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Draft - 1/31/96
ALPS Mutual Funds Services, Inc.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
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
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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.
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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.
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(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 Xxxxx 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.,
Xxxxxxx Xxxxx & Co., Xxxxxxx, 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
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arrangements to you will be subject to your execution of a securities
borrowing agreement substantially in the form customarily required by
Deutsche Xxxxxx Xxxxxxxx/ X. X. Xxxxxxxx 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.
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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., 000 00xx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx 00000.
Very truly yours,
ALPS MUTUAL FUNDS SERVICES, INC.
Date: , 1996
By:______________________________
Authorized Officer
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Accepted and Agreed to:
_________________________________
[Name of Participating Financial Institution]
Date: , 1996
By: _____________________________
Authorized Officer
Address: _______________________
_______________________
_______________________
Facsimile No.____________________
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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
