SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WEBS INDEX FUND, INC.
__________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
__________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
__________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
__________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
___________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
___________________________________________________________________________
(5) Total fee paid:
___________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
___________________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
___________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
(3) Filing Party:
___________________________________________________________________________
(4) Date Filed:
__________________________________________________________________________
Preliminary Copy
________________
WEBS INDEX FUND, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
August __, 1998
To the Shareholders of WEBS Index Fund, Inc.:
A special meeting of the shareholders of WEBS Index Fund, Inc. (the
"Fund") will be held on October 2, 1998 at 10:00 a.m. (Eastern Time) in the
offices of the Fund's administrator and fund accounting agent, PFPC Inc.,
at 400 Bellevue Parkway, Wilmington, Delaware 19809, for the following
purposes:
(1) to approve or disapprove a change of each WEBS Index Series'
concentration policy; and
(2) to transact such other business as may properly come before the
special meeting or any adjournment thereof.
The proposal referred to above is discussed in the Proxy Statement
attached to this Notice. Each shareholder is invited to attend the special
meeting in person. Shareholders of record at the close of business on
August 17, 1998 have the right to vote at the special meeting. IF YOU
CANNOT BE PRESENT AT THE SPECIAL MEETING, WE URGE YOU TO FILL IN, SIGN AND
PROMPTLY RETURN THE ENCLOSED PROXY IN ORDER THAT THE SPECIAL MEETING MAY BE
HELD AND A MAXIMUM NUMBER OF SHARES MAY BE VOTED.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE
ASK THAT YOU MAIL YOUR PROXY PROMPTLY NO MATTER HOW MANY SHARES YOU OWN.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR
OF THE PROPOSAL.
By Order of the Board of Directors
R. Sheldon Johnson
Secretary
YOUR VOTE IS IMPORTANT.
Preliminary Copy
________________
WEBS INDEX FUND, INC.
c/o PFPC Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
(800) 810-WEBS (9327)
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of WEBS Index Fund, Inc. (the "Fund")
for use at the Fund's special meeting of shareholders to be held in the
offices of the Fund's administrator and fund accounting agent, PFPC Inc., at
400 Bellevue Parkway, Wilmington, Delaware 19809, on October 2, 1998 at
10:00 a.m. (Eastern Time). Such special meeting and any adjournment thereof
are hereinafter collectively referred to as the "Meeting." Each WEBS Index
Series' shares are hereinafter referred to as "Shares."
It is expected that the solicitation of proxies will be primarily by
mail. The Fund's officers and service contractors may also solicit proxies
by telephone, telegraph, facsimile or personal interview. The Fund will
bear all proxy solicitation costs. Any shareholder giving a proxy may
revoke it at any time before it is exercised by submitting to the Fund a
written notice of revocation or a subsequently executed proxy or by
attending the Meeting and electing to vote in person. This Proxy Statement
and the enclosed form of proxy (the "Proxy") are expected to be distributed
to shareholders of each WEBS Index Series on or about August __, 1998.
A Proxy is enclosed with respect to your Shares. The Proxy should be
completed in full. Each Share is entitled to one vote.
If a Proxy is executed properly and returned, the Shares represented by
it will be voted at the Meeting in accordance with the instructions thereon.
If you do not expect to be present at the Meeting and wish your Shares to be
voted, please date and sign the enclosed Proxy and mail it in the enclosed
reply envelope.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT ANNUAL
REPORT TO SHAREHOLDERS TO ANY SHAREHOLDER UPON REQUEST. THE FUND'S ANNUAL
REPORT TO SHAREHOLDERS MAY BE OBTAINED FROM THE FUND BY SENDING A WRITTEN
REQUEST TO THE FUND AT THE ADDRESS PROVIDED ABOVE, OR BY CALLING THE
TOLL-FREE NUMBER PROVIDED ABOVE.
PROPOSAL 1:
APPROVAL OF A CHANGE IN THE FUND'S CONCENTRATION POLICY
(Each WEBS Index Series Voting Separately)
Each WEBS Index Series of the Fund has a common concentration policy
that governs when a WEBS Index Series will invest more than 25% of its
assets in securities of an industry or industries. This policy cannot be
changed without a vote of the shareholders of the Fund. The Board of
Directors has approved, and recommends for your approval, changes to the
concentration policy of each WEBS Index Series in order to alleviate the
burdens imposed by the current policy and to improve the WEBS Index Series'
ability to achieve their investment objectives.
Each WEBS Index Series currently has a policy to concentrate its
investments (that is, invest more than 25% of the value of its assets) in
securities of issuers in an industry or industries if, and to the extent
that, its benchmark index concentrates in the industry or industries, except
when the concentration of the relevant benchmark index is the result of a
single stock. As a result of this policy, each WEBS Index Series currently
is required to maintain at least 25% of the value of its assets in
securities of issuers in each industry where its benchmark index has a
concentration of more than 25%, except when the concentration of the index
is the result of a single stock. If the benchmark index for a WEBS Index
Series has an industry concentration of more than 25% because of a single
stock, the WEBS Index Series currently invests less than 25% of its assets
in such stock and reallocates the excess to stocks in other industries.
The current concentration policy was designed to deal with the fact
that industry concentrations in the benchmark indices of the WEBS Index
Series change from time to time, and that since the WEBS Index Series are
index funds, their concentration policies must permit changes in
concentration as the concentration of the benchmark indices change. The
special provision for situations where a benchmark index is concentrated
because of a single stock reflects a limitation imposed by the Internal
Revenue Code, which generally prevents a WEBS Index Series from investing
more than 25% of its total assets in the securities of any single issuer.
As a result of the stock selection technique utilized by the Fund's
investment adviser, and the need to comply with applicable regulatory
requirements (particularly the diversification requirements of the Internal
Revenue Code), the proportions of securities in the portfolio of a WEBS
Index Series do not correspond to the proportions of securities in the
relevant benchmark index. Instead, the WEBS Index Series typically hold a
portion of the securities in the relevant benchmark index, and some WEBS
Index Series (the Australia, Belgium, Hong Kong, Mexico (Free),
Netherlands, Spain, Sweden and Switzerland WEBS Index Series) may hold
stocks that are not in the benchmark index at all. Changes in
concentration of a benchmark index are not necessarily "automatically"
reflected in the concentration of a WEBS Index Series, because changes in
the market prices of securities held by a WEBS Index Series may impact that
WEBS Index Series differently than its benchmark index. Consequently, a
benchmark index may become concentrated in an industry or group of
industries at a time when the WEBS Index Series, despite maintaining an
optimized portfolio that is designed to best achieve its investment
objective, does not become so concentrated, and vice versa.
The current concentration policy raises portfolio management issues,
particularly when the benchmark index of a WEBS Index Series includes
securities of an industry or group of industries that comprise in the range
of 23% and 27% of the index (currently the situation with the Belgium WEBS
Index Series, Hong Kong WEBS Index Series, Italy WEBS Index Series, Mexico
(Free) WEBS Index Series, Netherlands WEBS Index Series, Singapore (Free)
WEBS Index Series and Switzerland WEBS Index Series). In these situations,
relatively small changes in the market prices of the portfolio securities
may cause the benchmark index to experience sudden and frequent "jumps"
back and forth across the 25% industry concentration threshold, which in
turn can cause sudden and frequent "disconnects" between the concentration
(or nonconcentration) of a WEBS Index Series and its benchmark index. In
order to maintain compliance with the current concentration policy in these
circumstances, the Fund's investment adviser is required to "chase" the
benchmark index back and forth across the 25% industry concentration
threshold by making repeated adjustments to the portfolio of the WEBS Index
Series. Such activity is contrary to the spirit of the Fund's investment
objective and passive indexing approach, and results in the incurrence of
transaction costs, and the realization of capital gains or losses, that
would otherwise not be incurred or realized. Increased transaction costs
due solely to the Fund's concentration policy adversely affect the WEBS
Index Series' ability to track their benchmark indices. Such activity is
also an administrative and compliance burden on the Fund and its investment
adviser.
In light of these issues, the investment adviser proposed to the Board
of Directors that the concentration policy of each WEBS Index Series be
changed to permit each WEBS Index Series greater flexibility to concentrate
or not concentrate its investments, consistent with each WEBS Index Series'
status as a passively managed index fund managed using optimization
techniques that take into account applicable tax and other requirements. The
Board of Directors has concluded that the proposed changes would be in the
best interests of the Fund and its shareholders and approved such changes
and now recommends them to shareholders for their approval. While to date
the Fund's concentration policy has resulted in portfolio management issues
for only the Austria WEBS Index Series, Belgium WEBS Index Series, Hong
Kong WEBS Index Series, Italy WEBS Index Series, Netherlands WEBS Index
Series, Spain WEBS Index Series, Sweden WEBS Index Series and Switzerland
WEBS Index Series, the Directors approved the change for all WEBS Index
Series, on the theory that similar issues may arise for different WEBS
Index Series in the future and that a consistent approach across all of
the WEBS Index Series is in the best interests of the Fund.
The proposed new concentration policy for each WEBS Index Series is
as follows:
Consistent with its investment objective and other investment
policies, each WEBS Index Series may invest more than 25% of the value
of its net assets (i.e., it may concentrate) in stocks of an industry
or group of industries, subject to applicable tax and other
requirements, including the diversification requirements of the
Internal Revenue Code.
The proposed concentration policy would allow each WEBS Index Series
sufficient flexibility to avoid the burdensome and potentially expensive
activity of having to "chase" the concentration or nonconcentration of a
benchmark index back and forth across the 25% industry concentration
threshold solely because of the concentration policy. This concentration
policy would also give each WEBS Index Series greater flexibility to seek
its investment objective in light of the legal and regulatory
requirements applicable to each WEBS Index Series. For example, in order
to comply with the diversification requirements in the Internal Revenue
Code, if as a result of the WEBS Index Series' indexing investment
approach its investment in the stock of a single issuer (but for such
diversification requirements) would account for more than 25% of a WEBS
Index Series, the WEBS Index Series will invest less than 25% of its net
assets in such stock and may reallocate the excess to other stocks in the
same industry or group of industries and/or to stocks in other industries
in accordance with its investment objective and other investment policies.
In all cases, shareholders and prospective WEBS investors would have the
assurance that a WEBS Index Series would not take actions with respect to
concentration in a particular industry or group of industries that would
be inconsistent with its investment objective and other investment
policies.
Shareholders of each WEBS Index Series will vote separately on this
proposal. Each WEBS Index Series' change in concentration policy will
require the approval by the lesser of (i) a majority of each WEBS Index
Series' outstanding shares on August 17, 1998, or (ii) 67% of the shares
voted, so long as more than 50% of the outstanding shares actually vote.
In the event that Proposal 1 does not receive the affirmative vote of the
holders of a majority of the outstanding Shares of each WEBS Index Series,
the Board of Directors will consider other actions that may be taken,
including such proposals as may be recommended by the Fund's investment
adviser and counsel.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSED
CHANGE IN THE CONCENTRATION POLICY.
VOTING INFORMATION
RECORD DATE. Only shareholders of record at the close of business on
August 17, 1998 will be entitled to vote at the Meeting. On that date, the
number of outstanding Shares were as follows:
WEBS Index Series Number of Shares Outstanding
Australia
Austria
Belgium
Canada
France
Germany
Hong Kong
Italy
Japan
Malaysia (Free)
Mexico (Free)
Netherlands
Singapore (Free)
Spain
Sweden
Switzerland
United Kingdom
QUORUM. In the event that a quorum is not present at the Meeting, or in
the event that a quorum is present at the Meeting but sufficient votes to
approve the proposal are not received, the persons named as proxies, or
their substitutes, may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require
the affirmative vote of a majority of those shares represented at the
Meeting in person or by proxy. If a quorum is not present, the persons
named as proxies will vote those proxies which they are entitled to vote
FOR the proposal in favor of any adjournment, and will vote those proxies
required to be voted AGAINST the proposal against any adjournment. A
quorum is constituted with respect to each WEBS Index Series by the
presence in person or by proxy of the holders of more than 50% of the
outstanding shares of each WEBS Index Series entitled to vote at the
Meeting. Shares represented by broker non-votes are treated as being
present for purposes of determining a quorum. A vote cast does not include
an abstention or the failure to vote for or against either proposal.
Therefore, for purposes of determining the affirmative vote of a "majority
of the outstanding shares," an abstention or the failure to vote, including
a broker non-vote, will be the equivalent of a vote against the proposal.
ANNUAL MEETINGS. Consistent with its By-Laws and Maryland law, the Fund
does not presently intend to hold annual meetings of shareholders except as
required by the 1940 Act or other applicable law.
OTHER SHAREHOLDER INFORMATION
On August 17, 1998, the name, address and share ownership of each
person who owned of record 5% or more of the outstanding shares of each
WEBS Index Series are listed in the following table:
[INSERT 5% SHAREHOLDER TABLE]
As of August 17, 1998, the Directors and Officers of the Fund owned
less than 1% of the outstanding Shares of the Fund.
INFORMATION ABOUT THE ADVISER, ADMINISTRATOR, SUB-ADMINISTRATOR AND
DISTRIBUTOR
Barclays Global Fund Advisors (the "Adviser") serves as the Fund's
investment adviser. The Adviser is located at 45 Fremont Street, San
Francisco, California 94105.
PFPC Inc. (the "Administrator") serves as the Fund's administrator and
fund accounting agent. The Administrator is located at 400 Bellevue
Parkway, Wilmington, Delaware 19809.
Morgan Stanley Trust Company (the "Sub-Administrator") serves as the
Fund's sub-administrator. The Sub-Administrator is located at 1 Pierrepont
Plaza, 8th Floor, Brooklyn, New York 11201.
Funds Distributor Inc. (the "Distributor") serves as the Fund's
distributor. The Distributor is located at 60 State Street, Suite 1300,
Boston, Massachusetts 02109.
SHAREHOLDER PROPOSALS
A shareholder proposal intended to be represented at any meeting
hereafter called must be received by the Fund within a reasonable time
before the solicitation relating thereto is made in order to be included
in the notice of meeting, proxy statement and form of proxy relating to
such meeting. As noted above, it is not anticipated that shareholder
meetings will be held on an annual basis. The submission by a shareholder
of a proposal for inclusion in the proxy statement does not guarantee that
it will be included. Shareholder proposals are subject to certain
regulations under federal law.
OTHER MATTERS
No business other than the matter described above is expected to come
before the Meeting with respect to the Fund. Should any other matter
requiring a vote of shareholders arise, including any question as to an
adjournment of the Meeting, the persons named in the enclosed Proxy will
vote thereon according to their best judgment in the interests of the Fund.
Dated: August __, 1998
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
Preliminary Copy
_______________
FORM OF PROXY
VOTE THIS PROXY CARD TODAY!
WEBS INDEX FUND, INC.
WILMINGTON, DELAWARE 19809
This proxy is solicited by the Board of Directors of Webs Index Fund, Inc.
(the "Fund") for use at a special meeting of shareholders of the Fund to be
held on October 2, 1998 at 10:00 a.m. (Eastern Time) in the offices of the
Fund's administrator and accounting agent, PFPC Inc., At 400 Bellevue
Parkway, Wilmington, Delaware 19809.
Please fold and detach card at perforation before mailing.
...........................................................................
WEBS INDEX FUND, INC.
The undersigned hereby appoints R. Sheldon Johnson, Gary M. Gardner and
Mary Jane Maloney, and each of them, attorneys and proxies of the
undersigned each with the power of substitution and resubstitution, to
attend, vote and act for the undersigned at the above-referenced Special
Meeting of Shareholders, and at any adjournment or adjournments thereof,
casting votes according to the number of shares of the WEBS Index Series
indicated on the reverse side of this proxy which the undersigned may be
entitled to vote with respect to the proposal set forth on the reverse
side, in accordance with the specification indicated, if any, and with all
the powers which the undersigned would possess if personally present,
hereby revoking any prior proxy to vote at such Special Meeting, and hereby
ratifying and confirming all that said attorneys and proxies, or each of
them, may lawfully do by virtue hereof. PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL
MEETING OF SHAREHOLDERS OF THE FUND AND THE PROXY STATEMENT DATED
AUGUST __, 1998.
____________________________________________________________/____/98
Signature Title (if applicable) Date
____________________________________________________________/____/98
Signature Title (if applicable) Date
Please sign above exactly as name(s) appear(s) hereon. Corporate or
partnership proxies should be signed in full corporate or partnership name
by an authorized officer. Each joint owner should sign personally. When
signing as a fiduciary, please give full title as such.
FORM OF PROXY
Please fold and detach card at perforation before mailing.
...........................................................................
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW USING BLUE OR BLACK
INK. DO NOT USE RED INK OR PENCIL.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
This proxy will be voted as specified below with respect to the action to
be taken on the following proposal. In the absence of any specification,
this proxy will be voted in favor of the proposal.
PROPOSAL FOR AGAINST ABSTAIN SHARES VOTED
To approve or disapprove a change
of the concentration policy of the
WEBS Index Fund, Inc.
Australia WEBS Index Series [ ] [ ] [ ] _________________
Austria WEBS Index Series [ ] [ ] [ ] _________________
Belgium WEBS Index Series [ ] [ ] [ ] _________________
Canada WEBS Index Series [ ] [ ] [ ] _________________
France WEBS Index Series [ ] [ ] [ ] _________________
Germany WEBS Index Series [ ] [ ] [ ] _________________
Hong Kong WEBS Index Series [ ] [ ] [ ] _________________
Italy WEBS Index Series [ ] [ ] [ ] _________________
Japan WEBS Index Series [ ] [ ] [ ] _________________
Malaysia (Free) WEBS Index Series [ ] [ ] [ ] _________________
Mexico (Free) WEBS Index Series [ ] [ ] [ ] _________________
Netherlands WEBS Index Series [ ] [ ] [ ] _________________
Singapore (Free) WEBS Index Series[ ] [ ] [ ] _________________
Spain WEBS Index Series [ ] [ ] [ ] _________________
Sweden WEBS Index Series [ ] [ ] [ ] _________________
Switzerland WEBS Index Series [ ] [ ] [ ] _________________
United Kingdom WEBS Index Series [ ] [ ] [ ] _________________
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Special Meeting or any adjournment
thereof.
SULLIVAN & CROMWELL
1701 Pennsylvania Ave., N.W.
Washington, D.C. 20006-5805
August 10, 1998
VIA EDGAR
Securities and Exchange Commision,
Judiciary Plaza,
450 Fifth Street, NW,
Washington, D.C. 20549.
Re: WEBS Index Fund, Inc. (the "Fund"):
Preliminary Proxy Statement
Ladies and Gentlemen:
On behalf of the Fund, we hereby transmit for filing pursuant to the
Securities Exchange Act of 1934 (the "1934 Act") and the Investment
Company Act of 1940 (the "1940 Act"), as amended, the preliminary notice
of meeting, the preliminary proxy statement (the "Preliminary Proxy
Statement") and the form of proxy card relating to a special meeting of
shareholders of the Fund.
The purpose of the special meeting of shareholders is to approve or
disapprove a change to the concentration policy of each WEBS Index Series.
The Board of Directors of the Fund has approved amendments to the
concentration policy of each WEBS Index Series in order to afford each WEBS
Index Series greater flexibility to concentrate or not concentrate its
investments, consistent with its status as an index fund managed using
optimization techniques and with applicable tax and other requirements.
As described in detail in the Preliminary Proxy Statement, the Directors
believe that the proposed concentration policy would (i) allow a WEBS Index
Series sufficient flexibility to avoid the burdensome and potentially
expensive activity of having to "chase" the concentration or
nonconcentration of a benchmark index back and forth across the 25%
concentration threshold solely as a result of the concentration policy;
and (ii) provide WEBS investors with assurance that a WEBS Index Series
will not take actions with respect to concentration in a particular
industry or group of industries that would be inconsistent with its
investment objective and other investment policies.
The Board believes that the proposed changes to the Fund's
concentration policy are in the best interests of the Fund and its
shareholders and that the current concentration policy (which was designed
to comply with recently rescinded Guide 19 to Form N-1A) is unduly
restrictive. In light of the fact that each WEBS Index Series is an "index"
fund, the Fund is of the view that the proposed concentration policy is not
inconsistent with Sections 8(b)(1) and 13(a)(3) of the 1940 Act.
Any questions or comments concerning this filing may be directed to
the undersigned at (202) 956-7550.
Sincerely yours,
/s/ Paul J. McElroy
Paul J. McElroy
(Enclosure)
