<PAGE> 1
As filed with the Securities and Exchange Commission on February 28, 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. 5
Post-Effective Amendment No.
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 5
(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 10019
New York, New York (Zip Code)
(Address of Principal Executive Offices)
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
THE COUNTRYBASKETS(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
Considerations and Risks; --FT/S&P--
Actuaries World Indices(TM); --The
FT Index Components; --Lending of
Securities; --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> 3
Part B
Form N-1 Caption in Prospectus or Statement
of Additional Information ( SAI")
Item Number
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
Investment 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
Stockholder 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
Transactions (SAI)
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)
<PAGE> 4
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
Aggregations (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> 5
SUBJECT TO COMPLETION DATED FEBRUARY 28, 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 primary 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. To achieve this
investment objective, 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> 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 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> 3
"Financial Times/Standard & Poor's Actuaries World Indices" and
"FT/S&P Actuaries World Indices" are trademarks of The Financial Times
Limited ("FT") and Standard & Poor's ("S&P") and have been licensed for
use by DMG. The Fund and the CB Shares(SM) are an authorized
sublicensee thereof. The Fund is not sponsored, endorsed, sold or
promoted by FT or S&P and neither FT nor S&P makes any representation
regarding the advisability of investing therein.
The Fund and the securities described herein (the
"Products") have been produced by reference to various
country indices included in the FT/S&P Actuaries World
Indices(TM) (the "Indices"), copyright 1996, which are
owned and jointly compiled by FT-SE International Limited
("FT-SE"), Goldman, Sachs & Co. ("GS") and S&P in con-
junction with the Institute of Actuaries and the Faculty of
"Actuaries (together with FT-SE, GS and S&P, the "Owners").
NatWest Securities Limited was a co-founder of the Indices.
The Products are not sponsored, endorsed, sold or promoted
by the Owners. The Owners make no warranty, express or
implied, to the owners of the Products or any member of the
public regarding the advisability of investing in
securities generally or in the Products particularly or the
ability of the Indices to track general stock market
performance. The Owners' only relationship to Deutsche
Morgan Grenfell/C. J. Lawrence Inc. (the "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 Licensee or the
owners of the Products into consideration in determining,
composing or calculating the Indices. The Owners are not
responsible for and have not participated in the
determination or calculation of the equation by which the
Products are to be converted into cash. 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 FT 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 FT 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, FT and S&P will jointly calculate the indices. In November
1995, The FT transferred its ownership rights in the FT/S&P Actuaries
World Indices(TM) to FT-SE, a company jointly owned by FT, the London
Stock Exchange and the Institute of Actuaries.
<PAGE> 4
By the end of 1996, it is expected that FT-SE will assume
responsibility for calculating the European and Asia-Pacific indices
and S&P will calculate the U.S. indices. The Fund is not sponsored by
or affiliated with S&P, FT-SE or FT. 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
"Lit." 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$ ____________, Lit. ____________, 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> 5
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 primary 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 primary 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".
To achieve its primary 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 secondary
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
weighting 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
<PAGE> 6
Creation Unit aggregations referred to
below, CB Shares(SM) are not
redeemable securities of the Fund. The
acquisition of CB Shares(SM) of each
Series by investment companies is
subject to the restrictions of
Section 12(d)(1) of the Investment
Company Act of 1940 (the "1940 Act").
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).
<PAGE> 7
The Fund will offer and sell Creation
Unit size aggregations of shares of
each Series continuously through the
Distributor (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.
For information about the initial
issuance of Creation Units of each
Series and the commencement of trading
on the NYSE of CB Shares(SM), see
"Purchase and Issuance of Fund Shares
in Creation Unit Aggregations Initial
Issuance of Creation Units and
Commencement of Trading" 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.
<PAGE> 8
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".
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 .015% 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. Subject to certain
conditions, each Series will also make
a quarterly contribution to bonus
payments to be made by the Distributor
to certain employees engaged in
marketing activities with respect to
Fund shares. Each Series will also pay
certain expenses of printing and
distributing prospectuses and 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.
<PAGE> 9
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 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".
<PAGE> 10
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".
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> 11
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> 12
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
A. Stockholder Transaction
Expenses
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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)<F1>. . . . . . $2,624 $3,737 $1,952 $3,192 $1,593 $12,123 $1,408 $5,535 $12,103
Local Stock Transfer
Taxes(b)<F2>
(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)<F3>
as a percentage of
cash amount of
investment . . . . 1.15% 1.00% 1.00% 1.20% 1.00% 1.32% 2.00% 1.50% 0%
as a percentage of
total investment
amount . . . . . . .015% .01% .01% .012% .01% .013% .02% .015% 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)<F1> $2,050 $3,030 $1,525 $2,800 $1,180 $8,980 $1,100 $4,100 $7,644
Local Stock Transfer
Taxes(b)<F2>
(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)<F4>
as a percentage of
cash redemption
proceeds . . . . . 1.15% 1.00% 1.00% 1.20% 1.00% 1.32% 1.00% 1.00% 0%
as a percentage of
total redemption
proceeds . . . . . .015% .01% .01% .012% .01% .013% .01% .01% 0%
<PAGE> 13
B. Annual Series Operating
Expenses (as a
percentage of average
net assets)
Management Fees(e)<F5> .30% .30% .30% .45% .30% .30% .45% .30% .20%
Distribution Fees (12b-
1)(f)<F6> . . . . . . .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>
____________________
<F1> (a) Estimated based on a delivery to or from the Fund of one or more Fund Baskets 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. Such estimated costs are based on the
number of constituent securities in a Fund Basket for each Series as of February 27, 1995. Such
costs will vary with the number of constituent securities in a Fund Basket for the relevant
Series, but will not vary according to the number of Fund Baskets submitted on purchase or
delivered on redemption, as the case may be. Investors will also bear 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" above. 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.
<F2> (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).
<F3> (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 that will not exceed 10% of the total purchase
price except in certain circumstances under which 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.
<F4> (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.
<F5> (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".
<PAGE> 14
<F6> (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 .015% 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. Subject to certain conditions, each Series will also make a quarterly
contribution to bonus payments to be made by the Distributor to certain employees engaged in
marketing activities with respect to the secondary market for Fund shares. Each Series will also
make payments to certain dealers and other persons for marketing and stockholder services, will
pay certain expenses of printing and distributing prospectuses 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> 15
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
Index Index Index Index Index Index Index UK Index US 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
Index Index Index Index Index Index Index UK Index US 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> 16
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 on estimated 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,
will be reimbursed for certain expenses and, subject to certain
conditions, will receive contributions toward bonus payments to be made
to certain employees of the Distributor. Each Series will also pay
certain expenses of printing and distributing prospectuses and 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> 17
THE FUND
The CountryBaskets(SM) The Fund is a non-diversified, open-end management
Index Fund, Inc. and investment company registered under the 1940 Act,
its Investment organized as a series fund. Each Series of the Fund
Objective 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
primary 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.
To achieve its primary investment objective, 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
secondary 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
objectives 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 weighting 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.
<PAGE> 18
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 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.
<PAGE> 19
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 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 investment
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.
<PAGE> 20
FT/S&P Actuaries World The FT/S&P Actuaries World Indices(TM) are jointly
Indices(TM) owned by FT-SE International Limited (a company
jointly owned by The Financial Times Limited, the
London Stock Exchange and the Institute of Actuaries)
("FT-SE"), 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. In November 1995, FT-SE assumed the
ownership rights of The Financial Times Limited in the
FT Index. By the end of 1996, it is expected that FT-
SE will assume responsibility for calculating the
Asian-Pacific and European indices and Standard &
Poor's will calculate the U.S. indices. 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") 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
consistent 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 Weighting. 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 percentage 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.
<PAGE> 21
The FT Index The Australia Component. The Australia component of
Components 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.
The France Component. The France component of the FT
Index consists of stocks traded on the Paris Bourse.
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%, respectively, 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.
<PAGE> 22
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 Italian Stock Exchange. As of
December 29, 1995, stocks of 59 issuers were included.
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.
<PAGE> 23
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 repre-
sented 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.
<PAGE> 24
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 purchase or sale transaction on
a principal basis will be done with DMG, Deutsche Bank
or their affiliates in securities, foreign currency or
other assets. Deutsche Bank 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-INFOS. 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 Distribution 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.
<PAGE> 25
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 and
Agent 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.
<PAGE> 26
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 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 .015% 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 .02%
per annum of Aggregate Net Assets of all such Series
in excess of $5 billion up to $10 billion, plus .015
per annum of the Aggregate Net Assets of all such
Series in excess of $10 billion. Subject to the
approval of the Board of Directors of the Fund,
including a majority of the Directors who are not
interested persons" of the Fund (as defined under the
1940 Act) and have no direct or indirect financial
interest in the operation of the 12b-1 Plans, each
Series will also pay to the Distributor, on a
quarterly basis commencing with such approval, such
Series' allocable portion of .01% per annum of the
Aggregate Net Assets of all Series in excess of $500
million up to Aggregate Net Assets of $2.5 billion as
a contribution toward certain bonus payments to be
made by the Distributor to employees engaged in
marketing activities with respect to the secondary
market for Fund shares. In addition, subject to the
aggregate limitation on payments under each 12b-1
Plan, the Fund will pay certain expenses of printing
and distributing prospectuses and 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.
<PAGE> 27
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
administration 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 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.
<PAGE> 28
Exchange Listing Application has been made to list the CB Shares(SM) of
and Trading 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.
<PAGE> 27
Creation Units The Fund will sell 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 involves
Considerations and risks similar to those of investing in a broadly-based
Risks portfolio of equity securities traded on exchanges in
the countries represented by the relevant FT Index
component, such as market fluctuations caused by such
factors as economic and political developments,
changes in interest rates and perceived trends in
stock prices. Investing in 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.
<PAGE> 29
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 and
economic 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> 30
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.
<PAGE> 31
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 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 accounting
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.
<PAGE> 32
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
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 net
Gains Distributions 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 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 CB Shares(SM). The Fund
will inform stockholders of the amount and nature of
all distributions made to them.
<PAGE> 33
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 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.
<PAGE> 34
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'
<PAGE> 35
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, U.S. 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.
Investment Restrictions Each Series intends to observe certain limitations on
of the Fund 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 outstanding, provided,
that for purposes of this restriction, short-term
credits necessary for the clearance of transactions
are not considered borrowings;
<PAGE> 36
(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 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.
<PAGE> 37
Determination of Net Net asset value per share for each Series of the Fund
Asset Value 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
<PAGE> 38
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.
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".
<PAGE> 39
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
<PAGE> 40
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 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 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. Morgan Grenfell & Co. Ltd., 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.
<PAGE> 41
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.
<PAGE> 42
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 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.
<PAGE> 43
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 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).
<PAGE> 44
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
<PAGE> 45
King Day (observed) for such Series. See "Purchase and
Issuance of Fund Shares in Creation Unit
Aggregations".
Purchase and Issuance The Fund will issue and sell shares of each Series
of Fund Shares in only in Creation Unit size aggregations on a
Creation Unit continuous basis through the Distributor at their net
Aggregations 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
weighting 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 initial
and subsequent investment amount for shares of any
Series from the Fund.
<PAGE> 46
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. If
an investor is restricted by regulation or otherwise
from investing or engaging in a transaction in one or
more Fund Basket securities, the Adviser shall have
the right, in its discretion, to permit the cash
equivalent value of such Fund Basket security or
securities to be included as part of the Cash
Component in lieu thereof, subject to any applicable
cash transaction fee. In addition, the Adviser
reserves the right to permit or require the
substitution of an amount of cash to be added to the
<PAGE> 47
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. The Cash Component, as calculated based on
delivery in full of the Fund Basket announced for a
designated Issue Date, will not exceed 10% of the
total purchase price of a Creation Unit aggregation of
shares on such date. In the event that the Fund
accepts the substitution of cash for omitted Fund
Basket securities as described above, however, the
Cash Component may in certain limited circumstances
exceed 10% of the total purchase price. 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.
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
(as the same may be amended from time to time, 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.
<PAGE> 48
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 (as defined below) 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
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"). 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(SM) 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 and, in the case of the Australia, South
Africa and UK Index Series, all applicable stock
transfer taxes or stamp duties. See "Summary of Fund
Expenses".
<PAGE> 49
The foregoing procedures for purchase of Creation
Units of CB Shares(SM) are subject to modifications
applicable to an alternative purchase option
contemplated by the Fund. See "Purchase and Issuance
of Fund Shares in Creation Unit Aggregations--Possible
Alternative Purchase Procedure Option" in the
Statement of Additional Information.
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) of each Series by
investment companies is subject to the restrictions of
Section 12(d)(1) of the 1940 Act.
Absent an applicable exemption, beneficial owners of
10% of the CB Shares(SM) of any Series will be subject
to the insider reporting, short-swing profit and short
sale provisions under the Exchange Act. The Exchange
Act provides that, with certain exceptions, any gain
realized by any such beneficial owner from any
purchase and sale or sale and purchase of
CB Shares(SM) of a Series within any period of less
than six months is recoverable by the Series.
Additionally, every such beneficial owner must file
with the SEC a statement showing ownership and changes
in ownership of CB Shares(SM) within ten days after
the end of any calendar month in which there has been
a change in such beneficial owner's ownership of
CB Shares(SM).
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. For additional details concerning the purchase
of CB Shares(SM) from the Fund in Creation Unit
aggregations and information about the initial
issuance of Creation Units of each Series and the
commencement of trading of CB Shares(SM) on the NYSE,
see "Purchase and Issuance of Fund Shares in Creation
Unit Aggregations" in the Statement of Additional
Information.
<PAGE> 50
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 redemption 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 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.
<PAGE> 51
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.
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
<PAGE> 52
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.
<PAGE> 53
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(SM) Clearing Process by calling
800-CB-INFOS.
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 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 and, in the case of
the Japan Index Series, all applicable stock transfer
taxes. See "Summary of Fund Expenses".
<PAGE> 54
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> 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)
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)
* 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> 2
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
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
<PAGE> 3
Redemption Redemption Period in
Request Date Delivery Date Calendar Days
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> 4
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>
Investment Adviser
Deutsche Morgan Grenfell/C. J. Lawrence Inc. [Logo]
31 West 52nd Street
New York, New York 10019
Administrator
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Custodian and Transfer Agent THE COUNTRYBASKETS(SM) INDEX
State Street Bank and Trust Company FUND, INC.
225 Franklin Street
Boston, Massachusetts 02110
Distributor
ALPS Mutual Funds Services, Inc.
370 Seventeenth Street, Suite 2700
Denver, Colorado 80202
Investor Information: 1-800-CB-INFOS
TABLE OF CONTENTS _____________
Page
Prospectus Summary . . . . . . 4
Summary of Fund Expenses . . . 9 PROSPECTUS
The Fund . . . . . . . . . . . 15
The CountryBaskets(SM) Index _____________
Fund, Inc. and its
Investment Objective . . . 15
Investment Policies . . . . 15 ______ __, 1996
FT/S&P Actuaries World
Indices(TM) . . . . . . . 17
The FT Index Components . . 18
Investment Management . . . 21
Distributor . . . . . . . . 22
Administrator . . . . . . . 22
Custodian and Transfer Agent 22 No person has been authorized
Fees . . . . . . . . . . . . 22 to give any information or to make
CB Shares(SM) . . . . . . . 24 any representations other than
Exchange Listing and Trading 24 those contained in this Prospectus
Creation Units . . . . . . . 25 in connection with the offer of the
Investment Considerations and Fund's shares made by this
Risks . . . . . . . . . . 25 Prospectus, and, if given or made,
Dividends and Capital Gains such information or representations
Distributions . . . . . . 28 must not be relied upon as having
Tax Matters . . . . . . . . 28 been authorized by the Fund. This
Lending of Securities . . . 29 Prospectus does not constitute an
Investment Restrictions of offer to sell, or a solicitation of
the Fund . . . . . . . . . 30 an offer to buy, any shares in any
Determination of Net Asset jurisdiction in which such offer to
Value . . . . . . . . . . 31 sell or solicitation of an offer to
Board of Directors . . . . . 32 buy may not lawfully be made.
Capital Stock . . . . . . . 32
Book-Entry Only System . . . 33 Dealers effecting transactions
Business Day . . . . . . . . 35 in the shares, whether or not
Purchase and Issuance of Fund participating in this distribution,
Shares in Creation Unit are required to deliver a pros-
Aggregations . . . . . . . 36 pectus. This is in addition to
Redemption of Fund Shares in any obligation of dealers to
Creation Unit Aggregations 39 deliver a prospectus when
Available Information . . . 42 acting as underwriters.
Appendix A . . . . . . . . . . A-1
Table of Contents of Statement SUBJECT TO COMPLETION
of Additional Information DATED FEBRUARY 28, 1996
<PAGE> 1
SUBJECT TO COMPLETION, DATED FEBRUARY 28, 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> 3
TABLE OF CONTENTS
Page
General Description of the Fund . . . . . . . . . . . . . . . . . 1
Investment Policies and Restrictions . . . . . . . . . . . . . . . 1
Special Considerations and Risks . . . . . . . . . . . . . . . . . 13
The FT Index . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Exchange Listing and Trading . . . . . . . . . . . . . . . . . . . 31
Reasons for Investors to Purchase CB Shares(SM) . . . . . . . . . 32
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . 34
Investment Advisory, Management and Other Services . . . . . . . . 39
Brokerage Transactions . . . . . . . . . . . . . . . . . . . . . . 40
Purchase and Issuance of Fund Shares in Creation Unit Aggregations 41
Redemption of Fund Shares in Creation Unit Aggregations . . . . . 51
Determining Net Asset Value . . . . . . . . . . . . . . . . . . . 55
Dividends and Distributions . . . . . . . . . . . . . . . . . . . 56
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Capital Stock and Stockholder Reports . . . . . . . . . . . . . . 59
Counsel and Independent Accountants . . . . . . . . . . . . . . . 59
Report of Independent Accountants . . . . . . . . . . . . . . . . 60
Statement of Assets and Liabilities . . . . . . . . . . . . . . . 61
Notes to Financial Statements . . . . . . . . . . . . . . . . . . 62
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" and
"FT/S&P Actuaries World Indices" are trademarks of The Financial Times
Limited ("FT") and Standard & Poor's ("S&P") and have been licensed for use
by DMG. The Fund is an authorized sublicensee thereof. The Fund and the CB
Shares(SM) are not sponsored, endorsed, sold or promoted by FT or S&P and
neither FT nor S&P makes any representation regarding the advisability of
investing therein.
____________________
The Fund and the securities described herein (the "Products")
have been produced by reference to various country indices
included in the FT/S&P Actuaries World Indices(TM) (the
"Indices"), copyright 1996, which are owned and jointly
compiled by FT-SE International Limited ("FT-SE"), Goldman,
Sachs & Co. ("GS") and S&P in conjunction with the Institute of
Actuaries and the Faculty of Actuaries (together with FT-SE, GS
and S&P, the "Owners"). NatWest Securities Limited was a co-
founder of the Indices.
The Products are not sponsored, endorsed, sold or promoted by
the Owners. The Owners make no warranty, express or implied, to
the owners of the Products or any member of the public
regarding the advisability of investing in securities generally
or in the Products particularly or the ability of the Indices
to track general stock market performance. The Owners' only
relationship to Deutsche Morgan Grenfell/C. J. Lawrence Inc.
(the "Licensee") is the licensing of certain trademarks and
trade names and of the Indices,
<PAGE> 2
which are determined, composed and calculated without regard to the
Licensee or the Products. The Owners have no obligation to take the
needs of Licensee or the owners of the Products into consideration in
determining, composing or calculating the Indices. The Owners are not
responsible for and have not participated in the determination or
calculation of the equation by which the Products are to be converted
into cash. 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 FT 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 FT 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, FT and S&P will
jointly calculate the indices. In November 1995, FT transferred its
ownership rights in the FT/S&P Actuaries World Indices(TM) to FT-SE, a
company jointly owned by FT, the London Stock Exchange and the Institute of
Actuaries. By the end of 1996, it is expected that FT-SE will assume
responsibility for calculating the European and Asia-Pacific indices and
S&P will calculate the U.S. indices. The Fund is not sponsored by or
affiliated with S&P, FT-SE or FT. 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 "Lit." 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$____________,
Lit. ____________, 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> 3
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(SM)" 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.
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. The estimated 1995 Gross
Domestic Product ("GDP") of Australia, based on data provided by the
Adviser, was US$346.7 billion.
<PAGE> 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 estimated 1995 GDP of France, based
on data provided by the Adviser, was US$1.5 trillion.
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 1994, 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> 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 estimated 1995 GDP of Germany, based on data
provided by the Adviser, was US$2.4 trillion.
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 estimated 1995
GDP of Hong Kong, based on data provided by the Adviser, was US$144.9
billion.
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. - 5:00 p.m. (4:00 a.m. - 11:00 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 Lit. 312.1 trillion,
or US $196.8 billion. The aggregate investible market capitalization (as
defined by the WIPC) of Italy was approximately Lit. 247.1 trillion, or US
$155.7 billion, as of December 29, 1995. The leading major market index is
the MIB-30, owned and
<PAGE> 4
published by the Milan Stock Exchange. The estimated 1995 GDP of Italy,
based on data provided by the Adviser, was US$1.1 trillion.
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 1994, 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-225, owned and published by Nihon Keizai Shimbun. The estimated
1995 GDP of Japan, based on data provided by the Adviser, was US$5.6
trillion.
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,
<PAGE> 5
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. The estimated 1995 GDP of South
Africa, based on data provided by the Adviser, was US$133.5 billion.
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 estimated
1995 GDP of the United Kingdom, based on data provided by the Adviser, was
US$1.1 trillion.
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 1994. 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
<PAGE> 6
Index* ("S&P 500"), owned and published by Standard & Poor's. The estimated
1995 GDP of the United States, based on data provided by the Adviser, was
US$7.1 trillion.
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 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.
* "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> 7
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
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 the 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-
<PAGE> 8
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. 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
<PAGE> 9
"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 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
<PAGE> 10
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 certain 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 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
<PAGE> 11
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 or 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.
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
<PAGE> 12
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;
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
<PAGE> 13
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:
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.
<PAGE> 14
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 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
<PAGE> 15
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.
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
<PAGE> 16
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 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. In November 1995, The Financial Times Limited
transferred its ownership rights in the FT/S&P Actuaries World Indices(TM)
to FT-SE International Limited ("FT-SE"), 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 FT-SE are
referred to in this SAI as the "Owners". By the end of 1996, it is expected
that FT-SE 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, FT-SE 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.
<PAGE> 17
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 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.
* 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> 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 certain historical data on the FT Index
components corresponding to the initial nine Series of the Fund. See
"Purchase and Issuance of Fund Shares in Certain Unit Aggregations -- The
Distributor".
<PAGE> 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> 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> 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 is 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> 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
All index performance information contained in this SAI is
based on historical information and is not intended to indicate future
returns of the indices. Furthermore, historical performance information for
an FT Index country component may or may not be indicative of the market
performance that CB Shares(SM) of the corresponding Fund Series 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 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 or index performance, is reported below for each of
the FT Index components corresponding to the initial nine Series of the
Fund for the one-, three-, five- and ten-year periods ending December 29,
1995. Average annual total return is calculated by determining the growth
or decline in the value of the index 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 for the FT Index components assume the reinvestment
of dividends and other distributions on the underlying securities, the FT
Index returns do not reflect deductions for administrative or management
costs and expenses. If each Series of the Fund had been operating over the
relevant period, the corresponding average annual returns for such Series
would reflect deductions for costs and expenses of the Series and
deductions for estimated cash transaction fees paid by an investor on an
initial purchase of Creation Unit aggregations of shares of such Series and
on redemption of such shares at the end of the indicated period.
While average annual total returns are a convenient means of
comparing alternative investments, investors should realize that the
performance of an index 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 index. 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 holders of equity
securities comprising any index must pay on a current basis, or for foreign
taxes or withholding that may be applicable to income on such securities.
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. and for the ten-year period by Ibbotson
Associates.
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 six-year period ended December 29, 1995. Each
correlation is an indication of
<PAGE> 23
the extent to which, during such six-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 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%
<PAGE> 24
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 goods and services sector, represented by the Diversified
Consumer Goods and Services, Media and Retail Trade industries, have in the
aggregate accounted for an increasing share of the Australia component since
December 31, 1990. 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 is set forth below for the indicated periods
prior to December 29, 1995:
FT Index-Australia
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.
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:
<PAGE> 25
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 is set forth below for the indicated periods
prior to December 29, 1995:
FT Index-France
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%). In addition to these large-capitalization companies, the FT
Index-Germany also includes a number of well known mid-capitalization
German companies, such as Continental and Deutsche Babcock.
Over the six-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 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.
<PAGE> 26
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 is set forth below for the indicated periods
prior to December 29, 1995:
FT Index-Germany
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%),
New World Dev. (3.4%), and Wharf Holdings (3.4%). Many of the companies
comprising the FT Index-Hong Kong maintain investments in the People's
Republic of China and in other regional economies, such as Singapore.
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
<PAGE> 27
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 is set forth below for the indicated periods
prior to December 29, 1995:
FT Index-Hong Kong
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
Lit. 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%).
Over the six-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
<PAGE> 28
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 is set forth below for the indicated periods prior to
December 29, 1995:
FT Index-Italy
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%), Fuji
Bank (2.3%), Dai-ichi Kangyo Bank (2.2%), Sanwa Bank (2.1%), Sakura Bank
(1.5%), Nomura Securities (1.5%) and Tokyo Electric Power (1.3%). Many of
the companies comprising the FT Index-Japan have contributed to the export
economy of Japan, which over the period 1990 to 1994 produced trade
surpluses with the rest of the world averaging US$75.4 billion per annum,
based on data provided by the Adviser.
Over the six-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.
<PAGE> 29
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 Materials 4.3%
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 is set forth below for the indicated periods prior to
December 29, 1995:
FT Index-Japan
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
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%), SASOL (3.5%), Gencor (3.5%), Liberty
Holdings (2.9%) and First National Bank (2.9%).
<PAGE> 30
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 is set forth below for the indicated periods
prior to December 29, 1995:
FT Index-South Africa
1 Year 18.2%
3 Years 41.3
5 Years 19.5
10 Years 16.9
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: Glaxo Wellcome (4.6%),
British Petroleum (4.3%), Shell Transport & Trading (4.0%), British Telecom
(3.2%), BAT Industries (2.5%), HSBC Holdings (2.5%), Lloyds TSB Group
(2.4%), Marks & Spencer (1.8%), BTR (1.8%) and Barclays (1.7%).
<PAGE> 31
Over the six-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 is set forth below for the indicated periods prior to
December 29, 1995:
FT Index-UK
1 Year 23.3%
3 Years 14.7
5 Years 11.6
10 Years 16.1
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%).
<PAGE> 32
Over the six-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
is set forth below for the indicated periods prior to December 29, 1995:
FT Index-US
1 Year 37.3%
3 Years 15.3
5 Years 16.8
10 Years 14.6
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.
<PAGE> 33
EXCHANGE LISTING AND TRADING
Application has been 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 $56.
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 within or close to 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 Boerse 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.
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 or shares
of mutual funds 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.
<PAGE> 34
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. Subject to the
receipt of favorable no-action relief from the Commission by the NYSE,
short sales of CB Shares(SM) will be permitted notwithstanding Rule 10a-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Because the securities portfolio of each Series will substantially
replicate the securities comprising the corresponding FT Index component,
the Adviser expects that the potential for 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. Subject to
receipt by the NYSE of no-action relief from the Commission, broker-dealers
may generally extend credit on CB Shares(SM) just as on other marginable
securities, subject to the applicable provisions of Regulation T of the
Board of Governors of the Federal Reserve System. Under the terms of such
no-action relief, the extension of credit on CB Shares(SM) by broker-
dealers participating in the distribution of CB Shares(SM) would be subject
to certain limitations.
<PAGE> 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. 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.
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. The Adviser has made arrangements with third party vendors,
including Bloomberg Financial Markets, Reuters Ltd., Dow Jones Telerate and
Automated Data Processing, to make available to subscribers through their
on-line data services certain real-time or daily updated news and
information relating to the country markets represented by the respective
Series (e.g., spot foreign exchange rates and major market index prices).
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 February , 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> 36
<TABLE>
<CAPTION>
Position with the Principal Occupations During
Name and Address Fund Past Five Years
<S> <S> <S>
Warner Heineman 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
New York, New York 10019 President, Nomura Securities International (1990 to 1992).
W. Carter McClelland* Director and President and Chief Executive Officer, Deutsche Morgan
31 West 52nd Street Chairman Grenfell/C. J. Lawrence Inc. (since 1995); Division
New York, New York 10019 Director and other positions, Morgan Stanley & Co. (1974 to
1995).
<PAGE> 37
Position with the Principal Occupations During
Name and Address Fund Past Five Years
Lawrence C. McQuade Director Chairman, Qualitas International (international consulting)
125 East 72nd Street (since 1995); Director, Bunzl PLC (paper distributor)
New York, New York 10021 (since 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 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.
Robert H. Wadsworth Director President, Robert H. Wadsworth & Associates, Inc.
4455 E. Camelback Road (financial services consulting); President, Investment
Suite 261 E Company Administration Corporation (since 1992); President,
Phoenix, Arizona 85018 First 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).
<PAGE> 38
Position with the Principal Occupations During
Name and Address Fund Past Five Years
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 1993),
The Germany Fund, Inc., The Central European Equity Fund,
Inc. and The New Germany Fund, Inc.
</TABLE>
<PAGE> 39
The following table sets forth the remuneration of Directors
and officers of the Fund:
<TABLE>
<CAPTION>
Name of Person, Aggregate Compensation from Total Compensation from the Fund and
Position the Fund Fund Complex Paid to Directors
<S> <S> <S>
Warner Heineman *<F1> *<F1>
Director
Joseph A. La Corte NONE NONE
Director and President
W. Carter McClelland NONE NONE
Director and Chairman
Lawrence C. McQuade *<F1> *<F1>
Director
Karl M. von der Heyden *<F1> *<F1>
Director
Robert H. Wadsworth *<F1> *<F1>
Director **<F2>
Thomas A. Curtis NONE NONE
Vice President and Secretary
Joseph Cheung NONE NONE
Vice President and Treasurer
<FN>
_____________________
<F1>* The Fund will pay each Director $7,000 per annum, $2,000 per directors' meeting attended and $500 per committee meeting
attended.
<F2>** Mr. Wadsworth received $42,000 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.
</FN>
</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> 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 automatically 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
<PAGE> 41
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 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 Administration
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
<PAGE> 42
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.
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 turn-
over 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
<PAGE> 43
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-CB-INFOS; 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), 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".
For information on the initial issuance of Creation Units of
CB Shares(SM) and the commencement of trading on the NYSE, see "Initial
Issuance of Creation Units and Commencement of Trading" below.
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 for such Series subsequent to such NYSE business day
(except as may be provided otherwise in the case of an alternative purchase
option; see "Possible Alternative Purchase Procedure Option" below). 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,
<PAGE> 44
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" or
as provided under "Possible Alternative Purchase Procedure Option". All
questions as to the number of shares of each security in the Fund Basket
required to be delivered, and the waiver of any deficiency in the Fund
Basket delivered, shall be determined by the Adviser, whose determination
shall be final. The Custodian's determination of the validity, form and
acceptance or rejection for deposit of the securities delivered by an
Authorized Participant shall be final and binding on the Authorized
Participant.
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 and similar costs, are as follows: the Australia Index
Series, $2,624; the France Index Series, $3,737; the Germany Index Series,
$1,952; the Hong Kong Index Series, $3,192; the Italy Index Series, $1,593;
the Japan Index Series, $12,123; the South Africa Index Series, $1,408; the
UK Index Series, $5,535; and the US Index Series, $12,103. Such transfer
costs will vary with the number of constituent securities in the relevant
Fund Basket, but will not vary according to the number of Fund Baskets
delivered to the Fund's subcustodian simultaneously in respect of a single
purchase order. In addition, investors purchasing Creation Units of CB
Shares(SM) of the Australia, South Africa and UK Index Series will pay
stock transfer taxes or stamp duties of .30%, 1.0% and .50%, respectively,
of the value of each Fund Basket delivered to the relevant subcustodian in
connection with the registration of transfer of such Fund Basket securities
to the Fund. See "Summary of Fund Expenses" in the Prospectus.
<PAGE> 45
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. If an
investor is restricted by regulation or otherwise from investing or
engaging in a transaction in one or more Fund Basket securities, including
accepting the return of one or more Fund Basket securities should these
exceed the net asset value of the Creation Unit of CB Shares(SM) being
acquired, the Adviser shall have the right, in its discretion, to permit
the cash equivalent value of such Fund Basket security or securities to be
included as part of the Cash Component in lieu thereof, subject to the
applicable Cash Component transaction fee, or, as the case may be, to
purchase for the Fund the Fund Basket securities otherwise to be returned
and reimburse the amount of the excess to the investor in cash. With
respect to a determination whether to accept or permit cash to be
substituted in lieu of Fund Basket securities, the Distributor shall
communicate the request to the Adviser without providing any information
disclosing the identity of the Authorized Participant or the investor
concerned. 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.
The Cash Component, as calculated based on delivery in full of the Fund
Basket announced for a designated Issue Date, will not exceed 10% of the
total purchase price of a Creation Unit aggregation of shares on such date.
In the event that the Fund accepts the substitution of cash for omitted
Fund Basket securities as described above, however, the Cash Component may
in certain limited circumstances exceed 10% of the total purchase price.
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.
<PAGE> 46
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, 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
<PAGE> 47
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 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
<PAGE> 48
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.
If the Fund Basket delivered by an Authorized Participant to the
Custodian or the applicable subcustodian, as the case may be, on an
intended Issue Date is incomplete, and cash is not permitted by the Adviser
to be substituted for the omitted Fund Basket securities (as described
above under "The Fund Basket"), the Authorized Participant may at its
option request the Custodian or the applicable subcustodian to retain the
securities that have been delivered for up to two NYSE business days in
order to permit such Authorized Participant to complete delivery of the
Fund Basket in effect on the date that the relevant purchase order was
submitted to the Distributor. On the date of completion of delivery of such
Fund Basket, the Authorized Participant will be required to submit a new
purchase order form, properly completed, to the Distributor. Subject to the
foregoing and to the completion of arrangements satisfactory to the Fund
for the payment to the Custodian on the new date of purchase 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
of the applicable Series at the close of trading on the NYSE on such new
date of purchase, the Fund will issue the appropriate number of Creation
Unit aggregations of shares at their net asset value on such date as
described above.
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.
The foregoing procedures may be modified with respect to the possible
alternative purchase procedure described below.
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
<PAGE> 49
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.
Absent an applicable exemption, beneficial owners of 10% of the CB
Shares(SM) of any Series will be subject to the insider reporting, short-
swing profit and short sale provisions under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Exchange Act provides that, with
certain exceptions, any gain realized by any such beneficial owner from any
purchase and sale or sale and purchase of CB Shares(SM) within any period
of less than six months is recoverable by the Series. Additionally, every
such beneficial owner must file with the SEC a statement showing ownership
and change in ownership of CB Shares(SM) within ten days after the end of
any calendar month in which there has been a change in such beneficial
owner's ownership of CB Shares(SM).
Initial Issuance of Creation Units
and Commencement of Trading
In connection with the commencement of trading on the NYSE of CB
Shares(SM) of each Series, the Fund and the Distributor will enter into
purchase agreements with the purchasers of the initial Creation Units of CB
Shares(SM) of such Series to meet the conditions to listing on the NYSE.
The agreement will provide that the Fund and the Distributor may waive
delivery of the notice of intention otherwise required for all Series
except the US Index Series and that such initial Creation Units of CB
Shares(SM) of the Series will be sold at the net asset value of the CB
Shares(SM) computed at the close of trading on the NYSE (currently 4:00
p.m. New York time) on the effective date of the agreement with respect to
such Series. Such Creation Units of CB Shares(SM) will be issued at the end
of the same business day on the books of the Transfer Agent. The purchase
agreement will provide for delivery of the Fund Basket and the Cash
Component (together with any cash purchase transaction fees) by the close
of trading on the NYSE (currently at 4:00 p.m. New York time) on the date
of the purchase agreement or for delivery of the Fund Basket and the
applicable Cash Component (and applicable fees) on a designated subsequent
Business Day applicable to that Series as described under "The Fund Basket"
above. In the case of the latter, an irrevocable stand-by letter of credit
acceptable to the Fund will be delivered to State Street as Custodian for the
benefit of the Fund to secure the settlement of the Fund Basket securities,
the Cash Component and any Cash Component transaction fees.
It is anticipated that trading on the NYSE of CB Shares(SM) of such
Series will commence within [two] NYSE business days following the date of
the issuance of the initial Creation Unit aggregations of such CB
Shares(SM) or shortly thereafter. The Fund and the Distributor will jointly
announce the date on which NYSE trading of CB Shares(SM) of that Series
will commence at the time of effectiveness of the purchase agreements for
that Series. Additional purchase orders for Creation Units of such Series
will be accepted from and after the date that NYSE trading of CB Shares(SM)
of such Series commences. In the case of the initial purchase of Creation
Units of the US Index Series, Fund Deposits will be accepted only through
the CB Shares(SM) Clearing Process. In all other respects, the procedures
for purchase of a Creation Unit of CB Shares(SM) will be as described above
under "Procedures for Purchase Creation Units" and will require, as
provided in the purchase agreement, the tender on the date of purchase of a
properly completed purchase order by or
<PAGE> 50
through an Authorized Participant. The Distributor shall reject any order
that is not submitted in proper form.
Sequence of Commencement of Trading for
the Nine CountryBaskets Index Series
It is intended that the sale of Creation Units offered hereby and
trading of CB Shares(SM) on the NYSE will commence on or about March 25,
1996 with CB Shares(SM) of the ________ Index Series, the _________ Index
Series and the _______ Index Series. The Distributor anticipates that
commencement of trading on the NYSE of CB Shares(SM) of the ________ Index
Series, the ________ Index Series and the _________ Index Series will
follow within approximately ____ NYSE business days, and of the ________
Index Series, the __________ Index Series and the _________ Index Series
within approximately ___ NYSE business days thereafter.
Possible Alternative Purchase Procedure Option
The Fund will seek to offer investors an additional purchase
procedure option for Creation Unit aggregations of CB Shares(SM) of any
Series. As presently contemplated, the Authorized Participant on its own
behalf and on behalf of investors for whom it is acting would maintain with
the Custodian on behalf of the Fund an irrevocable stand-by letter of
credit acceptable to the Fund in an amount equal to at least 105% of the
amount of the Fund Deposit and applicable Cash Component transaction fees
of Creation Units of any Series for which it intends to submit purchase
orders in order to secure delivery and settlement of the Fund Basket, Cash
Component and any such fees. The net asset value of a Creation Unit of CB
Shares(SM) being purchased pursuant to this option would be determined at the
close of trading on the NYSE (currently 4:00 p.m. New York time) on the date
the purchase order is submitted in proper form. The Fund Basket would be the
one announced at 8:00 p.m. New York time on the previous NYSE trading day
and effective for the Business Day on which the purchase is made. An
appropriate form would be submitted with the purchase order to provide
for delivery instructions by the Authorized Participant to the Custodian or
subcustodian, as the case may be. Delivery of the Fund Basket securities and
cash would be due on the designated subsequent Business Day for the Series as
described under "The Fund Basket" above. Pursuant to procedures to be
established, the Custodian would be authorized to draw on the letter of credit
as required for the amounts needed to acquire the Fund Basket securities and
for cash payments due and to pay for the associated transaction costs. The
Authorized Participant Agreement would be appropriately amended to provide
for the letter of credit purchase option procedures ("LC Purchase
Procedures"). A purchase order for shares of any Series will be considered in
"proper form" pursuant to the LC Purchase Procedures 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 letter of
credit in the required amount is confirmed on such date by the Custodian, and
(iii) all other procedures applicable to the LC Purchase Procedures set forth
in the Authorized Participant Agreement, as so amended, are properly followed.
In other respects, the purchase procedures for a Creation Unit of CB
Shares(SM) would be as described above.
<PAGE> 51
There can be no assurance whether or when such purchase procedure
option will be available.
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 any related agreements (the "Non-Interested
Directors"), cast in person at a meeting called for the purpose of voting
on 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 up to
Aggregate Net Assets of $2.5 billion, plus .015% 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 .02% per annum of Aggregate Net Assets of such Series in
excess of $5 billion up to $10 billion, plus .015% per annum of Aggregate
Net Assets of such Series in excess of $10 billion. Subject to the approval
by the Board of Directors of the Fund, including a majority of the Non-
Interested Directors, of the Supplemental Compensation Agreement between
the Fund and the Distributor (the "Supplemental Compensation Agreement"),
each Series will also pay to the Distributor, on a quarterly basis
commencing with such approval, such Series' allocable portion of .01% per
annum of the Aggregate Net Assets of the nine Series in excess of $500
million up to Aggregate Net Assets of $2.5 billion as a contribution toward
certain bonus payments to be made by the Distributor to employees engaged
in marketing activities with respect to the secondary market for Fund
shares. The allocation among the Series of fees and expenses payable under
the Distribution Agreement, Marketing Agreement and Supplemental
Compensation 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
<PAGE> 52
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, 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 Non-Interested Directors.
Each of the Distribution Agreement, the Marketing Agreement and the
Supplemental Compensation 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 Non-Interested Directors 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 Supplemental Compensation
Agreement will terminate automatically upon the termination of the
Marketing 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.
<PAGE> 53
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 Exchange Act
and a member of the National Association of Securities Dealers, Inc.
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.
<PAGE> 54
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 limitation,
settlement and custody charges, registration fees and similar fees, from
the Fund to their account or on their order. Currently, the estimated
redemption transfer costs for each Series based on the number of
constituent securities in the relevant Fund Basket are as follows: the
Australia Index Series, $2,050; the France Index Series, $3,030; the
Germany Index Series, $1,525; the Hong Kong Index Series, $2,800; the Italy
Index Series, $1,180; the Japan Index Series, $8,980; the South Africa
Index Series, $1,100; the UK Index Series, $4,100; and the US Index Series,
$7,644. Such transfer costs will vary with the number of constituent
securities in the relevant Fund Basket, but will not vary according to the
number of Fund Baskets delivered to an investor on execution of a single
redemption request. An investor redeeming Creation Units of Japan CB
Shares(SM) will pay a stock transfer tax of .30% of the value of each Fund
Basket delivered on redemption in connection with the registration of
transfer of such Fund Basket securities to such investor. 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-CB-INFOS. 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
<PAGE> 55
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 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
<PAGE> 56
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-CB-INFOS. 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 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,
<PAGE> 57
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 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.
<PAGE> 58
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
December 31 of such calendar year and to have been paid by the Series
<PAGE> 59
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.
<PAGE> 60
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.
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
<PAGE> 61
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. Morgan Grenfell & Co. Ltd., 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.
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> 62
REPORT OF INDEPENDENT ACCOUNTANTS
<PAGE> 63
STATEMENT OF ASSETS AND LIABILITIES
The CountryBaskets(SM) Index Fund, Inc.
Statement of Assets and Liabilities
February __, 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> 64
THE COUNTRYBASKETS INDEX FUND, INC.
Notes to Financial Statements
February [ ], 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
<PAGE> 65
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 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 .015% 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,
will receive contributions from the Fund toward certain bonus payments to
be made to employees of the Distributor, and will be reimbursed for certain
expenses. Each Series will also pay certain expenses of printing and
distributing prospectuses and will 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
<PAGE> 66
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 February __, 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
(6) (H) --Supplemental Compensation Agreement between the Fund and
ALPS Mutual Funds Services, Inc.
(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.
* 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 pre-effective Amendment No. 4, filed on February 12,
1996.
<PAGE> 2
***(10) --Opinion and consent of Sullivan & Cromwell
***(11) --Opinion and consent of Price Waterhouse LLP
(12) --Not applicable
*(13) (A) --Form of 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
*** To be filed by Amendment.
<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 February , 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 to time such Bylaws, resolutions or
contracts implementing such provisions or such further
<PAGE> 7
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.
The Fund currently maintains directors' and officers' liability
insurance to supplement the protections provided in the Fund's Articles of
Amendment and Restatement and its Bylaws, and to fund certain payments that
the Fund may be required to make under any such provisions. Such insurance
is renewable annually and is subject to standard terms and conditions,
including exclusions from coverage.
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.
<PAGE> 8
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.
(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 and
officers 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 paragraphs (b)(3), (4), (5), (6), (7), (9), (10) and
(11) of Rule 31a-1 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.
<PAGE> 9
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
(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 28th day of February, 1996.
THE COUNTRYBASKETS 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.
Name Title Date
* Director February 28, 1996
Warner Heineman
/s/ Joseph A. La Corte Director and President February 28, 1996
Joseph A. La Corte (Principal Executive Officer)
* Director February 28, 1996
W. Carter McClelland
* Director February 28, 1996
Lawrence C. McQuade
* Director February 28, 1996
Karl M. von der Heyden
* Director February 28, 1996
Robert H. Wadsworth
* Vice President and February 28, 1996
Joseph Cheung Treasurer (Principal
Financial and Accounting Officer)
* Joseph A. La Corte, by signing his name hereto, does sign this
document on behalf of the persons indicated above pursuant to a power
of attorney duly executed by such person, a copy of which power of
attorney was filed as part of Amendment No. 4 to this Registration
Statement.
/s/ Joseph A. La Corte
Joseph A. La Corte
Attorney-in-fact
<PAGE> 1
The CountryBaskets(SM) Index Fund, Inc.
MARKETING AGREEMENT
MARKETING AGREEMENT (the "Agreement") made as of [March 1],
1996, 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 CB 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 Act"), and the 1940 Act, as such registration
statement is amended by any amendments thereto at the time in effect.
<PAGE> 2
(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;
(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);
<PAGE> 3
(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) 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
<PAGE> 4
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.
(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:
<PAGE> 5
(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) .02% per annum of Aggregate Net Assets in excess of $5
billion up to $10 billion, plus
(v) .015% per annum of Aggregate Net Assets in excess of $10
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 Company.
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 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
<PAGE> 6
("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 Company'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:
(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.
<PAGE> 7
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 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 Company.
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
<PAGE> 8
(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
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 ShareSM" 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
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."
<PAGE> 2
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. 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
<PAGE> 3
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 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
<PAGE> 4
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.
The treatment of income items and corporate actions with respect to
the securities so delivered shall be as set forth in Annex VIII
hereto.
(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 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
<PAGE> 5
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 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. Any
determination (which shall be final) with respect to the delivery of
the Cash Component or estimated amount sufficient to pay the Cash
Component shall be made by State Street Bank; any determination
(which shall be final) as to the number of shares of each security in
the Fund Basket required to be delivered, and the waiver of any
deficiency therein or as to the validity, form or sufficiency and
acceptance or rejection for deposit of the securities delivered by an
Authorized Participant shall be made by State Street Bank and/or the
Adviser, as the case may be, as set forth in the Fund prospectus and
SAI, and neither State Street Bank nor the Advisor shall be liable
for any loss incurred by the Participant as a result of such
determination. Notwithstanding the foregoing, in the case of any
delay in confirmation by the Custodian of receipt of a complete and
satisfactory Fund Basket tendered by an
<PAGE> 6
Authorized Participant in proper form to the Custodian or a
subcustodian, as applicable, so that a purchase order in all respects
in proper form is not accepted on the date of its submission and the
Creation Unit of CB Shares is not issued pursuant thereto at the net
asset value of such shares next determined on such date, State Street
Bank shall, if a new purchase order properly completed is submitted
by the Authorized Participant on the following Business Day, for the
Creation Unit of CB Shares to be issued at the net asset value
thereof next computed on the date of such new purchase order (and
against delivery of the Fund Basket initially tendered with any
required adjustment in the Cash Component), reimburse such Authorized
Participant (i) its reasonable additional costs of transferring the
Fund Basket securities and (ii) its carrying costs resulting from the
delay in issuance of the Creation Unit of CB Shares at LIBOR rate
(fixed at midday) for the time between the expected settlement date
of the CB Shares and the actual date. THE AUTHORIZED PARTICIPANT
ACCEPTS AND AGREES THAT THE FOREGOING SHALL BE ITS SOLE REMEDY IN ANY
SUCH CASE AND THAT NONE OF STATE STREET BANK, THE DISTRIBUTOR OR THE
FUND SHALL BE RESPONSIBLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES IN CONNECTION THEREWITH.
If a Fund Basket tendered to the Custodian or subcustodian is
found to be incomplete in part, the Authorized Participant may at its
option request that the Custodian/subcustodian retain the securities
that have been delivered for up to two NYSE business days in order to
seek to complete the delivery of the Fund Basket (effective on the
date the purchase order was first submitted), unless cash in lieu of
such securities is permitted to be substituted as provided in the
Fund prospectus and SAI, provided that, in any such case, the
Authorized Participant shall submit at the request of the Distributor
a new purchase order form properly completed on the date of
completion of delivery of the Fund Basket, together with any required
adjustment in the Cash Component, the net asset value of the CB
Shares to be acquired with such Fund Basket to be the net asset value
of such CB Shares as next computed on the date of completion of
delivery.
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
<PAGE> 7
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 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
<PAGE> 8
the redeeming Beneficial Owner will be required to receive its
redemption proceeds in cash, less the cash transaction fee applicable
to cash redemption proceeds.
(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
<PAGE> 9
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 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
<PAGE> 10
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 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
<PAGE> 11
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) of the Participant. Failure to complete properly a
purchase order submitted to the Distributor may, in the discretion of
the Fund, be regarded as such a breach. 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:
<PAGE> 12
Date: , 199 TELEPHONE:
FACSIMILE:
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
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
ELECTRONIC INTERFACE ("ELECTRONIC INTERFACE") PROVIDED TO THE PARTICIPANT.
<PAGE> II-3
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
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 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-5
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-6
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-7
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-8
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-9
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-10
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-11
(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-12
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-13
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 COUNTRY BASKETS(TM) INDEX FUND, INC.
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: DTC Participant Number:
Telex Number:
NUMBER AND SERIES OF CREATION UNITS* 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:
_________________________________________
[Originating Bank or other Custodian]
_________________________________________
[Account Name]
_________________________________________
[Reference #]
* 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
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.
THE FUND AND THE DISTRIBUTOR ON BEHALF OF THE FUND RESERVE THE RIGHT TO
REJECT ANY PURCHASE ORDER.
<PAGE> IV-1
ANNEX IV
THE COUNTRYBASKET(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 UNITS* 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:
* 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
__ Declined - Reason:____________________________________________
________ ________ ___________________________
Date Time Authorized Signature
<PAGE> V-1
ANNEX V
THE COUNTRYBASKET(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 UNITS* 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]
* 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.
<PAGE> V-3
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
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
250Lan01\115980.4 V-4
ANNEX VI
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
<PAGE> VI-1
ANNEX VI
THE COUNTRYBASKET(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
Fund Number: XXXX Fund or Account Number will be
BIC: MGTCITMXXXX specific to a Participant.
<PAGE> VII-1
ANNEX VII
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
AUSTRALIA
T+3
<TABLE>
<CAPTION>
No. U.S. Bus.
Australia Days to
Redemption Settlement Settlement
Date Date Date Reason
<C> <C> <C> <C>
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 Monday, 4/8/96
4/3/96 4/10/96 4
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
</TABLE>
<PAGE> VII-2
FRANCE
T+2
<TABLE>
<CAPTION>
No. U.S. Bus.
France Days to
Redemption Settlement Settlement
Date Date Date Reason
<C> <C> <C> <C>
8/13/96 8/19/96 4 Holiday: Assumption Day, 8/15/96; Day after
8/14/96 8/20/96 4 Assumption Day, 8/16/96
</TABLE>
<PAGE> VII-3
GERMANY
T+2
<TABLE>
<CAPTION>
No. U.S. Bus.
Germany Days to
Redemption Settlement Settlement
Date Date Date Reason
<C> <C> <C> <C>
12/20/96 12/27/96 4 Holiday: Christmas Eve, 12/24/96; Christmas Holiday,
12/23/96 12/30/96 4 12/26/96
</TABLE>
<PAGE> VII-4
HONG KONG
T+2
<TABLE>
<CAPTION>
No. U.S. Bus.
Germany Days to
Redemption Settlement Settlement
Date Date Date Reason
<C> <C> <C> <C>
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
</TABLE>
<PAGE> VII-5
ITALY
T+3
<TABLE>
<CAPTION>
No. U.S. Bus.
Italy Days To
Redemption Settlement Settlement
Date Date Date Reason
<C> <C> <C> <C>
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
</TABLE>
<PAGE> VII-6
JAPAN
T+3
<TABLE>
<CAPTION>
No. U.S. Bus.
Japan Days To
Redemption Settlement Settlement
Date Date Date Reason
<C> <C> <C> <C>
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
</TABLE>
<PAGE> VII-7
SOUTH AFRICA
T+3
<TABLE>
<CAPTION>
South No. U.S. Bus.
Africa Days To
Redemption Settlement Settlement
Date Date Date Reason
<C> <C> <C> <C>
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
</TABLE>
<PAGE> VIII-1
ANNEX VIII
THE COUNTRYBASKETS(TM) INDEX FUND, INC.
This Annex VIII to the Authorized Participant Agreement sets
forth procedures with respect to income items or corporate actions on
securities constituting a Fund Basket and delivered to the Fund by a
Participant in connection with an order for the purchase of a Creation
Unit:
Neither the Custodian nor the applicable subcustodian will
notify the Participant of income items or corporate actions to which the
Participant is entitled. The Participant must claim the Custodian or such
subcustodian for entitlements with respect to income items and mandatory
corporate action proceeds paid to the Custodian or such subcustodian. With
respect to voluntary corporate actions to which a Participant is entitled,
the Custodian or such subcustodian will process unsolicited elections
communicated to it by such Participant. With respect to voluntary
corporate actions for which such election shall not have been received from
a Participant, the Custodian shall apply the default elections set forth on
the attached schedule of "State Street Bank Corporate Action Defaults".
With respect to any voluntary corporate action not set forth in such
schedule, the election shall be made by the Fund's Investment Adviser,
Deutsche Morgan Grenfell/C.J. Lawrence Inc.
<PAGE> VIII-2
State Street Bank Corporate Action Defaults
ACTION
TYPE ACTION TYPE NAME DEFAULT
BNEX Bonus Rights Exercise/Expiration Subscribe
CONS Consent Take No Action
CONV Conversion Take No Action
CPAY Call Payment Take No Action
CURO Currency Option Company Default
DIVR Dividend Reinvestment Cash
DTRT Dissenters Rights Take No Action
ELEC Election Options Company Default
EXCH Exchange Offer Take No Action
EXWR Exercise/Expiration Warrants Let Expire
FCCN Full Call/Conversion Accept Call
GMTE General Meeting - Special Take No Action
GMTG General Meeting - Annual Take No Action
IMER International Merger Company Default
MWDR Merger with Dissenter's Rights Take No Action
NRRO Non Renounceable Rights Exercise Take No Action
OPUT Option Put Take No Action
PCCN Partial Call/Conversion Accept Call
REPO Repayment Option Take No Action
RGEX Rights Exercise/Expiration Let Expire
SCRL Scrip to Scripless Convert to Scripless
<PAGE> VIII-3
ACTION
TYPE ACTION TYPE NAME DEFAULT
STCO Stock/Cash Option Company Default
SUBO Subscription Offer Take No Action
TE99 Odd Lot Tender Take No Action
TEND Tender Offer Take No Action
TKOV Takeover Take No Action
<PAGE> 1
THE COUNTRYBASKETS(SM) INDEX FUND, INC.
SUPPLEMENTAL COMPENSATION AGREEMENT
SUPPLEMENTAL COMPENSATION AGREEMENT (the "Agreement") made as
of March 1, 1996, 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 Marketing Agreement
with ALPS dated the date hereof (the "Marketing Agreement") providing for,
among other things, various marketing and stockholder services to be
provided by ALPS with respect to the shares of common stock ("CB Shares")
of its initial nine series (each, a "Series");
WHEREAS, pursuant to the Marketing Agreement ALPS will make
available on a full-time basis four regional wholesalers to perform the
activities specified in Section 1.3(b) thereof and Mr. Chris Jemapete to
perform the services specified in Section 1.3(d) thereof (such wholesalers,
together with Mr. Jemapete and any additional wholesalers who may be
employed by ALPS from time to time in connection with the marketing of CB
Shares, the "Wholesalers");
WHEREAS, the Company and ALPS desire to make certain funds
available specifically for supplemental compensation to be paid by ALPS to
the Wholsesalers as a performance incentive as described herein; 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 marketing and stockholder services and for
supplemental compensation to the Wholesalers.
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, the Company and ALPS agree as follows:
<PAGE> 2
SECTION 1
SUPPLEMENTAL COMPENSATION
1.1 Definitions. All capitalized terms used but not defined
in this Agreement shall have the meanings ascribed to such terms in the
Company's registration statement on Form N-1A most recently filed by the
Company 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.
1.2 Contributions to the Bonus Pool. The aggregate amount of
supplemental compensation (the "Bonus Pool") that shall be available for
distribution [quarterly] by ALPS to the Wholsesalers shall be the sum of
the contributions to be made by the Company and ALPS, as follows:
(a) Subject to the terms and conditions of the 12b-1 Plans
and to the conditions set forth in Section 3.1 hereof, each Series
will pay to ALPS as a contribution to the Bonus Pool an amount,
calculated daily and payable [quarterly], equal to such Series'
allocable portion of 0.01% per annum of the average aggregate daily
net assets of all nine Series ("Aggregate Net Assets") in excess of
$500 million up to Aggregate Net Assets of $2.5 billion. Such
contribution shall be allocated among the Series subject to this
Agreement pro rata in accordance with the 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 Company.
(b) Subject to the conditions set forth in Section 3.1
hereof, ALPS will set aside from the amounts payable to ALPS by all
Series under Section 3.1 of the Marketing Agreement and contribute to
the Bonus Pool an amount, calculated daily and payable [quarterly],
equal to (i) 0.01% per annum of Aggregate Net Assets in excess of $2
billion up to $5 billion, plus (ii) .005% per annum of Aggregate Net
Assets in excess of $5 billion.
1.3 Distributions of the Bonus Pool. Promptly upon receipt
of any contribution to the Bonus Pool payable by the Series at the end of
each calendar [quarter], ALPS shall distribute the aggregate Bonus Pool
then available equally among all Wholesalers, provided that ALPS may make
such distribution on a basis other than equally if such alternative
distribution has been set forth in a written
<PAGE> 3
plan delivered to the Company in advance of the end of such calendar
quarter and such alternative distribution is approved at the next
succeeding regular meeting of the Board of Directors of the Company.
1.4 Base Salary. ALPS agrees that during the term of the
Marketing Agreement it shall pay each Wholesaler from the fees payable to
ALPS under Section 3.1 of the Marketing Agreement an annual salary on
average among all Wholesalers of not less than $75,000.
SECTION 2
ALPS'S REPRESENTATIONS AND OBLIGATIONS
2.1 ALPS agrees and 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
Commission.
2.2 ALPS will provide to the Company's Board of Directors at
least quarterly a written report of the Bonus Pool amounts distributed
hereunder and will furnish the Company's Board of Directors or its
designees with such information as the Company or they may reasonably
request (including, without limitation, periodic reports confirming the
provision by the Wholsesalers of the services described in the Marketing
Agreement).
SECTION 3
EFFECTIVENESS, TERMINATION AND AMENDMENT
3.1 Effectiveness. This Agreement shall become effective
without any further action of or approval by ALPS immediately upon its
approval by vote of (i) the Company's Board of Directors and (ii) a
majority of those Directors who are not "interested persons" (as defined in
the 1940 Act) of the Company and have no direct or indirect financial
interest in the operation of the 12b-1 Plans adopted by the Company or in
any agreement related thereto ("Disinterested Directors") cast in person at
a meeting called for the purpose of voting on such approval. Neither ALPS
nor any Series shall make any contributions to the Bonus Pool in accordance
with Section 1.2 with respect to any period prior to the effectiveness of
this Agreement.
3.2 Termination. This Agreement may be terminated at any
time as to any Series, without penalty, (a) upon sixty days' written notice
to ALPS, by the Company by the vote of a majority of the Disinterested
Directors or the vote of a majority of the outstanding voting securities
(as defined in the 1940 Act) of such Series, and (b) upon the termination
of the Marketing Agreement by the Company or ALPS in accordance with the
terms thereof.
<PAGE> 4
3.3 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.
3.4 Amendment. This Agreement may be amended by mutual
consent, provided that the Company'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.
3.5 Non-interested Company Directors. While this Agreement
is in effect, the selection and nomination of the Disinterested Directors
shall be committed to the discretion of such Disinterested Directors.
SECTION 4
NOTICE
4.1 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 5
MISCELLANEOUS
5.1 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
5.2 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.
5.3 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.
<PAGE> 5
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> 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 CountryBaskets(SM) 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;
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;
<PAGE> 4
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;
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;
<PAGE> 5
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;
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
<PAGE> 6
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.
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.
<PAGE> 7
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, 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 judgment or mistake
of law or for any loss or damage resulting from the
<PAGE> 8
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 (i) its total annual compensation earned and fees
paid hereunder during the preceding twelve months multiplied by two or (ii)
One Million Seven Hundred and Ten Thousand Dollars ($1,710,000) 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.
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
<PAGE> 9
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 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
<PAGE> 10
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.
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> 11
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 COUNTRYBASKETS(SM) INDEX FUND, INC.
By:
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
By:
Name:
Title:
<PAGE> 1
ADMINISTRATION AGREEMENT
The CountryBaskets(SM) 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> 1
ADMINISTRATION AGREEMENT
The CountryBaskets(SM) Index Fund, Inc.
SCHEDULE B
FEES AND EXPENSES
<PAGE> 1
ADMINISTRATION AGREEMENT
The CountryBaskets(SM) 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> 1
ADMINISTRATION AGREEMENT
The CountryBaskets(SM) Index Fund, Inc.
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of , 1996 that The
CountryBaskets(SM) 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 CountryBaskets(SM) Index Fund, Inc.
By:
Name:
Title:
<PAGE> 1
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 $2.0 billion, plus (ii) .015% per annum of Aggregate
Net Assets of all such Series in excess of $2.0 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 Distributor, monthly in arrears, for its distribution-
related services to all such Series of the Fund under the
<PAGE> 2
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
delivering 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
communications 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) .02% per annum of the
Aggregate Net Assets of all such Series in excess of $5 billion
up to $10 billion, plus (v) .015% per annum of the Aggregate
Net Assets of all such Series in excess of $10 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
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
<PAGE> 3
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 hereafter be
approved by the Board of Directors in accordance
with Rule 12b-1 as a related agreement 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
<PAGE> 4
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 printing and distribution
costs incurred by 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 required to accompany
confirmations of 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 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.
<PAGE> 5
4. This Plan shall become effective with respect to the
Designated Series (the "Effective Date") upon the later of (i) March 1,
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.
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
<PAGE> 6
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 February 8, 1996
