QUANTITATIVE GROUP OF FUNDS, 497, 1998-05-18

QUANTITATIVE GROUP OF FUNDS
497, 1998-05-18

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QUANTITATIVE GROUP OF FUNDS
55 Old Bedford Road
Lincoln, Massachusetts 01773
800-331-1244

PROSPECTUS
May 18, 1998

The Quantitative Group of Funds (the "Trust") is an open-end, non-diversified
investment company that offers six funds (collectively the "Quantitative
Funds"), one of which, the Quantitative Foreign Value Fund, is offered with this
Prospectus. A prospectus for the other Quantitative Funds is available by
calling 800-331-1244. Quantitative Advisors, Inc. ("Manager") provides overall
management and operational services to the Fund. Another investment advisor
("Advisor") is presently responsible for the day-to-day management of the Fund.
The Fund is distributed by U.S. Boston Capital Corporation ("Distributor"), an
affiliate of the Manager.

QUANTITATIVE FOREIGN VALUE FUND

The Fund has two classes of shares, Ordinary Shares and Institutional Shares.
Ordinary Shares are offered subject to a one percent (1%) deferred sales charge
and a service fee of .25%. Institutional Shares are offered on a pure no-load
basis.

The minimum investment for Ordinary Shares generally is $5,000. A $1,000
minimum applies to investors acquiring Ordinary Shares through an Automatic
Investment Plan who agree to make minimum monthly purchases of $100 and to
investors establishing certain accounts for minors. There is also a $1,000
minimum for Individual Retirement Accounts, pension, profit sharing and other
employee benefit plans. There is no minimum for subsequent investments.
Institutional Shares are available to qualified investors, as described in this
Prospectus, and to clients of certain securities dealers and financial advisors
participating in programs described later in the Prospectus. There is no
minimum for subsequent investments.

This Prospectus concisely describes the information that investors ought to know
before investing. Please read the Prospectus carefully and keep it for further
reference. A Statement of Additional Information dated May 18, 1998 is
available free of charge by writing or telephoning the Fund at 800-331-1244. The
Statement, which contains more detailed information about the Fund, has been
filed with the Securities and Exchange Commission ("SEC") and is incorporated by
reference in this Prospectus.

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TABLE OF CONTENTS
Page
<S> <C>
Quick Reference Guide 2
Summary of Fees and Expenses 3
Prior Performance of the Portfolio Manager
Managing Other Accounts 4
Investment Objectives and Policies 5
Risk Considerations 6
Management of the Fund 7
How to Invest 9
How to Make Exchanges 11
How to Redeem 12
Calculation of Net Asset Value 13
Dividends, Distributions, and Taxation 13
Portfolio Securities 14
Other Investment Practices 15
Performance Data 17
The Quantitative Group 17
</TABLE>

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>

QUANTITATIVE GROUP OF FUNDS

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QUICK REFERENCE GUIDE

Quantitative Foreign Value Fund

The investment objectives of the Fund are summarized below. There is no
assurance that the Fund will be able to attain its investment objectives.
Because the Fund is limited by specific investment objectives, investments in
the Fund may be subject to greater market fluctuations than a portfolio with
broader investment alternatives. More detailed information about the Fund,
including risk considerations relevant to the Fund, is presented in Investment
Objectives and Policies on page 5, Risk Considerations on page 6, Portfolio
Securities on page 14, and Other Investment Practices on page 15.

QUANTITATIVE FOREIGN VALUE FUND ("Foreign Value Fund" or the "Fund") seeks
long-term capital growth and income by investing primarily in a diversified
portfolio consisting of foreign securities. Generally, the Fund invests in
Western Europe, Australia, and the larger capital markets in the Far East. The
Fund may also invest in emerging markets.

Minimum Investments

The Fund offers Ordinary Shares and Institutional Shares. Purchasers of Ordinary
Shares pay a one percent (1%) deferred sales charge upon redemption and a
service fee of .25%. Institutional Shares are offered on a pure no-load basis.
The minimum investment for Ordinary Shares of a Fund generally is $5,000. A
$1,000 minimum investment applies to investors establishing an Automatic
Investment Plan who agree to make minimum monthly purchases of $100 and to
investors establishing certain accounts for minors. There is also a $1,000
minimum for Individual Retirement Accounts (IRAs), pension, profit sharing and
other employee benefit plans. Institutional Shares are available to certain
institutional investors purchasing Shares in amounts greater than or equal to
$1,000,000, and to other qualified investors described later in the Prospectus.
There is no minimum for subsequent investments. See How to Invest on page 9.

How to Invest

Ordinary Shares may be purchased at their daily net asset value by completing
the Account Application provided with this Prospectus and sending the
Application, along with a check payable to QUANTITATIVE GROUP OF FUNDS, to the
following address:

Quantitative Group of Funds
Attention: Transfer Agent
55 Old Bedford Road
Lincoln, Massachusetts 01773

Investors also may make monthly automatic investments through their checking
account. Call 800-331-1244 with any questions, or to request an IRA Account
Application. See How to Invest on page 9.

Redemptions and Exchanges

Shares may be redeemed at any time at their daily net asset value less a one
percent (1%) deferred sales charge for Ordinary Shares. Ordinary Shares of the
Fund may generally be exchanged for Ordinary Shares of another Quantitative Fund
at any time without incurring a deferred sales charge. Special rules apply to
exchanges into the Quantitative Numeric II Fund. The exchange privilege only is
available to investors in states in which shares of the Quantitative Fund to be
acquired may legally be sold. An individual Quantitative Fund may not be
offered in each state.

Redemptions or exchanges of shares may be requested in writing. Shares also may
be redeemed or exchanged by telephone or by automatic withdrawal, if those
options are selected on the Account Application. See How to Make Exchanges on
page 11 and How to Redeem on page 12.

<PAGE>

<TABLE>
<CAPTION>
SUMMARY OF FEES AND EXPENSES
<S> <C> <C>

Shareholder Transaction Expenses
Ordinary Institutional
Shares Shares
Maximum Sales Load Imposed on Purchases None None
Maximum Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Charge (as a percentage of redemption proceeds)* 1.00% None
Exchange Fee None None
</TABLE>
* Shares held in no transaction fee programs of certain broker-dealers and
shares meeting certain other criteria are not subject to the deferred sales
charge. See How to Redeem - Payment of Redemption Amount on page 12.

Annual Operating Expenses (as a percentage of average net assets)
<TABLE>
<CAPTION>

Ordinary Institutional
Shares Shares
--------- --------------
<S> <C> <C>
Management Fee 1.00% 1.00%
12b-1 Fees .25% None
Other Expenses (after reimbursement)* .65% .65%
Total Operating Expenses 1.90% 1.65%
</TABLE>

*Other expenses and total operating expenses are based on estimated amounts and
are shown before giving effect to custody credits expected to be received by the
fund in accordance with sec regulations. These credits are generated by
interest earned on uninvested cash balances maintained by the fund, and are used
to offset custodial expenses of the fund. Expenses net of custody credits are
estimated to be as follows:
<TABLE>
<CAPTION>

<S> <C> <C>
Other Expenses (after reimbursement) .53% .53%
Total Operating Expenses 1.78% 1.53%

Example: You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time period.
Expenses shown in this example are do not give effect to the custody
credits:

1 year 3 years
Ordinary Shares $ 30 $ 71
Institutional Shares $ 17 $ 52

You would pay the following expenses on the same investment, assuming
no redemption:

Ordinary Shares $ 19 $ 60
Institutional Shares $ 17 $ 52
</TABLE>

The purpose of the summary of expenses of the respective Funds is to assist an
investor in understanding the various costs and expenses that an investor in the
Fund will bear, whether directly or indirectly. For more complete descriptions
of the various costs and expenses, see Management of the Fund on page 7. None
of the above examples should be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. Expenses for
the Fund are estimated based on projected expenses for the period ended March
31, 1999. Long-term shareholders owning Ordinary Shares may pay more than the
economic equivalent of the maximum front-end sales charges permitted by the
National Association of Securities Dealers, Inc.
<PAGE>

QUANTITATIVE GROUP OF FUNDS

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PRIOR PERFORMANCE OF THE PORTFOLIO MANAGER MANAGING OTHER ACCOUNTS

Provided below are historical performance figures reflecting a composite of the
total returns for all private accounts managed by Bernard J. Horn, Jr. (the
"Portfolio Manager") for the periods indicated, that have investment objectives,
policies and strategies substantially similar to those of the Foreign Value Fund
(the "Composite International Accounts"). The data presented are unaudited and
represent the performance of the Composite International Accounts while Mr. Horn
was employed by Polaris Capital Management, Inc., the Fund's Advisor ("Polaris"
or the "Advisor"), and other investment firms. See Management of the Fund - the
Manager and the Advisor on page 7. Prior to acquiring Polaris in January 1995,
Mr. Horn worked as a portfolio manager at Horn & Company from February 1980 to
January 1991, at Freedom Capital Management Corporation from January 1991 to
September 1992 , and at MDT Advisers, Inc. from September 1992 to December 1994.
No one other than Mr. Horn played a significant part in achieving the Composite
International Accounts' performance during the time periods shown.

At Polaris, Mr. Horn is responsible for managing the Foreign Value Fund. Mr.
Horn will generally have the same degree of investment discretion in making
decisions with respect to the Foreign Value Fund as with his private accounts,
although the Fund is subject to certain legal restrictions, set forth below,
that do not apply to private accounts. The Composite International Accounts
information is provided merely to illustrate the past performance of the
Portfolio Manager in managing substantially similar accounts, as measured
against a specified market index, and does not represent the performance of the
Foreign Value Fund, which does not yet have a performance record of its own.
Investors should not consider this performance data as indication of future
performance of the Fund, the Portfolio Manager, or the Advisor.

The performance information for the Composite International Accounts has been
adjusted to reflect the same types of fees and expenses to which the Foreign
Value Fund is subject, including the 1% redemption fee for Ordinary Shares, and
prior to any fee waivers or expense reimbursements. Due to the difference in
expenses between the Composite International Accounts and the Foreign Value
Fund, the actual returns for the Composite International Accounts would have
been higher. In addition, the Composite International Accounts are not subject
to the diversification requirements, specific tax restrictions and investment
limitations imposed on the Fund by the Investment Company Act of 1940 and
Subchapter M of the Internal Revenue Code. Consequently, the performance results
for the Composite International Accounts could have been lower than what is
shown had they been regulated as investment companies under the federal
securities laws.

The following table summarizes the calculation of average annual return for the
Composite International Accounts compared with the performance of the Morgan
Stanley Europe, Australia and Far East ("EAFE") Index for the periods indicated.

Average Annual Total Return as of 3/31/98 (Assuming
- ---------------------------------------------------
Expenses of Ordinary Shares)
- ---------------------------
<TABLE>
<CAPTION>
One Five Ten
Year Years Years
<S> <C> <C> <C>

Composite International 13.36% 13.58% 10.69%
Accounts /(1)/
Composite International
Accounts, Excluding
Cash /(1)/ 12.77% 15.91% 11.92%
EAFE Index /(2)/ 18.61% 11.93% 6.20%
</TABLE>

Average Annual Total Return as of 3/31/98 (Assuming
- ---------------------------------------------------
Expenses of Institutional Shares)
- --------------------------------
<TABLE>
<CAPTION>
One Five Ten
Year Years Years
<S> <C> <C> <C>

Composite International 14.78% 14.09% 11.08%
Accounts /(1)/
Composite International
Accounts, Excluding
Cash /(1)/ 14.19% 16.42% 12.30%
EAFE Index /(2)/ 18.61% 11.93% 6.20%
</TABLE>

(1) The term "Composite International Accounts" refers to fully discretionary
private accounts having investment objectives substantially similar to
those employed in managing the Foreign Value Fund. The percentages shown
consist of the average annual total return (net of the projected fees and
expenses for the Foreign Value Fund) for the years 1988 through 1997 of
Composite International Accounts which Bernard J. Horn, Jr., President of
Polaris, personally managed in his capacity as sole investment officer for
other investment firms by which he was then employed, and which accounts,
after January 1, 1995, continued under management by Polaris. The data for
1988 through 1994 are not, and should not be construed as, the performance
data of Polaris, which began operations in January 1995.

(2) The EAFE Index is an unmanaged index of common stocks considered to be
generally representative of the performance of issuers located in Europe,
Australia and the Far East. The Index is adjusted to reflect the
reinvestment of dividends, but does not reflect fees, brokerage
commissions, or other expenses of investing.

<PAGE>

- -----------------------------------------------------QUANTITATIVE GROUP OF FUNDS

VALUE OF $10,000 INVESTMENT IN COMPOSITE INTERNATIONAL ACCOUNTS VS. EAFE INDEX

The following line graph compares the value of $10,000 invested in the Composite
International Accounts for the ten year period ended December 31, 1997 with the
value of $10,000 invested in the EAFE Index. The performance data presented
represents past performance of the Composite International Accounts and does not
indicate future performance of the Foreign Value Fund, the Portfolio Manager, or
the Advisor. Share prices and investment returns of the Foreign Value Fund will
fluctuate with market conditions, as well as changes in company-specific
fundamentals of portfolio securities, so that an investor's shares in the Fund,
when redeemed, may be worth more or less than their original cost.
________________________________________________________________________________

[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
88 89 90 91 92 93 94 95 96 97 98
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10K EAF 10000 11206 9956 10296 9535 10740 13227 14079 15917 16233 19301
9570 10522 10931 9740 9754 11836 13914 14206 16188 18359
9647 11827 8636 10597 9930 12641 13928 14831 16188 18249
11161 12383 9560 10798 9572 12767 13803 15454 16463 16826

10K Pol 10000 12174 14045 12812 13557 14735 17537 17590 22723 27333 31136
10533 11836 16072 12021 14644 14548 17226 18967 23751 30756
9903 13165 12347 13335 13520 15279 17747 20432 23567 32117
10985 13958 12424 13045 13578 17498 17343 20784 26660 28849

</TABLE>
________________________________________________________________________________
INVESTMENT OBJECTIVES AND POLICIES

Quantitative Investment Style

The Foreign Value Fund employs a "quantitative" investment approach to
selecting investments. Investment managers using this approach to investing rely
on computer technology and financial databases to assist in the stock selection
process. Proprietary computer models are capable of rapidly ranking a large
universe of eligible investments using an array of traditional factors applied
in financial analysis, such as cash flow, earnings growth, and price to earnings
ratios, as well as other non-traditional factors, such as the bond yields in
individual countries. With the benefit of these rankings, a portfolio of
securities consistent with the Fund's investment objectives is constructed.

General

It is generally the practice of the Fund to remain fully invested during most
market conditions. However, for temporary defensive purposes, when market
conditions are such that a more conservative approach to investment is
desirable, and for liquidity purposes, the Fund may invest in the short-term
debt obligations described under Portfolio Securities on page 15. Current
income is only a secondary consideration for the Fund in selecting investments.

Because the investment alternatives available to the Fund may be limited by its
specific objectives, investors should be aware that an investment in the Fund
may be subject to greater market fluctuation than an investment in a portfolio
of securities representing a broader range of investment alternatives. In view
of the specialized nature of the investment activities of the Fund, an
investment in the Fund should not be considered a complete investment program.
There is no assurance that the Fund will achieve its investment objectives.

Quantitative Foreign Value Fund

The investment objectives of the Foreign Value Fund are to seek long-term
capital growth and income by investing in a diversified portfolio consisting
primarily
- -------------------------------------------------------------------------------
<PAGE>

QUANTITATIVE GROUP OF FUNDS

- --------------------------------------------------------------------------------
of foreign securities. Generally, the Fund invests in Western Europe, Australia,
and the larger capital markets in the Far East. The Fund may also invest in
emerging markets. The Fund's policy is to concentrate its investments in
securities issued by companies having their principal business activities
outside of the United States, and foreign government securities. Under normal
market conditions, the Fund will invest at least 65%, and may invest up to 100%,
of the value of its total assets in foreign securities. Investments by the Fund
in foreign securities may involve special considerations and additional
investment risks. See Risk Considerations - Foreign Securities below.

The Fund intends to seek investment opportunities in securities principally
traded on recognized stock exchanges in Australia, Canada, New Zealand, Western
Europe (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the
Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom) and the
Far East (Hong Kong, Japan, Malaysia and Singapore) and on such other recognized
foreign stock exchanges as may be determined from time to time.

The Fund may also invest in securities principally traded on recognized stock
exchanges in emerging markets. An emerging market is broadly defined as one
with low- to middle per capita income. The classification system used by the
World Bank and International Finance Corporation in determining the emerging
markets of the world will be used to define the eligible universe of potential
markets for investment. The Fund currently expects to invest in issuers
located in some or all of the following emerging market countries: Argentina,
Brazil, Czech Republic, Chile, China, Colombia, Greece, Hungary, India,
Indonesia, Israel, Jordan, South Korea, Malaysia, Mexico, Morocco, Pakistan,
Peru, Philippines, Poland, Portugal, Singapore, South Africa, Sri Lanka, Taiwan,
Thailand, Turkey, Venezuela and Zimbabwe. The list of countries in which the
Fund can invest may change from time to time. There is no limit as to the
percentage of the Fund's assets that may be invested in emerging markets.

RISK CONSIDERATIONS

Investors should be aware that the Foreign Value Fund may invest in foreign
securities, which involve special risks that are described below. Consequently,
only those investors who are in the financial position to assume such risks in
seeking the possibility of long-term growth of capital should consider an
investment in the Fund.

Foreign Securities

The Foreign Value Fund will have a substantial portion of its assets invested in
foreign securities. Investments in foreign securities may involve special
considerations and risks not present in investments in domestic securities.
Foreign stock markets, while growing in volume, generally have substantially
less volume than the New York Stock Exchange, and securities of some foreign
companies are less liquid and at times more volatile than securities of
comparable U.S. companies. Foreign brokerage commissions are generally higher
than in the United States, and custodial expenses for a portfolio of foreign
securities are generally higher than for a portfolio of U.S. securities.

Dividends, interest and other amounts received by the Fund on account of its
investments in foreign securities may be subject to foreign withholding taxes
and collection fees. In addition, with respect to certain foreign countries,
there is a possibility of expropriation of assets, confiscatory taxation,
political or financial instability and diplomatic developments that could affect
the value of investments in those countries. There also may be less publicly
available information about a foreign company than about a U.S. company, and
foreign companies are not generally subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to U.S. companies.

Foreign securities markets may have different clearance and settlement
procedures than the U.S. securities markets. In certain markets there have been
times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct securities trades. The
inability of the Funds to make intended securities purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result either in losses to the Fund due to subsequent declines in the value of
the portfolio security or, if the Fund has entered into a contract to sell the
security, could result in liability to the purchaser.

Emerging Markets

The Foreign Value Fund may invest a portion of its assets in issuers located in
emerging markets. The risks described above generally are greater for
investments in emerging markets. In addition, economies in individual emerging
markets may differ favorably or unfavorably from the U.S. economy in such
respects as rates of growth of gross domestic product, rates of inflation,
currency depreciation, capital reinvestment, resource

<PAGE>

- -----------------------------------------------------QUANTITATIVE GROUP OF FUNDS

self-sufficiency and balance of payments positions. Many countries with
emerging markets have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have negative effects on the
economies and securities markets of certain emerging markets countries. These
factors may strongly influence the price of securities held by the Fund in a
particular country.

Foreign Currency Risks

Because investments in foreign companies generally involve currencies of foreign
countries, changes in currency exchange rates and in exchange control
regulations may affect the value of foreign securities held by the Fund, and the
Fund may incur costs in connection with conversions between various currencies.
A change in the value of a foreign currency against the U.S. dollar will result
in a corresponding change in the U.S. dollar value of the Fund's securities
denominated in the same currency. Such changes will also affect the Fund's
income and distributions to shareholders. The Foreign Value Fund may attempt to
minimize the effect of currency fluctuation by entering into hedging
transactions. The success of these strategies will depend on the Advisor's
ability to predict movements in exchange rates. See Other Investment Practices
- - Foreign Currency Transactions on page 15.

MANAGEMENT OF THE FUND

Under Massachusetts law, the management of the Fund's business and affairs is
the ultimate responsibility of the Board of Trustees ("Trustees") of the Fund.

The Manager and the Advisor

The Fund is managed by Quantitative Advisors, Inc., 55 Old Bedford Road,
Lincoln, MA 01773, which provides overall management and administration of the
Fund. Under the terms of the management agreement, the Manager may, subject to
the approval of the Trustees, manage the Fund itself or, subject to the approval
by the Trustees and the shareholders, select one or more subadvisors (the
"Advisor") to manage the Fund. In the latter case, the Manager monitors the
Advisor's investment program and results, reviews brokerage matters, oversees
compliance by the Fund with various federal and state statutes and carries out
the directives of the Trustees.

The Manager also provides the Fund with office space, office equipment, and
personnel necessary to operate and administer the Fund's business, and
supervises the provision of services by third parties such as the Fund's
custodian.

Pursuant to an Advisory Contract with the Manager, the Advisor to the Fund
furnishes continuously an investment program for the Fund, makes investment
decisions on behalf of the Fund, places all orders for the purchase and sale of
portfolio investments for the Fund's account with brokers or dealers selected by
such Advisor and may perform certain limited related administrative functions in
connection therewith.

Under the terms of the Management Agreement and the Advisory Contract, portfolio
transactions may be executed with broker-dealers who furnish the Advisor or the
Manager, without cost to it, certain services of value to the Advisor or Manager
in advising the Fund and other clients. In so doing, the Fund may pay greater
brokerage commissions than it might otherwise pay. Sales of shares of the Fund
may also be considered as a factor in the selection of brokers for the Fund's
portfolio transactions.

The Fund emphasizes the use of computer models in the stock selection process.
These computer models generally are developed as a result of research conducted
by a team of individuals. The same investment strategy used to manage the Fund
also may be used to manage separate institutional accounts maintained at the
Manager or Advisor.

The Manager is an affiliate of U.S. Boston Capital Corporation, the Fund's
Distributor, which is a wholly owned subsidiary of U.S. Boston Corporation.
Willard L. Umphrey, CFA and Leon Okurowski, Trustees of the Funds, and Edward L.
Pittman, President of the Funds, together own 100% of the Manager's outstanding
voting securities. Messrs. Umphrey and Okurowski also are affiliates of U.S.
Boston Capital Corporation.

Day-to-day responsibility for managing the Foreign Value Fund presently is
provided by Polaris Capital Management, Inc., 125 Summer Street, Boston, MA
02110 ("Polaris"). Polaris was organized in 1995 as a Massachusetts
corporation. The firm presently has over fifty million dollars under management
for institutional clients and wealthy individuals. The Foreign Value Fund is
managed by Bernard R. Horn, Jr. Mr. Horn received a MS in management from the
Alfred P. Sloan School of Management at the Massachusetts Institute of
Technology in 1980 and a BS in Business Administration from Northeastern
University in 1978. Prior to founding Polaris in 1995, Mr. Horn worked as a
portfolio manager at Horn & Company, Freedom

- -------------------------------------------------------------------------------
<PAGE>

QUANTITATIVE GROUP OF FUNDS

- --------------------------------------------------------------------------------
Capital Management Corporation, and MDT Advisers, Inc.

Management and Advisory Fees

As compensation for services rendered, the Fund pays the Manager a monthly fee
at the annual rate of 1% of the average daily net asset value of the Foreign
Value Fund. From this fee, the Manager pays the expenses of providing investment
advisory services to the Fund, including the fees of the Advisor(s) of the Fund,
if applicable (see Advisory Contract below).

The Manager may voluntarily agree to limit the total operating expenses of the
Fund for a period of time by waiving fees or reimbursing the Fund for an expense
that it would otherwise incur. In such cases, the Manager may seek
reimbursement from the Fund if the Fund's total operating expenses fall below
that limit prior to the end of the Fund's fiscal year.

In addition to the management fee, the Fund pays all expenses not assumed by the
Manager, including, without limitation, Trustees' fees and fees for auditing,
legal, custodian and shareholder services. All general expenses of the Trust are
allocated among and charged to the assets of the on a basis that the Trustees
deem fair and equitable, which may be based on the relative net assets of the
Fund to those of the other Quantitative Funds, or the nature of the services
performed and relative applicability to the Fund.

Advisory Contracts

For services rendered, the Manager pays to the Advisor of the Fund a fee based
on a percentage of the management fee. The fee paid by the Manager to the
Advisor of the Fund is (i) 35% of the management fee paid by the Trust to the
Manager for assets under management in the Fund up to $30,000,000 and (ii) 50%
of the management fee paid by the Trust to the Manager for assets under
management in the Fund over $30,000,000 .

The Manager and the Trust on behalf of the Fund and the Quantitative Funds
intend to seek an exemptive order from the Securities and Exchange Commission
that would permit the Manager, subject to certain conditions such as initial
shareholder approval, to enter into or amend an Advisory Contract without
obtaining shareholder approval each time. The initial shareholder of the Fund
has voted to give the Fund and the Manager this ongoing authority, subject to
the issuance of the exemptive order. If the order is issued, with Trustee
approval, the Manager would be permitted to employ a new Advisor for the Fund,
change the terms of the Advisory Contracts, or enter into a new Advisory
Contract with the Advisor. Under the exemptive order, the Manager would retain
ultimate responsibility to oversee the Adviser and to recommend its hiring,
termination, and replacement. Shareholders would continue to have the right to
terminate the Advisory Contract at any time by a vote of the majority of the
outstanding voting securities of the Fund. Shareholders would be notified of
any Advisor changes or other material amendments to Advisory Contract that
occurs under these arrangements.

Distributor and Distribution Plan

U.S. Boston Capital Corporation, 55 Old Bedford Road, Lincoln, MA 01773
("Distributor"), a Massachusetts corporation organized April 23, 1970, is a
broker-dealer registered under the Securities Exchange Act of 1934 and a member
of the National Association of Securities Dealers, Inc. The Distributor acts as
the principal distributor of the Fund's shares pursuant to a written agreement
dated April 17, 1985 ("Distribution Agreement"). Under the Distribution
Agreement, the Distributor is not obligated to sell any specific amount of
shares of the Fund and will purchase shares for resale only against orders for
shares. The Distribution Agreement calls for the Distributor to use its best
efforts to secure purchasers for shares of the Fund.

Under the terms of a Distribution Plan ("12b-1 Plan") adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940 ("Investment Company Act"), the
Fund pays the Distributor a monthly fee at the annual rate of 0.25% of the
average net asset value of Ordinary Shares of the Foreign Value Fund held in
shareholder accounts opened during the period the 12b-1 Plan is in effect, as
determined at the close of each business day during the month. The 12b-1 Plan is
a "compensation" plan, which means that although the Trustees of the Fund are
expected to take into account the expenses of the Distributor in their periodic
review of the 12b-1 Plan, the fee is payable to compensate the Distributor for
services rendered even if the amount paid exceeds the Distributor's expenses. If
the expenses of distribution exceed payments under the 12b-1 Plan and deferred
sales charges received by the Distributor, the Fund is not required to reimburse
the Distributor for excess expenses; if payments under the 12b-1 Plan and
deferred sales charges received by the Distributor exceed expenses of
distribution, the Distributor may realize a profit.

The Distributor, and in some cases the Manager, may make ongoing payments to
brokerage firms, financial institutions (including banks) and others that
facilitate the administration and servicing of shareholder accounts.

8
<PAGE>

- -----------------------------------------------------QUANTITATIVE GROUP OF FUNDS

Custodian

Investors Fiduciary Trust Company ("Custodian") is the custodian of the Fund's
securities and cash. The Fund has authorized the Custodian to deposit certain
portfolio securities in a central depository system as allowed by Federal law.

Transfer Agent

Quantitative Institutional Services ("Transfer Agent"), a division of the
Manager, is the transfer agent and dividend disbursing agent for the Fund. All
mutual fund transfer, dividend disbursing and shareholder services activities
are performed at the offices of Quantitative Institutional Services, 55 Old
Bedford Road, Lincoln, Massachusetts 01773. Account balances and other
shareholder inquiries can be directed to the Transfer Agent at 800-331-1244.
Subject to the approval of the Trustees of the Fund, the Transfer Agent or the
Fund may from time to time appoint a sub-transfer agent for the receipt of
purchase orders and funds from certain investors.

HOW TO INVEST

Classes of Shares

The Fund offers two classes of shares, Ordinary Shares and Institutional Shares.
The main distinction between the two classes of shares lies in a one percent
(1%) deferred sales charge paid upon redemption and an ongoing .25% annual
asset-based sales charge borne by Ordinary Shareholders, which are not
applicable to Institutional Shareholders. See How to Redeem - Payment of
Redemption Amount on page 12. Both classes of shares represent interests in the
same portfolios of securities and each has the same rights, except that Ordinary
Shares have exclusive voting rights with respect to the Funds' 12b-1 Plan.

Ordinary Shares

Ordinary Shares of the Fund generally are available to investors purchasing a
minimum of $5,000. However, the minimum is only $1,000 for investors who elect
to participate in the Funds' Automatic Investment Plan and invest $100 or more
per month pursuant to the Plan and investors establishing accounts for minors
pursuant to state laws governing Uniform Gifts/Transfers to Minors. There is
also a $1,000 minimum for purchases of shares held in an Individual Retirement
Account ("IRA") or similar plan established under the Employee Retirement Income
Security Act of 1974, or for any pension, profit sharing or other employee
benefit plan or participant therein, whether or not the plan is qualified under
Section 401 of the Internal Revenue Code, including any plan established under
the Self-Employed Individuals Tax Retirement Act of 1962 (HR-10). The Funds or
the Distributor, at their discretion, may waive these minimums. There is no
minimum for additional investments, although the Fund or the Distributor, at
their discretion, reserve the right to impose such a minimum at any time.
Investors may exceed the minimum initial investment for Institutional Shares by
cumulative purchases and appreciation of shares over a period of time.

Institutional Shares

Institutional Shares (formerly "Class A Shares") of a Fund generally are
available in minimum investments of $1,000,000 or more. Institutional Shares,
subject to the $1,000,000 minimum, may only be purchased by the following
classes of investors:

(i) benefit plans with at least $10,000,000 in plan assets and 200
participants, that either have a separate trustee vested with investment
discretion and certain limitations on the ability of plan beneficiaries to
access their plan investments without incurring adverse tax consequences or
which allow their participants to select among one or more investment options,
including the Fund; (ii) banks and insurance companies purchasing shares for
their own account; (iii) a bank, trust company, credit union, savings
institution or other depository institution, its trust departments or common
trust funds purchasing for non-discretionary customers or accounts; (iv) certain
fee paid registered investment advisors not affiliated with the Manager or
Distributor purchasing on behalf of their clients; and (v) investors who hold
Institutional Shares purchasing for existing Institutional Share accounts.

The following classes of investors may also purchase Institutional Shares and
are not subject to the minimum initial investment requirement:

(i) any state, county, city, or any instrumentality, department, authority, or
agency of these entities or any trust, pension, profit-sharing or other benefit
plan for the benefit of the employees of these entities which is prohibited by
applicable investment laws from paying a sales charge or commission when it
purchases shares of any registered investment management company; (ii) officers,
partners, Trustees or directors and employees of the Funds, the Funds'
affiliated corporations, or of the Funds' Advisors and their affiliated
corporations (a

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QUANTITATIVE GROUP OF FUNDS

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"Fund Employee"), the spouse or child of a Fund Employee, a Fund
Employee acting as custodian for a minor child, any trust, pension, profit-
sharing or other benefit plan for the benefit of a Fund Employee or spouse and
maintained by one of the above entities, the employee of a broker-dealer with
whom the Distributor has a sales agreement or the spouse or child of such
employee; and (iii) clients of certain securities dealers not affiliated with
the Distributor offering programs in which the client pays a separate fee to an
advisor providing financial management or consulting services, including WRAP
fee programs. The securities dealers offering WRAP fees or similar programs may
charge a separate fee for purchases and redemptions of Institutional Shares.
Neither the Fund, the Manager, nor the Distributor receives any part of the fees
charged clients of such securities dealers or financial advisors. To qualify for
the purchase of Institutional Shares, Fund Employees and other persons listed in
section (ii) must provide the Transfer Agent with a letter stating that the
purchase is for their own investment purposes only and that the shares will not
be resold except to the Funds.

Institutional Shares are not subject to any sales charges, including fees
pursuant to the Funds' 12b-1 Plan. Investments in Institutional Shares require
a special Account Application. Please call 800-331-1244 for an Application.

Making an Initial Investment

Shares of each class of the Fund may be purchased at the per share net asset
value of shares next determined after the purchase order is received by the
Fund. Orders received prior to the close of regular trading on the New York
Stock Exchange ("NYSE") (ordinarily 4:00 p.m., New York time), will receive
that evening's closing price. The Fund will accept orders for purchases of
shares on any day on which the NYSE is open. See Calculation of Net Asset Value
on page 13. The offering of shares of the Fund, may be suspended from time to
time, and the Fund reserves the right to reject any specific order.

All initial investments must be accompanied by a completed Account Application.
Investors who wish to have telephone exchange or telephone redemption privileges
for their accounts must elect these options on the Account Application.
Investors completing an Account Application should carefully review the
Application and particularly consider the discussion in this Prospectus
regarding the Fund's policies on exchanges of Fund shares and processing of
redemption requests. Some accounts, including IRA accounts, require a special
Account Application. See Investment Through Tax Deferred Retirement Plans on
page 11. For further information, including assistance in completing an Account
Application, call the Fund's toll-free number 800-331-1244.

Investments by Check

Shares of the Fund may be purchased by sending a check payable to QUANTITATIVE
GROUP OF FUNDS Specifying the name of the Fund and amount of investment,
together with the appropriate Account Application (in the case of an initial
investment) to:

Quantitative Group of Funds
Attention: Transfer Agent
55 Old Bedford Road
Lincoln, Massachusetts 01773

The account of a shareholder making an investment with a check that is not
honored for its full amount may be subject to extra charges to cover collection
costs.

Automatic Investment Plan

An investor may participate in the Automatic Investment Plan for the Fund by
completing the appropriate section of the Account Application and enclosing a
minimum investment of $1,000. A shareholder may authorize an automatic
withdrawal of at least $100 to be made from a credit balance in his or her
checking, NOW or similar account each month to purchase shares of the Fund. The
Automatic Investment Plan may be terminated at any time by the shareholder, the
Fund, or the Transfer Agent.

Investments by Wire

Investors desiring to make payment for the Fund's shares by wire should contact
the Transfer Agent at 800-331-1244 or their dealer or broker for wire
instructions. For new accounts, a completed Account Application must precede or
accompany payment. To ensure that a wire is credited to the proper account,
investors should specify their names, the name of the Fund in which they are
investing, and their account numbers. A bank may charge a fee for wiring funds.

Investments through Brokers

Ordinary Shares may be purchased through any securities dealer with whom the
Distributor has a sales agreement. Orders received by the Distributor from
dealers or brokers will receive that evening's closing price if the orders are
received by the dealer or broker from its customer prior to 4:00 p.m., or such
other time as agreed upon by the Distributor, and are transmitted

10
<PAGE>

- -----------------------------------------------------QUANTITATIVE GROUP OF FUNDS

to and received by the Distributor prior to its close of business that day.

Sales agreements may provide, among other things, that during the term thereof,
the Distributor will pay a sales fee of 1.00% of the offering price to the
dealer transmitting an order for Ordinary Shares, provided that the Ordinary
Shares sold are subject to the 1% deferred sales charge, and a service fee at an
annual rate of 0.25% of the average daily net asset value of Ordinary Shares
owned by shareholders with whom the dealer has a servicing relationship, or for
whom the dealer is the holder of record or dealer of record.

Exchange of Securities for Shares of the Fund

At the discretion of the Manager and the Advisor, shares of the Fund may be
purchased in exchange for securities of certain companies, consistent with the
Fund's investment objectives. Additional information regarding this option is
contained in the Statement of Additional Information.

Subsequent Investments

Additional purchases of shares by a shareholder for his or her existing account
in the Fund should identify the Fund and the shareholder's account number.
Failure to specify the Fund in which the additional investment is to be made
will result in the return of the additional investment to the shareholder. If
additional investments are to be made in more than one Fund, a shareholder
should, in addition to providing his or her account numbers, identify the amount
to be invested in each Fund, although payment for all additional investments may
be made by a single check.

Investments Through Tax-Deferred Retirement Plans

Retirement plans offer investors a number of benefits, including the chance to
shelter investment income and capital gains. Contributions to a retirement plan
also may be tax deductible. Custodial retirement accounts, including Individual
Retirement Accounts (IRAs), Roth IRAs, Rollover IRAs, Simplified Employee
Pension Plans (SEP-IRAs), and 403(b) Accounts for employees of tax exempt
institutions including schools, hospitals and charitable organizations require a
special Account Application. Please call 800-331-1244 for assistance. State
Street Bank and Trust Company acts as custodian for the Fund's tax-deferred
accounts. Custodial accounts are subject to specific fees. Other types of tax-
deferred accounts, including accounts established by a Plan Sponsor under
Section 401(k) of the Internal Revenue Code for employee benefit plans, may be
opened using the attached Account Application.

HOW TO MAKE EXCHANGES

Shareholders may exchange all or a portion of their shares for shares of a like
class in another Fund (subject to the applicable minimum). No exchanges will be
permitted from one class of shares to another class of shares of the same or a
different Fund. There is no fee for exchanges. The Trust offers Ordinary Shares
that, depending on the individual funds, are either no-load or subject to a 1%
deferred sales charge. Exchanges are generally permitted between Ordinary
Shares of each Fund. An investor owning Ordinary Shares subject to the deferred
sales charge may exchange into the no-load Ordinary Shares of the Quantitative
Numeric II Fund without incurring the deferred sales charge but would be
assessed the deferred sales charge upon redemption from the Fund group
regardless of the character of shares held at the time of redemption. The
exchange privilege is available only in states where shares of the Fund being
acquired may legally be sold. Individual Funds may not be registered in each
state. Shareholders should be aware that exchanges may produce a gain or loss,
as the case may be, for tax purposes. Shareholders should request a prospectus
for any Quantitative Fund into which they wish to exchange by calling 800-331-
1244.

Exchange transactions may be executed in writing or by telephone, if applicable.
Exchanges must be made between accounts that have the same name, address and tax
identification number. Exchanges will be made at the per share net asset value
of shares of such class next determined after the exchange request is received
in good order by the Fund. Telephone requests for exchange must be made prior to
the close of regular trading on the NYSE (ordinarily 4:00 p.m., New York time),
and will be honored only if the shareholder has elected the telephone exchange
option on the Account Application.

Neither the Fund, the Manager, the Distributor, nor the Transfer Agent will be
responsible for the authenticity of exchange instructions received by telephone
if they act in good faith on instructions reasonably believed to be genuine. The
Fund employs reasonable procedures to confirm that instructions communicated by
telephone are genuine. It is the Fund's policy to require some form of personal
identification prior to acting upon instructions received by telephone and to
provide written confirmation of all transactions effected by telephone.

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QUANTITATIVE GROUP OF FUNDS

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HOW TO REDEEM

Investors may directly redeem shares of the Fund by written request, by
telephone, and by automatic withdrawal. Redemptions will be made at the per
share net asset value of such shares next determined after the redemption
request is received in good order by the Fund. The Transfer Agent will accept
redemption requests only on days the NYSE is open. Requests for redemption that
are subject to any special conditions or which specify a future or past
effective date, except for certain notices of redemptions exceeding $250,000
(see Payment of Redemption Amount on page 12), cannot be accepted.

Written Request for Redemption

Shareholders are entitled to redeem all or any portion of the shares credited to
their accounts by submitting a written request for redemption signed by each
registered owner exactly as the shares are registered. The request must clearly
identify the account number and the number of shares or the dollar amount to be
redeemed.

If a shareholder redeems more than $10,000, or requests that the redemption
proceeds be paid to someone other than the shareholder of record or sent to an
address other than the address of record, the signature of the redeeming
shareholder must be signature guaranteed. The use of signature guarantees is
designed to protect both the shareholder and the Fund from the possibility of
fraudulent requests for redemption. The Transfer Agent has adopted standards and
procedures pursuant to which signature guarantees in proper form generally will
be accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies and
savings associations. Signature guarantees by notaries public are not
acceptable. Shares may not be redeemed by facsimile request.

Requests should be sent to:

Quantitative Group of Funds
Attention: Transfer Agent
55 Old Bedford Road
Lincoln, Massachusetts 01773

Telephone Redemption

Shareholders who have authorized the Fund to accept telephone instructions on
their Account Application may redeem shares credited to their account(s) by
calling the Transfer Agent at 800-331-1244 provided that they have not changed
their address of record within the last thirty days. Requests for redemption
must be made prior to the close of regular trading on the NYSE (ordinarily 4:00
p.m., New York time). Once made, a telephone request for redemption may not be
modified or canceled. The Fund, the Manager, the Distributor, and the Transfer
Agent will not be liable for any loss or damage for acting in good faith on
instructions received by telephone reasonably believed to be genuine. The Fund
employs reasonable procedures to confirm that instructions communicated by
telephone are genuine. It is the Fund's policy to require some form of personal
identification prior to acting upon instructions received by telephone, to
provide written confirmation of all transactions effected by telephone, and to
mail the proceeds of telephone redemptions only to the redeeming shareholder's
address of record.

Automatic Withdrawal Plan

A shareholder with a $10,000 minimum account may request withdrawal of a
specified dollar amount (a minimum of $100) on either a monthly or quarterly
basis. If withdrawal payments exceed dividends, the number of shares in an
account will be reduced and may eventually be depleted. An Automatic Withdrawal
Plan may be established by completing the Automatic Withdrawal Form, which is
available by calling 800-331-1244. The Automatic Withdrawal Plan may be
terminated at any time by the shareholder, the Funds or the Transfer Agent.

Redemption through Brokers

Shareholders may sell shares back to the Funds through selected dealers or
brokers. Shareholders should contact their securities broker or dealer for
appropriate instructions and for information concerning any transaction or
service fee that may be imposed by the dealer or broker. Redemption requests
received by the Distributor from dealers or brokers will receive that evening's
closing price if the requests are received by the dealer or broker from its
customer prior to 4:00 p.m., New York time, or such other time as agreed upon by
the Distributor, and are transmitted to and received by the Distributor prior to
its close of business that day.

Payment of Redemption Amount

Redemption proceeds, less a deferred sales charge of one percent (1%) for
Ordinary Shares where applicable, will generally be sent within three business
days of the execution of a redemption request. However, if the shares

12
<PAGE>

- -----------------------------------------------------QUANTITATIVE GROUP OF FUNDS

to be redeemed represent an investment made by check or through the automatic
investment plan, the Fund reserves the right not to honor the redemption request
until the check or monies have been collected.

Except as noted below, a deferred sales charge amounting to one percent (1%) of
the value of the shares redeemed will be withheld from the redemption proceeds
of Ordinary Shares and paid to the Distributor. Because of this deferred sales
charge, prospective investors should purchase Ordinary Shares only as a long-
term investment. The deferred sales charge is not imposed in the case of: (i)
Institutional Shares; (ii) involuntary redemptions; (iii) redemptions of shares
tendered for exchange; (iv) redemptions of shares held by contributory plans
qualified under Section 401(k) of the Internal Revenue Code of 1986; and (v)
redemptions of shares held in omnibus accounts maintained by no transaction fee
programs of certain broker-dealers pursuant to a written agreement between the
broker-dealer and the Fund, the Manager and/or the Distributor. In addition, the
deferred sales charge will not be imposed on redemptions of Ordinary Shares made
by Fund Employees and related persons qualified to purchase Institutional
Shares.

Redemptions in Excess of $250,000

To the extent consistent with state and federal law, the Fund may make payment
of the redemption price either in cash or in kind. Pursuant to Rule 18f-1 under
the Investment Company Act, the Fund has elected to pay in cash all requests for
redemption by any shareholder of record, but may limit such cash in respect to
each shareholder of the Fund during any 90-day period to the lesser of $250,000
or one percent (1%) of the net asset value of the Fund at the beginning of such
period. In case of a redemption in kind, securities delivered in payment for
shares of a particular class of the Fund would be valued at the same value
assigned to them in computing the net asset value per share of such class.
Shareholders receiving such securities incur brokerage costs when the securities
are sold.

The above limitation notwithstanding, if a shareholder elects to redeem shares
valued at more than $250,000 from any one account in the Fund in a 90-day
period, the redemption proceeds will be paid in cash if the shareholder provides
the Fund, at least 30 days prior to the date of the proposed redemption
transaction, with an unconditional instruction to redeem such shares on that
date. The instruction must specify the dollar amount or number of shares to be
redeemed and the date of the transaction, a minimum of 30 days after receipt of
the instruction by the Fund. The instruction may be made by telephone if the
shareholder has authorized the Fund to accept such an instruction. If the
shareholder has not done so, the instruction must be in writing with all
signatures guaranteed. Shares will be redeemed at their net asset value on the
date specified in the instruction and the redemption proceeds, less any
applicable deferred sales charge will, in the absence of a request that the
proceeds be wired or sent by electronic funds transfer, be sent by check to the
shareholder's address as it appears on his or her account registration.

If an unconditional instruction to redeem shares valued at more than $250,000 on
a specified date is subsequently canceled by a shareholder, the Fund will not
accept a like instruction from such shareholder for a period of 90 days from the
date of cancellation.

CALCULATION OF NET ASSET VALUE

Net asset value per share of shares of the Fund will be determined as of close
of market on the NYSE on each day on which the NYSE is open for trading, in the
following manner: securities for which market quotations are readily available
shall be valued at market value, which is determined by using the last reported
sale price on the primary exchange or market for each such security, or, if no
sales are reported as in the case of some securities traded over-the-counter,
the mean between the last reported bid and asked prices. Securities quoted in
foreign currencies are translated into U.S. dollars based upon the prevailing
exchange rate of each business day. Short-term notes having remaining maturities
of 60 days or less are stated at amortized cost, which approximates market,
subject to a determination by the Trustees that this method represents fair
value. All other securities and assets, including any restricted securities,
will be valued at their fair value as determined in good faith by the Trustees.
Liabilities are deducted from the total, and the resulting amount is divided by
the number of shares outstanding to produce the "net asset value" per share.

DIVIDENDS, DISTRIBUTIONS, AND TAXATION

Dividends and Distributions

The Fund's policy is to pay at least annually as dividends substantially all of
its net investment income and to distribute annually substantially all of its
net realized capital gains, if any, after giving effect to any available capital
loss carryover.

All dividends and/or distributions paid on the Fund will be paid in shares of
such class (taken at the Fund's

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<PAGE>

QUANTITIATIVE GROUP OF FUNDS

- --------------------------------------------------------------------------------
per share net asset value determined at the close of business on the ex-date of
the dividend or distribution) or, at the election of each shareholder, in cash.
Shareholders also may elect to have income dividends paid in cash and capital
gains distributions paid in additional shares at net asset value. All
distributions, whether received in shares or cash, are taxable and must be
reported by each shareholder on Federal income tax returns.

Taxation

The following discussion is intended for general information only. An investor
should consult with his or her own tax advisor as to the particular tax
consequences of an investment in the Fund. The Fund intends to qualify as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"). To so qualify, the Fund must satisfy certain income,
asset diversification and distribution requirements. For any taxable year in
which the fund so qualifies and timely distributes all of its taxable income, it
generally will be relieved of federal income and excise taxes.

For federal income tax purposes, distributions paid from the Fund's net
investment income and from any net realized short-term capital gains are taxable
to shareholders as ordinary income, whether received in cash or in additional
shares. Distributions paid from long-term capital gains are taxable to
individual shareholders at a maximum 20% or 28% capital gains rate, (depending
on the Fund's holding period for the assets giving rise to the gain)., whether
received in cash or additional shares and regardless of how long a shareholder
has held the shares. If a portion of the fund's income consists of dividends
from U.S. corporations, a portion of the dividends paid by the Fund might be
eligible for the corporate dividends-received deduction. Any distribution which
is declared in October, November or December payable to shareholders of record
on any date in those months and paid by January 31 of the next year will be
treated as paid on December 31. Distributions on Fund shares received shortly
after their purchase are subject to federal income taxes, although such
distributions may in effect be a return of capital.

Upon the sale or other disposition of shares of the Fund, a shareholder may
realize a capital gain or loss which may be eligible for reduc4ed capital gains
rates for individual shareholders, generally depending on the shareholder's
holding period for the shares.

Annually, shareholders will receive information as to the federal tax status of
distributions received from the Fund.

The Fund may be required to withhold U.S. federal income tax at the rate of 31%
of all taxable distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRA that they are subject to
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against the shareholder's U.S. federal income tax
liability.

Further information relating to tax consequences is contained in the Statement
of Additional Information. Fund distributions also may be subject to state,
local and foreign taxes.

PORTFOLIO SECURITIES

Equity Securities

The Foreign Value Fund will invest primarily in common stocks. The Fund also
may invest in other types of equity securities such as preferred stocks,
convertible securities, warrants and options. The Fund must invest at least 65%
of its assets in equity securities of foreign issuers.

Convertible Securities

The Fund may invest in convertible securities, such as convertible debentures,
bonds and preferred stock, that allow the holder thereof to convert the
instrument into common stock at a specified share price or ratio. The price of
the common stock may fluctuate above or below the specified price or ratio,
which may allow the Fund the opportunity to purchase the common stock at below
market price or, conversely, render the right of conversion worthless. The Fund
will invest in convertible securities primarily for their equity
characteristics.

Investment Companies

The Foreign Value Fund may invest up to 10% of its assets in closed-end country
funds whose shares are traded in the United States. Investments in closed-end
funds may allow the Fund to attain exposure to a broader base of companies in
certain emerging markets and to avoid foreign government restrictions that may
limit direct investment in a country's equity markets. Closed-end funds are
managed pools of securities of companies having their principal place of
business in a particular foreign country. Shares of certain of these closed-end
investment companies may at times only be acquired at market premiums to their
net asset values.

14
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- -----------------------------------------------------QUANTITATIVE GROUP OF FUNDS

Investments in closed-end funds by the Fund are subject to limitations under the
Investment Company Act.

Short-term Debt Obligations

The Fund may invest in Short-term Debt Obligations. Short-term Debt Obligations
may include obligations of the U.S. government and securities of foreign
governments. U.S. government securities purchased by the Fund will be backed by
the full faith and credit of the United States. Short-term Debt Obligations also
may include certificates of deposit and bankers acceptances issued by U.S. and
foreign banks having deposits in excess of $2 billion; commercial paper; short-
term corporate bonds; debentures; and notes; all with one year or less to
maturity. Investments in commercial paper are limited to obligations (i) rated
Prime 1 by Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard &
Poor's Corporation ("Standard & Poor's"), or in the case of any instrument that
is not rated, of comparable quality as determined by the Advisor, or (ii) issued
by companies having an outstanding debt issue currently rated Aaa or Aa by
Moody's or AAA or AA by Standard & Poor's. Investments in other corporate
obligations are limited to those having a maturity of one year or less and rated
Aaa or Aa by Moody's or AAA or AA by Standard & Poor's. Short-term Debt
Obligations also may include repurchase agreements. Investment grade securities
are securities rated in one of the top four statistical rating categories by a
nationally recognized statistical ratings organization (NRSRO) such as Moody's
or Standard & Poor's. Fixed-income securities, unless rated A or higher by
Standard & Poor's or by Moody's, may have some speculative characteristics. See
Other Investment Practices in the Statement of Additional Information for a
description of the ratings categories. The value of fixed-income securities may
fluctuate inversely in relation to the direction of interest rate changes.

OTHER INVESTMENT PRACTICES

Portfolio Turnover

A change in securities held by the Fund is known as "portfolio turnover" and
almost always involves the payment by the Fund of brokerage commissions or
dealer markups and other transaction costs on the sale of securities as well as
on the reinvestment of the proceeds in other securities. High portfolio turnover
involves correspondingly greater brokerage commissions and other transaction
costs, which will be borne directly by the Fund and may affect taxes paid by
shareholders to the extent short-term gains are distributed. Portfolio turnover
is not a limiting factor with respect to investment decisions by the Fund.

While it is, of course, impossible to predict portfolio turnover rates in future
years, portfolio turnover is not expected to exceed 100% for the Foreign Value
Fund.

Securities Loans

The Fund may make secured, short-term loans to broker-dealers of its portfolio
securities amounting to not more than 30% of its total assets. The risks in
lending portfolio securities, as with other extensions of credit, consist of
possible delay in recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially.

Options

The Fund may purchase put options and call options on widely recognized
securities indices, as well as the common stock of individual companies or
baskets of individual companies' stocks in a particular industry or sector. The
Fund may write covered call options on common stocks in its portfolio to realize
a greater current return, to provide greater flexibility in disposing of such
securities, or to partially hedge a possible stock market decline. The Fund
receives a premium on the sale of an option, but gives up the opportunity to
profit from any increase in the price of the stock above the exercise price of
the option and retains the risk of loss should the value of the underlying
security decline. There can be no assurance that the Fund will always be able to
close out options positions at acceptable prices. Both the options themselves,
as well as the underlying securities, will be traded on national securities
exchanges. The aggregate value of the securities underlying the options may not
exceed 25% of the Fund's net assets. Any gains or losses realized by the Fund as
a result of its investment in options will depend on the portfolio manager's
ability to predict correctly the direction of stock prices, interest rates and
other economic factors. See the Statement of Additional Information.

Short Sales

The Fund may sell short securities identical to ones that it owns in its
portfolio.

Foreign Currency Transactions

The Foreign Value Fund may engage in foreign currency exchange transactions
either on a spot (i.e.,

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QUANTITATIVE GROUP OF FUNDS

- --------------------------------------------------------------------------------
cash) basis at the spot rate prevailing in the foreign currency exchange market,
or through entering into forward contracts to purchase or sell foreign
currencies. The Fund will generally not enter into a forward contract with a
term of greater than one year. The Fund's Custodian will place cash or liquid
debt securities into a segregated account of the Fund in an amount equal to the
value of the Fund's total assets committed to the consummation of forward
foreign currency exchange contracts. If the value of the securities placed in
the segregated account declines, additional cash or securities will be placed in
the account on a daily basis so that the value of the account will equal the
amount of the Fund's commitments with respect to such contracts.

The Foreign Value Fund may enter into forward foreign currency exchange
contracts under two circumstances. First, when the Fund enters into a contract
for the purchase or sale of a security denominated in a foreign currency, it may
desire to "lock in" the U.S. dollar price of the security. Second, when it
appears that the currency of a particular foreign country may experience an
adverse movement against the U.S. dollar, it may enter into a forward contract
to sell an amount of the foreign currency approximating the value of some or all
of the Fund's portfolio securities denominated in such foreign currency. At all
times, however, at least 25% of the Fund's assets would not be subject to such
contracts. The effect a substantial commitment of a Fund's assets to forward
contracts would have on the investment program of the Fund and the flexibility
of the Fund to purchase additional securities are among the factors considered
in determining whether to enter into such contracts. Although forward contracts
will be used primarily to protect the Fund from adverse currency movements, they
also involve the risk that anticipated currency movements will not be accurately
predicted.

Except as specified below, and as described under Investment Restrictions of the
Fund in the Statement of Additional Information, the foregoing investment
practices are not fundamental and the Trustees may vote to change the Fund's
policies without an affirmative vote of a "majority of the outstanding voting
securities" (as defined in Investment Restrictions of the Fund) of the Fund.

Investment Restrictions

Specific investment restrictions help the Fund limit investment risks for its
shareholders. These restrictions prohibit the Fund from: acquiring more than
10% of any class of securities of any issuer, or more than 10% of the voting
securities of any issuer; investing more than 10% of its net assets in
securities of companies (including predecessors) less than three years old,
securities which are not readily marketable, restricted securities, and in
repurchase agreements that have a maturity longer than seven days; or investing
more than 25% of its total assets in any one industry; or investing more than
15% of its net assets in illiquid securities.

Other significant investment restrictions include the following fundamental
policies which, like the Fund's investment objectives, may not be changed
without the affirmative vote of a majority of the Fund's outstanding voting
securities.

(1) The Fund may not make short sales of securities or maintain a short
position, unless at all times when a short position is open the Fund owns an
equal amount of such securities (or securities convertible into, or exchangeable
without payment of any further consideration for, securities of the same issue
as, and equal in amount to, the securities sold short), and (ii) not more than
10% of the Fund's net assets (taken at current value) are held as collateral for
such sales at any one time. Such sales of securities subject to outstanding
options would not be made. The Fund may maintain short positions in a stock
index by selling futures contracts on that index.

(2) The Fund may not issue senior securities, borrow money or pledge its
assets, except that the Fund may borrow from a bank for temporary or emergency
purposes in amounts not exceeding 10% (taken at the lower of cost or current
value) of its total assets (not including the amount borrowed) and pledge its
assets to secure such borrowings. The Fund will not purchase any additional
portfolio securities so long as its borrowings amount to more than 5% of its
total assets. (For purposes of this restriction, collateral arrangements with
respect to the writing of covered call options and options on index futures and
collateral arrangements with respect to margin for a stock index future are not
deemed to be a pledge of assets and neither such arrangements nor the purchase
or sale of stock index futures or the purchase of related options are deemed to
be the issuance of a senior security).

(3) The Foreign Value Fund may not write, purchase or sell puts, calls or
combinations thereof, except that the Fund may (i) write covered call options
with respect to all of its portfolio securities; (ii) purchase put options and
call options on widely recognized securities indices, common stock of individual
companies or baskets of individual companies in a particular industry or sector;
(iii) purchase and write call options on stock index futures and on stock
indices; and (iv) sell and purchase such options to terminate existing
positions.

16
<PAGE>

- -----------------------------------------------------QUANTITATIVE GROUP OF FUNDS

Although these policies envision the Fund maintaining a position in a stock
index by selling futures contracts on that index and also envision that under
certain conditions the Fund may engage in transactions in stock index futures
and related options, the Fund does not currently intend to engage in such
transactions.

PERFORMANCE DATA

Further information about the performance of the Fund is available in the annual
reports to shareholders of the Fund, which may be obtained free of charge by
calling 800-331-1244.

From time to time, the Fund may advertise its performance in various ways.
These methods include providing information on the returns of the Fund, such as
average annual total return, and comparing the performance of the Fund to
relevant benchmarks. In reports to shareholders or other literature, the Fund
may compare its performance to that of other mutual funds with similar
investment objectives and to stock or other relevant indices. Performance
information, rankings, ratings, published editorial comments and listings
reported in national financial publications also may be used in computing
performance of the Fund (if the Fund is listed in any such publication). In
making such comparisons, the Fund may from time to time include a total return
figure for Ordinary Shares that does not take into account the 1% deferred sales
charge, in order to make a more accurate comparison to other measures of
investment return. When the period since inception is less than one year, the
total return quoted will be the aggregate return for the period. See
Performance Measures in the Statement of Additional Information.

THE QUANTITATIVE GROUP

The Fund is a series of Quantitative Group of Funds, which was established in
1983 as a business trust under Massachusetts law. The Trust initially was
established as the U.S. Boston Investment Company and was renamed the
Quantitative Group of Funds in 1993. The Trust has an unlimited authorized
number of shares of beneficial interest that may, without shareholder approval,
be divided into an unlimited number of series of such shares and an unlimited
number of classes of shares of any such series. Shares are presently divided
into six series of shares, Quantitative Small Cap Fund, Quantitative Mid Cap
Fund, Quantitative Growth and Income Fund, Quantitative International Equity
Fund, Quantitative Emerging Markets Fund and Quantitative Foreign Value Fund.
These shares are entitled to vote at any meeting of shareholders. Matters
submitted to shareholder vote must be approved by each Fund separately except
(i) when required by the Investment Company Act of 1940 shares shall be voted
together as a single class and (ii) when the Trustees have determined that the
matter does not affect each Fund, then only shareholders of the Fund(s) affected
shall be entitled to vote on the matter. Shares are freely transferable, and
are entitled to dividends as declared by the Trustees. In liquidation of a
Fund, shareholders are entitled to receive the net assets of their Fund, but not
of the other Funds. The Funds do not generally hold annual meetings of
shareholders and will do so only when required by law. Shareholders may remove
Trustees from office by votes cast in person or by proxy at a meeting of
shareholders, or by written consent.

- -------------------------------------------------------------------------------
<PAGE>

QUANTITATIVE GROUP OF FUNDS
55 Old Bedford Road
Lincoln, MA 01773
1-800-331-1244
www.quantfunds.com

MANAGER

Quantitative Advisors, Inc.
55 Old Bedford Road
Lincoln, MA 01773

ADVISOR

Polaris Capital Management, Inc.
125 Summer Street
Boston, MA 02110

DISTRIBUTOR

U.S. Boston Capital Corporation
55 Old Bedford Road
Lincoln, MA 01773

CUSTODIAN

Investors Fiduciary Trust Company
801 Pennsylvania Ave.
Kansas City, MO 64105

TRANSFER AGENT

Quantitative Institutional Services
55 Old Bedford Road
Lincoln, MA 01773

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP
160 Federal Street
Boston, MA 02110

18
<PAGE>

QUANTITATIVE GROUP OF FUNDS
QUANTITATIVE FOREIGN VALUE FUND
Statement of Additional Information
-----------------------------------

May 18, 1998
------------

This Statement of Additional Information contains information which may be of
interest to investors but which is not included in the Prospectus of
Quantitative Foreign Value Fund (the "Fund"), one of six series of Quantitative
Group of Funds (the "Trust"). The other five funds are described in a separate
Prospectus and separate statement of additional information dated August 1,
1997. This Statement is not a Prospectus and is only authorized for
distribution when accompanied by the Prospectus of the Fund dated May 18, 1998,
and should be read in conjunction with the Prospectus. Investors may obtain a
free copy of the Prospectus by writing Quantitative Group of Funds, 55 Old
Bedford Road, Lincoln, MA 01773. Capitalized terms used, but not defined,
herein have the same meaning as in the Prospectus.

TABLE OF CONTENTS
<TABLE>
<CAPTION>

PAGE
<S> <C>

INVESTMENT OBJECTIVES AND POLICIES............................................................ 2

MANAGEMENT OF THE FUNDS....................................................................... 2

PORTFOLIO TRANSACTIONS........................................................................ 5

HOW TO INVEST................................................................................. 6

HOW TO MAKE EXCHANGES......................................................................... 8

HOW TO REDEEM................................................................................. 8

CALCULATION OF NET ASSET VALUE................................................................ 9

DISTRIBUTIONS................................................................................. 10

TAXATION...................................................................................... 10

OTHER INVESTMENT PRACTICES.................................................................... 13

INVESTMENT RESTRICTIONS OF THE FUND........................................................... 17

PERFORMANCE MEASURES.......................................................................... 18

THE QUANTITATIVE GROUP........................................................................ 19
</TABLE>
<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives and policies of the Funds are summarized in the text
of the Prospectus following the captions Quick Reference Guide - Quantitative
------------------------------------
Foreign Value Fund and Investment Objectives and Policies. There is no
- ------------------ -----------------------------------
assurance that those objectives will be achieved. This Statement contains
certain additional information about those objectives and policies.

MANAGEMENT OF THE FUND

Trustees and Officers
- ---------------------

Position with
Position Distributor, U.S. Boston
Name and Address+ with Fund Principal Occupation** Capital Corporation
- ---------------------- -------------- ------------------------------- ---------------------------
<S> <C> <C> <C>

ROBERT M. ARMSTRONG Trustee Associate, Keystone None
Associates; formerly President,
Alumni Career Services, Inc.
(consulting firm); Director of
Alumni Career Services,
Harvard University,
Graduate School of
Business Administration

EDWARD A. BOND, JR. Trustee President, Bond Brothers None
Inc. (general contractors).

JOHN M. BULBROOK Trustee President, John M. Bulbrook None
Insurance Agency, Inc.

EDWARD E. BURROWS Trustee Independent consulting None
actuary - employee benefit
plans, formerly Vice President
and Director of Actuarial Services,
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, PC
(law firm/consulting);
formerly President, The Pentad
Corporation (employee benefit
consultants and actuaries).

MARK A. KATZOFF Clerk Vice President - Counsel, U.S. Vice President - Counsel
Boston Capital Corporation

LEON OKUROWSKI* Trustee,
Vice President Director and Vice President, Director and Vice President
U.S. Boston Capital
Corporation

EDWARD L. PITTMAN President, President and Treasurer, None
Treasurer Quantitative Advisors, Inc.

WILLARD L. UMPHREY* Trustee Director, President, and Director, President,
Treasurer, U.S. Boston and Treasurer
Capital Corporation

RON ZWANZIGER Trustee Director, President, and None
Chief Executive Officer,
Selfcare, Inc.
</TABLE>

2
<PAGE>

Mr. Pittman and Mr. Umphrey are brothers-in-law.

+The mailing address of each of the officers and Trustees is 55 Old Bedford
Road, Lincoln, Massachusetts 01773.

*Messrs. Umphrey and Okurowski are "interested persons" (as defined in the
Investment Company Act of 1940) of the Fund, the Manager or an Advisor.

**The principal occupations of the officers and Trustees for the last five
years have been with the employers shown above, although in some cases they have
held different positions with such employers.

Each Trustee receives an annual fee of $4,000. For services rendered during
the fiscal year ended March 31, 1997, the Fund paid Trustees' fees aggregating
$20,400.

The following Compensation Table provides, in tabular form, the following
data:

Column (1) All Trustees who receive compensation from the Trust.
Column (2) Aggregate compensation received by a Trustee from all series of the
Trust.
Columns (3) and (4) Pension or retirement benefits accrued or proposed to be
paid by the Trust. The Trust does not pay its Trustees such benefits.
Column (5) Total compensation received by a Trustee from the Trust plus
compensation received from all funds managed by the Manager for which a Trustee
serves. As there are no such funds other than the series of the Trust, this
figure is identical to column (2).

COMPENSATION TABLE
for the fiscal year ended March 31, 1998
<TABLE>
<CAPTION>

Pension or Total
Retirement Estimated Compensation
Aggregate Benefits Accrued Annual Benefits From the Trust
Name of Person, Compensation As Part of Fund Upon and Fund Complex
Position from the Trust Expenses Retirement Paid to Trustee
<S> <C> <C> <C> <C>

Robert M. Armstrong, $4,000 N/A N/A $4,000
Trustee

Edward A. Bond, Jr. $4,000 N/A N/A $4,000
Trustee

John M Bulbrook, $4,000 N/A N/A $4,000
Trustee

Edward E. Burrows, $4,000 N/A N/A $4,000
Trustee

Leon Okurowski, $4,000 N/A N/A $4,000
Trustee

Willard L. Umphrey, $4,000 N/A N/A $4,000
Trustee

Ron Zwanziger, $ 0* N/A N/A $ 0*
Trustee
</TABLE>

3
<PAGE>

*Mr. Zwanziger became a trustee in April 1998 and thus was not eligible for
compensation during the fiscal year ended March 31, 1998.

The Trust's Agreement and Declaration of Trust provides that the Fund will
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with the litigation in which they may be involved because of their
offices with the Fund, except if it is determined in the manner specified in the
Agreement and Declaration of Trust that they have not acted in good faith in the
reasonable belief that their actions were in the best interests of the Fund or
that such indemnification would relieve any officer or Trustee of any liability
to the Fund or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties. The Fund, at its
expense, will provide liability insurance for the benefit of its Trustees and
officers.

Messrs. Pittman, Umphrey and Okurowski, as officers of the Manager and the
Distributor, will benefit from the management and distribution fees paid or
allowed by the Fund and from brokerage commissions received by U.S. Boston
Capital Corporation in connection with the purchase and sale of the Fund's
portfolio securities.

Management Contract
- -------------------

The Management Contract continues in force from year to year, but only so long
as its continuance is approved at least annually by (i) vote, cast in person at
a meeting called for the purpose, of a majority of those Trustees who are not
"interested persons" of the Manager or the Fund, and by (ii) either the majority
vote of all the Trustees or the vote of a majority of the outstanding voting
securities of the Fund. The Management Contract automatically terminates on
assignment, and is terminable on 60 days' written notice by either party.

In addition to the management fee, the Fund pays all expenses not assumed by
the Manager, including, without limitation, fees and expenses of the Trustees,
interest charges, taxes, brokerage commissions, expenses of issue or redemption
of shares, fees and expenses of registering and qualifying the Trust and shares
of the Fund for distribution under federal and state laws and regulations,
charges of custodians, auditing and legal expenses, expenses of determining net
asset value of the Fund's shares, reports to shareholders, expenses of meetings
of shareholders, expenses of printing and mailing prospectuses and proxies to
existing shareholders, and its proportionate share of insurance premiums and
professional association dues or assessments. All general Trust expenses are
allocated and charged to the assets of the Fund on a basis that the Trustees
deem fair and equitable, which may be based on the relative net assets of the
Fund to those of the other Funds or the nature of the services performed and
relative applicability to the Fund. The Fund is also responsible for such non
recurring expenses as may arise, including litigation in which the Fund may be a
party, and other expenses as determined by the Trustees. The Fund may have an
obligation to indemnify its officers and Trustees with respect to such
litigation.

Advisory Contracts
- ------------------

The Advisory Contract provides that it will continue in force for two years
from its date, and from year to year thereafter, but only so long as its
continuance is approved at least annually by (i) vote, cast in person at a
meeting called for the purpose, of a majority of those Trustees who are not
"interested persons" of the Advisor, the Manager or the Funds, and by (ii)
either the majority vote of all of the Trustees or the vote of a majority of the
outstanding voting securities of each Fund to which it relates. The Advisory
Contract may be terminated without penalty with respect to the Fund by vote of
the Trustees or the shareholders of the Fund, or by the Manager on not less that
30 nor more than 60 days' written notice or by the particular Advisor on not
less than 150 days' written notice. The Advisory Contract may be amended with
respect to any Fund only by a vote of the shareholders of that Fund. The Fund
and the Manager intend to seek an exemptive order from the Securities and
Exchange Commission to enable the Manager, subject to certain conditions
including Trustee approval, to enter into or amend the Advisory Contract without
obtaining the approval of shareholders. The Advisory Contract also terminates
without payment of any penalty in the event of its assignment and in the event
that for any reason the Management Contract between the Fund and the Manager
terminates generally or terminates with respect to the Fund.

The Advisory Contract provides that the Advisor shall not 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 the

4
<PAGE>

rendering of services thereunder in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its duties on the part of the
Advisor.

Distributor and Distribution Plan
- ---------------------------------

The principal terms of the Fund's Distribution Agreement with U.S. Boston
Capital Corporation, the principal distributor of the Fund's shares ( the
"Distributor"), are described in the prospectus under the caption Management of
-------------
the Fund - Distributor and Distribution Plan.
- --------------------------------------------

To permit the Fund to pay a monthly fee to the Distributor, the Fund has
adopted a distribution plan (the "Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The Fund pays the Distributor a monthly fee at
the annual rate of 0.25% of the average net asset value of shares held in
shareholder accounts opened during the period the plan is in effect, as
determined at the close of each business day during the month. Rule 12b-1
provides that any payments made by an investment company to a distributor must
be made pursuant to a written plan describing all material aspects of the
proposed financing of distributions and that all agreements with any person
relating to implementation of the plan must be in writing. Continuance of the
Plan and the Distribution Agreement is subject to annual approval by a vote of
the Trustees, including a majority of the Trustees who are not "interested
persons" of the Fund and have no direct or indirect financial interest in the
operation of the plan or related agreements ("Qualified Trustees"), cast in
person at a meeting called for the purpose. The Plan may be terminated as to
the Fund by the vote of a majority of the Qualified Trustees, or by the vote of
a majority of the outstanding voting securities of the Fund. All material
amendments to the Plan must be approved by the Qualified Trustees and any
amendment to increase materially the amount to be spent pursuant to the Plan
must be approved by the vote of a majority of the outstanding voting securities
of the Fund. The Trustees of the Fund review quarterly a written report of the
amounts so expended and the purposes for which such expenditures were made.

The Distributor also receives the deferred sales charges withheld from
redemption proceeds, see How to Redeem, and may benefit from its temporary
-------------
holding of investors' funds in connection with certain purchases and redemptions
of shares of the Fund.

PORTFOLIO TRANSACTIONS

Investment Decisions. Investment decisions for the Fund and for other
--------------------
investment advisory clients of the Manager or the Fund's Advisor or its
affiliates are made with a view to achieving their respective investment
objectives. Investment decisions are the product of many factors in addition to
basic suitability for the particular client involved. Thus, a particular
security may be bought or sold for certain clients even though it could have
been bought or sold for other clients at the same time. Likewise, a particular
security may be bought for one or more clients when one or more other clients
are selling the security. In some instances, one client may sell a particular
security to another client. It also happens that two or more clients
simultaneously buy or sell the same security, in which event each day's
transactions in such security are, insofar as possible, allocated between such
clients in a manner designed to be equitable to each, taking into account among
other things the amount being purchased or sold by each. There may be
circumstances when purchases or sales of portfolio securities for one or more
clients will have an adverse effect on other clients.

Brokerage and Research Services. Transactions on stock exchanges and other
-------------------------------
agency transactions involve the payment by the Fund of negotiated brokerage
commissions. Such commissions vary among different brokers. Also, a particular
broker may charge different commissions according to such factors as the
difficulty and size of the transaction. There is generally no stated commission
in the case of securities traded in the over-the-counter markets, but the price
paid by the Fund usually includes an undisclosed dealer commission or mark-up.
In underwritten offerings, the price paid includes a disclosed, fixed commission
or discount retained by the underwriter or dealer.

All orders for the purchase and sale of portfolio securities for the Fund are
placed, and securities for the Fund bought and sold through a number of brokers
and dealers. In so doing, the Manager or Advisor uses 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 as described
below. In seeking the most favorable price and execution, the Manager or
Advisor, having in mind the Fund's best interests, considers all factors it
deems relevant, including, by way of illustration, price, the size of the
transaction, the nature of the market for the

5
<PAGE>

security, the amount of commission, the timing of the transaction taking into
account market prices and trends, the reputation, experience and financial
stability of the broker-dealer involved and the quality of service rendered by
the broker-dealer in other transactions.

It has for many years been common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive research, statistical and quotation services from broker-dealers
which execute portfolio transactions for the clients of such advisers.
Consistent with this practice, the Advisor and the Manager may receive research,
statistical and quotation services from certain broker-dealers with which the
Manager or Advisor place the Fund's portfolio transactions. These services,
which in some instances may also be purchased for cash, include such matters as
general economic and security market reviews, industry and company reviews,
evaluations of securities and recommendations as to the purchase and sale of
securities. Some of these services are of value to the Advisor or the Manager
in advising various of their clients (including the Fund), although not all of
these services are necessarily useful and of value in advising the Fund. The
fees paid to the Advisor by the Manager or paid to the Manager by the Fund are
not reduced because the Advisor or the Manager receive such services.

As permitted by Section 28(e) of the Securities Exchange Act of 1934, and by
the Advisory Contract, the Manager or Advisor may cause the Fund to pay a
broker-dealer which provides "brokerage and research services" (as defined in
the Act) to the Manager or Advisor an amount of disclosed commission for
effecting a securities transaction for the Fund in excess of the commission
which another broker-dealer would have charged for effecting that transaction.
The Manager's or Advisor's authority to cause the Fund to pay any such greater
commissions is subject to such written policies as the Trustees may adopt from
time to time.

Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., subject to seeking the most favorable price and execution
available and such other policies as the Trustees may determine, the Manager or
Advisor may consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.

Pursuant to conditions set forth in rules of the Securities and Exchange
Commission, the Fund may purchase securities from an underwriting syndicate of
which U.S. Boston Capital Corporation is a member (but not from U. S. Boston
Capital Corporation itself). The conditions relate to the price and amount of
the securities purchased, the commission or spread paid, and the quality of the
issuer. The rules further require that such purchases take place in accordance
with procedures adopted and reviewed periodically by the Trustees, particularly
those Trustees who are not "interested persons" of the Fund.

HOW TO INVEST

The procedures for purchasing shares are summarized in the Prospectus under
the caption How to Invest.
-------------

Exchange of Securities for Shares of the Fund. Applications to exchange
common stocks for Fund Shares must be accompanied by stock certificates (if any)
and stock powers with signatures guaranteed by domestic banks, brokers, dealers,
credit unions, national securities exchanges, registered securities associates,
clearing agencies or savings associations. Securities accepted by the Fund will
be valued as set forth under Calculation of Net Asset Value in the Prospectus as
------------------------------
of the time of the next determination of net asset value after receipt of the
securities. Shares of a Fund are issued at net asset value determined as of the
same time. All dividends, subscription, or other rights which are reflected in
the market price of accepted securities at the time of valuation become the
property of the Fund and must be delivered to the Fund by the investor upon
receipt from the issuer. A gain or loss for Federal income tax purposes would be
realized by the investor upon the exchange depending upon the cost of the
securities tendered. The Fund reserves the right not to accept any particular
securities tendered for exchange. Securities exchanged for shares of the Fund
will meet the investment objectives and policies of the Fund, will be acquired
for investment and not for resale, and will be liquid securities which are not
restricted as to transfer either by law or liquidity of market.

Open Account System. Under the Fund's Open Account System all shares
-------------------
purchased are credited directly to your account in the Fund at the time of
purchase. All shares remain on deposit with Quantitative Institutional Services,
the transfer, dividend-paying and shareholder servicing agent for the Fund (the
"Transfer Agent"). No certificates are issued.

6
<PAGE>

The following services are currently offered by the Open Account System:

1. You may make additional investments in the Fund by sending a check
(made payable to "Quantitative Group of Funds") to the Fund or by wire, as
described under How to Invest in the Prospectus.
-------------

2. You may select one of the following distribution options which best
fits your needs.

* REINVESTMENT PLAN OPTION: Income dividends and capital gain
distributions paid in additional shares at net asset value.
* INCOME OPTION: Income dividends paid in cash, capital gain
distributions paid in additional shares at net asset value.
* CASH OPTION: Income dividends and capital gain distributions
paid in cash.

You should indicate the Option you prefer, as well as the other
registration details of your account, on the Account Application. The
Reinvestment Plan Option will automatically be assigned unless you select a
different option. Dividends and distributions paid on Fund shares will be paid
in Fund shares taken at the per share net asset value of such class determined
at the close of business on the ex-date of the dividend or distribution or, at
the election of the shareholder, in cash.

3. You will receive a statement setting forth the most recent
transactions in your account after each transaction which affects your share
balance.

The cost of services rendered under the Open Account System to the holders
of the Fund are borne as an expense of all shareholders of the Fund. However,
in order to cover additional administrative costs, any shareholder requesting a
historical transcript of his account will be charged a fee based upon the number
of years researched. There is a minimum fee of $5. The right is reserved on 60
days' written notice to make charges to individual investors to cover other
administrative costs of the Open Account System.

Tax Deferred Retirement Plans. The Funds offer investors the opportunity
-----------------------------
to participate in the following types of retirement plans:

*For individuals whether or not covered by other qualified plans
*For employees of tax exempt organizations

Capital gains and income received by participants in each of the foregoing
plans are exempt from taxation until distribution from the plans. Investors
considering participation in any such plan should review specific tax laws
relating thereto and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of any such plan. Additional information,
including the fees and charges with respect to these plans, is available upon
request to the Distributor.

Individual Retirement Account (IRA). All individuals (whether or not
-----------------------------------
covered by qualified private or governmental retirement plans) may purchase
shares of the Fund pursuant to an IRA. However, contributions to an IRA for
taxable years after 1986 by an individual who is covered by a qualified private
or governmental plan may not be tax-deductible depending on the individual's
income. Detailed information concerning the IRA is available from the
Distributor. Custodian services are provided by State Street Bank and Trust
Company.

Retirement Plan for Employees of Tax Exempt Organizations (403(b)).
------------------------------------------------------------------
Employees of public school systems and certain types of charitable organizations
may enter into a deferred compensation arrangement for the purchase of shares of
any of the Funds without being taxed currently on the investment. Contributions
which are made by the employer through salary reduction are excludable from the
gross income of the employee. Such deferred compensation plans, which are
intended to qualify under Section 403 (b) of the Internal Revenue Code, are
available through the Distributor. Custodian services are provided by State
Street Bank and Trust Company.

7
<PAGE>

HOW TO MAKE EXCHANGES

The procedures for exchanging shares of the Fund for those of another Fund
are described in the Prospectus under How to Make Exchanges.
---------------------

An exchange involves a redemption of all or a portion of shares of the Fund
and the investment of the redemption proceeds in Ordinary Shares in another
Fund. The redemption will be made at the per share net asset value of the Fund
shares being redeemed which is next determined after the exchange request is
received in proper order.

Ordinary Shares of the Fund being acquired will be purchased when the
proceeds from the redemption become available, normally on the day of the
exchange request, at the per share net asset value of such class next determined
after acceptance of the purchase order by the Fund being acquired in accordance
with the customary policy of that Fund for accepting investments.

The exchange of shares of the Fund for Ordinary Shares of another Fund will
constitute a sale for federal income tax purposes on which the investor will
realize a capital gain or loss.

The exchange privilege may be modified or terminated at any time, and the
Funds may discontinue offering shares of any Fund or any class of any Fund
generally or in any particular State without notice to shareholders.

HOW TO REDEEM

The procedures for redeeming shares of the Fund are described in the
Prospectus under How to Redeem.
-------------

Proceeds will normally be forwarded on the second day on which the New York
Stock Exchange is open after a redemption request is processed; however, the
Fund reserves the right to take up to three (3) business days to make payment.
This amount may be more or less than the shareholder's investment and thus may
involve a capital gain or loss for tax purposes. If the shares to be redeemed
represent an investment made by check or through the automatic investment plan,
the Fund reserves the right not to honor the redemption request until the check
or monies have been collected.

Shareholders are entitled to redeem all or any portion of the shares
credited to their accounts by submitting a written request for redemption to
Quantitative Group of Funds. Shareholders who redeem more than $10,000, or
request that the redemption proceeds be paid to someone other than the
shareholders of record or sent to an address other than the address of record,
must have their signature(s) guaranteed by domestic banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies or savings associations. If the shareholder is
a corporation, partnership, agent, fiduciary or surviving joint owner, the Fund
may require additional documentation of a customary nature. Shareholders who
have authorized the Fund to accept telephone instructions may redeem shares
credited to their accounts by telephone. Once made, a telephone request may not
be modified or canceled.

The Fund and the Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. If the Fund
and the Transfer Agent fail to do so, they may be liable for any losses due to
unauthorized or fraudulent transactions. The Fund provides written confirmation
of all transactions effected by telephone and only mail the proceeds of
telephone redemptions to the redeeming shareholder's address of record.

The Fund may suspend this right of redemption and may postpone payment for
more than seven days only when the New York Stock Exchange is closed for other
than customary weekends and holidays, or if permitted by the rules of the
Securities and Exchange Commission during periods when trading on the Exchange
is restricted or during any emergency which makes it impracticable for the Fund
to dispose of its securities or to determine fairly the value of its net assets,
or during any other period permitted by order of the Securities and Exchange
Commission.

8
<PAGE>

The Fund reserves the right to redeem shares and mail the proceeds to the
shareholder if at any time the number of shares in the shareholder's account
falls below a specified amount, currently set at 50 shares. Shareholders will
be notified and will have 30 days to bring the account up to the required amount
before any redemption action will be taken by the Fund. To prevent a
shareholder from becoming an affiliate of the Fund, the Fund reserves the right
to redeem shares in a shareholder's account in excess of an amount set from time
to time by the Trustees. No such limit is presently in effect, but such a limit
could be established at any time and could be applicable to existing as well as
future shareholders.

CALCULATION OF NET ASSET VALUE

Net asset value per share of each class of shares of the Fund will be
determined as of close of market on the New York Stock Exchange ("NYSE"), on
each day on which the NYSE is open for trading. Currently, the NYSE is closed
Saturdays, Sundays, and the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, the Fourth of July,
Labor Day, Thanksgiving and Christmas. The Foreign Value Fund may invest in
securities listed on foreign exchanges which trade on days on which the Fund
does not compute net asset value (i.e., Saturdays and Exchange holidays) and the
net asset value of shares of the Fund may be significantly affected on such
days.

Securities for which market quotations are readily available shall be
valued at market value, which is determined by using the last reported sale
price on the primary exchange or market for each such security, or, if no sales
are reported - as in the case of some securities traded over-the-counter - the
mean between the last reported bid and asked prices. Securities quoted in
foreign currencies shall be translated into U.S. dollars based upon the
prevailing exchange rate of each business day. Short-term notes having
remaining maturities of 60 days or less are stated at amortized cost, which
approximates market, subject to a determination by the Trustees that this method
represents fair value. All other securities and assets, including any
restricted securities, will be valued at their fair value as determined in good
faith by the Trustees. Liabilities are deducted from the total, and the
resulting amount is divided by the number of shares outstanding to produce the
"net asset value" per share.

The fair value of any restricted securities from time to time held by the
Fund is determined by its Advisor in accordance with procedures approved by the
Trustees. Such valuations and procedures are reviewed periodically by the
Trustees. The fair value of such securities is generally determined as the
amount which the Fund could reasonably expect to realize from an orderly
disposition of such securities over a reasonable period of time. The valuation
procedures applied in any specific instance are likely to vary from case to
case. However, consideration is generally given to the financial position of
the issuer and other fundamental analytical data relating to the investment and
to the nature of the restrictions on disposition of the securities (including
any registration expenses that might be borne by the Fund in connection with
such disposition). In addition, such specific factors are also generally
considered as the cost of the investment, the market value of any unrestricted
securities of the same class (both at the time of purchase and at the time of
valuation), the size of the holding, the prices of any recent transactions or
offers with respect to such securities and any available analysts' reports
regarding the issuer.

Market quotations are not considered to be readily available for long-term
corporate bonds, debentures and notes; such investments are stated at fair value
on the basis of valuations furnished by a pricing service, approved by the
Trustees, which determines valuations for normal, institutional-size trading
units of such securities using methods based on market transactions for
comparable securities and various relationships between securities which are
generally recognized by institutional traders.

For purposes of determining the net asset value per share of the Fund, all
assets and liabilities initially expressed in foreign currencies will be valued
in U.S. dollars at the mean between the bid and asked prices of such currencies
against U.S. dollars.

Generally, trading in foreign securities, as well as corporate bonds, U.S.
government securities and money market instruments is substantially completed
each day at various times prior to 4:15 p.m. Eastern time upon the close of
business on the primary exchange for such securities. The values of such
securities used in determining the net asset value of the Funds' shares are
computed as of such other times. Foreign currency exchange rates are also
generally determined prior to 4:15 p.m. Eastern time. Occasionally, events
affecting the value of such securities may occur between such times and 4:15
p.m. Eastern time which will not be reflected in

9
<PAGE>

the computation of the Fund's net asset value. If events materially affecting
the value of the Fund's securities occur during such a period, then these
securities will be valued at their fair value as determined in good faith by the
Trustees.

Expenses of the Funds directly charged or attributable to the Fund will be
paid from the assets of the Fund. General Trust expenses will be allocated
among and charged to the assets of the Fund on a basis that the Trustees deem
fair and equitable, which may be the relative assets of the Fund to those of the
other Funds or the nature of the services performed and relative applicability
to the Fund.

DISTRIBUTIONS

The Fund will be treated as a separate entity for federal income tax
purposes (see Taxation), with its net realized gains or losses being determined
---------
separately, and capital loss carryovers determined and applied on a separate
Fund basis.

TAXATION

The Fund intends to qualify annually as a "regulated investment company"
("RIC") under the Internal Revenue Code of 1986, as amended (the "Code").

To qualify as a RIC, the Fund must (a) derive at least 90% of its gross
income from dividends, interest, gains from the sale or other disposition of
stock, securities or foreign currencies, certain payments with respect to
securities loans or other income derived with respect to its business of
investing in such stock, securities or currencies; and (b) diversify its
holdings so that, at the close of each quarter of its taxable year, (i) at least
50% of the value of its total assets consists of cash, cash items, Government
securities, securities of other RICs, and other securities limited generally
with respect to any one issuer to not more than 5% of the total assets of the
Fund and not more than 10% of the outstanding voting securities of such issuer
and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than Government securities and securities of
RICs); (c) distribute at least 90% of its investment company taxable income
(which includes interest, dividends, and net short-term capital gains in excess
of net long-term capital losses) each taxable year. These requirements may
limit the Fund's ability to write covered call options.

As a RIC, the Fund generally will not be subject to U.S. federal income tax
on its investment company taxable income and net capital gains (the excess of
net long-term capital gains over net short-term capital losses), if any, that it
distributes to shareholders. The Fund intends to distribute to its
shareholders, at least annually, substantially all of its investment company
taxable income and net capital gains. Amounts not distributed on a timely basis
in accordance with a calendar year distribution requirement are subject to a
nondeductible 4% excise tax. To prevent imposition of the excise tax, the Fund
must distribute during each calendar year an amount equal to the sum of (1) at
least 98% of its ordinary income (not taking into account any capital gains or
losses) for the calendar year, (2) at least 98% of its capital gains in excess
of its capital losses (adjusted for certain ordinary losses, as prescribed by
the Code) for the one-year period ending on October 31 of the calendar year, and
(3) any ordinary income and capital gains for previous years that was not
distributed during those years. A distribution will be treated as paid on
December 31 of the current calendar year if it is declared by the Fund in
October, November or December with a record date in such a month and paid by the
Fund during January of the following calendar year. Such distributions will be
taxable to shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
To prevent application of the excise tax, the Fund intends to make its
distributions in accordance with the calendar year distribution requirement.

Dividends paid out of the Fund's investment company taxable income will be
taxable to a U.S. shareholder as ordinary income. If a portion of the Fund's
income consists of dividends paid by U.S. corporations, a portion of the
dividends paid by the Fund may be eligible for the corporate dividends-received
deduction. Distributions of net capital gains, if any, designated as capital
gain dividends are taxable to individual shareholders at a maximum 20% or 28%
capital gains rate (depending on the Fund's holding period for the assets giving
rise to the gain), regardless of how long the shareholder has held the Fund's
shares, and are not eligible for the dividends-received deduction. Shareholders
receiving distributions in the form of additional shares, rather than cash,

10
<PAGE>

generally will have a cost basis in each such share equal to the net asset value
of a share of the Fund on the reinvestment date. Shareholders will be notified
annually as to the U.S. federal tax status of distributions, and shareholders
receiving distributions in the form of additional shares will receive a report
as to the net asset value of those shares.

The taxation of equity options and over-the-counter options on debt
securities is governed by Code section 1234. Pursuant to Code section 1234, the
premium received by the Fund for selling a put or call option is not included in
income at the time of receipt. If the option expires, the premium is short-term
capital gain to the Fund. If the Fund enters into a closing transaction, the
difference between the amount paid to close out its position and the premium
received is short-term capital gain or loss. If a call option written by the
Fund is exercised, thereby requiring the Fund to sell the underlying security,
the premium will increase the amount realized upon the sale of such security and
any resulting gain or loss will be a capital gain or loss, and will be long-term
or short-term depending upon the holding period of the security. With respect
to a put or call option that is purchased by the Fund, if the option is sold,
any resulting gain or loss will be a capital gain or loss, and will be long-term
or short-term, depending upon the holding period of the option. If the option
expires, the resulting loss is a capital loss and is long-term or short-term,
depending upon the holding period of the option. If the option is exercised,
the cost of the option, in the case of a call option, is added to the basis of
the purchased security and, in the case of a put option, reduces the amount
realized on the underlying security in determining gain or loss.

Certain options and futures contracts in which the Fund may invest are
"section 1256 contracts." Gains or losses on section 1256 contracts generally
are considered 60% long-term and 40% short-term capital gains or losses;
however, foreign currency gains or losses (as discussed below) arising from
certain section 1256 contracts may be treated as ordinary income or loss. Also,
section 1256 contracts held by the Fund at the end of each taxable year (and,
generally, for purposes of the 4% excise tax, on October 31 of each year) are
"marked-to-market" (that is, treated as sold at fair market value), resulting in
unrealized gains or losses being treated as though they were realized.

Generally, the hedging transactions undertaken by the Fund may result in
"straddles" for U.S. federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by the Fund. In addition, losses
realized by the Fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which the losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences to the Fund of engaging in hedging
transactions are not entirely clear. Hedging transactions may increase the
amount of short-term capital gain realized by the Fund which is taxed as
ordinary income when distributed to shareholders.

The Fund may make one or more of the elections available under the Code
which are applicable to straddles. If the Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
may operate to accelerate the recognition of gains or losses from the affected
straddle positions.

Because the straddle rules may affect the character of gains or losses,
defer losses and/or accelerate the recognition of gains or losses from the
affected straddle positions, the amount which may be distributed to
shareholders, and which will be taxed to them as ordinary income or long-term
capital gain, may be increased or decreased as compared to a fund that did not
engage in such hedging transactions.

Notwithstanding any of the foregoing, the Fund may recognize gain (but not
loss) from a constructive sale of certain "appreciated financial positions" if
the Fund enters into a short sale, offsetting notional principal contract or
forward contract transaction with respect to the appreciated position or
substantially identical property. Appreciated financial positions subject to
this constructive sale treatment are interests (including options and forward
contracts and short sales) in stock, partnership interests, certain actively
traded trust instruments and certain debt instruments. Constructive sale
treatment does not apply to certain transactions closed in the 90-day period
ending with the 30th day after the close of the taxable year, if certain
conditions are met.

11
<PAGE>

Unless certain constructive sale rules (discussed more fully above) apply,
the Fund will not realize gain or loss on a short sale of a security until it
closes the transaction by delivering the borrowed security to the lender.
Pursuant to Code Section 1233, all or a portion of any gain arising from a short
sale may be treated as short-term capital gain, regardless of the period for
which the Fund held the security used to close the short sale. In addition, the
Fund's holding period of any security which is substantially identical to that
which is sold short may be reduced or eliminated as a result of the short sale.
Recent legislation, however, alters this treatment by treating certain short
sales against the box and other transactions as a constructive sale of the
underlying security held by the Fund, thereby requiring current recognition of
gain, as described more fully above. Similarly, if the Fund enters into a short
sale of property that becomes substantially worthless, the Fund will recognize
gain at that time as though it had closed the short sale. Future Treasury
regulations may apply similar treatment to other transactions with respect to
property that becomes substantially worthless.

Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time the Fund accrues receivables or liabilities
denominated in a foreign currency, and the time the Fund actually collects such
receivables or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of certain options and futures contracts,
gains or losses attributable to fluctuations in the value of foreign currency
between the date of acquisition of the security or contract and the date of
disposition also are treated as ordinary gain or loss. These gains or losses,
referred to under the Code as "section 988" gains or losses, may increase or
decrease the amount of the Fund's investment company taxable income to be
distributed to its shareholders as ordinary income.

Upon the sale or other disposition of shares of the Fund, a shareholder may
realize a capital gain or loss which may be eligible for reduced capital gains
rates for individual shareholders, generally depending upon the shareholder's
holding period for the shares. Any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced (including shares
acquired pursuant to a dividend reinvestment plan) within a period of 61 days
beginning 30 days before and ending 30 days after disposition of the shares. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized by a shareholder on a disposition of Fund
shares held by the shareholder for six months or less will be treated as a long-
term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares. If the Fund invests in
stock of certain foreign investment companies, the Fund may be subject to U.S.
federal income taxation on a portion of any "excess distribution" with respect
to, or gain from the disposition of, such stock. The tax would be determined by
allocating such distribution or gain ratably to each day of the Fund's holding
period for the stock. The distribution or gain so allocated to any taxable year
of the Fund, other than the taxable year of the excess distribution or
disposition, would be taxed to the Fund at the highest ordinary income tax rate
in effect for such year, and the tax would be further increased by an interest
charge to reflect the value of the tax deferral deemed to have resulted from the
ownership of the foreign company's stock. Any amount of distribution or gain
allocated to the taxable year of the distribution or disposition would be
included in the Fund's investment company taxable income and, accordingly, would
not be taxable to the Fund to the extent distributed by the Fund as a dividend
to its shareholders.

Alternatively, the Fund may elect to mark to market its foreign investment
company stock, resulting in the stock being treated as sold at fair market value
on the last business day of each taxable year. Any resulting gain would be
reported as ordinary income; any resulting loss and any loss from an actual
disposition of the stock would be reported as ordinary loss to the extent of any
net mark-to-market gains previously included in income. The Fund also may
elect, in lieu of being taxable in the manner described above, to include
annually in income its pro rata share of the ordinary earnings and net capital
gain of the foreign investment company.

Income received by a Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries.

If more than 50% of the value of the Fund's total assets at the close of
its taxable year consists of securities of foreign corporations, the Fund will
be eligible and intends to elect to "pass-through" to the Fund's shareholders
the amount of foreign income and similar taxes paid by the Fund. Pursuant to
this election, a shareholder will be required to include in gross income (in
addition to taxable dividends actually received) his or her pro rata share of
the foreign income and similar taxes paid by the Fund, and will be entitled
either to deduct his or her pro rata share of foreign income and similar taxes
in computing his taxable income or to use it as a foreign tax credit against his
U.S. Federal income taxes, subject to limitations. No deduction for foreign

12
<PAGE>

taxes may be claimed by a shareholder who does not itemize deductions. Foreign
taxes generally may not be deducted by a shareholder that is an individual in
computing the alternative minimum tax.

Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's U.S. tax attributable to his total foreign
source taxable income. For this purpose, if the Fund makes the election
described in the preceding paragraph, the source of the Fund's income flows
through to its shareholders. With respect to the Fund, gains from the sale of
securities generally will be treated as derived from U.S. sources and section
988 gains will be treated as ordinary income derived from U.S. sources. The
limitation on the foreign tax credit is applied separately to foreign source
passive income, including foreign source passive income received from the Fund.
The foreign tax credit limitation rules do not apply to certain electing
individual taxpayers who have limited creditable foreign taxes and no foreign
source income other than passive investment-type income. The foreign tax credit
is eliminated with respect to foreign taxes withheld on dividends if the
dividend paying shares or the shares of the Fund are held by the Fund or the
shareholder, as the case may be, for less than 16 days (46 days in the case of
preferred shares) during the 30-day period (90-day period for preferred shares)
beginning 15 days (45 days for preferred shares) before the shares become ex-
dividend. In addition, the foreign tax credit may offset only 90% of the
revised alternative minimum tax imposed on corporations and individuals.

The foregoing is only a general description of the foreign tax credit under
current law. Because application of the credit depends on the particular
circumstances of each shareholder, shareholders are advised to consult their own
tax advisers.

The Fund may be required to withhold U.S. federal income tax at the rate of
31% of all taxable distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Corporate shareholders and certain other shareholders
specified in the Code generally are exempt from such backup withholding. Backup
withholding is not an additional tax. Any amounts withheld may be credited
against the shareholder's U.S. federal income tax liability.

Fund shareholders may be subject to state, local and foreign taxes on their
Fund distributions. In many states, Fund distributions which are derived from
interest on certain U.S. Government obligations are exempt from taxation. The
tax consequences to a foreign shareholder of an investment in the Fund may be
different from those described herein. Foreign shareholders are advised to
consult their own tax advisers with respect to the particular tax consequences
to them of an investment in a Fund. Shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them of an
investment in the Fund.

OTHER INVESTMENT PRACTICES
--------------------------

Foreign Currency Transactions. A forward foreign currency exchange contract
------------------------------
involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. These contracts are
principally traded in the inter bank market conducted directly between currency
traders (usually large commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades.

Since investments in foreign companies will usually involve currencies of
foreign countries, and since the Foreign Value Fund may temporarily hold funds
in bank deposits in foreign currencies during the completion of investment
programs, the value of the assets of the Fund as measured in U.S. dollars may be
affected favorably or unfavorably by changes in foreign currency exchange rates
and exchange control regulations, and the Funds may incur costs in connection
with conversions between various currencies. The Fund will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through entering
into forward contracts to purchase or sell foreign currencies. The Fund will
generally not enter into a forward contract with a term of greater than one
year. The Fund's Custodian will place cash or liquid debt securities into a
segregated account of the series in an amount equal to the value of the Fund's
total assets committed to the consummation of forward foreign currency exchange
contracts. If the value of the securities placed in the segregated account
declines, additional cash or securities will be placed in the account on
a daily basis so that the value of the account will equal the amount of the
Fund's commitments with respect to such contracts.

13
<PAGE>

The Foreign Value Fund will generally enter into forward foreign currency
exchange contracts under two circumstances. First, when the Fund enters into a
contract for the purchase or sale of a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security. By
entering into a forward contract for the purchase or sale, for a fixed amount of
U.S. dollars, of the amount of foreign currency involved in the underlying
security transactions, the Fund will be able to protect itself against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the subject foreign currency during the period between the date
the security is purchased or sold and the date on which payment is made or
received.

Second, when the Fund's Advisor believes that the currency of a particular
foreign country may experience an adverse movement against the U.S. dollar, it
may enter into a forward contract to sell an amount of the foreign currency
approximating the value of some or all of the Fund's portfolio securities
denominated in such foreign currency. Alternatively, where appropriate, the
Fund may hedge all or part of its foreign currency exposure through the use of a
basket of currencies where certain of such currencies act as an effective proxy
for other currencies. In such a case, the Fund may enter into a forward
contract where the amount of the foreign currency to be sold exceeds the value
of the securities denominated in such currency. The use of this basket hedging
technique may be more efficient and economical than entering into separate
forward contracts for each currency held in the Fund. The precise matching of
the forward contract amounts and the value of the securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of short-term currency market movement is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. Under certain circumstances, the Fund may commit
a substantial portion, or up to 75% of the value of its assets, to the
consummation of these contracts. The Fund's Advisor will consider the effect a
substantial commitment of its assets to forward contracts would have on the
investment program of the Fund and the flexibility of the Fund to purchase
additional securities. Other than as set forth above, the Fund will also not
enter into such forward contracts or maintain a net exposure to such contracts
where the consummation of the contracts would obligate the Fund to deliver an
amount of foreign currency in excess of the value of the Fund's portfolio
securities or other assets denominated in that currency. Under normal
circumstances, consideration of the prospect for currency parities will be
incorporated into the longer term investment decisions made with regard to
overall diversification strategies. However, the Fund's Advisor believes that
it is important to have the flexibility to enter into such forward contracts
when it determines that the best interests of the Fund will be served.

At the maturity of a forward contract, the Fund may either sell the portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.

As indicated above, it is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of the forward contract.
Accordingly, it may be necessary for the Fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign currency the
Fund is obligated to deliver and if a decision is made to sell the security and
make delivery of the foreign currency. Conversely, it may be necessary to sell
on the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver.

If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between the Fund's entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, the Fund will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
will suffer a loss to the extent the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell.

The Fund is not required to enter into forward contracts with regard to its
foreign currency-denominated securities and will not do so unless deemed
appropriate by the Fund's Advisor. It also should be realized that this method
of hedging against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. It simply establishes
a rate of exchange at a future date. Additionally,

14
<PAGE>

although such contracts tend to minimize the risk of loss due to a decline in
the value of the hedged currency, at the same time, they tend to limit any
potential gain which might result from an increase in the value of that
currency.

Although the Fund values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. They will do so from time to time, and investors should be aware
of the costs of currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer.

Short-term Debt Obligations. The Fund may invest in Short-term Debt
---------------------------
Obligations for temporary defensive purposes, and the Fund may invest in Short-
term Debt Obligations for liquidity purposes (e.g., for redemption of shares, to
pay expenses or pending other investments). Short-term Debt Obligations may
include obligations of the U.S. government and securities of foreign
governments. Short-term Debt Obligations may also include certificates of
deposit and bankers acceptances issued by U.S. and foreign banks having deposits
in excess of $2 billion, commercial paper, short-term corporate bonds,
debentures and notes and repurchase agreements, all with one year or less to
maturity. Investments in commercial paper are limited to obligations (i) rated
Prime-1 by Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard &
Poor's Corporation ("Standard & Poor's"), or in the case of any instrument that
is not rated, of comparable quality as determined by the Manager or Advisor, or
(ii) issued by companies having an outstanding debt issue currently rated Aaa or
Aa by Moody's or AAA or AA by Standard & Poor's. Investments in other corporate
obligations are limited to those having a maturity of one year or less and rated
Aaa or Aa by Moody's or AAA or AA by Standard & Poor's.

Bond Ratings. The Moody's bond ratings cited above are as follows:
------------

Aaa: Bonds that are rated "Aaa" are judged to be the best quality and to
carry the smallest degree of investment risk. Interest payments are protected
by a large or exceptionally stable margin and principal is secure.

Aa: Bonds that are rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group, they comprise what are generally
known as "high-grade" bonds. They are rated lower than the best bonds because
margins of protection may not be as large as with "Aaa" securities or other
elements may make long-term risks appear greater than those of "Aaa" securities.

The Standard & Poor's bond ratings cited above are as follows:

AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.

AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from "AAA" issues only in small degree.

Repurchase Agreements. A repurchase agreement is a contract under which a
---------------------
Fund would acquire a security for a relatively short period (usually not more
than one week), subject to the obligation of the seller to repurchase and the
Fund to resell such security at a fixed time and price (representing the Fund's
cost plus interest). The Fund will enter into repurchase agreements only with
(i) commercial banks or (ii) registered broker-dealers. Although the Fund may
enter into repurchase agreements with respect to any securities which it may
acquire consistent with its investment policies and restrictions, it is the
Fund's present intention to enter into repurchase agreements only with respect
to obligations of the U.S. government or its agencies or instrumentalities.
While the repurchase agreements entered into by the Fund will provide that the
underlying security at all times shall have a value at least equal to the resale
price stated in the agreements (and, for this purpose, the underlying security
will be marked to market daily), if the seller defaults, the Fund could realize
a loss on the sale of the underlying security to the extent that the proceeds of
the sale including accrued interest are less than the resale price provided in
the agreement including interest. In addition, if the seller should be involved
in bankruptcy or insolvency proceedings, the Fund may incur delay and costs in
selling the underlying

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<PAGE>

security or may suffer a loss of principal and interest if the Fund is treated
as an unsecured creditor and required to return the underlying collateral to the
seller's estate.

Securities Loans. The Fund may make secured loans of its portfolio securities
----------------
amounting to not more than 30% of its total assets. See Investment Restrictions
-----------------------
of the Fund. The risks in lending portfolio securities, as with other
- -----------
extensions of credit, consist of possible delay in recovery of the securities or
possible loss of rights in the collateral should the borrower fail financially.
However, such loans will be made only to broker-dealers that the Fund's Advisor
believes to be of high credit standing. Securities loans are made to broker-
dealers pursuant to agreements requiring that loans be continuously secured by
collateral in cash or cash equivalents (such as U.S. Treasury bills) at least
equal at all times to the market value of the securities lent. The borrower
pays to the Fund an amount equal to any dividends or interest received on the
securities lent. The Fund may invest the cash collateral received in interest-
bearing, short-term securities or receive a fee from the borrower. Although
voting rights, or rights to consent, with respect to the loaned securities pass
to the borrower, the Fund retains the right to call the loans at any time on
reasonable notice, and it will do so in order that the securities may be voted
by the Fund if the holders of such securities are asked to vote upon or consent
to matters materially affecting the investment. The Fund may also call such
loans in order to sell the security involved.

Options. The Fund may write covered call options which are traded on national
-------
securities exchanges with respect to stocks in its portfolio (ensuring that the
Fund at all times will have in its portfolios the securities which it may be
obligated to deliver if the options are exercised). The "writer" of a call
option gives to the purchaser of that option the right to buy the underlying
security from the writer at the exercise price prior to the expiration date of
the call. Call options are generally written for periods of less than six
months. The Fund may write covered call options on securities in its portfolios
in an attempt to realize a greater current return than would be realized on the
securities alone or to provide greater flexibility in disposing of such
securities. The Fund may also write call options to partially hedge a possible
stock market decline. Because the Fund's objective is growth of capital,
covered call options would not be written except at a time when it is believed
that the price of the common stock on which the call is being written will not
rise in the near future and the Fund does not desire to sell the common stock
for tax or other reasons. The writer of a covered call option receives a
premium for undertaking the obligation to sell the underlying security at a
fixed price during the option period if the option is exercised. So long as the
Fund remains obligated as a writer of covered calls, it foregoes the opportunity
to profit from increases in the market prices of the underlying securities above
the exercise prices of the options, except insofar as the premiums represent
such profits, and retain the risk of loss should the value of the underlying
securities decline. The Fund may also enter into "closing purchase
transactions" in order to terminate its obligations as a writer of covered call
options prior to the expiration of the options. Although limiting writing
covered call options to those which are traded on national securities exchanges
increases the likelihood of being able to make closing purchase transactions,
there is no assurance that the Fund will be able to effect such transactions at
any particular time or at an acceptable price. If the Fund was unable to enter
into a closing purchase transaction, the principal risks to the Fund would be
the loss of any capital appreciation of the underlying security in excess of the
exercise price and the inability to sell the underlying security in a down
market until the call option was terminated. The writing of covered call
options could result in an increase in the portfolio turnover rate of the Fund,
especially during periods when market prices of the underlying securities
appreciate.

Short Sales. The Fund may sell short securities identical to ones that it owns
-----------
in its portfolios.

Forward Commitments. The Fund may make contracts to purchase securities for a
-------------------
fixed price at a future date beyond customary settlement time ("forward
commitments"), if the Fund holds, and maintains until the settlement date in a
segregated account with the Fund's custodian, cash or Short-term Debt
Obligations in an amount sufficient to meet the purchase price. These debt
obligations will be marked to market on a daily basis and additional liquid
assets will be added to such segregated accounts as required. Forward
commitments may be considered securities in themselves. They involve a risk of
loss if the value of the security to be purchased declines prior to the
settlement date, which risk is in addition to the risk of decline in the value
of the Fund's other assets. Although the Fund will generally enter into forward
commitments with the intention of acquiring securities for its portfolio, the
Fund may dispose of a commitment prior to settlement if the Advisor deems it
appropriate to do so. The Fund may realize short-term profits or losses upon the
sale of forward commitments.

Warrants. The Fund may invest in warrants purchased as units or attached
--------
to securities purchased by the Fund. Warrants are options to purchase equity
securities at specific prices valid for a specific period of time.

16
<PAGE>

Their prices do not necessarily move parallel to the prices of the underlying
securities. Warrants have no voting rights, receive no dividends and have no
rights with respect to the assets of the issuer.

INVESTMENT RESTRICTIONS OF THE FUND

As fundamental policies, which may not be changed without "a vote of the
majority of the outstanding voting securities" of the Fund (as defined below),
the Fund will not take any of the following actions:

(1) purchase any security if as a result the Fund would then hold more
than 10% of any class of securities of an issuer (taking all common stock issues
of an issuer as a single class, all preferred stock issues as a single class,
and all debt issues as a single class) or more than 10% of the outstanding
voting securities of an issuer;

(2) purchase any security if as a result the Fund would then have more
than 10% of the value of its net assets (taken at current value) invested in any
of the following types of investment vehicles: in securities of companies
(including predecessors) less than three years old, in securities which are not
readily marketable, in securities which are subject to legal or contractual
restrictions on resale ("restricted securities") and in repurchase agreements
which have a maturity longer than seven (7) days, provided, however, that the
Fund may not invest more than 15% of its assets in illiquid securities;

(3) make short sales of securities unless at all times when a short
position is open the Fund owns an equal amount of such securities or securities
convertible into, or exchangeable without payment of any further consideration
for, securities of the same issue as, and equal in amount to, the securities
sold short, and unless not more than 10% of the Fund's net assets (taken at
current value) is held as collateral for such sales at any one time. Such sales
of securities subject to outstanding options would not be made. The Fund may
maintain short positions in a stock index by selling futures contracts on that
Index);

(4) issue senior securities, borrow money or pledge its assets except
that the Fund may borrow from a bank for temporary or emergency purposes in
amounts not exceeding 10% (taken at the lower of cost or current value) of its
total assets (not including the amount borrowed) and pledge its assets to secure
such borrowings. The Fund will not purchase any additional portfolio securities
so long as its borrowings amount to more than 5% of its total assets. (For
purposes of this restriction, collateral arrangements with respect to the
writing of covered call options and options on index futures and collateral
arrangements with respect to margin for a stock index future are not deemed to
be a pledge of assets and neither such arrangements nor the purchase or sale of
stock index futures or the purchase of related options are deemed to be the
issuance of a senior security.);

(5) purchase or retain securities of any company if, to the knowledge of
the Fund, officers and Trustees of the Fund or of the Manager or of the Advisor
of the Fund who individually own more than 1/2 of 1% of the securities of that
company together own beneficially more than 5% of such securities;

(6) buy or sell real estate or interests in real estate, although it may
purchase and sell securities which are secured by real estate and securities of
companies which invest or deal in real estate;

(7) act as underwriter except to the extent that, in connection with the
disposition of Fund securities, it may be deemed to be an underwriter under
certain provisions of the federal securities laws;

(8) make investments for the purpose of exercising control or management;

(9) participate on a joint or joint and several basis in any trading
account in securities;

(10) write, purchase, or sell puts, calls or combinations thereof, except
that the Fund may (i) write covered call options with respect to all of its
portfolio securities; (ii) purchase put options and call options on widely
recognized securities indices, common stock of individual companies or baskets
of individual companies in a particular industry or sector; (iii) purchase and
write call options on stock index futures and on stock indices; and (iv) sell
and purchase such options to terminate existing positions;

17
<PAGE>

(11) invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in the common stocks of companies
which invest in or sponsor such programs;

(12) make loans, except (i) through the purchase of bonds, debentures,
commercial paper, corporate notes and similar evidences of indebtedness of a
type commonly sold privately to financial institutions, (ii) through repurchase
agreements and loans of portfolio securities (limited to 30% of the value of the
Fund's total assets). The purchase of a portion of an issue of such securities
distributed publicly, whether or not such purchase is made on the original
issuance, is not considered the making of a loan;

(13) invest more than 25% of the value of its total assets in any one
industry;

No more than 5% of the value of the Fund's total assets will be invested in
repurchase agreements which have a maturity longer than seven (7) days.
(Investments in repurchase agreements which have a longer maturity are not
considered to be readily marketable and their purchase is therefore also
restricted as set forth in restriction number (2) above). In addition, the Fund
will not enter into repurchase agreements with a securities dealer if such
transactions constitute the purchase of an interest in such dealer under the
Investment Company Act of 1940.

All percentage limitations on investments will apply at the time of the
making of an investment and shall not be considered violated unless an excess or
deficiency occurs or exists immediately after and as a result of such
investment.

As provided in the Investment Company Act of 1940, a "vote of a majority of
the outstanding voting securities" necessary to amend a fundamental policy as to
the Fund means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund or (2) 67% or more of the shares of the Fund
present at a meeting if more than 50% of the outstanding shares are represented
at the meeting in person or by proxy.

PERFORMANCE MEASURES

From time to time, the Fund may advertise its performance in various ways.
These methods include providing information on the returns of the Fund and
comparing the performance of the Fund to relevant benchmarks. Performance will
be stated in terms of total return. "Total return" figures are based on the
historical performance of the Fund, show the performance of a hypothetical
investment and are not intended to indicate future performance.

Under the rules of the Securities and Exchange Commission (the
"Commission"), funds advertising performance must include total return quotes,
"T" below, calculated according to the following formula:

P(1+T)/n/ = ERV

Where: P = a hypothetical initial payment of $1,000

T = average annual total return

n = number of years (1, 5, or 10)

ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the "n" year period (or fractional portion thereof) at the end
of such period.

The average annual total return will be calculated under the foregoing
formula and the time periods used in advertising will be based on rolling
calendar quarters, updated to the last day of the most recent quarter prior
to submission of the advertising for publication, and will cover one, five, and
ten year periods plus the time period since the effective date of the
registration statement relating to the Fund. When the period since inception is
less than one year, the total return quoted will be the aggregate return for the
period. In calculating redeemable value, the maximum sales load is deducted
from the initial $1,000 payment and all dividends and distributions by the Fund
are deemed to have been reinvested at net asset value as described in the
Prospectus on the reinvestment dates during the period. Total return, or "T" in
the formula above, is computed by finding

18
<PAGE>

the average annual compounded rates of return over the 1, 5 and 10 year periods
(or fractional portions thereof) that would equate the initial amount invested
to the ending redeemable value. Any sales loads that might in the future be made
applicable at the time to reinvestments would be included as would any recurring
account charges that might be imposed on the Fund.

In reports to shareholders or other literature, the Fund may compare its
performance to that of other mutual funds with similar investment objectives and
to stock or other relevant indices. For example, it may compare its performance
to rankings prepared by Lipper Analytical Services Inc. (Lipper) or Morningstar,
Inc., widely recognized independent services which monitor the performance of
mutual funds. The Fund may also compare its performance to the Standard &
Poor's 500 Stock Index (S&P 500), an index of unmanaged groups of common stocks;
or the Morgan Stanley Capital International Europe, Australia, Far East Index,
an index of unmanaged groups of common stocks of foreign companies having their
principal business activities in one of eighteen foreign countries in Europe,
Australia, and the Far East. In making such comparisons, the Fund may from time
to time include a total aggregate return figure or an average annual total
return figure that is not calculated according to the formula set forth above in
order to make a more accurate comparison to other measures of investment return.
For such purposes, the Fund calculate its aggregate total return in the same
manner as the above formula except that no sales charges are deducted from the
initial amount. When the period since inception is less than one year, the
total return quoted will be the aggregate return for the period. The Fund,
however, will disclose the maximum sales charge and will also disclose that the
performance data so quoted do not reflect sales charges and that the inclusion
of sales charges would reduce the performance quoted. Such alternative
information will be given no greater prominence in such sales literature than
the information prescribed under Commission rules.

Performance information, rankings, ratings, published editorial comments
and listings reported in national financial publications may also be used in
computing performance of the Fund (if the Fund is listed in any such
publication). Performance comparisons should not be considered as
representative of the future performance of the Fund.

THE QUANTITATIVE GROUP

The Trust was established in 1983 as a business trust under Massachusetts
law. A copy of the Amended and Restated Declaration of Trust (as amended
through July 19, 1993) amending and restating the Agreement and Declaration of
Trust dated June 27, 1983, is on file with the Secretary of the Commonwealth of
Massachusetts. The Trust has an unlimited authorized number of shares of
beneficial interest which may, without shareholder approval, be divided into an
unlimited number of series of such shares and an unlimited number of classes of
shares of any such series. Shares are presently divided into six series of
shares, Quantitative Small Cap Fund, Quantitative Mid Cap Fund, Quantitative
Growth and Income Fund, Quantitative International Equity Fund, Quantitative
Emerging Markets Fund and Quantitative Foreign Value Fund. Each Fund is
comprised of two classes of shares. There are no rights of conversion between
shares of different Funds which are granted by the Amended and Restated
Declaration of Trust, but holders of shares of either class of a Fund may
exchange all or a portion of their shares for shares of a like class in another
Fund (subject to their respective minimums). No exchanges are permitted from
one class of shares to another class of shares of the same or a different Fund.

These shares are entitled to one vote per share (with proportional voting for
fractional shares) on such matters as shareholders are entitled to vote,
including the election of Trustees. Shares vote by individual Fund on all
matters except that (i) when the Investment Company Act of 1940 so requires,
shares shall be voted in the aggregate and not by individual Fund and (ii) when
the Trustees of the Funds have determined that a matter affects only the
interest of one or more Funds, then only holders of shares of such Fund shall be
entitled to vote thereon.

There will normally be no meetings of shareholders for the purpose of
electing Trustees unless and until such time as less than a majority of the
Trustees have been elected by the shareholders, at which time the Trustees then
in office will call a shareholders' meeting for the election of Trustees. In
addition, Trustees may be removed from office by a written consent signed by the
holders of two-thirds of the outstanding shares of each Fund and filed with the
Funds' custodian or by a vote of the holders of two-thirds of the outstanding
shares of each Fund at a meeting duly called for that purpose, which meeting
shall be held upon the written

19
<PAGE>

request of the holders of not less than 10% of the outstanding shares. Upon
written request by ten or more shareholders, who have been such for at least six
months and who hold, in the aggregate, shares having a net asset value of at
least $25,000, stating that such shareholders wish to communicate with the other
shareholders for the purpose of obtaining the signatures necessary to demand a
meeting to consider removal of a Trustee, the Funds have undertaken to provide a
list of shareholders or to disseminate appropriate materials (at the expense of
the requesting shareholders). Except as set forth above, the Trustees shall
continue to hold office and may appoint their successors.

Shares are freely transferable, are entitled to dividends as declared by the
Trustees, and in liquidation of the Trust are entitled to receive the net assets
of their Fund, but not of the other Funds. Shareholders have no preemptive
rights. The Fund's fiscal year ends on the last day of March.

Under Massachusetts law, shareholders could, under certain circumstances, be
held liable for the obligations of the Fund. However, the Agreement and
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Fund and requires notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or the Trustees.
The Agreement and Declaration of Trust provides for indemnification out of the
Fund's property for all loss and expense of any shareholder of the Fund held
liable on account of being or having been a shareholder. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund of which he was a shareholder would
be unable to meet its obligations.