<PAGE> 1
As filed with the Securities and Exchange Commission on February 12, 1996
Registration No. 33-85710
811-8734
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 4 [X]
Post-Effective Amendment No. [ ]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 4 [X]
(Check appropriate box or boxes)
The CountryBaskets Index Fund, Inc.
(Exact name of registrant as specified in charter)
c/o Deutsche Morgan Grenfell/C. J. Lawrence
Inc.
(Investment Adviser)
31 West 52nd Street
New York, New York 10019
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 469-8000
Robert Lynch
c/o Deutsche Morgan Grenfell/C. J. Lawrence Inc. (Investment Adviser)
31 West 52nd Street
New York, New York 10019
(Name and Address of Agent for Service)
Copies to:
Stephen K. West, Esq. Tuuli-Ann Ristkok, Esq.
Sullivan & Cromwell Donovan Leisure Newton & Irvine
125 Broad Street 30 Rockefeller Plaza
New York, New York 10004 New York, New York 10112
Approximate date of proposed public offering: As soon as practicable
after the effective date of this Registration Statement.
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE> 2
Note
This Amendment to the Registration Statement of The CountryBaskets(SM)
Index Fund, Inc. (the "Fund"), formerly Eurofund, Inc., contains one
prospectus and the related SAI.
The prospectus and related SAI filed as part of this Amendment apply
to an offering by the Fund of its shares on a "Fund-only" basis, pursuant
to which sales of shares of each Fund series (a "Series") will only be made
in aggregations of shares constituting a "Creation Unit". For example, an
investor seeking to purchase shares of the Germany Index Series from the
Fund must purchase shares in aggregations of 100,000 Germany Index Series
shares. Each aggregation of 100,000 Germany Index Series shares thus
constitutes a Creation Unit for that Series. Likewise, redemptions of
Series shares may only be made in Creation Unit size aggregations (e.g.,
100,000 shares in the case of the Germany Index Series). An investor may
not redeem shares of any Series in less than Creation Unit size
aggregations. The number of shares constituting a Creation Unit for each
Fund Series differs and is set forth in the Prospectus. Application is
being made to list the shares of each Fund Series (referred to as "CB
Shares(SM)") on the New York Stock Exchange, Inc. This "Fund-only" prospectus
and SAI, first filed with the Securities and Exchange Commission (the
"Commission") as part of Amendment No. 1 to the Fund's Registration
Statement, have been amended as described in the letter, dated February 12,
1996, from Stephen K. West and Tuuli-Ann Ristkok to the Commission.
A second prospectus and related SAI applying to an offering by the
Fund in which shares of the Fund may be exchanged for redeemable units of a
separate unit trust was filed with Amendment No. 1 to the Fund's
Registration Statement on December 2, 1994, but will not be used by the
Fund. Accordingly, this Amendment No. 4 omits such prospectus and related
SAI.
<PAGE> 3
THE COUNTRYBASKET(SM) INDEX FUND, INC.
CROSS-REFERENCE SHEET
Part A
Form N-1A
Item Number Caption in Prospectus
1. Cover Page . . . . . . . . . . . Outside Cover Page of Prospectus
2. Synopsis . . . . . . . . . . . . Prospectus Summary; Summary of
Fund Expenses
3. Condensed Financial
Information. . . . . . . . . . . Not applicable
4. General Description of
Registrant . . . . . . . . . . . The Fund--The CountryBaskets(SM)
Index Fund, Inc. and its
Investment Objective;--Investment
Policies;--Investment Considera-
tions and Risks;--FT/S&P-Actuaries
World Indices(TM);--The FT Index
Components;--Lending of Secu-
rities; --Investment Restrictions
of the Fund
5. Management of the Fund. . . . . . The Fund--Board of Directors;--
Investment Management;--Fees;--
Administrator; --Custodian
and Transfer Agent
5A. Management's Discussion of
Fund Performance . . . . . . . . Not applicable
6. Capital Stock and
Other Securities . . . . . . . . The Fund--CB Shares(SM);--Capital
Stock;--Available Information;--
Dividends and Capital Gains
Distributions;--Tax Matters
7. Purchase of Securities
Being Offered . . . . . . . . . . Summary of Fund Expenses; The
Fund--Purchase and Issuance of
Fund Shares in Creation Unit
Aggregations;--Distributor;--
Fees; Back Cover of Prospectus;
8. Redemption or Repurchase . . . . . Summary of Fund Expenses; The
Fund--Redemption of Fund Shares
in Creation Unit Aggregations;--Fees
9. Pending Legal Proceedings. . . . . Not applicable
<PAGE> 2
Part B
Form N-1A Caption in Prospectus or Statement
Item Number of Additional Information ("SAI")
10. Cover Page . . . . . . . . . . . . Outside Front Cover Page of SAI
11. Table of Contents. . . . . . . . . Table of Contents
12. General Information and
History . . . . . . . . . . . . . General Description of The Fund
13. Investment Objectives and
Policies . . . . . . . . . . . . The Fund--The CountryBaskets(SM)
Index Fund, Inc. and its Invest-
ment Objective (Prospectus); The
Fund--Investment Policies
(Prospectus); The Fund--Investment
Restrictions of the Fund
(Prospectus); Investment Policies
and Restrictions (SAI); Brokerage
Transactions (SAI)
14. Management of the Fund . . . . . . The Fund--Board of Directors
(Prospectus); Management of the
Fund (SAI)
15. Control Persons and Principal
Holders of Securities . . . . . . The Fund--Capital Stock
(Prospectus); Capital Stock and
Shareholder Reports (SAI);
Management of the Fund (SAI)
16. Investment Advisory and
Other Services . . . . . . . . . The Fund--Investment Management
(Prospectus); The Fund--Fees
(Prospectus); Purchase and
Issuance of Fund Shares in
Creation Unit Aggregations (SAI);
The Fund--Administrator
(Prospectus); The Fund--Custodian
and Transfer Agent (Prospectus);
Investment Advisory, Management
and Administrative Services--The
Investment Adviser, --The
Administrator, Custodian And
Transfer Agent (SAI); Counsel and
Independent Accountants (SAI)
17. Brokerage Allocation and
Other Practices . . . . . . . . . The Fund--Investment Management
(Prospectus); Brokerage Transac-
tions (SAI)
<PAGE> 3
18. Capital Stock and Other
Securities. . . . . . . . . . . . The Fund--CB Shares(SM)
(Prospectus); The Fund--Capital
Stock (Prospectus); Capital Stock
and Stockholder Reports (SAI);
Dividends and Distributions (SAI);
Taxes (SAI)
19. Purchase, Redemption and
Pricing of Securities
Being Offered . . . . . . . . . . Summary of Fund Expenses
(Prospectus); The Fund--Creation
Units (Prospectus); The Fund--
Purchase and Issuance of Fund
Shares in Creation Unit Aggrega-
tions (Prospectus); The Fund--
Redemption of Fund Shares in
Creation Unit Aggregations
(Prospectus); Purchase and
Issuance of Fund Shares in
Creation Unit Aggregations (SAI);
Redemption of Fund Shares in
Creation Unit Aggregations (SAI);
Determining Net Asset Value (SAI)
20. Tax Status . . . . . . . . . . . . The Fund--Tax Matters
(Prospectus); Taxes (SAI)
21. Underwriters . . . . . . . . . . . The Fund--Distributor
(Prospectus); Purchase and
Issuance of Fund Shares in
Creation Unit Aggregations (SAI)
22. Calculation of Performance
Data . . . . . . . . . . . . . . Not applicable
23. Financial Statements . . . . . . . Statement of Assets and Liabilities
(SAI)
Part C
Information required to be included in Part C is set forth under the
appropriate item heading.
<PAGE> 1
SUBJECT TO COMPLETION DATED FEBRUARY 12, 1996
PROSPECTUS
THE COUNTRYBASKETS(SM) INDEX FUND, INC.
The CountryBaskets(SM) Index Fund, Inc. (the "Fund") is a management
investment company organized as a series fund, with each series of shares
(a "Series") representing a broad-based index of publicly traded equity
securities in a particular country, geographical region or industry sector.
The initial nine Series offered by this Prospectus are the Australia
Index Series, the France Index Series, the Germany Index Series, the Hong
Kong Index Series, the Italy Index Series, the Japan Index Series, the
South Africa Index Series, the UK Index Series and the US Index Series. The
Board of Directors of the Fund may authorize additional Series.
The investment objective of each of the initial nine Series is to
provide investment results that substantially correspond to the price and
yield performance of a broad-based index of publicly traded equity
securities in a particular country. Each of the nine Series will seek to
provide investment results that substantially correspond to the price and
yield performance of its respective country component of the FT/S&P
Actuaries World Indices(SM) (the "FT Index"). See "The Fund--FT/S&P Actuaries
World Indices(TM)".
The shares of common stock of each Series offered hereby are
sometimes referred to herein as "CB Shares(SM)". The Fund will sell and
redeem shares of each Series only in aggregations of a specified number of
shares for such Series (each, a "Creation Unit") at their net asset value
principally for an in-kind portfolio of equity securities of the relevant
FT Index component, together with some cash. Except in Creation Unit size
aggregations, the CB Shares(SM) are not redeemable securities of the Fund.
The number of CB Shares(SM) constituting a Creation Unit will initially be
250,000 CB Shares(SM) in the case of the Japan Index Series and 100,000 CB
Shares(SM) in the case of each other Series. See "The Fund--Purchase and
Issuance of Fund Shares in Creation Unit Aggregations" and "--Redemption of
Fund Shares in Creation Unit Aggregations".
Investors may not redeem CB Shares(SM) in less than Creation Unit
aggregations.
Application is being made to list the non-redeemable CB Shares(SM) for
trading on the New York Stock Exchange, Inc. (the "NYSE"). It is expected
that the non-redeemable CB Shares(SM) will trade on the NYSE during the day
at prices that differ to some degree from their net asset value. See "The
Fund--Determination of Net Asset Value", "--Exchange Listing and Trading" and
"--Investment Considerations and Risks".
Deutsche Morgan Grenfell/C. J. Lawrence Inc. ("DMG"), a subsidiary of
Deutsche Bank AG, will serve as investment adviser to each Series of the
Fund, providing investment advisory, management and certain administrative
services. ALPS Mutual Funds Services, Inc. is the distributor of the Fund.
See "The Fund Investment Management" and " Distributor".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus sets forth concisely the information about the Fund
that an investor should know before investing. It should be read and
retained for future reference. A Statement of Additional Information dated
, 1996, provides further discussion of certain topics referred to
in this Prospectus and other matters which may be of interest to investors.
The Statement of Additional Information has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. The
Statement of Additional Information may be obtained without charge by
writing to the Fund or the Distributor (at its address set forth on the
back cover of this Prospectus). The Fund's address is c/o Deutsche Morgan
Grenfell/C. J. Lawrence Inc., 31 West 52nd Street, New York, New York
10019.
"The CountryBaskets Index Fund, Inc.", "CountryBaskets" and "CB
Shares" are service marks of DMG. DMG has filed applications for
registration of such service marks with the U.S. Patent and Trademark
Office. The Fund is an authorized licensee of such marks.
Distributor:
ALPS Mutual Funds Services, Inc.
Investor Information: 1-800-CB-INFOS
Prospectus dated , 1996
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
<PAGE> 2
"Financial Times/Standard & Poor's Actuaries World Indices", "FT/S&P
Actuaries World Indices" and "FT/S&P AWI" are trademarks of FTSE
International Limited ("FTSE") and Standard & Poor's ("S&P") and have been
licensed for use by DMG. The Fund is an authorized sublicensee thereof. The
Fund is not sponsored, endorsed, sold or promoted by FTSE or S&P and
neither FTSE nor S&P makes any representation regarding the advisability of
investing therein. See the inside front cover of this Prospectus.
The Fund and the securities described herein (the "Products")
are not sponsored, endorsed, sold or promoted by FTSE, Goldman,
Sachs & Co. or Standard & Poor's (collectively, the "Owners").
None of the Owners makes any representation or warranty,
express or implied, to the sponsors of the Products or any
member of the public regarding the advisability of investing in
securities generally or in the Products particularly or in the
ability of the FT/S&P Actuaries World Indices(TM) (the
"Indices") to track general stock market performance. The
Owners' only relationship to Deutsche Morgan Grenfell/C. J.
Lawrence Inc. ("Licensee") is the licensing of certain
trademarks and trade names and of the Indices which are
determined, composed and calculated without regard to the
Licensee or the Products. The Owners have no obligation to take
the needs of the Licensee or the Products into consideration in
determining, composing or calculating the Indices. The Owners
are not responsible for and have not participated in the
determination of the prices and amount of the Products or the
timing of the issuance or sale of the Products. The Owners have
no obligation or liability in connection with the
administration, marketing or trading of the Products.
The Owners do not guarantee the accuracy and/or the
completeness of the Indices or any data included therein and
the Owners shall have no liability for any errors, omissions or
interruptions therein. The Owners make no express or implied
warranties, and expressly disclaim all warranties of quality or
merchantability or fitness for a particular purpose or use with
respect to the Indices or any data included therein. Without
limiting any of the foregoing, in no event shall the Owners
have any liability for any special, punitive, indirect or
consequential damages (including lost profits), even if
notified of the possibility of such damages.
The FT-Actuaries World Indices(TM) were originally developed by
Goldman, Sachs & Co., NatWest Securities Limited and The Financial Times
Limited in 1986, and until May 23, 1995, were jointly published by them. On
May 23, 1995, Standard & Poor's, a division of The McGraw-Hill Companies,
Inc., joined The Financial Times Limited and Goldman, Sachs & Co. as a co-
publisher of the FT-Actuaries World Indices(TM), now known as the
Financial Times/Standard & Poor's Actuaries World Indices(TM) or the FT/S&P
Actuaries World Indices(TM). The FT/S&P Actuaries World Indices(TM) are a
continuation of the FT-Actuaries World Indices(TM). Following the current
transition period, The Financial Times Limited and Standard & Poor's will
jointly calculate the indices. On November [__], 1995, The Financial Times
Limited transferred its ownership rights in the FT/S&P Actuaries World
Indices(TM) to FTSE, a company jointly owned by The Financial Times
Limited, the London Stock Exchange and the Institute of Actuaries. By the
end of 1996, it is expected that FTSE will assume responsibility for
calculating the European and Asia-Pacific indices and Standard & Poor's
will calculate the U.S. indices. The Fund is not sponsored by or affiliated
with Standard & Poor's, FTSE or The Financial Times
<PAGE> 3
Limited. References herein to the "FT Index" and to certain index data
prior to May 23, 1995 are to the FT-Actuaries World Index(TM); references
thereafter are to the FT/S&P Actuaries World Indices(TM).
Unless otherwise specified, all references in this Prospectus to
"dollars", "US $" or "$" are to United States dollars, all references to
"A$" are to Australian dollars, all references to "FF" are to the French
francs, all references to "DM" are to Deutsche marks, all references to "HK
$" are to Hong Kong dollars, all references to "L" are to Italian lira, all
references to "Y" are to Japanese Yen, all references to "CR" are to South
African commercial rands (a currency abandoned as of March 20, 1995), all
references to "R" are to South African rands and all references to "L" are
to pounds sterling. On __________, 1996, the noon 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 $1.00: A$ ____________, FF ____________, DM
____________, HK$ ____________, ____________, Y ____________, R
____________, and L ____________. Some numbers in this Prospectus have been
rounded. All US-dollar equivalents provided in this Prospectus are
calculated at the exchange rate prevailing on the date to which the
corresponding foreign currency amount refers.
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus and in the Statement of
Additional Information.
The Fund and its
Investment Objective . . . . The CountryBaskets(SM) Index Fund, Inc., a
Maryland corporation (the "Fund"), is a
management investment company organized
as a series fund. The investment
objective of each series of shares (a
"Series") of the Fund is to provide
investment results that substantially
correspond to the price and yield
performance of a broad-based index of
publicly traded equity securities in a
particular country, geographical region
or industry sector. In the case of each
of the initial nine Series offered by
this Prospectus, the relevant index is a
broad-based index of publicly traded
equity securities in a particular country.
The investment objective of each Series is
fundamental and may not be changed
without a vote of the Series'
stockholders. There can be no assurance
that the investment objective of any
Series will be achieved. See "The
Fund--The Country Baskets(SM) Index Fund,
Inc. and its Investment Objective".
Each of the initial nine Series offered
by this Prospectus seeks to provide
investment results that substantially
correspond to the price and yield
performance of its respective country
component of the FT/S&P Actuaries World
Indices(TM) (the "FT Index"). This
investment objective is not fundamental
and may be changed by the Board of
Directors without a stockholder vote. The
country components of the FT Index are
based on equity securities trading in the
markets of a particular country.
The initial nine Series of the Fund are
the Australia Index Series, the France
Index Series, the Germany Index Series,
the Hong Kong Index Series, the Italy
Index Series, the Japan Index Series, the
South Africa Index Series, the UK Index
Series and the US Index Series. Each such
Series is non-diversified. Such Series
represent separate portfolios of equity
securities, each substantially
corresponding in composition and weighing
to its respective country component of
the FT Index. The net asset value of
shares of each Series will fluctuate. See
"The Fund--Determination of Net Asset
Value".
CB Shares(SM) . . . . . . . . The shares of common stock of each Series
are sometimes referred to herein as the
"CB Shares(SM)". Except in the Creation
Unit aggregations referred to below, CB
Shares(SM) are not redeemable securities
of the Fund. The acquisition
<PAGE> 5
of CB Shares(SM) by investment companies
is subject to the restrictions of
Section 12(d)(1) of the Investment
Company Act of 1940.
Trading of CB Shares(SM)
on the New York Stock
Exchange . . . . . . . . . . Application has been made to list the CB
Shares(SM) of each Series for trading on
the New York Stock Exchange, Inc. (the
"NYSE"). Their respective symbols are:
Series Trading Symbol
Australia CB Shares(SM) GXA
France CB Shares(SM) GXF
Germany CB Shares(SM) GXG
Hong Kong CB Shares(SM) GXH
Italy CB Shares(SM) GXI
Japan CB Shares(SM) GXJ
South Africa CB Shares(SM) GXR
UK CB Shares(SM) GXK
US CB Shares(SM) GXU
It is expected that the non-redeemable CB
Shares(SM) of each Series will trade on
the NYSE at prices that may differ to some
degree from their net asset value. See
"The Fund--Exchange Listing and Trading",
"--Investment Considerations and Risks"
and "--Determination of Net Asset Value".
Book Entry Ownership of
CB Shares(SM) . . . . . . . The Depository Trust Company, a limited
purpose trust company organized under the
laws of the State of New York (the
"Depositary" or "DTC"), or its nominee
will be the record or registered owner of
all outstanding CB Shares(SM). Beneficial
ownership of CB Shares(SM) will be shown on
the records of the Depositary or its
participants. Certificates will not be
issued for CB Shares(SM). Beneficial owners
of CB Shares(SM) will exercise their rights
through DTC and such participants. See
"The Fund Book-Entry Only System".
Purchases and Redemptions
of Creation Unit Aggregations
of CB Shares(SM) . . . . . . The Fund will issue and redeem CB
Shares(SM) of any Series only in
aggregations of a specified number of
shares (each a "Creation Unit") at their
net asset value. A Creation Unit of the
Japan Index Series consists of 250,000 CB
Shares(SM) and a Creation Unit of each
other Series consists of 100,000 CB
Shares(SM).
The Fund will offer and sell Creation
Unit size aggregations of shares of each
Series continuously through the
Distributor
<PAGE> 6
(see below) at their net asset value next
determined after receipt of a purchase
order in proper form. Creation Unit
aggregations of shares are sold for an
in-kind portfolio of equity securities
included in the relevant component of the
FT Index (the "Fund Basket") and cash in
an amount equal to the difference between
the value of a Fund Basket and the net
asset value of the Creation Unit
aggregation of shares (the "Cash
Component"), as described more fully
herein. See "The Fund--Purchase and
Issuance of Fund Shares in Creation Unit
Aggregations" in this Prospectus and
"Purchase and Issuance of Fund Shares in
Creation Unit Aggregations" in the
Statement of Additional Information.
The Fund will generally redeem shares of
each Series only in Creation Unit size
aggregations at their net asset value,
principally in-kind for a Fund Basket and
a cash payment equal to the difference
between the value of the Fund Basket and
the net asset value of the shares to be
redeemed, as described more fully herein.
See "The Fund--Redemption of Fund Shares
in Creation Unit Aggregations" in this
Prospectus and "Redemption of Fund Shares
in Creation Unit Aggregations" in the
Statement of Additional Information.
Investment Management . . . . Deutsche Morgan Grenfell/C. J. Lawrence
Inc. ("DMG" or the "Adviser") will act as
investment adviser and, in addition, will
provide management and certain
administrative services to the Fund. DMG
is a wholly owned indirect subsidiary of
Deutsche Bank AG, a major German banking
institution.
Distributor . . . . . . . . . ALPS Mutual Funds Services, Inc. ("ALPS")
is the distributor of the Fund shares
(the "Distributor"). Information about
purchases of CB Shares(SM) in Creation
Unit aggregations may be obtained from the
Distributor.
Administrator . . . . . . . . State Street Bank and Trust Company
("State Street") will act as
administrator of the Fund (in such
capacity, the "Administrator").
Fees . . . . . . . . . . . . For its services as Adviser to each
Series, including services in connection
with lending portfolio securities (see
"The Fund--Lending of Securities"), DMG
will receive a monthly investment
management fee at an annual rate of .30%
of the average daily net assets of each
Series, except for the Hong Kong and
South Africa Index Series, for which such
annual rate will be .45%, and the US
Index Series, for which such annual rate
will be .20%, plus in each case 40% of
the gross investment income excluding
dividends on portfolio securities of each
Series. See "Fees".
<PAGE> 7
Each Series will pay the Distributor for
its distribution services a monthly
distribution services fee equal to such
Series' allocable portion of .02% per
annum of the average aggregate daily net
assets ("Aggregate Net Assets") of all
Series up to Aggregate Net Assets of $2.5
billion, plus .01% per annum of Aggregate
Net Assets of all Series in excess of
$2.5 billion up to $5 billion, plus .005%
per annum of Aggregate Net Assets of all
Series in excess of $5 billion. The
Distributor will also be paid a marketing
fee and will be reimbursed for certain
expenses. Each Series will also make
payments to dealers and other persons for
marketing and stockholder services. All
payments by each Series to the
Distributor and to such dealers or other
persons will be made under the 12b-1 Plan
(as defined herein) of such Series and
will not exceed, in the aggregate, on an
annualized basis, .25% of its average
daily net assets. See "The Fund--Fees".
The Administrator will receive monthly
administrative fees for each Series at an
annual rate of .08% of the average daily
net assets of each Series up to $125
million, plus .06% of the average daily
net assets of such Series in excess of
$125 million up to $250 million and .04%
of average daily net assets of such
Series in excess of $250 million, subject
to a minimum annual fee of $95,000 for
each Series.
Investment Considerations
and Risks . . . . . . . . . . An investment in CB Shares(SM) of the
initial nine Series of the Fund involves
risks similar to those of investing in a
broadly based portfolio of equity
securities traded on exchanges in the
respective countries represented by their
corresponding FT Index components. These
risks include equity market fluctuations
caused by such factors as economic and
political developments, changes in
interest rates and perceived trends in
stock prices, and, with respect to each
Series other than the US Index Series,
exchange-rate fluctuations.
The net asset value of shares of each
Series will fluctuate with changes in the
market value of its portfolio securities
and, in the case of each Series except
the US Index Series, changes in the
market rate of exchange between the US
dollar and the national currency in which
the relevant component of the FT Index is
denominated. See "The Fund--Investment
Considerations and Risks".
Prior to the date of this Prospectus,
there has been no market for CB Shares(SM)
and, consequently, there can be no
assurance that active trading markets
will develop. The Distributor will not
maintain a secondary market in CB
Shares(SM). See "Purchase and Issuance of
Fund Shares in
<PAGE> 8
Creation Unit Aggregations--The
Distributor" in the Statement of
Additional Information. The market prices
of CB Shares(SM) will fluctuate in
accordance with supply and demand on the
NYSE. The Fund cannot predict whether the
CB Shares(SM) will trade below, at or
above their net asset value. See "The
Fund--Investment Considerations and
Risks."
The securities held by each Series,
except for the US Index Series, will
primarily be equity securities of non-
U.S. companies. Non-U.S. companies
generally do not provide all or the same
kind of disclosure required by U.S. law
and accounting practice. See "The Fund
--Investment Considerations and Risks" in
this Prospectus and "Investment Policies
and Restrictions" in the Statement of
Additional Information.
The Fund will engage in the lending of
portfolio securities (see "The
Fund--Lending of Securities") and engage
in certain foreign currency transactions
designed to maintain the value of each
non-US Index Series' assets in terms of
the foreign currency value of its
respective FT Index component (see "The
Fund--Investment Policies" in this
Prospectus and "Investment Policies and
Restrictions Currency Transactions" in the
Statement of Additional Information).
As of December 29, 1995, the following FT
Index components were each concentrated
(in excess of 25% of such component) in
the stocks of the indicated industry
group: Australia--Mining, Metals and
Minerals; Hong Kong--Real Estate;
Italy--Utilities; and South
Africa--Precious Metals and Minerals. The
portfolio securities of each such Series
will generally have such industry
concentration for so long as the
corresponding FT Index component is so
concentrated. See "The Fund--Investment
Restrictions of the Fund" and
"--Investment Considerations and Risks".
Dividends and Capital
Gains Distributions . . . . . Dividends from net investment income of
all Series other than the US Index Series
will be declared and paid at least
annually and, in the case of the US Index
Series, quarterly. Capital gains of each
Series, if any, will be distributed at
least annually. Dividends and capital
gains distributions will be distributed
by each Series in US dollars. The Fund
does not currently maintain a plan for
the automatic reinvestment of cash
distributions in additional shares of the
Fund. See "The Fund--Dividends and Capital
Gains Distributions".
<PAGE> 9
Tax Matters . . . . . . . . . The purchase, sale, and redemption of CB
Shares(SM) are taxable events and may
result in a capital gain or loss to
investors. Dividend distributions,
capital gain distributions and capital
gains or losses from redemptions and
sales of CB Shares(SM) may be subject to
federal, state and local taxes. See "The
Fund--Tax Matters".
<PAGE> 10
SUMMARY OF FUND EXPENSES
The purpose of the following tables is to assist investors in
understanding the various costs and expenses an investor will bear directly
and indirectly in respect of each Series of the Fund. The tables show all
expenses and fees the Fund is expected to incur and are based on estimates
expressed as a percentage of average net assets. "Other Expenses" are
estimated amounts for the current fiscal year. The examples set forth below
are presented for an investment of $1,000(1) as required by rules of the
Securities and Exchange Commission (the "SEC"). The examples in the tables
should not be considered a representation of past or future expenses or
performance. Actual expenses may be greater or less than those shown.
(1) As of December 29, 1995, the minimum value of a portfolio of index
securities comprising a Fund Basket (assuming the inclusion of all
stocks in the relevant FT Index component in their exact weightings)
for an in-kind purchase or redemption of a Creation Unit aggregation
of shares of each Series would have been as follows: the Australia
Index Series, $1,900,000; the France Index Series, $3,587,500; the
Germany Index Series, $3,275,000; the Hong Kong Index Series,
$2,587,500; the Italy Index Series, $2,462,500; the Japan Index
Series, $9,687,500; the South Africa Index Series, $1,925,000; the UK
Index Series, $3,837,500; and the US Index Series, $5,025,000.
<PAGE> 11
Fund Expense Table
<TABLE>
<CAPTION>
The The
The The The Hong The The South
Australia France Germany Kong Italy Japan Africa The UK The US
Index Index Index Index Index Index Index Index Index
Series Series Series Series Series Series Series Series Series
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A. Stockholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases of Creation Unit
aggregations of Shares (as a
percentage of amount of
investment) . . . . . . . . . . None None None None None None None None None
Estimated Cost to Investor of
Transferring Securities in Fund
Basket to Fund(a) . . . . . . . $2,176 $3,774 $1,856 $3,192 $1,593 $12,636 $1,888 $5,508 $9,747
Local Stock Transfer Taxes(b)
(as a percentage of the value of
Fund Basket contributed) . . . . .30% 0% 0% 0% 0% 0% 1.0% .50% 0%
Purchases--Cash Component
Transaction Fee(c)
as a percentage of cash amount
of investment . . . . . . . . 1.15% 1.0% 1.0% 1.2% 1.0% 1.32% 2.0% 1.5% 0%
as a percentage of total
investment amount . . . . . . .01% .01% .01% .01% .01% .01% .02% .01% 0%
Deferred Sales Load . . . . . . None None None None None None None None None
Estimated Cost to Redeemer of
Transferring Securities in Fund
Basket from Fund to Redeemer(a) $ $ $ $ $ $ $ $ $
Local Stock Transfer Taxes(b)
(as a percentage of the value of
Fund Basket delivered on
redemption) . . . . . . . . . . 0% 0% 0% 0% 0% .30% 0% 0% 0%
Redemptions--Transaction Fee on
Cash Portion(d) . . . . . . . .
as a percentage of cash
redemption proceeds . . . . . 1.15% 1.0% 1.0% 1.2% 1.0% 1.32% 1.0% 1.0% 0%
as a percentage of total
redemption proceeds . . . . . .01% .01% .01% .01% .01% .01% .01% .01% 0%
<PAGE> 12
B. Annual Series Operating Expenses
(as a percentage of average net
assets)
Management Fees(e) . . . . . . . .30% .30% .30% .45% .30% .30% .45% .30% .20%
Distribution Fees (12b-1)(f) . . .25% .25% .25% .25% .25% .25% .25% .25% .25%
Other Expenses . . . . . . . . . .24% .26% .23% .36% .28% .26% .26% .25% .24%
Total Operating Expenses . . . . .79% .81% .78% 1.06% .83% .81% .96% .80% .69%
____________________
<FN>
(a) Estimated based on a delivery to or from the Fund of one Fund Basket of securities. An investor
purchasing shares in Creation Unit aggregations will bear the costs of transferring the securities in the
Fund Basket to the Fund and an investor redeeming Creation Unit aggregations of shares will bear the
costs of transferring securities in the Fund Basket constituting a portion of the redemption proceeds
from the Fund to the investor. Such costs will include settlement and custody charges, registration costs
and similar charges. Investors will also beat certain stock transfer taxes or stamp duties on purchases
or redemptions of Creation Units of shares of certain Series. See the line item "Local Stock Transfer
Taxes". See "Purchase and Issuance of Fund Shares in Creation Unit Aggregations--The Fund Basket" and
"Redemption of Fund Shares in Creation Unit Aggregations--Redemption Proceeds" in the Statement of
Additional Information.
(b) Based on the stock transfer taxes or stamp duty currently payable in the indicated countries in
connection with the registration of transfers of Fund Basket securities to the Fund (on purchases of
Creation Units of shares of the Australia, South Africa and UK Index Series) or to the redeeming investor
(on redemptions of Creation Units of shares of the Japan Index Series).
(c) Paid to the Fund and applicable only to the amount of a purchase represented by the Cash Component
to offset the Fund's brokerage and other transaction costs of investing cash in portfolio securities of
each Series other than the US Index Series. The cash purchase transaction fee is not a sales charge. The
Cash Component is generally estimated to be 1% of the total purchase price, but may amount to a higher
portion, not to exceed 10% of the total purchase price, in the event that cash is permitted or required
by the Adviser to be substituted for a security or securities in the applicable Fund Basket. See
"Purchase and Issuance of Fund Shares in Creation Unit Aggregations" in this Prospectus and in the
Statement of Additional Information. The US Index Series will bear brokerage and other transaction
expenses associated with investing the Cash Component contributed on purchases of Creation Unit
aggregations of shares of the US Index Series in portfolio securities of that Series.
(d) Paid to the Fund and applicable only to the amount of redemption proceeds represented by the cash
portion to offset the Fund's brokerage and other transaction costs of selling portfolio securities of
each Series other than the U.S. Index Series to pay a portion of redemption proceeds. The cash portion is
generally estimated to be 1% of the total redemption proceeds of a Creation Unit aggregation of shares,
but the cash portion could in certain limited circumstances amount to up to 100% of such proceeds. See
"Redemption of Fund Shares in Creation Unit Aggregations" in this Prospectus and in the Statement of
Additional Information.
(e) Management fees are .30% of the average daily net assets of each Series, except for the Hong Kong
and South Africa Index Series, for which such annual rate will be .45%, and the US Index Series, for
which such annual rate will be .20% (see "The Fund--Fees"). In addition, each Series will pay to the
Adviser 40% of the gross investment income, excluding dividends on portfolio securities, of the Series.
Investment income is received primarily from interest earned on the collateral for securities loaned. See
"The Fund--Lending of Securities".
(f) The Distributor will be paid distribution services fees by each Series equal to such Series'
allocable portion of: .02% per annum of the Aggregate Net Assets of all Series up to Aggregate Net Assets
of $2.5 billion, plus .01% per annum of Aggregate Net Assets of all Series in excess of $2.5 billion up
to $5 billion, plus .005% per annum of Aggregate Net Assets of all Series in excess of $5 billion. The
Distributor will also be paid a marketing fee and
<PAGE> 13
will be reimbursed for certain expenses. Each Series will also make payments to certain dealers and other
persons for marketing and stockholder services and, to the extent of amounts available under such Series'
12b-1 Plan, will reimburse the Distributor and/or the Adviser for its costs incurred in producing
advertising or marketing material, all as more fully described under "The Fund--Fees". All payments by
each Series to the Distributor and to such dealers and other persons, and all such reimbursements, will
be made under the 12b-1 Plan of such Series and will not exceed, in the aggregate, on an annualized
basis, .25% of its average daily net assets. Because the fees and expenses paid under the 12b-1 Plan of
each Series are charged against the assets of the Series, long-term stockholders may indirectly pay an
amount that is more than the economic equivalent of the maximum front-end sales charge that such Series
would be permitted to charge. See "The Fund--Fees".
</FN>
</TABLE>
<PAGE> 14
C. Examples of Expenses
(a) An investor would pay the following expenses on a $1,000 investment
(payment with a ratable portion of a Fund Basket and a Cash Component
of $10 (estimated as 1% of the total purchase price)), assuming
(1) a 5% annual return and (2) redemption (delivery of a Fund Basket
and a cash redemption payment of $10 (estimated as 1% of the total
redemption proceeds)) at the end of each indicated time period:
<TABLE>
<CAPTION>
Hong South
Australia France Germany Kong Italy Japan Africa UK US
Index Index Index Index Index Index Index Index Index
Series Series Series Series Series Series Series Series Series
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year
3 years
</TABLE>
(b) An investor would pay the following expenses on the same
investment, assuming no redemptions:
<TABLE>
<CAPTION>
Hong South
Australia France Germany Kong Italy Japan Africa UK US
Index Index Index Index Index Index Index Index Index
Series Series Series Series Series Series Series Series Series
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year
3 years
</TABLE>
Explanation of Table
A. Stockholder Transaction Expenses are charges that investors pay to
buy or sell Creation Unit aggregations of shares of the Fund. See "The
Fund--Purchase and Issuance of Fund Shares in Creation Unit Aggregations"
and "--Redemption of Fund Shares in Creation Unit Aggregations" in this
Prospectus and "Purchase and Issuance of Fund Shares in Creation Unit
Aggregations" and "Redemption of Fund Shares in Creation Unit
Aggregations" in the Statement of Additional Information for an
explanation of how these charges apply.
<PAGE> 15
B. Annual Series Operating Expenses are based on estimated expenses.
Management Fees are paid to DMG to provide each Series with investment
advisory, management and certain administrative services and services in
connection with the lending of portfolio securities. See "The Fund--Lending
of Securities". Administration fees estimated at .074% of the average daily
net assets of each Series, based estimated on average net assets of
US $250,000,000, are included in "Other Expenses" and are paid to State
Street, as Administrator, to provide the Fund with administrative services.
Distribution fees are paid to ALPS, as Distributor, to provide distribution
services to the Fund. The Distributor will also be paid a marketing fee and
will be reimbursed for certain expenses. Each Series will also make payments
to dealers and other persons providing marketing and stockholder services.
See "The Fund--Investment Management", "--Distributor", "--Administrator"
and "--Fees" for additional information.
C. Examples of Expenses. The examples illustrate the estimated expenses
associated with a $1,000 investment in a Creation Unit aggregation of Fund
shares over periods of 1 and 3 years, based on the expenses in the table and
an assumed annual rate of return of 5%. The return of 5% and estimated
expenses are for illustration purposes only and should not be considered
indications of expected Series expenses or performance, both of which may
vary. The expenses associated with a hypothetical $1,000 investment in CB
Shares(SM) include a pro rata portion of stockholder transaction expenses
associated with the purchase or sale of a Creation Unit aggregation of shares,
which would have been valued as of December 29, 1995 at between $1,900,000 and
$10,000,000, depending on the Series, assuming for this purpose that the net
asset value of a Creation Unit aggregation of shares were the same as the
value of the Fund Basket as of such date. See footnote 1 to the Summary of
Fund Expenses. Based on the 1995 annual rates of return of the FT Index
components represented by each Series, the annual rate of return of each
Series, assuming reinvestment of dividends, after estimated expenses
applicable to the respective Series, would have been ____% for the
Australia Index Series, ____% for the France Index Series, ____% for the
Germany Index Series, ____% for the Hong Kong Index Series, ____% for the
Italy Index Series, ____% for the Japan Index Series, ____% for the South
Africa Index Series, ____% for the UK Index Series and ___% for the US Index
Series. These rates of return do not include interest earned on collateral
from securities loaned, which would have been increased to the extent of
any net interest income so earned, and are not indicative of future results.
<PAGE> 16
THE FUND
The CountryBaskets(SM) The Fund is a non-diversified, open-end management
Index Fund, Inc. and investment company registered under the Investment
its Investment Company Act of 1940 (the "1940 Act"), organized as
Objective a series fund. Each Series of the Fund seeks to
provide investment results that substantially
correspond to the price and yield performance of a
broad-based index of publicly traded equity
securities in a particular country, geographic
region or industry sector.
The Initial Series. Initially, nine Series of the
Fund will issue shares: the Australia Index
Series, the France Index Series, the Germany Index
Series, the Hong Kong Index Series, the Italy
Index Series, the Japan Index Series, the South
Africa Index Series, the UK Index Series and the
US Index Series. Each such Series seeks to provide
investment results that substantially correspond
to the price and yield performance of a broad-
based index of publicly traded equity securities
in the relevant country. This investment objective
is fundamental and may not be changed without the
approval of the holders of a majority of the
voting securities (as defined in the 1940 Act) of
the respective Series. The Board of Directors of
the Fund may authorize additional Series. Each of
the nine Series seeks investment results
substantially corresponding to the price and yield
performance of its respective country component of
the FT Index. This investment objective is not
fundamental, and in the case of any Series the
index may be changed by the Board of Directors,
subject to any applicable regulatory approvals, to
another broad-based index of equity securities in
the relevant country without a stockholder vote.
See "Investment Policies and Restrictions--
Investment Restrictions" in the Statement of
Additional Information. There can be no assurance
that the investment objective of any Series will
be achieved.
Investment Policies Each Series will seek to implement its investment
objective by a policy of remaining fully invested,
except as described below, in a portfolio of
equity securities that will provide investment
results that substantially correspond to the price
and yield performance of its respective country
component of the FT Index. Each country component
of the FT Index is a capitalization-weighted index
of equity securities traded on the principal
securities exchange(s) and, in some cases, the
over-the-counter market, of that country. See
"The FT Index Components". Each Series will invest
the largest proportion of its net assets
practicable, in any event at least 95% of its net
assets, in the securities of its respective
component of the FT Index, and the weighing of the
portfolio securities of each Series will
substantially correspond to their proportional
representation in the relevant component of the FT
Index. These investment policies are not
fundamental and so may be changed by the Board of
Directors of the Fund without stockholder approval.
Correlation with the FT Index. The correlation
between the performance of each Series and its
respective FT Index component is expected to be at
least 0.95 (1.00 indicating a perfect
correlation). The ability to correlate the
performance of a Series with that of the
corresponding
<PAGE> 17
component of the FT Index will be affected by,
among other things, changes in securities markets,
the manner in which the FT Index is calculated
(see "FT/S&P Actuaries World Indices(TM)"), the
expenses incurred by such Series, the asset size
of such Series, and the timing and size of
purchases and redemptions of Creation Unit
aggregations of shares. Investment changes to
accommodate purchases and redemptions of shares in
Creation Unit size aggregations will be made at
the direction of the Adviser to maintain to the
extent practicable the correlation of each Series'
portfolio to its corresponding component of the FT
Index. In the event, considered unlikely by the
Fund, that the Adviser is unable to maintain a
correlation of 0.95 between a Series' performance
and that of its respective FT Index component, the
Fund's Board of Directors will consider
alternative investment advisory arrangements for
that Series.
Each Series may invest in high quality, short-term
fixed income obligations as cash reserves,
including obligations denominated in US dollars
and in the principal foreign currency or
currencies of the portfolio securities of such
Series (the "Series Currency") and repurchase
agreements collateralized by U.S. Government
securities. To a limited extent each Series may
also purchase securities of U.S. or foreign
investment companies, stock index futures
contracts and options thereon traded on recognized
exchanges in the markets relevant to such Series,
and purchase call options, and write (sell) put
options, on securities and indices in such
markets. A Series will invest in such instruments
(or combinations thereof) only for the purpose of
exposing cash reserves and short-term money market
investments to the equity risk and return of the
corresponding component of the FT Index in order
to achieve a higher correlation to such component.
Investment company securities, stock index
futures, options and options on futures in which a
Series may invest will be those which the Adviser
believes would, alone or in combination with other
instruments, replicate the performance of the
relevant FT Index component better than the
uninvested cash. In addition, if market conditions
make it impracticable to purchase a security in
the relevant FT Index component, a Series may
purchase another equity security that the Adviser
considers an appropriate substitute for such FT
Index constituent security or may purchase or
write an option or combination of options on such
FT Index security (or a security expected to
perform similarly to the missing index security)
to expose the uninvested assets to the equity risk
and return of such unavailable security and
thereby improve the correlation of the Series with
the relevant FT Index component. A Series will not
invest in options and futures contracts and
options thereon for speculative purposes. See
"Investment Policies and Restrictions--Other Fund
Investments" in the Statement of Additional
Information.
Investments other than the equity securities
included in the applicable FT Index component will
not exceed 5% of each Series' net assets. As
described above, such investments include cash and
cash equivalents, repurchase agreements,
investment company securities, call and put
options and stock index futures contracts and
options thereon, and equity
<PAGE> 18
securities not included in the relevant component
of the FT Index that may be an appropriate
substitute for an index equity security if market
conditions make it impracticable to purchase the
index security in the relevant FT Index component.
See "Investment Policies and Restrictions--Other
Fund Investments" in the Statement of Additional
Information. The activities of the Fund are
subject to certain restrictions that may not be
changed without stockholder approval. See
"Investment Restrictions of the Fund" in this
Prospectus and "Investment Policies and
Restrictions--Investment Restrictions" in the
Statement of Additional Information.
Each Series may lend its portfolio securities in
an amount up to 33 1/3% of the value of its total
assets in order to earn income and thereby reduce
the effect that expenses have on the Series'
ability to provide investment results that
substantially correspond to the price and yield
performance of the relevant FT Index component.
See "Lending of Securities". Each Series will also
engage in certain foreign currency transactions
that are designed to maintain the correspondence
between the value of the Series' assets and the
foreign currency-denominated values of the
respective indices. A Series will not hold
illiquid assets in excess of 15% of its net
assets. For purposes of this restriction,
"illiquid" securities shall mean securities which
may not be sold or disposed of in the ordinary
course of business within seven days at
approximately the value at which the Series has
valued the securities. See "Investment Policies
and Restrictions" in the Statement of Additional
Information.
Portfolio Turnover. Each Series of the Fund is
permitted to sell securities irrespective of how
long they have been held. Given that the invest-
ment management of each Series is fundamentally
"passive" in that it seeks to provide investment
results corresponding to that of an index, the
portfolio turnover rate for each Series is
expected to be under 50%. Ordinarily, securities
will be purchased or sold by a Series only to
reflect changes in the composition of the
corresponding component of the FT Index or to
accommodate cash flows required by, among other
things, redemptions of Creation Unit aggregations
of shares.
FT/S&P Actuaries World The FT/S&P Actuaries World Indices(TM) are jointly
Indices(TM) owned by FT-SE International (a company jointly
owned by The Financial Times Limited, the London
Stock Exchange and the Institute of Actuaries),
Standard & Poor's (a division of The McGraw-Hill
Companies, Inc.) and Goldman, Sachs & Co.
(collectively, the "Owners"). On May 23, 1995,
Standard & Poor's replaced NatWest Securities
Limited to join The Financial Times Limited and
Goldman, Sachs & Co. as a co-publisher of the FT
Index and, following the current transition
period, The Financial Times Limited and Standard &
Poor's will be jointly responsible for the
calculation of the FT Index components. On
November [__], 1995, FTSE assumed the ownership
rights of The Financial Times Limited in the FT
Index. By the end of 1996, it is expected that
FTSE will assume responsibility for calculating
the Asian-Pacific and European indices and
Standard & Poor's will calculate the U.S. indices.
The Institute of
<PAGE> 19
Actuaries and The Faculty of Actuaries, the
English and Scottish bodies, respectively, that
represent the actuarial profession in the United
Kingdom (together with the Owners, the
"Consortium") provide assistance in managing the
FT Index. The aim of the Consortium is to create
and maintain a series of equity indices for use by
the global investment community.
Selection Criteria. The World Index Policy
Committee (the "WIPC") makes all policy decisions
concerning the FT Index, including: objectives,
selection criteria, market representativeness,
calculation methodologies, and additions and
deletions of constituent securities. The WIPC
makes these decisions in a manner that is consis-
tent with the stated aims and objectives of the
Consortium. With respect to each country, regional
or sector component of the FT Index, WIPC's
objective is to capture 85% of the equity
available (known as the "investible universe") in
such country, region or sector. The "investible
universe" for a particular component of the FT
Index consists of the aggregate capitalization of
all equity securities listed on the exchanges
monitored within the relevant market after
application of five exclusionary "screens" and
certain other rules to the universe of such
exchange-traded equities. A fuller description
of the FT Index and the selection methodology is
included in the Statement of Additional
Information.
Market Capitalization Weighing. The proportional
representation of equity securities in the FT
Index is based on each security's total market
capitalization (that is, its market price times
the number of shares outstanding) relative to
other securities in the same market. The percent-
age of a Series' assets to be invested in each
equity security will not deviate significantly
from such security's corresponding proportional
representation in the relevant component of the FT
Index. FT Index values include dividends on
portfolio securities based on the most up-to-date
indicated annualized rates, adjusted for any
interim changes in, and any firm and precise
forecasts of, expected dividends. Each Series will
reinvest dividends and distributions it receives
as soon as practicable.
The FT Index The Australia Component. The Australia component
Components of the FT Index consists of stocks that are traded
on the Australian Stock Exchange Limited. As of
December 29, 1995, stocks of 81 issuers were
included. The three largest stocks and the
approximate percentages of the Australia component
represented thereby were Broken Hill Proprietaries
(16.3%), National Australia Bank (7.6%) and CRA
(5.6%), for a total of 29.5% of the Australia
component. The ten largest equity issues in the
Australia component represented approximately
52.2% of the Australia component. As of
December 29, 1995, equities of the mining, metals
and minerals, commercial and other banking and
real estate represented approximately 31.7%, 20.7%
and 5.6%, respectively, or a total of 58%, of the
Australia component. Equities comprising the
Australia component of the FT Index accounted for
approximately 83.9% of the aggregate investible
Australian market capitalization.
<PAGE> 20
The France Component. The France component of the
FT Index consists of stocks traded on the seven
French stock exchanges. As of December 29, 1995,
stocks of 100 issuers were included. The three
largest stocks and the approximate percentages of
the France component of the FT Index represented
thereby were Elf Aquitaine (5.4%), LVMH-Moet
Vuitton (4.9%) and L'Oreal (4.4%), for a total of
14.7% of the France component. The ten largest
equity issues in the France component represented
approximately 39% of the France component.
Equities of the health and personal care, oil and
commercial and other banks represented
approximately 9.9%, 9.6% and 8.9%, respectively,
or a total of 28.4%, of the France component. As
of December 29, 1995, equities comprising the
France component of the FT Index accounted for
approximately 88.2% of the aggregate investible
French market capitalization.
The Germany Component. The Germany component of
the FT Index consists of stocks that are traded on
the official (Amtlicher Handel) and the regulated
unlisted (Geregelter Markt) markets of the
Frankfurt Stock Exchange. As of December 29, 1995,
stocks of 59 issuers were included. The three
largest stocks and the approximate percentages of
the Germany component of the FT Index represented
thereby were Allianz AG (11.4%), Siemens AG (7.5%)
and Daimler Benz AG (6.5%) for a total of 25.4% of
the Germany component. The ten largest equity
issues in the Germany component represented
approximately 56% of the Germany component.
Equities of the insurance, commercial and other
banking, and chemicals industries represented
approximately 17.9%, 15.1% and 13.8%, respec-
tively, or a total of 46.8%, of the Germany
component. As of December 29, 1995, equities
comprising the Germany component of the FT Index
accounted for approximately 89% of the aggregate
investible German market capitalization.
The Hong Kong Component. The Hong Kong component
of the FT Index consists primarily of stocks
traded on the Stock Exchange of Hong Kong Limited
(the "HKX"). As of December 29, 1995, stocks of 55
issuers (including five issuers listed on the
Singapore Stock Exchange but not on the HKX) were
included. The three largest stocks and the
approximate percentages of the Hong Kong component
represented thereby were Hutchison Whampoa
(10.3%), Hong Kong Telecomm (9.4%) and Sun Hung
Kai Properties (8.9%), for a total of 28.6% of the
Hong Kong component. The ten largest equity issues
in the Hong Kong component represented
approximately 62% of the Hong Kong component.
Equities of the real estate, utilities, and
diversified consumer goods industries represented
approximately 37.0%, 18.7% and 12.7%,
respectively, or a total of 68.4%, of the Hong
Kong component. As of December 29, 1995, equities
comprising the Hong Kong component of the FT Index
accounted for approximately 85.7% of the aggregate
investible market capitalization of Hong Kong.
The Italy Component. The Italy component of the FT
Index consists of stocks on the official list
(Listino della Borsa) of the Milan Stock Exchange.
As of December 29, 1995, stocks of 59 issuers were
included.
<PAGE> 21
The three largest stocks and the approximate
percentages of the Italy component represented
thereby were Generali (13.9%), Telecom Italia
Mobile (8.4%) and Stet (7.8%), for a total of
30.1% of the Italy component. The ten largest
equity issues in the Italy component represented
approximately 61% of the Italy component. Equities
of the utilities, insurance and automobile
industries represented approximately 29.6%, 24.5%
and 9.7%, respectively, or a total of 63.8%, of
the Italy component. As of December 29, 1995,
equities comprising the Italy component of the FT
Index accounted for approximately 89.7% of the
aggregate investible Italian market
capitalization.
The Japan Component. The Japan component of the FT
Index consists of stocks traded on the first and
second sections of the Tokyo Stock Exchange and
the first section of the Osaka Stock Exchange. As
of December 29, 1995, stocks of 483 issuers were
included. The three largest stocks and the
approximate percentages of the Japan component
represented thereby were Toyota Motor (2.8%),
Industrial Bank of Japan (2.5%) and Mitsubishi
Bank (2.4%), for a total of 7.7% of the Japan
component. The ten largest equity issues in the
Japan component represented approximately 21% of
the Japan component. Equities of the commercial
and other banks, financial institutions and
utilities represented approximately 22.5%, 6.2%
and 6.1%, respectively, or a total of 34.8%, of
the Japan component. As of December 29, 1995,
equities comprising the Japan component of the FT
Index accounted for approximately 83.1% of the
aggregate investible Japanese market
capitalization.
The South Africa Component. The South Africa
component of the FT Index consists of stocks that
are traded on the Johannesburg Stock Exchange. As
of December 29, 1995, stocks of 45 issuers were
included. The three largest stocks and the
approximate percentages of the South Africa
component represented thereby were Anglo American
Corp. (10.1%), De Beers/Centenary (8.2%) and South
African Breweries (7.7%), for a total of 26% of
the South Africa component. The ten largest equity
issues in the South Africa component represented
approximately 52% of the South Africa component.
Equities of the precious metals and minerals,
diversified holding companies and beverages and
tobacco industries represented approximately
34.9%, 11.6% and 11.3%, respectively, or a total
of 57.8%, of the South Africa component. As of
December 29, 1995, equities comprising the South
Africa component of the FT Index accounted for
approximately 82.2% of the aggregate investible
market capitalization of the Johannesburg Stock
Exchange.
The UK Component. The UK component of the FT Index
consists of stocks on the official list of the
London Stock Exchange. As of December 29, 1995,
stocks of 205 issuers were included. The three
largest stocks and the approximate percentages of
the UK component represented thereby were Glaxo
Wellcome (4.6%), British Petroleum (4.3%) and
Shell Transport & Trading (4.0%), for a total of
12.9% of the UK component. The ten largest equity
issues in the UK component
<PAGE> 22
represented approximately 29% of the UK component.
Equities of the commercial and other banks,
utilities and health and personal care industries
represented approximately 12.5%, 11.8% and 9.7%,
respectively, or a total of 34.0%, of the UK
component. As of December 29, 1995, equities
comprising the UK component of the FT Index
accounted for approximately 82.6% of the aggregate
investible market capitalization of the United
Kingdom.
The US Component. The US component of the FT Index
consists of stocks traded on the NYSE, the
American Stock Exchange and the National
Association of Securities Dealers Automated
Quotation (NASDAQ) system. As of December 29,
1995, stocks of 639 issuers were included. The
three largest stocks and the approximate
percentages of the US component represented
thereby were General Electric (2.5%), AT&T (2.1%)
and Exxon Corp. (2.0%), for a total of 6.6% of the
US component. The ten largest equity issues in the
US component represented approximately 16% of the
US component. Equities of the utilities, health
and personal care and commercial and other bank
industries represented approximately 13.1%, 11.1%
and 7.8%, respectively, or a total of 32%, of the
US component. As of December 29, 1995, equities
comprising the US component of the FT Index
accounted for approximately 73.8% of the aggregate
investible market capitalization of the United
States.
Investment Management DMG will act as investment adviser to the Fund
and, subject to the supervision of the Board of
Directors of the Fund, will be responsible for
management of each Series' affairs, including
providing certain administrative services and
services in connection with the lending of
portfolio securities, pursuant to an Investment
Management Agreement entered into with the Fund
with respect to each Series. The Adviser receives
a fee from the Fund for its services. See "Fees"
in this Prospectus and "Investment Advisory,
Management and Administrative Services--The
Investment Adviser" in the Statement of Additional
Information. DMG is organized under Delaware law
and is registered as an investment adviser under
the Investment Advisers Act of 1940 and as a
broker-dealer under the Securities Exchange Act
of 1934 (the "Exchange Act"). DMG is a wholly
owned indirect subsidiary of Deutsche Bank AG, a
major German banking institution ("Deutsche Bank").
DMG is engaged in the securities underwriting and
securities brokerage businesses. The principal
business address of DMG is 31 West 52nd Street,
New York, New York 10019. Subject to obtaining the
best price together with efficient execution, the
Fund may place orders for the purchase and sale of
securities for the Fund's portfolio with both DMG
and/or Deutsche Bank, among other brokers and
dealers, and incur brokerage commissions for such
transactions. Except as permitted by exemptive
order or applicable rule or regulation, no
portfolio transaction on a principal basis will be
done with DMG, Deutsche Bank or their affiliates
in securities, foreign currency or other assets.
Deutsche Bank
<PAGE> 23
and its affiliates may have commercial lending
relationships with companies whose securities may
be held by a Series of the Fund.
Distributor ALPS Mutual Funds Services, Inc. is the
Distributor of CB Shares(SM) (see "CB Shares(SM)"
below). Its address is 370 17th Street, Suite
2700, Denver, Colorado 80202, and investor
information can be obtained by calling 1-800-
[ - ]. CB Shares(SM) will be sold by the Fund
and distributed only in Creation Unit size
aggregations, as described below under "Purchase
and Issuance of Fund Shares in Creation Unit
Aggregations". CB Shares(SM) in less than Creation
Unit size aggregations will not be distributed by
the Distributor. The Distributor is a registered
broker-dealer under the Exchange Act. The
Distributor was incorporated in 1986 under Colorado
law. The Distributor has entered into a Distri-
bution Agreement with the Fund pursuant to which
it will distribute Fund shares. The Distributor
will receive fees from the Fund for its services
pursuant to the 12b-1 Plans described below. See
"Fees" below and "Purchase and Issuance of Fund
Shares in Creation Unit Aggregations--The
Distributor" in the Statement of Additional
Information.
Administrator State Street will act as Administrator of the Fund
pursuant to an Administration Agreement with the
Fund and will be responsible for certain clerical,
record keeping and bookkeeping services, except
those to be performed by the Adviser or by State
Street in its capacity as Custodian. See
"Investment Advisory, Management and
Administrative Services--The Administrator,
Custodian and Transfer Agent" in the Statement of
Additional Information.
Custodian and Transfer State Street serves as the Custodian for the cash
Agent and portfolio securities of each Series of the
Fund and provides fund accounting services
pursuant to a Custodian Agreement between State
Street and the Fund. State Street also provides
transfer agency services (in such capacity, the
"Transfer Agent") pursuant to an agreement with
the Fund. State Street, as Custodian and Transfer
Agent, has no role in determining the investment
policies of the Fund or which securities are to be
purchased or sold by the Fund. The principal
business address of State Street is 225 Franklin
Street, Boston, Massachusetts 02110.
Fees As Adviser, DMG will be paid a fee, computed daily
and paid monthly, at an annual rate of .30% of the
average daily net assets of each Series, except
for the Hong Kong and South Africa Index Series,
for which such annual rate will be .45%, and the
US Index Series, for which such annual rate will
be .20%, plus in each case 40% of the gross
investment income, excluding dividends on
securities held in the portfolio, of such Series.
See "Summary of Fund Expenses" for the fee for
each Series.
Pursuant to a plan with respect to each Series
(each, a "12b-1 Plan") adopted by the Board of
Directors of the Fund under Rule 12b-1 under the
1940 Act, each Series will pay the Distributor
such Series' allocable portion of the aggregate
distribution services fees payable by all Series
<PAGE> 24
of the Fund subject to the Distribution Agreement
(the "Distribution Agreement") with the
Distributor, equal to .02% per annum of the
aggregate average daily net assets ("Aggregate Net
Assets") of all such Series up to Aggregate Net
Assets of $2.5 billion, plus .01% per annum of
Aggregate Net Assets of all such Series in excess
of $2.5 billion up to $5 billion, plus .005% per
annum of Aggregate Net Assets of all such Series
in excess of $5 billion. Each Series will also pay
the Distributor for marketing and promotional
services pursuant to a Marketing Agreement with
the Distributor (the "Marketing Agreement") such
Series' allocable portion of the aggregate
marketing fees payable by all Series subject to
the Marketing Agreement, equal to .23% per annum
of the Aggregate Net Assets of all such Series up
to Aggregate Net Assets of $200 million, plus .03%
per annum of Aggregate Net Assets of all such
Series in excess of $1.5 billion up to $5 billion,
plus .015% per annum of Aggregate Net Assets of
all such Series in excess of $5 billion. In
addition, subject to the aggregate limitation on
payments under each 12b-1 Plan, the Fund will make
payments to certain dealers or other persons which
have entered into agreements with the Distributor
to provide marketing and stockholder services.
Such payments will be made by the Fund to each
such dealer or other person at the rate of .05% of
the Aggregate Net Assets of all Series subject to
such an agreement. To the extent of amounts
available under its 12b-1 Plan, each Series will
also reimburse the Distributor and/or the Adviser
for its costs incurred in producing advertising or
marketing material prepared at the request of the
Series. The fees paid by a Series under its 12b-1
Plan as compensation for distribution, marketing
or stockholder services for that Series may exceed
the expenses actually incurred by the recipients
of such fees. Aggregate payments under each 12b-1
Plan, including reimbursements to the Adviser or
the Distributor of costs of advertising or
marketing material, will not exceed, on an
annualized basis, .25% of average daily net assets
of the applicable Series. Each 12b-1 Plan is
subject to approval annually by the Board of
Directors. See "Purchase and Issuance of Fund
Shares in Creation Unit Aggregations--The
Distributor" in the Statement of Additional
Information.
The Administrator will receive monthly
administrative fees from the Fund at an annual
rate of .08% of the average daily net assets of
each Series up to $125 million, plus .06% of the
average daily net assets of each Series in excess
of $125 million up to $250 million and .04% of the
average daily net assets of each Series in excess
of $250 million, subject to a minimum annual fee
for each Series of $95,000. In addition, the
Administrator will be reimbursed for its own out-
of-pocket costs incurred in providing adminis-
tration services.
In addition to the fees described above, the Fund
will be responsible for the payment of expenses
that will include, among other things,
organizational expenses, compensation of the
Directors of the Fund, reimbursement of out-of-
pocket expenses incurred by certain service
providers, exchange listing fees, brokerage costs
and litigation and
<PAGE> 25
extraordinary expenses. In addition, the US Index
Series will bear brokerage and other transaction
expenses associated with investing the Cash
Component (as defined herein) contributed on
purchases of Creation Unit aggregations of shares
of such Series in portfolio securities of that
Series.
CB Shares(SM) The shares of common stock, par value $.001 per
share, of each Series are referred to herein as
the "CB Shares(SM)". The CB Shares(SM) of the
initial nine series of the Fund are the "Australia
CB Shares(SM)", the "France CB Shares(SM)", the
"Germany CB Shares(SM)", the "Hong Kong CB
Shares(SM)", the "Italy CB Shares(SM)", the
"Japan CB Shares(SM)", the "South Africa CB
Shares(SM)", the "UK CB Shares(SM)" and the "US
CB Shares(SM)". Except in the Creation Unit
size aggregations described under "Creation
Units" below, CB Shares(SM) are not redeemable
securities of the Fund.
Exchange Listing Application has been made to list the CB Shares(SM)
and Trading of each Series for trading on the NYSE. The CB
Shares(SM) are expected to trade on the NYSE at
prices that may differ to some degree from their
net asset value. See "Investment Considerations
and Risks" and "Determination of Net Asset Value".
There can be no assurance that the requirements of
the NYSE necessary to maintain the listing of CB
Shares(SM) of any Series will continue to be met or
will remain unchanged. The NYSE may remove the CB
Shares(SM) of a Series from listing if (1) following
the initial twelve-month period beginning upon the
commencement of trading of a Series of CB
Shares(SM), there are fewer than 50 record and/or
beneficial holders of the CB Shares(SM) for 30 or
more consecutive trading days, (2) the value of
the underlying index or portfolio of securities on
which such Series is based is no longer calculated
or available or (3) such other event shall occur
or condition exist that, in the opinion of the
NYSE, makes further dealings on the NYSE
inadvisable. In addition, the NYSE will remove the
CB Shares(SM) from listing and trading upon
termination of the Fund.
Creation Units The Fund will issue and redeem CB Shares(SM) of each
Series only in aggregations of a specific number
of shares applicable to a Series. See "Purchase
and Issuance of Fund Shares in Creation Unit
Aggregations" and "Redemption of Fund Shares in
Creation Unit Aggregations". A Creation Unit of
the Japan Index Series consists of 250,000 shares
and a Creation Unit of each other Series consists
of 100,000 shares. The Board of Directors of the
Fund reserves the right to declare a split in the
number of CB Shares(SM) outstanding of any Series,
and to make a corresponding change in the number
of CB Shares(SM) constituting a Creation Unit, in
the event that the per CB Share(SM) price in the
secondary market rises to an amount that exceeds
the desirable retail range.
Investment An investment in CB Shares(SM) of each Series
Considerations and involves risks similar to those of investing in a
Risks broadly-based portfolio of equity securities traded on
exchanges in the countries represented by the
relevant FT Index component, such as market fluctu-
ations caused by such factors as economic and politi-
cal developments, changes in interest rates and
<PAGE> 26
perceived trends in stock prices. Investing in
Fund Series whose portfolios contain securities of
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 greater price volatility;
reduced liquidity and the significantly smaller
market capitalization of most non-U.S. 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.
The Adviser has advised the Fund that investments
in the Hong Kong and South African equity markets
in particular may entail special risks of
political uncertainty. In 1997, the People's
Republic of China will take control of the colony
of Hong Kong. The extent to which China may change
the regulatory or financial structures of Hong
Kong, and the possible adverse effects of any such
changes on the Hong Kong equity markets, cannot be
predicted. Investors should also be aware that
although South Africa currently has a democratic
government, risks of political and economic
instability remain that could adversely affect the
country's equity markets.
Each Series of the Fund is classified as "non-
diversified" for purposes of the 1940 Act, which
means the Series is not limited by the 1940 Act
with regard to the portion of its assets that may
be invested in the securities of a single issuer.
However, each Series 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
Internal Revenue Code of 1986 (the "Code"), which
will relieve the Series of any liability for
Federal income tax to the extent that its earnings
are distributed to stockholders. See "Dividends
and Capital Gains Distributions" in this
Prospectus and "Taxes" in the Statement of
Additional Information.
To a limited extent, each Series may purchase
stock index futures contracts and options thereon
traded on recognized exchanges in the markets
relevant to such Series. Each Series may also
purchase call options and write (sell) covered put
options on securities and indices in such markets.
The purpose of purchasing stock index futures and
options thereon, purchasing call options and
writing put options is to expose cash reserves and
short-term money market investments to the equity
risk and return of the corresponding component of
the FT Index in order to achieve a higher
correlation to such component. The aggregate value
of futures contracts and options thereon, plus the
segregated assets in respect of such contracts and
written put options, any equity securities in
which the Fund invests as temporary substitutes
for FT Index securities that are unavailable,
investment company securities, repurchase
agreements and any other temporary cash and short-
term investments, will not exceed 5% of the
Series' net assets. See "Investment Policies and
Restrictions--Other Fund Investments" and "Special
Considerations and Risks--Options and Futures" in
the Statement of Additional Information.
<PAGE> 27
The Fund is a newly organized investment company
with no previous operating history. As indicated
above, application is being made to list the CB
Shares(SM) of each Series on the NYSE. There can be
no assurance that active trading markets for the
CB Shares(SM) will develop. The Distributor will not
maintain a secondary market in CB Shares(SM). See
"Purchase and Issuance of Fund Shares in Creation
Unit Aggregations--The Distributor" in the Statement
of Additional Information. Trading in CB Shares(SM)
on the NYSE may be halted due to market conditions
or, in light of NYSE rules and procedures, for
reasons that, in the view of the NYSE, make
trading in CB Shares(SM) inadvisable. In addition,
trading in CB Shares(SM) on the NYSE will be subject
to trading halts caused by extraordinary market
volatility pursuant to NYSE "circuit breaker"
rules that require trading in securities on the
NYSE to be halted for a specified time period in
the event of a specified market decline. There can
be no assurance that the requirements of the NYSE
necessary to maintain the listing of CB Shares(SM)
of any Series will continue to be met or will
remain unchanged. See "Exchange Listing and
Trading".
The net asset value of the CB Shares(SM) of each
Series will fluctuate with changes in the market
value of the portfolio securities of the Series
and, in each case other than the US Index Series,
changes in the market rate of exchange between the
US dollar and the Series Currency. The market
prices of CB Shares(SM) will fluctuate in accordance
with supply and demand on the NYSE. The Fund
cannot predict whether the CB Shares(SM) 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 at work in the
secondary trading market for CB Shares(SM) will be
closely related to, but not identical to, the same
forces influencing the prices of the stocks of the
relevant FT Index component trading individually
or in the aggregate at any point in time.
Because each Series' assets, except those of the
US Index Series, will generally be invested in non-
U.S. securities, the US dollar equivalent of a
Series' net assets would be adversely affected by
reductions in the value of such foreign currencies
relative to the dollar and would be positively
affected by increases in the value of such foreign
currencies relative to the dollar. The Fund does
not expect to engage in currency transactions for
the purpose of hedging against the decline in
value of any Series Currency. Each Series may,
however, purchase forward contracts, currency
futures contracts and options on such contracts
and currency call options in the Series Currency
(other than the US dollar) up to the aggregate
amount of any US dollar-denominated assets to
maintain exposure to the Series Currency and may
engage in currency transactions for the purpose of
meeting the US dollar cash requirements of
redemptions of Series shares in Creation Unit size
aggregations. See "Investment Policies and
Restrictions--Currency Transactions" in the
Statement of Additional Information.
CB Shares(SM) may be more susceptible to any single
economic, political or regulatory occurrence than
the portfolio securities of an investment
<PAGE> 28
company that is more broadly invested in the
equity securities of the relevant market than the
Fund Series. In addition, the securities held by
each Series other than the US Index Series will
primarily be equity securities of non-U.S.
companies, which do not provide all or the same
kind of disclosure required by U.S. law and account-
ing practice.
The Adviser has advised the Fund that as of
December 29, 1995, the following FT Index
components were each concentrated (in excess of
25% of such component) in the stocks of the
indicated industry group: Australia--Mining, Metals
and Minerals; Hong Kong--Real Estate;
Italy--Utilities; and South Africa--Precious Metals
and Minerals. The portfolio securities of each
corresponding Series will generally have the same
industry concentration for as long as its
corresponding FT Index component is so
concentrated. An investment in the CB Shares(SM) of
each such Series therefore involves a greater
exposure to the performance and risks associated
with the relevant industry group than would be the
case if such Series' portfolio securities were
more broadly diversified among industry groups.
The Adviser has advised the Fund of certain risks
associated with such concentrations:
Australia - Mining, Metals, and Minerals
Australia has known reserves of several major
minerals, such as aluminum, copper, and gold,
with current production sufficient for domestic
demand and exports. Although production has
increased in several areas, the mining sector is
volatile, with relatively small commodity price
rises prompting large-scale investment in new
capacity.
Hong Kong - Real Estate
Despite weakness in the Hong Kong property
market, the total return for the Real Estate
Sector of the FT Index Hong Kong was over 27% in
US dollar terms for 1995. Although property
prices have begun to recover from recent
declines, this sector faces several risks in the
near future. For example, the Hong Kong real
estate market may be adversely affected by any
increase in interest rates, with consequently
higher borrowing costs.
Italy - Utilities
Italy is preparing for major changes in the
utilities industry, specifically the planned
privatization of ENEL, the government-controlled
national electric power agency. Italian
utilities, traditionally a counter-cyclical
industry, may be adversely affected by increases
in interest rates due to a relatively high level
of debt financing in the industry.
South Africa - Precious Metals & Minerals
<PAGE> 29
South African Precious Metals & Minerals have
demonstrated historical volatility in total
returns. In 1995, the total return of equities
in this sector was -13.58%, versus a five-year
annualized return of 9.86%. The risks in this
sector include fluctuating gold, diamond, and
other precious metals prices.
Purchasers of Creation Unit aggregations of Shares
should also see "Special Considerations and
Risks--Continuous Offering" in the Statement of
Additional Information.
Dividends and Capital Dividends from net investment income, including
Gains Distributions net foreign currency gains, if any, of all Series
other than the US Index Series will be declared
and paid at least annually and, in the case of the
US Index Series, quarterly. Capital gains of each
Series, if any, will be distributed at least annu-
ally. Dividends and capital gains distributions
will be distributed by each Series in US dollars.
The Fund does not currently maintain a plan for
the automatic reinvestment of cash distributions
in additional CB Shares(SM). The Fund will inform
stockholders of the amount and nature of all
distributions made to them.
Tax Matters Each Series intends to qualify for and to elect
treatment as a "regulated investment company"
under Subchapter M of the Code. As a regulated
investment company, a Series will not be subject
to U.S. federal income tax on its income and gains
that it distributes to stockholders, provided that
it distributes annually at least 90% of its net
investment income. Net investment income includes
income from dividends and interest and gains and
losses from foreign currency transactions net of
operating expenses plus the Series' net short-term
capital gains in excess of its net long-term
capital losses. Each Series intends to distribute
at least annually or, in the case of the US Index
Series, quarterly to its stockholders all of its
net investment income and any net long-term
capital gains. See "Taxes--Tax Treatment of the
Fund" in the Statement of Additional Information.
Dividends paid out of a Series' net investment
income and distributions of net realized short-
term capital gains in excess of long-term capital
losses are taxable to a U.S. investor as ordinary
income. Distributions of net long-term capital
gains, if any, in excess of net short-term capital
losses are taxable to a U.S. investor as long-term
capital gains, regardless of how long the investor
has held the CB Shares(SM).
Dividends and distributions paid by a Series other
than the US Index Series generally will not
qualify for the deduction for dividends received
by corporations. Distributions in excess of a
Series' current and accumulated earnings and
profits will generally be treated as a tax-free
return of capital to each of the Series' investors
to the extent of the investor's basis in its CB
Shares(SM) of the Series, and as capital gain
thereafter.
Since more than 50% of the value of the total
assets of each Series other than the US Index
Series will consist of stock or securities of
foreign
<PAGE> 30
corporations at the close of its taxable year,
each such Series will be eligible to file an
election with the Internal Revenue Service to
"pass through" to its investors the amount of
foreign income taxes (including withholding taxes)
paid by such Series. The foreign income taxes
passed through (other than foreign income taxes
paid with respect to dividend equivalents received
on portfolio securities on loan) may qualify as a
deduction against income or as a foreign tax
credit against U.S. federal income taxes. Each
investor will be notified within 60 days after the
close of the Series' taxable year of the
investor's portion of the foreign income taxes
paid to each country and the portion of dividends
that represents income derived from sources within
each country.
The Fund may be required to withhold for U.S.
federal income tax purposes 31% of the dividends
and distributions payable to investors who fail to
provide the Fund with their correct taxpayer
identification number or to make required
certifications, or who have been notified by the
U.S. Internal Revenue Service that they are
subject to backup withholding. Backup withholding
is not an additional tax; amounts withheld may be
credited against the investor's U.S. federal
income tax liability.
For further information on taxes, see "Taxes" in
the Statement of Additional Information.
Lending of Securities The Fund may lend securities from the portfolio of
each Series to brokers, dealers and other
financial institutions needing to borrow
securities to complete transactions and for other
purposes. Because the cash, U.S. government
securities or other assets that are pledged as
collateral to the Fund earn interest, securities
lending enables a Series to earn additional
income, which may partially offset the expenses of
the Series and thereby reduce the effect that
expenses have on the Series' ability to provide
investment results that substantially correspond
to the price and yield performance of the relevant
component of the FT Index. These loans may not
exceed 33 1/3% of a Series' total assets. The Fund
will comply with the conditions for lending
established by the SEC. In connection with these
loans, the Series will receive collateral equal to
at least 100% of the current market value of the
loaned securities, as marked to market each day
that the net asset value of the Series is
determined, consisting of cash, government
securities or other assets permitted by applicable
regulations. A Series will pay reasonable
administrative and custodial fees in connection
with the loan of securities. The interest income
the Series earns from the loan collateral is
included in the Series' gross investment income on
which a portion of the management fee paid to DMG
is based. See "Fees". The Fund will not pay any
finder's fees in connection with the lending of
portfolio securities. See "Investment Policies and
Restrictions--Lending Portfolio Securities" in the
Statement of Additional Information for further
details of the lending transactions.
<PAGE> 31
Investment Restrictions Each Series intends to observe certain limitations
of the Fund on its investment practices. Specifically, a
Series may not:
(i) lend any funds or other assets except that a
Series may enter into repurchase agreements and
may lend its portfolio securities in an amount
not to exceed 33 1/3% of the value of its total
assets;
(ii) issue senior securities or borrow money,
except borrowings from banks (which may be from
an affiliate of the Adviser) for temporary or
emergency purposes in an amount up to 33 1/3% of
the value of the 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 Series will not
purchase securities while borrowings in excess
of 5% of the Series' total assets are outstand-
ing, provided, that for purposes of this
restriction, short-term credits necessary for
the clearance of transactions are not considered
borrowings;
(iii) pledge, hypothecate, mortgage or otherwise
encumber its assets, except in an amount up to
33 1/3% of the value of its total assets, to
secure permitted borrowings, provided that the
deposit of underlying securities and other
assets in escrow and collateral arrangements
with respect to initial or variation margin for
currency transactions, options, futures
contracts and options on futures will not be
deemed to be pledges of the Series' assets;
(iv) 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
particular industry, except that a Series will
invest 25% or more of its total assets in a
single industry in the event that the relevant
component of the FT Index becomes so
concentrated.
See "The FT Index" in the Statement of Additional
Information for a description of the ten most
highly represented industry sectors in the FT
Index component for each Series. Except with
regard to a Series' borrowing policy, all
percentage limitations apply immediately after a
purchase or initial investment, and any subsequent
change in any applicable percentage resulting from
market fluctuations or other changes in total or
net assets does not require elimination of any
security from the Series' portfolio. With respect
to the fundamental restriction set forth in (iv)
above, the Adviser has advised the Fund that as of
December 29, 1995, the following FT Index
components were concentrated (in excess
<PAGE> 32
of 25% of such component) in the stocks of the
indicated industry groups (as defined by the
Consortium):
Australia Mining, Metals and Minerals
Hong Kong Real Estate
Italy Utilities
South Africa Precious Metals and Minerals
See "Investment Considerations and Risks". The
investment limitations described here, and certain
additional limitations described under "Investment
Policies and Restrictions--Investment Restrictions"
in the Statement of Additional Information, may be
changed with respect to a Series only with the
approval of the holders of a majority of the
outstanding voting securities (as defined in the
1940 Act) of such Series.
For a description of additional investment
restrictions of the Fund, see the Statement of
Additional Information.
Determination of Net Net asset value per share for each Series of the
Asset Value Fund is computed by dividing the value of the net
assets of such Series (i.e., the value of its
total assets less total liabilities) by the total
number of CB Shares(SM) of such Series outstanding,
rounded to the nearest cent. Expenses and fees,
including management, administration and
distribution fees, are accrued daily and taken
into account for purposes of determining net asset
value.
The net asset value per CB Share(SM) of each Series
is determined as of the close of the regular
trading session on the NYSE (currently 4:00 p.m.,
New York time) on each day that the NYSE is open.
See "Business Day".
In computing a Series' net asset value, the
Series' portfolio securities are valued based on
their last quoted current sales price (or, if no
sales price is available, the arithmetic mean of
the most recent bid and asked prices or, if no
asked price is available, at the bid price) on the
primary exchange or market upon which they trade.
However, when market quotations are not readily
available, portfolio securities are valued based
on fair value as determined in good faith by the
Adviser in accordance with procedures adopted by
the Board of Directors of the Fund. Events
affecting the values of portfolio securities that
occur between the time their prices are determined
on the primary exchange or market in which they
are traded and the close of regular trading on the
NYSE will not be reflected in the calculation of a
Series' net asset value unless the Adviser
determines that the particular event would
materially affect net asset value, in which case
an adjustment will be made.
The values of portfolio securities denominated in
currencies other than the US dollar, determined as
described above, are converted into US dollars at
the relevant foreign exchange rate for each Series
in effect at 4:00 p.m., London time, on the day
that the foreign-currency values of the securities
are determined.
<PAGE> 33
Board of Directors The Board of Directors of the Fund has
responsibility for the overall management of the
Fund, including general supervision of the duties
performed by the Adviser and other service
providers. Additional information about the Board
of Directors and the officers of the Fund appears
in the Statement of Additional Information under
the heading "Management of the Fund--Directors and
Officers of the Fund".
Capital Stock The Fund, a Maryland corporation incorporated on
August 8, 1994, is currently comprised of nine
series of shares of common stock, par value $.001
per share, referred to herein as "CB Shares(SM)":
the Australia Index Series, the France Index
Series, the Germany Index Series, the Hong Kong
Index Series, the Italy Index Series, the Japan
Index Series, the South Africa Index Series, the
UK Index Series and the US Index Series. The Board
of Directors of the Fund may designate additional
series of common stock and classify shares of a
particular series into one or more classes of that
series.
Each CB Share(SM) issued by the Fund will have a pro
rata interest in the assets of the corresponding
Series. The Fund is currently authorized to issue
5 billion shares of common stock, including
200 million shares of each of the initial nine
Series. Fractional shares may be issued. Each CB
Share(SM) has one vote with respect to matters upon
which a stockholder vote is required; 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 Series it will
be voted on only by that Series and if a matter
affects a particular Series differently from other
Series, that Series will vote separately on such
matter. Under Maryland law, the Fund is not
required to hold an annual meeting of stockholders
unless required to do so under the 1940 Act. The
policy of the Fund is not to hold an annual
meeting of stockholders unless required to do so
under the 1940 Act. All shares of the Fund
(regardless of Series) have noncumulative voting
rights for the election of Directors. Under
Maryland law, Directors of the Fund may be removed
by vote of the stockholders.
The Fund has provisions in its charter and by-laws
that could have the effect of limiting the ability
of other entities or persons to acquire control of
the Fund. The Board of Directors currently
consists of six Directors, divided into three
classes. At each annual meeting of stockholders of
the Fund, the term of one class expires and the
successor or successors elected to such class will
serve until the third succeeding annual meeting,
provided that, in the event the Fund is not required
to hold an annual meeting in one or more years, the
term of any class will not exceed five years. These
provisions could delay for up to two years the
replacement of a majority of the Board of Directors
of Directors by the stockholders of the Fund. The
replacement of a majority of the Board could be
delayed for substantially longer periods when the
Fund is not required to hold annual stockholder
meetings.
The Fund expects that, immediately prior to the
initial public offering of the CB Shares(SM), the
<PAGE> 34
sole holder of the capital stock of each Series
will be ALPS. ALPS will therefore be a "control
person" of the Fund. Upon the commencement of
trading of CB Shares(SM) on the NYSE, each Series
may have a number of stockholders each holding
more than 5% of the outstanding shares of such
Series in Creation Unit size aggregations.
_____________, an affiliate of the Adviser, is
expected initially to be among the control persons
of each Series. The Fund cannot predict the length
of time that any such persons will remain control
persons of a Series.
Book-Entry Only System DTC will act as securities depositary for the CB
Shares(SM). CB Shares(SM) will be represented by
global securities, which will be 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 CB Shares(SM).
DTC has advised the Fund 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 NYSE, the American Stock Exchange,
Inc., 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.
Beneficial ownership of CB Shares(SM) will be
limited to DTC Participants, Indirect Participants
and persons holding interests through DTC
Participants and Indirect Participants. Ownership
of beneficial interests in CB Shares(SM) (owners of
such beneficial interests are referred to herein
as "Beneficial Owners") will be shown on, and the
transfer of ownership will be 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 are expected
to receive from or through the DTC Participant a
written confirmation relating to their purchase of
CB Shares(SM). The laws of some jurisdictions may
require that certain purchasers of securities take
physical delivery of such securities in
<PAGE> 35
definitive form. Such laws may impair the ability
of certain investors to acquire beneficial
interests in CB Shares(SM).
So long as Cede & Co., as nominee of DTC, is the
registered owner of CB Shares(SM), the registered or
record owners of CB Shares(SM) shall not be the
Beneficial Owners of CB Shares(SM). Beneficial
Owners of CB Shares(SM) will not be entitled to have
CB Shares(SM) registered in their names, will not
receive or be entitled to receive physical
delivery of certificates in definitive form and
will not be considered the record or 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 CB Shares(SM).
The Fund understands that under existing industry
practice, in the event the Fund requests any
action of holders of CB Shares(SM), or a Beneficial
Owner desires to take any action that DTC, as the
record owner of all outstanding CB Shares(SM), 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 Fund recognizes DTC or its
nominee as the owner of all CB Shares(SM) for all
purposes. Conveyance of all notices, statements
and other communications to Beneficial Owners is
effected as follows. Pursuant to the Letter of
Representations among the Fund, the Transfer Agent
and DTC, DTC is required to make available to the
Fund upon request and for a fee to be charged to
the Fund a listing of the CB Share(SM) holdings of
each DTC Participant. The Fund shall inquire of
each such DTC Participant as to the number of
Beneficial Owners holding CB Shares(SM), directly or
indirectly, through such DTC Participant. The Fund
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 Fund 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.
Distributions with respect to CB Shares(SM) of each
Series shall be made to DTC or its nominee,
Cede & Co., as the registered owner of all CB
Shares(SM). The Fund expects that 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 CB
Shares(SM) as shown on the records of DTC or its
nominee. The Fund also expects that payments by
DTC Participants to Indirect Participants and
Beneficial Owners of CB Shares(SM) held through such
DTC Participants will be governed by standing
instructions and customary practices, as is now
the case with securities held for the
<PAGE> 36
accounts of customers in bearer form or registered
in "street name," and will be the responsibility
of such DTC Participants. The Fund will have 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 CB Shares(SM), 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 CB Shares(SM) at any time by
giving reasonable (currently 90 days') notice to
the Fund and discharging its responsibilities with
respect thereto under applicable law. Under such
circumstances, the Fund 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 CB
Shares(SM), unless the Fund makes other arrangements
with respect thereto satisfactory to the NYSE (or
such other exchange on which the CB Shares(SM) may
be listed).
Business Day For purposes of purchasing a Creation Unit
aggregation of shares, a "Business Day" with
respect to each Series other than the US Index
Series is any day on which (i) the NYSE, (ii) the
stock exchange(s) and subcustodian(s) relevant to
such Series and (iii) financial institutions in
Massachusetts are open for business and, with
respect to the US Index Series, is any day on
which the NYSE and financial institutions in
Massachusetts are open for business. As of the
date of this Prospectus, the NYSE observes the
following holidays: New Year's Day, President's
Day (Washington's Birthday), Good Friday, Memorial
Day (observed), Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The local
holidays for each current Series of the Fund are
set forth in Appendix A to this Prospectus.
Massachusetts financial institutions, such as the
Fund's Custodian, are open on all days when the
NYSE is open except Columbus Day, Veterans Day and
Martin Luther King Day (observed) for such Series.
See "Purchase and Issuance of Fund Shares in
Creation Unit Aggregations".
Purchase and Issuance of The Fund will issue and sell shares of each Series
Fund Shares in Creation only in Creation Unit size aggregations on a
Unit Aggregations continuous basis through the Distributor at their
net asset value next determined after receipt of a
purchase order in proper form, without an initial
sales charge, on any Business Day. See "Business
Day". The consideration for purchase of a Creation
Unit size aggregation of shares of a Series will
be the in-kind deposit of a designated portfolio
of equity securities substantially corresponding
in composition and weighing to the corresponding
FT Index component (the "Fund Basket") and an
amount of cash computed as described below (the
"Cash Component"). Together, the Fund Basket and
the Cash Component constitute the "Fund Deposit"
which represents the minimum <PAGE> 37
initial and subsequent investment amount for shares
of any Series from the Fund.
Prior to the opening of business on the NYSE on
each day that the NYSE is open (currently by 8:00
p.m. New York time, on the previous business day),
the names and number of shares of each security
constituting the Fund Basket, as determined by the
Adviser following the calculation of the net asset
value of CB Shares(SM) of each Series after the
close of business on the NYSE (currently 4:00 p.m.
New York time) on such previous day, will be made
available through the Distributor and the
facilities of the National Securities Clearing
Corporation ("NSCC"), a clearing agency registered
with the SEC. Such Fund Basket for each Series
will be in effect on such NYSE business day for
redemptions for that Series and for purchases of
Creation Unit aggregations of Fund shares of the
US Index Series and will be in effect for
purchases of Creation Unit aggregations of shares
of all other Series on a specified Business Day
subsequent to such NYSE business day designated
for each such Series. The Business Day on which
the shares of a Series are purchased and issued is
referred to as an "Issue Date". Each Fund Basket
is subject to adjustment by the Adviser to reflect
changes known to the Adviser on the date of the
announcement of such Fund Basket to be in effect
on the Issue Date in the relevant component of the
FT Index or resulting from stock splits and other
corporate actions. The Fund Basket for each Series
will generally change with changes in the
corresponding FT Index component. See "Purchase
and Issuance of Fund Shares in Creation Unit
Aggregations--The Fund Basket" in the Statement of
Additional Information. Except as described below,
the Cash Component will equal the difference
between the value of the Fund Basket and the net
asset value of a Creation Unit aggregation of
shares as determined on the Issue Date. If the
value of the Fund Basket should exceed the net
asset value of a Creation Unit size aggregation of
shares on a Business Day, the Adviser may
determine to accept fewer (or none) of each, or a
designated portion, of the portfolio securities
comprising the Fund Basket and may request some
cash to be substituted for the omitted securities
in order to limit the value of the Fund Basket as
tendered to the net asset value of the Creation
Unit of shares. In addition, the Adviser reserves
the right to permit or require the substitution of
an amount of cash to be added to the Cash
Component to replace any security in the relevant
FT Index component which may not be available in
sufficient quantity for delivery or for other
similar reasons. In any event, the Cash Component
will not exceed 10% of the total purchase price of
a Creation Unit aggregation of shares. Securities
not accepted as part of the Fund Basket will be
returned promptly. The net asset value per share
of each Series will be computed as described above
under "Determination of Net Asset Value" at the
close of business on the NYSE (currently
4:00 p.m., New York time). Tendered securities in
the Fund Basket will be valued in the same manner
as the relevant Series values its portfolio
securities.
<PAGE> 38
The Fund Basket must be delivered for receipt on
the Issue Date (provided that for the France Index
Series and the South Africa Index Series delivery
of the Fund Basket must be made on the day prior
to the Issue Date) into an account maintained at
the Custodian, in the case of the US Index Series
(unless the Fund Basket is delivered by the CB
Shares(SM) Clearing Process as described below), or
at the applicable local subcustodian, in the case
of each other Series. Delivery procedures of local
subcustodians will vary from country to country.
Purchase orders for Creation Unit size
aggregations of shares may be placed with the
Distributor only by an "Authorized Participant",
i.e., a DTC Participant who has entered into an
Authorized Participant Agreement (the "Authorized
Participant Agreement") with the Fund, the
Distributor and State Street, as Custodian and
Transfer Agent for the Fund. The Authorized
Participant Agreement sets forth procedures for
the purchase and redemption of Creation Unit
aggregations of Fund shares that supplement those
discussed in this Prospectus and the Statement of
Additional Information. The Fund does not expect
to enter into Authorized Participant Agreements
with more than a few Authorized Participants.
Investors who are not Authorized Participants must
make appropriate arrangements with an Authorized
Participant in order to purchase Creation Unit
size aggregations of shares from the Fund. A list
of the Authorized Participants may be obtained
from the Distributor. These arrangements include
making available in advance of each purchase of
shares 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 cash transaction fee described below.
For a purchase order submitted by an Authorized
Participant (on its own or on another investor's
behalf), other than one submitted through the CB
Shares(SM) Clearing Process for CB Shares(SM) of the
US Index Series, to be in "proper form" means that
a properly completed purchase order has been
submitted to the Distributor not later than
4:00 p.m., New York time, on the intended Issue
Date; that delivery of the applicable Fund Basket
has been confirmed on such date by the Custodian;
and that arrangements satisfactory to the Fund
have been made for the payment to the Custodian on
such date of the Cash Component (together with the
Cash Component transaction fee applicable to each
Series other than the US Index Series), as next
determined upon computation of the net asset value
of shares of the Series at 4:00 p.m. on such Issue
Date. Currently, information needed to confirm the
delivery of the Fund Basket will generally be
available to the Custodian by 3:00 p.m., New York
time, in the case of the US Index Series and by
1:00 p.m., New York time, in the case of the other
Series. The Fund, and the Distributor on behalf of
the Fund, reserve the right to reject any order.
In the case of the US Index Series, an Authorized
Participant that is a participant in the
Continuous Net Settlement ("CNS") System of the
NSCC may alternatively deliver the Fund Basket and
the Cash
<PAGE> 39
Component through the CNS clearing processes of
the NSCC, as such processes have been enhanced to
effect purchases and redemptions of Creation Unit
size aggregations of CB Shares of the US Index
Series (referred to herein as the "CB Shares
Clearing Process"). In such event, a purchase
order to be effective on a particular Issue Date
will be deemed in proper form if it is received by
4:00 p.m., New York time, as described above on
such date and the other procedures with respect to
the CB Shares(SM) Clearing Process set forth in the
Authorized Participant Agreement are followed. The
Distributor will upon request provide a list of
Authorized Participants that are participants in
the CNS System of the NSCC. For additional
information about the use of the CB Shares
Clearing Process, see "Purchase and Issuance of
Fund Shares in Creation Unit Aggregations" in the
Statement of Additional Information.
A cash transaction fee payable to the Fund is
imposed on purchases of Creation Unit aggregations
of shares of all Series other than the US Index
Series only on the amount of the Cash Component to
compensate the Fund for the brokerage and other
costs of investing the cash in portfolio
securities of the applicable Series. Investors are
also responsible for payment of the costs of
transferring the Fund Basket securities to the
Fund. See "Summary of Fund Expenses".
Purchase orders for Creation Unit aggregations of
shares may be directed to the Distributor through
an Authorized Participant by a dealer which has
entered into an agreement with the Distributor for
solicitation of purchases of Creation Unit
aggregations of shares.
The acquisition of CB Shares(SM) by investment
companies is subject to the restrictions of
Section 12(d)(1) of the 1940 Act.
See "Distributor" and "Fees", above, and "Purchase
and Issuance of Fund Shares in Creation Unit
Aggregations--The Distributor" in the Statement of
Additional Information, for additional information
concerning the distribution arrangements for Fund
shares. See "Purchase and Issuance of Fund Shares
in Creation Unit Aggregations" in the Statement of
Additional Information for additional details
concerning the purchase of CB Shares(SM) from the
Fund in Creation Unit aggregations.
Redemption of Fund CB Shares(SM) in less than Creation Unit size
Shares in Creation aggregations are not redeemable. CB Shares(SM) of a
Unit Aggregations Series will be redeemed by the Fund only in
Creation Unit size aggregations on any day that
the NYSE is open for trading at their net asset
value next determined after receipt of a redemp-
tion request in proper form by the Transfer Agent
on behalf of the Fund. "Proper form" for a
redemption request, other than one submitted
through the CB Shares(SM) Clearing Process for CB
Shares(SM) of the US
<PAGE> 40
Index Series, means receipt of a duly completed
redemption request form by the Transfer Agent from
an Authorized Participant by 4:00 p.m., New York
time, on any day the NYSE is open, and delivery of
the shares being redeemed to the Transfer Agent
through the facilities of DTC by 4:00 p.m. on such
day. Creation Units of CB Shares(SM) of the US Index
Series may also be redeemed through the CB
Shares(SM) Clearing Process, as described below.
Requests for redemption may not be made to the
Distributor. On Columbus Day, Veterans Day and
Martin Luther King Day when the NYSE is open but
DTC and NSCC facilities for transfer of securities
are closed, CB Shares(SM) must be delivered to the
Transfer Agent at the opening of business on the
business day following the day the redemption
request is received. Except in the case of
redemption through the CB Shares(SM) Clearing
Process, if the Transfer Agent does not receive
the redeeming investor's CB Shares(SM) through DTC
facilities by 4:00 p.m. on the same day that the
redemption request is received or, in the case of
the aforementioned DTC and NSCC holidays, at the
opening of business on the following day, the
redemption request shall be rejected and may be
resubmitted the next day that the NYSE is open for
business. Investors other than Authorized
Participants must make arrangements through an
Authorized Participant in order to redeem their
Creation Unit aggregations of shares. 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. Authorized Participants
will not charge any fee for handling redemptions
of CB Shares(SM). Investors who use the services of
a broker or other such intermediary may be charged
a fee for their services. The Distributor will
furnish a list of the Authorized Participants on
request.
The Fund generally will redeem a Creation Unit
aggregation of shares of any Series principally on
an in-kind basis for a Fund Basket as announced by
the Distributor on the NYSE trading day prior to
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 Fund Basket, less the
redemption cash transaction fee described below.
If the value of the Fund Basket should exceed the
net asset value of a Creation Unit size
aggregation of shares, the Adviser may determine
that fewer (or none) of each, or a designated
portion, of the portfolio securities comprising
the Fund Basket will be required to be delivered
and an amount of cash may be substituted for the
omitted securities in order to limit the value of
the redemption proceeds to the net asset value of
the Creation Unit aggregation of shares being
redeemed. At its sole option, the Fund may pay
redemption proceeds entirely in cash or include
additional amounts of cash as redemption proceeds
in order to provide for timely delivery of such
proceeds in accordance with applicable regulations
as described below.
<PAGE> 41
Normally, cash redemption proceeds will be paid as
soon as practicable after the date the redemption
request is received in proper form (usually one
business day), but in any event not later than seven
calendar days after the date of redemption. In-kind
redemption proceeds will be delivered within the time
permitted by applicable law and regulations. Subject
to applicable law or SEC rule, enforcement position
or order, the time for such delivery in some cases
could be extended, but not later than seven calendar
days from the date of redemption (other than in the
case of the Japan Index Series and the UK Index Series
where in accordance with an SEC order because of local
holidays, delivery may be made in some cases
within a few additional days). See Appendix A to
this Prospectus. The Fund reserves the right to
redeem Creation Unit aggregations of shares
entirely for cash when local holiday schedules or
other unforeseen circumstances in the relevant
local markets would otherwise result in deliveries
of in-kind redemption proceeds after the time
permitted by applicable regulations or SEC order.
See "Redemption of Fund Shares in Creation Unit
Aggregations" in the Statement of Additional
Information.
Redemptions of Creation Units of the US Index
Series may be made through the CB Shares(SM)
Clearing Process. In any such case, State Street
as Custodian, Transfer Agent and Index Receipt
Agent (as such term is used in rules of the NSCC)
will effect a transfer of the cash redemption
payment and the Fund Basket of securities through
the facilities of the NSCC as more fully described
under "Redemption of Fund Shares in Creation Unit
Aggregations" in the Statement of Additional
Information. Investors may, upon request, obtain a
list of the Authorized Participants eligible to
use the CB Shares Clearing Process by calling
800-[___-____].
Investors may purchase CB Shares(SM) in the
secondary market and aggregate such purchases into
a Creation Unit for redemption. There can be no
assurance, however, that there always will be
sufficient liquidity in the public trading market
to permit assembly of a Creation Unit size
aggregation of CB Shares(SM). Investors should
expect to incur brokerage and other costs in
connection with assembling a sufficient number of
CB Shares(SM) to constitute a redeemable Creation
Unit. The approximate cost of a Creation Unit of
each Series, based on FT Index values at
December 29, 1995, is indicated in Note 1 to the
Fund Expense Table under "Summary of Fund
Expenses".
For additional details concerning the redemption
of Fund shares in Creation Unit aggregations, see
"Redemption of Fund Shares in Creation Unit
Aggregations" in the Statement of Additional
Information.
A cash redemption transaction fee payable to each
Series of the Fund other than the US Index Series
is imposed only on the cash portion of the
redemption proceeds, as described above, to offset
brokerage and other transaction costs that may be
incurred by the Series. Investors will also bear
the costs of transferring the Fund Basket
securities from the Fund to their account or on
their order. See "Summary of Fund Expenses".
<PAGE> 42
Because the portfolio securities of a Series may
trade on the relevant exchange(s) on days that the
NYSE is closed or are otherwise not Business Days
for such Series, stockholders may not be able to
purchase or redeem, as the case may be, Creation
Unit aggregations of shares of such Series, or to
purchase or sell CB Shares(SM) on the NYSE, on days
when the net asset value of such Series could be
significantly affected by price movements in the
relevant foreign markets. Similarly, on any of the
three days when Massachusetts financial
institutions are closed but both the relevant
foreign exchange and the NYSE are open,
stockholders will not have the ability to purchase
Creation Unit aggregations of shares when price
movements in the foreign market could
significantly affect their prices.
A stockholder redeeming CB Shares(SM) in Creation
Unit aggregations will generally receive
redemption proceeds in the form of the applicable
Fund Basket and will be required to sell such
securities proceeds for its own account if the
stockholder desires to obtain cash. Because such
securities proceeds may be delivered several days
after the date of redemption, the stockholder may
receive significantly less cash proceeds than the
redemption value of the CB Shares(SM) redeemed due
to intervening fluctuations in the market value of
such securities and, in the case of each Series
other than the US Index Series, exchange rate
fluctuations between the applicable Series
Currency and the US dollar. In addition, such
stockholder may incur certain transaction costs
and significant commission expenses with respect
to the sale of such securities proceeds.
Available Information This Prospectus does not contain all the
information included in the Registration Statement
filed with the SEC under the Securities Act of
1933 with respect to the securities offered
hereby, certain portions of which have been
omitted pursuant to the rules and regulations of
the SEC. The Registration Statement, including the
exhibits filed therewith and the Statement of
Additional Information, may be examined at the
office of the SEC, Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington D.C. 20549. Such
documents and other information concerning the
Fund may also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.
Statements contained in this Prospectus as to the
contents of any agreement or other document
referred to are not necessarily complete, and, in
each instance, reference is made to the copy of
such agreement or other document filed as an
exhibit to the Registration Statement of which
this Prospectus forms a part, each such statement
being qualified in all respects by such reference.
Stockholder inquiries may be directed to the Fund
in writing, c/o Deutsche Morgan Grenfell/C. J.
Lawrence Inc., 31 West 52nd Street, New York,
New York 10019, and by telephone, to
(212) 469-8000.
<PAGE> A-1
Appendix A
The CountryBaskets(SM) Index Fund, Inc.
Local Holidays *
Series Local Holidays
The Australia Index New Year's Day (1/1/96), Australia Day (1/26/96),
Series Good Friday (4/5/96), Easter Monday (4/8/96),
ANZAC Day (4/25/96), Queen's Birthday (6/10/96),
Bank Holiday (8/5/96), Labour Day (10/7/96),
Christmas Day (12/25/96) and Boxing Day (12/26/96)
The France Index Series New Year's Day (1/1/96), Good Friday (4/5/96),
Easter Monday (4/8/96), Labour Day (5/1/96),
Victory Day (5/8/96), Ascension Day (5/16/96),
Whit Monday (5/27/96), National Day (7/14/96),
Assumption Day (8/15/96), All Saints Day
(11/1/96), Armistice Day (11/11/96) and Christmas
Day (12/25/96)
The Germany Index New Year's Day (1/1/96), Epiphany Day (1/6/96),
Series Carnival (2/19/96), Good Friday (4/5/96), Easter
Monday (4/8/96), Labour Day (5/1/96), Ascension
Day (5/16/96), Whit Monday (5/27/96), Corpus
Christi Day (6/6/96), Assumption Day (8/15/96),
German Unity Day (10/3/96), All Saints Day
(11/1/96), Prayer & Repentance (11/20/96),
Christmas Eve (12/24/96), Christmas Day
(12/25/96), Christmas Holiday (12/26/96) and New
Year's Eve (12/31/96)
The Hong Kong Index New Year's Day (1/1/96), Lunar New Year (2/19/96),
Series Day After LNY (2/20/96 and 2/21/96), Ching Ming
Festival (4/4/96), Good Friday (4/5/96), Easter
Saturday (4/6/96), Easter Monday (4/8/96), Queen's
Birthday (6/17/96), Tueng Ng Festival (6/20/96),
Liberation Day (8/26/96), Mid Autumn Festival
(9/28/96), Chung Yeung Festival (11/21/96),
Christmas Day (12/25/96) and Boxing Day (12/26/96)
The Italy Index Series New Year's Day (1/1/96), Epiphany Day (1/6/96),
Easter Monday (4/8/96), Liberation Day (4/25/96),
Labour Day (5/1/96), Assumption Day (8/15/96), All
Saints Day (11/1/96), Immaculate Conception
(12/8/96), Christmas Day (12/25/96) and Christmas
Holiday (12/26/96)
* Days that are not Business Days for purchases of Creation Unit
aggregations of shares of the indicated Series. The dates on which
such holidays fall during 1996 are indicated in parentheses. In
addition to the days listed in the table, days on which the NYSE or
financial institutions in Massachusetts are closed for business are
not Business Days for any Series. See "Business Day".
<PAGE> A-2
The Japan Index Series Bank Holiday (1/1/96, 1/2/96 and 1/3/96), Coming
of Age Day (1/15/96), National Foundation Day
(2/12/96), Vernal Equinox (3/20/96),
Constitutional Memorial Day (5/3/96), National
Holiday (5/4/96), Children's Day (5/6/96), Youth
Day (6/16/96), Respect For Aged (9/16/96),
Autumnal Equinox (9/23/96), Health Sports Day
(10/10/96), Culture Day (11/4/96), Labor-
Thanksgiving Day (11/23/96), Emperor's Birthday
(12/23/96) and Bank Holiday (12/31/96)
The South Africa Index New Year's (1/1/96), Human Rights Day (3/21/96),
Series Good Friday (4/5/96), Family Day (4/17/96),
Constitution Day (4/27/96), Worker's Day (5/1/96),
Women's Day (8/9/96), Heritage Day (9/26/96), Day
of Reconciliation (12/16/96), Christmas Day
(12/25/96) and Day of Goodwill (12/26/96)
The UK Index Series New Year's Day (1/1/96), Good Friday (4/5/96),
Easter Monday (4/8/96), May Day (5/6/96), Spring
Bank Holiday (5/27/96), Summer Bank Holiday
(8/26/96), Christmas Day (12/25/96), Boxing Day
(12/26/96)
The US Index Series New Year's Day (1/1/96), Martin Luther King Day
(1/15/96), President's Day (2/19/96), Good Friday
(4/5/96), Memorial Day (5/27/96), Independence Day
(7/4/96), Labor Day (9/2/96), Columbus Day
(10/14/96), Veteran's Day (11/11/96), Thanksgiving
Day (11/28/96) and Christmas Day (12/25/96)
Instances in 1996 in which local holidays will require a time period
longer than seven calendar days for delivery of in-kind redemption proceeds
for the Japan Index Series and the UK Index Series are set forth below.
The Japan Index Series
Redemption Redemption Period in
Request Date Delivery Date Calendar Days
12/26/96 1/6/97 11
12/27/96 1/7/97 11
12/30/96 1/8/97 9
12/31/96 1/8/97 8
The UK Index Series
Redemption Redemption Period in
Request Date Delivery Date Calendar Days
3/29/96 4/9/96 11
<PAGE> A-3
Redemption Redemption Period in
Request Date Delivery Date Calendar Days
4/1/96 4/10/96 9
4/2/96 4/11/96 9
4/3/96 4/12/96 9
4/4/96 4/15/96 11
4/29/96 5/7/96 8
4/30/96 5/8/96 8
5/1/96 5/9/96 8
5/2/96 5/10/96 8
5/3/96 5/13/96 10
5/20/96 5/28/96 8
5/21/96 5/29/96 8
5/22/96 5/30/96 8
5/23/96 5/31/96 8
5/24/96 6/3/96 10
8/19/96 8/27/96 8
8/20/96 8/28/96 8
8/21/96 8/29/96 8
8/22/96 8/30/96 8
8/23/96 9/2/96 10
12/18/96 12/27/96 9
12/19/96 12/30/96 11
12/20/96 12/31/96 11
12/23/96 1/2/97 10
12/24/96 1/3/97 10
12/26/96 1/3/97 8
12/27/96 1/6/97 10
12/30/96 1/7/97 8
12/31/96 1/8/97 8
<PAGE> 1
Page
Table of Contents of General Description of the Fund
Statement of Additional Investment Policies and Restrictions
Information Special Considerations and Risks
The FT Index
Exchange Listing and Trading
Reasons for Investors to Purchase
CB Shares(SM)
Management of the Fund
Investment Advisory, Management and
Other Services
Brokerage Transactions
Purchase and Issuance of Fund Shares in
Creation Unit Aggregations
Redemption of Fund Shares in Creation
Unit Aggregations
Determining Net Asset Value
Dividends and Distributions
Taxes
Capital Stock and Stockholder Reports
Counsel and Independent Accountants
Report of Independent Accountants
Statement of Assets and Liabilities
Notes to Financial Statements
APPENDICES
A. FT-Actuaries Australia Index Constituency Summary
B. FT-Actuaries France Index Constituency Summary
C. FT-Actuaries Germany Index Constituency Summary
D. FT-Actuaries Hong Kong Index Constituency Summary
E. FT-Actuaries Italy Index Constituency Summary
F. FT-Actuaries Japan Index Constituency Summary
G. FT-Actuaries South Africa Index Constituency Summary
H. FT-Actuaries UK Index Constituency Summary
I. FT-Actuaries US Index Constituency Summary
<PAGE> COVER
<TABLE>
INVESTMENT ADVISER [Logo]
Deutsche Morgan Grenfell/C. J. Lawrence Inc.
31 West 52nd Street
New York, New York 10019
ADMINISTRATOR
State Street Bank and Trust Company THE COUNTRYBASKETS(SM) INDEX FUND, INC.
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
225 Franklin Street ____________
Boston, Massachusetts 02110
DISTRIBUTOR
ALPS Mutual Funds Services, Inc. PROSPECTUS
370 Seventeenth Street, Suite 2700
Denver, Colorado 80202 ____________
Investor Information: 1-800- -
________________
______ __, 1996
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
Prospectus Summary . . . . . . . . . . . .
Summary of Fund Expenses . . . . . . . . .
The Fund . . . . . . . . . . . . . . . . .
The CountryBaskets(SM) Index Fund, Inc.
and its Investment Objective. . . . . NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
Investment Policies . . . . . . . . . . INFORMATION OR TO MAKE ANY REPRESENTATIONS
FT/S&P Actuaries World Indices(TM). . . OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
The FT Index Components . . . . . . . . IN CONNECTION WITH THE OFFER OF THE FUND'S
Investment Management . . . . . . . . . SHARES MADE BY THIS PROSPECTUS, AND, IF GIVEN
Distributor . . . . . . . . . . . . . . OR MADE, SUCH INFORMATION OR REPRESENTATIONS
Administrator . . . . . . . . . . . . . MUST NOT BE RELIED UPON AS HAVING BEEN
Custodian and Transfer Agent. . . . . . AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES
Fees. . . . . . . . . . . . . . . . . . NOT CONSTITUTE AN OFFER TO SELL, OR A
CB Shares(SM) . . . . . . . . . . . . . SOLICITATION OF AN OFFER TO BUY, ANY SHARES IN
Exchange Listing and Trading. . . . . . ANY JURISDICTION IN WHICH SUCH OFFER TO SELL OR
Creation Units. . . . . . . . . . . . . SOLICITATION OF AN OFFER TO BUY MAY NOT
Investment Considerations and Risks . . LAWFULLY BE MADE.
Dividends and Capital Gains
Distributions . . . . . . . . . . . . DEALERS EFFECTING TRANSACTIONS IN THE
Tax Matters . . . . . . . . . . . . . . SHARES, WHETHER OR NOT PARTICIPATING IN THIS
Lending of Securities . . . . . . . . . DISTRIBUTION, ARE REQUIRED TO DELIVER A
Investment Restrictions of the Fund . . PROSPECTUS. THIS IS IN ADDITION TO ANY
Determination of Net Asset Value. . . . OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
Board of Directors. . . . . . . . . . . WHEN ACTING AS UNDERWRITERS.
Capital Stock . . . . . . . . . . . . .
Book-Entry Only System. . . . . . . . .
Business Day. . . . . . . . . . . . . .
Purchase and Issuance of Fund Shares
in Creation Unit Aggregations . . . .
Redemption of Fund Shares in Creation
Unit Aggregations . . . . . . . . . .
Available Information . . . . . . . . .
Appendix A . . . . . . . . . . . . . . . .
Table of Contents of Statement SUBJECT TO COMPLETION
of Additional Information. . . . . . . . DATED FEBRUARY __, 1996
</TABLE>
<PAGE> 1
SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1996
THE COUNTRYBASKETS(SM) INDEX FUND, INC.
Statement of Additional Information
, 1996
This Statement of Additional Information is not a Prospectus, and should be
read in conjunction with the Prospectus dated ________, 1996 (the
"Prospectus") for The CountryBaskets(SM) Index Fund, Inc. (the "Fund"), as it
may be revised from time to time. A copy of the Prospectus for the Fund
may be obtained without charge from ALPS Mutual Funds Services, Inc. at the
address set forth herein.
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> i
TABLE OF CONTENTS
Page
General Description of the Fund . . . . . . . . . . . . . . . . .
Investment Policies and Restrictions . . . . . . . . . . . . . . .
Special Considerations and Risks . . . . . . . . . . . . . . . . .
The FT Index . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange Listing and Trading . . . . . . . . . . . . . . . . . . .
Reasons for Investors to Purchase CB Shares(SM) . . . . . . . . .
Management of the Fund . . . . . . . . . . . . . . . . . . . . . .
Investment Advisory, Management and Other Services . . . . . . . .
Brokerage Transactions . . . . . . . . . . . . . . . . . . . . . .
Purchase and Issuance of Fund Shares in Creation Unit Aggregations
Redemption of Fund Shares in Creation Unit Aggregations . . . . .
Determining Net Asset Value . . . . . . . . . . . . . . . . . . .
Dividends and Distributions . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Stock and Stockholder Reports . . . . . . . . . . . . . .
Counsel and Independent Accountants . . . . . . . . . . . . . . .
Report of Independent Accountants . . . . . . . . . . . . . . . .
Statement of Assets and Liabilities . . . . . . . . . . . . . . .
Notes to Financial Statements . . . . . . . . . . . . . . . . . .
APPENDICES ____________________
"The CountryBaskets Index Fund, Inc.", "CountryBaskets" and "CB
Shares" are service marks of Deutsche Morgan Grenfell/C. J. Lawrence Inc.
("DMG"). DMG has filed applications for registration of such service marks
with the U.S. Patent and Trademark Office. The Fund is an authorized
licensee of such marks.
______
"Financial Times/Standard & Poor's Actuaries World Indices", "FT/S&P
Actuaries World Indices" and "FT/S&P AWI" are trademarks of FTSE
International Limited ("FTSE") and Standard & Poor's ("S&P") and have been
licensed for use by DMG. The Fund is an authorized sublicensee thereof.
The Fund is not sponsored, endorsed, sold or promoted by FTSE or S&P and
neither FTSE nor S&P makes any representation regarding the advisability of
investing therein.
____________________
The Fund and the securities described herein (the "Products") are not
sponsored, endorsed, sold or promoted by FTSE, Goldman, Sachs & Co.
or Standard & Poor's (collectively, the "Owners"). None of the Owners
makes any representation or warranty, express or implied, to the
sponsors of the Products or any member of the public regarding the
advisability of investing in securities generally or in the Products
particularly or in the ability of the FT/S&P Actuaries World
Indices(TM) (the "Indices") to track general stock market
performance. The Owners' only relationship to Deutsche Morgan
Grenfell/C. J. Lawrence Inc. ("Licensee") is the licensing of certain
trademarks and trade names and of the Indices which are determined,
composed and calculated without regard to the Licensee or the
Products. The Owners have no obligation to take the needs of the
Licensee or the Products into consideration in determining, composing
or calculating the Indices. The Owners are not responsible for and
have not participated in the determination of the prices and amount
of the Products or the timing of the issuance or sale of the
Products. The Owners have no obligation or liability in connection
with the administration, marketing or trading of the Products.
The Owners do not guarantee the accuracy and/or the completeness of
the Indices or any data included therein and the Owners shall have no
liability for any errors, omissions or interruptions therein. The
Owners make no express or implied warranties, and expressly disclaim
all warranties of quality or merchantability or fitness for a
particular purpose or use with respect to the Indices or any data
included therein. Without limiting any of the foregoing, in no event
shall the Owners have any liability for any special, punitive,
indirect or consequential damages (including lost profits), even if
notified of the possibility of such damages.
<PAGE> ii
The FT-Actuaries World Indices(TM) were originally developed by
Goldman, Sachs & Co., NatWest Securities Limited and The Financial Times
Limited in 1986, and until May 23, 1995, were jointly published by them.
On May 23, 1995, Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., joined The Financial Times Limited and Goldman, Sachs &
Co. as a co-publisher of the FT-Actuaries World Indices(TM), now known as
the Financial Times/Standard & Poor's Actuaries World Indices(TM) or FT/S&P
Actuaries World Indices(TM). The FT/S&P Actuaries World Indices(TM) are a
continuation of the FT-Actuaries World Indices(TM). Following the current
transition period, The Financial Times Limited and Standard & Poor's will
jointly calculate the indices. On November [__], 1995, The Financial Times
Limited transferred its ownership rights in the FT/S&P Actuaries World
Indices(TM) to FTSE, a company jointly owned by The Financial Times
Limited, the London Stock Exchange and the Institute of Actuaries. By the
end of 1996, it is expected that FTSE will assume responsibility for
calculating the European and Asia-Pacific indices and Standard & Poor's
will calculate the U.S. indices. The Fund is not sponsored by or
affiliated with Standard & Poor's, FTSE or The Financial Times Limited.
References herein to the "FT Index" and to certain index data prior to
May 23, 1995 are to the FT-Actuaries World Index(TM); references thereafter
are to the FT/S&P Actuaries World Indices(TM).
____________________
Unless otherwise specified, all references in this Statement of
Additional Information ("SAI") to "dollars", "US $" or "$" are to United
States dollars, all references to "A$" are to Australian dollars, all
references to "FF" are to French francs, all references to "DM" are to
Deutsche marks, all references to "HK $" are to Hong Kong dollars, all
references to "IL" are to Italian lira, all references to "Y" are to
Japanese Yen, all references to "CR" are to South African commercial rands
(a currency abandoned as of March 20, 1995), all references to "R" are to
South African rands and all references to "L" are to pounds sterling. On
__________, 1996, the noon 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 $1.00: A$____________, FF____________, DM____________, HK$____________,
IL____________, Y____________, R____________ and L____________. Some
numbers in this SAI have been rounded. All US-dollar equivalents provided
in this SAI are calculated at the exchange rate prevailing on the date to
which the corresponding foreign currency amount refers.
<PAGE> SAI-1
GENERAL DESCRIPTION OF THE FUND
The CountryBaskets(SM) Index Fund, Inc. (the "Fund") is a management
investment company organized as a series fund. The Fund was incorporated
under the laws of the State of Maryland under the name "Eurofund, Inc." on
August 8, 1994. The Fund is authorized to issue shares of common stock,
with a par value of $.001 per share, in one or more series. The Fund's
shares of common stock (sometimes referred to herein as "CB Shares " or
"CountryBaskets(SM)") currently are issued in nine series (each, a "Series"):
the Australia Index Series, the France Index Series, the Germany Index
Series, the Hong Kong Index Series, the Italy Index Series, the Japan Index
Series, the South Africa Index Series, the UK Index Series and the US Index
Series.
INVESTMENT POLICIES AND RESTRICTIONS
The following information supplements and should be read in
conjunction with the sections entitled "Investment Policies" and
"Investment Restrictions of the Fund" in the Prospectus.
Each of the initial nine Series will seek to remain fully invested,
except to the extent described below under "Other Fund Investments", in a
portfolio of common stocks and other equity securities which will provide
investment results that substantially correspond to the price and yield
performance of the corresponding country component of the FT Index. Brief
descriptions of the equity markets in which the Fund Series will be
invested are provided below. Unless otherwise indicated, numerical data
set forth below with respect to the equity markets represented by the
Series of the Fund were provided by Goldman, Sachs & Co. Neither the Fund
nor the Adviser has independently verified such data.
The Australian Equity Markets
General Background. Publicly traded Australian equity securities are
listed on the Australian Stock Exchange Limited ("ASX"), which maintains
wholly-owned subsidiary exchanges in Sydney, Adelaide, Brisbane, Hobart,
Melbourne and Perth. The local exchange hours are 10:00 a.m. to 4:00 p.m.
(6:00 p.m. - 12:00 a.m. Eastern Standard Time ("EST")). Only equity
securities traded on the ASX are currently eligible for inclusion in the
Australia component of the FT Index. As of December 30, 1994, the market
capitalization of the ASX was equal to more than 50% of Australian GDP (US
$326.0 billion).
Reporting, Accounting, and Auditing. Australian reporting,
accounting, and auditing practices are regulated by the Australian
Securities Commission. These practices bear many similarities to American
standards, but differ significantly in some important respects. In
general, Australian corporations are not required to provide all of the
disclosure required by American law and accounting practice, and such
disclosure may be less timely and frequent than that required of U.S.
corporations.
Structure of Equity Markets. As of December 29, 1995, the total
market capitalization of the Australian equity markets was approximately
A$304.3 billion, or US $227.1 billion. The aggregate "investible" market
capitalization (as defined by the World Index Policy Committee ("WIPC") of
the FT Index, described below under "The FT Index--World Index Policy
Committee") of Australia was approximately A$269.4 billion, or US $201.1
billion, as of December 29, 1995. The leading major market index is the
All Ordinaries Index, owned and published by the ASX.
<PAGE> SAI-2
The French Equity Markets
General Background. Equity securities trade on the Bourse de Paris
(Paris Stock Exchange), which since 1991 lists all of the securities
previously traded on France's seven regional stock exchanges. Trading in
most of the stocks listed on the Bourse takes place through the Cotation
Assistee en Continu (CAC), a computer order-driven trading system. The
local exchange hours for the Paris Stock Exchange are 10:00 a.m. - 5:00
p.m. (4:00 a.m. - 11:00 a.m. EST). Only equities traded on the Official
List (Marche Officiel) are currently eligible for inclusion in the France
component of the FT Index.
Reporting, Accounting, and Auditing. Although French reporting,
accounting, and auditing practices are considered rigorous by European
standards, they are not identical to U.S. standards in some important
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 frequent than that required of U.S.
corporations.
Structure of Equity Markets. As of December 29, 1995 the total
market capitalization of the French equity markets was approximately
FF2,515.1 billion, or US $514.3 billion. The aggregate investible market
capitalization (as defined by the WIPC) of France was approximately
FF2058.6 billion, or US $421.0 billion, as of December 29, 1995. The
leading major market index in France is the CAC-40, owned and published by
the Societe des Bourses Francais.
The German Equity Markets
General Background. Equity securities trade on Germany's eight
independent local stock exchanges. The Frankfurt Stock Exchange, which
accounted for approximately 73.9% of the total trading volume on the German
stock exchanges in 1995, is the principal stock exchange in Germany.
Exchange securities are denominated in Deutsche marks, the official
currency of Germany. The local exchange hours are 10:30 a.m. - 1:30 p.m.
(4:30 a.m. - 7:30 a.m. EST). German stock exchanges offer three different
market segments in which stocks are traded: the official market segment
(Amtlicher Handel); the regulated unlisted market (Geregelter Markt); and
the unofficial, unregulated, over-the-counter market (Freiverkehr). The
official market comprises trading in shares that have been formally
admitted to official listing by the admissions committee of the relevant
stock exchange, based upon disclosure in the listing application or
"prospectus". The regulated unlisted market comprises trading in shares
admitted to the stock exchange but not traded in the official market. Only
equity securities traded on the official and regulated unlisted markets of
the Frankfurt Stock Exchange are currently eligible for inclusion in the
German component of the FT Index.
Reporting, Accounting, and Auditing. German reporting, accounting,
and auditing standards differ from U.S. standards in important respects.
German corporations, other than subsidiaries of U.S. companies, normally do
not provide all or the same kind of disclosure required by U.S. law and
accounting practice, and such disclosure may be less timely and less
frequent than required of public corporations in the United States.
Structure of Equity Markets. As of December 29, 1995, the total
market capitalization of Germany was approximately DM 785.9 billion, or
US $549.0 billion. The aggregate investible market capitalization (as
defined by the WIPC) of Germany was approximately DM 646.4 billion, or
<PAGE> SAI-3
US $451.6 billion, as of December 29, 1995. The leading major market index
in Germany is the Deutscher Aktienindex, or "DAX", published by the
Frankfurt Stock Exchange.
The Hong Kong Equity Markets
General Background. The publicly traded equity securities of Hong
Kong are listed on the Stock Exchange of Hong Kong Limited ("HKX"), Hong
Kong's sole stock exchange. Exchange securities are denominated in Hong
Kong dollars, the official currency of Hong Kong. The local exchange hours
are 10:00 a.m. - 12:30 p.m. and 2:30 p.m. - 3:55 p.m. (9:00 a.m. - 11:30
p.m. EST and 1:30 a.m. - 2:55 a.m. EST) Only equity securities traded on
the HKX and shares of certain Hong Kong issuers that are listed on the
Singapore Stock Exchange are currently eligible for inclusion in the Hong
Kong component of the FT Index.
Reporting, Accounting, and Auditing. While Hong Kong has
significantly upgraded reporting, accounting, and auditing practices during
the last decade, its standards remain significantly less rigorous than U.S.
standards. In general, Hong Kong corporations are not required to provide
all or the same kind of disclosure required by U.S. law and accounting
practice, and such disclosure may be less timely and frequent than that
required of U.S. corporations.
Structure of Equity Markets. As of December 29, 1995, the total
market capitalization of Hong Kong was approximately HK $2,067.5 billion,
or US $267.3 billion. The aggregate investible market capitalization (as
defined by the WIPC) of Hong Kong was approximately HK $1,920.3 billion, or
US $248.3 billion, as of December 29, 1995. The leading major market index
is the Hang Seng, owned and published by HSI Services.
The Italian Equity Markets
General Background. Italy's ten stock exchanges were consolidated in
1993 into one national stock exchange, Borsa Valori Italiana (the "Italian
Stock Exchange"). The Italian market is dominated by financial companies
and utilities and is not representative of that country's overall economy.
Only equity securities on the official list (Listino della Borsa) of the
Italian Stock Exchange are currently eligible for inclusion in the Italy
component of the FT Index. The local exchange hours of the Italian Stock
Exchange are 10:00 a.m. - 4:00 p.m. (4:00 a.m. - 10:00 a.m. EST).
Reporting, Accounting, and Auditing. Italian reporting, accounting,
and auditing practices are regulated by Italy's National Control
Commission. These practices bear some similarities to American standards,
but differ significantly in many important respects. Generally, Italian
corporations are not required to provide all or the same kind of disclosure
required by U.S. law and accounting practice, and such disclosure may be
less timely, frequent and consistent than that required of U.S.
corporations.
Structure of Equity Markets. As of December 29, 1995, the aggregate
capitalization of the Italian markets was approximately IL312.1 trillion, or
US $196.8 billion. The aggregate investible market capitalization (as
defined by the WIPC) of Italy was approximately IL247.1 trillion, or US
$155.7 billion, as of December 29, 1995. The leading major market index is
the MIB-30, owned and published by the Milan Stock Exchange.
<PAGE> SAI-4
The Japanese Equity Markets
General Background. Equity securities trade on Japan's eight stock
exchanges, as well as in an over-the-counter market. Japan is second only
to the U.S. in aggregate stock market capitalization. Only equity
securities traded on the first and second sections of the Tokyo Stock
Exchange and the first section of the Osaka Stock Exchange, which together
accounted for approximately 93.1% of the total trading volume on the
Japanese stock exchanges in 1995, are currently eligible for inclusion in
the Japan component of the FT Index. The local exchange hours of the Tokyo
and Osaka Stock Exchanges are 9:00 a.m. - 11:00 a.m. and 12:30 p.m. - 3:00
p.m. (7:00 p.m. - 9:00 p.m. and 10:30 p.m. - 1:00 a.m. EST).
Reporting, Accounting, and Auditing. Although some Japanese
reporting, accounting, and auditing practices are substantially based on
U.S. principles, these standards are not identical to American ones in some
important respects, particularly with regard to unconsolidated subsidiaries
and related structures. Generally, Japanese corporations are not required
to provide all or the same kind of disclosure required by U.S. law and
accounting practice, and such disclosure may be less timely and frequent
than that required of U.S. corporations.
Structure of Equity Markets. As of December 29, 1995, the total
market capitalization of Japan was approximately Y392.6 trillion, or US
$3.8 trillion. The aggregate investible market capitalization (as defined
by the WIPC) of Japan was approximately Y353.4 trillion, or US $3.4
trillion, as of December 29, 1995. A leading major market index in Japan
is the Nikkei-300, owned and published by Nihon Keizai Shimbun.
The South African Equity Markets
General Background. South Africa's publicly traded equity securities
are listed on the Johannesburg Stock Exchange ("JSX"), South Africa's sole
stock exchange. The JSX, which has historically concentrated in mining
industries, is far less diversified than the overall South African economy.
[The aggregate market capitalization of the JSX was equal to more than 100%
of South Africa's GDP as of December 30, 1994.] The local exchange hours
are 9:30 a.m. - 1:00 p.m. and 2:00 p.m. - 4:00 p.m. (2:30 a.m. - 6:00 a.m.
and 7:00 a.m. - 9:00 a.m. EST). Prior to March 20, 1995, South Africa had
maintained a two-currency system that included the Commercial Rand ("CR"),
but now it has only a single unit of currency, the Rand.
Reporting, Accounting, and Auditing. South Africa's reporting,
accounting, and auditing practices differ significantly from American
standards in many respects. In general, South African corporations are not
required to provide all or the same kind of disclosure required by U.S. law
and accounting practice, and such disclosure may be less timely and
frequent than that required of U.S. corporations.
Structure of Equity Markets. As of December 29, 1995, the total
market capitalization of South Africa was approximately CR766.9 billion, or
US $210.4 billion. The aggregate investible market capitalization (as
defined by the WIPC) of South Africa was approximately CR621.4 billion, or
US $170.4 billion, as of December 29, 1995. A leading broad major market
index in South Africa is All Share Index, jointly published by the JSX and
the Actuarial Society of South Africa.
<PAGE> SAI-5
The United Kingdom Equity Markets
General Background. The United Kingdom is Europe's largest equity
market in terms of aggregate market capitalization. Trading is fully
computerized under the Stock Exchange Automated Quotation System. The
London Stock Exchange has the largest volume of trading in international
equities in the world. The local exchange hours are 8:30 a.m. - 4:30 p.m.
(3:30 a.m. - 11:30 a.m. EST). Only stocks traded on the official list of
the London Stock Exchange are currently eligible for inclusion in the UK
component of the FT Index.
Reporting, Accounting, and Auditing. Although United Kingdom
reporting, accounting, and auditing standards are among the most stringent
outside the United States, such standards are not identical to U.S.
standards in some important respects. Some United Kingdom corporations are
not required to provide all or the same kind of disclosure required by U.S.
law and accounting practice, and such disclosure may, in certain cases, be
less timely and less frequent than that required of U.S. corporations.
Structure of Equity Markets. As of December 29, 1995, the aggregate
market capitalization of the United Kingdom was approximately L895.4
billion, or US $1,390.2 billion. The aggregate investible market
capitalization (as defined by the WIPC) of the United Kingdom was
approximately L851 billion, or US $1,321.2 billion, as of December 29,
1995. A leading major market index in the United Kingdom is the FT-SE 100,
published by the London Stock Exchange in association with The Financial
Times Limited and the Institute and Faculty of Actuaries.
The United States Equity Markets
General Background. Equity securities trade on nine U.S. stock
exchanges. The New York Stock Exchange, Inc. (the "NYSE"), the American
Stock Exchange (the "AMEX") and the National Association of Securities
Dealers Automated Quotation ("NASDAQ") system, accounted for more than
91.2% of the total U.S. equity trading volume in 1995. Only stocks traded
on the NYSE, the AMEX and the NASDAQ are currently eligible for inclusion
in the US component of the FT Index. The exchange hours for the NYSE, AMEX
and NASDAQ are 9:30 a.m. - 4:00 p.m. EST.
Reporting, Accounting, and Auditing. U.S. reporting, accounting, and
auditing practices are generally regarded as the most stringent of all
major global markets.
Structure of Equity Markets. As of December 29, 1995, the aggregate
capitalization of the U.S. equity markets was approximately US
$7.2 trillion. The aggregate investible market capitalization (as defined
by the WIPC) of the United States was approximately US $6.7 trillion, as of
December 29, 1995. A leading broad major market index in the U.S. is the
Standard & Poor's 500 Index* ("S&P 500"), owned and published by Standard
& Poor's.
Other Fund Investments
Because the investment objective of each Series is to provide
investment results that substantially correspond to the price and yield
performance of the equity securities in the applicable
* "S&P", "Standard & Poor's", "S&P 500" and "Standard & Poor's 500" are
trademarks of Standard & Poor's, a division of The McGraw Hill
Companies.
<PAGE> SAI-6
component of the FT Index, each Series will invest the largest proportion
of its assets as is practicable, in any event at least 95% of its net
assets, in the equity securities of the relevant FT Index component.
The remainder of each Series' assets will consist of temporary cash
which may be used to purchase high quality, short-term fixed income
securities denominated in US dollars or foreign currency, including
obligations of the U.S. Government and its agencies or instrumentalities,
obligations issued or guaranteed by foreign sovereigns, certificates of
deposit and other short-term obligations of domestic and foreign banks and
commercial paper; repurchase agreements collateralized by obligations
issued or guaranteed by the U.S. Government or an agency thereof;
securities of U.S. and foreign investment companies; stock index futures
contracts or options on such contracts; and call options on securities and
indices in the relevant market. Each Series may also purchase other equity
securities that are not components of the relevant FT Index component but
may be an appropriate substitution for a security in the relevant FT Index
component if market conditions make it impracticable to purchase such index
security. Such "substitute" securities will be carefully selected for the
high degree of positive correlation between the values of such securities
and the values of the FT Index securities to which the Series seeks
exposure.
Investments in foreign obligations involve certain investment risks
that are somewhat different from those affecting domestic obligations.
Foreign issuers are not generally subject to uniform accounting, auditing
and financial reporting standards or governmental supervision comparable to
those applicable to U.S. issuers. In addition, there is a possibility that
liquidity could be impaired because of future political and economic
developments, that the foreign obligations may be less marketable than
comparable obligations of U.S. entities, that a foreign jurisdiction might
impose withholding taxes on interest income payable on foreign debt
obligations, that deposits in foreign banks may be seized or nationalized
and that governmental restrictions (such as foreign exchange controls) may
be adopted which might adversely affect the payment of principal and
interest on those obligations.
The Adviser may make short-term investments of the available cash of
any Series in securities of U.S. or foreign investment companies that are
invested principally in the equity securities of the country relevant to
such Series, for the purpose of exposing such available cash to the equity
risk and return of that country's equity market. A Series will only invest
in investment company securities in order to achieve a higher correlation
with its corresponding FT Index component than could be obtained if cash
reserves were invested in short-term debt obligations. A Series'
investments in investment company securities are limited by Section
12(d)(1) of the 1940 Act.
Regulatory requirements designed to eliminate leverage accompanying
investments in futures contracts and options on futures contracts require
each Series to segregate in an account with the Fund's custodian (see
"Investment Advisory, Management and Other Services -- The Administrator,
Custodian and Transfer Agent" below) an amount of its assets equal to the
obligation to purchase the assets underlying such contracts. The assets
segregated will be cash, U.S. Government securities or other liquid, high-
grade, short-term debt securities denominated in the currency or currencies
of the portfolio equity securities of the particular Series (the "Series
Currency").
The purpose of investing in futures contracts and options on futures
contracts and purchasing call options and the related activity of writing
put options (explained below) is to expose cash reserves and short term
money market investments to the equity risk and return of the corresponding
<PAGE> SAI-7
component of the FT Index in order to achieve a higher correlation with
such component. A Series will not invest in options and futures contracts
and options thereon for speculative purposes. Certain of the risks
typically associated with such contracts, e.g., the risk that the portfolio
manager's view of future market movements may be mistaken, are therefore
not applicable to the Fund.
The total value of options and futures contracts and options thereon,
plus the related segregated assets, the "substitute" securities for FT
Index component securities and investment company securities referred to
above, repurchase agreements and any other temporary cash and short-term
investments, will not exceed 5% of the net asset value of a Series.
Options on Securities
Purchase of Call Options
Each Series may purchase call options on securities and indices
thereof. Call options are contracts which give the buyer the right, but
not the obligation, to buy a fixed amount of securities at a fixed price
for a fixed period of time or, in the case of options on indices, to make
or receive a cash settlement. A Series will only invest in call options,
in combination with other instruments, for the purpose of exposing the
Series' cash reserves and short-term investments to the equity risk and
return of the corresponding component of the FT Index in order to achieve a
higher correlation with such component. It will not purchase call options
for purposes of benefiting from anticipated market appreciation without the
risk of market decline.
Each Series may purchase both options that are traded on United
States and foreign exchanges and options traded over-the-counter with
broker-dealers who make markets in these options. Unlike exchange-traded
options in the United States that are issued by clearing organizations
affiliated with the exchange on which the option is listed, which, in
effect, gives its guarantee to every exchange-traded option transaction,
"over-the-counter" options are contracts between the Fund and its
counterparty with no clearing organization guarantee. Thus, when a Series
purchases an over-the-counter option, it relies on the dealer from which it
has purchased the over-the-counter option to make or take delivery of the
securities underlying the option or pay any cash settlement amount.
Failure by the dealer to do so would result in the loss of the premium paid
by the Series as well as the loss of the expected benefit of the
transaction. The Adviser will evaluate the creditworthiness of any dealer
from which a Series proposes to purchase options.
Although exchange-traded options generally have a continuous liquid
market, over-the-counter options may not. Consequently, a Series will
generally be able to realize the value of an over-the-counter option it has
purchased only by exercising it or reselling it to the dealer who issued
it. While the Fund will purchase over-the-counter call options only with
dealers which agree to, and which are expected to be capable of, entering
into closing transactions with the Series, there can be no assurance that
the Series will be able to liquidate an over-the-counter call option at a
favorable price at any time prior to expiration. In the event of
insolvency of the counterparty, the Series may be unable to liquidate an
over-the-counter call option.
Writing Put Options
When the Fund writes (sells) a put option, the purchaser has the
right, for a specified period of time, to sell the securities or index
subject to the option to the Fund at the specified exercise price.
<PAGE> SAI-8
The Fund receives a premium for writing the put option which it retains
whether or not the option is exercised.
A Series will write a covered put option only in connection with its
purchase of a related call option on the same security or index. This
technique will allow a Series to expose uninvested cash to the risk of both
market appreciation and market decline in the value of the relevant
security or index.
Futures Contracts
A Series will enter into futures contracts only for the purpose of
exposing the Series' cash reserves and short-term investments to the equity
risk and return of the corresponding component of the FT Index in order to
achieve a higher correlation with such component. A Series will not use
futures for speculative purposes. Each Series intends to invest only in
contracts on indices of securities which the Adviser believes will provide
appropriate proxies for the performance of the FT Index component relevant
to such Series. A Series may enter into such futures contracts on any
recognized futures exchange, if permitted by applicable U.S. law.
A futures contract on a stock index is an agreement between two
parties to buy and sell an index of securities at its closing value at a
specified future time. Stock index futures are settled by delivery by one
party of the net cash settlement price rather than the securities
underlying the contract. Each Series will only take "long" futures
positions, i.e., the Series will assume the obligation to acquire the index
of securities underlying the contract.
In order to open and maintain a position in futures contracts, the
Fund is required to make a good faith deposit, known as "initial margin",
in cash or government securities, which are held in the broker's name in an
account at the Fund's custodian. A Series expects to earn interest income
on its initial margin deposits. Minimal initial margin requirements are
established by the futures exchange and may be changed. Brokers may
establish initial margin requirements which are higher than the exchange
minimums. Initial margin requirements typically range upward from less
than 5% of the underlying value of the contract being traded. After a
futures contract position is opened, the value of the contract is marked to
market daily. The change in the futures contract's closing value is
settled each day by paying or receiving "variation margin", depending upon
the direction of change in the value of the futures contract. Variation
margin payments are made to and from the futures broker for as long as the
contract remains open.
A Series will invest in futures contracts and options thereon only to
the extent that the Fund, the Adviser or any related persons will not as a
result of such contracts be required to register as a "commodity pool
operator" with the Commodity Futures Trading Commission (the "CFTC").
Under CFTC regulations, each Series will be required to limit the amount of
initial margin and premiums on positions in futures or options on futures
entered into by the Series for non-hedging purposes to not more than 5% of
the net assets of such Series. A Series will limit its investments to
those which have been approved by the CFTC for investment by United States
investors.
Options on Futures Contracts
Each Series may also enter into options on futures contracts for the
same purposes described above with respect to options and futures
contracts. The Fund may purchase only call options on futures contracts.
A call option on a futures contract gives the purchaser the right, in
return for the
<PAGE> SAI-9
premium paid, to assume a long position in a futures contract at a
specified exercise price at any time during the option exercise period.
Repurchase Agreements
Each Series may invest in repurchase agreements collateralized by
obligations issued or guaranteed by the U.S. Government or any agency
thereof for the purpose of generating income from its excess cash balances.
A repurchase agreement is an agreement under which a Series purchases a
security or money market instrument and simultaneously commits to resell
that security or instrument to the seller (a bank or securities dealer) at
an agreed upon price on an agreed upon date (usually within seven days of
purchase). A repurchase agreement may be considered a loan collateralized
by such security or instrument. The resale price reflects the purchase
price plus an agreed upon market rate of interest unrelated to the coupon
rate or date of maturity of the purchased security. In these transactions,
the securities acquired by the Series (including accrued interest earned
thereon) must have a total value in excess of the value of the repurchase
agreement and will be held by State Street Bank and Trust Company ("State
Street"), the Fund's custodian (the "Custodian"), until repurchased. A
Series will enter into repurchase agreements only with a seller meeting
creditworthiness standards approved by the Fund's Board of Directors and
the Adviser will monitor the creditworthiness of the seller under the
general supervision of the Board of Directors. The Custodian will
continually monitor the value of the underlying securities to ensure that
their value always equals or exceeds the total value of the repurchase
agreement.
The use of repurchase agreements involves certain risks. For
example, if the seller of securities under the agreement defaults on its
obligation to repurchase the underlying security at a time when the value
of the security has declined, the Series holding the repurchase agreement
may incur a loss upon disposition of the security. If the seller under the
agreement becomes insolvent and subject to liquidation or reorganization
under the U.S. Bankruptcy Code or other laws, a court may determine that
the underlying security is collateral for a loan by the Series not within
the control of the Series and therefore the Series may not be able to
substantiate its interest in the underlying security and may be deemed an
unsecured creditor of the seller. While the Adviser acknowledges these
risks, it is expected that they can be controlled through careful
monitoring procedures.
Lending Portfolio Securities
To a limited extent each Series may lend its portfolio securities to
brokers, dealers and other financial institutions, provided it receives
collateral in US dollar or Series Currency cash, U.S. Government securities
or other assets permitted by applicable regulations, the total value of
which at all times is maintained in an amount equal to at least 100% of the
current market value of the securities loaned. By lending its portfolio
securities, a Series can increase its income through securities lending
fees and through the investment of the collateral and help offset the
effect that the expenses of the Series have on the ability of such Series
to provide investment results that correspond to that of its applicable
component of the FT Index. Cash collateral received by any Series against
securities loans will be invested only in high quality, short-term debt
securities, repurchase agreements or commingled money market investment
vehicles offered by the Fund's Custodian. These loans may not exceed 33 1/3%
of each Series' total assets. Each Series will pay reasonable administrative
and custodial fees in connection with the loan of securities. The interest
income the Series receives from the loan collateral is included in the
Series' gross investment income on which a portion of the management fee
paid to DMG, in its capacity as investment adviser to the
<PAGE> SAI-10
Fund, is based. See "Investment Advisory, Management and Other
Services--The Adviser". The Fund will pay no finder's fees in connection
with the lending of its securities.
The following conditions will be met whenever portfolio securities
are loaned: (1) the Series must receive at least 100% collateral from the
borrower; (2) the borrower must increase such collateral whenever the
market value of the securities loaned rises above the level of the
collateral; (3) the Series must be able to terminate the loan at any time;
(4) the 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 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 Fund'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. Each Series will
comply with the foregoing conditions. DMG will provide securities lending
services to the Fund under its investment advisory and management agreement
with the Fund. DMG may delegate certain duties with respect to securities
lending to State Street, which acts as Custodian, or to other qualified
persons approved by the Fund's Board of Directors, pursuant to an agency
agreement. See "Investment Advisory, Management and Other Services--The
Adviser".
Currency Transactions
The investment policy of each Series is to remain as fully invested
as practicable in the equity securities of the relevant FT Index component.
Hence, no Series of the Fund expects to engage in currency transactions for
the purpose of hedging against declines in the value of the Series
Currency.
Each Series will engage in currency transactions for the purpose of
meeting the U.S. dollar cash requirements of redemptions of Series shares
in Creation Unit size aggregations (see "Purchase and Issuance of Fund
Shares in Creation Unit Aggregations--Generally") and Series expenses and
distributions. This is considered a "transaction hedge". In addition, to
the extent a Series (other than the US Index Series) holds US dollar-
denominated cash balances or short term money market-type investments, it
may purchase a forward currency contract or other instruments which would
enable it to purchase the applicable Series Currency at a fixed price in
the future and eliminate the risk that the US dollar-denominated assets of
the Series would widen any deviation between the performance of the
applicable FT Index component and the Series in the event that the value of
the Series Currency rose in relation to the US dollar. This is considered
a "position hedge". A non-US Series may also enter into arrangements under
which its cash reserves in the applicable Series Currency (for example,
foreign currency received by such Series as collateral against loans of
portfolio securities) would be converted into US dollars for purposes of
investing in an available US dollar-denominated short-term money market
investment vehicle and the money market investment (including accrued
interest) would be converted back to Series Currency the following day at
an exchange rate adjusted for any differential between prevailing US dollar
and Series Currency short-term interest rates.
Since it is not expected that US dollar-denominated assets would
exceed 5% of net assets of any Series other than the US Index Series (and
would under normal conditions be significantly less than 5%), the value of
forward currency contracts, currency futures contracts and options on such
contracts, currency options and other currency instruments should not
exceed 5% of a Series' net assets and net forward currency contracts and
other currency instruments should not exceed the value of US dollar-
denominated assets.
<PAGE> SAI-11
Transaction hedging is the purchase or sale of a forward contract
with respect to specific receivables or payables of a Series generally
arising in connection with the purchase or sale of its portfolio securities
and accruals of interest or dividends receivable and Series expenses.
Position hedging is the sale of a foreign currency with respect to
portfolio security positions denominated or quoted in that currency. A
forward currency contract involves 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. Currency options give the buyer the right, but
not the obligation, to buy or sell a fixed amount of a specific currency at
a fixed price for a fixed period of time. 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. Certain risks of
transactions in foreign currency and related derivatives are described
below under "Special Considerations and Risks--Currency Transactions".
Investment Restrictions
The Fund has adopted the following investment restrictions as
fundamental policies with respect to each Series. These restrictions
cannot be changed with respect to a Series without the approval of the
holders of a majority of such Series' outstanding voting securities. For
purposes of the Investment Company Act of 1940, as amended (the "1940
Act"), a majority of the outstanding voting securities of a Series means
the vote, at an annual or a special meeting of the security holders of the
Fund, of the lesser of (1) 67% or more of the voting securities of the
Series present at such meeting, if the holders of more than 50% of the
outstanding voting securities of such Series are present or represented by
proxy, or (2) more than 50% of the outstanding voting securities of the
Series. A Series may not:
1. Change its investment objective, which is to provide investment
results that substantially correspond to the price and yield performance of
a broad-based index of publicly traded equity securities in a specified
country, geographical region or industry sector;
2. Lend any funds or other assets except that a Series may enter
into repurchase agreements and may lend its portfolio securities in an
amount not to exceed 33 1/3% 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 1/3% of the
value of the 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 Series will not
purchase securities while borrowings in excess of 5% of the 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 in an amount up to 33 1/3% of the value of its total assets to
secure permitted borrowings, except that the deposit of underlying
securities and other assets in escrow and collateral arrangements with
respect to initial or variation margin for currency transactions, options,
futures contracts and options on futures will not be deemed to be pledges
of the Series' assets;
<PAGE> SAI-12
5. Purchase a security (other than obligations of the U.S.
Government, its agencies or instrumentalities) if as a result 25% or more
of its total assets would be invested in a particular industry, except that
a Series will invest 25% or more of its total assets in a single industry
in the event that its corresponding equity index is or becomes similarly
concentrated;
6. Purchase, hold or deal in real estate, or oil, gas or mineral
interests or leases, but a 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 Series may be deemed an underwriter in connection with the
sale of securities in its portfolio;
8. Purchase securities on margin, except for such short-term credits
as are necessary for the clearance of transactions, except that a Series
may make margin deposits in connection with transactions in currencies,
options, futures and options on futures;
9. Sell securities short, but reserves the right to sell securities
short if it owns the security;
10. Invest in commodities or commodity contracts, except that the
Series may buy and sell currencies and forward contracts with respect
thereto, futures contracts on securities, stock indices and currencies and
options on such futures contracts and make margin deposits in connection
with such contracts; or
11. Write call options. A Series may write covered put options.
With respect to the fundamental restriction set forth in (5), above,
the Adviser has advised the Fund that as of December 29, 1995, the
following FT Index components were concentrated (in excess of 25% of such
component) in stocks of the indicated industry groups, as defined by the
Consortium of the FT Index (see "The FT Index" below):
Australia Mining, Metals and Minerals
Hong Kong Real Estate
Italy Utilities
South Africa Precious Metals and Minerals
The securities portfolios of the Australia Index Series, the Hong Kong
Index Series, the Italy Index Series and the South Africa Index Series will
be concentrated in the indicated industries for so long as the
corresponding FT Index components are so concentrated. An investment in
the CB Shares(SM) of each such Series therefore involves a greater exposure to
the performance and risks associated with the relevant industry group than
would be the case if such Series' portfolio securities were more broadly
diversified among industry groups. See "The Fund--Investment Considerations
and Risks" in the Prospectus.
In addition to the investment restrictions adopted as fundamental
policies as set forth above, each Series will observe the following
restrictions, which may be changed by the Board without a stockholder vote.
A Series will not:
<PAGE> SAI-13
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 Fund may
vote the investment securities owned by each 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 Series has valued the investment.
For purposes of the percentage limitation on each Series' investments
in illiquid securities, with respect to each Series other than the US Index
Series, foreign equity securities, though not registered under the
Securities Act of 1933 (the "Securities Act"), will not be deemed per se
illiquid if they are listed on an exchange and are not legally restricted
from sale by the Series. The Consortium, i.e. the Owners of the FT Index
and their associates (see "The FT Index--In General"), automatically
excludes a security from the FT Index if it fails to trade for more than
fifteen working days within each of two successive calendar quarters. The
Adviser will monitor the liquidity of restricted securities in each Series'
portfolio under the supervision of the Fund's Board of Directors. In
reaching liquidity decisions, the Adviser will consider, among other
things, the following factors:
(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.
SPECIAL CONSIDERATIONS AND RISKS
A discussion of the risks associated with an investment in the Fund
is contained in the Prospectus under the heading "The Fund--Investment
Considerations and Risks". The discussion below supplements, and should be
read in conjunction with, such section of the Prospectus.
Non-U.S. Equity Portfolios
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
and exchange control regulations, and the costs that
<PAGE> SAI-14
may be incurred in connection with conversions between various currencies.
In addition, investments in countries other than the United States could be
affected by other factors generally not thought to be present in the United
States, including less liquid and less efficient securities markets,
greater price volatility, less publicly available information about
issuers, the imposition of withholding or other taxes, restrictions on the
expatriation of funds or other assets of a Series, higher transaction and
custody costs, delays attendant in settlement procedures and difficulties
in enforcing contractual obligations.
Currency Transactions
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. The risks
associated with foreign currency options and futures contracts generally
include those discussed under "Other Fund Investments--Options on
Securities" and "--Futures Contracts", with respect to stock index futures,
options on securities and indices and options on futures, and below under
"Options and Futures". If the Adviser applies a currency hedging strategy
at an inappropriate time or judges market correlations incorrectly, foreign
currency derivatives strategies may not serve their intended purpose of
improving the correlation of a Series' return with the performance of the
corresponding FT Index component and may lower the Series' return. The
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 Series will incur transaction costs,
including trading commissions, in connection with its foreign currency
transactions.
Options and Futures
A Series' ability to establish and close out positions in options,
futures contracts and options on futures contracts will be subject to the
existence of a liquid market. Although a Series generally will purchase or
sell only those options, futures contracts and options thereon for which
there appears to be a liquid market and, in the case of futures contracts,
which are traded on regulated futures exchanges, there can be no assurance
that a liquid market will exist for any particular option or futures
contract or option thereon in which the Series maintains a position. Thus,
it may not be possible to effect a closing transaction in any contract or
to do so at a satisfactory price and the Series would have to either make
or take delivery under the contract or, in the case of a written option,
wait to sell the underlying securities until the option expires or is
exercised or, in the case of a purchased option, exercise the option. In
the case of a futures contract that the Series has purchased and which the
Fund is unable to close, the Series may be required to maintain margin
deposits on the futures contract and to make variation margin payments
until the contract is closed. In such situations, if a Series has
insufficient cash, it may have to sell portfolio securities to meet
applicable daily margin requirements. Closing transactions in these
contracts may result in short-term capital gains. These transactions may
be limited by U.S. tax considerations because the beneficial treatment
accorded regulated investment companies under Subchapter M of the Code (as
defined herein) limits the amount of permissible short-term gain.
<PAGE> SAI-15
Options and futures contracts based on foreign stock indices may be
purchased by a Series only if the options or futures contracts have been
approved by the CFTC for purchase by U.S. persons. Currently, options and
futures contracts on foreign equity indices are approved for certain
Australian, French, German, Hong Kong, Italian, Japanese and United Kingdom
equity indices.
Because the futures strategies of each Series are engaged in only for
the purpose of seeking a higher correlation with the corresponding
component of the FT Index and its use of futures will be unleveraged, the
Fund does not believe that the Series are subject to the risks of loss
frequently associated with futures transactions. A Series would presumably
have sustained comparable losses if, instead of the futures contract, it
had invested in the underlying security or index of securities and sold it
after the decline.
Successful use of futures contracts and options thereon by any Series
is subject to the ability of the Adviser to predict correctly correlations
between the movements in the values of such contracts (or the underlying
securities or indices) with the direction of the relevant FT Index
component or securities to which the Series seeks exposure. If the
Adviser's expectations are not met, the Series would be in a worse position
than if the futures exposure had not been effected. If a Series buys
futures contracts on stock indices that historically have had a high degree
of positive correlation to the value of the FT Index, and such historical
experience were not to obtain in the future, the value of the relevant FT
Index component might rise or decline more rapidly than the value of such
an imperfectly correlated futures contract. In that case, the futures
strategy will be less effective than if the correlation had been greater.
In a similar but more extreme situation, the value of the futures position
might in fact decline while the value of the relevant FT Index component
holds steady or rises. This would result in a loss that would not have
occurred but for the futures position.
Continuous Offering
Since new Creation Unit aggregations of shares can be issued and sold
by the Fund on an ongoing basis, at any point during the life of the
offering a "distribution", as such term is used in the Securities Act, may
be occurring. 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 Unit aggregations of shares after placing a purchase
order with the Distributor, breaks them down into the constituent CB
Shares(SM), and sells the CB Shares(SM) directly to its customers; or if it
chooses to couple the acquisition of a supply of new CB Shares(SM) with an
active selling effort involving solicitation of secondary market demands
for CB Shares(SM). A determination of whether one is an underwriter must take
into account all the facts and circumstances pertaining to the activities
of a broker-dealer or its client in the particular case, and the examples
mentioned above should not be considered a complete description of all the
activities that could lead to categorization as an underwriter.
Broker-dealer firms should also note that dealers who are not
"underwriters" but are participating in a distribution (as contrasted with
ordinary secondary trading transactions), and thus dealing with shares 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 do incur a prospectus-delivery obligation with respect to CB Shares(SM)
are reminded that under Securities Act Rule 153 a prospectus-delivery
<PAGE> SAI-16
obligation under Section 5(b)(2) of the Securities Act owed to a NYSE
member in connection with a sale on the NYSE is satisfied by the fact that
prospectuses will be available at the NYSE upon request. Of course, the
prospectus-delivery mechanism provided in Rule 153 is only available with
respect to transactions on an exchange.
THE FT INDEX
In General
The FT-Actuaries World Indices(TM) were originally developed by
Goldman, Sachs & Co., NatWest Securities Limited and The Financial Times
Limited in 1986, and until May 23, 1995, were jointly published by them.
On May 23, 1995, Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., joined The Financial Times Limited and Goldman, Sachs &
Co. as a co-publisher of the FT-Actuaries World Indices(TM), now known as
the Financial Times/Standard & Poor's Actuaries World Indices(TM) or the
FT/S&P Actuaries World Indices(TM). The FT/S&P Actuaries World Indices(TM)
are a continuation of the FT-Actuaries World Indices(TM). Following the
current transition period, Standard & Poor's and The Financial Times
Limited will jointly calculate the indices (in such capacity, the
"Compilers"). The Compilers are responsible for the day-to-day data
processes that enable the calculation of the FT Index. As of
November [__], 1995, The Financial Times Limited transferred its ownership
rights in the FT/S&P Actuaries World Indices(TM) to FTSE, a company jointly
owned by The Financial Times Limited, the London Stock Exchange and the
Institute of Actuaries. Together, Standard & Poor's, Goldman, Sachs & Co.
and FTSE are referred to in this SAI as the "Owners". By the end of 1996,
it is expected that FT-SE International will assume responsibility for
calculating the European and Asia-Pacific indices and Standard & Poor's
will calculate the U.S. indices. The Fund is not sponsored by or
affiliated with Standard & Poor's, FTSE or The Financial Times Limited.
The FT Index is managed with the assistance of The Institute of Actuaries
and The Faculty of Actuaries, the English and Scottish bodies,
respectively, that represent the actuarial profession in the United Kingdom
(together with the Owners, the "Consortium"). NatWest Securities Limited
has withdrawn as an owner of the FT Index, but will continue to be
recognized as a founding member.
The following summary of the compilation and operation of the FT
Index is based on information provided by Goldman, Sachs & Co. and Standard
& Poor's.**
The FT Index offers measures of stock price performance for the major
world stock markets as well as for regional areas, broad economic sectors,
and industry groups. The components of the FT Index represent separately
each of 26 countries, 12 geographic regions and 7 broad economic
** See The FT-Actuaries World Indices(TM)--An Introduction (The
Financial Times Limited, Goldman, Sachs & Co. and Wood MacKenzie &
Co., Ltd., 1987); FT-Actuaries World Indices(TM)--Construction and
Maintenance Rules (The Financial Times Limited, Goldman, Sachs & Co.
and County NatWest Securities Limited, 1991); FT-Actuaries World
Indices(TM)-- Construction and Maintenance Rules Amendments (Goldman,
Sachs & Co. and NatWest Securities Limited, April 1993); FT-
Actuaries World Indices(TM)-- Construction and Maintenance Rules
Amendments (The Financial Times Limited, Goldman, Sachs & Co. and
NatWest Securities Limited, March 1995).
<PAGE> SAI-17
sectors. In total over 1,000 indices are calculated daily across
countries, regions, industry groups, and economic sectors. Among the
criteria that the FT Index is structured to satisfy are coverage of the
investible opportunities available in the world's equity markets for the
international investor and an objectively constructed measure of the
changes in market value of international investors' portfolios resulting
from market activity.
<PAGE> SAI-18
The World Index Policy Committee
Daily and quarterly review of and policy decisions made concerning
the FT Index are the responsibility of the WIPC. The Financial Times
Limited, Goldman, Sachs & Co., and Standard & Poor's each have one vote on
the WIPC, and they can each appoint two additional voting members to the
WIPC to act as representatives of actual or prospective main user groups of
the FT Index. In addition, The Institute of Actuaries and The Faculty of
Actuaries have two voting members on the WIPC, including the Chairman.
NatWest Securities Limited has one vote on the WIPC until 1998. To the
best of the Adviser's knowledge, the WIPC included no employees of the
Adviser or Deutsche Bank AG as of December 29, 1995.
Specifically, the WIPC determines the overall policy and objectives
of the FT Index; establishes selection criteria, liquidity requirements,
calculation methodologies, rules and representation for inclusion of index
components and the timing and disclosure of additions and deletions of FT
Index constituents; determines what data on distributions to stockholders
and other capital changes are included; and scrutinizes and ensures that
the FT Index is theoretically and operationally correct and accurate. The
guidelines for the determinations of the Consortium, and its calculation
methodologies, are publicly available. The WIPC may at any time change the
stock exchange or exchanges from which the constituents of a particular FT
Index component may be selected.
Delivery and Availability
The FT Index's values and related performance figures for various
periods of time are calculated after the close of the NYSE for publication
the following day in the various editions of the Financial Times. The FT
Index components are reported in local currency, US dollars, and UK pounds
sterling to allow an explicit valuation of the impact of the currency
component on various user groups. Constituent changes during a quarter are
noted at the foot of the FT Index table. Where possible, these are shown
prior to the actual day of implementation. Decisions regarding the
addition of new eligible constituents which are unrelated to existing index
constituents, or investible weighting changes to existing constituents,
will be announced in the Financial Times at least four working days before
they are implemented in the indices which are published in the daily table.
Monday editions of the Financial Times show all constituent changes made
during the previous week together with base values for the country indices.
Quarter-end changes are published as soon as is practicable following the
quarterly WIPC meeting but before the quarter-end. The FT Index components
are calculated on weekdays when one or more of the constituent markets are
open; the indices are syndicated and published in the financial sections of
several newspapers worldwide, including The New York Times. FT Index data
also may be purchased electronically through Goldman, Sachs & Co.
Extensive index data will be available through a number of market data
vendors to their subscribers. The Adviser will make available on diskette
to certain financial institutions that have entered into agreements with
the Fund's distributor to provide stockholder support services and
undertake certain marketing-related activities five-year historical data on
the FT Index components corresponding to the initial nine Series of the
Fund and related major market indices. See "Purchase and Issuance of Fund
Shares in Certain Unit Aggregations -- The Distributor".
<PAGE> SAI-19
Selection
Country Selection Criteria. In order for a country to be included in
the FT Index, the following criteria must be satisfied: (1) direct equity
investment by non-nationals must be permitted; (2) accurate and timely data
must be available; (3) no significant exchange controls exist which would
prevent the timely repatriation of capital or dividends; (4) significant
international investor interest in the local equity market must have been
demonstrated; and (5) adequate liquidity must exist.
Allocation of Stocks to Countries. In most instances stocks are
included in the index component of that country where the company is
legally registered and is recognized for taxation purposes, including
regulation of its financial affairs. However, exceptions may be made where
the international investor's recognition of the area of the company's
business or its market listings clearly suggests a different allocation.
Classes Included. Companies whose business is that of holding equity
and other investments (e.g., United Kingdom investment trusts) are eligible
for inclusion. Split capital investment trusts are excluded. Those whose
price is a direct derivation of underlying holdings (e.g., mutual funds)
are also excluded.
Investibility Screens. All securities are subjected to the five
investibility screens described below.
1. A "Size Screen". All securities comprising the bottom 5% of
any market's capitalization are excluded from the FT Index. The
average size of the remaining 95% of the companies represents
the "Large Company Cut-Off Size".
2. A "Total Restriction Screen". A security is totally excluded
from the FT Index if foreign investors are barred from
ownership.
3. A "Partial Restriction Screen". An "investibility weight" is
attached to those securities for which there are partial
restrictions on foreign ownership. The capitalization
included, therefore, for any such security generally is
restricted to that portion available to foreign investors.
Consideration will also be given to what extent this portion is
effectively reduced by "strategic" foreign holdings which may
either require a commensurate adjustment to the investibility
weight or lead to a company being considered ineligible for
inclusion.
4. A "'Free Float' Screen". The full capitalization of a security
is eligible for inclusion in the FT Index if 25% or more of the
outstanding securities is publicly available for investment and
not in the hands of a single party or parties "acting in
concert". A government's shareholdings are included in this
total if these holdings have a stock exchange listing and could
be offered to the public. However, when a government is a
holder of shares but either the shares are not listed or the
government is constrained through requiring legislation before
being able to sell them, a weighting factor will be applied.
Two or more identifiable holders of more than 75% of a single
security may be deemed to be acting in concert unless evidence
is available to the contrary.
<PAGE> SAI-20
Securities will also be considered for inclusion, however, if
the existing "free float" is less than 25% but more than 10%
and if the free float capitalization is more than one half of
the large-company cut-off size (described below) in that
particular market. Only that portion of capitalization deemed
to be "free float" will be eligible for inclusion, this being
considered to be equivalent to the application of the "Partial
Restriction Screen". The free float will be automatically
included if its size is greater than the large-company cut-off
size. The free float may be considered for inclusion if it is
more than one half of but less than the Large Company Cut-Off
Size.
5. A "Liquidity Screen". A security is deemed to be illiquid, and
therefore ineligible for inclusion, if it fails to trade for
more than 15 working days within each of two successive
quarters.
Stock Selection Criteria. The "investible universe" consists of the
aggregate capitalization of all equity securities listed on the exchanges
monitored (in some cases, only certain sections of particular exchanges are
monitored) within a market after the application of the five investibility
screens described above and after certain "multiple equity line" rules are
applied. Where there are multiple lines of equity capital in the one
company, all are included and priced separately, except that lines will be
excluded if: (i) they are not available owing to failure under the
investibility screens; (ii) the size of the line is less than 50% of the
market's minimum size; or (iii) the size of the line is between 50% and
100% of the market's minimum size but is less than 25% of the company's
main line of equity. All partly-paid classes of equity are priced on a
fully-paid basis if the calls are payable at known future dates. Those
recognized as being "permanently partly-paid" are priced on a partly-paid
basis.
An objective of the FT Index in selecting constituent stocks is
to capture 85% of the investible universe in each market. In practice,
representation is maintained within a band of 82-88% of the investible
universe. For the purposes of the implementation of the current FT Index
rules, a band of 82-90% is used in order to restrict turnover to 5%-7% for
the larger markets. Large additions of stocks to the investible universe
of an FT Index market, or dramatic price movements in stocks within the
investible universe, over a short period of time may temporarily reduce the
relevant FT Index component's representation of the investible universe
below the normal band of 82 - 88%. This may occur where, for example, a
number of new public offerings of investible stocks occur simultaneously
and the adjustments required to the constituents of the relevant FT Index
components to maintain such representation cannot be made quickly or
simultaneously because such adjustments would violate other FT Index rules.
Consideration is also given in assembling the equities comprising any
market to the economic sector distribution of the sample chosen. The
objective is that this distribution reflect the overall economic sector
distribution of the investible universe.
Companies greater in size than the "Large Company Cut-Off Size"
qualify for inclusion in an FT Index component automatically should they
remain eligible after application of all other investibility screens.
Stocks in the investible universe below the Large Company Cut-Off Size are
selected and added to the existing sample using the methods described
below.
Stocks are added in descending order of size within economic sectors
such that any divergences in economic sector weights between the Large
Company sample and the investible universe are minimized. The selection
process continues until the aggregate capitalization of the sample
represents as closely as possible 85% of the capitalization of the
investible universe. The
<PAGE> SAI-21
representation of each market is reviewed as a rolling process and at any
time that there is evidence that representation of the investible universe
has fallen without the normal band of 82%-88%.
Constituent Changes
Additions may be made to existing FT Index components for six
reasons: (1) the current representation of the total investible market is
below the required level or is not representative of its economic sector
make-up; (2) a non-constituent has gained in importance and replaces an
existing constituent under the rules of review; (3) market events indicate
that the current representation is below that required; (4) a new, eligible
security becomes available whose capitalization available for foreign
investment, taking into account all relevant factors including application
of the investibility screens and consideration of any existing strategic
foreign holdings, is 1% or more of the current capitalization of the
relevant FT Index component and is greater than the Large Company Cut-Off
Size, as last calculated; (5) an existing constituent "spins off" a part of
its business and issues new equity to the existing stockholders; or
(6) changes in investibility factors lead to a stock being eligible for
inclusion and that stock now qualifies on other grounds.
Deletions from the FT Index may be made for any of four reasons:
(1) the FT Index component comprises too high a percentage of its
representative universe or is such that it does not represent the market's
sectoral make-up; (2) a review shows that a constituent has declined in
importance and should be replaced by a non-constituent; (3) market events
result in evidence that the current representation as above that required;
or (4) evidence of a change in circumstances regarding investibility would
make an existing constituent ineligible if a full market review was to be
undertaken.
Certain adjustments may be made to the constituents of an FT Index
component immediately. For example, if an existing constituent is acquired
for eligible shares by a quoted non-constituent in the same market then the
acquiring company is added to the FT Index immediately if eligible on all
other counts. The existing constituent is deleted immediately.
Calculation Methodologies
The FT Index values are calculated through widely accepted
mathematical formulae, with the effect that the components are weighted
arithmetic averages of the price relatives of the constituents -- as
produced solely by changes in the marketplace -- adjusted for intervening
capital changes. The FT Index component values are base-weighted
aggregates of the initial market capitalization, the price of each issue
being weighted by the number of shares outstanding. The FT Index
components are modified to maintain continuity when subsequent capital
changes occur. Values are derived to illustrate the longer-term changes
associated with the value of the component over time, although still
reflecting day-to-day movements. The arithmetic average is the sum of the
values divided by the total shares in a component. The arithmetic average
is suitable so long as the series of data is not widely dispersed.
Dividends. The FT Index uses the most up-to-date indicated
annualized rates, adjusted for any interim changes and updated also for any
firm and precise forecasts.
Policy Changes. Policy changes made by the WIPC are disseminated to
all end-users through the Financial Times and in advance of any
implementation.
<PAGE> SAI-22
Special Issues. Where the WIPC has given special consideration to
issues of particular importance to end-users of the FT Index, and where the
decision is not to implement a change, then users will be notified through
the Financial Times that such issues have been reviewed.
Performance
Although the Fund has no operating history, the availability of
historical data on the performance of each of the FT Index components since
1985 permits the calculation of the hypothetical performance of each Series
of the Fund as if each Series had been operating since that time. All
performance information contained in this SAI is based on historical
information and is not intended to indicate future returns. Each Series'
net asset value, yield and total return will fluctuate in response to
market conditions and other factors, and the value of CB Shares(SM) of any
Series when redeemed in Creation Unit aggregations may be more or less than
their original cost. Furthermore, since the hypothetical performance
information for Fund Series provided in this SAI is based on changes in
each Series' net asset value over time, and the CB Shares(SM) may trade on the
NYSE at prices at, below or above their net asset value, historical
performance information for a Series may or may not be indicative of the
market performance that such CB Shares(SM) would have demonstrated over the
relevant periods or will demonstrate in the future. See "The
Fund--Investment Considerations and Risks" in the Prospectus. Performance
data for the FT Index and the Series of the Fund are based on information
provided by Ibbotson Associates of Chicago, Illinois, except as otherwise
indicated.
Average Annual Total Returns. Average annual total return, a
common measure of fund performance, is reported below for each of the
initial nine Series of the Fund and its corresponding FT Index component
for the one-, three-, five-, seven- and ten-year periods ending
December 29, 1995. Average annual total return is calculated by
determining the growth or decline in the value of a hypothetical investment
(e.g., in a Series of the Fund or an index of stocks) over a stated period,
after giving effect to the reinvestment of dividends and distributions
during the period, and then calculating the annual compounded percentage
rate that would have produced the same result if the rate of growth or
decline in value had been constant over the period. For example, a
cumulative total return of 100% over 10 years would produce an average
annual return of 7.18%, which is the steady annual rate of return that
would equal 100% growth on a compounded basis in ten years. All average
annual total returns reported herein are US dollar returns. While the
annual average total returns reported below both for the FT Index
components and for each Series of the Fund assume the reinvestment of
dividends and other distributions on the underlying securities, the FT
Index returns do not reflect deductions for administrative and management
costs and expenses. The average annual returns indicated for a Series of
the Fund do reflect deductions for estimated costs and expenses of the
Series and deductions for estimated cash transaction fees paid by an
investor on the initial purchase of Creation Unit aggregations of shares of
such Series and on redemption of such shares at the end of the indicated
period, but do not reflect deductions for brokerage expenses incurred by an
investor to purchase or sell Fund Basket securities in connection with
purchases and redemptions.
While average annual total returns are a convenient means of
comparing alternative investments, investors should realize that a fund's
or an index's performance is not constant over time, but changes from year
to year, and that average annual returns represent averaged figures as
opposed to the actual year-to-year performance of the investment. In
addition, all average annual total return figures presented in this SAI do
not make any allowance for federal, state or local income taxes, which
stockholders of the Fund must pay on a current basis, or for foreign taxes
or
<PAGE> SAI-23
withholding that may be applicable to income on equity securities
comprising any index or any Series' portfolio.
Average annual returns of the respective FT Index country
components for one-, three- and five-year periods were provided to the
Adviser by Goldman, Sachs & Co.
Correlations with Other Indices. The description set forth
below of each Series' corresponding FT Index component also contains
coefficients of correlation between the performance of the component and
the performance of a leading major market index in the relevant country and
of the S&P 500 over the five-year period ended December 29, 1995. Each
correlation is an indication of the extent to which, during such five-year
period, the record of the FT Index component, based only on changes in the
market prices of the underlying stocks, followed the record of the compared
index, whether in rising or falling markets. A correlation of 1.00 between
two indexes would indicate that movements in one index tracked movements in
the other exactly over the relevant period. A correlation of 0, on the
other hand, would indicate that movements in the two indices were entirely
independent over the relevant period.
The correlation of each FT Index component with the leading
market index in the relevant country is provided for the information of
investors who are interested in the extent to which the performance of the
FT Index component has tended historically to move in tandem with, or
independently of, the overall performance of a widely recognized equity
index in the same market. Similarly, the correlation with the S&P 500 is
provided to give investors an indication of whether the performance of the
particular FT Index component has tended historically to move in tandem
with, or independently of, the performance of a broad average of U.S.
equities. The correlations provided are historical and are not intended to
predict the future relationship between the performance of the FT Index
component and the leading market index or the S&P 500. Furthermore,
correlations with the performance of any FT Index component are not
intended to be equivalent to correlations with the performance of the
corresponding Series because the management, administrative and other costs
and expenses associated with a hypothetical investment in a Series would
tend to make its correlation with comparative indexes weaker than that of
the FT Index component.
The Australia Component
On December 29, 1995, the Australia component of the FT Index
consisted of 81 stocks with an aggregate market capitalization of
approximately A$227.2 billion, or US $168.9 billion. In percentage terms,
the Australia component represented approximately 83.9% of the aggregate
investible Australian market capitalization. The ten largest constituents
of the Australia component and the respective approximate percentages of
the Australia component represented by such constituents were, in order:
Broken Hill Proprietaries (16.3%), National Australia Bank (7.6%), CRA
(5.6%), Westpac (4.9%), Western Mining (4.2%), ANZ Bank (4.0%), Amcor
(2.6%), News Corp (2.5%), Coca-Cola Amatil (2.3%) and Commonwealth Bank of
Australia (2.3%).
Over the six-year period ended December 29, 1995, the performance of
the Australia component of the FT Index had a correlation of 0.994 with the
All Ordinaries Index, a broad-based capitalization weighted index of all
common stocks listed on the ASX, and 0.717 with the S&P 500.
As of December 29, 1995, the largest five holdings together comprised
approximately 39% of the market capitalization of the Australia component;
the largest ten holdings comprised
<PAGE> SAI-24
approximately 52% of the market capitalization of the Australia component;
and the largest 20 holdings comprised approximately 70% of the market
capitalization of the Australia component.
The ten most highly represented industry sectors in the Australia
component of the FT Index, and the approximate percentages of the Australia
component represented thereby, as of December 29, 1995, were:
1) Mining, Metals & Minerals 31.7%
2) Banks: Commercial & Other 20.7%
3) Real Estate 5.6%
4) Construction & Building Materials 5.2%
5) Diversified Industrials 4.0%
6) Oil 3.8%
7) Retail Trade 3.5%
8) Precious Metals and Minerals 3.3%
9) Diversified Consumer Goods 3.1%
10) Media 3.1%
The consumer oriented industry sectors represented by the ______________,
_____________ and _______________________ industries, have in the aggregate
accounted for an increasing share of the Australia component since 19__.
Appendix A hereto contains a complete list of the securities in the
Australia component as of December 29, 1995.
The average annual total returns in US Dollars of the Australia
component of the FT Index, and the corresponding pro forma average annual
total returns of the Australia Index Series (with reinvestment of Series
dividends, after estimated expenses applicable to the Australia Index
Series), are set forth below for the indicated periods prior to
December 29, 1995:
FT Index-Australia Australia Index Series
1 Year 15.2%
3 Years 19.3
5 Years 14.7
10 Years 15.0
The France Component
On December 29, 1995, the France component of the FT Index consisted
of 100 stocks with an aggregate market capitalization of approximately
FF1,815.9 billion, or US $371.3 billion. In percentage terms, the France
component represented approximately 88.2% of the aggregate investible
French market capitalization. The ten largest constituents of the France
component and the respective approximate percentages of the France
component represented by such constituents were, in order: Elf Aquitaine
(5.4%), LVMH-Moet Vuitton (4.9%), L'Oreal (4.4%), Total (4.3%), Carrefour
(4.2%), Alcatel Alsthom (3.5%), Eaux (3.2%), Danone (3.2%), Axa (3.0%) and
Air Liquide (3.0%).
Over the six-year period ended December 29, 1995, the performance of
the France component of the FT Index had a correlation of 0.968 with the
performance of the CAC 40, a narrow-based, capitalization-weighted index of
40 companies listed on the Paris Stock Exchange, and 0.762 with that of the
S&P 500.
<PAGE> SAI-25
As of December 29, 1995, the largest five holdings together comprised
approximately 23% of the market capitalization of the France component; the
largest ten holdings comprised approximately 39% of the market
capitalization of the France component; and the largest 20 holdings
comprised approximately 60% of the market capitalization of the France
component.
The ten most highly represented industry sectors in the France
component of the FT Index, and the approximate percentages of the France
component represented thereby, as of December 29, 1995, were:
1) Health and Personal Care 9.9%
2) Oil 9.6%
3) Banks: Commercial and Other 8.9%
4) Retail Trade 8.8%
5) Construction & Building Materials 6.7%
6) Beverages & Tobacco 5.8%
7) Food & Grocery Products 5.6%
8) Insurance Multi/Property/Casualty 5.4%
9) Chemicals 4.8%
10) Utilities 4.7%
Appendix B hereto contains a complete list of the securities in the France
component as of December 29, 1995.
The average annual total returns in US Dollars of the France
component of the FT Index, and the corresponding pro forma average annual
total returns of the France Index Series (with reinvestment of Series
dividends, after estimated expenses applicable to the France Index Series),
are set forth below for the indicated periods prior to December 29, 1995:
FT Index-France France Index Series
1 Year 13.2%
3 Years 10.2
5 Years 9.9
10 Years 15.7
The Germany Component
On December 29, 1995, the Germany component of the FT Index consisted
of 59 stocks with an aggregate market capitalization of approximately DM
575.3 billion or US $401.9 billion. In percentage terms, the Germany
component represented approximately 89% of the aggregate investible German
market capitalization. The ten largest constituents of the Germany
component and the respective approximate percentages of the Germany
component represented by such constituents were, in order: Allianz AG HLDG.
(11.4%), Siemens (7.5%), Daimler Benz (6.5%), Deutsche Bank (5.9%), Veba
(5.2%), Bayer (4.6%), Munich Re (4.3%), Hoechst (4.0%), BASF (3.4%), and
RWE (3.0%).
Over the five-year period ended December 29, 1995, the performance of
the Germany component of the FT Index had a correlation of 0.952 with the
performance of the DAX, a total rate
<PAGE> SAI-26
of return index consisting of 30 selected German stocks traded on the
Frankfurt Stock Exchange, and 0.701 with that of the S&P 500.
As of December 29, 1995, together, the largest five holdings
comprised approximately 36% of the market capitalization of the Germany
component; the largest ten holdings comprised approximately 56% of the
market capitalization of the German component; and the largest 20 holdings
comprised approximately 77% of the market capitalization of the Germany
component.
The ten most highly represented industry sectors in the Germany
component of the FT Index and the approximate percentages of the Germany
component represented thereby as of December 29, 1995, were:
1) Insurance Multi/Property/Casualty 17.9%
2) Banks: Commercial & Other 15.1%
3) Chemicals 13.8%
4) Automobiles 11.6%
5) Electrical Equipment 8.1%
6) Utilities 6.5%
7) Machinery & Engineering Services 5.3%
8) Diversified Holding Companies 5.2%
9) Mining, Metals & Minerals 5.1%
10) Retail Trade 2.4%
Appendix C hereto contains a complete list of the component securities of
the Germany component as of December 29, 1995.
The average annual total returns in US Dollars of the Germany
component of the FT Index, and the corresponding pro forma average annual
total returns of the Germany Index Series (with reinvestment of Series
dividends, after estimated expenses applicable to the Germany Index
Series), are set forth below for the indicated periods prior to December
29, 1995:
FT Index-Germany Germany Index Series
1 Year 16.5%
3 Years 18.6
5 Years 10.2
10 Years 10.6
The Hong Kong Component
On December 29, 1995, the Hong Kong component of the FT Index
consisted of 55 stocks with an aggregate market capitalization of
approximately HK $1,645.7 billion, or US $212.8 billion. In percentage
terms, the Hong Kong component represented approximately 85.7% of the
aggregate investible market capitalization of Hong Kong. The ten largest
constituents of the Hong Kong component and the respective approximate
percentages of the Hong Kong component represented by such constituents
were, in order: Hutchison Whampoa (10.3%), Hong Kong Telecomm (9.4%), Sun
Hung Kai Properties (8.9%), Hang Seng Bank (8.1%), Cheung Kong (6.3%),
Henderson Land (4.5%), China Light & Power (4.3%), Swire Pacific (3.5%),
Wharf Holdings (3.4%), and New World Dev. (3.4%)
<PAGE> SAI-27
Over the six-year period ended December 29, 1995, the performance of
the Hong Kong component of the FT Index had a correlation of 0.998 with the
performance of the Hang Seng, a capitalization-weighted index of the 33
stocks traded on the HKX, and 0.845 with that of the S&P 500.
As of December 29, 1995, the largest five holdings together comprised
approximately 43% of the market capitalization of the Hong Kong component;
the largest ten holdings comprised approximately 62% of the market
capitalization of the Hong Kong component; and the largest 20 holdings
comprised approximately 84% of the market capitalization of the Hong Kong
component.
The ten most highly represented industry sectors in the Hong Kong
component of the FT Index, and the approximate percentages of the Hong Kong
component represented thereby, as of December 29, 1995, were:
1) Real Estate 37.0%
2) Utilities 18.7%
3) Diversified Consumer Goods 12.7%
4) Diversified Holding Companies 10.3%
5) Banks: Commercial & Other 9.6%
6) Transportation and Storage 3.2%
7) Retail Trade 2.9%
8) Entertainment/Leisure/Toys 2.2%
9) Media 1.1%
10) Financial Institutions & Services 1.0%
Appendix D hereto contains a complete list of the securities in the Hong
Kong component as of December 29, 1995.
The average annual total returns in US Dollars of the Hong Kong
component of the FT Index, and the corresponding pro forma average annual
total returns of the Hong Kong Index Series (with reinvestment of Series
dividends, after estimated expenses applicable to the Hong Kong Index
Series), are set forth below for the indicated periods prior to
December 29, 1995:
FT Index-Hong Kong Hong Kong Index Series
1 Year 23.6%
3 Years 24.7
5 Years 30.8
10 Years 23.6
The Italy Component
On December 29, 1995, the Italy component of the FT Index consisted
of 59 stocks with an aggregate market capitalization of approximately
221.7 trillion, or US $139.7 billion. In percentage terms, the Italy
component represented approximately 89.7% of the aggregate investible
market capitalization of Italy. The ten largest constituents of the Italy
component and the respective approximate percentages of the Italy component
represented by such constituents were, in order: Generali (13.9%), Telecom
Italia Mobile (8.4%), Stet (7.8%), Fiat (7.6%), Telecom Italia (7.4%), INA
(3.8%), Alleanza (3.8%), San Paolo (3.1%), ENI (3.0%) and IMI (2.7%).
<PAGE> SAI-28
Over the five-year period ended December 29, 1995, the performance of
the Italy component of the FT Index had a correlation of 0.990 with the
performance of the MIB-30, a capitalization-weighted index of 30 Italian
stocks traded on the Milan Stock Exchange, and -0.357 with that of the
S&P 500.
As of December 29, 1995, the largest five holdings together comprised
approximately 45% of the market capitalization of the Italy component; the
largest ten holdings comprised approximately 61% of the market
capitalization of the Italy component; and the largest 20 holdings
comprised approximately 81% of the market capitalization of the Italy
component.
The ten most highly represented industry sectors in the Italy
component of the FT Index, and the approximate percentages of the Italy
component represented thereby, as of December 29, 1995, were:
1) Utilities 29.6%
2) Insurance Multi/Property/Casualty 24.5%
3) Automobiles 9.7%
4) Banks: Commercial & Other 8.6%
5) Financial Institutions & Services 6.5%
6) Insurance: Life & Agents/Brokers 3.8%
7) Diversified Holding Companies 3.6%
8) Oil 3.0%
9) Computers/Office Equipment 2.9%
10) Food and Grocery Products 1.9%
Appendix E hereto contains a complete list of the securities constituting
the Italy component as of December 29, 1995.
The average annual total returns in US Dollars of the Italy component
of the FT Index, and the corresponding pro forma average annual total
returns of the Italy Index Series (with reinvestment of Series dividends,
after estimated expenses applicable to the Italy Index Series), are set
forth below for the indicated periods prior to December 29, 1995:
FT Index-Italy Italy Index Series
1 Year -0.4%
3 Years 12.5
5 Years 1.4
10 Years 7.3
The Japan Component
On December 29, 1995, the Japan component of the FT Index consisted
of 483 stocks with an aggregate market capitalization of approximately
Y293.6 trillion, or US $2.8 trillion. In percentage terms, the Japan
component represented approximately 83.1% of the aggregate investible
Japanese market capitalization. The ten largest constituents of the Japan
component and the respective approximate percentages of the Japan component
represented by such constituents were, in order: Toyota Motor (2.8%), Ind
Bank of Japan (2.5%), Mitsubishi Bank (2.4%), Sumitomo Bank (2.3%),
<PAGE> SAI-29
Fuji Bank (2.3%), Dai-ichi Kangyo Bank (2.2%), Sanwa Bank (2.1%), Nomura
Securities (1.5%), Sakura Bank (1.5%) and Tokyo Electric Power (1.3%).
Over the five-year period ended December 29, 1995, the performance of
the Japan component of the FT Index had a correlation of 0.979 with the
performance of the Nikkei-225, a broad-based price-weighted index of 225
major equity securities traded on the first section of the Tokyo Stock
Exchange, and 0.231 with that of the S&P 500.
As of December 29, 1995, the largest five holdings together comprised
approximately 12% of the market capitalization of the Japan component; the
largest ten holdings comprised approximately 21% of the market
capitalization of the Japan component; and the largest 20 holdings
comprised approximately 31% of the market capitalization of the Japan
component.
The ten most highly represented industry sectors in the Japan
component of the FT Index, and the approximate percentages of the Japan
component represented thereby, as of December 29, 1995, were:
1) Banks: Commercial and Other 22.5%
2) Financial Institutions 6.2%
3) Utilities 6.1%
4) Electronics & Instrumentation 6.1%
5) Automobiles 5.2%
6) Transportation and Storage 4.9%
7) Construction and Building 4.3%
Materials
8) Retail Trade 4.3%
9) Household Durables & Appliances 3.7%
10) Chemicals 3.6%
Appendix F hereto contains a complete list of the securities constituting
the Japan component as of December 29, 1995.
The average annual total returns in US Dollars of the Japan component
of the FT Index, and the corresponding pro forma average annual total
returns of the Japan Index Series (with reinvestment of Series dividends,
after estimated expenses applicable to the Japan Index Series), are set
forth below for the indicated periods prior to December 29, 1995:
FT Index-Japan Japan Index Series
1 Year -0.4%
3 Years 14.8
5 Years 5.3
10 Years 12.5
The South Africa Component
On December 29, 1995, the South Africa component of the FT Index
consisted of 45 stocks with an aggregate market capitalization of
approximately CR510.8 billion, or US $140.1 billion. In percentage terms,
the South Africa component represented approximately 82.2% of the aggregate
<PAGE> SAI-30
investible South Africa market capitalization. The ten largest
constituents of the South Africa component and the respective approximate
percentages of the South Africa component represented by such constituents
were, in order: Anglo American Corp. (10.1%), De Beers/Centenary (8.2%),
South African Breweries (7.7%), Liberty Life Association (5.4%), Standard
Bank Inv. (4.1%), Rembrandt Group (3.6%), Gencor (3.5%), SASOL (3.5%),
First National Bank (2.9%) and Liberty Holdings (2.9%).
Over the five-year period ended December 29, 1995, the performance of
the South Africa component of the FT Index had a correlation of 0.998 with
the performance of the All Share Index, a capitalization-weighted index of
South African stocks, and 0.747 with that of the S&P 500.
As of December 29, 1995, the largest five holdings together comprised
approximately 35% of the market capitalization of the South Africa
component; the largest ten holdings comprised approximately 52% of the
market capitalization of the South Africa component; and the largest 20
holdings comprised approximately 72% of the market capitalization of the
South Africa component.
The ten most highly represented industry sectors in the South Africa
component of the FT Index, and the approximate percentages of the South
Africa component represented thereby, as of December 29, 1995, were:
1) Precious Metals & Minerals 34.9%
2) Diversified Holding Companies 11.6%
3) Beverages & Tobacco 11.3%
4) Insurance: Life and Agents/Brokers 9.8%
5) Banks: Commercial & Other 9.6%
6) Food & Grocery Products 4.0%
7) Forestry and Paper Products 3.7%
8) Mining, Metals & Minerals 3.7%
9) Oil 3.5%
10) Construction & Bldg. Materials 1.7%
Appendix G hereto contains a complete list of the securities in the South
Africa component as of December 29, 1995.
The average annual total returns in US Dollars of the South Africa
component of the FT Index, and the corresponding pro forma average annual
total returns of the South Africa Index Series (with reinvestment of Series
dividends, after estimated expenses applicable to the South Africa Index
Series), are set forth below for the indicated periods prior to
December 29, 1995:
FT Index-South Africa South Africa Index Series
1 Year 18.2%
3 Years 41.3
5 Years 19.5
10 Years 16.9
<PAGE> SAI-31
The UK Component
On December 29, 1995, the UK component of the FT Index consisted of
205 stocks with an aggregate market capitalization of approximately L702.9
billion, or US $1,091.3 billion. In percentage terms, the UK component
represented approximately 82.6% of the aggregate investible market
capitalization of the United Kingdom. The ten largest constituents of the
UK component and the respective approximate percentages of the UK component
represented by such constituents were, in order: Galxo Wellcome (4.6%),
British Petroleum (4.3%), Shell Transport & Trading (4.0%), British Telecom
(3.2%), HSBC Holdings (2.5%), BAT Industries (2.5%), Lloyds TSB Group
(2.4%), BTR (1.8%), Marks & Spencer (1.8%) and Barclays (1.7%).
Over the five-year period ended December 29, 1995, the performance of
the UK component of the FT Index had a correlation of 0.998 with the
performance of the FT-SE 100 Index, an index of 100 U.K. companies ranked
by market capitalization, and 0.892 with that of the S&P 500.
As of December 29, 1995, the largest five holdings together comprised
approximately 19% of the market capitalization of the UK component; the
largest ten holdings comprised approximately 29% of the market
capitalization of the UK component; and the largest 20 holdings comprised
approximately 44% of the market capitalization of the UK component.
The ten most highly represented industry sectors in the UK component
of the FT Index, and the approximate percentages of the UK component
represented thereby, as of December 29, 1995, were:
1) Banks: Commercial & Other 12.5%
2) Utilities 11.8%
3) Health & Personal Care 9.7%
4) Oil 9.1%
5) Retail Trade 8.8%
6) Beverages & Tobacco 8.3%
7) Media 4.4%
8) Food & Grocery Products 3.9%
9) Construction and Building Materials 3.1%
10) Diversified Industrials 2.8%
Appendix H hereto contains a complete list of the component securities of
the UK component as of December 29, 1995.
The average annual total returns in US Dollars of the UK component of
the FT Index, and the corresponding pro forma average annual total returns
of the UK Index Series (with reinvestment of Series dividends, after
estimated expenses applicable to the UK Index Series), are set forth below
for the indicated periods prior to December 29, 1995:
FT Index-UK UK Index Series
1 Year 23.3%
3 Years 14.7
5 Years 11.6
10 Years 16.1
<PAGE> SAI-32
The US Component
On December 29, 1995, the US component of the FT Index consisted of
639 stocks with an aggregate market capitalization of approximately US $4.9
trillion. In percentage terms, the US component represented approximately
73.8% of the aggregate investible market capitalization of the U.S.
markets. The ten largest constituents of the US component and the
respective approximate percentages of the US component represented by such
constituents were, in order: General Electric (2.5%), AT&T (2.1%), Exxon
Corp. (2.0%), Coca-Cola (1.9%), Merck & Co (1.6%), Philip Morris (1.5%),
Procter & Gamble (1.2%), Johnson & Johnson (1.1%), IBM (1.1%) and Microsoft
Corp. (1.1%).
Over the five-year period ended December 29, 1995, the performance of
the US component of the FT Index had a correlation of 1.000 with the
performance of the S&P 500.
As of December 29, 1995, the largest five holdings together comprised
approximately 10% of the market capitalization of the US component; the
largest ten holdings comprised approximately 16% of the market
capitalization of the US component; and the largest 20 holdings comprised
approximately 25% of the market capitalization of the US component.
The ten most highly represented industry sectors in the US component
of the FT Index, and the approximate percentages of the US component
represented thereby, as of December 29, 1995, were:
1) Utilities 13.1%
2) Health & Personal Care 11.1%
3) Banks: Commercial & Other 7.8%
4) Oil 6.4%
5) Beverages & Tobacco 5.3%
6) Computer and Office Equipment 4.7%
7) Retail Trade 4.5%
8) Food and Grocery 4.1%
9) Electrical Equipment 3.5%
10) Business Services &
Computer Software 3.5%
Appendix I hereto contains a complete list of the securities in the US
component as of December 29, 1995.
The average annual total returns of the US component of the FT Index,
and the corresponding pro forma average annual total returns of the US
Index Series (with reinvestment of Series dividends, after estimated
expenses applicable to the US Index Series), are set forth below for the
indicated periods prior to December 29, 1995:
FT Index-US US Index Series
1 Year 37.3%
3 Years 15.3
5 Years 16.8
10 Years 14.6
<PAGE> SAI-33
Other Components of the FT Index
In addition to the country components of the FT Index represented by
the initial nine Series offered hereby, the FT Index includes components
representing fifteen other countries, twelve regions grouped by geographic
areas, thirty-six groups classified by industry sectors and seven broad
economic sectors. It is anticipated that Series of the Fund covering
additional national markets will be organized in the future, although there
can be no assurance that any such additional Series will be created.
EXCHANGE LISTING AND TRADING
Application is being made to list the CB Shares(SM) of each Series for
trading on the NYSE. The NYSE has approved modifications to its Rules to
permit the listing of CB Shares(SM). The non-redeemable CB Shares(SM) are
expected to trade on the NYSE at prices that may differ to some degree from
their net asset value. See "Investment Considerations and Risks" and
"Determination of Net Asset Value". There can be no assurance that the
requirements of the NYSE necessary to maintain the listing of CB Shares(SM) of
any Series will continue to be met. The NYSE may remove the CB Shares(SM) of
a Series from listing if (1) following the initial twelve-month period
beginning upon the commencement of trading of a Series of CB Shares(SM), there
are fewer than 50 record and/or beneficial holders of the CB Shares(SM) for 30
or more consecutive trading days, (2) the value of the underlying index or
portfolio of securities on which such Series is based is no longer
calculated or available or (3) such other event shall occur or condition
exist that, in the opinion of the NYSE, makes further dealings on the NYSE
inadvisable. In addition, the NYSE will remove the shares from listing and
trading upon termination of the Fund.
The size of each Series' Fund Basket and the related size of its
Creation Unit was designed to provide an initial net asset value per CB(TM)
Share, depending on the Series, of between approximately $19 and $50.
Because of the range of initial net asset values, it is expected that
initial trading of CB Shares(SM) of the various Series on the NYSE will
commence at market prices also within this range. Price movements in CB
Shares(SM) on the NYSE will be quoted in 1/8ths. The Adviser anticipates that
the movements in the price of CB Shares(SM) will correlate closely with the
value of the respective FT Index component. As in the case of other stocks
traded on the NYSE, brokers' commissions on transactions will be based on
negotiated commission rates at customary levels for retail customers and
rates which are anticipated to range between $.015 to $.12 per share for
institutions and high net worth individuals.
Within the next year management of the Fund plans to apply for
listing CB Shares(SM) on a number of foreign stock exchanges such as the
Deutsche Borse and the Australian Stock Exchange with the eventual
intention of creating a 24-hour global market for the CB Shares(SM). There
can be no assurance that any such listings will be applied for or obtained.
<PAGE> SAI-34
REASONS FOR INVESTORS TO PURCHASE CB SHARES(SM)
User Rationale
Investors with differing investment objectives and trading styles may
consider using CB Shares(SM) as part of their investment program. For
investments of less than US $25 million, the Adviser expects that each
Series will have a cost structure roughly equivalent to comparable
institutional index-based investments. Individual investors could use
CountryBaskets(SM) to gain exposure to foreign markets represented by the
various FT Index components, both for investment and trading. In addition,
CB Shares(SM) may be used in combination with foreign securities for hedging
or to pursue various trading strategies. Professional investors could use
CB Shares(SM) for arbitrage, hedging and trading, including as an alternative
to futures based on different foreign market indices, when the investor
wants exposure to foreign markets. It is expected that arbitrage involving
the purchase and redemption of multiple Creation Units would eventually
enable dealers and other investors to benefit from certain economies of
scale in transactional costs. Institutional investors could use CB Shares(SM)
as a management tool for tactical asset allocation without the use of
derivatives, to gain international exposure and, depending on future
experiences with costs and liquidity, for long term holdings in core
positions for their investment portfolio. In addition, CB Shares(SM) may be
used by asset managers to gain market exposure in markets for their clients
where they do not necessarily possess the analytic resources needed to
select individual securities; to invest cash balances on a short- to
medium-term basis; to reduce or neutralize portfolio exposure in a specific
national market by short selling CB Shares(SM); in tandem with use of other
securities and derivatives, to tailor portfolio exposure to foreign markets
to meet specific investment objectives; to reallocate relative market
exposures of a portfolio without disposing of existing portfolio
components; and to take advantage of potential liquidity and pricing
disparities and potential stock lending returns.
Possible User Benefits
CountryBaskets(SM) are designed to provide investors with a highly
liquid mechanism, using securities rather than derivatives, for investing
in the national markets represented by each series. The Adviser intends to
make reasonable efforts to foster a liquid and transparent market, which is
generally characteristic of securities trading on the NYSE. There can be
no assurance, however, that active trading markets for the CB Shares(SM) will
develop. In addition, since CB Shares(SM) will be quoted on the NYSE, CB
Shares(SM) are expected to serve as a price discovery mechanism during U.S.
trading hours for investment in the various foreign markets represented by
the Series. Subject to any suspension of trading by the NYSE, CB Shares(SM)
may be traded throughout the regular trading session of the NYSE, including
at times when the relevant foreign markets are closed.
Because the securities portfolio of each Series will substantially
replicate the securities comprising the corresponding FT Index component,
the Adviser expects that index tracking error relative to index-based
products relying on optimization or similar management strategies should be
substantially reduced. Moreover, CB Shares(SM) do not entail the counterparty
risk present in over-the-counter derivatives contracts, like index swaps,
to which CB Shares(SM) are an alternative.
Individual, non-redeemable CB Shares(SM) are book-entry securities
subject to normal U.S. settlement procedures, including a three-day
settlement cycle. Unlike many direct investments in foreign equities, CB
Shares(SM) traded in the secondary market will not entail complicated foreign
custody and settlement arrangements, stamp taxes and other levies
associated with trading in non-U.S. equities. In addition, CB Shares(SM) may
be loaned on the same basis as other U.S. equity securities, creating
potential for increasing the total return to an investor.
<PAGE> SAI-35
Investment Rationale
Since the basket of securities held by each Series is represented by
an individual stock, the CB Shares(SM) of such Series, it is anticipated that
investors will trade CB Shares(SM) based on their investment outlook for the
particular national market represented by the Series. Accordingly, it is
expected that much of the trading in CB Shares(SM) will be driven by
macroeconomic fundamentals applied to an assessment of the prospects for
the particular national market. Further, the CB Shares(SM) of each Series
will have statistical characteristics normally associated with shares of
stock of any company (price/earnings ratios, price/book value ratios,
price/cash flow ratios, earnings per share, etc.). Because of these
characteristics, CB Shares(SM) can be included in an investment portfolio in
much the same way as other stocks and ADRs, such as those of General
Electric, AT&T, Intel, Royal Dutch Shell or Norsk Hydro. Because no Series
may borrow money for the purpose of leveraging its portfolio, an investment
in CB Shares(SM) does not carry the risks associated with investment in a
leveraged portfolio.
MANAGEMENT OF THE FUND
Directors and Officers of the Fund
The Fund's Board consists of six Directors. The Board of
Directors is divided into three classes. At each annual meeting of
stockholders, the term of one class expires and the successor or successors
elected to such class will serve until the third succeeding annual meeting
of stockholders, provided that, in the event the Fund is not required to hold
an annual meeting in one or more years, the term of any class will not exceed
five years. These provisions could delay the replacement of a majority of the
Board of Directors by the stockholders of the Fund for up to two years. The
replacement of a majority of the Board could be delayed for substantially
longer periods when the Fund is not required to hold annual stockholder
meetings. See "Capital Stock and Stockholder Reports". The Board has the
responsibility for the overall management of the Fund, including general
supervision and review of its investment activities. The Board, in turn,
elects the officers of the Fund. The addresses, principal occupations, and
present positions, including any affiliations with the Adviser, State Street,
the Fund's administrator (the "Administrator") or ALPS Mutual Funds Services,
Inc., the principal underwriter of each Series ("ALPS" or the
"Distributor"), of the Directors and the officers of the Fund and their
principal occupations for the past five years are listed below. As of
__________, 1996, the Directors and officers of the Fund owned of record as
a group none of the outstanding shares of the Fund. Directors who are
deemed to be interested persons of the Fund, as defined in the 1940 Act,
are indicated by an asterisk (*).
<PAGE> SAI-36
<TABLE>
<CAPTION>
Position with the Principal Occupations During
Name and Address Age Fund Past Five Years
<S> <S> <S> <S>
Warner Heineman 73 Director Senior Advisor (consultant), 1st Business Bank, Los Angeles
1800 Avenue of the Stars (since 1992); Senior Vice President, Bank of Los Angeles
Los Angeles, California 90067 (1989 to 1992); Senior Vice-President, City National Bank,
Beverly Hills (CA.) (1981 to 1988); Vice Chairman and
Director, Union Bank, Los Angeles (1943 to 1981); Director,
FHP International Corporation (a health maintenance
organization) (since 1990); Director, FHP Life Insurance
Company (1992 to 1994); Director, Great States Insurance
Company (1993 to 1994); Director, FHP Financial Corporation
(holding company for FHP Life Insurance Company and Great
States Insurance Company) (since 1994); Director, Alexander
Haagen Properties, Inc. (real estate investment trust)
(since 1994); Director, Capital Market Fund, Inc. (mutual
fund) (1990 to 1995); Trustee, Southwestern University
School of Law (since 1983); Member of the Board of Advisors,
UCLA Medical Center (since 1985); Member of Board of
Visitors, UCLA School of Medicine (since 1988); Director,
Los Angeles Music Center Opera (since 1967); Director, FHP
Foundation (philanthropic organization) (since 1995); and
Member of the Advisory Board, Recording for the Blind, Inc.
Joseph A. La Corte* [ ] Director and Director (since 1994) and Vice President (1992 to 1994) of
31 West 52nd Street President Deutsche Morgan Grenfell/C.J. Lawrence Inc.; Vice President,
New York, New York 10019 Nomura Securities International (1990 to 1992).
Carter McClelland* [ ] Director and President and Chief Executive Officer, Deutsche Morgan
31 West 52nd Street Chairman Grenfell/C.J. Lawrence Inc. (since 1995); Division Director
New York, New York 10019 and other positions, Morgan Stanley (1974 to 1995).
<PAGE> SAI-37
Position with the Principal Occupations During
Name and Address Age Fund Past Five Years
Lawrence C. McQuade 68 Director Chairman, Qualitas International (international consulting)
125 East 72nd Street (since 1995); Director, Bunzl PLC (paper distributor) (since
New York, New York 10021 1991); Director, Quixote Corporation (highway safety,
manufacturer of CDs and CD ROMS) (since 1992); Director,
Applied Bioscience Inc. (conducts clinical trials for
pharmaceutical companies (since 1995); Chairman (since 1995)
and Director (since 1994), Czech & Slovak American
Enterprise Fund (investment fund); Director, Oxford
Analytica Inc. (provides political, economic and business
information) (since 1988); Vice-Chairman, Prudential Mutual
Fund Management (1988 to 1995); served as President and
Director (until 1995) of 39 investment companies advised by
Prudential Mutual Fund Management.
Karl M. von der Heyden 59 Director Senior Advisor, The Clipper Group (since 1994); Chairman,
12 East 49th Street Financial Accounting Standards Advisory Council (since
New York, New York 10017 1995); President and Chief Executive Officer,
Metallgesellschaft Corp. (1993 to 1994); Chief Financial
Officer (1989 to 1993) and Co-Chairman and Chief Executive
Officer (1993 to 1993), RJR Nabisco Holdings Corp.;
Director, Federated Department Stores (retail department
stores) (since 1992); Director, Trizec Corporation Ltd.
(real estate developer) (since 1994); Member of the Board of
Trustees, Duke University (since 1995); and Vice Chairman of
the Board of Trustees, YMCA of Greater New York.
<PAGE> SAI-38
Position with the Principal Occupations During
Name and Address Age Fund Past Five Years
Robert H. Wadsworth 55 Director President, Robert H. Wadsworth & Associates, Inc. (financial
4455 E. Camelback Road services consulting); President, Investment Company
Suite 261 E Administration Corporation (since 1992); President, First
Phoenix, Airzona 85018 Fund Distributors, Inc.; Vice President, Professionally
Managed Portfolios (since 1991); Member of the Board of
Supervisory Directors of ML High Yield-Treasury Securities
Fund N.V. (since 1991); Member of the Boards of Directors of
The Central European Equity Fund, Inc. (since 1990), The
Germany Fund, Inc. (since 1986) and The New Germany Fund,
Inc. (since 1990).
Thomas A. Curtis [ ] Vice President Vice President and Senior Counsel, Deutsche Bank AG (New
31 West 52nd Street and Secretary York Branch) (since 1995); Associate, Cleary, Gottlieb,
New York, New York 10019 Steen & Hamilton (law firm) (1986 to 1993 and 1994 to 1995);
Executive Vice President and General Counsel, Del Monte
Fresh Company (1993).
Joseph Cheung [ ] Vice President Assistant Vice President (since 1994) and Associate (1991-
31 West 52nd Street and Treasurer 1994), Deutsche Morgan Grenfell/C.J. Lawrence Inc.;
New York, New York 10019 Assistant Secretary and Assistant Treasurer (since 199_),
The Germany Fund, Inc., The Central European Equity Fund,
Inc. and The New Germany Fund, Inc.
</TABLE>
<PAGE> SAI-39
The following table sets forth the remuneration of Directors
and officers of the Fund:
<TABLE>
<CAPTION>
Name of Person, Aggregate Compensation Total Compensation from the Fund and
Position from the Fund Fund Complex Paid to Directors
<S> <S> <S>
Warner Heineman
Director * *
Joseph A. La Corte
Director and President NONE NONE
Carter McClelland
Director and Chairman NONE NONE
Lawrence C. McQuade
Director * *
Karl M. von der Heyden
Director * *
Robert H. Wadsworth *
Director * **
Thomas A. Curtis
Vice President and Secretary NONE NONE
Joseph Cheung
Vice President and Treasurer NONE NONE
_____________________
<FN>
* The Fund will pay each Director $7,000 per annum; $2,000 per
directors' meeting attended; and $500 per committee meeting attended.
** Mr. Wadsworth received $_______ in aggregate compensation in 1995 for
his services as a director of The Germany Fund, Inc., The Central
European Equity Fund, Inc. and The New Germany Fund, Inc., three
closed-end funds for which DMG serves as manager and Deutsche Asset
Management GmbH, an affiliate of DMG, serves as investment adviser.
</TABLE>
No Director or officer of the Fund is entitled to any pension or
retirement benefits from the Fund.
Certain Affiliated Relationships
Messrs. McClelland and La Corte, Directors of the Fund, are
President and Chief Executive Officer, and Director, respectively, of DMG.
Messrs. Curtis and Cheung, officers of the Fund, are Vice President and
Senior Counsel of Deutsche Bank AG (New York Branch), and Assistant Vice
President of DMG, respectively.
<PAGE> SAI-40
INVESTMENT ADVISORY, MANAGEMENT
AND OTHER SERVICES
The following information supplements and should be read in
conjunction with the sections in the Prospectus entitled "Investment
Management" and "Administrator".
The Investment Adviser
DMG, a corporation organized under the laws of the State of Delaware,
is a wholly owned direct subsidiary of DB U.S. Financial Markets Holding
Corporation and a wholly owned indirect subsidiary of Deutsche Bank AG, a
major German banking institution. DMG is engaged in the securities
underwriting, investment advisory, and securities brokerage business. It
is a member of the NYSE and other principal U.S. stock exchanges. DMG has
significant global investment management experience. As of December 29,
1995, Deutsche Bank AG and its affiliates together managed over US $130
billion in institutional and mutual fund assets.
DMG serves as investment adviser to each Series pursuant to an
Investment Management Agreement (the "Management Agreement") between the
Fund and DMG. Under the Management Agreement, the Adviser, subject to the
supervision of the Fund's Board of Directors and in conformity with the
stated investment policies of each Series, will manage the investment of
each Series' assets. The Adviser has not previously acted as investment
adviser to an investment company that seeks to track the performance of an
index. The Adviser will be responsible for placing purchase and sale orders
and providing continuous supervision of the investment portfolio of each
Series. In addition, the Adviser will provide administrative services to
the Fund that will include negotiating and overseeing the Fund's
contractual arrangements with third-party service providers. Each Series
will pay the Adviser an investment advisory and management fee, computed
daily and paid monthly, equal to an annual rate of (i) .20% (in the case of
the US Index Series), .30% (in the case of the Australia Index Series, the
France Index Series, the Germany Index Series, the Italy Index Series, the
Japan Index Series and the UK Index Series) or .45% (in the case of the
Hong Kong Index Series and the South Africa Index Series) of the average
daily net assets of such Series, plus (ii) in the case of each Series, as
remuneration for the Adviser's services in connection with lending
portfolio securities of the Series, 40% of the Series' gross investment
income, excluding dividends on portfolio securities. In addition, DMG will
be reimbursed by each Series for its out-of-pocket costs incurred in
providing certain administrative services. See "Investment Policies and
Restrictions--Lending Portfolio Securities". The Management Agreement will
continue in effect until February 8, 1998, and thereafter will be subject
to annual approval by (1) the Fund's Board of Directors or (2) vote of a
majority of the outstanding voting securities (as defined in the 1940 Act)
of the Fund, provided that in either event the continuance also is approved
by a majority of the Fund's Board who are not interested persons (as
defined in the 1940 Act) of the Fund 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 Fund's
Board or by vote of the holders of a majority (as defined in the 1940 Act)
of the Fund's outstanding voting securities. The Management Agreement is
also terminable upon 60 days' notice by DMG and will terminate auto-
matically in the event of its assignment (as defined in the 1940 Act).
The Management Agreement provides that the Adviser will not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund in connection with the matters to which the Management Agreement
relates, except for a loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Adviser in the performance of its
obligations and duties under the Management Agreement.
The Adviser will reimburse, on a pro rata basis, each Series for
annual expenses of such Series which exceed the most stringent limits
prescribed by any state in which shares of the Series are offered for sale.
Currently, the only limitation which the Fund believes would be applicable
requires the Adviser to reimburse a Series to the extent
<PAGE> SAI-41
that aggregate operating expenses of the Series (excluding interest, taxes,
brokerage commissions, distribution expenses, if any, and extraordinary
expenses) exceed in any year 2.5% of the first $30 million of average net
assets of such Series, 2.0% of the next $70 million of average net assets
of the Series and 1.5% of average net assets of the Series in excess of
$100 million.
The Administrator, Custodian and Transfer Agent
State Street, a Massachusetts trust company, provides certain
administrative services to the Fund, including clerical, bookkeeping and
recordkeeping services not otherwise performed by the Adviser or the
Custodian, pursuant to an Administration Agreement (the "Administration
Agreement") between the Fund and State Street. Pursuant to the
Administration Agreement, State Street will provide administrative services
to the Fund which include, among other things, monitoring and administering
payment of Fund expenses, preparing the Fund's financial statements and
regulatory filings and preparing the Fund's tax returns. The Admin-
istration Agreement is terminable with respect to the Fund without penalty,
on 60 days' notice, by the Fund's Board. The Administration Agreement is
also terminable upon 60 days' notice by State Street.
The Administration Agreement provides that State Street will not be
liable for any error of judgment or mistake of law or for any loss suffered
by the Fund in connection with the matters to which the Administration
Agreement relates, except for a loss resulting from willful misfeasance,
bad faith or negligence on the part of State Street in the performance of
its obligations and duties under the Administration Agreement.
For its administrative services to the Fund, State Street is entitled
to a fee, computed daily and paid monthly, equal to an annual rate of .08%
of the average daily net assets of each Series up to $125 million, plus
.06% of the average daily net assets of such Series in excess of $125
million up to $250 million and .04% of the average daily net assets of such
Series in excess of $250 million, subject to a minimum annual fee of
$95,000 for each Series. In addition, State Street will be reimbursed by
the Fund for certain out-of-pocket costs incurred in providing
administrative services.
State Street will also act as Custodian and transfer agent (the
"Transfer Agent") for the Fund. See "Custodian and Transfer Agent" in the
Prospectus. State Street served as custodian for more than $2 trillion in
assets worldwide as of September 30, 1995, and manages securities
processing operations and treasury centers in the United States, Europe and
the Pacific Basin.
BROKERAGE TRANSACTIONS
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 Fund will not deal with affiliates in
principal transactions unless permitted by exemptive order or applicable
rule or regulation. Since the investment objective of each 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. Orders for agency
brokerage transactions may be placed with Deutsche Bank AG as well as DMG.
The Fund's policy requires that commissions paid to Deutsche Bank AG and
DMG comply with Section 17(e) of the 1940 Act and the rules thereunder.
<PAGE> SAI-42
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 Series, to reduce expenses
of the Series.
The Adviser will assume general supervision over placing orders on
behalf of the Fund for the purchase or sale of portfolio securities. If
purchases or sales of portfolio securities of the Fund 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 will
be 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
Fund 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 Fund. 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 Series is expected to be
under 50%. See "The Fund--Investment Policies--Portfolio Turnover" 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.
PURCHASE AND ISSUANCE OF FUND SHARES IN CREATION UNIT AGGREGATIONS
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Purchase and
Issuance of Fund Shares in Creation Unit Aggregations".
Generally
The Fund will offer and sell shares of each Series on a continuous
basis only in aggregations of a specified number of shares for such Series
as set forth below (each a "Creation Unit"), without an initial sales
charge, at the net asset value of the shares next determined after receipt
of an order in proper form (as described below under "Procedures for
Purchasing Creation Units"). The consideration for a purchase of each
Creation Unit aggregation of shares of a Series is an in-kind deposit of a
designated portfolio of equity securities substantially corresponding in
composition and weighting to the relevant component of the FT Index (a
"Fund Basket"), plus a specified amount of cash (the "Cash Component").
Together, a single Fund Basket and related Cash Component (the "Fund
Deposit") represent the minimum initial and subsequent investment amount
required for the purchase of shares of a Series, which may only be made in
Creation Unit size aggregations. The number of shares constituting a
Creation Unit of each Series, subject to any stock splits or
reclassifications by the Board of Directors, is 250,000 for the Japan Index
Series and 100,000 for each other Series. The aggregate net asset value of
a Creation Unit of shares is expected to be between US$1.9 million and
US$10 million. Orders for Creation Units must be placed with ALPS, the
Fund's Distributor. The address and telephone number of the Distributor
are 370 Seventeenth Street, Suite 2700, Denver, Colorado, 1-800- - ;
facsimiles should be sent to - - . See "Procedures for Purchasing
Creation Units" below.
The Fund will issue and sell shares of a Series only on a Business
Day. A "Business Day" with respect to a Series other than the US Index
Series is any day on which (i) the NYSE, (ii) the stock exchange(s) and
Fund subcustodian(s) relevant to such Series and (iii) financial
institutions in Massachusetts are open for business, and in the case of the
US Index Series, any day on which the NYSE is open and financial
institutions in Massachusetts are open for business. As of the date of
this Statement of Additional Information, the NYSE observes the following
holidays: New Year's Day, President's Day (Washington's Birthday), Good
Friday, Memorial Day (observed),
<PAGE> SAI-43
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The stock
exchange and/or subcustodian holidays relevant to each Series are set forth
in Appendix A to the Prospectus. Massachusetts financial institutions are
open on all days when the NYSE is open (see "Business Day" below) except
Columbus Day, Veterans Day and Martin Luther King Day (observed). See also
"Special Considerations and Risks--Continuous Offering".
The Fund Basket
Prior to the opening of business on the NYSE on each day that the
NYSE is open (currently by 8:00 p.m., New York time, on the previous NYSE
business day), the names and number of shares of each security constituting
the Fund Basket for each Series, as determined by the Adviser at the close
of business on the NYSE on such previous day, will be made available
through the Distributor and the National Securities Clearing Corporation
("NSCC"), a clearing agency registered with the Securities and Exchange
Commission (the "Commission"). Such Fund Basket will be in effect for
redemptions of Creation Units of CB Shares(SM) of each Series and purchases of
Creation Units of the US Index Series on such NYSE business day and for
purchases of Creation Units of CB Shares(SM) of each other Series on a
specified Business Day subsequent to such NYSE business day designated for
each Series. The date of purchase and issuance of Creation Units of CB
Shares(SM) of each Series is referred to as an "Issue Date". The Issue Date
for a purchase of Creation Units of the US Index Series is the same day as
the effective date for the applicable Fund Basket. The Issue Date for each
non-US Index Series will be the indicated number of days after the
effective date of the applicable Fund Basket: the Australia Index Series,
the third Business Day; the France Index Series, the third Business Day;
the Germany Index Series, the second Business Day; the Hong Kong Index
Series, the second Business Day; the Italy Index Series, the third Business
Day; the Japan Index Series, the third Business Day; the South Africa Index
Series, the fourth Business Day; and the UK Index Series, the fifth
Business Day. For example, the Fund Basket for the France Index Series to
be in effect on Tuesday, April 16, 1996 for redemptions on such date will
be made available presently by 8:00 p.m. New York time on Monday, April 15,
1996, the previous business day on which the NYSE is open. Such Fund
Basket will be applicable to purchases of a Creation Unit of CB Shares(SM) of
the France Index Series on Friday, April 19, 1996 (the subsequent third
Business Day). On each day the NYSE is open, the Distributor and the NSCC
will also make available on the morning of each day that the NYSE is open
the amount of the Cash Component for the previous Business Day for each
Series.
The composition of the Fund Basket will change with changes in the
relevant FT Index component. In addition, in the event that the Adviser
determines, in its discretion, that a security is likely to be unavailable
or available in insufficient quantities for delivery as part of a Fund
Basket or that, for example, an investor is legally prohibited from
acquiring a particular security, the cash equivalent value of such security
may be required or permitted to be delivered in lieu of the security in the
Fund Basket. Such amount will be added to the Cash Component (see "The
Cash Component" below). The announcement of a Fund Basket for a Series
will include the announcement of any adjustments to the Fund Basket that
will be in effect for purchases of such Series' shares on the Issue Date in
order to reflect stock splits, mergers, issuer replacements or other
corporate events. If the securities tendered by an investor for a purchase
of a Creation Unit aggregation of shares will not constitute the complete
Fund Basket for the Issue Date, the Adviser in its discretion may waive any
deficiency in the Fund Basket delivered and require the cash equivalent
value of any undelivered securities to be included in the Cash Component of
the Fund Deposit.
No shares of any Series will be issued until the transfer of good
title to the Fund of the Fund Basket and the payment of the Cash Component
(together, in the case of each Series other than the US Index Series, with
the applicable Cash Component transaction fee) have been completed, subject
in the case of the US Index Series to the provisions for guarantee of
completion of delivery of the CB Shares(SM) Clearing Process (as defined
herein) described below under "Procedures for Purchasing Creation Units".
All questions as to the number of shares of each security
<PAGE> SAI-44
in the Fund Basket and the validity, form, eligibility and acceptance for
deposit of any securities to be delivered shall be determined by the
Adviser, whose determination shall be final and binding.
Purchasers of Fund shares in Creation Unit size aggregations are
responsible for the costs of transferring the Fund Basket securities to the
account of the Fund. As of December 29, 1995, the estimated costs of
transferring the securities in a Fund Basket to the Fund, which may
include, among others, settlement and custody charges, securities
registration costs, stock transfer taxes and similar costs, are as follows:
the Australia Index Series, $2,176; the France Index Series, $3,774; the
Germany Index Series, $1,856; the Hong Kong Index Series, $3,192; the Italy
Index Series, $1,593; the Japan Index Series, $12,636; the South Africa
Index Series, $1,888; the UK Index Series, $5,508; and the US Index Series,
$9,747. See "Summary of Fund Expenses" in the Prospectus.
The Cash Component
The Cash Component will be equal to the difference between the value
of the Fund Basket delivered for the purchase of a Creation Unit of CB
Shares(SM) on the Issue Date and the net asset value of the Creation Unit
aggregation of shares of the particular Series next computed on such
Business Day and will be determined at the close of the NYSE (currently
4:00 p.m., New York time) on such Business Day when the net asset value of
Fund shares is determined. If the value of the Fund Basket should exceed
the net asset value of a Creation Unit size aggregation of shares on a
Business Day, the Adviser may determine to accept fewer (or none) of each,
or a designated portion, of the portfolio securities comprising the Fund
Basket and may request some cash to be substituted for the omitted
securities in order to limit the value of the Fund Basket as tendered to
the net asset value of the Creation Unit aggregation of shares. In
addition, the Adviser reserves the right to permit or require the
substitution of an amount of cash to be added to the Cash Component to
replace any security in the relevant FT Index component which may not be
available in sufficient quantity for delivery or for other similar reasons.
In no event will the Cash Component exceed 10% of the total purchase price
of a Creation Unit aggregation of shares of any Series. Securities not
accepted as part of the Fund Basket will be returned promptly. The
tendered securities in the Fund Basket will be valued on an Issue Date in
the same manner as the relevant Series values its portfolio securities for
purposes of calculating the Series' net asset value. See "Determining Net
Asset Value". The Distributor and NSCC will also make available on the
morning of each Business Day information with respect to the Cash Component
for purchases of shares of such Series at the end of the previous Business
Day.
In the case of each Series other than the US Index Series, a cash
transaction fee will be imposed by the Fund on the Cash Component of the
Fund Deposit to offset the Fund's brokerage and other transaction costs of
investing such cash. The Cash Component transaction fee for the purchase
of shares of the applicable Series, as a percentage of the Cash Component,
is as follows: the Australia Index Series, 1.15%; the France Index Series,
1.0%; the Germany Index Series, 1.0%; the Hong Kong Index Series, 1.2%; the
Italy Index Series, 1.0%; the Japan Index Series, 1.32%; the South Africa
Index Series, 2.0%; and the UK Index Series, 1.5%. See "Summary of Fund
Expenses" in the Prospectus. The US Index Series will bear brokerage and
other transaction costs associated with investing the Cash Component
received on purchases of Creation Unit aggregations of US CB Shares(SM).
Arrangements satisfactory to the Fund for delivery of the Cash Component
and the cash purchase transaction fee must be made on the date of purchase
in order for shares to be issued. See "Procedures for Purchasing Creation
Units" below.
Procedures for Purchasing Creation Units
Orders for Creation Unit size aggregations of shares of any Series
may be placed with the Distributor only by an "Authorized Participant",
i.e., a participant (a "DTC Participant") in The Depository Trust Company
("DTC") who has entered into an Authorized Participant Agreement (the
"Authorized Participant Agreement") with the Fund,
<PAGE> SAI-45
the Distributor and State Street, as Custodian and Transfer Agent. The
Authorized Participant Agreement provides for procedures with respect to
the purchase and redemption of Creation Unit aggregations of shares that
supplement the procedures set forth herein. Investors who are not
Authorized Participants must make appropriate arrangements with an
Authorized Participant to purchase Creation Unit aggregations of shares.
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 Unit aggregations of Fund
shares may have to be placed by the investor's broker through an Authorized
Participant. As a result, purchase orders placed through an Authorized
Participant may result in additional charges to such investor. The Fund
anticipates that it will enter into Authorized Participant Agreements with
only a few DTC Participants. Investors seeking to purchase Creation Unit
size aggregations of Fund shares are directed to contact the Distributor
for a current list of Authorized Participants. Purchase orders for Creation
Unit aggregations of shares may be directed to the Distributor through an
Authorized Participant by a dealer which has entered into an agreement with
the Distributor for solicitation of purchases of Creation Unit aggregations
of shares. All shares of the Fund will be entered on the records of DTC in
the name of Cede & Co. for the account of the Authorized Participant. For
additional information, see "The Fund--Book-Entry Only System" in the
Prospectus. In placing an order, an Authorized Participant agrees that it
will provide for payment of the Cash Component and related Cash Component
transaction fee on its own behalf or on behalf of the investor for which it
acts. Investors are responsible for making their own arrangements with an
Authorized Participant for payment to it of the Cash Component amount and
related cash purchase transaction fee.
In addition, in the case of the US Index Series, an Authorized
Participant that is a participant in the Continuous Net Settlement ("CNS")
System of the NSCC may alternatively deliver the Fund Basket and the Cash
Component through the CNS clearing processes of the NSCC, as such processes
have been enhanced to effect purchases and redemptions of Creation Unit
size aggregations of CB Shares(SM) of the US Index Series (referred to herein
as the "CB Shares(SM) Clearing Process"). The Distributor will upon request
provide a list of Authorized Participants that are participants in the CNS
System of the NSCC. The Authorized Participant authorizes State Street, as
Index Receipt Agent (as such term is defined in the rules of the NSCC, the
"Agent") to transmit to NSCC on behalf of the Authorized Participant such
trade instructions as are necessary to effect the purchase order. Pursuant
to such trade instructions from the Agent to NSCC, the Authorized
Participant agrees to transfer the requisite Fund Basket securities and the
Cash Component to the Agent, together with such additional information as
may be required by the Agent. See "Placement of Purchase Orders for US
Index Series Shares Using the CB Shares(SM) Clearing Process" below. In
accordance with its procedures in effect from time to time, NSCC will
guarantee delivery of the Fund Basket and the related Cash Component to the
Fund for each purchase effected through the CNS System.
To place an order for shares of any Series other than the US Index
Series to be issued on an Issue Date, the Authorized Participant must first
give notice to the Distributor on the day a Fund Basket becomes effective
for purchases on a subsequent Business Day (see "The Fund Basket") by
delivering a notice of intention to purchase one or more Creation Unit
aggregations of shares on the applicable Issue Date. No notice of
intention is required for a purchase of shares of the US Index Series. The
Authorized Participant must cause to be delivered or arrange for the
investor to deliver the securities constituting the Fund Basket to the
account maintained by the Custodian, in the case of the US Index Series, or
with the appropriate subcustodian in the jurisdiction where the portfolio
securities of the Series are traded, in the case of each other Series, by
the intended Issue Date, provided that for the France Index Series and the
South Africa Index Series delivery of the Fund Basket must be made to the
appropriate subcustodian on the day prior to the Issue Date.
Following the notice of intention, an order to purchase Creation
Units on an Issue Date, in the form required by the Fund, must be received
on the designated Business Day, i.e., the Issue Date, 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 NYSE (currently
4:00 p.m., New York time) in order for the issuance of Creation Unit
aggregations of shares to
<PAGE> SAI-46
be effected at the net asset value next determined at the close of trading
on the NYSE on such date. Those placing orders to purchase Creation Units
through an Authorized Participant should afford sufficient time to permit
proper submission of the purchase order to the Distributor in time for
issuance on the desired Issue Date. 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 shall have also made arrangements
satisfactory to the Fund for the payment, in immediately available or same
day funds, of the Cash Component determined on the Issue Date (together
with the Cash Component transaction fee applicable to each Series other
than the US Index Series) on such date, subject in the case of the US Index
Series to payment of the Cash Component through the CB Shares(SM) Clearing
Process. Any excess funds will be returned. 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 NYSE.
A purchase order for shares of any Series will be considered in
"proper form" if (i) a properly completed purchase order, in the form
required by the Fund (available through the Distributor), has been
submitted on the intended date of purchase, whether on its own or another
customer's behalf, by the Authorized Participant by the 4:00 p.m. close of
trading on the NYSE, (ii) delivery of the Fund Basket is confirmed on such
date by the Custodian, subject in the case of the US Index Series to the
provisions for guarantee of completion of delivery of the CB Shares(SM)
Clearing Process, and (iii) arrangements satisfactory to the Fund have been
made for the payment to the Custodian on such date of any Cash Component
(together with the Cash Component transaction fee, if any) which may be due
based on the determination of the net asset value of the shares at the
close of trading on the NYSE (4:00 p.m.) on such Issue Date. Currently,
information as to the delivery of the Fund Basket will be available to the
Custodian by 1:00 p.m., New York time, in the case of each Series except
the US Index Series, for which confirmation of delivery of the Fund Basket
will be available by 3:00 p.m., New York time, on the Issue Date, subject
in the case of the US Index Series to the provisions for guarantee of
completion of delivery of the CB Shares(SM) Clearing Process. If the
Authorized Participant's purchase order is received in proper form, the
Distributor, on behalf of the Fund, will accept the order and upon
determination of the net asset value of the shares of such Series at the
close of business on the NYSE, the Fund will issue the appropriate number
of Creation Unit aggregations of shares. Either the Fund or the
Distributor may at its sole discretion reject any purchase order. Upon
payment in full, the Transfer Agent will issue the shares to DTC on the
same Business Day for credit to the account of the Authorized Participant
on the following Business Day. Once an order is accepted, the Distributor
will transmit a confirmation of acceptance to the Authorized Participant
that placed the order. Investors should be aware that an Authorized
Participant may require orders for purchases of CB Shares(SM) placed with an
Authorized Participant 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 Fund, which the Authorized Participant must
deliver to the Distributor.
As indicated above, Fund Deposits for the US Index Series submitted
through the CB Shares(SM) Clearing Process must be delivered through an
Authorized Participant that is a participant in the CNS System of the NSCC.
Pursuant to trade instructions from the Agent to NSCC, the Authorized
Participant agrees to transfer the requisite Fund Basket securities and the
Cash Component to the Agent. An order to purchase a Creation Unit of CB
Shares(SM) of the US Index Series through the CB Shares(SM) Clearing Process is
deemed received by the Distributor on the Issue Date if (i) such order is
received by the Distributor not later than the close of the regular trading
session on the NYSE (currently 4:00 p.m., New York time), on such date and
(ii) all other procedures set forth in the Authorized Participant Agreement
are properly followed.
<PAGE> SAI-47
The Fund reserves the absolute right to reject a purchase order
transmitted to the Distributor in respect of any Fund Basket or any
component thereof if (a) the purchaser or group of purchasers, upon
obtaining the shares ordered, would own 80% or more of the current
outstanding shares of any Series; (b) the Fund Basket delivered is not as
specified by the Adviser, as described above; (c) acceptance of the Fund
Basket would have certain adverse tax consequences to the Fund; (d) the
acceptance of the Fund Deposit would, in the opinion of counsel, be
unlawful; (e) the acceptance of the Fund Deposit would otherwise, in the
discretion of the Fund or the Adviser, have an adverse effect on the Fund
or the rights of beneficial owners; or (f) in the event that circumstances
outside the control of the Fund, the Distributor and the Adviser make it
for all practical purposes impossible to process purchase orders. The Fund
and the Distributor are under no duty to give notification of any defects
or irregularities in the delivery of Fund Deposits or any component thereof
nor shall either of them incur any liability for the failure to give any
such notification.
The Distributor
Creation Unit size aggregations of shares for each Series will be
continuously offered for sale through the Fund's principal underwriter and
Distributor, ALPS. The Distributor will serve as the principal underwriter
for each Series pursuant to an agreement which by its terms will continue,
unless earlier terminated as described below, until February 8, 1998 (the
"Distribution Agreement"). The Distribution Agreement is subject to
renewal in 1997 with respect to each Series and will remain in effect only
if its continuance is specifically approved annually thereafter as to such
Series by the affirmative vote of both the Fund's Board of Directors or a
majority of the outstanding voting securities (as defined under the 1940
Act) of such Series and a majority of the Directors who are not "interested
persons" (as defined in the 1940 Act) of the Fund and have no direct or
indirect financial interest in the operation of the 12b-1 Plan (as defined
below) of such Series or in the Distribution Agreement, cast in person at a
meeting called for the purpose of voting on such Plan or the Distribution
Agreement. The Distributor will act as agent for the Fund. Pursuant to the
Distribution Agreement, the Fund has agreed to indemnify the Distributor
against certain liabilities under the Securities Act.
Pursuant to plans adopted by the Board of Directors of the Fund for
each Series under Rule 12b-1 under the 1940 Act (each, a "12b-1 Plan"),
each Series will pay the Distributor distribution services fees, calculated
daily and payable monthly, equal to such Series' allocable portion of the
aggregate distribution services fees payable by the Fund as follows: .02%
per annum of the average aggregate daily net assets ("Aggregate Net
Assets") of all Series subject to the Distribution Agreement with the
Distributor (the "Distribution Agreement") up to Aggregate Net Assets of
$2.5 billion, plus .01% per annum of Aggregate Net Assets of all such
Series in excess of $2.5 billion up to $5 billion, plus .005% per annum of
Aggregate Net Assets of all such Series in excess of $5 billion. In
addition, pursuant to a Marketing Agreement with the Distributor (the
"Marketing Agreement"), each Series will pay the Distributor for marketing
and promotional services its allocable portion of the aggregate marketing
fees payable by the Fund, equal to .23% per annum of the Aggregate Net
Assets of all Series subject to the Marketing Agreement up to Aggregate Net
Assets of $200 million, plus .03% per annum of Aggregate Net Assets of such
Series in excess of $1.5 billion up to $5 billion, plus .015% per annum of
Aggregate Net Assets of such Series in excess of $5 billion. The allocation
among the Series of fees and expenses payable under the Distribution
Agreement and Marketing Agreement will be made pro rata in accordance with
the daily net assets of the respective Series.
Pursuant to agreements entered into with such persons ("Fund Payment
Agreements"), each Series will make payments under its 12b-1 Plan to
certain broker-dealers or other persons ("Investor Services Organizations")
that enter into investor services agreements with the Distributor to
provide marketing and/or stockholder services to such Series ("Investor
Services Agreements"). Each of the Fund Payment Agreements and Investor
Services Agreements will be a "related agreement" under the 12b-1 Plan of
each Series. In particular, the Distributor will enter into such an
Investor Services Agreement with Smith Barney Inc. ("Smith Barney") to
provide certain marketing, education,
<PAGE> SAI-48
research and promotional services relating to the secondary market trading
of CB Shares(SM), for which the applicable Fund Payment Agreement will provide
annual fees of 0.05% of the average daily net assets in excess of $200
million of all Series subject to such Investor Services Agreement.
Pursuant to the Fund Payment Agreement with Smith Barney, the Fund will
indemnify Smith Barney against certain liabilities under the Securities
Act.
The fees paid by a Series under its 12b-1 Plan will be compensation
for distribution or marketing services for that Series. To the extent the
foregoing 12b-1 Plan fees aggregate less than 0.25% per annum of the
average daily net assets of a Series, each Series will also reimburse the
Distributor and the Adviser for their respective costs incurred in
producing advertising or marketing material prepared at the request of the
Series. The aggregate payments under each 12b-1 Plan will not exceed, on an
annualized basis, .25% of average daily net assets of the
applicable Series.
The continuation of the 12b-1 Plan of each Series, the Distribution
Agreement, the Marketing Agreement and each of the other related agreements
referred to above is subject to the annual approval of the Fund's Board,
including by a majority of the Directors who are not "interested persons"
of the Fund and have no direct or indirect financial interest in the
operation of such 12b-1 Plan or any related agreements.
Each of the Distribution Agreement and the Marketing Agreement, and
each Investor Services Agreement and Fund Payment Agreement referred to
above, will provide 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 Fund (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 Series, on at least 60 days' written
notice to the other party. Each of the Distribution Agreement and the
Marketing 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). Each Investor Services Agreement and Fund
Payment Agreement is also terminable by the Investor Services Organization,
upon 60 days' notice to the other party thereto and will terminate
automatically upon the termination of the Distribution Agreement.
The Distributor expects to enter into stockholder services agreements
with certain participating financial institutions ("PFIs"). Such
agreements will not provide for any payments from the Fund or the
Distributor. Pursuant to the agreements, PFIs will, among other things,
agree to provide stockholder support services and research and promotional
services related to the secondary market trading of CB Shares(SM) and make a
market in CB Shares(SM) and/or Fund Basket securities. The Distributor will
provide or arrange with third parties to provide PFIs with, among other
things, sales and advertising material relating to CB Shares(SM), education
and data support for PFIs' research and sales promotion activities and a
limited pool of CB Shares(SM) available for lending to PFIs at preferential
rates to settle secondary market transactions in CB Shares(SM). The
Distributor will provide or will arrange for third parties to provide
similar services to NYSE specialist firms ("Specialist Institutions")
registered in CB Shares(SM) of one or more designated Series, in each case
pursuant to an agreement under which the Specialist Institution agreed to
enter into a purchase agreement with the Fund to purchase a certain number
of Creation Units of CB Shares(SM) of such designated Series prior to the
commencement of trading of such CB Shares(SM) on the NYSE.
The Distributor may enter into agreements with securities dealers
("Soliciting Dealers") who will solicit purchases of Creation Unit
aggregations of Fund shares. Such Soliciting Dealers may also be
Authorized Participants and/or PFIs.
The Distributor is a broker-dealer registered under the Securities
Exchange Act of 1934, as amended, and a member of the National Association
of Securities Dealers, Inc.
<PAGE> SAI-49
REDEMPTION OF FUND SHARES IN CREATION UNIT AGGREGATIONS
See "Redemption of Fund Shares in Creation Unit Aggregations" in the
Prospectus for information concerning redemptions of Fund shares. The
following information supplements and should be read in conjunction with
such section.
Generally
The Fund will redeem shares of a Series only in Creation Unit size
aggregations and only on a day on which the NYSE is open for trading. The
Fund will not redeem Fund shares in less than Creation Unit size
aggregations of Fund shares. Generally, redemption proceeds for a Creation
Unit aggregation of shares will consist of a Fund Basket and a minimal
amount of cash. See "Redemption Procedures". All redemptions will be
effected at the net asset value next determined after receipt of a
redemption request in proper form. Investors may purchase CB Shares(SM) in
the secondary market and aggregate such purchases into Creation Units for
redemption. 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 size aggregation of CB Shares(SM). See
"Investment Considerations and Risks" in the Prospectus. Investors will
incur brokerage and other costs in connection with such purchase in the
secondary market. See "Summary of Fund Expenses" in the Prospectus for
information about the dollar value of Creation Unit aggregations of shares.
Redemption Proceeds
Prior to the opening of business on the NYSE on each day that the
NYSE is open (currently by 8:00 p.m., New York time, on the previous NYSE
business day), the names and number of shares of each security constituting
the Fund Basket, as determined by the Adviser at the close of business on
the NYSE on such previous day, will be made available through the
Distributor and the NSCC for each Series and will be in effect for
redemptions on such NYSE business day. For example, the Fund Basket for
the France Index Series to be in effect on Tuesday, April 16, 1996 for
redemptions on such date will be made available presently by 8:00 p.m. New
York time on Monday, April 15, 1996. The redemption proceeds for a
Creation Unit aggregation of shares generally will consist of a Fund Basket
together with a cash redemption payment equal to the difference, if any,
between the net asset value of the Creation Unit aggregation of shares
being redeemed next determined following receipt of a redemption request in
proper form, and the value of the Fund Basket. The cash redemption
transaction fee described below will be deducted from such proceeds. Net
asset value is determined at the close of the regular trading session on
the NYSE (currently 4:00 p.m., New York time). For this purpose the
securities in the Fund Basket will be valued in the same manner as the
relevant Series values its portfolio securities. See "Determination of Net
Asset Value" in the Prospectus and "Determining Net Asset Value" in this
Statement of Additional Information.
If the value of the Fund Basket should exceed the net asset value of
a Creation Unit size aggregation of shares, the Adviser may determine that
fewer (or none) of each, or a designated portion, of the portfolio
securities comprising the Fund Basket will be required to be delivered and
an amount of cash may be substituted for the omitted securities in order to
limit the value of the redemption proceeds to the net asset value of the
Creation Unit aggregation of shares being redeemed. At its sole option, the
Fund may pay redemption proceeds entirely in cash or include additional
amounts of cash as redemption proceeds in order to provide for timely
delivery of such proceeds in accordance with applicable regulations as
described under "Redemption Procedures" below.
A cash redemption transaction fee payable to the Fund will be imposed
on the cash portion of the redemption proceeds of shares of each Series,
other than the US Index Series, in Creation Unit size aggregations to
offset brokerage and other transaction costs of the portfolio transactions
that may be required. The fee that will be imposed ranges from 1% to
1.32%, depending on the Series. See "Summary of Fund Expenses" in the
Prospectus. Investors redeeming shares of the Fund will also bear the
costs of transferring the Fund Basket, which may include, without
<PAGE> SAI-50
limitation, settlement and custody charges, registration fees, stock
transfer taxes and similar fees, from the Fund to their account or on their
order. Currently, the estimated redemption transfer costs for each Series
are as follows: the Australia Index Series, $_____; the France Index
Series, $_____; the Germany Index Series, $_____; the Hong Kong Index
Series, $_____; the Italy Index Series, $_____; the Japan Index Series,
$_____; the South Africa Index Series, $_____; the UK Index Series, $_____;
and the US Index Series, $_____. Investors who use the services of a
broker or other such intermediary may be charged a fee for their services.
A stockholder redeeming CB Shares(SM) in Creation Unit aggregations will
generally receive redemption proceeds in the form of the applicable Fund
Basket and will be required to sell such securities for its own account if
the stockholder desires to obtain cash. Because such securities proceeds
generally will be delivered, in each case other than the US Index Series,
several days after the date of redemption, the stockholder may receive
significantly less cash proceeds than the redemption value of the CB
Shares(SM) redeemed due to intervening fluctuations in the market value of
such securities and (in the case of each Series other than the US Index
Series) exchange rate fluctuations between the applicable Series Currency
and the US dollar. In addition, such stockholder may incur certain
transaction costs and significant commission expenses with respect to the
sale of such securities proceeds.
Redemption Procedures
Redemption requests in respect of shares of any Series must be
submitted to State Street, as the Fund's Transfer Agent, by or through an
Authorized Participant on a day that the NYSE is open for business.
Investors other than Authorized Participants are responsible for making
arrangements for a redemption request to be made through an Authorized
Participant. Upon request, an investor may obtain a list of current
Authorized Participants by calling [1-800-___-____.] A Creation Unit
aggregation of shares will be redeemed at the net asset value determined at
the close of the NYSE on the day that the redemption request is received in
proper form, provided that such request is received by the Transfer Agent
from an Authorized Participant by 4:00 p.m., New York time, and the CB
Shares(SM) to be redeemed are delivered through the facilities of DTC by
4:00 p.m., New York time, on such day (except as provided below), provided
that redemption requests for Creation Units of the US Index Series may also
be placed through the CB Shares(SM) Clearing Process as described below.
Redemption requests received after such time will be rejected and may be
resubmitted on the next day that the NYSE is open for business.
The Authorized Participant must transmit the request for redemption,
in the form required by the Fund, to the North Quincy, Massachusetts office
of the Transfer Agent in accordance with procedures set forth in the
Authorized Participant Agreement. Redemption requests may not be
transmitted to the Distributor. Investors should be aware that their
particular broker may not have executed an Authorized Participant
Agreement, and that, therefore, requests to redeem Creation Unit size
aggregations of shares 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 may be only a limited
number of persons that have executed an Authorized Participant Agreement.
Investors making redemption requests should be aware that an Authorized
Participant acting on its behalf may require that such request be in the
irrevocable form specified by such Authorized Participant. Investors
making requests to redeem shares should afford sufficient time to permit
proper submission of the request by an Authorized Participant and transfer
of the CB Shares(SM) to the Fund's Transfer Agent. A redemption request will
be considered to be in proper form if (i) a duly completed request form is
received by the Transfer Agent by 4:00 p.m., New York time, and (ii) the
Authorized Participant has transferred or caused to be transferred to the
Transfer Agent the Creation Unit aggregation of shares being redeemed
through the DTC book-entry system by 4:00 p.m., New York time, on the same
day that the redemption request is received (except in the case of the US
Index Series, if the CB Shares(SM) Clearing Process is used). On Columbus Day,
Veterans Day and Martin Luther King Day, when the NYSE is open but DTC
facilities for transfer of securities are closed, CB Shares(SM) must be
delivered to the Transfer Agent at the opening of business on the business
day following the day the redemption request is received. Except in the
case of redemption through the
<PAGE> SAI-51
CB Shares(SM) Clearing Process, if the Transfer Agent does not receive the
investor's Fund shares through DTC facilities by 4:00 p.m. on the same day
that the redemption request is received or, in the case of the
aforementioned DTC holidays, at the opening of business on the following
day, the redemption request shall be rejected and may be resubmitted the
next day that the NYSE is open for business. 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 CB Shares(SM).
Except with respect to a redemption of Creation Units of the US Index
Series using the CB Shares(SM) Clearing Process (discussed below), the tender
of an investor's Fund shares for redemption will be effected through the
relevant Authorized Participant and DTC. 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 shares, as the case may be, or by such
other means specified by the Authorized Participant submitting the
redemption request. See "The Fund--Book-Entry Only System" in the
Prospectus. In the case of the US Index Series, the Fund will transfer the
Fund Basket to or on the order of the relevant Authorized Participant
through the DTC system or, if the CB Shares(SM) Clearing Process is used,
through the CNS System, and, in the case of each other Series, to the
account of the Authorized Participant or beneficial owner in the foreign
jurisdiction where such securities are traded. Normally, cash redemption
proceeds will be paid as soon as practicable after the date the redemption
request is received in proper form (usually one business day), but in any
event not later than seven calendar days after the date of redemption. In-
kind redemption proceeds will be delivered within the time permitted by
applicable law and regulations. Subject to applicable law or Commission rule,
enforcement position or order, the time for such delivery in some cases
could be extended, but not later than seven calendar days from the date of
redemption, except in certain instances, in the case of the Japan Index
Series and the UK Index Series, where holiday schedules in the respective
national markets will require a longer delivery process for the in-kind
redemption proceeds. In such instances, pursuant to an order of the
Commission, the Fund will make delivery of in-kind redemption proceeds
within a number of days not to exceed 10 calendar days in the case of the
Japan Index Series and 12 calendar days in the case of the UK Index Series.
The dates of redemption in 1996 when such delays in the delivery process
would occur are set forth in Appendix A to the Prospectus. In the event
that local holiday schedules or other unforeseen circumstances in the
relevant local markets would not permit delivery of in-kind redemption
proceeds within the time permitted by Commission order or applicable
regulations, the Fund may redeem Creation Unit aggregations of CB Shares(SM)
entirely for cash. Cash redemptions are subject to the cash redemption
transaction fee applicable to each Series.
In order to accept delivery of the portfolio securities in the Fund
Basket, a redeeming investor or the Authorized Participant on its behalf
must maintain appropriate securities broker-dealer, bank or other custody
arrangements in the jurisdiction in which the portfolio securities of the
Series are customarily traded, to which account such portfolio securities
will be delivered. In the event that neither the redeeming investor nor
the Authorized Participant acting on its behalf has appropriate
arrangements in place to take delivery of the portfolio securities in the
applicable jurisdiction, and it is not possible to make other comparable
arrangements satisfactory to the Fund, or if it is not possible to effect
deliveries of the portfolio securities in such jurisdiction, the Fund will
exercise its option to redeem such shares in cash and the redeeming
beneficial owner will be required to receive the redemption proceeds
entirely in cash. In such a case the cash redemption transaction fee will
be charged by the Fund upon and be subtracted from the entire redemption
proceeds.
Orders to redeem CB Shares(SM) of the US Index Series in Creation Unit
size aggregations through the CB Shares(SM) Clearing Process must be delivered
through an Authorized Participant that is a participant in the CNS System
of the NSCC. Investors may obtain a list of such Authorized Participants
upon request by calling 1-800-___-____. An order to redeem CB Shares(SM) of
the US Index Series using the CB Shares(SM) Clearing Process is deemed
received in proper form if (i) such request is received by State Street, as
Transfer Agent, not later than the close of the regular
<PAGE> SAI-52
trading session on the NYSE (currently 4:00 p.m., New York time) on a day
the NYSE is open and (ii) all other procedures applicable to the CB Shares(SM)
Clearing Process have been properly followed. Redemption requests made in
proper form but received by the Transfer Agent after the 4:00 p.m. NYSE
closing time will be deemed received on the next succeeding business day.
The Authorized Participant Agreement authorizes State Street as Agent to
transmit to NSCC on behalf of the beneficial owner of the Creation Unit of
CB Shares(SM) tendered for redemption such trade instructions as are necessary
to effect the redemption order. Pursuant to such trade instructions from
the Agent to NSCC, the Agent will transfer to the relevant Authorized
Participant the requisite securities by the third NSCC Business Day
following the date on which such request for redemption is deemed received.
The Agent will also effect a transfer of the cash redemption payment to the
relevant Authorized Participant via DTC cash transfer facilities or by
federal funds wire by the same date. An "NSCC Business Day" for purposes
hereof is a day when the NSCC is open for business, currently each day on
which the NYSE is open for business except for Columbus Day, Veterans Day
and Martin Luther King Day. The Fund Basket securities are covered by
NSCC's guarantee of completion of such delivery.
Suspension of Redemption
The right of redemption may be suspended or the date of payment
postponed with respect to any Series (1) during any period when the NYSE is
closed (other than customary weekend and holiday closings); (2) when
trading on the NYSE is suspended or restricted; or (3) when an emergency
exists as a result of which disposal of the Series' portfolio securities or
determination of its net asset value is not reasonably practicable.
DETERMINING NET ASSET VALUE
The following information supplements and should be read in
conjunction with the section in the Prospectus entitled "Determination of
Net Asset Value".
Each Series calculates its net asset value per share at the close of
the regular trading session on the NYSE (currently 4:00 p.m., New York
time) on each day when the NYSE is open for business. See "Purchase and
Issuance of Creation Unit Aggregations of Fund Shares -- Business Day".
Valuation of Portfolio Securities by the Fund
Portfolio securities held by a Series are valued, for purposes of
determining the net asset value per share of the Series, at the last quoted
sales price on the securities exchange or national securities market on
which such securities are primarily traded. The value of portfolio
securities delivered to the Fund as part of the in-kind deposit of
portfolio securities (i.e., the Fund Basket) required for a purchase of
Creation Units on any Business Day will be determined on the same basis.
Securities not listed on an exchange or national securities market, or
securities in which there were no transactions, are valued at the
arithmetic mean of the most recent bid and asked prices, or if no asked
price is available, at the bid price. However, when market quotations are
not readily available, portfolio securities and other assets are valued
based on fair value as determined in good faith by the Adviser in
accordance with procedures adopted by the Board of Directors of the Fund.
Events affecting the values of portfolio securities that occur between the
time their prices are determined on the primary exchange or market in which
they are traded and the close of regular trading on the NYSE will not be
reflected in the calculation of a Series' net asset value unless the
Adviser determines that the particular event would materially affect net
asset value, in which case an adjustment will be made. The values of
portfolio securities denominated in currencies other than the US dollar are
converted into US dollars at the WM Reuters spot rate for the relevant
Series Currency at 4:00 p.m., London time, on the day that the foreign-
currency values of the securities are determined, or at such other quoted
exchange rate as may be
<PAGE> SAI-53
determined by the Adviser to be appropriate. Expenses and fees, including
the investment advisory, administration and distribution fees of each
Series, are accrued daily and taken into account for the purpose of
determining the net asset value of shares of that Series.
DIVIDENDS AND DISTRIBUTIONS
See "Dividends and Capital Gains Distributions" in the Prospectus for
information concerning the Fund's policy on dividends and distributions.
TAXES
The following information supplements and should be read in
conjunction with the sections in the Prospectus entitled "Dividends and
Capital Gains Distributions" and "Tax Matters".
Tax Treatment of the Fund
Each Series is expected to be treated as a separate entity for tax
purposes. As such, each Series must calculate its income and losses, and
satisfy the requirements as to its status as a regulated investment
company, separately. It is intended that each Series will qualify for and
elect treatment as a regulated investment company (a "RIC") under the
Internal Revenue Code of 1986, as amended (the "Code"). Such treatment
generally will relieve a Series of federal income tax liability to the
extent it distributes its net investment income and net capital gain income
to stockholders.
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 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; (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 RICs 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)(4)(B) of the Code) 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 RICs); and (3) the company may not derive 30 percent or more of its
annual gross income from the sale or other disposition of (i) stock or
securities, (ii) options, futures or forward contracts on stock or
securities (other than options, futures or forward contracts on foreign
currencies) or (iii) foreign currencies (including options, futures and
forward contracts on foreign currencies) not directly related to the
company's principal business of investing in stock, securities or foreign
currencies, in each case held for less than three months.
Any dividend declared by a Series in October, November or December of
any calendar year and payable to investors of record on a specified date in
such a month shall be deemed to have been received by each investor on
<PAGE> SAI-54
December 31 of such calendar year and to have been paid by the Series not
later than such December 31 so long as the dividend is actually paid by the
Series during January of the following calendar year.
Tax Treatment of Investors
A person other than a tax-exempt entity who exchanges securities for
Creation Units of Fund shares generally will recognize gain or loss equal
to the difference between the market value of the Creation Units and the
sum of his aggregate basis in the securities surrendered and the Cash
Component paid. A person other than a tax-exempt entity who redeems
Creation Units of Fund shares generally will recognize gain or loss equal
to the difference between the sum of the market value of the securities
received and the cash redemption payment and his aggregate basis in the
Fund shares redeemed.
Generally, persons who are not subject to tax on their income will
not be taxed upon distributions from the Fund (unless the persons are
subject to the U.S. federal tax on unrelated business income and incur
indebtedness allocable to shares of the Fund). The Series' dividends and
distributions will not be a specified preference item for purposes of the
U.S. federal alternative minimum tax imposed on individuals and
corporations. Other investors will be taxed upon the distribution of
dividends from the Fund. Dividends paid from net investment income will
generally be taxable as ordinary income for federal income tax purposes.
Distributions in excess of a Series' current and accumulated earnings and
profits will, as to each of the Series' investors, be treated as a tax-free
return of capital, to the extent of the investor's basis in his shares and
as a capital gain thereafter. Investors should consult their own tax
advisers regarding the treatment of distributions under applicable state
law. Dividends of net investment income from a Series other than the US
Index Series generally will not qualify for the dividends-received
deduction permitted to corporate owners under Section 243 of the Code.
Regardless of the length of time a stockholder has held his shares,
distributions designated as being from a Series' net long-term capital
gains (i.e., the excess of net long-term capital gains over net short-term
capital losses) will be taxable as such.
A distribution by a Series will reduce its net asset value per share.
Such a distribution may be taxable to the investor as ordinary income or
capital gain as described above even though, from an investment standpoint,
it may constitute a return of capital.
Upon the sale or exchange of Fund shares (other than a redemption of
a Creation Unit aggregation of Fund Shares, the treatment of which is
described above), an investor will realize a taxable gain or loss equal to
the difference between the amount realized and the investor's basis in the
shares. Such gain or loss will be treated as capital gain or loss, if the
shares are capital assets in the investor's hands, and will be long-term or
short-term depending upon the investor's holding period for the shares.
Any loss realized on a sale or exchange will be disallowed to the extent
that the shares disposed of are replaced within a 61-day period beginning
30 days before and ending 30 days after the disposition of the shares. In
such a case, the basis of the shares acquired will be adjusted upward to
reflect the disallowed loss. Any loss realized by an investor on a
disposition of the Fund's shares held by the investor for six months or
less will be treated as a long-term capital loss for U.S. income tax
purposes to the extent of any distributions of long-term capital gains
received by the investor (and any amounts retained by the Fund that were
designated as undistributed capital gains), with respect to such shares.
The Fund will make annual reports of the federal income tax status of
distributions to owners of shares. Such reports will set forth the dollar
amounts of dividends from net investment income and long-term capital
gains, the investor's portion of the foreign income taxes paid to each
country, the portion of dividends that represents income derived from
sources within each country and, in the case of the US Index Series,
dividends which may qualify for the dividends-received deduction described
above. Investors should consult their own tax advisers to determine the
consequences of holding shares in a Series under state, local or other tax
law.
<PAGE> SAI-55
The Fund may be required to withhold for U.S. federal income tax
purposes 31% of the dividends and distributions payable to investors who
fail to provide the Fund with their correct taxpayer identification number
or to make required certifications, or who have been notified by the U.S.
Internal Revenue Service that they are subject to backup withholding.
Corporate investors and other investors specified in the Code are or may be
exempt from such backup withholding. Backup withholding is not an
additional tax. Any amounts withheld may be credited against the
stockholder's U.S. federal income tax liability.
The foregoing discussion is a summary only and is not intended as a
substitute for careful tax planning. Purchasers of shares of the Fund
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
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.
CAPITAL STOCK AND STOCKHOLDER REPORTS
Each Fund share has one vote as to matters affecting the holder
thereof and, when issued and paid for in accordance with the terms of
purchase described under "Purchase and Issuance of Fund Shares in Creation
Unit Aggregations", will be fully paid and non-assessable. Shares have no
preemptive, exchange, subscription or conversion rights and are freely
transferable. 200,000,000 shares are currently authorized for each Series
of the Fund.
Shares of all Series vote together as a single class except that if
the matter being voted on affects only a particular Series it will be voted
on only by that Series and if a matter affects a particular Series
differently from other Series, that Series will vote separately on such
matter. Fractional shares of the Fund may be issued. Each share is
entitled to participate equally in dividends and distributions declared by
the Board of Directors with respect to the relevant Series, and in the net
distributable assets of such Series on liquidation. Stockholders are
entitled to require the Fund to redeem only Creation Unit size aggregations
of their shares. The Board of Directors of the Fund may from time to time
change the number of shares constituting a Creation Unit aggregation of
shares of any Series.
A registered investment company incorporated in Maryland, such as the
Fund, is not required to hold annual stockholder meetings if its charter or
bylaws provide that such meetings would not be held in any year such a
meeting is not required to be held for certain purposes specified in the
1940 Act. Accordingly, the Fund's bylaws provide that it is not required
to hold annual stockholder meetings for the purpose of electing Directors
as long as two-thirds of the Directors then in office have been elected by
the stockholders. Under Maryland law, Directors of the Fund may be removed
by the vote of the holders of a majority of the outstanding shares of the
Fund. The Fund does not intend to hold stockholder meetings unless
required to for certain purposes specified in the 1940 Act.
Control Persons. The Fund expects that, immediately prior to the
initial public offering of Fund shares contemplated hereby, the sole
stockholder and controlling person of each Series will be ALPS. ALPS will
therefore be a "control person" of the Fund. Upon the commencement of
trading of CB Shares(SM) on the NYSE, each Series may have a number of
stockholders each holding more than 5% of the outstanding shares of such
Series. _____________, an affiliate of the Adviser, is expected initially
to be among the control persons of each Series. The Fund cannot predict the
length of time that any such persons will remain control persons of each
Series.
<PAGE> SAI-56
Reports. The Fund will issue to its stockholders semi-annual reports
containing unaudited financial statements and annual reports containing
financial statements audited by independent accountants approved by the
Fund's Directors and by the stockholders when meetings are held.
Stockholder Inquiries. Stockholder inquiries may be made by writing
to the Fund, c/o Deutsche Morgan Grenfell/C. J. Lawrence Inc., 31 West 52nd
Street, New York, New York 10019.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Sullivan & Cromwell, 125 Broad Street, New York, New York 10004, is
counsel to the Fund and has passed upon the validity of the Fund shares.
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York
10036, serves as the independent accountants of the Fund.
<PAGE> SAI-57
REPORT OF INDEPENDENT ACCOUNTANTS
<PAGE> SAI-58
STATEMENT OF ASSETS AND LIABILITIES
The CountryBaskets(SM) Index Fund, Inc.
Statement of Assets and Liabilities
________ __, 1996
<TABLE>
<CAPTION>
Australia France Germany Hong Kong Italy Japan S. Africa UK US
Index Index Index Index Index Index Index Index Index
Series Series Series Series Series Series Series Series Series
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Cash $ $ $ $ $ $ $ $ $
Deferred organization expenses
Total Assets
Liabilities
Organization expenses payable
Total Liabilities $ $ $ $ $ $ $ $ $
Net Assets $ $ $ $ $ $ $ $ $
Shares outstanding ($.001 par value)
Net Asset Value per share $ $ $ $ $ $ $ $ $
Composition of net assets
Capital stock
Paid-in capital $ $ $ $ $ $ $ $ $
Net Assets, ________ __, 1996 $ $ $ $ $ $ $ $ $
See Notes to financial statements.
</TABLE>
<PAGE> SAI-59
THE COUNTRYBASKETS(SM) INDEX FUND, INC.
Notes to Financial Statements
________ [ ], 1996
1. General
The CountryBaskets(SM) Index Fund, Inc. (the "Fund") was incorporated under
the laws of the State of Maryland on August 8, 1994. The Fund is
registered under the Investment Company Act of 1940 (the "Act") as an open-
end management investment company. The Fund currently has nine common
stock series: the Australia Index Series; the France Index Series; the
Germany Index Series; the Hong Kong Index Series; the Italy Index Series;
the Japan Index Series; the South Africa Index Series; the UK Index Series;
and the US Index Series (each, a "Series").
Deutsche Morgan Grenfell/C. J. Lawrence Inc. ("DMG"), an indirect
subsidiary of Deutsche Bank AG, serves as investment adviser (the
"Adviser") to the Fund. State Street Bank and Trust Company ("State
Street") serves as administrator, custodian and transfer agent to the Fund,
and ALPS Mutual Funds Services, Inc. ("ALPS") serves as distributor of the
Fund.
The Series have had no operations other than the sale of the following Fund
Series shares to ALPS for the noted amounts: Australia Index Series
(________ shares for proceeds of $________); France Index Series (________
shares for proceeds of $________); Germany Index Series (________ shares
for proceeds of $________); Hong Kong Index Series (________ shares for
proceeds of $________); Italy Index Series (________ shares for proceeds of
$________); Japan Index Series (________ shares for proceeds of $________);
South Africa Index Series (________ shares for proceeds of $________); UK
Index Series (________ shares for proceeds of $________); and US Index
Series (________ shares for proceeds of $________).
The costs of organizing the Fund and registering its shares will be paid
initially by DMG and reimbursed by the Fund at the time of the initial
offering. These costs in turn will be equitably allocated to each Series
as provided for by the Fund's Board. Such organization costs have been
deferred and will be amortized ratably over a period of sixty months from
the commencement of operations of the Series. If any of the initial shares
are redeemed before the end of the amortization period, the proceeds of the
redemption will be reduced by the pro rata share of the unamortized
organization costs.
2. Agreements and Transactions with Affiliates
The Fund has an Investment Management Agreement (the "Management
Agreement") with DMG. As investment adviser, DMG manages the investments
of each of the Series. For its services, DMG is entitled to receive a fee
from each Series at an annual rate of .20% of the average daily net assets,
in the case of the US Index Series, .45% of the average daily net assets in
the case of the Hong Kong Index Series and the South African Index Series,
and .30% of the average daily net assets of each other Series, plus, in the
case of each Series, 40% of the gross investment income, less dividends on
securities held in portfolio. The Management Agreement also provides that
DMG will be reimbursed for out-of-pocket expenses incurred in providing
certain administrative services.
The Fund has an Administration Agreement with State Street. Under the
Administration Agreement, State Street assists in supervising the
operations of the Series. For its services, State Street is entitled to
receive a fee from each Series at an annual rate of .08% of the average
daily net assets of such Series up to $125 million, plus .06% of the
average daily net assets of such Series in excess of $125 million up to
$250 million, and .04% of the average daily net assets of such Series in
excess of $250 million, subject to a minimum annual fee of $95,000 per
Series. The
<PAGE> SAI-60
THE COUNTRYBASKETS(SM) INDEX FUND, INC.
Notes to Financial Statements
________ [ ], 1996
Administration Agreement also provides that State Street will be reimbursed
for out-of-pocket expenses incurred in providing certain services.
The Fund has a Distribution Agreement with ALPS. Under the Distribution
Agreement, ALPS serves as Distributor of the shares of the Series. The
Fund also has established a 12b-1 Plan for each Series (each, a "Plan"),
pursuant to which each Series pays the Distributor a distribution services
fee for activities intended to result in the sale of shares of the Series,
equal to such Series' allocable portion of the aggregate distribution
services fees payable by the Fund, as follows: .02% per annum of the
average aggregate daily net assets ("Aggregate Net Assets") of all Series
up to Aggregate Net Assets of $2.5 billion, plus .01% per annum of
Aggregate Net Assets of all Series in excess of $2.5 billion up to $5
billion, plus .005% per annum of Aggregate Net Assets of all Series in
excess of $5 billion. The Distributor will also be paid a marketing fee and
reimbursed for certain expenses. Each Series will also make payments made
to dealers and other persons for marketing and stockholder services,
including payments of 0.05% per annum of the average aggregate daily net
assets of all Series to each such person entering into an investor services
agreement with ALPS. All payments to the Distributor and such dealers and
other persons by each Series, and all reimbursements to the Distributor or
the Adviser for their respective costs incurred in producing advertising or
marketing material prepared at the request of the Series, will be made
under the 12b-1 Plan of such Series and will not exceed in the aggregate,
on an annualized basis, .25% of the average daily net assets of the Series.
3. Capital Shares
The Fund is authorized to issue 5,000,000,000 shares of common stock.
Currently, the Board has created nine Series of stock and allocated the
following number of shares to each Series: Australia Index Series
(200,000,000 shares); France Index Series (200,000,000 shares); Germany
Index Series (200,000,000 shares); Hong Kong Index Series (200,000,000
shares); Italy Index Series (200,000,000 shares); Japan Index Series
(200,000,000 shares); South Africa Index Series (200,000,000 shares); UK
Index Series (200,000,000 shares); and US Index Series (200,000,000
shares). Shares of each Series are offered at net asset value without a
sales charge, in exchange for an in-kind deposit of a designated portfolio
of securities specified by the Distributor each day, plus a specified
amount of cash. Redemptions of the shares of the Series are made
principally in portfolio securities. The Fund imposes a transaction fee to
the cash portion of each purchase and of each redemption of Series shares
(other than shares of the US Index Series). The percentage fee imposed on
the cash portion of purchases, for each Series other than the US Index
Series, is as follows: Australia Index Series (1.15%); France Index Series
(1.0%); Germany Index Series (1.0%); Hong Kong Index Series (1.2%); Italy
Index Series (1.0%); Japan Index Series (1.32%); South Africa Index Series
(2.0%); and UK Index Series (1.5%). The percentage fee imposed on the cash
portion of redemption proceeds for each Series other than the US Index
Series is as follows: Australia Index Series (1.15%); France Index Series
(1.0%); Germany Index Series (1.0%); Hong Kong Index Series (1.2%); Italy
Index Series (1.0%); Japan Index Series (1.32%); South Africa Index Series
(1.0%); and UK Index Series (1.0%).
<PAGE> A-1
APPENDIX A
FT/S&P-Actuaries World Indices
Australia Component as of 29 December 1995
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
<S> <S> <C> <C>
BROKEN HILL PROP Mining & Extractive Industries 27,496.58 16.28%
NATL AUSTRALIA BANK Commercial Banks & Other Banks 12,857.05 7.61%
CRA Mining & Extractive Industries 9,435.03 5.59%
WESTPAC Commercial Banks & Other Banks 8,252.97 4.89%
WESTERN MINING Mining & Extractive Industries 7,131.23 4.22%
ANZ BANK Commercial Banks & Other Banks 6,819.86 4.04%
AMCOR Paper & Paper Products 4,353.46 2.58%
NEWS CORP Publishing 4,135.48 2.45%
COCA-COLA AMATIL Diversified Consumer Goods &
Services 3,922.34 2.32%
COMMONWLTH BK OF AUS Commercial Banks & Other Banks 3,808.62 2.26%
WOODSIDE PETROLEUM Oil - Crude Producers 3,411.94 2.02%
LEND LEASE CORP Real Estate 3,382.31 2.00%
COLES MYER Retail - Department Stores 3,355.04 1.99%
FOSTERS BREWING GR Diversified Industrials 3,222.26 1.91%
CSR Building Materials 3,107.59 1.84%
COMALCO Non-Ferrous Metals 3,006.84 1.78%
BORAL Building Materials 2,780.45 1.65%
WOOLWORTHS LTD. Retail - Grocery Chains 2,590.98 1.53%
BRAMBLES INDUSTRIES Freight Forwarders 2,458.20 1.46%
PACIFIC DUNLOP Diversified Industrials 2,449.90 1.45%
PIONEER INTERNATIONL Building Materials 2,288.16 1.36%
ICI AUSTRALIA Chemicals, Fibres, Paints & Gases 2,270.38 1.34%
MIM HOLDINGS Mining & Extractive Industries 2,222.64 1.32%
NORTH LTD Mining & Extractive Industries 1,941.74 1.15%
WESTFIELD TRUST Real Estate 1,794.95 1.06%
SANTOS Oil - Crude Producers 1,570.25 0.93%
ADVANCE BANK AUST Commercial Banks & Other Banks 1,433.03 0.85%
MAYNE NICKLESS Freight Forwarders 1,378.50 0.82%
WESFARMERS Agriculture & Fishing 1,374.75 0.81%
SOUTHCORP HOLDINGS Beverages - Brewers 1,321.18 0.78%
GIO AUSTRALIA Insurance - Multiline 1,320.33 0.78%
GENERAL PROPERTY TST Real Estate 1,264.25 0.75%
GOODMAN FIELDER LTD Food Processors 1,201.98 0.71%
BURNS PHILP Diversified Consumer Goods &
Services 1,148.49 0.68%
POSGOLD Precious Metals & Minerals 1,147.78 0.68%
WESTFIELD HDGS Real Estate 1,130.10 0.67%
ST.GEORGE BANK Commercial Banks & Other Banks 1,109.63 0.66%
AUST GAS LIGHT Natural Gas Utilities 1,078.79 0.64%
<PAGE> A-2
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
QBE INSURANCE GP Insurance - Multiline 1,034.34 0.61%
RGC LIMITED Mining & Extractive Industries 1,014.97 0.60%
NEWCREST MINING LTD. Precious Metals & Minerals 973.91 0.58%
PASMINCO Metal Ore Mining 945.65 0.56%
ARNOTTS Food Processors 932.10 0.55%
GOLD MINE KALGOORLIE Precious Metals & Minerals 887.90 0.53%
TUBEMAKERS Heavy Engineering & Shipbuilding 867.33 0.51%
PLUTONIC RESOURCES Precious Metals & Minerals 858.65 0.51%
SMITH (HOWARD) Non-Oil Energy Sources 843.57 0.50%
NORMANDY MINING Precious Metals & Minerals 771.57 0.46%
T.N.T Rail & Road Transport 769.98 0.46%
QCT RESOURCES Non-Oil Energy Sources 733.10 0.43%
STOCKLAND TST Real Estate 717.35 0.42%
AUST FOUNDATION Investment Trusts 712.61 0.42%
CALTEX AUSTRALIA Petroleum Products & Refineries 711.00 0.42%
EMAIL Household Durables & Appliances 674.50 0.40%
HARDIE (JAMES) INDS Building Materials 666.04 0.39%
AMPOLEX LTD. Oil - Crude Producers 638.87 0.38%
JOHN FAIRFAX HOLDING Publishing - Newspapers 628.22 0.37%
BANK OF MELBOURNE Commercial Banks & Other Banks 623.58 0.37%
AUST NATIONAL INDS Diversified Industrials 584.60 0.35%
FAULDING & CO Drugs 521.05 0.31%
ROTHMANS HDG Tobacco Manufacturers 498.72 0.30%
GANDEL RETAIL TRUST Real Estate 478.17 0.28%
SIMSMETAL Engineering Services & Pollution
Control 453.95 0.27%
FRANKED INCOME Investment Trusts 448.95 0.27%
DAVIDS Wholesale - Nondurables 441.30 0.26%
SCHRODERS PROP FUND Real Estate 426.89 0.25%
METAL MANUFACTURES Diversified Industrials 412.90 0.24%
ASHTON MINING Precious Metals & Minerals 406.26 0.24%
SONS OF GWALIA LTD Precious Metals & Minerals 394.98 0.23%
FOODLAND ASSOCIATED Wholesale - Nondurables 346.81 0.21%
NATIONAL FOODS Food - Sugar & Confectionary 325.96 0.19%
AAPC Restaurants & Hotels 289.77 0.17%
ORBITAL ENGINE CORP Machinery - Industrial &
Speciality 286.15 0.17%
CAPITAL PROPERTY Real Estate 271.67 0.16%
PUBLISH AND BCST ORD Broadcasting Media 231.13 0.14%
OPSM PROTECTOR LTD Diversified Consumer Goods &
Services 221.19 0.13%
ABERFOYLE Non-Ferrous Metals 207.35 0.12%
BOUGAINVILLE COPPER Non-Ferrous Metals 179.01 0.11%
KIDSTON GOLD MINES Precious Metals & Minerals 172.02 0.10%
SEVEN NETWORK Broadcasting Media 160.27 0.09%
PUBLISH AND BCST PRF Broadcasting Media 120.91 0.07%
FT-AUSTRALIA 168,860.31
</TABLE>
<PAGE> B-1
APPENDIX B
FT/S&P-Actuaries World Indices
France Component as of 29 December 1995
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
<S> <S> <C> <C>
ELF AQUITAINE Oil Internationals 19,981.04 5.38%
LVMH - MOET VUITTON Beverages - Distillers 18,149.14 4.89%
L'OREAL Cosmetics 16,470.27 4.44%
TOTAL Oil Internationals 15,794.06 4.25%
CARREFOUR Retail - Grocery Chains 15,577.00 4.20%
ALCATEL ALSTHOM Communications Equipment 12,996.90 3.50%
EAUX (GENERALE DES) Electric Utilities & Water Works
Supply 11,736.00 3.16%
DANONE Food Processors 11,735.45 3.16%
AXA Insurance - Property & Casualty 11,094.36 2.99%
AIR LIQUIDE Chemicals, Fibres, Paints & Gases 10,957.16 2.95%
SOCIETE GENERALE Commercial Banks & Other Banks 10,791.03 2.91%
SAINT GOBAIN Building Materials 9,118.67 2.46%
BANQUE NATIONALE DE PARIS Commercial Banks & Other Banks 8,680.80 2.34%
U.A.P Insurance - Multiline 7,874.64 2.12%
RENAULT Automobiles 6,890.94 1.86%
RHONE POULENC A ORD Chemicals (Diversified) 6,866.56 1.85%
PEUGEOT S.A Automobiles 6,609.79 1.78%
PARIBAS Commercial Banks & Other Banks 6,598.55 1.78%
ELF SANOFI Drugs 6,587.25 1.77%
SUEZ (FINANCIERE) Commercial Banks & Other Banks 6,586.18 1.77%
LAFARGE Building Materials 5,918.02 1.59%
LYONNAISE DES EAUX-DUMEZ Electric Utilities & Water Works
Supply 5,584.15 1.50%
ROUSSEL-UCLAF Drugs 4,604.57 1.24%
CHRISTIAN DIOR Cosmetics 4,533.75 1.22%
PINAULT-PRINTEMPS/La REDOUTE Retail - Department Stores 4,471.97 1.20%
ERIDANIA/BEGHIN-SAY Food Processors 4,455.32 1.20%
SCHNEIDER SA Construction 4,356.91 1.17%
MICHELIN 'B' Tyre & Rubber Goods 4,289.93 1.16%
CANAL PLUS Broadcasting Media 4,136.02 1.11%
PROMODES Retail - Grocery Chains 4,117.52 1.11%
HAVAS Advertising 4,009.64 1.08%
CMB PACKAGING S.A Containers 3,769.50 1.02%
ACCOR Restaurants & Hotels 3,748.60 1.01%
CREDIT. COMM. FRANCE Financial Services 3,537.54 0.95%
LEGRAND Electrical Equipment 3,309.06 0.89%
USINOR SACILOR Iron & Steel 3,220.20 0.87%
PERNOD RICARD Beverages - Distillers 3,208.77 0.86%
VALEO Auto Parts - Original Equipment 3,202.84 0.86%
<PAGE> B-2
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
BANCAIRE (CIE) Financial Institutions 3,052.69 0.82%
SYNTHELABO Drugs 3,029.38 0.82%
CREDIT LOCAL DE FRANCE Financial Services 2,941.30 0.79%
BIC Diversified Consumer Goods &
Services 2,815.40 0.76%
THOMSON-CSF Electronics 2,602.63 0.70%
CASTORAMA DUBOIS Retail - General Merchandise 2,562.04 0.69%
BOUYGUES Construction 2,310.51 0.62%
NAVIGATION MIXTE Diversified Holding Companies 2,152.28 0.58%
POLIET Building Materials 2,152.13 0.58%
SIDEL Machinery - Industrial & Speciality 2,148.04 0.58%
SAINT - LOUIS Food Processors 2,127.37 0.57%
DOCKS DE FRANCE Retail - Grocery Chains 1,975.43 0.53%
S.E.B Household Durables & Appliances 1,847.11 0.50%
IMETAL Non-Ferrous Metals 1,772.88 0.48%
CASINO Retail - Grocery Chains 1,770.61 0.48%
EURO DISNEY Entertainment & Leisure Time 1,744.24 0.47%
COMPTOIRS MODERNES Retail - Miscellaneous & Speciality 1,673.07 0.45%
LAGARDERE GROUPE Communications Equipment 1,578.37 0.43%
GROUPE WORMS ET CIE Diversified Holding Companies 1,557.42 0.42%
CHARGEURS Diversified Holding Companies 1,539.51 0.41%
SAGEM Electrical Equipment 1,529.05 0.41%
PECHINEY INTL. Containers 1,526.19 0.41%
ECCO Business Services 1,518.21 0.41%
CAP GEMINI SOGETI Computer Software & Services 1,497.61 0.40%
ESSILOR INTL Health Care 1,441.56 0.39%
SIMCO Real Estate 1,423.48 0.38%
FROMAGERIES Food Processors 1,369.78 0.37%
C.G.I.P Diversified Holding Companies 1,280.04 0.34%
EURAFRANCE Financial Services 1,169.55 0.32%
AGF Insurance - Multiline 1,141.38 0.31%
BONGRAIN Food Processors 1,085.75 0.29%
CLUB MEDITERRANEE Restaurants & Hotels 1,072.46 0.29%
CREDIT NATIONAL Financial Services 1,054.49 0.28%
SEFIMEG Real Estate 1,053.58 0.28%
G.T.M. ENTREPOSE Construction 1,029.31 0.28%
UNIBAIL Financial Services 972.79 0.26%
GAZ ET EAUX Diversified Holding Companies 970.88 0.26%
SALOMON Entertainment & Leisure Time 899.79 0.24%
GROUPE DE LA CITE Publishing 852.24 0.23%
CPR (PARIS REESC.) Financial Services 819.34 0.22%
UIF Real Estate 723.07 0.19%
EUROTUNNEL Rail & Road Transport 625.19 0.17%
SOMMER ALLIBERT Household Durables & Appliances 571.34 0.15%
CR FONCIER FRANCE Financial Institutions 545.93 0.15%
<PAGE> B-3
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
DAMART S.A Clothing 495.09 0.13%
UFB LOCABAIL Commercial Banks & Other Banks 461.22 0.12%
LABINAL Aerospace & Defence 456.07 0.12%
EURO RSCG Advertising 440.12 0.12%
S.I.L.I.C. Financial Services 436.99 0.12%
EBF Auto Parts - Original Equipment 430.66 0.12%
IMMEUBLES DE FRANCE Real Estate 408.34 0.11%
CASINO PREF. Retail - Grocery Chains 387.08 0.10%
MOULINEX Household Durables & Appliances 384.59 0.10%
FONCIERE LYONNAISE Real Estate 368.35 0.10%
NORD - EST Diversified Holding Companies 326.39 0.09%
VALLOUREC Iron & Steel 291.36 0.08%
LEGRIS Machinery - Industrial & Speciality 280.93 0.08%
INTERBAIL Financial Services 280.71 0.08%
D.M.C. Textile Products 266.47 0.07%
TAITTINGER Beverages - Distillers 246.36 0.07%
FINEXTEL Financial Services 163.59 0.04%
GEOPHYSIQUE Energy Equipment & Services 101.27 0.03%
FT-FRANCE 371,321.09
</TABLE>
<PAGE> C-1
APPENDIX C
FT/S&P-Actuaries World Indices
Germany Component as of 29 December 1995
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
<S> <S> <C> <C>
ALLIANZ AG HLDG. Insurance - Multiline 45,863.03 11.41%
SIEMENS Electrical Equipment 30,194.79 7.51%
DAIMLER BENZ Automobiles 25,912.27 6.45%
DEUTSCHE BANK Commercial Banks & Other Banks 23,738.29 5.91%
VEBA Diversified Holding Companies 20,687.19 5.15%
BAYER Chemicals (Diversified) 18,652.81 4.64%
MUNICH RE (PART PD. REG) Insurance - Multiline 17,323.93 4.31%
HOECHST Chemicals (Diversified) 15,979.46 3.98%
BASF Chemicals (Diversified) 13,614.18 3.39%
RWE Electric Utilities & Water Works
Supply 12,002.14 2.99%
DRESDNER BANK Commercial Banks & Other Banks 11,921.93 2.97%
MANNESMANN Machinery 11,713.37 2.91%
BMW (BR.) Automobiles 9,492.00 2.36%
COMMERZBANK Commercial Banks & Other Banks 9,231.14 2.30%
VOLKSWAGEN REGD. Automobiles 9,047.16 2.25%
VIAG Non-Ferrous Metals 8,270.86 2.06%
BAYERISCHE VEREINSBANK Commercial Banks & Other Banks 6,839.45 1.70%
BAY. HYP.-U. WECHSEL BANK. Commercial Banks & Other Banks 6,492.33 1.62%
SAP AG Computer Software & Services 6,102.32 1.52%
THYSSEN Iron & Steel 5,698.86 1.42%
RWE PREF Electric Utilities & Water Works
Supply 5,573.84 1.39%
LUFTHANSA Airlines 5,265.56 1.31%
VEW Electric Utilities & Water Works
Supply 5,022.33 1.25%
LINDE Machinery - Industrial &
Speciality 4,911.99 1.22%
SCHERING Chemicals (Diversified) 4,537.51 1.13%
PREUSSAG Non-Ferrous Metals 4,267.36 1.06%
GEHE Wholesale - Nondurables 3,718.09 0.93%
KARSTADT Retail - Department Stores 3,450.85 0.86%
<PAGE> C-2
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
BER. KRAFT UND LICHT (BEWAG) Electric Utilities & Water Works
Supply 3,360.86 0.84%
AACH. & MUNCH. BETEIL REGD. Insurance - Multiline 3,039.93 0.76%
HOCHTIEF Construction 2,993.08 0.74%
MAN Machinery - Industrial &
Speciality 2,989.50 0.74%
BEIERSDORF Cosmetics 2,949.07 0.73%
DEGUSSA Precious Metals & Minerals 2,864.93 0.71%
VICTORIA HLDG. REGD. Insurance - Multiline 2,513.10 0.63%
HENKEL KGA PREF. Chemicals (Diversified) 2,487.22 0.62%
KAUFHOF Retail - Department Stores 2,478.70 0.62%
HEIDELBERGER ZEMENT Building Materials 2,420.88 0.60%
METALLGESELLSCHAFT Non-Ferrous Metals 2,377.80 0.59%
SPRINGER (AXEL) VERLAG REG Publishing 2,280.44 0.57%
ALTANA Drugs 2,275.20 0.57%
BHF-BANK Commercial Banks & Other Banks 2,271.68 0.57%
COLONIA KONZERN REGD. Insurance - Multiline 2,199.25 0.55%
RHEINELEKTRA Electrical Equipment 2,171.45 0.54%
ASKO DEUTSCHE KAUFHAUS Retail - Department Stores 2,076.35 0.52%
VOLKSWAGEN PREF Automobiles 1,569.89 0.39%
HOLZMANN (PHILIPP) Construction 1,548.02 0.39%
BILFINGER & BERGER Construction 1,365.75 0.34%
CONTINENTAL Tyre & Rubber Goods 1,323.99 0.33%
DOUGLAS HLDG. Retail - Drug Chains 1,058.78 0.26%
PWA Paper & Paper Products 1,055.40 0.26%
MAN PREF. Machinery - Industrial &
Speciality 949.71 0.24%
AGIV Diversified Industrials 850.97 0.21%
DEUTSCHE BABCOCK Engineering Services & Pollution
Control 643.12 0.16%
AACH. & MUNCH. BET. BR. Insurance - Multiline 559.49 0.14%
MUNICH RE Insurance - Multiline 555.44 0.14%
KAUFHOF PREF Retail - Department Stores 485.75 0.12%
BMW (PREF.) Automobiles 457.23 0.11%
LINOTYPE-HELL Electronics 247.33 0.06%
FT- GERMANY 401,945.36
</TABLE>
<PAGE> D-1
APPENDIX D
FT/S&P-Actuaries World Indices
Hong Kong Component as of 29 December 1995
<TABLE>
<CAPTION>
Index Market
Capitalization Weight in
(Millions of FT/S&P
Constituent Name Industry Sector US$) Index
<S> <S> <C> <C>
HUTCHISON WHAMPOA Diversified Consumer Goods & Services 22,015.24 10.34%
HONG KONG TELECOMM Telephone Companies 19,904.87 9.35%
SUN HUNG KAI PROPS Real Estate 19,014.92 8.93%
HANG SENG BANK Commercial Banks & Other Banks 17,298.63 8.13%
CHEUNG KONG Real Estate 13,386.22 6.29%
HENDERSON LAND Real Estate 9,618.63 4.52%
CHINA LIGHT & POWER Electric Utilities & Water Works
Supply 9,165.22 4.31%
SWIRE PACIFIC 'A' Diversified Holding Companies 7,527.04 3.54%
NEW WORLD DEV Real Estate 7,302.91 3.43%
WHARF HLDS Diversified Holding Companies 7,223.95 3.39%
CITIC PACIFIC $HK0.40 Real Estate 6,886.63 3.24%
HONG KONG ELECTRIC Electric Utilities & Water Works
Supply 6,623.66 3.11%
JARDINE MATHESON Diversified Consumer Goods & Services 5,070.87 2.38%
HONG KONG LAND Real Estate 5,006.61 2.35%
CATHAY PACIFIC A/WYS Airlines 4,371.49 2.05%
HK & CHINA GAS Natural Gas Utilities 3,999.14 1.88%
SWIRE PACIFIC 'B' Diversified Holding Companies 3,839.82 1.80%
WHEELOCK AND CO. Retail - Miscellaneous & Speciality 3,453.73 1.62%
JARDINE STRATEGIC Diversified Holding Companies 3,249.38 1.53%
BANK OF EAST ASIA Commercial Banks & Other Banks 3,215.07 1.51%
HYSAN DEV Real Estate 2,666.36 1.25%
HOPEWELL Real Estate 2,516.39 1.18%
AMOY PROPERTIES Real Estate 2,489.72 1.17%
HANG LUNG DEV Real Estate 2,144.49 1.01%
HENDERSON INVESTMENT Real Estate 2,106.35 0.99%
GUOCO GROUP LIMITED Financial Services 2,058.06 0.97%
SINO LAND Real Estate 1,900.90 0.89%
DAIRY FARM INTL Retail - Miscellaneous & Speciality 1,608.60 0.76%
HK & SHANGHAI HOTELS Restaurants & Hotels 1,562.77 0.73%
TELEVISION BROADCAST Broadcasting Media 1,496.48 0.70%
MIRAMAR HOTEL Restaurants & Hotels 1,216.84 0.57%
GREAT EAGLE HLDS Real Estate 1,163.53 0.55%
SHUN TAK HOLDINGS LTD Sea Transport 1,031.33 0.48%
<PAGE> D-2
Index Market
Capitalization Weight in
(Millions of FT/S&P
Constituent Name Industry Sector US$) Index
CHINESE ESTATES Real Estate 1,030.83 0.48%
SOUTH CHINA MORNING POST $HK0.10 Publishing - Newspapers 916.62 0.43%
MANDARIN ORIENTAL Restaurants & Hotels 864.04 0.41%
NEW ASIA REALTY & TS Real Estate 695.67 0.33%
JOHNSON ELECTRIC Electrical Equipment 680.34 0.32%
REALTY DEV 'A' Real Estate 658.41 0.31%
KOWLOON MOTOR Rail & Road Transport 657.75 0.31%
DICKSON CONCEPTS INT Retail - Miscellaneous & Speciality 632.69 0.30%
SEMI-TECH (GLOBAL) Household Durables & Appliances 569.63 0.27%
JARDINE INTNL. MOTOR Automobiles 543.26 0.26%
HK AIRCRAFT Aircraft Manufacturers 479.02 0.23%
SIME DARBY Wholesale - Durables 449.17 0.21%
SHAW BROS Entertainment & Leisure Time 437.95 0.21%
CHINA MOTOR BUS Rail & Road Transport 400.92 0.19%
HARBOUR CENTRE DEV Restaurants & Hotels 364.61 0.17%
CROSS-HARBOUR TUNNEL Storage, Warehousing & Supporting
Transport Services 363.09 0.17%
WING ON CO INTL LTD Retail - Department Stores 285.29 0.13%
WINSOR INDUSTRIAL Textile Products 219.98 0.10%
SUN HUNG KAI Financial Institutions 147.62 0.07%
PLAYMATES TOYS HLDG Toys 131.68 0.06%
LANE CRAWFORD INTL A Retail - Miscellaneous & Speciality 91.23 0.04%
PLAYMATES PROP HLDGS Real Estate 78.64 0.04%
FT-HONG KONG 212,834.30
</TABLE>
<PAGE> E-1
APPENDIX E
FT/S&P-Actuaries World Indices
Italy Component as of 29 December 1995
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
<S> <S> <C> <C>
GENERALI (ASSICURAZIONI) Insurance - Multiline 19,428.59 13.90%
TELECOM ITAL MOBILE Telephone Companies 11,696.76 8.37%
STET Telephone Companies 10,851.94 7.77%
FIAT Automobiles 10,682.56 7.64%
TELECOM ITALIA Telephone Companies 10,336.68 7.40%
INA Insurance - Life & Agents &
Brokers 5,307.45 3.80%
ALLEANZA (ASSICURAZIONI) Insurance - Multiline 5,261.50 3.77%
SAN PAOLO Commercial Banks & Other Banks 4,342.75 3.11%
ENI Oil Internationals 4,197.64 3.00%
IMI Financial Institutions 3,782.03 2.71%
MONTEDISON Diversified Holding Companies 3,569.69 2.55%
RAS Insurance - Multiline 3,402.06 2.43%
BANCA COMM. ITALIANA Commercial Banks & Other Banks 3,363.31 2.41%
MEDIOBANCA Financial Institutions 3,298.95 2.36%
STET RISP Telephone Companies 2,955.00 2.11%
OLIVETTI ORD Office Equipment 2,833.56 2.03%
CREDITO ITALIANO Commercial Banks & Other Banks 2,588.75 1.85%
ITALGAS Natural Gas Utilities 2,015.53 1.44%
TELECOM ITALIA SVGS Telephone Companies 1,915.69 1.37%
PIRELLI SPA Tyre & Rubber Goods 1,898.25 1.36%
FIAT PTC PREF Automobiles 1,738.11 1.24%
FONDIARIA Insurance - Multiline 1,685.93 1.21%
TELECOM ITAL MOB RIS Telephone Companies 1,647.37 1.18%
BANCO AMBROVENETO Commercial Banks & Other Banks 1,368.18 0.98%
SAI Insurance - Multiline 1,256.43 0.90%
SIRTI Communications Equipment 1,236.98 0.89%
GEMINA Investment Companies 1,229.42 0.88%
IFIL Food Processors 1,178.70 0.84%
FIAT SVG N/CV Automobiles 1,135.19 0.81%
ITALCEMENTI Building Materials 974.05 0.70%
RINASCENTE ORD Retail - Department Stores 957.79 0.69%
SME Food Processors 928.35 0.66%
SAIPEM Energy Equipment & Services 918.74 0.66%
TORO ASSICURAZIONI Insurance - Multiline 840.89 0.60%
FIDIS Investment Companies 719.77 0.52%
RAS SVGS N/CV Insurance - Multiline 690.82 0.49%
BURGO (CARTIERE) Paper & Paper Products 629.75 0.45%
<PAGE> E-2
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
ALLEANZA ASSIC N\CV Insurance - Multiline 607.24 0.43%
IFIL N/C SVGS. Food Processors 586.08 0.42%
IFI PTC PREF Diversified Holding Companies 573.34 0.41%
SNIA BPD Chemicals, Fibres, Paints & Gases 568.98 0.41%
MAGNETI MARELLI Auto Parts - Original Equipment 483.43 0.35%
MILANO ASSICURAZIONI Insurance - Multiline 482.60 0.35%
MONTEDISON SVG. N/CV. Diversified Holding Companies 428.79 0.31%
CIR-COMPAGNIE Diversified Holding Companies 376.23 0.27%
SASIB Machinery 370.09 0.26%
UNICEM Building Materials 342.40 0.25%
MARZOTTO Clothing 339.45 0.24%
BANCO AMBROVEN N/C SVGS Commercial Banks & Other Banks 282.29 0.20%
ITALCEMENTI SVGS N/CV Building Materials 249.79 0.18%
SAI SVGS N/CV Insurance - Multiline 243.43 0.17%
TORO ASSICURAZIONI SVG N/CV Insurance - Multiline 201.86 0.14%
EDITOR L'ESPRESSO Publishing - Newspapers 181.79 0.13%
SASIB SVG N/CV Machinery 157.35 0.11%
TORO ASS. PTC PREF Insurance - Multiline 130.31 0.09%
UNICEM SVG N/CV Building Materials 109.72 0.08%
CIR-COMPAGNIE SVG N/CV Diversified Holding Companies 101.85 0.07%
BANCA COMM. ITALIANA SVGS N/CV Commercial Banks & Other Banks 32.23 0.02%
CREDITO ITALIANO SVG N/CV Commercial Banks & Other Banks 21.89 0.02%
FT-ITALY 139,736.27
</TABLE>
<PAGE> F-1
APPENDIX F
FT/S&P-Actuaries World Indices
Japan Component as of 29 December 1995
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
<S> <S> <C> <C>
TOYOTA MOTOR Automobiles 79,406.90 2.79%
IND BANK OF JAPAN Commercial Banks & Other Banks 71,349.68 2.51%
MITSUBISHI BANK Commercial Banks & Other Banks 67,859.35 2.38%
SUMITOMO BANK Commercial Banks & Other Banks 66,685.34 2.34%
FUJI BANK Commercial Banks & Other Banks 64,038.21 2.25%
DAI-ICHI KANGYO BANK Commercial Banks & Other Banks 61,412.70 2.16%
SANWA BANK Commercial Banks & Other Banks 59,057.54 2.07%
SAKURA BANK LTD. Commercial Banks & Other Banks 43,484.60 1.53%
NOMURA SECURITIES Financial Institutions 42,816.14 1.50%
TOKYO ELEC POWER Electric Utilities & Water Works
Supply 36,197.12 1.27%
BANK OF TOKYO Commercial Banks & Other Banks 35,709.59 1.25%
HITACHI Electronics 34,241.16 1.20%
MATSUSHITA ELECT IND Household Durables & Appliances 34,156.38 1.20%
ASAHI BANK Commercial Banks & Other Banks 29,261.94 1.03%
TOKAI BANK Commercial Banks & Other Banks 28,323.71 1.00%
MITSUBISHI HEAVY IND Heavy Engineering & Shipbuilding 26,884.56 0.94%
SEVEN-ELEVEN Retail - Grocery Chains 26,718.13 0.94%
NTT Telephone Companies 26,265.41 0.92%
ITO YOKADO Retail - Grocery Chains 25,583.50 0.90%
TOSHIBA Electronics 25,245.00 0.89%
KANSAI ELEC POWER Electric Utilities & Water Works
Supply 23,717.67 0.83%
NIPPON STEEL Iron & Steel 23,644.28 0.83%
SONY CORP Household Durables & Appliances 22,438.87 0.79%
MITSUBISHI TRUST BNK Financial Services 21,714.51 0.76%
<PAGE> F-2
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
DAIWA SECURITIES Financial Institutions 20,591.39 0.72%
FUJITSU Computers 20,526.15 0.72%
LONG TERM CREDIT BK Commercial Banks & Other Banks 20,413.51 0.72%
TOKIO MARINE & FIRE Insurance - Property & Casualty 20,254.45 0.71%
SEIBU RAILWAY Rail & Road Transport 20,162.49 0.71%
HONDA MOTOR Automobiles 20,115.40 0.71%
EAST JAPAN RAILWAY Rail & Road Transport 19,465.85 0.68%
NISSAN MOTOR Automobiles 19,316.44 0.68%
MITSUBISHI CORP Wholesale - Durables 19,292.14 0.68%
NIKKO SECS Financial Institutions 18,939.50 0.67%
NEC CORP Electronics 18,879.40 0.66%
SHARP CORP Household Durables & Appliances 17,823.42 0.63%
CHUBU ELEC POWER Electric Utilities & Water Works
Supply 17,631.17 0.62%
SUMITOMO TRUST BANK Financial Services 17,609.11 0.62%
NIPPONDENSO Auto Parts - Original Equipment 16,265.63 0.57%
MITSUBISHI ESTATE Real Estate 16,246.90 0.57%
MITSUBISHI ELECTRIC Electronics 15,464.00 0.54%
CANON Office Equipment 15,156.16 0.53%
FUJI PHOTO FILM Photography 14,866.80 0.52%
TAKEDA CHEMICAL Drugs 14,431.88 0.51%
KYOCERA Electronics 13,900.60 0.49%
MITSUI Wholesale - Durables 13,640.48 0.48%
MITSUI TRUST&BANKING Financial Services 13,126.61 0.46%
ASAHI GLASS Diversified Industrials 13,101.77 0.46%
DAI-NIPPON PRINTING Printing 12,725.06 0.45%
BRIDGESTONE CORP Tyre & Rubber Goods 12,465.85 0.44%
KIRIN BREWERY Beverages - Brewers 12,447.56 0.44%
DAIWA BANK Commercial Banks & Other Banks 12,308.55 0.43%
TOHOKU ELEC POWER Electric Utilities & Water Works
Supply 12,138.80 0.43%
KINKI NIPPON RAILWAY Rail & Road Transport 11,892.95 0.42%
KAWASAKI STEEL Iron & Steel 11,347.58 0.40%
SANYO ELECTRIC Household Durables & Appliances 11,249.29 0.40%
KYUSHU ELEC POWER Electric Utilities & Water Works
Supply 11,216.20 0.39%
ASAHI CHEMICAL INDS Chemicals (Diversified) 11,048.09 0.39%
SUMITOMO SHOJI Wholesale - Durables 10,834.51 0.38%
NINTENDO Toys 10,780.88 0.38%
MITSUBISHI KASEI Chemicals, Fibres, Paints &
Gases 10,661.87 0.37%
<PAGE> F-3
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
FANUC Instrumentation & Control
Equipment 10,370.85 0.36%
NIPPON EXPRESS Freight Forwarders 10,351.93 0.36%
SHIZUOKA BANK Commercial Banks & Other Banks 10,139.71 0.36%
SANKYO Drugs 10,081.00 0.35%
MITSUI FUDOSAN Real Estate 10,001.95 0.35%
TOKYO GAS Natural Gas Utilities 9,915.51 0.35%
KAJIMA Construction 9,674.07 0.34%
ITOCHU CORP Wholesale - Durables 9,603.20 0.34%
SUMITOMO METAL Iron & Steel 9,544.00 0.34%
NKK Iron & Steel 9,495.96 0.33%
TONEN CORP Petroleum Products & Refineries 9,464.25 0.33%
YAMAICHI SECURITIES Financial Institutions 9,408.69 0.33%
BANK OF YOKOHAMA Commercial Banks & Other Banks 9,320.34 0.33%
TORAY INDS Chemicals, Fibres, Paints &
Gases 9,238.60 0.32%
TOPPAN PRINTING Printing 9,219.27 0.32%
KUBOTA Machinery - Farm Equipment 9,087.50 0.32%
SEKISUI HOUSE Homebuilding 8,796.95 0.31%
KOBE STEEL Iron & Steel 8,768.40 0.31%
OSAKA GAS Natural Gas Utilities 8,749.49 0.31%
MURATA MFG Electronics 8,677.20 0.30%
DAIEI Retail - Grocery Chains 8,648.34 0.30%
CHUGOKU ELEC POWER Electric Utilities & Water Works
Supply 8,597.00 0.30%
SUMITOMO ELECTRIC Electrical Equipment 8,545.74 0.30%
KOMATSU Machinery - Construction 8,272.34 0.29%
SEKISUI CHEMICAL Building Materials 8,132.73 0.29%
SUMITOMO CHEMICAL Chemicals, Fibres, Paints &
Gases 8,096.21 0.28%
MARUBENI CORP Wholesale - Durables 8,092.34 0.28%
JUSCO Retail - Grocery Chains 8,046.79 0.28%
SHIMIZU CORP Construction 8,025.73 0.28%
NIPPON CREDIT BANK Commercial Banks & Other Banks 7,941.01 0.28%
SECOM Business Services 7,922.50 0.28%
DAIWA HOUSE INDUSTRY Homebuilding 7,887.99 0.28%
MATSUSHITA ELEC WKS Electrical Equipment 7,849.75 0.28%
TOKYU Rail & Road Transport 7,761.96 0.27%
NIPPON OIL Petroleum Products & Refineries 7,726.07 0.27%
MARUI Retail - Department Stores 7,676.89 0.27%
MITSUBISHI MOTORS Automobiles 7,504.84 0.26%
KAO Soaps 7,451.16 0.26%
<PAGE> F-4
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
TOSTEM CORP Building Materials 7,272.88 0.26%
AJINOMOTO Food Processors 7,234.23 0.25%
RICOH Office Equipment 7,138.67 0.25%
CHIBA BANK Commercial Banks & Other Banks 7,013.02 0.25%
YAMANOUCHI PHARM Drugs 6,958.55 0.24%
TOYO TST AND BANKING Financial Institutions 6,948.65 0.24%
NIPPON YUSEN Sea Transport 6,817.73 0.24%
TAISEI CORP Construction 6,810.75 0.24%
SHIN-ETSU CHEMICAL Chemicals (Diversified) 6,734.68 0.24%
NEW OJI PAPER Paper & Paper Products 6,726.98 0.24%
TDK Household Durables & Appliances 6,717.99 0.24%
TAISHO PHARM Drugs 6,713.00 0.24%
NIPPON PAPER CO. Paper & Paper Products 6,592.71 0.23%
YASUDA TST AND BANK Financial Institutions 6,534.85 0.23%
JOYO BANK Commercial Banks & Other Banks 6,469.90 0.23%
SHIKOKU ELEC POWER Electric Utilities & Water Works
Supply 6,463.18 0.23%
HACHIJUNI BANK Commercial Banks & Other Banks 6,327.78 0.22%
YASUDA FIRE & MARINE Insurance - Property & Casualty 6,285.02 0.22%
ROHM (OK) Electronics 6,226.83 0.22%
KAWASAKI HEAVY Heavy Engineering & Shipbuilding 6,216.55 0.22%
OMRON TATEISI ELECT Electrical Equipment 6,047.21 0.21%
TOYO SEIKAN Containers 6,042.51 0.21%
OHBAYASHI-GUMI Construction 5,923.37 0.21%
MITSUBISHI MATERIALS Non-Ferrous Metals 5,881.77 0.21%
TOKYO ELECTRON Electronics 5,805.10 0.20%
SONY MUSIC ENTMNT Entertainment & Leisure Time 5,663.02 0.20%
SEGA ENTERPRISES Toys 5,560.68 0.20%
GUNMA BANK Commercial Banks & Other Banks 5,507.80 0.19%
OKI ELECTRIC Communications Equipment 5,507.35 0.19%
SUMITOMO MARINE&FIRE Insurance - Property & Casualty 5,487.01 0.19%
IHI Heavy Engineering & Shipbuilding 5,475.70 0.19%
TOBU RAILWAY Rail & Road Transport 5,377.37 0.19%
HITACHI ZOSEN Heavy Engineering & Shipbuilding 5,197.44 0.18%
MITSUI MARINE & FIRE Insurance - Property & Casualty 5,182.16 0.18%
HOKKAIDO ELEC POWER Electric Utilities & Water Works
Supply 5,125.30 0.18%
<PAGE> F-5
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
HOKURIKU ELEC POWER Electric Utilities & Water Works
Supply 5,126.27 0.18%
TOYODA AUTO LOOM Machinery - Industrial &
Speciality 5,058.92 0.18%
ASAHI BREWERIES Beverages - Brewers 5,023.68 0.18%
NIKON CORP Instrumentation & Control
Equipment 5,020.59 0.18%
BANK OF FUKUOKA Commercial Banks & Other Banks 5,017.53 0.18%
SUMITOMO METAL MNG Precious Metals & Minerals 5,005.86 0.18%
SUZUKI MOTOR Automobiles 5,001.85 0.18%
TEIJIN Chemicals, Fibres, Paints &
Gases 4,987.81 0.18%
ODAKYU ELEC RAILWAY Rail & Road Transport 4,860.02 0.17%
ISUZU MOTORS Automobiles 4,806.25 0.17%
ALL NIPPON AIRWAYS Airlines 4,801.36 0.17%
SHISEIDO Cosmetics 4,772.09 0.17%
TOTO Building Materials 4,715.62 0.17%
ONO PHARMACEUTICAL Drugs 4,706.80 0.17%
HANKYU CORP Rail & Road Transport 4,701.32 0.17%
MAZDA MOTOR Automobiles 4,588.39 0.16%
MITSUKOSHI Retail - Department Stores 4,524.41 0.16%
EISAI Drugs 4,513.19 0.16%
TAKASHIMAYA Retail - Department Stores 4,493.50 0.16%
HITACHI METALS Iron & Steel 4,466.56 0.16%
MATSUSHITA COMMS Communications Equipment 4,376.80 0.15%
YAMATO TRANSPORT Freight Forwarders 4,343.62 0.15%
HOKURIKU BANK Commercial Banks & Other Banks 4,303.33 0.15%
KYOWA HAKKO KOGYO Drugs 4,214.42 0.15%
EBARA Machinery - Industrial &
Speciality 4,205.88 0.15%
KINDEN Electrical Equipment 4,124.94 0.14%
NISSHIN STEEL Iron & Steel 4,109.31 0.14%
YAMAZAKI BAKING Food Processors 4,100.06 0.14%
NIPPON SEIKO Machinery - Industrial &
Speciality 4,071.32 0.14%
KOKUSAI SECURITIES Financial Institutions 4,066.46 0.14%
NISSHO-IWAI Wholesale - Durables 4,027.54 0.14%
MATSUSHITA KOTOBUKI Household Durables & Appliances 4,016.70 0.14%
NAGOYA RAILROAD Rail & Road Transport 4,014.03 0.14%
HOYA Instrumentation & Control
Equipment 3,996.33 0.14%
MITSUBISHI OIL Petroleum Products & Refineries 3,989.52 0.14%
<PAGE> F-6
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
KEYENCE CORP Instrumentation & Control
Equipment 3,959.30 0.14%
NIPPON FIRE & MARINE Insurance - Property & Casualty 3,940.48 0.14%
JAPAN AIR LINES Airlines 3,937.29 0.14%
ASHIKAGA BANK Commercial Banks & Other Banks 3,883.31 0.14%
DAIICHI SEIYAKU Drugs 3,875.33 0.14%
KEIO TEITO ELEC RAIL Rail & Road Transport 3,762.63 0.13%
DAINIPPON INK & CHEM Chemicals (Diversified) 3,697.07 0.13%
JAPAN ENERGY CORP. Petroleum Products & Refineries 3,669.24 0.13%
NICHII Retail - Grocery Chains 3,658.73 0.13%
AISIN SEIKI Auto Parts - Original Equipment 3,653.15 0.13%
FUJI ELECTRIC Electrical Equipment 3,639.24 0.13%
ISETAN Retail - Department Stores 3,631.31 0.13%
FAMILYMART Retail - Grocery Chains 3,592.31 0.13%
UNY CO Y50 Retail - General Merchandise 3,560.01 0.13%
NGK INSULATORS Diversified Industrials 3,549.32 0.12%
MITSUI OSK LINES Sea Transport 3,519.79 0.12%
SEVENTY-SEVEN BANK Commercial Banks & Other Banks 3,512.74 0.12%
YAMAHA Entertainment & Leisure Time 3,499.49 0.12%
GENERAL SEKIYU Petroleum Products & Refineries 3,479.55 0.12%
COSMO OIL Petroleum Products & Refineries 3,453.85 0.12%
NICHIDO FIRE & MAR Insurance - Multiline 3,443.01 0.12%
JAPAN TOBACCO Tobacco Manufacturers 3,420.84 0.12%
YAMAGUCHI BANK Commercial Banks & Other Banks 3,412.34 0.12%
KURARAY Chemicals, Fibres, Paints &
Gases 3,409.08 0.12%
CANON SALES Wholesale - Durables 3,320.81 0.12%
NIPPON MEAT PACKERS Food Processors 3,312.28 0.12%
PIONEER ELECTRONIC Household Durables & Appliances 3,290.11 0.12%
MINEBEA Machinery 3,264.81 0.11%
SHOWA DENKO Chemicals, Fibres, Paints &
Gases 3,260.37 0.11%
BANYU PHARMACEUTICAL Drugs 3,250.16 0.11%
NISHIMATSU CONSTRN Construction 3,240.48 0.11%
BANK OF HIROSHIMA Commercial Banks & Other Banks 3,230.37 0.11%
VICTOR CO OF JAPAN Household Durables & Appliances 3,228.23 0.11%
KURITA WATER Machinery - Industrial &
Speciality 3,218.46 0.11%
FURUKAWA ELECTRIC Electrical Equipment 3,212.61 0.11%
<PAGE> F-7
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
HEIWA Entertainment & Leisure Time 3,190.81 0.11%
UBE INDUSTRIES Chemicals (Diversified) 3,167.69 0.11%
SHOWA SHELL SEKIYU Petroleum Products & Refineries 3,160.06 0.11%
SAPPORO BREWERIES Beverages - Brewers 3,150.97 0.11%
AUTOBACS Retail - Miscellaneous &
Speciality 3,142.42 0.11%
MITSUI TOATSU CHEM Chemicals, Fibres, Paints &
Gases 3,143.79 0.11%
NATIONAL HOUSE Homebuilding 3,130.32 0.11%
NANKAI ELECTRIC RAIL Rail & Road Transport 3,125.96 0.11%
NISSIN FOOD Food Processors 3,120.58 0.11%
DAI TOKYO FIRE & MARINE INSURANC Insurance - Property & Casualty 3,110.06 0.11%
NTN TOYO-BEARING Machinery - Industrial &
Speciality 3,097.37 0.11%
ONODA CEMENT Building Materials 3,082.14 0.11%
FUJISAWA PHARM Drugs 3,081.26 0.11%
NIPPON LIGHT METAL Non-Ferrous Metals 3,080.79 0.11%
HINO MOTORS Automobiles 3,052.86 0.11%
KYUSHU MATSUSHITA Electronics 3,043.18 0.11%
KOKUYO Office Equipment 3,040.96 0.11%
NIPPON ELECTR GLASS Diversified Industrials 3,035.72 0.11%
KEIHIN ELEC EXP RAIL Rail & Road Transport 2,984.32 0.10%
SHIONOGI Drugs 2,958.04 0.10%
MABUCHI MOTORS Auto Parts - Original Equipment 2,913.73 0.10%
TOSOH CORP Chemicals (Diversified) 2,894.00 0.10%
SUMITOMO REALTY Real Estate 2,878.89 0.10%
TOKYO STEEL Iron & Steel 2,874.53 0.10%
AMADA Machine Tools 2,866.51 0.10%
NEW JAPAN SECURITIES Financial Institutions 2,791.45 0.10%
TODA CORP Construction 2,790.98 0.10%
TOKYO DOME CORP Entertainment & Leisure Time 2,785.49 0.10%
SEIYU Retail - Grocery Chains 2,777.11 0.10%
HOKKAIDO TAKUSHOKU Commercial Banks & Other Banks 2,763.14 0.10%
PENTA OCEAN CONST Construction 2,742.77 0.10%
SUMITOMO FORESTRY Forestry Products 2,742.76 0.10%
HANKYU DEPT STORES Retail - Department Stores 2,740.41 0.10%
TOHO Entertainment & Leisure Time 2,740.54 0.10%
KUMAGAI-GUMI Construction 2,738.61 0.10%
NGK SPARK PLUG CO Auto Parts - Original Equipment 2,732.01 0.10%
CASIO COMPUTER Computers 2,702.97 0.10%
FUJITA TOURIST Restaurants & Hotels 2,698.17 0.09%
NISSHIN FLOUR Food Processors 2,692.66 0.09%
ORIX CORPORATION Financial Services 2,672.67 0.09%
<PAGE> F-8
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
FUKUYAMA TRANSPTNG Rail & Road Transport 2,669.14 0.09%
HITACHI CABLE Fabricated Metal Products 2,667.50 0.09%
JAPAN TELECOM Telephone Companies 2,622.34 0.09%
MITSUBISHI WAREHOUSE Storage, Warehousing &
Supporting Transport Services 2,623.05 0.09%
KONICA Photography 2,593.44 0.09%
DAIKIN INDUSTRIES Machinery - Industrial &
Speciality 2,583.03 0.09%
MAKITA ELECTRIC WKS Electrical Equipment 2,575.32 0.09%
MITSUBISHI RAYON Chemicals, Fibres, Paints &
Gases 2,572.83 0.09%
OLYMPUS OPTICAL Instrumentation & Control
Equipment 2,561.44 0.09%
SEINO TRANSPORT Rail & Road Transport 2,559.31 0.09%
MITSUI PETROCHEMICAL Chemicals (Diversified) 2,553.06 0.09%
TOYOBO Textile Products 2,485.20 0.09%
ONWARD KASHIYAMA Clothing 2,480.18 0.09%
TOMEN CORP Y50 Wholesale - Durables 2,473.52 0.09%
YOKOGAWA ELECTRIC Instrumentation & Control
Equipment 2,453.42 0.09%
SHIMANO IND Toys 2,404.80 0.08%
YAKULT HONSHA Food Processors 2,404.47 0.08%
CITIZEN WATCH Instrumentation & Control
Equipment 2,401.22 0.08%
CHUGAI PHARM Drugs 2,362.93 0.08%
NITTO ELECTRIC IND Electronics 2,350.37 0.08%
MEIJI SEIKA Food - Sugar & Confectionary 2,348.18 0.08%
NIPPON SHINPAN Financial Services 2,349.76 0.08%
KANDENKO Electrical Equipment 2,333.84 0.08%
MITSUI ENG & SHIPBLD Heavy Engineering & Shipbuilding 2,311.99 0.08%
FUJI HEAVY INDS Automobiles 2,309.50 0.08%
AOYAMA TRADING Retail - Miscellaneous &
Speciality 2,292.15 0.08%
NISSHINBO INDS Textile Products 2,292.08 0.08%
INAX Building Materials 2,280.12 0.08%
OKUMURA CORP Construction 2,259.45 0.08%
HIROSE ELECTRONICS Electronics 2,256.88 0.08%
SHIMA SEIKI MANUFACT Machinery - Industrial &
Speciality 2,249.53 0.08%
MITSUBISHI GAS CHEM Chemicals, Fibres, Paints &
Gases 2,247.35 0.08%
CHUO TST AND BANKING Financial Institutions 2,234.87 0.08%
FUJITA CORP Construction 2,233.45 0.08%
ARABIAN OIL Oil - Crude Producers 2,215.02 0.08%
<PAGE> F-9
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
FUJIKURA Fabricated Metal Products 2,213.68 0.08%
KANEGAFUCHI CHEMICAL Chemicals (Diversified) 2,208.61 0.08%
MORI SEIKI Machine Tools 2,196.07 0.08%
NIHON CEMENT Building Materials 2,190.86 0.08%
MATSUZAKAYA Retail - Department Stores 2,169.78 0.08%
DAIDO STEEL Iron & Steel 2,165.37 0.08%
HITACHI CREDIT Financial Services 2,153.09 0.08%
DAICEL CHEMICAL Chemicals, Fibres, Paints &
Gases 2,127.98 0.07%
SUMITOMO OSAKA CEMNT Building Materials 2,127.41 0.07%
HONSHU PAPER Paper & Paper Products 2,117.29 0.07%
SUMITOMO HEAVY INDS Heavy Engineering & Shipbuilding 2,117.27 0.07%
DAIMARU Retail - Department Stores 2,100.38 0.07%
WACOAL Clothing 2,091.64 0.07%
HITACHI CHEMICAL Y50 Chemicals, Fibres, Paints &
Gases 2,077.21 0.07%
SNOW BRAND MILK Food Processors 2,073.65 0.07%
ALPS ELECTRIC Electronics 2,066.51 0.07%
BANK OF KYOTO Commercial Banks & Other Banks 2,055.91 0.07%
HOUSE FOOD INDS Food Processors 2,054.57 0.07%
TAKARA SHUZO Beverages - Distillers 2,020.41 0.07%
NICHIREI Storage, Warehousing &
Supporting Transport Services 2,018.97 0.07%
CSK CORP Computer Software & Services 2,008.15 0.07%
CHIYODA FIRE & MAR Insurance - Property & Casualty 2,003.56 0.07%
MOCHIDA PHARM Drugs 2,004.52 0.07%
TOKYU LAND Real Estate 1,994.72 0.07%
NIPPON HODO Construction 1,986.16 0.07%
MITSUI MIN & SMELT Non-Ferrous Metals 1,966.63 0.07%
MITSUBISHI PAPER Paper & Paper Products 1,963.02 0.07%
ORIENT FINANCE Financial Services 1,948.67 0.07%
A T & T GLOBAL INFO Communications Equipment 1,932.24 0.07%
CHIYODA CHEMICAL ENG Heavy Engineering & Shipbuilding 1,930.38 0.07%
NIPPON SHOKUBAI Chemicals, Fibres, Paints &
Gases 1,927.68 0.07%
YORK-BENIMARU Retail - Grocery Chains 1,923.42 0.07%
YOKOHAMA RUBBER Tyre & Rubber Goods 1,918.95 0.07%
NIPPON SHEET GLASS Diversified Industrials 1,912.83 0.07%
BEST DENKI Office Equipment 1,875.78 0.07%
DOWA FIRE & MARINE Insurance - Property & Casualty 1,869.86 0.07%
JGC CORP Heavy Engineering & Shipbuilding 1,863.86 0.07%
<PAGE> F-10
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
KAWASAKI KISEN Sea Transport 1,861.71 0.07%
SKYLARK Restaurants & Hotels 1,837.08 0.06%
TOKYU DEPT STORE Retail - Department Stores 1,828.18 0.06%
SUMITOMO BAKELITE Chemicals, Fibres, Paints &
Gases 1,802.59 0.06%
TOKUYAMA CORP Chemicals (Diversified) 1,801.90 0.06%
TEIKOKU OIL Non-Oil Energy Sources 1,796.09 0.06%
KOYO SEIKO Auto Parts - Original Equipment 1,787.53 0.06%
AOKI CONSTRUCTION Construction 1,783.03 0.06%
MARUICHI STEEL TUBE Iron & Steel 1,780.15 0.06%
MEIJI MILK Food Processors 1,777.22 0.06%
HITACHI MAXELL Entertainment & Leisure Time 1,767.48 0.06%
TOKYO STYLE Clothing 1,754.86 0.06%
MAEDA CORP Construction 1,751.15 0.06%
TANABE SEIYAKU Drugs 1,742.55 0.06%
TERUMO CORP Drugs 1,741.95 0.06%
HASEKO Homebuilding 1,735.40 0.06%
IZUMIYA Retail - Grocery Chains 1,729.71 0.06%
ITOHAM FOODS Food Processors 1,727.53 0.06%
SANWA SHUTTER Building Materials 1,719.14 0.06%
DAISHOWA PAPER MFG Paper & Paper Products 1,704.53 0.06%
DAITO TRUST CONSTUCT Homebuilding 1,680.63 0.06%
LION Soaps 1,673.33 0.06%
ZEXEL CORPN Auto Parts - Original Equipment 1,673.71 0.06%
SHIMACHU Retail - General Merchandise 1,647.76 0.06%
TOYOTA TSUSHO Y50 Fabricated Metal Products 1,634.81 0.06%
MINOLTA CAMERA Office Equipment 1,631.98 0.06%
HANWA Wholesale - Durables 1,617.45 0.06%
DAIFUKU Machinery - Farm Equipment 1,608.83 0.06%
SATO KOGYO CO Y50 Construction 1,609.69 0.06%
DAINIPPON PHARM Drugs 1,599.35 0.06%
KISSEI PHARMACUTICAL Drugs 1,596.71 0.06%
JAPAN SYNTH RUBBER Tyre & Rubber Goods 1,579.65 0.06%
KOKUSAI ELECTRIC Communications Equipment 1,518.30 0.05%
GREEN CROSS Drugs 1,495.83 0.05%
JAPAN RADIO Communications Equipment 1,471.32 0.05%
BROTHER INDS Office Equipment 1,461.41 0.05%
NIPPON SANSO Chemicals, Fibres, Paints &
Gases 1,459.96 0.05%
KIKKOMAN Food Processors 1,452.90 0.05%
UNITIKA Chemicals, Fibres, Paints &
Gases 1,448.83 0.05%
FUJI FIRE & MARINE Insurance - Property & Casualty 1,443.58 0.05%
TOYO INK Chemicals, Fibres, Paints &
Gases 1,442.24 0.05%
<PAGE> F-11
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
NISSAN FIRE & MARINE Insurance - Property & Casualty 1,433.05 0.05%
TOA Construction 1,431.78 0.05%
FUDO CONSTRUCTION Construction 1,427.89 0.05%
NIPPON SHARYO Auto Trucks & Parts 1,415.48 0.05%
DAIKYO Homebuilding 1,383.28 0.05%
NORITAKE Household Durables & Appliances 1,371.30 0.05%
HAZAMA-GUMI Construction 1,369.53 0.05%
NIPPON PAINT Chemicals, Fibres, Paints &
Gases 1,363.61 0.05%
NISSEI SANGYO Wholesale - Durables 1,360.18 0.05%
IWATANI Wholesale - Nondurables 1,340.22 0.05%
GUNZE Clothing 1,307.52 0.05%
NAGASE Wholesale - Durables 1,303.56 0.05%
NIPPON ZEON Chemicals, Fibres, Paints &
Gases 1,302.43 0.05%
YAMATAKE HONEYWELL Instrumentation & Control
Equipment 1,302.89 0.05%
KANSAI PAINT Chemicals, Fibres, Paints &
Gases 1,298.83 0.05%
YOSHITOMI PHARM Drugs 1,296.99 0.05%
TOSHOKU Wholesale - Nondurables 1,291.09 0.05%
ANRITSU Communications Equipment 1,285.20 0.05%
MATSUSHITA REFRIGER Household Durables & Appliances 1,283.87 0.05%
HANSHIN ELECT RAIL Rail & Road Transport 1,282.06 0.05%
EZAKI GLICO Food - Sugar & Confectionary 1,273.73 0.04%
KANEBO Textile Products 1,272.71 0.04%
ATSUGI NYLON Clothing 1,265.25 0.04%
OKUMA MACHINERY Machine Tools 1,258.80 0.04%
DOWA MINING Non-Ferrous Metals 1,243.31 0.04%
MITSUMI ELECTRIC Electronics 1,240.43 0.04%
JAPAN STORAGE BATTRY Auto Parts - Original Equipment 1,236.23 0.04%
NHK SPRING Auto Parts - Original Equipment 1,230.33 0.04%
NIPPON SUISAN Food Processors 1,230.27 0.04%
NOK Auto Parts - Original Equipment 1,225.38 0.04%
NIPPON KAYAKU Drugs 1,204.80 0.04%
TOYO CONSTRUCTION Construction 1,203.82 0.04%
AMANO CORP Instrumentation & Control
Equipment 1,199.35 0.04%
MIZUNO Entertainment & Leisure Time 1,187.57 0.04%
TEKKEN CONSTRUCTION Construction 1,187.12 0.04%
MORINAGA MILK Food Processors 1,177.73 0.04%
SANKYU Rail & Road Transport 1,170.82 0.04%
<PAGE> F-12
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
TSUBAKIMOTO CHAIN Machinery - Industrial &
Speciality 1,158.12 0.04%
NAVIX LINE LTD Sea Transport 1,155.19 0.04%
SANYO CHEMICAL Chemicals, Fibres, Paints &
Gases 1,138.51 0.04%
STANLEY ELECTRIC Auto Parts - Original Equipment 1,137.70 0.04%
KANEMATSU CORPN Wholesale - Durables 1,135.66 0.04%
MISAWA HOMES Homebuilding 1,125.28 0.04%
KDD Telephone Companies 1,121.51 0.04%
MITSUI-SOKO Storage, Warehousing &
Supporting Transport Services 1,119.05 0.04%
HITACHI KOKI Electrical Equipment 1,116.72 0.04%
TOKYU CONSTRUCTION Construction 1,109.81 0.04%
NISSHIN OIL MILLS Food Processors 1,107.14 0.04%
NISSAN DIESEL MOTOR Automobiles 1,102.61 0.04%
KOITO MFG Auto Parts - Original Equipment 1,090.37 0.04%
YASKAWA ELECTRIC Electrical Equipment 1,085.08 0.04%
TOKAI CARBON Ceramic & Glass 1,074.85 0.04%
MERCIAN CORPN. Beverages - Distillers 1,066.06 0.04%
JAPAN STEEL WORKS Machinery - Industrial &
Speciality 1,062.30 0.04%
NIIGATA ENG Machinery 1,055.48 0.04%
KUREHA CHEMICAL Chemicals, Fibres, Paints &
Gases 1,041.90 0.04%
SHOWA ELEC WIRE Fabricated Metal Products 1,034.89 0.04%
ISEKI & CO Machinery - Farm Equipment 1,034.58 0.04%
KURABO INDS Textile Products 1,033.61 0.04%
ISHIHARA SANGYO Chemicals, Fibres, Paints &
Gases 1,029.88 0.04%
YUASA CORP Auto Parts - Original Equipment 1,018.57 0.04%
MARUHA CORP Food Processors 1,014.98 0.04%
SUMITOMO LT METAL Non-Ferrous Metals 1,012.50 0.04%
DENNY'S JAPAN CO Restaurants & Hotels 983.78 0.03%
TOSHIBA MACHINERY Machinery - Industrial &
Speciality 982.44 0.03%
SHOWA SANGYO Food Processors 974.71 0.03%
CALSONIC CORPORATION Auto Parts - Original Equipment 966.83 0.03%
SHOWA ALUMINIUM Non-Ferrous Metals 968.75 0.03%
NITSUKO Communications Equipment 965.48 0.03%
RENOWN Clothing 965.61 0.03%
MARUDAI FOOD Food Processors 949.70 0.03%
TOBISHIMA Construction 949.10 0.03%
NIPPON FLOUR MILLS Food Processors 941.00 0.03%
HATTORI SEIKO Instrumentation & Control
Equipment 936.69 0.03%
<PAGE> F-13
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
SANDEN Auto Parts - Original Equipment 926.25 0.03%
YAMATO KOGYO Iron & Steel 925.23 0.03%
SUMITOMO WAREHOUSE Storage, Warehousing &
Supporting Transport Services 915.78 0.03%
NACHI-FUJIKOSHI Machinery - Industrial &
Speciality 909.61 0.03%
MITSUBISHI PLASTICS Building Materials 909.19 0.03%
TOYO TIRE Tyre & Rubber Goods 908.92 0.03%
SANRIO Entertainment & Leisure Time 906.10 0.03%
TOEI Entertainment & Leisure Time 901.98 0.03%
SHOCHIKU Entertainment & Leisure Time 882.72 0.03%
RYOBI Machinery - Industrial &
Speciality 880.97 0.03%
HEIWA REAL ESTATE Real Estate 873.17 0.03%
MIKUNI COCA COLA Beverages - Soft Drinks 836.58 0.03%
KAKEN PHARMACEUTICAL Drugs 827.62 0.03%
TOKYO ROPE Fabricated Metal Products 829.54 0.03%
NITTO BOSEKI Textile Products 825.95 0.03%
NIPPON ROAD Construction 823.29 0.03%
MAKINO MILLING MACHINE CO Machine Tools 807.43 0.03%
NISSIN ELECTRIC Electrical Equipment 801.78 0.03%
NIPPON YAKIN KOGYO Iron & Steel 772.27 0.03%
MITSUBISHI STEEL Iron & Steel 753.82 0.03%
CENTRAL GLASS Ceramic & Glass 750.86 0.03%
JAPAN METALS & CHEM Iron & Steel 748.85 0.03%
JAPAN WOOL Textile Products 748.33 0.03%
KAGOME Beverages - Soft Drinks 719.26 0.03%
YAMAMURA GLASS Containers 720.49 0.03%
TOYO KANETSU Energy Equipment & Services 716.07 0.03%
SEIYO FOOD SYSTEMS Restaurants & Hotels 713.30 0.03%
ROYAL CO Restaurants & Hotels 689.46 0.02%
SETTSU Paper & Paper Products 689.91 0.02%
NIPPON TV Broadcasting Media 678.00 0.02%
GAKKEN Publishing 671.03 0.02%
ASICS CORP Footwear 655.44 0.02%
TOKICO Auto Parts - Original Equipment 639.53 0.02%
NAGASAKIYA Retail - Department Stores 637.30 0.02%
YOMIURI LAND Entertainment & Leisure Time 633.87 0.02%
IWATSU ELECTRIC Communications Equipment 633.23 0.02%
MITSUBOSHI BELTING Tyre & Rubber Goods 612.94 0.02%
GUN-EI CHEMICAL Chemicals, Fibres, Paints &
Gases 604.44 0.02%
PRIMA MEAT PACKERS Food Processors 604.02 0.02%
TOSHIBA ENG & CONSTR Heavy Engineering & Shipbuilding 601.17 0.02%
<PAGE> F-14
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
TOKYU CAR Fabricated Metal Products 594.38 0.02%
NICHIRO GYOGYO Food Processors 590.01 0.02%
ASAHI OPTICAL Photography 583.47 0.02%
TOKYO BROADCASTING Broadcasting Media 576.31 0.02%
TAKAOKA ELECTRIC Electrical Equipment 573.09 0.02%
CENTRAL FINANCE Financial Services 564.94 0.02%
CALPIS FOOD INDS Beverages - Soft Drinks 525.23 0.02%
FUJIYA Food - Sugar & Confectionary 525.44 0.02%
NIHON NOSAN KOGYO Agriculture & Fishing 527.31 0.02%
SHOKUSAN JUTAKU SOGO Construction 528.03 0.02%
NIPPON SIGNAL Machinery - Industrial &
Speciality 511.55 0.02%
HYOGO BANK Commercial Banks & Other Banks 3.24 0.00%
FT-JAPAN 2,846,585.17
</TABLE>
<PAGE> G-1
APPENDIX G
FT/S&P-Actuaries World Indices
South Africa Component as of 29 December 1995
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
<S> <S> <C> <C>
ANGLO AMER CORP Precious Metals & Minerals 14,081.27 10.05%
DE BEERS/CENTENARY Precious Metals & Minerals 11,524.54 8.23%
SA BREWERIES Beverages - Brewers 10,786.24 7.70%
LIBERTY LIFE ASSOC. Insurance - Life & Agents & Brokers 7,560.42 5.40%
STANDARD BK. INV. Commercial Banks & Other Banks 5,748.81 4.10%
REMBRANDT GP Tobacco Manufacturers 5,011.66 3.58%
SASOL Oil - Crude Producers 4,876.15 3.48%
GENCOR Precious Metals & Minerals 4,832.76 3.45%
LIBERTY HLDGS. Insurance - Life & Agents & Brokers 4,008.55 2.86%
FIRST NATL. BANK Commercial Banks & Other Banks 4,000.46 2.86%
NEDCOR Commercial Banks & Other Banks 3,669.83 2.62%
SMITH (CG) LTD. Diversified Holding Companies 3,617.44 2.58%
ANGLO AMERICAN IND Diversified Holding Companies 3,033.61 2.17%
GFSA Precious Metals & Minerals 2,896.25 2.07%
Barlow Limited Diversified Holding Companies 2,874.03 2.05%
NAMPAK Paper & Paper Products 2,805.17 2.00%
TIGER OATS Food Processors 2,604.21 1.86%
DRIEFONTEIN CONSOL Precious Metals & Minerals 2,588.12 1.85%
REMBRANDT CONTROLLING INV. Diversified Holding Companies 2,468.80 1.76%
ANGLOVAAL INDS. Diversified Holding Companies 2,394.10 1.71%
SAMANCOR Mining & Extractive Industries 2,384.46 1.70%
SAPPI Paper & Paper Products 2,367.47 1.69%
MURRAY & ROBERTS Construction 2,330.78 1.66%
JOHNNIC Diversified Industrials 2,272.21 1.62%
ISCOR Iron & Steel 2,126.49 1.52%
SOUTHERN LIFE ASSOC Insurance - Life & Agents & Brokers 2,113.92 1.51%
RUSTENBURG PLATINUM Precious Metals & Minerals 2,103.88 1.50%
<PAGE> G-2
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
SAFREN Sea Transport 2,020.13 1.44%
AMGOLD Precious Metals & Minerals 1,967.28 1.40%
ANGLOVAAL LTD. (N.) Diversified Holding Companies 1,865.32 1.33%
TONGAAT-HULETT GP Food - Sugar & Confectionary 1,584.04 1.13%
PREMIER GROUP HLDG Food Processors 1,380.91 0.99%
GENBEL Investment Companies 1,336.38 0.95%
KLOOF GOLD MINING Precious Metals & Minerals 1,330.68 0.95%
REUNERT Electrical Equipment 1,313.28 0.94%
MID WITS Precious Metals & Minerals 1,279.33 0.91%
VAAL REEFS EXP & MNG Precious Metals & Minerals 1,237.43 0.88%
JCI Precious Metals & Minerals 1,177.35 0.84%
IMPALA PLATINUM Precious Metals & Minerals 1,134.63 0.81%
WOOLTRU A Retail - General Merchandise 1,101.86 0.79%
AMPLATS Precious Metals & Minerals 971.46 0.69%
WESTERN DEEP LEVEL Precious Metals & Minerals 927.44 0.66%
WOOLTRU LTD Retail - General Merchandise 893.50 0.64%
FREEGOLD Precious Metals & Minerals 889.40 0.63%
HIGHVELD STEEL Iron & Steel 623.99 0.45%
FT-SOUTH AFRICA 140,116.03
</TABLE>
<PAGE> H-1
APPENDIX H
FT/S&P-Actuaries World Indices
United Kingdom Component as of 29 December 1995
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
<S> <S> <C> <C>
GLAXO WELLCOME Drugs 49,765.54 4.56%
BRITISH PETROLEUM Oil Internationals 46,629.75 4.27%
SHELL TRANS & TRAD Oil Internationals 43,824.29 4.02%
BRITISH TELECOM Telephone Companies 34,569.22 3.17%
BAT INDUSTRIES Tobacco Manufacturers 27,221.05 2.49%
HSBC HOLDINGS (HK$ 10) Commercial Banks & Other
Banks 27,041.66 2.48%
LLOYDS TSB GROUP Commercial Banks & Other
Banks 26,149.85 2.40%
MARKS & SPENCER Retail - General Merchandise 19,626.18 1.80%
BTR Diversified Industrials 19,263.47 1.77%
BARCLAYS Commercial Banks & Other
Banks 18,611.26 1.71%
ZENECA Drugs 18,304.05 1.68%
NATL WESTMINSTER BANK Commercial Banks & Other
Banks 17,805.59 1.63%
BRITISH GAS Natural Gas Utilities 17,268.42 1.58%
UNILEVER Food Processors 16,734.70 1.53%
CABLE & WIRELESS Telephone Companies 15,787.56 1.45%
RTZ (REG) Non-Ferrous Metals 15,527.00 1.42%
HANSON Diversified Holding
Companies 15,506.06 1.42%
SMITHKLINE BEECHAM A Drugs 15,408.00 1.41%
REUTERS HOLDINGS Publishing 15,345.00 1.41%
GENERAL ELECTRIC Electronics 15,180.47 1.39%
GRAND METROPOLITAN Beverages - Brewers 15,062.16 1.38%
GUINNESS Beverages - Distillers 14,886.67 1.36%
SMITHKLINE BEECH/SMITH BECK UNIT Drugs 14,277.63 1.31%
HSBC HOLDINGS (ORD 75P) Commercial Banks & Other
Banks 13,427.60 1.23%
ABBEY NATIONAL Commercial Banks & Other
Banks 13,036.86 1.19%
PRUDENTIAL CORP Insurance - Life & Agents &
Brokers 12,304.73 1.13%
SAINSBURY (J) Retail - Grocery Chains 11,143.00 1.02%
VODAFONE GROUP Telephone Companies 10,929.68 1.00%
BRIT SKY BROADCASTNG Broadcasting Media 10,823.93 0.99%
<PAGE> H-2
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
GREAT UNIVERSAL STORES Retail - Miscellaneous &
Speciality 10,688.53 0.98%
THORN-EMI Entertainment & Leisure Time 10,127.22 0.93%
TESCO Retail - Grocery Chains 9,914.00 0.91%
BASS Beverages - Brewers 9,801.65 0.90%
BOOTS Retail - General Merchandise 8,657.77 0.79%
REED INTL Publishing 8,612.29 0.79%
I.C.I Chemicals (Diversified) 8,580.61 0.79%
ALLIED DOMECQ Beverages - Brewers 8,427.89 0.77%
STANDARD CHARTERED Commercial Banks & Other
Banks 8,249.79 0.76%
CADBURY SCHWEPPES Food Processors 8,173.51 0.75%
NATIONAL POWER Electric Utilities & Water
Works Supply 7,945.48 0.73%
BAA Storage, Warehousing &
Supporting Transport
Services 7,765.09 0.71%
ROYAL BANK SCOTLAND Commercial Banks & Other
Banks 7,348.96 0.67%
BOC GROUP Chemicals, Fibres, Paints &
Gases 6,724.65 0.62%
COMMERCIAL UNION Insurance - Multiline 6,488.93 0.59%
RANK ORGANISATION Entertainment & Leisure Time 6,021.48 0.55%
POWERGEN Electric Utilities & Water
Works Supply 6,014.72 0.55%
ARGYLL GROUP Retail - Grocery Chains 6,014.56 0.55%
GRANADA GROUP Entertainment & Leisure Time 5,856.56 0.54%
SCOT & NEWCASTLE Beverages - Brewers 5,834.10 0.53%
KINGFISHER Retail - General Merchandise 5,630.66 0.52%
SCOTTISH POWER Electric Utilities & Water
Works Supply 5,394.38 0.49%
PEARSON Publishing 5,383.10 0.49%
SIEBE Diversified Industrials 5,284.70 0.48%
TOMKINS Fabricated Metal Products 5,188.00 0.48%
ASSD BRITISH FOODS Food Processors 5,153.91 0.47%
BRITISH STEEL Iron & Steel 5,142.87 0.47%
BANK OF SCOTLAND Commercial Banks & Other
Banks 5,132.03 0.47%
RENTOKIL GP Chemicals, Fibres, Paints &
Gases 5,129.87 0.47%
LEGAL & GENERAL GROUP Insurance - Life & Agents &
Brokers 5,126.56 0.47%
WHITBREAD (ORD.) Beverages - Brewers 5,093.62 0.47%
<PAGE> H-3
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
ASDA GROUP Retail - Grocery Chains 5,013.85 0.46%
NORTH WEST WATER Electric Utilities & Water
Works Supply 4,964.81 0.46%
LAND SECURITIES Real Estate 4,886.90 0.45%
LLOYDS ABBEY LIFE Insurance - Life & Agents &
Brokers 4,866.22 0.45%
FORTE Restaurants & Hotels 4,862.19 0.45%
GENERAL ACCIDENT Insurance - Multiline 4,842.05 0.44%
SUN ALLIANCE GROUP Insurance - Multiline 4,726.94 0.43%
RECKITT & COLMAN Health Care 4,693.76 0.43%
P. & O. DEFD STOCK Sea Transport 4,468.91 0.41%
GKN Auto Parts - Original
Equipment 4,219.07 0.39%
SEVERN TRENT WATER Electric Utilities & Water
Works Supply 3,912.54 0.36%
ROYAL INSURANCE HDGS Insurance - Multiline 3,903.90 0.36%
BLUE CIRCLE INDS Building Materials 3,897.16 0.36%
WOLSELEY Building Materials 3,865.61 0.35%
SOUTHERN ELECTRIC Electric Utilities & Water
Works Supply 3,842.04 0.35%
GUARDIAN ROYAL EXCHANGE Insurance - Multiline 3,823.63 0.35%
3I GROUP Investment Trusts 3,809.36 0.35%
RMC GP Building Materials 3,809.55 0.35%
THAMES WATER Electric Utilities & Water
Works Supply 3,510.07 0.32%
CARLTON COMMS Broadcasting Media 3,467.48 0.32%
TI GROUP Machinery - Industrial &
Speciality 3,343.00 0.31%
COOKSON GROUP Chemicals, Fibres, Paints &
Gases 3,224.63 0.30%
SCHRODERS Financial Institutions 3,199.15 0.29%
SMITH & NEPHEW Health Care 3,193.47 0.29%
VENDOME UNITS Diversified Consumer Goods &
Services 3,168.31 0.29%
PILKINGTON Building Materials 3,143.11 0.29%
REDLAND Building Materials 3,131.57 0.29%
ENTERPRISE OIL Oil - Crude Producers 3,041.81 0.28%
SMITHS INDUSTRIES Aircraft Manufacturers 2,982.77 0.27%
BURTON GROUP Retail - Miscellaneous &
Speciality 2,970.30 0.27%
WILLIAMS HLDGS. Diversified Industrials 2,947.18 0.27%
BURMAH CASTROL Petroleum Products &
Refineries 2,913.71 0.27%
TATE & LYLE Food Processors 2,909.35 0.27%
ARGOS Retail - Department Stores 2,815.89 0.26%
<PAGE> H-4
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
DIXONS GROUP Retail - Miscellaneous &
Speciality 2,776.87 0.25%
REXAM Forestry Products 2,768.00 0.25%
GREENALLS GROUP Beverages - Brewers 2,699.07 0.25%
LADBROKE GROUP Entertainment & Leisure Time 2,652.73 0.24%
NEXT Retail - Miscellaneous &
Speciality 2,650.58 0.24%
FOR & COL IT Investment Trusts 2,643.53 0.24%
LASMO Oil - Crude Producers 2,623.16 0.24%
COURTAULDS Chemicals, Fibres, Paints &
Gases 2,557.57 0.23%
BRITISH LAND Real Estate 2,549.31 0.23%
ANGLIAN WATER Electric Utilities & Water
Works Supply 2,522.25 0.23%
MEPC Real Estate 2,492.91 0.23%
MERCURY ASSET MANAGE Financial Institutions 2,464.20 0.23%
LUCAS INDS Auto Parts - Original
Equipment 2,460.92 0.23%
SEARS Retail - General Merchandise 2,456.07 0.23%
BPB INDS Building Materials 2,360.30 0.22%
ELECTROCOMPONENTS Electronics 2,360.08 0.22%
DE LA RUE Printing 2,258.18 0.21%
MIDLANDS ELECTRICITY Electric Utilities & Water
Works Supply 2,250.55 0.21%
TELEWEST PLC Telephone Companies 2,213.85 0.20%
STOREHOUSE Retail - General Merchandise 2,158.03 0.20%
SCOT HYDRO-ELECTRIC Electric Utilities & Water
Works Supply 2,144.63 0.20%
LONRHO Diversified Holding
Companies 2,122.76 0.19%
UNITED NEWS & MEDIA Publishing - Newspapers 2,115.91 0.19%
UNITED BISCUITS Food Processors 2,097.28 0.19%
ARJO WIGGINS APPLETON Paper & Paper Products 2,096.39 0.19%
EAST MIDLAND ELECT Electric Utilities & Water
Works Supply 2,052.81 0.19%
INCHCAPE Wholesale - Durables 2,040.69 0.19%
LAPORTE Chemicals (Diversified) 2,020.72 0.19%
YORKSHIRE ELECT Electric Utilities & Water
Works Supply 1,910.53 0.18%
COATS VIYELLA Textile Products 1,895.02 0.17%
BET Diversified Holding
Companies 1,872.39 0.17%
BBA GROUP Auto Parts - Original
Equipment 1,860.41 0.17%
<PAGE> H-5
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
SMITH (W H) Retail - Miscellaneous &
Speciality 1,847.90 0.17%
HILLSDOWN Food Processors 1,826.72 0.17%
CARADON Building Materials 1,819.82 0.17%
DALGETY Food Processors 1,817.76 0.17%
LONDON ELECTRICITY Electric Utilities & Water
Works Supply 1,768.01 0.16%
HARRISONS & CROSFIELD Wholesale - Nondurables 1,765.10 0.16%
IMI Fabricated Metal Products 1,753.05 0.16%
JOHNSON MATTHEY Precious Metals & Minerals 1,752.42 0.16%
BRITISH AIRWAYS Airlines 1,735.31 0.16%
PROVIDENT FINANCIAL Financial Institutions 1,717.39 0.16%
ASSD BRITISH PORTS Sea Transport 1,707.82 0.16%
BRITISH AEROSPACE Aircraft Manufacturers 1,561.58 0.14%
MAI Financial Services 1,553.36 0.14%
HAMMERSON PLC Real Estate 1,551.15 0.14%
WITAN INV Investment Trusts 1,544.08 0.14%
NORTHERN FOODS Food Processors 1,533.16 0.14%
NFC Storage, Warehousing &
Supporting Transport
Services 1,531.55 0.14%
FARNELL ELECTRONICS Electronics 1,521.75 0.14%
BICC Electrical Equipment 1,517.20 0.14%
ENGLISH CHINA CLAYS Building Materials 1,505.42 0.14%
UNIGATE Food Processors 1,501.23 0.14%
EDINBURGH INV TRUST Investment Trusts 1,500.70 0.14%
TARMAC Construction 1,479.55 0.14%
M & G GROUP Financial Services 1,457.85 0.13%
FKI Machinery 1,443.86 0.13%
BUNZL Paper & Paper Products 1,372.56 0.13%
T & N Diversified Industrials 1,335.80 0.12%
SLOUGH ESTATES Real Estate 1,327.90 0.12%
MORGAN CRUCIBLE Diversified Industrials 1,315.45 0.12%
VICKERS Machinery - Industrial &
Speciality 1,307.82 0.12%
ROLLS-ROYCE Aerospace & Defence 1,264.09 0.12%
BOWTHORPE Electronics 1,261.51 0.12%
BOOKER Food Processors 1,254.19 0.11%
KWIK SAVE GROUP Retail - Grocery Chains 1,217.12 0.11%
GLYNWED INTL Machinery - Industrial &
Speciality 1,209.04 0.11%
HEPWORTH Building Materials 1,207.54 0.11%
CHARTER Building Materials 1,163.02 0.11%
ALLIED COLLOIDS Chemicals, Fibres, Paints &
Gases 1,111.91 0.10%
<PAGE> H-6
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
RUGBY GROUP Building Materials 1,089.20 0.10%
INVESCO Financial Services 1,035.03 0.09%
SEDGWICK GP Insurance - Agents & Brokers 1,026.51 0.09%
ELECTRA INV TRUST Investment Trusts 982.23 0.09%
FIRST LEISURE CORP Entertainment & Leisure Time 967.80 0.09%
WILLIS CORROON GROUP Insurance - Agents & Brokers 917.88 0.08%
GREAT PORTLAND EST Real Estate 874.07 0.08%
SCAPA GP Diversified Industrials 821.91 0.08%
WIMPEY (G) Construction 807.53 0.07%
SCHRODERS NON/VTG Financial Institutions 768.72 0.07%
MEYER INTL Building Materials 757.28 0.07%
HALMA Machinery 730.05 0.07%
SPIRAX-SARCO ENG Machinery - Industrial &
Speciality 722.85 0.07%
BARRATT DEVELOPMENTS Homebuilding 705.97 0.06%
TAYLOR WOODROW Construction 703.64 0.06%
HIGHLAND DISTILLERIES Beverages - Distillers 666.96 0.06%
FLEMING MERCANTILE INV TRUST Investment Trusts 644.99 0.06%
BRIXTON ESTATE Real Estate 638.23 0.06%
EUROTUNNEL UNITS ORD Rail & Road Transport 621.12 0.06%
VAUX GROUP Beverages - Brewers 615.74 0.06%
MCKECHNIE Fabricated Metal Products 606.85 0.06%
MARLEY Building Materials 578.06 0.05%
COURTAULDS TEXTILES Textile Products 571.81 0.05%
HAMBROS Financial Institutions 564.09 0.05%
TR SMALLER COMPANIES INV. TST. Investment Trusts 562.32 0.05%
TR CITY OF LON (DFD) Investment Trusts 547.83 0.05%
CHRISTIES INTL Retail - Miscellaneous &
Speciality 535.93 0.05%
ALBERT FISHER Wholesale - Nondurables 530.55 0.05%
WILSON (CONNOLLY) Construction 514.05 0.05%
BRYANT GROUP Homebuilding 486.12 0.04%
BRADFORD PROPERTY TRUST Real Estate 469.45 0.04%
TRAFALGAR HOUSE Diversified Holding
Companies 464.19 0.04%
MERCHANTS TRUST Investment Trusts 454.37 0.04%
AMSTRAD Electronics 354.70 0.03%
DIPLOMA Electronics 338.70 0.03%
APV Machinery 335.44 0.03%
DAWSON INTL Clothing 326.29 0.03%
<PAGE> H-7
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
BAIRD (WILLIAM) Textile Products 313.37 0.03%
BILTON Real Estate 284.45 0.03%
LAING (JOHN) Construction 197.20 0.02%
LAING (JOHN) 'A' Construction 192.34 0.02%
FT-UK 1,091,274.35
</TABLE>
<PAGE> I-1
APPENDIX I
FT/S&P-Actuaries World Indices
US Component as of 29 December 1995
<TABLE>
<CAPTION>
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
<S> <S> <C> <C>
GENERAL ELECTRIC CO Electrical Equipment 121,134.74 2.45%
AMER TEL & TEL Telephone Companies 102,715.97 2.08%
EXXON CORP Oil Internationals 99,489.45 2.02%
COCA-COLA Beverages - Soft Drinks 93,136.38 1.89%
MERCK & CO Drugs 80,959.16 1.64%
PHILIP MORRIS Tobacco Manufacturers 75,543.61 1.53%
PROCTER & GAMBLE Soaps 56,985.64 1.15%
JOHNSON & JOHNSON Health Care 55,453.00 1.12%
IBM Computers 52,180.34 1.06%
MICROSOFT CORP Computer Software & Services 51,974.85 1.05%
WAL-MART STORES Retail - General Merchandise 51,340.44 1.04%
INTEL Electronics 46,603.10 0.94%
MOBIL CORP Oil Internationals 44,181.00 0.90%
PEPSICO Beverages - Soft Drinks 44,025.31 0.89%
AMER INTL GROUP Insurance - Multiline 43,853.51 0.89%
BRISTOL MYERS SQUIBB CO Health Care 43,329.69 0.88%
BELLSOUTH CORP Telephone Companies 43,199.00 0.88%
HEWLETT-PACKARD Computers 42,863.25 0.87%
GTE CORP Telephone Companies 42,619.28 0.86%
PFIZER Drugs 40,077.70 0.81%
GENERAL MOTORS Automobiles 39,624.47 0.80%
DU PONT E I DE NEMOURS Chemicals (Diversified) 38,803.19 0.79%
BERKSHIRE HATHAWAY INC DEL Diversified Holding Companies 38,327.40 0.78%
AMOCO Petroleum Products & Refineries 35,285.66 0.71%
SBC COMMUNICATIONS Telephone Companies 35,066.95 0.71%
CHEVRON CORP Oil Internationals 34,242.29 0.69%
FED NATL MORTGAGE Financial Institutions 33,861.55 0.69%
MOTOROLA Electronics 33,684.89 0.68%
ABBOTT LABS Health Care 33,130.25 0.67%
AMERITECH Telephone Companies 32,698.16 0.66%
MCDONALD'S CORP Restaurants & Hotels 31,419.59 0.64%
FORD MOTOR Automobiles 31,148.58 0.63%
LILLY (ELI) Drugs 31,023.56 0.63%
DISNEY (WALT) PRODS Entertainment & Leisure Time 30,843.67 0.62%
AMER HOME PRODUCTS Drugs 30,059.14 0.61%
BELL ATLANTIC Telephone Companies 29,197.56 0.59%
CITICORP Commercial Banks & Other Banks 28,585.42 0.58%
<PAGE> I-2
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
MINNESOTA MINING Diversified Consumer Goods &
Services 27,839.05 0.56%
BOEING Aircraft Manufacturers 26,839.05 0.54%
BANKAMERICA Commercial Banks & Other Banks 24,108.76 0.49%
NYNEX CORP Telephone Companies 23,219.51 0.47%
GILLETTE Cosmetics 23,113.58 0.47%
KIMBERLY-CLARK Paper & Paper Products 23,045.46 0.47%
EASTMAN KODAK Photography 22,921.17 0.46%
HOME DEPOT INC Retail - General Merchandise 22,827.66 0.46%
GENERAL MOTORS 'E' Computer Software & Services 22,822.90 0.46%
COLUMBIA HEALTHCARE CORP Hospital Supply & Management 22,515.54 0.46%
CHRYSLER Automobiles 21,184.32 0.43%
TEXACO Oil Internationals 20,732.64 0.42%
CISCO SYSTEMS Communications Equipment 20,615.31 0.42%
SCHERING-PLOUGH Drugs 20,385.34 0.41%
AMERICAN EXPRESS Financial Institutions 20,042.26 0.41%
TRAVELERS GROUP Financial Institutions 19,889.88 0.40%
PHARMACIA & UPJOHN Drugs 19,529.58 0.40%
CAP CITIES / ABC Broadcasting Media 18,986.43 0.38%
NATIONSBANK CORP Commercial Banks & Other Banks 18,862.94 0.38%
DOW CHEMICAL Chemicals (Diversified) 18,423.05 0.37%
ORACLE SYSTEMS CORP Computer Software & Services 18,416.77 0.37%
ALLSTATE CORP Insurance - Property & Casualty 18,408.17 0.37%
EMERSON ELECTRIC Electrical Equipment 18,352.88 0.37%
ATLANTIC RICHFIELD Petroleum Products & Refineries 17,810.59 0.36%
MCI COMMS Telephone Companies 17,798.31 0.36%
ANHEUSER-BUSCH Beverages - Brewers 17,083.82 0.35%
U S WEST COMMUNICATIONS Telephone Companies 16,831.46 0.34%
KELLOGG Food Processors 16,796.24 0.34%
SCHLUMBERGER Energy Equipment & Services 16,750.33 0.34%
SOUTHERN CO Electric Utilities & Water Works
Supply 16,404.12 0.33%
LOCKHEED MARTIN CORP Aerospace & Defence 15,733.00 0.32%
AMGEN INC Drugs 15,644.00 0.32%
SARA LEE Food Processors 15,423.07 0.31%
SEARS ROEBUCK & CO Retail - General Merchandise 15,189.88 0.31%
FEDERAL HOME LN MTG CORP Financial Institutions 15,093.63 0.31%
VIACOM CLASS B Broadcasting Media 15,065.30 0.31%
MORGAN (J.P) Commercial Banks & Other Banks 15,050.41 0.30%
CAMPBELL SOUP Food Processors 14,948.28 0.30%
FIRST DATA Business Services 14,909.58 0.30%
XEROX CORP Office Equipment 14,775.72 0.30%
BANC ONE CORP Commercial Banks & Other Banks 14,771.00 0.30%
CHEMICAL BANKING CORP. Commercial Banks & Other Banks 14,689.73 0.30%
TIME WARNER INC Publishing 14,675.31 0.30%
<PAGE> I-3
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
WASTE MANAGEMENT Engineering Services & Pollution
Control 14,536.22 0.29%
PACIFIC TELESIS Telephone Companies 14,406.13 0.29%
MONSANTO Chemicals (Diversified) 14,244.06 0.29%
AIRTOUCH COMMUNICATIONS Telephone Companies 13,995.42 0.28%
SPRINT CORP Telephone Companies 13,908.04 0.28%
COMPUTER ASSOC INTL INC Computer Software & Services 13,743.67 0.28%
UNION PACIFIC Rail & Road Transport 13,553.69 0.27%
ALLIED SIGNAL Diversified Industrials 13,450.10 0.27%
WARNER-LAMBERT Health Care 13,149.37 0.27%
MEDTRONIC Health Care 12,980.15 0.26%
FIRST CHICAGO NBD CORP Commercial Banks & Other Banks 12,760.77 0.26%
GENERAL RE CORP Insurance - Property & Casualty 12,714.34 0.26%
COMPAQ COMPUTER CORPORATION Computers 12,681.60 0.26%
TELECOM CORP'A' Broadcasting Media 12,573.80 0.25%
HEINZ (H.J) Food Processors 12,245.00 0.25%
PACIFIC GAS&ELECTRIC Electric Utilities & Water Works
Supply 11,889.89 0.24%
NORWEST CORP Commercial Banks & Other Banks 11,650.75 0.24%
CATERPILLAR TRACTOR Machinery - Construction 11,604.24 0.24%
UNITED TECHNOLOGIES Diversified Industrials 11,575.51 0.23%
ROCKWELL INTL CORP Aerospace & Defence 11,479.59 0.23%
RAYTHEON Aerospace & Defence 11,452.08 0.23%
UNITED HEALTHCARE Health Care 11,442.59 0.23%
BAXTER INTL INC Health Care 11,368.77 0.23%
BURLINGTON NORTHERN Rail & Road Transport 11,076.00 0.22%
DUN & BRADSTREET Publishing 10,972.79 0.22%
CHASE MANHATTAN Commercial Banks & Other Banks 10,849.21 0.22%
AUTO DATA PROCESS Computer Software & Services 10,682.20 0.22%
PENNEY (J.C) Retail - General Merchandise 10,652.38 0.22%
MAY DEPT STORES Retail - Department Stores 10,519.00 0.21%
NORFOLK STHN CORP Rail & Road Transport 10,400.19 0.21%
FIRST INTERSTATE BK Commercial Banks & Other Banks 10,339.06 0.21%
MCDONNELL DOUGLAS Aircraft Manufacturers 10,306.21 0.21%
COLGATE-PALMOLIVE Soaps 10,227.21 0.21%
WELLS FARGO & CO DEL Commercial Banks & Other Banks 10,144.87 0.21%
FLEET FINANCIAL GROUP Commercial Banks & Other Banks 10,016.35 0.20%
CPC INTL Food Processors 10,002.09 0.20%
NIKE, INC CL'B' Footwear 9,954.15 0.20%
INTERNATIONAL PAPER Paper & Paper Products 9,876.21 0.20%
CONAGRA Food Processors 9,836.97 0.20%
TEXAS INSTRUMENTS Electronics 9,771.00 0.20%
DUKE POWER Electric Utilities & Water Works
Supply 9,705.20 0.20%
<PAGE> I-4
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
DIGITAL EQUIPMENT Computers 9,670.76 0.20%
CSX Rail & Road Transport 9,603.33 0.19%
ENRON CORP Oil - Crude Producers 9,593.20 0.19%
ARCHER-DANIELS Food Processors 9,543.04 0.19%
FIRST UNION Commercial Banks & Other Banks 9,479.06 0.19%
ALUMINIUM CO AMER Non-Ferrous Metals 9,437.92 0.19%
BANK OF NEW YORK Commercial Banks & Other Banks 9,363.90 0.19%
TEXAS UTILITIES Electric Utilities & Water Works
Supply 9,287.71 0.19%
PPG INDUSTRIES Chemicals (Diversified) 9,280.00 0.19%
DEERE & CO Machinery - Farm Equipment 9,232.50 0.19%
LOEW'S CORP Diversified Holding Companies 9,235.08 0.19%
GENERAL MILLS Food Processors 9,159.00 0.19%
MERRILL LYNCH Financial Institutions 8,961.57 0.18%
PHILLIPS PETROLEUM Petroleum Products & Refineries 8,943.07 0.18%
U S WEST MEDIA Broadcasting Media 8,945.39 0.18%
TENNECO Diversified Industrials 8,799.75 0.18%
WEYERHAEUSER Forestry Products 8,723.96 0.18%
SUN MICROSYSTEMS Computers 8,666.65 0.18%
GANNETT Publishing - Newspapers 8,605.14 0.17%
FPL GROUP Electric Utilities & Water Works
Supply 8,584.01 0.17%
KEYCORP Commercial Banks & Other Banks 8,582.44 0.17%
CHUBB Insurance - Property & Casualty 8,437.66 0.17%
RJR NABISCO HOLDINGS CORP Tobacco Manufacturers 8,419.43 0.17%
AMP Electrical Equipment 8,349.94 0.17%
ALBERTSONS Retail - Grocery Chains 8,312.64 0.17%
AMERICAN BRANDS Tobacco Manufacturers 8,292.13 0.17%
MICRON TECHNOLOGY Electronics 8,180.11 0.17%
DEAN WITTER DISCOVER & CO Financial Institutions 8,012.28 0.16%
AETNA LIFE & CAS Insurance - Multiline 7,916.31 0.16%
SCECORP Electric Utilities & Water Works
Supply 7,903.88 0.16%
CIGNA CORP Insurance - Multiline 7,840.70 0.16%
WACHOVIA CORP Commercial Banks & Other Banks 7,792.42 0.16%
SUNTRUST BANKS Commercial Banks & Other Banks 7,751.46 0.16%
MELLON BK CORP Commercial Banks & Other Banks 7,595.36 0.15%
3COM CORP Communications Equipment 7,562.25 0.15%
AMER ELEC POWER Electric Utilities & Water Works
Supply 7,530.37 0.15%
CONS EDISON Electric Utilities & Water Works
Supply 7,518.43 0.15%
PUBLIC SVC ENTERPRISE GROUP Electric Utilities & Water Works
Supply 7,493.88 0.15%
BAY NETWORKS Communications Equipment 7,486.97 0.15%
<PAGE> I-5
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
BOSTON SCIENTIFIC Hospital Supply & Management 7,435.55 0.15%
PNC BANK CORP Commercial Banks & Other Banks 7,419.47 0.15%
WALGREEN Retail - Drug Chains 7,353.46 0.15%
CORNING INC Building Materials 7,336.16 0.15%
UNOCAL Petroleum Products & Refineries 7,173.95 0.15%
DOMINION RESOURCES Electric Utilities & Water Works
Supply 7,157.33 0.15%
RHONE POULENC RORER INC Health Care 7,150.36 0.14%
AMER GENERAL CORP Insurance - Multiline 7,144.49 0.14%
U.S. HEALTHCARE Health Care 7,139.19 0.14%
PITNEY BOWES Office Equipment 7,125.01 0.14%
UNICOM CORP Electric Utilities & Water Works
Supply 7,035.39 0.14%
APPLIED MATERIALS Machinery - Industrial &
Speciality 7,022.22 0.14%
CARNIVAL CORP'A' Entertainment & Leisure Time 6,941.71 0.14%
GOODYEAR TIRE Tyre & Rubber Goods 6,912.34 0.14%
WESTINGHOUSE ELEC Electrical Equipment 6,851.81 0.14%
OCCIDENTAL PETROL Petroleum Products & Refineries 6,806.85 0.14%
WORLDCOM INC Telephone Companies 6,807.76 0.14%
MATTEL INC Toys 6,791.11 0.14%
ILLINOIS TOOL Diversified Industrials 6,735.15 0.14%
PECO ENERGY CO Electric Utilities & Water Works
Supply 6,687.03 0.14%
ENTERGY CORP. Electric Utilities & Water Works
Supply 6,661.86 0.14%
RALSTON PURINA Agriculture & Fishing 6,606.26 0.13%
FIRST BANK SYSTEM Commercial Banks & Other Banks 6,590.90 0.13%
UST INC Tobacco Manufacturers 6,516.40 0.13%
MARSH & MCLENNAN Insurance - Agents & Brokers 6,492.86 0.13%
HOUSTON INDUSTRIES Electric Utilities & Water Works
Supply 6,369.80 0.13%
ITT CORPORATION Restaurants & Hotels 6,307.00 0.13%
GEORGIA-PACIFIC Forestry Products 6,300.94 0.13%
BROWNING-FERRIS Engineering Services & Pollution
Control 6,271.76 0.13%
GENENTECH INC Drugs 6,266.72 0.13%
MORGAN STANLEY GROUP INC Financial Institutions 6,260.29 0.13%
LIMITED Retail - Miscellaneous &
Speciality 6,223.38 0.13%
CUC INTL Business Services 6,220.78 0.13%
HERCULES Chemicals, Fibres, Paints & Gases 6,199.62 0.13%
HONEYWELL Instrumentation & Control
Equipment 6,174.31 0.13%
FIRST FIDELITY BANCORP Commercial Banks & Other Banks 6,163.57 0.12%
LORAL CORP Defence Electronics 6,095.86 0.12%
WRIGLEY, (WM) JR Food - Sugar & Confectionary 6,097.93 0.12%
<PAGE> I-6
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
DURACELL INTL Electrical Equipment 6,090.98 0.12%
DONNELLEY (RR) Printing 6,049.10 0.12%
SYSCO US$1 Wholesale - Nondurables 6,045.00 0.12%
GAP INC DEL Retail - Miscellaneous &
Speciality 6,042.08 0.12%
PACIFICORP Electric Utilities & Water Works
Supply 6,040.89 0.12%
TOYS (R) Retail - Miscellaneous &
Speciality 5,939.62 0.12%
AIR PRODUCTS & CHEM Chemicals, Fibres, Paints & Gases 5,891.28 0.12%
CABLETRON SYSTEMS Communications Equipment 5,829.08 0.12%
HOUSEHOLD INTL Financial Services 5,801.05 0.12%
HALLIBURTON Energy Equipment & Services 5,790.84 0.12%
GRACE (WR) Chemicals (Diversified) 5,752.80 0.12%
TEXTRON Diversified Industrials 5,725.42 0.12%
BARNETT BANKS INC Commercial Banks & Other Banks 5,722.41 0.12%
FREEP'T MCMORAN COPPER&GO Precious Metals & Minerals 5,681.50 0.12%
AMR CORP Airlines 5,669.14 0.11%
ITT HARTFORD GROUP Insurance - Property & Casualty 5,645.36 0.11%
USX-MARATHON GROUP Petroleum Products & Refineries 5,604.26 0.11%
LINCOLN NAT CORP Insurance - Life & Agents &
Brokers 5,587.90 0.11%
ALLTEL CORP Telephone Companies 5,572.17 0.11%
FEDERATED DEPT STORES Retail - Department Stores 5,571.36 0.11%
WINN-DIXIE STORES Retail - Grocery Chains 5,553.74 0.11%
SAFEWAY INC Retail - Grocery Chains 5,489.54 0.11%
CONRAIL Rail & Road Transport 5,482.82 0.11%
FLUOR CORP Heavy Engineering & Shipbuilding 5,479.58 0.11%
MBNA CORP Commercial Banks & Other Banks 5,475.94 0.11%
TYCO INTERNATIONAL Diversified Industrials 5,442.82 0.11%
DAYTON-HUDSON Retail - Department Stores 5,392.58 0.11%
LOWE'S COS. Retail - Miscellaneous &
Speciality 5,387.10 0.11%
CAROLINA PWR & LIGHT Electric Utilities & Water Works
Supply 5,362.37 0.11%
CENTRAL & SOUTH WEST Electric Utilities & Water Works
Supply 5,343.64 0.11%
AON CORP Insurance - Multiline 5,340.62 0.11%
INTERNATIONAL FLAVORS&FRAGRA Cosmetics 5,341.54 0.11%
MORTON INTL INC Chemicals (Diversified) 5,322.42 0.11%
BOATMEN'S BANCSHARES Commercial Banks & Other Banks 5,288.08 0.11%
NOVELL INC Computer Software & Services 5,278.02 0.11%
CORESTATES FINL Commercial Banks & Other Banks 5,266.59 0.11%
BANKERS TRUST Commercial Banks & Other Banks 5,232.75 0.11%
BANK OF BOSTON Commercial Banks & Other Banks 5,189.48 0.11%
UNION CARBIDE Chemicals (Diversified) 5,147.29 0.10%
AVON PRODUCTS Cosmetics 5,132.59 0.10%
<PAGE> I-7
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
TRW Auto Parts - Original Equipment 5,120.43 0.10%
ALCO STANDARD Paper & Paper Products 5,077.33 0.10%
HERSHEY FOODS Food - Sugar & Confectionary 5,047.90 0.10%
MASCO CORP Fabricated Metal Products 5,038.57 0.10%
GENUINE PARTS CO Auto Parts - After Market 5,036.24 0.10%
EASTMAN CHEMICAL Chemicals (Diversified) 5,030.42 0.10%
DETROIT EDISON Electric Utilities & Water Works
Supply 5,006.64 0.10%
SERVICE CORP INTL Diversified Consumer Goods &
Services 5,006.63 0.10%
NUCOR CORP Iron & Steel 4,994.84 0.10%
TRANSAMERICA CORP Diversified Holding Companies 4,982.46 0.10%
BURLINGTON RES INC Natural Gas Utilities 4,967.72 0.10%
BECTON DICKINSON Health Care 4,945.58 0.10%
AMERADA HESS Petroleum Products & Refineries 4,929.16 0.10%
READERS DIGEST ASSN INC Publishing 4,883.72 0.10%
NATIONAL CITY CORP Commercial Banks & Other Banks 4,877.92 0.10%
CINERGY CORP Electric Utilities & Water Works
Supply 4,814.56 0.10%
MARRIOTT INTERNATIONAL Restaurants & Hotels 4,788.40 0.10%
FIFTH THIRD BANCORP Commercial Banks & Other Banks 4,778.61 0.10%
GENERAL MOTORS 'H' Aerospace & Defence 4,722.98 0.10%
GEICO CORP Insurance - Property & Casualty 4,718.59 0.10%
ST PAUL COMPANIES Insurance - Property & Casualty 4,702.09 0.10%
GREAT LAKES CHEM CORP Chemicals (Diversified) 4,660.34 0.09%
PRAXAIR INC Chemicals, Fibres, Paints & Gases 4,655.72 0.09%
PIONEER HI_BRED Agriculture & Fishing 4,643.96 0.09%
KROGER Retail - Grocery Chains 4,635.68 0.09%
QUAKER OATS Food Processors 4,633.70 0.09%
NORTHWEST AIRLINES'A' Airlines 4,611.52 0.09%
COMERICA INC Commercial Banks & Other Banks 4,596.56 0.09%
CHIRON CORP Drugs 4,592.05 0.09%
WILLIAMS COS INC DEL Natural Gas Utilities 4,455.99 0.09%
DRESSER INDS Energy Equipment & Services 4,448.90 0.09%
SILICON GRAPHICS Computers 4,441.66 0.09%
EQUITABLE COS Insurance - Life & Agents &
Brokers 4,431.89 0.09%
HUMANA Hospital Supply & Management 4,431.68 0.09%
COMCAST CL'A'SPL(NON-VTG) Broadcasting Media 4,363.51 0.09%
MCGRAW-HILL Publishing 4,350.24 0.09%
SAFECO CORP Insurance - Property & Casualty 4,345.93 0.09%
PHELPS DODGE CORP Non-Ferrous Metals 4,336.27 0.09%
ROHM & HAAS CO Chemicals, Fibres, Paints & Gases 4,332.05 0.09%
THERMO ELECTRON Diversified Industrials 4,322.40 0.09%
<PAGE> I-8
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
UNION ELEC CO Electric Utilities & Water Works
Supply 4,263.68 0.09%
NEWMONT MINING Precious Metals & Minerals 4,259.25 0.09%
CONS NATURAL GAS Natural Gas Utilities 4,236.89 0.09%
DSC COMMUNICATIONS Communications Equipment 4,230.41 0.09%
AUTOZONE INC Retail - Miscellaneous &
Speciality 4,227.50 0.09%
LSI LOGIC Electronics 4,225.70 0.09%
BLOCK (H&R) Business Services 4,208.44 0.09%
BALTIMORE GAS & ELEC Electric Utilities & Water Works
Supply 4,202.10 0.09%
DOVER CORP Diversified Industrials 4,188.19 0.08%
PANHANDLE EAST'N Natural Gas Utilities 4,184.79 0.08%
AFLAC INC Insurance - Life & Agents &
Brokers 4,176.84 0.08%
FEDERAL EXPRESS Freight Forwarders 4,173.57 0.08%
EATON CORP Auto Parts - Original Equipment 4,161.30 0.08%
TENET HEALTHCARE Hospital Supply & Management 4,148.36 0.08%
STUDENT LOAN MARKETING ASSN Financial Institutions 4,143.54 0.08%
NEWELL CO Household Durables & Appliances 4,102.61 0.08%
PARAMETRIC TECHNOLOGY Computer Software & Services 4,095.93 0.08%
FRANKLIN RESOURCES Financial Services 4,077.60 0.08%
GENERAL PUB UTILS CP Electric Utilities & Water Works
Supply 4,077.31 0.08%
CHAMPION INTL Forestry Products 4,053.50 0.08%
INFORMIX CORP Computer Software & Services 4,037.01 0.08%
RUBBERMAID Household Durables & Appliances 4,031.45 0.08%
UNUM CORP Insurance - Multiline 3,996.41 0.08%
P P & L RESOURCES Electric Utilities & Water Works
Supply 3,976.53 0.08%
TRIBUNE Publishing - Newspapers 3,979.36 0.08%
COOPER INDUSTRIES Electrical Equipment 3,964.41 0.08%
ADOBE SYSTEMS Computer Software & Services 3,956.78 0.08%
WHIRLPOOL CORP Household Durables & Appliances 3,940.87 0.08%
APPLE COMPUTER Computers 3,918.14 0.08%
AMER STORES Retail - Drug Chains 3,915.34 0.08%
COASTAL CORP Petroleum Products & Refineries 3,911.81 0.08%
COMPUTER SCIENCES Computer Software & Services 3,908.85 0.08%
PROVIDIAN CORP Insurance - Life & Agents &
Brokers 3,879.89 0.08%
DOW JONES Publishing - Newspapers 3,870.43 0.08%
INGERSOLL-RAND Machinery 3,825.32 0.08%
CROWN CORK & SEAL Fabricated Metal Products 3,783.01 0.08%
DELTA AIR LINES Airlines 3,779.22 0.08%
SALOMON Financial Institutions 3,776.74 0.08%
CLOROX Soaps 3,744.27 0.08%
<PAGE> I-9
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
SOUTHERN PACIFIC RAIL Rail & Road Transport 3,747.31 0.08%
GENERAL DYNAMICS Aerospace & Defence 3,723.69 0.08%
STATE STR BOSTON Commercial Banks & Other Banks 3,719.66 0.08%
TIMES MIRROR CO Publishing - Newspapers 3,679.57 0.07%
GREEN TREE FINL Financial Institutions 3,611.37 0.07%
REYNOLDS METALS Non-Ferrous Metals 3,600.61 0.07%
OHIO EDISON Electric Utilities & Water Works
Supply 3,585.37 0.07%
TURNER BROADCAST'B' Broadcasting Media 3,579.34 0.07%
U.S. ROBOTICS Communications Equipment 3,553.70 0.07%
PROGRESSIVE CORP,OHIO Insurance - Property & Casualty 3,510.98 0.07%
SCHWAB(CHAS)CORP Financial Institutions 3,504.21 0.07%
REPUBLIC N Y CORP Commercial Banks & Other Banks 3,491.98 0.07%
GREAT WSTN FINANCIAL Commercial Banks & Other Banks 3,484.70 0.07%
CINCINNATI FINANCIAL Insurance - Multiline 3,460.08 0.07%
SHERWIN-WILLIAMS Chemicals, Fibres, Paints & Gases 3,462.04 0.07%
BAKER HUGHES INC. Energy Equipment & Services 3,441.90 0.07%
MIDLANTIC CORP Commercial Banks & Other Banks 3,441.51 0.07%
VIACOM INC CL'A' Broadcasting Media 3,438.70 0.07%
ALLEGHENY POWER Electric Utilities & Water Works
Supply 3,436.35 0.07%
COCA-COLA ENTERPRISES Beverages - Soft Drinks 3,437.19 0.07%
SEAGATE TECHNOLOGY Computers 3,419.53 0.07%
FLORIDA PROG CORP Electric Utilities & Water Works
Supply 3,401.20 0.07%
INTERPUBLIC GROUP CO Advertising 3,386.11 0.07%
WISCONSIN ENERGY CORP Electric Utilities & Water Works
Supply 3,382.65 0.07%
GRAINGER (W.W) Electrical Equipment 3,367.55 0.07%
VF CORP Clothing 3,363.08 0.07%
IVAX CORP Drugs 3,357.81 0.07%
EQUIFAX INC Business Services 3,350.62 0.07%
NTHN STATES POWER Electric Utilities & Water Works
Supply 3,345.36 0.07%
SOUTHWEST AIRLINES Airlines 3,346.42 0.07%
UNION CAMP Paper & Paper Products 3,344.09 0.07%
K MART CORP Retail - General Merchandise 3,330.38 0.07%
JEFFERSON-PILOT Insurance - Life & Agents &
Brokers 3,310.80 0.07%
EMC CORP Computers 3,300.21 0.07%
NORDSTROM BEST Retail - Miscellaneous &
Speciality 3,287.47 0.07%
KERR-MCGEE Petroleum Products & Refineries 3,276.60 0.07%
TELLABS, INC Communications Equipment 3,276.28 0.07%
U.S. BANCORP Commercial Banks & Other Banks 3,278.40 0.07%
<PAGE> I-10
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
CASE CORP Instrumentation & Control
Equipment 3,251.27 0.07%
TORCHMARK Insurance - Life & Agents &
Brokers 3,242.43 0.07%
GOLDEN WEST FIN Commercial Banks & Other Banks 3,239.92 0.07%
MELVILLE CORP Retail - Miscellaneous &
Speciality 3,231.46 0.07%
DELL COMPUTER CORP Computers 3,222.93 0.07%
DILLARD DEPT STORE Retail - Department Stores 3,221.81 0.07%
GENL INSTRUMENT Communications Equipment 3,216.89 0.07%
HUNTINGTON BANCSHARES Commercial Banks & Other Banks 3,207.41 0.07%
MOLEX INC Electronics 3,198.40 0.06%
ANADARKO PETROLEUM Oil - Crude Producers 3,192.67 0.06%
MGIC INVESTMENT Insurance - Property & Casualty 3,179.86 0.06%
NORTHROP CORP Aircraft Manufacturers 3,159.94 0.06%
MIRAGE RESORTS Entertainment & Leisure Time 3,154.78 0.06%
SCRIPPS(E.W.)'A' Publishing - Newspapers 3,150.79 0.06%
MBIA INC Insurance - Property & Casualty 3,143.33 0.06%
ENGLEHARD CORP Chemicals (Diversified) 3,133.11 0.06%
AHMANSON (H.F) Commercial Banks & Other Banks 3,113.27 0.06%
POTOMAC ELECTRIC Electric Utilities & Water Works
Supply 3,110.44 0.06%
WILLAMETTE Forestry Products 3,109.16 0.06%
NORTHERN TRUST Commercial Banks & Other Banks 3,105.76 0.06%
WASHINGTON POST Publishing - Newspapers 3,103.13 0.06%
PREMARK INTL Household Durables & Appliances 3,098.86 0.06%
WHEELABRATOR TECH Engineering Services & Pollution
Control 3,094.56 0.06%
NORTH EAST UTILITES Electric Utilities & Water Works
Supply 3,079.78 0.06%
PALL CORP Machinery - Industrial &
Speciality 3,080.25 0.06%
OFFICE DEPOT Retail - Miscellaneous &
Speciality 3,066.31 0.06%
SONAT Natural Gas Utilities 3,065.78 0.06%
HARCOURT GENERAL INC Retail - Department Stores 3,049.46 0.06%
KNIGHT-RIDDER Publishing - Newspapers 3,032.13 0.06%
BLACK & DECKER MFG Machine Tools 3,020.71 0.06%
ST. JUDE MEDICAL Hospital Supply & Management 3,008.73 0.06%
TECO ENERGY Electric Utilities & Water Works
Supply 2,988.36 0.06%
PRICE/COSTCO INC Wholesale - Nondurables 2,977.33 0.06%
FIRSTAR CORP Commercial Banks & Other Banks 2,971.60 0.06%
HILTON HOTELS CORP Restaurants & Hotels 2,970.57 0.06%
DANA CORP Auto Parts - Original Equipment 2,965.54 0.06%
LINEAR TECHNOLOGY CORP Electronics 2,896.49 0.06%
CIRCUS CIRCUS ENTERP Entertainment & Leisure Time 2,868.09 0.06%
RITE AID Retail - Drug Chains 2,868.71 0.06%
<PAGE> I-11
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
ITT INDUSTRIES Auto Trucks & Parts 2,856.00 0.06%
NEW YORK TIMES Publishing - Newspapers 2,856.95 0.06%
JOHNSON CONTROLS Diversified Industrials 2,827.07 0.06%
MYLAN LABS Drugs 2,821.48 0.06%
FIRST OF AMERICA BK Commercial Banks & Other Banks 2,808.01 0.06%
MEAD Paper & Paper Products 2,810.21 0.06%
OMNICOM GROUP INC. Advertising 2,803.36 0.06%
WESTVACO CORP Paper & Paper Products 2,792.01 0.06%
DIAL CORP ARIZ Diversified Consumer Goods &
Services 2,786.77 0.06%
MALLINCKRODT GROUP Drugs 2,783.78 0.06%
SAN DIEGO GAS & ELEC Electric Utilities & Water Works
Supply 2,767.80 0.06%
NAT SEMICONDUCTOR Electronics 2,745.41 0.06%
CMS ENERGY CORP Electric Utilities & Water Works
Supply 2,722.54 0.06%
HASBRO Toys 2,717.86 0.06%
SOUTHERN NATIONAL Commercial Banks & Other Banks 2,711.63 0.05%
TANDY CORP Retail - Miscellaneous &
Speciality 2,705.68 0.05%
ANALOG DEVICES Instrumentation & Control
Equipment 2,695.79 0.05%
CIRCUIT CITY STORES Retail - Miscellaneous &
Speciality 2,686.09 0.05%
WESTERN ATLAS INC Energy Equipment & Services 2,686.25 0.05%
AVERY DENNISON CORP Chemicals, Fibres, Paints & Gases 2,666.00 0.05%
MERIDIAN BANCORP Commercial Banks & Other Banks 2,666.17 0.05%
LOUISIANA PACIFIC Forestry Products 2,616.28 0.05%
SUNAMERICA INC Financial Institutions 2,584.86 0.05%
NEW ENGLAND ELECT Electric Utilities & Water Works
Supply 2,572.65 0.05%
PARKER-HANNIFIN Machinery - Industrial &
Speciality 2,539.71 0.05%
USX-US STEEL Iron & Steel 2,544.29 0.05%
FIRST USA Financial Institutions 2,534.21 0.05%
PINNACLE WEST CAPITAL CORP. Electric Utilities & Water Works
Supply 2,513.58 0.05%
RAYCHEM Electrical Equipment 2,509.21 0.05%
CONSOLIDATED PAPERS Paper & Paper Products 2,495.37 0.05%
HARRAH'S ENTERTAINMENT CORP Restaurants & Hotels 2,486.40 0.05%
FMC CORP Diversified Industrials 2,481.57 0.05%
TEMPLE INLAND Paper & Paper Products 2,475.24 0.05%
BENEFICIAL CORP Financial Institutions 2,469.96 0.05%
SIGMA-ALDRICH Chemicals (Diversified) 2,468.22 0.05%
MARSHALL & ILSLEY Commercial Banks & Other Banks 2,443.32 0.05%
WHITMAN CORP Food Processors 2,444.74 0.05%
IMC GLOBAL Fertilizers 2,431.90 0.05%
CYPRUS AMAX MINERALS Mining & Extractive Industries 2,428.21 0.05%
<PAGE> I-12
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
MERCANTILE BANCORP Commercial Banks & Other Banks 2,423.92 0.05%
HILLENBRAND INDUS Hospital Supply & Management 2,396.89 0.05%
DELUXE CORP Printing 2,396.15 0.05%
PACIFIC ENTERPRISES Natural Gas Utilities 2,392.44 0.05%
SONOCO PRODUCTS Paper & Paper Products 2,391.32 0.05%
DQE Electric Utilities & Water Works
Supply 2,384.45 0.05%
AMSOUTH BANCORP Commercial Banks & Other Banks 2,358.10 0.05%
BEAR STEARNS COMPANIES INC Financial Institutions 2,360.73 0.05%
FREEP'T MCMORAN COPPER&GO Precious Metals & Minerals 2,354.80 0.05%
BRUNSWICK CORP Entertainment & Leisure Time 2,299.18 0.05%
MERCURY FINANCE Financial Institutions 2,295.38 0.05%
ADC TELECOMMUNICATIONS Communications Equipment 2,285.23 0.05%
ARMSTRONG WORLD IND Building Materials 2,284.02 0.05%
OWENS-CORNING FIBER Building Materials 2,283.24 0.05%
STANLEY WORKS Machine Tools 2,283.10 0.05%
BAUSCH & LOMB Health Care 2,269.13 0.05%
ILLINOVA CORP Electric Utilities & Water Works
Supply 2,269.32 0.05%
UAL INC. Airlines 2,261.06 0.05%
MCKESSON CORP (NEW) Wholesale - Nondurables 2,243.80 0.05%
ASHLAND INC Petroleum Products & Refineries 2,238.90 0.05%
SOUTHTRUST CORP Commercial Banks & Other Banks 2,240.91 0.05%
CRESTAR FINANCIAL Commercial Banks & Other Banks 2,227.00 0.05%
COLUMBIA GAS SYSTEM Natural Gas Utilities 2,218.89 0.05%
LEHMAN BR HOLDINGS Financial Institutions 2,221.86 0.05%
COUNTRYWIDE CREDIT INDUS Financial Institutions 2,215.96 0.04%
SUNDSTRAND CORP Aerospace & Defence 2,204.08 0.04%
SYNOVUS FINANCIAL Commercial Banks & Other Banks 2,200.26 0.04%
WENDYS INTL Restaurants & Hotels 2,197.61 0.04%
MANOR CARE Health Care 2,185.75 0.04%
MAYTAG Household Durables & Appliances 2,185.97 0.04%
ECHLIN INC Auto Parts - After Market 2,177.52 0.04%
ATMEL CORP Electronics 2,172.81 0.04%
XILINX INC Electronics 2,165.29 0.04%
HOMESTAKE MINING Precious Metals & Minerals 2,155.53 0.04%
POLAROID Photography 2,152.72 0.04%
HARRIS CORP Electronics 2,142.28 0.04%
SUPER VALU STORES Wholesale - Nondurables 2,140.83 0.04%
REEBOK INTERNATIONAL Footwear 2,135.02 0.04%
MARRIOTT CORP Restaurants & Hotels 2,110.57 0.04%
DOLE FOOD INC Food Processors 2,094.16 0.04%
INTEGRA FINL CORP Commercial Banks & Other Banks 2,073.77 0.04%
TERADYNE INC Electronics 2,064.53 0.04%
UJB FINANCIAL Commercial Banks & Other Banks 2,061.60 0.04%
<PAGE> I-13
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
AMERICAN GREETINGS A Diversified Consumer Goods &
Services 2,060.58 0.04%
LITTON INDUSTRIES Aerospace & Defence 2,057.81 0.04%
LIZ CLAIBORNE Clothing 2,054.58 0.04%
SUN CO Petroleum Products & Refineries 2,054.17 0.04%
JAMES RIVER CORP VA Paper & Paper Products 2,045.99 0.04%
CABOT CORP Chemicals, Fibres, Paints & Gases 2,044.34 0.04%
LEGGETT & PLATT INC Household Durables & Appliances 2,036.71 0.04%
FIRST TENN NATL Commercial Banks & Other Banks 2,031.29 0.04%
PREMIER INDUSTRIES Electrical Equipment 2,034.53 0.04%
NALCO CHEMICAL Chemicals (Diversified) 2,026.33 0.04%
VULCAN MATERIALS Building Materials 2,027.77 0.04%
ARROW ELECTRONICS Electronics 2,006.09 0.04%
SHAW INDUS Household Durables & Appliances 2,004.42 0.04%
CITIZENS UTIL 'A' Telephone Companies 1,979.63 0.04%
REGIONS FINANCIAL Commercial Banks & Other Banks 1,979.42 0.04%
TYSON FOODS CL'A' Food Processors 1,978.60 0.04%
KANSAS CITY SO. IND Rail & Road Transport 1,957.92 0.04%
LONG ISLAND LIGHTING Electric Utilities & Water Works
Supply 1,954.90 0.04%
PENNZOIL Petroleum Products & Refineries 1,956.98 0.04%
RYDER SYSTEM Rail & Road Transport 1,953.49 0.04%
PAINE WEBBER Financial Institutions 1,948.74 0.04%
AVNET Instrumentation & Control
Equipment 1,937.09 0.04%
ECOLAB Diversified Consumer Goods &
Services 1,932.45 0.04%
AMER RE CORP Insurance - Property & Casualty 1,923.17 0.04%
FIRST SECURITY Commercial Banks & Other Banks 1,927.16 0.04%
WEST ONE BANCORP Commercial Banks & Other Banks 1,919.74 0.04%
ROADWAY SERVICES Freight Forwarders 1,909.50 0.04%
UNITRIN INC Insurance - Life & Agents &
Brokers 1,912.37 0.04%
WASHINGTON MUTUAL Commercial Banks & Other Banks 1,902.95 0.04%
USF & G Insurance - Property & Casualty 1,896.04 0.04%
WORTHINGTON INDUS Iron & Steel 1,888.67 0.04%
CERIDIAN CORP Computers 1,884.96 0.04%
DARDEN RESTAURANTS Restaurants & Hotels 1,882.71 0.04%
BAYBANKS INC Commercial Banks & Other Banks 1,867.44 0.04%
OLD KENT FINL Commercial Banks & Other Banks 1,864.16 0.04%
OLD REPUBLIC INTL Insurance - Property & Casualty 1,851.64 0.04%
MILLIPORE CORP Chemicals (Diversified) 1,832.28 0.04%
SNAP-ON-TOOLS Auto Parts - After Market 1,830.36 0.04%
OLIN CORP Chemicals (Diversified) 1,828.33 0.04%
<PAGE> I-14
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
PROVIDENT LIFE AND ACCID' Insurance - Life & Agents &
Brokers 1,828.71 0.04%
TIG HOLDINGS Insurance - Property & Casualty 1,827.28 0.04%
BANK SOUTH CORP Commercial Banks & Other Banks 1,785.62 0.04%
HUBBELL INC CL'B' Electronics 1,783.14 0.04%
MEDITRUST SBI Real Estate 1,779.92 0.04%
STAR BANC CORP Commercial Banks & Other Banks 1,776.13 0.04%
LUBRIZOL CORP Chemicals, Fibres, Paints & Gases 1,771.23 0.04%
GOODRICH (BF) Chemicals (Diversified) 1,767.44 0.04%
AMER NATL INSURANCE Insurance - Life & Agents &
Brokers 1,760.85 0.04%
TAMBRANDS Health Care 1,751.76 0.04%
KEMPER CORP Insurance - Life & Agents &
Brokers 1,736.13 0.04%
WOOLWORTH CORP Retail - General Merchandise 1,729.53 0.04%
ADVANCED MICRO DEV Electronics 1,720.46 0.03%
MERC STORES Retail - Department Stores 1,704.03 0.03%
AMER FINL GROUP Insurance - Property & Casualty 1,699.47 0.03%
DIEBOLD Business Services 1,690.49 0.03%
TRANSATLANTIC HOLDINGS Insurance - Property & Casualty 1,683.74 0.03%
ST. JOE PAPER Paper & Paper Products 1,677.44 0.03%
BOISE CASCADE CORP Forestry Products 1,653.72 0.03%
LOCTITE CORP Chemicals (Diversified) 1,654.85 0.03%
ALLMERICA PROP & CAS COS Insurance - Property & Casualty 1,651.02 0.03%
AMBAC INC Insurance - Property & Casualty 1,647.42 0.03%
WITCO CORP Chemicals (Diversified) 1,650.69 0.03%
TEKTRONIX Instrumentation & Control
Equipment 1,644.61 0.03%
PACCAR Auto Trucks & Parts 1,637.02 0.03%
HARNISCHFEGER Machinery - Industrial &
Speciality 1,615.72 0.03%
RELIASTAR FINANCIAL Insurance - Life & Agents &
Brokers 1,608.90 0.03%
PERKIN-ELMER Instrumentation & Control
Equipment 1,595.62 0.03%
SANTA FE PACIFIC GOLD Precious Metals & Minerals 1,593.82 0.03%
PACIFICARE HEALTH SYS'B' Health Care 1,591.39 0.03%
PMI GROUP Insurance - Property & Casualty 1,583.75 0.03%
CAPITAL ONE FINANCIAL Financial Institutions 1,579.50 0.03%
ILLINOIS CENTRAL CORP Rail & Road Transport 1,581.70 0.03%
BETHLEHEM STEEL Iron & Steel 1,576.18 0.03%
NAT SERVICE Business Services 1,565.46 0.03%
MOLEX INC'A' Electronics 1,551.13 0.03%
GENERAL SIGNAL CORP Instrumentation & Control
Equipment 1,535.74 0.03%
FOSTER WHEELER CORP. Diversified Industrials 1,523.92 0.03%
<PAGE> I-15
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
VARITY CORP Auto Parts - Original Equipment 1,521.09 0.03%
EQUITY INCOME FUND Investment Trusts 1,517.46 0.03%
LEUCADIA NATL Diversified Holding Companies 1,503.07 0.03%
BANCORP HAWAII Commercial Banks & Other Banks 1,489.60 0.03%
EDWARDS(AG)INC Financial Institutions 1,490.09 0.03%
ANDREW CORP Communications Equipment 1,486.74 0.03%
AUTODESK Computer Software & Services 1,483.54 0.03%
CUMMINS ENGINE Machinery 1,483.70 0.03%
ETHYL CORP COM Chemicals, Fibres, Paints & Gases 1,480.42 0.03%
PUGET SOUND Electric Utilities & Water Works
Supply 1,479.65 0.03%
BROWN-FORMAN 'B' Beverages - Distillers 1,465.11 0.03%
TRI-CONTINENTAL CP Investment Trusts 1,452.34 0.03%
LOUISIANA LAND & EXP Oil - Crude Producers 1,435.50 0.03%
GREENPOINT FINL Commercial Banks & Other Banks 1,430.19 0.03%
TELEDYNE Diversified Industrials 1,429.23 0.03%
BROOKLYN UNION GAS Natural Gas Utilities 1,427.05 0.03%
KING WORLD PRODUCTIONS Broadcasting Media 1,428.07 0.03%
SECURITY CAP PACIFIC TR Real Estate 1,426.17 0.03%
STONE CONTAINER Paper & Paper Products 1,425.05 0.03%
SIMON PROPERTY GROUP Real Estate 1,419.58 0.03%
FIRST VIRGINIA BANKS Commercial Banks & Other Banks 1,416.91 0.03%
BANDAG INC Tyre & Rubber Goods 1,413.91 0.03%
ORYX ENERGY COMPANY Oil - Crude Producers 1,396.75 0.03%
SIGNET BANKING Commercial Banks & Other Banks 1,398.28 0.03%
BOWATER Paper & Paper Products 1,386.91 0.03%
NIAGARA MOHAWK POWER Electric Utilities & Water Works
Supply 1,389.20 0.03%
DELMARVA POWER & LT Electric Utilities & Water Works
Supply 1,381.38 0.03%
NICOR INC Natural Gas Utilities 1,383.75 0.03%
FOOD LION INC CLASS A Retail - Grocery Chains 1,375.82 0.03%
FOOD LION INC CLASS B Retail - Grocery Chains 1,371.01 0.03%
TJX COS INC Retail - Miscellaneous &
Speciality 1,367.12 0.03%
ASARCO Non-Ferrous Metals 1,357.63 0.03%
BELO (AH) CORP Publishing - Newspapers 1,341.91 0.03%
CENTERIOR ENERGY COR Electric Utilities & Water Works
Supply 1,313.78 0.03%
KLA INSTRUMENTS Instrumentation & Control
Equipment 1,314.10 0.03%
TRINITY INDS Fabricated Metal Products 1,308.86 0.03%
PITTSTON SERVICES GROUP Freight Forwarders 1,304.38 0.03%
CENTRAL FIDELITY BANKS Commercial Banks & Other Banks 1,283.26 0.03%
EG & G Instrumentation & Control
Equipment 1,272.96 0.03%
<PAGE> I-16
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
SENSORMATIC ELECT Instrumentation & Control
Equipment 1,274.14 0.03%
CHRIS-CRAFT INDS Diversified Consumer Goods &
Services 1,261.52 0.03%
SHARED MED SYS Health Care 1,263.40 0.03%
BRIGGS & STRATTON Machinery 1,254.71 0.03%
TANDEM COMPUTERS Computers 1,243.17 0.03%
INLAND STEEL Iron & Steel 1,225.40 0.02%
WEIS MARKETS INC Retail - Grocery Chains 1,219.13 0.02%
MCDERMOTT INTL Heavy Engineering & Shipbuilding 1,195.72 0.02%
CONS FREIGHTWAYS Freight Forwarders 1,153.70 0.02%
SCIENTIFIC ATLANTA Communications Equipment 1,143.61 0.02%
ENSERCH CORP Natural Gas Utilities 1,112.61 0.02%
PEOPLES ENERGY CORP Natural Gas Utilities 1,108.49 0.02%
NORAM ENERGY CORP Natural Gas Utilities 1,105.24 0.02%
BROWN-FORMAN'A' Beverages - Distillers 1,083.43 0.02%
RUSSELL CORP Clothing 1,080.89 0.02%
CYPRESS SEMICONDUCTOR CORP. Electronics 1,068.81 0.02%
PACIFICARE HEALTH SYS'A' Health Care 1,070.62 0.02%
ALEX & BALDWIN Sea Transport 1,046.82 0.02%
BEVERLY ENTERPRISES DEL Health Care 1,046.11 0.02%
USLIFE CORP Insurance - Life & Agents &
Brokers 1,026.79 0.02%
GAYLORD ENTERTAINMENT 'A' Entertainment & Leisure Time 1,023.81 0.02%
AMDAHL CORP Computers 1,010.44 0.02%
ROUSE Real Estate 976.39 0.02%
CCH INC CLASS A Publishing 962.34 0.02%
UNISYS CORP Computers 964.11 0.02%
MENTOR GRAPHICS Computers 951.99 0.02%
SAFETY-KLEEN Business Services 904.20 0.02%
CINCINNATI MILACRON Machine Tools 899.53 0.02%
CITIZENS UTIL 'B' Telephone Companies 897.83 0.02%
AMER POWER CONVERSION Electrical Equipment 883.80 0.02%
COMSAT CORP Telephone Companies 884.43 0.02%
GREAT ATLANTIC & PAC Retail - Grocery Chains 879.06 0.02%
WASHINGTON GAS LT Natural Gas Utilities 877.07 0.02%
ADVANTA CORP CL'B' Financial Institutions 866.34 0.02%
FREEPORT-MCMORAN Precious Metals & Minerals 847.67 0.02%
ALEX & ALEXANDER Insurance - Agents & Brokers 844.40 0.02%
BALL CORP Containers 830.94 0.02%
USAIR GROUP Airlines 827.75 0.02%
TRINOVA CORP. Auto Parts - Original Equipment 824.77 0.02%
NAVISTAR INTL CORP Auto Trucks & Parts 789.57 0.02%
ARCO CHEM CO Chemicals (Diversified) 782.80 0.02%
FLEMING Wholesale - Nondurables 776.78 0.02%
<PAGE> I-17
Index Market Weight in
Capitalization FT/S&P
Constituent Name Industry Sector (Millions of US$) Index
COMCAST CORP. Broadcasting Media 689.19 0.01%
BATTLE MTN GOLD Precious Metals & Minerals 679.15 0.01%
ADVANTA CORP CL'A' Financial Institutions 667.12 0.01%
NL INDUSTRIES Chemicals, Fibres, Paints & Gases 632.00 0.01%
ARMCO Iron & Steel 623.90 0.01%
FT-US 4,935,800.29
</TABLE>
<PAGE> 1
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Part B - The CountryBaskets(SM) Index Fund, Inc. Financial Statements:
Statement of Assets and Liabilities, at [ ], 1996.
(b) Exhibits:
*(1) --Articles of Amendment and Restatement of the Fund
(2) --Bylaws of the Fund
(3) --Not applicable
(4) (A) --Form of global certificate evidencing shares of the
Common Stock, $.001 par value, of the Fund
**(4) (B) --Articles FIFTH, SIXTH, NINTH and TWELFTH of the Fund's
Articles of Amendment and Restatement, and Article II,
Article III Section 3, Article IV and Article VII of the
Fund's Bylaws, relating to the rights of stockholders
(5) --Investment Management Agreement between the Fund and
Deutsche Morgan Grenfell/C.J. Lawrence Inc.
(6) (A) --Distribution Agreement between the Fund and ALPS Mutual
Funds Services, Inc.
(6) (B) --Marketing Agreement between the Fund and ALPS Mutual
Funds Services, Inc.
(6) (C) --Form of Soliciting Dealer Agreement
(6) (D) --Form of Investor Services Agreement
(6) (E) --Form of Authorized Participant Agreement (including as
annexes the forms of purchase order, notice of intention
and redemption request)
(6) (F) --Form of Participating Financial Institutions Investor
Services Agreement
(6) (G) --Form of Specialist Institutions Services Agreement
(7) --Not applicable
(8) --Custodian Contract between the Fund and State Street
Bank and Trust Company
(9) (A) --Administration Agreement between the Fund and State
Street Bank and Trust Company
(9) (B) --Transfer Agency and Service Agreement between the Fund
and State Street Bank and Trust Company
(9) (C) --Indemnity Agreement between the Fund and Alexander Lucey
Inc.
***(9) (D) --Form of Purchase Agreement
***(10) --Opinion and consent of Sullivan & Cromwell
* Previously filed.
** Incorporated herein by reference to the specified
portions of the Fund's Articles of Incorporation filed
as Exhibit (1) to pre-effective Amendment No. 3, filed
on July 11, 1995, and the Bylaws filed as Exhibit (2)
to this Amendment No. 4.
*** To be filed by Amendment.
<PAGE> 2
***(11) --Opinion and consent of Price Waterhouse LLP
(12) --Not applicable
(13) (A) --Subscription Agreement between the Fund and ALPS Mutual
Funds Services, Inc. with respect to the Fund's initial
capitalization
(13) (B) --Letter of Representations among The Depository Trust
Company, the Fund and State Street Bank and Trust
Company
(14) --Not applicable
(15) (A) --Form of 12b-1 Plan
(15) (B) --Form of Fund Payment Agreement
(16) --Not applicable
(17) --Not applicable
<PAGE> 3
Item 25. Persons Controlled by or Under Common Control with Registrant
Immediately prior to the initial public offering of the shares of the
Fund, ALPS Mutual Funds Services, Inc. ("ALPS"), a Colorado corporation,
will own all of the outstanding shares of each of Australia Index Series,
France Index Series, Germany Index Series, Hong Kong Index Series, Italy
Index Series, Japan Index Series, South Africa Index Series, UK Index
Series and US Index Series of the Fund. At such time, based on their
percentage shareholdings of the common stock of ALPS at December 29, 1995,
the following persons may be deemed to control ALPS and, therefore,
indirectly control the Fund: W. Robert Alexander and Arthur J.L. Lucey.
Item 26. Number of Holders of Securities
As of [____________________], 1996, the number of record holders of
each class of securities of the Fund is one. See Item 25.
Item 27. Indemnification
State Law, Articles of Amendment and Restatement, and Bylaws. It is
the Fund's policy to indemnify officers, directors, employees and other
agents to the maximum extent permitted by Section 2-418 of the Maryland
General Corporation Law, Articles SEVENTH and EIGHTH of the Fund's Articles
of Amendment and Restatement and Article VI of the Fund's Bylaws (each set
forth below).
Section 2-418 of the Maryland General Corporation Law reads as follows:
"2-418 INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.
(a) In this section the following words have the meaning indicated.
(1) "Director" means any person who is or was a director of a
corporation and any person who, while a director of a corporation, is or
was serving at the request of the corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, other enterprise, or
employee benefit plan.
(2) "Corporation" includes any domestic or foreign predecessor
entity of a corporation in a merger, consolidation, or other transaction in
which the predecessor's existence ceased upon consummation of the
transaction.
(3) "Expenses" include attorney's fees.
(4) "Official capacity" means the following:
(i) When used with respect to a director, the office of director in
the corporation; and
(ii) When used with respect to a person other than a director as
contemplated in subsection (j), the elective or appointive office in the
corporation held by the officer, or the employment or agency relationship
undertaken by the employee or agent in behalf of the corporation.
(iii) "Official capacity" does not include service for any other
foreign or domestic corporation or any partnership, joint venture, trust,
other enterprise, or employee benefit plan.
(5) "Party" includes a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(6) "Proceeding" means any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, or
investigative.
(b)(1) A corporation may indemnify any director made a party to any
proceeding by reason of service in that capacity unless it is established
that:
<PAGE> 4
(i) the act or omission of the director was material to the matter
giving rise to the proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and deliberate dishonesty; or
(ii) The director actually received an improper personal benefit in
money, property, or services; or
(iii) In the case of any criminal proceeding, the director had
reasonable cause to believe that the act or omission was unlawful.
(2)(i) Indemnification may be against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding.
(ii) However, if the proceeding was one by or in the right of the
corporation, indemnification may not be made in respect of any proceeding
in which the director shall have been adjudged to be liable to the
corporation.
(3)(i) The termination of any proceeding by judgment, order, or
settlement does not create a presumption that the director did not meet the
requisite standard of conduct set forth in this subsection.
(ii) The termination of any proceeding by conviction, or a plea of
nolo contendere or its equivalent, or an entry of an order of probation
prior to judgment, creates a rebuttable presumption that the director did
not meet that standard of conduct.
(c) A director may not be indemnified under subsection (B) of this
section in respect of any proceeding charging improper personal benefit to
the director, whether or not involving action in the director's official
capacity, in which the director was adjudged to be liable on the basis that
personal benefit was improperly received.
(d) Unless limited by the charter:
(1) A director who has been successful, on the merits or otherwise,
in the defense of any proceeding referred to in subsection (B) of this
section shall be indemnified against reasonable expenses incurred by the
director in connection with the proceeding.
(2) A court of appropriate jurisdiction upon application of a
director and such notice as the court shall require, may order
indemnification in the following circumstances:
(i) If it determines a director is entitled to reimbursement under
paragraph (1) of this subsection, the court shall order indemnification, in
which case the director shall be entitled to recover the expenses of
securing such reimbursement; or
(ii) If it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances,
whether or not the director has met the standards of conduct set forth in
subsection (b) of this section or has been adjudged liable under the
circumstances described in subsection (c) of this section, the court may
order such indemnification as the court shall deem proper. However,
indemnification with respect to any proceeding by or in the right of the
corporation or in which liability shall have been adjudged in the
circumstances described in subsection (c) shall be limited to expenses.
(3) A court of appropriate jurisdiction may be the same court in
which the proceeding involving the director's liability took place.
(e)(1) Indemnification under subsection (b) of this section may not
be made by the corporation unless authorized for a specific proceeding
after a determination has been made that indemnification of the director is
permissible in the circumstances because the director has met the standard
of conduct set forth in subsection (b) of this section.
(2) Such determination shall be made:
(i) By the board of directors by a majority vote of a quorum
consisting of directors not, at the time, parties to the proceeding, or, if
such a quorum cannot be obtained, then by a majority vote of a committee of
the board consisting solely of two or more directors not, at the time,
parties to such
<PAGE> 5
proceeding and who were duly designated to act in the matter by a majority
vote of the full board in which the designated directors who are parties
may participate;
(ii) By special legal counsel selected by the board of directors or a
committee of the board by vote as set forth in subparagraph (I) of this
paragraph, or, if the requisite quorum of the full board cannot be obtained
therefor and the committee cannot be established, by a majority vote of the
full board in which director [sic] who are parties may participate; or
(iii) By the shareholders.
(3) Authorization of indemnification and determination as to
reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible. However, if the
determination that indemnification is permissible is made by special legal
counsel, authorization of indemnification and determination as to
reasonableness of expenses shall be made in the manner specified in
subparagraph (ii) of paragraph (2) of this subsection for selection of such
counsel.
(4) Shares held by directors who are parties to the proceeding may
not be voted on the subject matter under this subsection.
(f)(1) Reasonable expenses incurred by a director who is a party to a
proceeding may be paid or reimbursed by the corporation in advance of the
final disposition of the proceeding upon receipt by the corporation of:
(i) A written affirmation by the director of the director's good
faith belief that the standard of conduct necessary for indemnification by
the corporation as authorized in this section has been met; and
(ii) A written undertaking by or on behalf of the director to repay
the amount if it shall ultimately be determined that the standard of
conduct has not been met.
(2) The undertaking required by subparagraph (ii) of paragraph (1) of
this subsection shall be an unlimited general obligation of the director
but need not be secured and may be accepted without reference to financial
ability to make the repayment.
(3) Payments under this subsection shall be made as provided by the
charter, bylaws, or contract or as specified in subsection (e) of this
section.
(g) The indemnification and advancement of expenses provided or
authorized by this section may not be deemed exclusive of any other rights,
by indemnification or otherwise, to which a director may be entitled under
the charter, the bylaws, a resolution of shareholders or directors, an
agreement or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office.
(h) This section does not limit the corporation's power to pay or
reimburse expenses incurred by a director in connection with an appearance
as a witness in a proceeding at a time when the director has not been made
a named defendant or respondent in the proceeding.
(i) For purposes of this section:
(1) The corporation shall be deemed to have requested a director to
serve an employee benefit plan where the performance of the director's
duties to the corporation also imposes duties on, or otherwise involves
services by, the director to the plan or participants or beneficiaries of
the plan;
(2) Excise taxes assessed on a director with respect to an employee
benefit plan pursuant to applicable law shall be deemed fines; and
(3) Action taken or omitted by the director with respect to an
employee benefit plan in the performance of the director's duties for a
purpose reasonably believed by the director to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a
purpose which is not opposed to the best interests of the corporation.
(j) Unless limited by the charter:
(1) An officer of the corporation shall be indemnified as and to the
extent provided in subsection (d) of this section for a director and shall
be entitled, to the same extent as a director, to seek indemnification
pursuant to the provisions of subsection (d);
<PAGE> 6
(2) A corporation may indemnify and advance expenses to an officer,
employee, or agent of the corporation to the same extent that it may
indemnify directors under this section; and
(3) A corporation, in addition, may indemnify and advance expenses to
an officer, employee, or agent who is not a director to such further
extent, consistent with law, as may be provided by its charter, bylaws,
general or specific action of its board of directors or contract.
(k)(1) A corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, or agent of the
corporation, or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, or agent of another foreign
or domestic corporation, partnership, joint venture, trust, other
enterprise, or employee benefit plan against any liability asserted against
and incurred by such person in any such capacity or arising out of such
person's position, whether or not the corporation would have the power to
indemnify against liability under the provisions of this section.
(2) A corporation may provide similar protection, including a trust
fund, letter of credit, or surety bond, not inconsistent with this section.
(3) The insurance or similar protection may be provided by a
subsidiary or an affiliate of the corporation.
(l) Any indemnification of, or advance of expenses to, a director in
accordance with this section, if arising out of a proceeding by or in the
right of the corporation, shall be reported in writing to the shareholders
with the notice of the next stockholders' meeting or prior to the meeting."
Article SEVENTH of the Fund's Articles of Amendment and Restatement
provides:
"To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company
Act of 1940, no director or officer of the Corporation shall be
personally liable to the Corporation or its stockholders for money
damages; provided, however, that nothing herein shall be construed to
protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office. No amendment of the charter of the
Corporation or repeal of any of its provisions shall limit or
eliminate the limitation of liability provided to directors and
officers hereunder with respect to any act or omission occurring
prior to such amendment or repeal."
Article EIGHTH of the Fund's Articles of Amendment and Restatement
provides:
"The Corporation shall indemnify (i) its directors and
officers, whether serving the Corporation or at its request any other
entity, to the full extent required or permitted by the General Laws
of the State of Maryland now or hereafter in force, including the
advance of expenses under the procedures and to the full extent
permitted by law, and (ii) other employees and agents to such extent
as shall be authorized by the Board of Directors or the Bylaws and as
permitted by law. Nothing contained herein shall be construed to
protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office. The foregoing rights of
indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt,
approve and amend from time
<PAGE> 7
to time such Bylaws, resolutions or contracts implementing such provisions
or such further indemnification arrangements as may be permitted by law.
No amendment of the charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the right of indemnification provided
hereunder with respect to acts or omissions occurring prior to such
amendment or repeal."
Article SIXTH of the Fund's Bylaws provides:
Section 1. Indemnification of Directors and Officers. The
Corporation shall indemnify to the fullest extent permitted by law
(including the Act) and the Articles of Incorporation, as currently in
effect or as hereafter amended, any person made or threatened to be made
a party to any action, suit or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that such person
or such person's testator or intestate is or was a Director, officer or
employee of the Corporation or serves or served at the request of the
Corporation any other enterprise as a director, officer or employee.
To the fullest extent permitted by law (including the Act) and the
Articles of Incorporation, as currently in effect or as hereafter
amended, expenses incurred by any such person in defending any such
action, suit or proceeding shall be paid or reimbursed by the Corporation
promptly upon receipt by it of an undertaking of such person to repay
such expenses if it shall ultimately be determined that such person
is not entitled to be indemnified by the Corporation. The rights
provided to any person by this Article shall be enforceable against
the Corporation by such person who shall be presumed to have relied
upon it in serving or continuing to serve as a Director, officer or
employee as provided above. No amendment of this Article shall
impair the rights of any person arising at any time with respect to
events occurring prior to such amendment. For purposes of this
Article, the term "Corporation" shall include any predecessor of the
Corporation and any constituent corporation (including any
constituent of a constituent) absorbed by the Corporation in a
consolidation or merger; the term "other enterprise" shall include
any corporation, partnership, joint venture, trust or employee
benefit plan; service "at the request of the Corporation" shall
include service as a Director, officer or employee of the Corporation
which imposes duties on, or involves services by, such Director,
officer or employee with respect to an employee benefit plan, its
participants or beneficiaries; any excise taxes assessed on a person
with respect to an employee benefit plan shall be deemed to be
indemnifiable expenses; and action by a person with respect to any
employee benefit plan which such person reasonably believes to be in
the interest of the participants and beneficiaries of such plan shall
be deemed to be action not opposed to the best interests of the
Corporation.
Item 28. Business and Other Connections of Investment Adviser
See "Management of the Fund" in the Statement of Additional
Information. Information as to the directors and officers of the Adviser
is included in its form ADV filed with the Commission and is incorporated
herein by reference thereto.
Item 29. Principal Underwriters
(a) ALPS is the Fund's principal underwriter. ALPS also acts as a
principal underwriter and distributor for the following investment
companies: Mariner Funds Trust, Mariner Mutual Funds Trust, Duff & Phelps
Mutual Funds and FGIC Public Trust.
<PAGE> 8
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
W. Robert Alexander Chairman, President and None
Director
Arthur J.L. Lucey Secretary, Vice President None
and Director
John W. Hannon, Jr. Director None
Asa W. Smith Director None
Rick Pederson Director None
Gordon Hobgood, Jr. Director None
Steve J. Bettcher Director None
Mark A. Pougnet CFO None
Ned Burke Senior Vice President None
* The principal business address for each of the above directors is
370 Seventeenth Street, Suite 2700, Denver, Colorado 80202.
(c) ALPS has received no commissions or other compensation from the
Fund to date.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules thereunder will be maintained
at the offices of State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110 except that the accounts, books and other
documents required by Rules 31(a)[ ] will be kept at the offices of
the Fund's Adviser, Deutsche Morgan Grenfell/C.J. Lawrence Inc., 31 West
52nd Street, New York, New York 10019.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Fund undertakes that it will file:
(a) an amendment to the registration statement with certified
financial statements showing the initial capital received before
accepting subscriptions from any persons in excess of 25 if the Fund
proposes to raise its initial capital pursuant to Section 14(a)(3) of
the 1940 Act [15 U.S.C. 80a-14(a)(3)]; and
<PAGE> 9
(b) a post-effective amendment, using financial statements
which need not be certified, within four to six months from the
effective date of the Fund's registration statement under the
Securities Act of 1933, as amended (the "Act").
Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the Fund
pursuant to the foregoing provisions, or otherwise, the Fund has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Fund of expenses
incurred or paid by a director, officer or controlling person of the Fund
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Fund will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Fund has duly caused this Amendment to
be signed on its behalf by the undersigned, thereto duly authorized, in the
City and State of New York, on the 12th day of February, 1996.
THE COUNTRYBASKETS(SM) INDEX FUND, INC.
By: /s/ Joseph A. La Corte
Joseph A. La Corte
President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment has been signed below by the following persons in the capacities
and on the date indicated. In addition, the undersigned hereby constitutes
and appoints Joseph A. La Corte and Thomas A. Curtis, acting singly or
together, his attorneys-in-fact, with power of substitution, in his name
and in the capacity indicated below, to sign any and all amendments
(including post-effective amendments) to the Registration Statement and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact, or their substitutes, may
do or cause to be done by virtue hereof.
Name Title Date
/s/ Warner Heineman Director February 12, 1996
Warner Heineman
/s/ Joseph A. La Corte Director and President February 12, 1996
Joseph A. La Corte (Principal Executive
Officer)
/s/ W. Carter McClelland Director February 12, 1996
W. Carter McClelland
/s/ Lawrence C. McQuade Director February 12, 1996
Lawrence C. McQuade
/s/ Karl M. von der Heyden Director February 12, 1996
Karl M. von der Heyden
/s/ Robert H. Wadsworth Director February 12, 1996
Robert H. Wadsworth
/s/ Joseph Cheung Vice President and February 12, 1996
Joseph Cheung Treasurer (Principal
Financial and Accounting
Officer)
<PAGE> 1
Adopted February 7, 1996
BY-LAWS OF
THE COUNTRYBASKETS INDEX FUND, INC.
ARTICLE I.
Fiscal Year and Offices
Section 1. Fiscal Year. Unless otherwise provided by resolution of
the Board of Directors the fiscal year of The CountryBaskets Index Fund,
Inc. (the "Corporation") shall begin on November 1 and end on the last day
of October.
Section 2. Registered Office. The registered office of the
Corporation in Maryland shall be located at 32 South Street, Baltimore,
Maryland 21202, and the name and address of its Resident Agent is The
Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland 21202.
Section 3. Other Offices. The Corporation shall have such
additional places of business, either within or outside the State of
Maryland, as the Board of Directors may from time to time designate.
ARTICLE II.
Meetings of Stockholders
Section 1. Place of Meeting. Meetings of the Stockholders shall be
held in such place in the United States as may from time to time be
designated by the Board of Directors and stated in the notice of the
Meeting.
Section 2. Annual Meetings. The Corporation shall not be required
to hold an annual meeting of Stockholders in any year in which the election
of directors is not required to be acted upon under the Investment Company
Act of 1940, as amended (the "Act"). In the event that the Corporation
shall hold an annual meeting of stockholders, such meeting shall be held at
a date and time set by the Board of Directors, provided, however, that if
the purpose of the meeting is to elect directors or to approve an
investment advisory agreement or distribution agreement, then the date and
time of such meeting shall be set in accordance with the Act. Any meeting
of Stockholders held in accordance with the preceding sentence may
constitute the annual meeting of Stockholders for the fiscal year of the
Corporation in which the meeting is held.
<PAGE> 2
Section 3. Special Meetings. Special meetings of the Stockholders
may be called at any time by the Chairman of the Board or the President, or
by a majority of the Board of Directors, and shall be called by the
Chairman of the Board, President or Secretary upon written request of (a)
the holders of record of not less than ten percent of the outstanding
shares of the Corporation, in the case of any request to call a special
meeting for the purpose of voting on the question of removal of any
Director or Directors and (b) the holders of shares entitled to cast not
less than twenty-five percent of all the votes entitled to be cast at such
meeting, in any other case; provided that any such request shall state the
purpose or purposes of such meeting and the matters proposed to be acted
on, and the Stockholders requesting such meeting shall have paid to the
Corporation the reasonably estimated cost of preparing and mailing the
notice thereof, which the Secretary of the Corporation shall determine and
specify to such Stockholders. No special meeting need be called upon the
request of holders of common stock entitled to cast less than a majority of
all votes entitled to be cast at such meeting to consider any matter (other
than the removal of any Director or Directors) which is substantially the
same as a matter voted on at any meeting of the Stockholders held during
the preceding twelve months.
Section 4. Stockholder Communications. Whenever ten or more
Stockholders of record who have been such for at least six months preceding
the date of application, and who hold in the aggregate either shares having
a net asset value of at least $25,000 or at least one percent of the
outstanding shares, whichever is less, shall apply to the Board of
Directors in writing, stating that they wish to communicate with other
Stockholders with a view to obtaining signatures to a request for a meeting
pursuant to subsection (a) of Section 3 and accompanied by a form of
communication and request which they wish to transmit, the Secretary of the
Corporation shall within five business days after receipt of such
application either--
(a) afford to such applicants access to a list of the names and
addresses of all shareholders as shown in the records of the Corporation;
or
(b) inform such applicants as to the approximate number of
Stockholders of record, and the approximate cost of mailing to them the
proposed communication and form of request.
If the Corporation elects to follow the course specified in
subsection (b) of this Section 4 the Secretary of the Corporation, upon the
written request of such applicants, accompanied by a tender of the material
to be mailed and of the reasonable expenses of mailing, shall, with
reasonable promptness, mail such material to all Stockholders of record at
their addresses as shown in the records of the Corporation, unless within
five business days after such tender the Secretary of the Corporation shall
mail to such applicants and file with the Securities and Exchange
Commission, together with a copy of the material to be mailed, a written
<PAGE> 3
statement signed by at least a majority of the Board of Directors to the
effect that in their opinion either such material contains untrue
statements of fact or omits to state facts necessary to make the statements
contained therein not misleading, or would be in violation of applicable
law, and specifying the basis of such opinion.
Section 5. Notice. Not less than ten nor more than ninety days
before the date of every annual or special meeting of the Stockholders, the
Secretary shall give to each Stockholder entitled to vote at such meeting
and to each other Stockholder entitled to notice of such meeting, written
notice stating the time and place of the meeting and, in the case of a
special meeting of Stockholders or when otherwise required by the laws of
the State of Maryland, the purpose of the meeting. Notice of adjournment
of a Stockholders' meeting to another time or place need not be given, if
such time and place are announced at the meeting. Such notice shall be
given in the manner required by the laws of the State of Maryland. No
notice of the time, place or purpose of any meeting of Stockholders need be
given to any Stockholder who attends in person or by proxy or to any
Stockholder who, in writing executed and filed with the records of the
meeting, either before or after the holding thereof, waives such notice.
Section 6. Record Date for Meetings. Subject to the provisions of
Maryland law, the Board of Directors may fix in advance a date as the
record date for the determination of the Stockholders entitled to receive
notice of, and to vote at any meeting and any adjournment thereof, or
Stockholders entitled to receive payment of any dividend or the allotment
of any other rights. Such date in any case shall not be more than ninety
days and, in the case of a meeting of Stockholders, not less than ten days,
prior to the date on which the action requiring the determination will be
taken. Such Stockholders and only such Stockholders as shall be
Stockholders of record on the date so fixed shall be entitled to receive
notice of and to vote at such meeting and any adjournment thereof, or to
receive such payment or allotment, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record
date fixed as aforesaid.
Section 7. Quorum. A quorum for the transaction of business at any
meeting of Stockholders shall be as set forth in the Articles of
Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the Stockholders, the holders of a majority
of the stock present or in person or by proxy shall have the power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented
to a date not more than 120 days after the original record date. At such
adjourned meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at the meeting
as originally notified.
<PAGE> 4
Section 8. Voting. Each Stockholder shall have one vote for each
full share and a fractional vote for each fractional share of stock,
irrespective of the series or class of stock, held by such Stockholder on
the record date set pursuant to Section 6 on each matter submitted to a
vote at a meeting of Stockholders. On any matter submitted to a vote of
Stockholders, all shares of Common Stock of the Corporation then issued and
outstanding and entitled to vote, irrespective of the series or class,
shall be voted in the aggregate and not by series or class except (a) when
otherwise expressly provided by the laws of the State of Maryland or the
Articles of Incorporation, or when required by the Act, shares shall be
voted by individual series or class; and (b) when the matter does not
affect any interest of a particular series or class, then only Stockholders
of such other series or class or series or classes whose interests may be
affected shall be entitled to vote thereon. Such vote may be made in
person or by proxy. At all meetings of the Stockholders, a quorum being
present, the number of votes cast at such meeting sufficient to approve any
matter which properly comes before such meeting shall be as set forth in
the Articles of Incorporation unless the question is one which by express
provision of the Act, as from time to time amended, a different vote is
required, in which case such express provision shall control the decision
of such question. At all meetings of the Stockholders, unless the voting
is conducted by inspectors, all questions relating to the qualification of
voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting.
Section 9. Voting - Proxies. The right to vote by proxy shall exist
only if the instrument authorizing such proxy to act shall have been
executed in writing by the Stockholder himself or by his attorney thereunto
duly authorized in writing. No proxy shall be voted on after eleven months
from its date unless it provides for a longer period.
Section 10. Inspectors. At any election of Directors, the Board of
Directors prior thereto may, or, if they have not so acted, the Chairman of
the meeting may, and upon the request of the holders of ten percent of the
stock entitled to vote at such election shall, appoint one or more
inspectors of election who shall first subscribe an oath of affirmation to
execute faithfully the duties of inspectors at such election with strict
impartiality and according to the best of their ability, and shall after
the election make a certificate of the result of the vote taken.
Section 11. Stock Ledger and List of Stockholders. It shall be the
duty of the Secretary or Assistant Secretary of the Corporation to cause an
original or duplicate stock ledger to be maintained at the office of the
Corporation's transfer agent. Such stock ledger may be in written form or
any other form capable of being converted into written form within a
reasonable time for visual inspection.
<PAGE> 5
Section 12. Conduct of Meetings. Each meeting of Stockholders shall
be presided over by the Chairman of the Board or, if he is not present, by
the Vice Chairman of the Board or, if he is not present, by the President
or, if he is not present, by a Vice-President or if none of them is
present, by a chairman to be elected at the Meeting. The Secretary of the
Corporation shall act as secretary of the meeting or, if he is not present,
an Assistant Secretary shall so act. If neither the Secretary nor the
Assistant Secretary is present, the chairman of the Meeting shall appoint a
secretary.
Section 13. Action Without Meeting. Any action to be taken by
Stockholders may be taken without a meeting if (a) all Stockholders
entitled to vote on the matter consent to the action in writing, and (b)
all Stockholders entitled to notice of the meeting but not entitled to vote
at it sign a written waiver of any right to dissent and (c) the written
consents are filed with the records of the meetings of Stockholders. Such
consent shall be treated for all purposes as a vote at a meeting.
ARTICLE III.
Directors
Section 1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of its Board of
Directors, which may exercise all powers of the Corporation, except such as
are by statute, or the Articles of Incorporation, or by these By-Laws
conferred upon or reserved to the Stockholders.
Section 2. Number and Term of Office. The number of Directors which
shall constitute the whole Board shall be determined from time to time by
the vote of a majority of the Directors then in office but shall not be
fewer than three nor more than fifteen, provided that (a) if there is no
stock of the Corporation outstanding the number of Directors may be less
than three but not less than one and (b) if there is stock of the
Corporation outstanding and so long as there are fewer than three
Stockholders of record, the number of Directors may be less than three but
not less than the number of Stockholders of record. Subject to the
foregoing, until changed by the Board of Directors, the number of Directors
shall initially be one. Each Director elected shall hold office until his
successor is elected and qualifies. Directors need not be Stockholders.
At such time as the number of Directors first equals or exceeds three, the
Board of Directors shall be divided into three classes, as nearly equal in
number as the then total number of Directors constituting the entire Board
permits, with the term of office of one class expiring at each annual
meeting of Stockholders. At the annual meeting of Stockholders next
following such division into three classes, Directors of the first class
shall be elected to hold office for a term expiring at the next succeeding
annual meeting, Directors of the second class shall be elected to hold
<PAGE> 6
office for a term expiring at the second succeeding annual meeting and
Directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. At each annual meeting of
stockholders succeeding the annual meeting of stockholders next following
such division into three classes, the successors to the class of Directors
whose term shall then expire shall be elected to hold office for a term
expiring at the third succeeding annual meeting. The term of office of a
Director may not be longer than five years.
Section 3. Vacancies. Subject to the provisions of the Act, any
vacancy in the Board of Directors may be filled by a majority vote of the
remaining Directors, although less than a quorum, or by a sole remaining
Director, provided that any vacancy which results from an increase in the
number of Directors may, subject to the provisions of the Act, be filled
only by the vote of a majority vote of all the Directors then holding
office. A Director elected by the Board of Directors to fill a vacancy
serves until his successor is elected and qualifies or until his earlier
resignation or removal.
Section 4. Removal of Directors. At any meeting of Stockholders,
the Stockholders of the Corporation may remove any Director from office,
either with or without cause, by the affirmative vote of a majority of the
votes entitled to be cast for the election of Directors and may elect a
successor to fill any resulting vacancy for the unexpired term of the
removed Director.
Section 5. Place of Meetings. Meetings of the Board of Directors,
regular or special, may be held at any place in or out of the State of
Maryland as the Board may from time to time determine.
Section 6. Quorum. At all meetings of the Board of Directors one-
third of the entire Board of Directors shall constitute a quorum for the
transaction of business provided that in no case may a quorum be less than
two persons. The act of a majority of the Directors present at any meeting
at which a quorum is present shall be the act of the Board of Directors
unless the concurrence of a greater proportion is required for such action
by the laws of the State of Maryland, the Act, the Articles of
Incorporation or these By-Laws. If a quorum shall not be present at any
meeting of Directors, the Directors present thereat may by a majority vote
adjourn the meeting from time to time without notice other than
announcement at the meeting, until a quorum shall be present.
Section 7. Regular Meetings. Regular meetings of the Board of
Directors may be held without additional notice at such time and place as
shall from time to time be determined by the Board of Directors, provided
that notice of any change in the time or place of such meetings shall be
<PAGE> 7
sent promptly to each Director not present at the meeting at which such
change was made in the manner provided for notice of special meetings.
Section 8. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board or the President on
one day's notice to each Director. Special Meetings shall be called by the
Chairman of the Board, President or SecretaZry in like manner and on like
notice on the written request of two Directors.
Section 9. Telephone Meetings. Members of the Board of Directors or
a committee of the Board of Directors may participate in a meeting by means
of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means constitutes, subject to the
provisions of the Act, presence in person at the meeting.
Section 10. Action Without a Meeting. Except as may be required by
the Act, any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a
meeting, if a written consent to such action is signed by all members of
the Board or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the Board or committee.
Section 11. Committees. The Board of Directors may by resolution
passed by a majority of the entire Board appoint from among its members an
Executive Committee and other committees composed of two or more Directors,
and may delegate to such committees any or all of such powers of the Board
of Directors as may be provided in their resolutions and which the Board of
Directors may lawfully delegate.
Section 12. Action of Committees. In the absence of an appropriate
resolution of the Board of Directors, each committee may adopt such rules
and regulations governing its proceedings, quorum and manner of acting as
it shall deem proper and desirable, provided that the quorum shall not be
less than two Directors. The committees shall keep minutes of their
proceedings and shall report the same to the Board of Directors at the
meeting next succeeding, and any action by the committee shall be subject
to revision and alteration by the Board of Directors, provided that no
rights of third persons shall be affected by any such revision or
alteration. In the absence of any member of such committee the members
thereof present at any meeting, whether or not they constitute a quorum,
may appoint a member of the Board of Directors to act in the place of such
absent member.
<PAGE> 8
Section 13. Compensation. Any Director may be compensated for his
services as Director or as a member of a committee of Directors, or as
Chairman of the Board or chairman of a committee, by fixed periodic
payments or by fees for attendance at meetings or by both, and in addition
may be reimbursed for transportation and other expenses, and in such manner
and amounts as the Board of Directors may from time to time determine.
ARTICLE IV.
Notices
Section 1. Form. Notices to Stockholders shall be given in the
manner required by the laws of the State of Maryland. Notices to Directors
shall be oral or by telephone, telegram or telecopy or in writing delivered
personally or mailed to the Directors at their addresses appearing on the
books of the Corporation. Notice by mail shall be deemed to be given at
the time when the same shall be mailed. Subject to the provisions of the
Act, notice to Directors need not state the purpose of a regular or special
meeting.
Section 2. Waiver. Whenever any notice of the time, place or
purpose of any meeting of Stockholders, Directors or a committee is
required to be given under the provisions of Maryland law or under the
provisions of the Articles of Incorporation or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to such notice
and filed with the records of the meeting, whether before or after the
holding thereof, or actual attendance at the meeting of Stockholders in
person or by proxy, or at the meeting of Directors or committee in person,
shall be deemed equivalent to the giving of such notice to such persons.
ARTICLE V.
Officers
Section 1. Executive Officers. The officers of the Corporation
shall be chosen by the Board of Directors and shall include a President, a
Secretary and a Treasurer. The Board of Directors may, from time to time,
elect or appoint a Controller, one or more Vice Presidents, Assistant
Secretaries and Assistant Treasurers. The Board of Directors, at its
discretion, may also appoint a Director as Chairman of the Board who shall
perform and execute such executive and administrative duties and powers as
the Board of Directors shall from time to time prescribe. The same person
may hold two or more offices, except that no person shall be both President
and Vice-President and no officer shall execute, acknowledge or verify any
<PAGE> 9
investment in more than one capacity, if such instrument is required by
law, the Articles of Incorporation or these By-Laws to be executed,
acknowledged or verified by two or more officers.
Section 2. Election. The Board of Directors shall choose a
President, a Secretary and a Treasurer at its first meeting.
Section 3. Other Officers. The Board of Directors from time to time
may appoint such other officers and agents as it shall deem advisable, who
shall hold their offices for such terms and shall exercise powers and
perform such duties as shall be determined from time to time by the Board.
The Board of Directors from time to time may delegate to one or more
officers or agents the power to appoint any such subordinate officers or
agents and to prescribe their respective rights, terms of office,
authorities and duties.
Section 4. Compensation. The salaries or other compensation of all
officers and agents of the Corporation shall be fixed by the Board of
Directors, except that the Board of Directors may delegate to any person or
group of persons the power to fix the salary or other compensation of any
subordinate officers or agents appointed pursuant to Section 3 of this
Article V.
Section 5. Tenure. The officers of the Corporation shall serve for
one year and until their successors are chosen and qualify. Any officer or
agent may be removed by the affirmative vote of a majority of the Board of
Directors whenever, in its judgment, the best interests of the Corporation
will be served thereby. In addition, any officer or agent appointed
pursuant to Section 3 may be removed, either with or without cause, by any
officer upon whom such power of removal shall have been conferred by the
Board of Directors. Any vacancy occurring in any office of the Corporation
by death, resignation, removal or otherwise shall be filled by the Board of
Directors, unless pursuant to Section 3 the power of appointment has been
conferred by the Board of Directors on any other officer.
Section 6. President. The President, unless the Chairman has been
so designated, shall be the Chief Executive Officer of the Corporation and
shall see that all orders and resolutions of the Board are carried into
effect. The President, unless the Chairman has been so designated, shall
also be the chief administrative officer of the Corporation and shall
perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
Section 7. Chairman of the Board. The Chairman of the Board, if one
shall be chosen, shall perform and execute such executive duties and
administrative powers as the Board of Directors shall from time to time
prescribe.
<PAGE> 10
Section 8. Vice-President. The Vice-Presidents, in order of their
seniority, shall, in the absence or disability of the President, perform
the duties and exercise the powers of the President and shall perform such
other duties as the Board of Directors or the Chief Executive Officer may
from time to time prescribe.
Section 9. Secretary. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the Stockholders and record all
the proceedings thereof and shall perform like duties for any committee
when required. He (she) shall give, or cause to be given, notice of
meetings of the Stockholders and of the Board of Directors, shall have
charge of the records of the Corporation, including the stock books, and
shall perform such other duties as may be prescribed by the Board of
Directors or Chief Executive Officer, under whose supervision he (she)
shall be. He (she) shall keep in safe custody the seal of the Corporation
and, when authorized by the Board of Directors, shall affix and attest the
same to any instrument requiring it. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation
and to attest to the affixing by his (her) signature.
Section 10. Assistant Secretaries. The Assistant Secretaries in
order of their seniority, shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary and
shall perform such other duties as the Board of Directors shall prescribe.
Section 11. Treasurer. The Treasurer, unless another officer has
been so designated, shall be the Chief Financial Officer of the
Corporation. He (she) shall have general charge of the finances and books
of account of the Corporation. Except as otherwise provided by the Board
of Directors, he (she) shall have general supervision of the funds and
property of the Corporation and of the funds and property of the
Corporation and of the performance by the custodian of its duties with
respect thereto. He (she) shall render to the Board of Directors, whenever
directed by the Board, an account of the financial condition of the
Corporation and of all his (her) transactions as Treasurer, and as soon as
possible after the close of each financial year he (she) shall make and
submit to the Board of Directors a like report for such financial year. He
(she) shall cause to be prepared annually a full and correct statement of
the affairs of the Corporation, including a balance sheet and a financial
statement of operations for the preceding fiscal year, which shall be
submitted at the next succeeding annual meeting of Stockholders and filed
within twenty days thereafter at the principal office of the Corporation.
He (she) shall perform all the acts incidental to the office of Treasurer,
subject to the control of the Board of Directors.
Section 12. Assistant Treasurer. The Assistant Treasurers, in the
order of their seniority, shall in the absence or disability of the
<PAGE> 11
Treasurer, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties as the Board of Directors may from time to
time presume.
Section 13. Surety Bonds. The Board of Directors may require any
officer or agent of the Corporation to execute a bond (including, without
limitation, any bond required by the Act, and the rules and regulations of
the Securities and Exchange Commission) to the Corporation in such sum and
with such surety or sureties as the Board of Directors may determine,
conditioned upon the faithful performance of his (her) duties of the
Corporation, including responsibility for negligence and for the accounting
of any Corporation's property, funds or securities that may come into his
(her) hands.
ARTICLE VI.
Indemnification and Insurance
Section 1. Indemnification of Directors and Officers. The
Corporation shall indemnify to the fullest extent permitted by law
(including the Act) and the Articles of Incorporation, as currently in
effect or as hereafter amended, any person made or threatened to be made a
party to any action, suit or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that such person or
such person's testator or intestate is or was a Director, officer or
employee of the Corporation or serves or served at the request of the
Corporation any other enterprise as a director, officer or employee. To
the fullest extent permitted by law (including the Act) and the Articles of
Incorporation, as currently in effect or as hereafter amended, expenses
incurred by any such person in defending any such action, suit or
proceeding shall be paid or reimbursed by the Corporation promptly upon
receipt by it of an undertaking of such person to repay such expenses if it
shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation. The rights provided to any person by this
Article shall be enforceable against the Corporation by such person who
shall be presumed to have relied upon it in serving or continuing to serve
as a Director, officer or employee as provided above. No amendment of this
Article shall impair the rights of any person arising at any time with
respect to events occurring prior to such amendment. For purposes of this
Article, the term "Corporation" shall include any predecessor of the
Corporation and any constituent corporation (including any constituent of a
constituent) absorbed by the Corporation in a consolidation or merger; the
term "other enterprise" shall include any corporation, partnership, joint
venture, trust or employee benefit plan; service "at the request of the
Corporation" shall include service as a Director, officer or employee of
the Corporation which imposes duties on, or involves services by, such
Director, officer or employee with respect to an employee benefit plan, its
participants or beneficiaries; any excise taxes assessed on a person with
<PAGE> 12
respect to an employee benefit plan shall be deemed to be indemnifiable
expenses; and action by a person with respect to any employee benefit plan
which such person reasonably believes to be in the interest of the
participants and beneficiaries of such plan shall be deemed to be action
not opposed to the best interests of the Corporation.
Section 2. Insurance. Subject to the provisions of the Act, the
Corporation, directly, through third parties or through affiliates of the
Corporation, may purchase, or provide through a trust fund, letter of
credit or surety bond insurance on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation, or who, while a
Director, officer, employee or agent of the Corporation, is or was serving
at the request of the Corporation as a Director, officer, employee,
partner, trustee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against and incurred by such person in any such capacity or
arising out of such person's position, whether or not the Corporation would
have the power to indemnify such person against such liability.
ARTICLE VII.
Stock
Section 1. Certificates. Stockholders are not entitled to receive
certificates evidencing their share ownership unless the Directors shall,
by resolution, otherwise determine.
Section 2. Transfer of Capital Stock. Transfers of shares of the
stock of the Corporation shall be made on the books of the Corporation by
the holder of record thereof (in person or by his attorney thereunto duly
authorized by a power of attorney duly executed in writing and filed with
the Secretary of the Corporation) (i) if a certificate or certificates have
been issued, upon the surrender of the certificate or certificates,
properly endorsed or accompanied by proper instruments of transfer,
representing such shares, or (ii) as otherwise prescribed by the Board of
Directors. Every certificate exchanged, surrendered for redemption or
otherwise returned to the Corporation shall be marked "Canceled" with the
date of cancellation.
Section 3. Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a person registered on
its books as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such shares or shares on the
part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the General Laws of the
State of Maryland.
<PAGE> 13
Section 4. Transfer Agents and Registrars. The Board of Directors
may, from time to time, appoint or remove transfer agents and/or registrars
of transfers of shares of stock of the Corporation, and it may appoint the
same person as both transfer agent and registrar. Upon any such
appointment being made all certificates representing shares of stock
thereafter issued shall be countersigned by one of such transfer agents or
by one of such registrars of transfers or by both and shall not be valid
unless so countersigned. If the same person shall be both transfer agent
and registrar, only one countersignature by such person shall be required.
Section 5. Stock Ledger. The Corporation shall maintain an original
stock ledger containing the names and addresses of all Stockholders and the
number and class of shares held by each Stockholder. Such stock ledger may
be in written form or any other form capable of being converted into
written form within a reasonable time for visual inspection.
ARTICLE VIII.
General Provisions
Section 1. Custodianship. The Corporation shall place and at all
times maintain in the custody of a custodian (including any subcustodian
for the custodian) all funds, securities and similar investments owned by
the Corporation. The Corporation shall have as custodian or custodians
(including any subcustodian) banks of good standing which shall conform to
the requirements of Section 17(f) of the Act and, to the extent required by
the Act, the funds and securities held by the Corporation shall be kept in
the custody of one or more such custodians (or subcustodians), provided
such custodian or custodians (and any subcustodian) can be found ready and
willing to act, and further provided that the Corporation may use as
subcustodians, for the purpose of holding any foreign securities and
related funds of the Corporation, such foreign banks as the Board of
Directors may approve and as shall be permitted by law. The Corporation
shall upon the resignation or inability to serve of its custodian or upon
change of the custodian:
(a) in case of such resignation or inability to serve, use its
best efforts to obtain a successor custodian;
(b) require that the cash and securities owned by the
Corporation be delivered directly to the successor custodian; and
(c) in the event that no successor custodian can be found,
submit to the Stockholders before permitting delivery of the cash and
securities owned by the Corporation otherwise than to a successor
<PAGE> 14
custodian, the question whether the Corporation shall be liquidated
or shall function without a custodian.
Section 2. Seal. The corporate seal shall have inscribed thereon
the name of the Corporation and the year of its organization. The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
Section 3. Execution of Instruments. Unless otherwise prescribed by
the Board of Directors, all deeds, documents, transfers, contracts,
agreements and other instruments requiring execution by the Corporation
shall be signed by any officer thereof.
ARTICLE IX.
Amendments
The Board of Directors shall have the power to make, alter and repeal
the By-Laws of the Corporation.
<PAGE> 1
DRAFT - 1/28/96
[Form of the Face of Global Certificate]
COMMON STOCK COMMON STOCK
THE COUNTRYBASKETS INDEX FUND, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
THE ____________________ INDEX SERIES
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of The Depository
Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
since the registered owner hereof, Cede & Co., has an interest herein.
CUSIP 22236E______
SEE REVERSE FOR CERTAIN
DEFINITIONS
THIS IS TO CERTIFY THAT
CEDE & CO.
is the owner and registered Holder of the number of fully paid and non-
assessable shares of the common stock, par value $.001 per share (the
"CB(TM) Shares"), of the ____________ Index Series of The CountryBaskets
Index Fund, Inc., a Maryland corporation (the "Corporation"), shown from
time to time on the records of the transfer agent thereof as represented by
this Certificate which shall be all of the outstanding CB(TM) Shares of the
____ Index Series of the Corporation. This Certificate and the shares
represented hereby are issued and shall be held subject to the provisions
of the General Corporation Law of the State of Maryland and the Articles of
Incorporation and By-laws of the Corporation, as they may be amended from
time to time.
<PAGE> 2
This certificate is not valid unless manually countersigned by
the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated
_____________________________ ____________________________
SECRETARY PRESIDENT
____________________________
TRANSFER AGENT
By __________________________________
Authorized Officer
<PAGE> 3
[Reverse of form of global certificate]
THE COUNTRYBASKETS INDEX FUND, INC.
Incorporated Under the Laws of the State of Maryland
_____ Index Series
This Certificate represents all shares of common stock, par
value $.001 per share (the "CB(TM) Shares"), of the ____ Index Series of
The CountryBaskets Index Fund, Inc. (the "Corporation") recorded from time
to time on the books of the Transfer Agent. The registered Holder is
entitled to all the rights, interests and privileges of a stockholder as
provided in the Articles of Incorporation and By-Laws of the Corporation,
as amended, which are incorporated by reference herein.
This Certificate shall be transferable by Cede & Co. as the
registered Holder hereof by presentation and surrender hereof at the office
of State Street Bank and Trust Company, as transfer agent (the "Transfer
Agent"), located in Boston, Massachusetts, properly endorsed or accompanied
by an instrument of transfer, in form satisfactory to the Transfer Agent,
and executed in blank by the registered Holder hereof or his authorized
attorney. CB(TM) Shares represented hereby may be redeemed at the net
asset value thereof in kind, in cash or a combination thereof pursuant to
Article V of the Articles of Incorporation, as amended in accordance with
the requirements thereof, by the registered Holder when tendered together
with an instrument of assignment and transfer duly endorsed or executed in
blank, together with an irrevocable instruction in writing to redeem the
same, and the Corporation will thereafter redeem said CB(TM) Shares at net
asset value, provided that the CB(TM) Shares to be redeemed represented by
this Certificate shall equal one or more Creation Units of shares as
provided in the Articles of Incorporation, as amended from time to time.
The Corporation has authority to issue stock of more than one
series. The Corporation will furnish without charge to the registered
Holder hereof a full statement of: (1) the designations and any
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the stock of each series which the Corporation is authorized
to issue; (2) the differences in the relative rights and preferences
between the shares of each series which the Corporation is authorized to
issue to the extent such rights and preferences have been set; and (3) the
authority of the Board of Directors to set the relative rights and
preferences of subsequent series.
<PAGE> 4
The registered Holder hereof may be required to pay taxes or
other governmental charges that may be imposed in connection with the
transfer, redemption or other surrender of this Certificate.
The Transfer Agent, notwithstanding any notice to the contrary,
may treat the person in whose name this Certificate is registered upon the
books of the Transfer Agent as the absolute owner hereof for all purposes.
[SEE CURRENT PROSPECTUS FOR FURTHER INFORMATION
CONCERNING REDEMPTION OF SHARES]
_____________
<PAGE> 5
[FORM OF ASSIGNMENT]
For value received ______________________________ hereby sells,
assigns and transfers unto ____________________ [______________] (please
insert Social Security Number or other identifying number of the Assignee)
all shares of the __________ Index Series of The CountryBaskets Index Fund,
Inc. represented by the within Certificate, and does hereby irrevocably
constitute and appoint __________________________ Attorney to transfer the
said shares on the books of the Transfer Agent for such __________ with
full power of substitution in the premises.
Dated:____________ ____________________________
(Signature)
SIGNATURE GUARANTEED BY: __________________________
NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the within instrument in every
particular without alteration or enlargement or any change
whatever.
<PAGE> 1
Draft of January 30, 1996
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT (this "Agreement"), dated
________ __, 1996, between The CountryBaskets Index Fund, Inc., a Maryland
corporation (the "Company"), with respect to each series of the Company
listed on Annex A (each such series, and each series hereafter authorized
and incorporated into Annex A, herein referred to as a "Series"), and
Deutsche Morgan Grenfell/C. J. Lawrence Inc., a Delaware corporation (the
"Adviser").
W I T N E S S E T H :
WHEREAS, the Company is a management investment company organ-
ized as a series fund and registered under the Investment Company Act of
1940, as amended (the "1940 Act");
WHEREAS, the Adviser is a registered investment adviser under
the Investment Advisers Act of 1940, as amended, and a registered broker-
dealer under the Securities Exchange Act of 1934, as amended (the "1934
Act");
WHEREAS, each Series is considered to be an open-end fund and
the Company desires to retain the Adviser to render specified investment
advisory and certain management and administrative services to it with
respect to each Series; and
WHEREAS, the Adviser desires to render such services to the
Company with respect to each Series;
NOW, THEREFORE, in consideration of the mutual agreements,
covenants, and representations contained in this Agreement, the parties
hereto agree as follows:
ARTICLE I
Investment Management Services
1.1 Investment Advisory Services. The Adviser shall, for the
period and on the terms set forth in this Agreement, act as the investment
adviser to each Series. The Adviser shall determine which securities shall
be purchased, sold and loaned, which options contracts, futures contracts
and options thereon the Series will enter into and which other investments
shall be made by the Series, make purchases and sales of securities and
other investments on behalf of the Series and arrange for the lending of
the portfolio securities of the Series, determine how the securities held
by the Series should be voted, determine what portion of the Series' assets
<PAGE> 2
shall be held uninvested, in each case subject to the overall supervision
of the Company's Board of Directors and in compliance with the investment
objectives, policies and restrictions pertaining to such Series set forth
from time to time in the Fund's registration statement (File Nos. 33-85710,
811-8734) under the Securities Act of 1933, as amended (the "1933 Act"),
and the 1940 Act (the "Registration Statement"), the prospectus and
statement of additional information contained therein, the 1940 Act, and
other applicable laws and regulations. The lending of portfolio securities
shall be subject to liability as set forth in Section 3.1 and conducted in
accordance with such policies, standards and procedures as may be adopted
by the Board of Directors from time to time and all applicable laws and
regulations, and in connection therewith the Adviser, subject to the
approval of the Company's Board of Directors, may appoint as its agent and
at its expense and continuing responsibility hereunder, one or more persons
to carry out such lending operations.
1.2 Portfolio Transactions.
(a) The Adviser shall select the brokers or dealers that will
execute the purchases and sales of securities and other investments for the
Series and is directed to use its best efforts to obtain the best available
price and most favorable execution, except as permitted herein.
(b) If in good faith the Adviser believes it can obtain the
best price and most favorable execution in connection therewith, the
Adviser may execute each Series' portfolio transactions on an agency basis
through itself or an affiliated broker or dealer, provided that any
transaction so executed complies with Section 17(e) of the 1940 Act and the
rules thereunder. Such transactions may not be executed by the Adviser or
an affiliate as principal unless permitted by an exemptive order of the
Securities and Exchange Commission (the "Commission") or applicable rule or
regulation.
(c) Unless and until otherwise directed by the Board of
Directors of the Company, the Adviser may also effect individual securities
and other transactions with nonaffiliated brokers or dealers at commission
rates in excess of the commission rates another broker or dealer would have
charged, if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Adviser's overall responsibili-
ties with respect to the Series as contemplated by Section 28(e) of the
<PAGE> 3
1934 Act. The execution of such transactions shall not be deemed to
represent an unlawful act or breach of any duty created by this Agreement
or otherwise. The Adviser will promptly communicate to the officers and
Board of Directors of the Company such information relating to Series
portfolio transactions as they may reasonably request.
1.3 Third-Party Service Providers. The Adviser shall:
(a) negotiate, maintain, evaluate and coordinate contractual
arrangements with third-party service providers, including, but not limited
to, administrators, custodians, transfer agents, distributors, independent
accountants, principal underwriters, attorneys, insurers and printers; and
(b) assist the various third-party service providers retained
by the Company for itself or with respect to a Series by, among other
things, providing any information to such service providers as the
Company's Board of Directors deems appropriate; reviewing and providing
advice to such service providers regarding sales literature and marketing
plans and providing information to the Series' principal underwriters
concerning Series performance and administration.
1.4 Determination of Fund Basket. The Adviser shall determine
after the end of each trading day on the New York Stock Exchange (the
"NYSE"), in accordance with the Series' policies as adopted from time to
time by the Board of Directors, the identity and weighting of the
securities in the Fund Basket (as defined in the Registration Statement)
required for the issuance of shares of the Series on a specified date of
purchase and for the redemption of shares of the Series on the next trading
day. The Adviser shall provide or cause to be provided this information to
the Series' distributor and other persons according to the policy
established by the Company's Board of Directors.
1.5 Reports and Records. (a) The Adviser shall assist the
Company in determining the amount of dividends and other shareholder
distributions to be declared and paid with respect to the Series; provide
the Company's Board of Directors with those financial reports and analyses
that the Board deems necessary to fulfill its fiduciary obligations with
respect to the Series; plan and facilitate all quarterly and special
meetings of the Board of Directors of the Company; oversee the preparation
of and, as necessary, filing of all documents and reports required under
<PAGE> 4
the 1933 Act, the 1934 Act and the 1940 Act, including all information,
documents and reports required to be filed by the Company under
Sections 30(a) and (b) of the 1940 Act and any financial statements
contained therein, but the Adviser shall not be responsible for the
preparation of any of the above material; oversee the tabulation of proxies
by the Company's transfer agent; assist the Company in maintaining its
corporate existence; oversee and implement procedures for monitoring the
Company's compliance with federal and state law, regulations applicable to
the Company's operations and each Series' investment objective, policies
and restrictions as established by the Company's Board of Directors;
oversee and coordinate the maintenance of appropriate insurance and
fidelity bonds on behalf of each Series and provide any other management
services that the Company may reasonably request with respect to the
Series, and oversee the filings and other requirements under the rules of
the NYSE applying to the shares of its Series as listed securities.
(b) The Adviser shall be responsible for preparing,
maintaining and preserving for the periods prescribed by Rule 31a-2 of the
Commission under the 1940 Act the following records:
(i) the journals required by paragraph (b)(1) of Rule 31a-
1 under the 1940 Act (the "Rule") insofar as such journals require
entries with respect to purchases and sales of portfolio securities
of each Series;
(ii) the securities record or ledger required by paragraph
(b)(3) of the Rule;
(iii) the Company's Articles of Incorporation, by-laws and
other corporate documents required by paragraph (b)(4) of the Rule;
(iv) the record of brokerage orders and portfolio purchases
and sales required by paragraphs (b)(5) and (b)(6) of the Rule;
(v) the record of all puts, calls, spreads, straddles and
other options required by paragraph (b)(7) of the Rule;
(vi) the record of allocation of portfolio purchase and
sale orders to named brokers or dealers required by paragraph (b)(9)
of the Rule;
<PAGE> 5
(vii) the record of authorizations of transactions in
portfolio securities required by paragraph (b)(10) of the Rule; and
(viii) the file of advisory material required by paragraph
(b)(11) of the Rule.
1.6 Budgets and Allocation of Expenses.
(a) The Adviser shall establish the Series' operating expense
budgets and oversee the payment of incurred operating expenses. The
Adviser shall bear all expenses, including personnel costs and overhead,
incurred by the Adviser pursuant to its duties under this Agreement and
shall pay the salaries of directors and officers of the Company who are
affiliated persons (as defined in the 1940 Act) of the Adviser. The
Adviser shall provide office facilities and personnel adequate to perform
the services described in Article I of this Agreement. The Adviser shall
not be required to pay expenses of any activity which is primarily intended
to result in sales of shares of the Series.
(b) Each Series shall be responsible for all its own
expenses, including, without limitation, its allocable share of the
organizational expenses of the Company; insurance expenses; the
compensation of directors not affiliated with the Adviser, administrator or
distributor and their travel expenses; expenses incurred by the Series in
connection with Board of Directors meetings other than those incurred by
persons affiliated with the Adviser, administrator or distributor;
brokerage and other costs of executing portfolio transactions; payment for
portfolio pricing services to a pricing agent, if any; litigation expenses;
interest expense; taxes and governmental fees; registration and qualifying
fees paid to the Commission and any other state or foreign governmental
agency regulating the purchase and sale of the Series' shares; legal and
independent accountants' fees; custody, dividend paying, and transfer agent
expenses; fees payable to the Series' administrator; expenses of obtaining
and maintaining stock exchange listings of the Series' shares; shareholder
meeting expenses; proxy and shareholder report expenses; expenses of
preparing, printing and delivering the Company's prospectuses and
statements of additional information required to be delivered to purchases
of its shares by the 1934 Act as well as those used in connection with
making offers to sell the Series' shares in Creation Unit size which are
paid for by each Series in accordance with its plan adopted under
Rule 12b-1 of the 1940 Act; expenses incurred by the Series in connection
<PAGE> 6
with the Company's membership in investment company organizations and
trade associations; and extraordinary expenses.
1.7 Shareholder and Press Relations. The Adviser shall
arrange the Company's relationships with shareholders of the Series and the
NYSE, including responding to shareholder inquiries and requests related to
the Series and shall prepare or oversee the preparation of all press
releases and notices to the NYSE.
ARTICLE II
Fees and Duration
2.1 Fees. In return for the Adviser's services with respect
to the Series under this Agreement, each Series shall pay the Adviser a
fee, computed daily and paid monthly, equal to the annualized percentage of
the average daily net assets of the Series set forth on Annex A, plus 40%
of: (a) the gross investment income of the Series as calculated for
financial reporting purposes less (b) dividends on securities held in the
portfolio of the Series.
2.2 Duration.
(a) Unless sooner terminated, this Agreement shall continue
in effect with respect to each Series until __________, 1998. Thereafter,
if not terminated, this Agreement shall continue in effect for successive
periods of twelve months after such date, provided that each such
continuance shall be subject to annual approval with respect to each Series
by (i) the Company's Board of Directors or (ii) the vote of a majority of
the Series' outstanding voting securities (as defined in the 1940 Act),
provided that in either event the continuance is also approved by a
majority of the Company's Board of Directors 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. This Agreement
is terminable with respect to any Series, without penalty, upon 60 days'
notice, by the Board of Directors or by the vote of a majority (as defined
in the 1940 Act) of the Series' outstanding voting securities. The
Agreement is also terminable without penalty, upon 60 days' notice, by the
Adviser with respect to any Series, and will terminate automatically in the
event of its assignment (as defined in the 1940 Act). Except as may be
provided by law, the termination of this Agreement with respect to one or
more particular Series shall not act to terminate this Agreement with
respect to any other Series, as to which this Agreement shall remain in
full force and effect.
<PAGE> 7
(b) Notwithstanding anything to the contrary contained in
this Section 2.2, the sublicense granted to the Company pursuant to Section
4.7 shall terminate upon the termination of this Agreement except that in
the event of termination resulting from a change of control of the Adviser
that is deemed to be an assignment under the 1940 Act and a termination by
the Adviser, the Company may elect to continue as a sublicensee for 90 days
provided it pays the Adviser a license fee during the period equal to the
license fee the Adviser is paying under the License Agreement.
(c) Upon termination of this Agreement with respect to any
Series the obligations of each party shall cease except for the provisions
of this Section 2.2 and Sections 4.7 and 4.9.
2.3 Reductions to Fees. The Adviser shall reimburse the
Series for that portion of the Series' annual net expenses (excluding
interest, taxes, brokerage commissions, distribution expenses, if any, and
extraordinary expenses), that exceeds the most stringent limits prescribed
by any state in which Series shares are offered for sale. However, the
Adviser will not be obligated to reimburse any Series for any such amounts
that exceed the fees (calculated pursuant to Section 2.1) paid to the
Adviser by the Series.
ARTICLE III
Liability
3.1 Generally. Absent (i) willful misfeasance, bad faith or
gross negligence on its part in the performance of, or reckless disregard
by it of its obligations and duties under, this Agreement, or (ii) a breach
of a fiduciary duty owed to the Series with respect to the receipt of com-
pensation for services (in which case any award of damages shall be limited
to the period and the amount set forth in Section 36(b)(3) of the 1940
Act), neither the Adviser nor any of its directors, officers, or employees
shall be liable to the Series, the Company or to any Series shareholder for
any error of judgment, mistake of law, or for any loss suffered by the
Series in connection with the matters to which this Agreement relates
including, without limitation, any loss that may be sustained in connection
with the purchase, holding, redemption, sale or lending of any security or
investments or the entering into of any futures or options on futures
contracts on behalf of the Series.
<PAGE> 8
3.2 Other Liabilities. The Adviser does not assume
responsibility for the acts or omissions of any other person.
ARTICLE IV
Miscellaneous
4.1 Notices. Any notice or other communication required to be
given pursuant to this Agreement shall be deemed duly given if addressed
and delivered or mailed by registered mail, postage prepaid, to (1)
Deutsche Morgan Grenfell/C. J. Lawrence Inc. at 31 West 52nd Street, New
York, New York 10019, Attention: Robert Lynch; and (2) The CountryBaskets
Index Fund, Inc. at 31 West 52nd Street, New York, New York 10019,
Attention: Secretary.
4.2. Choice of Law. This Agreement shall be construed in
accordance with New York State law.
4.3. Captions. The captions in this Agreement are included
for convenience only and in no way define or limit any of the provisions
hereof or otherwise affect their construction.
4.4 Severability. If any provisions of this Agreement shall
be held or made invalid, in whole or in part, then the other provisions of
this Agreement shall remain in force. Invalid provisions shall, in
accordance with this Agreement's intent and purpose, be replaced, to the
extent legally possible, by valid provisions in order to effectuate the
intended results of the invalid provisions.
4.5 Agency. The Company has not appointed the Adviser as its
agent under this Agreement.
4.6 Reliance on Communications. The Adviser shall be entitled
to rely on any notice or communication reasonably believed by it to be
genuine and correct and to have been sent by or on behalf of the Series.
4.7 FT Index Sublicense. The Adviser hereby grants to the
Company with respect to each Series a non-exclusive, non-transferable
royalty free sublicense to use and refer to the Financial Times/Standard &
Poor's Actuaries World Indices(TM) and the related trade name and trademark
rights identified as "Trademarks" in the License Agreement, dated as of
__________, 1996, between Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., and the Adviser (the "License Agreement"), on the terms
and conditions specified in Section 13(a) thereof. Such sublicense shall
<PAGE> 9
terminate at the later of 60 days after notice is given under Section 2.2
by the Adviser of termination of this Agreement or 60 days after the
termination of the License Agreement. No Series shall be required to make
any payments in respect of such sublicense after the termination of the
sublicense except as provided in Section 2.2.
4.8 Exclusivity. The Adviser's services to the Series shall
not be exclusive and nothing in the Agreement shall prevent the Adviser, or
any of its affiliates, from providing similar services to other investment
companies or clients (regardless of whether their investment objectives or
policies are similar to the Series') or from engaging in any other
activities. When the Adviser's other clients seek to purchase or sell a
security at the same time such security is being purchased or sold for the
Series, such purchases and sales will, to the extent feasible, be allocated
among the Series and the Adviser's other clients in a manner that the
Adviser believes equitable.
4.9 Right of Company to Use Name of CountryBaskets Index Fund.
"The CountryBaskets Index Fund," "CountryBaskets," "CB Shares" and various
names connected with CountryBaskets, for which the Adviser has filed
registration applications with the U.S. Patent and Trademarks Office (the
"Marks"), are trade and service marks of the Adviser. The Adviser consents
to the Company's use of "CountryBaskets" in its corporate name and
otherwise and grants to the Company a non-exclusive, non-transferable
royalty fee sublicense to use and refer to the Marks during the term of
this Agreement. Upon termination of this Agreement such consent and
sublicense shall terminate after 120 days and the Company will promptly
take the necessary steps to change its name. To the extent that is not
accomplished within 120 days, the Company agrees that it will cease issuing
new shares until its name is changed to one that has no similarity to "The
CountryBaskets Index Fund".
<PAGE> 10
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day and year first written above.
THE COUNTRYBASKETS INDEX FUND, INC.
By:________________________________
Name:
Title:
DEUTSCHE MORGAN GRENFELL/
C. J. LAWRENCE INC.
By:________________________________
Name:
Title:
<PAGE> 11
INVESTMENT MANAGEMENT AGREEMENT
The CountryBaskets Index Fund, Inc.
Annex A
Percentage of
Average Daily
Series Net Assets (Annualized)
Australia Index Series .30%
France Index Series .30%
Germany Index Series .30%
Hong Kong Index Series .45%
Italy Index Series .30%
Japan Index Series .30%
South Africa Index Series .45%
UK Index Series .30%
US Index Series .20%
<PAGE> 1
Draft - 1/29/96
THE COUNTRYBASKETS INDEX FUND, INC.
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT (the "Agreement") made as of
, 1996, between THE COUNTRYBASKETS INDEX FUND, INC., a
Maryland corporation (the "Fund"), and ALPS MUTUAL FUNDS SERVICES, INC., a
Colorado corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Fund is an open-end management investment company
organized as a series fund and registered under the Investment Company Act
of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund is authorized to issue shares of common
stock, par value $.001 per share (the "Shares"), in one or more series
(each, a "Series"), currently consisting of the Series listed in Annex A
hereto; and
WHEREAS, the Shares of each Series will be listed on the New
York Stock Exchange ("NYSE") and traded under the symbols set forth in
Annex A hereto; and
WHEREAS, the Fund will sell and redeem Shares of each Series
only in aggregations constituting a Creation Unit as such term is used in
the Registration Statement (as defined herein), in accordance with the
terms and conditions set forth therein; and
WHEREAS, the Distributor is a registered broker-dealer under
the Securities Exchange Act of 1934, as amended (the "1934 Act"); and
WHEREAS, the Fund desires to retain the Distributor to act as
distributor with respect to the continuous offering and sale of Shares of
each Series in Creation Unit aggregations as set forth in the Fund's
Registration Statement, to provide for the servicing of stockholder
accounts and to enter into arrangements with dealers; and
WHEREAS, the Distributor desires to render these services to
the Fund; and
WHEREAS, the Board of Directors of the Fund has adopted a Plan
of Distribution pursuant to Rule 12b-1 under the 1940 Act with respect to
each Series (collectively, the
<PAGE> 2
"12b-1 Plan") and may make payments to the Distributor pursuant to such
12b-1 Plan, subject to and in accordance with the terms and conditions
thereof and any related agreements;
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, the Fund and the Distributor hereby agree as
follows:
Section 1
Distribution and Stockholder Services
1.1 Appointment. The Fund hereby appoints the Distributor as
the exclusive distributor for the continuous offering and sale of the
Shares of each Series in Creation Unit aggregations on the terms and for
the periods set forth in this Agreement, and the Distributor hereby accepts
such appointment and agrees to act in such capacity hereunder.
1.2 Definitions.
(a) The term "Registration Statement" shall mean the
registration statement most recently filed from time to time by the
Fund with the Securities and Exchange Commission (the "Commission")
and effective under the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act, as such registration statement is amended by
any amendments thereto at the time in effect.
(b) The term "Prospectus" shall mean the prospectus included
as part of the Fund's Registration Statement, as such prospectus may
be amended or supplemented from time to time.
(c) The term "Statement of Additional Information" shall mean
the Statement of Additional Information included as part of the
Fund's Registration Statement, as such Statement of Additional
Information may be amended or supplemented from time to time.
(d) All capitalized terms used but not defined in this
Agreement shall have the meanings ascribed to such terms in the
Registration Statement.
1.3 Distributor's Duties. The Distributor shall have the
following duties:
(a) The Distributor agrees to sell, as agent for each Series,
from time to time during the term of this
<PAGE> 3
Agreement, Shares of each Series in Creation Unit size aggregations
specified for such Series in the Registration Statement on the terms
described therein and in accordance with the provisions hereof. Each
Series reserves the right to issue and sell Shares in the event that
the Distributor, either in the exercise of its rights or in breach of
its covenants hereunder, is not selling Creation Unit aggregations of
Shares of such Series.
(b) At the request of the Fund, the Distributor shall enter
into an agreement in the form specified by the Fund (each an
"Authorized Participant Agreement") with selected participants in the
system for book-entry of securities of The Depository Trust Company
("DTC") (or any successor depository thereto) (each an "Authorized
Participant").
(c) Upon commencement of the Fund's operations, the
Distributor will hold itself available to receive notices of
intention to purchase (other than in the case of the US Index Series)
and purchase orders in the form specified by the Fund from Authorized
Participants for the purchase of Creation Unit size aggregations of
Shares of each Series on Business Days designated for such Series and
on the terms and in the manner set forth in the Prospectus and the
Statement of Additional Information. The Distributor will transmit
each such notice of intention and purchase order received to the
Fund's Custodian and Transfer Agent as promptly as practicable. Upon
confirmation by the Custodian of receipt of the Fund Basket and cash
in an amount sufficient to pay the Cash Component and acceptance by
the Fund or by the Distributor as agent on behalf of the Fund of a
purchase order in "proper form," as defined in the Prospectus and
the Statement of Additional Information, the Distributor will
transmit advice of such acceptance to the Transfer Agent and the
Custodian. Upon receipt of advice from the Transfer Agent of the
issuance of Creation Unit aggregations of Shares pursuant to such
purchase order, the Distributor shall confirm the issuance and sale
of such Creation Unit aggregations of Shares to the Authorized
Participant placing the order by mailing a confirmation, together
with copies of the Prospectus and the Statement of Additional
Information. Purchase orders shall be deemed effective only at the
time accepted by the Fund or by the Distributor as agent of the Fund.
The Fund, and the Distributor on behalf of the Fund, each reserves
the right to reject any purchase order until acceptance.
<PAGE> 4
(d) The offering price of each Creation Unit aggregation of
Shares of a Series shall be the net asset value per Share for such
Series next determined following receipt of a purchase order in
proper form and shall be determined as set forth in the Registration
Statement. The Fund will cause the Custodian to furnish or cause to
be furnished to the Distributor, promptly after 4:00 p.m., New York
time, an advice (i) on each day the NYSE is open of each computation
of net asset value per Share of each Series and (ii) on each Business
Day for a Series on which Creation Unit aggregations of Shares are
sold of the amount of the Cash Component for each Series on such
Business Day.
(e) Based on information provided to it, the Distributor will
make available by 8:00 p.m., New York time, following the computation
of the net asset value of Shares of each Series at the close of
business on the NYSE (presently 4:00 p.m. New York time) on each day
the NYSE is open for business as set forth in the Registration
Statement (i) the list of names and the required number of shares of
each of the portfolio securities constituting the Fund Basket for
each Series, as designated by the Fund's investment adviser (which
shall be the Fund Basket for redemption for such Series on the next
NYSE business day and for purchases on a designated subsequent
Business Day as described in the Registration Statement), and
(ii) the amount of the Cash Component for purchases of Creation Unit
size aggregations of Shares of such Series on such Business Day (or
if such day is not a Business Day, on the previous Business Day), as
designated by the Fund's Custodian.
(f) In performing its duties hereunder, the Distributor shall
act in conformity with the Articles of Incorporation, By-Laws,
Registration Statement and each Prospectus and Statement of
Additional Information relating to Shares of the Fund and with the
instructions and directions of the Board of Directors of the Fund,
and will comply with and conform in all material respects to the
requirements of the 1933 Act, the 1934 Act and the 1940 Act and all
other applicable federal and state laws, regulations and rulings, and
the rules and regulations of the National Association of Securities
Dealers, Inc. ("NASD").
(g) The Distributor shall not be obligated to sell any certain
number of Creation Unit size aggregations of Shares of any Series,
and, subject to
<PAGE> 5
Section 6.6 hereof, nothing herein contained shall prevent the
Distributor from entering into like distribution arrangements with
other investment companies.
(h) The Distributor may enter into written dealer agreements
("Dealer Agreements") and service agreements ("Service Agreements"),
in each case in the forms approved by the Board of Directors of the
Fund, with registered broker-dealers and other persons, as the case
may be, for distribution, marketing and for stockholder services to
stockholders of one or more Series. Such Dealer Agreements may be
entered into with registered broker-dealers who are members of the
NASD or foreign securities dealers who are not eligible for
membership in the NASD who have agreed to comply with the applicable
provisions of the Rules of Fair Practice of the NASD. Each Dealer
Agreement and Service Agreement shall be subject to annual approval
by the Board of Directors of the Fund and if payments thereunder are
to be made pursuant to the 12b-1 Plans shall comply with the terms
and conditions thereof.
(i) The Distributor agrees to be responsible for implementing
and/or operating the 12b-1 Plans in accordance with the terms
thereof, including maintaining Dealer Agreements and Service
Agreements and processing payments and reimbursements thereunder (in
conjunction with the services provided with respect thereto by the
Fund's administrator).
(j) The Distributor shall provide toll-free lines for direct
investor and stockholder use between the hours of 6:30 a.m. to
7:00 p.m. Mountain time on each day that the NYSE is open for
business, with appropriate NASD licensed order taking and
distribution services staff.
(k) The Distributor shall clear and file all advertising,
sales, marketing and promotional materials of the Fund provided to
the Distributor, or in the preparation of which it has participated,
with the NASD as required by the 1933 Act and the 1940 Act, and the
rules promulgated thereunder, and by the rules of the NASD.
(l) The Distributor will ensure that all direct requests for
Prospectuses and Statements of Additional Information are fulfilled.
In addition, the Distributor will arrange to provide the NYSE (and
any other national stock exchange on which the Shares may
<PAGE> 6
be listed) with copies of Prospectuses to be provided to purchasers
in the secondary market. The Distributor will generally make it
known in the brokerage community that prospectuses and statements of
additional information are available, [including] by (i) advising the
NYSE on behalf of its member firms of the same, (ii) making such
disclosure in all marketing and advertising materials prepared and/or
filed by the Distributor with the NASD, and (iii) as may otherwise be
required by the Commission.
(m) The Distributor agrees to make available at its own cost
and expense one or more members of its staff to attend all Board
meetings of the Fund in order to provide information with regard to
the ongoing distribution process and for such other purposes as may
be requested by the Board of Directors of the Fund.
(n) The Distributor will provide and maintain a direct
computer communications link with the DTC, the Fund's Transfer Agent
and Custodian and the National Securities Clearing Corporation, Inc.
(the "NSCC"). The Distributor will compare for consistency the Fund
Basket for each Series as made available by the NSCC through its
systems with the composition of the Fund Basket as provided to the
Distributor.
(o) The Distributor shall examine the notices of intention to
purchase and purchase order forms submitted by Authorized
Participants with respect to the representations made therein to
determine whether the beneficial owners of the Creation Unit or Units
if purchased in accordance with such order upon issuance of such
Shares would own or hold 80% or more of the outstanding Shares of
such Series for purposes of compliance with section 351 of the
Internal Revenue Code of 1986, as amended, and shall review the
determination of the Transfer Agent with respect thereto.
(p) The Distributor shall consult with Authorized Participants
with respect to estimating the amount of the Cash Component for
purchase of Creation Unit aggregations of Shares of each Series.
(q) The Distributor shall consult with the Fund with respect
to the production and printing of prospectuses to be used in
connection with purchases by new investors of Creation Unit
aggregations of Shares of each Series.
<PAGE> 7
(r) The Distributor may, and at the request of the Fund shall,
cause a subsidiary or affiliate to enter into a service contract with
the transfer agent of the Fund to provide certain administrative and
processing services for the transfer agent in order to further the
purposes and procedures set forth in the Prospectus and the Statement
of Additional Information.
(s) In performing its duties hereunder the Distributor shall
be entitled to rely on and shall not be responsible in any way for
information provided to it by the Fund and its service providers and
shall not be liable or responsible for the errors and omissions of
such service providers, provided that the foregoing shall not be
construed to protect the Distributor against any liability to the
Fund or its stockholders to which the Distributor would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this
Agreement.
1.4 The Fund's Duties. The Fund shall have the following
duties:
(a) The Fund agrees to sell Creation Unit size aggregations of
Shares of each Series, subject to paragraph (e) of this Section 1.4,
so long as it has Shares of such Series available for sale and to
request the Transfer Agent to record on its books the ownership of
such Shares in accordance with the book-entry system procedures
described in the Prospectus and the Statement of Additional
Information in such amounts as the Distributor has requested in
writing or other means of data transmission, as promptly as
practicable after receipt by Custodian on behalf of the Fund of the
Fund Basket and Cash Component (together with any fees) for such
purchases and acceptance by the Fund or by the Distributor on behalf
of the Fund of a purchase order for such Shares, upon the terms
described in the Registration Statement.
(b) The Fund shall furnish to the Distributor copies of all
information, financial statements and other papers which the
Distributor may reasonably request for use of each Series in
connection with the distribution of Shares, and this shall include
one certified copy, upon request by the Distributor, of all financial
statements for each Series by independent accountants and such
reasonable number of copies of the Prospectus, Statement of
Additional Information and the
<PAGE> 8
Fund's annual and interim reports as the Distributor may request.
The Fund authorizes the Distributor to use the Prospectus and
Statement of Additional Information, but the Fund shall not be
responsible in any way for any information, statements or
representations given or made by the Distributor or its
representatives or agents other than such information, statements or
representations as are contained in the Prospectus and Statement of
Additional Information or financial reports filed by the Fund or in
any sales literature or advertisements specifically approved by the
Fund in writing.
(c) The Fund shall take, from time to time, such steps,
including payment of the related filing fees, as may be necessary to
register Shares under the 1933 Act and the 1940 Act to the end that
there will be available for sale such number of Creation Unit size
aggregations of Shares of each Series as the Distributor may be
expected to sell. The Fund agrees to file from time to time such
amendments, supplements, reports and other documents as may be
necessary in order that there may be in a Registration Statement,
Prospectus or Statement of Additional Information no (i) untrue
statement of a material fact or (ii) omission to state a material
fact necessary in order to make the statements therein, in the case
of the Prospectus and Statement of Additional Information in light of
the circumstances in which made, not misleading. The Distributor
shall furnish such information and other material relating to its
affairs and activities as may be required by the Fund for inclusion
in the Registration Statement, Prospectus or Statement of Additional
Information.
(d) The Fund shall keep the Distributor informed of the states
and other foreign and domestic jurisdictions in which the Fund has
qualified and maintains the qualification of Shares of the respective
Series for sale under the securities laws thereof. The Distributor
shall furnish such information and other material relating to its
affairs and activities as may be required by the Fund in connection
with such qualifications.
(e) The Fund may reject any purchase order for Creation Unit
aggregations of Shares or stop all sales of Shares at any time or
from time to time upon notice to the Distributor.
<PAGE> 9
1.5 Representations.
(a) The Distributor represents and warrants to the Fund that
(i) it is duly organized as a Colorado corporation and is and at all
times will remain duly authorized and licensed to carry out its
services as contemplated herein; and (ii) its entering into this
Agreement or providing the services contemplated hereby does not
conflict with or constitute a default or require a consent under or
breach of any provision of any agreement or document to which the
Distributor is a party or by which it is bound (except for any
consent in writing which shall have been obtained by the date hereof,
including the consent of the Mariner Funds Trust and the Mariner
Mutual Funds Trust).
(b) The Fund represents and warrants to the Distributor that
(i) the Registration Statement and the Prospectus have been or will
be, as the case may be, prepared in conformity in all material
respects with the 1933 Act, the 1940 Act and the rules and
regulations of the Commission (the "Rules and Regulations"); (ii)
contain or will contain all statements required to be stated therein
in accordance with the 1933 Act, the 1940 Act and the Rules and
Regulations; and (iii) all statements of fact contained or to be
contained therein are or will be true and correct in all material
respects at the time indicated or the effective date, as the case may
be, and neither the Registration Statement nor the Prospectus, when
it shall become effective under the 1933 Act or be authorized for
use, shall include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the case of the Prospectus in light
of the circumstances in which made, not misleading. The Fund shall
from time to time file such amendment or amendments to the
Registration Statement and the Prospectus as, in the light of future
developments, shall, in the opinion of the Fund's counsel, be
necessary in order to have the Registration Statement and the
Prospectus at all times contain all material facts required to be
stated therein or necessary to make the statements therein, in the
case of the Prospectus in light of the circumstances in which made,
not misleading to a purchaser of shares. If the Fund shall not file
such amendment or amendments within 15 days after receipt by the Fund
of a written request from the Distributor to do so, the Distributor
may, at its option, cease to accept orders for the purchase of
Creation Units of Shares until such
<PAGE> 10
amendment is filed. The Fund shall not file any amendment to the
Registration Statement or the Prospectus without giving the
Distributor reasonable notice thereof in advance, provided that
nothing in this Agreement shall in any way limit the Fund's right to
file at any time such amendments to the Registration Statement or the
Prospectus as the Fund may deem advisable. Notwithstanding the
foregoing, the Fund shall not be deemed to make any representation or
warranty as to any information or statement provided by the
Distributor for inclusion in the Registration Statement or the
Prospectus.
Section 2
Fees and Expenses
2.1 Compensation of the Distributor. Except to the extent
that may be provided in Section 2.2, the Distributor shall not receive any
payment or compensation with respect to the provision of distribution
services under this Agreement; provided, however, that the Distributor
shall be entitled to receive payments, if any, under the 12b-1 Plan in
accordance with the terms thereof.
2.2 Expenses. (a) Each Series shall bear all costs and
expenses of the continuous offering of the Creation Unit size aggregations
of Shares of such Series in connection with: (i) fees and disbursements of
the Fund's counsel and independent accountants, (ii) the preparation,
filing and printing of any registration statements, prospectuses and/or
statements of additional information required to be filed by and under
federal and state securities laws or required to be delivered by dealers in
connection with purchases and sales of Shares on the NYSE, (iii) the
preparation and mailing of annual and interim reports, prospectuses and
proxy materials required to be distributed to stockholders, (iv) any
qualifications of Shares for sale and of the Fund as a broker or dealer
under the securities laws of such states or other foreign or domestic
jurisdictions as shall be selected by the Fund pursuant to Section 1.4(d)
hereof and the cost and expenses payable to each such state for continuing
qualification therein and (v) all fees and expenses incident to the listing
of the Shares of each Series on the NYSE or any other stock exchange.
(b) The Distributor shall bear the following costs and
expenses relating to the distribution of the Shares: (i) the costs (other
than those payable pursuant to the Fund's agreement with its Transfer
Agent) of generating
<PAGE> 11
and mailing confirmations of purchases of Creation Unit aggregations of
Shares, mailing accompanying Prospectuses and Statements of Additional
Information and generating and transmitting confirmations of redemptions of
Shares, (ii) all costs of maintaining the records required of a
broker/dealer registered under the 1934 Act; (iii) incremental printing and
mailing costs for prospectuses to be used in connection with offers and
sales to prospective investors of Creation Units of Shares up to a maximum
of $25,000 per annum; (iv) the expenses of maintaining its registration or
qualification as a dealer or broker under federal or state laws; (v) the
expenses incurred by the Distributor and its officers for attending regular
and special meetings of the Board of Directors of the Fund held in the
United States (or approximately equivalent amounts in the case of such
meetings held outside of the United States), and (vi) all other expenses
incurred in connection with the distribution services as contemplated
herein, except as otherwise specifically provided in this Agreement.
2.3 Segregation of Fees and Expenses. Amounts paid by each
Series to the Distributor under its 12b-1 Plan either for distribution
related services or stockholder services shall not be used to pay for the
distribution of Shares of, or stockholder servicing in respect of, any
other Series. However, fees under the 12b-1 Plan attributable to the Fund
as a whole shall be allocated to each Series according to the method
adopted by the Fund's Board of Directors. Fees attributable to the Fund as
a whole shall include any amounts payable under the 12b-1 Plans to the
Distributor for its services rendered hereunder. The Distributor's
allocation of such 12b-1 Plan fees shall be subject to review by the Fund's
Board of Directors.
Section 3
Indemnification
3.1 Indemnification of Distributor. The Fund agrees to
indemnify, defend and hold the Distributor, its officers and directors and
any person who controls the Distributor within the meaning of Section 15 of
the 1933 Act (any of the Distributor, its officers and directors or such
control persons, for purposes of this Section 3.1, an "Indemnitee"), free
and harmless from and against any and all claims, demands, liabilities, and
expenses (including costs reasonably incurred in connection with
investigating or defending such claims, demands or liabilities and any
counsel fees reasonably incurred in connection therewith) which the
Indemnitee may incur, under the 1933 Act or under
<PAGE> 12
common law or otherwise, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in the Fund's
Registration Statement, or the omission or alleged omission to state in
such document a material fact required to be stated therein or necessary to
make the statements therein not misleading or, with respect to the
Prospectus or the Statement of Additional Information or any amendment or
supplement thereto, any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state in such document a
material fact required to be stated therein or necessary to make the
statements therein in the light of the circumstances under which they were
made, not misleading; provided, however, that nothing in this Section 3.1
shall protect the Indemnitee against any liability to the Fund or its
security holders that the Indemnitee would otherwise be subject to (i) by
reason of willful malfeasance, bad faith, or gross negligence in the
performance of its duties, (ii) by reason of the Indemnitee's reckless
disregard of its obligations and duties under this Agreement, or
(iii) where such liability arises out of or is based upon any untrue
statement or omission or alleged untrue statement or omission in the Fund's
Registration Statement, Prospectus or Statement of Additional Information
that was made in reliance upon and in conformity with written information
furnished by the Distributor to the Fund; and provided, further, that the
Fund will not be liable in any such case to the Indemnitee with respect to
any untrue statement or omission or alleged untrue statement or omission
made in the Registration Statement, the Prospectus or the Statement of
Additional Information that is subsequently corrected in such document (or
an amendment thereof or supplement thereto), if a copy of the Prospectus or
Statement of Additional Information (or such amendment thereof or
supplement thereto) was not sent or given to the person asserting any such
claim, demand, liability or expense at or before the written confirmation
of the sale to such person in any case where such delivery is required by
the 1933 Act and the Fund had notified the Distributor of the amendment or
supplement prior to sending of the written confirmation of sale.
Notwithstanding the foregoing, this indemnity of any person who is an
officer or director of the Distributor and who is also a director of the
Fund shall not inure to the benefit of such officer or director unless a
court of competent jurisdiction shall determine, or it shall have been
determined by controlling precedent, that such result would not be against
public policy as expressed in the 1933 Act or the 1940 Act, and in no event
shall anything contained herein be so construed as to protect the
Distributor against any liability to the Fund or its stockholders to which
the Distributor would otherwise be
<PAGE> 13
subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement. The Fund's obligation to
indemnify the Indemnitee is expressly conditioned upon the Indemnitee's
notification of the Fund of the commencement of any action against the
Indemnitee, which notification shall be given by letter or by facsimile
transmission addressed to the Fund at its principal office in New York, New
York, and sent to the Fund by the person against whom such action is
brought within ten days after the summons or other first legal process
shall have been served. The Indemnitee's failure to so notify the Fund
shall not relieve the Fund of any liability which it may have to the
Indemnitee by reason of any such alleged untrue statement or omission or
alleged untrue statement or omission independent of this indemnification.
The Fund will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability and to retain legal counsel of
good standing chosen by the Fund and approved by the Indemnitee (such
approval not to be unreasonably withheld). If the Fund elects to assume
the defense of any such suit and retain counsel approved by the Indemnitee,
the defendant or defendants in such suit shall bear the fees and expenses
of any additional counsel retained by any of them. In the event the Fund
does not elect to assume the defense of any such suit and retain counsel of
good standing approved by the Indemnitee or the Indemnitee does not approve
of the counsel chosen by the Fund (such approval not to be unreasonably
withheld), the defendant or defendants in such suit shall bear the fees and
expenses of any counsel retained by any of them and the Fund shall
reimburse any Indemnitee named as defendant in such suit for the reasonable
fees and expenses of any such counsel retained by them. The
indemnification agreement contained in this Section 3.1 shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of the Indemnitee and shall survive the sale of any
Creation Units of Shares made pursuant to purchase orders obtained by the
Indemnitee. This indemnification will inure exclusively to the benefit of
the Indemnitee and its successors, assigns and estate. The Fund shall
promptly notify the Indemnitee of the commencement of any litigation or
proceeding against the Fund in connection with the issue and sale of any
Creation Units of Shares.
3.2 Indemnification of the Fund. The Distributor agrees to
indemnify, defend, and hold the Fund, its several officers and directors
and any person who controls the Fund within the meaning of Section 15 of
the 1933 Act (for purposes of this Section 3.2, the Fund, its officers and
<PAGE> 14
directors, and its controlling persons are collectively referred to as the
"Fund Affiliates"), free and harmless from and against any and all claims,
demands, liabilities, and expenses (including costs reasonably incurred in
investigating or defending such claims, demands or liabilities and any
counsel fees reasonably incurred in connection therewith) which the Fund
Affiliates may incur under the 1933 Act or under common law or otherwise,
but only to the extent that such liability or expense shall arise out of or
be based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in information furnished by the Distributor to the
Fund for use in the Registration Statement, Prospectus or Statement of
Additional Information in effect from time to time under the 1933 Act, or
(ii) any omission or alleged omission, on the part of the Distributor, to
state a material fact in connection with such information required to be
stated in the Registration Statement, Prospectus or Statement of Additional
Information or necessary to make such information not misleading, it being
understood that the Fund will rely upon the information provided by the
Distributor for use in the preparation of the Registration Statement, the
Prospectus and the Statement of Additional Information, or (iii) any
alleged act or omission on the Distributor's part as the Fund's agent that
has not been expressly authorized by the Fund in writing. The
Distributor's obligation to indemnify the Fund Affiliates is expressly
conditioned upon the Distributor being notified of the commencement of any
action brought against the Fund Affiliates, which notification shall be
given by letter or facsimile transmission addressed to the Distributor at
its principal offices in Denver, Colorado, and sent to the Distributor by
the person against whom such action is brought within ten days after the
summons or other first legal process shall have been served. The Fund
Affiliates' failure to notify the Distributor of the commencement of any
such action shall not relieve the Distributor from any liability which it
may have to the Fund Affiliates by reason of any such untrue statement or
omission or alleged untrue statement or omission on the part of the
Distributor independent of this indemnification. The Distributor shall
have a right to control the defense of such action, with counsel of its own
choosing, satisfactory to the Fund Affiliates, if such action is based
solely upon such untrue statement or omission or alleged untrue statement
or omission on its part, and in any other event the Distributor and the
Fund Affiliates shall each have the right to participate in the defense or
preparation of the defense of such action at their own expense.
<PAGE> 15
Section 4
Duration, Termination, and Amendment
4.1 Duration. This Agreement shall become effective on
, 1996 and continue, unless terminated as provided in Section
4.2 or Section 4.5(a), until , 1998. This Agreement shall
thereafter be renewed for successive one-year periods only so long as such
continuance or renewal is specifically approved at least annually with
respect to each Series as to which it is to continue in effect by both
(a) the Fund's Board of Directors or the vote of a majority of the
outstanding voting securities (as such term is defined in the 1940 Act) of
the Fund and (b) a majority of the Fund's directors who are not parties to
this Agreement or "interested persons" (as defined in the 1940 Act) of
either party hereto cast in person at a meeting called for the purpose of
voting on approval of this Agreement, and, if applicable, as provided in
Section 4.5(a).
4.2 Termination. Subject to Section 4.5(b), this Agreement
may be terminated at any time as to any Series, without penalty, upon 60
days' prior written notice to the other party by the Fund or by the
Distributor. If this Agreement is terminated with respect to any Series,
it shall nevertheless remain in effect with respect to any remaining
Series.
4.3 Assignment. This Agreement shall automatically terminate
in the event of its "assignment." As used in this Agreement, the term
"assignment" shall have the meaning such term has in the 1940 Act.
4.4 Amendment. Subject to Section 4.5(c), this Agreement may
be amended by mutual consent, provided that no provision of this Agreement
may be changed, waived, discharged or terminated except by an instrument in
writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought, and that the Fund's consent to
any material amendment to this Agreement requires the approval provided for
in Section 4.1.
4.5 Rule 12b-1 Requirements. During such period as the
Distributor receives compensation pursuant to the 12b-1 Plan and this
Agreement constitutes a 12b-1 Plan related agreement:
(a) This Agreement shall continue in effect from and after
________, 1997 only if such continuance is specifically approved
annually as to any Series as to which it is to continue in effect by
the vote of both
<PAGE> 16
(x) the Fund's Board of Directors or a majority of its outstanding
voting securities (as defined in the 1940 Act) and (y) by the
directors who are not "interested persons" (as defined in the 1940
Act) of the Fund and have no direct or indirect financial interest in
the operation of the 12b-1 Plan or in any agreements related thereto
(the "Independent Directors"), cast in person at a meeting called for
the purpose of voting on such Plan or related agreements.
(b) This Agreement may be terminated, without the payment of
any penalty, by the Fund as to any Series by vote of a majority of
the Independent Directors or by a vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the
Fund, or by the Distributor, in either case, on sixty days' prior
written notice to the other party.
(c) Any material amendment to this Agreement requires the
approval provided for in Section 4.1(a) with respect to annual
renewals of this Agreement, and any amendment that materially
increases the amount to be spent for distribution services requires
the additional approval of the majority of the Fund's outstanding
voting securities (as defined in the 1940 Act) of each affected
Series.
(d) The selection and nomination of those directors who are
not "interested persons" (as defined in the 1940 Act) of the Fund
shall be committed to the discretion of the directors of the Fund who
are not such "interested persons" of the Fund.
Section 5
Notice
5.1 Conditions. The Fund shall notify the Distributor
immediately of:
(a) any request by the Commission for amendments to the Fund's
Registration Statement, Prospectus or Statement of Additional
Information or for additional information;
(b) any stop order suspending the effectiveness of the Fund's
Registration Statement or the initiation of any proceeding for that
purpose;
<PAGE> 17
(c) all actions of the Commission with respect to any
amendment to the Fund's Registration Statement, Prospectus or
Statement of Additional Information.
5.2 Notification of Parties. Any notice or other
communication required or permitted to be given pursuant to this Agreement
shall be deemed duly given if addressed and delivered, or mailed by
registered mail, postage prepaid, to (1) ALPS Mutual Funds Services, Inc.,
at 370 17th Street, Suite 1700, Denver, CO 80202, Attention: Chief
Financial Officer and (2) The CountryBaskets Index Fund, Inc. at 31 West
52nd Street, New York, New York 10019, Attention: Secretary.
Section 6
Miscellaneous
6.1 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
6.2 Captions. The captions in this Agreement are included for
convenience only and in no way define or limit any of the provisions hereof
or otherwise affect their construction.
6.3 Severability. If any provisions of this Agreement shall
be held or made invalid, in whole or in part, then the other provisions of
this Agreement shall remain in force. Invalid provisions shall, in
accordance with this Agreement's intent and purpose, be amended, to the
extent legally possible, by valid provisions in order to effectuate the
intended results of the invalid provisions.
6.4 Seed Money. The Distributor shall not redeem any Shares
which it owns and has invested in as seed money in a Series during the
first five years of the Fund's operations without obtaining approval by the
Fund's Board of Directors prior to any such redemption. Thereafter, the
Distributor may make such a redemption in its sole discretion. In the
event that this Agreement is terminated, the Distributor shall be entitled
to redeem such Shares subject to applicable regulatory requirements.
6.5 Insurance. The Distributor will maintain at its expense
an errors and omissions insurance policy which covers services by the
Distributor hereunder.
6.6 Exclusivity. The Distributor agrees to obtain the prior
written approval of the Board of Directors
<PAGE> 18
of the Fund before agreeing to render or rendering any distribution or
marketing services to an investment company, whether directly or through
any affiliate ("distribution services"), if the total number of such
distribution services arrangements to be provided by the Distributor and
its affiliates on behalf of registered investment companies shall be more
than nine (9) in number. None of the nine distribution services
arrangements may be for an investment product substantially similar to the
CB Shares(TM), which involves an investment company registered under the
1940 Act and listing of the securities for trading on the NYSE or on
another securities exchange; provided further that no more than one (1)
such distribution services arrangement may be with a company that is
primarily a registered broker-dealer with more than 24 retail offices
(other than bank branches). The foregoing provisos shall not be
applicable: (i) at any time after April 28, 1997; (ii) if the Distributor
provides services to investment companies which are not distribution
services and (iii) if the total net assets of the Fund are below $1 billion
at any time nine months after the initial issuance of Creation Units of
shares.
6.7 Separate and Additional Series. The Fund is entering into
this Agreement on behalf of the Series listed on Annex A severally and not
jointly. Except as otherwise indicated herein, the responsibilities and
benefits set forth in this Agreement shall refer to each Series severally
and not jointly. Except as provided in Section 2.3 hereof, no individual
Series shall have any responsibility for any obligation, if any, with
respect to any other Series arising out of this Agreement. The Fund will
initially issue and sell Shares of the Series listed in Annex A to this
Agreement. In the event that the Fund is authorized to issue and issues
Shares of one or more additional Series with respect to which it wishes to
retain the Distributor to act as distributor and principal underwriter
hereunder, the Fund shall notify the Distributor in writing. Upon written
acceptance by the Distributor, such Series shall become subject to the
provisions of this Agreement to the same extent as the existing Series,
except to the extent that such provisions may be modified with respect to
each additional Series in writing by the Fund and the Distributor at the
time of the addition of the Series.
<PAGE> 19
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day and year first written above.
THE COUNTRYBASKETS INDEX FUND, INC.
By:
Name:
Title:
ALPS MUTUAL FUNDS SERVICES, INC.
By:
Name:
Title:
<PAGE> 20
No. of Shares
per NYSE CUSIP
Series Creation Unit Symbol No.
Australia Index Series 100,000 GXA 22236E109
France Index Series 100,000 GXF 22236E208
Germany Index Series 100,000 GXG 22236E307
Hong Kong Index Series 100,000 GXH 22236E406
Italy Index Series 100,000 GXI 22236E505
Japan Index Series 250,000 GXJ 22236E604
South Africa Index 100,000 GXR 22236E703
Series
UK Index Series 100,000 GXK 22236E802
US Index Series 100,000 GXU 22236E885
<PAGE> 1
Draft of February 1, 1996
The CountryBaskets(SM) Index Fund, Inc.
MARKETING AGREEMENT
MARKETING AGREEMENT (the "Agreement") made as of
________________, 1995, between The CountryBaskets(SM) Index Fund, Inc., a
Maryland corporation (the "Company"), and ALPS Mutual Funds Services, Inc.,
a Colorado corporation ("ALPS").
W I T N E S S E T H :
WHEREAS, the Company is a management investment company
organized as a series fund and registered under the Investment Company Act
of 1940 (the "1940 Act");
WHEREAS, the Company has entered into a Distribution Agreement
with ALPS providing for, among other things, the distribution and sale of
the shares ("CB Shares(SM)") of common stock of its initial nine series (each,
a "Series");
WHEREAS, the Company desires to retain ALPS to provide various
marketing and stockholder services with respect to the CS Shares(SM) of the
Series as described herein;
WHEREAS, ALPS desires to render these services to the Company;
and
WHEREAS, the Company has adopted a Plan of Distribution
pursuant to Rule 12b-1 under the 1940 Act (each, a "12b-1 Plan") with
respect to each Series and will make payments to ALPS pursuant to such 12b-
1 Plans for providing these marketing and stockholder services.
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, the Company and ALPS agree as follows:
Section 1
Marketing and Stockholder Services
1.1 Definitions.
(a) The term "Registration Statement" shall mean the
registration statement most recently filed from time to time by the
Company with the Securities and Exchange Commission (the
"Commission") and effective under the Securities Act of 1933, as
amended (the "1933
<PAGE> 2
Act"), and the 1940 Act, as such registration statement is amended
by any amendments thereto at the time in effect.
(b) The term "Prospectus" shall mean the prospectus included
as part of the Company's Registration Statement, as such prospectus
may be amended or supplemented from time to time.
(c) The term "SAI" shall mean the Statement of Additional
Information included as part of the Company's Registration Statement,
as such Statement of Additional Information may be amended or
supplemented from time to time.
(d) All capitalized terms used but not defined in this
Agreement shall have the meanings ascribed to such terms in the
Registration Statement.
1.2 ALPS' Representations and Obligations. ALPS represents
that:
(a) It has approval of and consent by all parties necessary
to permit it to carry out its obligations under this Agreement,
including the consent of the Mariner Funds Trust and the Mariner
Mutual Funds Trust;
(b) It is duly organized as a Colorado corporation and is and
at all times will remain duly authorized and licensed to carry out
its services as contemplated herein; and
(c) Its entering into this Agreement or providing the
services contemplated hereby does not conflict with or constitute a
default or require a consent (except for any consent in writing which
shall have been obtained by the date hereof) under or breach of any
provision of any agreement or document to which it is a party or by
which it is bound.
1.3 ALPS Obligations. (a) ALPS agrees to make available
four regional wholesalers on a full time basis and four product
knowledgeable 800-line registered representatives to carry out the
marketing plan and provide stockholder services as contemplated by Section
1.4.
(b) The regional wholesalers will:
(i) within 30 days after the Company's commencement of
sales to the public, create four territory business plans;
<PAGE> 3
(ii) conduct product training for the benefit of product
and branch managers and account executives of broker/dealers who are
active or potentially active in the secondary markets for CB Shares(SM);
(iii) conduct product seminars for the same persons listed
in (ii) above and potential retail and institutional investors for CB
Shares(SM);
(iv) be subject to specific activity requirements to be
developed as part of the marketing plan as described in Section 1.4;
and
(v) refer any inquiries concerning Creation Units to
the Distributor.
(c) The four product knowledgeable 800-line registered
representatives will be available to:
(i) provide support for the wholesalers' activities set
forth in (b) above;
(ii) provide support for broker/dealers active in the
secondary market;
(iii) provide product information suitable for the
secondary market upon inquiry; and
(iv) maintain lists of dealer contacts.
(d) Mr. Chris Jemapete will, for the first twelve months
following the Company's commencement of sales to the public, spend
full-time and be exclusively dedicated to the services to be provided
by ALPS hereunder and will be based in the borough of Manhattan and
have his principal family residence within commuting distance
thereof. Mr. Jemapete will be involved with the services provided by
ALPS hereunder as long as he is in the employ of or have any
consulting or other relationship with ALPS or any affiliate and the
Company so desires.
(e) At such time as the aggregate average daily net assets of
the first nine Series of the Company exceed $1 billion for three
successive months, ALPS agrees it will pay $20,000 during the next
twelve- months for marketing expenses provided for in the marketing
budget. Such annual payments shall continue for succeeding twelve
month periods as long as the aggregate average daily net assets of
the first nine
<PAGE> 4
Series of the Company during the preceding twelve-month period exceed
$1 billion.
(f) It is understood that all Prospectuses and SAIs required
to be delivered by ALPS under this Agreement or by law, regulation or
NYSE or NASD rules shall be delivered at the Company's expense to
ALPS at its Denver office.
1.4 Marketing Plans and Stockholder Servicing. ALPS agrees:
(a) to develop in conjunction with the Company and its
Adviser a marketing plan to encourage the use and trading of CB
Shares(SM) on the secondary market by various elements of the financial
community, both institutional and retail, in order to make effective
use of the resources provided by ALPS under this Agreement. ALPS
agrees to use its best efforts to cooperate with the Company and its
Adviser in developing a marketing plan for the first year of this
Agreement by 30 days after the Company's commencement of sales to the
public. During the term of this Agreement it will continue to work
with the Company and its Adviser to adjust such marketing plans as
may be appropriate and to develop plans for successive years.
(b) to work with broker/dealers and other intermediaries who
hold CB Shares(SM) for the benefit of their customers to facilitate
communications with such customers and to develop a knowledge and
understanding of CB Shares(SM) with such customers.
(c) to consult and advise on the preparation of marketing
material with respect to its substance and legality.
Section 2
Company's Representation and Obligations
2.1 Company's Obligations. The Company shall have the
following obligations:
(a) The Company shall take, from time to time, such steps,
including payment of the related filing fee, as may be necessary to
register CB Shares(SM) under the 1933 Act to the end that CB Shares(SM) of
each Series to which the services under this Agreement relate will be
registered under the 1933 Act during the term of this Agreement.
<PAGE> 5
(b) The Company will furnish ALPS such marketing material as
may be agreed upon from time to time to be used in conjunction with
the marketing program.
The Company represents that when such material is signed by an
officer or authorized agent of the Company it will be true and
correct in all material respects. ALPS will have responsibility for
filing and clearing the signed materials with the NASD.
Section 3
Compensation
3.1 Compensation of ALPS. Subject to the terms and
conditions of the 12b-1 Plans, each Series will pay to ALPS a fee in
compensation for its services hereunder, calculated daily and payable
monthly, equal to such Series' allocable portion of the aggregate fees
payable by the initial nine Series, as follows:
(i) .23% per annum of the average aggregate daily net assets of
all nine Series ("Aggregate Net Assets") up to Aggregate Net Assets
of $200 million, plus
(ii) .0% per annum of Aggregate Net Assets in excess of $200
million up to $1.5 billion, plus
(iii) .03% per annum of Aggregate Net Assets in excess of $1.5
billion up to $5 billion, plus
(iv) .015% per annum of Aggregate Net Assets in excess of $5
billion.
Such fees shall be allocated by the Distributor among the Series subject to
this Agreement pro rata in accordance with the [average daily net assets]
of the respective Series, the method of such allocation to be subject to
the annual review and approval of the Board of Directors of the Fund.
3.2 Each Series shall reimburse ALPS on a monthly basis for
its reasonable costs incurred in connection with the costs to ALPS of
marketing materials which ALPS is asked in writing by the Company to
provide the Company or the Adviser but not including the costs of any
marketing material provided by ALPS pursuant to Section 1.3(e).
3.3 Segregating Expenses. With respect to reimbursement
payments to ALPS pursuant to Section 3.2 as provided by each Series' 12b-1
Plan, ALPS shall indicate with its reimbursement request one or more Series
for which
<PAGE> 6
the expense was incurred. Reimbursed payments attributable to the Company
as a whole shall be requested with allocations for each Series according to
the method adopted by the Company's Board of Directors. ALPS' allocation
of reimbursed expenses shall be subject to the review of the Company's
Board of Directors.
Section 4
Termination and Amendment
4.1 Termination. This Agreement may be terminated at any
time as to any Series, without penalty, upon
(a) sixty days' written notice to the other party, by (i) the
Company by the vote of a majority of the members of the Board of
Directors of the Company who are not "interested persons" of the
Company (as defined in the 1940 Act) who have no direct or indirect
financial interest in the operation of the 12b-1 Plan, this Agreement
or the Distribution Agreement ("Independent Directors"), or the vote
of a majority of the outstanding voting securities (as defined in the
1940 Act) of such Series, or (ii) ALPS, or
(b) upon the termination of the Distribution Agreement.
4.2 Assignment. This Agreement may not be assigned and shall
automatically terminate in the event of its "assignment" as defined in the
1940 Act or upon a change of control of ALPS.
4.3 Amendment. This Agreement may be amended by mutual
consent, provided that the Fund's consent to any material amendment to this
Agreement requires the approval provided for in paragraph (b)(4) of
Rule 12b-1 under the 1940 Act.
4.4 Non-interested Company Directors. While this Agreement
is in effect, the selection and nomination of the Independent Directors
shall be committed to the discretion of such Independent Directors.
Section 5
Notice
5.1 Conditions. The Company shall notify ALPS immediately
of:
<PAGE> 7
(a) any request by the Commission for amendments to the
Company's Registration Statement, Prospectus or SAI, or for
additional information;
(b) any stop order suspending the effectiveness of the
Company's Registration Statement or the initiation of any proceeding
for that purpose;
(c) all actions of the Commission with respect to any
amendment to the Company's Registration Statement, Prospectus, or
Statement of Additional Information.
5.2 Notification of Parties. Any notice or other
communication required or permitted to be given pursuant to this Agreement
shall be deemed duly given if addressed and delivered, or mailed by
registered mail, postage prepaid, to (1) ALPS Mutual Funds Services, Inc.,
310 Seventeenth Street, Suite 2700, Denver, Colorado 80202 Attention:
Chief Financial Officer and (2) The CountryBaskets(SM) Index Fund, Inc. at
31 West 52nd Street, New York, New York 10019, Attention: Secretary.
Section 6
Miscellaneous
6.1 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
6.2 Captions. The captions in this Agreement are included
for convenience only and in no way define or limit any of the provisions
hereof or otherwise affect their construction.
6.3 Severability. If any provisions of this Agreement shall
be held or made invalid, in whole or in part, then the other provisions of
this Agreement shall remain in force. Invalid provisions shall, in
accordance with this Agreement's intent and purpose, be replaced, to the
extent legally possible, by valid provisions in order to effectuate the
intended economic results of the invalid provisions.
6.4 Exclusivity. ALPS agrees to obtain the prior written
approval of the Board of Directors of the Company before agreeing to render
or rendering any distribution or marketing services to any investment
company, whether directly or through any affiliate ("distribution
services"), if the total number of such distribution services arrangements
to be provided by ALPS and its affiliates on
<PAGE> 8
behalf of registered investment companies shall be more than nine (9) in
number. None of the nine distribution services arrangements may be for an
investment product substantially similar to the CB Shares(SM), which involves
an investment company registered under the 1940 Act and listing of the
securities for trading on the NYSE or on another securities exchange;
provided further that no more than one (1) such distribution services
arrangement may be with a company that is primarily a registered broker-
dealer with more than 24 retail offices (other than bank branches). The
foregoing provisos shall not be applicable: (i) at any time after
April 28, 1997; (ii) if ALPS provides services to investment companies
which are not distribution services and (iii) if the total net assets of
the Company are below $1 billion at any time nine months after the initial
issuance of Creation Units of shares by the Fund.
6.5 Electronic Compatibility. ALPS will adapt its Local Area
Network capabilities so that it is compatible and can interface with the
equipment of the Adviser for the following utilizations:
(1) E-Mail
(2) Electronic download of trade activity
(3) Electronic access to call reports of wholesalers and 800-
line registered representatives provided by ALPS under
Section 1.3.
<PAGE> 9
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first written above.
THE COUNTRYBASKETS(SM) INDEX
FUND, INC.
By:____________________
Name:
Title:
ALPS MUTUAL FUNDS SERVICES, INC.
By:____________________
Name:
Title:
<PAGE> 1
DRAFT - 1/28/96
THE COUNTRYBASKETS INDEX FUND, INC.
SOLICITING DEALER AGREEMENT
Date: _______ __, 1996
______________________
______________________
______________________
Ladies and Gentlemen:
The CountryBaskets Index Fund, Inc. (the "Fund") is an open-end
management investment company registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), organized as a series fund and formed
as a corporation under the laws of the State of Maryland. The Fund will
consist initially of nine series (each a "Series"),1 and will issue shares
of common stock, par value $.001, of each series (the "Shares"). The Fund
will only sell and redeem Shares in aggregations of a specified number of
Shares (each a "Creation Unit") depending on the Series as set forth in
Annex I hereto. Pursuant to a Distribution Agreement between the Fund and
us (the "Distribution Agreement"), we will act as distributor (the
"Distributor") and principal underwriter of Creation Units of Shares of the
Series listed on Annex I as exclusive agent on behalf of the Fund.
Capitalized terms not defined herein shall have the meanings attributed to
them in the current prospectus and statement of additional information of
the Fund relating to the Shares.
Creation Units of Shares of each Series will be sold at net
asset value, without a sales charge, in exchange for the Fund Basket
designated for delivery on a subsequent business day for a Series and the
Cash Component. A purchase order must be preceded by a notice of intention
as provided in the Fund's current prospectus and statement of additional
information.
________________
1 Australia Index Series, France Index Series, Germany
Index Series, Hong Kong Index Series, Italy Index
Series, Japan Index Series, South Africa Index Series,
UK Index Series and US Index Series.
<PAGE> 2
In consideration of the mutual covenants contained herein, it
is hereby agreed that our respective rights and obligations shall be as
follows:
1. Role of Distributor. Pursuant to and in accordance with
the provisions of the Distribution Agreement, we will make arrangements for
securities dealers which can make the representations set forth in Section
4 of this Agreement to solicit from the public orders to purchase Creation
Units of Shares of each Series. You are hereby invited to become one of
the securities dealers referred to herein as a "Soliciting Dealer". This
will confirm our mutual agreement as to the terms and conditions applicable
to your participation as a Soliciting Dealer, such agreement to be
effective on your confirmation hereof. You understand that we are seeking
to enter into this Agreement in counterparts with you and other firms which
also may act as Soliciting Dealers. All purchases of Creation Units of
Shares from the Fund shall be effected through us in our capacity as
principal underwriter and distributor acting as agent on behalf of the
Fund. You understand that we shall have no obligation to you hereunder at
such times as we are not acting as distributor and principal underwriter
for the sale of Shares in Creation Unit aggregations.
2. Role of Soliciting Dealers. (a) As a Soliciting Dealer,
you shall offer and solicit purchase orders for Creation Units of Shares.
As, when and if you generate a customer request for the purchase of
Creation Units of Shares of any Series and you determine to transmit such
request to us, you shall comply with the procedures for the purchase of
Creation Units of Shares set forth in the then current prospectus and
statement of additional information of the Fund. You shall be responsible
for opening, approving and monitoring customer accounts and for the review
and supervision of these accounts, all in accordance with the rules of the
Securities and Exchange Commission ("SEC") and the National Association of
Securities Dealers, Inc. (the "NASD"). You understand that all orders for
the purchase of Creation Units of Shares of each Series must be placed with
us and may be placed only through an Authorized Participant that has
entered into an Authorized Participant Agreement with us and the Fund.
During any period you are an Authorized Participant, you may submit
purchase orders to us in such capacity. Your duties and obligations as an
Authorized Participant are determined by the terms and conditions of the
Authorized Participant Agreement and not pursuant hereto. The procedures
relating to orders and the handling thereof will be subject to the terms of
the then current prospectus and statement of additional information of the
Fund, the Authorized
<PAGE> 3
Participant Agreement and instructions in writing received by you from us
or the Fund's transfer agent from time to time. No conditional orders will
be accepted. No Creation Units of Shares shall be issued except upon
receipt of the consideration therefor. If payment for any purchase order
is not received in accordance with the terms of the then current prospectus
and statement of additional information, we reserve the right, without
notice, to cancel the sale and to hold you responsible for any loss
sustained as a result thereof. Unless otherwise mutually agreed in
writing, each transaction shall be promptly confirmed in writing to the
customer on a fully disclosed basis and a copy of each confirmation shall
be sent simultaneously to you. You agree that upon receipt of duplicate
confirmations you will examine the same and promptly notify us of any
errors or discrepancies which you discover and shall promptly bring to our
attention and the Fund's any errors in such confirmations claimed by your
customers.
(b) You agree to offer Shares in Creation Unit size
aggregations to the public at the then current public offering price per
Share (i.e. the net asset value per Share) as set forth in the then current
prospectus and statement of additional information for the Shares, as the
same may be amended or supplemented. All orders are subject to acceptance
or rejection by us or the Fund in our or its sole discretion.
(c) Subject to the requirements of applicable law and
regulations, nothing in this Agreement shall be construed to prohibit or
restrict your purchasing or selling for your own account Creation Unit
aggregations of Shares, whether as agent or principal. Nothing herein
shall be deemed to constitute you or any other Soliciting Dealer as agent
for the Fund, for us, or any other Soliciting Dealer. You agree not to act
as our agent and not to claim to act as our agent or as agent of any of the
foregoing.
3. Information.
We will furnish you, without charge, the Fund's current
prospectus and statement of additional information and copies of sales
materials relating to the offer and sale of Creation Units of Shares
approved and filed with the NASD by us ("Fund Sales Materials") in such
quantities as are reasonably requested by you and made available to us by
the Fund or are supplied by us under a marketing agreement between the Fund
and us (the "Marketing Agreement") for use in connection with the offer and
sale of Creation Units of Shares. You agree to the use of your name
therein as a Soliciting Dealer in accordance with Annex II hereto. Such
<PAGE> 4
Fund Sales Materials, as prepared pursuant to the Marketing Agreement or
otherwise on behalf of the Fund, are expected to include materials suitable
for institutional marketing efforts, including conferences, road shows and
institutional advertisements and/or "tombstones" related to the initial
public offering of Creation Units of Shares. Under this Agreement you will
not act for us, the Fund or the Investment Adviser, nor make any
representation on our behalf or the Fund's, or as authorized by us, the
Fund or the Investment Adviser, and in offering and selling Creation Units
of Shares hereunder you may rely only upon, the Fund's then current
prospectus and statement of additional information and the Fund Sales
Materials, provided that you are authorized to prepare and use at your own
cost and expense other brochures, advertisements (in print or other format)
or similar materials in connection with your solicitation of purchases of
Creation Units of Shares which may constitute "sales literature" within the
meaning of Section 24(b) of the 1940 Act ("Other Soliciting Materials"),
but only if such Other Soliciting Materials (i) are prepared in compliance
with all applicable NASD and SEC rules and regulations, (ii) provided to
us a reasonable time prior to their intended use and (iii) are not used
until approved by us and the Fund and filed by us with the NASD. You
understand that the Fund will not be advertised or marketed as an open-end
investment company, i.e., as a mutual fund, which offers redeemable
securities. Any advertising materials, including the Fund prospectus, will
prominently disclose that the CB Shares(TM) are not redeemable units of
beneficial interest in the Fund. In addition, any advertising material,
including the Fund prospectus, will disclose that the owners of CB
Shares(TM) may acquire and tender those shares for redemption to the Fund
in Creation Unit aggregations only.
4. Representations.
(a) You represent to us as follows, and agree to abide by all
of the rules and regulations of the NASD, including, without limitation,
the following provisions of its Rules of Fair Practice, except as otherwise
permitted by the NASD as set forth in writing, a copy of which shall be
provided to you by us:
(i) you will not withhold placing customers' orders for any
Creation Units of Shares so as to profit yourself as a result of such
withholding;
(ii) you shall not, as principal, purchase any Shares from a
record holder at a price lower than the net asset value next computed
by or for the Fund in
<PAGE> 5
accordance with the provisions of the 1940 Act; nothing in this
subparagraph shall prevent you from redeeming a Creation Unit
aggregation of Shares for the account of a record holder at the net
asset value then quoted by or for the Fund and charging the investor
a fair commission or administrative fee for handling the transaction;
(iii) you are familiar with Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), Section 4(3) of
the Securities Act of 1933, as amended (the "1933 Act"), and Section
24(d) of the 1940 Act relating to the distribution and delivery of
preliminary and final prospectuses and agree that you will comply
therewith;
(iv) you are a member in good standing of the NASD or, if you
are not such a member, you are a foreign bank, dealer or institution
not eligible for membership in the NASD which agrees to make no sale
within the United States, its territories or its possessions or to
persons who are citizens thereof or residents therein, and in making
other sales to comply, as though you were a member of NASD, with the
provisions of Sections 8, 24 and 36 of Article III of the Rules of
Fair Practice of the NASD and with Section 25 thereof as that Section
applies to a non-NASD member broker or dealer in a foreign country.
(b) You agree that your expulsion from the NASD will
automatically terminate this Agreement.
(c) You agree to comply with any rules of the New York Stock
Exchange or such other secondary market or markets as has or have been
approved by an order of the SEC for the trading of the Shares. You
acknowledge that you have been provided a copy of the conditions of the SEC
order in accordance with which the Shares are offered.
(d) We represent to you that we are a member in good standing
of the NASD and agree to abide by all of the NASD's rules and regulations.
5. Expenses; No Compensation. Unless otherwise specifically
provided for in this Agreement, you shall bear all of your own costs and
expenses in connection with your acting as a Soliciting Dealer, it being
understood that we and the Fund shall bear our and the Fund's respective
costs and expenses as set forth in the Distribution Agreement. You shall
not be required to bear any of the costs or expenses assumed by us or any
other Soliciting Dealer except
<PAGE> 6
as provided for herein or as you may have agreed with another Soliciting
Dealer. You shall be obligated to pay for the cost of printing and
delivering all prospectuses requested by you other than as provided
pursuant to Section 3 of this Agreement. No compensation shall be due to
you from us or the Fund hereunder.
6. Compliance.
(a) You agree that your activities pursuant to this Agreement
will be at all times in conformity in all material respects with all
applicable federal and state laws, rules and regulations, including without
limitation, the 1933 Act, the 1934 Act, the 1940 Act and the Rules of Fair
Practice of the NASD (as provided in Section 4 hereof). In connection with
offers to sell and sales of Shares of each Series, you agree to deliver or
cause to be delivered to each person to whom any such offer or sale is
made, at or prior to the time of such offer or sale, a copy of the then
current prospectus and the statement of additional information of the Fund.
(b) We agree to inform you, as the Fund provides or causes to
be provided to us such information, as to the states in which we believe
Shares of the respective Series have been qualified for sale under, or are
exempt from the requirements of, the respective securities laws thereof,
but we shall have no obligation or responsibility to make Shares of any
Series available for sale in any jurisdiction.
7. Term; Termination; Amendment. (a) This Agreement will
become effective on the date a fully executed copy of this Agreement is
received by us, and is subject to approval by the Board of Directors of the
Fund. This Agreement is terminable, without penalty, at any time by us or
by you upon 20 days' prior written notice to the other party hereto. This
Agreement will also terminate automatically in the event of its assignment
(within the meaning of the 1940 Act) or, unless we and the Fund consent
thereto in writing, a change in control (within the meaning of the 1940
Act) of the undersigned Soliciting Dealer.
(b) This Agreement may be amended in writing by the parties
hereto.
8. Suspension. All sales will be made subject to receipt of
Shares from the Fund. We and the Fund reserve the right, in our sole
discretion, without notice, to suspend sales or withdraw the offering of
sales of Creation Units of Shares of any Series entirely, including the
sale
<PAGE> 7
of such Shares to you for the account of any client or clients.
9. No Other Agreement. This Agreement shall supersede any
prior agreements between us regarding the sale of Creation Units of Shares.
10. Miscellaneous. (a) Notice. Notice shall have been duly
given if delivered by hand, mail or facsimile transmission to you, at your
address or facsimile number set forth below and (b) if to us, to ALPS
Mutual Funds Services, Inc., 370 Seventeenth Street, Suite 2700, Denver,
Colorado 80202, facsimile no. ( ) - , Attention: , or in
each case such other addresses as may be notified to the other party.
(b) Successors. Subject to Section 8 hereof, this Agreement
will inure to the benefit of and be binding upon the parties hereto and
their respective legal successors and the Fund, and no other person will
have any right or obligation hereunder.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York,
without giving effect to principles of conflicts of law.
Please confirm your agreement by signing and returning to us the
enclosed duplicate copies of this Agreement. Upon our acceptance hereof,
this Agreement shall constitute a valid and binding contract between us.
After our acceptance, we will deliver to you one fully executed copy of
this Agreement.
Very truly yours,
ALPS MUTUAL FUNDS SERVICES, INC.
By_____________________________
Name:
Title:
<PAGE> 8
Confirmed: ________ __, 1996
_______________________________
(Name of Soliciting Dealer)
By_____________________________
(sign name and print title)
Address: ______________________
______________________
______________________
Facsimile No.: _______________
<PAGE> 9
Annex I
Soliciting Dealer Agreement
CB Shares(TM) No. of Shares
NYSE per CUSIP
Series Symbol Creation Unit No.
Australia Index Series GXA 100,000 22236E109
France Index Series GXF 100,000 22236E208
Germany Index Series GXG 100,000 22236E307
Hong Kong Index Series GXH 100,000 22236E406
Italy Index Series GXI 100,000 22236E505
Japan Index Series GXJ 250,000 22236E604
South Africa Index GXR 100,000 22236E703
Series
UK Index Series GXK 100,000 22236E802
US Index Series GXU 100,000 22236E885
<PAGE> 10
Annex II
As a Soliciting Dealer, you agree that you may be named as such
in sales materials and presentations as follows:
Yes No
1. Institutional marketing efforts, _____ _____
including conferences, road shows and
institutional advertisements.
2. Print advertising related to the initial _____ _____
public offering of Creation Units of
Shares.
<PAGE> 1 Draft - 1/30/96
ALPS Mutual Funds Services, Inc.
370 17th Street, Suite 2700
Denver, Colorado 80202
INVESTOR SERVICES AGREEMENT
Smith Barney Inc.
390 Greenwich Street
New York, New York 10013
Gentlemen:
As distributor and principal underwriter of The CountryBasketsSM
Index Fund, Inc. (the "Fund"), a management investment company organized in
multiple series and registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), we wish to enter into this Investor Services
Agreement (this "Agreement") with you concerning (i) your provision of
broker-dealer and shareholder support services to your clients ("Clients")
who may from time to time beneficially own issued and outstanding shares of
common stock (the "CB SharesSM" or "CountryBasketsSM") of the initial nine
series of the Fund indicated on Appendix A hereto (each, an "Initial
Series"), and each additional series subsequently established by the Fund
and made subject to this Agreement in accordance with Section 10 (each, an
"Additional Series" and, together with the Initial Series, the "Series"),
and (ii) your educational and promotional activities in the secondary
market for CB SharesSM listed and traded on the New York Stock Exchange (the
"NYSE"). Pursuant to a Marketing Agreement (the "Marketing Agreement")
between us and the Fund we will provide various marketing and shareholder
services with respect to the CB SharesSM. Capitalized terms, unless
otherwise defined herein, shall have the meanings attributed to them in the
Fund's current prospectus and statement of additional information.
This Agreement is a related agreement as contemplated by Rule
12b-1 under the 1940 Act with respect to the Rule 12b-1 plan (each a "12b-1
Plan" and together the "12b-1 Plans") of each Initial Series of the Fund
and, subject to the approval of the Board of Directors pursuant to
Rule 12b-1, each Additional Series. Both you and we and the Fund expect
that your services and educational and promotional activities in connection
with CB SharesSM pursuant to this Agreement will tend to increase investor
interest in and the use and trading of CB SharesSM on the secondary market
and thus further sales of shares of the Fund.
<PAGE> 2
The terms and conditions of this Agreement are as follows:
Section 1. The services you agree to provide to the Fund with
respect to each Series shall include: (a) broker/dealer and shareholder
support services to Clients in connection with the outstanding and issued
CB SharesSM, including one or more of the following: (i) distributing
prospectuses and shareholder reports to current shareholders;
(ii) processing dividend and distribution payments on behalf of Clients;
(iii) providing information periodically to Clients showing their positions
in CB SharesSM; (iv) at your discretion, providing and maintaining elective
services such as check writing on the Client's account and wire transfer
services; (v) acting as nominee for Clients; (vi) maintaining account
records for Clients; (vii) issuing confirmations of transactions;
(viii) providing account information with respect to CB SharesSM
beneficially owned by Clients; (ix) if required by law, forwarding
shareholder communications from us or on behalf of the Fund (such as
proxies, shareholder reports, annual and semi-annual financial statements
and dividend, distribution and tax notices); (x) providing services
primarily intended to result in the sale of CB SharesSM; (xi) assisting
shareholders who wish to aggregate sufficient CB SharesSM of a Series to
constitute a Creation Unit for redemption; and (xii) such other services
analogous to the foregoing as you customarily provide to Clients with
respect to holdings of shares of open-end investment companies or exchange-
listed stocks or as the Fund and you may agree from time to time to the
extent you are permitted to do so under applicable statutes, rules and
regulations; and
(b) educational and promotional services related to the secondary market
trading of CB SharesSM, including the following: (i) facilitating access
for investor relations representatives for CB SharesSM to designated Smith
Barney branches for the purpose of broker education, including through
sales meetings and, one-on-one broker contact; and (ii) during the first
180 days following the initial sale of Creation Units of the Initial
Series, providing sales incentives to your brokers, all pursuant to
arrangements set forth in a letter from you to us.
Mutual understandings between you and the Adviser with respect
to educational and promotional services related to secondary market trading
of CB SharesSM to be performed by you, including, but not limited to,
(i) making your country allocation research available widely through your
internal systems; (ii) working with us and the Adviser to facilitate the
flow of CountryBasketsSM data through your internal
<PAGE> 3
information systems, which information shall include specified CB SharesSM
data and may also include composite data and other research and news; and
(iii) certain activities of management promoting use of CB SharesSM as a
trading and portfolio diversification tool, shall be set forth in a
separate agreement (the "Branch Marketing Contract") between the Adviser
and you.
Section 2. You will provide such office space and equipment,
telephone facilities and personnel (which may be any part of the space,
equipment and facilities currently used in your business, or any personnel
employed by you) as may be reasonably necessary or beneficial in order to
provide the services to Clients described in Section 1.
Section 3. (a) Pursuant to the terms of the 12b-1 Plans,
during the initial twelve months thereunder, the Fund is expected to have
available 0.05% of the average aggregate daily net assets over $200 million
of the Initial Series for expenditures for sales, advertising and marketing
materials. Such materials are expected to be produced pursuant to
arrangements which may be entered into by the Fund either through us as
Distributor and under the Marketing Agreement or with third parties,
including the Adviser; additional amounts may be made available by such
third parties for the costs of advertising and marketing materials related
to the CB SharesSM. Such sales, advertising and marketing materials are
expected to include customer and account executive brochures, materials for
sales presentations, videotapes, print advertisements in national
publications and radio and TV advertising. Mutual understandings with
respect to the sales, advertising and marketing materials which may be
provided to you in connection with your services hereunder shall be set
forth in the Branch Marketing Contract.
(b) Pursuant to the Marketing Agreement, we expect to retain
appropriate investor representatives and marketing staff to provide sales
and marketing support with respect to CB SharesSM. In accordance therewith,
we will make available their services to conduct the broker education
program for your sales staff described in the Branch Marketing Contract.
Section 4. You and your officers, employees and agents will
not make any representations on our behalf or the Fund's, or as authorized
by us, the Fund or the Adviser, except those contained in the Fund's then
current prospectus and statement of additional information for such CB
SharesSM or in such sales, marketing or advertising materials as may be
authorized by us and the Fund in writing, including those referred to in
Section 3 hereof. You understand that neither the Fund nor any Series will
be advertised or
<PAGE> 4
marketed as an open-end investment company, i.e., as a mutual fund, which
offers redeemable securities. Any advertising materials, including the
Fund prospectus, will prominently disclose that the CB SharesSM are not
redeemable units of beneficial interest in the Fund. In addition, any
advertising material, including the Fund prospectus, will disclose that the
owners of CB SharesSM may acquire and tender those shares for redemption to
the Fund in Creation Unit aggregations only.
Section 5. For all purposes of this Agreement, you will be
deemed to be an independent contractor, and will have no authority to act
as agent, partner, joint venture participant or in any similar capacity for
us in any matter or in any respect. You and your officers and employees
will, upon request, be available during normal business hours to consult
with us or our designees concerning the performance of our responsibilities
under this Agreement.
Section 6. In consideration of the services and facilities
provided by you hereunder, subject to the terms and conditions of the 12b-1
Plans, the Fund has agreed pursuant to an agreement with you of this date
(the "Fund Payment Agreement") to compensate you on behalf of the Initial
Series directly for the services performed under this Agreement and you
agree to accept as full payment therefor, a fee at the annual rate of 0.05
of 1% of the average aggregate daily net assets over $200 million of all
Initial Series, computed daily and payable on a quarterly basis. If this
Agreement is renewed in accordance with Section 10 hereof and the Fund
Payment Agreement is renewed in accordance with the terms thereof, the Fund
pursuant to the Fund Payment Agreement and subject to the terms and
conditions of the 12b-1 Plans will compensate you for any subsequent
twelve-month period hereunder at the rate of 0.05 of 1% of the average
aggregate daily net assets over $200 million of all Initial Series, subject
to review by the Board of Directors of the Fund. In the event that any
Additional Series becomes subject to this Agreement, the Fund has also
agreed pursuant to the Fund Payment Agreement to pay you for the services
and facilities to be provided by you hereunder with respect to such
Additional Series a fee at the rate set forth in the 12b-1 Plan approved by
the Board of Directors of the Fund with respect to such Additional Series.
Section 7. You will provide to us and the Fund's Board of
Directors, and we and the Fund's Directors will review, at least quarterly,
a written report of the amounts so expended and the purposes for which such
expenditures were made. In addition, you will furnish us or our
<PAGE> 5
designees with such information as we or they may reasonably request
(including, without limitation, periodic certifications confirming the
provision to Clients by you or your agents of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors designated by us or the Fund), in
connection with preparation of reports to the Fund's Board of Directors
concerning this Agreement and the Fund Payment Agreement and the monies
paid or payable to you by the Fund in connection with your services
hereunder as well as any other reports or filings that may be required by
law.
Section 8. By your written acceptance of this Agreement, you
represent, warrant and agree that you understand that this Agreement is a
Rule 12b-1 related agreement under the 1940 Act, subject to the provisions
of such Rule, as well as any other applicable rules or regulations of the
Securities and Exchange Commission; agree to conform to the reasonable
applicable compliance standards adopted by us for sale of CB SharesSM, as in
effect from time to time, provided that you shall be given the opportunity
to review and discuss with our counsel prior to their adoption any such
compliance standards proposed after the date hereof that will be applicable
to the activities to be performed by you hereunder; and agree to comply
with applicable federal and state securities laws and regulations
pertaining to transactions in CB SharesSM.
Section 9. [RESERVED]
Section 10. Unless sooner terminated, this Agreement will
continue for one year following the date of its adoption as provided in
Section 13, and thereafter will continue automatically for successive
annual periods provided such continuance is specifically approved at least
annually by the Fund in the manner described in Section 12 hereof. This
Agreement is terminable, without penalty, at any time (a) by the Fund with
respect to any Series of CB SharesSM (which termination may be by a vote of
a majority of the Disinterested Directors (as defined in Section 13 hereof)
or by vote of the holders of a majority of the voting securities (as such
term is defined in the 1940 Act) of such Series) or by you upon 60 days'
notice in writing to the other party hereto or (b) upon the termination of
the Distribution Agreement between the Fund and us or the Branch Marketing
Contract. This Agreement will also terminate automatically in the event of
its assignment (within the meaning of the 1940 Act). This Agreement may be
amended in writing by the parties hereto. In the event that the Board of
Directors of the Fund establishes any series of CB
<PAGE> 6
SharesSM listed and traded on the NYSE or any other national securities
exchange in addition to the Series then subject to this Agreement, adopts a
12b-1 Plan with respect to such additional series and approves this
Agreement and the Fund Payment Agreement as "related agreements" with
respect to such additional series in accordance with Rule 12b-1, such
additional series shall be made subject to this Agreement and shall become
an "Additional Series" hereunder effective immediately upon such adoption
and approval.
Section 11. All notices and other communications to either you
or us will be duly given if mailed, telegraphed, telexed or transmitted by
similar telecommunications device to us at the address shown above and to
you at the address shown below.
Section 12. This Agreement will be construed in accordance
with the laws of the State of New York.
Section 13. This Agreement, and each Rule 12b-1 Plan, is
subject to approval by vote of (i) the Fund's Board of Directors and
(ii) of a majority of those Directors who are not "interested persons" (as
defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the 12b-1 Plans adopted by the Fund
regarding the provision of support services to the beneficial owners of CB
SharesSM of the respective Series or in any agreement related thereto
("Disinterested Directors") cast in person at a meeting called for the
purpose of voting on such approval.
<PAGE> 7
If you agree to be bound by the provisions for this Agreement,
please sign a copy of this letter where indicated below and promptly return
it to us, c/o ALPS Mutual Funds Services, Inc., 370 17th Street, Suite
2700, Denver, Colorado 80202.
Very truly yours,
ALPS MUTUAL FUNDS SERVICES, INC.
Date: By:
Authorized Officer
Accepted and Agreed to:
SMITH BARNEY INC.
Date: By:
Authorized Officer
<PAGE> 8
Appendix A
Investor Services Agreement
CB SharesSM
NYSE CUSIP
Series Symbol No.
Australia Index Series GXA 22236E10 9
France Index Series GXF 22236E20 8
Germany Index Series GXG 22236E30 7
Hong Kong Index Series GXH 22236E40 6
Italy Index Series GXI 22236E50 5
Japan Index Series GXJ 22236E60 4
South Africa Index GXR 22236E70 3
Series
UK Index Series GXK 22236E80 2
US Index Series GXU 22236E88 5
<PAGE> 1
FORM OF
- AUTHORIZED PARTICIPANT AGREEMENT -
This Authorized Participant Agreement (the "Agreement") is entered into by
and among THE COUNTRYBASKETS INDEX FUND, INC. (the "Fund"), ALPS MUTUAL
FUNDS SERVICES, INC. (the "Distributor"), STATE STREET BANK AND TRUST
COMPANY, AS INDEX RECEIPT AGENT, CUSTODIAN AND TRANSFER AGENT ("State
Street Bank"), and ______________________________ (the "Participant"). The
Distributor has been retained to provide services as principal underwriter
of the Fund acting on an agency basis in connection with the sale and
distribution of shares of common stock, par value $.001 per share
(sometimes referred to each as a "CB Share(SM)" and collectively as the "CB
Shares(TM)"), of the series of the Fund (each a "Series") named on Annex I
hereto. State Street Bank serves as Custodian and Transfer Agent of the
Fund and is an Index Receipt Agent as that term is defined in the rules of
the National Securities Clearing Corporation ("NSCC"). As specified in the
Fund's prospectus included as part of its registration statement on Form
N-1A (No. 33-85710), the CB Shares(TM) of any Series offered thereby may be
purchased or redeemed only in aggregations of a specified number of CB
Shares(TM), referred to therein and herein as a "Creation Unit". The
number of CB Shares(TM) presently constituting a Creation Unit of each
Series is set forth in Annex I. The Fund's prospectus and statement of
additional information ("SAI") provide that Creation Units shall be sold in
exchange for a Fund Deposit, consisting of a Fund Basket and a Cash
Component, delivered to the Fund by the Participant for its own account or
acting on behalf of another party in accordance with and subject to the
terms and conditions set forth therein and that CB Shares may be redeemed
only in Creation Unit aggregations generally for a Fund Basket and a
minimal cash redemption payment. References to the Fund prospectus and the
SAI are to the then current prospectus and SAI as each may be supplemented
or amended from time to time. Capitalized terms not otherwise defined
herein are used herein as defined in the Fund prospectus or SAI (as the
case may be). This Agreement is intended to set forth certain premises and
the procedures by which the Participant may acquire and/or redeem Creation
<PAGE> 2
Unit size aggregations of Fund shares (i) of each Series through the
facilities of The Depository Trust Company ("DTC"), as described herein,
and (ii) of the US Index Series through the Continuous Net Settlement
("CNS") clearing processes of NSCC as such processes have been enhanced to
effect purchases and redemptions of Creation Units, such processes being
referred to herein as the "CB Shares Clearing Process."
The parties hereto in consideration of the premises and of the mutual
agreements contained herein agree as follows:
1. STATUS OF PARTICIPANT. The Participant hereby represents, covenants
and warrants that (i) with respect to orders for the purchase or
requests for redemption of Creation Units of the U.S. Index Series by
means of the CB Shares Clearing Process, it is a member of NSCC and a
participant in the CNS System of NSCC and a DTC Participant, (ii)
that it is a U.S. resident for purposes of income taxation and (iii)
with respect to orders for the purchase or requests for redemption of
Creation Unit size aggregations of Fund shares of any Series other
than the U.S. Index Series, it is a DTC Participant. The Participant
may place orders for the purchase or redemption of Creation Unit size
aggregations of Fund shares subject to the procedures for purchase
and redemption referred to in paragraph 2 of this Agreement
("Execution of Orders; NSCC") and the provisions of Annex II hereto,
either, in the case of the US Index Series, by means of the CB Shares
Clearing Process, or in the case of any Series, outside the CB Shares
Clearing Process. Any change in the foregoing status of the
Participant shall terminate this Agreement and Participant shall give
prompt written notice to the Fund, State Street Bank and the
Distributor of such change.
2. EXECUTION OF ORDERS; NSCC. All orders for the purchase or redemption
of Creation Units shall be handled in accordance with the terms of
the Fund prospectus and SAI and the procedures described in Annex II
to this Agreement and shall require the timely execution and delivery
of an appropriate notice of intention (except in the case of the U.S.
Index Series) to place an order, purchase order or redemption
request, as the case may be, substantially in the forms set forth in
Annex III, IV and V hereto respectively. Each party hereto agrees to
comply with the provisions of such documents to the extent applicable
to it. In the event the procedures include the use of recorded
telephone lines, the Participant hereby consents to such use.
<PAGE> 3
The Participant understands and agrees that Beneficial Owners may
submit requests for redemption on each day that the New York Stock
Exchange is open for trading and that the Participant is prepared to
process such requests, as provided herein and in the Fund prospectus
and SAI. The Fund reserves the right to issue additional or other
procedures relating to the manner of purchase or redemption of
Creation Units, and the Distributor, State Street Bank and the
Participant each agrees to comply with such procedures as may be
issued from time to time which are applicable to it respectively.
Solely with respect to orders for the purchase or requests for the
redemption of Creation Units of the US Index Series through the CB
Shares Clearing Process, the Participant hereby authorizes State
Street Bank to transmit to NSCC on behalf of the Participant such
instructions, including share amounts of Fund Basket securities and
cash amounts, as are necessary with respect to the purchase and
redemption of Creation Units, consistent with the instructions issued
by the Participant to the CB Share telephone representative (the "CB
Share Telephone Representative"). The Participant agrees to be bound
by the terms of such instructions issued by State Street Bank and
reported to NSCC as though such instructions were issued by the
Participant directly to NSCC.
3. ROLE OF PARTICIPANT. (a) The Participant shall have no authority in
any transaction to act as agent of the Distributor, the Fund or State
Street Bank.
(b) By executing this Agreement, the Participant agrees in connection
with any purchase or redemption transactions in which it acts for a
customer or for any other DTC Participant or indirect DTC
Participant, or any Beneficial Owner, that it shall extend to any
such party all of the rights, and shall be bound by all of the
obligations of an NSCC participant if the CB Shares Clearing Process
is used and of a DTC Participant in addition to any obligations that
it undertakes hereunder or in accordance with the Fund prospectus and
SAI.
4. AUTHORIZED PERSONS. Concurrently with the execution of this
Agreement and from time to time thereafter, the Participant shall
deliver to the Fund, with copies to State Street Bank and the
Distributor, duly certified as appropriate by its Secretary or other
duly authorized official, a certificate setting forth the
<PAGE> 4
names and signatures of all persons authorized to give instructions
relating to activity contemplated hereby or any other notice, request
or instruction on behalf of the Participant (each an "Authorized
Person"). Such certificate may be accepted and relied upon by the
Fund, the Distributor and State Street Bank as conclusive evidence of
the facts set forth therein and shall be considered to be in full
force and effect until delivery to the Fund, the Distributor and
State Street Bank of a superseding certificate bearing a subsequent
date. The Distributor shall issue to each Authorized Person a unique
personal identification number ("PIN Number") by which such
Authorized Person and the Participant shall be identified and
instructions issued by the Participant hereunder shall be
authenticated. The PIN number shall be kept confidential and only
provided to Authorized Persons. Upon the termination or revocation
of authority of such Authorized Person by the Participant, the
Participant shall give immediate written notice of such fact to the
Fund, the Distributor and State Street Bank and such notice shall be
effective upon receipt by the Fund, the Distributor and State Street
Bank.
5. PURCHASE. (a)The Participant understands and agrees that in the case
of each Series other than the US Index Series, the Fund has caused
the Custodian to maintain with the applicable subcustodian for such
Series an account in the relevant foreign jurisdiction to which the
Participant shall deliver or cause to be delivered in connection with
the purchase of a Creation Unit the securities constituting a Fund
Basket on behalf of itself or any party for which it is acting
(whether or not a customer) in accordance with the terms and
conditions applicable to such account in such jurisdiction. The
Participant also acknowledges and agrees on behalf of itself and any
party for which it is acting (whether as a customer or otherwise)
that delivery of the securities constituting a Fund Basket together
with a purchase order shall be irrevocable, subject to acceptance by
the Fund, or by the Distributor on behalf of the Fund, of the order.
(b) The Participant represents on behalf of itself and any party for
which it acts that upon delivery of portfolio securities constituting
a Fund Basket to the Custodian and/or the relevant subcustodian in
accordance with the terms of the Fund prospectus and the SAI, the
Fund will acquire good and unencumbered title to such securities,
free and clear of all liens, restrictions, charges and encumbrances
and not subject
<PAGE> 5
to any adverse claims, including, without limitation, any restriction
upon the sale or transfer of such securities imposed by (i) any
agreement or arrangement entered into by the Participant or any party
for which it is acting in connection with a purchase order or
(ii) any provision of the Securities Act of 1933, as amended (the
"1933 Act"), and any regulations thereunder (except that portfolio
securities of issuers other than U.S. issuers shall not be required
to have been registered under the 1933 Act if not exempt from such
registration), or of the securities laws or regulations of any other
applicable jurisdiction and (iii) no such securities are "restricted
securities" as such term is used in Rule 144(a)(3)(i) promulgated
under the 1933 Act.
(c) The Participant hereby agrees that as between the Fund and/or
State Street Bank and itself or any party for which it acts in
connection with a purchase order, it will provide for and assume
responsibility for payment of the Cash Component and any other
amounts of cash due to the Fund in connection with the purchase of
any Creation Unit aggregation of shares (including the cash purchase
transaction fee). Such payment shall be made on the Issue Date in
same day or immediately available funds by wire transfer to an
account maintained by the Custodian at __________ or by such other
means as may be agreed upon from time to time by the Fund and State
Street Bank. In the case of the CB Shares Clearing Process, the Cash
Component for Creation Units of the US Index Series may also be
delivered thereby. The Participant may require the investor to enter
into an agreement with the Participant with respect to such matters
relating to payment or any other matters set forth herein. In
connection with any purchase order, the Participant shall be liable
to the Distributor for the amounts, if any, advanced by the
Distributor in its sole discretion to the Participant for payment of
the amounts due and owing for the Cash Component and related cash
transaction fee.
6. REDEMPTION. (a) The Participant represents and warrants that it will
not obtain an Order Number (as described in Annex II) from the Fund
for the purpose of redeeming any Creation Unit size aggregation of
Fund shares of any Series unless it first ascertains that it or its
customer, as the case may be, owns outright or has full legal
authority and legal and beneficial right to tender for redemption the
requisite number of CB Shares of the relevant Series to be redeemed
and to the
<PAGE> 6
entire proceeds of the redemption and that such CB Shares have not
been loaned or pledged to another party nor are the subject of a
repurchase agreement, securities lending agreement or such other
arrangement which would preclude the delivery of such CB Shares to
State Street Bank on a Regular Way (as defined below) basis if the CB
Shares Clearing Process is used or in accordance with the Fund
prospectus and SAI or as otherwise required by the Fund. Any such
tender of CB Shares for redemption shall be irrevocable. The
Participant understands that CB Shares of any Series can be redeemed
only when Creation Unit size aggregations of a Beneficial Owner are
held in the account of a single Participant. As of the date hereof,
"Regular Way" settlement shall take place within three (3) business
days following a securities trade (generally expressed as "T+3"). In
the case of securities, including CB Shares delivered through the
CB Shares Clearing Process, "T+3" refers to three (3) NSCC business
days (i.e., days during which NSCC is open for business).
(b) (i) In order to provide for taking delivery of shares of
portfolio securities constituting a Fund Basket (or lesser amount of
such securities as may be the case, as provided in the Fund
prospectus and SAI) upon redemption of CB Shares in Creation Unit
aggregations, the Participant agrees for itself and on behalf of any
Beneficial Owner for which it is acting, to maintain, or to ascertain
that the party to receive the redemption proceeds maintains,
appropriate securities broker-dealer, bank or other custody
arrangements in the jurisdiction in which the portfolio securities
are customarily traded, to which account such portfolio securities of
the Fund Basket will be delivered by the Custodian or subcustodian.
If neither the redeeming Beneficial Owner, nor the Participant acting
on behalf of such redeeming Beneficial Owner, has appropriate
arrangements satisfactory to the Fund to take delivery of the
portfolio securities in the applicable foreign jurisdiction, and it
is not possible to make other such arrangements (to which the
Participant shall reasonably agree), or if it is not possible to
effect deliveries of the portfolio securities of the Fund Basket in
such jurisdiction, the Participant understands and agrees that the
Fund will exercise its option to redeem such shares in cash and the
redeeming Beneficial Owner will be required to receive its redemption
proceeds in cash, less the cash transaction fee applicable to cash
redemption proceeds.
<PAGE> 7
(ii) The Participant covenants and agrees that it shall give or
shall cause to be given written notice to the counterparty that is to
receive portfolio securities in the Fund Basket as part of redemption
proceeds no later than the date and time when a request for
redemption (as defined herein) is submitted to the Fund by such
Participant. Such notice to accept delivery from the appropriate
subcustodian shall be by facsimile, telex or other means of
communication reasonably designed to ensure the counterparty's
receipt of instructions by the day following the date of the
redemption request is duly made to the Fund.
(iii) In order to permit delivery of Fund Basket securities by
the Fund upon redemption in the case of Series other than the US
Index Series in conformity with the requirements of applicable U.S.
federal securities laws, the Participant irrevocably agrees with the
Fund that if Participant is a broker or dealer (a "BD Participant"),
it will on its own behalf or on behalf of a Beneficial Owner of a
Creation Unit of shares of any Series designated on Annex VII hereto
on any date specified therein (the "Designated Series" and the
"Designated Dates") either (A) refer any request for redemption to a
Participant that is not such a broker or dealer designated by the
Fund and named in Annex VII (a "Designated Participant") or (B)
execute and sign an agreement in a form determined by the Fund to
comply with the provisions of Rule 15c6-1 under the Securities
Exchange Act of 1934, as amended, to waive compliance with T+3 and
extend the time for delivery of redemption proceeds securities by
such number of days as may be specified by the Fund (but in any case
not to exceed the number of calendar days permitted by Section 22(e)
of the 1940 Act or Securities and Exchange Commission order as
described in the Fund prospectus and SAI). The form of such
agreement and waiver is set forth in the form of redemption request
included as Annex V hereto. If for any reason, the redemption
request with respect to a Creation Unit of a Designated Series
submitted by a BD Participant on a Designated Date does not include
such a duly executed waiver provided for in the form of redemption
request, the BD Participant understands and agrees that State Street
Bank shall cause such redemption request to be referred to a
Designated Participant. The Participant agrees that Annex VII hereto
may be amended from time to time by the Fund in its sole discretion.
The Participant also covenants and agrees to use its best efforts to
cause any person on whose behalf it submits a redemption request if
such person is a broker or dealer
<PAGE> 8
to execute and deliver an agreement to waive delivery in T+3 in
accordance with Rule 15c6-1 with respect to any Designated Series and
Date. The BD Participant agrees that in referring any redemption
request with respect to a Designated Series on a Designated Date to a
Designated Participant it shall do so in a prompt and timely manner
to permit such Designated Participant to execute the redemption
request on the same date. The Participant understands that any
request for redemption not in compliance with the covenants set forth
in this paragraph (iii) may be rejected by the Fund. The Participant
acknowledges that if the Fund so determines, the Fund may in its sole
discretion in order to permit timely delivery of redemption proceeds
pay any part or the entire redemption proceeds in cash, subject to
the cash redemption transaction fee.
7. BENEFICIAL OWNERSHIP. The Participant represents and warrants to the
Fund that it does not hold for the account of any single Beneficial
Owner of CB Shares(TM) of the relevant Series 80 percent or more of
the outstanding CB Shares(TM) of such relevant Series, so as to cause
the Fund to have a basis in the portfolio securities deposited with
the Fund with respect to such Series different from the market value
of such portfolio securities on the date of such deposit, pursuant to
section 351 of the Internal Revenue Code of 1986, as amended. The
Fund, and its Transfer Agent and Distributor, shall have the right to
require information from the Participant regarding CB Share(TM)
ownership of each Series and to rely thereon to the extent necessary
to make a determination regarding ownership of 80 percent or more of
outstanding CB Shares(TM) of any Series by a Beneficial Owner as a
condition to the acceptance of a Fund Deposit.
8. INDEMNIFICATION. The Participant hereby agrees to indemnify and hold
harmless the Distributor, the Fund, State Street Bank and Trust
Company as Custodian, Transfer Agent and Index Receipt Agent, their
respective subsidiaries, affiliates, directors, officers, employees
and agents (each an "Indemnified Party") from and against any loss,
liability, cost and expense incurred by such Indemnified Party as a
result of (i) any breach by the Participant of any provision of this
Agreement; or (ii) any actions of such Indemnified Party in reliance
upon any instructions issued in accordance with Annex II (as may be
amended from time to time) believed by the Fund, the Distributor
and/or State Street Bank to be genuine and to have been given by the
Participant. This paragraph
<PAGE> 9
shall survive the termination of this Agreement. THE DISTRIBUTOR
SHALL NOT BE LIABLE TO THE PARTICIPANT FOR ANY DAMAGES ARISING OUT OF
MISTAKES OR ERRORS IN DATA PROVIDED TO THE DISTRIBUTOR BY OR
INTERRUPTIONS OR DELAYS OF COMMUNICATIONS WITH THIRD PARTY SERVICE
PROVIDERS TO THE FUND.
9. FUND BASKET DATA. The Participant understands that the number and
names of the portfolio securities constituting the Fund Basket for
each Series will be made available by the Distributor as such
information is supplied to the Distributor each day that the NYSE is
open for trading and will also be made available on each such day
through the facilities of the NSCC.
10. ACKNOWLEDGMENT. The Participant acknowledges receipt of the Fund
prospectus and the SAI and represents it has reviewed such documents
and understands the terms thereof.
11. NOTICES. Except as otherwise specifically provided in this
Agreement, all notices required or permitted to be given pursuant to
this Agreement shall be given in writing and delivered by personal
delivery or by postage prepaid registered or certified United States
first class mail, return receipt requested, or by telex, telegram or
facsimile or similar means of same day delivery (with a confirming
copy by mail as provided herein). Unless otherwise notified in
writing, all notices to the Fund shall be at the address or
telephone, facsimile or telex numbers indicated below the Fund's
signature line, Attn.: , with a copy to State Street Bank
and Trust Company, _____________________, P.O. Box 1978, Boston, MA
02105, Attn.: CB Shares(TM).
All notices to the Participant and the Distributor shall be directed
to the address or telephone, facsimile or telex numbers indicated
below the signature line of such party.
12. TERMINATION AND AMENDMENT. This Agreement shall become effective in
this form as of the date executed by the Fund and may be terminated
at any time by any party upon
sixty days' prior written notice to the other parties and may be
terminated earlier by the Fund at any time in the event of a breach
by the Participant of this Agreement or the procedures described or
incorporated herein or upon a change in control (as such term is used
in the Investment Company Act of 1940, as amended)
<PAGE> 10
of the Participant. This Agreement supersedes any prior such
agreement between or among the parties. This Agreement may be
amended by the Fund from time to time without the consent of any
Beneficial Owner by the following procedure. The Fund will mail a
copy of the amendment to the Distributor, State Street Bank and the
Participant. If none of the Distributor, State Street Bank or the
Participant objects in writing to the amendment within five days
after its receipt, the amendment will become part of this Agreement
in accordance with its terms.
13. GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York.
14. COUNTERPARTS. This Agreement may be simultaneously executed in
several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered as of the day and year written below.
THE COUNTRYBASKETS(TM) INDEX FUND,
INC.
BY:
TITLE:
ADDRESS:
Date: , 199 TELEPHONE:
FACSIMILE:
TELEX:
_________________________________
PARTICIPANT
BY:
TITLE:
ADDRESS:
Date: , 199 TELEPHONE:
FACSIMILE:
<PAGE> 11
ALPS MUTUAL FUNDS SERVICES, INC.
BY:
TITLE:
ADDRESS:
Date: , 199 TELEPHONE:
FACSIMILE:
STATE STREET BANK AND TRUST COMPANY, AS
CUSTODIAN, TRANSFER AGENT AND INDEX RECEIPT
AGENT
BY:
TITLE:
ADDRESS:
Date: , 199 TELEPHONE:
FACSIMILE:
TELEX:
<PAGE> I-1
ANNEX I
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
FORM OF AUTHORIZED PARTICIPANT AGREEMENT
No. of Shares
Series in Creation Units
The 100,000
Australia
Index
The 100,000
France
Index
The 100,000
Germany
Index
The 100,000
Hong Kong
Index
The 100,000
Italy
Index
The 250,000
Japan
Index
The 100,000
South
Africa
Index
The UK 100,000
Index
The US 100,000
Index
<PAGE> II-1
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
This Annex II to the Authorized Participant Agreement supplements the
Fund prospectus and SAI and is an attachment to the Authorized Participant
Agreement (i) with respect to the procedures to be used in processing an
order for the purchase and redemption of CB Shares(TM) in Creation Unit
size aggregations of each Series outside of the CB Shares Clearing Process
and (ii) with respect to the purchase and redemption of CB Shares(TM) in
Creation Unit size aggregations of the US Index Series through the CB
Shares Clearing Process. Capitalized terms, unless otherwise defined in
this Annex II, have the meanings attributed to them in the Authorized
Participant Agreement or the Fund prospectus and SAI.
A Participant is required to have signed the Authorized Participant
Agreement. Upon acceptance of the Agreement and execution thereof by the
Fund and in connection with the initial purchase order submitted by the
Participant, the Distributor will assign a personal identification number
("PIN") to each Authorized Person authorized to act for the Participant.
This will allow a Participant through its Authorized Person(s) to place an
order with respect to Creation Units of CB Shares(TM).
<PAGE> II-2
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
Part A
TO SUBMIT A NOTICE OF INTENTION FOR THE SUBSEQUENT PURCHASE OF ONE OR MORE
CREATION UNITS OF CB SHARES(TM)
A Notice of Intention is not an order for the purchase of CB Shares(TM),
which can only be completed subsequently. See the Fund prospectus and SAI
and Part B to this Annex II. A Notice of Intention must be submitted on
the date that a given Fund Basket for a Series is announced for delivery on
a subsequent Issue Date, provided that no Notice of Intention is required
to initiate a purchase order for CB Shares of the US Index Series through
the CB Shares Clearing Process.
1. Call to Receive an Intention Number. An Authorized Person of a
Participant must call the CB Shares(TM) telephone representative at
800-482-3940 not later than 15 minutes prior to the closing time of the
regular trading session on the New York Stock Exchange (the "NYSE Closing
Time") (ordinarily 4:00 p.m. New York time) to receive an Intention Number.
Upon verifying the authenticity of the caller (as determined by the use of
the appropriate PIN Number) and the terms of the Notice of Intention, the
CB Shares(TM) telephone representative will issue a unique Intention
Number. All submissions with respect to a notice of the intention to
purchase CB Shares(TM) are required to be in writing in the form of Notice
of Intention approved by the Fund (see Annex III hereto) and accompanied by
the designated Intention Number. Incoming telephone calls are queued and
will be handled in the sequence received. Calls placed before the NYSE
Closing Time will be processed even if the call is taken after this cutoff
time. ACCORDINGLY, DO NOT HANG UP AND REDIAL. INCOMING CALLS THAT ARE
ATTEMPTED LATER THAN THE NYSE CLOSING TIME WILL NOT BE ACCEPTED.
NOTE THAT THE TELEPHONE CALL IN WHICH THE INTENTION NUMBER IS ISSUED
INITIATES THE INTENTION PROCESS BUT DOES NOT ALONE CONSTITUTE THE NOTICE OF
INTENTION. A NOTICE OF INTENTION (SUCH NOTICE REFERRED TO HEREIN AS THE
"INTENTION") IS ONLY COMPLETED AND PROCESSED UPON RECEIPT OF WRITTEN
INSTRUCTIONS CONTAINING THE DESIGNATED INTENTION NUMBER AND TRANSMITTED BY
FACSIMILE TO OR THE APPROPRIATE
<PAGE> II-3
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
ELECTRONIC INTERFACE ("ELECTRONIC INTERFACE") PROVIDED TO THE PARTICIPANT.
2. Place the Intention. An Intention Number is only valid for a limited
time. The Intention must be sent by facsimile or Electronic Interface to
the CB Shares(TM) telephone representative within 15 minutes of the
issuance of the Intention Number, but prior to the NYSE Closing Time. In
the event that the Intention is not received within such time period, the
CB Shares(TM) representative will attempt to contact the Participant to
request immediate transmission of the Intention. Unless the Intention is
received by the CB Shares(TM) representative upon the earlier of (i) within
15 minutes of contact with the Participant or (ii) 1 hour after the NYSE
Closing Time, the Intention will be deemed invalid.
3. Await Receipt of Confirmation. The Distributor shall issue an advice
of receipt of the Intention within one (1) hour of its receipt of an
Intention in good form. In the event the Participant does not receive a
timely advice from the Distributor, it should contact the CB Shares(TM)
telephone representative at the telephone number indicated above.
4. Ambiguous Instructions. In the event that an Intention contains
ambiguous instructions or terms that differ from the information provided
in the telephone call at the time of issuance of the Intention Number, the
CB Shares(TM) telephone representative will attempt to contact the
Participant to request confirmation of the terms of the Intention. If an
Authorized Person confirms the terms as they appear in the Intention, the
Intention will be processed. If an Authorized Person contradicts its
terms, the Intention will be deemed invalid and a corrected Intention must
be received by the CB Shares(TM) telephone representative not later than
the earlier of (i) within 15 minutes of such contact with the Participant
or (ii) 1 hour after the NYSE Closing Time. If the CB Shares(TM) telephone
representative is not able to contact an Authorized Person, then the
Intention shall be processed in accordance with its terms notwithstanding
any inconsistency from the terms of the telephone information. In the
event that an Intention contains terms that are illegible, the Intention
will be deemed invalid and the CB Shares(TM) representative will
<PAGE> II-4
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
attempt to contact the Participant to request retransmission of the
Intention. A corrected Intention must be received by the CB Shares(TM)
representative not later than the earlier of (i) within 15 minutes of such
contact with the Participant or (ii) 1 hour after the NYSE Closing Time.
5. Processing an Intention. The Distributor reserves the right to
suspend an Intention in the event that the acceptance of a Purchase Order
subsequent to the Intention would appear to result in the Participant or a
Beneficial Owner owning 80 percent or more of all outstanding CB Shares(TM)
of a given Series upon the subsequent purchase of CB Shares(TM). In such
event, the CB Shares(TM) telephone representative will attempt to contact
an Authorized Person for purposes of confirmation of the fact that with
respect to such Participant no Beneficial Owner would own 80 percent or
more of all outstanding CB Shares(TM) of the applicable Series upon
execution of the subsequent Purchase Order. In the event that (i) the CB
Shares(TM) telephone representative is unable to contact an Authorized
Person or (ii) the Participant fails to transmit an identical Intention
containing a representation and warranty as to such fact, then the
Intention shall be deemed invalid.
6. Delivery of Intention. The Participant must make delivery to State
Street Bank and Trust Company as the Custodian or to the appropriate
subcustodian for the Series (see Annex VI) of a single Fund Basket with
respect to one Intention with respect to a given Series. For multiple
Intentions (greater than one), one Fund Basket must be delivered with the
number of shares of each component security of that Fund Basket multiplied
by the number of Intentions. The Custodian or the appropriate subcustodian
will expect delivery from a single designated counter-party determined at
the time of completion of the Authorized Participant Agreement. The
counter-party may be changed by the Participant by written instructions to
the Custodian no later than 24 hours prior to executing an Intention.
7. Cancellation of Intention. If upon the designated settlement date
for the purchase of CB Shares(TM) (as determined by the Intention) a
purchase order is not received from the Participant and accepted, the
Intention
<PAGE> II-5
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
will be canceled, and any securities deposited at the Custodian or at the
appropriate subcustodian will be delivered back to the Participant at a
cost to be incurred by the Participant.
<PAGE> II-6
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
Part B
TO PLACE AN ORDER FOR PURCHASE OF CB SHARES(TM) IN CREATION UNIT SIZE
AGGREGATIONS
1. Call to Receive an Order Number. An Authorized Person for the
Participant must call the CB Shares(TM) telephone representative at
800-482-3940 not later than 15 minutes prior to the NYSE Closing Time to
receive an Order Number. Upon verifying the authenticity of the caller (as
determined by the use of the appropriate PIN Number) and the terms of the
order, the CB Shares(TM) telephone representative will issue a unique Order
Number. All orders with respect to the purchase of Creation Unit
aggregations of CB Shares of any Series are required to be in writing on
the form of purchase order ("Purchase Order") approved by the Fund (see
Annex IV hereto) and accompanied by the designated Order Number. Incoming
telephone calls are queued and will be handled in the sequence received.
Calls placed before the NYSE Closing Time will be processed even if the
call is taken after this cut-off time. ACCORDINGLY, DO NOT HANG UP AND
REDIAL. INCOMING CALLS THAT ARE ATTEMPTED LATER THAN THE NYSE CLOSING TIME
WILL NOT BE ACCEPTED.
NOTE THAT THE TELEPHONE CALL IN WHICH THE ORDER NUMBER IS ISSUED INITIATES
THE ORDER PROCESS BUT DOES NOT ALONE CONSTITUTE THE PURCHASE ORDER. A
PURCHASE ORDER IS ONLY COMPLETED AND PROCESSED UPON RECEIPT OF WRITTEN
INSTRUCTIONS CONTAINING THE DESIGNATED ORDER NUMBER AND PIN NUMBER AND
TRANSMITTED BY FACSIMILE OR ELECTRONIC INTERFACE. INSTRUCTIONS FOR USE OF
THE ELECTRONIC INTERFACE WILL BE PROVIDED TO THE PARTICIPANT WHEN THE ORDER
NUMBER IS OBTAINED.
2. Place the Order. An Order Number is only valid for a limited time.
The Purchase Order for creation of Creation Unit size aggregations of CB
Shares(TM) must be sent by facsimile or Electronic Interface to the CB
Shares(TM) telephone representative within 15 minutes of the issuance of
the Order Number but prior to the NYSE Closing Time. In the event that the
Purchase Order is not received within such time period, the CB Shares(TM)
telephone representative will attempt to contact the Participant to request
immediate transmission of the Purchase Order. Unless the Purchase
<PAGE> II-7
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
Order is received by the CB Shares(TM) telephone representative upon the
earlier of (i) within 15 minutes of such contact with the Participant or
(ii) the NYSE Closing Time, the order will be deemed invalid.
3. Await Receipt of Confirmation.
(a) In the Case of Purchases through the CB Shares Clearing Process.
The Participant shall transfer or arrange for the transfer of the requisite
Fund Basket of securities for the US Index Series and the Cash Component to
State Street Bank by means of the CB Shares Clearing Process so as to be
received no later than on the Regular Way settlement date following the
Business Day on which the Purchase Order is received by the Distributor.
The Distributor shall issue to both the Participant and State Street
Bank an acknowledgment of receipt of a Purchase Order for CB Shares of the
US Index Series through the CB Shares Clearing Process within one (1) hour
of its receipt of a Purchase Order in proper form as described above. In
the event the Participant does not receive a timely acknowledgment from the
Distributor, it should contact the CB Shares telephone representative at
the telephone number indicated. After the Distributor has received a duly
completed Purchase Order for CB Shares of the US Index Series, State Street
Bank shall initiate procedures to transfer the requisite CB Shares through
the CB Shares Clearing Process so as to be received by the Participant no
later than on the Regular Way settlement date following the Business Day on
which the duly completed Purchase Order is received by the Distributor.
(b) In All Other Cases:
(i) In the case of the US Index Series, the Participant shall deliver
on the Issue Date (i) the Fund Basket to the Custodian through DTC
and (ii) the Cash Component or estimated amount sufficient to pay the
Cash Component in same day or immediately available funds by wire
transfer to the account designated by the Custodian.
(ii) In the case of all other Series, the Participant shall deliver
on the Issue Date (except as indicated
<PAGE> II-8
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
below) (i) the Fund Basket to the relevant subcustodian and (ii) the
Cash Component or estimated amount sufficient to pay the Cash
Component and the Cash Component transaction fee in same day or
immediately available funds by wire transfer to the account
designated by the Custodian. In the case of the France Index Series
and the Italy Index Series, the Fund Basket must be received by the
subcustodian on the day before the Issue Date.
The Participant will receive an acknowledgment of acceptance of the
Purchase Order from the Distributor upon the later to occur of (i) within
one (1) hour of its receipt of a duly completed Purchase Order and (ii)
confirmation from the Custodian that all Fund Basket securities have been
delivered and that cash is on hand to cover the Cash Component, together
with the applicable Cash Component transaction fee. In certain
circumstances, the confirmation from the Custodian that all securities have
been delivered may not be available until the NYSE Closing Time. In the
event that the Participant does not receive a timely confirmation from the
Distributor, the Participant should contact the CB Shares(TM) telephone
representative at the telephone number indicated.
4. Ambiguous Instructions. In the event that a Purchase Order contains
ambiguous instructions or terms that differ from the information provided
in the telephone call at the time of issuance of the Order Number, the CB
Shares(TM) telephone representative will attempt to contact the Participant
to request confirmation of the terms of the order. If an Authorized Person
confirms the terms as they appear in the Purchase Order then the order will
be accepted and processed. If an Authorized Person contradicts its terms,
the Purchase Order will be deemed invalid and a corrected Order must be
received by the CB Shares(TM) telephone representative not later than the
earlier of (i) within 15 minutes of such contact with the Participant or
(ii) the NYSE Closing Time. If the CB Shares(TM) telephone representative
is not able to contact an Authorized Person, then the Purchase Order shall
be accepted and processed in accordance with its terms notwithstanding any
inconsistency with the telephone information. In the event that a Purchase
Order contains terms that are illegible, the Purchase Order will be deemed
invalid and the CB Shares(TM)
<PAGE> II-9
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
telephone representative will attempt to contact the Participant to request
retransmission of the Purchase Order. A corrected Purchase Order must be
received by the CB Shares(TM) telephone representative not later than the
earlier of (i) within 15 minutes of such contact with the Participant or
(ii) the NYSE Closing time.
5. Processing Purchase Orders. The Distributor reserves the right to
suspend a Purchase Order in the event that its acceptance would appear to
result in the Participant or a Beneficial Owner owning 80 percent or more
of all outstanding CB Shares(TM) of a Series. In such event, the CB
Shares(TM) telephone representative will attempt to contact an Authorized
Person for purposes of confirmation of the fact that with respect to such
Participant no Beneficial Owner would own 80 percent or more of all
outstanding CB Shares(TM) of a given Series upon execution of the Purchase
Order. In the event that (i) the CB Shares(TM) telephone representative is
unable to contact an Authorized Person or (ii) the Participant fails to
transmit an identical Purchase Order confirming the representation and
warranty as to such fact, then the Purchase Order shall be deemed invalid.
If the Participant fails to deliver all components of the Fund Basket
in the specified share amounts, the Distributor shall notify the Adviser to
determine whether cash may be accepted in lieu of the securities not
delivered, as provided in the Fund prospectus and SAI. If the Purchase
Order is not accepted, any securities delivered by the Participant to the
Custodian or appropriate subcustodian will be delivered back to the
Participant at a cost to be incurred by the Participant.
6. Subcustodian Accounts. Annex VI hereto contains a list of the
subcustodian accounts to which the portfolio securities constituting the
Fund Basket of each Series other than the US Index Series are to be
delivered in connection with a Purchase Order.
<PAGE> II-10
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
Part C
TO PLACE A REQUEST FOR REDEMPTION OF CB SHARES(TM) IN CREATION UNIT SIZE
AGGREGATIONS
Prior to submitting a Redemption Request with
respect to the Series indicated on the dates set
forth on Annex VII hereto, please review the
provisions of paragraph (b) of Section 6 of the
Agreement.
The Participant understands and agrees that
Beneficial Owners may submit requests for
redemption on each day that the New York Stock
Exchange is open for trading.
1. Call to Receive a Redemption Number and to Notify Delivery of CB
Shares. (a) An Authorized Person of the Participant must call the Transfer
Agent at (___)- - prior to delivering the aggregated CB Shares(TM)
constituting a Creation Unit in order to notify the Transfer Agent of the
intention to redeem. The Transfer Agent will arrange for the Authorized
Person to obtain the Redemption Request Number as described in (b) below.
Participants planning to deliver CB Shares(TM) for redemption on such day
should ascertain the deadlines applicable to DTC by contacting the
operations department of the broker or depository institution effectuating
such transfer of securities. These deadlines will vary and are likely to
be significantly earlier than the closing time of the regular trading
session of the New York Stock Exchange (the "NYSE Closing Time")
(ordinarily 4:00 p.m. New York time). In no event may CB Shares be
delivered subsequent to the NYSE Closing Time to be effective for
redemption that day. Participants should note that transfers of CB Shares
through DTC cannot be made on Columbus Day, Veterans Day and Martin Luther
King Day and plan accordingly, as described in the Fund prospectus and
SAI. The Fund will accept Redemption Requests otherwise in proper form on
these dates provided that the requisite CB Shares are delivered to State
Street Bank's account by : a.m. on the next DTC business day. If the
CB Shares in
<PAGE> II-11
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
Creation unit size aggregations are not received by such time, the
Redemption Request will be cancelled.
(b) An Authorized Person of the Participant must call the Transfer
Agent (___)-___-____ not later than 15 minutes prior to the NYSE Closing
Time to receive a Redemption Request Number. Upon verification of the
authenticity of the caller (as determined by the use of the appropriate PIN
Number), the Authorized Person will be issued a unique Redemption Request
Number.
All orders with respect to the redemption of Creation Unit
aggregations of CB Shares(TM) are required to be on the form of redemption
request approved by the Fund (see Annex V hereto) and accompanied by the
designated Redemption Request Number. Incoming telephone calls are queued
and will be handled in the sequence received. Calls placed before the NYSE
Closing Time will be processed even if the call is taken after this on-off
time. ACCORDINGLY, DO NOT HANG UP AND REDIAL. INCOMING CALLS THAT ARE
ATTEMPTED LATER THAN THE NYSE CLOSING TIME WILL NOT BE ACCEPTED.
NOTE THAT ISSUANCE OF THE REDEMPTION REQUEST NUMBER INITIATES THE
REDEMPTION REQUEST PROCESS BUT DOES NOT ALONE CONSTITUTE THE REDEMPTION
REQUEST. A REDEMPTION REQUEST (THE "REDEMPTION REQUEST") IS ONLY COMPLETED
AND PROCESSED UPON RECEIPT OF WRITTEN INSTRUCTIONS CONTAINING THE
DESIGNATED REDEMPTION REQUEST NUMBER AND PIN NUMBER AND TRANSMITTED BY
FACSIMILE TO THE TRANSFER AGENT AT (___) ___-____ OR BY ELECTRONIC
INTERFACE, WITH A COPY BY FACSIMILE TO (___) ___-____.
2. Place the Request. A Redemption Request Number is only valid for a
limited time. The Redemption Request for Creation Unit size aggregations
of CB Shares(TM) must be sent to the Transfer Agent by facsimile at (___)
___-____ or by Electronic Interface, with a copy by facsimile to (___) ___-
____, within 15 minutes of the issuance of the Redemption Request Number.
In the event that the Redemption Request is not received within such time
period, State Street Bank or its representative will attempt to contact the
Participant to request immediate transmission of the Redemption Request.
Unless the Redemption Request is received upon the earlier of (i) within 15
minutes of contact with the Participant or
<PAGE> II-12
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
(ii) the NYSE Closing Time, the order will be deemed invalid.
3. Ambiguous Instructions. In the event that a Redemption Request
contains terms that differ from the information provided in the telephone
call at the time of issuance of the Order Number, State Street Bank or its
representative will attempt to contact the Participant to request
confirmation of the terms of the request. If an Authorized Person confirms
the terms as they appear in the Redemption Request, the order will be
processed. If an Authorized Person contradicts its terms, the Request will
be deemed invalid and a corrected Redemption Request must be received not
later than the earlier of (i) within 15 minutes of such contact with the
Participant or (ii) the NYSE Closing Time. If State Street Bank or its
representative is not able to contact an Authorized Person, the Redemption
Request shall be processed in accordance with its terms notwithstanding any
inconsistency with the terms of the telephone information. In the event
that a Redemption Request contains terms that are illegible, the Request
will be deemed invalid and State Street Bank or its representative will
attempt to contact the Participant to request retransmission of the
Request. A corrected Request must be received not later than the earlier
of (i) within 15 minutes of such contact with the Participant or (ii) the
NYSE Closing Time.
4. Await Receipt of Confirmation.
(a) In the Case of Redemptions through the CB Shares Clearing
Process. The Participant shall be required to transfer or arrange for the
transfer of the requisite CB Shares of the US Index Series to State Street
Bank by means of the CB Shares Clearing Process so as to be received no
later than on the Regular Way settlement date following the business day on
which such Redemption Request is received in proper form. After the
receipt of a Redemption Request for CB Shares of the US Index Series, State
Street Bank shall initiate procedures to transfer the requisite Fund Basket
securities and the cash redemption payment, if any, through the CB Shares
Clearing Process so as to be received by the Participant no later than on
the Regular Way settlement date
<PAGE> II-13
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
following the business day on which the Redemption Request is duly received
in proper form by the Fund.
State Street Bank shall issue to the Participant an acknowledgment of
a Redemption Request within one (1) hour of its receipt of a Redemption
Request in proper form. If a Participant does not receive a timely
acknowledgment, it should contact State Street Bank or its representative
directly at the telephone number(s) indicated.
(b) In All Other Cases. In the case of all Redemption Requests
other than through the CB Shares Clearing Process, the Participant must
deliver on the same date the Redemption Request is made the Creation Unit
size aggregation of CB Shares(TM) of the relevant Series to the Transfer
Agent on behalf of the Fund through DTC, except in the case of three DTC
non-settlement days when delivery may be made by : a.m. on the next DTC
business day, as indicated above. Upon completion of the process and
receipt of the duly completed Redemption Request and of the CB Shares(TM)
by the Transfer Agent, the Transfer Agent will deliver or cause to be
delivered to the Participant an acknowledgment of acceptance. The Fund
shall make delivery of the Fund Basket and cash redemption proceeds (less
the amount of the applicable cash redemption transaction fee) in accordance
with the time required by applicable rules or an appropriate order of the
Securities and Exchange Commission.
In the case of each Series other than the US Index Series, the Fund
Basket or appropriate securities included therein constituting in-kind
redemption proceeds will be delivered to the appropriate foreign account
which must be indicated on the Redemption Request form. An appropriate
account must be established by the Participant or the customer on whose
behalf the Participant is acting in the foreign jurisdiction to which the
in-kind redemption proceeds are to be delivered in advance of the request
for redemption. The Redemption Request must include all necessary
information about the counterparty to permit the Fund's subcustodian to
arrange for prompt delivery of proceeds securities. Instructions to accept
the Fund Basket securities as redemption proceeds must be given by the
Participant in writing to the counterparty on the date the redemption
request is made by facsimile, telex or other means of communication to
ensure that such instructions are received by the counterparty no later
than the day following
<PAGE> II-14
ANNEX II
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
the date of redemption. The cash proceeds will be delivered to or for the
account of the Participant in accordance with the instructions on the
Redemption Request form.
<PAGE> III-1
ANNEX III
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
{#Pres12}
INTENTION NUMBER
(assigned by Distributor): ______
FORM OF NOTICE OF INTENTION
CONTACT INFORMATION FOR ORDER EXECUTION:
Telephone Order Number: (800) 482-3940 Business Number: (303) 623-2577
Facsimile Number: (303) 623-7580
ALL ITEMS IN PART I MUST BE COMPLETED BY PARTICIPANT.
I. TO BE COMPLETED BY PARTICIPANT.
Date: Time:
Participant Name: Soliciting Dealer (if any):
Telephone Number: PIN (issued by the Distributor):
Fax Number:
Telex Number: DTC Participant Number:
NUMBER AND SERIES OF CREATION UNITS1 INTENDED TO BE PURCHASED:
(This Notice of Intention may be used for intended purchases of Creation
Units of only one Series of the Fund. Use additional forms for intended
purchases of Creation Units of other Series.)
____________ Creation Unit(s) of the ______________ Index Series
DELIVERY OF FUND BASKET:
Upon acknowledgment of this Notice of Intention by the Distributor,
the undersigned Participant will arrange for the delivery to
_______________________ (the designated (sub)Custodian for the __________
Series) of the designated Fund Basket(s) of securities for a purchase of
shares of such Series on the intended Issue Date. Transfer of the Fund
Basket securities will be made from the following custodial account:
1 One Creation Unit of the Australia Index Series, the
France Index Series, the Germany Index Series, the
Hong Kong Index Series, the Italy Index Series, the
South Africa Index Series and the UK Index Series
consists of 100,000 shares. One Creation Unit of
the Japan Index Series consists of 250,000 shares.
No Form of Notice of Intention is used in connection
with the US Index Series.
<PAGE> III-2
_________________________________________
[Originating Bank or other Custodian]
_________________________________________
[Account Name]
_________________________________________
[Reference #]
<PAGE> III-3
The Participant represents and warrants to the Distributor and the Fund
that it does not and will not, after the consummation of the purchase
contemplated by this notice, hold for the account of any single beneficial
owner of Fund shares of the Series to which this Notice of Intention
relates eighty percent (80%) or more of the outstanding shares of such
Series.
Signature of Authorized Person:
Name:
Title:
II. TO BE COMPLETED BY DISTRIBUTOR.
[ ] Reviewed by the Distributor to determine whether the
Participant will hold for the account of any beneficial owner
of Fund shares of the Series to which this Notice relates,
after the consummation of the purchase contemplated by this
Notice, eighty percent (80%) or more of the outstanding shares
of such Series.
The above intention is:
[ ] Acknowledged by the Distributor.
THE INTENDED ISSUE DATE FOR THE ABOVE INTENTION IS
______________, _______.
[ ] Rejected - Reason:
__________ ___________ ________________________________
Date Time Authorized Signature
Acknowledgement of the above intention by the Distributor does not
constitute acceptance of a purchase order. In order for Fund shares to be
issued on the relevant Issue Date indicated above, (1) a properly completed
purchase order (in the form available from the Distributor) must be
received by the Distributor from the Participant by 4:00 p.m. (New York
time) on the Issue Date, (2) delivery of the applicable Fund Basket of
securities announced for the Series to the account of the Fund's Custodian
or the appropriate subcustodian in the relevant country must be confirmed
on the Issue Date (provided that delivery of the Fund Basket for each of
the France Index Series and the South Africa Index Series must be made on
the day prior to the Issue Date) and (3) arrangements satisfactory to the
Fund for the payment to the Custodian of the Cash Component and the
applicable Cash Component transaction fee for the intended purchase on such
Issue Date (based on the net asset value determined at 4:00 p.m. on the
Issue Date) must have been made. See the Fund's Prospectus and Statement
of Additional Information.
<PAGE> III-4
THE FUND AND THE DISTRIBUTOR ON BEHALF OF THE FUND RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER.
<PAGE> IV-1
ANNEX IV
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
Purchase Order
Number __________
FORM OF PURCHASE ORDER
CONTACT INFORMATION FOR ORDER EXECUTION:
Telephone Order Number: (800) 482-3940 Business Number: (303) 623-2577
Facsimile Number: (303) 623-7580
ALL ITEMS IN PART I MUST BE COMPLETED BY PARTICIPANT. THE DISTRIBUTOR, IN
ITS DISCRETION, MAY REJECT ANY ORDER NOT SUBMITTED IN PROPER FORM. SEE THE
FUND'S PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION.
I. TO BE COMPLETED BY PARTICIPANT.
Date: Time:
Participant Name:
Telephone Number: PIN (issued by the Distributor):
Fax Number: DTC Participant Number:
Telex Number:
Date of Notice
of Intention: Soliciting Dealer
Intention Number: Placing Order (if any):
NUMBER AND SERIES OF CREATION UNITS2 TO BE PURCHASED:
(This Purchase Order Form may be used for purchases of Creation Units
of only one Series of the Fund.)
___________ Creation Unit(s) of the _____________ Index Series
PURCHASE ORDER NUMBER (assigned by Distributor):
DELIVERY OF CASH COMPONENT:
The undersigned Participant has arranged for delivery to the
Custodian of funds equal, at a minimum, to the Cash Component and,
for each Series other than the US Index Series, the Cash Component
transaction fee with respect to the above Order. The details of the
delivery of the Cash Component and Cash Component transaction fee to
the Custodian are set forth below:
2 One Creation Unit of the Australia Index Series, the
France Index Series, the Germany Index Series, the
Hong Kong Index Series, the Italy Index Series, the
South Africa Index Series and the UK Index Series
consists of 100,000 shares. One Creation Unit of
the Japan Index Series consists of 250,000 shares.
<PAGE> IV-2
Wire Transfer: Other:
____________________________________
______________________________________
[Originating Bank]
____________________________________
______________________________________
[Account]
____________________________________
______________________________________
[Ref. #]
TRANSFER OF GOOD TITLE:
The undersigned Participant understands and agrees that upon
acceptance by the Fund or the Distributor on behalf of the Fund of
this Order and the related Fund Basket(s) of securities, the purchase
of Creation Unit aggregations of Fund shares shall be irrevocable and
that transfer to the Fund of good title to the securities
constituting the Fund Basket shall have been made. The Participant
also represents and warrants to the Distributor and the Fund that it
does not and will not, after the consummation of the purchase
contemplated by this Order, hold for the account of any single
beneficial owner of Fund shares of the Series to which this Order
relates 80 percent or more of the outstanding shares of such Series.
Signature of Authorized Person:
Name:
Title:
II. TO BE COMPLETED BY DISTRIBUTOR
[ ] Reviewed by the Distributor to determine whether the
Participant will hold for the account of any beneficial owner
of Fund shares of the Series to which this Notice relates,
after the consummation of the purchase contemplated by this
Notice, eighty percent (80%) or more of the outstanding shares
of such Series.
[ ] Fund Basket(s) Received by (sub)Custodian.
[ ] Cash Component and Cash Component transaction fee (not
applicable in US Index Series) received by Custodian.
This certifies that the above order has been:
[ ] Accepted by the Fund
<PAGE> IV-3
[ ] Declined - Reason:
___________ ___________ _________________________________
Date Time Authorized Signature
<PAGE> V-1
ANNEX V
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
FORM OF REDEMPTION REQUEST
Redemption Request Number: __________
CONTACT INFORMATION FOR REQUEST EXECUTION:
Telephone Order Number: (800) - Business Number: (617) -
Facsimile Number: (617) -
ALL ITEMS IN PART I MUST BE COMPLETED BY PARTICIPANT. THE TRANSFER AGENT
IN ITS DISCRETION MAY REJECT ANY REQUEST NOT SUBMITTED IN PROPER FORM. SEE
THE FUND'S PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION ("SAI").
I. TO BE COMPLETED BY PARTICIPANT.
Date: Time:
Participant Name:
Telephone Number: PIN (issued by the Distributor):
Fax Number: DTC Participant Number:
Telex Number:
NUMBER AND SERIES OF CREATION UNITS3 TO BE REDEEMED:
(This Redemption Request Form may be used for the redemption of
Creation Units of only one Series of the Fund. Use additional forms
for redemptions of Creation Units of other Series.)
______________ Creation Units of the ________________ Index Series
REDEMPTION REQUEST NUMBER (issued by Transfer Agent): ______________
INSTRUCTION FOR DELIVERY OF FUND BASKET(S):
(for Series other than the US Index Series,
indicate foreign custodial account information)
Deliver ________ Fund Basket(s) to:________ Fund Basket(s) to:
(Number) (Number)
____________________________________ ____________________________
[Custodian] [Custodian]
____________________________________ ____________________________
[Account Name] [Account Name]
____________________________________ ____________________________
[Account No.] [Account No.]
____________________________________ ____________________________
[Other Reference] [Other Reference]
3 One Creation Unit of the Australia Index Series, the
France Index Series, the Germany Index Series, the
Hong Kong Index Series, the Italy Index Series, the
South Africa Index Series and the UK Index Series
consists of 100,000 shares. One Creation Unit of
the Japan Index Series consists of 250,000 shares.
<PAGE> V-2
Additional delivery instructions, if necessary, may be attached on a
separate sheet.
___________________
INSTRUCTIONS FOR DELIVERY OF CASH REDEMPTION PROCEEDS:
Other
____________________________________ ____________________________
[Bank]
____________________________________ ____________________________
[Account Name]
____________________________________ ____________________________
[Account No.]
____________________________________ ____________________________
[Other Reference]
The Participant must deliver, on the redemption date, to the Transfer
Agent ( [account name]; account number ;
reference ) the Creation Unit size
aggregation(s) of Fund shares being redeemed.
The undersigned Participant represents and warrants to the Transfer
Agent and the Fund that it has the right and authority for itself or
on behalf of its customer to redeem the Fund shares contemplated by
this redemption.
Signature of Authorized Person:
Name:
Title:
II. TO BE COMPLETED BY THE PARTICIPANT ON DATES INDICATED ON ANNEX VII
The Participant hereby irrevocably waives compliance with Rule 15c6-1 under
the Securities Exchange Act of 1934 in respect of this Redemption Request
and agrees that the time of delivery of redemption proceeds securities to
the Participant may be extended by the Fund for that number of days set
forth in Annex VII for this redemption (but in any case not to exceed the
number of calendar days permitted by Section 22(e) of the Investment
Company Act of 1940 or the order of the Securities and Exchange Commission
described in the Fund's Prospectus and SAI).
If the Participant is submitting this Redemption Request on behalf of a
broker or dealer, the Participant represents that it has obtained a written
waiver dated the date hereof of such customer for delivery of Fund Basket
securities as provided herein.
The Participant hereby irrevocably agrees that if the Fund so determines,
the Fund may in its sole discretion in order to permit timely delivery of
redemption proceeds pay the entire amount of redemption proceeds in respect
<PAGE> V-3
of this Redemption Request in cash, subject to the cash redemption
transaction fee.
Signature of Authorized Person:
Name:
Title:
III. TO BE COMPLETED BY TRANSFER AGENT
This certifies that the above request has been:
[ ] Accepted by the Fund
[ ] Declined - Reason:
____________ ____________ ________________________________
Date Time Authorized Signature
<PAGE> VI-1
ANNEX VI
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
LIST OF CUSTODIAN/SUBCUSTODIAN ACCOUNTS
Australia: Japan:
Westpac Custodian Nominees Ltd. The Sumitomo Trust & Banking
8th Floor, 50 Pitt Street Co. Ltd.
Sydney, NSW 2000 Overseas Custody Section
Australia 11-5 Nihonbashi - Honcho
4 Chome
Fund Number: XXXX Chuo-Ku, Tokyo 103
BIC: WPACAU2SNOM Japan
Attn: Deputy General Manager
France: Securities Operations Dept.
Banque Paribas
Services de TitrosConservation Fund Number: XXXX
B.P. 141 BIC: STBCIPJTXXX
3 Rue d'Antin
75078 Paris Singapore:
Cedex 02, France Development Bank of Singapore
Investment Banking
Fund Number: XXXX 24 Raffles Place
BIC: PARBFRPPXXX Hex B1-00 Clifford Centre
Singapore 048621
Germany:
BHF-BANK Fund Number: XXXX
Bockenheimer Landstrasse 10 BIC: DBSSSGSGXXX
60323 Frankfurt/Main
South Africa:
Fund Number: XXXX Standard Bank of South Africa
BIC: BHFBDEFF500 Limited
Johannesburg Stock Exchange
Hong Kong: Building
Standard Chartered Bank 46 Marshell Street
Edinburgh Tower, 8th Floor Johannesburg 2001
Securities Department Republic of South Africa
The Landmark, 15 Queens Road
Hong Kong Fund Number: XXXX
Attn: Operations Manager BIC: SBZAZAJJXXX
Custodial Service &
Securities Department United Kingdom:
State Street Bank and Trust Company
Fund Number: XXXX Canary Wharf
BIC: SCBLHKHHXXX 27th Floor - One Canada Square
London E14 5AF
Italy: Attn: UK Custody
Morgan Guaranty Trust Co. of NY
Milan Branch Fund Number: XXXX
Corso Venezia 54 BIC: SSLLGB2XGBL
20121 Milan
Italy
Attn: Securities Trust and
Information Services
<PAGE> VI-2
Fund Number: XXXX
BIC: MGTCITMXXXX Fund or Account Number will be
specific to a Participant.
<PAGE> VII-I
ANNEX VII
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
{*Pres12}
AUSTRALIA
T+3
No. U.S. Bus.
Australia Days To
Redemption Settlement Settlement
Date Date Date Reason
1/23/96 1/29/96 4 Holiday: Australia Day, 1/26/96
1/24/96 1/30/96 4
1/25/96 1/31/96 4
3/6/96 3/12/96 4 Holiday: Labor Day, 3/11/96
3/7/96 3/13/96 4
3/8/96 3/14/96 4
4/2/96 4/9/96 4 Holiday: Good Friday, 4/5/96; Easter
4/3/96 4/10/96 4 Monday, 4/8/96
4/4/96 4/11/96 4
4/22/96 4/26/96 4 Holiday: ANZAC Day, 4/25/96
4/23/96 4/29/96 4
4/24/96 4/30/96 4
6/5/96 6/11/96 4 Holiday: Queen's Birthday, 6/10/96
6/6/96 6/12/96 4
6/7/96 6/13/96 4
7/31/96 8/6/96 4 Holiday: Bank Holiday, 8/5/96
8/1/96 8/7/96 4
8/2/96 8/8/96 4
10/2/96 10/8/96 4 Holiday: Labor Day, 10/7/96
10/3/96 10/9/96 4
10/4/96 10/10/96 4
12/20/96 12/27/96 4 Holiday: Christmas Day, 12/25/96;
12/23/96 12/30/96 4 Boxing Day, 12/26/96
12/24/96 12/31/96 4
<PAGE> 2
FRANCE
T+2
No. U.S. Bus.
France Days To
Redemption Settlement Settlement
Date Date Date Reason
8/13/96 8/19/96 4 Holiday: Assumption Day, 8/15/96;
8/14/96 8/20/96 4 Day after Assumption Day, 8/16/96
<PAGE> 3
GERMANY
T+2
No. U.S. Bus.
Germany Days To
Redemption Settlement Settlement
Date Date Date Reason
12/20/96 12/27/96 4 Holiday: Christmas Eve, 12/24/96;
12/23/96 12/30/96 4 Christmas Day, 12/25/96; Christmas
Holiday, 12/26/96
<PAGE> 4
HONG KONG
T+2
No. U.S. Bus.
Hong Kong Days To
Redemption Settlement Settlement
Date Date Date Reason
2/15/96 2/22/96 4 Holiday: Lunar New Year, 2/19/96;
2/16/96 2/23/96 4 Day after Lunar New Year, 2/20/96;
Day after Lunar New Year, 2/21/96
4/2/96 4/9/96 4 Holiday: Ching Ming Festival, 4/4/96;
4/3/96 4/10/96 4 Good Friday, 4/5/96; Easter Monday,
4/8/96
4/26/96 5/2/96 4 Holiday: Hari Raya Haji, 4/29/96;
Labor Day, 5/1/96
<PAGE> 5
ITALY
T+3
No. U.S. Bus.
Italy Days To
Redemption Settlement Settlement
Date Date Date Reason
4/22/96 4/26/96 4 Holiday: Liberation Day, 4/25/96
4/23/96 4/29/96 4
4/24/96 4/30/96 4
4/26/96 5/2/96 4 Holiday: Labor Day, 5/1/96
4/29/96 5/3/96 4
4/30/96 5/6/96 4
8/12/96 6/16/96 4 Holiday: Assumption Day, 8/15/96
8/13/96 8/19/96 4
8/14/96 8/20/96 4
10/29/96 11/4/96 4 Holiday: All Saints Day, 11/1/96
10/30/96 11/5/96 4
10/31/96 11/6/96 4
12/20/96 12/27/96 4 Holiday: Christmas Day, 12/25/96;
12/23/96 12/30/96 4 Christmas Holiday, 12/26/96
12/24/96 12/31/96 4
<PAGE> 6
JAPAN
T+3
No. U.S. Bus.
Japan Days To
Redemption Settlement Settlement
Date Date Date Reason
1/2/96 1/8/96 4 Holiday: Bank Holiday, 1/3/96
1/10/96 1/16/96 4 Holiday: Coming of Age Day, 1/15/96
1/11/96 1/17/96 4
1/12/96 1/18/96 4
2/7/96 2/13/96 4 Holiday: National Foundation Day,
2/8/96 2/14/96 4 2/12/96
2/9/96 2/15/96 4
3/15/96 3/21/96 4 Holiday: Vernal Equinox, 3/20/96
3/18/96 3/22/96 4
3/19/96 3/25/96 4
4/30/96 5/7/96 5 Holiday: Constitution/Memorial Day,
5/1/96 5/8/96 5 5/3/96; Children's Day, 5/6/96
5/2/96 5/9/96 5
5/3/96 5/9/96 4
9/11/96 9/17/96 4 Holiday: Respect for the Aged Day,
9/12/96 9/18/96 4 9/16/96
9/13/96 9/19/96 4
9/18/96 9/24/96 4 Holiday: Autumnal Equinox, 9/23/96
9/19/96 9/25/96 4
9/20/96 9/26/96 4
10/7/96 10/11/96 4 Holiday: Health Sports Day, 10/10/96
10/8/96 10/14/96 4
10/9/96 10/15/96 4
10/30/96 11/5/96 4 Holiday: Culture Day, 11/4/96
10/31/96 11/6/96 4
11/1/96 11/7/96 4
12/18/96 12/24/96 4 Holiday: Emperor's Birthday, 12/23/96
12/26/96 1/6/97 6 Holiday: Bank Holiday, 12/31/96;
12/27/96 1/7/97 6 Bank Holiday, 1/1/97; Bank Holiday,
12/30/96 1/8/97 6 1/2/97; Bank Holiday, 1/3/97
12/31/96 1/8/97 5
<PAGE> 7
SOUTH AFRICA
T+3
South No. U.S. Bus.
Africa Days To
Redemption Settlement Settlement
Date Date Date Reason
3/18/96 3/22/96 4 Holiday: Human Rights Day, 3/21/96
3/19/96 3/25/96 4
3/20/96 3/26/96 4
4/2/96 4/9/96 4 Holiday: Good Friday, 4/5/96; Family
4/3/96 4/10/96 4 Day, 4/8/96
4/4/96 4/11/96 4
4/26/96 5/2/96 4 Holiday: Worker's Day, 5/1/96
4/29/96 5/3/96 4
4/30/96 5/6/96 4
6/12/96 6/18/96 4 Holiday: Youth Day, 6/17/96
6/13/96 6/19/96 4
6/14/96 6/20/96 4
8/6/96 8/12/96 4 Holiday: Women's Day, 8/9/96
8/7/96 8/13/96 4
8/8/96 8/14/96 4
9/19/96 9/25/96 4 Holiday: Heritage Day, 9/24/96
9/20/96 9/26/96 4
9/23/96 9/27/96 4
12/11/96 12/17/96 4 Holiday: Day of Reconciliation,
12/12/96 12/18/96 4 12/16/96
12/13/96 12/19/96 4
12/20/96 12/27/96 4 Holiday: Christmas Day, 12/25/96;
12/23/96 12/30/96 4 Day of Goodwill, 12/26/96
12/24/96 12/31/96 4
<PAGE> 1
Draft - 1/31/96
ALPS Mutual Funds Services, Inc.
370 17th Street, Suite 2700
Denver, Colorado 80202
PARTICIPATING FINANCIAL INSTITUTIONS
INVESTOR SERVICES AGREEMENT
____________________
____________________
____________________
Ladies and Gentlemen:
As distributor and principal underwriter of The CountryBaskets(SM)
Index Fund, Inc. (the "Fund"), we wish to enter into this Participating
Financial Institutions Investor Services Agreement ("this Agreement") with
you, acting as a "Participating Financial Institution" hereunder,
concerning (i) your provision of certain broker-dealer and shareholder
support services to your clients ("Clients") who may from time to time
beneficially own issued and outstanding shares of common stock (the "CB
Shares(SM)" or "CountryBaskets(SM)") of the series (each a "Series") of the Fund
indicated on Appendix A hereto and (ii) your research and other activities
related to secondary market trading in CB Shares(SM). Pursuant to a Marketing
Agreement between us and the Fund (the "Marketing Agreement"), we will
provide various marketing and shareholder services with respect to the CB
Shares(SM). Capitalized terms, unless otherwise defined herein, shall have
the meanings attributed to them in the Fund's current prospectus and
statement of additional information.
The terms and conditions of this Agreement are as follows:
Section 1. Services of a Participating Financial Institution.
The services you agree to provide with respect to the Series shall include:
(a) in connection with outstanding and issued CB Shares(SM), such
broker/dealer and shareholder support services to Clients as you
customarily provide to Clients with respect to shares of open-end
investment companies, exchange-listed stocks and/or American Depositary
Receipts, including but not limited to one or more of the following:
(i) distributing prospectuses and shareholder reports to current
shareholders; (ii) maintaining account records and processing dividend and
distribution payments for Clients; (iii) issuing confirmations of
transactions; (iv) periodically providing account information with respect
to CB Shares(SM) beneficially owned by Clients, including their positions in
CB Shares(SM); (v) at your discretion, providing and maintaining elective
services such as check writing on the
<PAGE> 2
Client's account and wire transfer services; (vi) acting as
nominee for Clients; (vii) if required by law, forwarding shareholder
communications from us or on behalf of the Fund (such as proxies,
shareholder reports, annual and semi-annual financial statements and
dividend, distribution and tax notices); (viii) assisting Fund shareholders
who wish to aggregate sufficient CB Shares(SM) of a Series to constitute a
Creation Unit aggregation for redemption; and (ix) such other services
analogous to the foregoing as we or the Fund may reasonably request and
which you customarily provide to Clients with respect to holdings of shares
of open-end investment companies or exchange-listed stocks, to the extent
you are permitted to do so under applicable statutes, rules and
regulations. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by
you) as may be reasonably necessary or beneficial in order to provide the
services to Clients described in this paragraph.
(b) research and services related to the secondary market
trading of CB Shares(SM), including the following: (i) generating and
publishing periodic product research, such as product applications,
statistics, efficiency comparisons and other similar data; (ii) developing
trading strategies for CB Shares(SM) for institutional investors and others;
and (iii) following developments in trading of CB Shares(SM).
(c) Market Making In Fund Baskets or CB Shares(SM). At all
times during the regular trading session of the New York Stock Exchange,
Inc. (the "NYSE"), unless otherwise prohibited by applicable law, rules or
regulations, you will furnish bona fide, competitive bid and offer
quotations to brokers and dealers and Clients, on request, for (i)
portfolios of securities ("Partial Fund Baskets") each constituting a one-
fifth, pro rata portion (subject to rounding the number of shares of any
portfolio security to the nearest one share) of the Fund Basket announced
prior to the opening of each such NYSE session, in quantities of one
through four such Partial Fund Baskets and one complete Fund Basket or (ii)
quantities of CB Shares(SM) equal to one-fifth, two-fifths, three-fifths and
four-fifths of a Creation Unit aggregation of CB Shares(SM) and one full
Creation Unit, in either case (i) or (ii), with respect to no fewer than
_____ Series selected by you and identified to us and the Adviser (the
"Designated Series"). You agree to be ready and willing on a continuous
basis to effect transactions in the above-described Partial Fund Baskets
and Fund Basket or CB Shares(SM) for your own account at such bid and offered
prices.
(d) Inventory of CB Shares(SM). At any time that the number of
CB Shares(SM) of a Designated Series issued and outstanding is less than
2,000,000, you agree to maintain an average daily inventory, calculated on
a monthly basis, of a quantity of CB Shares(SM) of such Designated Series
equal to three Creation Unit aggregations, provided that no such inventory
shall be required to be maintained with respect to the ______ Index Series
during the months of _____________, inclusive.
<PAGE> 3
Such inventory will be used, at your discretion, for the
purpose of dealing, trading, arbitrage or lending in CB Shares(SM) or any
other purpose permissible under applicable laws and regulations.
Section 2. Support for your Services.
(a) Promotion and Advertising. A list of all Participating
Financial Institutions will be distributed or caused to be distributed by
us (i) along with sales, advertising or marketing material relating to CB
Shares(SM) intended for potential institutional investors and developed by or
made available to us pursuant to the Marketing Agreement for distribution
to institutional investors and (ii) as part of all product seminars,
conference and other presentations relating to CB Shares(SM) which we or the
Adviser shall sponsor or in which we or any registered investor relations
representatives appointed by us in accordance with the Marketing Agreement
shall participate. We agree that we will, upon inquiry, direct secondary
market trades of institutional investors in CB Shares(SM) to Participating
Financial Institutions and will not make any unsolicited recommendation of
any particular Participating Financial Institution. To the extent permitted
under applicable laws and regulations, reference will be made to you in any
advertising, including "tombstone" notices, directed to the institutional
market.
(b) Communications with Specialists. We shall include in our
oral and written communications relating to CB Shares(SM) with any NYSE
specialist making a market in CB Shares(SM), as appropriate and to the extent
permissible under the rules of the NYSE and other applicable laws, rules
and regulations, statements (i) identifying you and the other Participating
Financial Institutions as active participants in the support and promotion
of secondary market trading of CB Shares(SM) and (ii) highlighting the special
capacity of you and other Participating Financial Institutions to meet
market demand on the part of institutional and professional investors for
purchases and sales of CB Shares(SM).
(c) CB Shares(SM) Conference. A representative of your
organization designated by you will be invited to, and will participate in,
an annual two-day conference to be organized pursuant to the marketing plan
to be developed in accordance with the Marketing Agreement and in
conjunction with the Adviser at which CB Shares(SM) product and market trends
will be considered. The conference agenda is expected to be presented by
CB Shares(SM) product specialists, academics, international economists and
others. You will bear any expenses (including transportation, compensation
and any other out-of-pocket expenses) in connection with the attendance of
your representative at such conference.
<PAGE> 4
(d) Data Support. The official net asset value, net
accumulated dividends and price-only net asset value for each
CountryBaskets(SM) Series will be made available daily on the Consolidated
Tape. In addition, indicative FT/S&P Actuaries World Indices(TM) index
values, as well as indicative net asset values, with respect to each
Series, will be made available on a real time basis at 30-second intervals
on the Consolidated Tape. Real-time or daily updated news and information
with respect to CB Shares(SM) (including, subject to the establishment of
satisfactory arrangements with third party vendors, spot foreign exchange
rates and major market index prices related to the country markets relevant
to the Series) will be made available by the Adviser through one or more
third-party vendors of on-line market information, including Automated Data
Processing, Reuters, Dow Jones Telerate and/or Bloomberg, which vendors
will distribute such news and information in the form of a separate
CountryBaskets(SM) "page". You will also be provided with access to
additional market information, including without limitation, 5-year
historical data (prior to _______, 1995) on the relevant FT/S&P Actuaries
World Indices(TM) country indices, on diskette (or other suitable format)
and in printed form; key analytic data (spreads, correlations, historic
performance, optimization routines); and, as and when deemed necessary by
the Adviser to support trading, arbitrage and brokerage in CB Shares(SM),
specific dealer research (such as hedging strategies, options strategies
and security-specific correlations), in each case as made available to us
or the Fund by the Adviser or another third party (who shall consent to
such data being provided to you), for redistribution to your Clients under
your name.
(e) CB Shares(SM) Loan Pool. In conjunction with the Adviser, we
will make arrangements with a major securities dealer to make available for
lending exclusively to Participating Financial Institutions and the NYSE
specialist firms entering into similar investor services agreements with us
("Specialist PFIs") a quantity of CB Shares(SM) equal in aggregate market
value to not less than $100,000,000, divided among all Series, and
available to Participating Financial Institutions and Specialist PFIs on a
"first-come, first-served" basis. Such arrangements will remain in effect
for a period of not less than six months after the initial issuance and
sale of CB Shares(SM) and will be for the sole purpose of settling secondary
market transactions entered into by Participating Financial Institutions.
Such arrangements are expected to include (i) pre-approved aggregate
borrowing limits for each Participating Financial Institution or Specialist
PFI; and (ii) lending fees equivalent to _____ basis points below a CB
Share(SM) lending Call Rate. The "Call Rate" on any [London] Business Day
with respect to all Series will be the arithmetic mean, determined daily by
the Adviser, of the lending fee rates offered by three major custodians or
broker dealers selected by the Adviser from among State Street Bank and
Trust Company, The Bank of New York, The Chase Manhattan Bank, N.A.,
Merrill Lynch & Co., Goldman, Sachs & Co., Nomura International PLC and
Paloma Securities, L.P. for loans of not less than ________ [amount] CB
Shares(SM) in a single transaction. You understand also that the
availability of such
<PAGE> 5
arrangements to you will be subject to your execution of a securities
borrowing agreement substantially in the form customarily required by
Deutsche Morgan Grenfell/ C. J. Lawrence Inc., the authorized securities
lending agent for the lender(s).
(f) Exclusivity. We shall not have agreements in the form
hereof with any persons other than twelve (12) Participating Financial
Institutions and the Specialist PFIs at any one time.
Section 3. No Representations. You and your officers,
employees or agents shall not make any representations as authorized by us,
the Fund or the Adviser except those contained in the Fund's then current
prospectus and statement of additional information or in such sales,
marketing or advertising materials as may be authorized by us and the Fund
in writing, including the materials referred to in Section 2(a) hereof.
You understand that neither the Fund nor any Series will be advertised or
marketed as an open-end investment company, i.e., as a mutual fund, which
offers redeemable securities. Any advertising materials, including the
Fund prospectus, will prominently disclose that the CB Shares(SM) are not
redeemable units of beneficial interest in the Fund. In addition, any
advertising material, including the Fund prospectus, will disclose that the
owners of CB Shares(SM) may acquire and tender those shares for redemption to
the Fund in Creation Unit aggregations only. You understand further that
any advertising or marketing materials relating to the Fund will contain
such disclosures and caveats as the Fund or we may deem to be required
under any applicable statute or rule, regulation or order of any
governmental authority or self-regulatory organization or under the
policies of the Fund.
Section 4. Independent Contractor. For all purposes of this
Agreement, you will be deemed to be an independent contractor, and will
have no authority to act as agent for us in any matter or in any respect.
You and your employees will, upon request, be available during normal
business hours to consult with us or our designees concerning the
performance of your responsibilities under this Agreement.
Section 5. Termination; Amendment. This Agreement will become
effective between us on the date a fully executed copy of this Agreement is
received by us or our designee. This Agreement is terminable, without
penalty, (a) at any time by the Fund with respect to any Series of CB
Shares(SM) or (b) by you, in either case upon 90 days' notice in writing to
the other party hereto. This Agreement may be amended by execution of an
instrument in writing by each of the parties hereto.
<PAGE> 6
Section 6. Miscellaneous.
(a) All notices and other communications to either you or us
will be duly given if mailed, telegraphed or transmitted by facsimile or
similar telecommunications device at the address shown below.
(b) This Agreement shall be construed in accordance with the
laws of the State of New York.
If you agree to be bound by the provisions for this Agreement,
please sign a copy of this letter where indicated below and promptly return
it to us, c/o ALPS Mutual Funds Services Inc., 370 17th Street, Suite 2700,
Denver, Colorado 80202.
Very truly yours,
ALPS MUTUAL FUNDS SERVICES, INC.
Date: , 1996
By:______________________________
Authorized Officer
<PAGE> 7
Accepted and Agreed to:
_________________________________
[Name of Participating Financial Institution]
Date: , 1996
By: _____________________________
Authorized Officer
Address: _______________________
_______________________
_______________________
Facsimile No.____________________
<PAGE> 8
Appendix A
Participating Financial Institutions
Investor Services Agreement
CB Shares(SM)
NYSE CUSIP
Series Symbol No.
Australia Index Series GXA 22236E10 9
France Index Series GXF 22236E20 8
Germany Index Series GXG 22236E30 7
Hong Kong Index Series GXH 22236E40 6
Italy Index Series GXI 22236E50 5
Japan Index Series GXJ 22236E60 4
South Africa Index GXR 22236E70 3
Series
UK Index Series GXK 22236E80 2
US Index Series GXU 22236E88 5
<PAGE> 1
Draft - 2/6/96
ALPS Mutual Funds Services, Inc.
370 17th Street, Suite 2700
Denver, Colorado 80202
SPECIALIST INSTITUTIONS SERVICES AGREEMENT
____________________
____________________
____________________
Ladies and Gentlemen:
As distributor and principal underwriter of The
CountryBaskets(SM) Index Fund, Inc. (the "Fund"), we wish to enter into
this Specialist Institutions Services Agreement (this "Agreement") with
you, acting as a "Specialist Institution" hereunder, concerning your
Creation Unit purchases supporting the commencement of, and continued
liquidity in, the secondary market for, issued and outstanding shares of
common stock (the "CB Shares(SM)" or "CountryBaskets(SM)") of the series
(each a "Series") of the Fund in which you are registered as the NYSE
specialist, as indicated on Annex A hereto. Pursuant to a Marketing
Agreement between us and the Fund (the "Marketing Agreement"), we will
provide various marketing and other services with respect to the CB
Shares(SM) that will support and complement your secondary market trading
activities, as described herein. Capitalized terms, unless otherwise
defined herein, shall have the meanings attributed to them in the Fund's
current prospectus and statement of additional information.
In consideration of your covenants and agreements contained in
Section 1 and our covenants and agreements contained in Section 2, the
parties hereto agree as follows:
Section 1. Obligations of a Specialist Institution. In
connection with the offering by the Fund of CB Shares(SM) in Creation Unit
aggregations, you agree that you will enter into a purchase agreement with
the Fund, substantially in the form attached hereto as Annex B (a "Purchase
Agreement"), pursuant to which you agree to purchase (acting through an
Authorized Participant, if required to comply with procedures established
by the Fund) prior to the commencement of trading of CB Shares(SM) on the
NYSE the lesser of (i) three Creation Unit aggregations of CB Shares(SM) of
each Series and (ii) the maximum number of such Creation Units that the
rules of the NYSE would then permit you (taking into account any exemptions
then available to you), as appropriate to facilitate the maintenance of a
fair and orderly market, to purchase based on the aggregate number of CB
Shares(SM)
<PAGE> 2
outstanding after giving effect to all purchases of Creation Units to be
sold by the Fund pursuant to Purchase Agreements on the same date.
Section 2. Support for your Activities.
(a) Promotion and Advertising. The marketing and promotional
activities undertaken by us, and the sales, advertising or marketing
material relating to CB Shares(SM) developed by or made available to us,
pursuant to the Marketing Agreement for distribution to potential investors
and participants in the CountryBaskets(SM) secondary markets will be
designed or developed with a view to increasing the demand for CB
Shares(SM) on the secondary market.
(b) PFIs. We have entered into investor services agreements
with certain participating financial institutions (the "PFIs") to provide
certain services that will support your activities under Section 1(b),
including making markets in CB Shares(SM) or Fund Basket securities. The
availability of these services is a supplement to your usual and customary
mechanisms for satisfying market demand for CB Shares(SM). We agree, upon
inquiry, to facilitate communications between you and PFIs that may offer
special services to you, including access to foreign equity markets,
foreign listed derivatives markets, foreign exchange and over-the-counter
derivatives and clearance and settlement facilities for foreign securities.
(c) CB Shares(SM) Conference. A representative of your
organization designated by you will be invited to, and will participate in,
an annual two-day conference to be organized pursuant to the marketing plan
to be developed in accordance with the Marketing Agreement and in
conjunction with the Adviser at which CB Shares(SM) product and market
trends will be considered. The conference agenda is expected to be
presented by CB Shares(SM) product specialists, academics, international
economists and others. You will bear any expenses (including
transportation, compensation and any other out-of-pocket expenses) in
connection with the attendance of your representative at such conference.
(d) Data Support. The official net asset value, indicative net
accumulated dividends and indicative price-only net asset value for each
CountryBaskets(SM) Series will be made available daily on the Consolidated
Tape. In addition, indicative FT/S&P Actuaries World Indices(TM) index
values, as well as indicative net asset values, with respect to each
Series, will be made available on a real time basis at 30-second intervals
on the Consolidated Tape. Real-time or daily updated news and information
with respect to CB Shares(SM) (including, subject to the establishment of
satisfactory arrangements with third party vendors, spot foreign exchange
rates and major market index prices related to the country markets relevant
to the Series) will be made available by the Adviser through one or more
third-party vendors of on-line market information, including Automated Data
Processing,
<PAGE> 3
Reuters, Dow Jones Telerate and/or Bloomberg, which vendors will distribute
such news and information in the form of a separate CountryBaskets(SM)
"page". You will also be provided with access to additional market
information, including without limitation, 5-year historical data (prior to
_______, 1995) on the relevant FT/S&P Actuaries World Indices(TM) country
indices, on diskette (or other suitable format) and in printed form; key
analytic data (spreads, correlations, historic performance, optimization
routines); and, as and when deemed necessary by the Adviser to support
trading, arbitrage and brokerage in CB Shares(SM), specific dealer research
(such as hedging strategies, options strategies and security-specific
correlations), in each case as made available to us or the Fund by the
Adviser or another third party (who shall consent to such data being
provided to you).
(e) CB Shares(SM) Loan Pool. In conjunction with the Adviser,
we will make arrangements with a major securities dealer to make available
for lending exclusively to Specialist Institutions which have executed an
agreement in this form (the "Specialist Institutions") and the PFIs a
quantity of CB Shares(SM) equal in aggregate market value to not less than
$100,000,000, divided among all Series, and available to Specialist
Institutions and PFIs on a "first-come, first-served" basis. Such
arrangements will remain in effect for a period of not less than six months
after the initial issuance and sale of CB Shares(SM) and will be for the
sole purpose of settling secondary market transactions entered into by
Specialist Institutions and PFIs. Such arrangements are expected to
include (i) pre-approved aggregate borrowing limits for each Specialist
Institution or PFI; and (ii) lending fees equivalent to _____ basis points
below a CB Share(SM) lending Call Rate. The "Call Rate" on any [London]
Business Day with respect to all Series will be the arithmetic mean,
determined daily by the Adviser, of the lending fee rates offered by three
major custodians or broker dealers selected by the Adviser from among State
Street Bank and Trust Company, The Bank of New York, The Chase Manhattan
Bank, N.A., Merrill Lynch & Co., Goldman, Sachs & Co., Nomura International
PLC and Paloma Securities, L.P. for loans of not less than ________
[amount] CB Shares(SM) in a single transaction. You understand also that
the availability of such arrangements to you will be subject to your
execution of a securities borrowing agreement substantially in the form
customarily required by Deutsche Morgan Grenfell/C. J. Lawrence Inc., the
authorized securities lending agent for the lender(s).
(f) Exclusivity. We shall not have agreements in the form
hereof with any persons other than twelve (12) PFIs and the other
Specialist Institutions.
Section 3. No Representations. You and your officers,
employees or agents shall not make any representations as authorized by us,
the Fund or the Adviser except those contained in the Fund's then current
prospectus and statement of additional information or in such sales,
marketing or advertising materials as may be
<PAGE> 4
authorized by us and the Fund in writing, including the materials referred
to in Section 2(a) hereof. You understand that neither the Fund nor any
Series will be advertised or marketed as an open-end investment company,
i.e., as a mutual fund, which offers redeemable securities. Any
advertising materials, including the Fund prospectus, will prominently
disclose that the CB Shares(SM) are not redeemable units of beneficial
interest in the Fund. In addition, any advertising material, including the
Fund prospectus, will disclose that the owners of CB Shares(SM) may acquire
and tender those shares for redemption to the Fund in Creation Unit
aggregations only. You understand further that any advertising or
marketing materials relating to the Fund will contain such disclosures and
caveats as the Fund or we may deem to be required under any applicable
statute or rule, regulation or order of any governmental authority or self-
regulatory organization or under the policies of the Fund.
Section 4. Independent Contractor. For all purposes of this
Agreement, you will be deemed to be an independent contractor, and will
have no authority to act as agent for us in any matter or in any respect.
You and your employees will, upon request, be available during normal
business hours to consult with us or our designees concerning the
performance of your responsibilities under this Agreement.
Section 5. Termination; Amendment. This Agreement will become
effective between us on the date a fully executed copy of this Agreement is
received by us or our designee. This Agreement is terminable, without
penalty, (a) at any time by the Fund with respect to any Series of CB
Shares(SM) or (b) by you, in either case upon 90 days' notice in writing to
the other party hereto. This Agreement may be amended by execution of an
instrument in writing by each of the parties hereto.
Section 6. Miscellaneous.
(a) All notices and other communications to either you or us
will be duly given if mailed, telegraphed or transmitted by facsimile or
similar telecommunications device at the address shown below.
(b) This Agreement shall be construed in accordance with the
laws of the State of New York.
<PAGE> 5
If you agree to be bound by the provisions for this Agreement,
please sign a copy of this letter where indicated below and promptly return
it to us, c/o ALPS Mutual Funds Services Inc., 370 17th Street, Suite 2700,
Denver, Colorado 80202.
Very truly yours,
ALPS MUTUAL FUNDS SERVICES, INC.
Date: , 1996
By:______________________________
Authorized Officer
Accepted and Agreed to:
_________________________________
[Name of Specialist Institution]
Date: , 1996
By: _____________________________
Authorized Officer
Address: _______________________
_______________________
_______________________
Facsimile No.____________________
<PAGE> 6
Annex A
Specialist Institutions
Specialist Institutions Services Agreement
[DELETE SERIES AS NECESSARY.]
CB Shares(SM)
NYSE CUSIP
Series Symbol No.
Australia Index Series GXA 22236E10 9
France Index Series GXF 22236E20 8
Germany Index Series GXG 22236E30 7
Hong Kong Index Series GXH 22236E40 6
Italy Index Series GXI 22236E50 5
Japan Index Series GXJ 22236E60 4
South Africa Index GXR 22236E70 3
Series
UK Index Series GXK 22236E80 2
US Index Series GXU 22236E88 5
<PAGE> 1
Draft: 1/29/96
CUSTODIAN CONTRACT
Between
THE COUNTRYBASKETSSM INDEX FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
GlobalSeriesCorp
21N
<PAGE> 2
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It . . . . . . 1
2. Duties of the Custodian with Respect to Property of the Fund
Held By the Custodian in the United States . . . . . . . . . . . 2
2.1 Holding Securities and Other Assets . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . . . . . . 5
2.4 Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Foreign Exchange Transactions and Futures . . . . . . . . . . . . 5
2.6 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Call or Time Deposits . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Availability of Federal Funds . . . . . . . . . . . . . . . . . . 7
2.9 Collection of Income . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Payment of Fund Monies . . . . . . . . . . . . . . . . . . . . . 8
2.11 Liability for Payment in Advance of Receipt of Securities
Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.12 Appointment of Agents . . . . . . . . . . . . . . . . . . . . . . 9
2.13 Deposit of Fund Assets in U.S. Securities Systems . . . . . . . . 10
2.14 Fund Assets Held in the Custodian's Direct Paper System . . . . . 11
2.15 Segregated Account . . . . . . . . . . . . . . . . . . . . . . . 12
2.16 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.17 Communications Relating to Series Securities . . . . . . . . . . 13
3. Duties of the Custodian with Respect to Property of the Fund
Held Outside of the United States . . . . . . . . . . . . . . . . 13
3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . . . . . . 13
3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . . . . . 14
3.3 Holding Securities . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Foreign Securities Systems . . . . . . . . . . . . . . . . . . . 14
3.5 Agreements with Foreign Banking Institutions . . . . . . . . . . 15
3.6 Access of Independent Accountants of the Fund . . . . . . . . . . 15
3.7 Reports by Custodian . . . . . . . . . . . . . . . . . . . . . . 15
3.8 Transactions in Foreign Custody Account . . . . . . . . . . . . . 16
3.9 Liability of Foreign Sub-Custodians . . . . . . . . . . . . . . . 16
3.10 Monitoring Responsibilities . . . . . . . . . . . . . . . . . . . 17
3.11 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . . . . 17
3.12 Collection of Income . . . . . . . . . . . . . . . . . . . . . . 17
3.13 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.14 Communications Relating to Portfolio Securities . . . . . . . . . 18
<PAGE> 3
4. Payments for Purchases or Redemptions of Shares of the Fund . . . 19
4.1 Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . 19
4.2 Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . 19
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . 20
6. Actions Permitted without Express Authority . . . . . . . . . . . 20
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . 21
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income . . . . . . . . . . 21
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10. Opinion of Fund's Independent Accountant . . . . . . . . . . . . 22
11. Reports to Fund by Independent Public Accountants . . . . . . . . 22
12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . 23
13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . 23
14. Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
15. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
16. Effective Period, Termination and Amendment . . . . . . . . . . . 25
17. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . 26
18. Interpretive and Additional Provisions . . . . . . . . . . . . . 26
19. Additional Series . . . . . . . . . . . . . . . . . . . . . . . . 27
20. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . 27
21. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 27
<PAGE> 4
22. Shareholder Communications . . . . . . . . . . . . . . . . . . . 27
<PAGE> 5
CUSTODIAN CONTRACT
This Contract between The CountryBasketsSM Index Fund, Inc., a
corporation organized and existing under the laws of Maryland, having its
principal place of business at 31 West 52nd Street, New York, New York
10019, hereinafter called the "Fund", and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of
business at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter
called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares of the following
series: Australia Index Series, France Index Series, Germany Index Series,
Hong Kong Index Series, Italy Index Series, Japan Index Series, South
Africa Index Series, UK Index Series and US Index Series (such series,
together with all other series subsequently established by the Fund and
made subject to this Contract in accordance with Article 17, being herein
referred to as the "Series");
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets
of the Series of the Fund, including securities which the Fund, on behalf
of the applicable Series, desires to be held in places within the United
States ("domestic securities") and securities it desires to be held outside
the United States and which constitute "foreign securities," as defined in
paragraph (c)(1) of Rule 17f-5 ("Rule 17f-5") under the Investment Company
Act of 1940, as amended (the "Investment Company Act") ("foreign
securities"). The Fund agrees to deliver to the Custodian all securities
and other investments and cash of each Series, and all payments of income,
payments of principal or capital distributions received by it with respect
to all securities and other instruments owned by the Series from time to
time, and the consideration received by it for such new or treasury shares
of common stock of the Fund representing interests in the Series,
("Shares") as may be issued or sold from time to time. The Custodian shall
not be responsible for any property of a Series held or received by the
Series and not delivered to the Custodian.
<PAGE> 2
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Series from time to
time employ one or more Sub-custodians, located in the United States to
hold domestic securities and cash, provided that any such Sub-custodian
meets at least the minimum qualifications required by Section 17(f)(1) of
the Investment Company Act to act as a custodian, but only in accordance
with an applicable vote by the Board of Directors of the Fund on behalf of
the applicable Series, and subject to Article 13. The Custodian may from
time to time employ any foreign banking institution or foreign securities
depository designated in Schedule A hereto as Sub-custodian (a "Foreign
Sub-custodian") for the Fund's foreign securities on behalf of the
applicable Series, but only in accordance with the provisions of Article 3
and subject to Article 13.
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States
2.1 Holding Securities and Other Assets. The Custodian shall hold in a
separate account or accounts and segregated at all times from the
assets of other Series and third parties all non-cash property of
each Series which may now or hereafter be delivered to it for the
account of such Series, including all domestic securities owned by
such Series, other than (a) securities which are maintained pursuant
to Section 2.10 in a "U.S. Securities System" (as therein defined),
and (b) commercial paper of an issuer for which State Street Bank and
Trust Company acts as issuing and paying agent ("Direct Paper") which
is deposited and/or maintained in the Direct Paper System of the
Custodian pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Series held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System
Account") only upon receipt of Proper Instructions from the Fund on
behalf of the applicable Series, which may be continuing instructions
when deemed appropriate by the parties, and only in the following
cases:
1) Upon sale of such securities for the account of the Series
against receipt of payment in full therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Series;
3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.10
hereof;
<PAGE> 3
4) To the agent of the issuer or trustee of such securities in
connection with invitations for tenders or other similar offers
for securities of the Series provided, in any such case, that
the consideration is either to be paid or delivered to the
Custodian or the tendered securities are to be returned to the
Custodian;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to
be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Series or into the name of any nominee or nominees of
the Custodian or into the name or nominee name of any agent
appointed pursuant to Section 2.9 or into the name or nominee
name of any sub-custodian appointed pursuant to Article 1; or
for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Series,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom;
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered
to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by
the Series, but only against receipt of adequate collateral as
agreed upon
<PAGE> 4
from time to time by the Custodian and the Fund on behalf of
the Series, which may be in the form of cash, obligations
issued or guaranteed by the United States government, its
agencies or instrumentalities or such other securities or
instruments as may be permitted under the Investment Company
Act and which have been approved as acceptable collateral by
the Board of Directors of the Fund, except that in connection
with any loans for which collateral is to be credited to the
Custodian's account in a U.S. Securities System, the Custodian
will not be held liable or responsible for the delivery of
securities owned by the Series prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Series requiring a pledge of assets
by the Fund on behalf of the Series, but only against receipt
of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Series, the Custodian and a
broker-dealer registered under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and a member of The
National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange,
or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by
the Series of the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Series, the Custodian, and a
Futures Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by the Series
of the Fund;
14) Upon receipt of Proper Instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to the holders of
Shares in connection with redemptions in kind, as may be
described from time to time in the currently effective
prospectus and statement of additional information contained in
the Fund's Registration Statement (together, the "Prospectus"),
in satisfaction of requests by holders of Shares for repurchase
or redemption; and
15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund on behalf
of the
<PAGE> 5
applicable Series, a certified copy of a resolution of the
Board of Directors signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
specifying the securities of the Series to be delivered,
setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate purpose,
and naming the person or persons to whom delivery of such
securities shall be made.
2.3 Registration of Securities. Domestic securities physically held by
the Custodian (other than bearer securities) shall be registered in
the name of a Series or of the Fund or in the name of any nominee of
the Fund on behalf of such Series or of any nominee of the Custodian
which nominee shall be assigned exclusively to the Series, unless the
Fund has authorized in writing the appointment of a nominee to be
used in common with other registered investment companies having the
same investment adviser as the Series, or in the name or nominee name
of any agent appointed pursuant to Section 2.9 or in the name or
nominee name of any sub-custodian appointed pursuant to Article 1.
All securities accepted by the Custodian on behalf of a Series under
the terms of this Contract shall be in "street name" or other good
delivery form. If, however, the Fund directs the Custodian to
maintain securities in "street name", the Custodian shall utilize its
best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of
relevant corporate actions including, without limitation, pendency of
calls, maturities, tender or exchange offers.
2.4 Options. The Custodian shall receive and retain confirmations or
other documents evidencing the purchase of or writing of an option on
a security or securities index by a Series; deposit and maintain in a
segregated account, either physically or by book-entry in a
Securities System (as defined herein), securities subject to a
covered put option written by a Series; and release and/or transfer
such securities or other assets only in accordance with a notice or
other communication evidencing the expiration, termination or
exercise of such covered option furnished by the Fund's investment
adviser, The Options Clearing Corporation, the securities or options
exchange on which such covered option is traded or such other
organization as may be responsible for handling such options
transactions.
2.5 Foreign Exchange Transactions and Futures. Pursuant to Proper
Instructions, the Custodian shall enter into foreign exchange
contracts or options to purchase and sell foreign currencies for spot
and future delivery on behalf and for the account of a Series. Such
transactions may be undertaken by the Custodian with such banking
institutions, including the Custodian or any Sub-custodian(s)
appointed pursuant to Article I as principals, as approved and
<PAGE> 6
authorized by the Fund. Foreign exchange contracts and options other
than those executed with the Custodian, shall be deemed to be
portfolio securities of the applicable Series [and the responsibi-
lities of the Custodian therefor shall be the same as those for
demand deposit bank accounts placed with other banks or trust
companies as described in Section 2.6 of this Contract?]. Upon
receipt of Proper Instructions, the Custodian shall receive and
retain confirmations evidencing the purchase or sale of a futures
contract or an option on a futures contract by a Series; deposit
and maintain in a segregated account, for the benefit of any futures
commission merchant or to pay to such futures commission merchant,
assets designated by the Fund as initial, maintenance or variation
"margin" deposits intended to secure the Series' performance of its
obligations under any futures contracts purchased or sold or any
options on futures contracts written by the Series, in accordance
with the provisions of any agreement or agreements among any of the
Fund, the Custodian and such futures commission merchant, designed
to comply with the rules of the Commodity Futures Trading Commission
and/or any contract market, or any similar organization or organiza-
tions, regarding such margin deposits; and to release and/or transfer
assets in such margin accounts only in accordance with any such
agreements or rules.
2.6 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Series
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such
account or accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Series, other than cash
maintained by the Series in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act or placed
in fixed term and call deposits pursuant to Section 2.7. Funds held
by the Custodian for a Series may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary
or desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the Investment
Company Act and that each such bank or trust company and the funds to
be deposited with each such bank or trust company shall on behalf of
each applicable Series be approved by vote of a majority of the Board
of Directors of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by
the Custodian only in that capacity.
2.7 Call or Time Deposits. The Custodian may place interest bearing
fixed time and call deposits with such banks and in such amounts as
the Fund may authorize with respect to a Series pursuant to Proper
Instructions. Such deposits may be placed with the Custodian, or
with any Sub-custodian
<PAGE> 7
appointed under Article I or such other banks or trust companies
eligible to hold the Fund's demand deposits pursuant to Section 2.6,
as the Fund may determine. Deposits may be denominated in U.S.
Dollars or other currencies and need not be evidenced by the issuance
or delivery of a certificate to the Custodian, provided that the
Custodian shall include in its records with respect to the assets of
such Series, appropriate notation as to the amount and currency of
each such deposit, the accepting banking institution, and other
appropriate details. Such deposits, other than those placed with the
Custodian, shall be deemed portfolio securities of the applicable
Series and the responsibilities of the Custodian therefor shall be
the same as those for demand deposit bank accounts placed with other
banks, as described in Section 2.6 of this Agreement. The respon-
sibility of the Custodian hereunder for such deposits accepted on the
Custodian's books shall be that of a U.S. bank for a similar deposit.
2.8 Availability of Federal Funds. Upon mutual agreement between the
Fund on behalf of each applicable Series and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions from the
Fund on behalf of a Series, make federal funds available to such
Series as of specified times agreed upon from time to time by the
Fund and the Custodian in the amount of checks received in payment
for Shares of such Series which are deposited into the Series's
account.
2.9 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held
hereunder to which each Series shall be entitled either by law or
pursuant to custom in the securities business; collect on a timely
basis all income and other payments with respect to bearer domestic
securities if, on the date of payment by the issuer, such securities
are held by the Custodian or its agent thereof and credit such income
or payments, as collected, to such Series's custodian account.
Without limiting the generality of the foregoing, the Custodian shall
(a) detach and present for payment all coupons and instruments
representing other income items requiring presentation as and when
they become due and shall collect interest when due on securities
held hereunder and (b) promptly execute ownership and other
certificates and affidavits for all federal, state and foreign tax
payments with respect to portfolio securities and other assets of
each applicable Series, or in connection with the purchase, sale or
transfer of such securities and other assets. The Custodian shall
deliver to the Fund periodic written reports providing information as
to amount payable with respect to domestic securities or other assets
of any Series not received by the Custodian when due. Income due
each Series on securities loaned pursuant to the provisions of
Section 2.2 (10) shall be the responsibility of the Fund.
<PAGE> 8
The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or
data as may be necessary to assist the Fund in monitoring and in
arranging for the timely delivery to the Custodian of the income to
which the Series is properly entitled.
2.10 Payment of Fund Monies. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Series, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Series in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Series but only (a) against the delivery of such securities
or evidence of title to such options, futures contracts or
options on futures contracts to the Custodian (or any bank,
banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment
Company Act to act as a custodian and has been designated by
the Custodian as its agent for this purpose) registered in the
name of the Series or the Fund or its nominee or in the name of
a nominee of the Custodian referred to in Section 2.3 hereof or
in proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance with
the conditions set forth in Section 2.10 hereof; (c) in the
case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11; (d)
in the case of repurchase agreements entered into between the
Fund on behalf of the Series and the Custodian, or another
bank, or a broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificated form or
through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Series of
securities owned by the Custodian along with written evidence
of the agreement by the Custodian to repurchase such securities
from the Series or (e) for transfer to a time deposit account
of the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation
from a broker and/or the applicable bank pursuant to Proper
Instructions from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Series as set forth in Section 2.2
hereof;
<PAGE> 9
3) For the redemption or repurchase of Shares issued by the Series
as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Series, including but not limited to the following payments for
the account of the Series: interest, taxes, management,
accounting, administration, distribution, transfer agent and
legal fees, and operating expenses of the Fund whether or not
such expenses are to be in whole or part capitalized or treated
as deferred expenses;
5) For the payment of any dividends on Shares of the Series
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For repayment of loans made to the Fund or upon redelivery of
cash collateral for loans of securities made by a Series or for
payment in connection with a foreign exchange transaction;
8) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Series, a certified copy of a resolution of the Board of
Directors of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the person or
persons to whom such payment is to be made.
2.11 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Series is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions from the Fund on behalf of such Series to so pay in
advance, the Custodian shall be absolutely liable to the Fund for
such securities to the same extent as if the securities had been
received by the Custodian.
2.12 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under Section 17(f)(1) of the
Investment Company Act, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may
from time to time direct;
<PAGE> 10
provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities here-
under and the Custodian shall be responsible for the acts and
omissions of such agents as if performed by the Custodian hereunder.
2.13 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Series in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Exchange Act, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "U.S. Securities System" in accordance with
applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, including Rule 17f-4 under the
Investment Company Act, and subject to the following provisions:
1) The Custodian may keep securities of the Series in a U.S.
Securities System provided that such securities are represented
in an account ("Account") of the Custodian in the U.S.
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to securities of the
Series which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the
Series;
3) The Custodian shall pay for securities purchased for the
account of the Series upon (i) receipt of advice from the U.S.
Securities System that such securities have been transferred to
the Account, and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer for the
account of the Series. The Custodian shall transfer securities
sold for the account of the Series upon (i) receipt of advice
from the U.S. Securities System that payment for such
securities has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect
such transfer and payment for the account of the Series.
Copies of all advices from the U.S. Securities System of
transfers of securities for the account of the Series shall
identify the Series, be maintained for the Series by the
Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund on behalf of the
Series a confirmation of each transfer to or from the account
of the Series in the form of a written advice or notice and
shall furnish to the Fund on behalf of the Series copies of
daily transaction sheets
<PAGE> 11
reflecting each day's transactions in the U.S. Securities
System for the account of the Series.
4) The Custodian shall promptly provide the Fund for the Series
with any report obtained by the Custodian on the U.S.
Securities System's accounting system, internal accounting
control and procedures for safeguarding securities deposited in
the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of
the Series the initial certificate required by Article 14
hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Series for any loss or damage to the Series resulting from use
of the U.S. Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents
or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights
as it may have against the U. S. Securities System; at the
election of the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claim against
the U.S. Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage
if and to the extent that the Series has not been made whole
for any such loss or damage.
2.14 Fund Assets Held in the Custodian's Direct Paper System.
Provided the Custodian has received a certified copy of a resolution
of the Board of Directors of the Fund specifically approving
participation in a system maintained by the Custodian for the holding
of commercial paper in book-entry form, upon receipt of Proper
Instructions, the Custodian may deposit and/or maintain securities
owned by a Series in the Direct Paper System of the Custodian subject
to the following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Series;
2) The Custodian may keep securities of the Series in the Direct
Paper System only if such securities are represented in an
account ("Account") of the Custodian in the Direct Paper System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
<PAGE> 12
3) The records of the Custodian with respect to securities of the
Series which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the
Series;
4) The Custodian shall pay for securities purchased for the
account of the Series upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Series. The Custodian
shall transfer securities sold for the account of the Series
upon the making of an entry on the records of the Custodian to
reflect such transfer and receipt of payment for the account of
the Series. Upon the maturity of a security, the Custodian
shall make an entry on its records to reflect such maturity and
receipt of payment for the account of the Series.
5) The Custodian shall furnish the Fund on behalf of the Series
confirmation of each transfer to or from the account of the
Series, in the form of a written advice or notice, of Direct
Paper on the next business day following such transfer and
shall furnish to the Fund on behalf of the Series copies of
daily transaction sheets reflecting each day's transaction in
the Direct Paper System for the account of the Series;
6) The Custodian shall provide the Fund on behalf of the Series
with any report on its system of internal accounting control as
the Fund may reasonably request from time to time.
2.15 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Series
establish and maintain on its books a segregated account or accounts
for and on behalf of each such Series, into which account or accounts
may be transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to Section 2.10
hereof, (i) in accordance with the provisions of any agreement among
the Fund on behalf of the Series, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any
Futures Commission Merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or
the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Series, (ii) for purposes of segregating cash, U.S. government or
other liquid, high-grade debt securities in connection with options
purchased, sold or written by the Series or commodity futures
contracts or options thereon purchased or sold by the
<PAGE> 13
Series, (iii) for the purposes of compliance by the Series with the
procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Series, a certified copy of a resolution of the Board of
Directors signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to
be proper corporate purposes.
2.16 Proxies. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are
registered otherwise than in the name of the Series or the Fund or a
nominee of either, all proxies, without indication of the manner in
which such proxies are to be voted, and shall promptly deliver to the
Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.17 Communications Relating to Series Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to
the Fund for each Series all written information (including, without
limitation, pendency of calls and maturities of domestic securities
and expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund on behalf of the
Series and the maturity of futures contracts purchased or sold by the
Series) received by the Custodian from issuers of the securities
being held for the Series. With respect to tender, subscription or
exchange offers, the Custodian shall transmit promptly to the Fund
all written information received by the Custodian from issuers of the
securities in respect of which tender, subscription or exchange is
sought and from the party (or his agents) making the tender,
subscription or exchange offer. If the Fund desires to take action
with respect to any tender offer, subscription rights offering,
exchange offer or any other similar transaction, the Fund shall
notify the Custodian at least three business days prior to the date
on which the Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes
and instructs the Custodian to employ as sub-custodians for the
Series's securities and other assets maintained outside the United
States the Foreign Sub-
<PAGE> 14
custodians designated on Schedule A hereto. Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together
with a certified resolution of the Fund's Board of Directors, the
Custodian and the Fund may agree to amend Schedule A hereto from
time to time to designate additional Foreign Sub-custodians or
clearing agencies which (i) qualify as Eligible Foreign Custodians
within the meaning of Rule 17f-5 (ii) or are exempted therefrom by
order of the Securities and Exchange Commission to act as sub-
custodians. Upon receipt of Proper Instructions, the Fund may
instruct the Custodian to cease the employment of any one or more
such Foreign Sub-custodians for maintaining custody of the Series's
assets. In the event of a material breach on the part of a foreign
banking institution, of its agreement with the Custodian provided for
in Section 3.5, which breach is not reasonably amenable of correc-
tion, at the request of the Fund, the Custodian will work with the
Fund to obtain the services of a mutually satisfactory substitute
foreign banking institution.
3.2 Assets to be Held. The Custodian shall limit the securities and
other assets maintained in the custody of the Foreign Sub-custodians
to: (a) foreign securities and, (b) subject to the approval of the
Board of Directors of the Fund, cash and cash equivalents in such
amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Series's foreign securities transactions.
3.3 Holding Securities. The Custodian may hold securities and other non-
cash property for all of its customers, including the Fund, with a
Foreign Sub-custodian in a single account that is identified as
belonging to the Custodian for the benefit of its customers, provided
however, that (i) the records of the Custodian with respect to
securities and other non-cash property of each Series which are
maintained in such account shall identify by book-entry those
securities and other non-cash property belonging to each Series and
(ii) the Custodian shall require that securities and other non-cash
property so held by the Foreign Sub-custodian be held separately from
any assets of the Foreign Sub-custodian or of others in an account
that shall not include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for customers.
3.4 Foreign Securities Systems. Assets of the Series may be maintained
in a clearing agency named in Schedule A which acts as a securities
depository or which operates a book-entry system for the central
handling of securities located outside of the United States and which
qualifies as an Eligible Foreign Custodian within the meaning of Rule
17f-5 (each a "Foreign Securities System") only through arrangements
implemented by the foreign banking institutions serving as Foreign
Sub-custodians pursuant to the terms
<PAGE> 15
hereof (Foreign Securities Systems and U.S. Securities Systems are
collectively referred to herein as the "Securities Systems"). Where
possible, such arrangements shall include entry into agreements
containing the provisions set forth in Section 3.5 hereof.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall provide that: (a) the assets
belonging to each Series will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the foreign
banking institution or its creditors or agent, except a claim of
payment for their safe custody or administration; (b) beneficial
ownership for the assets belonging to each Series will be freely
transferable without the payment of money or value other than for
safe custody or administration; (c) adequate records will be
maintained by the Custodian to identify the assets as belonging to
the applicable Series; (d) officers of or auditors employed by, or
other representatives of the Custodian, and, to the extent permitted
under applicable law, the independent public accountants for the
Fund, will be given access to the books and records of the foreign
banking institution relating to its actions under its agreement with
the Custodian; (e) assets of the Series held by the Foreign
Sub-custodian will be subject only to the instructions of the
Custodian or its agents; (f) the Fund will receive periodic reports
with respect to the safekeeping of the assets of the applicable
Series, including, but not limited to, notification of any transfer
to or from the Series' account; and (g) such foreign banking
institution will exercise reasonable care and indemnify the Custodian
and the Fund or the Custodian and each account of the Custodian in
accordance with Section 3.9.
Except with the prior approval of the Fund's Board of Directors, the
Custodian shall not put into effect with a foreign banking
institution designated on Schedule A either an amendment to an
existing agreement or a new agreement if any provision thereof (i)
would violate Rule 17f-5 or (ii) provide for a lesser standard of
care on the part of such foreign banking institution to the Custodian
than the Custodian's standard of care provided for in this Custodian
Contract.
Upon the request of the Fund, the Custodian shall make all reasonable
efforts to enforce the Custodian's rights and the foreign banking
institution's duties and obligations under each agreement provided
for in this Section 3.5.
3.6 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the
books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
<PAGE> 16
3.7 Reports by Custodian. The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Series held by Foreign
Sub-custodians, including but not limited to an identification of
entities having possession of the Series securities and other assets
and advices or notifications of any transfers of securities to or
from each custodial account maintained by a foreign banking institu-
tion for the Custodian on behalf of its customers indicating, as to
securities acquired for such Series, the identity of the entity
having physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.8, the provision of
Sections 2.2, 2.3, 2.4, 2.5, and 2.10 of this Contract shall apply,
mutatis mutandis to the foreign securities of the Fund held outside
the United States by Foreign Sub-custodians. (b) Notwithstanding the
foregoing, subject to any limitations or conditions contained in a
certified copy of resolutions of the Board of Directors of the Fund
delivered to the Custodian, (i) in the case of the purchase for the
account of any Series of securities, the settlement of which occurs
outside of the United States of America, the Custodian or any Foreign
Sub-custodian may, upon Proper Instructions (which may be standing
instructions), make payment therefor and receive delivery of such
securities in accordance with local custom and practice generally
accepted by Institutional Clients (as hereinafter defined) in the
country in which the settlement occurs, but in all events subject to
the standard of care set forth in Section 13; and (ii) in the case
of the sale for the account of any Series of securities, the
settlement of which occurs outside of the United States of America,
the Custodian or any Foreign Sub-custodian may, upon Proper
Instructions (which may be standing instructions), deliver such
securities in expectation of payment therefor in accordance with
local custom and practice generally accepted by Institutional Clients
in the country in which the settlement occurs, but in all events
subject to the standard of care set forth in Section 13. For
purposes of this Article 3, "Institutional Clients" means U.S.
registered investment companies, or major, U.S.-based commercial
banks, insurance companies, pension funds or substantially similar
financial institutions which as a substantial part of their business
operations, purchase or sell securities and make use of non-U.S.
custodial services. (c) Securities maintained in the custody of a
Foreign Sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this
Contract, and the Fund agrees to hold any such nominee harmless from
any liability in its capacity as a holder of record of such
securities.
<PAGE> 17
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to
which the Custodian employs a foreign banking institution as a
Foreign Sub-custodian shall require the institution to exercise
reasonable care in the performance of its duties and to indemnify,
and hold harmless, the Custodian and the Fund from and against any
loss, damage, cost, expense, liability or claim arising out of or
in connection with the institution's performance of such obligations.
At the election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claims against a
foreign banking institution as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that
the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund information concerning the Foreign Sub-custodians employed
by the Custodian to facilitate the review and approval by the Fund's
Board of Directors of the arrangements for the custody of foreign
securities of each Series as provided for in Rule 17f-5. Such
information shall be similar in kind and scope to that furnished to
the Fund in connection with the initial approval of this Contract.
In addition, the Custodian will promptly inform the Fund in the event
that the Custodian learns of a material adverse change in the
financial condition of a Foreign Sub-custodian or any material loss
of the assets of the Fund or, in the case of any Foreign
Sub-custodian not the subject of an exemptive order from the
Securities and Exchange Commission, is notified by such Foreign
Sub-custodian that there appears to be a substantial likelihood that
its shareholders' equity will decline below $200 million (U.S.
dollars or the equivalent thereof) or that its shareholders' equity
has declined below $200 million (in each case computed in accordance
with generally accepted U.S. accounting principles).
3.11 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions of Sections 3.1 and 3.5 shall not apply
where the custody of the Series assets are maintained in a foreign
branch of a banking institution which is a "Qualified U.S. Bank" as
defined in Rule 17f-5 and has aggregate capital, surplus and
undivided profits of not less than $100 million. The appointment of
any such branch as a Sub-custodian shall be governed by Article 1 of
this Contract. (b) Cash held for each Series of the Fund in the
United Kingdom shall be maintained in an interest bearing account
established for the Fund with the Custodian's London branch, which
account shall be subject to the direction of the Custodian, State
Street London Ltd. or both.
<PAGE> 18
3.12 Collection of Income. The Custodian (or the foreign banking
institution) shall act in accordance with the contractual standard
of care and in accordance with market practice generally accepted by
Institutional Clients to collect all income and other payments in due
course with respect to the securities held hereunder to which the
applicable Series shall be entitled and shall credit such income, as
collected, to the applicable Series. The Custodian shall promptly
execute ownership and other certificates and affidavits for all
federal, state and foreign tax payments with respect to foreign
securities and other assets of each applicable Series, or in connec-
tion with the purchase, sale or transfer of such securities and
other assets; and based upon information, and in reliance upon tax
advice, received from the Fund, take the steps and provide the
administrative and ministerial functions required in the particular
jurisdiction to obtain appropriate withholding exemptions and to
reclaim foreign taxes paid, and in connection therewith, to inform
the Fund of information with respect to foreign taxes of which it
became aware in the ordinary course of providing custody services
in that jurisdiction; provided, however, that with respect to
portfolio securities registered in so-called "street name," the
Custodian shall use reasonable efforts to collect amounts due and
payable to each Series. The Custodian shall deliver the Fund
periodic written reports providing information as to amounts payable
with respect to foreign securities or other assets of any Series not
received by the Custodian when due. In the event that extraordinary
measures are required to collect such income, the Fund and the
Custodian shall consult as to such measures and as to the compensa-
tion and expenses of the Custodian attendant thereto.
Collection of income due each Series on securities loaned shall the
responsibility of the Fund; the Custodian will have no duty or
responsibility in connection therewith, other than to provide the
Fund with such information or data in its possession as may be
necessary to assist the Fund in arranging for the timely delivery to
the Custodian of the income to which the Series is properly entitled.
3.13 Proxies. The Custodian will generally, with respect to the securities
held under this Article 3, act in accordance with the contractual
standard of care and in accordance with available practice generally
acceptable to Institutional Clients to facilitate the exercise of
voting and other shareholder proxy rights, subject always to the
laws, regulations and practical constraints that may obtain in the
jurisdiction where such securities are issued. The Fund acknowledges
that local conditions, including lack of regulation, onerous formal
constraints, lack of notice and the like, may have the effect of
severely limiting the ability of the Fund to exercise shareholder
rights.
<PAGE> 19
3.14 Communications Relating to Portfolio Securities. The transmit
promptly to the Fund written information (including, without
limitation, pendency of calls and maturities of securities and
expirations of rights in connection therewith) the substance of
which has been received by the Custodian from its foreign sub-
custodian from issuers of the securities being held for the
account of the applicable Series. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the
Fund written information so received by the Custodian from issuers
of the securities whose tender or exchange is sought or from the
party (or his or its agents) making the tender or exchange offer.
The Custodian shall not be liable for any untimely exercise of any
tender, exchange or other right or power in connection with secu-
rities or other property of a Series at any time held by it unless
(i) it or its foreign sub-custodian are in actual possession of such
securities or property and (ii) it receives Proper Instructions with
regard to the exercise of any such right or power, and both (i) and
(ii) occur at least three business days prior to the date on which
such right or power is to be exercised.
4. Payments for Purchases or Redemptions of Shares of the Fund
4.1 Purchase of Fund Shares. The Custodian shall maintain, on its own
books in the case of the US Index Series, or with the applicable
Foreign Sub-custodian in the case of each other Series, an account
into which an Authorized Participant (as defined in the Prospectus)
proposing to purchase Shares of the Series may deliver a Fund Basket
of securities (as defined in the Prospectus). Upon receipt from the
appointed distributor of Fund Shares of a notice of intention for the
purchase of Shares of any Series, the Custodian shall promptly notify
(other than in the case of the US Index Series) the applicable
Foreign Sub-custodian of the intended delivery to it of the
securities included in the designated Fund Basket. Upon delivery to
the Custodian, in the case of the US Index Series, or advice from the
applicable Foreign Sub-custodian of delivery to it, in the case of
each other Series, of the securities in one or more of the designated
Fund Baskets as contemplated in such notice of intention, the
Custodian shall promptly advise the distributor of such fact and any
deviation from delivery of the securities required in respect of such
purchase. The Custodian shall also promptly advise the distributor
of its receipt of the requisite Cash Component and any applicable
Cash Component transaction fee (both as defined in the Prospectus) in
respect of any such purchase.
4.2 Redemption of Fund Shares. From such funds and securities held by a
Series as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes
of the Board of Directors of the Fund pursuant thereto, the Custodian
shall, upon receipt of instructions from the
<PAGE> 20
Transfer Agent, make available for payment to Authorized Participants
of Shares who have delivered to the Transfer Agent a request for
redemption of their Shares which shall have been accepted by the
Transfer Agent, the applicable Fund Basket (or such securities in
lieu thereof as may be designated by the Adviser in accordance with
the Prospectus) for such Series and the applicable cash redemption
payment less any applicable cash redemption transaction fee. The
Custodian will transfer the securities proceeds, in the case of the
US Index Series, to or on the order of the Authorized Participant
through the DTC system (as defined in the Prospectus) or, at the
election of the Authorized Participant, through the CNS System of
NSCC and, in the case of each other Series, will instruct the
applicable Foreign Sub-custodian to transfer the Fund Basket of
securities to the account of the Authorized Participant or beneficial
owner in the applicable foreign jurisdiction, all as specified in
such instructions.
Transfers of the securities and cash redemption proceeds to or on the
order of the Authorized Participant in respect of each redemption
request accepted by the Fund shall be made (a) if the Authorized
Participant is a broker or dealer, within the number of business days
after the date of redemption specified by Rule 15c6-1 under the
Exchange Act, except as may otherwise be agreed in the Authorized
Participant Agreement among the Fund, the Fund's distributor, State
Street, as Transfer Agent and such Authorized Participant and except
for those dates of redemption and Series identified in Annex VII to
such Authorized Participant Agreement, and (b) in any event within
the number of calendar days permitted by Section 22(e) of the 1940
Act and the rules thereunder or as otherwise permitted under an
effective order of the Securities and Exchange Commission. The cash
redemption payment (less any applicable cash redemption transaction
fee) due to the Authorized Participant on redemption shall be
effected through DTC cash transfer facilities.
5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of
Directors shall have from time to time authorized. Each such writing shall
set forth the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person
authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Directors of the Fund
accompanied by a detailed description of procedures approved by the Board
of Directors, Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Board of Directors and the
<PAGE> 21
Custodian are satisfied that such procedures afford adequate safeguards for
the Series' assets. For purposes of this Section, Proper Instructions
shall include instructions received by the Custodian (and which are
designated to be authorized instructions of the Fund) pursuant to any
three-party agreement which requires a segregated asset account in accor-
dance with Section 2.12 or from the Transfer Agent as provided in
Section 2.2(14).
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from
the Fund on behalf of each applicable Series:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund on behalf of the Series;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Series, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property of
the Series except as otherwise directed by the Board of
Directors of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting in good faith reliance
upon any instructions, notice, request, consent, certificate or other
instrument or paper reasonably believed by it to be genuine and to have
been properly executed by or on behalf of the Fund. The Custodian may
receive and accept a certified copy of a vote of the Board of Directors of
the Fund as conclusive evidence (a) of the authority of any person to act
in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as
described in such vote, and such vote may be considered as in full force
and effect until receipt by the Custodian of written notice to the
contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
<PAGE> 22
The Custodian shall keep the books of account of each Series as set
forth in Schedule attached hereto and compute the net asset value per
share of the outstanding Shares of each Series. The net asset value
calculation for each Series shall be made in accordance with (1) the terms
set forth in the Prospectus, as such terms may, from time to time, be
amended or supplemented, (2) resolutions adopted by the Board of Directors
of the Fund and delivered to the Custodian and at the time in force and
applicable, and delivered to the Custodian, (3) Proper Instructions and
(4) the provisions of the Price Source Authorization Agreement between the
Fund and the Custodian. The Custodian shall transmit the net asset value
of each Series to the Fund's distributor and to the Transfer Agent. If
directed in writing to do so by the Fund, the Custodian shall also transmit
the net asset value of each Series to the National Association of
Securities Dealers Automated Quotations System and to such other entities
as directed by the Fund. If directed in writing to do so by the Fund, the
Custodian shall also calculate daily the net income of each Series as
described in the Fund's Prospectus and shall advise the Fund, its
distributor and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Fund to do so,
shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset
value per share and the daily income of each Series shall be made at the
time or times described from time to time in the Fund's Prospectus related
to such Series. In connection with computing the net asset value of shares
of each Series, the Custodian shall on each day a Series is open for the
purchase of shares of a given Series compute the amount of the Cash
Component and transmit such information to the Fund's Distributor and to
the Transfer Agent.
9. Records
The Custodian shall, with respect to each Series, create and maintain
all records relating to its activities and obligations under this Contract
in such manner as will meet the obligations of the Fund under the
Investment Company Act including without limitation Section 31 thereof and
Rules 31a-1 and 31a-2 thereunder. All such records shall be the property
of the Fund and shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the Securities and Exchange
Commission. The Custodian shall, at the Fund's request, supply the Fund
with a tabulation of securities owned by each Series and held by the
Custodian and shall, when requested to do so by the Fund and for such
compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Series may from time to time request, to obtain from
year to year favorable
<PAGE> 23
opinions from the Fund's independent accountants with respect to its
activities hereunder in connection with the preparation of the Fund's
Form N-1A, and Form N-SAR or other annual reports to the Securities and
Exchange Commission and with respect to any other requirements of such
Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the Series
at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal
accounting control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including
securities deposited and/or maintained in a U.S. Securities System relating
to the services provided by the Custodian under this Contract; such
reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there
are no such inadequacies, the reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between the Fund on behalf of each applicable Series and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in
acting upon any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be signed by the proper
party or parties, including any Futures Commission Merchant acting pursuant
to the terms of a three-party futures or options agreement. The Custodian
shall be held to the exercise of reasonable care in carrying out the
provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Fund for any action taken or omitted by it in good
faith without negligence. It shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and
shall be without liability for any action reasonably taken or omitted
pursuant to such advice.
The Custodian shall have no more or less responsibility or liability
to the Fund on account of the acts or omissions of a foreign banking
institution appointed pursuant to the provisions of Article 3 or a Sub-
custodian located in the United States and appointed pursuant to the
provisions of Article 1, than any such Sub-custodian has to the Custodian;
provided that this provision shall not protect the Custodian from
<PAGE> 24
responsibility or liability in the event of the Custodian's own negligence
or bad faith. Regardless of whether assets are maintained in the custody
of a foreign banking institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by Section 3.11 hereof, the Custodian
shall be without liability to the Fund for any loss, liability, claim or
expense resulting from or caused by: (i) events or circumstances beyond the
reasonable control of the Custodian or any Sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency
controls or restrictions, the interruption, suspension or restriction of
trading on or the closure of any securities markets, power or other
mechanical or technological failures or interruptions, computer viruses or
communications disruptions which, in any such case, the Custodian could not
have prevented by using commercially reasonable methods, acts of war or
terrorism, riots, revolutions, work stoppages, natural disasters or other
similar events or acts; (ii) errors by the Fund or its investment adviser
in their instructions to the Custodian provided such instructions have been
given in accordance with this Contract; (iii) the insolvency of or acts or
omissions by a Securities System; (iv) any delay or failure of any broker,
agent or intermediary, central bank or other commercially prevalent payment
or clearing system to deliver to the Custodian's Sub-custodian or agent
securities purchased or in the remittance of payment made in connection
with securities sold; (v) any delay or failure of any company, corporation,
or other body in charge of registering or transferring securities in the
name of the Custodian, the Fund, the Custodian's Sub-custodians, nominees
or agents or any consequential losses arising out of such delay or failure
to transfer such securities including non-receipt of bonus, dividends and
rights and other accretions or benefits; (vi) delays or inability to
perform its duties due to any disorder in market infrastructure with
respect to any particular security or Securities System; and (vii) any
provision of any present or future laws or regulations or orders of the
United States of America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent jurisdiction;
provided that this provision shall not protect the Custodian from
responsibility or liability in the event of the Custodian's own negligence
or bad faith. Notwithstanding the foregoing provisions of this Article 13,
in delegating custody duties to State Street London Ltd., the Custodian
shall not be relieved of any responsibility to the Fund for any loss due to
such delegation, except such loss as may result from (a) political risk
(including, but not limited to, exchange control restrictions,
confiscation, expropriation, nationalization, insurrection, civil strife or
armed hostilities) or (b) other losses (excluding a bankruptcy or
insolvency of State Street London Ltd. not caused by political risk) due to
Acts of God, nuclear incident or other losses under circumstances where the
Custodian and State Street London Ltd. have exercised reasonable care.
If the Fund on behalf of a Series requires the Custodian to take any
action with respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund or the Series being liable
for the payment of money or incurring liability of some
<PAGE> 25
other form, the Fund on behalf of the Series, as a prerequisite to
requiring the Custodian to take such action, shall provide indemnity to
the Custodian in an amount and form satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) for the benefit of a Series including the purchase or sale of
foreign exchange or of contracts for foreign exchange, any property at any
time held for the account of the applicable Series shall be security for
such advance and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of
such Series's assets to the extent necessary to obtain reimbursement.
14. Tax Law. The Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or any
state or political subdivision thereof. It shall be the responsibility of
the Fund to notify the Custodian of the obligations imposed on the Fund or
the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting.
15. Advances
From time to time and in accordance with the Custodian's internal
policies and guidelines it may make funds available for the settlement of
the Fund's securities transactions.
16. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided,
may be amended at any time by mutual written agreement of the parties
hereto and may be terminated by either party by an instrument in writing
delivered or mailed, postage prepaid to the other party, such termination
to take effect not sooner than sixty (60) days after the date of such
delivery or mailing; provided, that at the Fund's request such termination
may be postponed for an additional thirty (30) days if necessary to permit
the Fund to obtain the services of a successor custodian, and provided
further, however that the Custodian shall not with respect to a Series act
under Section 2.13 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Directors of the Fund has approved the initial use of a particular U.S.
Securities System by such Series, as required by Rule 17f-4 under the
Investment Company Act that the Custodian shall
<PAGE> 26
not with respect to a Series act under Section 2.14 hereof in the absence
of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors has approved the initial use of the
Direct Paper System by such Series and that the Custodian shall not, with
respect to a Series, act under Article 3 to appoint a Foreign Sub-
custodian or make any deposit of securities of a Series in any Foreign
Securities System in the absence of receipt of an initial certificate of
the Secretary or an Assistant Secretary that the Board of Directors has
approved the initial use of such Foreign Sub-custodian or Foreign
Securities System by such Series; provided further, however, that the
Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Articles
of Incorporation, and further provided, that the Fund on behalf of one or
more of the Series may at any time by action of its Board of Directors
(i) substitute another bank or trust company for the Custodian by giving
notice as described above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver
for the Custodian by the Comptroller of the Currency or upon the happening
of a like event at the direction of an appropriate regulatory agency or
court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each
applicable Series shall pay to the Custodian such compensation as may be
due as of the date of such termination and shall likewise reimburse the
Custodian for its costs, expenses and disbursements.
17. Successor Custodian
If a successor custodian for the Fund, of one or more of the Series
shall be appointed by the Board of Directors of the Fund, the Custodian
shall, upon termination, deliver to such successor custodian at the office
of the Custodian, duly endorsed and in the form for transfer, all
securities of each applicable Series and all cash and other instruments
then held by it or an agent hereunder and shall transfer to an account of
the successor custodian all of the securities of each such Series held in a
U.S. Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the
Board of Directors of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with
such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board of Directors shall have been
delivered to the Custodian on or before the date when such termination
shall become effective, then the Custodian shall have the right to deliver
to a bank or trust company, which is a "bank" as defined in the Investment
Company Act, doing business in Boston, Massachusetts, of its own
<PAGE> 27
selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of
each applicable Series and all instruments held by the Custodian relative
thereto and all other property held by it under this Contract on behalf of
each applicable Series and to transfer to an account of such successor
custodian all of the securities of each such Series held in any U.S.
Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in
the possession of the Custodian after the date of termination hereof owing
to failure of the Fund to procure the certified copy of the vote referred
to or of the Board of Directors to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services during
such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Contract relating to the
duties and obligations of the Custodian shall remain in full force and
effect.
18. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Series, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor
of this Contract. Any such interpretive or additional provisions shall be
in a writing signed by both parties and shall be annexed hereto, provided
that no such interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the Articles of
Incorporation of the Fund. No interpretive or additional provisions made
as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
19. Additional Series
In the event that the Fund establishes one or more series of Shares
in addition to the Australia Index Series, France Index Series, Germany
Index Series, Hong Kong Index Series, Italy Index Series, Japan Index
Series, South Africa Index Series, UK Index Series and US Index Series with
respect to which it desires to have the Custodian render services as
custodian under the terms hereof, it shall so notify the Custodian in
writing, and if the Custodian agrees in writing to provide such services,
such series of Shares shall become a Series hereunder.
20. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with the internal laws of The
Commonwealth of Massachusetts.
<PAGE> 28
21. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Series and the
Custodian relating to the custody of the Fund's assets.
22. Shareholder Communications
Rule 14b-2 under the Exchange Act requires banks which hold
securities for the account of customers to respond to requests by issuers
of securities for the names, addresses and holdings of beneficial owners
of securities of that issuer held by the bank unless the beneficial owner
has expressly objected to disclosure of this information. Unless and
until the Custodian receives Proper Instructions to the contrary, the
Custodian will (check applicable provision) ( ) disclose ( ) not disclose
the Fund's name, address and securities position to issuers whose
securities are held by the Fund upon request of such issuers.
<PAGE> 29
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative
and its seal to be hereunder affixed as of the day of
, 1995.
ATTEST THE COUNTRYBASKETSSM INDEX FUND, INC.
By
ATTEST STATE STREET BANK AND TRUST
COMPANY
By
Executive Vice President
<PAGE> 30
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of The
CountryBasketsSM Index Fund, Inc. for use as Sub-custodians for the Fund's
securities and other assets:
(Insert banks and securities depositories)
Certified:
Fund's Authorized Officer
Date:
w:\...\agmts\cbi-fnd3.cus
<PAGE> 1
ADMINISTRATION AGREEMENT
Agreement dated as of , 1996 by and between State
Street Bank and Trust Company, a Massachusetts trust company (the
"Administrator"), and The CountryBasketsSM Index Fund, Inc., a Maryland
corporation (the "Fund").
WHEREAS, the Fund is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended
(the "1940 Act");
WHEREAS, shares of the Fund's common stock will be listed on
the New York Stock Exchange ("NYSE") or another national securities
exchange; and
WHEREAS, the Fund desires to retain the Administrator to
furnish certain administrative services to the Fund and the Administrator
is willing to furnish such services on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
The Fund hereby appoints the Administrator to act as
administrator with respect to the Fund for purposes of providing certain
administrative services for the period and on the terms set forth in this
Agreement. The Administrator accepts such appointment and agrees to render
the services stated herein.
The Fund will initially issue and sell shares of Common Stock,
par value $.001 per share ("Shares"), of the initial series listed in
Schedule A to this Agreement (each such series, together with each other
series subsequently established by the Fund and made subject to this
Agreement pursuant to this paragraph, being herein referred to as a
"Series" and, collectively, the "Series"). In the event that the Fund is
authorized to issue and issues Shares of one or more additional Series with
respect to which it wishes to retain the Administrator to act as
administrator hereunder, the Fund shall notify the Administrator in
writing. Upon written acceptance by the Administrator, such Series shall
become subject to the provisions of this Agreement to the same extent as
the existing Series, except to the extent that such provisions (including
those relating to the fees and expenses payable by the Fund and its Series)
may be modified with respect to each additional Series in writing by the
Fund and the Administrator at the time of the addition of the Series.
2. DELIVERY OF DOCUMENTS
The Fund will promptly deliver to the Administrator copies of
each of the following documents and all future amendments and supplements
thereto, if any:
a. The Fund's charter document and by-laws;
<PAGE> 2
b. The Fund's currently effective registration statement
under the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act, and the Fund's Prospectus(es)
and Statement(s) of Additional Information relating to
all Series and all amendments and supplements thereto as
currently in effect;
c. Certified copies of the resolutions of the Board of
Directors of the Fund (the "Board") authorizing (1) this
Agreement and (2) certain individuals on behalf of the
Fund to (a) give instructions to the Administrator
pursuant to this Agreement and (b) authorize
disbursements, including payment of expenses;
d. A copy of the investment management agreement between the
Fund and its investment adviser (the "Adviser");
e. A copy of the distribution agreement between the Fund and
its distributor; and
f. Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem
necessary or appropriate in the proper performance of its
duties.
3. REPRESENTATIONS AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to the Fund that:
a. It is a Massachusetts trust company duly organized,
existing and in good standing under the laws of The
Commonwealth of Massachusetts;
b. It has full power and authority to carry on its business
in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been
instituted or threatened which would impair the
Administrator's ability to perform its duties and
obligations under this Agreement;
e. It possesses all material governmental licenses, permits,
consents, orders or approvals and other authorizations
necessary to perform its duties and obligations under
this Agreement; and
f. Its entry into this Agreement shall not cause a material
breach or be in material conflict with any other
agreement or obligation of the Administrator or any law
or regulation applicable to it.
<PAGE> 3
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Administrator that:
a. It is a corporation duly incorporated, existing and in
good standing under the laws of the State of Maryland;
b. It has full power and authority to enter into and perform
this Agreement;
c. All requisite corporate proceedings have been taken to
authorize the Fund to enter into and perform this
Agreement;
d. It is an investment company duly registered under the
1940 Act;
e. A registration statement with respect to the Shares under
the 1933 Act and the Fund under the 1940 Act has been
filed and has become effective. The Fund also warrants
to the Administrator that as of the date of commencement
of this Agreement, all necessary filings under the
securities laws of the states in which the Fund offers or
sells its Shares will have been made;
f. No legal or administrative proceedings have been
instituted or threatened which would impair the Fund's
ability to perform its duties and obligations under this
Agreement;
g. Its entry into this Agreement shall not cause a material
breach or be in material conflict with any other
agreement or obligation of the Fund or any law or
regulation applicable to it; and
h. As of the close of business on the date of this
Agreement, the Fund is authorized to issue Shares in the
amounts set forth in Schedule A to this Agreement.
5. ADMINISTRATIVE SERVICES
The Administrator shall provide the following administrative
services, subject to the general supervision and direction of the Fund, and
to review and correction by the Fund's independent accountants and legal
counsel, and in accordance with policies and procedures which may be
established from time to time between the Fund and the Administrator:
a. Oversee the determination and publication by the Fund's
custodian (the "Custodian") of the net asset value of
each Series in accordance with applicable regulations and
the Fund's policy as adopted from time to time by the
Board;
b. Oversee the maintenance by the Custodian of certain books
and records of the Fund as required under Rule 31a-1(b)
of the 1940 Act;
<PAGE> 4
c. Maintain those books and records of the Fund that are
required under Rule 31a-1(b) of the 1940 Act and not
otherwise maintained by the Custodian, distributor,
transfer agent and dividend disbursing agent (the
"Transfer Agent") or the Adviser, including without
limitation the books and records required to be
maintained under paragraphs (4) and (10) of such Rule,
unless otherwise directed by the Fund;
d. Prepare each Series' federal, state and local income tax
returns for review by the Fund's treasurer and
independent accountants prior to their filing by the
Fund's treasurer;
e. Review the calculation, submit for approval and arrange
for payment of the Fund's expenses and ensure proper
accounting treatment and allocation of the same to each
Series, where applicable;
f. Prepare each Series' expense projections, establish
accruals and review the same on a periodic basis and
submit the same for review by the Fund's treasurer;
g. Prepare, for review and approval by officers of the Fund,
financial information for the Fund's semi-annual and
annual reports, proxy statements and other communications
required by law, regulation or otherwise to be sent to
Fund shareholders, and arrange for the printing and
dissemination of such reports and communications to
record and, through The Depository Trust Company,
beneficial owners of Shares;
h. Prepare, for review and approval by an officer of the
Fund, (i) the Fund's periodic financial reports required
to be filed with the Securities and Exchange Commission
("SEC") on Form N-SAR, (ii) the financial information
required by Form N-1A, (iii) financial and other reports
required by the NYSE (or any other national securities
exchange, if applicable) and such other reports, forms or
filings as may be required by federal or state regulatory
authorities, in each case under this clause (iii) such
reports, forms or filings to be derived from information
reasonably accessible to the Administrator.
i. Prepare such reports relating to the business and affairs
of the Fund as may be mutually agreed upon and not
otherwise prepared by the Fund's Adviser, Custodian,
Transfer Agent, distributor, legal counsel or independent
accountants;
j. Prepare recommendations as to each Series' income and
capital gains available for distribution; calculate such
distributions for each Series in accordance with
applicable regulations and the distribution policies set
forth in the Fund's registration statement, and assist
Fund management in making final determination of
distribution amounts;
<PAGE> 5
k. Monitor each Series' share capital activity and notify
the Fund when a specified percentage, established by the
Adviser, of the authorized number of Shares of each
Series has been issued;
l. Make such reports and recommendations to the Fund's
officers and/or the Board concerning the performance of
the independent accountants and such other service
providers as the Board may reasonably request;
m. Make such reports and recommendations to the Fund's
officers and/or the Board concerning the performance and
fees of the Fund's Custodian, Transfer Agent and
distributor and the fees of the Fund's Adviser and
Administrator as the Board may reasonably request;
n. Oversee and review calculations of fees paid to the
Fund's Adviser, Administrator, Custodian, Transfer Agent
and distributor and pursuant to Rule 12b-1 plan(s) of the
Fund and its Series;
o. Consult with the Fund's officers, independent accountants
and legal counsel in establishing and implementing the
accounting policies and procedures of the Fund;
p. Review implementation of any dividend reinvestment
programs authorized by the Board;
q. Oversee the proper treatment/recording of all
transactions including, but not limited to, portfolio
transactions, capital stock transactions and income and
expense items, and reconciliation of such records with
Fund accounting records; monitor such records against
list of approved brokers, compile all transactions
effected by the Adviser and provide the Fund with related
reports derived from information reasonably accessible to
the Administrator, as requested by the Fund;
r. Monitor corporate actions on portfolio securities, the
receipt of other income, and cash and other
disbursements;
s. Monitor each Series' collection of refunds or rebates of
withholdings or other foreign taxes paid;
t. Prepare, and after review by the Fund's treasurer,
provide IRS Forms 1099 or 1042 to all persons (other than
shareholders) to whom the Fund is required to deliver
such forms;
u. Obtain Employer Identification Numbers and CUSIP numbers
for each Series;
v. Respond to or refer to the Fund's officers, distributor
or Transfer Agent shareholder inquiries relating to the
Fund;
<PAGE> 6
w. Provide periodic testing of portfolios and portfolio
transactions to assist the Fund's Adviser in complying
with Internal Revenue Code mandatory qualification
requirements, the requirements of the 1940 Act, including
Rule 17e-1 thereunder, and Fund prospectus restrictions,
and other testing at intervals reasonably acceptable to
the Administrator with respect to information reasonably
accessible to the Administrator and requested by the
Fund;
x. Review and provide assistance on shareholder
communications at the request of the Fund or the Fund's
distributor;
y. Maintain and monitor general Fund calendar for reporting,
filing and compliance purposes;
z. Maintain copies of the Fund's charter document and by-
laws;
aa. File annual and semi-annual shareholder reports with the
appropriate regulatory or self-regulatory agencies;
review text of "President's letters" to shareholders and
"Management's Discussion of Fund Performance" or any
equivalent text (which shall also be subject to review by
the Fund's independent accountants and legal counsel);
bb. Provide consultation on regulatory matters relating to
portfolio management, Fund operations and any potential
changes in each Series' investment policies, operations
or structure; act as liaison to outside legal counsel to
the Fund and, where applicable, to legal counsel to the
Fund's Board members who are not "interested persons" (as
defined in the 1940 Act) of the Fund;
cc. Develop or assist in developing guidelines and procedures
to improve overall accounting control and compliance by
the Fund and its various agents;
dd. Counsel and assist the Fund in the handling of routine
regulatory examinations and work closely with the Fund's
legal counsel in response to any non-routine regulatory
matters;
ee. Make presentations at Board meetings where appropriate
and follow up on matters raised at Board meetings;
ff. Provide assistance to the Fund's officers or the Adviser
in connection with notices, communications and press
releases for the NYSE pursuant to the Fund's listing
agreement with respect to the Shares; and
gg. Subject to review by the Fund's legal counsel,
1. prepare Rule 24f-2 Notices; and
2. maintain any state registrations or exemptions from
registration of the Fund's securities as detailed
in Schedule C to this Agreement.
<PAGE> 7
The Administrator will also provide the office facilities and
the personnel required by it to perform the services contemplated herein.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from the Fund with respect to
each Series such compensation for the Administrator's services provided
pursuant to this Agreement as may be agreed to from time to time in a
written fee schedule approved by the parties and initially set forth in
Schedule B to this Agreement. The fees are to be billed monthly and shall
be due and payable promptly upon receipt of the invoice. Upon the
termination of this Agreement before the end of any month, the fee for the
part of the month before such termination shall be prorated according to
the proportion which such part bears to the full monthly period and shall
be payable upon the date of termination of this Agreement. In addition,
the Fund shall reimburse the Administrator for reasonable out-of-pocket
costs incurred in connection with its services under this Agreement.
The Fund agrees to reimburse the Administrator promptly for
any equipment and supplies specially ordered by or for the Fund through the
Administrator and for any other expenses not contemplated by this Agreement
that the Administrator may incur on the Fund's behalf at the Fund's request
or as consented to by the Fund in advance in writing.
The Fund will bear all expenses that are incurred in its
operation and not specifically assumed by the Administrator. Expenses to
be borne directly or indirectly by the Fund with respect to each Series
include, but are not limited to: organizational expenses; cost of services
of independent accountants and outside legal and tax counsel (including
such counsel's review of the Fund's registration statement, proxy
materials, federal and state tax qualification as a regulated investment
company and other reports and materials prepared by the Administrator under
this Agreement); cost of any services contracted for by the Fund directly
from parties other than the Administrator; cost of trading operations and
brokerage fees, commissions and transfer taxes in connection with the
purchase and sale of securities for the Fund; investment advisory fees;
taxes, insurance premiums and other fees and expenses applicable to its
operation; costs incidental to any meetings of shareholders including, but
not limited to, legal fees, fees of independent accountants and proxy
filing fees and the costs of preparation (other than the preparation
specified in Section 5, subject to Schedule B), printing and mailing of any
proxy materials; costs incidental to Board meetings, including fees and
expenses of Board members; the salary and expenses of any officer or
director\trustee of the Fund (to the extent that any are paid); costs
incidental to the preparation (other than the preparation specified in
Section 5, subject to Schedule B), printing and distribution of the Fund's
shareholder reports; cost of typesetting and printing of prospectuses; cost
of preparation (other than the preparation specified in Section 5, subject
to Schedule B), and filing of the Fund's tax returns, Form N-1A and Form N-
SAR, and all notices, registrations and amendments associated with
applicable federal and state tax and securities laws; all applicable
registration fees and filing fees required under federal and state
securities laws; fidelity bond and directors' and officers' liability
insurance and the cost of independent pricing services used in computing
the net asset value of the Fund's Series, as set forth in the Custodian
Contract between the Fund and the Administrator.
The Administrator is authorized to and may employ or associate with
such person or persons as the Administrator may deem desirable to assist it
in performing its duties under this Agreement; provided,
<PAGE> 8
however, that the compensation of such person or persons shall be paid by
the Administrator and that the Administrator shall be as fully responsible
to the Fund for the acts and omissions of any such person or persons as it
is for its own acts and omissions; and further provided that the
Administrator shall not make a material delegation of its duties, except
in accordance with Section 14 of this Agreement.
7. INSTRUCTIONS AND ADVICE
At any time the Administrator may apply to any officer of the
Fund for instructions and may consult with outside counsel for the Fund or
the independent accountants for the Fund at the expense of the Fund or its
own legal counsel, with respect to any matter arising in connection with
the services to be performed by the Administrator under this Agreement.
The Administrator shall not be liable and shall be indemnified by the Fund
for any action taken or omitted by it in good faith in reliance upon any
such instructions or advice or upon any paper or document reasonably
believed by it to be genuine and to have been signed by the proper person
or persons. The Administrator shall not be held to have notice of any
change of authority of any person until receipt of written notice thereof
from the Fund. Nothing in this paragraph shall be construed as imposing
upon the Administrator any obligation to seek such instructions or advice.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall be responsible for the performance of
only such duties as are set forth in this Agreement and except as otherwise
provided under Section 6, shall have no responsibility for the actions or
activities of any other party, including other service providers. The
Administrator shall have no liability for any error of judgement or mistake
of law or for any loss or damage resulting from the performance or
nonperformance of its duties hereunder except for any loss or damage
resulting from acts or omissions of the Administrator, its officers, agents
or employees involving bad faith, negligence, willful misconduct or
reckless disregard of its or their obligations and duties under this
Agreement. The Administrator shall not be liable for consequential damages
under any provision of this Agreement or for any consequential damages
arising out of any act or failure to act hereunder. [In any event, the
Administrator's liability under this Agreement shall be limited to the
greater of its total annual compensation earned and fees paid hereunder
during the preceding twelve months or $855,000, for any liability or loss
suffered by the Fund, including, but not limited to, any liability relating
to qualification of the Fund as a regulated investment company or any
liability relating to the Fund's compliance with any federal or state tax
or securities statute, regulation or ruling.]
The Fund shall indemnify and hold the Administrator harmless
from all loss, cost, damage and expense, including reasonable fees and
expenses for counsel, incurred by the Administrator resulting from any
claim, demand, action or suit in connection with the Administrator's
acceptance of this Agreement, any action or omission by it in the
performance of its duties hereunder, or as a result of acting upon any
instructions reasonably believed by it to have been duly authorized by the
Fund, provided that this indemnification shall not apply to actions or
omissions of the Administrator, its officers or employees in cases of its
or their own bad faith, negligence, willful misconduct or reckless
disregard of its or their obligations and duties under this Agreement.
<PAGE> 9
The Fund will be entitled to participate at its own expense in
the defense, or, if it so elects, to assume the defense of any suit brought
to enforce any liability subject to the indemnification provided above. In
the event the Fund elects to assume the defense of any such suit and retain
counsel, the Administrator or any of its affiliated persons, named as
defendant or defendants in the suit, may retain additional counsel but
shall bear the fees and expenses of such counsel unless (i) the Fund shall
have specifically authorized the retaining of such counsel or (ii) the
Administrator shall have determined in good faith that the retention of
such counsel is required as a result of a conflict of interest. Neither
the Administrator nor any of its affiliated persons shall in any case
confess any claim or make any compromise or settlement in any case in which
the Fund may be required to indemnify any such persons except with the
Fund's prior written consent.
The indemnification contained herein shall survive the
termination of this Agreement.
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by
law, it will keep confidential all books, records and information in its
possession relating to the Fund or its shareholders or shareholder accounts
and will not disclose the same to any person except at the request or with
the written consent of the Fund.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
The Fund assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations
applicable to it.
In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Administrator agrees that all records which it maintains for
the Fund shall at all times remain the property of the Fund, shall be
readily accessible during normal business hours, and shall be promptly
surrendered upon the termination of the Agreement or otherwise on written
request. The Administrator further agrees that all records which it
maintains for the Fund pursuant to Rule 31a-1 under the 1940 Act will be
preserved for the periods prescribed by Rule 31a-2 under the 1940 Act
unless any such records are earlier surrendered as provided above. Records
shall be surrendered in usable machine-readable form.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to the Fund are not to be
deemed exclusive, and the Administrator shall be free to render similar
services to others. The Administrator shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided herein or
authorized by the Fund from time to time, have no authority to act or
represent the Fund in any way or otherwise be deemed an agent of the Fund.
12. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective on the date first written
above. The Agreement shall continue in effect unless and until terminated
in writing by either party on sixty (60) days' prior written
<PAGE> 10
notice. Termination of this Agreement with respect to any given Series
shall in no way affect the continued validity of this Agreement with
respect to any other Series. Upon termination of this Agreement, the Fund
shall pay to the Administrator such compensation and any reimbursable
expenses as may be due under the terms hereof as of the date of such
termination, including reasonable out-of-pocket expenses associated with
such termination. This Agreement may be modified or amended from time to
time by mutual written agreement of the parties hereto.
13. NOTICES
Any notice or other communication authorized or required by
this Agreement to be given to either party shall be in writing and deemed
to have been given when delivered in person or by confirmed facsimile, or
posted by certified mail, return receipt requested, to the following
address (or such other address as a party may specify by written notice to
the other): if to the Fund: The CountryBaskets Index Fund, Inc., c/o
Deutsche Morgan Grenfell/C.J. Lawrence Inc., 31 West 52nd Street, New York,
New York, 10019, Attn: Robert Lynch, fax: (212) 468-5491; if to the
Administrator: State Street Bank and Trust Company, 1776 Heritage Drive,
North Quincy, Massachusetts 02171, Attn: David M. Elwood, Vice President
and Senior Counsel, fax: (617) 985-2497.
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by either party hereto
without the prior consent in writing of the other party, except that the
Administrator may assign this Agreement to a successor of all or a
substantial portion of its business, or to a party controlling, controlled
by or under common control with the Administrator.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the
benefit of the Fund and the Administrator and their respective successors
and permitted assigns.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
previous representations, warranties or commitments regarding the services
to be performed hereunder whether oral or in writing.
17. WAIVER
The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be in
writing signed by the waiving party.
<PAGE> 11
18. FORCE MAJEURE
The Administrator shall not be responsible or liable for any
failure or delay in performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond
its control, including without limitation, work stoppage, power or other
mechanical failure, computer virus which the Administrator could not have
prevented by using commercially reasonable methods, natural disaster,
governmental action or communication disruption.
19. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable,
the balance of the Agreement shall remain in effect, and if any provision
is inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
20. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below as of the date first written
above.
THE COUNTRYBASKETSSM INDEX FUND, INC.
By:
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
By:
Name:
Title:
<PAGE> 13
ADMINISTRATION AGREEMENT
The CountryBasketsSM Index Fund, Inc.
SCHEDULE A
Listing of Series and Authorized Shares
Series Authorized Shares as of , 1996
Australia Index Series 200,000,000
France Index Series 200,000,000
Germany Index Series 200,000,000
Hong Kong Index Series 200,000,000
Italy Index Series 200,000,000
Japan Index Series 200,000,000
South Africa Index Series 200,000,000
UK Index Series 200,000,000
US Index Series 200,000,000
<PAGE> 14
ADMINISTRATION AGREEMENT
The CountryBasketsSM Index Fund, Inc.
SCHEDULE B
Fees and Expenses
<PAGE> 15
ADMINISTRATION AGREEMENT
The CountryBasketsSM Index Fund, Inc.
SCHEDULE C
Registration of Fund Shares
with State Securities Administrators
The Administrator will prepare and file required documentation to maintain
the registration or exemption from registration of Shares of each Series in
accordance with the securities laws of each jurisdiction in which such
Shares are to be offered or sold as determined by the Fund. The
registration services shall consist of the following:
1. Filing amendments to the Fund's Application to Register
Securities, if applicable;
2. Filing amendments to the Fund's registration statement under
applicable state securities laws where required;
3. Filing Fund sales reports and advertising literature where
required;
4. Payment at the expense of the Fund of any Fund state
registration and filing fees in connection with the maintenance
of registration or exemption of the Shares;
5. Filing the Prospectus and statements of additional information,
any supplements thereto or any amendments to the registration
statement on Form N-1A, where required to maintain the
registration or exemption of the Shares;
6. Filing required documentation to renew registration of Fund as
issuer or issuer/dealer;
7. Filing of annual, semi-annual and quarterly reports,
supplements or amendments thereto and proxy statements where
required; and
8. The performance of such additional services as the
Administrator and the Fund may agree upon in writing.
Unless otherwise specified in writing by the Administrator, registration
services by the Administrator shall not include determining the
availability of exemptions under a jurisdiction's blue sky law. Any such
determination shall be made by the Fund or its legal counsel. In
connection with the services described herein, the Fund shall issue in
favor of the Administrator a power of attorney to register Shares on behalf
of the Fund, which power of attorney shall be substantially in the form of
Exhibit I attached hereto.
<PAGE> 16
ADMINISTRATION AGREEMENT
The CountryBasketsSM Index Fund, Inc.
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of , 1996 that The
CountryBasketsSM Index Fund, Inc. (the "Fund") makes, constitutes, and
appoints STATE STREET BANK AND TRUST COMPANY (the "Administrator") with
principal offices at 225 Franklin Street, Boston, Massachusetts its lawful
attorney-in-fact for it to do as if it were itself acting, the following:
1. REGISTRATION OF SHARES. The power to register shares of each
authorized Series of the Fund in each jurisdiction in which Shares
are offered or sold and in connection therewith the power to prepare,
execute, and deliver and file any and all applications, including
without limitation, applications to register shares, to register
agents, consents, including consents to service of process, reports,
including without limitation, all periodic reports, claims for
exemption, or other documents and instruments now or hereafter
required or appropriate in the judgment of the Administrator in
connection with the registration of Shares, provided that this
Limited Power of Attorney shall not include the power to execute,
deliver or file any application, consent or other document to
maintain an office of the Fund in any state, to change the terms of
the offering of the Shares in any state from the terms set forth in
its registration statement filed with the Securities and Exchange
Commission, to qualify the Fund as a foreign corporation in any state
or to consent to service of process in any state other than with
respect to claims arising out of the offering of Shares.
2. CHECKS. The power to draw, endorse, and deposit checks in the name
of the Fund in connection with the registration of Shares of any
Series with state securities administrators.
The execution of this limited power of attorney shall be deemed coupled
with an interest and shall be revocable only upon receipt by the
Administrator of termination of such authority. Nothing herein shall be
construed to constitute the appointment of the Administrator as or
otherwise authorize the Administrator to act as an officer or director of
the Fund.
IN WITNESS WHEREOF, the Fund has caused this Agreement to be executed in
its name and on its behalf by and through its duly authorized officer, as
of the date first written above.
The CountryBasketsSM Index Fund, Inc.
By:
Name:
Title:
<PAGE> 1
TRANSFER AGENCY AND SERVICE AGREEMENT
between
THE COUNTRYBASKETSSM INDEX FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
1G - Domestic Corp/Series
<PAGE> 2
TABLE OF CONTENTS
Page
1. Terms of Appointment; Duties of the Bank . . . . . . . . . . . . 1
2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 4
3. Representations and Warranties of the Bank . . . . . . . . . . . 5
4. Representations and Warranties of the Fund . . . . . . . . . . . 5
5. Data Access and Proprietary Information . . . . . . . . . . . . 6
6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 7
7. Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . 8
8. Covenants of the Fund and the Bank . . . . . . . . . . . . . . . 8
9. Termination of Agreement . . . . . . . . . . . . . . . . . . . . 9
10. Additional Series . . . . . . . . . . . . . . . . . . . . . . . 9
11. Assignment; Subcontractors . . . . . . . . . . . . . . . . . . 9
12. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
13. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . 10
14. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . 10
15. Consequential Damages . . . . . . . . . . . . . . . . . . . . . 10
16. Merger of Agreement . . . . . . . . . . . . . . . . . . . . . . 10
17. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 10
18. Book-Entry System . . . . . . . . . . . . . . . . . . . . . . . 11
Schedule A . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Schedule B . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Schedule C . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE> 3
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the day of , 1996, by and between The
CountryBasketsSM Index Fund, Inc., a Maryland corporation, having its
principal office and place of business at 31 West 52nd Street, New York,
New York 10019 (the "Fund"), and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal office and place of
business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares of common stock, par value
$.001 per share ("CB Shares(SM)"), in separate series, with each such series
representing interests in a separate portfolio of securities and other
assets;
WHEREAS, the Fund intends to sell and redeem CB Shares(SM) only in
aggregations of the number of CB Shares(SM) specified with respect to each
series (each a "Creation Unit");
WHEREAS, the Fund will initially offer CB Shares(SM) in nine series, the
Australia Index Series, the France Index Series, the Germany Index Series,
the Hong Kong Index Series, the Italy Index Series, the Japan Index Series,
the South Africa Index Series, the UK Index Series and the US Index Series
(each such series, together with each other series subsequently established
by the Fund and made subject to this Agreement in accordance with Section
10, being herein referred to as a "Series", and collectively as the
"Series");
WHEREAS, the CB Shares(SM) of each of the initial nine Series have been
approved for listing on the New York Stock Exchange ("NYSE"), subject to
notice of issuance;
WHEREAS, the NYSE trading symbol, the CUSIP number of the CB Shares(SM) and
the number of CB Shares(SM) per Creation Unit of each Series is set forth in
Schedule A hereto;
WHEREAS, The Depository Trust Company, a limited purpose trust company
organized under the laws of the State of New York ("DTC"), or its nominee,
will be the initial record or registered owner (the "Shareholder") of all
CB Shares(SM);
WHEREAS, certificates will not be issued for CB Shares(SM) unless neither DTC
nor a replacement depository shall be the depository for the CB Shares(SM);
and
WHEREAS, the Fund desires to appoint the Bank as the transfer agent and
dividend disbursing agent with respect to each Series and the Bank desires
to accept such appointment;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. Terms of Appointment; Duties of the Bank
1.1 Subject to the terms and conditions set forth in this Agreement and
in the currently effective prospectus and statement of additional
information of the Fund (together, the "Prospectus"), the
<PAGE> 2
Fund hereby employs and appoints the Bank and the Bank agrees to act as
transfer agent for the Fund's authorized and issued CB Shares(SM) of each
Series and as the Fund's dividend disbursing agent.
1.2 Anything to the contrary herein notwithstanding, until such time as
the Fund issues certificates for the CB Shares(SM), the CB Shares(SM)
shall be held in book-entry form only through the facilities of DTC (or
such other depository as may be selected by the Fund) and the Bank
shall deal with such CB Shares(SM) and perform its services hereunder
accordingly.
1.3 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time
with respect to each Series by agreement between the Fund and
the Bank, the Bank shall:
(i) Review upon receipt from the Fund's distributor (the
"Distributor") orders for the purchase of Creation Unit
aggregations of CB Shares(SM) which have been submitted to
the Distributor and based on its records and the records
of DTC determine whether the order if accepted will
result in the depositor of the Fund Basket or Baskets
owning or appearing to own eighty percent (80%) of the
outstanding CB Shares(SM) of such Series and provide advice
of the same to the Distributor;
(ii) Receive from the Distributor purchase orders for Creation
Unit aggregations of CB Shares(SM) received in good form and
accepted by or on behalf of the Fund by the Distributor,
and pursuant to such orders issue the appropriate number
of CB Shares(SM) of the applicable Series and hold such CB
Shares(SM) in the account of the Shareholder for each of the
respective Series of the Fund;
(iii) Provide the Distributor, by means of facsimile, with
confirmations of the issuance of Creation Units, such
confirmations to be delivered by the Distributor;
(iv) Receive for acceptance from Authorized Participants (as
defined in the Prospectus) redemption requests; deliver
the appropriate documentation thereof to the authorized
custodian of the Fund (the "Custodian"); generate and
transmit or cause to be generated and transmitted
confirmation of receipt of such redemption requests to
the Authorized Participants submitting the same; and
redeem the appropriate number of CB Shares(SM) held in the
account of the Shareholder;
(v) Act as Index Receipt Agent with respect to purchases and
redemptions of Creation Unit aggregations of CB Shares(SM)
of the U.S. Index Series through the Continuous Net
Settlement System of the National Securities Clearing
Corporation ("NSCC") in accordance with the terms of each
Authorized Participant Agreement among the Fund, the
Distributor, the Bank and the Authorized Participant
named therein and the rules and procedures established by
NSCC from time to time;
<PAGE> 3
(vi) Prepare and transmit by means of DTC's book-entry system
payments for dividends and distributions declared by the
Fund with respect to each Series;
(vii) Maintain the record of the name and address of the
Shareholder and the number of CB Shares(SM) issued by each
Series of the Fund and held by the Shareholder;
(viii) Record the issuance of CB Shares(SM) of the Fund and
maintain pursuant to SEC Rule 17Ad-10(e) a record of the
total number of CB Shares(SM) of the Fund and of each Series
which are authorized, based upon data provided to it by
the Fund, issued and outstanding. The Bank shall also
provide the Fund on a regular basis with the total number
of CB Shares(SM) which are authorized, issued and
outstanding and shall not issue any Shares of a Series in
excess of the number of authorized shares of such Series
and shall have no obligation when recording the issuance
of CB Shares(SM) to take cognizance of any laws relating to
the issue or sale of such CB Shares(SM), which function
shall be the sole responsibility of the Fund except that
the Bank shall act in accordance with instructions of the
Fund related thereto;
(ix) Prepare and transmit to the Fund and the Administrator
all information with respect to purchases and redemptions
of CB Shares(SM) as may be required to be reported to the
NYSE and any other applicable securities exchange;
(x) On days that a Series may accept orders for purchases or
redemptions, calculate and transmit to the Custodian and
the Fund's administrator the number of outstanding CB
Shares(SM) for each Series;
(xi) On days that a Series may accept orders for purchases or
redemptions, transmit to the Custodian, the Fund and DTC
the amount of CB Shares(SM) purchased and redeemed for such
Series;
(xii) Confirm to DTC the number of CB Shares(SM) evidenced by each
global certificate in registered form (the "Global
Certificate") issued to the Shareholder, as DTC may
reasonably request;
(xii) Prepare and deliver other reports, information and
documents to DTC as DTC may reasonably request;
(xiv) On days that a Series may accept orders for purchases or
redemptions, notify the Distributor of the net asset
value per CB Share SM of such Series by sending a telecopy
to the office of the Distributor at the address set forth
in the Fund's Prospectus;
(xv) Extend voting rights to the Shareholder and/or beneficial
owners of CB Shares(SM) in accordance with the policies and
procedures of DTC for book-entry only securities;
<PAGE> 4
(xvi) Issue CB Shares(SM) and maintain Shareholder records in
accordance with the Prospectus in connection with any
dividend reinvestment plan, if adopted by the Board of
Directors; and
(xvii) Maintain those books and records of the Fund that are
required under Rule 31a-1(b)(2)(D) of the 1940 Act unless
otherwise directed by the Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall
perform the customary services of a transfer agent and dividend
disbursing agent, including but not limited to: maintaining
the account of the Shareholder for each Series, obtaining a
list of DTC participants holding interests in the Global
Certificate at the request of the Fund, mailing proxy material,
shareholder reports and Prospectuses to the Shareholder or DTC
participants or beneficial owners of CB Shares(SM) at the request
of the Distributor or the Fund.
(c) For so long as CB Shares(SM) are represented by Global
Certificates, the following shall be delivered to DTC for
delivery to beneficial owners in accordance with the procedures
for book-entry only securities of DTC:
(i) Annual and semi-annual reports of the Fund;
(ii) Proxies, proxy statements and other proxy soliciting
materials;
(iii) Prospectus and amendments and supplements to the
Prospectus, including stickers; and
(iv) Other communications as may be required by law or
reasonably requested by the Fund.
(d) The Bank shall provide additional services on behalf of the
Fund (e.g., escheatment services) which may be agreed upon in
writing between the Fund and the Bank.
(e) With respect to notices of an intention for the purchase of CB
Shares(SM) from an Authorized Participant (as defined in the
Prospectus) ("Intentions"), the Bank will:
(i) Upon receipt from the Distributor of a notice of an
Intention, assist the Distributor in determining whether
acceptance of the subsequent purchase order would result
in (a) the beneficial owner owning 80 percent or more of
the CB Shares(SM) or (b) the issuance of CB Shares(SM) in
excess of the number authorized by the particular Series;
(ii) Process Intentions received from the Distributor; and
1.4 In the event that (a) DTC notifies the Fund that it is unwilling or
unable to continue as depositary for the CB Shares(SM) or (b) the Fund
in its sole discretion determines to discontinue use of the DTC book-
entry system for the transfer of CB Shares(SM) and in either case, no
replacement depositary is appointed by the Fund, certificates
represented by the CB Shares(SM) will be printed and delivered, and,
upon ninety days prior notice to the Bank, this Agreement will be
amended
<PAGE> 5
to reflect the holding of CB Shares(SM) in certificated form, such amendment
to include the addition of provisions substantially as set forth in
Schedule C to this Agreement.
2. Fees and Expenses
2.1 For the performance by the Bank of the services to be rendered by it
pursuant to this Agreement, the Fund agrees with respect to each
Series to pay the Bank an annual maintenance fee for each Series as
set forth in the initial fee schedule attached hereto as Schedule B.
Such fees and out-of-pocket expenses and advances identified under
Section 2.2 below may be changed from time to time subject to mutual
written agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees
with respect to each Series to reimburse the Bank for reasonable
out-of-pocket expenses, including but not limited to postage, forms,
telephone, microfilm, microfiche, tabulating proxies, records storage
or advances incurred by the Bank for the items set out in Schedule B.
In addition, any other expenses incurred by the Bank at the request
or with the consent of the Fund, will be reimbursed by the Fund with
respect to each Series.
2.3 The Fund agrees with respect to each Series to pay all fees and
reimbursable expenses promptly upon the receipt of the billing
notice. Postage for mailing of dividends, proxies, Fund reports and
other mailings to all shareholder and beneficial owner accounts shall
be advanced to the Bank by the Fund at least seven (7) days prior to
the mailing date in cases where the Bank is to mail such materials to
DTC Participants and beneficial owners of CB Shares(SM).
3. Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.1 It is a trust company duly organized, existing and in good standing
under the laws of The Commonwealth of Massachusetts;
3.2 It is duly qualified to carry on its business in The Commonwealth of
Massachusetts;
3.3 It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement;
3.4 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement;
3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement; and
3.6 It is duly qualified to act as transfer agent and registrar in
accordance with the requirements of the New York Stock Exchange.
4. Representations and Warranties of the Fund
<PAGE> 6
The Fund represents and warrants to the Bank that:
4.1 It is a corporation, duly incorporated, existing and in good standing
under the laws of the State of Maryland;
4.2 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
4.3 All necessary corporate proceedings have been taken to authorize it
to enter into and perform this Agreement;
4.4 It is an open-end and non-diversified management investment company
registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
4.5 A registration statement under the Securities Act of 1933, as amended
(the "1933 Act"), and the 1940 Act with respect to each of the Series
has become and is currently effective.
5. Data Access and Proprietary Information
5.1 The Fund acknowledges that the computer programs, screen formats,
report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's
ability to access certain Fund-related share activity and shareholder
data ("Customer Data") maintained by the Bank on databases under the
control and ownership of the Bank or other third party ("Data Access
Services") constitute copyrighted, trade secret, or other proprietary
information (collectively, "Proprietary Information") of substantial
value to the Bank or other third party. In no event shall
Proprietary Information be deemed Customer Data or Customer Data be
deemed Proprietary Information. The Fund agrees to treat all
Proprietary Information as proprietary to the Bank and further agrees
that it shall not divulge any Proprietary Information to any person
or organization except as may be provided hereunder. Without
limiting the foregoing, the Fund agrees for itself, its employees,
officers and agents:
(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in accordance with
the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information except for use in reports prepared for
the Fund's officers or directors or for use in reports prepared
for the Fund by the Fund's service providers;
(c) to refrain from obtaining unauthorized access to any portion of
the Proprietary Information, and if such access is
inadvertently obtained, to inform in a timely manner of such
fact and dispose of such information in accordance with the
Bank's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer
facility or other location, except with the prior written
consent of the Bank;
<PAGE> 7
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law, under federal copyright
law and under other federal or state law.
Each party shall take reasonable efforts to advise its officers or
employees of their obligations pursuant to this Section 5. The
obligations of this Section shall survive any termination of this
Agreement.
<PAGE> 8
5.2 If the Fund notifies the Bank that any of the Data Access Services do
not operate in material compliance with the most recently issued user
documentation for such services, the Bank shall make best efforts in
a timely manner to correct such failure. Organizations from which
the Bank may obtain certain data included in the Data Access Services
are solely responsible for the contents of such data and the Fund
agrees to make no claim against the Bank arising out of the contents
of such third-party data, including, but not limited to, the accuracy
thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS,
AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES
EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
5.3 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i) effect
the transfer or movement of cash or CB Shares(SM) or (ii) transmit
shareholder information or other information, then in such event the
Bank shall be entitled to rely on the validity and authenticity
of such instruction without undertaking any further inquiry as long
as such instruction is undertaken in conformity with reasonable
security procedures established by the Bank from time to time.
6. Indemnification
6.1 The Bank shall not be responsible for, and the Fund shall with
respect to each Series indemnify and hold the Bank harmless from and
against, any and all losses, damages, costs, charges, reasonable
counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of the Bank or its agents or subcontractors
identified to the Fund in Section 11.3 ("Section 11.3
Subcontractors") hereof required to be taken pursuant to this
Agreement, provided that such actions are taken in good faith
and without negligence, willful misconduct or reckless
disregard of its or their obligations and duties under this
Agreement;
(b) The Fund's lack of good faith, or its negligence or willful
misconduct which arise out of the breach of any representation
or warranty of the Fund hereunder;
(c) The good faith reliance on or use by the Bank or its agents or
Section 11.3 Subcontractors of information, records or
documents which (i) are received by the Bank or its agents or
such Section 11.3 Subcontractors from persons authorized by the
Fund's Board of Directors ("Authorized Persons") or (ii) have
been prepared or maintained by the Fund or any other person or
firm on behalf of the Fund;
(d) The reliance on, or the carrying out by the Bank or its agents
or Section 11.3 Subcontractors of any instructions or requests
of the Fund received from Authorized Persons with respect to
each Series; or
<PAGE> 9
(e) The offer or sale of CB Shares(SM) in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state or in violation of
any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such
CB Shares(SM) in such state.
6.2 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the
Bank under this Agreement, and the Bank and its agents or Section
11.3 Subcontractors shall not be liable and shall be indemnified by
the Fund with respect to the applicable Series for any action taken
or omitted by it in good faith reliance upon such instructions or
upon the opinion of such counsel. The Bank, its agents and Section
11.3 Subcontractors shall be protected and indemnified in acting upon
any paper or document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed by the
proper person or persons, or upon any instruction, information, data,
records or documents provided the Bank or its agents or such Section
11.3 Subcontractors by machine readable input, telex, CRT data entry
or other similar means authorized by the Fund, and shall not be held
to have notice of any change of authority of any person, until
receipt of written notice thereof from the Fund.
6.3 In order that the indemnification provisions contained in this
Article 6 shall apply to a claim for which the Fund may be required
to indemnify the Bank, the Bank shall promptly notify the Fund of
such assertion and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund will be entitled to
participate in its own expense in the defense, or, if it so elects,
to assume the defense of any suit brought to enforce any liability
subject to the indemnification provided above. In the event the Fund
elects to assume the defense of any such suit and retain counsel, the
Administrator or any of its affiliated persons, named as defendant or
defendants in the suit, may retain additional counsel but shall bear
the fees and expenses of such counsel unless (i) the Fund shall have
specifically authorized the retaining of such counsel or (ii) the
Administrator shall have determined in good faith that the retention
of such counsel is required as a result of a conflict of interest.
The Bank shall in no case confess any claim or make any compromise or
settlement in any case in which the Fund may be required to indemnify
the Bank except with the Fund's prior written consent.
7. Standard of Care
The Bank shall at all times act in good faith and agrees to use its
best efforts within reasonable limits to insure the delivery and
accuracy of all services to be performed, including any documents or
information to be provided by it, under this Agreement, but assumes
no responsibility and shall not be liable for loss or damage due to
errors unless said errors are caused by its negligence, bad faith, or
willful misconduct or that of its agents, employees or Section 11.3
Subcontractors or the reckless disregard of its or their obligations
and duties hereunder.
8. Covenants of the Fund and the Bank
8.1 The Fund shall with respect to each Series promptly furnish to the
Bank the following:
<PAGE> 10
(a) Certified copies of the resolutions of the Board of Directors
of the Fund authorizing (1) the appointment of the Bank and the
execution and delivery of this Agreement and (2) the Authorized
Persons to give instructions or requests to the Bank pursuant
to this Agreement;
(b) A copy of the Articles of Incorporation and By-Laws of the Fund
and all amendments thereto; and
(c) A copy of the Fund's currently effective registration statement
under the 1933 Act and the 1940 Act and the Prospectus relating
to all Series and all amendments and supplements thereto.
8.2 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may reasonably deem
advisable. To the extent required by Section 31 of the 1940 Act and
the rules thereunder, the Bank agrees that all such records prepared
or maintained by the Bank relating to the services to be performed by
the Bank hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such
Section and rules, and will be surrendered promptly to the Fund upon
the termination of this Agreement or on and in accordance with its
request. All records shall be reasonably available for inspection
and use by the Fund.
8.3 The Bank and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out
of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required
by law.
8.4 In case of any requests or demands for the inspection of the
shareholder records of the Fund, the Bank will endeavor to notify the
Fund and to secure instructions from an Authorized Person of the
Fund as to such inspection. The Bank reserves the right, however, to
exhibit the shareholder records to any person whenever it is advised
by its counsel that it may be held liable under applicable law for
the failure to exhibit the shareholder records to such person.
9. Termination of Agreement
9.1 This Agreement may be terminated by either party upon sixty (60)
days' written notice to the other.
9.2 Upon the termination of this Agreement by either party, all
reasonable out-of-pocket expenses associated with the delivery of
records and material in accordance with the Fund's instructions will
be borne by the Fund with respect to each Series. Additionally, the
Bank reserves the right to charge for any other reasonable expenses
associated with such termination.
10. Additional Series
In the event that at any time the Fund establishes one or more Series
in addition to those then set forth in Schedule A for which it
desires to have the Bank render services as transfer agent and
<PAGE> 11
dividend disbursing agent under the terms hereof, it shall so notify the
Bank in writing, and if the Bank agrees in writing to provide such
services, such Series of the Fund shall become a Series subject to the
provisions of this Agreement and shall be added to Schedule A.
11. Assignment; Subcontractors
11.1 Except as provided in Section 11.3 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party
without the prior written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns.
11.3 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS"), which is duly
registered as a transfer agent pursuant to Section 17A(c)(1) of the
Securities Exchange Act of 1934, as amended ("Section 17A(c)(1)"),
(ii) a BFDS subsidiary duly registered as a transfer agent pursuant
to Section 17A(c)(1) or (iii) a BFDS affiliate registered pursuant to
Section 17A(c)(1) to the extent such registration is required by law
in order to perform the services so delegated; provided, however,
that the Bank shall be as fully responsible to the Fund for the acts
and omissions of any such subcontractor as it is for its own acts and
omissions.
11.4 The Bank may, with the consent of the Fund, subcontract for the
performance of all or some of its duties under Section 1.3(a)(iv)
with respect to the processing of redemption requests for CB SharesSM
to a subcontractor designated in writing by the Fund.
Notwithstanding any provision of this Agreement to the contrary, the
Bank shall have no liability for and shall be indemnified by the Fund
against any and all losses, damages, costs, charges, reasonable
counsel fees, payments, expenses and liability arising out of or
attributable to the acts or omissions of any such subcontractor.
12. Amendment
This Agreement may be amended or modified by a written agreement
executed by both parties.
13. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts without reference to the choice of law provisions
thereof.
14. Force Majeure
In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its
control, or other causes reasonably beyond its control, such party
shall not be liable for
<PAGE> 12
damages to the other for any damages resulting from such failure to perform
or otherwise from such causes.
15. Consequential Damages
Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or
for any consequential damages arising out of any act or failure to
act hereunder.
16. Merger of Agreement
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
17. Counterparts
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
18. Book-Entry System
Until the issuance of certificates in definitive form other than the
Global Certificate, the rights of beneficial owners of CB Shares(SM)
shall be exercised through DTC and the DTC participants, and shall be
those established by law and agreements between DTC and DTC
participants.
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first written above.
THE COUNTRYBASKETSSM INDEX FUND, INC.
By:
Name:
Title:
ATTEST:
STATE STREET BANK AND TRUST COMPANY
By:
Name:
Title: Executive Vice President
ATTEST:
<PAGE> 14
Transfer Agency and Service Agreement
The CountryBasketsSM Index Fund, Inc.
Schedule A
Name of Series CB Shares(SM) Per
(Trading Symbol) CUSIP Creation Unit
22236E
Australia Index Series 10 9 100,000
(GXA)
France Index Series 20 8 100,000
(GXF)
Germany Index Series 30 7 100,000
(GXG)
Hong Kong Index Series 40 6 100,000
(GXH)
Italy Index Series 50 5 100,000
(GXI)
Japan Index Series 60 4 250,000
(GXJ)
South Africa Index Series 70 3 100,000
(GXR)
UK Index Series 80 2 100,000
(GXK)
US Index Series 88 5 100,000
(GXU)
<PAGE> 15
Transfer Agency and Service Agreement
The CountryBasketsSM Index Fund, Inc.
Schedule B
Fee Schedule
<PAGE> 16
Transfer Agency and Service Agreement
The CountryBasketsSM Index Fund, Inc.
Schedule C
In the event that this Agreement is amended pursuant to Section 1.4, the
Bank shall provide the services listed below in addition to the services
set forth in Section 1.3. The Bank shall:
1. Effect transfers of CB Shares(SM) by the registered owners thereof
upon receipt of appropriate instructions;
2. Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and protecting the Bank
and the Fund, and the Bank, at its option, may issue replacement
certificates in place of mutilated stock certificates upon
presentation thereof and without such indemnity;
3. Maintain records of account for registered owners of CB Shares(SM);
4. Prepare shareholder meeting lists;
5. Mail proxies and proxy materials, shareholder reports, prospectuses
and other shareholder communications set forth in Section 1.3(c) to
shareholders of the Fund;
6. Prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of each Series;
7. Withhold taxes on U.S. resident and non-resident alien accounts,
prepare and file U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and
distributions by federal authorities for all shareholders; and
8. Prepare and mail statements of account to shareholders for all
purchases and redemptions of CB Shares(SM) and other confirmable
transactions in shareholder accounts.
W:\...\surprise\agmts\cbi-fnd9.ta
<PAGE> 1
Draft of February 7, 1996
The CountryBasketsSM Index Fund, Inc.
Indemnity Agreement
This Indemnity Agreement (the "Agreement"), is made as of
___________ __, 1996 between The CountryBasketsSM Index Fund, Inc., a
Maryland corporation (the "Fund"), and Alexander Lucey Inc., a
___________________ corporation (the "Servicer").
WHEREAS, the Fund has appointed State Street Bank and Trust
Company the transfer agent and dividend disbursing agent (the "Transfer
Agent") pursuant to a Transfer Agency and Service Agreement (the "Transfer
Agency Agreement") with respect to the nine initial series of shares of
Common Stock ("Shares") of the Fund identified therein (each such series,
and each series subsequently established by the Fund and made subject to
the Transfer Agency Agreement in accordance with the terms thereof, a
"Series"); and
WHEREAS, the Servicer has entered into a Service Agreement (the
"Service Agreement") with the Transfer Agent whereby the Servicer agrees to
provide certain administrative services to the Transfer Agent in connection
with the receipt and processing of requests for redemption of Shares; and
WHEREAS, the Fund and the Servicer wish to set forth their
mutual understandings with respect to the
<PAGE> 2
Servicer's responsibilities to the Fund for the performance of its duties
under the Service Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement and the Fund's designation of the Servicer as a
permitted subcontractor of the Transfer Agent pursuant to Section 11.4 of
the Transfer Agency Agreement, the Fund and the Servicer agree as follows:
Section 1. Standard of Care. The Servicer shall at all times
act in good faith and agrees to use its best efforts within reasonable
limits to insure the delivery and accuracy of all services to be performed,
including any documents or information to be provided by it, under the
Service Agreement, but assumes no responsibility and shall not be liable
for loss or damage due to errors unless said errors are caused by its
negligence, bad faith, or willful misconduct or that of its officers,
agents or employees or the reckless disregard of its or their obligations
and duties thereunder.
Section 2. Indemnification of Servicer. The Servicer shall
not be responsible for, and the Fund shall with respect to each Series
indemnify and hold the Servicer harmless from and against, any and all
losses, damages, costs, charges, reasonable counsel fees, payments,
expenses and liability (collectively, "Claims") arising out of or
attributable to (a) the reasonable good faith reliance on or
<PAGE> 3
use by the Serivcer, its officers and employees of information, records or
documents which (i) are received by the Servicer from persons authorized by
the Fund's Board of Directors to give instructions under the Transfer
Agency Agreement ("Authorized Persons") or (ii) have been prepared or
maintained by the Fund or any other person or firm authorized to prepare or
maintain same on behalf of the Fund; and (b) the reliance on, or the
carrying out by the Servicer or its officers or employees of any
instructions or requests of the Fund received from Authorized Persons with
respect to each Series.
Section 3. Indemnification of the Fund. The Servicer agrees
to indemnify and hold the Fund harmless from and against any and all Claims
arising out of or attributable to the negligent performance of or negligent
failure to perform the duties and obligations of, or the willful
misconduct of, the Servicer under the Service Agreement.
Section 4. Idemnification Procedures. In order that the
indemnification provisions contained in Sections 2 and 3 shall apply, upon
the assertion of a Claim for which a party hereto may be required to
indemnify the other party, the party seeking indemnification (the
"Indemnitee") shall promptly notify the indemnifying party (the
"Indemnitor") of such assertion and shall keep the Indemnitor advised with
respect to all developments concerning such Claim. The
<PAGE> 4
Indemnitor shall have the option to participate with the Indemnitee in the
defense of such Claim or to defend against said Claim in its own name or in
the name of the Indemnitee. The Indemnitee shall in no case confess any
Claim or make any compromise or settlement in any case in which the
Indemnitor may be required to indemnify the Indemnitee except with the
Indemnitor's prior written consent.
Section 5. Termination; Amendment. This Agreement may be
terminated by either party upon sixty days' prior written notice to the
other party and shall terminate automatically upon the termination of the
Service Agreement. This Agreement may be amended or modified by a written
instrument executed by the parties.
Section 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
<PAGE> 5
IN WITNESS WHEREOF the parties have caused the Agreement to be
executed as of the day and year first written above.
THE COUNTRYBASKETSSM INDEX
FUND, INC.
By: _________________________
Name:
Title:
ALEXANDER LUCEY INC.
By: _________________________
Name:
Title:
<PAGE> 1
SUBSCRIPTION AGREEMENT
The CountryBaskets Index Fund, Inc., a Maryland corporation
(the "Fund"), and ALPS Mutual Funds Services, Inc., a Colorado corporation
(the "Distributor"), hereby agree as follows:
1. The Fund hereby offers the Distributor and the Distributor
hereby agrees to purchase the following shares, par value $.001 per share,
of each series ("Series") of the Fund: _______ shares at $_______ per
share representing _______ shares of the Australia Index Series; _______
shares at $_______ per share representing ______ shares of the France Index
Series; _______ shares at $_______ per share representing _______ shares of
the Germany Index Series; _______ shares at $_______ per share representing
_______ shares of the Hong Kong Index Series; _______ shares at $_______
per share representing _______ shares of the Italy Index Series; _______
shares at $_______ per share representing _______ shares of the Japan Index
Series; _______ shares at $_______ per share representing _______ shares of
the South Africa Index Series; _______ shares at $_______ per share
representing _______ shares of the UK Index Series; and _______ shares at
$_______ per share representing _______ shares in US Index Series
(collectively, the "Shares"). The Distributor hereby acknowledges receipt
of a purchase confirmation reflecting the purchase of the Shares, and the
Fund hereby acknowledges receipt from the Distributor of cash in the amount
of $ _________ in full payment for the Shares.
2. The Distributor represents and warrants to the Fund that
the Shares are being acquired for investment purposes and not with a view
to the distribution thereof.
3. The Distributor agrees that if it or any direct or indirect
transferee of the Shares redeems the Shares prior to the fifth anniversary
of the date the Fund begins its investment activities, the Distributor will
pay to the Fund an amount equal to the number resulting from multiplying
each Fund's total unamortized organizational expenses by a fraction, the
numerator of which is equal to the number of Shares redeemed by the
Distributor or such transferee and the denominator of which is equal to the
number of shares of each Series outstanding as of the date of such
redemption, as long as the administrative position of the staff of the
Securities and Exchange Commission requires such reimbursement.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the ____ day of ________, 1996.
THE COUNTRYBASKETS INDEX FUND, INC.
Attest:
_____________________ By:__________________________________
Name: Name:
Title:
ALPS MUTUAL FUNDS SERVICES, INC.
Attest:
_____________________ By:__________________________________
Name: Name:
Title:
<PAGE> 1
CB Shares(TM)
BOOK-ENTRY-ONLY
Letter of Representations
The CountryBaskets(TM) Index Fund, Inc.
Name of Issuer
State Street Bank And Trust Company
Name of Agent
The Depository Trust Company 1996
55 Water Street, 49th Floor (Date)
New York, NY 10041
Attention: General Counsel's Office
Re: CB Shares(TM) of The CountryBaskets(TM) Index Fund, Inc.
(Issue Description)
The purpose of this letter is to set out certain matters relating to the
above-referenced "CB Shares(TM)" or "Securities." State Street Bank and
Trust Company (the "Agent") is acting as Administrator, Custodian, Transfer
Agent, Accounting Agent, Paying Agent, or other Agent with respect to the
CB Shares(TM). CB Shares(TM) are shares of common stock ("Shares") of The
CountryBaskets(TM) Index Fund, Inc. (the "Fund") issued by each of its
initial nine series, including: the Australia Index Series, the France
Index Series, the Germany Index Series, the Hong Kong Index Series, the
Italy Index Series, the Japan Index Series, the South Africa Index Series,
the UK Index Series, and the US Index Series pursuant to the Fund's
articles of incorporation and bylaws and its registration statement on Form
N-1A and related documents and instruments (the "Documents"). The Fund's
Board of Directors may authorize additional series. Pursuant to the
offering made in accordance with the Documents, the Fund will sell and
redeem CB Shares(TM) of each series only in aggregations of a specified
number of Shares ("Creation Units"). See Appendix A. CB(TM) Shares will
be listed on the New York Stock Exchange. The Depository Trust Company
("DTC") will act as securities depository for the CB Shares(TM), and DTC's
nominee,
<PAGE> 2
Cede & Co., will be the record or registered owner of all outstanding CB
Shares(TM).
To induce DTC to accept the CB Shares(TM) as eligible for deposit at DTC
and act in accordance with its Rules with respect to the CB Shares(TM), the
Issuer and the Agent make the following representations to DTC.
1. The CB Shares(TM) of each series are Shares of common stock of an
open-end investment company registered or to be registered with the
Securities and Exchange Commission. Each series of CB Shares(TM)
will have its own CUSIP number. The Issuer shall cause to be
delivered at the time of the initial deposit a global certificate for
each of the series of CB Shares(TM) respectively (the "Certificates")
registered in the name of DTC's nominee, Cede & Co., to be held in
custody by the Agent on behalf of DTC, which will represent in each
case the total number of Shares of each series respectively issued by
the Fund, which number shall be adjusted as appropriate by the Agent.
Each Certificate shall bear the following legend:
Unless this Certificate is presented by an
authorized representative of The Depository Trust
Company ("DTC"), a New York corporation, to Issuer
or its agent for registration of transfer,
exchange, or payment, and any registration of
transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co., or
in such other name as is required by an authorized
representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested
by an authorized representative of DTC). ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co. has an
interest herein.
The Certificate shall remain in the Agent's possession as custodian
for DTC pursuant to arrangements between the Agent and DTC, except as
provided below.
2. In the event of any solicitation of consents from or voting by
holders of the CB Shares(TM), the Issuer shall establish a record
date for such purposes and give DTC notice of such record date not
less than 15 calendar days in advance of such record date to the
extent possible. Notices to DTC pursuant to this paragraph by
telecopy shall be sent to DTC's Reorganization
<PAGE> 3
Department at (212) 709-6896, or (212) 709-6897, and receipt of such
notices shall be confirmed by telephoning (212) 709-6870. Notices to
DTC pursuant to this Paragraph by mail or by any other means shall be
sent to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004-2695
Each CB(TM) Share will have one vote. DTC shall make available to the
Issuer and Agent upon written request and for a customary fee from time to
time a securities position listing ("SPL") of the CB(TM) Share holdings of
each DTC Participant. Such request for an SPL will be addressed to DTC's
Reorganization Department and shall include the CUSIP number of the
respective CB Shares(TM) as well as the record date to be used to determine
beneficial holders. Notices sent by telecopy will be sent to (212)
709-1093 or (212) 709-1094. Notices sent by mail or by any other means
will be sent to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004-2695
The Issuer or Agent 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 to by such DTC Participant, directly or indirectly, to
the beneficial owners of the CB Shares(TM).
3. All notices and payment advices sent to DTC shall contain the CUSIP
number of the CB Shares(TM) of the respective series.
4. Dividend or distribution payments by the Fund or any series thereof
shall be received by Cede & Co., a nominee of DTC, or its registered
assignments in same-day funds on each payment date (or the equivalent
in accordance with existing arrangements between the Issuer or Agent
and DTC). Such payments shall be made payable to the order of Cede &
Co., and addressed as follows:
<PAGE> 4
Manager, Cash Receipts
Dividend Department
The Depository Trust Company
7 Hanover Square, 24th Floor
New York, NY 10004-2695
In the event that the Fund takes any action in respect of payment or
nonpayment of dividends or other distributions on CB Shares(TM) of any
series, the Agent shall promptly notify DTC of such action, and shall give
DTC notice of any applicable record date and the per CB(TM) Share amount to
be paid. Such notice shall be given by telephoning the Supervisor of DTC's
Dividend Announcement Section at (212) 709-1270 or by telecopy sent to
(212) 709-1723 on the date the dividend is declared. Such verbal or
telecopy notice shall be followed promptly by written confirmation sent by
a secure means to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 22nd Floor
New York, NY 10004-2695
5. DTC may direct the Issuer or Agent to use any other telephone number
for facsimile transmission, address or department of DTC as the
number, address or department to which notices may be sent.
6. Upon written request to DTC's Reorganization Department DTC shall
release security position listings only to such authorized persons of
the Issuer and Agent as are listed in the attached Appendix B, as
amended from time to time.
7. In the event of issuance and redemption of CB Shares(TM) in Creation
Unit size aggregations or any similar transactions necessitating an
increase or decrease in the number of outstanding CB Shares(TM) of
any series, DTC's DWAC procedures will be followed. Agent recognizes
that DTC accepts such instructions up until 6:30 p.m. New York City
time. Concurrently therewith, the Agent shall make appropriate
notation on an attachment to each applicable Certificate indicating
the amount of such decrease or increase and the total number of CB
Shares(TM) outstanding. On each day on which Agent is open for
business and on which it receives an instruction originated by a
Participant through DTC's DWAC system to increase the Participant's
account by a specified number of shares (a "Deposit Instruction"),
Agent shall, before 6:30 p.m., New York City time, approve or cancel
the Deposit Instruction through the DWAC system. On each day on
which Agent is open for
<PAGE> 5
business and on which it receives an instruction originated by a
Participant through the DWAC system to decrease the Participant's
account by a specified number of CB Shares(TM) (a "Withdrawal
Instruction"), Agent shall, before 6:30 p.m. New York City time
either approve or cancel the Withdrawal Instruction through the DWAC
system. Agent agrees that its approval of a Deposit or Withdrawal
Instruction shall be deemed to be the receipt by DTC of registration
of transfer to the name of Cede & Co. for the quantity of CB
Shares(TM) evidenced by the instruction after the Deposit or
Withdrawal Instruction is effected. All such transactions shall be
effected utilizing DTC's procedures as in effect until further
notice.
8. In the event the Issuer determines pursuant to the Document(s) that
beneficial owners of the CB Shares(TM) shall be able to obtain
certificated CB Shares(TM), the Issuer or Agent shall notify DTC of
the availability of CB(TM) Share certificates and shall issue,
transfer and exchange CB(TM) Share certificates in appropriate
amounts as required by DTC and others.
9. (a) DTC may determine to discontinue providing its services as
securities depository with respect to the CB Shares(TM) at any time
by giving reasonable prior written notice (90 days) to the Issuer or
Agent (with a copy to the Issuer) (at which time DTC will confirm
with the Issuer or Agent the aggregate number of CB Shares(TM) of
each series outstanding); provided, however, that if DTC is required
to discontinue its services as securities depository pursuant to any
governmental, judicial or regulatory order or decree, and such
discontinuation is required in less than 90 days from the date of
such order or decree, then DTC may discontinue such services by
giving notice to the Issuer or Agent (with a copy to the Issuer) as
soon as reasonably possible. Under such circumstances, at DTC's
request, if another securities depository is not available, the
Issuer and Agent shall cooperate with DTC by taking appropriate
action to make available one or more separate definitive certificates
evidencing CB Shares(TM) to any DTC Participant having CB Shares(TM)
deposited to its DTC accounts.
(b) The Issuer may determine to discontinue the services of DTC
thereunder by giving 30 days prior written notice to DTC (at which
time DTC will confirm with the Agent the aggregate number of CB
Shares(TM) of each series outstanding).
10. If applicable, publication of tax information and other like
notification will also be made to DTC.
<PAGE> 6
11. Issuer (a) understands that DTC has no obligation to, and will not,
communicate to its Participants or to any person having an interest
in the CB Shares(TM) any information contained in the Certificate(s);
and (b) acknowledges that neither DTC's Participants nor any person
having an interest in the CB Shares(TM) shall be deemed to have
notice of the provisions of the Certificate(s) by virtue of
submission of such Certificates(s) to DTC.
12. Nothing herein shall be deemed to require the Agent to advance funds
on behalf of the Issuer.
Very truly yours,
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
(As Issuer)
THE DEPOSITORY TRUST COMPANY
By:
(Authorized Officer's Signature)
Dated: , 1996
STATE STREET BANK AND TRUST COMPANY
(As Agent)
By:
(Authorized Officer's Signature)
Address for Purposes of Notice:
Received and Accepted:
<PAGE> i
APPENDIX A
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
No. of Shares
Series in Creation Units CUSIP No.
The 100,000 22236E109
Australia
Index
The 100,000 22236E208
France
Index
The 100,000 22236E307
Germany
Index
The 100,000 22236E406
Hong Kong
Index
The 100,000 22236E505
Italy
Index
The 250,000 22236E604
Japan
Index
The 100,000 22236E703
South
Africa
Index
The UK 100,000 22236E802
Index
The US 100,000 22236E885
Index
<PAGE> i
APPENDIX B
Authorized Persons of Issuer and Agent:
<PAGE> i
Principal and Income Payments Rider
1. This Rider supersedes any contradictory language set forth in the
Letter of Representations to which it is appended.
2. With respect to principal and income payments in the Securities:
A. DTC shall receive all dividend and interest payments on
payable date in same-day funds by 2:30 p.m. ET (Eastern
Time). Absent any other arrangements between Issuer or
Agent and DTC, such funds shall be wired as follows:
Chemical Bank
ABA 021000128
For credit to A/C The Depository Trust Company
Dividend Deposit Account 066-026776
B. Issuer agrees that it or Agent shall provide dividend and
interest payment information to a standard announcement
service subscribed to by DTC. In the unlikely event that
no such service exists, Issuer agrees that it or Agent
shall provide this information directly to DTC in advance
of the dividend or interest record date as soon as the
information is available.
This information should be conveyed directly to DTC
electronically. If electronic transmission is not
possible, such information should be conveyed by
telephone or facsimile transmission to:
The Depository Trust Company
Manager, Announcements
Dividend Department
7 Hanover Square, 22nd Floor
New York, New York 10004
Phone: (212) 709-1270
Fax: (212) 709-1723, 1686
C. Issuer agrees that for dividend and interest payments, it
or Agent shall provide automated notification of
CUSIP-level detail to the
<PAGE> ii
depository no later than noon ET on the payment date.
D. DTC shall receive maturity and redemption payments and
CUSIP-level detail on the payable date in same-day funds
by 2:30 p.m. ET. Absent any other arrangements between
Agent and DTC, such payments shall be wired according to
the following instructions:
Chemical Bank
ABA 021000128
For credit to A/C Depository Trust Company
Redemption Account 066-027306
in accordance with existing SDFS payment procedures in
the manner set forth in DTC's SDFS Paying Agent Operating
Procedures a copy of which has previously been furnished
to Agent.
E. DTC shall receive all other payments and CUSIP-level
detail resulting from corporate actions (such as tender
offers or mergers) on the first payable date in same-day
funds by 2:30 p.m. ET. Absent any other arrangements
between the Agent and DTC, such payments shall be wired
to the following address:
Chemical Bank
ABA 021000128
For credit to A/C Depository Trust Company
Reorganization Account 066-027608
<PAGE> 1
Draft 2/8/96
The CountryBaskets(SM) Index Fund, Inc.
________ Index Series
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, The CountryBaskets(SM) Index Fund, Inc. (the "Fund") is
an open-end management investment company registered as such under the
Investment Company Act of 1940, as amended (the "Act"), and organized as a
series fund; and
WHEREAS, the Fund desires to adopt a Plan of Distribution
pursuant to Rule 12b-1 under the Act with respect to the shares of Common
Stock, par value $.001 per share (the "Shares" or "CB Shares(SM)"), of the
_________________ Index Series (the "Designated Series"; the Designated
Series and any other series of Shares of the Fund authorized from time to
time each being referred to herein as a "Series"), and the Board of
Directors of the Fund (the "Board of Directors") has determined that there
is a reasonable likelihood that adoption of this Plan of Distribution (the
"Plan") will benefit the Designated Series and its holders of Shares and
accordingly has approved the adoption of this Plan for the Designated
Series; and
WHEREAS, ALPS Mutual Funds Services, Inc., a Colorado
corporation (the "Distributor"), is the exclusive distributor of the
Shares;
NOW, THEREFORE, the Fund hereby adopts this Plan in accordance
with Rule 12b-1 under the Act on the following terms and conditions
(capitalized terms not otherwise defined herein having the meanings
assigned thereto in the Fund's registration statement under the Act and the
Securities Act of 1933):
1. The Designated Series will pay fees, in the amounts and on
the terms set forth below or as may hereafter be determined by the Board of
Directors, that collectively will not exceed, on an annualized basis, .25%
of such Designated Series' average daily net assets for purposes permitted
by Rule 12b-1. Such fees may include payments made on the following basis:
(a) a portion of the fees (such portion, the
"Distributor's Fee"), calculated daily and payable monthly,
equal to such Designated Series' allocable portion of (i) .02%
per annum of the average aggregate daily net assets, calculated
on a daily basis ("Aggregate Net Assets"), of all Series of the
Fund that have adopted a plan under Rule 12b-1 and the
Distribution Agreement referred to below, up to Aggregate Net
Assets of $2.5 billion, plus (ii) .01% per annum of Aggregate
Net Assets of
<PAGE> 2
all such Series in excess of $2.5 billion up to $5 billion,
plus (iii) .005% per annum of Aggregate Net Assets of all such
Series in excess of $5 billion, shall be paid to the Distri-
butor, monthly in arrears, for its distribution-related
services to all such Series of the Fund under the Distribution
Agreement, dated as of __________________, 1996 (the
"Distribution Agreement"), between the Distributor and the
Fund, including without limitation (A) acting as agent of the
Fund with respect to the sale of Shares in "Creation Unit" size
aggregations as set forth in the Fund's registration statement
under the Securities Act of 1933, (B) disseminating information
supplied by or on behalf of Deutsche Morgan Grenfell/C. J.
Lawrence Inc., the Fund's investment adviser (the "Adviser"),
with respect to the "Fund Basket" of securities applicable to
purchases and redemptions of Creation Unit aggregations of
Shares and the "Cash Component" for purchases of Creation Unit
aggregations of Shares, all in accordance with the Distribution
Agreement, (C) generating and transmitting confirmations of
purchases of Creation Unit aggregations of Shares and deli-
vering copies of the Fund's Prospectus and Statement of
Additional Information in connection with purchases thereof;
(D) administering this 12b-1 Plan in accordance with the terms
hereof, including making payments and reimbursements to third
parties as provided for herein; (E) clearing and filing all
advertising, sales, marketing and promotional materials of the
Fund with the National Association of Securities Dealers, Inc.
(the "NASD"); (F) maintaining access to direct computer commu-
nications links with The Depository Trust Company, the Fund's
transfer agent and the Fund's custodian; and (G) such other
services and obligations as are set forth in the Distribution
Agreement.
(b) a portion of the fees (such portion, the "Marketing
Fee"), calculated daily and payable monthly, equal to such
Designated Series' allocable portion of (i) .23% per annum of
the Aggregate Net Assets of all Series that have adopted a plan
under Rule 12b-1 and the Marketing Agreement referred to below,
up to Aggregate Net Assets of $200 million, plus (ii) .0% per
annum of the Aggregate Net Assets of all such Series in excess
of $200 million up to $1.5 billion, plus (iii) .03% per annum
of Aggregate Net Assets of all such Series in excess of $1.5
billion up to $5 billion, plus (iv) .015% per annum of the
Aggregate Net Assets of all such Series in excess of $5
billion, shall be paid to the Distributor, monthly in arrears,
for its marketing and promotional services to the Fund under
the Marketing Agreement, dated as of ____________________, 1996
(the "Marketing Agreement"), between the Distributor and the
Fund, including without limitation (A) making available four
regional wholesalers and four 800-line registered
<PAGE> 3
representatives to carry out the Fund's marketing plan and
provide certain stockholder services; (B) developing in
conjunction with the Fund and the Adviser a marketing plan for
the use and trading of CB Shares(SM) of all Series subject to the
Marketing Agreement; (C) facilitating through broker-dealers
and other persons communications with and education of
beneficial owners of CB Shares(SM) with respect to the Fund and
the respective Series; and (D) certain other services and
obligations set forth in the Marketing Agreement.
(c) The remainder of the fees, not to exceed, on an
annualized basis, .25% of the average daily net assets of the
Designated Series less any applicable Distributor's Fee and
Marketing Fee paid or payable by the Designated Series to the
Distributor, shall be used, subject to paragraph 3 hereof, to
pay for any activities primarily intended to result in the sale
of Shares of the Fund in Creation Unit aggregations or for the
provision of stockholder services to holders of CB Shares(SM),
including, but not limited to:
(i) payments to registered broker-dealers, banks or
other persons (each, an "Investor Services
Organization" or "ISO"), of investor services fees
("Investor Services Fees"), in each case pursuant
to a separate payment agreement, in substantially
the form approved by the Board of Directors of the
Fund and attached hereto as Annex A (a "Fund
Payment Agreement"), as compensation for certain
stockholder support, educational and promotional
services relating to CB Shares(SM) to be provided by
the respective ISO pursuant to an agreement between
such ISO and the Distributor, substantially in the
form approved by the Board of Directors and
attached hereto as Annex B (an "Investor Services
Agreement"), with respect to all Series of the Fund
subject to such Investor Services Agreement, such
Investor Services Fees to be computed daily and
payable quarterly in accordance with the applicable
Fund Payment Agreement with the respective ISO;
(ii) reimbursing the Distributor for payments of
supplemental compensation to regional wholesalers
employed by the Distributor pursuant to the
Marketing Agreement in amounts, and on terms and
conditions, set forth in such agreement between the
Fund and the Distributor ("Supplemental
Compensation Agreement") as may
<PAGE> 4
hereafter be approved by the Board of Directors
in accordance with Rule 12b-1 as a related agree-
ment under this Plan; and
(iii) reimbursing the Distributor and, to extent of
any amounts remaining available to the Designated
Series under this Plan, the Adviser for promotion
and marketing activities (including any such
activities undertaken by arrangements with third
parties pursuant to Investor Services Agreements,
Stockholder Services Agreements or otherwise)
related to the sale of Shares of the Designated
Series in Creation Unit aggregations or secondary
market trading in CB Shares(SM) of the Designated
Series, including, but not limited to, paying for
the printing and distribution of the Fund's
prospectus and Statement of Additional Information
(other than (a) incremental the Distributor for
prospectuses and Statements of Additional
Information to be used in connection with offers
and sales to prospective investors up to a maximum
of $25,000 per annum, for which costs the
Distributor's only compensation shall be the
Distributor's Fee referred to in paragraph (a) of
this section 1, and (b) such printing and
distribution costs incurred by the Fund directly
in connection with prospectuses and/or Statements
of Additional Information purchases of CB Shares(SM))
and, in accordance with the Marketing Agreement,
production and distribution of sales and marketing
materials relating to the Designated Series,
communications to and with the Designated Series
stockholders and advertisements (including the
creative costs associated therewith).
2. The Adviser may make payments from time to time from its
own resources for the purposes described in paragraph 1(c)(iii) hereof.
3. Any fees or expenses for distribution-related, marketing,
promotional or stockholder services relating to the Designated Series' or
all Series' Shares accrued by the Distributor or any Investor Services
Organization in one fiscal year of the Fund may not be paid from fees
hereunder received or receivable from the Designated Series with respect to
subsequent fiscal years. Amounts paid by the Designated Series to the
Distributor or the Adviser under paragraph 1(c)(iii) above in
<PAGE> 5
reimbursement of certain expenses of marketing and promotional activities
shall not be used to pay for reimbursement of similar expenses with respect
to any other Series. The aggregate Distributor's Fees, Marketing Fees,
Investor Services Fees and other fees payable by all Series of the Fund
shall be allocated among the Series pro rata in accordance with the average
daily net assets of each Series, and reimbursements of expenses for such
activities and services attributable to the Fund as a whole shall be
allocated to each Series according to the method adopted by the Board of
Directors. The Distributor's allocation of fees and other expenditures
hereunder shall be subject to the annual review of the Board of Directors.
Fees and other expenditures hereunder will not be used by the recipient to
pay any interest expense, carrying charges or other financing costs.
4. This Plan shall become effective with respect to the
Designated Series (the "Effective Date") upon the later of (i) ________ __,
1996 or (ii) the date upon which it has been approved by a "vote of a
majority of the outstanding voting securities" (as defined in the Act) of
the Designated Series and a majority of the Board of Directors, including a
majority of those Directors of the Fund ("Directors") who are not "inter-
ested persons" of the Fund (as defined in the Act) and have no direct or
indirect financial interest in the operation of the Plan or any agreements
related to it (the "Independent Directors"), cast in person at a meeting
(or meetings) called for the purpose of voting on this Plan.
5. This Plan and any related agreements shall remain in effect
with respect to the Designated Series until February 28, 1997 (such period
being within one year from the Effective Date) and may be continued
thereafter if this Plan or such related agreement is approved each year
with respect to the Designated Series by votes of a majority of both
(a) the Directors and (b) the Independent Directors, cast in person at a
meeting (or meetings) called for the purpose of voting on this Plan and
such related agreements.
6. The Treasurer of the Fund shall provide to the Directors
and the Directors shall review, at least quarterly, a quarterly written
report, and once a year, an annual written report, complying with the
requirements of Rule 12b-1 under the Act, setting forth all amounts
expended pursuant to this Plan or any related agreement and the purposes
for which such expenditures were made. In such reports, only expenses
properly attributable to the sale or servicing of Shares of the Designated
Series will be used to justify any expenses reimbursed hereunder and
charged to Shares of the Designated Series.
7. This Plan may be terminated with respect to the Designated
Series at any time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities (as defined in the Act) of
the Designated Series, or by the vote of a majority of the Independent
Directors.
<PAGE> 6
8. All agreements related to this Plan (including each Fund
Payment Agreement and Investor Services Agreement, any Special Compensation
Agreement), shall be in writing, and shall provide: (a) that such agreement
may be terminated with respect to any Series at any time, without payment
of any penalty, by vote of a majority of the Independent Directors or by a
vote of a majority of the outstanding voting securities (as defined in the
Act) of the Designated Series, on not more than 60 days' written notice to
any other party to the agreement, and (b) that such agreement shall
terminate automatically in the event of its assignment (as defined in the
Act).
9. This Plan may not be amended with respect to the Designated
Series to increase materially the amount of fees and expenses provided for
in the first sentence of paragraph 1 hereof unless such amendment is
approved by a majority of the outstanding voting securities (as defined in
the Act) of the Designated Series and no material amendment to this Plan
shall be made unless approved in the manner provided for annual continuance
in paragraph 5 hereof.
10. While this Plan is in effect, the selection and nomination
of Directors who are not "interested persons" (as defined in the Act) of
the Fund shall be committed to the discretion of the Directors who are not
"interested persons".
11. The Fund shall preserve copies of this Plan and any
related agreements and all reports made pursuant to paragraph 6 hereof, for
a period of not less than six years from the date of this Plan, or such
agreement or such report, as the case may be, the first two years in an
easily accessible place.
Form of Plan adopted ___________, 1996
<PAGE> 1
Draft of February 2, 1996
The CountryBasketsSM Index Fund, Inc.
Fund Payment Agreement
This Fund Payment Agreement (the "Agreement"), is made as of
___________ __, 1996 between The CountryBasketsSM Index Fund, Inc., a
Maryland corporation (the "Fund"), and _________________ (the "Investor
Servicer").
WHEREAS, the Fund has entered into a Distribution Agreement
with ALPS Mutual Funds Services, Inc. ("ALPS") whereby ALPS agrees to act
as its distributor and principal underwriter; and
WHEREAS, ALPS and the Investor Servicer have entered into an
Investors Services Agreement (the "Services Agreement") whereby the
Investor Servicer agrees to provide certain broker/dealer and shareholder
support services to its clients and educational and promotional services
with respect to the issued and outstanding shares of common stock ("CB
SharesSM" or "CountryBasketsSM") of the nine initial series of the Fund
indicated on Appendix A thereto (each, an "Initial Series") and each
additional series of CB SharesSM subsequently established by the Fund and
made subject to the Services Agreement and this Agreement in accordance
with the terms thereof and hereof (each, an "Additional Series" and,
together with the Initial Series, the "Series") for the benefit of the
Fund; and
WHEREAS, the Fund wishes to compensate the Investor Servicer
directly for such services.
<PAGE> 2
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, the Fund and the Investor Servicer agree as
follows:
Section 1. In consideration of the services and facilities
provided by the Investor Servicer to ALPS pursuant to the Services
Agreement and subject to the terms and conditions of the 12b-1 Plans (as
defined herein), the Fund agrees to compensate the Investor Servicer on
behalf of the Initial Series directly for such services and the Investor
Servicer agrees to accept as full payment therefor, a fee at the annual
rate of 0.05 of 1% of the average aggregate daily net assets over $200
million of all Initial Series, computed daily and payable on a quarterly
basis. If the Services Agreement is renewed for any subsequent twelve-
month period, as set forth in Section 10 thereof, and subject to the terms
and conditions of the 12b-1 Plans, the Fund will pay the Investor Servicer
0.05 of 1% of the average aggregate daily net assets over $200 million of
all Initial Series, subject to review by the Board of Directors of the Fund
and the termination of this Agreement. In the event that any Additional
Series becomes subject to this Agreement, the Fund will pay the Investor
Servicer for the services and facilities to be provided by the Investor
Servicer with respect to such Additional Series a fee at the rate set
forth in the 12b-1 Plan approved by the Board of Directors of the Fund with
respect to such Additional Series.
<PAGE> 3
For purposes of determining the fees payable under this
Agreement, the average aggregate daily net assets of the Series will be
computed in the manner specified in the Fund's Registration Statement (as
the same is in effect from time to time) in connection with the computation
of the net asset value of CB SharesSM for purposes of purchases and
redemptions. All fees payable by the Fund under this Agreement with
respect to the CB SharesSM of a particular Series shall be borne solely by
the holders of such CB SharesSM and no other Series of CB SharesSM or
shareholders shall be responsible for such fees. However, payments and
reimbursed expenses under the 12b-1 Plans attributable to the Fund as a
whole shall be allocated to each Series according to the method adopted by
the Fund's Board of Directors.
Section 2. This Agreement is a related agreement as
contemplated by Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act") with respect to the Rule 12b-1 plan (each a "12b-1 Plan" and
together the "12b-1 Plans") of each Initial Series of the Fund and, subject
to the approval of the Board of Directors of the Fund as contemplated in
Section 5, each Additional Series. The Investor Servicer and the Fund
expect that the Investor Servicer's services and educational and
promotional activities in connection with CB SharesSM pursuant to the
Services Agreement will tend to increase investor interest in and the
use and trading of
<PAGE> 4
CB SharesSM on the secondary market and thus further sales of shares
by the Fund.
Section 3. The Investor Servicer represents, warrants and
agrees that it understands that this Agreement is a Rule 12b-1 related
agreement under the 1940 Act, subject to the provisions of such Rule, as
well as any other applicable rules or regulations of the Securities and
Exchange Commission, and agrees to conform to the reasonable applicable
compliance standards adopted by the Fund's distributor for the sale of CB
SharesSM, as in effect from time to time, provided that the Investor
Servicer shall be given the opportunity to review and discuss with counsel
to the distributor prior to their adoption any such compliance standards
proposed after the date hereof that will be applicable to the activities to
be performed by the Investor Servicer pursuant to the Services Agreement.
Section 4. (a) The Fund agrees to be liable for and to hold
the Investor Servicer, its officers, directors and employees
("Indemnitees") harmless from and to indemnify each of them for any losses
and costs arising out of the Indemnitees' performance of the Services
Agreement relating to the purchase and sale of outstanding and issued CB
SharesSM trading in the secondary market as a result of (i)
any untrue statement of a material fact or omission of a material fact
necessary in order to make the statements made, in light of the
circumstances under which they were
<PAGE> 5
made, not misleading which are contained in any marketing or other written
material relating to the Fund provided to the Investor Servicer and
authorized for the Investor Servicer's use by ALPS and the Fund in
connection with the purchase and sale of outstanding and issued CB Shares;
(ii) any material misstatement in or omission of a material fact from the
Fund's current prospectus or statement of additional information necessary
in order to make the statements made, in light of the circumstances under
which they were made, not misleading; or (iii) any failure of the Fund, any
Series or the CB SharesSM to be registered and qualified for sale under any
applicable federal law and regulation or the laws of and regulations of any
state, U.S. territory or the District of Columbia when the Fund has
represented to the Investor Servicer that the Fund, any Series or the CB
SharesSM are so registered or qualified, provided that any payments under
this subparagraph (iii) shall be limited to the amount of any losses or
costs for which the Fund is indemnified by State Street Bank and Trust
Company ("State Street"), the Fund's Administrator, pursuant to the
Administration Agreement between the Fund and State Street; provided,
however, that nothing in this Section 4 shall protect the Indemnitees
against any losses or costs to which the Indemnitees would otherwise be
liable to a Fund or its security holders (A) by reason of willful
malfeasance, bad faith or gross negligence in the performance of its
duties
<PAGE> 6
under the Services Agreement, (B) by reason of the Indemnitee's reckless
disregard of its obligations and duties under the Services Agreement or
(C) where such liability arises out of or is based upon any untrue
statement or omission or alleged untrue statement or omission in the
Fund's prospectus or statement of additional information that was made in
reliance upon and in conformity with written information furnished by the
Investor Servicer to the Fund or ALPS. The Fund's obligation to indemnify
any Indemnitee is expressly conditioned upon the Indemnitee's notification
of the Fund of the commencement of any action against the Indemnitee, which
notification shall be given by letter or by facsimile transmission
addressed to the Fund at its principal office in New York, New York, and
sent to the Fund by the person against whom such action is brought within
ten days after the summons or other first legal process shall have been
served. The Indemnitee's failure to so notify the Fund shall not relieve
the Fund of any liability which it may have to the Indemnitee by reason of
any such untrue statement or omission or alleged untrue statement or
omission independent of this indemnification. The Fund will be entitled
to assume the defense of any suit brought to enforce any such claim, demand
or liability and
<PAGE> 7
to retain legal counsel of good standing chosen by the Fund and approved by
the Indemnitee (such approval not to be unreasonably withheld). If the
Fund elects to assume the defense of any such suit and retain counsel
approved by the Indemnitee, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of
them. In the event the Fund does not elect to assume the defense of any
such suit and retain counsel of good standing approved by the Indemnitee or
the Indemnitee does not approve of the counsel chosen by the Fund (such
approval not to be unreasonably withheld), the defendant or defendants in
such suit shall bear the fees and expenses of any counsel retained by any
of them and the Fund shall reimburse any Indemnitee named as defendant in
such suit for the reasonable fees and expenses of any such counsel retained
by them. The indemnification agreement contained in this Section 4(a)
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Indemnitees. This
indemnification will inure exclusively to the benefit of the Indemnitees
and their successors, assigns and estate.
(b) The Investor Servicer agrees to be liable for, to hold the
Fund, its officers, directors and employees (for purposes of this
Section 4(b), the "Fund Affiliates") harmless from, and to indemnify them
from any losses and costs arising from (i) any statements or
representations
<PAGE> 8
that the Investor Servicer or its employees make concerning the Fund or any
Series that are inconsistent with the Fund's current prospectus and
statement of additional information or any marketing or other written
material provided to the Investor Servicer and authorized for the Investor
Servicer's use by ALPS and the Fund relating to the Fund or any Series; or
(ii) any sale of CB SharesSM in any state, any U.S. territory or the
District of Columbia where the Fund, any Series or its CB SharesSM were not
registered or qualified for sale, when the Fund has not indicated to the
Investor Servicer that the Fund, such Series or its CB SharesSM were so
registered or qualified. The Investor Servicer's obligation to indemnify
the Fund Affiliates is expressly conditioned upon the Investor Servicer
being notified of the commencement of any action brought against the Fund
Affiliates, which notification shall be given by letter or facsimile
transmission addressed to the Investor Servicer at its principal offices in
New York, New York and sent to the Investor Servicer by the person against
whom such action is brought within ten days after the summons or other
first legal process shall have been served. The Fund Affiliates' failure
to notify the Investor Servicer of the commencement of any such action
shall not relieve the Investor Servicer from any liability which it may
have to the Fund Affiliates by reason of any such statements or
representations or sale of CB SharesSM on the part of the Investor Servicer
<PAGE> 9
independent of this indemnification. The Investor Servicer shall have a
right to control the defense of such action, with counsel of its own
choosing, satisfactory to the Fund Affiliates, if such action is based
solely upon such untrue statement or omission or alleged untrue statement
or omission on its part, and in any other event the Investor Servicer and
the Fund Affiliates shall each have the right to participate in the defense
or preparation of the defense of such action at their own expense.
(c) The provisions of this Section 4 shall survive the
termination of this Agreement.
Section 1. Unless sooner terminated, this Agreement will
continue for one year following the date of its adoption as provided in
Section 8 hereof, and thereafter will continue automatically for successive
annual periods provided such continuance is specifically approved at least
annually by the Fund in the manner described in Section 8 hereof. This
Agreement is terminable, without penalty, at any time (a) by the Fund with
respect to any Series of CB SharesSM (which termination may be by a vote of
a majority of the Disinterested Directors as defined in Section 8 hereof or
by vote of the holders of a majority of the voting securities (as such term
is defined in the 1940 Act) of such Series) or by the Investor Servicer
upon 60 days' notice in writing to the other party hereto or (b) upon the
termination of the Services Agreement between the Investor
<PAGE> 10
Servicer and ALPS. This Agreement will also terminate automatically in the
event of its assignment (within the meaning of the 1940 Act). This
Agreement may be amended in writing by the parties hereto. In the event
that the Board of Directors of the Fund establishes any series of CB
SharesSM listed and traded on the New York Stock Exchange or any other
national securities exchange (as defined under the Securities Exchange Act
of 1934) in addition to the Series then subject to this Agreement, adopts a
12b-1 Plan with respect to such additional series and approves the Services
Agreement and this Agreement as "related agreements" with respect to such
additional series in accordance with Rule 12b-1, such additional series
shall be made subject to this Agreement and shall become an "Additional
Series" hereunder effective immediately upon such adoption and approval.
Section 2. All notices and other communications to either
party will be duly given if mailed, telegraphed, telexed or transmitted by
similar telecommunications device as follows:
To the Investor Servicer:
_____________________
_____________________
Attention:
To the Fund:
c/o Deutsche Morgan Grenfell/
C. J. Lawrence Inc.
1290 Avenue of the Americas
New York, New York 10019
Attention: Joseph A. La Corte
<PAGE> 11
Section 3. This Agreement will be construed in accordance with
the laws of the State of New York.
Section 4. This Agreement, and each Rule 12b-1 Plan, is
subject to approval by vote of (i) the Fund's Board of Directors and
(ii) of a majority of those Directors who are not "interested persons" (as
defined in the 1940 Act) of the Fund and have no direct or indirect
financial interest in the operation of the 12b-1 Plans adopted by the Fund
regarding the provision of support services to the beneficial owners of CB
SharesSM of the respective Series or in any agreement related thereto
("Disinterested Directors") cast in person at a meeting called for the
purpose of voting on such approval.
<PAGE> 12
IN WITNESS WHEREOF the parties have caused the Agreement to be
executed as of the day and year first written above.
THE COUNTRYBASKETSSM INDEX
FUND, INC.
By: _________________________
Name:
Title:
[NAME OF INVESTOR SERVICER]
By: _________________________
Name:
Title:
