WORLD
EQUITY
BENCHMARK
SHARES
WEBS [GRAPHIC OMITTED]
1 9 9 6
ANNUAL REPORT
FOREIGN FUND, INC.
<PAGE>
FOREIGN FUND, INC.
================================================================================
Dear Shareholder,
As a pioneering investor in World Equity Benchmark Shares (WEBS), you will
be glad to see your good judgment affirmed: WEBS have met their performance and
pricing goals in the first six months of operation. You can expect more and more
investors to follow your lead into this exciting arena of international
equities.
ALREADY, A GOOD TRACK RECORD
As you know, each of the 17 WEBS series seeks to deliver the investment
performance of a specific country's stock market, as measured by a Morgan
Stanley Capital International (MSCI) country index. This annual report contains
information about the tracking of each series of WEBS as compared to its
benchmark MSCI country index during the period from inception (March 12, 1996)
through August 31, 1996. As you will see, each WEBS produced performance well
within the limit set forth in the prospectus. For an indicator of how well WEBS
perform for our shareholders, we designed a weighted basket of WEBS to mirror
the performance of the MSCI EAFE (Europe, Australasia, Far East) index, the
standard international benchmark for US institutional investors. The tracking
error of this basket compared to EAFE was only 0.09% from WEBS' introduction on
March 12, 1996 through the end of their first fiscal year.
While this performance may reassure current and prospective shareholders,
it should come as no surprise. Barclays Global Fund Advisors, which manages
WEBS, uses sophisticated optimization models to construct portfolios that have
capitalization, industry and fundamental investment characteristics similar to
those of the relevant index. They also use these models to rebalance each WEBS
portfolio when the underlying MSCI index changes.
PRICE/VALUE STABILITY
WEBS have also shown that their unique structure has indeed kept share
prices very close to their net asset values. While the relationships between
market price and net asset value varied from moment to moment and from index
series to index series, WEBS traded on the American Stock Exchange at an average
end-of-day market price only 4 cents per share -- about one-third of 1% -- over
their underlying net asset values. The largest average end-of-day spread, for
Australia, was only 1.27%. In contrast, shares in closed-end international funds
frequently trade at substantial discounts or premiums to their net asset values.
INTERNATIONAL OUTLOOK
While we are pleased to present these favorable results, the true
excitement of WEBS -- and the compelling reason you purchased your shares -- is
the opportunity represented by the international markets whose performance WEBS
deliver.
First, adding international assets to a portfolio of US equities generally
decreases overall risk because many foreign markets have a low correlation to US
markets. In 1987, for example, when the US equities market delivered its worst
performance in a decade and rose only 0.61% for the year, Japan, Spain, and the
United Kingdom delivered returns of 42.41%, 32.70% and 31.56%, respectively.1
Second, foreign markets have offered superior returns over the past two
decades. In seven of the 10 years from 1986 through 1995, the US market did not
even rank among the top five developed markets. This year, the US equity market
ranked only tenth when compared to the 17 WEBS markets for the first eight
months. Mexico's total return was 18.22% and Sweden's was 17.81%, compared with
8.46% for the US.
These diversification and return advantages have led a number of leading
financial advisors to routinely recommend that investors place from 10% to 40%
of their assets in non-US securities. Moreover, investors are increasingly
putting their foreign assets in indexed investments such as WEBS. Pension funds
placed almost half their 1995 international equity investments into indexed
products, according to INSTITUTIONAL INVESTOR.
GROWTH
WEBS were launched on March 12 with aggregate net assets of $79 million,
which grew 280% to
- -------------------
1 Market performance data are as measured by the relevant MSCI Index in US
dollars with net dividends reinvested for each country. It is not possible to
invest in an MSCI Index.
1
<PAGE>
ANNUAL REPORT OF THE INVESTMENT ADVISER
================================================================================
more than $300 million by August 31. The success of WEBS in fiscal 1996,
together with the growing importance of international equities to US investors,
the attractiveness of index investing, and the ease of investing in WEBS, make
us optimistic about the prospect for continued strong investment interest in
WEBS in fiscal 1997.
The creation of new WEBS to meet increased demand should result in reduced
expense ratios for all shares as certain costs are spread over a larger asset
base. Lower expense ratios would make WEBS an even more efficient vehicle for
international investing. We hope that many of you, our initial shareholders,
will purchase additional WEBS as you gain confidence in them and continue to
diversify your portfolios.
In the meantime, we wish to thank you for your early support of and
confidence in WEBS.
Sincerely,
/s/ NATHAN MOST /s/ DONALD L. LUSKIN
Nathan Most Donald L. Luskin
Chairman and President Vice Chairman
Foreign Fund, Inc. Barclays Global
Fund Advisors
2
<PAGE>
FOREIGN FUND, INC.
===============================================================================
INTRODUCTION
The Investment Adviser for each WEBS Index Series is Barclays Global Fund
Advisors. Each WEBS Index Series is managed to hold a representative sample of
the securities held in the corresponding MSCI Index (using an analytic technique
known as "portfolio sampling"), as opposed to a full replication of the Index.
Portfolio sampling is a highly disciplined approach to capturing index returns
which involves maximizing float and liquidity, reflecting accurately the
market's size and industry profiles and minimizing cross-ownership. No attempt
is made to manage the WEBS Index Series using economic, financial or market
analysis.
There are several factors that should be kept in mind when reviewing the
performance of the Fund's various WEBS Index Series. First, because of the
portfolio sampling approach discussed above, as well as regulatory and other
constraints imposed on its use (such as limits on investing in particular stocks
imposed by the Internal Revenue Code and the need to comply with the Fund's
concentration policy), the resulting performance of the WEBS Index Series may
vary positively or negatively from that of the MSCI Index during any period.
Second, the MSCI Indices are unmanaged and, therefore, do not bear
management, administration, distribution, transaction or other expenses.
However, the WEBS Index Series do incur such expenses, which impacts their
performance.
A final factor to be considered is the method in which the MSCI Index
records dividend income. The MSCI Index calculates total dividends received in a
year and allocates that total pro rata over a twelve-month period (i.e., the
dividend payments are "smoothed" throughout the year). Each WEBS Index Series
records dividend income on its portfolio securities on their specific
ex-dividend dates, which results in uneven flows of dividend income during the
year. It should be noted that computations for the MSCI Indices herein allocate
a pro rata portion of the March 1996 dividend amount over the 20 days in March
that the Fund was operational.
3
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
AUSTRALIA
For the period ended August 31, 1996 the total return of the WEBS Australia
Index Series was 3.88%. The corresponding Index total return for the period was
3.83%. The Australia Index Series outperformed the Index total return by 0.05%
in this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS AUSTRALIA
INDEX SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Australia Index Series outperformed the benchmark for several reasons,
including the impact of portfolio sampling and dividend smoothing. The primary
reason the Index Series outperformed the benchmark was due to portfolio
sampling. This technique resulted in an overweighting of the gold mining and
banking sectors, which impacted performance positively, more than offsetting the
effect of the Fund's expenses on the Australia Index Series' performance.
WHAT MARKET CONDITIONS AFFECTED THE WEBS AUSTRALIA INDEX SERIES' PERFORMANCE
DURING THE PERIOD?
The fear of an Australian Reserve Bank interest rate cut came to an end
following the report showing a GDP growth rate of 4.8% through March. The
consumer, business and government sectors all contributed to this growth,
although the services, agriculture and mining (particularly gold mining) sectors
were the leaders. The manufacturing and construction sectors performed poorly
overall. In May, the Australian dollar appreciated 1.4% against the United
States dollar, which resulted in increased imports. In June, there was a slump
in gold and copper prices which contributed to a slight depreciation in the
value of the Australian dollar. The Australian stock market sustained losses in
May with industrial stocks sliding 2%. Overall, Australia has experienced stable
inflation rates, asset prices and healthy corporate profits which has resulted
in slow, steady growth of the economy.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
AUSTRALIA INDEX SERIES VS. THE MSCI AUSTRALIA INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000.00 $10,000.00
March 31,1996 $10,170.68 $10,160.80
April 30,1996 $10,670.15 $10,633.17
May 31,1996 $10,587.76 $10,522.61
June 30,1996 $10,238.20 $10,261.31
July 31,1996 $9,758.14 $9,768.84
August 31,1996 $10,383.06 $10,388.19
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- -- Australia Index Series $10,388*
== MSCI Australia Index $10,383
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
-----------------
Australia Index Series 3.88%
MSCI Australia Index 3.83%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Australia
Index Series and reflects all expenses of the Index Series. Investors should
note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
4
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
AUSTRIA
For the period ended August 31, 1996 the total return of the WEBS Austria
Index Series was (3.39)%. The corresponding Index total return for the period
was 0.73%. The Austria Index Series underperformed the Index total return by
4.12% in this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS AUSTRIA
INDEX SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Austria Index Series underperformed the benchmark for several reasons,
including the impact of expenses and dividend smoothing. The primary reason the
Index Series underperformed the benchmark was due to portfolio sampling. This
technique resulted in certain securities within the banking and insurance
sectors being overweighted in the Index Series. These securities performed
poorly during this period, which caused the Index Series to underperform the
Index.
WHAT MARKET CONDITIONS AFFECTED THE WEBS AUSTRIA INDEX SERIES' PERFORMANCE
DURING THE PERIOD?
The cyclical upswing that Austria had experienced in the last year is
losing momentum. The long period of growth in the construction sector has slowed
and tourism has also suffered. The construction sector is expected to continue
to perform poorly due to small wage increases, a low savings rate and smaller
disposable income in Austria. The GDP has decreased from 2.1% in 1995 to 1.6% in
the first half of 1996. Risks have arisen in the European business cycle
resulting from a movement to restrictive fiscal policies in the hopes of
reducing excessive budget deficits (as required by the criteria set in the
Maastricht Treaty). Austria plans to decrease its deficit (currently at 5.4% of
GDP) to 3% of GDP by 1997. The Government plans to accomplish this deficit
decrease by cutting public labor costs and the rate of early retirements.
Inflation has slowed down, falling below 2% in early 1996. It should continue
its decline. Unemployment has risen from 4.6% in 1995 to 4.7% in 1996 (although
traditionally low for Austria) and should continue rising into 1997. The
slowdown of growth Austria has experienced, in addition to rising unemployment
and the strict budget reduction plan, has put a strain on economic growth this
year.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
AUSTRIA INDEX SERIES VS. THE MSCI AUSTRIA INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,237 $10,101
April 30,1996 $10,304 $10,009
May 31,1996 $10,866 $10,577
June 30,1996 $10,202 $9,881
July 31,1996 $9,978 $9,698
August 31,1996 $10,073 $9,661
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- --- Austria Index Series $9,661*
== MSCI Austria Index $10,073
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
-----------------
Austria Index Series (3.39)%
MSCI Austria Index 0.73%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Austria
Index Series and reflects all expenses of the Index Series. Investors should
note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
5
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
BELGIUM
For the period ended August 31, 1996 the total return of the WEBS Belgium
Index Series was 5.01%. The corresponding Index total return for the period was
4.96%. The Belgium Index Series outperformed the Index total return by 0.05% in
this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS BELGIUM INDEX
SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Belgium Index Series outperformed the benchmark for several reasons,
including dividend smoothing and portfolio sampling. The majority of the
overperformance was due to dividend smoothing by the benchmark. The Index Series
received over 90% of the year's dividends during the May through August period,
the months many European companies pay dividends. The result of dividend
smoothing more than offset the effect of the Fund's expenses on the Belgium
Index Series' performance.
WHAT MARKET CONDITIONS AFFECTED THE WEBS BELGIUM INDEX SERIES' PERFORMANCE
DURING THE PERIOD?
The Belgian economy is showing signs of picking up again after a short
downturn. The GDP growth rate was 2% in 1995 and decreased slightly to 1.8% in
the first part of 1996, although the forecast for 1997 is 2.4%. This growth
downturn was caused by a general slowdown in the manufacturing sector in Europe,
which affected the intermediate goods sector in Belgium. Inventories have been
accumulating due to weak domestic demand caused by higher taxes, unemployment
and a freeze on real wage increases. The unemployment rate is expected to remain
subdued, holding at an average of 2% in 1996. Along with the rest of Europe,
Belgium is determined to decrease it's budget deficit from 4.3% of GDP in 1995
to 3% of GDP by the end of 1996. This plan to reduce the deficit looks promising
based on a government austerity program which includes a three year wage freeze
and cuts in health and social spending. The biggest challenge facing the country
is the reduction of the deficit by 1998. Overall, Belgium has experienced steady
growth in 1996, along with a decrease in its unemployment rate.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
BELGIUM INDEX SERIES VS. THE MSCI BELGIUM INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $9,823 $9,759
April 30,1996 $10,076 $9,966
May 31,1996 $10,237 $10,288
June 30,1996 $10,284 $10,322
July 31,1996 $10,399 $10,456
August 31,1996 $10,496 $10,501
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- -- Belgium Index Series $10,501*
== MSCI Belgium Index $10,496
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Belgium Index Series 5.01%
MSCI Belgium Index 4.96%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Belgium
Index Series and reflects all expenses of the Index Series. Investors should
note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
6
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
CANADA
For the period ended August 31, 1996 the total return of the WEBS Canada
Index Series was 4.63%. The corresponding Index total return for the period was
5.21%. The Canada Index Series underperformed the Index total return by 0.58% in
this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS CANADA INDEX
SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Canada Index Series underperformed the benchmark for several reasons,
including dividend smoothing and the impact of expenses. The primary reason for
the underperformance was expenses incurred by the Index Series.
WHAT MARKET CONDITIONS AFFECTED THE WEBS CANADA INDEX SERIES' PERFORMANCE
DURING THE PERIOD?
Canada has experienced continued growth due to the strength of the U.S.
economy, additional penetration by Canadian exporters in the U.S. and overseas
markets, as well as a stronger world economy. Expectations are that the pace of
economic growth in Canada will accelerate from 1.6% this year to 2.4% in 1997.
Productivity growth, low inflation and a slow rate of wage increases have
allowed Canadian producers to win market share abroad. This export growth should
continue with increased market share penetration in the U.S., and especially in
overseas markets. The financial services sector has experienced above average
growth consistent with the growth in demand for new services. In government,
cutbacks are a major focus. These cutbacks will adversely affect the health care
and education sectors. The manufacturing sector, which slowed in the last year,
is regaining strength and should outperform most other sectors in 1997.
Increasing competition, due to modest growth, will keep businesses focused on
productivity improvements and reducing costs. Unemployment is forecast to drop
slightly to 9.2% for 1996, due to the creation of jobs. The strong growth that
Canada has experienced in the last year, which was fueled by export growth, is
forecast to continue through 1997.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
CANADA INDEX SERIES VS. THE MSCI CANADA INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,100 $10,088
April 30,1996 $10,516 $10,462
May 31,1996 $10,682 $10,639
June 30,1996 $10,389 $10,344
July 31,1996 $10,071 $10,029
August 31,1996 $10,521 $10,463
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- -- Canada Index Series $10,463*
== MSCI Canada Index $10,521
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Canada Index Series 4.63%
MSCI Canada Index 5.21%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Canada
Index Series and reflects all expenses of the Index Series. Investors should
note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
7
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
FRANCE
For the period ended August 31, 1996 the total return of the WEBS France
Index Series was 4.95%. The corresponding Index total return for the period was
3.71%. The France Index Series outperformed the Index total return by 1.24% in
this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS FRANCE INDEX
SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The France Index Series outperformed the benchmark for several reasons,
including dividend smoothing and portfolio sampling. The primary reason the
Index Series outperformed the benchmark was due to dividend smoothing by the
benchmark. The Index Series received over 90% of the year's dividends during the
June through July period, the months many European companies pay dividends. The
result of dividend smoothing more than offset the effect of the Fund's expenses
on the France Index Series' performance.
WHAT MARKET CONDITIONS AFFECTED THE WEBS FRANCE INDEX SERIES' PERFORMANCE
DURING THE PERIOD?
A major change in the government following the general election (a move from
a Socialist president to a Center-Right president) has upset the economy.
Consumer spending has fallen, as have the volumes of both imports and exports.
The rate of inflation has remained stable at 2% and should continue at this
level. The biggest problem facing the French economy is restricting public
finances in order to reduce the deficit to a target level of 4% of GDP by the
end of 1996 (in keeping with the criteria set in the Maastricht Treaty). The
plan to reduce the deficit has resulted in wage freezes, reduction of military
spending, postponement of payments to the unemployment insurance fund and tax
increases on petroleum products and tobacco. A proposed social security benefit
cut has resulted in large scale public sector strikes by unions in France. The
unemployment rate is 11.6%, due to a rigid labor market, high minimum wages and
unskilled workers. The unemployment rate is expected to rise in the next year.
The French economy has experienced a year of sluggish growth due to changes in
government and efforts to reduce the deficit.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
FRANCE INDEX SERIES VS. THE MSCI FRANCE INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,629 $10,596
April 30,1996 $10,821 $10,765
May 31,1996 $10,701 $10,668
June 30,1996 $10,893 $10,998
July 31,1996 $10,589 $10,757
August 31,1996 $10,371 $10,495
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- -- France Index Series $10,495*
== MSCI France Index $10,371
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
-----------------
France Index Series 4.95%
MSCI France Index 3.71%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the France
Index Series and reflects all expenses of the Index Series. Investors should
note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
8
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
GERMANY
For the period ended August 31, 1996 the total return of the WEBS Germany
Index Series was 4.00%. The corresponding Index total return for the period was
4.51%. The Germany Index Series underperformed the Index total return by 0.51%
in this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS GERMANY
INDEX SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Germany Index Series underperformed the benchmark due principally to
expenses incurred by the Index Series.
WHAT MARKET CONDITIONS AFFECTED THE WEBS GERMANY INDEX SERIES' PERFORMANCE
DURING THE PERIOD?
In the last year, Germany has seen its growth rate slow down after a very
strong 1995. There has been a surge in the value of the currency, excessive wage
settlements, a slowdown in overseas export activity and a tax related drop in
construction activity. The slowdown of the economy and the strength of the
Deutschmark in late 1995 had a beneficial impact on inflation and it fell, below
estimates, to 1.6%. The Bundesbank eased monetary policy and reduced the key
discount rate to 3%. The slow growth environment had a detrimental impact on the
public finances and the budget deficit widened to 3.6% of GDP, taking Germany
above the Maastricht Treaty borrowing criteria. Unemployment has increased
sharply in the last few years, but is expected to decrease slightly from 10.3%
in 1996 to 10% in 1997. Labor market reforms are being implemented to make the
market more flexible and to address the very serious unemployment crisis.
Consumer expenditure should get a boost from a recent reduction in personal
taxes. Although the growth rate in Germany has slowed in the last year, the
country has experienced low inflation and is working to increase growth in 1997.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
GERMANY INDEX SERIES VS. THE MSCI GERMANY INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,216 $10,181
April 30,1996 $9,843 $9,781
May 31,1996 $9,984 $9,955
June 30,1996 $10,187 $10,144
July 31,1996 $10,216 $10,197
August 31,1996 $10,451 $10,400
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- --- Germany Index Series $10,400*
== MSCI Germany Index $10,451
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Germany Index Series 4.00%
MSCI Germany Index 4.51%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Germany
Index Series and reflects all expenses of the Index Series. Investors should
note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
9
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
HONG KONG
For the period ended August 31, 1996 the total return of the WEBS Hong Kong
Index Series was 3.22%. The corresponding Index total return for the period was
4.15%. The Hong Kong Index Series underperformed the Index total return by 0.93%
in this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS HONG KONG
INDEX SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Hong Kong Index Series underperformed the benchmark for several reasons,
including the impact of expenses and portfolio sampling. The primary reason for
the underperformance was expenses incurred by the Index Series.
WHAT MARKET CONDITIONS AFFECTED THE WEBS HONG KONG INDEX SERIES' PERFORMANCE
DURING THE PERIOD?
There was a considerable slow down in export growth over 1995 which
contributed to a weak overall economy during this time. The main factors
underlying the deceleration in export growth were the strengthening of the Hong
Kong dollar, a slowdown in import demand in the United States and China and a
heightening of tension in the Taiwan Strait. As a result, exports have risen by
only 4% in the first half of 1996, compared to 10% in the last half of 1995. The
GDP growth rate reached a low of 3.1% in the first quarter of 1996. Unemployment
fell below the 3% mark in July for the first time in 14 months. However,
unemployment in the local manufacturing sector showed no signs of abatement,
being affected by weak exports and an on-going trend of relocation of production
processes outside Hong Kong. Inflation was at 6.8% in the first half of 1996.
There has been a surge in tourism which, together with a shift in the structure
of trade towards offshore trading and a continued increase in exports of
financial and other business products, should contribute to robust growth in
exports of services in late 1996. Import demand in the United States is expected
to revive and the unfavorable exchange rate effect should dissipate by 1997.
Hong Kong has experienced a slow economy during 1996 primarily due to the
strength of the Hong Kong dollar.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
HONG KONG INDEX SERIES VS. THE MSCI HONG KONG INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,477 $10,429
April 30,1996 $10,501 $10,468
May 31,1996 $10,817 $10,826
June 30,1996 $10,566 $10,569
July 31,1996 $10,085 $10,031
August 31,1996 $10,415 $10,322
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- --- Hong Kong Index Series $10,322*
== MSCI Hong Kong Index $10,415
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Hong Kong Index Series 3.22%
MSCI Hong Kong Index 4.15%
------------------
* The chart assumes a hypothetical $10,000 initial investment in the Hong Kong
Index Series and reflects all expenses of the Index Series. Investors should
note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
10
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
ITALY
For the period ended August 31, 1996 the total return of the WEBS Italy Index
Series was 4.11%. The corresponding Index total return for the period was 3.33%.
The Italy Index Series outperformed the Index total return by 0.78% in this
period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS ITALY INDEX
SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Italy Index Series outperformed the benchmark for several reasons,
including portfolio sampling and dividend smoothing. The primary reason the
Index Series outperformed the Index was due to portfolio sampling, more than
offsetting the effect of the Fund's expenses on the Italy Index Series'
performance.
WHAT MARKET CONDITIONS AFFECTED THE WEBS ITALY INDEX SERIES' PERFORMANCE
DURING THE PERIOD?
The Italian economy has expanded by 4% in the first quarter of 1996, fueled
by export growth as a result of the weakness of the Lira. However, there has
been a slowdown in export demand lately, due to subdued external markets. The
deterioration in the prospects of European economies, which account for 40% of
Italy's exports, indicate a further decline in coming months. Monetary policy
has been stable since May of 1995 when the discount rate was raised to 9%. The
reason for tight monetary policy is governmental concern over inflation.
Inflation has been at 4.5% for 1996, down from 5.4% in 1995. Along with the rest
of Europe, budget deficit concerns are a major priority. Italy aims to reduce
its budget deficit to 3% of GDP by 1998. This is extremely optimistic and the
deficit is expected to be 6.5% of GDP for 1996 and 6% of GDP for 1997. The
budget package for 1996 was finalized in the beginning of 1996 and includes 0.1%
of GDP in spending cuts and 0.4% of GDP in revenue increasing measures. Budget
revisions later in the year are necessary to further cut spending if the goal of
a budget deficit of 5.8% of GDP in 1996 is to be met. The budgetary goals that
pertain to all European countries have had a detrimental effect on the Italian
economy, in terms of a decrease in exports. Budgetary concerns will continue to
be a major focus for Italy into 1997, and will continue to put a strain on
economic growth.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
ITALY INDEX SERIES VS. THE MSCI ITALY INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $9,918 $9,875
April 30,1996 $11,272 $11,197
May 31,1996 $11,207 $11,226
June 30,1996 $11,233 $11,300
July 31,1996 $10,416 $10,514
August 31,1996 $10,333 $10,411
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- -- Italy Index Series $10,411*
== MSCI Italy Index $10,333
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Italy Index Series 4.11%
MSCI Italy Index 3.33%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Italy Index
Series and reflects all expenses of the Index Series. Investors should note
that the Index Series is professionally managed while the relevant MSCI Index
is unmanaged, does not incur expenses and is not available for investment.
(DAGGER) For the period March 12, 1996 (commencement of operations) through
August 31, 1996 (unannualized).
11
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
JAPAN
For the period ended August 31, 1996 the total return of the WEBS Japan Index
Series was (3.11)%. The corresponding Index total return for the period was
(2.80)%. The Japan Index Series underperformed the Index total return by 0.31%
in this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS JAPAN INDEX
SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Japan Index Series underperformed the benchmark for several reasons,
including the impact of expenses and dividend smoothing. The primary reason for
the underperformance was expenses incurred by the Index Series.
WHAT MARKET CONDITIONS AFFECTED THE WEBS JAPAN INDEX SERIES' PERFORMANCE
DURING THE PERIOD?
Business sentiment has been weak. The economy is expected to continue
weakening in the second half of this year. Inflation is developing moderately
(-.1% in 1995 and .2% in the first half of 1996), but is not considered to be a
problem. Competition in the retail sector has become more fierce as a result of
deregulation of the entry requirements for large supermarkets (discount stores).
When the currency began its downward trend in late 1995, inflation was finally
stabilized. The appreciation of the Japanese Yen in the mid-1990's had caused
the prices of imported goods to fall. Thus, foreign inputs (raw materials)
became cheaper for Japanese producers, as did imported finished goods. This
triggered productivity improvements and had considerable impact on price trends.
Japan increased the Value Added Tax (VAT) from 3% to 5% on April 1, 1996. There
is a question as to whether the retailers will pass the price increase to their
clients (given the growing competition) or absorb all or some of the increase
themselves. GDP growth is on the rise moving from .8% in 1995 to a forecasted
3.4% for 1996. Japan has experienced a year of turmoil, with GDP growing while
the Yen depreciated. Expected growth and business development looks promising in
the year ahead, with employment prospects improving as well.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
JAPAN INDEX SERIES VS. THE MSCI JAPAN INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,570 $10,548
April 30,1996 $11,171 $11,116
May 31,1996 $10,596 $10,548
June 30,1996 $10,652 $10,629
July 31,1996 $10,175 $10,149
August 31,1996 $9,720 $9,689
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- -- Japan Index Series $9,689*
== MSCI Japan Index $9,720
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Japan Index Series (3.11)%
MSCI Japan Index (2.80)%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Japan Index
Series and reflects all expenses of the Index Series. Investors should note
that the Index Series is professionally managed while the relevant MSCI Index
is unmanaged, does not incur expenses and is not available for investment.
(DAGGER) For the period March 12, 1996 (commencement of operations) through
August 31, 1996 (unannualized).
12
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
MALAYSIA
For the period ended August 31, 1996 the total return of the WEBS Malaysia
Index Series was 4.28%. The corresponding Index total return for the period was
5.12%. The Malaysia Index Series underperformed the Index total return by 0.84%
in this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS MALAYSIA
INDEX SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Malaysia Index Series underperformed the benchmark for several reasons,
including the impact of expenses and portfolio sampling. The primary reason for
the underperformance was expenses incurred by the Index Series.
WHAT MARKET CONDITIONS AFFECTED THE WEBS MALAYSIA INDEX SERIES' PERFORMANCE
DURING THE PERIOD?
The economy expanded by 9.6% in 1995 due to large investments in
construction. There has also been strong growth in the mining, agriculture and
manufacturing sectors. GDP will remain driven by investment and private
consumption, growing an expected 8.3% this year. The capital, Kuala Lumpur, is
being transformed by skyscrapers and new roads. Many of the large infrastructure
changes are being funded by the private sector, although there have also been
large inflows of foreign funds since 1991. A continuation of Malaysia's overseas
funding depends on the country's ability to enter the next stage of
industrialization. The economy is dependent on labor intensive industries rather
than high technology sectors, which is detrimental in the long run. The economy
has changed from one based on commodities to one based on manufacturing exports.
The link to the domestic economy is weak due to the shortage of skilled workers
and a sub par education system. Inflation has been on the rise moving from 3.4%
in 1995 to a forecasted 3.8% for 1996. The current account deficit widened to 9%
of GDP in 1995 and could move to 9.6% of GDP in 1996. This indicates that the
economy is expanding too rapidly. The Malaysian central bank has increased
reserve requirements to 12.5% in February in an effort to absorb liquidity and
limit credit expansion. Further tightening of monetary policy is expected as
current fiscal policy is considered to be inadequate to curb growth. The last
few years have seen explosive growth for the Malaysian economy. This growth has
stemmed from Malaysia's evolving from a developing country to an industrial
nation.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
MALAYSIA INDEX SERIES VS. THE MSCI MALAYSIA INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,450 $10,438
April 30,1996 $11,007 $10,899
May 31,1996 $10,562 $10,498
June 30,1996 $10,612 $10,551
July 31,1996 $9,966 $9,894
August 31,1996 $10,512 $10,428
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- --- Malaysia Index Series $10,428*
== MSCI Malaysia Index $10,512
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Malaysia Index Series 4.28%
MSCI Malaysia Index 5.12%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Malaysia
Index Series and reflects all expenses of the Index Series. Investors should
note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
13
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
MEXICO
For the period ended August 31, 1996 the total return of the WEBS Mexico
(Free) Index Series was 15.93%. The corresponding Index total return for the
period was 17.36%. The Mexico (Free) Index Series underperformed the Index total
return by 1.43% in this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS MEXICO (FREE)
INDEX SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Mexico (Free) Index Series underperformed the benchmark for several
reasons, including portfolio sampling and the impact of expenses. The primary
reason the Index Series underperformed the Index was because of portfolio
sampling.
WHAT MARKET CONDITIONS AFFECTED THE WEBS MEXICO (FREE) INDEX SERIES'
PERFORMANCE DURING THE PERIOD?
The slump in Mexico turned out to be worse than expected in 1995, with the
GDP decline for the year as a whole estimated to have been as high as 6%, giving
negative growth performance for two years in a row. GDP fell by 10.5% in the
second quarter of 1995, which represented the worse decline in growth in more
than a decade. It is also an indication of the depth of the adjustment that is
taking place in the economy as a result of the devaluation of the Peso in
December 1994 and the subsequent capital outflows. The economy of Mexico
expanded in the first half of 1996. The economy is expected to grow 2% in 1996.
This growth is based on increased consumption, government spending and
investment spending. The Peso has been strong and, as such, has contributed to
lower inflation this year, although inflation remains high in comparison to
other countries, having increased to 53% in 1995. The huge increase in inflation
is a result of the 50% depreciation of the Peso against the U.S. dollar from
December 1994 to March 1995 and an increase in nominal interest rates to 80%.
Interest rates have held relatively stable at 31.6% in 1996. An increase in the
Value Added Tax (VAT) level from 10% to 15% and higher gasoline and electricity
prices have put upward pressure on prices. The expansion of the Mexican economy
is due, in part, to a sizable public-sector surplus, a stronger Peso and
declining domestic interest rates.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
MEXICO (FREE) INDEX SERIES VS. THE MSCI MEXICO (FREE) INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,913 $10,864
April 30,1996 $11,540 $11,437
May 31,1996 $11,617 $11,618
June 30,1996 $11,486 $11,427
July 31,1996 $10,743 $10,683
August 31,1996 $11,736 $11,593
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- -- Mexico (Free) Index Series $11,593*
== MSCI Mexico (Free) Index $11,736
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Mexico (Free) Index Series 15.93%
MSCI Mexico (Free) Index 17.36%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Mexico
(Free) Index Series and reflects all expenses of the Index Series. Investors
should note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
14
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
===============================================================================
NETHERLANDS
For the period ended August 31, 1996 the total return of the WEBS Netherlands
Index Series was 11.19%. The corresponding Index total return for the period was
9.74%. The Netherlands Index Series outperformed the Index total return by 1.45%
in this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS NETHERLANDS
INDEX SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Netherlands Index Series outperformed the benchmark due to portfolio
sampling and compliance with Subchapter M of the Internal Revenue Code, which
generally requires that no more than 25% of an Index Series' portfolio can be
made up of one individual security. In keeping with this tax provision, holdings
of Royal Dutch Petroleum have been restricted to 25%. This resulted in a
re-weighting of the remaining securities in the portfolio which has had a
positive effect on performance. This caused the Index Series to outperform the
Index and more than offset the effect of the Fund's expenses on the Netherlands
Index Series' performance.
WHAT MARKET CONDITIONS AFFECTED THE WEBS NETHERLANDS INDEX SERIES'
PERFORMANCE DURING THE PERIOD?
Compared to other countries in Europe, the Netherlands experienced relatively
high first quarter growth of GDP at 1.8% in 1996. Export growth slowed in 1995
and should continue its slowdown into 1996 due to appreciation of the Guilder
and a slowdown in the economy of the Dutch trading partners. Private consumption
should increase driven by increases in wages in the corporate sector and
measures in the 1996 budget to reduce taxes. Reducing the budget deficit is a
major concern in keeping with the criteria set in the Maastricht Treaty. The
Government aims to reduce the budget deficit to 2.8% of GDP in 1996. Employment
growth has been sluggish and a drop in the unemployment rate has been slow to
materialize because of the growth of the labor force. This growth has been a
result of overall population growth and an increase in the participation rate.
Inflation has decreased as well to an expected 2.1% in 1996 because of wage
restraints and the strength of the Guilder. Overall, the economy is expected to
expand by 2.1% this year. The economy of the Netherlands has gained strength
this year due to the reduction of personal taxes and the increase in wages.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
NETHERLANDS INDEX SERIES VS. THE MSCI NETHERLANDS INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,412 $10,434
April 30,1996 $10,457 $10,471
May 31,1996 $10,941 $11,113
June 30,1996 $10,966 $11,094
July 31,1996 $10,792 $10,911
August 31,1996 $10,974 $11,119
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- --- Netherlands Index Series $11,119*
== MSCI Netherlands Index $10,974
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Netherlands Index Series 11.19%
MSCI Netherlands Index 9.74%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Netherlands
Index Series and reflects all expenses of the Index Series. Investors should
note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
15
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
SINGAPORE
For the period ended August 31, 1996 the total return of the WEBS Singapore
(Free) Index Series was (6.73)%. The corresponding Index total return for the
period was (8.04)%. The Singapore (Free) Index Series outperformed the Index
total return by 1.31% in this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS SINGAPORE
(FREE) INDEX SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Singapore (Free) Index Series outperformed the benchmark for several
reasons, including portfolio sampling, dividend smoothing and compliance with
Subchapter M of the Internal Revenue Code, which imposes restrictions on the
composition of the Index Series. In keeping with this tax provision, Singapore
Telecom was added to the Index but, due to compliance concerns, the Index Series
did not purchase Singapore Telecom until later. The Index Series benefited from
not holding the security because the return of Singapore Telecom was down during
the period, which more than offset the effect of the Fund's expenses on the
Singapore (Free) Index Series' performance.
WHAT MARKET CONDITIONS AFFECTED THE WEBS SINGAPORE (FREE) INDEX SERIES'
PERFORMANCE DURING THE PERIOD?
The economy expanded 8.9% in 1995 but is estimated to expand only 8.1% in
1996. GDP growth is also expected to be moderate at 8.1% this year and 7.5%
forecast for 1997. In the past, public investment in the subway system boosted
investment in transportation and equipment by 70% (the subway is now complete).
Government spending has been increasing and contributed to the growth last year.
Inflation is on the rise coming in at 1.7% for 1995 and forecast at 2.1% for
1996. This is down from a high in 1994 of 3.1% inflation. The Government is
running a fiscal surplus of 14.4% of GDP and can afford to invest in the economy
via expansionary measures. Government spending will increase in order to
counteract weak private consumption. Measures are being taken to increase
consumer demand, such as a 2% cut in the personal income tax, a 1% cut in
property taxes and a 10% rebate on 1995 personal income taxes. Singapore has
felt a slowdown in its economy after two years of double digit growth primarily
due to the completion of major construction projects.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
SINGAPORE (FREE) INDEX SERIES VS. THE MSCI SINGAPORE (FREE) INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,308 $10,278
April 30,1996 $10,284 $10,302
May 31,1996 $9,692 $9,714
June 30,1996 $9,571 $9,722
July 31,1996 $8,828 $8,979
August 31,1996 $9,196 $9,327
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- -- Singapore (Free) Index Series $9,327*
== MSCI Singapore (Free) Index $9,196
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Singapore (Free) Index Series (6.73)%
MSCI Singapore (Free) Index (8.04)%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Singapore
(Free) Index Series and reflects all expenses of the Index Series. Investors
should note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
16
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
SPAIN
For the period ended August 31, 1996 the total return of the WEBS Spain Index
Series was 8.45%. The corresponding Index total return for the period was 9.17%.
The Spain Index Series underperformed the Index total return by 0.72% in this
period. WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS SPAIN
INDEX SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Spain Index Series underperformed the benchmark for several reasons,
including portfolio sampling and the impact of expenses. The primary reason the
Index Series underperformed the Index was because of portfolio sampling.
WHAT MARKET CONDITIONS AFFECTED THE WEBS SPAIN INDEX SERIES' PERFORMANCE
DURING THE PERIOD?
Growth in Spain averaged 3% in 1995 and is estimated to be slightly lower
(2.7%) for 1996. A weakness in consumer spending reflects high interest rates,
lower household income and an extremely high unemployment rate (the highest in
Europe). The unemployment rate fell to 22.7% at the end of 1995 and should
improve in 1996-97 due to labor market reforms, which included hiring
flexibility through part-time and temporary employment. The Bank of Spain
reduced key interest rates to 7.75% in April 1996. The cut was the fourth cut
since December 1994 when rates peaked at 9.25%. This easing of monetary policy
reflects the increased confidence the Bank of Spain has in the improved
inflationary environment, as well as concerns over a slowdown and appreciation
of the Peseta. Inflation has been decreasing and is expected to be 3.6% for 1996
(3.4% for 1997). The Government is focusing on reducing the deficit, which fell
to 5.8% of GDP for 1995. The goal is to reduce the deficit to 4.5% of GDP for
1996. Investment has been the main force of growth in 1996, while export demand
declined and private consumption has slowed.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
SPAIN INDEX SERIES VS. THE MSCI SPAIN INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12, 1996 $10,000 $10,000
March 31,1996 $10,428 $10,399
April 30,1996 $10,824 $10,715
May 31,1996 $10,747 $10,640
June 30,1996 $11,199 $11,069
July 31,1996 $10,688 $10,663
August 31,1996 $10,917 $10,845
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- -- Spain Index Series $10,845*
== MSCI Spain Index $10,917
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Spain Index Series 8.45%
MSCI Spain Index 9.17%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Spain Index
Series and reflects all expenses of the Index Series. Investors should note
that the Index Series is professionally managed while the relevant MSCI Index
is unmanaged, does not incur expenses and is not available for investment.
(DAGGER) For the period March 12, 1996 (commencement of operations) through
August 31, 1996 (unannualized).
17
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
SWEDEN
For the period ended August 31, 1996 the total return of the WEBS Sweden
Index Series was 14.13%. The corresponding Index total return for the period was
12.00%. The Sweden Index Series outperformed the Index total return by 2.13% in
this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS SWEDEN INDEX
SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Sweden Index Series outperformed the benchmark for several reasons,
including portfolio sampling and dividend smoothing. The primary reason the
Index Series outperformed the Index was because of portfolio sampling. The
technique resulted in an underweighting in the health and personal care industry
and overweighting in the merchandising and construction sectors. These weighting
factors resulted in the outperformance of the Index, which more than offset the
effect of the Fund's expenses on the Sweden Index Series' performance.
WHAT MARKET CONDITIONS AFFECTED THE WEBS SWEDEN INDEX SERIES' PERFORMANCE
DURING THE PERIOD?
The Government is determined to restrict public finances and reduce the
budget deficit to 8% of GDP this year (down from an estimated 9.5% in 1995),
with further reductions into 1997. A preliminary budget has been drafted and
savings are planned for 1997 and 1998, 65% of which are to be made via spending
cuts. The remaining 35% is expected to come from increased taxes - increased
energy taxes, base tax rates and payroll taxes. Spending cuts are widespread
except on higher and adult education. This budget revision is a response to the
criteria set forth in the Maastricht Treaty requiring Europe to reduce budget
deficits. Inflation has been falling to 2.6% in 1995 and an expected 2.5% in
1996. Lower interest rates and lower prices on clothing and gasoline were the
main sources of the decline. Both the appreciation of the Swedish Krona and the
sluggishness in consumer demand eased price pressures. The Riksbank has cut the
repo rate eight times this year from 8.91% to 7.15%. The deposit rate has been
cut from 7.5% to 6.75% and the lending rate from 9% to 8.25%. This easing of
monetary policy reflects a benign inflationary environment and the improvement
of the currency over the last few months. The Swedish economy has expanded this
year, being driven mainly by fixed investment and exports, with consumer demand
remaining weak.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
SWEDEN INDEX SERIES VS. THE MSCI SWEDEN INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,459 $10,424
April 30,1996 $10,345 $10,446
May 31,1996 $10,805 $10,976
June 30,1996 $10,949 $11,127
July 31,1996 $10,499 $10,651
August 31,1996 $11,200 $11,413
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- -- Sweden Index Series $11,413*
== MSCI Sweden Index $11,200
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Sweden Index Series 14.13%
MSCI Sweden Index 12.00%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Sweden
Index Series and reflects all expenses of the Index Series. Investors should
note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
18
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
SWITZERLAND
For the period ended August 31, 1996 the total return of the WEBS Switzerland
Index Series was 2.60%. The corresponding Index total return for the period was
3.19%. The Switzerland Index Series underperformed the Index total return by
0.59% in this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS SWITZERLAND
INDEX SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The Switzerland Index Series underperformed the benchmark for several
reasons, including portfolio sampling and the impact of expenses. The primary
reason the Index Series underperformed the Index was because of portfolio
sampling.
WHAT MARKET CONDITIONS AFFECTED THE WEBS SWITZERLAND INDEX SERIES'
PERFORMANCE DURING THE PERIOD?
Switzerland has had relatively flat growth in the last year with the economy
expanding only .7% in 1995. Domestic demand remains too weak to lead the
recovery, with consumer spending remaining subdued. Construction activity has
remained flat, limited by excess capacity. The export sector is expected to
continue to suffer as a result of the strength of the currency. A rise in VAT
last year pushed the inflation rate to 1.8% in 1995 (compared to .8% in 1994).
Inflation is expected to average 1.5% this year and decrease to 1.2% in 1997.
The effects of last year's VAT increase are dissipating and rent reductions are
expected to be legally imposed, which should ease price pressures. Unemployment
was 4.2% last year and is expected to rise slightly to 4.5% this year. Real
household income growth is expected to remain weak this year, which will limit
private consumption. The government deficit fell to .9% of GDP in 1995 from 2%
of GDP in 1994. The Government is aiming to balance the budget by 2001. The
Swiss National Bank lowered the discount rate to 1.5% the lowest level in
eighteen years. This comes in an attempt to boost growth and to counter the
effects of the strong currency. Overall, the economy has been fairly stable
during the year due to a decrease in inflation and the (counteractive) strength
of the Swiss franc.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
SWITZERLAND INDEX SERIES VS. THE MSCI SWITZERLAND INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,357 $10,298
April 30,1996 $9,951 $10,025
May 31,1996 $9,617 $9,751
June 30,1996 $10,095 $10,207
July 31,1996 $9,891 $9,876
August 31,1996 $10,319 $10,260
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- -- Switzerland Index Series $10,260*
== MSCI Switzerland Index $10,319
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
Switzerland Index Series 2.60%
MSCI Switzerland Index 3.19%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the Switzerland
Index Series and reflects all expenses of the Index Series. Investors should
note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
19
<PAGE>
PERFORMANCE REVIEW FOREIGN FUND, INC.
================================================================================
UNITED KINGDOM
For the period ended August 31, 1996 the total return of the WEBS United
Kingdom Index Series was 10.41%. The corresponding Index total return for the
period was 10.78%. The United Kingdom Index Series underperformed the Index
total return by 0.37% in this period.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE WEBS UNITED
KINGDOM INDEX SERIES' PERFORMANCE OVER THE PERIOD ENDED AUGUST 31, 1996?
The United Kingdom Index Series underperformed the benchmark due, primarily,
to the impact of expenses incurred by the Index Series.
WHAT MARKET CONDITIONS AFFECTED THE WEBS UNITED KINGDOM INDEX SERIES'
PERFORMANCE DURING THE PERIOD?
The British economy is beginning to pick up after several years of sluggish
growth.There are several reasons for this improvement: lower mortgage rates and
tax cuts (actual and forecast). Consumer demand is on the rise due to rising job
security, real income gains and rising housing prices. The services sector has
been performing well because leisure activities have increased. The
manufacturing sector is experiencing slow growth and production has been on the
decline.Bond market yields have been increasing in the first half of 1996.
Inflation is at a thirty year low (currently 2.20%) and is expected to remain
below the Government's target for 1996 (2.50%). Consumer demand is expected to
fuel domestic markets, rather than export growth. Overall, the economy is
experiencing growth, but has yet to deal with budgetary concerns imposed by the
Maastricht Treaty that will be a major focus into 1997. These fiscal concerns
will put a strain on economic growth.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
UNITED KINGDOM INDEX SERIES VS. THE MSCI UNITED KINGDOM INDEX
CHART [GRAPHIC OMITTED]
MSCI Index Fund
Date PLOT POINTS PLOT POINTS
- ------- -------------------- --------------------
March 12,1996 $10,000 $10,000
March 31,1996 $10,200 $10,206
April 30,1996 $10,399 $10,371
May 31,1996 $10,521 $10,470
June 30,1996 $10,459 $10,412
July 31,1996 $10,532 $10,478
August 31,1996 $11,078 $11,041
Past performance is not predictive of future performance
Value
August 31, 1996
------------------
- -- United Kingdom Index Series $11,041*
== MSCI United Kingdom Index $11,078
TOTAL RETURN
SINCE
INCEPTION(DAGGER)
----------------
United Kingdom Index Series 10.41%
MSCI United Kingdom Index 10.78%
- ------------------
* The chart assumes a hypothetical $10,000 initial investment in the United
Kingdom Index Series and reflects all expenses of the Index Series. Investors
should note that the Index Series is professionally managed while the relevant
MSCI Index is unmanaged, does not incur expenses and is not available for
investment.
(DAGGER) For the period March 12, 1996 (commencement of operations)
through August 31, 1996 (unannualized).
20
<PAGE>
FOREIGN FUND, INC.
================================================================================
[THIS PAGE INTENTIONALLY LEFT BLANK]
21
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
AUSTRALIA INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 98.29%
APPLIANCES & HOUSEHOLD DURABLES 0.71%
34,200 Email Limited $ 86,059
----------
BANKING 16.71%
121,200 National Australia Bank Limited 1,182,516
169,200 Westpac Banking Limited 831,444
----------
2,013,960
----------
BEVERAGES & TOBACCO 7.16%
40,800 Coca-Cola Amatil Limited 531,089
180,600 Foster's Brewing Group Limited 331,548
----------
862,637
----------
BROADCASTING & PUBLISHING 9.63%
156,600 News Corporation Limited 835,204
72,000 News Corporation Limited - Preferred 324,750
----------
1,159,954
----------
BUILDING MATERIALS & COMPONENTS 4.82%
100,200 Boral Limited 241,036
39,000 James Hardie Industries Limited 86,101
87,600 Pioneer International Limited 253,010
----------
580,147
----------
BUSINESS & PUBLIC SERVICES 2.31%
18,600 Brambles Industries Limited 278,174
----------
CHEMICALS 1.86%
24,600 ICI Australia Limited 224,637
----------
ENERGY SOURCES 19.27%
157,200 Broken Hill Proprietary Company 2,142,036
46,800 Santos Limited 179,239
----------
2,321,275
----------
FOOD & HOUSEHOLD PRODUCTS 1.41%
43,200 Burns Phillip & Company Limited 63,924
102,600 Goodman Fielder Limited 106,355
----------
170,279
----------
FOREST PRODUCTS & PAPER 2.53%
49,800 Amcor Limited 305,008
----------
GOLD MINES 2.22%
24,000 Newcrest Mining Limited 87,170
52,800 Normandy Mining Limited 87,322
18,600 Plutonic Resources Limited 93,460
----------
267,952
----------
LEISURE & TOURISM 1.10%
57,000 Crown Limited * 133,057
----------
MERCHANDISING 2.64%
91,200 Coles Myer Limited 317,533
----------
METALS - NON FERROUS 11.71%
25,800 CRA Limited 392,387
128,400 Mount Isa Mines Holdings Limited 164,597
64,200 North Limited 191,522
16,800 Renison Goldfields Consolidated
Limited 77,104
84,000 WMC Limited 584,929
----------
1,410,539
----------
METALS - STEEL 0.72%
107,400 Australian National Industries Limited 86,685
----------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
MULTI-INDUSTRY 6.61%
82,800 CSR Limited $ 290,907
22,800 Howard Smith Limited 167,968
82,800 Pacific Dunlop Limited 179,524
63,000 Southcorp Holdings Limited 158,529
----------
796,928
----------
REAL ESTATE 6.88%
77,400 General Property Trust 140,255
19,800 Lend Lease Corporation Limited 324,009
58,200 Stockland Trust Group 136,779
123,600 Westfield Trust 227,885
----------
828,928
----------
TOTAL COMMON STOCK - BASKET
(Cost $11,581,794) 11,843,752
----------
COMMON STOCK - NON-BASKET 1.71%
GOLD MINES 1.71%
124,250 Normandy Mining Limited 205,487
----------
TOTAL COMMON STOCK -
NON-BASKET (Cost $188,949) 205,487
----------
TOTAL INVESTMENTS
(COST $11,770,743)(DAGGER) 100.00% $12,049,239
======= ===========
- --------------------
* Non-income producing security.
(DAGGER) Aggregate cost for Federal income tax purposes is $11,811,083. The
aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 420,726
Excess of tax cost over value (182,570)
-----------
$ 238,156
===========
See accompanying notes to financial statements.
22
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
AUSTRIA INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
--------- ----------- -----
COMMON STOCK - BASKET 100.00%
BANKING 34.91%
38,428 Bank Austria AG $ 3,159,559
9,256 Creditanstalt Bankverein 591,913
19,760 Creditanstalt Bankverein Vorzug 893,665
-----------
4,645,137
-----------
BEVERAGES & TOBACCO 4.69%
10,140 Oesterreichische Brau Beteiligungs AG 624,066
-----------
BUILDING MATERIALS & COMPONENTS 4.29%
3,055 Wienerberger Baustoffindustrie AG 571,404
-----------
BUSINESS & PUBLIC SERVICES 4.82%
9,178 Flughafen Wien AG 641,645
-----------
CHEMICALS 1.36%
2,860 Lenzing 180,694
-----------
CONSTRUCTION & HOUSING 4.55%
4,017 Bau Holdings AG 225,980
3,965 Bau Holdings AG Vorzug 179,969
4,706 Universale-Bau 199,121
-----------
605,070
-----------
ELECTRONIC COMPONENTS,
INSTRUMENTS 2.22%
4,290 Austria Mikro Systeme International AG 296,206
-----------
ENERGY SOURCES 4.64%
6,175 OMV AG 617,565
-----------
INSURANCE 10.95%
5,122 EA - Generali AG 1,457,954
-----------
MACHINERY & ENGINEERING 8.01%
2,249 BWT 265,583
12,480 Steyr Daimler Puch* 192,020
4,745 Va Technologie AG 607,789
-----------
1,065,392
-----------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
METALS - STEEL 4.67%
7,956 Boehler - Uddeholm $ 621,246
-----------
MISCELLANEOUS MATERIALS &
COMMODITIES 7.39%
11,687 Mayr Melnhof Karton* 549,572
14,872 Radex-Heraklith Industries 433,336
-----------
982,908
-----------
TRANSPORTATION - AIRLINES 3.03%
2,873 Austrian Airlines* 403,092
-----------
UTILITIES - ELECTRICAL & GAS 4.47%
8,190 Oesterreichische
Elektrizitaetswirtschafts AG -
Class A 594,941
-----------
TOTAL COMMON STOCK - BASKET
(Cost $14,484,721) 13,307,320
-----------
TOTAL INVESTMENTS
(COST $14,484,721)(DAGGER) 100.00% $13,307,320
======= ===========
- --------------------
* Non-income producing security.
(DAGGER) Aggregate cost for Federal income tax purposes is $14,490,908. The
aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 76,039
Excess of tax cost over value (1,259,627)
-----------
($1,183,588)
===========
See accompanying notes to financial statements.
23
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
BELGIUM INDEX SERIES
- -------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 100.00%
BANKING 13.55%
432 Generale de Banque SA $ 159,711
279 Kredietbank NV 88,660
----------
248,371
----------
BUILDING MATERIALS & COMPONENTS 4.51%
1,089 Cimenteries CBR Cementbedrij 82,668
----------
CHEMICALS 4.32%
135 Solvay SA 79,079
----------
ELECTRONIC COMPONENTS,
INSTRUMENTS 4.92%
525 Barco NV 90,232
----------
ENERGY SOURCES 10.90%
633 Petrofina SA 199,698
----------
INDUSTRIAL COMPONENTS 4.09%
99 Bekaert SA 74,990
----------
INSURANCE 8.77%
615 Fortis AG 85,894
402 Royal Belge 74,772
----------
160,666
----------
MERCHANDISING 4.82%
1,650 Delhaize - Le Lion SA 88,383
----------
METALS - NON FERROUS 4.57%
1,086 Union Miniere Group SA * 83,689
----------
MISCELLANEOUS MATERIALS &
COMMODITIES 4.20%
705 Glaverbel 76,918
----------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
MULTI-INDUSTRY 17.15%
1,230 Gevaert NV $ 80,033
615 Groupe Bruxelles Lambert SA 76,900
372 Tractebel 157,394
----------
314,327
----------
UTILITIES - ELECTRICAL & GAS 18.20%
1,506 Electrabel SA 333,567
----------
TOTAL COMMON STOCK - BASKET
(Cost $1,801,814) 1,832,588
----------
COMMON STOCK - NON-BASKET 0.00%
UTILITIES - ELECTRICAL & GAS 0.00%
74 Electrabel SA-Strip * 78
----------
TOTAL COMMON STOCK -
NON-BASKET (Cost $0) 78
----------
TOTAL INVESTMENTS
(COST $1,801,814)(DAGGER) 100.00% $1,832,666
======= ==========
- --------------------
* Non-income producing security.
(DAGGER) Aggregate cost for Federal income tax purposes is $1,812,869. The
aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 44,201
Excess of tax cost over value (24,404)
-----------
$ 19,797
===========
See accompanying notes to financial statements.
24
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
CANADA INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 99.71%
AEROSPACE & MILITARY TECHNOLOGY 2.59%
5,200 Bombardier Incorporated - Class A $ 73,727
15,600 Bombardier Incorporated - Class B 220,039
7,800 Cae Incorporated 60,710
------------
354,476
------------
BANKING 13.25%
16,900 Bank of Montreal 414,997
14,300 Bank of Nova Scotia 354,286
13,000 Canadian Imperial Bank of Commerce 433,713
10,400 National Bank of Canada 87,788
20,800 Royal Bank of Canada 522,166
------------
1,812,950
------------
BEVERAGES & TOBACCO 6.17%
3,900 Cott Corporation * 30,498
2,600 Molson Company Limited - Class A 39,904
23,400 Seagram Company Limited 772,988
------------
843,390
------------
BROADCASTING & PUBLISHING 6.41%
3,900 Quebecor Incorporated - Class B 60,710
11,700 Rogers Communications
Incorporated - Class B * 84,652
5,200 Southam Incorporated 62,516
37,700 Thomson Corporation 669,524
------------
877,402
------------
BUSINESS & PUBLIC SERVICES 2.77%
3,900 Corel Systems Corporation * 37,338
15,600 Laidlaw Incorporated - Class B 150,493
2,600 Loewen Group Incorporated 76,102
6,500 Moore Corporation Limited 114,723
------------
378,656
------------
CHEMICALS 1.03%
6,500 Dupont Canada
Incorporated - Class A 141,087
------------
ELECTRICAL & ELECTRONICS 5.71%
15,600 Northern Telecommunication Limited 780,969
------------
ELECTRONIC COMPONENTS,
INSTRUMENTS 2.18%
5,200 Newbridge Networks Corporation * 298,897
------------
ENERGY SOURCES 12.76%
6,500 Alberta Energy Company Limited 119,948
7,800 Anderson Exploration Limited * 79,237
5,200 Canadian Natural Resources * 106,599
10,400 Canadian Occidental Petroleum 172,915
10,400 Imperial Oil Limited 449,200
5,200 IPL Energy Incorporated 137,762
6,500 Norcen Energy Resources Incorporated 118,048
7,800 Numac Energy Incorporated * 33,918
6,500 Renaissance Energy Limited * 182,891
5,200 Suncor Incorporated 183,556
6,500 Talisman Energy Incorporated * 160,802
------------
1,744,876
------------
FINANCIAL SERVICES 1.01%
7,800 Power Corporation of Canada Limited 137,667
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
FOREST PRODUCTS & PAPER 1.98%
3,900 Avenor Incorporated $ 66,981
7,800 Domtar Incorporated 62,421
7,800 Macmillan Bloedel Limited 112,300
7,800 Repap Enterprises Incorporated* 28,788
------------
270,490
------------
GOLD MINES 8.68%
26,000 Barrick Gold Corporation 702,112
7,800 Echo Bay Mines Limited 77,527
16,900 Placer Dome Incorporated 407,586
------------
1,187,225
------------
INDUSTRIAL COMPONENTS 1.38%
3,900 Magna International
Incorporated - Class A 188,117
------------
MERCHANDISING 1.56%
5,200 Canadian Tire Corporation - Class A 61,946
3,900 George Weston Limited 151,063
------------
213,009
------------
METALS - NON FERROUS 10.96%
14,300 Alcan Aluminum Limited 451,480
3,900 Cameco Corporation 194,672
5,200 Cominco Limited 116,670
7,800 Inco Limited 251,392
14,300 Noranda Incorporated 301,509
6,500 Teck Corporation - Class B 137,287
3,900 Viridian Incorporated 46,602
------------
1,499,612
------------
METALS - STEEL 0.81%
5,200 Dofasco Incorporated 79,617
6,500 Stelco Incorporated - Class A * 31,115
------------
110,732
------------
MISCELLANEOUS MATERIALS &
COMMODITIES 2.01%
2,600 Potash Corporation of Saskatchewan 196,667
3,900 Rio Algom Limited 78,382
------------
275,049
------------
MULTI-INDUSTRY 6.56%
6,500 Brascan Limited - Class A 124,699
20,800 Canadian Pacific Limited 465,921
15,600 Imasco Limited 307,257
------------
897,877
------------
TELECOMMUNICATIONS 6.54%
19,500 BCE Incorporated 769,568
9,100 Telus Corporation 124,699
------------
894,267
------------
TRANSPORTATION - AIRLINES 0.24%
9,100 Air Canada Incorporated * 32,388
------------
UTILITIES - ELECTRICAL & GAS 5.11%
31,200 Nova Corporation 277,045
11,700 Transalta Corporation 131,682
13,000 Transcanada Pipelines Limited 207,594
5,200 Westcoast Energy Incorporated 82,657
------------
698,978
------------
See accompanying notes to financial statements.
25
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
CANADA INDEX SERIES (CONTINUED)
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
TOTAL COMMON STOCK - BASKET
(Cost $13,613,715) $13,638,114
------------
COMMON STOCK - NON-BASKET 0.29%
ENERGY SOURCES 0.27%
837 Imperial Oil Limited 36,152
------------
METALS - NON FERROUS 0.02%
1,020 Westaim Corporation * 2,982
------------
TOTAL COMMON STOCK -
NON-BASKET (Cost $37,763) 39,134
------------
TOTAL INVESTMENTS
(COST $13,651,478)(DAGGER) 100.00% $13,677,248
======= ============
- --------------------
* Non-income producing security.
(DAGGER) Aggregate cost for Federal income tax purposes is substantially the
same as for book purposes. The aggregate gross unrealized appreciation
(depreciation) for all securities is as follows:
Excess of value over tax cost $ 416,637
Excess of tax cost over value (390,867)
-----------
$ 25,770
===========
See accompanying notes to financial statements.
26
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
FRANCE INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 99.58%
AEROSPACE & MILITARY TECHNOLOGY 1.08%
8,775 Thomson CSF $ 243,494
------------
AUTOMOBILES 1.71%
3,375 PSA Peugeot Citroen 387,156
------------
BANKING 8.82%
12,474 Banque National de Paris 450,003
8,100 Cie Financiere de Paribas - Class A 509,925
10,737 Compagnie Financiere de Suez 385,853
5,868 Societe Generale de Paris 646,442
------------
1,992,223
------------
BEVERAGES & TOBACCO 7.43%
5,940 LVMH (Moet-Hennessy Louis Vuitton) 1,253,531
4,050 Pernod Ricard 245,751
4,455 Societe Nationale D'exploration 178,866
------------
1,678,148
------------
BROADCASTING & PUBLISHING 1.55%
1,521 Canal Plus SA 348,957
------------
BUILDING MATERIALS & COMPONENTS 1.52%
6,210 Lafarge SA 343,901
------------
BUSINESS & PUBLIC SERVICES 5.84%
8,010 Compagnie Generale des Eaux 773,736
4,410 Havas SA 296,553
540 Sodexho SA 247,673
------------
1,317,962
------------
CHEMICALS 6.10%
4,725 L'Air Liquide 805,552
21,771 Rhone-Poulenc - Class A 571,391
------------
1,376,943
------------
CONSTRUCTION & HOUSING 0.68%
1,575 Bouygues 153,416
------------
ELECTRICAL & ELECTRONICS 7.16%
10,080 Alcatel Alsthom 781,504
1,935 Legrand SA 289,709
270 Sagem SA 153,261
8,775 Schneider SA 391,882
------------
1,616,356
------------
ENERGY SOURCES 10.95%
18,000 Elf Acquitaine SA 1,312,949
15,750 Total SA - Class B 1,160,356
------------
2,473,305
------------
FINANCIAL SERVICES 1.36%
1,800 Compagnie Bancaire 178,359
315 Societe Eurafrance SA 127,717
------------
306,076
------------
FOOD & HOUSEHOLD PRODUCTS 4.10%
1,800 Eridania Beghin-Say SA 253,476
4,860 Groupe Danone 671,889
------------
925,365
------------
- -------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
HEALTH & PERSONAL CARE 9.60%
720 Essilor International $ 190,819
4,554 L'Oreal 1,424,898
6,975 Sanofi SA 552,085
------------
2,167,802
------------
INDUSTRIAL COMPONENTS 2.59%
7,380 Michelin - Class B 345,347
4,752 Valeo SA 239,663
------------
585,010
------------
INSURANCE 5.00%
12,609 AXA 708,743
20,907 Union des Assurances de Paris 420,944
------------
1,129,687
------------
LEISURE & TOURISM 1.21%
2,250 Accor SA 272,789
------------
MACHINERY & ENGINEERING 1.00%
1,944 Sidel SA 116,422
1,197 Compagnie Francaise d'Etudes
de Construction Technip 108,665
------------
225,087
------------
MERCHANDISING 10.75%
2,565 Carrefour SA 1,298,201
4,320 Casino Guichard Perrachon 170,797
369 Comptoirs Modernes 159,099
1,539 Pinault-Printemps Redoute SA 494,017
1,260 Promodes 306,022
------------
2,428,136
------------
METALS - NON FERROUS 0.53%
900 Imetal 118,906
------------
METALS - STEEL 1.01%
16,533 Usinor Sacilor 227,259
------------
MISCELLANEOUS MATERIALS &
COMMODITIES 3.11%
5,670 Compagnie de Saint Gobain 703,129
------------
MULTI-INDUSTRY 2.88%
594 Groupe Saint Louis Bouchon 138,629
6,552 Lagardere S.C.A. 156,410
4,050 Lyonnaise des Eaux SA 355,489
------------
650,528
------------
REAL ESTATE 1.27%
2,475 Simco SA 200,698
846 Union du Credit-Bail Immobilier 86,673
------------
287,371
------------
RECREATION, OTHER CONSUMER
GOODS 1.64%
2,025 Bic 295,974
90 Salomon SA 74,761
------------
370,735
------------
UTILITIES - ELECTRICAL & GAS 0.69%
1,449 Primagaz CIE 155,615
------------
See accompanying notes to financial statements.
27
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
FRANCE INDEX SERIES (CONTINUED)
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
TOTAL COMMON STOCK - BASKET
(Cost $22,624,598) $22,485,356
------------
COMMON STOCK - NON-BASKET 0.42%
BANKING 0.07%
1,240 Credit Foncier de France* 16,910
------------
MERCHANDISING 0.35%
315 Docks de France SA 77,876
------------
TOTAL COMMON STOCK -
NON-BASKET (Cost $73,316) 94,786
------------
TOTAL INVESTMENTS
(COST $22,697,914)(DAGGER) 100.00% $22,580,142
======= ============
- --------------------
* Non-income producing security.
(DAGGER) Aggregate cost for Federal income tax purposes is $22,704,553. The
aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 375,891
Excess of tax cost over value (500,302)
-----------
$ (124,411)
===========
See accompanying notes to financial statements.
28
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
GERMANY INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 99.90%
AUTOMOBILES 10.11%
35,000 Daimler-Benz AG * $ 1,907,735
2,100 Volkswagen AG 781,567
700 Volkswagen AG Preferred 195,155
------------
2,884,457
------------
BANKING 14.47%
18,200 Bayer Hypotheken-Und Wechsel
Bank AG 516,024
22,750 Bayerische Vereinsbank AG 761,258
32,550 Deutsche Bank AG 1,609,879
45,500 Dresdner Bank AG 1,242,337
------------
4,129,498
------------
BEVERAGES & TOBACCO 0.10%
350 Brau Und Brunnen AG* 29,605
------------
BUILDING MATERIALS & COMPONENTS 0.82%
350 Heidelberger Zement AG 232,812
------------
BUSINESS & PUBLIC SERVICES 4.46%
385 Herlitz AG * 41,032
4,466 SAP AG 744,938
2,961 SAP AG Preferred 486,086
------------
1,272,056
------------
CHEMICALS 9.58%
45,500 BASF AG 1,357,180
38,500 Bayer AG 1,378,164
------------
2,735,344
------------
CONSTRUCTION & HOUSING 1.27%
7,000 Hochtief AG 331,574
350 Strabag AG * 29,486
------------
361,060
------------
ELECTRICAL & ELECTRONICS 7.14%
38,500 Siemens AG 2,037,285
------------
FOREST PRODUCTS & PAPER 0.35%
700 Pwa-Papierwerke
Waldhof-Aschaffenburg AG 100,656
------------
HEALTH & PERSONAL CARE 4.32%
7,000 Beiersdorf AG 321,390
12,978 Merck KGAA 476,861
5,950 Schering AG 434,836
------------
1,233,087
------------
INDUSTRIAL COMPONENTS 0.52%
8,750 Continental AG 148,498
------------
INSURANCE 17.59%
1,750 Allianz AG Holdings 3,121,532
350 AMB Aachener & Muench
Beteiligungs AG * 286,575
700 Muenchener Rueckversicherung AG 1,611,449
------------
5,019,556
------------
MACHINERY & ENGINEERING 6.36%
350 Industrie-Werke Karlsruheaugsburg AG 75,788
5,250 Kloeckner Humboldt-Deutz AG * 28,776
700 Linde AG 435,783
1,050 MAN AG 263,601
2,800 Mannesmann AG 1,011,774
------------
1,815,722
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
MERCHANDISING 3.28%
2,499 Douglas Holding AG $ 101,800
1,050 Karstadt AG 369,468
4,900 Metro AG * 465,861
------------
937,129
------------
METALS - STEEL 1.56%
2,450 Thyssen AG 445,967
------------
MISCELLANEOUS MATERIALS &
COMMODITIES 1.30%
1,050 Degussa 371,600
------------
MULTI-INDUSTRY 3.96%
3,850 Agiv AG * 63,568
1,750 Preussag AG 414,467
1,785 Viag AG 652,253
------------
1,130,288
------------
RECREATION, OTHER CONSUMER
GOODS 1.02%
3,388 Adidas AG 291,733
------------
TEXTILES & APPAREL 0.07%
126 Escada AG 20,719
------------
TRANSPORTATION - AIRLINES 1.57%
3,150 Deutsche Lufthansa 448,691
------------
UTILITIES - ELECTRICAL & GAS 10.05%
20,300 Rwe AG 740,405
10,850 Rwe AG - Preferred 325,617
34,300 Veba AG 1,802,270
------------
2,868,292
------------
TOTAL COMMON STOCK - BASKET
(Cost $28,226,838) 28,514,055
------------
COMMON STOCK - NON-BASKET 0.10%
MERCHANDISING 0.10%
315 Metro AG 29,948
------------
TOTAL COMMON STOCK -
NON-BASKET (Cost $24,211) 29,948
------------
TOTAL INVESTMENTS
(COST $28,251,049)(DAGGER) 100.00% $28,544,003
======= ============
- ------------------
* Non-income producing security.
(DAGGER) Aggregate cost for Federal income tax purposes is substantially the
same as for book purposes. The aggregate gross unrealized appreciation
(depreciation) for all securities is as follows:
Excess of value over tax cost $ 674,027
Excess of tax cost over value (381,073)
-----------
$ 292,954
===========
See accompanying notes to financial statements.
29
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
HONG KONG INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 99.99%
BANKING 14.04%
99,200 Bank of East Asia Limited $ 359,843
72,000 Hang Seng Bank Limited 737,905
------------
1,097,748
------------
BROADCASTING & PUBLISHING 1.46%
32,000 Television Broadcast Limited 113,803
------------
FINANCIAL SERVICES 1.01%
56,000 Peregrine Investment Holdings 78,938
------------
LEISURE & TOURISM 3.46%
96,000 Hong Kong & Shanghai Hotels Limited 165,738
80,000 Shangri-La Asia Limited 104,491
------------
270,229
------------
MERCHANDISING 1.63%
72,000 Dickson Concepts International 87,524
48,000 Giordano International Limited 39,727
------------
127,251
------------
MULTI-INDUSTRY 16.93%
160,000 Hutchison Whampoa Limited 968,355
40,000 Swire Pacific Limited `A' 355,633
------------
1,323,988
------------
REAL ESTATE 39.05%
48,000 Cheung Kong Holdings Limited 336,752
128,000 Chinese Estates Holdings 114,216
160,000 Hang Lung Development Company 302,094
240,000 Hopewell Holdings Limited 128,028
80,000 Hysan Development Company Limited 246,744
72,000 Miramar Hotel & Investment 133,614
64,000 New World Development Company
Limited 310,370
112,000 Sun Hung Kai Properties Limited 1,093,538
112,000 Tai Cheung Properties 86,180
80,000 Wharf Holdings Limited 302,094
------------
3,053,630
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
TELECOMMUNICATIONS 10.28%
480,000 Hong Kong Telecommunications
Limited $ 803,859
------------
TRANSPORTATION - AIRLINES 4.08%
192,000 Cathay Pacific Airways Limited 319,061
------------
UTILITIES - ELECTRICAL & GAS 8.05%
72,000 China Light & Power Company Limited 306,335
200,000 Hong Kong & China Gas Company
Limited 323,302
------------
629,637
------------
TOTAL COMMON STOCK - BASKET
(Cost $7,866,524) 7,818,144
------------
COMMON STOCK - NON-BASKET 0.01%
UTILITIES - ELECTRICAL & GAS 0.01%
600 Hong Kong & China Gas Company
Limited 970
------------
TOTAL COMMON STOCK -
NON-BASKET(Cost $950) 970
------------
TOTAL INVESTMENTS
(COST $7,867,474)(DAGGER) 100.00% $7,819,114
======= ==========
- ------------------
(DAGGER) Aggregate cost for Federal income tax purposes is $7,875,654. The
aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 159,870
Excess of tax cost over value (216,410)
----------
$ (56,540)
----------
See accompanying notes to financial statements.
30
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
ITALY INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 100.00%
AUTOMOBILES 6.08%
684,811 Fiat SPA $ 2,116,641
------------
BANKING 19.35%
513,910 Banca Commerciale Italiana 976,071
127,500 Banca Popolare di Milano 610,472
149,243 Banco Ambrosiano Veneto 331,327
728,943 Credito Italiano 846,825
267,257 Istituto Bancario San Paolo de Torino 1,681,143
180,999 Istituto Mobiliare Italiano 1,420,668
161,262 Mediobanca 865,315
------------
6,731,821
------------
BROADCASTING & PUBLISHING 0.87%
43,656 Arnoldo Mondadori Editore 302,762
------------
CONSTRUCTION & HOUSING 1.24%
69,428 Sirti SPA 430,746
------------
DATA PROCESSING & REPRODUCTION 1.49%
991,287 Olivetti Group* 518,710
------------
ENERGY SOURCES 14.32%
1,137,317 Ente Nazionale Idrocarburi SPA 4,983,476
------------
FOOD & HOUSEHOLD PRODUCTS 1.37%
347,786 Parmalat Finanziaria SPA 477,551
------------
FOREST PRODUCTS & PAPER 0.59%
45,288 Burgo (Cartiere) 206,786
------------
INDUSTRIAL COMPONENTS 3.03%
137,343 Magneti Marelli SPA 174,753
525,266 Pirelli SPA 880,331
------------
1,055,084
------------
INSURANCE 16.75%
110,211 Assicurazioni Generali 2,428,407
1,239,640 Istituto Nazionale delle Assicurazioni 1,771,178
105,145 Riunione Adriatica di Sicurta SPA 907,021
62,951 Riunione Adriatica di Sicurta SPA RNC 279,676
53,873 Societa Assicuratrice Industriale 440,916
------------
5,827,198
------------
MACHINERY & ENGINEERING 0.52%
50,694 Sasib SPA 181,413
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
MERCHANDISING 1.37%
78,438 Rinascente $ 475,626
------------
METALS - STEEL 0.40%
35,190 Falck Acciaierie & Ferriere Lombarde 138,593
------------
MULTI-INDUSTRY 2.80%
1,267,054 Montedison SPA * 814,572
172,686 SNIA Bpd 159,986
------------
974,558
------------
RECREATION - OTHER CONSUMER
GOODS 1.26%
25,925 Bulgari SPA 436,918
------------
TELECOMMUNICATIONS 20.39%
267,393 Telecom Italia-Rnc 430,600
1,527,501 Telecom Italia SPA 3,001,402
1,615,748 Telecom Italia Mobile SPA 3,335,413
269,671 Telecom Italia Mobile SPA-Rnc 325,970
------------
7,093,385
------------
TEXTILES & APPAREL 2.64%
54,604 Benetton Group SPA 590,088
53,703 Marzotto & Figli SPA 328,523
------------
918,611
------------
UTILITIES - ELECTRICAL & GAS 5.53%
197,693 Edison SPA 1,070,494
249,781 Italgas 855,129
------------
1,925,623
------------
TOTAL COMMON STOCK -
BASKET (Cost $36,470,270) 34,795,502
------------
TOTAL INVESTMENTS
(COST $36,470,270)(DAGGER) 100.00% $34,795,502
======= ===========
- ------------------
* Non-income producing security.
(DAGGER) Aggregate cost for Federal income tax purposes is $36,523,245. The
aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 210,608
Excess of tax cost over value (1,938,351)
-----------
($1,727,743)
-----------
-----------
See accompanying notes to financial statements.
31
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
===============================================================================
JAPAN INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 99.75%
APPLIANCES & HOUSEHOLD DURABLES 4.95%
108,000 Matsushita Electric Industrial $ 1,819,890
12,000 Pioneer Electronic Corporation 243,094
108,000 Sanyo Electric 556,906
60,000 Sharp Corporation 950,276
24,000 Sony Corporation 1,507,182
------------
5,077,348
------------
AUTOMOBILES 6.56%
48,000 Honda Motor Company 1,109,392
132,000 Nissan Motor 988,177
192,000 Toyota Motor Corporation 4,632,044
------------
6,729,613
------------
BANKING 21.21%
120,000 Asahi Bank Limited 1,337,017
36,000 Ashikaga Bank Limited 207,182
240,000 Bank of Tokyo - Mitsubishi 4,883,978
60,000 Bank of Yokohama Limited 487,845
36,000 Chiba Bank Limited 285,083
144,000 Fuji Bank 2,651,934
12,000 Gunma Bank Limited 120,442
36,000 Hokuriku Bank 202,541
120,000 Industrial Bank of Japan 2,552,486
36,000 Joyo Bank 261,878
72,000 Mitsubishi Trust & Banking 1,080,663
60,000 Mitsui Trust & Banking 602,210
180,000 Sakura Bank 1,707,182
24,000 Seventy-Seven Bank 232,044
48,000 Shizuoka Bank 534,807
156,000 Sumitimo Bank Limited 2,858,564
108,000 Tokai Bank 1,282,873
12,000 Yamaguchi Bank 182,320
60,000 Yasuda Trust & Banking 300,000
------------
21,771,049
------------
BEVERAGES & TOBACCO 1.07%
24,000 Asahi Breweries Limited 260,773
60,000 Kirin Brewery Company Limited 618,785
24,000 Sapporo Breweries Limited 220,332
------------
1,099,890
------------
BUILDING MATERIALS & COMPONENTS 1.74%
36,000 Chichibu Onoda Cement Corporation 176,354
24,000 Inax Corporation 229,834
24,000 Nihon Cement 157,348
36,000 Sekisui Chemical 391,160
12,000 Sumitomo Forestry Company 173,481
12,000 Tostem Company 342,541
24,000 Toto Limited 318,232
------------
1,788,950
------------
BUSINESS & PUBLIC SERVICES 2.75%
48,000 Dai Nippon Printing Limited 844,199
12,000 Kamigumi Company 97,680
12,000 Kokuyo Company 314,917
12,000 Mitsubishi Logistics Corporation 190,055
12,000 Secom Company 767,956
48,000 Toppan Printing Company 605,525
------------
2,820,332
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
CHEMICALS 3.97%
84,000 Asahi Chemical Industries Company
Limited $ 564,641
72,000 Dai Nippon Ink & Chemical Corporation 314,254
12,000 Kuraray Company Limited 122,652
144,000 Mitsubishi Chemical Corporation 604,641
36,000 Mitsubishi Rayon Company 144,199
60,000 Mitsui Toatsu Chemicals Incorporated 217,127
24,000 Shin-Etsu Chemical 424,309
84,000 Showa Denko K. K.* 241,326
108,000 Sumitomo Chemical Company Limited 469,392
60,000 Teijin Limited 292,818
84,000 Toray Industries 523,646
36,000 Tosoh Corporation* 148,508
------------
4,067,513
------------
CONSTRUCTION & HOUSING 4.18%
36,000 Daiwa House Industry Company Limited 513,812
60,000 Fujita Corporation 238,122
60,000 Kajima Corporation 538,122
12,000 Kandenko Company Limited 140,331
24,000 Kinden Corporation 366,851
60,000 Kumagai Gumi Company Limited 213,260
12,000 Nishimatsu Construction Company
Limited 111,602
60,000 Obayashi Corporation 498,343
24,000 Penta-Ocean Construction 143,425
48,000 Sekisui House 508,287
60,000 Shimizu Corporation 558,011
72,000 Taisei Corporation 456,796
------------
4,286,962
------------
DATA PROCESSING & REPRODUCTION 1.71%
48,000 Canon Incorporated 892,818
96,000 Fujitsu Limited 865,414
------------
1,758,232
------------
ELECTRICAL & ELECTRONICS 3.44%
168,000 Hitachi Limited 1,543,867
12,000 Makita Corporation 172,376
108,000 Mitsubishi Electric Corporation 693,149
84,000 NEC Corporation 897,238
12,000 Omron Corporation 219,890
------------
3,526,520
------------
ELECTRONIC COMPONENTS,
INSTRUMENTS 2.30%
12,000 Fanuc Company Limited 438,674
12,000 Kyocera Corporation 815,470
12,000 Murata Manufacturing Company 426,519
24,000 Nikon Corporation 260,773
12,000 Tokyo Electron 313,812
12,000 Yokogwa Wokushin Electric Corporation 103,315
------------
2,358,563
------------
ENERGY SOURCES 1.05%
36,000 Cosmo Oil Company Limited 208,840
72,000 Japan Energy Corporation 247,956
24,000 Mitsubishi Oil Company Limited 184,530
72,000 Nippon Oil Company Limited 440,884
------------
1,082,210
------------
See accompanying notes to financial statements.
32
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
JAPAN INDEX SERIES (CONTINUED)
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
FINANCIAL SERVICES 3.80%
12,000 Acom Company Limited $ 481,768
12,000 Credit Saison Company 288,398
72,000 Daiwa Securities Company 815,470
108,000 Nomura Securities Company 1,879,558
72,000 Yamaichi Securities Company 437,569
------------
3,902,763
------------
FOOD & HOUSEHOLD PRODUCTS 1.63%
36,000 Ajinomoto Company Incorporated 381,215
36,000 Kao Corporation 427,624
36,000 Meiji Seika Kaisha 207,514
12,000 Nippon Meat Packers Incorporated 166,851
12,000 Nissin Food Products Company 289,503
12,000 Yamazaki Baking Company Limited 204,420
------------
1,677,127
------------
FOREST PRODUCTS & PAPER 0.72%
24,000 Honshu Paper Company 160,221
36,000 New Oji Paper Company Limited 292,376
48,000 Nippon Paper Industries Company 287,293
------------
739,890
------------
HEALTH & PERSONAL CARE 3.11%
12,000 Daiichi Pharmaceutical 183,425
12,000 Eisai Company Limited 207,735
36,000 Kyowa Hakko Kogyo Company Limited 311,271
24,000 Sankyo Company Limited 596,685
24,000 Shionogi & Company 187,624
12,000 Shiseido Company Limited 145,856
24,000 Taisho Pharmaceutical 481,768
48,000 Takeda Chemical Industries 830,939
12,000 Yamanouchi Pharmaceutical 247,514
------------
3,192,817
------------
INDUSTRIAL COMPONENTS 3.62%
36,000 Bridgestone Corporation 590,055
24,000 Fujikura Limited 185,856
48,000 Furukawa Electric Company 262,099
24,000 Minebea Company Limited 200,663
24,000 NGK Insulators Limited 251,934
12,000 NGK Spark Plug Company 123,757
48,000 Nippondenso Company Limited 990,055
48,000 NSK Limited 316,022
24,000 NTN Corporation 153,591
48,000 Sumitomo Electric Industries 636,464
------------
3,710,496
------------
INSURANCE 2.19%
48,000 Mitsui Marine & Fire Insurance 333,702
24,000 Nichido Fire & Marine Insurance 166,851
24,000 Nippon Fire & Marine Insurance 142,320
48,000 Sumitomo Fire & Marine Insurance 371,271
108,000 Tokio Marine & Fire Insurance 1,233,149
------------
2,247,293
------------
LEISURE & TOURISM 0.44%
12,000 Fujita Kanko 233,149
12,000 Tokyo Dome Corporation 223,204
------------
456,353
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
MACHINERY & ENGINEERING 4.64%
24,000 Amada Company Limited $ 225,414
24,000 Daikin Kogyo Industries 236,464
24,000 Ebara Corporation 362,431
72,000 Hitachi Zosen Shipbuilding 351,381
72,000 Kawasaki Heavy Industries 331,492
48,000 Komatsu Limited 410,608
84,000 Kubota Corporation 493,481
12,000 Kurita Water Industries 250,829
180,000 Mitsubishi Heavy Industries 1,423,757
84,000 Mitsui Engineering & Shipping* 225,856
60,000 Sumitomo Heavy Industries 214,365
12,000 Toyoda Automatic Loom Works 230,939
------------
4,757,017
------------
MERCHANDISING 4.12%
36,000 Daiei, Incorporated 361,326
12,000 Hankyu Department Stores 153,591
12,000 Isetan Company 163,536
24,000 Ito Yokado Company 1,266,298
24,000 Jusco Company Limited 711,602
24,000 Marui Company 470,718
24,000 Mitsukoshi 216,575
24,000 Mycal Corporation 377,901
12,000 Seiyu 135,912
12,000 Takashimaya Company 163,536
12,000 Uny Company Limited 211,050
------------
4,232,045
------------
METALS - NON FERROUS 0.90%
72,000 Mitsubishi Materials Corporation 348,066
36,000 Nippon Light Metal Company 181,657
48,000 Sumitomo Metal Mining 394,696
------------
924,419
------------
METALS - STEEL 3.29%
180,000 Kawasaki Steel Corporation 604,972
456,000 Nippon Steel Corporation 1,444,420
228,000 NKK Corporation* 602,541
180,000 Sumitomo Metal Industries 508,840
12,000 Tokyo Steel Manufacturing Company 214,365
------------
3,375,138
------------
MISCELLANEOUS MATERIALS &
COMMODITIES 1.37%
60,000 Asahi Glass Company Limited 668,508
12,000 Nitto Denko Corporation 183,425
12,000 Toyo Seikan Kaisha Limited 385,635
48,000 Ube Industries Limited 167,956
------------
1,405,524
------------
REAL ESTATE 1.15%
60,000 Mitsubishi Estate Company 734,807
36,000 Mitsui Fudosan Company 444,199
------------
1,179,006
------------
RECREATION, OTHER CONSUMER
GOODS 1.77%
24,000 Casio Computer Company Limited 207,735
24,000 Citizen Watch Company 192,928
24,000 Fuji Photo Film Limited 722,652
24,000 Konica Corporation 165,746
12,000 Olympus Optical Corporation 110,497
12,000 Shimano 222,099
12,000 Yamaha Corporation 190,055
------------
1,811,712
------------
See accompanying notes to financial statements.
33
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
JAPAN INDEX SERIES (CONCLUDED)
- -------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
TEXTILES & APPAREL 0.41%
24,000 Nisshinbo Industries $ 220,332
60,000 Toyobo Company Limited 200,552
------------
420,884
------------
TRANSPORTATION - AIRLINES 0.70%
96,000 Japan Air Lines* 716,022
------------
TRANSPORTATION - ROAD & RAIL 3.63%
60,000 Hankyu Corporation* 332,597
24,000 Keihin Electric Express 134,807
84,000 Kinki Nippon Railway Company 591,713
72,000 Nagoya Railroad 336,796
36,000 Nankai Electric Railway Company 216,464
60,000 Nippon Express Company 528,729
36,000 Odakyu Electric Railway Company 232,707
12,000 Seino Transportation Company 176,796
60,000 Tobu Railway Company 362,431
84,000 Tokyu Corporation 552,265
24,000 Yamato Transport Company 260,773
------------
3,726,078
------------
TRANSPORTATION - SHIPPING 0.62%
84,000 Mitsui Osk Lines* 252,155
72,000 Nippon Yusen K.K. 380,552
------------
632,707
------------
UTILITIES - ELECTRICAL & GAS 3.78%
36,000 Kansai Electric Power Incorporated 802,210
168,000 Osaka Gas Company 578,564
24,000 Tohoku Electric Power Company 517,127
60,000 Tokyo Electric Power Company
Incorporated 1,464,088
156,000 Tokyo Gas Limited 520,000
------------
3,881,989
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
WHOLESALE & INTERNATIONAL TRADE 2.93%
84,000 Itochu Corporation $ 509,724
72,000 Marubeni Corporation 350,055
84,000 Mitsubishi Corporation 935,912
84,000 Mitsui & Company 709,282
60,000 Sumitomo Corporation 506,630
------------
3,011,603
------------
TOTAL COMMON STOCK - BASKET
(Cost $111,083,020) 102,368,065
------------
COMMON STOCK - NON-BASKET 0.25%
BANKING 0.09%
8,800 Industrial Bank of Japan Rights
(expiration date 10/15/96)** 89,945
------------
BROADCASTING & PUBLISHING 0.16%
11,000 Tokyo Broadcasting 168,140
------------
TOTAL COMMON STOCK -
NON-BASKET (Cost $294,099) 258,085
------------
TOTAL INVESTMENTS
(COST $111,377,119)(DAGGER) 100.00% $102,626,150
======= =============
- ------------------
* Non-income producing security.
** Fair valued security.
(DAGGER) Aggregate cost for Federal income tax purposes is $111,396,190. The
aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 629,671
Excess of tax cost over value (9,399,711)
-------------
$ (8,770,040)
=============
See accompanying notes to financial statements.
34
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
MALAYSIA INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 99.73%
AUTOMOBILES 5.33%
18,000 Edaran Otomobil Nasional BHD $ 187,666
36,000 Perusahaan Otomobil Nasional BHD 194,883
63,000 Tan Chong Motor Holdings BHD 111,661
------------
494,210
------------
BANKING 12.04%
18,000 Commerce Asset Holdings BHD 112,599
54,000 DCB Holdings BHD 164,568
72,000 Malayan Banking BHD 684,257
81,000 Public Bank BHD (Foreign) 155,257
------------
1,116,681
------------
BEVERAGES & TOBACCO 4.16%
45,000 Guinness Anchor BHD 101,953
27,000 Rothmans of Pall Mall BHD 284,205
------------
386,158
------------
BROADCASTING & PUBLISHING 1.09%
18,000 New Straits Times Press BHD 101,051
------------
BUILDING MATERIALS & COMPONENTS 3.43%
27,000 Hume Industries - Malaysia BHD 138,584
36,000 Malayan Cement BHD 89,502
81,000 Pan Malaysia Cement Works BHD 90,621
------------
318,707
------------
CONSTRUCTION & HOUSING 3.09%
36,000 Ekran BHD 153,019
27,000 YTL Corporation BHD 133,170
------------
286,189
------------
ELECTRICAL & ELECTRONICS 0.82%
36,000 Time Engineering BHD 76,510
------------
ELECTRONIC COMPONENTS,
INSTRUMENTS 1.04%
27,000 Malaysian Pacific Industries BHD 96,900
------------
ENERGY SOURCES 0.88%
27,000 Shell Refining Company BHD 81,201
------------
FINANCIAL SERVICES 5.27%
22,000 AMMB Holdings BHD 149,972
14,000 AMMB Holdings BHD Class A** 93,753
81,000 MBF Capital BHD 115,631
36,000 Rashid Hussain BHD 129,200
------------
488,556
------------
FOOD & HOUSEHOLD PRODUCTS 1.94%
18,000 Nestle (Malaysia) BHD 179,726
------------
INDUSTRIAL COMPONENTS 0.84%
36,000 Leader Universal Holdings BHD 77,953
------------
INSURANCE 0.89%
63,000 Idris Hydraulic (Malaysia) BHD * 82,861
------------
LEISURE & TOURISM 6.81%
117,000 Magnum Corporation BHD 189,542
81,000 Resorts World BHD 441,736
------------
631,278
------------
MACHINERY & ENGINEERING 4.98%
36,000 UMW Holdings BHD 142,914
45,000 United Engineers (Malaysia) Limited 319,392
------------
462,306
------------
METALS - NON FERROUS 0.87%
72,000 Malaysian Mining Corporation BHD 80,840
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
METALS - STEEL 0.90%
117,000 Amsteel Corporation BHD $ 83,042
------------
MISCELLANEOUS MATERIALS &
COMMODITIES 5.86%
90,000 Golden Hope Plantations BHD 145,080
63,000 Highlands & Lowlands BHD 107,114
18,000 Kian Joo Can Factory BHD 106,825
36,000 Kuala Lumpur Kepong BHD 89,502
27,000 Perlis Plantations BHD 94,735
------------
543,256
------------
MULTI-INDUSTRY 8.21%
135,000 Berjaya Group BHD 89,322
36,000 Land and General Holdings BHD 65,827
63,000 Multi-Purpose Holdings BHD 87,914
153,000 Sime Darby BHD 518,425
------------
761,488
------------
REAL ESTATE 2.21%
81,000 Hong Leong Properties BHD 91,270
36,000 Malaysian Resource Corporation BHD 114,043
------------
205,313
------------
TELECOMMUNICATIONS 16.22%
81,000 Technology Resources Industries BHD 233,860
144,000 Telekom Malaysia BHD 1,270,350
------------
1,504,210
------------
TRANSPORTATION - AIRLINES 1.74%
54,000 Malaysian Airlines System BHD 161,320
------------
TRANSPORTATION - SHIPPING 2.66%
81,000 Malaysia International Shipping
BHD (Foreign) 246,852
------------
UTILITIES - ELECTRICAL & GAS 8.45%
216,000 Tenaga Nasional BHD 783,864
------------
TOTAL COMMON STOCK - BASKET
(Cost $9,167,360) 9,250,472
------------
COMMON STOCK - NON-BASKET 0.27%
BANKING 0.05%
2,333 Public Bank BHD (Foreign) 4,472
------------
METALS - NON FERROUS 0.02%
1,600 Malaysian Mining Corporation BHD 1,796
------------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.20%
5,250 Perlis Plantations BHD 18,421
------------
TOTAL COMMON STOCK -
NON-BASKET (COST $22,815) 24,689
------------
TOTAL INVESTMENTS
(COST $9,190,175)(DAGGER) 100.00% $9,275,161
======= ============
- ------------------
BHD - Berhad
* Non-income producing security.
** Fair valued security.
(DAGGER) Aggregate cost for Federal income tax purposes is $9,191,178.
The aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 378,273
Excess of tax cost over value (294,290)
----------
$ 83,983
==========
See accompanying notes to financial statements.
35
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
MEXICO (FREE) INDEX SERIES
- -------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 94.33%
BANKING 5.74%
65,000 Grupo Financiero Banamex - Series B* $ 137,889
30,000 Grupo Financiero Banamex - Series L* 61,583
165,000 Grupo Financiero Bancomer - Series B* 80,323
85,000 Grupo Financiero Serfin - Series BCP* 46,201
------------
325,996
------------
BEVERAGES & TOBACCO 15.96%
50,000 Empresas La Moderna - Series A 252,639
70,000 Fomento Economico Mexicano - Series B 209,169
25,000 Grupo Continental S.A. - Series CP 98,615
75,000 Grupo Modelo S.A. - Series C 346,306
------------
906,729
------------
BROADCASTING & PUBLISHING 7.89%
30,000 Grupo Televisa S.A. - Series CPO* 448,417
------------
BUILDING MATERIALS & COMPONENTS 8.40%
35,000 Apasco S.A. 235,488
35,000 Cemex S.A. - Series A 124,670
15,000 Cemex S.A. - Series B 62,137
15,000 Cemex S.A. - Series CPO 54,815
------------
477,110
------------
CONSTRUCTION & HOUSING 2.60%
10,000 Empresas ICA S.A.* 147,757
------------
ENERGY EQUIPMENT & SERVICES 1.90%
10,000 Tubos de Acero de Mexico S.A.* 108,179
------------
FINANCIAL SERVICES 1.41%
1,080,000 Grupo Financiero BBV - Probursa* 79,789
------------
FOOD & HOUSEHOLD PRODUCTS 5.51%
35,000 Grupo Industrial Bimbo - Series A 181,003
110,000 Grupo Industrial Maseca - Series B 131,768
------------
312,771
------------
LEISURE & TOURISM 0.61%
275,000 Grupo Situr S.A. - Series B* 34,829
------------
MERCHANDISING 7.23%
150,000 Cifra S.A. de C.V. - Series B* 234,301
45,000 Cifra S.A. de C.V. - Series C* 69,578
110,000 Controladora Comercial
Mexicana - Series B* 106,807
------------
410,686
------------
METALS - NON FERROUS 6.94%
65,000 Grupo Mexico S.A. - Series B* 193,799
45,000 Industrias Penoles S.A. - Series CP 200,660
------------
394,459
------------
MISCELLANEOUS MATERIALS &
COMMODITIES 1.37%
40,000 Vitro S.A. 78,100
------------
MULTI-INDUSTRY 6.59%
50,000 ALFA S.A. - Series A 219,327
30,000 Desc S.A. - Series B* 155,145
------------
374,472
------------
TELECOMMUNICATIONS 21.45%
750,000 Telefonos de Mexico - Series L 1,218,997
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
TRANSPORTATION - SHIPPING 0.73%
5,000 Transportacion Maritima
Mexicana - Series L $ 41,557
------------
TOTAL COMMON STOCK - BASKET
(Cost $4,825,519) 5,359,848
------------
COMMON STOCK - NON-BASKET 5.67%
BANKING 0.07%
1,710 Grupo Financiero Banamex - Series L* 3,510
------------
FINANCIAL SERVICES 0.27%
209,520 Grupo Financiero BBV-Probursa* 15,479
------------
HEALTH & PERSONAL CARE 5.17%
16,000 Kimberly-Clark de Mexico - Series A 293,826
------------
MULTI-INDUSTRY 0.16%
1,487 ALFA S.A. - Series A 6,523
500 Desc S.A. - Series C* 2,599
------------
9,122
------------
TOTAL COMMON STOCK -
NON-BASKET (Cost $300,054) 321,937
------------
TOTAL INVESTMENTS
(COST $5,125,573)(DAGGER) 100.00% $5,681,785
======= ===========
- ------------------
* Non-income producing security.
(DAGGER) Aggregate cost for Federal income tax purposes is substantially the
same as for book purposes. The aggregate gross unrealized appreciation
(depreciation) for all securities is as follows:
Excess of value over tax cost $ 613,611
Excess of tax cost over value (57,399)
-----------
$ 556,212
-----------
See accompanying notes to financial statements.
36
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
NETHERLANDS INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 100.00%
APPLIANCES & HOUSEHOLD DURABLES 4.12%
8,200 Philips Electronics Nv $ 277,689
------------
BANKING 4.55%
5,600 ABN Amro Holdings Nv 306,604
------------
BEVERAGES & TOBACCO 4.24%
1,280 Heineken Nv 285,269
------------
BROADCASTING & PUBLISHING 9.31%
18,800 Elsevier Nv 299,602
2,600 Wolters Kluwer - CVA 327,236
------------
626,838
------------
CHEMICALS 4.29%
2,480 AKZO Nobel 288,779
------------
CONSTRUCTION & HOUSING 4.35%
672 Hollandsche Beton Groep Nv 122,506
3,136 IHC Caland Nv 170,373
------------
292,879
------------
DATA PROCESSING & REPRODUCTION 3.46%
4,224 Getronics Nv 103,012
1,264 Oce Van Der Grinten Nv 130,322
------------
233,334
------------
ENERGY SOURCES 23.47%
10,560 Royal Dutch Petroleum Company 1,580,876
------------
FINANCIAL SERVICES 12.14%
26,200 Ing Groep Nv 817,663
------------
FOOD & HOUSEHOLD PRODUCTS 11.54%
5,400 Unilever Nv - CVA 777,436
------------
FOREST PRODUCTS & PAPER 1.43%
4,144 Koninklijke KNP Bt Nv 96,058
------------
- --------------------------------------------------------------------------------
SECURITY VALUE
----------- -----
INSURANCE 4.65%
8,800 Stad Rotterdam $ 312,882
------------
MERCHANDISING 4.52%
5,440 Koninklijke Ahold Nv 304,740
------------
METALS - STEEL 1.06%
2,008 Koninklijke Nederlandsche
Hoogovens Nv 71,515
------------
TELECOMMUNICATIONS 4.26%
8,160 Koninklijke Ptt Nederland Nv 286,679
------------
TRANSPORTATION - AIRLINES 2.61%
6,376 KLM - Konin Luchvaart Mij Nv 175,892
------------
TOTAL COMMON STOCK - BASKET
(Cost $6,369,828) 6,735,133
------------
TOTAL INVESTMENTS
(COST $6,369,828)(DAGGER) 100.00% $6,735,133
======= ===========
- --------------------
(DAGGER) Aggregate cost for Federal income tax purposes is $6,372,295.
The aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 436,862
Excess of tax cost over value (74,024)
-----------
$ 362,838
===========
See accompanying notes to financial statements.
37
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
SINGAPORE (FREE) INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------ ----------- -----
COMMON STOCK-BASKET 99.48%
AUTOMOBILES 2.58%
24,000 Cycle and Carriage $ 230,244
------------
BANKING 26.72%
56,000 Developmental Bank
Singapore (Foreign) 656,623
80,000 Oversea - Chinese Banking
Corporation Limited 960,773
80,000 United Overseas Bank
Limited (Foreign) 767,482
------------
2,384,878
------------
BEVERAGES & TOBACCO 4.52%
40,000 Fraser & Neave Limited 403,639
------------
BROADCASTING & PUBLISHING 4.66%
24,000 Singapore Press Holdings
Limited (Foreign) 416,146
------------
LEISURE & TOURISM 1.56%
88,000 Hotel Properties 139,454
------------
MACHINERY & ENGINEERING 0.82%
16,000 Jurong Shipyard Limited 72,769
------------
MERCHANDISING 1.64%
40,000 Metro Holdings Limited 146,390
------------
METALS - NON FERROUS 2.14%
80,000 Straits Trading Company Limited 191,018
------------
METALS - STEEL 1.78%
96,000 NatSteel Limited 158,954
------------
MULTI-INDUSTRY 14.06%
144,000 Haw Par Brothers International 313,133
104,000 Inchcape Berhad 329,619
48,000 Keppel Corporation 364,980
104,000 Singapore Technologies 246,845
------------
1,254,577
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------ ----------- -----
REAL ESTATE 16.61%
56,000 City Development $ 465,605
120,000 DBS Land 399,090
64,000 Parkway Holdings 201,023
224,000 United Industrial Corporation Limited 213,303
120,000 United Overseas Land 202,956
------------
1,481,977
------------
TELECOMMUNICATIONS 10.68%
392,000 Singapore Telecommunications 952,700
------------
TRANSPORTATION - AIRLINES 10.44%
88,000 Singapore Airlines Limited (Foreign) 931,779
------------
TRANSPORTATION - SHIPPING 1.27%
128,000 Neptune Orient Lines Limited 113,701
------------
TOTAL COMMON STOCK - BASKET
(Cost $9,353,149) 8,878,226
------------
COMMON STOCK - NON-BASKET 0.52%
APPLIANCES & HOUSEHOLD DURABLES 0.52%
35,000 Amcol Holdings* 46,760
------------
TOTAL COMMON STOCK -
NON-BASKET (Cost $95,756) 46,760
------------
TOTAL INVESTMENTS
(COST $9,448,905)(DAGGER) 100.00% $8,924,986
======= ===========
- ------------------
* Fair valued security.
(DAGGER) Aggregate cost for Federal income tax purposes is $9,515,898.
The aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 49,439
Excess of tax cost over value (640,351)
-----------
$ (590,912)
===========
See accompanying notes to financial statements.
38
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
SPAIN INDEX FUND
- -------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 99.67%
BANKING 25.39%
11,192 Banco Bilbao Vizcaya $ 470,790
9,136 Banco Central Hispanoamer SA 185,942
3,856 Banco Santander SA 197,973
4,632 Corporacion Bancaria de Espana SA 191,510
------------
1,046,215
------------
BEVERAGES & TOBACCO 2.09%
2,108 Tabacalera SA-A 85,975
------------
BUSINESS & PUBLIC SERVICES 7.48%
16,600 Autopistas Concesionaria ESP 178,531
2,672 General de Aguas D'Barcelona 104,598
680 Prosegur Comp Seguridad 25,015
------------
308,144
------------
CONSTRUCTION & HOUSING 2.53%
3,748 Dragados y Construcciones SA 47,358
728 Fomento De Construcion &
Contratas SA 57,055
------------
104,413
------------
ENERGY SOURCES 7.30%
9,260 Repsol SA 301,027
------------
FOOD & HOUSEHOLD PRODUCTS 1.56%
5,836 Ebro Agricolas 64,173
------------
INSURANCE 2.11%
1,780 Corporacion Mapfre 86,833
------------
MACHINERY & ENGINEERING 2.54%
1,084 Zardoya-Otis SA 104,893
------------
METALS - STEEL 1.59%
584 Acerinox SA 65,384
------------
MISCELLANEOUS MATERIALS &
COMMODITIES 0.57%
1,736 Viscofan Industria Navarra
De Envolturas Celulosicas SA 23,462
------------
MULTI-INDUSTRY 3.53%
1,736 Corporacion Financiera Alba 145,494
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
REAL ESTATE 3.10%
2,200 Inmobilaria Metropolitana Vasco
Central SA $ 73,541
2,972 Vallehermoso SA 54,309
------------
127,850
------------
TELECOMMUNICATIONS 13.93%
30,872 Telefonica de Espana 574,013
------------
UTILITIES - ELECTRICAL & GAS 25.95%
9,768 Empresa Nacional de
Electridad SA (Endesa) 569,465
872 Gas Natural SDG-E 167,364
17,364 Iberdrola SA 156,914
28,940 Union Electrica Fenosa SA 175,660
------------
1,069,403
------------
TOTAL COMMON STOCK - BASKET
(Cost $3,968,554) 4,107,279
------------
COMMON STOCK - NON-BASKET 0.33%
MACHINERY & ENGINEERING 0.33%
140 Zardoya-Otis 13,547
------------
TOTAL COMMON STOCK -
NON-BASKET (Cost $8,585) 13,547
------------
TOTAL INVESTMENTS
(COST $3,977,139)(DAGGER) 100.00% $4,120,826
======= ===========
- --------------------
(DAGGER) Aggregate cost for Federal income tax purposes is $3,983,641.
The aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 203,255
Excess of tax cost over value (66,070)
-----------
$ 137,185
===========
See accompanying notes to financial statements.
39
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
SWEDEN INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 100.00%
APPLIANCES & HOUSEHOLD DURABLES 3.66%
2,800 Electrolux AB-B $ 162,956
------------
AUTOMOBILES 3.83%
2,400 Volvo AB-A 51,517
5,600 Volvo AB-B 119,360
------------
170,877
------------
BANKING 7.51%
19,600 Skandinaviska Enskilda Banken-A 162,955
8,400 Svenska Handlesbanken-A 172,056
------------
335,011
------------
BUILDING MATERIALS & COMPONENTS 1.73%
2,400 Scancem AB-A 77,275
------------
BUSINESS & PUBLIC SERVICES 3.76%
2,144 Esselte AB-A 45,049
1,992 Esselte AB-B 42,458
3,200 Securitas AB-B 80,057
------------
167,564
------------
CHEMICALS 3.81%
5,660 Aga AB-A 94,115
4,656 Aga AB-B 75,661
------------
169,776
------------
CONSTRUCTION & HOUSING 4.04%
4,800 Skanska AB-B 179,946
------------
ELECTRICAL & ELECTRONICS 25.97%
2,340 ABB AB-A 252,914
1,120 ABB AB-B 119,868
33,600 Ericsson LM-B 784,726
------------
1,157,508
------------
FINANCIAL SERVICES 3.16%
5,440 Stadshypotek AB 141,031
------------
FOREST PRODUCTS & PAPER 6.31%
8,400 Stora Kopparbergs-A 118,090
1,936 Stora Kopparbergs-B 27,071
6,400 Svenska Cellulosa AB-B 135,927
------------
281,088
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
HEALTH & PERSONAL CARE 20.18%
17,828 Astra AB-A $ 754,590
3,504 Astra AB-B 145,133
------------
899,723
------------
INDUSTRIAL COMPONENTS 4.40%
2,388 Autoliv AB 78,874
2,244 S.K.F. AB-A 51,221
2,800 S.K.F. AB-B 65,817
------------
195,912
------------
INSURANCE 1.98%
3,756 Skandia Forsakring AB 88,289
------------
MACHINERY & ENGINEERING 4.01%
6,400 Atlas Copco AB-A 128,188
2,520 Atlas Copco AB-B 50,474
------------
178,662
------------
MERCHANDISING 3.57%
1,532 Hennes & Mauritz AB-B 159,330
------------
MULTI-INDUSTRY 1.35%
4,580 Trelleborg AB-B 60,233
------------
RECREATION, OTHER CONSUMER
GOODS 0.73%
11,284 Swedish Match * 32,409
------------
TOTAL COMMON STOCK - BASKET
(Cost $4,167,765) 4,457,590
------------
TOTAL INVESTMENTS
(COST $4,167,765)(DAGGER) 100.00% $4,457,590
======= ============
- --------------------
* Non-income producing security.
(DAGGER) Aggregate cost for Federal income tax purposes is $4,192,703.
The aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 296,205
Excess of tax cost over value (31,318)
-----------
$ 264,887
===========
See accompanying notes to financial statements.
40
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
================================================================================
SWITZERLAND INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
COMMON STOCK - BASKET 100.00%
BANKING 13.43%
2,600 CS Holding - Registered $ 270,291
272 Schweiz Bankgesellscraft - Bearer 264,596
1,436 Schweizerischer Bankverein - Bearer 280,281
------------
815,168
------------
BUILDING MATERIALS & COMPONENTS 4.31%
1,704 Holderbank Finance Glaris - Registered 261,804
------------
BUSINESS & PUBLIC SERVICES 7.37%
316 Adecco SA 89,185
84 Danzas Namen 86,623
116 SGS Soc Gen Surveillance - Bearer 271,693
------------
447,501
------------
CHEMICALS 7.17%
344 Ciba - Geigy AG - Registered 435,170
------------
ELECTRICAL & ELECTRONICS 4.31%
212 ABB AG - Bearer 261,814
------------
FOOD & HOUSEHOLD PRODUCTS 9.74%
504 Nestle SA - Registered 591,282
------------
HEALTH & PERSONAL CARE 28.97%
136 Roche Holding AG - Genussein 1,038,510
604 Sandoz AG - Registered 720,200
------------
1,758,710
------------
INSURANCE 9.19%
264 Schweizerische Rueckversicherungs -
Gesellschaft 285,912
988 Zuerich Versicherungs - Registered 272,244
------------
558,156
------------
LEISURE & TOURISM 1.20%
256 Mowenpick Holding - Bearer 72,679
------------
MACHINERY & ENGINEERING 2.02%
76 Schindler Namen 74,883
76 Sulzer Namen 47,786
------------
122,669
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
MERCHANDISING 3.89%
208 Grands Magasins Jelmoni - Bearer* $ 117,582
652 Valora Holding AG - Registered 118,684
------------
236,266
------------
MULTI - INDUSTRY 4.24%
328 Alusuisse - Lonza Holdings -
Registered 257,722
------------
RECREATION, OTHER CONSUMER
GOODS 2.29%
200 S.M.H. AG - Registered 139,279
------------
TRANSPORTATION - AIRLINES 1.87%
124 Swissair - Registered* 113,584
------------
TOTAL COMMON STOCK - BASKET
(Cost $5,985,680) 6,071,804
------------
TOTAL INVESTMENTS
(COST $5,985,680)(DAGGER) 100.00% $6,071,804
======= ==========
- --------------------
* Non-income producing security.
(DAGGER) Aggregate cost for Federal income tax purposes is $6,006,772.
The aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 171,860
Excess of tax cost over value (106,828)
-----------
$ 65,032
===========
See accompanying notes to financial statements.
41
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGNFUND, INC.
=================================================
UNITED KINGDOM INDEX SERIES
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------ ----------- -----
COMMON STOCK - BASKET 100.00%
AEROSPACE & MILITARY TECHNOLOGY 1.40%
7,830 British Aerospace Plc* $ 121,771
28,260 Rolls-Royce Plc 98,058
------------
219,829
------------
BANKING 12.62%
22,440 Abbey National Plc 207,286
25,530 Barclays Plc 362,722
15,420 HSBC Holdings Plc (75p) 270,780
30,840 HSBC Plc ($HK10) 529,268
89,370 Lloyds Bank TSB Group Plc 523,820
12,150 Royal Bank of Scotland Plc 92,483
------------
1,986,359
------------
BEVERAGES & TOBACCO 2.60%
38,160 Guinness Plc 285,397
11,670 Scottish & Newcastle Plc 123,577
------------
408,974
------------
BROADCASTING & TOBACCO 3.61%
27,060 British Sky Broadcasting Plc 241,715
11,250 Pearson Plc 120,009
11,520 Reed International Plc 206,616
------------
568,340
------------
BUILDING MATERIALS & COMPONENTS 2.89%
16,260 Blue Circle Industries Plc 93,652
9,060 BPB Industries Plc 50,625
4,770 Hepworth Plc 20,614
9,720 Redland Plc 66,619
5,070 RMC Group Plc 85,306
11,850 Williams Holdings Plc 65,474
9,990 Wolseley British Plc 72,138
------------
454,428
------------
BUSINESS & PUBLIC SERVICES 3.75%
5,520 Anglian Water Plc 50,386
3,360 De la Rue Plc 33,611
29,040 Reuters Holdings Plc 338,606
8,100 Thames Water Plc 70,455
10,290 United Utilities Plc 97,465
------------
590,523
------------
CHEMICALS 2.16%
8,220 Boc Group Plc 111,519
10,860 Courtaulds Plc 73,244
12,270 Imperial Chemical Industries Plc 155,054
------------
339,817
------------
CONSTRUCTION & HOUSING 0.16%
9,330 Taylor Woodrow Plc 24,864
------------
ELECTRICAL & ELECTRONICS 1.81%
47,280 General Electric Company Plc 284,879
------------
ELECTRONIC COMPONENTS,
INSTRUMENTS 0.20%
4,650 Bowthrope Plc 31,761
------------
ENERGY SOURCES 6.60%
94,290 British Petroleum Company Plc 914,464
3,870 Burmah Castrol Plc 63,422
20,280 LASMO Plc 61,493
------------
1,039,379
------------
- -------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
FINANCIAL SERVICES 0.84%
3,420 Mercury Asset Management Group Plc $ 52,546
3,660 Schroder Plc 79,373
------------
131,919
------------
FOOD & HOUSEHOLD PRODUCTS 5.54%
19,470 Associated British Foods Plc 121,270
17,520 Cadbury Schweppes Plc 140,479
39,630 Grand Metropolitan Plc 293,604
14,640 Unilever Plc 290,491
7,950 United Biscuits Holdings Plc 25,721
------------
871,565
------------
FOREST PRODUCTS & PAPER 0.63%
14,700 Arjo Wiggins Appleton Plc 42,506
9,480 Rexam Plc 56,306
------------
98,812
------------
HEALTH & PERSONAL CARE 11.18%
58,920 Glaxo Wellcome Plc 845,404
45,666 Smithkline Beecham Plc 533,892
15,930 Zeneca Plc 380,948
------------
1,760,244
------------
INDUSTRIAL COMPONENTS 1.09%
10,830 BBA Group Plc 55,183
10,290 BICC Plc 53,799
16,860 Lucas Industries Plc 62,982
------------
171,964
------------
INSURANCE 3.87%
15,060 Commercial Union Plc 139,114
9,180 General Accident Plc 94,197
8,490 Legal & General Group Plc 95,676
39,060 Prudential Corporation Plc 263,739
8,310 Sedgwick Group Plc 15,716
------------
608,442
------------
LEISURE & TOURISM 3.78%
17,640 Bass 229,393
4,950 Carlton Communications Plc 37,098
10,200 Granada Group Plc 138,940
22,440 Ladbroke Group Plc 73,129
16,710 Rank Organisation Plc 117,007
------------
595,567
------------
MACHINERY & ENGINEERING 1.07%
10,260 GKN Plc 168,542
------------
MERCHANDISING 9.32%
17,010 Boots Company Plc 165,768
18,330 Great Universal Stores Plc* 186,653
13,050 Kingfisher Plc 133,601
52,050 Marks & Spencer Plc 400,669
9,270 Next Plc 84,109
21,360 Safeway Plc 113,845
32,490 Sainsbury (J) Plc 197,795
39,090 Tesco Plc 185,126
------------
1,467,566
------------
METALS - NON FERROUS 1.67%
17,640 RTZ Corporation Plc* 262,755
------------
METALS - STEEL 0.58%
31,560 British Steel Plc 91,751
------------
See accompanying notes to financial statements.
42
<PAGE>
AUGUST 31, 1996
PORTFOLIO OF INVESTMENTS FOREIGN FUND, INC.
===============================================================================
UNITED KINGDOM INDEX SERIES (CONTINUED)
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
MISCELLANEOUS MATERIALS &
COMMODITIES 0.68%
11,430 Caradon Plc $ 39,660
21,240 Pilkington Plc 67,060
------------
106,720
------------
MULTI-INDUSTRY 6.45%
54,150 B.A.T. Industries Plc 364,360
68,760 BTR Plc 274,053
94,050 Hanson Plc 231,525
13,650 Lonhro Plc 37,336
12,660 TI Group Plc 108,535
------------
1,015,809
------------
REAL ESTATE 1.62%
10,890 British Land Corporation Plc 78,297
11,490 Land Securities Plc 122,390
7,890 MEPC Plc 53,583
------------
254,270
------------
RECREATION, OTHER CONSUMER
GOODS 1.42%
7,830 EMI Group Plc 176,354
7,830 Thorn Plc* 47,607
------------
223,961
------------
TELECOMMUNICATIONS 6.95%
105,150 British Telecommunications Plc 617,132
40,350 Cable & Wireless Plc 265,512
55,770 Vodafone Group Plc 210,512
------------
1,093,156
------------
TEXTILES & APPAREL 0.30%
19,170 Coats Viyella Plc 47,491
------------
- --------------------------------------------------------------------------------
NO. OF
SHARES SECURITY VALUE
------- ----------- -----
TRANSPORTATION - AIRLINES 0.95%
18,180 British Airways Plc $ 149,323
------------
TRANSPORTATION - SHIPPING 0.58%
11,340 Peninsular & Oriental Steam NAV 91,103
------------
UTILITIES - ELECTRICAL & GAS 3.68%
71,970 British Gas Plc 230,040
3,150 East Midlands Electric Plc 28,359
29,310 National Grid Plc 79,712
19,890 National Power Group Plc 124,974
14,820 Scottish Power Plc 70,997
4,320 Southern Electricity Plc 45,341
------------
579,423
------------
TOTAL COMMON STOCK - BASKET
(Cost $14,876,592) 15,739,536
------------
COMMON STOCK - NON-BASKET 0.00%
HEALTH & PERSONAL CARE 0.00%
13 Smithkline Beecham Plc 152
------------
TOTAL COMMON STOCK -
NON-BASKET (Cost $133) 152
------------
TOTAL INVESTMENTS
(COST $14,876,725)(DAGGER) 100.00% $15,739,688
======= ============
- --------------------
* Non-income producing security.
(DAGGER) Aggregate cost for Federal income tax purposes is $14,902,260. The
aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:
Excess of value over tax cost $ 1,053,911
Excess of tax cost over value (216,483)
-----------
$ 837,428
============
See accompanying notes to financial statements.
43
<PAGE>
AUGUST 31, 1996
STATEMENTS OF ASSETS AND LIABILITIES FOREIGN FUND, INC.
================================================================================
<TABLE>
<CAPTION>
AUSTRALIA AUSTRIA BELGIUM CANADA FRANCE GERMANY HONG KONG
INDEX INDEX INDEX INDEX INDEX INDEX INDEX
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
----------- ----------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value $12,049,239 $13,307,320 $1,832,666 $13,677,248 $22,580,142 $28,544,003 $7,819,114
Cash 83,065 186,991 1,936 86,106 299,339 82,500 6,141
Dividends receivable 11,325 11,535 4,021 21,828 73,005 8,567 21,040
Interest receivable 686 401 16 89 383 1,095 467
Receivable for securities sold -- -- -- -- 18,364 -- --
Receivable for shares sold 2,017,965 1,037,517 605,644 1,055,723 2,551,724 16,353,147 --
Deferred organization cost 103,246 76,744 33,565 72,956 199,982 189,983 53,039
Prepaid expenses 3,580 2,576 1,014 2,412 7,580 7,131 1,788
----------- ----------- ---------- ----------- ----------- ----------- ----------
Total assets 14,269,106 14,623,084 2,478,862 14,916,362 25,730,519 45,186,426 7,901,589
----------- ----------- ---------- ----------- ----------- ----------- ----------
LIABILITIES
Liability for in-kind subscriptions 1,960,439 1,019,365 615,165 1,055,723 2,499,217 16,330,579 --
Advisory fee payable 2,357 2,873 289 2,920 2,684 3,659 1,625
Administration fee payable 708 1,809 -- 1,839 -- 53 1,009
Distribution fee payable 2,183 2,660 267 2,704 2,485 3,388 1,504
Custody fee payable 2,420 3,045 1,548 4,792 9,945 6,902 3,390
Accrued expenses 11,889 13,058 2,764 14,835 20,315 25,329 8,197
Deferred organization cost payable 82,330 60,215 24,042 57,150 160,939 152,477 40,406
Loan payable 30,000 -- 35,000 -- 105,000 -- --
----------- ----------- ---------- ----------- ----------- ----------- ----------
Total liabilities 2,092,326 1,103,025 679,075 1,139,963 2,800,585 16,522,387 56,131
----------- ----------- ---------- ----------- ----------- ----------- ----------
NET ASSETS
Capital stock, $0.001 par value 1,200 1,300 120 1,300 1,801 2,101 601
Paid-in capital 11,931,054 14,696,778 1,775,527 13,743,951 23,036,770 28,355,338 7,897,650
Accumulated net investment income/(loss) (34,085) 5,240 (5,884) 5,167 7,522 13,453 (4,432)
Accumulated net realized gain/(loss)
on investments -- (6,187) (943) -- -- -- --
Net unrealized appreciation/(depreciation)
on investments and translation of other
assets and liabilities denominated
in foreign currencies 278,611 (1,177,072) 30,967 25,981 (116,159) 293,147 (48,361)
----------- ----------- ---------- ----------- ----------- ----------- ----------
Net Assets $12,176,780 $13,520,059 $1,799,787 $13,776,399 $22,929,934 $28,664,039 $7,845,458
=========== =========== ========== =========== =========== =========== ==========
Shares of common stock issued
and outstanding 1,200,030 1,300,030 120,030 1,300,030 1,801,000 2,101,000 601,000
=========== =========== ========== =========== =========== =========== ==========
Net Asset Value Per Share $ 10.15 $ 10.40 $ 14.99 $ 10.60 $ 12.73 $ 13.64 $ 13.05
=========== =========== ========== =========== =========== =========== ==========
MEXICO SINGAPORE
ITALY JAPAN MALAYSIA (FREE) NETHERLANDS (FREE) SPAIN
INDEX INDEX INDEX INDEX INDEX INDEX INDEX
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
----------- ------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value $34,795,502 $102,626,150 $9,275,161 $5,681,785 $6,735,133 $8,924,986 $4,120,826
Cash 378,318 597,681 36,381 75,162 205,151 162,065 66,173
Dividends receivable -- 20,361 6,979 -- 20,656 7,667 4,185
Interest receivable 3,314 3,913 28 87 708 71 157
Receivable for securities sold -- -- -- -- -- -- --
Receivable for shares sold 2,093,444 8,797,346 1,036,028 -- -- 1,138,707 1,063,858
Deferred organization cost 100,757 419,197 56,230 56,806 47,594 66,768 83,312
Prepaid expenses 3,456 16,297 1,820 1,880 1,449 2,207 2,998
----------- ------------ ---------- ---------- ---------- ---------- ----------
Total assets 37,374,791 112,480,945 10,412,627 5,815,720 7,010,691 10,302,471 5,341,509
----------- ------------ ---------- ---------- ---------- ---------- ----------
LIABILITIES
Liability for in-kind subscriptions 2,069,385 8,797,346 1,020,487 -- -- 1,105,263 1,030,646
Advisory fee payable 6,531 22,633 1,728 1,326 1,608 293 742
Administration fee payable 4,112 14,251 1,081 394 880 1,149 --
Distribution fee payable 6,047 20,957 1,600 1,227 1,489 1,690 687
Custody fee payable 12,041 13,574 17,007 3,783 2,091 21,981 10,645
Accrued expenses 27,487 106,716 9,441 6,441 6,553 13,099 6,525
Deferred organization cost payable 79,479 341,524 43,363 43,815 36,251 51,978 64,888
Loan payable -- -- -- -- -- -- --
----------- ------------ ---------- ---------- ---------- ---------- ----------
Total liabilities 2,205,082 9,317,001 1,094,707 56,986 48,872 1,195,453 1,114,133
----------- ------------ ---------- ---------- ---------- ---------- ----------
NET ASSETS
Capital stock, $0.001 par value 2,550 7,201 675 500 401 800 300
Paid-in capital 36,882,237 111,901,662 9,229,300 5,198,163 6,594,813 9,703,783 4,076,622
Accumulated net investment income/(loss) (42,495) 4,047 2,970 3,858 3,182 3,716 6,089
Accumulated net realized gain/(loss)
on investments (3,346) -- -- -- (2,467) (77,971) 156
Net unrealized appreciation/(depreciation)
on investments and translation of other
assets and liabilities denominated
in foreign currencies (1,669,237) (8,748,966) 84,975 556,213 365,890 (523,310) 144,209
----------- ------------ ---------- ---------- ---------- ---------- ----------
Net Assets $35,169,709 $103,163,944 $9,317,920 $5,758,734 $6,961,819 $9,107,018 $4,227,376
=========== ============ ========== ========== ========== ========== ==========
Shares of common stock issued
and outstanding 2,550,030 7,201,000 675,030 500,030 401,000 800,030 300,030
=========== ============ ========== ========== ========== ========== ==========
Net Asset Value Per Share $ 13.79 $ 14.33 $ 13.80 $ 11.52 $ 17.36 $ 11.38 $ 14.09
=========== ============ ========== ========== ========== ========== ==========
UNITED
SWEDEN SWITZERLAND KINGDOM
INDEX INDEX INDEX
SERIES SERIES SERIES
---------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Investments, at value $4,457,590 $6,071,804 $15,739,688
Cash 6,515 33,474 26,196
Dividends receivable -- 15,691 117,640
Interest receivable 165 149 145
Receivable for securities sold -- -- 987
Receivable for shares sold 1,107,301 1,548,216 2,638,269
Deferred organization cost 54,267 123,789 119,325
Prepaid expenses 2,456 4,553 5,727
---------- ---------- -----------
Total assets 5,628,294 7,797,676 18,647,977
---------- ---------- -----------
LIABILITIES
Liability for in-kind subscriptions 1,119,535 1,527,338 2,625,641
Advisory fee payable 756 1,062 3,013
Administration fee payable -- -- --
Distribution fee payable 700 983 2,790
Custody fee payable 193 3,051 6,407
Accrued expenses 6,097 8,913 20,425
Deferred organization cost payable 41,039 98,124 94,459
Loan payable 60,000 -- 105,000
---------- ---------- -----------
Total liabilities 1,228,320 1,639,471 2,857,735
---------- ---------- -----------
NET ASSETS
Capital stock, $0.001 par value 300 501 1,201
Paid-in capital 4,125,250 6,099,525 14,941,861
Accumulated net investment income/(loss) (15,400) 7,552 (17,085)
Accumulated net realized gain/(loss)
on investments -- (36,109) --
Net unrealized appreciation/(depreciation)
on investments and translation of other
assets and liabilities denominated
in foreign currencies 289,824 86,736 864,265
---------- ---------- -----------
Net Assets $4,399,974 $6,158,205 $15,790,242
========== ========== ===========
Shares of common stock issued
and outstanding 300,030 501,000 1,201,000
========== ========== ===========
Net Asset Value Per Share $ 14.67 $ 12.29 $ 13.15
========== ========== ===========
</TABLE>
See accompanying notes to financial statements.
44 & 45
<PAGE>
FOR THE PERIOD MARCH 12, 1996* THROUGH AUGUST 31, 1996
STATEMENTS OF OPERATIONS FOREIGN FUND, INC.
================================================================================
<TABLE>
<CAPTION>
AUSTRALIA AUSTRIA BELGIUM CANADA FRANCE GERMANY HONG KONG
INDEX INDEX INDEX INDEX INDEX INDEX INDEX
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
-------- ---------- ------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
withholding taxes) $138,877 $ 84,425 $59,588 $112,885 $243,047 $155,019 $106,954
Interest 5,866 3,483 698 948 1,930 7,196 2,577
-------- ---------- ------- -------- -------- -------- ---------
Total investment income 144,743 87,908 60,286 113,833 244,977 162,215 109,531
-------- ---------- ------- -------- -------- -------- ---------
EXPENSES:
Advisory fees 10,350 9,748 2,045 13,800 14,503 16,309 7,597
Administration fees 6,524 6,123 1,289 8,682 9,081 10,284 4,793
Distribution fees 9,583 9,026 1,894 12,780 13,429 15,100 7,034
Custodian fees and expenses 5,683 6,262 3,857 4,228 10,775 6,267 3,657
Transfer agent fees 583 714 629 629 614 598 661
Directors' fees 3,989 3,359 915 4,662 6,532 6,720 2,678
Professional fees 7,930 7,375 1,963 10,905 13,452 15,263 6,045
Federal and state registration
fees 4,393 5,345 657 5,047 8,210 10,242 2,898
Amortization of deferred
organization costs 3,349 2,489 1,089 2,366 6,486 6,162 1,720
Insurance 3,190 2,296 903 2,148 6,756 6,356 1,591
Printing 1,387 931 361 1,956 2,389 2,316 1,045
Licensing fees 1,150 1,083 227 1,534 1,612 1,812 844
Amex listing fee 340 306 72 422 514 554 238
Miscellaneous expenses 2,985 1,669 1,513 4,792 4,918 4,152 2,220
-------- ---------- ------- -------- -------- -------- ---------
Total expenses before waiver 61,436 56,726 17,414 73,951 99,271 102,135 43,021
Less: Fees waived (340) (306) (72) (422) (514) (554) (238)
-------- ---------- ------- -------- -------- -------- ---------
Total expenses after waiver 61,096 56,420 17,342 73,529 98,757 101,581 42,783
-------- ---------- ------- -------- -------- -------- ---------
Net investment income/(loss) 83,647 31,488 42,944 40,304 146,220 60,634 66,748
-------- ---------- ------- -------- -------- -------- ---------
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 24,823 27,793 5,147 3,392 8,421 14,044 3,153
Net realized gain/(loss) on
investments on in-kind
redemptions -- 57,688 12,517 68,111 573,003 (55,306) 40,285
Net realized gain/(loss) on foreign
currency related transactions (1,056) (194) 383 7 2,141 990 (8)
-------- ---------- ------- -------- -------- -------- ---------
23,767 85,287 18,047 71,510 583,565 (40,272) 43,430
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies 278,611 (1,177,072) 30,967 25,981 (116,159) 293,147 (48,361)
-------- ---------- ------- -------- -------- -------- ---------
Net realized and unrealized gain/
(loss) on investments and
foreign currency related
transactions and translation
of other assets and liabilities
denominated in foreign currencies 302,378 (1,091,785) 49,014 97,491 467,406 252,875 (4,931)
-------- ---------- ------- -------- -------- -------- ---------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $386,025 $(1,060,297) $91,958 $137,795 $613,626 $313,509 $ 61,817
======== =========== ======= ======== ======== ======== ========
MEXICO SINGAPORE
ITALY JAPAN MALAYSIA (FREE) NETHERLANDS (FREE) SPAIN
INDEX INDEX INDEX INDEX INDEX INDEX INDEX
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
--------- ----------- -------- -------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
withholding taxes) $ 453,211 $ 112,954 $33,790 $ 35,713 $ 89,150 $ 69,738 $ 82,915
Interest 27,400 25,975 645 457 3,772 1,816 3,762
--------- ----------- ------- -------- -------- --------- --------
Total investment income 480,611 138,929 34,435 36,170 92,922 71,554 86,677
--------- ----------- ------- -------- -------- --------- --------
EXPENSES:
Advisory fees 25,345 105,230 7,550 5,552 5,510 8,578 6,162
Administration fees 15,927 66,484 4,761 3,503 3,475 5,412 3,858
Distribution fees 23,467 97,436 6,990 5,141 5,102 7,943 5,706
Custodian fees and expenses 14,974 35,384 3,355 5,461 4,191 5,377 4,648
Transfer agent fees 661 676 598 567 598 645 598
Directors' fees 8,152 35,571 2,712 2,119 1,937 3,091 2,781
Professional fees 17,073 80,272 5,903 4,226 4,312 6,545 5,951
Federal and state registration
fees 13,379 41,163 3,371 1,941 2,432 3,571 1,478
Amortization of deferred
organization costs 3,268 13,596 1,824 1,842 1,544 2,166 2,702
Insurance 3,079 14,525 1,622 1,676 1,292 1,968 2,673
Printing 2,770 13,343 1,080 741 606 1,164 1,129
Licensing fees 2,816 11,692 839 617 612 953 685
Amex listing fee 767 3,231 239 181 174 272 217
Miscellaneous expenses 3,409 19,106 3,707 2,622 1,613 2,142 1,721
--------- ----------- ------- -------- -------- --------- --------
Total expenses before waiver 135,087 537,709 44,551 36,189 33,398 49,827 40,309
Less: Fees waived (767) (3,231) (239) (181) (174) (272) (217)
--------- ----------- ------- -------- -------- --------- --------
Total expenses after waiver 134,320 534,478 44,312 36,008 33,224 49,555 40,092
--------- ----------- ------- -------- -------- --------- --------
Net investment income/(loss) 346,291 (395,549) (9,877) 162 59,698 21,999 46,585
--------- ----------- ------- -------- -------- --------- --------
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 338,824 174,395 3,874 -- 32,030 (77,255) 29,410
Net realized gain/(loss) on
investments on in-kind
redemptions 63,591 -- -- -- -- (43,489) 208,077
Net realized gain/(loss) on foreign
currency related transactions 8,698 (6,564) (7) (165) (188) 82 907
--------- ----------- ------- -------- -------- --------- --------
411,113 167,831 3,867 (165) 31,842 (120,662) 238,394
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies (1,669,237) (8,748,966) 84,975 556,213 365,890 (523,310) 144,209
--------- ----------- ------- -------- -------- --------- --------
Net realized and unrealized gain/
(loss) on investments and
foreign currency related
transactions and translation
of other assets and liabilities
denominated in foreign currencies (1,258,124) (8,581,135) 88,842 556,048 397,732 (643,972) 382,603
--------- ----------- ------- -------- -------- --------- --------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(911,833) $(8,976,684) $78,965 $556,210 $457,430 $(621,973) $429,188
========= =========== ======= ======== ======== ========= ========
UNITED
SWEDEN SWITZERLAND KINGDOM
INDEX INDEX INDEX
SERIES SERIES SERIES
-------- ----------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign
withholding taxes) $ 78,624 $97,531 $ 280,838
Interest 1,850 2,317 2,002
-------- ------- ----------
Total investment income 80,474 99,848 282,840
-------- ------- ----------
EXPENSES:
Advisory fees 4,522 8,392 14,599
Administration fees 2,878 5,251 9,200
Distribution fees 4,187 7,770 13,517
Custodian fees and expenses 1,832 7,358 3,785
Transfer agent fees 598 583 583
Directors' fees 1,987 3,893 6,026
Professional fees 4,299 8,533 13,570
Federal and state registration
fees 1,512 2,325 5,499
Amortization of deferred
organization costs 1,760 4,015 3,870
Insurance 2,189 4,058 5,102
Printing 678 1,546 2,561
Licensing fees 502 932 1,622
Amex listing fee 158 301 496
Miscellaneous expenses 2,423 1,853 7,176
-------- ------- ----------
Total expenses before waiver 29,525 56,810 87,606
Less: Fees waived (158) (301) (496)
-------- ------- ----------
Total expenses after waiver 29,367 56,509 87,110
-------- ------- ----------
Net investment income/(loss) 51,107 43,339 195,730
-------- ------- ----------
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 27,507 (36,109) 987
Net realized gain/(loss) on
investments on in-kind
redemptions 67,281 (70,863) 103,343
Net realized gain/(loss) on foreign
currency related transactions 49 (67) 2,316
-------- ------- ----------
94,837 (107,039) 106,646
Net change in unrealized
appreciation/(depreciation) on
investments and translation of
other assets and liabilities
denominated in foreign currencies 289,824 86,736 864,265
-------- ------- ----------
Net realized and unrealized gain/
(loss) on investments and
foreign currency related
transactions and translation
of other assets and liabilities
denominated in foreign currencies 384,661 (20,303) 970,911
-------- ------- ----------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $435,768 $23,036 $1,166,641
======== ======= ==========
<FN>
- --------
*Commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
46 & 47
<PAGE>
FOR THE PERIOD MARCH 12, 1996* THROUGH AUGUST 31, 1996
STATEMENTS OF CHANGES IN NET ASSETS FOREIGN FUND, INC.
===============================================================================
<TABLE>
<CAPTION>
AUSTRALIA AUSTRIA BELGIUM CANADA FRANCE GERMANY HONG KONG
INDEX INDEX INDEX INDEX INDEX INDEX INDEX
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
----------- ----------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income/(loss) $ 83,647 $ 31,488 $ 42,944 $ 40,304 $ 146,220 $ 60,634 $ 66,748
Net realized gain/(loss) on
investments and foreign currency
related transactions 23,767 85,287 18,047 71,510 583,565 (40,272) 43,430
Net change in unrealized appreciation/
(depreciation) on investments and
translation of other assets and
liabilities denominated in foreign
currencies 278,611 (1,177,072) 30,967 25,981 (116,159) 293,147 (48,361)
----------- ----------- ---------- ----------- ----------- ----------- ----------
Net increase/(decrease) in net
assets resulting from operations 386,025 (1,060,297) 91,958 137,795 613,626 313,509 61,817
----------- ----------- ---------- ----------- ----------- ----------- ----------
DISTRIBUTIONS:
Net investment income. (83,647) (26,054) (42,944) (35,145) (140,840) (48,171) (66,748)
In excess of net investment income (47,153) (7,923) (7,116) (7,532) (20,645) (19,615) (9,901)
Net realized gains (21,359) (33,980) (5,241) (3,392) (8,421) -- (3,153)
In excess of net realized gains -- -- -- -- -- (14,044) --
Return of capital (34,847) (100,047) -- (3,132) (329,606) (132,489) (24,346)
----------- ----------- ---------- ----------- ----------- ----------- ----------
Net decrease in net assets from
distributions (187,006) (168,004) (55,301) (49,201) (499,512) (214,319) (104,148)
----------- ----------- ---------- ----------- ----------- ----------- ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from the sale of shares 11,977,456 19,180,869 2,982,750 15,788,335 30,831,940 32,463,206 8,886,964
Cost of shares redeemed -- (4,432,844) (1,220,075) (2,100,833) (8,028,940) (3,911,977) (1,012,585)
----------- ----------- ---------- ----------- ----------- ----------- ----------
Net increase in net assets derived
from capital share transactions 11,977,456 14,748,025 1,762,675 13,687,502 22,803,000 28,551,229 7,874,379
----------- ----------- ---------- ----------- ----------- ----------- ----------
Total increase in net assets 12,176,475 13,519,724 1,799,332 13,776,096 22,917,114 28,650,419 7,832,048
NET ASSETS:
Beginning of period 305 335 455 303 12,820 13,620 13,410
----------- ----------- ---------- ----------- ----------- ----------- ----------
End of period $12,176,780 $13,520,059 $1,799,787 $13,776,399 $22,929,934 $28,664,039 $7,845,458
=========== =========== ========== =========== =========== =========== ==========
<FN>
- --------
* Commencement of operations.
</FN>
Capital Share Transactions:
Shares sold 1,200,000 1,700,000 200,000 1,500,000 2,400,000 2,400,000 675,000
Shares redeemed -- (400,000) (80,000) (200,000) (600,000) (300,000) (75,000)
----------- ----------- ---------- ----------- ----------- ----------- ----------
Net increase in shares 1,200,000 1,300,000 120,000 1,300,000 1,800,000 2,100,000 600,000
=========== =========== ========== =========== =========== =========== ==========
MEXICO SINGAPORE
ITALY JAPAN MALAYSIA (FREE) NETHERLANDS (FREE) SPAIN
INDEX INDEX INDEX INDEX INDEX INDEX INDEX
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
----------- ------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income/(loss) $ 346,291 $ (395,549) $ (9,877) $ 162 $ 59,698 $ 21,999 $ 46,585
Net realized gain/(loss) on
investments and foreign currency
related transactions 411,113 167,831 3,867 (165) 31,842 (120,662) 238,394
Net change in unrealized appreciation/
(depreciation) on investments and
translation of other assets and
liabilities denominated in foreign
currencies (1,669,237) (8,748,966) 84,975 556,213 365,890 (523,310) 144,209
----------- ------------ ---------- ---------- ---------- ---------- ----------
Net increase/(decrease) in net
assets resulting from operations (911,833) (8,976,684) 78,965 556,210 457,430 (621,973) 429,188
----------- ------------ ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS:
Net investment income. (346,291) -- -- -- (56,328) (19,081) (41,405)
In excess of net investment income (78,413) -- -- (2,004) (4,914) (6,120) --
Net realized gains (325,362) -- -- -- (31,842) -- (29,254)
In excess of net realized gains -- -- -- -- (2,655) -- --
Return of capital (195,546) -- (4,200) (5,496) (37,393) -- --
----------- ------------ ---------- ---------- ---------- ---------- ----------
Net decrease in net assets from
distributions (945,612) -- (4,200) (7,500) (133,132) (25,201) (70,659)
----------- ------------ ---------- ---------- ---------- ---------- ----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from the sale of shares 39,202,785 112,125,708 9,242,755 5,209,737 6,621,571 10,940,175 7,091,661
Cost of shares redeemed (2,176,057) -- -- -- -- (1,186,369) (3,223,243)
----------- ------------ ---------- ---------- ---------- ---------- ----------
Net increase in net assets derived
from capital share transactions 37,026,728 112,125,708 9,242,755 5,209,737 6,621,571 9,753,806 3,868,418
----------- ------------ ---------- ---------- ---------- ---------- ----------
Total increase in net assets 35,169,283 103,149,024 9,317,520 5,758,447 6,945,869 9,106,632 4,226,947
NET ASSETS:
Beginning of period 426 14,920 400 287 15,950 386 429
----------- ------------ ---------- ---------- ---------- ---------- ----------
End of period $35,169,709 $103,163,944 $9,317,920 $5,758,734 $6,961,819 $9,107,018 $4,227,376
=========== ============ ========== ========== ========== ========== ==========
<FN>
- --------
* Commencement of operations.
</FN>
Capital Share Transactions:
Shares sold 2,700,000 7,200,000 675,000 500,000 400,000 900,000 525,000
Shares redeemed (150,000) -- -- -- -- (100,000) (225,000)
----------- ------------ ---------- ---------- ---------- ---------- ----------
Net increase in shares 2,550,000 7,200,000 675,000 500,000 400,000 800,000 300,000
=========== ============ ========== ========== ========== ========== ==========
UNITED
SWEDEN SWITZERLAND KINGDOM
INDEX INDEX INDEX
SERIES SERIES SERIES
---------- ----------- -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income/(loss) $ 51,107 $ 43,339 $ 195,730
Net realized gain/(loss) on
investments and foreign currency
related transactions 94,837 (107,039) 106,646
Net change in unrealized appreciation/
(depreciation) on investments and
translation of other assets and
liabilities denominated in foreign
currencies 289,824 86,736 864,265
---------- ---------- -----------
Net increase/(decrease) in net
assets resulting from operations 435,768 23,036 1,166,641
---------- ---------- -----------
DISTRIBUTIONS:
Net investment income. (51,107) (35,720) (195,730)
In excess of net investment income (16,685) -- (31,721)
Net realized gains (26,271) -- (987)
In excess of net realized gains -- -- --
Return of capital -- -- (26,817)
---------- ---------- -----------
Net decrease in net assets from
distributions (94,063) (35,720) (255,255)
---------- ---------- -----------
CAPITAL STOCK TRANSACTIONS:
Net proceeds from the sale of shares 5,130,382 10,622,671 17,417,928
Cost of shares redeemed (1,072,542) (4,464,972) (2,551,512)
---------- ---------- -----------
Net increase in net assets derived
from capital share transactions 4,057,840 6,157,699 14,866,416
---------- ---------- -----------
Total increase in net assets 4,399,545 6,145,015 15,777,802
NET ASSETS:
Beginning of period 429 13,190 12,440
---------- ---------- -----------
End of period $4,399,974 $6,158,205 $15,790,242
========== ========== ===========
<FN>
- --------
* Commencement of operations.
</FN>
Capital Share Transactions:
Shares sold 375,000 875,000 1,400,000
Shares redeemed (75,000) (375,000) (200,000)
---------- ---------- -----------
Net increase in shares 300,000 500,000 1,200,000
========== ========== ===========
</TABLE>
See accompanying notes to financial statements.
48 & 49
<PAGE>
FOR THE PERIOD MARCH 12, 1996* THROUGH AUGUST 31, 1996
FINANCIAL HIGHLIGHTS FOREIGN FUND, INC.
===============================================================================
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
AUSTRALIA AUSTRIA BELGIUM CANADA FRANCE GERMANY HONG KONG
INDEX INDEX INDEX INDEX INDEX INDEX INDEX
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
-------- ---------- ------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning
of period (1) $ 9.95 $ 10.91 $ 14.92 $ 10.17 $ 12.42 $ 13.23 $ 12.83
-------- ---------- ------- -------- -------- -------- ---------
Net investment income/
(loss) (DAGGER) 0.10 0.04 0.40 0.04 0.17 0.06 0.15
Net realized and unrealized gain/
(loss) on investments, foreign
currency related transactions,
and translation of other assets
and liabilities denominated in
foreign currencies 0.29 (0.41) 0.36 0.43 0.45 0.47 0.27
-------- ---------- ------- -------- -------- -------- ---------
Net increase/(decrease) in net
assets resulting from
operations 0.39 (0.37) 0.76 0.47 0.62 0.53 0.42
-------- ---------- ------- -------- -------- -------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income (0.08) (0.02) (0.54) (0.03) (0.09) (0.03) (0.13)
Dividends from excess of net
investment income (0.05) (0.01) (0.09) (0.01) (0.01) (0.01) (0.02)
Distributions from net realized gains (0.02) (0.03) (0.06) -- 0.00** -- (0.01)
Distributions from excess of net
realized gains -- -- -- 0.00** -- (0.01) --
Return of capital (0.04) (0.08) -- 0.00** (0.21) (0.07) (0.04)
-------- ---------- ------- -------- -------- -------- ---------
Total dividends and distributions (0.19) (0.14) (0.69) (0.04) (0.31) (0.12) (0.20)
-------- ---------- ------- -------- -------- -------- ---------
Net asset value, end of period $ 10.15 $ 10.40 $ 14.99 $ 10.60 $ 12.73 $ 13.64 $ 13.05
======== ========== ======= ======== ======== ======== =========
TOTAL INVESTMENT RETURN (2) (4) 3.88% (3.39)% 5.01% 4.63% 4.95% 4.00% 3.22%
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $12,177 $13,520 $1,800 $13,776 $22,930 $28,664 $ 7,845
Ratios of expenses to average
net assets (3) (5) 1.59% 1.56% 2.29% 1.44% 1.84% 1.68% 1.52%
Ratios of net investment income/
(loss) to average net
assets (3) (5) 2.18% 0.87% 5.67% 0.79% 2.72% 1.00% 2.37%
Portfolio turnover (4)(6) 8.84% 9.60% 6.25% 0.00% 0.00% 0.00% 0.00%
Average commission rate paid $0.0085 $0.2986 $0.4327 -- $0.3956 -- $0.0007
<FN>
* Commencement of operations.
** Less than one cent per share.
(DAGGER) Based on average shares
outstanding throughout
the period.
(1) Net asset value per share on
March 12, 1996 (commencement
of operations).
(2) Total investment return is
calculated assuming a purchase
of capital stock at net asset
value per share on the first day
and a sale at the net asset value
per share on the last day of the
period reported. Dividends and
distributions, if any, are assumed,
for purposes of this calculation,
to be reinvested at the net asset
value per share on the ex-dividend
date.
(3) Annualized
(4) Not Annualized
(5) Includes voluntary waivers by the
American Stock Exchange. If
such waivers had not been made
the ratios of expenses to average
net assets and ratios of net
investment income/(loss) to average
net assets would have been as follows:
Ratios of expenses to average net
assets before waivers (3) 1.60% 1.57% 2.30% 1.45% 1.85% 1.69% 1.53%
Ratios of net investment income/
(loss) to average net assets
before waivers (3) 2.17% 0.86% 5.66% 0.78% 2.71% 0.99% 2.36%
(6) Excludes portfolio securities received
or delivered as a result of processing
capital share transactions in
Creation Unit(s).
</FN>
MEXICO SINGAPORE
ITALY JAPAN MALAYSIA (FREE) NETHERLANDS (FREE) SPAIN
INDEX INDEX INDEX INDEX INDEX INDEX INDEX
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
--------- ----------- -------- -------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning
of period (1) $ 13.62 $ 14.79 $ 13.24 $ 9.95 $ 15.91 $ 12.24 $ 13.28
--------- ----------- -------- -------- ----------- --------- --------
Net investment income/
(loss) (DAGGER) 0.25 (0.07) (0.02) 0.00** 0.24 0.04 0.14
Net realized and unrealized gain/
(loss) on investments, foreign
currency related transactions,
and translation of other assets
and liabilities denominated in
foreign currencies 0.31 (0.39) 0.59 1.59 1.54 (0.86) 0.98
--------- ----------- -------- -------- ----------- --------- --------
Net increase/(decrease) in net
assets resulting from
operations 0.56 (0.46) 0.57 1.59 1.78 (0.82) 1.12
--------- ----------- -------- -------- ----------- --------- --------
LESS DISTRIBUTIONS
Dividends from net investment income (0.14) -- -- -- (0.14) (0.03) (0.18)
Dividends from excess of net
investment income (0.03) -- -- (0.01) (0.01) (0.01) --
Distributions from net realized gains (0.14) -- -- -- (0.08) -- (0.13)
Distributions from excess of net
realized gains -- -- -- -- (0.01) -- --
Return of capital (0.08) -- (0.01) (0.01) (0.09) -- --
--------- ----------- -------- -------- ----------- --------- --------
Total dividends and distributions (0.39) -- (0.01) (0.02) (0.33) (0.04) (0.31)
--------- ----------- -------- -------- ----------- --------- --------
Net asset value, end of period $ 13.79 $ 14.33 $ 13.80 $ 11.52 $ 17.36 $ 11.38 $ 14.09
========= =========== ======== ======== =========== ========= ========
TOTAL INVESTMENT RETURN (2) (4) 4.11% (3.11)% 4.28% 15.93% 11.19% (6.73)% 8.45%
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $35,170 $103,164 $ 9,318 $ 5,759 $ 6,962 $ 9,107 $ 4,227
Ratios of expenses to average
net assets (3) (5) 1.43% 1.37% 1.58% 1.75% 1.63% 1.56% 1.76%
Ratios of net investment income/
(loss) to average net
assets (3) (5) 3.69% (1.01)% (0.35)% 0.01% 2.93% 0.69% 2.04%
Portfolio turnover (4)(6) 19.80% 21.54% 0.00% 0.00% 4.32% 26.29% 4.73%
Average commission rate paid $0.0046 $ 0.0152 -- -- $0.0651 $0.0118 $0.0723
<FN>
* Commencement of operations.
** Less than one cent per share.
(DAGGER) Based on average shares
outstanding throughout
the period.
(1) Net asset value per share on
March 12, 1996 (commencement
of operations).
(2) Total investment return is
calculated assuming a purchase
of capital stock at net asset
value per share on the first day
and a sale at the net asset value
per share on the last day of the
period reported. Dividends and
distributions, if any, are assumed,
for purposes of this calculation,
to be reinvested at the net asset
value per share on the ex-dividend
date.
(3) Annualized
(4) Not Annualized
(5) Includes voluntary waivers by the
American Stock Exchange. 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 following
Ratios of expenses to average net
assets before waivers (3) 1.44% 1.38% 1.59% 1.76% 1.64% 1.57% 1.77%
Ratios of net investment income/
(loss) to average net assets
before waivers (3) 3.68% (1.02)% (0.36)% 0.00% 2.92% 0.68% 2.03%
(6) Excludes portfolio securities received
or delivered as a result of processing
capital share transactions in
Creation Unit(s).
</FN>
UNITED
SWEDEN SWITZERLAND KINGDOM
INDEX INDEX INDEX
SERIES SERIES SERIES
-------- ----------- ----------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning
of period (1) $ 13.22 $ 12.07 $ 12.14
-------- ----------- ----------
Net investment income/
(loss) (DAGGER) 0.20 0.08 0.21
Net realized and unrealized gain/
(loss) on investments, foreign
currency related transactions,
and translation of other assets
and liabilities denominated in
foreign currencies 1.67 0.24 1.06
-------- ----------- ----------
Net increase/(decrease) in net
assets resulting from
operations 1.87 0.32 1.27
-------- ----------- ----------
LESS DISTRIBUTIONS
Dividends from net investment income (0.23) (0.10) (0.20)
Dividends from excess of net
investment income (0.07) -- (0.03)
Distributions from net realized gains (0.12) -- 0.00**
Distributions from excess of net
realized gains -- -- --
Return of capital -- -- (0.03)
-------- ----------- ----------
Total dividends and distributions (0.42) (0.10) (0.26)
-------- ----------- ----------
Net asset value, end of period $ 14.67 $ 12.29 $ 13.15
======== =========== ==========
TOTAL INVESTMENT RETURN (2) (4) 14.13% 2.60% 10.41%
RATIOS/ SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $ 4,400 $ 6,158 $15,790
Ratios of expenses to average
net assets (3) (5) 1.75% 1.82% 1.61%
Ratios of net investment income/
(loss) to average net
assets (3) (5) 3.05% 1.39% 3.62%
Portfolio turnover (4)(6) 5.87% 17.06% 0.00%
Average commission rate paid $0.0561 $0.7852 --
<FN>
* Commencement of operations.
** Less than one cent per share.
(DAGGER) Based on average shares
outstanding throughout
the period.
(1) Net asset value per share on
March 12, 1996 (commencement
of operations).
(2) Total investment return is
calculated assuming a purchase
of capital stock at net asset
value per share on the first day
and a sale at the net asset value
per share on the last day of the
period reported. Dividends and
distributions, if any, are assumed,
for purposes of this calculation,
to be reinvested at the net asset
value per share on the ex-dividend
date.
(3) Annualized
(4) Not Annualized
(5) Includes voluntary waivers by the
American Stock Exchange. 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 following
Ratios of expenses to average net
assets before waivers (3) 1.76% 1.83% 1.62%
Ratios of net investment income/
(loss) to average net assets
before waivers (3) 3.04% 1.38% 3.61%
(6) Excludes portfolio securities received
or delivered as a result of processing
capital share transactions in
Creation Unit(s).
</FN>
</TABLE>
See accompanying notes to financial statements.
50 & 51
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
GENERAL
Foreign 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.
The shares of common stock of each 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:
INDEX SERIES SYMBOL
------------- --------
Australia Index Series EWA
Austria Index Series EWO
Belgium Index Series EWK
Canada Index Series EWC
France Index Series EWQ
Germany Index Series EWG
Hong Kong Index Series EWH
Italy Index Series EWI
Japan Index Series EWJ
Malaysia Index Series EWM
Mexico (Free) Index Series EWW
Netherlands Index Series EWN
Singapore (Free) Index Series EWS
Spain Index Series EWP
Sweden Index Series EWD
Switzerland Index Series EWL
United Kingdom Index Series EWU
The investment objective of each of the 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) Index Series, which reflects the
reinvestment of gross dividends).
Each Index Series of the Fund utilizes a "passive" or indexing investment
approach to approximate the investment performance of its benchmark index
through the use of quantitative analytical procedures.
The Fund issues and redeems WEBS of each Index Series only in aggregations
of a specified number of shares (each, a "Creation Unit") at net asset value.
Except when aggregated in Creation Units, WEBS are not redeemable securities of
the 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 Index Series, the France Index Series, the Japan Index
Series and the United Kingdom Index Series is classified as a "diversified"
investment company under the Act. Each of the other Index Series is classified
as a "non-diversified" investment company under the Act.
The Index Series had no operations prior to their commencement of
operations on March 12, 1996, other than the sale of the following Index Series
shares to Funds Distributor, Inc. (the "Distributor") for the noted amounts:
Australia Index Series - 30 shares for proceeds of $305; Austria Index Series -
30 shares for proceeds of $335; Belgium Index Series - 30 shares for proceeds of
$455; Canada Index Series - 30 shares for proceeds of $303; France Index Series
- - 1,000 shares for proceeds of $12,820; Germany Index Series - 1,000 shares for
proceeds of $13,620; Hong Kong Index Series - 1,000 shares for proceeds of
$13,410; Italy Index Series - 30 shares for proceeds of $426; Japan Index Series
- - 1,000 shares for proceeds of $14,920; Malaysia Index Series - 30 shares for
proceeds of $400; Mexico (Free) Index Series - 30 shares for proceeds of $287;
Netherlands Index Series - 1,000 shares for proceeds of $15,950; Singapore
(Free) Index Series - 30 shares for proceeds of $386; Spain Index Series - 30
shares for proceeds of $429; Sweden Index Series - 30 shares for proceeds of
$429; Switzerland Index Series - 1,000 shares for proceeds of $13,190 and United
Kingdom Index Series - 1,000 shares for proceeds of $12,440.
52
<PAGE>
FOREIGN FUND, INC.
================================================================================
SIGNIFICANT ACCOUNTING POLICIES
Each Index Series' financial statements are prepared in accordance with
generally accepted accounting principles which may require the use of management
estimates and assumptions. Actual results could differ from those estimates.
PORTFOLIO VALUATION
Investments are stated at value. All securities for which market quotations
are readily available are valued at (i) the last sales price prior to the time
of determination, if there was a sale on the date of determination, (ii) at the
mean between the last current bid and asked prices if there was no sales price
on such date and bid and asked quotations are available, or (iii) at the bid
price if there was no sales price on such date and only bid quotations are
available. Securities that are traded over-the-counter are valued at the last
quoted bid price. Securities for which market values are not readily available,
are carried at fair value as determined in good faith by the Adviser in
accordance with procedures adopted by the Fund's Board of Directors.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on trade date. The cost of
investments sold is determined by use of the specific identification method for
both financial reporting and income tax purposes. Interest income is recorded on
the accrual basis; dividend income is recorded on the ex-dividend date.
TAX STATUS
No provision is made for U.S. Federal income or excise taxes as it is each
Index Series' intention to qualify as a regulated investment company and to make
the requisite distributions to its shareholders which will be sufficient to
relieve it from all or substantially all Federal income and excise taxes.
If so elected, each Index Series' realized net foreign exchange losses and
realized net capital losses incurred since the commencement of operations will
be deemed to arise on the first business day of the following year. Each Index
Series incurred and will elect to defer such losses as follows:
<TABLE>
<CAPTION>
FOREIGN EXCHANGE NET REALIZED CAPITAL
INDEX SERIES LOSSES LOSSES
------------ ----------------- --------------------
<S> <C> <C>
Australia Index Series $1,056 --
Austria Index Series $ 194 --
Belgium Index Series -- --
Canada Index Series -- --
France Index Series -- --
Germany Index Series -- --
Hong Kong Index Series $ 8 --
Italy Index Series -- --
Japan Index Series $6,564 --
Malaysia Index Series $ 7 --
Mexico (Free) Index Series $ 165 --
Netherlands Index Series $ 188 --
Singapore (Free) Index Series -- $11,989
Spain Index Series -- --
Sweden Index Series -- --
Switzerland Index Series $ 67 $15,017
United Kingdom Index Series -- --
</TABLE>
If any Index Series owns shares in certain foreign investment entities,
referred to, under U.S. tax law principles, as "passive foreign investment
companies", the Index Series may elect to mark-to-market annually the shares of
the passive foreign investment company, and would be required to distribute to
shareholders any such mark-to-market gains.
FOREIGN CURRENCY TRANSLATION
The books and records of the 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.
53
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
Foreign currency and assets and liabilities denominated in foreign currency
are converted into U.S. dollars using the same exchange rates utilized by MSCI
in the calculation of the relevant MSCI Indices (currently, exchange rates as of
4:00 p.m. London time, except that the exchange rate for the MSCI Mexico (Free)
Index is that as of 3:00 p.m. New York City time).
The 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 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 Index Series intends to distribute, at least annually, to
shareholders, substantially all of its net investment income, including 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 Index Series intends to distribute at least annually,
amounts representing the dividend yield on the underlying portfolio securities
of each Index Series, net of expenses, as if such 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 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.
During the period ended August 31, 1996, each Index Series reclassified
certain amounts from accumulated net realized gain (loss) on investments and
foreign currency transactions and accumulated net investment income (loss),
respectively, as a result of permanent book and tax differences relating to net
investment loss, return of capital, realized foreign currency gains and losses
and gains and losses on in-kind redemptions.
54
<PAGE>
FOREIGN FUND, INC.
================================================================================
ORGANIZATION COSTS
A portion of the costs of organizing the Fund and registering its shares
were paid by Morgan Stanley & Co. Incorporated ("Morgan Stanley") and will be
reimbursed by each Index Series. These organization costs were allocated to each
Index Series based on the net assets of each Index Series. Such organization
costs have been deferred and are amortized ratably on the reverse sum of the
years digits method over a period of sixty months from the commencement of
operations. The amounts of deferred organization costs payable to Morgan Stanley
at August 31, 1996 are as follows:
INDEX SERIES
-------------
Australia Index Series $ 72,096
Austria Index Series $ 49,058
Belgium Index Series $ 20,564
Canada Index Series $ 49,932
France Index Series $140,174
Germany Index Series $132,634
Hong Kong Index Series $ 35,079
Italy Index Series $ 69,106
Japan Index Series $298,107
Malaysia Index Series $ 37,870
Mexico (Free) Index Series $ 38,252
Netherlands Index Series $ 31,651
Singapore (Free) Index Series $ 43,528
Spain Index Series $ 56,208
Sweden Index Series $ 35,398
Switzerland Index Series $ 85,208
United Kingdom Index Series $ 82,009
If any of the shares initially issued to the Distributor are redeemed
before the end of the amortization period, the proceeds of the redemption will
be reduced by their pro rata share of the unamortized organization costs. The
pro rata share by which the proceeds are reduced is derived by dividing the
number of original shares redeemed by the total number of original shares
outstanding at the time of redemption.
FEE ARRANGEMENTS
The Fund has an Investment Management Agreement (the "Management
Agreement") with Barclays Global Fund Advisors (the "Adviser"). The Adviser
manages the investments of each of the Index Series. For its services to each
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 Index
Series. For its administrative services and Fund accounting services, PFPC is
paid aggregate fees equal to each Index Series' allocable portion of: .10% per
annum of the aggregate average daily net assets less than $3 billion, plus .09%
per annum of the aggregate net assets between $3 billion and $5 billion, plus
.08% per annum of the aggregate net assets between $5 billion and $7.5 billion,
plus .065% per annum of the aggregate net assets between $7.5 billion and $10
billion, plus .05% per annum of the aggregate net assets in excess of $10
billion ("Standard Fee Schedule").
Pursuant to a revised fee schedule with the Fund, PFPC will charge an
annual minimum fee of $850,000 for fiscal year one, $1,275,000 for fiscal year
two, and $1,700,000 for fiscal year three and thereafter (based on an annual
minimum of $50,000, $75,000 and $100,000 per Index Series, respectively). PFPC
will cap its minimum fees at the annual rate of .17% of average daily net
assets. Any resulting shortfall between the above required minimums and the
asset based fee of .17% will be recouped as each Index Series' asset level reach
the threshold to permit such recovery of fees. Once the aggregate minimum fees
are recouped, the Standard Fee Schedule, including minimum fee rates, would
apply, subject to the maximum charge of .17% of average daily net assets and
future recoupment of any deferred minimum fees.
If the Administrator is terminated within the first three years of the
Fund's operations, each Index Series will repay the Administrator the difference
between the amounts calculated under the Standard Fee Schedule and the amounts
paid during the first year of operations.
55
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
PNC Bank, N.A., an affiliate of the Administrator, serves as each Index
Series' Transfer Agent and Dividend Disbursement Agent.
The Fund has a Licensing Agreement with MSCI for the use of the relevant
MSCI Index. Each Index Series pays a license fee equal to .03% per annum of the
aggregate net assets of each of the 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 Index Series. Under the Rule 12b-1
Plan, the Distributor is paid an annual fee as compensation in connection with
the offering and sale of shares of each Index Series. The fee paid to the
Distributor under the Rule 12b-1 Plan is accrued daily and paid monthly with
respect to each Index Series at an annual rate of up to .25% of the average
daily net assets of such Index Series. From time to time the Distributor may
waive all or a portion of the fee.
Morgan Stanley Trust Company ("MSTC") serves as custodian as well as the
Securities Lending Agent to each of the Index Series. For its custody services
to each Index Series, MSTC is paid per annum fees based on the aggregate net
assets of the Index Series as follows: Australia Index Series (.10%); Austria
Index Series (.10%); Belgium Index Series (.10%); Canada Index Series (.07%);
France Index Series (.11%); Germany Index Series (.10%); Hong Kong Index Series
(.12%); Italy Index Series (.09%); Japan Index Series (.07%); Malaysia Index
Series (.13%); Mexico (Free) Index Series (.25%); Netherlands Index Series
(.10%); Singapore (Free) Index Series (.10%); Spain Index Series (.10%); Sweden
Index Series (.10%); Switzerland Index Series (.10%); and United Kingdom Index
Series (.08%).
The AMEX has agreed to voluntarily waive its annual listing fee through
December 31,1996.
The Fund pays each director who is not a director, officer or employee of
the Adviser, Administrator, Distributor or any affiliate thereof, an annual fee
of $20,000 plus $5,000 for each Board of Directors meeting attended. In
addition, the Fund reimburses the directors for travel and out-of-pocket
expenses incurred in connection with the Board of Directors meetings.
FOREIGN CURRENCY
At August 31, 1996, each Index Series' cash balance included the
following amount of foreign currency:
<TABLE>
<CAPTION>
VALUE COST
------ ------
<S> <C> <C>
Australia Index Series $ 73,495 $ 73,453
Austria Index Series $ 65 $ 65
Belgium Index Series $ 28 $ 28
Canada Index Series $ 54,516 $ 54,306
France Index Series $ 39,099 $ 39,099
Germany Index Series $ 1,025 $ 1,017
Hong Kong Index Series $ 169 $ 169
Italy Index Series $341,123 $335,591
Japan Index Series $447,814 $445,773
Malaysia Index Series $ 3,796 $ 3,797
Mexico (Free) Index Series $ 78 $ 78
Netherlands Index Series $ 21,765 $ 21,268
Singapore (Free) Index Series $126,240 $125,645
Spain Index Series $ 55,852 $ 55,401
Sweden Index Series $ 719 $ 720
Switzerland Index Series $ 19,064 $ 19,037
United Kingdom Index Series $ 5,040 $ 5,016
</TABLE>
STOCK LOAN
Each Index Series may lend securities from its portfolio to brokers,
dealers and other financial institutions. Because the collateral pledged to each
Index Series in connection with these loans generates income, securities lending
enables an Index Series to earn income that may partially offset the expenses of
the Index Series. Each Index Series receives collateral equal to at least 100%
of the current market value of the loaned securities. The Index Series invests
collateral in short-term investments, and bears the risk of loss of the invested
collateral. In addition, an Index Series is exposed to the risk of loss should a
borrower default on its obligation to return the borrowed securities. MSTC
serves as the securities lending agent of the Fund and, in such capacity, shares
equally with the respective Index Series any net income earned on invested
collateral. For its services as the securities lending agent, the Fund pays
MSTC, in respect of each Index Series, 50% of the net investment income earned
on the collateral for securities loaned.
56
<PAGE>
FOREIGN FUND, INC.
================================================================================
The market values of securities on loan to broker/dealers at August 31,
1996, and the collateral received with respect to such loans were as follows:
<TABLE>
<CAPTION>
MARKET VALUE OF COLLATERAL
INDEX SERIES LOANED SECURITIES RECEIVED
------------ ------------------ -----------
<S> <C> <C>
Australia Index Series $ 3,900,357 $ 4,206,050
Austria Index Series $ 198,882 $ 211,480
Belgium Index Series -- --
Canada Index Series -- --
France Index Series $ 186,453 $ 196,094
Germany Index Series $ 4,371,043 $ 4,724,876
Hong Kong Index Series $ 1,120,597 $ 1,299,323
Italy Index Series $ 3,270,387 $ 3,716,453
Japan Index Series $21,044,290 $22,309,896
Malaysia Index Series -- --
Mexico (Free) Index Series -- --
Netherlands Index Series $ 1,578,795 $ 1,678,071
Singapore (Free) Index Series -- --
Spain Index Series $ 133,512 $ 143,279
Sweden Index Series $ 188,009 $ 195,386
Switzerland Index Series $ 432,720 $ 454,396
United Kingdom Index Series -- --
</TABLE>
CAPITAL SHARES
The Fund currently is authorized to issue 6 billion shares of common stock,
with the following number of shares allocated to each Index Series: Australia
Index Series (127.8 million shares); Austria Index Series (19.8 million shares);
Belgium Index Series (136.2 million shares); Canada Index Series (340.2 million
shares); France Index Series (340.2 million shares); Germany Index Series (382.2
million shares); Hong Kong Index Series (191.4 million shares); Italy Index
Series (63.6 million shares); Japan Index Series (2,124.6 million shares);
Malaysia Index Series (127.8 million shares); Mexico (Free) Index Series (255
million shares); Netherlands Index Series (255 million shares); Singapore (Free)
Index Series (191.4 million shares); Spain Index Series (127.8 million shares);
Sweden Index Series (63.6 million shares); Switzerland Index Series (318.625
million shares); and United Kingdom 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 WEBS of an Index
Series is the in-kind deposit of a designated portfolio of equity securities
constituting an optimized representation of the corresponding MSCI Index (the
"Basket Securities") and an amount of cash (the "Cash Component"). Such in-kind
deposit is designated as the "liability for in-kind subscriptions" on the
Statements of Assets and Liabilities. Non-Basket Securities may be held by an
Index Series as a result of corporate actions, odd share lots, or as a result of
rebalancing of the Basket Securities.
Shares of each 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 Index
Series may also be issued in the specified aggregations for cash in the sole
discretion of the Fund. Redemptions of the shares of each Index Series in the
specified aggregations are made in portfolio securities, plus or minus a
specified amount of cash, and minus a specified redemption transaction fee.
Shares of each Index Series may also be redeemed in the specified aggregations
for cash in the sole discretion of the Fund.
57
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
LOAN AGREEMENT
Effective August 26, 1996, each of the Index Series has entered into a Line
of Credit Agreement ("Agreement") with PNC Bank, N.A., an affiliate of the
Administrator. Under the terms of the Agreement, any of the Index Series may
request an advance of the full amount of the $5,000,000 line of credit;
provided, however, that:
(i) Total outstanding advances to all Index Series under the line of credit
may not exceed $5,000,000 and
(ii) The aggregate amount outstanding under the line of credit to any
one Index Series may not exceed the lowest of (a) $5,000,000 (b) one-quarter of
that 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
Index Series under the Act. Each Index Series shall be severally, and not
jointly, liable for its particular advances under the line. Advances made under
the line of credit are due and payable on demand and will bear interest at a
rate per annum equal to the sum of the Federal Funds Rate plus 1%. The interest
rate at August 31, 1996 is 6.375%. The following Index Series had advances on
the line of credit outstanding at August 31, 1996:
Australia Index Series $ 30,000
Belgium Index Series $ 35,000
France Index Series $105,000
Sweden Index Series $ 60,000
United Kingdom Index Series $105,000
Average borrowings under the line of credit did not exceed 10% of net
assets of any of the above Index Series during the period ended August 31, 1996.
PORTFOLIO ACTIVITY
The Index Series' purchases and sales of securities (excluding in-kind
transactions), other than short-term obligations, were as follows, for the
period ended August 31, 1996:
<TABLE>
<CAPTION>
PURCHASES OF SALES OF
INDEX SERIES SECURITIES SECURITIES
------------ ------------- ----------
<S> <C> <C>
Australia Index Series $ 766,594 $ 845,975
Austria Index Series $ 769,158 $ 811,984
Belgium Index Series $ 105,993 $ 107,302
Canada Index Series -- $ 61,202
France Index Series -- $ 59,684
Germany Index Series -- $ 14,044
Hong Kong Index Series -- $ 3,153
Italy Index Series $ 4,305,861 $ 4,551,484
Japan Index Series $18,776,247 $18,832,323
Malaysia Index Series -- $ 12,961
Mexico (Free) Index Series -- --
Netherlands Index Series $ 192,484 $ 337,768
Singapore (Free) Index Series $ 1,883,628 $ 2,024,777
Spain Index Series $ 230,547 $ 387,512
Sweden Index Series $ 218,165 $ 219,331
Switzerland Index Series $ 1,155,234 $ 1,205,759
United Kingdom Index Series -- $ 987
</TABLE>
58
<PAGE>
FOREIGN FUND, INC.
================================================================================
FOREIGN INCOME TAXES
For the period ended August 31, 1996, each Index Series' net foreign
withholding taxes deducted from foreign dividends received were as follows:
FOREIGN
WITHOLDING
INDEX SERIES TAX
------------- ------------
Australia Index Series $ 2,788
Austria Index Series $10,470
Belgium Index Series $10,516
Canada Index Series $20,684
France Index Series $43,823
Germany Index Series $17,224
Hong Kong Index Series --
Italy Index Series $78,209
Japan Index Series $19,933
Malaysia Index Series $11,813
Mexico (Free) Index Series --
Netherlands Index Series $15,732
Singapore (Free) Index Series --
Spain Index Series $14,641
Sweden Index Series $13,875
Switzerland Index Series $17,211
United Kingdom Index Series $46,773
MARKET AND PORTFOLIO RISKS
An investment in the WEBS of an 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 an Index
Series; higher transaction and custody costs; delays in settlement; difficulties
in enforcing contractual obligations; less liquidity and smaller market
capitalization of most non-U.S. securities markets; lower levels of regulation
of the securities markets; different accounting, disclosure and reporting
requirements; more substantial government involvement in the economy; higher
rates of inflation; greater social, economic, and political uncertainty and the
risk of nationalization or expropriation of assets and risk of war.
Each Index Series has a policy to concentrate its investments in an
industry or industries if, and to the extent that, its benchmark index
concentrates in such industry or industries, except where the concentration of
the relevant index is the result of a single stock. As a result of this policy,
an Index Series will maintain at least 25% of the value of its assets in
securities of issuers in each industry for which its benchmark index has a
concentration of more than 25% (except where the concentration of the index is
the result of a single stock).
The stocks of particular issuers, or of issuers in particular industries,
may dominate the benchmark indices of certain Index Series and, consequently,
the investment portfolios of such Index Series may adversely affect the
peformance of such Index Series or subject such Index Series to greater price
volatility than that experienced by more diversified investment companies.
59
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
- --------------------------------------------------------------------------------
FEDERAL TAXATION NOTICE (UNAUDITED)
The Index Series paid the following foreign taxes during the period ended
August 31, 1996 which they intend to pass through to their shareholders pursuant
to Section 853 of the Internal Revenue Code. In addition, each of the Index
Series earned the following foreign source income:
<TABLE>
<CAPTION>
FOREIGN SOURCE
INDEX SERIES INCOME FOREIGN TAXES
------------ --------------- --------------
<S> <C> <C>
Australia Index Series $187,440 $ 2,788
Austria Index Series $ 94,938 $10,470
Belgium Index Series $ 81,098 $10,516
Canada Index Series $133,921 $20,684
France Index Series $293,728 $43,823
Germany Index Series $172,663 $17,224
Hong Kong Index Series $115,449 --
Italy Index Series $608,313 $78,209
Japan Index Series $152,061 $19,933
Malaysia Index Series $ 46,684 $11,813
Mexico (Free) Index Series $ 35,713 --
Netherlands Index Series $105,055 $15,732
Singapore (Free) Index Series $ 70,836 --
Spain Index Series $ 98,474 $14,641
Sweden Index Series $118,888 $13,875
Switzerland Index Series $114,880 $17,211
United Kingdom Index Series $353,748 $46,773
</TABLE>
Shareholders will receive more detailed information along with Form 1099-DIV in
January 1997.
60
<PAGE>
REPORT OF INDEPENDENT AUDITORS FOREIGN FUND, INC.
================================================================================
Shareholders and Board of Directors
Foreign Fund, Inc.
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Foreign Fund, Inc. (comprising the
Australia Index Series, the Austria Index Series, the Belgium Index Series, the
Canada Index Series, the France Index Series, the Germany Index Series, the Hong
Kong Index Series, the Italy Index Series, the Japan Index Series, the Malaysia
Index Series, the Mexico (Free) Index Series,the Netherlands Index Series, the
Singapore (Free) Index Series, the Spain Index Series, the Sweden Index Series,
the Switzerland Index Series, and the United Kingdom Index Series)
(collectively, the "Fund") as of August 31, 1996, and the related statements of
operations and changes in net assets and financial highlights for the period
fromMarch 12, 1996 (commencement of operations) to August 31, 1996. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements.Our procedures included confirmation of securities owned as of August
31, 1996 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the Index Series comprising Foreign Fund, Inc. at August 31, 1996, and
the results of their operations, the changes in their net assets and the
financial highlights for the period from March 12, 1996 to August 31, 1996, in
conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
New York, New York
October 14, 1996
61
<PAGE>
FOREIGN FUND, INC.
INVESTMENT ADVISER
BARCLAYS GLOBAL FUND ADVISORS
ADMINISTRATOR
PFPC INC.
DISTRIBUTOR
FUNDS DISTRIBUTOR INC.
TRANSFER AGENT
PNC BANK, N.A.
CUSTODIAN
MORGAN STANLEY TRUST CO.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
