<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
[X] Definitive Proxy Statement BY RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
QUANTITATIVE GROUP
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
QUANTITATIVE GROUP
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
QUANTITATIVE GROUP OF FUNDS
September 25, 1996
Dear Fellow Shareholder:
I am writing to request that you return the enclosed proxy card casting your
vote at a special meeting of shareholders on October 28, 1996 to approve new
advisory contracts for four of our six funds. Although the enclosed proxy
statement covers changes in subadvisors ("Advisors") in four different funds,
you will be asked only to vote the shares for funds in which you are an
investor. YOUR PROMPT RESPONSE IS VERY IMPORTANT, SINCE WE MUST HAVE A QUORUM
OF OVER 50% OF THE SHARES IN EACH FUND TO APPROVE THE PROPOSALS.
The need for a special meeting is dictated by the business reorganization of
the Advisor to our Quantitative International Equity Fund and Quantitative
Foreign Frontier Fund, and the replacement of the Advisor to our Quantitative
Numeric Fund and Quantitative Numeric II (MidCap) Fund. Each of these changes,
which I have summarized below, requires a new advisory contract between the
Fund's manager, Quantitative Advisors, Inc., and the Advisor.
. On July 1, 1996, Columbia Partners, L.L.C., Investment Management
("Columbia Partners") became the Advisor of the Quantitative Numeric Fund
and the Quantitative Numeric II (MidCap) Fund. Columbia Partners and
Robert A. von Pentz were selected as subadvisor to the funds because of
the similarity of their quantitative investment models to those that we
have employed in the past to manage the fund, and the strong reputations
and prior performance records of the individuals associated with the
firm. I believe that Bob will be an excellent replacement for the former
subadvisor to these funds.
. Beginning approximately October 1, 1996, Boston International Advisors,
Inc. ("BIA"), the Advisor of the Quantitative International Equity Fund
and the Quantitative Foreign Frontier Fund (collectively, the "Foreign
Funds") will be acquired by Independence Investment Associates, Inc., an
indirect subsidiary of John Hancock Mutual Life Insurance Company
specializing in investment management. At that time BIA will change its
name to Independence International Associates, Inc. BIA will continue to
operate as a separate company, and the same personnel and investment
models will continue to be used to manage the Quantitative International
Equity Fund and the Quantitative Foreign Frontier Fund.
THE BOARD OF TRUSTEES OF THE FUNDS, INCLUDING ALL OF THE FUNDS' INDEPENDENT
TRUSTEES, HAS CONSIDERED THE NEW CONTRACTS AND RECOMMENDS THAT YOU VOTE IN
FAVOR OF THE PROPOSALS. YOU ARE URGED TO COMPLETE, SIGN AND RETURN YOUR PROXY
CARD AS SOON AS POSSIBLE. BY RETURNING THE PROXY CARD PROMPTLY, YOU WILL HELP
AVOID THE EXPENSE OF SUBSEQUENT MAILINGS TO ACHIEVE A QUORUM.
If you are planning to attend the meeting in person, or have any questions
about the information contained in the proxy, please call our shareholder
service department at 1-800-331-1244 or 617-259-1144.
Sincerely,
EDWARD L. PITTMAN
President
<PAGE>
QUANTITATIVE GROUP OF FUNDS
55 OLD BEDFORD ROAD
LINCOLN, MA 01773
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
OF THE QUANTITATIVE NUMERIC FUND, QUANTITATIVE NUMERIC II FUND,
QUANTITATIVE INTERNATIONAL EQUITY FUND AND
QUANTITATIVE FOREIGN FRONTIER FUND
OCTOBER 28, 1996
To the Shareholders of the Quantitative Numeric Fund, the Quantitative
Numeric II Fund, the Quantitative International Equity Fund, and the
Quantitative Foreign Frontier Fund of the Quantitative Group of Funds.
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of the forgoing funds (collectively, the "Series") of the
Quantitative Group of Funds (the "Trust"), a Massachusetts business trust that
is registered with the Securities and Exchange Commission as an open-end
management investment company, will be held at 7:00 p.m., Eastern Standard
Time, on October 28, 1996 at 55 Old Bedford Road, Lincoln, Massachusetts 01773
for the following purposes:
I, II. SHAREHOLDERS OF THE QUANTITATIVE NUMERIC AND QUANTITATIVE NUMERIC II
FUNDS ONLY. To consider and vote on approval of advisory contracts
between Quantitative Advisors, Inc. (the "Manager") and Columbia
Partners, L.L.C., Investment Management ("Columbia Partners") under
which Columbia Partners would serve as advisor to the Quantitative
Numeric and Quantitative Numeric II Funds;
III, IV. SHAREHOLDERS OF THE QUANTITATIVE INTERNATIONAL EQUITY FUND AND
QUANTITATIVE FOREIGN FRONTIER FUND (COLLECTIVELY THE "FOREIGN FUNDS")
ONLY. To consider and vote on approval of advisory contracts between
the Manager and Independence International Associates, Inc.
("Independence"), under which Independence would continue to serve as
advisor to the Foreign Funds;
V. SHAREHOLDERS OF ALL SERIES. To transact such other business as may
properly come before the Meeting or any adjournment thereof.
The Board of Trustees unanimously recommends that you vote in favor of items
I, II, III and IV.
The record date for determining Shareholders entitled to notice of and to
vote at the Meeting, and any adjournment thereof, is the close of business on
September 13, 1996.
You are cordially invited to attend the Meeting. Shareholders who do not
expect to attend the Meeting are requested to complete, sign, and return the
enclosed proxy promptly. The enclosed proxy is being solicited by the Board of
Trustees of the Trust.
PLEASE RESPOND--YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THIS
MEETING, PLEASE FILL IN, SIGN, AND MAIL THE PROXY IN THE ENVELOPE PROVIDED. IT
IS IMPORTANT THAT YOU RETURN YOUR PROXY AS SOON AS POSSIBLE.
By Order of the Board of Trustees
By: Mark A. Katzoff, Esq.
Clerk
Lincoln, Massachusetts
September 25, 1996
<PAGE>
QUANTITATIVE GROUP OF FUNDS
55 OLD BEDFORD ROAD
LINCOLN, MA 01773
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
OF THE QUANTITATIVE NUMERIC FUND, QUANTITATIVE NUMERIC II FUND,
QUANTITATIVE INTERNATIONAL EQUITY FUND AND
QUANTITATIVE FOREIGN FRONTIER FUND
OCTOBER 28, 1996
SOLICITATION OF PROXIES
This statement is furnished in connection with the solicitation of proxies
by the Board of Trustees of the Quantitative Group of Funds (the "Trust"), a
Massachusetts business trust, for use at a special meeting of shareholders
(the "Meeting") of the Quantitative Numeric Fund, the Quantitative Numeric II
Fund, the Quantitative International Equity Fund, and the Quantitative Foreign
Frontier Fund (collectively, the "Series") of the Trust to be held at 7:00
p.m., Eastern Standard Time, on October 28, 1996 at 55 Old Bedford Road,
Lincoln, Massachusetts 01773, and at any adjournment thereof, The date of the
first mailing of this proxy statement was on or about September 27, 1996.
The Trust's annual report and most recent semi-annual report, which contain
further information about the Series' performance, are available to
shareholders without charge upon request by either writing to the Quantitative
Group of Funds, 55 Old Bedford Road, Lincoln, Massachusetts 01773 or by
calling 1-800-331-1244.
The following table summarizes all the proposals for which votes are
solicited and indicates which Series' shareholders are solicited with respect
to each proposal: You will be asked only to vote for the proposals that affect
the funds in which you are a shareholder.
<TABLE>
<CAPTION>
PROPOSAL VOTING SERIES
-------- -------------
<S> <C>
I. To consider and vote on approval of
an advisory contract between
Quantitative Advisors, Inc. (the
"Manager") and Columbia Partners,
L.L.C., Investment Management
("Columbia Partners") under which
Columbia Partners would serve as
subadvisor ("Advisor") to the
Quantitative Numeric Fund;......... Quantitative Numeric Fund
II. To consider and vote on approval of
an advisory contract between the
Manager and Columbia Partners under
which Columbia Partners would serve
as Advisor to the Quantitative
Numeric II Fund;................... Quantitative Numeric II Fund
III. To consider and vote on approval
of an advisory contract between
the Manager and Independence
International Associates, Inc.
("Independence"), under which
Independence would continue to
serve as Advisor to the
Quantitative International Equity
Fund;.............................. Quantitative International Equity Fund
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PROPOSAL VOTING SERIES
-------- -------------
<S> <C>
IV. To consider and vote on approval of an
advisory contract between the Manager
and Independence under which
Independence would continue to serve
as Advisor to the Quantitative Foreign
Frontier Fund;......................... Quantitative Foreign Frontier Fund
V. To transact such other business as may
properly come before the Meeting or any
adjournment thereof.................... All Series
</TABLE>
In the event that a sufficient number of votes to approve a proposal is not
received, the persons named as proxies may propose one or more adjournments of
the Meeting for a period of not more than 30 days to permit further
solicitation of voting instructions. In determining whether to adjourn the
Meeting, the following factors may be considered: the nature of the proposals
that are the subject of the Meeting, the percentage of votes actually cast,
the percentage of negative votes actually cast, the nature of any further
solicitation, and the information to be provided to Shareholders with respect
to the reasons for the solicitation. Any adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. The persons named as proxies will vote in favor of
adjournment those proxies which they are entitled to vote in favor of such
proposals. They will vote against any such adjournment those proxies required
to be voted against any of such proposals. A vote may be taken on a proposal
in this Proxy Statement for the Trust prior to any adjournment if sufficient
votes have been received for approval of that proposal. Abstentions and broker
"non-votes" (i.e., proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owner or other
person entitled to vote shares on a particular matter with respect to which
the brokers or nominees do not have discretionary power) will be counted as
shares that are present for purposes of determining the presence of a quorum
and will have the effect of a vote against the proposals set forth in this
Proxy Statement.
The following shares of beneficial interest of the Series, no par value,
were outstanding at the close of business on the Record Date:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
NAME OF SERIES ORDINARY SHARES INSTITUTIONAL SHARES
- -------------- --------------- --------------------
<S> <C> <C>
Quantitative Numeric Fund................. 3,771,042.131 851,577.354
Quantitative Numeric II Fund.............. 490,702.311 173,817.769
Quantitative International Equity Fund.... 2,550,051.307 122,264.092
Quantitative Foreign Frontier Fund........ 1,018,617.603 104,367.456
</TABLE>
INVESTMENT MANAGEMENT
The Manager serves as the manager to the Series pursuant to a Management
Agreement between the Trust and the Manager dated April 17, 1985 (the
"Management Agreement"). The Manager is a corporation organized under the laws
of the Commonwealth of Massachusetts and registered with the Securities and
Exchange Commission ("SEC") as an investment adviser and a transfer agent. Its
address is 55 Old Bedford Road, Lincoln, Massachusetts 01773.
The Manager provides overall management and administration of the Series.
The Manager may, subject to the approval of the Trustees, manage any of the
Series itself or, subject to the approval by the Trustees and the
shareholders, select subadvisors ("Advisors") to manage one or all of the
Series. In the latter case, the Manager monitors the Advisors' investment
program and results, reviews brokerage matters, oversees compliance by the
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Series with various federal and state statutes and carries out the directives
of the Trustees. The following proposals relate to contracts between the
Manager and Advisors to the various Series.
PROPOSALS I AND II
Approval of Advisory Contracts between the Manager and Columbia Partners
The Board of Trustees is proposing that Shareholders of the Quantitative
Numeric and Quantitative Numeric II Funds (collectively the "Quantitative
Numeric Funds") each approve a new Advisory Contract (the "New Advisory
Contract") between the Manager and Columbia Partners, L.L.C., Investment
Management ("Columbia Partners") for the management of their respective funds.
The following description of the terms of the New Advisory Contracts is
qualified in its entirety by reference to the copies of the New Advisory
Contracts attached hereto as Exhibit A.
Numeric Investors, l.p. ("Numeric Investors") acted as Advisor of the
Quantitative Numeric Funds since commencement of operations of the
Quantitative Numeric and Quantitative Numeric II Funds in 1992 and 1994
respectively through June 30, 1996. Numeric Investors was engaged to serve as
portfolio manager for each Series pursuant to advisory contracts between the
Manager and Numeric Investors dated August 1, 1992 and August 8, 1994
respectively (the "Old Advisory Contracts"). The contracts were each approved
by the initial shareholder of the respective Series on May 29, 1992 and
October 3, 1994 respectively.
On May 20, 1996, the Board of Trustees, including those Trustees who are not
interested persons of any party to the Old Advisory Contracts, voted to
terminate the Old Advisory Contracts in response to notice provided by Numeric
Investors of their intent to leave their role as Advisor to pursue other
business opportunities. The Old Advisory Contracts terminated on June 30,
1996. On May 20, 1996, the New Advisory Contracts were approved by the Board
of Trustees, including those Trustees who are not interested persons of any
party to the New Advisory Contracts. Pursuant to these contracts, Columbia
Partners began serving as Advisor on July 1, 1996. The New Advisory Contracts
are being submitted for Shareholder approval at this time pursuant to Section
15(a) of the Investment Company Act of 1940, as amended (the "1940 Act"),
which requires shareholder approval of each investment advisory contract. In
the event that the New Advisory Contracts are not approved by the
Shareholders, the Manager and Trustees may choose to resolicit the approval of
the Shareholders for the New Advisory Contracts or to seek new Advisors to
manage the Series. The Manager may also seek approval of the Trustees to
assume the day-to-day investment management responsibility for the Series.
THE OLD ADVISORY CONTRACTS
Under the Old Advisory Contracts, the Advisor provided, subject to the
supervision of the Trust's Board of Trustees and the Manager, a continuous
investment program for the Quantitative Numeric Funds' portfolio and
determined the composition of the assets of the Quantitative Numeric Funds'
portfolio, including determination of the purchase, retention, or sale of the
securities, cash, and other investments contained in the portfolio. The Old
Advisory Contracts required the Advisor to provide investment research and to
conduct a continuous program of evaluation, investment, sales, and
reinvestment of the Quantitative Numeric Funds' assets by determining the
securities and other investments that were to be purchased, entered into,
sold, closed, or exchanged for the Quantitative Numeric Funds, when these
transactions should be executed, and what portion of the assets of the
Quantitative Numeric Funds should be held in the various securities and other
investments in which they invested, all in accordance with the Quantitative
Numeric Funds' investment objective or objectives and policies.
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<PAGE>
For the services provided by the Advisor under the Old Advisory Contract,
the Manager paid Numeric Investors a monthly fee at the following annual rate,
which is expressed as percentages of the value of the average daily net assets
of the Quantitative Numeric Funds: 0.75% of the first $20,000,000, 0.60% of
the next $30,000,000, and 0.50% of net assets in excess thereof, calculated
separately for each Series. For the fiscal year ended March 31, 1996, the
Manager paid Numeric Investors $627,347 for its services to the Quantitative
Numeric Fund and $28,783 for its services to the Quantitative Numeric II Fund.
COMPARISON OF THE OLD ADVISORY CONTRACTS AND THE NEW ADVISORY CONTRACTS
The Old Advisory Contracts and the New Advisory Contracts are substantially
similar, except for the fees paid to Columbia Partners. The fees payable by
the Manager to Columbia Partners under the New Advisory Contracts are 0.50% of
the average daily net assets of the Quantitative Numeric Fund and 0.40% of the
average daily net assets of the Quantitative Numeric II Fund, and are lower
than the fee paid to Numeric Investors under the Old Advisory Contracts. If
the fee structures of the New Advisory Contracts were in effect during the
1996 fiscal year, Numeric Investors would have been paid $547,347 for its
services to the Quantitative Numeric Fund and $15,351 for its services to the
Quantitative Numeric II Fund, a decrease of 13% and 47% respectively. Because
the fees are payable by the Manager, and not the Trust, the Manager would
retain the difference in the fees. However, the Manager intends to use at
least half of its savings realized under the New Advisory Contract for the
Quantitative Numeric Fund, which are expected to be $80,000 per year to reduce
the expenses of the Quantitative Numeric Fund over the next two years. The
Manager is not currently receiving compensation for its services to the
Quantitative Numeric II Fund due to effects of a voluntary expense cap on that
Series, and the Manager or its affiliates have waived additional fees due to
the effects of the cap. In recognition of the reduced fees payable to the
Advisor, for fiscal year 1997, the Manager lowered the voluntary expense cap
from 2.5% of average net assets to 1.70% of net assets. The voluntary cap is
subject to periodic review, and there is no guarantee that the Manager will
continue to limit expenses of this Series in the future. In addition, U.S.
Boston Capital Corporation, an affiliate of the Manager and distributor of the
Series, has also agreed to reduce its 12b-1 fee for the Quantitative Numeric
II Fund from 0.50% of average net assets to 0.25% of average net assets and to
eliminate the 1% redemption fee payable upon redemption of Ordinary Shares of
the Series for new shares purchased on or after August 1, 1996.
In performing its duties under the New Advisory Contracts, Columbia Partners
will provide, subject to the supervision of the Board of Trustees and the
Manager, a continuous investment program for the Quantitative Numeric Funds'
portfolios and determine the composition of the assets of the Quantitative
Numeric Funds' portfolios, including determination of the purchase, retention,
or sale of the securities, cash, or other investments contained in the
portfolio.
If each New Advisory Contract with Columbia Partners is approved by the
necessary Majority Vote of the outstanding voting interests of the respective
Series, it will continue in effect until June 30, 1998 and will continue from
year to year thereafter, subject to approval annually by the Board or a
Majority Vote of the Shareholders of the respective Series, and also, in
either event, approval by a majority of those Trustees who are not parties to
the New Advisory Contracts or interested persons of any such party at a
meeting called for the purpose of voting on such approval.
Pursuant to the New Advisory Contracts, Columbia Partners will not be
subject to liability for, or subject to any damages, expenses, or losses in
connection with, any act or omission connected with or arising out of any
services rendered under the New Advisory Contracts, except by reason of
willful misfeasance, bad faith, or gross
4
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negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties under the New Advisory Contracts.
Each New Advisory Contract provides that it will terminate automatically in
the event of its assignment, as that term is described in the 1940 Act. In
addition, each New Advisory Contract may be terminated by the Manager upon 30
days' written notice or by Columbia Partners upon 150 days' written notice to
the other parties, and by the Trust upon the vote of a majority of the Trust's
Board of Trustees or a majority of the outstanding shares of the respective
Series, upon 30 days' written notice to the Manager and Columbia Partners.
INFORMATION ABOUT COLUMBIA PARTNERS, L.L.C., INVESTMENT MANAGEMENT
Columbia Partners is located at 1701 Pennsylvania Avenue, N.W., Washington,
DC 20006. Columbia Partners was founded in 1995. The firm and its affiliates
currently manage over $1.5 billion in assets. Galway Capital Management,
L.L.C. owns 50% of the outstanding shares of Columbia Partners, L.L.C.
Robert A. von Pentz CFA, a Managing Partner of Columbia Partners, will be
primarily responsible for the day-to-day management of the Quantitative
Numeric Funds. Mr. von Pentz has been with Columbia Partners since its
inception in 1995. Prior to that time, he served as chairman of the board and
chief executive officer of Riggs Investment Management Corporation. Mr. von
Pentz has been managing investments using quantitative investment techniques
for over 10 years.
See Exhibit B for a list of the directors and principal executive officers
of Columbia Partners.
THE TRUSTEES' RECOMMENDATION
The Board of Trustees believes that the terms of the New Advisory Contracts
are fair to, and in the best interests of the Trust, the Series, and their
shareholders. In determining whether or not it was appropriate to approve the
New Advisory Contracts with Columbia Partners and to recommend approval to
Shareholders, the Board, including the Trustees who are not interested persons
of the Manager or Columbia Partners, considered various matters and materials
provided by the Manager and Columbia Partners. In particular, the Trustees
considered the prior investment performance of the investment personnel at
Columbia Partners who would be providing services to the Quantitative Numeric
Funds and the nature of the quantitative models used by Columbia Partners,
emphasizing both growth and value characteristics. The trustees also
considered, among other things, the following: (1) the fairness of the
compensation to be received by Columbia Partners for its investment advisory
services; and (2) Columbia Partners' reputation within the securities
industry.
ACCORDINGLY, THE BOARD OF TRUSTEES (INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW ADVISORY CONTRACTS) RECOMMENDS THE
APPROVAL OF THE NEW ADVISORY CONTRACTS BETWEEN THE MANAGER AND COLUMBIA
PARTNERS, L.L.C., INVESTMENT MANAGEMENT.
PROPOSALS III AND IV
Approval of Advisory Contracts between the Manager and Independence
International Associates, Inc.
The Board of Trustees is proposing that Shareholders of each of the
Quantitative International Equity Fund and the Foreign Frontier Fund
(collectively the "Foreign Funds") approve a new Advisory Contract (the "New
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Independence Advisory Contract") between the Manager and Independence
International Associates, Inc. ("Independence"). The following description of
the terms of the New Independence Advisory Contracts is qualified in its
entirety by reference to the copies of the New Independence Advisory Contracts
attached hereto as Exhibit C. The approval of these proposals by Shareholders
will not result in an increase in the rates of advisory fees payable by the
Foreign Funds.
Independence, currently known as Boston International Advisors, Inc.
("BIA"), has served as Advisor of the Quantitative International Equity Fund
and the Quantitative Foreign Frontier Fund since their respective inceptions
in 1987 and 1994. BIA was engaged to serve as an Advisor for the Foreign Funds
pursuant to a separate advisory contract for each Series between the Manager
and BIA dated July 30, 1987 and August 8, 1994 respectively (the "Old BIA
Advisory Contracts"). The contract for the International Equity Fund was last
approved by the shareholders of the Series on April 2, 1990, and the contract
for the Foreign Frontier Fund was approved by the initial shareholder of the
Series on August 8, 1994.
BIA anticipates that it will be acquired by Independence Investment
Associates, Inc. ("IIA"), a Delaware corporation, on or about October 1, 1996,
at which time it will assume the name of Independence. This acquisition will
result in an automatic termination of the Old BIA Advisory Contracts. The
Foreign Funds applied for and have received an order from the SEC permitting
Independence to continue to serve as the Foreign Funds' investment advisor
pursuant to the New Independence Advisory Contracts until the earlier of 120
days after the automatic termination of the Old BIA Advisory Contracts or
March 1, 1997. Pursuant to the terms of such order, the advisory fees earned
by Independence under the Independence Advisory Contracts will be paid to
Independence only upon approval by shareholders of the Foreign Funds of the
New Independence Advisory Contracts, or in the absence of such approval, will
be remitted to the Foreign Funds. The Board of Trustees, including the
Trustees who are not interested persons of the Manager or Independence, voted
to recommend to shareholders of the Foreign Funds that they approve the
payment to Independence of the advisory fees under the New Independence
Advisory Contracts.
On July 9, 1996, the New Independence Advisory Contracts were approved by
the Board of Trustees, including those Trustees who are not interested persons
of any party to the New Advisory Contracts. Pursuant to these agreements,
Independence will continue to serve as Advisor to the Foreign Funds. Each New
Independence Advisory Contract is being submitted for Shareholder approval at
this time pursuant to Section 15(a) of the 1940 Act, which requires
shareholder approval of each investment advisory contract. In the event that
the New Independence Advisory Contracts are not approved by the Shareholders,
the Manager and Trustees may choose to resolicit the approval of the
Shareholders for the New Independence Advisory Contracts or to seek new
Advisors to manage the Foreign Funds. The Manager may also seek the approval
of the Trustees to assume the day-to-day investment management responsibility
for the Foreign Funds.
THE OLD ADVISORY CONTRACTS
Under the Old BIA Advisory Contracts, the Advisor provided, subject to the
supervision of the Trust's Board of Trustees and the Manager, a continuous
investment program for the Foreign Funds' portfolios and determined the
composition of the assets of the Foreign Funds' portfolios, including
determination of the purchase, retention, or sale of the securities, cash, and
other investments contained in the portfolios. The Old BIA Advisory Contracts
required the Advisor to provide investment research and to conduct a
continuous program of evaluation, investment, sales, and reinvestment of the
Foreign Funds' assets by determining the securities and other investments that
were to be purchased, entered into, sold, closed, or exchanged for the Foreign
Funds, when these transactions should be executed, and what portion of the
assets of the Foreign Funds
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should be held in the various securities and other investments in which it
invested, all in accordance with the Foreign Funds' investment objective or
objectives and policies.
For the services provided by the Advisor under the Old BIA Advisory
Contracts, the Manager paid BIA monthly fees at the following annual rates,
which are expressed as percentages of the value of the average daily net
assets of the Foreign Funds: 0.50% of the Quantitative International Equity
Fund and 0.40% of the Foreign Frontier Fund, calculated separately for each
Series. For the fiscal year ended March 31, 1996, the Manager paid BIA
$160,948 for its services to the International Equity Fund and $25,229 for its
services to the Foreign Frontier Fund.
COMPARISON OF THE OLD BIA ADVISORY CONTRACTS AND THE NEW INDEPENDENCE ADVISORY
CONTRACTS
The Old BIA Advisory Contracts and the New Independence Advisory Contracts
are substantially similar. The rates of the fees payable by the Manager to
Independence under the New Independence Advisory Contracts is identical to
that paid to BIA under the Old Advisory Contracts. In performing its duties
under the New Independence Advisory Contracts, Independence will provide,
subject to the supervision of the Board of Trustees and the Manager, a
continuous investment program for the Foreign Funds' portfolios and determine
the composition of the assets of the Foreign Funds' portfolios, including
determination of the purchase, retention, or sale of the securities, cash, or
other investments contained in the portfolios.
If each New Independence Advisory Contract with Independence is approved by
the necessary Majority Vote (as defined below) of the outstanding voting
interests of the respective Series, it will continue in effect until two years
from the effective date of the New Independence Advisory Contracts, which will
be the date on which Independence is acquired by IIA, and will continue from
year to year thereafter, subject to approval annually by the Board or a
Majority Vote of the Shareholders of the respective Foreign Funds, and also,
in either event, approval by a majority of those Trustees who are not parties
to the New Independence Advisory Contracts or interested persons of any such
party at a meeting called for the purpose of voting on such approval.
Pursuant to the New Independence Advisory Contracts, Independence will not
be subject to liability for, or subject to any damages, expenses, or losses in
connection with, any act or omission connected with or arising out of any
services rendered under the New Independence Advisory Contracts, except by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties under the New Independence Advisory Contracts.
Each New Independence Advisory Contract provides that it will terminate
automatically in the event of its assignment, as that term is described in the
1940 Act. In addition, each New Independence Advisory Contract may be
terminated by the Manager upon 30 days' written notice or by Independence upon
150 days' written notice to the other parties, and by the Trust upon the vote
of a majority of the Trust's Board of Trustees or a majority of the
outstanding shares of the Foreign Funds, upon 30 days' written notice to the
Manager and Independence.
INFORMATION ABOUT INDEPENDENCE INTERNATIONAL ASSOCIATES, INC.
Independence is located at 75 State Street, Boston, Massachusetts 02110.
Independence is a professional investment adviser which has been providing
services to employee benefit plans, corporations, and high net worth
individuals, both foreign and domestic, since 1986. As of June 30, 1996,
Independence had investment management authority with respect to approximately
$2 billion of assets. Lyle H. Davis, CFA, David Umstead,
7
<PAGE>
Ph.D., CFA and Norman H. Meltz each currently own more than 25% of the
outstanding voting securities of Independence. On or about October 1, 1996,
Independence will become a wholly-owned subsidiary of IIA. IIA is a wholly
owned subsidiary of John Hancock Asset Management, Inc., a holding company
which in turn is wholly owned by John Hancock Mutual Life Insurance Company.
IIA currently has over $21 billion under management.
Messrs. Davis and Umstead, respectively the President and a Managing
Director of BIA, will continue to be the individuals primarily responsible for
the day-to-day operation of the Foreign Funds. They have been portfolio
managers for Independence since the inception of the company. In addition,
Independence will continue to retain the remainder of the existing management
team for the Foreign Funds and will have access to the additional resources of
IIA.
See Exhibit D for a list of the directors and principal executive officers
of Independence.
THE TRUSTEES' RECOMMENDATION
The Board of Trustees believes that the terms of the New Independence
Advisory Contracts are fair to, and in the best interests of the Trust, the
Series, and their shareholders. In determining whether or not it was
appropriate to approve the New Independence Advisory Contracts with
Independence and to recommend approval to Shareholders, the Board, including
the Trustees who are not interested persons of the Manager or Independence,
considered various matters and materials provided by the Manager and
Independence. In particular, the Trustees considered the fact that the
investment personnel managing the Foreign Funds and the investment methodology
employed by such persons would remain unchanged, the fact that the terms of
the New Independence Advisory Contracts, including the fees to be paid to IIA,
were virtually identical to the terms of the Old BIA Advisory Contracts and
the potential additional resources available to IIA by virtue of its
acquisition by Independence. The Trustees also considered, among other things,
the following: (1) the fairness of the compensation to be received by
Independence for its investment advisory services; and (2) Independence's
prior investment performance and reputation within the securities industry.
ACCORDINGLY, THE BOARD OF TRUSTEES (INCLUDING THE TRUSTEES WHO ARE NOT
INTERESTED PERSONS OF ANY PARTY TO THE NEW ADVISORY CONTRACTS) RECOMMENDS THE
APPROVAL OF THE NEW INDEPENDENCE ADVISORY CONTRACTS BETWEEN THE MANAGER AND
INDEPENDENCE.
PROPOSAL V
Other Matters
The Trustees know of no business to be brought before the Meeting other than
as set forth above. If, however, any other matters properly come before the
Meeting, it is the intention of the persons named in the enclosed form of
proxy to vote on such matters in accordance with their best judgment.
OTHER INFORMATION
VOTING; QUORUM
A quorum for the transaction of business for the applicable Series at the
meeting is constituted by the presence in person or by proxy of the holders of
the majority of the outstanding shares of the applicable Series
8
<PAGE>
entitled to vote at the meeting. Each share of a Series, and of each class of
shares within a Series generally has equal rights and privileges with all
other shares of that Series, except with respect to voting on matters that
affect only one class of shares of the Series. Shares of each class of the
Series entitle their holders to one vote per share, with proportionate voting
for fractional shares.
Shares represented by timely and properly executed proxies will be voted as
specified. Executed proxies that are unmarked will be voted in favor of the
proposals set forth in the attached Notice of Meeting. Executed proxies marked
as abstentions will not be considered votes cast for or against the proposals,
although they will be counted for quorum purposes. A proxy may be revoked at
any time prior to its exercise by written notice, by execution of a subsequent
proxy, or by voting in person by attending the Meeting.
Approval of each Proposal requires the favorable vote of the holders of a
majority of the outstanding voting securities of the applicable Series. Under
the 1940, such majority is defined as a vote of 67% or more of the voting
securities of the applicable Series present at the meeting, if the holders of
more than 50% of the outstanding voting securities are present or represented
by proxy at the Meeting, or the vote of more than 50% of the outstanding
voting securities of the applicable Series, whichever is less ("Majority
Vote").
VOTING SECURITIES AND PRINCIPAL HOLDERS
As of the record date, the officers and Trustees of the Trust as a group
owned in the aggregate 2% of the outstanding Ordinary Shares of the Numeric
Fund, 2% of the outstanding Institutional Shares of the Numeric Fund, 3% of
the outstanding Ordinary Shares of the Numeric II Fund, 1% of the outstanding
Institutional Shares of the Numeric II Fund, 3% of the outstanding Ordinary
Shares of the International Equity Fund, 9% of the outstanding Institutional
Shares of the International Equity Fund, 0% of the outstanding Ordinary Shares
of the Foreign Frontier Fund, and 4% of the outstanding Institutional Shares
of the Foreign Frontier Fund. On the same date, each of the following persons
owned 5% or more of the outstanding shares of the Series and classes listed
below:
<TABLE>
<CAPTION>
PERCENT
NUMBER OF OF
SHARES CLASS
----------- -------
<S> <C> <C>
QUANTITATIVE NUMERIC FUND--INSTITUTIONAL SHARES
Charles Schwab & Co, Inc. 162,431.911 19.07%
Special Custody Account for the Benefit of Customers
101 Montgomery Street, San Francisco, CA 94101-4122
Pershing Division of Donaldson, Lufkin & Jenrette 565,702.140 66.43%
Special Custody Account for the Benefit of Customers
P.O. Box 2052
Jersey City, NJ 07383
QUANTITATIVENUMERIC II FUND--ORDINARY SHARES
George Howell 74,443.607 15.17%
107 Dudley Road
Wayland, MA 01778
Edward H. McCall, D.D.S. & Edward H. McCall, D.D.S., 40,156.485 8.18%
P.C. Profit Sharing Plan
14 Winn Street
Woburn, MA 01801
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
PERCENT
NUMBER OF OF
SHARES CLASS
----------- -------
<S> <C> <C>
QUANTITATIVE NUMERIC II FUND--INSTITUTIONAL SHARES
National Financial Services Corporation 165,050.683 94.96%
Special Custody Account for the Benefit of Customers
One World Financial Center, 200 Liberty Street
New York, NY 10281
QUANTITATIVE INTERNATIONAL EQUITY FUND--INSTITUTIONAL
SHARES
Dover Instrument Corporation Profit Sharing Retirement
Plan 111,560.117 91.33%
200 Flanders Road, P.O. Box 200
Westboro, MA 01581
USB Corporation Employee Incentive Savings Plan 10,034.710 8.21%
55 Old Bedford Road
Lincoln, MA 01773
QUANTITATIVE FOREIGN FRONTIER FUND--ORDINARY SHARES
William J. Durr 55,075.674 5.41%
5775 Green Road
Haslett, MI 48840
QUANTITATIVE FOREIGN FRONTIER FUND--INSTITUTIONAL SHARES
Strafe & Co. FAO 100,347.468 96.15%
Greater Kanawha Valley Foundation (GKVF)
P.O. Box 160
Westerville, OH 43086-0160
</TABLE>
SOLICITATION OF PROXIES
The costs of the Meeting, including the solicitation of proxies, will be
paid by the Fund, the Manager, and certain of the Advisors. In addition to the
solicitation of proxies by mail, officers and regular employees of the Manager
and its affiliates may solicit proxies personally or by telephone or
facsimile. While the Trust does not expect to retain a proxy solicitation
firm, it may determine that the services of such a firm are necessary. The
terms of any agreement with a proxy solicitation firm will depend on the
nature and extent of the services to be provided.
TRANSACTIONS WITH AFFILIATED BROKERS
No brokerage commissions were paid to any broker which is (i) an "affiliated
person" of the Trust, as defined in the 1940 Act; (ii) an affiliated person of
such affiliated person; or (iii) an affiliated person of which is an
affiliated person of the Trust, its principal underwriter, or any current or
proposed investment advisor.
NEXT MEETING OF SHAREHOLDERS
Massachusetts business trust law does not require the Trust to hold annual
shareholder meetings, although special meetings may be called for a specific
Series, or for the Trust as a whole, for purposes such as electing Trustees or
removing Trustees, changing fundamental policies, or approving an advisory
contract. Shareholder
10
<PAGE>
proposals to be presented at any subsequent meeting of shareholders must be
received at the Trust's office, 55 Old Bedford Road, Lincoln, Massachusetts
01773, within a reasonable time before the proxy solicitation is made.
DISTRIBUTOR
Shares of the Trust are distributed through U.S. Boston Capital Corporation
(the "Distributor"), located at 55 Old Bedford Road, Lincoln, Massachusetts
01773. The Distributor is a broker-dealer registered with the SEC and a member
of the National Association of Securities Dealers, Inc.
YOU ARE URGED TO FILL IN, DATE, SIGN, AND RETURN THE ENCLOSED PROXY
PROMPTLY.
By Order of the Board of Trustees
Mark A. Katzoff, Esq.
Clerk
September 25, 1996
11
<PAGE>
EXHIBIT LIST
<TABLE>
<C> <S>
Exhibit A Advisory Contracts between Quantitative Advisors, Inc. and Columbia
Partners, L.L.C. Investment Management
Exhibit B Other Information regarding Columbia Partners, L.L.C. Investment
Management
Exhibit C Advisory Contracts between Quantitative Advisors, Inc. and
Independence International Associates, Inc.
Exhibit D Other Information regarding Independence International Associates,
Inc.
</TABLE>
12
<PAGE>
EXHIBIT A
QUANTITATIVE ADVISORS, INC.
ADVISORY CONTRACT
Advisory Contract ("Contract") dated as of June 20, 1996, between
QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and
COLUMBIA PARTNERS, L.L.C., INVESTMENT MANAGEMENT a Delaware limited liability
company (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is agreed
as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO TRUST.
(a) Subject always to the control of the trustees (the "Trustees") of
Quantitative Group of Funds, a Massachusetts business trust (the "Trust"),
and the Manager, the Advisor, at its expense, will furnish continuously an
investment program for the Quantitative Numeric Fund (the "Fund") of the
Trust. The Advisor will determine what securities shall be purchased, held,
sold or exchanged by the Fund and what portion, if any, of the assets of
the Fund shall be held uninvested and shall, on behalf of the Fund, make
changes in the Fund's investments. In the performance of its duties, the
Advisor will comply with the provisions of the Agreement and Declaration of
Trust and By-Laws of the Trust, as amended, and the stated investment
objectives, policies and restrictions of the Fund as set forth in the then
current Prospectus and/or Statement of Additional Information of the Trust
and with other written policies which the Trustees or the Manager may from
time-to-time determine and of which the Advisor has received notice. In
furnishing an investment program to the Fund and in determining what
securities shall be purchased, held, sold or exchanged by the Fund, the
Advisor shall (1) comply in all material respects with all provisions of
applicable law governing its duties and responsibilities hereunder,
including, without limitation, the Investment Company Act of 1940 (the
"1940 Act") and the Rules and Regulations thereunder; the Investment
Advisors Act of 1940, and the Rules and Regulations thereunder; the
Internal Revenue Code of 1986, as amended (the "Code"), relating to
regulated investment companies and all Rules and Regulations thereunder;
the Insider Trading and Securities Fraud Enforcement Act of 1988; and such
other laws as may be applicable to its activities as Advisor to the Fund
and (2) use its best efforts to manage the Fund so that the Fund will
qualify, and continue to qualify, as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Advisor
shall make its officers and employees available to the Manager or Trustees
from time-to-time at reasonable times to review investment policies of the
Fund and to consult with the Manager or Trustees regarding the investment
affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all necessary
investment and management facilities, including salaries of personnel,
required for it to execute its duties hereunder, (2) keep records relating
to the purchase, sale or current status of portfolio securities, (3)
provide clerical personnel and equipment necessary for the efficient
rendering of investment advice to the Fund, (4) furnish to the Manager such
reports and records regarding the Fund and the Advisor as the Manager or
Trustees shall from time-to-time request, and, (5) upon reasonable notice,
review written references to the Advisor, or its methodology, whether in a
Prospectus, Statement of Additional Information, sales material or
otherwise. The Advisor shall have no obligation with respect to the
determination of the Fund's net asset value, except to provide the
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<PAGE>
Trust's custodian with information as to the securities held in the Fund's
portfolio. The Advisor shall not be obligated to provide shareholder
accounting services.
(c) The Advisor shall place all orders for the purchase and sale of
portfolio investments for the Fund's account with brokers or dealers
selected by the Advisor. In the selection of such brokers or dealers and
the placing of such orders, the Advisor shall use its best efforts to
obtain for the Fund the most favorable price and execution available,
except to the extent that it may be permitted to pay higher brokerage
commissions for brokerage and research services as described below. In
using its best efforts to obtain for the Fund the most favorable price and
execution available, the Advisor, bearing in mind the Fund's best interests
at all times, shall consider all factors it deems relevant, including by
way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, if any, the timing
of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or dealer
involved and the quality of service rendered by the broker or dealer in
other transactions. Subject to such written policies as the Trustees or the
Manager may determine, and of which the Advisor has received notice and
which the Advisor has accepted in writing, the Advisor shall not be deemed
to have acted unlawfully or to have breached any duty created by this
Contract or otherwise solely by reason of its having caused the Fund to pay
a broker or dealer that provides brokerage and research services to the
Advisor and/or the Manager an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction,
if the Advisor 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 Advisor's and/or Manager's overall
responsibilities with respect to the Trust and to other clients as to which
the Advisor and/or Manager or persons controlled by or under common control
with the Advisor and/or Manager exercise investment discretion. The Advisor
agrees that in connection with purchase or sales of portfolio instruments
for the Fund's account, neither the Advisor nor any officer, director,
employee or agent of the Advisor shall act as principal or receive any
commission other than as provided in Section 3.
(d) The assets of the Fund shall be held by the Trust's custodian in an
account which the Trust has directed the Custodian to open. The Advisor
shall at no time have custody or physical control of any of the assets of
the Fund. The Manager shall cause such custodian to provide the Advisor
with such information and reports concerning the Fund or its assets as the
Advisor may from time to time reasonably request and to accept instructions
from the Advisor with respect to such assets and transactions by the Fund
in the performance of the Advisor's duties hereunder. The Advisor shall
have no liability or obligation to pay the cost of such custodian or any of
its services.
(e) Advice rendered to the Fund shall be confidential and may not be used
by any shareholder, Trustee, officer, director, employee or agent of the
Trust or of the Manager or by the advisor of any other fund of the Trust.
Non-public information provided to the Manager on a confidential basis
regarding the methodology of the Advisor shall not be made publicly
available by the Manager, except that such information may be disclosed to
the Trustees and may be disclosed to the extent necessary to comply with
the federal and state securities laws and, after notice to the Advisor,
upon order of any court or administrative agency or self regulatory
organization of which the Manager or its affiliates are members.
(f) The Advisor shall not be obligated to pay any expenses of or for the
Fund not expressly assumed by the Advisor pursuant to this Section 1.
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<PAGE>
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a shareholder, partner, director, officer or
employee of, or be otherwise interested in, the Advisor, and in any person
controlled by or under common control with the Advisor, and that the Advisor
and any person controlled by or under common control with the Advisor may have
an interest in the Trust. It is also understood that the Advisor and persons
controlled by or under common control with the Advisor have and may have
advisory, management, service or other contracts with other organizations
(including other investment companies and other managed accounts) and persons,
and may have other interests and businesses.
Nothing in this Contract shall prohibit the Advisor or any of its affiliates
from providing any services for any other person or entity or limit the
services which the Advisor or any such affiliate can provide to any person or
entity, provided, however, that without the written consent of the Manager,
the Advisor may not provide investment advisory or investment management
services to another investment company which invests the primary portion of
its assets in companies comprising the Russell 2000 Index, or any other widely
recognized index of small cap stocks. The Manager understands and agrees that
the Advisor and its affiliates perform investment advisory and investment
management services for various clients other than the Manager and the Trust.
The Manager agrees that the Advisor and its affiliates may give advice and
take action in the performance of duties with respect to any other client
which may differ from advice given, or the timing or nature of action taken,
with respect to the Fund. Nothing in this Contract shall be deemed to impose
upon the Advisor any obligation to purchase or sell or to recommend for
purchase or sale for the Fund any security or other property which the Advisor
or any of its affiliates may purchase or sell for its own account or for the
account of any other client, so long as it continues to be the policy and
practice of the Advisor not to favor or disfavor consistently or consciously
any client or class of clients in the allocation of investment opportunities,
so that to the extent practical, such opportunities will be allocated among
clients over a period of time on a fair and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR.
The Manager will pay to the Advisor, as compensation for the Advisor's
services rendered and for the expenses borne by the Advisor pursuant to
Section 1, a fee, computed and paid monthly at the annual rate of 0.50% of the
aggregate average daily net asset value of the Fund. Such fee shall be paid by
the Manager and not by the Fund out of the management fee paid by the Trust to
the Manager pursuant to the Management Contract between the Manager and the
Trust or out of any other funds available to the Manager. Such average daily
net asset value of the Fund shall be determined by taking an average of all
the determinations of such net asset value during such month at the close of
business on each business day, and for non-business days, the net asset value
determined on the previous business day, during such month while this Contract
is in effect. Such fee shall be payable for each month within 30 days after
the end of each month.
If the Advisor shall serve for less than the whole of a month, the foregoing
compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract between the Trust and the Manager is terminated generally, or with
respect to the Fund; and this Contract shall not be amended unless (i) such
amendment is approved at a meeting by an affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Trust who are not interested persons of the Trust or of
the Manager or of the Advisor.
A-3
<PAGE>
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on June 30, 1996 or such other time as
shall be agreed upon by the Manager and the Advisor, and shall remain in full
force and effect as to the Fund for 119 days thereafter, and, provided that
this Contract is approved by a majority of the outstanding voting shares of
the Fund by the end of such 119th day, shall remain in full force and effect
continuously thereafter (unless terminated automatically as set forth in
Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract as
to the Fund by not more than sixty days' or less than thirty days' written
notice delivered or mailed by registered mail, postage prepaid, to the
Advisor, or
(b) The Advisor may at any time terminate this Contract as to the Fund by
not less than one hundred fifty days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund, and
(ii) a majority of the Trustees of the Trust who are not interested persons
of the Trust or of the Manager or of the Advisor, by vote cast in person at
a meeting called for the purpose of voting on such approval, do not
specifically approve at least annually the continuance of this Contract,
then this Contract shall automatically terminate as to the Fund at the
close of business on the second anniversary of the effective date hereof or
the expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the continuance
of this Contract is submitted to the shareholders of the Fund for their
approval and such shareholders fail to approve such continuance of this
Contract as provided herein, the Advisor may continue to serve hereunder in
a manner consistent with the 1940 Act and the Rules and Regulations
thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without the
payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of
the Trust or the Fund, as the case may be, present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Trust or the Fund, as the case may be, entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders
of more than 50% of the outstanding shares of the Trust or the Fund, as the
case may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person", "control",
"interested person" and "assignment" shall have their respective meanings
defined in the 1940 Act and the Rules and Regulations thereunder, subject,
however, to such exemptions as may be granted by the Securities and Exchange
Commission ("SEC") under said Act; the term "specifically approve at least
annually" shall be construed in a manner consistent with the 1940 Act and the
Rules and Regulations thereunder; and the term "brokerage and research
services" shall have the meaning given by the Securities Exchange Act of 1934
and the Rules and Regulations thereunder.
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<PAGE>
7. NONLIABILITY OF ADVISOR.
Notwithstanding any other agreement to the contrary, in the absence of
willful misfeasance, bad faith or gross negligence on the part of the Advisor,
its partners, officers, directors, employees or agents or reckless disregard
of the Advisor's obligations and duties hereunder, neither the Advisor nor its
officers, directors, employees or agents shall be subject to any liability to
the Trust or to the Manager, or to any shareholder of the Trust, for any act
or omission in the course of, or connected with, rendering services hereunder,
unless the Advisor is claiming indemnity from any of them in connection
herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all
securities in which assets of the Fund may be invested from time to time and
shall not be required to seek or take instructions from the Manager or the
Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not violate
any obligation by which it is bound, whether arising by contract, operation
of law or otherwise, and that it has the power, capacity and authority to
enter into this Contract and to perform in accordance herewith. In
addition, the Manager represents, warrants and covenants to the Advisor
that it has the power, capacity and authority to commit the Trust to this
Contract; that a true and complete copy of the Agreement and Declaration of
Trust and By-Laws of the Trust and the stated objectives, policies and
restrictions of the Fund have been delivered to the Advisor; and that true
and complete copies of every amendment thereto will be delivered to the
Advisor as promptly as practicable after the adoption thereof. The Manager
agrees that notwithstanding any other provision of this Contract to the
contrary, the Advisor will not be bound by any such amendment until the
Advisor has received a copy thereof and has had a reasonable opportunity to
review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its
partners, officers, employees and agents and each person, if any, who
controls the Advisor within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation,
reasonable fees and other expenses of an Indemnified Party's counsel, other
than attorneys' fees and costs in relation to the preparation of this
Contract; each party bearing responsibility for its own such costs and
fees), joint or several, (other than liabilities, losses, expenses,
attorneys' fees and costs or damages arising from the failure of the
Advisor to perform its responsibilities hereunder or claims arising from
its acts or failure to act in performing this Contract) to which the
Advisor or any other Indemnified Party may become subject under any federal
or state law as a result of any failure of the Manager or, if caused by any
failure of the Manager, of the Trust or the Fund, to disclose a material
fact, or any omission by the Manager, or, if caused by any failure of the
Manager, of the Trust or the Fund, to disclose a material fact, in any
document relating to the Trust or the Fund, except any failure or omission
caused solely by (i) the incorporation in any such document of information
relating to the Advisor which is furnished to the Manager in writing by or
with the consent of the Advisor expressly for inclusion in such document or
(ii) a breach, of which the Manager was not aware, by the Advisor of its
duties hereunder. With respect to any claim for which an Indemnified Party
is entitled to indemnity hereunder, the Manager shall assume the reasonable
expenses and costs (including any reasonable attorneys' fees and costs) of
the Indemnified Party or investigating and/or defending any claim asserted
or threatened by any party, subject
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<PAGE>
always to the Manager first receiving a written undertaking from the
Indemnified Party to repay any amounts paid on its behalf in the event and
to the extent of any subsequent determination that the Indemnified Party
was not entitled to indemnification hereunder with respect of such claim.
(c) No public reference to, or description of, the Advisor or its
methodology or work shall be made by the Manager or the Trust, whether in a
prospectus, Statement of Additional Information or otherwise, unless the
Manager provides the Advisor with a reasonable opportunity to review any
such reference or description prior to the first use of such reference or
description.
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not violate
any obligation by which it is bound, whether arising by contract, operation
of law, or otherwise, and that it has the power, capacity and authority to
enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that
the Advisor or any of its affiliates: (1) becomes aware that it is subject
to a statutory disqualification that prevents the Advisor from serving as
investment advisor pursuant to this Contract; or (2) becomes aware that it
the subject of an administrative proceeding or enforcement action by the
SEC or any other regulatory authority. The Advisor further agrees to notify
the Manager immediately of any material fact known to the Advisor
respecting or relating to the Advisor that is not contained in the Trust's
Registration Statement regarding the Fund, or any amendment or supplement
thereto, but that is required to be disclosed therein, and of any statement
contained therein that becomes untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect to
its services to the Fund as are required under the 1940 Act, and rules
adopted thereunder, and by other applicable legal provisions, and to
preserve such records for the periods and in the manner required by that
Section, and those rules and legal provisions. The Advisor also agrees that
records it maintains and preserves pursuant to Rule 31a-1 and Rule 31a-2
under the 1940 Act and otherwise in connection with its services hereunder
are the property of the Trust and will be surrendered promptly to the Trust
upon its request. The Advisor further agrees that it will furnish to
regulatory authorities having the requisite authority any information or
reports in connection with its services hereunder which may be requested in
order to determine whether the operations of the Fund are being conducted
in accordance with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly representations
regarding the compliance of its' employees with the Advisor's code of
ethics governing personal securities transactions. The Advisor shall
provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the Fund,
their partners, officers, employees and agents and each person, if any, who
controls the Manager or Fund within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation,
reasonable fees and other expenses of an Indemnified Party's counsel, other
than attorneys' fees and costs in relation to the preparation of this
Contract; each party bearing responsibility for its own such costs and
fees), joint or several, (other than liabilities, losses, expenses,
attorneys' fees and costs or damages arising from the failure of the
Manager to perform its responsibilities hereunder or claims arising from
its acts or failure to act in performing this Contract) arising from
Advisor's (or its respective agents and employees) failure to perform its
duties and assume its
A-6
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obligations hereunder, including any action or claim against the Manager
based on any alleged untrue statement or misstatement of a material fact
made or provided in writing by or with the consent of Advisor contained in
any registration statement, prospectus, shareholder report or other
information or materials relating to the Fund and shares issued by the
Fund, or the failure or alleged failure to state a material fact therein
required to be stated in order that the statements therein are not
misleading, which fact should have been made known or provided by the
Advisor to the Manager. With respect to any claim for which an Indemnified
Party is entitled to indemnity hereunder, the Advisor shall assume the
reasonable expenses and costs (including any reasonable attorneys' fees and
costs) of the Indemnified Party of investigating and/or defending any claim
asserted or threatened by any party, subject always to the Advisor first
receiving a written undertaking from the Indemnified Party to repay any
amounts paid on its behalf in the event and to the extent of any subsequent
determination that the Indemnified Party was not entitled to
indemnification hereunder with respect of such claim.
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time
to time while the Advisor provides services pursuant to this Contract) or any
derivative thereof or logo associated with that name is the valuable property
of the Trust and/or its affiliates, and that the Advisor has the right to use
such name (or derivative or logo) only with the approval of the Manager and
only so long as the Advisor is Advisor to the Trust and/or the Fund. Upon
termination of this Contract the Advisor shall forthwith cease to use such
name (or derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in accordance
with, the substantive laws of The Commonwealth of Massachusetts without regard
to its principles of conflicts of laws, except to the extent such laws shall
be preempted by the Investment Company Act of 1940 or by other applicable
laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an
independent contractor and, except as otherwise expressly provided herein,
shall have no authority to act for, bind or represent the Fund in any way or
otherwise be deemed to be an agent of the Fund. Likewise, the Fund, the
Manager and their affiliates, agents and employees shall not be deemed agents
of the Advisor and shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only and
in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to any
action or proceedings in respect of which indemnification may be sought
hereunder, the party seeking indemnification shall promptly notify the
other party thereof. The party from whom indemnification is sought shall
not be liable hereunder for any settlement of any action or claim effected
without its written consent, which consent shall not be reasonably
withheld.
(c) This Contract may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same
instrument.
A-7
<PAGE>
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and COLUMBIA PARTNERS,
L.L.C. INVESTMENT MANAGEMENT have each caused this instrument to be signed in
duplicate in its behalf, all as of the day and year first above written.
Quantitative Advisors, Inc.
By /s/ Edward L. Pittman
----------------------------------
EDWARD L. PITTMAN
President
Columbia Partners, L.L.C.,
Investment Management
By
----------------------------------
A-8
<PAGE>
QUANTITATIVE ADVISORS, INC.
ADVISORY CONTRACT
Advisory Contract ("Contract") dated as of June 20, 1996, between
QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and
COLUMBIA PARTNERS, L.L.C., INVESTMENT MANAGEMENT a Delaware limited liability
company (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is agreed
as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO TRUST.
(a) Subject always to the control of the trustees (the "Trustees") of
Quantitative Group of Funds, a Massachusetts business trust (the "Trust"),
and the Manager, the Advisor, at its expense, will furnish continuously an
investment program for the Quantitative Numeric II Fund (the "Fund") of the
Trust. The Advisor will determine what securities shall be purchased, held,
sold or exchanged by the Fund and what portion, if any, of the assets of
the Fund shall be held uninvested and shall, on behalf of the Fund, make
changes in the Fund's investments. In the performance of its duties, the
Advisor will comply with the provisions of the Agreement and Declaration of
Trust and By-Laws of the Trust, as amended, and the stated investment
objectives, policies and restrictions of the Fund as set forth in the then
current Prospectus and/or Statement of Additional Information of the Trust
and with other written policies which the Trustees or the Manager may from
time-to-time determine and of which the Advisor has received notice. In
furnishing an investment program to the Fund and in determining what
securities shall be purchased, held, sold or exchanged by the Fund, the
Advisor shall (1) comply in all material respects with all provisions of
applicable law governing its duties and responsibilities hereunder,
including, without limitation, the Investment Company Act of 1940 (the
"1940 Act") and the Rules and Regulations thereunder; the Investment
Advisors Act of 1940, and the Rules and Regulations thereunder; the
Internal Revenue Code of 1986, as amended (the "Code"), relating to
regulated investment companies and all Rules and Regulations thereunder;
the Insider Trading and Securities Fraud Enforcement Act of 1988; and such
other laws as may be applicable to its activities as Advisor to the Fund
and (2) use its best efforts to manage the Fund so that the Fund will
qualify, and continue to qualify, as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Advisor
shall make its officers and employees available to the Manager or Trustees
from time-to-time at reasonable times to review investment policies of the
Fund and to consult with the Manager or Trustees regarding the investment
affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all necessary
investment and management facilities, including salaries of personnel,
required for it to execute its duties hereunder, (2) keep records relating
to the purchase, sale or current status of portfolio securities, (3)
provide clerical personnel and equipment necessary for the efficient
rendering of investment advice to the Fund, (4) furnish to the Manager such
reports and records regarding the Fund and the Advisor as the Manager or
Trustees shall from time-to-time request, and, (5) upon reasonable notice,
review written references to the Advisor, or its methodology, whether in a
Prospectus, Statement of Additional Information, sales material or
otherwise. The Advisor shall have no obligation with respect to the
determination of the Fund's net asset value, except to provide the Trust's
custodian with information as to the securities held in the Fund's
portfolio. The Advisor shall not be obligated to provide shareholder
accounting services.
A-9
<PAGE>
(c) The Advisor shall place all orders for the purchase and sale of
portfolio investments for the Fund's account with brokers or dealers
selected by the Advisor. In the selection of such brokers or dealers and
the placing of such orders, the Advisor shall use its best efforts to
obtain for the Fund the most favorable price and execution available,
except to the extent that it may be permitted to pay higher brokerage
commissions for brokerage and research services as described below. In
using its best efforts to obtain for the Fund the most favorable price and
execution available, the Advisor, bearing in mind the Fund's best interests
at all times, shall consider all factors it deems relevant, including by
way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, if any, the timing
of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or dealer
involved and the quality of service rendered by the broker or dealer in
other transactions. Subject to such written policies as the Trustees or the
Manager may determine, and of which the Advisor has received notice and
which the Advisor has accepted in writing, the Advisor shall not be deemed
to have acted unlawfully or to have breached any duty created by this
Contract or otherwise solely by reason of its having caused the Fund to pay
a broker or dealer that provides brokerage and research services to the
Advisor and/or the Manager an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction,
if the Advisor 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 Advisor's and/or Manager's overall
responsibilities with respect to the Trust and to other clients as to which
the Advisor and/or Manager or persons controlled by or under common control
with the Advisor and/or Manager exercise investment discretion. The Advisor
agrees that in connection with purchase or sales of portfolio instruments
for the Fund's account, neither the Advisor nor any officer, director,
employee or agent of the Advisor shall act as principal or receive any
commission other than as provided in Section 3.
(d) The assets of the Fund shall be held by the Trust's custodian in an
account which the Trust has directed the Custodian to open. The Advisor
shall at no time have custody or physical control of any of the assets of
the Fund. The Manager shall cause such custodian to provide the Advisor
with such information and reports concerning the Fund or its assets as the
Advisor may from time to time reasonably request and to accept instructions
from the Advisor with respect to such assets and transactions by the Fund
in the performance of the Advisor's duties hereunder. The Advisor shall
have no liability or obligation to pay the cost of such custodian or any of
its services.
(e) Advice rendered to the Fund shall be confidential and may not be used
by any shareholder, Trustee, officer, director, employee or agent of the
Trust or of the Manager or by the advisor of any other fund of the Trust.
Non-public information provided to the Manager on a confidential basis
regarding the methodology of the Advisor shall not be made publicly
available by the Manager, except that such information may be disclosed to
the Trustees and may be disclosed to the extent necessary to comply with
the federal and state securities laws and, after notice to the Advisor,
upon order of any court or administrative agency or self regulatory
organization of which the Manager or its affiliates are members.
(f) The Advisor shall not be obligated to pay any expenses of or for the
Fund not expressly assumed by the Advisor pursuant to this Section 1.
A-10
<PAGE>
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a shareholder, partner, director, officer or
employee of, or be otherwise interested in, the Advisor, and in any person
controlled by or under common control with the Advisor, and that the Advisor
and any person controlled by or under common control with the Advisor may have
an interest in the Trust. It is also understood that the Advisor and persons
controlled by or under common control with the Advisor have and may have
advisory, management, service or other contracts with other organizations
(including other investment companies and other managed accounts) and persons,
and may have other interests and businesses.
Nothing in this Contract shall prohibit the Advisor or any of its affiliates
from providing any services for any other person or entity or limit the
services which the Advisor or any such affiliate can provide to any person or
entity, provided, however, that without the written consent of the Manager,
the Advisor may not provide investment advisory or investment management
services to another investment company which invests the primary portion of
its assets in companies comprising the Russell 2000 Index, or any other widely
recognized index of small cap stocks. The Manager understands and agrees that
the Advisor and its affiliates perform investment advisory and investment
management services for various clients other than the Manager and the Trust.
The Manager agrees that the Advisor and its affiliates may give advice and
take action in the performance of duties with respect to any other client
which may differ from advice given, or the timing or nature of action taken,
with respect to the Fund. Nothing in this Contract shall be deemed to impose
upon the Advisor any obligation to purchase or sell or to recommend for
purchase or sale for the Fund any security or other property which the Advisor
or any of its affiliates may purchase or sell for its own account or for the
account of any other client, so long as it continues to be the policy and
practice of the Advisor not to favor or disfavor consistently or consciously
any client or class of clients in the allocation of investment opportunities,
so that to the extent practical, such opportunities will be allocated among
clients over a period of time on a fair and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR.
The Manager will pay to the Advisor, as compensation for the Advisor's
services rendered and for the expenses borne by the Advisor pursuant to
Section 1, a fee, computed and paid monthly at the annual rate of 0.40% of the
aggregate average daily net asset value of the Fund. Such fee shall be paid by
the Manager and not by the Fund out of the management fee paid by the Trust to
the Manager pursuant to the Management Contract between the Manager and the
Trust or out of any other funds available to the Manager. Such average daily
net asset value of the Fund shall be determined by taking an average of all
the determinations of such net asset value during such month at the close of
business on each business day, and for non-business days, the net asset value
determined on the previous business day, during such month while this Contract
is in effect. Such fee shall be payable for each month within 30 days after
the end of each month.
If the Advisor shall serve for less than the whole of a month, the foregoing
compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract between the Trust and the Manager is terminated generally, or with
respect to the Fund; and this Contract shall not be amended unless (i) such
amendment is approved at a meeting by an affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Trust who are not interested persons of the Trust or of
the Manager or of the Advisor.
A-11
<PAGE>
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on June 30, 1996 or such other time as
shall be agreed upon by the Manager and the Advisor, and shall remain in full
force and effect as to the Fund for 119 days thereafter, and, provided that
this Contract is approved by a majority of the outstanding voting shares of
the Fund by the end of such 119/th/ day, shall remain in full force and effect
continuously thereafter (unless terminated automatically as set forth in
Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract as
to the Fund by not more than sixty days' or less than thirty days' written
notice delivered or mailed by registered mail, postage prepaid, to the
Advisor, or
(b) The Advisor may at any time terminate this Contract as to the Fund by
not less than one hundred fifty days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund, and
(ii) a majority of the Trustees of the Trust who are not interested persons
of the Trust or of the Manager or of the Advisor, by vote cast in person at
a meeting called for the purpose of voting on such approval, do not
specifically approve at least annually the continuance of this Contract,
then this Contract shall automatically terminate as to the Fund at the
close of business on the second anniversary of the effective date hereof or
the expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the continuance
of this Contract is submitted to the shareholders of the Fund for their
approval and such shareholders fail to approve such continuance of this
Contract as provided herein, the Advisor may continue to serve hereunder in
a manner consistent with the 1940 Act and the Rules and Regulations
thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without the
payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of
the Trust or the Fund, as the case may be, present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Trust or the Fund, as the case may be, entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders
of more than 50% of the outstanding shares of the Trust or the Fund, as the
case may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person", "control",
"interested person" and "assignment" shall have their respective meanings
defined in the 1940 Act and the Rules and Regulations thereunder, subject,
however, to such exemptions as may be granted by the Securities and Exchange
Commission ("SEC") under said Act; the term "specifically approve at least
annually" shall be construed in a manner consistent with the 1940 Act and the
Rules and Regulations thereunder; and the term "brokerage and research
services" shall have the meaning given by the Securities Exchange Act of 1934
and the Rules and Regulations thereunder.
A-12
<PAGE>
7. NONLIABILITY OF ADVISOR.
Notwithstanding any other agreement to the contrary, in the absence of
willful misfeasance, bad faith or gross negligence on the part of the Advisor,
its partners, officers, directors, employees or agents or reckless disregard
of the Advisor's obligations and duties hereunder, neither the Advisor nor its
officers, directors, employees or agents shall be subject to any liability to
the Trust or to the Manager, or to any shareholder of the Trust, for any act
or omission in the course of, or connected with, rendering services hereunder,
unless the Advisor is claiming indemnity from any of them in connection
herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all
securities in which assets of the Fund may be invested from time to time and
shall not be required to seek or take instructions from the Manager or the
Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not violate
any obligation by which it is bound, whether arising by contract, operation
of law or otherwise, and that it has the power, capacity and authority to
enter into this Contract and to perform in accordance herewith. In
addition, the Manager represents, warrants and covenants to the Advisor
that it has the power, capacity and authority to commit the Trust to this
Contract; that a true and complete copy of the Agreement and Declaration of
Trust and By-Laws of the Trust and the stated objectives, policies and
restrictions of the Fund have been delivered to the Advisor; and that true
and complete copies of every amendment thereto will be delivered to the
Advisor as promptly as practicable after the adoption thereof. The Manager
agrees that notwithstanding any other provision of this Contract to the
contrary, the Advisor will not be bound by any such amendment until the
Advisor has received a copy thereof and has had a reasonable opportunity to
review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its
partners, officers, employees and agents and each person, if any, who
controls the Advisor within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation,
reasonable fees and other expenses of an Indemnified Party's counsel, other
than attorneys' fees and costs in relation to the preparation of this
Contract; each party bearing responsibility for its own such costs and
fees), joint or several, (other than liabilities, losses, expenses,
attorneys' fees and costs or damages arising from the failure of the
Advisor to perform its responsibilities hereunder or claims arising from
its acts or failure to act in performing this Contract) to which the
Advisor or any other Indemnified Party may become subject under any federal
or state law as a result of any failure of the Manager or, if caused by any
failure of the Manager, of the Trust or the Fund, to disclose a material
fact, or any omission by the Manager, or, if caused by any failure of the
Manager, of the Trust or the Fund, to disclose a material fact, in any
document relating to the Trust or the Fund, except any failure or omission
caused solely by (i) the incorporation in any such document of information
relating to the Advisor which is furnished to the Manager in writing by or
with the consent of the Advisor expressly for inclusion in such document or
(ii) a breach, of which the Manager was not aware, by the Advisor of its
duties hereunder. With respect to any claim for which an Indemnified Party
is entitled to indemnity hereunder, the Manager shall assume the reasonable
expenses and costs (including any reasonable attorneys' fees and costs) of
the Indemnified Party or investigating and/or defending any claim asserted
or threatened by any party, subject
A-13
<PAGE>
always to the Manager first receiving a written undertaking from the
Indemnified Party to repay any amounts paid on its behalf in the event and
to the extent of any subsequent determination that the Indemnified Party
was not entitled to indemnification hereunder with respect of such claim.
(c) No public reference to, or description of, the Advisor or its
methodology or work shall be made by the Manager or the Trust, whether in a
prospectus, Statement of Additional Information or otherwise, unless the
Manager provides the Advisor with a reasonable opportunity to review any
such reference or description prior to the first use of such reference or
description.
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not violate
any obligation by which it is bound, whether arising by contract, operation
of law, or otherwise, and that it has the power, capacity and authority to
enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that
the Advisor or any of its affiliates: (1) becomes aware that it is subject
to a statutory disqualification that prevents the Advisor from serving as
investment advisor pursuant to this Contract; or (2) becomes aware that it
the subject of an administrative proceeding or enforcement action by the
SEC or any other regulatory authority. The Advisor further agrees to notify
the Manager immediately of any material fact known to the Advisor
respecting or relating to the Advisor that is not contained in the Trust's
Registration Statement regarding the Fund, or any amendment or supplement
thereto, but that is required to be disclosed therein, and of any statement
contained therein that becomes untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect to
its services to the Fund as are required under the 1940 Act, and rules
adopted thereunder, and by other applicable legal provisions, and to
preserve such records for the periods and in the manner required by that
Section, and those rules and legal provisions. The Advisor also agrees that
records it maintains and preserves pursuant to Rule 31a-1 and Rule 31a-2
under the 1940 Act and otherwise in connection with its services hereunder
are the property of the Trust and will be surrendered promptly to the Trust
upon its request. The Advisor further agrees that it will furnish to
regulatory authorities having the requisite authority any information or
reports in connection with its services hereunder which may be requested in
order to determine whether the operations of the Fund are being conducted
in accordance with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly representations
regarding the compliance of its' employees with the Advisor's code of
ethics governing personal securities transactions. The Advisor shall
provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the Fund,
their partners, officers, employees and agents and each person, if any, who
controls the Manager or Fund within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation,
reasonable fees and other expenses of an Indemnified Party's counsel, other
than attorneys' fees and costs in relation to the preparation of this
Contract; each party bearing responsibility for its own such costs and
fees), joint or several, (other than liabilities, losses, expenses,
attorneys' fees and costs or damages arising from the failure of the
Manager to perform its responsibilities hereunder or claims arising from
its acts or failure to act in performing this Contract) arising from
Advisor's (or its respective agents and employees) failure to perform its
duties and assume its
A-14
<PAGE>
obligations hereunder, including any action or claim against the Manager
based on any alleged untrue statement or misstatement of a material fact
made or provided in writing by or with the consent of Advisor contained in
any registration statement, prospectus, shareholder report or other
information or materials relating to the Fund and shares issued by the
Fund, or the failure or alleged failure to state a material fact therein
required to be stated in order that the statements therein are not
misleading, which fact should have been made known or provided by the
Advisor to the Manager. With respect to any claim for which an Indemnified
Party is entitled to indemnity hereunder, the Advisor shall assume the
reasonable expenses and costs (including any reasonable attorneys' fees and
costs) of the Indemnified Party of investigating and/or defending any claim
asserted or threatened by any party, subject always to the Advisor first
receiving a written undertaking from the Indemnified Party to repay any
amounts paid on its behalf in the event and to the extent of any subsequent
determination that the Indemnified Party was not entitled to
indemnification hereunder with respect of such claim.
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time
to time while the Advisor provides services pursuant to this Contract) or any
derivative thereof or logo associated with that name is the valuable property
of the Trust and/or its affiliates, and that the Advisor has the right to use
such name (or derivative or logo) only with the approval of the Manager and
only so long as the Advisor is Advisor to the Trust and/or the Fund. Upon
termination of this Contract the Advisor shall forthwith cease to use such
name (or derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in accordance
with, the substantive laws of The Commonwealth of Massachusetts without regard
to its principles of conflicts of laws, except to the extent such laws shall
be preempted by the Investment Company Act of 1940 or by other applicable
laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an
independent contractor and, except as otherwise expressly provided herein,
shall have no authority to act for, bind or represent the Fund in any way or
otherwise be deemed to be an agent of the Fund. Likewise, the Fund, the
Manager and their affiliates, agents and employees shall not be deemed agents
of the Advisor and shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only and
in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to any
action or proceedings in respect of which indemnification may be sought
hereunder, the party seeking indemnification shall promptly notify the
other party thereof. The party from whom indemnification is sought shall
not be liable hereunder for any settlement of any action or claim effected
without its written consent, which consent shall not be reasonably
withheld.
(c) This Contract may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same
instrument.
A-15
<PAGE>
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and COLUMBIA PARTNERS,
L.L.C. INVESTMENT MANAGEMENT have each caused this instrument to be signed in
duplicate in its behalf, all as of the day and year first above written.
Quantitative Advisors, Inc.
By /s/ Edward L. Pittman
----------------------------------
EDWARD L. PITTMAN
President
Columbia Partners, L.L.C.,
Investment Management
By
----------------------------------
A-16
<PAGE>
EXHIBIT B
OTHER INFORMATION REGARDING
COLUMBIA PARTNERS, L.L.C., INVESTMENT MANAGEMENT
The directors and principal executive officer of Columbia Partners, L.L.C.,
Investment Management, and their principal occupations are as shown below. The
business address of each such person, unless otherwise indicated, is 1701
Pennsylvania Avenue, N.W., Washington, DC 20006. The principal occupation of
each person is with Columbia Partners, unless otherwise stated.
<TABLE>
<CAPTION>
NAME AND POSITION
WITH ADVISOR PRINCIPAL OCCUPATION
----------------- --------------------
<S> <C>
Terence W. Collins...................
Chief Executive Officer and President
Landon V. Butler..................... President, Landon Butler & Company
Director
Lester G. Fant, III.................. Director of various public and private
Director organizations
Paul X. Kelley....................... Vice President for Corporate Strategy,
Director Cassidy & Associates, Inc.
John R. McKernan, Jr. ............... Senior Advisor, Galway Partners, L.L.C.
Director
Closson L. Vaughan................... Managing Partner, Columbia Partners
Director
Robert A. von Pentz.................. Managing Partner, Columbia Partners
Director
</TABLE>
B-1
<PAGE>
EXHIBIT C
QUANTITATIVE ADVISORS, INC.
ADVISORY CONTRACT
Advisory Contract dated as of , 1996, between QUANTITATIVE ADVISORS,
INC., a Massachusetts corporation (the "Manager") and INDEPENDENCE
INTERNATIONAL ASSOCIATES, INC., a Massachusetts Corporation (the "Adviser").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is agreed
as follows:
1. SERVICES TO BE RENDERED BY ADVISER TO FUND.
(a) Subject always to the control of the Trustees of Quantitative Group
of Funds, a Massachusetts business trust (the "Fund"), and the Manager, the
Adviser, at its expense, will furnish continuously an investment program
for the Quantitative International Equity Fund (the "Series") of the Fund.
The Adviser will determine what securities shall be purchased, held, sold
or exchanged by the Series and what portion, if any, of the assets of the
Series shall be held uninvested and shall, on behalf of the Series, make
changes in the Series' investments. In the performance of its duties, the
Adviser will comply with the provisions of the Agreement and Declaration of
Trust and By-laws of the Fund and the stated investment objectives,
policies and restrictions of the Series as set forth in the then current
Prospectus and/or Statement of Additional Information of the Fund, and will
use its best efforts to safeguard and promote the welfare of the Series,
and to comply with other written policies which the Trustees or the Manager
may from time to time determine and of which the Adviser has received
notice and which the Adviser has accepted in writing, and shall exercise
the same care and diligence expected of the Trustees. In furnishing an
investment program to the Series and in determining what securities shall
be purchased, held, sold or exchanged by the Series, the Adviser will do
all things necessary so that the Series may qualify as a "regulated
investment company" within the meaning of the Internal Revenue Code of
1986, as amended, and will comply with all provisions of applicable Law
including, without limitations the Investment Company Act of 1940, as
amended, and the Rules and Regulations thereunder. The Adviser shall make
its officers and employees available to the Manager from time to time at
reasonable times to review investment policies of the Series and to consult
with the Manager regarding the investment affairs of the Series.
(b) The Adviser, at its expense, will (1) furnish all necessary
investment and management facilities, including salaries of personnel,
required for it to execute its duties faithfully, (2) keep records relating
to the purchase, sale or current status of portfolio securities, and (3)
provide clerical personnel and equipment necessary for the efficient
rendering of investment advice to the Series. The Adviser shall have no
obligation with respect to the determination of the Series' net asset value
except to provide the Fund's Custodian with information as to the
securities held in the Series' portfolio. The Adviser shall not be
obligated to provide shareholder accounting services.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio investments for the Series' account with brokers or dealers
selected by the Adviser. In the selection of such brokers or dealers and
the placing of such orders, the Adviser shall use its best efforts to
obtain for the Series the most favorable price and execution available,
except to the extent it may be permitted to pay higher brokerage
commissions for
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<PAGE>
brokerage and research services as described below. In using its best
efforts to obtain for the Series the most favorable price and execution
available, the Adviser, bearing in mind the Series' best interests at all
times, shall consider all factors it deems relevant, including by way of
illustration, price, the size of the transaction, the nature of the market
for the security, the amount of the commission, if any, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker or dealer involved and the
quality of service rendered by the broker or dealer in other transactions.
Subject to such written policies as the Trustees or the Manager may
determine and of which the Adviser has received notice and which the
Adviser has accepted in writing, the Adviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Contract or
otherwise solely by reason of its having caused the Series to pay a broker
or dealer that provides brokerage and research services to the Adviser an
amount of commission for effecting a portfolio investment transaction in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction, if the Adviser determines in good
faith that such amount of commission was 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 responsibilities with respect to the Fund and to other
clients as to which the Adviser or persons controlled by or under common
control with the Adviser exercise investment discretion. The Adviser agrees
that in connection with purchases or, sales of portfolio investments for
the Series' account, neither the Adviser or any officer, director, employee
or agent of the Adviser shall act as a principal or receive any commission
other than as provided in Section 3.
(d) The Adviser shall not be obligated to pay any expenses of or for the
Series not expressly assumed by the Adviser pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or employee of,
or be otherwise interested in, the Adviser, and in any person controlled by or
under common control with the Adviser, and that the Adviser and any person
controlled by or under common control with the Adviser may have an interest in
the Fund. It is also understood that the Adviser and persons controlled by or
under common control with the Adviser have and may have advisory, management
service or other contracts with other organizations (including without
limitation other investment companies and other managed accounts) and persons,
and may having other interests and businesses. Advice rendered to the Series
shall be confidential and may not be used by any shareholder, Trustee,
officer, director, employee or agent of the Fund or of the Manager or by the
Adviser of any other series of the Fund.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISER.
The Manager will pay to the Adviser as compensation for the Adviser's
services rendered and for the expenses borne by the Adviser pursuant to
Section 1, a fee, computed and paid monthly at the annual rate of 0.5% of the
average daily net asset value of the Series. Such fee shall be paid by the
Manager and not by the Series out of the management fee paid by the Fund to
the Manager pursuant to the Management Contract between the Manager and the
Fund or out of any other funds available to the Manager. Such average daily
net asset value of the Series shall be determined by taking an average of all
the determinations of such net asset value during such month at the close of
business on each business day during such month while this Contract is in
effect. Such fee shall be payable for each month within 30 days after the end
of such month. Until this Contract is approved by the shareholders of the
Series, the fees shall be paid to an interest-bearing escrow account. Upon
approval of the Contract by the shareholders the fees, including interest
earned on the fees, will be paid to the
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<PAGE>
Adviser, provided, however, that if the shareholders do not approve this
Contract by the earlier of 120 days after the commencement of this agreement
or March 1, 1997, the fees held in escrow shall be paid to the Series.
If the Adviser shall serve for less than the whole of a month, the foregoing
compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract between the Fund and the Manager terminates generally or with respect
to the Series; and this Contract shall not be amended unless such amendment be
approved at a meeting by the affirmative vote of a majority of the outstanding
shares of the Series, and by the vote, cast in person at a meeting called for
the purpose of voting on such approval, of a majority of the Trustees of the
Fund who are not interested persons of the Fund or of the Manager or of the
Advisers.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall remain in
full force and effect as to the Series continuously thereafter (unless
terminated automatically as set forth in Section 4) until terminated as
follows:
(a) The Fund or the Manager may at any time terminate this Contract as to
the Series by not more than sixty days' nor less than thirty days' written
notice delivered or mailed by registered mail, postage prepaid, to the
Adviser, or
(b) The Adviser may at any time terminate this Contract as to the Series
by not less than one hundred fifty days' written notice delivered or mailed
by registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Fund or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Series, and
(ii) a majority of the Trustees of the Fund who are not interested persons
of the Fund or of the Manager or of the Adviser, by vote cast in person at
a meeting called for the purpose of voting on such approval, do not
specifically approve at least annually the continuance of this Contract,
then this Contract shall automatically terminate as to the Series at the
close of business on the second anniversary of the date hereof or the
expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the continuance
of this Contract is submitted to the shareholders of the Series for their
approval and such shareholders fail to approve such continuance of this
Contract as provided herein, the Adviser may continue to serve hereunder in
a manner consistent with the Investment Company Act of 1940 and the Rules
and Regulations thereunder.
Action by the Fund under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Series.
Termination of this Contract pursuant to this Section 5 shall be without the
payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of
the Fund or the Series, as the case may be, present (in person or by proxy)
and entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Fund or the Series, as the case may be,
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<PAGE>
entitled to vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of the Fund or the
Series, as the case may be, entitled to vote at such meeting, whichever is
less.
For the purposes of this Contract, the terms "affiliated person", "control",
"interested person" and "assignment" shall have their respective meanings
defined in the Investment Company Act of 1940 and the Rules and Regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act; the term "specifically
approve at least annually" shall be construed in a manner consistent with the
Investment Company Act of 1940 and the Rules and Regulations thereunder; and
the term "brokerage and research services" shall have the meaning given in the
Securities Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NONLIABILITY OF ADVISER.
In the absence of willful misfeasance, bad faith or gross negligence on the
part, of the Adviser, its officers, directors, employees or agents or reckless
disregard of the Adviser's obligations and duties hereunder, neither the
Adviser nor its officers, directors, employees or agents shall be subject to
any liability to the Fund or to the Manager, or to any shareholder of the
Fund, for any act or omission in the course of, or connected with, rendering
services hereunder.
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. AND INDEPENDENCE
INTERNATIONAL ASSOCIATES, INC. HAVE EACH CAUSED THIS INSTRUMENT TO BE SIGNED
IN DUPLICATE IN ITS BEHALF BY ITS PRESIDENT OR A VICE PRESIDENT THEREUNTO DULY
AUTHORIZED, ALL AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
Quantitative Advisors, Inc.
By: /s/ Edward L. Pittman
---------------------------------
EDWARD L. PITTMAN
President
Independence International
Associates, Inc.
By: /s/ Lyle H. Davis
---------------------------------
LYLE H. DAVIS
President
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<PAGE>
QUANTITATIVE ADVISORS, INC.
ADVISORY CONTRACT
Advisory Contract ("Contract") dated as of , 1996, between QUANTITATIVE
ADVISORS, INC., a Massachusetts corporation (the "Manager") and INDEPENDENCE
INTERNATIONAL ASSOCIATES, INC., a Massachusetts corporation (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is agreed
as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO FUND.
(a) Subject always to the control of the trustees (the "Trustees") of
Quantitative Group of Funds, a Massachusetts business trust (the "Trust"),
and the Manager, the Advisor, at its expense, will furnish continuously an
investment program for the Quantitative Foreign Frontier Fund (the "Fund")
of the Trust. The Advisor will determine what securities shall be
purchased, held, sold or exchanged by the Fund and what portion, if any, of
the assets of the Fund shall be held uninvested and shall, on behalf of the
Fund, make changes in the Fund's investments. In the performance of its
duties, the Advisor will comply with the provisions of the Agreement and
Declaration of Trust and By-Laws of the Trust and the stated investment
objectives, policies and restrictions of the Fund as set forth in the then
current Prospectus and/or Statement of Additional Information of the Trust
and with other written policies which the Trustees or the Manager may from
time-to-time determine and of which the Advisor has received notice and the
Advisor has accepted in writing. In furnishing an investment program to the
Fund and in determining what securities shall be purchased, held, sold or
exchanged by the Fund, the Advisor shall comply in all material respects
with all provisions of applicable law governing its duties and
responsibilities hereunder, including, without limitation, the Investment
Company Act of 1940, the Investment Advisors Act of 1940, and the Rules and
Regulations thereunder, and such other laws as may be applicable to its
activities as Advisor to the Fund. The Advisor shall make its officers and
employees available to the Manager or Trustees from time-to-time at
reasonable times to review investment policies of the Fund and to consult
with the Manager or Trustees regarding the investment affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all necessary
investment and management facilities, including salaries of personnel,
required for it to execute its duties hereunder, (2) keep records relating
to the purchase, sale or current status of portfolio securities, (3)
provide clerical personnel and equipment necessary for the efficient
rendering of investment advice to the Fund, (4) furnish to the Manager such
reports and records regarding the Fund and the Advisor as the Manager or
Trustees shall from time-to-time request, and, (5) upon reasonable notice,
review written references to the Advisor, or its methodology, whether in a
Prospectus, Statement of Additional Information, sales material or
otherwise. The Advisor shall have no obligation with respect to the
determination of the Fund's net asset value, except to provide the Trust's
custodian with information as to the securities held in the Fund's
portfolio. The Advisor shall not be obligated to provide shareholder
accounting services.
(c) The Advisor shall place all orders for the purchase and sale of
portfolio investments for the Fund's account with brokers or dealers
selected by the Advisor. In the selection of such brokers or dealers and
the placing of such orders, the Advisor shall use its best efforts to
obtain for the Fund the most favorable price and execution available,
except to the extent that it may be permitted to pay higher brokerage
commissions
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<PAGE>
for brokerage and research services as described below. In using its best
efforts to obtain for the Fund the most favorable price and execution
available, the Advisor, bearing in mind the Fund's best interests at all
times, shall consider all factors it deems relevant, including by way of
illustration, price, the size of the transaction, the nature of the market
for the security, the amount of the commission, if any, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker or dealer involved and the
quality of service rendered by the broker or dealer in other transactions.
Subject to such written policies as the Trustees or the Manager may
determine, and of which the Advisor has received notice and which the
Advisor has accepted in writing, the Advisor shall not be deemed to have
acted unlawfully or to have breached any duty created by this Contract or
otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides brokerage and research services to the Advisor an
amount of commission for effecting a portfolio investment transaction in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction, if the Advisor 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 Advisor's
overall responsibilities with respect to the Trust and to other clients as
to which the Advisor or persons controlled by or under common control with
the Advisor exercise investment discretion. The Advisor agrees that in
connection with purchases or sales of portfolio instruments for the Fund's
account, neither the Advisor nor any officer, director, employee or agent
of the Advisor shall act as principal or receive any commission other than
as provided in Section 3.
(d) The assets of the Fund shall be held by the Trust's custodian in an
account which the Trust has directed the Custodian to open. The Advisor
shall at no time have custody or physical control of any of the assets of
the Fund. The Manager shall cause such custodian to provide the Advisors
with such information and reports concerning the Fund or its assets as the
Advisor may from time to time reasonably request and to accept instructions
from the Advisor with respect to such assets and transactions by the Fund
in the performance of the Advisor's duties hereunder. The Advisor shall
have no liability or obligation to pay the cost of such custodian or any of
its services.
(e) Advice rendered to the Fund shall be confidential and may not be used
by any shareholder, Trustee, officer, director, employee or agent of the
Trust or of the Manager or by the advisor of any other fund of the Trust.
Non-public information provided to the Manager on a confidential basis
regarding the Advisor's methodology shall not be made publicly available by
the Manager, except that such information may be disclosed to the Trustees
and may be disclosed to the extent necessary to comply with the federal and
state securities laws and, after notice to the Advisor, upon order of any
court or administrative agency or self regulatory organization of which the
Manager or its affiliates are members.
(f) The Advisor shall not be obligated to pay any expenses of or for the
Fund not expressly assumed by the Advisor pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a shareholder, partner, director, officer or
employee of, or be otherwise interested in, the Advisor, and in any person
controlled by or under common control with the Advisor, and that the Advisor
and any person controlled by or under common control with the Advisor may have
an interest in the Trust. It is also understood that the Advisor and persons
controlled by or under common control with the Advisor have and may have
advisory, management, service or other contracts with other organizations
(including other investment companies and other managed accounts) and persons,
and may have other interests and businesses.
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<PAGE>
Nothing in this Contract shall prohibit the Advisor or any of its affiliates
from providing any services for any other person or entity or limit the
services which the Advisor or any such affiliate can provide to any person or
entity. The Manager understands and agrees that the Advisor and its affiliates
perform investment advisory and investment management services for various
clients other than the Manager and the Trust. The Manager agrees that the
Advisor and its affiliates may give advice and take action in the performance
of duties with respect to any other client which may differ from advice given,
or the timing or nature of action taken, with respect to the Fund. Nothing in
this Agreement shall be deemed to impose upon the Advisor any obligation to
purchase or sell or to recommend for purchase or sale for the Fund any
security or other property which the Advisor or any of its affiliates may
purchase or sell for its own account or for the account of any other client,
so long as it continues to be the policy and practice of the Advisor not to
favor or disfavor consistently or consciously any client or class of clients
in the allocation of investment opportunities, so that to the extent
practical, such opportunities will be allocated among clients over a period of
time on a fair and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR.
The Manager will pay to the Advisor, as compensation for the Advisor's
services rendered and for the expenses borne by the Advisor pursuant to
Section 1, a fee, computed and paid monthly at the annual rate of 0.40% of the
aggregate average daily net asset value of the Fund. Such fee shall be paid by
the Manager and not by the Fund out of the management fee paid by the Trust to
the Manager pursuant to the Management Contract between the Manager and the
Trust or out of any other funds available to the Manager. Such average daily
net asset value of the Fund shall be determined by taking an average of all
the determinations of such net asset value during such month at the close of
business on each business day during such month while this Contract is in
effect. Such fee shall be payable for each month within 30 days after the end
of each month. Until this Contract is approved by the shareholders of the
Series, the fees shall be paid to an interest-bearing escrow account. Upon
approval of the Contract by the shareholders, the fees, including interest
earned on the fees, will be paid to the Advisor, provided, however, that if
the shareholders do not approve this Contract by the earlier of 120 days after
the commencement of this agreement or March 1, 1997, the fees held in escrow
shall be paid to the Fund.
If the Advisor shall serve for less than the whole of a month, the foregoing
compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract between the Trust and the Manager is terminated generally, or with
respect to the Fund; and this Contract shall not be amended unless (i) such
amendment is approved at a meeting by an affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Trust who are not interested persons of the Trust or of
the Manager or of the Advisor.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall remain in
full force and effect as to the Fund continuously thereafter (unless
terminated automatically as set forth in Section 4) until terminated as
follows:
(a) The Trust or the Manager may at any time terminate this Contract as
to the Fund by not more than sixty days' or less than thirty days' written
notice delivered or mailed by registered mail, postage prepaid, to the
Advisor or
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<PAGE>
(b) The Advisor may at any time terminate this Contract as to the Fund by
not less than one hundred fifty days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund, and
(ii) a majority of the Trustees of the Trust who are not interested persons
of the Trust or of the Manager or of the Advisor, by vote cast in person at
a meeting called for the purpose of voting on such approval, do not
specifically approve at least annually the continuance of this Contract,
then this Contract shall automatically terminate as to the Fund at the
close of business on the second anniversary of the date hereof or the
expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the continuance
of this Contract is submitted to the shareholders of the Fund for their
approval and such shareholders fail to approve such continuance of this
Contract as provided herein, the Advisor may continue to serve hereunder in
a manner consistent with the Investment Company Act of 1940 and the Rules
and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without the
payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of
the Trust or the Fund, as the case may be, present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Trust or the Fund, as the case may be, entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders
of more than 50% of the outstanding shares of the Trust or the Fund, as the
case may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person", "control",
"interested person" and "assignment" shall have their respective meanings
defined in the Investment Company Act of 1940 and the Rules and Regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act; the term "specifically
approve at least annually" shall be construed in a manner consistent with the
Investment Company Act of 1940 and the Rules and Regulations thereunder; and
the term "brokerage and research services" shall have the meaning given by the
Securities Exchange Act of 1934 and the Rules and Regulations thereunder.
7. NONLIABILITY OF ADVISOR.
In the absence of willful misfeasance, bad faith or gross negligence on the
part of the Advisor, its partners, officers, directors, employees or agents or
reckless disregard of the Advisor's obligations and duties hereunder, neither
the Advisor nor its officers, directors, employees or agents shall be subject
to any liability to the Trust or to the Manager, or to any shareholder of the
Trust, for any act or omission in the course of, or connected with, rendering
services hereunder, unless the Advisor is claiming indemnity from any of them
in connection herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all
securities in which assets of the Fund may be invested from time to time and
shall not be required to seek or take instructions from the Manager or the
Trustees of the Trust, or to take any action, with respect thereto.
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<PAGE>
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not violate
any obligation by which it is bound, whether arising by contract, operation
of law or otherwise, and that it has the power, capacity and authority to
enter into this Contract and to perform in accordance herewith. In
addition, the Manager represents, warrants and covenants to the Advisor
that it has the power, capacity and authority to commit the Trust to this
Contract; that a true and complete copy of the Agreement and Declaration of
Trust and By-Laws of the Trust and the stated objectives, policies and
restrictions of the Fund have been delivered to the Advisor; and that true
and complete copies of every amendment thereto will be delivered to the
Advisor as promptly as practicable after the adoption thereof. The Manager
agrees that notwithstanding any other provision of this Contract to the
contrary, the Advisor will not be bound by any such amendment until the
Advisor has received a copy thereof and has had a reasonable opportunity to
review it.
(b) The Manager acknowledges and agrees that it and the Trust shall be
solely responsible for compliance with all disclosure requirements under
all applicable federal and state laws relating to the Trust or the Fund,
including, without limitation, the Investment Company Act of 1940, as
amended, and the Rules and Regulations thereunder, and that the Advisor
shall have no liability or responsibility in connection therewith except as
to material consented to in writing by the Advisor.
(c) The Manager shall indemnify and hold harmless the Advisor, its
partners, officers, employees and agents and each person, if any, who
controls the Advisor within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation,
reasonable fees and other expenses of an Indemnified Party's counsel),
joint or several, to which the Advisor or any other Indemnified Party may
become subject under any federal or state law as a result of any failure of
the Manager or, if caused by any failure of the Manager, of the Trust or
the Fund, to disclose a material fact, or any omission by the Manager, or,
if caused by any failure of the Manager, of the Trust or the Fund, to
disclose a material fact, in any document relating to the Trust or the
Fund, except any failure or omission caused solely by (i) the incorporation
in any such document of information relating to the Advisor which is
furnished to the Manager in writing by the Advisor expressly for inclusion
in such document or (ii) a breach, of which the Manager was not aware, by
the Advisor of its duties hereunder.
(d) No public reference to, or description of, the Advisor or its
methodology or work shall be made by the Manager or the Trust, whether in a
prospectus, Statement of Additional Information or otherwise, without the
prior written consent of the Advisor which will not be unreasonably
withheld. In each case, the Manager shall provide the Advisor a reasonable
opportunity to review any such reference or description before being asked
for such consent.
10. REPRESENTATIONS OF THE ADVISOR.
The Advisor represents that the terms of this Contract do not violate any
obligation by which it is bound, whether arising by contract, operation of
law, or otherwise, and that it has the power, capacity and authority to enter
into this Contract and to perform in accordance herewith.
11. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in accordance
with, the substantive laws of The Commonwealth of Massachusetts without regard
to its principles of conflicts of laws, except to the extent such laws shall
be preempted by the Investment Company Act of 1940 or by other applicable
laws.
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<PAGE>
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. AND INDEPENDENCE
INTERNATIONAL ASSOCIATES, INC. HAVE EACH CAUSED THIS INSTRUMENT TO BE SIGNED IN
DUPLICATE IN ITS BEHALF, ALL AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
Quantitative Advisors, Inc.
By /s/ Edward L. Pittman
----------------------------------
EDWARD L. PITTMAN
President
Independence International
Associates, Inc.
By /s/ Lyle H. Davis
----------------------------------
LYLE H. DAVIS
President
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<PAGE>
EXHIBIT D
OTHER INFORMATION REGARDING
INDEPENDENCE INTERNATIONAL ASSOCIATES, INC.
The directors and principal executive officer of Independence International
Associates, Inc. ("Independence") and their principal occupations will be as
shown below, effective with the acquisition of Independence by Independence
Investment Associates, Inc. The business address of each such person, unless
otherwise indicated is 75 State Street, Boston, MA 02110. The principal
occupation of each person is with Independence International Associates, Inc.,
unless otherwise stated.
<TABLE>
<CAPTION>
NAME AND POSITION
WITH ADVISOR PRINCIPAL OCCUPATION
----------------- --------------------
<C> <S>
Lyle H. Davis President
President
Foster L. Aborn Vice Chairman--Investment and Pension Section,
Director John Hancock Mutual Life Insurance Company
John T. Farady Senior Vice President and Treasurer John Hancock
Director Mutual Life Insurance Company
William C. Fletcher President, Independence Investment Associates, Inc.
Director
Lewis J. Kleinrock Retired
Director
Henry D. Shaw Senior Vice President, John Hancock Mutual Life
Director Insurance Company
Joseph A. Tomlinson Vice President, John Hancock Mutual Life Insurance
Director Company
</TABLE>
D-1
<PAGE>
[Quantitative Group of Funds]
QUANTITATIVE NUMERIC FUND PROXY
The undersigned shareholder of the Quantitative Numeric Fund (the "Numeric
Fund") Quantitative Group of Funds (the "Fund") hereby constitutes and appoints
Willard L. Umphrey, Leon Okurowski, and Mark A. Katzoff, Esq., and any and each
of them, proxies and attorneys of the undersigned, with power of substitution to
each, for and in the name of the undersigned to vote and act upon all matters
(unless and except as expressly limited below) at the Special Meeting of
Shareholders of the Fund to be held at 7:00 p.m., on October 28, 1996 at the
offices of the Fund at 55 Old Bedford Road, Lincoln, Massachusetts 01773, and at
any and all adjournments thereof, with respect to all shares of the Numeric Fund
held by the undersigned or with respect to which the undersigned would be
entitled to vote or act, with all the powers the undersigned would possess if
personally present, and to vote with respect to specific matters as set forth
below. All proxies heretofore given by the undersigned with respect to said
meeting are hereby revoked. The Trustees recommend a vote FOR Item 1.
1. Approval of New Advisory Contract with Columbia Partners
FOR / / AGAINST / / ABSTAIN / /
To transact any other business that may properly come before the meeting or any
adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES, SPECIFY DESIRED ACTION BY
CHECK MARK IN THE APPROPRIATE SPACE. IN THE ABSENCE OF SUCH SPECIFICATION THE
PERSONS NAMED PROXIES HAVE DISCRETIONARY AUTHORITY WHICH THEY INTEND TO EXERCISE
BY VOTING IN FAVOR OF ITEM 1.
Dated:____________________, 1996
--------------------------------
- ------------------------------ --------------------------------
Printed Name of Shareholder(s) Signature of Shareholder(s)
The signature on this Proxy should correspond exactly with the name in
which the shareholder(s)' shares are registered on the books of the Fund, as
shown on the mailing label of the envelope enclosing proxy material. In the case
of joint tenancies, co-executors or co-trustees, all should sign. Persons
signing as attorney, executor, administrator, trustee or guardian should give
their full title.
- --------------------------------------------------------------------------------
PLEASE RETURN THIS PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE TO:
QUANTITATIVE GROUP OF FUNDS, ATTENTION: TRANSFER AGENT
55 OLD BEDFORD ROAD, LINCOLN, MA 01773
- --------------------------------------------------------------------------------
<PAGE>
[Quantitative Group of Funds]
QUANTITATIVE NUMERIC II FUND PROXY
The undersigned shareholder of the Quantitative Numeric II Fund (the
"Numeric II Fund") Quantitative Group of Funds (the "Fund") hereby constitutes
and appoints Willard L. Umphrey, Leon Okurowski, and Mark A. Katzoff, Esq., and
any and each of them, proxies and attorneys of the undersigned, with power of
substitution to each, for and in the name of the undersigned to vote and act
upon all matters (unless and except as expressly limited below) at the Special
Meeting of Shareholders of the Fund to be held at 7:00 p.m., on October 28, 1996
at the offices of the Fund at 55 Old Bedford Road, Lincoln, Massachusetts 01773,
and at any and all adjournments thereof, with respect to all shares of the
Numeric II Fund held by the undersigned or with respect to which the undersigned
would be entitled to vote or act, with all the powers the undersigned would
possess if personally present, and to vote with respect to specific matters as
set forth below. All proxies heretofore given by the undersigned with respect to
said meeting are hereby revoked. The Trustees recommend a vote FOR Item 2.
2. Approval of New Advisory Contract with Columbia Partners
FOR / / AGAINST / / ABSTAIN / /
To transact any other business that may properly come before the meeting or any
adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES, SPECIFY DESIRED ACTION BY
CHECK MARK IN THE APPROPRIATE SPACE. IN THE ABSENCE OF SUCH SPECIFICATION THE
PERSONS NAMED PROXIES HAVE DISCRETIONARY AUTHORITY WHICH THEY INTEND TO EXERCISE
BY VOTING IN FAVOR OF ITEM 2.
Dated:____________________, 1996
--------------------------------
- ------------------------------ --------------------------------
Printed Name of Shareholder(s) Signature of Shareholder(s)
The signature on this Proxy should correspond exactly with the name in
which the shareholder(s)' shares are registered on the books of the Fund, as
shown on the mailing label of the envelope enclosing proxy material. In the case
of joint tenancies, co-executors or co-trustees, all should sign. Persons
signing as attorney, executor, administrator, trustee or guardian should give
their full title.
- --------------------------------------------------------------------------------
PLEASE RETURN THIS PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE TO:
QUANTITATIVE GROUP OF FUNDS, ATTENTION: TRANSFER AGENT
55 OLD BEDFORD ROAD, LINCOLN, MA 01773
- --------------------------------------------------------------------------------
<PAGE>
[Quantitative Group of Funds]
QUANTITATIVE INTERNATIONAL EQUITY FUND PROXY
The undersigned shareholder of the Quantitative International Equity Fund
(the "Quantitative International Equity Fund") Quantitative Group of Funds (the
"Fund") hereby constitutes and appoints Willard L. Umphrey, Leon Okurowski, and
Mark A. Katzoff, Esq., and any and each of them, proxies and attorneys of the
undersigned, with power of substitution to each, for and in the name of the
undersigned to vote and act upon all matters (unless and except as expressly
limited below) at the Special Meeting of Shareholders of the Fund to be held at
7:00 p.m., on October 28, 1996 at the offices of the Fund at 55 Old Bedford
Road, Lincoln, Massachusetts 01773, and at any and all adjournments thereof,
with respect to all shares of the Quantitative International Equity Fund held by
the undersigned or with respect to which the undersigned would be entitled to
vote or act, with all the powers the undersigned would possess if personally
present, and to vote with respect to specific matters as set forth below. All
proxies heretofore given by the undersigned with respect to said meeting are
hereby revoked. The Trustees recommend a vote FOR Item 3.
3. Approval of New Advisory Contract with Independence International Advisors,
Inc.
FOR / / AGAINST / / ABSTAIN / /
To transact any other business that may properly come before the meeting or any
adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES, SPECIFY DESIRED ACTION BY
CHECK MARK IN THE APPROPRIATE SPACE. IN THE ABSENCE OF SUCH SPECIFICATION THE
PERSONS NAMED PROXIES HAVE DISCRETIONARY AUTHORITY WHICH THEY INTEND TO EXERCISE
BY VOTING IN FAVOR OF ITEM 3.
Dated:____________________, 1996
--------------------------------
- ------------------------------ --------------------------------
Printed Name of Shareholder(s) Signature of Shareholder(s)
The signature on this Proxy should correspond exactly with the name in
which the shareholder(s)' shares are registered on the books of the Fund, as
shown on the mailing label of the envelope enclosing proxy material. In the case
of joint tenancies, co-executors or co-trustees, all should sign. Persons
signing as attorney, executor, administrator, trustee or guardian should give
their full title.
- --------------------------------------------------------------------------------
PLEASE RETURN THIS PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE TO:
QUANTITATIVE GROUP OF FUNDS, ATTENTION: TRANSFER AGENT
55 OLD BEDFORD ROAD, LINCOLN, MA 01773
- --------------------------------------------------------------------------------
<PAGE>
[Quantitative Group of Funds]
QUANTITATIVE FOREIGN FRONTIER FUND PROXY
The undersigned shareholder of the Quantitative Foreign Frontier Fund (the
"Foreign Frontier Fund") Quantitative Group of Funds (the "Fund") hereby
constitutes and appoints Willard L. Umphrey, Leon Okurowski, and Mark A.
Katzoff, Esq., and any and each of them, proxies and attorneys of the
undersigned, with power of substitution to each, for and in the name of the
undersigned to vote and act upon all matters (unless and except as expressly
limited below) at the Special Meeting of Shareholders of the Fund to be held at
7:00 p.m., on October 28, 1996 at the offices of the Fund at 55 Old Bedford
Road, Lincoln, Massachusetts 01773, and at any and all adjournments thereof,
with respect to all shares of the Foreign Frontier Fund held by the undersigned
or with respect to which the undersigned would be entitled to vote or act, with
all the powers the undersigned would possess if personally present, and to vote
with respect to specific matters as set forth below. All proxies heretofore
given by the undersigned with respect to said meeting are hereby revoked. The
Trustees recommend a vote FOR Item 4.
4. Approval of New Advisory Contract with Independence International Advisors,
Inc.
FOR / / AGAINST / / ABSTAIN / /
To transact any other business that may properly come before the meeting or any
adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES, SPECIFY DESIRED ACTION BY
CHECK MARK IN THE APPROPRIATE SPACE. IN THE ABSENCE OF SUCH SPECIFICATION THE
PERSONS NAMED PROXIES HAVE DISCRETIONARY AUTHORITY WHICH THEY INTEND TO EXERCISE
BY VOTING IN FAVOR OF ITEM 4.
Dated:____________________, 1996
--------------------------------
- ------------------------------ --------------------------------
Printed Name of Shareholder(s) Signature of Shareholder(s)
The signature on this Proxy should correspond exactly with the name in
which the shareholder(s)' shares are registered on the books of the Fund, as
shown on the mailing label of the envelope enclosing proxy material. In the case
of joint tenancies, co-executors or co-trustees, all should sign. Persons
signing as attorney, executor, administrator, trustee or guardian should give
their full title.
- --------------------------------------------------------------------------------
PLEASE RETURN THIS PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE TO:
QUANTITATIVE GROUP OF FUNDS, ATTENTION: TRANSFER AGENT
55 OLD BEDFORD ROAD, LINCOLN, MA 01773
- --------------------------------------------------------------------------------
