-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RpSDd5z3POWGy4P623JA7qEWbzBKxBS+6hs5794/me2cxRiKRq3u6q8JN3xCKhvb msCqbRT1zuKQ2a+8A41lvA== 0000891836-96-000032.txt : 19960213 0000891836-96-000032.hdr.sgml : 19960213 ACCESSION NUMBER: 0000891836-96-000032 CONFORMED SUBMISSION TYPE: N-1A EL/A PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 19960212 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COUNTRYBASKET INDEX FUND INC /NY/ CENTRAL INDEX KEY: 0000033732 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-1A EL/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-85710 FILM NUMBER: 96515962 FILING VALUES: FORM TYPE: N-1A EL/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-08734 FILM NUMBER: 96515963 BUSINESS ADDRESS: STREET 1: 31 W 52ND ST STREET 2: C/O DEUTSCHE BANK SECURITIES CORP CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124748000 MAIL ADDRESS: STREET 1: DEUTSCH BANK SECURITIES CORP STREET 2: INVESTMENT ADVISOR CITY: 31 WEST 52ND ST FORMER COMPANY: FORMER CONFORMED NAME: EUROFUND INC DATE OF NAME CHANGE: 19941213 N-1A EL/A 1 PROSPECTUS, SAI AND ONE PART C 1 As filed with the Securities and Exchange Commission on February 12, 1996 Registration No. 33-85710 811-8734 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. 4 [X] Post-Effective Amendment No. [ ] and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ] Amendment No. 4 [X] (Check appropriate box or boxes) The CountryBaskets Index Fund, Inc. (Exact name of registrant as specified in charter) c/o Deutsche Morgan Grenfell/C. J. Lawrence Inc. (Investment Adviser) 31 West 52nd Street New York, New York 10019 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code: (212) 469-8000 Robert Lynch c/o Deutsche Morgan Grenfell/C. J. Lawrence Inc. (Investment Adviser) 31 West 52nd Street New York, New York 10019 (Name and Address of Agent for Service) Copies to: Stephen K. West, Esq. Tuuli-Ann Ristkok, Esq. Sullivan & Cromwell Donovan Leisure Newton & Irvine 125 Broad Street 30 Rockefeller Plaza New York, New York 10004 New York, New York 10112 Approximate date of proposed public offering: As soon as practicable after the effective date of this Registration Statement. It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) [ ] on (date) pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(i) [ ] on (date) pursuant to paragraph (a)(i) [ ] 75 days after filing pursuant to paragraph (a)(ii) [ ] on (date) pursuant to paragraph (a)(ii) of rule 485. If appropriate, check the following box: [ ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. 2 Note This Amendment to the Registration Statement of The CountryBaskets(SM) Index Fund, Inc. (the "Fund"), formerly Eurofund, Inc., contains one prospectus and the related SAI. The prospectus and related SAI filed as part of this Amendment apply to an offering by the Fund of its shares on a "Fund-only" basis, pursuant to which sales of shares of each Fund series (a "Series") will only be made in aggregations of shares constituting a "Creation Unit". For example, an investor seeking to purchase shares of the Germany Index Series from the Fund must purchase shares in aggregations of 100,000 Germany Index Series shares. Each aggregation of 100,000 Germany Index Series shares thus constitutes a Creation Unit for that Series. Likewise, redemptions of Series shares may only be made in Creation Unit size aggregations (e.g., 100,000 shares in the case of the Germany Index Series). An investor may not redeem shares of any Series in less than Creation Unit size aggregations. The number of shares constituting a Creation Unit for each Fund Series differs and is set forth in the Prospectus. Application is being made to list the shares of each Fund Series (referred to as "CB Shares(SM)") on the New York Stock Exchange, Inc. This "Fund-only" prospectus and SAI, first filed with the Securities and Exchange Commission (the "Commission") as part of Amendment No. 1 to the Fund's Registration Statement, have been amended as described in the letter, dated February 12, 1996, from Stephen K. West and Tuuli-Ann Ristkok to the Commission. A second prospectus and related SAI applying to an offering by the Fund in which shares of the Fund may be exchanged for redeemable units of a separate unit trust was filed with Amendment No. 1 to the Fund's Registration Statement on December 2, 1994, but will not be used by the Fund. Accordingly, this Amendment No. 4 omits such prospectus and related SAI. 3 THE COUNTRYBASKET(SM) INDEX FUND, INC. CROSS-REFERENCE SHEET Part A Form N-1A Item Number Caption in Prospectus 1. Cover Page . . . . . . . . . . . Outside Cover Page of Prospectus 2. Synopsis . . . . . . . . . . . . Prospectus Summary; Summary of Fund Expenses 3. Condensed Financial Information. . . . . . . . . . . Not applicable 4. General Description of Registrant . . . . . . . . . . . The Fund--The CountryBaskets(SM) Index Fund, Inc. and its Investment Objective;--Investment Policies;--Investment Considera- tions and Risks;--FT/S&P-Actuaries World Indices(TM);--The FT Index Components;--Lending of Secu- rities; --Investment Restrictions of the Fund 5. Management of the Fund. . . . . . The Fund--Board of Directors;-- Investment Management;--Fees;-- Administrator; --Custodian and Transfer Agent 5A. Management's Discussion of Fund Performance . . . . . . . . Not applicable 6. Capital Stock and Other Securities . . . . . . . . The Fund--CB Shares(SM);--Capital Stock;--Available Information;-- Dividends and Capital Gains Distributions;--Tax Matters 7. Purchase of Securities Being Offered . . . . . . . . . . Summary of Fund Expenses; The Fund--Purchase and Issuance of Fund Shares in Creation Unit Aggregations;--Distributor;-- Fees; Back Cover of Prospectus; 8. Redemption or Repurchase . . . . . Summary of Fund Expenses; The Fund--Redemption of Fund Shares in Creation Unit Aggregations;--Fees 9. Pending Legal Proceedings. . . . . Not applicable 2 Part B Form N-1A Caption in Prospectus or Statement Item Number of Additional Information ("SAI") 10. Cover Page . . . . . . . . . . . . Outside Front Cover Page of SAI 11. Table of Contents. . . . . . . . . Table of Contents 12. General Information and History . . . . . . . . . . . . . General Description of The Fund 13. Investment Objectives and Policies . . . . . . . . . . . . The Fund--The CountryBaskets(SM) Index Fund, Inc. and its Invest- ment Objective (Prospectus); The Fund--Investment Policies (Prospectus); The Fund--Investment Restrictions of the Fund (Prospectus); Investment Policies and Restrictions (SAI); Brokerage Transactions (SAI) 14. Management of the Fund . . . . . . The Fund--Board of Directors (Prospectus); Management of the Fund (SAI) 15. Control Persons and Principal Holders of Securities . . . . . . The Fund--Capital Stock (Prospectus); Capital Stock and Shareholder Reports (SAI); Management of the Fund (SAI) 16. Investment Advisory and Other Services . . . . . . . . . The Fund--Investment Management (Prospectus); The Fund--Fees (Prospectus); Purchase and Issuance of Fund Shares in Creation Unit Aggregations (SAI); The Fund--Administrator (Prospectus); The Fund--Custodian and Transfer Agent (Prospectus); Investment Advisory, Management and Administrative Services--The Investment Adviser, --The Administrator, Custodian And Transfer Agent (SAI); Counsel and Independent Accountants (SAI) 17. Brokerage Allocation and Other Practices . . . . . . . . . The Fund--Investment Management (Prospectus); Brokerage Transac- tions (SAI) 3 18. Capital Stock and Other Securities. . . . . . . . . . . . The Fund--CB Shares(SM) (Prospectus); The Fund--Capital Stock (Prospectus); Capital Stock and Stockholder Reports (SAI); Dividends and Distributions (SAI); Taxes (SAI) 19. Purchase, Redemption and Pricing of Securities Being Offered . . . . . . . . . . Summary of Fund Expenses (Prospectus); The Fund--Creation Units (Prospectus); The Fund-- Purchase and Issuance of Fund Shares in Creation Unit Aggrega- tions (Prospectus); The Fund-- Redemption of Fund Shares in Creation Unit Aggregations (Prospectus); Purchase and Issuance of Fund Shares in Creation Unit Aggregations (SAI); Redemption of Fund Shares in Creation Unit Aggregations (SAI); Determining Net Asset Value (SAI) 20. Tax Status . . . . . . . . . . . . The Fund--Tax Matters (Prospectus); Taxes (SAI) 21. Underwriters . . . . . . . . . . . The Fund--Distributor (Prospectus); Purchase and Issuance of Fund Shares in Creation Unit Aggregations (SAI) 22. Calculation of Performance Data . . . . . . . . . . . . . . Not applicable 23. Financial Statements . . . . . . . Statement of Assets and Liabilities (SAI) Part C Information required to be included in Part C is set forth under the appropriate item heading. 1 SUBJECT TO COMPLETION DATED FEBRUARY 12, 1996 PROSPECTUS THE COUNTRYBASKETS(SM) INDEX FUND, INC. The CountryBaskets(SM) Index Fund, Inc. (the "Fund") is a management investment company organized as a series fund, with each series of shares (a "Series") representing a broad-based index of publicly traded equity securities in a particular country, geographical region or industry sector. The initial nine Series offered by this Prospectus are the Australia Index Series, the France Index Series, the Germany Index Series, the Hong Kong Index Series, the Italy Index Series, the Japan Index Series, the South Africa Index Series, the UK Index Series and the US Index Series. The Board of Directors of the Fund may authorize additional Series. The investment objective of each of the initial nine Series is to provide investment results that substantially correspond to the price and yield performance of a broad-based index of publicly traded equity securities in a particular country. Each of the nine Series will seek to provide investment results that substantially correspond to the price and yield performance of its respective country component of the FT/S&P Actuaries World Indices(SM) (the "FT Index"). See "The Fund--FT/S&P Actuaries World Indices(TM)". The shares of common stock of each Series offered hereby are sometimes referred to herein as "CB Shares(SM)". The Fund will sell and redeem shares of each Series only in aggregations of a specified number of shares for such Series (each, a "Creation Unit") at their net asset value principally for an in-kind portfolio of equity securities of the relevant FT Index component, together with some cash. Except in Creation Unit size aggregations, the CB Shares(SM) are not redeemable securities of the Fund. The number of CB Shares(SM) constituting a Creation Unit will initially be 250,000 CB Shares(SM) in the case of the Japan Index Series and 100,000 CB Shares(SM) in the case of each other Series. See "The Fund--Purchase and Issuance of Fund Shares in Creation Unit Aggregations" and "--Redemption of Fund Shares in Creation Unit Aggregations". Investors may not redeem CB Shares(SM) in less than Creation Unit aggregations. Application is being made to list the non-redeemable CB Shares(SM) for trading on the New York Stock Exchange, Inc. (the "NYSE"). It is expected that the non-redeemable CB Shares(SM) will trade on the NYSE during the day at prices that differ to some degree from their net asset value. See "The Fund--Determination of Net Asset Value", "--Exchange Listing and Trading" and "--Investment Considerations and Risks". Deutsche Morgan Grenfell/C. J. Lawrence Inc. ("DMG"), a subsidiary of Deutsche Bank AG, will serve as investment adviser to each Series of the Fund, providing investment advisory, management and certain administrative services. ALPS Mutual Funds Services, Inc. is the distributor of the Fund. See "The Fund Investment Management" and " Distributor". THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This Prospectus sets forth concisely the information about the Fund that an investor should know before investing. It should be read and retained for future reference. A Statement of Additional Information dated , 1996, provides further discussion of certain topics referred to in this Prospectus and other matters which may be of interest to investors. The Statement of Additional Information has been filed with the Securities and Exchange Commission and is incorporated herein by reference. The Statement of Additional Information may be obtained without charge by writing to the Fund or the Distributor (at its address set forth on the back cover of this Prospectus). The Fund's address is c/o Deutsche Morgan Grenfell/C. J. Lawrence Inc., 31 West 52nd Street, New York, New York 10019. "The CountryBaskets Index Fund, Inc.", "CountryBaskets" and "CB Shares" are service marks of DMG. DMG has filed applications for registration of such service marks with the U.S. Patent and Trademark Office. The Fund is an authorized licensee of such marks. Distributor: ALPS Mutual Funds Services, Inc. Investor Information: 1-800-CB-INFOS Prospectus dated , 1996 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. 2 "Financial Times/Standard & Poor's Actuaries World Indices", "FT/S&P Actuaries World Indices" and "FT/S&P AWI" are trademarks of FTSE International Limited ("FTSE") and Standard & Poor's ("S&P") and have been licensed for use by DMG. The Fund is an authorized sublicensee thereof. The Fund is not sponsored, endorsed, sold or promoted by FTSE or S&P and neither FTSE nor S&P makes any representation regarding the advisability of investing therein. See the inside front cover of this Prospectus. The Fund and the securities described herein (the "Products") are not sponsored, endorsed, sold or promoted by FTSE, Goldman, Sachs & Co. or Standard & Poor's (collectively, the "Owners"). None of the Owners makes any representation or warranty, express or implied, to the sponsors of the Products or any member of the public regarding the advisability of investing in securities generally or in the Products particularly or in the ability of the FT/S&P Actuaries World Indices(TM) (the "Indices") to track general stock market performance. The Owners' only relationship to Deutsche Morgan Grenfell/C. J. Lawrence Inc. ("Licensee") is the licensing of certain trademarks and trade names and of the Indices which are determined, composed and calculated without regard to the Licensee or the Products. The Owners have no obligation to take the needs of the Licensee or the Products into consideration in determining, composing or calculating the Indices. The Owners are not responsible for and have not participated in the determination of the prices and amount of the Products or the timing of the issuance or sale of the Products. The Owners have no obligation or liability in connection with the administration, marketing or trading of the Products. The Owners do not guarantee the accuracy and/or the completeness of the Indices or any data included therein and the Owners shall have no liability for any errors, omissions or interruptions therein. The Owners make no express or implied warranties, and expressly disclaim all warranties of quality or merchantability or fitness for a particular purpose or use with respect to the Indices or any data included therein. Without limiting any of the foregoing, in no event shall the Owners have any liability for any special, punitive, indirect or consequential damages (including lost profits), even if notified of the possibility of such damages. The FT-Actuaries World Indices(TM) were originally developed by Goldman, Sachs & Co., NatWest Securities Limited and The Financial Times Limited in 1986, and until May 23, 1995, were jointly published by them. On May 23, 1995, Standard & Poor's, a division of The McGraw-Hill Companies, Inc., joined The Financial Times Limited and Goldman, Sachs & Co. as a co- publisher of the FT-Actuaries World Indices(TM), now known as the Financial Times/Standard & Poor's Actuaries World Indices(TM) or the FT/S&P Actuaries World Indices(TM). The FT/S&P Actuaries World Indices(TM) are a continuation of the FT-Actuaries World Indices(TM). Following the current transition period, The Financial Times Limited and Standard & Poor's will jointly calculate the indices. On November [__], 1995, The Financial Times Limited transferred its ownership rights in the FT/S&P Actuaries World Indices(TM) to FTSE, a company jointly owned by The Financial Times Limited, the London Stock Exchange and the Institute of Actuaries. By the end of 1996, it is expected that FTSE will assume responsibility for calculating the European and Asia-Pacific indices and Standard & Poor's will calculate the U.S. indices. The Fund is not sponsored by or affiliated with Standard & Poor's, FTSE or The Financial Times 3 Limited. References herein to the "FT Index" and to certain index data prior to May 23, 1995 are to the FT-Actuaries World Index(TM); references thereafter are to the FT/S&P Actuaries World Indices(TM). Unless otherwise specified, all references in this Prospectus to "dollars", "US $" or "$" are to United States dollars, all references to "A$" are to Australian dollars, all references to "FF" are to the French francs, all references to "DM" are to Deutsche marks, all references to "HK $" are to Hong Kong dollars, all references to "L" are to Italian lira, all references to "Y" are to Japanese Yen, all references to "CR" are to South African commercial rands (a currency abandoned as of March 20, 1995), all references to "R" are to South African rands and all references to "L" are to pounds sterling. On __________, 1996, the noon buying rates in New York City for cable transfers payable in the applicable currency, as certified for customs purposes by the Federal Reserve Bank of New York, were as follows for each US $1.00: A$ ____________, FF ____________, DM ____________, HK$ ____________, ____________, Y ____________, R ____________, and L ____________. Some numbers in this Prospectus have been rounded. All US-dollar equivalents provided in this Prospectus are calculated at the exchange rate prevailing on the date to which the corresponding foreign currency amount refers. 4 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the detailed information appearing elsewhere in this Prospectus and in the Statement of Additional Information. The Fund and its Investment Objective . . . . The CountryBaskets(SM) Index Fund, Inc., a Maryland corporation (the "Fund"), is a management investment company organized as a series fund. The investment objective of each series of shares (a "Series") of the Fund is to provide investment results that substantially correspond to the price and yield performance of a broad-based index of publicly traded equity securities in a particular country, geographical region or industry sector. In the case of each of the initial nine Series offered by this Prospectus, the relevant index is a broad-based index of publicly traded equity securities in a particular country. The investment objective of each Series is fundamental and may not be changed without a vote of the Series' stockholders. There can be no assurance that the investment objective of any Series will be achieved. See "The Fund--The Country Baskets(SM) Index Fund, Inc. and its Investment Objective". Each of the initial nine Series offered by this Prospectus seeks to provide investment results that substantially correspond to the price and yield performance of its respective country component of the FT/S&P Actuaries World Indices(TM) (the "FT Index"). This investment objective is not fundamental and may be changed by the Board of Directors without a stockholder vote. The country components of the FT Index are based on equity securities trading in the markets of a particular country. The initial nine Series of the Fund are the Australia Index Series, the France Index Series, the Germany Index Series, the Hong Kong Index Series, the Italy Index Series, the Japan Index Series, the South Africa Index Series, the UK Index Series and the US Index Series. Each such Series is non-diversified. Such Series represent separate portfolios of equity securities, each substantially corresponding in composition and weighing to its respective country component of the FT Index. The net asset value of shares of each Series will fluctuate. See "The Fund--Determination of Net Asset Value". CB Shares(SM) . . . . . . . . The shares of common stock of each Series are sometimes referred to herein as the "CB Shares(SM)". Except in the Creation Unit aggregations referred to below, CB Shares(SM) are not redeemable securities of the Fund. The acquisition 5 of CB Shares(SM) by investment companies is subject to the restrictions of Section 12(d)(1) of the Investment Company Act of 1940. Trading of CB Shares(SM) on the New York Stock Exchange . . . . . . . . . . Application has been made to list the CB Shares(SM) of each Series for trading on the New York Stock Exchange, Inc. (the "NYSE"). Their respective symbols are: Series Trading Symbol Australia CB Shares(SM) GXA France CB Shares(SM) GXF Germany CB Shares(SM) GXG Hong Kong CB Shares(SM) GXH Italy CB Shares(SM) GXI Japan CB Shares(SM) GXJ South Africa CB Shares(SM) GXR UK CB Shares(SM) GXK US CB Shares(SM) GXU It is expected that the non-redeemable CB Shares(SM) of each Series will trade on the NYSE at prices that may differ to some degree from their net asset value. See "The Fund--Exchange Listing and Trading", "--Investment Considerations and Risks" and "--Determination of Net Asset Value". Book Entry Ownership of CB Shares(SM) . . . . . . . The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York (the "Depositary" or "DTC"), or its nominee will be the record or registered owner of all outstanding CB Shares(SM). Beneficial ownership of CB Shares(SM) will be shown on the records of the Depositary or its participants. Certificates will not be issued for CB Shares(SM). Beneficial owners of CB Shares(SM) will exercise their rights through DTC and such participants. See "The Fund Book-Entry Only System". Purchases and Redemptions of Creation Unit Aggregations of CB Shares(SM) . . . . . . The Fund will issue and redeem CB Shares(SM) of any Series only in aggregations of a specified number of shares (each a "Creation Unit") at their net asset value. A Creation Unit of the Japan Index Series consists of 250,000 CB Shares(SM) and a Creation Unit of each other Series consists of 100,000 CB Shares(SM). The Fund will offer and sell Creation Unit size aggregations of shares of each Series continuously through the Distributor 6 (see below) at their net asset value next determined after receipt of a purchase order in proper form. Creation Unit aggregations of shares are sold for an in-kind portfolio of equity securities included in the relevant component of the FT Index (the "Fund Basket") and cash in an amount equal to the difference between the value of a Fund Basket and the net asset value of the Creation Unit aggregation of shares (the "Cash Component"), as described more fully herein. See "The Fund--Purchase and Issuance of Fund Shares in Creation Unit Aggregations" in this Prospectus and "Purchase and Issuance of Fund Shares in Creation Unit Aggregations" in the Statement of Additional Information. The Fund will generally redeem shares of each Series only in Creation Unit size aggregations at their net asset value, principally in-kind for a Fund Basket and a cash payment equal to the difference between the value of the Fund Basket and the net asset value of the shares to be redeemed, as described more fully herein. See "The Fund--Redemption of Fund Shares in Creation Unit Aggregations" in this Prospectus and "Redemption of Fund Shares in Creation Unit Aggregations" in the Statement of Additional Information. Investment Management . . . . Deutsche Morgan Grenfell/C. J. Lawrence Inc. ("DMG" or the "Adviser") will act as investment adviser and, in addition, will provide management and certain administrative services to the Fund. DMG is a wholly owned indirect subsidiary of Deutsche Bank AG, a major German banking institution. Distributor . . . . . . . . . ALPS Mutual Funds Services, Inc. ("ALPS") is the distributor of the Fund shares (the "Distributor"). Information about purchases of CB Shares(SM) in Creation Unit aggregations may be obtained from the Distributor. Administrator . . . . . . . . State Street Bank and Trust Company ("State Street") will act as administrator of the Fund (in such capacity, the "Administrator"). Fees . . . . . . . . . . . . For its services as Adviser to each Series, including services in connection with lending portfolio securities (see "The Fund--Lending of Securities"), DMG will receive a monthly investment management fee at an annual rate of .30% of the average daily net assets of each Series, except for the Hong Kong and South Africa Index Series, for which such annual rate will be .45%, and the US Index Series, for which such annual rate will be .20%, plus in each case 40% of the gross investment income excluding dividends on portfolio securities of each Series. See "Fees". 7 Each Series will pay the Distributor for its distribution services a monthly distribution services fee equal to such Series' allocable portion of .02% per annum of the average aggregate daily net assets ("Aggregate Net Assets") of all Series up to Aggregate Net Assets of $2.5 billion, plus .01% per annum of Aggregate Net Assets of all Series in excess of $2.5 billion up to $5 billion, plus .005% per annum of Aggregate Net Assets of all Series in excess of $5 billion. The Distributor will also be paid a marketing fee and will be reimbursed for certain expenses. Each Series will also make payments to dealers and other persons for marketing and stockholder services. All payments by each Series to the Distributor and to such dealers or other persons will be made under the 12b-1 Plan (as defined herein) of such Series and will not exceed, in the aggregate, on an annualized basis, .25% of its average daily net assets. See "The Fund--Fees". The Administrator will receive monthly administrative fees for each Series at an annual rate of .08% of the average daily net assets of each Series up to $125 million, plus .06% of the average daily net assets of such Series in excess of $125 million up to $250 million and .04% of average daily net assets of such Series in excess of $250 million, subject to a minimum annual fee of $95,000 for each Series. Investment Considerations and Risks . . . . . . . . . . An investment in CB Shares(SM) of the initial nine Series of the Fund involves risks similar to those of investing in a broadly based portfolio of equity securities traded on exchanges in the respective countries represented by their corresponding FT Index components. These risks include equity market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in stock prices, and, with respect to each Series other than the US Index Series, exchange-rate fluctuations. The net asset value of shares of each Series will fluctuate with changes in the market value of its portfolio securities and, in the case of each Series except the US Index Series, changes in the market rate of exchange between the US dollar and the national currency in which the relevant component of the FT Index is denominated. See "The Fund--Investment Considerations and Risks". Prior to the date of this Prospectus, there has been no market for CB Shares(SM) and, consequently, there can be no assurance that active trading markets will develop. The Distributor will not maintain a secondary market in CB Shares(SM). See "Purchase and Issuance of Fund Shares in 8 Creation Unit Aggregations--The Distributor" in the Statement of Additional Information. The market prices of CB Shares(SM) will fluctuate in accordance with supply and demand on the NYSE. The Fund cannot predict whether the CB Shares(SM) will trade below, at or above their net asset value. See "The Fund--Investment Considerations and Risks." The securities held by each Series, except for the US Index Series, will primarily be equity securities of non- U.S. companies. Non-U.S. companies generally do not provide all or the same kind of disclosure required by U.S. law and accounting practice. See "The Fund --Investment Considerations and Risks" in this Prospectus and "Investment Policies and Restrictions" in the Statement of Additional Information. The Fund will engage in the lending of portfolio securities (see "The Fund--Lending of Securities") and engage in certain foreign currency transactions designed to maintain the value of each non-US Index Series' assets in terms of the foreign currency value of its respective FT Index component (see "The Fund--Investment Policies" in this Prospectus and "Investment Policies and Restrictions Currency Transactions" in the Statement of Additional Information). As of December 29, 1995, the following FT Index components were each concentrated (in excess of 25% of such component) in the stocks of the indicated industry group: Australia--Mining, Metals and Minerals; Hong Kong--Real Estate; Italy--Utilities; and South Africa--Precious Metals and Minerals. The portfolio securities of each such Series will generally have such industry concentration for so long as the corresponding FT Index component is so concentrated. See "The Fund--Investment Restrictions of the Fund" and "--Investment Considerations and Risks". Dividends and Capital Gains Distributions . . . . . Dividends from net investment income of all Series other than the US Index Series will be declared and paid at least annually and, in the case of the US Index Series, quarterly. Capital gains of each Series, if any, will be distributed at least annually. Dividends and capital gains distributions will be distributed by each Series in US dollars. The Fund does not currently maintain a plan for the automatic reinvestment of cash distributions in additional shares of the Fund. See "The Fund--Dividends and Capital Gains Distributions". 9 Tax Matters . . . . . . . . . The purchase, sale, and redemption of CB Shares(SM) are taxable events and may result in a capital gain or loss to investors. Dividend distributions, capital gain distributions and capital gains or losses from redemptions and sales of CB Shares(SM) may be subject to federal, state and local taxes. See "The Fund--Tax Matters". 10 SUMMARY OF FUND EXPENSES The purpose of the following tables is to assist investors in understanding the various costs and expenses an investor will bear directly and indirectly in respect of each Series of the Fund. The tables show all expenses and fees the Fund is expected to incur and are based on estimates expressed as a percentage of average net assets. "Other Expenses" are estimated amounts for the current fiscal year. The examples set forth below are presented for an investment of $1,000(1) as required by rules of the Securities and Exchange Commission (the "SEC"). The examples in the tables should not be considered a representation of past or future expenses or performance. Actual expenses may be greater or less than those shown. (1) As of December 29, 1995, the minimum value of a portfolio of index securities comprising a Fund Basket (assuming the inclusion of all stocks in the relevant FT Index component in their exact weightings) for an in-kind purchase or redemption of a Creation Unit aggregation of shares of each Series would have been as follows: the Australia Index Series, $1,900,000; the France Index Series, $3,587,500; the Germany Index Series, $3,275,000; the Hong Kong Index Series, $2,587,500; the Italy Index Series, $2,462,500; the Japan Index Series, $9,687,500; the South Africa Index Series, $1,925,000; the UK Index Series, $3,837,500; and the US Index Series, $5,025,000. 11 Fund Expense Table
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 Maximum Sales Load Imposed on Purchases of Creation Unit aggregations of Shares (as a percentage of amount of investment) . . . . . . . . . . None None None None None None None None None Estimated Cost to Investor of Transferring Securities in Fund Basket to Fund(a) . . . . . . . $2,176 $3,774 $1,856 $3,192 $1,593 $12,636 $1,888 $5,508 $9,747 Local Stock Transfer Taxes(b) (as a percentage of the value of Fund Basket contributed) . . . . .30% 0% 0% 0% 0% 0% 1.0% .50% 0% Purchases--Cash Component Transaction Fee(c) as a percentage of cash amount of investment . . . . . . . . 1.15% 1.0% 1.0% 1.2% 1.0% 1.32% 2.0% 1.5% 0% as a percentage of total investment amount . . . . . . .01% .01% .01% .01% .01% .01% .02% .01% 0% Deferred Sales Load . . . . . . None None None None None None None None None Estimated Cost to Redeemer of Transferring Securities in Fund Basket from Fund to Redeemer(a) $ $ $ $ $ $ $ $ $ Local Stock Transfer Taxes(b) (as a percentage of the value of Fund Basket delivered on redemption) . . . . . . . . . . 0% 0% 0% 0% 0% .30% 0% 0% 0% Redemptions--Transaction Fee on Cash Portion(d) . . . . . . . . as a percentage of cash redemption proceeds . . . . . 1.15% 1.0% 1.0% 1.2% 1.0% 1.32% 1.0% 1.0% 0% as a percentage of total redemption proceeds . . . . . .01% .01% .01% .01% .01% .01% .01% .01% 0% 12 B. Annual Series Operating Expenses (as a percentage of average net assets) Management Fees(e) . . . . . . . .30% .30% .30% .45% .30% .30% .45% .30% .20% Distribution Fees (12b-1)(f) . . .25% .25% .25% .25% .25% .25% .25% .25% .25% Other Expenses . . . . . . . . . .24% .26% .23% .36% .28% .26% .26% .25% .24% Total Operating Expenses . . . . .79% .81% .78% 1.06% .83% .81% .96% .80% .69% ____________________ (a) Estimated based on a delivery to or from the Fund of one Fund Basket of securities. An investor purchasing shares in Creation Unit aggregations will bear the costs of transferring the securities in the Fund Basket to the Fund and an investor redeeming Creation Unit aggregations of shares will bear the costs of transferring securities in the Fund Basket constituting a portion of the redemption proceeds from the Fund to the investor. Such costs will include settlement and custody charges, registration costs and similar charges. Investors will also beat certain stock transfer taxes or stamp duties on purchases or redemptions of Creation Units of shares of certain Series. See the line item "Local Stock Transfer Taxes". See "Purchase and Issuance of Fund Shares in Creation Unit Aggregations--The Fund Basket" and "Redemption of Fund Shares in Creation Unit Aggregations--Redemption Proceeds" in the Statement of Additional Information. (b) Based on the stock transfer taxes or stamp duty currently payable in the indicated countries in connection with the registration of transfers of Fund Basket securities to the Fund (on purchases of Creation Units of shares of the Australia, South Africa and UK Index Series) or to the redeeming investor (on redemptions of Creation Units of shares of the Japan Index Series). (c) Paid to the Fund and applicable only to the amount of a purchase represented by the Cash Component to offset the Fund's brokerage and other transaction costs of investing cash in portfolio securities of each Series other than the US Index Series. The cash purchase transaction fee is not a sales charge. The Cash Component is generally estimated to be 1% of the total purchase price, but may amount to a higher portion, not to exceed 10% of the total purchase price, in the event that cash is permitted or required by the Adviser to be substituted for a security or securities in the applicable Fund Basket. See "Purchase and Issuance of Fund Shares in Creation Unit Aggregations" in this Prospectus and in the Statement of Additional Information. The US Index Series will bear brokerage and other transaction expenses associated with investing the Cash Component contributed on purchases of Creation Unit aggregations of shares of the US Index Series in portfolio securities of that Series. (d) Paid to the Fund and applicable only to the amount of redemption proceeds represented by the cash portion to offset the Fund's brokerage and other transaction costs of selling portfolio securities of each Series other than the U.S. Index Series to pay a portion of redemption proceeds. The cash portion is generally estimated to be 1% of the total redemption proceeds of a Creation Unit aggregation of shares, but the cash portion could in certain limited circumstances amount to up to 100% of such proceeds. See "Redemption of Fund Shares in Creation Unit Aggregations" in this Prospectus and in the Statement of Additional Information. (e) Management fees are .30% of the average daily net assets of each Series, except for the Hong Kong and South Africa Index Series, for which such annual rate will be .45%, and the US Index Series, for which such annual rate will be .20% (see "The Fund--Fees"). In addition, each Series will pay to the Adviser 40% of the gross investment income, excluding dividends on portfolio securities, of the Series. Investment income is received primarily from interest earned on the collateral for securities loaned. See "The Fund--Lending of Securities". (f) The Distributor will be paid distribution services fees by each Series equal to such Series' allocable portion of: .02% per annum of the Aggregate Net Assets of all Series up to Aggregate Net Assets of $2.5 billion, plus .01% per annum of Aggregate Net Assets of all Series in excess of $2.5 billion up to $5 billion, plus .005% per annum of Aggregate Net Assets of all Series in excess of $5 billion. The Distributor will also be paid a marketing fee and 13 will be reimbursed for certain expenses. Each Series will also make payments to certain dealers and other persons for marketing and stockholder services and, to the extent of amounts available under such Series' 12b-1 Plan, will reimburse the Distributor and/or the Adviser for its costs incurred in producing advertising or marketing material, all as more fully described under "The Fund--Fees". All payments by each Series to the Distributor and to such dealers and other persons, and all such reimbursements, will be made under the 12b-1 Plan of such Series and will not exceed, in the aggregate, on an annualized basis, .25% of its average daily net assets. Because the fees and expenses paid under the 12b-1 Plan of each Series are charged against the assets of the Series, long-term stockholders may indirectly pay an amount that is more than the economic equivalent of the maximum front-end sales charge that such Series would be permitted to charge. See "The Fund--Fees".
14 C. Examples of Expenses (a) An investor would pay the following expenses on a $1,000 investment (payment with a ratable portion of a Fund Basket and a Cash Component of $10 (estimated as 1% of the total purchase price)), assuming (1) a 5% annual return and (2) redemption (delivery of a Fund Basket and a cash redemption payment of $10 (estimated as 1% of the total redemption proceeds)) at the end of each indicated time period:
Hong South Australia France Germany Kong Italy Japan Africa UK US Index Index Index Index Index Index Index Index Index Series Series Series Series Series Series Series Series Series 1 year 3 years
(b) An investor would pay the following expenses on the same investment, assuming no redemptions:
Hong South Australia France Germany Kong Italy Japan Africa UK US Index Index Index Index Index Index Index Index Index Series Series Series Series Series Series Series Series Series 1 year 3 years
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. 15 B. Annual Series Operating Expenses are based on estimated expenses. Management Fees are paid to DMG to provide each Series with investment advisory, management and certain administrative services and services in connection with the lending of portfolio securities. See "The Fund--Lending of Securities". Administration fees estimated at .074% of the average daily net assets of each Series, based estimated on average net assets of US $250,000,000, are included in "Other Expenses" and are paid to State Street, as Administrator, to provide the Fund with administrative services. Distribution fees are paid to ALPS, as Distributor, to provide distribution services to the Fund. The Distributor will also be paid a marketing fee and will be reimbursed for certain expenses. Each Series will also make payments to dealers and other persons providing marketing and stockholder services. See "The Fund--Investment Management", "--Distributor", "--Administrator" and "--Fees" for additional information. C. Examples of Expenses. The examples illustrate the estimated expenses associated with a $1,000 investment in a Creation Unit aggregation of Fund shares over periods of 1 and 3 years, based on the expenses in the table and an assumed annual rate of return of 5%. The return of 5% and estimated expenses are for illustration purposes only and should not be considered indications of expected Series expenses or performance, both of which may vary. The expenses associated with a hypothetical $1,000 investment in CB Shares(SM) include a pro rata portion of stockholder transaction expenses associated with the purchase or sale of a Creation Unit aggregation of shares, which would have been valued as of December 29, 1995 at between $1,900,000 and $10,000,000, depending on the Series, assuming for this purpose that the net asset value of a Creation Unit aggregation of shares were the same as the value of the Fund Basket as of such date. See footnote 1 to the Summary of Fund Expenses. Based on the 1995 annual rates of return of the FT Index components represented by each Series, the annual rate of return of each Series, assuming reinvestment of dividends, after estimated expenses applicable to the respective Series, would have been ____% for the Australia Index Series, ____% for the France Index Series, ____% for the Germany Index Series, ____% for the Hong Kong Index Series, ____% for the Italy Index Series, ____% for the Japan Index Series, ____% for the South Africa Index Series, ____% for the UK Index Series and ___% for the US Index Series. These rates of return do not include interest earned on collateral from securities loaned, which would have been increased to the extent of any net interest income so earned, and are not indicative of future results. 16 THE FUND The CountryBaskets(SM) The Fund is a non-diversified, open-end management Index Fund, Inc. and investment company registered under the Investment its Investment Company Act of 1940 (the "1940 Act"), organized as Objective a series fund. Each Series of the Fund seeks to provide investment results that substantially correspond to the price and yield performance of a broad-based index of publicly traded equity securities in a particular country, geographic region or industry sector. The Initial Series. Initially, nine Series of the Fund will issue shares: the Australia Index Series, the France Index Series, the Germany Index Series, the Hong Kong Index Series, the Italy Index Series, the Japan Index Series, the South Africa Index Series, the UK Index Series and the US Index Series. Each such Series seeks to provide investment results that substantially correspond to the price and yield performance of a broad- based index of publicly traded equity securities in the relevant country. This investment objective is fundamental and may not be changed without the approval of the holders of a majority of the voting securities (as defined in the 1940 Act) of the respective Series. The Board of Directors of the Fund may authorize additional Series. Each of the nine Series seeks investment results substantially corresponding to the price and yield performance of its respective country component of the FT Index. This investment objective is not fundamental, and in the case of any Series the index may be changed by the Board of Directors, subject to any applicable regulatory approvals, to another broad-based index of equity securities in the relevant country without a stockholder vote. See "Investment Policies and Restrictions-- Investment Restrictions" in the Statement of Additional Information. There can be no assurance that the investment objective of any Series will be achieved. Investment Policies Each Series will seek to implement its investment objective by a policy of remaining fully invested, except as described below, in a portfolio of equity securities that will provide investment results that substantially correspond to the price and yield performance of its respective country component of the FT Index. Each country component of the FT Index is a capitalization-weighted index of equity securities traded on the principal securities exchange(s) and, in some cases, the over-the-counter market, of that country. See "The FT Index Components". Each Series will invest the largest proportion of its net assets practicable, in any event at least 95% of its net assets, in the securities of its respective component of the FT Index, and the weighing of the portfolio securities of each Series will substantially correspond to their proportional representation in the relevant component of the FT Index. These investment policies are not fundamental and so may be changed by the Board of Directors of the Fund without stockholder approval. Correlation with the FT Index. The correlation between the performance of each Series and its respective FT Index component is expected to be at least 0.95 (1.00 indicating a perfect correlation). The ability to correlate the performance of a Series with that of the corresponding 17 component of the FT Index will be affected by, among other things, changes in securities markets, the manner in which the FT Index is calculated (see "FT/S&P Actuaries World Indices(TM)"), the expenses incurred by such Series, the asset size of such Series, and the timing and size of purchases and redemptions of Creation Unit aggregations of shares. Investment changes to accommodate purchases and redemptions of shares in Creation Unit size aggregations will be made at the direction of the Adviser to maintain to the extent practicable the correlation of each Series' portfolio to its corresponding component of the FT Index. In the event, considered unlikely by the Fund, that the Adviser is unable to maintain a correlation of 0.95 between a Series' performance and that of its respective FT Index component, the Fund's Board of Directors will consider alternative investment advisory arrangements for that Series. Each Series may invest in high quality, short-term fixed income obligations as cash reserves, including obligations denominated in US dollars and in the principal foreign currency or currencies of the portfolio securities of such Series (the "Series Currency") and repurchase agreements collateralized by U.S. Government securities. To a limited extent each Series may also purchase securities of U.S. or foreign investment companies, stock index futures contracts and options thereon traded on recognized exchanges in the markets relevant to such Series, and purchase call options, and write (sell) put options, on securities and indices in such markets. A Series will invest in such instruments (or combinations thereof) only for the purpose of exposing cash reserves and short-term money market investments to the equity risk and return of the corresponding component of the FT Index in order to achieve a higher correlation to such component. Investment company securities, stock index futures, options and options on futures in which a Series may invest will be those which the Adviser believes would, alone or in combination with other instruments, replicate the performance of the relevant FT Index component better than the uninvested cash. In addition, if market conditions make it impracticable to purchase a security in the relevant FT Index component, a Series may purchase another equity security that the Adviser considers an appropriate substitute for such FT Index constituent security or may purchase or write an option or combination of options on such FT Index security (or a security expected to perform similarly to the missing index security) to expose the uninvested assets to the equity risk and return of such unavailable security and thereby improve the correlation of the Series with the relevant FT Index component. A Series will not invest in options and futures contracts and options thereon for speculative purposes. See "Investment Policies and Restrictions--Other Fund Investments" in the Statement of Additional Information. Investments other than the equity securities included in the applicable FT Index component will not exceed 5% of each Series' net assets. As described above, such investments include cash and cash equivalents, repurchase agreements, investment company securities, call and put options and stock index futures contracts and options thereon, and equity 18 securities not included in the relevant component of the FT Index that may be an appropriate substitute for an index equity security if market conditions make it impracticable to purchase the index security in the relevant FT Index component. See "Investment Policies and Restrictions--Other Fund Investments" in the Statement of Additional Information. The activities of the Fund are subject to certain restrictions that may not be changed without stockholder approval. See "Investment Restrictions of the Fund" in this Prospectus and "Investment Policies and Restrictions--Investment Restrictions" in the Statement of Additional Information. Each Series may lend its portfolio securities in an amount up to 33 1/3% of the value of its total assets in order to earn income and thereby reduce the effect that expenses have on the Series' ability to provide investment results that substantially correspond to the price and yield performance of the relevant FT Index component. See "Lending of Securities". Each Series will also engage in certain foreign currency transactions that are designed to maintain the correspondence between the value of the Series' assets and the foreign currency-denominated values of the respective indices. A Series will not hold illiquid assets in excess of 15% of its net assets. For purposes of this restriction, "illiquid" securities shall mean securities which may not be sold or disposed of in the ordinary course of business within seven days at approximately the value at which the Series has valued the securities. See "Investment Policies and Restrictions" in the Statement of Additional Information. Portfolio Turnover. Each Series of the Fund is permitted to sell securities irrespective of how long they have been held. Given that the invest- ment management of each Series is fundamentally "passive" in that it seeks to provide investment results corresponding to that of an index, the portfolio turnover rate for each Series is expected to be under 50%. Ordinarily, securities will be purchased or sold by a Series only to reflect changes in the composition of the corresponding component of the FT Index or to accommodate cash flows required by, among other things, redemptions of Creation Unit aggregations of shares. FT/S&P Actuaries World The FT/S&P Actuaries World Indices(TM) are jointly Indices(TM) owned by FT-SE International (a company jointly owned by The Financial Times Limited, the London Stock Exchange and the Institute of Actuaries), Standard & Poor's (a division of The McGraw-Hill Companies, Inc.) and Goldman, Sachs & Co. (collectively, the "Owners"). On May 23, 1995, Standard & Poor's replaced NatWest Securities Limited to join The Financial Times Limited and Goldman, Sachs & Co. as a co-publisher of the FT Index and, following the current transition period, The Financial Times Limited and Standard & Poor's will be jointly responsible for the calculation of the FT Index components. On November [__], 1995, FTSE assumed the ownership rights of The Financial Times Limited in the FT Index. By the end of 1996, it is expected that FTSE will assume responsibility for calculating the Asian-Pacific and European indices and Standard & Poor's will calculate the U.S. indices. The Institute of 19 Actuaries and The Faculty of Actuaries, the English and Scottish bodies, respectively, that represent the actuarial profession in the United Kingdom (together with the Owners, the "Consortium") provide assistance in managing the FT Index. The aim of the Consortium is to create and maintain a series of equity indices for use by the global investment community. Selection Criteria. The World Index Policy Committee (the "WIPC") makes all policy decisions concerning the FT Index, including: objectives, selection criteria, market representativeness, calculation methodologies, and additions and deletions of constituent securities. The WIPC makes these decisions in a manner that is consis- tent with the stated aims and objectives of the Consortium. With respect to each country, regional or sector component of the FT Index, WIPC's objective is to capture 85% of the equity available (known as the "investible universe") in such country, region or sector. The "investible universe" for a particular component of the FT Index consists of the aggregate capitalization of all equity securities listed on the exchanges monitored within the relevant market after application of five exclusionary "screens" and certain other rules to the universe of such exchange-traded equities. A fuller description of the FT Index and the selection methodology is included in the Statement of Additional Information. Market Capitalization Weighing. The proportional representation of equity securities in the FT Index is based on each security's total market capitalization (that is, its market price times the number of shares outstanding) relative to other securities in the same market. The percent- age of a Series' assets to be invested in each equity security will not deviate significantly from such security's corresponding proportional representation in the relevant component of the FT Index. FT Index values include dividends on portfolio securities based on the most up-to-date indicated annualized rates, adjusted for any interim changes in, and any firm and precise forecasts of, expected dividends. Each Series will reinvest dividends and distributions it receives as soon as practicable. The FT Index The Australia Component. The Australia component Components of the FT Index consists of stocks that are traded on the Australian Stock Exchange Limited. As of December 29, 1995, stocks of 81 issuers were included. The three largest stocks and the approximate percentages of the Australia component represented thereby were Broken Hill Proprietaries (16.3%), National Australia Bank (7.6%) and CRA (5.6%), for a total of 29.5% of the Australia component. The ten largest equity issues in the Australia component represented approximately 52.2% of the Australia component. As of December 29, 1995, equities of the mining, metals and minerals, commercial and other banking and real estate represented approximately 31.7%, 20.7% and 5.6%, respectively, or a total of 58%, of the Australia component. Equities comprising the Australia component of the FT Index accounted for approximately 83.9% of the aggregate investible Australian market capitalization. 20 The France Component. The France component of the FT Index consists of stocks traded on the seven French stock exchanges. As of December 29, 1995, stocks of 100 issuers were included. The three largest stocks and the approximate percentages of the France component of the FT Index represented thereby were Elf Aquitaine (5.4%), LVMH-Moet Vuitton (4.9%) and L'Oreal (4.4%), for a total of 14.7% of the France component. The ten largest equity issues in the France component represented approximately 39% of the France component. Equities of the health and personal care, oil and commercial and other banks represented approximately 9.9%, 9.6% and 8.9%, respectively, or a total of 28.4%, of the France component. As of December 29, 1995, equities comprising the France component of the FT Index accounted for approximately 88.2% of the aggregate investible French market capitalization. The Germany Component. The Germany component of the FT Index consists of stocks that are traded on the official (Amtlicher Handel) and the regulated unlisted (Geregelter Markt) markets of the Frankfurt Stock Exchange. As of December 29, 1995, stocks of 59 issuers were included. The three largest stocks and the approximate percentages of the Germany component of the FT Index represented thereby were Allianz AG (11.4%), Siemens AG (7.5%) and Daimler Benz AG (6.5%) for a total of 25.4% of the Germany component. The ten largest equity issues in the Germany component represented approximately 56% of the Germany component. Equities of the insurance, commercial and other banking, and chemicals industries represented approximately 17.9%, 15.1% and 13.8%, respec- tively, or a total of 46.8%, of the Germany component. As of December 29, 1995, equities comprising the Germany component of the FT Index accounted for approximately 89% of the aggregate investible German market capitalization. The Hong Kong Component. The Hong Kong component of the FT Index consists primarily of stocks traded on the Stock Exchange of Hong Kong Limited (the "HKX"). As of December 29, 1995, stocks of 55 issuers (including five issuers listed on the Singapore Stock Exchange but not on the HKX) were included. The three largest stocks and the approximate percentages of the Hong Kong component represented thereby were Hutchison Whampoa (10.3%), Hong Kong Telecomm (9.4%) and Sun Hung Kai Properties (8.9%), for a total of 28.6% of the Hong Kong component. The ten largest equity issues in the Hong Kong component represented approximately 62% of the Hong Kong component. Equities of the real estate, utilities, and diversified consumer goods industries represented approximately 37.0%, 18.7% and 12.7%, respectively, or a total of 68.4%, of the Hong Kong component. As of December 29, 1995, equities comprising the Hong Kong component of the FT Index accounted for approximately 85.7% of the aggregate investible market capitalization of Hong Kong. The Italy Component. The Italy component of the FT Index consists of stocks on the official list (Listino della Borsa) of the Milan Stock Exchange. As of December 29, 1995, stocks of 59 issuers were included. 21 The three largest stocks and the approximate percentages of the Italy component represented thereby were Generali (13.9%), Telecom Italia Mobile (8.4%) and Stet (7.8%), for a total of 30.1% of the Italy component. The ten largest equity issues in the Italy component represented approximately 61% of the Italy component. Equities of the utilities, insurance and automobile industries represented approximately 29.6%, 24.5% and 9.7%, respectively, or a total of 63.8%, of the Italy component. As of December 29, 1995, equities comprising the Italy component of the FT Index accounted for approximately 89.7% of the aggregate investible Italian market capitalization. The Japan Component. The Japan component of the FT Index consists of stocks traded on the first and second sections of the Tokyo Stock Exchange and the first section of the Osaka Stock Exchange. As of December 29, 1995, stocks of 483 issuers were included. The three largest stocks and the approximate percentages of the Japan component represented thereby were Toyota Motor (2.8%), Industrial Bank of Japan (2.5%) and Mitsubishi Bank (2.4%), for a total of 7.7% of the Japan component. The ten largest equity issues in the Japan component represented approximately 21% of the Japan component. Equities of the commercial and other banks, financial institutions and utilities represented approximately 22.5%, 6.2% and 6.1%, respectively, or a total of 34.8%, of the Japan component. As of December 29, 1995, equities comprising the Japan component of the FT Index accounted for approximately 83.1% of the aggregate investible Japanese market capitalization. The South Africa Component. The South Africa component of the FT Index consists of stocks that are traded on the Johannesburg Stock Exchange. As of December 29, 1995, stocks of 45 issuers were included. The three largest stocks and the approximate percentages of the South Africa component represented thereby were Anglo American Corp. (10.1%), De Beers/Centenary (8.2%) and South African Breweries (7.7%), for a total of 26% of the South Africa component. The ten largest equity issues in the South Africa component represented approximately 52% of the South Africa component. Equities of the precious metals and minerals, diversified holding companies and beverages and tobacco industries represented approximately 34.9%, 11.6% and 11.3%, respectively, or a total of 57.8%, of the South Africa component. As of December 29, 1995, equities comprising the South Africa component of the FT Index accounted for approximately 82.2% of the aggregate investible market capitalization of the Johannesburg Stock Exchange. The UK Component. The UK component of the FT Index consists of stocks on the official list of the London Stock Exchange. As of December 29, 1995, stocks of 205 issuers were included. The three largest stocks and the approximate percentages of the UK component represented thereby were Glaxo Wellcome (4.6%), British Petroleum (4.3%) and Shell Transport & Trading (4.0%), for a total of 12.9% of the UK component. The ten largest equity issues in the UK component 22 represented approximately 29% of the UK component. Equities of the commercial and other banks, utilities and health and personal care industries represented approximately 12.5%, 11.8% and 9.7%, respectively, or a total of 34.0%, of the UK component. As of December 29, 1995, equities comprising the UK component of the FT Index accounted for approximately 82.6% of the aggregate investible market capitalization of the United Kingdom. The US Component. The US component of the FT Index consists of stocks traded on the NYSE, the American Stock Exchange and the National Association of Securities Dealers Automated Quotation (NASDAQ) system. As of December 29, 1995, stocks of 639 issuers were included. The three largest stocks and the approximate percentages of the US component represented thereby were General Electric (2.5%), AT&T (2.1%) and Exxon Corp. (2.0%), for a total of 6.6% of the US component. The ten largest equity issues in the US component represented approximately 16% of the US component. Equities of the utilities, health and personal care and commercial and other bank industries represented approximately 13.1%, 11.1% and 7.8%, respectively, or a total of 32%, of the US component. As of December 29, 1995, equities comprising the US component of the FT Index accounted for approximately 73.8% of the aggregate investible market capitalization of the United States. Investment Management DMG will act as investment adviser to the Fund and, subject to the supervision of the Board of Directors of the Fund, will be responsible for management of each Series' affairs, including providing certain administrative services and services in connection with the lending of portfolio securities, pursuant to an Investment Management Agreement entered into with the Fund with respect to each Series. The Adviser receives a fee from the Fund for its services. See "Fees" in this Prospectus and "Investment Advisory, Management and Administrative Services--The Investment Adviser" in the Statement of Additional Information. DMG is organized under Delaware law and is registered as an investment adviser under the Investment Advisers Act of 1940 and as a broker-dealer under the Securities Exchange Act of 1934 (the "Exchange Act"). DMG is a wholly owned indirect subsidiary of Deutsche Bank AG, a major German banking institution ("Deutsche Bank"). DMG is engaged in the securities underwriting and securities brokerage businesses. The principal business address of DMG is 31 West 52nd Street, New York, New York 10019. Subject to obtaining the best price together with efficient execution, the Fund may place orders for the purchase and sale of securities for the Fund's portfolio with both DMG and/or Deutsche Bank, among other brokers and dealers, and incur brokerage commissions for such transactions. Except as permitted by exemptive order or applicable rule or regulation, no portfolio transaction on a principal basis will be done with DMG, Deutsche Bank or their affiliates in securities, foreign currency or other assets. Deutsche Bank 23 and its affiliates may have commercial lending relationships with companies whose securities may be held by a Series of the Fund. Distributor ALPS Mutual Funds Services, Inc. is the Distributor of CB Shares(SM) (see "CB Shares(SM)" below). Its address is 370 17th Street, Suite 2700, Denver, Colorado 80202, and investor information can be obtained by calling 1-800- [ - ]. CB Shares(SM) will be sold by the Fund and distributed only in Creation Unit size aggregations, as described below under "Purchase and Issuance of Fund Shares in Creation Unit Aggregations". CB Shares(SM) in less than Creation Unit size aggregations will not be distributed by the Distributor. The Distributor is a registered broker-dealer under the Exchange Act. The Distributor was incorporated in 1986 under Colorado law. The Distributor has entered into a Distri- bution Agreement with the Fund pursuant to which it will distribute Fund shares. The Distributor will receive fees from the Fund for its services pursuant to the 12b-1 Plans described below. See "Fees" below and "Purchase and Issuance of Fund Shares in Creation Unit Aggregations--The Distributor" in the Statement of Additional Information. Administrator State Street will act as Administrator of the Fund pursuant to an Administration Agreement with the Fund and will be responsible for certain clerical, record keeping and bookkeeping services, except those to be performed by the Adviser or by State Street in its capacity as Custodian. See "Investment Advisory, Management and Administrative Services--The Administrator, Custodian and Transfer Agent" in the Statement of Additional Information. Custodian and Transfer State Street serves as the Custodian for the cash Agent and portfolio securities of each Series of the Fund and provides fund accounting services pursuant to a Custodian Agreement between State Street and the Fund. State Street also provides transfer agency services (in such capacity, the "Transfer Agent") pursuant to an agreement with the Fund. State Street, as Custodian and Transfer Agent, has no role in determining the investment policies of the Fund or which securities are to be purchased or sold by the Fund. The principal business address of State Street is 225 Franklin Street, Boston, Massachusetts 02110. Fees As Adviser, DMG will be paid a fee, computed daily and paid monthly, at an annual rate of .30% of the average daily net assets of each Series, except for the Hong Kong and South Africa Index Series, for which such annual rate will be .45%, and the US Index Series, for which such annual rate will be .20%, plus in each case 40% of the gross investment income, excluding dividends on securities held in the portfolio, of such Series. See "Summary of Fund Expenses" for the fee for each Series. Pursuant to a plan with respect to each Series (each, a "12b-1 Plan") adopted by the Board of Directors of the Fund under Rule 12b-1 under the 1940 Act, each Series will pay the Distributor such Series' allocable portion of the aggregate distribution services fees payable by all Series 24 of the Fund subject to the Distribution Agreement (the "Distribution Agreement") with the Distributor, equal to .02% per annum of the aggregate average daily net assets ("Aggregate Net Assets") of all such Series up to Aggregate Net Assets of $2.5 billion, plus .01% per annum of Aggregate Net Assets of all such Series in excess of $2.5 billion up to $5 billion, plus .005% per annum of Aggregate Net Assets of all such Series in excess of $5 billion. Each Series will also pay the Distributor for marketing and promotional services pursuant to a Marketing Agreement with the Distributor (the "Marketing Agreement") such Series' allocable portion of the aggregate marketing fees payable by all Series subject to the Marketing Agreement, equal to .23% per annum of the Aggregate Net Assets of all such Series up to Aggregate Net Assets of $200 million, plus .03% per annum of Aggregate Net Assets of all such Series in excess of $1.5 billion up to $5 billion, plus .015% per annum of Aggregate Net Assets of all such Series in excess of $5 billion. In addition, subject to the aggregate limitation on payments under each 12b-1 Plan, the Fund will make payments to certain dealers or other persons which have entered into agreements with the Distributor to provide marketing and stockholder services. Such payments will be made by the Fund to each such dealer or other person at the rate of .05% of the Aggregate Net Assets of all Series subject to such an agreement. To the extent of amounts available under its 12b-1 Plan, each Series will also reimburse the Distributor and/or the Adviser for its costs incurred in producing advertising or marketing material prepared at the request of the Series. The fees paid by a Series under its 12b-1 Plan as compensation for distribution, marketing or stockholder services for that Series may exceed the expenses actually incurred by the recipients of such fees. Aggregate payments under each 12b-1 Plan, including reimbursements to the Adviser or the Distributor of costs of advertising or marketing material, will not exceed, on an annualized basis, .25% of average daily net assets of the applicable Series. Each 12b-1 Plan is subject to approval annually by the Board of Directors. See "Purchase and Issuance of Fund Shares in Creation Unit Aggregations--The Distributor" in the Statement of Additional Information. The Administrator will receive monthly administrative fees from the Fund at an annual rate of .08% of the average daily net assets of each Series up to $125 million, plus .06% of the average daily net assets of each Series in excess of $125 million up to $250 million and .04% of the average daily net assets of each Series in excess of $250 million, subject to a minimum annual fee for each Series of $95,000. In addition, the Administrator will be reimbursed for its own out- of-pocket costs incurred in providing adminis- tration services. In addition to the fees described above, the Fund will be responsible for the payment of expenses that will include, among other things, organizational expenses, compensation of the Directors of the Fund, reimbursement of out-of- pocket expenses incurred by certain service providers, exchange listing fees, brokerage costs and litigation and 25 extraordinary expenses. In addition, the US Index Series will bear brokerage and other transaction expenses associated with investing the Cash Component (as defined herein) contributed on purchases of Creation Unit aggregations of shares of such Series in portfolio securities of that Series. CB Shares(SM) The shares of common stock, par value $.001 per share, of each Series are referred to herein as the "CB Shares(SM)". The CB Shares(SM) of the initial nine series of the Fund are the "Australia CB Shares(SM)", the "France CB Shares(SM)", the "Germany CB Shares(SM)", the "Hong Kong CB Shares(SM)", the "Italy CB Shares(SM)", the "Japan CB Shares(SM)", the "South Africa CB Shares(SM)", the "UK CB Shares(SM)" and the "US CB Shares(SM)". Except in the Creation Unit size aggregations described under "Creation Units" below, CB Shares(SM) are not redeemable securities of the Fund. Exchange Listing Application has been made to list the CB Shares(SM) and Trading of each Series for trading on the NYSE. The CB Shares(SM) are expected to trade on the NYSE at prices that may differ to some degree from their net asset value. See "Investment Considerations and Risks" and "Determination of Net Asset Value". There can be no assurance that the requirements of the NYSE necessary to maintain the listing of CB Shares(SM) of any Series will continue to be met or will remain unchanged. The NYSE may remove the CB Shares(SM) of a Series from listing if (1) following the initial twelve-month period beginning upon the commencement of trading of a Series of CB Shares(SM), there are fewer than 50 record and/or beneficial holders of the CB Shares(SM) for 30 or more consecutive trading days, (2) the value of the underlying index or portfolio of securities on which such Series is based is no longer calculated or available or (3) such other event shall occur or condition exist that, in the opinion of the NYSE, makes further dealings on the NYSE inadvisable. In addition, the NYSE will remove the CB Shares(SM) from listing and trading upon termination of the Fund. Creation Units The Fund will issue and redeem CB Shares(SM) of each Series only in aggregations of a specific number of shares applicable to a Series. See "Purchase and Issuance of Fund Shares in Creation Unit Aggregations" and "Redemption of Fund Shares in Creation Unit Aggregations". A Creation Unit of the Japan Index Series consists of 250,000 shares and a Creation Unit of each other Series consists of 100,000 shares. The Board of Directors of the Fund reserves the right to declare a split in the number of CB Shares(SM) outstanding of any Series, and to make a corresponding change in the number of CB Shares(SM) constituting a Creation Unit, in the event that the per CB Share(SM) price in the secondary market rises to an amount that exceeds the desirable retail range. Investment An investment in CB Shares(SM) of each Series Considerations and involves risks similar to those of investing in a Risks broadly-based portfolio of equity securities traded on exchanges in the countries represented by the relevant FT Index component, such as market fluctu- ations caused by such factors as economic and politi- cal developments, changes in interest rates and 26 perceived trends in stock prices. Investing in Fund Series whose portfolios contain securities of non-U.S. issuers involves certain risks and considerations not typically associated with investing in the securities of U.S. issuers. These risks include generally greater price volatility; reduced liquidity and the significantly smaller market capitalization of most non-U.S. securities markets; more substantial government involvement in the economy; higher rates of inflation; greater social, economic, and political uncertainty and the risk of nationalization or expropriation of assets and risk of war. The Adviser has advised the Fund that investments in the Hong Kong and South African equity markets in particular may entail special risks of political uncertainty. In 1997, the People's Republic of China will take control of the colony of Hong Kong. The extent to which China may change the regulatory or financial structures of Hong Kong, and the possible adverse effects of any such changes on the Hong Kong equity markets, cannot be predicted. Investors should also be aware that although South Africa currently has a democratic government, risks of political and economic instability remain that could adversely affect the country's equity markets. Each Series of the Fund is classified as "non- diversified" for purposes of the 1940 Act, which means the Series is not limited by the 1940 Act with regard to the portion of its assets that may be invested in the securities of a single issuer. However, each Series intends to maintain the required level of diversification and otherwise conduct its operations so as to qualify as a "regulated investment company" for purposes of the Internal Revenue Code of 1986 (the "Code"), which will relieve the Series of any liability for Federal income tax to the extent that its earnings are distributed to stockholders. See "Dividends and Capital Gains Distributions" in this Prospectus and "Taxes" in the Statement of Additional Information. To a limited extent, each Series may purchase stock index futures contracts and options thereon traded on recognized exchanges in the markets relevant to such Series. Each Series may also purchase call options and write (sell) covered put options on securities and indices in such markets. The purpose of purchasing stock index futures and options thereon, purchasing call options and writing put options is to expose cash reserves and short-term money market investments to the equity risk and return of the corresponding component of the FT Index in order to achieve a higher correlation to such component. The aggregate value of futures contracts and options thereon, plus the segregated assets in respect of such contracts and written put options, any equity securities in which the Fund invests as temporary substitutes for FT Index securities that are unavailable, investment company securities, repurchase agreements and any other temporary cash and short- term investments, will not exceed 5% of the Series' net assets. See "Investment Policies and Restrictions--Other Fund Investments" and "Special Considerations and Risks--Options and Futures" in the Statement of Additional Information. 27 The Fund is a newly organized investment company with no previous operating history. As indicated above, application is being made to list the CB Shares(SM) of each Series on the NYSE. There can be no assurance that active trading markets for the CB Shares(SM) will develop. The Distributor will not maintain a secondary market in CB Shares(SM). See "Purchase and Issuance of Fund Shares in Creation Unit Aggregations--The Distributor" in the Statement of Additional Information. Trading in CB Shares(SM) on the NYSE may be halted due to market conditions or, in light of NYSE rules and procedures, for reasons that, in the view of the NYSE, make trading in CB Shares(SM) inadvisable. In addition, trading in CB Shares(SM) on the NYSE will be subject to trading halts caused by extraordinary market volatility pursuant to NYSE "circuit breaker" rules that require trading in securities on the NYSE to be halted for a specified time period in the event of a specified market decline. There can be no assurance that the requirements of the NYSE necessary to maintain the listing of CB Shares(SM) of any Series will continue to be met or will remain unchanged. See "Exchange Listing and Trading". The net asset value of the CB Shares(SM) of each Series will fluctuate with changes in the market value of the portfolio securities of the Series and, in each case other than the US Index Series, changes in the market rate of exchange between the US dollar and the Series Currency. The market prices of CB Shares(SM) will fluctuate in accordance with supply and demand on the NYSE. The Fund cannot predict whether the CB Shares(SM) will trade below, at or above their net asset value. Price differences may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for CB Shares(SM) will be closely related to, but not identical to, the same forces influencing the prices of the stocks of the relevant FT Index component trading individually or in the aggregate at any point in time. Because each Series' assets, except those of the US Index Series, will generally be invested in non- U.S. securities, the US dollar equivalent of a Series' net assets would be adversely affected by reductions in the value of such foreign currencies relative to the dollar and would be positively affected by increases in the value of such foreign currencies relative to the dollar. The Fund does not expect to engage in currency transactions for the purpose of hedging against the decline in value of any Series Currency. Each Series may, however, purchase forward contracts, currency futures contracts and options on such contracts and currency call options in the Series Currency (other than the US dollar) up to the aggregate amount of any US dollar-denominated assets to maintain exposure to the Series Currency and may engage in currency transactions for the purpose of meeting the US dollar cash requirements of redemptions of Series shares in Creation Unit size aggregations. See "Investment Policies and Restrictions--Currency Transactions" in the Statement of Additional Information. CB Shares(SM) may be more susceptible to any single economic, political or regulatory occurrence than the portfolio securities of an investment 28 company that is more broadly invested in the equity securities of the relevant market than the Fund Series. In addition, the securities held by each Series other than the US Index Series will primarily be equity securities of non-U.S. companies, which do not provide all or the same kind of disclosure required by U.S. law and account- ing practice. The Adviser has advised the Fund that as of December 29, 1995, the following FT Index components were each concentrated (in excess of 25% of such component) in the stocks of the indicated industry group: Australia--Mining, Metals and Minerals; Hong Kong--Real Estate; Italy--Utilities; and South Africa--Precious Metals and Minerals. The portfolio securities of each corresponding Series will generally have the same industry concentration for as long as its corresponding FT Index component is so concentrated. An investment in the CB Shares(SM) of each such Series therefore involves a greater exposure to the performance and risks associated with the relevant industry group than would be the case if such Series' portfolio securities were more broadly diversified among industry groups. The Adviser has advised the Fund of certain risks associated with such concentrations: Australia - Mining, Metals, and Minerals Australia has known reserves of several major minerals, such as aluminum, copper, and gold, with current production sufficient for domestic demand and exports. Although production has increased in several areas, the mining sector is volatile, with relatively small commodity price rises prompting large-scale investment in new capacity. Hong Kong - Real Estate Despite weakness in the Hong Kong property market, the total return for the Real Estate Sector of the FT Index Hong Kong was over 27% in US dollar terms for 1995. Although property prices have begun to recover from recent declines, this sector faces several risks in the near future. For example, the Hong Kong real estate market may be adversely affected by any increase in interest rates, with consequently higher borrowing costs. Italy - Utilities Italy is preparing for major changes in the utilities industry, specifically the planned privatization of ENEL, the government-controlled national electric power agency. Italian utilities, traditionally a counter-cyclical industry, may be adversely affected by increases in interest rates due to a relatively high level of debt financing in the industry. South Africa - Precious Metals & Minerals 29 South African Precious Metals & Minerals have demonstrated historical volatility in total returns. In 1995, the total return of equities in this sector was -13.58%, versus a five-year annualized return of 9.86%. The risks in this sector include fluctuating gold, diamond, and other precious metals prices. Purchasers of Creation Unit aggregations of Shares should also see "Special Considerations and Risks--Continuous Offering" in the Statement of Additional Information. Dividends and Capital Dividends from net investment income, including Gains Distributions net foreign currency gains, if any, of all Series other than the US Index Series will be declared and paid at least annually and, in the case of the US Index Series, quarterly. Capital gains of each Series, if any, will be distributed at least annu- ally. Dividends and capital gains distributions will be distributed by each Series in US dollars. The Fund does not currently maintain a plan for the automatic reinvestment of cash distributions in additional CB Shares(SM). The Fund will inform stockholders of the amount and nature of all distributions made to them. Tax Matters Each Series intends to qualify for and to elect treatment as a "regulated investment company" under Subchapter M of the Code. As a regulated investment company, a Series will not be subject to U.S. federal income tax on its income and gains that it distributes to stockholders, provided that it distributes annually at least 90% of its net investment income. Net investment income includes income from dividends and interest and gains and losses from foreign currency transactions net of operating expenses plus the Series' net short-term capital gains in excess of its net long-term capital losses. Each Series intends to distribute at least annually or, in the case of the US Index Series, quarterly to its stockholders all of its net investment income and any net long-term capital gains. See "Taxes--Tax Treatment of the Fund" in the Statement of Additional Information. Dividends paid out of a Series' net investment income and distributions of net realized short- term capital gains in excess of long-term capital losses are taxable to a U.S. investor as ordinary income. Distributions of net long-term capital gains, if any, in excess of net short-term capital losses are taxable to a U.S. investor as long-term capital gains, regardless of how long the investor has held the CB Shares(SM). Dividends and distributions paid by a Series other than the US Index Series generally will not qualify for the deduction for dividends received by corporations. Distributions in excess of a Series' current and accumulated earnings and profits will generally be treated as a tax-free return of capital to each of the Series' investors to the extent of the investor's basis in its CB Shares(SM) of the Series, and as capital gain thereafter. Since more than 50% of the value of the total assets of each Series other than the US Index Series will consist of stock or securities of foreign 30 corporations at the close of its taxable year, each such Series will be eligible to file an election with the Internal Revenue Service to "pass through" to its investors the amount of foreign income taxes (including withholding taxes) paid by such Series. The foreign income taxes passed through (other than foreign income taxes paid with respect to dividend equivalents received on portfolio securities on loan) may qualify as a deduction against income or as a foreign tax credit against U.S. federal income taxes. Each investor will be notified within 60 days after the close of the Series' taxable year of the investor's portion of the foreign income taxes paid to each country and the portion of dividends that represents income derived from sources within each country. The Fund may be required to withhold for U.S. federal income tax purposes 31% of the dividends and distributions payable to investors who fail to provide the Fund with their correct taxpayer identification number or to make required certifications, or who have been notified by the U.S. Internal Revenue Service that they are subject to backup withholding. Backup withholding is not an additional tax; amounts withheld may be credited against the investor's U.S. federal income tax liability. For further information on taxes, see "Taxes" in the Statement of Additional Information. Lending of Securities The Fund may lend securities from the portfolio of each Series to brokers, dealers and other financial institutions needing to borrow securities to complete transactions and for other purposes. Because the cash, U.S. government securities or other assets that are pledged as collateral to the Fund earn interest, securities lending enables a Series to earn additional income, which may partially offset the expenses of the Series and thereby reduce the effect that expenses have on the Series' ability to provide investment results that substantially correspond to the price and yield performance of the relevant component of the FT Index. These loans may not exceed 33 1/3% of a Series' total assets. The Fund will comply with the conditions for lending established by the SEC. In connection with these loans, the Series will receive collateral equal to at least 100% of the current market value of the loaned securities, as marked to market each day that the net asset value of the Series is determined, consisting of cash, government securities or other assets permitted by applicable regulations. A Series will pay reasonable administrative and custodial fees in connection with the loan of securities. The interest income the Series earns from the loan collateral is included in the Series' gross investment income on which a portion of the management fee paid to DMG is based. See "Fees". The Fund will not pay any finder's fees in connection with the lending of portfolio securities. See "Investment Policies and Restrictions--Lending Portfolio Securities" in the Statement of Additional Information for further details of the lending transactions. 31 Investment Restrictions Each Series intends to observe certain limitations of the Fund on its investment practices. Specifically, a Series may not: (i) lend any funds or other assets except that a Series may enter into repurchase agreements and may lend its portfolio securities in an amount not to exceed 33 1/3% of the value of its total assets; (ii) issue senior securities or borrow money, except borrowings from banks (which may be from an affiliate of the Adviser) for temporary or emergency purposes in an amount up to 33 1/3% of the value of the Series' total assets (including the amount borrowed), valued at the lesser of cost or market, less liabilities (not including the amount borrowed) valued at the time the borrowing is made, and the Series will not purchase securities while borrowings in excess of 5% of the Series' total assets are outstand- ing, provided, that for purposes of this restriction, short-term credits necessary for the clearance of transactions are not considered borrowings; (iii) pledge, hypothecate, mortgage or otherwise encumber its assets, except in an amount up to 33 1/3% of the value of its total assets, to secure permitted borrowings, provided that the deposit of underlying securities and other assets in escrow and collateral arrangements with respect to initial or variation margin for currency transactions, options, futures contracts and options on futures will not be deemed to be pledges of the Series' assets; (iv) purchase a security (other than obligations of the United States Government, its agencies or instrumentalities) if as a result 25% or more of its total assets would be invested in a particular industry, except that a Series will invest 25% or more of its total assets in a single industry in the event that the relevant component of the FT Index becomes so concentrated. See "The FT Index" in the Statement of Additional Information for a description of the ten most highly represented industry sectors in the FT Index component for each Series. Except with regard to a Series' borrowing policy, all percentage limitations apply immediately after a purchase or initial investment, and any subsequent change in any applicable percentage resulting from market fluctuations or other changes in total or net assets does not require elimination of any security from the Series' portfolio. With respect to the fundamental restriction set forth in (iv) above, the Adviser has advised the Fund that as of December 29, 1995, the following FT Index components were concentrated (in excess 32 of 25% of such component) in the stocks of the indicated industry groups (as defined by the Consortium): Australia Mining, Metals and Minerals Hong Kong Real Estate Italy Utilities South Africa Precious Metals and Minerals See "Investment Considerations and Risks". The investment limitations described here, and certain additional limitations described under "Investment Policies and Restrictions--Investment Restrictions" in the Statement of Additional Information, may be changed with respect to a Series only with the approval of the holders of a majority of the outstanding voting securities (as defined in the 1940 Act) of such Series. For a description of additional investment restrictions of the Fund, see the Statement of Additional Information. Determination of Net Net asset value per share for each Series of the Asset Value Fund is computed by dividing the value of the net assets of such Series (i.e., the value of its total assets less total liabilities) by the total number of CB Shares(SM) of such Series outstanding, rounded to the nearest cent. Expenses and fees, including management, administration and distribution fees, are accrued daily and taken into account for purposes of determining net asset value. The net asset value per CB Share(SM) of each Series is determined as of the close of the regular trading session on the NYSE (currently 4:00 p.m., New York time) on each day that the NYSE is open. See "Business Day". In computing a Series' net asset value, the Series' portfolio securities are valued based on their last quoted current sales price (or, if no sales price is available, the arithmetic mean of the most recent bid and asked prices or, if no asked price is available, at the bid price) on the primary exchange or market upon which they trade. However, when market quotations are not readily available, portfolio securities are valued based on fair value as determined in good faith by the Adviser in accordance with procedures adopted by the Board of Directors of the Fund. Events affecting the values of portfolio securities that occur between the time their prices are determined on the primary exchange or market in which they are traded and the close of regular trading on the NYSE will not be reflected in the calculation of a Series' net asset value unless the Adviser determines that the particular event would materially affect net asset value, in which case an adjustment will be made. The values of portfolio securities denominated in currencies other than the US dollar, determined as described above, are converted into US dollars at the relevant foreign exchange rate for each Series in effect at 4:00 p.m., London time, on the day that the foreign-currency values of the securities are determined. 33 Board of Directors The Board of Directors of the Fund has responsibility for the overall management of the Fund, including general supervision of the duties performed by the Adviser and other service providers. Additional information about the Board of Directors and the officers of the Fund appears in the Statement of Additional Information under the heading "Management of the Fund--Directors and Officers of the Fund". Capital Stock The Fund, a Maryland corporation incorporated on August 8, 1994, is currently comprised of nine series of shares of common stock, par value $.001 per share, referred to herein as "CB Shares(SM)": the Australia Index Series, the France Index Series, the Germany Index Series, the Hong Kong Index Series, the Italy Index Series, the Japan Index Series, the South Africa Index Series, the UK Index Series and the US Index Series. The Board of Directors of the Fund may designate additional series of common stock and classify shares of a particular series into one or more classes of that series. Each CB Share(SM) issued by the Fund will have a pro rata interest in the assets of the corresponding Series. The Fund is currently authorized to issue 5 billion shares of common stock, including 200 million shares of each of the initial nine Series. Fractional shares may be issued. Each CB Share(SM) has one vote with respect to matters upon which a stockholder vote is required; stockholders have no cumulative voting rights with respect to their shares. Shares of all series vote together as a single class except that if the matter being voted on affects only a particular Series it will be voted on only by that Series and if a matter affects a particular Series differently from other Series, that Series will vote separately on such matter. Under Maryland law, the Fund is not required to hold an annual meeting of stockholders unless required to do so under the 1940 Act. The policy of the Fund is not to hold an annual meeting of stockholders unless required to do so under the 1940 Act. All shares of the Fund (regardless of Series) have noncumulative voting rights for the election of Directors. Under Maryland law, Directors of the Fund may be removed by vote of the stockholders. The Fund has provisions in its charter and by-laws that could have the effect of limiting the ability of other entities or persons to acquire control of the Fund. The Board of Directors currently consists of six Directors, divided into three classes. At each annual meeting of stockholders of the Fund, the term of one class expires and the successor or successors elected to such class will serve until the third succeeding annual meeting, provided that, in the event the Fund is not required to hold an annual meeting in one or more years, the term of any class will not exceed five years. These provisions could delay for up to two years the replacement of a majority of the Board of Directors of Directors by the stockholders of the Fund. The replacement of a majority of the Board could be delayed for substantially longer periods when the Fund is not required to hold annual stockholder meetings. The Fund expects that, immediately prior to the initial public offering of the CB Shares(SM), the 34 sole holder of the capital stock of each Series will be ALPS. ALPS will therefore be a "control person" of the Fund. Upon the commencement of trading of CB Shares(SM) on the NYSE, each Series may have a number of stockholders each holding more than 5% of the outstanding shares of such Series in Creation Unit size aggregations. _____________, an affiliate of the Adviser, is expected initially to be among the control persons of each Series. The Fund cannot predict the length of time that any such persons will remain control persons of a Series. Book-Entry Only System DTC will act as securities depositary for the CB Shares(SM). CB Shares(SM) will be represented by global securities, which will be registered in the name of DTC or its nominee and deposited with, or on behalf of, DTC. Except as provided below, certificates will not be issued for CB Shares(SM). DTC has advised the Fund as follows: it is a limited- purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of its participants (the "DTC Participants") and to facilitate the clearance and settlement of securities transactions among the DTC Participants in such securities through electronic book-entry changes in accounts of the DTC Participants, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom (and/or their representatives) own DTC. More specifically, DTC is owned by a number of its DTC Participants and by the NYSE, the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (the "Indirect Participants"). DTC agrees with and represents to its Participants that it will administer its book-entry system in accordance with its rules and by-laws and requirements of law. Beneficial ownership of CB Shares(SM) will be limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests in CB Shares(SM) (owners of such beneficial interests are referred to herein as "Beneficial Owners") will be shown on, and the transfer of ownership will be effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners are expected to receive from or through the DTC Participant a written confirmation relating to their purchase of CB Shares(SM). The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in 35 definitive form. Such laws may impair the ability of certain investors to acquire beneficial interests in CB Shares(SM). So long as Cede & Co., as nominee of DTC, is the registered owner of CB Shares(SM), the registered or record owners of CB Shares(SM) shall not be the Beneficial Owners of CB Shares(SM). Beneficial Owners of CB Shares(SM) will not be entitled to have CB Shares(SM) registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form and will not be considered the record or registered holder thereof. Accordingly, each Beneficial Owner must rely on the procedures of DTC, the DTC Participant and any Indirect Participant through which such Beneficial Owner holds its interests, to exercise any rights of a holder of CB Shares(SM). The Fund understands that under existing industry practice, in the event the Fund requests any action of holders of CB Shares(SM), or a Beneficial Owner desires to take any action that DTC, as the record owner of all outstanding CB Shares(SM), is entitled to take, DTC would authorize the DTC Participants to take such action and that the DTC Participants would authorize the Indirect Participants and Beneficial Owners acting through such DTC Participants to take such action and would otherwise act upon the instructions of Beneficial Owners owning through them. As described above, the Fund recognizes DTC or its nominee as the owner of all CB Shares(SM) for all purposes. Conveyance of all notices, statements and other communications to Beneficial Owners is effected as follows. Pursuant to the Letter of Representations among the Fund, the Transfer Agent and DTC, DTC is required to make available to the Fund upon request and for a fee to be charged to the Fund a listing of the CB Share(SM) holdings of each DTC Participant. The Fund shall inquire of each such DTC Participant as to the number of Beneficial Owners holding CB Shares(SM), directly or indirectly, through such DTC Participant. The Fund shall provide each such DTC Participant with copies of such notice, statement or other communication, in such form, number and at such place as such DTC Participant may reasonably request, in order that such notice, statement or communication may be transmitted by such DTC Participant, directly or indirectly, to such Beneficial Owners. In addition, the Fund shall pay to each such DTC Participant a fair and reasonable amount as reimbursement for the expenses attendant to such transmittal, all subject to applicable statutory and regulatory requirements. Distributions with respect to CB Shares(SM) of each Series shall be made to DTC or its nominee, Cede & Co., as the registered owner of all CB Shares(SM). The Fund expects that DTC or its nominee, upon receipt of any such distributions, shall credit immediately DTC Participants' accounts with payments in amounts proportionate to their respective beneficial interests in CB Shares(SM) as shown on the records of DTC or its nominee. The Fund also expects that payments by DTC Participants to Indirect Participants and Beneficial Owners of CB Shares(SM) held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the 36 accounts of customers in bearer form or registered in "street name," and will be the responsibility of such DTC Participants. The Fund will have no responsibility or liability for any aspects of the records relating to or notices to Beneficial Owners, or payments made on account of beneficial ownership interests in such CB Shares(SM), or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests or for any other aspect of the relationship between DTC and the DTC Participants or the relationship between such DTC Participants and the Indirect Participants and Beneficial Owners owning through such DTC Participants. DTC may determine to discontinue providing its service with respect to CB Shares(SM) at any time by giving reasonable (currently 90 days') notice to the Fund and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the Fund shall take action either to find a replacement for DTC to perform its functions at a comparable cost or, if such a replacement is unavailable, to issue and deliver printed certificates representing ownership of CB Shares(SM), unless the Fund makes other arrangements with respect thereto satisfactory to the NYSE (or such other exchange on which the CB Shares(SM) may be listed). Business Day For purposes of purchasing a Creation Unit aggregation of shares, a "Business Day" with respect to each Series other than the US Index Series is any day on which (i) the NYSE, (ii) the stock exchange(s) and subcustodian(s) relevant to such Series and (iii) financial institutions in Massachusetts are open for business and, with respect to the US Index Series, is any day on which the NYSE and financial institutions in Massachusetts are open for business. As of the date of this Prospectus, the NYSE observes the following holidays: New Year's Day, President's Day (Washington's Birthday), Good Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The local holidays for each current Series of the Fund are set forth in Appendix A to this Prospectus. Massachusetts financial institutions, such as the Fund's Custodian, are open on all days when the NYSE is open except Columbus Day, Veterans Day and Martin Luther King Day (observed) for such Series. See "Purchase and Issuance of Fund Shares in Creation Unit Aggregations". Purchase and Issuance of The Fund will issue and sell shares of each Series Fund Shares in Creation only in Creation Unit size aggregations on a Unit Aggregations continuous basis through the Distributor at their net asset value next determined after receipt of a purchase order in proper form, without an initial sales charge, on any Business Day. See "Business Day". The consideration for purchase of a Creation Unit size aggregation of shares of a Series will be the in-kind deposit of a designated portfolio of equity securities substantially corresponding in composition and weighing to the corresponding FT Index component (the "Fund Basket") and an amount of cash computed as described below (the "Cash Component"). Together, the Fund Basket and the Cash Component constitute the "Fund Deposit" which represents the minimum 37 initial and subsequent investment amount for shares of any Series from the Fund. Prior to the opening of business on the NYSE on each day that the NYSE is open (currently by 8:00 p.m. New York time, on the previous business day), the names and number of shares of each security constituting the Fund Basket, as determined by the Adviser following the calculation of the net asset value of CB Shares(SM) of each Series after the close of business on the NYSE (currently 4:00 p.m. New York time) on such previous day, will be made available through the Distributor and the facilities of the National Securities Clearing Corporation ("NSCC"), a clearing agency registered with the SEC. Such Fund Basket for each Series will be in effect on such NYSE business day for redemptions for that Series and for purchases of Creation Unit aggregations of Fund shares of the US Index Series and will be in effect for purchases of Creation Unit aggregations of shares of all other Series on a specified Business Day subsequent to such NYSE business day designated for each such Series. The Business Day on which the shares of a Series are purchased and issued is referred to as an "Issue Date". Each Fund Basket is subject to adjustment by the Adviser to reflect changes known to the Adviser on the date of the announcement of such Fund Basket to be in effect on the Issue Date in the relevant component of the FT Index or resulting from stock splits and other corporate actions. The Fund Basket for each Series will generally change with changes in the corresponding FT Index component. See "Purchase and Issuance of Fund Shares in Creation Unit Aggregations--The Fund Basket" in the Statement of Additional Information. Except as described below, the Cash Component will equal the difference between the value of the Fund Basket and the net asset value of a Creation Unit aggregation of shares as determined on the Issue Date. If the value of the Fund Basket should exceed the net asset value of a Creation Unit size aggregation of shares on a Business Day, the Adviser may determine to accept fewer (or none) of each, or a designated portion, of the portfolio securities comprising the Fund Basket and may request some cash to be substituted for the omitted securities in order to limit the value of the Fund Basket as tendered to the net asset value of the Creation Unit of shares. In addition, the Adviser reserves the right to permit or require the substitution of an amount of cash to be added to the Cash Component to replace any security in the relevant FT Index component which may not be available in sufficient quantity for delivery or for other similar reasons. In any event, the Cash Component will not exceed 10% of the total purchase price of a Creation Unit aggregation of shares. Securities not accepted as part of the Fund Basket will be returned promptly. The net asset value per share of each Series will be computed as described above under "Determination of Net Asset Value" at the close of business on the NYSE (currently 4:00 p.m., New York time). Tendered securities in the Fund Basket will be valued in the same manner as the relevant Series values its portfolio securities. 38 The Fund Basket must be delivered for receipt on the Issue Date (provided that for the France Index Series and the South Africa Index Series delivery of the Fund Basket must be made on the day prior to the Issue Date) into an account maintained at the Custodian, in the case of the US Index Series (unless the Fund Basket is delivered by the CB Shares(SM) Clearing Process as described below), or at the applicable local subcustodian, in the case of each other Series. Delivery procedures of local subcustodians will vary from country to country. Purchase orders for Creation Unit size aggregations of shares may be placed with the Distributor only by an "Authorized Participant", i.e., a DTC Participant who has entered into an Authorized Participant Agreement (the "Authorized Participant Agreement") with the Fund, the Distributor and State Street, as Custodian and Transfer Agent for the Fund. The Authorized Participant Agreement sets forth procedures for the purchase and redemption of Creation Unit aggregations of Fund shares that supplement those discussed in this Prospectus and the Statement of Additional Information. The Fund does not expect to enter into Authorized Participant Agreements with more than a few Authorized Participants. Investors who are not Authorized Participants must make appropriate arrangements with an Authorized Participant in order to purchase Creation Unit size aggregations of shares from the Fund. A list of the Authorized Participants may be obtained from the Distributor. These arrangements include making available in advance of each purchase of shares an amount of cash sufficient to pay the Cash Component, once the net asset value of a Creation Unit is next determined after receipt of the purchase order in proper form, together with the cash transaction fee described below. For a purchase order submitted by an Authorized Participant (on its own or on another investor's behalf), other than one submitted through the CB Shares(SM) Clearing Process for CB Shares(SM) of the US Index Series, to be in "proper form" means that a properly completed purchase order has been submitted to the Distributor not later than 4:00 p.m., New York time, on the intended Issue Date; that delivery of the applicable Fund Basket has been confirmed on such date by the Custodian; and that arrangements satisfactory to the Fund have been made for the payment to the Custodian on such date of the Cash Component (together with the Cash Component transaction fee applicable to each Series other than the US Index Series), as next determined upon computation of the net asset value of shares of the Series at 4:00 p.m. on such Issue Date. Currently, information needed to confirm the delivery of the Fund Basket will generally be available to the Custodian by 3:00 p.m., New York time, in the case of the US Index Series and by 1:00 p.m., New York time, in the case of the other Series. The Fund, and the Distributor on behalf of the Fund, reserve the right to reject any order. In the case of the US Index Series, an Authorized Participant that is a participant in the Continuous Net Settlement ("CNS") System of the NSCC may alternatively deliver the Fund Basket and the Cash 39 Component through the CNS clearing processes of the NSCC, as such processes have been enhanced to effect purchases and redemptions of Creation Unit size aggregations of CB Shares of the US Index Series (referred to herein as the "CB Shares Clearing Process"). In such event, a purchase order to be effective on a particular Issue Date will be deemed in proper form if it is received by 4:00 p.m., New York time, as described above on such date and the other procedures with respect to the CB Shares(SM) Clearing Process set forth in the Authorized Participant Agreement are followed. The Distributor will upon request provide a list of Authorized Participants that are participants in the CNS System of the NSCC. For additional information about the use of the CB Shares Clearing Process, see "Purchase and Issuance of Fund Shares in Creation Unit Aggregations" in the Statement of Additional Information. A cash transaction fee payable to the Fund is imposed on purchases of Creation Unit aggregations of shares of all Series other than the US Index Series only on the amount of the Cash Component to compensate the Fund for the brokerage and other costs of investing the cash in portfolio securities of the applicable Series. Investors are also responsible for payment of the costs of transferring the Fund Basket securities to the Fund. See "Summary of Fund Expenses". Purchase orders for Creation Unit aggregations of shares may be directed to the Distributor through an Authorized Participant by a dealer which has entered into an agreement with the Distributor for solicitation of purchases of Creation Unit aggregations of shares. The acquisition of CB Shares(SM) by investment companies is subject to the restrictions of Section 12(d)(1) of the 1940 Act. See "Distributor" and "Fees", above, and "Purchase and Issuance of Fund Shares in Creation Unit Aggregations--The Distributor" in the Statement of Additional Information, for additional information concerning the distribution arrangements for Fund shares. See "Purchase and Issuance of Fund Shares in Creation Unit Aggregations" in the Statement of Additional Information for additional details concerning the purchase of CB Shares(SM) from the Fund in Creation Unit aggregations. Redemption of Fund CB Shares(SM) in less than Creation Unit size Shares in Creation aggregations are not redeemable. CB Shares(SM) of a Unit Aggregations Series will be redeemed by the Fund only in Creation Unit size aggregations on any day that the NYSE is open for trading at their net asset value next determined after receipt of a redemp- tion request in proper form by the Transfer Agent on behalf of the Fund. "Proper form" for a redemption request, other than one submitted through the CB Shares(SM) Clearing Process for CB Shares(SM) of the US 40 Index Series, means receipt of a duly completed redemption request form by the Transfer Agent from an Authorized Participant by 4:00 p.m., New York time, on any day the NYSE is open, and delivery of the shares being redeemed to the Transfer Agent through the facilities of DTC by 4:00 p.m. on such day. Creation Units of CB Shares(SM) of the US Index Series may also be redeemed through the CB Shares(SM) Clearing Process, as described below. Requests for redemption may not be made to the Distributor. On Columbus Day, Veterans Day and Martin Luther King Day when the NYSE is open but DTC and NSCC facilities for transfer of securities are closed, CB Shares(SM) must be delivered to the Transfer Agent at the opening of business on the business day following the day the redemption request is received. Except in the case of redemption through the CB Shares(SM) Clearing Process, if the Transfer Agent does not receive the redeeming investor's CB Shares(SM) through DTC facilities by 4:00 p.m. on the same day that the redemption request is received or, in the case of the aforementioned DTC and NSCC holidays, at the opening of business on the following day, the redemption request shall be rejected and may be resubmitted the next day that the NYSE is open for business. Investors other than Authorized Participants must make arrangements through an Authorized Participant in order to redeem their Creation Unit aggregations of shares. Such investors should allow for the additional time that may be required to effect redemptions through their banks, brokers or other financial intermediaries if such intermediaries are not Authorized Participants. Authorized Participants will not charge any fee for handling redemptions of CB Shares(SM). Investors who use the services of a broker or other such intermediary may be charged a fee for their services. The Distributor will furnish a list of the Authorized Participants on request. The Fund generally will redeem a Creation Unit aggregation of shares of any Series principally on an in-kind basis for a Fund Basket as announced by the Distributor on the NYSE trading day prior to the request for redemption, plus cash in an amount equal to the difference between the net asset value of the shares being redeemed, as next determined after a receipt of a request in proper form, and the value of the Fund Basket, less the redemption cash transaction fee described below. If the value of the Fund Basket should exceed the net asset value of a Creation Unit size aggregation of shares, the Adviser may determine that fewer (or none) of each, or a designated portion, of the portfolio securities comprising the Fund Basket will be required to be delivered and an amount of cash may be substituted for the omitted securities in order to limit the value of the redemption proceeds to the net asset value of the Creation Unit aggregation of shares being redeemed. At its sole option, the Fund may pay redemption proceeds entirely in cash or include additional amounts of cash as redemption proceeds in order to provide for timely delivery of such proceeds in accordance with applicable regulations as described below. 41 Normally, cash redemption proceeds will be paid as soon as practicable after the date the redemption request is received in proper form (usually one business day), but in any event not later than seven calendar days after the date of redemption. In-kind redemption proceeds will be delivered within the time permitted by applicable law and regulations. Subject to applicable law or SEC rule, enforcement position or order, the time for such delivery in some cases could be extended, but not later than seven calendar days from the date of redemption (other than in the case of the Japan Index Series and the UK Index Series where in accordance with an SEC order because of local holidays, delivery may be made in some cases within a few additional days). See Appendix A to this Prospectus. The Fund reserves the right to redeem Creation Unit aggregations of shares entirely for cash when local holiday schedules or other unforeseen circumstances in the relevant local markets would otherwise result in deliveries of in-kind redemption proceeds after the time permitted by applicable regulations or SEC order. See "Redemption of Fund Shares in Creation Unit Aggregations" in the Statement of Additional Information. Redemptions of Creation Units of the US Index Series may be made through the CB Shares(SM) Clearing Process. In any such case, State Street as Custodian, Transfer Agent and Index Receipt Agent (as such term is used in rules of the NSCC) will effect a transfer of the cash redemption payment and the Fund Basket of securities through the facilities of the NSCC as more fully described under "Redemption of Fund Shares in Creation Unit Aggregations" in the Statement of Additional Information. Investors may, upon request, obtain a list of the Authorized Participants eligible to use the CB Shares Clearing Process by calling 800-[___-____]. Investors may purchase CB Shares(SM) in the secondary market and aggregate such purchases into a Creation Unit for redemption. There can be no assurance, however, that there always will be sufficient liquidity in the public trading market to permit assembly of a Creation Unit size aggregation of CB Shares(SM). Investors should expect to incur brokerage and other costs in connection with assembling a sufficient number of CB Shares(SM) to constitute a redeemable Creation Unit. The approximate cost of a Creation Unit of each Series, based on FT Index values at December 29, 1995, is indicated in Note 1 to the Fund Expense Table under "Summary of Fund Expenses". For additional details concerning the redemption of Fund shares in Creation Unit aggregations, see "Redemption of Fund Shares in Creation Unit Aggregations" in the Statement of Additional Information. A cash redemption transaction fee payable to each Series of the Fund other than the US Index Series is imposed only on the cash portion of the redemption proceeds, as described above, to offset brokerage and other transaction costs that may be incurred by the Series. Investors will also bear the costs of transferring the Fund Basket securities from the Fund to their account or on their order. See "Summary of Fund Expenses". 42 Because the portfolio securities of a Series may trade on the relevant exchange(s) on days that the NYSE is closed or are otherwise not Business Days for such Series, stockholders may not be able to purchase or redeem, as the case may be, Creation Unit aggregations of shares of such Series, or to purchase or sell CB Shares(SM) on the NYSE, on days when the net asset value of such Series could be significantly affected by price movements in the relevant foreign markets. Similarly, on any of the three days when Massachusetts financial institutions are closed but both the relevant foreign exchange and the NYSE are open, stockholders will not have the ability to purchase Creation Unit aggregations of shares when price movements in the foreign market could significantly affect their prices. A stockholder redeeming CB Shares(SM) in Creation Unit aggregations will generally receive redemption proceeds in the form of the applicable Fund Basket and will be required to sell such securities proceeds for its own account if the stockholder desires to obtain cash. Because such securities proceeds may be delivered several days after the date of redemption, the stockholder may receive significantly less cash proceeds than the redemption value of the CB Shares(SM) redeemed due to intervening fluctuations in the market value of such securities and, in the case of each Series other than the US Index Series, exchange rate fluctuations between the applicable Series Currency and the US dollar. In addition, such stockholder may incur certain transaction costs and significant commission expenses with respect to the sale of such securities proceeds. Available Information This Prospectus does not contain all the information included in the Registration Statement filed with the SEC under the Securities Act of 1933 with respect to the securities offered hereby, certain portions of which have been omitted pursuant to the rules and regulations of the SEC. The Registration Statement, including the exhibits filed therewith and the Statement of Additional Information, may be examined at the office of the SEC, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549. Such documents and other information concerning the Fund may also be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005. Statements contained in this Prospectus as to the contents of any agreement or other document referred to are not necessarily complete, and, in each instance, reference is made to the copy of such agreement or other document filed as an exhibit to the Registration Statement of which this Prospectus forms a part, each such statement being qualified in all respects by such reference. Stockholder inquiries may be directed to the Fund in writing, c/o Deutsche Morgan Grenfell/C. J. Lawrence Inc., 31 West 52nd Street, New York, New York 10019, and by telephone, to (212) 469-8000. A-1 Appendix A The CountryBaskets(SM) Index Fund, Inc. Local Holidays * Series Local Holidays The Australia Index New Year's Day (1/1/96), Australia Day (1/26/96), Series Good Friday (4/5/96), Easter Monday (4/8/96), ANZAC Day (4/25/96), Queen's Birthday (6/10/96), Bank Holiday (8/5/96), Labour Day (10/7/96), Christmas Day (12/25/96) and Boxing Day (12/26/96) The France Index Series New Year's Day (1/1/96), Good Friday (4/5/96), Easter Monday (4/8/96), Labour Day (5/1/96), Victory Day (5/8/96), Ascension Day (5/16/96), Whit Monday (5/27/96), National Day (7/14/96), Assumption Day (8/15/96), All Saints Day (11/1/96), Armistice Day (11/11/96) and Christmas Day (12/25/96) The Germany Index New Year's Day (1/1/96), Epiphany Day (1/6/96), Series Carnival (2/19/96), Good Friday (4/5/96), Easter Monday (4/8/96), Labour Day (5/1/96), Ascension Day (5/16/96), Whit Monday (5/27/96), Corpus Christi Day (6/6/96), Assumption Day (8/15/96), German Unity Day (10/3/96), All Saints Day (11/1/96), Prayer & Repentance (11/20/96), Christmas Eve (12/24/96), Christmas Day (12/25/96), Christmas Holiday (12/26/96) and New Year's Eve (12/31/96) The Hong Kong Index New Year's Day (1/1/96), Lunar New Year (2/19/96), Series Day After LNY (2/20/96 and 2/21/96), Ching Ming Festival (4/4/96), Good Friday (4/5/96), Easter Saturday (4/6/96), Easter Monday (4/8/96), Queen's Birthday (6/17/96), Tueng Ng Festival (6/20/96), Liberation Day (8/26/96), Mid Autumn Festival (9/28/96), Chung Yeung Festival (11/21/96), Christmas Day (12/25/96) and Boxing Day (12/26/96) The Italy Index Series New Year's Day (1/1/96), Epiphany Day (1/6/96), Easter Monday (4/8/96), Liberation Day (4/25/96), Labour Day (5/1/96), Assumption Day (8/15/96), All Saints Day (11/1/96), Immaculate Conception (12/8/96), Christmas Day (12/25/96) and Christmas Holiday (12/26/96) * Days that are not Business Days for purchases of Creation Unit aggregations of shares of the indicated Series. The dates on which such holidays fall during 1996 are indicated in parentheses. In addition to the days listed in the table, days on which the NYSE or financial institutions in Massachusetts are closed for business are not Business Days for any Series. See "Business Day". A-2 The Japan Index Series Bank Holiday (1/1/96, 1/2/96 and 1/3/96), Coming of Age Day (1/15/96), National Foundation Day (2/12/96), Vernal Equinox (3/20/96), Constitutional Memorial Day (5/3/96), National Holiday (5/4/96), Children's Day (5/6/96), Youth Day (6/16/96), Respect For Aged (9/16/96), Autumnal Equinox (9/23/96), Health Sports Day (10/10/96), Culture Day (11/4/96), Labor- Thanksgiving Day (11/23/96), Emperor's Birthday (12/23/96) and Bank Holiday (12/31/96) The South Africa Index New Year's (1/1/96), Human Rights Day (3/21/96), Series Good Friday (4/5/96), Family Day (4/17/96), Constitution Day (4/27/96), Worker's Day (5/1/96), Women's Day (8/9/96), Heritage Day (9/26/96), Day of Reconciliation (12/16/96), Christmas Day (12/25/96) and Day of Goodwill (12/26/96) The UK Index Series New Year's Day (1/1/96), Good Friday (4/5/96), Easter Monday (4/8/96), May Day (5/6/96), Spring Bank Holiday (5/27/96), Summer Bank Holiday (8/26/96), Christmas Day (12/25/96), Boxing Day (12/26/96) The US Index Series New Year's Day (1/1/96), Martin Luther King Day (1/15/96), President's Day (2/19/96), Good Friday (4/5/96), Memorial Day (5/27/96), Independence Day (7/4/96), Labor Day (9/2/96), Columbus Day (10/14/96), Veteran's Day (11/11/96), Thanksgiving Day (11/28/96) and Christmas Day (12/25/96) Instances in 1996 in which local holidays will require a time period longer than seven calendar days for delivery of in-kind redemption proceeds for the Japan Index Series and the UK Index Series are set forth below. The Japan Index Series Redemption Redemption Period in Request Date Delivery Date Calendar Days 12/26/96 1/6/97 11 12/27/96 1/7/97 11 12/30/96 1/8/97 9 12/31/96 1/8/97 8 The UK Index Series Redemption Redemption Period in Request Date Delivery Date Calendar Days 3/29/96 4/9/96 11 A-3 Redemption Redemption Period in Request Date Delivery Date Calendar Days 4/1/96 4/10/96 9 4/2/96 4/11/96 9 4/3/96 4/12/96 9 4/4/96 4/15/96 11 4/29/96 5/7/96 8 4/30/96 5/8/96 8 5/1/96 5/9/96 8 5/2/96 5/10/96 8 5/3/96 5/13/96 10 5/20/96 5/28/96 8 5/21/96 5/29/96 8 5/22/96 5/30/96 8 5/23/96 5/31/96 8 5/24/96 6/3/96 10 8/19/96 8/27/96 8 8/20/96 8/28/96 8 8/21/96 8/29/96 8 8/22/96 8/30/96 8 8/23/96 9/2/96 10 12/18/96 12/27/96 9 12/19/96 12/30/96 11 12/20/96 12/31/96 11 12/23/96 1/2/97 10 12/24/96 1/3/97 10 12/26/96 1/3/97 8 12/27/96 1/6/97 10 12/30/96 1/7/97 8 12/31/96 1/8/97 8 1 Page Table of Contents of General Description of the Fund Statement of Additional Investment Policies and Restrictions Information Special Considerations and Risks The FT Index Exchange Listing and Trading Reasons for Investors to Purchase CB Shares(SM) Management of the Fund Investment Advisory, Management and Other Services Brokerage Transactions Purchase and Issuance of Fund Shares in Creation Unit Aggregations Redemption of Fund Shares in Creation Unit Aggregations Determining Net Asset Value Dividends and Distributions Taxes Capital Stock and Stockholder Reports Counsel and Independent Accountants Report of Independent Accountants Statement of Assets and Liabilities Notes to Financial Statements APPENDICES A. FT-Actuaries Australia Index Constituency Summary B. FT-Actuaries France Index Constituency Summary C. FT-Actuaries Germany Index Constituency Summary D. FT-Actuaries Hong Kong Index Constituency Summary E. FT-Actuaries Italy Index Constituency Summary F. FT-Actuaries Japan Index Constituency Summary G. FT-Actuaries South Africa Index Constituency Summary H. FT-Actuaries UK Index Constituency Summary I. FT-Actuaries US Index Constituency Summary COVER INVESTMENT ADVISER [Logo] Deutsche Morgan Grenfell/C. J. Lawrence Inc. 31 West 52nd Street New York, New York 10019 ADMINISTRATOR State Street Bank and Trust Company THE COUNTRYBASKETS(SM) INDEX FUND, INC. 225 Franklin Street Boston, Massachusetts 02110 CUSTODIAN AND TRANSFER AGENT State Street Bank and Trust Company 225 Franklin Street ____________ Boston, Massachusetts 02110 DISTRIBUTOR ALPS Mutual Funds Services, Inc. PROSPECTUS 370 Seventeenth Street, Suite 2700 Denver, Colorado 80202 ____________ Investor Information: 1-800- - ________________ ______ __, 1996 TABLE OF CONTENTS
Page Prospectus Summary . . . . . . . . . . . . Summary of Fund Expenses . . . . . . . . . The Fund . . . . . . . . . . . . . . . . . The CountryBaskets(SM) Index Fund, Inc. and its Investment Objective. . . . . NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY Investment Policies . . . . . . . . . . INFORMATION OR TO MAKE ANY REPRESENTATIONS FT/S&P Actuaries World Indices(TM). . . OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS The FT Index Components . . . . . . . . IN CONNECTION WITH THE OFFER OF THE FUND'S Investment Management . . . . . . . . . SHARES MADE BY THIS PROSPECTUS, AND, IF GIVEN Distributor . . . . . . . . . . . . . . OR MADE, SUCH INFORMATION OR REPRESENTATIONS Administrator . . . . . . . . . . . . . MUST NOT BE RELIED UPON AS HAVING BEEN Custodian and Transfer Agent. . . . . . AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES Fees. . . . . . . . . . . . . . . . . . NOT CONSTITUTE AN OFFER TO SELL, OR A CB Shares(SM) . . . . . . . . . . . . . SOLICITATION OF AN OFFER TO BUY, ANY SHARES IN Exchange Listing and Trading. . . . . . ANY JURISDICTION IN WHICH SUCH OFFER TO SELL OR Creation Units. . . . . . . . . . . . . SOLICITATION OF AN OFFER TO BUY MAY NOT Investment Considerations and Risks . . LAWFULLY BE MADE. Dividends and Capital Gains Distributions . . . . . . . . . . . . DEALERS EFFECTING TRANSACTIONS IN THE Tax Matters . . . . . . . . . . . . . . SHARES, WHETHER OR NOT PARTICIPATING IN THIS Lending of Securities . . . . . . . . . DISTRIBUTION, ARE REQUIRED TO DELIVER A Investment Restrictions of the Fund . . PROSPECTUS. THIS IS IN ADDITION TO ANY Determination of Net Asset Value. . . . OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS Board of Directors. . . . . . . . . . . WHEN ACTING AS UNDERWRITERS. Capital Stock . . . . . . . . . . . . . Book-Entry Only System. . . . . . . . . Business Day. . . . . . . . . . . . . . Purchase and Issuance of Fund Shares in Creation Unit Aggregations . . . . Redemption of Fund Shares in Creation Unit Aggregations . . . . . . . . . . Available Information . . . . . . . . . Appendix A . . . . . . . . . . . . . . . . Table of Contents of Statement SUBJECT TO COMPLETION of Additional Information. . . . . . . . DATED FEBRUARY __, 1996
1 SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1996 THE COUNTRYBASKETS(SM) INDEX FUND, INC. Statement of Additional Information , 1996 This Statement of Additional Information is not a Prospectus, and should be read in conjunction with the Prospectus dated ________, 1996 (the "Prospectus") for The CountryBaskets(SM) Index Fund, Inc. (the "Fund"), as it may be revised from time to time. A copy of the Prospectus for the Fund may be obtained without charge from ALPS Mutual Funds Services, Inc. at the address set forth herein. 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. i TABLE OF CONTENTS Page General Description of the Fund . . . . . . . . . . . . . . . . . Investment Policies and Restrictions . . . . . . . . . . . . . . . Special Considerations and Risks . . . . . . . . . . . . . . . . . The FT Index . . . . . . . . . . . . . . . . . . . . . . . . . . . Exchange Listing and Trading . . . . . . . . . . . . . . . . . . . Reasons for Investors to Purchase CB Shares(SM) . . . . . . . . . Management of the Fund . . . . . . . . . . . . . . . . . . . . . . Investment Advisory, Management and Other Services . . . . . . . . Brokerage Transactions . . . . . . . . . . . . . . . . . . . . . . Purchase and Issuance of Fund Shares in Creation Unit Aggregations Redemption of Fund Shares in Creation Unit Aggregations . . . . . Determining Net Asset Value . . . . . . . . . . . . . . . . . . . Dividends and Distributions . . . . . . . . . . . . . . . . . . . Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital Stock and Stockholder Reports . . . . . . . . . . . . . . Counsel and Independent Accountants . . . . . . . . . . . . . . . Report of Independent Accountants . . . . . . . . . . . . . . . . Statement of Assets and Liabilities . . . . . . . . . . . . . . . Notes to Financial Statements . . . . . . . . . . . . . . . . . . APPENDICES ____________________ "The CountryBaskets Index Fund, Inc.", "CountryBaskets" and "CB Shares" are service marks of Deutsche Morgan Grenfell/C. J. Lawrence Inc. ("DMG"). DMG has filed applications for registration of such service marks with the U.S. Patent and Trademark Office. The Fund is an authorized licensee of such marks. ______ "Financial Times/Standard & Poor's Actuaries World Indices", "FT/S&P Actuaries World Indices" and "FT/S&P AWI" are trademarks of FTSE International Limited ("FTSE") and Standard & Poor's ("S&P") and have been licensed for use by DMG. The Fund is an authorized sublicensee thereof. The Fund is not sponsored, endorsed, sold or promoted by FTSE or S&P and neither FTSE nor S&P makes any representation regarding the advisability of investing therein. ____________________ The Fund and the securities described herein (the "Products") are not sponsored, endorsed, sold or promoted by FTSE, Goldman, Sachs & Co. or Standard & Poor's (collectively, the "Owners"). None of the Owners makes any representation or warranty, express or implied, to the sponsors of the Products or any member of the public regarding the advisability of investing in securities generally or in the Products particularly or in the ability of the FT/S&P Actuaries World Indices(TM) (the "Indices") to track general stock market performance. The Owners' only relationship to Deutsche Morgan Grenfell/C. J. Lawrence Inc. ("Licensee") is the licensing of certain trademarks and trade names and of the Indices which are determined, composed and calculated without regard to the Licensee or the Products. The Owners have no obligation to take the needs of the Licensee or the Products into consideration in determining, composing or calculating the Indices. The Owners are not responsible for and have not participated in the determination of the prices and amount of the Products or the timing of the issuance or sale of the Products. The Owners have no obligation or liability in connection with the administration, marketing or trading of the Products. The Owners do not guarantee the accuracy and/or the completeness of the Indices or any data included therein and the Owners shall have no liability for any errors, omissions or interruptions therein. The Owners make no express or implied warranties, and expressly disclaim all warranties of quality or merchantability or fitness for a particular purpose or use with respect to the Indices or any data included therein. Without limiting any of the foregoing, in no event shall the Owners have any liability for any special, punitive, indirect or consequential damages (including lost profits), even if notified of the possibility of such damages. ii The FT-Actuaries World Indices(TM) were originally developed by Goldman, Sachs & Co., NatWest Securities Limited and The Financial Times Limited in 1986, and until May 23, 1995, were jointly published by them. On May 23, 1995, Standard & Poor's, a division of The McGraw-Hill Companies, Inc., joined The Financial Times Limited and Goldman, Sachs & Co. as a co-publisher of the FT-Actuaries World Indices(TM), now known as the Financial Times/Standard & Poor's Actuaries World Indices(TM) or FT/S&P Actuaries World Indices(TM). The FT/S&P Actuaries World Indices(TM) are a continuation of the FT-Actuaries World Indices(TM). Following the current transition period, The Financial Times Limited and Standard & Poor's will jointly calculate the indices. On November [__], 1995, The Financial Times Limited transferred its ownership rights in the FT/S&P Actuaries World Indices(TM) to FTSE, a company jointly owned by The Financial Times Limited, the London Stock Exchange and the Institute of Actuaries. By the end of 1996, it is expected that FTSE will assume responsibility for calculating the European and Asia-Pacific indices and Standard & Poor's will calculate the U.S. indices. The Fund is not sponsored by or affiliated with Standard & Poor's, FTSE or The Financial Times Limited. References herein to the "FT Index" and to certain index data prior to May 23, 1995 are to the FT-Actuaries World Index(TM); references thereafter are to the FT/S&P Actuaries World Indices(TM). ____________________ Unless otherwise specified, all references in this Statement of Additional Information ("SAI") to "dollars", "US $" or "$" are to United States dollars, all references to "A$" are to Australian dollars, all references to "FF" are to French francs, all references to "DM" are to Deutsche marks, all references to "HK $" are to Hong Kong dollars, all references to "IL" are to Italian lira, all references to "Y" are to Japanese Yen, all references to "CR" are to South African commercial rands (a currency abandoned as of March 20, 1995), all references to "R" are to South African rands and all references to "L" are to pounds sterling. On __________, 1996, the noon buying rates in New York City for cable transfers payable in the applicable currency, as certified for customs purposes by the Federal Reserve Bank of New York, were as follows for each US $1.00: A$____________, FF____________, DM____________, HK$____________, IL____________, Y____________, R____________ and L____________. Some numbers in this SAI have been rounded. All US-dollar equivalents provided in this SAI are calculated at the exchange rate prevailing on the date to which the corresponding foreign currency amount refers. SAI-1 GENERAL DESCRIPTION OF THE FUND The CountryBaskets(SM) Index Fund, Inc. (the "Fund") is a management investment company organized as a series fund. The Fund was incorporated under the laws of the State of Maryland under the name "Eurofund, Inc." on August 8, 1994. The Fund is authorized to issue shares of common stock, with a par value of $.001 per share, in one or more series. The Fund's shares of common stock (sometimes referred to herein as "CB Shares " or "CountryBaskets(SM)") currently are issued in nine series (each, a "Series"): the Australia Index Series, the France Index Series, the Germany Index Series, the Hong Kong Index Series, the Italy Index Series, the Japan Index Series, the South Africa Index Series, the UK Index Series and the US Index Series. INVESTMENT POLICIES AND RESTRICTIONS The following information supplements and should be read in conjunction with the sections entitled "Investment Policies" and "Investment Restrictions of the Fund" in the Prospectus. Each of the initial nine Series will seek to remain fully invested, except to the extent described below under "Other Fund Investments", in a portfolio of common stocks and other equity securities which will provide investment results that substantially correspond to the price and yield performance of the corresponding country component of the FT Index. Brief descriptions of the equity markets in which the Fund Series will be invested are provided below. Unless otherwise indicated, numerical data set forth below with respect to the equity markets represented by the Series of the Fund were provided by Goldman, Sachs & Co. Neither the Fund nor the Adviser has independently verified such data. The Australian Equity Markets General Background. Publicly traded Australian equity securities are listed on the Australian Stock Exchange Limited ("ASX"), which maintains wholly-owned subsidiary exchanges in Sydney, Adelaide, Brisbane, Hobart, Melbourne and Perth. The local exchange hours are 10:00 a.m. to 4:00 p.m. (6:00 p.m. - 12:00 a.m. Eastern Standard Time ("EST")). Only equity securities traded on the ASX are currently eligible for inclusion in the Australia component of the FT Index. As of December 30, 1994, the market capitalization of the ASX was equal to more than 50% of Australian GDP (US $326.0 billion). Reporting, Accounting, and Auditing. Australian reporting, accounting, and auditing practices are regulated by the Australian Securities Commission. These practices bear many similarities to American standards, but differ significantly in some important respects. In general, Australian corporations are not required to provide all of the disclosure required by American law and accounting practice, and such disclosure may be less timely and frequent than that required of U.S. corporations. Structure of Equity Markets. As of December 29, 1995, the total market capitalization of the Australian equity markets was approximately A$304.3 billion, or US $227.1 billion. The aggregate "investible" market capitalization (as defined by the World Index Policy Committee ("WIPC") of the FT Index, described below under "The FT Index--World Index Policy Committee") of Australia was approximately A$269.4 billion, or US $201.1 billion, as of December 29, 1995. The leading major market index is the All Ordinaries Index, owned and published by the ASX. SAI-2 The French Equity Markets General Background. Equity securities trade on the Bourse de Paris (Paris Stock Exchange), which since 1991 lists all of the securities previously traded on France's seven regional stock exchanges. Trading in most of the stocks listed on the Bourse takes place through the Cotation Assistee en Continu (CAC), a computer order-driven trading system. The local exchange hours for the Paris Stock Exchange are 10:00 a.m. - 5:00 p.m. (4:00 a.m. - 11:00 a.m. EST). Only equities traded on the Official List (Marche Officiel) are currently eligible for inclusion in the France component of the FT Index. Reporting, Accounting, and Auditing. Although French reporting, accounting, and auditing practices are considered rigorous by European standards, they are not identical to U.S. standards in some important respects. In general, French corporations are not required to provide all of the disclosure required by U.S. law and accounting practice, and such disclosure may be less timely and frequent than that required of U.S. corporations. Structure of Equity Markets. As of December 29, 1995 the total market capitalization of the French equity markets was approximately FF2,515.1 billion, or US $514.3 billion. The aggregate investible market capitalization (as defined by the WIPC) of France was approximately FF2058.6 billion, or US $421.0 billion, as of December 29, 1995. The leading major market index in France is the CAC-40, owned and published by the Societe des Bourses Francais. The German Equity Markets General Background. Equity securities trade on Germany's eight independent local stock exchanges. The Frankfurt Stock Exchange, which accounted for approximately 73.9% of the total trading volume on the German stock exchanges in 1995, is the principal stock exchange in Germany. Exchange securities are denominated in Deutsche marks, the official currency of Germany. The local exchange hours are 10:30 a.m. - 1:30 p.m. (4:30 a.m. - 7:30 a.m. EST). German stock exchanges offer three different market segments in which stocks are traded: the official market segment (Amtlicher Handel); the regulated unlisted market (Geregelter Markt); and the unofficial, unregulated, over-the-counter market (Freiverkehr). The official market comprises trading in shares that have been formally admitted to official listing by the admissions committee of the relevant stock exchange, based upon disclosure in the listing application or "prospectus". The regulated unlisted market comprises trading in shares admitted to the stock exchange but not traded in the official market. Only equity securities traded on the official and regulated unlisted markets of the Frankfurt Stock Exchange are currently eligible for inclusion in the German component of the FT Index. Reporting, Accounting, and Auditing. German reporting, accounting, and auditing standards differ from U.S. standards in important respects. German corporations, other than subsidiaries of U.S. companies, normally do not provide all or the same kind of disclosure required by U.S. law and accounting practice, and such disclosure may be less timely and less frequent than required of public corporations in the United States. Structure of Equity Markets. As of December 29, 1995, the total market capitalization of Germany was approximately DM 785.9 billion, or US $549.0 billion. The aggregate investible market capitalization (as defined by the WIPC) of Germany was approximately DM 646.4 billion, or SAI-3 US $451.6 billion, as of December 29, 1995. The leading major market index in Germany is the Deutscher Aktienindex, or "DAX", published by the Frankfurt Stock Exchange. The Hong Kong Equity Markets General Background. The publicly traded equity securities of Hong Kong are listed on the Stock Exchange of Hong Kong Limited ("HKX"), Hong Kong's sole stock exchange. Exchange securities are denominated in Hong Kong dollars, the official currency of Hong Kong. The local exchange hours are 10:00 a.m. - 12:30 p.m. and 2:30 p.m. - 3:55 p.m. (9:00 a.m. - 11:30 p.m. EST and 1:30 a.m. - 2:55 a.m. EST) Only equity securities traded on the HKX and shares of certain Hong Kong issuers that are listed on the Singapore Stock Exchange are currently eligible for inclusion in the Hong Kong component of the FT Index. Reporting, Accounting, and Auditing. While Hong Kong has significantly upgraded reporting, accounting, and auditing practices during the last decade, its standards remain significantly less rigorous than U.S. standards. In general, Hong Kong corporations are not required to provide all or the same kind of disclosure required by U.S. law and accounting practice, and such disclosure may be less timely and frequent than that required of U.S. corporations. Structure of Equity Markets. As of December 29, 1995, the total market capitalization of Hong Kong was approximately HK $2,067.5 billion, or US $267.3 billion. The aggregate investible market capitalization (as defined by the WIPC) of Hong Kong was approximately HK $1,920.3 billion, or US $248.3 billion, as of December 29, 1995. The leading major market index is the Hang Seng, owned and published by HSI Services. The Italian Equity Markets General Background. Italy's ten stock exchanges were consolidated in 1993 into one national stock exchange, Borsa Valori Italiana (the "Italian Stock Exchange"). The Italian market is dominated by financial companies and utilities and is not representative of that country's overall economy. Only equity securities on the official list (Listino della Borsa) of the Italian Stock Exchange are currently eligible for inclusion in the Italy component of the FT Index. The local exchange hours of the Italian Stock Exchange are 10:00 a.m. - 4:00 p.m. (4:00 a.m. - 10:00 a.m. EST). Reporting, Accounting, and Auditing. Italian reporting, accounting, and auditing practices are regulated by Italy's National Control Commission. These practices bear some similarities to American standards, but differ significantly in many important respects. Generally, Italian corporations are not required to provide all or the same kind of disclosure required by U.S. law and accounting practice, and such disclosure may be less timely, frequent and consistent than that required of U.S. corporations. Structure of Equity Markets. As of December 29, 1995, the aggregate capitalization of the Italian markets was approximately IL312.1 trillion, or US $196.8 billion. The aggregate investible market capitalization (as defined by the WIPC) of Italy was approximately IL247.1 trillion, or US $155.7 billion, as of December 29, 1995. The leading major market index is the MIB-30, owned and published by the Milan Stock Exchange. SAI-4 The Japanese Equity Markets General Background. Equity securities trade on Japan's eight stock exchanges, as well as in an over-the-counter market. Japan is second only to the U.S. in aggregate stock market capitalization. Only equity securities traded on the first and second sections of the Tokyo Stock Exchange and the first section of the Osaka Stock Exchange, which together accounted for approximately 93.1% of the total trading volume on the Japanese stock exchanges in 1995, are currently eligible for inclusion in the Japan component of the FT Index. The local exchange hours of the Tokyo and Osaka Stock Exchanges are 9:00 a.m. - 11:00 a.m. and 12:30 p.m. - 3:00 p.m. (7:00 p.m. - 9:00 p.m. and 10:30 p.m. - 1:00 a.m. EST). Reporting, Accounting, and Auditing. Although some Japanese reporting, accounting, and auditing practices are substantially based on U.S. principles, these standards are not identical to American ones in some important respects, particularly with regard to unconsolidated subsidiaries and related structures. Generally, Japanese corporations are not required to provide all or the same kind of disclosure required by U.S. law and accounting practice, and such disclosure may be less timely and frequent than that required of U.S. corporations. Structure of Equity Markets. As of December 29, 1995, the total market capitalization of Japan was approximately Y392.6 trillion, or US $3.8 trillion. The aggregate investible market capitalization (as defined by the WIPC) of Japan was approximately Y353.4 trillion, or US $3.4 trillion, as of December 29, 1995. A leading major market index in Japan is the Nikkei-300, owned and published by Nihon Keizai Shimbun. The South African Equity Markets General Background. South Africa's publicly traded equity securities are listed on the Johannesburg Stock Exchange ("JSX"), South Africa's sole stock exchange. The JSX, which has historically concentrated in mining industries, is far less diversified than the overall South African economy. [The aggregate market capitalization of the JSX was equal to more than 100% of South Africa's GDP as of December 30, 1994.] The local exchange hours are 9:30 a.m. - 1:00 p.m. and 2:00 p.m. - 4:00 p.m. (2:30 a.m. - 6:00 a.m. and 7:00 a.m. - 9:00 a.m. EST). Prior to March 20, 1995, South Africa had maintained a two-currency system that included the Commercial Rand ("CR"), but now it has only a single unit of currency, the Rand. Reporting, Accounting, and Auditing. South Africa's reporting, accounting, and auditing practices differ significantly from American standards in many respects. In general, South African corporations are not required to provide all or the same kind of disclosure required by U.S. law and accounting practice, and such disclosure may be less timely and frequent than that required of U.S. corporations. Structure of Equity Markets. As of December 29, 1995, the total market capitalization of South Africa was approximately CR766.9 billion, or US $210.4 billion. The aggregate investible market capitalization (as defined by the WIPC) of South Africa was approximately CR621.4 billion, or US $170.4 billion, as of December 29, 1995. A leading broad major market index in South Africa is All Share Index, jointly published by the JSX and the Actuarial Society of South Africa. SAI-5 The United Kingdom Equity Markets General Background. The United Kingdom is Europe's largest equity market in terms of aggregate market capitalization. Trading is fully computerized under the Stock Exchange Automated Quotation System. The London Stock Exchange has the largest volume of trading in international equities in the world. The local exchange hours are 8:30 a.m. - 4:30 p.m. (3:30 a.m. - 11:30 a.m. EST). Only stocks traded on the official list of the London Stock Exchange are currently eligible for inclusion in the UK component of the FT Index. Reporting, Accounting, and Auditing. Although United Kingdom reporting, accounting, and auditing standards are among the most stringent outside the United States, such standards are not identical to U.S. standards in some important respects. Some United Kingdom corporations are not required to provide all or the same kind of disclosure required by U.S. law and accounting practice, and such disclosure may, in certain cases, be less timely and less frequent than that required of U.S. corporations. Structure of Equity Markets. As of December 29, 1995, the aggregate market capitalization of the United Kingdom was approximately L895.4 billion, or US $1,390.2 billion. The aggregate investible market capitalization (as defined by the WIPC) of the United Kingdom was approximately L851 billion, or US $1,321.2 billion, as of December 29, 1995. A leading major market index in the United Kingdom is the FT-SE 100, published by the London Stock Exchange in association with The Financial Times Limited and the Institute and Faculty of Actuaries. The United States Equity Markets General Background. Equity securities trade on nine U.S. stock exchanges. The New York Stock Exchange, Inc. (the "NYSE"), the American Stock Exchange (the "AMEX") and the National Association of Securities Dealers Automated Quotation ("NASDAQ") system, accounted for more than 91.2% of the total U.S. equity trading volume in 1995. Only stocks traded on the NYSE, the AMEX and the NASDAQ are currently eligible for inclusion in the US component of the FT Index. The exchange hours for the NYSE, AMEX and NASDAQ are 9:30 a.m. - 4:00 p.m. EST. Reporting, Accounting, and Auditing. U.S. reporting, accounting, and auditing practices are generally regarded as the most stringent of all major global markets. Structure of Equity Markets. As of December 29, 1995, the aggregate capitalization of the U.S. equity markets was approximately US $7.2 trillion. The aggregate investible market capitalization (as defined by the WIPC) of the United States was approximately US $6.7 trillion, as of December 29, 1995. A leading broad major market index in the U.S. is the Standard & Poor's 500 Index* ("S&P 500"), owned and published by Standard & Poor's. Other Fund Investments Because the investment objective of each Series is to provide investment results that substantially correspond to the price and yield performance of the equity securities in the applicable * "S&P", "Standard & Poor's", "S&P 500" and "Standard & Poor's 500" are trademarks of Standard & Poor's, a division of The McGraw Hill Companies. SAI-6 component of the FT Index, each Series will invest the largest proportion of its assets as is practicable, in any event at least 95% of its net assets, in the equity securities of the relevant FT Index component. The remainder of each Series' assets will consist of temporary cash which may be used to purchase high quality, short-term fixed income securities denominated in US dollars or foreign currency, including obligations of the U.S. Government and its agencies or instrumentalities, obligations issued or guaranteed by foreign sovereigns, certificates of deposit and other short-term obligations of domestic and foreign banks and commercial paper; repurchase agreements collateralized by obligations issued or guaranteed by the U.S. Government or an agency thereof; securities of U.S. and foreign investment companies; stock index futures contracts or options on such contracts; and call options on securities and indices in the relevant market. Each Series may also purchase other equity securities that are not components of the relevant FT Index component but may be an appropriate substitution for a security in the relevant FT Index component if market conditions make it impracticable to purchase such index security. Such "substitute" securities will be carefully selected for the high degree of positive correlation between the values of such securities and the values of the FT Index securities to which the Series seeks exposure. Investments in foreign obligations involve certain investment risks that are somewhat different from those affecting domestic obligations. Foreign issuers are not generally subject to uniform accounting, auditing and financial reporting standards or governmental supervision comparable to those applicable to U.S. issuers. In addition, there is a possibility that liquidity could be impaired because of future political and economic developments, that the foreign obligations may be less marketable than comparable obligations of U.S. entities, that a foreign jurisdiction might impose withholding taxes on interest income payable on foreign debt obligations, that deposits in foreign banks may be seized or nationalized and that governmental restrictions (such as foreign exchange controls) may be adopted which might adversely affect the payment of principal and interest on those obligations. The Adviser may make short-term investments of the available cash of any Series in securities of U.S. or foreign investment companies that are invested principally in the equity securities of the country relevant to such Series, for the purpose of exposing such available cash to the equity risk and return of that country's equity market. A Series will only invest in investment company securities in order to achieve a higher correlation with its corresponding FT Index component than could be obtained if cash reserves were invested in short-term debt obligations. A Series' investments in investment company securities are limited by Section 12(d)(1) of the 1940 Act. Regulatory requirements designed to eliminate leverage accompanying investments in futures contracts and options on futures contracts require each Series to segregate in an account with the Fund's custodian (see "Investment Advisory, Management and Other Services -- The Administrator, Custodian and Transfer Agent" below) an amount of its assets equal to the obligation to purchase the assets underlying such contracts. The assets segregated will be cash, U.S. Government securities or other liquid, high- grade, short-term debt securities denominated in the currency or currencies of the portfolio equity securities of the particular Series (the "Series Currency"). The purpose of investing in futures contracts and options on futures contracts and purchasing call options and the related activity of writing put options (explained below) is to expose cash reserves and short term money market investments to the equity risk and return of the corresponding SAI-7 component of the FT Index in order to achieve a higher correlation with such component. A Series will not invest in options and futures contracts and options thereon for speculative purposes. Certain of the risks typically associated with such contracts, e.g., the risk that the portfolio manager's view of future market movements may be mistaken, are therefore not applicable to the Fund. The total value of options and futures contracts and options thereon, plus the related segregated assets, the "substitute" securities for FT Index component securities and investment company securities referred to above, repurchase agreements and any other temporary cash and short-term investments, will not exceed 5% of the net asset value of a Series. Options on Securities Purchase of Call Options Each Series may purchase call options on securities and indices thereof. Call options are contracts which give the buyer the right, but not the obligation, to buy a fixed amount of securities at a fixed price for a fixed period of time or, in the case of options on indices, to make or receive a cash settlement. A Series will only invest in call options, in combination with other instruments, for the purpose of exposing the Series' cash reserves and short-term investments to the equity risk and return of the corresponding component of the FT Index in order to achieve a higher correlation with such component. It will not purchase call options for purposes of benefiting from anticipated market appreciation without the risk of market decline. Each Series may purchase both options that are traded on United States and foreign exchanges and options traded over-the-counter with broker-dealers who make markets in these options. Unlike exchange-traded options in the United States that are issued by clearing organizations affiliated with the exchange on which the option is listed, which, in effect, gives its guarantee to every exchange-traded option transaction, "over-the-counter" options are contracts between the Fund and its counterparty with no clearing organization guarantee. Thus, when a Series purchases an over-the-counter option, it relies on the dealer from which it has purchased the over-the-counter option to make or take delivery of the securities underlying the option or pay any cash settlement amount. Failure by the dealer to do so would result in the loss of the premium paid by the Series as well as the loss of the expected benefit of the transaction. The Adviser will evaluate the creditworthiness of any dealer from which a Series proposes to purchase options. Although exchange-traded options generally have a continuous liquid market, over-the-counter options may not. Consequently, a Series will generally be able to realize the value of an over-the-counter option it has purchased only by exercising it or reselling it to the dealer who issued it. While the Fund will purchase over-the-counter call options only with dealers which agree to, and which are expected to be capable of, entering into closing transactions with the Series, there can be no assurance that the Series will be able to liquidate an over-the-counter call option at a favorable price at any time prior to expiration. In the event of insolvency of the counterparty, the Series may be unable to liquidate an over-the-counter call option. Writing Put Options When the Fund writes (sells) a put option, the purchaser has the right, for a specified period of time, to sell the securities or index subject to the option to the Fund at the specified exercise price. SAI-8 The Fund receives a premium for writing the put option which it retains whether or not the option is exercised. A Series will write a covered put option only in connection with its purchase of a related call option on the same security or index. This technique will allow a Series to expose uninvested cash to the risk of both market appreciation and market decline in the value of the relevant security or index. Futures Contracts A Series will enter into futures contracts only for the purpose of exposing the Series' cash reserves and short-term investments to the equity risk and return of the corresponding component of the FT Index in order to achieve a higher correlation with such component. A Series will not use futures for speculative purposes. Each Series intends to invest only in contracts on indices of securities which the Adviser believes will provide appropriate proxies for the performance of the FT Index component relevant to such Series. A Series may enter into such futures contracts on any recognized futures exchange, if permitted by applicable U.S. law. A futures contract on a stock index is an agreement between two parties to buy and sell an index of securities at its closing value at a specified future time. Stock index futures are settled by delivery by one party of the net cash settlement price rather than the securities underlying the contract. Each Series will only take "long" futures positions, i.e., the Series will assume the obligation to acquire the index of securities underlying the contract. In order to open and maintain a position in futures contracts, the Fund is required to make a good faith deposit, known as "initial margin", in cash or government securities, which are held in the broker's name in an account at the Fund's custodian. A Series expects to earn interest income on its initial margin deposits. Minimal initial margin requirements are established by the futures exchange and may be changed. Brokers may establish initial margin requirements which are higher than the exchange minimums. Initial margin requirements typically range upward from less than 5% of the underlying value of the contract being traded. After a futures contract position is opened, the value of the contract is marked to market daily. The change in the futures contract's closing value is settled each day by paying or receiving "variation margin", depending upon the direction of change in the value of the futures contract. Variation margin payments are made to and from the futures broker for as long as the contract remains open. A Series will invest in futures contracts and options thereon only to the extent that the Fund, the Adviser or any related persons will not as a result of such contracts be required to register as a "commodity pool operator" with the Commodity Futures Trading Commission (the "CFTC"). Under CFTC regulations, each Series will be required to limit the amount of initial margin and premiums on positions in futures or options on futures entered into by the Series for non-hedging purposes to not more than 5% of the net assets of such Series. A Series will limit its investments to those which have been approved by the CFTC for investment by United States investors. Options on Futures Contracts Each Series may also enter into options on futures contracts for the same purposes described above with respect to options and futures contracts. The Fund may purchase only call options on futures contracts. A call option on a futures contract gives the purchaser the right, in return for the SAI-9 premium paid, to assume a long position in a futures contract at a specified exercise price at any time during the option exercise period. Repurchase Agreements Each Series may invest in repurchase agreements collateralized by obligations issued or guaranteed by the U.S. Government or any agency thereof for the purpose of generating income from its excess cash balances. A repurchase agreement is an agreement under which a Series purchases a security or money market instrument and simultaneously commits to resell that security or instrument to the seller (a bank or securities dealer) at an agreed upon price on an agreed upon date (usually within seven days of purchase). A repurchase agreement may be considered a loan collateralized by such security or instrument. The resale price reflects the purchase price plus an agreed upon market rate of interest unrelated to the coupon rate or date of maturity of the purchased security. In these transactions, the securities acquired by the Series (including accrued interest earned thereon) must have a total value in excess of the value of the repurchase agreement and will be held by State Street Bank and Trust Company ("State Street"), the Fund's custodian (the "Custodian"), until repurchased. A Series will enter into repurchase agreements only with a seller meeting creditworthiness standards approved by the Fund's Board of Directors and the Adviser will monitor the creditworthiness of the seller under the general supervision of the Board of Directors. The Custodian will continually monitor the value of the underlying securities to ensure that their value always equals or exceeds the total value of the repurchase agreement. The use of repurchase agreements involves certain risks. For example, if the seller of securities under the agreement defaults on its obligation to repurchase the underlying security at a time when the value of the security has declined, the Series holding the repurchase agreement may incur a loss upon disposition of the security. If the seller under the agreement becomes insolvent and subject to liquidation or reorganization under the U.S. Bankruptcy Code or other laws, a court may determine that the underlying security is collateral for a loan by the Series not within the control of the Series and therefore the Series may not be able to substantiate its interest in the underlying security and may be deemed an unsecured creditor of the seller. While the Adviser acknowledges these risks, it is expected that they can be controlled through careful monitoring procedures. Lending Portfolio Securities To a limited extent each Series may lend its portfolio securities to brokers, dealers and other financial institutions, provided it receives collateral in US dollar or Series Currency cash, U.S. Government securities or other assets permitted by applicable regulations, the total value of which at all times is maintained in an amount equal to at least 100% of the current market value of the securities loaned. By lending its portfolio securities, a Series can increase its income through securities lending fees and through the investment of the collateral and help offset the effect that the expenses of the Series have on the ability of such Series to provide investment results that correspond to that of its applicable component of the FT Index. Cash collateral received by any Series against securities loans will be invested only in high quality, short-term debt securities, repurchase agreements or commingled money market investment vehicles offered by the Fund's Custodian. These loans may not exceed 33 1/3% of each Series' total assets. Each Series will pay reasonable administrative and custodial fees in connection with the loan of securities. The interest income the Series receives from the loan collateral is included in the Series' gross investment income on which a portion of the management fee paid to DMG, in its capacity as investment adviser to the SAI-10 Fund, is based. See "Investment Advisory, Management and Other Services--The Adviser". The Fund will pay no finder's fees in connection with the lending of its securities. The following conditions will be met whenever portfolio securities are loaned: (1) the Series must receive at least 100% collateral from the borrower; (2) the borrower must increase such collateral whenever the market value of the securities loaned rises above the level of the collateral; (3) the Series must be able to terminate the loan at any time; (4) the Series must receive reasonable interest on the loan, as well as any dividends, interest or other distributions on the loaned securities, and any increase in market value; (5) the Series may pay only reasonable custodian fees in connection with the loan and will pay no finder's fees; and (6) while voting rights on the loaned securities may pass to the borrower, the Fund's Board of Directors (the "Board" or the "Directors") must terminate the loan and regain the right to vote the securities if a material event adversely affecting the investment occurs. Each Series will comply with the foregoing conditions. DMG will provide securities lending services to the Fund under its investment advisory and management agreement with the Fund. DMG may delegate certain duties with respect to securities lending to State Street, which acts as Custodian, or to other qualified persons approved by the Fund's Board of Directors, pursuant to an agency agreement. See "Investment Advisory, Management and Other Services--The Adviser". Currency Transactions The investment policy of each Series is to remain as fully invested as practicable in the equity securities of the relevant FT Index component. Hence, no Series of the Fund expects to engage in currency transactions for the purpose of hedging against declines in the value of the Series Currency. Each Series will engage in currency transactions for the purpose of meeting the U.S. dollar cash requirements of redemptions of Series shares in Creation Unit size aggregations (see "Purchase and Issuance of Fund Shares in Creation Unit Aggregations--Generally") and Series expenses and distributions. This is considered a "transaction hedge". In addition, to the extent a Series (other than the US Index Series) holds US dollar- denominated cash balances or short term money market-type investments, it may purchase a forward currency contract or other instruments which would enable it to purchase the applicable Series Currency at a fixed price in the future and eliminate the risk that the US dollar-denominated assets of the Series would widen any deviation between the performance of the applicable FT Index component and the Series in the event that the value of the Series Currency rose in relation to the US dollar. This is considered a "position hedge". A non-US Series may also enter into arrangements under which its cash reserves in the applicable Series Currency (for example, foreign currency received by such Series as collateral against loans of portfolio securities) would be converted into US dollars for purposes of investing in an available US dollar-denominated short-term money market investment vehicle and the money market investment (including accrued interest) would be converted back to Series Currency the following day at an exchange rate adjusted for any differential between prevailing US dollar and Series Currency short-term interest rates. Since it is not expected that US dollar-denominated assets would exceed 5% of net assets of any Series other than the US Index Series (and would under normal conditions be significantly less than 5%), the value of forward currency contracts, currency futures contracts and options on such contracts, currency options and other currency instruments should not exceed 5% of a Series' net assets and net forward currency contracts and other currency instruments should not exceed the value of US dollar- denominated assets. SAI-11 Transaction hedging is the purchase or sale of a forward contract with respect to specific receivables or payables of a Series generally arising in connection with the purchase or sale of its portfolio securities and accruals of interest or dividends receivable and Series expenses. Position hedging is the sale of a foreign currency with respect to portfolio security positions denominated or quoted in that currency. A forward currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. Currency options give the buyer the right, but not the obligation, to buy or sell a fixed amount of a specific currency at a fixed price for a fixed period of time. A currency futures contract is a contract involving an obligation to deliver or acquire the specified amount of currency at a specified price at a specified future time. Futures contracts may be settled on a net cash payment basis rather than by the sale and delivery of the underlying currency. Certain risks of transactions in foreign currency and related derivatives are described below under "Special Considerations and Risks--Currency Transactions". Investment Restrictions The Fund has adopted the following investment restrictions as fundamental policies with respect to each Series. These restrictions cannot be changed with respect to a Series without the approval of the holders of a majority of such Series' outstanding voting securities. For purposes of the Investment Company Act of 1940, as amended (the "1940 Act"), a majority of the outstanding voting securities of a Series means the vote, at an annual or a special meeting of the security holders of the Fund, of the lesser of (1) 67% or more of the voting securities of the Series present at such meeting, if the holders of more than 50% of the outstanding voting securities of such Series are present or represented by proxy, or (2) more than 50% of the outstanding voting securities of the Series. A Series may not: 1. Change its investment objective, which is to provide investment results that substantially correspond to the price and yield performance of a broad-based index of publicly traded equity securities in a specified country, geographical region or industry sector; 2. Lend any funds or other assets except that a Series may enter into repurchase agreements and may lend its portfolio securities in an amount not to exceed 33 1/3% of the value of its total assets; 3. Issue senior securities or borrow money, except borrowings from banks for temporary or emergency purposes in an amount up to 33 1/3% of the value of the Series' total assets (including the amount borrowed), valued at the lesser of cost or market, less liabilities (not including the amount borrowed) valued at the time the borrowing is made, and the Series will not purchase securities while borrowings in excess of 5% of the Series' total assets are outstanding, provided, that for purposes of this restriction, short-term credits necessary for the clearance of transactions are not considered borrowings; 4. Pledge, hypothecate, mortgage or otherwise encumber its assets, except in an amount up to 33 1/3% of the value of its total assets to secure permitted borrowings, except that the deposit of underlying securities and other assets in escrow and collateral arrangements with respect to initial or variation margin for currency transactions, options, futures contracts and options on futures will not be deemed to be pledges of the Series' assets; SAI-12 5. Purchase a security (other than obligations of the U.S. Government, its agencies or instrumentalities) if as a result 25% or more of its total assets would be invested in a particular industry, except that a Series will invest 25% or more of its total assets in a single industry in the event that its corresponding equity index is or becomes similarly concentrated; 6. Purchase, hold or deal in real estate, or oil, gas or mineral interests or leases, but a Series may purchase and sell securities that are issued by companies that invest or deal in such assets; 7. Act as an underwriter of securities of other issuers, except to the extent the Series may be deemed an underwriter in connection with the sale of securities in its portfolio; 8. Purchase securities on margin, except for such short-term credits as are necessary for the clearance of transactions, except that a Series may make margin deposits in connection with transactions in currencies, options, futures and options on futures; 9. Sell securities short, but reserves the right to sell securities short if it owns the security; 10. Invest in commodities or commodity contracts, except that the Series may buy and sell currencies and forward contracts with respect thereto, futures contracts on securities, stock indices and currencies and options on such futures contracts and make margin deposits in connection with such contracts; or 11. Write call options. A Series may write covered put options. With respect to the fundamental restriction set forth in (5), above, the Adviser has advised the Fund that as of December 29, 1995, the following FT Index components were concentrated (in excess of 25% of such component) in stocks of the indicated industry groups, as defined by the Consortium of the FT Index (see "The FT Index" below): Australia Mining, Metals and Minerals Hong Kong Real Estate Italy Utilities South Africa Precious Metals and Minerals The securities portfolios of the Australia Index Series, the Hong Kong Index Series, the Italy Index Series and the South Africa Index Series will be concentrated in the indicated industries for so long as the corresponding FT Index components are so concentrated. An investment in the CB Shares(SM) of each such Series therefore involves a greater exposure to the performance and risks associated with the relevant industry group than would be the case if such Series' portfolio securities were more broadly diversified among industry groups. See "The Fund--Investment Considerations and Risks" in the Prospectus. In addition to the investment restrictions adopted as fundamental policies as set forth above, each Series will observe the following restrictions, which may be changed by the Board without a stockholder vote. A Series will not: SAI-13 1. Invest in the securities of a company for the purpose of exercising management or control, or in any event purchase and hold more than 10% of the securities of a single issuer, provided that the Fund may vote the investment securities owned by each Series in accordance with its views; or 2. Hold illiquid assets in excess of 15% of its net assets. An illiquid asset is any asset which may not be sold or disposed of in the ordinary course of business within seven days at approximately the value at which the Series has valued the investment. For purposes of the percentage limitation on each Series' investments in illiquid securities, with respect to each Series other than the US Index Series, foreign equity securities, though not registered under the Securities Act of 1933 (the "Securities Act"), will not be deemed per se illiquid if they are listed on an exchange and are not legally restricted from sale by the Series. The Consortium, i.e. the Owners of the FT Index and their associates (see "The FT Index--In General"), automatically excludes a security from the FT Index if it fails to trade for more than fifteen working days within each of two successive calendar quarters. The Adviser will monitor the liquidity of restricted securities in each Series' portfolio under the supervision of the Fund's Board of Directors. In reaching liquidity decisions, the Adviser will consider, among other things, the following factors: (1) the frequency of trades and quotes for the security; (2) the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; (3) dealer undertakings to make a market in the security; and (4) the nature of the security and the nature of the marketplace in which it trades (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). If a percentage limitation is adhered to at the time of investment or contract, a later increase or decrease in percentage resulting from any change in value or total or net assets will not result in a violation of such restriction, except that the percentage limitations with respect to the borrowing of money and illiquid securities will be observed continuously. SPECIAL CONSIDERATIONS AND RISKS A discussion of the risks associated with an investment in the Fund is contained in the Prospectus under the heading "The Fund--Investment Considerations and Risks". The discussion below supplements, and should be read in conjunction with, such section of the Prospectus. Non-U.S. Equity Portfolios Investing in securities issued by companies domiciled in countries other than the domicile of the investor and denominated in currencies other than an investor's local currency entails certain considerations and risks not typically encountered by the investor in making investments in its home country and in that country's currency. These considerations include favorable or unfavorable changes in interest rates, currency exchange rates and exchange control regulations, and the costs that SAI-14 may be incurred in connection with conversions between various currencies. In addition, investments in countries other than the United States could be affected by other factors generally not thought to be present in the United States, including less liquid and less efficient securities markets, greater price volatility, less publicly available information about issuers, the imposition of withholding or other taxes, restrictions on the expatriation of funds or other assets of a Series, higher transaction and custody costs, delays attendant in settlement procedures and difficulties in enforcing contractual obligations. Currency Transactions Foreign exchange transactions involve a significant degree of risk and the markets in which foreign exchange transactions are effected are highly volatile, highly specialized and highly technical. Significant changes, including changes in liquidity and prices, can occur in such markets within very short periods of time, often within minutes. Foreign exchange trading risks include, but are not limited to, exchange rate risk, maturity gaps, interest rate risk and potential interference by foreign governments through regulation of local exchange markets, foreign investment or particular transactions in foreign currency. The risks associated with foreign currency options and futures contracts generally include those discussed under "Other Fund Investments--Options on Securities" and "--Futures Contracts", with respect to stock index futures, options on securities and indices and options on futures, and below under "Options and Futures". If the Adviser applies a currency hedging strategy at an inappropriate time or judges market correlations incorrectly, foreign currency derivatives strategies may not serve their intended purpose of improving the correlation of a Series' return with the performance of the corresponding FT Index component and may lower the Series' return. The Series could experience losses if the values of its currency forwards, options and futures positions were poorly correlated with its other investments or if it could not close out its positions because of an illiquid market. In addition, each Series will incur transaction costs, including trading commissions, in connection with its foreign currency transactions. Options and Futures A Series' ability to establish and close out positions in options, futures contracts and options on futures contracts will be subject to the existence of a liquid market. Although a Series generally will purchase or sell only those options, futures contracts and options thereon for which there appears to be a liquid market and, in the case of futures contracts, which are traded on regulated futures exchanges, there can be no assurance that a liquid market will exist for any particular option or futures contract or option thereon in which the Series maintains a position. Thus, it may not be possible to effect a closing transaction in any contract or to do so at a satisfactory price and the Series would have to either make or take delivery under the contract or, in the case of a written option, wait to sell the underlying securities until the option expires or is exercised or, in the case of a purchased option, exercise the option. In the case of a futures contract that the Series has purchased and which the Fund is unable to close, the Series may be required to maintain margin deposits on the futures contract and to make variation margin payments until the contract is closed. In such situations, if a Series has insufficient cash, it may have to sell portfolio securities to meet applicable daily margin requirements. Closing transactions in these contracts may result in short-term capital gains. These transactions may be limited by U.S. tax considerations because the beneficial treatment accorded regulated investment companies under Subchapter M of the Code (as defined herein) limits the amount of permissible short-term gain. SAI-15 Options and futures contracts based on foreign stock indices may be purchased by a Series only if the options or futures contracts have been approved by the CFTC for purchase by U.S. persons. Currently, options and futures contracts on foreign equity indices are approved for certain Australian, French, German, Hong Kong, Italian, Japanese and United Kingdom equity indices. Because the futures strategies of each Series are engaged in only for the purpose of seeking a higher correlation with the corresponding component of the FT Index and its use of futures will be unleveraged, the Fund does not believe that the Series are subject to the risks of loss frequently associated with futures transactions. A Series would presumably have sustained comparable losses if, instead of the futures contract, it had invested in the underlying security or index of securities and sold it after the decline. Successful use of futures contracts and options thereon by any Series is subject to the ability of the Adviser to predict correctly correlations between the movements in the values of such contracts (or the underlying securities or indices) with the direction of the relevant FT Index component or securities to which the Series seeks exposure. If the Adviser's expectations are not met, the Series would be in a worse position than if the futures exposure had not been effected. If a Series buys futures contracts on stock indices that historically have had a high degree of positive correlation to the value of the FT Index, and such historical experience were not to obtain in the future, the value of the relevant FT Index component might rise or decline more rapidly than the value of such an imperfectly correlated futures contract. In that case, the futures strategy will be less effective than if the correlation had been greater. In a similar but more extreme situation, the value of the futures position might in fact decline while the value of the relevant FT Index component holds steady or rises. This would result in a loss that would not have occurred but for the futures position. Continuous Offering Since new Creation Unit aggregations of shares can be issued and sold by the Fund on an ongoing basis, at any point during the life of the offering a "distribution", as such term is used in the Securities Act, may be occurring. Broker-dealers and other persons are cautioned that some activities on their part may, depending on the circumstances, result in their being deemed participants in a distribution in a manner which could render them statutory underwriters and subject them to the prospectus- delivery and liability provisions of the Securities Act. For example, a broker-dealer firm or its client may be deemed a statutory underwriter if it takes Creation Unit aggregations of shares after placing a purchase order with the Distributor, breaks them down into the constituent CB Shares(SM), and sells the CB Shares(SM) directly to its customers; or if it chooses to couple the acquisition of a supply of new CB Shares(SM) with an active selling effort involving solicitation of secondary market demands for CB Shares(SM). A determination of whether one is an underwriter must take into account all the facts and circumstances pertaining to the activities of a broker-dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could lead to categorization as an underwriter. Broker-dealer firms should also note that dealers who are not "underwriters" but are participating in a distribution (as contrasted with ordinary secondary trading transactions), and thus dealing with shares that are part of an "unsold allotment" within the meaning of Section 4(3)(C) of the Securities Act, would be unable to take advantage of the prospectus- delivery exemption provided by Section 4(3) of the Securities Act. Firms that do incur a prospectus-delivery obligation with respect to CB Shares(SM) are reminded that under Securities Act Rule 153 a prospectus-delivery SAI-16 obligation under Section 5(b)(2) of the Securities Act owed to a NYSE member in connection with a sale on the NYSE is satisfied by the fact that prospectuses will be available at the NYSE upon request. Of course, the prospectus-delivery mechanism provided in Rule 153 is only available with respect to transactions on an exchange. THE FT INDEX In General The FT-Actuaries World Indices(TM) were originally developed by Goldman, Sachs & Co., NatWest Securities Limited and The Financial Times Limited in 1986, and until May 23, 1995, were jointly published by them. On May 23, 1995, Standard & Poor's, a division of The McGraw-Hill Companies, Inc., joined The Financial Times Limited and Goldman, Sachs & Co. as a co-publisher of the FT-Actuaries World Indices(TM), now known as the Financial Times/Standard & Poor's Actuaries World Indices(TM) or the FT/S&P Actuaries World Indices(TM). The FT/S&P Actuaries World Indices(TM) are a continuation of the FT-Actuaries World Indices(TM). Following the current transition period, Standard & Poor's and The Financial Times Limited will jointly calculate the indices (in such capacity, the "Compilers"). The Compilers are responsible for the day-to-day data processes that enable the calculation of the FT Index. As of November [__], 1995, The Financial Times Limited transferred its ownership rights in the FT/S&P Actuaries World Indices(TM) to FTSE, a company jointly owned by The Financial Times Limited, the London Stock Exchange and the Institute of Actuaries. Together, Standard & Poor's, Goldman, Sachs & Co. and FTSE are referred to in this SAI as the "Owners". By the end of 1996, it is expected that FT-SE International will assume responsibility for calculating the European and Asia-Pacific indices and Standard & Poor's will calculate the U.S. indices. The Fund is not sponsored by or affiliated with Standard & Poor's, FTSE or The Financial Times Limited. The FT Index is managed with the assistance of The Institute of Actuaries and The Faculty of Actuaries, the English and Scottish bodies, respectively, that represent the actuarial profession in the United Kingdom (together with the Owners, the "Consortium"). NatWest Securities Limited has withdrawn as an owner of the FT Index, but will continue to be recognized as a founding member. The following summary of the compilation and operation of the FT Index is based on information provided by Goldman, Sachs & Co. and Standard & Poor's.** The FT Index offers measures of stock price performance for the major world stock markets as well as for regional areas, broad economic sectors, and industry groups. The components of the FT Index represent separately each of 26 countries, 12 geographic regions and 7 broad economic ** See The FT-Actuaries World Indices(TM)--An Introduction (The Financial Times Limited, Goldman, Sachs & Co. and Wood MacKenzie & Co., Ltd., 1987); FT-Actuaries World Indices(TM)--Construction and Maintenance Rules (The Financial Times Limited, Goldman, Sachs & Co. and County NatWest Securities Limited, 1991); FT-Actuaries World Indices(TM)-- Construction and Maintenance Rules Amendments (Goldman, Sachs & Co. and NatWest Securities Limited, April 1993); FT- Actuaries World Indices(TM)-- Construction and Maintenance Rules Amendments (The Financial Times Limited, Goldman, Sachs & Co. and NatWest Securities Limited, March 1995). SAI-17 sectors. In total over 1,000 indices are calculated daily across countries, regions, industry groups, and economic sectors. Among the criteria that the FT Index is structured to satisfy are coverage of the investible opportunities available in the world's equity markets for the international investor and an objectively constructed measure of the changes in market value of international investors' portfolios resulting from market activity. SAI-18 The World Index Policy Committee Daily and quarterly review of and policy decisions made concerning the FT Index are the responsibility of the WIPC. The Financial Times Limited, Goldman, Sachs & Co., and Standard & Poor's each have one vote on the WIPC, and they can each appoint two additional voting members to the WIPC to act as representatives of actual or prospective main user groups of the FT Index. In addition, The Institute of Actuaries and The Faculty of Actuaries have two voting members on the WIPC, including the Chairman. NatWest Securities Limited has one vote on the WIPC until 1998. To the best of the Adviser's knowledge, the WIPC included no employees of the Adviser or Deutsche Bank AG as of December 29, 1995. Specifically, the WIPC determines the overall policy and objectives of the FT Index; establishes selection criteria, liquidity requirements, calculation methodologies, rules and representation for inclusion of index components and the timing and disclosure of additions and deletions of FT Index constituents; determines what data on distributions to stockholders and other capital changes are included; and scrutinizes and ensures that the FT Index is theoretically and operationally correct and accurate. The guidelines for the determinations of the Consortium, and its calculation methodologies, are publicly available. The WIPC may at any time change the stock exchange or exchanges from which the constituents of a particular FT Index component may be selected. Delivery and Availability The FT Index's values and related performance figures for various periods of time are calculated after the close of the NYSE for publication the following day in the various editions of the Financial Times. The FT Index components are reported in local currency, US dollars, and UK pounds sterling to allow an explicit valuation of the impact of the currency component on various user groups. Constituent changes during a quarter are noted at the foot of the FT Index table. Where possible, these are shown prior to the actual day of implementation. Decisions regarding the addition of new eligible constituents which are unrelated to existing index constituents, or investible weighting changes to existing constituents, will be announced in the Financial Times at least four working days before they are implemented in the indices which are published in the daily table. Monday editions of the Financial Times show all constituent changes made during the previous week together with base values for the country indices. Quarter-end changes are published as soon as is practicable following the quarterly WIPC meeting but before the quarter-end. The FT Index components are calculated on weekdays when one or more of the constituent markets are open; the indices are syndicated and published in the financial sections of several newspapers worldwide, including The New York Times. FT Index data also may be purchased electronically through Goldman, Sachs & Co. Extensive index data will be available through a number of market data vendors to their subscribers. The Adviser will make available on diskette to certain financial institutions that have entered into agreements with the Fund's distributor to provide stockholder support services and undertake certain marketing-related activities five-year historical data on the FT Index components corresponding to the initial nine Series of the Fund and related major market indices. See "Purchase and Issuance of Fund Shares in Certain Unit Aggregations -- The Distributor". SAI-19 Selection Country Selection Criteria. In order for a country to be included in the FT Index, the following criteria must be satisfied: (1) direct equity investment by non-nationals must be permitted; (2) accurate and timely data must be available; (3) no significant exchange controls exist which would prevent the timely repatriation of capital or dividends; (4) significant international investor interest in the local equity market must have been demonstrated; and (5) adequate liquidity must exist. Allocation of Stocks to Countries. In most instances stocks are included in the index component of that country where the company is legally registered and is recognized for taxation purposes, including regulation of its financial affairs. However, exceptions may be made where the international investor's recognition of the area of the company's business or its market listings clearly suggests a different allocation. Classes Included. Companies whose business is that of holding equity and other investments (e.g., United Kingdom investment trusts) are eligible for inclusion. Split capital investment trusts are excluded. Those whose price is a direct derivation of underlying holdings (e.g., mutual funds) are also excluded. Investibility Screens. All securities are subjected to the five investibility screens described below. 1. A "Size Screen". All securities comprising the bottom 5% of any market's capitalization are excluded from the FT Index. The average size of the remaining 95% of the companies represents the "Large Company Cut-Off Size". 2. A "Total Restriction Screen". A security is totally excluded from the FT Index if foreign investors are barred from ownership. 3. A "Partial Restriction Screen". An "investibility weight" is attached to those securities for which there are partial restrictions on foreign ownership. The capitalization included, therefore, for any such security generally is restricted to that portion available to foreign investors. Consideration will also be given to what extent this portion is effectively reduced by "strategic" foreign holdings which may either require a commensurate adjustment to the investibility weight or lead to a company being considered ineligible for inclusion. 4. A "'Free Float' Screen". The full capitalization of a security is eligible for inclusion in the FT Index if 25% or more of the outstanding securities is publicly available for investment and not in the hands of a single party or parties "acting in concert". A government's shareholdings are included in this total if these holdings have a stock exchange listing and could be offered to the public. However, when a government is a holder of shares but either the shares are not listed or the government is constrained through requiring legislation before being able to sell them, a weighting factor will be applied. Two or more identifiable holders of more than 75% of a single security may be deemed to be acting in concert unless evidence is available to the contrary. SAI-20 Securities will also be considered for inclusion, however, if the existing "free float" is less than 25% but more than 10% and if the free float capitalization is more than one half of the large-company cut-off size (described below) in that particular market. Only that portion of capitalization deemed to be "free float" will be eligible for inclusion, this being considered to be equivalent to the application of the "Partial Restriction Screen". The free float will be automatically included if its size is greater than the large-company cut-off size. The free float may be considered for inclusion if it is more than one half of but less than the Large Company Cut-Off Size. 5. A "Liquidity Screen". A security is deemed to be illiquid, and therefore ineligible for inclusion, if it fails to trade for more than 15 working days within each of two successive quarters. Stock Selection Criteria. The "investible universe" consists of the aggregate capitalization of all equity securities listed on the exchanges monitored (in some cases, only certain sections of particular exchanges are monitored) within a market after the application of the five investibility screens described above and after certain "multiple equity line" rules are applied. Where there are multiple lines of equity capital in the one company, all are included and priced separately, except that lines will be excluded if: (i) they are not available owing to failure under the investibility screens; (ii) the size of the line is less than 50% of the market's minimum size; or (iii) the size of the line is between 50% and 100% of the market's minimum size but is less than 25% of the company's main line of equity. All partly-paid classes of equity are priced on a fully-paid basis if the calls are payable at known future dates. Those recognized as being "permanently partly-paid" are priced on a partly-paid basis. An objective of the FT Index in selecting constituent stocks is to capture 85% of the investible universe in each market. In practice, representation is maintained within a band of 82-88% of the investible universe. For the purposes of the implementation of the current FT Index rules, a band of 82-90% is used in order to restrict turnover to 5%-7% for the larger markets. Large additions of stocks to the investible universe of an FT Index market, or dramatic price movements in stocks within the investible universe, over a short period of time may temporarily reduce the relevant FT Index component's representation of the investible universe below the normal band of 82 - 88%. This may occur where, for example, a number of new public offerings of investible stocks occur simultaneously and the adjustments required to the constituents of the relevant FT Index components to maintain such representation cannot be made quickly or simultaneously because such adjustments would violate other FT Index rules. Consideration is also given in assembling the equities comprising any market to the economic sector distribution of the sample chosen. The objective is that this distribution reflect the overall economic sector distribution of the investible universe. Companies greater in size than the "Large Company Cut-Off Size" qualify for inclusion in an FT Index component automatically should they remain eligible after application of all other investibility screens. Stocks in the investible universe below the Large Company Cut-Off Size are selected and added to the existing sample using the methods described below. Stocks are added in descending order of size within economic sectors such that any divergences in economic sector weights between the Large Company sample and the investible universe are minimized. The selection process continues until the aggregate capitalization of the sample represents as closely as possible 85% of the capitalization of the investible universe. The SAI-21 representation of each market is reviewed as a rolling process and at any time that there is evidence that representation of the investible universe has fallen without the normal band of 82%-88%. Constituent Changes Additions may be made to existing FT Index components for six reasons: (1) the current representation of the total investible market is below the required level or is not representative of its economic sector make-up; (2) a non-constituent has gained in importance and replaces an existing constituent under the rules of review; (3) market events indicate that the current representation is below that required; (4) a new, eligible security becomes available whose capitalization available for foreign investment, taking into account all relevant factors including application of the investibility screens and consideration of any existing strategic foreign holdings, is 1% or more of the current capitalization of the relevant FT Index component and is greater than the Large Company Cut-Off Size, as last calculated; (5) an existing constituent "spins off" a part of its business and issues new equity to the existing stockholders; or (6) changes in investibility factors lead to a stock being eligible for inclusion and that stock now qualifies on other grounds. Deletions from the FT Index may be made for any of four reasons: (1) the FT Index component comprises too high a percentage of its representative universe or is such that it does not represent the market's sectoral make-up; (2) a review shows that a constituent has declined in importance and should be replaced by a non-constituent; (3) market events result in evidence that the current representation as above that required; or (4) evidence of a change in circumstances regarding investibility would make an existing constituent ineligible if a full market review was to be undertaken. Certain adjustments may be made to the constituents of an FT Index component immediately. For example, if an existing constituent is acquired for eligible shares by a quoted non-constituent in the same market then the acquiring company is added to the FT Index immediately if eligible on all other counts. The existing constituent is deleted immediately. Calculation Methodologies The FT Index values are calculated through widely accepted mathematical formulae, with the effect that the components are weighted arithmetic averages of the price relatives of the constituents -- as produced solely by changes in the marketplace -- adjusted for intervening capital changes. The FT Index component values are base-weighted aggregates of the initial market capitalization, the price of each issue being weighted by the number of shares outstanding. The FT Index components are modified to maintain continuity when subsequent capital changes occur. Values are derived to illustrate the longer-term changes associated with the value of the component over time, although still reflecting day-to-day movements. The arithmetic average is the sum of the values divided by the total shares in a component. The arithmetic average is suitable so long as the series of data is not widely dispersed. Dividends. The FT Index uses the most up-to-date indicated annualized rates, adjusted for any interim changes and updated also for any firm and precise forecasts. Policy Changes. Policy changes made by the WIPC are disseminated to all end-users through the Financial Times and in advance of any implementation. SAI-22 Special Issues. Where the WIPC has given special consideration to issues of particular importance to end-users of the FT Index, and where the decision is not to implement a change, then users will be notified through the Financial Times that such issues have been reviewed. Performance Although the Fund has no operating history, the availability of historical data on the performance of each of the FT Index components since 1985 permits the calculation of the hypothetical performance of each Series of the Fund as if each Series had been operating since that time. All performance information contained in this SAI is based on historical information and is not intended to indicate future returns. Each Series' net asset value, yield and total return will fluctuate in response to market conditions and other factors, and the value of CB Shares(SM) of any Series when redeemed in Creation Unit aggregations may be more or less than their original cost. Furthermore, since the hypothetical performance information for Fund Series provided in this SAI is based on changes in each Series' net asset value over time, and the CB Shares(SM) may trade on the NYSE at prices at, below or above their net asset value, historical performance information for a Series may or may not be indicative of the market performance that such CB Shares(SM) would have demonstrated over the relevant periods or will demonstrate in the future. See "The Fund--Investment Considerations and Risks" in the Prospectus. Performance data for the FT Index and the Series of the Fund are based on information provided by Ibbotson Associates of Chicago, Illinois, except as otherwise indicated. Average Annual Total Returns. Average annual total return, a common measure of fund performance, is reported below for each of the initial nine Series of the Fund and its corresponding FT Index component for the one-, three-, five-, seven- and ten-year periods ending December 29, 1995. Average annual total return is calculated by determining the growth or decline in the value of a hypothetical investment (e.g., in a Series of the Fund or an index of stocks) over a stated period, after giving effect to the reinvestment of dividends and distributions during the period, and then calculating the annual compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. For example, a cumulative total return of 100% over 10 years would produce an average annual return of 7.18%, which is the steady annual rate of return that would equal 100% growth on a compounded basis in ten years. All average annual total returns reported herein are US dollar returns. While the annual average total returns reported below both for the FT Index components and for each Series of the Fund assume the reinvestment of dividends and other distributions on the underlying securities, the FT Index returns do not reflect deductions for administrative and management costs and expenses. The average annual returns indicated for a Series of the Fund do reflect deductions for estimated costs and expenses of the Series and deductions for estimated cash transaction fees paid by an investor on the initial purchase of Creation Unit aggregations of shares of such Series and on redemption of such shares at the end of the indicated period, but do not reflect deductions for brokerage expenses incurred by an investor to purchase or sell Fund Basket securities in connection with purchases and redemptions. While average annual total returns are a convenient means of comparing alternative investments, investors should realize that a fund's or an index's performance is not constant over time, but changes from year to year, and that average annual returns represent averaged figures as opposed to the actual year-to-year performance of the investment. In addition, all average annual total return figures presented in this SAI do not make any allowance for federal, state or local income taxes, which stockholders of the Fund must pay on a current basis, or for foreign taxes or SAI-23 withholding that may be applicable to income on equity securities comprising any index or any Series' portfolio. Average annual returns of the respective FT Index country components for one-, three- and five-year periods were provided to the Adviser by Goldman, Sachs & Co. Correlations with Other Indices. The description set forth below of each Series' corresponding FT Index component also contains coefficients of correlation between the performance of the component and the performance of a leading major market index in the relevant country and of the S&P 500 over the five-year period ended December 29, 1995. Each correlation is an indication of the extent to which, during such five-year period, the record of the FT Index component, based only on changes in the market prices of the underlying stocks, followed the record of the compared index, whether in rising or falling markets. A correlation of 1.00 between two indexes would indicate that movements in one index tracked movements in the other exactly over the relevant period. A correlation of 0, on the other hand, would indicate that movements in the two indices were entirely independent over the relevant period. The correlation of each FT Index component with the leading market index in the relevant country is provided for the information of investors who are interested in the extent to which the performance of the FT Index component has tended historically to move in tandem with, or independently of, the overall performance of a widely recognized equity index in the same market. Similarly, the correlation with the S&P 500 is provided to give investors an indication of whether the performance of the particular FT Index component has tended historically to move in tandem with, or independently of, the performance of a broad average of U.S. equities. The correlations provided are historical and are not intended to predict the future relationship between the performance of the FT Index component and the leading market index or the S&P 500. Furthermore, correlations with the performance of any FT Index component are not intended to be equivalent to correlations with the performance of the corresponding Series because the management, administrative and other costs and expenses associated with a hypothetical investment in a Series would tend to make its correlation with comparative indexes weaker than that of the FT Index component. The Australia Component On December 29, 1995, the Australia component of the FT Index consisted of 81 stocks with an aggregate market capitalization of approximately A$227.2 billion, or US $168.9 billion. In percentage terms, the Australia component represented approximately 83.9% of the aggregate investible Australian market capitalization. The ten largest constituents of the Australia component and the respective approximate percentages of the Australia component represented by such constituents were, in order: Broken Hill Proprietaries (16.3%), National Australia Bank (7.6%), CRA (5.6%), Westpac (4.9%), Western Mining (4.2%), ANZ Bank (4.0%), Amcor (2.6%), News Corp (2.5%), Coca-Cola Amatil (2.3%) and Commonwealth Bank of Australia (2.3%). Over the six-year period ended December 29, 1995, the performance of the Australia component of the FT Index had a correlation of 0.994 with the All Ordinaries Index, a broad-based capitalization weighted index of all common stocks listed on the ASX, and 0.717 with the S&P 500. As of December 29, 1995, the largest five holdings together comprised approximately 39% of the market capitalization of the Australia component; the largest ten holdings comprised SAI-24 approximately 52% of the market capitalization of the Australia component; and the largest 20 holdings comprised approximately 70% of the market capitalization of the Australia component. The ten most highly represented industry sectors in the Australia component of the FT Index, and the approximate percentages of the Australia component represented thereby, as of December 29, 1995, were: 1) Mining, Metals & Minerals 31.7% 2) Banks: Commercial & Other 20.7% 3) Real Estate 5.6% 4) Construction & Building Materials 5.2% 5) Diversified Industrials 4.0% 6) Oil 3.8% 7) Retail Trade 3.5% 8) Precious Metals and Minerals 3.3% 9) Diversified Consumer Goods 3.1% 10) Media 3.1% The consumer oriented industry sectors represented by the ______________, _____________ and _______________________ industries, have in the aggregate accounted for an increasing share of the Australia component since 19__. Appendix A hereto contains a complete list of the securities in the Australia component as of December 29, 1995. The average annual total returns in US Dollars of the Australia component of the FT Index, and the corresponding pro forma average annual total returns of the Australia Index Series (with reinvestment of Series dividends, after estimated expenses applicable to the Australia Index Series), are set forth below for the indicated periods prior to December 29, 1995: FT Index-Australia Australia Index Series 1 Year 15.2% 3 Years 19.3 5 Years 14.7 10 Years 15.0 The France Component On December 29, 1995, the France component of the FT Index consisted of 100 stocks with an aggregate market capitalization of approximately FF1,815.9 billion, or US $371.3 billion. In percentage terms, the France component represented approximately 88.2% of the aggregate investible French market capitalization. The ten largest constituents of the France component and the respective approximate percentages of the France component represented by such constituents were, in order: Elf Aquitaine (5.4%), LVMH-Moet Vuitton (4.9%), L'Oreal (4.4%), Total (4.3%), Carrefour (4.2%), Alcatel Alsthom (3.5%), Eaux (3.2%), Danone (3.2%), Axa (3.0%) and Air Liquide (3.0%). Over the six-year period ended December 29, 1995, the performance of the France component of the FT Index had a correlation of 0.968 with the performance of the CAC 40, a narrow-based, capitalization-weighted index of 40 companies listed on the Paris Stock Exchange, and 0.762 with that of the S&P 500. SAI-25 As of December 29, 1995, the largest five holdings together comprised approximately 23% of the market capitalization of the France component; the largest ten holdings comprised approximately 39% of the market capitalization of the France component; and the largest 20 holdings comprised approximately 60% of the market capitalization of the France component. The ten most highly represented industry sectors in the France component of the FT Index, and the approximate percentages of the France component represented thereby, as of December 29, 1995, were: 1) Health and Personal Care 9.9% 2) Oil 9.6% 3) Banks: Commercial and Other 8.9% 4) Retail Trade 8.8% 5) Construction & Building Materials 6.7% 6) Beverages & Tobacco 5.8% 7) Food & Grocery Products 5.6% 8) Insurance Multi/Property/Casualty 5.4% 9) Chemicals 4.8% 10) Utilities 4.7% Appendix B hereto contains a complete list of the securities in the France component as of December 29, 1995. The average annual total returns in US Dollars of the France component of the FT Index, and the corresponding pro forma average annual total returns of the France Index Series (with reinvestment of Series dividends, after estimated expenses applicable to the France Index Series), are set forth below for the indicated periods prior to December 29, 1995: FT Index-France France Index Series 1 Year 13.2% 3 Years 10.2 5 Years 9.9 10 Years 15.7 The Germany Component On December 29, 1995, the Germany component of the FT Index consisted of 59 stocks with an aggregate market capitalization of approximately DM 575.3 billion or US $401.9 billion. In percentage terms, the Germany component represented approximately 89% of the aggregate investible German market capitalization. The ten largest constituents of the Germany component and the respective approximate percentages of the Germany component represented by such constituents were, in order: Allianz AG HLDG. (11.4%), Siemens (7.5%), Daimler Benz (6.5%), Deutsche Bank (5.9%), Veba (5.2%), Bayer (4.6%), Munich Re (4.3%), Hoechst (4.0%), BASF (3.4%), and RWE (3.0%). Over the five-year period ended December 29, 1995, the performance of the Germany component of the FT Index had a correlation of 0.952 with the performance of the DAX, a total rate SAI-26 of return index consisting of 30 selected German stocks traded on the Frankfurt Stock Exchange, and 0.701 with that of the S&P 500. As of December 29, 1995, together, the largest five holdings comprised approximately 36% of the market capitalization of the Germany component; the largest ten holdings comprised approximately 56% of the market capitalization of the German component; and the largest 20 holdings comprised approximately 77% of the market capitalization of the Germany component. The ten most highly represented industry sectors in the Germany component of the FT Index and the approximate percentages of the Germany component represented thereby as of December 29, 1995, were: 1) Insurance Multi/Property/Casualty 17.9% 2) Banks: Commercial & Other 15.1% 3) Chemicals 13.8% 4) Automobiles 11.6% 5) Electrical Equipment 8.1% 6) Utilities 6.5% 7) Machinery & Engineering Services 5.3% 8) Diversified Holding Companies 5.2% 9) Mining, Metals & Minerals 5.1% 10) Retail Trade 2.4% Appendix C hereto contains a complete list of the component securities of the Germany component as of December 29, 1995. The average annual total returns in US Dollars of the Germany component of the FT Index, and the corresponding pro forma average annual total returns of the Germany Index Series (with reinvestment of Series dividends, after estimated expenses applicable to the Germany Index Series), are set forth below for the indicated periods prior to December 29, 1995: FT Index-Germany Germany Index Series 1 Year 16.5% 3 Years 18.6 5 Years 10.2 10 Years 10.6 The Hong Kong Component On December 29, 1995, the Hong Kong component of the FT Index consisted of 55 stocks with an aggregate market capitalization of approximately HK $1,645.7 billion, or US $212.8 billion. In percentage terms, the Hong Kong component represented approximately 85.7% of the aggregate investible market capitalization of Hong Kong. The ten largest constituents of the Hong Kong component and the respective approximate percentages of the Hong Kong component represented by such constituents were, in order: Hutchison Whampoa (10.3%), Hong Kong Telecomm (9.4%), Sun Hung Kai Properties (8.9%), Hang Seng Bank (8.1%), Cheung Kong (6.3%), Henderson Land (4.5%), China Light & Power (4.3%), Swire Pacific (3.5%), Wharf Holdings (3.4%), and New World Dev. (3.4%) SAI-27 Over the six-year period ended December 29, 1995, the performance of the Hong Kong component of the FT Index had a correlation of 0.998 with the performance of the Hang Seng, a capitalization-weighted index of the 33 stocks traded on the HKX, and 0.845 with that of the S&P 500. As of December 29, 1995, the largest five holdings together comprised approximately 43% of the market capitalization of the Hong Kong component; the largest ten holdings comprised approximately 62% of the market capitalization of the Hong Kong component; and the largest 20 holdings comprised approximately 84% of the market capitalization of the Hong Kong component. The ten most highly represented industry sectors in the Hong Kong component of the FT Index, and the approximate percentages of the Hong Kong component represented thereby, as of December 29, 1995, were: 1) Real Estate 37.0% 2) Utilities 18.7% 3) Diversified Consumer Goods 12.7% 4) Diversified Holding Companies 10.3% 5) Banks: Commercial & Other 9.6% 6) Transportation and Storage 3.2% 7) Retail Trade 2.9% 8) Entertainment/Leisure/Toys 2.2% 9) Media 1.1% 10) Financial Institutions & Services 1.0% Appendix D hereto contains a complete list of the securities in the Hong Kong component as of December 29, 1995. The average annual total returns in US Dollars of the Hong Kong component of the FT Index, and the corresponding pro forma average annual total returns of the Hong Kong Index Series (with reinvestment of Series dividends, after estimated expenses applicable to the Hong Kong Index Series), are set forth below for the indicated periods prior to December 29, 1995: FT Index-Hong Kong Hong Kong Index Series 1 Year 23.6% 3 Years 24.7 5 Years 30.8 10 Years 23.6 The Italy Component On December 29, 1995, the Italy component of the FT Index consisted of 59 stocks with an aggregate market capitalization of approximately 221.7 trillion, or US $139.7 billion. In percentage terms, the Italy component represented approximately 89.7% of the aggregate investible market capitalization of Italy. The ten largest constituents of the Italy component and the respective approximate percentages of the Italy component represented by such constituents were, in order: Generali (13.9%), Telecom Italia Mobile (8.4%), Stet (7.8%), Fiat (7.6%), Telecom Italia (7.4%), INA (3.8%), Alleanza (3.8%), San Paolo (3.1%), ENI (3.0%) and IMI (2.7%). SAI-28 Over the five-year period ended December 29, 1995, the performance of the Italy component of the FT Index had a correlation of 0.990 with the performance of the MIB-30, a capitalization-weighted index of 30 Italian stocks traded on the Milan Stock Exchange, and -0.357 with that of the S&P 500. As of December 29, 1995, the largest five holdings together comprised approximately 45% of the market capitalization of the Italy component; the largest ten holdings comprised approximately 61% of the market capitalization of the Italy component; and the largest 20 holdings comprised approximately 81% of the market capitalization of the Italy component. The ten most highly represented industry sectors in the Italy component of the FT Index, and the approximate percentages of the Italy component represented thereby, as of December 29, 1995, were: 1) Utilities 29.6% 2) Insurance Multi/Property/Casualty 24.5% 3) Automobiles 9.7% 4) Banks: Commercial & Other 8.6% 5) Financial Institutions & Services 6.5% 6) Insurance: Life & Agents/Brokers 3.8% 7) Diversified Holding Companies 3.6% 8) Oil 3.0% 9) Computers/Office Equipment 2.9% 10) Food and Grocery Products 1.9% Appendix E hereto contains a complete list of the securities constituting the Italy component as of December 29, 1995. The average annual total returns in US Dollars of the Italy component of the FT Index, and the corresponding pro forma average annual total returns of the Italy Index Series (with reinvestment of Series dividends, after estimated expenses applicable to the Italy Index Series), are set forth below for the indicated periods prior to December 29, 1995: FT Index-Italy Italy Index Series 1 Year -0.4% 3 Years 12.5 5 Years 1.4 10 Years 7.3 The Japan Component On December 29, 1995, the Japan component of the FT Index consisted of 483 stocks with an aggregate market capitalization of approximately Y293.6 trillion, or US $2.8 trillion. In percentage terms, the Japan component represented approximately 83.1% of the aggregate investible Japanese market capitalization. The ten largest constituents of the Japan component and the respective approximate percentages of the Japan component represented by such constituents were, in order: Toyota Motor (2.8%), Ind Bank of Japan (2.5%), Mitsubishi Bank (2.4%), Sumitomo Bank (2.3%), SAI-29 Fuji Bank (2.3%), Dai-ichi Kangyo Bank (2.2%), Sanwa Bank (2.1%), Nomura Securities (1.5%), Sakura Bank (1.5%) and Tokyo Electric Power (1.3%). Over the five-year period ended December 29, 1995, the performance of the Japan component of the FT Index had a correlation of 0.979 with the performance of the Nikkei-225, a broad-based price-weighted index of 225 major equity securities traded on the first section of the Tokyo Stock Exchange, and 0.231 with that of the S&P 500. As of December 29, 1995, the largest five holdings together comprised approximately 12% of the market capitalization of the Japan component; the largest ten holdings comprised approximately 21% of the market capitalization of the Japan component; and the largest 20 holdings comprised approximately 31% of the market capitalization of the Japan component. The ten most highly represented industry sectors in the Japan component of the FT Index, and the approximate percentages of the Japan component represented thereby, as of December 29, 1995, were: 1) Banks: Commercial and Other 22.5% 2) Financial Institutions 6.2% 3) Utilities 6.1% 4) Electronics & Instrumentation 6.1% 5) Automobiles 5.2% 6) Transportation and Storage 4.9% 7) Construction and Building 4.3% Materials 8) Retail Trade 4.3% 9) Household Durables & Appliances 3.7% 10) Chemicals 3.6% Appendix F hereto contains a complete list of the securities constituting the Japan component as of December 29, 1995. The average annual total returns in US Dollars of the Japan component of the FT Index, and the corresponding pro forma average annual total returns of the Japan Index Series (with reinvestment of Series dividends, after estimated expenses applicable to the Japan Index Series), are set forth below for the indicated periods prior to December 29, 1995: FT Index-Japan Japan Index Series 1 Year -0.4% 3 Years 14.8 5 Years 5.3 10 Years 12.5 The South Africa Component On December 29, 1995, the South Africa component of the FT Index consisted of 45 stocks with an aggregate market capitalization of approximately CR510.8 billion, or US $140.1 billion. In percentage terms, the South Africa component represented approximately 82.2% of the aggregate SAI-30 investible South Africa market capitalization. The ten largest constituents of the South Africa component and the respective approximate percentages of the South Africa component represented by such constituents were, in order: Anglo American Corp. (10.1%), De Beers/Centenary (8.2%), South African Breweries (7.7%), Liberty Life Association (5.4%), Standard Bank Inv. (4.1%), Rembrandt Group (3.6%), Gencor (3.5%), SASOL (3.5%), First National Bank (2.9%) and Liberty Holdings (2.9%). Over the five-year period ended December 29, 1995, the performance of the South Africa component of the FT Index had a correlation of 0.998 with the performance of the All Share Index, a capitalization-weighted index of South African stocks, and 0.747 with that of the S&P 500. As of December 29, 1995, the largest five holdings together comprised approximately 35% of the market capitalization of the South Africa component; the largest ten holdings comprised approximately 52% of the market capitalization of the South Africa component; and the largest 20 holdings comprised approximately 72% of the market capitalization of the South Africa component. The ten most highly represented industry sectors in the South Africa component of the FT Index, and the approximate percentages of the South Africa component represented thereby, as of December 29, 1995, were: 1) Precious Metals & Minerals 34.9% 2) Diversified Holding Companies 11.6% 3) Beverages & Tobacco 11.3% 4) Insurance: Life and Agents/Brokers 9.8% 5) Banks: Commercial & Other 9.6% 6) Food & Grocery Products 4.0% 7) Forestry and Paper Products 3.7% 8) Mining, Metals & Minerals 3.7% 9) Oil 3.5% 10) Construction & Bldg. Materials 1.7% Appendix G hereto contains a complete list of the securities in the South Africa component as of December 29, 1995. The average annual total returns in US Dollars of the South Africa component of the FT Index, and the corresponding pro forma average annual total returns of the South Africa Index Series (with reinvestment of Series dividends, after estimated expenses applicable to the South Africa Index Series), are set forth below for the indicated periods prior to December 29, 1995: FT Index-South Africa South Africa Index Series 1 Year 18.2% 3 Years 41.3 5 Years 19.5 10 Years 16.9 SAI-31 The UK Component On December 29, 1995, the UK component of the FT Index consisted of 205 stocks with an aggregate market capitalization of approximately L702.9 billion, or US $1,091.3 billion. In percentage terms, the UK component represented approximately 82.6% of the aggregate investible market capitalization of the United Kingdom. The ten largest constituents of the UK component and the respective approximate percentages of the UK component represented by such constituents were, in order: Galxo Wellcome (4.6%), British Petroleum (4.3%), Shell Transport & Trading (4.0%), British Telecom (3.2%), HSBC Holdings (2.5%), BAT Industries (2.5%), Lloyds TSB Group (2.4%), BTR (1.8%), Marks & Spencer (1.8%) and Barclays (1.7%). Over the five-year period ended December 29, 1995, the performance of the UK component of the FT Index had a correlation of 0.998 with the performance of the FT-SE 100 Index, an index of 100 U.K. companies ranked by market capitalization, and 0.892 with that of the S&P 500. As of December 29, 1995, the largest five holdings together comprised approximately 19% of the market capitalization of the UK component; the largest ten holdings comprised approximately 29% of the market capitalization of the UK component; and the largest 20 holdings comprised approximately 44% of the market capitalization of the UK component. The ten most highly represented industry sectors in the UK component of the FT Index, and the approximate percentages of the UK component represented thereby, as of December 29, 1995, were: 1) Banks: Commercial & Other 12.5% 2) Utilities 11.8% 3) Health & Personal Care 9.7% 4) Oil 9.1% 5) Retail Trade 8.8% 6) Beverages & Tobacco 8.3% 7) Media 4.4% 8) Food & Grocery Products 3.9% 9) Construction and Building Materials 3.1% 10) Diversified Industrials 2.8% Appendix H hereto contains a complete list of the component securities of the UK component as of December 29, 1995. The average annual total returns in US Dollars of the UK component of the FT Index, and the corresponding pro forma average annual total returns of the UK Index Series (with reinvestment of Series dividends, after estimated expenses applicable to the UK Index Series), are set forth below for the indicated periods prior to December 29, 1995: FT Index-UK UK Index Series 1 Year 23.3% 3 Years 14.7 5 Years 11.6 10 Years 16.1 SAI-32 The US Component On December 29, 1995, the US component of the FT Index consisted of 639 stocks with an aggregate market capitalization of approximately US $4.9 trillion. In percentage terms, the US component represented approximately 73.8% of the aggregate investible market capitalization of the U.S. markets. The ten largest constituents of the US component and the respective approximate percentages of the US component represented by such constituents were, in order: General Electric (2.5%), AT&T (2.1%), Exxon Corp. (2.0%), Coca-Cola (1.9%), Merck & Co (1.6%), Philip Morris (1.5%), Procter & Gamble (1.2%), Johnson & Johnson (1.1%), IBM (1.1%) and Microsoft Corp. (1.1%). Over the five-year period ended December 29, 1995, the performance of the US component of the FT Index had a correlation of 1.000 with the performance of the S&P 500. As of December 29, 1995, the largest five holdings together comprised approximately 10% of the market capitalization of the US component; the largest ten holdings comprised approximately 16% of the market capitalization of the US component; and the largest 20 holdings comprised approximately 25% of the market capitalization of the US component. The ten most highly represented industry sectors in the US component of the FT Index, and the approximate percentages of the US component represented thereby, as of December 29, 1995, were: 1) Utilities 13.1% 2) Health & Personal Care 11.1% 3) Banks: Commercial & Other 7.8% 4) Oil 6.4% 5) Beverages & Tobacco 5.3% 6) Computer and Office Equipment 4.7% 7) Retail Trade 4.5% 8) Food and Grocery 4.1% 9) Electrical Equipment 3.5% 10) Business Services & Computer Software 3.5% Appendix I hereto contains a complete list of the securities in the US component as of December 29, 1995. The average annual total returns of the US component of the FT Index, and the corresponding pro forma average annual total returns of the US Index Series (with reinvestment of Series dividends, after estimated expenses applicable to the US Index Series), are set forth below for the indicated periods prior to December 29, 1995: FT Index-US US Index Series 1 Year 37.3% 3 Years 15.3 5 Years 16.8 10 Years 14.6 SAI-33 Other Components of the FT Index In addition to the country components of the FT Index represented by the initial nine Series offered hereby, the FT Index includes components representing fifteen other countries, twelve regions grouped by geographic areas, thirty-six groups classified by industry sectors and seven broad economic sectors. It is anticipated that Series of the Fund covering additional national markets will be organized in the future, although there can be no assurance that any such additional Series will be created. EXCHANGE LISTING AND TRADING Application is being made to list the CB Shares(SM) of each Series for trading on the NYSE. The NYSE has approved modifications to its Rules to permit the listing of CB Shares(SM). The non-redeemable CB Shares(SM) are expected to trade on the NYSE at prices that may differ to some degree from their net asset value. See "Investment Considerations and Risks" and "Determination of Net Asset Value". There can be no assurance that the requirements of the NYSE necessary to maintain the listing of CB Shares(SM) of any Series will continue to be met. The NYSE may remove the CB Shares(SM) of a Series from listing if (1) following the initial twelve-month period beginning upon the commencement of trading of a Series of CB Shares(SM), there are fewer than 50 record and/or beneficial holders of the CB Shares(SM) for 30 or more consecutive trading days, (2) the value of the underlying index or portfolio of securities on which such Series is based is no longer calculated or available or (3) such other event shall occur or condition exist that, in the opinion of the NYSE, makes further dealings on the NYSE inadvisable. In addition, the NYSE will remove the shares from listing and trading upon termination of the Fund. The size of each Series' Fund Basket and the related size of its Creation Unit was designed to provide an initial net asset value per CB(TM) Share, depending on the Series, of between approximately $19 and $50. Because of the range of initial net asset values, it is expected that initial trading of CB Shares(SM) of the various Series on the NYSE will commence at market prices also within this range. Price movements in CB Shares(SM) on the NYSE will be quoted in 1/8ths. The Adviser anticipates that the movements in the price of CB Shares(SM) will correlate closely with the value of the respective FT Index component. As in the case of other stocks traded on the NYSE, brokers' commissions on transactions will be based on negotiated commission rates at customary levels for retail customers and rates which are anticipated to range between $.015 to $.12 per share for institutions and high net worth individuals. Within the next year management of the Fund plans to apply for listing CB Shares(SM) on a number of foreign stock exchanges such as the Deutsche Borse and the Australian Stock Exchange with the eventual intention of creating a 24-hour global market for the CB Shares(SM). There can be no assurance that any such listings will be applied for or obtained. SAI-34 REASONS FOR INVESTORS TO PURCHASE CB SHARES(SM) User Rationale Investors with differing investment objectives and trading styles may consider using CB Shares(SM) as part of their investment program. For investments of less than US $25 million, the Adviser expects that each Series will have a cost structure roughly equivalent to comparable institutional index-based investments. Individual investors could use CountryBaskets(SM) to gain exposure to foreign markets represented by the various FT Index components, both for investment and trading. In addition, CB Shares(SM) may be used in combination with foreign securities for hedging or to pursue various trading strategies. Professional investors could use CB Shares(SM) for arbitrage, hedging and trading, including as an alternative to futures based on different foreign market indices, when the investor wants exposure to foreign markets. It is expected that arbitrage involving the purchase and redemption of multiple Creation Units would eventually enable dealers and other investors to benefit from certain economies of scale in transactional costs. Institutional investors could use CB Shares(SM) as a management tool for tactical asset allocation without the use of derivatives, to gain international exposure and, depending on future experiences with costs and liquidity, for long term holdings in core positions for their investment portfolio. In addition, CB Shares(SM) may be used by asset managers to gain market exposure in markets for their clients where they do not necessarily possess the analytic resources needed to select individual securities; to invest cash balances on a short- to medium-term basis; to reduce or neutralize portfolio exposure in a specific national market by short selling CB Shares(SM); in tandem with use of other securities and derivatives, to tailor portfolio exposure to foreign markets to meet specific investment objectives; to reallocate relative market exposures of a portfolio without disposing of existing portfolio components; and to take advantage of potential liquidity and pricing disparities and potential stock lending returns. Possible User Benefits CountryBaskets(SM) are designed to provide investors with a highly liquid mechanism, using securities rather than derivatives, for investing in the national markets represented by each series. The Adviser intends to make reasonable efforts to foster a liquid and transparent market, which is generally characteristic of securities trading on the NYSE. There can be no assurance, however, that active trading markets for the CB Shares(SM) will develop. In addition, since CB Shares(SM) will be quoted on the NYSE, CB Shares(SM) are expected to serve as a price discovery mechanism during U.S. trading hours for investment in the various foreign markets represented by the Series. Subject to any suspension of trading by the NYSE, CB Shares(SM) may be traded throughout the regular trading session of the NYSE, including at times when the relevant foreign markets are closed. Because the securities portfolio of each Series will substantially replicate the securities comprising the corresponding FT Index component, the Adviser expects that index tracking error relative to index-based products relying on optimization or similar management strategies should be substantially reduced. Moreover, CB Shares(SM) do not entail the counterparty risk present in over-the-counter derivatives contracts, like index swaps, to which CB Shares(SM) are an alternative. Individual, non-redeemable CB Shares(SM) are book-entry securities subject to normal U.S. settlement procedures, including a three-day settlement cycle. Unlike many direct investments in foreign equities, CB Shares(SM) traded in the secondary market will not entail complicated foreign custody and settlement arrangements, stamp taxes and other levies associated with trading in non-U.S. equities. In addition, CB Shares(SM) may be loaned on the same basis as other U.S. equity securities, creating potential for increasing the total return to an investor. SAI-35 Investment Rationale Since the basket of securities held by each Series is represented by an individual stock, the CB Shares(SM) of such Series, it is anticipated that investors will trade CB Shares(SM) based on their investment outlook for the particular national market represented by the Series. Accordingly, it is expected that much of the trading in CB Shares(SM) will be driven by macroeconomic fundamentals applied to an assessment of the prospects for the particular national market. Further, the CB Shares(SM) of each Series will have statistical characteristics normally associated with shares of stock of any company (price/earnings ratios, price/book value ratios, price/cash flow ratios, earnings per share, etc.). Because of these characteristics, CB Shares(SM) can be included in an investment portfolio in much the same way as other stocks and ADRs, such as those of General Electric, AT&T, Intel, Royal Dutch Shell or Norsk Hydro. Because no Series may borrow money for the purpose of leveraging its portfolio, an investment in CB Shares(SM) does not carry the risks associated with investment in a leveraged portfolio. MANAGEMENT OF THE FUND Directors and Officers of the Fund The Fund's Board consists of six Directors. The Board of Directors is divided into three classes. At each annual meeting of stockholders, the term of one class expires and the successor or successors elected to such class will serve until the third succeeding annual meeting of stockholders, provided that, in the event the Fund is not required to hold an annual meeting in one or more years, the term of any class will not exceed five years. These provisions could delay the replacement of a majority of the Board of Directors by the stockholders of the Fund for up to two years. The replacement of a majority of the Board could be delayed for substantially longer periods when the Fund is not required to hold annual stockholder meetings. See "Capital Stock and Stockholder Reports". The Board has the responsibility for the overall management of the Fund, including general supervision and review of its investment activities. The Board, in turn, elects the officers of the Fund. The addresses, principal occupations, and present positions, including any affiliations with the Adviser, State Street, the Fund's administrator (the "Administrator") or ALPS Mutual Funds Services, Inc., the principal underwriter of each Series ("ALPS" or the "Distributor"), of the Directors and the officers of the Fund and their principal occupations for the past five years are listed below. As of __________, 1996, the Directors and officers of the Fund owned of record as a group none of the outstanding shares of the Fund. Directors who are deemed to be interested persons of the Fund, as defined in the 1940 Act, are indicated by an asterisk (*). SAI-36
Position with the Principal Occupations During Name and Address Age Fund Past Five Years Warner Heineman 73 Director Senior Advisor (consultant), 1st Business Bank, Los Angeles 1800 Avenue of the Stars (since 1992); Senior Vice President, Bank of Los Angeles Los Angeles, California 90067 (1989 to 1992); Senior Vice-President, City National Bank, Beverly Hills (CA.) (1981 to 1988); Vice Chairman and Director, Union Bank, Los Angeles (1943 to 1981); Director, FHP International Corporation (a health maintenance organization) (since 1990); Director, FHP Life Insurance Company (1992 to 1994); Director, Great States Insurance Company (1993 to 1994); Director, FHP Financial Corporation (holding company for FHP Life Insurance Company and Great States Insurance Company) (since 1994); Director, Alexander Haagen Properties, Inc. (real estate investment trust) (since 1994); Director, Capital Market Fund, Inc. (mutual fund) (1990 to 1995); Trustee, Southwestern University School of Law (since 1983); Member of the Board of Advisors, UCLA Medical Center (since 1985); Member of Board of Visitors, UCLA School of Medicine (since 1988); Director, Los Angeles Music Center Opera (since 1967); Director, FHP Foundation (philanthropic organization) (since 1995); and Member of the Advisory Board, Recording for the Blind, Inc. Joseph A. La Corte* [ ] Director and Director (since 1994) and Vice President (1992 to 1994) of 31 West 52nd Street President Deutsche Morgan Grenfell/C.J. Lawrence Inc.; Vice President, New York, New York 10019 Nomura Securities International (1990 to 1992). Carter McClelland* [ ] Director and President and Chief Executive Officer, Deutsche Morgan 31 West 52nd Street Chairman Grenfell/C.J. Lawrence Inc. (since 1995); Division Director New York, New York 10019 and other positions, Morgan Stanley (1974 to 1995). SAI-37 Position with the Principal Occupations During Name and Address Age Fund Past Five Years Lawrence C. McQuade 68 Director Chairman, Qualitas International (international consulting) 125 East 72nd Street (since 1995); Director, Bunzl PLC (paper distributor) (since New York, New York 10021 1991); Director, Quixote Corporation (highway safety, manufacturer of CDs and CD ROMS) (since 1992); Director, Applied Bioscience Inc. (conducts clinical trials for pharmaceutical companies (since 1995); Chairman (since 1995) and Director (since 1994), Czech & Slovak American Enterprise Fund (investment fund); Director, Oxford Analytica Inc. (provides political, economic and business information) (since 1988); Vice-Chairman, Prudential Mutual Fund Management (1988 to 1995); served as President and Director (until 1995) of 39 investment companies advised by Prudential Mutual Fund Management. Karl M. von der Heyden 59 Director Senior Advisor, The Clipper Group (since 1994); Chairman, 12 East 49th Street Financial Accounting Standards Advisory Council (since New York, New York 10017 1995); President and Chief Executive Officer, Metallgesellschaft Corp. (1993 to 1994); Chief Financial Officer (1989 to 1993) and Co-Chairman and Chief Executive Officer (1993 to 1993), RJR Nabisco Holdings Corp.; Director, Federated Department Stores (retail department stores) (since 1992); Director, Trizec Corporation Ltd. (real estate developer) (since 1994); Member of the Board of Trustees, Duke University (since 1995); and Vice Chairman of the Board of Trustees, YMCA of Greater New York. SAI-38 Position with the Principal Occupations During Name and Address Age Fund Past Five Years Robert H. Wadsworth 55 Director President, Robert H. Wadsworth & Associates, Inc. (financial 4455 E. Camelback Road services consulting); President, Investment Company Suite 261 E Administration Corporation (since 1992); President, First Phoenix, Airzona 85018 Fund Distributors, Inc.; Vice President, Professionally Managed Portfolios (since 1991); Member of the Board of Supervisory Directors of ML High Yield-Treasury Securities Fund N.V. (since 1991); Member of the Boards of Directors of The Central European Equity Fund, Inc. (since 1990), The Germany Fund, Inc. (since 1986) and The New Germany Fund, Inc. (since 1990). Thomas A. Curtis [ ] Vice President Vice President and Senior Counsel, Deutsche Bank AG (New 31 West 52nd Street and Secretary York Branch) (since 1995); Associate, Cleary, Gottlieb, New York, New York 10019 Steen & Hamilton (law firm) (1986 to 1993 and 1994 to 1995); Executive Vice President and General Counsel, Del Monte Fresh Company (1993). Joseph Cheung [ ] Vice President Assistant Vice President (since 1994) and Associate (1991- 31 West 52nd Street and Treasurer 1994), Deutsche Morgan Grenfell/C.J. Lawrence Inc.; New York, New York 10019 Assistant Secretary and Assistant Treasurer (since 199_), The Germany Fund, Inc., The Central European Equity Fund, Inc. and The New Germany Fund, Inc.
SAI-39 The following table sets forth the remuneration of Directors and officers of the Fund:
Name of Person, Aggregate Compensation Total Compensation from the Fund and Position from the Fund Fund Complex Paid to Directors Warner Heineman Director * * Joseph A. La Corte Director and President NONE NONE Carter McClelland Director and Chairman NONE NONE Lawrence C. McQuade Director * * Karl M. von der Heyden Director * * Robert H. Wadsworth * Director * ** Thomas A. Curtis Vice President and Secretary NONE NONE Joseph Cheung Vice President and Treasurer NONE NONE _____________________ * The Fund will pay each Director $7,000 per annum; $2,000 per directors' meeting attended; and $500 per committee meeting attended. ** Mr. Wadsworth received $_______ in aggregate compensation in 1995 for his services as a director of The Germany Fund, Inc., The Central European Equity Fund, Inc. and The New Germany Fund, Inc., three closed-end funds for which DMG serves as manager and Deutsche Asset Management GmbH, an affiliate of DMG, serves as investment adviser.
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. SAI-40 INVESTMENT ADVISORY, MANAGEMENT AND OTHER SERVICES The following information supplements and should be read in conjunction with the sections in the Prospectus entitled "Investment Management" and "Administrator". The Investment Adviser DMG, a corporation organized under the laws of the State of Delaware, is a wholly owned direct subsidiary of DB U.S. Financial Markets Holding Corporation and a wholly owned indirect subsidiary of Deutsche Bank AG, a major German banking institution. DMG is engaged in the securities underwriting, investment advisory, and securities brokerage business. It is a member of the NYSE and other principal U.S. stock exchanges. DMG has significant global investment management experience. As of December 29, 1995, Deutsche Bank AG and its affiliates together managed over US $130 billion in institutional and mutual fund assets. DMG serves as investment adviser to each Series pursuant to an Investment Management Agreement (the "Management Agreement") between the Fund and DMG. Under the Management Agreement, the Adviser, subject to the supervision of the Fund's Board of Directors and in conformity with the stated investment policies of each Series, will manage the investment of each Series' assets. The Adviser has not previously acted as investment adviser to an investment company that seeks to track the performance of an index. The Adviser will be responsible for placing purchase and sale orders and providing continuous supervision of the investment portfolio of each Series. In addition, the Adviser will provide administrative services to the Fund that will include negotiating and overseeing the Fund's contractual arrangements with third-party service providers. Each Series will pay the Adviser an investment advisory and management fee, computed daily and paid monthly, equal to an annual rate of (i) .20% (in the case of the US Index Series), .30% (in the case of the Australia Index Series, the France Index Series, the Germany Index Series, the Italy Index Series, the Japan Index Series and the UK Index Series) or .45% (in the case of the Hong Kong Index Series and the South Africa Index Series) of the average daily net assets of such Series, plus (ii) in the case of each Series, as remuneration for the Adviser's services in connection with lending portfolio securities of the Series, 40% of the Series' gross investment income, excluding dividends on portfolio securities. In addition, DMG will be reimbursed by each Series for its out-of-pocket costs incurred in providing certain administrative services. See "Investment Policies and Restrictions--Lending Portfolio Securities". The Management Agreement will continue in effect until February 8, 1998, and thereafter will be subject to annual approval by (1) the Fund's Board of Directors or (2) vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund, provided that in either event the continuance also is approved by a majority of the Fund's Board who are not interested persons (as defined in the 1940 Act) of the Fund by vote cast in person at a meeting called for the purpose of voting on such approval. The Management Agreement is terminable without penalty, on 60 days' notice, by the Fund's Board or by vote of the holders of a majority (as defined in the 1940 Act) of the Fund's outstanding voting securities. The Management Agreement is also terminable upon 60 days' notice by DMG and will terminate auto- matically in the event of its assignment (as defined in the 1940 Act). The Management Agreement provides that the Adviser will not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which the Management Agreement relates, except for a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Adviser in the performance of its obligations and duties under the Management Agreement. The Adviser will reimburse, on a pro rata basis, each Series for annual expenses of such Series which exceed the most stringent limits prescribed by any state in which shares of the Series are offered for sale. Currently, the only limitation which the Fund believes would be applicable requires the Adviser to reimburse a Series to the extent SAI-41 that aggregate operating expenses of the Series (excluding interest, taxes, brokerage commissions, distribution expenses, if any, and extraordinary expenses) exceed in any year 2.5% of the first $30 million of average net assets of such Series, 2.0% of the next $70 million of average net assets of the Series and 1.5% of average net assets of the Series in excess of $100 million. The Administrator, Custodian and Transfer Agent State Street, a Massachusetts trust company, provides certain administrative services to the Fund, including clerical, bookkeeping and recordkeeping services not otherwise performed by the Adviser or the Custodian, pursuant to an Administration Agreement (the "Administration Agreement") between the Fund and State Street. Pursuant to the Administration Agreement, State Street will provide administrative services to the Fund which include, among other things, monitoring and administering payment of Fund expenses, preparing the Fund's financial statements and regulatory filings and preparing the Fund's tax returns. The Admin- istration Agreement is terminable with respect to the Fund without penalty, on 60 days' notice, by the Fund's Board. The Administration Agreement is also terminable upon 60 days' notice by State Street. The Administration Agreement provides that State Street will not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which the Administration Agreement relates, except for a loss resulting from willful misfeasance, bad faith or negligence on the part of State Street in the performance of its obligations and duties under the Administration Agreement. For its administrative services to the Fund, State Street is entitled to a fee, computed daily and paid monthly, equal to an annual rate of .08% of the average daily net assets of each Series up to $125 million, plus .06% of the average daily net assets of such Series in excess of $125 million up to $250 million and .04% of the average daily net assets of such Series in excess of $250 million, subject to a minimum annual fee of $95,000 for each Series. In addition, State Street will be reimbursed by the Fund for certain out-of-pocket costs incurred in providing administrative services. State Street will also act as Custodian and transfer agent (the "Transfer Agent") for the Fund. See "Custodian and Transfer Agent" in the Prospectus. State Street served as custodian for more than $2 trillion in assets worldwide as of September 30, 1995, and manages securities processing operations and treasury centers in the United States, Europe and the Pacific Basin. BROKERAGE TRANSACTIONS When selecting brokers and dealers to handle the purchase and sale of portfolio securities, the Adviser looks for prompt execution of the order at a favorable price. Generally, the Adviser works with recognized dealers in these securities, except when a better price and execution of the order can be obtained elsewhere. The Fund will not deal with affiliates in principal transactions unless permitted by exemptive order or applicable rule or regulation. Since the investment objective of each Series is investment performance that corresponds to that of an index, the Adviser does not intend to select brokers and dealers for the purpose of receiving research services in addition to a favorable price and prompt execution either from that broker or an unaffiliated third party. Orders for agency brokerage transactions may be placed with Deutsche Bank AG as well as DMG. The Fund's policy requires that commissions paid to Deutsche Bank AG and DMG comply with Section 17(e) of the 1940 Act and the rules thereunder. SAI-42 Subject to allocating brokerage to receive a favorable price and prompt execution, the Adviser may select brokers who are willing to provide payments to third party service suppliers to a Series, to reduce expenses of the Series. The Adviser will assume general supervision over placing orders on behalf of the Fund for the purchase or sale of portfolio securities. If purchases or sales of portfolio securities of the Fund and one or more other investment companies or clients supervised by the Adviser are considered at or about the same time, transactions in such securities will be allocated among the several investment companies and clients in a manner deemed equitable to all by the Adviser, taking into account the sizes of such other investment companies and clients and the amount of securities to be purchased or sold. In some cases this procedure could have a detrimental effect on the price or volume of the security so far as the Fund is concerned. However, in other cases it is possible that the ability to participate in volume transactions and to negotiate lower brokerage commissions will be beneficial to the Fund. The primary consideration is prompt execution of orders at the most favorable net price. Portfolio turnover may vary from year to year, as well as within a year. High turnover rates are likely to result in comparatively greater brokerage expenses. The portfolio turnover rate for each Series is expected to be under 50%. See "The Fund--Investment Policies--Portfolio Turnover" in the Prospectus. The overall reasonableness of brokerage commissions is evaluated by the Adviser based upon its knowledge of available information as to the general level of commissions paid by other institutional investors for comparable services. PURCHASE AND ISSUANCE OF FUND SHARES IN CREATION UNIT AGGREGATIONS The following information supplements and should be read in conjunction with the section in the Prospectus entitled "Purchase and Issuance of Fund Shares in Creation Unit Aggregations". Generally The Fund will offer and sell shares of each Series on a continuous basis only in aggregations of a specified number of shares for such Series as set forth below (each a "Creation Unit"), without an initial sales charge, at the net asset value of the shares next determined after receipt of an order in proper form (as described below under "Procedures for Purchasing Creation Units"). The consideration for a purchase of each Creation Unit aggregation of shares of a Series is an in-kind deposit of a designated portfolio of equity securities substantially corresponding in composition and weighting to the relevant component of the FT Index (a "Fund Basket"), plus a specified amount of cash (the "Cash Component"). Together, a single Fund Basket and related Cash Component (the "Fund Deposit") represent the minimum initial and subsequent investment amount required for the purchase of shares of a Series, which may only be made in Creation Unit size aggregations. The number of shares constituting a Creation Unit of each Series, subject to any stock splits or reclassifications by the Board of Directors, is 250,000 for the Japan Index Series and 100,000 for each other Series. The aggregate net asset value of a Creation Unit of shares is expected to be between US$1.9 million and US$10 million. Orders for Creation Units must be placed with ALPS, the Fund's Distributor. The address and telephone number of the Distributor are 370 Seventeenth Street, Suite 2700, Denver, Colorado, 1-800- - ; facsimiles should be sent to - - . See "Procedures for Purchasing Creation Units" below. The Fund will issue and sell shares of a Series only on a Business Day. A "Business Day" with respect to a Series other than the US Index Series is any day on which (i) the NYSE, (ii) the stock exchange(s) and Fund subcustodian(s) relevant to such Series and (iii) financial institutions in Massachusetts are open for business, and in the case of the US Index Series, any day on which the NYSE is open and financial institutions in Massachusetts are open for business. As of the date of this Statement of Additional Information, the NYSE observes the following holidays: New Year's Day, President's Day (Washington's Birthday), Good Friday, Memorial Day (observed), SAI-43 Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The stock exchange and/or subcustodian holidays relevant to each Series are set forth in Appendix A to the Prospectus. Massachusetts financial institutions are open on all days when the NYSE is open (see "Business Day" below) except Columbus Day, Veterans Day and Martin Luther King Day (observed). See also "Special Considerations and Risks--Continuous Offering". The Fund Basket Prior to the opening of business on the NYSE on each day that the NYSE is open (currently by 8:00 p.m., New York time, on the previous NYSE business day), the names and number of shares of each security constituting the Fund Basket for each Series, as determined by the Adviser at the close of business on the NYSE on such previous day, will be made available through the Distributor and the National Securities Clearing Corporation ("NSCC"), a clearing agency registered with the Securities and Exchange Commission (the "Commission"). Such Fund Basket will be in effect for redemptions of Creation Units of CB Shares(SM) of each Series and purchases of Creation Units of the US Index Series on such NYSE business day and for purchases of Creation Units of CB Shares(SM) of each other Series on a specified Business Day subsequent to such NYSE business day designated for each Series. The date of purchase and issuance of Creation Units of CB Shares(SM) of each Series is referred to as an "Issue Date". The Issue Date for a purchase of Creation Units of the US Index Series is the same day as the effective date for the applicable Fund Basket. The Issue Date for each non-US Index Series will be the indicated number of days after the effective date of the applicable Fund Basket: the Australia Index Series, the third Business Day; the France Index Series, the third Business Day; the Germany Index Series, the second Business Day; the Hong Kong Index Series, the second Business Day; the Italy Index Series, the third Business Day; the Japan Index Series, the third Business Day; the South Africa Index Series, the fourth Business Day; and the UK Index Series, the fifth Business Day. For example, the Fund Basket for the France Index Series to be in effect on Tuesday, April 16, 1996 for redemptions on such date will be made available presently by 8:00 p.m. New York time on Monday, April 15, 1996, the previous business day on which the NYSE is open. Such Fund Basket will be applicable to purchases of a Creation Unit of CB Shares(SM) of the France Index Series on Friday, April 19, 1996 (the subsequent third Business Day). On each day the NYSE is open, the Distributor and the NSCC will also make available on the morning of each day that the NYSE is open the amount of the Cash Component for the previous Business Day for each Series. The composition of the Fund Basket will change with changes in the relevant FT Index component. In addition, in the event that the Adviser determines, in its discretion, that a security is likely to be unavailable or available in insufficient quantities for delivery as part of a Fund Basket or that, for example, an investor is legally prohibited from acquiring a particular security, the cash equivalent value of such security may be required or permitted to be delivered in lieu of the security in the Fund Basket. Such amount will be added to the Cash Component (see "The Cash Component" below). The announcement of a Fund Basket for a Series will include the announcement of any adjustments to the Fund Basket that will be in effect for purchases of such Series' shares on the Issue Date in order to reflect stock splits, mergers, issuer replacements or other corporate events. If the securities tendered by an investor for a purchase of a Creation Unit aggregation of shares will not constitute the complete Fund Basket for the Issue Date, the Adviser in its discretion may waive any deficiency in the Fund Basket delivered and require the cash equivalent value of any undelivered securities to be included in the Cash Component of the Fund Deposit. No shares of any Series will be issued until the transfer of good title to the Fund of the Fund Basket and the payment of the Cash Component (together, in the case of each Series other than the US Index Series, with the applicable Cash Component transaction fee) have been completed, subject in the case of the US Index Series to the provisions for guarantee of completion of delivery of the CB Shares(SM) Clearing Process (as defined herein) described below under "Procedures for Purchasing Creation Units". All questions as to the number of shares of each security SAI-44 in the Fund Basket and the validity, form, eligibility and acceptance for deposit of any securities to be delivered shall be determined by the Adviser, whose determination shall be final and binding. Purchasers of Fund shares in Creation Unit size aggregations are responsible for the costs of transferring the Fund Basket securities to the account of the Fund. As of December 29, 1995, the estimated costs of transferring the securities in a Fund Basket to the Fund, which may include, among others, settlement and custody charges, securities registration costs, stock transfer taxes and similar costs, are as follows: the Australia Index Series, $2,176; the France Index Series, $3,774; the Germany Index Series, $1,856; the Hong Kong Index Series, $3,192; the Italy Index Series, $1,593; the Japan Index Series, $12,636; the South Africa Index Series, $1,888; the UK Index Series, $5,508; and the US Index Series, $9,747. See "Summary of Fund Expenses" in the Prospectus. The Cash Component The Cash Component will be equal to the difference between the value of the Fund Basket delivered for the purchase of a Creation Unit of CB Shares(SM) on the Issue Date and the net asset value of the Creation Unit aggregation of shares of the particular Series next computed on such Business Day and will be determined at the close of the NYSE (currently 4:00 p.m., New York time) on such Business Day when the net asset value of Fund shares is determined. If the value of the Fund Basket should exceed the net asset value of a Creation Unit size aggregation of shares on a Business Day, the Adviser may determine to accept fewer (or none) of each, or a designated portion, of the portfolio securities comprising the Fund Basket and may request some cash to be substituted for the omitted securities in order to limit the value of the Fund Basket as tendered to the net asset value of the Creation Unit aggregation of shares. In addition, the Adviser reserves the right to permit or require the substitution of an amount of cash to be added to the Cash Component to replace any security in the relevant FT Index component which may not be available in sufficient quantity for delivery or for other similar reasons. In no event will the Cash Component exceed 10% of the total purchase price of a Creation Unit aggregation of shares of any Series. Securities not accepted as part of the Fund Basket will be returned promptly. The tendered securities in the Fund Basket will be valued on an Issue Date in the same manner as the relevant Series values its portfolio securities for purposes of calculating the Series' net asset value. See "Determining Net Asset Value". The Distributor and NSCC will also make available on the morning of each Business Day information with respect to the Cash Component for purchases of shares of such Series at the end of the previous Business Day. In the case of each Series other than the US Index Series, a cash transaction fee will be imposed by the Fund on the Cash Component of the Fund Deposit to offset the Fund's brokerage and other transaction costs of investing such cash. The Cash Component transaction fee for the purchase of shares of the applicable Series, as a percentage of the Cash Component, is as follows: the Australia Index Series, 1.15%; the France Index Series, 1.0%; the Germany Index Series, 1.0%; the Hong Kong Index Series, 1.2%; the Italy Index Series, 1.0%; the Japan Index Series, 1.32%; the South Africa Index Series, 2.0%; and the UK Index Series, 1.5%. See "Summary of Fund Expenses" in the Prospectus. The US Index Series will bear brokerage and other transaction costs associated with investing the Cash Component received on purchases of Creation Unit aggregations of US CB Shares(SM). Arrangements satisfactory to the Fund for delivery of the Cash Component and the cash purchase transaction fee must be made on the date of purchase in order for shares to be issued. See "Procedures for Purchasing Creation Units" below. Procedures for Purchasing Creation Units Orders for Creation Unit size aggregations of shares of any Series may be placed with the Distributor only by an "Authorized Participant", i.e., a participant (a "DTC Participant") in The Depository Trust Company ("DTC") who has entered into an Authorized Participant Agreement (the "Authorized Participant Agreement") with the Fund, SAI-45 the Distributor and State Street, as Custodian and Transfer Agent. The Authorized Participant Agreement provides for procedures with respect to the purchase and redemption of Creation Unit aggregations of shares that supplement the procedures set forth herein. Investors who are not Authorized Participants must make appropriate arrangements with an Authorized Participant to purchase Creation Unit aggregations of shares. Investors should be aware that their particular broker may not be a DTC Participant or may not have executed an Authorized Participant Agreement, and that therefore orders to purchase Creation Unit aggregations of Fund shares may have to be placed by the investor's broker through an Authorized Participant. As a result, purchase orders placed through an Authorized Participant may result in additional charges to such investor. The Fund anticipates that it will enter into Authorized Participant Agreements with only a few DTC Participants. Investors seeking to purchase Creation Unit size aggregations of Fund shares are directed to contact the Distributor for a current list of Authorized Participants. Purchase orders for Creation Unit aggregations of shares may be directed to the Distributor through an Authorized Participant by a dealer which has entered into an agreement with the Distributor for solicitation of purchases of Creation Unit aggregations of shares. All shares of the Fund will be entered on the records of DTC in the name of Cede & Co. for the account of the Authorized Participant. For additional information, see "The Fund--Book-Entry Only System" in the Prospectus. In placing an order, an Authorized Participant agrees that it will provide for payment of the Cash Component and related Cash Component transaction fee on its own behalf or on behalf of the investor for which it acts. Investors are responsible for making their own arrangements with an Authorized Participant for payment to it of the Cash Component amount and related cash purchase transaction fee. In addition, in the case of the US Index Series, an Authorized Participant that is a participant in the Continuous Net Settlement ("CNS") System of the NSCC may alternatively deliver the Fund Basket and the Cash Component through the CNS clearing processes of the NSCC, as such processes have been enhanced to effect purchases and redemptions of Creation Unit size aggregations of CB Shares(SM) of the US Index Series (referred to herein as the "CB Shares(SM) Clearing Process"). The Distributor will upon request provide a list of Authorized Participants that are participants in the CNS System of the NSCC. The Authorized Participant authorizes State Street, as Index Receipt Agent (as such term is defined in the rules of the NSCC, the "Agent") to transmit to NSCC on behalf of the Authorized Participant such trade instructions as are necessary to effect the purchase order. Pursuant to such trade instructions from the Agent to NSCC, the Authorized Participant agrees to transfer the requisite Fund Basket securities and the Cash Component to the Agent, together with such additional information as may be required by the Agent. See "Placement of Purchase Orders for US Index Series Shares Using the CB Shares(SM) Clearing Process" below. In accordance with its procedures in effect from time to time, NSCC will guarantee delivery of the Fund Basket and the related Cash Component to the Fund for each purchase effected through the CNS System. To place an order for shares of any Series other than the US Index Series to be issued on an Issue Date, the Authorized Participant must first give notice to the Distributor on the day a Fund Basket becomes effective for purchases on a subsequent Business Day (see "The Fund Basket") by delivering a notice of intention to purchase one or more Creation Unit aggregations of shares on the applicable Issue Date. No notice of intention is required for a purchase of shares of the US Index Series. The Authorized Participant must cause to be delivered or arrange for the investor to deliver the securities constituting the Fund Basket to the account maintained by the Custodian, in the case of the US Index Series, or with the appropriate subcustodian in the jurisdiction where the portfolio securities of the Series are traded, in the case of each other Series, by the intended Issue Date, provided that for the France Index Series and the South Africa Index Series delivery of the Fund Basket must be made to the appropriate subcustodian on the day prior to the Issue Date. Following the notice of intention, an order to purchase Creation Units on an Issue Date, in the form required by the Fund, must be received on the designated Business Day, i.e., the Issue Date, by the Distributor from an Authorized Participant on its own or another investor's behalf by the closing time of the regular trading session on the NYSE (currently 4:00 p.m., New York time) in order for the issuance of Creation Unit aggregations of shares to SAI-46 be effected at the net asset value next determined at the close of trading on the NYSE on such date. Those placing orders to purchase Creation Units through an Authorized Participant should afford sufficient time to permit proper submission of the purchase order to the Distributor in time for issuance on the desired Issue Date. Orders must be transmitted by the Authorized Participant to the Distributor by facsimile or electronic transmission as provided in the Authorized Participant Agreement. The Authorized Participant shall have also made arrangements satisfactory to the Fund for the payment, in immediately available or same day funds, of the Cash Component determined on the Issue Date (together with the Cash Component transaction fee applicable to each Series other than the US Index Series) on such date, subject in the case of the US Index Series to payment of the Cash Component through the CB Shares(SM) Clearing Process. Any excess funds will be returned. Those placing orders should ascertain the applicable deadline for cash transfers by contacting the operations department of the broker or depositary institution effectuating the transfer of the Cash Component. This deadline is likely to be significantly earlier than the closing time of the regular trading session on the NYSE. A purchase order for shares of any Series will be considered in "proper form" if (i) a properly completed purchase order, in the form required by the Fund (available through the Distributor), has been submitted on the intended date of purchase, whether on its own or another customer's behalf, by the Authorized Participant by the 4:00 p.m. close of trading on the NYSE, (ii) delivery of the Fund Basket is confirmed on such date by the Custodian, subject in the case of the US Index Series to the provisions for guarantee of completion of delivery of the CB Shares(SM) Clearing Process, and (iii) arrangements satisfactory to the Fund have been made for the payment to the Custodian on such date of any Cash Component (together with the Cash Component transaction fee, if any) which may be due based on the determination of the net asset value of the shares at the close of trading on the NYSE (4:00 p.m.) on such Issue Date. Currently, information as to the delivery of the Fund Basket will be available to the Custodian by 1:00 p.m., New York time, in the case of each Series except the US Index Series, for which confirmation of delivery of the Fund Basket will be available by 3:00 p.m., New York time, on the Issue Date, subject in the case of the US Index Series to the provisions for guarantee of completion of delivery of the CB Shares(SM) Clearing Process. If the Authorized Participant's purchase order is received in proper form, the Distributor, on behalf of the Fund, will accept the order and upon determination of the net asset value of the shares of such Series at the close of business on the NYSE, the Fund will issue the appropriate number of Creation Unit aggregations of shares. Either the Fund or the Distributor may at its sole discretion reject any purchase order. Upon payment in full, the Transfer Agent will issue the shares to DTC on the same Business Day for credit to the account of the Authorized Participant on the following Business Day. Once an order is accepted, the Distributor will transmit a confirmation of acceptance to the Authorized Participant that placed the order. Investors should be aware that an Authorized Participant may require orders for purchases of CB Shares(SM) placed with an Authorized Participant to be in the form required by the individual Authorized Participant, which form will not be the same as the form of purchase order specified by the Fund, which the Authorized Participant must deliver to the Distributor. As indicated above, Fund Deposits for the US Index Series submitted through the CB Shares(SM) Clearing Process must be delivered through an Authorized Participant that is a participant in the CNS System of the NSCC. Pursuant to trade instructions from the Agent to NSCC, the Authorized Participant agrees to transfer the requisite Fund Basket securities and the Cash Component to the Agent. An order to purchase a Creation Unit of CB Shares(SM) of the US Index Series through the CB Shares(SM) Clearing Process is deemed received by the Distributor on the Issue Date if (i) such order is received by the Distributor not later than the close of the regular trading session on the NYSE (currently 4:00 p.m., New York time), on such date and (ii) all other procedures set forth in the Authorized Participant Agreement are properly followed. SAI-47 The Fund reserves the absolute right to reject a purchase order transmitted to the Distributor in respect of any Fund Basket or any component thereof if (a) the purchaser or group of purchasers, upon obtaining the shares ordered, would own 80% or more of the current outstanding shares of any Series; (b) the Fund Basket delivered is not as specified by the Adviser, as described above; (c) acceptance of the Fund Basket would have certain adverse tax consequences to the Fund; (d) the acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful; (e) the acceptance of the Fund Deposit would otherwise, in the discretion of the Fund or the Adviser, have an adverse effect on the Fund or the rights of beneficial owners; or (f) in the event that circumstances outside the control of the Fund, the Distributor and the Adviser make it for all practical purposes impossible to process purchase orders. The Fund and the Distributor are under no duty to give notification of any defects or irregularities in the delivery of Fund Deposits or any component thereof nor shall either of them incur any liability for the failure to give any such notification. The Distributor Creation Unit size aggregations of shares for each Series will be continuously offered for sale through the Fund's principal underwriter and Distributor, ALPS. The Distributor will serve as the principal underwriter for each Series pursuant to an agreement which by its terms will continue, unless earlier terminated as described below, until February 8, 1998 (the "Distribution Agreement"). The Distribution Agreement is subject to renewal in 1997 with respect to each Series and will remain in effect only if its continuance is specifically approved annually thereafter as to such Series by the affirmative vote of both the Fund's Board of Directors or a majority of the outstanding voting securities (as defined under the 1940 Act) of such Series and a majority of the Directors who are not "interested persons" (as defined in the 1940 Act) of the Fund and have no direct or indirect financial interest in the operation of the 12b-1 Plan (as defined below) of such Series or in the Distribution Agreement, cast in person at a meeting called for the purpose of voting on such Plan or the Distribution Agreement. The Distributor will act as agent for the Fund. Pursuant to the Distribution Agreement, the Fund has agreed to indemnify the Distributor against certain liabilities under the Securities Act. Pursuant to plans adopted by the Board of Directors of the Fund for each Series under Rule 12b-1 under the 1940 Act (each, a "12b-1 Plan"), each Series will pay the Distributor distribution services fees, calculated daily and payable monthly, equal to such Series' allocable portion of the aggregate distribution services fees payable by the Fund as follows: .02% per annum of the average aggregate daily net assets ("Aggregate Net Assets") of all Series subject to the Distribution Agreement with the Distributor (the "Distribution Agreement") up to Aggregate Net Assets of $2.5 billion, plus .01% per annum of Aggregate Net Assets of all such Series in excess of $2.5 billion up to $5 billion, plus .005% per annum of Aggregate Net Assets of all such Series in excess of $5 billion. In addition, pursuant to a Marketing Agreement with the Distributor (the "Marketing Agreement"), each Series will pay the Distributor for marketing and promotional services its allocable portion of the aggregate marketing fees payable by the Fund, equal to .23% per annum of the Aggregate Net Assets of all Series subject to the Marketing Agreement up to Aggregate Net Assets of $200 million, plus .03% per annum of Aggregate Net Assets of such Series in excess of $1.5 billion up to $5 billion, plus .015% per annum of Aggregate Net Assets of such Series in excess of $5 billion. The allocation among the Series of fees and expenses payable under the Distribution Agreement and Marketing Agreement will be made pro rata in accordance with the daily net assets of the respective Series. Pursuant to agreements entered into with such persons ("Fund Payment Agreements"), each Series will make payments under its 12b-1 Plan to certain broker-dealers or other persons ("Investor Services Organizations") that enter into investor services agreements with the Distributor to provide marketing and/or stockholder services to such Series ("Investor Services Agreements"). Each of the Fund Payment Agreements and Investor Services Agreements will be a "related agreement" under the 12b-1 Plan of each Series. In particular, the Distributor will enter into such an Investor Services Agreement with Smith Barney Inc. ("Smith Barney") to provide certain marketing, education, SAI-48 research and promotional services relating to the secondary market trading of CB Shares(SM), for which the applicable Fund Payment Agreement will provide annual fees of 0.05% of the average daily net assets in excess of $200 million of all Series subject to such Investor Services Agreement. Pursuant to the Fund Payment Agreement with Smith Barney, the Fund will indemnify Smith Barney against certain liabilities under the Securities Act. The fees paid by a Series under its 12b-1 Plan will be compensation for distribution or marketing services for that Series. To the extent the foregoing 12b-1 Plan fees aggregate less than 0.25% per annum of the average daily net assets of a Series, each Series will also reimburse the Distributor and the Adviser for their respective costs incurred in producing advertising or marketing material prepared at the request of the Series. The aggregate payments under each 12b-1 Plan will not exceed, on an annualized basis, .25% of average daily net assets of the applicable Series. The continuation of the 12b-1 Plan of each Series, the Distribution Agreement, the Marketing Agreement and each of the other related agreements referred to above is subject to the annual approval of the Fund's Board, including by a majority of the Directors who are not "interested persons" of the Fund and have no direct or indirect financial interest in the operation of such 12b-1 Plan or any related agreements. Each of the Distribution Agreement and the Marketing Agreement, and each Investor Services Agreement and Fund Payment Agreement referred to above, will provide that it may be terminated at any time, without the payment of any penalty, (i) by vote of a majority of the Directors who are not interested persons of the Fund (as defined under the 1940 Act) or (ii) by vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the relevant Series, on at least 60 days' written notice to the other party. Each of the Distribution Agreement and the Marketing Agreement is also terminable upon 60 days' notice by the Distributor and will terminate automatically in the event of its assignment (as defined in the 1940 Act). Each Investor Services Agreement and Fund Payment Agreement is also terminable by the Investor Services Organization, upon 60 days' notice to the other party thereto and will terminate automatically upon the termination of the Distribution Agreement. The Distributor expects to enter into stockholder services agreements with certain participating financial institutions ("PFIs"). Such agreements will not provide for any payments from the Fund or the Distributor. Pursuant to the agreements, PFIs will, among other things, agree to provide stockholder support services and research and promotional services related to the secondary market trading of CB Shares(SM) and make a market in CB Shares(SM) and/or Fund Basket securities. The Distributor will provide or arrange with third parties to provide PFIs with, among other things, sales and advertising material relating to CB Shares(SM), education and data support for PFIs' research and sales promotion activities and a limited pool of CB Shares(SM) available for lending to PFIs at preferential rates to settle secondary market transactions in CB Shares(SM). The Distributor will provide or will arrange for third parties to provide similar services to NYSE specialist firms ("Specialist Institutions") registered in CB Shares(SM) of one or more designated Series, in each case pursuant to an agreement under which the Specialist Institution agreed to enter into a purchase agreement with the Fund to purchase a certain number of Creation Units of CB Shares(SM) of such designated Series prior to the commencement of trading of such CB Shares(SM) on the NYSE. The Distributor may enter into agreements with securities dealers ("Soliciting Dealers") who will solicit purchases of Creation Unit aggregations of Fund shares. Such Soliciting Dealers may also be Authorized Participants and/or PFIs. The Distributor is a broker-dealer registered under the Securities Exchange Act of 1934, as amended, and a member of the National Association of Securities Dealers, Inc. SAI-49 REDEMPTION OF FUND SHARES IN CREATION UNIT AGGREGATIONS See "Redemption of Fund Shares in Creation Unit Aggregations" in the Prospectus for information concerning redemptions of Fund shares. The following information supplements and should be read in conjunction with such section. Generally The Fund will redeem shares of a Series only in Creation Unit size aggregations and only on a day on which the NYSE is open for trading. The Fund will not redeem Fund shares in less than Creation Unit size aggregations of Fund shares. Generally, redemption proceeds for a Creation Unit aggregation of shares will consist of a Fund Basket and a minimal amount of cash. See "Redemption Procedures". All redemptions will be effected at the net asset value next determined after receipt of a redemption request in proper form. Investors may purchase CB Shares(SM) in the secondary market and aggregate such purchases into Creation Units for redemption. There can be no assurance, however, that there will be sufficient liquidity in the public trading market at any time to permit assembly of a Creation Unit size aggregation of CB Shares(SM). See "Investment Considerations and Risks" in the Prospectus. Investors will incur brokerage and other costs in connection with such purchase in the secondary market. See "Summary of Fund Expenses" in the Prospectus for information about the dollar value of Creation Unit aggregations of shares. Redemption Proceeds Prior to the opening of business on the NYSE on each day that the NYSE is open (currently by 8:00 p.m., New York time, on the previous NYSE business day), the names and number of shares of each security constituting the Fund Basket, as determined by the Adviser at the close of business on the NYSE on such previous day, will be made available through the Distributor and the NSCC for each Series and will be in effect for redemptions on such NYSE business day. For example, the Fund Basket for the France Index Series to be in effect on Tuesday, April 16, 1996 for redemptions on such date will be made available presently by 8:00 p.m. New York time on Monday, April 15, 1996. The redemption proceeds for a Creation Unit aggregation of shares generally will consist of a Fund Basket together with a cash redemption payment equal to the difference, if any, between the net asset value of the Creation Unit aggregation of shares being redeemed next determined following receipt of a redemption request in proper form, and the value of the Fund Basket. The cash redemption transaction fee described below will be deducted from such proceeds. Net asset value is determined at the close of the regular trading session on the NYSE (currently 4:00 p.m., New York time). For this purpose the securities in the Fund Basket will be valued in the same manner as the relevant Series values its portfolio securities. See "Determination of Net Asset Value" in the Prospectus and "Determining Net Asset Value" in this Statement of Additional Information. If the value of the Fund Basket should exceed the net asset value of a Creation Unit size aggregation of shares, the Adviser may determine that fewer (or none) of each, or a designated portion, of the portfolio securities comprising the Fund Basket will be required to be delivered and an amount of cash may be substituted for the omitted securities in order to limit the value of the redemption proceeds to the net asset value of the Creation Unit aggregation of shares being redeemed. At its sole option, the Fund may pay redemption proceeds entirely in cash or include additional amounts of cash as redemption proceeds in order to provide for timely delivery of such proceeds in accordance with applicable regulations as described under "Redemption Procedures" below. A cash redemption transaction fee payable to the Fund will be imposed on the cash portion of the redemption proceeds of shares of each Series, other than the US Index Series, in Creation Unit size aggregations to offset brokerage and other transaction costs of the portfolio transactions that may be required. The fee that will be imposed ranges from 1% to 1.32%, depending on the Series. See "Summary of Fund Expenses" in the Prospectus. Investors redeeming shares of the Fund will also bear the costs of transferring the Fund Basket, which may include, without SAI-50 limitation, settlement and custody charges, registration fees, stock transfer taxes and similar fees, from the Fund to their account or on their order. Currently, the estimated redemption transfer costs for each Series are as follows: the Australia Index Series, $_____; the France Index Series, $_____; the Germany Index Series, $_____; the Hong Kong Index Series, $_____; the Italy Index Series, $_____; the Japan Index Series, $_____; the South Africa Index Series, $_____; the UK Index Series, $_____; and the US Index Series, $_____. Investors who use the services of a broker or other such intermediary may be charged a fee for their services. A stockholder redeeming CB Shares(SM) in Creation Unit aggregations will generally receive redemption proceeds in the form of the applicable Fund Basket and will be required to sell such securities for its own account if the stockholder desires to obtain cash. Because such securities proceeds generally will be delivered, in each case other than the US Index Series, several days after the date of redemption, the stockholder may receive significantly less cash proceeds than the redemption value of the CB Shares(SM) redeemed due to intervening fluctuations in the market value of such securities and (in the case of each Series other than the US Index Series) exchange rate fluctuations between the applicable Series Currency and the US dollar. In addition, such stockholder may incur certain transaction costs and significant commission expenses with respect to the sale of such securities proceeds. Redemption Procedures Redemption requests in respect of shares of any Series must be submitted to State Street, as the Fund's Transfer Agent, by or through an Authorized Participant on a day that the NYSE is open for business. Investors other than Authorized Participants are responsible for making arrangements for a redemption request to be made through an Authorized Participant. Upon request, an investor may obtain a list of current Authorized Participants by calling [1-800-___-____.] A Creation Unit aggregation of shares will be redeemed at the net asset value determined at the close of the NYSE on the day that the redemption request is received in proper form, provided that such request is received by the Transfer Agent from an Authorized Participant by 4:00 p.m., New York time, and the CB Shares(SM) to be redeemed are delivered through the facilities of DTC by 4:00 p.m., New York time, on such day (except as provided below), provided that redemption requests for Creation Units of the US Index Series may also be placed through the CB Shares(SM) Clearing Process as described below. Redemption requests received after such time will be rejected and may be resubmitted on the next day that the NYSE is open for business. The Authorized Participant must transmit the request for redemption, in the form required by the Fund, to the North Quincy, Massachusetts office of the Transfer Agent in accordance with procedures set forth in the Authorized Participant Agreement. Redemption requests may not be transmitted to the Distributor. Investors should be aware that their particular broker may not have executed an Authorized Participant Agreement, and that, therefore, requests to redeem Creation Unit size aggregations of shares may have to be placed by the investor's broker through an Authorized Participant who has executed an Authorized Participant Agreement. At any given time there may be only a limited number of persons that have executed an Authorized Participant Agreement. Investors making redemption requests should be aware that an Authorized Participant acting on its behalf may require that such request be in the irrevocable form specified by such Authorized Participant. Investors making requests to redeem shares should afford sufficient time to permit proper submission of the request by an Authorized Participant and transfer of the CB Shares(SM) to the Fund's Transfer Agent. A redemption request will be considered to be in proper form if (i) a duly completed request form is received by the Transfer Agent by 4:00 p.m., New York time, and (ii) the Authorized Participant has transferred or caused to be transferred to the Transfer Agent the Creation Unit aggregation of shares being redeemed through the DTC book-entry system by 4:00 p.m., New York time, on the same day that the redemption request is received (except in the case of the US Index Series, if the CB Shares(SM) Clearing Process is used). On Columbus Day, Veterans Day and Martin Luther King Day, when the NYSE is open but DTC facilities for transfer of securities are closed, CB Shares(SM) must be delivered to the Transfer Agent at the opening of business on the business day following the day the redemption request is received. Except in the case of redemption through the SAI-51 CB Shares(SM) Clearing Process, if the Transfer Agent does not receive the investor's Fund shares through DTC facilities by 4:00 p.m. on the same day that the redemption request is received or, in the case of the aforementioned DTC holidays, at the opening of business on the following day, the redemption request shall be rejected and may be resubmitted the next day that the NYSE is open for business. Those making redemption requests should ascertain the deadline applicable to transfers of shares through the DTC system by contacting the operations department of the broker or depositary institution effecting the transfer of the CB Shares(SM). Except with respect to a redemption of Creation Units of the US Index Series using the CB Shares(SM) Clearing Process (discussed below), the tender of an investor's Fund shares for redemption will be effected through the relevant Authorized Participant and DTC. The distribution of the cash redemption payment in respect of Creation Units redeemed, will be effected through DTC and the relevant Authorized Participant to the beneficial owner thereof as recorded on the book-entry system of DTC or the DTC Participant through which such investor holds shares, as the case may be, or by such other means specified by the Authorized Participant submitting the redemption request. See "The Fund--Book-Entry Only System" in the Prospectus. In the case of the US Index Series, the Fund will transfer the Fund Basket to or on the order of the relevant Authorized Participant through the DTC system or, if the CB Shares(SM) Clearing Process is used, through the CNS System, and, in the case of each other Series, to the account of the Authorized Participant or beneficial owner in the foreign jurisdiction where such securities are traded. Normally, cash redemption proceeds will be paid as soon as practicable after the date the redemption request is received in proper form (usually one business day), but in any event not later than seven calendar days after the date of redemption. In- kind redemption proceeds will be delivered within the time permitted by applicable law and regulations. Subject to applicable law or Commission rule, enforcement position or order, the time for such delivery in some cases could be extended, but not later than seven calendar days from the date of redemption, except in certain instances, in the case of the Japan Index Series and the UK Index Series, where holiday schedules in the respective national markets will require a longer delivery process for the in-kind redemption proceeds. In such instances, pursuant to an order of the Commission, the Fund will make delivery of in-kind redemption proceeds within a number of days not to exceed 10 calendar days in the case of the Japan Index Series and 12 calendar days in the case of the UK Index Series. The dates of redemption in 1996 when such delays in the delivery process would occur are set forth in Appendix A to the Prospectus. In the event that local holiday schedules or other unforeseen circumstances in the relevant local markets would not permit delivery of in-kind redemption proceeds within the time permitted by Commission order or applicable regulations, the Fund may redeem Creation Unit aggregations of CB Shares(SM) entirely for cash. Cash redemptions are subject to the cash redemption transaction fee applicable to each Series. In order to accept delivery of the portfolio securities in the Fund Basket, a redeeming investor or the Authorized Participant on its behalf must maintain appropriate securities broker-dealer, bank or other custody arrangements in the jurisdiction in which the portfolio securities of the Series are customarily traded, to which account such portfolio securities will be delivered. In the event that neither the redeeming investor nor the Authorized Participant acting on its behalf has appropriate arrangements in place to take delivery of the portfolio securities in the applicable jurisdiction, and it is not possible to make other comparable arrangements satisfactory to the Fund, or if it is not possible to effect deliveries of the portfolio securities in such jurisdiction, the Fund will exercise its option to redeem such shares in cash and the redeeming beneficial owner will be required to receive the redemption proceeds entirely in cash. In such a case the cash redemption transaction fee will be charged by the Fund upon and be subtracted from the entire redemption proceeds. Orders to redeem CB Shares(SM) of the US Index Series in Creation Unit size aggregations through the CB Shares(SM) Clearing Process must be delivered through an Authorized Participant that is a participant in the CNS System of the NSCC. Investors may obtain a list of such Authorized Participants upon request by calling 1-800-___-____. An order to redeem CB Shares(SM) of the US Index Series using the CB Shares(SM) Clearing Process is deemed received in proper form if (i) such request is received by State Street, as Transfer Agent, not later than the close of the regular SAI-52 trading session on the NYSE (currently 4:00 p.m., New York time) on a day the NYSE is open and (ii) all other procedures applicable to the CB Shares(SM) Clearing Process have been properly followed. Redemption requests made in proper form but received by the Transfer Agent after the 4:00 p.m. NYSE closing time will be deemed received on the next succeeding business day. The Authorized Participant Agreement authorizes State Street as Agent to transmit to NSCC on behalf of the beneficial owner of the Creation Unit of CB Shares(SM) tendered for redemption such trade instructions as are necessary to effect the redemption order. Pursuant to such trade instructions from the Agent to NSCC, the Agent will transfer to the relevant Authorized Participant the requisite securities by the third NSCC Business Day following the date on which such request for redemption is deemed received. The Agent will also effect a transfer of the cash redemption payment to the relevant Authorized Participant via DTC cash transfer facilities or by federal funds wire by the same date. An "NSCC Business Day" for purposes hereof is a day when the NSCC is open for business, currently each day on which the NYSE is open for business except for Columbus Day, Veterans Day and Martin Luther King Day. The Fund Basket securities are covered by NSCC's guarantee of completion of such delivery. Suspension of Redemption The right of redemption may be suspended or the date of payment postponed with respect to any Series (1) during any period when the NYSE is closed (other than customary weekend and holiday closings); (2) when trading on the NYSE is suspended or restricted; or (3) when an emergency exists as a result of which disposal of the Series' portfolio securities or determination of its net asset value is not reasonably practicable. DETERMINING NET ASSET VALUE The following information supplements and should be read in conjunction with the section in the Prospectus entitled "Determination of Net Asset Value". Each Series calculates its net asset value per share at the close of the regular trading session on the NYSE (currently 4:00 p.m., New York time) on each day when the NYSE is open for business. See "Purchase and Issuance of Creation Unit Aggregations of Fund Shares -- Business Day". Valuation of Portfolio Securities by the Fund Portfolio securities held by a Series are valued, for purposes of determining the net asset value per share of the Series, at the last quoted sales price on the securities exchange or national securities market on which such securities are primarily traded. The value of portfolio securities delivered to the Fund as part of the in-kind deposit of portfolio securities (i.e., the Fund Basket) required for a purchase of Creation Units on any Business Day will be determined on the same basis. Securities not listed on an exchange or national securities market, or securities in which there were no transactions, are valued at the arithmetic mean of the most recent bid and asked prices, or if no asked price is available, at the bid price. However, when market quotations are not readily available, portfolio securities and other assets are valued based on fair value as determined in good faith by the Adviser in accordance with procedures adopted by the Board of Directors of the Fund. Events affecting the values of portfolio securities that occur between the time their prices are determined on the primary exchange or market in which they are traded and the close of regular trading on the NYSE will not be reflected in the calculation of a Series' net asset value unless the Adviser determines that the particular event would materially affect net asset value, in which case an adjustment will be made. The values of portfolio securities denominated in currencies other than the US dollar are converted into US dollars at the WM Reuters spot rate for the relevant Series Currency at 4:00 p.m., London time, on the day that the foreign- currency values of the securities are determined, or at such other quoted exchange rate as may be SAI-53 determined by the Adviser to be appropriate. Expenses and fees, including the investment advisory, administration and distribution fees of each Series, are accrued daily and taken into account for the purpose of determining the net asset value of shares of that Series. DIVIDENDS AND DISTRIBUTIONS See "Dividends and Capital Gains Distributions" in the Prospectus for information concerning the Fund's policy on dividends and distributions. TAXES The following information supplements and should be read in conjunction with the sections in the Prospectus entitled "Dividends and Capital Gains Distributions" and "Tax Matters". Tax Treatment of the Fund Each Series is expected to be treated as a separate entity for tax purposes. As such, each Series must calculate its income and losses, and satisfy the requirements as to its status as a regulated investment company, separately. It is intended that each Series will qualify for and elect treatment as a regulated investment company (a "RIC") under the Internal Revenue Code of 1986, as amended (the "Code"). Such treatment generally will relieve a Series of federal income tax liability to the extent it distributes its net investment income and net capital gain income to stockholders. To qualify for treatment as a RIC, a company must annually distribute at least 90 percent of its net investment company taxable income (which includes dividends, interest and net short-term capital gains) and meet several other requirements. Among such other requirements are the following: (1) at least 90 percent of the company's annual gross income must be derived from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies, or other income (including gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies; (2) at the close of each quarter of the company's taxable year, (a) at least 50 percent of the market value of the company's total assets must be represented by cash and cash items, U.S. government securities, securities of other RICs and other securities, with such other securities limited for purposes of this calculation in respect of any one issuer to an amount not greater than 5% of the value of the company's assets and not greater than 10% of the outstanding voting securities of such issuer, and (b) not more than 25 percent of the value of its total assets may be invested in the securities of any one issuer or of two or more issuers that are controlled by the company (within the meaning of Section 851(b)(4)(B) of the Code) that are engaged in the same or similar trades or businesses or related trades or businesses (other than U.S. government securities or the securities of other RICs); and (3) the company may not derive 30 percent or more of its annual gross income from the sale or other disposition of (i) stock or securities, (ii) options, futures or forward contracts on stock or securities (other than options, futures or forward contracts on foreign currencies) or (iii) foreign currencies (including options, futures and forward contracts on foreign currencies) not directly related to the company's principal business of investing in stock, securities or foreign currencies, in each case held for less than three months. Any dividend declared by a Series in October, November or December of any calendar year and payable to investors of record on a specified date in such a month shall be deemed to have been received by each investor on SAI-54 December 31 of such calendar year and to have been paid by the Series not later than such December 31 so long as the dividend is actually paid by the Series during January of the following calendar year. Tax Treatment of Investors A person other than a tax-exempt entity who exchanges securities for Creation Units of Fund shares generally will recognize gain or loss equal to the difference between the market value of the Creation Units and the sum of his aggregate basis in the securities surrendered and the Cash Component paid. A person other than a tax-exempt entity who redeems Creation Units of Fund shares generally will recognize gain or loss equal to the difference between the sum of the market value of the securities received and the cash redemption payment and his aggregate basis in the Fund shares redeemed. Generally, persons who are not subject to tax on their income will not be taxed upon distributions from the Fund (unless the persons are subject to the U.S. federal tax on unrelated business income and incur indebtedness allocable to shares of the Fund). The Series' dividends and distributions will not be a specified preference item for purposes of the U.S. federal alternative minimum tax imposed on individuals and corporations. Other investors will be taxed upon the distribution of dividends from the Fund. Dividends paid from net investment income will generally be taxable as ordinary income for federal income tax purposes. Distributions in excess of a Series' current and accumulated earnings and profits will, as to each of the Series' investors, be treated as a tax-free return of capital, to the extent of the investor's basis in his shares and as a capital gain thereafter. Investors should consult their own tax advisers regarding the treatment of distributions under applicable state law. Dividends of net investment income from a Series other than the US Index Series generally will not qualify for the dividends-received deduction permitted to corporate owners under Section 243 of the Code. Regardless of the length of time a stockholder has held his shares, distributions designated as being from a Series' net long-term capital gains (i.e., the excess of net long-term capital gains over net short-term capital losses) will be taxable as such. A distribution by a Series will reduce its net asset value per share. Such a distribution may be taxable to the investor as ordinary income or capital gain as described above even though, from an investment standpoint, it may constitute a return of capital. Upon the sale or exchange of Fund shares (other than a redemption of a Creation Unit aggregation of Fund Shares, the treatment of which is described above), an investor will realize a taxable gain or loss equal to the difference between the amount realized and the investor's basis in the shares. Such gain or loss will be treated as capital gain or loss, if the shares are capital assets in the investor's hands, and will be long-term or short-term depending upon the investor's holding period for the shares. Any loss realized on a sale or exchange will be disallowed to the extent that the shares disposed of are replaced within a 61-day period beginning 30 days before and ending 30 days after the disposition of the shares. In such a case, the basis of the shares acquired will be adjusted upward to reflect the disallowed loss. Any loss realized by an investor on a disposition of the Fund's shares held by the investor for six months or less will be treated as a long-term capital loss for U.S. income tax purposes to the extent of any distributions of long-term capital gains received by the investor (and any amounts retained by the Fund that were designated as undistributed capital gains), with respect to such shares. The Fund will make annual reports of the federal income tax status of distributions to owners of shares. Such reports will set forth the dollar amounts of dividends from net investment income and long-term capital gains, the investor's portion of the foreign income taxes paid to each country, the portion of dividends that represents income derived from sources within each country and, in the case of the US Index Series, dividends which may qualify for the dividends-received deduction described above. Investors should consult their own tax advisers to determine the consequences of holding shares in a Series under state, local or other tax law. SAI-55 The Fund may be required to withhold for U.S. federal income tax purposes 31% of the dividends and distributions payable to investors who fail to provide the Fund with their correct taxpayer identification number or to make required certifications, or who have been notified by the U.S. Internal Revenue Service that they are subject to backup withholding. Corporate investors and other investors specified in the Code are or may be exempt from such backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against the stockholder's U.S. federal income tax liability. The foregoing discussion is a summary only and is not intended as a substitute for careful tax planning. Purchasers of shares of the Fund should consult their own tax advisors as to the tax consequences of investing in such shares, including under state, local and other tax laws. Finally, the foregoing discussion is based on applicable provisions of the Code, regulations, judicial authority and administrative interpretations in effect on the date hereof. Changes in applicable authority could materially affect the conclusions discussed above, and such changes often occur. CAPITAL STOCK AND STOCKHOLDER REPORTS Each Fund share has one vote as to matters affecting the holder thereof and, when issued and paid for in accordance with the terms of purchase described under "Purchase and Issuance of Fund Shares in Creation Unit Aggregations", will be fully paid and non-assessable. Shares have no preemptive, exchange, subscription or conversion rights and are freely transferable. 200,000,000 shares are currently authorized for each Series of the Fund. Shares of all Series vote together as a single class except that if the matter being voted on affects only a particular Series it will be voted on only by that Series and if a matter affects a particular Series differently from other Series, that Series will vote separately on such matter. Fractional shares of the Fund may be issued. Each share is entitled to participate equally in dividends and distributions declared by the Board of Directors with respect to the relevant Series, and in the net distributable assets of such Series on liquidation. Stockholders are entitled to require the Fund to redeem only Creation Unit size aggregations of their shares. The Board of Directors of the Fund may from time to time change the number of shares constituting a Creation Unit aggregation of shares of any Series. A registered investment company incorporated in Maryland, such as the Fund, is not required to hold annual stockholder meetings if its charter or bylaws provide that such meetings would not be held in any year such a meeting is not required to be held for certain purposes specified in the 1940 Act. Accordingly, the Fund's bylaws provide that it is not required to hold annual stockholder meetings for the purpose of electing Directors as long as two-thirds of the Directors then in office have been elected by the stockholders. Under Maryland law, Directors of the Fund may be removed by the vote of the holders of a majority of the outstanding shares of the Fund. The Fund does not intend to hold stockholder meetings unless required to for certain purposes specified in the 1940 Act. Control Persons. The Fund expects that, immediately prior to the initial public offering of Fund shares contemplated hereby, the sole stockholder and controlling person of each Series will be ALPS. ALPS will therefore be a "control person" of the Fund. Upon the commencement of trading of CB Shares(SM) on the NYSE, each Series may have a number of stockholders each holding more than 5% of the outstanding shares of such Series. _____________, an affiliate of the Adviser, is expected initially to be among the control persons of each Series. The Fund cannot predict the length of time that any such persons will remain control persons of each Series. SAI-56 Reports. The Fund will issue to its stockholders semi-annual reports containing unaudited financial statements and annual reports containing financial statements audited by independent accountants approved by the Fund's Directors and by the stockholders when meetings are held. Stockholder Inquiries. Stockholder inquiries may be made by writing to the Fund, c/o Deutsche Morgan Grenfell/C. J. Lawrence Inc., 31 West 52nd Street, New York, New York 10019. COUNSEL AND INDEPENDENT ACCOUNTANTS Sullivan & Cromwell, 125 Broad Street, New York, New York 10004, is counsel to the Fund and has passed upon the validity of the Fund shares. Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036, serves as the independent accountants of the Fund. SAI-57 REPORT OF INDEPENDENT ACCOUNTANTS SAI-58 STATEMENT OF ASSETS AND LIABILITIES The CountryBaskets(SM) Index Fund, Inc. Statement of Assets and Liabilities ________ __, 1996
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 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.
SAI-59 THE COUNTRYBASKETS(SM) INDEX FUND, INC. Notes to Financial Statements ________ [ ], 1996 1. General The CountryBaskets(SM) Index Fund, Inc. (the "Fund") was incorporated under the laws of the State of Maryland on August 8, 1994. The Fund is registered under the Investment Company Act of 1940 (the "Act") as an open- end management investment company. The Fund currently has nine common stock series: the Australia Index Series; the France Index Series; the Germany Index Series; the Hong Kong Index Series; the Italy Index Series; the Japan Index Series; the South Africa Index Series; the UK Index Series; and the US Index Series (each, a "Series"). Deutsche Morgan Grenfell/C. J. Lawrence Inc. ("DMG"), an indirect subsidiary of Deutsche Bank AG, serves as investment adviser (the "Adviser") to the Fund. State Street Bank and Trust Company ("State Street") serves as administrator, custodian and transfer agent to the Fund, and ALPS Mutual Funds Services, Inc. ("ALPS") serves as distributor of the Fund. The Series have had no operations other than the sale of the following Fund Series shares to ALPS for the noted amounts: Australia Index Series (________ shares for proceeds of $________); France Index Series (________ shares for proceeds of $________); Germany Index Series (________ shares for proceeds of $________); Hong Kong Index Series (________ shares for proceeds of $________); Italy Index Series (________ shares for proceeds of $________); Japan Index Series (________ shares for proceeds of $________); South Africa Index Series (________ shares for proceeds of $________); UK Index Series (________ shares for proceeds of $________); and US Index Series (________ shares for proceeds of $________). The costs of organizing the Fund and registering its shares will be paid initially by DMG and reimbursed by the Fund at the time of the initial offering. These costs in turn will be equitably allocated to each Series as provided for by the Fund's Board. Such organization costs have been deferred and will be amortized ratably over a period of sixty months from the commencement of operations of the Series. If any of the initial shares are redeemed before the end of the amortization period, the proceeds of the redemption will be reduced by the pro rata share of the unamortized organization costs. 2. Agreements and Transactions with Affiliates The Fund has an Investment Management Agreement (the "Management Agreement") with DMG. As investment adviser, DMG manages the investments of each of the Series. For its services, DMG is entitled to receive a fee from each Series at an annual rate of .20% of the average daily net assets, in the case of the US Index Series, .45% of the average daily net assets in the case of the Hong Kong Index Series and the South African Index Series, and .30% of the average daily net assets of each other Series, plus, in the case of each Series, 40% of the gross investment income, less dividends on securities held in portfolio. The Management Agreement also provides that DMG will be reimbursed for out-of-pocket expenses incurred in providing certain administrative services. The Fund has an Administration Agreement with State Street. Under the Administration Agreement, State Street assists in supervising the operations of the Series. For its services, State Street is entitled to receive a fee from each Series at an annual rate of .08% of the average daily net assets of such Series up to $125 million, plus .06% of the average daily net assets of such Series in excess of $125 million up to $250 million, and .04% of the average daily net assets of such Series in excess of $250 million, subject to a minimum annual fee of $95,000 per Series. The SAI-60 THE COUNTRYBASKETS(SM) INDEX FUND, INC. Notes to Financial Statements ________ [ ], 1996 Administration Agreement also provides that State Street will be reimbursed for out-of-pocket expenses incurred in providing certain services. The Fund has a Distribution Agreement with ALPS. Under the Distribution Agreement, ALPS serves as Distributor of the shares of the Series. The Fund also has established a 12b-1 Plan for each Series (each, a "Plan"), pursuant to which each Series pays the Distributor a distribution services fee for activities intended to result in the sale of shares of the Series, equal to such Series' allocable portion of the aggregate distribution services fees payable by the Fund, as follows: .02% per annum of the average aggregate daily net assets ("Aggregate Net Assets") of all Series up to Aggregate Net Assets of $2.5 billion, plus .01% per annum of Aggregate Net Assets of all Series in excess of $2.5 billion up to $5 billion, plus .005% per annum of Aggregate Net Assets of all Series in excess of $5 billion. The Distributor will also be paid a marketing fee and reimbursed for certain expenses. Each Series will also make payments made to dealers and other persons for marketing and stockholder services, including payments of 0.05% per annum of the average aggregate daily net assets of all Series to each such person entering into an investor services agreement with ALPS. All payments to the Distributor and such dealers and other persons by each Series, and all reimbursements to the Distributor or the Adviser for their respective costs incurred in producing advertising or marketing material prepared at the request of the Series, will be made under the 12b-1 Plan of such Series and will not exceed in the aggregate, on an annualized basis, .25% of the average daily net assets of the Series. 3. Capital Shares The Fund is authorized to issue 5,000,000,000 shares of common stock. Currently, the Board has created nine Series of stock and allocated the following number of shares to each Series: Australia Index Series (200,000,000 shares); France Index Series (200,000,000 shares); Germany Index Series (200,000,000 shares); Hong Kong Index Series (200,000,000 shares); Italy Index Series (200,000,000 shares); Japan Index Series (200,000,000 shares); South Africa Index Series (200,000,000 shares); UK Index Series (200,000,000 shares); and US Index Series (200,000,000 shares). Shares of each Series are offered at net asset value without a sales charge, in exchange for an in-kind deposit of a designated portfolio of securities specified by the Distributor each day, plus a specified amount of cash. Redemptions of the shares of the Series are made principally in portfolio securities. The Fund imposes a transaction fee to the cash portion of each purchase and of each redemption of Series shares (other than shares of the US Index Series). The percentage fee imposed on the cash portion of purchases, for each Series other than the US Index Series, is as follows: Australia Index Series (1.15%); France Index Series (1.0%); Germany Index Series (1.0%); Hong Kong Index Series (1.2%); Italy Index Series (1.0%); Japan Index Series (1.32%); South Africa Index Series (2.0%); and UK Index Series (1.5%). The percentage fee imposed on the cash portion of redemption proceeds for each Series other than the US Index Series is as follows: Australia Index Series (1.15%); France Index Series (1.0%); Germany Index Series (1.0%); Hong Kong Index Series (1.2%); Italy Index Series (1.0%); Japan Index Series (1.32%); South Africa Index Series (1.0%); and UK Index Series (1.0%). A-1 APPENDIX A FT/S&P-Actuaries World Indices Australia Component as of 29 December 1995
Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index 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% 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
B-1 APPENDIX B FT/S&P-Actuaries World Indices France Component as of 29 December 1995
Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index 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% 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% 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
C-1 APPENDIX C FT/S&P-Actuaries World Indices Germany Component as of 29 December 1995
Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index ALLIANZ AG HLDG. Insurance - Multiline 45,863.03 11.41% SIEMENS Electrical Equipment 30,194.79 7.51% DAIMLER BENZ Automobiles 25,912.27 6.45% DEUTSCHE BANK Commercial Banks & Other Banks 23,738.29 5.91% VEBA Diversified Holding Companies 20,687.19 5.15% BAYER Chemicals (Diversified) 18,652.81 4.64% MUNICH RE (PART PD. REG) Insurance - Multiline 17,323.93 4.31% HOECHST Chemicals (Diversified) 15,979.46 3.98% BASF Chemicals (Diversified) 13,614.18 3.39% RWE Electric Utilities & Water Works Supply 12,002.14 2.99% DRESDNER BANK Commercial Banks & Other Banks 11,921.93 2.97% MANNESMANN Machinery 11,713.37 2.91% BMW (BR.) Automobiles 9,492.00 2.36% COMMERZBANK Commercial Banks & Other Banks 9,231.14 2.30% VOLKSWAGEN REGD. Automobiles 9,047.16 2.25% VIAG Non-Ferrous Metals 8,270.86 2.06% BAYERISCHE VEREINSBANK Commercial Banks & Other Banks 6,839.45 1.70% BAY. HYP.-U. WECHSEL BANK. Commercial Banks & Other Banks 6,492.33 1.62% SAP AG Computer Software & Services 6,102.32 1.52% THYSSEN Iron & Steel 5,698.86 1.42% RWE PREF Electric Utilities & Water Works Supply 5,573.84 1.39% LUFTHANSA Airlines 5,265.56 1.31% VEW Electric Utilities & Water Works Supply 5,022.33 1.25% LINDE Machinery - Industrial & Speciality 4,911.99 1.22% SCHERING Chemicals (Diversified) 4,537.51 1.13% PREUSSAG Non-Ferrous Metals 4,267.36 1.06% GEHE Wholesale - Nondurables 3,718.09 0.93% KARSTADT Retail - Department Stores 3,450.85 0.86% C-2 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) 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
D-1 APPENDIX D FT/S&P-Actuaries World Indices Hong Kong Component as of 29 December 1995
Index Market Capitalization Weight in (Millions of FT/S&P Constituent Name Industry Sector US$) Index 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 $HK0.40 Real Estate 6,886.63 3.24% HONG KONG ELECTRIC Electric Utilities & Water Works Supply 6,623.66 3.11% JARDINE MATHESON Diversified Consumer Goods & Services 5,070.87 2.38% HONG KONG LAND Real Estate 5,006.61 2.35% CATHAY PACIFIC A/WYS Airlines 4,371.49 2.05% HK & CHINA GAS Natural Gas Utilities 3,999.14 1.88% SWIRE PACIFIC 'B' Diversified Holding Companies 3,839.82 1.80% WHEELOCK AND CO. Retail - Miscellaneous & Speciality 3,453.73 1.62% JARDINE STRATEGIC Diversified Holding Companies 3,249.38 1.53% BANK OF EAST ASIA Commercial Banks & Other Banks 3,215.07 1.51% HYSAN DEV Real Estate 2,666.36 1.25% HOPEWELL Real Estate 2,516.39 1.18% AMOY PROPERTIES Real Estate 2,489.72 1.17% HANG LUNG DEV Real Estate 2,144.49 1.01% HENDERSON INVESTMENT Real Estate 2,106.35 0.99% GUOCO GROUP LIMITED Financial Services 2,058.06 0.97% SINO LAND Real Estate 1,900.90 0.89% DAIRY FARM INTL Retail - Miscellaneous & Speciality 1,608.60 0.76% HK & SHANGHAI HOTELS Restaurants & Hotels 1,562.77 0.73% TELEVISION BROADCAST Broadcasting Media 1,496.48 0.70% MIRAMAR HOTEL Restaurants & Hotels 1,216.84 0.57% GREAT EAGLE HLDS Real Estate 1,163.53 0.55% SHUN TAK HOLDINGS LTD Sea Transport 1,031.33 0.48% D-2 Index Market Capitalization Weight in (Millions of FT/S&P Constituent Name Industry Sector US$) Index CHINESE ESTATES Real Estate 1,030.83 0.48% SOUTH CHINA MORNING POST $HK0.10 Publishing - Newspapers 916.62 0.43% MANDARIN ORIENTAL Restaurants & Hotels 864.04 0.41% NEW ASIA REALTY & TS Real Estate 695.67 0.33% JOHNSON ELECTRIC Electrical Equipment 680.34 0.32% REALTY DEV 'A' Real Estate 658.41 0.31% KOWLOON MOTOR Rail & Road Transport 657.75 0.31% DICKSON CONCEPTS INT Retail - Miscellaneous & Speciality 632.69 0.30% SEMI-TECH (GLOBAL) Household Durables & Appliances 569.63 0.27% JARDINE INTNL. MOTOR Automobiles 543.26 0.26% HK AIRCRAFT Aircraft Manufacturers 479.02 0.23% SIME DARBY Wholesale - Durables 449.17 0.21% SHAW BROS Entertainment & Leisure Time 437.95 0.21% CHINA MOTOR BUS Rail & Road Transport 400.92 0.19% HARBOUR CENTRE DEV Restaurants & Hotels 364.61 0.17% CROSS-HARBOUR TUNNEL Storage, Warehousing & Supporting Transport Services 363.09 0.17% WING ON CO INTL LTD Retail - Department Stores 285.29 0.13% WINSOR INDUSTRIAL Textile Products 219.98 0.10% SUN HUNG KAI Financial Institutions 147.62 0.07% PLAYMATES TOYS HLDG Toys 131.68 0.06% LANE CRAWFORD INTL A Retail - Miscellaneous & Speciality 91.23 0.04% PLAYMATES PROP HLDGS Real Estate 78.64 0.04% FT-HONG KONG 212,834.30
E-1 APPENDIX E FT/S&P-Actuaries World Indices Italy Component as of 29 December 1995
Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index 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% E-2 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index ALLEANZA ASSIC N\CV Insurance - Multiline 607.24 0.43% IFIL N/C SVGS. Food Processors 586.08 0.42% IFI PTC PREF Diversified Holding Companies 573.34 0.41% SNIA BPD Chemicals, Fibres, Paints & Gases 568.98 0.41% MAGNETI MARELLI Auto Parts - Original Equipment 483.43 0.35% MILANO ASSICURAZIONI Insurance - Multiline 482.60 0.35% MONTEDISON SVG. N/CV. Diversified Holding Companies 428.79 0.31% CIR-COMPAGNIE Diversified Holding Companies 376.23 0.27% SASIB Machinery 370.09 0.26% UNICEM Building Materials 342.40 0.25% MARZOTTO Clothing 339.45 0.24% BANCO AMBROVEN N/C SVGS Commercial Banks & Other Banks 282.29 0.20% ITALCEMENTI SVGS N/CV Building Materials 249.79 0.18% SAI SVGS N/CV Insurance - Multiline 243.43 0.17% TORO ASSICURAZIONI SVG N/CV Insurance - Multiline 201.86 0.14% EDITOR L'ESPRESSO Publishing - Newspapers 181.79 0.13% SASIB SVG N/CV Machinery 157.35 0.11% TORO ASS. PTC PREF Insurance - Multiline 130.31 0.09% UNICEM SVG N/CV Building Materials 109.72 0.08% CIR-COMPAGNIE SVG N/CV Diversified Holding Companies 101.85 0.07% BANCA COMM. ITALIANA SVGS N/CV Commercial Banks & Other Banks 32.23 0.02% CREDITO ITALIANO SVG N/CV Commercial Banks & Other Banks 21.89 0.02% FT-ITALY 139,736.27
F-1 APPENDIX F FT/S&P-Actuaries World Indices Japan Component as of 29 December 1995
Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index 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% 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% 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% F-4 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index TOSTEM CORP Building Materials 7,272.88 0.26% AJINOMOTO Food Processors 7,234.23 0.25% RICOH Office Equipment 7,138.67 0.25% CHIBA BANK Commercial Banks & Other Banks 7,013.02 0.25% YAMANOUCHI PHARM Drugs 6,958.55 0.24% TOYO TST AND BANKING Financial Institutions 6,948.65 0.24% NIPPON YUSEN Sea Transport 6,817.73 0.24% TAISEI CORP Construction 6,810.75 0.24% SHIN-ETSU CHEMICAL Chemicals (Diversified) 6,734.68 0.24% NEW OJI PAPER Paper & Paper Products 6,726.98 0.24% TDK Household Durables & Appliances 6,717.99 0.24% TAISHO PHARM Drugs 6,713.00 0.24% NIPPON PAPER CO. Paper & Paper Products 6,592.71 0.23% YASUDA TST AND BANK Financial Institutions 6,534.85 0.23% JOYO BANK Commercial Banks & Other Banks 6,469.90 0.23% SHIKOKU ELEC POWER Electric Utilities & Water Works Supply 6,463.18 0.23% HACHIJUNI BANK Commercial Banks & Other Banks 6,327.78 0.22% YASUDA FIRE & MARINE Insurance - Property & Casualty 6,285.02 0.22% ROHM (OK) Electronics 6,226.83 0.22% KAWASAKI HEAVY Heavy Engineering & Shipbuilding 6,216.55 0.22% OMRON TATEISI ELECT Electrical Equipment 6,047.21 0.21% TOYO SEIKAN Containers 6,042.51 0.21% OHBAYASHI-GUMI Construction 5,923.37 0.21% MITSUBISHI MATERIALS Non-Ferrous Metals 5,881.77 0.21% TOKYO ELECTRON Electronics 5,805.10 0.20% SONY MUSIC ENTMNT Entertainment & Leisure Time 5,663.02 0.20% SEGA ENTERPRISES Toys 5,560.68 0.20% GUNMA BANK Commercial Banks & Other Banks 5,507.80 0.19% OKI ELECTRIC Communications Equipment 5,507.35 0.19% SUMITOMO MARINE&FIRE Insurance - Property & Casualty 5,487.01 0.19% IHI Heavy Engineering & Shipbuilding 5,475.70 0.19% TOBU RAILWAY Rail & Road Transport 5,377.37 0.19% HITACHI ZOSEN Heavy Engineering & Shipbuilding 5,197.44 0.18% MITSUI MARINE & FIRE Insurance - Property & Casualty 5,182.16 0.18% HOKKAIDO ELEC POWER Electric Utilities & Water Works Supply 5,125.30 0.18% F-5 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) 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% 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% 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% F-8 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index FUKUYAMA TRANSPTNG Rail & Road Transport 2,669.14 0.09% HITACHI CABLE Fabricated Metal Products 2,667.50 0.09% JAPAN TELECOM Telephone Companies 2,622.34 0.09% MITSUBISHI WAREHOUSE Storage, Warehousing & Supporting Transport Services 2,623.05 0.09% KONICA Photography 2,593.44 0.09% DAIKIN INDUSTRIES Machinery - Industrial & Speciality 2,583.03 0.09% MAKITA ELECTRIC WKS Electrical Equipment 2,575.32 0.09% MITSUBISHI RAYON Chemicals, Fibres, Paints & Gases 2,572.83 0.09% OLYMPUS OPTICAL Instrumentation & Control Equipment 2,561.44 0.09% SEINO TRANSPORT Rail & Road Transport 2,559.31 0.09% MITSUI PETROCHEMICAL Chemicals (Diversified) 2,553.06 0.09% TOYOBO Textile Products 2,485.20 0.09% ONWARD KASHIYAMA Clothing 2,480.18 0.09% TOMEN CORP Y50 Wholesale - Durables 2,473.52 0.09% YOKOGAWA ELECTRIC Instrumentation & Control Equipment 2,453.42 0.09% SHIMANO IND Toys 2,404.80 0.08% YAKULT HONSHA Food Processors 2,404.47 0.08% CITIZEN WATCH Instrumentation & Control Equipment 2,401.22 0.08% CHUGAI PHARM Drugs 2,362.93 0.08% NITTO ELECTRIC IND Electronics 2,350.37 0.08% MEIJI SEIKA Food - Sugar & Confectionary 2,348.18 0.08% NIPPON SHINPAN Financial Services 2,349.76 0.08% KANDENKO Electrical Equipment 2,333.84 0.08% MITSUI ENG & SHIPBLD Heavy Engineering & Shipbuilding 2,311.99 0.08% FUJI HEAVY INDS Automobiles 2,309.50 0.08% AOYAMA TRADING Retail - Miscellaneous & Speciality 2,292.15 0.08% NISSHINBO INDS Textile Products 2,292.08 0.08% INAX Building Materials 2,280.12 0.08% OKUMURA CORP Construction 2,259.45 0.08% HIROSE ELECTRONICS Electronics 2,256.88 0.08% SHIMA SEIKI MANUFACT Machinery - Industrial & Speciality 2,249.53 0.08% MITSUBISHI GAS CHEM Chemicals, Fibres, Paints & Gases 2,247.35 0.08% CHUO TST AND BANKING Financial Institutions 2,234.87 0.08% FUJITA CORP Construction 2,233.45 0.08% ARABIAN OIL Oil - Crude Producers 2,215.02 0.08% F-9 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) 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% 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% 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% 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% 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% F-14 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index TOKYU CAR Fabricated Metal Products 594.38 0.02% NICHIRO GYOGYO Food Processors 590.01 0.02% ASAHI OPTICAL Photography 583.47 0.02% TOKYO BROADCASTING Broadcasting Media 576.31 0.02% TAKAOKA ELECTRIC Electrical Equipment 573.09 0.02% CENTRAL FINANCE Financial Services 564.94 0.02% CALPIS FOOD INDS Beverages - Soft Drinks 525.23 0.02% FUJIYA Food - Sugar & Confectionary 525.44 0.02% NIHON NOSAN KOGYO Agriculture & Fishing 527.31 0.02% SHOKUSAN JUTAKU SOGO Construction 528.03 0.02% NIPPON SIGNAL Machinery - Industrial & Speciality 511.55 0.02% HYOGO BANK Commercial Banks & Other Banks 3.24 0.00% FT-JAPAN 2,846,585.17
G-1 APPENDIX G FT/S&P-Actuaries World Indices South Africa Component as of 29 December 1995
Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index 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% G-2 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index SAFREN Sea Transport 2,020.13 1.44% AMGOLD Precious Metals & Minerals 1,967.28 1.40% ANGLOVAAL LTD. (N.) Diversified Holding Companies 1,865.32 1.33% TONGAAT-HULETT GP Food - Sugar & Confectionary 1,584.04 1.13% PREMIER GROUP HLDG Food Processors 1,380.91 0.99% GENBEL Investment Companies 1,336.38 0.95% KLOOF GOLD MINING Precious Metals & Minerals 1,330.68 0.95% REUNERT Electrical Equipment 1,313.28 0.94% MID WITS Precious Metals & Minerals 1,279.33 0.91% VAAL REEFS EXP & MNG Precious Metals & Minerals 1,237.43 0.88% JCI Precious Metals & Minerals 1,177.35 0.84% IMPALA PLATINUM Precious Metals & Minerals 1,134.63 0.81% WOOLTRU A Retail - General Merchandise 1,101.86 0.79% AMPLATS Precious Metals & Minerals 971.46 0.69% WESTERN DEEP LEVEL Precious Metals & Minerals 927.44 0.66% WOOLTRU LTD Retail - General Merchandise 893.50 0.64% FREEGOLD Precious Metals & Minerals 889.40 0.63% HIGHVELD STEEL Iron & Steel 623.99 0.45% FT-SOUTH AFRICA 140,116.03
H-1 APPENDIX H FT/S&P-Actuaries World Indices United Kingdom Component as of 29 December 1995
Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index 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% H-2 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index GREAT UNIVERSAL STORES Retail - Miscellaneous & Speciality 10,688.53 0.98% THORN-EMI Entertainment & Leisure Time 10,127.22 0.93% TESCO Retail - Grocery Chains 9,914.00 0.91% BASS Beverages - Brewers 9,801.65 0.90% BOOTS Retail - General Merchandise 8,657.77 0.79% REED INTL Publishing 8,612.29 0.79% I.C.I Chemicals (Diversified) 8,580.61 0.79% ALLIED DOMECQ Beverages - Brewers 8,427.89 0.77% STANDARD CHARTERED Commercial Banks & Other Banks 8,249.79 0.76% CADBURY SCHWEPPES Food Processors 8,173.51 0.75% NATIONAL POWER Electric Utilities & Water Works Supply 7,945.48 0.73% BAA Storage, Warehousing & Supporting Transport Services 7,765.09 0.71% ROYAL BANK SCOTLAND Commercial Banks & Other Banks 7,348.96 0.67% BOC GROUP Chemicals, Fibres, Paints & Gases 6,724.65 0.62% COMMERCIAL UNION Insurance - Multiline 6,488.93 0.59% RANK ORGANISATION Entertainment & Leisure Time 6,021.48 0.55% POWERGEN Electric Utilities & Water Works Supply 6,014.72 0.55% ARGYLL GROUP Retail - Grocery Chains 6,014.56 0.55% GRANADA GROUP Entertainment & Leisure Time 5,856.56 0.54% SCOT & NEWCASTLE Beverages - Brewers 5,834.10 0.53% KINGFISHER Retail - General Merchandise 5,630.66 0.52% SCOTTISH POWER Electric Utilities & Water Works Supply 5,394.38 0.49% PEARSON Publishing 5,383.10 0.49% SIEBE Diversified Industrials 5,284.70 0.48% TOMKINS Fabricated Metal Products 5,188.00 0.48% ASSD BRITISH FOODS Food Processors 5,153.91 0.47% BRITISH STEEL Iron & Steel 5,142.87 0.47% BANK OF SCOTLAND Commercial Banks & Other Banks 5,132.03 0.47% RENTOKIL GP Chemicals, Fibres, Paints & Gases 5,129.87 0.47% LEGAL & GENERAL GROUP Insurance - Life & Agents & Brokers 5,126.56 0.47% WHITBREAD (ORD.) Beverages - Brewers 5,093.62 0.47% H-3 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) 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% H-4 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index DIXONS GROUP Retail - Miscellaneous & Speciality 2,776.87 0.25% REXAM Forestry Products 2,768.00 0.25% GREENALLS GROUP Beverages - Brewers 2,699.07 0.25% LADBROKE GROUP Entertainment & Leisure Time 2,652.73 0.24% NEXT Retail - Miscellaneous & Speciality 2,650.58 0.24% FOR & COL IT Investment Trusts 2,643.53 0.24% LASMO Oil - Crude Producers 2,623.16 0.24% COURTAULDS Chemicals, Fibres, Paints & Gases 2,557.57 0.23% BRITISH LAND Real Estate 2,549.31 0.23% ANGLIAN WATER Electric Utilities & Water Works Supply 2,522.25 0.23% MEPC Real Estate 2,492.91 0.23% MERCURY ASSET MANAGE Financial Institutions 2,464.20 0.23% LUCAS INDS Auto Parts - Original Equipment 2,460.92 0.23% SEARS Retail - General Merchandise 2,456.07 0.23% BPB INDS Building Materials 2,360.30 0.22% ELECTROCOMPONENTS Electronics 2,360.08 0.22% DE LA RUE Printing 2,258.18 0.21% MIDLANDS ELECTRICITY Electric Utilities & Water Works Supply 2,250.55 0.21% TELEWEST PLC Telephone Companies 2,213.85 0.20% STOREHOUSE Retail - General Merchandise 2,158.03 0.20% SCOT HYDRO-ELECTRIC Electric Utilities & Water Works Supply 2,144.63 0.20% LONRHO Diversified Holding Companies 2,122.76 0.19% UNITED NEWS & MEDIA Publishing - Newspapers 2,115.91 0.19% UNITED BISCUITS Food Processors 2,097.28 0.19% ARJO WIGGINS APPLETON Paper & Paper Products 2,096.39 0.19% EAST MIDLAND ELECT Electric Utilities & Water Works Supply 2,052.81 0.19% INCHCAPE Wholesale - Durables 2,040.69 0.19% LAPORTE Chemicals (Diversified) 2,020.72 0.19% YORKSHIRE ELECT Electric Utilities & Water Works Supply 1,910.53 0.18% COATS VIYELLA Textile Products 1,895.02 0.17% BET Diversified Holding Companies 1,872.39 0.17% BBA GROUP Auto Parts - Original Equipment 1,860.41 0.17% H-5 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) 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% H-6 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index RUGBY GROUP Building Materials 1,089.20 0.10% INVESCO Financial Services 1,035.03 0.09% SEDGWICK GP Insurance - Agents & Brokers 1,026.51 0.09% ELECTRA INV TRUST Investment Trusts 982.23 0.09% FIRST LEISURE CORP Entertainment & Leisure Time 967.80 0.09% WILLIS CORROON GROUP Insurance - Agents & Brokers 917.88 0.08% GREAT PORTLAND EST Real Estate 874.07 0.08% SCAPA GP Diversified Industrials 821.91 0.08% WIMPEY (G) Construction 807.53 0.07% SCHRODERS NON/VTG Financial Institutions 768.72 0.07% MEYER INTL Building Materials 757.28 0.07% HALMA Machinery 730.05 0.07% SPIRAX-SARCO ENG Machinery - Industrial & Speciality 722.85 0.07% BARRATT DEVELOPMENTS Homebuilding 705.97 0.06% TAYLOR WOODROW Construction 703.64 0.06% HIGHLAND DISTILLERIES Beverages - Distillers 666.96 0.06% FLEMING MERCANTILE INV TRUST Investment Trusts 644.99 0.06% BRIXTON ESTATE Real Estate 638.23 0.06% EUROTUNNEL UNITS ORD Rail & Road Transport 621.12 0.06% VAUX GROUP Beverages - Brewers 615.74 0.06% MCKECHNIE Fabricated Metal Products 606.85 0.06% MARLEY Building Materials 578.06 0.05% COURTAULDS TEXTILES Textile Products 571.81 0.05% HAMBROS Financial Institutions 564.09 0.05% TR SMALLER COMPANIES INV. TST. Investment Trusts 562.32 0.05% TR CITY OF LON (DFD) Investment Trusts 547.83 0.05% CHRISTIES INTL Retail - Miscellaneous & Speciality 535.93 0.05% ALBERT FISHER Wholesale - Nondurables 530.55 0.05% WILSON (CONNOLLY) Construction 514.05 0.05% BRYANT GROUP Homebuilding 486.12 0.04% BRADFORD PROPERTY TRUST Real Estate 469.45 0.04% TRAFALGAR HOUSE Diversified Holding Companies 464.19 0.04% MERCHANTS TRUST Investment Trusts 454.37 0.04% AMSTRAD Electronics 354.70 0.03% DIPLOMA Electronics 338.70 0.03% APV Machinery 335.44 0.03% DAWSON INTL Clothing 326.29 0.03% H-7 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) 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
I-1 APPENDIX I FT/S&P-Actuaries World Indices US Component as of 29 December 1995
Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) Index GENERAL ELECTRIC CO Electrical Equipment 121,134.74 2.45% AMER TEL & TEL Telephone Companies 102,715.97 2.08% EXXON CORP Oil Internationals 99,489.45 2.02% COCA-COLA Beverages - Soft Drinks 93,136.38 1.89% MERCK & CO Drugs 80,959.16 1.64% PHILIP MORRIS Tobacco Manufacturers 75,543.61 1.53% PROCTER & GAMBLE Soaps 56,985.64 1.15% JOHNSON & JOHNSON Health Care 55,453.00 1.12% IBM Computers 52,180.34 1.06% MICROSOFT CORP Computer Software & Services 51,974.85 1.05% WAL-MART STORES Retail - General Merchandise 51,340.44 1.04% INTEL Electronics 46,603.10 0.94% MOBIL CORP Oil Internationals 44,181.00 0.90% PEPSICO Beverages - Soft Drinks 44,025.31 0.89% AMER INTL GROUP Insurance - Multiline 43,853.51 0.89% BRISTOL MYERS SQUIBB CO Health Care 43,329.69 0.88% BELLSOUTH CORP Telephone Companies 43,199.00 0.88% HEWLETT-PACKARD Computers 42,863.25 0.87% GTE CORP Telephone Companies 42,619.28 0.86% PFIZER Drugs 40,077.70 0.81% GENERAL MOTORS Automobiles 39,624.47 0.80% DU PONT E I DE NEMOURS Chemicals (Diversified) 38,803.19 0.79% BERKSHIRE HATHAWAY INC DEL Diversified Holding Companies 38,327.40 0.78% AMOCO Petroleum Products & Refineries 35,285.66 0.71% SBC COMMUNICATIONS Telephone Companies 35,066.95 0.71% CHEVRON CORP Oil Internationals 34,242.29 0.69% FED NATL MORTGAGE Financial Institutions 33,861.55 0.69% MOTOROLA Electronics 33,684.89 0.68% ABBOTT LABS Health Care 33,130.25 0.67% AMERITECH Telephone Companies 32,698.16 0.66% MCDONALD'S CORP Restaurants & Hotels 31,419.59 0.64% FORD MOTOR Automobiles 31,148.58 0.63% LILLY (ELI) Drugs 31,023.56 0.63% DISNEY (WALT) PRODS Entertainment & Leisure Time 30,843.67 0.62% AMER HOME PRODUCTS Drugs 30,059.14 0.61% BELL ATLANTIC Telephone Companies 29,197.56 0.59% CITICORP Commercial Banks & Other Banks 28,585.42 0.58% I-2 Index Market Weight in Capitalization FT/S&P Constituent Name Industry Sector (Millions of US$) 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% 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% 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% 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% 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% 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% 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% 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% 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% 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% 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% 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% 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% 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% 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% 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
1 PART C OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements: Part B - The CountryBaskets(SM) Index Fund, Inc. Financial Statements: Statement of Assets and Liabilities, at [ ], 1996. (b) Exhibits: *(1) --Articles of Amendment and Restatement of the Fund (2) --Bylaws of the Fund (3) --Not applicable (4) (A) --Form of global certificate evidencing shares of the Common Stock, $.001 par value, of the Fund **(4) (B) --Articles FIFTH, SIXTH, NINTH and TWELFTH of the Fund's Articles of Amendment and Restatement, and Article II, Article III Section 3, Article IV and Article VII of the Fund's Bylaws, relating to the rights of stockholders (5) --Investment Management Agreement between the Fund and Deutsche Morgan Grenfell/C.J. Lawrence Inc. (6) (A) --Distribution Agreement between the Fund and ALPS Mutual Funds Services, Inc. (6) (B) --Marketing Agreement between the Fund and ALPS Mutual Funds Services, Inc. (6) (C) --Form of Soliciting Dealer Agreement (6) (D) --Form of Investor Services Agreement (6) (E) --Form of Authorized Participant Agreement (including as annexes the forms of purchase order, notice of intention and redemption request) (6) (F) --Form of Participating Financial Institutions Investor Services Agreement (6) (G) --Form of Specialist Institutions Services Agreement (7) --Not applicable (8) --Custodian Contract between the Fund and State Street Bank and Trust Company (9) (A) --Administration Agreement between the Fund and State Street Bank and Trust Company (9) (B) --Transfer Agency and Service Agreement between the Fund and State Street Bank and Trust Company (9) (C) --Indemnity Agreement between the Fund and Alexander Lucey Inc. ***(9) (D) --Form of Purchase Agreement ***(10) --Opinion and consent of Sullivan & Cromwell * Previously filed. ** Incorporated herein by reference to the specified portions of the Fund's Articles of Incorporation filed as Exhibit (1) to pre-effective Amendment No. 3, filed on July 11, 1995, and the Bylaws filed as Exhibit (2) to this Amendment No. 4. *** To be filed by Amendment. 2 ***(11) --Opinion and consent of Price Waterhouse LLP (12) --Not applicable (13) (A) --Subscription Agreement between the Fund and ALPS Mutual Funds Services, Inc. with respect to the Fund's initial capitalization (13) (B) --Letter of Representations among The Depository Trust Company, the Fund and State Street Bank and Trust Company (14) --Not applicable (15) (A) --Form of 12b-1 Plan (15) (B) --Form of Fund Payment Agreement (16) --Not applicable (17) --Not applicable 3 Item 25. Persons Controlled by or Under Common Control with Registrant Immediately prior to the initial public offering of the shares of the Fund, ALPS Mutual Funds Services, Inc. ("ALPS"), a Colorado corporation, will own all of the outstanding shares of each of Australia Index Series, France Index Series, Germany Index Series, Hong Kong Index Series, Italy Index Series, Japan Index Series, South Africa Index Series, UK Index Series and US Index Series of the Fund. At such time, based on their percentage shareholdings of the common stock of ALPS at December 29, 1995, the following persons may be deemed to control ALPS and, therefore, indirectly control the Fund: W. Robert Alexander and Arthur J.L. Lucey. Item 26. Number of Holders of Securities As of [____________________], 1996, the number of record holders of each class of securities of the Fund is one. See Item 25. Item 27. Indemnification State Law, Articles of Amendment and Restatement, and Bylaws. It is the Fund's policy to indemnify officers, directors, employees and other agents to the maximum extent permitted by Section 2-418 of the Maryland General Corporation Law, Articles SEVENTH and EIGHTH of the Fund's Articles of Amendment and Restatement and Article VI of the Fund's Bylaws (each set forth below). Section 2-418 of the Maryland General Corporation Law reads as follows: "2-418 INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. (a) In this section the following words have the meaning indicated. (1) "Director" means any person who is or was a director of a corporation and any person who, while a director of a corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan. (2) "Corporation" includes any domestic or foreign predecessor entity of a corporation in a merger, consolidation, or other transaction in which the predecessor's existence ceased upon consummation of the transaction. (3) "Expenses" include attorney's fees. (4) "Official capacity" means the following: (i) When used with respect to a director, the office of director in the corporation; and (ii) When used with respect to a person other than a director as contemplated in subsection (j), the elective or appointive office in the corporation held by the officer, or the employment or agency relationship undertaken by the employee or agent in behalf of the corporation. (iii) "Official capacity" does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, other enterprise, or employee benefit plan. (5) "Party" includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding. (6) "Proceeding" means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative. (b)(1) A corporation may indemnify any director made a party to any proceeding by reason of service in that capacity unless it is established that: 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 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); 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 7 to time such Bylaws, resolutions or contracts implementing such provisions or such further indemnification arrangements as may be permitted by law. No amendment of the charter of the Corporation or repeal of any of its provisions shall limit or eliminate the right of indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal." Article SIXTH of the Fund's Bylaws provides: Section 1. Indemnification of Directors and Officers. The Corporation shall indemnify to the fullest extent permitted by law (including the Act) and the Articles of Incorporation, as currently in effect or as hereafter amended, any person made or threatened to be made a party to any action, suit or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that such person or such person's testator or intestate is or was a Director, officer or employee of the Corporation or serves or served at the request of the Corporation any other enterprise as a director, officer or employee. To the fullest extent permitted by law (including the Act) and the Articles of Incorporation, as currently in effect or as hereafter amended, expenses incurred by any such person in defending any such action, suit or proceeding shall be paid or reimbursed by the Corporation promptly upon receipt by it of an undertaking of such person to repay such expenses if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation. The rights provided to any person by this Article shall be enforceable against the Corporation by such person who shall be presumed to have relied upon it in serving or continuing to serve as a Director, officer or employee as provided above. No amendment of this Article shall impair the rights of any person arising at any time with respect to events occurring prior to such amendment. For purposes of this Article, the term "Corporation" shall include any predecessor of the Corporation and any constituent corporation (including any constituent of a constituent) absorbed by the Corporation in a consolidation or merger; the term "other enterprise" shall include any corporation, partnership, joint venture, trust or employee benefit plan; service "at the request of the Corporation" shall include service as a Director, officer or employee of the Corporation which imposes duties on, or involves services by, such Director, officer or employee with respect to an employee benefit plan, its participants or beneficiaries; any excise taxes assessed on a person with respect to an employee benefit plan shall be deemed to be indemnifiable expenses; and action by a person with respect to any employee benefit plan which such person reasonably believes to be in the interest of the participants and beneficiaries of such plan shall be deemed to be action not opposed to the best interests of the Corporation. Item 28. Business and Other Connections of Investment Adviser See "Management of the Fund" in the Statement of Additional Information. Information as to the directors and officers of the Adviser is included in its form ADV filed with the Commission and is incorporated herein by reference thereto. Item 29. Principal Underwriters (a) ALPS is the Fund's principal underwriter. ALPS also acts as a principal underwriter and distributor for the following investment companies: Mariner Funds Trust, Mariner Mutual Funds Trust, Duff & Phelps Mutual Funds and FGIC Public Trust. 8 (b) Name and Principal Positions and Offices Positions and Offices Business Address* with Underwriter with Registrant W. Robert Alexander Chairman, President and None Director Arthur J.L. Lucey Secretary, Vice President None and Director John W. Hannon, Jr. Director None Asa W. Smith Director None Rick Pederson Director None Gordon Hobgood, Jr. Director None Steve J. Bettcher Director None Mark A. Pougnet CFO None Ned Burke Senior Vice President None * The principal business address for each of the above directors is 370 Seventeenth Street, Suite 2700, Denver, Colorado 80202. (c) ALPS has received no commissions or other compensation from the Fund to date. Item 30. Location of Accounts and Records All accounts, books and other documents required to be maintained by Section 31(a) of the 1940 Act and the Rules thereunder will be maintained at the offices of State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110 except that the accounts, books and other documents required by Rules 31(a)[ ] will be kept at the offices of the Fund's Adviser, Deutsche Morgan Grenfell/C.J. Lawrence Inc., 31 West 52nd Street, New York, New York 10019. Item 31. Management Services Not applicable. Item 32. Undertakings The Fund undertakes that it will file: (a) an amendment to the registration statement with certified financial statements showing the initial capital received before accepting subscriptions from any persons in excess of 25 if the Fund proposes to raise its initial capital pursuant to Section 14(a)(3) of the 1940 Act [15 U.S.C. 80a-14(a)(3)]; and 9 (b) a post-effective amendment, using financial statements which need not be certified, within four to six months from the effective date of the Fund's registration statement under the Securities Act of 1933, as amended (the "Act"). Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Fund pursuant to the foregoing provisions, or otherwise, the Fund has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Fund of expenses incurred or paid by a director, officer or controlling person of the Fund in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Fund will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 10 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Fund has duly caused this Amendment to be signed on its behalf by the undersigned, thereto duly authorized, in the City and State of New York, on the 12th day of February, 1996. THE COUNTRYBASKETS(SM) INDEX FUND, INC. By: /s/ Joseph A. La Corte Joseph A. La Corte President Pursuant to the requirements of the Securities Act of 1933, this Amendment has been signed below by the following persons in the capacities and on the date indicated. In addition, the undersigned hereby constitutes and appoints Joseph A. La Corte and Thomas A. Curtis, acting singly or together, his attorneys-in-fact, with power of substitution, in his name and in the capacity indicated below, to sign any and all amendments (including post-effective amendments) to the Registration Statement and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or their substitutes, may do or cause to be done by virtue hereof. Name Title Date /s/ Warner Heineman Director February 12, 1996 Warner Heineman /s/ Joseph A. La Corte Director and President February 12, 1996 Joseph A. La Corte (Principal Executive Officer) /s/ W. Carter McClelland Director February 12, 1996 W. Carter McClelland /s/ Lawrence C. McQuade Director February 12, 1996 Lawrence C. McQuade /s/ Karl M. von der Heyden Director February 12, 1996 Karl M. von der Heyden /s/ Robert H. Wadsworth Director February 12, 1996 Robert H. Wadsworth /s/ Joseph Cheung Vice President and February 12, 1996 Joseph Cheung Treasurer (Principal Financial and Accounting Officer) EX-99.B2 2 BYLAWS OF THE FUND 1 Adopted February 7, 1996 BY-LAWS OF THE COUNTRYBASKETS INDEX FUND, INC. ARTICLE I. Fiscal Year and Offices Section 1. Fiscal Year. Unless otherwise provided by resolution of the Board of Directors the fiscal year of The CountryBaskets Index Fund, Inc. (the "Corporation") shall begin on November 1 and end on the last day of October. Section 2. Registered Office. The registered office of the Corporation in Maryland shall be located at 32 South Street, Baltimore, Maryland 21202, and the name and address of its Resident Agent is The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland 21202. Section 3. Other Offices. The Corporation shall have such additional places of business, either within or outside the State of Maryland, as the Board of Directors may from time to time designate. ARTICLE II. Meetings of Stockholders Section 1. Place of Meeting. Meetings of the Stockholders shall be held in such place in the United States as may from time to time be designated by the Board of Directors and stated in the notice of the Meeting. Section 2. Annual Meetings. The Corporation shall not be required to hold an annual meeting of Stockholders in any year in which the election of directors is not required to be acted upon under the Investment Company Act of 1940, as amended (the "Act"). In the event that the Corporation shall hold an annual meeting of stockholders, such meeting shall be held at a date and time set by the Board of Directors, provided, however, that if the purpose of the meeting is to elect directors or to approve an investment advisory agreement or distribution agreement, then the date and time of such meeting shall be set in accordance with the Act. Any meeting of Stockholders held in accordance with the preceding sentence may constitute the annual meeting of Stockholders for the fiscal year of the Corporation in which the meeting is held. 2 Section 3. Special Meetings. Special meetings of the Stockholders may be called at any time by the Chairman of the Board or the President, or by a majority of the Board of Directors, and shall be called by the Chairman of the Board, President or Secretary upon written request of (a) the holders of record of not less than ten percent of the outstanding shares of the Corporation, in the case of any request to call a special meeting for the purpose of voting on the question of removal of any Director or Directors and (b) the holders of shares entitled to cast not less than twenty-five percent of all the votes entitled to be cast at such meeting, in any other case; provided that any such request shall state the purpose or purposes of such meeting and the matters proposed to be acted on, and the Stockholders requesting such meeting shall have paid to the Corporation the reasonably estimated cost of preparing and mailing the notice thereof, which the Secretary of the Corporation shall determine and specify to such Stockholders. No special meeting need be called upon the request of holders of common stock entitled to cast less than a majority of all votes entitled to be cast at such meeting to consider any matter (other than the removal of any Director or Directors) which is substantially the same as a matter voted on at any meeting of the Stockholders held during the preceding twelve months. Section 4. Stockholder Communications. Whenever ten or more Stockholders of record who have been such for at least six months preceding the date of application, and who hold in the aggregate either shares having a net asset value of at least $25,000 or at least one percent of the outstanding shares, whichever is less, shall apply to the Board of Directors in writing, stating that they wish to communicate with other Stockholders with a view to obtaining signatures to a request for a meeting pursuant to subsection (a) of Section 3 and accompanied by a form of communication and request which they wish to transmit, the Secretary of the Corporation shall within five business days after receipt of such application either-- (a) afford to such applicants access to a list of the names and addresses of all shareholders as shown in the records of the Corporation; or (b) inform such applicants as to the approximate number of Stockholders of record, and the approximate cost of mailing to them the proposed communication and form of request. If the Corporation elects to follow the course specified in subsection (b) of this Section 4 the Secretary of the Corporation, upon the written request of such applicants, accompanied by a tender of the material to be mailed and of the reasonable expenses of mailing, shall, with reasonable promptness, mail such material to all Stockholders of record at their addresses as shown in the records of the Corporation, unless within five business days after such tender the Secretary of the Corporation shall mail to such applicants and file with the Securities and Exchange Commission, together with a copy of the material to be mailed, a written 3 statement signed by at least a majority of the Board of Directors to the effect that in their opinion either such material contains untrue statements of fact or omits to state facts necessary to make the statements contained therein not misleading, or would be in violation of applicable law, and specifying the basis of such opinion. Section 5. Notice. Not less than ten nor more than ninety days before the date of every annual or special meeting of the Stockholders, the Secretary shall give to each Stockholder entitled to vote at such meeting and to each other Stockholder entitled to notice of such meeting, written notice stating the time and place of the meeting and, in the case of a special meeting of Stockholders or when otherwise required by the laws of the State of Maryland, the purpose of the meeting. Notice of adjournment of a Stockholders' meeting to another time or place need not be given, if such time and place are announced at the meeting. Such notice shall be given in the manner required by the laws of the State of Maryland. No notice of the time, place or purpose of any meeting of Stockholders need be given to any Stockholder who attends in person or by proxy or to any Stockholder who, in writing executed and filed with the records of the meeting, either before or after the holding thereof, waives such notice. Section 6. Record Date for Meetings. Subject to the provisions of Maryland law, the Board of Directors may fix in advance a date as the record date for the determination of the Stockholders entitled to receive notice of, and to vote at any meeting and any adjournment thereof, or Stockholders entitled to receive payment of any dividend or the allotment of any other rights. Such date in any case shall not be more than ninety days and, in the case of a meeting of Stockholders, not less than ten days, prior to the date on which the action requiring the determination will be taken. Such Stockholders and only such Stockholders as shall be Stockholders of record on the date so fixed shall be entitled to receive notice of and to vote at such meeting and any adjournment thereof, or to receive such payment or allotment, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. Section 7. Quorum. A quorum for the transaction of business at any meeting of Stockholders shall be as set forth in the Articles of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the Stockholders, the holders of a majority of the stock present or in person or by proxy shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented to a date not more than 120 days after the original record date. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. 4 Section 8. Voting. Each Stockholder shall have one vote for each full share and a fractional vote for each fractional share of stock, irrespective of the series or class of stock, held by such Stockholder on the record date set pursuant to Section 6 on each matter submitted to a vote at a meeting of Stockholders. On any matter submitted to a vote of Stockholders, all shares of Common Stock of the Corporation then issued and outstanding and entitled to vote, irrespective of the series or class, shall be voted in the aggregate and not by series or class except (a) when otherwise expressly provided by the laws of the State of Maryland or the Articles of Incorporation, or when required by the Act, shares shall be voted by individual series or class; and (b) when the matter does not affect any interest of a particular series or class, then only Stockholders of such other series or class or series or classes whose interests may be affected shall be entitled to vote thereon. Such vote may be made in person or by proxy. At all meetings of the Stockholders, a quorum being present, the number of votes cast at such meeting sufficient to approve any matter which properly comes before such meeting shall be as set forth in the Articles of Incorporation unless the question is one which by express provision of the Act, as from time to time amended, a different vote is required, in which case such express provision shall control the decision of such question. At all meetings of the Stockholders, unless the voting is conducted by inspectors, all questions relating to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided by the chairman of the meeting. Section 9. Voting - Proxies. The right to vote by proxy shall exist only if the instrument authorizing such proxy to act shall have been executed in writing by the Stockholder himself or by his attorney thereunto duly authorized in writing. No proxy shall be voted on after eleven months from its date unless it provides for a longer period. Section 10. Inspectors. At any election of Directors, the Board of Directors prior thereto may, or, if they have not so acted, the Chairman of the meeting may, and upon the request of the holders of ten percent of the stock entitled to vote at such election shall, appoint one or more inspectors of election who shall first subscribe an oath of affirmation to execute faithfully the duties of inspectors at such election with strict impartiality and according to the best of their ability, and shall after the election make a certificate of the result of the vote taken. Section 11. Stock Ledger and List of Stockholders. It shall be the duty of the Secretary or Assistant Secretary of the Corporation to cause an original or duplicate stock ledger to be maintained at the office of the Corporation's transfer agent. Such stock ledger may be in written form or any other form capable of being converted into written form within a reasonable time for visual inspection. 5 Section 12. Conduct of Meetings. Each meeting of Stockholders shall be presided over by the Chairman of the Board or, if he is not present, by the Vice Chairman of the Board or, if he is not present, by the President or, if he is not present, by a Vice-President or if none of them is present, by a chairman to be elected at the Meeting. The Secretary of the Corporation shall act as secretary of the meeting or, if he is not present, an Assistant Secretary shall so act. If neither the Secretary nor the Assistant Secretary is present, the chairman of the Meeting shall appoint a secretary. Section 13. Action Without Meeting. Any action to be taken by Stockholders may be taken without a meeting if (a) all Stockholders entitled to vote on the matter consent to the action in writing, and (b) all Stockholders entitled to notice of the meeting but not entitled to vote at it sign a written waiver of any right to dissent and (c) the written consents are filed with the records of the meetings of Stockholders. Such consent shall be treated for all purposes as a vote at a meeting. ARTICLE III. Directors Section 1. General Powers. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors, which may exercise all powers of the Corporation, except such as are by statute, or the Articles of Incorporation, or by these By-Laws conferred upon or reserved to the Stockholders. Section 2. Number and Term of Office. The number of Directors which shall constitute the whole Board shall be determined from time to time by the vote of a majority of the Directors then in office but shall not be fewer than three nor more than fifteen, provided that (a) if there is no stock of the Corporation outstanding the number of Directors may be less than three but not less than one and (b) if there is stock of the Corporation outstanding and so long as there are fewer than three Stockholders of record, the number of Directors may be less than three but not less than the number of Stockholders of record. Subject to the foregoing, until changed by the Board of Directors, the number of Directors shall initially be one. Each Director elected shall hold office until his successor is elected and qualifies. Directors need not be Stockholders. At such time as the number of Directors first equals or exceeds three, the Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of Directors constituting the entire Board permits, with the term of office of one class expiring at each annual meeting of Stockholders. At the annual meeting of Stockholders next following such division into three classes, Directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, Directors of the second class shall be elected to hold 6 office for a term expiring at the second succeeding annual meeting and Directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. At each annual meeting of stockholders succeeding the annual meeting of stockholders next following such division into three classes, the successors to the class of Directors whose term shall then expire shall be elected to hold office for a term expiring at the third succeeding annual meeting. The term of office of a Director may not be longer than five years. Section 3. Vacancies. Subject to the provisions of the Act, any vacancy in the Board of Directors may be filled by a majority vote of the remaining Directors, although less than a quorum, or by a sole remaining Director, provided that any vacancy which results from an increase in the number of Directors may, subject to the provisions of the Act, be filled only by the vote of a majority vote of all the Directors then holding office. A Director elected by the Board of Directors to fill a vacancy serves until his successor is elected and qualifies or until his earlier resignation or removal. Section 4. Removal of Directors. At any meeting of Stockholders, the Stockholders of the Corporation may remove any Director from office, either with or without cause, by the affirmative vote of a majority of the votes entitled to be cast for the election of Directors and may elect a successor to fill any resulting vacancy for the unexpired term of the removed Director. Section 5. Place of Meetings. Meetings of the Board of Directors, regular or special, may be held at any place in or out of the State of Maryland as the Board may from time to time determine. Section 6. Quorum. At all meetings of the Board of Directors one- third of the entire Board of Directors shall constitute a quorum for the transaction of business provided that in no case may a quorum be less than two persons. The act of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors unless the concurrence of a greater proportion is required for such action by the laws of the State of Maryland, the Act, the Articles of Incorporation or these By-Laws. If a quorum shall not be present at any meeting of Directors, the Directors present thereat may by a majority vote adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present. Section 7. Regular Meetings. Regular meetings of the Board of Directors may be held without additional notice at such time and place as shall from time to time be determined by the Board of Directors, provided that notice of any change in the time or place of such meetings shall be 7 sent promptly to each Director not present at the meeting at which such change was made in the manner provided for notice of special meetings. Section 8. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board or the President on one day's notice to each Director. Special Meetings shall be called by the Chairman of the Board, President or SecretaZry in like manner and on like notice on the written request of two Directors. Section 9. Telephone Meetings. Members of the Board of Directors or a committee of the Board of Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes, subject to the provisions of the Act, presence in person at the meeting. Section 10. Action Without a Meeting. Except as may be required by the Act, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if a written consent to such action is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. Section 11. Committees. The Board of Directors may by resolution passed by a majority of the entire Board appoint from among its members an Executive Committee and other committees composed of two or more Directors, and may delegate to such committees any or all of such powers of the Board of Directors as may be provided in their resolutions and which the Board of Directors may lawfully delegate. Section 12. Action of Committees. In the absence of an appropriate resolution of the Board of Directors, each committee may adopt such rules and regulations governing its proceedings, quorum and manner of acting as it shall deem proper and desirable, provided that the quorum shall not be less than two Directors. The committees shall keep minutes of their proceedings and shall report the same to the Board of Directors at the meeting next succeeding, and any action by the committee shall be subject to revision and alteration by the Board of Directors, provided that no rights of third persons shall be affected by any such revision or alteration. In the absence of any member of such committee the members thereof present at any meeting, whether or not they constitute a quorum, may appoint a member of the Board of Directors to act in the place of such absent member. 8 Section 13. Compensation. Any Director may be compensated for his services as Director or as a member of a committee of Directors, or as Chairman of the Board or chairman of a committee, by fixed periodic payments or by fees for attendance at meetings or by both, and in addition may be reimbursed for transportation and other expenses, and in such manner and amounts as the Board of Directors may from time to time determine. ARTICLE IV. Notices Section 1. Form. Notices to Stockholders shall be given in the manner required by the laws of the State of Maryland. Notices to Directors shall be oral or by telephone, telegram or telecopy or in writing delivered personally or mailed to the Directors at their addresses appearing on the books of the Corporation. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Subject to the provisions of the Act, notice to Directors need not state the purpose of a regular or special meeting. Section 2. Waiver. Whenever any notice of the time, place or purpose of any meeting of Stockholders, Directors or a committee is required to be given under the provisions of Maryland law or under the provisions of the Articles of Incorporation or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to such notice and filed with the records of the meeting, whether before or after the holding thereof, or actual attendance at the meeting of Stockholders in person or by proxy, or at the meeting of Directors or committee in person, shall be deemed equivalent to the giving of such notice to such persons. ARTICLE V. Officers Section 1. Executive Officers. The officers of the Corporation shall be chosen by the Board of Directors and shall include a President, a Secretary and a Treasurer. The Board of Directors may, from time to time, elect or appoint a Controller, one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers. The Board of Directors, at its discretion, may also appoint a Director as Chairman of the Board who shall perform and execute such executive and administrative duties and powers as the Board of Directors shall from time to time prescribe. The same person may hold two or more offices, except that no person shall be both President and Vice-President and no officer shall execute, acknowledge or verify any 9 investment in more than one capacity, if such instrument is required by law, the Articles of Incorporation or these By-Laws to be executed, acknowledged or verified by two or more officers. Section 2. Election. The Board of Directors shall choose a President, a Secretary and a Treasurer at its first meeting. Section 3. Other Officers. The Board of Directors from time to time may appoint such other officers and agents as it shall deem advisable, who shall hold their offices for such terms and shall exercise powers and perform such duties as shall be determined from time to time by the Board. The Board of Directors from time to time may delegate to one or more officers or agents the power to appoint any such subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties. Section 4. Compensation. The salaries or other compensation of all officers and agents of the Corporation shall be fixed by the Board of Directors, except that the Board of Directors may delegate to any person or group of persons the power to fix the salary or other compensation of any subordinate officers or agents appointed pursuant to Section 3 of this Article V. Section 5. Tenure. The officers of the Corporation shall serve for one year and until their successors are chosen and qualify. Any officer or agent may be removed by the affirmative vote of a majority of the Board of Directors whenever, in its judgment, the best interests of the Corporation will be served thereby. In addition, any officer or agent appointed pursuant to Section 3 may be removed, either with or without cause, by any officer upon whom such power of removal shall have been conferred by the Board of Directors. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise shall be filled by the Board of Directors, unless pursuant to Section 3 the power of appointment has been conferred by the Board of Directors on any other officer. Section 6. President. The President, unless the Chairman has been so designated, shall be the Chief Executive Officer of the Corporation and shall see that all orders and resolutions of the Board are carried into effect. The President, unless the Chairman has been so designated, shall also be the chief administrative officer of the Corporation and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. Section 7. Chairman of the Board. The Chairman of the Board, if one shall be chosen, shall perform and execute such executive duties and administrative powers as the Board of Directors shall from time to time prescribe. 10 Section 8. Vice-President. The Vice-Presidents, in order of their seniority, shall, in the absence or disability of the President, perform the duties and exercise the powers of the President and shall perform such other duties as the Board of Directors or the Chief Executive Officer may from time to time prescribe. Section 9. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the Stockholders and record all the proceedings thereof and shall perform like duties for any committee when required. He (she) shall give, or cause to be given, notice of meetings of the Stockholders and of the Board of Directors, shall have charge of the records of the Corporation, including the stock books, and shall perform such other duties as may be prescribed by the Board of Directors or Chief Executive Officer, under whose supervision he (she) shall be. He (she) shall keep in safe custody the seal of the Corporation and, when authorized by the Board of Directors, shall affix and attest the same to any instrument requiring it. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest to the affixing by his (her) signature. Section 10. Assistant Secretaries. The Assistant Secretaries in order of their seniority, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board of Directors shall prescribe. Section 11. Treasurer. The Treasurer, unless another officer has been so designated, shall be the Chief Financial Officer of the Corporation. He (she) shall have general charge of the finances and books of account of the Corporation. Except as otherwise provided by the Board of Directors, he (she) shall have general supervision of the funds and property of the Corporation and of the funds and property of the Corporation and of the performance by the custodian of its duties with respect thereto. He (she) shall render to the Board of Directors, whenever directed by the Board, an account of the financial condition of the Corporation and of all his (her) transactions as Treasurer, and as soon as possible after the close of each financial year he (she) shall make and submit to the Board of Directors a like report for such financial year. He (she) shall cause to be prepared annually a full and correct statement of the affairs of the Corporation, including a balance sheet and a financial statement of operations for the preceding fiscal year, which shall be submitted at the next succeeding annual meeting of Stockholders and filed within twenty days thereafter at the principal office of the Corporation. He (she) shall perform all the acts incidental to the office of Treasurer, subject to the control of the Board of Directors. Section 12. Assistant Treasurer. The Assistant Treasurers, in the order of their seniority, shall in the absence or disability of the 11 Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board of Directors may from time to time presume. Section 13. Surety Bonds. The Board of Directors may require any officer or agent of the Corporation to execute a bond (including, without limitation, any bond required by the Act, and the rules and regulations of the Securities and Exchange Commission) to the Corporation in such sum and with such surety or sureties as the Board of Directors may determine, conditioned upon the faithful performance of his (her) duties of the Corporation, including responsibility for negligence and for the accounting of any Corporation's property, funds or securities that may come into his (her) hands. ARTICLE VI. Indemnification and Insurance Section 1. Indemnification of Directors and Officers. The Corporation shall indemnify to the fullest extent permitted by law (including the Act) and the Articles of Incorporation, as currently in effect or as hereafter amended, any person made or threatened to be made a party to any action, suit or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that such person or such person's testator or intestate is or was a Director, officer or employee of the Corporation or serves or served at the request of the Corporation any other enterprise as a director, officer or employee. To the fullest extent permitted by law (including the Act) and the Articles of Incorporation, as currently in effect or as hereafter amended, expenses incurred by any such person in defending any such action, suit or proceeding shall be paid or reimbursed by the Corporation promptly upon receipt by it of an undertaking of such person to repay such expenses if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation. The rights provided to any person by this Article shall be enforceable against the Corporation by such person who shall be presumed to have relied upon it in serving or continuing to serve as a Director, officer or employee as provided above. No amendment of this Article shall impair the rights of any person arising at any time with respect to events occurring prior to such amendment. For purposes of this Article, the term "Corporation" shall include any predecessor of the Corporation and any constituent corporation (including any constituent of a constituent) absorbed by the Corporation in a consolidation or merger; the term "other enterprise" shall include any corporation, partnership, joint venture, trust or employee benefit plan; service "at the request of the Corporation" shall include service as a Director, officer or employee of the Corporation which imposes duties on, or involves services by, such Director, officer or employee with respect to an employee benefit plan, its participants or beneficiaries; any excise taxes assessed on a person with 12 respect to an employee benefit plan shall be deemed to be indemnifiable expenses; and action by a person with respect to any employee benefit plan which such person reasonably believes to be in the interest of the participants and beneficiaries of such plan shall be deemed to be action not opposed to the best interests of the Corporation. Section 2. Insurance. Subject to the provisions of the Act, the Corporation, directly, through third parties or through affiliates of the Corporation, may purchase, or provide through a trust fund, letter of credit or surety bond insurance on behalf of any person who is or was a Director, officer, employee or agent of the Corporation, or who, while a Director, officer, employee or agent of the Corporation, is or was serving at the request of the Corporation as a Director, officer, employee, partner, trustee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise against any liability asserted against and incurred by such person in any such capacity or arising out of such person's position, whether or not the Corporation would have the power to indemnify such person against such liability. ARTICLE VII. Stock Section 1. Certificates. Stockholders are not entitled to receive certificates evidencing their share ownership unless the Directors shall, by resolution, otherwise determine. Section 2. Transfer of Capital Stock. Transfers of shares of the stock of the Corporation shall be made on the books of the Corporation by the holder of record thereof (in person or by his attorney thereunto duly authorized by a power of attorney duly executed in writing and filed with the Secretary of the Corporation) (i) if a certificate or certificates have been issued, upon the surrender of the certificate or certificates, properly endorsed or accompanied by proper instruments of transfer, representing such shares, or (ii) as otherwise prescribed by the Board of Directors. Every certificate exchanged, surrendered for redemption or otherwise returned to the Corporation shall be marked "Canceled" with the date of cancellation. Section 3. Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such shares or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the General Laws of the State of Maryland. 13 Section 4. Transfer Agents and Registrars. The Board of Directors may, from time to time, appoint or remove transfer agents and/or registrars of transfers of shares of stock of the Corporation, and it may appoint the same person as both transfer agent and registrar. Upon any such appointment being made all certificates representing shares of stock thereafter issued shall be countersigned by one of such transfer agents or by one of such registrars of transfers or by both and shall not be valid unless so countersigned. If the same person shall be both transfer agent and registrar, only one countersignature by such person shall be required. Section 5. Stock Ledger. The Corporation shall maintain an original stock ledger containing the names and addresses of all Stockholders and the number and class of shares held by each Stockholder. Such stock ledger may be in written form or any other form capable of being converted into written form within a reasonable time for visual inspection. ARTICLE VIII. General Provisions Section 1. Custodianship. The Corporation shall place and at all times maintain in the custody of a custodian (including any subcustodian for the custodian) all funds, securities and similar investments owned by the Corporation. The Corporation shall have as custodian or custodians (including any subcustodian) banks of good standing which shall conform to the requirements of Section 17(f) of the Act and, to the extent required by the Act, the funds and securities held by the Corporation shall be kept in the custody of one or more such custodians (or subcustodians), provided such custodian or custodians (and any subcustodian) can be found ready and willing to act, and further provided that the Corporation may use as subcustodians, for the purpose of holding any foreign securities and related funds of the Corporation, such foreign banks as the Board of Directors may approve and as shall be permitted by law. The Corporation shall upon the resignation or inability to serve of its custodian or upon change of the custodian: (a) in case of such resignation or inability to serve, use its best efforts to obtain a successor custodian; (b) require that the cash and securities owned by the Corporation be delivered directly to the successor custodian; and (c) in the event that no successor custodian can be found, submit to the Stockholders before permitting delivery of the cash and securities owned by the Corporation otherwise than to a successor 14 custodian, the question whether the Corporation shall be liquidated or shall function without a custodian. Section 2. Seal. The corporate seal shall have inscribed thereon the name of the Corporation and the year of its organization. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Section 3. Execution of Instruments. Unless otherwise prescribed by the Board of Directors, all deeds, documents, transfers, contracts, agreements and other instruments requiring execution by the Corporation shall be signed by any officer thereof. ARTICLE IX. Amendments The Board of Directors shall have the power to make, alter and repeal the By-Laws of the Corporation. EX-99.B4 3 FORM OF GLOBAL CERTIFICATE 1 DRAFT - 1/28/96 [Form of the Face of Global Certificate] COMMON STOCK COMMON STOCK THE COUNTRYBASKETS INDEX FUND, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND THE ____________________ INDEX SERIES Unless this Certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. CUSIP 22236E______ SEE REVERSE FOR CERTAIN DEFINITIONS THIS IS TO CERTIFY THAT CEDE & CO. is the owner and registered Holder of the number of fully paid and non- assessable shares of the common stock, par value $.001 per share (the "CB(TM) Shares"), of the ____________ Index Series of The CountryBaskets Index Fund, Inc., a Maryland corporation (the "Corporation"), shown from time to time on the records of the transfer agent thereof as represented by this Certificate which shall be all of the outstanding CB(TM) Shares of the ____ Index Series of the Corporation. This Certificate and the shares represented hereby are issued and shall be held subject to the provisions of the General Corporation Law of the State of Maryland and the Articles of Incorporation and By-laws of the Corporation, as they may be amended from time to time. 2 This certificate is not valid unless manually countersigned by the Transfer Agent. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated _____________________________ ____________________________ SECRETARY PRESIDENT ____________________________ TRANSFER AGENT By __________________________________ Authorized Officer 3 [Reverse of form of global certificate] THE COUNTRYBASKETS INDEX FUND, INC. Incorporated Under the Laws of the State of Maryland _____ Index Series This Certificate represents all shares of common stock, par value $.001 per share (the "CB(TM) Shares"), of the ____ Index Series of The CountryBaskets Index Fund, Inc. (the "Corporation") recorded from time to time on the books of the Transfer Agent. The registered Holder is entitled to all the rights, interests and privileges of a stockholder as provided in the Articles of Incorporation and By-Laws of the Corporation, as amended, which are incorporated by reference herein. This Certificate shall be transferable by Cede & Co. as the registered Holder hereof by presentation and surrender hereof at the office of State Street Bank and Trust Company, as transfer agent (the "Transfer Agent"), located in Boston, Massachusetts, properly endorsed or accompanied by an instrument of transfer, in form satisfactory to the Transfer Agent, and executed in blank by the registered Holder hereof or his authorized attorney. CB(TM) Shares represented hereby may be redeemed at the net asset value thereof in kind, in cash or a combination thereof pursuant to Article V of the Articles of Incorporation, as amended in accordance with the requirements thereof, by the registered Holder when tendered together with an instrument of assignment and transfer duly endorsed or executed in blank, together with an irrevocable instruction in writing to redeem the same, and the Corporation will thereafter redeem said CB(TM) Shares at net asset value, provided that the CB(TM) Shares to be redeemed represented by this Certificate shall equal one or more Creation Units of shares as provided in the Articles of Incorporation, as amended from time to time. The Corporation has authority to issue stock of more than one series. The Corporation will furnish without charge to the registered Holder hereof a full statement of: (1) the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the stock of each series which the Corporation is authorized to issue; (2) the differences in the relative rights and preferences between the shares of each series which the Corporation is authorized to issue to the extent such rights and preferences have been set; and (3) the authority of the Board of Directors to set the relative rights and preferences of subsequent series. 4 The registered Holder hereof may be required to pay taxes or other governmental charges that may be imposed in connection with the transfer, redemption or other surrender of this Certificate. The Transfer Agent, notwithstanding any notice to the contrary, may treat the person in whose name this Certificate is registered upon the books of the Transfer Agent as the absolute owner hereof for all purposes. [SEE CURRENT PROSPECTUS FOR FURTHER INFORMATION CONCERNING REDEMPTION OF SHARES] _____________ 5 [FORM OF ASSIGNMENT] For value received ______________________________ hereby sells, assigns and transfers unto ____________________ [______________] (please insert Social Security Number or other identifying number of the Assignee) all shares of the __________ Index Series of The CountryBaskets Index Fund, Inc. represented by the within Certificate, and does hereby irrevocably constitute and appoint __________________________ Attorney to transfer the said shares on the books of the Transfer Agent for such __________ with full power of substitution in the premises. Dated:____________ ____________________________ (Signature) SIGNATURE GUARANTEED BY: __________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular without alteration or enlargement or any change whatever. EX-99.B5 4 INVESTMENT MANAGEMENT AGREEMENT 1 Draft of January 30, 1996 INVESTMENT MANAGEMENT AGREEMENT INVESTMENT MANAGEMENT AGREEMENT (this "Agreement"), dated ________ __, 1996, between The CountryBaskets Index Fund, Inc., a Maryland corporation (the "Company"), with respect to each series of the Company listed on Annex A (each such series, and each series hereafter authorized and incorporated into Annex A, herein referred to as a "Series"), and Deutsche Morgan Grenfell/C. J. Lawrence Inc., a Delaware corporation (the "Adviser"). W I T N E S S E T H : WHEREAS, the Company is a management investment company organ- ized as a series fund and registered under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, the Adviser is a registered investment adviser under the Investment Advisers Act of 1940, as amended, and a registered broker- dealer under the Securities Exchange Act of 1934, as amended (the "1934 Act"); WHEREAS, each Series is considered to be an open-end fund and the Company desires to retain the Adviser to render specified investment advisory and certain management and administrative services to it with respect to each Series; and WHEREAS, the Adviser desires to render such services to the Company with respect to each Series; NOW, THEREFORE, in consideration of the mutual agreements, covenants, and representations contained in this Agreement, the parties hereto agree as follows: ARTICLE I Investment Management Services 1.1 Investment Advisory Services. The Adviser shall, for the period and on the terms set forth in this Agreement, act as the investment adviser to each Series. The Adviser shall determine which securities shall be purchased, sold and loaned, which options contracts, futures contracts and options thereon the Series will enter into and which other investments shall be made by the Series, make purchases and sales of securities and other investments on behalf of the Series and arrange for the lending of the portfolio securities of the Series, determine how the securities held by the Series should be voted, determine what portion of the Series' assets 2 shall be held uninvested, in each case subject to the overall supervision of the Company's Board of Directors and in compliance with the investment objectives, policies and restrictions pertaining to such Series set forth from time to time in the Fund's registration statement (File Nos. 33-85710, 811-8734) under the Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act (the "Registration Statement"), the prospectus and statement of additional information contained therein, the 1940 Act, and other applicable laws and regulations. The lending of portfolio securities shall be subject to liability as set forth in Section 3.1 and conducted in accordance with such policies, standards and procedures as may be adopted by the Board of Directors from time to time and all applicable laws and regulations, and in connection therewith the Adviser, subject to the approval of the Company's Board of Directors, may appoint as its agent and at its expense and continuing responsibility hereunder, one or more persons to carry out such lending operations. 1.2 Portfolio Transactions. (a) The Adviser shall select the brokers or dealers that will execute the purchases and sales of securities and other investments for the Series and is directed to use its best efforts to obtain the best available price and most favorable execution, except as permitted herein. (b) If in good faith the Adviser believes it can obtain the best price and most favorable execution in connection therewith, the Adviser may execute each Series' portfolio transactions on an agency basis through itself or an affiliated broker or dealer, provided that any transaction so executed complies with Section 17(e) of the 1940 Act and the rules thereunder. Such transactions may not be executed by the Adviser or an affiliate as principal unless permitted by an exemptive order of the Securities and Exchange Commission (the "Commission") or applicable rule or regulation. (c) Unless and until otherwise directed by the Board of Directors of the Company, the Adviser may also effect individual securities and other transactions with nonaffiliated brokers or dealers at commission rates in excess of the commission rates another broker or dealer would have charged, if the Adviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Adviser's overall responsibili- ties with respect to the Series as contemplated by Section 28(e) of the 3 1934 Act. The execution of such transactions shall not be deemed to represent an unlawful act or breach of any duty created by this Agreement or otherwise. The Adviser will promptly communicate to the officers and Board of Directors of the Company such information relating to Series portfolio transactions as they may reasonably request. 1.3 Third-Party Service Providers. The Adviser shall: (a) negotiate, maintain, evaluate and coordinate contractual arrangements with third-party service providers, including, but not limited to, administrators, custodians, transfer agents, distributors, independent accountants, principal underwriters, attorneys, insurers and printers; and (b) assist the various third-party service providers retained by the Company for itself or with respect to a Series by, among other things, providing any information to such service providers as the Company's Board of Directors deems appropriate; reviewing and providing advice to such service providers regarding sales literature and marketing plans and providing information to the Series' principal underwriters concerning Series performance and administration. 1.4 Determination of Fund Basket. The Adviser shall determine after the end of each trading day on the New York Stock Exchange (the "NYSE"), in accordance with the Series' policies as adopted from time to time by the Board of Directors, the identity and weighting of the securities in the Fund Basket (as defined in the Registration Statement) required for the issuance of shares of the Series on a specified date of purchase and for the redemption of shares of the Series on the next trading day. The Adviser shall provide or cause to be provided this information to the Series' distributor and other persons according to the policy established by the Company's Board of Directors. 1.5 Reports and Records. (a) The Adviser shall assist the Company in determining the amount of dividends and other shareholder distributions to be declared and paid with respect to the Series; provide the Company's Board of Directors with those financial reports and analyses that the Board deems necessary to fulfill its fiduciary obligations with respect to the Series; plan and facilitate all quarterly and special meetings of the Board of Directors of the Company; oversee the preparation of and, as necessary, filing of all documents and reports required under 4 the 1933 Act, the 1934 Act and the 1940 Act, including all information, documents and reports required to be filed by the Company under Sections 30(a) and (b) of the 1940 Act and any financial statements contained therein, but the Adviser shall not be responsible for the preparation of any of the above material; oversee the tabulation of proxies by the Company's transfer agent; assist the Company in maintaining its corporate existence; oversee and implement procedures for monitoring the Company's compliance with federal and state law, regulations applicable to the Company's operations and each Series' investment objective, policies and restrictions as established by the Company's Board of Directors; oversee and coordinate the maintenance of appropriate insurance and fidelity bonds on behalf of each Series and provide any other management services that the Company may reasonably request with respect to the Series, and oversee the filings and other requirements under the rules of the NYSE applying to the shares of its Series as listed securities. (b) The Adviser shall be responsible for preparing, maintaining and preserving for the periods prescribed by Rule 31a-2 of the Commission under the 1940 Act the following records: (i) the journals required by paragraph (b)(1) of Rule 31a- 1 under the 1940 Act (the "Rule") insofar as such journals require entries with respect to purchases and sales of portfolio securities of each Series; (ii) the securities record or ledger required by paragraph (b)(3) of the Rule; (iii) the Company's Articles of Incorporation, by-laws and other corporate documents required by paragraph (b)(4) of the Rule; (iv) the record of brokerage orders and portfolio purchases and sales required by paragraphs (b)(5) and (b)(6) of the Rule; (v) the record of all puts, calls, spreads, straddles and other options required by paragraph (b)(7) of the Rule; (vi) the record of allocation of portfolio purchase and sale orders to named brokers or dealers required by paragraph (b)(9) of the Rule; 5 (vii) the record of authorizations of transactions in portfolio securities required by paragraph (b)(10) of the Rule; and (viii) the file of advisory material required by paragraph (b)(11) of the Rule. 1.6 Budgets and Allocation of Expenses. (a) The Adviser shall establish the Series' operating expense budgets and oversee the payment of incurred operating expenses. The Adviser shall bear all expenses, including personnel costs and overhead, incurred by the Adviser pursuant to its duties under this Agreement and shall pay the salaries of directors and officers of the Company who are affiliated persons (as defined in the 1940 Act) of the Adviser. The Adviser shall provide office facilities and personnel adequate to perform the services described in Article I of this Agreement. The Adviser shall not be required to pay expenses of any activity which is primarily intended to result in sales of shares of the Series. (b) Each Series shall be responsible for all its own expenses, including, without limitation, its allocable share of the organizational expenses of the Company; insurance expenses; the compensation of directors not affiliated with the Adviser, administrator or distributor and their travel expenses; expenses incurred by the Series in connection with Board of Directors meetings other than those incurred by persons affiliated with the Adviser, administrator or distributor; brokerage and other costs of executing portfolio transactions; payment for portfolio pricing services to a pricing agent, if any; litigation expenses; interest expense; taxes and governmental fees; registration and qualifying fees paid to the Commission and any other state or foreign governmental agency regulating the purchase and sale of the Series' shares; legal and independent accountants' fees; custody, dividend paying, and transfer agent expenses; fees payable to the Series' administrator; expenses of obtaining and maintaining stock exchange listings of the Series' shares; shareholder meeting expenses; proxy and shareholder report expenses; expenses of preparing, printing and delivering the Company's prospectuses and statements of additional information required to be delivered to purchases of its shares by the 1934 Act as well as those used in connection with making offers to sell the Series' shares in Creation Unit size which are paid for by each Series in accordance with its plan adopted under Rule 12b-1 of the 1940 Act; expenses incurred by the Series in connection 6 with the Company's membership in investment company organizations and trade associations; and extraordinary expenses. 1.7 Shareholder and Press Relations. The Adviser shall arrange the Company's relationships with shareholders of the Series and the NYSE, including responding to shareholder inquiries and requests related to the Series and shall prepare or oversee the preparation of all press releases and notices to the NYSE. ARTICLE II Fees and Duration 2.1 Fees. In return for the Adviser's services with respect to the Series under this Agreement, each Series shall pay the Adviser a fee, computed daily and paid monthly, equal to the annualized percentage of the average daily net assets of the Series set forth on Annex A, plus 40% of: (a) the gross investment income of the Series as calculated for financial reporting purposes less (b) dividends on securities held in the portfolio of the Series. 2.2 Duration. (a) Unless sooner terminated, this Agreement shall continue in effect with respect to each Series until __________, 1998. Thereafter, if not terminated, this Agreement shall continue in effect for successive periods of twelve months after such date, provided that each such continuance shall be subject to annual approval with respect to each Series by (i) the Company's Board of Directors or (ii) the vote of a majority of the Series' outstanding voting securities (as defined in the 1940 Act), provided that in either event the continuance is also approved by a majority of the Company's Board of Directors who are not interested persons (as defined in the 1940 Act) of the Company by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable with respect to any Series, without penalty, upon 60 days' notice, by the Board of Directors or by the vote of a majority (as defined in the 1940 Act) of the Series' outstanding voting securities. The Agreement is also terminable without penalty, upon 60 days' notice, by the Adviser with respect to any Series, and will terminate automatically in the event of its assignment (as defined in the 1940 Act). Except as may be provided by law, the termination of this Agreement with respect to one or more particular Series shall not act to terminate this Agreement with respect to any other Series, as to which this Agreement shall remain in full force and effect. 7 (b) Notwithstanding anything to the contrary contained in this Section 2.2, the sublicense granted to the Company pursuant to Section 4.7 shall terminate upon the termination of this Agreement except that in the event of termination resulting from a change of control of the Adviser that is deemed to be an assignment under the 1940 Act and a termination by the Adviser, the Company may elect to continue as a sublicensee for 90 days provided it pays the Adviser a license fee during the period equal to the license fee the Adviser is paying under the License Agreement. (c) Upon termination of this Agreement with respect to any Series the obligations of each party shall cease except for the provisions of this Section 2.2 and Sections 4.7 and 4.9. 2.3 Reductions to Fees. The Adviser shall reimburse the Series for that portion of the Series' annual net expenses (excluding interest, taxes, brokerage commissions, distribution expenses, if any, and extraordinary expenses), that exceeds the most stringent limits prescribed by any state in which Series shares are offered for sale. However, the Adviser will not be obligated to reimburse any Series for any such amounts that exceed the fees (calculated pursuant to Section 2.1) paid to the Adviser by the Series. ARTICLE III Liability 3.1 Generally. Absent (i) willful misfeasance, bad faith or gross negligence on its part in the performance of, or reckless disregard by it of its obligations and duties under, this Agreement, or (ii) a breach of a fiduciary duty owed to the Series with respect to the receipt of com- pensation for services (in which case any award of damages shall be limited to the period and the amount set forth in Section 36(b)(3) of the 1940 Act), neither the Adviser nor any of its directors, officers, or employees shall be liable to the Series, the Company or to any Series shareholder for any error of judgment, mistake of law, or for any loss suffered by the Series in connection with the matters to which this Agreement relates including, without limitation, any loss that may be sustained in connection with the purchase, holding, redemption, sale or lending of any security or investments or the entering into of any futures or options on futures contracts on behalf of the Series. 8 3.2 Other Liabilities. The Adviser does not assume responsibility for the acts or omissions of any other person. ARTICLE IV Miscellaneous 4.1 Notices. Any notice or other communication required to be given pursuant to this Agreement shall be deemed duly given if addressed and delivered or mailed by registered mail, postage prepaid, to (1) Deutsche Morgan Grenfell/C. J. Lawrence Inc. at 31 West 52nd Street, New York, New York 10019, Attention: Robert Lynch; and (2) The CountryBaskets Index Fund, Inc. at 31 West 52nd Street, New York, New York 10019, Attention: Secretary. 4.2. Choice of Law. This Agreement shall be construed in accordance with New York State law. 4.3. Captions. The captions in this Agreement are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction. 4.4 Severability. If any provisions of this Agreement shall be held or made invalid, in whole or in part, then the other provisions of this Agreement shall remain in force. Invalid provisions shall, in accordance with this Agreement's intent and purpose, be replaced, to the extent legally possible, by valid provisions in order to effectuate the intended results of the invalid provisions. 4.5 Agency. The Company has not appointed the Adviser as its agent under this Agreement. 4.6 Reliance on Communications. The Adviser shall be entitled to rely on any notice or communication reasonably believed by it to be genuine and correct and to have been sent by or on behalf of the Series. 4.7 FT Index Sublicense. The Adviser hereby grants to the Company with respect to each Series a non-exclusive, non-transferable royalty free sublicense to use and refer to the Financial Times/Standard & Poor's Actuaries World Indices(TM) and the related trade name and trademark rights identified as "Trademarks" in the License Agreement, dated as of __________, 1996, between Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and the Adviser (the "License Agreement"), on the terms and conditions specified in Section 13(a) thereof. Such sublicense shall 9 terminate at the later of 60 days after notice is given under Section 2.2 by the Adviser of termination of this Agreement or 60 days after the termination of the License Agreement. No Series shall be required to make any payments in respect of such sublicense after the termination of the sublicense except as provided in Section 2.2. 4.8 Exclusivity. The Adviser's services to the Series shall not be exclusive and nothing in the Agreement shall prevent the Adviser, or any of its affiliates, from providing similar services to other investment companies or clients (regardless of whether their investment objectives or policies are similar to the Series') or from engaging in any other activities. When the Adviser's other clients seek to purchase or sell a security at the same time such security is being purchased or sold for the Series, such purchases and sales will, to the extent feasible, be allocated among the Series and the Adviser's other clients in a manner that the Adviser believes equitable. 4.9 Right of Company to Use Name of CountryBaskets Index Fund. "The CountryBaskets Index Fund," "CountryBaskets," "CB Shares" and various names connected with CountryBaskets, for which the Adviser has filed registration applications with the U.S. Patent and Trademarks Office (the "Marks"), are trade and service marks of the Adviser. The Adviser consents to the Company's use of "CountryBaskets" in its corporate name and otherwise and grants to the Company a non-exclusive, non-transferable royalty fee sublicense to use and refer to the Marks during the term of this Agreement. Upon termination of this Agreement such consent and sublicense shall terminate after 120 days and the Company will promptly take the necessary steps to change its name. To the extent that is not accomplished within 120 days, the Company agrees that it will cease issuing new shares until its name is changed to one that has no similarity to "The CountryBaskets Index Fund". 10 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first written above. THE COUNTRYBASKETS INDEX FUND, INC. By:________________________________ Name: Title: DEUTSCHE MORGAN GRENFELL/ C. J. LAWRENCE INC. By:________________________________ Name: Title: 11 INVESTMENT MANAGEMENT AGREEMENT The CountryBaskets Index Fund, Inc. Annex A Percentage of Average Daily Series Net Assets (Annualized) Australia Index Series .30% France Index Series .30% Germany Index Series .30% Hong Kong Index Series .45% Italy Index Series .30% Japan Index Series .30% South Africa Index Series .45% UK Index Series .30% US Index Series .20% EX-99.B6A 5 DISTRIBUTION AGREEMENT 1 Draft - 1/29/96 THE COUNTRYBASKETS INDEX FUND, INC. DISTRIBUTION AGREEMENT DISTRIBUTION AGREEMENT (the "Agreement") made as of , 1996, between THE COUNTRYBASKETS INDEX FUND, INC., a Maryland corporation (the "Fund"), and ALPS MUTUAL FUNDS SERVICES, INC., a Colorado corporation (the "Distributor"). W I T N E S S E T H: WHEREAS, the Fund is an open-end management investment company organized as a series fund and registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the Fund is authorized to issue shares of common stock, par value $.001 per share (the "Shares"), in one or more series (each, a "Series"), currently consisting of the Series listed in Annex A hereto; and WHEREAS, the Shares of each Series will be listed on the New York Stock Exchange ("NYSE") and traded under the symbols set forth in Annex A hereto; and WHEREAS, the Fund will sell and redeem Shares of each Series only in aggregations constituting a Creation Unit as such term is used in the Registration Statement (as defined herein), in accordance with the terms and conditions set forth therein; and WHEREAS, the Distributor is a registered broker-dealer under the Securities Exchange Act of 1934, as amended (the "1934 Act"); and WHEREAS, the Fund desires to retain the Distributor to act as distributor with respect to the continuous offering and sale of Shares of each Series in Creation Unit aggregations as set forth in the Fund's Registration Statement, to provide for the servicing of stockholder accounts and to enter into arrangements with dealers; and WHEREAS, the Distributor desires to render these services to the Fund; and WHEREAS, the Board of Directors of the Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act with respect to each Series (collectively, the 2 "12b-1 Plan") and may make payments to the Distributor pursuant to such 12b-1 Plan, subject to and in accordance with the terms and conditions thereof and any related agreements; NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the Fund and the Distributor hereby agree as follows: Section 1 Distribution and Stockholder Services 1.1 Appointment. The Fund hereby appoints the Distributor as the exclusive distributor for the continuous offering and sale of the Shares of each Series in Creation Unit aggregations on the terms and for the periods set forth in this Agreement, and the Distributor hereby accepts such appointment and agrees to act in such capacity hereunder. 1.2 Definitions. (a) The term "Registration Statement" shall mean the registration statement most recently filed from time to time by the Fund with the Securities and Exchange Commission (the "Commission") and effective under the Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act, as such registration statement is amended by any amendments thereto at the time in effect. (b) The term "Prospectus" shall mean the prospectus included as part of the Fund's Registration Statement, as such prospectus may be amended or supplemented from time to time. (c) The term "Statement of Additional Information" shall mean the Statement of Additional Information included as part of the Fund's Registration Statement, as such Statement of Additional Information may be amended or supplemented from time to time. (d) All capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Registration Statement. 1.3 Distributor's Duties. The Distributor shall have the following duties: (a) The Distributor agrees to sell, as agent for each Series, from time to time during the term of this 3 Agreement, Shares of each Series in Creation Unit size aggregations specified for such Series in the Registration Statement on the terms described therein and in accordance with the provisions hereof. Each Series reserves the right to issue and sell Shares in the event that the Distributor, either in the exercise of its rights or in breach of its covenants hereunder, is not selling Creation Unit aggregations of Shares of such Series. (b) At the request of the Fund, the Distributor shall enter into an agreement in the form specified by the Fund (each an "Authorized Participant Agreement") with selected participants in the system for book-entry of securities of The Depository Trust Company ("DTC") (or any successor depository thereto) (each an "Authorized Participant"). (c) Upon commencement of the Fund's operations, the Distributor will hold itself available to receive notices of intention to purchase (other than in the case of the US Index Series) and purchase orders in the form specified by the Fund from Authorized Participants for the purchase of Creation Unit size aggregations of Shares of each Series on Business Days designated for such Series and on the terms and in the manner set forth in the Prospectus and the Statement of Additional Information. The Distributor will transmit each such notice of intention and purchase order received to the Fund's Custodian and Transfer Agent as promptly as practicable. Upon confirmation by the Custodian of receipt of the Fund Basket and cash in an amount sufficient to pay the Cash Component and acceptance by the Fund or by the Distributor as agent on behalf of the Fund of a purchase order in "proper form," as defined in the Prospectus and the Statement of Additional Information, the Distributor will transmit advice of such acceptance to the Transfer Agent and the Custodian. Upon receipt of advice from the Transfer Agent of the issuance of Creation Unit aggregations of Shares pursuant to such purchase order, the Distributor shall confirm the issuance and sale of such Creation Unit aggregations of Shares to the Authorized Participant placing the order by mailing a confirmation, together with copies of the Prospectus and the Statement of Additional Information. Purchase orders shall be deemed effective only at the time accepted by the Fund or by the Distributor as agent of the Fund. The Fund, and the Distributor on behalf of the Fund, each reserves the right to reject any purchase order until acceptance. 4 (d) The offering price of each Creation Unit aggregation of Shares of a Series shall be the net asset value per Share for such Series next determined following receipt of a purchase order in proper form and shall be determined as set forth in the Registration Statement. The Fund will cause the Custodian to furnish or cause to be furnished to the Distributor, promptly after 4:00 p.m., New York time, an advice (i) on each day the NYSE is open of each computation of net asset value per Share of each Series and (ii) on each Business Day for a Series on which Creation Unit aggregations of Shares are sold of the amount of the Cash Component for each Series on such Business Day. (e) Based on information provided to it, the Distributor will make available by 8:00 p.m., New York time, following the computation of the net asset value of Shares of each Series at the close of business on the NYSE (presently 4:00 p.m. New York time) on each day the NYSE is open for business as set forth in the Registration Statement (i) the list of names and the required number of shares of each of the portfolio securities constituting the Fund Basket for each Series, as designated by the Fund's investment adviser (which shall be the Fund Basket for redemption for such Series on the next NYSE business day and for purchases on a designated subsequent Business Day as described in the Registration Statement), and (ii) the amount of the Cash Component for purchases of Creation Unit size aggregations of Shares of such Series on such Business Day (or if such day is not a Business Day, on the previous Business Day), as designated by the Fund's Custodian. (f) In performing its duties hereunder, the Distributor shall act in conformity with the Articles of Incorporation, By-Laws, Registration Statement and each Prospectus and Statement of Additional Information relating to Shares of the Fund and with the instructions and directions of the Board of Directors of the Fund, and will comply with and conform in all material respects to the requirements of the 1933 Act, the 1934 Act and the 1940 Act and all other applicable federal and state laws, regulations and rulings, and the rules and regulations of the National Association of Securities Dealers, Inc. ("NASD"). (g) The Distributor shall not be obligated to sell any certain number of Creation Unit size aggregations of Shares of any Series, and, subject to 5 Section 6.6 hereof, nothing herein contained shall prevent the Distributor from entering into like distribution arrangements with other investment companies. (h) The Distributor may enter into written dealer agreements ("Dealer Agreements") and service agreements ("Service Agreements"), in each case in the forms approved by the Board of Directors of the Fund, with registered broker-dealers and other persons, as the case may be, for distribution, marketing and for stockholder services to stockholders of one or more Series. Such Dealer Agreements may be entered into with registered broker-dealers who are members of the NASD or foreign securities dealers who are not eligible for membership in the NASD who have agreed to comply with the applicable provisions of the Rules of Fair Practice of the NASD. Each Dealer Agreement and Service Agreement shall be subject to annual approval by the Board of Directors of the Fund and if payments thereunder are to be made pursuant to the 12b-1 Plans shall comply with the terms and conditions thereof. (i) The Distributor agrees to be responsible for implementing and/or operating the 12b-1 Plans in accordance with the terms thereof, including maintaining Dealer Agreements and Service Agreements and processing payments and reimbursements thereunder (in conjunction with the services provided with respect thereto by the Fund's administrator). (j) The Distributor shall provide toll-free lines for direct investor and stockholder use between the hours of 6:30 a.m. to 7:00 p.m. Mountain time on each day that the NYSE is open for business, with appropriate NASD licensed order taking and distribution services staff. (k) The Distributor shall clear and file all advertising, sales, marketing and promotional materials of the Fund provided to the Distributor, or in the preparation of which it has participated, with the NASD as required by the 1933 Act and the 1940 Act, and the rules promulgated thereunder, and by the rules of the NASD. (l) The Distributor will ensure that all direct requests for Prospectuses and Statements of Additional Information are fulfilled. In addition, the Distributor will arrange to provide the NYSE (and any other national stock exchange on which the Shares may 6 be listed) with copies of Prospectuses to be provided to purchasers in the secondary market. The Distributor will generally make it known in the brokerage community that prospectuses and statements of additional information are available, [including] by (i) advising the NYSE on behalf of its member firms of the same, (ii) making such disclosure in all marketing and advertising materials prepared and/or filed by the Distributor with the NASD, and (iii) as may otherwise be required by the Commission. (m) The Distributor agrees to make available at its own cost and expense one or more members of its staff to attend all Board meetings of the Fund in order to provide information with regard to the ongoing distribution process and for such other purposes as may be requested by the Board of Directors of the Fund. (n) The Distributor will provide and maintain a direct computer communications link with the DTC, the Fund's Transfer Agent and Custodian and the National Securities Clearing Corporation, Inc. (the "NSCC"). The Distributor will compare for consistency the Fund Basket for each Series as made available by the NSCC through its systems with the composition of the Fund Basket as provided to the Distributor. (o) The Distributor shall examine the notices of intention to purchase and purchase order forms submitted by Authorized Participants with respect to the representations made therein to determine whether the beneficial owners of the Creation Unit or Units if purchased in accordance with such order upon issuance of such Shares would own or hold 80% or more of the outstanding Shares of such Series for purposes of compliance with section 351 of the Internal Revenue Code of 1986, as amended, and shall review the determination of the Transfer Agent with respect thereto. (p) The Distributor shall consult with Authorized Participants with respect to estimating the amount of the Cash Component for purchase of Creation Unit aggregations of Shares of each Series. (q) The Distributor shall consult with the Fund with respect to the production and printing of prospectuses to be used in connection with purchases by new investors of Creation Unit aggregations of Shares of each Series. 7 (r) The Distributor may, and at the request of the Fund shall, cause a subsidiary or affiliate to enter into a service contract with the transfer agent of the Fund to provide certain administrative and processing services for the transfer agent in order to further the purposes and procedures set forth in the Prospectus and the Statement of Additional Information. (s) In performing its duties hereunder the Distributor shall be entitled to rely on and shall not be responsible in any way for information provided to it by the Fund and its service providers and shall not be liable or responsible for the errors and omissions of such service providers, provided that the foregoing shall not be construed to protect the Distributor against any liability to the Fund or its stockholders to which the Distributor would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement. 1.4 The Fund's Duties. The Fund shall have the following duties: (a) The Fund agrees to sell Creation Unit size aggregations of Shares of each Series, subject to paragraph (e) of this Section 1.4, so long as it has Shares of such Series available for sale and to request the Transfer Agent to record on its books the ownership of such Shares in accordance with the book-entry system procedures described in the Prospectus and the Statement of Additional Information in such amounts as the Distributor has requested in writing or other means of data transmission, as promptly as practicable after receipt by Custodian on behalf of the Fund of the Fund Basket and Cash Component (together with any fees) for such purchases and acceptance by the Fund or by the Distributor on behalf of the Fund of a purchase order for such Shares, upon the terms described in the Registration Statement. (b) The Fund shall furnish to the Distributor copies of all information, financial statements and other papers which the Distributor may reasonably request for use of each Series in connection with the distribution of Shares, and this shall include one certified copy, upon request by the Distributor, of all financial statements for each Series by independent accountants and such reasonable number of copies of the Prospectus, Statement of Additional Information and the 8 Fund's annual and interim reports as the Distributor may request. The Fund authorizes the Distributor to use the Prospectus and Statement of Additional Information, but the Fund shall not be responsible in any way for any information, statements or representations given or made by the Distributor or its representatives or agents other than such information, statements or representations as are contained in the Prospectus and Statement of Additional Information or financial reports filed by the Fund or in any sales literature or advertisements specifically approved by the Fund in writing. (c) The Fund shall take, from time to time, such steps, including payment of the related filing fees, as may be necessary to register Shares under the 1933 Act and the 1940 Act to the end that there will be available for sale such number of Creation Unit size aggregations of Shares of each Series as the Distributor may be expected to sell. The Fund agrees to file from time to time such amendments, supplements, reports and other documents as may be necessary in order that there may be in a Registration Statement, Prospectus or Statement of Additional Information no (i) untrue statement of a material fact or (ii) omission to state a material fact necessary in order to make the statements therein, in the case of the Prospectus and Statement of Additional Information in light of the circumstances in which made, not misleading. The Distributor shall furnish such information and other material relating to its affairs and activities as may be required by the Fund for inclusion in the Registration Statement, Prospectus or Statement of Additional Information. (d) The Fund shall keep the Distributor informed of the states and other foreign and domestic jurisdictions in which the Fund has qualified and maintains the qualification of Shares of the respective Series for sale under the securities laws thereof. The Distributor shall furnish such information and other material relating to its affairs and activities as may be required by the Fund in connection with such qualifications. (e) The Fund may reject any purchase order for Creation Unit aggregations of Shares or stop all sales of Shares at any time or from time to time upon notice to the Distributor. 9 1.5 Representations. (a) The Distributor represents and warrants to the Fund that (i) it is duly organized as a Colorado corporation and is and at all times will remain duly authorized and licensed to carry out its services as contemplated herein; and (ii) its entering into this Agreement or providing the services contemplated hereby does not conflict with or constitute a default or require a consent under or breach of any provision of any agreement or document to which the Distributor is a party or by which it is bound (except for any consent in writing which shall have been obtained by the date hereof, including the consent of the Mariner Funds Trust and the Mariner Mutual Funds Trust). (b) The Fund represents and warrants to the Distributor that (i) the Registration Statement and the Prospectus have been or will be, as the case may be, prepared in conformity in all material respects with the 1933 Act, the 1940 Act and the rules and regulations of the Commission (the "Rules and Regulations"); (ii) contain or will contain all statements required to be stated therein in accordance with the 1933 Act, the 1940 Act and the Rules and Regulations; and (iii) all statements of fact contained or to be contained therein are or will be true and correct in all material respects at the time indicated or the effective date, as the case may be, and neither the Registration Statement nor the Prospectus, when it shall become effective under the 1933 Act or be authorized for use, shall include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances in which made, not misleading. The Fund shall from time to time file such amendment or amendments to the Registration Statement and the Prospectus as, in the light of future developments, shall, in the opinion of the Fund's counsel, be necessary in order to have the Registration Statement and the Prospectus at all times contain all material facts required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances in which made, not misleading to a purchaser of shares. If the Fund shall not file such amendment or amendments within 15 days after receipt by the Fund of a written request from the Distributor to do so, the Distributor may, at its option, cease to accept orders for the purchase of Creation Units of Shares until such 10 amendment is filed. The Fund shall not file any amendment to the Registration Statement or the Prospectus without giving the Distributor reasonable notice thereof in advance, provided that nothing in this Agreement shall in any way limit the Fund's right to file at any time such amendments to the Registration Statement or the Prospectus as the Fund may deem advisable. Notwithstanding the foregoing, the Fund shall not be deemed to make any representation or warranty as to any information or statement provided by the Distributor for inclusion in the Registration Statement or the Prospectus. Section 2 Fees and Expenses 2.1 Compensation of the Distributor. Except to the extent that may be provided in Section 2.2, the Distributor shall not receive any payment or compensation with respect to the provision of distribution services under this Agreement; provided, however, that the Distributor shall be entitled to receive payments, if any, under the 12b-1 Plan in accordance with the terms thereof. 2.2 Expenses. (a) Each Series shall bear all costs and expenses of the continuous offering of the Creation Unit size aggregations of Shares of such Series in connection with: (i) fees and disbursements of the Fund's counsel and independent accountants, (ii) the preparation, filing and printing of any registration statements, prospectuses and/or statements of additional information required to be filed by and under federal and state securities laws or required to be delivered by dealers in connection with purchases and sales of Shares on the NYSE, (iii) the preparation and mailing of annual and interim reports, prospectuses and proxy materials required to be distributed to stockholders, (iv) any qualifications of Shares for sale and of the Fund as a broker or dealer under the securities laws of such states or other foreign or domestic jurisdictions as shall be selected by the Fund pursuant to Section 1.4(d) hereof and the cost and expenses payable to each such state for continuing qualification therein and (v) all fees and expenses incident to the listing of the Shares of each Series on the NYSE or any other stock exchange. (b) The Distributor shall bear the following costs and expenses relating to the distribution of the Shares: (i) the costs (other than those payable pursuant to the Fund's agreement with its Transfer Agent) of generating 11 and mailing confirmations of purchases of Creation Unit aggregations of Shares, mailing accompanying Prospectuses and Statements of Additional Information and generating and transmitting confirmations of redemptions of Shares, (ii) all costs of maintaining the records required of a broker/dealer registered under the 1934 Act; (iii) incremental printing and mailing costs for prospectuses to be used in connection with offers and sales to prospective investors of Creation Units of Shares up to a maximum of $25,000 per annum; (iv) the expenses of maintaining its registration or qualification as a dealer or broker under federal or state laws; (v) the expenses incurred by the Distributor and its officers for attending regular and special meetings of the Board of Directors of the Fund held in the United States (or approximately equivalent amounts in the case of such meetings held outside of the United States), and (vi) all other expenses incurred in connection with the distribution services as contemplated herein, except as otherwise specifically provided in this Agreement. 2.3 Segregation of Fees and Expenses. Amounts paid by each Series to the Distributor under its 12b-1 Plan either for distribution related services or stockholder services shall not be used to pay for the distribution of Shares of, or stockholder servicing in respect of, any other Series. However, fees under the 12b-1 Plan attributable to the Fund as a whole shall be allocated to each Series according to the method adopted by the Fund's Board of Directors. Fees attributable to the Fund as a whole shall include any amounts payable under the 12b-1 Plans to the Distributor for its services rendered hereunder. The Distributor's allocation of such 12b-1 Plan fees shall be subject to review by the Fund's Board of Directors. Section 3 Indemnification 3.1 Indemnification of Distributor. The Fund agrees to indemnify, defend and hold the Distributor, its officers and directors and any person who controls the Distributor within the meaning of Section 15 of the 1933 Act (any of the Distributor, its officers and directors or such control persons, for purposes of this Section 3.1, an "Indemnitee"), free and harmless from and against any and all claims, demands, liabilities, and expenses (including costs reasonably incurred in connection with investigating or defending such claims, demands or liabilities and any counsel fees reasonably incurred in connection therewith) which the Indemnitee may incur, under the 1933 Act or under 12 common law or otherwise, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Fund's Registration Statement, or the omission or alleged omission to state in such document a material fact required to be stated therein or necessary to make the statements therein not misleading or, with respect to the Prospectus or the Statement of Additional Information or any amendment or supplement thereto, any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state in such document a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made, not misleading; provided, however, that nothing in this Section 3.1 shall protect the Indemnitee against any liability to the Fund or its security holders that the Indemnitee would otherwise be subject to (i) by reason of willful malfeasance, bad faith, or gross negligence in the performance of its duties, (ii) by reason of the Indemnitee's reckless disregard of its obligations and duties under this Agreement, or (iii) where such liability arises out of or is based upon any untrue statement or omission or alleged untrue statement or omission in the Fund's Registration Statement, Prospectus or Statement of Additional Information that was made in reliance upon and in conformity with written information furnished by the Distributor to the Fund; and provided, further, that the Fund will not be liable in any such case to the Indemnitee with respect to any untrue statement or omission or alleged untrue statement or omission made in the Registration Statement, the Prospectus or the Statement of Additional Information that is subsequently corrected in such document (or an amendment thereof or supplement thereto), if a copy of the Prospectus or Statement of Additional Information (or such amendment thereof or supplement thereto) was not sent or given to the person asserting any such claim, demand, liability or expense at or before the written confirmation of the sale to such person in any case where such delivery is required by the 1933 Act and the Fund had notified the Distributor of the amendment or supplement prior to sending of the written confirmation of sale. Notwithstanding the foregoing, this indemnity of any person who is an officer or director of the Distributor and who is also a director of the Fund shall not inure to the benefit of such officer or director unless a court of competent jurisdiction shall determine, or it shall have been determined by controlling precedent, that such result would not be against public policy as expressed in the 1933 Act or the 1940 Act, and in no event shall anything contained herein be so construed as to protect the Distributor against any liability to the Fund or its stockholders to which the Distributor would otherwise be 13 subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement. The Fund's obligation to indemnify the Indemnitee is expressly conditioned upon the Indemnitee's notification of the Fund of the commencement of any action against the Indemnitee, which notification shall be given by letter or by facsimile transmission addressed to the Fund at its principal office in New York, New York, and sent to the Fund by the person against whom such action is brought within ten days after the summons or other first legal process shall have been served. The Indemnitee's failure to so notify the Fund shall not relieve the Fund of any liability which it may have to the Indemnitee by reason of any such alleged untrue statement or omission or alleged untrue statement or omission independent of this indemnification. The Fund will be entitled to assume the defense of any suit brought to enforce any such claim, demand or liability and to retain legal counsel of good standing chosen by the Fund and approved by the Indemnitee (such approval not to be unreasonably withheld). If the Fund elects to assume the defense of any such suit and retain counsel approved by the Indemnitee, the defendant or defendants in such suit shall bear the fees and expenses of any additional counsel retained by any of them. In the event the Fund does not elect to assume the defense of any such suit and retain counsel of good standing approved by the Indemnitee or the Indemnitee does not approve of the counsel chosen by the Fund (such approval not to be unreasonably withheld), the defendant or defendants in such suit shall bear the fees and expenses of any counsel retained by any of them and the Fund shall reimburse any Indemnitee named as defendant in such suit for the reasonable fees and expenses of any such counsel retained by them. The indemnification agreement contained in this Section 3.1 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Indemnitee and shall survive the sale of any Creation Units of Shares made pursuant to purchase orders obtained by the Indemnitee. This indemnification will inure exclusively to the benefit of the Indemnitee and its successors, assigns and estate. The Fund shall promptly notify the Indemnitee of the commencement of any litigation or proceeding against the Fund in connection with the issue and sale of any Creation Units of Shares. 3.2 Indemnification of the Fund. The Distributor agrees to indemnify, defend, and hold the Fund, its several officers and directors and any person who controls the Fund within the meaning of Section 15 of the 1933 Act (for purposes of this Section 3.2, the Fund, its officers and 14 directors, and its controlling persons are collectively referred to as the "Fund Affiliates"), free and harmless from and against any and all claims, demands, liabilities, and expenses (including costs reasonably incurred in investigating or defending such claims, demands or liabilities and any counsel fees reasonably incurred in connection therewith) which the Fund Affiliates may incur under the 1933 Act or under common law or otherwise, but only to the extent that such liability or expense shall arise out of or be based upon (i) any untrue statement or alleged untrue statement of a material fact contained in information furnished by the Distributor to the Fund for use in the Registration Statement, Prospectus or Statement of Additional Information in effect from time to time under the 1933 Act, or (ii) any omission or alleged omission, on the part of the Distributor, to state a material fact in connection with such information required to be stated in the Registration Statement, Prospectus or Statement of Additional Information or necessary to make such information not misleading, it being understood that the Fund will rely upon the information provided by the Distributor for use in the preparation of the Registration Statement, the Prospectus and the Statement of Additional Information, or (iii) any alleged act or omission on the Distributor's part as the Fund's agent that has not been expressly authorized by the Fund in writing. The Distributor's obligation to indemnify the Fund Affiliates is expressly conditioned upon the Distributor being notified of the commencement of any action brought against the Fund Affiliates, which notification shall be given by letter or facsimile transmission addressed to the Distributor at its principal offices in Denver, Colorado, and sent to the Distributor by the person against whom such action is brought within ten days after the summons or other first legal process shall have been served. The Fund Affiliates' failure to notify the Distributor of the commencement of any such action shall not relieve the Distributor from any liability which it may have to the Fund Affiliates by reason of any such untrue statement or omission or alleged untrue statement or omission on the part of the Distributor independent of this indemnification. The Distributor shall have a right to control the defense of such action, with counsel of its own choosing, satisfactory to the Fund Affiliates, if such action is based solely upon such untrue statement or omission or alleged untrue statement or omission on its part, and in any other event the Distributor and the Fund Affiliates shall each have the right to participate in the defense or preparation of the defense of such action at their own expense. 15 Section 4 Duration, Termination, and Amendment 4.1 Duration. This Agreement shall become effective on , 1996 and continue, unless terminated as provided in Section 4.2 or Section 4.5(a), until , 1998. This Agreement shall thereafter be renewed for successive one-year periods only so long as such continuance or renewal is specifically approved at least annually with respect to each Series as to which it is to continue in effect by both (a) the Fund's Board of Directors or the vote of a majority of the outstanding voting securities (as such term is defined in the 1940 Act) of the Fund and (b) a majority of the Fund's directors who are not parties to this Agreement or "interested persons" (as defined in the 1940 Act) of either party hereto cast in person at a meeting called for the purpose of voting on approval of this Agreement, and, if applicable, as provided in Section 4.5(a). 4.2 Termination. Subject to Section 4.5(b), this Agreement may be terminated at any time as to any Series, without penalty, upon 60 days' prior written notice to the other party by the Fund or by the Distributor. If this Agreement is terminated with respect to any Series, it shall nevertheless remain in effect with respect to any remaining Series. 4.3 Assignment. This Agreement shall automatically terminate in the event of its "assignment." As used in this Agreement, the term "assignment" shall have the meaning such term has in the 1940 Act. 4.4 Amendment. Subject to Section 4.5(c), this Agreement may be amended by mutual consent, provided that no provision of this Agreement may be changed, waived, discharged or terminated except by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and that the Fund's consent to any material amendment to this Agreement requires the approval provided for in Section 4.1. 4.5 Rule 12b-1 Requirements. During such period as the Distributor receives compensation pursuant to the 12b-1 Plan and this Agreement constitutes a 12b-1 Plan related agreement: (a) This Agreement shall continue in effect from and after ________, 1997 only if such continuance is specifically approved annually as to any Series as to which it is to continue in effect by the vote of both 16 (x) the Fund's Board of Directors or a majority of its outstanding voting securities (as defined in the 1940 Act) and (y) by the directors who are not "interested persons" (as defined in the 1940 Act) of the Fund and have no direct or indirect financial interest in the operation of the 12b-1 Plan or in any agreements related thereto (the "Independent Directors"), cast in person at a meeting called for the purpose of voting on such Plan or related agreements. (b) This Agreement may be terminated, without the payment of any penalty, by the Fund as to any Series by vote of a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund, or by the Distributor, in either case, on sixty days' prior written notice to the other party. (c) Any material amendment to this Agreement requires the approval provided for in Section 4.1(a) with respect to annual renewals of this Agreement, and any amendment that materially increases the amount to be spent for distribution services requires the additional approval of the majority of the Fund's outstanding voting securities (as defined in the 1940 Act) of each affected Series. (d) The selection and nomination of those directors who are not "interested persons" (as defined in the 1940 Act) of the Fund shall be committed to the discretion of the directors of the Fund who are not such "interested persons" of the Fund. Section 5 Notice 5.1 Conditions. The Fund shall notify the Distributor immediately of: (a) any request by the Commission for amendments to the Fund's Registration Statement, Prospectus or Statement of Additional Information or for additional information; (b) any stop order suspending the effectiveness of the Fund's Registration Statement or the initiation of any proceeding for that purpose; 17 (c) all actions of the Commission with respect to any amendment to the Fund's Registration Statement, Prospectus or Statement of Additional Information. 5.2 Notification of Parties. Any notice or other communication required or permitted to be given pursuant to this Agreement shall be deemed duly given if addressed and delivered, or mailed by registered mail, postage prepaid, to (1) ALPS Mutual Funds Services, Inc., at 370 17th Street, Suite 1700, Denver, CO 80202, Attention: Chief Financial Officer and (2) The CountryBaskets Index Fund, Inc. at 31 West 52nd Street, New York, New York 10019, Attention: Secretary. Section 6 Miscellaneous 6.1 Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 6.2 Captions. The captions in this Agreement are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction. 6.3 Severability. If any provisions of this Agreement shall be held or made invalid, in whole or in part, then the other provisions of this Agreement shall remain in force. Invalid provisions shall, in accordance with this Agreement's intent and purpose, be amended, to the extent legally possible, by valid provisions in order to effectuate the intended results of the invalid provisions. 6.4 Seed Money. The Distributor shall not redeem any Shares which it owns and has invested in as seed money in a Series during the first five years of the Fund's operations without obtaining approval by the Fund's Board of Directors prior to any such redemption. Thereafter, the Distributor may make such a redemption in its sole discretion. In the event that this Agreement is terminated, the Distributor shall be entitled to redeem such Shares subject to applicable regulatory requirements. 6.5 Insurance. The Distributor will maintain at its expense an errors and omissions insurance policy which covers services by the Distributor hereunder. 6.6 Exclusivity. The Distributor agrees to obtain the prior written approval of the Board of Directors 18 of the Fund before agreeing to render or rendering any distribution or marketing services to an investment company, whether directly or through any affiliate ("distribution services"), if the total number of such distribution services arrangements to be provided by the Distributor and its affiliates on behalf of registered investment companies shall be more than nine (9) in number. None of the nine distribution services arrangements may be for an investment product substantially similar to the CB Shares(TM), which involves an investment company registered under the 1940 Act and listing of the securities for trading on the NYSE or on another securities exchange; provided further that no more than one (1) such distribution services arrangement may be with a company that is primarily a registered broker-dealer with more than 24 retail offices (other than bank branches). The foregoing provisos shall not be applicable: (i) at any time after April 28, 1997; (ii) if the Distributor provides services to investment companies which are not distribution services and (iii) if the total net assets of the Fund are below $1 billion at any time nine months after the initial issuance of Creation Units of shares. 6.7 Separate and Additional Series. The Fund is entering into this Agreement on behalf of the Series listed on Annex A severally and not jointly. Except as otherwise indicated herein, the responsibilities and benefits set forth in this Agreement shall refer to each Series severally and not jointly. Except as provided in Section 2.3 hereof, no individual Series shall have any responsibility for any obligation, if any, with respect to any other Series arising out of this Agreement. The Fund will initially issue and sell Shares of the Series listed in Annex A to this Agreement. In the event that the Fund is authorized to issue and issues Shares of one or more additional Series with respect to which it wishes to retain the Distributor to act as distributor and principal underwriter hereunder, the Fund shall notify the Distributor in writing. Upon written acceptance by the Distributor, such Series shall become subject to the provisions of this Agreement to the same extent as the existing Series, except to the extent that such provisions may be modified with respect to each additional Series in writing by the Fund and the Distributor at the time of the addition of the Series. 19 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first written above. THE COUNTRYBASKETS INDEX FUND, INC. By: Name: Title: ALPS MUTUAL FUNDS SERVICES, INC. By: Name: Title: 20 No. of Shares per NYSE CUSIP Series Creation Unit Symbol No. Australia Index Series 100,000 GXA 22236E109 France Index Series 100,000 GXF 22236E208 Germany Index Series 100,000 GXG 22236E307 Hong Kong Index Series 100,000 GXH 22236E406 Italy Index Series 100,000 GXI 22236E505 Japan Index Series 250,000 GXJ 22236E604 South Africa Index 100,000 GXR 22236E703 Series UK Index Series 100,000 GXK 22236E802 US Index Series 100,000 GXU 22236E885 EX-99.B6B 6 MARKETING AGREEMENT 1 Draft of February 1, 1996 The CountryBaskets(SM) Index Fund, Inc. MARKETING AGREEMENT MARKETING AGREEMENT (the "Agreement") made as of ________________, 1995, between The CountryBaskets(SM) Index Fund, Inc., a Maryland corporation (the "Company"), and ALPS Mutual Funds Services, Inc., a Colorado corporation ("ALPS"). W I T N E S S E T H : WHEREAS, the Company is a management investment company organized as a series fund and registered under the Investment Company Act of 1940 (the "1940 Act"); WHEREAS, the Company has entered into a Distribution Agreement with ALPS providing for, among other things, the distribution and sale of the shares ("CB Shares(SM)") of common stock of its initial nine series (each, a "Series"); WHEREAS, the Company desires to retain ALPS to provide various marketing and stockholder services with respect to the CS Shares(SM) of the Series as described herein; WHEREAS, ALPS desires to render these services to the Company; and WHEREAS, the Company has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act (each, a "12b-1 Plan") with respect to each Series and will make payments to ALPS pursuant to such 12b- 1 Plans for providing these marketing and stockholder services. NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the Company and ALPS agree as follows: Section 1 Marketing and Stockholder Services 1.1 Definitions. (a) The term "Registration Statement" shall mean the registration statement most recently filed from time to time by the Company with the Securities and Exchange Commission (the "Commission") and effective under the Securities Act of 1933, as amended (the "1933 2 Act"), and the 1940 Act, as such registration statement is amended by any amendments thereto at the time in effect. (b) The term "Prospectus" shall mean the prospectus included as part of the Company's Registration Statement, as such prospectus may be amended or supplemented from time to time. (c) The term "SAI" shall mean the Statement of Additional Information included as part of the Company's Registration Statement, as such Statement of Additional Information may be amended or supplemented from time to time. (d) All capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Registration Statement. 1.2 ALPS' Representations and Obligations. ALPS represents that: (a) It has approval of and consent by all parties necessary to permit it to carry out its obligations under this Agreement, including the consent of the Mariner Funds Trust and the Mariner Mutual Funds Trust; (b) It is duly organized as a Colorado corporation and is and at all times will remain duly authorized and licensed to carry out its services as contemplated herein; and (c) Its entering into this Agreement or providing the services contemplated hereby does not conflict with or constitute a default or require a consent (except for any consent in writing which shall have been obtained by the date hereof) under or breach of any provision of any agreement or document to which it is a party or by which it is bound. 1.3 ALPS Obligations. (a) ALPS agrees to make available four regional wholesalers on a full time basis and four product knowledgeable 800-line registered representatives to carry out the marketing plan and provide stockholder services as contemplated by Section 1.4. (b) The regional wholesalers will: (i) within 30 days after the Company's commencement of sales to the public, create four territory business plans; 3 (ii) conduct product training for the benefit of product and branch managers and account executives of broker/dealers who are active or potentially active in the secondary markets for CB Shares(SM); (iii) conduct product seminars for the same persons listed in (ii) above and potential retail and institutional investors for CB Shares(SM); (iv) be subject to specific activity requirements to be developed as part of the marketing plan as described in Section 1.4; and (v) refer any inquiries concerning Creation Units to the Distributor. (c) The four product knowledgeable 800-line registered representatives will be available to: (i) provide support for the wholesalers' activities set forth in (b) above; (ii) provide support for broker/dealers active in the secondary market; (iii) provide product information suitable for the secondary market upon inquiry; and (iv) maintain lists of dealer contacts. (d) Mr. Chris Jemapete will, for the first twelve months following the Company's commencement of sales to the public, spend full-time and be exclusively dedicated to the services to be provided by ALPS hereunder and will be based in the borough of Manhattan and have his principal family residence within commuting distance thereof. Mr. Jemapete will be involved with the services provided by ALPS hereunder as long as he is in the employ of or have any consulting or other relationship with ALPS or any affiliate and the Company so desires. (e) At such time as the aggregate average daily net assets of the first nine Series of the Company exceed $1 billion for three successive months, ALPS agrees it will pay $20,000 during the next twelve- months for marketing expenses provided for in the marketing budget. Such annual payments shall continue for succeeding twelve month periods as long as the aggregate average daily net assets of the first nine 4 Series of the Company during the preceding twelve-month period exceed $1 billion. (f) It is understood that all Prospectuses and SAIs required to be delivered by ALPS under this Agreement or by law, regulation or NYSE or NASD rules shall be delivered at the Company's expense to ALPS at its Denver office. 1.4 Marketing Plans and Stockholder Servicing. ALPS agrees: (a) to develop in conjunction with the Company and its Adviser a marketing plan to encourage the use and trading of CB Shares(SM) on the secondary market by various elements of the financial community, both institutional and retail, in order to make effective use of the resources provided by ALPS under this Agreement. ALPS agrees to use its best efforts to cooperate with the Company and its Adviser in developing a marketing plan for the first year of this Agreement by 30 days after the Company's commencement of sales to the public. During the term of this Agreement it will continue to work with the Company and its Adviser to adjust such marketing plans as may be appropriate and to develop plans for successive years. (b) to work with broker/dealers and other intermediaries who hold CB Shares(SM) for the benefit of their customers to facilitate communications with such customers and to develop a knowledge and understanding of CB Shares(SM) with such customers. (c) to consult and advise on the preparation of marketing material with respect to its substance and legality. Section 2 Company's Representation and Obligations 2.1 Company's Obligations. The Company shall have the following obligations: (a) The Company shall take, from time to time, such steps, including payment of the related filing fee, as may be necessary to register CB Shares(SM) under the 1933 Act to the end that CB Shares(SM) of each Series to which the services under this Agreement relate will be registered under the 1933 Act during the term of this Agreement. 5 (b) The Company will furnish ALPS such marketing material as may be agreed upon from time to time to be used in conjunction with the marketing program. The Company represents that when such material is signed by an officer or authorized agent of the Company it will be true and correct in all material respects. ALPS will have responsibility for filing and clearing the signed materials with the NASD. Section 3 Compensation 3.1 Compensation of ALPS. Subject to the terms and conditions of the 12b-1 Plans, each Series will pay to ALPS a fee in compensation for its services hereunder, calculated daily and payable monthly, equal to such Series' allocable portion of the aggregate fees payable by the initial nine Series, as follows: (i) .23% per annum of the average aggregate daily net assets of all nine Series ("Aggregate Net Assets") up to Aggregate Net Assets of $200 million, plus (ii) .0% per annum of Aggregate Net Assets in excess of $200 million up to $1.5 billion, plus (iii) .03% per annum of Aggregate Net Assets in excess of $1.5 billion up to $5 billion, plus (iv) .015% per annum of Aggregate Net Assets in excess of $5 billion. Such fees shall be allocated by the Distributor among the Series subject to this Agreement pro rata in accordance with the [average daily net assets] of the respective Series, the method of such allocation to be subject to the annual review and approval of the Board of Directors of the Fund. 3.2 Each Series shall reimburse ALPS on a monthly basis for its reasonable costs incurred in connection with the costs to ALPS of marketing materials which ALPS is asked in writing by the Company to provide the Company or the Adviser but not including the costs of any marketing material provided by ALPS pursuant to Section 1.3(e). 3.3 Segregating Expenses. With respect to reimbursement payments to ALPS pursuant to Section 3.2 as provided by each Series' 12b-1 Plan, ALPS shall indicate with its reimbursement request one or more Series for which 6 the expense was incurred. Reimbursed payments attributable to the Company as a whole shall be requested with allocations for each Series according to the method adopted by the Company's Board of Directors. ALPS' allocation of reimbursed expenses shall be subject to the review of the Company's Board of Directors. Section 4 Termination and Amendment 4.1 Termination. This Agreement may be terminated at any time as to any Series, without penalty, upon (a) sixty days' written notice to the other party, by (i) the Company by the vote of a majority of the members of the Board of Directors of the Company who are not "interested persons" of the Company (as defined in the 1940 Act) who have no direct or indirect financial interest in the operation of the 12b-1 Plan, this Agreement or the Distribution Agreement ("Independent Directors"), or the vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of such Series, or (ii) ALPS, or (b) upon the termination of the Distribution Agreement. 4.2 Assignment. This Agreement may not be assigned and shall automatically terminate in the event of its "assignment" as defined in the 1940 Act or upon a change of control of ALPS. 4.3 Amendment. This Agreement may be amended by mutual consent, provided that the Fund's consent to any material amendment to this Agreement requires the approval provided for in paragraph (b)(4) of Rule 12b-1 under the 1940 Act. 4.4 Non-interested Company Directors. While this Agreement is in effect, the selection and nomination of the Independent Directors shall be committed to the discretion of such Independent Directors. Section 5 Notice 5.1 Conditions. The Company shall notify ALPS immediately of: 7 (a) any request by the Commission for amendments to the Company's Registration Statement, Prospectus or SAI, or for additional information; (b) any stop order suspending the effectiveness of the Company's Registration Statement or the initiation of any proceeding for that purpose; (c) all actions of the Commission with respect to any amendment to the Company's Registration Statement, Prospectus, or Statement of Additional Information. 5.2 Notification of Parties. Any notice or other communication required or permitted to be given pursuant to this Agreement shall be deemed duly given if addressed and delivered, or mailed by registered mail, postage prepaid, to (1) ALPS Mutual Funds Services, Inc., 310 Seventeenth Street, Suite 2700, Denver, Colorado 80202 Attention: Chief Financial Officer and (2) The CountryBaskets(SM) Index Fund, Inc. at 31 West 52nd Street, New York, New York 10019, Attention: Secretary. Section 6 Miscellaneous 6.1 Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 6.2 Captions. The captions in this Agreement are included for convenience only and in no way define or limit any of the provisions hereof or otherwise affect their construction. 6.3 Severability. If any provisions of this Agreement shall be held or made invalid, in whole or in part, then the other provisions of this Agreement shall remain in force. Invalid provisions shall, in accordance with this Agreement's intent and purpose, be replaced, to the extent legally possible, by valid provisions in order to effectuate the intended economic results of the invalid provisions. 6.4 Exclusivity. ALPS agrees to obtain the prior written approval of the Board of Directors of the Company before agreeing to render or rendering any distribution or marketing services to any investment company, whether directly or through any affiliate ("distribution services"), if the total number of such distribution services arrangements to be provided by ALPS and its affiliates on 8 behalf of registered investment companies shall be more than nine (9) in number. None of the nine distribution services arrangements may be for an investment product substantially similar to the CB Shares(SM), which involves an investment company registered under the 1940 Act and listing of the securities for trading on the NYSE or on another securities exchange; provided further that no more than one (1) such distribution services arrangement may be with a company that is primarily a registered broker- dealer with more than 24 retail offices (other than bank branches). The foregoing provisos shall not be applicable: (i) at any time after April 28, 1997; (ii) if ALPS provides services to investment companies which are not distribution services and (iii) if the total net assets of the Company are below $1 billion at any time nine months after the initial issuance of Creation Units of shares by the Fund. 6.5 Electronic Compatibility. ALPS will adapt its Local Area Network capabilities so that it is compatible and can interface with the equipment of the Adviser for the following utilizations: (1) E-Mail (2) Electronic download of trade activity (3) Electronic access to call reports of wholesalers and 800- line registered representatives provided by ALPS under Section 1.3. 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: EX-99.B6C 7 FORM OF SOLICITING DEALER AGREEMENT 1 DRAFT - 1/28/96 THE COUNTRYBASKETS INDEX FUND, INC. SOLICITING DEALER AGREEMENT Date: _______ __, 1996 ______________________ ______________________ ______________________ Ladies and Gentlemen: The CountryBaskets Index Fund, Inc. (the "Fund") is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), organized as a series fund and formed as a corporation under the laws of the State of Maryland. The Fund will consist initially of nine series (each a "Series"),1 and will issue shares of common stock, par value $.001, of each series (the "Shares"). The Fund will only sell and redeem Shares in aggregations of a specified number of Shares (each a "Creation Unit") depending on the Series as set forth in Annex I hereto. Pursuant to a Distribution Agreement between the Fund and us (the "Distribution Agreement"), we will act as distributor (the "Distributor") and principal underwriter of Creation Units of Shares of the Series listed on Annex I as exclusive agent on behalf of the Fund. Capitalized terms not defined herein shall have the meanings attributed to them in the current prospectus and statement of additional information of the Fund relating to the Shares. Creation Units of Shares of each Series will be sold at net asset value, without a sales charge, in exchange for the Fund Basket designated for delivery on a subsequent business day for a Series and the Cash Component. A purchase order must be preceded by a notice of intention as provided in the Fund's current prospectus and statement of additional information. ________________ 1 Australia Index Series, France Index Series, Germany Index Series, Hong Kong Index Series, Italy Index Series, Japan Index Series, South Africa Index Series, UK Index Series and US Index Series. 2 In consideration of the mutual covenants contained herein, it is hereby agreed that our respective rights and obligations shall be as follows: 1. Role of Distributor. Pursuant to and in accordance with the provisions of the Distribution Agreement, we will make arrangements for securities dealers which can make the representations set forth in Section 4 of this Agreement to solicit from the public orders to purchase Creation Units of Shares of each Series. You are hereby invited to become one of the securities dealers referred to herein as a "Soliciting Dealer". This will confirm our mutual agreement as to the terms and conditions applicable to your participation as a Soliciting Dealer, such agreement to be effective on your confirmation hereof. You understand that we are seeking to enter into this Agreement in counterparts with you and other firms which also may act as Soliciting Dealers. All purchases of Creation Units of Shares from the Fund shall be effected through us in our capacity as principal underwriter and distributor acting as agent on behalf of the Fund. You understand that we shall have no obligation to you hereunder at such times as we are not acting as distributor and principal underwriter for the sale of Shares in Creation Unit aggregations. 2. Role of Soliciting Dealers. (a) As a Soliciting Dealer, you shall offer and solicit purchase orders for Creation Units of Shares. As, when and if you generate a customer request for the purchase of Creation Units of Shares of any Series and you determine to transmit such request to us, you shall comply with the procedures for the purchase of Creation Units of Shares set forth in the then current prospectus and statement of additional information of the Fund. You shall be responsible for opening, approving and monitoring customer accounts and for the review and supervision of these accounts, all in accordance with the rules of the Securities and Exchange Commission ("SEC") and the National Association of Securities Dealers, Inc. (the "NASD"). You understand that all orders for the purchase of Creation Units of Shares of each Series must be placed with us and may be placed only through an Authorized Participant that has entered into an Authorized Participant Agreement with us and the Fund. During any period you are an Authorized Participant, you may submit purchase orders to us in such capacity. Your duties and obligations as an Authorized Participant are determined by the terms and conditions of the Authorized Participant Agreement and not pursuant hereto. The procedures relating to orders and the handling thereof will be subject to the terms of the then current prospectus and statement of additional information of the Fund, the Authorized 3 Participant Agreement and instructions in writing received by you from us or the Fund's transfer agent from time to time. No conditional orders will be accepted. No Creation Units of Shares shall be issued except upon receipt of the consideration therefor. If payment for any purchase order is not received in accordance with the terms of the then current prospectus and statement of additional information, we reserve the right, without notice, to cancel the sale and to hold you responsible for any loss sustained as a result thereof. Unless otherwise mutually agreed in writing, each transaction shall be promptly confirmed in writing to the customer on a fully disclosed basis and a copy of each confirmation shall be sent simultaneously to you. You agree that upon receipt of duplicate confirmations you will examine the same and promptly notify us of any errors or discrepancies which you discover and shall promptly bring to our attention and the Fund's any errors in such confirmations claimed by your customers. (b) You agree to offer Shares in Creation Unit size aggregations to the public at the then current public offering price per Share (i.e. the net asset value per Share) as set forth in the then current prospectus and statement of additional information for the Shares, as the same may be amended or supplemented. All orders are subject to acceptance or rejection by us or the Fund in our or its sole discretion. (c) Subject to the requirements of applicable law and regulations, nothing in this Agreement shall be construed to prohibit or restrict your purchasing or selling for your own account Creation Unit aggregations of Shares, whether as agent or principal. Nothing herein shall be deemed to constitute you or any other Soliciting Dealer as agent for the Fund, for us, or any other Soliciting Dealer. You agree not to act as our agent and not to claim to act as our agent or as agent of any of the foregoing. 3. Information. We will furnish you, without charge, the Fund's current prospectus and statement of additional information and copies of sales materials relating to the offer and sale of Creation Units of Shares approved and filed with the NASD by us ("Fund Sales Materials") in such quantities as are reasonably requested by you and made available to us by the Fund or are supplied by us under a marketing agreement between the Fund and us (the "Marketing Agreement") for use in connection with the offer and sale of Creation Units of Shares. You agree to the use of your name therein as a Soliciting Dealer in accordance with Annex II hereto. Such 4 Fund Sales Materials, as prepared pursuant to the Marketing Agreement or otherwise on behalf of the Fund, are expected to include materials suitable for institutional marketing efforts, including conferences, road shows and institutional advertisements and/or "tombstones" related to the initial public offering of Creation Units of Shares. Under this Agreement you will not act for us, the Fund or the Investment Adviser, nor make any representation on our behalf or the Fund's, or as authorized by us, the Fund or the Investment Adviser, and in offering and selling Creation Units of Shares hereunder you may rely only upon, the Fund's then current prospectus and statement of additional information and the Fund Sales Materials, provided that you are authorized to prepare and use at your own cost and expense other brochures, advertisements (in print or other format) or similar materials in connection with your solicitation of purchases of Creation Units of Shares which may constitute "sales literature" within the meaning of Section 24(b) of the 1940 Act ("Other Soliciting Materials"), but only if such Other Soliciting Materials (i) are prepared in compliance with all applicable NASD and SEC rules and regulations, (ii) provided to us a reasonable time prior to their intended use and (iii) are not used until approved by us and the Fund and filed by us with the NASD. You understand that the Fund will not be advertised or marketed as an open-end investment company, i.e., as a mutual fund, which offers redeemable securities. Any advertising materials, including the Fund prospectus, will prominently disclose that the CB Shares(TM) are not redeemable units of beneficial interest in the Fund. In addition, any advertising material, including the Fund prospectus, will disclose that the owners of CB Shares(TM) may acquire and tender those shares for redemption to the Fund in Creation Unit aggregations only. 4. Representations. (a) You represent to us as follows, and agree to abide by all of the rules and regulations of the NASD, including, without limitation, the following provisions of its Rules of Fair Practice, except as otherwise permitted by the NASD as set forth in writing, a copy of which shall be provided to you by us: (i) you will not withhold placing customers' orders for any Creation Units of Shares so as to profit yourself as a result of such withholding; (ii) you shall not, as principal, purchase any Shares from a record holder at a price lower than the net asset value next computed by or for the Fund in 5 accordance with the provisions of the 1940 Act; nothing in this subparagraph shall prevent you from redeeming a Creation Unit aggregation of Shares for the account of a record holder at the net asset value then quoted by or for the Fund and charging the investor a fair commission or administrative fee for handling the transaction; (iii) you are familiar with Rule 15c2-8 under the Securities Exchange Act of 1934, as amended (the "1934 Act"), Section 4(3) of the Securities Act of 1933, as amended (the "1933 Act"), and Section 24(d) of the 1940 Act relating to the distribution and delivery of preliminary and final prospectuses and agree that you will comply therewith; (iv) you are a member in good standing of the NASD or, if you are not such a member, you are a foreign bank, dealer or institution not eligible for membership in the NASD which agrees to make no sale within the United States, its territories or its possessions or to persons who are citizens thereof or residents therein, and in making other sales to comply, as though you were a member of NASD, with the provisions of Sections 8, 24 and 36 of Article III of the Rules of Fair Practice of the NASD and with Section 25 thereof as that Section applies to a non-NASD member broker or dealer in a foreign country. (b) You agree that your expulsion from the NASD will automatically terminate this Agreement. (c) You agree to comply with any rules of the New York Stock Exchange or such other secondary market or markets as has or have been approved by an order of the SEC for the trading of the Shares. You acknowledge that you have been provided a copy of the conditions of the SEC order in accordance with which the Shares are offered. (d) We represent to you that we are a member in good standing of the NASD and agree to abide by all of the NASD's rules and regulations. 5. Expenses; No Compensation. Unless otherwise specifically provided for in this Agreement, you shall bear all of your own costs and expenses in connection with your acting as a Soliciting Dealer, it being understood that we and the Fund shall bear our and the Fund's respective costs and expenses as set forth in the Distribution Agreement. You shall not be required to bear any of the costs or expenses assumed by us or any other Soliciting Dealer except 6 as provided for herein or as you may have agreed with another Soliciting Dealer. You shall be obligated to pay for the cost of printing and delivering all prospectuses requested by you other than as provided pursuant to Section 3 of this Agreement. No compensation shall be due to you from us or the Fund hereunder. 6. Compliance. (a) You agree that your activities pursuant to this Agreement will be at all times in conformity in all material respects with all applicable federal and state laws, rules and regulations, including without limitation, the 1933 Act, the 1934 Act, the 1940 Act and the Rules of Fair Practice of the NASD (as provided in Section 4 hereof). In connection with offers to sell and sales of Shares of each Series, you agree to deliver or cause to be delivered to each person to whom any such offer or sale is made, at or prior to the time of such offer or sale, a copy of the then current prospectus and the statement of additional information of the Fund. (b) We agree to inform you, as the Fund provides or causes to be provided to us such information, as to the states in which we believe Shares of the respective Series have been qualified for sale under, or are exempt from the requirements of, the respective securities laws thereof, but we shall have no obligation or responsibility to make Shares of any Series available for sale in any jurisdiction. 7. Term; Termination; Amendment. (a) This Agreement will become effective on the date a fully executed copy of this Agreement is received by us, and is subject to approval by the Board of Directors of the Fund. This Agreement is terminable, without penalty, at any time by us or by you upon 20 days' prior written notice to the other party hereto. This Agreement will also terminate automatically in the event of its assignment (within the meaning of the 1940 Act) or, unless we and the Fund consent thereto in writing, a change in control (within the meaning of the 1940 Act) of the undersigned Soliciting Dealer. (b) This Agreement may be amended in writing by the parties hereto. 8. Suspension. All sales will be made subject to receipt of Shares from the Fund. We and the Fund reserve the right, in our sole discretion, without notice, to suspend sales or withdraw the offering of sales of Creation Units of Shares of any Series entirely, including the sale 7 of such Shares to you for the account of any client or clients. 9. No Other Agreement. This Agreement shall supersede any prior agreements between us regarding the sale of Creation Units of Shares. 10. Miscellaneous. (a) Notice. Notice shall have been duly given if delivered by hand, mail or facsimile transmission to you, at your address or facsimile number set forth below and (b) if to us, to ALPS Mutual Funds Services, Inc., 370 Seventeenth Street, Suite 2700, Denver, Colorado 80202, facsimile no. ( ) - , Attention: , or in each case such other addresses as may be notified to the other party. (b) Successors. Subject to Section 8 hereof, this Agreement will inure to the benefit of and be binding upon the parties hereto and their respective legal successors and the Fund, and no other person will have any right or obligation hereunder. (c) Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to principles of conflicts of law. Please confirm your agreement by signing and returning to us the enclosed duplicate copies of this Agreement. Upon our acceptance hereof, this Agreement shall constitute a valid and binding contract between us. After our acceptance, we will deliver to you one fully executed copy of this Agreement. Very truly yours, ALPS MUTUAL FUNDS SERVICES, INC. By_____________________________ Name: Title: 8 Confirmed: ________ __, 1996 _______________________________ (Name of Soliciting Dealer) By_____________________________ (sign name and print title) Address: ______________________ ______________________ ______________________ Facsimile No.: _______________ 9 Annex I Soliciting Dealer Agreement CB Shares(TM) No. of Shares NYSE per CUSIP Series Symbol Creation Unit No. Australia Index Series GXA 100,000 22236E109 France Index Series GXF 100,000 22236E208 Germany Index Series GXG 100,000 22236E307 Hong Kong Index Series GXH 100,000 22236E406 Italy Index Series GXI 100,000 22236E505 Japan Index Series GXJ 250,000 22236E604 South Africa Index GXR 100,000 22236E703 Series UK Index Series GXK 100,000 22236E802 US Index Series GXU 100,000 22236E885 10 Annex II As a Soliciting Dealer, you agree that you may be named as such in sales materials and presentations as follows: Yes No 1. Institutional marketing efforts, _____ _____ including conferences, road shows and institutional advertisements. 2. Print advertising related to the initial _____ _____ public offering of Creation Units of Shares. EX-99.B6D 8 FORM OF INVESTOR SERVICES AGREEMENT 1 Draft - 1/30/96 ALPS Mutual Funds Services, Inc. 370 17th Street, Suite 2700 Denver, Colorado 80202 INVESTOR SERVICES AGREEMENT Smith Barney Inc. 390 Greenwich Street New York, New York 10013 Gentlemen: As distributor and principal underwriter of The CountryBasketsSM Index Fund, Inc. (the "Fund"), a management investment company organized in multiple series and registered under the Investment Company Act of 1940, as amended (the "1940 Act"), we wish to enter into this Investor Services Agreement (this "Agreement") with you concerning (i) your provision of broker-dealer and shareholder support services to your clients ("Clients") who may from time to time beneficially own issued and outstanding shares of common stock (the "CB SharesSM" or "CountryBasketsSM") of the initial nine series of the Fund indicated on Appendix A hereto (each, an "Initial Series"), and each additional series subsequently established by the Fund and made subject to this Agreement in accordance with Section 10 (each, an "Additional Series" and, together with the Initial Series, the "Series"), and (ii) your educational and promotional activities in the secondary market for CB SharesSM listed and traded on the New York Stock Exchange (the "NYSE"). Pursuant to a Marketing Agreement (the "Marketing Agreement") between us and the Fund we will provide various marketing and shareholder services with respect to the CB SharesSM. Capitalized terms, unless otherwise defined herein, shall have the meanings attributed to them in the Fund's current prospectus and statement of additional information. This Agreement is a related agreement as contemplated by Rule 12b-1 under the 1940 Act with respect to the Rule 12b-1 plan (each a "12b-1 Plan" and together the "12b-1 Plans") of each Initial Series of the Fund and, subject to the approval of the Board of Directors pursuant to Rule 12b-1, each Additional Series. Both you and we and the Fund expect that your services and educational and promotional activities in connection with CB SharesSM pursuant to this Agreement will tend to increase investor interest in and the use and trading of CB SharesSM on the secondary market and thus further sales of shares of the Fund. 2 The terms and conditions of this Agreement are as follows: Section 1. The services you agree to provide to the Fund with respect to each Series shall include: (a) broker/dealer and shareholder support services to Clients in connection with the outstanding and issued CB SharesSM, including one or more of the following: (i) distributing prospectuses and shareholder reports to current shareholders; (ii) processing dividend and distribution payments on behalf of Clients; (iii) providing information periodically to Clients showing their positions in CB SharesSM; (iv) at your discretion, providing and maintaining elective services such as check writing on the Client's account and wire transfer services; (v) acting as nominee for Clients; (vi) maintaining account records for Clients; (vii) issuing confirmations of transactions; (viii) providing account information with respect to CB SharesSM beneficially owned by Clients; (ix) if required by law, forwarding shareholder communications from us or on behalf of the Fund (such as proxies, shareholder reports, annual and semi-annual financial statements and dividend, distribution and tax notices); (x) providing services primarily intended to result in the sale of CB SharesSM; (xi) assisting shareholders who wish to aggregate sufficient CB SharesSM of a Series to constitute a Creation Unit for redemption; and (xii) such other services analogous to the foregoing as you customarily provide to Clients with respect to holdings of shares of open-end investment companies or exchange- listed stocks or as the Fund and you may agree from time to time to the extent you are permitted to do so under applicable statutes, rules and regulations; and (b) educational and promotional services related to the secondary market trading of CB SharesSM, including the following: (i) facilitating access for investor relations representatives for CB SharesSM to designated Smith Barney branches for the purpose of broker education, including through sales meetings and, one-on-one broker contact; and (ii) during the first 180 days following the initial sale of Creation Units of the Initial Series, providing sales incentives to your brokers, all pursuant to arrangements set forth in a letter from you to us. Mutual understandings between you and the Adviser with respect to educational and promotional services related to secondary market trading of CB SharesSM to be performed by you, including, but not limited to, (i) making your country allocation research available widely through your internal systems; (ii) working with us and the Adviser to facilitate the flow of CountryBasketsSM data through your internal 3 information systems, which information shall include specified CB SharesSM data and may also include composite data and other research and news; and (iii) certain activities of management promoting use of CB SharesSM as a trading and portfolio diversification tool, shall be set forth in a separate agreement (the "Branch Marketing Contract") between the Adviser and you. Section 2. You will provide such office space and equipment, telephone facilities and personnel (which may be any part of the space, equipment and facilities currently used in your business, or any personnel employed by you) as may be reasonably necessary or beneficial in order to provide the services to Clients described in Section 1. Section 3. (a) Pursuant to the terms of the 12b-1 Plans, during the initial twelve months thereunder, the Fund is expected to have available 0.05% of the average aggregate daily net assets over $200 million of the Initial Series for expenditures for sales, advertising and marketing materials. Such materials are expected to be produced pursuant to arrangements which may be entered into by the Fund either through us as Distributor and under the Marketing Agreement or with third parties, including the Adviser; additional amounts may be made available by such third parties for the costs of advertising and marketing materials related to the CB SharesSM. Such sales, advertising and marketing materials are expected to include customer and account executive brochures, materials for sales presentations, videotapes, print advertisements in national publications and radio and TV advertising. Mutual understandings with respect to the sales, advertising and marketing materials which may be provided to you in connection with your services hereunder shall be set forth in the Branch Marketing Contract. (b) Pursuant to the Marketing Agreement, we expect to retain appropriate investor representatives and marketing staff to provide sales and marketing support with respect to CB SharesSM. In accordance therewith, we will make available their services to conduct the broker education program for your sales staff described in the Branch Marketing Contract. Section 4. You and your officers, employees and agents will not make any representations on our behalf or the Fund's, or as authorized by us, the Fund or the Adviser, except those contained in the Fund's then current prospectus and statement of additional information for such CB SharesSM or in such sales, marketing or advertising materials as may be authorized by us and the Fund in writing, including those referred to in Section 3 hereof. You understand that neither the Fund nor any Series will be advertised or 4 marketed as an open-end investment company, i.e., as a mutual fund, which offers redeemable securities. Any advertising materials, including the Fund prospectus, will prominently disclose that the CB SharesSM are not redeemable units of beneficial interest in the Fund. In addition, any advertising material, including the Fund prospectus, will disclose that the owners of CB SharesSM may acquire and tender those shares for redemption to the Fund in Creation Unit aggregations only. Section 5. For all purposes of this Agreement, you will be deemed to be an independent contractor, and will have no authority to act as agent, partner, joint venture participant or in any similar capacity for us in any matter or in any respect. You and your officers and employees will, upon request, be available during normal business hours to consult with us or our designees concerning the performance of our responsibilities under this Agreement. Section 6. In consideration of the services and facilities provided by you hereunder, subject to the terms and conditions of the 12b-1 Plans, the Fund has agreed pursuant to an agreement with you of this date (the "Fund Payment Agreement") to compensate you on behalf of the Initial Series directly for the services performed under this Agreement and you agree to accept as full payment therefor, a fee at the annual rate of 0.05 of 1% of the average aggregate daily net assets over $200 million of all Initial Series, computed daily and payable on a quarterly basis. If this Agreement is renewed in accordance with Section 10 hereof and the Fund Payment Agreement is renewed in accordance with the terms thereof, the Fund pursuant to the Fund Payment Agreement and subject to the terms and conditions of the 12b-1 Plans will compensate you for any subsequent twelve-month period hereunder at the rate of 0.05 of 1% of the average aggregate daily net assets over $200 million of all Initial Series, subject to review by the Board of Directors of the Fund. In the event that any Additional Series becomes subject to this Agreement, the Fund has also agreed pursuant to the Fund Payment Agreement to pay you for the services and facilities to be provided by you hereunder with respect to such Additional Series a fee at the rate set forth in the 12b-1 Plan approved by the Board of Directors of the Fund with respect to such Additional Series. Section 7. You will provide to us and the Fund's Board of Directors, and we and the Fund's Directors will review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. In addition, you will furnish us or our 5 designees with such information as we or they may reasonably request (including, without limitation, periodic certifications confirming the provision to Clients by you or your agents of the services described herein), and will otherwise cooperate with us and our designees (including, without limitation, any auditors designated by us or the Fund), in connection with preparation of reports to the Fund's Board of Directors concerning this Agreement and the Fund Payment Agreement and the monies paid or payable to you by the Fund in connection with your services hereunder as well as any other reports or filings that may be required by law. Section 8. By your written acceptance of this Agreement, you represent, warrant and agree that you understand that this Agreement is a Rule 12b-1 related agreement under the 1940 Act, subject to the provisions of such Rule, as well as any other applicable rules or regulations of the Securities and Exchange Commission; agree to conform to the reasonable applicable compliance standards adopted by us for sale of CB SharesSM, as in effect from time to time, provided that you shall be given the opportunity to review and discuss with our counsel prior to their adoption any such compliance standards proposed after the date hereof that will be applicable to the activities to be performed by you hereunder; and agree to comply with applicable federal and state securities laws and regulations pertaining to transactions in CB SharesSM. Section 9. [RESERVED] Section 10. Unless sooner terminated, this Agreement will continue for one year following the date of its adoption as provided in Section 13, and thereafter will continue automatically for successive annual periods provided such continuance is specifically approved at least annually by the Fund in the manner described in Section 12 hereof. This Agreement is terminable, without penalty, at any time (a) by the Fund with respect to any Series of CB SharesSM (which termination may be by a vote of a majority of the Disinterested Directors (as defined in Section 13 hereof) or by vote of the holders of a majority of the voting securities (as such term is defined in the 1940 Act) of such Series) or by you upon 60 days' notice in writing to the other party hereto or (b) upon the termination of the Distribution Agreement between the Fund and us or the Branch Marketing Contract. This Agreement will also terminate automatically in the event of its assignment (within the meaning of the 1940 Act). This Agreement may be amended in writing by the parties hereto. In the event that the Board of Directors of the Fund establishes any series of CB 6 SharesSM listed and traded on the NYSE or any other national securities exchange in addition to the Series then subject to this Agreement, adopts a 12b-1 Plan with respect to such additional series and approves this Agreement and the Fund Payment Agreement as "related agreements" with respect to such additional series in accordance with Rule 12b-1, such additional series shall be made subject to this Agreement and shall become an "Additional Series" hereunder effective immediately upon such adoption and approval. Section 11. All notices and other communications to either you or us will be duly given if mailed, telegraphed, telexed or transmitted by similar telecommunications device to us at the address shown above and to you at the address shown below. Section 12. This Agreement will be construed in accordance with the laws of the State of New York. Section 13. This Agreement, and each Rule 12b-1 Plan, is subject to approval by vote of (i) the Fund's Board of Directors and (ii) of a majority of those Directors who are not "interested persons" (as defined in the 1940 Act) of the Fund and have no direct or indirect financial interest in the operation of the 12b-1 Plans adopted by the Fund regarding the provision of support services to the beneficial owners of CB SharesSM of the respective Series or in any agreement related thereto ("Disinterested Directors") cast in person at a meeting called for the purpose of voting on such approval. 7 If you agree to be bound by the provisions for this Agreement, please sign a copy of this letter where indicated below and promptly return it to us, c/o ALPS Mutual Funds Services, Inc., 370 17th Street, Suite 2700, Denver, Colorado 80202. Very truly yours, ALPS MUTUAL FUNDS SERVICES, INC. Date: By: Authorized Officer Accepted and Agreed to: SMITH BARNEY INC. Date: By: Authorized Officer 8 Appendix A Investor Services Agreement CB SharesSM NYSE CUSIP Series Symbol No. Australia Index Series GXA 22236E10 9 France Index Series GXF 22236E20 8 Germany Index Series GXG 22236E30 7 Hong Kong Index Series GXH 22236E40 6 Italy Index Series GXI 22236E50 5 Japan Index Series GXJ 22236E60 4 South Africa Index GXR 22236E70 3 Series UK Index Series GXK 22236E80 2 US Index Series GXU 22236E88 5 EX-99.B6E 9 FORM OF AUTHORIZED PARTICIPATION AGREEMENT 1 FORM OF - AUTHORIZED PARTICIPANT AGREEMENT - This Authorized Participant Agreement (the "Agreement") is entered into by and among THE COUNTRYBASKETS INDEX FUND, INC. (the "Fund"), ALPS MUTUAL FUNDS SERVICES, INC. (the "Distributor"), STATE STREET BANK AND TRUST COMPANY, AS INDEX RECEIPT AGENT, CUSTODIAN AND TRANSFER AGENT ("State Street Bank"), and ______________________________ (the "Participant"). The Distributor has been retained to provide services as principal underwriter of the Fund acting on an agency basis in connection with the sale and distribution of shares of common stock, par value $.001 per share (sometimes referred to each as a "CB Share(SM)" and collectively as the "CB Shares(TM)"), of the series of the Fund (each a "Series") named on Annex I hereto. State Street Bank serves as Custodian and Transfer Agent of the Fund and is an Index Receipt Agent as that term is defined in the rules of the National Securities Clearing Corporation ("NSCC"). As specified in the Fund's prospectus included as part of its registration statement on Form N-1A (No. 33-85710), the CB Shares(TM) of any Series offered thereby may be purchased or redeemed only in aggregations of a specified number of CB Shares(TM), referred to therein and herein as a "Creation Unit". The number of CB Shares(TM) presently constituting a Creation Unit of each Series is set forth in Annex I. The Fund's prospectus and statement of additional information ("SAI") provide that Creation Units shall be sold in exchange for a Fund Deposit, consisting of a Fund Basket and a Cash Component, delivered to the Fund by the Participant for its own account or acting on behalf of another party in accordance with and subject to the terms and conditions set forth therein and that CB Shares may be redeemed only in Creation Unit aggregations generally for a Fund Basket and a minimal cash redemption payment. References to the Fund prospectus and the SAI are to the then current prospectus and SAI as each may be supplemented or amended from time to time. Capitalized terms not otherwise defined herein are used herein as defined in the Fund prospectus or SAI (as the case may be). This Agreement is intended to set forth certain premises and the procedures by which the Participant may acquire and/or redeem Creation 2 Unit size aggregations of Fund shares (i) of each Series through the facilities of The Depository Trust Company ("DTC"), as described herein, and (ii) of the US Index Series through the Continuous Net Settlement ("CNS") clearing processes of NSCC as such processes have been enhanced to effect purchases and redemptions of Creation Units, such processes being referred to herein as the "CB Shares Clearing Process." The parties hereto in consideration of the premises and of the mutual agreements contained herein agree as follows: 1. STATUS OF PARTICIPANT. The Participant hereby represents, covenants and warrants that (i) with respect to orders for the purchase or requests for redemption of Creation Units of the U.S. Index Series by means of the CB Shares Clearing Process, it is a member of NSCC and a participant in the CNS System of NSCC and a DTC Participant, (ii) that it is a U.S. resident for purposes of income taxation and (iii) with respect to orders for the purchase or requests for redemption of Creation Unit size aggregations of Fund shares of any Series other than the U.S. Index Series, it is a DTC Participant. The Participant may place orders for the purchase or redemption of Creation Unit size aggregations of Fund shares subject to the procedures for purchase and redemption referred to in paragraph 2 of this Agreement ("Execution of Orders; NSCC") and the provisions of Annex II hereto, either, in the case of the US Index Series, by means of the CB Shares Clearing Process, or in the case of any Series, outside the CB Shares Clearing Process. Any change in the foregoing status of the Participant shall terminate this Agreement and Participant shall give prompt written notice to the Fund, State Street Bank and the Distributor of such change. 2. EXECUTION OF ORDERS; NSCC. All orders for the purchase or redemption of Creation Units shall be handled in accordance with the terms of the Fund prospectus and SAI and the procedures described in Annex II to this Agreement and shall require the timely execution and delivery of an appropriate notice of intention (except in the case of the U.S. Index Series) to place an order, purchase order or redemption request, as the case may be, substantially in the forms set forth in Annex III, IV and V hereto respectively. Each party hereto agrees to comply with the provisions of such documents to the extent applicable to it. In the event the procedures include the use of recorded telephone lines, the Participant hereby consents to such use. 3 The Participant understands and agrees that Beneficial Owners may submit requests for redemption on each day that the New York Stock Exchange is open for trading and that the Participant is prepared to process such requests, as provided herein and in the Fund prospectus and SAI. The Fund reserves the right to issue additional or other procedures relating to the manner of purchase or redemption of Creation Units, and the Distributor, State Street Bank and the Participant each agrees to comply with such procedures as may be issued from time to time which are applicable to it respectively. Solely with respect to orders for the purchase or requests for the redemption of Creation Units of the US Index Series through the CB Shares Clearing Process, the Participant hereby authorizes State Street Bank to transmit to NSCC on behalf of the Participant such instructions, including share amounts of Fund Basket securities and cash amounts, as are necessary with respect to the purchase and redemption of Creation Units, consistent with the instructions issued by the Participant to the CB Share telephone representative (the "CB Share Telephone Representative"). The Participant agrees to be bound by the terms of such instructions issued by State Street Bank and reported to NSCC as though such instructions were issued by the Participant directly to NSCC. 3. ROLE OF PARTICIPANT. (a) The Participant shall have no authority in any transaction to act as agent of the Distributor, the Fund or State Street Bank. (b) By executing this Agreement, the Participant agrees in connection with any purchase or redemption transactions in which it acts for a customer or for any other DTC Participant or indirect DTC Participant, or any Beneficial Owner, that it shall extend to any such party all of the rights, and shall be bound by all of the obligations of an NSCC participant if the CB Shares Clearing Process is used and of a DTC Participant in addition to any obligations that it undertakes hereunder or in accordance with the Fund prospectus and SAI. 4. AUTHORIZED PERSONS. Concurrently with the execution of this Agreement and from time to time thereafter, the Participant shall deliver to the Fund, with copies to State Street Bank and the Distributor, duly certified as appropriate by its Secretary or other duly authorized official, a certificate setting forth the 4 names and signatures of all persons authorized to give instructions relating to activity contemplated hereby or any other notice, request or instruction on behalf of the Participant (each an "Authorized Person"). Such certificate may be accepted and relied upon by the Fund, the Distributor and State Street Bank as conclusive evidence of the facts set forth therein and shall be considered to be in full force and effect until delivery to the Fund, the Distributor and State Street Bank of a superseding certificate bearing a subsequent date. The Distributor shall issue to each Authorized Person a unique personal identification number ("PIN Number") by which such Authorized Person and the Participant shall be identified and instructions issued by the Participant hereunder shall be authenticated. The PIN number shall be kept confidential and only provided to Authorized Persons. Upon the termination or revocation of authority of such Authorized Person by the Participant, the Participant shall give immediate written notice of such fact to the Fund, the Distributor and State Street Bank and such notice shall be effective upon receipt by the Fund, the Distributor and State Street Bank. 5. PURCHASE. (a)The Participant understands and agrees that in the case of each Series other than the US Index Series, the Fund has caused the Custodian to maintain with the applicable subcustodian for such Series an account in the relevant foreign jurisdiction to which the Participant shall deliver or cause to be delivered in connection with the purchase of a Creation Unit the securities constituting a Fund Basket on behalf of itself or any party for which it is acting (whether or not a customer) in accordance with the terms and conditions applicable to such account in such jurisdiction. The Participant also acknowledges and agrees on behalf of itself and any party for which it is acting (whether as a customer or otherwise) that delivery of the securities constituting a Fund Basket together with a purchase order shall be irrevocable, subject to acceptance by the Fund, or by the Distributor on behalf of the Fund, of the order. (b) The Participant represents on behalf of itself and any party for which it acts that upon delivery of portfolio securities constituting a Fund Basket to the Custodian and/or the relevant subcustodian in accordance with the terms of the Fund prospectus and the SAI, the Fund will acquire good and unencumbered title to such securities, free and clear of all liens, restrictions, charges and encumbrances and not subject 5 to any adverse claims, including, without limitation, any restriction upon the sale or transfer of such securities imposed by (i) any agreement or arrangement entered into by the Participant or any party for which it is acting in connection with a purchase order or (ii) any provision of the Securities Act of 1933, as amended (the "1933 Act"), and any regulations thereunder (except that portfolio securities of issuers other than U.S. issuers shall not be required to have been registered under the 1933 Act if not exempt from such registration), or of the securities laws or regulations of any other applicable jurisdiction and (iii) no such securities are "restricted securities" as such term is used in Rule 144(a)(3)(i) promulgated under the 1933 Act. (c) The Participant hereby agrees that as between the Fund and/or State Street Bank and itself or any party for which it acts in connection with a purchase order, it will provide for and assume responsibility for payment of the Cash Component and any other amounts of cash due to the Fund in connection with the purchase of any Creation Unit aggregation of shares (including the cash purchase transaction fee). Such payment shall be made on the Issue Date in same day or immediately available funds by wire transfer to an account maintained by the Custodian at __________ or by such other means as may be agreed upon from time to time by the Fund and State Street Bank. In the case of the CB Shares Clearing Process, the Cash Component for Creation Units of the US Index Series may also be delivered thereby. The Participant may require the investor to enter into an agreement with the Participant with respect to such matters relating to payment or any other matters set forth herein. In connection with any purchase order, the Participant shall be liable to the Distributor for the amounts, if any, advanced by the Distributor in its sole discretion to the Participant for payment of the amounts due and owing for the Cash Component and related cash transaction fee. 6. REDEMPTION. (a) The Participant represents and warrants that it will not obtain an Order Number (as described in Annex II) from the Fund for the purpose of redeeming any Creation Unit size aggregation of Fund shares of any Series unless it first ascertains that it or its customer, as the case may be, owns outright or has full legal authority and legal and beneficial right to tender for redemption the requisite number of CB Shares of the relevant Series to be redeemed and to the 6 entire proceeds of the redemption and that such CB Shares have not been loaned or pledged to another party nor are the subject of a repurchase agreement, securities lending agreement or such other arrangement which would preclude the delivery of such CB Shares to State Street Bank on a Regular Way (as defined below) basis if the CB Shares Clearing Process is used or in accordance with the Fund prospectus and SAI or as otherwise required by the Fund. Any such tender of CB Shares for redemption shall be irrevocable. The Participant understands that CB Shares of any Series can be redeemed only when Creation Unit size aggregations of a Beneficial Owner are held in the account of a single Participant. As of the date hereof, "Regular Way" settlement shall take place within three (3) business days following a securities trade (generally expressed as "T+3"). In the case of securities, including CB Shares delivered through the CB Shares Clearing Process, "T+3" refers to three (3) NSCC business days (i.e., days during which NSCC is open for business). (b) (i) In order to provide for taking delivery of shares of portfolio securities constituting a Fund Basket (or lesser amount of such securities as may be the case, as provided in the Fund prospectus and SAI) upon redemption of CB Shares in Creation Unit aggregations, the Participant agrees for itself and on behalf of any Beneficial Owner for which it is acting, to maintain, or to ascertain that the party to receive the redemption proceeds maintains, appropriate securities broker-dealer, bank or other custody arrangements in the jurisdiction in which the portfolio securities are customarily traded, to which account such portfolio securities of the Fund Basket will be delivered by the Custodian or subcustodian. If neither the redeeming Beneficial Owner, nor the Participant acting on behalf of such redeeming Beneficial Owner, has appropriate arrangements satisfactory to the Fund to take delivery of the portfolio securities in the applicable foreign jurisdiction, and it is not possible to make other such arrangements (to which the Participant shall reasonably agree), or if it is not possible to effect deliveries of the portfolio securities of the Fund Basket in such jurisdiction, the Participant understands and agrees that the Fund will exercise its option to redeem such shares in cash and the redeeming Beneficial Owner will be required to receive its redemption proceeds in cash, less the cash transaction fee applicable to cash redemption proceeds. 7 (ii) The Participant covenants and agrees that it shall give or shall cause to be given written notice to the counterparty that is to receive portfolio securities in the Fund Basket as part of redemption proceeds no later than the date and time when a request for redemption (as defined herein) is submitted to the Fund by such Participant. Such notice to accept delivery from the appropriate subcustodian shall be by facsimile, telex or other means of communication reasonably designed to ensure the counterparty's receipt of instructions by the day following the date of the redemption request is duly made to the Fund. (iii) In order to permit delivery of Fund Basket securities by the Fund upon redemption in the case of Series other than the US Index Series in conformity with the requirements of applicable U.S. federal securities laws, the Participant irrevocably agrees with the Fund that if Participant is a broker or dealer (a "BD Participant"), it will on its own behalf or on behalf of a Beneficial Owner of a Creation Unit of shares of any Series designated on Annex VII hereto on any date specified therein (the "Designated Series" and the "Designated Dates") either (A) refer any request for redemption to a Participant that is not such a broker or dealer designated by the Fund and named in Annex VII (a "Designated Participant") or (B) execute and sign an agreement in a form determined by the Fund to comply with the provisions of Rule 15c6-1 under the Securities Exchange Act of 1934, as amended, to waive compliance with T+3 and extend the time for delivery of redemption proceeds securities by such number of days as may be specified by the Fund (but in any case not to exceed the number of calendar days permitted by Section 22(e) of the 1940 Act or Securities and Exchange Commission order as described in the Fund prospectus and SAI). The form of such agreement and waiver is set forth in the form of redemption request included as Annex V hereto. If for any reason, the redemption request with respect to a Creation Unit of a Designated Series submitted by a BD Participant on a Designated Date does not include such a duly executed waiver provided for in the form of redemption request, the BD Participant understands and agrees that State Street Bank shall cause such redemption request to be referred to a Designated Participant. The Participant agrees that Annex VII hereto may be amended from time to time by the Fund in its sole discretion. The Participant also covenants and agrees to use its best efforts to cause any person on whose behalf it submits a redemption request if such person is a broker or dealer 8 to execute and deliver an agreement to waive delivery in T+3 in accordance with Rule 15c6-1 with respect to any Designated Series and Date. The BD Participant agrees that in referring any redemption request with respect to a Designated Series on a Designated Date to a Designated Participant it shall do so in a prompt and timely manner to permit such Designated Participant to execute the redemption request on the same date. The Participant understands that any request for redemption not in compliance with the covenants set forth in this paragraph (iii) may be rejected by the Fund. The Participant acknowledges that if the Fund so determines, the Fund may in its sole discretion in order to permit timely delivery of redemption proceeds pay any part or the entire redemption proceeds in cash, subject to the cash redemption transaction fee. 7. BENEFICIAL OWNERSHIP. The Participant represents and warrants to the Fund that it does not hold for the account of any single Beneficial Owner of CB Shares(TM) of the relevant Series 80 percent or more of the outstanding CB Shares(TM) of such relevant Series, so as to cause the Fund to have a basis in the portfolio securities deposited with the Fund with respect to such Series different from the market value of such portfolio securities on the date of such deposit, pursuant to section 351 of the Internal Revenue Code of 1986, as amended. The Fund, and its Transfer Agent and Distributor, shall have the right to require information from the Participant regarding CB Share(TM) ownership of each Series and to rely thereon to the extent necessary to make a determination regarding ownership of 80 percent or more of outstanding CB Shares(TM) of any Series by a Beneficial Owner as a condition to the acceptance of a Fund Deposit. 8. INDEMNIFICATION. The Participant hereby agrees to indemnify and hold harmless the Distributor, the Fund, State Street Bank and Trust Company as Custodian, Transfer Agent and Index Receipt Agent, their respective subsidiaries, affiliates, directors, officers, employees and agents (each an "Indemnified Party") from and against any loss, liability, cost and expense incurred by such Indemnified Party as a result of (i) any breach by the Participant of any provision of this Agreement; or (ii) any actions of such Indemnified Party in reliance upon any instructions issued in accordance with Annex II (as may be amended from time to time) believed by the Fund, the Distributor and/or State Street Bank to be genuine and to have been given by the Participant. This paragraph 9 shall survive the termination of this Agreement. THE DISTRIBUTOR SHALL NOT BE LIABLE TO THE PARTICIPANT FOR ANY DAMAGES ARISING OUT OF MISTAKES OR ERRORS IN DATA PROVIDED TO THE DISTRIBUTOR BY OR INTERRUPTIONS OR DELAYS OF COMMUNICATIONS WITH THIRD PARTY SERVICE PROVIDERS TO THE FUND. 9. FUND BASKET DATA. The Participant understands that the number and names of the portfolio securities constituting the Fund Basket for each Series will be made available by the Distributor as such information is supplied to the Distributor each day that the NYSE is open for trading and will also be made available on each such day through the facilities of the NSCC. 10. ACKNOWLEDGMENT. The Participant acknowledges receipt of the Fund prospectus and the SAI and represents it has reviewed such documents and understands the terms thereof. 11. NOTICES. Except as otherwise specifically provided in this Agreement, all notices required or permitted to be given pursuant to this Agreement shall be given in writing and delivered by personal delivery or by postage prepaid registered or certified United States first class mail, return receipt requested, or by telex, telegram or facsimile or similar means of same day delivery (with a confirming copy by mail as provided herein). Unless otherwise notified in writing, all notices to the Fund shall be at the address or telephone, facsimile or telex numbers indicated below the Fund's signature line, Attn.: , with a copy to State Street Bank and Trust Company, _____________________, P.O. Box 1978, Boston, MA 02105, Attn.: CB Shares(TM). All notices to the Participant and the Distributor shall be directed to the address or telephone, facsimile or telex numbers indicated below the signature line of such party. 12. TERMINATION AND AMENDMENT. This Agreement shall become effective in this form as of the date executed by the Fund and may be terminated at any time by any party upon sixty days' prior written notice to the other parties and may be terminated earlier by the Fund at any time in the event of a breach by the Participant of this Agreement or the procedures described or incorporated herein or upon a change in control (as such term is used in the Investment Company Act of 1940, as amended) 10 of the Participant. This Agreement supersedes any prior such agreement between or among the parties. This Agreement may be amended by the Fund from time to time without the consent of any Beneficial Owner by the following procedure. The Fund will mail a copy of the amendment to the Distributor, State Street Bank and the Participant. If none of the Distributor, State Street Bank or the Participant objects in writing to the amendment within five days after its receipt, the amendment will become part of this Agreement in accordance with its terms. 13. GOVERNING LAW. This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York. 14. COUNTERPARTS. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the day and year written below. THE COUNTRYBASKETS(TM) INDEX FUND, INC. BY: TITLE: ADDRESS: Date: , 199 TELEPHONE: FACSIMILE: TELEX: _________________________________ PARTICIPANT BY: TITLE: ADDRESS: Date: , 199 TELEPHONE: FACSIMILE: 11 ALPS MUTUAL FUNDS SERVICES, INC. BY: TITLE: ADDRESS: Date: , 199 TELEPHONE: FACSIMILE: STATE STREET BANK AND TRUST COMPANY, AS CUSTODIAN, TRANSFER AGENT AND INDEX RECEIPT AGENT BY: TITLE: ADDRESS: Date: , 199 TELEPHONE: FACSIMILE: TELEX: 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 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). II-2 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. Part A TO SUBMIT A NOTICE OF INTENTION FOR THE SUBSEQUENT PURCHASE OF ONE OR MORE CREATION UNITS OF CB SHARES(TM) A Notice of Intention is not an order for the purchase of CB Shares(TM), which can only be completed subsequently. See the Fund prospectus and SAI and Part B to this Annex II. A Notice of Intention must be submitted on the date that a given Fund Basket for a Series is announced for delivery on a subsequent Issue Date, provided that no Notice of Intention is required to initiate a purchase order for CB Shares of the US Index Series through the CB Shares Clearing Process. 1. Call to Receive an Intention Number. An Authorized Person of a Participant must call the CB Shares(TM) telephone representative at 800-482-3940 not later than 15 minutes prior to the closing time of the regular trading session on the New York Stock Exchange (the "NYSE Closing Time") (ordinarily 4:00 p.m. New York time) to receive an Intention Number. Upon verifying the authenticity of the caller (as determined by the use of the appropriate PIN Number) and the terms of the Notice of Intention, the CB Shares(TM) telephone representative will issue a unique Intention Number. All submissions with respect to a notice of the intention to purchase CB Shares(TM) are required to be in writing in the form of Notice of Intention approved by the Fund (see Annex III hereto) and accompanied by the designated Intention Number. Incoming telephone calls are queued and will be handled in the sequence received. Calls placed before the NYSE Closing Time will be processed even if the call is taken after this cutoff time. ACCORDINGLY, DO NOT HANG UP AND REDIAL. INCOMING CALLS THAT ARE ATTEMPTED LATER THAN THE NYSE CLOSING TIME WILL NOT BE ACCEPTED. NOTE THAT THE TELEPHONE CALL IN WHICH THE INTENTION NUMBER IS ISSUED INITIATES THE INTENTION PROCESS BUT DOES NOT ALONE CONSTITUTE THE NOTICE OF INTENTION. A NOTICE OF INTENTION (SUCH NOTICE REFERRED TO HEREIN AS THE "INTENTION") IS ONLY COMPLETED AND PROCESSED UPON RECEIPT OF WRITTEN INSTRUCTIONS CONTAINING THE DESIGNATED INTENTION NUMBER AND TRANSMITTED BY FACSIMILE TO OR THE APPROPRIATE II-3 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. ELECTRONIC INTERFACE ("ELECTRONIC INTERFACE") PROVIDED TO THE PARTICIPANT. 2. Place the Intention. An Intention Number is only valid for a limited time. The Intention must be sent by facsimile or Electronic Interface to the CB Shares(TM) telephone representative within 15 minutes of the issuance of the Intention Number, but prior to the NYSE Closing Time. In the event that the Intention is not received within such time period, the CB Shares(TM) representative will attempt to contact the Participant to request immediate transmission of the Intention. Unless the Intention is received by the CB Shares(TM) representative upon the earlier of (i) within 15 minutes of contact with the Participant or (ii) 1 hour after the NYSE Closing Time, the Intention will be deemed invalid. 3. Await Receipt of Confirmation. The Distributor shall issue an advice of receipt of the Intention within one (1) hour of its receipt of an Intention in good form. In the event the Participant does not receive a timely advice from the Distributor, it should contact the CB Shares(TM) telephone representative at the telephone number indicated above. 4. Ambiguous Instructions. In the event that an Intention contains ambiguous instructions or terms that differ from the information provided in the telephone call at the time of issuance of the Intention Number, the CB Shares(TM) telephone representative will attempt to contact the Participant to request confirmation of the terms of the Intention. If an Authorized Person confirms the terms as they appear in the Intention, the Intention will be processed. If an Authorized Person contradicts its terms, the Intention will be deemed invalid and a corrected Intention must be received by the CB Shares(TM) telephone representative not later than the earlier of (i) within 15 minutes of such contact with the Participant or (ii) 1 hour after the NYSE Closing Time. If the CB Shares(TM) telephone representative is not able to contact an Authorized Person, then the Intention shall be processed in accordance with its terms notwithstanding any inconsistency from the terms of the telephone information. In the event that an Intention contains terms that are illegible, the Intention will be deemed invalid and the CB Shares(TM) representative will II-4 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. attempt to contact the Participant to request retransmission of the Intention. A corrected Intention must be received by the CB Shares(TM) representative not later than the earlier of (i) within 15 minutes of such contact with the Participant or (ii) 1 hour after the NYSE Closing Time. 5. Processing an Intention. The Distributor reserves the right to suspend an Intention in the event that the acceptance of a Purchase Order subsequent to the Intention would appear to result in the Participant or a Beneficial Owner owning 80 percent or more of all outstanding CB Shares(TM) of a given Series upon the subsequent purchase of CB Shares(TM). In such event, the CB Shares(TM) telephone representative will attempt to contact an Authorized Person for purposes of confirmation of the fact that with respect to such Participant no Beneficial Owner would own 80 percent or more of all outstanding CB Shares(TM) of the applicable Series upon execution of the subsequent Purchase Order. In the event that (i) the CB Shares(TM) telephone representative is unable to contact an Authorized Person or (ii) the Participant fails to transmit an identical Intention containing a representation and warranty as to such fact, then the Intention shall be deemed invalid. 6. Delivery of Intention. The Participant must make delivery to State Street Bank and Trust Company as the Custodian or to the appropriate subcustodian for the Series (see Annex VI) of a single Fund Basket with respect to one Intention with respect to a given Series. For multiple Intentions (greater than one), one Fund Basket must be delivered with the number of shares of each component security of that Fund Basket multiplied by the number of Intentions. The Custodian or the appropriate subcustodian will expect delivery from a single designated counter-party determined at the time of completion of the Authorized Participant Agreement. The counter-party may be changed by the Participant by written instructions to the Custodian no later than 24 hours prior to executing an Intention. 7. Cancellation of Intention. If upon the designated settlement date for the purchase of CB Shares(TM) (as determined by the Intention) a purchase order is not received from the Participant and accepted, the Intention II-5 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. will be canceled, and any securities deposited at the Custodian or at the appropriate subcustodian will be delivered back to the Participant at a cost to be incurred by the Participant. II-6 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. Part B TO PLACE AN ORDER FOR PURCHASE OF CB SHARES(TM) IN CREATION UNIT SIZE AGGREGATIONS 1. Call to Receive an Order Number. An Authorized Person for the Participant must call the CB Shares(TM) telephone representative at 800-482-3940 not later than 15 minutes prior to the NYSE Closing Time to receive an Order Number. Upon verifying the authenticity of the caller (as determined by the use of the appropriate PIN Number) and the terms of the order, the CB Shares(TM) telephone representative will issue a unique Order Number. All orders with respect to the purchase of Creation Unit aggregations of CB Shares of any Series are required to be in writing on the form of purchase order ("Purchase Order") approved by the Fund (see Annex IV hereto) and accompanied by the designated Order Number. Incoming telephone calls are queued and will be handled in the sequence received. Calls placed before the NYSE Closing Time will be processed even if the call is taken after this cut-off time. ACCORDINGLY, DO NOT HANG UP AND REDIAL. INCOMING CALLS THAT ARE ATTEMPTED LATER THAN THE NYSE CLOSING TIME WILL NOT BE ACCEPTED. NOTE THAT THE TELEPHONE CALL IN WHICH THE ORDER NUMBER IS ISSUED INITIATES THE ORDER PROCESS BUT DOES NOT ALONE CONSTITUTE THE PURCHASE ORDER. A PURCHASE ORDER IS ONLY COMPLETED AND PROCESSED UPON RECEIPT OF WRITTEN INSTRUCTIONS CONTAINING THE DESIGNATED ORDER NUMBER AND PIN NUMBER AND TRANSMITTED BY FACSIMILE OR ELECTRONIC INTERFACE. INSTRUCTIONS FOR USE OF THE ELECTRONIC INTERFACE WILL BE PROVIDED TO THE PARTICIPANT WHEN THE ORDER NUMBER IS OBTAINED. 2. Place the Order. An Order Number is only valid for a limited time. The Purchase Order for creation of Creation Unit size aggregations of CB Shares(TM) must be sent by facsimile or Electronic Interface to the CB Shares(TM) telephone representative within 15 minutes of the issuance of the Order Number but prior to the NYSE Closing Time. In the event that the Purchase Order is not received within such time period, the CB Shares(TM) telephone representative will attempt to contact the Participant to request immediate transmission of the Purchase Order. Unless the Purchase II-7 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. Order is received by the CB Shares(TM) telephone representative upon the earlier of (i) within 15 minutes of such contact with the Participant or (ii) the NYSE Closing Time, the order will be deemed invalid. 3. Await Receipt of Confirmation. (a) In the Case of Purchases through the CB Shares Clearing Process. The Participant shall transfer or arrange for the transfer of the requisite Fund Basket of securities for the US Index Series and the Cash Component to State Street Bank by means of the CB Shares Clearing Process so as to be received no later than on the Regular Way settlement date following the Business Day on which the Purchase Order is received by the Distributor. The Distributor shall issue to both the Participant and State Street Bank an acknowledgment of receipt of a Purchase Order for CB Shares of the US Index Series through the CB Shares Clearing Process within one (1) hour of its receipt of a Purchase Order in proper form as described above. In the event the Participant does not receive a timely acknowledgment from the Distributor, it should contact the CB Shares telephone representative at the telephone number indicated. After the Distributor has received a duly completed Purchase Order for CB Shares of the US Index Series, State Street Bank shall initiate procedures to transfer the requisite CB Shares through the CB Shares Clearing Process so as to be received by the Participant no later than on the Regular Way settlement date following the Business Day on which the duly completed Purchase Order is received by the Distributor. (b) In All Other Cases: (i) In the case of the US Index Series, the Participant shall deliver on the Issue Date (i) the Fund Basket to the Custodian through DTC and (ii) the Cash Component or estimated amount sufficient to pay the Cash Component in same day or immediately available funds by wire transfer to the account designated by the Custodian. (ii) In the case of all other Series, the Participant shall deliver on the Issue Date (except as indicated II-8 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. below) (i) the Fund Basket to the relevant subcustodian and (ii) the Cash Component or estimated amount sufficient to pay the Cash Component and the Cash Component transaction fee in same day or immediately available funds by wire transfer to the account designated by the Custodian. In the case of the France Index Series and the Italy Index Series, the Fund Basket must be received by the subcustodian on the day before the Issue Date. The Participant will receive an acknowledgment of acceptance of the Purchase Order from the Distributor upon the later to occur of (i) within one (1) hour of its receipt of a duly completed Purchase Order and (ii) confirmation from the Custodian that all Fund Basket securities have been delivered and that cash is on hand to cover the Cash Component, together with the applicable Cash Component transaction fee. In certain circumstances, the confirmation from the Custodian that all securities have been delivered may not be available until the NYSE Closing Time. In the event that the Participant does not receive a timely confirmation from the Distributor, the Participant should contact the CB Shares(TM) telephone representative at the telephone number indicated. 4. Ambiguous Instructions. In the event that a Purchase Order contains ambiguous instructions or terms that differ from the information provided in the telephone call at the time of issuance of the Order Number, the CB Shares(TM) telephone representative will attempt to contact the Participant to request confirmation of the terms of the order. If an Authorized Person confirms the terms as they appear in the Purchase Order then the order will be accepted and processed. If an Authorized Person contradicts its terms, the Purchase Order will be deemed invalid and a corrected Order must be received by the CB Shares(TM) telephone representative not later than the earlier of (i) within 15 minutes of such contact with the Participant or (ii) the NYSE Closing Time. If the CB Shares(TM) telephone representative is not able to contact an Authorized Person, then the Purchase Order shall be accepted and processed in accordance with its terms notwithstanding any inconsistency with the telephone information. In the event that a Purchase Order contains terms that are illegible, the Purchase Order will be deemed invalid and the CB Shares(TM) II-9 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. telephone representative will attempt to contact the Participant to request retransmission of the Purchase Order. A corrected Purchase Order must be received by the CB Shares(TM) telephone representative not later than the earlier of (i) within 15 minutes of such contact with the Participant or (ii) the NYSE Closing time. 5. Processing Purchase Orders. The Distributor reserves the right to suspend a Purchase Order in the event that its acceptance would appear to result in the Participant or a Beneficial Owner owning 80 percent or more of all outstanding CB Shares(TM) of a Series. In such event, the CB Shares(TM) telephone representative will attempt to contact an Authorized Person for purposes of confirmation of the fact that with respect to such Participant no Beneficial Owner would own 80 percent or more of all outstanding CB Shares(TM) of a given Series upon execution of the Purchase Order. In the event that (i) the CB Shares(TM) telephone representative is unable to contact an Authorized Person or (ii) the Participant fails to transmit an identical Purchase Order confirming the representation and warranty as to such fact, then the Purchase Order shall be deemed invalid. If the Participant fails to deliver all components of the Fund Basket in the specified share amounts, the Distributor shall notify the Adviser to determine whether cash may be accepted in lieu of the securities not delivered, as provided in the Fund prospectus and SAI. If the Purchase Order is not accepted, any securities delivered by the Participant to the Custodian or appropriate subcustodian will be delivered back to the Participant at a cost to be incurred by the Participant. 6. Subcustodian Accounts. Annex VI hereto contains a list of the subcustodian accounts to which the portfolio securities constituting the Fund Basket of each Series other than the US Index Series are to be delivered in connection with a Purchase Order. II-10 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. Part C TO PLACE A REQUEST FOR REDEMPTION OF CB SHARES(TM) IN CREATION UNIT SIZE AGGREGATIONS Prior to submitting a Redemption Request with respect to the Series indicated on the dates set forth on Annex VII hereto, please review the provisions of paragraph (b) of Section 6 of the Agreement. The Participant understands and agrees that Beneficial Owners may submit requests for redemption on each day that the New York Stock Exchange is open for trading. 1. Call to Receive a Redemption Number and to Notify Delivery of CB Shares. (a) An Authorized Person of the Participant must call the Transfer Agent at (___)- - prior to delivering the aggregated CB Shares(TM) constituting a Creation Unit in order to notify the Transfer Agent of the intention to redeem. The Transfer Agent will arrange for the Authorized Person to obtain the Redemption Request Number as described in (b) below. Participants planning to deliver CB Shares(TM) for redemption on such day should ascertain the deadlines applicable to DTC by contacting the operations department of the broker or depository institution effectuating such transfer of securities. These deadlines will vary and are likely to be significantly earlier than the closing time of the regular trading session of the New York Stock Exchange (the "NYSE Closing Time") (ordinarily 4:00 p.m. New York time). In no event may CB Shares be delivered subsequent to the NYSE Closing Time to be effective for redemption that day. Participants should note that transfers of CB Shares through DTC cannot be made on Columbus Day, Veterans Day and Martin Luther King Day and plan accordingly, as described in the Fund prospectus and SAI. The Fund will accept Redemption Requests otherwise in proper form on these dates provided that the requisite CB Shares are delivered to State Street Bank's account by : a.m. on the next DTC business day. If the CB Shares in II-11 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. Creation unit size aggregations are not received by such time, the Redemption Request will be cancelled. (b) An Authorized Person of the Participant must call the Transfer Agent (___)-___-____ not later than 15 minutes prior to the NYSE Closing Time to receive a Redemption Request Number. Upon verification of the authenticity of the caller (as determined by the use of the appropriate PIN Number), the Authorized Person will be issued a unique Redemption Request Number. All orders with respect to the redemption of Creation Unit aggregations of CB Shares(TM) are required to be on the form of redemption request approved by the Fund (see Annex V hereto) and accompanied by the designated Redemption Request Number. Incoming telephone calls are queued and will be handled in the sequence received. Calls placed before the NYSE Closing Time will be processed even if the call is taken after this on-off time. ACCORDINGLY, DO NOT HANG UP AND REDIAL. INCOMING CALLS THAT ARE ATTEMPTED LATER THAN THE NYSE CLOSING TIME WILL NOT BE ACCEPTED. NOTE THAT ISSUANCE OF THE REDEMPTION REQUEST NUMBER INITIATES THE REDEMPTION REQUEST PROCESS BUT DOES NOT ALONE CONSTITUTE THE REDEMPTION REQUEST. A REDEMPTION REQUEST (THE "REDEMPTION REQUEST") IS ONLY COMPLETED AND PROCESSED UPON RECEIPT OF WRITTEN INSTRUCTIONS CONTAINING THE DESIGNATED REDEMPTION REQUEST NUMBER AND PIN NUMBER AND TRANSMITTED BY FACSIMILE TO THE TRANSFER AGENT AT (___) ___-____ OR BY ELECTRONIC INTERFACE, WITH A COPY BY FACSIMILE TO (___) ___-____. 2. Place the Request. A Redemption Request Number is only valid for a limited time. The Redemption Request for Creation Unit size aggregations of CB Shares(TM) must be sent to the Transfer Agent by facsimile at (___) ___-____ or by Electronic Interface, with a copy by facsimile to (___) ___- ____, within 15 minutes of the issuance of the Redemption Request Number. In the event that the Redemption Request is not received within such time period, State Street Bank or its representative will attempt to contact the Participant to request immediate transmission of the Redemption Request. Unless the Redemption Request is received upon the earlier of (i) within 15 minutes of contact with the Participant or II-12 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. (ii) the NYSE Closing Time, the order will be deemed invalid. 3. Ambiguous Instructions. In the event that a Redemption Request contains terms that differ from the information provided in the telephone call at the time of issuance of the Order Number, State Street Bank or its representative will attempt to contact the Participant to request confirmation of the terms of the request. If an Authorized Person confirms the terms as they appear in the Redemption Request, the order will be processed. If an Authorized Person contradicts its terms, the Request will be deemed invalid and a corrected Redemption Request must be received not later than the earlier of (i) within 15 minutes of such contact with the Participant or (ii) the NYSE Closing Time. If State Street Bank or its representative is not able to contact an Authorized Person, the Redemption Request shall be processed in accordance with its terms notwithstanding any inconsistency with the terms of the telephone information. In the event that a Redemption Request contains terms that are illegible, the Request will be deemed invalid and State Street Bank or its representative will attempt to contact the Participant to request retransmission of the Request. A corrected Request must be received not later than the earlier of (i) within 15 minutes of such contact with the Participant or (ii) the NYSE Closing Time. 4. Await Receipt of Confirmation. (a) In the Case of Redemptions through the CB Shares Clearing Process. The Participant shall be required to transfer or arrange for the transfer of the requisite CB Shares of the US Index Series to State Street Bank by means of the CB Shares Clearing Process so as to be received no later than on the Regular Way settlement date following the business day on which such Redemption Request is received in proper form. After the receipt of a Redemption Request for CB Shares of the US Index Series, State Street Bank shall initiate procedures to transfer the requisite Fund Basket securities and the cash redemption payment, if any, through the CB Shares Clearing Process so as to be received by the Participant no later than on the Regular Way settlement date II-13 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. following the business day on which the Redemption Request is duly received in proper form by the Fund. State Street Bank shall issue to the Participant an acknowledgment of a Redemption Request within one (1) hour of its receipt of a Redemption Request in proper form. If a Participant does not receive a timely acknowledgment, it should contact State Street Bank or its representative directly at the telephone number(s) indicated. (b) In All Other Cases. In the case of all Redemption Requests other than through the CB Shares Clearing Process, the Participant must deliver on the same date the Redemption Request is made the Creation Unit size aggregation of CB Shares(TM) of the relevant Series to the Transfer Agent on behalf of the Fund through DTC, except in the case of three DTC non-settlement days when delivery may be made by : a.m. on the next DTC business day, as indicated above. Upon completion of the process and receipt of the duly completed Redemption Request and of the CB Shares(TM) by the Transfer Agent, the Transfer Agent will deliver or cause to be delivered to the Participant an acknowledgment of acceptance. The Fund shall make delivery of the Fund Basket and cash redemption proceeds (less the amount of the applicable cash redemption transaction fee) in accordance with the time required by applicable rules or an appropriate order of the Securities and Exchange Commission. In the case of each Series other than the US Index Series, the Fund Basket or appropriate securities included therein constituting in-kind redemption proceeds will be delivered to the appropriate foreign account which must be indicated on the Redemption Request form. An appropriate account must be established by the Participant or the customer on whose behalf the Participant is acting in the foreign jurisdiction to which the in-kind redemption proceeds are to be delivered in advance of the request for redemption. The Redemption Request must include all necessary information about the counterparty to permit the Fund's subcustodian to arrange for prompt delivery of proceeds securities. Instructions to accept the Fund Basket securities as redemption proceeds must be given by the Participant in writing to the counterparty on the date the redemption request is made by facsimile, telex or other means of communication to ensure that such instructions are received by the counterparty no later than the day following II-14 ANNEX II THE COUNTRYBASKETS(TM) INDEX FUND, INC. the date of redemption. The cash proceeds will be delivered to or for the account of the Participant in accordance with the instructions on the Redemption Request form. III-1 ANNEX III THE COUNTRYBASKETS(TM) INDEX FUND, INC. {#Pres12} INTENTION NUMBER (assigned by Distributor): ______ FORM OF NOTICE OF INTENTION CONTACT INFORMATION FOR ORDER EXECUTION: Telephone Order Number: (800) 482-3940 Business Number: (303) 623-2577 Facsimile Number: (303) 623-7580 ALL ITEMS IN PART I MUST BE COMPLETED BY PARTICIPANT. I. TO BE COMPLETED BY PARTICIPANT. Date: Time: Participant Name: Soliciting Dealer (if any): Telephone Number: PIN (issued by the Distributor): Fax Number: Telex Number: DTC Participant Number: NUMBER AND SERIES OF CREATION UNITS1 INTENDED TO BE PURCHASED: (This Notice of Intention may be used for intended purchases of Creation Units of only one Series of the Fund. Use additional forms for intended purchases of Creation Units of other Series.) ____________ Creation Unit(s) of the ______________ Index Series DELIVERY OF FUND BASKET: Upon acknowledgment of this Notice of Intention by the Distributor, the undersigned Participant will arrange for the delivery to _______________________ (the designated (sub)Custodian for the __________ Series) of the designated Fund Basket(s) of securities for a purchase of shares of such Series on the intended Issue Date. Transfer of the Fund Basket securities will be made from the following custodial account: 1 One Creation Unit of the Australia Index Series, the France Index Series, the Germany Index Series, the Hong Kong Index Series, the Italy Index Series, the South Africa Index Series and the UK Index Series consists of 100,000 shares. One Creation Unit of the Japan Index Series consists of 250,000 shares. No Form of Notice of Intention is used in connection with the US Index Series. III-2 _________________________________________ [Originating Bank or other Custodian] _________________________________________ [Account Name] _________________________________________ [Reference #] III-3 The Participant represents and warrants to the Distributor and the Fund that it does not and will not, after the consummation of the purchase contemplated by this notice, hold for the account of any single beneficial owner of Fund shares of the Series to which this Notice of Intention relates eighty percent (80%) or more of the outstanding shares of such Series. Signature of Authorized Person: Name: Title: II. TO BE COMPLETED BY DISTRIBUTOR. [ ] Reviewed by the Distributor to determine whether the Participant will hold for the account of any beneficial owner of Fund shares of the Series to which this Notice relates, after the consummation of the purchase contemplated by this Notice, eighty percent (80%) or more of the outstanding shares of such Series. The above intention is: [ ] Acknowledged by the Distributor. THE INTENDED ISSUE DATE FOR THE ABOVE INTENTION IS ______________, _______. [ ] Rejected - Reason: __________ ___________ ________________________________ Date Time Authorized Signature Acknowledgement of the above intention by the Distributor does not constitute acceptance of a purchase order. In order for Fund shares to be issued on the relevant Issue Date indicated above, (1) a properly completed purchase order (in the form available from the Distributor) must be received by the Distributor from the Participant by 4:00 p.m. (New York time) on the Issue Date, (2) delivery of the applicable Fund Basket of securities announced for the Series to the account of the Fund's Custodian or the appropriate subcustodian in the relevant country must be confirmed on the Issue Date (provided that delivery of the Fund Basket for each of the France Index Series and the South Africa Index Series must be made on the day prior to the Issue Date) and (3) arrangements satisfactory to the Fund for the payment to the Custodian of the Cash Component and the applicable Cash Component transaction fee for the intended purchase on such Issue Date (based on the net asset value determined at 4:00 p.m. on the Issue Date) must have been made. See the Fund's Prospectus and Statement of Additional Information. III-4 THE FUND AND THE DISTRIBUTOR ON BEHALF OF THE FUND RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER. IV-1 ANNEX IV THE COUNTRYBASKETS(TM) INDEX FUND, INC. Purchase Order Number __________ FORM OF PURCHASE ORDER CONTACT INFORMATION FOR ORDER EXECUTION: Telephone Order Number: (800) 482-3940 Business Number: (303) 623-2577 Facsimile Number: (303) 623-7580 ALL ITEMS IN PART I MUST BE COMPLETED BY PARTICIPANT. THE DISTRIBUTOR, IN ITS DISCRETION, MAY REJECT ANY ORDER NOT SUBMITTED IN PROPER FORM. SEE THE FUND'S PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION. I. TO BE COMPLETED BY PARTICIPANT. Date: Time: Participant Name: Telephone Number: PIN (issued by the Distributor): Fax Number: DTC Participant Number: Telex Number: Date of Notice of Intention: Soliciting Dealer Intention Number: Placing Order (if any): NUMBER AND SERIES OF CREATION UNITS2 TO BE PURCHASED: (This Purchase Order Form may be used for purchases of Creation Units of only one Series of the Fund.) ___________ Creation Unit(s) of the _____________ Index Series PURCHASE ORDER NUMBER (assigned by Distributor): DELIVERY OF CASH COMPONENT: The undersigned Participant has arranged for delivery to the Custodian of funds equal, at a minimum, to the Cash Component and, for each Series other than the US Index Series, the Cash Component transaction fee with respect to the above Order. The details of the delivery of the Cash Component and Cash Component transaction fee to the Custodian are set forth below: 2 One Creation Unit of the Australia Index Series, the France Index Series, the Germany Index Series, the Hong Kong Index Series, the Italy Index Series, the South Africa Index Series and the UK Index Series consists of 100,000 shares. One Creation Unit of the Japan Index Series consists of 250,000 shares. 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 IV-3 [ ] Declined - Reason: ___________ ___________ _________________________________ Date Time Authorized Signature V-1 ANNEX V THE COUNTRYBASKETS(TM) INDEX FUND, INC. FORM OF REDEMPTION REQUEST Redemption Request Number: __________ CONTACT INFORMATION FOR REQUEST EXECUTION: Telephone Order Number: (800) - Business Number: (617) - Facsimile Number: (617) - ALL ITEMS IN PART I MUST BE COMPLETED BY PARTICIPANT. THE TRANSFER AGENT IN ITS DISCRETION MAY REJECT ANY REQUEST NOT SUBMITTED IN PROPER FORM. SEE THE FUND'S PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION ("SAI"). I. TO BE COMPLETED BY PARTICIPANT. Date: Time: Participant Name: Telephone Number: PIN (issued by the Distributor): Fax Number: DTC Participant Number: Telex Number: NUMBER AND SERIES OF CREATION UNITS3 TO BE REDEEMED: (This Redemption Request Form may be used for the redemption of Creation Units of only one Series of the Fund. Use additional forms for redemptions of Creation Units of other Series.) ______________ Creation Units of the ________________ Index Series REDEMPTION REQUEST NUMBER (issued by Transfer Agent): ______________ INSTRUCTION FOR DELIVERY OF FUND BASKET(S): (for Series other than the US Index Series, indicate foreign custodial account information) Deliver ________ Fund Basket(s) to:________ Fund Basket(s) to: (Number) (Number) ____________________________________ ____________________________ [Custodian] [Custodian] ____________________________________ ____________________________ [Account Name] [Account Name] ____________________________________ ____________________________ [Account No.] [Account No.] ____________________________________ ____________________________ [Other Reference] [Other Reference] 3 One Creation Unit of the Australia Index Series, the France Index Series, the Germany Index Series, the Hong Kong Index Series, the Italy Index Series, the South Africa Index Series and the UK Index Series consists of 100,000 shares. One Creation Unit of the Japan Index Series consists of 250,000 shares. V-2 Additional delivery instructions, if necessary, may be attached on a separate sheet. ___________________ INSTRUCTIONS FOR DELIVERY OF CASH REDEMPTION PROCEEDS: Other ____________________________________ ____________________________ [Bank] ____________________________________ ____________________________ [Account Name] ____________________________________ ____________________________ [Account No.] ____________________________________ ____________________________ [Other Reference] The Participant must deliver, on the redemption date, to the Transfer Agent ( [account name]; account number ; reference ) the Creation Unit size aggregation(s) of Fund shares being redeemed. The undersigned Participant represents and warrants to the Transfer Agent and the Fund that it has the right and authority for itself or on behalf of its customer to redeem the Fund shares contemplated by this redemption. Signature of Authorized Person: Name: Title: II. TO BE COMPLETED BY THE PARTICIPANT ON DATES INDICATED ON ANNEX VII The Participant hereby irrevocably waives compliance with Rule 15c6-1 under the Securities Exchange Act of 1934 in respect of this Redemption Request and agrees that the time of delivery of redemption proceeds securities to the Participant may be extended by the Fund for that number of days set forth in Annex VII for this redemption (but in any case not to exceed the number of calendar days permitted by Section 22(e) of the Investment Company Act of 1940 or the order of the Securities and Exchange Commission described in the Fund's Prospectus and SAI). If the Participant is submitting this Redemption Request on behalf of a broker or dealer, the Participant represents that it has obtained a written waiver dated the date hereof of such customer for delivery of Fund Basket securities as provided herein. The Participant hereby irrevocably agrees that if the Fund so determines, the Fund may in its sole discretion in order to permit timely delivery of redemption proceeds pay the entire amount of redemption proceeds in respect V-3 of this Redemption Request in cash, subject to the cash redemption transaction fee. Signature of Authorized Person: Name: Title: III. TO BE COMPLETED BY TRANSFER AGENT This certifies that the above request has been: [ ] Accepted by the Fund [ ] Declined - Reason: ____________ ____________ ________________________________ Date Time Authorized Signature VI-1 ANNEX VI THE COUNTRYBASKETS(TM) INDEX FUND, INC. LIST OF CUSTODIAN/SUBCUSTODIAN ACCOUNTS Australia: Japan: Westpac Custodian Nominees Ltd. The Sumitomo Trust & Banking 8th Floor, 50 Pitt Street Co. Ltd. Sydney, NSW 2000 Overseas Custody Section Australia 11-5 Nihonbashi - Honcho 4 Chome Fund Number: XXXX Chuo-Ku, Tokyo 103 BIC: WPACAU2SNOM Japan Attn: Deputy General Manager France: Securities Operations Dept. Banque Paribas Services de TitrosConservation Fund Number: XXXX B.P. 141 BIC: STBCIPJTXXX 3 Rue d'Antin 75078 Paris Singapore: Cedex 02, France Development Bank of Singapore Investment Banking Fund Number: XXXX 24 Raffles Place BIC: PARBFRPPXXX Hex B1-00 Clifford Centre Singapore 048621 Germany: BHF-BANK Fund Number: XXXX Bockenheimer Landstrasse 10 BIC: DBSSSGSGXXX 60323 Frankfurt/Main South Africa: Fund Number: XXXX Standard Bank of South Africa BIC: BHFBDEFF500 Limited Johannesburg Stock Exchange Hong Kong: Building Standard Chartered Bank 46 Marshell Street Edinburgh Tower, 8th Floor Johannesburg 2001 Securities Department Republic of South Africa The Landmark, 15 Queens Road Hong Kong Fund Number: XXXX Attn: Operations Manager BIC: SBZAZAJJXXX Custodial Service & Securities Department United Kingdom: State Street Bank and Trust Company Fund Number: XXXX Canary Wharf BIC: SCBLHKHHXXX 27th Floor - One Canada Square London E14 5AF Italy: Attn: UK Custody Morgan Guaranty Trust Co. of NY Milan Branch Fund Number: XXXX Corso Venezia 54 BIC: SSLLGB2XGBL 20121 Milan Italy Attn: Securities Trust and Information Services VI-2 Fund Number: XXXX BIC: MGTCITMXXXX Fund or Account Number will be specific to a Participant. VII-I ANNEX VII THE COUNTRYBASKETS(TM) INDEX FUND, INC. {*Pres12} AUSTRALIA T+3 No. U.S. Bus. Australia Days To Redemption Settlement Settlement Date Date Date Reason 1/23/96 1/29/96 4 Holiday: Australia Day, 1/26/96 1/24/96 1/30/96 4 1/25/96 1/31/96 4 3/6/96 3/12/96 4 Holiday: Labor Day, 3/11/96 3/7/96 3/13/96 4 3/8/96 3/14/96 4 4/2/96 4/9/96 4 Holiday: Good Friday, 4/5/96; Easter 4/3/96 4/10/96 4 Monday, 4/8/96 4/4/96 4/11/96 4 4/22/96 4/26/96 4 Holiday: ANZAC Day, 4/25/96 4/23/96 4/29/96 4 4/24/96 4/30/96 4 6/5/96 6/11/96 4 Holiday: Queen's Birthday, 6/10/96 6/6/96 6/12/96 4 6/7/96 6/13/96 4 7/31/96 8/6/96 4 Holiday: Bank Holiday, 8/5/96 8/1/96 8/7/96 4 8/2/96 8/8/96 4 10/2/96 10/8/96 4 Holiday: Labor Day, 10/7/96 10/3/96 10/9/96 4 10/4/96 10/10/96 4 12/20/96 12/27/96 4 Holiday: Christmas Day, 12/25/96; 12/23/96 12/30/96 4 Boxing Day, 12/26/96 12/24/96 12/31/96 4 2 FRANCE T+2 No. U.S. Bus. France Days To Redemption Settlement Settlement Date Date Date Reason 8/13/96 8/19/96 4 Holiday: Assumption Day, 8/15/96; 8/14/96 8/20/96 4 Day after Assumption Day, 8/16/96 3 GERMANY T+2 No. U.S. Bus. Germany Days To Redemption Settlement Settlement Date Date Date Reason 12/20/96 12/27/96 4 Holiday: Christmas Eve, 12/24/96; 12/23/96 12/30/96 4 Christmas Day, 12/25/96; Christmas Holiday, 12/26/96 4 HONG KONG T+2 No. U.S. Bus. Hong Kong Days To Redemption Settlement Settlement Date Date Date Reason 2/15/96 2/22/96 4 Holiday: Lunar New Year, 2/19/96; 2/16/96 2/23/96 4 Day after Lunar New Year, 2/20/96; Day after Lunar New Year, 2/21/96 4/2/96 4/9/96 4 Holiday: Ching Ming Festival, 4/4/96; 4/3/96 4/10/96 4 Good Friday, 4/5/96; Easter Monday, 4/8/96 4/26/96 5/2/96 4 Holiday: Hari Raya Haji, 4/29/96; Labor Day, 5/1/96 5 ITALY T+3 No. U.S. Bus. Italy Days To Redemption Settlement Settlement Date Date Date Reason 4/22/96 4/26/96 4 Holiday: Liberation Day, 4/25/96 4/23/96 4/29/96 4 4/24/96 4/30/96 4 4/26/96 5/2/96 4 Holiday: Labor Day, 5/1/96 4/29/96 5/3/96 4 4/30/96 5/6/96 4 8/12/96 6/16/96 4 Holiday: Assumption Day, 8/15/96 8/13/96 8/19/96 4 8/14/96 8/20/96 4 10/29/96 11/4/96 4 Holiday: All Saints Day, 11/1/96 10/30/96 11/5/96 4 10/31/96 11/6/96 4 12/20/96 12/27/96 4 Holiday: Christmas Day, 12/25/96; 12/23/96 12/30/96 4 Christmas Holiday, 12/26/96 12/24/96 12/31/96 4 6 JAPAN T+3 No. U.S. Bus. Japan Days To Redemption Settlement Settlement Date Date Date Reason 1/2/96 1/8/96 4 Holiday: Bank Holiday, 1/3/96 1/10/96 1/16/96 4 Holiday: Coming of Age Day, 1/15/96 1/11/96 1/17/96 4 1/12/96 1/18/96 4 2/7/96 2/13/96 4 Holiday: National Foundation Day, 2/8/96 2/14/96 4 2/12/96 2/9/96 2/15/96 4 3/15/96 3/21/96 4 Holiday: Vernal Equinox, 3/20/96 3/18/96 3/22/96 4 3/19/96 3/25/96 4 4/30/96 5/7/96 5 Holiday: Constitution/Memorial Day, 5/1/96 5/8/96 5 5/3/96; Children's Day, 5/6/96 5/2/96 5/9/96 5 5/3/96 5/9/96 4 9/11/96 9/17/96 4 Holiday: Respect for the Aged Day, 9/12/96 9/18/96 4 9/16/96 9/13/96 9/19/96 4 9/18/96 9/24/96 4 Holiday: Autumnal Equinox, 9/23/96 9/19/96 9/25/96 4 9/20/96 9/26/96 4 10/7/96 10/11/96 4 Holiday: Health Sports Day, 10/10/96 10/8/96 10/14/96 4 10/9/96 10/15/96 4 10/30/96 11/5/96 4 Holiday: Culture Day, 11/4/96 10/31/96 11/6/96 4 11/1/96 11/7/96 4 12/18/96 12/24/96 4 Holiday: Emperor's Birthday, 12/23/96 12/26/96 1/6/97 6 Holiday: Bank Holiday, 12/31/96; 12/27/96 1/7/97 6 Bank Holiday, 1/1/97; Bank Holiday, 12/30/96 1/8/97 6 1/2/97; Bank Holiday, 1/3/97 12/31/96 1/8/97 5 7 SOUTH AFRICA T+3 South No. U.S. Bus. Africa Days To Redemption Settlement Settlement Date Date Date Reason 3/18/96 3/22/96 4 Holiday: Human Rights Day, 3/21/96 3/19/96 3/25/96 4 3/20/96 3/26/96 4 4/2/96 4/9/96 4 Holiday: Good Friday, 4/5/96; Family 4/3/96 4/10/96 4 Day, 4/8/96 4/4/96 4/11/96 4 4/26/96 5/2/96 4 Holiday: Worker's Day, 5/1/96 4/29/96 5/3/96 4 4/30/96 5/6/96 4 6/12/96 6/18/96 4 Holiday: Youth Day, 6/17/96 6/13/96 6/19/96 4 6/14/96 6/20/96 4 8/6/96 8/12/96 4 Holiday: Women's Day, 8/9/96 8/7/96 8/13/96 4 8/8/96 8/14/96 4 9/19/96 9/25/96 4 Holiday: Heritage Day, 9/24/96 9/20/96 9/26/96 4 9/23/96 9/27/96 4 12/11/96 12/17/96 4 Holiday: Day of Reconciliation, 12/12/96 12/18/96 4 12/16/96 12/13/96 12/19/96 4 12/20/96 12/27/96 4 Holiday: Christmas Day, 12/25/96; 12/23/96 12/30/96 4 Day of Goodwill, 12/26/96 12/24/96 12/31/96 4 EX-99.B6F 10 FORM OF PARTICIPATING FIN. INST. INV. SERV. AGR. 1 Draft - 1/31/96 ALPS Mutual Funds Services, Inc. 370 17th Street, Suite 2700 Denver, Colorado 80202 PARTICIPATING FINANCIAL INSTITUTIONS INVESTOR SERVICES AGREEMENT ____________________ ____________________ ____________________ Ladies and Gentlemen: As distributor and principal underwriter of The CountryBaskets(SM) Index Fund, Inc. (the "Fund"), we wish to enter into this Participating Financial Institutions Investor Services Agreement ("this Agreement") with you, acting as a "Participating Financial Institution" hereunder, concerning (i) your provision of certain broker-dealer and shareholder support services to your clients ("Clients") who may from time to time beneficially own issued and outstanding shares of common stock (the "CB Shares(SM)" or "CountryBaskets(SM)") of the series (each a "Series") of the Fund indicated on Appendix A hereto and (ii) your research and other activities related to secondary market trading in CB Shares(SM). Pursuant to a Marketing Agreement between us and the Fund (the "Marketing Agreement"), we will provide various marketing and shareholder services with respect to the CB Shares(SM). Capitalized terms, unless otherwise defined herein, shall have the meanings attributed to them in the Fund's current prospectus and statement of additional information. The terms and conditions of this Agreement are as follows: Section 1. Services of a Participating Financial Institution. The services you agree to provide with respect to the Series shall include: (a) in connection with outstanding and issued CB Shares(SM), such broker/dealer and shareholder support services to Clients as you customarily provide to Clients with respect to shares of open-end investment companies, exchange-listed stocks and/or American Depositary Receipts, including but not limited to one or more of the following: (i) distributing prospectuses and shareholder reports to current shareholders; (ii) maintaining account records and processing dividend and distribution payments for Clients; (iii) issuing confirmations of transactions; (iv) periodically providing account information with respect to CB Shares(SM) beneficially owned by Clients, including their positions in CB Shares(SM); (v) at your discretion, providing and maintaining elective services such as check writing on the 2 Client's account and wire transfer services; (vi) acting as nominee for Clients; (vii) if required by law, forwarding shareholder communications from us or on behalf of the Fund (such as proxies, shareholder reports, annual and semi-annual financial statements and dividend, distribution and tax notices); (viii) assisting Fund shareholders who wish to aggregate sufficient CB Shares(SM) of a Series to constitute a Creation Unit aggregation for redemption; and (ix) such other services analogous to the foregoing as we or the Fund may reasonably request and which you customarily provide to Clients with respect to holdings of shares of open-end investment companies or exchange-listed stocks, to the extent you are permitted to do so under applicable statutes, rules and regulations. You will provide such office space and equipment, telephone facilities and personnel (which may be any part of the space, equipment and facilities currently used in your business, or any personnel employed by you) as may be reasonably necessary or beneficial in order to provide the services to Clients described in this paragraph. (b) research and services related to the secondary market trading of CB Shares(SM), including the following: (i) generating and publishing periodic product research, such as product applications, statistics, efficiency comparisons and other similar data; (ii) developing trading strategies for CB Shares(SM) for institutional investors and others; and (iii) following developments in trading of CB Shares(SM). (c) Market Making In Fund Baskets or CB Shares(SM). At all times during the regular trading session of the New York Stock Exchange, Inc. (the "NYSE"), unless otherwise prohibited by applicable law, rules or regulations, you will furnish bona fide, competitive bid and offer quotations to brokers and dealers and Clients, on request, for (i) portfolios of securities ("Partial Fund Baskets") each constituting a one- fifth, pro rata portion (subject to rounding the number of shares of any portfolio security to the nearest one share) of the Fund Basket announced prior to the opening of each such NYSE session, in quantities of one through four such Partial Fund Baskets and one complete Fund Basket or (ii) quantities of CB Shares(SM) equal to one-fifth, two-fifths, three-fifths and four-fifths of a Creation Unit aggregation of CB Shares(SM) and one full Creation Unit, in either case (i) or (ii), with respect to no fewer than _____ Series selected by you and identified to us and the Adviser (the "Designated Series"). You agree to be ready and willing on a continuous basis to effect transactions in the above-described Partial Fund Baskets and Fund Basket or CB Shares(SM) for your own account at such bid and offered prices. (d) Inventory of CB Shares(SM). At any time that the number of CB Shares(SM) of a Designated Series issued and outstanding is less than 2,000,000, you agree to maintain an average daily inventory, calculated on a monthly basis, of a quantity of CB Shares(SM) of such Designated Series equal to three Creation Unit aggregations, provided that no such inventory shall be required to be maintained with respect to the ______ Index Series during the months of _____________, inclusive. 3 Such inventory will be used, at your discretion, for the purpose of dealing, trading, arbitrage or lending in CB Shares(SM) or any other purpose permissible under applicable laws and regulations. Section 2. Support for your Services. (a) Promotion and Advertising. A list of all Participating Financial Institutions will be distributed or caused to be distributed by us (i) along with sales, advertising or marketing material relating to CB Shares(SM) intended for potential institutional investors and developed by or made available to us pursuant to the Marketing Agreement for distribution to institutional investors and (ii) as part of all product seminars, conference and other presentations relating to CB Shares(SM) which we or the Adviser shall sponsor or in which we or any registered investor relations representatives appointed by us in accordance with the Marketing Agreement shall participate. We agree that we will, upon inquiry, direct secondary market trades of institutional investors in CB Shares(SM) to Participating Financial Institutions and will not make any unsolicited recommendation of any particular Participating Financial Institution. To the extent permitted under applicable laws and regulations, reference will be made to you in any advertising, including "tombstone" notices, directed to the institutional market. (b) Communications with Specialists. We shall include in our oral and written communications relating to CB Shares(SM) with any NYSE specialist making a market in CB Shares(SM), as appropriate and to the extent permissible under the rules of the NYSE and other applicable laws, rules and regulations, statements (i) identifying you and the other Participating Financial Institutions as active participants in the support and promotion of secondary market trading of CB Shares(SM) and (ii) highlighting the special capacity of you and other Participating Financial Institutions to meet market demand on the part of institutional and professional investors for purchases and sales of CB Shares(SM). (c) CB Shares(SM) Conference. A representative of your organization designated by you will be invited to, and will participate in, an annual two-day conference to be organized pursuant to the marketing plan to be developed in accordance with the Marketing Agreement and in conjunction with the Adviser at which CB Shares(SM) product and market trends will be considered. The conference agenda is expected to be presented by CB Shares(SM) product specialists, academics, international economists and others. You will bear any expenses (including transportation, compensation and any other out-of-pocket expenses) in connection with the attendance of your representative at such conference. 4 (d) Data Support. The official net asset value, net accumulated dividends and price-only net asset value for each CountryBaskets(SM) Series will be made available daily on the Consolidated Tape. In addition, indicative FT/S&P Actuaries World Indices(TM) index values, as well as indicative net asset values, with respect to each Series, will be made available on a real time basis at 30-second intervals on the Consolidated Tape. Real-time or daily updated news and information with respect to CB Shares(SM) (including, subject to the establishment of satisfactory arrangements with third party vendors, spot foreign exchange rates and major market index prices related to the country markets relevant to the Series) will be made available by the Adviser through one or more third-party vendors of on-line market information, including Automated Data Processing, Reuters, Dow Jones Telerate and/or Bloomberg, which vendors will distribute such news and information in the form of a separate CountryBaskets(SM) "page". You will also be provided with access to additional market information, including without limitation, 5-year historical data (prior to _______, 1995) on the relevant FT/S&P Actuaries World Indices(TM) country indices, on diskette (or other suitable format) and in printed form; key analytic data (spreads, correlations, historic performance, optimization routines); and, as and when deemed necessary by the Adviser to support trading, arbitrage and brokerage in CB Shares(SM), specific dealer research (such as hedging strategies, options strategies and security-specific correlations), in each case as made available to us or the Fund by the Adviser or another third party (who shall consent to such data being provided to you), for redistribution to your Clients under your name. (e) CB Shares(SM) Loan Pool. In conjunction with the Adviser, we will make arrangements with a major securities dealer to make available for lending exclusively to Participating Financial Institutions and the NYSE specialist firms entering into similar investor services agreements with us ("Specialist PFIs") a quantity of CB Shares(SM) equal in aggregate market value to not less than $100,000,000, divided among all Series, and available to Participating Financial Institutions and Specialist PFIs on a "first-come, first-served" basis. Such arrangements will remain in effect for a period of not less than six months after the initial issuance and sale of CB Shares(SM) and will be for the sole purpose of settling secondary market transactions entered into by Participating Financial Institutions. Such arrangements are expected to include (i) pre-approved aggregate borrowing limits for each Participating Financial Institution or Specialist PFI; and (ii) lending fees equivalent to _____ basis points below a CB Share(SM) lending Call Rate. The "Call Rate" on any [London] Business Day with respect to all Series will be the arithmetic mean, determined daily by the Adviser, of the lending fee rates offered by three major custodians or broker dealers selected by the Adviser from among State Street Bank and Trust Company, The Bank of New York, The Chase Manhattan Bank, N.A., Merrill Lynch & Co., Goldman, Sachs & Co., Nomura International PLC and Paloma Securities, L.P. for loans of not less than ________ [amount] CB Shares(SM) in a single transaction. You understand also that the availability of such 5 arrangements to you will be subject to your execution of a securities borrowing agreement substantially in the form customarily required by Deutsche Morgan Grenfell/ C. J. Lawrence Inc., the authorized securities lending agent for the lender(s). (f) Exclusivity. We shall not have agreements in the form hereof with any persons other than twelve (12) Participating Financial Institutions and the Specialist PFIs at any one time. Section 3. No Representations. You and your officers, employees or agents shall not make any representations as authorized by us, the Fund or the Adviser except those contained in the Fund's then current prospectus and statement of additional information or in such sales, marketing or advertising materials as may be authorized by us and the Fund in writing, including the materials referred to in Section 2(a) hereof. You understand that neither the Fund nor any Series will be advertised or marketed as an open-end investment company, i.e., as a mutual fund, which offers redeemable securities. Any advertising materials, including the Fund prospectus, will prominently disclose that the CB Shares(SM) are not redeemable units of beneficial interest in the Fund. In addition, any advertising material, including the Fund prospectus, will disclose that the owners of CB Shares(SM) may acquire and tender those shares for redemption to the Fund in Creation Unit aggregations only. You understand further that any advertising or marketing materials relating to the Fund will contain such disclosures and caveats as the Fund or we may deem to be required under any applicable statute or rule, regulation or order of any governmental authority or self-regulatory organization or under the policies of the Fund. Section 4. Independent Contractor. For all purposes of this Agreement, you will be deemed to be an independent contractor, and will have no authority to act as agent for us in any matter or in any respect. You and your employees will, upon request, be available during normal business hours to consult with us or our designees concerning the performance of your responsibilities under this Agreement. Section 5. Termination; Amendment. This Agreement will become effective between us on the date a fully executed copy of this Agreement is received by us or our designee. This Agreement is terminable, without penalty, (a) at any time by the Fund with respect to any Series of CB Shares(SM) or (b) by you, in either case upon 90 days' notice in writing to the other party hereto. This Agreement may be amended by execution of an instrument in writing by each of the parties hereto. 6 Section 6. Miscellaneous. (a) All notices and other communications to either you or us will be duly given if mailed, telegraphed or transmitted by facsimile or similar telecommunications device at the address shown below. (b) This Agreement shall be construed in accordance with the laws of the State of New York. If you agree to be bound by the provisions for this Agreement, please sign a copy of this letter where indicated below and promptly return it to us, c/o ALPS Mutual Funds Services Inc., 370 17th Street, Suite 2700, Denver, Colorado 80202. Very truly yours, ALPS MUTUAL FUNDS SERVICES, INC. Date: , 1996 By:______________________________ Authorized Officer 7 Accepted and Agreed to: _________________________________ [Name of Participating Financial Institution] Date: , 1996 By: _____________________________ Authorized Officer Address: _______________________ _______________________ _______________________ Facsimile No.____________________ 8 Appendix A Participating Financial Institutions Investor Services Agreement CB Shares(SM) NYSE CUSIP Series Symbol No. Australia Index Series GXA 22236E10 9 France Index Series GXF 22236E20 8 Germany Index Series GXG 22236E30 7 Hong Kong Index Series GXH 22236E40 6 Italy Index Series GXI 22236E50 5 Japan Index Series GXJ 22236E60 4 South Africa Index GXR 22236E70 3 Series UK Index Series GXK 22236E80 2 US Index Series GXU 22236E88 5 EX-99.B6G 11 FORM OF SPECIALIST INSTITUTIONS SERV. AGR. 1 Draft - 2/6/96 ALPS Mutual Funds Services, Inc. 370 17th Street, Suite 2700 Denver, Colorado 80202 SPECIALIST INSTITUTIONS SERVICES AGREEMENT ____________________ ____________________ ____________________ Ladies and Gentlemen: As distributor and principal underwriter of The CountryBaskets(SM) Index Fund, Inc. (the "Fund"), we wish to enter into this Specialist Institutions Services Agreement (this "Agreement") with you, acting as a "Specialist Institution" hereunder, concerning your Creation Unit purchases supporting the commencement of, and continued liquidity in, the secondary market for, issued and outstanding shares of common stock (the "CB Shares(SM)" or "CountryBaskets(SM)") of the series (each a "Series") of the Fund in which you are registered as the NYSE specialist, as indicated on Annex A hereto. Pursuant to a Marketing Agreement between us and the Fund (the "Marketing Agreement"), we will provide various marketing and other services with respect to the CB Shares(SM) that will support and complement your secondary market trading activities, as described herein. Capitalized terms, unless otherwise defined herein, shall have the meanings attributed to them in the Fund's current prospectus and statement of additional information. In consideration of your covenants and agreements contained in Section 1 and our covenants and agreements contained in Section 2, the parties hereto agree as follows: Section 1. Obligations of a Specialist Institution. In connection with the offering by the Fund of CB Shares(SM) in Creation Unit aggregations, you agree that you will enter into a purchase agreement with the Fund, substantially in the form attached hereto as Annex B (a "Purchase Agreement"), pursuant to which you agree to purchase (acting through an Authorized Participant, if required to comply with procedures established by the Fund) prior to the commencement of trading of CB Shares(SM) on the NYSE the lesser of (i) three Creation Unit aggregations of CB Shares(SM) of each Series and (ii) the maximum number of such Creation Units that the rules of the NYSE would then permit you (taking into account any exemptions then available to you), as appropriate to facilitate the maintenance of a fair and orderly market, to purchase based on the aggregate number of CB Shares(SM) 2 outstanding after giving effect to all purchases of Creation Units to be sold by the Fund pursuant to Purchase Agreements on the same date. Section 2. Support for your Activities. (a) Promotion and Advertising. The marketing and promotional activities undertaken by us, and the sales, advertising or marketing material relating to CB Shares(SM) developed by or made available to us, pursuant to the Marketing Agreement for distribution to potential investors and participants in the CountryBaskets(SM) secondary markets will be designed or developed with a view to increasing the demand for CB Shares(SM) on the secondary market. (b) PFIs. We have entered into investor services agreements with certain participating financial institutions (the "PFIs") to provide certain services that will support your activities under Section 1(b), including making markets in CB Shares(SM) or Fund Basket securities. The availability of these services is a supplement to your usual and customary mechanisms for satisfying market demand for CB Shares(SM). We agree, upon inquiry, to facilitate communications between you and PFIs that may offer special services to you, including access to foreign equity markets, foreign listed derivatives markets, foreign exchange and over-the-counter derivatives and clearance and settlement facilities for foreign securities. (c) CB Shares(SM) Conference. A representative of your organization designated by you will be invited to, and will participate in, an annual two-day conference to be organized pursuant to the marketing plan to be developed in accordance with the Marketing Agreement and in conjunction with the Adviser at which CB Shares(SM) product and market trends will be considered. The conference agenda is expected to be presented by CB Shares(SM) product specialists, academics, international economists and others. You will bear any expenses (including transportation, compensation and any other out-of-pocket expenses) in connection with the attendance of your representative at such conference. (d) Data Support. The official net asset value, indicative net accumulated dividends and indicative price-only net asset value for each CountryBaskets(SM) Series will be made available daily on the Consolidated Tape. In addition, indicative FT/S&P Actuaries World Indices(TM) index values, as well as indicative net asset values, with respect to each Series, will be made available on a real time basis at 30-second intervals on the Consolidated Tape. Real-time or daily updated news and information with respect to CB Shares(SM) (including, subject to the establishment of satisfactory arrangements with third party vendors, spot foreign exchange rates and major market index prices related to the country markets relevant to the Series) will be made available by the Adviser through one or more third-party vendors of on-line market information, including Automated Data Processing, 3 Reuters, Dow Jones Telerate and/or Bloomberg, which vendors will distribute such news and information in the form of a separate CountryBaskets(SM) "page". You will also be provided with access to additional market information, including without limitation, 5-year historical data (prior to _______, 1995) on the relevant FT/S&P Actuaries World Indices(TM) country indices, on diskette (or other suitable format) and in printed form; key analytic data (spreads, correlations, historic performance, optimization routines); and, as and when deemed necessary by the Adviser to support trading, arbitrage and brokerage in CB Shares(SM), specific dealer research (such as hedging strategies, options strategies and security-specific correlations), in each case as made available to us or the Fund by the Adviser or another third party (who shall consent to such data being provided to you). (e) CB Shares(SM) Loan Pool. In conjunction with the Adviser, we will make arrangements with a major securities dealer to make available for lending exclusively to Specialist Institutions which have executed an agreement in this form (the "Specialist Institutions") and the PFIs a quantity of CB Shares(SM) equal in aggregate market value to not less than $100,000,000, divided among all Series, and available to Specialist Institutions and PFIs on a "first-come, first-served" basis. Such arrangements will remain in effect for a period of not less than six months after the initial issuance and sale of CB Shares(SM) and will be for the sole purpose of settling secondary market transactions entered into by Specialist Institutions and PFIs. Such arrangements are expected to include (i) pre-approved aggregate borrowing limits for each Specialist Institution or PFI; and (ii) lending fees equivalent to _____ basis points below a CB Share(SM) lending Call Rate. The "Call Rate" on any [London] Business Day with respect to all Series will be the arithmetic mean, determined daily by the Adviser, of the lending fee rates offered by three major custodians or broker dealers selected by the Adviser from among State Street Bank and Trust Company, The Bank of New York, The Chase Manhattan Bank, N.A., Merrill Lynch & Co., Goldman, Sachs & Co., Nomura International PLC and Paloma Securities, L.P. for loans of not less than ________ [amount] CB Shares(SM) in a single transaction. You understand also that the availability of such arrangements to you will be subject to your execution of a securities borrowing agreement substantially in the form customarily required by Deutsche Morgan Grenfell/C. J. Lawrence Inc., the authorized securities lending agent for the lender(s). (f) Exclusivity. We shall not have agreements in the form hereof with any persons other than twelve (12) PFIs and the other Specialist Institutions. Section 3. No Representations. You and your officers, employees or agents shall not make any representations as authorized by us, the Fund or the Adviser except those contained in the Fund's then current prospectus and statement of additional information or in such sales, marketing or advertising materials as may be 4 authorized by us and the Fund in writing, including the materials referred to in Section 2(a) hereof. You understand that neither the Fund nor any Series will be advertised or marketed as an open-end investment company, i.e., as a mutual fund, which offers redeemable securities. Any advertising materials, including the Fund prospectus, will prominently disclose that the CB Shares(SM) are not redeemable units of beneficial interest in the Fund. In addition, any advertising material, including the Fund prospectus, will disclose that the owners of CB Shares(SM) may acquire and tender those shares for redemption to the Fund in Creation Unit aggregations only. You understand further that any advertising or marketing materials relating to the Fund will contain such disclosures and caveats as the Fund or we may deem to be required under any applicable statute or rule, regulation or order of any governmental authority or self- regulatory organization or under the policies of the Fund. Section 4. Independent Contractor. For all purposes of this Agreement, you will be deemed to be an independent contractor, and will have no authority to act as agent for us in any matter or in any respect. You and your employees will, upon request, be available during normal business hours to consult with us or our designees concerning the performance of your responsibilities under this Agreement. Section 5. Termination; Amendment. This Agreement will become effective between us on the date a fully executed copy of this Agreement is received by us or our designee. This Agreement is terminable, without penalty, (a) at any time by the Fund with respect to any Series of CB Shares(SM) or (b) by you, in either case upon 90 days' notice in writing to the other party hereto. This Agreement may be amended by execution of an instrument in writing by each of the parties hereto. Section 6. Miscellaneous. (a) All notices and other communications to either you or us will be duly given if mailed, telegraphed or transmitted by facsimile or similar telecommunications device at the address shown below. (b) This Agreement shall be construed in accordance with the laws of the State of New York. 5 If you agree to be bound by the provisions for this Agreement, please sign a copy of this letter where indicated below and promptly return it to us, c/o ALPS Mutual Funds Services Inc., 370 17th Street, Suite 2700, Denver, Colorado 80202. Very truly yours, ALPS MUTUAL FUNDS SERVICES, INC. Date: , 1996 By:______________________________ Authorized Officer Accepted and Agreed to: _________________________________ [Name of Specialist Institution] Date: , 1996 By: _____________________________ Authorized Officer Address: _______________________ _______________________ _______________________ Facsimile No.____________________ 6 Annex A Specialist Institutions Specialist Institutions Services Agreement [DELETE SERIES AS NECESSARY.] CB Shares(SM) NYSE CUSIP Series Symbol No. Australia Index Series GXA 22236E10 9 France Index Series GXF 22236E20 8 Germany Index Series GXG 22236E30 7 Hong Kong Index Series GXH 22236E40 6 Italy Index Series GXI 22236E50 5 Japan Index Series GXJ 22236E60 4 South Africa Index GXR 22236E70 3 Series UK Index Series GXK 22236E80 2 US Index Series GXU 22236E88 5 EX-99.B8 12 CUSTODIAN CONTRACT 1 Draft: 1/29/96 CUSTODIAN CONTRACT Between THE COUNTRYBASKETSSM INDEX FUND, INC. and STATE STREET BANK AND TRUST COMPANY GlobalSeriesCorp 21N 2 TABLE OF CONTENTS Page 1. Employment of Custodian and Property to be Held by It . . . . . . 1 2. Duties of the Custodian with Respect to Property of the Fund Held By the Custodian in the United States . . . . . . . . . . . 2 2.1 Holding Securities and Other Assets . . . . . . . . . . . . . . . 2 2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . . . . 2 2.3 Registration of Securities . . . . . . . . . . . . . . . . . . . 5 2.4 Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.5 Foreign Exchange Transactions and Futures . . . . . . . . . . . . 5 2.6 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.7 Call or Time Deposits . . . . . . . . . . . . . . . . . . . . . . 6 2.8 Availability of Federal Funds . . . . . . . . . . . . . . . . . . 7 2.9 Collection of Income . . . . . . . . . . . . . . . . . . . . . . 7 2.10 Payment of Fund Monies . . . . . . . . . . . . . . . . . . . . . 8 2.11 Liability for Payment in Advance of Receipt of Securities Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2.12 Appointment of Agents . . . . . . . . . . . . . . . . . . . . . . 9 2.13 Deposit of Fund Assets in U.S. Securities Systems . . . . . . . . 10 2.14 Fund Assets Held in the Custodian's Direct Paper System . . . . . 11 2.15 Segregated Account . . . . . . . . . . . . . . . . . . . . . . . 12 2.16 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.17 Communications Relating to Series Securities . . . . . . . . . . 13 3. Duties of the Custodian with Respect to Property of the Fund Held Outside of the United States . . . . . . . . . . . . . . . . 13 3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . . . . . . 13 3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . . . . . 14 3.3 Holding Securities . . . . . . . . . . . . . . . . . . . . . . . 14 3.4 Foreign Securities Systems . . . . . . . . . . . . . . . . . . . 14 3.5 Agreements with Foreign Banking Institutions . . . . . . . . . . 15 3.6 Access of Independent Accountants of the Fund . . . . . . . . . . 15 3.7 Reports by Custodian . . . . . . . . . . . . . . . . . . . . . . 15 3.8 Transactions in Foreign Custody Account . . . . . . . . . . . . . 16 3.9 Liability of Foreign Sub-Custodians . . . . . . . . . . . . . . . 16 3.10 Monitoring Responsibilities . . . . . . . . . . . . . . . . . . . 17 3.11 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . . . . 17 3.12 Collection of Income . . . . . . . . . . . . . . . . . . . . . . 17 3.13 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.14 Communications Relating to Portfolio Securities . . . . . . . . . 18 3 4. Payments for Purchases or Redemptions of Shares of the Fund . . . 19 4.1 Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . 19 4.2 Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . 19 5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . 20 6. Actions Permitted without Express Authority . . . . . . . . . . . 20 7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . 21 8. Duties of Custodian with Respect to the Books of Account and Calculation of Net Asset Value and Net Income . . . . . . . . . . 21 9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 10. Opinion of Fund's Independent Accountant . . . . . . . . . . . . 22 11. Reports to Fund by Independent Public Accountants . . . . . . . . 22 12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . 23 13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . 23 14. Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 15. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 16. Effective Period, Termination and Amendment . . . . . . . . . . . 25 17. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . 26 18. Interpretive and Additional Provisions . . . . . . . . . . . . . 26 19. Additional Series . . . . . . . . . . . . . . . . . . . . . . . . 27 20. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . 27 21. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 27 4 22. Shareholder Communications . . . . . . . . . . . . . . . . . . . 27 5 CUSTODIAN CONTRACT This Contract between The CountryBasketsSM Index Fund, Inc., a corporation organized and existing under the laws of Maryland, having its principal place of business at 31 West 52nd Street, New York, New York 10019, hereinafter called the "Fund", and State Street Bank and Trust Company, a Massachusetts trust company, having its principal place of business at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the "Custodian", WITNESSETH: WHEREAS, the Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and WHEREAS, the Fund intends to initially offer shares of the following series: Australia Index Series, France Index Series, Germany Index Series, Hong Kong Index Series, Italy Index Series, Japan Index Series, South Africa Index Series, UK Index Series and US Index Series (such series, together with all other series subsequently established by the Fund and made subject to this Contract in accordance with Article 17, being herein referred to as the "Series"); NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows: 1. Employment of Custodian and Property to be Held by It The Fund hereby employs the Custodian as the custodian of the assets of the Series of the Fund, including securities which the Fund, on behalf of the applicable Series, desires to be held in places within the United States ("domestic securities") and securities it desires to be held outside the United States and which constitute "foreign securities," as defined in paragraph (c)(1) of Rule 17f-5 ("Rule 17f-5") under the Investment Company Act of 1940, as amended (the "Investment Company Act") ("foreign securities"). The Fund agrees to deliver to the Custodian all securities and other investments and cash of each Series, and all payments of income, payments of principal or capital distributions received by it with respect to all securities and other instruments owned by the Series from time to time, and the consideration received by it for such new or treasury shares of common stock of the Fund representing interests in the Series, ("Shares") as may be issued or sold from time to time. The Custodian shall not be responsible for any property of a Series held or received by the Series and not delivered to the Custodian. 2 Upon receipt of "Proper Instructions" (within the meaning of Article 5), the Custodian shall on behalf of the applicable Series from time to time employ one or more Sub-custodians, located in the United States to hold domestic securities and cash, provided that any such Sub-custodian meets at least the minimum qualifications required by Section 17(f)(1) of the Investment Company Act to act as a custodian, but only in accordance with an applicable vote by the Board of Directors of the Fund on behalf of the applicable Series, and subject to Article 13. The Custodian may from time to time employ any foreign banking institution or foreign securities depository designated in Schedule A hereto as Sub-custodian (a "Foreign Sub-custodian") for the Fund's foreign securities on behalf of the applicable Series, but only in accordance with the provisions of Article 3 and subject to Article 13. 2. Duties of the Custodian with Respect to Property of the Fund Held By the Custodian in the United States 2.1 Holding Securities and Other Assets. The Custodian shall hold in a separate account or accounts and segregated at all times from the assets of other Series and third parties all non-cash property of each Series which may now or hereafter be delivered to it for the account of such Series, including all domestic securities owned by such Series, other than (a) securities which are maintained pursuant to Section 2.10 in a "U.S. Securities System" (as therein defined), and (b) commercial paper of an issuer for which State Street Bank and Trust Company acts as issuing and paying agent ("Direct Paper") which is deposited and/or maintained in the Direct Paper System of the Custodian pursuant to Section 2.11. 2.2 Delivery of Securities. The Custodian shall release and deliver domestic securities owned by a Series held by the Custodian or in a U.S. Securities System account of the Custodian or in the Custodian's Direct Paper book entry system account ("Direct Paper System Account") only upon receipt of Proper Instructions from the Fund on behalf of the applicable Series, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases: 1) Upon sale of such securities for the account of the Series against receipt of payment in full therefor; 2) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Series; 3) In the case of a sale effected through a U.S. Securities System, in accordance with the provisions of Section 2.10 hereof; 3 4) To the agent of the issuer or trustee of such securities in connection with invitations for tenders or other similar offers for securities of the Series provided, in any such case, that the consideration is either to be paid or delivered to the Custodian or the tendered securities are to be returned to the Custodian; 5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian; 6) To the issuer thereof, or its agent, for transfer into the name of the Series or into the name of any nominee or nominees of the Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.9 or into the name or nominee name of any sub-custodian appointed pursuant to Article 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Custodian; 7) Upon the sale of such securities for the account of the Series, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that in any such case, the Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Custodian's own negligence or willful misconduct; 8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; 9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; 10) For delivery in connection with any loans of securities made by the Series, but only against receipt of adequate collateral as agreed upon 4 from time to time by the Custodian and the Fund on behalf of the Series, which may be in the form of cash, obligations issued or guaranteed by the United States government, its agencies or instrumentalities or such other securities or instruments as may be permitted under the Investment Company Act and which have been approved as acceptable collateral by the Board of Directors of the Fund, except that in connection with any loans for which collateral is to be credited to the Custodian's account in a U.S. Securities System, the Custodian will not be held liable or responsible for the delivery of securities owned by the Series prior to the receipt of such collateral; 11) For delivery as security in connection with any borrowings by the Fund on behalf of the Series requiring a pledge of assets by the Fund on behalf of the Series, but only against receipt of amounts borrowed; 12) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Series, the Custodian and a broker-dealer registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and a member of The National Association of Securities Dealers, Inc. ("NASD"), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Series of the Fund; 13) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Series, the Custodian, and a Futures Commission Merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission and/or any Contract Market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Series of the Fund; 14) Upon receipt of Proper Instructions from the transfer agent ("Transfer Agent") for the Fund, for delivery to the holders of Shares in connection with redemptions in kind, as may be described from time to time in the currently effective prospectus and statement of additional information contained in the Fund's Registration Statement (together, the "Prospectus"), in satisfaction of requests by holders of Shares for repurchase or redemption; and 15) For any other proper corporate purpose, but only upon receipt of, in addition to Proper Instructions from the Fund on behalf of the 5 applicable Series, a certified copy of a resolution of the Board of Directors signed by an officer of the Fund and certified by the Secretary or an Assistant Secretary, specifying the securities of the Series to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purpose to be a proper corporate purpose, and naming the person or persons to whom delivery of such securities shall be made. 2.3 Registration of Securities. Domestic securities physically held by the Custodian (other than bearer securities) shall be registered in the name of a Series or of the Fund or in the name of any nominee of the Fund on behalf of such Series or of any nominee of the Custodian which nominee shall be assigned exclusively to the Series, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment adviser as the Series, or in the name or nominee name of any agent appointed pursuant to Section 2.9 or in the name or nominee name of any sub-custodian appointed pursuant to Article 1. All securities accepted by the Custodian on behalf of a Series under the terms of this Contract shall be in "street name" or other good delivery form. If, however, the Fund directs the Custodian to maintain securities in "street name", the Custodian shall utilize its best efforts only to timely collect income due the Fund on such securities and to notify the Fund on a best efforts basis only of relevant corporate actions including, without limitation, pendency of calls, maturities, tender or exchange offers. 2.4 Options. The Custodian shall receive and retain confirmations or other documents evidencing the purchase of or writing of an option on a security or securities index by a Series; deposit and maintain in a segregated account, either physically or by book-entry in a Securities System (as defined herein), securities subject to a covered put option written by a Series; and release and/or transfer such securities or other assets only in accordance with a notice or other communication evidencing the expiration, termination or exercise of such covered option furnished by the Fund's investment adviser, The Options Clearing Corporation, the securities or options exchange on which such covered option is traded or such other organization as may be responsible for handling such options transactions. 2.5 Foreign Exchange Transactions and Futures. Pursuant to Proper Instructions, the Custodian shall enter into foreign exchange contracts or options to purchase and sell foreign currencies for spot and future delivery on behalf and for the account of a Series. Such transactions may be undertaken by the Custodian with such banking institutions, including the Custodian or any Sub-custodian(s) appointed pursuant to Article I as principals, as approved and 6 authorized by the Fund. Foreign exchange contracts and options other than those executed with the Custodian, shall be deemed to be portfolio securities of the applicable Series [and the responsibi- lities of the Custodian therefor shall be the same as those for demand deposit bank accounts placed with other banks or trust companies as described in Section 2.6 of this Contract?]. Upon receipt of Proper Instructions, the Custodian shall receive and retain confirmations evidencing the purchase or sale of a futures contract or an option on a futures contract by a Series; deposit and maintain in a segregated account, for the benefit of any futures commission merchant or to pay to such futures commission merchant, assets designated by the Fund as initial, maintenance or variation "margin" deposits intended to secure the Series' performance of its obligations under any futures contracts purchased or sold or any options on futures contracts written by the Series, in accordance with the provisions of any agreement or agreements among any of the Fund, the Custodian and such futures commission merchant, designed to comply with the rules of the Commodity Futures Trading Commission and/or any contract market, or any similar organization or organiza- tions, regarding such margin deposits; and to release and/or transfer assets in such margin accounts only in accordance with any such agreements or rules. 2.6 Bank Accounts. The Custodian shall open and maintain a separate bank account or accounts in the United States in the name of each Series of the Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Contract, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Series, other than cash maintained by the Series in a bank account established and used in accordance with Rule 17f-3 under the Investment Company Act or placed in fixed term and call deposits pursuant to Section 2.7. Funds held by the Custodian for a Series may be deposited by it to its credit as Custodian in the Banking Department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the Investment Company Act and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall on behalf of each applicable Series be approved by vote of a majority of the Board of Directors of the Fund. Such funds shall be deposited by the Custodian in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity. 2.7 Call or Time Deposits. The Custodian may place interest bearing fixed time and call deposits with such banks and in such amounts as the Fund may authorize with respect to a Series pursuant to Proper Instructions. Such deposits may be placed with the Custodian, or with any Sub-custodian 7 appointed under Article I or such other banks or trust companies eligible to hold the Fund's demand deposits pursuant to Section 2.6, as the Fund may determine. Deposits may be denominated in U.S. Dollars or other currencies and need not be evidenced by the issuance or delivery of a certificate to the Custodian, provided that the Custodian shall include in its records with respect to the assets of such Series, appropriate notation as to the amount and currency of each such deposit, the accepting banking institution, and other appropriate details. Such deposits, other than those placed with the Custodian, shall be deemed portfolio securities of the applicable Series and the responsibilities of the Custodian therefor shall be the same as those for demand deposit bank accounts placed with other banks, as described in Section 2.6 of this Agreement. The respon- sibility of the Custodian hereunder for such deposits accepted on the Custodian's books shall be that of a U.S. bank for a similar deposit. 2.8 Availability of Federal Funds. Upon mutual agreement between the Fund on behalf of each applicable Series and the Custodian, the Custodian shall, upon the receipt of Proper Instructions from the Fund on behalf of a Series, make federal funds available to such Series as of specified times agreed upon from time to time by the Fund and the Custodian in the amount of checks received in payment for Shares of such Series which are deposited into the Series's account. 2.9 Collection of Income. Subject to the provisions of Section 2.3, the Custodian shall collect on a timely basis all income and other payments with respect to registered domestic securities held hereunder to which each Series shall be entitled either by law or pursuant to custom in the securities business; collect on a timely basis all income and other payments with respect to bearer domestic securities if, on the date of payment by the issuer, such securities are held by the Custodian or its agent thereof and credit such income or payments, as collected, to such Series's custodian account. Without limiting the generality of the foregoing, the Custodian shall (a) detach and present for payment all coupons and instruments representing other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder and (b) promptly execute ownership and other certificates and affidavits for all federal, state and foreign tax payments with respect to portfolio securities and other assets of each applicable Series, or in connection with the purchase, sale or transfer of such securities and other assets. The Custodian shall deliver to the Fund periodic written reports providing information as to amount payable with respect to domestic securities or other assets of any Series not received by the Custodian when due. Income due each Series on securities loaned pursuant to the provisions of Section 2.2 (10) shall be the responsibility of the Fund. 8 The Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data as may be necessary to assist the Fund in monitoring and in arranging for the timely delivery to the Custodian of the income to which the Series is properly entitled. 2.10 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund on behalf of the applicable Series, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out monies of a Series in the following cases only: 1) Upon the purchase of domestic securities, options, futures contracts or options on futures contracts for the account of the Series but only (a) against the delivery of such securities or evidence of title to such options, futures contracts or options on futures contracts to the Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the Investment Company Act to act as a custodian and has been designated by the Custodian as its agent for this purpose) registered in the name of the Series or the Fund or its nominee or in the name of a nominee of the Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a U.S. Securities System, in accordance with the conditions set forth in Section 2.10 hereof; (c) in the case of a purchase involving the Direct Paper System, in accordance with the conditions set forth in Section 2.11; (d) in the case of repurchase agreements entered into between the Fund on behalf of the Series and the Custodian, or another bank, or a broker-dealer which is a member of NASD, (i) against delivery of the securities either in certificated form or through an entry crediting the Custodian's account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Series of securities owned by the Custodian along with written evidence of the agreement by the Custodian to repurchase such securities from the Series or (e) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign; such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank pursuant to Proper Instructions from the Fund as defined in Article 5; 2) In connection with conversion, exchange or surrender of securities owned by the Series as set forth in Section 2.2 hereof; 9 3) For the redemption or repurchase of Shares issued by the Series as set forth in Article 4 hereof; 4) For the payment of any expense or liability incurred by the Series, including but not limited to the following payments for the account of the Series: interest, taxes, management, accounting, administration, distribution, transfer agent and legal fees, and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses; 5) For the payment of any dividends on Shares of the Series declared pursuant to the governing documents of the Fund; 6) For payment of the amount of dividends received in respect of securities sold short; 7) For repayment of loans made to the Fund or upon redelivery of cash collateral for loans of securities made by a Series or for payment in connection with a foreign exchange transaction; 8) For any other proper purpose, but only upon receipt of, in addition to Proper Instructions from the Fund on behalf of the Series, a certified copy of a resolution of the Board of Directors of the Fund signed by an officer of the Fund and certified by its Secretary or an Assistant Secretary, specifying the amount of such payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper purpose, and naming the person or persons to whom such payment is to be made. 2.11 Liability for Payment in Advance of Receipt of Securities Purchased. Except as specifically stated otherwise in this Contract, in any and every case where payment for purchase of domestic securities for the account of a Series is made by the Custodian in advance of receipt of the securities purchased in the absence of specific written instructions from the Fund on behalf of such Series to so pay in advance, the Custodian shall be absolutely liable to the Fund for such securities to the same extent as if the securities had been received by the Custodian. 2.12 Appointment of Agents. The Custodian may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company which is itself qualified under Section 17(f)(1) of the Investment Company Act, to act as a custodian, as its agent to carry out such of the provisions of this Article 2 as the Custodian may from time to time direct; 10 provided, however, that the appointment of any agent shall not relieve the Custodian of its responsibilities or liabilities here- under and the Custodian shall be responsible for the acts and omissions of such agents as if performed by the Custodian hereunder. 2.13 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may deposit and/or maintain securities owned by a Series in a clearing agency registered with the Securities and Exchange Commission under Section 17A of the Exchange Act, which acts as a securities depository, or in the book-entry system authorized by the U.S. Department of the Treasury and certain federal agencies, collectively referred to herein as "U.S. Securities System" in accordance with applicable Federal Reserve Board and Securities and Exchange Commission rules and regulations, including Rule 17f-4 under the Investment Company Act, and subject to the following provisions: 1) The Custodian may keep securities of the Series in a U.S. Securities System provided that such securities are represented in an account ("Account") of the Custodian in the U.S. Securities System which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers; 2) The records of the Custodian with respect to securities of the Series which are maintained in a U.S. Securities System shall identify by book-entry those securities belonging to the Series; 3) The Custodian shall pay for securities purchased for the account of the Series upon (i) receipt of advice from the U.S. Securities System that such securities have been transferred to the Account, and (ii) the making of an entry on the records of the Custodian to reflect such payment and transfer for the account of the Series. The Custodian shall transfer securities sold for the account of the Series upon (i) receipt of advice from the U.S. Securities System that payment for such securities has been transferred to the Account, and (ii) the making of an entry on the records of the Custodian to reflect such transfer and payment for the account of the Series. Copies of all advices from the U.S. Securities System of transfers of securities for the account of the Series shall identify the Series, be maintained for the Series by the Custodian and be provided to the Fund at its request. Upon request, the Custodian shall furnish the Fund on behalf of the Series a confirmation of each transfer to or from the account of the Series in the form of a written advice or notice and shall furnish to the Fund on behalf of the Series copies of daily transaction sheets 11 reflecting each day's transactions in the U.S. Securities System for the account of the Series. 4) The Custodian shall promptly provide the Fund for the Series with any report obtained by the Custodian on the U.S. Securities System's accounting system, internal accounting control and procedures for safeguarding securities deposited in the U.S. Securities System; 5) The Custodian shall have received from the Fund on behalf of the Series the initial certificate required by Article 14 hereof; 6) Anything to the contrary in this Contract notwithstanding, the Custodian shall be liable to the Fund for the benefit of the Series for any loss or damage to the Series resulting from use of the U.S. Securities System by reason of any negligence, misfeasance or misconduct of the Custodian or any of its agents or of any of its or their employees or from failure of the Custodian or any such agent to enforce effectively such rights as it may have against the U. S. Securities System; at the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claim against the U.S. Securities System or any other person which the Custodian may have as a consequence of any such loss or damage if and to the extent that the Series has not been made whole for any such loss or damage. 2.14 Fund Assets Held in the Custodian's Direct Paper System. Provided the Custodian has received a certified copy of a resolution of the Board of Directors of the Fund specifically approving participation in a system maintained by the Custodian for the holding of commercial paper in book-entry form, upon receipt of Proper Instructions, the Custodian may deposit and/or maintain securities owned by a Series in the Direct Paper System of the Custodian subject to the following provisions: 1) No transaction relating to securities in the Direct Paper System will be effected in the absence of Proper Instructions from the Fund on behalf of the Series; 2) The Custodian may keep securities of the Series in the Direct Paper System only if such securities are represented in an account ("Account") of the Custodian in the Direct Paper System which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers; 12 3) The records of the Custodian with respect to securities of the Series which are maintained in the Direct Paper System shall identify by book-entry those securities belonging to the Series; 4) The Custodian shall pay for securities purchased for the account of the Series upon the making of an entry on the records of the Custodian to reflect such payment and transfer of securities to the account of the Series. The Custodian shall transfer securities sold for the account of the Series upon the making of an entry on the records of the Custodian to reflect such transfer and receipt of payment for the account of the Series. Upon the maturity of a security, the Custodian shall make an entry on its records to reflect such maturity and receipt of payment for the account of the Series. 5) The Custodian shall furnish the Fund on behalf of the Series confirmation of each transfer to or from the account of the Series, in the form of a written advice or notice, of Direct Paper on the next business day following such transfer and shall furnish to the Fund on behalf of the Series copies of daily transaction sheets reflecting each day's transaction in the Direct Paper System for the account of the Series; 6) The Custodian shall provide the Fund on behalf of the Series with any report on its system of internal accounting control as the Fund may reasonably request from time to time. 2.15 Segregated Account. The Custodian shall upon receipt of Proper Instructions from the Fund on behalf of each applicable Series establish and maintain on its books a segregated account or accounts for and on behalf of each such Series, into which account or accounts may be transferred cash and/or securities, including securities maintained in an account by the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the provisions of any agreement among the Fund on behalf of the Series, the Custodian and a broker-dealer registered under the Exchange Act and a member of the NASD (or any Futures Commission Merchant registered under the Commodity Exchange Act), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange (or the Commodity Futures Trading Commission or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Series, (ii) for purposes of segregating cash, U.S. government or other liquid, high-grade debt securities in connection with options purchased, sold or written by the Series or commodity futures contracts or options thereon purchased or sold by the 13 Series, (iii) for the purposes of compliance by the Series with the procedures required by Investment Company Act Release No. 10666, or any subsequent release or releases of the Securities and Exchange Commission relating to the maintenance of segregated accounts by registered investment companies and (iv) for other proper corporate purposes, but only, in the case of clause (iv), upon receipt of, in addition to Proper Instructions from the Fund on behalf of the applicable Series, a certified copy of a resolution of the Board of Directors signed by an officer of the Fund and certified by the Secretary or an Assistant Secretary, setting forth the purpose or purposes of such segregated account and declaring such purposes to be proper corporate purposes. 2.16 Proxies. The Custodian shall, with respect to the domestic securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Series or the Fund or a nominee of either, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Fund such proxies, all proxy soliciting materials and all notices relating to such securities. 2.17 Communications Relating to Series Securities. Subject to the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund for each Series all written information (including, without limitation, pendency of calls and maturities of domestic securities and expirations of rights in connection therewith and notices of exercise of call and put options written by the Fund on behalf of the Series and the maturity of futures contracts purchased or sold by the Series) received by the Custodian from issuers of the securities being held for the Series. With respect to tender, subscription or exchange offers, the Custodian shall transmit promptly to the Fund all written information received by the Custodian from issuers of the securities in respect of which tender, subscription or exchange is sought and from the party (or his agents) making the tender, subscription or exchange offer. If the Fund desires to take action with respect to any tender offer, subscription rights offering, exchange offer or any other similar transaction, the Fund shall notify the Custodian at least three business days prior to the date on which the Custodian is to take such action. 3. Duties of the Custodian with Respect to Property of the Fund Held Outside of the United States 3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and instructs the Custodian to employ as sub-custodians for the Series's securities and other assets maintained outside the United States the Foreign Sub- 14 custodians designated on Schedule A hereto. Upon receipt of "Proper Instructions", as defined in Section 5 of this Contract, together with a certified resolution of the Fund's Board of Directors, the Custodian and the Fund may agree to amend Schedule A hereto from time to time to designate additional Foreign Sub-custodians or clearing agencies which (i) qualify as Eligible Foreign Custodians within the meaning of Rule 17f-5 (ii) or are exempted therefrom by order of the Securities and Exchange Commission to act as sub- custodians. Upon receipt of Proper Instructions, the Fund may instruct the Custodian to cease the employment of any one or more such Foreign Sub-custodians for maintaining custody of the Series's assets. In the event of a material breach on the part of a foreign banking institution, of its agreement with the Custodian provided for in Section 3.5, which breach is not reasonably amenable of correc- tion, at the request of the Fund, the Custodian will work with the Fund to obtain the services of a mutually satisfactory substitute foreign banking institution. 3.2 Assets to be Held. The Custodian shall limit the securities and other assets maintained in the custody of the Foreign Sub-custodians to: (a) foreign securities and, (b) subject to the approval of the Board of Directors of the Fund, cash and cash equivalents in such amounts as the Custodian or the Fund may determine to be reasonably necessary to effect the Series's foreign securities transactions. 3.3 Holding Securities. The Custodian may hold securities and other non- cash property for all of its customers, including the Fund, with a Foreign Sub-custodian in a single account that is identified as belonging to the Custodian for the benefit of its customers, provided however, that (i) the records of the Custodian with respect to securities and other non-cash property of each Series which are maintained in such account shall identify by book-entry those securities and other non-cash property belonging to each Series and (ii) the Custodian shall require that securities and other non-cash property so held by the Foreign Sub-custodian be held separately from any assets of the Foreign Sub-custodian or of others in an account that shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers. 3.4 Foreign Securities Systems. Assets of the Series may be maintained in a clearing agency named in Schedule A which acts as a securities depository or which operates a book-entry system for the central handling of securities located outside of the United States and which qualifies as an Eligible Foreign Custodian within the meaning of Rule 17f-5 (each a "Foreign Securities System") only through arrangements implemented by the foreign banking institutions serving as Foreign Sub-custodians pursuant to the terms 15 hereof (Foreign Securities Systems and U.S. Securities Systems are collectively referred to herein as the "Securities Systems"). Where possible, such arrangements shall include entry into agreements containing the provisions set forth in Section 3.5 hereof. 3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign banking institution shall provide that: (a) the assets belonging to each Series will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the foreign banking institution or its creditors or agent, except a claim of payment for their safe custody or administration; (b) beneficial ownership for the assets belonging to each Series will be freely transferable without the payment of money or value other than for safe custody or administration; (c) adequate records will be maintained by the Custodian to identify the assets as belonging to the applicable Series; (d) officers of or auditors employed by, or other representatives of the Custodian, and, to the extent permitted under applicable law, the independent public accountants for the Fund, will be given access to the books and records of the foreign banking institution relating to its actions under its agreement with the Custodian; (e) assets of the Series held by the Foreign Sub-custodian will be subject only to the instructions of the Custodian or its agents; (f) the Fund will receive periodic reports with respect to the safekeeping of the assets of the applicable Series, including, but not limited to, notification of any transfer to or from the Series' account; and (g) such foreign banking institution will exercise reasonable care and indemnify the Custodian and the Fund or the Custodian and each account of the Custodian in accordance with Section 3.9. Except with the prior approval of the Fund's Board of Directors, the Custodian shall not put into effect with a foreign banking institution designated on Schedule A either an amendment to an existing agreement or a new agreement if any provision thereof (i) would violate Rule 17f-5 or (ii) provide for a lesser standard of care on the part of such foreign banking institution to the Custodian than the Custodian's standard of care provided for in this Custodian Contract. Upon the request of the Fund, the Custodian shall make all reasonable efforts to enforce the Custodian's rights and the foreign banking institution's duties and obligations under each agreement provided for in this Section 3.5. 3.6 Access of Independent Accountants of the Fund. Upon request of the Fund, the Custodian will use its best efforts to arrange for the independent accountants of the Fund to be afforded access to the books and records of any foreign banking institution employed as a foreign sub-custodian insofar as such books and records relate to the performance of such foreign banking institution under its agreement with the Custodian. 16 3.7 Reports by Custodian. The Custodian will supply to the Fund from time to time, as mutually agreed upon, statements in respect of the securities and other assets of the Series held by Foreign Sub-custodians, including but not limited to an identification of entities having possession of the Series securities and other assets and advices or notifications of any transfers of securities to or from each custodial account maintained by a foreign banking institu- tion for the Custodian on behalf of its customers indicating, as to securities acquired for such Series, the identity of the entity having physical possession of such securities. 3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided in paragraph (b) of this Section 3.8, the provision of Sections 2.2, 2.3, 2.4, 2.5, and 2.10 of this Contract shall apply, mutatis mutandis to the foreign securities of the Fund held outside the United States by Foreign Sub-custodians. (b) Notwithstanding the foregoing, subject to any limitations or conditions contained in a certified copy of resolutions of the Board of Directors of the Fund delivered to the Custodian, (i) in the case of the purchase for the account of any Series of securities, the settlement of which occurs outside of the United States of America, the Custodian or any Foreign Sub-custodian may, upon Proper Instructions (which may be standing instructions), make payment therefor and receive delivery of such securities in accordance with local custom and practice generally accepted by Institutional Clients (as hereinafter defined) in the country in which the settlement occurs, but in all events subject to the standard of care set forth in Section 13; and (ii) in the case of the sale for the account of any Series of securities, the settlement of which occurs outside of the United States of America, the Custodian or any Foreign Sub-custodian may, upon Proper Instructions (which may be standing instructions), deliver such securities in expectation of payment therefor in accordance with local custom and practice generally accepted by Institutional Clients in the country in which the settlement occurs, but in all events subject to the standard of care set forth in Section 13. For purposes of this Article 3, "Institutional Clients" means U.S. registered investment companies, or major, U.S.-based commercial banks, insurance companies, pension funds or substantially similar financial institutions which as a substantial part of their business operations, purchase or sell securities and make use of non-U.S. custodial services. (c) Securities maintained in the custody of a Foreign Sub-custodian may be maintained in the name of such entity's nominee to the same extent as set forth in Section 2.3 of this Contract, and the Fund agrees to hold any such nominee harmless from any liability in its capacity as a holder of record of such securities. 17 3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the Custodian employs a foreign banking institution as a Foreign Sub-custodian shall require the institution to exercise reasonable care in the performance of its duties and to indemnify, and hold harmless, the Custodian and the Fund from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the institution's performance of such obligations. At the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claims against a foreign banking institution as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Fund has not been made whole for any such loss, damage, cost, expense, liability or claim. 3.10 Monitoring Responsibilities. The Custodian shall furnish annually to the Fund information concerning the Foreign Sub-custodians employed by the Custodian to facilitate the review and approval by the Fund's Board of Directors of the arrangements for the custody of foreign securities of each Series as provided for in Rule 17f-5. Such information shall be similar in kind and scope to that furnished to the Fund in connection with the initial approval of this Contract. In addition, the Custodian will promptly inform the Fund in the event that the Custodian learns of a material adverse change in the financial condition of a Foreign Sub-custodian or any material loss of the assets of the Fund or, in the case of any Foreign Sub-custodian not the subject of an exemptive order from the Securities and Exchange Commission, is notified by such Foreign Sub-custodian that there appears to be a substantial likelihood that its shareholders' equity will decline below $200 million (U.S. dollars or the equivalent thereof) or that its shareholders' equity has declined below $200 million (in each case computed in accordance with generally accepted U.S. accounting principles). 3.11 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract, the provisions of Sections 3.1 and 3.5 shall not apply where the custody of the Series assets are maintained in a foreign branch of a banking institution which is a "Qualified U.S. Bank" as defined in Rule 17f-5 and has aggregate capital, surplus and undivided profits of not less than $100 million. The appointment of any such branch as a Sub-custodian shall be governed by Article 1 of this Contract. (b) Cash held for each Series of the Fund in the United Kingdom shall be maintained in an interest bearing account established for the Fund with the Custodian's London branch, which account shall be subject to the direction of the Custodian, State Street London Ltd. or both. 18 3.12 Collection of Income. The Custodian (or the foreign banking institution) shall act in accordance with the contractual standard of care and in accordance with market practice generally accepted by Institutional Clients to collect all income and other payments in due course with respect to the securities held hereunder to which the applicable Series shall be entitled and shall credit such income, as collected, to the applicable Series. The Custodian shall promptly execute ownership and other certificates and affidavits for all federal, state and foreign tax payments with respect to foreign securities and other assets of each applicable Series, or in connec- tion with the purchase, sale or transfer of such securities and other assets; and based upon information, and in reliance upon tax advice, received from the Fund, take the steps and provide the administrative and ministerial functions required in the particular jurisdiction to obtain appropriate withholding exemptions and to reclaim foreign taxes paid, and in connection therewith, to inform the Fund of information with respect to foreign taxes of which it became aware in the ordinary course of providing custody services in that jurisdiction; provided, however, that with respect to portfolio securities registered in so-called "street name," the Custodian shall use reasonable efforts to collect amounts due and payable to each Series. The Custodian shall deliver the Fund periodic written reports providing information as to amounts payable with respect to foreign securities or other assets of any Series not received by the Custodian when due. In the event that extraordinary measures are required to collect such income, the Fund and the Custodian shall consult as to such measures and as to the compensa- tion and expenses of the Custodian attendant thereto. Collection of income due each Series on securities loaned shall the responsibility of the Fund; the Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data in its possession as may be necessary to assist the Fund in arranging for the timely delivery to the Custodian of the income to which the Series is properly entitled. 3.13 Proxies. The Custodian will generally, with respect to the securities held under this Article 3, act in accordance with the contractual standard of care and in accordance with available practice generally acceptable to Institutional Clients to facilitate the exercise of voting and other shareholder proxy rights, subject always to the laws, regulations and practical constraints that may obtain in the jurisdiction where such securities are issued. The Fund acknowledges that local conditions, including lack of regulation, onerous formal constraints, lack of notice and the like, may have the effect of severely limiting the ability of the Fund to exercise shareholder rights. 19 3.14 Communications Relating to Portfolio Securities. The transmit promptly to the Fund written information (including, without limitation, pendency of calls and maturities of securities and expirations of rights in connection therewith) the substance of which has been received by the Custodian from its foreign sub- custodian from issuers of the securities being held for the account of the applicable Series. With respect to tender or exchange offers, the Custodian shall transmit promptly to the Fund written information so received by the Custodian from issuers of the securities whose tender or exchange is sought or from the party (or his or its agents) making the tender or exchange offer. The Custodian shall not be liable for any untimely exercise of any tender, exchange or other right or power in connection with secu- rities or other property of a Series at any time held by it unless (i) it or its foreign sub-custodian are in actual possession of such securities or property and (ii) it receives Proper Instructions with regard to the exercise of any such right or power, and both (i) and (ii) occur at least three business days prior to the date on which such right or power is to be exercised. 4. Payments for Purchases or Redemptions of Shares of the Fund 4.1 Purchase of Fund Shares. The Custodian shall maintain, on its own books in the case of the US Index Series, or with the applicable Foreign Sub-custodian in the case of each other Series, an account into which an Authorized Participant (as defined in the Prospectus) proposing to purchase Shares of the Series may deliver a Fund Basket of securities (as defined in the Prospectus). Upon receipt from the appointed distributor of Fund Shares of a notice of intention for the purchase of Shares of any Series, the Custodian shall promptly notify (other than in the case of the US Index Series) the applicable Foreign Sub-custodian of the intended delivery to it of the securities included in the designated Fund Basket. Upon delivery to the Custodian, in the case of the US Index Series, or advice from the applicable Foreign Sub-custodian of delivery to it, in the case of each other Series, of the securities in one or more of the designated Fund Baskets as contemplated in such notice of intention, the Custodian shall promptly advise the distributor of such fact and any deviation from delivery of the securities required in respect of such purchase. The Custodian shall also promptly advise the distributor of its receipt of the requisite Cash Component and any applicable Cash Component transaction fee (both as defined in the Prospectus) in respect of any such purchase. 4.2 Redemption of Fund Shares. From such funds and securities held by a Series as may be available for the purpose but subject to the limitations of the Articles of Incorporation and any applicable votes of the Board of Directors of the Fund pursuant thereto, the Custodian shall, upon receipt of instructions from the 20 Transfer Agent, make available for payment to Authorized Participants of Shares who have delivered to the Transfer Agent a request for redemption of their Shares which shall have been accepted by the Transfer Agent, the applicable Fund Basket (or such securities in lieu thereof as may be designated by the Adviser in accordance with the Prospectus) for such Series and the applicable cash redemption payment less any applicable cash redemption transaction fee. The Custodian will transfer the securities proceeds, in the case of the US Index Series, to or on the order of the Authorized Participant through the DTC system (as defined in the Prospectus) or, at the election of the Authorized Participant, through the CNS System of NSCC and, in the case of each other Series, will instruct the applicable Foreign Sub-custodian to transfer the Fund Basket of securities to the account of the Authorized Participant or beneficial owner in the applicable foreign jurisdiction, all as specified in such instructions. Transfers of the securities and cash redemption proceeds to or on the order of the Authorized Participant in respect of each redemption request accepted by the Fund shall be made (a) if the Authorized Participant is a broker or dealer, within the number of business days after the date of redemption specified by Rule 15c6-1 under the Exchange Act, except as may otherwise be agreed in the Authorized Participant Agreement among the Fund, the Fund's distributor, State Street, as Transfer Agent and such Authorized Participant and except for those dates of redemption and Series identified in Annex VII to such Authorized Participant Agreement, and (b) in any event within the number of calendar days permitted by Section 22(e) of the 1940 Act and the rules thereunder or as otherwise permitted under an effective order of the Securities and Exchange Commission. The cash redemption payment (less any applicable cash redemption transaction fee) due to the Authorized Participant on redemption shall be effected through DTC cash transfer facilities. 5. Proper Instructions Proper Instructions as used throughout this Contract means a writing signed or initialed by one or more person or persons as the Board of Directors shall have from time to time authorized. Each such writing shall set forth the specific transaction or type of transaction involved, including a specific statement of the purpose for which such action is requested. Oral instructions will be considered Proper Instructions if the Custodian reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. The Fund shall cause all oral instructions to be confirmed in writing. Upon receipt of a certificate of the Secretary or an Assistant Secretary as to the authorization by the Board of Directors of the Fund accompanied by a detailed description of procedures approved by the Board of Directors, Proper Instructions may include communications effected directly between electro-mechanical or electronic devices provided that the Board of Directors and the 21 Custodian are satisfied that such procedures afford adequate safeguards for the Series' assets. For purposes of this Section, Proper Instructions shall include instructions received by the Custodian (and which are designated to be authorized instructions of the Fund) pursuant to any three-party agreement which requires a segregated asset account in accor- dance with Section 2.12 or from the Transfer Agent as provided in Section 2.2(14). 6. Actions Permitted without Express Authority The Custodian may in its discretion, without express authority from the Fund on behalf of each applicable Series: 1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Contract, provided that all such payments shall be accounted for to the Fund on behalf of the Series; 2) surrender securities in temporary form for securities in definitive form; 3) endorse for collection, in the name of the Series, checks, drafts and other negotiable instruments; and 4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Series except as otherwise directed by the Board of Directors of the Fund. 7. Evidence of Authority The Custodian shall be protected in acting in good faith reliance upon any instructions, notice, request, consent, certificate or other instrument or paper reasonably believed by it to be genuine and to have been properly executed by or on behalf of the Fund. The Custodian may receive and accept a certified copy of a vote of the Board of Directors of the Fund as conclusive evidence (a) of the authority of any person to act in accordance with such vote or (b) of any determination or of any action by the Board of Directors pursuant to the Articles of Incorporation as described in such vote, and such vote may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary. 8. Duties of Custodian with Respect to the Books of Account and Calculation of Net Asset Value and Net Income 22 The Custodian shall keep the books of account of each Series as set forth in Schedule attached hereto and compute the net asset value per share of the outstanding Shares of each Series. The net asset value calculation for each Series shall be made in accordance with (1) the terms set forth in the Prospectus, as such terms may, from time to time, be amended or supplemented, (2) resolutions adopted by the Board of Directors of the Fund and delivered to the Custodian and at the time in force and applicable, and delivered to the Custodian, (3) Proper Instructions and (4) the provisions of the Price Source Authorization Agreement between the Fund and the Custodian. The Custodian shall transmit the net asset value of each Series to the Fund's distributor and to the Transfer Agent. If directed in writing to do so by the Fund, the Custodian shall also transmit the net asset value of each Series to the National Association of Securities Dealers Automated Quotations System and to such other entities as directed by the Fund. If directed in writing to do so by the Fund, the Custodian shall also calculate daily the net income of each Series as described in the Fund's Prospectus and shall advise the Fund, its distributor and the Transfer Agent daily of the total amounts of such net income and, if instructed in writing by an officer of the Fund to do so, shall advise the Transfer Agent periodically of the division of such net income among its various components. The calculations of the net asset value per share and the daily income of each Series shall be made at the time or times described from time to time in the Fund's Prospectus related to such Series. In connection with computing the net asset value of shares of each Series, the Custodian shall on each day a Series is open for the purchase of shares of a given Series compute the amount of the Cash Component and transmit such information to the Fund's Distributor and to the Transfer Agent. 9. Records The Custodian shall, with respect to each Series, create and maintain all records relating to its activities and obligations under this Contract in such manner as will meet the obligations of the Fund under the Investment Company Act including without limitation Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the Securities and Exchange Commission. The Custodian shall, at the Fund's request, supply the Fund with a tabulation of securities owned by each Series and held by the Custodian and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and the Custodian, include certificate numbers in such tabulations. 10. Opinion of Fund's Independent Accountant The Custodian shall take all reasonable action, as the Fund on behalf of each applicable Series may from time to time request, to obtain from year to year favorable 23 opinions from the Fund's independent accountants with respect to its activities hereunder in connection with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual reports to the Securities and Exchange Commission and with respect to any other requirements of such Commission. 11. Reports to Fund by Independent Public Accountants The Custodian shall provide the Fund, on behalf of each of the Series at such times as the Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including securities deposited and/or maintained in a U.S. Securities System relating to the services provided by the Custodian under this Contract; such reports, shall be of sufficient scope and in sufficient detail, as may reasonably be required by the Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state. 12. Compensation of Custodian The Custodian shall be entitled to reasonable compensation for its services and expenses as Custodian, as agreed upon from time to time between the Fund on behalf of each applicable Series and the Custodian. 13. Responsibility of Custodian So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Contract and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties, including any Futures Commission Merchant acting pursuant to the terms of a three-party futures or options agreement. The Custodian shall be held to the exercise of reasonable care in carrying out the provisions of this Contract, but shall be kept indemnified by and shall be without liability to the Fund for any action taken or omitted by it in good faith without negligence. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. The Custodian shall have no more or less responsibility or liability to the Fund on account of the acts or omissions of a foreign banking institution appointed pursuant to the provisions of Article 3 or a Sub- custodian located in the United States and appointed pursuant to the provisions of Article 1, than any such Sub-custodian has to the Custodian; provided that this provision shall not protect the Custodian from 24 responsibility or liability in the event of the Custodian's own negligence or bad faith. Regardless of whether assets are maintained in the custody of a foreign banking institution, a foreign securities depository or a branch of a U.S. bank as contemplated by Section 3.11 hereof, the Custodian shall be without liability to the Fund for any loss, liability, claim or expense resulting from or caused by: (i) events or circumstances beyond the reasonable control of the Custodian or any Sub-custodian or Securities System or any agent or nominee of any of the foregoing, including, without limitation, nationalization or expropriation, imposition of currency controls or restrictions, the interruption, suspension or restriction of trading on or the closure of any securities markets, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions which, in any such case, the Custodian could not have prevented by using commercially reasonable methods, acts of war or terrorism, riots, revolutions, work stoppages, natural disasters or other similar events or acts; (ii) errors by the Fund or its investment adviser in their instructions to the Custodian provided such instructions have been given in accordance with this Contract; (iii) the insolvency of or acts or omissions by a Securities System; (iv) any delay or failure of any broker, agent or intermediary, central bank or other commercially prevalent payment or clearing system to deliver to the Custodian's Sub-custodian or agent securities purchased or in the remittance of payment made in connection with securities sold; (v) any delay or failure of any company, corporation, or other body in charge of registering or transferring securities in the name of the Custodian, the Fund, the Custodian's Sub-custodians, nominees or agents or any consequential losses arising out of such delay or failure to transfer such securities including non-receipt of bonus, dividends and rights and other accretions or benefits; (vi) delays or inability to perform its duties due to any disorder in market infrastructure with respect to any particular security or Securities System; and (vii) any provision of any present or future laws or regulations or orders of the United States of America, or any state thereof, or any other country, or political subdivision thereof or of any court of competent jurisdiction; provided that this provision shall not protect the Custodian from responsibility or liability in the event of the Custodian's own negligence or bad faith. Notwithstanding the foregoing provisions of this Article 13, in delegating custody duties to State Street London Ltd., the Custodian shall not be relieved of any responsibility to the Fund for any loss due to such delegation, except such loss as may result from (a) political risk (including, but not limited to, exchange control restrictions, confiscation, expropriation, nationalization, insurrection, civil strife or armed hostilities) or (b) other losses (excluding a bankruptcy or insolvency of State Street London Ltd. not caused by political risk) due to Acts of God, nuclear incident or other losses under circumstances where the Custodian and State Street London Ltd. have exercised reasonable care. If the Fund on behalf of a Series requires the Custodian to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund or the Series being liable for the payment of money or incurring liability of some 25 other form, the Fund on behalf of the Series, as a prerequisite to requiring the Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it. If the Fund requires the Custodian, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to securities settlements, foreign exchange contracts and assumed settlement) for the benefit of a Series including the purchase or sale of foreign exchange or of contracts for foreign exchange, any property at any time held for the account of the applicable Series shall be security for such advance and should the Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of such Series's assets to the extent necessary to obtain reimbursement. 14. Tax Law. The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on the Fund or the Custodian as custodian of the Fund by the tax law of the United States of America or any state or political subdivision thereof. It shall be the responsibility of the Fund to notify the Custodian of the obligations imposed on the Fund or the Custodian as custodian of the Fund by the tax law of jurisdictions other than those mentioned in the above sentence, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. 15. Advances From time to time and in accordance with the Custodian's internal policies and guidelines it may make funds available for the settlement of the Fund's securities transactions. 16. Effective Period, Termination and Amendment This Contract shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual written agreement of the parties hereto and may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid to the other party, such termination to take effect not sooner than sixty (60) days after the date of such delivery or mailing; provided, that at the Fund's request such termination may be postponed for an additional thirty (30) days if necessary to permit the Fund to obtain the services of a successor custodian, and provided further, however that the Custodian shall not with respect to a Series act under Section 2.13 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Directors of the Fund has approved the initial use of a particular U.S. Securities System by such Series, as required by Rule 17f-4 under the Investment Company Act that the Custodian shall 26 not with respect to a Series act under Section 2.14 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Directors has approved the initial use of the Direct Paper System by such Series and that the Custodian shall not, with respect to a Series, act under Article 3 to appoint a Foreign Sub- custodian or make any deposit of securities of a Series in any Foreign Securities System in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Directors has approved the initial use of such Foreign Sub-custodian or Foreign Securities System by such Series; provided further, however, that the Fund shall not amend or terminate this Contract in contravention of any applicable federal or state regulations, or any provision of the Articles of Incorporation, and further provided, that the Fund on behalf of one or more of the Series may at any time by action of its Board of Directors (i) substitute another bank or trust company for the Custodian by giving notice as described above to the Custodian, or (ii) immediately terminate this Contract in the event of the appointment of a conservator or receiver for the Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. Upon termination of the Contract, the Fund on behalf of each applicable Series shall pay to the Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Custodian for its costs, expenses and disbursements. 17. Successor Custodian If a successor custodian for the Fund, of one or more of the Series shall be appointed by the Board of Directors of the Fund, the Custodian shall, upon termination, deliver to such successor custodian at the office of the Custodian, duly endorsed and in the form for transfer, all securities of each applicable Series and all cash and other instruments then held by it or an agent hereunder and shall transfer to an account of the successor custodian all of the securities of each such Series held in a U.S. Securities System. If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of a certified copy of a vote of the Board of Directors of the Fund, deliver at the office of the Custodian and transfer such securities, funds and other properties in accordance with such vote. In the event that no written order designating a successor custodian or certified copy of a vote of the Board of Directors shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a bank or trust company, which is a "bank" as defined in the Investment Company Act, doing business in Boston, Massachusetts, of its own 27 selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by the Custodian on behalf of each applicable Series and all instruments held by the Custodian relative thereto and all other property held by it under this Contract on behalf of each applicable Series and to transfer to an account of such successor custodian all of the securities of each such Series held in any U.S. Securities System. Thereafter, such bank or trust company shall be the successor of the Custodian under this Contract. In the event that securities, funds and other properties remain in the possession of the Custodian after the date of termination hereof owing to failure of the Fund to procure the certified copy of the vote referred to or of the Board of Directors to appoint a successor custodian, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian retains possession of such securities, funds and other properties and the provisions of this Contract relating to the duties and obligations of the Custodian shall remain in full force and effect. 18. Interpretive and Additional Provisions In connection with the operation of this Contract, the Custodian and the Fund on behalf of each of the Series, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Contract as may in their joint opinion be consistent with the general tenor of this Contract. Any such interpretive or additional provisions shall be in a writing signed by both parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of the Articles of Incorporation of the Fund. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Contract. 19. Additional Series In the event that the Fund establishes one or more series of Shares in addition to the Australia Index Series, France Index Series, Germany Index Series, Hong Kong Index Series, Italy Index Series, Japan Index Series, South Africa Index Series, UK Index Series and US Index Series with respect to which it desires to have the Custodian render services as custodian under the terms hereof, it shall so notify the Custodian in writing, and if the Custodian agrees in writing to provide such services, such series of Shares shall become a Series hereunder. 20. Massachusetts Law to Apply This Contract shall be construed and the provisions thereof interpreted under and in accordance with the internal laws of The Commonwealth of Massachusetts. 28 21. Prior Contracts This Contract supersedes and terminates, as of the date hereof, all prior contracts between the Fund on behalf of each of the Series and the Custodian relating to the custody of the Fund's assets. 22. Shareholder Communications Rule 14b-2 under the Exchange Act requires banks which hold securities for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. Unless and until the Custodian receives Proper Instructions to the contrary, the Custodian will (check applicable provision) ( ) disclose ( ) not disclose the Fund's name, address and securities position to issuers whose securities are held by the Fund upon request of such issuers. 29 IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the day of , 1995. ATTEST THE COUNTRYBASKETSSM INDEX FUND, INC. By ATTEST STATE STREET BANK AND TRUST COMPANY By Executive Vice President 30 Schedule A The following foreign banking institutions and foreign securities depositories have been approved by the Board of Directors of The CountryBasketsSM Index Fund, Inc. for use as Sub-custodians for the Fund's securities and other assets: (Insert banks and securities depositories) Certified: Fund's Authorized Officer Date: w:\...\agmts\cbi-fnd3.cus EX-99.B9A 13 ADMINISTRATION AGR. 1 ADMINISTRATION AGREEMENT Agreement dated as of , 1996 by and between State Street Bank and Trust Company, a Massachusetts trust company (the "Administrator"), and The CountryBasketsSM Index Fund, Inc., a Maryland corporation (the "Fund"). WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, shares of the Fund's common stock will be listed on the New York Stock Exchange ("NYSE") or another national securities exchange; and WHEREAS, the Fund desires to retain the Administrator to furnish certain administrative services to the Fund and the Administrator is willing to furnish such services on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto agree as follows: 1. APPOINTMENT OF ADMINISTRATOR The Fund hereby appoints the Administrator to act as administrator with respect to the Fund for purposes of providing certain administrative services for the period and on the terms set forth in this Agreement. The Administrator accepts such appointment and agrees to render the services stated herein. The Fund will initially issue and sell shares of Common Stock, par value $.001 per share ("Shares"), of the initial series listed in Schedule A to this Agreement (each such series, together with each other series subsequently established by the Fund and made subject to this Agreement pursuant to this paragraph, being herein referred to as a "Series" and, collectively, the "Series"). In the event that the Fund is authorized to issue and issues Shares of one or more additional Series with respect to which it wishes to retain the Administrator to act as administrator hereunder, the Fund shall notify the Administrator in writing. Upon written acceptance by the Administrator, such Series shall become subject to the provisions of this Agreement to the same extent as the existing Series, except to the extent that such provisions (including those relating to the fees and expenses payable by the Fund and its Series) may be modified with respect to each additional Series in writing by the Fund and the Administrator at the time of the addition of the Series. 2. DELIVERY OF DOCUMENTS The Fund will promptly deliver to the Administrator copies of each of the following documents and all future amendments and supplements thereto, if any: a. The Fund's charter document and by-laws; 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. 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; 4 c. Maintain those books and records of the Fund that are required under Rule 31a-1(b) of the 1940 Act and not otherwise maintained by the Custodian, distributor, transfer agent and dividend disbursing agent (the "Transfer Agent") or the Adviser, including without limitation the books and records required to be maintained under paragraphs (4) and (10) of such Rule, unless otherwise directed by the Fund; d. Prepare each Series' federal, state and local income tax returns for review by the Fund's treasurer and independent accountants prior to their filing by the Fund's treasurer; e. Review the calculation, submit for approval and arrange for payment of the Fund's expenses and ensure proper accounting treatment and allocation of the same to each Series, where applicable; f. Prepare each Series' expense projections, establish accruals and review the same on a periodic basis and submit the same for review by the Fund's treasurer; g. Prepare, for review and approval by officers of the Fund, financial information for the Fund's semi-annual and annual reports, proxy statements and other communications required by law, regulation or otherwise to be sent to Fund shareholders, and arrange for the printing and dissemination of such reports and communications to record and, through The Depository Trust Company, beneficial owners of Shares; h. Prepare, for review and approval by an officer of the Fund, (i) the Fund's periodic financial reports required to be filed with the Securities and Exchange Commission ("SEC") on Form N-SAR, (ii) the financial information required by Form N-1A, (iii) financial and other reports required by the NYSE (or any other national securities exchange, if applicable) and such other reports, forms or filings as may be required by federal or state regulatory authorities, in each case under this clause (iii) such reports, forms or filings to be derived from information reasonably accessible to the Administrator. i. Prepare such reports relating to the business and affairs of the Fund as may be mutually agreed upon and not otherwise prepared by the Fund's Adviser, Custodian, Transfer Agent, distributor, legal counsel or independent accountants; j. Prepare recommendations as to each Series' income and capital gains available for distribution; calculate such distributions for each Series in accordance with applicable regulations and the distribution policies set forth in the Fund's registration statement, and assist Fund management in making final determination of distribution amounts; 5 k. Monitor each Series' share capital activity and notify the Fund when a specified percentage, established by the Adviser, of the authorized number of Shares of each Series has been issued; l. Make such reports and recommendations to the Fund's officers and/or the Board concerning the performance of the independent accountants and such other service providers as the Board may reasonably request; m. Make such reports and recommendations to the Fund's officers and/or the Board concerning the performance and fees of the Fund's Custodian, Transfer Agent and distributor and the fees of the Fund's Adviser and Administrator as the Board may reasonably request; n. Oversee and review calculations of fees paid to the Fund's Adviser, Administrator, Custodian, Transfer Agent and distributor and pursuant to Rule 12b-1 plan(s) of the Fund and its Series; o. Consult with the Fund's officers, independent accountants and legal counsel in establishing and implementing the accounting policies and procedures of the Fund; p. Review implementation of any dividend reinvestment programs authorized by the Board; q. Oversee the proper treatment/recording of all transactions including, but not limited to, portfolio transactions, capital stock transactions and income and expense items, and reconciliation of such records with Fund accounting records; monitor such records against list of approved brokers, compile all transactions effected by the Adviser and provide the Fund with related reports derived from information reasonably accessible to the Administrator, as requested by the Fund; r. Monitor corporate actions on portfolio securities, the receipt of other income, and cash and other disbursements; s. Monitor each Series' collection of refunds or rebates of withholdings or other foreign taxes paid; t. Prepare, and after review by the Fund's treasurer, provide IRS Forms 1099 or 1042 to all persons (other than shareholders) to whom the Fund is required to deliver such forms; u. Obtain Employer Identification Numbers and CUSIP numbers for each Series; v. Respond to or refer to the Fund's officers, distributor or Transfer Agent shareholder inquiries relating to the Fund; 6 w. Provide periodic testing of portfolios and portfolio transactions to assist the Fund's Adviser in complying with Internal Revenue Code mandatory qualification requirements, the requirements of the 1940 Act, including Rule 17e-1 thereunder, and Fund prospectus restrictions, and other testing at intervals reasonably acceptable to the Administrator with respect to information reasonably accessible to the Administrator and requested by the Fund; x. Review and provide assistance on shareholder communications at the request of the Fund or the Fund's distributor; y. Maintain and monitor general Fund calendar for reporting, filing and compliance purposes; z. Maintain copies of the Fund's charter document and by- laws; aa. File annual and semi-annual shareholder reports with the appropriate regulatory or self-regulatory agencies; review text of "President's letters" to shareholders and "Management's Discussion of Fund Performance" or any equivalent text (which shall also be subject to review by the Fund's independent accountants and legal counsel); bb. Provide consultation on regulatory matters relating to portfolio management, Fund operations and any potential changes in each Series' investment policies, operations or structure; act as liaison to outside legal counsel to the Fund and, where applicable, to legal counsel to the Fund's Board members who are not "interested persons" (as defined in the 1940 Act) of the Fund; cc. Develop or assist in developing guidelines and procedures to improve overall accounting control and compliance by the Fund and its various agents; dd. Counsel and assist the Fund in the handling of routine regulatory examinations and work closely with the Fund's legal counsel in response to any non-routine regulatory matters; ee. Make presentations at Board meetings where appropriate and follow up on matters raised at Board meetings; ff. Provide assistance to the Fund's officers or the Adviser in connection with notices, communications and press releases for the NYSE pursuant to the Fund's listing agreement with respect to the Shares; and gg. Subject to review by the Fund's legal counsel, 1. prepare Rule 24f-2 Notices; and 2. maintain any state registrations or exemptions from registration of the Fund's securities as detailed in Schedule C to this Agreement. 7 The Administrator will also provide the office facilities and the personnel required by it to perform the services contemplated herein. 6. FEES; EXPENSES; EXPENSE REIMBURSEMENT The Administrator shall receive from the Fund with respect to each Series such compensation for the Administrator's services provided pursuant to this Agreement as may be agreed to from time to time in a written fee schedule approved by the parties and initially set forth in Schedule B to this Agreement. The fees are to be billed monthly and shall be due and payable promptly upon receipt of the invoice. Upon the termination of this Agreement before the end of any month, the fee for the part of the month before such termination shall be prorated according to the proportion which such part bears to the full monthly period and shall be payable upon the date of termination of this Agreement. In addition, the Fund shall reimburse the Administrator for reasonable out-of-pocket costs incurred in connection with its services under this Agreement. The Fund agrees to reimburse the Administrator promptly for any equipment and supplies specially ordered by or for the Fund through the Administrator and for any other expenses not contemplated by this Agreement that the Administrator may incur on the Fund's behalf at the Fund's request or as consented to by the Fund in advance in writing. The Fund will bear all expenses that are incurred in its operation and not specifically assumed by the Administrator. Expenses to be borne directly or indirectly by the Fund with respect to each Series include, but are not limited to: organizational expenses; cost of services of independent accountants and outside legal and tax counsel (including such counsel's review of the Fund's registration statement, proxy materials, federal and state tax qualification as a regulated investment company and other reports and materials prepared by the Administrator under this Agreement); cost of any services contracted for by the Fund directly from parties other than the Administrator; cost of trading operations and brokerage fees, commissions and transfer taxes in connection with the purchase and sale of securities for the Fund; investment advisory fees; taxes, insurance premiums and other fees and expenses applicable to its operation; costs incidental to any meetings of shareholders including, but not limited to, legal fees, fees of independent accountants and proxy filing fees and the costs of preparation (other than the preparation specified in Section 5, subject to Schedule B), printing and mailing of any proxy materials; costs incidental to Board meetings, including fees and expenses of Board members; the salary and expenses of any officer or director\trustee of the Fund (to the extent that any are paid); costs incidental to the preparation (other than the preparation specified in Section 5, subject to Schedule B), printing and distribution of the Fund's shareholder reports; cost of typesetting and printing of prospectuses; cost of preparation (other than the preparation specified in Section 5, subject to Schedule B), and filing of the Fund's tax returns, Form N-1A and Form N- SAR, and all notices, registrations and amendments associated with applicable federal and state tax and securities laws; all applicable registration fees and filing fees required under federal and state securities laws; fidelity bond and directors' and officers' liability insurance and the cost of independent pricing services used in computing the net asset value of the Fund's Series, as set forth in the Custodian Contract between the Fund and the Administrator. The Administrator is authorized to and may employ or associate with such person or persons as the Administrator may deem desirable to assist it in performing its duties under this Agreement; provided, 8 however, that the compensation of such person or persons shall be paid by the Administrator and that the Administrator shall be as fully responsible to the Fund for the acts and omissions of any such person or persons as it is for its own acts and omissions; and further provided that the Administrator shall not make a material delegation of its duties, except in accordance with Section 14 of this Agreement. 7. INSTRUCTIONS AND ADVICE At any time the Administrator may apply to any officer of the Fund for instructions and may consult with outside counsel for the Fund or the independent accountants for the Fund at the expense of the Fund or its own legal counsel, with respect to any matter arising in connection with the services to be performed by the Administrator under this Agreement. The Administrator shall not be liable and shall be indemnified by the Fund for any action taken or omitted by it in good faith in reliance upon any such instructions or advice or upon any paper or document reasonably believed by it to be genuine and to have been signed by the proper person or persons. The Administrator shall not be held to have notice of any change of authority of any person until receipt of written notice thereof from the Fund. Nothing in this paragraph shall be construed as imposing upon the Administrator any obligation to seek such instructions or advice. 8. LIMITATION OF LIABILITY AND INDEMNIFICATION The Administrator shall be responsible for the performance of only such duties as are set forth in this Agreement and except as otherwise provided under Section 6, shall have no responsibility for the actions or activities of any other party, including other service providers. The Administrator shall have no liability for any error of judgement or mistake of law or for any loss or damage resulting from the performance or nonperformance of its duties hereunder except for any loss or damage resulting from acts or omissions of the Administrator, its officers, agents or employees involving bad faith, negligence, willful misconduct or reckless disregard of its or their obligations and duties under this Agreement. The Administrator shall not be liable for consequential damages under any provision of this Agreement or for any consequential damages arising out of any act or failure to act hereunder. [In any event, the Administrator's liability under this Agreement shall be limited to the greater of its total annual compensation earned and fees paid hereunder during the preceding twelve months or $855,000, for any liability or loss suffered by the Fund, including, but not limited to, any liability relating to qualification of the Fund as a regulated investment company or any liability relating to the Fund's compliance with any federal or state tax or securities statute, regulation or ruling.] The Fund shall indemnify and hold the Administrator harmless from all loss, cost, damage and expense, including reasonable fees and expenses for counsel, incurred by the Administrator resulting from any claim, demand, action or suit in connection with the Administrator's acceptance of this Agreement, any action or omission by it in the performance of its duties hereunder, or as a result of acting upon any instructions reasonably believed by it to have been duly authorized by the Fund, provided that this indemnification shall not apply to actions or omissions of the Administrator, its officers or employees in cases of its or their own bad faith, negligence, willful misconduct or reckless disregard of its or their obligations and duties under this Agreement. 9 The Fund will be entitled to participate at its own expense in the defense, or, if it so elects, to assume the defense of any suit brought to enforce any liability subject to the indemnification provided above. In the event the Fund elects to assume the defense of any such suit and retain counsel, the Administrator or any of its affiliated persons, named as defendant or defendants in the suit, may retain additional counsel but shall bear the fees and expenses of such counsel unless (i) the Fund shall have specifically authorized the retaining of such counsel or (ii) the Administrator shall have determined in good faith that the retention of such counsel is required as a result of a conflict of interest. Neither the Administrator nor any of its affiliated persons shall in any case confess any claim or make any compromise or settlement in any case in which the Fund may be required to indemnify any such persons except with the Fund's prior written consent. The indemnification contained herein shall survive the termination of this Agreement. 9. CONFIDENTIALITY The Administrator agrees that, except as otherwise required by law, it will keep confidential all books, records and information in its possession relating to the Fund or its shareholders or shareholder accounts and will not disclose the same to any person except at the request or with the written consent of the Fund. 10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS The Fund assumes full responsibility for complying with all securities, tax, commodities and other laws, rules and regulations applicable to it. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Administrator agrees that all records which it maintains for the Fund shall at all times remain the property of the Fund, shall be readily accessible during normal business hours, and shall be promptly surrendered upon the termination of the Agreement or otherwise on written request. The Administrator further agrees that all records which it maintains for the Fund pursuant to Rule 31a-1 under the 1940 Act will be preserved for the periods prescribed by Rule 31a-2 under the 1940 Act unless any such records are earlier surrendered as provided above. Records shall be surrendered in usable machine-readable form. 11. SERVICES NOT EXCLUSIVE The services of the Administrator to the Fund are not to be deemed exclusive, and the Administrator shall be free to render similar services to others. The Administrator shall be deemed to be an independent contractor and shall, unless otherwise expressly provided herein or authorized by the Fund from time to time, have no authority to act or represent the Fund in any way or otherwise be deemed an agent of the Fund. 12. TERM, TERMINATION AND AMENDMENT This Agreement shall become effective on the date first written above. The Agreement shall continue in effect unless and until terminated in writing by either party on sixty (60) days' prior written 10 notice. Termination of this Agreement with respect to any given Series shall in no way affect the continued validity of this Agreement with respect to any other Series. Upon termination of this Agreement, the Fund shall pay to the Administrator such compensation and any reimbursable expenses as may be due under the terms hereof as of the date of such termination, including reasonable out-of-pocket expenses associated with such termination. This Agreement may be modified or amended from time to time by mutual written agreement of the parties hereto. 13. NOTICES Any notice or other communication authorized or required by this Agreement to be given to either party shall be in writing and deemed to have been given when delivered in person or by confirmed facsimile, or posted by certified mail, return receipt requested, to the following address (or such other address as a party may specify by written notice to the other): if to the Fund: The CountryBaskets Index Fund, Inc., c/o Deutsche Morgan Grenfell/C.J. Lawrence Inc., 31 West 52nd Street, New York, New York, 10019, Attn: Robert Lynch, fax: (212) 468-5491; if to the Administrator: State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy, Massachusetts 02171, Attn: David M. Elwood, Vice President and Senior Counsel, fax: (617) 985-2497. 14. NON-ASSIGNABILITY This Agreement shall not be assigned by either party hereto without the prior consent in writing of the other party, except that the Administrator may assign this Agreement to a successor of all or a substantial portion of its business, or to a party controlling, controlled by or under common control with the Administrator. 15. SUCCESSORS This Agreement shall be binding on and shall inure to the benefit of the Fund and the Administrator and their respective successors and permitted assigns. 16. ENTIRE AGREEMENT This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes all previous representations, warranties or commitments regarding the services to be performed hereunder whether oral or in writing. 17. WAIVER The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver nor shall it deprive such party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement. Any waiver must be in writing signed by the waiving party. 11 18. FORCE MAJEURE The Administrator shall not be responsible or liable for any failure or delay in performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its control, including without limitation, work stoppage, power or other mechanical failure, computer virus which the Administrator could not have prevented by using commercially reasonable methods, natural disaster, governmental action or communication disruption. 19. SEVERABILITY If any provision of this Agreement is invalid or unenforceable, the balance of the Agreement shall remain in effect, and if any provision is inapplicable to any person or circumstance it shall nevertheless remain applicable to all other persons and circumstances. 20. GOVERNING LAW This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of The Commonwealth of Massachusetts. 12 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the date first written above. THE COUNTRYBASKETSSM INDEX FUND, INC. By: Name: Title: STATE STREET BANK AND TRUST COMPANY By: Name: Title: 13 ADMINISTRATION AGREEMENT The CountryBasketsSM Index Fund, Inc. SCHEDULE A Listing of Series and Authorized Shares Series Authorized Shares as of , 1996 Australia Index Series 200,000,000 France Index Series 200,000,000 Germany Index Series 200,000,000 Hong Kong Index Series 200,000,000 Italy Index Series 200,000,000 Japan Index Series 200,000,000 South Africa Index Series 200,000,000 UK Index Series 200,000,000 US Index Series 200,000,000 14 ADMINISTRATION AGREEMENT The CountryBasketsSM Index Fund, Inc. SCHEDULE B Fees and Expenses 15 ADMINISTRATION AGREEMENT The CountryBasketsSM Index Fund, Inc. SCHEDULE C Registration of Fund Shares with State Securities Administrators The Administrator will prepare and file required documentation to maintain the registration or exemption from registration of Shares of each Series in accordance with the securities laws of each jurisdiction in which such Shares are to be offered or sold as determined by the Fund. The registration services shall consist of the following: 1. Filing amendments to the Fund's Application to Register Securities, if applicable; 2. Filing amendments to the Fund's registration statement under applicable state securities laws where required; 3. Filing Fund sales reports and advertising literature where required; 4. Payment at the expense of the Fund of any Fund state registration and filing fees in connection with the maintenance of registration or exemption of the Shares; 5. Filing the Prospectus and statements of additional information, any supplements thereto or any amendments to the registration statement on Form N-1A, where required to maintain the registration or exemption of the Shares; 6. Filing required documentation to renew registration of Fund as issuer or issuer/dealer; 7. Filing of annual, semi-annual and quarterly reports, supplements or amendments thereto and proxy statements where required; and 8. The performance of such additional services as the Administrator and the Fund may agree upon in writing. Unless otherwise specified in writing by the Administrator, registration services by the Administrator shall not include determining the availability of exemptions under a jurisdiction's blue sky law. Any such determination shall be made by the Fund or its legal counsel. In connection with the services described herein, the Fund shall issue in favor of the Administrator a power of attorney to register Shares on behalf of the Fund, which power of attorney shall be substantially in the form of Exhibit I attached hereto. 16 ADMINISTRATION AGREEMENT The CountryBasketsSM Index Fund, Inc. EXHIBIT I LIMITED POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, as of , 1996 that The CountryBasketsSM Index Fund, Inc. (the "Fund") makes, constitutes, and appoints STATE STREET BANK AND TRUST COMPANY (the "Administrator") with principal offices at 225 Franklin Street, Boston, Massachusetts its lawful attorney-in-fact for it to do as if it were itself acting, the following: 1. REGISTRATION OF SHARES. The power to register shares of each authorized Series of the Fund in each jurisdiction in which Shares are offered or sold and in connection therewith the power to prepare, execute, and deliver and file any and all applications, including without limitation, applications to register shares, to register agents, consents, including consents to service of process, reports, including without limitation, all periodic reports, claims for exemption, or other documents and instruments now or hereafter required or appropriate in the judgment of the Administrator in connection with the registration of Shares, provided that this Limited Power of Attorney shall not include the power to execute, deliver or file any application, consent or other document to maintain an office of the Fund in any state, to change the terms of the offering of the Shares in any state from the terms set forth in its registration statement filed with the Securities and Exchange Commission, to qualify the Fund as a foreign corporation in any state or to consent to service of process in any state other than with respect to claims arising out of the offering of Shares. 2. CHECKS. The power to draw, endorse, and deposit checks in the name of the Fund in connection with the registration of Shares of any Series with state securities administrators. The execution of this limited power of attorney shall be deemed coupled with an interest and shall be revocable only upon receipt by the Administrator of termination of such authority. Nothing herein shall be construed to constitute the appointment of the Administrator as or otherwise authorize the Administrator to act as an officer or director of the Fund. IN WITNESS WHEREOF, the Fund has caused this Agreement to be executed in its name and on its behalf by and through its duly authorized officer, as of the date first written above. The CountryBasketsSM Index Fund, Inc. By: Name: Title: EX-99.B9B 14 TRANSFER AGENCY AND SERVICE AGR. 1 TRANSFER AGENCY AND SERVICE AGREEMENT between THE COUNTRYBASKETSSM INDEX FUND, INC. and STATE STREET BANK AND TRUST COMPANY 1G - Domestic Corp/Series 2 TABLE OF CONTENTS Page 1. Terms of Appointment; Duties of the Bank . . . . . . . . . . . . 1 2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 4 3. Representations and Warranties of the Bank . . . . . . . . . . . 5 4. Representations and Warranties of the Fund . . . . . . . . . . . 5 5. Data Access and Proprietary Information . . . . . . . . . . . . 6 6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 7 7. Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . 8 8. Covenants of the Fund and the Bank . . . . . . . . . . . . . . . 8 9. Termination of Agreement . . . . . . . . . . . . . . . . . . . . 9 10. Additional Series . . . . . . . . . . . . . . . . . . . . . . . 9 11. Assignment; Subcontractors . . . . . . . . . . . . . . . . . . 9 12. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 13. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . 10 14. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . 10 15. Consequential Damages . . . . . . . . . . . . . . . . . . . . . 10 16. Merger of Agreement . . . . . . . . . . . . . . . . . . . . . . 10 17. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 10 18. Book-Entry System . . . . . . . . . . . . . . . . . . . . . . . 11 Schedule A . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Schedule B . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Schedule C . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3 TRANSFER AGENCY AND SERVICE AGREEMENT AGREEMENT made as of the day of , 1996, by and between The CountryBasketsSM Index Fund, Inc., a Maryland corporation, having its principal office and place of business at 31 West 52nd Street, New York, New York 10019 (the "Fund"), and State Street Bank and Trust Company, a Massachusetts trust company, having its principal office and place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank"). WHEREAS, the Fund is authorized to issue shares of common stock, par value $.001 per share ("CB Shares(SM)"), in separate series, with each such series representing interests in a separate portfolio of securities and other assets; WHEREAS, the Fund intends to sell and redeem CB Shares(SM) only in aggregations of the number of CB Shares(SM) specified with respect to each series (each a "Creation Unit"); WHEREAS, the Fund will initially offer CB Shares(SM) in nine series, the Australia Index Series, the France Index Series, the Germany Index Series, the Hong Kong Index Series, the Italy Index Series, the Japan Index Series, the South Africa Index Series, the UK Index Series and the US Index Series (each such series, together with each other series subsequently established by the Fund and made subject to this Agreement in accordance with Section 10, being herein referred to as a "Series", and collectively as the "Series"); WHEREAS, the CB Shares(SM) of each of the initial nine Series have been approved for listing on the New York Stock Exchange ("NYSE"), subject to notice of issuance; WHEREAS, the NYSE trading symbol, the CUSIP number of the CB Shares(SM) and the number of CB Shares(SM) per Creation Unit of each Series is set forth in Schedule A hereto; WHEREAS, The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York ("DTC"), or its nominee, will be the initial record or registered owner (the "Shareholder") of all CB Shares(SM); WHEREAS, certificates will not be issued for CB Shares(SM) unless neither DTC nor a replacement depository shall be the depository for the CB Shares(SM); and WHEREAS, the Fund desires to appoint the Bank as the transfer agent and dividend disbursing agent with respect to each Series and the Bank desires to accept such appointment; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto agree as follows: 1. Terms of Appointment; Duties of the Bank 1.1 Subject to the terms and conditions set forth in this Agreement and in the currently effective prospectus and statement of additional information of the Fund (together, the "Prospectus"), the 2 Fund hereby employs and appoints the Bank and the Bank agrees to act as transfer agent for the Fund's authorized and issued CB Shares(SM) of each Series and as the Fund's dividend disbursing agent. 1.2 Anything to the contrary herein notwithstanding, until such time as the Fund issues certificates for the CB Shares(SM), the CB Shares(SM) shall be held in book-entry form only through the facilities of DTC (or such other depository as may be selected by the Fund) and the Bank shall deal with such CB Shares(SM) and perform its services hereunder accordingly. 1.3 The Bank agrees that it will perform the following services: (a) In accordance with procedures established from time to time with respect to each Series by agreement between the Fund and the Bank, the Bank shall: (i) Review upon receipt from the Fund's distributor (the "Distributor") orders for the purchase of Creation Unit aggregations of CB Shares(SM) which have been submitted to the Distributor and based on its records and the records of DTC determine whether the order if accepted will result in the depositor of the Fund Basket or Baskets owning or appearing to own eighty percent (80%) of the outstanding CB Shares(SM) of such Series and provide advice of the same to the Distributor; (ii) Receive from the Distributor purchase orders for Creation Unit aggregations of CB Shares(SM) received in good form and accepted by or on behalf of the Fund by the Distributor, and pursuant to such orders issue the appropriate number of CB Shares(SM) of the applicable Series and hold such CB Shares(SM) in the account of the Shareholder for each of the respective Series of the Fund; (iii) Provide the Distributor, by means of facsimile, with confirmations of the issuance of Creation Units, such confirmations to be delivered by the Distributor; (iv) Receive for acceptance from Authorized Participants (as defined in the Prospectus) redemption requests; deliver the appropriate documentation thereof to the authorized custodian of the Fund (the "Custodian"); generate and transmit or cause to be generated and transmitted confirmation of receipt of such redemption requests to the Authorized Participants submitting the same; and redeem the appropriate number of CB Shares(SM) held in the account of the Shareholder; (v) Act as Index Receipt Agent with respect to purchases and redemptions of Creation Unit aggregations of CB Shares(SM) of the U.S. Index Series through the Continuous Net Settlement System of the National Securities Clearing Corporation ("NSCC") in accordance with the terms of each Authorized Participant Agreement among the Fund, the Distributor, the Bank and the Authorized Participant named therein and the rules and procedures established by NSCC from time to time; 3 (vi) Prepare and transmit by means of DTC's book-entry system payments for dividends and distributions declared by the Fund with respect to each Series; (vii) Maintain the record of the name and address of the Shareholder and the number of CB Shares(SM) issued by each Series of the Fund and held by the Shareholder; (viii) Record the issuance of CB Shares(SM) of the Fund and maintain pursuant to SEC Rule 17Ad-10(e) a record of the total number of CB Shares(SM) of the Fund and of each Series which are authorized, based upon data provided to it by the Fund, issued and outstanding. The Bank shall also provide the Fund on a regular basis with the total number of CB Shares(SM) which are authorized, issued and outstanding and shall not issue any Shares of a Series in excess of the number of authorized shares of such Series and shall have no obligation when recording the issuance of CB Shares(SM) to take cognizance of any laws relating to the issue or sale of such CB Shares(SM), which function shall be the sole responsibility of the Fund except that the Bank shall act in accordance with instructions of the Fund related thereto; (ix) Prepare and transmit to the Fund and the Administrator all information with respect to purchases and redemptions of CB Shares(SM) as may be required to be reported to the NYSE and any other applicable securities exchange; (x) On days that a Series may accept orders for purchases or redemptions, calculate and transmit to the Custodian and the Fund's administrator the number of outstanding CB Shares(SM) for each Series; (xi) On days that a Series may accept orders for purchases or redemptions, transmit to the Custodian, the Fund and DTC the amount of CB Shares(SM) purchased and redeemed for such Series; (xii) Confirm to DTC the number of CB Shares(SM) evidenced by each global certificate in registered form (the "Global Certificate") issued to the Shareholder, as DTC may reasonably request; (xii) Prepare and deliver other reports, information and documents to DTC as DTC may reasonably request; (xiv) On days that a Series may accept orders for purchases or redemptions, notify the Distributor of the net asset value per CB Share SM of such Series by sending a telecopy to the office of the Distributor at the address set forth in the Fund's Prospectus; (xv) Extend voting rights to the Shareholder and/or beneficial owners of CB Shares(SM) in accordance with the policies and procedures of DTC for book-entry only securities; 4 (xvi) Issue CB Shares(SM) and maintain Shareholder records in accordance with the Prospectus in connection with any dividend reinvestment plan, if adopted by the Board of Directors; and (xvii) Maintain those books and records of the Fund that are required under Rule 31a-1(b)(2)(D) of the 1940 Act unless otherwise directed by the Fund. (b) In addition to and neither in lieu nor in contravention of the services set forth in the above paragraph (a), the Bank shall perform the customary services of a transfer agent and dividend disbursing agent, including but not limited to: maintaining the account of the Shareholder for each Series, obtaining a list of DTC participants holding interests in the Global Certificate at the request of the Fund, mailing proxy material, shareholder reports and Prospectuses to the Shareholder or DTC participants or beneficial owners of CB Shares(SM) at the request of the Distributor or the Fund. (c) For so long as CB Shares(SM) are represented by Global Certificates, the following shall be delivered to DTC for delivery to beneficial owners in accordance with the procedures for book-entry only securities of DTC: (i) Annual and semi-annual reports of the Fund; (ii) Proxies, proxy statements and other proxy soliciting materials; (iii) Prospectus and amendments and supplements to the Prospectus, including stickers; and (iv) Other communications as may be required by law or reasonably requested by the Fund. (d) The Bank shall provide additional services on behalf of the Fund (e.g., escheatment services) which may be agreed upon in writing between the Fund and the Bank. (e) With respect to notices of an intention for the purchase of CB Shares(SM) from an Authorized Participant (as defined in the Prospectus) ("Intentions"), the Bank will: (i) Upon receipt from the Distributor of a notice of an Intention, assist the Distributor in determining whether acceptance of the subsequent purchase order would result in (a) the beneficial owner owning 80 percent or more of the CB Shares(SM) or (b) the issuance of CB Shares(SM) in excess of the number authorized by the particular Series; (ii) Process Intentions received from the Distributor; and 1.4 In the event that (a) DTC notifies the Fund that it is unwilling or unable to continue as depositary for the CB Shares(SM) or (b) the Fund in its sole discretion determines to discontinue use of the DTC book- entry system for the transfer of CB Shares(SM) and in either case, no replacement depositary is appointed by the Fund, certificates represented by the CB Shares(SM) will be printed and delivered, and, upon ninety days prior notice to the Bank, this Agreement will be amended 5 to reflect the holding of CB Shares(SM) in certificated form, such amendment to include the addition of provisions substantially as set forth in Schedule C to this Agreement. 2. Fees and Expenses 2.1 For the performance by the Bank of the services to be rendered by it pursuant to this Agreement, the Fund agrees with respect to each Series to pay the Bank an annual maintenance fee for each Series as set forth in the initial fee schedule attached hereto as Schedule B. Such fees and out-of-pocket expenses and advances identified under Section 2.2 below may be changed from time to time subject to mutual written agreement between the Fund and the Bank. 2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees with respect to each Series to reimburse the Bank for reasonable out-of-pocket expenses, including but not limited to postage, forms, telephone, microfilm, microfiche, tabulating proxies, records storage or advances incurred by the Bank for the items set out in Schedule B. In addition, any other expenses incurred by the Bank at the request or with the consent of the Fund, will be reimbursed by the Fund with respect to each Series. 2.3 The Fund agrees with respect to each Series to pay all fees and reimbursable expenses promptly upon the receipt of the billing notice. Postage for mailing of dividends, proxies, Fund reports and other mailings to all shareholder and beneficial owner accounts shall be advanced to the Bank by the Fund at least seven (7) days prior to the mailing date in cases where the Bank is to mail such materials to DTC Participants and beneficial owners of CB Shares(SM). 3. Representations and Warranties of the Bank The Bank represents and warrants to the Fund that: 3.1 It is a trust company duly organized, existing and in good standing under the laws of The Commonwealth of Massachusetts; 3.2 It is duly qualified to carry on its business in The Commonwealth of Massachusetts; 3.3 It is empowered under applicable laws and by its Charter and By-Laws to enter into and perform this Agreement; 3.4 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement; 3.5 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement; and 3.6 It is duly qualified to act as transfer agent and registrar in accordance with the requirements of the New York Stock Exchange. 4. Representations and Warranties of the Fund 6 The Fund represents and warrants to the Bank that: 4.1 It is a corporation, duly incorporated, existing and in good standing under the laws of the State of Maryland; 4.2 It is empowered under applicable laws and by its Articles of Incorporation and By-Laws to enter into and perform this Agreement; 4.3 All necessary corporate proceedings have been taken to authorize it to enter into and perform this Agreement; 4.4 It is an open-end and non-diversified management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and 4.5 A registration statement under the Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act with respect to each of the Series has become and is currently effective. 5. Data Access and Proprietary Information 5.1 The Fund acknowledges that the computer programs, screen formats, report formats, interactive design techniques, and documentation manuals furnished to the Fund by the Bank as part of the Fund's ability to access certain Fund-related share activity and shareholder data ("Customer Data") maintained by the Bank on databases under the control and ownership of the Bank or other third party ("Data Access Services") constitute copyrighted, trade secret, or other proprietary information (collectively, "Proprietary Information") of substantial value to the Bank or other third party. In no event shall Proprietary Information be deemed Customer Data or Customer Data be deemed Proprietary Information. The Fund agrees to treat all Proprietary Information as proprietary to the Bank and further agrees that it shall not divulge any Proprietary Information to any person or organization except as may be provided hereunder. Without limiting the foregoing, the Fund agrees for itself, its employees, officers and agents: (a) to access Customer Data solely from locations as may be designated in writing by the Bank and solely in accordance with the Bank's applicable user documentation; (b) to refrain from copying or duplicating in any way the Proprietary Information except for use in reports prepared for the Fund's officers or directors or for use in reports prepared for the Fund by the Fund's service providers; (c) to refrain from obtaining unauthorized access to any portion of the Proprietary Information, and if such access is inadvertently obtained, to inform in a timely manner of such fact and dispose of such information in accordance with the Bank's instructions; (d) to refrain from causing or allowing third-party data acquired hereunder from being retransmitted to any other computer facility or other location, except with the prior written consent of the Bank; 7 (e) that the Fund shall have access only to those authorized transactions agreed upon by the parties; (f) to honor all reasonable written requests made by the Bank to protect at the Bank's expense the rights of the Bank in Proprietary Information at common law, under federal copyright law and under other federal or state law. Each party shall take reasonable efforts to advise its officers or employees of their obligations pursuant to this Section 5. The obligations of this Section shall survive any termination of this Agreement. 8 5.2 If the Fund notifies the Bank that any of the Data Access Services do not operate in material compliance with the most recently issued user documentation for such services, the Bank shall make best efforts in a timely manner to correct such failure. Organizations from which the Bank may obtain certain data included in the Data Access Services are solely responsible for the contents of such data and the Fund agrees to make no claim against the Bank arising out of the contents of such third-party data, including, but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 5.3 If the transactions available to the Fund include the ability to originate electronic instructions to the Bank in order to (i) effect the transfer or movement of cash or CB Shares(SM) or (ii) transmit shareholder information or other information, then in such event the Bank shall be entitled to rely on the validity and authenticity of such instruction without undertaking any further inquiry as long as such instruction is undertaken in conformity with reasonable security procedures established by the Bank from time to time. 6. Indemnification 6.1 The Bank shall not be responsible for, and the Fund shall with respect to each Series indemnify and hold the Bank harmless from and against, any and all losses, damages, costs, charges, reasonable counsel fees, payments, expenses and liability arising out of or attributable to: (a) All actions of the Bank or its agents or subcontractors identified to the Fund in Section 11.3 ("Section 11.3 Subcontractors") hereof required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence, willful misconduct or reckless disregard of its or their obligations and duties under this Agreement; (b) The Fund's lack of good faith, or its negligence or willful misconduct which arise out of the breach of any representation or warranty of the Fund hereunder; (c) The good faith reliance on or use by the Bank or its agents or Section 11.3 Subcontractors of information, records or documents which (i) are received by the Bank or its agents or such Section 11.3 Subcontractors from persons authorized by the Fund's Board of Directors ("Authorized Persons") or (ii) have been prepared or maintained by the Fund or any other person or firm on behalf of the Fund; (d) The reliance on, or the carrying out by the Bank or its agents or Section 11.3 Subcontractors of any instructions or requests of the Fund received from Authorized Persons with respect to each Series; or 9 (e) The offer or sale of CB Shares(SM) in violation of any requirement under the federal securities laws or regulations or the securities laws or regulations of any state or in violation of any stop order or other determination or ruling by any federal agency or any state with respect to the offer or sale of such CB Shares(SM) in such state. 6.2 At any time the Bank may apply to any officer of the Fund for instructions, and may consult with legal counsel with respect to any matter arising in connection with the services to be performed by the Bank under this Agreement, and the Bank and its agents or Section 11.3 Subcontractors shall not be liable and shall be indemnified by the Fund with respect to the applicable Series for any action taken or omitted by it in good faith reliance upon such instructions or upon the opinion of such counsel. The Bank, its agents and Section 11.3 Subcontractors shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Fund, reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided the Bank or its agents or such Section 11.3 Subcontractors by machine readable input, telex, CRT data entry or other similar means authorized by the Fund, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund. 6.3 In order that the indemnification provisions contained in this Article 6 shall apply to a claim for which the Fund may be required to indemnify the Bank, the Bank shall promptly notify the Fund of such assertion and shall keep the Fund advised with respect to all developments concerning such claim. The Fund will be entitled to participate in its own expense in the defense, or, if it so elects, to assume the defense of any suit brought to enforce any liability subject to the indemnification provided above. In the event the Fund elects to assume the defense of any such suit and retain counsel, the Administrator or any of its affiliated persons, named as defendant or defendants in the suit, may retain additional counsel but shall bear the fees and expenses of such counsel unless (i) the Fund shall have specifically authorized the retaining of such counsel or (ii) the Administrator shall have determined in good faith that the retention of such counsel is required as a result of a conflict of interest. The Bank shall in no case confess any claim or make any compromise or settlement in any case in which the Fund may be required to indemnify the Bank except with the Fund's prior written consent. 7. Standard of Care The Bank shall at all times act in good faith and agrees to use its best efforts within reasonable limits to insure the delivery and accuracy of all services to be performed, including any documents or information to be provided by it, under this Agreement, but assumes no responsibility and shall not be liable for loss or damage due to errors unless said errors are caused by its negligence, bad faith, or willful misconduct or that of its agents, employees or Section 11.3 Subcontractors or the reckless disregard of its or their obligations and duties hereunder. 8. Covenants of the Fund and the Bank 8.1 The Fund shall with respect to each Series promptly furnish to the Bank the following: 10 (a) Certified copies of the resolutions of the Board of Directors of the Fund authorizing (1) the appointment of the Bank and the execution and delivery of this Agreement and (2) the Authorized Persons to give instructions or requests to the Bank pursuant to this Agreement; (b) A copy of the Articles of Incorporation and By-Laws of the Fund and all amendments thereto; and (c) A copy of the Fund's currently effective registration statement under the 1933 Act and the 1940 Act and the Prospectus relating to all Series and all amendments and supplements thereto. 8.2 The Bank shall keep records relating to the services to be performed hereunder, in the form and manner as it may reasonably deem advisable. To the extent required by Section 31 of the 1940 Act and the rules thereunder, the Bank agrees that all such records prepared or maintained by the Bank relating to the services to be performed by the Bank hereunder are the property of the Fund and will be preserved, maintained and made available in accordance with such Section and rules, and will be surrendered promptly to the Fund upon the termination of this Agreement or on and in accordance with its request. All records shall be reasonably available for inspection and use by the Fund. 8.3 The Bank and the Fund agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law. 8.4 In case of any requests or demands for the inspection of the shareholder records of the Fund, the Bank will endeavor to notify the Fund and to secure instructions from an Authorized Person of the Fund as to such inspection. The Bank reserves the right, however, to exhibit the shareholder records to any person whenever it is advised by its counsel that it may be held liable under applicable law for the failure to exhibit the shareholder records to such person. 9. Termination of Agreement 9.1 This Agreement may be terminated by either party upon sixty (60) days' written notice to the other. 9.2 Upon the termination of this Agreement by either party, all reasonable out-of-pocket expenses associated with the delivery of records and material in accordance with the Fund's instructions will be borne by the Fund with respect to each Series. Additionally, the Bank reserves the right to charge for any other reasonable expenses associated with such termination. 10. Additional Series In the event that at any time the Fund establishes one or more Series in addition to those then set forth in Schedule A for which it desires to have the Bank render services as transfer agent and 11 dividend disbursing agent under the terms hereof, it shall so notify the Bank in writing, and if the Bank agrees in writing to provide such services, such Series of the Fund shall become a Series subject to the provisions of this Agreement and shall be added to Schedule A. 11. Assignment; Subcontractors 11.1 Except as provided in Section 11.3 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the prior written consent of the other party. 11.2 This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and permitted assigns. 11.3 The Bank may, without further consent on the part of the Fund, subcontract for the performance hereof with (i) Boston Financial Data Services, Inc., a Massachusetts corporation ("BFDS"), which is duly registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of 1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS affiliate registered pursuant to Section 17A(c)(1) to the extent such registration is required by law in order to perform the services so delegated; provided, however, that the Bank shall be as fully responsible to the Fund for the acts and omissions of any such subcontractor as it is for its own acts and omissions. 11.4 The Bank may, with the consent of the Fund, subcontract for the performance of all or some of its duties under Section 1.3(a)(iv) with respect to the processing of redemption requests for CB SharesSM to a subcontractor designated in writing by the Fund. Notwithstanding any provision of this Agreement to the contrary, the Bank shall have no liability for and shall be indemnified by the Fund against any and all losses, damages, costs, charges, reasonable counsel fees, payments, expenses and liability arising out of or attributable to the acts or omissions of any such subcontractor. 12. Amendment This Agreement may be amended or modified by a written agreement executed by both parties. 13. Massachusetts Law to Apply This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of The Commonwealth of Massachusetts without reference to the choice of law provisions thereof. 14. Force Majeure In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for 12 damages to the other for any damages resulting from such failure to perform or otherwise from such causes. 15. Consequential Damages Neither party to this Agreement shall be liable to the other party for consequential damages under any provision of this Agreement or for any consequential damages arising out of any act or failure to act hereunder. 16. Merger of Agreement This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written. 17. Counterparts This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 18. Book-Entry System Until the issuance of certificates in definitive form other than the Global Certificate, the rights of beneficial owners of CB Shares(SM) shall be exercised through DTC and the DTC participants, and shall be those established by law and agreements between DTC and DTC participants. 13 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first written above. THE COUNTRYBASKETSSM INDEX FUND, INC. By: Name: Title: ATTEST: STATE STREET BANK AND TRUST COMPANY By: Name: Title: Executive Vice President ATTEST: 14 Transfer Agency and Service Agreement The CountryBasketsSM Index Fund, Inc. Schedule A Name of Series CB Shares(SM) Per (Trading Symbol) CUSIP Creation Unit 22236E Australia Index Series 10 9 100,000 (GXA) France Index Series 20 8 100,000 (GXF) Germany Index Series 30 7 100,000 (GXG) Hong Kong Index Series 40 6 100,000 (GXH) Italy Index Series 50 5 100,000 (GXI) Japan Index Series 60 4 250,000 (GXJ) South Africa Index Series 70 3 100,000 (GXR) UK Index Series 80 2 100,000 (GXK) US Index Series 88 5 100,000 (GXU) 15 Transfer Agency and Service Agreement The CountryBasketsSM Index Fund, Inc. Schedule B Fee Schedule 16 Transfer Agency and Service Agreement The CountryBasketsSM Index Fund, Inc. Schedule C In the event that this Agreement is amended pursuant to Section 1.4, the Bank shall provide the services listed below in addition to the services set forth in Section 1.3. The Bank shall: 1. Effect transfers of CB Shares(SM) by the registered owners thereof upon receipt of appropriate instructions; 2. Issue replacement certificates for those certificates alleged to have been lost, stolen or destroyed upon receipt by the Bank of indemnification satisfactory to the Bank and protecting the Bank and the Fund, and the Bank, at its option, may issue replacement certificates in place of mutilated stock certificates upon presentation thereof and without such indemnity; 3. Maintain records of account for registered owners of CB Shares(SM); 4. Prepare shareholder meeting lists; 5. Mail proxies and proxy materials, shareholder reports, prospectuses and other shareholder communications set forth in Section 1.3(c) to shareholders of the Fund; 6. Prepare and transmit payments for dividends and distributions declared by the Fund on behalf of each Series; 7. Withhold taxes on U.S. resident and non-resident alien accounts, prepare and file U.S. Treasury Department Forms 1099 and other appropriate forms required with respect to dividends and distributions by federal authorities for all shareholders; and 8. Prepare and mail statements of account to shareholders for all purchases and redemptions of CB Shares(SM) and other confirmable transactions in shareholder accounts. W:\...\surprise\agmts\cbi-fnd9.ta EX-99.B9C 15 INDEMNITY AGR. 1 Draft of February 7, 1996 The CountryBasketsSM Index Fund, Inc. Indemnity Agreement This Indemnity Agreement (the "Agreement"), is made as of ___________ __, 1996 between The CountryBasketsSM Index Fund, Inc., a Maryland corporation (the "Fund"), and Alexander Lucey Inc., a ___________________ corporation (the "Servicer"). WHEREAS, the Fund has appointed State Street Bank and Trust Company the transfer agent and dividend disbursing agent (the "Transfer Agent") pursuant to a Transfer Agency and Service Agreement (the "Transfer Agency Agreement") with respect to the nine initial series of shares of Common Stock ("Shares") of the Fund identified therein (each such series, and each series subsequently established by the Fund and made subject to the Transfer Agency Agreement in accordance with the terms thereof, a "Series"); and WHEREAS, the Servicer has entered into a Service Agreement (the "Service Agreement") with the Transfer Agent whereby the Servicer agrees to provide certain administrative services to the Transfer Agent in connection with the receipt and processing of requests for redemption of Shares; and WHEREAS, the Fund and the Servicer wish to set forth their mutual understandings with respect to the 2 Servicer's responsibilities to the Fund for the performance of its duties under the Service Agreement. NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement and the Fund's designation of the Servicer as a permitted subcontractor of the Transfer Agent pursuant to Section 11.4 of the Transfer Agency Agreement, the Fund and the Servicer agree as follows: Section 1. Standard of Care. The Servicer shall at all times act in good faith and agrees to use its best efforts within reasonable limits to insure the delivery and accuracy of all services to be performed, including any documents or information to be provided by it, under the Service Agreement, but assumes no responsibility and shall not be liable for loss or damage due to errors unless said errors are caused by its negligence, bad faith, or willful misconduct or that of its officers, agents or employees or the reckless disregard of its or their obligations and duties thereunder. Section 2. Indemnification of Servicer. The Servicer shall not be responsible for, and the Fund shall with respect to each Series indemnify and hold the Servicer harmless from and against, any and all losses, damages, costs, charges, reasonable counsel fees, payments, expenses and liability (collectively, "Claims") arising out of or attributable to (a) the reasonable good faith reliance on or 3 use by the Serivcer, its officers and employees of information, records or documents which (i) are received by the Servicer from persons authorized by the Fund's Board of Directors to give instructions under the Transfer Agency Agreement ("Authorized Persons") or (ii) have been prepared or maintained by the Fund or any other person or firm authorized to prepare or maintain same on behalf of the Fund; and (b) the reliance on, or the carrying out by the Servicer or its officers or employees of any instructions or requests of the Fund received from Authorized Persons with respect to each Series. Section 3. Indemnification of the Fund. The Servicer agrees to indemnify and hold the Fund harmless from and against any and all Claims arising out of or attributable to the negligent performance of or negligent failure to perform the duties and obligations of, or the willful misconduct of, the Servicer under the Service Agreement. Section 4. Idemnification Procedures. In order that the indemnification provisions contained in Sections 2 and 3 shall apply, upon the assertion of a Claim for which a party hereto may be required to indemnify the other party, the party seeking indemnification (the "Indemnitee") shall promptly notify the indemnifying party (the "Indemnitor") of such assertion and shall keep the Indemnitor advised with respect to all developments concerning such Claim. The 4 Indemnitor shall have the option to participate with the Indemnitee in the defense of such Claim or to defend against said Claim in its own name or in the name of the Indemnitee. The Indemnitee shall in no case confess any Claim or make any compromise or settlement in any case in which the Indemnitor may be required to indemnify the Indemnitee except with the Indemnitor's prior written consent. Section 5. Termination; Amendment. This Agreement may be terminated by either party upon sixty days' prior written notice to the other party and shall terminate automatically upon the termination of the Service Agreement. This Agreement may be amended or modified by a written instrument executed by the parties. Section 6. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 5 IN WITNESS WHEREOF the parties have caused the Agreement to be executed as of the day and year first written above. THE COUNTRYBASKETSSM INDEX FUND, INC. By: _________________________ Name: Title: ALEXANDER LUCEY INC. By: _________________________ Name: Title: EX-99.B13A 16 SUBSCRIPTION AGR. 1 SUBSCRIPTION AGREEMENT The CountryBaskets Index Fund, Inc., a Maryland corporation (the "Fund"), and ALPS Mutual Funds Services, Inc., a Colorado corporation (the "Distributor"), hereby agree as follows: 1. The Fund hereby offers the Distributor and the Distributor hereby agrees to purchase the following shares, par value $.001 per share, of each series ("Series") of the Fund: _______ shares at $_______ per share representing _______ shares of the Australia Index Series; _______ shares at $_______ per share representing ______ shares of the France Index Series; _______ shares at $_______ per share representing _______ shares of the Germany Index Series; _______ shares at $_______ per share representing _______ shares of the Hong Kong Index Series; _______ shares at $_______ per share representing _______ shares of the Italy Index Series; _______ shares at $_______ per share representing _______ shares of the Japan Index Series; _______ shares at $_______ per share representing _______ shares of the South Africa Index Series; _______ shares at $_______ per share representing _______ shares of the UK Index Series; and _______ shares at $_______ per share representing _______ shares in US Index Series (collectively, the "Shares"). The Distributor hereby acknowledges receipt of a purchase confirmation reflecting the purchase of the Shares, and the Fund hereby acknowledges receipt from the Distributor of cash in the amount of $ _________ in full payment for the Shares. 2. The Distributor represents and warrants to the Fund that the Shares are being acquired for investment purposes and not with a view to the distribution thereof. 3. The Distributor agrees that if it or any direct or indirect transferee of the Shares redeems the Shares prior to the fifth anniversary of the date the Fund begins its investment activities, the Distributor will pay to the Fund an amount equal to the number resulting from multiplying each Fund's total unamortized organizational expenses by a fraction, the numerator of which is equal to the number of Shares redeemed by the Distributor or such transferee and the denominator of which is equal to the number of shares of each Series outstanding as of the date of such redemption, as long as the administrative position of the staff of the Securities and Exchange Commission requires such reimbursement. 2 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the ____ day of ________, 1996. THE COUNTRYBASKETS INDEX FUND, INC. Attest: _____________________ By:__________________________________ Name: Name: Title: ALPS MUTUAL FUNDS SERVICES, INC. Attest: _____________________ By:__________________________________ Name: Name: Title: EX-99.B13B 17 LETTER OF REPRESENTATIONS 1 CB Shares(TM) BOOK-ENTRY-ONLY Letter of Representations The CountryBaskets(TM) Index Fund, Inc. Name of Issuer State Street Bank And Trust Company Name of Agent The Depository Trust Company 1996 55 Water Street, 49th Floor (Date) New York, NY 10041 Attention: General Counsel's Office Re: CB Shares(TM) of The CountryBaskets(TM) Index Fund, Inc. (Issue Description) The purpose of this letter is to set out certain matters relating to the above-referenced "CB Shares(TM)" or "Securities." State Street Bank and Trust Company (the "Agent") is acting as Administrator, Custodian, Transfer Agent, Accounting Agent, Paying Agent, or other Agent with respect to the CB Shares(TM). CB Shares(TM) are shares of common stock ("Shares") of The CountryBaskets(TM) Index Fund, Inc. (the "Fund") issued by each of its initial nine series, including: the Australia Index Series, the France Index Series, the Germany Index Series, the Hong Kong Index Series, the Italy Index Series, the Japan Index Series, the South Africa Index Series, the UK Index Series, and the US Index Series pursuant to the Fund's articles of incorporation and bylaws and its registration statement on Form N-1A and related documents and instruments (the "Documents"). The Fund's Board of Directors may authorize additional series. Pursuant to the offering made in accordance with the Documents, the Fund will sell and redeem CB Shares(TM) of each series only in aggregations of a specified number of Shares ("Creation Units"). See Appendix A. CB(TM) Shares will be listed on the New York Stock Exchange. The Depository Trust Company ("DTC") will act as securities depository for the CB Shares(TM), and DTC's nominee, 2 Cede & Co., will be the record or registered owner of all outstanding CB Shares(TM). To induce DTC to accept the CB Shares(TM) as eligible for deposit at DTC and act in accordance with its Rules with respect to the CB Shares(TM), the Issuer and the Agent make the following representations to DTC. 1. The CB Shares(TM) of each series are Shares of common stock of an open-end investment company registered or to be registered with the Securities and Exchange Commission. Each series of CB Shares(TM) will have its own CUSIP number. The Issuer shall cause to be delivered at the time of the initial deposit a global certificate for each of the series of CB Shares(TM) respectively (the "Certificates") registered in the name of DTC's nominee, Cede & Co., to be held in custody by the Agent on behalf of DTC, which will represent in each case the total number of Shares of each series respectively issued by the Fund, which number shall be adjusted as appropriate by the Agent. Each Certificate shall bear the following legend: Unless this Certificate is presented by an authorized representative of The Depository Trust Company ("DTC"), a New York corporation, to Issuer or its agent for registration of transfer, exchange, or payment, and any registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co., or in such other name as is required by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC). ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co. has an interest herein. The Certificate shall remain in the Agent's possession as custodian for DTC pursuant to arrangements between the Agent and DTC, except as provided below. 2. In the event of any solicitation of consents from or voting by holders of the CB Shares(TM), the Issuer shall establish a record date for such purposes and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible. Notices to DTC pursuant to this paragraph by telecopy shall be sent to DTC's Reorganization 3 Department at (212) 709-6896, or (212) 709-6897, and receipt of such notices shall be confirmed by telephoning (212) 709-6870. Notices to DTC pursuant to this Paragraph by mail or by any other means shall be sent to: Manager, Reorganization Department Reorganization Window The Depository Trust Company 7 Hanover Square, 23rd Floor New York, NY 10004-2695 Each CB(TM) Share will have one vote. DTC shall make available to the Issuer and Agent upon written request and for a customary fee from time to time a securities position listing ("SPL") of the CB(TM) Share holdings of each DTC Participant. Such request for an SPL will be addressed to DTC's Reorganization Department and shall include the CUSIP number of the respective CB Shares(TM) as well as the record date to be used to determine beneficial holders. Notices sent by telecopy will be sent to (212) 709-1093 or (212) 709-1094. Notices sent by mail or by any other means will be sent to: Manager, Reorganization Department Reorganization Window The Depository Trust Company 7 Hanover Square, 23rd Floor New York, NY 10004-2695 The Issuer or Agent shall provide each such DTC Participant with copies of such notice, statement or other communication, in such form, number and at such place as such DTC Participant may reasonably request, in order that such notice, statement, or communication may be transmitted to by such DTC Participant, directly or indirectly, to the beneficial owners of the CB Shares(TM). 3. All notices and payment advices sent to DTC shall contain the CUSIP number of the CB Shares(TM) of the respective series. 4. Dividend or distribution payments by the Fund or any series thereof shall be received by Cede & Co., a nominee of DTC, or its registered assignments in same-day funds on each payment date (or the equivalent in accordance with existing arrangements between the Issuer or Agent and DTC). Such payments shall be made payable to the order of Cede & Co., and addressed as follows: 4 Manager, Cash Receipts Dividend Department The Depository Trust Company 7 Hanover Square, 24th Floor New York, NY 10004-2695 In the event that the Fund takes any action in respect of payment or nonpayment of dividends or other distributions on CB Shares(TM) of any series, the Agent shall promptly notify DTC of such action, and shall give DTC notice of any applicable record date and the per CB(TM) Share amount to be paid. Such notice shall be given by telephoning the Supervisor of DTC's Dividend Announcement Section at (212) 709-1270 or by telecopy sent to (212) 709-1723 on the date the dividend is declared. Such verbal or telecopy notice shall be followed promptly by written confirmation sent by a secure means to: Manager, Announcements Dividend Department The Depository Trust Company 7 Hanover Square, 22nd Floor New York, NY 10004-2695 5. DTC may direct the Issuer or Agent to use any other telephone number for facsimile transmission, address or department of DTC as the number, address or department to which notices may be sent. 6. Upon written request to DTC's Reorganization Department DTC shall release security position listings only to such authorized persons of the Issuer and Agent as are listed in the attached Appendix B, as amended from time to time. 7. In the event of issuance and redemption of CB Shares(TM) in Creation Unit size aggregations or any similar transactions necessitating an increase or decrease in the number of outstanding CB Shares(TM) of any series, DTC's DWAC procedures will be followed. Agent recognizes that DTC accepts such instructions up until 6:30 p.m. New York City time. Concurrently therewith, the Agent shall make appropriate notation on an attachment to each applicable Certificate indicating the amount of such decrease or increase and the total number of CB Shares(TM) outstanding. On each day on which Agent is open for business and on which it receives an instruction originated by a Participant through DTC's DWAC system to increase the Participant's account by a specified number of shares (a "Deposit Instruction"), Agent shall, before 6:30 p.m., New York City time, approve or cancel the Deposit Instruction through the DWAC system. On each day on which Agent is open for 5 business and on which it receives an instruction originated by a Participant through the DWAC system to decrease the Participant's account by a specified number of CB Shares(TM) (a "Withdrawal Instruction"), Agent shall, before 6:30 p.m. New York City time either approve or cancel the Withdrawal Instruction through the DWAC system. Agent agrees that its approval of a Deposit or Withdrawal Instruction shall be deemed to be the receipt by DTC of registration of transfer to the name of Cede & Co. for the quantity of CB Shares(TM) evidenced by the instruction after the Deposit or Withdrawal Instruction is effected. All such transactions shall be effected utilizing DTC's procedures as in effect until further notice. 8. In the event the Issuer determines pursuant to the Document(s) that beneficial owners of the CB Shares(TM) shall be able to obtain certificated CB Shares(TM), the Issuer or Agent shall notify DTC of the availability of CB(TM) Share certificates and shall issue, transfer and exchange CB(TM) Share certificates in appropriate amounts as required by DTC and others. 9. (a) DTC may determine to discontinue providing its services as securities depository with respect to the CB Shares(TM) at any time by giving reasonable prior written notice (90 days) to the Issuer or Agent (with a copy to the Issuer) (at which time DTC will confirm with the Issuer or Agent the aggregate number of CB Shares(TM) of each series outstanding); provided, however, that if DTC is required to discontinue its services as securities depository pursuant to any governmental, judicial or regulatory order or decree, and such discontinuation is required in less than 90 days from the date of such order or decree, then DTC may discontinue such services by giving notice to the Issuer or Agent (with a copy to the Issuer) as soon as reasonably possible. Under such circumstances, at DTC's request, if another securities depository is not available, the Issuer and Agent shall cooperate with DTC by taking appropriate action to make available one or more separate definitive certificates evidencing CB Shares(TM) to any DTC Participant having CB Shares(TM) deposited to its DTC accounts. (b) The Issuer may determine to discontinue the services of DTC thereunder by giving 30 days prior written notice to DTC (at which time DTC will confirm with the Agent the aggregate number of CB Shares(TM) of each series outstanding). 10. If applicable, publication of tax information and other like notification will also be made to DTC. 6 11. Issuer (a) understands that DTC has no obligation to, and will not, communicate to its Participants or to any person having an interest in the CB Shares(TM) any information contained in the Certificate(s); and (b) acknowledges that neither DTC's Participants nor any person having an interest in the CB Shares(TM) shall be deemed to have notice of the provisions of the Certificate(s) by virtue of submission of such Certificates(s) to DTC. 12. Nothing herein shall be deemed to require the Agent to advance funds on behalf of the Issuer. Very truly yours, THE COUNTRYBASKETS(TM) INDEX FUND, INC. (As Issuer) THE DEPOSITORY TRUST COMPANY By: (Authorized Officer's Signature) Dated: , 1996 STATE STREET BANK AND TRUST COMPANY (As Agent) By: (Authorized Officer's Signature) Address for Purposes of Notice: Received and Accepted: i APPENDIX A THE COUNTRYBASKETS(TM) INDEX FUND, INC. No. of Shares Series in Creation Units CUSIP No. The 100,000 22236E109 Australia Index The 100,000 22236E208 France Index The 100,000 22236E307 Germany Index The 100,000 22236E406 Hong Kong Index The 100,000 22236E505 Italy Index The 250,000 22236E604 Japan Index The 100,000 22236E703 South Africa Index The UK 100,000 22236E802 Index The US 100,000 22236E885 Index i APPENDIX B Authorized Persons of Issuer and Agent: i Principal and Income Payments Rider 1. This Rider supersedes any contradictory language set forth in the Letter of Representations to which it is appended. 2. With respect to principal and income payments in the Securities: A. DTC shall receive all dividend and interest payments on payable date in same-day funds by 2:30 p.m. ET (Eastern Time). Absent any other arrangements between Issuer or Agent and DTC, such funds shall be wired as follows: Chemical Bank ABA 021000128 For credit to A/C The Depository Trust Company Dividend Deposit Account 066-026776 B. Issuer agrees that it or Agent shall provide dividend and interest payment information to a standard announcement service subscribed to by DTC. In the unlikely event that no such service exists, Issuer agrees that it or Agent shall provide this information directly to DTC in advance of the dividend or interest record date as soon as the information is available. This information should be conveyed directly to DTC electronically. If electronic transmission is not possible, such information should be conveyed by telephone or facsimile transmission to: The Depository Trust Company Manager, Announcements Dividend Department 7 Hanover Square, 22nd Floor New York, New York 10004 Phone: (212) 709-1270 Fax: (212) 709-1723, 1686 C. Issuer agrees that for dividend and interest payments, it or Agent shall provide automated notification of CUSIP-level detail to the ii depository no later than noon ET on the payment date. D. DTC shall receive maturity and redemption payments and CUSIP-level detail on the payable date in same-day funds by 2:30 p.m. ET. Absent any other arrangements between Agent and DTC, such payments shall be wired according to the following instructions: Chemical Bank ABA 021000128 For credit to A/C Depository Trust Company Redemption Account 066-027306 in accordance with existing SDFS payment procedures in the manner set forth in DTC's SDFS Paying Agent Operating Procedures a copy of which has previously been furnished to Agent. E. DTC shall receive all other payments and CUSIP-level detail resulting from corporate actions (such as tender offers or mergers) on the first payable date in same-day funds by 2:30 p.m. ET. Absent any other arrangements between the Agent and DTC, such payments shall be wired to the following address: Chemical Bank ABA 021000128 For credit to A/C Depository Trust Company Reorganization Account 066-027608 EX-99.B15A 18 FORM OF 12B-1 PLAN 1 Draft 2/8/96 The CountryBaskets(SM) Index Fund, Inc. ________ Index Series PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1 WHEREAS, The CountryBaskets(SM) Index Fund, Inc. (the "Fund") is an open-end management investment company registered as such under the Investment Company Act of 1940, as amended (the "Act"), and organized as a series fund; and WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to Rule 12b-1 under the Act with respect to the shares of Common Stock, par value $.001 per share (the "Shares" or "CB Shares(SM)"), of the _________________ Index Series (the "Designated Series"; the Designated Series and any other series of Shares of the Fund authorized from time to time each being referred to herein as a "Series"), and the Board of Directors of the Fund (the "Board of Directors") has determined that there is a reasonable likelihood that adoption of this Plan of Distribution (the "Plan") will benefit the Designated Series and its holders of Shares and accordingly has approved the adoption of this Plan for the Designated Series; and WHEREAS, ALPS Mutual Funds Services, Inc., a Colorado corporation (the "Distributor"), is the exclusive distributor of the Shares; NOW, THEREFORE, the Fund hereby adopts this Plan in accordance with Rule 12b-1 under the Act on the following terms and conditions (capitalized terms not otherwise defined herein having the meanings assigned thereto in the Fund's registration statement under the Act and the Securities Act of 1933): 1. The Designated Series will pay fees, in the amounts and on the terms set forth below or as may hereafter be determined by the Board of Directors, that collectively will not exceed, on an annualized basis, .25% of such Designated Series' average daily net assets for purposes permitted by Rule 12b-1. Such fees may include payments made on the following basis: (a) a portion of the fees (such portion, the "Distributor's Fee"), calculated daily and payable monthly, equal to such Designated Series' allocable portion of (i) .02% per annum of the average aggregate daily net assets, calculated on a daily basis ("Aggregate Net Assets"), of all Series of the Fund that have adopted a plan under Rule 12b-1 and the Distribution Agreement referred to below, up to Aggregate Net Assets of $2.5 billion, plus (ii) .01% per annum of Aggregate Net Assets of 2 all such Series in excess of $2.5 billion up to $5 billion, plus (iii) .005% per annum of Aggregate Net Assets of all such Series in excess of $5 billion, shall be paid to the Distri- butor, monthly in arrears, for its distribution-related services to all such Series of the Fund under the Distribution Agreement, dated as of __________________, 1996 (the "Distribution Agreement"), between the Distributor and the Fund, including without limitation (A) acting as agent of the Fund with respect to the sale of Shares in "Creation Unit" size aggregations as set forth in the Fund's registration statement under the Securities Act of 1933, (B) disseminating information supplied by or on behalf of Deutsche Morgan Grenfell/C. J. Lawrence Inc., the Fund's investment adviser (the "Adviser"), with respect to the "Fund Basket" of securities applicable to purchases and redemptions of Creation Unit aggregations of Shares and the "Cash Component" for purchases of Creation Unit aggregations of Shares, all in accordance with the Distribution Agreement, (C) generating and transmitting confirmations of purchases of Creation Unit aggregations of Shares and deli- vering copies of the Fund's Prospectus and Statement of Additional Information in connection with purchases thereof; (D) administering this 12b-1 Plan in accordance with the terms hereof, including making payments and reimbursements to third parties as provided for herein; (E) clearing and filing all advertising, sales, marketing and promotional materials of the Fund with the National Association of Securities Dealers, Inc. (the "NASD"); (F) maintaining access to direct computer commu- nications links with The Depository Trust Company, the Fund's transfer agent and the Fund's custodian; and (G) such other services and obligations as are set forth in the Distribution Agreement. (b) a portion of the fees (such portion, the "Marketing Fee"), calculated daily and payable monthly, equal to such Designated Series' allocable portion of (i) .23% per annum of the Aggregate Net Assets of all Series that have adopted a plan under Rule 12b-1 and the Marketing Agreement referred to below, up to Aggregate Net Assets of $200 million, plus (ii) .0% per annum of the Aggregate Net Assets of all such Series in excess of $200 million up to $1.5 billion, plus (iii) .03% per annum of Aggregate Net Assets of all such Series in excess of $1.5 billion up to $5 billion, plus (iv) .015% per annum of the Aggregate Net Assets of all such Series in excess of $5 billion, shall be paid to the Distributor, monthly in arrears, for its marketing and promotional services to the Fund under the Marketing Agreement, dated as of ____________________, 1996 (the "Marketing Agreement"), between the Distributor and the Fund, including without limitation (A) making available four regional wholesalers and four 800-line registered 3 representatives to carry out the Fund's marketing plan and provide certain stockholder services; (B) developing in conjunction with the Fund and the Adviser a marketing plan for the use and trading of CB Shares(SM) of all Series subject to the Marketing Agreement; (C) facilitating through broker-dealers and other persons communications with and education of beneficial owners of CB Shares(SM) with respect to the Fund and the respective Series; and (D) certain other services and obligations set forth in the Marketing Agreement. (c) The remainder of the fees, not to exceed, on an annualized basis, .25% of the average daily net assets of the Designated Series less any applicable Distributor's Fee and Marketing Fee paid or payable by the Designated Series to the Distributor, shall be used, subject to paragraph 3 hereof, to pay for any activities primarily intended to result in the sale of Shares of the Fund in Creation Unit aggregations or for the provision of stockholder services to holders of CB Shares(SM), including, but not limited to: (i) payments to registered broker-dealers, banks or other persons (each, an "Investor Services Organization" or "ISO"), of investor services fees ("Investor Services Fees"), in each case pursuant to a separate payment agreement, in substantially the form approved by the Board of Directors of the Fund and attached hereto as Annex A (a "Fund Payment Agreement"), as compensation for certain stockholder support, educational and promotional services relating to CB Shares(SM) to be provided by the respective ISO pursuant to an agreement between such ISO and the Distributor, substantially in the form approved by the Board of Directors and attached hereto as Annex B (an "Investor Services Agreement"), with respect to all Series of the Fund subject to such Investor Services Agreement, such Investor Services Fees to be computed daily and payable quarterly in accordance with the applicable Fund Payment Agreement with the respective ISO; (ii) reimbursing the Distributor for payments of supplemental compensation to regional wholesalers employed by the Distributor pursuant to the Marketing Agreement in amounts, and on terms and conditions, set forth in such agreement between the Fund and the Distributor ("Supplemental Compensation Agreement") as may 4 hereafter be approved by the Board of Directors in accordance with Rule 12b-1 as a related agree- ment under this Plan; and (iii) reimbursing the Distributor and, to extent of any amounts remaining available to the Designated Series under this Plan, the Adviser for promotion and marketing activities (including any such activities undertaken by arrangements with third parties pursuant to Investor Services Agreements, Stockholder Services Agreements or otherwise) related to the sale of Shares of the Designated Series in Creation Unit aggregations or secondary market trading in CB Shares(SM) of the Designated Series, including, but not limited to, paying for the printing and distribution of the Fund's prospectus and Statement of Additional Information (other than (a) incremental the Distributor for prospectuses and Statements of Additional Information to be used in connection with offers and sales to prospective investors up to a maximum of $25,000 per annum, for which costs the Distributor's only compensation shall be the Distributor's Fee referred to in paragraph (a) of this section 1, and (b) such printing and distribution costs incurred by the Fund directly in connection with prospectuses and/or Statements of Additional Information purchases of CB Shares(SM)) and, in accordance with the Marketing Agreement, production and distribution of sales and marketing materials relating to the Designated Series, communications to and with the Designated Series stockholders and advertisements (including the creative costs associated therewith). 2. The Adviser may make payments from time to time from its own resources for the purposes described in paragraph 1(c)(iii) hereof. 3. Any fees or expenses for distribution-related, marketing, promotional or stockholder services relating to the Designated Series' or all Series' Shares accrued by the Distributor or any Investor Services Organization in one fiscal year of the Fund may not be paid from fees hereunder received or receivable from the Designated Series with respect to subsequent fiscal years. Amounts paid by the Designated Series to the Distributor or the Adviser under paragraph 1(c)(iii) above in 5 reimbursement of certain expenses of marketing and promotional activities shall not be used to pay for reimbursement of similar expenses with respect to any other Series. The aggregate Distributor's Fees, Marketing Fees, Investor Services Fees and other fees payable by all Series of the Fund shall be allocated among the Series pro rata in accordance with the average daily net assets of each Series, and reimbursements of expenses for such activities and services attributable to the Fund as a whole shall be allocated to each Series according to the method adopted by the Board of Directors. The Distributor's allocation of fees and other expenditures hereunder shall be subject to the annual review of the Board of Directors. Fees and other expenditures hereunder will not be used by the recipient to pay any interest expense, carrying charges or other financing costs. 4. This Plan shall become effective with respect to the Designated Series (the "Effective Date") upon the later of (i) ________ __, 1996 or (ii) the date upon which it has been approved by a "vote of a majority of the outstanding voting securities" (as defined in the Act) of the Designated Series and a majority of the Board of Directors, including a majority of those Directors of the Fund ("Directors") who are not "inter- ested persons" of the Fund (as defined in the Act) and have no direct or indirect financial interest in the operation of the Plan or any agreements related to it (the "Independent Directors"), cast in person at a meeting (or meetings) called for the purpose of voting on this Plan. 5. This Plan and any related agreements shall remain in effect with respect to the Designated Series until February 28, 1997 (such period being within one year from the Effective Date) and may be continued thereafter if this Plan or such related agreement is approved each year with respect to the Designated Series by votes of a majority of both (a) the Directors and (b) the Independent Directors, cast in person at a meeting (or meetings) called for the purpose of voting on this Plan and such related agreements. 6. The Treasurer of the Fund shall provide to the Directors and the Directors shall review, at least quarterly, a quarterly written report, and once a year, an annual written report, complying with the requirements of Rule 12b-1 under the Act, setting forth all amounts expended pursuant to this Plan or any related agreement and the purposes for which such expenditures were made. In such reports, only expenses properly attributable to the sale or servicing of Shares of the Designated Series will be used to justify any expenses reimbursed hereunder and charged to Shares of the Designated Series. 7. This Plan may be terminated with respect to the Designated Series at any time, without the payment of any penalty, by the vote of a majority of the outstanding voting securities (as defined in the Act) of the Designated Series, or by the vote of a majority of the Independent Directors. 6 8. All agreements related to this Plan (including each Fund Payment Agreement and Investor Services Agreement, any Special Compensation Agreement), shall be in writing, and shall provide: (a) that such agreement may be terminated with respect to any Series at any time, without payment of any penalty, by vote of a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities (as defined in the Act) of the Designated Series, on not more than 60 days' written notice to any other party to the agreement, and (b) that such agreement shall terminate automatically in the event of its assignment (as defined in the Act). 9. This Plan may not be amended with respect to the Designated Series to increase materially the amount of fees and expenses provided for in the first sentence of paragraph 1 hereof unless such amendment is approved by a majority of the outstanding voting securities (as defined in the Act) of the Designated Series and no material amendment to this Plan shall be made unless approved in the manner provided for annual continuance in paragraph 5 hereof. 10. While this Plan is in effect, the selection and nomination of Directors who are not "interested persons" (as defined in the Act) of the Fund shall be committed to the discretion of the Directors who are not "interested persons". 11. The Fund shall preserve copies of this Plan and any related agreements and all reports made pursuant to paragraph 6 hereof, for a period of not less than six years from the date of this Plan, or such agreement or such report, as the case may be, the first two years in an easily accessible place. Form of Plan adopted ___________, 1996 EX-99.B15B 19 FORM OF FUND PAYMENT AGR. 1 Draft of February 2, 1996 The CountryBasketsSM Index Fund, Inc. Fund Payment Agreement This Fund Payment Agreement (the "Agreement"), is made as of ___________ __, 1996 between The CountryBasketsSM Index Fund, Inc., a Maryland corporation (the "Fund"), and _________________ (the "Investor Servicer"). WHEREAS, the Fund has entered into a Distribution Agreement with ALPS Mutual Funds Services, Inc. ("ALPS") whereby ALPS agrees to act as its distributor and principal underwriter; and WHEREAS, ALPS and the Investor Servicer have entered into an Investors Services Agreement (the "Services Agreement") whereby the Investor Servicer agrees to provide certain broker/dealer and shareholder support services to its clients and educational and promotional services with respect to the issued and outstanding shares of common stock ("CB SharesSM" or "CountryBasketsSM") of the nine initial series of the Fund indicated on Appendix A thereto (each, an "Initial Series") and each additional series of CB SharesSM subsequently established by the Fund and made subject to the Services Agreement and this Agreement in accordance with the terms thereof and hereof (each, an "Additional Series" and, together with the Initial Series, the "Series") for the benefit of the Fund; and WHEREAS, the Fund wishes to compensate the Investor Servicer directly for such services. 2 NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the Fund and the Investor Servicer agree as follows: Section 1. In consideration of the services and facilities provided by the Investor Servicer to ALPS pursuant to the Services Agreement and subject to the terms and conditions of the 12b-1 Plans (as defined herein), the Fund agrees to compensate the Investor Servicer on behalf of the Initial Series directly for such services and the Investor Servicer agrees to accept as full payment therefor, a fee at the annual rate of 0.05 of 1% of the average aggregate daily net assets over $200 million of all Initial Series, computed daily and payable on a quarterly basis. If the Services Agreement is renewed for any subsequent twelve- month period, as set forth in Section 10 thereof, and subject to the terms and conditions of the 12b-1 Plans, the Fund will pay the Investor Servicer 0.05 of 1% of the average aggregate daily net assets over $200 million of all Initial Series, subject to review by the Board of Directors of the Fund and the termination of this Agreement. In the event that any Additional Series becomes subject to this Agreement, the Fund will pay the Investor Servicer for the services and facilities to be provided by the Investor Servicer with respect to such Additional Series a fee at the rate set forth in the 12b-1 Plan approved by the Board of Directors of the Fund with respect to such Additional Series. 3 For purposes of determining the fees payable under this Agreement, the average aggregate daily net assets of the Series will be computed in the manner specified in the Fund's Registration Statement (as the same is in effect from time to time) in connection with the computation of the net asset value of CB SharesSM for purposes of purchases and redemptions. All fees payable by the Fund under this Agreement with respect to the CB SharesSM of a particular Series shall be borne solely by the holders of such CB SharesSM and no other Series of CB SharesSM or shareholders shall be responsible for such fees. However, payments and reimbursed expenses under the 12b-1 Plans attributable to the Fund as a whole shall be allocated to each Series according to the method adopted by the Fund's Board of Directors. Section 2. This Agreement is a related agreement as contemplated by Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") with respect to the Rule 12b-1 plan (each a "12b-1 Plan" and together the "12b-1 Plans") of each Initial Series of the Fund and, subject to the approval of the Board of Directors of the Fund as contemplated in Section 5, each Additional Series. The Investor Servicer and the Fund expect that the Investor Servicer's services and educational and promotional activities in connection with CB SharesSM pursuant to the Services Agreement will tend to increase investor interest in and the use and trading of 4 CB SharesSM on the secondary market and thus further sales of shares by the Fund. Section 3. The Investor Servicer represents, warrants and agrees that it understands that this Agreement is a Rule 12b-1 related agreement under the 1940 Act, subject to the provisions of such Rule, as well as any other applicable rules or regulations of the Securities and Exchange Commission, and agrees to conform to the reasonable applicable compliance standards adopted by the Fund's distributor for the sale of CB SharesSM, as in effect from time to time, provided that the Investor Servicer shall be given the opportunity to review and discuss with counsel to the distributor prior to their adoption any such compliance standards proposed after the date hereof that will be applicable to the activities to be performed by the Investor Servicer pursuant to the Services Agreement. Section 4. (a) The Fund agrees to be liable for and to hold the Investor Servicer, its officers, directors and employees ("Indemnitees") harmless from and to indemnify each of them for any losses and costs arising out of the Indemnitees' performance of the Services Agreement relating to the purchase and sale of outstanding and issued CB SharesSM trading in the secondary market as a result of (i) any untrue statement of a material fact or omission of a material fact necessary in order to make the statements made, in light of the circumstances under which they were 5 made, not misleading which are contained in any marketing or other written material relating to the Fund provided to the Investor Servicer and authorized for the Investor Servicer's use by ALPS and the Fund in connection with the purchase and sale of outstanding and issued CB Shares; (ii) any material misstatement in or omission of a material fact from the Fund's current prospectus or statement of additional information necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or (iii) any failure of the Fund, any Series or the CB SharesSM to be registered and qualified for sale under any applicable federal law and regulation or the laws of and regulations of any state, U.S. territory or the District of Columbia when the Fund has represented to the Investor Servicer that the Fund, any Series or the CB SharesSM are so registered or qualified, provided that any payments under this subparagraph (iii) shall be limited to the amount of any losses or costs for which the Fund is indemnified by State Street Bank and Trust Company ("State Street"), the Fund's Administrator, pursuant to the Administration Agreement between the Fund and State Street; provided, however, that nothing in this Section 4 shall protect the Indemnitees against any losses or costs to which the Indemnitees would otherwise be liable to a Fund or its security holders (A) by reason of willful malfeasance, bad faith or gross negligence in the performance of its duties 6 under the Services Agreement, (B) by reason of the Indemnitee's reckless disregard of its obligations and duties under the Services Agreement or (C) where such liability arises out of or is based upon any untrue statement or omission or alleged untrue statement or omission in the Fund's prospectus or statement of additional information that was made in reliance upon and in conformity with written information furnished by the Investor Servicer to the Fund or ALPS. The Fund's obligation to indemnify any Indemnitee is expressly conditioned upon the Indemnitee's notification of the Fund of the commencement of any action against the Indemnitee, which notification shall be given by letter or by facsimile transmission addressed to the Fund at its principal office in New York, New York, and sent to the Fund by the person against whom such action is brought within ten days after the summons or other first legal process shall have been served. The Indemnitee's failure to so notify the Fund shall not relieve the Fund of any liability which it may have to the Indemnitee by reason of any such untrue statement or omission or alleged untrue statement or omission independent of this indemnification. The Fund will be entitled to assume the defense of any suit brought to enforce any such claim, demand or liability and 7 to retain legal counsel of good standing chosen by the Fund and approved by the Indemnitee (such approval not to be unreasonably withheld). If the Fund elects to assume the defense of any such suit and retain counsel approved by the Indemnitee, the defendant or defendants in such suit shall bear the fees and expenses of any additional counsel retained by any of them. In the event the Fund does not elect to assume the defense of any such suit and retain counsel of good standing approved by the Indemnitee or the Indemnitee does not approve of the counsel chosen by the Fund (such approval not to be unreasonably withheld), the defendant or defendants in such suit shall bear the fees and expenses of any counsel retained by any of them and the Fund shall reimburse any Indemnitee named as defendant in such suit for the reasonable fees and expenses of any such counsel retained by them. The indemnification agreement contained in this Section 4(a) shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Indemnitees. This indemnification will inure exclusively to the benefit of the Indemnitees and their successors, assigns and estate. (b) The Investor Servicer agrees to be liable for, to hold the Fund, its officers, directors and employees (for purposes of this Section 4(b), the "Fund Affiliates") harmless from, and to indemnify them from any losses and costs arising from (i) any statements or representations 8 that the Investor Servicer or its employees make concerning the Fund or any Series that are inconsistent with the Fund's current prospectus and statement of additional information or any marketing or other written material provided to the Investor Servicer and authorized for the Investor Servicer's use by ALPS and the Fund relating to the Fund or any Series; or (ii) any sale of CB SharesSM in any state, any U.S. territory or the District of Columbia where the Fund, any Series or its CB SharesSM were not registered or qualified for sale, when the Fund has not indicated to the Investor Servicer that the Fund, such Series or its CB SharesSM were so registered or qualified. The Investor Servicer's obligation to indemnify the Fund Affiliates is expressly conditioned upon the Investor Servicer being notified of the commencement of any action brought against the Fund Affiliates, which notification shall be given by letter or facsimile transmission addressed to the Investor Servicer at its principal offices in New York, New York and sent to the Investor Servicer by the person against whom such action is brought within ten days after the summons or other first legal process shall have been served. The Fund Affiliates' failure to notify the Investor Servicer of the commencement of any such action shall not relieve the Investor Servicer from any liability which it may have to the Fund Affiliates by reason of any such statements or representations or sale of CB SharesSM on the part of the Investor Servicer 9 independent of this indemnification. The Investor Servicer shall have a right to control the defense of such action, with counsel of its own choosing, satisfactory to the Fund Affiliates, if such action is based solely upon such untrue statement or omission or alleged untrue statement or omission on its part, and in any other event the Investor Servicer and the Fund Affiliates shall each have the right to participate in the defense or preparation of the defense of such action at their own expense. (c) The provisions of this Section 4 shall survive the termination of this Agreement. Section 1. Unless sooner terminated, this Agreement will continue for one year following the date of its adoption as provided in Section 8 hereof, and thereafter will continue automatically for successive annual periods provided such continuance is specifically approved at least annually by the Fund in the manner described in Section 8 hereof. This Agreement is terminable, without penalty, at any time (a) by the Fund with respect to any Series of CB SharesSM (which termination may be by a vote of a majority of the Disinterested Directors as defined in Section 8 hereof or by vote of the holders of a majority of the voting securities (as such term is defined in the 1940 Act) of such Series) or by the Investor Servicer upon 60 days' notice in writing to the other party hereto or (b) upon the termination of the Services Agreement between the Investor 10 Servicer and ALPS. This Agreement will also terminate automatically in the event of its assignment (within the meaning of the 1940 Act). This Agreement may be amended in writing by the parties hereto. In the event that the Board of Directors of the Fund establishes any series of CB SharesSM listed and traded on the New York Stock Exchange or any other national securities exchange (as defined under the Securities Exchange Act of 1934) in addition to the Series then subject to this Agreement, adopts a 12b-1 Plan with respect to such additional series and approves the Services Agreement and this Agreement as "related agreements" with respect to such additional series in accordance with Rule 12b-1, such additional series shall be made subject to this Agreement and shall become an "Additional Series" hereunder effective immediately upon such adoption and approval. Section 2. All notices and other communications to either party will be duly given if mailed, telegraphed, telexed or transmitted by similar telecommunications device as follows: To the Investor Servicer: _____________________ _____________________ Attention: To the Fund: c/o Deutsche Morgan Grenfell/ C. J. Lawrence Inc. 1290 Avenue of the Americas New York, New York 10019 Attention: Joseph A. La Corte 11 Section 3. This Agreement will be construed in accordance with the laws of the State of New York. Section 4. This Agreement, and each Rule 12b-1 Plan, is subject to approval by vote of (i) the Fund's Board of Directors and (ii) of a majority of those Directors who are not "interested persons" (as defined in the 1940 Act) of the Fund and have no direct or indirect financial interest in the operation of the 12b-1 Plans adopted by the Fund regarding the provision of support services to the beneficial owners of CB SharesSM of the respective Series or in any agreement related thereto ("Disinterested Directors") cast in person at a meeting called for the purpose of voting on such approval. 12 IN WITNESS WHEREOF the parties have caused the Agreement to be executed as of the day and year first written above. THE COUNTRYBASKETSSM INDEX FUND, INC. By: _________________________ Name: Title: [NAME OF INVESTOR SERVICER] By: _________________________ Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----