WORLD EQUITY BENCHMARK SHARESSM
WEBS INDEX FUND, INC.
WEBS Index Fund, Inc. is an index fund consisting of separate series, each of
which seeks investment results similar to the performance of a single stock
market or all of the stock markets in a geographic region.
Australia WEBS Index Series Malaysia (Free) WEBS Index Series
Austria WEBS Index Series Mexico (Free) WEBS Index Series
Belgium WEBS Index Series Netherlands WEBS Index Series
Brazil (Free) WEBS Index Series Singapore (Free) WEBS Index Series
Canada WEBS Index Series South Africa WEBS Index Series
EMU WEBS Index Series Spain WEBS Index Series
France WEBS Index Series Sweden WEBS Index Series
Germany WEBS Index Series Switzerland WEBS Index Series
Hong Kong WEBS Index Series Taiwan WEBS Index Series
Italy WEBS Index Series United Kingdom WEBS Index Series
Japan WEBS Index Series USA WEBS Index Series
Korea WEBS Index Series
The WEBS Index Series Shares, known as "World Equity Benchmark SharesSM" or
"WEBSSM", are listed for trading on the American Stock Exchange LLC. Individual
WEBS are not redeemable at their net asset value, but trade on the AMEX during
the day at prices that are normally close to, but not the same as, their net
asset value. There is no assurance that an active trading market will be
maintained for WEBS or that market prices of WEBS of any WEBS Index Series will
be close to their net asset values in the future. Each WEBS Index Series issues
and redeems WEBS on a continuous basis -- at net asset value -- only in large
specified numbers of WEBS called "Creation Units", usually in exchange for a
basket of portfolio securities and an amount of cash. Except when aggregated in
Creation Units, WEBS are not redeemable securities.
The WEBS of the Brazil (Free), EMU, Korea, Taiwan, South Africa, and USA WEBS
Index Series are not listed on the AMEX and are not being offered for sale as of
the date of this prospectus. This prospectus will be supplemented when one or
more of these WEBS Index Series commences operations.
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the SEC determined whether the information in this
prospectus is accurate or complete. Anyone who tells you otherwise is committing
a crime.
PROSPECTUS
DECEMBER 30, 1999
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<S> <C>
TABLE OF CONTENTS
INTRODUCTION.............................................................3
INVESTMENT OBJECTIVE.....................................................3
PRINCIPAL INVESTMENT STRATEGIES..........................................3
PRINCIPAL RISK FACTORS...................................................4
FEES AND EXPENSES........................................................5
Details on each WEBS Index Series' THE WEBS INDEX SERIES
market, benchmark index and
performance
Australia WEBS Index Series...........................................7
Austria WEBS Index Series.............................................8
Belgium WEBS Index Series.............................................9
Brazil (Free) WEBS Index Series......................................10
Canada WEBS Index Series.............................................11
EMU WEBS Index Series................................................12
France WEBS Index Series.............................................13
Germany WEBS Index Series............................................14
Hong Kong WEBS Index Series..........................................15
Italy WEBS Index Series..............................................16
Japan WEBS Index Series..............................................17
Korea WEBS Index Series..............................................18
Malaysia (Free) WEBS Index Series....................................19
Mexico (Free) WEBS Index Series......................................20
Netherlands WEBS Index Series........................................21
Singapore (Free) WEBS Index Series...................................22
South Africa WEBS Index Series.......................................23
Spain WEBS Index Series..............................................24
Sweden WEBS Index Series.............................................25
Switzerland WEBS Index Series........................................26
Taiwan WEBS Index Series.............................................27
United Kingdom WEBS Index Series.....................................28
USA WEBS Index Series................................................29
INVESTMENT POLICIES AND STRATEGIES......................................30
ADDITIONAL RISK CONSIDERATIONS..........................................32
Details on the management and MANAGEMENT
operations of the WEBS Index Series
Investment Adviser...................................................35
Service Provider Chart...............................................36
Details on buying and selling WEBS SHAREHOLDER INFORMATION
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<TABLE>
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Determination of Net Asset Value.....................................37
Buying and Selling WEBS..............................................37
Dividends and Capital Gains Distributions............................38
Tax Matters..........................................................38
Details on the Rule 12b-1 DISTRIBUTION ARRANGEMENTS...............................................39
Distribution Plan
Per share financial data for each FINANCIAL HIGHLIGHTS....................................................40
WEBS Index Series
</TABLE>
3
<PAGE>
INTRODUCTION
This Prospectus provides you with information you need to make an informed
decision about whether to invest in a WEBS Index Series of the WEBS Fund. It is
organized to provide you with important facts about the WEBS Fund as a whole and
each particular WEBS Index Series. The Investment Objective, Principal
Investment Strategies and Principal Risk Factors sections discuss the general
strategies and risks applicable to all WEBS Index Series, while the WEBS Index
Series section provides important information about each particular WEBS Index
Series, including a brief description of its benchmark index, specific risks
associated with a particular market or region and prior performance.
INVESTMENT OBJECTIVE
Each WEBS Index Series seeks investment results similar to the performance of a
single stock market or all of the stock markets in a geographic region. The
performance of these markets is measured by stock indices compiled by Morgan
Stanley Capital International Inc. ("MSCI"), and calculated based on the
reinvestment of net dividends (gross dividends in the case of the MSCI Mexico
(Free) Index).
PRINCIPAL INVESTMENT STRATEGIES
Unlike many investment companies, a WEBS Index Series does not attempt to "beat"
the market or its benchmark index. Instead, it uses a "passive," or indexing,
investment approach to try to produce investment results that come as close as
possible to matching the performance of its benchmark index. The WEBS Index
Series do this by investing in a representative sample of index stocks that the
investment adviser selects using a "portfolio sampling" technique. However, most
WEBS Index Series don't usually invest in all of the stocks of a benchmark
index. Some WEBS Index Series may even invest in stocks that are not in its
benchmark index. The benchmark indices used by the WEBS Index Series are
compiled by MSCI.
The use of an indexing approach may eliminate some of the risks of active
management such as poor stock selection. An indexing approach may also help
increase after-tax performance by keeping portfolio turnover low in comparison
to actively managed investment companies.
One negative feature of indexing is that the WEBS Fund's investment adviser
can't change a strategy even if it would be beneficial to do so. For example, a
WEBS Index Series would not ordinarily sell a stock because its issuer was in
financial trouble. It would normally only sell a stock if the stock was removed
from a WEBS Index Series' benchmark index by MSCI or if the investment adviser
believes that selling the stock would make a WEBS Index Series' performance more
like that of its benchmark index.
Under each WEBS Index Series' industry concentration policy, the industry
weightings in a WEBS Index Series must be within 10% of the weightings of the
two most heavily weighted industries in its benchmark index.
WEBS are designed for investors who want a relatively inexpensive passive
approach to investing in a portfolio of stocks from a single country or region.
International diversification is a generally recognized way to reduce investment
portfolio risk. Also, many of the foreign stocks in WEBS Index Series, other
than the USA WEBS Index Series, are difficult to purchase or hold, or are, as a
practical matter, not available to retail investors.
WEBS Index Series offers investors a convenient way to obtain index-based
exposure to the stock markets of a specific country or region. The prices of
WEBS may be volatile. Therefore, if you purchase WEBS, you should be able to
tolerate sudden, or even drastic, changes in the value of your investment. We
can not assure that any WEBS Index Series will achieve its investment objective,
and you should understand that your investment, other than an investment in the
USA WEBS Index Series, will be exposed to the risks of international equity
investing.
Each WEBS Index Series issues and redeems WEBS on a continuous basis - at net
asset value - only in large specified numbers of WEBS called "Creation Units"
usually in exchange for a basket of portfolio securities and an amount of cash.
As a practical matter, only large institutions purchase or redeem Creation Units
of WEBS. Information about the fees paid when they do this is included in the
Statement of Additional Information. Except when aggregated in Creation Units,
WEBS are not redeemable securities.
4
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PRINCIPAL RISK FACTORS
You may lose money by investing in a WEBS Index Series. Each WEBS Index Series
is also subject to the following principal risks, more fully described in the
Additional Risk Considerations section in this prospectus. Additional risks
associated with a particular market or region in which a WEBS Index Series
invests are discussed under each WEBS Index Series' profile in The WEBS Index
Series section. Some or all of these risks may adversely affect a WEBS Index
Series' net asset value, yield, total return and/or its ability to achieve its
objective:
|X| Market Risk. The net asset value of a WEBS Index Series will change with
changes in the market value of the stocks it holds.
|X| Foreign Security Risk. Each WEBS Index Series (except for the USA WEBS
Index Series) invests entirely within the equity markets of a single
country or region. These markets are subject to special risks associated
with foreign investment including, but not limited to: generally less
liquid and less efficient securities markets; generally greater price
volatility; exchange rate fluctuations and exchange controls; less publicly
available information about issuers; the imposition of taxes; exchange
controls; higher transaction and custody costs; settlement delays and risk
of loss; difficulties in enforcing contracts; less liquidity and smaller
market capitalizations; lesser regulation of securities markets; different
accounting and disclosure standards; governmental interference; higher
inflation; and social, economic and political uncertainties and the risk of
expropriation of assets.
|X| Management Risk. Because a WEBS Index Series does not fully replicate its
benchmark index and may hold non-index stocks, it is subject to management
risk. This is the risk that the investment advisor's strategy, the
implementation of which is subject to a number of constraints, may not
produce the intended results.
|X| Currency Risk. Because each WEBS Index Series' net asset value is
determined on the basis of U.S. dollars, you may lose money if the local
currency of a foreign market depreciates against the U.S. dollar, even if
the local currency value of a WEBS Index Series' holdings goes up.
|X| Emerging Market Risk. Some foreign markets in which WEBS Index Series
invest are considered to be emerging market countries. Investment in these
countries subjects a WEBS Index Series to a greater risk of loss than
investments in a developed country. This is due to, among other things,
greater market volatility, lower trading volume, political and economic
instability, greater risk of market shut down and more governmental
limitations on foreign investment policy than those typically found in a
developed market. The following WEBS Index Series invest in emerging
markets: Brazil (Free), Korea, Malaysia (Free), Mexico (Free), South Africa
and Taiwan WEBS Index Series.
|X| Non-Diversification Risk. Each WEBS Index Series (except for the EMU,
Canada, Japan, United Kingdom and USA WEBS Index Series) is classified as
"non-diversified." This means that these WEBS Index Series may invest most
of their assets in securities issued by a small number of companies. As a
result, these WEBS Index Series are more susceptible to the risks
associated with these particular companies, or to a single economic,
political or regulatory occurrence.
|X| Trading Risk. While the creation/redemption feature of WEBS is designed to
make it likely that WEBS will trade close to their net asset value,
disruptions to creations and redemptions (as has occurred because of
Malaysia's capital controls) may result in trading prices that differ
significantly from net asset value. Also, there can be no assurance that an
active trading market will exist for WEBS of each series on the AMEX.
|X| Year 2000. Computer system failures at the WEBS Fund's service providers
could have a negative impact on the WEBS Fund and each WEBS Index Series'
operations, including the handling of securities trades, pricing and
shareholder transactions. The Year 2000 problem could also adversely affect
many of the companies whose stocks are held by the various WEBS Index
Series.
5
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FEES AND EXPENSES
If you invest in a WEBS Index Series, you will pay various expenses, either
directly or indirectly. The following tables and examples describe the fees and
expenses that you may pay if you buy and hold WEBS of a WEBS Index Series.
Shareholder Transaction Fees (fees paid directly from your investment). When
buying or selling WEBS of a WEBS Index Series through a broker, you will incur
customary brokerage commissions and charges.
Annual Series Operating Expenses (expenses that are deducted from the Series'
assets). For the WEBS Index Series that have commenced investment operations,
total annual Series operating expenses are based on actual expenses accrued by
those Series for the fiscal year ended August 31, 1999.
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<CAPTION>
Brazil
WEBS Index Series Australia Austria Belgium (Free)* Canada EMU*
- --------------------------------------- ------------ ------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Management fees....................... 0.27% 0.27% 0.27% 0.50% 0.27% 0.27%
Distribution (Rule 12b-1) fees........ 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
Other expenses........................ 0.53% 0.84% 0.77% 0.79% 0.76% 0.64%
----- ----- ----- ----- ----- -----
Total annual Series operating expenses 1.00% 1.31% 1.24% 1.49% 1.23% 1.11%
===== ===== ===== ===== ===== =====
</TABLE>
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<CAPTION>
Hong
WEBS Index Series France Germany Kong Italy
- --------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Management fees....................... 0.27% 0.27% 0.27% 0.27%
Distribution (Rule 12b-1) fees........ 0.20% 0.20% 0.20% 0.20%
Other expenses........................ 0.59% 0.53% 0.54% 0.56%
----- ----- ----- -----
Total annual Series operating expenses 1.06% 1.00% 1.01% 1.03%
===== ===== ===== =====
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<CAPTION>
Malaysia Mexico
WEBS Index Series Japan Korea* (Free) (Free) Netherlands
- --------------------------------------- ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Management fees....................... 0.27% 0.50% 0.27% 0.27% 0.27%
Distribution (Rule 12b-1) fees........ 0.20% 0.20% 0.20% 0.20% 0.20%
Other expenses........................ 0.47% 0.64% 0.96% 0.79% 0.60%
----- ----- ----- ----- -----
Total annual Series operating expenses 0.94% 1.34% 1.43% 1.26% 1.07%
===== ===== ===== ===== =====
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Singapore South
WEBS Index Series (Free) Africa* Spain Sweden Switzerland Taiwan*
- --------------------------------------- ------------ ------------ ---------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Management fees....................... 0.27% 0.50% 0.27% 0.27% 0.27% 0.50%
Distribution (Rule 12b-1) fees........ 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
Other expenses........................ 0.50% 0.57% 0.57% 0.66% 0.62% 0.78%
----- ----- ----- ----- ----- -----
Total annual Series operating expenses 0.97% 1.27% 1.04% 1.13% 1.09% 1.48%
===== ===== ===== ===== ===== =====
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United
WEBS Index Series Kingdom USA*
- --------------------------------------- ------------------ -------------------
<S> <C> <C>
Management fees....................... 0.27% 0.27%
Distribution (Rule 12b-1) fees........ 0.20% 0.20%
Other expenses........................ 0.50% 0.53%
----- -----
Total annual Series operating expenses 0.97% 1.00%
===== =====
</TABLE>
* As of the date of this prospectus, this Series has not started
investment operations. Therefore, these expenses are based on estimated
expenses the Series expects to incur for the current fiscal year. Fees
paid to the administrator are included in "other expenses" and are
estimated based on assumed average daily net assets of $50 million for
each of the Brazil (Free), EMU, Korea, South Africa, Taiwan and USA
WEBS Index Series.
6
<PAGE>
Example of Expenses
These examples are intended to help you compare the cost of investing in a WEBS
Index Series with the cost of investing in other mutual funds. We are assuming
an initial investment of $10,000, a 5% total return each year with no changes in
operating expenses and redemption at the end of each period. Although your
actual costs may be higher or lower, based on these assumptions, your costs
would be:
<TABLE>
<CAPTION>
WEBS Index Series 1 Year 3 Years 5 Years 10 Years
($) ($) ($) ($)
- ------------------------------ ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Australia 119.80 335.80 569.20 1,238.30
Austria 170.70 451.60 753.20 1,608.30
Belgium 174.30 440.40 726.60 1,539.90
Brazil (Free) 291.20 607.80 N/A N/A
Canada 170.20 434.30 718.30 1,525.80
EMU 108.70 323.20 N/A N/A
France 122.10 350.80 597.60 1,303.80
Germany 109.30 325.40 558.90 1,228.40
Hong Kong 188.00 405.40 640.20 1,313.20
Italy 118.10 340.50 580.60 1,268.40
Japan 113.10 316.40 536.30 1,168.20
Korea 273.90 559.60 N/A N/A
Malaysia (Free) 344.60 648.00 973.00 1,890.30
Mexico (Free) 160.00 430.50 721.30 1,547.20
Netherlands 141.90 372.50 621.30 1,332.90
Singapore (Free) 160.50 369.60 595.80 1,244.90
South Africa 186.90 459.20 N/A N/A
Spain 130.20 354.60 596.90 1,290.40
Sweden 145.00 388.30 650.50 1,398.60
Switzerland 133.40 368.40 621.80 1,235.90
Taiwan 277.90 592.70 N/A N/A
United Kingdom 122.10 331.70 558.30 1,208.60
USA 109.50 325.60 N/A N/A
</TABLE>
The above examples are for illustration purposes only and are not a
representation of the Series' actual expenses and returns, either past or
future.
7
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THE WEBS INDEX SERIES
AUSTRALIA WEBS INDEX SERIES
CUSIP: 92923H 10 3 AMEX Trading Symbol: EWA
SERIES INVESTMENT OBJECTIVE
The Australia WEBS Index Series (the "Series") seeks to provide investment
results that correspond generally to the price and yield performance of publicly
traded securities in the aggregate in the Australian market, as measured by the
MSCI Australia Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 55 stocks traded primarily on the Australian Stock
Exchange. As of August 31, 1999, the Index's three largest stocks were Telstra
Corp., National Australia Bank and Broken Hill Proprietary Co. (which comprise
12.39%, 10.37% and 8.67%, respectively, of the Index's market capitalization)
and its three largest industries were banking, broadcasting & publishing and
telecommunications (which comprise 15.61%, 13.27% and 12.39%, respectively, of
the Index's market capitalization).
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
(10.19%) 2.18%
1999 Total Return as of September 30: 9.58%
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
13.59% (12.94%)
(Quarter ended December 31, 1998) (Quarter ended December 31, 1997)
</TABLE>
Average Annual Total Returns as of 12/31/98 - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Australia Series 2.18% 1.09%
MSCI Australia Index 6.07% 2.23%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
8
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AUSTRIA WEBS INDEX SERIES
CUSIP: 92923H 20 2 AMEX Trading Symbol: EAO
SERIES INVESTMENT OBJECTIVE
The Austria WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the Austrian market, as represented by the MSCI
Austria Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 19 stocks traded primarily on the Vienna Stock Exchange.
As of August 31, 1999, the Index's three largest stocks were Bank Austria,
Verbund Oesterreich Elektrik A and OMV Ag (which comprise 25.74%, 19.79% and
11.59%, respectively, of the Index's market capitalization) and its three
largest industries were banking, utilities (electrical & gas) and energy sources
(which comprise 25.74%, 19.79% and 11.59%, respectively, of the Index's market
capitalization).
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
1.05% (1.83)%
1999 Total Return as of September 30: (10.26%)
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
12.76% (23.45%)
(Quarter ended March 31, 1998) (Quarter ended September 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns as of 12/31/98- Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Austria Series (1.83%) (1.26%)
MSCI Austria Index 0.35% 1.52%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
9
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BELGIUM WEBS INDEX SERIES
CUSIP: 92923H 30 1 AMEX Trading Symbol: EWK
SERIES INVESTMENT OBJECTIVE
The Belgium WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the Belgian market, as measured by the MSCI
Belgium Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 16 stocks traded primarily on the Brussels Stock Exchange.
As of August 31, 1999, the Index's three largest stocks were Fortis Belgium,
Electrabel and KBC Bancassurance (which comprise 22.70%, 16.80% and 15.36%,
respectively, of the Index's market capitalization) and its three largest
industries were utilities (electrical & gas), insurance and banking (which
comprise 31.13%, 22.70% and 15.36%, respectively, of the Index's market
capitalization).
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
11.84% 51.69%
1999 Total Return as of September 30: (16.88%)
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
17.78% (5.56%)
(Quarter ended December 31, 1998) (Quarter ended September 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Belgium Series 51.69% 24.45%
MSCI Belgium Index 67.75% 30.77%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
10
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BRAZIL (FREE) WEBS INDEX SERIES
CUSIP: N/A AMEX Trading Symbol: N/A
The WEBS of the Brazil (Free) WEBS Index Series are not listed on the AMEX and
are not being offered for sale to the public as of the date of this prospectus.
SERIES INVESTMENT OBJECTIVE
The Brazil (Free) WEBS Index Series (the "Series") seeks to provide investment
results that correspond generally to the price and yield performance of publicly
traded securities in the aggregate in the Brazilian market, as measured by the
MSCI Brazil (Free) Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 65 stocks traded primarily on the Bolsa de Valores de Sao
Paulo. As of August 31, 1999, the Index's three largest stocks Vale Do Rio Doce
Pna, Eletrobras On and Petrobras Pn (which comprise 12.73%, 10.41% and 8.93%,
respectively, of the Index's market capitalization) and its three largest
industries were telecommunications, utilities (electrical & gas) and metals
(steel) (which comprise 27.69%, 18.06% and 16.94%, respectively, of the Index's
market capitalization).
SERIES-SPECIFIC RISKS
In addition to the principal risk factors referred to elsewhere in this
prospectus, you should know that Brazil has in recent history experienced
substantial economic instability resulting from, among other things, periods of
very high inflation and signifigant devaluations of the Brazilian currency.
Brazil also has suffered from chronic structural public sector deficits. Such
challenges have contributed to high price volitility in the Brazilian equity
markets.
PRIOR PERFORMANCE
As of the date of this prospectus, the Brazil (Free) WEBS Index Series has not
started investment operations, and therefore no prior performance information is
available.
11
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CANADA WEBS INDEX SERIES
CUSIP: 92923H 40 0 AMEX Trading Symbol: EWC
SERIES INVESTMENT OBJECTIVE
The Canada WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the Canadian market, as measured by the MSCI
Canada Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 75 stocks traded primarily on the Toronto Stock Exchange.
As of August 31, 1999, the Index's three largest stocks were Nortel Netwks, BCE
Inc. and Seagram Co. (which comprise 16.19%, 8.82% and 6.24%, respectively, of
the Index's market capitalization) and its three largest industries were
electrical & electronics, banking and energy sources (which comprise 17.63%,
13.17% and 12.25%, respectively, of the Index's market capitalization).
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
10.91% (6.47%)
1999 Total Return as of September 30: 20.33%
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
14.39% (24.40%)
(Quarter ended December 31, 1998) (Quarter ended September 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Canada Series (6.47%) 8.48%
MSCI Canada Index (6.14%) 9.58%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
12
<PAGE>
EMU WEBS INDEX SERIES
CUSIP: N/A AMEX Trading Symbol: N/A
The WEBS of the EMU WEBS Index Series are not listed on the AMEX and are not
being offered for sale to the public as of the date of the prospectus.
SERIES INVESTMENT OBJECTIVE
The EMU WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the European Monetary Union (EMU) markets, as
measured by the MSCI EMU Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index is comprised of 332 stocks from the following ten countries: Austria,
Belgium, Finland, France, Germany, Ireland, Italy, the Netherlands, Portugal and
Spain. As of August 31, 1999, the Index's three largest stocks were Royal Dutch
Petroleum Co., Deutsche Telekom and Nokia Corp. (which comprise 4.42%, 3.61% and
3.39%, respectively, of the Index's market capitalization) and its three largest
industries were telecommunications, banking and energy sources (which comprise
14.90%, 12.72% and 10.10%, respectively, of the Index's market capitalization).
SERIES-SPECIFIC RISKS
In addition to the pricipal risk factors referred to elsewhere in this
prospectus, you should know that EMU was implemented only recently (January 1,
1999) and it is anticipated that additional countries will join the system over
time. Also, it is possible that countries may withdraw from EMU or that EMU may
be abandoned at some future time. Any change to EMU may adversely affect the
investment performance of the Series. If EMU were to be abandoned the Board of
Directors would propose a change in the investment objective of the Series or
cause its liquidation.
PRIOR PERFORMANCE
As of the date of this prospectus, the EMU WEBS Index Series has not started
investment operations, and therefore no prior performance information is
available.
13
<PAGE>
FRANCE WEBS INDEX SERIES
CUSIP: 92923H 50 9 AMEX Trading Symbol: EWQ
SERIES INVESTMENT OBJECTIVE
The France WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the French market, as measured by the MSCI France
Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 65 stocks traded primarily on the Paris Stock Exchange. As
of August 31, 1999, the Index's three largest stocks were France Telecom, Elf
Aquitaine and Total Fina (which comprise 10.07%, 6.13% and 5.70%, respectively,
of the Index's market capitalization) and its three largest industries were
health & personal care, energy sources and business & public services (which
comprise 12.07%, 11.82% and 11.32%, respectively, of the Index's market
capitalization).
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
11.47% 40.78%
1999 Total Return as of September 30: 6.81%
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
23.51% (16.16%)
(Quarter ended March 31, 1998) (Quarter ended September 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
France Series 40.78% 25.05%
MSCI France Index 41.54% 25.27%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
14
<PAGE>
GERMANY WEBS INDEX SERIES
CUSIP: 92923H 60 8 AMEX Trading Symbol: EWG
SERIES INVESTMENT OBJECTIVE
The Germany WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the German market, as measured by the MSCI
Germany Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 58 stocks traded primarily on the Frankfurt Stock
Exchange. As of August 31, 1999, the Index's three largest stocks were Deutsche
Telekom, DaimlerChrysler and Allianz (which comprise 13.88%, 9.68% and 8.23%,
respectively, of the Index's market capitalization) and its three largest
industries were telecommunications, insurance and automobiles (which comprise
21.46%, 13.46% and 12.55%, respectively, of the Index's market capitalization).
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
22.75% 28.28%
1999 Total Return as of September 30: (4.92%)
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
17.40% (15.76%)
(Quarter ended June 30, 1998) (Quarter ended September 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Germany Series 28.28% 21.40%
MSCI Germany Index 29.43% 22.90%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
15
<PAGE>
HONG KONG WEBS INDEX SERIES
CUSIP: 92923H 70 7 AMEX Trading Symbol: EWH
SERIES INVESTMENT OBJECTIVE
The Hong Kong WEBS Index Series (the "Series") seeks to provide investment
results that correspond generally to the price and yield performance of publicly
traded securities in the aggregate in the Hong Kong market, as measured by the
MSCI Hong Kong Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 33 stocks traded primarily on the Stock Exchange of Hong
Kong Limited (SEHK). As of August 31, 1999, the Index's three largest stocks
were Hutchison Whampoa, Cable &Wireless HKT and Hang Seng Bank (which comprise
19.48%, 14.01% and 11.13%, respectively, of the Index's market capitalization)
and its three largest industries were real estate, multi-industry and
telecommunications (which comprise 29.67%, 23.93% and 14.01%, respectively, of
the Index's market capitalization).
SERIES-SPECIFIC RISKS
In addition to the principal risk factors referred to elsewhere in this
prospectus, you should know that in recent times, Hong Kong's economy has been
adversely affected by the Asian economic crisis, contributing to the current
recession, Issues and uncertainties linger regarding the integration of Hong
Kong's economy with that of China, and the manner in which the Chinese
government will honor and interpret the agreement pursuant to which Hong Kong
was returned to China by the United Kingdom.
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
(26.74%) (9.21%)
1999 Total Return as of September 30: 24.65%
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
26.95% (30.12%)
(Quarter ended December 31, 1998) (Quarter ended December 31, 1997)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Hong Kong Series (9.21%) (6.86%)
MSCI Hong Kong Index (2.92%) (2.58%)
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
16
<PAGE>
ITALY WEBS INDEX SERIES
CUSIP: 92923H 80 6 AMEX Trading Symbol: EWI
SERIES INVESTMENT OBJECTIVE
The Italy WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the Italian market, as measured by the MSCI Italy
Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 52 stocks traded primarily on the Milan Stock Exchange. As
of August 31, 1999, the Index's three largest stocks were ENI, Tim Ord and
Telecom Italia Ord (which comprise 14.17%, 11.34% and 10.96%, respectively, of
the Index's market capitalization) and its three largest industries were
telecommunications, banking and insurance (which comprise 28.39%, 21.74% and
15.18%, respectively, of the Index's market capitalization).
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
35.77% 50.24%
1999 Total Return as of September 30: (11.43%)
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
34.44% (10.61%)
(Quarter ended March 31, 1998) (Quarter ended September 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Italy Series 50.24% 34.61%
MSCI Italy Index 52.52% 34.95%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
17
<PAGE>
JAPAN WEBS INDEX SERIES
CUSIP: 92923H 88 9 AMEX Trading Symbol: EWJ
SERIES INVESTMENT OBJECTIVE
The Japan WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the Japanese market, as measured by the MSCI
Japan Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 305 stocks traded primarily on the Tokyo Stock Exchange.
As of August 31, 1999, the Index's three largest stocks were NTT Corp., Toyota
Motor Corp. and Bank Tokyo-Mitsubishi (which comprise 6.92%, 5.38% and 3.38%,
respectively, of the Index's market capitalization) and its three largest
industries were banking, automobiles and telecommunications (which comprise
13.33%, 7.98% and 6.92%, respectively, of the Index's market capitalization).
SERIES-SPECIFIC RISKS
In addition to the principal risk factors referred to elsewhere in this
prospectus, you should know that the Japanese economy faces several concerns,
including: a financial system with large levels of nonperforming loans; over-
levereged corporate balance sheets; a labor market undergoing fundamental
structural changes, as traditional lifetime employment clashes with the need for
increased labor mobility; and a changing corporate governance structure. Japan's
economy is heavily dependent on international trade and has been adversely
affected by trade tariffs and other protectionist measures.
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
(23.63%) 3.53%
1999 Total Return as of September 30: 36.57%
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
26.25% (19.80%)
(Quarter ended December 31, 1998) (Quarter ended December 31, 1997)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Japan Series 3.53% (11.91%)
MSCI Japan Index 5.05% (11.32%)
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
18
<PAGE>
KOREA WEBS INDEX SERIES
CUSIP: N/A AMEX Trading Symbol: N/A
The WEBS of the Korea WEBS Index Series are not listed on the AMEX and are not
being offered for sale to the public as of the date of this prospectus.
SERIES INVESTMENT OBJECTIVE
The Korea WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the South Korean market, as measured by the MSCI
Korea Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 95 stocks traded primarily on the South Korean Stock
Exchange. As of August 31, 1999, the Index's three largest stocks were Samsung
Electronics Co., Kepco Korea Electric Power and Posco Pohang Iron & Steel (which
comprise 22.91%, 16.39% and 4.52%, respectively, of the Index's market
capitalization) and its three largest industries were appliances & household
durables, utilities (electrical & gas) and banking (which comprise 26.74%,
16.54% and 8.15%, respectively, of the Index's market capitalization).
SERIES-SPECIFIC RISKS
In addition to the principal risk factors referred to elsewhere in this
prospectus, you should know that while South Korea's relations with communist
North Korea have improved somewhat in recent times, each has substantial
military capabilities, and there is a risk of war between North and South Korea
at any time. Any outbreak of hostilities between the two countries could have a
severe adverse affect on the South Korean economy.
PRIOR PERFORMANCE
As of the date of this prospectus, the Korea WEBS Index Series has not started
investment operations, and therefore no prior performance information is
available.
19
<PAGE>
MALAYSIA (FREE) WEBS INDEX SERIES
CUSIP: 92923H 87 1 AMEX Trading Symbol: EWM
SERIES INVESTMENT OBJECTIVE
The Malaysia (Free) WEBS Index Series (the "Series") seeks to provide investment
results that correspond generally to the price and yield performance of publicly
traded securities in the aggregate in the Malaysian market, as measured by the
MSCI Malaysia (Free) Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 70 stocks traded primarily on the Kuala Lumpur Stock
Exchange. As of August 31, 1999, the Index's three largest stocks were Telekom
Malaysia, Malayan Banking and Tenaga Nasional (which comprise 13.19%, 11.15% and
10.50%, respectively, of the Index's market capitalization) and its three
largest industries were banking, telecommunications and multi-industry (which
comprise 19.16%, 13.96% and 10.60%, respectively, of the Index's market
capitalization).
SERIES-SPECIFIC RISKS
In addition to the principal risks referred to elsewhere in this prospectus, you
should know that Malaysian currency volatility and general economic
deterioration led to the imposition of stringent capital controls in September
1998, including a one-year prohibition on repatriation of capital and an
indefinite prohibition on free transfers of securities. The prohibition on
repatriation of capital was removed in February 1999 but the controls have
adversely impacted foreign investors, including the Series, which suspended
creations in response to the controls. This adversely affected the trading
market for Malaysia Series WEBS. Currently, the Series is not issuing new WEBS
and is redeeming Creation Units only for Malaysian ringgits in response to
capital controls in that country, and as a result Malaysia Series WEBS have been
trading at prices that are materially different from their net asset value.
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
(66.93%) (29.31%)
1999 Total Return as of September 30: 55.40%
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
27.24% (46.01%)
(Quarter ended March 31, 1998) (Quarter ended June 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Malaysia (Free) Series (29.31%) (37.71%)
MSCI Malaysia (Free) Index (30.55%) (38.59%)
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
20
<PAGE>
MEXICO (FREE) WEBS INDEX SERIES
CUSIP: 92923H 86 3 AMEX Trading Symbol: EWW
SERIES INVESTMENT OBJECTIVE
The Mexico (Free) WEBS Index Series (the "Series") seeks to provide investment
results that correspond generally to the price and yield performance of publicly
traded securities in the aggregate in the Mexican market, as measured by the
MSCI Mexico (Free) Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 36 stocks traded primarily on the Mexican Stock Exchange.
As of August 31, 1999, the Index's three largest stocks were Telefonos Mexico L,
Telefonos Mexico A and Grupo Modelo C (which comprise 21.01%, 9.34% and 9.24%,
respectively, of the Index's market capitalization) and its three largest
industries were telecommunications, beverages & tobacco and merchandising (which
comprise 30.36%, 16.92% and 9.78%, respectively, of the Index's market
capitalization).
SERIES-SPECIFIC RISKS
In addition to the principal risk factors referred to elsewhere in this
prospectus, you should know that the Mexican economy is heavily dependent on the
health of the U.S. economy, as the United States purchases most of Mexico's
exports. Mexico also has suffered from severe currency devaluations in the past,
and has been destabilized by local insurrections in certain regions,
particularly the State of Chiapas.
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
48.53% (35.00%)
1999 Total Return as of September 30: 29.57%
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
20.67% (24.30%)
(Quarter ended September 30, 1997) (Quarter ended September 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Mexico (Free) Series (35.00%) 3.96%
MSCI Mexico (Free) Index (33.53%) 6.89%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
21
<PAGE>
NETHERLANDS WEBS INDEX SERIES
CUSIP: 92923H 85 5 AMEX Trading Symbol: EWN
SERIES INVESTMENT OBJECTIVE
The Netherlands WEBS Index Series (the "Series") seeks to provide investment
results that correspond generally to the price and yield performance of publicly
traded securities in the aggregate in the Dutch market, as measured by the MSCI
Netherlands Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 25 stocks traded primarily on the Amsterdam Stock
Exchange. As of August 31, 1999, the Index's three largest stocks were Royal
Dutch Petroleum Co., Aegon and ING Groep (which comprise 27.70%, 12.24% and
10.94%, respectively, of the Index's market capitalization) and its three
largest industries were energy sources, insurance and financial services (which
comprise 27.70%, 12.24% and 10.94%, respectively, of the Index's market
capitalization).
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
20.11% 24.09%
1999 Total Return as of September 30: (6.05%)
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
17.76% (15.33%)
(Quarter ended December 31, 1998) (Quarter ended September 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Netherlands Series 24.09% 24.80%
MSCI Netherlands Index 23.23% 25.99%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
22
<PAGE>
SINGAPORE (FREE) WEBS INDEX SERIES
CUSIP: 92923H 84 8 AMEX Trading Symbol: EWS
SERIES INVESTMENT OBJECTIVE
The Singapore (Free) WEBS Index Series (the "Series") seeks to provide
investment results that correspond generally to the price and yield performance
of publicly traded securities in the aggregate in the Singaporean market, as
measured by the MSCI Singapore (Free) Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 29 stocks traded primarily on the Singapore Stock
Exchange. As of August 31, 1999, the Index's three largest stocks were Singapore
Telecom, DBS Bank Fgn and Singapore Airlines Fgn (which comprise 14.28%, 12.11%
and 11.10%, respectively, of the Index's market capitalization) and its three
largest industries were banking, telecommunications and real estate (which
comprise 28.53%, 14.28% and 12.64%, respectively, of the Index's market
capitalization).
SERIES-SPECIFIC RISKS
In addition to the principal risk factors referred to elsewhere in this
prospectus, you should know that as a small open economy, Singapore is
particularly vulnerable to external economic influences, including in recent
times the Asian economic crisis. While Singapore has been a leading manufacturer
of electronic goods, the extent to which other countries can successfully
compete with Singapore in this and related industries, and adverse Asian
economic influences generally, may adversely impact Singapore's economy.
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
(43.87%) (5.44)%
1999 Total Return as of September 30: 27.16%
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
55.99% (36.28%)
(Quarter ended December 31, 1998) (Quarter ended June 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Singapore (Free) Series (5.44%) (21.00%)
MSCI Singapore (Free) Index (3.59%) (18.17%)
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
23
<PAGE>
SOUTH AFRICA WEBS INDEX SERIES
CUSIP: N/A AMEX Trading Symbol: N/A
The WEBS of the South Africa WEBS Index Series are not listed on the AMEX and
are not being offered for sale to the public as of the date of this prospectus.
SERIES INVESTMENT OBJECTIVE
The South Africa WEBS Index Series (the "Series") seeks to provide investment
results that correspond generally to the price and yield performance of publicly
traded securities in the aggregate in the South African market, as measured by
the MSCI South Africa Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 46 stocks traded primarily on the Johannesburg Stock
Exchange. As of August 31, 1999, the Index's three largest stocks were De Beers
Consolidated Mines, South African Brewers Plc and Firstrand (which comprise
10.97%, 6.63% and 5.76%, respectively, of the Index's market capitalization) and
its three largest industries were financial services, misc. materials &
commodities and beverages & tobacco (which comprise 14.17%, 12.24% and 10.71%,
respectively, of the Index's market capitalization).
SERIES-SPECIFIC RISKS
In addition to the principal risk factors referred to elsewhere in this
prospectus, you should know that South Africa has in the past experienced
internal racial and political turmoil in connection with the recently-abolished
system of apartheid. While South Africa's international isolation ended with the
enfranchisement of the black majority, the country continues to face significant
social and economic challenges, including managing the expectations of its
people in the post-apartheid era.
PRIOR PERFORMANCE
As of the date of this prospectus, the South Africa WEBS Index Series has not
started investment operations, and therefore no prior performance information is
available.
24
<PAGE>
SPAIN WEBS INDEX SERIES
CUSIP: 92923H 83 0 AMEX Trading Symbol: EWP
SERIES INVESTMENT OBJECTIVE
The Spain WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the Spanish market, as measured by the MSCI Spain
Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 36 stocks traded primarily on the Madrid Stock Exchange.
As of August 31, 1999, the Index's three largest stocks were Telefonica, BSCH
BCO Santander Central and Banco Bilbao Vizcaya (which comprise 21.56%, 15.57%
and 11.71%, respectively, of the Index's market capitalization) and its three
largest industries were banking, telecommunications and utilities (electrical &
gas) (which comprise 32.00%, 21.56% and 20.74%, respectively, of the Index's
market capitalization).
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
23.90% 51.30%
1999 Total Return as of September 30: (12.16%)
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
38.58% (16.56%)
(Quarter ended March 31, 1998) (Quarter ended September 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Spain Series 51.30% 39.45%
MSCI Spain Index 49.90% 40.33%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
25
<PAGE>
SWEDEN WEBS INDEX SERIES
CUSIP: 92923H 82 2 AMEX Trading Symbol: EWD
SERIES INVESTMENT OBJECTIVE
The Sweden WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the Swedish market, as measured by the MSCI
Sweden Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 33 stocks traded primarily on the Stockholm Stock
Exchange. As of August 31, 1999, the Index's three largest stocks were Ericsson
(Lm) B, Hennes & Mauritz B and Skandia Forsakring (which comprise 33.95%, 11.29%
and 5.62%, respectively, of the Index's market capitalization) and its three
largest industries were electrical & electronics, banking and merchandising
(which comprise 33.95%, 12.89% and 11.29%, respectively, of the Index's market
capitalization).
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
11.00% 11.06%
1999 Total Return as of September 30: 19.98%
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
19.30% (24.05%)
(Quarter ended March 31, 1998) (Quarter ended September 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Sweden Series 11.06% 19.04%
MSCI Sweden Index 13.96% 20.42%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
26
<PAGE>
SWITZERLAND WEBS INDEX SERIES
CUSIP: 92923H 81 4 AMEX Trading Symbol: EWL
SERIES INVESTMENT OBJECTIVE
The Switzerland WEBS Index Series (the "Series") seeks to provide investment
results that correspond generally to the price and yield performance of publicly
traded securities in the aggregate in the Swiss market, as measured by the MSCI
Switzerland Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 30 stocks traded primarily on the Zurich Stock Exchange.
As of August 31, 1999, the Index's three largest stocks were Novartis, Roche
Holding Genuss and Nestle (which comprise 17.85%, 14.72% and 14.03%,
respectively, of the Index's market capitalization) and its three largest
industries were health & personal care, banking and food & household products
(which comprise 37.73%, 19.71% and 14.03%, respectively, of the Index's market
capitalization).
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
35.23% 18.27%
1999 Total Return as of September 30: (7.10%)
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
24.63% (22.09%)
(Quarter ended December 31, 1998) (Quarter ended September 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
Switzerland Series 18.27% 18.00%
MSCI Switzerland Index 23.53% 22.51%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
27
<PAGE>
TAIWAN WEBS INDEX SERIES
CUSIP: N/A AMEX Trading Symbol: N/A
The WEBS of the Taiwan WEBS Index Series are not listed on the AMEX and are not
being offered for sale to the public as of the date of this prospectus.
SERIES INVESTMENT OBJECTIVE
The Taiwan WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the Taiwanese market, as measured by the MSCI
Taiwan Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 76 stocks traded primarily on the Taiwan Stock Exchange.
As of August 31, 1999, the Index's three largest stocks were Taiwan
Semiconductor Mfg, United Microelectronics and Cathay Life Insurance Co. (which
comprise 14.49%, 7.26% and 6.55%, respectively, of the Index's market
capitalization) and its three largest industries were electronic comp. &
instruments, banking and data processing & reproduction (which comprise 37.70%,
11.30% and 9.88%, respectively, of the Index's market capitalization).
SERIES-SPECIFIC RISKS
In addition to the principal risk factors referred to elsewhere in this
prospectus, you should know that owing to Taiwan's size and geographic proximity
to the People's Republic of China, and its history of political contention with
China (which regards Taiwan as a renegade province), developments in Taiwan's
ongoing relations with China, including the ongoing risk of invasion by or war
with China and other factors may materially impact the Taiwanese economy.
PRIOR PERFORMANCE
As of the date of this prospectus, the Taiwan WEBS Index Series has not started
investment operations, and therefore no prior performance information is
available.
28
<PAGE>
UNITED KINGDOM WEBS INDEX SERIES
CUSIP: 92923H 79 8 AMEX Trading Symbol: EWU
SERIES INVESTMENT OBJECTIVE
The United Kingdom WEBS Index Series (the "Series") seeks to provide investment
results that correspond generally to the price and yield performance of publicly
traded securities in the aggregate in the British market, as measured by the
MSCI United Kingdom Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 127 stocks traded primarily on the London Stock Exchange.
As of August 31, 1999, the Index's three largest stocks were BP Amoco, Vodafone
Airtouch and HSBC Holdings (GB) (which comprise 10.21%, 6.92% and 5.89%,
respectively, of the Index's market capitalization) and its three largest
industries were banking, telecommunications and health & personal care (which
comprise 16.51%, 14.09% and 13.51%, respectively, of the Index's market
capitalization).
PRIOR PERFORMANCE
The chart and table below give you a picture of the Series' long-term
performance. The information shows you how the Series' performance has varied
year by year and provides some indication of the risks of investing in the
Series.
Annual Total Returns as of 12/31/98
1997 1998
------ ------
20.85% 18.42%
1999 Total Return as of September 30: 2.11%
<TABLE>
<CAPTION>
Best Quarter Worst Quarter
------------ -------------
<S> <C>
18.43% (10.56%)
(Quarter ended March 31, 1998) (Quarter ended September 30, 1998)
</TABLE>
As of 12/31/98
Average Annual Total Returns - Comparison
<TABLE>
<CAPTION>
1 Year Since Inception (3/12/96)
------ ------------------------
<S> <C> <C>
United Kingdom Series 18.42% 24.15%
MSCI United Kingdom Index 17.80% 25.10%
</TABLE>
Past performance is not necessarily an indicator of how the Series will perform
in the future.
29
<PAGE>
USA WEBS INDEX SERIES
CUSIP: N/A AMEX Trading Symbol: N/A
The WEBS of the USA WEBS Index Series are not listed on the AMEX and are not
being offered for sale to the public as of the date of this porspectus.
SERIES INVESTMENT OBJECTIVE
The USA WEBS Index Series (the "Series") seeks to provide investment results
that correspond generally to the price and yield performance of publicly traded
securities in the aggregate in the U.S. market, as measured by the MSCI USA
Index (the "Index").
BENCHMARK INDEX INFORMATION
The Index consists of 356 stocks traded primarily on the New York Stock
Exchange. As of August 31, 1999, the Index's three largest stocks were Microsoft
Corp., General Electric Co. and Intel Corp. (which comprise 5.48%, 4.31% and
3.24%, respectively, of the Index's market capitalization) and its three largest
industries were health & personal care, business & public services and
electronic comp. & instruments (which comprise 12.39%, 10.84% and 8.80%,
respectively, of the Index's market capitalization).
PRIOR PERFORMANCE
As of the date of this prospectus, the USA WEBS Index Series has not started
investment operations, and therefore no prior performance information is
available.
30
<PAGE>
INVESTMENT POLICIES AND STRATEGIES
Indexing Investment Approach. WEBS Index Series are not managed according to
traditional methods of "active" investment management, which involve the buying
and selling of securities based on economic, financial and market analysis and
investment judgment. Instead, each WEBS Index Series, using a "passive" or
indexing investment approach, attempts to approximate the investment performance
of its benchmark MSCI Index by investing in a portfolio of stocks selected by
using quantitative analytical procedures. Stocks are selected for inclusion in a
WEBS Index Series in order to have investment characteristics (based on market
capitalization and industry weightings), fundamental characteristics (such as
return variability, earnings valuation and yield) and liquidity measures that,
taken together, are similar to those of the benchmark MSCI Index taken in its
entirety.
Portfolio Sampling. Generally, a WEBS Index Series does not hold all of the
issues that comprise its benchmark MSCI Index, due in part to the costs involved
and, in certain instances, the potential illiquidity of certain securities.
Instead, a WEBS Index Series will attempt to hold a representative sample of the
securities in its benchmark MSCI Index, which will be selected by the investment
adviser using quantitative analytical models in a technique known as "portfolio
sampling." Under this technique, each stock is considered for inclusion in a
WEBS Index Series based on its contribution to certain capitalization, industry
and fundamental investment characteristics. The investment adviser seeks to
construct the portfolio of a WEBS Index Series so that, in the aggregate, its
capitalization, industry and fundamental investment characteristics perform like
those of its benchmark MSCI Index. Over time, the portfolio composition of a
WEBS Index Series may be altered (or "rebalanced") to reflect changes in the
characteristics of its benchmark MSCI Index or to bring the performance and
characteristics of a WEBS Index Series more in line with that of its benchmark
MSCI Index. Rebalancing may also be required for tax purposes. These
rebalancings will require a WEBS Index Series to incur transaction costs and
other expenses.
A WEBS Index Series reserves the right to invest in all of the securities in its
benchmark MSCI Index, and a WEBS Index Series with a benchmark index comprised
of relatively few stocks may do so on a regular basis. In addition, the
Australia, Austria, Belgium, Brazil (Free), Hong Kong, Italy, Korea, Mexico
(Free), Netherlands, Singapore (Free), South Africa, Spain, Sweden,
Switzerland and Taiwan WEBS Index Series may hold stocks that are not in their
benchmark MSCI Index if the investment adviser determines this to be appropriate
in light of the WEBS Index Series' investment objective and relevant investment
constraints.
Investment Assets. Each WEBS Index Series has a policy to remain as fully
invested as practicable in a pool of equity securities. Each WEBS Index Series
will normally invest at least 95% of its total assets in stocks that are
represented in its benchmark MSCI index except, in limited circumstances, to
help meet shareholder redemptions of Creation Units. To comply with the U.S.
Internal Revenue Code, manage corporate actions and index changes in the smaller
markets, each of the Australia, Austria, Belgium, Brazil (Free), Hong Kong,
Italy, Korea, Mexico (Free), Netherlands, Singapore (Free), South Africa, Spain,
Sweden, Switzerland and Taiwan WEBS Index Series will at all times invest at
least 80% of its total assets in such stocks and at least half of the remaining
20% of its total assets in such stocks or in stocks included in the relevant
market, but not in its benchmark MSCI Index.
Each WEBS Index Series may invest its remaining assets in money market
instruments or funds that invest exclusively in money market instruments
(subject to applicable limitations under the Investment Company Act of 1940), in
repurchase agreements, in stocks that are in the relevant market but not its
benchmark MSCI Index (as indicated above), and/or in combinations of stock index
futures contracts, options on futures contracts, stock index options, stock
index swaps, cash, local currency and forward currency exchange contracts that
are intended to provide a WEBS Index Series with exposure to a stock. The
investment adviser may attempt to reduce tracking error by using futures
contracts whose behavior is expected to represent the market performance of the
WEBS Index Series' underlying securities, although there can be no assurance
that these futures will correlate with the performance of its benchmark MSCI
Index. A WEBS Index Series will not use these instruments to leverage, or borrow
against, their securities holdings or for speculative purposes. In some cases
the use of these special investment techniques can adversely affect the
performance of a WEBS Index Series.
31
<PAGE>
Lending of Securities. Each WEBS Index Series may lend its portfolio securities.
In connection with these loans, the Fund receives liquid collateral equal to at
least 100% of the value of the portfolio securities being lent. This collateral
is marked to market on a frequent basis. Notwithstanding such collateral, the
WEBS Index Series would lose value to the extent that a borrower defaults on its
obligation to return borrowed portfolio securities and the value of the
collateral is less than the value of the borrowed securities.
Industry concentration. With respect to the two most heavily weighted industries
or groups of industries in its benchmark MSCI Index, a WEBS Index Series will
invest in securities (consistent with its investment objective and other
investment policies) so that the weighting of each such industry or group of
industries in the WEBS Index Series does not diverge by more than 10% from the
respective weighting of such industry or group of industries in its benchmark
MSCI Index. An exception to this policy is that if investment in the stock of a
single issuer would account for more than 25% of the WEBS Index Series, the WEBS
Index Series will invest less than 25% of its net assets in such stock and will
reallocate the excess to stock(s) in the same industry or group of industries,
and/or to stock(s) in another industry or group of industries, in its benchmark
MSCI Index. Each WEBS Index Series will evaluate these industry weightings at
least weekly, and at the time of evaluation will adjust its portfolio
composition to the extent necessary to maintain compliance with the above
policy. A WEBS Index Series may not concentrate its investments except as
discussed above. This policy is a fundamental investment policy and may not be
changed without the approval of a majority of a WEBS Index Series' shareholders.
As of November 19, 1999, as a result of this policy with respect to industry
concentration, the following WEBS Index Series were concentrated (that is,
invested 25% or more of the value of their assets) in the specified industries:
WEBS Index Series Industry or Industries
-----------------------------------------------------------------
Austria Banking
Canada Electrical & Electronics
Germany Telecommunications
Italy Telecommunications
Singapore (Free) Banking
Spain Banking and Telecommunications
Switzerland Health & Personal Care
Borrowing Money. A WEBS Index Series may borrow money from a bank up to a limit
of 33% of the market value of its assets, but only for temporary or emergency
purposes. To the extent that a WEBS Index Series borrows money, it may be
leveraged; at such times, the WEBS Index Series' value may appreciate or
depreciate more rapidly than its benchmark MSCI Index. A WEBS Index Series will
not make cash purchases of securities when the amount of money borrowed exceeds
5% of the market value of its total assets.
Fundamental Policies. The concentration policy of each WEBS Index Series is a
fundamental policy that may be changed only with shareholder approval. Each of
the other investment policies is a non-fundamental policy that may be changed by
the Board of Directors without shareholder approval. Shareholders will be
notified before any material change in these policies is implemented.
Tracking Error. Due to the use of the portfolio sampling technique described
above and other factors discussed in this Prospectus, a WEBS Index Series is not
expected to track its benchmark MSCI Index with the same degree of accuracy as
would an investment vehicle that invested in every component security of its
benchmark index. The investment adviser expects that, over time, a WEBS Index
Series' "expected tracking error" relative to the performance of its benchmark
index will be less than 5% and its tracking error will generally be greater if
its benchmark index has fewer rather than greater numbers of component stocks.
An expected tracking error of 5% means that there is a 68% probability that the
net asset value of a WEBS Index Series will be within plus or minus 5% of its
benchmark MSCI Index level after one year, without rebalancing the portfolio
composition. Thus, actual tracking error in a period may exceed 5%, perhaps
significantly, even though the expected tracking error is less than 5%. For the
fiscal year ended August 31, 1999, the following WEBS Index Series had a
tracking error greater than 5%: Malaysia (Free) (-18.87%); Mexico (Free)
(-8.37%); and Singapore (Free) (10.47%).
32
<PAGE>
A tracking error of 0% would indicate perfect tracking, which would be achieved
when the net asset value of a WEBS Index Series increases or decreases in exact
proportion to changes in its benchmark MSCI Index.
The following factors may adversely affect the tracking of a WEBS Index Series
to that of its benchmark MSCI Index:
|X| the WEBS Index Series must pay various expenses, while the benchmark MSCI
Indices do not reflect any expenses;
|X| since the investment portfolios of the WEBS Index Series do not generally
replicate the underlying MSCI Indices, their investment performance is
likely to differ from that of the Indices;
|X| the portfolio sampling technique used to manage the WEBS Index Series is
based on historical price relationships and changes to those relationships
can adversely affect tracking. In some situations, the requirements of the
U.S. Internal Revenue Code can adversely affect tracking by preventing a
WEBS Index Series from holding optimal positions in particular securities;
|X| a WEBS Index Series must comply with regulatory constraints that do not
affect the calculation of its corresponding MSCI Index;
|X| the existence of uninvested assets in the portfolios (including cash and
deferred organizational expenses);
|X| the fact that each MSCI Index "smooths" dividend payments evenly over a
year while each WEBS Index Series records dividends on the ex-dividend
date; and
|X| the fact that a WEBS Index Series may be subject to a different foreign
withholding tax rate than that assumed by its benchmark MSCI Index.
Although the investment adviser regularly monitors the tracking error of each
WEBS Index Series, there can be no assurance that any WEBS Index Series will
achieve any particular level of tracking error relative to the performance of
its benchmark MSCI Index. Semi-annual and annual reports of the WEBS Fund
disclose tracking error for each WEBS Index Series over the previous six-month
period, and in the event that tracking error exceeds 5%, the Board of Directors
will consider whether it would be appropriate to take any action.
ADDITIONAL INFORMATION ABOUT PRINCIPAL RISK FACTORS
An investment in WEBS of a WEBS Index Series (except for the USA WEBS Index
Series) involves risks similar to those of investing in a broad-based portfolio
of equity securities traded on exchanges in the relevant foreign securities
market, including market fluctuations caused by factors such 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. The principal risk factors which
could decrease the value of your investment, are listed and described below:
|X| less liquid and less efficient securities markets;
|X| greater price volatility;
|X| exchange rate fluctuations and exchange controls;
|X| less publicly available information about issuers;
|X| the imposition of withholding or other taxes;
|X| the imposition of restrictions on the expatriation of funds or other assets
of a WEBS Index Series;
|X| higher transaction and custody costs and delays and risks of loss attendant
in settlement procedures;
|X| difficulties in enforcing contractual obligations;
|X| lesser levels of regulation of the securities markets;
|X| different accounting, disclosure and reporting requirements;
|X| more substantial government involvement in the economy;
|X| higher rates of inflation;
|X| greater social, economic, and political uncertainty and the risk of
nationalization or expropriation of assets and risk of war.
WEBS Index Series that issue and redeem Creation Units for cash (the Brazil
(Free), Korea and Taiwan WEBS Index Series) may have greater tracking error than
other WEBS Index Series since they are at risk that the prices they
33
<PAGE>
pay or receive for portfolio securities will be different than the prices in
effect when they determine the value of the Creation Units being issued or
redeemed.
Volatility of Foreign Equity Markets. The U.S. dollar performance of foreign
equity markets, particularly emerging markets, has generally been substantially
more volatile than that of U.S. markets. For example, from November 30, 1994 to
November 30, 1999, the average price volatility of the MSCI USA Index, a broad
measure of the U.S. equity market, was 13.9%. In contrast, during the same
period, the average price volatility of the respective MSCI Indices was as
follows:
<TABLE>
<S> <C> <C> <C>
MSCI Australia 16.8% MSCI Malaysia (Free) 47.7%
MSCI Austria 18.9% MSCI Mexico (Free) 40.4%
MSCI Belgium 13.4% MSCI Netherlands 15.4%
MSCI Brazil (Free) 41.4% MSCI Singapore (Free) 35.0%
MSCI Canada 18.1% MSCI South Africa 29.5%
MSCI France 16.2% MSCI Spain 21.3%
MSCI Germany 16.4% MSCI Sweden 20.0%
MSCI Hong Kong 34.0% MSCI Switzerland 17.5%
MSCI Italy 23.2% MSCI Taiwan 33.8
MSCI Japan 21.7% MSCI United Kingdom 10.9%
MSCI Korea 57.6%
</TABLE>
Short-term volatility in these markets can be significantly greater. This type
of volatility means that the value of your WEBS may fluctuate considerably over
shorter and longer periods of time.
Foreign Currency Fluctuations. Because each WEBS Index Series' assets are
generally invested in non-U.S. securities (except for the USA WEBS Index
Series), and because a substantial portion of the revenue and income of each
WEBS Index Series is received in a foreign currency, the dollar value of a WEBS
Index Series' net assets is reduced by declines in the value of the relevant
foreign currency relative to the dollar and are positively affected by increases
in the value of that currency relative to the dollar. Also, government or
monetary authorities may impose or alter exchange controls in a way that would
adversely affect exchange rates.
Any currency fluctuations will affect the net asset value of a WEBS Index Series
regardless of the performance of its underlying portfolio. Other than to
facilitate settlements in local markets or to protect against currency exposure
in connection with its distributions to shareholders or borrowings, no WEBS
Index Series expects to engage in currency transactions for the purpose of
hedging against a decline in value of any foreign currencies.
Concentration and Lack of Diversification of Certain WEBS Index Series. Each
WEBS Index Series (except for the Canada, EMU, Japan, United Kingdom and USA
WEBS Index Series) is classified as "non-diversified" for purposes of the
Investment Company Act of 1940, which means that it is not limited by that Act
with regard to the portion of its assets that may be invested in the securities
of a single issuer. In addition, a number of WEBS Index Series concentrate their
investments in particular industries as noted in the descriptions of each
non-diversified WEBS Index Series. Each WEBS Index Series, however, whether
diversified or non-diversified, intends to maintain the required level of
diversification and otherwise conduct its operations so as to qualify as a
"regulated investment company" for purposes of the U.S. Internal Revenue Code,
to relieve the WEBS Index Series of any liability for federal income tax to the
extent that its earnings are distributed to shareholders. Compliance with the
diversification requirements of the U.S. Internal Revenue Code severely limits
the investment flexibility of certain WEBS Index Series and makes it less likely
that such WEBS Index Series will meet their investment objectives.
The stocks of particular issuers, or of issuers in particular industries, may
dominate the benchmark index of a WEBS Index Series and, consequently, the
investment portfolio of a WEBS Index Series. This may adversely affect the
performance of a WEBS Index Series or subject it to greater price volatility
than that experienced by more diversified investment companies. The WEBS of a
WEBS Index Series may be more susceptible to any single
34
<PAGE>
economic, political or regulatory occurrence than the portfolio securities of an
investment company that is more broadly invested in the equity securities of the
relevant market.
Trading Issues. Trading in WEBS on the AMEX may be halted due to market
conditions or for reasons that, in the AMEX's view, make trading in WEBS
inadvisable. In addition, trading in WEBS on the AMEX is subject to trading
halts caused by extraordinary market volatility pursuant to AMEX "circuit
breaker" rules. If trading on the AMEX is halted, you may not be able to sell
your WEBS until trading resumes. There can be no assurance that the requirements
of the AMEX necessary to maintain the listing of any WEBS Index Series will
continue to be met or will remain unchanged.
Fluctuation of Net Asset Value and Trading Prices. The net asset value of WEBS
of a WEBS Index Series will fluctuate with changes in the market value of a WEBS
Index Series' security holdings and changes in the exchange rate between the
U.S. dollar and the subject foreign currency. The market prices of WEBS will
fluctuate in accordance with changes in net asset value and supply and demand on
the AMEX. The investment adviser cannot predict whether WEBS will trade below,
at or above their net asset value. Price differences may be due, in large part,
to the fact that supply and demand forces in the secondary trading market for
WEBS will be closely related, but not identical, to the same forces influencing
the prices of the stocks of the MSCI Index trading individually or in the
aggregate at any point in time. Given, however, that WEBS must be created and
redeemed in Creation Unit aggregations (unlike shares of many closed-end funds,
which frequently trade at appreciable discounts from, and sometimes at premiums
to, their net asset value), the investment adviser believes that ordinarily
large discounts or premiums to the net asset value of WEBS should not be
sustained. In the event that the WEBS Fund must suspend or discourage creations
and/or redemptions of Creation Unit aggregations of WEBS of a WEBS Index Series,
we expect larger discounts or premiums. This has occurred in the case of the
Malaysia Series WEBS, which have frequently traded at prices that materially
differ from their net asset values since creations and "in kind" redemptions of
the Malaysia (Free) Series WEBS were suspended in response to capital controls
imposed by Malaysia in September 1998.
Year 2000. Many computer software systems in use today cannot properly process
date-related information from and after January 1, 2000 because of the way they
encode and calculate dates. That failure could have a negative impact on the
WEBS Fund and each WEBS Index Series' operations, including the handling of
securities trades, pricing and shareholder transactions. The WEBS Fund has no
computer systems of its own, but relies on those of its service providers. In
response to an inquiry from the WEBS Fund's Board of Directors, the WEBS Fund's
investment adviser, administrator and transfer agent, custodian and lending
agent, sub-administrator and distributor each have advised the Board that they
are reviewing all of the computer systems used by them, and making inquiries of
persons whose systems they rely on, in an effort to confirm that all such
systems will be appropriately adapted in advance of the Year 2000. The Board has
requested that each of the WEBS Fund's service providers report on the status of
preparations and corrective activity for the Year 2000 at each Board meeting
prior to the Year 2001. There can be no assurance that these steps will be
sufficient to prevent an adverse impact on the WEBS Fund or any WEBS Index
Series. Moreover, the Year 2000 problem could adversely affect many of the
companies whose stocks are held by the various WEBS Index Series. Therefore, the
value of any WEBS held by you could decline.
35
<PAGE>
MANAGEMENT
Investment Adviser
Barclays Global Fund Advisors is responsible for the investment management of
each WEBS Index Series. The investment adviser is a California corporation
indirectly owned by Barclays Bank PLC and is registered under the Investment
Advisers Act of 1940. Barclays Global Fund Advisors have managed equity
portfolios, including index funds and mutual funds, for over 25 years. As of
August 31, 1999, the investment adviser and its parent, Barclays Global
Investors, N.A., managed, administered or advised assets aggregating in excess
of $682 billion.
For the fiscal year ended August 31, 1999, the investment adviser received a fee
of 0.27% of average daily net assets of each WEBS Index Series that has
commenced investment operations (the Australia, Austria, Belgium, Canada,
France, Germany, Hong Kong, Italy, Japan, Malaysia (Free), Mexico (Free),
Netherlands, Singapore (Free), Spain, Sweden, Switzerland and United Kingdom
WEBS Index Series).
36
<PAGE>
Service Providers
The chart below shows the WEBS Fund's service providers and includes their
addresses and principal activities:
<TABLE>
<CAPTION>
---------------------------------
| Shareholders |
---------------------------------
|
------------------------------------------------
| | |
<S> <C> <C>
--------------------------------------- | -------------------------------------
| Principal Distributor | | | Transfer Agent |
Distribution and | Funds Distributor, Inc. | | | PFPC Inc. |
Shareholder Services | 60 State Street | | | 400 Bellevue Parkway |
| Boston, MA 02109 | | | Wilmington, DE 19809 |
| | | | |
|Distributes Creation Units of each | | | Handles distribution of dividends |
|WEBS Index Series. | | | and processing of buy and sell |
| | | | requests. |
--------------------------------------- | -------------------------------------
|
--------------------------------------- | -------------------------------------
| Investment Adviser | | | Custodian and Lending Agent |
Asset Management | Barclays Global Fund Advisors | | | The Chase Manhattan Bank |
| 45 Fremont Street | | | One Pierrepont Plaza |
| San Francisco, CA 94105 | | | Brooklyn, NY 11201 |
| | | | |
|Manages each WEB Index Series' |----|----| As custodian, is responsible for |
|business and investment activities. | | | the custody of the assets of each |
| | | | WEBS Index Series. As lending |
| | | | agent, arranges loans and |
| | | | maintains collateral for loaned |
| | | | securities. |
--------------------------------------- | -------------------------------------
|
--------------------------------------- |
| Administrator | |
Fund Operations | PFPC Inc. | |
| 400 Bellevue Parkway | |
| Wilmington, DE 19809 | |
| | |
|Provides facilities, equipment and |----|
|personnel to carry out administrative| |
|services and calculates each WEBS | |
|Index Series' NAV, dividends and | |
|distributions. | |
--------------------------------------- |
|
---------------------------------
| Board of Directors |
| Supervises WEBS Fund's |
| activities. |
---------------------------------
</TABLE>
37
<PAGE>
SHAREHOLDER INFORMATION
Determination of Net Asset Value
The net asset value per WEBS for each WEBS Index Series is computed by dividing
the value of the net assets of a WEBS Index Series (i.e., the value of its total
assets less total liabilities) by the total number of WEBS outstanding, rounded
to the nearest cent. Expenses and fees, including the management, administration
and distribution fees, are accrued daily and taken into account for purposes of
determining net asset value. Except for the WEBS Index Series named below, the
net asset value of each WEBS Index Series is determined as of the close of the
regular trading session on the New York Stock Exchange, Inc. ("NYSE")
(ordinarily 4:00 p.m., New York City time) on each day that the NYSE is open.
The net asset values of the Korea, Malaysia (Free) and Taiwan WEBS Index Series
are determined as of 8:30 a.m. (New York City time) on each day that the NYSE is
open. The price at which a purchase or redemption of Creation Units of WEBS is
made is based on the next calculation of net asset value.
Buying and Selling WEBS
There are two ways for you to buy and sell WEBS. Most investors buy and sell
WEBS through a broker in transactions on the AMEX. WEBS are also issued and
redeemed directly by the WEBS Fund, but only in transactions involving
aggregations of very large numbers of WEBS, referred to as Creation Units. These
transactions occur on an "in kind" basis for most WEBS Index Series.
Institutions capable of purchasing or redeeming Creation Units of WEBS should
refer to the Statement of Additional Information for further details.
WEBS may trade on the AMEX at prices that differ to some degree from their net
asset value. If you buy or sell WEBS in the secondary market, you will incur
customary brokerage commissions and charges and may pay some or all of the
difference between the bid price and the offered price in the secondary market
on each leg of a round trip (purchase and sale) transaction. Given that WEBS may
be created or redeemed in Creation Units, however, the investment adviser
believes that ordinarily large discounts or premiums to the net asset value of
WEBS should not be sustained for long periods. If creations or redemptions of
WEBS in Creation Units are suspended or difficult to effect, the WEBS may trade
at sustained discounts or premiums from net asset value. This occurred in the
case of WEBS of the Malaysia (Free) WEBS Index Series after the WEBS Fund
suspended creations and "in kind" redemptions of these WEBS in September 1998 as
a result of capital controls imposed in Malaysia.
The AMEX disseminates during its trading day an indicative optimized portfolio
value, or IOPV, for each WEBS Index Series. This should not be viewed as a real
time update of the net asset value per WEBS of a WEBS Index Series, which is
calculated only once a day, because it may not be computed in a manner
consistent with such net asset value.
The Depository Trust Company ("DTC") serves as securities depository for WEBS.
WEBS may be held only in book-entry form; stock certificates will not be issued.
DTC, or its nominee, is the record or registered owner of all outstanding WEBS
of each WEBS Index Series. Beneficial ownership of WEBS will be shown on the
records of DTC or its participants (described below). Beneficial owners of WEBS
are not entitled to have WEBS registered in their names, will not receive or be
entitled to receive physical delivery of certificates in definitive form and are
not considered the registered holder of WEBS. Accordingly, to exercise any
rights of a holder of WEBS, a beneficial owner must rely on the procedures of
(i) DTC; (ii) "DTC Participants", i.e., securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own DTC; and (iii) "Indirect Participants",
i.e., brokers, dealers, banks and trust companies that clear through or maintain
a custodial relationship with a DTC Participant, either directly or indirectly,
through which the beneficial owner holds its interests.
As described above, the WEBS Fund recognizes DTC or its nominee as the owner of
all WEBS for all purposes.
The WEBS Fund will send its shareholders, through DTC Participants, unaudited
semi-annual reports, audited annual reports and other information as may be
required by applicable laws, rules and regulations. Beneficial owners also
receive an annual notification as to the tax status of the WEBS Fund's
distributions.
38
<PAGE>
For purposes of the Investment Company Act of 1940, WEBS are issued by the WEBS
Index Series, and the acquisition of WEBS by investment companies is subject to
the restrictions of section 12(d)(1) of the Investment Company Act.
Dividends and Capital Gains Distributions
Dividends from net investment income, including any net foreign currency gains,
are declared and paid at least annually and any net realized securities gains,
are distributed at least annually. In order to improve tracking error or comply
with the distribution requirements of the Internal Revenue Code of 1986,
dividends may be declared and paid more frequently than annually for certain
WEBS Index Series. In addition, the WEBS Fund intends to distribute, at least
annually, amounts representing the full dividend yield on the underlying
portfolio securities of each WEBS Index Series, net of expenses, as if the WEBS
Index Series owned the underlying portfolio securities for the entire dividend
period. As a result, some portion of each distribution may result in a return of
capital. See "Tax Matters" below. Dividends and securities gains distributions
are distributed in U.S. dollars and cannot be automatically reinvested in
additional WEBS. The WEBS Fund will inform shareholders within 60 days after the
close of a WEBS Index Series' taxable year of the amount and nature of all
distributions made to them.
Tax Matters
As with any investment, you should consider how the WEBS of a WEBS Index Series
will be taxed. The tax information in this prospectus is provided as general
information. You should consult your own tax professional about the tax
consequences of an investment in WEBS.
Unless your investment in a WEBS Index Series is through a tax-exempt entity or
taxed-deferred retirement account, such as a 401(k) plan, you need to be aware
of the possible tax consequences when:
|X| A WEBS Index Series makes distributions, and
|X| You sell WEBS on the AMEX.
Taxes on Distributions. Each WEBS Index Series will distribute annually any net
investment income, and any net realized long-term or short-term capital gains.
Each WEBS Index Series may also pay a special distribution at the end of the
calendar year to comply with federal tax requirements. In general, your
distributions are subject to federal income tax when they are paid. Dividends
paid out of a WEBS Index Series' income and net short-term gains, if any, are
taxable as ordinary income. Distributions of net long-term capital gains, if
any, in excess of net short-term capital losses are taxable as long-term capital
gains, regardless of how long you have held the WEBS.
Distributions in excess of a WEBS Index Series' current and accumulated earnings
and profits are treated as a tax-free return of capital to the extent of your
basis in WEBS, and as capital gain thereafter. A distribution may be taxable to
you as ordinary income or capital gain even though, from an investment
standpoint, it may constitute a return of capital.
Dividends and interest received by each WEBS Index Series may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes. Since more than 50% of each WEBS Index Series' total assets (with the
exception of the USA WEBS Index Series) at the end of its taxable year will
consist of foreign stock or securities, each WEBS Index Series will "pass
through" to you any foreign income taxes (including withholding taxes) paid by a
WEBS Index Series, if you held the WEBS Index Series, and the WEBS Index Series
held the security, on the dividend entitlement date and for at least fifteen
additional days immediately before and/or after. Subject to certain limitations,
the foreign income taxes passed through may qualify as a deduction in
calculating U.S. taxable income or as a credit in calculating U.S. federal
income tax. You will be notified of your portion of the foreign income taxes
paid to each country and the portion of dividends that represents income derived
from sources within each country.
If you are neither a lawful permanent resident nor a citizen of the United
States or if you are a foreign entity, each WEBS Index Series' ordinary income
dividends (which include distributions of net short-term capital gains) will
generally be subject to a 30% U.S. withholding tax, unless a lower treaty rate
applies.
39
<PAGE>
By law, each WEBS Index Series must withhold 31% of a shareholder's
distributions and proceeds if the shareholder has not provided a taxpayer
identification number or social security number.
Taxes When WEBS Are Sold on the AMEX. Currently, any capital gain or loss
realized upon a sale of WEBS is generally treated as long-term capital gain or
loss if the WEBS have been held for more than one year and as short-term capital
gain or loss if the WEBS have been held for one year or less.
The foregoing discussion summarizes some of the consequences under current
federal tax law of an investment in a WEBS Index Series. It is not a substitute
for personal tax advice. Consult your personal tax adviser about the potential
tax consequences of an investment in a WEBS Index Series under all applicable
tax laws.
DISTRIBUTION ARRANGEMENTS
The WEBS Fund has adopted a plan under Rule 12b-1 of the Investment Company Act
of 1940 that allows the WEBS Fund to pay distribution fees for the sale and
distribution of WEBS. Because these fees are paid out of a WEBS Index Series'
assets on an ongoing basis, over time the fees will increase the cost of your
investment and may cost you more than paying other types of sales charges. The
fees to be paid to the distributor under the Rule 12b-1 Plan are calculated and
paid monthly with respect to each WEBS Index Series at a rate set from time to
time by the Board, provided that the annual rate may not exceed .25% of the
average daily net assets of each WEBS Index Series. The Board currently limits
the annual fee payable under the 12b-1 Plan with respect to each WEBS Index
Series so as not to exceed .20% of the average daily net assets of each WEBS
Index Series. From time to time, the distributor may waive all or a portion of
the fees. The distributor has entered into sales and investor services
agreements with broker-dealers or other persons that are DTC Participants to
provide distribution assistance, including broker-dealer and shareholder support
and educational and promotional services. Under the terms of each sales and
investor services agreement, the distributor will pay broker-dealers or other
persons, out of 12b-1 fees received from a WEBS Index Series, at the annual rate
of .08 of 1% of the average daily net asset value of WEBS held through DTC for
the account of such DTC Participant. The distributor may retain any amount of
its fee that is not expended for the foregoing purposes. The amount of the fee
is not dependent upon the distribution expenses actually incurred by the
distributor. The distributor has no role in determining the investment policies
of any WEBS Index Series or which securities are to be purchased or sold by any
WEBS Index Series.
40
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance since inception of those WEBS Index Series that have commenced
investment operations (the Australia, Austria, Belgium, Canada, France, Germany,
Hong Kong, Italy, Japan, Malaysia (Free), Mexico (Free), Netherlands, Singapore
(Free), Spain, Sweden, Switzerland and United Kingdom WEBS Index Series).
Certain information reflects financial results for a single WEBS of a WEBS Index
Series. The total returns in the table represent the rate that a shareholder
would have earned (or lost) on an investment in a WEBS Index Series (assuming
reinvestment of all dividends and distributions). This information has been
audited by Ernst & Young, LLP, whose report, along with the financial statements
of those WEBS Index Series' that have commenced operations, is included in the
Annual Report, which is incorporated by reference in the SAI and available
without charge upon request.
41
FINANCIAL HIGHLIGHTS WEBS INDEX FUND, INC.
FOREIGN FUND, INC.
================================================================================
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
Australia
WEBS
Index
Series
--------------------------------------------
For the For the For the
year year year
ended ended ended
08/31/99 08/31/98 08/31/97
---------- ---------- ----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 7.75 $ 10.35 $ 10.15
---------- ---------- ----------
Net investment income/(loss) (+) ................................................. 0.20 0.23 0.17
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 2.29 (2.60) 0.47
---------- ---------- ----------
Net increase/(decrease) in net assets resulting from operations .............. 2.49 (2.37) 0.64
---------- ---------- ----------
Less Distributions
Dividends from net investment income ............................................. (0.19) (0.23) (0.16)
Dividends in excess of net investment income ..................................... 0.00** 0.00** (0.04)
Distributions from net realized gains ............................................ -- -- (0.04)
Distributions in excess of net realized gains .................................... -- -- --
Return of capital ................................................................ (0.06) -- (0.20)
---------- ---------- ----------
Total dividends and distributions ............................................ (0.25) (0.23) (0.44)
---------- ---------- ----------
Net asset value, end of period ................................................... $ 9.99 $ 7.75 $ 10.35
========== ========== ==========
Total Investment Return (2) ......................................................... 32.09% (23.11)% 6.23%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 53,957 $ 34,099 $ 41,406
Ratios of expenses to average net assets (5) ..................................... 1.00% 1.05% 1.33%
Ratios of net investment income/(loss) to average net assets (5) ................. 2.03% 2.38% 1.57%
Portfolio turnover (6) ........................................................... 13.83% 1.49% 5.30%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... -- -- 1.33%
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. -- -- 1.57%
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Australia Austria
WEBS WEBS
Index Index
Series Series
---------- ----------------------------
For the For the For the
period year year
03/12/96*- ended ended
08/31/96 08/31/99 08/31/98
---------- ---------- ----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 9.95(1) $ 10.11 $ 10.51
---------- ---------- ----------
Net investment income/(loss) (+) ................................................. 0.10 0.10 0.06
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 0.29 (0.98) 0.20
---------- ---------- ----------
Net increase/(decrease) in net assets resulting from operations .............. 0.39 (0.88) 0.26
---------- ---------- ----------
Less Distributions
Dividends from net investment income ............................................. (0.08) (0.07) (0.04)
Dividends in excess of net investment income ..................................... (0.05) (0.01) (0.01)
Distributions from net realized gains ............................................ (0.02) -- (0.61)
Distributions in excess of net realized gains .................................... -- -- 0.00**
Return of capital ................................................................ (0.04) (0.02) 0.00**
---------- ---------- ----------
Total dividends and distributions ............................................ (0.19) (0.10) (0.66)
---------- ---------- ----------
Net asset value, end of period ................................................... $ 10.15 $ 9.13 $ 10.11
========== ========== ==========
Total Investment Return (2) ......................................................... 3.88%(4) (8.69)% 2.16%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 12,177 $ 12,776 $ 8,085
Ratios of expenses to average net assets (5) ..................................... 1.59%(3) 1.31% 1.41%
Ratios of net investment income/(loss) to average net assets (5) ................. 2.18%(3) 1.04% 0.51%
Portfolio turnover (6) ........................................................... 8.84%(4) 49.95% 36.14%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... 1.60%(3) -- --
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. 2.17%(3) -- --
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Austria Belgium
WEBS WEBS
Index Index
Series Series
------------------------- ----------
For the For the For the
year period year
ended 03/12/96*- ended
08/31/97 08/31/96 08/31/99
---------- ---------- ----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 10.40 $ 10.91(1) $ 18.40
---------- ---------- ----------
Net investment income/(loss) (+) ................................................. (0.02) 0.04 0.08
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 0.13 (0.41) (0.30)
---------- ---------- ----------
Net increase/(decrease) in net assets resulting from operations .............. 0.11 (0.37) (0.22)
---------- ---------- ----------
Less Distributions
Dividends from net investment income ............................................. -- (0.02) --
Dividends in excess of net investment income ..................................... -- (0.01) (0.01)
Distributions from net realized gains ............................................ -- (0.03) (1.19)
Distributions in excess of net realized gains .................................... -- -- --
Return of capital ................................................................ -- (0.08) (0.91)
---------- ---------- ----------
Total dividends and distributions ............................................ -- (0.14) (2.11)
---------- ---------- ----------
Net asset value, end of period ................................................... $ 10.51 $ 10.40 $ 16.07
========== ========== ==========
Total Investment Return (2) ......................................................... 1.06% (3.39)%(4) (1.00)%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 4,205 $ 13,520 $ 13,496
Ratios of expenses to average net assets (5) ..................................... 1.68% 1.56%(3) 1.24%
Ratios of net investment income/(loss) to average net assets (5) ................. (0.22)% 0.87%(3) 0.45%
Portfolio turnover (6) ........................................................... 28.47% 9.60%(4) 62.99%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... 1.69% 1.57%(3) --
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. (0.22)% 0.86%(3) --
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Belgium
WEBS
Index
Series
----------------------------------------
For the For the For the
year year period
ended ended 03/12/96*-
08/31/98 08/31/97 08/31/96
---------- ---------- ----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 15.64 $ 14.99 $ 14.92(1)
---------- ---------- ----------
Net investment income/(loss) (+) ................................................. 0.24 0.77 0.40
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 6.09 0.62 0.36
---------- ---------- ----------
Net increase/(decrease) in net assets resulting from operations .............. 6.33 1.39 0.76
---------- ---------- ----------
Less Distributions
Dividends from net investment income ............................................. (0.27) (0.33) (0.54)
Dividends in excess of net investment income ..................................... (1.21) (0.28) (0.09)
Distributions from net realized gains ............................................ (1.99) (0.12) (0.06)
Distributions in excess of net realized gains .................................... -- -- --
Return of capital ................................................................ (0.10) (0.01) --
---------- ---------- ----------
Total dividends and distributions ............................................ (3.57) (0.74) (0.69)
---------- ---------- ----------
Net asset value, end of period ................................................... $ 18.40 $ 15.64 $ 14.99
========== ========== ==========
Total Investment Return (2) ......................................................... 39.42% 9.26% 5.01%(4)
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 25,765 $ 32,528 $ 1,800
Ratios of expenses to average net assets (5) ..................................... 1.04% 1.24% 2.29%(3)
Ratios of net investment income/(loss) to average net assets (5) ................. 1.28% 4.63% 5.67%(3)
Portfolio turnover (6) ........................................................... 50.46% 16.83% 6.25%(4)
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... -- 1.24% 2.30%(3)
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. -- 4.63% 5.66%(3)
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Canada
WEBS
Index
Series
-------------------------------------------
For the For the For the
year year year
ended ended ended
08/31/99 08/31/98 08/31/97
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 9.90 $ 13.43 $ 10.60
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.07 0.07 0.05
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 3.87 (2.89) 2.97
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 3.94 (2.82) 3.02
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.08) (0.13) (0.05)
Dividends in excess of net investment income ..................................... (0.01) (0.00)** (0.00)**
Distributions from net realized gains ............................................ (0.53) (0.58) (0.14)
Distributions in excess of net realized gains .................................... -- -- --
Return of capital ................................................................ -- -- --
----------- ----------- -----------
Total dividends and distributions ............................................ (0.62) (0.71) (0.19)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 13.22 $ 9.90 $ 13.43
=========== =========== ===========
Total Investment Return (2) ......................................................... 39.71% (21.69)% 28.50%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 9,253 $ 6,932 $ 24,168
Ratios of expenses to average net assets (5) ..................................... 1.23% 1.14% 1.35%
Ratios of net investment income/(loss) to average net assets (5) ................. 0.53% 0.46% 0.39%
Portfolio turnover (6) ........................................................... 11.66% 3.70% 11.02%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... -- -- 1.36%
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. -- -- 0.39%
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Canada France
WEBS WEBS
Index Index
Series Series
----------- ---------------------------
For the For the For the
period year year
03/12/96*- ended ended
08/31/96 08/31/99 08/31/98
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 10.17(1) $ 19.13 $ 14.50
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.04 0.14 0.30
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 0.43 3.88 4.76
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 0.47 4.02 5.06
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.03) (0.10) (0.19)
Dividends in excess of net investment income ..................................... (0.01) (0.02) (0.03)
Distributions from net realized gains ............................................ -- (0.05) (0.13)
Distributions in excess of net realized gains .................................... 0.00** -- (0.01)
Return of capital ................................................................ 0.00** (0.08) (0.07)
----------- ----------- -----------
Total dividends and distributions ............................................ (0.04) (0.25) (0.43)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 10.60 $ 22.90 $ 19.13
=========== =========== ===========
Total Investment Return (2) ......................................................... 4.63%(4) 21.01% 34.77%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 13,776 $ 77,885 $ 45,922
Ratios of expenses to average net assets (5) ..................................... 1.44%(3) 1.06% 1.18%
Ratios of net investment income/(loss) to average net assets (5) ................. 0.79%(3) 0.67% 1.58%
Portfolio turnover (6) ........................................................... 0.00%(4) 0.00% 5.65%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... 1.45%(3) -- --
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. 0.78%(3) -- --
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
France Germany
WEBS WEBS
Index Index
Series Series
--------------------------- -----------
For the For the For the
year period year
ended 03/12/96*- ended
08/31/97 08/31/96 08/31/99
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 12.73 $ 12.42(1) $ 20.25
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.17 0.17 0.12
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 1.95 0.45 1.31
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 2.12 0.62 1.43
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.15) (0.09) (0.10)
Dividends in excess of net investment income ..................................... -- (0.01) (0.01)
Distributions from net realized gains ............................................ (0.20) 0.00** (0.31)
Distributions in excess of net realized gains .................................... -- -- (0.08)
Return of capital ................................................................ -- (0.21) (0.01)
----------- ----------- -----------
Total dividends and distributions ............................................ (0.35) (0.31) (0.51)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 14.50 $ 12.73 $ 21.17
=========== =========== ===========
Total Investment Return (2) ......................................................... 16.60% 4.95%(4) 7.04%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 14,519 $ 22,930 $ 101,645
Ratios of expenses to average net assets (5) ..................................... 1.52% 1.84%(3) 1.00%
Ratios of net investment income/(loss) to average net assets (5) ................. 1.17% 2.72%(3) 0.57%
Portfolio turnover (6) ........................................................... 7.13% 0.00%(4) 13.67%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... 1.52% 1.85%(3) --
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. 1.17% 2.71%(3) --
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Germany
WEBS
Index
Series
----------------------------------------
For the For the For the
year year period
ended ended 03/12/96*-
08/31/98 08/31/97 08/31/96
---------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 16.31 $ 13.64 $ 13.23(1)
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.29 0.03 0.06
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 3.92 2.77 0.47
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 4.21 2.80 0.53
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.17) (0.03) (0.03)
Dividends in excess of net investment income ..................................... (0.01) (0.01) (0.01)
Distributions from net realized gains ............................................ (0.01) (0.07) --
Distributions in excess of net realized gains .................................... 0.00** -- (0.01)
Return of capital ................................................................ (0.08) (0.02) (0.07)
----------- ----------- -----------
Total dividends and distributions ............................................ (0.27) (0.13) (0.12)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 20.25 $ 16.31 $ 13.64
=========== =========== ===========
Total Investment Return (2) ......................................................... 25.69% 20.51% 4.00%(4)
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 72,934 $ 24,486 $ 28,664
Ratios of expenses to average net assets (5) ..................................... 1.08% 1.37% 1.68%(3)
Ratios of net investment income/(loss) to average net assets (5) ................. 1.43% 0.23% 1.00%(3)
Portfolio turnover (6) ........................................................... 0.64% 9.04% 0.00%(4)
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... -- 1.37% 1.69%(3)
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. -- 0.22% 0.99%(3)
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Hong Kong
WEBS
Index
Series
----------------------------------------------
For the For the For the
year year year
ended ended ended
08/31/99 08/31/98 08/31/97
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 6.41 $ 14.73 $ 13.05
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.29 0.35 0.26
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 5.49 (8.27) 2.12
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 5.78 (7.92) 2.38
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.31) (0.28) (0.21)
Dividends in excess of net investment income ..................................... (0.05) 0.00** (0.01)
Distributions from net realized gains ............................................ -- -- (0.34)
Distributions in excess of net realized gains .................................... -- -- 0.00**
Return of capital ................................................................ -- (0.12) (0.14)
----------- ----------- -----------
Total dividends and distributions ............................................ (0.36) (0.40) (0.70)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 11.83 $ 6.41 $ 14.73
=========== =========== ===========
Total Investment Return (2) ......................................................... 90.51% (54.22)% 17.80%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 77,200 $ 49,973 $ 25,417
Ratios of expenses to average net assets (5) ..................................... 1.01% 1.09% 1.43%
Ratios of net investment income/(loss) to average net assets (5) ................. 2.84% 3.76% 1.71%
Portfolio turnover (6) ........................................................... 42.89% 21.50% 22.90%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... -- -- 1.43%
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. -- -- 1.71%
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Hong Kong Italy
WEBS WEBS
Index Index
Series Series
----------- ----------------------------
For the For the For the
period year year
03/12/96*- ended ended
08/31/96 08/31/99 08/31/98
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 12.83(1) $ 22.89 $ 16.66
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.15 0.17 0.18
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 0.27 1.05 7.94
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 0.42 1.22 8.12
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.13) (0.06) (0.18)
Dividends in excess of net investment income ..................................... (0.02) -- (1.02)
Distributions from net realized gains ............................................ (0.01) (2.24) (0.69)
Distributions in excess of net realized gains .................................... -- -- --
Return of capital ................................................................ (0.04) (0.25) --
----------- ----------- -----------
Total dividends and distributions ............................................ (0.20) (2.55) (1.89)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 13.05 $ 21.56 $ 22.89
=========== =========== ===========
Total Investment Return (2) ......................................................... 3.22%(4) 5.14% 47.66%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 7,845 $ 58,224 $ 58,368
Ratios of expenses to average net assets (5) ..................................... 1.52%(3) 1.03% 1.02%
Ratios of net investment income/(loss) to average net assets (5) ................. 2.37%(3) 0.70% 0.76%
Portfolio turnover (6) ........................................................... 0.00%(4) 7.89% 8.16%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... 1.53%(3) -- --
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. 2.36%(3) -- --
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Italy Japan
WEBS WEBS
Index Index
Series Series
---------------------------- -----------
For the For the For the
year period year
ended 03/12/96*- ended
08/31/97 08/31/96 08/31/99
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 13.79 $ 13.62(1) $ 8.39
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.12 0.25 (0.03)
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 3.10 0.31 4.91
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 3.22 0.56 4.88
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.11) (0.14) --
Dividends in excess of net investment income ..................................... (0.24) (0.03) (0.04)
Distributions from net realized gains ............................................ -- (0.14) --
Distributions in excess of net realized gains .................................... -- -- --
Return of capital ................................................................ -- (0.08) (0.01)
----------- ----------- -----------
Total dividends and distributions ............................................ (0.35) (0.39) (0.05)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 16.66 $ 13.79 $ 13.22
=========== =========== ===========
Total Investment Return (2) ......................................................... 23.37% 4.11%(4) 58.14%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 32,495 $ 35,170 $ 713,653
Ratios of expenses to average net assets (5) ..................................... 1.33% 1.43%(3) 0.94%
Ratios of net investment income/(loss) to average net assets (5) ................. 0.76% 3.69%(3) (0.27)%
Portfolio turnover (6) ........................................................... 13.70% 19.80%(4) 0.00%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... 1.33% 1.44%(3) --
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. 0.76% 3.68%(3) --
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Japan
WEBS
Index
Series
-----------------------------------------
For the For the For the
year year period
ended ended 03/12/96*-
08/31/98 08/31/97 08/31/96
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 12.61 $ 14.33 $ 14.79(1)
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. (0.02) (0.06) (0.07)
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... (4.19) (1.65) (0.39)
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. (4.21) (1.71) (0.46)
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. -- -- --
Dividends in excess of net investment income ..................................... -- -- --
Distributions from net realized gains ............................................ 0.00** -- --
Distributions in excess of net realized gains .................................... -- (0.01) --
Return of capital ................................................................ (0.01) -- --
----------- ----------- -----------
Total dividends and distributions ............................................ (0.01) (0.01) --
----------- ----------- -----------
Net asset value, end of period ................................................... $ 8.39 $ 12.61 $ 14.33
=========== =========== ===========
Total Investment Return (2) ......................................................... (33.38)% (11.97)% (3.11)%(4)
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 201,485 $ 158,957 $ 103,164
Ratios of expenses to average net assets (5) ..................................... 1.04% 1.19% 1.37%(3)
Ratios of net investment income/(loss) to average net assets (5) ................. (0.21)% (0.48)% (1.01)%(3)
Portfolio turnover (6) ........................................................... 0.00% 12.90% 21.54%(4)
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... -- 1.19% 1.38%(3)
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. -- (0.48)% (1.02)%(3)
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Malaysia (Free)
WEBS
Index
Series
----------------------------------------
For the For the For the
year year year
ended ended ended
08/31/99 08/31/98 08/31/97
---------- ---------- ----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 2.11 $ 8.23 $ 13.80
---------- ---------- ----------
Net investment income/(loss) (+) ................................................. 0.01 0.06 0.01
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 3.67 (6.10) (5.55)
---------- ---------- ----------
Net increase/(decrease) in net assets resulting from operations .............. 3.68 (6.04) (5.54)
---------- ---------- ----------
Less Distributions
Dividends from net investment income ............................................. (0.01) (0.05) 0.00**
Dividends in excess of net investment income ..................................... -- -- (0.01)
Distributions from net realized gains ............................................ -- -- --
Distributions in excess of net realized gains .................................... -- -- --
Return of capital ................................................................ (0.19) (0.03) (0.02)
---------- ---------- ----------
Total dividends and distributions ............................................ (0.20) (0.08) (0.03)
---------- ---------- ----------
Net asset value, end of period ................................................... $ 5.59 $ 2.11 $ 8.23
========== ========== ==========
Total Investment Return (2) ......................................................... 185.81% (73.57)% (40.20)%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 95,251 $ 35,867 $ 12,339
Ratios of expenses to average net assets (5) ..................................... 1.43% 1.09% 1.46%
Ratios of net investment income/(loss) to average net assets (5) ................. 0.33% 1.40% 0.04%
Portfolio turnover (6) ........................................................... 7.24% 2.11% 0.00%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... -- -- 1.47%
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. -- -- 0.04%
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Malaysia (Free) Mexico (Free)
WEBS WEBS
Index Index
Series Series
-------------- ---------------------------
For the For the For the
period year year
03/12/96*- ended ended
08/31/96 08/31/99 08/31/98
---------- ---------- ----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 13.24(1) $ 8.11 $ 15.11
---------- ---------- ----------
Net investment income/(loss) (+) ................................................. (0.02) 0.06 0.09
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 0.59 5.36 (6.71)
---------- ---------- ----------
Net increase/(decrease) in net assets resulting from operations .............. 0.57 5.42 (6.62)
---------- ---------- ----------
Less Distributions
Dividends from net investment income ............................................. -- (0.06) (0.09)
Dividends in excess of net investment income ..................................... -- (0.01) --
Distributions from net realized gains ............................................ -- -- (0.29)
Distributions in excess of net realized gains .................................... -- (0.01) --
Return of capital ................................................................ (0.01) (0.06) --
---------- ---------- ----------
Total dividends and distributions ............................................ (0.01) (0.14) (0.38)
---------- ---------- ----------
Net asset value, end of period ................................................... $ 13.80 $ 13.39 $ 8.11
========== ========== ==========
Total Investment Return (2) ......................................................... 4.28%(4) 66.92% (44.18)%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 9,318 $ 21,430 $ 7,296
Ratios of expenses to average net assets (5) ..................................... 1.58%(3) 1.26% 1.34%
Ratios of net investment income/(loss) to average net assets (5) ................. (0.35)%(3) 0.52% 0.60%
Portfolio turnover (6) ........................................................... 0.00%(4) 18.36% 14.05%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... 1.59%(3) -- --
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. (0.36)%(3) -- --
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Mexico (Free) Netherlands
WEBS WEBS
Index Index
Series Series
------------------------- -----------
For the For the For the
year period year
ended 03/12/96*- ended
08/31/97 08/31/96 08/31/99
---------- ---------- ----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 11.52 $ 9.95(1) $ 23.50
---------- ---------- ----------
Net investment income/(loss) (+) ................................................. 0.02 0.00** 0.53
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 4.07 1.59 1.60
---------- ---------- ----------
Net increase/(decrease) in net assets resulting from operations .............. 4.09 1.59 2.13
---------- ---------- ----------
Less Distributions
Dividends from net investment income ............................................. (0.01) -- (0.43)
Dividends in excess of net investment income ..................................... (0.01) (0.01) (0.01)
Distributions from net realized gains ............................................ (0.44) -- (1.42)
Distributions in excess of net realized gains .................................... -- -- (0.24)
Return of capital ................................................................ (0.04) (0.01) (0.08)
---------- ---------- ----------
Total dividends and distributions ............................................ (0.50) (0.02) (2.18)
---------- ---------- ----------
Net asset value, end of period ................................................... $ 15.11 $ 11.52 $ 23.45
========== ========== ==========
Total Investment Return (2) ......................................................... 35.21% 15.93%(4) 8.98%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 16,627 $ 5,759 $ 31,685
Ratios of expenses to average net assets (5) ..................................... 1.63% 1.75%(3) 1.07%
Ratios of net investment income/(loss) to average net assets (5) ................. 0.14% 0.01%(3) 2.20%
Portfolio turnover (6) ........................................................... 22.80% 0.00%(4) 32.13%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... 1.63% 1.76%(3) --
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. 0.13% 0.00%(3) --
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Netherlands
WEBS
Index
Series
---------------------------------------
For the For the For the
year year period
ended ended 03/12/96*-
08/31/98 08/31/97 08/31/96
---------- ---------- ----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 21.42 $ 17.36 $ 15.91(1)
---------- ---------- ----------
Net investment income/(loss) (+) ................................................. 0.25 0.11 0.24
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 3.53 4.79 1.54
---------- ---------- ----------
Net increase/(decrease) in net assets resulting from operations .............. 3.78 4.90 1.78
---------- ---------- ----------
Less Distributions
Dividends from net investment income ............................................. (0.16) (0.10) (0.14)
Dividends in excess of net investment income ..................................... -- (0.01) (0.01)
Distributions from net realized gains ............................................ (1.47) (0.71) (0.08)
Distributions in excess of net realized gains .................................... -- -- (0.01)
Return of capital ................................................................ (0.07) (0.02) (0.09)
---------- ---------- ----------
Total dividends and distributions ............................................ (1.70) (0.84) (0.33)
---------- ---------- ----------
Net asset value, end of period ................................................... $ 23.50 $ 21.42 $ 17.36
========== ========== ==========
Total Investment Return (2) ......................................................... 17.41% 28.04% 11.19%(4)
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 22,349 $ 9,661 $ 6,962
Ratios of expenses to average net assets (5) ..................................... 1.12% 1.46% 1.63%(3)
Ratios of net investment income/(loss) to average net assets (5) ................. 1.00% 0.54% 2.93%(3)
Portfolio turnover (6) ........................................................... 15.81% 12.68% 4.32%(4)
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... -- 1.46% 1.64%(3)
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. -- 0.53% 2.92%(3)
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Singapore (Free)
WEBS
Index
Series
---------------------------------------------
For the For the For the
year year year
ended ended ended
08/31/99 08/31/98 08/31/97
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 3.30 $ 8.66 $ 11.38
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.05 0.07 0.00**
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 4.70 (5.37) (2.67)
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 4.75 (5.30) (2.67)
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.05) (0.04) 0.00**
Dividends in excess of net investment income ..................................... (0.06) (0.01) (0.01)
Distributions from net realized gains ............................................ -- -- (0.02)
Distributions in excess of net realized gains .................................... -- -- --
Return of capital ................................................................ (0.01) (0.01) (0.02)
----------- ----------- -----------
Total dividends and distributions ............................................ (0.12) (0.06) (0.05)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 7.93 $ 3.30 $ 8.66
=========== =========== ===========
Total Investment Return (2) ......................................................... 144.52% (61.29)% (23.48)%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 113,438 $ 47,248 $ 14,722
Ratios of expenses to average net assets (5) ..................................... 0.97% 1.08% 1.43%
Ratios of net investment income/(loss) to average net assets (5) ................. 0.76% 1.17% 0.03%
Portfolio turnover (6) ........................................................... 25.31% 67.17% 13.40%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... -- -- 1.43%
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. -- -- 0.03%
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Singapore (Free) Spain
WEBS WEBS
Index Index
Series Series
----------- -------------------------
For the For the For the
period year year
03/12/96*- ended ended
08/31/96 08/31/99 08/31/98
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 12.24(1) $ 23.84 $ 18.49
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.04 0.09 0.16
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... (0.86) 3.14 5.94
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. (0.82) 3.23 6.10
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.03) (0.07) (0.12)
Dividends in excess of net investment income ..................................... (0.01) (0.02) (0.02)
Distributions from net realized gains ............................................ -- (1.35) (0.55)
Distributions in excess of net realized gains .................................... -- -- --
Return of capital ................................................................ -- (0.04) (0.06)
----------- ----------- -----------
Total dividends and distributions ............................................ (0.04) (1.48) (0.75)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 11.38 $ 25.59 $ 23.84
=========== =========== ===========
Total Investment Return (2) ......................................................... (6.73)%(4) 13.39% 32.58%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 9,107 $ 36,469 $ 25,029
Ratios of expenses to average net assets (5) ..................................... 1.56%(3) 1.04% 1.11%
Ratios of net investment income/(loss) to average net assets (5) ................. 0.69%(3) 0.31% 0.61%
Portfolio turnover (6) ........................................................... 26.29%(4) 16.58% 9.10%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... 1.57%(3) -- --
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. 0.68%(3) -- --
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Spain Sweden
WEBS WEBS
Index Index
Series Series
--------------------------- ------------
For the For the For the
year period year
ended 03/12/96*- ended
08/31/97 08/31/96 08/31/99
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 14.09 $ 13.28(1) $ 18.39
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.19 0.14 0.10
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 5.33 0.98 4.52
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 5.52 1.12 4.62
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.12) (0.18) (0.09)
Dividends in excess of net investment income ..................................... (0.05) -- (0.01)
Distributions from net realized gains ............................................ (0.86) (0.13) (0.62)
Distributions in excess of net realized gains .................................... -- -- (0.01)
Return of capital ................................................................ (0.09) -- (0.02)
----------- ----------- -----------
Total dividends and distributions ............................................ (1.12) (0.31) (0.75)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 18.49 $ 14.09 $ 22.26
=========== =========== ===========
Total Investment Return (2) ......................................................... 39.15% 8.45%(4) 25.09%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 8,321 $ 4,227 $ 20,034
Ratios of expenses to average net assets (5) ..................................... 1.67% 1.76%(3) 1.13%
Ratios of net investment income/(loss) to average net assets (5) ................. 1.04% 2.04%(3) 0.49%
Portfolio turnover (6) ........................................................... 19.21% 4.73%(4) 33.44%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... 1.67% 1.77%(3) --
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. 1.04% 2.03%(3) --
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Sweden
WEBS
Index
Series
------------------------------------------
For the For the For the
year year period
ended ended 03/12/96*-
08/31/98 08/31/97 08/31/96
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 18.32 $ 14.67 $ 13.22(1)
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.10 (0.03) 0.20
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 0.95 4.45 1.67
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 1.05 4.42 1.87
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.08) -- (0.23)
Dividends in excess of net investment income ..................................... (0.01) -- (0.07)
Distributions from net realized gains ............................................ (0.86) (0.77) (0.12)
Distributions in excess of net realized gains .................................... (0.01) -- --
Return of capital ................................................................ (0.02) -- --
----------- ----------- -----------
Total dividends and distributions ............................................ (0.98) (0.77) (0.42)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 18.39 $ 18.32 $ 14.67
=========== =========== ===========
Total Investment Return (2) ......................................................... 5.48% 30.10% 14.13%(4)
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 13,791 $ 8,243 $ 4,400
Ratios of expenses to average net assets (5) ..................................... 1.17% 1.64% 1.75%(3)
Ratios of net investment income/(loss) to average net assets (5) ................. 0.48% (0.19)% 3.05%(3)
Portfolio turnover (6) ........................................................... 10.88% 13.71% 5.87%(4)
* Commencement of operations.
** Less than one cent per share.
+ 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 through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... -- 1.64% 1.76%(3)
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. -- (0.19)% 3.04%(3)
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Switzerland
WEBS
Index
Series
------------------------------------------
For the For the For the
year year year
ended ended ended
08/31/99 08/31/98 08/31/97
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 15.55 $ 13.79 $ 12.29
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.04 (0.00)%** (0.04)
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 0.19 3.01 2.11
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 0.23 3.01 2.07
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.03) -- --
Dividends in excess of net investment income ..................................... (0.04) (0.01) --
Distributions from net realized gains ............................................ (0.17) (1.21) (0.57)
Distributions in excess of net realized gains .................................... (0.14) -- --
Return of capital ................................................................ (0.01) (0.03) 0.00**
----------- ----------- -----------
Total dividends and distributions ............................................ (0.39) (1.25) (0.57)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 15.39 $ 15.55 $ 13.79
=========== =========== ===========
Total Investment Return (2) ......................................................... 1.47% 21.24% 16.69%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 38,499 $ 29,163 $ 13,805
Ratios of expenses to average net assets (5) ..................................... 1.09% 1.15% 1.52%
Ratios of net investment income/(loss) to average net assets (5) ................. 0.24% (0.03)% (0.29)%
Portfolio turnover (6) ........................................................... 35.10% 43.09% 48.05%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... -- -- 1.53%
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. -- -- (0.29)%
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
Switzerland United Kingdom
WEBS WEBS
Index Index
Series Series
----------- ----------------------------
For the For the For the
period year year
03/12/96*- ended ended
08/31/96 08/31/99 08/31/98
----------- ----------- -----------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 12.07(1) $ 18.48 $ 16.50
----------- ----------- -----------
Net investment income/(loss) (+) ................................................. 0.08 0.44 0.37
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 0.24 2.40 2.12
----------- ----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 0.32 2.84 2.49
----------- ----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.10) (0.36) (0.29)
Dividends in excess of net investment income ..................................... -- (0.01) (0.04)
Distributions from net realized gains ............................................ -- (0.60) (0.11)
Distributions in excess of net realized gains .................................... -- (0.02) --
Return of capital ................................................................ -- (0.08) (0.07)
----------- ----------- -----------
Total dividends and distributions ............................................ (0.10) (1.07) (0.51)
----------- ----------- -----------
Net asset value, end of period ................................................... $ 12.29 $ 20.25 $ 18.48
=========== =========== ===========
Total Investment Return (2) ......................................................... 2.60%(4) 15.33% 14.98%
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 6,158 $ 113,402 $ 62,846
Ratios of expenses to average net assets (5) ..................................... 1.82%(3) 0.97% 1.03%
Ratios of net investment income/(loss) to average net assets (5) ................. 1.39%(3) 2.16% 1.90%
Portfolio turnover (6) ........................................................... 17.06%(4) 13.24% 2.83%
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... 1.83%(3) -- --
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. 1.38%(3) -- --
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
<CAPTION>
United Kingdom
WEBS
Index
Series
---------------------------
For the For the
year period
ended 03/12/96*-
08/31/97 08/31/96
----------- -----------
<S> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ............................................. $ 13.15 $ 12.14(1)
----------- -----------
Net investment income/(loss) (+) ................................................. 0.38 0.21
Net realized and unrealized gain/(loss) on investments and foreign currency
related transactions and translation of other assets and liabilities denominated
in foreign currencies .......................................................... 3.62 1.06
----------- -----------
Net increase/(decrease) in net assets resulting from operations .............. 4.00 1.27
----------- -----------
Less Distributions
Dividends from net investment income ............................................. (0.32) (0.20)
Dividends in excess of net investment income ..................................... (0.06) (0.03)
Distributions from net realized gains ............................................ (0.17) 0.00**
Distributions in excess of net realized gains .................................... -- --
Return of capital ................................................................ (0.10) (0.03)
----------- -----------
Total dividends and distributions ............................................ (0.65) (0.26)
----------- -----------
Net asset value, end of period ................................................... $ 16.50 $ 13.15
=========== ===========
Total Investment Return (2) ......................................................... 30.48% 10.41%(4)
Ratios/ Supplemental Data
Net assets, end of period (in 000's) ............................................. $ 29,721 $ 15,790
Ratios of expenses to average net assets (5) ..................................... 1.38% 1.61%(3)
Ratios of net investment income/(loss) to average net assets (5) ................. 2.47% 3.62%(3)
Portfolio turnover (6) ........................................................... 1.84% 0.00%(4)
* Commencement of operations.
** Less than one cent per share.
+ Based on average shares outstanding throughout the period.
(1) Net asset value per share on March 12, 1996 (commencement of operations).
(2) Total investment return is calculated assuming a purchase of capital stock at
net asset value per share on the first day and a sale at the net asset value
per share on the last day of the period reported. Dividends and distributions,
if any, are assumed, for purposes of this calculation, to be reinvested at the
net asset value per share on the ex-dividend date.
(3) Annualized.
(4) Not Annualized.
(5) Includes voluntary waivers through December 31, 1996. If such waivers had not
been made the ratios of expenses to average net assets and ratios of net
investment income/(loss) to average net assets would have been as follows:
Ratios of expenses to average net assets before waivers ...................... 1.38% 1.62%(3)
Ratios of net investment income/(loss) to average
net assets before waivers ................................................. 2.47% 3.61%(3)
(6) Excludes portfolio securities received or delivered as a result of processing
capital share transactions in Creation Unit(s).
</TABLE>
<PAGE>
FOR MORE INFORMATION
FOR INVESTORS WHO WANT MORE INFORMATION ON WEBS INDEX SERIES, THE FOLLOWING
DOCUMENTS ARE AVAILABLE FREE UPON REQUEST:
Annual/Semi-Annual Reports: Contain performance data and information on
portfolio holdings for the WEBS Fund's most recently completed fiscal year or
half year, a statement from management and, on an annual basis, the auditor's
report.
Statement of Additional Information (SAI): Contains more detailed information
about the WEBS Fund's policies, investment restrictions, risks and business
structure. This Prospectus incorporates the SAI by reference.
Copies of these documents and answers to questions about WEBS Index Series may
be obtained without charge by contacting:
WEBS INDEX FUND, INC.
400 Bellevue Parkway
Wilmington, Delaware 19809
1-800-810-WEBS (9327)
Information about WEBS Index Series (including the SAI) can be viewed and copied
at the Public Reference Room of the SEC in Washington, D.C. Copies of this
information may be obtained, upon payment of a duplicating fee, by writing the
Public Reference Room of the SEC, Washington, D.C., 20549-6009. Information on
the operation of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. Reports and other information about WEBS Index Series may be
viewed on-screen or downloaded from the SEC's Internet site at
http://www.sec.gov.
- --------------------------------------------------------------------------------
FOR MORE INFORMATION ON WEBS INDEX SERIES, PLEASE CALL:
1-800-810-WEBS (9327)
Monday through Friday
8:30 a.m. to 5:00 p.m. (EST)
or visit our Website at: http://websontheweb.com
- --------------------------------------------------------------------------------
Investment Company Act File No. 811-09102.
<PAGE>
WEBS INDEX FUND, INC.
(THE "COMPANY")
WEBS INDEX SERIES
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 30, 1999
This Statement of Additional Information ("SAI") provides information about the
Company and its WEBS Index Series. This information is in addition to the
information contained in the Company's Prospectus dated December 30, 1999.
This SAI is not a prospectus. It should be read in conjunction with the
Prospectus and the Company's Annual Report dated August 31, 1999. The financial
statements and notes contained in the Annual Report are incorporated by
reference into this SAI. Copies of the Company's Prospectus and Annual Report
may be obtained free of charge by telephoning (888) 810-WEBS (9327).
The WEBS of the Brazil (Free), EMU, Korea, Taiwan, South Africa, and USA WEBS
Index Series are not listed on the AMEX and are not being offered for sale as of
the date of this SAI. This SAI will be supplemented when one or more of these
WEBS Index Series commences operations.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION......................................................................................5
INVESTMENT STRATEGIES AND RISKS .........................................................................5
Exchange Listing and Trading........................................................................5
Lending Portfolio Securities........................................................................6
Repurchase Agreements...............................................................................7
Currency Transactions...............................................................................7
Futures Contracts and Options.......................................................................8
Futures Transactions............................................................................8
Restrictions on the Use of Futures Contracts and Options on Future Contracts....................9
Federal Tax Treatment of Futures Contracts......................................................9
Future Developments............................................................................10
Swap Agreements ...................................................................................10
Non-U.S. Equity Portfolios.........................................................................10
Concentrations and Lack of Diversification of Certain WEBS Index Series............................10
Year 2000..........................................................................................11
Investments in Subject Equity Markets..............................................................11
Regional and Country-Specific Economic Considerations..............................................26
MSCI INDICES............................................................................................43
INVESTMENT LIMITATIONS..................................................................................47
MANAGEMENT OF THE FUND..................................................................................49
Directors and Officers of the Company..............................................................49
Directors' Compensation............................................................................51
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.....................................................51
INVESTMENT ADVISORY MANAGMENT, ADMINISTRATIVE
AND DISTRIBUTION SERVICES..........................................................................57
Investment Adviser.................................................................................57
Administrator......................................................................................59
Sub-Administrator..................................................................................59
Distributor........................................................................................60
Custodian and Lending Agent........................................................................61
Transfer Agent.....................................................................................62
BROKERAGE ALLOCATION....................................................................................62
ADDITIONAL INFORMATION CONCERNING WEBS..................................................................62
Capital Stock......................................................................................62
Book Entry Only System.............................................................................63
PURCHASE AND REDEMPTION OF WEBS.........................................................................64
Creation Units.....................................................................................64
Purchase and Issuance of WEBS in Creation Units....................................................65
Redemption of WEBS in Creation Units...............................................................70
Determining Net Asset Value........................................................................72
Continuous Offering................................................................................73
TAXES ...............................................................................................73
PERFORMANCE INFORMATION.................................................................................75
COUNSEL AND INDEPENDENT AUDITORS........................................................................78
Counsel............................................................................................78
Independent Auditors...............................................................................78
FINANCIAL STATEMENTS....................................................................................78
APPENDIX A.............................................................................................A-1
APPENDIX B.............................................................................................B-1
</TABLE>
2
<PAGE>
The information contained herein regarding Morgan Stanley Capital International
Inc. ("MSCI"), the MSCI Indices, local securities markets and The Depository
Trust Company ("DTC") was obtained from publicly available sources.
3
<PAGE>
MSCI is a company jointly owned by Morgan Stanley Dean Witter & Co.
("MSDW"), an international investment banking, asset management and brokerage
firm and The Capital Group Companies, Inc. ("Capital"), an international
investment management company that is not affiliated with MSDW. MSCI is the
owner of the MSCI Indices and has full responsibility for the design,
maintenance, production and distribution of the Indices, including additions and
deletions of constituents within the Indices.
World Equity Benchmark Shares ("WEBS")are not sponsored, endorsed, or
promoted by MSDW or any of its affiliates. Neither MSDW nor any of its
affiliates make any representation or warranty, express or implied, to the
owners of the WEBS of any WEBS Index Series or any member of the public
regarding the advisability of investing in securities generally, or in the WEBS
of any WEBS Index Series particularly, or the ability of the indices identified
herein to track general stock market performance. The MSCI Indices identified
herein are determined, composed and calculated without regard to the WEBS of any
WEBS Index Series or the issuer thereof. Neither MSCI nor either of its owners
has any obligation to take the needs of the issuer of the WEBS of any WEBS Index
Series or the owners of the WEBS of any WEBS Index Series into consideration in
determining, composing, calculating or disseminating the respective MSCI
Indices. Neither MSCI nor either of its owners is responsible for, nor have they
participated in the determination of the timing of, prices of, or quantities of
the WEBS of any WEBS Index Series to be issued or in the determination or
calculation of the equation by which the WEBS of any WEBS Index Series are
redeemable. Neither MSCI nor either of its owners has any obligation or
liability to owners of the WEBS of any WEBS Index Series in connection with the
administration, marketing or trading of the WEBS of any WEBS Index Series.
Although MSCI and Capital, which are primarily responsible for
formulating the MSCI Indices, shall obtain information for inclusion in or for
use in the calculation of the MSCI Indices from sources which they consider
reliable, neither MSCI nor Capital guarantees the accuracy and/or the
completeness of the component data of any MSCI Index obtained from independent
sources. Neither MSCI nor Capital makes any warranty, express or implied, as to
results to be obtained by licensee, owners of the products, or any other person
or entity from the use of the MSCI Indices or any data included therein in
connection with the rights licensed under any license agreement or for any other
use. Neither MSCI nor Capital makes any express or implied warranties, and each
hereby expressly disclaims all warranties of merchantability or fitness for a
particular purpose with respect to the MSCI Indices or any data included
therein. Without limiting any of the foregoing, in no event shall MSCI or
Capital have any liability for any direct, indirect, special, punitive,
consequential or any other damages (including lost profits) even if notified of
the possibility of such damages.
Unless otherwise specified, all references in this Statement of
Additional Information to "dollars," "USD," "US$" or "$" are to United States
Dollars, all references to "AUD," or "A$" are to Australian Dollars, all
references to "ATS" are to Austrian Schillings, all references to "BEF" are to
Belgian Francs, all references to "BRL" are to Brazilian Reals, all references
to "CAD" or "CA$" are to Canadian Dollars, all references to "EUR" are to Euros,
all references to "FRF" or "FF" are to French Francs, all references to "DEM" or
"DM" are to the German Deutsche Mark, all references to "HKD" or "HK$" are to
Hong Kong Dollars, all references to "ITL" or "LL" are to Italian Lira, all
references to "JPY" or "Y" are to Japanese Yen, all references to "KRW" are to
Korean Wons, all references to "MYR" are to Malaysian Ringgits, all references
to "MXN" are to Mexican Pesos, all references to "NLG" are to Netherlands
Guilders, all references to "SGD" are to Singapore Dollars, all references to
"ZAR" are to South African Rands, all references to "ESP" are to Spanish
Pesetas, all references to "SEK" are to Swedish Krona, all references to "CHF"
are to Swiss Francs, all references to "TWD: are to New Taiwan Dollars and all
references to "GBP," "(pound)" or "L" are to British Pounds Sterling. On August
31, 1999, the 4:00 p.m. buying rates in New York City for cable transfers
payable in the applicable currency, as certified for customs purposes by the
Federal Reserve Bank of New York, were as follows for each US $1.00: AUD
1.569489, ATS 13.02755, BEF 38.1916, BRL 1.918, CAD 1.4922, EUR 0.946746, FRF
6.21025, DEM 1.85165, HKD 7.76515, ITL 1833.15505, JPY 109.645, KRW 1180.5, MYR
3.8, MXN 9.355, NLG 2.08635, SGD 1.6843, ZAR 6.082, ESP 157.5252, SEK 8.259, CHF
1.5151, TWD 31.8425 and GBP 0.62191. Some numbers in this Statement of
Additional Information have been rounded. All US Dollar equivalents provided in
this Statement of Additional Information are calculated at the exchange rate
prevailing on the date to which the corresponding foreign currency amount
refers.
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GENERAL INFORMATION
WEBS Index Fund, Inc. (the "WEBS Fund") was organized as a Maryland
corporation on August 31, 1994, and is an open-end management investment company
currently operating or proposing to operate 28 separate investment portfolios or
"WEBS Index Series". The following seventeen WEBS Index Series commenced
operations on March 6, 1996: the Australia WEBS Index Series, the Austria WEBS
Index Series, the Belgium WEBS Index Series, the Canada WEBS Index Series, the
France WEBS Index Series, the Germany WEBS Index Series, the Hong Kong WEBS
Index Series, the Italy WEBS Index Series, the Japan WEBS Index Series, the
Malaysia (Free) WEBS Index Series, the Mexico (Free) WEBS Index Series, the
Netherlands WEBS Index Series, the Singapore (Free) WEBS Index Series, the Spain
WEBS Index Series, the Sweden WEBS Index Series, the Switzerland WEBS Index
Series and the United Kingdom WEBS Index Series. The following WEBS Index Series
had not commenced operations as of the date of this SAI: the Brazil (Free) WEBS
Index Series, the EMU WEBS Index Series, the Korea WEBS Index Series, the South
Africa WEBS Index Series, the Taiwan WEBS Index Series and the USA WEBS Index
Series. The Canada WEBS Index Series, the EMU WEBS Index Series, the Japan WEBS
Index Series, the United Kingdom WEBS Index Series and the USA WEBS Index Series
are each classified as a "diversified" investment company under the 1940 Act.
Each of the other WEBS Index Series offered hereby is classified as a
"non-diversified" investment company under the Investment Company Act of 1940.
The Board of Directors of the Company may authorize additional WEBS Index Series
in the future.
INVESTMENT STRATEGIES AND RISKS
The following supplements the information contained in the Prospectus
concerning the investment objectives and policies of the WEBS Index Series.
Exchange Listing and Trading. Except for those WEBS specified on the
cover of (or in a supplement to) this SAI, the WEBS of each WEBS Index Series
have been listed for trading on the AMEX. The AMEX has approved modifications to
its Rules to permit the listing of WEBS. The non-redeemable WEBS trade on the
AMEX at prices that may differ to some degree from their net asset value. See
"Special Considerations and Risks" and "Determining Net Asset Value". There can
be no assurance that the requirements of the AMEX necessary to maintain the
listing of WEBS of any Index Series will continue to be met. The AMEX may remove
the WEBS of a WEBS Index Series from listing if (1) following the initial
twelve-month period beginning upon the commencement of trading of a WEBS Index
Series, there are fewer than 50 beneficial holders of the WEBS for 30 or more
consecutive trading days, (2) the value of the underlying index or portfolio of
securities on which such WEBS Index Series is based is no longer calculated or
available or (3) any other event shall occur or condition exist that, in the
opinion of the AMEX, makes further dealings on the AMEX inadvisable. In
addition, the AMEX will remove the shares from listing and trading upon
termination of the Company.
As in the case of other stocks traded on the AMEX, the brokers'
commission on transactions will be based on negotiated commission rates at
customary levels for retail customers and rates which range between $.015 to
$.12 per share for institutions and high net worth individuals.
In order to provide current WEBS pricing information, the AMEX
disseminates through the facilities of the Consolidated Tape Association an
updated "indicative optimized portfolio value" ("IOPV") for each WEBS Index
Series as calculated by Bloomberg, L.P ("Bloomberg"). The Company is not
involved in or responsible for any aspect of the calculation or dissemination of
the IOPVs, and makes no warranty as to the accuracy of the IOPVs. IOPVs are
disseminated on a per WEBS Index Series basis every 15 seconds during regular
AMEX trading hours of 9:30 a.m. to 4:00 p.m. New York time.
The IOPV has an equity securities value component and a cash component.
The equity securities values included in the IOPV are the values of the Deposit
Securities for each WEBS Index Series. While the IOPV reflects the current
market value of the Deposit Securities required to be deposited in connection
with the purchase of a Creation Unit of WEBS, it does not necessarily reflect
the precise composition of the current portfolio of securities held by the
Company for each WEBS Index Series at a particular point in time, because the
current portfolio of a WEBS Index Series may include securities that are not a
part of the current Deposit Securities. Therefore, the IOPV on a per WEBS Index
Series basis disseminated during AMEX trading hours should not be viewed as a
real time
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update of the net asset value per WEBS share of the Company, which is calculated
only once a day. It is possible that the value of the portfolio of securities
held by the Company for a particular WEBS Index Series may diverge from the
applicable IOPV during any trading day. In such case, the IOPV would not
precisely reflect the value of a WEBS Index Series' portfolio. In addition, the
foreign exchange rate used by the Company in computing net asset value of a WEBS
Index Series may differ materially from that used by Bloomberg. See "Determining
Net Asset Value" below.
The equity securities included in the IOPV reflect the same market
capitalization weighting as the Deposit Securities of the particular WEBS Index
Series. In addition to the equity component described in the preceding
paragraph, the IOPV for each WEBS Index Series includes a cash component
consisting of estimated accrued dividend and other income, less expenses. Each
IOPV also reflects changes in currency exchange rates between the U.S. dollar
and the applicable home foreign currency. For the Australia, Hong Kong, Japan,
Korea, Malaysia (Free), Singapore (Free)and Taiwan, there is no overlap in
trading hours between the foreign market and the AMEX. Therefore, for each of
these WEBS Index Series, Bloomberg utilizes closing prices (in applicable
foreign currency prices) in the foreign market for securities in the WEBS Index
Series portfolio, and converts the price to U.S. dollars. This value is updated
every 15 seconds during AMEX trading hours to reflect changes in currency
exchange rates between the U.S. dollar and the applicable foreign currency. For
WEBS Index Series which have trading hours overlapping regular AMEX trading
hours, Bloomberg updates the applicable IOPV every 15 seconds to reflect price
changes in the principal foreign market, and converts such prices into U.S.
dollars based on the current currency exchange rate. When the foreign market is
closed but the AMEX is open, the IOPV is updated every 15 seconds to reflect
changes in currency exchange rates after the foreign market closes.
Lending Portfolio Securities. The Company may lend portfolio securities
to brokers, dealers and other financial institutions needing to borrow
securities to complete transactions and for other purposes. Because the
government securities or other assets that are pledged as collateral to the
Company in connection with these loans generate income, securities lending
enables a WEBS Index Series to earn additional income that may partially offset
the expenses of such WEBS Index Series, and thereby reduce the effect that
expenses have on such WEBS Index Series' ability to provide investment results
that substantially correspond to the price and yield performance of its
respective MSCI Index. These loans may not exceed 33% of a WEBS Index Series'
total assets. The documentation for these loans provide that the WEBS Index
Series will receive collateral equal to at least 100% of the current market
value of the loaned securities, as marked to market each day on the same basis
as the net asset value of the WEBS Index Series is determined, consisting of
government securities or other assets permitted by applicable regulations and
interpretations. A WEBS Index Series pays reasonable administrative and
custodial fees in connection with the loan of securities. The WEBS Index Series
invests collateral in short-term investments. The Chase Manhattan Bank ("Chase")
serves as Lending Agent of the Company and, in such capacity, shares equally
with the respective WEBS Index Series any net income earned on invested
collateral. A WEBS Index Series' share of income from the loan collateral is
included in the WEBS Index Series' gross investment income.
The Company will comply with the conditions for lending established by
the SEC. The SEC currently requires that the following conditions be met
whenever portfolio securities are loaned: (1) the WEBS Index Series must receive
at least 100% collateral from the borrower; (2) the borrower must increase such
collateral whenever the market value of the securities lent rises above the
level of the collateral; (3) the WEBS Index Series must be able to terminate the
loan at any time; (4) the WEBS Index Series must receive reasonable interest on
the loan, as well as any dividends, interest or other distributions on the
loaned securities, and any increase in market value; (5) the WEBS Index Series
may pay only reasonable custodian fees in connection with the loan and will pay
no finder's fees; and (6) while voting rights on the loaned securities may pass
to the borrower, the Company's Board of Directors (the "Board" or the
"Directors") must terminate the loan and regain the right to vote the securities
if a material event adversely affecting the investment occurs. Although each
WEBS Index Series will receive collateral in connection with all loans of
portfolio securities, and such collateral will be marked to market, the WEBS
Index Series will be exposed to the risk of loss should a borrower default on
its obligation to return the borrowed securities (e.g., the loaned securities
may have appreciated beyond the value of the collateral held by the Company). In
addition, each WEBS Index Series bears the risk of loss of any cash collateral
that it invests in short-term investments.
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Repurchase Agreements. Each WEBS Index Series may invest in repurchase
agreements with commercial banks, brokers or dealers to generate income from its
excess cash balances and to invest securities lending cash collateral. A
repurchase agreement is an agreement under which a WEBS Index Series acquires a
money market instrument (generally a security issued by the U.S. Government or
an agency thereof, a banker's acceptance or a certificate of deposit) from a
seller, subject to resale to the seller at an agreed upon price and date
(normally, the next business day). A repurchase agreement may be considered a
loan collateralized by securities. The resale price reflects an agreed upon
interest rate effective for the period the instrument is held by a WEBS Index
Series and is unrelated to the interest rate on the underlying instrument. In
these transactions, the securities acquired by a WEBS Index Series (including
accrued interest earned thereon) must have a total value in excess of the value
of the repurchase agreement and are held by the Company's custodian bank until
repurchased. In addition, the Company's Board of Directors monitors the
Company's repurchase agreement transactions generally and has established
guidelines and standards for review of the creditworthiness of any bank, broker
or dealer counterparty to a repurchase agreement with a WEBS Index Series. No
more than an aggregate of 15% of the WEBS Index Series' net assets will be
invested in repurchase agreements having maturities longer than seven days and
securities subject to legal or contractual restrictions on resale, or for which
there are no readily available market quotations. A WEBS Index Series will enter
into repurchase agreements only with Federal Reserve member banks with minimum
assets of at least $2 billion or registered securities dealers.
The use of repurchase agreements involves certain risks. For example,
if the other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
Company may incur a loss upon disposition of the security. If the other party to
the agreement becomes insolvent and subject to liquidation or reorganization
under the Bankruptcy Code or other laws, a court may determine that the
underlying security is collateral for a loan by a WEBS Index Series not within
the control of the WEBS Index Series and therefore the WEBS Index Series may not
be able to substantiate its interest in the underlying security and may be
deemed an unsecured creditor of the other party to the agreement. While the
Company's management acknowledges these risks, it is expected that they can be
controlled through careful monitoring procedures.
Currency Transactions. The investment policy of each WEBS Index Series
is to remain as fully invested as practicable in the equity securities of the
relevant market. Hence, no WEBS Index Series expects to engage in currency
transactions for the purpose of hedging against declines in the value of the
WEBS Index Series' currency. A WEBS Index Series may enter into foreign currency
forward and foreign currency futures contracts to facilitate local securities
settlement or to protect against currency exposure in connection with its
distributions to shareholders, but may not enter into such contracts for
speculative purposes or as a way of protecting against anticipated adverse
changes in exchange rates between foreign currencies and the U.S. dollar.
A forward currency contract is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. A currency futures contract is a contract involving an
obligation to deliver or acquire the specified amount of currency at a specified
price at a specified future time. Futures contracts may be settled on a net cash
payment basis rather than by the sale and delivery of the underlying currency.
Foreign exchange transactions involve a significant degree of risk and
the markets in which foreign exchange transactions are effected are highly
volatile, highly specialized and highly technical. Significant changes,
including changes in liquidity and prices, can occur in such markets within very
short periods of time, often within minutes. Foreign exchange trading risks
include, but are not limited to, exchange rate risk, maturity gaps, interest
rate risk and potential interference by foreign governments through regulation
of local exchange markets, foreign investment, or particular transactions in
foreign currency. If the Adviser utilizes foreign exchange transactions at an
inappropriate time or judges market conditions, trends or correlations
incorrectly, foreign exchange transactions may not serve their intended purpose
of improving the correlation of a WEBS Index Series' return with the performance
of the corresponding MSCI Index and may lower the WEBS Index Series' return. The
WEBS Index Series could experience losses if the values of its currency
forwards, options and futures positions were poorly correlated with its other
investments or if it could not close out its positions because of an illiquid
market. In addition, each WEBS Index Series will incur transaction costs,
including trading commissions, in connection with certain of its foreign
currency transactions.
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Futures Contracts and Options. Each WEBS Index Series may utilize
futures contracts and options to the extent described in the Prospectus. Futures
contracts generally provide for the future sale by one party and purchase by
another party of a specified commodity at a specified future time and at a
specified price. Stock index futures contracts are settled by the payment by one
party to the other of a cash amount based on the difference between the level of
the stock index specified in the contract and at maturity of the contract.
Futures contracts are standardized as to maturity date and underlying commodity
and are traded on futures exchanges. At the present time, there are no liquid
futures contracts traded on most of the benchmark indices of the WEBS Index
Series. In such circumstances a WEBS Index Series may use futures contracts, and
options on futures contracts, based on other local market indices or may utilize
futures contracts, and options on such contracts, on other indices or
combinations of indices that the Adviser believes to be representative of the
relevant benchmark index.
Although futures contracts (other than cash settled futures contracts
including most stock index futures contracts) by their terms call for actual
delivery or acceptance of the underlying commodity, in most cases the contracts
are closed out before the settlement date without the making or taking of
delivery. Closing out an open futures position is done by taking an opposite
position ("buying" a contract which has previously been "sold," or "selling" a
contract previously "purchased") in an identical contract to terminate the
position. Brokerage commissions are incurred when a futures contract position is
opened or closed.
Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying
commodity or payment of the cash settlement amount) if it is not terminated
prior to the specified delivery date. Relatively low initial margin requirements
are established by the futures exchanges and may be changed. Brokers may
establish deposit requirements which are higher than the exchange minimums.
Futures contracts are customarily purchased and sold on margin deposits which
may range upward from less than 5% of the value of the contract being traded.
After a futures contract position is opened, the value of the contract
is marked to market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Company
expects to earn interest income on its margin deposits.
Each WEBS Index Series may use futures contracts and options thereon,
together with positions in cash and Short-Term Investments, to simulate full
investment in the underlying index. As noted above, liquid futures contracts are
not currently available for the benchmark indices of many WEBS Index Series. In
addition, the Company is not permitted to utilize certain stock index futures
under applicable law. Under such circumstances, the Adviser may seek to utilize
other instruments that it believes to be correlated to the underlying index.
Since there are very few futures traded on the MSCI Indices, a WEBS
Index Series may need to utilize other futures contracts or combinations thereof
to simulate the performance of its benchmark MSCI Index. This process may
magnify the "tracking error" of a WEBS Index Series' performance compared to
that of its benchmark MSCI Index, due to the lower correlation of the selected
futures with its benchmark MSCI Index. The investment adviser will attempt to
reduce this tracking error by using futures contracts whose behavior is expected
to represent the market performance of the WEBS Index Series' underlying
securities, although there can be no assurance that these selected futures will
in fact correlate with the performance of its benchmark MSCI Index.
Futures Transactions. Positions in futures contracts and options
thereon may be closed out only on an exchange which provides a secondary market
for such futures. However, there can be no assurance that a liquid secondary
market will exist for any particular futures contract or option at any specific
time. Thus, it may not be possible to close a futures or options position. In
the event of adverse price movements, a WEBS Index Series would continue to be
required to make daily cash payments to maintain its required margin. In such
situations, if a WEBS Index Series has insufficient cash, it may have to sell
portfolio securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, a WEBS Index Series may be required to
make delivery of the instruments underlying futures contracts it holds.
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A WEBS Index Series will minimize the risk that it will be unable to
close out a futures or options contract by only entering into futures and
options for which there appears to be a liquid secondary market.
The risk of loss in trading futures contracts in some strategies is
potentially unlimited, due both to the low margin deposits required, and the
extremely high degree of leverage involved in futures pricing. As a result, a
relatively small price movement in a futures contract may result in immediate
and substantial loss (or gain) to the investor. For example, if at the time of
purchase, 10% of the value of a futures contract is deposited as margin, a
subsequent 10% decrease in the value of the futures contract would result in a
total loss of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out. A 15% decrease would result in a
loss equal to 150% of the original margin deposit if the contract were closed
out. Thus, entering into long or short futures positions may result in losses
well in excess of the amount initially paid. However, given the limited purposes
for which futures contracts are used, and the fact that steps will be taken to
eliminate the leverage of any futures positions, a WEBS Index Series would
presumably have sustained comparable losses if, instead of the futures
contracts, it had invested in the underlying financial instrument and sold it
after the decline.
Utilization of futures transactions by a WEBS Index Series involves the
risk of imperfect or no correlation to the benchmark index where the index
underlying the futures contracts being used differs from the benchmark index.
There is also the risk of loss by the Company of margin deposits in the event of
bankruptcy of a broker with whom a WEBS Index Series has an open position in the
futures contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit establishes
the maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of a trading session.
Once the daily limit has been reached in a particular type of contract, no
trades may be made on that day at a price beyond that limit. The daily limit
governs only price movement during a particular trading day and therefore does
not limit potential losses, because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of future positions and subjecting some
futures traders to substantial losses.
Restrictions on the Use of Futures Contracts and Options on Futures
Contracts. A WEBS Index Series will not enter into futures contract transactions
for purposes other than hedging to the extent that, immediately thereafter, the
sum of its initial margin deposits on open contracts exceeds 5% of the market
value of a WEBS Index Series' total assets. Assets committed to initial margin
deposits for futures and options on futures are held in a segregated account at
the Company's custodian bank. Each WEBS Index Series will take steps to prevent
its futures positions from "leveraging" its portfolio. When it has a long
futures position, it will maintain in a segregated account with its custodian
bank, cash or high quality debt securities having a value equal to the purchase
price of the contract (less any margin deposited in connection with the
position). When it has a short futures position, it will maintain in a
segregated account with its custodian bank assets substantially identical to
those underlying the contract or cash and high quality debt securities (or a
combination of the foregoing) having a value equal to its obligations under the
contract (less the value of any margin deposits in connection with the
position).
Federal Tax Treatment of Futures Contracts. Each WEBS Index Series is
required for federal income tax purposes to recognize as income for each taxable
year its net unrealized gains and losses on certain futures contracts as of the
end of the year as well as those actually realized during the year. In most
cases, any gain or loss recognized with respect to the futures contract is
considered to be 60% long-term capital gain or loss and 40% short-term capital
gain or loss, without regard to the holding period of the contract. Furthermore,
sales of futures contracts which hedge against a change in the value of
securities held by a WEBS Index Series may affect the holding period of such
securities and, consequently, the nature of the gain or loss on such securities
upon disposition. A WEBS Index Series may be required to defer the recognition
of losses on futures contracts to the extent of any unrecognized gains on
related positions held by the WEBS Index Series.
In order for a WEBS Index Series to continue to qualify for federal
income tax treatment as a regulated investment company, at least 90% of its
gross income for a taxable year must be derived from qualifying income; i.e.,
dividends, interest, income derived from loans of securities, gains from the
sale of securities or of foreign currencies or other income derived with respect
to the WEBS Index Series' business of investing in securities. It is
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anticipated that any net gain realized from the closing out of futures contracts
will be considered gain from the sale of securities and therefore will be
qualifying income for purposes of the 90% requirement.
Each WEBS Index Series distributes to shareholders annually any net
capital gains which have been recognized for federal income tax purposes
(including unrealized gains at the end of the WEBS Index Series' fiscal year) on
futures transactions. Such distributions are combined with distributions of
capital gains realized on the WEBS Index Series' other investments and
shareholders are advised on the nature of the distributions.
Future Developments. Each WEBS Index Series may take advantage of
opportunities in the area of options, and futures contracts, options on futures
contracts, warrants, swaps and any other investments which are not presently
contemplated for use by such WEBS Index Series or which are not currently
available but which may be developed, to the extent such opportunities are both
consistent with a WEBS Index Series' investment objective and legally
permissible for the WEBS Index Series. Before entering into such transactions or
making any such investment, the WEBS Index Series will provide appropriate
disclosure.
Swap Agreements. Each WEBS Index Series may utilize swap agreements to
the extent described in the Prospectus. Swap agreements are contracts between
parties in which one party agrees to make payments to the other party based on
the change in market value or level of a specified index or asset. In return,
the other party agrees to make payments to the first party based on the return
of a different specified index or asset. Although swap agreements entail the
risk that a party will default on its payment obligations thereunder, each WEBS
Index Series seeks to reduce this risk by entering into agreements that involve
payments no less frequently than quarterly. The net amount of the excess, if
any, of a WEBS Index Series' obligations over its entitlements with respect to
each swap is accrued on a daily basis and an amount of cash or high quality debt
securities having an aggregate value at least equal to the accrued excess is
maintained in a segregated account at the Company's custodian bank.
Non-U.S. Equity Portfolios. An investment in WEBS involves risks
similar to those of investing in a broad-based portfolio of equity securities
traded on exchanges in the respective countries covered by the individual WEBS
Index Series. These risks include market fluctuations caused by such factors as
economic and political developments, changes in interest rates and perceived
trends in stock prices. Investing in securities issued by companies domiciled in
countries other than the domicile of the investor and denominated in currencies
other than an investor's local currency entails certain considerations and risks
not typically encountered by the investor in making investments in its home
country and in that country's currency. These considerations include favorable
or unfavorable changes in interest rates, currency exchange rates, exchange
control regulations and the costs that may be incurred in connection with
conversions between various currencies. Investing in a WEBS Index Series whose
portfolio contains non-U.S. issuers involves certain risks and considerations
not typically associated with investing in the securities of U.S. issuers. These
risks include generally less liquid and less efficient securities markets;
generally greater price volatility; less publicly available information about
issuers; the imposition of withholding or other taxes; the imposition of
restrictions on the expatriation of funds or other assets of a WEBS Index
Series; higher transaction and custody costs; delays and risks attendant in
settlement procedures; difficulties in enforcing contractual obligations; lesser
liquidity and significantly smaller market capitalization of most non-U.S.
securities markets; lesser levels of regulation of the securities markets; 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.
Concentrations and Lack of Diversification of Certain WEBS Index
Series. Each WEBS Index Series (except for the Canada, EMU, Japan, United
Kingdom and USA WEBS Index Series) is classified as "non-diversified" for
purposes of the Investment Company Act of 1940, which means that it is not
limited by that Act with regard to the portion of its assets that may be
invested in the securities of a single issuer. In addition, a number of WEBS
Index Series concentrate their investments in particular industries as noted in
the descriptions of each non-diversified WEBS Index Series. Each WEBS Index
Series, however, whether diversified or non-diversified, intends to maintain the
required level of diversification and otherwise conduct its operations so as to
qualify as a "regulated investment company" for purposes of the U.S. Internal
Revenue Code, to relieve the WEBS Index Series of any liability for federal
income tax to the extent that its earnings are distributed to shareholders.
Compliance with the diversification requirements of the U.S. Internal Revenue
Code severely limits the investment flexibility of certain WEBS Index Series and
makes it less likely that such WEBS Index Series will meet their investment
objectives.
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The stocks of a particular issuers, or of issuers in particular
industries, may dominate the benchmark index of a WEBS Index Series and,
consequently, the investment portfolio of a WEBS Index Series. This may
adversely affect the performance of a WEBS Index Series or subject it to greater
price volatility than that experienced by more diversified investment companies.
The WEBS of a WEBS Index Series may be more susceptible to any single economic,
political or regulatory occurrence than the portfolio securities of an
investment company that is more broadly invested in the equity securities of the
relevant market.
Year 2000. Many computer software systems in use today cannot properly
process date-related information from and after January 1, 2000 because of the
way they encode and calculate dates. That failure could have a negative impact
on the WEBS Fund and each WEBS Index Series' operations, including the handling
of securities trades, pricing and shareholder transactions. The WEBS Fund has no
computer systems of its own, but relies on those of its service providers. In
response to any inquiry from the WEBS Fund's Board of Directors, the WEBS Fund's
investment adviser, administrator and transfer agent, custodian and lending
agent, sub-administrator and distributor each have advised the Board that they
are reviewing all of the computer systems used by them, and making inquiries of
persons whose systems they rely on, in an effort to confirm that all such
systems will be appropriately adapted in advance of the Year 2000. The Board has
requested that each of the WEBS Fund's service providers report on the status of
preparations and corrective activity for the Year 2000 at each Board meeting
prior to the Year 2001. There can be no assurance that these steps will be
sufficient to prevent an adverse impact on the WEBS Fund or any WEBS Index
Series. Moreover, the Year 2000 problem could adversely affect many of the
companies whose stocks are held by the various WEBS Index Series. Therefore the
value of any WEBS held by you could decline.
Investments in Subject Equity Markets. Brief descriptions of the equity markets
in which the respective WEBS Index Series are invested are provided below.
The Australian Equity Markets
General Background. Trading shares has taken place in Australia since
1828, but did not become significant until the latter half of the nineteenth
century when there was strong demand for equity capital to support the growth of
mining activities. A stock market was first formed in Melbourne in 1865. In
1885, the Melbourne market became The Stock Exchange of Melbourne, in which form
it has remained until recently. Other stock exchanges were also established in
Sydney (1871), Brisbane (1884), Adelaide (1887), Hobart (1891) and Perth (1891).
In 1937, the six capital city stock exchanges established the Australian
Associated Stock Exchanges (AASE) to represent them at a national level. In
1987, the regional exchanges merged to create the single entity -- The
Australian Stock Exchange (ASX). Trading is done via a computer link-up called
"SEATS." SEATS enables all exchanges to quote uniform prices. All the exchanges
are members of the ASX and are subject to the Securities Industry Act, which
regulates the major aspects of stock exchange operations. Although there are
stock exchanges in all six states, the Melbourne and Sydney Stock Exchanges are
the major centers, covering 90% of all trades.
Reporting, Accounting and Auditing. Australian reporting, accounting
and auditing standards differ substantially from U.S. standards. In general
Australian corporations do not provide all of the disclosure required by U.S.
law and accounting practice, and such disclosure may be less timely and less
frequent than that required of U.S. corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Australian equity markets was approximately AUD 562.1
billion or US$ 358.2 billion.
The Austrian Equity Markets
General Background. Relative to international standards, the Vienna
stock market is small in terms of total capitalization and yearly turnover. The
Vienna Stock Exchange (VSE) is one of the oldest in the world and was founded in
1771 as a state institution to provide a market for state-issued bonds, as well
as for exchange transactions. The Stock Exchange Act of 1875 (the "Act")
established the VSE as an autonomous institution. The Act is still in force,
placing control and administration of the exchange in the hands of the
Borsekammer (Board of Governors), chosen from among the members of the exchange.
The Borsekammer consists of 25 individuals with the title of Borserat (stock
exchange councillor). Some are elected by members and some are designated by
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organizations of the securities industry for a period of five years. The
councillors must be members of the exchange and they elect from amongst
themselves a President and three Vice Presidents. Shares account for about 80%
and investment fund certificates for about 20% of total listed securities on the
VSE. Business of the exchange can be transacted only by members. Almost all the
credit institutions in Vienna, some in the Austrian provinces and the joint
stock banks are represented on the stock exchange, as well as the private banks,
savings banks and other credit institutions. Certain securities which do not
have an official listing may be dealt in on the floor of the stock exchange with
permission of the management. This unlisted trading is the main activity of the
free brokers (Frei Makeler).
Reporting, Accounting and Auditing. Austrian reporting, accounting and
auditing standards differ from U.S. standards. In general, Austrian corporations
do not provide all of the disclosure required by U.S. law and accounting
practice, and such disclosure may be less timely and less frequent than that
required of U.S. corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Austrian equity markets was approximately EUR 31.2 billion
or US$ 32.9 billion.
The Belgian Equity Markets
General Background. The Brussels Stock Exchange (BSE) was founded by
Napoleonic decree in 1801. Since January 1, 1991 the BSE has been officially
organized as the "Societe de la Bourse de Valeurs Mobileres de Bruxelles" (SBVM)
the shareholders of which are Belgian securities houses. The law of December 4,
1990 on financial operations and markets terminated the monopoly of the
individual brokers. Now only securities houses are allowed to carry out stock
exchange orders. Brokers, banks, brokerage firms and insurance companies can
participate in the capital of a securities house. Its management is composed of
a majority of qualified people bearing the title of stockbroker. The Banking and
Finance Commission was granted the power to approve securities houses by this
law. The Board of Directors of the SBVM, the Stock Exchange Committee organizes
and supervises the different markets and ensures market transparency. The Stock
Exchange Committee also admits or dismisses brokerage firms and ensures
compliance with all regulations. The Stock Exchange Committee is also in charge
of the admission to listing and suspension of listing. On the Brussels Stock
Exchange equities are traded on three different markets: the Official Market,
which includes a Cash and a Forward Market, the Second Market and an "Over the
Counter Market."
Reporting, Accounting and Auditing. Belgian reporting, accounting and
auditing standards differ substantially from U.S. standards. In general Belgian
corporations do not provide all of the disclosure required by U.S. law and
accounting practice, and such disclosure may be less timely and less frequent
than that required of U.S. corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Belgian equity markets was approximately EUR 180.8 billion
or US$ 191.0 billion.
The Brazilian Equity Markets
General Background. There are nine stock exchanges in Brazil. The Rio
de Janeiro exchange, or BVRJ (Bolsa de Valores de Rio de Janeiro) is the oldest,
but is overshadowed by the Sao Paulo exchange, called BOVESPA (Bolsa de Valores
de Sao Paulo), which is the largest and accounts for about 90% of trading
activity. The over-the-counter market (Mercado de Balcao) trades non-listed
equities. Government securities, corporate bonds, and money market instruments
are traded on the open market. The Bolsa Mercdorias e de Futuros (BM&F), in Sao
Paulo, is Brazil's futures exchange. It is the third largest derivatives
exchange in the world in contract volume. Options on the futures also are
traded, but are less liquid. BM&F is the clearinghouse for all transactions. The
financial market is regulated by three main bodies: the National Monetary
Council, or CMN (Conselho Monetario Nacional); the Central Bank (Banco Central
do Brasil), and the Securities Commission, or CVM (Comissao de Valores
Mobiliarios).
Reporting, Accounting And Auditing. Brazilian reporting, auditing and
accounting standards differ from U.S. standards. In general, Brazilian
corporations do not provide all of the disclosure required by U.S. law and
accounting practice, and such disclosure may be less timely and less frequent
than that required of U.S. corporations.
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Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Brazilian equity markets was approximately BRL 262.7
billion or US$ 137.0 billion.
The Canadian Equity Markets
General Background. The first Canadian stock exchange appeared in the
1870s. Today, Canada is the world's fourth largest public equity market by
trading volume and the fifth largest by market capitalization. There are five
stock exchanges across Canada, located in Toronto, Montreal, Vancouver, Calgary
and Winnipeg. Of these, the Toronto Stock Exchange is the largest, accounting
for almost 80% of Canadian trading volumes. Measured by the value of shares
traded, the Toronto Stock Exchange is the second largest organized securities
exchange in North America and among the ten largest in the world.
Reporting, Accounting and Auditing. According to the SEC in one of the
proposing releases relating to the Multijurisdictional Disclosure System,
Canadian reporting, accounting and auditing practices are closer to U.S.
standards than those of any other foreign jurisdiction. Every issuer that
qualifies an offering of securities for distribution in Canada becomes subject
to periodic disclosure requirements. Authoritative accounting and auditing
standards, which are uniform across Canada, are developed by a national body,
the Canadian Institute of Chartered Accountants ("CICA"). Although promulgated
auditing standards in Canada differ from U.S. standards in some respects,
generally accepted practices in Canada routinely encompass all significant
auditing procedures required by U.S. standards. Further, CICA periodically
evaluates new auditing standards adopted by the American Institute of Certified
Public Accountants, CICA's U.S. counterpart, to determine whether similar
guidelines may be appropriate for Canadian auditors. Canadian GAAP are similar
to their U.S. counterparts, although there are some differences in measurement
and disclosure.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Canadian markets was approximately CAD 889.8 billion or
US$ 596.3 billion.
The EMU Equity Markets
The EMU equity markets are comprised of the equity markets from the
following eleven countries who are participating in the European economic and
monetary union or "EMU": Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, the Netherlands, Portugal and Spain. The MSCI EMU is
currently comprised of companies from ten of these EMU countries (i.e., all of
the EMU countries except Luxembourg).
General Background
Austria. Relative to international standards, the Vienna stock market
is small in terms of total capitalization and yearly turnover. The Vienna Stock
Exchange (VSE) is one of the oldest in the world and was founded in 1771 as a
state institution to provide a market for state-issued bonds, as well as for
exchange transactions. The Stock Exchange Act of 1875 (the "Act") established
the VSE as an autonomous institution. The Act is still in force, placing control
and administration of the exchange in the hands of the Borsekammer (Board of
Governors), chosen from among the members of the exchange. The Borsekammer
consists of 25 individuals with the title of Borserat (stock exchange
councillor). Some are elected by members and some are designated by
organizations of the securities industry for a period of five years. The
councillors must be members of the exchange and they elect from amongst
themselves a President and three Vice Presidents. Shares account for about 80%
and investment fund certificates for about 20% of total listed securities on the
VSE. Business of the exchange can be transacted only by members. Almost all the
credit institutions in Vienna, some in the Austrian provinces and the joint
stock banks are represented on the stock exchange, as well as the private banks,
savings banks and other credit institutions. Certain securities which do not
have an official listing may be dealt in on the floor of the stock exchange with
permission of the management. This unlisted trading is the main activity of the
free brokers (Frei Makeler).
Belgium. The Brussels Stock Exchange (BSE) was founded by Napoleonic
decree in 1801. Since January 1, 1991 the BSE has been officially organized as
the "Societe de la Bourse de Valeurs Mobileres de Bruxelles" (SBVM) the
shareholders of which are Belgian securities houses. The law of December 4, 1990
on financial
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operations and markets terminated the monopoly of the individual brokers. Now
only securities houses are allowed to carry out stock exchange orders. Brokers,
banks, brokerage firms and insurance companies can participate in the capital of
a securities house. Its management is composed of a majority of qualified people
bearing the title of stockbroker. The Banking and Finance Commission was granted
the power to approve securities houses by this law. The Board of Directors of
the SBVM, the Stock Exchange Committee organizes and supervises the different
markets and ensures market transparency. The Stock Exchange Committee also
admits or dismisses brokerage firms and ensures compliance with all regulations.
The Stock Exchange Committee is also in charge of the admission to listing and
suspension of listing. On the Brussels Stock Exchange equities are traded on
three different markets: the Official Market, which includes a Cash and a
Forward Market, the Second Market and an "Over the Counter Market."
Finland. Organized securities trading has existed in Finland since the
1860s, but it was 1912 before a formal exchange, the Helsinki Arvopaperiporssi,
was founded. Since then there have been few changes in the rules governing
trading in Finland. In October 1984, the management of the stock exchange in
Helsinki was vested in a newly formed co-operative. That form of corporation was
chosen because Finnish legislation covering cooperatives does not limit the
number of members or the amount of capital. As a result, alone among the world's
stock exchanges, the Arvopaperiporssi accepts as members all companies listed on
its trading board and business organizations in addition to the bankers and
brokers. Decision-making and administration with the organization are vested in
the annual general meeting of the co-operative, which elects the board of
administration and the board of directors to manage the daily running of the
exchange.
The OTC List established in 1984 acquired an organized form in
September 1985, when the Association of Securities Brokers approved the listing
and regulations for the information requirements of listed companies. The
brokers and brokerage firms have undertaken to act as market makers. Mainly
medium-sized companies are traded on the OTC List. The OTC Market is based on an
agreement between a company seeking access to the share market and a brokerage
firm; both are subject to certain obligations.
France. Trading of securities in France is subject to the monopoly of
the Societe de Bourse, which replaced the individual agents de change in 1991 in
order to increase the cohesion of the French equity market. All purchases or
sales of equity securities in listed companies on any one of the French
exchanges must be executed through the Societe de Bourse. There are three
different markets on which French securities may be listed: (1) the official
list (La Cote Officielle), comprised of equity securities of large French and
foreign companies and most bond issues; (2) the second market (Le Second
Marche), designed for the trading of equity securities of smaller companies; and
(3) the "Hors-Cote" Market. Securities may only be traded on the official list
and the second market after they have been admitted for the listing by the
Conseil des Bourses de Valeurs (the "CBV"). By contrast, the Hors-Cote Market
has no prerequisites to listing, and shares of otherwise unlisted companies may
be freely traded there, once they have been introduced on the market by the
Societe de Bourse. Although the Hors-Cote Market is frequently referred to as an
over-the-counter market, this term is inaccurate in that, like the official list
and the second market, it is supervised by Societes des Bourses Francaises and
regulated by the CBV.
Although there are seven stock exchanges in France (located in Paris,
Bordeaux, Lille, Lyon, Marseille, Nancy and Nantes), the Paris Stock Exchange
handles more than 95% of transactions in the country. All bonds and shares,
whether listed or unlisted, must be traded on one of the seven exchanges.
Trading in most of the Paris exchange-listed stocks takes place through the
computer order-driven trading system CAC, launched in 1988. French market
capitalization constitutes approximately 30% of the French Gross Domestic
Product. Securities are denominated in the Euro. Unless otherwise provided by a
double tax treaty, dividends on French shares are subject to a withholding tax
of 25%.
Germany. The history of Frankfurt as a financial center can be traced
back to the early Middle Ages. Frankfurt had the right to issue coins as early
as 1180; the first exchange office was opened in 1402. Germany has been without
a central stock exchange, the position formerly held by the Berlin exchange,
since 1945. Today there are eight independent stock exchanges, of which
Dusseldorf and Frankfurt account for over three-quarters of the total volume.
Frankfurt is the main exchange in Germany. Exchange securities are denominated
in the Euro. Equities may be traded in Germany in one of three markets: (i) the
official market, comprised of trading in shares which have been formally
admitted to official listing by the admissions committee of the relevant stock
exchange, based on disclosure in the listing application; (ii) the
"semi-official" unlisted market, comprised of trading in shares not in the
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official listing; and (iii) the unofficial, over-the-counter market, which is
governed by the provisions of the Civil Code and the Merchant Code and not by
the provisions of any stock exchange. There is no stamp duty in Germany, but a
nonresident capital gains tax may apply in certain circumstances.
Ireland. The Irish Stock Exchange, founded in the 18th century, is the
second oldest in the world. Previously it operated as part of the International
Stock Exchange of the United Kingdom and Republic of Ireland. On December 8,
1995, it split from the U.K. Stock Exchange to form the Irish Stock Exchange
(ISE). The new exchange is committed to maintaining standards equivalent to
those of the London Stock Exchange (LSE), subject to adjustments dictated by
Irish Law. The ISE will sign a listing protocol with the LSE, under which the
ISE will maintain equivalence with the LSE rules. Companies that were listed on
both the Dublin and London exchanges may apply for dual primary listing, under
which they will be regulated to the same standard by both exchanges. A set of
procedures has been agreed with the LSE that will streamline companies' dealing
with the two exchanges.
Italy. The regulatory structure of the Italian Stock Exchange changed
radically in February 1997, when the Italian Stock Exchange Council set up a new
private company, "Borsa Italiana Spa", which is now responsible for the
regulation, promotion and management of the Stock Exchange, the unlisted
securities market and the Italian Derivatives Market (IDEM).
In 1991, the Parliament passed legislation creating Societa de
intermediazone mobiliare (SIMs). SIMS were created to regulate brokerage
activities in the securities market and are allowed to trade on their own and
for customers' accounts.
In November 1994, the Italian Derivatives Market (IDEM) started trading
its first exchange-listed derivatives product, the Mib 30 index futures contract
(Fib 30). In November 1995, the MIB30 Index option (MIBO30) began trading on the
IDEM. In February 1996, options were introduced on single stocks, together with
the transfer of all shares to a rolling settlement basis. In March 1998, the
MIDEX Index contract, the futures contract on the 25 Mid-Cap Stock Index, was
launched.
Access to the Italian trading system can be obtained directly through
the terminals provided to users or indirectly through users' own front office
systems (using Application Programming Interfaces). The latter allows the use of
information, analytical and trading functions developed by the users.
Italy has one of the world's largest government securities markets. At
the end of 1998, issues of treasury bills, notes and bonds outstanding totaled
US $1,300 billion.
Netherlands. Trading securities on the AEX Stock Exchange (AEX)
(formerly the Amsterdam Stock Exchange) started at the beginning of the
seventeenth century. The United East India Company was the first company in the
world financed by an issue of shares, and such issue was effected through the
exchange. The Netherlands claims the honor of having the oldest established
stock exchange in existence. In 1611 a stock market began trading in the coffee
houses along the Dam Square. A more formal establishment, the Amsterdam Stock
Exchange Association, began trading industrial stocks in 1876, and until World
War II, Amsterdam ranked after New York and London as the third most important
stock market in the world. After the war, the AEX Stock Exchange only gradually
began to resume its activities, as members felt threatened by what they saw as
an impending socialist order which would leave little of the stock market
intact. Since the end of the war, the Dutch market has remained relatively
neglected, as local companies have found it more favorable to use bank financing
to meet their capital requirements. Trading in shares on the AEX may take place
on the official market or on the parallel market, which is available to
medium-sized and smaller companies that cannot yet meet the requirements
demanded for the official market.
Portugal. EU membership marked the start of a period that has seen
dramatic growth in the scope and activity of the Portuguese stock market. The
Lisbon Stock Exchange ("LSE") is divided into three markets, each with specific
requirements regarding admission to listing and trading: (1) the official
market, which was created on July 23, 1991; (2) the second market, created in
January 1992, which is intended for trading securities that do not meet all the
requirements for admission to the official market. The main purpose of this
market is to allow access to the stock exchange for small and medium-sized
companies; and (3) the unofficial market, created on October 22,
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1991, is intended for trading securities that do not meet the requirements for
the other two markets. Securities can be admitted to this market for a limited
period of time.
In 1992, the LSE was privatized. It is now under the management of the
Lisbon Stock Exchange Association.
Futures and Options. The Oporto Derivatives Exchange was established in
June 1996, where five futures contracts are traded.
Spain. The Securities Market Act (LMV) recognizes as official secondary
markets stock exchanges, the public debt market organized by the Bank of Spain,
and futures and options markets.
Stock exchanges in Spain (Madrid, Bilbao, Barcelona and Valencia) are
the official secondary markets which trade shares and convertible bonds or those
which grant the right of purchase or subscription. Issuers of shares go to the
stock market as the primary market, where they formalize transactions or capital
increases. Fixed-income securities (both governmental and private sector debt)
are also traded on the stock market.
The organization and functioning of each stock exchange is the
responsibility of each respective governing body (Sociedad Rectora), each of
which is a limited company whose sole shareholders are the dealer-brokers and
brokers and the stock exchanges themselves. The Sociedad de Bolsa, established
by the four stock exchanges, is responsible for the technical management of the
computerized trading system, which operates at a national level.
The Spanish futures and options markets are organized by the holding
company MEFF (Mercado Espanol de Futuros Financieros) Sociedad Holding and two
subsidiaries: MEFF Renta Variable (equities), based in Madrid, and MEFF Renta
Fija (fixed-income securities), based in Barcelona. MEFF Renta Variable manages
the trading of options and futures on the Ibex-35 stock index, and individual
options on certain shares. MEFF Renta Fija manages the trading of futures and
options on interest rates and bonds.
Bonds, Treasury bills and debt issued by other public administrations
and organizations are traded in the public debt market. These securities are
also traded at the same time on the stock market, which has a specific trading
system for them. The Bank of Spain's Book-Entry Office is responsible for this
market.
Reporting, Accounting and Auditing
Reporting, accounting and auditing standards in the nations of the EMU
differ from U.S. standards. In general, corporations in the EMU do not provide
all of the disclosure required by U.S. law and accounting practice, and such
disclosure may be less timely and less frequent than that required of U.S.
corporations.
Structure of Equity Markets
As of August 31, 1999, the total market capitalization of the combined
equity markets of Austria, Belgium, Finland, France, Germany, Ireland, Italy,
the Netherlands, Portugal and Spain was approximately US$ 4.236 trillion.
The French Equity Markets
General Background. Trading of securities in France is subject to the
monopoly of the Societe de Bourse, which replaced the individual agents de
change in 1991 in order to increase the cohesion of the French equity market.
All purchases or sales of equity securities in listed companies on any one of
the French exchanges must be executed through the Societe de Bourse. There are
three different markets on which French securities may be listed: (1) the
official list (La Cote Officielle), comprised of equity securities of large
French and foreign companies and most bond issues; (2) the second market (Le
Second Marche), designed for the trading of equity securities of smaller
companies; and (3) the "Hors-Cote" Market. Securities may only be traded on the
official list and the second market after they have been admitted for the
listing by the Conseil des Bourses de Valeurs (the "CBV"). By contrast, the
Hors-Cote Market has no prerequisites to listing, and shares of otherwise
unlisted companies may be freely traded there, once they have been introduced on
the market by the Societe de Bourse. Although the Hors-Cote Market is
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frequently referred to as an over-the-counter market, this term is inaccurate in
that, like the official list and the second market, it is supervised by Societes
des Bourses Francaises and regulated by the CBV.
Although there are seven stock exchanges in France (located in Paris,
Bordeaux, Lille, Lyon, Marseille, Nancy and Nantes), the Paris Stock Exchange
handles more than 95% of transactions in the country. All bonds and shares,
whether listed or unlisted, must be traded on one of the seven exchanges.
Trading in most of the Paris exchange-listed stocks takes place through the
computer order-driven trading system CAC, launched in 1988. French market
capitalization constitutes approximately 30% of the French Gross Domestic
Product. Exchange securities are denominated in the Euro. Unless otherwise
provided by a double tax treaty, dividends on French shares are subject to a
withholding tax of 25%.
Reporting, Accounting and Auditing. Although French reporting,
accounting and auditing standards are considered rather rigorous by European
standards, they differ from U.S. standards in certain material respects. In
general, French corporations are not required to provide all of the disclosure
required by U.S. law and accounting practice, and such disclosure may be less
timely and less frequent than that required of U.S. corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the French equity markets was approximately EUR 1,036.6
billion or US$ 1,095.0 billion.
The German Equity Markets
General Background. The history of Frankfurt as a financial center can
be traced back to the early Middle Ages. Frankfurt had the right to issue coins
as early as 1180; the first exchange office was opened in 1402. Germany has been
without a central stock exchange, the position formerly held by the Berlin
exchange, since 1945. Today there are eight independent stock exchanges, of
which Dusseldorf and Frankfurt account for over three-quarters of the total
volume. Frankfurt is the main exchange in Germany. Exchange securities are
denominated in the Euro. Equities may be traded in Germany in one of three
markets: (i) the official market, comprised of trading in shares which have been
formally admitted to official listing by the admissions committee of the
relevant stock exchange, based on disclosure in the listing application; (ii)
the "semi-official" unlisted market, comprised of trading in shares not in the
official listing; and (iii) the unofficial, over-the-counter market, which is
governed by the provisions of the Civil Code and the Merchant Code and not by
the provisions of any stock exchange. There is no stamp duty in Germany, but a
nonresident capital gains tax may apply in certain circumstances.
Reporting, Accounting and Auditing. German reporting, accounting and
auditing standards differ substantially from U.S. standards. In general, German
corporations do not provide all of the disclosure required by U.S. law and
accounting practice, and such disclosure may be less timely and less frequent
than that required of U.S. corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Germany equity markets was approximately EUR 1,123.0
billion or US$ 1,186.2 billion.
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The Hong Kong Equity Markets
General Background. Trading in equity securities in Hong Kong began in
1891 with the formation of the Association of Stockbrokers, which was changed in
1914 to the Hong Kong Stock Exchange. In 1921, a second stock exchange, The Hong
Kong Stockbrokers' Association, was established. In 1947, these two exchanges
were merged under the name The Hong Kong Stock Exchange Limited. Three
additional exchanges, the Far East Exchange Limited (1969), The Kam Ngan Stock
Exchange Limited (1971) and The Kowloon Stock Exchange (1972) also commenced
trading activities. These four exchanges were unified in 1986 to form The Stock
Exchange of Hong Kong Limited (the "SEHK"). The value of the SEHK constitutes
more than 100% of Hong Kong's Gross Domestic Product. Trading on the SEHK is
conducted in the post trading method, matching buyers and sellers through public
outcry. Securities are denominated in the official unit of currency, the Hong
Kong Dollar. Foreign investment in Hong Kong is generally unrestricted. All
investors are subject to a small stamp duty and a stock exchange levy, but
capital gains are tax-exempt.
Reporting, Accounting and Auditing. Hong Kong has significantly
upgraded the required presentation of financial information in the past decade.
Nevertheless, reporting, accounting and auditing practices remain significantly
less rigorous than U.S. standards. In general, Hong Kong corporations are not
required to provide all of the disclosure required by U.S. law and accounting
practice, and such disclosure may be less timely and less frequent than that
required of U.S. corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Hong Kong equity markets was approximately HKD 3,555.4
billion or US$ 457.9 billion.
The Italian Equity Markets
General Background. The regulatory structure of the Italian Stock
Exchange changed radically in February 1997, when the Italian Stock Exchange
Council set up a new private company, "Borsa Italiana Spa", which is now
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responsible for the regulation, promotion and management of the Stock Exchange,
the unlisted securities market and the Italian Derivatives Market (IDEM).
In 1991, the Parliament passed legislation creating Societa de
intermediazone mobiliare (SIMs). SIMS were created to regulate brokerage
activities in the securities market and are allowed to trade on their own and
for customers' accounts.
In November 1994, the Italian Derivatives Market (IDEM) started trading
its first exchange-listed derivatives product, the Mib 30 index futures contract
(Fib 30). In November 1995, the MIB30 Index option (MIBO30) began trading on the
IDEM. In February 1996, options were introduced on single stocks, together with
the transfer of all shares to a rolling settlement basis. In March 1998, the
MIDEX Index contract, the futures contract on the 25 Mid-Cap Stock Index, was
launched.
Access to the Italian trading system can be obtained directly through
the terminals provided to users or indirectly through users' own front office
systems (using Application Programming Interfaces). The latter allows the use of
information, analytical and trading functions developed by the users.
Italy has one of the world's largest government securities markets. At
the end of 1998, issues of treasury bills, notes and bonds outstanding totaled
US $1,300 billion.
Reporting, Accounting and Auditing. Italian reporting, accounting and
auditing practices are regulated by Italy's National Control Commission
(Consob). These practices bear some similarities to United States standards.
However, in general, Italian corporations do not provide all of the disclosure
required by US law and accounting practice, and such disclosure may be less
timely, less frequent and less consistent than that required of US corporations.
Italy is, however, moving toward more transparency: from 2000, for example, the
law will require quarterly disclosure.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Italian equity markets was approximately EUR 500.1 billion
or US$ 528.2 billion.
The Japanese Equity Markets
General Background. The Japanese stock market has a history of over 100
years beginning with the establishment of the Tokyo Stock Exchange Company Ltd.
in 1878. Stock exchanges are located in eight cities in Japan (Tokyo, Osaka,
Nagoya, Kyoto, Hiroshima, Fukuoka, Niigata and Sapporo). There is also an
over-the-counter market. There are three distinct sections on the main Japanese
stock exchanges. The First Section trades in over 1,100 of the largest and most
active stocks, which account for over 95% of total market capitalization. The
Second Section consists of over 400 issues with lower turnover than the First
Section, which are newly quoted on the exchange or which are not listed and
would otherwise be traded over-the-counter. The Third Section consists of
foreign stocks which are traded over-the-counter. The main activity of the
regular exchange members is the buying and selling of securities on the floor of
an exchange, both for their customers and for their own account. Japan is second
only to the United States in aggregate stock market capitalization. Securities
are denominated in the official unit of currency, the Japanese Yen. Takeover
activity is negligible in Tokyo, and although foreign investors play a
significant role, the trend of the market is set by the domestic investor. The
statutory at-source withholding tax is 20% on dividends. There also is a
transaction tax on share trades and a small stamp duty.
Reporting, Accounting and Auditing. Although some Japanese reporting,
accounting and auditing practices are based substantially on U.S. principles,
they are not identical to U.S. standards in some important respects,
particularly with regard to unconsolidated subsidiaries and related structures.
In general, Japanese corporations are not required to provide all of the
disclosure required by U.S. law and accounting practice, and such disclosure may
be less timely and less frequent than that required of U.S. corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Japanese equity markets was approximately JPY 391,436.4
billion or US$ 3,570.3 billion.
The Korean Equity Markets
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General Background. After the formation of South Korea in 1948, the
government issued Farmland Compensation Bonds to landowners in exchange for
their farmland, and Kunkuk Bonds to cover their financial debt. The Daehan Stock
Exchange was established in 1956 to enable trading of these bonds. The South
Korea Stock Exchange was established several years later. The government enacted
the Securities and Exchange Law in January 1962 as part of the First Five Year
Economic Plan. The law was intended to help South Korean companies arrange funds
for economic development by using the stock market. Within a year the market
boomed and crashed.
The Securities and Exchange Law was amended in April 1962 to impose
stricter regulatory measures on the operation of the securities market. The
stock exchange became a non-profit, government-owned corporation called the
South Korea Stock Exchange. However, the securities market was unable to
overcome the aftermath of the crash and entered a period of inactivity.
In 1967, as part of the Second Five Year Economic Plan, the government
encouraged the public to invest in the stock market by increasing the number of
listed companies and the acceptability of equity shares. Tax advantages were
given to companies that went public. Further legislation was passed in 1972 to
encourage share flotation in the belief that corporations would reduce their
high financing costs by converting bank loans into share capital.
As a result of these market measures, the number of listed companies
started to increase. The Securities and Exchange Commission and its executive
body, the Securities Supervisory Board, were established to strengthen investor
protection.
The South Korea Securities Settlement Corporation, since renamed the
South Korea Depository Corporation (KSD), was set up in 1974 to act as the
clearing agent for the stock exchange and as the central depository. In 1977,
the South Korea Securities Computer Corporation was established as an electronic
data processing center for the securities industry to enable members to transmit
orders directly to the trading floor.
In 1981, the government announced its long-term plans for opening the
South Korean securities market to foreigners. International investment trusts
were established and the South Korea Fund and the South Korea Europe Fund were
incorporated overseas. In 1985, the government began to allow some domestic
corporations to issue convertible bonds, bonds with warrants and depository
receipts overseas. The government also eased controls to allow domestic
institutional investors to invest in foreign securities. In December 1988, a
new, detailed plan was put forward for the internationalization of the capital
market from 1989 to 1992. A more open capital market was proposed to improve the
financial structure of domestic firms and to strengthen their international
competitiveness. The firms would be given access to an expanded and revitalized
domestic capital market and cheaper sources of financing in the international
markets. The stock market began to be opened to foreign investors in January
1992.
Reporting, Accounting and Auditing. Korean reporting, accounting and
auditing standards differ substantially from U.S. standards. In general, Korean
corporations do not provide all of the disclosure required by U.S. law and
accounting practice, and such disclosure may be less timely and less frequent
than that required of U.S. corporations.
Structure of Equity Markets. As of August 31, 1999, the total market
capitalization of the South Korean equity markets was approximately KRW
280,229.5 billion or US$ 237.4 billion.
The Malaysian Equity Markets
General Background. The securities industry in Malaysia dates back to
the early 1930's. Kuala Lumpur and Singapore were a single exchange until 1973
when they separated and the Kuala Lumpur Stock Exchange (KLSE) was formed. The
KLSE operated under a provisional set of rules until 1983 when a new Securities
Industry Act came into force. As of April 30, 1993, 320 companies were listed on
the KLSE main board. A Second Board, established in 1988, allows smaller
companies to tap additional capital. Fifty-seven companies were listed on the
Second Board as of April 30, 1993. Over the years, the KLSE's close links with
the Stock Exchange of Singapore (SES) has rendered it very vulnerable to
developments in Singapore. Consequently, the Government decided, as a matter of
national policy, on a delisting of Malaysian incorporated companies from the
SES. This was effected on
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January 1, 1990. A similar move was made by Singapore, resulting in the
delisting of all Singapore companies on the KLSE on January 1, 1990. There are
two main stock indices in Malaysia. The wider ranging KLSE Composite represents
80 companies. The New Straits Times Industrial Index is an average of 30
industrial stocks.
Malaysian currency volatility and general economic deterioration led to
the imposition of stringent capital controls in September 1998, including a one
year prohibition on repatriation of capital and an indefinite prohibition on
free transfers of securities. The prohibition on repatriation of capital was
removed in February 1999 but the controls have adversely impacted foreign
investors, including the Series, which suspended creations in response to the
controls. This adversely affected the trading market for Malaysia Series WEBS.
Reporting, Accounting and Auditing. Malaysian reporting, accounting and
auditing standards differ substantially from U.S. standards. In general,
Malaysian corporations do not provide all of the disclosure required by U.S. law
and accounting practice, and such disclosure may be less timely and less
frequent than that required of U.S. corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Malaysian equity markets was approximately MYR 500.6
billion or US$ 131.7 billion.
The Mexican Equity Markets
General Background. There is only one stock exchange in Mexico, the
Bolsa Mexicana de Valores (BMV), which was established in 1894 and is located in
Mexico City. The stock exchange is a private corporation whose shares are owned
solely by its authorized members and operates under the stock market laws passed
by the government. The National Banking and Securities Commission (CNV)
supervises the stock exchange. The Mexican exchange operates primarily via the
open outcry method. However, firm orders in writing can supersede this system,
provided there is a perfect match of the details of a buy and sell order.
Executions on the exchange can be done by members only. Membership of the stock
exchange is restricted to Casas de Bolsa brokerage houses and Especialistas
Bursatiles (stock exchange specialists).
Reporting, Accounting and Auditing. Mexican reporting, accounting and
auditing standards differ substantially from U.S. standards. In general, Mexican
corporations do not provide all of the disclosure required by U.S. law and
accounting practice, and such disclosure may be less timely and less frequent
than that required of U.S. corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Mexican equity markets was approximately MXN 1,278.8
billion or US$ 136.7 billion.
The Netherlands Equity Markets
General Background. Trading securities on the AEX Stock Exchange (AEX)
(formerly the Amsterdam Stock Exchange) started at the beginning of the
seventeenth century. The United East India Company was the first company in the
world financed by an issue of shares, and such issue was effected through the
exchange. The Netherlands claims the honor of having the oldest established
stock exchange in existence. In 1611 a stock market began trading in the coffee
houses along the Dam Square. A more formal establishment, the Amsterdam Stock
Exchange Association, began trading industrial stocks in 1876, and until World
War II, Amsterdam ranked after New York and London as the third most important
stock market in the world. After the war, the AEX Stock Exchange only gradually
began to resume its activities, as members felt threatened by what they saw as
an impending socialist order which would leave little of the stock market
intact. Since the end of the war, the Dutch market has remained relatively
neglected, as local companies have found it more favorable to use bank financing
to meet their capital requirements. Trading in shares on the AEX may take place
on the official market or on the parallel market, which is available to
medium-sized and smaller companies that cannot yet meet the requirements
demanded for the official market.
Reporting, Accounting and Auditing. Dutch reporting, accounting and
auditing standards differ substantially from U.S. standards. In general, Dutch
corporations do not provide all of the disclosure required by
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U.S. law and accounting practice, and such disclosure may be less timely and
less frequent than that required of U.S. corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Dutch equity markets was approximately EUR 534.2 billion
or US$ 564.3 billion.
The Singaporean Equity Markets
General Background. The Stock Exchange of Singapore (SES) was formed in
1973 with the separation of the joint stock exchange with Malaysia, which had
been in existence since 1938. The linkage between the SES and the Kuala Lumpur
Stock Exchange (KLSE) remained strong as many companies in Singapore and
Malaysia jointly listed on both exchanges, until January 1, 1990 when the dual
listing was terminated. SES has a tiered market, with the formation of the
second securities market, SESDAQ (Stock Exchange of Singapore Dealing and
Automated Quotation System) in 1987. SESDAQ was designed to provide an avenue
for small and medium-sized companies to raise funds for expansion. In 1990, SES
introduced an over-the-counter (OTC) market known as CLOB International, to
allow investors access to international securities listed on foreign exchanges.
SES also has a direct link with the National Association of Securities Dealers
Automated Quotation (NASDAQ) system, which was set up in March 1988 to allow
traders in the Asian time zone access to selected securities on the U.S. OTC
markets. This is made possible through a daily exchange of trading prices and
volumes of the stocks quoted on NASDAQ. The Singapore Stock Exchange is one of
the most developed in Asia and has a strong international orientation.
Reporting, Accounting and Auditing. Singaporean reporting, accounting
and auditing standards differ substantially from U.S. standards. In general,
Singaporean corporations do not provide all of the disclosure required by U.S.
law and accounting practice, and such disclosure may be less timely and less
frequent than that required of U.S. corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Singaporean markets was approximately SGD 269.4 billion or
US$ 159.9 billion.
The South African Equity Markets
General Background. The Johannesburg Stock Exchange (JSE), established
in 1887, is the only stock exchange in South Africa. Its major traded shares
have been mining and gold stocks, such as De Beers and the
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Anglo American Corporation of South Africa. The minerals-related sectors still
account for 14% of the market's capitalization, although there are now many
other important sectors including banking, insurance, industrials and leisure.
The market capitalization of the JSE has grown enormously from ZAR 13.3 billion
in 1970 to approximately ZAR 1022.0 billion in 1995.
Reporting, Accounting and Auditing. South African reporting, accounting
and auditing standards differ substantially from U.S. standards. In general,
South African corporations do not provide all of the disclosure required by U.S.
law and accounting practice, and such disclosure may be less timely and less
frequent than that required of U.S. corporations.
Structure of Equity Markets. As of August 31, 1999, the total market
capitalization of the South African equity markets was approximately ZAR 1,298.3
billion or US$ 213.5 billion.
The Spanish Equity Markets
General Background. The Securities Market Act (LMV) recognizes the
following as official secondary markets:
o stock exchanges;
o the public debt market organized by the Bank of Spain; and
o futures and options markets.
Stock exchanges in Spain (Madrid, Bilbao, Barcelona and Valencia) are
the official secondary markets which trade shares and convertible bonds or those
which grant the right of purchase or subscription. Issuers of shares go to the
stock market as the primary market, where they formalize transactions or capital
increases. Fixed-income securities (both governmental and private sector debt)
are also traded on the stock market.
The organization and functioning of each stock exchange is the
responsibility of each respective governing body (Sociedad Rectora), each of
which is a limited company whose sole shareholders are the dealer-brokers and
brokers and the stock exchanges themselves. The Sociedad de Bolsa, established
by the four stock exchanges, is responsible for the technical management of the
computerized trading system, which operates at a national level. Under the LMV,
the National Securities Market Commission (CNMV) is responsible for supervising
and inspecting the securities markets as well as the activity of all individuals
and companies who deal with the markets. It has the power to punish and other
functions.
These Spanish futures and options markets are organized by the holding
company MEFF (Mercado Espanol de Futuros Financieros) Sociedad Holding and two
subsidiaries: MEFF Renta Variable (equities), based in Madrid, and MEFF Renta
Fija (fixed-income securities), based in Barcelona. MEFF Renta Variable manages
the trading of options and futures on the Ibex-35 stock index, and individual
options on certain shares. MEFF Renta Fija manages the trading of futures and
options on interest rates and bonds.
Bonds, Treasury bills and debt issued by other public administrations
and organizations are traded in the public debt market. These securities are
also traded at the same time on the stock market, which has a specific trading
system for them. The Bank of Spain's Book-Entry Office is responsible for
supervising the public debt market.
Reporting, Accounting and Auditing. Spanish reporting, accounting and
auditing standards differ substantially from US standards. In general, Spanish
corporations do not provide all of the disclosure required by US law and
accounting practice, and such disclosure may be less timely and less frequent
than that required of US corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Spanish equity markets was approximately EUR 298.1 billion
or US$ 314.9 billion.
The Swedish Equity Markets
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General Background. Organized trading of securities in Sweden can be
traced back to 1776. Although the Stockholm Stock Exchange was founded in 1864,
the real formation of a stock exchange in an international sense took place in
1901. The statutes of the Stock Exchange were modified in 1906 and, from the
beginning of 1907, commercial banks were admitted as members. During the 1970s,
the Stockholm market had low turnover and dull trading conditions. The market
started to climb in 1980 and for several years Stockholm was one of the best
performing stock markets, in terms of both price and volume growth. This
regeneration of a market for risk capital was reflected in the large number of
companies introduced in the early 1980s. The Stockholm Stock Exchange is
structured on a membership basis, under the supervision of the Bank Inspection
Board. The Board consists of 11 directors and one chief executive. The directors
of the Board are elected by the Swedish government, the Association of the
Swedish Chamber of Commerce, the Federation of Swedish Industries and the member
companies of the Stock Exchange. There are three different markets for trading
shares in Sweden. The dominant market is the A-1 list, for the largest and most
heavily traded companies. The second market is the over-the-counter market,
which is more loosely regulated than the official market and caters to small-
and medium-sized companies. The third market is the unofficial parallel market,
which deals in unlisted shares, both on and off the exchange floor. The shares
most frequently traded on this market are those which have been de-listed from
other markets and those that are only occasionally available for trading.
On July 1, 1999, the Stockholm Stock Exchange and OM Stockholm merged
to create the OM Stockholm Exchange - OM Stockholmsborsen AB. In addition, the
Stockholm Stock Exchange and the Copenhagen Stock Exchange have signed an
agreement covering a common Nordic securities market, NOREX.
There are also two independent markets for options - the Swedish
Options Market (OM) and the Swedish Options and Futures Exchange (SOFE), which
offer calls, puts and forwards on Swedish stocks and stock market indices.
Reporting, Accounting and Auditing. Swedish reporting, accounting and
auditing standards differ substantially from US standards. In general, Swedish
corporations do not provide all of the disclosure required by US law and
accounting practice, and such disclosure may be less timely and less frequent
than that required of US corporations. The basic concepts used are historical
cost, going concern, accrual basis, consistency and prudence.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Swedish equity markets was approximately SEK 2,219.0
billion or US$ 268.7 billion.
The Swiss Equity Markets
General Background. There are three principal stock exchanges in
Switzerland, the largest of which is Zurich, followed by Geneva and Basle. The
Geneva exchange is the oldest and was formally organized in 1850. The Basle and
the Zurich exchanges were founded in 1876 and 1877, respectively. The Geneva
Exchange is a corporation under public law and in Zurich and Basle the exchanges
are institutions under public law. There are three different market segments for
the trading of equities in Switzerland. The first is the official market, the
second is the semi-official market, and the third is the unofficial market. On
the official market, trading takes place among members of the exchange on the
official trading floors. Trading in the semi-official market also takes place on
the floors of the exchanges, but this market has traditionally been reserved for
smaller companies not yet officially accepted on the exchange. Unofficial market
trading is conducted by members and non-members alike. Typical trading on this
market involves shares with small turnover. Both listed and unlisted securities
can, however, be traded on this market.
Since July 1998, SWX has provided facilities for electronic trading in
Eurobonds. Repo SWX, the first electronic market for repos with integrated
clearing and settlement, was inaugurated in June 1999. In addition, SWX launched
a new market segment for emerging-growth companies in July 1999, under the name
SWX New Market. Eurex, the first trans-national derivatives market, is a
co-operative venture between the SWX Swiss Exchange and Deutsche Borse Ag, each
of which holds a 50% stake. Eurex is the largest derivative exchange in the
world.
Reporting, Accounting and Auditing. Swiss reporting, accounting and
auditing standards differ substantially from US standards. In general, Swiss
corporations do not provide all of the disclosure required by US
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law and accounting practice, and such disclosure may be less timely and less
frequent than that required of US corporations.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the Swiss equity markets was approximately CHF 978.6 billion
or US$ 645.9 billion.
The Taiwanese Equity Markets
General Background. The Taiwan Stock Exchange, in Taipei, is the only
stock exchange in Taiwan. Its roots can be traced to the Land Reform Movement of
1953. The government bought tracts of land from large landowners and paid for
them with bonds and shares in government-owned companies. The need to trade
those shares and bonds gradually bred the formation of a fledging
over-the-counter market. As the economy prospered, the importance of a
securities market was recognized. The government established the Securities
Market Research Committee to study the feasibility of a formal stock market.
Consequently, the Securities and Exchange Commission (SEC) was established on
September 1, 1960, as a department of the Ministry of Finance. The Taiwan Stock
Exchange (TSE) was founded a year later and officially commenced operation in
February 1962.
In the exchange's first year, there were 18 listed companies with an
average trading volume of TWD 1,647,760. By 1963, there were 23 listed
companies; by 1980, there were 100. Listings steadily increased and the market
remained stable for several years. Since then, the number of brokerage firms has
multiplied and limitations on foreign investors have recently been relaxed.
Reporting, Accounting and Auditing. Taiwanese reporting, accounting and
auditing standards differ substantially from US standards. In general, Taiwanese
corporations do not provide all of the disclosure required by US law and
accounting practice, and such disclosure may be less timely and less frequent
than that required of US corporations.
Structure of Equity Markets. As of August 31, 1999, the total market
capitalization of the Taiwanese equity markets was approximately TWD 10,393.1
billion or US$ 326.4 billion.
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The United Kingdom Equity Markets
General Background. The UK is Europe's largest equity market in terms
of aggregate market capitalization. Trading is fully computerized under the SETS
System for FTSE- 100 (and 83 other) stocks and the Stock Exchange Automated
Quotation System (SEAQ) operates for international equities. The London Stock
Exchange exists alongside Tradepoint, while there is also a network of regional
offices. The London Stock Exchange has the largest volume of trading in
international equities in the world.
Reporting, Accounting and Auditing. Despite having a great deal of
common purpose and common concepts, the accounting principles in the UK and the
US can lead to markedly different financial statements. In the global market for
capital, investors may want to know about a company's results and financial
position under their own principles. This is particularly so in the US capital
markets. The overriding requirement for a UK company's financial statements is
that they give a `true and fair' view. Accounting standards are an authoritative
source as to what is and is not a true and fair view, but do not define it
unequivocally. Ad hoc adaptations to specific circumstances may be required. In
the US, financial statements are more conformed because they must be prepared in
accordance with GAAP.
Size of Equity Markets. As of August 31, 1999, the total market
capitalization of the United Kingdom equity markets was approximately GBP
1,637.1 billion or US$ 2,632.4 billion.
Regional and Country-Specific Economic Considerations.
Europe. In 1986, the member states of the European Union (the "Member
States") signed the "Single European Act," an agreement to establish a free
market. The development of a unified common European market has promoted the
free flow of goods and services; however, since September 1992, Europe's
monetary policy has been affected by fluctuating currencies. Additionally,
1993's tight monetary policies and high inflation caused Europe's economies to
ebb into recession.
The Maastricht Treaty on economic and monetary union (the "EMU") is
intended to provide its members with a stable monetary framework. The prospect
of EMU has triggered a sharp convergence of interest rates across Europe, with
risk premium over the German interest rates levels having decreased. Adding to
the favorable monetary conditions, the monetary easing experienced by core
countries has triggered a strong depreciation of their currencies. Consequently,
European activity has accelerated again in 1997.
On January 1, 1999, the third and final stage of EMU began with the
establishment of a currency union encompassing 11 of the 15 Member States of the
European Union (EU) - Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, the Netherlands, Portugal, and Spain. On that date, these
countries locked their exchange rates and adopted the euro as their common
currency, with monetary and exchange rate policy determined by area-wide
institutions. Thus, each country will give up the possibility of independent
monetary and exchange rate policy.
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EMU does not change the locus of responsibility for policies other than
monetary and exchange rate policies. Policies affecting external trade and the
integration of internal markets were already a matter of EU competence. Fiscal
and labor market policies will continue to be decided mostly at the national
level, albeit subject to closer surveillance by EU institutions. The Stability
and Growth Pact (SGP), agreed in June 1997, set out the procedures for
surveillance of national fiscal policies, strengthening the framework provided
in the Maastricht Treaty. Also, the Treaty of Amsterdam, signed in October 1997,
explicitly recognized labor market policies as a matter of common concern and
set out procedures for their surveillance. Except for monetary and exchange rate
policies, area-wide decision making and surveillance are the responsibility of
institutions of the EU as a whole. It has been agreed that ministers of
euro-area countries can meet (as the Euro-11 Group), to discuss issues related
to the single currency, but that formal surveillance and coordination decisions
will be the prerogative of the full EU Council of Ministers (ECOFIN). The
prospective euro-area rivals the United States in terms of output and trade. The
delineation of monetary, fiscal, and structural policy responsibility between
the euro-area institutions and national governments helps assign responsibility
for these policies, but also complicates their coordination.
Austria. Following three years of acceleration, culminating in 3.3% GDP
growth in 1998, economic activity in Austria decelerated sharply in late 1998
and early 1999. The main culprit for the slowdown was the Russian crisis (which
hit Austria's exports to Central and Eastern Europe) and the generalized slowing
of growth in the euro area. However, there was a turnaround in foreign demand
and a continuation of solid consumer-spending growth in late 1999.
Consumer price inflation troughed at 0.2% year on year in April 1999,
following a deceleration from 1.2% a year earlier, because of falling oil
prices. The recovery in oil prices and the depreciation of the euro since the
start of the year led to a moderate acceleration in price increases, to 0.6% in
August 1999. Meanwhile, short-term interest rates declined from 3.7% in 1997 to
3.2% in 1998 and long-term interest rates fell from 5.5% in 1997 to 3.8% in
1998.
The general government deficit was 2.1% of GDP in 1998 and 1.9% of GDP
in 1997. Tax cuts for low- and middle-income households planned for 2000 may
mean that the deficit could come dangerously close to the 3% Maastricht
threshold. Thus, one of the first tasks of the new government will be to prevent
the deficit from surpassing that level.
Belgium. Belgium joined the European Monetary Union on May 1, 1998.
Belgium shows a high degree of economic openness. It is therefore
extremely sensitive to economic developments abroad and, in particular, to those
occurring in the EMU, as activity in Belgium fluctuates almost exactly in line
with that of the euro area. The latest economic developments are no exception in
that respect. Thus, in 1998, along with the rest of the euro area, Belgium faced
a general slowdown of activity. Output growth slowed from a healthy 4% pace at
the beginning of the year to a sluggish 1.6% by the fourth quarter. During the
first two quarters of 1999, activity remained somewhat subdued, as output grew
by 1.6% to1.7%. Since late 1998, general economic sentiment, as measured by the
National Bank of Belgium, has been improving. Similarly, manufacturers have
completely recovered from their recent sluggishness.
The Belgian unemployment rate typically is lower than the rest of the
EMU. But that gap shrunk significantly in 1997 and 1998 and now amounts to less
than one percent. Total employment growth has remained strong and the
unemployment rate was below 9% in fall 1999.
Belgian consumers' prices rose by 0.9% in August and by 1.3% in
September against an average of 1.2% and 1.3%, respectively, in the euro area.
After some hard times, Belgian public finances have greatly improved.
The public sector borrowing requirement has been curbed from roughly 8% of GDP
in 1992 to about 1% in 1998. Similarly, the primary surplus has risen from 3.0%
of GDP to 6.7%. Public debt has fallen from almost 128% of GDP in 1992 to 116%
in 1998. The recovery of public finances is such that despite lower GDP growth,
the budget ministry decided, in last spring's budget review, to carry on with
its six-year program to cut permanently employers' social security contributions
and reduce labor costs by some 6%.
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General elections were held on June 13, resulting in an historic shift
of power: Jean-Luc Dehaene's Christian Democrats lost the majority in the lower
house to Liberals for the first time in history. Now, Guy Verhofstadt's
`blue-red-green' coalition made of French-and-Dutch speaking Liberals,
Socialists and Greens - the latter in a coalition for the first time - faces the
task of restoring public confidence after a series of political scandals.
France. Following a slowdown last winter, growth re-accelerated in the
second quarter of 1999. Since then, manufacturing companies have become
increasingly optimistic about trends in aggregate demand and their own
production plans. In September, they signaled that output prices should cease
declining for the first time since early 1996. On the demand side, retail sales
jumped sharply during the summer months, led by booming durable goods sales.
Employment growth remained surprisingly robust during the winter
slowdown, due to a buoyant services sector, in which new companies, having
benefitted from the deregulation of former state monopolies (such as telecoms,
public utilities and media) are doing well. On the other hand, French companies
have kept wage rates steady (up 1.5% year on year in the second quarter of 1999)
in order to mitigate the rise in labor costs that might result from the
reduction of working hours next year.
At 0.5% on average for 1999, French inflation is among the lowest in
Europe. On top of very slow wage growth, deregulation is taking its toll on
retail prices every month, largely offsetting cyclical forces.
The budget was slightly expansionary in 1999, as civil servants
benefitted from pay raises based on inflation forecasts that proved to be too
high. The 2000 budget signals a return to orthodoxy.
The first two years of the government's five-year term were favorable
for corporate France, despite the rise of the corporate tax rate to 40% in 1997.
Large-scale privatization took place (France Telecom, Air France, Aerospatiale,
Credit Lyonnais, among others) and French companies, which had been hurt by
years of high real interest rates, fully reaped the benefits of EMU and its
generous monetary policy. Despite promises, it is unclear whether the corporate
tax rate will be cut next year. The pending reduction of the working week will
make business more costly and more complicated for medium-sized companies
(smaller companies will be hit only in 2001). Finally, the government is
planning to make restructuring more costly and short-term labor contracts (used
to encourage labor flexibility) more expensive for companies.
Germany. Germany, the third largest economy in the world, has faced
substantial economic and political challenges in the wake of reunification
between West and East Germany. Previously-communist eastern Germany, which had
been largely insulated from international competition, saw most of its capital
stock become obsolete after the reunification. Transforming eastern Germany into
a modern market economy has been more difficult and costly than anticipated
initially.
According to new measures of national accounts data, unified Germany's
economic growth in the period 1991-98 was worse than previously thought. For
instance, GDP rose by only 2.2% in 1998, when measured according to the new
standards, as compared to 2.8% under the old measure. Since Germany's 1993
recession, annual GDP growth has averaged only 1.8% according to the new
standards. An export-led, sharp deceleration of growth in the second half of
1998 resulted from the global recession, which meant that the German economy
started 1999 on a weak footing.
The Bundesbank no longer conducts an independent monetary policy, as it
surrendered its monetary policy-making ability to the European Central Bank in
1999. The German government recently introduced a reform package consisting of
reductions in personal and corporate income tax spending cuts. A corporate tax
reform will reduce the overall tax rate on German corporate profits to 35% by
2001, from more than 56% currently.
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Italy. Italy's economic strength lies in manufacturing, mainly through
networks of small and medium-sized companies, producing in particular machine
tools and consumer goods. Two key service sectors are tourism and the rapidly
expanding telecom industry. In the early 1990's, industry began to struggle to
compete as a result of wage increases and a restrictive exchange rate policy
designed to put an `external bound' on the inflation rate. But in September
1992, the lira collapsed and was forced to leave the Exchange Rate Mechanism
(ERM). The lira recovered in 1996 and returned to the ERM by the end of that
year.
The Italian economy has been characterized in recent years by the
attempt to reduce the significant public deficit, and reverse the dynamic of the
public debt, which reached a peak in 1995 at 125% of GDP. These efforts were
particularly strong in 1996 and 1997, in the run up to the European Monetary
Union, to comply with the Maastricht rules. The attempt was successful: the
public deficit was lowered to 2.7% of GDP in 1997 from 11%, which allowed Italy
to joint EMU from its inception. Restrictive budget measures were, however,
mainly responsible for the poor performance of the Italian economy in the 1990s
(the economy grew by 1.3% on average in 1990-1998).
The Italian unemployment rate is high (11.8%), although reforms in 1997
eased the rigidity in the labor market. As a consequence, a healthy increase in
employment has taken place since the beginning of 1998 (more than 1% yearly),
driven mostly by the development of part-time and short-term contracts.
In 1992, Italy began a privatisation program by transferring major
state holdings to joint stock companies as an intermediate step to total or, at
least partial, floatation of those holdings on the stock exchange. Since then,
Italy has performed one of the world's largest privatization programs and is
still proceeding.
Currently, after having reached the much-desired EMU target and having
consolidated its public finances, the aim of the government is to rekindle with
growth, while pursuing a systematic and continued reduction of the public debt.
The Netherlands. The economic performance of the Netherlands, the fifth
largest economy in the European Union, has grown impressively in the past
decade. Emerging from a deep recession in the 1980s, the Netherlands' economy
has become one of the fastest growing in Europe and the pace at which new jobs
are generated is close to that of the United States.
In the first half of 1999, the Dutch economy expanded by about 3% over
the same period in 1998. GDP grew 0.7% in the first quarter of 1999 and by 0.8%
in the second quarter, which was more than twice the expected rate. The
unemployment rate is at 3.2% of the labor force. Despite a tight labor market,
collective wage agreements entered into this year have provided for relatively
moderate pay rises only.
The Dutch government has announced plans to bring the budget into
surplus in 2001, which would be the first surplus since 1974.
Stronger-than-expected growth created leeway to cut taxes and trim the budget
deficit. The Dutch government has also presented a comprehensive tax reform to
be implemented in 2001, which would reduce the top income tax rate from 60% to
52% and the lowest income tax rate from 36.5% to 20%. At the same time, the
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VAT will be raised by 1.5 %, to 19%. The tax reform is estimated to result in a
net tax relief of NLG 5 billion (0.7% of GDP), with low income earners being the
main beneficiaries. In addition, the Dutch government has announced plans to cut
the corporate tax rate from 35% to 30%.
Spain. Spain's entry into the European Community in 1986 was followed
by a period of rapid economic growth and sharp restructuring. Strong growth did
not continue, however, and the government's restrictive monetary policy and the
overvalued peseta contributed to a downturn in investment, along with a rise in
unemployment, in the early 1990s. Despite the devaluation of the peseta and the
easing of monetary policy in 1993, Spain slipped into its worst recession in 30
years. Economic growth has recovered since then, averaging 3.0% from 1994 to
1998. The center-right government elected in 1996 has displayed a strong ability
to control public spending through structural reforms. In 1997, Spain was able
to fulfill all the Maastricht criteria and was among the eleven participants in
the European Monetary Union, which started at the beginning of 1999.
The Spanish unemployment rate is currently the highest in the European
Union, and unemployment is the main economic problem in Spain. In 1994 and again
in 1997, reforms in the labor market were undertaken, mainly to ease the rigid
regulations that govern permanent job contracts. The recent strong economic
growth and new reforms to improve the flexibility of the labor market have
decreased the rate of unemployment from 25% in 1994 to 16% in 1999.
Currently, the government faces the challenges of addressing the
domestic concerns of controlling inflation, at 2.4% yearly in August 1999, which
was more than one percentage point above the EMU average, and consolidating the
improvements in the labor market.
Sweden. Sweden has a highly developed and successful industrial sector.
The chief industries, most of which are privately owned, include textiles,
furniture, electronics, dairy, metals, ship building, clothing, engineering,
chemicals, food processing, fishing, paper, oil and gas, automobiles and
shipping. Productivity, as measured by GDP per capita, is well above the
European average, although two-thirds of GDP passes through the public sector.
Successive governments have traditionally afforded Swedes generous
benefits for unemployment, sick leave, childcare and general public welfare,
along with state medical care. This extensive social welfare system has become
unsustainable in recent years, notably when the economy slowed down
significantly in the early 1990s, which caused large government deficits. Almost
half of the personal disposable income received by Swedes resulted from transfer
payments, a system for redistributing income. Since then, a massive turnaround
in public finances has occurred thanks to years of fiscal restraint and an
increase in economic growth. The Swedish government has announced that it plans
to cut taxes within the next five years.
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The Swedish economy has weathered an export slowdown, due mostly to the
currency depreciation of the third quarter of 1999. Further, the repo rate was
cut 1.45% between October 1998 and March 1999.
The Swedish central bank, the Riksbank, has a two-year forward
inflation target of 1.0% to 3.0%. The upside surprises on growth and the looming
tax cuts were not factored in the last inflation report, when two-years forward
inflation was foreseen to remain at 2.0%. Indeed, the Riksbank has repeatedly
warned that tax cuts boosting consumer spending may lead to an overexpansion of
the economy.
Switzerland. Due to its lack of raw materials, Switzerland has based
its economic growth on its highly skilled labor market and technological
manufacturing expertise. Switzerland's strengths lie in chemicals and
pharmaceuticals, watches, precision instruments (machinery equipment),
engineering, food, financial services and tourism. Additionally, its small
domestic market's reliance on exports accounted for 36% of the GDP in 1994. It
therefore suffered significantly from the world trade slowdown of the second
half of 1998.
While the Swiss official unemployment rate fell to 2.5% in July 1999,
the underlying rate was 4.6%, i.e. above official estimates, which range between
2% and 2.5%.
The VAT hike (from 6.5% to 7.5% on Jan 1st 1999), a tobacco tax
increase and oil prices have all pushed inflation away from deflationary
readings since early 1999, up to 0.9% for the year from August 1998 to August
1999.
The United Kingdom. The UK is a large, open economy with total exports
accounting for approximately 30% of GDP. The service sector's share in total GDP
has been on an upward trend and now stands at about two-thirds of overall
activity, as the UK has particularly strong business and financial services
sector. By contrast, the manufacturing sector's share in GDP has been declining
and is now estimated at just over 20%. The Bank of England was made independent
in May 1997 and conducts interest rate policy consistent with reaching an
inflation target (set by the government) two years hence.
Economic growth was slow throughout most of 1998 and early 1999. Last
year's slowdown in large part reflected a sharp deterioration in the net trade
position, prompted by continued currency strength and a weakening in world trade
and global economic growth. Net trade in 1998 fell by more than 2%.
Manufacturing output slowed accordingly, exhibiting growth of only 0.4% during
1998. The sector was in technical recession in the fourth quarter of 1998, but
contributed positively to output growth for the first time in a year by the
second quarter of 1999. The service sector meanwhile grew by 3.7% in 1998,
supported by robust activity across the range of sub-sectors, particularly
within business and financial services.
Strength in the service sector has to some extent been reflected within
the expenditure components of GDP, where domestic demand remained resilient,
expanding by 4.1% in 1998. Of this, just over 2% was household spending, while
total fixed investment contributed a further 1.5%. Household spending expanded
by an annualized rate of 5.5% during the first half of 1999. A sharp
(pound)1.8bn de-stocking weighed on total domestic demand during the second
quarter of 1999, but the underlying picture is very robust. Excluding stocks,
total demand expanded by 4.4% in the year from the second quarter of 1998 to the
second quarter of 1999.
Household spending growth has been underpinned by a strong labor
market. Manufac turing employment has fallen by some 5% since early 1998, but
total employment has risen by more than 0.5% over the same period. The labor
market has proved tighter than previously assumed. Declines in claimant count
unemployment have continued, while vacancies have remained high. Thus far,
inflation pressures have been subdued. The retail prices index excluding
mortgage interest payments (RPIX) - the government's target measure - stood at
3.2% in the year to May 1998, but fell to just 2.1% by August. This is explained
by goods price inflation, which eased from over 2% in early 1998 to a series-low
of 0.5% in August 1999. This in turn reflects sterling's persistent strength,
which has dragged import prices lower. From a peak of 7.5% in June 1998, the
Bank of England started lowering interest rates in October, because of perceived
undershooting of its inflation target. Rates bottomed at 5% in June 1999. But
with upside risks to the RPIX target gathering momentum, the Bank has started a
tightening cycle, raising interest rates to 5.25% in September 1999.
Real GDP Annual Rate of Growth (annual % change)
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1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Austria 0.5 2.4 1.7 2.0 2.5 3.3
Belgium -1.5 2.6 2.3 1.3 3.0 3.0
France -1.3 2.8 2.1 1.6 2.3 3.2
Germany -1.1 2.4 1.8 0.8 1.8 2.3
Greece -1.6 2.0 2.1 2.4 3.2 3.7
Italy -0.9 2.2 2.9 0.9 1.5 1.3
Netherlands 0.8 3.2 2.3 3.1 3.6 3.8
Portugal -1.4 2.4 2.4 3.6 3.8 3.9
Spain -1.2 2.1 2.9 2.4 3.7 4.0
Sweden -2.2 3.9 3.7 1.3 1.8 2.6
Switzerland -0.5 0.5 0.5 0.3 1.7 2.1
United Kingdom 2.3 4.4 2.8 2.6 3.5 2.2
Source: World Economic Outlook, October 1999 (International Monetary Fund)
Japan, the Pacific Basin, and Southeast Asia. Many Asian countries may
be subject to a greater degree of social, political and economic instability
than is the case in the United States and Western European countries. Such
instability may result from (i) authoritarian governments or military
involvement in political and economic decision-making; (ii) popular unrest
associated with demands for improved political, economic, and social conditions;
(iii) internal insurgencies; (iv) hostile relations with neighboring countries;
and (v) ethnic, religious, and racial disaffection.
The economies of most of the Asian countries continue to depend heavily
upon international trade and, accordingly, are affected by protective trade
barriers and the economic conditions of their trading partners, principally the
United States, Japan, China and the European Community. The enactment by the
United States or other principal trading partners of protectionist trade
legislation, along with the reduction of foreign investment in the local
economies and a general decline in the international securities markets, could
have a significant adverse effect upon the economies and securities markets of
the Asian countries.
The success of market reforms and a surge in infrastructure spending
have fueled rapid growth in many developing Asian countries. Rapidly rising
household incomes have fostered large middle classes and new waves of consumer
spending. The increases in infrastructure spending and consumer spending have
made domestic demand the growth engine for these countries. Thus, their growth
now depends less upon exports. While exports may no longer be the sole source of
growth for these developing economies, improved competitiveness in export
markets has contributed to growth in many of these nations. The increased
productivity of many Asian countries has enabled them to achieve, or continue,
their status as top exporters while improving their national living standards.
In the fourth quarter 1997, the Southeast Asian currency markets came
under severe selling pressure from abroad, as foreign investors and speculators
alike have heavily sold regional currencies viewed to be overvalued. The Thai
Baht was the first to come under pressure, but Indonesian, Malaysian,
Phillipine, Singaporean, Taiwanese, South Korean and Hong Kong currencies have
all been affected. Equity and fixed income markets have also faced selling
pressure as foreign investors have been concerned with the overall financial
prospects of the region.
Among the countries at the center of the Asian crisis, Korea and
Thailand have made encouraging advances toward restoring confidence and
initiating recovery, although their turnarounds remain at risk, including from
the external environment. The situation in Indonesia, however, remains very
difficult. Malaysia has resorted to external payments controls in an effort to
insulate its economy from the regional crisis. In Japan, despite substantial
fiscal stimulus and new initiatives to deal with banking sector problems,
significant downside risks remain. Growth in China appears to be slowing, and
both the renminbi and the Hong Kong dollar have been under considerable
pressure.
Australia. After a period of high growth in 1998 and early 1999, the
Australian economy began to show signs of slowing in the second quarter of 1999.
Private investment growth slowed to just 2.2% (annualized) in the first half of
1999, down from an average rate of approximately 9% in 1998. Consumer demand,
which fueled the
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economy through 1998, has remained reasonably strong. But demand for some goods,
such as autos and white goods, has been distorted by the phasing-in of several
tax reforms (the addition of a goods and services tax and abolition of a
wholesale sales tax). Meanwhile, inflation has been relatively low. In the
second quarter of 1999, Australia's consumer prices were up just 1.1% from a
year earlier. The most recent national budget featured a surplus of A$5.4
billion, or about 0.9% of GDP.
The Government, headed by John Howard, was reelected in October 1998
with a mandate to overhaul Australia's tax system. After the implementation of
goods and services and personal income taxes, business tax reform is the next
major item it intends to push through the legislature. The Howard Government
holds 80 of 148 seats in the Lower House and 35 out of 76 seats in the Senate.
The next general election is due by December 2001.
Hong Kong. The transfer of sovereignty from Britain to China, which has
created a sense of uncertainty in Hong Kong's economy, has largely been a smooth
transition. Under the principle of "one country, two systems," Hong Kong is now
a special administrative region (SAR) of the People's Republic of China and is
empowered with a high degree of autonomy. It has retained its administrative,
legislative and judicial systems. The SAR government has full control over its
monetary and fiscal policies and it maintains its own customs and immigration
control, separate from the mainland. Except for issues relating to national
security and foreign policy, the SAR is largely run as an independent territory.
The first chief executive of the SAR, Mr. C.H. Tung, a former shipping
tycoon, has vowed to make a difference in the lives of the people of Hong Kong,
by focusing his attention on the areas of housing, education and infrastructure.
In the past, the chronic shortage of housing has been a strong influence on the
property market. Hong Kong property prices today are among the highest in the
world. Worth noting is that there is heavy exposure to the property market in
Hong Kong's banking sector as well as the stock market as a whole.
The integration of Hong Kong's economy with that of the mainland
continues apace. While the integration process in the 1980's was driven by the
relocation of Hong Kong's labor-intensive manufacturing sector to Southern
China, the integration theme for the 1990's is that of Hong Kong becoming a
service center for China's fast growing economy. A large number of mainland
companies have established offices in Hong Kong as a window for interaction with
the global economy. The Hong Kong financial sector is increasing its role in the
intermediation of foreign funds for investment in China. Close to half of the
FDI into China goes through Hong Kong. Furthermore, Hong Kong is increasingly
playing a role in intermediating China's savings for investment in China. Hong
Kong is well on its way in becoming a bona fide financial center for China.
Hong Kong's economy has been in a recession since the Asian crisis that
began in the second half of 1998. Deflation has been a major problem, as it has
discouraged investment, postponed consumption and delayed a turnaround in the
inventory cycle. Nevertheless, GDP growth seems to be recovering somewhat, as it
has increased to a seasonally adjusted rate of 3.1% from the first quarter of
1999 to the second quarter of the year, as compared to an average 1998 GDP
growth rate of -5.1%.
The downward adjustment in goods and services prices in Hong Kong
continues; this is the natural process of restoring competitiveness against the
territory's devalued neighbors. Further, deflation deepened sharply in July and
August due to cuts in housing costs resulting from concessions on rates (taxes)
granted by the government. The CPI(A) declined 3.2% in the first eight months of
this year.
Despite loose liquidity conditions and the plunging of the
loan-to-deposit ratio to 1991 levels, Hong Kong's banking cartel raised interest
rates in August, following the Fed's latest move. Ongoing deflation has reduced
the demand for and supply of new loans; outstanding domestic credit has declined
by 11.7% from the peak in September 1997.
Fiscal support remains key to Hong Kong's economy. The government ran a
HK$30 billion deficit in the first four months of fiscal year 2000 following one
of HK$31.5 billion (2.5% of GDP) in fiscal year 1999. The deficit has been
financed primarily by foreign reserves, which totaled US$89.2 billion at the end
of August. In efforts to maintain the level of foreign reserves, the government
will start selling off its local stock holdings, which could curb liquidity
conditions. Future sources of fiscal revenue include the privatization of water
supply services and the Mass Transit Railway Corp.
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The trade deficit shrank in the first half of 1999 due to weak domestic
demand and the curtailing of smuggling into China. However, the deficit started
to expand again in July and August (on a year-on-year basis) as domestic demand
recovered. Domestic demand recovery is key to growth going forward.
The Hang Seng Index has been flat in the past few months. The
government's plan to dispose of its local stock holdings starting in October
will increase the supply of Hong Kong dollar assets.
Japan. Japan's economic growth in the 1990s has been substantially
below the levels of earlier decades. Major fiscal spending programs have brought
positive growth in some years, but Japan's gross national product shrank by 2.8%
in calendar 1998, its worst performance in the postwar period. A further round
of major fiscal spending was implemented in late 1998. Prices are largely stable
at the consumer level, even though deflation is occurring at the wholesale
level, and cash earnings per worker have continued to drop in nominal terms. The
unemployment rate has reached a historical peak of 4.9%.
Despite growth problems, the Japanese economy maintains several
strengths. The manufacturing sector includes some of the world's most innovative
companies in the electronics and precision machinery areas, along with world
leaders in automotive and machinery industries. Educational achievement levels
are high in comparison with other developed nations. Public sector
infrastructure is also extremely well developed.
Nevertheless, the Japanese economy faces significant weaknesses. The
financial system retains large levels of non-performing loans, which have made
intermediaries conservative in lending behavior. Many corporate
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balance sheets remain overleveraged, with low returns on assets, compared to
both some other industrial countries and to Japan's own history. The labor
market is undergoing a fundamental structural change, because of the system of
lifetime employment clashes with the need for increased labor mobility to adapt
to new technologies and global competition. Corporate governance is also
undergoing major changes, with the introduction of new accounting rules, new
decision making mechanisms, and changed incentives for managers.
Growth may continue to be hindered in 2000, due to the difficulty of
expanding fiscal policy further and to the adverse effects of industrial and
financial sector restructuring on business investment and wages. Investors have
shown confidence, as the Japanese stock market has grown in the first nine
months of 1999. The macroeconomic performance of the Japanese economy could
suffer, however, as cuts in employment and investment may constrain income.
Interest rates in the overnight market are currently at 0.03%
(effectively zero), in light of the policy of the Bank of Japan to give maximum
support to the economy. Nevertheless, long term bond yields have risen since the
end of 1998, because of high government deficits and the hesitant attitude on
the part of some institutions to buy securities with high duration risk, even if
government-issued.
The Japanese yen has fluctuated widely over the last year. At its most
recent trough, the currency was Y147/US$, in September 1998, just prior to the
adoption of financial sector reform bills by the Japanese Diet. After
strengthening early in 1999, then weakening at mid-year, the currency has
restrengthened, to Y104/US$ in mid-September 1999. Most observers view this
level of the yen as strong, and likely to have adverse impacts on the Japanese
economy, although neighboring Asian countries could benefit.
The political environment is stable, with the pending formation of a
three-party coalition government. The next general election (in which all seats
of the Lower House are up for re-election) must occur by November 2000, within
one month of the expiration of the 4 year term of the current Lower House. The
next election for the Upper House is scheduled for July 2001.
Japan has very large and active securities markets. The main stock
exchange is the Tokyo Stock Exchange, where a large majority of equity
transactions occur. This exchange is supported, however, by several regional
exchanges, which list local companies. Fixed income securities are traded
actively, usually off-exchange. Derivative markets in Japanese securities are
well developed. The securities markets are overseen by both private and public
regulatory bodies. The Japan Securities Dealers Association is the main private
regulatory force. In the public sector, a set of agencies under the Financial
Regulatory Commission is responsible for the oversight of trading activities and
inspection of securities companies.
Japan's heavy dependence on international trade has been adversely
affected by trade tariffs and other protectionist measures, as well as the
economic condition of its trading partners. Japan subsidizes its agricultural
industry since only 19% of its land is suitable for cultivation. It is only 50%
self-sufficient in food production. Accordingly, it is highly dependent on large
imports of wheat, sorghum and soybeans. In addition, industry, its most
important economic sector, depends on imported raw materials and fuels,
including iron ore, copper, oil and many forest products. Japan's high volume of
exports, such as automobiles, machine tools and semiconductors, has caused trade
tensions, particularly with the United States. Some trade agreements have been
implemented to reduce these tensions. The relaxing of official and de facto
barriers to imports, or hardships created by any pressures brought by trading
partners, could adversely affect Japan's economy. A substantial rise in world
oil or commodity prices could also have a negative affect. Since the Japanese
economy is so dependent on exports, any fall off in exports may be seen as a
sign of economic weakness, which may adversely affect the market. Japan's real
GDP for the first six months of 1998 was 2.7% less than the level achieved in
the first half of 1997.
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Geologically, Japan is located in a volatile area of the world and has
historically been vulnerable to earthquakes, volcanoes and other natural
disasters. As demonstrated by the Kobe earthquake in January of 1995, which
resulted in the death of 5,000 people and billions of dollars of damage, natural
disasters can be significant enough to affect the country's economy.
Korea. The Korean economic recovery has gained momentum. After
recording 4.6% GDP growth in the first quarter of 1999, in August the government
announced stronger 9.8% GDP growth for the second quarter of the year.
Despite rising oil and commodity prices, inflation remained subdued
during the first eight months of 1999, averaging 0.6% for the period. Import
prices have risen faster recently, however.
In response to the Daewoo liquidity crunch and market uncertainty about
possible runs on investment trust companies (ITCs), the government has committed
to keep the official overnight call rate at the current level to help stabilize
long-term interest rates. In case of a liquidity squeeze, the central bank will
supply liquidity to narrow the spread between long-term and short-term interest
rates. The overnight call rate has been quite stable over the last four months
but the corporate bond yield has been under pressure. Since Daewoo's insolvency
was exposed in mid-July, the spread between the 3-year corporate bond yield and
the overnight call rate has increased by 2.25%.
The government has budgeted for a W22 trillion deficit this year,
equivalent to 5% of GDP. As the economy has recovered faster than expected, tax
revenue collected has been higher than the government's original projection.
Government outlays will continue to focus on social safety net and financial
sector restructuring. The government now expects the budget deficit to narrow to
4% this year and 3.5% for 2000, and seeks a balanced budget in 2003.
Moving to the third quarter of 1999, the external account improved
substantially. Double-digit export growth rates have been recorded since June.
Import growth rates have been even stronger, rising by more than 30%. The
collapse of imports in 1998 forced many firms to deplete their stocks. As export
orders mount, firms have the incentive to increase imports of raw materials in
machinery. Korea now imports about US$10 billion a month, still considerably
lower than the monthly rate of US$12 billion before the crisis. Stronger imports
have resulted in a shrinking trade surplus, and hence a narrowing current
account surplus.
Malaysia. Over the last two decades, Malaysia has experienced rapid
industrialization, transforming a once commodity driven economy to one dominated
by the manufacturing sector. Although commodities remain important to the
Malaysian economy, where tin, rubber, palm oil, timber, oil and gas have played
a leading role, the electronics sector is now the fastest growing and most
important sector by far. In fact, Malaysia has become the world's third-largest
producer of semiconductor devices (after the U.S. and Japan) and the world's
largest exporter of semiconductor devices.
The high rates of investment that have been required to sustain
Malaysia's rapid growth have been met with high rates of domestic savings and
significant inflows of foreign direct investment. This combination has been
instrumental in maintaining fast growth while simultaneously limiting
inflationary pressures. Although free repatriation of profits is allowed,
Malaysia has experienced a high rate of reinvestment of profits from foreign
direct investment.
Until September 1, 1998 Bank Negara Malaysia (the central bank) managed
the exchange value of the ringgit against a basket of foreign currencies. During
the first nine months of 1998, investors sold ringgit together with other East
Asian currencies because of fundamental concerns over the economic conditions
within the region as reflected in the sharp contractions in some economies,
including Malaysia, as well as a general deterioration in sentiment toward
emerging markets, particularly following the Russian debt moratorium.
Malaysian currency volatility and general economic deterioration led to
the imposition of stringent capital controls in September 1998, including a one
year prohibition on repatriation of capital and an indefinite prohibition on
free transfers of securities. The prohibition on repatriation of capital was
removed in February 1999 but the controls have adversely impacted foreign
investors, including the Malaysia (Free) WEBS Index Series, which
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suspended creations in response to the controls. This adversely affected the
trading market for the Malaysia (Free) WEBS Index Series.
After contracting for five consecutive quarters, the Malaysian economy
returned to 4.1% growth in the second quarter of 1999. The GDP decline was a
severe 7.5% in 1998. The decline was particularly marked in the second half of
the year, at 10.6%. The expansionary monetary and fiscal policies implemented
since the second half of 1998 set the stage for economic recovery in 1999. Added
to this, the turnaround in global trade, especially electronics goods, acted as
a catalyst for economic recovery. A 38.3% growth in electronics exports boosted
overall export growth by 15.8% in the second quarter of 1999 and 28.9% in July.
Consumer prices have been quite stable since the beginning of the year.
However, on a year-on-year basis, inflation has declined steadily from 4% in the
first quarter to 2.4% in the July-August period. At this point, inflationary
pressure is still a non-issue. Year-to-date, inflation averaged 3.1%.
Monetary policy has been easing. Since the third quarter of 1998, the
central bank has cut the official three-month intervention rate nine times, for
a total cut of 5.5%. Most of the rate cuts were implemented between August and
November 1998. The statutory reserve requirement was cut by 6% during the third
quarter of 1998. The stringent rate cut effectively pushed down market interest
rates. The three-month interbank rate fell to a record low of 3.2% recently,
down from the peak of 11% in 1998.
After a 1.8% fiscal deficit in 1998, the Malaysian government budgeted
for a deeper deficit of 5.4% in 1999. This was due to a 9.3% increase in
government expenditure in nominal terms. In real terms, government consumption
rose 13.9% in the first half of 1999, against declines of 5.5% in the first half
of 1998 and 9.5% in the second half of 1998.
The government pegged the ringgit at an undervalued rate of M$3.8:US$1
on September 1, 1998. The undervaluation of the currency has supported export
growth. US dollar exports returned to growth starting from October last year,
half a year earlier than the export recovery in other Asian economies. Export
competitiveness has improved over time. Exports measured in US dollars rose 4.5%
in the first quarter of 1999 and accelerated to 15.8% in the second quarter of
1999. In July, exports surged 28.2%, led mainly by 56% growth in electronics
exports. Malaysia produces and packages about one-third of the world's
semiconductors and benefits from the strong demand for electronics worldwide.
Singapore. Singapore has become a high-income, highly industrialized
country though rapid growth in its manufacturing sector due largely to
significant foreign investment. Of particular importance is the electronics
industry in which Singapore is the leading producer of disk drives. The
financial and business services sector has also experienced recent growth, while
the mining and agriculture sectors are of minimal importance. Oil refining and
chemical industries have long been important and recently a significant
pharmaceutical sector has emerged. Since 1987, annual growth has been high,
ultimately reaching 10% in 1993 and 1994 and 9% in 1995. This sustained annual
growth can be attributed to high investment and exports. Personal consumption
growth has been low, which makes Singapore the highest saving country in the
world.
The government has followed an interventionist economic policy with
respect to its individual industries. To instill faith in its interventionist
policies, the government has sought to maintain economic stability. The taxes
are relatively high, but rates are stable. Monetary policy has aimed at keeping
inflation low by using the exchange rate as the main instrument. Labor market
pressure has been controlled by setting limits on the percentage of foreign
labor employed and applying a levy on employers of foreign labor. In addition,
the government, recognizing that land use is a constraint on growth, has sought
to make existing land use more efficient.
The government directly holds stakes in individual companies across the
board, from high-tech defense contractors to low-tech service businesses. The
government also holds indirect stakes in firms through a number of agencies.
Such government ownership interests may discourage the development of private
firms due to fears that the government entities may be given certain advantages
not available to private entities. Some privatization of state-owned businesses
is ongoing, however, such as the telephone business and certain other utilities.
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As a small open economy, Singapore is particularly vulnerable to
external shocks. The Asian crisis that crushed its neighbors caused the economy
to shrink for two quarters in 1998. The economy has returned to growth since the
first quarter of 1999, led by the manufacturing sector. In the second quarter of
1999, GDP growth accelerated to 6.7%. Although the recovery is becoming more
broad-based, not every sector is doing well. Consumer confidence resumed quickly
as the rate of retrenchment slowed substantially. External demand is recovering
gradually but the investment sector is still shrinking. Weak demand for disk
drives and Indonesia's political situation pose two big risks to the Singaporean
economy.
The 11-month deflation spiral ended in April. Since then, the CPI has
risen moderately, averaging 0.4% for the three months through July. The import
price index registered four straight months of growth from April to July.
Singapore opts to control its exchange rate. This decision is based on
the economy's openness. By controlling the exchange rate, it is easier to attain
the objective of monetary policy -- price stability. The exchange rate policy
was eased at the height of the crisis to cushion the economy from adverse
shocks. This year, the trade-weighted exchange rate index (TWI) has returned to
the pre-crisis level. The exchange rate band has also narrowed as the crisis has
subsided. By ceding control of monetary aggregates, domestic interest rates are
moving in line with foreign interest rates. The spread between the three-month
interbank rate and the Federal Funds rate widened to about 8% at one stage; it
has since returned to its historical level of around 3%.
The Singapore government has historically been prudent in its fiscal
policy, keeping fiscal expenditure below 20% of GDP. In response to the Asian
crisis, the government announced two stimulus packages in 1998 -- a S$2 billion
off-budget package and a S$10.5 billion cost-cutting package. The cost-cutting
package has an impact on the current budget, raising government expenditure to
20.5% of GDP in fiscal year 1999 from 19.6% in fiscal year 1998.
Singapore's competitive advantage is in producing electronics goods.
Electronics goods account for about half of total manufacturing production and
two-thirds of domestic exports. The external trade account is, therefore, highly
sensitive to the global electronics cycle. Global electronics demand has revived
due to Year 2000 computer adaptability issues. Electronics production rose 14%
in the first quarter of 1999 and 23% in the second quarter of 1999. In July, it
accelerated to 34%. However, strong electronics production failed to boost
electronics exports. Exports of electronics goods rose a mere 1.4% in the second
quarter of 1999. Although they accelerated to 13% in July, exports slowed again
to 6.1% in August. Non-electronics goods, however, have become the main driver
for Singapore's overall export growth. After enjoying 18 months of trade
surplus, the external trade account reverted to a deficit for July and August.
Taiwan. The Central Bank has maintained an eased monetary policy in
recent times. This has not fueled inflation. The New Taiwan dollar has
strengthened against the US dollar. The government has tightened controls on the
foreign-exchange market. The budget deficit has eased.
The government has revised its forecast for economic growth in 1999 to
at least 5.5%. Private consumption indicators have remained weak. New domestic
investment fell by 12.5% year on year in January-June 1999.
The electronics sector has continued to perform strongly in 1999.
Housing construction performance has been mixed. A delay in a national
high-speed rail project has harmed construction companies.
Consumer prices have remained subdued and wholesale prices have
continued to fall through September 30, 1999. Unemployment rose to 2.9% in June
1999, owing both to weaker domestic demand and technological innovations that
reduce the need for workers.
Non-performing loan ratios have remained high. The government announced
in May that all state banks would be privatized by 2002. Foreign banks have
established themselves in areas such as derivatives. Foreigners were net buyers
of Taiwan stocks, in the amount of NT$140bn (US$4.3bn) in January-June 1999. The
government intervened in July to prop up the stock market after military threats
from China caused a sharp fall in the TAIEX.
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Merchandise exports rose by 5.4% year-on-year in US dollar terms in
January-July 1999. Merchandise imports have also started to revive. The
merchandise trade surplus totalled US$6.7bn in the first seven months of 1999,
nearly triple the level recorded in the same period in 1998. The current-account
surplus rose to US$1.7bn in the second quarter of 1999. Merchandise trade with
China has remained strong.
Real GDP Annual Rate of Growth (annual % change)
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Australia 3.8 5.0 4.4 4.0 3.9 5.1
Hong Kong 6.1 5.4 3.9 4.5 5.3 -5.1
Indonesia 7.3 7.5 8.2 8.0 4.8 -13.7
Japan 0.3 0.6 1.5 5.1 1.4 -2.8
Korea 5.5 8.3 8.9 6.8 5.0 -5.8
Malaysia 8.4 9.3 9.4 8.6 7.7 -6.7
Singapore 12.8 11.4 8.2 7.5 9.0 0.4
Taiwan 6.3 6.5 6.0 5.7 6.8 4.9
Thailand 8.5 8.6 8.8 5.5 -1.3 -9.4
Source: World Economic Outlook, October 1999 (International Monetary Fund)
Brazil. Brazil is Latin America's largest economy and the world's tenth
largest. Manufacturing is the dominant industrial sector, generating 24% of GDP,
followed by agriculture at 12%; services represent 55% of GDP. In the period
from 1994 to 1998, annualized economic growth averaged 3.1%. Growth ended in
mid-1998, as fears of contagion from Russia caused a sharp loss of liquidity
through capital flight. The economy contracted 2.1% in the fourth quarter of
1998, bringing growth for the year to 0.1%. The economy fell 0.7% in the first
half of 1999, following January's currency devaluation.
The real stood at R$1.21/US$ at the end of 1998. Growing concerns over
the sustainability of the real's crawling peg exchange rate resulted in the
devaluation of the currency on January 13. By March 1, the currency had
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fallen to R$2.13/US$, but it then rallied to R$1.66/US$ in early May. Concerns
about fiscal progress at home and general global concerns weakened the currency
again, to near R$2/US$ by mid-August.
Inflation tumbled from more than 2500% per annum in 1994 to 1.7% in
1998. The January 1999 currency devaluation caused inflation to surge to 3.6% in
February, but it receded quickly thereafter.
Despite tight control of monetary aggregates, real rates of interest
have decreased, with lower foreign exchange risk and reduced risk of an
inflation surge. Real rates of interest declined from 40% at the end of the
first quarter of 1999 to roughly 15% by mid-August. Further, after several
failed attempts, Congress passed fiscal adjustment measures in January-February
1999, after years of delay.
Brazilian Real GDP Annual Rate of Growth (annual % change)
1998 0.1
1997 3.7
1996 2.8
1995 4.2
1994 5.9
1993 4.9
Source: World Economic Outlook, October 1999 (International Monetary Fund)
Canada. The Canadian economy has performed well in recent quarters,
expanding at a 3.75% annualized pace in the first half of 1999. Growth in the
first half of 1999 was evenly balanced between the domestic and net export
sectors. Initial indicators suggest that the economy continued to expand in the
4% to 4.5% range in the second half of 1999, on average.
Underlying inflation pressure remains benign in Canada. The "core" CPI
inflation rate, which excludes food and energy prices, was 1.6% in August, at
roughly the mid-point of the Bank of Canada's 1% to 3% target band for core
inflation.
The Bank of Canada's primary policy objective is to target core
inflation, i.e. keep it to within a range of 1% to 3%. To achieve this goal, the
authorities have traditionally relied on their estimates of potential output
(and the output gap) to determine the inflation outlook. However, as the economy
nears theoretical levels of full capacity, the Bank has announced that it will
put increased emphasis on other measures of inflation and capacity pressures.
Meanwhile, the weak Canadian dollar has remained below US 69(cent) (CAD 1.45).
Canada's Federal budget was balanced in 1997 and is forecast to remain
in balance for the next two years. Additionally, all ten provinces are expected
to post balanced budgets by 2000. This may speed a decline in Canada's public
sector debt-to-GDP ratio, which was 98% of GDP in 1997.
Separation politics seems to be on hold as Quebeckers seem more
concerned about employment growth and the provision of government services. One
issue that continues to rise to the surface nationally is whether Canada should
enter a currency union with the United States.
Canadian Real GDP Annual Rate of Growth (annual % change)
1998 3.1
1997 4.0
1996 1.7
1995 2.8
1994 4.7
1993 2.3
Source: World Economic Outlook, October 1999 (International Monetary Fund)
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Mexico. Mexico's economy is the second largest in Latin America.
Post-NAFTA integration with the U.S. has been the engine for growth in the
Mexican economy since the peso crisis of 1994-95. GDP growth was 7.0% in 1997
and 4.8% in 1998.
Mexican inflation is sensitive to both monetary and exchange-rate
policy. In 1998, higher-than-expected inflation of 18.6%, up from 15.7% in 1997,
was generated by currency weakness, the decontrol of tortilla prices, and higher
crop prices due to El Nino. Real wages fell sharply in the 1995 recession and
had recovered only slightly by the end of the third quarter of 1999. The
strength of the peso, weak demand, and an ongoing restrictive monetary policy
have helped restrain inflation.
The peso is a floating currency that was priced at M$9.4/US$ at the end
of summer 1999. The peso ended 1998 at M$9.91/US$, down 23.0% for the year in
nominal terms. The peso's history since the late-1994 devaluation is a mixture
of periods of remarkable stability interwoven with episodes of sudden moves to
either weaker or stronger levels. Further, since the 1994 devaluation, Mexico
has assiduously adhered to tight monetary targets.
Timely fiscal cuts and very strong oil prices have helped the
government adhere to its 1.25% of GDP fiscal target for 1999. The cost of a bank
support program boosts actual deficit spending by about 1% of GDP per annum, but
the overall fiscal policy is prudent. The government reportedly is pushing for a
1% deficit in 2000 and for a real spending hike of 5%.
Mexican Real GDP Annual Rate of Growth (annual % change)
1998 4.6
1997 7.0
1996 5.2
1995 -6.2
1994 4.4
1993 2.0
Source: World Economic Outlook, October 1999 (International Monetary Fund)
South Africa. The South African economy is recovering slowly. 1999
second-quarter GDP gained 0.4% from the first quarter of 1999, following a 0.2%
rise in the first quarter of the year. In the first half of 1999, GDP grew 0.4%
from the second half of last year, while final sales grew by 1.1%.
Inflation in August declined to 3.2%. The decline, from almost 9% at
the beginning of the year, is due mainly to the effect of a 6% decline in
mortgage rates in 1999. Further, core inflation declined from 8.2% in July to
7.9% in August.
Last year's state budget constituted 3.3% of GDP, compared with an
original target of 3.5% of GDP. Furthermore, the publication of the first
inter-governmental fiscal review revealed that the country's nine provinces
managed to run a combined surplus of R 1.1 billion in fiscal 1998-1999, a
significant improvement from the deficit of R 5.8 billion in the previous fiscal
year, suggesting that fiscal austerity has extended beyond the central
government.
On September 23, 1999, commercial banks cut the prime rate by 1% to
15.5%. The cut followed an accelerated pace of cuts in the official repo rate.
This accelerated pace is underscored by the economic data and the economy
appears to be recovering.
A rally in the price of gold, beginning with the second gold auction by
the Bank of England, highlighted improved sentiment in the gold market and
supported the rand. Finally, despite sharp interest rate cuts in recent months,
bond-market performance has continued to be disappointing.
South African Real GDP Annual Rate of Growth (annual % change)
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1998 0.6
1997 2.5
1996 4.2
1995 3.1
1994 3.2
1993 1.2
Source: World Economic Outlook, October 1999 (International Monetary Fund)
The United States. The United States economy has grown consistently in
the 1990s, while inflation has been kept to favorable levels in the last two
years. Recently, GDP has grown in the U.S. at a rate of 3.9% in both 1997 and
1998, while inflation, measured by the Consumer Price Index, grew by 2.3% in
1997 and 1.5% in 1998.
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While corporate profits, after tax, grew substantially in 1997, at a
rate of 7.5%, they slipped somewhat in 1998, to -2.2%, due mainly to the effects
of the world-wide slowdown caused by Russia's default on bond payments in August
1998 and the Asian recession that hindered world markets generally in the second
half of 1998.
Meanwhile, U.S. economic expansion in the 1990s led to the first U.S.
federal government surplus in decades: 0.8% of GDP in 1998. The federal budget
deficit had already begun to show signs of turning in 1997, when it was reduced
to -0.3%. The Federal Reserve's monetary policy continued to be favorable to
economic expansion in recent years, as the Federal Funds Rate was 5.5% in 1997
and 4.75% in 1998. The Federal Reserve increased its lending rate slightly to
5.25% in September 1999 to ameliorate inflationary concerns, but the U.S.
equity markets did not immediately slow as a result.
U.S. bond markets were relatively flat. The 30-year Treasury Bond yield
was 5.95% at the end of 1997 and 5.15% at the close of 1998, and increased
somewhat by September 1999 to approximately 6.0%.
United States Real GDP Annual Rate of Growth (annual % change)
1998 3.9
1997 3.9
1996 3.5
1995 2.3
1994 3.5
1993 2.3
Source: World Economic Outlook, October 1999 (International Monetary Fund)
THE MSCI INDICES
In General. The Indices were founded in 1969 by Capital International
S.A. as the first international performance benchmarks constructed to facilitate
accurate comparison of world markets. Morgan Stanley acquired rights to the
Indices in 1986. In November 1998, Morgan Stanley transferred all rights to the
MSCI Indices to Morgan Stanley Capital International Inc. ("MSCI"), a Delaware
corporation of which MSDW is the majority owner. The MSCI Indices have covered
the world's developed markets since 1969, and in 1988, MSCI commenced coverage
of the emerging markets.
Although local stock exchanges have traditionally calculated their own
indices, these are generally not comparable with one another, due to differences
in the representation of the local market, mathematical formulas, base dates and
methods of adjusting for capital changes. MSCI applies the same criteria and
calculation methodology across all markets for all indices, developed and
emerging.
MSCI Indices are notable for the depth and breadth of their coverage.
MSCI generally seeks to have 60% of the capitalization of a country's stock
market reflected in the MSCI Index for such country. Thus, the MSCI Indices
balance the inclusiveness of an "all share" index against the replicability of a
"blue chip" index.
Weighting. All single-country MSCI Indices are market capitalization
weighted, i.e., companies are included in the indices at their full market value
(total number of shares issued and paid up, multiplied by price). MSCI believes
full market capitalization weighting is preferable to other weighting schemes
for both theoretical and practical reasons.
MSCI calculates two indices in some countries in order to address the
issue of restrictions on foreign ownership in such countries. The additional
indices are called "free" indices, and they exclude companies and share classes
not purchasable by foreigners. Free indices are currently calculated for Brazil,
China, Indonesia, Malaysia, Mexico, the Philippines, Singapore and Thailand, and
for those regional and international indices which include such markets.
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Indonesia, Malaysia, Singapore and Thailand currently impose foreign
ownership limits on domestic stock, and when the foreign ownership limit is
reached, foreigners may only trade with other foreigners, frequently at a price
that is higher than the price available to domestic investors. The Free Indices
for such countries are designed to reflect the actual investment conditions for
international investors by using the foreign prices for stocks where relevant.
The Free Indices for Indonesia, Malaysia, Singapore and Thailand will use
foreign prices only when a foreign ownership limit is reached on a constituent
stock and a determination is made that there is sufficient long-term liquidity
at the foreign price. To compensate for the distorting inflation of a company's
weight that may occur as a result of using the higher foreign prices for its
shares, a compensating factor called a Free Market Capitalization Factor
("FMCF") may be applied to the total number of shares of a "foreign priced"
constituent stock in the respective Index. A FMCF is the approximate ratio of
domestic price to foreign price and is applied in an effort to align the free
market capitalization weight with the domestic market capitalization weight.
Regional Weights. Market capitalization weighting, combined with a
consistent target of 60% of market capitalization, helps ensure that each
country's weight in regional and international indices approximates its weight
in the total universe of developing and emerging markets. Maintaining consistent
policy among MSCI developed and emerging market indices is also critical to the
calculation of certain combined developed and emerging market indices published
by MSCI.
Selection Criteria
The Universe of Securities. The constituents of a country index are
selected from the full range of securities available in the market, excluding
issues which are either small or highly illiquid. Non-domiciled companies and
investment trusts are also excluded from consideration. After the index
constituents are chosen, they are reclassified using MSCI's schema of 38
industries and 8 economic sectors in order to facilitate cross-country
comparisons.
The Optimization Process. The process of choosing index constituents
from the universe of available securities is consistent among indices.
Determining the constituents of an index is an optimization process which
involves maximizing float and liquidity, reflecting accurately the market's size
and industry profiles and minimizing cross-ownership. The optimization variables
and their targets are:
Market Coverage Target 60% of market
Industry Representation Mirror the local market
Liquidity Maximize
Float Maximize
Cross-Ownership Avoid/Minimize
Size Sample with size characteristics of universe
Coverage. To reflect accurately country-wide performance as well as the
performance of industry groups, MSCI aims to capture 60% of total market
capitalization at both the country and industry level. To reflect local market
performance, an index should contain a percentage of the market's overall
capitalization sufficient to achieve a high level of tracking. The greater the
coverage, however, the greater the risk of including securities which are
illiquid or have restricted float. MSCI's 60% coverage target reflects a balance
of these considerations.
Industry Representation. Within the overall target of 60% market
coverage, MSCI aims to capture 60% of the capitalization of each industry group,
as defined by local practice. MSCI believes this target assures that the index
reflects the industry characteristics of the overall market and permits the
construction of accurate industry indices.
MSCI may exceed the 60% of market capitalization target in the index
for a particular country because, e.g., one or two large companies dominate an
industry. Similarly, MSCI may underweight an industry in an index if, e.g., the
companies in such industry lack good liquidity and float, or because of
extensive cross-ownership.
Liquidity. Liquidity is measured by trading value, as reported by the
local exchanges. Trading value is monitored over time in order to determine
"normal" levels exclusive of short-term peaks and troughs. A stock's
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liquidity is significant not only in absolute terms (i.e., a determination of
the market's most actively traded stocks), but also relative to its market
capitalization and to average liquidity for the country as a whole.
Float. Float, or the percentage of shares freely tradeable, is one
measure of potential short-term supply. Low float raises the risk of
insufficient liquidity. MSCI monitors float for every security in its coverage,
and low float may exclude a stock from consideration. However, float can be
difficult to determine. In some markets good sources are generally not
available. In other markets, information on smaller and less prominent issues
can be subject to error and time lags. Government ownership and cross-ownership
positions can change over time, and are not always made public. Float also tends
to be defined differently depending on the source. MSCI seeks to maximize float.
As with liquidity, float is an important determinant, but not a hard-and-fast
screen for inclusion of a stock in, or exclusion of a stock from, a particular
index.
Cross-ownership. Cross-ownership occurs when one company has an
ownership position in another. In situations where cross-ownership is
substantial, including both companies in an index may skew industry weights,
distort country-level valuations and over-represent buyable opportunities. An
integral part of MSCI's country research is identifying cross-ownerships in
order to avoid or minimize them. Cross-ownership cannot always be avoided,
especially in markets where it is prevalent. When MSCI makes exceptions, it
strives to select situations where the constituents operate in different
economic sectors, or where the subsidiary company makes only a minor
contribution to the parent company's results.
Size. MSCI attempts to meet its 60% coverage target by including a
representative sample of large, medium and small capitalization stocks, in order
to capture the sometimes disparate performance of these sectors. In the emerging
markets, the liquidity of smaller issues can be a constraint. At the same time,
properly representing the lower capitalization end of the market risks
overwhelming the index with names. Within these constraints, MSCI strives to
include smaller capitalization stocks, provided they exhibit sufficient
liquidity.
Calculation Methodology. All MSCI Indices are calculated daily using
Laspeyres' concept of a weighted arithmetic average together with the concept of
"chain-linking," a classical method of calculating stock market indices. The
Laspeyres method weights stocks in an index by their beginning-of-period market
capitalization. Share prices are "swept clean" daily and adjusted for any rights
issues, stock dividends or splits. Most MSCI Indices are currently calculated in
local currency and in U.S. dollars, without dividends, with gross dividends
reinvested and with net dividends reinvested. With the exception of the Mexico
(Free) WEBS Index Series (where the MSCI Mexico (Free) Index with gross
dividends reinvested is utilized), the Company's WEBS Index Series utilize MSCI
Indices calculated with net dividends reinvested. "Net dividends" means
dividends after reduction for taxes withheld at source at the rate applicable to
holders of the underlying stock that are resident in Luxembourg. With respect to
the Australia, Austria and Germany WEBS Index Series, such withholding rate
currently differs from that applicable to United States residents. So-called
"un-franked" dividends from Australian companies are withheld at a 30% rate to
Luxembourg residents and a 15% rate to the Australia WEBS Index Series (there is
no difference in the treatment of "franked" dividends). Austrian companies
impose a 15% dividend withholding on Luxembourg residents and an 11% rate on the
Austria WEBS Index Series. German companies impose a 15% dividend withholding on
Luxembourg residents and a 10% rate on the German WEBS Index Series. "Gross
dividends" means dividends before reduction for taxes withheld at source.
Dividend Treatment. In respect of developed markets, MSCI Indices with
dividends reinvested constitute an estimate of total return arrived at by
reinvesting one twelfth of the year end yield at every month end.
In respect of emerging markets, MSCI has constructed its indices with
dividends reinvested as follows:
o In the period between the ex date and the date of dividend
reinvestment, a dividend receivable is a component of the index
return.
o Dividends are deemed received on the payment date.
o To determine the payment date, a fixed time lag is assumed to
exist between the ex date and the payment date. This time lag
varies by country, and is determined in accordance with general
practice within that market.
o Reinvestment of dividends occurs at the end of the month in which
the payment date falls.
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Price and Exchange Rates.
Prices. Prices used to calculate the MSCI Indices are the official
exchange closing prices. All prices are taken from the dominant exchange in each
market. In countries where there are foreign ownership limits, MSCI uses the
price quoted on the official exchange, regardless of whether the limit has been
reached.
Exchange Rates. MSCI uses WM/Reuters Closing Spot Rates for all
developed and emerging markets except those in Latin America. The WM/Reuters
Closing Spot Rates were established by a committee of investment managers and
data providers, including MSCI, whose object was to standardize exchange rates
used by the investment community. Exchange rates are taken daily at 4 p.m.
London time by the WM Company and are sourced whenever possible from
multi-contributor quotes on Reuters. Representative rates are selected for each
currency based on a number of "snapshots" of the latest contributed quotations
taken from the Reuters service at short intervals around 4 PM. WM/Reuters
provides closing bid and offer rates. MSCI uses these to calculate the mid-point
to 5 decimal places.
MSCI continues to monitor exchange rates independently and may, under
exceptional circumstances, elect to use an alternative exchange rate if the
WM/Reuters rate is believed not to be representative for a given currency on a
particular day. Because of the high volatility of currencies in some Latin
American countries, MSCI continues to use its own timing and sources for these
markets. The exchange rate for the MSCI Mexico (Free) Index is that prevailing
as of 3:00 p.m. New York City time.
Changes to the Indices. In changing the constituents of the indices,
MSCI attempts to balance representativeness versus undue turnover. An index must
represent the current state of an evolving marketplace, yet at the same time
minimize turnover, which is costly as well as inconvenient for managers.
There are two broad categories of changes to the MSCI Indices. The
first consists of market-driven changes such as mergers, acquisitions,
bankruptcies, etc. These are announced and implemented as they occur. The second
category consists of structural changes to reflect the evolution of a market,
for example due to changes in industry composition or regulations. In the
emerging markets, index restructurings generally take place every one year to
eighteen months. Structural changes may occur only on four dates throughout the
year: the first business day of March, June, September and December. They are
preannounced at least two weeks in advance.
Additions. Restructuring an index involves a balancing of additions and
deletions. To maintain continuity and minimize turnover, MSCI is reluctant to
delete index constituents, and its approach to additions is correspondingly
stringent. As markets grow because of privatizations, investor interest, or the
relaxation of regulations, index additions (with or without corresponding
deletions) may be needed to bring industry representations up to the 60% target.
Companies are considered not only based on their broad industry, but also based
on their sub-sector, in order to achieve, if possible, a broader range of
economic activity. Beyond industry representativeness, new constituents are
selected based on the criteria discussed above, i.e. float, liquidity,
cross-ownership, etc.
New Issues. In general, new issues are not eligible for immediate
inclusion in the MSCI Indices because their liquidity remains unproven. Usually,
new issues undergo a "seasoning" period of one year to eighteen months between
index restructurings until a trading pattern and volume are established. After
that time, they are eligible for inclusion, subject to the criteria discussed
above (industry representation, float, cross-ownership, etc.).
In the emerging markets, however, it is not uncommon that a large new
issue, usually a privatization, comes to market and substantially changes the
country's industry profile. In exceptional circumstances, where the issue's
size, visibility and investor interest assure high liquidity, and where
excluding it would distort the characteristics of the market, MSCI may decide to
include it immediately in the indices.
In other cases, MSCI may decide not to include a large new issue even
in the normal process of restructuring, and in spite of its substantial size and
liquidity.
Deletions. MSCI's primary concern when considering deletions is the
continuity of the indices. Of secondary concern are the turnover costs
associated with deletions. The indices must represent the full investment
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cycle, including bear as well as bull markets. Out-of-favor stocks may exhibit
declining price, market capitalization or liquidity, and yet continue to be good
representatives of their industry.
Companies may be deleted because they have diversified away from their
industry classification, because the industry has evolved in a different
direction from the company's thrust, or because a better industry representative
exists (either a new issue or an existing company). In addition, in order not to
exceed the 60% target coverage of industries and countries, adding new index
companies may entail corresponding deletions. Usually such deletions take place
within the same industry, but there are occasional exceptions.
Each of the MSCI Indices utilized as the benchmark for a WEBS Index
Series is calculated reflecting dividends reinvested. With the exception of the
Mexico (Free) WEBS Index Series, the WEBS Index Series utilize MSCI Indices
calculated with net dividends reinvested. MSCI refers to each of its Indices
calculated reflecting net dividends reinvested as the "MSCI [relevant country]
Index (with net dividends reinvested)."
INVESTMENT LIMITATIONS
The Company has adopted the following investment restrictions as
fundamental policies with respect to each WEBS Index Series. These restrictions
cannot be changed with respect to a WEBS Index Series without the approval of
the holders of a majority of such WEBS Index Series' outstanding voting
securities. For purposes of the 1940 Act, a majority of the outstanding voting
securities of a WEBS Index Series means the vote, at an annual or a special
meeting of the security holders of the Company, of the lesser of (1) 67% or more
of the voting securities of the WEBS Index Series present at such meeting, if
the holders of more than 50% of the outstanding voting securities of such WEBS
Index Series are present or represented by proxy, or (2) more than 50% of the
outstanding voting securities of the WEBS Index Series. A WEBS Index Series may
not:
1. Change its investment objective;
2. Lend any funds or other assets except through the purchase of all
or a portion of an issue of securities or obligations of the type
in which it is permitted to invest (including participation
interests in such securities or obligations) and except that a
WEBS Index Series may lend its portfolio securities in an amount
not to exceed 33% of the value of its total assets;
3. Issue senior securities or borrow money, except borrowings from
banks for temporary or emergency purposes in an amount up to 33%
of the value of the WEBS Index Series' total assets (including
the amount borrowed), valued at the lesser of cost or market,
less liabilities (not including the amount borrowed) valued at
the time the borrowing is made, and the WEBS Index Series will
not purchase securities while borrowings in excess of 5% of the
WEBS Index Series' total assets are outstanding, provided, that
for purposes of this restriction, short-term credits necessary
for the clearance of transactions are not considered borrowings;
4. Pledge, hypothecate, mortgage or otherwise encumber its assets,
except to secure permitted borrowings. (The deposit of underlying
securities and other assets in escrow and collateral arrangements
with respect to initial or variation margin for currency
transactions and futures contracts will not be deemed to be
pledges of the WEBS Index Series' assets);
5. Purchase a security (other than obligations of the United States
Government, its agencies or instrumentalities) if as a result 25%
or more of its total assets would be invested in a single issuer;
6. Purchase, hold or deal in real estate, or oil, gas or mineral
interests or leases, but a WEBS Index Series may purchase and
sell securities that are issued by companies that invest or deal
in such assets;
7. Act as an underwriter of securities of other issuers, except to
the extent the WEBS Index Series may be deemed an underwriter in
connection with the sale of securities in its portfolio;
47
<PAGE>
8. Purchase securities on margin, except for such short-term credits
as are necessary for the clearance of transactions, except that a
WEBS Index Series may make margin deposits in connection with
transactions in currencies, options, futures and options on
futures;
9. Sell securities short; or
10. Invest in commodities or commodity contracts, except that a WEBS
Index Series may buy and sell currencies and forward contracts
with respect thereto, and may transact in futures contracts on
securities, stock indices and currencies and options on such
futures contracts and make margin deposits in connection with
such contracts.
Industry concentration. With respect to the two most heavily weighted
industries or groups of industries in its benchmark MSCI Index, a WEBS Index
Series will invest in securities (consistent with its investment objective and
other investment policies) so that the weighting of each such industry or group
of industries in the WEBS Index Series does not diverge by more than 10% from
the respective weighting of such industry or group of industries in its
benchmark MSCI Index. An exception to this policy is that if investment in the
stock of a single issuer would account for more than 25% of the WEBS Index
Series, the WEBS Index Series will invest less than 25% of its net assets in
such stock and will reallocate the excess to stock(s) in the same industry or
group of industries, and/or to stock(s) in another industry or group of
industries, in its benchmark MSCI Index. Each WEBS Index Series will evaluate
these industry weightings at least weekly, and at the time of evaluation will
adjust its portfolio composition to the extent necessary to maintain compliance
with the above policy. A WEBS Index Series may not concentrate its investments
except as discussed above. This policy is a fundamental investment policy and
may not be changed without the approval of a majority of a WEBS Index Series'
shareholders.
As of November 19, 1999, as a result of this policy with respect
to industry concentration, the following WEBS Index Series were
concentrated (that is, invested 25% or more of the value of their
assets) in the specified industries:
WEBS Index Series Industry or Industries
----------------------------------------------------
Austria Banking
Canada Electrical & Electronics
Germany Telecommunications
Italy Telecommunications
Singapore (Free) Banking
Spain Banking and Telecommunications
Switzerland Health & Personal Care
In addition to the investment restrictions adopted as fundamental
policies as set forth above, each WEBS Index Series observes the following
restrictions, which may be changed by the Board without a shareholder vote.
A WEBS Index Series will not:
1. Invest in the securities of a company for the purpose of
exercising management or control, or in any event purchase and
hold more than 10% of the securities of a single issuer, provided
that the Company may vote the investment securities owned by each
WEBS Index Series in accordance with its views; or
2. Hold illiquid assets in excess of 15% of its net assets. An
illiquid asset is any asset which may not be sold or disposed of
in the ordinary course of business within seven days at
approximately the value at which the WEBS Index Series has valued
the investment.
For purposes of the percentage limitation on each WEBS Index Series'
investments in illiquid securities, with respect to each WEBS Index Series,
foreign equity securities, though not registered under the Securities Act of
1933 (the "Securities Act"), are not deemed illiquid if they are otherwise
readily marketable. Such securities ordinarily are considered to be "readily
marketable" if they are traded on an exchange or other organized market and are
not legally restricted from sale by the WEBS Index Series. The Adviser monitors
the liquidity of restricted securities in each WEBS Index Series' portfolio
under the supervision of the Company's Board. In reaching liquidity decisions,
the Adviser considers, inter alia, the following factors:
48
<PAGE>
1. the frequency of trades and quotes for the security;
2. the number of dealers wishing to purchase or sell the security
and the number of other potential purchasers;
3. dealer undertakings to make a market in the security; and
4. the nature of the security and the nature of the marketplace in
which it trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of
transfer).
If a percentage limitation is adhered to at the time of investment or
contract, a later increase or decrease in percentage resulting from any change
in value or total or net assets will not result in a violation of such
restriction, except that the percentage limitations with respect to the
borrowing of money and illiquid securities will be observed continuously.
MANAGEMENT OF THE FUND
Directors and Officers of the Company. The Board has responsibility for
the overall management and operations of the Company, including general
supervision of the duties performed by the Adviser and other service providers.
The Board currently consists of five Directors. Nathan Most is an "interested"
director, as defined in the 1940 Act, by reason of his position as President of
the Company.
<TABLE>
<CAPTION>
Position with the Company Principal Occupations
Name and Address During Past Five Years
- ----------------------------------- ----------------------------- ---------------------------------------------
<S> <C> <C>
Nathan Most Director, President and Consultant to various companies including the
P.O. Box 193 Chairman of the Board investment advisor; Senior Vice President
Burlingame, CA 94011-0193 (retired) (from 1992 to 1996) and Vice President
Age 84 (from 1980 to 1992) of the American Stock
Exchange, Inc.; President and CEO (retired)
(from 1982 to 1996) of AMEX Commodities
Corporation.
John B. Carroll Director Vice President of Investment Management (since
Vice President, Investment 1984) of GTE Corporation; Advisory Board
Management member of Ibbotson Assoc. (since 1998); former
GTE Corporation Trustee and Member of the Executive Committee
One Stamford Forum (since 1991) of The Common Fund, a non-profit
Stamford, CT 06904 organization; Member of the Investment
Age 62 Committee (since 1988) of the TWA Pilots
Annuity Trust Fund; former Vice Chairman and
Executive Committee Member (since 1992) of
the Committee on Investment of Employee
Benefit Assets of the Financial Executive
Institute; and Member (since 1986) of the
Pension Advisory Committee of the New York
Stock Exchange.
Timothy A. Hultquist Director Advisory Director (since 1995 and Managing
Advisory Director Director (from 1985 to 1995) of Morgan Stanley
Morgan Stanley & Co., & Co., Incorporated; Chairman (since 1994) and
Incorporated Trustee (since 1885) of the Board of Trustees of
1221 Avenue of the Americas Macalester College; Treasurer and Trustee (since
30th Floor 1995) of Russell Sage Foundation; Member
New York, NY 10020 (since 1994) of Wilmer Eye Institute Advisory
Counsel at John Hopkins University Hospital;
President (since 1992) of the Hultquist
Foundation; Chairman, Council of Board
Chairmen of Independent Colleges.
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
Position with the Company Principal Occupations
Name and Address During Past Five Years
- ----------------------------------- ----------------------------- ---------------------------------------------
<S> <C> <C>
Lloyd N. Morrisett Director President (retired) of The John and Mary R.
Children's Television Markle Foundation (from 1969 to 1998);
Workshop Chairman (since 1970) of the Children's
One Lincoln Plaza, 4th Floor Television Workshop; Chairman (since 1998)
New York, NY 10023 and Director(since 1994) of Infonautics
Age 68 Corporation; Trustee (from 1973 to 1983, from
1985 to 1995, and since 1996) of RAND;
Director (since 1976) of Haskins Laboratories,
Inc.; Director (1990-January, 1997) of the
Multimedia Corporation; Director (since 1992)
of Classroom, Inc.; Director (since 1995) of
Smith College Center for the Study of Social and
Political Change; Director (since 1998) of Public
Agenda Foundation; Member of Board of
Overseers (from 1995 to 1998) of Dartmouth
School of Medicine; Member (since 1968) of the
Council on Foreign Relations; and Member
(since 1970) of the American Association for the
Advancement of Science.
W. Allen Reed Director President and CEO and Director (since 1994) of
President General Motors Investment Management
General Motors Investment Corporation; Vice President and Treasurer (from
Management Corp. 1991 to 1994) of Hughes Electronics; President
767 Fifth Avenue (from 1984 to 1991) of Hughes Investment
New York, NY 10153 Management Company; Director (from 1995 to
Age 51 1998) of Taubman Centers, Inc. (a real estate
investment trust); Director (since 1992) of FLIR
Systems (an imaging technology company);
Director (since 1994) of General Motors
Acceptance Corporation; Director (since 1994)
of General Motors Insurance Corporation;
Director (since 1995) of Equity Fund of Latin
America; Director (since 1995) of the
Commonwealth Equity Fund; Member (from
1994 to 1998) of the Pension Managers Advisory
Committee of the New York Stock Exchange;
Member (since 1995) of the New York State
Retirement System Advisory Board; Chairman
(since 1995) of the Investment Advisory
Committee of Howard Hughes Medical Institute.
Stephen M. Wynne Treasurer Chairman of PFPC Trustee & Custodial Services
Executive Vice President Ltd. (since 1995); Executive Vice President and
PFPC Inc. Chief Accounting Officer (since 1993) and
400 Bellevue Parkway Senior Vice President and Chief Accounting
Wilmington, DE 19809 Officer (from 1991 to 1993) of PFPC Inc.;
Age 43 Executive Vice President (from 1993 to 1995) of
PFPC International.
R. Sheldon Johnson Secretary Managing Director, Global Equity
Managing Director Derivatives, Morgan Stanley & Co.
Morgan Stanley & Co. Incorporated Incorporated (since 1988).
1585 Broadway
New York, NY 10036
Age 50
</TABLE>
50
<PAGE>
Directors' Compensation. The table below sets forth the compensation
paid to Directors and officers of the Company for the fiscal year ended August
31, 1999.
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits Accrued from Registrant
Aggregate as Part of Estimated Annual and Company
Name of Person Compensation from Company Benefits Upon Complex Paid to
and Position Registrant Expenses Retirement Directors
- ---------------------------- ----------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Nathan Most, Director, $60,000 None None $60,000
President and Chairman of
the Board
John B. Carroll, Director $40,000 None None $40,000
Timothy A. Hultquist, $40,000 None None $40,000
Director
Lloyd N. Morrisett, $40,000 None None $40,000
Director
W. Allen Reed, Director $40,000 None None $40,000
</TABLE>
No officer is entitled to any compensation, and no officer or Director
is entitled to any pension or retirement benefits, from the Company.
The Company does not have information concerning the beneficial
ownership of the WEBS held in the names of such DTC Participants.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Although the WEBS Fund does not have information concerning the
beneficial ownership of WEBS held in the names of DTC Participants, as of
November 30, 1999, the name, address and percentage ownership of each DTC
Participant that owned of record 5% or more of the outstanding shares of a WEBS
Index Series were as follows:
<TABLE>
<CAPTION>
WEBS Index Series Name and Address Percentage of Ownership
- ----------------- ---------------- -----------------------
<S> <C> <C>
Australia The Chase Manhattan Bank 55.38%
One Chase Manhattan Plaza
New York, NY 10081
The Bank of New York 6.51%
One Wall Street
New York, NY 10286
Bankers Trust 5.37%
648 Grassmere Park Road
Nashville, TN 37211
Austria Morgan Stanley & Co. Incorporated 31.24%
One Pierrepont Plaza
Brooklyn, NY 11201
The Bank of New York 18.61%
One Wall Street
New York, NY 10286
Salomon Smith Barney Inc. 13.26%
333 West 34th Street, 3rd Floor
New York, NY 10001
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
WEBS Index Series Name and Address Percentage of Ownership
- ----------------- ---------------- -----------------------
<S> <C> <C>
PaineWebber Incorporated 5.49%
1000 Harbor Blvd.
Weehawken, NJ 07086
National Financial Services Corporation 5.06%
1 World Financial Center, Tower A
New York, NY 10281
Belgium The Bank of New York 22.63%
One Wall Street
New York, NY 10286
Morgan Stanley & Co. Incorporated 13.66%
One Pierrepont Plaza
Brooklyn, NY 11201
PaineWebber Incorporated 7.47%
1000 Harbor Blvd.
Weehawken, NJ 07086
Citibank, N.A. 6.99%
1410 Westshore Blvd.
Tampa, FL 33607
Salomon Smith Barney Inc. 5.71%
333 West 34th Street, 3rd Floor
New York, NY 10001
Canada Charles Schwab & Co., Inc. 17.06%
Newport Financial Center
111 Pavonia Avenue East, 3rd Floor
Jersey City, NJ 07310
Prudential Securities Incorporated 9.39%
1 New York Plaza, 9th Floor
New York, NY 10292
Goldman, Sachs & Co. 8.37%
1 New York Plaza
New York, NY 10004
Brown Bros. Harriman & Co. 7.34%
59 Wall Street
New York, NY 10005
RBC Dominion Securities Inc. -- NSCC 6.49%
200 Bay Street, Royal Bank Plaza
Toronto, Ontario
Canada M5J 2W7
Morgan Stanley & Co. Incorporated 5.17%
One Pierrepont Plaza
Brooklyn, NY 11201
France Morgan Stanley & Co. Incorporated 12.15%
One Pierrepont Plaza
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
WEBS Index Series Name and Address Percentage of Ownership
- ----------------- ---------------- -----------------------
<S> <C> <C>
Brooklyn, NY 11201
The Bank of New York 11.20%
One Wall Street
New York, NY 10286
Wells Fargo Bank, N.A. 9.94%
464 California Street
San Francisco, CA 94104
State Street Bank & Trust Company 7.74%
1776 Heritage Drive
Quincy, MA 02171
Brown Bros. Harriman & Co. 6.98%
59 Wall Street
New York, NY 10005
Citibank, N.A. 6.88%
1410 Westshore Blvd.
Tampa, FL 33607
Germany Brown Bros. Harriman & Co. 8.45%
59 Wall Street
New York, NY 10005
Wells Fargo Bank, N.A. 7.81%
464 California Street
San Francisco, CA 94104
The Bank of New York 7.39%
One Wall Street
New York, NY 10286
The Chase Manhattan Bank 7.04%
One Chase Manhattan Plaza
New York, NY 10081
Morgan Stanley & Co. Incorporated 5.88%
One Pierrepont Plaza
Brooklyn, NY 11201
State Street Bank & Trust Company 5.60%
1776 Heritage Drive
Quincy, MA 02171
Citibank, N.A. 5.60%
1410 Westshore Blvd.
Tampa, FL 33607
Bear, Stearns Securities Corp. 5.45%
One Metrotech Center North
Brooklyn, NY 11201-3859
Hong Kong Salomon Smith Barney Inc. 11.11%
333 West 34th Street, 3rd Floor
New York, NY 10001
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
WEBS Index Series Name and Address Percentage of Ownership
- ----------------- ---------------- -----------------------
<S> <C> <C>
Morgan Stanley & Co. Incorporated 7.77%
One Pierrepont Plaza
Brooklyn, NY 11201
Merrill Lynch Pierce Fenner & Smith 6.54%
Safekeeping
101 Hudson Street
Jersey City, NJ 07302
Charles Schwab & Co., Inc. 6.09%
Newport Financial Center
111 Pavonia Avenue East, 3rd Floor
Jersey City, NJ 07310
Brown Bros. Harriman & Co. 5.66%
59 Wall Street
New York, NY 10005
Prudential Securities Incorporated 5.34%
1 New York Plaza, 9th Floor
New York, NY 10292
Italy The Bank of New York 19.39%
One Wall Street
New York, NY 10286
Brown Bros. Harriman & Co. 12.00%
59 Wall Street
New York, NY 10005
Morgan Stanley & Co. Incorporated 11.23%
One Pierrepont Plaza
Brooklyn, NY 11201
Citibank, N.A. 9.11%
1410 Westshore Blvd.
Tampa, FL 33607
Bear, Stearns Securities Corp. 8.71%
One Metrotech Center North
Brooklyn, NY 11201-3859
Japan Morgan Stanley & Co. Incorporated 11.28%
One Pierrepont Plaza
Brooklyn, NY 11201
The Bank of New York 6.55%
One Wall Street
New York, NY 10286
State Street Bank & Trust Company 6.06%
1776 Heritage Drive
Quincy, MA 02171
Citibank, N.A. 5.36%
1410 Westshore Blvd.
Tampa, FL 33607
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
WEBS Index Series Name and Address Percentage of Ownership
- ----------------- ---------------- -----------------------
<S> <C> <C>
Brown Bros. Harriman & Co. 5.14%
59 Wall Street
New York, NY 10005
Malaysia (Free) Boston Safe Deposit & Trust Co. 12.66%
One Cabot Road
Medford, MA 02155
Merrill Lynch Pierce Fenner & Smith 10.02%
Safekeeping
101 Hudson Street
Jersey City, NJ 07302
Salomon Smith Barney Inc. 7.70%
333 West 34th Street, 3rd Floor
New York, NY 10001
Morgan Stanley & Co. Incorporated 5.53%
One Pierrepont Plaza
Brooklyn, NY 11201
Charles Schwab & Co., Inc. 5.29%
Newport Financial Center
111 Pavonia Avenue East, 3rd Floor
Jersey City, NJ 07310
Mexico (Free) Morgan Stanley & Co. Incorporated 40.36%
One Pierrepont Plaza
Brooklyn, NY 11201
The Bank of New York 7.29%
One Wall Street
New York, NY 10286
Netherlands Morgan Stanley & Co. Incorporated 17.43%
One Pierrepont Plaza
Brooklyn, NY 11201
The Bank of New York 15.59%
One Wall Street
New York, NY 10286
Brown Bros. Harriman & Co. 9.20%
59 Wall Street
New York, NY 10005
Citibank, N.A. 7.62%
1410 Westshore Blvd.
Tampa, FL 33607
Prudential Securities Incorporated 5.74%
1 New York Plaza
9th Floor
New York, NY 10292
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
WEBS Index Series Name and Address Percentage of Ownership
- ----------------- ---------------- -----------------------
<S> <C> <C>
Singapore (Free) Charles Schwab & Co., Inc. 8.82%
Newport Financial Center
111 Pavonia Avenue East, 3rd Floor
Jersey City, NJ 07310
Salomon Smith Barney Inc. 8.14%
333 West 34th Street, 3rd Floor
New York, NY 10001
Merrill Lynch Pierce Fenner & Smith 6.79%
Safekeeping
101 Hudson Street
Jersey City, NJ 07302
National Financial Services Corporation 6.30%
1 World Financial Center, Tower A
New York, NY 10281
Morgan Stanley & Co. Incorporated 5.84%
One Pierrepont Plaza
Brooklyn, NY 11201
Spain The Bank of New York 19.94%
One Wall Street
New York, NY 10286
Brown Bros. Harriman & Co. 14.33%
59 Wall Street
New York, NY 10005
Morgan Stanley & Co. Incorporated 10.42%
One Pierrepont Plaza
Brooklyn, NY 11201
Prudential Securities Incorporated 6.72%
1 New York Plaza, 9th Floor
New York, NY 10292
Citibank, N.A. 6.05%
1410 Westshore Blvd.
Tampa, FL 33607
Sweden Morgan Stanley & Co. Incorporated 18.75%
One Pierrepont Plaza
Brooklyn, NY 11201
The Bank of New York 18.48%
One Wall Street
New York, NY 10286
Brown Bros. Harriman & Co. 10.05%
59 Wall Street
New York, NY 10005
Citibank, N.A. 8.95%
1410 Westshore Blvd.
Tampa, FL 33607
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
WEBS Index Series Name and Address Percentage of Ownership
- ----------------- ---------------- -----------------------
<S> <C> <C>
Merrill Lynch Pierce Fenner & Smith 7.12%
Safekeeping
101 Hudson Street
Jersey City, NJ 07302
Switzerland Brown Bros. Harriman & Co. 22.76%
59 Wall Street
New York, NY 10005
Morgan Stanley & Co. Incorporated 12.06%
One Pierrepont Plaza
Brooklyn, NY 11201
Citibank, N.A. 10.83%
1410 Westshore Blvd.
Tampa, FL 33607
State Street Bank & Trust Company 6.25%
1776 Heritage Drive
Quincy, MA 02171
The Bank of New York 6.02%
One Wall Street
New York, NY 10286
United Kingdom Morgan Stanley & Co. Incorporated 11.44%
One Pierrepont Plaza
Brooklyn, NY 11201
Brown Bros. Harriman & Co. 11.73%
59 Wall Street
New York, NY 10005
The Bank of New York 9.29%
One Wall Street
New York, NY 10286
State Street Bank & Trust Company 8.55%
1776 Heritage Drive
Quincy, MA 02171
Prudential Securities Incorporated 6.29%
1 New York Plaza, 9th Floor
New York, NY 10292
Citibank, N.A. 5.82%
1410 Westshore Blvd.
Tampa, FL 33607
</TABLE>
INVESTMENT ADVISORY, MANAGEMENT, ADMINISTRATIVE AND DISTRIBUTION SERVICES
Investment Adviser. Barclays Global Fund Advisors (the "Adviser") acts
as investment adviser to the Company and, subject to the supervision of the
Board, is responsible for the investment management of each WEBS Index Series.
The Adviser is a California corporation indirectly owned by Barclays Bank PLC,
and is registered as an investment adviser under the Investment Advisers Act of
1940. As of August 31, 1998, the Adviser and its
57
<PAGE>
parent, Barclays Global Investors, N.A., manage, administer or advise assets
aggregating in excess of $501 billion as of August 31, 1998.
The Adviser serves as investment adviser to each WEBS Index Series
pursuant to an Investment Management Agreement (the "Management Agreement")
between the Company and the Adviser. Under the Management Agreement, the
Adviser, subject to the supervision of the Company's Board and in conformity
with the stated investment policies of each WEBS Index Series, manages the
investment of each WEBS Index Series' assets. The Adviser may enter into
subadvisory agreements with additional investment advisers to act as subadvisers
with respect to particular WEBS Index Series. The Adviser will pay subadvisers,
if any, out of the fees received by the Adviser. The Adviser is responsible for
placing purchase and sale orders and providing continuous supervision of the
investment portfolio of each WEBS Index Series. For its investment management
services to each WEBS Index Series, except those listed below, the Adviser is
paid management fees equal to each WEBS Index Series' allocable portion of: .27%
per annum of the aggregate net assets of the Series of the WEBS Fund, except
those listed below, less than or equal to $1.7 billion, plus .15% per annum of
the aggregate net assets of the Series of the WEBS Fund, except those listed
below, between $1.7 billion and $7 billion, plus .12% per annum of the aggregate
net assets of the Series of the WEBS Fund, except those listed below, between $7
billion and $10 billion, plus .08% per annum of the aggregate net assets of the
Series of the WEBS Fund, except those listed below, in excess of $10 billion.
For its investment management services to the Brazil (Free) WEBS Index Series,
Korea WEBS Index Series, South Africa WEBS Index Series and Taiwan WEBS Index
Series, the Adviser is paid management fees equal to each such WEBS Index
Series's allocable portion of: 0.50% per annum per such WEBS Index Series on per
Series assets less than or equal to $100 million, plus 0.28% per annum per WEBS
Index Series on per Series assets between $100 million and $400 million, plus
0.22% per annum per WEBS Index Series on per Series assets between $400 million
and $600 million, plus 0.15% per annum per WEBS Index Series on per Series
assets greater than $600 million. The management fees are accrued daily and paid
by the Company as soon as practical after the last day of each calendar quarter.
The Adviser may from time to time reimburse expenses to one or more WEBS Index
Series. The Company's management fees, like those paid by most index funds, are
lower than those paid by many actively managed funds. One reason for the
difference in fee levels is that passive management requires fewer investment,
research and trading decisions, thereby justifying lower fees. Pursuant to the
Management Agreement, the Adviser is not liable for any error of judgment or
mistake of law or for any loss suffered by the Company, and the Company has
agreed to indemnify the Adviser for certain liabilities, including certain
liabilities arising under the federal securities laws, unless such loss or
liability results from willful misfeasance, bad faith or gross negligence in the
performance of its duties or the reckless disregard of its obligations and
duties. The Management Agreement, with respect to all WEBS Index Series, is
subject to annual approval by (1) the Company's Board or (2) vote of a majority
of the outstanding voting securities (as defined in the 1940 Act) of the
Company, provided that in either event the continuance also is approved by a
majority of the Company's Board who are not interested persons (as defined in
the 1940 Act) of the Company by vote cast in person at a meeting called for the
purpose of voting on such approval. The Management Agreement is terminable
without penalty, on 60 days' notice, by the Company's Board or by vote of the
holders of a majority (as defined in the 1940 Act) of the Company's outstanding
voting securities. The Management Agreement is also terminable upon 60 days'
notice by the Adviser and will terminate automatically in the event of its
assignment (as defined in the 1940 Act).
For the fiscal years ended August 31, 1997, 1998 and 1999,
respectively, the Company paid fees to the Adviser for its advisory service as
follows: Australia WEBS Index Series $49,326, $113,929 and $135,613; Austria
WEBS Index Series $8,459, $17,769 and $27,123; Belgium WEBS Index Series
$38,995, $80,997 and $44,906; Canada WEBS Index Series $59,093, $56,716 and
$33,205; France WEBS Index Series $35,574, $74,578 and $137,387; Germany WEBS
Index Series $49,546, $118,054 and $219,901; Hong Kong WEBS Index Series
$40,743, $124,506 and $197,467; Italy WEBS Index Series $78,513, $162,294 and
$186,292; Japan WEBS Index Series $318,796, $433,508 and $1,096,060; Malaysia
(Free) WEBS Index Series $44,814, $132,902 and $176,782; Mexico (Free) WEBS
Index Series $26,482, $38,055 and $39,012; Netherlands WEBS Index Series
$22,577, $44,756 and $68,016; Singapore (Free) WEBS Index Series $34,141,
$119,392 and $255,259; Spain WEBS Index Series $14,044, $53,561 and $92,868;
Sweden WEBS Index Series $15,088, $35,809 and $43,348; Switzerland WEBS Index
Series $24,197, $64,666 and $93,758; and United Kingdom WEBS Index Series
$57,283, $137,019 and $245,947.
58
<PAGE>
Administrator. PFPC Inc. (the "Administrator"), an indirect wholly
owned subsidiary of PNC Bank Corp., acts as administration and accounting agent
of the Company pursuant to an Administration and Accounting Services Agreement
with the Company and is responsible for certain clerical, recordkeeping and
bookkeeping services, except those to be performed by the Adviser, by Chase in
its capacity as Custodian, or by PNC Bank, N.A. ("PNC") in its capacity as
Transfer Agent. The Administrator has no role in determining the investment
policies of the Company or which securities are to be purchased or sold by the
Company. The principal business address of the Administrator is 400 Bellevue
Parkway, Wilmington, DE 19809.
For the administrative and fund accounting services the Administrator
provides to the Company, PFPC is paid aggregate fees equal to each WEBS Index
Series' allocable portion of: .22% per annum of the aggregate average daily net
assets of the Company up to $1.5 billion; plus .15% per annum of the aggregate
average daily net assets of the Company between $1.5 billion and $3 billion,
plus .14% per annum of the aggregate average daily net assets of the Company
between $3 billion and $5 billion, plus .13% per annum of the aggregate average
daily net assets of the Company between $5 billion and $7.5 billion, plus .115%
per annum of the aggregate average daily net assets of the Company between $7.5
billion and $10 billion, plus .10% per annum of the aggregate average daily net
assets of the Company in excess of $10 billion. The Administrator pays Morgan
Stanley & Co. Incorporated a fee of .05% of the average daily net assets of the
Company for sub-administration services as described under "The
Sub-Administrator" below. The Administrator may from time to time waive all or a
portion of its fees or may reimburse expenses to one or more WEBS Index Series.
Pursuant to the Administration and Accounting Services Agreement, the
Administrator is liable for damages arising of its failure to perform its duties
due to willful misfeasance, bad faith, gross negligence or reckless disregard of
such duties. The Company will indemnify the Administrator for certain
liabilities, including certain liabilities arising under federal securities
laws, except for liabilities arising out of the Administrator's willful
misfeasance, bad faith, gross negligence or reckless disregard of its duties.
For the fiscal years ended August 31, 1997, 1998 and 1999,
respectively, the Company paid fees to the Administrator for its administrative
services as follows: Australia WEBS Index Series $31,057, $89,377 and $110,319;
Austria WEBS Index Series $5,326, $14,128 and $22,059; Belgium WEBS Index Series
$24,552, $63,121 and $36,546; Canada WEBS Index Series $37,207, $44,201 and
$27,026; France WEBS Index Series $22,398, $59,529 and $111,716; Germany WEBS
Index Series $31,196, $94,141 and $178,860; Hong Kong WEBS Index Series $25,653,
$98,932 and $160,647; Italy WEBS Index Series $49,434, $128,961 and $151,590;
Japan WEBS Index Series $200,723, $340,915 and $890,839; Malaysia (Free) WEBS
Index Series $28,216, $106,617 and $143,744; Mexico (Free) WEBS Index Series
$16,674, $29,580 and $31,717; Netherlands WEBS Index Series $14,215, $35,512 and
$55,318; Singapore (Free) WEBS Index Series $21,496, $95,590 and $207,640; Spain
WEBS Index Series $8,842, $42,795 and $75,553; Sweden WEBS Index Series $9,500,
$29,928 and $35,257; Switzerland WEBS Index Series $15,235, $51,205 and $76,274;
and United Kingdom WEBS Index Series $36,067, $108,935 and $200,033.
Sub-Administrator. Morgan Stanley & Co. Incorporated provides certain
sub-administrative services relating to the Company pursuant to a
Sub-Administration Agreement and receives a fee from the Administrator equal to
.05% of the Company's average daily net assets for providing such services.
Morgan Stanley & Co. Incorporated may from time to time reimburse expenses to
one or more WEBS Index Series. Morgan Stanley & Co. Incorporated, as
Sub-Administrator, has no role in determining the investment policies of the
Company or which securities are to be purchased or sold by the Company. The
principal business address of Morgan Stanley & Co. Incorporated is 1585
Broadway, New York, New York, 10036.
For the period from the commencement of the sub-administration
arrangements on October 29, 1997 to August 31, 1998 and the fiscal year ended
August 31, 1999, the Administrator paid sub-administration fees to a prior
sub-administrator (a former affiliate of the Sub-Administrator) for its services
as follows: Australia WEBS Index Series - $17,644 and $25,114; Austria WEBS
Index Series - $2,940 and $5,023; Belgium WEBS Index Series - $12,122 and
$8,316; Canada WEBS Index Series - $8,491 and $6,149; France WEBS Index Series -
$12,573 and $25,442; Germany WEBS Index Series - $19,811 and $40,722; Hong Kong
WEBS Index Series - $20,539 and $36,568; Italy WEBS Index Series - $26,776 and
$34,499; Japan WEBS Index Series - $67,965 and $202,974; Malaysia (Free) WEBS
Index Series - $22,936 and $32,737; Mexico (Free) WEBS Index Series - $5,620 and
$7,224; Netherlands WEBS Index Series - $7,332 and $12,596; Singapore (Free)
WEBS Index Series - $20,417 and
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$47,270; Spain WEBS Index Series - $9,072 and $17,198; Sweden WEBS Index Series
- - $5,789 and $8,027; Switzerland WEBS Index Series - $10,490 and $17,363; and
United Kingdom WEBS Index Series - $22,664 and $45,546.
Distributor. Funds Distributor, Inc. (the "Distributor") is the
principal underwriter and distributor of WEBS. Its address is 60 State Street,
Suite 1300, Boston, MA 02109, and investor information can be obtained by
calling 1-800-810-WEBS(9327). The Distributor has entered into an agreement with
the Company which will continue for two years from its effective date, and which
is renewable annually thereafter (the "Distribution Agreement"), pursuant to
which it distributes Company shares. WEBS will be continuously offered for sale
by the Company through the Distributor only in Creation Units, as described
below under "Purchase and Issuance of WEBS in Creation Units." WEBS in less than
Creation Units are not distributed by the Distributor. The Distributor also acts
as agent for the Company. The Distributor will deliver a prospectus to persons
purchasing WEBS in Creation Units and will maintain records of both orders
placed with it and confirmations of acceptance furnished by it. The Distributor
is a broker-dealer registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of the National Association of Securities Dealers,
Inc. Funds Distributor, Inc., as Distributor, has no role in determining the
investment policies of the Company or which securities are to be purchased or
sold by the Company.
To compensate the Distributor for the distribution-related services it
provides, and broker-dealers authorized by the Distributor for distribution
services they provide, the Company has adopted a distribution plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. Under the Company's Plan, for each
WEBS Index Series the Distributor is entitled to receive a distribution fee,
accrued daily and paid monthly, calculated with respect to each WEBS Index
Series at a rate set from time to time by the Board of Directors, provided that
the annual rate may not exceed .25% of the average daily net assets of such WEBS
Index Series. The Board of Directors has determined to limit the annual fee
payable under the Rule 12b-1 Plan with respect to each WEBS Index Series so as
not to exceed .20% of the average daily net assets of each WEBS Index Series
until further notice. From time to time the Distributor may waive all or a
portion of these fees.
The Plan is designed to enable the Distributor to be compensated by the
Company for distribution services provided by it with respect to each WEBS Index
Series. Payments under the Plan are not tied exclusively to the distribution
expenses actually incurred by the Distributor. The Board, including a majority
of the Directors who are not interested persons of the Company and who have no
direct or indirect financial interest in the operation of the Plan ("Independent
Directors"), evaluate the appropriateness of the Plan and its payment terms on a
continuing basis and in doing so consider all relevant factors, including
expenses borne by the Distributor in the current year and in prior years and
amounts received under the Plan.
Under its terms, the Plan remains in effect from year to year, provided
such continuance is approved annually by vote of the Board, including a majority
of the Independent Directors. The Plan may not be amended to increase materially
the amount to be spent for the services provided by the Distributor without
approval by the shareholders of the WEBS Index Series to which the Plan applies,
and all material amendments of the Plan also require Board approval. The Plan
may be terminated at any time, without penalty, by vote of a majority of the
Independent Directors, or, with respect to any WEBS Index Series, by a vote of a
majority of the outstanding voting securities of such WEBS Index Series (as such
vote is defined in the 1940 Act). If a Plan is terminated (or not renewed) with
respect to any one or more WEBS Index Series, it may continue in effect with
respect to any WEBS Index Series as to which it has not been terminated (or has
been renewed). Pursuant to the Distribution Agreement, the Distributor will
provide the Board periodic reports of any amounts expended under the Plan and
the purpose for which such expenditures were made.
The Distributor may also enter into sales and investor services
agreements with broker-dealers or other persons that are DTC Participants (as
defined below) to provide distribution assistance, including broker-dealer and
shareholder support and educational and promotional services. Under the terms of
each sales and investor services agreement, the Distributor will pay such
broker-dealers or other persons, out of Rule 12b-1 fees received from the WEBS
Index Series, at the annual rate of .08 of 1% of the average daily net asset
value of WEBS held through DTC for the account of such DTC Participant.
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For the fiscal years ended August 31, 1997, 1998 and 1999,
respectively, the Distributor received the following amounts pursuant to the
Plan with respect to each WEBS Index Series: Australia WEBS Index Series,
$45,672, $87,845 and $100,454; Austria WEBS Index Series, $7,833, $13,513 and
$20,091; Belgium WEBS Index Series, $36,106, $62,876 and $33,264; Canada WEBS
Index Series, $54,716, $44,024 and $24,597; France WEBS Index Series, $32,938,
$56,481 and $101,768; Germany WEBS Index Series, $45,876, $89,498 and $162,890;
Hong Kong WEBS Index Series, $37,724, $94,745 and $146,272; Italy WEBS Index
Series, $72,698, $123,496 and $137,994; Japan WEBS Index Series, $295,181,
$333,432 and $811,896; Malaysia (Free) WEBS Index Series, $41,495, $100,121 and
$130,950; Mexico (Free) WEBS Index Series, $24,521, $29,617 and $28,898;
Netherlands WEBS Index Series, $20,904, $34,109 and $50,383; Singapore (Free)
WEBS Index Series, $31,612, $90,132 and $189,081; Spain WEBS Index Series,
$13,003, $40,521 and $68,791; Sweden WEBS Index Series, $13,971, $25,775 and
$32,110; Switzerland WEBS Index Series, $22,405, $49,386 and $69,451; and United
Kingdom WEBS Index Series, $53,040, $104,206 and $182,183.
In the aggregate, the Distributor received $849,695, $1,379,777 and
$2,291,073 for the fiscal years ended August 31, 1997, 1998 and 1999,
respectively, from the WEBS Index Series pursuant to the Plan, retaining
$67,976, $133,964 and $229,107, respectively, and paying out the remainder to
unaffiliated third parties. The retained amounts represent .02%, respectively,
of the average daily net assets of the WEBS Index Series, which the Distributor
receives for monitoring the purchase and redemption of Creation Units, as
described below under the "Purchase and Issuance of WEBS in Creation Units" and
"Redemption of WEBS in Creation Units." During the fiscal years ended August 31,
1997, 1998 and 1999, the Distributor paid $494,970, $885,446 and $1,553,929;
$342,394, $248,720 and $347,662; and $35,841, $111,647 and $160,375,
respectively, for (1) postage and other expenses of distributing prospectuses,
statements of additional information and other marketing materials, (2)
advertising-related expenses and (3) compensation to broker-dealers for
distribution assistance, respectively, which amounts were allocated to payments
made under the Plan by each WEBS Index Series based on its average daily net
assets for the period.
The Distribution Agreement provides that it may be terminated at any
time, without the payment of any penalty, (i) by vote of a majority of the
Directors who are not interested persons of the Company (as defined under the
1940 Act) or (ii) by vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the relevant WEBS Index Series, on at least 60
days' written notice to the Distributor. The Distribution Agreement is also
terminable upon 60 days' notice by the Distributor and will terminate
automatically in the event of its assignment (as defined in the 1940 Act).
Custodian and Lending Agent. Chase serves as the Custodian for the cash
and portfolio securities of each WEBS Index Series pursuant to a Custodian
Agreement between Chase and the Company and as Lending Agent for each WEBS Index
Series. As Lending Agent, Chase causes the delivery of loaned securities from
the Company to borrowers, arranges for the return of loaned securities to the
Company at the termination of the loans, requests deposit of collateral,
monitors daily the value of the loaned securities and collateral, requests that
borrowers add to the collateral when required by the loan agreements, and
provides recordkeeping and accounting services necessary for the operation of
the program. Chase may from time to time reimburse expenses to one or more WEBS
Index Series. Chase, as Custodian and Lending Agent, has no role in determining
the investment policies of the Company or which securities are to be purchased
or sold by the Company. The principal business address of Chase is One
Pierrepont Plaza, Brooklyn, New York, 11201.
For its custody services to each WEBS Index Series, Chase will be paid
per annum fees based on the aggregate net assets of the WEBS Index Series as
follows: Australia WEBS Index Series (0.07%); Austria WEBS Index Series (0.09%);
Belgium WEBS Index Series (0.09%); Brazil (Free) WEBS Index Series (0.35%);
Canada WEBS Index Series (0.05%); EMU WEBS Index Series (0.09%); France WEBS
Index Series (0.09%); Germany WEBS Index Series (0.08%); Hong Kong WEBS Index
Series (0.10%); Italy WEBS Index Series (0.08%); Japan WEBS Index Series
(.055%); Korea WEBS Index Series (0.20%); Malaysia (Free) WEBS Index Series
(0.10%); Mexico (Free) WEBS Index Series (0.15%); Netherlands WEBS Index Series
(0.09%); Singapore (Free) WEBS Index Series (0.09%); South Africa WEBS Index
Series (0.15%); Spain WEBS Index Series (0.09%); Sweden WEBS Index Series
(0.09%); Switzerland WEBS Index Series (0.09%); Taiwan WEBS Index Series
(0.35%); United Kingdom WEBS Index Series (0.05%); and USA WEBS Index Series
(0.01%). As remuneration for its services in connection
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with lending portfolio securities of the WEBS Index Series, Chase is paid by the
Company, in respect of each WEBS Index Series, 40% of the net investment income
earned on the collateral for securities loaned.
Transfer Agent. PNC (the "Transfer Agent"), an indirect wholly owned
subsidiary of PNC Bank Corp., provides transfer agency services pursuant to an
agreement with the Company. The Transfer Agent has no role in determining the
investment policies of the Company or which securities are to be purchased or
sold by the Company. The principal business address of the Transfer Agent is
Broad and Chestnut Streets, Philadelphia, Pennsylvania 19110.
BROKERAGE ALLOCATION
When selecting brokers and dealers to handle the purchase and sale of
portfolio securities, the Adviser looks for prompt execution of the order at a
favorable price. Generally, the Adviser works with recognized dealers in these
securities, except when a better price and execution of the order can be
obtained elsewhere. The Company will not deal with affiliates in principal
transactions unless permitted by exemptive order or applicable rule or
regulation. Since the investment objective of each WEBS Index Series is
investment performance that corresponds to that of an index, the Adviser does
not intend to select brokers and dealers for the purpose of receiving research
services in addition to a favorable price and prompt execution either from that
broker or an unaffiliated third party.
Subject to allocating brokerage to receive a favorable price and prompt
execution, the Adviser may select brokers who are willing to provide payments to
third party service suppliers to a WEBS Index Series, to reduce expenses of the
WEBS Index Series.
The Adviser assumes general supervision over placing orders on behalf
of the Company for the purchase or sale of portfolio securities. If purchases or
sales of portfolio securities of the Company and one or more other investment
companies or clients supervised by the Adviser are considered at or about the
same time, transactions in such securities are allocated among the several
investment companies and clients in a manner deemed equitable to all by the
Adviser, taking into account the sizes of such other investment companies and
clients and the amount of securities to be purchased or sold. In some cases this
procedure could have a detrimental effect on the price or volume of the security
so far as the Company is concerned. However, in other cases it is possible that
the ability to participate in volume transactions and to negotiate lower
brokerage commissions will be beneficial to the Company. The primary
consideration is prompt execution of orders at the most favorable net price.
Portfolio turnover may vary from year to year, as well as within a year. High
turnover rates are likely to result in comparatively greater brokerage expenses.
The portfolio turnover rate for each WEBS Index Series is expected to be under
50%. See "Implementation of Policies" in the Prospectus. The overall
reasonableness of brokerage commissions is evaluated by the Adviser based upon
its knowledge of available information as to the general level of commissions
paid by other institutional investors for comparable services.
ADDITIONAL INFORMATION CONCERNING WEBS
Capital Stock. The Company currently is comprised of twenty-eight
series of shares of common stock, par value $.001 per share, referred to herein
as WEBS: the Australia WEBS Index Series, the Austria WEBS Index Series, the
Belgium WEBS Index Series, the Brazil (Free) WEBS Index Series, the Canada WEBS
Index Series, the EMU WEBS Index Series, the France WEBS Index Series, the
Germany WEBS Index Series, the Greece WEBS Index Series, the Hong Kong WEBS
Index Series, the Indonesia (Free) WEBS Index Series, the Italy WEBS Index
Series, the Japan WEBS Index Series, the Korea WEBS Index Series, the Malaysia
(Free) WEBS Index Series, the Mexico (Free) WEBS Index Series, the Netherlands
WEBS Index Series, the Portugal WEBS Index Series, the Singapore (Free) WEBS
Index Series, the South Africa WEBS Index Series, the Spain WEBS Index Series,
the Sweden WEBS Index Series, the Switzerland WEBS Index Series, the Taiwan WEBS
Index Series, the Thailand (Free) WEBS Index Series, the Turkey WEBS Index
Series, the United Kingdom WEBS Index Series and the USA WEBS Index Series. Each
WEBS Index Series has been issued a separate class of capital stock. The Board
may designate additional series of common stock and classify shares of a
particular series into one or more classes of that series. The Articles of
Incorporation provide that the shares of each series of common stock of the
Company are redeemable, at net asset value, at the option of the Company, in
whole or any part, on such terms as the Board of Directors may by resolution
approve, without the consent of the holders thereof.
Each WEBS issued by the Company has a pro rata interest in the assets
of the corresponding WEBS Index Series. The Company is currently authorized to
issue 10.9 billion shares of common stock. The following number of
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shares is currently authorized for each WEBS Index Series: the Australia WEBS
Index Series, 127.8 million shares; the Austria WEBS Index Series, 19.8 million
shares; the Belgium WEBS Index Series, 136.2 million shares; the Brazil (Free)
WEBS Index Series, 500 million shares; the Canada WEBS Index Series, 340.2
million shares; the EMU WEBS Index Series, 500 million shares; the France WEBS
Index Series, 340.2 million shares; the Germany WEBS Index Series, 382.2 million
shares; the Greece WEBS Index Series, 200 million shares; the Hong Kong WEBS
Index Series, 191.4 million shares; the Indonesia (Free) WEBS Index Series, 200
million shares; the Italy WEBS Index Series, 63.6 million shares; the Japan WEBS
Index Series, 2,124.6 million shares; the Korea WEBS Index Series, 200 million
shares; the Malaysia (Free) WEBS Index Series, 127.8 million shares; the Mexico
(Free) WEBS Index Series, 255 million shares; the Netherlands WEBS Index Series,
255 million shares; the Portugal WEBS Index Series, 200 million shares; the
Singapore (Free) WEBS Index Series, 191.4 million shares; the South Africa WEBS
Index Series, 200 million shares; the Spain WEBS Index Series, 127.8 million
shares; the Sweden WEBS Index Series, 63.6 million shares; the Switzerland WEBS
Index Series, 318.625 million shares; the Taiwan WEBS Index Series, 200 million
shares; the Thailand (Free) WEBS Index Series, 200 million shares; the Turkey
WEBS Index Series, 200 million shares; the United Kingdom WEBS Index Series,
943.2 million shares; and the USA WEBS Index Series, 500 million shares.
Fractional shares will not be issued. Shares have no preemptive, exchange,
subscription or conversion rights and are freely transferable. Each share is
entitled to participate equally in dividends and distributions declared by the
Board with respect to the relevant WEBS Index Series, and in the net
distributable assets of such WEBS Index Series on liquidation. Shareholders are
entitled to require the Company to redeem Creation Units of their shares. The
Articles of Incorporation confers upon the Board of Directors the power, by
resolution, to alter the number of shares constituting a Creation Unit or to
specify that shares of common stock of the Company may be individually
redeemable.
Each WEBS has one vote with respect to matters upon which a stockholder
vote is required consistent with the requirements of the 1940 Act and the rules
promulgated thereunder and the Maryland General Corporation Law; stockholders
have no cumulative voting rights with respect to their shares. Shares of all
series vote together as a single class except that if the matter being voted on
affects only a particular WEBS Index Series it will be voted on only by that
WEBS Index Series and if a matter affects a particular WEBS Index Series
differently from other WEBS Index Series, that WEBS Index Series will vote
separately on such matter. Under Maryland law, the Company is not required to
hold an annual meeting of stockholders unless required to do so under the 1940
Act. The policy of the Company is not to hold an annual meeting of stockholders
unless required to do so under the 1940 Act. All shares of the Company
(regardless of WEBS Index Series) have noncumulative voting rights for the
election of Directors. Under Maryland law, Directors of the Company may be
removed by vote of the stockholders.
The Company issues through the Authorized Participants to its
stockholders semi-annual reports containing unaudited financial statements and
annual reports containing financial statements audited by independent auditors
approved by the Company's Directors and by the stockholders when meetings are
held and such other information as may be required by applicable laws, rules and
regulations. Beneficial Owners also receive annually notification as to the tax
status of the Company's distributions.
Stockholder inquiries may be made by writing to the Company, c/o PFPC
Inc., 400 Bellevue Parkway, Wilmington, DE 19809.
Book Entry Only System. DTC acts as securities depositary for the WEBS.
WEBS of each WEBS Index Series are represented by global securities registered
in the name of DTC or its nominee and deposited with, or on behalf of, DTC.
Except as provided below, certificates will not be issued for WEBS.
DTC has advised the Company as follows: it is a limited-purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities of its participants (the "DTC Participants") and to facilitate the
clearance and settlement of securities transactions among the DTC Participants
in such securities through electronic book-entry changes in accounts of the DTC
Participants, thereby eliminating the need for physical movement of securities
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own DTC. More specifically, DTC is owned by
a number of its DTC Participants and by the New York Stock Exchange, Inc., the
AMEX and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a DTC
Participant, either directly or indirectly (the "Indirect Participants"). DTC
agrees with and represents to its Participants that it will administer its
book-entry system in accordance with its rules and by-laws and requirements of
law.
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Beneficial ownership of WEBS is limited to DTC Participants, Indirect
Participants and persons holding interests through DTC Participants and Indirect
Participants. Ownership of beneficial interests in WEBS (owners of such
beneficial interests are referred to herein as "Beneficial Owners") is shown on,
and the transfer of ownership is effected only through, records maintained by
DTC (with respect to DTC Participants) and on the records of DTC Participants
(with respect to Indirect Participants and Beneficial Owners that are not DTC
Participants). Beneficial Owners will receive from or through the DTC
Participant a written confirmation relating to their purchase of WEBS. The laws
of some jurisdictions may require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such laws may impair
the ability of certain investors to acquire beneficial interests in WEBS.
Beneficial Owners of WEBS are not entitled to have WEBS registered in
their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and are not considered the registered holder
thereof. Accordingly, each Beneficial Owner must rely on the procedures of DTC,
the DTC Participant and any Indirect Participant through which such Beneficial
Owner holds its interests, to exercise any rights of a holder of WEBS. The
Company understands that under existing industry practice, in the event the
Company requests any action of holders of WEBS, or a Beneficial Owner desires to
take any action that DTC, as the record owner of all outstanding WEBS, is
entitled to take, DTC would authorize the DTC Participants to take such action
and that the DTC Participants would authorize the Indirect Participants and
Beneficial Owners acting through such DTC Participants to take such action and
would otherwise act upon the instructions of Beneficial Owners owning through
them. As described above, the Company recognizes DTC or its nominee as the owner
of all WEBS for all purposes. Conveyance of all notices, statements and other
communications to Beneficial Owners is effected as follows. Pursuant to the
Depositary Agreement between the Company and DTC, DTC is required to make
available to the Company upon request and for a fee to be charged to the Company
a listing of the WEBS holdings of each DTC Participant. The Company shall
inquire of each such DTC Participant as to the number of Beneficial Owners
holding WEBS, directly or indirectly, through such DTC Participant. The Company
shall provide each such DTC Participant with copies of such notice, statement or
other communication, in such form, number and at such place as such DTC
Participant may reasonably request, in order that such notice, statement or
communication may be transmitted by such DTC Participant, directly or
indirectly, to such Beneficial Owners. In addition, the Company shall pay to
each such DTC Participant a fair and reasonable amount as reimbursement for the
expenses attendant to such transmittal, all subject to applicable statutory and
regulatory requirements.
WEBS distributions shall be made to DTC or its nominee, Cede & Co., as
the registered holder of all WEBS. DTC or its nominee, upon receipt of any such
distributions, shall credit immediately DTC Participants' accounts with payments
in amounts proportionate to their respective beneficial interests in WEBS as
shown on the records of DTC or its nominee. Payments by DTC Participants to
Indirect Participants and Beneficial Owners of WEBS held through such DTC
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in a "street name," and will be the responsibility of such
DTC Participants. The Company has no responsibility or liability for any aspects
of the records relating to or notices to Beneficial Owners, or payments made on
account of beneficial ownership interests in such WEBS, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests or for any other aspect of the relationship between DTC and the DTC
Participants or the relationship between such DTC Participants and the Indirect
Participants and Beneficial Owners owning through such DTC Participants.
DTC may determine to discontinue providing its service with respect to
WEBS at any time by giving reasonable notice to the Company and discharging its
responsibilities with respect thereto under applicable law. Under such
circumstances, the Company shall take action either to find a replacement for
DTC to perform its functions at a comparable cost or, if such a replacement is
unavailable, to issue and deliver printed certificates representing ownership of
WEBS, unless the Company makes other arrangements with respect thereto
satisfactory to the AMEX (or such other exchange on which WEBS may be listed).
PURCHASE AND REDEMPTION OF WEBS
Creation Units. The Company issues and redeems WEBS of each WEBS Index
Series only in aggregations of WEBS specified for each WEBS Index Series. The
following table sets forth the number of WEBS
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of a WEBS Index Series that constitute a Creation Unit for such WEBS Index
Series and the value of such Creation Unit at Decemebr 6, 1999:
Value Per
WEBS Per Creation
WEBS Index Series Creation Unit Unit ($U.S.)
-------------------------------------------------------
Australia 200,000 $2,106,166
Austria 100,000 $ 841,191
Belgium 40,000 $ 629,622
Brazil (Free) 50,000 $ 995,184
Canada 100,000 $1,543,702
EMU 200,000 $ 991,188
France 200,000 $5,242,787
Germany 300,000 $7,062,349
Hong Kong 75,000 $1,060,736
Italy 150,000 $3,431,160
Japan 600,000 $9,107,245
Korea 50,000 $1,011,072
Malaysia (Free) 75,000 $ 402,715
Mexico (Free) 100,000 $1,639,416
Netherlands 50,000 $1,180,191
Singapore (Free) 100,000 $ 858,630
South Africa 50,000 $1,000,804
Spain 75,000 $2,106,635
Sweden 75,000 $2,106,971
Switzerland 125,000 $1,995,106
Taiwan 50,000 $ 997,766
United Kingdom 200,000 $4,231,095
USA 500,000 $5,010,500
See "Purchase and Issuance of WEBS in Creation Units" and "Redemption
of WEBS in Creation Units" below. The Board of Directors of the Company reserves
the right to declare a split or a consolidation in the number of WEBS
outstanding of any WEBS Index Series of the Company, and to make a corresponding
change in the number of WEBS constituting a Creation Unit, in the event that the
per WEBS price in the secondary market rises (or declines) to an amount that
falls outside the range deemed desirable by the Board.
Purchase and Issuance of WEBS in Creation Units.
General. The Company issues and sells WEBS only in Creation Units on a
continuous basis through the Distributor, without an initial sales load, at
their net asset value next determined after receipt, on any Business Day (as
defined herein), of an order in proper form.
A "Business Day" with respect to each WEBS Index Series is any day on
which (i) the New York Stock Exchange ("NYSE") and (ii) the stock exchange(s)
and Company subcustodian(s) relevant to such WEBS Index Series are open for
business. As of the date of the Prospectus, the NYSE observes the following
holidays: New Year's Day, Dr. Martin Luther King, Jr. Day, President's Day
(Washington's Birthday), Good Friday, Memorial Day (observed), Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. The stock exchange and/or
subcustodian holidays relevant to each WEBS Index Series are set forth in
Appendix B to this Statement of Additional Information.
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Portfolio Deposit. The consideration for purchase of a Creation Unit of
WEBS of a WEBS Index Series (except for the Brazil (Free), Korea and Taiwan WEBS
Index Series which are currently offered in their WEBS Creation Units solely for
cash) generally consists of the in-kind deposit of a designated portfolio of
equity securities (the "Deposit Securities") constituting an optimized
representation of the WEBS Index Series' benchmark foreign securities index and
an amount of cash computed as described below (the "Cash Component"). Together,
the Deposit Securities and the Cash Component constitute the "Portfolio
Deposit," which represents the minimum initial and subsequent investment amount
for shares of any WEBS Index Series of the Company. The Cash Component is an
amount equal to the Dividend Equivalent Payment (as defined below), plus or
minus, as the case may be, a Balancing Amount (as defined below). The "Dividend
Equivalent Payment" enables the Company to make a complete distribution of
dividends on the next dividend payment date, and is an amount equal, on a per
Creation Unit basis, to the dividends on all the Portfolio Securities with
ex-dividend dates within the accumulation period for such distribution (the
"Accumulation Period"), net of expenses and liabilities for such period, as if
all of the Portfolio Securities had been held by the Company for the entire
Accumulation Period. The "Balancing Amount" is an amount equal to the difference
between (x) the net asset value (per Creation Unit) of the WEBS Index Series and
(y) the sum of (i) the Dividend Equivalent Payment and (ii) the market value
(per Creation Unit) of the securities deposited with the Company (the sum of (i)
and (ii) is referred to as the "Deposit Amount"). The Balancing Amount serves
the function of compensating for any differences between the net asset value per
Creation Unit and the Deposit Amount.
The Adviser makes available through the Distributor on each Business
Day, immediately prior to the opening of business on the AMEX (currently 9:30
a.m., New York time), the list of the names and the required number of shares of
each Deposit Security to be included in the current Portfolio Deposit (based on
information at the end of the previous Business Day) for each WEBS Index Series.
Such Portfolio Deposit is applicable, subject to any adjustments as described
below, in order to effect purchases of Creation Units of WEBS of a given WEBS
Index Series until such time as the next-announced Portfolio Deposit composition
is made available.
The identity and number of shares of the Deposit Securities required
for a Portfolio Deposit for each WEBS Index Series changes as rebalancing
adjustments and corporate action events are reflected from time to time by the
Adviser with a view to the investment objective of the WEBS Index Series. The
composition of the Deposit Securities may also change in response to adjustments
to the weighting or composition of the securities constituting the relevant
securities index. In addition, the Company reserves the right to permit or
require the substitution of an amount of cash (i.e., a "cash in lieu" amount) to
be added to the Cash Component to replace any Deposit Security which may not be
available in sufficient quantity for delivery or for other similar reasons. The
adjustments described above will reflect changes, known to the Adviser on the
date of announcement to be in effect by the time of delivery of the Portfolio
Deposit, in the composition of the subject index being tracked by the relevant
WEBS Index Series, or resulting from stock splits and other corporate actions.
In addition to the list of names and numbers of securities constituting
the current Deposit Securities of a Portfolio Deposit, the Distributor also
makes available (i) on each Business Day, the Dividend Equivalent Payment
effective through and including the previous Business Day, per outstanding WEBS
of each WEBS Index Series, and (ii) on a continuous basis throughout the day,
the sum of the Dividend Equivalent Payment effective through and including the
close of the previous trading session in the relevant foreign market, plus the
current value of the requisite Deposit Securities as in effect on such day.
Role of The Authorized Participant. Creation Units of WEBS may be
purchased only by or through a DTC Participant that has entered into an
Authorized Participant Agreement with the Company and the Distributor
("Authorized Participant"). Such Authorized Participant will agree pursuant to
the terms of such Authorized Participant Agreement on behalf of itself or any
investor on whose behalf it will act, as the case may be, to certain conditions,
including that such Authorized Participant will make available in advance of
each purchase of WEBS an amount of cash sufficient to pay the Cash Component,
once the net asset value of a Creation Unit is next determined after receipt of
the purchase order in proper form, together with the transaction fee described
below. The Authorized Participant may require the investor to enter into an
agreement with such Authorized Participant with respect to certain matters,
including payment of the Cash Component. Investors who are not Authorized
Participants must make appropriate arrangements with an Authorized Participant.
Investors should be aware that their particular broker may not be a DTC
Participant or may not have executed an Authorized Participant Agreement, and
that therefore orders to purchase Creation Units of WEBS may have to be placed
by the investor's broker through an
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Authorized Participant. As a result, purchase orders placed through an
Authorized Participant may result in additional charges to such investor. The
Company does not expect to enter into an Authorized Participant Agreement with
more than a small number of DTC Participants that have international
capabilities. A list of the current Authorized Participants may be obtained from
the Distributor.
Purchase Order. To initiate an order for a Creation Unit of WEBS, the
Authorized Participant must give notice to the Distributor of its intent to
submit an order to purchase WEBS after 9:00 a.m. but not later than 4:00 p.m.,
New York time on the relevant Business Day. The Distributor shall cause the
Adviser and the Custodian to be informed of such advice. The Custodian will then
provide such information to the appropriate subcustodian. For each WEBS Index
Series, the Custodian shall cause the subcustodian of the WEBS Index Series to
maintain an account into which the Authorized Participant shall deliver, on
behalf of itself or the party on whose behalf it is acting, the securities
included in the designated Portfolio Deposit (or the cash value of all or a part
of such securities, in the case of a permitted or required cash purchase or
"cash in lieu" amount), with any appropriate adjustments as advised by the
Company.
Deposit Securities must be delivered to an account maintained at the
applicable local subcustodian.
Following the notice of intention, an irrevocable order to purchase
Creation Units, in the form required by the Company, must be received by the
Distributor from an Authorized Participant on its own or another investor's
behalf by the closing time of the regular trading session on the AMEX (currently
4:00 p.m., New York time) on the relevant Business Day. (The required form of an
order to purchase is available on request from the Distributor.) Those placing
orders to purchase Creation Units through an Authorized Participant should allow
sufficient time to permit proper submission of the purchase order to the
Distributor by the cut-off time on such Business Day. Orders must be transmitted
by the Authorized Participant to the Distributor by facsimile or electronic
transmission as provided in the Authorized Participant Agreement.
The Authorized Participant must also make available on or before the
contractual settlement date, by means satisfactory to the Company, immediately
available or same day funds estimated by the Company to be sufficient to pay the
Cash Component next determined after acceptance of the purchase order, together
with the applicable purchase transaction fee. Any excess funds will be returned
following settlement of the issue of the Creation Unit of WEBS. Those placing
orders should ascertain the applicable deadline for cash transfers by contacting
the operations department of the broker or depositary institution effectuating
the transfer of the Cash Component. This deadline is likely to be significantly
earlier than the closing time of the regular trading session on the AMEX.
Investors should be aware that an Authorized Participant may require
orders for purchases of WEBS placed with it to be in the form required by the
individual Authorized Participant, which form will not be the same as the form
of purchase order specified by the Company, which the Authorized Participant
must deliver to the Distributor.
Acceptance of Purchase Order. Subject to the conditions that (i) a
properly completed irrevocable purchase order has been submitted by the
Authorized Participant (either on its own or another investor's behalf) not
later than the closing time of the regular trading session on the AMEX, and (ii)
arrangements satisfactory to the Company are in place for payment of the Cash
Component and any other cash amounts which may be due, the Company will accept
the order, subject to its right (and the right of the Distributor and the
Adviser) to reject any order until acceptance.
Once the Company has accepted an order, upon next determination of the
net asset value of the shares, the Company will confirm the issuance, against
receipt of payment, of a Creation Unit of WEBS of the WEBS Index Series at such
net asset value. The Distributor will then transmit a confirmation of acceptance
to the Authorized Participant that placed the order.
The Company reserves the absolute right to reject a purchase order
transmitted to it by the Distributor in respect of any WEBS Index Series if (a)
the purchaser or group of purchasers, upon obtaining the shares ordered, would
own 80% or more of the currently outstanding shares of any WEBS Index Series;
(b) the Deposit Securities delivered are not as specified by the Adviser, as
described above; (c) acceptance of the Deposit Securities would have certain
adverse tax consequences to the WEBS Index Series; (d) the acceptance of the
Portfolio Deposit would, in the opinion of counsel, be unlawful; (e) the
acceptance of the Portfolio Deposit would otherwise, in the discretion
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<PAGE>
of the Company or the Adviser, have an adverse effect on the Company or the
rights of beneficial owners; or (f) in the event that circumstances outside the
control of the Company, the Distributor and the Adviser make it for all
practical purposes impossible to process purchase orders. The Company shall
notify a prospective purchaser of its rejection of the order of such person. The
Company and the Distributor are under no duty, however, to give notification of
any defects or irregularities in the delivery of Portfolio Deposits nor shall
either of them incur any liability for the failure to give any such
notification.
Issuance of a Creation Unit. Except as provided herein, a Creation Unit
of WEBS of a WEBS Index Series will not be issued until the transfer of good
title to the Company of the Deposit Securities and the payment of the Cash
Component have been completed. When the subcustodian has confirmed to the
Custodian that the required securities included in the Portfolio Deposit (or the
cash value thereof) have been delivered to the account of the relevant
subcustodian, the Custodian shall notify the Distributor and the Adviser, and
the Company will issue and cause the delivery of the Creation Unit of WEBS.
To the extent contemplated by an Authorized Participant's agreement
with the Company, the Company will issue Creation Units of WEBS to such
Authorized Participant notwithstanding the fact that the corresponding Portfolio
Deposits have not been received in part or in whole, in reliance on the
undertaking of the Authorized Participant to deliver the missing Deposit
Securities as soon as possible, which undertaking shall be secured by such
Authorized Participant's delivery and maintenance of collateral consisting of
cash or Short-Term Investments having a value at least equal to such amount as
required by the Company in accordance with its then-effective procedures,
provided that such amount shall be no less than 125% of the value of the missing
Deposit Securities. Information concerning the Company's current procedures for
collateralization of missing Deposit Securities is available from the
Distributor. The Authorized Participant Agreement will permit the Company to buy
the missing Deposit Securities at any time and will subject the Authorized
Participant to liability for any shortfall between the cost to the Company of
purchasing such securities and the value of the collateral.
All questions as to the number of shares of each security in the
Deposit Securities and the validity, form, eligibility and acceptance for
deposit of any securities to be delivered shall be determined by the Company,
and the Company's determination shall be final and binding.
Cash Purchase Method. Although the Company does not ordinarily permit
cash purchases of Creation Units, when cash purchases of Creation Units of WEBS
are available or specified for a WEBS Index Series (Creation Units of the Brazil
(Free), Korea and Taiwan WEBS Index Series are currently offered only for cash),
they will be effected in essentially the same manner as in-kind purchases
thereof. In the case of a cash purchase, the investor must pay the cash
equivalent of the Deposit Securities it would otherwise be required to provide
through an in-kind purchase, plus the same Cash Component required to be paid by
an in-kind purchaser. In addition, to offset the Company's brokerage and other
transaction costs associated with using the cash to purchase the requisite
Deposit Securities, the investor will be required to pay a fixed purchase
transaction fee, plus an additional variable charge for cash purchases, which is
expressed as a percentage of the value of the Deposit Securities. The
transaction fees for in-kind and cash purchases of Creation Units of WEBS are
described below.
Purchase Transaction Fee. A purchase transaction fee payable to the
Company is imposed to compensate the Company for the transfer and other
transaction costs of a WEBS Index Series associated with the issuance of
Creation Units of WEBS. Purchasers of Creation Units of WEBS for cash are
required to pay an additional variable charge to compensate the relevant WEBS
Index Series for brokerage and market impact expenses. Where the Company permits
an in-kind purchaser to substitute cash in lieu of depositing a portion of the
Deposit Securities, the purchaser will be assessed the additional variable
charge for cash purchases on the "cash in lieu" portion of its investment.
Purchasers of WEBS in Creation Units are responsible for the costs of
transferring the securities constituting the Deposit Securities to the account
of the Company. The purchase transaction fees for in-kind purchases and cash
purchases (when available) are listed in the table below. This table is subject
to revision from time to time. Investors are also responsible for payment of the
costs of transferring the Deposit Securities to the Company.
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Additional Variable
In-kind and cash Charge for Cash
WEBS Index Series purchases Purchases*
--------------------------------------------------------------------
Australia $1,750 0.60%
Austria $1,600 0.67%
Belgium $1,500 0.30%
Brazil (Free) $7,000 1.15%
Canada $3,250 0.30%
EMU $8,000 1.05%
France $3,400 0.25%
Germany $2,400 0.25%
Hong Kong $3,800 0.60%
Italy $2,100 0.30%
Japan $7,600 0.15%
Korea $7,000 1.16%
Malaysia (Free) $4,150 1.07%
Mexico (Free) $2,200 0.50%
Netherlands $1,900 0.25%
Singapore (Free) $2,500 1.30%
South Africa $2,900 1.60%
Spain $2,300 0.25%
Sweden $2,700 0.30%
Switzerland $2,200 0.40%
Taiwan $6,400 1.21%
United Kingdom $4,750 0.25%
USA $1,900 0.50%
* As a percentage of amount of invested.
Example. A hypothetical example of the costs of creating a Creation
Unit of WEBS of the Japan WEBS Index Series is set forth below for illustrative
purposes only. The exchange rate reflected in the table is Y 103.195 per US$1.
<TABLE>
<CAPTION>
Unit Creation Calculation in Unit Creation Calculation in Daily NAV Calculation in United
Japanese Yen United States Dollars States Dollars
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Execution 938,463,276 9,094,077 9,094,077
Commissions 938,455 9,094 N/A
Stamp Taxes 0 0 N/A
Risk Premium 0 0 N/A
Accrued Income 1,358,872 13,168 13,168
Creation Charge 784,282 7,600 N/A
WEBS Unit Value 941,544,885 9,123,939 9,107,245
Per WEBS 15.21 15.18
Shares 600,000
</TABLE>
See "Investment Advisory, Management, Administrative and Distribution
Services" herein, for additional information concerning the distribution
arrangements for WEBS.
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<PAGE>
Redemption of Webs in Creation Units. WEBS may be redeemed only in
Creation Units at their net asset value next determined after receipt of a
redemption request in proper form by the Distributor and only on a day on which
the AMEX is open for trading. The Company will not redeem WEBS in amounts less
than Creation Units. Beneficial Owners also may sell WEBS in the secondary
market, but must accumulate enough WEBS to constitute a Creation Unit in order
to have such shares redeemed by the Company. There can be no assurance, however,
that there will be sufficient liquidity in the public trading market at any time
to permit assembly of a Creation Unit of WEBS. Investors should expect to incur
brokerage and other costs in connection with assembling a sufficient number of
WEBS to constitute a redeemable Creation Unit.
With respect to each WEBS Index Series (other than the Brazil (Free),
Korea and Taiwan WEBS Index Series, which currently redeem Creation Units of
WEBS solely for cash in U.S. dollars, and the Malaysia (Free) WEBS Index Series,
which currently redeems Creation Units of its WEBS solely for Malaysian
ringgits), the Adviser makes available through the Distributor immediately prior
to the opening of business on the AMEX (currently 9:30 am, New York time) on
each day that the AMEX is open for business the Portfolio Securities that will
be applicable (subject to possible amendment or correction) to redemption
requests received in proper form (as defined below) on that day. Unless cash
redemptions are available or specified for a WEBS Index Series, the redemption
proceeds for a Creation Unit generally consist of Deposit Securities as
announced by the Distributor on the Business Day of the request for redemption,
plus cash in an amount equal to the difference between the net asset value of
the shares being redeemed, as next determined after a receipt of a request in
proper form, and the value of the Deposit Securities, less the redemption
transaction fee described below. The redemption transaction fee described below
is deducted from such redemption proceeds. In the case of a resident Australian
or New Zealand holder, notwithstanding the foregoing, such holder is only
entitled to receive cash upon its redemption of Creation Units of WEBS.
A redemption transaction fee payable to the Company is imposed to
offset transfer and other transaction costs that may be incurred by the relevant
WEBS Index Series. The redemption transaction fee for redemptions in kind and
for cash and the additional variable charge for cash redemptions (when cash
redemptions are available or specified) are listed in the table below. Investors
will also bear the costs of transferring the Portfolio Deposit from the Company
to their account or on their order. Investors who use the services of a broker
or other such intermediary may be charged a fee for such services.
Additional variable
In-kind and cash charge for cash
WEBS Index Series redemptions redemptions*
-------------------------------------------------------------------
Australia $1,750 0.60%
Austria $1,600 0.67%
Belgium $1,500 0.30%
Brazil (Free) $7,000 1.15%
Canada $3,250 0.30%
EMU $8,000 1.05%
France $3,400 0.25%
Germany $2,400 0.25%
Hong Kong $3,800 0.60%
Italy $2,100 0.30%
Japan $7,600 0.40%
Korea $7,000 1.16%
Malaysia (Free) $4,150 1.07%
Mexico (Free) $2,200 0.50%
Netherlands $1,900 0.25%
Singapore (Free) $2,500 1.30%
South Africa $2,900 1.60%
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Spain $2,300 0.45%
Sweden $2,700 0.30%
Switzerland $2,200 0.40%
Taiwan $6,400 1.21%
United Kingdom $4,750 0.75%
USA $1,900 0.50%
* As a percentage of amount of invested.
Redemption requests in respect of Creation Units of any WEBS Index
Series must be submitted to the Distributor by or through an Authorized
Participant on a day that the AMEX is open for business, between the hours of
9:00 a.m. and 4:00 p.m., New York City time. Investors other than through
Authorized Participants are responsible for making arrangements for a redemption
request to be made through an Authorized Participant. The Distributor will
provide a list of current Authorized Participants upon request.
The Authorized Participant must transmit the request for redemption, in
the form required by the Company, to the Distributor in accordance with
procedures set forth in the Authorized Participant Agreement. Persons wishing to
redeem Creations Units of the Malaysia (Free) WEBS Index Series are currently
required to sign a form acknowledging, among other things, that they are
receiving Malaysian ringgits as their redemption proceeds and that such ringgit
proceeds are subject to applicable Malaysian capital controls. Investors should
be aware that their particular broker may not have executed an Authorized
Participant Agreement, and that, therefore, requests to redeem Creation Units
may have to be placed by the investor's broker through an Authorized Participant
who has executed an Authorized Participant Agreement. At any given time there
will be only a limited number of broker-dealers that have executed an Authorized
Participant Agreement. Investors making a redemption request should be aware
that such request be in the form specified by such Authorized Participant.
Investors making a request to redeem Creation Units should allow sufficient time
to permit proper submission of the request by an Authorized Participant and
transfer of the WEBS to the Company's Transfer Agent; such investors should
allow for the additional time that may be required to effect redemptions through
their banks, brokers or other financial intermediaries if such intermediaries
are not Authorized Participants.
A redemption request is considered to be in "proper form" if (i) an
Authorized Participant has transferred or caused to be transferred to the
Company's Transfer Agent the Creation Unit of WEBS being redeemed through the
book-entry system of DTC so as to be effective by the AMEX closing time on a day
on which the AMEX is open for business and (ii) a duly completed request form is
received by the Distributor from the Authorized Participant on behalf of itself
or another redeeming investor after 9:00 a.m. and not later than the AMEX
closing time on such day. If the Transfer Agent does not receive the investor's
WEBS through DTC's facilities by the AMEX closing time on the same day that the
redemption request is received, the redemption request shall be rejected and may
be resubmitted the next day that the AMEX is open for business. Investors should
be aware that the deadline for such transfers of shares through the DTC system
may be significantly earlier than the close of business on the AMEX. Those
making redemption requests should ascertain the deadline applicable to transfers
of shares through the DTC system by contacting the operations department of the
broker or depositary institution effecting the transfer of the WEBS.
Upon receiving a redemption request, the Distributor shall notify the
Company and the Company's Transfer Agent of such redemption request. The tender
of an investor's WEBS for redemption and the distribution of the cash redemption
payment in respect of Creation Units redeemed will be effected through DTC and
the relevant Authorized Participant to the beneficial owner thereof as recorded
on the book-entry system of DTC or the DTC Participant through which such
investor holds WEBS, as the case may be, or by such other means specified by the
Authorized Participant submitting the redemption request. See "Book-Entry System
Only."
In connection with taking delivery of shares of Deposit Securities upon
redemption of WEBS, a redeeming Beneficial Owner or Authorized Participant
acting on behalf of such Beneficial Owner must maintain appropriate security
arrangements with a qualified broker-dealer, bank or other custody providers in
each jurisdiction in which any of the Portfolio Securities are customarily
traded, to which account such Portfolio Securities will be delivered.
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<PAGE>
Deliveries of redemption proceeds by the WEBS Index Series relating to
those countries generally will be made within three business days. Due to the
schedule of holidays in certain countries, however, the delivery of in-kind
redemption proceeds may take longer than three business days after the day on
which the redemption request is received in proper form. For each country
relating to a WEBS Index Series, Appendix B hereto identifies the instances
where more than seven days would be needed to deliver redemption proceeds.
Pursuant to an order of the SEC, in respect of each WEBS Index Series, the
Company will make delivery of in-kind redemption proceeds within the number of
days stated in Appendix B to be the maximum number of days necessary to deliver
redemption proceeds.
If neither the redeeming Beneficial Owner nor the Authorized
Participant acting on behalf of such redeeming Beneficial Owner has appropriate
arrangements to take delivery of the Portfolio Securities in the applicable
foreign jurisdiction and it is not possible to make other such arrangements, or
if it is not possible to effect deliveries of the Portfolio Securities in such
jurisdiction, the Company may in its discretion exercise its option to redeem
such shares in cash, and the redeeming Beneficial Owner will be required to
receive its redemption proceeds in cash. In such case, the investor will receive
a cash payment equal to the net asset value of its shares based on the net asset
value of WEBS of the relevant WEBS Index Series next determined after the
redemption request is received in proper form (minus a redemption transaction
fee and additional variable charge for cash redemptions specified above, to
offset the Company's brokerage and other transaction costs associated with the
disposition of Portfolio Securities of the WEBS Index Series). Redemptions of
WEBS for Deposit Securities will be subject to compliance with applicable United
States federal and state securities laws and each WEBS Index Series (whether or
not it otherwise permits cash redemptions) reserves the right to redeem Creation
Units for cash to the extent that the WEBS Index Series could not lawfully
deliver specific Deposit Securities upon redemptions or could not do so without
first registering the Deposit Securities under such laws.
Although the Company does not ordinarily permit cash redemptions of
Creation Units (except that, as noted above, resident Australian and New Zealand
holders may redeem solely for cash), in the event that cash redemptions are
permitted or required by the Company, proceeds will be paid to the Authorized
Participant redeeming shares on behalf of the redeeming investor as soon as
practicable after the date of redemption (within seven calendar days thereafter,
except for the instances listed in Appendix B hereto where more than seven
calendar days would be needed).
Because the Portfolio Securities of a WEBS Index Series may trade on
the relevant exchange(s) on days that the AMEX is closed or are otherwise not
Business Days for such WEBS Index Series, stockholders may not be able to redeem
their shares of such WEBS Index Series, or to purchase or sell WEBS on the AMEX,
on days when the net asset value of such WEBS Index Series could be
significantly affected by events in the relevant foreign markets.
The right of redemption may be suspended or the date of payment
postponed with respect to any WEBS Index Series (1) for any period during which
the New York Stock Exchange is closed (other than customary weekend and holiday
closings); (2) for any period during which trading on the New York Stock
Exchange is suspended or restricted; (3) for any period during which an
emergency exists as a result of which disposal of the shares of the WEBS Index
Series' portfolio securities or determination of its net asset value is not
reasonably practicable; or (4) in such other circumstance as is permitted by the
SEC.
Determining Net Asset Value. Net asset value per share for each WEBS
Index Series is computed by dividing the value of the net assets of such WEBS
Index Series (i.e., the value of its total assets less total liabilities) by the
total number of WEBS outstanding, rounded to the nearest cent. Expenses and
fees, including the management, administration and distribution fees, are
accrued daily and taken into account for purposes of determining net asset
value. Except in the case of the Malaysia (Free) WEBS Index Series, the net
asset value of each WEBS Index Series is determined as of the close of the
regular trading session on the New York Stock Exchange, Inc. ("NYSE")
(ordinarily 4:00 p.m., New York City time) on each day that the NYSE is open.
The net asset value of Malaysia (Free) WEBS Index Series is determined as of
8:30 a.m. (New York City time) on each day that the NYSE is open.
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<PAGE>
In computing a WEBS Index Series' net asset value, the WEBS Index
Series' portfolio securities are valued based on their last quoted current
price. Price information on listed securities is taken from the exchange where
the security is primarily traded. Securities regularly traded in an
over-the-counter market are valued at the latest quoted bid price in such
market. Other portfolio securities and assets for which market quotations are
not readily available are valued based on fair value as determined in good faith
by the Adviser in accordance with procedures adopted by the Board. Currency
values generally are converted into US dollars using the same exchange rates
utilized by Morgan Stanley Capital International 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). However, the Company may use a different rate
from the rate used by MSCI in the event the Adviser concludes that such rate is
more appropriate and, as of the date of this Statement of Additional
Information, is using a different rate than the MSCI in computing the net asset
value of the Malaysia (Free) WEBS Index Series. Any such use of a different rate
than MSCI may adversely affect a WEBS Index Series ability to track its
benchmark MSCI Index.
Continuous Offering. The method by which Creation Units of WEBS are
created and traded may raise certain issues under applicable securities laws.
Because new Creation Units of WEBS are issued and sold by the Fund on an ongoing
basis, at any point a "distribution", as such term is used in the Securities Act
of 1933, may occur. Broker-dealers and other persons are cautioned that some
activities on their part may, depending on the circumstances, result in their
being deemed participants in a distribution in a manner which could render them
statutory underwriters and subject them to the prospectus delivery and liability
provisions of the Securities Act. For example, a broker-dealer firm or its
client may be deemed a statutory underwriter if it takes Creation Units after
placing an order with the Distributor, breaks them down into constituent WEBS,
and sells some or all of the WEBS comprising such Creation Units directly to its
customers; or if it chooses to couple the creation of a supply of New WEBS with
an active selling effort involving solicitation of secondary market demand for
WEBS. A determination of whether a person is an underwriter for the purposes of
the Securities Act depends upon all the facts and circumstances pertaining to
that person's activities. Thus, the examples mentioned above should not be
considered a complete description of all the activities that could lead to a
categorization as an underwriter. Broker-dealer firms should also note that
dealers who are effecting transactions in WEBS, whether or not participating in
the distribution of WEBS, are generally required to deliver a prospectus. This
is because the prospectus delivery exemption in Section 4(3) of the Securities
Act is not available in respect of such transactions as a result of Section
24(d) of the 1940 Act. The Company has, however, applied to the Securities and
Exchange Commission for an exemption from this prospectus delivery obligation in
ordinary WEBS secondary market transactions under certain circumstances, on the
condition that WEBS purchasers are provided with a WEBS product description. If
the SEC granted the Company this relief, broker-dealer firms should note that
dealers who are not "underwriters" but are participating in a distribution (as
contrasted to ordinary secondary market transaction), and thus dealing with WEBS
that are part of an "unsold allotment" within the meaning of section 4(3)(C) of
the Securities Act, would be unable to take advantage of the prospectus delivery
exemption provided by section 4(3) of the Securities Act. Firms that incur a
prospectus-delivery obligation with respect to WEBS are reminded that under
Securities Act Rule 153 a prospectus delivery obligation under Section 5(b)(2)
of the Securities Act owed to an exchange member in connection with a sale on
the exchange is satisfied by the fact that the WEBS Index Series' prospectus is
available at the exchange (i.e., the AMEX) upon request. The prospectus delivery
mechanism provided in Rule 153 is only available with respect to transactions on
an exchange and not with respect to "upstairs" transactions.
TAXES
The Company on behalf of each WEBS Index Series has the right to reject
an order for a purchase of WEBS if the purchaser (or group of purchasers) would,
upon obtaining the WEBS so ordered, own 80% or more of the outstanding WEBS of a
given WEBS Index Series and if, pursuant to section 351 of the Internal Revenue
Code, the respective WEBS Index Series would have a basis in the securities
different from the market value of such securities on the date of deposit. The
Company also has the right to require information necessary to determine
beneficial share ownership for purposes of the 80% determination. See "Purchase
and Issuance of WEBS in Creation Units."
Each WEBS Index Series intends to qualify for and to elect treatment as
a separate RIC under Subchapter M of the Internal Revenue Code. To qualify for
treatment as a RIC, a company must annually distribute at least 90 percent of
its net investment company taxable income (which includes dividends, interest
and net short-term capital
73
<PAGE>
gains) and meet several other requirements. Among such other requirements are
the following: (1) at least 90 percent of the company's annual gross income must
be derived from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock or securities or foreign
currencies, or other income (including gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies; and (2) at the close of each quarter of the company's
taxable year, (a) at least 50 percent of the market value of the company's total
assets must be represented by cash and cash items, U.S. government securities,
securities of other regulated investment companies and other securities, with
such other securities limited for purposes of this calculation in respect of any
one issuer to an amount not greater than 5% of the value of the company's assets
and not greater than 10% of the outstanding voting securities of such issuer,
and (b) not more than 25 percent of the value of its total assets may be
invested in the securities of any one issuer or of two or more issuers that are
controlled by the company (within the meaning of Section 851(b)(3)(B) of the
Internal Revenue Code) and that are engaged in the same or similar trades or
businesses or related trades or businesses (other than U.S. government
securities or the securities of other regulated investment companies).
Each WEBS Index Series may be subject to foreign income taxes withheld
at source. Each WEBS Index Series will elect to "pass through" to its investors
the amount of foreign income taxes paid by the WEBS Index Series provided that
the investor held the WEBS Index Series, and the WEBS Index Series held the
security, on the dividend settlement date and for at least fourteen additional
days immediately before and/or thereafter, with the result that each investor
will (i) include in gross income, even though not actually received, the
investor's pro rata share of the WEBS Index Series' foreign income taxes, and
(ii) either deduct (in calculating U.S. taxable income) or credit (in
calculating U.S. federal income tax) the investor's pro rata share of the WEBS
Index Series' foreign income taxes. A foreign tax credit may not exceed the
investor's U.S. federal income tax otherwise payable with respect to the
investor's foreign source income. For this purpose, each shareholder must treat
as foreign source gross income (i) his proportionate share of foreign taxes paid
by the WEBS Index Series and (ii) the portion of any dividend paid by the WEBS
Index Series which represents income derived from foreign sources; the WEBS
Index Series' gain from the sale of securities will generally be treated as U.S.
source income. This foreign tax credit limitation is applied separately to
separate categories of income; dividends from the WEBS Index Series will be
treated as "passive" or "financial services" income for this purpose. The effect
of this limitation may be to prevent investors from claiming as a credit the
full amount of their pro rata share of the WEBS Index Series' foreign income
taxes.
If any WEBS Index Series owns shares in certain foreign investment
entities, referred to as "passive foreign investment companies," the WEBS Index
Series will be subject to one of the following special tax regimes: (i) the WEBS
Index Series is liable for U.S. federal income tax, and an additional charge in
the nature of interest, on a portion of any "excess distribution" from such
foreign entity or any gain from the disposition of such shares, even if the
entire distribution or gain is paid out by the WEBS Index Series as a dividend
to its shareholders; (ii) if the WEBS Index Series were able and elected to
treat a passive foreign investment company as a "qualified electing fund," the
WEBS Index Series would be required each year to include in income, and
distribute to shareholders in accordance with the distribution requirements set
forth above, the WEBS Index Series' pro rata share of the ordinary earnings and
net capital gains of the passive foreign investment company, whether or not such
earnings or gains are distributed to the WEBS Index Series or (iii) the WEBS
Index Series is entitled to mark-to-market annually the shares of the passive
foreign investment company, and is required to distribute to shareholders any
such mark-to-market gains in accordance with the distribution requirements set
forth above.
A WEBS Index Series will be subject to a 4 percent excise tax on
certain undistributed income if it does not distribute to its shareholders in
each calendar year at least 98 percent of its ordinary income for the calendar
year plus 98 percent of its capital gain net income for the twelve months ended
October 31 of such year. Each WEBS Index Series intends to declare and
distribute dividends and distributions in the amounts and at the times necessary
to avoid the application of this 4 percent excise tax.
An investor in a WEBS Index Series that is a foreign corporation or an
individual who is a nonresident alien for U.S. tax purposes will be subject to
significant adverse U.S. tax consequences. For example, dividends paid out of a
WEBS Index Series' investment company taxable income will generally be subject
to U.S. federal withholding tax at a rate of 30% (or lower treaty rate if the
foreign investor is eligible for the benefits of an income tax treaty). Foreign
investors are urged to consult their own tax advisors regarding the U.S. tax
treatment, in their particular circumstances, of ownership of shares in a WEBS
Index Series.
74
<PAGE>
The foregoing discussion is a summary only and is not intended as a
substitute for careful tax planning. Purchasers of shares of the Company should
consult their own tax advisors as to the tax consequences of investing in such
shares, including under state, local and other tax laws. Finally, the foregoing
discussion is based on applicable provisions of the Internal Revenue Code,
regulations, judicial authority and administrative interpretations in effect on
the date hereof. Changes in applicable authority could materially affect the
conclusions discussed above, and such changes often occur.
PERFORMANCE INFORMATION
The performance of the WEBS Index Series may be quoted in
advertisements, sales literature or reports to shareholders in terms of average
annual total return, cumulative total return and yield.
Quotations of average annual total return are expressed in terms of the
average annual rate of return of a hypothetical investment in a WEBS Index
Series over periods of 1, 5 and 10 years (or the life of a WEBS Index Series, if
shorter). Such total return figures will reflect the deduction of a proportional
share of such WEBS Index Series' expenses on an annual basis, and will assume
that all dividends and distributions are reinvested when paid.
Total return is calculated according to the following formula: P(1 +
T)n = ERV (where P = a hypothetical initial payment of $1,000, T = the average
annual total return, n = the number of years and ERV = the ending redeemable
value of a hypothetical $1,000 payment made at the beginning of the 1, 5 or 10
year period). The total return for the period from commencement of operations to
August 31, 1996 (not annualized) and for the fiscal years ended August 31, 1997,
1998 and 1999, respectively, for each of the following WEBS Index Series was:
Australia WEBS Index Series 3.88%, 6.23%, (23.11)% and 32.09%; Austria WEBS
Index Series (3.39)%, 1.06%, 2.16% and (8.69)%; Belgium WEBS Index Series 5.01%,
9.26%, 39.42% and (1.00)%; Canada WEBS Index Series 4.63%, 28.50%, (21.69)% and
39.71%; France WEBS Index Series 4.95%, 16.60%, 34.77% and 21.01%; Germany WEBS
Index Series 4.00%, 20.51%, 25.69% and 7.04%; Hong Kong WEBS Index Series 3.22%,
17.80%, (54.22)% and 90.51%; Italy WEBS Index Series 4.11%, 23.37%, 47.66% and
5.14%; Japan WEBS Index Series (3.11)%, (11.97)%, (33.38)% and 58.14%; Malaysia
(Free) WEBS Index Series 4.28%, (40.20)%, (73.57)% and 185.81%; Mexico (Free)
WEBS Index Series 15.93%, 35.21%, (44.18)% and 66.92%; Netherlands WEBS Index
Series 11.19%, 28.04%, 17.41% and 8.98%; Singapore (Free) WEBS Index Series
(6.73)%, (23.48)%, (61.29)% and 144.52%; Spain WEBS Index Series 8.45%, 39.15%,
32.58% and 13.39%; Sweden WEBS Index Series 14.13%, 30.10%, 5.48% and 25.09%;
Switzerland WEBS Index Series 2.60%, 16.69%, 21.24% and 1.47%; and United
Kingdom WEBS Index Series 10.41%, 30.48%, 14.98% and 15.33%. As of the date of
this SAI, the Brazil (Free), EMU, Korea, South Africa, Taiwan and USA WEBS Index
Series have not commenced investment operations.
Quotations of a cumulative total return will be calculated for any
specified period by assuming a hypothetical investment in a WEBS Index Series on
the date of the commencement of the period and will assume that all dividends
and distributions are reinvested on ex date. However, currently there is no
dividend reinvestment option available to shareholders of WEBS and such
calculation is provided for informational purposes only. The net increase or
decrease in the value of the investment over the period will be divided by its
beginning value to arrive at cumulative total return. Total return calculated in
this manner will differ from the calculation of average annual total return in
that it is not expressed in terms of an average rate of return.
The yield of a WEBS Index Series is the net annualized yield based on a
specified 30-day (or one month) period assuming a semiannual compounding of
income. Included in net investment income is the amortization of market premium
or accretion of market and original issue discount. Yield is calculated by
dividing the net investment income per share earned during the period by the
maximum offering price per share on the last day of the period, according to the
following formula: YIELD = 2[(a-b/cd + 1)6-1] (where a = dividends and interest
earned during the period, b = expenses accrued for the period (net of
reimbursements), c = the average daily number of shares outstanding during the
period that were entitled to receive dividends and d = the maximum offering
price per share on the last day of the period).
Quotations of cumulative total return, average annual total return or
yield reflect only the performance of a hypothetical investment in a WEBS Index
Series during the particular time period on which the calculations are
75
<PAGE>
based. Such quotations for a WEBS Index Series will vary based on changes in
market conditions and the level of such WEBS Index Series' expenses, and no
reported performance figure should be considered an indication of performance
which may be expected in the future.
The cumulative and average total returns and yields do not take into
account federal or state income taxes which may be payable; total returns and
yields would, of course, be lower if such charges were taken into account.
A comparison of the quoted non-standard performance offered for various
investments is valid only if performance is calculated in the same manner. Since
there are different methods for calculating performance, investors should
consider the effects of the methods used to calculate performance when comparing
performance of the Company with performance quoted with respect to other
investment companies or types of investments.
Because some or all of the Company's investments are denominated in
foreign currencies, the strength or weakness of the U.S. dollar as against these
currencies may account for part of the Company's investment performance.
Historical information on the value of the dollar versus foreign currencies may
be used from time to time in advertisements concerning the Company. Such
historical information is not indicative of future fluctuations in the value of
the U.S. dollar against these currencies. In addition, marketing materials may
cite country and economic statistics and historical stock market performance
information for any of the countries in which the Company invests, including,
but not limited to, the following: population growth, gross domestic product,
inflation rate, average stock market price-earnings ratios and the total value
of stock markets. Sources for such statistics may include official publications
of various foreign governments and exchanges.
From time to time, in advertising and marketing literature, the
Company's performance may be compared to the performance of broad groups of
open-end and closed-end investment companies with similar investment goals, as
tracked by independent organizations such as Investment Company Data, Inc.,
Lipper Analytical Services, Inc., CDA Investment Technologies, Inc.,
Morningstar, Inc., Value Line Mutual Fund Survey and other independent
organizations. When these organizations' tracking results are used, the Company
will be compared to the appropriate fund category, that is, by fund objective
and portfolio holdings, or to the appropriate volatility grouping, where
volatility is a measure of a fund's risk.
In addition, in connection with the communication of its performance to
current or prospective shareholders, the Company also may compare those figures
to the performance of certain unmanaged indices which may assume the
reinvestment of dividends or interest but generally do not reflect deductions
for administrative and management costs. Examples of such indices include, but
are not limited to the following:
o Dow Jones Industrial Average
o Consumer Price Index
o Standard & Poor's 500 Composite Stock Price Index (S&P 500)
o NASDAQ OTC Composite Index
o NASDAQ Industrials Index
o International Finance Corporation's (Global) Composite and
(Investable) Composite Indices
o Morgan Stanley Capital International Indices
o NASDAQ Composite Index
o Wilshire 5000 Stock Index
In addition, the Company from time to time may compare the results of
each WEBS Index Series to the following national benchmarks:
COUNTRY NATIONAL INDEX
----------------------------------------------
Australia All Ordinaries
Austria Vienna Stock Exchange
Belgium Brussels Stock Exchange
Brazil Sao Paulo Bovespa
Canada Toronto 300
EMU Euro Stoxx 50
76
<PAGE>
COUNTRY NATIONAL INDEX
----------------------------------------------
France CAC 40
Germany DAX
Hong Kong Hang Seng
Italy BCI
Japan Nikkei 225
Korea Composite
Malaysia KLSE
Mexico IPC
Netherlands CBS All Share
Singapore SES All
South Africa Johannesburg All-Share
Spain MA Madrid Index
Sweden Aff. General
Switzerland Swiss Market Index
Thailand SET
U.K. FTSE100
From time to time, the Company may use in marketing materials a graph
entitled "The Efficient Frontier," which illustrates the historical risks and
returns of selected unmanaged indices which track the performance of various
combinations of United States and international securities for a certain time
period, such as twenty years. A twenty year graph, for example, shall use twenty
year annualized international returns represented by the MSCI Europe,
Australasia and Far East (EAFE) Index and twenty year annualized United States
returns represented by the S&P 500 Index. Risk is measured by the standard
deviation in overall performance within each index. Data presented in the graph
shall be provided by Ibbotson Associates, Inc. Performance of an index is
historical and does not represent performance of the Company, and is not a
guarantee of future results. For an example of the use of an "Efficient
Frontier" graph, please see "The Case for International Index Investing" at
Appendix C of this Statement of Additional Information.
Evaluation of Company performance of the WEBS Index Series or other
relevant statistical information made by independent sources may also be used in
advertisements and sales literature concerning the Company, including reprints
of, or selections from, editorials or articles about the Company. Sources for
Company performance information and articles about the Company include, but are
not limited to, the following:
American Association of Individual Investors' Journal, a monthly
publication of the AAII that includes articles on investment analysis
techniques.
Barron's, a Dow Jones and Company, Inc. business and financial weekly
that periodically reviews investment company performance data.
Business Week, a national business weekly that periodically reports the
performance rankings and ratings of a variety of investment companies investing
abroad.
CDA Investment Technologies, an organization that provides performance
and ranking information through examining the dollar results of hypothetical
mutual fund investments and comparing these results against appropriate indices.
Forbes, a national business publication that from time to time reports
the performance of specific investment companies.
Fortune, a national business publication that periodically rates the
performance of a variety of investment companies.
The Frank Russell Company, a West-Coast investment management firm that
periodically evaluates international stock markets and compares foreign equity
market performance to U.S. stock market performance.
77
<PAGE>
Ibbotson Associates, Inc., a company specializing in investment
research and data.
Investment Company Data, Inc., an independent organization that
provides performance ranking information for broad classes of mutual funds.
Investor's Business Daily, a daily newspaper that features financial,
economic, and business news.
Kiplinger's Personal Finance Magazine, a monthly investment advisory
publication that periodically features the performance of a variety of
securities.
Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis, a
weekly publication of industry-wide mutual fund averages by type of fund.
Money, a monthly magazine that from time to time features both specific
funds and the mutual fund industry as a whole.
Morgan Stanley International, an integrated investment banking firm
that compiles statistical information.
The New York Times, a nationally distributed newspaper that regularly
covers financial news.
Smart Money, a national personal finance magazine published monthly by
Dow Jones & Company, Inc. and The Hearst Corporation that focuses on ideas for
investing, spending and saving.
Value Line Mutual Fund Survey, an independent organization that
provides biweekly performance and other information on mutual funds.
The Wall Street Journal, a Dow Jones and Company, Inc. newspaper that
regularly covers financial news.
Wiesenberger Investment Companies Services, an annual compendium of
information about mutual funds and other investment companies, including
comparative data on funds' backgrounds, management policies, salient features,
management results, income and dividend records and price ranges.
Worth, a national publication distributed ten times per year by Capital
Publishing Company, a subsidiary of Fidelity Investments that focuses on
personal financial journalism.
COUNSEL AND INDEPENDENT AUDITORS
Counsel. Sullivan & Cromwell, 125 Broad Street, New York, New York
10004, are counsel to the Company and have passed upon the validity of the
Company's shares.
Independent Auditors. Ernst & Young LLP, 787 Seventh Avenue, New York,
New York 10019, serve as the independent auditors of the Company.
FINANCIAL STATEMENTS
The audited financial statements and notes thereto in the Company's
Annual Report to Shareholders for the fiscal year ended August 31, 1999 (the
"1999 Annual Report") are incorporated in this Statement of Additional
Information by reference. No other parts of the 1999 Annual Report are
incorporated by reference herein. The financial statements included in the 1999
Annual Report have been audited by the Company's independent auditors, Ernst &
Young LLP, whose report thereon is incorporated herein by reference. Additional
copies of the 1999 Annual Report may be obtained at no charge by telephoning the
Distributor at 1-800-810-WEBS (9327).
78
<PAGE>
APPENDIX A-1
MSCI AUSTRALIA INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
TELSTRA CORP Telecommunications 26,725 12.39%
NATIONAL AUSTRALIA BANK Banking 22,383 10.37%
BROKEN HILL PROP CO Energy Sources 18,713 8.67%
NEWS CORP Broadcasting & Publishing 14,736 6.83%
NEWS CORP PLVO Broadcasting & Publishing 13,897 6.44%
WESTPAC BANKING Banking 11,302 5.24%
AMP LTD Insurance 10,790 5.00%
COLES MYER Merchandising 6,425 2.98%
BRAMBLES INDUSTRIES Business & Public Services 6,301 2.92%
LEND LEASE Real Estate 6,136 2.84%
WMC Metals - Non-Ferrous 5,039 2.34%
FOSTERS BREWING GROUP Beverages & Tobacco 5,038 2.33%
RIO TINTO LTD Metals - Non-Ferrous 4,957 2.30%
WOOLWORTHS LTD Merchandising 4,009 1.86%
COCA-COLA AMATIL Beverages & Tobacco 3,677 1.70%
COLONIAL Financial Services 3,480 1.61%
AMCOR Forest Products & Paper 3,320 1.54%
WESTFIELD TRUST Real Estate 3,064 1.42%
CSR Building Materials & Components 2,639 1.22%
GENERAL PROPERTY TRUST Real Estate 2,408 1.12%
WESFARMERS Multi-Industry 2,393 1.11%
SOUTHCORP HOLDINGS Multi-Industry 2,321 1.08%
AUSTRALIAN GAS LIGHT CO Utilities - Electrical & Gas 2,133 0.99%
PIONEER INTERNATIONAL Building Materials & Components 2,100 0.97%
TABCORP HOLDINGS Leisure & Tourism 2,075 0.96%
SANTOS Energy Sources 1,806 0.84%
BORAL Building Materials & Components 1,725 0.80%
NORTH Metals - Non-Ferrous 1,677 0.78%
CSL Health & Personal Care 1,565 0.73%
SMITH (HOWARD) Multi-Industry 1,525 0.71%
PACIFIC DUNLOP Multi-Industry 1,524 0.71%
ORICA Chemicals 1,401 0.65%
QBE INSURANCE GROUP Insurance 1,384 0.64%
MIM HOLDINGS Metals - Non-Ferrous 1,328 0.62%
ROTHMANS (AUSTRALIA) Beverages & Tobacco 1,270 0.59%
NORMANDY MINING Gold Mines 1,224 0.57%
GOODMAN FIELDER Food & Household Products 1,167 0.54%
SUNCORP-METWAY Financial Services 1,114 0.52%
MAYNE NICKLESS Business & Public Services 1,113 0.52%
HARDIE (JAMES) IND Building Materials & Components 1,081 0.50%
FAULDING (F.H.) & CO Health & Personal Care 1,049 0.49%
LEIGHTON HOLDINGS Construction & Housing 1,044 0.48%
GIO AUSTRALIA HLDGS Insurance 1,016 0.47%
STOCKLAND TRUST Real Estate 969 0.45%
FUTURIS CORP Misc. Materials & Commodities 757 0.35%
SCHRODERS PROPERTY FUND Real Estate 687 0.32%
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
NEWCREST MINING Gold Mines 571 0.26%
ILUKA RESOURCES(WESTRALI Misc. Materials & Commodities 531 0.25%
STAR CITY HOLDINGS Leisure & Tourism 528 0.24%
EMAIL Appliances & Household Durables 526 0.24%
JONES (DAVID) Merchandising 308 0.14%
DELTA GOLD Gold Mines 302 0.14%
SONS OF GWALIA Gold Mines 274 0.13%
METAL MANUFACTURES Industrial Components 153 0.07%
RESOLUTE Gold Mines 80 0.04%
</TABLE>
A-2
<PAGE>
APPENDIX A-2
MSCI AUSTRIA INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) ($)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
BANK AUSTRIA Banking 6,011 25.74%
VERBUND OESTERR ELEK A Utilities - Electrical & Gas 4,623 19.79%
OMV AG Energy Sources 2,708 11.59%
WIENERBERGER BAUSTOFF Building Materials & Components 1,650 7.06%
VA TECHNOLOGIE Machinery & Engineering 1,323 5.66%
GENERALI HOLDING VIENNA Insurance 1,318 5.64%
AUSTRIA TABAK Beverages & Tobacco 1,199 5.13%
FLUGHAFEN WIEN Business & Public Services 831 3.56%
AUSTRIAN AIRLINES Transportation - Airlines 792 3.39%
MAYR-MELNHOF KARTON Misc. Materials & Commodities 575 2.46%
BOEHLER-UDDEHOLM Metals - Steel 529 2.26%
BBAG OESTERR BRAU STAMM Beverages & Tobacco 409 1.75%
RHI Misc. Materials & Commodities 395 1.69%
BWT STAMM Machinery & Engineering 308 1.32%
LENZING Chemicals 206 0.88%
BAU HOLDING STAMM Construction & Housing 157 0.67%
UNIVERSALE-BAU Construction & Housing 152 0.65%
AUSTRIA MIKRO SYSTEME Electronic Comp. & Instruments 113 0.48%
BAU HOLDING VORZUG Construction & Housing 58 0.25%
</TABLE>
A-3
<PAGE>
APPENDIX A-3
MSCI BELGIUM INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
FORTIS BELGIUM Insurance 24,585 22.70%
ELECTRABEL Utilities - Electrical & Gas 18,199 16.80%
KBC BANCASSURANCE Banking 16,633 15.36%
TRACTEBEL Utilities - Electrical & Gas 15,518 14.33%
UCB (GROUPE) Health & Personal Care 6,181 5.71%
SOLVAY Chemicals 5,928 5.47%
GROUPE BRUXELLES LAMBERT Multi-Industry 4,668 4.31%
DELHAIZE-LE LION Merchandising 4,421 4.08%
COLRUYT Merchandising 2,632 2.43%
D'IETEREN Automobiles 2,570 2.37%
CBR (CIMENTERIES) Building Materials & Components 2,098 1.94%
BARCO Electronic Comp. & Instruments 1,712 1.58%
BEKAERT Industrial Components 1,040 0.96%
UNION MINIERE Metals - Non-Ferrous 1,026 0.95%
GLAVERBEL (GROUPE) Misc. Materials & Commodities 727 0.67%
CMB Transportation - Shipping 382 0.35%
</TABLE>
A-4
<PAGE>
APPENDIX A-4
MSCI BRAZIL (FREE) INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
VALE DO RIO DOCE PNA Metals - Steel 8,630 12.73%
ELETROBRAS ON Utilities - Electrical & Gas 7,054 10.41%
PETROBRAS PN Energy Sources 6,056 8.93%
TELESP PARTICIPACOES PN Telecommunications 3,471 5.12%
TELE NORTE LESTE PART.PN Telecommunications 3,395 5.01%
CEMIG PN Utilities - Electrical & Gas 2,454 3.62%
CERVEJARIA BRAHMA PN Beverages & Tobacco 2,447 3.61%
BANCO ITAU PN Banking 2,383 3.52%
TELE CENTRO SUL PART. PN Telecommunications 2,245 3.31%
EMBRATEL PART. PN Telecommunications 2,201 3.25%
ARACRUZ CELULOSE PNB Forest Products & Paper 2,164 3.19%
BANCO BRADESCO PN Banking 2,019 2.98%
TELESP CELULAR PART. PN Telecommunications 1,916 2.83%
CSN SIDERURGICA NAC'L ON Metals - Steel 1,739 2.56%
SOUZA CRUZ ON Beverages & Tobacco 1,721 2.54%
TELESP PARTICIPACOES ON Telecommunications 1,329 1.96%
ELETROBRAS PNB Utilities - Electrical & Gas 1,294 1.91%
VOTORANTIM CELULOSE PN Forest Products & Paper 1,199 1.77%
PAULISTA FORCA E LUZ ON Utilities - Electrical & Gas 1,113 1.64%
TELE NORTE LESTE PART.ON Telecommunications 1,090 1.61%
CERVEJARIA BRAHMA ON Beverages & Tobacco 1,085 1.60%
TELE SUD. CELU PART. PN Telecommunications 995 1.47%
EMBRATEL PART. ON Telecommunications 680 1.00%
UNIBANCO PN Banking 669 0.99%
USIMINAS PNA (NEW) Metals - Steel 652 0.96%
TELE CENTRO SUL PART. ON Telecommunications 593 0.88%
BANESPA PN Banking 581 0.86%
TELESP CELULAR PART. ON Telecommunications 558 0.82%
WHITE MARTINS ON Chemicals 422 0.62%
KLABIN PAPEL CELULOSE PN Forest Products & Paper 369 0.54%
FOSFERTIL PN Chemicals 341 0.50%
GERDAU METALURGICA PN Metals - Steel 306 0.45%
IPIRANGA (PETROLEO) PN Energy Sources 304 0.45%
TELE SUD. CELU PART. ON Telecommunications 302 0.45%
WEG PN Electrical & Electronics 280 0.41%
COPENE PNA Chemicals 278 0.41%
PERDIGAO PN Food & Household Products 274 0.40%
GERASUL ON Utilities - Electrical & Gas 271 0.40%
PIRELLI PNEUS PN Industrial Components 235 0.35%
CIMENTO PORTLAND ITAU PN Building Materials & Components 216 0.32%
COTEMINAS PN Textiles & Apparel 202 0.30%
VIDRARIA SANTA MARINA ON Misc. Materials & Commodities 196 0.29%
DURATEX PN Building Materials & Components 188 0.28%
BRASMOTOR PN Appliances & Household Durables 173 0.26%
CEVAL ALIMENTOS PN Food & Household Products 157 0.23%
PIRELLI CABOS PN Industrial Components 135 0.20%
</TABLE>
A-5
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
CAEMI METAL PN Metals - Steel 125 0.18%
LOJAS AMERICANAS PN Merchandising 115 0.17%
BOMBRIL CIRIO PN Food & Household Products 110 0.16%
BELGO-MINEIRA ON Metals - Non-Ferrous 106 0.16%
MAHLE-MET. LEVE PN(METAL Industrial Components 103 0.15%
BELGO-MINEIRA PN Metals - Non-Ferrous 90 0.13%
GUARARAPES CONFECCOES ON Textiles & Apparel 88 0.13%
PARANAPANEMA PN Metals - Non-Ferrous 84 0.12%
LOJAS RENNER PN Merchandising 79 0.12%
MARCOPOLO PN Industrial Components 79 0.12%
ALPARGATAS SAO PAULO PN Textiles & Apparel 71 0.10%
GERASUL PNB Utilities - Electrical & Gas 60 0.09%
UNIPAR PNB Chemicals 55 0.08%
LOJAS AMERICANAS ON Merchandising 54 0.08%
SANTISTA ALIMENTOS ON Food & Household Products 50 0.07%
IOCHPE-MAXION PN Machinery & Engineering 44 0.06%
MANNESMANN ON Metals - Steel 34 0.05%
BARDELLA PN Machinery & Engineering 34 0.05%
VARIG PN Transportation - Airlines 33 0.05%
</TABLE>
A-6
<PAGE>
APPENDIX A-5
MSCI CANADA INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C>
NORTEL NETWKS(NORTH TELE Electrical & Electronics 54,989 16.19%
BCE INC Telecommunications 29,961 8.82%
SEAGRAM CO Beverages & Tobacco 21,192 6.24%
THOMSON CORP Broadcasting & Publishing 18,200 5.36%
ROYAL BANK OF CANADA Banking 13,411 3.95%
IMASCO Multi-Industry 11,494 3.38%
BANK NOVA SCOTIA Banking 10,704 3.15%
BOMBARDIER B Aerospace & Military Technology 10,612 3.12%
BANK MONTREAL Banking 9,350 2.75%
IMPERIAL OIL Energy Sources 9,079 2.67%
CANADIAN IMPERIAL BANK Banking 8,973 2.64%
CANADIAN PACIFIC Multi-Industry 7,832 2.31%
BARRICK GOLD CORP Gold Mines 7,593 2.24%
ALCAN ALUMINIUM Metals - Non-Ferrous 7,211 2.12%
TRANSCANADA PIPELINES Utilities - Electrical & Gas 6,546 1.93%
NEWBRIDGE NETWORKS CORP Electrical & Electronics 4,907 1.44%
WESTON (GEORGE) Merchandising 4,722 1.39%
SUNCOR ENERGY Energy Sources 4,546 1.34%
ALBERTA ENERGY CO Energy Sources 4,317 1.27%
PETRO-CANADA Energy Sources 4,080 1.20%
BCT.TELUS COMMUNI. VTG Telecommunications 3,889 1.14%
MAGNA INTERNATIONAL A Industrial Components 3,836 1.13%
TALISMAN ENERGY Energy Sources 3,490 1.03%
POWER CORP OF CANADA Financial Services 3,450 1.02%
PLACER DOME Gold Mines 3,418 1.01%
INCO COMMON Metals - Non-Ferrous 3,411 1.00%
ENBRIDGE Energy Sources 3,329 0.98%
NORANDA Metals - Non-Ferrous 3,324 0.98%
ROGERS COMMUNICATIONS B Broadcasting & Publishing 3,143 0.93%
POTASH CORP SASKATCHEWAN Chemicals 3,028 0.89%
CANADIAN OCCIDENTAL Energy Sources 2,535 0.75%
CANADIAN NAT RESOURCES Energy Sources 2,474 0.73%
EDPERBRASCAN CORP A Multi-Industry 2,473 0.73%
ABITIBI-CONSOLIDATED Forest Products & Paper 2,359 0.69%
NATIONAL BANK OF CANADA Banking 2,285 0.67%
TRANSALTA CORP Utilities - Electrical & Gas 2,251 0.66%
FAIRFAX FINANCIAL HLDGS Insurance 2,233 0.66%
WESTCOAST ENERGY Utilities - Electrical & Gas 2,221 0.65%
RENAISSANCE ENERGY Energy Sources 2,201 0.65%
LAIDLAW Business & Public Services 2,080 0.61%
DOMTAR Forest Products & Paper 2,004 0.59%
CANADIAN TIRE CORP A Merchandising 1,985 0.58%
MACMILLAN BLOEDEL Forest Products & Paper 1,826 0.54%
ANDERSON EXPLORATION Energy Sources 1,801 0.53%
POCO PETROLEUMS Energy Sources 1,758 0.52%
</TABLE>
A-7
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C>
QUEBECOR B Broadcasting & Publishing 1,630 0.48%
COMINCO Metals - Non-Ferrous 1,474 0.43%
DOFASCO Metals - Steel 1,452 0.43%
GULF CANADA RESOURCES Energy Sources 1,426 0.42%
BCT.TELUS COMMUNI. N-VTG Telecommunications 1,278 0.38%
AGRIUM Chemicals 1,148 0.34%
AIR CANADA COMMON Transportation - Airlines 1,141 0.34%
MDS B Health & Personal Care 1,124 0.33%
CAMECO CORP Metals - Non-Ferrous 1,078 0.32%
MOLSON A Beverages & Tobacco 1,011 0.30%
HUDSON'S BAY CO Merchandising 970 0.29%
UNITED DOMINION IND Machinery & Engineering 943 0.28%
TECK CORP B Metals - Non-Ferrous 927 0.27%
RIO ALGOM Metals - Non-Ferrous 924 0.27%
MOORE CORP Business & Public Services 833 0.25%
STELCO A Metals - Steel 813 0.24%
SOBEYS Merchandising 676 0.20%
CAE Aerospace & Military Technology 664 0.20%
RANGER OIL Energy Sources 574 0.17%
METHANEX CORP Chemicals 511 0.15%
CCL INDUSTRIES B Misc. Materials & Commodities 399 0.12%
COREL CORP Business & Public Services 338 0.10%
AGNICO-EAGLE MINES Gold Mines 333 0.10%
CO-STEEL Metals - Steel 291 0.09%
EXTENDICARE SV Business & Public Services 269 0.08%
INCO VBN Metals - Non-Ferrous 227 0.07%
COTT CORP Beverages & Tobacco 217 0.06%
CAMBIOR Gold Mines 192 0.06%
ECHO BAY MINES Gold Mines 188 0.06%
SPAR AEROSPACE Aerospace & Military Technology 114 0.03%
</TABLE>
A-8
<PAGE>
APPENDIX A-6
MSCI EMU INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
ROYAL DUTCH PETROLEUM CO Energy Sources 131,818 4.42%
DEUTSCHE TELEKOM Telecommunications 107,821 3.61%
NOKIA CORP Electrical & Electronics 101,123 3.39%
FRANCE TELECOM Telecommunications 79,762 2.67%
DAIMLERCHRYSLER Automobiles 75,177 2.52%
ALLIANZ Insurance 63,897 2.14%
MANNESMANN Telecommunications 58,849 1.97%
AEGON Insurance 58,233 1.95%
ING GROEP Financial Services 52,068 1.74%
TELEFONICA Telecommunications 51,020 1.71%
SIEMENS Electrical & Electronics 49,392 1.66%
ELF AQUITAINE Energy Sources 48,543 1.63%
ENI Energy Sources 48,166 1.61%
TOTAL FINA (TOTAL SA) Energy Sources 45,148 1.51%
AXA Insurance 43,881 1.47%
LOREAL Health & Personal Care 43,667 1.46%
VIVENDI Business & Public Services 41,761 1.40%
DEUTSCHE BANK NAMEN Banking 41,670 1.40%
UNILEVER NV CERT Food & Household Products 39,755 1.33%
TIM ORD Telecommunications 38,548 1.29%
CARREFOUR Merchandising 37,912 1.27%
TELECOM ITALIA ORD Telecommunications 37,281 1.25%
BSCH BCO SANTANDER CENTR Banking 36,843 1.23%
ABN AMRO HOLDING Banking 35,475 1.19%
PHILIPS ELECTRS (KON.) Appliances & Household Durables 34,938 1.17%
ASSICURAZIONI GENERALI Insurance 34,750 1.16%
MUENCHENER RUECKVERSICH. Insurance 33,265 1.11%
VEBA Utilities - Electrical & Gas 31,397 1.05%
BAYER Chemicals 31,381 1.05%
ALCATEL Electrical & Electronics 30,434 1.02%
SANOFI-SYNTHELABO Health & Personal Care 30,420 1.02%
LVMH Recreation, Other Consumer Goods 29,798 1.00%
BANCO BILBAO VIZCAYA Banking 27,721 0.93%
BASF Chemicals 27,596 0.92%
SUEZ LYONNAISE DES EAUX Business & Public Services 25,250 0.85%
REPSOL YPF Energy Sources 24,883 0.83%
FORTIS BELGIUM Insurance 24,585 0.82%
HYPOVEREINSBK(BAYER.HYPO Banking 24,089 0.81%
DRESDNER BANK Banking 23,526 0.79%
AHOLD (KON.) Merchandising 22,528 0.75%
UNICREDITO ITALIANO ORD Banking 22,472 0.75%
SAP STAMM Business & Public Services 21,391 0.72%
KPN (KON.) Telecommunications 21,342 0.72%
</TABLE>
A-9
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
ENDESA Utilities - Electrical & Gas 21,248 0.71%
SOCIETE GENERALE Banking 20,350 0.68%
PINAULT-PRINT.-REDOUTE Merchandising 20,343 0.68%
RWE STAMM Utilities - Electrical & Gas 20,010 0.67%
SAN PAOLO-IMI ORD Banking 18,885 0.63%
VOLKSWAGEN STAMM Automobiles 18,615 0.62%
ELECTRABEL Utilities - Electrical & Gas 18,199 0.61%
DANONE (GROUPE) Food & Household Products 18,112 0.61%
PROMODES Merchandising 18,057 0.61%
RHONE-POULENC Health & Personal Care 18,051 0.60%
SAP VORZUG Business & Public Services 17,210 0.58%
PARIBAS Banking 17,203 0.58%
BNP BANQUE NTLE PARIS Banking 16,833 0.56%
SAINT-GOBAIN Building Materials & Components 16,822 0.56%
KBC BANCASSURANCE Banking 16,633 0.56%
HEINEKEN NV Beverages & Tobacco 15,634 0.52%
TRACTEBEL Utilities - Electrical & Gas 15,518 0.52%
METRO STAMM Merchandising 15,125 0.51%
VIAG Utilities - Electrical & Gas 14,501 0.49%
AKZO NOBEL Chemicals 13,277 0.44%
IBERDROLA Utilities - Electrical & Gas 12,951 0.43%
CAP GEMINI SA Business & Public Services 12,904 0.43%
AIR LIQUIDE Chemicals 12,653 0.42%
BANCA COMMERCIALE ORD Banking 12,267 0.41%
FIAT ORD Automobiles 11,929 0.40%
TNT POST GROEP Business & Public Services 11,763 0.39%
THYSSEN KRUPP Metals - Steel 11,738 0.39%
LAFARGE (FRANCE) Building Materials & Components 11,248 0.38%
ARGENTARIA CORP BANCARIA Banking 11,162 0.37%
ALLIED IRISH BANKS Banking 11,155 0.37%
BANCA INTESA ORD Banking 10,888 0.36%
GAS NATURAL SDG Utilities - Electrical & Gas 10,533 0.35%
SCHNEIDER ELECTRIC Electrical & Electronics 10,520 0.35%
SONERA GROUP Telecommunications 10,501 0.35%
MEDIASET Broadcasting & Publishing 10,451 0.35%
WOLTERS KLUWER Broadcasting & Publishing 10,278 0.34%
EDP ELECTRICIDADE PORT Utilities - Electrical & Gas 10,140 0.34%
OLIVETTI ORD Telecommunications 10,121 0.34%
BORD TELECOM EIREANN Telecommunications 10,051 0.34%
INA Insurance 9,714 0.33%
PREUSSAG Multi-Industry 9,404 0.32%
PEUGEOT SA Automobiles 9,211 0.31%
UPM-KYMMENE Forest Products & Paper 9,205 0.31%
PORTUGAL TELECOM Telecommunications 8,740 0.29%
ACCOR Leisure & Tourism 8,714 0.29%
CRH Building Materials & Components 8,652 0.29%
CANAL + Broadcasting & Publishing 8,646 0.29%
BOUYGUES ORD Construction & Housing 7,971 0.27%
CASINO ORD Merchandising 7,889 0.26%
</TABLE>
A-10
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
ELSEVIER Broadcasting & Publishing 7,686 0.26%
SCHERING Health & Personal Care 7,490 0.25%
LUFTHANSA Transportation - Airlines 7,255 0.24%
VALEO Industrial Components 6,666 0.22%
LEGRAND ORD Electrical & Electronics 6,649 0.22%
UCB (GROUPE) Health & Personal Care 6,181 0.21%
THOMSON-CSF Aerospace & Military Technology 6,130 0.21%
BANK AUSTRIA Banking 6,011 0.20%
MICHELIN Industrial Components 5,965 0.20%
SOLVAY Chemicals 5,928 0.20%
MEDIOBANCA Banking 5,921 0.20%
MERCK KGAA Health & Personal Care 5,850 0.20%
BEIERSDORF Health & Personal Care 5,652 0.19%
GETRONICS Business & Public Services 5,515 0.18%
SODEXHO ALLIANCE Business & Public Services 5,497 0.18%
TIM RNC Telecommunications 5,438 0.18%
EDISON ORD Utilities - Electrical & Gas 5,303 0.18%
BCP BANCO COMERCIAL NOM Banking 5,230 0.18%
TELECOM ITALIA RNC Telecommunications 5,125 0.17%
HEIDELBERGER ZEMENT STAM Building Materials & Components 5,064 0.17%
LINDE Machinery & Engineering 5,043 0.17%
LAGARDERE Multi-Industry 4,918 0.16%
PIRELLI SPA ORD Industrial Components 4,762 0.16%
PECHINEY ORD A Metals - Non-Ferrous 4,747 0.16%
GROUPE BRUXELLES LAMBERT Multi-Industry 4,668 0.16%
VERBUND OESTERR ELEK A Utilities - Electrical & Gas 4,623 0.15%
DELHAIZE-LE LION Merchandising 4,421 0.15%
MERITA A Banking 4,394 0.15%
AMB AACHENER & MUNCH BET Insurance 4,362 0.15%
UNION ELECTRICA FENOSA Utilities - Electrical & Gas 4,345 0.15%
PERNOD RICARD Beverages & Tobacco 4,324 0.14%
DASSAULT SYSTEMES Business & Public Services 4,297 0.14%
ADIDAS-SALOMON Recreation, Other Consumer Goods 4,172 0.14%
ALITALIA Transportation - Airlines 4,145 0.14%
RAS ORD Insurance 3,990 0.13%
KARSTADT Merchandising 3,948 0.13%
MONTEDISON ORD Multi-Industry 3,919 0.13%
USINOR Metals - Steel 3,764 0.13%
SIDEL Machinery & Engineering 3,742 0.13%
MAN STAMM Machinery & Engineering 3,704 0.12%
VOLKSWAGEN VORZUG Automobiles 3,635 0.12%
FOMENTO CONST Y CONTR Construction & Housing 3,562 0.12%
TABACALERA Beverages & Tobacco 3,534 0.12%
ESSILOR INTERNATIONAL Health & Personal Care 3,520 0.12%
BENETTON GROUP Textiles & Apparel 3,492 0.12%
ERIDANIA BEGHIN-SAY Food & Household Products 3,436 0.12%
SMURFIT (JEFFERSON) Forest Products & Paper 3,086 0.10%
</TABLE>
A-11
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
HOCHTIEF Construction & Housing 3,039 0.10%
BANCO ESPIRITO SANTO Banking 2,980 0.10%
AUTOPISTAS CESA (ACESA) Business & Public Services 2,964 0.10%
ITALGAS Utilities - Electrical & Gas 2,913 0.10%
CONTINENTAL Industrial Components 2,901 0.10%
BIC Recreation, Other Consumer Goods 2,897 0.10%
IRISH LIFE&PER.(IRISH PE Financial Services 2,891 0.10%
SEITA Beverages & Tobacco 2,839 0.10%
JERONIMO MARTINS SGPS Merchandising 2,741 0.09%
SAGEM Electrical & Electronics 2,729 0.09%
OMV AG Energy Sources 2,708 0.09%
PATHE Leisure & Tourism 2,684 0.09%
COLRUYT Merchandising 2,632 0.09%
RWE VORZUG Utilities - Electrical & Gas 2,625 0.09%
TIETOENATOR (TIETO) Business & Public Services 2,609 0.09%
HAGEMEYER Wholesale & International Trade 2,583 0.09%
D'IETEREN Automobiles 2,570 0.09%
IMETAL Misc. Materials & Commodities 2,552 0.09%
AXA COLONIA KONZ STAMM Insurance 2,549 0.09%
EURAFRANCE Financial Services 2,428 0.08%
ALBA (CORP FINANCIERA) Multi-Industry 2,415 0.08%
ITALCEMENTI ORD Building Materials & Components 2,342 0.08%
SOL MELIA Leisure & Tourism 2,336 0.08%
BRISA AUTO-ESTRADAS PORT Business & Public Services 2,323 0.08%
CIMPOR CIMENTOS DE PORT Building Materials & Components 2,295 0.08%
BPI SGPS NOM Banking 2,269 0.08%
AGUAS DE BARCELONA Business & Public Services 2,258 0.08%
HOOGOVENS (KON.) Metals - Steel 2,233 0.07%
UNIONE IMMOBILIARE Real Estate 2,232 0.07%
NATEXIS BQ POP. Banking 2,162 0.07%
GRUPO DRAGADOS Construction & Housing 2,116 0.07%
KERRY GROUP A Food & Household Products 2,105 0.07%
CBR (CIMENTERIES) Building Materials & Components 2,098 0.07%
MONDADORI ORD Broadcasting & Publishing 2,085 0.07%
KLM Transportation - Airlines 2,032 0.07%
GECINA Real Estate 2,008 0.07%
RINASCENTE ORD Merchandising 2,004 0.07%
SAMPO INSURANCE CO A Insurance 1,991 0.07%
BANCA POPOLARE MILANO Banking 1,956 0.07%
PARMALAT FINANZIARIA Food & Household Products 1,947 0.07%
ACERINOX Metals - Steel 1,937 0.06%
BULGARI Recreation, Other Consumer Goods 1,891 0.06%
OCE Data Processing & Reproduction 1,782 0.06%
TECHNIP Machinery & Engineering 1,755 0.06%
METSO CORP(VALMET-RAUMA) Machinery & Engineering 1,722 0.06%
BARCO Electronic Comp. & Instruments 1,712 0.06%
UNIBAIL Real Estate 1,697 0.06%
SIMCO Real Estate 1,685 0.06%
GROUPE GTM Construction & Housing 1,670 0.06%
</TABLE>
A-12
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
RAISIO GROUP V Food & Household Products 1,668 0.06%
VEDIOR Business & Public Services 1,662 0.06%
WIENERBERGER BAUSTOFF Building Materials & Components 1,650 0.06%
OUTOKUMPU A Metals - Non-Ferrous 1,627 0.05%
FIAT PRIV Automobiles 1,626 0.05%
ZARDOYA OTIS Machinery & Engineering 1,604 0.05%
CLUB MEDITERRANEE Leisure & Tourism 1,555 0.05%
SGL CARBON Misc. Materials & Commodities 1,547 0.05%
BANCA INTESA RNC Banking 1,543 0.05%
ACS ACTIV. CONST. Y SVCS Construction & Housing 1,538 0.05%
DOUGLAS HOLDING Merchandising 1,529 0.05%
RYANAIR HOLDINGS Transportation - Airlines 1,523 0.05%
RAS RNC Insurance 1,496 0.05%
COFLEXIP Energy Equipment & Services 1,410 0.05%
BUHRMANN Wholesale & International Trade 1,335 0.04%
SONAE INVESTIMENTOS SGPS Merchandising 1,331 0.04%
VA TECHNOLOGIE Machinery & Engineering 1,323 0.04%
GENERALI HOLDING VIENNA Insurance 1,318 0.04%
IHC CALAND Construction & Housing 1,301 0.04%
SAI ORD Insurance 1,290 0.04%
FIAT RNC Automobiles 1,284 0.04%
INDEPENDENT NEWS & MEDIA Broadcasting & Publishing 1,256 0.04%
VALLEHERMOSO Real Estate 1,206 0.04%
AUSTRIA TABAK Beverages & Tobacco 1,199 0.04%
SEB Appliances & Household Durables 1,173 0.04%
CASINO ADP Merchandising 1,147 0.04%
MAPFRE (CORPORACION) Insurance 1,141 0.04%
KESKO B Wholesale & International Trade 1,140 0.04%
SIRTI Construction & Housing 1,139 0.04%
TELEPIZZA Leisure & Tourism 1,120 0.04%
CORTEFIEL Merchandising 1,119 0.04%
METROVACESA Real Estate 1,118 0.04%
BUDERUS Building Materials & Components 1,115 0.04%
ZODIAC Aerospace & Military Technology 1,100 0.04%
DYCKERHOFF VORZUG Building Materials & Components 1,059 0.04%
BEKAERT Industrial Components 1,040 0.03%
UNION MINIERE Metals - Non-Ferrous 1,026 0.03%
POHJOLA GROUP B Insurance 1,023 0.03%
RAUTARUUKKI Metals - Steel 998 0.03%
AZUCARERA EBRO AGRICOLAS Food & Household Products 976 0.03%
MAN VORZUG Machinery & Engineering 949 0.03%
POHJOLA GROUP A Insurance 936 0.03%
CARTIERE BURGO ORD Forest Products & Paper 930 0.03%
BILFINGER + BERGER Construction & Housing 869 0.03%
GROHE (FRIEDRICH) VORZUG Building Materials & Components 857 0.03%
PAKHOED (KON.) Energy Equipment & Services 848 0.03%
KONE B Machinery & Engineering 834 0.03%
FLUGHAFEN WIEN Business & Public Services 831 0.03%
AGIV Multi-Industry 827 0.03%
</TABLE>
A-13
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
HARTWALL A Beverages & Tobacco 817 0.03%
BONGRAIN Food & Household Products 807 0.03%
MAGNETI MARELLI ORD Industrial Components 801 0.03%
SNIA BPD ORD Multi-Industry 798 0.03%
AUSTRIAN AIRLINES Transportation - Airlines 792 0.03%
METRO VORZUG Merchandising 735 0.02%
KEMIRA Chemicals 735 0.02%
WATERFORD WEDGWOOD UNIT Recreation, Other Consumer Goods 733 0.02%
GLAVERBEL (GROUPE) Misc. Materials & Commodities 727 0.02%
METRA CORP B Multi-Industry 723 0.02%
DCC Multi-Industry 683 0.02%
STORK (VER MACHINE.) Machinery & Engineering 669 0.02%
GREENCORE GROUP Food & Household Products 658 0.02%
ASKO Building Materials & Components 654 0.02%
NEDLLOYD (KON.) Transportation - Road & Rail 652 0.02%
PORTLAND VALDERRIVAS Building Materials & Components 644 0.02%
FAG KUGELFISCHER Industrial Components 641 0.02%
PROSEGUR Business & Public Services 592 0.02%
SOMMER-ALLIBERT Industrial Components 589 0.02%
PORTUCEL INDUSTRIAL Forest Products & Paper 588 0.02%
MAYR-MELNHOF KARTON Misc. Materials & Commodities 575 0.02%
INSTRUMENTARIUM CORP A Health & Personal Care 574 0.02%
IMPREGILO ORD Construction & Housing 566 0.02%
FYFFES Food & Household Products 561 0.02%
FINNLINES Transportation - Shipping 553 0.02%
ASTURIANA DE ZINC Metals - Non-Ferrous 553 0.02%
SEGUROS TRANQUILIDADE Insurance 532 0.02%
URBIS (INMOBILIARIA) Real Estate 529 0.02%
BOEHLER-UDDEHOLM Metals - Steel 529 0.02%
CPR Financial Services 528 0.02%
ITALCEMENTI RNC Building Materials & Components 512 0.02%
VISCOFAN Misc. Materials & Commodities 490 0.02%
JURYS DOYLE HOTEL GROUP Leisure & Tourism 488 0.02%
RENO MEDICI A ORD Forest Products & Paper 460 0.02%
LANE G.MARZOTTO ORD Textiles & Apparel 459 0.02%
URALITA Building Materials & Components 448 0.01%
STOCKMANN A Merchandising 447 0.01%
MONTEDISON RNC Multi-Industry 445 0.01%
PULEVA Food & Household Products 439 0.01%
DEUTZ Machinery & Engineering 437 0.01%
AMER-YHTYMAE A Multi-Industry 433 0.01%
ENCE EMPR NAC CELULOSAS Forest Products & Paper 426 0.01%
AXA COLONIA KONZ VORZUG Insurance 422 0.01%
IWKA Machinery & Engineering 414 0.01%
HOLLANDSCHE BETON GROEP Construction & Housing 409 0.01%
BBAG OESTERR BRAU STAMM Beverages & Tobacco 409 0.01%
RHI Misc. Materials & Commodities 395 0.01%
CHARGEURS Textiles & Apparel 394 0.01%
CMB Transportation - Shipping 382 0.01%
</TABLE>
A-14
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
RHEINMETALL STAMM Aerospace & Military Technology 380 0.01%
STOCKMANN B Merchandising 379 0.01%
SAI RNC Insurance 368 0.01%
FAES Health & Personal Care 367 0.01%
CLONDALKIN GROUP UNIT Misc. Materials & Commodities 364 0.01%
UNICER UNIAO CERVEJEIRA Beverages & Tobacco 362 0.01%
NORD-EST Misc. Materials & Commodities 352 0.01%
CEMENTIR Building Materials & Components 335 0.01%
AGUILA (EL) Beverages & Tobacco 334 0.01%
INSTRUMENTARIUM CORP B Health & Personal Care 315 0.01%
GENERALE GEOPHYSIQUE Energy Equipment & Services 309 0.01%
BWT STAMM Machinery & Engineering 308 0.01%
IRISH CONTINENTAL GROUP Transportation - Shipping 307 0.01%
BRAU & BRUNNEN Beverages & Tobacco 289 0.01%
RHEINMETALL VORZUG Aerospace & Military Technology 286 0.01%
INAPA Forest Products & Paper 275 0.01%
METRA CORP A Multi-Industry 251 0.01%
TULLOW OIL Energy Sources 250 0.01%
SALAMANDER Textiles & Apparel 218 0.01%
RINASCENTE RNC Merchandising 216 0.01%
DANIELI & CO ORD Machinery & Engineering 215 0.01%
LENZING Chemicals 206 0.01%
HOLSTEN-BRAUEREI Beverages & Tobacco 200 0.01%
SKIS ROSSIGNOL Recreation, Other Consumer Goods 185 0.01%
ERCROS Chemicals 170 0.01%
PIRELLI SPA RNC Industrial Components 165 0.01%
RINASCENTE PRIV Merchandising 163 0.01%
STRABAG Construction & Housing 161 0.01%
BAU HOLDING STAMM Construction & Housing 157 0.01%
UNIVERSALE-BAU Construction & Housing 152 0.01%
CORTICEIRA AMORIM Misc. Materials & Commodities 145 0.00%
ENGIL SGPS Construction & Housing 140 0.00%
AUSTRIA MIKRO SYSTEME Electronic Comp. & Instruments 113 0.00%
DANIELI & CO RNC Machinery & Engineering 113 0.00%
ESCADA STAMM Textiles & Apparel 107 0.00%
ESCADA VORZUG Textiles & Apparel 100 0.00%
CIN CORP IND'L DO NORTE Chemicals 98 0.00%
EFACEC CAPITAL SGPS Electrical & Electronics 88 0.00%
LANE G.MARZOTTO RISP Textiles & Apparel 87 0.00%
COLEP PORTUGAL Misc. Materials & Commodities 78 0.00%
SOARES DA COSTA Construction & Housing 71 0.00%
SNIA BPD RNC Multi-Industry 59 0.00%
SOMAGUE SGPS Construction & Housing 58 0.00%
BAU HOLDING VORZUG Construction & Housing 58 0.00%
HERLITZ STAMM Business & Public Services 51 0.00%
HERLITZ VORZUG Business & Public Services 33 0.00%
</TABLE>
A-15
<PAGE>
APPENDIX A-7
MSCI FRANCE INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
FRANCE TELECOM Telecommunications 79,762 10.07%
ELF AQUITAINE Energy Sources 48,543 6.13%
TOTAL FINA (TOTAL SA) Energy Sources 45,148 5.70%
AXA Insurance 43,881 5.54%
LOREAL Health & Personal Care 43,667 5.51%
VIVENDI Business & Public Services 41,761 5.27%
CARREFOUR Merchandising 37,912 4.78%
ALCATEL Electrical & Electronics 30,434 3.84%
SANOFI-SYNTHELABO Health & Personal Care 30,420 3.84%
LVMH Recreation, Other Consumer Goods 29,798 3.76%
SUEZ LYONNAISE DES EAUX Business & Public Services 25,250 3.19%
SOCIETE GENERALE Banking 20,350 2.57%
PINAULT-PRINT.-REDOUTE Merchandising 20,343 2.57%
DANONE (GROUPE) Food & Household Products 18,112 2.29%
PROMODES Merchandising 18,057 2.28%
RHONE-POULENC Health & Personal Care 18,051 2.28%
PARIBAS Banking 17,203 2.17%
BNP BANQUE NTLE PARIS Banking 16,833 2.12%
SAINT-GOBAIN Building Materials & Components 16,822 2.12%
CAP GEMINI SA Business & Public Services 12,904 1.63%
AIR LIQUIDE Chemicals 12,653 1.60%
LAFARGE (FRANCE) Building Materials & Components 11,248 1.42%
SCHNEIDER ELECTRIC Electrical & Electronics 10,520 1.33%
PEUGEOT SA Automobiles 9,211 1.16%
ACCOR Leisure & Tourism 8,714 1.10%
CANAL + Broadcasting & Publishing 8,646 1.09%
BOUYGUES ORD Construction & Housing 7,971 1.01%
CASINO ORD Merchandising 7,889 1.00%
VALEO Industrial Components 6,666 0.84%
LEGRAND ORD Electrical & Electronics 6,649 0.84%
THOMSON-CSF Aerospace & Military Technology 6,130 0.77%
MICHELIN Industrial Components 5,965 0.75%
SODEXHO ALLIANCE Business & Public Services 5,497 0.69%
LAGARDERE Multi-Industry 4,918 0.62%
PECHINEY ORD A Metals - Non-Ferrous 4,747 0.60%
PERNOD RICARD Beverages & Tobacco 4,324 0.55%
DASSAULT SYSTEMES Business & Public Services 4,297 0.54%
USINOR Metals - Steel 3,764 0.47%
SIDEL Machinery & Engineering 3,742 0.47%
ESSILOR INTERNATIONAL Health & Personal Care 3,520 0.44%
ERIDANIA BEGHIN-SAY Food & Household Products 3,436 0.43%
BIC Recreation, Other Consumer Goods 2,897 0.37%
SEITA Beverages & Tobacco 2,839 0.36%
SAGEM Electrical & Electronics 2,729 0.34%
PATHE Leisure & Tourism 2,684 0.34%
IMETAL Misc. Materials & Commodities 2,552 0.32%
</TABLE>
A-16
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
EURAFRANCE Financial Services 2,428 0.31%
NATEXIS BQ POP. Banking 2,162 0.27%
GECINA Real Estate 2,008 0.25%
TECHNIP Machinery & Engineering 1,755 0.22%
UNIBAIL Real Estate 1,697 0.21%
SIMCO Real Estate 1,685 0.21%
GROUPE GTM Construction & Housing 1,670 0.21%
CLUB MEDITERRANEE Leisure & Tourism 1,555 0.20%
COFLEXIP Energy Equipment & Services 1,410 0.18%
SEB Appliances & Household Durables 1,173 0.15%
CASINO ADP Merchandising 1,147 0.14%
ZODIAC Aerospace & Military Technology 1,100 0.14%
BONGRAIN Food & Household Products 807 0.10%
SOMMER-ALLIBERT Industrial Components 589 0.07%
CPR Financial Services 528 0.07%
CHARGEURS Textiles & Apparel 394 0.05%
NORD-EST Misc. Materials & Commodities 352 0.04%
GENERALE GEOPHYSIQUE Energy Equipment & Services 309 0.04%
SKIS ROSSIGNOL Recreation, Other Consumer Goods 185 0.02%
</TABLE>
A-17
<PAGE>
APPENDIX A-8
MSCI GERMANY INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
DEUTSCHE TELEKOM Telecommunications 107,821 13.88%
DAIMLERCHRYSLER Automobiles 75,177 9.68%
ALLIANZ Insurance 63,897 8.23%
MANNESMANN Telecommunications 58,849 7.58%
SIEMENS Electrical & Electronics 49,392 6.36%
DEUTSCHE BANK NAMEN Banking 41,670 5.37%
MUENCHENER RUECKVERSICH. Insurance 33,265 4.28%
VEBA Utilities - Electrical & Gas 31,397 4.04%
BAYER Chemicals 31,381 4.04%
BASF Chemicals 27,596 3.55%
HYPOVEREINSBK(BAYER.HYPO Banking 24,089 3.10%
DRESDNER BANK Banking 23,526 3.03%
SAP STAMM Business & Public Services 21,391 2.75%
RWE STAMM Utilities - Electrical & Gas 20,010 2.58%
VOLKSWAGEN STAMM Automobiles 18,615 2.40%
SAP VORZUG Business & Public Services 17,210 2.22%
METRO STAMM Merchandising 15,125 1.95%
VIAG Utilities - Electrical & Gas 14,501 1.87%
THYSSEN KRUPP Metals - Steel 11,738 1.51%
PREUSSAG Multi-Industry 9,404 1.21%
SCHERING Health & Personal Care 7,490 0.96%
LUFTHANSA Transportation - Airlines 7,255 0.93%
MERCK KGAA Health & Personal Care 5,850 0.75%
BEIERSDORF Health & Personal Care 5,652 0.73%
HEIDELBERGER ZEMENT STAM Building Materials & Components 5,064 0.65%
LINDE Machinery & Engineering 5,043 0.65%
AMB AACHENER & MUNCH BET Insurance 4,362 0.56%
ADIDAS-SALOMON Recreation, Other Consumer Goods 4,172 0.54%
KARSTADT Merchandising 3,948 0.51%
MAN STAMM Machinery & Engineering 3,704 0.48%
VOLKSWAGEN VORZUG Automobiles 3,635 0.47%
HOCHTIEF Construction & Housing 3,039 0.39%
CONTINENTAL Industrial Components 2,901 0.37%
RWE VORZUG Utilities - Electrical & Gas 2,625 0.34%
AXA COLONIA KONZ STAMM Insurance 2,549 0.33%
SGL CARBON Misc. Materials & Commodities 1,547 0.20%
DOUGLAS HOLDING Merchandising 1,529 0.20%
BUDERUS Building Materials & Components 1,115 0.14%
DYCKERHOFF VORZUG Building Materials & Components 1,059 0.14%
MAN VORZUG Machinery & Engineering 949 0.12%
BILFINGER + BERGER Construction & Housing 869 0.11%
GROHE (FRIEDRICH) VORZUG Building Materials & Components 857 0.11%
AGIV Multi-Industry 827 0.11%
</TABLE>
A-18
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
METRO VORZUG Merchandising 735 0.09%
FAG KUGELFISCHER Industrial Components 641 0.08%
DEUTZ Machinery & Engineering 437 0.06%
AXA COLONIA KONZ VORZUG Insurance 422 0.05%
IWKA Machinery & Engineering 414 0.05%
RHEINMETALL STAMM Aerospace & Military Technology 380 0.05%
BRAU & BRUNNEN Beverages & Tobacco 289 0.04%
RHEINMETALL VORZUG Aerospace & Military Technology 286 0.04%
SALAMANDER Textiles & Apparel 218 0.03%
HOLSTEN-BRAUEREI Beverages & Tobacco 200 0.03%
STRABAG Construction & Housing 161 0.02%
ESCADA STAMM Textiles & Apparel 107 0.01%
ESCADA VORZUG Textiles & Apparel 100 0.01%
HERLITZ STAMM Business & Public Services 51 0.01%
HERLITZ VORZUG Business & Public Services 33 0.00%
</TABLE>
A-19
<PAGE>
APPENDIX A-9
MSCI HONG KONG INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
HUTCHISON WHAMPOA Multi-Industry 37,809 19.48%
CABLE &WIREL. HKT(HK TEL Telecommunications 27,182 14.01%
HANG SENG BANK Banking 21,605 11.13%
SUN HUNG KAI PROPERTIES Real Estate 20,561 10.60%
CHEUNG KONG HOLDINGS Real Estate 19,972 10.29%
CLP HOLDINGS Utilities - Electrical & Gas 11,604 5.98%
SWIRE PACIFIC A Multi-Industry 8,015 4.13%
HONGKONG CHINA GAS Utilities - Electrical & Gas 6,621 3.41%
WHARF HOLDINGS Real Estate 6,236 3.21%
CATHAY PACIFIC AIRWAYS Transportation - Airlines 5,753 2.96%
NEW WORLD DEVELOPMENT Real Estate 5,103 2.63%
JOHNSON ELECTRIC HLDGS Electrical & Electronics 4,140 2.13%
BANK EAST ASIA Banking 3,183 1.64%
SHANGRI-LA ASIA Leisure & Tourism 2,033 1.05%
TELEVISION BROADCASTS Broadcasting & Publishing 1,952 1.01%
SINO LAND Real Estate 1,741 0.90%
HANG LUNG DEVELOPMENT CO Real Estate 1,531 0.79%
HYSAN DEVELOPMENT Real Estate 1,342 0.69%
SOUTH CHINA MORNING POST Broadcasting & Publishing 1,098 0.57%
WING LUNG BANK Banking 960 0.49%
HONGKONG SHANGHAI HOTEL Leisure & Tourism 916 0.47%
GIORDANO INTERNATIONAL Merchandising 648 0.33%
VARITRONIX INTERNATIONAL Misc. Materials & Commodities 629 0.32%
MIRAMAR HOTEL & INVEST. Real Estate 624 0.32%
HOPEWELL HOLDINGS Multi-Industry 609 0.31%
REGAL HOTELS INT'L Leisure & Tourism 420 0.22%
HONGKONG AIRCRAFT HAECO Aerospace & Military Technology 327 0.17%
SHUN TAK HOLDINGS Transportation - Shipping 324 0.17%
CHINESE ESTATES HOLDINGS Real Estate 313 0.16%
HONGKONG CONST (KUMAGAI Construction & Housing 247 0.13%
ORIENTAL PRESS GROUP Broadcasting & Publishing 234 0.12%
ELEC & ELTEK INT'L HLDGS Electronic Comp. & Instruments 167 0.09%
TAI CHEUNG HOLDINGS Real Estate 151 0.08%
</TABLE>
A-20
<PAGE>
APPENDIX A-10
MSCI ITALY INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
ENI Energy Sources 48,166 14.17%
TIM ORD Telecommunications 38,548 11.34%
TELECOM ITALIA ORD Telecommunications 37,281 10.96%
ASSICURAZIONI GENERALI Insurance 34,750 10.22%
UNICREDITO ITALIANO ORD Banking 22,472 6.61%
SAN PAOLO-IMI ORD Banking 18,885 5.55%
BANCA COMMERCIALE ORD Banking 12,267 3.61%
FIAT ORD Automobiles 11,929 3.51%
BANCA INTESA ORD Banking 10,888 3.20%
MEDIASET Broadcasting & Publishing 10,451 3.07%
OLIVETTI ORD Telecommunications 10,121 2.98%
INA Insurance 9,714 2.86%
MEDIOBANCA Banking 5,921 1.74%
TIM RNC Telecommunications 5,438 1.60%
EDISON ORD Utilities - Electrical & Gas 5,303 1.56%
TELECOM ITALIA RNC Telecommunications 5,125 1.51%
PIRELLI SPA ORD Industrial Components 4,762 1.40%
ALITALIA Transportation - Airlines 4,145 1.22%
RAS ORD Insurance 3,990 1.17%
MONTEDISON ORD Multi-Industry 3,919 1.15%
BENETTON GROUP Textiles & Apparel 3,492 1.03%
ITALGAS Utilities - Electrical & Gas 2,913 0.86%
ITALCEMENTI ORD Building Materials & Components 2,342 0.69%
UNIONE IMMOBILIARE Real Estate 2,232 0.66%
MONDADORI ORD Broadcasting & Publishing 2,085 0.61%
RINASCENTE ORD Merchandising 2,004 0.59%
BANCA POPOLARE MILANO Banking 1,956 0.58%
PARMALAT FINANZIARIA Food & Household Products 1,947 0.57%
BULGARI Recreation, Other Consumer Goods 1,891 0.56%
FIAT PRIV Automobiles 1,626 0.48%
BANCA INTESA RNC Banking 1,543 0.45%
RAS RNC Insurance 1,496 0.44%
SAI ORD Insurance 1,290 0.38%
FIAT RNC Automobiles 1,284 0.38%
SIRTI Construction & Housing 1,139 0.33%
CARTIERE BURGO ORD Forest Products & Paper 930 0.27%
MAGNETI MARELLI ORD Industrial Components 801 0.24%
SNIA BPD ORD Multi-Industry 798 0.23%
IMPREGILO ORD Construction & Housing 566 0.17%
ITALCEMENTI RNC Building Materials & Components 512 0.15%
RENO MEDICI A ORD Forest Products & Paper 460 0.14%
LANE G.MARZOTTO ORD Textiles & Apparel 459 0.13%
MONTEDISON RNC Multi-Industry 445 0.13%
SAI RNC Insurance 368 0.11%
CEMENTIR Building Materials & Components 335 0.10%
RINASCENTE RNC Merchandising 216 0.06%
</TABLE>
A-21
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
DANIELI & CO ORD Machinery & Engineering 215 0.06%
PIRELLI SPA RNC Industrial Components 165 0.05%
RINASCENTE PRIV Merchandising 163 0.05%
DANIELI & CO RNC Machinery & Engineering 113 0.03%
LANE G.MARZOTTO RISP Textiles & Apparel 87 0.03%
SNIA BPD RNC Multi-Industry 59 0.02%
</TABLE>
A-22
<PAGE>
APPENDIX A-11
MSCI JAPAN INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
NTT CORP Telecommunications 142,801 6.92%
TOYOTA MOTOR CORP Automobiles 110,888 5.38%
BANK TOKYO-MITSUBISHI Banking 69,719 3.38%
FUJITSU Data Processing & Reproduction 54,964 2.67%
SONY CORP Appliances & Household Durables 53,114 2.58%
TAKEDA CHEMICAL IND Health & Personal Care 44,608 2.16%
SUMITOMO BANK Banking 42,971 2.08%
MATSUSHITA ELECT IND'L Appliances & Household Durables 40,628 1.97%
HONDA MOTOR CO Automobiles 39,103 1.90%
FUJI BANK Banking 35,469 1.72%
HITACHI Electrical & Electronics 33,822 1.64%
TOKYO ELECTRIC POWER CO Utilities - Electrical & Gas 31,463 1.53%
ITO-YOKADO CO Merchandising 30,556 1.48%
NOMURA SECURITIES CO Financial Services 28,734 1.39%
INDUSTRIAL BANK OF JAPAN Banking 26,842 1.30%
NEC CORP Electrical & Electronics 26,413 1.28%
CANON INC Data Processing & Reproduction 25,401 1.23%
EAST JAPAN RAILWAY CO Transportation - Road & Rail 24,187 1.17%
BRIDGESTONE CORP Industrial Components 23,972 1.16%
ROHM CO Electronic Comp. & Instruments 23,399 1.13%
SAKURA BANK Banking 21,599 1.05%
DENSO CORP Industrial Components 19,947 0.97%
MURATA MANUFACTURING CO Electronic Comp. & Instruments 19,250 0.93%
FUJI PHOTO FILM CO Recreation, Other Consumer Goods 18,774 0.91%
KANSAI ELECTRIC POWER CO Utilities - Electrical & Gas 18,744 0.91%
TOKIO MARINE & FIRE Insurance 18,233 0.88%
NIPPON STEEL CORP Metals - Steel 17,818 0.86%
KAO CORP Food & Household Products 17,620 0.85%
SHARP CORP Appliances & Household Durables 17,158 0.83%
ASAHI BANK Banking 16,997 0.82%
SHIN-ETSU CHEMICAL CO Chemicals 16,736 0.81%
SECOM CO Business & Public Services 15,870 0.77%
YAMANOUCHI PHARM. Health & Personal Care 15,331 0.74%
ACOM CO Financial Services 14,858 0.72%
MITSUBISHI HEAVY IND Machinery & Engineering 14,674 0.71%
NISSAN MOTOR CO Automobiles 14,623 0.71%
TAISHO PHARMACEUTICAL CO Health & Personal Care 14,527 0.70%
FANUC Electronic Comp. & Instruments 14,417 0.70%
TOKAI BANK Banking 14,293 0.69%
MITSUBISHI TRUST Banking 13,659 0.66%
ADVANTEST CORP Electronic Comp. & Instruments 13,454 0.65%
MITSUBISHI ESTATE CO Real Estate 13,413 0.65%
MITSUBISHI CORP Wholesale & International Trade 13,021 0.63%
SANKYO CO Health & Personal Care 12,763 0.62%
KYOCERA CORP Electronic Comp. & Instruments 12,498 0.61%
</TABLE>
A-23
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
KIRIN BREWERY CO Beverages & Tobacco 12,482 0.61%
DAI NIPPON PRINTING CO Business & Public Services 12,399 0.60%
TOKYO ELECTRON Electronic Comp. & Instruments 12,263 0.59%
DAIWA SECURITIES GROUP Financial Services 12,036 0.58%
MITSUI & CO Wholesale & International Trade 11,136 0.54%
MITSUBISHI ELECTRIC CORP Electrical & Electronics 10,849 0.53%
YAMATO TRANSPORT CO Transportation - Road & Rail 10,459 0.51%
SMC CORP Machinery & Engineering 10,145 0.49%
SUMITOMO ELECTRIC IND Industrial Components 9,896 0.48%
TOPPAN PRINTING CO Business & Public Services 8,930 0.43%
SHIZUOKA BANK Banking 8,664 0.42%
SUMITOMO CHEMICAL CO Chemicals 8,312 0.40%
SANYO ELECTRIC CO Appliances & Household Durables 8,250 0.40%
NIPPON EXPRESS CO Transportation - Road & Rail 8,201 0.40%
KINKI NIPPON RAILWAY CO Transportation - Road & Rail 8,099 0.39%
OSAKA GAS CO Utilities - Electrical & Gas 7,982 0.39%
TOHOKU ELECTRIC POWER CO Utilities - Electrical & Gas 7,980 0.39%
ASAHI CHEMICAL IND CO Chemicals 7,697 0.37%
SEKISUI HOUSE Construction & Housing 7,672 0.37%
SUMITOMO CORP Wholesale & International Trade 7,572 0.37%
ASAHI BREWERIES Beverages & Tobacco 7,557 0.37%
ASAHI GLASS CO Misc. Materials & Commodities 7,417 0.36%
KAWASAKI STEEL CORP Metals - Steel 7,414 0.36%
AJINOMOTO CO Food & Household Products 7,410 0.36%
TORAY INDUSTRIES Chemicals 7,183 0.35%
OJI PAPER CO Forest Products & Paper 7,163 0.35%
MITSUBISHI CHEMICAL CORP Chemicals 7,018 0.34%
HOYA CORP Electronic Comp. & Instruments 6,948 0.34%
TOKYO GAS CO Utilities - Electrical & Gas 6,920 0.34%
EISAI CO Health & Personal Care 6,840 0.33%
JAPAN AIRLINES CO Transportation - Airlines 6,831 0.33%
MITSUI FUDOSAN CO Real Estate 6,603 0.32%
NIPPON MTB OIL(NIPPON OI Energy Sources 6,499 0.32%
JUSCO CO Merchandising 6,285 0.30%
NIKON CORP Electronic Comp. & Instruments 6,262 0.30%
ORIX CORP Financial Services 6,236 0.30%
NIPPON PAPER IND CO Forest Products & Paper 6,229 0.30%
KOMATSU Machinery & Engineering 6,186 0.30%
MARUI CO Merchandising 6,153 0.30%
SHISEIDO CO Health & Personal Care 5,825 0.28%
DAIWA HOUSE IND CO Construction & Housing 5,256 0.25%
OMRON CORP Electrical & Electronics 5,241 0.25%
ALPS ELECTRIC CO Electronic Comp. & Instruments 5,196 0.25%
TOYO SEIKAN KAISHA Misc. Materials & Commodities 5,161 0.25%
HIROSE ELECTRIC CO Electronic Comp. & Instruments 4,996 0.24%
SUMITOMO METAL IND Metals - Steel 4,870 0.24%
MINEBEA CO Industrial Components 4,789 0.23%
KONAMI CO Business & Public Services 4,646 0.23%
TOYODA AUTOMATIC LOOM Machinery & Engineering 4,630 0.22%
TOSTEM CORP Building Materials & Components 4,493 0.22%
</TABLE>
A-24
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
KUBOTA CORP Machinery & Engineering 4,448 0.22%
NIPPON YUSEN K.K Transportation - Shipping 4,445 0.22%
NITTO DENKO CORP Misc. Materials & Commodities 4,375 0.21%
SUMITOMO MARINE & FIRE Insurance 4,371 0.21%
KURARAY CO Chemicals 4,368 0.21%
ITOCHU CORP Wholesale & International Trade 4,355 0.21%
MITSUI MARINE & FIRE Insurance 4,315 0.21%
DAIICHI PHARMACEUTICAL Health & Personal Care 4,248 0.21%
KAJIMA CORP Construction & Housing 4,147 0.20%
OBAYASHI CORP Construction & Housing 4,017 0.19%
KANEKA CORP Chemicals 4,007 0.19%
OLYMPUS OPTICAL CO Electronic Comp. & Instruments 3,934 0.19%
TEIJIN Chemicals 3,842 0.19%
UNI-CHARM CORP Health & Personal Care 3,802 0.18%
CREDIT SAISON CO Financial Services 3,765 0.18%
SEVENTY-SEVEN BANK Banking 3,744 0.18%
SANRIO CO Recreation, Other Consumer Goods 3,718 0.18%
NGK INSULATORS Industrial Components 3,716 0.18%
FURUKAWA ELECTRIC CO Industrial Components 3,642 0.18%
NSK Industrial Components 3,607 0.17%
JOYO BANK Banking 3,550 0.17%
EBARA CORP Machinery & Engineering 3,541 0.17%
MARUBENI CORP Wholesale & International Trade 3,529 0.17%
BANK YOKOHAMA Banking 3,529 0.17%
SHIMIZU CORP Construction & Housing 3,517 0.17%
NISSIN FOOD PRODUCTS CO Food & Household Products 3,431 0.17%
GUNMA BANK Banking 3,324 0.16%
SHIMANO Recreation, Other Consumer Goods 3,321 0.16%
KYOWA HAKKO KOGYO CO Health & Personal Care 3,230 0.16%
TAKARA SHUZO CO Beverages & Tobacco 3,188 0.15%
PIONEER CORP(PIONEER ELE Appliances & Household Durables 3,181 0.15%
KAWASAKI HEAVY IND Machinery & Engineering 3,171 0.15%
NKK CORP Metals - Steel 3,170 0.15%
MITSUBISHI MATERIALS Metals - Non-Ferrous 3,149 0.15%
NIPPON MEAT PACKERS Food & Household Products 3,125 0.15%
HANKYU CORP Transportation - Road & Rail 3,091 0.15%
DAINIPPON INK Chemicals 3,073 0.15%
SEKISUI CHEMICAL CO Building Materials & Components 3,071 0.15%
DAIEI Merchandising 3,040 0.15%
SHIONOGI & CO Health & Personal Care 3,010 0.15%
MITSUI MINING & SMELTING Metals - Non-Ferrous 3,003 0.15%
SKYLARK CO Leisure & Tourism 2,967 0.14%
CHIBA BANK Banking 2,916 0.14%
YAMAZAKI BAKING CO Food & Household Products 2,913 0.14%
TOHO CO Leisure & Tourism 2,913 0.14%
MEIJI SEIKA KAISHA Food & Household Products 2,912 0.14%
DAIKIN INDUSTRIES Machinery & Engineering 2,887 0.14%
TOKYU CORP Transportation - Road & Rail 2,885 0.14%
MITSUKOSHI Merchandising 2,852 0.14%
TBS TOKYO BROADCASTING Broadcasting & Publishing 2,831 0.14%
</TABLE>
A-25
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
TOTO Building Materials & Components 2,746 0.13%
TAKASHIMAYA CO Merchandising 2,726 0.13%
CHUGAI PHARMACEUTICAL CO Health & Personal Care 2,720 0.13%
AOYAMA TRADING CO Merchandising 2,680 0.13%
KINDEN CORP Construction & Housing 2,669 0.13%
TOBU RAILWAY CO Transportation - Road & Rail 2,655 0.13%
CITIZEN WATCH CO Recreation, Other Consumer Goods 2,655 0.13%
ONWARD KASHIYAMA CO Textiles & Apparel 2,630 0.13%
UNY CO Merchandising 2,590 0.13%
TAIYO YUDEN CO Electronic Comp. & Instruments 2,519 0.12%
TAIHEIYO CEMENT CORP Building Materials & Components 2,496 0.12%
TRANS COSMOS Business & Public Services 2,476 0.12%
MITSUI TRUST & BANK CO Banking 2,470 0.12%
NAGOYA RAILROAD CO Transportation - Road & Rail 2,446 0.12%
AMADA CO Machinery & Engineering 2,432 0.12%
KURITA WATER INDUSTRIES Machinery & Engineering 2,405 0.12%
FUJIKURA Industrial Components 2,380 0.12%
NIPPON COMSYS CORP Construction & Housing 2,377 0.12%
ODAKYU ELECTRIC RAILWAY Transportation - Road & Rail 2,361 0.11%
MITSUI OSK LINES Transportation - Shipping 2,355 0.11%
KOKUYO CO Business & Public Services 2,325 0.11%
NGK SPARK PLUG CO Industrial Components 2,281 0.11%
YAMAHA CORP Recreation, Other Consumer Goods 2,260 0.11%
SUMITOMO METAL MINING CO Metals - Non-Ferrous 2,222 0.11%
NANKAI ELECTRIC RAILWAY Transportation - Road & Rail 2,160 0.10%
TAISEI CORP Construction & Housing 2,156 0.10%
NICHIDO FIRE & MARINE Insurance 2,152 0.10%
NAMCO Leisure & Tourism 2,065 0.10%
NIPPON SHEET GLASS CO Misc. Materials & Commodities 2,044 0.10%
AUTOBACS SEVEN CO Merchandising 1,983 0.10%
SUMITOMO HEAVY IND Machinery & Engineering 1,976 0.10%
ISETAN CO Merchandising 1,976 0.10%
MYCAL CORP Merchandising 1,911 0.09%
NIPPON FIRE & MARINE Insurance 1,907 0.09%
SEGA ENTREPRISES Recreation, Other Consumer Goods 1,904 0.09%
MAKITA CORP Electrical & Electronics 1,897 0.09%
CASIO COMPUTER CO Recreation, Other Consumer Goods 1,890 0.09%
TOSOH CORP Chemicals 1,890 0.09%
MITSUBISHI LOGISTICS Business & Public Services 1,890 0.09%
UBE INDUSTRIES Misc. Materials & Commodities 1,849 0.09%
KEIHIN ELECTRIC EXPRESS Transportation - Road & Rail 1,838 0.09%
KOYO SEIKO CO Industrial Components 1,823 0.09%
CSK CORP Business & Public Services 1,813 0.09%
MITSUBISHI RAYON CO Chemicals 1,812 0.09%
DAITO TRUST CONSTRUCTION Construction & Housing 1,789 0.09%
INAX CORP Building Materials & Components 1,750 0.08%
YOKOGAWA ELECTRIC CORP Electronic Comp. & Instruments 1,749 0.08%
HOUSE FOODS(HOUSE FD IND Food & Household Products 1,711 0.08%
KOMORI CORP Machinery & Engineering 1,674 0.08%
</TABLE>
A-26
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
KAMIGUMI CO Business & Public Services 1,654 0.08%
WACOAL CORP Textiles & Apparel 1,630 0.08%
KIKKOMAN CORP Food & Household Products 1,617 0.08%
NTN CORP Industrial Components 1,605 0.08%
NISHIMATSU CONSTRUCTION Construction & Housing 1,602 0.08%
MORI SEIKI CO Machinery & Engineering 1,593 0.08%
YAMAGUCHI BANK Banking 1,560 0.08%
DAICEL CHEMICAL IND Chemicals 1,515 0.07%
SNOW BRAND MILK PRODUCTS Food & Household Products 1,481 0.07%
KONICA CORP Recreation, Other Consumer Goods 1,439 0.07%
MITSUBISHI GAS CHEMICAL Chemicals 1,432 0.07%
SAPPORO BREWERIES Beverages & Tobacco 1,422 0.07%
SHOWA DENKO K.K Chemicals 1,420 0.07%
JAPAN ENERGY CORP Energy Sources 1,397 0.07%
SUMITOMO FORESTRY CO Building Materials & Components 1,396 0.07%
HOKURIKU BANK Banking 1,383 0.07%
SEIYU Merchandising 1,339 0.06%
HANKYU DEPARTMENT STORES Merchandising 1,291 0.06%
ASHIKAGA BANK Banking 1,276 0.06%
DAIMARU Merchandising 1,272 0.06%
SANDEN CORP Industrial Components 1,251 0.06%
NISSHINBO INDUSTRIES Textiles & Apparel 1,231 0.06%
KANDENKO CO Construction & Housing 1,215 0.06%
KAWASAKI KISEN KAISHA Transportation - Shipping 1,191 0.06%
DAINIPPON SCREEN MFG CO Electronic Comp. & Instruments 1,190 0.06%
LION CORP Health & Personal Care 1,185 0.06%
HITACHI ZOSEN CORP Machinery & Engineering 1,179 0.06%
NIPPON SHOKUBAI CO Chemicals 1,178 0.06%
COSMO OIL CO Energy Sources 1,152 0.06%
KISSEI PHARMACEUTICAL CO Health & Personal Care 1,143 0.06%
SANWA SHUTTER CORP Building Materials & Components 1,141 0.06%
MEIJI MILK PRODUCTS CO Food & Household Products 1,115 0.05%
TSUBAKIMOTO CHAIN CO Machinery & Engineering 1,110 0.05%
Q. P. CORP Food & Household Products 1,109 0.05%
TOKYO STYLE CO Textiles & Apparel 1,103 0.05%
TOYOBO CO Textiles & Apparel 1,103 0.05%
DENKI KAGAKU KOGYO K.K Chemicals 1,076 0.05%
NIPPON SHINPAN CO Financial Services 1,064 0.05%
KATOKICHI CO Food & Household Products 1,026 0.05%
HIGO BANK Banking 1,008 0.05%
TEIKOKU OIL CO Energy Sources 981 0.05%
FUJITA KANKO Leisure & Tourism 976 0.05%
SEINO TRANSPORTATION CO Transportation - Road & Rail 973 0.05%
ORIENT CORP Financial Services 956 0.05%
SHIMACHU CO Merchandising 951 0.05%
TAKUMA CO Machinery & Engineering 942 0.05%
TAKARA STANDARD CO Appliances & Household Durables 940 0.05%
OKUMURA CORP Construction & Housing 938 0.05%
TOKYO DOME CORP Leisure & Tourism 912 0.04%
</TABLE>
A-27
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
MITSUI ENGINEERING&SHIP. Machinery & Engineering 894 0.04%
ITOHAM FOODS Food & Household Products 884 0.04%
ARABIAN OIL CO Energy Sources 872 0.04%
KANEBO Health & Personal Care 851 0.04%
NICHIREI CORP Food & Household Products 851 0.04%
DAIFUKU CO Machinery & Engineering 829 0.04%
NORITAKE CO Recreation, Other Consumer Goods 826 0.04%
SUMITOMO OSAKA CEMENT CO Building Materials & Components 807 0.04%
EZAKI GLICO CO Food & Household Products 794 0.04%
BROTHER INDUSTRIES Appliances & Household Durables 784 0.04%
KANSAI PAINT CO Chemicals 763 0.04%
DAIDO STEEL CO Metals - Steel 750 0.04%
NIPPON LIGHT METAL CO Metals - Non-Ferrous 739 0.04%
AMANO CORP Machinery & Engineering 736 0.04%
TOKYO STEEL MFG CO Metals - Steel 729 0.04%
KUMAGAI GUMI CO Construction & Housing 714 0.03%
OKUMA CORP Machinery & Engineering 712 0.03%
NAGASE & CO Chemicals 699 0.03%
MAKINO MILLING MACHINE Machinery & Engineering 699 0.03%
DAIWA KOSHO LEASE CO Real Estate 689 0.03%
KAKEN PHARMACEUTICAL CO Health & Personal Care 670 0.03%
JACCS CO Financial Services 670 0.03%
MAEDA ROAD CONSTRUCTION Construction & Housing 650 0.03%
KUREHA CHEMICAL IND CO Chemicals 648 0.03%
GUNZE Textiles & Apparel 644 0.03%
PENTA-OCEAN CONSTRUCTION Construction & Housing 633 0.03%
DAIKYO Real Estate 625 0.03%
IWATANI INTERNATIONAL Utilities - Electrical & Gas 610 0.03%
OYO CORP Business & Public Services 600 0.03%
JGC CORP Machinery & Engineering 599 0.03%
MITSUBISHI PAPER MILLS Forest Products & Paper 586 0.03%
NIPPON SUISAN KAISHA Food & Household Products 583 0.03%
ISHIHARA SANGYO KAISHA Chemicals 578 0.03%
UNIDEN CORP Electrical & Electronics 552 0.03%
TOKYO TATEMONO CO Real Estate 551 0.03%
TOEI CO Leisure & Tourism 550 0.03%
TOYO EXTERIOR CO Building Materials & Components 546 0.03%
NOF CORP Chemicals 532 0.03%
MISAWA HOMES CO Construction & Housing 503 0.02%
TOKYOTOKEIBA CO Leisure & Tourism 491 0.02%
JAPAN STEEL WORKS Machinery & Engineering 464 0.02%
MITSUI-SOKO CO Business & Public Services 464 0.02%
CHIYODA CORP Machinery & Engineering 458 0.02%
NIPPON SHARYO Machinery & Engineering 424 0.02%
KYUDENKO CORP Construction & Housing 419 0.02%
UNITIKA Chemicals 391 0.02%
FUJITA CORP Construction & Housing 383 0.02%
RENOWN Textiles & Apparel 380 0.02%
OKAMOTO INDUSTRIES Multi-Industry 352 0.02%
</TABLE>
A-28
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
TOA CORP Construction & Housing 347 0.02%
KURABO INDUSTRIES Textiles & Apparel 325 0.02%
MARUHA CORP Food & Household Products 315 0.02%
HASEKO CORP Construction & Housing 294 0.01%
NIPPON BEET SUGAR MFG CO Food & Household Products 280 0.01%
NIIGATA ENGINEERING CO Machinery & Engineering 268 0.01%
AOKI CORP Construction & Housing 241 0.01%
SANKYO ALUMINIUM IND CO Building Materials & Components 239 0.01%
JAPAN METALS & CHEMICALS Metals - Steel 212 0.01%
HAZAMA CORP Construction & Housing 205 0.01%
SATO KOGYO CO Construction & Housing 188 0.01%
TOYO ENGINEERING CORP Machinery & Engineering 187 0.01%
GAKKEN CO Broadcasting & Publishing 154 0.01%
</TABLE>
A-29
<PAGE>
APPENDIX A-12
MSCI KOREA INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
SAMSUNG ELECTRONICS CO Appliances & Household Durables 32,720 22.91%
KEPCO KOREA ELECT. POWER Utilities - Electrical & Gas 23,415 16.39%
POSCO POHANG IRON &STEEL Metals - Steel 6,457 4.52%
HYUNDAI MOTOR CO Automobiles 5,687 3.98%
LG ELECTRONICS Appliances & Household Durables 5,310 3.72%
KOOKMIN BANK Banking 4,281 3.00%
SK TELECOM CO Telecommunications 4,134 2.89%
SAMSUNG ELECTRO-MECH. CO Electronic Comp. & Instruments 3,748 2.62%
LG CHEMICAL Chemicals 3,536 2.48%
SAMSUNG DISPLAY DEVICES Electronic Comp. & Instruments 2,644 1.85%
SAMSUNG CORP Wholesale & International Trade 2,476 1.73%
KOREA EXCHANGE BANK Banking 2,464 1.73%
SAMSUNG SECURITIES CO Financial Services 2,191 1.53%
SK CORP Energy Sources 2,133 1.49%
HYUNDAI SECURITIES CO Financial Services 2,126 1.49%
HOUSING &COMMERCIAL BANK Banking 2,086 1.46%
SAMSUNG FIRE & MARINE Insurance 1,975 1.38%
HYUNDAI ENG. & CONSTR. Construction & Housing 1,890 1.32%
SHINHAN BANK Banking 1,886 1.32%
DAEWOO SECURITIES CO Financial Services 1,652 1.16%
CHEIL JEDANG CORP Food & Household Products 1,622 1.14%
LG SECURITIES CO Financial Services 1,517 1.06%
KOREAN AIR LINES CO Transportation - Airlines 1,281 0.90%
SHINSEGAE DEPT STORE CO Merchandising 1,092 0.76%
HYUNDAI MERCHANT MARINE Transportation - Shipping 1,058 0.74%
HANWHA CHEMICAL CORP Chemicals 925 0.65%
HANA BANK Banking 924 0.65%
DONGWON SECURITIES CO Financial Services 876 0.61%
DAISHIN SECURITIES CO Financial Services 807 0.57%
LG CABLE & MACHINERY Industrial Components 737 0.52%
DOOSAN CORP Beverages & Tobacco 657 0.46%
HONAM PETROCHEMICAL Chemicals 653 0.46%
HANKOOK TIRE MFG CO Industrial Components 628 0.44%
HANJIN HEAVY INDUSTRIES Machinery & Engineering 599 0.42%
DAELIM INDUSTRIAL CO Construction & Housing 585 0.41%
DAEWOO HEAVY INDUSTRIES Machinery & Engineering 582 0.41%
KOREA ZINC Metals - Non-Ferrous 575 0.40%
HITE BREWERY CO Beverages & Tobacco 540 0.38%
DAE DUCK ELECTRONICS CO Electronic Comp. & Instruments 530 0.37%
ANAM SEMICONDUCTOR Electronic Comp. & Instruments 485 0.34%
CHEIL INDUSTRIAL Chemicals 479 0.34%
HANWHA CORP Chemicals 466 0.33%
TAE KWANG INDUSTRY CO Chemicals 465 0.33%
DAESANG CORP Food & Household Products 461 0.32%
DONGKUK STEEL MILL CO Metals - Steel 435 0.30%
</TABLE>
A-30
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
SSANGYONG CEMENT IND'L Building Materials & Components 394 0.28%
SINDO RICOH CO Data Processing & Reproduction 393 0.28%
NHONG SHIM Food & Household Products 391 0.27%
LG INSURANCE CO Insurance 384 0.27%
HYOSUNG CORP Chemicals 383 0.27%
SK GLOBAL Wholesale & International Trade 377 0.26%
MEDISON CO Health & Personal Care 373 0.26%
TAE YOUNG CORP Construction & Housing 361 0.25%
HOTEL SHILLA CO Leisure & Tourism 349 0.24%
NAMHAE CHEMICAL CO Chemicals 335 0.23%
KEUMKANG Building Materials & Components 333 0.23%
HANSOL PAPER CO. Forest Products & Paper 327 0.23%
KOREA CHEMICAL CO Chemicals 314 0.22%
KEUM KANG DEVLPT IND CO Merchandising 314 0.22%
SHINYOUNG SECURITIES CO Financial Services 301 0.21%
HANKUK GLASS INDUSTRY CO Misc. Materials & Commodities 299 0.21%
DONG AH CONSTR. IND'L CO Construction & Housing 273 0.19%
KOREA EXPRESS Transportation - Road & Rail 256 0.18%
PACIFIC (CHEMICAL) CORP Health & Personal Care 254 0.18%
HYUNDAI MARINE &FIRE INS Insurance 248 0.17%
ORIENTAL CHEMICAL IND CO Chemicals 245 0.17%
KUMHO INDUSTRIAL CO Industrial Components 230 0.16%
KOLON INDUSTRIES Chemicals 224 0.16%
SEOUL CITY GAS CO Utilities - Electrical & Gas 208 0.15%
HANWHA ENERGY CORP Energy Sources 184 0.13%
KOREA GREEN CROSS CORP Health & Personal Care 171 0.12%
DAESUNG INDUSTRIAL CO Wholesale & International Trade 167 0.12%
ORION ELECTRIC Electronic Comp. & Instruments 166 0.12%
HANKOOK SYNTHETICS Chemicals 160 0.11%
SAM YANG Multi-Industry 156 0.11%
HANKUK CARBON CO Chemicals 156 0.11%
HANIL CEMENT MFG CO Building Materials & Components 155 0.11%
DAEWOO ELECTRONICS Appliances & Household Durables 155 0.11%
KOREAN REINSURANCE CO Insurance 148 0.10%
SKC CO Chemicals 147 0.10%
HYUNDAI ELEVATOR CO Machinery & Engineering 144 0.10%
ISU CHEMICAL CO Chemicals 143 0.10%
KUKDO CHEMICAL CO Chemicals 128 0.09%
DAEWOO TELECOM Data Processing & Reproduction 121 0.08%
DONG-A PHARMACEUTICAL CO Health & Personal Care 121 0.08%
KWANG DONG PHARMA CO Health & Personal Care 119 0.08%
KOREA FINE CHEMICAL CO Chemicals 119 0.08%
YOUNG POONG MINING&CONST Metals - Non-Ferrous 111 0.08%
SSANGYONG MOTOR CO Machinery & Engineering 110 0.08%
SAMWHAN CORP. Construction & Housing 107 0.07%
CHONG KUN DANG CORP Health & Personal Care 100 0.07%
SAEHAN INDUSTRIES Chemicals 100 0.07%
DONGAH TIRE INDUSTRIAL Industrial Components 97 0.07%
</TABLE>
A-31
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
SEONDO ELECTRIC CO Electrical & Electronics 95 0.07%
YOUNGONE CORP Wholesale & International Trade 88 0.06%
</TABLE>
A-32
<PAGE>
APPENDIX A-13
MSCI MALAYSIA INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
TELEKOM MALAYSIA Telecommunications 8,918 13.19%
MALAYAN BANKING Banking 7,537 11.15%
TENAGA NASIONAL Utilities - Electrical & Gas 7,097 10.50%
SIME DARBY Multi-Industry 3,060 4.53%
MALAYSIA INT'L SHIP FGN Transportation - Shipping 2,839 4.20%
RESORTS WORLD Leisure & Tourism 2,773 4.10%
YTL CORP Construction & Housing 2,478 3.67%
PUBLIC BANK FGN Banking 2,196 3.25%
ROTHMANS PALL MALL (MAL) Beverages & Tobacco 2,010 2.97%
COMMERCE ASSET-HOLDING Banking 1,796 2.66%
UNITED ENGINEERS (MAL) Multi-Industry 1,490 2.20%
RHB CAPITAL Banking 1,422 2.10%
MAGNUM CORP Leisure & Tourism 1,319 1.95%
PROTON Automobiles 1,078 1.60%
KUALA LUMPUR KEPONG Misc. Materials & Commodities 947 1.40%
MALAYAN CEMENT Building Materials & Components 944 1.40%
NESTLE (MALAYSIA) Food & Household Products 907 1.34%
MALAYSIAN AIRLINE SYSTEM Transportation - Airlines 863 1.28%
MALAYSIAN RESOURCES CORP Real Estate 862 1.28%
EDARAN OTOMOBIL NASIONAL Automobiles 836 1.24%
GOLDEN HOPE PLANTATIONS Misc. Materials & Commodities 825 1.22%
MALAYSIAN PACIFIC IND Electronic Comp. & Instruments 749 1.11%
AMMB HOLDINGS Financial Services 714 1.06%
ORIENTAL HOLDINGS Automobiles 710 1.05%
UMW HOLDINGS Machinery & Engineering 573 0.85%
TA ENTERPRISE Financial Services 539 0.80%
JAYA TIASA HOLDINGS Forest Products & Paper 528 0.78%
MALAYAN UNITED IND Multi-Industry 526 0.78%
TECHNOLOGY RESOURCES IND Telecommunications 519 0.77%
IOI CORP Misc. Materials & Commodities 513 0.76%
MULTI-PURPOSE HOLDINGS Multi-Industry 472 0.70%
NEW STRAITS TIMES PRESS Broadcasting & Publishing 433 0.64%
TAN CHONG MOTOR HOLDINGS Automobiles 400 0.59%
MALAYSIA MINING CORP Multi-Industry 394 0.58%
BERJAYA LAND Leisure & Tourism 392 0.58%
PERLIS PLANTATIONS Food & Household Products 385 0.57%
SHELL REFINING CO (FOM) Energy Sources 385 0.57%
BERJAYA GROUP Multi-Industry 373 0.55%
HIGHLANDS & LOWLANDS Misc. Materials & Commodities 370 0.55%
RASHID HUSSAIN Financial Services 344 0.51%
GUINNESS ANCHOR Beverages & Tobacco 337 0.50%
AMSTEEL CORP Metals - Steel 330 0.49%
MALAYSIAN OXYGEN Chemicals 290 0.43%
RJ REYNOLDS Beverages & Tobacco 286 0.42%
PAN MALAYSIA CORP Building Materials & Components 286 0.42%
</TABLE>
A-33
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
LAND & GENERAL Multi-Industry 285 0.42%
METROPLEX Real Estate 279 0.41%
MULPHA INTERNATIONAL Multi-Industry 278 0.41%
KEDAH CEMENT HOLDINGS Building Materials & Components 274 0.41%
TIME ENGINEERING Electrical & Electronics 271 0.40%
MBF CAPITAL Financial Services 264 0.39%
HONG LEONG INDUSTRIES Multi-Industry 261 0.39%
SUNGEI WAY HOLDINGS Building Materials & Components 250 0.37%
EKRAN Construction & Housing 244 0.36%
HUME INDUSTRIES MALAYSIA Building Materials & Components 241 0.36%
HONG LEONG PROPERTIES Real Estate 219 0.32%
IGB CORP Real Estate 216 0.32%
KIAN JOO CAN FACTORY Misc. Materials & Commodities 209 0.31%
LEADER UNIVERSAL HLDGS Industrial Components 174 0.26%
LANDMARKS Leisure & Tourism 174 0.26%
SELANGOR PROPERTIES Real Estate 167 0.25%
MALAYSIAN MOSAICS Wholesale & International Trade 130 0.19%
PETALING GARDEN Real Estate 118 0.17%
ANTAH HOLDINGS Financial Services 102 0.15%
MYCOM Real Estate 86 0.13%
JOHAN HOLDINGS Industrial Components 81 0.12%
MALAYAWATA STEEL Metals - Steel 80 0.12%
PILECON ENGINEERING Construction & Housing 79 0.12%
KEMAYAN CORP Misc. Materials & Commodities 47 0.07%
KELANAMAS INDUSTRIES Multi-Industry 25 0.04%
</TABLE>
A-34
<PAGE>
APPENDIX A-14
MSCI MEXICO (FREE) INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
TELEFONOS MEXICO L Telecommunications 19,805 21.01%
TELEFONOS MEXICO A Telecommunications 8,804 9.34%
GRUPO MODELO C Beverages & Tobacco 8,707 9.24%
CIFRA V Merchandising 6,585 6.99%
GRUPO TELEVISA CPO Broadcasting & Publishing 5,582 5.92%
KIMBERLY-CLARK MEXICO A Health & Personal Care 4,380 4.65%
FEMSA UNIT Beverages & Tobacco 3,559 3.78%
GRUPO CARSO Multi-Industry 3,511 3.73%
GRUPO MEXICO B Metals - Non-Ferrous 2,987 3.17%
GRUPO INDUSTRIAL BIMBO A Food & Household Products 2,882 3.06%
BANACCI O Banking 2,842 3.02%
SAVIA A(EMPR. LA MODERNA Beverages & Tobacco 2,647 2.81%
CEMEX A Building Materials & Components 2,541 2.70%
ALFA Multi-Industry 2,246 2.38%
CEMEX B Building Materials & Components 1,932 2.05%
APASCO Building Materials & Components 1,494 1.58%
GRUPO FIN BANCOMER O Banking 1,476 1.57%
CEMEX CPO Building Materials & Components 1,464 1.55%
DESC B Multi-Industry 1,407 1.49%
INDUSTRIAS PENOLES CP Metals - Non-Ferrous 1,081 1.15%
CIFRA C Merchandising 1,042 1.11%
GRUPO CONTINENTAL Beverages & Tobacco 1,034 1.10%
CONTROLADORA COM MEX UBC Merchandising 1,022 1.08%
TUBOS ACERO DE MEXICO Energy Equipment & Services 809 0.86%
GRUPO IND'L MASECA B2 Food & Household Products 595 0.63%
GRUPO ELEKTRA CPO Merchandising 568 0.60%
GRUPO FIN BANORTE O Banking 557 0.59%
VITRO A Misc. Materials & Commodities 512 0.54%
EMPRESAS ICA Construction & Housing 389 0.41%
EMPAQUES PONDEROSA Misc. Materials & Commodities 381 0.40%
GRUPO FIN BBV-PROBURSA B Financial Services 373 0.40%
BANACCI L Banking 355 0.38%
CORPORACION GEO B Construction & Housing 318 0.34%
CYDSA Chemicals 172 0.18%
HERDEZ (GRUPO) B Food & Household Products 98 0.10%
CONSORCIO G GRUPO DINA Machinery & Engineering 86 0.09%
</TABLE>
A-35
<PAGE>
APPENDIX A-15
MSCI NETHERLANDS INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
ROYAL DUTCH PETROLEUM CO Energy Sources 131,818 27.70%
AEGON Insurance 58,233 12.24%
ING GROEP Financial Services 52,068 10.94%
UNILEVER NV CERT Food & Household Products 39,755 8.36%
ABN AMRO HOLDING Banking 35,475 7.46%
PHILIPS ELECTRS (KON.) Appliances & Household Durables 34,938 7.34%
AHOLD (KON.) Merchandising 22,528 4.73%
KPN (KON.) Telecommunications 21,342 4.49%
HEINEKEN NV Beverages & Tobacco 15,634 3.29%
AKZO NOBEL Chemicals 13,277 2.79%
TNT POST GROEP Business & Public Services 11,763 2.47%
WOLTERS KLUWER Broadcasting & Publishing 10,278 2.16%
ELSEVIER Broadcasting & Publishing 7,686 1.62%
GETRONICS Business & Public Services 5,515 1.16%
HAGEMEYER Wholesale & International Trade 2,583 0.54%
HOOGOVENS (KON.) Metals - Steel 2,233 0.47%
KLM Transportation - Airlines 2,032 0.43%
OCE Data Processing & Reproduction 1,782 0.37%
VEDIOR Business & Public Services 1,662 0.35%
BUHRMANN Wholesale & International Trade 1,335 0.28%
IHC CALAND Construction & Housing 1,301 0.27%
PAKHOED (KON.) Energy Equipment & Services 848 0.18%
STORK (VER MACHINE.) Machinery & Engineering 669 0.14%
NEDLLOYD (KON.) Transportation - Road & Rail 652 0.14%
HOLLANDSCHE BETON GROEP Construction & Housing 409 0.09%
</TABLE>
A-36
<PAGE>
APPENDIX A-16
MSCI SINGAPORE INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
SINGAPORE TELECOM Telecommunications 10,830 14.28%
DBS BANK FGN(DEV BK SING Banking 9,186 12.11%
SINGAPORE AIRLINES FGN Transportation - Airlines 8,422 11.10%
OCBC BANK FGN Banking 7,278 9.59%
SINGAPORE PRESS HLDG Broadcasting & Publishing 6,071 8.00%
UNITED OVERSEAS BANK FGN Banking 5,180 6.83%
CITY DEVELOPMENTS Real Estate 4,851 6.39%
SINGAPORE TECH ENGR. Machinery & Engineering 3,419 4.51%
DBS LAND Real Estate 2,886 3.80%
KEPPEL CORP Multi-Industry 2,544 3.35%
VENTURE MANUFACTURING Electronic Comp. & Instruments 2,168 2.86%
SEMBCORP INDUSTRIES Multi-Industry 2,130 2.81%
NEPTUNE ORIENT LINES NOL Transportation - Shipping 1,518 2.00%
CYCLE & CARRIAGE Automobiles 1,320 1.74%
FRASER & NEAVE Beverages & Tobacco 1,133 1.49%
CREATIVE TECHNOLOGY Electronic Comp. & Instruments 891 1.18%
UIC UNITED INDUSTRIAL Real Estate 789 1.04%
NATSTEEL Metals - Steel 760 1.00%
PARKWAY HOLDINGS Business & Public Services 755 1.00%
UNITED OVERSEAS LAND Real Estate 551 0.73%
FIRST CAPITAL CORP Real Estate 510 0.67%
OVERSEAS UNION ENT. Leisure & Tourism 496 0.65%
HOTEL PROPERTIES Leisure & Tourism 416 0.55%
SHANGRI-LA HOTEL Leisure & Tourism 371 0.49%
STRAITS TRADING Multi-Industry 353 0.46%
HAW PAR CORP Multi-Industry 313 0.41%
COMFORT GROUP Transportation - Road & Rail 270 0.36%
ROBINSON AND CO Merchandising 225 0.30%
INCHCAPE MOTORS Automobiles 222 0.29%
</TABLE>
A-37
<PAGE>
APPENDIX A-17
MSCI SOUTH AFRICA INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
DE BEERS CONS'D MINES Misc. Materials & Commodities 10,526 10.97%
SOUTH AFRICAN BREW. PLC Beverages & Tobacco 6,360 6.63%
FIRSTRAND Financial Services 5,524 5.76%
ANGLOGOLD Gold Mines 4,915 5.12%
ANGLO AMERICAN PLATINUM Metals - Non-Ferrous 4,910 5.12%
NEDCOR Banking 4,675 4.87%
SASOL Chemicals 4,405 4.59%
REMBRANDT GROUP Beverages & Tobacco 3,914 4.08%
ABSA GROUP Financial Services 3,309 3.45%
SANLAM Insurance 3,164 3.30%
LIBERTY LIFE ASSOCIATION Insurance 3,164 3.30%
DIMENSION DATA HOLDINGS Business & Public Services 2,850 2.97%
INVESTEC GROUP Banking 2,778 2.89%
M-CELL Telecommunications 2,108 2.20%
IMPALA PLATINUM HOLDINGS Metals - Non-Ferrous 2,071 2.16%
SAPPI Forest Products & Paper 2,064 2.15%
BOE LTD Financial Services 2,057 2.14%
BIDVEST GROUP Multi-Industry 2,053 2.14%
COMPAREX HOLDINGS Business & Public Services 2,053 2.14%
IMPERIAL HOLDINGS Business & Public Services 1,747 1.82%
CORONATION HOLDINGS N Financial Services 1,567 1.63%
GOLD FIELDS (DRIEFONTEIN Gold Mines 1,548 1.61%
TIGER OATS Food & Household Products 1,406 1.47%
FEDSURE HOLDINGS Insurance 1,298 1.35%
NAMPAK Misc. Materials & Commodities 1,221 1.27%
THETA GROUP Financial Services 1,144 1.19%
BARLOW Machinery & Engineering 1,091 1.14%
METRO CASH & CARRY Wholesale & International Trade 1,007 1.05%
ISCOR Metals - Steel 957 1.00%
OMNI MEDIA CORP Broadcasting & Publishing 894 0.93%
METROPOLITAN LIFE Insurance 892 0.93%
MIH HOLDINGS Broadcasting & Publishing 827 0.86%
PROFURN Merchandising 820 0.85%
AFRICAN LIFE ASSURANCE Insurance 742 0.77%
PEPKOR Merchandising 716 0.75%
WOOLWORTHS HOLDINGS Merchandising 627 0.65%
PICK'N PAY STORES Merchandising 624 0.65%
NASPERS N Broadcasting & Publishing 619 0.65%
JD GROUP Merchandising 578 0.60%
FOSCHINI Merchandising 576 0.60%
TONGAAT-HULETT GROUP Food & Household Products 492 0.51%
WOOLTRU N Merchandising 472 0.49%
SAFMARINE & RENNIES HLDG Transportation - Shipping 360 0.38%
WOOLTRU Merchandising 327 0.34%
REUNERT Electrical & Electronics 255 0.27%
PRIMEDIA N Broadcasting & Publishing 251 0.26%
</TABLE>
A-38
<PAGE>
APPENDIX A-18
MSCI SPAIN INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
TELEFONICA Telecommunications 51,020 21.56%
BSCH BCO SANTANDER CENTR Banking 36,843 15.57%
BANCO BILBAO VIZCAYA Banking 27,721 11.71%
REPSOL YPF Energy Sources 24,883 10.52%
ENDESA Utilities - Electrical & Gas 21,248 8.98%
IBERDROLA Utilities - Electrical & Gas 12,951 5.47%
ARGENTARIA CORP BANCARIA Banking 11,162 4.72%
GAS NATURAL SDG Utilities - Electrical & Gas 10,533 4.45%
UNION ELECTRICA FENOSA Utilities - Electrical & Gas 4,345 1.84%
FOMENTO CONST Y CONTR Construction & Housing 3,562 1.51%
TABACALERA Beverages & Tobacco 3,534 1.49%
AUTOPISTAS CESA (ACESA) Business & Public Services 2,964 1.25%
ALBA (CORP FINANCIERA) Multi-Industry 2,415 1.02%
SOL MELIA Leisure & Tourism 2,336 0.99%
AGUAS DE BARCELONA Business & Public Services 2,258 0.95%
GRUPO DRAGADOS Construction & Housing 2,116 0.89%
ACERINOX Metals - Steel 1,937 0.82%
ZARDOYA OTIS Machinery & Engineering 1,604 0.68%
ACS ACTIV. CONST. Y SVCS Construction & Housing 1,538 0.65%
VALLEHERMOSO Real Estate 1,206 0.51%
MAPFRE (CORPORACION) Insurance 1,141 0.48%
TELEPIZZA Leisure & Tourism 1,120 0.47%
CORTEFIEL Merchandising 1,119 0.47%
METROVACESA Real Estate 1,118 0.47%
AZUCARERA EBRO AGRICOLAS Food & Household Products 976 0.41%
PORTLAND VALDERRIVAS Building Materials & Components 644 0.27%
PROSEGUR Business & Public Services 592 0.25%
ASTURIANA DE ZINC Metals - Non-Ferrous 553 0.23%
URBIS (INMOBILIARIA) Real Estate 529 0.22%
VISCOFAN Misc. Materials & Commodities 490 0.21%
URALITA Building Materials & Components 448 0.19%
PULEVA Food & Household Products 439 0.19%
ENCE EMPR NAC CELULOSAS Forest Products & Paper 426 0.18%
FAES Health & Personal Care 367 0.16%
AGUILA (EL) Beverages & Tobacco 334 0.14%
ERCROS Chemicals 170 0.07%
</TABLE>
A-39
<PAGE>
APPENDIX A-19
MSCI SWEDEN INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
ERICSSON (LM) B Electrical & Electronics 62,848 33.95%
HENNES & MAURITZ B Merchandising 20,891 11.29%
SKANDIA FORSAKRING Insurance 10,410 5.62%
SVENSKA HANDELSBK A Banking 9,011 4.87%
VOLVO B Automobiles 8,472 4.58%
FOERENINGSSPARBANKEN Banking 7,924 4.28%
ELECTROLUX B Appliances & Household Durables 7,360 3.98%
SKAND.ENSKILDA BANKEN A Banking 6,090 3.29%
SCA SV CELLULOSA B Forest Products & Paper 5,736 3.10%
SANDVIK A Machinery & Engineering 5,161 2.79%
SECURITAS B Business & Public Services 4,645 2.51%
SKANSKA B Construction & Housing 4,453 2.41%
VOLVO A Automobiles 3,902 2.11%
ATLAS COPCO A Machinery & Engineering 3,530 1.91%
NETCOM B Telecommunications 3,508 1.90%
WM-DATA B Business & Public Services 2,737 1.48%
AGA A Chemicals 1,978 1.07%
SANDVIK B Machinery & Engineering 1,899 1.03%
ATLAS COPCO B Machinery & Engineering 1,740 0.94%
SWEDISH MATCH Beverages & Tobacco 1,739 0.94%
AGA B Chemicals 1,725 0.93%
SKF B Industrial Components 1,470 0.79%
SSAB SVENSKT STAL A Metals - Steel 1,141 0.62%
TRELLEBORG B Multi-Industry 1,051 0.57%
SKF A Industrial Components 1,050 0.57%
DROTT B Real Estate 986 0.53%
OM GRUPPEN Financial Services 948 0.51%
SVENSKA HANDELSBK B Banking 832 0.45%
GRAENGES Metals - Non-Ferrous 696 0.38%
DILIGENTIA Real Estate 467 0.25%
SSAB SVENSKT STAL B Metals - Steel 413 0.22%
ESSELTE A Business & Public Services 158 0.09%
ESSELTE B Business & Public Services 127 0.07%
</TABLE>
A-40
<PAGE>
APPENDIX A-20
MSCI SWITZERLAND INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
NOVARTIS Health & Personal Care 98,540 17.85%
ROCHE HOLDING GENUSS Health & Personal Care 81,241 14.72%
NESTLE Food & Household Products 77,439 14.03%
UBS (NEW) Banking 58,513 10.60%
CREDIT SUISSE Banking 50,296 9.11%
ABB LTD Electrical & Electronics 30,592 5.54%
ROCHE HOLDING INHABER Health & Personal Care 28,513 5.17%
ZURICH ALLIED Insurance 28,485 5.16%
SCHWEIZ RUECKVERS Insurance 27,905 5.06%
SWISSCOM Telecommunications 24,248 4.39%
ADECCO Business & Public Services 9,363 1.70%
ALUSUISSE-LONZA GROUP Multi-Industry 7,428 1.35%
HOLDERBANK INHABER Building Materials & Components 6,580 1.19%
HOLDERBANK NAMEN Building Materials & Components 3,529 0.64%
SWATCH GROUP PORT Recreation, Other Consumer Goods 2,643 0.48%
SWATCH GROUP NOM Recreation, Other Consumer Goods 2,376 0.43%
SULZER Machinery & Engineering 2,284 0.41%
SAIRGROUP Transportation - Airlines 2,261 0.41%
KUONI REISEN NAMEN B Leisure & Tourism 1,279 0.23%
SCHINDLER NAMEN Machinery & Engineering 1,234 0.22%
SGS SURVEILLANCE PORT Business & Public Services 1,182 0.21%
VALORA HOLDING NAMEN Merchandising 1,034 0.19%
FISCHER (GEORG) NAMEN Machinery & Engineering 994 0.18%
SCHINDLER PART Machinery & Engineering 922 0.17%
SIKA FINANZ INHABER Chemicals 713 0.13%
SGS SURVEILLANCE NOM Business & Public Services 702 0.13%
FORBO HOLDING Building Materials & Components 581 0.11%
MOEVENPICK INHABER Leisure & Tourism 489 0.09%
JELMOLI HOLDING INHABER Merchandising 390 0.07%
JELMOLI HOLDING NAMEN Merchandising 264 0.05%
</TABLE>
A-41
<PAGE>
APPENDIX A-21
MSCI TAIWAN INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
TAIWAN SEMICONDUCTOR MFG Electronic Comp. & Instruments 32,003 14.49%
UNITED MICROELECTRONICS Electronic Comp. & Instruments 16,031 7.26%
CATHAY LIFE INSURANCE CO Insurance 14,456 6.55%
ASUSTEK COMPUTER Electronic Comp. & Instruments 12,297 5.57%
QUANTA COMPUTER Data Processing & Reproduction 11,274 5.11%
CHINA DEVLPT IND'L BANK Financial Services 8,604 3.90%
NAN YA PLASTIC Chemicals 7,587 3.44%
FORMOSA PLASTIC CORP Chemicals 6,771 3.07%
CHINA STEEL CORP COMMON Metals - Steel 6,703 3.04%
HON HAI PRECISION IND CO Electronic Comp. & Instruments 6,686 3.03%
ACER Data Processing & Reproduction 6,361 2.88%
ASE Electronic Comp. & Instruments 5,910 2.68%
WINBOND ELECTRONICS CORP Electronic Comp. & Instruments 5,344 2.42%
HUA NAN COMMERCIAL BANK Banking 5,239 2.37%
FIRST COMMERCIAL BANK Banking 5,132 2.32%
UNITED WORLD CHIN COM BK Banking 4,063 1.84%
TATUNG Multi-Industry 4,041 1.83%
COMPAL ELECTRONICS Data Processing & Reproduction 3,917 1.77%
FAR EASTERN TEXTILE Textiles & Apparel 3,808 1.72%
CHANG HWA COMMERCIAL BK Banking 3,668 1.66%
ICBC INT'L COMM BK CHINA Banking 3,465 1.57%
CHINATRUST COMMERCIAL BK Banking 3,390 1.54%
FORMOSA CHEMICAL FIBERS Chemicals 3,213 1.45%
DELTA ELECTRONICS Electronic Comp. & Instruments 2,742 1.24%
MOSEL VITELIC Electronic Comp. & Instruments 2,248 1.02%
UNI-PRESIDENT ENT.(PRESI Food & Household Products 2,039 0.92%
EVERGREEN MARINE CORP Transportation - Shipping 1,917 0.87%
POU CHEN CORP Recreation, Other Consumer Goods 1,858 0.84%
ASIA CEMENT CORP Building Materials & Components 1,503 0.68%
YULON MOTOR CO(YUE LOONG Automobiles 1,486 0.67%
TAIWAN CEMENT CORP Building Materials & Components 1,402 0.63%
PACIFIC ELECTRIC WIRE Industrial Components 1,376 0.62%
CHINA MOTOR CORP Automobiles 1,374 0.62%
TECO ELECTRIC & MACH. Multi-Industry 1,254 0.57%
CHUNG HSING BILLS FIN Financial Services 1,179 0.53%
WALSIN LIHWA CORP Industrial Components 1,143 0.52%
YANG MING MARINE TRANSP Transportation - Shipping 946 0.43%
TAIWAN TEA CORP Wholesale & International Trade 884 0.40%
KINPO ELECTRONICS Recreation, Other Consumer Goods 852 0.39%
TAIWAN GLASS IND'L CORP Building Materials & Components 844 0.38%
LITE-ON ELECTRONICS Electrical & Electronics 801 0.36%
CATHAY CONSTRUCTION Real Estate 800 0.36%
CHENG SHIN RUBBER IND Industrial Components 777 0.35%
AURORA CORP Merchandising 749 0.34%
</TABLE>
A-42
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
TAIWAN PINEAPPLE Food & Household Products 701 0.32%
HUALON-TEIJRAN COMMON Chemicals 700 0.32%
TON YI INDUSTRIAL COMMON Misc. Materials & Commodities 656 0.30%
TUNTEX DISTINCT Chemicals 614 0.28%
NIEN HSING TEXTILE CORP Textiles & Apparel 598 0.27%
SHINKONG SYNTH. FIBERS Chemicals 547 0.25%
SHIHLIN ELECTR. & ENG Industrial Components 496 0.22%
CONTINENTAL ENGINEERING Construction & Housing 485 0.22%
SAMPO CORP Appliances & Household Durables 469 0.21%
ORIENTAL UNION CHEMICAL Chemicals 462 0.21%
EVER FORTUNE Construction & Housing 460 0.21%
SHIHLIN PAPER Forest Products & Paper 454 0.21%
FAR EAST DEPT STORES Merchandising 429 0.19%
CHUNG HWA PULP CORP Forest Products & Paper 417 0.19%
BES ENGINEERING CORP Construction & Housing 395 0.18%
CHINA SYNTHETIC RUBBER Chemicals 364 0.16%
GOLDSUN DEVLPT & CONSTR. Building Materials & Components 352 0.16%
PACIFIC CONSTRUCTION Real Estate 331 0.15%
LIEN HWA INDUSTRIAL CORP Food & Household Products 327 0.15%
MICROELECTRONICS TECH Electrical & Electronics 325 0.15%
LEE CHANG YUNG CHEMICAL Chemicals 324 0.15%
TAY FENG TIRE Industrial Components 322 0.15%
YUNG TAI ENGINEERING Machinery & Engineering 306 0.14%
LEOFOO DEVELOPMENT CORP Leisure & Tourism 285 0.13%
TUNG HO STEEL ENTERPRISE Metals - Steel 276 0.12%
FORMOSAN RUBBER GROUP Chemicals 272 0.12%
ADI CORP Data Processing & Reproduction 264 0.12%
HUA ENG WIRE & CABLE Industrial Components 241 0.11%
TAIWAN PULP & PAPER CO Forest Products & Paper 230 0.10%
CHUNG SHING TEXTILE CO Textiles & Apparel 211 0.10%
WEI CHUAN FOOD Food & Household Products 208 0.09%
AMBASSADOR HOTEL Leisure & Tourism 170 0.08%
</TABLE>
A-43
<PAGE>
APPENDIX A-22
MSCI UNITED KINGDOM INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
BP AMOCO Energy Sources 180,313 10.21%
VODAFONE AIRTOUCH Telecommunications 122,260 6.92%
HSBC HOLDINGS (GB) Banking 104,021 5.89%
BRITISH TELECOM Telecommunications 99,136 5.61%
GLAXO WELLCOME Health & Personal Care 95,090 5.38%
LLOYDS TSB GROUP Banking 75,269 4.26%
SMITHKLINE BEECHAM Health & Personal Care 72,822 4.12%
ASTRAZENECA (ZENECA) Health & Personal Care 70,784 4.01%
BARCLAYS Banking 44,650 2.53%
DIAGEO Beverages & Tobacco 34,726 1.97%
PRUDENTIAL CORP Insurance 29,110 1.65%
CABLE & WIRELESS Telecommunications 27,521 1.56%
UNILEVER PLC Food & Household Products 27,478 1.56%
GENERAL ELECTRIC PLC Electrical & Electronics 27,216 1.54%
HALIFAX GROUP Banking 25,082 1.42%
ABBEY NATIONAL Banking 24,341 1.38%
BG Utilities - Electrical & Gas 23,776 1.35%
REUTERS GROUP Business & Public Services 20,836 1.18%
TESCO Merchandising 19,616 1.11%
CGU Insurance 19,504 1.10%
INVENSYS (BTR SIEBE) Electronic Comp. & Instruments 19,369 1.10%
ALLIED ZURICH Insurance 19,225 1.09%
MARKS & SPENCER Merchandising 19,179 1.09%
RIO TINTO PLC REG Metals - Non-Ferrous 19,067 1.08%
ROYAL BANK OF SCOTLAND Banking 18,378 1.04%
BRITISH AMERICAN TOBACCO Beverages & Tobacco 18,308 1.04%
KINGFISHER Merchandising 16,367 0.93%
GRANADA GROUP Leisure & Tourism 16,356 0.93%
BRITISH SKY BROADCASTING Broadcasting & Publishing 16,292 0.92%
LEGAL & GENERAL GROUP Insurance 14,053 0.80%
SAINSBURY (J) Merchandising 13,232 0.75%
CADBURY SCHWEPPES Beverages & Tobacco 12,934 0.73%
BRITISH AEROSPACE Aerospace & Military Technology 12,932 0.73%
PEARSON Broadcasting & Publishing 12,589 0.71%
ROYAL & SUN ALLIANCE INS Insurance 11,855 0.67%
RENTOKIL INITIAL Business & Public Services 11,505 0.65%
BOOTS CO Merchandising 11,302 0.64%
BAA Business & Public Services 11,130 0.63%
SCOTTISH POWER Utilities - Electrical & Gas 11,034 0.62%
GKN Machinery & Engineering 10,908 0.62%
BASS Leisure & Tourism 10,707 0.61%
CENTRICA Utilities - Electrical & Gas 10,646 0.60%
PEN & ORIENTAL STEAM Transportation - Shipping 10,547 0.60%
BOC GROUP Chemicals 10,300 0.58%
GREAT UNIVERSAL STORES Merchandising 10,140 0.57%
NATIONAL GRID GROUP Utilities - Electrical & Gas 9,869 0.56%
</TABLE>
A-44
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
RAILTRACK GROUP Business & Public Services 9,720 0.55%
NATIONAL POWER Utilities - Electrical & Gas 8,817 0.50%
IMPERIAL CHEMICAL ICI Chemicals 8,271 0.47%
SCOTTISH & SOUTH. ENERGY Utilities - Electrical & Gas 8,040 0.46%
LAND SECURITIES Real Estate 7,849 0.44%
REED INTERNATIONAL Broadcasting & Publishing 7,587 0.43%
BRITISH AIRWAYS Transportation - Airlines 7,028 0.40%
EMI GROUP Recreation, Other Consumer Goods 6,692 0.38%
UNITED UTILITIES Business & Public Services 6,511 0.37%
SCHRODERS Financial Services 6,368 0.36%
COMPASS GROUP Business & Public Services 6,325 0.36%
SCOTTISH & NEWCASTLE Leisure & Tourism 6,146 0.35%
ROLLS-ROYCE Aerospace & Military Technology 5,936 0.34%
HILTON GROUP (LADBROKE) Leisure & Tourism 5,688 0.32%
HANSON Building Materials & Components 5,544 0.31%
BLUE CIRCLE INDUSTRIES Building Materials & Components 5,484 0.31%
ASSOCIATED BRITISH FOODS Food & Household Products 5,429 0.31%
BRITISH STEEL Metals - Steel 5,201 0.29%
MISYS Business & Public Services 5,088 0.29%
THAMES WATER Business & Public Services 5,029 0.28%
STAGECOACH HOLDINGS Transportation - Road & Rail 4,802 0.27%
SMITHS INDUSTRIES Machinery & Engineering 4,677 0.26%
CARLTON COMMUNICATIONS Leisure & Tourism 4,629 0.26%
WOLSELEY Building Materials & Components 4,570 0.26%
NEXT Merchandising 4,431 0.25%
SAFEWAY PLC Merchandising 4,382 0.25%
BRITISH LAND CO Real Estate 4,346 0.25%
RMC GROUP Building Materials & Components 4,274 0.24%
WILLIAMS Electronic Comp. & Instruments 4,140 0.23%
TI GROUP Multi-Industry 3,882 0.22%
BBA GROUP Industrial Components 3,508 0.20%
ELECTROCOMPONENTS Electronic Comp. & Instruments 3,488 0.20%
PROVIDENT FINANCIAL Financial Services 3,380 0.19%
BURMAH CASTROL Energy Sources 3,368 0.19%
LASMO Energy Sources 3,301 0.19%
ANGLIAN WATER Business & Public Services 3,238 0.18%
RANK GROUP Leisure & Tourism 3,212 0.18%
TATE & LYLE Food & Household Products 2,957 0.17%
ARJO WIGGINS APPLETON Forest Products & Paper 2,923 0.17%
MEPC Real Estate 2,919 0.17%
BPB Building Materials & Components 2,881 0.16%
SLOUGH ESTATES Real Estate 2,406 0.14%
BUNZL Misc. Materials & Commodities 2,360 0.13%
OCEAN GROUP Business & Public Services 2,330 0.13%
HAMMERSON Real Estate 2,306 0.13%
JOHNSON MATTHEY Multi-Industry 2,149 0.12%
BOWTHORPE Electronic Comp. & Instruments 1,979 0.11%
FKI Electrical & Electronics 1,947 0.11%
PILKINGTON Misc. Materials & Commodities 1,905 0.11%
REXAM Misc. Materials & Commodities 1,864 0.11%
</TABLE>
A-45
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
REXAM Misc. Materials & Commodities 1,864 0.11%
RACAL ELECTRONICS Electrical & Electronics 1,752 0.10%
IMI Multi-Industry 1,723 0.10%
TARMAC Building Materials & Components 1,615 0.09%
BERKELEY GROUP (THE) Construction & Housing 1,603 0.09%
UNITED BISCUITS Food & Household Products 1,478 0.08%
UNIGATE Food & Household Products 1,476 0.08%
LONMIN (LONRHO) Gold Mines 1,445 0.08%
ST JAMES'S PLACE CAPITAL Financial Services 1,372 0.08%
GREAT PORTLAND ESTATES Real Estate 1,369 0.08%
HYDER Business & Public Services 1,363 0.08%
DE LA RUE Business & Public Services 1,358 0.08%
COBHAM Aerospace & Military Technology 1,353 0.08%
CARADON Building Materials & Components 1,302 0.07%
BARRATT DEVELOPMENTS Construction & Housing 1,214 0.07%
TAYLOR WOODROW Construction & Housing 1,195 0.07%
MEYER INTERNATIONAL Building Materials & Components 1,164 0.07%
RUGBY GROUP Building Materials & Components 1,157 0.07%
LEX SERVICE Business & Public Services 1,142 0.06%
AMEC Construction & Housing 902 0.05%
WIMPEY (GEORGE) Construction & Housing 895 0.05%
HEPWORTH Building Materials & Components 890 0.05%
ELEMENTIS 98 Chemicals 812 0.05%
BICC Industrial Components 765 0.04%
LAIRD GROUP Machinery & Engineering 700 0.04%
VICKERS Machinery & Engineering 653 0.04%
JARVIS Construction & Housing 629 0.04%
COATS VIYELLA Textiles & Apparel 597 0.03%
WILSON (CONNOLLY) HLDGS Construction & Housing 570 0.03%
DELTA Industrial Components 394 0.02%
TRANSPORT DEVELOPMENT Transportation - Road & Rail 328 0.02%
COURTAULDS TEXTILES Textiles & Apparel 282 0.02%
</TABLE>
A-46
<PAGE>
APPENDIX A-23
MSCI USA INDEX AS OF AUGUST 31, 1999
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
MICROSOFT CORP Business & Public Services 467,155 5.48%
GENERAL ELECTRIC CO Multi-Industry 367,473 4.31%
INTEL CORP Electronic Comp. & Instruments 276,505 3.24%
IBM CORP Data Processing & Reproduction 226,061 2.65%
CISCO SYSTEMS Electronic Comp. & Instruments 218,566 2.56%
WAL-MART STORES Merchandising 197,054 2.31%
LUCENT TECHNOLOGIES Electrical & Electronics 194,741 2.29%
EXXON CORP Energy Sources 191,492 2.25%
MERCK & CO Health & Personal Care 158,599 1.86%
CITIGROUP Financial Services 151,861 1.78%
AT & T CORP Telecommunications 150,928 1.77%
COCA-COLA CO Beverages & Tobacco 147,593 1.73%
PFIZER Health & Personal Care 146,576 1.72%
AMERICAN INT'L GROUP Insurance 143,467 1.68%
BRISTOL-MYERS SQUIBB CO Health & Personal Care 139,770 1.64%
JOHNSON & JOHNSON Health & Personal Care 137,547 1.61%
MCI WORLDCOM Telecommunications 133,515 1.57%
PROCTER & GAMBLE CO Food & Household Products 131,854 1.55%
HEWLETT-PACKARD CO Data Processing & Reproduction 106,745 1.25%
BANK OF AMERICA CORP Banking 105,565 1.24%
AMERICA ONLINE Business & Public Services 101,182 1.19%
BELL ATLANTIC CORP Telecommunications 95,174 1.12%
SBC COMMUNICATIONS Telecommunications 94,387 1.11%
HOME DEPOT Merchandising 91,124 1.07%
PHILIP MORRIS COS Beverages & Tobacco 90,327 1.06%
BELLSOUTH CORP Telecommunications 85,706 1.01%
LILLY (ELI) & CO Health & Personal Care 82,153 0.96%
MOBIL CORP Energy Sources 80,111 0.94%
SCHERING-PLOUGH CORP Health & Personal Care 77,481 0.91%
TIME WARNER Broadcasting & Publishing 70,751 0.83%
ABBOTT LABORATORIES Health & Personal Care 65,988 0.77%
WELLS FARGO & CO Banking 65,803 0.77%
TEXAS INSTRUMENTS Electronic Comp. & Instruments 64,474 0.76%
FANNIE MAE Financial Services 63,796 0.75%
DU PONT (E.I) DE NEMOURS Chemicals 62,042 0.73%
AMERICAN EXPRESS Financial Services 61,776 0.72%
CHEVRON CORP Energy Sources 60,497 0.71%
EMC CORP Electronic Comp. & Instruments 60,373 0.71%
DISNEY (WALT) CO NEW Leisure & Tourism 57,219 0.67%
WARNER-LAMBERT CO Health & Personal Care 56,476 0.66%
MCDONALD'S CORP Leisure & Tourism 56,185 0.66%
MOTOROLA Electronic Comp. & Instruments 55,627 0.65%
AMERICAN HOME PRODUCTS Health & Personal Care 54,697 0.64%
ORACLE CORP Business & Public Services 52,541 0.62%
GILLETTE CO Health & Personal Care 51,622 0.61%
BANK ONE CORP Banking 47,058 0.55%
</TABLE>
A-47
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
GENERAL MOTORS CORP Automobiles 42,956 0.50%
BOEING CO Aerospace & Military Technology 41,818 0.49%
AT&T-LIBERTY MEDIA GRP A Broadcasting & Publishing 40,484 0.48%
FIRST UNION CORP Banking 40,168 0.47%
SPRINT FON GROUP Telecommunications 38,496 0.45%
MINNESOTA MINING & MFG Multi-Industry 38,049 0.45%
ANHEUSER-BUSCH Beverages & Tobacco 36,042 0.42%
GAP Merchandising 33,549 0.39%
CBS CORP Broadcasting & Publishing 32,445 0.38%
SCHWAB (CHARLES) CORP Financial Services 32,102 0.38%
UNITED TECHNOLOGIES CORP Aerospace & Military Technology 31,766 0.37%
XEROX CORP Data Processing & Reproduction 31,701 0.37%
KIMBERLY-CLARK CORP Health & Personal Care 30,314 0.36%
COMPUTER ASSOC INT'L Business & Public Services 30,303 0.36%
ENRON CORP Utilities - Electrical & Gas 29,616 0.35%
VIACOM B Broadcasting & Publishing 29,040 0.34%
QUALCOMM Electrical & Electronics 28,952 0.34%
ATLANTIC RICHFIELD Energy Sources 28,312 0.33%
ELECTRONIC DATA SYSTEMS Business & Public Services 27,626 0.32%
CARNIVAL CORP A Leisure & Tourism 27,401 0.32%
MERRILL LYNCH & CO Financial Services 27,170 0.32%
APPLIED MATERIALS Electronic Comp. & Instruments 26,504 0.31%
BANK NEW YORK CO Banking 26,287 0.31%
ALLSTATE CORP Insurance 26,196 0.31%
MONSANTO CO Chemicals 25,969 0.30%
DAYTON HUDSON CORP Merchandising 25,559 0.30%
DOW CHEMICAL CO Chemicals 24,964 0.29%
AUTOMATIC DATA PROCESS Business & Public Services 24,324 0.29%
EASTMAN KODAK CO Recreation, Other Consumer Goods 23,626 0.28%
ALCOA Metals - Non-Ferrous 23,214 0.27%
WALGREEN CO Merchandising 23,149 0.27%
MORGAN (J.P) & CO Banking 22,914 0.27%
FLEET FINANCIAL GROUP Banking 22,709 0.27%
US BANCORP Banking 22,406 0.26%
DUKE ENERGY CORP Utilities - Electrical & Gas 20,943 0.25%
SUNTRUST BANKS Banking 20,681 0.24%
HALLIBURTON CO Energy Equipment & Services 20,433 0.24%
CATERPILLAR Machinery & Engineering 20,148 0.24%
ALBERTSON'S Merchandising 20,132 0.24%
SARA LEE CORP Food & Household Products 20,102 0.24%
MBNA CORP Financial Services 19,794 0.23%
BAXTER INTERNATIONAL Health & Personal Care 19,525 0.23%
ILLINOIS TOOL WORKS Industrial Components 19,521 0.23%
INT'L PAPER CO Forest Products & Paper 19,298 0.23%
CAMPBELL SOUP CO (US) Food & Household Products 19,185 0.23%
MARSH & MCLENNAN COS Insurance 19,167 0.22%
KROGER CO Merchandising 19,027 0.22%
FIRST DATA CORP Business & Public Services 19,004 0.22%
GANNETT CO Broadcasting & Publishing 18,981 0.22%
WASHINGTON MUTUAL Banking 18,886 0.22%
</TABLE>
A-48
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
SOUTHERN CO Utilities - Electrical & Gas 18,865 0.22%
MICRON TECHNOLOGY Electronic Comp. & Instruments 18,748 0.22%
CIGNA CORP Insurance 18,273 0.21%
HOUSEHOLD INTERNATIONAL Financial Services 18,097 0.21%
WILLIAMS COS Energy Sources 17,646 0.21%
NATIONAL CITY CORP Banking 17,372 0.20%
HEINZ (H.J) CO Food & Household Products 16,783 0.20%
COSTCO CO Merchandising 16,506 0.19%
CVS CORP Merchandising 16,293 0.19%
CORNING Electronic Comp. & Instruments 16,230 0.19%
WACHOVIA CORP Banking 15,929 0.19%
PNC BANK CORP Banking 15,814 0.19%
COLUMBIA/HCA HEALTHCARE Business & Public Services 15,298 0.18%
SEARS, ROEBUCK & CO Merchandising 14,285 0.17%
CENDANT CORP Business & Public Services 13,999 0.16%
BANKBOSTON CORP Banking 13,804 0.16%
BURLINGTON NTHN SANTA FE Transportation - Road & Rail 13,482 0.16%
NIKE B Recreation, Other Consumer Goods 13,428 0.16%
WASTE MANAGEMENT Business & Public Services 13,323 0.16%
MAY DEPARTMENT STORES CO Merchandising 13,053 0.15%
KEYCORP Banking 12,988 0.15%
BMC SOFTWARE Business & Public Services 12,875 0.15%
GENERAL MILLS Food & Household Products 12,800 0.15%
FDX CORP Business & Public Services 12,623 0.15%
GENERAL DYNAMICS CORP Aerospace & Military Technology 12,584 0.15%
TEXTRON Multi-Industry 12,176 0.14%
UNION PACIFIC CORP Transportation - Road & Rail 12,054 0.14%
AFLAC Insurance 12,007 0.14%
CONAGRA Food & Household Products 11,961 0.14%
PG&E CORP Utilities - Electrical & Gas 11,627 0.14%
NEWELL RUBBERMAID(NEWELL Appliances & Household Durables 11,552 0.14%
AVON PRODUCTS Health & Personal Care 11,491 0.13%
TEXAS UTILITIES Utilities - Electrical & Gas 11,349 0.13%
UNITED HEALTHCARE CORP Business & Public Services 11,325 0.13%
WEYERHAEUSER CO Forest Products & Paper 11,284 0.13%
ROCKWELL INT'L Electronic Comp. & Instruments 11,257 0.13%
BAKER HUGHES Energy Equipment & Services 11,222 0.13%
INTERPUBLIC GROUP OF COS Business & Public Services 11,094 0.13%
TRIBUNE CO Broadcasting & Publishing 11,066 0.13%
AETNA Business & Public Services 10,961 0.13%
SYSCO CORP Business & Public Services 10,798 0.13%
CLOROX CO Food & Household Products 10,679 0.13%
DELPHI AUTOMOTIVE SYS Industrial Components 10,594 0.12%
INGERSOLL-RAND CO Machinery & Engineering 10,558 0.12%
APPLE COMPUTER Data Processing & Reproduction 10,497 0.12%
PPG INDUSTRIES Chemicals 10,433 0.12%
HARTFORD FINANCIAL SVCS Insurance 10,311 0.12%
MCGRAW-HILL COS Broadcasting & Publishing 10,224 0.12%
UNOCAL CORP Energy Sources 10,114 0.12%
</TABLE>
A-49
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
STAPLES Merchandising 10,089 0.12%
CHUBB CORP Insurance 10,061 0.12%
CONSOLIDATED EDISON Utilities - Electrical & Gas 9,998 0.12%
NORFOLK SOUTHERN CORP Transportation - Road & Rail 9,950 0.12%
FPL GROUP Utilities - Electrical & Gas 9,729 0.11%
STATE STREET CORP Banking 9,644 0.11%
USX-MARATHON GROUP Energy Sources 9,607 0.11%
MASCO CORP Building Materials & Components 9,540 0.11%
CSX CORP Transportation - Road & Rail 9,497 0.11%
PENNEY (J.C) CO Merchandising 9,428 0.11%
LINCOLN NATIONAL CORP Insurance 9,391 0.11%
PIONEER HI-BRED INT'L Misc. Materials & Commodities 9,369 0.11%
COASTAL CORP Energy Sources 9,259 0.11%
TANDY CORP Merchandising 9,243 0.11%
IMS HEALTH Business & Public Services 9,240 0.11%
PUBLIC SV ENTERPRISE CO Utilities - Electrical & Gas 9,098 0.11%
DEERE & CO Machinery & Engineering 9,068 0.11%
QUAKER OATS CO Food & Household Products 9,010 0.11%
DOMINION RESOURCES Utilities - Electrical & Gas 8,878 0.10%
MARRIOTT INT'L A Leisure & Tourism 8,828 0.10%
AMR CORP Transportation - Airlines 8,825 0.10%
EDISON INTERNATIONAL Utilities - Electrical & Gas 8,810 0.10%
GOODYEAR TIRE & RUBBER Industrial Components 8,755 0.10%
RALSTON - RALSTON PURINA Food & Household Products 8,601 0.10%
UNUMPROVIDENT (UNUM CORP Insurance 8,600 0.10%
AON CORP Insurance 8,550 0.10%
MCKESSON HBOC Business & Public Services 8,481 0.10%
UNICOM CORP Utilities - Electrical & Gas 8,388 0.10%
SOUTHWEST AIRLINES CO Transportation - Airlines 8,371 0.10%
HARLEY-DAVIDSON Recreation, Other Consumer Goods 8,360 0.10%
RELIANT ENER(HOUSTON IND Utilities - Electrical & Gas 8,205 0.10%
COMERICA Banking 8,139 0.10%
LIMITED Merchandising 8,108 0.10%
MATTEL Recreation, Other Consumer Goods 8,101 0.10%
DOVER CORP Multi-Industry 8,063 0.09%
ARCHER-DANIELS-MIDLAND Food & Household Products 8,028 0.09%
NOVELL Business & Public Services 7,997 0.09%
ROHM & HAAS CO Chemicals 7,938 0.09%
PECO ENERGY CO Utilities - Electrical & Gas 7,792 0.09%
GEORGIA-PACIFIC GROUP Forest Products & Paper 7,747 0.09%
UNION CARBIDE CORP Chemicals 7,564 0.09%
OCCIDENTAL PETROLEUM Energy Sources 7,542 0.09%
PRAXAIR Chemicals 7,432 0.09%
SEAGATE TECHNOLOGY Data Processing & Reproduction 7,391 0.09%
ENTERGY CORP Utilities - Electrical & Gas 7,361 0.09%
ST PAUL COS Insurance 7,255 0.09%
AIR PRODUCTS & CHEMICALS Chemicals 7,169 0.08%
DELTA AIR LINES Transportation - Airlines 7,131 0.08%
FORT JAMES CORP Health & Personal Care 7,126 0.08%
</TABLE>
A-50
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
JEFFERSON-PILOT CORP Insurance 7,070 0.08%
BECTON, DICKINSON Health & Personal Care 7,040 0.08%
EATON CORP Industrial Components 7,036 0.08%
AMERICAN ELECTRIC POWER Utilities - Electrical & Gas 7,022 0.08%
PE CORP-PE BIOSYSTEMS Health & Personal Care 6,854 0.08%
GENERAL MOTORS H (NEW) Electrical & Electronics 6,820 0.08%
FIRSTENERGY CORP Utilities - Electrical & Gas 6,702 0.08%
EQUITY OFFICE PROPERTIES Real Estate 6,592 0.08%
TRW Industrial Components 6,560 0.08%
K.MART CORP Merchandising 6,219 0.07%
CONSOLIDATED NATURAL GAS Utilities - Electrical & Gas 6,102 0.07%
ADOBE SYSTEMS Business & Public Services 6,078 0.07%
PACIFICORP Utilities - Electrical & Gas 6,077 0.07%
JOHNSON CONTROLS Industrial Components 5,825 0.07%
CAROLINA POWER & LIGHT Utilities - Electrical & Gas 5,803 0.07%
DTE ENERGY Utilities - Electrical & Gas 5,784 0.07%
PAINE WEBBER GROUP Financial Services 5,732 0.07%
MAYTAG CORP Appliances & Household Durables 5,537 0.06%
AVERY DENNISON CORP Business & Public Services 5,445 0.06%
BLOCK (H&R) Business & Public Services 5,431 0.06%
SEMPRA ENERGY Utilities - Electrical & Gas 5,355 0.06%
WHIRLPOOL CORP Appliances & Household Durables 5,323 0.06%
CHAMPION INTERNATIONAL Forest Products & Paper 5,266 0.06%
EQUITY RESIDENTIAL PPTY Real Estate 5,261 0.06%
MBIA Insurance 5,177 0.06%
GENUINE PARTS CO Wholesale & International Trade 5,170 0.06%
GOLDEN WEST FINANCIAL Banking 5,094 0.06%
WINN-DIXIE STORES Merchandising 5,053 0.06%
SEALED AIR CORP Misc. Materials & Commodities 4,905 0.06%
COOPER INDUSTRIES Electrical & Electronics 4,897 0.06%
COLUMBIA ENERGY GROUP Utilities - Electrical & Gas 4,884 0.06%
SAFECO CORP Insurance 4,856 0.06%
CENTRAL & SOUTH WEST Utilities - Electrical & Gas 4,810 0.06%
RITE AID CORP Merchandising 4,789 0.06%
PARKER HANNIFIN CORP Industrial Components 4,748 0.06%
BLACK & DECKER CORP Recreation, Other Consumer Goods 4,578 0.05%
DOW JONES & CO Broadcasting & Publishing 4,552 0.05%
CONSTELLATION ENER(BALTI Utilities - Electrical & Gas 4,431 0.05%
PP&L RESOURCES Utilities - Electrical & Gas 4,415 0.05%
WILLAMETTE INDUSTRIES Forest Products & Paper 4,412 0.05%
INT'L FLAVORS FRAGRANCES Chemicals 4,321 0.05%
VF CORP Textiles & Apparel 4,317 0.05%
VULCAN MATERIALS CO Building Materials & Components 4,300 0.05%
GENERAL PUBLIC UTILITIES Utilities - Electrical & Gas 4,289 0.05%
SIMON PROPERTY GROUP Real Estate 4,227 0.05%
DUN & BRADSTREET CORP Business & Public Services 4,216 0.05%
STARWOOD HOT.&RES. WORLD Leisure & Tourism 4,212 0.05%
ELECTRONIC ARTS Recreation, Other Consumer Goods 4,198 0.05%
TIMES MIRROR CO A Broadcasting & Publishing 4,153 0.05%
SHERWIN-WILLIAMS CO Chemicals 4,146 0.05%
</TABLE>
A-51
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
REYNOLDS METALS CO Metals - Non-Ferrous 4,124 0.05%
DONNELLEY (RR) & SONS Business & Public Services 4,120 0.05%
GRAINGER (WW) Wholesale & International Trade 4,065 0.05%
NUCOR CORP Metals - Steel 4,063 0.05%
SONAT Utilities - Electrical & Gas 3,976 0.05%
PARAMETRIC TECHNOLOGY Business & Public Services 3,870 0.05%
TORCHMARK CORP Insurance 3,801 0.04%
MEAD CORP Forest Products & Paper 3,787 0.04%
SERVICE CORP INT'L Business & Public Services 3,757 0.04%
CASE CORP Machinery & Engineering 3,670 0.04%
COUNTRYWIDE CREDIT IND Financial Services 3,638 0.04%
EASTMAN CHEMICAL CO Chemicals 3,630 0.04%
NORTHERN STATES POWER CO Utilities - Electrical & Gas 3,619 0.04%
ALLEGHENY TELEDYNE Multi-Industry 3,560 0.04%
PARK PLACE ENTERTAINMENT Leisure & Tourism 3,489 0.04%
TEMPLE INLAND Forest Products & Paper 3,454 0.04%
NEWMONT MINING CORP Gold Mines 3,422 0.04%
TOYS R US Merchandising 3,420 0.04%
HEALTHSOUTH CORP Business & Public Services 3,396 0.04%
NALCO CHEMICAL CO Chemicals 3,381 0.04%
AMERICAN PWR CONVERSION Electrical & Electronics 3,375 0.04%
PEOPLESOFT Business & Public Services 3,363 0.04%
UAL CORP Transportation - Airlines 3,333 0.04%
READERS DIGEST ASS'N A Broadcasting & Publishing 3,330 0.04%
CROWN CORK & SEAL CO Misc. Materials & Commodities 3,250 0.04%
PHELPS DODGE CORP Metals - Non-Ferrous 3,241 0.04%
NAVISTAR INTERNATIONAL Machinery & Engineering 3,217 0.04%
SUPERVALU Merchandising 3,167 0.04%
HILTON HOTELS CORP Leisure & Tourism 3,164 0.04%
POTOMAC ELEC POWER CO Utilities - Electrical & Gas 3,141 0.04%
FLUOR CORP Machinery & Engineering 3,136 0.04%
GLOBAL MARINE Energy Equipment & Services 3,081 0.04%
VIAD CORP Business & Public Services 2,981 0.03%
ITT INDUSTRIES Industrial Components 2,973 0.03%
SUNOCO Energy Sources 2,945 0.03%
LITTON INDUSTRIES Aerospace & Military Technology 2,919 0.03%
DIAL CORP (NEW) Food & Household Products 2,860 0.03%
HARRAH'S ENTERTAINMENT Leisure & Tourism 2,860 0.03%
NIAGARA MOHAWK HOLDINGS Utilities - Electrical & Gas 2,834 0.03%
WISCONSIN ENERGY CORP Utilities - Electrical & Gas 2,825 0.03%
SHAW INDUSTRIES Appliances & Household Durables 2,820 0.03%
PACIFICARE HEALTH SYS Business & Public Services 2,736 0.03%
DELUXE CORP Business & Public Services 2,661 0.03%
SPX CORP Industrial Components 2,636 0.03%
CRESCENT REAL ESTATE Real Estate 2,632 0.03%
WESTVACO CORP Forest Products & Paper 2,623 0.03%
ENGELHARD CORP Chemicals 2,505 0.03%
CUMMINS ENGINE CO Machinery & Engineering 2,500 0.03%
PROMUS HOTEL CORP Leisure & Tourism 2,441 0.03%
NORTHEAST UTILITIES Utilities - Electrical & Gas 2,408 0.03%
</TABLE>
A-52
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
BRUNSWICK CORP Recreation, Other Consumer Goods 2,350 0.03%
USX-US STEEL GROUP Metals - Steel 2,345 0.03%
STANLEY WORKS Recreation, Other Consumer Goods 2,341 0.03%
LIZ CLAIBORNE Textiles & Apparel 2,336 0.03%
MURPHY OIL CORP Energy Sources 2,282 0.03%
MALLINCKRODT Health & Personal Care 2,276 0.03%
US AIRWAYS GROUP Transportation - Airlines 2,275 0.03%
ILLINOVA CORP Utilities - Electrical & Gas 2,229 0.03%
GEORGIA-PACIFIC TIMBER Forest Products & Paper 2,217 0.03%
HOMESTAKE MINING CO Gold Mines 2,212 0.03%
HCR MANOR CARE Business & Public Services 2,168 0.03%
MANPOWER Business & Public Services 2,137 0.03%
HOST MARRIOTT CORP Leisure & Tourism 2,109 0.02%
DARDEN RESTAURANTS Leisure & Tourism 2,091 0.02%
HARRIS CORP Electrical & Electronics 2,070 0.02%
BOISE CASCADE CORP Forest Products & Paper 2,051 0.02%
LOUISIANA-PACIFIC CORP Building Materials & Components 1,987 0.02%
SNAP-ON Machinery & Engineering 1,972 0.02%
ARMSTRONG WORLD IND Building Materials & Components 1,946 0.02%
INT'L GAME TECHNOLOGY Leisure & Tourism 1,882 0.02%
CNF TRANSPORTATION Transportation - Road & Rail 1,874 0.02%
FMC CORP Multi-Industry 1,850 0.02%
COMSAT CORP Telecommunications 1,830 0.02%
TIDEWATER Energy Equipment & Services 1,806 0.02%
CENTEX CORP Construction & Housing 1,672 0.02%
ROUSE CO Real Estate 1,658 0.02%
IKON OFFICE SOLUTIONS Business & Public Services 1,654 0.02%
FREEPORT MCMORAN C & G B Metals - Non-Ferrous 1,586 0.02%
RYDER SYSTEM Business & Public Services 1,562 0.02%
TEKTRONIX Electronic Comp. & Instruments 1,558 0.02%
AVNET Wholesale & International Trade 1,555 0.02%
OWENS CORNING Building Materials & Components 1,542 0.02%
CYPRUS AMAX MINERALS CO Metals - Non-Ferrous 1,532 0.02%
HUMANA Business & Public Services 1,524 0.02%
CATELLUS DEVELOPMENT Real Estate 1,463 0.02%
ACNIELSEN CORP Business & Public Services 1,451 0.02%
EG&G Multi-Industry 1,438 0.02%
BRIGGS & STRATTON CORP Machinery & Engineering 1,417 0.02%
MEDPARTNERS Business & Public Services 1,395 0.02%
WORTHINGTON INDUSTRIES Metals - Steel 1,387 0.02%
LUBRIZOL CORP Chemicals 1,384 0.02%
CLAYTON HOMES Construction & Housing 1,373 0.02%
HELMERICH & PAYNE Energy Sources 1,362 0.02%
NATIONAL SERVICE IND Multi-Industry 1,307 0.02%
TRINITY INDUSTRIES Machinery & Engineering 1,271 0.01%
MCDERMOTT INTERNATIONAL Energy Equipment & Services 1,270 0.01%
OXFORD HEALTH PLANS Business & Public Services 1,253 0.01%
OGDEN CORP Multi-Industry 1,116 0.01%
BETHLEHEM STEEL CORP Metals - Steel 1,003 0.01%
PULTE CORP Construction & Housing 1,000 0.01%
</TABLE>
A-53
<PAGE>
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization MSCI Index
Constituent Name Industry Sector (Millions of US$) (%)
- ---------------- --------------- ---------------- ---
<S> <C> <C> <C>
VENATOR GROUP Merchandising 979 0.01%
PITTSTON BRINK'S GROUP Business & Public Services 973 0.01%
FREEPORT MCMORAN C & G A Metals - Non-Ferrous 968 0.01%
ASARCO Metals - Non-Ferrous 829 0.01%
UNIFI Textiles & Apparel 813 0.01%
CBRL GROUP Leisure & Tourism 803 0.01%
PE CORP-CELERA GENOMICS Business & Public Services 716 0.01%
CALLAWAY GOLF CO Recreation, Other Consumer Goods 702 0.01%
MILACRON Machinery & Engineering 667 0.01%
VARIAN MEDICAL(VARIAN AS Health & Personal Care 648 0.01%
HARLAND (JOHN H) CO Business & Public Services 618 0.01%
BATTLE MOUNTAIN GOLD CO Gold Mines 402 0.00%
</TABLE>
A-54
<PAGE>
APPENDIX B
The Company intends to effect deliveries of Portfolio Securities on a basis of
"T" plus three New York business days (i.e., days on which the New York Stock
Exchange is open) in the relevant foreign market of each WEBS Index Series,
except as discussed below. The ability of the Company to effect in-kind
redemptions within three New York business days of receipt of a redemption
request is subject, among other things, to the condition that, within the time
period from the date of the request to the date of delivery of the securities,
there are no days that are local market holidays but "good" New York business
days. For every occurrence of one or more intervening holidays in the local
market that are not holidays observed in New York, the redemption settlement
cycle will be extended by the number of such intervening local holidays. In
addition to holidays, other unforeseeable closings in a foreign market due to
emergencies may also prevent the Company from delivering securities within three
New York business days.
The securities delivery cycles currently practicable for transferring Portfolio
Securities to redeeming investors, coupled with local market holiday schedules,
will require a delivery process longer than seven calendar days for some WEBS
Index Series, in certain circumstances, during the fourth quarter of 1999 and
calendar year 2000. The holidays applicable to each WEBS Index Series during
such periods are listed below, as are instances where more than seven days will
be needed to deliver redemption proceeds. Although certain holidays may occur on
different dates in subsequent years, the number of days required to deliver
redemption proceeds in any given year is not expected to exceed the maximum
number of days listed below for each WEBS Index Series. The proclamation of new
holidays, the treatment by market participants of certain days as "informal
holidays" (e.g., days on which no or limited securities transactions occur, as a
result of substantially shortened trading hours), the elimination of existing
holidays, or changes in local securities delivery practices, could affect the
information set forth herein at some time in the future.
THE AUSTRALIA WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Australian holidays affecting the relevant
securities markets (and their respective dates in the forth quarter of 1999 and
calendar year 2000) are as follows:
-----------------------------------------------------
Labour Day 1 - October 4, 1999
Melbourne Cup Day 2 - November 2, 1999
Christmas Holiday - December 27, 1999
Boxing Day - December 28, 1999
Market Holiday - December 31, 1999
Public Holiday - January 3, 2000
Australia Day - January 26, 2000
Labour Day 3 - March 13, 2000
Labour Day 4 - March 20, 2000
Good Friday - April 21, 2000
Easter Monday - April 24, 2000
Anzac Day - April 25, 2000
Queen's Birthday - June 12, 2000
Bank Holiday 5 - August 7, 2000
Labour Day 1 - October 2, 2000
Melbourne Cup Day 2 - November 7, 2000
Christmas Day - December 25, 2000
Boxing Day - December 26, 2000
-----------------------------------------------------
1. New South Wales only.
2. Melbourne only.
3. Victoria only.
4. Australia Capital Territory only.
5. New South Wales and Northern Territory only.
REDEMPTION. Redemption request over the following Australian holidays would
result in a settlement period that will exceed 7 calendar days (examples are
based on the days particular holidays fall in the fourth quarter of 1999 and
calendar
B-1
<PAGE>
year 2000):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
REDEMPTION REDEMPTION
DATE HOLIDAY REQUEST DATE (R) SETTLEMENT DATE SETTLEMENT PERIOD
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12/27/99 Christmas Holiday 12/24/99 1/3/00 R+10
4/21/00 Good Friday 4/18/00 4/26/00 R+8
4/24/00 Easter Monday 4/19/00 4/27/00 R+8
4/25/00 Anzac Day 4/20/00 4/28/00 R+8
- -----------------------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1999 and calendar year 2000, R+8 calendar days would be
the maximum number of calendar days necessary to satisfy a redemption request
made on the Australia WEBS Index Series.
THE AUSTRIA WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Austrian holidays affecting the relevant
securities markets (and their respective dates in the fourth quarter of 1999 and
calendar year 2000) are as follows:
- ------------------------------------------------------------
National Holiday - October 26, 1999
Bank Holiday - November 1, 1999
Immaculate Conception - December 8, 1999
Christmas Eve - December 24, 1999
Christmas Day - December 25, 1999
Exchange Holiday 1 - December 30, 1999
New Year's Eve - December 31, 1999
Epiphany - January 6, 2000
Good Friday 1 - April 21, 2000
Easter Monday - April 24, 2000
Labor Day - May 1, 2000
Ascension Day - June 1, 2000
Whit Monday - June 12, 2000
Bank Holiday - June 22, 2000
Bank Holiday - August 15, 2000
National Day - October 26, 2000
All Saints' Day - November 1, 2000
Immaculate Conception - December 8, 2000
Christmas Eve 2 - December 22, 2000
Christmas Day - December 25, 2000
Boxing Day - December 26, 2000
Exchange Holiday 1 - December 29, 2000
New Year's Eve - December 31, 2000
- ------------------------------------------------------------
1. Stock Exchange holiday only.
2. Bank holiday only.
REDEMPTION. A redemption request over the following Austrian holidays would
result in a settlement period that will exceed 7 calendar days (examples are
based on the days particular holidays fall in the fourth quarter of 1999 and
calendar year 2000):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
REDEMPTION REDEMPTION
DATE HOLIDAY REQUEST DATE (R) SETTLEMENT DATE SETTLEMENT PERIOD
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12/22/00 Christmas Eve 12/23/99 12/31/99 R+8
12/25/00 Christmas Day 12/20/00 12/28/00 R+8
12/26/00 Boxing Day 12/21/00 12/29/00 R+8
- ------------------------------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1999 and calendar year 2000, R+8 calendar days would be
the maximum number of calendar days necessary to satisfy a redemption request
made on the Austria WEBS Index Series.
B-2
<PAGE>
THE BELGIUM WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Belgian holidays affecting the relevant securities
markets (and their respective dates in the fourth quarter of 1999 and calendar
year 2000) are as follows:
- ---------------------------------------------------------
All Saints' Day - November 1, 1999
Armistice Day - November 11, 1999
Christmas Eve 1 - December 24, 1999
New Years Eve - December 31, 1999
Good Friday - April 21, 2000
Easter Monday - April 24, 2000
Labour Day - May 1, 2000
Ascension Day 2 - June 1, 2000
Bank Holiday 3 - June 2, 2000
Whit Monday 2 - June 12, 2000
National Holiday 2 - July 21, 2000
Assumption Day 2 - August 15, 2000
All Saints' Day 2 - November 1, 2000
Bank Holiday 3 - November 13, 2000
Christmas Day - December 25, 2000
Boxing Day - December 26, 2000
- ---------------------------------------------------------
1. Brussels Exchanges close at 2:00 p.m.
2. Stock Exchange holiday only.
3. Target, BXS and Central Depository open.
REDEMPTION. The Company is not aware of a redemption request over any Belgian
holiday that would result in a settlement period that will exceed 7 calendar
days in the fourth quarter of 1999 and calendar year 2000.
THE BRAZIL (FREE) WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Brazilian holidays affecting the relevant
securities markets (and their respective dates in the fourth quarter of 2000 and
calendar year 2000) are as follows:
- ------------------------------------------------------------
Religious Holiday - October 12, 1999
All Souls' Day - November 2, 1999
Republic Day - November 15, 1999
Christmas Eve 1 - December 24, 1999
Holiday - December 31, 1999
New Year's Day - January 1, 2000
Rio de Janeiro's Anniversary 2 - January 20, 2000
Sao Paulo's Anniversary 3 - January 25, 2000
Carnival - March 6, 2000
Carnival - March 7, 2000
Good Friday - April 21, 2000
Labor Day - May 1, 2000
Corpus Christi - June 22, 2000
Independence Day - September 7, 2000
Our Lady of Aparecida - October 12, 2000
All Souls' Day - November 2, 2000
Republic Day - November 15, 2000
Christmas Day - December 25, 2000
New Year Holiday - December 29, 2000
Bank Holiday - December 31, 2000
- ------------------------------------------------------------
B-3
<PAGE>
1. Banks close at 12:00 p.m. local time; BOVESPA BVRJ and BM&F closed all day.
2. Rio de Janeiro only.
3. Sao Paulo only.
REDEMPTION. The Company is not aware of a redemption request over any Brazilian
holiday that would result in a settlement period that will exceed 7 calendar
days in the fourth quarter of 2000 and calendar year 2000.
THE CANADA WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Canadian holidays affecting the relevant
securities markets (and their respective dates in the fourth quarter of 1999 and
calendar year 2000) are as follows:
- -----------------------------------------------------------
Thanksgiving Day - October 11, 1999
Remembrance Day 1 - November 11, 1999
Christmas Eve 2 - December 24, 1999
Christmas Day (observed) - December 27, 1999
Boxing Day (observed) - December 28, 1999
New Year's Eve 2 - December 31, 1999
Bank Holiday - January 3, 2000
Traditional Holiday 3 - January 4, 2000
Good Friday - April 21, 2000
Victoria Day - May 22, 2000
Saint Jean Baptiste 3 - June 26, 2000
Canada Day - July 3, 2000
Civic Holiday 1 - August 7, 2000
Labor Day - September 4, 2000
Thanksgiving Day - October 9, 2000
Remembrance Day 1 - November 13, 2000
Christmas Day - December 25, 2000
Boxing Day - December 26, 2000
- -----------------------------------------------------------
1. Except Quebec.
2. Toronto Stock Exchange will close at 1:00 p.m. local time.
3. Quebec only.
REDEMPTION. The Company is not aware of a redemption request over any Canadian
holiday that would result in a settlement period that will exceed 7 calendar
days in the fourth quarter of 1999 and calendar year 2000.
THE EMU WEBS INDEX SERIES
REGULAR HOLIDAYS. The dates in the fourth quarter of 1999 and the calendar year
2000 on which the regular Austrian, Belgian, Finnish, French, German, Irish,
Italian, Dutch, Portuguese and Spanish holidays affecting the relevant
securities markets fall are as follows:
AUSTRIA
-----------------------------------------------------------------
October 26, 1999 January 6, 2000 October 26, 2000
November 1, 1999 April 21, 2000 November 1, 2000
December 8, 1999 April 24, 2000 December 8, 2000
December 24, 1999 May 1, 2000 December 22, 2000
December 25, 1999 June 1, 2000 December 25, 2000
December 30, 1999 June 12, 2000 December 26, 2000
December 31, 1999 June 22, 2000 December 29, 2000
August 15, 2000 December 31, 2000
-----------------------------------------------------------------
BELGIUM
B-4
<PAGE>
-----------------------------------------------------------------
November 1, 1999 May 1, 2000 August 15, 2000
November 11, 1999 June 1, 2000 November 1, 2000
December 24, 1999 June 2, 2000 November 13, 2000
December 31, 2000 June 12, 2000 December 25, 2000
April 21, 2000 July 21, 2000 December 26, 2000
April 24, 2000
-----------------------------------------------------------------
FINLAND
------------------------------------------------------------------
December 6, 1999 April 21, 2000 June 24, 2000
December 24, 1999 April 24, 2000 December 6, 2000
December 27, 1999 May 1, 2000 December 24, 2000
December 28, 1999 June 1, 2000 December 25, 2000
January 1, 2000 June 23, 2000 December 26, 2000
January 6, 2000
------------------------------------------------------------------
FRANCE
------------------------------------------------------------------
November 1, 1999 May 1, 2000 August 15, 2000
November 11, 1999 May 8, 2000 November 1, 2000
December 24, 1999 June 1, 2000 November 11, 2000
December 31, 1999 June 12, 2000 December 25, 2000
April 21, 2000 July 14, 2000 December 26, 2000
April 24, 2000
------------------------------------------------------------------
GERMANY
------------------------------------------------------------------
October 3, 1999 April 21, 2000 October 3, 2000
December 24, 1999 April 24, 2000 December 24, 2000
December 25, 1999 May 1, 2000 December 25, 2000
December 26, 1999 June 1, 2000 December 26, 2000
December 31, 1999 June 12, 2000 December 31, 2000
January 1, 2000 June 22, 2000
------------------------------------------------------------------
IRELAND
------------------------------------------------------------------
October 25, 1999 March 17, 2000 August 7, 2000
December 27, 1999 April 21, 2000 October 30, 2000
December 28, 1999 April 24, 2000 December 25, 2000
December 29, 1999 May 1, 2000 December 26, 2000
January 3, 2000 June 5, 2000 December 27, 2000
------------------------------------------------------------------
ITALY
------------------------------------------------------------------
November 1, 1999 April 24, 2000 December 24, 2000
December 24, 1999 May 1, 2000 December 25, 2000
December 31, 1999 August 15, 2000 December 26, 2000
April 21, 2000
------------------------------------------------------------------
NETHERLANDS
------------------------------------------------------------------
December 31, 1999 June 1, 2000 December 25, 2000
April 21, 2000 June 12, 2000 December 26, 2000
April 24, 2000
------------------------------------------------------------------
PORTUGAL
------------------------------------------------------------------
October 5, 1999 March 7, 2000 August 15, 2000
November 1, 1999 April 21, 2000 October 5, 2000
December 1, 1999 April 24, 2000 November 1, 2000
December 8, 1999 April 25, 2000 December 1, 2000
December 24, 1999 May 1, 2000 December 8, 2000
December 25, 1999 June 10, 2000 December 22, 2000
------------------------------------------------------------------
B-5
<PAGE>
------------------------------------------------------------------
December 31, 1999 June 13, 2000 December 25, 2000
January 1, 2000 June 22, 2000 December 26, 2000
------------------------------------------------------------------
SPAIN
------------------------------------------------------------------
October 12, 1999 December 31, 1999 November 1, 2000
November 1, 1999 January 6, 2000 December 6, 2000
November 8, 1999 April 21, 2000 December 8, 2000
December 6, 1999 April 24, 2000 December 25, 2000
December 8, 1999 May 1, 2000 December 26, 2000
December 24, 1999 October 12, 2000
------------------------------------------------------------------
REDEMPTION. A redemption request over the following holidays would result in a
settlement period that will exceed 7 calendar days (examples are based on the
days particular holidays fall during the fourth quarter of 1999 and the calendar
year 2000 ). The longest redemption cycle for the EMU WEBS Index Series is a
function of the longest redemption cycles among the countries whose stocks
comprise this WEBS Index Series. In the fourth quarter of 1999 and the calendar
year 2000, the dates of the regular holidays affecting the German securities
markets present the worst-case redemption cycle for the EMU WEBS Index Series as
follows:
<TABLE>
<CAPTION>
GERMANY
- ------------------------------------------------------------------------------------------------
REDEMPTION REDEMPTION
DATE HOLIDAY REQUEST DATE (R) SETTLEMENT DATE SETTLEMENT PERIOD
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12/24/99 Christmas Eve 12/21/99 12/29/99 R+8
12/27/99 Christmas Day 12/22/99 12/30/99 R+8
12/28/99 St. Stephen's Day 12/23/99 1/3/00 R+11
12/22/00 Christmas Eve 12/19/00 12/27/00 R+8
12/25/00 Christmas Day 12/20/00 12/28/00 R+8
12/26/00 St. Stephen's Day 12/21/00 12/29/00 R+8
- ------------------------------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1999 and calendar year 2000, R+11 calendar days would
be the maximum number of calendar days necessary to satisfy a redemption request
made on the EMU WEBS Index Series.
THE FRANCE WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular French holidays affecting the relevant securities
markets (and their respective dates in the fourth quarter of 1999 and calendar
year 2000) are as follows:
- --------------------------------------------------
All Saints' Day - November 1, 1999
1918 Armistice Day 1 - November 11 1999
Christmas Eve 2 - December 24, 1999
Market Systems Closed 3 - December 31, 1999
Good Friday 4 - April 21, 2000
Easter Monday - April 24, 2000
Labour Day - May 1, 2000
1945 Armistice Day 1 - May 8, 2000
Ascension Day 1 - June 1, 2000
Whit Monday 5 - June 12, 2000
Bastille Day 5 - July 14, 2000
Assumption Day 1 - August 15, 2000
All Saints' Day 1 - November 1, 2000
Christmas Day - December 25, 2000
Boxing Day 4 - December 26, 2000
- --------------------------------------------------
1. Bank holiday only.
2. Banks close at noon.
3. Clearing and settlement systems closed.
4. Stock exchange holiday only.
B-6
<PAGE>
5. Banks and equities market closed.
REDEMPTION. The Company is not aware of a redemption request over any French
holiday that would result in a settlement period that will exceed 7 calendar
days in the fourth quarter of 1999 and calendar year 2000.
THE GERMANY WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular German holidays affecting the relevant securities
markets (and their respective dates in the fourth quarter of 1999 and calendar
year 2000) are as follows:
- ---------------------------------------------------------
Re-unification Day - October 3, 1999
Christmas Eve 1 - December 24, 1999
Christmas Day - December 25, 1999
Boxing Day - December 26, 1999
New Year's Eve 1 - December 31, 1999
New Year's Day - January 1, 2000
Good Friday 2 - April 21, 2000
Easter Monday 2 - April 24, 2000
Labor Day - May 1, 2000
Ascension Day 3 - June 1, 2000
Whit Monday 3 - June 12, 2000
Corpus Christi 3 - June 22, 2000
Re-unification Day 3 - October 3, 2000
Christmas Eve 2 - December 24, 2000
Christmas Day - December 25, 2000
Boxing Day - December 26, 2000
New Year's Eve - December 31, 2000
- ---------------------------------------------------------
1. Only cash cleaning will take place.
2. TARGET system remains open.
3. Bank holiday only.
REDEMPTION. The Company is not aware of a redemption request over any German
holiday that would result in a settlement period that will exceed 7 calendar
days in the fourth quarter of 1999 and calendar year 2000.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
REDEMPTION REDEMPTION
DATE HOLIDAY REQUEST DATE (R) SETTLEMENT DATE SETTLEMENT PERIOD
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12/22/00 Christmas Eve 12/19/00 12/27/00 R+8
12/25/00 Christmas Day 12/20/00 12/28/00 R+8
12/26/00 St. Stephen's Day 12/21/00 12/29/00 R+8
- ------------------------------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1999 and calendar year 2000, R+11 calendar days would
be the maximum number of calendar days necessary to satisfy a redemption request
made on the Germany WEBS Index Series.
B-7
<PAGE>
THE HONG KONG WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Hong Kong holidays affecting the relevant
securities markets (and their respective dates in the fourth quarter of 1999 and
calendar year 2000) are as follows:
----------------------------------------------------------
National Day - October 1, 1999
Chung Yeung Festival - October 18, 1999
Christmas Holiday - December 27, 1999
Bank Holiday - December 31, 1999
New Year's Day - January 1, 2000
Lunar New Year's Day - February 4, 2000
Lunar New Year's Day - February 7, 2000
Ching Ming Festival - April 4, 2000
Good Friday - April 21, 2000
Day Following Good Friday - April 22, 2000
Easter Monday - April 24, 2000
Labour Day - May 1, 2000
Buddha's Birthday - May 11, 2000
Tuen Ng Festival - June 6, 2000
SAR Establishment Day - July 1, 2000
Mid-Autumn Festival - September 13, 2000
National Day - October 2, 2000
Chung Yeung Festival - October 6, 2000
Christmas Day - December 25, 2000
Christmas Holiday - December 26, 2000
----------------------------------------------------------
REDEMPTION. The Company is not aware of a redemption request over any Hong Kong
holiday that would result in a settlement period that will exceed 7 calendar
days in the fourth quarter of 1999 and calendar year 2000.
B-8
<PAGE>
THE ITALY WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Italian holidays affecting the relevant securities
markets (and their respective dates in the fourth quarter of 1999 and calendar
year 2000) are as follows:
- ------------------------------------------------------------
All Saints' Day - November 1, 1999
Christmas Eve 1 - December 24, 1999
New Year's Eve - December 31, 1999
Good Friday - April 21, 2000
Easter Monday - April 24, 2000
Labor Day - May 1, 2000
Assumption Day 1 - August 15, 2000
Christmas Eve - December 24, 2000
Christmas Day - December 25, 2000
Boxing Day - December 26, 2000
- ------------------------------------------------------------
1. Stock exchange holiday only.
REDEMPTION. The Company is not aware of a redemption request over any Italian
holiday that would result in a settlement period that will exceed 7 calendar
days in the fourth quarter of 1999 and calendar year 2000.
THE JAPAN WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Japanese holidays affecting the relevant
securities markets (and their respective dates in the fourth quarter of 1999 and
calendar year 2000) are as follows:
B-9
<PAGE>
- -----------------------------------------------------------
Health-Sports Day - October 11, 1999
Culture Day - November 3, 1999
Labor Thanksgiving Day - November 23, 1999
Emperor's Birthday - December 23, 1999
New Year's Day (observed) - January 3, 2000
Adult's Day - January 10, 2000
Foundation Day - February 11, 2000
Vernal Equinox Day - March 20, 2000
Constitution Day - May 3, 2000
National Holiday - May 4, 2000
Children's Day - May 5, 2000
Marine Day - July 20, 2000
Respect for the Aged Day - September 15, 2000
Sports Day - October 9, 2000
Culture Day - November 3, 2000
Labor Thanksgiving Day - November 23, 2000
Emperor's Birthday - December 23, 2000
- -----------------------------------------------------------
REDEMPTION. A redemption request over the following Japanese holidays would
result in a settlement period that will exceed 7 calendar days (examples are
based on the days particular holidays fall in the fourth quarter of 1999 and
calendar year 2000):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
REDEMPTION REDEMPTION
DATE HOLIDAY REQUEST DATE (R) SETTLEMENT DATE SETTLEMENT PERIOD
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
5/3/00 Constitution Day 4/28/00 5/8/00 R+10
5/4/00 National Holiday 5/1/00 5/9/00 R+8
5/5/00 Children's Day 5/2/00 5/10/00 R+8
- ---------------------------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1999 and calendar year 2000, R+10 calendar days would
be the maximum number of calendar days necessary to satisfy a redemption request
made on the Japan WEBS Index Series.
THE KOREA WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Korean holidays affecting the relevant securities
markets (and their respective dates in the fourth quarter of 1999 and calendar
year 2000) are as follows:
- -------------------------------------------------------------------------
National Foundation Day - October 3, 1999
Christmas Day - December 25, 1999
Bank Holiday - December 29, 1999
Bank Holiday - December 30, 1999
Bank Holiday - December 31, 1999
Bank Holiday - January 1, 2000
Bank Holiday - January 2, 2000
Y2K Banking and Exchange Holiday - January 3, 2000
Lunar New Year - February 4, 2000
Lunar New Year - February 5, 2000
Independence Day - March 1, 2000
Arbor Day - April 5, 2000
Bank Holiday - May 1, 2000
Children's Day - May 5, 2000
Buddha's Birthday May 11, 2000
Memorial Day - June 6, 2000
Constitution Day - July 17, 2000
- -------------------------------------------------------------------------
B-10
<PAGE>
- ------------------------------------------------------------------------
Liberation Day - August 15, 2000
Thanksgiving Day - September 11, 2000
Thanksgiving Day - September 12, 19999
Thanksgiving Day - September 13, 2000
National Foundation Day - October 3, 2000
Christmas Day - December 25, 2000
- ------------------------------------------------------------------------
REDEMPTION. A redemption request over the following Korean holidays would result
in a settlement period that will exceed 7 calendar days (examples are based on
the days particular holidays fall in the fourth quarter of 1999 and calendar
year 2000):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
REDEMPTION REDEMPTION
DATE HOLIDAY REQUEST DATE (R) SETTLEMENT DATE SETTLEMENT PERIOD
- ---- ------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
12/29/99 Bank Holiday 12/24/99 1/4/00 R+11
12/30/99 Bank Holiday 12/27/99 1/5/00 R+9
12/31/99 Bank Holiday 12/28/99 1/6/00 R+9
9/11/00 Thanksgiving Day 9/6/00 9/14/00 R+8
9/12/00 Thanksgiving Day 9/7/00 9/15/00 R+8
9/13/00 Thanksgiving Day 9/8/00 9/18/00 R+10
- ---------------------------------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1999 and calendar year 2000, R+11 calendar days would
be the maximum number of calendar days necessary to satisfy a redemption request
made on the Korean WEBS Index Series.
THE MALAYSIA (FREE) WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Malaysian holidays affecting the relevant
securities markets (and their respective dates in the fourth quarter of 1999 and
calendar year 2000) are as follows:
- ----------------------------------------------------------------------
Deepavali - November 7, 1999
Public Holiday - November 8, 1999
Christmas Day - December 25, 1999
Non Trading and Non Settlement Day 1 - December 31, 1999
New Year's Day - January 1, 2000
Hari Raya Puasa - January 8, 2000
Hari Raya Puasa - January 9, 2000
Federal Territory Day - February 1, 2000
Chinese New Year - February 5, 2000
Chinese New Year - February 6, 2000
Hari Raya Haji - March 16, 2000
Awal Muharram - April 6, 2000
Labour Day - May 1, 2000
Wesak Day - May 18, 2000
King's Birthday - June 3, 2000
Prophet Mohammed's Birthday - June 15, 2000
National Day - August 31, 2000
Deepavali - October 26, 2000
Christmas Day - December 25, 2000
Hari Raya Puasa - December 27, 2000
Hari Raya Puasa - December 28, 2000
- ----------------------------------------------------------------------
1. Stock Exchange and Central Depository only.
REDEMPTIONS. In light of the Malaysian capital restrictions imposed in September
1998, the Company is concerned about its ability to honor redemptions of
Creation Units of WEBS of the Malaysia (Free) WEBS Index Series. To the extent
the Company is presented with requests for the redemption of Creation Units of
WEBS of the Malaysia (Free) WEBS Index
B-11
<PAGE>
Series, the Company will seek to honor such requests consistent with the
Malaysian capital restrictions. Based on the information available to date, the
Company believes that (i) it cannot currently make in-kind redemptions of WEBS
of the Malaysia (Free) WEBS Index Series and (ii) it may only be able to honor
redemption requests through the delivery of Malaysian ringgits in Malaysia,
subject to receipt of Malaysian Central Bank approval on a case by case basis.
In the current circumstances, the Company suggests that requests for the
redemption of Creation Units of Malaysia Series WEBS should not be made and
urges investors contemplating such redemptions to consult with Malaysian
counsel. See "Special Factors Regarding the Malaysia (Free) WEBS Index Series"
in the Statement of Additional Information.
Assuming the Company were able to make in-kind redemptions of WEBS of the
Malaysia (Free) WEBS Index Series in the manner it had done so prior to
September 1999, a redemption request over the following Malaysian holidays would
result in a settlement period that will exceed 7 calendar days (examples are
based on the days particular holidays fall in the fourth quarter 1999 and
calendar year 2000):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
REDEMPTION REDEMPTION
DATE HOLIDAY REQUEST DATE (R) SETTLEMENT DATE SETTLEMENT PERIOD
<S> <C> <C> <C> <C>
12/25/00 Christmas Day 12/21/00 12/29/00 R+8
12/27/00 Hari Raya Puasa 12/22/00 1/1/01 R+10
- ----------------------------------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1999 and calendar year 2000, R+10 calendar days would
be the maximum number of calendar days necessary to satisfy a redemption request
made on the Malaysia (Free) WEBS Index Series.
THE MEXICO (FREE) WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Mexican holidays affecting the relevant securities
markets (and their respective dates in the fourth quarter of 1999 and calendar
year 2000) are as follows:
- -------------------------------------------------------------
All Souls' Day - November 2, 1999
Christmas Eve - December 24, 1999
New Year's Eve - December 31, 1999
New Year's Day - January 1, 2000
Benito Juarery Day - March 21, 2000
Holy Wednesday - April 19, 2000
Holy Thursday - April 20, 2000
Good Friday - April 21, 2000
Labor Day - May 1, 2000
Battle of Puebla Day - May 5, 2000
Mother's Day 1 - May 10, 2000
State of the Union Address - September 1, 2000
Independence Day - September 16, 2000
All Souls' Day - November 2, 2000
Revolution Day - November 20, 2000
Our Lady of Guadalupe Day - December 12, 2000
Christmas Day - December 25, 2000
New Year's Eve - December 31, 2000
- -------------------------------------------------------------
1. Banks close at noon.
REDEMPTION. The Company is not aware of a redemption request over any Mexican
holiday that would result in a settlement period that will exceed 7 calendar
days in the fourth quarter of 1999 and calendar year 2000.
THE NETHERLANDS WEBS INDEX SERIES
1.
REGULAR HOLIDAYS. The regular Netherlands holidays affecting the relevant
securities markets (and their respective dates in the fourth quarter of 1999 and
calendar year 2000) are as follows:
B-12
<PAGE>
- ---------------------------------------------------------
New Year's Eve 1 - December 31, 1999
Good Friday - April 21, 2000
Easter Monday - April 24, 2000
Ascension Day - June 1, 2000
Whit Monday - June 12, 2000
Christmas Day - December 25, 2000
Boxing Day - December 26, 2000
- ---------------------------------------------------------
1. TARGET system only closed.
REDEMPTION. The Company is not aware of a redemption request over any Dutch
holiday that would result in a settlement period that will exceed 7 calendar
days in the fourth quarter of 1999 and calendar year 2000.
THE SINGAPORE (FREE) WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Singaporean holidays affecting the relevant
securities markets (and their respective dates in the fourth quarter of 1999 and
calendar year 2000) are as follows:
B-13
<PAGE>
- ---------------------------------------------------------
Deepavali - November 7 1999
Public Holiday - November 8, 1999
Christmas Eve - December 24, 1999
Christmas Day - December 25 1999
Bank Holiday - December 31, 1999
New Year's Day - January 1, 2000
Hari Raya Puasa - January 8, 2000
Chinese New Year - February 5, 2000
Chinese New Year - February 6, 2000
Chinese New Year - February 7, 2000
Hari Raya Haji - March 16, 2000
Good Friday - April 21, 2000
Labour Day - May 1, 2000
Vesak Day Observance - May 18, 2000
National Day - August 9, 2000
Deepavali - October 26, 2000
Christmas Day - December 25, 2000
Hari Raya Puasa - December 27, 2000
- ---------------------------------------------------------
REDEMPTION. The Company is not aware of a redemption request over any
Singaporean holiday that would result in a settlement period that will exceed 7
calendar days in the fourth quarter of 1999 and calendar year 2000.
THE SOUTH AFRICA WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular South African holidays affecting the relevant
securities markets (and their respective dates in the fourth quarter of 1999 and
calendar year 2000) are as follows:
- -------------------------------- ----- ------------------------
Day of Reconciliation - December 16, 1999
Christmas Day - December 25 1999
Goodwill Day - December 26 1999
Public Holiday - December 27, 1999
Public Holiday 1 - December 30, 1999
Public Holiday - December 31, 1999
New Year's Day - January 1, 2000
Public Holiday - January 2, 2000
Public Holiday - January 3, 2000
Human Rights Day - March 21, 2000
Good Friday - April 21, 2000
Family Day - April 24, 2000
Freedom Day - April 27, 2000
Workers' Day - May 1, 2000
Youth Day - June 16, 2000
National Women's Day - August 9, 2000
Heritage Day - September 24 2000
Public Holiday - September 25, 2000
Day of Reconciliation - December 16, 2000
Christmas Day - December 25, 2000
Goodwill Day - December 26, 2000
- -------------------------------- ----- ------------------------
1. Stock Exchange only.
REDEMPTION. A redemption request over the following South African holiday would
result in a settlement period that will exceed 7 calendar days (examples are
based on the Days particular holidays fall in the fourth quarter of 1999 and
calendar year 2000):
B-14
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
REDEMPTION REDEMPTION
DATE HOLIDAY REQUEST DATE (R) SETTLEMENT DATE SETTLEMENT PERIOD
<S> <C> <C> <C> <C>
12/27/99 Public Holiday 12/24/99 1/3/00 R+10
4/21/00 Good Friday 4/20/00 4/28/00 R+8
- ----------------------------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1999 and calendar year 2000, R+10 calendar days would
be the maximum number of calendar days necessary to satisfy a redemption request
made on the South African WEBS Index Series.
THE SPAIN WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Spanish holidays affecting the relevant securities
markets (and their respective dates in the fourth quarter of 1999 and calendar
year 2000) are as follows:
- -------------------------------------------------------
National Day - October 12, 1999
All Saints' Day - November 1, 1999
Saint Almudena - November 8, 1999
Constitution Day - December 6, 1999
Immaculate Concepcion 1 - December 8, 1999
Christmas Eve 2 - December 24, 1999
Christmas Day - December 25, 1999
Holiday - December 31, 1999
Epiphany 3 - January 6, 2000
Good Friday - April 21, 2000
Easter Monday - April 24, 2000
Labour Day - May 1, 2000
National Day 3 - October 12, 2000
All Saints' Day 3 - November 1, 2000
Constitution Day 3 - December 6, 2000
Immaculate Concepcion 3 - December 8, 2000
Christmas Day - December 25, 2000
Boxing Day - December 26, 2000
- -------------------------------------------------------
1. Banks closed; only trading and settlement for free trades and loans will take
place.
2. Banks and stock exchanges closed; depository closed.
3. Stock exchange holiday only.
REDEMPTION. The Company is not aware of a redemption request over any Spanish
holiday that would result in a settlement period that will exceed 7 calendar
days in the fourth quarter of 1999 and calendar year 2000.
THE SWEDEN WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Swedish holidays affecting the relevant securities
markets (and their respective dates in the fourth quarter of 1999 and calendar
year 2000) are as follows:
- ------------------------------------------------------
Christmas Eve - December 24, 1999
New Year's Eve - December 31, 1999
Epiphany Eve 1 - January 5, 2000
Epiphany - January 6, 2000
Maundy Thursday 1 - April 20, 2000
Good Friday - April 21, 2000
Easter Monday - April 24, 2000
May Day - May 1, 2000
Eve of Ascension Day 1 - May 31, 2000
Ascension Day - June 1, 2000
- ------------------------------------------------------
B-15
<PAGE>
- ------------------------------------------------------
Whit Monday - June 12, 2000
Midsummer Eve - June 23, 2000
All Saints' Eve 1 - November 3, 2000
Christmas Day - December 25, 2000
Boxing Day - December 26, 2000
- ------------------------------------------------------
1. Banks will close at 1:00 p.m. local time.
REDEMPTION. A redemption request over the following Swedish holidays would
result in a settlement period that will exceed 7 calendar days (examples are
based on the days particular holidays fall in the fourth quarter of 1999 and
calendar year 2000):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
REDEMPTION REDEMPTION
DATE HOLIDAY REQUEST DATE (R) SETTLEMENT DATE SETTLEMENT PERIOD
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4/20/00 Maundy Thursday 4/17/00 4/25/00 R+8
4/21/00 Good Friday 4/18/00 4/26/00 R+8
4/24/00 Easter Monday 4/19/00 4/27/00 R+8
- -----------------------------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1999 and calendar year 2000, R+12 calendar days would
be the maximum number of calendar days necessary to satisfy a redemption request
made on the Sweden WEBS Index Series.
THE SWITZERLAND WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Swiss (Zurich) holidays affecting the relevant
securities markets (and their respective dates in the fourth quarter of 1999 and
calendar year 2000) are as follows:
- ------------------------------------------------------------
New Year's Eve - December 31, 1999
New Year Holiday - January 3, 2000
Good Friday - April 21, 2000
Easter Monday - April 24, 2000
Labour Day - May 1, 2000
Ascension Day - June 1, 2000
Whit Monday - June 12, 2000
National Day - August 1, 2000
Christmas Day - December 25, 2000
Boxing Day - December 26, 2000
- ------------------------------------------------------------
REDEMPTION. The Company is not aware of a redemption request over any Swiss
holiday that would result in a settlement period that will exceed 7 calendar
days in the fourth quarter of 1999 and calendar year 2000.
THE TAIWAN WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular Taiwanese holidays affecting the relevant
securities markets (and their respective dates in the fourth quarter of 1999 and
calendar year 2000) are as follows:
- -----------------------------------------------------------
National Day - October 10, 1999
Sun Yat-Sen's Birthday - November 12, 1999
Constitution Day - December 25, 1999
Stock Market Closed - December 29, 1999
Stock Market Closed - December 30, 1999
Bank Holiday - December 31, 1999
New Year's Day - January 1, 2000
Bank Holiday - January 3, 2000
Stock Market Closed - January 8, 2000
Stock Market Closed - January 22, 2000
- -----------------------------------------------------------
B-16
<PAGE>
- -----------------------------------------------------------
Lunar New Year - February 4, 2000
Lunar New Year - February 5, 2000
Lunar New Year - February 7, 2000
Lunar New Year - February 8, 2000
Youth Day - March 29, 2000
Women and Children's Day - April 4, 2000
Tomb Sweeping Day - April 5, 2000
Dragon Boat Festival - June 6, 2000
Bank Holiday - July 1, 1999
Moon Festival Day - September 12, 2000
Confuscius' Birthday - September 28, 2000
National Day - October 10, 2000
Taiwan Retrocession Day - October 25, 1999
Chiang Kai-Shek's Birthday - October 31, 2000
Sun Yat-Sen's Birthday - November 13, 2000
Constitution Day - December 25, 2000
- -----------------------------------------------------------
REDEMPTION. A redemption request over the following Taiwanese holidays would
result in a settlement period that will exceed 7 calendar days (examples are
based on the days particular holidays fall in the fourth quarter of 1999 and
calendar year 2000):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
REDEMPTION REDEMPTION
DATE HOLIDAY REQUEST DATE (R) SETTLEMENT DATE SETTLEMENT PERIOD
- ---- ------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
12/29/99 Stock Market Closed 12/24/99 1/3/00 R+11
12/30/99 Stock Market Closed 12/27/99 1/4/00 R+9
12/31/99 Bank Holiday 12/28/99 1/5/99 R+9
2/4/00 Lunar New Year 2/1/00 2/9/00 R+8
2/7/00 Lunar New Year 2/2/00 2/10/00 R+8
2/8/00 Lunar New Year 2/3/00 2/11/00 R+8
- -----------------------------------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1999 and calendar year 2000, R+8 calendar days would be
the maximum number of calendar days necessary to satisfy a redemption request
made on the Taiwan WEBS Index Series.
B-17
<PAGE>
THE UNITED KINGDOM WEBS INDEX SERIES
REGULAR HOLIDAYS. The regular United Kingdom holidays affecting the relevant
securities markets (and their respective dates in the fourth quarter of 1999 and
calendar year 2000) are as follows:
- ---------------------------------------------------------
Christmas Holiday - December 27, 1999
Christmas Holiday - December 28, 1999
New Year's Eve 1 - December 31, 1999
New Year's Day - January 3, 2000
- ---------------------------------------------------------
B-18
<PAGE>
- ---------------------------------------------------------
Good Friday - April 21, 2000
Easter Monday - April 24, 2000
May Day - May 1, 2000
Spring Bank Holiday - May 29, 2000
Summer Holiday - August 28, 2000
Christmas Day - December 25, 2000
Boxing Day - December 26, 2000
- ---------------------------------------------------------
1. Banking holiday.
2. CREST, CGO and CMO open for EURO settlement only.
REDEMPTION. A redemption request over the following United Kingdom holiday would
result in a settlement period that will exceed 7 calendar days (example is based
on the days particular holidays fall in the fourth quarter of 1999 and calendar
year 2000):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
REDEMPTION REDEMPTION
DATE HOLIDAY REQUEST DATE (R) SETTLEMENT DATE SETTLEMENT PERIOD
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12/27/99 Christmas Day 12/24/99 1/4/00 R+11
- --------------------------------------------------------------------------------------------------
</TABLE>
In the fourth quarter of 1999 and calendar year 2000, R+11 calendar days would
be the maximum number of calendar days necessary to satisfy a redemption request
made on the United Kingdom WEBS Index Series.
<PAGE>
