sumitomo Chemical Company Limited 1,271,386 200,000 Teijin Limited 718,078 300,000 Toray Industries Incorporated 1,312,263 150,000 Tosoh Corporation 219,975 ------------- 9,498,524 ------------- Construction & Housing 2.32% 100,000 Daiwa House Industry Company Limited 1,024,863 350,000 Kajima Corporation 840,708 50,000 Kandenko Company Limited 325,327 50,000 Kinden Corporation 657,396 350,000 Kumagai Gumi Company Limited* 247,788 100,000 Nishimatsu Construction Company Limited 483,776 150,000 Obayashi Corporation 676,359 150,000 Sekisui House Limited 1,536,030 250,000 Shimizu Corporation 809,102 250,000 Taisei Corporation 434,050 ------------- 7,035,399 ------------- Data Processing & Reproduction 2.85% 200,000 Canon Incorporated 4,281,500 350,000 Fujitsu Limited 4,365,782 ------------- 8,647,282 ------------- Electrical & Electronics 3.24% 700,000 Hitachi Limited 4,424,779 50,000 Makita Corporation 479,140 450,000 Mitsubishi Electric Corporation* 1,350,190 300,000 NEC Corporation 3,029,077 50,000 Omron Corporation 543,616 ------------- 9,826,802 ------------- See accompanying notes to financial statements. 31 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Japan WEBS Index Series (continued) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Electronic Components, Instruments 3.78% 50,000 Fanuc Limited $ 1,866,835 50,000 Kyocera Corporation 2,359,882 50,000 Murata Manufacturing Company Limited 2,250,316 100,000 Nikon Corporation 1,399,073 100,000 Olympus Optical Company Limited 1,087,231 50,000 Tokyo Electron Limited 2,275,600 50,000 Yokogawa Electric Corporation 237,252 ------------- 11,476,189 ------------- Energy Sources 0.58% 150,000 Cosmo Oil Company Limited 212,389 250,000 Japan Energy Corporation 223,346 150,000 Mitsubish Oil Company Limited* 270,544 300,000 Nippon Oil Company Limited 1,054,362 ------------- 1,760,641 ------------- Financial Services 2.81% 50,000 Acom Company Limited 2,954,067 50,000 Credit Saison Company Limited 1,051,412 300,000 Daiwa Securities Company Limited 1,238,938 400,000 Nomura Securities Coompany Limited 3,290,350 ------------- 8,534,767 ------------- Food & Household Products 2.13% 150,000 Ajinomoto Company Incorporated 1,639,697 100,000 Kao Corporation 1,997,472 100,000 Meiji Seika Incorporated 406,237 50,000 Nippon Meat Packers Incorporated 678,887 50,000 Nissin Food Products Company Limited 1,057,733 50,000 Yamazaki Baking Company Limited 672,566 ------------- 6,452,592 ------------- Forest Products & Paper 0.66% 200,000 Nippon Paper Industries Company 765,276 250,000 Oji Paper Company Limited 1,234,724 ------------- 2,000,000 ------------- Health & Personal Care 5.28% 50,000 Daiichi Pharmaceutical Company Limited 761,062 50,000 Eisai Company Limited 935,525 100,000 Kyowa Hakko Kogyo Company Limited 472,819 100,000 Sankyo Company Limited 2,149,178 100,000 Shionogi & Company Limited 774,547 100,000 Shiseido Company Limited 1,213,654 50,000 Taisho Pharmaceutical Company Limited 1,327,434 200,000 Takeda Chemical Industries 6,877,370 50,000 Yamanouchi Pharmaceutical Company Limited 1,525,495 ------------- 16,037,084 ------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Industrial Components 4.57% 150,000 Bridgestone Corporation $ 3,356,511 200,000 Denso Corporation 3,472,398 100,000 Fujikura Limited 539,402 150,000 Furukawa Electric Company Limited 562,579 100,000 Minebea Company Limited 994,522 100,000 NGK Insulators Limited 1,147,071 50,000 NGK Spark Plug Company Limited 549,937 150,000 NSK Limited 681,416 150,000 NTN Corporation 458,913 200,000 Sumitomo Electric Industries 2,105,352 ------------- 13,868,101 ------------- Insurance 2.42% 200,000 Mitsui Marine & Fire Insurance Company Limited 945,638 100,000 Nichido Fire & Marine Insurance Company Limited 536,873 150,000 Nippon Fire & Marine Insurance Company Limited 462,705 200,000 Sumitomo Marine & Fire Insurance Company Limited 1,114,201 400,000 Tokio Marine & Fire Insurance Company Limited 4,281,500 ------------- 7,340,917 ------------- Leisure & Tourism 0.08% 50,000 Tokyo Dome Corporation 257,059 ------------- Machinery & Engineering 3.16% 100,000 Amada Company Limited 492,204 100,000 Daikin Industries Limited 800,674 50,000 Ebara Corporation 520,017 250,000 Hitachi Zosen Corporation 305,520 300,000 Kawasaki Heavy Industries Limited 573,957 250,000 Komatsu Limited 1,224,189 350,000 Kubota Corporation 861,357 50,000 Kurita Water Industries Limited 659,503 700,000 Mitsubishi Heavy Industries Limited 2,601,770 300,000 Mitsui Engineering & Shipbuilding Company Limited* 265,487 200,000 Sumitomo Heavy Industries Limited 446,692 50,000 Toyoda Automatic Loom Works Limited 884,922 ------------- 9,596,292 ------------- Merchandising 3.71% 150,000 Daiei, Incorporated 372,946 50,000 Hankyu Department Stores 308,049 50,000 Isetan Company Limited Incorporated 434,471 100,000 Ito-Yokado Company Limited 5,832,280 50,000 Jusco Company Limited 809,524 100,000 Marui Company Limited 1,635,061 100,000 Mitsukoshi Limited 241,045 50,000 Mycal Corporation 280,236 50,000 Seiyu Limited* 172,777 50,000 Takashimaya Company Limited 375,895 50,000 Uny Company Limited 801,096 ------------- 11,263,380 ------------- See accompanying notes to financial statements. 32 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Japan WEBS Index Series (concluded) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Metals - Non-Ferrous 0.33% 250,000 Mitsubishi Materials Corporation $ 438,264 200,000 Nippon Light Metal Company Limited 197,219 100,000 Sumitomo Metal Mining Company 364,939 ------------- 1,000,422 ------------- Metals - Steel 1.41% 450,000 Kawasaki Steel Corporation 701,643 1,300,000 Nippon Steel Corporation 2,278,972 700,000 NKK Corporation 412,979 650,000 Sumitomo Metal Industries Limited* 651,917 50,000 Tokyo Steel Manufacturing Company Limited 224,189 ------------- 4,269,700 ------------- Miscellaneous Materials & Commodities 1.20% 250,000 Asahi Glass Company Limited 1,662,453 50,000 Nitto Denko Corporation 748,420 50,000 Toyo Seikan Kaisha Limited 952,381 200,000 Ube Industries Limited 283,186 ------------- 3,646,440 ------------- Real Estate 1.37% 300,000 Mitsubishi Estate Company Limited 2,960,809 150,000 Mitsui Fudosan Company Limited 1,202,276 ------------- 4,163,085 ------------- Recreation - Other Consumer Goods 2.32% 100,000 Casio Computer Company Limited 666,667 100,000 Citizen Watch Company Limited 676,780 100,000 Fuji Photo Film Company 3,674,673 100,000 Konica Corporation 420,565 50,000 Shimano Incorporated 1,150,442 50,000 Yamaha Corporation 462,284 ------------- 7,051,411 ------------- Telecommunications 6.93% 2,550 Nippon Telegraph & Telephone Corporation 21,018,963 ------------- Textiles & Apparel 0.20% 50,000 Nisshinbo Industries Incorporated 166,456 350,000 Toyobo Company Limited 436,578 ------------- 603,034 ------------- Transportation - Airlines 0.34% 400,000 Japan Airlines Company Limited 1,021,492 ------------- Transportation - Road & Rail 4.43% 800 East Japan Railway Company 4,814,159 250,000 Hankyu Corporation 1,051,412 100,000 Keihin Electric Express Railway Company Limited 307,627 300,000 Kinki Nippon Railway Company Limited 1,582,807 200,000 Nagoya Railroad Company Limited 675,938 NO. OF SHARES SECURITY VALUE ------- -------- ----- Transportation - Road & Rail (continued) 150,000 Nankai Electric Railway Company Limited $ 704,172 200,000 Nippon Express Company Limited 1,001,264 150,000 Odakyu Electric Railway Company 505,689 50,000 Seino Transportation Company Limited 265,487 200,000 Tobu Railway Company Limited 574,800 250,000 Tokyu Corporation 604,720 100,000 Yamato Transport Company Limited 1,345,976 ------------- 13,434,051 ------------- Transportation - Shipping 0.49% 300,000 Mitsui O.S.K. Lines Limited 467,762 300,000 Nippon Yusen Kabushiki Kaisha 1,011,378 ------------- 1,479,140 ------------- Utilities - Electrical & Gas 4.76% 200,000 Kansai Electric Power Company Incorporated 3,809,524 550,000 Osaka Gas Company Limited 1,645,596 100,000 Tohoku Electric Power Company Incorporated 1,543,194 300,000 Tokyo Electric Power Company 6,055,626 600,000 Tokyo Gas Company Limited 1,405,815 ------------- 14,459,755 ------------- Wholesale & International Trade 1.92% 300,000 Itochu Corporation 525,917 300,000 Marubeni Corporation 498,104 300,000 Mitsubishi Corporation 1,618,205 400,000 Mitsui & Company Limited 2,177,834 200,000 Sumitomo Corporation 1,004,635 ------------- 5,824,695 ------------- TOTAL COMMON STOCK - BASKET (Cost $332,110,889) 303,445,849 ------------- COMMON STOCK - NON-BASKET 0.01% Electronic Components, Instruments 352 Tokyo Electron Limited 0.01% 16,020 ------------- Financial Services 0.00% 400 Credit Saison Company Limited 8,411 ------------- TOTAL COMMON STOCK - NON-BASKET (Cost $19,139) 24,431 ------------- Total Investments (Cost $332,130,028)+ 100.00% $ 303,470,280 ======= ============= - ---------------- * Non-income producing security. + Aggregate cost for Federal income tax purposes is $334,375,631. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 9,065,147 Excess of tax cost over value (39,970,498) ------------- $ (30,905,351) ============= See accompanying notes to financial statements. 33 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Malaysia (Free) WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- COMMON STOCK - BASKET 99.80% Automobiles 4.60% 454,000 Edaran Otomobil Nasional BHD $ 523,846 454,000 Oriental Holdings BHD 559,665 681,000 Perusahaan Otomobil Nasional BHD 711,894 1,589,000 Tan Chong Motor Holdings BHD 341,619 ------------- 2,137,024 ------------- Banking 14.39% 1,135,000 Commerce Asset Holdings BHD 788,008 2,951,000 Malayan Banking BHD 4,074,359 2,043,000 Public Bank BHD (Foreign) 846,213 2,043,000 RHB Capital BHD 983,219 ------------- 6,691,799 ------------- Beverages & Tobacco 6.00% 1,135,000 Guinness Anchor BHD 828,304 454,000 Rothmans of Pall Mall BHD 1,961,065 ------------- 2,789,369 ------------- Broadcasting & Publishing 0.62% 454,000 New Straits Times Press BHD 286,548 ------------- Building Materials & Components 2.04% 681,000 Hume Industries (Malaysia) BHD 359,976 908,000 Malayan Cement BHD 218,493 2,043,000 Pan Malaysia Cement Works BHD 370,722 ------------- 949,191 ------------- Construction & Housing 3.63% 227,000 Ekran BHD* 40,072 1,589,000 YTL Corporation BHD 1,645,414 ------------- 1,685,486 ------------- Electrical & Electronics 0.17% 681,000 Time Engineering BHD* 81,263 ------------- Electronic Components, Instruments 1.14% 454,000 Malaysian Pacific Industries BHD 528,324 ------------- Energy Sources 1.13% 681,000 Shell Refining Company BHD 523,846 ------------- Financial Services 2.58% 681,000 AMMB Holdings BHD 467,432 1,135,000 Idris Hydraulic (Malaysia) BHD* 164,541 1,135,000 MBF Capital BHD* 133,200 908,000 Rashid Hussain BHD* 433,404 ------------- 1,198,577 ------------- Food & Household Products 3.95% 454,000 Nestle (Malaysia) BHD 1,316,331 681,000 Perlis Plantations BHD 521,160 ------------- 1,837,491 ------------- Industrial Components 0.38% 908,000 Leader Universal Holdings BHD* 178,197 ------------- Leisure & Tourism 6.77% 2,951,000 Magnum Corporation BHD 1,140,821 2,043,000 Resorts World BHD 2,006,734 ------------- 3,147,555 ------------- Machinery & Engineering 1.14% 681,000 UMW Holdings BHD 529,219 ------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Metals - Steel 0.40% 2,497,000 Amsteel Corporation BHD $ 187,152 ------------- Miscellaneous Materials & Commodities 8.04% 2,043,000 Golden Hope Plantations BHD 1,531,243 1,589,000 Highlands & Lowlands BHD 717,714 681,000 IOI Corporation BHD 278,041 227,000 Kian Joo Can Factory BHD 235,059 908,000 Kuala Lumpur Kepong BHD 976,055 ------------- 3,738,112 ------------- Multi-Industry 9.70% 3,178,000 Berjaya Group BHD 520,264 454,000 Land & General BHD* 71,637 1,816,000 Malaysia Mining Corporation BHD 651,897 1,589,000 Multi-Purpose Holdings BHD* 426,241 2,724,000 Sime Darby BHD 2,278,059 1,135,000 United Engineers (Malaysia) BHD* 559,665 ------------- 4,507,763 ------------- Real Estate 1.15% 2,043,000 Hong Leong Properties BHD 278,041 1,135,000 Malaysian Resources Corporation BHD 257,446 ------------- 535,487 ------------- Telecommunications 15.65% 2,043,000 Technology Resources Industries BHD 705,178 4,086,000 Telekom Malaysia BHD 6,568,225 ------------- 7,273,403 ------------- Transportation - Airlines 0.49% 681,000 Malaysian Airline System BHD 229,686 ------------- Transportation - Shipping 4.30% 2,043,000 Malaysia International Shipping BHD (Foreign) 1,998,675 ------------- Utilities - Electrical & Gas 11.53% 4,313,000 Tenaga Nasional BHD 5,359,349 ------------- TOTAL COMMON STOCK - BASKET (Cost $70,468,510) 46,393,516 ------------- COMMON STOCK - NON-BASKET 0.20% Banking 0.20% 226,399 Public Bank BHD (Foreign) 93,775 ------------- Metals - Steel 0.00% 35,944 Silverstone BHD*,** 0 ------------- TOTAL COMMON STOCK - NON-BASKET (Cost $86,017) 93,775 ------------- Total Investments (Cost $70,554,527)+ 100.00% $ 46,487,291 ======= ============= - ------------------- * Non-income producing security. ** Fair valued security. + Aggregate cost for Federal income tax purposes is $73,243,954. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 77,911 Excess of tax cost over value (26,834,574) ------------- $ (26,756,663) ============= See accompanying notes to financial statements. 34 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Mexico (Free) WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - ------- -------- ----- COMMON STOCK - BASKET 99.53% Banking 2.74% 132,000 Grupo Financiero Banamex Accival SA de CV - Series B* $ 202,718 11,000 Grupo Financiero Banamex Accival SA de CV - Series L* 15,560 495,000 Grupo Financiero Bancomer SA de CV - Series B 117,530 ------------- 335,808 ------------- Beverages & Tobacco 20.98% 99,000 Empresas La Moderna SA de CV - Series A* 584,148 198,000 Fomento Economico Mexicano SA de CV - Series UBD 523,132 53,900 Grupo Continental SA 134,512 594,000 Grupo Modelo SA de CV - Series C 1,326,335 ------------- 2,568,127 ------------- Broadcasting & Publishing 4.96% 44,000 Grupo Televisa SA - Series CPO* 606,820 ------------- Building Materials & Components 6.78% 55,000 Apasco SA de CV 243,951 88,000 Cemex SA de CV - Series A 252,508 77,000 Cemex SA de CV - Series B 238,449 33,000 Cemex SA de CV - Series CPO 95,191 ------------- 830,099 ------------- Chemicals 0.28% 33,000 Cydsa SA de CV 33,675 ------------- Construction & Housing 1.31% 22,000 Corporacion GEO SA de CV - Series B* 58,459 132,000 Empresas ICA Sociedad Controladora SA de CV 101,359 ------------- 159,818 ------------- Energy Equipment & Services 0.58% 11,000 Tubos de Acero de Mexico SA 71,129 ------------- Financial Services 0.53% 539,000 Grupo Financiero Probursa SA de CV - Series B* 65,350 ------------- Food & Household Products 5.55% 264,000 Grupo Industrial Bimbo SA de CV - Series A 528,133 176,000 Grupo Industrial Maseca SA de CV - Series B 151,149 ------------- 679,282 ------------- Health & Personal Care 5.30% 209,000 Kimberly-Clark de Mexico SA de CV -Series A 649,331 ------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Merchandising 10.43% 88,000 Cifra SA de CV - Series C* $ 112,917 682,000 Cifra SA de CV - Series V* 882,001 198,000 Controladora Comercial Mexicana SA de CV - Series UBC 166,042 242,000 Grupo Elektra SA de CV - Series CPO 116,140 ------------- 1,277,100 ------------- Metals - Non Ferrous 4.62% 121,000 Grupo Mexico SA - Series B 334,362 77,000 Industrias Penoles SA - Series CP 231,836 ------------- 566,198 ------------- Miscellaneous Materials & Commodities 0.82% 66,000 Vitro SA - Series A 100,292 ------------- Multi-Industry 9.76% 143,000 Alfa SA de CV - Series A 353,978 341,000 Desc SA de CV - Series B 326,616 154,000 Grupo Carso SA de CV - Series A1 515,019 ------------- 1,195,613 ------------- Telecommunications 24.89% 253,000 Telefonos de Mexico SA - Series A 728,517 814,000 Telefonos de Mexico SA - Series L 2,319,252 ------------- 3,047,769 ------------- TOTAL COMMON STOCK - BASKET (Cost $13,193,577) 12,186,411 ------------- COMMON STOCK - NON-BASKET 0.47% Machinery & Engineering 0.15% 55,000 Consorcio Grupo Dina SA* 18,616 ------------- Miscellaneous Materials & Commodities 0.32% 72,000 Empaques Ponderosa SA de CV - Series B* 38,555 ------------- TOTAL COMMON STOCK - NON-BASKET (Cost $96,009) 57,171 ------------- Total Investments (Cost $13,289,586)+ 100.00% $ 12,243,582 ======= ============= - ---------------------- * Non-income producing security. + Aggregate cost for Federal income tax purposes is $13,312,167. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 662,870 Excess of tax cost over value (1,731,455) ------------- $ (1,068,585) ============= See accompanying notes to financial statements. 35 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Netherlands WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - ------- -------- ----- COMMON STOCK - BASKET 100.00% Appliances & Household Durables 4.76% 17,600 Royal Philips Electronics NV $ 1,226,905 ------------- Banking 4.69% 59,400 ABN Amro Holding NV 1,209,636 ------------- Beverages & Tobacco 4.24% 20,900 Heineken NV 1,092,139 ------------- Broadcasting & Publishing 6.47% 50,424 Elsevier NV 819,263 4,400 Wolters Kluwer NV 847,724 ------------- 1,666,987 ------------- Business & Public Services 6.93% 13,134 Getronics NV 573,137 28,600 TNT Post Group NV 978,022 11,000 Vedior NV 233,667 ------------- 1,784,826 ------------- Chemicals 3.69% 25,080 Akzo Nobel NV 951,262 ------------- Construction & Housing 0.94% 16,060 Hollandsche Beton Groep NV 153,387 2,794 IHC Caland NV 90,177 ------------- 243,564 ------------- Data Processing & Reproduction 2.26% 20,900 Oce NV 581,633 ------------- Energy Equipment & Services 0.81% 8,580 Koninklijke Pakhoed NV 208,163 ------------- Energy Sources 19.49% 114,400 Royal Dutch/Shell Group 5,023,548 ------------- Financial Services 9.56% 44,000 Ing Groep NV 2,463,471 ------------- Food & Household Products 8.62% 30,800 Unilever NV - CVA 2,221,471 ------------- NO. OF SHARES SECURITY VALUE - ------- -------- ----- Forest Products & Paper 0.89% 12,320 Buhrmann NV $ 230,600 ------------- Insurance 10.25% 25,300 Aegon NV 2,641,348 ------------- Machinery & Engineering 0.46% 6,358 Stork NV 117,959 ------------- Merchandising 4.76% 31,900 Koninklijke Ahold NV 1,225,697 ------------- Metals - Steel 0.77% 6,600 Koninklijke Hoogovens NV 198,889 ------------- Telecommunications 4.93% 24,200 Koninklijke Kpn NV 1,269,896 ------------- Transportation - Airlines 2.02% 18,700 KLM - Konin Luchvaart Mij NV 521,435 ------------- Transportation - Road & Rail 1.09% 24,200 Koninklijke Nedlloyd NV 280,280 ------------- Wholesale & International Trade 2.37% 19,800 Hagemeyer NV 610,796 ------------- TOTAL COMMON STOCK - BASKET (Cost $26,773,410) 25,770,505 ------------- Total Investments (Cost $26,773,410)+ 100.00% $ 25,770,505 ======= ============= - ------------------- + Aggregate cost for Federal income tax purposes is $26,828,856. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 1,215,210 Excess of tax cost over value (2,273,561) ------------- $ (1,058,351) ============= See accompanying notes to financial statements. 36 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Singapore (Free) WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE - ------- -------- ----- COMMON STOCK - BASKET 100.00% Automobiles 0.63% 160,000 Cycle & Carriage Limited $ 585,366 ------------- Banking 26.78% 960,000 Development Bank of Singapore Limited (Foreign) 6,968,641 1,760,000 Oversea-Chinese Banking Corporation Limited 11,753,775 640,000 Overseas Union Bank Limited 2,341,463 640,000 United Overseas Bank Limited (Foreign) 3,753,775 ------------- 24,817,654 ------------- Beverages & Tobacco 2.93% 800,000 Fraser & Neave Limited 2,717,770 ------------- Broadcasting & Publishing 3.34% 272,000 Singapore Press Holdings Limited (Foreign) 3,095,935 ------------- Business & Public Services 1.52% 640,000 Parkway Holdings Limited 1,122,416 160,000 Sembawang Marine and Logistics Limited 282,462 ------------- 1,404,878 ------------- Electronic Components, Instruments 2.96% 160,000 Creative Technology Limited 2,072,009 160,000 Venture Manufacturing (Singapore) Limited 673,635 ------------- 2,745,644 ------------- Leisure & Tourism 1.63% 160,000 Hotel Properties Limited 69,686 960,000 Shangri-La Hotel Limited 1,438,328 ------------- 1,508,014 ------------- Machinery & Engineering 3.71% 4,000,000 Singapore Technologies Engineering Limited 3,437,863 ------------- Merchandising 0.44% 160,000 Robinson & Company Limited 406,969 ------------- Metals - Steel 0.33% 320,000 Natsteel Limited 302,904 ------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Multi-Industry 10.60% 640,000 Haw Par Corporation Limited $ 717,305 1,600,000 Keppel Corporation Limited 3,716,609 2,880,000 Sembcorp Industries Limited* 3,127,526 2,560,000 Straits Trading Company Limited 2,259,698 ------------- 9,821,138 ------------- Real Estate 13.14% 960,000 City Developments Limited 4,013,937 2,240,000 DBS Land Limited 2,770,732 160,000 First Capital Corporation Limited 117,073 5,920,000 United Industrial Corporation Limited 2,440,883 4,480,000 United Overseas Land Limited 2,835,772 ------------- 12,178,397 ------------- Telecommunications 16.21% 10,559,994 Singapore Telecommunications Limited 15,024,382 ------------- Transportation - Airlines 12.73% 1,600,000 Singapore Airlines Limited (Foreign) 11,800,232 ------------- Transportation - Road & Rail 1.76% 5,920,000 Comfort Group Limited 1,632,985 ------------- Transportation - Shipping 1.29% 3,520,000 Neptune Orient Lines Limited* 1,195,819 ------------- TOTAL COMMON STOCK - BASKET (Cost $86,631,301) 92,675,950 ------------- Total Investments (Cost $86,631,301)+ 100.00% $ 92,675,950 ======= ============= - ------------------- * Non-income producing security. + Aggregate cost for Federal income tax purposes is $91,914,825. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 7,982,488 Excess of tax cost over value (7,221,363) ------------- $ 761,125 ============= See accompanying notes to financial statements. 37 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Spain WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- COMMON STOCK - BASKET 99.74% Banking 28.69% 76,000 Argentaria SA $ 1,818,841 332,500 Banco Bilbao Vizcaya SA 4,924,114 165,300 Banco Central Hispanoamericano SA 1,972,545 147,250 Banco Santander SA 2,925,893 ------------- 11,641,393 ------------- Beverages & Tobacco 3.41% 21,166 El Aguila SA* 232,361 51,300 Tabacalera SA 1,151,126 ------------- 1,383,487 ------------- Business & Public Services 5.50% 76,000 Autopistas Concesionaria Espanola SA 1,077,955 16,112 Prosegur Cia de Seguridad SA 158,129 15,960 Sociedad General de Aguas de Barcelona SA 995,189 ------------- 2,231,273 ------------- Chemicals 0.38% 126,977 Ercros SA* 153,335 ------------- Construction & Housing 5.38% 9,500 Actividades de Construccion y Servicios SA 350,419 16,093 Dragados & Construcciones SA 621,877 17,100 Fomento de Construcciones y Contratas SA 1,212,699 ------------- 2,184,995 ------------- Energy Sources 4.43% 34,200 Repsol SA 1,798,399 ------------- Food & Household Products 1.23% 24,491 Azucarera Ebro Agricolas SA 500,623 ------------- Forest Products & Paper 0.31% 7,600 Empresa Nacional de Celulosas SA 125,483 ------------- Insurance 1.14% 21,128 Corporacion Mapfre 461,568 ------------- Leisure & Tourism 1.29% 5,700 Sol Melia SA 212,066 38,000 TelePizza SA* 310,788 ------------- 522,854 ------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Machinery & Engineering 0.69% 9,500 Zardoya Otis SA $ 277,936 ------------- Metals - Steel 1.07% 16,625 Acerinox SA 434,556 ------------- Miscellaneous Materials & Commodities 0.52% 6,973 Viscofan Industria Navarra De Envolturas Celulosicas SA 212,196 ------------- Multi-Industry 1.47% 4,123 Corporacion Financiera Alba SA 595,201 ------------- Real Estate 3.39% 23,161 Inmobiliaria Urbis SA* 373,765 9,500 Metrovacesa SA 244,563 62,244 Vallehermoso SA 759,165 ------------- 1,377,493 ------------- Telecommunications 18.17% 161,500 Telefonica SA 7,375,482 ------------- Utilities - Electrical & Gas 22.67% 163,400 Endesa SA 4,330,260 19,000 Gas Natural SDG SA 1,888,716 114,000 Iberdrola SA 1,783,381 70,300 Union Electrica Fenosa SA 1,195,450 ------------- 9,197,807 ------------- TOTAL COMMON STOCK - BASKET (Cost $36,199,518) 40,474,081 ------------- COMMON STOCK - NON-BASKET 0.26% Telecommunications 0.26% 2,324 Telefonica SA 106,134 ------------- TOTAL COMMON STOCK - NON-BASKET (Cost $82,241) 106,134 ------------- Total Investments (Cost $36,281,759)+ 100.00% $ 40,580,215 ======= ============= - --------------------- * Non-income producing security. + Aggregate cost for Federal income tax purposes is $36,287,841. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 4,678,653 Excess of tax cost over value (386,279) ------------- $4,292,374 ============= See accompanying notes to financial statements. 38 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Sweden WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- COMMON STOCK - BASKET 100.00% Appliances & Household Durables 4.53% 38,500 Electrolux AB - B $ 729,025 ------------ Automobiles 4.39% 13,200 Volvo AB - A 335,144 14,300 Volvo AB - B 370,038 ------------ 705,182 ------------ Banking 11.05% 27,500 ForeningsSparbanken AB 627,892 47,300 Skandinaviska Enskilda Banken - A 527,028 17,600 Svenska Handelsbanken - A 621,529 ------------ 1,776,449 ------------ Beverages & Tobacco 0.90% 44,000 Swedish Match AB 145,202 ------------ Business & Public Services 5.74% 7,700 Esselte AB - A 118,613 6,600 Esselte AB - B 105,285 30,800 Securitas AB - B 508,207 4,400 WM-Data AB - B 190,209 ------------ 922,314 ------------ Chemicals 1.97% 11,000 AGA AB - A 144,666 13,200 AGA AB - B 172,796 ------------ 317,462 ------------ Construction & Housing 2.47% 12,100 Skanska AB - B 396,359 ------------ Electrical & Electronics 26.91% 52,800 ABB AB - A 597,954 11,000 ABB AB - B 123,904 136,400 Ericsson LM - B 3,604,335 ------------ 4,326,193 ------------ Financial Services 0.80% 9,900 Om Gruppen AB 128,994 ------------ Forest Products & Paper 2.72% 22,000 Svenska Cellulosa AB - B 438,018 ------------ Health & Personal Care 15.97% 107,800 Astra AB - A 2,133,159 22,000 Astra AB - B 433,999 ------------ 2,567,158 ------------ NO. OF SHARES SECURITY VALUE ------- -------- ----- Industrial Components 1.85% 11,000 SKF AB - A $ 145,336 11,000 SKF AB - B 151,364 ------------ 296,700 ------------ Insurance 5.02% 44,000 Skandia Forsakrings AB 806,381 ------------ Machinery & Engineering 4.15% 14,300 Atlas Copco AB - A 352,624 7,700 Atlas Copco AB - B 187,999 6,600 Sandvik AB - A* 126,181 ------------ 666,804 ------------ Merchandising 6.84% 14,300 Hennes & Mauritz AB - B 1,100,536 ------------ Metals - Non Ferrous 0.47% 5,500 Granges AB 75,682 ------------ Metals - Steel 0.93% 8,800 SSAB Svenskt Stal AB - A 92,694 5,500 SSAB Svenskt Stal AB - B 56,929 ------------ 149,623 ------------ Multi-Industry 0.73% 13,200 Trelleborg AB - B 118,144 ------------ Real Estate 1.00% 8,800 Diligentia AB 58,402 12,100 Drott AB - B* 103,142 ------------ 161,544 ------------ Telecommunications 1.56% 6,600 NetCom AB - B* 251,559 ------------ TOTAL COMMON STOCK - BASKET (Cost $14,911,075) 16,079,329 ------------ Total Investments (Cost $14,911,075)+ 100.00% $ 16,079,329 ======= ============ - ----------------------- * Non-income producing security. + Aggregate cost for Federal income tax purposes is $14,929,981. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 2,108,818 Excess of tax cost over value (959,470) ------------ $ 1,149,348 ============ See accompanying notes to financial statements. 39 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- Switzerland WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- COMMON STOCK - BASKET 100.00% Banking 17.60% 475 Banca del Gottardo $ 450,711 2,356 Banque Cantonale Vaudoise 708,865 11,362 Credit Suisse Group 1,764,164 10,887 UBS AG 3,388,336 228 Vontobel Holding AG 369,747 -------------- 6,681,823 -------------- Building Materials & Components 5.51% 1,387 Forbo Holding AG 564,716 627 Holderbank Financiere Glarus AG - Bearer 652,485 3,477 Holderbank Financiere Glarus AG - Registered 875,788 -------------- 2,092,989 -------------- Business & Public Services 2.94% 2,109 Adecco SA 1,106,093 57 SGS Societe Generale de Surveillance Holding SA 11,407 -------------- 1,117,500 -------------- Chemicals 3.89% 247 EMS-Chemie Holding AG*,** 1,261,335 836 Sika Finanz AG 215,187 -------------- 1,476,522 -------------- Electrical & Electronics 2.63% 684 ABB AG - Bearer 835,470 665 ABB AG - Registered 161,535 -------------- 997,005 -------------- Financial Services 2.43% 304 Julius Baer Holding Limited AG** 923,265 -------------- Food & Household Products 5.20% 1,045 Nestle SA 1,972,310 -------------- Health & Personal Care 33.96% 3,477 Novartis AG 6,099,327 57 Roche Holding AG - Bearer 1,018,574 456 Roche Holding AG - Genussein 5,774,343 -------------- 12,892,244 -------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Insurance 9.42% 798 Schweizerische Rueckversicherungs (Swiss Re) $ 1,786,978 2,698 Zurich Allied AG 1,791,095 -------------- 3,578,073 -------------- Leisure & Tourism 0.19% 133 Moevenpick Holding AG 73,058 -------------- Machinery & Engineering 1.91% 190 Georg Fischer AG 62,280 38 Schindler Holding AG - Participation Certificates 61,624 285 Schindler Holding AG - Registered 489,718 190 Sulzer AG 112,104 -------------- 725,726 -------------- Merchandising 3.28% 646 Jelmoni Holding AG - Bearer 566,158 456 Jelmoni Holding AG - Registered 79,928 2,717 Valora Holding AG 600,924 -------------- 1,247,010 -------------- Multi-Industry 4.40% 1,501 Alusuisse Lonza Group AG 1,668,699 -------------- Recreation - Other Consumer Goods 0.44% 2,071 Tag Heuer International SA** 166,855 -------------- Telecommunications 5.18% 4,978 Swisscom AG* 1,968,390 -------------- Transportation - Airlines 1.02% 1,805 SAirGroup 388,627 -------------- TOTAL COMMON STOCK - BASKET (Cost $37,156,029) 37,970,096 -------------- Total Investments (Cost $37,156,029)+ 100.00% $ 37,970,096 ======= ============== - ---------------------- * Non-income producing security. ** Non index security. + Aggregate cost for Federal income tax purposes is $37,553,534. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 2,346,891 Excess of tax cost over value (1,930,329) -------------- $ 416,562 ============== See accompanying notes to financial statements. 40 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- United Kingdom WEBS Index Series - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Common Stock - Basket 100.00% Aerospace & Military Technology 1.31% 109,620 British Aerospace Plc $ 696,299 98,910 Rolls-Royce Plc 432,183 -------------- 1,128,482 -------------- Banking 15.14% 78,540 Abbey National Plc 1,576,538 89,355 Barclays Plc 2,384,824 100,800 HSBC Holdings Plc ($HK10) 2,885,676 50,400 HSBC Holdings Plc (75p) 1,469,483 273,000 Lloyds TSB Group Plc 3,912,060 42,525 Royal Bank of Scotland Group Plc 829,763 -------------- 13,058,344 -------------- Beverages & Tobacco 4.57% 94,752 British American Tobacco Plc 864,459 61,320 Cadbury Schweppes Plc 940,105 193,221 Diageo Plc 2,134,279 -------------- 3,938,843 -------------- Broadcasting & Publishing 2.91% 94,710 British Sky Broadcasting Group Plc 869,766 39,375 Pearson Plc 865,440 80,640 Reed International Plc 776,081 -------------- 2,511,287 -------------- Building Materials & Components 1.49% 56,910 Blue Circle Industries Plc 284,678 31,710 BPB Plc 121,157 30,849 Caradon Plc 76,107 41,139 Hanson Plc 336,279 16,695 Hepworth Plc 41,054 17,745 RMC Group Plc 196,576 34,965 Wolseley Plc 225,736 -------------- 1,281,587 -------------- Business & Public Services 3.46% 18,018 Anglian Water Plc 209,270 11,760 De La Rue Plc 38,809 25,200 Railtrack Group Plc 626,549 88,074 Reuters Group Plc 1,228,228 25,977 Thames Water Plc 425,723 36,015 United Utilities Plc 456,664 -------------- 2,985,243 -------------- Chemicals 0.89% 28,770 BOC Group Plc 388,535 42,945 Imperial Chemical Industries Plc 375,292 -------------- 763,827 -------------- Construction & Housing 0.10% 32,655 Taylor Woodrow Plc 88,671 -------------- Electrical & Electronics 1.53% 165,480 General Electric Company Plc 1,320,193 -------------- Electronic Components, Instruments 0.90% 16,275 Bowthorpe Plc 97,902 104,202 BTR Siebe Plc 439,447 38,283 Williams Plc 237,805 -------------- 775,154 -------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Energy Sources 8.68% 503,370 BP Amoco Plc $ 7,168,885 13,545 Burmah Castrol Plc 176,088 70,980 LASMO Plc 136,452 -------------- 7,481,425 -------------- Financial Services 0.82% 20,244 Provident Financial Plc 314,093 19,215 Schroders Plc 396,170 -------------- 710,263 -------------- Food & Household Products 2.98% 68,145 Associated British Foods Plc 528,920 204,960 Unilever Plc 1,970,076 24,717 United Biscuits Holdings Plc 71,868 -------------- 2,570,864 -------------- Forest Products & Paper 0.12% 51,450 Arjo Wiggins Appleton Plc 99,320 -------------- Gold Mines 0.09% 11,928 Lonrho Plc 76,578 -------------- Health & Personal Care 14.34% 185,220 Glaxo Wellcome Plc 5,907,744 294,000 Smithkline Beecham Plc 4,139,985 55,755 Zeneca Group Plc 2,318,734 -------------- 12,366,463 -------------- Industrial Components 0.64% 37,905 BBA Group Plc 230,143 36,015 BICC Plc 51,638 59,010 LucasVarity Plc 268,004 -------------- 549,785 -------------- Insurance 6.66% 94,752 Allied Zurich AG Plc* 1,398,770 52,710 CGU Plc 776,439 79,989 Guardian Royal Exchange Plc 453,304 74,277 Legal & General Group Plc 926,351 105,000 Prudential Corporation Plc 1,421,374 90,300 Royal & Sun Alliance Insurance Group Plc 763,085 -------------- 5,739,323 -------------- Leisure & Tourism 3.62% 55,125 Bass Plc 764,767 33,600 Carlton Communications Plc 331,576 52,500 Granada Group Plc 1,058,461 63,000 Ladbroke Group Plc 291,928 58,485 Rank Group Plc 224,629 40,845 Scottish & Newcastle Plc 449,202 -------------- 3,120,563 -------------- Machinery & Engineering 0.96% 37,800 GKN Plc 511,089 21,000 Smith Industries Plc 318,422 -------------- 829,511 -------------- See accompanying notes to financial statements. 41 February 28, 1999 PORTFOLIO OF INVESTMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- United Kingdom WEBS Index Series (concluded) - -------------------------------------------------------------------------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Merchandising 7.82% 59,535 Boots Company Plc $ 956,135 64,155 Great Universal Stores Plc 817,072 91,350 Kingfisher Plc 1,151,717 182,175 Marks & Spencer Plc 1,225,017 32,445 Next Plc 376,313 74,760 Safeway Plc 321,271 126,000 Sainsbury Plc 727,676 410,445 Tesco Plc 1,163,833 -------------- 6,739,034 -------------- Metals - Non Ferrous 0.93% 61,740 Rio Tinto Plc 799,667 -------------- Metals - Steel 0.25% 110,460 British Steel Plc 219,869 -------------- Miscellaneous Materials & Commodities 0.18% 74,340 Pilkington Plc 75,028 25,788 Rexam Plc 81,798 -------------- 156,826 -------------- Multi-Industry 0.32% 44,310 TI Group Plc 278,615 -------------- Real Estate 1.16% 38,115 British Land Company Plc 308,965 40,215 Land Securities Plc 522,160 22,806 MEPC Plc 172,081 -------------- 1,003,206 -------------- Recreation - Other Consumer Goods 0.42% 49,329 EMI Group Plc 364,108 -------------- Telecommunications 12.35% 334,425 British Telecommunications Plc 5,791,445 141,225 Cable & Wireless Plc 1,930,979 159,600 Vodafone Group Plc 2,927,527 -------------- 10,649,951 -------------- Textiles & Apparel 0.05% 67,095 Coats Viyella Plc 40,845 -------------- NO. OF SHARES SECURITY VALUE ------- -------- ----- Transportation - Airlines 0.54% 63,630 British Airways Plc $ 469,667 -------------- Transportation - Shipping 0.54% 39,690 Peninsular & Oriental Steam Navigation Company Plc 466,384 -------------- Utilities - Electrical & Gas 4.23% 222,243 BG Plc 1,308,421 251,895 Centrica Plc* 468,102 87,192 National Grid Group Plc 629,964 69,615 National Power Plc 553,155 22,575 Scottish and Southern Energy Plc 209,215 51,870 Scottish Power Plc 479,047 -------------- 3,647,904 -------------- TOTAL COMMON STOCK - BASKET (Cost $76,412,471) 86,231,802 -------------- COMMON STOCK - NON-BASKET 0.00% Business & Public Services 0.00% 11 Anglian Water Plc 128 -------------- Electronic Components, Instruments 0.00% 16 BTR Siebe Plc 67 -------------- Energy Sources 0.00% 18 BP Amoco Plc 256 -------------- Miscellaneous Materials & Commodities 0.00% 14 Rexam Plc 44 -------------- Utilities - Electrical & Gas 0.00% 18 Scottish and Southern Energy Plc 167 -------------- TOTAL COMMON STOCK - NON-BASKET (Cost $733) 662 -------------- Total Investments (Cost $76,413,204)+ 100.00% $ 86,232,464 ======= ============== - ------------------- * Non-income producing security. + Aggregate cost for Federal income tax purposes is $76,529,186. The aggregate gross unrealized appreciation (depreciation) for all securities is as follows: Excess of value over tax cost $ 12,814,171 Excess of tax cost over value (3,110,893) -------------- $ 9,703,278 ============== See accompanying notes to financial statements. 42 (THIS PAGE INTENTIONALLY LEFT BLANK.) February 28, 1999 STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
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............... $51,766,541 $ 9,232,495 $15,300,692 $15,394,622 $49,775,587 $86,705,543 $66,500,240 Cash and foreign currency........... 409,213 380,903 40,749 86,334 113,935 168,054 4,742,933 Collateral for securities loaned.... 2,657,735 15,738 1,057,056 1,249,755 1,503,150 8,587,468 3,396,090 Dividends receivable................ 93,925 14,452 41,213 18,843 248,862 20,384 27,041 Interest receivable................. 553 12 425 206 370 2,593 1,596 Receivable for securities sold...... -- 30,712 860,281 -- -- -- 1,453,929 Deferred organization cost.......... 65,306 48,566 21,212 46,129 126,611 120,287 33,527 Prepaid expenses.................... 186 106 83 50 304 287 88 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total assets.................... 54,993,459 9,722,984 17,321,711 16,795,939 51,768,819 95,604,616 76,155,444 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Liabilities Payable for securities purchased......................... -- 153,510 819,427 25,770 -- -- 6,114,806 Payable for securities loaned....... 2,657,735 15,738 1,057,056 1,249,755 1,503,150 8,587,468 3,396,090 Advisory fee payable................ 22,354 4,097 7,177 6,725 22,969 36,766 28,684 Administration fee payable.......... 18,214 3,338 5,848 5,479 18,715 29,958 23,372 Distribution fee payable............ 16,558 3,035 5,316 4,981 17,014 27,234 21,247 Custody fee payable................. 22,612 8,799 9,248 17,468 25,214 34,858 39,341 Accrued expenses.................... 14,114 5,424 3,663 12,035 14,000 19,338 17,105 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total liabilities............... 2,751,587 193,941 1,907,735 1,322,213 1,601,062 8,735,622 9,640,645 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net Assets Capital stock, $0.001 par value..... 5,400 1,000 800 1,300 2,401 4,201 7,651 Paid-in capital..................... 56,846,310 10,956,297 11,851,643 15,345,805 42,013,419 80,843,409 82,841,913 Accumulated net investment income/(loss)..................... 175,594 (40,994) (913,245) 31,008 (229,822) (179,415) (44,553) Accumulated net realized gain/ (loss) on investments............. (980,913) (661,782) 3,922,665 42,546 3,596,998 6,320,824 (15,273,038) Net unrealized appreciation/ (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies........................ (3,804,519) (725,478) 552,113 53,067 4,784,761 (120,025) (1,017,174) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net Assets.......................... $52,241,872 $ 9,529,043 $15,413,976 $15,473,726 $50,167,757 $86,868,994 $66,514,799 =========== =========== =========== =========== =========== =========== =========== Shares of common stock issued and outstanding................... 5,400,030 1,000,030 800,030 1,300,030 2,401,000 4,201,000 7,651,000 =========== =========== =========== =========== =========== =========== =========== Net Asset Value Per Share........... $ 9.67 $ 9.53 $ 19.27 $ 11.90 $ 20.89 $ 20.68 $ 8.69 =========== =========== =========== =========== =========== =========== =========== See accompanying notes to financial statements. 44 WEBS INDEX FUND, INC. Malaysia Mexico Singapore United Italy Japan (Free) (Free) Netherlands (Free) Spain Sweden Switzerland Kingdom WEBS WEBS WEBS WEBS WEBS WEBS WEBS WEBS WEBS WEBS Index Index Index Index Index Index Index Index Index Index Series Series Series Series Series Series Series Series Series Series - ------------ ------------ ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- $ 75,847,877 $303,470,280 $46,487,291 $12,243,582 $25,770,505 $ 92,675,950 $40,580,215 $16,079,329 $37,970,096 $86,232,464 52,630 937,656 2,766,081 46,063 73,386 198,603 278,137 87,150 217,290 249,651 32,506,100 59,278,434 -- 972,127 8,067,900 24,247,136 5,587,068 1,006,020 878,105 -- 12,789 107,369 24,500 -- 4,074 1,756 15,036 -- 34,002 296,881 6,247 19,559 2,349 346 884 23,898 844 127 330 73 -- -- -- -- -- 322,417 -- -- -- -- 63,759 265,448 35,539 35,905 30,068 42,675 52,717 34,321 81,031 76,498 138 614 92 -- 52 111 136 99 200 229 - ------------ ------------ ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- 108,489,540 364,079,360 49,315,852 13,298,023 33,946,869 117,512,546 46,514,153 17,207,046 39,181,054 86,855,796 - ------------ ------------ ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- -- -- -- -- -- 147,739 -- -- -- -- 32,506,100 59,278,434 -- 972,127 8,067,900 24,247,136 5,587,068 1,006,020 878,105 -- 34,204 133,155 23,129 5,509 11,283 40,589 15,756 7,083 17,371 37,477 27,870 108,497 18,846 4,489 9,194 33,073 12,839 5,771 14,154 30,536 25,337 98,633 17,132 4,081 8,358 30,066 11,671 5,246 12,868 27,760 25,012 108,716 25,679 21,359 17,240 47,693 20,621 8,263 21,298 38,412 16,134 76,594 66,969 6,442 7,815 26,868 14,089 7,015 12,294 25,836 - ------------ ------------ ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- 32,634,657 59,804,029 151,755 1,014,007 8,121,790 24,573,164 5,662,044 1,039,398 956,090 160,021 - ------------ ------------ ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- 3,000 30,001 17,025 1,100 1,101 16,000 1,425 825 2,376 4,201 56,085,088 352,959,704 88,604,608 13,955,843 24,971,914 103,628,895 35,740,630 14,968,000 36,845,977 73,509,488 (2,775,128) (802,410) (206,017) 5,494 (40,061) (730,542) 43,460 (77,555) (169,713) (32,223) 5,224,456 (19,261,235) (15,184,284) (632,578) 1,895,338 (16,019,968) 768,296 109,576 732,516 3,404,131 17,317,467 (28,650,729) 24,067,235 (1,045,843) (1,003,213) 6,044,997 4,298,298 1,166,802 813,808 9,810,178 - ------------ ------------ ----------- ----------- ----------- ------------ ----------- ----------- ----------- ----------- $ 75,854,883 $304,275,331 $49,164,097 $12,284,016 $25,825,079 $ 92,939,382 $40,852,109 $16,167,648 $38,224,964 $86,695,775 ============ ============ =========== =========== =========== ============ =========== =========== =========== =========== 3,000,030 30,001,000 17,025,030 1,100,030 1,101,000 16,000,030 1,425,030 825,030 2,376,000 4,201,000 ============ ============ =========== =========== =========== ============ =========== =========== =========== =========== $ 25.28 $ 10.14 $ 2.89 $ 11.17 $ 23.46 $ 5.81 $ 28.67 $ 19.60 $ 16.09 $ 20.64 ============ ============ =========== =========== =========== ============ =========== =========== =========== ===========
45 For the six month period ending February 28, 1999 STATEMENTS OF OPERATIONS (Unaudited)
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) .................. $ 651,598 $ 5,746 $ 36,150 $ 109,515 $ 23,255 $ 123,281 Interest .............................. 7,755 937 6,647 3,420 2,367 28,711 ----------- ----------- ----------- ----------- ----------- ----------- Total investment income ............. 659,353 6,683 42,797 112,935 25,622 151,992 ----------- ----------- ----------- ----------- ----------- ----------- Expenses: Advisory fees ......................... 57,611 11,256 26,867 15,190 61,468 95,926 Administration fees ................... 46,943 9,171 21,892 12,377 50,086 78,162 Distribution fees ..................... 42,675 8,338 19,902 11,252 45,532 71,057 Custodian fees and expenses ........... 19,522 8,862 11,386 4,619 20,549 31,361 Transfer agent fees ................... 4,182 3,232 6,382 3,482 5,182 5,982 Directors' fees ....................... 5,197 1,223 2,243 1,140 5,569 8,677 Legal fees ............................ 7,387 1,695 4,568 1,828 9,194 14,333 Audit fees ............................ 6,882 881 7,080 4,271 3,107 5,411 Federal and state registration fees ... 3,287 1,005 -- 2,882 580 3,572 Amortization of deferred organization costs ............................... 10,688 7,948 3,472 7,549 20,721 19,686 Insurance ............................. 4,085 394 2,454 1,926 1,752 2,945 Printing .............................. 3,224 339 844 995 3,348 5,279 Licensing fees ........................ 6,401 1,251 2,985 1,688 6,830 10,658 Amex listing fee ...................... 612 60 367 302 268 373 Miscellaneous expenses ................ 4,243 3,053 17,304 6,431 7,319 8,996 ----------- ----------- ----------- ----------- ----------- ----------- Total expenses ...................... 222,939 58,708 127,746 75,932 241,505 362,418 ----------- ----------- ----------- ----------- ----------- ----------- Net investment income/(loss) .......... 436,414 (52,025) (84,949) 37,003 (215,883) (210,426) ----------- ----------- ----------- ----------- ----------- ----------- 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 ...................... (786,226) (635,287) 1,768,590 93,288 160,437 453,154 Net realized gain/(loss) on investments on in-kind redemptions .............. -- -- 2,152,280 -- 3,436,647 6,029,889 Net realized gain/(loss) on foreign currency related transactions ....... 3,040 1,236 19,488 6,064 (86) 10,824 ----------- ----------- ----------- ----------- ----------- ----------- (783,186) (634,051) 3,940,358 99,352 3,596,998 6,493,867 Net change in unrealized appreciation/(depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ... 8,838,700 218,141 (2,544,758) 1,339,470 (320,142) (5,362,047) ----------- ----------- ----------- ----------- ----------- ----------- Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies .................. 8,055,514 (415,910) 1,395,600 1,438,822 3,276,856 1,131,820 ----------- ----------- ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations .... $ 8,491,928 $ (467,935) $ 1,310,651 $ 1,475,825 $ 3,060,973 $ 921,394 =========== =========== =========== =========== =========== =========== See accompanying notes to financial statements. 46 WEBS INDEX FUND, INC. Malaysia Mexico Singapore United Hong Kong Italy Japan (FREE) (FREE) Netherlands (FREE) Spain Sweden Switzerland Kingdom WEBS WEBS WEBS WEBS WEBS WEBS WEBS WEBS WEBS WEBS WEBS Index Index Index Index Index Index Index Index Index Index Index Series Series Series Series Series Series Series Series Series Series Series - ----------- ---------- ----------- ----------- ---------- ---------- ----------- ---------- -------- -------- ---------- $ 937,005 $ 2,608 $ 753,282 $ 425,717 $ 112,698 $ 116,293 $ 496,213 $ 187,956 $ -- $ 373 $ 607,677 115,304 36,001 141,752 73,091 4,091 7,865 152,433 7,542 1,865 3,308 8,429 - ----------- ---------- ----------- ----------- ---------- ---------- ----------- ---------- -------- -------- ---------- 1,052,309 38,609 895,034 498,808 116,789 124,158 648,646 195,498 1,865 3,681 616,106 - ----------- ---------- ----------- ----------- ---------- ---------- ----------- ---------- -------- -------- ---------- 85,862 89,967 351,959 63,293 13,794 30,682 103,688 41,024 19,151 44,607 98,532 69,961 73,307 286,782 51,572 11,239 25,000 84,486 33,427 15,604 36,347 80,286 63,601 66,642 260,710 46,883 10,217 22,728 76,806 30,389 14,186 33,043 72,987 42,675 29,517 72,795 34,751 12,179 15,067 37,573 15,355 7,784 19,769 24,056 16,982 5,382 13,982 18,282 3,982 3,982 13,982 4,982 3,982 3,982 4,482 7,821 8,099 32,289 6,391 1,238 2,786 10,440 3,701 1,736 4,003 8,843 11,165 11,044 46,508 211,522 1,689 4,599 15,350 6,271 2,367 5,458 13,059 5,986 8,537 26,898 8,073 1,914 1,805 9,280 4,719 2,683 5,038 9,630 -- 3,697 16,886 -- 919 1,486 2,882 3,535 860 2,863 4,311 5,488 10,435 43,442 5,816 5,875 4,921 6,983 8,628 5,616 13,262 12,520 3,195 5,510 13,390 4,518 1,291 1,144 3,383 1,383 1,015 1,987 4,036 4,445 5,187 16,065 4,105 411 1,724 5,516 2,228 576 2,428 4,434 9,540 9,996 39,107 7,033 1,533 3,409 11,521 4,558 2,128 4,956 10,948 471 762 1,705 407 233 159 306 177 154 275 556 11,097 33,035 20,949 5,453 4,310 8,790 3,720 6,826 5,348 9,996 15,288 - ----------- ---------- ----------- ----------- ---------- ---------- ----------- ---------- -------- -------- ---------- 338,289 361,117 1,243,467 468,099 70,824 128,282 385,916 167,203 83,190 188,014 363,968 - ----------- ---------- ----------- ----------- ---------- ---------- ----------- ---------- -------- -------- ---------- 714,020 (322,508) (348,433) 30,709 45,965 (4,124) 262,730 28,295 (81,325) (184,333) 252,138 - ----------- ---------- ----------- ----------- ---------- ---------- ----------- ---------- -------- -------- ---------- (4,069,667) 5,060,726 -- (13,254,781) (462,986) 1,537,775 379,247 1,194,882 157,072 381,182 1,488,850 (3,680,775) 1,571,278 (16,848,335) -- (176,163) 697,524 (2,648,587) -- -- 307,892 2,145,861 647 (3,534) 180,313 (75,019) 14,593 5,097 151,579 (4,272) 5,496 67,401 18,299 - ----------- ---------- ----------- ----------- ---------- ---------- ----------- ---------- -------- -------- ---------- (7,749,795) 6,628,470 (16,668,022) (13,329,800) (624,556) 2,240,396 (2,117,761) 1,190,610 162,568 756,475 3,653,010 24,922,432 1,137,945 54,500,956 29,742,711 3,884,184 (2,088,744) 36,074,122 3,778,191 823,205 (66,024) 4,517,706 - ----------- ---------- ----------- ----------- ---------- ---------- ----------- ---------- -------- -------- ---------- 17,172,637 7,766,415 37,832,934 16,412,911 3,259,628 151,652 33,956,361 4,968,801 985,773 690,451 8,170,716 - ----------- ---------- ----------- ----------- ---------- ---------- ----------- ---------- -------- -------- ---------- $17,886,657 $7,443,907 $37,484,501 $16,443,620 $3,305,593 $ 147,528 $34,219,091 $4,997,096 $904,448 $506,118 $8,422,854 =========== ========== =========== =========== ========== ========== =========== ========== ======== ======== ==========
47 STATEMENTS OF CHANGES IN NET ASSETS
Australia Austria Belgium WEBS WEBS WEBS Index Index Index Series Series Series --------------------------- --------------------------- --------------------------- For the For the For the six months For the six months For the six months For the ending year ending year ending year 02/28/99 ended 02/28/99 ended 02/28/99 ended (Unaudited) 08/31/98 (Unaudited) 08/31/98 (Unaudited) 08/31/98 ------------ ------------ ------------ ------------ ------------ ------------ Operations: Net investment income/(loss) ......... $ 436,414 $ 1,004,449 $ (52,025) $ 33,653 $ (84,949) $ 383,039 Net realized gain/(loss) on investments and foreign currency related transactions ............... (783,186) (813,545) (634,051) 483,280 3,940,358 4,866,929 Net change in unrealized appreciation/ depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ................. 8,838,700 (11,081,054) 218,141 (922,261) (2,544,758) 3,689,571 ------------ ------------ ------------ ------------ ------------ ------------ Net increase/(decrease) in net assets resulting from operations ... 8,491,928 (10,890,150) (467,935) (405,328) 1,310,651 8,939,539 ------------ ------------ ------------ ------------ ------------ ------------ Distributions: Net investment income ................ (74,980) (1,004,449) -- (33,653) -- (383,039) In excess of net investment income ... -- (19,218) -- (10,327) -- (1,697,275) Net realized gains ................... -- -- -- (483,280) -- (2,779,100) In excess of net realized gains ...... -- -- -- (2,230) -- -- Return of capital .................... -- -- -- (1,490) -- (139,253) ------------ ------------ ------------ ------------ ------------ ------------ Net decrease in net assets from distributions ................. (74,980) (1,023,667) -- (530,980) -- (4,998,667) ------------ ------------ ------------ ------------ ------------ ------------ Capital Share Transactions: Net proceeds from sale of shares ..... 9,725,724 14,115,736 1,911,812 4,816,685 -- 9,993,974 Cost of shares redeemed .............. -- (9,508,450) -- -- (11,661,209) (20,697,973) ------------ ------------ ------------ ------------ ------------ ------------ Net increase/(decrease) in net assets derived from capital share transactions ......... 9,725,724 4,607,286 1,911,812 4,816,685 (11,661,209) (10,703,999) ------------ ------------ ------------ ------------ ------------ ------------ Total increase/(decrease) in net asets 18,142,672 (7,306,531) 1,443,877 3,880,377 (10,350,558) (6,763,127) Net assets: Beginning of period .................. 34,099,200 41,405,731 8,085,166 4,204,789 25,764,534 32,527,661 ------------ ------------ ------------ ------------ ------------ ------------ End of period ........................ $ 52,241,872 $ 34,099,200 $ 9,529,043 $ 8,085,166 $ 15,413,976 $ 25,764,534 ============ ============ ============ ============ ============ ============ Capital Share Transactions: Shares sold .......................... 1,000,000 1,400,000 200,000 400,000 -- 560,000 Shares redeemed ...................... -- (1,000,000) -- -- (600,000) (1,240,000) ------------ ------------ ------------ ------------ ------------ ------------ Net increase/(decrease) in shares .... 1,000,000 400,000 200,000 400,000 (600,000) (680,000) ============ ============ ============ ============ ============ ============ See accompanying notes to financial statements. 48 WEB INDEX FUND, INC. Canada France Germany Hong Kong Italy WEBS WEBS WEBS WEBS WEBS Index Index Index Index Index Series Series Series Series Series - ------------------------- ------------------------ ------------------------- ------------------------ ------------------------ For the For the For the For the For the six months For the six months For the six months For the six months For the six months For the ending year ending year ending year ending year ending year 02/28/99 ended 02/28/99 ended 02/28/99 ended 02/28/99 ended 02/28/99 ended (Unaudited) 08/31/98 (Unaudited) 08/31/98 (Unaudited) 08/31/98 (Unaudited) 08/31/98 (Unaudited) 08/31/98 - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $ 37,003 $ 97,330 $ (215,883) $ 435,172 $ (210,426) $ 626,103 $ 714,020 $ 1,733,479 $ (322,508) $ 455,253 99,352 4,111,037 3,596,998 312,674 6,493,867 39,489 (7,749,795) (9,056,025) 6,628,470 9,664,471 1,339,470 (5,251,304) (320,142) 3,937,546 (5,362,047) 2,623,288 24,922,432 (25,681,723) 1,137,945 11,937,409 - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 1,475,825 (1,042,937) 3,060,973 4,685,392 921,394 3,288,880 17,886,657 (33,004,269) 7,443,907 22,057,133 - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (18,862) (92,345) -- (435,172) -- (626,103) (714,020) (1,733,479) -- (455,253) -- -- -- (62,742) -- (12,798) (51,415) (12,675) -- (2,610,741) (41,750) (468,666) -- (312,674) (143,680) (39,489) -- -- (1,404,014) (1,763,418) -- -- -- (13,549) -- (12,490) -- -- -- -- -- -- -- (178,534) -- (290,393) -- (983,923) -- -- - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- (60,612) (561,011) -- (1,002,671) (143,680) (981,273) (765,435) (2,730,077) (1,404,014) (4,829,412) - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 7,126,953 -- 12,333,093 27,720,237 31,642,983 46,140,403 3,187,705 65,939,721 15,009,163 24,566,181 -- (15,632,312) (11,147,991) -- (18,485,578) -- (3,766,998) (5,649,119) (3,562,412) (15,920,335) - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 7,126,953 (15,632,312) 1,185,102 27,720,237 13,157,405 46,140,403 (579,293) 60,290,602 11,446,751 8,645,846 - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 8,542,166 (17,236,260) 4,246,075 31,402,958 13,935,119 48,448,010 16,541,929 24,556,256 17,486,644 25,873,567 6,931,560 24,167,820 45,921,682 14,518,724 72,933,875 24,485,865 49,972,870 25,416,614 58,368,239 32,494,672 - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $15,473,726 $ 6,931,560 $50,167,757 $45,921,682 $86,868,994 $72,933,875 $66,514,799 $49,972,870 $75,854,883 $58,368,239 =========== ============ =========== =========== =========== =========== =========== =========== =========== =========== 600,000 -- 600,000 1,400,000 1,500,000 2,100,000 375,000 6,600,000 600,000 1,200,000 -- (1,100,000) (600,000) -- (900,000) -- (525,000) (525,000) (150,000) (600,000) - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 600,000 (1,100,000) -- 1,400,000 600,000 2,100,000 (150,000) 6,075,000 450,000 600,000 =========== ============ =========== =========== =========== =========== =========== =========== =========== ===========
49 STATEMENTS OF CHANGES IN NET ASSETS (continued)
Japan Malaysia (Free) Mexico (Free) Netherlands WEBS WEBS WEBS WEBS Index Index Index Index Series Series Series Series -------------------------- ------------------------ ----------------------- ------------------------ For the For the For the For the six months For the six months For the six months For the six months For the ending year ending year ending year ending year 02/28/99 ended 02/28/99 ended 02/28/99 ended 02/28/99 ended (Unaudited) 08/31/98 (Unaudited) 08/31/98 (Unaudited) 08/31/98 (Unaudited) 08/31/98 ------------ ------------ ----------- ----------- ----------- ---------- ----------- ----------- Operations: Net investment income/ (loss) .................$ (348,433) $ (343,352) $ 30,709 $ 691,076 $ 45,965 $ 85,136 $ (4,124) $ 165,472 Net realized gain/(loss) on investments and foreign currency related transactions ... (16,668,022) (4,044,653) (13,329,800) (4,401,103) (624,556) 1,577,042 2,240,396 1,632,091 Net change in unrealized appreciation (depreciation) on investments and translation of other assets and liabilities denominated in foreign currencies ............. 54,500,956 (68,401,659) 29,742,711 (44,926,346) 3,884,184 (7,542,851) (2,088,744) (840,046 ------------ ------------ ----------- ----------- ----------- ---------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations ........ 37,484,501 (72,789,664) 16,443,620 (48,636,373) 3,305,593 (5,880,673) 147,528 957,517 ------------ ------------ ----------- ----------- ----------- ---------- ----------- ----------- Distributions: Net investment income ................. -- -- (30,709) (688,802) (45,439) (83,213) -- (154,868) In excess of net investment income ...... -- -- (114,004) -- -- -- (43,135) -- Net realized gains ....... -- (8,383) -- -- -- (261,068) (342,591) (1,331,940) In excess of net realized gains ......... -- -- -- -- (8,022) -- -- -- Return of capital ........ -- (259,229) (3,001,513) (450,458) -- -- -- (68,776) ------------ ------------ ----------- ----------- ----------- ---------- ----------- ----------- Net decrease in net assets from distributions .......... -- (267,612) (3,146,226) (1,139,260) (53,461) (344,281) (385,726) (1,555,584) ------------ ------------ ----------- ----------- ----------- ---------- ----------- ----------- Capital Stock Transactions: Net proceeds from sale of shares .............. 85,714,066 121,696,694 -- 74,873,951 3,954,474 1,486,432 6,008,853 14,394,424 Cost of shares redeemed ............... (20,408,514) (6,110,956) -- (1,570,595) (2,218,426) (4,592,150) (2,294,879) (1,108,188) ------------ ------------ ----------- ----------- ----------- ---------- ----------- ----------- Net increase/(decrease) in net assets derived from capital share transactions ........... 65,305,552 115,585,738 -- 73,303,356 1,736,048 (3,105,718) 3,713,974 13,286,236 ------------ ------------ ----------- ----------- ----------- ---------- ----------- ----------- Total increase/(decrease) in net asets ........... 102,790,053 42,528,462 13,297,394 23,527,723 4,988,180 (9,330,672) 3,475,776 12,688,169 Net assets: Beginning of period ...... 201,485,278 158,956,816 35,866,703 12,338,980 7,295,836 16,626,508 22,349,303 9,661,134 ------------ ------------ ----------- ----------- ----------- ---------- ----------- ----------- End of period ............$304,275,331 $201,485,278 $49,164,097 $35,866,703 $12,284,016 $7,295,836 $25,825,079 $22,349,303 ============ ============ =========== =========== =========== ========== =========== =========== Capital Share Transactions: Shares sold ............ 8,400,000 12,000,000 -- 15,825,000 400,000 100,000 250,000 550,000 Shares redeemed ........ (2,400,000) (600,000) -- (300,000) (200,000) (300,000) (100,000) (50,000) ------------ ------------ ---------- ----------- ----------- ---------- ----------- ----------- Net increase/(decrease) in shares .............. 6,000,000 11,400,000 -- 15,525,000 200,000 (200,000) 150,000 500,000 ============ ============ =========== =========== =========== ========== =========== =========== See accompanying notes to financial statements. 50 WEBS INDEX FUND, INC. Singapore (Free) Spain Sweden Switzerland WEBS WEBS WEBS WEBS Index Index Index Index Series Series Series Series - -------------------------- ------------------------- ----------------------- ------------------------ For the For the For the For the six months For the six months For the six months For the six months For the ending year ending year ending year ending year 02/28/99 ended 02/28/99 ended 02/28/99 ended 02/28/99 ended (Unaudited) 08/31/98 (Unaudited) 08/31/98 (Unaudited) 08/31/98 (Unaudited) 08/31/98 - ------------ ------------ ----------- ----------- ----------- --------- ----------- ----------- $ 262,730 $ 519,573 $ 28,295 $ 121,310 $ (81,325) $ 64,048 $ (184,333) $ (6,909) (2,117,761) (15,780,390) 1,190,610 1,661,273 162,568 639,667 756,475 2,711,388 36,074,122 (25,054,420) 3,778,191 (84,559) 823,205 (858,611) (66,024) (117,545) - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- 34,219,091 (40,315,156) 4,997,096 1,698,024 904,448 (154,896) 506,118 2,586,934 - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- (262,730) (519,573) -- (121,310) -- (64,048) -- -- (666,712) (92,309) -- (12,880) -- (5,006) -- (13,567) -- -- (415,812) (573,744) (49,052) (639,667) -- (2,272,030) -- -- -- -- -- (9,750) -- -- -- (211,720) -- (67,213) -- (13,138) -- (53,400) - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- (929,442) (823,602) (415,812) (775,147) (49,052) (731,609) -- (2,338,997) - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- 15,230,672 76,731,080 11,241,471 17,901,806 1,520,931 6,434,414 10,380,346 17,011,012 (2,829,057) (3,065,766) -- (2,116,697) -- -- (1,824,479) (1,901,034) - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- 12,401,615 73,665,314 11,241,471 15,785,109 1,520,931 6,434,414 8,555,867 15,109,978 - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- 45,691,264 32,526,556 15,822,755 16,707,986 2,376,327 5,547,909 9,061,985 15,357,915 47,248,118 14,721,562 25,029,354 8,321,368 13,791,321 8,243,412 29,162,979 13,805,064 - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- $92,939,382 $ 47,248,118 $40,852,109 $25,029,354 $16,167,648 $13,791,321 $38,224,964 $29,162,979 =========== ============ =========== =========== =========== =========== =========== =========== 2,500,000 13,100,000 375,000 675,000 75,000 300,000 625,000 1,000,000 (800,000) (500,000) -- (75,000) -- -- (125,000) (125,000) - ----------- ------------ ----------- ----------- ----------- ----------- ----------- ----------- 1,700,000 12,600,000 375,000 600,000 75,000 300,000 500,000 875,000 =========== ============ =========== =========== =========== =========== =========== =========== United Kingdom WEBS Index Series - ------------------------- For the six months For the ending year 02/28/99 ended (Unaudited) 08/31/98 - ----------- ----------- $ 252,138 $ 963,424 3,653,010 438,393 4,517,706 1,989,733 - ----------- ----------- 8,422,854 3,391,550 - ----------- ----------- (128,791) (963,424) -- (151,877) (248,879) (387,328) -- -- -- (228,725) - ----------- ----------- (377,670) (1,731,354) - ----------- ----------- 23,038,372 31,463,983 (7,233,314) -- - ----------- ----------- 15,805,058 31,463,983 - ----------- ----------- 23,850,242 33,124,179 62,845,533 29,721,354 - ----------- ----------- $86,695,775 $62,845,533 =========== =========== 1,200,000 1,600,000 (400,000) -- - ----------- ----------- 800,000 1,600,000 =========== ===========
51 FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period)
Australia WEBS Index Series ------------------------------------------------ For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- -------- --------- ----------- Per Share Operating Performance Net asset value, beginning of period ............. $ 7.75 $ 10.35 $ 10.15 $ 9.95(1) ------ ------- ------- ------- Net investment income/(loss)(+) .................. 0.09 0.23 0.17 0.10 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies .......................... 1.85 (2.60) 0.47 0.29 ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations .................... 1.94 (2.37) 0.64 0.39 ------- ------- ------- ------- Less Distributions Dividends from net investment income ............. (0.02) (0.23) (0.16) (0.08) Dividends in excess of net investment income ..... -- 0.00** (0.04) (0.05) Distributions from net realized gains ............ -- -- (0.04) (0.02) Distributions in excess of net realized gains .... -- -- -- -- Return of capital ................................ -- -- (0.20) (0.04) ------- ------- ------- ------- Total dividends and distributions ............ (0.02) (0.23) (0.44) (0.19) ------- ------- ------- ------- Net asset value, end of period ................... $ 9.67 $ 7.75 $ 10.35 $ 10.15 ======= ======= ======= ======= Total Investment Return (2) 24.99%(4) (23.11)% 6.23% 3.88%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) ............. $52,242 $34,099 $41,406 $12,177 Ratios of expenses to average net assets (5) ..... 1.04%(3) 1.05% 1.33% 1.59%(3) Ratios of net investment income/ (loss) to average net assets (5) ............... 2.05%(3) 2.38% 1.57% 2.18%(3) Portfolio turnover (6) ........................... 14.07%(4) 1.49% 5.30% 8.84%(4) * Commencement of operations. ** Less than one cent per share. + 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) Ratios of net investment income/(loss) to average net assets before waivers .......... -- -- 1.57% 2.17%(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 WEBS INDEX FUND, INC.
Austria WEBS Index Series --------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- -------- -------- ---------- Per Share Operating Performance Net asset value, beginning of period ............. $10.11 $10.51 $10.40 $10.91(1) ------ ------ ------ ------ Net investment income/(loss)(+) .................. (0.06) 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 .......................... (0.52) 0.20 0.13 (0.41) ------ ------ ------ ------ Net increase/(decrease) in net assets resulting from operations .................... (0.58) 0.26 0.11 (0.37) ------ ------ ------ ------ Less Distributions Dividends from net investment income ............. -- (0.04) -- (0.02) Dividends in excess of net investment income ..... -- (0.01) -- (0.01) Distributions from net realized gains ............ -- (0.61) -- (0.03) Distributions in excess of net realized gains .... -- 0.00** -- -- Return of capital ................................ -- 0.00** -- (0.08) ------ ------ ------ ------ Total dividends and distributions ............ -- (0.66) -- (0.14) ------ ------ ------ ------ Net asset value, end of period ................... $ 9.53 $10.11 $10.51 $10.40 ====== ====== ====== ====== Total Investment Return (2) (5.74)%(4) 2.16% 1.06% (3.39)%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) ............. $ 9,529 $8,085 $ 4,205 $13,520 Ratios of expenses to average net assets (5) ..... 1.41%(3) 1.41% 1.68% 1.56%(3) Ratios of net investment income/ (loss) to average net assets (5) ............... (1.25)%(3) 0.51% (0.22)% 0.87%(3) Portfolio turnover (6) ........................... 35.78%(4) 36.14% 28.47% 9.60%(4) * Commencement of operations. ** Less than one cent per share. + 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 ............................. -- -- 1.69% 1.57%(3) Ratios of net investment income/(loss) to average net assets before waivers .......... -- -- (0.22)% 0.86%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
Belgium WEBS Index Series ---------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ---------- -------- -------- -------- Per Share Operating Performance Net asset value, beginning of period ............. $ 18.40 $ 15.64 $ 14.99 $ 14.92(1) ------- ------- ------- ------- Net investment income/(loss)(+) .................. (0.08) 0.24 0.77 0.40 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies .......................... 0.95 6.09 0.62 0.36 ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations .................... 0.87 6.33 1.39 0.76 ------- ------- ------- ------- Less Distributions Dividends from net investment income ............. -- (0.27) (0.33) (0.54) Dividends in excess of net investment income ..... -- (1.21) (0.28) (0.09) Distributions from net realized gains ............ -- (1.99) (0.12) (0.06) Distributions in excess of net realized gains .... -- -- -- -- Return of capital ................................ -- (0.10) (0.01) -- ------- ------- ------- ------- Total dividends and distributions ............ -- (3.57) (0.74) (0.69) ------- ------- ------- ------- Net asset value, end of period ................... $ 19.27 $ 18.40 $ 15.64 $ 14.99 ======= ======= ======= ======= Total Investment Return (2) 4.73%(4) 39.42% 9.26% 5.01%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) ............. $15,414 $ 25,765 $32,528 $ 1,800 Ratios of expenses to average net assets (5) ..... 1.28%(3) 1.04% 1.24% 2.29%(3) Ratios of net investment income/ (loss) to average net assets (5) ............... (0.85)%(3) 1.28% 4.63% 5.67%(3) Portfolio turnover (6) ........................... 20.15%(4) 50.46% 16.83% 6.25%(4) * Commencement of operations. ** Less than one cent per share. + Based on average shares outstanding throughout the period. (1) Net asset value per share on March 12, 1996 (commencement of operations). (2) Total investment return is calculated assuming a purchase of capital stock at net asset value per share on the first day and a sale at the net asset value per share on the last day of the period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at the net asset value per share on the ex-dividend date. (3) Annualized. (4) Not Annualized. (5) Includes voluntary waivers by the American Stock Exchange through December 31, 1996. If such waivers had not been made the ratios of expenses to average net assets and ratios of net investment income/(loss) to average net assets would have been as follows: Ratios of expenses to average net assets before waivers ............................. -- -- 1.24% 2.30%(3) Ratios of net investment income/(loss) to average net assets before waivers .......... -- -- 4.63% 5.66%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
See accompanying notes to financial statements. 53 FINANCIAL HIGHLIGHTS (continued) - -------------------------------------------------------------------------------- (For a share outstanding throughout the period)
Canada WEBS Index Series --------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- --------- -------- --------- Per Share Operating Performance Net asset value, beginning of period $ 9.90 $ 13.43 $ 10.60 $ 10.17(1) ------ ------- ------- ------- Net investment income/(loss)(+) 0.04 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 2.02 (2.89) 2.97 0.43 ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations 2.06 (2.82) 3.02 0.47 ------- ------- ------- ------- Less Distributions Dividends from net investment income (0.02) (0.13) (0.05) (0.03) Dividends in excess of net investment income -- (0.00)** (0.00)** (0.01) Distributions from net realized gains (0.04) (0.58) (0.14) -- Distributions in excess of net realized gains -- -- -- 0.00** Return of capital -- -- -- 0.00** -------- ------- -------- ------- Total dividends and distributions (0.06) (0.71) (0.19) (0.04) -------- ------- -------- ------- Net asset value, end of period $ 11.90 $ 9.90 $ 13.43 $ 10.60 ======= ====== ======= ======= Total Investment Return (2) 20.78%(4) (21.69)% 28.50% 4.63%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $15,474 $ 6,932 $24,168 $13,776 Ratios of expenses to average net assets (5) 1.35%(3) 1.14% 1.35% 1.44%(3) Ratios of net investment income/(loss) to average net assets (5) 0.66%(3) 0.46% 0.39% 0.79%(3) Portfolio turnover (6) 4.98%(4) 3.70% 11.02% 0.00%(4) * Commencement of operations. ** Less than one cent per share. + Based on average shares outstanding throughout the period. (1) Net asset value per share on March 12, 1996 (commencement of operations). (2) Total investment return is calculated assuming a purchase of capital stock at net asset value per share on the first day and a sale at the net asset value per share on the last day of the period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at the net asset value per share on the ex-dividend date. (3) Annualized. (4) Not Annualized. (5) Includes voluntary waivers by the American Stock Exchange through December 31, 1996. If such waivers had not been made the ratios of expenses to average net assets and ratios of net investment income/(loss) to average net assets would have been as follows: Ratios of expenses to average net assets before waivers -- -- 1.36% 1.45%(3) Ratios of net investment income/(loss) to average net assets before waivers -- -- 0.39% 0.78%(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 WEBS INDEX FUND, INC.
France WEBS Index Series -------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- -------- -------- --------- Per Share Operating Performance Net asset value, beginning of period $ 19.13 $ 14.50 $ 12.73 $ 12.42(1) ------- ------- ------- ------- Net investment income/(loss)(+) (0.10) 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 1.86 4.76 1.95 0.45 ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations 1.76 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 $ 20.89 $ 19.13 $ 14.50 $ 12.73 ======= ======= ======= ======= Total Investment Return (2) 9.20%(4) 34.77% 16.60% 4.95%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $50,168 $45,922 $14,519 $22,930 Ratios of expenses to average net assets (5) 1.06%(3) 1.18% 1.52% 1.84%(3) Ratios of net investment income/(loss) to average net assets (5) (0.95)%(3) 1.58% 1.17% 2.72%(3) Portfolio turnover (6) 0.00%(4) 5.65% 7.13% 0.00%(4) * Commencement of operations. ** Less than one cent per share. + 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).
Germany WEBS Index Series ------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- Unaudited) 08/31/98 08/31/97 08/31/96 ---------- -------- -------- --------- Per Share Operating Performance Net asset value, beginning of period $ 20.25 $ 16.31 $ 13.64 $ 13.23(1) ------- ------- ------- ------- Net investment income/(loss)(+) (0.06) 0.29 0.03 0.06 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies 0.53 3.92 2.77 0.47 ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations 0.47 4.21 2.80 0.53 ------- ------- ------- ------- Less Distributions Dividends from net investment income -- (0.17) (0.03) (0.03) Dividends in excess of net investment income -- (0.01) (0.01) (0.01) Distributions from net realized gains (0.04) (0.01) (0.07) -- Distributions in excess of net realized gains -- 0.00** -- (0.01) Return of capital -- (0.08) (0.02) (0.07) ------- -------- ------- ------- Total dividends and distributions (0.04) (0.27) (0.13) (0.12) ------- ------- ------- ------- Net asset value, end of period $ 20.68 $ 20.25 $ 16.31 $ 13.64 ======= ======= ======= ======= Total Investment Return (2) 2.31%(4) 25.69% 20.51% 4.00%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $86,869 $72,934 $24,486 $28,664 Ratios of expenses to average net assets (5) 1.02%(3) 1.08% 1.37% 1.68%(3) Ratios of net investment income/(loss) to average net assets (5) (0.59)%(3) 1.43% 0.23% 1.00%(3) Portfolio turnover (6) 1.87%(4) 0.64% 9.04% 0.00%(4) * Commencement of operations. ** Less than one cent per share. + 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) Ratios of net investment income/(loss) to average net assets before waivers -- -- 0.22% 0.99%(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. 55 FINANCIAL HIGHLIGHTS (continued) (For a share outstanding throughout the period)
Hong Kong WEBS Index Series ------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ---------- -------- -------- -------- Per Share Operating Performance Net asset value, beginning of period $ 6.41 $ 14.73 $ 13.05 $ 12.83(1) -------- ------- ------- ------- Net investment income/(loss)(+) 0.10 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 2.29 (8.27) 2.12 0.27 ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations 2.39 (7.92) 2.38 0.42 ------- ------- ------- ------- Less Distributions Dividends from net investment income (0.10) (0.28) (0.21) (0.13) Dividends in excess of net investment income (0.01) 0.00** (0.01) (0.02) Distributions from net realized gains -- -- (0.34) (0.01) Distributions in excess of net realized gains -- -- 0.00** -- Return of capital -- (0.12) (0.14) (0.04) ------- ------- ------- ------- Total dividends and distributions (0.11) (0.40) (0.70) (0.20) ------- ------- ------- ------- Net asset value, end of period $ 8.69 $ 6.41 $ 14.73 $ 13.05 ======= ======= ======= ======= Total Investment Return (2) 37.06%(4) (54.22)% 17.80% 3.22%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $66,515 $49,973 $25,417 $ 7,845 Ratios of expenses to average net assets (5) 1.06%(3) 1.09% 1.43% 1.52%(3) Ratios of net investment income/(loss) to average net assets (5) 2.25%(3) 3.76% 1.71% 2.37%(3) Portfolio turnover (6) 35.72%(4) 21.50% 22.90% 0.00%(4) * Commencement of operations. ** Less than one cent per share. + 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% 1.53%(3) Ratios of net investment income/(loss) to average net assets before waivers -- -- 1.71% 2.36%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
56 WEBS INDEX FUND, INC.
Italy WEBS Index Series -------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- -------- -------- ---------- Per Share Operating Performance Net asset value, beginning of period $ 22.89 $ 16.66 $ 13.79 $ 13.62(1) ------- ------- ------- ------- Net investment income/(loss)(+) (0.12) 0.18 0.12 0.25 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies 2.98 7.94 3.10 0.31 ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations 2.86 8.12 3.22 0.56 ------- ------- ------- ------- 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 (0.47) (0.69) -- (0.14) Distributions in excess of net realized gains -- -- -- -- Return of capital -- -- -- (0.08) ------- ------- ------- ------- Total dividends and distributions (0.47) (1.89) (0.35) (0.39) ------- ------- ------- ------- Net asset value, end of period $ 25.28 $ 22.89 $ 16.66 $ 13.79 ======= ======= ======= ======= Total Investment Return (2) 12.44%(4) 47.66% 23.37% 4.11%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $75,855 $58,368 $32,495 $35,170 Ratios of expenses to average net assets (5) 1.08%(3) 1.02% 1.33% 1.43%(3) Ratios of net investment income/(loss) to average net assets (5) (0.97)%(3) 0.76% 0.76% 3.69%(3) Portfolio turnover (6) 7.26%(4) 8.16% 13.70% 19.80%(4) * Commencement of operations. ** Less than one cent per share. + Based on average shares outstanding throughout the period. (1) Net asset value per share on March 12, 1996 (commencement of operations). (2) Total investment return is calculated assuming a purchase of capital stock at net asset value per share on the first day and a sale at the net asset value per share on the last day of the period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at the net asset value per share on the ex-dividend date. (3) Annualized. (4) Not Annualized. (5) Includes voluntary waivers by the American Stock Exchange through December 31, 1996. If such waivers had not been made the ratios of expenses to average net assets and ratios of net investment income/(loss) to average net assets would have been as follows: Ratios of expenses to average net assets before waivers -- -- 1.33% 1.44%(3) Ratios of net investment income/(loss) to average net assets before waivers -- -- 0.76% 3.68%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
Japan WEBS Index Series -------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- -------- -------- ---------- Per Share Operating Performance Net asset value, beginning of period $8.39 $12.61 $14.33 $14.79(1) ------- ------- ------- ------- Net investment income/(loss)(+) (0.01) (0.02) (0.06) (0.07) Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies 1.76 (4.19) (1.65) (0.39) ------- ------ ------- ------- Net increase/(decrease) in net assets resulting from operations 1.75 (4.21) (1.71) (0.46) ------- ------ ------- ------- Less Distributions Dividends from net investment income -- -- -- -- Dividends in excess of net investment income -- -- -- -- Distributions from net realized gains -- 0.00** -- -- Distributions in excess of net realized gains -- -- (0.01) -- Return of capital -- (0.01) -- -- ------- ------- ------- ------- Total dividends and distributions -- (0.01) (0.01) -- ------- ------- ------- ------- Net asset value, end of period $ 10.14 $ 8.39 $ 12.61 $ 14.33 ======= ======= ======= ======= Total Investment Return (2) 20.86%(4) (33.38)% (11.97)% (3.11)%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $304,275 $ 201,485 $158,957 $103,164 Ratios of expenses to average net assets (5) 0.95%(3) 1.04% 1.19% 1.37%(3) Ratios of net investment income/(loss) to average net assets (5) (0.27)%(3) (0.21)% (0.48)% (1.01)%(3) Portfolio turnover (6) 0.00%(4) 0.00% 12.90% 21.54%(4) * Commencement of operations. ** Less than one cent per share. + Based on average shares outstanding throughout the period. (1) Net asset value per share on March 12, 1996 (commencement of operations). (2) Total investment return is calculated assuming a purchase of capital stock at net asset value per share on the first day and a sale at the net asset value per share on the last day of the period reported. Dividends and distributions, if any, are assumed, for purposes of this calculation, to be reinvested at the net asset value per share on the ex-dividend date. (3) Annualized. (4) Not Annualized. (5) Includes voluntary waivers by the American Stock Exchange through December 31, 1996. If such waivers had not been made the ratios of expenses to average net assets and ratios of net investment income/(loss) to average net assets would have been as follows: Ratios of expenses to average net assets before waivers -- -- 1.19% 1.38%(3) Ratios of net investment income/(loss) to average net assets before waivers -- -- (0.48)% (1.02)%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
See accompanying notes to financial statements. 57 FINANCIAL HIGHLIGHTS (continued) - -------------------------------------------------------------------------------- (For a share outstanding throughout the period)
Malaysia (Free) WEBS Index Series --------------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- ----------- ----------- ----------- Per Share Operating Performance Net asset value, beginning of period $2.11 $8.23 $13.80 $13.24(1) ---------- ---------- ---------- --------- Net investment income/(loss)(+) 0.00** 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 0.96 (6.10) (5.55) 0.59 ---------- ---------- ---------- --------- Net increase/(decrease) in net assets resulting from operations 0.96 (6.04) (5.54) 0.57 ---------- ---------- ---------- --------- Less Distributions Dividends from net investment income -- (0.05) 0.00** -- Dividends in excess of net investment income 0.00** -- (0.01) -- Distributions from net realized gains -- -- -- -- Distributions in excess of net realized gains -- -- -- -- Return of capital (0.18) (0.03) (0.02) (0.01) ---------- ---------- ---------- --------- Total dividends and distributions (0.18) (0.08) (0.03) (0.01) ---------- ---------- ---------- --------- Net asset value, end of period $2.89 $2.11 $8.23 $13.80 ========== ========== ========== ========= Total Investment Return (2) 47.30%(4) (73.57)% (40.20)% 4.28%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $49,164 $35,867 $12,339 $9,318 Ratios of expenses to average net assets (5) 2.00%(3) 1.09% 1.46% 1.58%(3) Ratios of net investment income/(loss) to average net assets (5) 0.13%(3) 1.40% 0.04% (0.35)%(3) Portfolio turnover (6) 10.38%(4) 2.11% 0.00% 0.00%(4) * Commencement of operations. ** Less than one cent per share. + 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. 58 WEBS INDEX FUND, INC. - --------------------------------------------------------------------------------
Mexico (Free) WEBS Index Series ---------------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- ----------- ----------- ----------- Per Share Operating Performance Net asset value, beginning of period $8.11 $15.11 $11.52 $9.95(1) ---------- --------- ---------- --------- Net investment income/(loss)(+) 0.04 0.09 0.02 0.00** Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies 3.07 (6.71) 4.07 1.59 ---------- --------- ---------- --------- Net increase/(decrease) in net assets resulting from operations 3.11 (6.62) 4.09 1.59 ---------- --------- ---------- --------- Less Distributions Dividends from net investment income (0.04) (0.09) (0.01) -- Dividends in excess of net investment income -- -- (0.01) (0.01) Distributions from net realized gains -- (0.29) (0.44) -- Distributions in excess of net realized gains (0.01) -- -- -- Return of capital -- -- (0.04) (0.01) ---------- --------- ---------- --------- Total dividends and distributions (0.05) (0.38) (0.50) (0.02) ---------- --------- ---------- --------- Net asset value, end of period $11.17 $8.11 $15.11 $11.52 ========== ========= ========== ========= Total Investment Return (2) 38.38%(4) (44.18)% 35.21% 15.93%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $12,284 $7,296 $16,627 $5,759 Ratios of expenses to average net assets (5) 1.39%(3) 1.34% 1.63% 1.75%(3) Ratios of net investment income/(loss) to average net assets (5) 0.90%(3) 0.60% 0.14% 0.01%(3) Portfolio turnover (6) 7.67%(4) 14.05% 22.80% 0.00%(4) * Commencement of operations. ** Less than one cent per share. + 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) Ratios of net investment income/(loss) to average net assets before waivers -- -- 0.13% 0.00%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
Netherlands WEBS Index Series ---------------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- ----------- ----------- ----------- Per Share Operating Performance Net asset value, beginning of period $23.50 $21.42 $17.36 $15.91(1) ---------- ---------- --------- --------- Net investment income/(loss)(+) 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 0.37 3.53 4.79 1.54 ---------- ---------- --------- --------- Net increase/(decrease) in net assets resulting from operations 0.37 3.78 4.90 1.78 ---------- ---------- --------- --------- Less Distributions Dividends from net investment income -- (0.16) (0.10) (0.14) Dividends in excess of net investment income (0.05) -- (0.01) (0.01) Distributions from net realized gains (0.36) (1.47) (0.71) (0.08) Distributions in excess of net realized gains -- -- -- (0.01) Return of capital -- (0.07) (0.02) (0.09) ---------- ---------- --------- --------- Total dividends and distributions (0.41) (1.70) (0.84) (0.33) ---------- ---------- --------- --------- Net asset value, end of period $23.46 $23.50 $21.42 $17.36 ========== ========== ========= ========= Total Investment Return (2) 1.45%(4) 17.41% 28.04% 11.19%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $25,825 $22,349 $9,661 $6,962 Ratios of expenses to average net assets (5) 1.13%(3) 1.12% 1.46% 1.63%(3) Ratios of net investment income/(loss) to average net assets (5) (0.04)%(3 1.00% 0.54% 2.93%(3) Portfolio turnover (6) 23.21%(4) 15.81% 12.68% 4.32%(4) * Commencement of operations. ** Less than one cent per share. + 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 -- -- 1.46% 1.64%(3) Ratios of net investment income/(loss) to average net assets before waivers -- -- 0.53% 2.92%(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. 59 FINANCIAL HIGHLIGHTS (continued) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- (For a share outstanding throughout the period)
Singapore (Free) WEBS Index Series --------------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- ----------- ----------- ----------- Per Share Operating Performance Net asset value, beginning of period $ 3.30 $ 8.66 $ 11.38 $ 12.24(1) -------- -------- -------- -------- Net investment income/(loss)(+) 0.02 0.07 0.00** 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 2.55 (5.37) (2.67) (0.86) -------- -------- -------- -------- Net increase/(decrease) in net assets resulting from operations 2.57 (5.30) (2.67) (0.82) -------- -------- -------- -------- Less Distributions Dividends from net investment income (0.02) (0.04) 0.00** (0.03) Dividends in excess of net investment income (0.04) (0.01) (0.01) (0.01) Distributions from net realized gains -- -- (0.02) -- Distributions in excess of net realized gains -- -- -- -- Return of capital -- (0.01) (0.02) -- -------- -------- -------- -------- Total dividends and distributions (0.06) (0.06) (0.05) (0.04) -------- -------- -------- -------- Net asset value, end of period $ 5.81 $ 3.30 $ 8.66 $ 11.38 ======== ======== ======== ======== Total Investment Return (2) 77.84%(4) (61.29)% (23.48)% (6.73)%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $ 92,939 $47,248 $14,722 $ 9,107 Ratios of expenses to average net assets (5) 1.00%(3) 1.08% 1.43% 1.56%(3) Ratios of net investment income/(loss) to average net assets (5) 0.68%(3) 1.17% 0.03% 0.69%(3) Portfolio turnover (6) 20.24%(4) 67.17% 13.40% 26.29%(4) * Commencement of operations. ** Less than one cent per share. + 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) Ratios of net investment income/(loss) to average net assets before waivers -- -- 0.03% 0.68%(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. 60
Spain WEBS Index Series --------------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- ----------- ---------- ------------ Per Share Operating Performance Net asset value, beginning of period $ 23.84 $ 18.49 $ 14.09 $ 13.28(1) -------- -------- -------- -------- Net investment income/(loss)(+) 0.03 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 5.20 5.94 5.33 0.98 -------- -------- -------- -------- Net increase/(decrease) in net assets resulting from operations 5.23 6.10 5.52 1.12 -------- -------- -------- -------- Less Distributions Dividends from net investment income -- (0.12) (0.12) (0.18) Dividends in excess of net investment income -- (0.02) (0.05) -- Distributions from net realized gains (0.40) (0.55) (0.86) (0.13) Distributions in excess of net realized gains -- -- -- -- Return of capital -- (0.06) (0.09) -- -------- -------- -------- -------- Total dividends and distributions (0.40) (0.75) (1.12) (0.31) -------- -------- -------- -------- Net asset value, end of period $ 28.67 $ 23.84 $ 18.49 $ 14.09 ======== ======== ======== ======== Total Investment Return (2) 21.89%(4) 32.58% 39.15% 8.45%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $40,852 $25,029 $ 8,321 $ 4,227 Ratios of expenses to average net assets (5) 1.10%(3) 1.11% 1.67% 1.76%(3) Ratios of net investment income/(loss) to average net assets (5) 0.19%(3) 0.61% 1.04% 2.04%(3) Portfolio turnover (6) 7.49%(4) 9.10% 19.21% 4.73%(4) * Commencement of operations. ** Less than one cent per share. + 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 -- -- 1.67% 1.77%(3) Ratios of net investment income/(loss) to average net assets before waivers -- -- 1.04% 2.03%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
Sweden WEBS Index Series --------------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- ----------- ---------- ------------ Per Share Operating Performance Net asset value, beginning of period $ 18.39 $ 18.32 $ 14.67 $ 13.22(1) -------- -------- ---------- ---------- Net investment income/(loss)(+) (0.11) 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 1.39 0.95 4.45 1.67 -------- -------- ---------- ---------- Net increase/(decrease) in net assets resulting from operations 1.28 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 (0.07) (0.86) (0.77) (0.12) Distributions in excess of net realized gains -- (0.01) -- -- Return of capital -- (0.02) -- -- -------- -------- ---------- ---------- Total dividends and distributions (0.07) (0.98) (0.77) (0.42) -------- -------- ---------- ---------- Net asset value, end of period $ 19.60 $ 18.39 $ 18.32 $ 14.67 ======== ======== ========== ========== Total Investment Return (2) 6.95%(4) 5.48% 30.10% 14.13%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $16,168 $ 13,791 $ 8,243 $ 4,400 Ratios of expenses to average net assets (5) 1.17%(3) 1.17% 1.64% 1.75%(3) Ratios of net investment income/(loss) to average net assets (5) (1.15)%(3) 0.48% (0.19)% 3.05%(3) Portfolio turnover (6) 5.19%(4) 10.88% 13.71% 5.87%(4) * Commencement of operations. ** Less than one cent per share. + 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. 61 FINANCIAL HIGHLIGHTS (concluded) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- (For a share outstanding throughout the period)
Switzerland WEBS Index Series --------------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- ----------- ---------- ------------ Per Share Operating Performance Net asset value, beginning of period $ 15.55 $ 13.79 $ 12.29 $ 12.07(1) -------- -------- -------- -------- Net investment income/(loss)(+) (0.09) (0.00)%** (0.04) 0.08 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions and translation of other assets and liabilities denominated in foreign currencies 0.63 3.01 2.11 0.24 -------- -------- -------- -------- Net increase/(decrease) in net assets resulting from operations 0.54 3.01 2.07 0.32 -------- -------- -------- -------- Less Distributions Dividends from net investment income -- -- -- (0.10) Dividends in excess of net investment income -- (0.01) -- -- Distributions from net realized gains -- (1.21) (0.57) -- Distributions in excess of net realized gains -- -- -- -- Return of capital -- (0.03) 0.00** -- -------- -------- -------- -------- Total dividends and distributions -- (1.25) (0.57) (0.10) -------- -------- -------- -------- Net asset value, end of period $ 16.09 $ 15.55 $ 13.79 $ 12.29 ======== ======== ======== ======== Total Investment Return (2) 3.47%(4) 21.24% 16.69% 2.60%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $38,225 $29,163 $13,805 $ 6,158 Ratios of expenses to average net assets (5) 1.14%(3) 1.15% 1.52% 1.82%(3) Ratios of net investment income/(loss) to average net assets (5) (1.12)%(3) (0.03)% (0.29)% 1.39%(3) Portfolio turnover (6) 32.50%(4) 43.09% 48.05% 17.06%(4) * Commencement of operations. ** Less than one cent per share. + 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) Ratios of net investment income/(loss) to average net assets before waivers -- -- (0.29)% 1.38%(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. 62
United Kingdom WEBS Index Series --------------------------------------------------------- For the six months For the For the For the ended year year period 02/28/99 ended ended 03/12/96*- (Unaudited) 08/31/98 08/31/97 08/31/96 ----------- ----------- ---------- ------------ Per Share Operating Performance Net asset value, beginning of period $ 18.48 $ 16.50 $ 13.15 $ 12.14(1) -------- -------- -------- -------- Net investment income/(loss)(+) 0.07 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 2.18 2.12 3.62 1.06 -------- -------- -------- -------- Net increase/(decrease) in net assets resulting from operations 2.25 2.49 4.00 1.27 -------- -------- -------- -------- Less Distributions Dividends from net investment income (0.03) (0.29) (0.32) (0.20) Dividends in excess of net investment income -- (0.04) (0.06) (0.03) Distributions from net realized gains (0.06) (0.11) (0.17) 0.00** Distributions in excess of net realized gains -- -- -- -- Return of capital -- (0.07) (0.10) (0.03) -------- -------- -------- -------- Total dividends and distributions (0.09) (0.51) (0.65) (0.26) -------- -------- -------- -------- Net asset value, end of period $ 20.64 $ 18.48 $ 16.50 $ 13.15 ======== ======== ======== ======== Total Investment Return (2) 12.18%(4) 14.98% 30.48% 10.41%(4) Ratios/Supplemental Data Net assets, end of period (in 000's) $86,696 $62,846 $29,721 $15,790 Ratios of expenses to average net assets (5) 1.00%(3) 1.03% 1.38% 1.61%(3) Ratios of net investment income/(loss) to average net assets (5) 0.69%(3) 1.90% 2.47% 3.62%(3) Portfolio turnover (6) 3.65%(4) 2.83% 1.84% 0.00%(4) * Commencement of operations. ** Less than one cent per share. + 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 -- -- 1.38% 1.62%(3) Ratios of net investment income/(loss) to average net assets before waivers -- -- 2.47% 3.61%(3) (6) Excludes portfolio securities received or delivered as a result of processing capital share transactions in Creation Unit(s).
63 NOTES TO FINANCIAL STATEMENTS (Unaudited) WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- GENERAL WEBS Index Fund, Inc. (the "Fund") was incorporated under the laws of the State of Maryland on September 1, 1994, and commenced operations on March 12, 1996. The Fund is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. On January 2, 1997, the name of the Fund was changed from Foreign Fund, Inc. to WEBS Index Fund, Inc. The shares of common stock of each WEBS Index Series are referred to as "World Equity Benchmark Shares" or "WEBS" and are traded on the American Stock Exchange, Inc. (the "AMEX") under the following symbols: WEBS Index Series Symbol ----------------- ------ Australia WEBS Index Series EWA Austria WEBS Index Series EWO Belgium WEBS Index Series EWK Canada WEBS Index Series EWC France WEBS Index Series EWQ Germany WEBS Index Series EWG Hong Kong WEBS Index Series EWH Italy WEBS Index Series EWI Japan WEBS Index Series EWJ Malaysia (Free) WEBS Index Series EWM Mexico (Free) WEBS Index Series EWW Netherlands WEBS Index Series EWN Singapore (Free) WEBS Index Series EWS Spain WEBS Index Series EWP Sweden WEBS Index Series EWD Switzerland WEBS Index Series EWL United Kingdom WEBS Index Series EWU The investment objective of each of the WEBS Index Series is to seek to provide investment results that correspond generally to the price and yield performance of publicly traded securities in the aggregate in particular markets, as represented by a particular foreign equity securities index compiled by Morgan Stanley Capital International ("MSCI"). The MSCI Indices utilized by the Fund reflect the reinvestment of net dividends (except for the MSCI Mexico (Free) Index utilized by the Mexico (Free) WEBS Index Series, which reflects the reinvestment of gross dividends). On June 2, 1997 the Malaysia WEBS Index Series commenced using the MSCI Malaysia (Free) Index as its benchmark and changed its name to the Malaysia (Free) WEBS Index Series. Each WEBS Index Series of the Fund utilizes a "passive" or indexing investment approach in an effort to approximate the investment performance of its benchmark index through the use of quantitative analytical procedures. The Fund issues and redeems WEBS of each WEBS Index Series only in aggregations of a specified number of shares (each, a "Creation Unit") at net asset value. WEBS of the Malaysia (Free) WEBS Index Series are not currently being offered. 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. 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. 64 WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- 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. See also "Foreign Currency Translation" below. 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 would 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. 65 NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) - -------------------------------------------------------------------------------- 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. 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 Malaysia (Free) WEBS Index Series was valuing the Malaysian Ringgit ("MR") at 5.07 MR per U.S. dollar at February 28, 1999 while MSCI was valuing the Malaysian Ringgit at 4.47 MR per U.S. dollar on such date. Effective January 1, 1999, the Austria, Belgium, France, Germany, Italy, Netherlands, and Spain WEBS Index Series are converted into U.S. Dollars using the Euro exchange rate. 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 to shareholders, at least annually, 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 Webs 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. 66 WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- If any of the shares initially issued to Funds Distributor Inc. ("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. PFPC is paid aggregate fees 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 billion 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 billion 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. PFPC has a Sub-Administration Agreement with Morgan Stanley & Co. Incorporated ("MS&Co.") whereby the Administrator pays MS&Co. a fee of .05% of the average daily net assets of the Fund for its sub-administration services. PNC Bank, N.A., an affiliate of the Administrator, serves as each WEBS Index Series' Transfer Agent and Dividend Disbursement Agent. The Fund has a Licensing Agreement with MSCI for the use of the relevant MSCI Indices. Each WEBS Index Series pays a license fee equal to .03% per annum of the average daily net assets of each 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% (currently .20%) 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. From time to time the Distributor may waive all or a portion of the fee. The Chase Manhattan Bank serves as custodian as well as Securities Lending Agent to each of the Webs Index Series. Prior to February 17, 1999, Chase was 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%). Effective February 17, 1999, the fees payable under the Custody Agreement were revised. For its custody services to each WEBS Index Series, Chase is now paid per annum fees based on the aggregate net assets of the WEBS Index Series as follows: Australia WEBS Index Series (.07%); Austria WEBS Index Series (.09%); Belgium WEBS Index Series (.09%); Canada WEBS Index Series (.05%); France WEBS Index Series (.09%); Germany WEBS Index Series (.08%); Hong Kong WEBS Index Series (.10%); Italy WEBS Index Series (.08%); Japan WEBS Index Series (.055%); Malaysia (Free) WEBS Index Series (.10%); Mexico (Free) WEBS Index Series (.15%); 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 (.05%). Chase also receives certain fees for each transaction of the WEBS Index Series and is reimbursed for certain out-of-pocket expenses. The Fund pays each director who is not a director, officer or employee of the Adviser, Administrator, Distributor or any affiliate thereof, an annual fee of $20,000 plus $5,000 for each Board of Directors meeting attended. 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. 67 NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) - -------------------------------------------------------------------------------- FOREIGN CURRENCY At February 28, 1999, each WEBS Index Series' cash balance included the following amount of foreign currency:
Value Cost ---------- ---------- Australia WEBS Index Series $ 333,934 $ 340,277 Austria WEBS Index Series $ 377,298 $ 378,969 Belgium WEBS Index Series $ 505 $ 538 Canada WEBS Index Series $ 35,492 $ 35,720 France WEBS Index Series $ 102,150 $ 107,791 Germany WEBS Index Series $ 120,857 $ 122,155 Hong Kong WEBS Index Series $4,618,601 $4,618,601 Italy WEBS Index Series $ 12,739 $ 12,711 Japan WEBS Index Series $ 850,933 $ 840,138 Malaysia (Free) WEBS Index Series $ 151,462 $ 151,462 Mexico (Free) WEBS Index Series $ 30,731 $ 30,569 Netherlands WEBS Index Series $ 32,520 $ 32,680 Singapore (Free) WEBS Index Series $ 167,008 $ 166,650 Spain WEBS Index Series $ 169,802 $ 169,857 Sweden WEBS Index Series $ 62,022 $ 63,474 Switzerland WEBS Index Series $ 200,910 $ 200,910 United Kingdom WEBS Index Series $ 130,736 $ 133,208
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 Chase, in respect of each WEBS Index Series, 50% of the net investment income earned on the collateral for securities loaned. The market values of securities on loan to broker/dealers at February 28, 1999, 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 $ 2,517,856 $ 2,657,735 Austria WEBS Index Series $ 15,219 $ 15,738 Belgium WEBS Index Series $ 993,373 $ 1,057,056 Canada WEBS Index Series $ 1,233,126 $ 1,249,755 France WEBS Index Series $ 1,413,242 $ 1,503,150 Germany WEBS Index Series $ 8,183,697 $ 8,587,468 Hong Kong WEBS Index Series $ 3,029,063 $ 3,396,090 Italy WEBS Index Series $30,468,058 $32,506,100 Japan WEBS Index Series $55,897,511 $59,278,434 Malaysia (Free) WEBS Index Series $ -- $ -- Mexico (Free) WEBS Index Series $ 910,427 $ 972,127 Netherlands WEBS Index Series $ 7,633,425 $ 8,067,900 Singapore (Free) WEBS Index Series $22,563,972 $24,247,136 Spain WEBS Index Series $ 5,286,189 $ 5,587,068 Sweden WEBS Index Series $ 771,613 $ 1,006,020 Switzerland WEBS Index Series $ 829,124 $ 878,105 United Kingdom WEBS Index Series $ -- $ --
68 WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- 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. Shares of the Malaysia (Free) WEBS Index Series are not currently being offered. 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 redemptions of Creation Units of the Malaysia (Free) WEBS Index Series are paid only in Malaysian Ringgits to shareholders that have established an appropriate account with a duly licensed Malaysian financial institution and acknowledged certain risks and restrictions, and except for residents of Australia and New Zealand whom 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 The Fund 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%. There were no loans outstanding at February 28,1999. The maximum amount of advances outstanding during the six months ended February 28, 1999 was as follows: WEBS Index Series Advances ----------------- ---------- 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 six months ended February 28, 1999. 69 NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) PORTFOLIO ACTIVITY The WEBS Index Series' purchases and sales of securities (excluding in-kind transactions), other than short-term obligations, were as follows, for the six months ended February 28, 1999:
Purchases of Sales of WEBS Index Series Securities Securities ----------------- ------------ ----------- Australia WEBS Index Series $ 6,222,052 $ 6,004,875 Austria WEBS Index Series $ 3,010,972 $ 3,565,991 Belgium WEBS Index Series $ 4,191,306 $ 8,351,736 Canada WEBS Index Series $ 571,613 $ 910,696 France WEBS Index Series $ -- $ 574,201 Germany WEBS Index Series $ 1,372,094 $ 2,406,253 Hong Kong WEBS Index Series $22,697,918 $24,060,125 Italy WEBS Index Series $ 4,972,128 $11,207,642 Japan WEBS Index Series $ -- $ -- Malaysia (Free) WEBS Index Series $ 4,412,501 $10,100,364 Mexico (Free) WEBS Index Series $ 776,833 $ 1,024,794 Netherlands WEBS Index Series $ 5,396,330 $ 7,014,115 Singapore (Free) WEBS Index Series $15,750,883 $15,538,205 Spain WEBS Index Series $ 2,320,007 $ 3,505,646 Sweden WEBS Index Series $ 750,244 $ 1,486,598 Switzerland WEBS Index Series $10,806,565 $12,129,140 United Kingdom WEBS Index Series $ 2,663,517 $ 3,204,658
FOREIGN INCOME TAXES For the six months ended February 28, 1999, 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 $ 18,021 Austria WEBS Index Series $ 817 Belgium WEBS Index Series $ 6,379 Canada WEBS Index Series $ 19,287 France WEBS Index Series $ 2,635 Germany WEBS Index Series $ 13,698 Hong Kong WEBS Index Series $ -- Italy WEBS Index Series $ 460 Japan WEBS Index Series $132,929 Malaysia (Free) WEBS Index Series $ -- Mexico (Free) WEBS Index Series $ 39 Netherlands WEBS Index Series $ 19,220 Singapore (Free) WEBS Index Series $ -- Spain WEBS Index Series $ 33,020 Sweden WEBS Index Series $ -- Switzerland WEBS Index Series $ -- United Kingdom WEBS Index Series $ 90,931 70 WEBS INDEX FUND, INC. - -------------------------------------------------------------------------------- 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). 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 as follows: 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 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. MALAYSIAN CAPITAL CONTROLS Bank Negara Malaysia, the central bank of Malaysia, announced measures on September 1, 1998 that significantly restricted the rights of non-residents (such as the Fund) with respect to transactions in Malaysian securities. The "Measures to Regain Monetary Independence" were intended to insulate Malaysia from the problems confronting the international financial markets and the current escalation of regional contagion effects. The measures affected 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. Certain restrictions imposed by the capital controls at September 1, 1998 were as follows: o Ringgit-denominated securities had to be deposited with authorized depositories and any transactions in ringgit-denominated securities held by non-residents had to be transacted through an authorized depository for good delivery; o All payments by non-residents for any security registered in Malaysia had to be made (a) in a foreign currency or (b) in ringgit from an "external account"; o All proceeds in ringgit received by a non-resident from the sale of any security registered in Malaysia had to 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 could be immediately converted to a foreign currency or credited to the external account); and o The use of funds in an external account was limited to the purchase of ringgit assets in Malaysia. On September 3, 1998 the Malaysia (Free) WEBS Index Series ("Malaysia Series") announced that it was unable to exchange Creation Units of WEBS principally on an in-kind basis. In such circumstances, the Fund temporarily suspended new creations of Creation Units of WEBS of the Malaysia Series. 71 NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) - -------------------------------------------------------------------------------- Effective February 4, 1999, the Malaysian Central Bank announced a system of graduated exit levies and profit taxes that replaced the prior repatriation restrictions. In general, capital invested in Malaysia prior to February 15, 1999 may be repatriated subject to a graduated levy based on the duration of the investment: -- Capital repatriated by March 31, 1999 - 30% Levy -- Capital repatriated by May 30, 1999 - 20% Levy -- Capital repatriated by August 31, 1999 - 10% Levy -- Capital repatriated by subsequent to August 31, 1999 - 0% Levy Profits on capital invested prior to February 15, 1999 may be repatriated without the payment of any levy, but are subject to a 10% levy if they are repatriated on or after September 1, 1999. Capital invested in Malaysia on or subsequent to February 15, 1999 will not be subject to levies upon repatriation on capital. However capital invested in Malaysia after February 15, 1999 will be subject to a 30% levy on profit repatriated within twelve months from the date it was earned. Profit repatriated after twelve months will be subject to a 10% levy. Effective February 17, 1999, the Malaysia Series announced that it is able to honor requests for the redemption of Creation Units through the delivery of Malaysian Ringgits only. The Malaysia Series is now permitted to transfer Malaysian ringgits representing redemption proceeds from its account to a redeeming investor's account maintained at a duly licensed Malaysian financial institution. The Malaysia Series will not make redemption payments in U.S. dollars because of the restrictions on repatriation of ringgits. Investors that redeem Creation Units of the Malaysia Series at different times may be subject to significantly different economic consequences, depending on how the Malaysian exit levies and profit taxes are applied, including the extent to which, if any, the Malaysian authorities trace the sources of ringgits paid to redeeming investors by the Malaysia Series. The redeeming holder of creation units of the Malaysia Series must open a ringgit denominated account in Malaysia in its own name to accept ringgit proceeds. The Fund also announced that, for the time being, it is continuing the suspension of sales of Creation Units of the Malaysia Series. The continued suspension of creations, and the limitations under Malaysian law on effecting in-kind redemptions and on repatriating redemption proceeds in ringgits, are likely to cause the Malaysia Series to continue to trade at larger discounts or premiums to net asset value than they did prior to September 1, 1998, and such discounts or premiums may be material. 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 was a return of capital, assuming all other current year and accumulated earnings and profits will be distributed for Federal income tax purposes. The dividend was 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 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; and October 7, to March 31, 1999 at 5.07%. Effective April 1, 1999, the Index Series uses a foreign exchange rate of 3.8 ringgits per U.S. dollar in computing its net asset value per share. Such rate currently differs from the rate being used by MSCI to compile the MSCI Malaysia (Free) Index, the benchmark for the Malaysia Series. These rates were determined in good faith in accordance with the Fund's policies for the valuation of foreign currency. The Malaysia Series may use different exchange rates for computing its net asset value in the future. 72 -----END PRIVACY-ENHANCED MESSAGE-----