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                                                                   EXHIBIT 10.18

                      INVESTORS FINANCIAL SERVICES CORP. 

                       1997 EMPLOYEE STOCK PURCHASE PLAN


1.   Purpose.
     ------- 

     This 1997 Employee Stock Purchase Plan (the "Plan") is intended to
encourage stock ownership by all eligible employees of Investors Financial
Services Corp., a Delaware corporation (the "Company"), and its participating
subsidiaries (as defined in Article 17) so that they may share in the growth of
the Company by acquiring or increasing their proprietary interest in the
Company. The Plan is designed to encourage eligible employees to remain in the
employ of the Company and its participating subsidiaries. It is intended that
options issued pursuant to this Plan will constitute options issued pursuant to
an "employee stock purchase plan" within the meaning of Section 423(b) of the
Internal Revenue Code of 1986, as amended (the "Code").

2.   Administration of the Plan.
     -------------------------- 

     The Plan may be administered by a committee appointed by the Board of
Directors of the Company (the "Committee"). The Committee shall consist of not
less than two members of the Company's Board of Directors. The Board of
Directors may from time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, however caused, shall be filled by the
Board of Directors. The Committee may select one of its members as Chairman, and
shall hold meetings at such times and places as it may determine. Acts by a
majority of the Committee, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee.

     The interpretation and construction by the Committee of any provisions of
the Plan or of any option granted under it shall be final, unless otherwise
determined by the Board of Directors. The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best,
provided that any such rules and regulations shall be applied on a uniform basis
to all employees under the Plan. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.

     In the event the Board of Directors fails to appoint or refrains from
appointing a Committee, the Board of Directors shall have all power and
authority to administer the Plan. In such event, the word "Committee" wherever
used herein shall be deemed to mean the Board of Directors.

3.   Eligible Employees.
     ------------------ 

     All employees who have completed six months of employment with the Company
or any of its participating subsidiaries and whose customary employment is more
than twenty (20) hours per week and for more than five (5) months in any
calendar year shall be eligible to receive options under this Plan to purchase
the Company's Common Stock, and all eligible employees shall have the same
rights and privileges hereunder. Persons who are eligible employees employed on
the first business day of any Payment Period (as defined in Article 5) shall
receive their options as of such day. Persons who become eligible employees are
employed after any date on which options are granted under this Plan shall be
granted options on the first day of the next succeeding Payment Period on which
options are granted to eligible employees. In no event may an employee be
granted an option if such employee, immediately after the option is granted,
owns stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company or of its parent
corporation or subsidiary corporations, as the terms "parent corporation" and
"subsidiary corporation" are defined in Section 424(e) and (f) of the Code. For
purposes of determining stock ownership under this paragraph, the rules of
Section 424(d) of the Code shall apply, and stock which the employee may
purchase under outstanding options shall be treated as stock owned by the
employee.

4.   Stock Subject to the Plan.
     ------------------------- 
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                                      -2-
 
     The stock subject to the options under the Plan shall be shares of the
Company's authorized but unissued Common Stock, par value $.01 per share, or
shares of such Common Stock reacquired by the Company, including shares
purchased in the open market. The aggregate number of shares which may be issued
pursuant to the Plan is 140,000, subject to adjustment as provided in Article
12. In the event any option granted under the Plan shall expire or terminate for
any reason without having been exercised in full or shall cease for any reason
to be exercisable in whole or in part, the unpurchased shares subject thereto
shall again be available under the Plan.

5.   Payment Period and Stock Options.
     -------------------------------- 

     The six-month periods, January 1 through June 30, and July 1 through
December 31, are Payment Periods during which payroll deductions will be
accumulated under the Plan. The first Payment Period under the Plan will
commence on July 1, 1997, and expire on December 31, 1997.

     Twice each year, on the first business day of each Payment Period, the
Company will grant to each eligible employee who is then a participant in the
Plan an option to purchase on the last day of such Payment Period, at the Option
Price hereinafter provided for, a maximum of 1,000 shares, on condition that
such employee remains eligible to participate in the Plan throughout such
Payment Period. The participant shall be entitled to exercise such option so
granted only to the extent of the participant's accumulated payroll deductions
on the last day of such Payment Period. In the event that the participant's
accumulated payroll deductions on the last day of the Payment Period would
enable the participant to purchase more than 1,000 shares except for the 1,000-
share limitation, the excess of the amount of the accumulated payroll deductions
over the aggregate purchase price of the 1,000 shares shall be promptly refunded
to the participant by the Company, without interest. The Option Price for each
Payment Period shall be the lesser of (i) 90 of the average market price of the
Company's Common Stock on the first business day of the Payment Period or (ii)
90% of the average market price of the Company's Common Stock on the last
business day of the Payment Period, in either event rounded up to avoid
fractions of a dollar other than 1/4, 1/2 and 3/4. The foregoing limitation on
the number of shares which may be granted in any Payment Period and the Option
Price per share shall be subject to adjustment as provided in Article 12.

     For purposes of this Plan, the term "average market price" on any date
means (i) the average (on that date) of the high and low prices of the Company's
Common Stock on the principal national securities exchange on which the Common
Stock is traded, if the Common Stock is then traded on a national securities
exchange; or (ii) the last reported sale price (on that date) of the Common
Stock on the Nasdaq National Market List, if the Common Stock is not then traded
on a national securities exchange; or (iii) the average of the closing bid and
asked prices last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the Nasdaq
National Market List. If the Company's Common Stock is not publicly traded at
the time an option is granted under this Plan, "average market price" shall mean
the fair market value of the Common Stock as determined by the Committee after
taking into consideration all factors which it deems appropriate, including,
without limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.

     For purposes of this Plan, the term "business day" means a day on which
there is trading on the Nasdaq National Market System or on the aforementioned
national securities exchange, whichever is applicable pursuant to the preceding
paragraph.

     No employee shall be granted an option which permits the employee's right
to purchase Common Stock under this Plan, and under all other Section 423(b)
employee stock purchase plans of the Company or any parent or subsidiary
corporations, to accrue at a rate which exceeds $25,000 of fair market value of
such stock (determined at the time such option is granted) for each calendar
year in which such option is outstanding at any time. The purpose of the
limitation in the preceding sentence is to comply with Section 423(b)(8) of the
Code. If an eligible employee's accumulated payroll deductions on the last day
of the Payment Period would otherwise enable such employee to purchase Common
Stock in excess of the Section 423(b)(8) limitation described in this paragraph,
the excess of the amount of the accumulated payroll deductions over the
aggregate purchase price of the shares actually purchased shall be promptly
refunded to the employee by the Company, without interest.
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6.   Exercise of Option.
     ------------------ 

     Each eligible employee who continues to be a participant in the Plan on the
last day of a Payment Period shall be deemed to have exercised his/her option on
such date and shall be deemed to have purchased from the Company such number of
full shares of Common Stock reserved for the purpose of the Plan as his/her
accumulated payroll deductions on such date will pay for at the Option Price,
subject to the 1,000-share limit of the option and the Section 423(b)(8)
limitation described in Article 5. If a person is not an eligible employee on
the last day of a Payment Period, he/she shall not be entitled to exercise
his/her option. Only full shares of Common Stock may be purchased under the
Plan. Unused payroll deductions remaining in an employee's account at the end of
a Payment Period by reason of the inability to purchase a fractional share will
be carried forward to the succeeding Payment Period.

7.   Authorization for Entering the Plan.
     ----------------------------------- 

     An employee may enter the Plan by filling out, signing and delivering to
the Company an authorization:

          A.   Stating the percentage to be deducted regularly from the
     employee's pay;

          B.   Authorizing the purchase of stock for the employee in each
     Payment Period in accordance with the terms of the Plan; and

          C.   Specifying the exact name in which stock purchased for the
     employee is to be issued as provided under Article 11 hereof.

          Such authorization must be received by the Company at least ten (10)
days before the beginning date of the next succeeding Payment Period.

          Unless an employee files a new authorization or withdraws from the
Plan, the deductions and purchases under the authorization the employee has on
file under the Plan will continue from one Payment Period to succeeding Payment
Periods as long as the Plan remains in effect.

     The Company will accumulate and hold for the employee's account the amounts
deducted from his/her pay. No interest will be paid on these amounts.

8.   Maximum Amount of Payroll Deductions.
     ------------------------------------ 

     An employee may authorize payroll deductions in an amount (expressed as a
percentage) not less than one percent (1%) but not more than fifteen percent
(15) of the employee's base salary compensation actually paid to the employee in
the Payment Period, excluding without limitation any benefits, bonuses or
commissions.

9.   Change in Payroll Deductions.
     ---------------------------- 

     Deductions may not be increased or decreased during a Payment Period.
However, an employee may withdraw in full from the Plan.

10.  Withdrawal from the Plan.
     ------------------------ 

     An employee may withdraw from the Plan in whole but not in part, at any
time prior to the last business day of each Payment Period by delivering a
withdrawal notice to the Company, in which event the Company will promptly
refund the entire balance of the employee's deductions not previously used to
purchase stock under the Plan.

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                                      -4-
 
     To re-enter the Plan, an employee who has previously withdrawn must file a
new authorization at least ten (10) days before the beginning date of the next
Payment Period in which he or she wishes to participate. The employee's re-entry
into the Plan becomes effective at the beginning of such Payment Period,
provided that he or she is an eligible employee on the first business day of the
Payment Period. 

11.  Issuance of Stock.
     ----------------- 

     Certificates for stock issued to participants will be delivered as soon as
practicable after each Payment Period by the Company's transfer agent.

     Stock purchased under the Plan will be issued only in the name of the
employee, or if his/her authorization so specifies, in the name of the employee
and another person of legal age as joint tenants with rights of survivorship.

12.  Adjustments.
     ----------- 

     Upon the happening of any of the following described events, an optionee's
rights under options granted under the Plan shall be adjusted as hereinafter
provided:

          A.   In the event shares of Common Stock of the Company shall be
     subdivided or combined into a greater or smaller number of shares or if,
     upon a reorganization, split-up, liquidation, recapitalization or the like
     of the Company, the shares of the Company's Common Stock shall be exchanged
     for other securities of the Company, each optionee shall be entitled,
     subject to the conditions herein stated, to purchase such number of shares
     of Common Stock or amount of other securities of the Company as were
     exchangeable for the number of shares of Common Stock of the Company which
     such optionee would have been entitled to purchase except for such action,
     and appropriate adjustments shall be made in the purchase price per share
     to reflect such subdivision, combination or exchange; and

          B.   In the event the Company shall issue any of its shares as a stock
     dividend upon or with respect to the shares of stock of the class which
     shall at the time be subject to option hereunder, each optionee upon
     exercising such an option shall be entitled to receive (for the purchase
     price paid upon such exercise) the shares as to which he/she is exercising
     his/her option and, in addition thereto (at no additional cost), such
     number of shares of the class or classes in which such stock dividend or
     dividends were declared or paid, and such amount of cash in lieu of
     fractional shares, as is equal to the number of shares thereof and the
     amount of cash in lieu of fractional shares, respectively, which he/she
     would have received if he/she had been the holder of the shares as to which
     he/she is exercising his/her option at all times between the date of the
     granting of such option and the date of its exercise.

     Upon the happening of any of the foregoing events, the class and aggregate
number of shares set forth in Article 4 hereof which are subject to options
which have been or may be granted under the Plan and the limitations set forth
in the second paragraph of Article 5 shall also be appropriately adjusted to
reflect the events specified in paragraphs A and B above. Notwithstanding the
foregoing, any adjustments made pursuant to paragraphs A or B shall be made only
to the extent that the Committee, based on advice of counsel for the Company,
determines whether such adjustments would constitute a "modification" (as that
terms is defined in Section 424 of the Code) or would constitute a change
requiring stockholder approval (pursuant to Section 423(b)(2) of the Code). If
the Committee determines that such adjustments would constitute a modification
or would require stockholder approval, it may refrain from making such
adjustments.

     If the Company is to be consolidated with or acquired by another entity in
a merger, a sale of all or substantially all of the Company's assets or
otherwise (an "Acquisition"), the Committee or the board of directors of any
entity assuming the obligations of the Company hereunder (the "Successor Board")
shall, with respect to options then outstanding under this Plan, either (i) make
appropriate provision for the continuation of such options by arranging for the
substitution on an equitable basis for the shares then subject to such options
either (a) the consideration payable with respect to the outstanding shares of
the Company's Common Stock in connection with the Acquisition, (b) shares of
stock of the successor corporation, or a parent or subsidiary of such
corporation, or
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                                      -5-
 
(c) such other securities as the Successor Board deems appropriate, the fair
market value of which shall not materially exceed the fair market value of the
shares of Common Stock subject to such options immediately preceding the
Acquisition; or (ii) terminate all outstanding options in exchange for a cash
payment equal to the excess of (a) the fair market value on the date of the
Acquisition, of the number of shares of Common Stock that the participant's
accumulated payroll deductions as of the date of the Acquisition could purchase,
at an option price determined with reference only to the first business day of
the applicable Payment Period and subject to the 1,000-share, Code Section
423(b)(8) and fractional-share limitations on the amount of stock a participant
would be entitled to purchase, over (b) the result of multiplying such number of
shares by such option price.

     The Committee or Successor Board of Directors shall determine the
adjustments to be made under this Article 12, and its determination shall be
conclusive.

13.  No Transfer or Assignment of Employee's Rights.
     ---------------------------------------------- 

     An employee's rights under the Plan are the employee's alone and may not be
transferred or assigned to, or availed of by, any other person other than by
will or the laws of descent and distribution. Any option granted under the Plan
to an employee may be exercised, during the employee's lifetime, only by the
employee.

14.  Termination of Employee's Rights.   
     --------------------------------         

     An employee's rights under the Plan will terminate when he/she ceases to be
an employee because of retirement, voluntary or involuntary termination,
resignation, lay-off, discharge, death, change of status or for any other reason
and the Company shall promptly refund, without interest, the entire balance of
his or her payroll deduction account under the Plan. Notwithstanding the
foregoing, eligible employment shall be treated as continuing intact while a
participant is on military leave, sick leave or other bona fide leave of
absence, for up to 90 days, or for so long as the employee's right to 
re-employment is guaranteed either by statute or by contract, if longer than 90
days. A withdrawal notice will be considered as having been received from the
employee on the day his/her employment ceases, and all payroll deductions not
used to purchase stock will be refunded.

     If an employee's payroll deductions are interrupted by any legal process, a
withdrawal notice will be considered as having been received from the employee
on the day the interruption occurs.

15.  Termination and Amendments to Plan.
     ---------------------------------- 

     Unless terminated sooner as provided below, the Plan shall terminate on
January 1, 2007. The Plan may be terminated at any time by the Company's Board
of Directors but such termination shall not affect options then outstanding
under the Plan. It will terminate in any case when all or substantially all of
the unissued shares of stock reserved for the purposes of the Plan have been
purchased. If at any time shares of stock reserved for the purpose of the Plan
remain available for purchase but not in sufficient number to satisfy all then
unfilled purchase requirements, the available shares shall be apportioned among
participants in proportion to their options and the Plan shall terminate. Upon
such termination or any other termination of the Plan, all payroll deductions
not used to purchase stock will be refunded, without interest.

     The Committee or the Board of Directors may from time to time adopt
amendments to the Plan provided that, without the approval of the stockholders
of the Company, no amendment may (i) increase the number of shares that may be
issued under the Plan; (ii) change the class of employees eligible to receive
options under the Plan, if such action would be treated as the adoption of a new
plan for purposes of Section 423(b) of the Code; or (iii) cause Rule or (iii)
cause Rule 16b-3 under the Securities Exchange Act of 1934 to become
inapplicable to the Plan.
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16.  Limits on Sale of Stock Purchased Under the Plan.
     ------------------------------------------------ 

     The Plan is intended to provide shares of Common Stock for investment and
not for resale. The Company does not, however, intend to restrict or influence
any employee in the conduct of his/her own affairs. An employee may, therefore,
sell stock purchased under the Plan at any time the employee chooses, subject to
compliance with any applicable federal or state securities laws and subject to
any restrictions imposed under Article 21 to ensure that tax withholding
obligations are satisfied. THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET
FLUCTUATIONS IN THE PRICE OF THE STOCK.

17.  Participating Subsidiaries.
     -------------------------- 

     The term "participating subsidiary" shall mean any subsidiary of the
Company, as that term is defined in Section 424(f) of the Code, which is
designated from time to time by the Board of Directors to participate in the
Plan. The Board of Directors shall have the power to make such designation
before or after the Plan is approved by the stockholders.

18.  Optionees Not Stockholders.
     -------------------------- 

     Neither the granting of an option to an employee nor the deductions from
his/her pay shall constitute such employee a stockholder of the shares covered
by an option until such shares have been actually purchased by the employee.

19.  Application of Funds.
     -------------------- 

     The proceeds received by the Company from the sale of Common Stock pursuant
to options granted under the Plan will be used for general corporate purposes.

20.  Notice to Company of Disqualifying Disposition.    
     ----------------------------------------------                   
       
     By electing to participate in the Plan, each employee agrees to notify the
Company in writing immediately after the employee transfers Common Stock
acquired under the Plan, if such transfer occurs within two years after the
first business day of the Payment Period in which such Common Stock was
acquired. Each employee further agrees to provide any information about such a
transfer as may be requested by the Company or any subsidiary corporation in
order to assist it in complying with the tax laws. Such dispositions generally
are treated as "disqualifying dispositions" under Sections 421 and 424 of the
Code, which have certain tax consequences to participants and to the Company and
its participating subsidiaries.
       
21.  Withholding of Additional Income Taxes.    
     --------------------------------------                   
       
     By electing to participate in the Plan, each employee acknowledges that the
Company and its participating subsidiaries are required to withhold taxes with
respect to the amounts deducted from the employee's compensation and accumulated
for the benefit of the employee under the Plan, and each employee agrees that
the Company and its participating subsidiaries may deduct additional amounts
from the employee's compensation, when amounts are added to the employee's
account, used to purchase Common Stock or refunded, in order to satisfy such
withholding obligations. Each employee further acknowledges that when Common
Stock is purchased under the Plan the Company and its participating subsidiaries
may be required to withhold taxes with respect to all or a portion of the
difference between the fair market value of the Common Stock purchased and its
purchase price, and each employee agrees that such taxes may be withheld from
compensation otherwise payable to such employee. It is intended that tax
withholding will be accomplished in such a manner that the full amount of
payroll deductions elected by the participant under Article 7 will be used to
purchase Common Stock. However, if amounts sufficient to satisfy applicable tax
withholding obligations have not been withheld from compensation otherwise
payable to any employee, then, notwithstanding any other provision of the Plan,
the Company may withhold such taxes from the employee's accumulated payroll
deductions and apply the net amount to the purchase of Common Stock, unless 
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                                      -7-
 
the employee pays to the Company, prior to the exercise date, an amount
sufficient to satisfy such withholding obligations. Each employee further
acknowledges that the Company and its participating subsidiaries may be required
to withhold taxes in connection with the disposition of stock acquired under the
Plan and agrees that the Company or any participating subsidiary may take
whatever action it considers appropriate to satisfy such withholding
requirements, including deducting from compensation otherwise payable to such
employee an amount sufficient to satisfy such withholding requirements or
conditioning any disposition of Common Stock by the employee upon the payment to
the Company or such subsidiary of an amount sufficient to satisfy such
withholding requirements.
       
22.  Governmental Regulations.
     ------------------------ 

     The Company's obligation to sell and deliver shares of the Company's Common
Stock under this Plan is subject to the approval of any governmental authority
required in connection with the authorization, issuance or sale of such shares,
including the Securities and Exchange Commission, the Board of Governors of the
Federal Reserve System, and the Internal Revenue Service. Government regulations
may impose reporting or other obligations on the Company with respect to the
Plan. For example, the Company may be required to identify shares of Common
Stock issued under the Plan on its stock ownership records and send tax
information statements to employees and former employees who transfer title to
such shares.

23.  Governing Law.
     ------------- 

     The validity and construction of the Plan shall be governed by the laws of
the Commonwealth of Massachusetts, without giving effect to the principles of
conflicts of law thereof

24.  Approval of Board of Directors and Stockholders of the Company.
     -------------------------------------------------------------- 

     The Plan was adopted by the Board of Directors on January 14, 1997.