<PAGE>
Registration No. 2-84904
811-3790
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 18
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 20
QUANTITATIVE GROUP OF FUNDS
---------------------------
(Exact Name of Registrant as Specified in Charter)
55 Old Bedford Road
Lincoln, Massachusetts 01773
----------------------------
(Address of Principal Executive Offices) (Zip Code)
(781) 259-1144
--------------
Registrant's Telephone Number, including Area Code
WILLARD L. UMPHREY, President
Quantitative Group of Funds
55 Old Bedford Road
Lincoln, Massachusetts 01773
----------------------------
(Name and Address of Agent for Service)
Copy to:
Joseph R. Fleming, Esq.
DECHERT PRICE & RHOADS
Ten Post Office Square, Suite 1230
Boston, Massachusetts 02109
________________
It is proposed that this filing will become effective:
/X/ immediately upon filing pursuant to paragraph (b)
/_/ on (date) pursuant to paragraph (b)
/_/ 75 days after filing pursuant to paragraph (a)(2)
/_/ on (date) pursuant to paragraph (a) of Rule 485
_________
Pursuant to Rule 24f-2, Registrant has registered an indefinite number of
its shares of beneficial interest under the Securities Act of 1933. The Rule
24f-2 Notice for the Registrant's fiscal year ended March 31, 1998 was filed on
May 28, 1998.
<PAGE>
QUANTITATIVE GROUP OF FUNDS
Cross Reference Sheet
Pursuant to Rule 495(a)
<TABLE>
<CAPTION>
Item No. Registration Statement Caption Caption in Prospectus
- -------- ------------------------------ ---------------------
<S> <C> <C>
Part A
- ------
1. Cover Page.......................................... Cover Page
2. Synopsis............................................ Summary of Fees and Expenses
3. Condensed Financial Information..................... Financial Highlights
4. General Description of Registrant................... Investment Objectives and
Policies; Risk Considerations;
Portfolio Securities; Other
Investment Practices
5. Management of the Fund.............................. Management of the Funds, Prior
Performance of the Portfolio
Manager of the Foreign Value
Fund
6. Capital Stock and Other Securities.................. The Quantitative Group
7. Purchase of Securities Being Offered................ Calculation of Net Asset Value;
How to Invest
8. Redemption or Repurchase............................ How to Redeem
9. Pending Legal Proceedings........................... Not Applicable
Item No. Registration Statement Caption Caption in Statement of
- -------- ------------------------------ -----------------------
Additional Information
----------------------
Part B
- ------
10. Cover Page and Table of Contents.................... Cover Page
11. Fund History........................................ The Quantitative Group
12. Description of the Fund and its Investment Objectives and
Investments and Risks ............................. Policies; Other Investment
Practices; Investment
Restrictions of the Funds
13. Management of the Registrant........................ Management of the Funds
14. Control Persons and Principal Holders Management of the Funds
of Securities...................................... (Trustees and Officers)
15. Investment Advisory and Other
Services........................................... Management of the Fund
(Trustees and Officers);
Management Contract;
Advisory Contracts;
Distribution and
Distribution Plan
16. Brokerage Allocation and Other Practices............ Portfolio Transactions
17. Capital Stock and Other Securities.................. The Quantitative Group
18. Purchase, Redemption and Pricing of How to Invest; How to
Shares............................................. Redeem; Calculation of Net
Asset Value
19. Taxation of the Fund................................ Distributions; Taxation
20. Underwriter......................................... Distributor and Distribution
Plan
21. Calculation of Performance Data..................... Performance Measures
22. Financial Statements................................ Financial Statements
Part C
- ------
</TABLE>
<PAGE>
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
<PAGE>
QUANTITATIVE GROUP OF FUNDS
PROSPECTUS
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
AUGUST 1, 1998
U.S. EQUITY FUNDS
Quantitative Small Cap Fund
Quantitative Mid Cap Fund
Quantitative Growth and Income Fund
INTERNATIONAL EQUITY FUNDS
Quantitative International Equity Fund
Quantitative Foreign Value Fund
Quantitative Emerging Markets Fund
<PAGE>
[LOGO OF QUANTITATIVE QUANTITATIVE GROUP of FUNDS
GROUP APPEARS HERE]------------------------------------------------------------
55 Old Bedford Road PROSPECTUS
Lincoln, Massachusetts 01773 August 1, 1998
800-331-1244
The Quantitative Group of Funds is an open-end, non-diversified investment com-
pany that offers six funds (individually a "Fund" and collectively the "Funds")
with this Prospectus. Each Fund has distinct investment objectives. Quantita-
tive Advisors, Inc. ("Manager") provides overall management and operational
services to the Funds. Individual investment advisors ("Advisors") are pres-
ently responsible for the day-to-day management of each Fund. The Funds are
distributed by U.S. Boston Capital Corporation ("Distributor"), an affiliate of
the Manager.
U.S. EQUITY FUNDS
QUANTITATIVE SMALL CAP FUND
QUANTITATIVE MID CAP FUND
QUANTITATIVE GROWTH AND INCOME FUND
INTERNATIONAL FUNDS
QUANTITATIVE INTERNATIONAL EQUITY FUND
QUANTITATIVE FOREIGN VALUE FUND
QUANTITATIVE EMERGING MARKETS FUND
Each Fund offers Ordinary Shares and Institutional Shares. Purchasers of Ordi-
nary Shares of the Quantitative Small Cap Fund, Quantitative Growth and Income
Fund, Quantitative International Equity Fund, and Quantitative Emerging Markets
Fund pay a one percent (1%) deferred sales charge upon redemption, and an an-
nual asset-based sales charge of .50%. Purchasers of Ordinary Shares of the
Quantitative Foreign Value Fund pay a one percent (1%) deferred sales charge
upon redemption, and a service fee of .25%. Ordinary Shares of the Quantitative
Mid Cap Fund are offered on a no-load basis and carry only 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 $2,500. A
$1,000 minimum applies to investors acquiring Ordinary Shares through an Auto-
matic 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. Institutional Shares are available to qualified invest-
ors, 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 ("SAI") dated August
1, 1998, which is incorporated by reference in this Prospectus, is available
free of charge by writing or telephoning the Funds at 800-331-1244. The SAI,
which contains more detailed information about the Funds, has been filed with
the Securities and Exchange Commission ("SEC") and is available along with
other related materials at the SEC's Internet Web site (http://www.sec.gov).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
Quick Reference Guide 2
Summary of Fees and Expenses 3
Financial Highlights 5
Prior Performance of the Portfolio Manager of the Foreign Value Fund Man-
aging Other Accounts 8
Investment Objectives and Policies 9
Risk Considerations 12
Management of the Funds 13
How to Invest 17
How to Make Exchanges 20
How to Redeem 20
Calculation of Net Asset Value 22
Dividends, Distributions, and Taxation 22
Portfolio Securities 23
Other Investment Practices 24
Performance Data 27
The Quantitative Group 27
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
QUANTITATIVE GROUP of FUNDS [LOGO OF QUANTITATIVE
- ----------------------------------------------------------GROUP APPEARS HERE]
QUICK REFERENCE GUIDE
The Quantitative Funds
The investment objectives of each Fund are summarized below. There is no as-
surance that a Fund will be able to attain its investment objectives. Because
each Fund is limited by specific investment objectives, investments in a par-
ticular Fund may be subject to greater market fluctuations than a portfolio
with broader investment alternatives. More detailed information about each of
the Funds, including risk considerations relevant to a particular Fund, is
presented in Investment Objectives and Policies on page 9, Risk Considerations
on page 12, Portfolio Securities on page 23, and Other Investment Practices on
page 24.
U.S. Equity Funds
QUANTITATIVE SMALL CAP FUND ("Small Cap Fund") (formerly Quantitative Numeric
Fund) seeks maximum long-term capital appreciation by investing primarily in
common stocks. The Fund generally invests in companies with smaller (one bil-
lion dollars or less) market capitalizations.
QUANTITATIVE MID CAP FUND ("Mid Cap Fund") (formerly Quantitative Numeric II
Fund) seeks long-term growth of capital by investing primarily in common stock
of companies with medium (one billion to five billion dollars) market capital-
izations.
QUANTITATIVE GROWTH AND INCOME FUND ("Growth and Income Fund") seeks long-term
growth of capital and income by investing primarily in common stocks of large
companies having substantial equity capital that are currently paying divi-
dends.
International Funds
QUANTITATIVE INTERNATIONAL EQUITY FUND ("International Equity Fund") seeks
long-term capital growth and income by investing primarily in foreign securi-
ties. Generally, the Fund invests in Western Europe, Australia, and the larger
capital markets in the Far East.
QUANTITATIVE FOREIGN VALUE FUND ("Foreign Value Fund") seeks long-term capital
growth and income by investing in a diversified portfolio consisting primarily
of foreign securities. Generally, the Fund invests in Western Europe, Austra-
lia, and the larger capital markets in the Far East. The Fund may also invest
in emerging markets.
QUANTITATIVE EMERGING MARKETS FUND ("Emerging Markets Fund") (formerly Quanti-
tative Foreign Frontier Fund) seeks long-term growth of capital by investing
in securities of issuers located in emerging markets. An investment in the
Emerging Markets Fund should be regarded as speculative and is subject to spe-
cial risks that should be considered carefully by potential investors.
Minimum Investments
Each Fund offers Ordinary Shares and Institutional Shares. Purchasers of Ordi-
nary Shares of the Small Cap Fund, Growth and Income Fund, International Eq-
uity Fund, and Emerging Markets Fund pay a one percent (1%) deferred sales
charge upon redemption, and an annual asset based sales charge of .50%. Pur-
chasers of Ordinary Shares of the Foreign Value Fund pay a one percent (1%)
deferred sales charge upon redemption, and a service fee of .25%. Ordinary
Shares of the Mid Cap Fund are offered on a no-load basis and carry only 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 $2,500. A
$1,000 minimum investment applies to investors establishing an Automatic In-
vestment Plan who agree to make minimum monthly purchases of $100 and to in-
vestors establishing certain accounts for minors. There is also a $1,000 mini-
mum 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 Prospec-
tus. There is no minimum for subsequent investments. See How to Invest on page
17.
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 Applica-
tion, along with a check payable to QUANTITATIVE GROUP OF FUNDS, to the fol-
lowing address:
Quantitative Group of Funds
Attention: Transfer Agent
55 Old Bedford Road
Lincoln, Massachusetts 01773
- --------------------------------------------------------------------------------
2
<PAGE>
[LOGO OF QUANTITATIVE QUANTITATIVE GROUP of FUNDS
GROUP APPEARS HERE]------------------------------------------------------------
Investors also may make monthly automatic investments through their checking
account. Call 800-331-1244 with any questions, or to request an IRA Account Ap-
plication. See How to Invest on page 17.
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. The deferred sales
charge is not deducted on redemption of Ordinary Shares of the Mid Cap Fund
purchased on or after August 1, 1996. Ordinary Shares of one Fund may generally
be exchanged for Ordinary Shares of another Fund at any time without incurring
a deferred sales charge. Special rules apply to exchanges into the Mid Cap
Fund. The exchange privilege only is available to investors in states in which
shares of the Fund to be acquired may legally be sold. An individual 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 op-
tions are selected on the Account Application. See How to Make Exchanges on
page 20 and How to Redeem on page 20.
SUMMARY OF FEES AND EXPENSES
Shareholder Transaction Expenses (All Funds)
<TABLE>
<CAPTION>
ORDINARY INSTITUTIONAL
SHARES SHARES
<S> <C> <C>
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) (Mid Cap Fund) None(1) None
Deferred Sales Charge (as a percentage of redemption
proceeds) (all other Funds) 1.00% None
Exchange Fee None None
</TABLE>
- --------
(1) The deferred sales charge is not imposed on redemptions of Ordinary Shares
of the Mid Cap Fund purchased on or after August 1, 1996.
Annual Operating Expenses (as a percentage of average net assets)
<TABLE>
<CAPTION>
Small Cap Mid Cap Growth and International Foreign Emerging Markets
Fund Fund Income Fund Equity Fund Value Fund** Fund
<S> <C> <C> <C> <C> <C> <C>
Ordinary Shares
Management Fee 1.00% 1.00% .75% 1.00% 1.00% .80%
12b-1 Fees .50% .25% .50% .50% .25% .50%
Other Expenses (after
reimbursement)* .37% .40% .35% .55% .50% .95%
Total Operating Expenses 1.87% 1.65% 1.60% 2.05% 1.75% 2.25%
</TABLE>
- --------
* Other expenses and total operating expenses are shown giving effect to cus-
tody credits received by the Funds in accordance with SEC regulations. These
credits are generated by interest earned on uninvested cash balances main-
tained by the Funds, and are used to offset custodial expenses of the Fund.
Expenses net of custody credits would be as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Other Expenses (after
reimbursement) .36% .40% .32% .50% .45% .95%
Total Operating Expenses 1.86% 1.65% 1.57% 2.00% 1.70% 2.25%
</TABLE>
- --------
** Other expenses are based on estimated expenses for the current fiscal year
of the Foreign Value Fund, which commenced investment operations on July 1,
1998.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Institutional Shares
Management Fee 1.00% 1.00% .75% 1.00% 1.00% .80%
12b-1 Fees None None None None None None
Other Expenses (after
reimbursement)* .38% .54% .35% .55% .50% .95%
Total Operating Expenses 1.38% 1.54% 1.10% 1.55% 1.50% 1.75%
</TABLE>
- --------
* Expenses net of custody credits would be as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Other Expenses (after
reimbursement) .37% .54% .32% .50% .45% .95%
Total Operating Expenses 1.37% 1.54% 1.07% 1.50% 1.45% 1.75%
</TABLE>
- --------------------------------------------------------------------------------
3
<PAGE>
QUANTITATIVE GROUP of FUNDS [LOGO OF QUANTITATIVE
- ----------------------------------------------------------GROUP APPEARS HERE]
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 a
particular Fund will bear, whether directly or indirectly. For more complete
descriptions of the various costs and expenses, see Management of the Funds on
page 13. 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 Funds are estimated based on actual expenses for each
Fund's fiscal year ended March 31, 1998, including expense limitations where
applicable, as well decreases in expenses anticipated in the current fiscal
year. The Manager has contractually agreed to limit the total operating
expenses of the Small Cap, and Growth and Income and International Equity
Funds to 2.00% of their average net assets, without giving effect to custody
credits, if applicable. The Manager also voluntarily has agreed to temporarily
limit the total operating expenses of the Mid Cap and Emerging Markets Funds
to 1.65% and 2.25%, respectively, of their average net assets, without giving
effect to custody credits, if applicable. The agreement is subject to periodic
review, and there is no guarantee that the Manager will continue to limit
expenses of these Funds in the future. During the period ended March 31, 1998,
the Manager agreed to limit the expenses of the Mid Cap Fund and the Emerging
Markets Fund to 1.65% and 2.45%, respectively, of their average net assets,
net of custody credits, and the Manager and the Distributor both waived
additional fees for the Mid Cap Fund. Expenses eligible for reimbursement
under all applicable expense limitations do not include interest, taxes,
brokerage commissions, or extraordinary expenses. If the agreement were not in
effect, the total expenses of the Funds would have been as follows: Mid Cap
Fund Ordinary Shares--2.19%, Mid Cap Fund Institutional Shares--2.01%,
Emerging Markets Fund Ordinary Shares--2.68%, and Emerging Markets Fund
Institutional Shares--2.01%. 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. The
management fee paid to the Manager for managing the Small Cap Fund, the Mid
Cap Fund, the International Equity Fund, and the Foreign Value Fund is higher
than that paid by most other investment companies.
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 do not give effect to the
custody credits:
<TABLE>
<CAPTION>
Ordinary Shares Institutional Shares
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap Fund $29 $70 $113 $233 $14 $44 $76 $166
Mid Cap Fund $17 $52 $ 90 $195 $16 $46 $78 $169
Growth and Income Fund $27 $62 $ 99 $204 $11 $35 $61 $134
International Equity
Fund $31 $75 $122 $251 $16 $49 $84 $185
Foreign Value Fund $28 $66 -- -- $15 $47 -- --
Emerging Markets Fund $33 $81 $132 $272 $18 $55 $95 $206
</TABLE>
You would pay the following expenses on the same investment,
assuming no redemption:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap Fund $19 $59 $101 $219 $14 $44 $76 $166
Mid Cap Fund $17 $52 $ 90 $195 $16 $46 $78 $169
Growth and Income Fund $16 $50 $ 87 $190 $11 $35 $61 $134
International Equity
Fund $21 $64 $110 $238 $16 $49 $84 $185
Foreign Value Fund $18 $55 -- -- $15 $47 -- --
Emerging Markets Fund $23 $70 $120 $258 $18 $55 $95 $206
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following per share financial information for the Small Cap Fund (formerly
Quantitative Numeric Fund), Mid Cap Fund (formerly Quantitative Numeric II
Fund), Growth and Income Fund, International Equity Fund, and Emerging Markets
Fund (formerly Quantitative Foreign Frontier Fund) has been examined by
PricewaterhouseCoopers LLP (formerly Price Waterhouse LLP), independent
accountants, whose report thereon is included in the Statement of Additional
Information. Per share financial information is not included for the Foreign
Value Fund because it commenced operations subsequent to March 31, 1998. This
condensed financial information should be read in conjunction with the related
financial statements and notes thereto included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
Income from
Investment Operations Distributions
Net Realized
Net Asset and Dividends Distributions Net Asset
Value at Net Unrealized Total From from Net from Value,
Beginning Investment Gain (Loss) Investment Investment Realized Total End of Total
of Period Income on Securities Operations Income Capital Gains Distributions Period Return (c)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SMALL CAP FUND
ORDINARY SHARES
Year Ended March
31,
1994 $14.12 (0.09) 2.57 2.48 -- (1.27) (1.27) $15.33 17.80%
1995(f) $15.33 (0.20) 1.67 1.47 -- (0.99) (0.99) $15.81 10.24%
1996(f) $15.81 (0.21)(a) 5.54 5.33 -- (2.23) (2.23) $18.91 34.25%
1997(f) $18.91 0.16 (a)(h) 0.77 0.93 -- (4.80) (4.80) $15.04 1.72%
1998(f) $15.04 (0.23)(a) 5.60 5.37 (0.16) (2.45)(i) (2.61) $17.80 37.79%
INSTITUTIONAL SHARES (D)
Year Ended March
31,
1994 $14.15 (0.05) 2.63 2.58 -- (1.27) (1.27) $15.46 18.50%
1995(f) $15.46 (0.13) 1.71 1.58 -- (0.99) (0.99) $16.05 10.88%
1996(f) $16.05 (0.12)(a) 5.63 5.51 -- (2.23) (2.23) $19.33 34.89%
1997(f) $19.33 0.08 (a)(h) 0.94 1.02 -- (4.80) (4.80) $15.55 2.21%
1998(f) $15.55 (0.15)(a) 5.79 5.64 (0.34) (2.45)(i) (2.79) $18.40 38.44%
MID CAP FUND
ORDINARY SHARES
Oct. 3, 1994**
to March 31,
1995(f) $10.00 0.05 (a) 0.07 0.12 -- -- -- $10.12 1.20%
Year Ended March
31,
1996(f) $10.12 0.06 (a) 3.27 3.33 (0.01) (0.24) (0.25) $13.20 33.01%
1997(f) $13.20 0.09 (a) 2.29 2.38 (0.14) (2.00) (2.14) $13.44 17.47%
1998(f) $13.55 (0.08)(a) 6.06 5.98 -- (3.37) (3.37) $16.05 46.76%
INSTITUTIONAL SHARES
April 17, 1995**
to March 31,
1996 $10.27 0.10 (a) 3.09 3.19 (0.02) (0.24) (0.26) $13.20 31.12%
Year Ended March
31,
1997 $13.20 0.11 (a) 2.27 2.38 (0.03) (2.00) (2.03) $13.55 17.51%
1998(f) $13.55 (0.06)(a) 6.12 6.06 -- (3.37) (3.37) $16.24 47.01%
GROWTH AND INCOME FUND
ORDINARY SHARES
Year Ended March
31,
1994 $17.27 0.18 0.21 0.39 (0.16) (3.64) (3.80) $13.86 1.51 %
1995(f) $13.86 0.14 1.44 1.58 (0.16) (1.56) (1.72) $13.72 12.71 %
<CAPTION>
Ratios and Supplemental Data
Net Ratio of Ratio of Net
Assets, Operating Investment
End of Expenses Income (Loss) Average
Period to Average to Average Portfolio Commission
(000s) Net Assets Net Assets Turnover Rate (g)
<S> <C> <C> <C> <C> <C>
SMALL CAP FUND
ORDINARY SHARES
Year Ended March
31,
1994 $40,852 1.83% (1.30)% 389.00% --
1995(f) $53,920 1.84% (1.31)% 320.00% --
1996(f) $71,618 1.97%* (1.17)% 324.00% --
1997(f) $57.135 1.97%* 0.90 %(h) 393.00% $0.0305
1998(f) $66.876 1.90%* (1.33)% 135.00% $0.0406
INSTITUTIONAL SHARES (D)
Year Ended March
31,
1994 $24,175 1.23% (0.70)% 389.00% --
1995(f) $47,044 1.36% (0.82)% 320.00% --
1996(f) $42,803 1.47%* (0.87)% 324.00% --
1997(f) $ 9,207 1.47%* 0.41 %(h) 393.00% $0.0305
1998(f) $ 6.286 1.41%* (0.86)% 135.00% $0.0406
MID CAP FUND
ORDINARY SHARES
Oct. 3, 1994**
to March 31,
1995(f) $ 420 -- 1.50 %(b) 0.00%(b) --
Year Ended March
31,
1996(f) $ 6,025 2.34%* 0.46 % 181.00% --
1997(f) $ 8,733 1.19%* 0.62 % 162.00% $0.0492
1998(f) $15,484 1.57% (0.52)% 128.00% $0.0466
INSTITUTIONAL SHARES
April 17, 1995**
to March 31,
1996 $ 4,621 2.02%(b)* 0.87 %(b) 181.00% --
Year Ended March
31,
1997 $ 361 1.44%* 0.77 % 162.00% $0.0492
1998(f) $ 823 1.40% (0.35)% 128.00% $0.0466
GROWTH AND INCOME FUND
ORDINARY SHARES
Year Ended March
31,
1994 $36,510 1.72% 1.02 % 110.00% --
1995(f) $37,048 1.69% 1.01 % 121.00% --
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Income from
Investment Operations Distributions
Net Realized
Net Asset and Dividends Distributions Net Asset
Value at Net Unrealized Total From from Net from Value,
Beginning Investment Gain (Loss) Investment Investment Realized Total End of Total
of Period Income on Securities Operations Income Capital Gains Distributions Period Return (c)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996(f) $13.72 0.12 (a) 2.89 3.01 (0.13) (2.03) (2.16) $14.57 22.17 %
1997(f) $14.57 0.08 (a) 2.53 2.61 (0.10) (1.86) (1.96) $15.22 17.97 %
1998(f) $15.22 0.00 7.61 7.61 (0.05) (1.93) (1.98) $20.85 51.52 %
INSTITUTIONAL SHARES (D)
Year Ended March
31,
1994 $17.28 0.28 0.19 0.47 (0.25) (3.64) (3.89) $13.86 1.99 %
1995(f) $13.86 0.21 1.44 1.65 (0.23) (1.56) (1.79) $13.72 13.29 %
1996(f) $13.72 0.20 (a) 2.89 3.09 (0.20) (2.03) (2.23) $14.58 22.75 %
1997(f) $14.58 0.15 (a) 2.55 2.70 (0.18) (1.86) (2.04) $15.24 18.62 %
1998(f) $15.24 0.10 7.60 7.70 (0.17) (1.93) (2.10) $20.84 52.18 %
INTERNATIONAL EQUITY FUND
ORDINARY SHARES
Year Ended March
31,
1994 $ 8.03 0.00 (a) 2.28 2.28 (0.13) -- (0.13) $10.18 28.69 %
1995(f) $10.18 (0.03)(a) 0.04 0.01 (0.13) -- (0.13) $10.06 0.07 %
1996(f) $10.06 0.00 (a) 0.67 0.67 (0.03) -- (0.03) $10.70 6.63 %
1997(f) $10.70 0.01 (a) 0.40 0.41 (0.08) -- (0.08) $11.03 3.82 %
1998(f) $11.03 0.07 (a) 1.30 1.37 (0.11) (0.06) (0.43)(j) $11.97 12.95 %
INSTITUTIONAL SHARES (D)
April 1, 1991 to
March 19,
1992 $ 9.40 0.09 (a) (1.40) (1.31) (0.15) -- (0.15) $ 7.94(e) (14.62)%(b)
August 25,
1994** to March
31,
1995(f) $11.00 0.01 (a) (0.73) (0.72) (0.18) -- (0.18) $10.10 (6.57)%
Year Ended March
31,
1996(f) $10.10 0.04 (a) 0.66 0.70 (0.07) -- (0.07) $10.73 6.95 %
1997(f) $10.73 0.06 (a) 0.41 0.47 (0.10) -- (0.10) $11.10 4.38 %
1998(f) $11.10 0.14 (a) 1.28 1.42 (0.20) (0.11) (0.57)(j) $11.95 13.50 %
EMERGING MARKETS FUND
ORDINARY SHARES
August 8, 1994**
to March 31,
1995(f) $10.00 (0.05)(a) (2.71) (2.76) -- -- -- $ 7.24 (27.60)%
Year Ended March
31,
1996(f) $ 7.24 (0.07)(a) 1.21 1.14 -- -- -- $ 8.38 15.75 %
1997(f) $ 8.38 (0.04)(a) 0.90 0.86 -- -- -- $ 9.24 10.26 %
1998(f) $ 9.24 (0.04) (1.50) (1.51) -- -- -- $ 7.70 (16.67)%
INSTITUTIONAL SHARES
April 2, 1996**
to March 31,
1997(f) $ 8.49 0.01 (a) 0.80 0.81 (0.03) -- (0.03) $ 9.27 9.54 %
Year Ended March
31,
1998(f) $ 9.27 0.02 (1.53) (1.51) -- -- -- $ 7.76 (16.29)%
<CAPTION>
Ratios and Supplemental Data
Net Ratio of Ratio of Net
Assets, Operating Investment
End of Expenses Income Average
Period to Average to Average Portfolio Commission
(000s) Net Assets Net Assets Turnover Rate (g)
<S> <C> <C> <C> <C> <C>
1996(f) $41,353 1.73%* 0.81 % 152.00% --
1997(f) $43,266 1.73%* 0.50 % 98.00% $0.0397
1998(f) $66,397 1.69%* (0.01)% 72.00% $0.0368
INSTITUTIONAL SHARES (D)
Year Ended March
31,
1994 $ 3,990 1.22% 1.52 % 110.00% --
1995(f) $ 1,975 1.23% 1.48 % 121.00% --
1996(f) $ 1,888 1.24%* 1.31 % 152.00% --
1997(f) $ 1,532 1.24%* 0.99 % 98.00% $0.0397
1998(f) $ 3,724 1.19%* 0.50 % 72.00% $0.0368
INTERNATIONAL EQUITY FUND
ORDINARY SHARES
Year Ended March
31,
1994 $26,222 2.01% (0.08)% 40.00% --
1995(f) $27,657 1.91% (0.24)% 46.48% --
1996(f) $27,402 2.15%* (0.04)% 43.00% --
1997(f) $27,410 2.20%* 0.10 % 135.00% $0.0140
1998(f) $32,182 2.18%* 0.62 % 61.00% $0.0095
INSTITUTIONAL SHARES (D)
April 1, 1991 to
March 19,
1992 $ 0 1.63% 1.05 % 52.00% --
August 25,
1994** to March
31,
1995(f) $ 3,052 1.66%(b) 0.13 %(b) 46.48%(b) --
Year Ended March
31,
1996(f) $ 1,241 1.65%* 0.38 % 43.00% --
1997(f) $ 1,760 1.69%* 0.51 % 135.00% $0.0140
1998(f) $ 1,728 1.68%* 1.19 % 61.00% $0.0095
EMERGING MARKETS FUND
ORDINARY SHARES
August 8, 1994**
to March 31,
1995(f) $ 4,259 2.54%(b) (1.03)%(b) 10.72%(b) --
Year Ended March
31,
1996(f) $ 7,736 2.74%* (0.84)% 9.00% --
1997(f) $10,052 2.68%* (0.47)% 8.00% $0.0024
1998(f) $ 9,241 2.69%* (0.43)% 52.00% $0.0008
INSTITUTIONAL SHARES
April 2, 1996**
to March 31,
1997(f) $ 1,212 2.01%(b)* 0.13 %(b) 8.00%(b) $0.0024
Year Ended March
31,
1998(f) $ 1,002 2.19%* 0.24 % 52.00% $0.0008
</TABLE>
6
<PAGE>
* EXPENSE RATIOS FOR THE PERIODS ENDED MARCH 31, 1998, MARCH 31, 1997 AND
MARCH 31, 1996 ARE SHOWN GROSS OF CUSTODY CREDITS IN ACCORDANCE WITH SEC
REGULATIONS. SEE NOTE 3 TO THE FINANCIAL STATEMENTS OF THE FUNDS CONTAINED
IN THE STATEMENT OF ADDITIONAL INFORMATION. THESE CREDITS ARE GENERATED BY
INTEREST EARNED ON UNINVESTED CASH BALANCES MAINTAINED BY THE FUNDS, AND
ARE USED TO OFFSET CUSTODIAL EXPENSES OF THE FUND. THE FUNDS' EXPENSE RA-
TIOS NET OF SUCH CREDITS, AS REPORTED IN PRIOR PERIODS, WOULD HAVE BEEN AS
FOLLOWS: SMALL CAP ORDINARY AND INSTITUTIONAL SHARES, 1.89%, 1.90%, 1.88%
AND 1.40%, 1.40%, 1.38%, RESPECTIVELY, FOR THE PERIODS ENDED MARCH 31,
1998, 1997, AND 1996; MID CAP ORDINARY AND INSTITUTIONAL SHARES, 1.11%,
1.92% AND 1.27, 1.66% (ANNUALIZED), RESPECTIVELY, FOR THE PERIODS ENDED
MARCH 31, 1997 AND 1996; GROWTH AND INCOME ORDINARY AND INSTITUTIONAL
SHARES, 1.65%, 1.70%, 1.64% AND 1.14%, 1.21%, 1.15%, RESPECTIVELY, FOR THE
PERIODS ENDED MARCH 31, 1998, 1997, AND 1996; INTERNATIONAL EQUITY ORDINARY
AND INSTITUTIONAL SHARES, 2.03%, 2.15%, 2.09% AND 1.54%, 1.64%, 1.59%, RE-
SPECTIVELY, FOR THE PERIODS ENDED MARCH 31, 1998, 1997, AND 1996; AND
EMERGING MARKETS ORDINARY AND INSTITUTIONAL SHARES 2.57%, 2.56%, 2.59% AND
2.07%, 1.89% (ANNUALIZED), %, RESPECTIVELY, FOR THE PERIODS ENDED MARCH
31, 1998, 1997, AND 1996.
** COMMENCEMENT OF OPERATIONS.
(a) Reflects expense waivers/reimbursements in effect during the period. See
Note 3 to the Financial Statements of the Funds. As a result of such
waivers/reimbursements, expenses of the Small Cap Fund Ordinary Shares for
the periods ended March 31, 1998, 1997 and 1996 reflect a reduction of
$0.01, $0.02, and $0.02 per share; expenses of the Small Cap Fund Institu-
tional Shares for the periods ended March 31, 1998, 1997 and 1996 reflect
a reduction of $0.01, $0.02 and $0.02 per share; expenses for the Mid Cap
Fund Ordinary Shares for the periods ended March 31, 1998, 1997, 1996 and
1995 reflect a reduction of $0.07, $0.15, $0.23 and $0.76 per share; ex-
penses for the Mid Cap Fund Institutional Shares for the period ended
March 31, 1998, 1997 and 1996 reflect a reduction of $0.06, $0.10 and
$0.11 per share; expenses of the Growth and Income Fund Ordinary Shares
for the periods ended March 31, 1997 and 1996 reflect a reduction of $0.01
and $0.01 per share; expenses of the Growth and Income Fund Institutional
Shares for the period ended March 31, 1997 and 1996 reflect a reduction of
$0.01 and $0.01 per share; expenses of the International Equity Fund Ordi-
nary Shares for the periods ended March 31, 1998, 1997, 1996, 1995 and
1994 reflect a reduction of $--, $0.01, $0.01, $0.01 and $0.01 per share,
respectively; expenses of the International Equity Fund Institutional
Shares for the periods ended March 31, 1998, 1997, 1996 and 1995 reflect a
reduction of $--, $0.02, $0.01 and $0.01 per share, respectively; expenses
of the Emerging Markets Fund Ordinary Shares for the periods ended March
31, 1997, 1996 and 1995 reflect a reduction of $0.01, $0.01 and $0.02 per
share; and expenses of the Emerging Markets Fund Institutional Shares for
the period ended March 31, 1997 reflect a reduction of $0.02 per share.
(b) Annualized.
(c) Total Return does not include the one time deferred sales charge of 1% for
the Ordinary Shares, where applicable. The total return would have been
lower if certain fees had not been waived or if fees had not been reduced
by credits allowed by the custodian. The deferred sales charge of 1% is
not deducted on Ordinary Shares of the Mid Cap purchased on or after Au-
gust 1, 1996.
(d) Investment Income and Expenses for the periods ending March 31, 1991
through March 31, 1994 were calculated for the Ordinary Shares and then
adjusted for the differences in distribution and transfer agency expenses
borne by the two classes of shares.
(e) Amount represents the last net asset value per share before the March 19,
1992 redemption which resulted in this Fund having no Institutional share-
holders and no Institutional Shares of beneficial interest outstanding
from that date until August 25, 1994. See Note 1 to the Financial State-
ments of the Funds.
(f) Per share numbers have been calculated using the average shares method.
(g) In accordance with SEC reporting requirements the average commission rate
has been calculated for fiscal years beginning on or after December 1,
1995.
(h) Net investment income per share and the net investment income ratio would
have been lower without a certain investment strategy followed by the ad-
visor during the fiscal year ended March 31, 1997.
(i) Represents $2.42 per share of distributions from realized capital gains
and $0.03 per share of a return of capital.
(j) Includes $0.06 per share of distributions in excess of net investment in-
come and $0.05 per share of distributions in excess of realized capital
gains for Ordinary Shares and $0.11 per share of distributions in excess
of net investment income and $0.05 per share of distributions in excess of
realized capital gains for Institutional Shares.
7
<PAGE>
QUANTITATIVE GROUP of FUNDS [LOGO OF QUANTITATIVE
- --------------------------------------------------------GROUP APPEARS HERE]
PRIOR PERFORMANCE OF THE PORTFOLIO MANAGER OF THE FOREIGN VALUE FUND 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 ob-
jectives, policies and strategies substantially similar to those of the For-
eign Value Fund (the "Composite International Accounts"). The data presented
are unaudited and represent the performance of the Composite International Ac-
counts while Mr. Horn was employed by Polaris Capital Management, Inc., the
Fund's Advisor ("Polaris"), and other investment firms. See Management of the
Fund--the Manager and the Advisor on page 13. 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 the Composite Inter-
national Accounts, although the Fund is subject to certain legal restrictions,
set forth below, that do not apply to private accounts. The Composite Interna-
tional Accounts information is provided merely to illustrate the past perfor-
mance of the Portfolio Manager in managing substantially similar accounts, as
measured against a specified market index, and does not represent the perfor-
mance 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 Polaris.
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 re-
sults for the Composite International Accounts could have been lower than what
is shown had they been regulated as investment companies under the federal se-
curities laws.
The following table summarizes the calculation of average annual return for
the Composite International Accounts compared with the performance of the Mor-
gan Stanley Europe, Australia and Far East ("EAFE") Index for the periods in-
dicated.
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 Accounts(1) 13.36% 13.58% 10.69%
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 Accounts(1) 14.78% 14.09% 11.08%
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 reinvest-
ment of dividends, but does not reflect fees, brokerage commissions, or
other expenses of investing.
- --------------------------------------------------------------------------------
8
<PAGE>
[LOGO OF QUANTITATIVE QUANTITATIVE GROUP of FUNDS
GROUP APPEARS HERE]-------------------------------------------------------------
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 Compos-
ite International Accounts for the ten year period ended March 31, 1998 (assum-
ing expenses commensurate with the Ordinary Shares of the Foreign Value Fund)
with the value of $10,000 invested in the EAFE Index. The performance data pre-
sented 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 compa-
ny-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.
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
YEAR EAFE COMPOSITE
88 $10,000 $10,000
9,570 10,533
9,647 9,903
11,161 10,985
89 11,206 12,174
10,522 11,836
11,827 13,165
12,383 13,958
90 9,956 14,045
10,931 16,072
8,636 12,347
9,560 12,424
91 10,296 12,812
9,740 12,021
10,597 13,335
10,798 13,045
92 9,535 13,557
9,754 14,644
9,930 13,520
9,572 13,578
93 10,740 14,735
11,836 14,548
12,641 15,279
12,767 17,498
94 13,227 17,537
13,914 17,226
13,928 17,747
13,803 17,343
95 14,079 17,590
14,206 18,967
14,831 20,432
15,454 20,784
96 15,917 22,723
16,188 23,751
16,188 23,567
16,463 26,660
97 16,233 27,333
18,359 30,756
18,249 32,117
16,826 28,849
98 19,301 30,824
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Quantitative Investment Style
Each of the Funds employs a "quantitative" investment approach to selecting in-
vestments. Investment managers using this approach to investing rely on com-
puter technology and financial databases to assist in the stock selection proc-
ess. Proprietary computer models are capable of rapidly ranking a large uni-
verse 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. With the benefit of these
rankings, a portfolio of securities consistent with an individual Fund's in-
vestment objectives is constructed.
General
It is generally the practice of each Fund to remain fully invested during most
market conditions. However, for temporary defensive purposes, when market con-
ditions are such that a more conservative approach to investment is desirable,
and for liquidity purposes, a Fund may invest in the short-term debt obliga-
tions described under Portfolio Securities on page 23. With the exception of
the Growth and Income Fund, current income is only a secondary consideration
for the Funds in selecting investments.
Because the investment alternatives available to each Fund may be limited by
the specific objectives of that Fund, investors should be aware that an invest-
ment in a particular Fund may be subject to greater market fluctuation than an
investment in a portfolio of secu-
- --------------------------------------------------------------------------------
9
<PAGE>
QUANTITATIVE GROUP of FUNDS [LOGO OF QUANTITATIVE
- --------------------------------------------------------GROUP APPEARS HERE]
rities representing a broader range of investment alternatives. In view of the
specialized nature of the investment activities of each Fund, an investment in
any single Fund should not be considered a complete investment program. There
is no assurance that any Fund will achieve its investment objectives.
U.S. Equity Funds
Quantitative Small Cap Fund
The investment objective of the Quantitative Small Cap Fund is to seek maximum
long-term capital appreciation by investing primarily in common stocks, al-
though it also may invest in convertible preferred stocks, warrants and con-
vertible debentures and bonds. The Small Cap Fund generally invests in common
stock of companies with smaller (one billion dollars or less) market capital-
izations. The Fund also may purchase investment-grade fixed-income securities
such as bonds, debentures and notes when it is believed that they have poten-
tial for long-term capital appreciation.
Quantitative Mid Cap Fund
The investment objective of the Quantitative Mid Cap Fund is to provide for
long-term growth of capital. The Fund seeks to attain its objective primarily
by investing in common stock of companies with medium (one billion to five
billion dollars) market capitalizations, although the Fund may invest in the
common stock of companies with smaller and larger market capitalizations as
well. The Fund also may purchase investment-grade fixed-income securities,
such as bonds, debentures and notes, when it is believed they have potential
for long-term capital appreciation. In anticipation of a decline in the price
of a security, it may be sold short and the same security would be borrowed
from a broker or other institution to complete the sale. The Fund's short
sales must be fully collateralized, and the Fund will not sell short securi-
ties whose underlying value exceeds 25% of the Fund's net assets. See Other
Investment Practices--Short Sales on page 25.
Under normal circumstances at least 65% of the Mid Cap Fund's total assets
will be invested in common stocks of domestic companies, as well as convert-
ible debt, preferred stock, rights, warrants, options and other securities ex-
changeable for shares of common stock. The Fund also may invest in equity se-
curities of foreign and multinational companies.
Quantitative Growth and Income Fund
The investment objective of the Quantitative Growth and Income Fund is to seek
long-term growth of capital and income by investing primarily in common stocks
of large companies having substantial equity capital that are currently paying
dividends. The Growth and Income Fund also may invest in securities, including
American Depository Receipts, of certain larger, well-capitalized foreign com-
panies whose stock is traded in the United States and is part of the Standard
& Poor's 500 Index, and in convertible debentures and bonds, convertible pre-
ferred stocks, and in investment-grade fixed-income securities, such as bonds,
debentures and notes. Fixed-income securities, unless rated A or higher by
Standard & Poor's Corporation or by Moody's Investors Service, Inc., may have
some speculative characteristics. Since changes in prevailing interest rates
affect the market value of debt instruments inversely, generally the longer
the maturity of the debt instrument the greater the risk of an adverse move-
ment in interest rates and a decline in the market value of the debt instru-
ment.
International Funds
Quantitative International Equity Fund
The investment objective of the Quantitative International Equity Fund is to
seek long-term capital growth and income by investing in a diversified portfo-
lio consisting primarily of foreign securities. The Fund's policy is to con-
centrate its investments in securities issued by companies having their prin-
cipal 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 securi-
ties. Investments by the Fund in foreign securities may involve special con-
siderations and additional investment risks. See Risk Considerations--Foreign
Securities on page 12.
The Fund intends to seek investment opportunities in securities principally
traded on recognized stock exchanges in Australia, Canada, New Zealand, West-
ern Europe (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Ita-
ly, the Netherlands, Norway, Spain, Sweden, Switzerland, and the United King-
- --------------------------------------------------------------------------------
10
<PAGE>
[LOGO OF QUANTITATIVE QUANTITATIVE GROUP of FUNDS
GROUP APPEARS HERE]-------------------------------------------------------------
dom) 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.
Under normal circumstances, at least 65% of the Fund's total assets will be in-
vested in securities of companies having their principal business activities in
nine or more foreign countries. This diversification should enable the Fund to
take advantage of differences between economic trends and the performance of
the securities markets in various countries. The diversification also may re-
duce the effect of events in any one country on the Fund's performance.
Quantitative Emerging Markets Fund
The investment objective of the Quantitative Emerging Markets Fund is to pro-
vide for long-term growth of capital by investing in equity securities of is-
suers located in emerging markets. Under normal circumstances, at least 65% of
the Emerging Markets Fund's total assets will be invested in common stocks, as
well as convertible debt, preferred stock, rights, warrants, options and other
securities exchangeable for shares of common stock.
The Fund is designed to provide investors with a broad exposure to the growth
of equity markets in less developed nations. The Fund generally will be in-
vested in eight or more 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 emerg-
ing markets of the world will be used to define the eligible universe of poten-
tial 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, Indone-
sia, 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.
The performance of individual emerging markets generally is characterized by
greater volatility than more developed markets. By diversifying the Fund's in-
vestments, the Fund attempts to reduce the affect of volatility in any one mar-
ket on the Fund's overall performance. Nevertheless, an investment in the
Emerging Markets Fund should be considered speculative and is subject to spe-
cial risks that should be reviewed carefully by potential investors. See Risk
Considerations--Foreign Securities on page 12.
Quantitative Foreign Value Fund
The investment objectives of the Foreign Value Fund are to seek long-term capi-
tal growth and income by investing in a diversified portfolio consisting pri-
marily 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 addi-
tional investment risks. See Risk Considerations--Foreign Securities on page
12.
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 class-ification 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,
- --------------------------------------------------------------------------------
11
<PAGE>
QUANTITATIVE GROUP of FUNDS [LOGO OF QUANTITATIVE
- --------------------------------------------------------GROUP APPEARS HERE]
Indonesia, Israel, Jordan, South Korea, Malaysia, Mexico, Morocco, Pakistan,
Peru, Philippines, Poland, Portugal, Singapore, South Africa, Sri Lanka, Tai-
wan, 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 Small Cap Fund may invest in smaller compa-
nies, and that the International Equity, Foreign Value and Emerging Markets
Funds may invest in foreign securities. Both classes of investments 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 these Funds.
Smaller Companies
The Small Cap Fund may have substantial portions of its investments in smaller
companies. Small companies may have more narrow product lines and often lack
the managerial, financial and other resources of medium- or larger-sized com-
panies with whom they compete. In addition, the securities of these companies
may not be as readily marketable and may experience more price volatility. The
securities of some smaller companies also may be purchased by the Fund because
they have a potential for growth and earnings over the next several years
greater than that of most other companies. Since securities of these companies
tend to trade in the marketplace at above-average price to earnings ratios,
the price of these securities often can experience a more sudden and dramatic
downward reaction to negative news than is the case with securities carrying a
lower market multiple. This is particularly true of companies with a narrow
product line or whose securities are relatively thinly traded.
Foreign Securities
The International Equity Fund, Foreign Value Fund and Emerging Markets Fund
will have a substantial portion of their assets invested in foreign securi-
ties. Investments in foreign securities may involve special considerations and
risks not present in investments in domestic securities. Foreign stock mar-
kets, 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. compa-
nies. Foreign brokerage commissions are generally higher than in the United
States, and custodial expenses for a portfolio of foreign securities are gen-
erally higher than for a portfolio of U.S. securities.
Dividends, interest and other amounts received by a Fund on account of its in-
vestments 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, po-
litical 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 proce-
dures 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 secu-
rities transactions, making it difficult to conduct securities trades. The in-
ability of the Funds to make intended securities purchases due to settlement
problems could cause the Funds to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems
could result either in losses to the Funds due to subsequent declines in the
value of the portfolio security or, if the Funds have entered into a contract
to sell the security, could result in liability to the purchaser.
Emerging Markets
The Emerging Markets Fund invests primarily 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
- --------------------------------------------------------------------------------
12
<PAGE>
[LOGO OF QUANTITATIVE QUANTITATIVE GROUP of FUNDS
GROUP APPEARS HERE]-------------------------------------------------------------
of growth of gross domestic product, rates of inflation, currency depreciation,
capital reinvestment, resource self-sufficiency and balance of payments posi-
tions. 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 for-
eign countries, changes in currency exchange rates and in exchange control reg-
ulations may affect the value of foreign securities held by the Funds, and the
Funds may incur costs in connection with conversions between various curren-
cies. 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 a Fund's securi-
ties denominated in the same currency. In addition, significant uncertainty
surrounds the proposed introduction of the euro (a common currency for the Eu-
ropean Union) in January 1999 and its effect on the value of securities denomi-
nated in local European currencies. These and other currencies in which the
Funds' assets are denominated may be devalued against the U.S. dollar, result-
ing in a loss to the Funds. Such changes will also affect the Fund's income and
distributions to shareholders. The International Equity Fund, Foreign Value
Fund and Emerging Markets Fund may attempt to minimize the effect of currency
fluctuation by entering into hedging transactions. The success of these strate-
gies will depend on the Advisor's ability to predict movements in exchange
rates. See Other Investment Practices--Foreign Currency Transactions on page
25.
MANAGEMENT OF THE FUNDS
Under Massachusetts law, the management of the Funds' business and affairs is
the ultimate responsibility of the Board of Trustees ("Trustees") of the Funds.
The Manager and the Advisors
The Funds are managed by Quantitative Advisors, Inc., 55 Old Bedford Road, Lin-
coln, MA 01773 (the "Manager"), which provides overall management and adminis-
tration of the Funds. Under the terms of the management agreement, the Manager
may, subject to the approval of the Trustees, manage the Funds itself or, sub-
ject to the approval by the Trustees and the shareholders, select subadvisors
(the "Advisors") to manage certain of the Funds. In the latter case, the Man-
ager monitors the Advisors' investment program and results, reviews brokerage
matters, oversees compliance by the Funds with various federal and state stat-
utes and carries out the directives of the Trustees. In each case, the Manager
also provides the Funds with office space, office equipment, and personnel nec-
essary to operate and administer the Funds' business, and supervises the provi-
sion of services by third parties such as the Funds' custodian.
Pursuant to an Advisory Contract with the Manager, the Advisor to a Fund fur-
nishes continuously an investment program for the Fund, makes investment deci-
sions 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 func-
tions in connection therewith.
Under the terms of the Management Agreement and the Advisory Contracts, portfo-
lio transactions may be executed with broker-dealers who furnish an 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 a
Fund may also be considered as a factor in the selection of brokers for a
Fund's portfolio transactions.
Each 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 a partic-
ular 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 Funds' Dis-
tributor, which is a wholly owned subsidiary of U.S. Boston Corporation.
Willard L. Umphrey, CFA President and Trustee of the Funds, Leon Okurowski,
Treasurer and Trustee of
- --------------------------------------------------------------------------------
13
<PAGE>
QUANTITATIVE GROUP of FUNDS [LOGO OF QUANTITATIVE
- --------------------------------------------------------GROUP APPEARS HERE]
the Funds, and Edward L. Pittman together own 100% of the Manager's outstand-
ing voting securities. Messrs. Umphrey and Okurowski also are affiliates of
U.S. Boston Capital Corporation.
Day-to-day responsibility for managing the Funds presently is provided by the
Advisors described below.
Quantitative Small Cap Fund
Quantitative Mid Cap Fund
Columbia Partners, L.L.C., Investment Management, 1701 Pennsylvania Ave., NW,
Washington, DC 20006 ("Columbia Partners") serves as Advisor to the Small Cap
Fund and the Mid Cap Fund. Columbia Partners was organized in 1995 as a Dela-
ware limited liability company and is located in Washington, D.C. The firm
presently has over one billion dollars in assets under management for individ-
ual, pension plan and endowment accounts. Robert A. von Pentz, CFA has managed
the Small Cap and Mid Cap Funds since July 1996. Mr. von Pentz is a founder of
Columbia Partners and previously served as chairman of the board and chief fi-
nancial officer of Riggs Investment Management Corporation, where he worked
from 1989 to 1995. Mr. von Pentz received a BA in Economics and an MBA in Fi-
nance from the University of New Mexico.
Quantitative Growth and Income Fund
State Street Global Advisors, 2 International Place, Boston, MA 02110, a unit
of State Street Bank and Trust Company ("State Street"), serves as Advisor to
the Growth and Income Fund. State Street is a wholly owned subsidiary of State
Street Boston Corporation, a publicly owned bank holding company. State Street
manages over $150 billion in assets for employee benefit plans, endowment
funds and individuals. The Growth and Income Fund has been managed continu-
ously by the Matrix Equity Group at State Street since the Fund's inception.
The team at State Street presently responsible for the daily management of the
Fund includes Steven M. Esielonis, Douglas T. Holmes, CFA, and Charles Babin,
CFA. Mr. Esielonis has served as a Vice President at State Street since 1992.
Prior to that time, he was a Portfolio Manager at Eastern Portfolio Advisors.
Mr. Holmes, Senior Vice President at State Street, has worked at State Street
since 1984. Mr. Babin joined State Street as a Managing Director in 1996.
Prior to that time, he was a Senior Vice President at Natwest Investment Man-
agement from 1995 to 1996 and the President and Managing Director of BRS Capi-
tal Management from 1987-1995. Mr. Esielonis received a BA in Economics from
St. Anselms College. Mr. Holmes received a BS in Mathematics from Northeastern
University. Mr. Babin received a BA in Accounting and an MBA from Boston Col-
lege.
Quantitative International Equity Fund
Quantitative Emerging Markets Fund
Independence International Associates, Inc., 53 State Street, Boston, MA
02109, formerly Boston International Advisors, Inc. ("Independence Interna-
tional"), serves as Advisor to the International Equity Fund and the Emerging
Markets Fund. Independence International was organized in 1986 as a Massachu-
setts corporation and is located in Boston, Massachusetts. The firm presently
has over two billion dollars under management in international portfolios of
pension and endowment funds, among others. Both the International Equity Fund
and Emerging Markets Fund are managed by Norman H. Meltz and David A. Umstead,
Ph.D., CFA. Mr. Meltz received his BS from Tufts University. Dr. Umstead re-
ceived a doctorate in finance from the University of North Carolina, his MBA
from Boston University, and an undergraduate degree from the University of
Vermont. Mr. Meltz and Dr. Umstead are the principal executive officers of In-
dependence International. Both individuals were among the founders of Indepen-
dence International and have been involved since the inception of each Fund in
the development and application of the Funds' investment strategies.
Independence International is wholly owned by Independence Investment Associ-
ates, Inc., a Delaware corporation.
Quantitative Foreign Value Fund
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 corpora-
tion. The firm presently has over fifty million dollars under management for
institutional clients and wealthy individuals. The Foreign
- --------------------------------------------------------------------------------
14
<PAGE>
[LOGO OF QUANTITATIVE QUANTITATIVE GROUP of FUNDS
GROUP APPEARS HERE]-------------------------------------------------------------
Value Fund is managed by Bernard R. Horn, Jr. Mr. Horn received a MS in manage-
ment from the Alfred P. Sloan School of Management at the Massachusetts Insti-
tute of Technology in 1980 and a BS in Business Administration from Northeast-
ern University in 1978. Prior to founding Polaris in 1995, Mr. Horn worked as a
portfolio manager at Horn & Company, Freedom 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 Small Cap
Fund, Mid Cap Fund, the International Equity Fund, and the Foreign Value Fund
(this fee is higher than that paid by most other investment companies); 0.80%
of the average daily net asset value of the Emerging Markets Fund; and 0.75% of
the average daily net asset value of the Growth and Income Fund. From this fee,
the Manager pays the expenses of providing investment advisory services to the
Funds, including the fees of the Advisors of the individual Funds, if applica-
ble (see Advisory Contracts on page 16).
Pursuant to an expense limitation in the Management Contract, the Manager has
agreed to reduce its compensation paid with respect to the Small Cap Fund,
Growth and Income Fund, and International Equity Fund to the extent that a
Fund's total expenses exceed 2% of average net asset value for any fiscal year.
The Funds' Distribution Agreement calls for U.S. Boston Capital Corporation,
the Funds' Distributor, to reduce its fee similarly after the Manager's fee has
been eliminated. The Manager has also agreed to assume expenses of those Funds
if necessary in order to reduce its total expenses to no more than 2% of aver-
age net asset value for any fiscal year. Fund expenses subject to this limita-
tion are exclusive of brokerage, interest, taxes and extraordinary expenses,
and are calculated gross of custody credits, if applicable. Extraordinary ex-
penses include, but are not limited to, the higher incremental costs of custody
associated with foreign securities.
The Manager may voluntarily agree to limit the total operating expenses of a
Fund for a period of time by waiving fees or reimbursing a Fund for an expense
that it would otherwise incur. In such cases, the Manager may seek reimburse-
ment from the Fund if the Fund's total operating expenses fall below that limit
prior to the end of the Fund's fiscal year. The Manager voluntarily has agreed
to waive fees or assume certain operating expenses of the Mid Cap and Emerging
Markets Funds in order to reduce the total expenses of the Funds to no more
than 1.65% and 2.25%, respectively, of their average net asset value. Expenses
eligible for reimbursement do not include interest, taxes, brokerage commis-
sions, or extraordinary expenses, and expenses are calculated gross of custody
credits, if applicable. Extraordinary expenses include, but are not limited to,
litigation and indemnification expenses. The agreement is subject to periodic
review and there is no guarantee that the Manager will continue to limit these
expenses in the future.
For services rendered by the Manager during the fiscal year ended March 31,
1998, the Funds paid to the Manager fees in an amount equivalent to 1% of the
average net assets of the Small Cap Fund, the Mid Cap Fund, and the Interna-
tional Equity Fund, 0.80% of the average net assets of the Emerging Markets
Fund, and 0.75% of the average net assets of the Growth and Income Fund. The
Foreign Value Fund was not in existence on March 31, 1998. These fees were
waived by the Manager to the extent required to comply with (i) its undertaking
to assume expenses of any of the Small Cap Fund, Growth and Income Fund and In-
ternational Equity Fund (including the Manager's compensation) in excess of 2%
of those Funds' average net assets and (ii) its voluntary undertaking to assume
expenses of the Mid Cap Fund and the Emerging Markets Fund (including the Man-
ager's compensation) in excess of 1.65% and 2.45%, respectively, of the Funds'
average net assets.
In addition to the management fee, the Funds pay all expenses not assumed by
the Manager, including, without limitation, Trustees' fees and fees for audit-
ing, legal, custodian and shareholder services. All general expenses of the
Funds are allocated among and charged to the assets of the respective Funds and
between the classes of each Fund on a basis that the Trustees deem fair and eq-
uitable, which may be based on the relative net assets of each Fund and class
of shares, or the nature of the services performed and relative applicability
to each Fund and class of shares.
- --------------------------------------------------------------------------------
15
<PAGE>
QUANTITATIVE GROUP of FUNDS [LOGO OF QUANTITATIVE
- --------------------------------------------------------GROUP APPEARS HERE]
Advisory Contracts
For services rendered, the Manager pays to the Advisor of a Fund a fee based
on a percentage of the average daily net asset value of the Fund. The fee for
each Fund is determined separately. The fees paid by the Manager to the Advi-
sors of the Funds are as follows: Small Cap Fund--0.50% of average daily total
net assets; Mid Cap Fund--0.40% of average daily total net assets; Growth and
Income Fund--0.375% of the first $20 million and 0.30% of amounts in excess of
$20 million of average daily total net assets, with an annual minimum of
$25,000; International Equity Fund--0.50% of average daily total net assets;
Foreign Value Fund--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 50% of the man-
agement fee paid by the Fund to the Manager for assets under management in the
Fund over $30,000,000; and Emerging Markets Fund--0.40% of average daily total
net assets.
For services rendered during the fiscal year ended March 31, 1998, the Manager
paid to the Advisors of the following Funds fees in amounts equivalent to the
following percentages of average daily net asset value: Small Cap Fund--0.50%;
Mid Cap Fund--0.40%, Growth and Income Fund--0.334%; International Equity
Fund--0.50%, and Emerging Markets Fund--0.40%.
The Manager and the Quantitative Group of Funds on behalf of the Funds have
filed a request for an exemptive order with the SEC that would permit the Man-
ager, subject to certain conditions such as initial shareholder approval, to
enter into or amend an Advisory Contract without obtaining shareholder ap-
proval each time. If the order is issued, with Trustee approval, the Manager
would be permitted to employ a new Advisor for a Fund, change the terms of the
Advisory Contracts, or enter into new Advisory Contracts with the Advisors.
Under the exemptive order, the Manager would retain ultimate responsibility to
oversee the Advisers and to recommend their hiring, termination, and replace-
ment. Shareholders of a Fund would continue to have the right to terminate the
Advisory Contract applicable to that Fund at any time by a vote of the major-
ity of the outstanding voting securities of the Fund. Shareholders would be
notified of any Advisor changes or other material amendments to an Advisory
Contract that occurs under these arrangements.
Distributor and Distribution Plan
U.S. Boston Capital Corporation, 55 Old Bedford Road, Lincoln, MA 01773 ("Dis-
tributor"), 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 Funds' shares pursuant to a written agreement
dated April 17, 1985 ("Distribution Agreement"). Under the Distribution Agree-
ment, the Distributor is not obligated to sell any specific amount of shares
of the Funds 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 Funds.
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
Funds pay the Distributor a monthly fee at the annual rate of (i) 0.50% of the
average net asset value of Ordinary Shares of the Small Cap Fund, Growth and
Income Fund, International Equity Fund, and Emerging Markets Fund and (ii)
0.25% of the average net asset value of Ordinary Shares of the Mid Cap Fund
and the Foreign Value Fund held in shareholder accounts opened during the pe-
riod 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 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 Dis-
tributor, the Funds are 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 real-
ize a profit.
Pursuant to an expense limitation in the Distribution Agreement, the Distribu-
tor has agreed to reduce its
- --------------------------------------------------------------------------------
16
<PAGE>
[LOGO OF QUANTITATIVE QUANTITATIVE GROUP of FUNDS
GROUP APPEARS HERE]-------------------------------------------------------------
compensation with respect to the Small Cap Fund, Growth and Income Fund and In-
ternational Equity Fund, to the extent that the total expenses of any of these
Funds individually exceed 2% of average net asset value for any fiscal year
(after reduction of the Manager's compensation in accordance with the Manage-
ment Contract). See Management of the Funds--Management and Advisory Fees on
page 15. The Distributor would not be required to reduce its compensation to
the extent it is committed to make payments to non-affiliated entities for
services in connection with the distribution of a Fund's shares. The Distribu-
tor, 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.
Custodian
Investors Fiduciary Trust Company ("Custodian") is the custodian of each of the
Funds' securities and cash. The Funds have authorized the Custodian to deposit
certain portfolio securities in a central depository system as allowed by Fed-
eral law.
Transfer Agent
Quantitative Institutional Services ("Transfer Agent"), a division of the Man-
ager, is the transfer agent and dividend disbursing agent for each of the
Funds. 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, the Transfer Agent or the Fund may
from time to time appoint a sub-transfer agent for the receipt of purchase or-
ders and funds from certain investors.
HOW TO INVEST
Classes of Shares
The Funds offer 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 .50% an-
nual asset-based sales charge borne by Ordinary Shareholders, which are not ap-
plicable to Institutional Shareholders. Shareholders of the Foreign Value Fund
pay the 1% deferred sales charge on redemption but only a service fee of .25%
of average net assets. The deferred sales charge is not paid on redemption of
Ordinary Shares of the Mid Cap Fund purchased on or after August 1, 1996, and
Ordinary Shares of this Fund bear only an annual service fee of .25% of average
net assets. See How to Redeem--Payment of Redemption Amount on page 21. 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 each Fund generally are available to investors purchasing a
minimum of $2,500. 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 In-
come 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 Funds or the Distributor, at
their discretion, reserve the right to impose such a minimum at any time. In-
vestors 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 avail-
able in minimum investments of $1,000,000 or more. Institutional Shares, sub-
ject 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 partici-
pants, that either have
- --------------------------------------------------------------------------------
17
<PAGE>
QUANTITATIVE GROUP of FUNDS [LOGO OF QUANTITATIVE
- ----------------------------------------------------------GROUP APPEARS HERE]
a separate trustee vested with investment discretion and certain limita-
tions on the ability of plan beneficiaries to access their plan investments
without incurring adverse tax consequences or which allow their partici-
pants 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 de-
pository institution, its trust departments or common trust funds purchas-
ing for non-discretionary customers or accounts; (iv) certain fee paid reg-
istered investment advisors not affiliated with the Manager or Distributor
purchasing on behalf of their clients; and (v) investors who hold Institu-
tional 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 com-
mission 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 "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 secu-
rities dealers not affiliated with the Distributor offering programs in
which the client pays a separate fee to an advisor providing financial man-
agement 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 cli-
ents 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 pur-
suant 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 a Fund may be purchased at the per share net asset
value of shares of such class next determined after the purchase order is re-
ceived 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 Funds will accept orders for
purchases of shares on any day on which the NYSE is open. See Calculation of
Net Asset Value on page 22. The offering of shares of the Funds, or of any
particular Fund, may be suspended from time to time, and the Funds reserve the
right to reject any specific order.
All initial investments must be accompanied by a completed Account Applica-
tion. Investors who wish to have telephone exchange or telephone redemption
privileges for their accounts must elect these options on the Account Applica-
tion. Investors completing an Account Application should carefully review the
Application and particularly consider the discussion in this Prospectus re-
garding the Funds' policies on exchanges of Fund shares and processing of re-
demption requests. Some accounts, including IRA accounts, require a special
Account Application. See Investment Through Tax Deferred Retirement Plans on
page 17. For further information, including assistance in completing an Ac-
count Application, call the Funds' toll-free number 800-331-1244.
Investments by Check
Shares of the Funds may be purchased by sending a check payable to QUANTITA-
TIVE GROUP OF FUNDS spec-
- --------------------------------------------------------------------------------
18
<PAGE>
[LOGO OF QUANTITATIVE QUANTITATIVE GROUP of FUNDS
GROUP APPEARS HERE]-------------------------------------------------------------
ifying the name(s) of the Fund(s) and amount(s) of investment(s), 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 hon-
ored 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 Funds by
completing the appropriate section of the Account Application and enclosing a
minimum investment of $1,000 per Fund. A shareholder may authorize an automatic
withdrawal of at least $100 per Fund 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 Funds, or the Transfer Agent.
Investments by Wire
Investors desiring to make payment for a Fund's shares by wire should contact
the Transfer Agent at 800-331-1244 or their dealer or broker for wire instruc-
tions. For new accounts, a completed Account Application must precede or accom-
pany payment. To ensure that a wire is credited to the proper account, invest-
ors should specify their names, the name(s) of the Fund(s) and class of shares
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 to and re-
ceived 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 relevant Advisors, shares of a 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 a particular 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 invest-
ments 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), Rollover IRAs, Roth IRAs, Simplified Employee Pen-
sion Plans (SEP-IRAs), and 403(b) Accounts for employees of tax exempt institu-
tions including schools, hospitals and charitable organizations require a spe-
cial Account Application. Please call 800-331-1244 for assistance. State Street
Bank and Trust Company acts as custodian for the Funds' tax-deferred accounts.
Custodial accounts are subject
- --------------------------------------------------------------------------------
19
<PAGE>
QUANTITATIVE GROUP of FUNDS [LOGO OF QUANTITATIVE
- ----------------------------------------------------------GROUP APPEARS HERE]
to specific fees. Other types of tax-deferred accounts, including accounts es-
tablished by a Plan Sponsor under Section 401(k) of the Internal Revenue Code
for employee benefit plans, may be opened using the attached Account Applica-
tion.
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 Or-
dinary Shares that, depending on the individual funds, are either no-load or
subject to a 1% deferred sales charge. Exchanges are generally permitted be-
tween 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 Mid Cap Fund without incurring the deferred sales charge but would be as-
sessed the deferred sales charge upon redemption from the Fund group regard-
less 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.
Exchange transactions may be executed in writing or by telephone, if applica-
ble. 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 as-
set 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 Funds, the Manager, the Distributor, nor the Transfer Agent will
be responsible for the authenticity of exchange instructions received by tele-
phone if they act in good faith on instructions reasonably believed to be gen-
uine. The Funds employ reasonable procedures to confirm that instructions com-
municated by telephone are genuine. It is the Funds' 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.
HOW TO REDEEM
Investors may directly redeem shares of a Fund by written request, by tele-
phone, 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 sub-
ject to any special conditions or which specify a future or past effective
date, except for certain notices of redemptions exceeding $250,000 (see Pay-
ment of Redemption Amount on page 21), 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 Funds 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, na-
tional 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
- --------------------------------------------------------------------------------
20
<PAGE>
[LOGO OF QUANTITATIVE QUANTITATIVE GROUP of FUNDS
GROUP APPEARS HERE]-------------------------------------------------------------
Telephone Redemption
Shareholders who have authorized the Funds 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 Funds, the Manager, the Distributor, and the Transfer
Agent will not be liable for any loss or damage for acting in good faith on in-
structions received by telephone reasonably believed to be genuine. The Funds
employ reasonable procedures to confirm that instructions communicated by tele-
phone are genuine. It is the Funds' policy to require some form of personal
identification prior to acting upon instructions received by telephone, to pro-
vide 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 speci-
fied 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 avail-
able 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 bro-
kers. Shareholders should contact their securities broker or dealer for appro-
priate 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 Ordi-
nary Shares where applicable, will generally be sent within three business days
of the execution of a redemption request. However, if the shares to be redeemed
represent an investment made by check or through the automatic investment plan,
the Funds reserve 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. The deferred sales charge is
also imposed when a shareholder transfers his or her shares from an account
maintained with the Fund that is subject to the deferred sales charge to an ac-
count maintained by a broker-dealer that is not subject to the deferred sales
charge due to one of the exceptions cited below. Ordinary Shares of the Mid Cap
Fund purchased after August 1, 1996 are no-load and are generally not subject
to the deferred sales charge. Special rules apply to exchanges into the Mid Cap
Fund (see How to Make Exchanges on page 20). Ordinary Shares of the Mid Cap
Fund purchased before August 1, 1996 (the "Pre-August Shares") remain subject
to a 1% deferred sales charge. Additional shares acquired by reinvestment of
dividends and capital gains paid on Pre-August shares are also subject to the
1% deferred sales charge on Pre-August Shares. 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; and (v) redemp-
tions of shares held in omnibus accounts maintained by no transaction fee
("NTF") programs of certain broker-dealers pursuant to a written agreement be-
tween the broker-dealer and the Fund, the Manager and/or the Distributor. Not-
withstanding the foregoing, the deferred sales charge will be imposed on re-
demptions of shares maintained by NTF programs held for fewer than thirty-one
calendar days. In
- --------------------------------------------------------------------------------
21
<PAGE>
QUANTITATIVE GROUP of FUNDS [LOGO OF QUANTITATIVE
- ----------------------------------------------------------GROUP APPEARS HERE]
addition, the deferred sales charge will not be imposed on redemptions of Or-
dinary 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 Funds may make pay-
ment of the redemption price either in cash or in kind. Pursuant to Rule 18f-1
under the Investment Company Act, the Funds have 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 a Fund during any 90-day period to the
lesser of $250,000 or one percent (1%) of the net asset value of such Fund at
the beginning of such period. In case of a redemption in kind, securities de-
livered in payment for shares of a particular class of a 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 either class of a Fund in
a 90-day period, the redemption proceeds will be paid in cash if the share-
holder provides the Funds, 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 Funds. The instruction may be made by
telephone if the shareholder has authorized the Funds to accept such an in-
struction. 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 pro-
ceeds, less any applicable deferred sales charge will, in the absence of a re-
quest 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 reg-
istration.
If an unconditional instruction to redeem shares valued at more than $250,000
on a specified date is subsequently canceled by a shareholder, the Funds 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 each class of shares of a 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 us-
ing 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. For certain foreign securities, where no sales have been reported, the
Fund may value such securities at the last reported bid price. 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 remain-
ing maturities of 60 days or less are stated at amortized cost, which approxi-
mates market, subject to a determination by the Trustees that this method rep-
resents 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 as-
set value" per share.
DIVIDENDS, DISTRIBUTIONS, AND TAXATION
Dividends and Distributions
Each 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 a class of shares of a Fund will be
paid in shares of such class (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 each shareholder, in cash. Shareholders
also may elect to have income dividends paid in cash and capital gains distri-
butions 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.
- --------------------------------------------------------------------------------
22
<PAGE>
[LOGO OF QUANTITATIVE QUANTITATIVE GROUP of FUNDS
GROUP APPEARS HERE]-------------------------------------------------------------
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 conse-
quences of an investment in the Funds. Each Fund offered to the public intends
to qualify as a "regulated investment company" by complying with provisions of
the Internal Revenue Code, as amended (the "Code"). To so qualify, the Fund
must satisfy certain income, asset diversification and distribution require-
ments. For any taxable year in which a 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 each Fund's net in-
vestment 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 individ-
ual 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 pur-
chase 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 re-
alize a capital gain or loss which may be eligible for reduced capital gains
rates for individual shareholders, generally depending on the shareholder's
holding period for the shares.
Annually, shareholders of each Fund will receive information as to the federal
tax status of distributions received from such 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 cer-
tifications, or who have been notified by the IRS 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 lia-
bility.
Further information relating to tax consequences is contained in the Statement
of Additional Information. Fund distributions also may be subject to state, lo-
cal and foreign taxes.
PORTFOLIO SECURITIES
Equity Securities
Each of the Funds will invest primarily in common stocks. The Funds also may
invest in other types of equity securities such as preferred stocks, convert-
ible securities, warrants and options. The International Equity Fund and Emerg-
ing Markets Fund must invest at least 65% of their assets in equity securities
of foreign issuers.
Convertible Securities
Each of the Funds may invest in convertible securities, such as convertible de-
bentures, 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 a Fund the opportunity to purchase the common stock at below
market price or, conversely, render the right of conversion worthless. The
Funds will invest in convertible securities primarily for their equity charac-
teristics.
Investment Companies
The International Equity Fund and Emerging Markets Fund may invest up to 10% of
their assets in closed-end country funds whose shares are traded in the United
States. Investments in closed-end funds may allow the Funds 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
- --------------------------------------------------------------------------------
23
<PAGE>
QUANTITATIVE GROUP of FUNDS [LOGO OF QUANTITATIVE
- ----------------------------------------------------------GROUP APPEARS HERE]
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. Investments in closed-end funds by the Funds are subject to limita-
tions under the Investment Company Act.
OPALS
The International Equity Fund, Foreign Value Fund, and Emerging Markets Fund
may each invest in OPALS. OPALS represent an interest in a basket of securi-
ties of companies primarily located in a specific country generally designed
to track an index for that country. Investments in OPALS are subject to the
same risks inherent in directly investing in foreign securities. See Risk Con-
siderations--Foreign Securities on page 12. In addition, because the OPALS are
not registered under the securities laws, they may only be sold to certain
classes of investors, and it may be more difficult for the Fund to sell the
OPALS than other types of securities. However, the OPALS may generally be ex-
changed with their issuer for the underlying securities, which may be more
readily tradable.
Short-term Debt Obligations
Each of the Funds may invest in Short-term Debt Obligations. Short-term Debt
Obligations may include obligations of the U.S. government (and in the case of
the International Equity Fund and Emerging Markets Fund, securities of foreign
governments). U.S. government securities purchased by a 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. banks (and, in the case of the International Equity Fund and Emerging
Markets Fund, foreign banks) having deposits in excess of $2 billion; commer-
cial paper; short-term corporate bonds; debentures; and notes; all with one
year or less to maturity. Investments in commercial paper are limited to obli-
gations (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 cur-
rently rated Aaa or Aa by Moody's or AAA or AA by Standard & Poor's. Invest-
ments 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 sta-
tistical rating categories by a nationally recognized statistical ratings or-
ganization (NRSRO) such as Moody's or Standard & Poor's. Fixed-income securi-
ties, unless rated A or higher by Standard & Poor's or by Moody's, may have
some speculative characteristics. See Other Investment Practices in the State-
ment 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 a Fund is known as "portfolio turnover" and al-
most 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 deci-
sions by any Fund.
While it is, of course, impossible to predict portfolio turnover rates in fu-
ture years, portfolio turnover is not expected to exceed 125% for the Growth
and Income Fund, or 100% for the Small Cap Fund, Mid Cap Fund, International
Equity Fund, Foreign Value Fund and the Emerging Markets Fund.
The portfolio turnover rates for the Funds for their fiscal years 1997 (April
1, 1996 to March 31, 1997) and 1998 (April 1, 1997 to March 31, 1998) were as
follows:
<TABLE>
<CAPTION>
1997 1998
<S> <C> <C>
Small Cap Fund........................................................ 393% 135%
(Ordinary and Institutional Shares)
Mid Cap Fund.......................................................... 162% 128%
(Ordinary and Institutional Shares)
Growth and Income Fund................................................ 98% 72%
(Ordinary and Institutional Shares)
International Equity Fund............................................. 135% 61%
(Ordinary and Institutional Shares)
Emerging Markets Fund................................................. 8% 52%
(Ordinary and Institutional Shares)
</TABLE>
- --------------------------------------------------------------------------------
24
<PAGE>
[LOGO OF QUANTITATIVE QUANTITATIVE GROUP of FUNDS
GROUP APPEARS HERE]-------------------------------------------------------------
The decrease in the turnover rate of the Small Cap Fund is attributable to the
fact that fiscal year 1998 was the Fund's first full fiscal year of operation
under a new Advisor whose investment style is less reliant on turnover that the
previous Advisor.
There were no outstanding shares of the Foreign Value Fund during the above-
referenced periods. The Foreign Value Fund commenced operations on May 18,
1998. The portfolio turnover rate for the Foreign Value Fund's initial fiscal
year is not expected to exceed 100%.
Securities Loans
Each 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 the recovery of the securities or loss of rights in the col-
lateral should the borrower fail financially.
Options
The Mid Cap Fund, Foreign Value Fund and Emerging Markets 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 Small Cap Fund may purchase put
and call options on stock index futures and on stock indices. The Small Cap
Fund, Mid Cap Fund, Growth and Income Fund, Foreign Value Fund and Emerging
Markets Fund may each write covered call options on common stocks in their
portfolios to realize a greater current return, to provide greater flexibility
in disposing of such securities, or to partially hedge a possible stock market
decline. A 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 ex-
ercise price of the option and retains the risk of loss should the value of the
underlying security decline. There can be no assurance that a 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 op-
tions may not exceed 25% of a Fund's net assets. Any gains or losses realized
by a 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 Other Investment Practices in the State-
ment of Additional Information.
Short Sales
The Mid Cap Fund may engage in short sales of securities by selling securities
it does not own in anticipation of a decline in the market value of the securi-
ties. The risk involved in these short sales is that the Fund will experience a
loss if there is an increase in the price in the security sold short. No secu-
rities will be sold short if, after giving effect to any short sales, the value
of all securities sold short would exceed 25% of the Fund's net assets. All six
Funds may sell short securities identical to ones that they own in their port-
folios.
Foreign Currency Transactions
The International Equity Fund, Foreign Value Fund and Emerging Markets Fund may
engage in 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 Funds will generally not enter into a forward contract with a term of
greater than one year. For each Fund, 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 for-
ward 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 International Equity Fund, Foreign Value Fund and Emerging Markets Fund may
enter into forward foreign currency exchange contracts under two circumstances.
First, when a Fund enters into a contract for the purchase or sale of a secu-
rity 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
- --------------------------------------------------------------------------------
25
<PAGE>
QUANTITATIVE GROUP of FUNDS [LOGO OF QUANTITATIVE
- ----------------------------------------------------------GROUP APPEARS HERE]
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 con-
tracts. 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 Funds in the Statement of Additional Information, the foregoing investment
practices are not fundamental and the Trustees may vote to change the policies
as to any Fund without an affirmative vote of a "majority of the outstanding
voting securities" (as defined in Investment Restrictions of the Funds) of
such Fund.
Investment Restrictions
Specific investment restrictions help each Fund limit investment risks for its
shareholders. These restrictions prohibit any 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 securi-
ties of companies (including predecessors) less than three years old, securi-
ties which are not readily marketable, restricted securities, and in repur-
chase agreements that have a maturity longer than seven days; investing more
than 25% of its total assets in any one industry; or investing more than 15%
of its assets in illiquid securities.
Other significant investment restrictions include the following fundamental
policies which, like a Fund's investment objectives, may not be changed as to
any Fund without the affirmative vote of a majority of such Fund's outstanding
voting securities.
(1) A Fund may not make short sales of securities or maintain a short posi-
tion, unless (a) with respect to the Mid Cap Fund, the conditions set forth
under Short Sales are met; or (b)(i) at all times when a short position is
open the particular Fund owns an equal amount of such securities (or securi-
ties convertible into, or exchangeable without payment of any further consid-
eration for, securities of the same issue as, and equal in amount to, the se-
curities 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. A Fund may maintain short positions in a stock index by selling futures
contracts on that index.
(2) A Fund may not issue senior securities, borrow money or pledge its assets,
except that a 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. A Fund will not purchase any additional portfolio se-
curities 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) A Fund may not write, purchase or sell puts, calls or combinations there-
of, except that: (i) the Small Cap Fund, Mid Cap Fund, Growth and Income Fund,
Foreign Value Fund and Emerging Markets Fund may each write covered call op-
tions on common stocks in their portfolios; (ii) the Mid Cap Fund, Foreign
Value Fund and Emerging Markets Fund may 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)
the Small Cap Fund may purchase put and call options on stock index futures
and on stock indices; (iv) the International Equity Fund and Foreign Value
Fund may purchase and write call options on stock index futures and on stock
indices; and (v) each of the Funds may sell and purchase such options to ter-
minate existing positions.
Although these policies envision a Fund maintaining a position in a stock in-
dex by selling futures contracts on that index and also envision that under
certain conditions one or more Funds may engage in transactions in stock index
futures and related options, the Funds do not currently intend to engage in
such transactions.
- --------------------------------------------------------------------------------
26
<PAGE>
[LOGO OF QUANTITATIVE QUANTITATIVE GROUP of FUNDS
GROUP APPEARS HERE]-------------------------------------------------------------
PERFORMANCE DATA
Further information about the performance of the Funds is available in the an-
nual reports to shareholders of the Fund, which may be obtained free of charge
by calling 800-331-1244.
From time to time, the Funds may advertise their performance in various ways.
These methods include providing information on the returns of the Funds, such
as average annual total return, and comparing the performance of the Funds to
relevant benchmarks. In reports to shareholders or other literature, the Funds
may compare their performance to that of other mutual funds with similar in-
vestment objectives and to stock or other relevant indices. Performance infor-
mation, rankings, ratings, published editorial comments and listings reported
in national financial publications also may be used in computing performance of
the Funds (if the Funds are listed in any such publication). In making such
comparisons, the Funds 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 re-
turn. 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
All of the Funds are series of Quantitative Group of Funds (the "Trust"), 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, the Funds. 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
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 sharehold-
ers 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 an-
nual meetings of shareholders and will do so only when required by law. Share-
holders may remove Trustees from office by votes cast in person or by proxy at
a meeting of shareholders, or by written consent.
- --------------------------------------------------------------------------------
27
<PAGE>
QUANTITATIVE GROUP of FUNDS
Ordinary Share Account Application
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
Do not use this application form for an IRA account. For an IRA application or
help with this application, please call us at 800-331-1244. Mail to:
Quantitative Group of Funds, Attention: Transfer Agent, 55 Old Bedford Road,
Lincoln, MA 01773.
1. ACCOUNT REGISTRATION
(Check one)
[_] INDIVIDUAL OR JOINT ACCOUNT
Joint Accounts will be registered as joint tenants with rights of survivorship,
unless otherwise specified.
- --------------------------------------------------------------------------------
FIRST NAME MIDDLE INITIAL LAST NAME
- --------------------------------------------------------------------------------
APPLICANT'S SOCIAL SECURITY NUMBER
- --------------------------------------------------------------------------------
CITIZENSHIP OF APPLICANT (if other than U.S., please specify)
- --------------------------------------------------------------------------------
FIRST NAME OF JOINT OWNER MIDDLE INITIAL LAST NAME
- --------------------------------------------------------------------------------
APPLICANT'S SOCIAL SECURITY NUMBER
- --------------------------------------------------------------------------------
CITIZENSHIP OF APPLICANT (if other than U.S., please specify)
[_] CORPORATION, TRUST OR OTHER ENTITY
- --------------------------------------------------------------------------------
NAME OF CORPORATION OR OTHER ENTITY; if trustee, include date of trust
instrument.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TYPE OF ENTITY ENTITY'S TAXPAYER ID NUMBER
- --------------------------------------------------------------------------------
[_] GIFT OF MINOR
as custodian for
_______________________________________________
CUSTODIAN'S NAME (only one custodian permitted)
_______________________________________________ under the
MINOR'S NAME (only one minor permitted)
______ Uniform Gifts/Transfer to Minors Act.
STATE
- --------------------------------------------------------------------------------
MINOR'S SOCIAL SECURITY NUMBER DATE OF BIRTH
2. ADDRESS, TELEPHONE AND OCCUPATION
- --------------------------------------------------------------------------------
STREET ADDRESS APARTMENT OR BOX NUMBER
- --------------------------------------------------------------------------------
CITY STATE ZIP CODE
( ) ( )
- --------------------------------------------------------------------------------
DAYTIME TELEPHONE EVENING TELEPHONE
- --------------------------------------------------------------------------------
APPLICANT'S OCCUPATION EMPLOYER
- --------------------------------------------------------------------------------
JOINT OWNER'S OCCUPATION EMPLOYER
3. INVESTMENT SELECTIONS
Ordinary Shares of the following ($5,000 minimum, except for IRA, UGMA and
Automatic Investment Plan accounts.)
U.S. Equity Funds
[_] Quantitative Small Cap $
--------------------------
[_] Quantitative Mid Cap $
--------------------------
[_] Quantitative Growth & Income $
--------------------------
International Funds
[_] Quantitative International Equity $
--------------------------
[_] Quantitative Foreign Value $
--------------------------
[_] Quantitative Emerging Markets $
--------------------------
Total $
--------------------------
Please make check payable to:
Quantitative Group of Funds.
PLEASE CONTINUE APPLICATION ON REVERSE SIDE
<PAGE>
4. DISTRIBUTION OPTIONS
All income dividends and capital gains will be reinvested in additional shares
of the Fund(s) you select unless you check one or both of the following boxes.
[_] Pay all income in cash.
[_] Pay all capital gains in cash.
5. TELEPHONE EXCHANGE AND REDEMPTION
To use either or both of these options, you must initial the appropriate line
below.
I authorize you to accept any instructions from me or any other registered owner
of the account by telephone, or in writing, without a signature guarantee, to:
Exchange shares for shares of
- ------------------------------------- another Fund.
INITIAL JOINT INITIAL
Redeem shares, and send the proceeds
- ------------------------------------- to the address of record.
INITIAL JOINT INITIAL
- --------------------------------------------------------------------------------
MOTHER'S MAIDEN NAME (for individual, joint, and UGMA accounts only). Joint
accounts - supply for first owner; UGMA accounts - supply for custodian.
6. AUTOMATIC INVESTMENT PLAN
($1,000 minimum initial contribution)
[_] I/We authorize you to withdraw from my/our bank account $ _________________
($100 minimum per fund) on a monthly basis on or about the twentieth of each
month to be invested in Ordinary Shares of
- --------------------------------------------------------------------------------
NAME OF FUND
under the terms set forth in the Prospectus.
Please attach an unsigned, voided check.
7. SIGNATURES
Each of the undersigned certifies that:
. I am of legal age, have received and read the Prospectus, agree to its terms
and understand that those terms are incorporated in this Account Application
by reference.
. I understand that all the information provided in sections 1, 2, 4 and 5 will
apply to any new Fund(s) into which my shares may be exchanged.
. If I have elected the telephone exchange and/or telephone redemption options,
I understand that this authorization will be applicable to any of the Funds.
I hereby ratify any instructions given pursuant to the above election and
agree that neither the Funds, the Distributor, nor the Transfer Agent will be
liable for any loss, liability, cost or expense for acting upon such
instructions believed by them to be genuine in accordance with the terms of
the Prospectus.
. If I have elected the Automatic Investment Plan, I agree to reimburse
Quantitative Group of Funds and/or its affiliated companies for any expenses
or losses that they may incur in connection with my investments, including
any incurred by my bank's failure to act in accordance with my request.
. Under penalties of perjury, I certify (1) that this Account Application
states my correct taxpayer identification number and (2) that I am not
subject to backup withholding because (a) I have not been notified that I am
subject to backup withholding as a result of failure to report all interest
or dividends, or (b) the Internal Revenue Service has notified me that I am
no longer subject to backup withholding. (If you are subject to backup
withholding due to notified shareholder underreporting, strike out clause
(2).) (The Internal Revenue Service does not require your consent to any
provision of this document other than the certifications required to avoid
backup withholding.)
- --------------------------------------------------------------------------------
SIGNATURE OF APPLICANT DATE
- --------------------------------------------------------------------------------
PRINT NAME TITLE (If applicable)
- --------------------------------------------------------------------------------
SIGNATURE OF JOINT OWNER DATE
- --------------------------------------------------------------------------------
PRINT NAME TITLE (If applicable)
If you are signing for a corporation, you must indicate corporate office or
title. If you wish additional signatories on the account, please include a
corporate resolution. If signing as a fiduciary, you must indicate capacity.
For Information or additional options, such as IRA Account Applications,
rollover requests for qualified retirement plans, Institutional Share
Applications, or for wire instructions, please call us at 800-331-1244.
DEALER OR ADVISER (for broker-dealer use only)
- --------------------------------------------------------------------------------
FIRM REP. NO.
<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
ADVISORS
Columbia Partners, LLC,
Investment Management State Street Global Advisors
1701 Pennsylvania Avenue, N.W. 2 International Place
Washington, D.C. 20006 Boston, MA 02110
Independence International Polaris Capital Management, Inc.
Associates, Inc. 125 Summer Street
53 State Street Boston, MA 02110
Boston, MA 02109
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
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
QUANTITATIVE
GROUP of FUNDS
55 Old Bedford Road
Lincoln, MA 01773
voice 800/331-1244
fax 781/259-1166
www.quantfunds.com
Distributed by U.S. Boston Capital Corp.
<PAGE>
QUANTITATIVE GROUP OF FUNDS
Statement of Additional Information
-----------------------------------
August 1, 1998
--------------
This Statement of Additional Information ("Statement") contains information
which may be of interest to investors but which is not included in the
Prospectus of Quantitative Group of Funds (the "Trust"). This Statement is not
a Prospectus and is only authorized for distribution when accompanied by the
Prospectus of the Trust dated August 1, 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.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES.................................... 2
MANAGEMENT OF THE FUNDS............................................... 2
PORTFOLIO TRANSACTIONS................................................ 8
HOW TO INVEST......................................................... 9
HOW TO MAKE EXCHANGES................................................. 10
HOW TO REDEEM......................................................... 11
CALCULATION OF NET ASSET VALUE........................................ 11
DISTRIBUTIONS......................................................... 13
TAXATION.............................................................. 13
OTHER INVESTMENT PRACTICES............................................ 16
INVESTMENT RESTRICTIONS OF THE FUNDS.................................. 20
PERFORMANCE MEASURES.................................................. 21
THE QUANTITATIVE GROUP................................................ 23
EXPERTS............................................................... 24
FINANCIAL STATEMENTS.................................................. 25
</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 - The
---------------------------
Quantitative Funds 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. Capitalized
terms used in this Statement but not defined herein have the same meaning as in
the Prospectus.
MANAGEMENT OF THE FUNDS
Trustees and Officers
- ---------------------
<TABLE>
<CAPTION>
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 (career
management); 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 Inc. None
(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, Vice President - Counsel
U.S. Boston Capital
Corporation
LEON OKUROWSKI* Trustee,
Vice President, Director and Vice President, Director and Vice President
Treasurer U.S. Boston Capital
Corporation
WILLARD L. UMPHREY* President, Director, President, and Director, President,
Chairman, Treasurer, U.S. Boston and Treasurer
Trustee Capital Corporation
RON ZWANZIGER Trustee Director, President, and None
Chief Executive Officer,
Selfcare, Inc.
</TABLE>
2
<PAGE>
+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 Funds, 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, 1998, the Funds paid Trustees' fees aggregating
$27,000.
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
Joseph H. Newberg, $3,000 N/A N/A $3,000
Trustee*
Leon Okurowski, $4,000 N/A N/A $4,000
Trustee
Willard L. Umphrey, $4,000 N/A N/A $4,000
Trustee
</TABLE>
* Mr. Newberg was not a trustee as of March 31, 1998.
Mr. Zwanziger was elected as a trustee subsequent to March 31, 1998.
3
<PAGE>
The Trust's Agreement and Declaration of Trust provides that the Funds will
indemnify their 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 Funds, 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 Funds
or that such indemnification would relieve any officer or Trustee of any
liability to the Funds or their shareholders by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of his or her duties. The
Funds, at their expense, will provide liability insurance for the benefit of
their Trustees and officers.
Messrs. Umphrey and Okurowski, as officers of the Manager and the
Distributor, will benefit from the management and distribution fees paid or
allowed by the Funds and from brokerage commissions received by U.S. Boston
Capital Corporation in connection with the purchase and sale of the Funds'
portfolio securities.
At June 30, 1998, the officers and Trustees as a group owned in the aggregate
1.12% of the outstanding Ordinary Shares of the Small Cap Fund, 12.07% of the
outstanding Institutional Shares of the Small Cap Fund, 0.17% of the outstanding
Ordinary Shares of the Mid Cap Fund, 45.39% of the outstanding Institutional
Shares of the Mid Cap Fund, 0.66% of the outstanding Ordinary Shares of the
Growth and Income Fund, 19.11% of the outstanding Institutional Shares of the
Growth and Income Fund, 0.33% of the outstanding Ordinary Shares of the
International Equity Fund, 5.66% of the outstanding Institutional Shares of the
International Equity Fund, 12.16% of the outstanding Ordinary Shares of the
Foreign Value Fund, 3.36% of the outstanding Ordinary Shares of the Emerging
Markets Fund, and 1.08% of the outstanding Institutional Shares of the Emerging
Markets Fund. At June 30, 1998, there were no outstanding Institutional Shares
of the Foreign Value Fund. On the same date, each of the following persons
owned 5% or more of the then outstanding Institutional Shares of the Small Cap
Fund:
<TABLE>
<CAPTION>
Name and Address % of Outstanding Institutional Shares
---------------- -------------------------------------
<S> <C>
The Henry and Annie Hurt Home for the Blind
Washington, DC 5.45%
The John Dickson Home
Washington, DC 11.85%
National Postal Forum
Fairfax, VA 6.60%
Pershing Division of Donaldson, Lufkin & Jenrette
Jersey City, NJ 30.99%
Temple Preservation Foundation
Washington, DC 6.41%
U.S. Boston Corporation
Lincoln, MA 9.04%
</TABLE>
On the same date, each of the following persons owned 5% or more of the then
outstanding Ordinary Shares of the Mid Cap Fund:
<TABLE>
<CAPTION>
Name and Address % of Outstanding Ordinary Shares
---------------- ---------------------------------
<S> <C>
Dover Instrument Corporation
Westboro, MA 8.40%
Mr. George H. Howell
Wayland, MA 12.28%
</TABLE>
On the same date, each of the following persons owned 5% or more of the then
outstanding Institutional Shares of the Mid Cap Fund:
4
<PAGE>
<TABLE>
<CAPTION>
Name and Address % of Outstanding Institutional Shares
---------------- --------------------------------------
<S> <C>
Charles Schwab and Co., Inc.
San Francisco, CA 23.52%
Mr. James E. and Ms. Sandra G. Jones
Owensboro, KY 7.54%
Ms. Lawrie Okurowski
Concord, MA 18.17%
State Street Bank and Trust Custodian for Marsha W. Vaughan IRA
Stafford, VA 5.03%
U.S. Boston Corporation
Lincoln, MA 22.33%
</TABLE>
On the same date, each of the following persons owned 5% or more of the then
outstanding Institutional Shares of the Growth and Income Fund:
<TABLE>
<CAPTION>
Name and Address % of Outstanding Institutional Shares
---------------- --------------------------------------
<S> <C>
Dover Instrument Corporation
Westboro, MA 33.70%
Mr. William K. Durr
Naples, FL 8.66%
Mr. Leon Okurowski
Concord, MA 6.13%
Pershing Division of Donaldson, Lufkin & Jenrette
Jersey City, NJ 31.43%
U.S. Boston Corporation
Lincoln, MA 6.98%
On the same date, the following person owned 5% or more of the then outstanding
Institutional Shares of the International Equity Fund:
Dover Instrument Corporation
Westboro, MA 92.20%
On the same date, each of the following persons owned 5% or more of the then
outstanding Ordinary Shares of the Foreign Value Fund:
Dermatology Associates of Concord, Inc. Profit Sharing Retirement Plan
Concord, MA 10.13%
Mr. William K. Durr
Naples, FL 9.51%
Arthur Fertman DDS PC Profit Sharing Retirement Plan
Burlington, MA 9.64%
Lexington Medical Associates Inc. Profit Sharing Trust 1974
Lexington, MA 9.38%
</TABLE>
5
<PAGE>
State Street Bank and Trust Custodian for Gerald M. McCue IRA
Cambridge, MA 5.58%
U.S. Boston Corporation
Lincoln, MA 9.64%
On the same date, the following person owned 5% or more of the then outstanding
Ordinary Shares of the Emerging Markets Fund:
Dover Instrument Corporation
Westboro, MA 5.02%
On the same date, the following person owned 5% or more of the then outstanding
Institutional Shares of the Emerging Markets Fund:
Strafe & Co.
Westerville, OH 97.44%
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 Funds, and by (ii) either the
majority vote of all the Trustees or the vote of a majority of the outstanding
voting securities of each 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 Funds pay 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 respective Funds for distribution under federal and state laws and
regulations, charges of custodians, auditing and legal expenses, expenses of
determining net asset value of the Funds' 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 Fund expenses are allocated among and charged to the assets of the
respective Funds on a basis that the Trustees deem fair and equitable, which may
be based on the relative net assets of each Fund or the nature of the services
performed and relative applicability to each Fund. The Funds are also
responsible for such non recurring expenses as may arise, including litigation
in which the Funds may be a party, and other expenses as determined by the
Trustees. The Funds may have an obligation to indemnify their officers and
Trustees with respect to such litigation.
For services rendered to the Small Cap Fund during the fiscal years ended
March 31, 1998, 1997, and 1996, the Manager received fees of $712,299,
$916,777, and $1,093,661, respectively. For services rendered to the Mid Cap
Fund during the fiscal years ended March 31, 1998, 1997, and 1996, the Manager
received fees of $122,800, $96,688, and $39,593, respectively, a portion of
which were waived by the Manager. For services rendered to the Growth and
Income Fund during the fiscal years ended March 31, 1998, 1997, and 1996, the
Manager received fees of $425,583, $334,461, and $321,748, respectively. For
services rendered to the International Equity Fund during the fiscal years ended
March 31, 1998, 1997, and 1996, the Manager received fees of $311,008, $287,461,
and $321,897, respectively. For services rendered to the Emerging Markets Fund
during the fiscal years ended March 31, 1998, 1997, and 1996, the Manager
received fees of $86,261, $77,271, and $50,458, respectively. The Foreign
Value Fund was not in existence as of March 31, 1998. Such fees were rebated
by the Manager to the extent required to comply with its contractual undertaking
to assume certain expenses of the Small Cap Fund, the Growth and Income Fund,
and the International Equity Fund (including the Manager's compensation) in
excess of 2% of such Fund's average net assets and its voluntary undertaking to
assume certain expenses of the Mid Cap Fund and the Emerging Markets Fund ) in
excess of 1.65 and 2.45%, respectively, of such Funds' average net assets.
6
<PAGE>
Advisory Contracts
- ------------------
Each 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. Each Advisory
Contract may be terminated without penalty with respect to any Fund by vote of
the Trustees or the shareholders of that Fund, or by the Manager on not less
than 30 nor more than 60 days' written notice or by the particular Advisor on
not less than 30 nor more than 60 days', or no less than 150 days' written
notice, depending on the Fund. Each Advisory Contract may be amended with
respect to any Fund only by a vote of the shareholders of that Fund. Each
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 Funds and the Manager terminates generally or terminates with
respect to that particular Fund.
Each Advisory Contract provides that the Advisor shall not be subject to any
liability to the Funds or to the Manager or to any shareholder of the Funds for
any act or omission in the course of or connected with the 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 Funds' Distribution Agreement with U.S. Boston
Capital Corporation, the principal distributor of the Funds' shares ( the
"Distributor"), are described in the prospectus under the caption Management of
-------------
the Funds - Distributor and Distribution Plan.
- ---------------------------------------------
To permit the Funds to pay a monthly fee to the Distributor, the Funds have
adopted a distribution plan (the "Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The Small Cap, Growth and Income, International
Equity, and Emerging Markets Funds pay the Distributor a monthly fee at the
annual rate of 0.50% of the average net asset value of shares (excluding
Institutional 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. The Mid Cap and Foreign Value Funds pay the Distributor a monthly fee at
the annual rate of 0.25% of the average net asset value of Ordinary Shares.
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 a 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 Funds review quarterly a written report of the
amounts so expended and the purposes for which such expenditures were made.
For the fiscal year ended March 31, 1998, the aggregate fees (net of fees
waived), paid to the Distributor totaled $818,421, or 0.50% of the average net
assets of the Ordinary Shares of the Small Cap, Growth and Income, International
Equity, and Emerging Markets Funds and 0.25% of the average net assets of the
Ordinary Shares of the Mid Cap Fund.
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 Funds.
Transfer Agent
- --------------
Quantitative Institutional Services ("Transfer Agent"), a division of the
Manager, is the transfer agent and dividend disbursing agent for each of the
Funds. All mutual fund transfer, dividend disbursing and shareholder
7
<PAGE>
services activities are performed at the offices of Quantitative Institutional
Services, 55 Old Bedford Road, Lincoln, Massachusetts 01773. For its services,
the Transfer Agent receives base at an annual rate of 0.13% of the aggregate
average daily net asset value of each class of shares of each Fund and is
reimbursed for out of pocket expenses.
PORTFOLIO TRANSACTIONS
Investment Decisions. Investment decisions for a Fund and for other
--------------------
investment advisory clients of the Manager or that 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 Funds 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 Funds 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 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 Advisors and the Manager may receive
research, statistical and quotation services from certain broker-dealers with
which the Manager or Advisors place the Funds' portfolio transactions. These
services, which in some instances may also be purchased for cash, include such
matters as general economic and securities 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 Advisors or the
Manager in advising various of their clients (including the Funds), although not
all of these services are necessarily useful and of value in advising the Funds.
The fees paid to the Advisors by the Manager or paid to the Manager by the Funds
are not reduced because the Advisors or the Manager receive such services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, and by
the Advisory Contracts, the Manager or Advisors may cause the Funds to pay a
broker-dealer which provides "brokerage and research services" (as defined in
that Act) to the Manager or Advisors 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 Advisors' authority to cause the Funds 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
8
<PAGE>
Manager or Advisors may consider sales of shares of the Funds as a factor in the
selection of broker-dealers to execute portfolio transactions for the Funds.
Pursuant to conditions set forth in rules of the Securities and Exchange
Commission, the Funds 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.
Brokerage commissions paid by the Funds on portfolio transactions totaled
$877,111 for the fiscal year ended March 31, 1996, $1,090,683 for the fiscal
year ended March 31, 1997, and $494,442 for the fiscal year ended March 31,
1998. None of such commissions was paid to a broker who was an affiliated
person of the Funds or an affiliated person of such a person or, to the
knowledge of the Funds, to a broker an affiliated person of which was an
affiliated person of the Fund, the Manager or any Advisor.
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 Funds. 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
associations, clearing agencies or savings associations. Securities accepted by
the Funds 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
such acceptance. 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 Funds and must be delivered to the Funds 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 Funds reserve the right not to accept any
particular securities tendered for exchange. The Funds have undertaken to a
state securities authority that securities exchanged for shares of the Funds
will meet the investment objectives and policies of the Funds, 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 Funds' Open Account System all shares
-------------------
purchased are credited directly to your account in the designated Fund at the
time of purchase. All shares remain on deposit with Quantitative Institutional
Services, Inc., the transfer, dividend-paying and shareholder servicing agent
for the Funds (the "Transfer Agent"). No certificates are issued.
The following services are currently offered by the Open Account System:
1. You may make additional investments in a Fund by sending a check
(made payable to "Quantitative Group of Funds") to the Funds 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 a class of shares of a
Fund will be paid in shares
9
<PAGE>
of such class 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 a particular class of shares of a Fund are borne by that class as an expense
of all shareholders of that class. 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 with earned income
-----------------------------------
(whether or not covered by qualified private or governmental retirement plans)
may purchase shares of any of the Funds 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.
HOW TO MAKE EXCHANGES
The procedures for exchanging shares of one Fund for those of another are
described in the Prospectus under How to Make Exchanges.
---------------------
An exchange involves a redemption of all or a portion of shares of one
class of a Fund and the investment of the redemption proceeds in shares of a
like class in another Fund. The redemption will be made at the per share net
asset value of the particular class of shares of a Fund being redeemed which is
next determined after the exchange request is received in proper order.
The shares of the particular class of 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 one class of a Fund for shares of a like class of
another Fund will constitute a sale for federal income tax purposes on which the
investor will realize a capital gain or loss.
10
<PAGE>
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 a 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
Funds reserve 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 Funds reserve 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 Funds
may require additional documentation of a customary nature. Shareholders who
have authorized the Funds 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 Funds and the Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. If the Funds
and the Transfer Agent fail to do so, they may be liable for any losses due to
unauthorized or fraudulent transactions. The Funds provide 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 Funds 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 Funds
to dispose of their securities or to determine fairly the value of their net
assets, or during any other period permitted by order of the Securities and
Exchange Commission.
The Funds reserve 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 Funds. To prevent a
shareholder from becoming an affiliate of the Funds, the Funds reserve 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 a Fund will be
determined as of the 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 International Equity and Emerging
Markets Funds may invest in securities listed on foreign exchanges which trade
on days on which the International Equity and Emerging Markets Funds do not
compute net asset value
11
<PAGE>
(i.e., Saturdays and Exchange holidays) and the net asset value of shares of the
International Equity and Emerging Markets Funds 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. For certain foreign
securities, where no sales have been reported, the Fund may value such
securities at the last reported bid price. 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 a
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 each class of
a 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 the computation of the Funds'
net asset value. If events materially affecting the value of the Funds'
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 any Fund will be
paid from the assets of that Fund except that 12b-1 Plan expenses will not be
borne by holders of Institutional Shares of the Funds and each class of shares
of the Fund will bear its own transfer agency fees. General expenses of the
Funds will be allocated among and charged to the assets of the respective Funds
on a basis that the Trustees deem fair and equitable, which may be the relative
assets of each Fund or the nature of the services performed and relative
applicability to each Fund.
12
<PAGE>
DISTRIBUTIONS
Each 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
Each Fund intends to qualify annually as a "regulated investment company"
("RIC") under the Code.
To qualify as a RIC, a 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); and (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.
As a RIC, a 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. Each 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, a 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 a
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, each Fund intends to make its
distributions in accordance with the calendar year distribution requirement.
Dividends paid out of a Fund's investment company taxable income will be
taxable to a U.S. shareholder as ordinary income. If a portion of a 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,
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 a 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 a 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 a 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
13
<PAGE>
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 a 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 a 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 a 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 a 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 a Fund of engaging in hedging transactions
are not entirely clear. Hedging transactions may increase the amount of short-
term capital gain realized by a Fund which is taxed as ordinary income when
distributed to shareholders.
Each Fund may make one or more of the elections available under the Code
which are applicable to straddles. If a 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, a 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.
Unless certain constructive sale rules (discussed more fully above) apply,
a 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 a 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.
14
<PAGE>
Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time a 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 futures, and forward
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 a Fund's investment company taxable income to
be distributed to its shareholders as ordinary income.
Upon the sale or other disposition of shares of a 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 a 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, a 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. A 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 a Fund's total assets at the close of its
taxable year consists of securities of foreign corporations, the Fund will be
eligible and may 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, if made, 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
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 a 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
15
<PAGE>
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 a 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.
A 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 a 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 International Equity, Foreign Value, and
Emerging Markets Funds may temporarily hold funds in bank deposits in foreign
currencies during the completion of investment programs, the value of the assets
of the Funds 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. Each 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 Funds will generally not enter into
a forward contract with a term of greater than one year. The Funds' Custodian
will place cash or liquid debt securities into a segregated account of the
series in an amount equal to the value of the Funds' 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 Funds' commitments with respect to such
contracts.
The International Equity, Foreign Value, and Emerging Markets Funds will
generally enter into forward foreign currency exchange contracts under two
circumstances. First, when a 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.
16
<PAGE>
Second, when a 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, a 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, a 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 a 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 a 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 Funds are not required to enter into forward contracts with regard to
their foreign currency-denominated securities and will not do so unless deemed
appropriate by the Funds' 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, 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 Funds value their assets daily in terms of U.S. dollars, they do
not intend to convert their 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
17
<PAGE>
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Funds at one rate, while offering a lesser rate of
exchange should the Funds desire to resell that currency to the dealer.
Short-term Debt Obligations. The Funds may invest in Short-term Debt
---------------------------
Obligations for temporary defensive purposes, and each 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 (in the case of the International
Equity Fund, Foreign Value Fund, and Emerging Markets Fund) securities of
foreign governments. Short-term Debt Obligations may also include certificates
of deposit and bankers' acceptances issued by U.S. banks (and, in the case of
the International Equity Fund, Foreign Value Fund and Emerging Markets Fund,
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. or A-1 by
Standard & Poor's Corporation, 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 Investors Service, Inc. 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 Corporation 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 Funds will enter into repurchase agreements only with
(i) commercial banks or (ii) registered broker-dealers. Although each 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
Funds' 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 a 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 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. Each Fund may make secured loans of its portfolio
----------------
securities amounting to not more than 30% of its total assets. See Investment
----------
Restrictions of the Funds. The risks in lending portfolio securities, as with
- -------------------------
other extensions of credit, consist of possible delay in the recovery of the
securities or loss of rights in the collateral should the borrower fail
financially. However, such loans will be made only to broker-dealers that a
18
<PAGE>
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 a Fund an amount equal to any dividends
or interest received on the securities lent. A 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, a 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 a Fund if the holders of such securities are asked to
vote upon or consent to matters materially affecting the investment. A Fund may
also call such loans in order to sell the security involved.
Options. The Small Cap Fund, Mid Cap Fund, Growth and Income Fund, Foreign
-------
Value Fund, and Emerging Markets Fund may write covered call options which are
traded on national securities exchanges with respect to stocks in their
portfolios (ensuring that the Funds at all times will have in their portfolios
the securities which they 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. These Funds may write covered call options
on securities in their 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 Small Cap Fund, Mid Cap Fund,
Growth and Income Fund, Foreign Value Fund, and Emerging Markets Fund may also
write call options to partially hedge a possible stock market decline. Because
these Funds seek 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 these Funds remain obligated as writers of covered
calls, they forego 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. These Funds may also
enter into "closing purchase transactions" in order to terminate their
obligations as writers 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 these Funds
will be able to effect such transactions at any particular time or at an
acceptable price. If the Funds were unable to enter into a closing purchase
transaction, the principal risks to the Funds 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 rates of the Funds, especially during periods when
market prices of the underlying securities appreciate.
Short Sales. The Mid Cap Fund also may engage in short sales of
-----------
securities by selling securities it does not own in anticipation of a decline in
the market value of those securities. To effect such transactions, the Fund
must borrow the security to make delivery to a buyer and then later replace the
borrowed security by purchasing it at market price. The Adviser may sell
securities short in anticipation of a decline in the price of the security
between the time it is sold and the time it is purchased for replacement.
However, the actual replacement price of the security may be more or less than
the price at the time of sale. The Fund will realize a gain if its replacement
price is less than the sale price, but will experience a loss if there is an
increase in price. The Fund also will incur transaction costs, including
interest expenses, and will be required to make margin deposits with brokers
until the short position is closed out.
No securities will be sold short if, after giving effect to any short
sales, the value of all securities sold short would exceed 25% of the Fund's net
assets. The Fund will place in a segregated account with its custodian an
amount of cash or U.S. government securities equal to the difference between (i)
the market value of the securities sold short at the time of sale and (ii) any
cash or securities required by the broker to be deposited as margin for the
short sale (excluding the proceeds of the short sale). The value of U.S.
government securities and cash in the segregated account will be marked to
market daily and additional deposits will be added if the value of the Fund's
short position declines. At all times, however, the deposits in the segregated
account together with the amounts held by the broker as margin will not be less
than the initial market value of the securities sold short.
19
<PAGE>
All of the Funds may sell short securities identical to ones that they
own in their portfolios.
Forward Commitments. Each 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 Funds' 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 a Fund will generally enter into forward
commitments with the intention of acquiring securities for its portfolio, a Fund
may dispose of a commitment prior to settlement if the Advisor deems it
appropriate to do so. A Fund may realize short-term profits or losses upon the
sale of forward commitments.
Warrants. The Funds may invest in warrants purchased as units or attached
--------
to securities purchased by the series. Warrants are options to purchase equity
securities at specific prices valid for a specific period of time. 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 FUNDS
As fundamental policies, which may not be changed without "a vote of the
majority of the outstanding voting securities" of a Fund (as defined below) , a
Fund will not take any of the following actions:
(1) purchase any security if as a result a 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 any 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 no
Fund may invest more than 15% of its assets in illiquid securities;
(3) make short sales of securities or maintain a short position, if, for
the Mid Cap Fund, as a result the value of all securities sold short would
exceed 25% of the Fund's net assets; or, for all other Funds, unless at all
times when a short position is open the particular 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. A 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 a 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. A 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 Funds, officers and Trustees of the Funds or of the Manager or of the
Advisor of the particular Funds who individually own more than 1/2 of 1% of the
securities of that company together own beneficially more than 5% of such
securities;
20
<PAGE>
(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: (i) the Small Cap Fund, Mid Cap Fund, Growth and Income Fund, Foreign
Value Fund, and Emerging Markets Fund may each write covered call options with
respect to all of their portfolio securities; (ii) the Mid Cap Fund, Foreign
Value Fund, and Emerging Markets Fund may 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) the
Small Cap Fund may purchase put and call options on stock index futures and on
stock indices; (iv) the International Equity Fund and Foreign Value Fund may
purchase and write call options on stock index futures and on stock indices; and
(v) each of the Funds may sell and purchase such options to terminate existing
positions;
(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 a
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 a 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, a 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
any Fund means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of such Fund or (2) 67% or more of the shares of such 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
Average Annual Total Rate of Return /(1)/, /(2)/, /(3)/
<TABLE>
<CAPTION>
Year Ended 5 Years Ended 10 Years Ended
March 31, 1998 March 31, 1998 March 31, 1998 Since Inception
<S> <C> <C> <C> <C>
SMALL CAP FUND
Ordinary Shares 36.63% 19.31% __ 24.22% (8/3/92)
Institutional Shares 38.44% 20.17% __ 21.35% (1/6/93)
</TABLE>
21
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
MID CAP FUND
Ordinary Shares 46.94% __ __ 32.08% (3/21/95)
Institutional Shares 47.28% __ __ 31.92% (4/17/95)
GROWTH AND INCOME FUND
Ordinary Shares 50.01% 19.87% 17.75% 17.09% (5/9/85)
Institutional Shares 52.18% 20.70% __ 18.41% (3/25/91)
INTERNATIONAL EQUITY FUND
Ordinary Shares 11.82% 9.78% 5.30% 4.35% (7/31/87)
Institutional Shares 13.50% __ __ 4.80% (8/25/94)
Emerging Markets FUND
Ordinary Shares (17.50)% __ __ ( 6.60)% (8/8/94)
Institutional Shares (16.29)% __ __ ( 4.25)% (4/2/96)
</TABLE>
Quantitative Foreign Value was not in existence as of March 31, 1998.
(1) Total return with all dividends and capital gains reinvested. The
performance data quoted represents past performance. The investment return
and principal value of a current investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
(2) These results reflect the impact of a contractual 2% expense cap applicable
to the Quantitative Small Cap Fund, Quantitative Growth and Income Fund,
and Quantitative International Equity Fund (when applicable), and voluntary
expense caps of 1.65% and 2.45%, respectively, applicable to the
Quantitative Mid Cap fund and Quantitative Emerging Markets Fund, as
described in the Prospectus, and expense waivers and/or reimbursements
applicable to the Funds. If the expenses had not been subsidized, the
performance would have been lower.
(3) The return for the Ordinary Shares of the Funds takes into account a one
percent (1%) deferred sales charge imposed at the time of redemption. The
deferred sales charge is not imposed in the case of redemptions of
Institutional Shares, redemptions of Ordinary Shares of the Mid Cap Fund
purchased on or after August 1, 1996, involuntary redemptions, redemptions
of Shares tendered for exchange and redemptions of Shares held by
contributory plans qualified under Section 401(k) of the Internal Revenue
Code or for certain other redemptions. (See How to Redeem in the
-------------
Prospectus.)
From time to time, the Funds may advertise their performance in various
ways. These methods include providing information on the returns of the Funds
and comparing the performance of the Funds to relevant benchmarks. Performance
will be stated in terms of total return. "Total return" figures are based on
the historical performance of each 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
22
<PAGE>
time period since the effective date of the registration statement relating to
the particular 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 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. The
average annual total returns for the Funds are set forth in the Prospectus under
the caption Performance Data.
-----------------
In reports to shareholders or other literature, the Funds may compare their
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 Funds may also compare their performance to
the Standard & Poor's 500 Stock Index (S&P 500) or Standard & Poor's 400 Mid
Cap Index, indexes of unmanaged groups of common stocks; the Russell 2000, an
unmanaged index of the smallest 2,000 of the 3,000 largest U.S. companies; the
Morgan Stanley Capital International Europe, Australasia, 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; or the Baring Emerging Markets Index,
International Finance Corporation Investable Composite Index or the Morgan
Stanley Capital International Emerging Markets Free Index, indexes of unmanaged
groups of common stocks of foreign companies having their principal business
activities in emerging nations. In making such comparisons, the Funds 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 Funds calculate their 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 Funds,
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 Funds (if the Funds are listed in any such
publication). Performance comparisons should not be considered as
representative of the future performance of the Funds.
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, the Funds, each 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 (or class
thereof under certain circumstances) 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
23
<PAGE>
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
Fund 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 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 Funds' 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 Funds. However, the Agreement and
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Funds and requires notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Funds or the Trustees.
The Agreement and Declaration of Trust provides for indemnification out of a
Fund's property for all loss and expense of any shareholder of that 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.
In April 1998, the names of three of the Funds were changed from the
Quantitative Numeric Fund, the Quantitative Numeric II Fund and the Quantitative
Foreign Frontier Fund to the Quantitative Small Cap Fund, the Quantitative Mid
Cap Fund and the Quantitative Emerging Markets Fund, respectively
EXPERTS
The audited financial statements as of March 31, 1998 included in this
Statement of Additional Information have been so included in reliance upon the
report of PricewaterhouseCoopers LLP (formerly Price Waterhouse LLP),
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
24
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
PORTFOLIO OF INVESTMENTS March 31, 1998
QUANTITATIVE SMALL CAP FUND
- --------------------------------------------------------------------------------
COMMON STOCK--99.4%
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
APPAREL & TEXILES--.8%
Tropical Sportswear International Corporation (a) 43,085 $ 608,576
-----------
AUTOMOBILES--1.9%
Avis Rent-A-Car Inc. (a) 42,560 1,380,540
-----------
BANKS--6.3%
Coast Federal Litigation Trust (a) 19,060 309,725
Golden State Bancorp Inc. (a) 30,655 1,170,638
Independence Community Bank Corporation (a) 31,840 569,140
PFF Bancorp Inc. (a) 45,120 930,600
Richmond County Financial Corporation 53,355 1,023,749
WestAmerica Bancorporation 15,540 518,647
-----------
4,522,499
-----------
BUILDING CONSTRUCTION--1.7%
McDermott (J. Ray) S.A. (a) 28,600 1,204,775
-----------
BUSINESS SERVICES--3.3%
American Capital Strategies Ltd. 43,710 967,084
Henry Jack & Associates Inc. 38,600 1,389,600
-----------
2,356,684
-----------
CHEMICALS--2.5%
Calgon Carbon Corporation 69,085 807,431
Mississippi Chemical Corporation 48,150 966,009
-----------
1,773,440
-----------
COMPUTERS & BUSINESS EQUIPMENT--1.2%
Xircom Inc. (a) 63,190 872,812
-----------
DRUGS & HEALTH CARE--15.2%
Coventry Corporation (a) 72,730 1,168,226
Curative Health Services Inc. (a) 35,855 1,194,420
Monarch Dental Corporation (a) 64,430 1,103,364
Orthodontic Centers of America Inc. (a) 60,280 1,307,322
Priority Healthcare Corporation (a) 41,980 750,392
PSS World Medical Inc. (a) 49,845 1,171,358
Quorum Health Group Inc. (a) 37,370 1,256,566
Steris Corporation (a) 21,325 1,151,550
Sunrise Assisted Living Inc. (a) 25,815 1,155,221
VISX Inc. (a) 28,520 713,000
-----------
10,971,419
-----------
ELECTRICAL EQUIPMENT--2.8%
AFC Cable Systems Inc. (a) 28,085 1,091,804
Watsco Inc. 34,615 930,278
-----------
2,022,082
-----------
ELECTRONICS--2.6%
ATMI Inc. (a) 29,605 895,551
Gentex Corporation (a)
(with rights exp. 8/26/01) 28,400 963,825
-----------
1,859,376
-----------
FINANCIAL SERVICES--1.0%
Ocwen Financial Corporation (a) 26,455 734,126
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
FOOD & BEVERAGES--5.6%
Earthgrains Company 22,970 $ 1,014,987
Flowers Industries Inc. 41,655 976,289
International Home Foods Inc. (a) 24,155 803,154
Ralcorp Holdings Inc. (a) 59,980 1,244,585
-----------
4,039,015
-----------
HOTELS & RESTAURANTS--1.6%
Showbiz Pizza Time Inc. (a) 33,475 1,115,136
-----------
HOUSEHOLD APPLIANCES & FURNISHINGS--1.7%
Furniture Brands International Inc. (a) 38,675 1,244,852
-----------
INSURANCE--8.0%
ESG Real Estate Ltd. 44,400 1,154,400
Fremont General Corporation 23,185 1,363,568
Mutual Risk Management Ltd. 28,190 954,936
NAC Real Estate Corporation 21,100 1,106,431
Reliance Group Holdings Inc. 61,570 1,177,526
-----------
5,756,861
-----------
LEISURE TIME--0.9%
Championship Auto Racing Team (a) 35,750 661,375
-----------
MISCELLANEOUS--1.5%
United Rentals Inc. (a) 42,515 1,105,390
-----------
OFFICE FURNISHINGS & SUPPLIES--1.5%
United Stationers Inc. (a) 17,575 1,086,355
-----------
PETROLEUM SERVICES--3.9%
Friede Goldman International Inc. 22,525 650,409
Pride International Inc. (a) 46,485 1,109,829
Veritas DGC Inc. (a) 20,970 1,060,296
-----------
2,820,534
-----------
POLLUTION CONTROL--3.9%
MPW Industrial Services Group Inc. (a) 50,035 544,131
Philip Services Corporation (a) 80,105 836,096
Superior Services Inc. (a) 45,695 1,425,113
-----------
2,805,340
-----------
PUBLISHING--3.8%
Consolidated Graphics Inc. (a) 24,705 1,429,802
Mail-Well Inc. (a) 34,555 1,308,771
-----------
2,738,573
-----------
REAL ESTATE--8.3%
Boston Properties Inc. 31,745 1,117,027
Capital Automotive Real Estate Investment Trust (a) 18,935 357,398
Entertainment Properties Trust 62,510 1,226,759
FelCor Suite Hotels Inc. 28,680 1,062,952
Imperial Credit Commercial Mortgage Investment Corporation 65,575 983,625
Kilroy Realty Corporation 42,470 1,213,049
-----------
5,960,810
-----------
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
PORTFOLIO OF INVESTMENTS March 31, 1998
QUANTITATIVE SMALL CAP FUND--CONTINUED
- -------------------------------------------------------------------------------
COMMON STOCK--Continued
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
RETAIL TRADE--6.6%
Dress Barn, The (a) 29,965 $ 861,494
Michaels Stores Inc. (a) 35,280 1,318,590
Ross Stores Inc. 30,709 1,355,035
Sunglass Hut International Inc. (a) 118,630 1,245,615
-----------
4,780,734
-----------
SAVINGS & LOAN--1.6%
Ahmanson (H.F.) & Company 0 22
Astoria Financial Corporation 18,680 1,154,658
-----------
1,154,680
-----------
SOFTWARE--4.1%
Arbor Software Corporation (a) 23,595 1,088,319
Rational Software Corporation (a) 71,275 926,575
Wind River Systems Inc. (a) 23,025 915,244
-----------
2,930,138
-----------
TELECOMMUNICATION SERVICES--1.9%
Lightbridge Inc. (a) 75,935 1,371,576
-----------
TELEPHONE--0.3%
Tel-Save Holdings Inc. (a) 10,000 227,500
-----------
TIRES & RUBBER--1.7%
Safeskin Corporation (a) 17,010 1,256,614
-----------
TRUCKING & FREIGHT FORWARDING--3.2%
CNF Transportation Inc. 14,965 537,805
Fritz Company Inc. (a) 43,870 696,436
Roadway Express Inc. 44,200 1,085,662
-----------
2,319,903
-----------
TOTAL COMMON STOCK
(Cost $59,414,856) $71,681,715
===========
</TABLE>
SHORT TERM INVESTMENTS--0.6%
<TABLE>
<CAPTION>
Par Value Value
<S> <C> <C>
State Street Repo 4.25%, 4/1/98, (Cost $402,000) (Dated
3/31/98), Collaterlized by $405,000 U.S. Treasury Bond
5.875%, 4/30/98, Market Value $414,988, Repurchase
Proceeds $402,047. $402,000 $ 402,000
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $402,000) $ 402,000
------------
TOTAL INVESMENTS--100%
(Cost $59,816,856) (b) $ 72,083,715
============
</TABLE>
(a) Non-income producing security.
(b) At March 31, 1998, the unrealized appreciation of investments based on ag-
gregate cost for federal tax purposes of $60,106,555 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost $13,959,090
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value (1,981,930)
-----------
Net unrealized appreciation $11,977,160
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- -------------------------------------------------------------------------------
12
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
PORTFOLIO OF INVESTMENTS March 31, 1998
QUANTITATIVE MID CAP FUND
- --------------------------------------------------------------------------------
COMMON STOCK--95.0%
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
AEROSPACE--3.7%
Sundstrand Corporation 5,335 $ 322,767
Thiokol Corporation 6,320 305,335
-----------
628,102
-----------
ALUMINUM--1.4%
Reynolds Metals Company 3,815 234,384
-----------
APPAREL & TEXTILES--3.7%
Tommy Hilfiger Corporation (a) 5,210 312,926
Intimate Brands Inc. 11,345 307,024
-----------
619,950
-----------
AUTOMOBILES--1.8%
Lear Corporation (a) 5,365 302,452
-----------
BANKS--3.9%
Dime Bancorp Inc. 12,175 366,011
Golden State Bancorp Inc. (a) 7,500 286,406
-----------
652,417
-----------
BUSINESS SERVICES--1.8%
AccuStaff Inc. (a) 8,675 299,287
-----------
COMPUTERS & BUSINESS EQUIPMENT--3.6%
Ingram Micro Inc. (a) 8,660 321,502
Tandy Corporation 5,860 275,420
-----------
596,922
-----------
DRUGS & HEALTH CARE--9.5%
General Nutrition Companies Inc. (a) 8,305 330,124
McKesson Corporation 5,405 312,139
Quorum Health Group Inc. (a) 10,237 344,219
Total Renal Care Holdings Inc. (a) 8,741 291,185
Watson Pharmaceuticals Inc. (a) 8,775 315,900
-----------
1,593,567
-----------
ELECTRIC UTILITIES--2.1%
Montana Power Company 9,735 351,068
-----------
ELECTRONICS--3.4%
Advanced Fibre Communications (a) 8,540 310,642
National Semiconductor Corporation (a) 12,425 260,148
-----------
570,790
-----------
FINANCIAL SERVICES--3.8%
Capital One Financial Corporation 4,615 364,008
SLM Holding Corporation 6,145 268,076
-----------
632,084
-----------
FOOD & BEVERAGES--6.8%
Dean Foods Company 5,410 272,191
Dole Food Inc. 5,815 281,301
Flowers Industries Inc. 11,890 278,672
Interstate Bakeries Corporation 9,435 304,868
-----------
1,137,032
-----------
GAS & PIPELINE UTILITIES--1.7%
Washington Gas Light Company 10,160 278,130
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
INSURANCE--9.5%
Ace Limited 9,465 $ 356,712
Lincoln National Corporation 3,605 305,974
MGIC Investment Corporation 4,790 314,643
Ohio Casualty Corporation 6,390 306,720
Old Republic International Corporation 6,975 309,080
-----------
1,593,129
-----------
OFFICE FURNISHINGS & SUPPLIES--4.3%
Miller Herman Inc. 10,720 359,455
OfficeMax Inc. (a) 20,080 358,930
-----------
718,385
-----------
PAPER--1.5%
Union Camp Corporation 4,150 247,962
-----------
PETROLEUM SERVICES--7.3%
Ensco International Inc. 10,930 303,308
EVI Inc. 6,930 320,946
Global Marine Inc. (a) 13,320 329,670
R & B Falcon Corporation (a) 9,375 277,734
-----------
1,231,658
-----------
POLLUTION CONTROL--2.1%
Allied Waste Industries Inc. (a) 13,850 345,817
-----------
PUBLISHING--1.8%
Times Mirror Company 4,895 310,221
-----------
RETAIL TRADE--5.6%
Consolidated Stores Corporation (a) 7,590 325,896
Ross Stores Inc. 6,720 296,520
TJX Companies Inc. 7,100 321,275
-----------
943,691
-----------
SOFTWARE--5.9%
Compuware Corporation (a) 6,960 343,650
Intuit (a) 6,575 318,066
Sterling Commerce Inc. (a) 7,040 326,480
-----------
988,196
-----------
TELECOMMUNICATION SERVICES--3.8%
CIENA Corporation (a) 7,195 306,687
Valassis Communications Inc. (a) 7,930 325,130
-----------
631,817
-----------
TELEPHONE--4.0%
EXCEL Communications Inc. (a) 14,305 337,062
LCI International Inc. (a) 8,800 338,800
-----------
675,862
-----------
TRUCKING & FREIGHT FORWARDING--2.0%
CNF Transportation Inc. 9,205 330,805
-----------
TOTAL COMMON STOCK
(Cost $12,937,633) $15,913,728
===========
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
PORTFOLIO OF INVESTMENTS March 31, 1998
QUANTITATIVE MID CAP FUND--CONTINUED
- --------------------------------------------------------------------------------
SHORT TERM INVESTMENTS--5.0%
<TABLE>
<CAPTION>
Par Value Value
<S> <C> <C>
State Street Repo 4.25%, 4/1/98, (Cost $831,000) (Dated
3/31/98), Collateralized by $830,000 U.S. Treasury Bond
5.875%, 4/30/98, Market Value $850,469, Repurchase
Proceeds $831,098. $831,000 $ 831,000
-----------
TOTAL SHORT TERM INVESTMENTS
(Cost $831,000) $ 831,000
===========
TOTAL INVESTMENTS--100%
(Cost $13,768,633) (b) $16,744,728
===========
</TABLE>
(a) Non-income producing security.
(b) At March 31, 1998, the unrealized appreciation of investments based on ag-
gregate cost for federal tax purposes of $13,771,669 were as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost $3,136,691
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (163,632)
----------
Net unrealized appreciation $2,973,059
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
14
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
PORTFOLIO OF INVESTMENTS March 31, 1998
QUANTITATIVE GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
COMMON STOCK--100.0%
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
AEROSPACE--3.1%
General Dynamics Corporation 8,600 $ 740,675
Northrop Grumman Corporation 5,600 601,650
Sundstrand Corporation 13,200 798,600
-----------
2,140,925
-----------
APPAREL & TEXTILES--0.5%
V.F. Corporation 6,800 357,425
-----------
AUTO PARTS--1.3%
Dana Corporation 14,700 855,356
-----------
AUTOMOBILES--2.7%
Chrysler Corporation 9,100 378,219
Ford Motor Company 23,100 1,497,169
-----------
1,875,388
-----------
BANKS--7.9%
AmSouth Bancorporation 6,450 380,953
BankAmerica Corporation 13,800 1,140,225
Bankers Trust NY Corporation 7,500 902,344
Comerica Inc. 9,200 973,475
First Union Corporation 6,100 346,175
Mercantile Bankshares Corporation 16,150 584,428
National City Corporation 1,200 87,975
Republic NY Corporation 2,500 333,437
SouthTrust Corporation 16,200 678,375
-----------
5,427,387
-----------
BUSINESS SERVICES--1.3%
Cognizant Corporation 1,800 103,275
Comdisco Inc. 18,500 807,062
-----------
910,337
-----------
CHEMICALS--2.3%
Dow Chemical Company 3,400 330,650
Goodrich B.F. Company 14,000 714,875
Olin Corporation 11,000 516,312
-----------
1,561,837
-----------
COMPUTERS & BUSINESS EQUIPMENT--9.5%
Bay Networks Inc. (a) 16,300 442,138
Cisco Systems Inc. (a) 7,800 533,325
Compaq Computer Corporation 47,500 1,229,062
Dell Computer Corporation (a) 28,000 1,897,000
Pitney Bowes Inc. 13,200 662,475
Unisys Corporation (a) 35,600 676,400
Xerox Corporation 9,900 1,053,731
-----------
6,494,131
-----------
CONSTRUCTION & MINING EQUIPMENT--2.2%
Case Corporation 9,600 654,000
Caterpillar Inc. 16,000 881,000
-----------
1,535,000
-----------
CONSTRUCTION MATERIALS--0.4%
USG Corporation (a) 4,400 238,425
-----------
COSMETICS & TOILETRIES--1.1%
Avon Products Inc. 9,300 725,400
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
DOMESTIC OIL--1.6%
Amerada Hess Corporation 3,900 $ 227,419
Murphy Oil Corporation 6,600 330,825
Phillips Petroleum Company 10,100 504,369
-----------
1,062,613
-----------
DRUGS & HEALTH CARE--8.7%
Baxter International Inc. 10,200 562,275
Biogen Inc. (a) 3,200 154,200
Bristol-Myers Squibb Company 8,400 876,225
Merck & Company Inc. 13,200 1,694,550
Mylan Laboratories Inc. 30,200 694,600
Schering-Plough Corporation 24,200 1,976,838
-----------
5,958,688
-----------
ELECTRIC UTILITIES--1.6%
DTE Energy Company 10,100 397,056
Long Island Lighting Company 12,800 403,200
Rochester Gas & Electric Corporation 9,900 321,750
-----------
1,122,006
-----------
ELECTRICAL EQUIPMENT--3.2%
General Electric Company 18,200 1,568,612
Johnson Controls Inc. 10,600 643,288
-----------
2,211,900
-----------
ELECTRONICS--8.5%
Eaton Corporation 4,200 399,788
General Instrument Corporation (a) 36,000 753,750
Harris Corporation 8,800 458,700
Intel Corporation 13,000 1,014,813
Lexmark International Group Inc. (a) 15,600 703,950
Linear Technology Corporation 11,100 765,900
Lucent Technologies Inc. 3,844 491,552
SCI Systems Inc. (a) 19,200 684,000
Tektronix Inc. 2,500 111,562
Tellabs Inc. (a) 5,800 389,325
-----------
5,773,340
-----------
FINANCIAL SERVICES--1.8%
Federal National Mortgage Association 12,000 759,000
SLM Holding Corporation 10,150 442,794
-----------
1,201,794
-----------
FOOD & BEVERAGES--3.4%
Coca-Cola Company 8,500 658,219
Heinz H.J. Company 14,000 817,250
Interstate Bakeries Corporation 12,000 387,750
McCormick & Company Inc. 15,100 486,975
-----------
2,350,194
-----------
GAS & PIPELINE UTILITIES--0.5%
National Fuel Gas Company (N.J.) 6,700 314,900
-----------
INDUSTRIAL MACHINERY--0.4%
Parker Hannifin Corporation 5,000 256,250
-----------
</TABLE>
- --------------------------------------------------------------------------------
15
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
PORTFOLIO OF INVESTMENTS March 31, 1998
QUANTITATIVE GROWTH AND INCOME FUND--CONTINUED
- -------------------------------------------------------------------------------
COMMON STOCK--Continued
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
INSURANCE--4.0%
AMBAC Financial Group Inc. 6,200 $ 362,312
Conseco Inc. 16,000 906,000
Everest Reinsurance Holdings 14,800 608,650
Marsh & McLennan Companies Inc. 9,500 829,469
-----------
2,706,431
-----------
INTERNATIONAL OIL--5.5%
Amoco Corporation 3,200 276,400
Chevron Corporation 8,600 690,687
Exxon Corporation 17,300 1,169,913
Mobil Corporation 12,200 934,825
Texaco Inc. 11,400 686,850
-----------
3,758,675
-----------
INVESTMENT COMPANIES--0.8%
Bear Stearns Companies Inc. 10,962 563,173
-----------
NEWSPAPERS--1.4%
Gannett Inc. 13,000 934,375
-----------
PAPER--1.1%
Consolidated Papers Inc. 10,500 672,000
Sonoco Products Company 2,200 88,137
-----------
760,137
-----------
PETROLEUM SERVICES--1.5%
Lyondell Petrochemical Company 19,100 650,594
Rowan Companies Inc. (a) 12,500 362,500
-----------
1,013,094
-----------
PUBLISHING--1.0%
Dun & Bradstreet Corporation 4,200 143,587
McGraw Hill Companies Inc. 7,100 540,044
-----------
683,631
-----------
RAILROADS & EQUIPMENT--0.9%
CSX Corporation 4,400 261,800
Trinity Inds Inc. 6,500 356,687
-----------
618,487
-----------
RETAIL TRADE--7.6%
Dayton Hudson Corporation 17,000 1,496,000
Federated Department Stores Inc. (a) 1,700 88,081
Home Depot Inc. 15,000 1,011,563
May Department Stores Company 10,400 660,400
Supervalu Inc. 16,900 787,962
TJX Companies Inc. 15,600 705,900
Tiffany & Company 9,300 452,794
-----------
5,202,700
-----------
SOFTWARE--5.0%
Autodesk Inc. 16,600 715,875
Compuware Corporation (a) 37,600 1,856,500
Microsoft Corporation (a) 9,400 841,300
-----------
3,413,675
-----------
STEEL--1.0%
USX--U.S. Steel Group 18,100 683,275
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
TELEPHONE--7.0%
AT & T Corporation 18,400 $ 1,207,500
Ameritech Corporation 16,200 800,888
Bell Atlantic Corporation 8,500 871,250
GTE Corporation 13,100 784,362
U.S. West Inc. 20,000 1,095,000
-----------
4,759,000
-----------
TOBACCO--1.2%
Philip Morris Companies Inc. 2,200 91,712
RJR Nabisco Holdings Corporation 3,000 93,938
UST Inc. 12,200 393,450
Universal Corporation VA 5,800 255,563
-----------
834,663
-----------
TOTAL COMMON STOCK
(Cost $46,710,340) (b) $68,304,612
===========
</TABLE>
(a) Non-income producing security.
(b) At March 31, 1998, the unrealized appreciation of investments based on ag-
gregate cost for federal tax purposes of $46,710,340 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost $21,812,823
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value (218,551)
-----------
Net unrealized appreciation $21,594,272
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- -------------------------------------------------------------------------------
16
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
PORTFOLIO OF INVESTMENTS March 31, 1998
QUANTITATIVE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK--97.4%
Shares Value
<S> <C> <C>
ARGENTINA--1.7%
Perez Companc SA, Class B (d) 11,968 $ 162,075
Telefonica De Argentina SA, Class B (d) 2,700 102,769
YPF Sociedad Anonima, Class D (d) 9,100 309,400
-----------
574,244
-----------
AUSTRALIA--0.4%
Westpac Banking Corporation (f) 20,500 137,588
-----------
AUSTRIA--1.1%
Austria Mikros System 20 1,264
Mayr Melnhof Karto 5,450 376,986
-----------
378,250
-----------
BELGIUM--0.5%
Electrabel (f) 625 159,240
-----------
BRAZIL--1.3%
Aracruz Celulose SA (d) 4,550 68,250
Centrais Eletricas Brasileiras (d) 2,900 67,587
Companhia Cerveja Ria Brahma 4,400 68,200
Companhia Siderurgica Nacional (d) 2,100 62,240
Petrobras Distribuidora 3,000 26,438
Telecomunicacoes Brasileiras (d) 1,240 160,968
-----------
453,683
-----------
CHILE--1.3%
Chilectra SA (d) 1,250 33,720
Compania Cervecerias Unidas SA (d) 1,600 48,400
Compania De Telecom De Chile (d) 3,100 85,444
Embotelladora Andina SA, Class A (d) 1,000 23,000
Embotelladora Andina SA, Class B (d) 1,000 20,000
Empresa Nacional De Electricia (d) 4,100 78,925
Enersis SA (d) 2,400 75,750
Sociedad Quimica Minera De Chile, Class B (d) 600 26,400
Vina Concha Y Toro SA (d) 1,200 39,300
-----------
430,939
-----------
CHINA--0.8%
Guangshen Railway Ltd. (d) 7,400 87,875
Jilin Chemical Industrial Ltd., Class H (d) 7,200 85,950
Shanghai Chlor-Alkali Chem Ltd. (d) 41,900 73,325
Shanghai Petrochemical Corporation 1,800 27,788
-----------
274,938
-----------
DENMARK--1.6%
Bang & Olufsen Holding, Class B 600 37,873
Novo-Nordisk AS, Class B (f) 2,950 502,142
-----------
540,015
-----------
FINLAND--6.8%
Kesko OYJ 17,700 286,974
Metra OYJ ABP, Class B 2,300 56,141
Nokia (AB) OY, Class K 8,500 914,408
Stockmann AB (OY), Class B 600 48,426
Upm-Kymmene OY 39,000 993,639
-----------
2,299,588
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
FRANCE--5.6%
AXA-UAP 3,250 $ 334,657
Compagnie Financiere De Paribas, Class A 2,700 273,229
Elf Aquitaine 8,400 1,100,857
Promodes 350 168,281
-----------
1,877,024
-----------
GERMANY--2.5%
Bayerische Hypoth-Und Wechel Bank (f) 12,710 694,122
Bayerische Vereinsbank AG (f) 2,200 160,593
-----------
854,715
-----------
HONG KONG--4.7%
Kumagai Gumi Hong Kong 336,000 213,569
New World Development Company 51,000 180,020
Shangri-La Asia Ltd. 164,000 140,753
Swire Pacific, Class A 24,000 126,996
Wharf (Holdings) 473,000 927,894
-----------
1,589,232
-----------
INDIA--1.2%
Bajaj Auto (e) 3,300 60,555
Grasim Industries (e) 2,700 20,588
Grasim Industries Ltd. (b) (e) 4,100 31,263
Gujarat Ambuja Cements (e) 11,200 72,800
Hindalco Industries Ltd. (b) (e) 2,600 44,122
Indian Hotels Company Ltd. (e) 3,800 63,650
Reliance Industries (e) 9,600 79,200
Steel Authority of India (e) 4,500 17,096
Tata Engineering & Locomotive (e) 4,100 30,416
-----------
419,690
-----------
IRELAND--7.2%
Allied Irish Banks 7,600 93,252
CRH 65,300 981,354
Irish Life 47,700 435,557
Kerry Group, Class A 69,300 922,820
-----------
2,432,983
-----------
ITALY--2.9%
Burgo (Cartiere) Spa (f) 68,600 609,636
Sirti Spa (f) 52,200 358,228
-----------
967,864
-----------
JAPAN--12.8%
Casio Computer Company (f) 58,000 500,169
Chichibu Onoda Cement (f) 214,000 378,718
Chugai Pharmaceutical Company 97,000 632,822
Fujitsu (f) 24,000 250,159
Hitachi 49,000 356,417
Kansai Electric Power (f) 7,000 117,581
Mitsubishi Chemical (f) 86,000 157,999
Mitsubishi Corporation 45,000 367,815
Nippon Oil Company (f) 43,000 150,583
Osaka Gas Company 55,000 120,843
Sekisui House 31,000 253,384
Tokio Marine & Fire Insurance 16,000 178,771
Tokyo Electric Power 29,000 548,011
Toyobo Company (f) 149,000 224,581
Yokogawa Electric 17,000 101,728
-----------
4,339,581
-----------
</TABLE>
- --------------------------------------------------------------------------------
17
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
PORTFOLIO OF INVESTMENTS March 31, 1998
QUANTITATIVE INTERNATIONAL EQUITY FUND--CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK--Continued
Shares Value
<S> <C> <C>
MALAYSIA--3.7%
Golden Hope Plantations 148,000 $ 187,033
Malaysia International Shipping 451,000 867,308
Perusahaan Otomobil Nasional 107,000 186,662
-----------
1,241,003
-----------
MEXICO--2.0%
Kimberly Clark De Mexico SA, Class A (d) 12,200 315,104
Telefonos De Mexico SA, Class L (d) 4,900 276,238
Vitro Sociedad Anonima (d) 7,400 88,800
-----------
680,142
-----------
NETHERLANDS--6.1%
Getronics NV 3,550 152,408
ING Groep NV 3,800 215,638
KLM 22,250 890,128
Koninklijke Hoogovens NV 5,250 253,849
Kon PTT Nederland 6,050 313,426
Philips Electronic 1,900 139,445
Unilever NV 1,600 107,910
-----------
2,072,804
-----------
NEW ZEALAND--2.1%
Fletcher Challenge Ltd. 201,500 694,078
-----------
NORWAY--3.1%
NCL Holdings AS (a) 160,480 728,278
Norske Skogsindust, Class A 9,710 312,022
-----------
1,040,300
-----------
PORTUGAL--2.7%
Banco Comercial Portugues SA (with rights exp. 4/7/98) (d) 3,362 54,422
Banco Comercial Portugues (d) 17,000 545,063
Portugal Telecom SA (d) 6,000 314,625
-----------
914,110
-----------
SINGAPORE--0.2%
Creative Technology (a) 3,000 66,130
-----------
SOUTH AFRICA--1.0%
Anglo American Corporation of South Africa Ltd. (d) 2,400 110,100
Billiton (d) 17,700 53,100
C.G. Smith Ltd. (d) 13,500 62,438
Gencor Ltd. (d) 3,540 6,195
Iscor Ltd. (d) 4,600 12,689
Malbak Ltd. (d) 36,800 29,900
Sasol Ltd. (d) 6,800 55,250
-----------
329,672
-----------
SPAIN--2.3%
Banco Santander SA 800 39,843
Iberdrola SA 48,477 736,348
-----------
776,191
-----------
SWEDEN--2.8%
Skandia Foersaekrings AB 14,620 952,783
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
SWITZERLAND--8.3%
Holderbank Financiere Glaris 280 $ 293,867
Sairgroup 495 691,279
Schweiz-Ruckversicherungs 180 395,421
Schweizerische Bankgesellschaf 875 1,429,157
-----------
2,809,724
-----------
TURKEY--0.8%
Erciyas Biracilik, Class A (e) 30,800 87,780
Tofas Otomobil Fab (e) 420,600 92,532
Turkiye Garanti Bankasi AS (e) 25,854 102,123
-----------
282,435
-----------
UNITED KINGDOM--9.9%
Abbey National 9,400 181,496
Anglian Water 68,000 1,064,706
Barclays 19,900 596,174
British Petroleum 8,900 128,099
British Telecommunications 32,500 352,941
HSBC Holdings 12,300 374,668
Royal Bank of Scotland Group 6,600 102,344
United Utilities 37,848 562,497
-----------
3,362,925
-----------
TOTAL COMMON STOCK
(Cost $28,440,868) $32,951,871
===========
PREFERRED STOCK--0.1%
BRAZIL--0.1%
Companhia Vale Do Rio Doce (d) 1,900 45,284
-----------
TOTAL PREFERRED STOCK
(Cost $44,413) $ 45,284
===========
</TABLE>
- --------------------------------------------------------------------------------
18
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
PORTFOLIO OF INVESTMENTS March 31, 1998
QUANTITATIVE INTERNATIONAL EQUITY FUND--CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT TERM INVESTMENTS--2.5%
Par
Value Value
<S> <C> <C>
State Street Repo 4.25%, 4/1/98 (Cost $837,000) (Dated
3/31/98), Collateralized by $835,000 U.S. Treasury Bond
5.875%, 4/30/98, Market Value $855,593, Repurchase
Proceeds $837,099. $837,000 $ 837,000
-----------
TOTAL SHORT TERM INVESTMENTS
(Cost $837,000) $ 837,000
===========
TOTAL INVESTMENTS--100%
(Cost $29,322,281) (c) $33,834,155
===========
</TABLE>
(a) Non-income producing security.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. (Note 2)
(c) At March 31, 1998, the unrealized appreciation of investments based on ag-
gregate cost for federal tax purposes of $29,733,476 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost $ 7,194,719
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value (3,094,040)
-----------
Net unrealized appreciation $ 4,100,679
===========
</TABLE>
(d) ADR--American Depository Receipts
(e) GDR--Global Depository Receipts
(f) A portion of security is on loan at 3/31/98 (Note 6).
<TABLE>
<CAPTION>
SECTOR ALLOCATIONS (AS A
PERCENTAGE OF TOTAL COMMON
AND PREFERRED STOCK)
- ---------------------------------
<S> <C>
Basic Industries 12.6%
Capital Goods 1.4%
Consumer Basics 9.5%
Consumer Durable Goods 1.5%
Consumer Non-Durable Goods 4.8%
Consumer Services 7.6%
Energy 5.9%
Finance 22.1%
General Business 6.8%
Miscellaneous 4.2%
Shelter 7.5%
Technology 4.6%
Transportation 2.9%
Utilities 8.6%
</TABLE>
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
19
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
PORTFOLIO OF INVESTMENTS March 31, 1998
QUANTITATIVE EMERGING MARKETS FUND
- --------------------------------------------------------------------------------
COMMON STOCK--89.1%
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
ARGENTINA--7.7%
Astra Cia Argentina 71,970 $ 136,757
Banco Frances Rio Plata (a) 14,000 140,014
Central Puerto SA, Class B (a) 20,000 63,206
Irsa Inversiones Y Representac 5,000 18,902
Ledesma Agricola, Class B 70,000 65,106
Telefonica De Argentina, Class B 46,000 175,738
Transport Gas Sur, Class B 14,000 32,553
YPF SA, Class D 4,600 155,956
-----------
788,232
-----------
BRAZIL--2.9%
Centrais Electrobras 3,030,000 140,695
Cia Paulista De Force E Luz (rights exp. 4/7/98) 239 0
Compania Vale Do Rio Doce 500 11,037
Sider Nacional Cia 2,383,000 70,604
Souza Cruz (Cia) 2,300 19,175
Telec Brasileiras--Telebras 528,000 54,560
-----------
296,071
-----------
CHILE--6.0%
Chilectra SA (d) 1,500 41,625
Chilgener SA (a) (d) 1,900 45,719
Compania Cervecerias Unidas SA (d) 2,280 68,970
Compania De Telecomunicaciones De Chile (d) 4,110 113,282
Embotelladora Andina SA, Class A (d) 1,500 34,500
Embotelladora Andina SA, Class B (d) 1,500 30,000
Embotelladora Buenos Aires, Class B 35 1,330
Empresa Nacional De Electricid (d) 5,630 108,377
Enersis SA (d) 3,000 94,687
Madeco SA (d) 2,880 49,860
Maderas Y Sinteticos Sociedad (d) 2,500 25,781
-----------
614,131
-----------
CHINA--5.1%
China International Marine, Class B 19,000 16,013
Guangdon Electric, Class B 42,800 23,200
Guangshen Railway, Class H 202,000 46,405
Huaneng Power International Inc. (a) (d) 6,600 155,100
Maanshan Iron & Steel, Class H 163,400 16,660
Qingling Motors, Class H 119,300 55,429
Shanghai Chlor-Alkali Chemical, Class B 4,350 748
Shanghai Dazhong Taxi, Class B (a) 12,000 8,496
Shanghai Hai Xing Shipping, Class H (a) 402,000 88,719
Shanghai Lujiazhui, Class B (a) 32,320 19,392
Shanghai Petrochemical Company, Class H 331,800 50,102
Shanghai Tyre & Rubber, Class B 32,000 7,360
Tsingtao Brewery, Class H (a) 45,900 10,663
Yizheng Chemical Fibre, Class H 96,000 15,735
-----------
514,022
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
GREECE--8.7%
Alpha Credit Bank 1,985 $ 153,633
Attica Enterprises 2,200 32,679
Attica Enterprises (with rights exp. 4/30/98) 2,200 2,002
Commercial Bank of Greece 1,140 45,988
Delta Dairy 1,830 20,602
Ergo Bank 1,290 92,379
Hellenic Bottling Company 5,460 157,083
Hellenic Sugar Industries 3,072 15,274
Heracles General Cement 2,900 68,106
Intracom 680 38,914
Ionian Bank 1,040 21,904
Naoussa Spinning Mills 5,300 19,557
National Bank of Greece (a) 926 101,351
Titan Cement Company 1,600 116,880
-----------
886,352
-----------
HUNGARY--3.0%
Magyar Olaj-Es Gazipare Resz 3,700 113,443
Matav Rt 8,000 49,319
OTP Bank 2,000 101,732
Pannonplast Muan Yagi Pari 1,000 40,716
-----------
305,210
-----------
INDIA--5.3%
Arvind Mills (a) (e) 8,000 12,000
Bombay Dyeing & Manufacturing (a) (e) 8,100 20,655
Century Textiles (a) (e) 6,000 9,600
Croslands Research Labs Ltd. (a) (b) (e) 1,200 31,356
Grasim Industries Ltd. (a) (b) (e) 2,900 22,113
Gujarat Ambuja Cements (e) 4,300 27,950
India Cements (e) 11,900 17,850
Indian Hotels Ltd. (e) 1,100 18,425
Indian Rayon & Industries (a) (e) 3,450 14,214
Indo Gulf Fertilisers & Chemical (e) 38,200 28,650
ITC Ltd. (e) 4,800 115,920
Larsen & Toubro (e) 3,000 39,375
Mahindra & Mahindra (e) 3,000 24,360
Reliance Industries (a) (e) 7,600 62,700
Southern Petrochemical Industries (b) (e) 10,100 45,955
Tata Engineering & Locomotive (e) 4,000 29,674
United Phosphorus (e) 4,800 14,688
-----------
535,485
-----------
MALAYSIA--3.7%
Golden Hope Plantations 35,000 44,231
Highlands & Lowlands 100,000 113,187
Malaysia International Shipping 35,000 62,500
Pan-Malaysia Cement Works 150,000 53,983
Tenaga Nasional 40,000 101,099
-----------
375,000
-----------
</TABLE>
- --------------------------------------------------------------------------------
20
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
PORTFOLIO OF INVESTMENTS March 31, 1998
QUANTITATIVE EMERGING MARKETS FUND--CONTINUED
- --------------------------------------------------------------------------------
COMMON STOCK--Continued
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
MEXICO--9.3%
Alfa SA, Class A 6,915 $ 38,967
Cemex SA, Class A 7,300 32,566
Cemex SA, Class B 7,000 37,802
Cifra SA De Cv, Class V 57,388 104,967
El Puerto De Liverpool, Class C 200 319
Empresas La Modern, Class A (a) 15,300 75,710
Fomento Economico Mexico, Class B 14,500 105,371
Grupo Industrial Bimbo, Class A 16,000 42,451
Grupo Mexico, Class B 7,800 25,457
Grupo Televisa SA (a) 2,100 38,632
Kimberly Clark De Mexico, Class B 5,000 23,949
Telefonos De Mexico, Class L 98,400 278,403
Tubos De Acero De Mexico (a) 2,100 39,076
Vitro SA 26,000 103,628
-----------
947,298
-----------
PERU--5.8%
Cementos Lima 2,879 56,381
Cervs Peruanas Backus & Johnston, Class T 51,257 37,779
Cervs Peruanas Backus & Johnston, Class A 5,724 50,952
Credicorp Ltd. 5,520 89,007
Minas Buenaventura, Class B 7,805 64,474
Pacifico Peru-Suiz 2 18
Southern Peru Copper Corporation 1,261 19,073
Telefonica Del Peru, Class B 125,600 268,776
-----------
586,460
-----------
PHILIPPINES--1.7%
Manila Electric Company, Class B 22,000 71,979
Petron Corporation 200,001 31,662
Philippine Long Distance 2,400 66,807
Philippine National Bank 975 2,392
-----------
172,840
-----------
PORTUGAL--10.3%
Banco Commercial Portugues (with rights exp. 4/20/98) 6,600 213,094
Banco Espir Santo 3,500 161,699
BPI Soc Gestora 1,700 65,390
Cimpor Cimentos De Portugal 2,000 70,477
Jeronimo Martins SGPS 2,496 102,663
Modelo Contin SGPS 1,300 101,559
Portugal Telecom 3,328 173,099
Sonae Investimentos 2,400 112,970
Soporcel 1,000 44,616
-----------
1,045,567
-----------
SOUTH AFRICA--4.8%
Adcock Ingram 948 $ 3,763
Anglo American Corporation of South Africa 2,500 114,507
Billiton 20,400 54,654
De Beers Centenary 4,300 93,697
Gencor 4,080 8,340
Liberty Life Association of Africa 2,700 91,090
Metro Cash and Carry 7,284 6,939
Millennium Entertainment 1,512 1,740
Polifin Limited 600 863
Premier Group 12,000 1,738
Sasol 7,700 62,346
South Africa Breweries 1,800 53,368
-----------
493,045
-----------
TAIWAN--8.9%
MSCI Taiwan Index Series (b) (f) 6,700 900,547
-----------
THAILAND--0.0%
One Holding (warrants exp. 10/11/01) 7,940 0
Prime Finance and Securities 131,400 0
-----------
0
-----------
TURKEY--5.9%
Akbank 930,042 67,920
Dogan Holding (a) 2,031,750 73,561
Ford Otomotiv San 40,000 24,686
KOC Holding 321,000 50,847
Konya Cimento 1,524,000 20,692
Sifas (a) 2,214,000 44,179
T Garanti Bankasi 1,441,998 56,955
Turkiye Is Bankasi 1,900,000 203,246
Turk Hava Yollari (a) 214,000 12,767
Vestel Electronic Sanayi Ve T 592,000 46,278
-----------
601,131
-----------
TOTAL COMMON STOCK
(Cost $7,933,462) $ 9,061,391
===========
PREFERRED STOCK--5.9%
BRAZIL--5.9%
Banco Bradesco SA 109,635 1,133
Banco Est Sao Paulo 850,000 56,811
Banco Itau SA 239,000 153,434
Belgo-Mineira 1,600,000 96,034
Bombril Cirio SA 5,000,000 28,142
Cemig Cia Energetica Minas Gerais 720,500 34,976
Compania Vale Do Rio Doce 1,648 39,566
Centrais Electrobras 380,000 18,781
Fosfatados Fertilizantes 11,700,000 52,681
Telec Brasileiras--Telebras 825,000 108,612
Usiminas 1,632 13,204
-----------
603,374
-----------
TOTAL PREFERRED STOCK
(Cost $451,297)
$ 603,374
===========
</TABLE>
- --------------------------------------------------------------------------------
21
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
PORTFOLIO OF INVESTMENTS March 31, 1998
QUANTITATIVE EMERGING MARKETS FUND--CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
SHORT TERM INVESTMENTS--5.0%
<CAPTION>
Par
Value Value
<S> <C> <C>
State Street Repo 4.25%, 4/1/98, (Cost $512,000) (Dated
3/31/98), Collateralized by $510,000 U.S. Treasury Bond
5.875%, 4/30/98, Market Value $522,578, Repurchase
Proceeds $512,060. $512,000 $ 512,000
-----------
TOTAL SHORT TERM INVESTMENTS
(Cost $512,000) $ 512,000
===========
TOTAL INVESTMENTS--100%
(Cost $8,896,759) (c) $10,176,765
===========
</TABLE>
(a) Non-income producing security.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. (Note 2)
(c) At March 31, 1998, the unrealized appreciation of investments based on ag-
gregate cost for federal tax purposes of $8,994,014 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost $ 2,189,273
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value (1,006,522)
-----------
Net unrealized appreciation $ 1,182,751
===========
(d) ADR--American Depository Receipts
(e) GDR--Global Depository Receipts
(f) OPAL, Rule 144A stock, issued by Morgan Stanley Capital (Delaware) LLC. An
OPAL represents an optimised portfolio of securities designed to track the
performance of a specific benchmark index in a single trade. Emerging Mar-
kets has the contractual right to exchange the OPAL for the underlying se-
curities, which may not be restricted securities, at any time.
SECTOR ALLOCATIONS (AS A PERCENTAGE OF TOTAL COMMON
AND PREFERRED STOCK)
- ----------------------------------------------------------------------------
Basic Industries 12.6%
Capital Goods 4.4%
Consumer Basics 6.2%
Consumer Durable Goods 1.3%
Consumer Non-Durable Goods 3.9%
Consumer Services 0.3%
Energy 6.5%
Finance 20.4%
General Business 3.9%
Miscellaneous 15.1%
Shelter 3.5%
Technology 1.1%
Transportation 2.5%
Utilities 18.3%
- --------------------------------------------------------------------------------
22
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES March 31, 1998
<TABLE>
<CAPTION>
Growth and International Emerging
Small Cap Mid Cap Income Equity Markets
<S> <C> <C> <C> <C> <C>
ASSETS :
Investments at value
(Note 2)
See accompanying
schedules $72,083,715 $16,744,728 $68,304,612 $33,834,155 $10,176,765
Foreign currency at
value (Cost $ 4,858 for
International Equity and
$ 391,231 for Emerging
Markets) (Note 2) -- -- -- 4,877 384,884
Cash -- 1,242 1,801,067 1,406 405,544
Collateral for
securities loaned at
value (Note 6) -- -- -- 4,198,112 --
Dividends, interest and
foreign tax reclaims
receivable 81,575 3,822 81,321 161,213 13,092
Receivable for
investments sold 2,531,996 -- -- -- --
Receivable for shares of
beneficial interest sold -- 111 50,103 435 --
Other assets 21,249 2,913 14,348 8,895 3,163
----------- ----------- ----------- ----------- -----------
Total assets 74,718,535 16,752,816 70,251,451 38,209,093 10,983,448
----------- ----------- ----------- ----------- -----------
LIABILITIES :
Collateral for
securities loaned (Note
6) -- -- -- 4,198,112 --
Due to custodian 740,312 -- -- -- --
Payable for investments
purchased 668,060 394,796 -- -- 690,782
Payable for shares of
beneficial interest
repurchased 12,840 -- -- 3,811 --
Payable for compensation
of Manager (Note 3) 61,117 17,678 43,806 28,001 6,788
Payable for distribution
fees (Note 3) 27,875 7,557 27,703 13,267 3,825
Payable to custodian 6,332 3,581 3,598 11,617 15,359
Payable to transfer
agent (Note 3) 10,032 1,565 10,023 4,964 1,713
Other accrued expenses 29,953 20,550 46,005 39,239 22,331
----------- ----------- ----------- ----------- -----------
Total liabilities 1,556,521 445,727 131,135 4,299,011 740,798
----------- ----------- ----------- ----------- -----------
NET ASSETS $73,162,014 $16,307,089 $70,120,316 $33,910,082 $10,242,650
----------- ----------- ----------- ----------- -----------
NET ASSETS CONSIST OF :
Shares of beneficial
interest $61,294,469 $12,958,183 $43,087,490 $29,841,039 $11,482,684
Undistributed net
investment income (loss) 947 -- 5,642 (292,161) (68,100)
Accumulated net realized
gain (loss) on
investments and foreign
denominated assets,
liabilities and currency (400,261) 372,811 5,432,912 (147,411) (2,453,704)
Unrealized appreciation
of investments and
foreign denominated
assets, liabilities and
currency 12,266,859 2,976,095 21,594,272 4,508,615 1,281,770
----------- ----------- ----------- ----------- -----------
$73,162,014 $16,307,089 $70,120,316 $33,910,082 $10,242,650
----------- ----------- ----------- ----------- -----------
Investment securities,
at cost $59,816,856 $13,768,633 $46,710,340 $29,322,281 $ 8,896,759
----------- ----------- ----------- ----------- -----------
NET ASSETS
Ordinary Shares $66,876,268 $15,484,375 $66,396,761 $32,182,491 $ 9,240,896
----------- ----------- ----------- ----------- -----------
Institutional Shares $ 6,285,746 $ 822,714 $ 3,723,555 $ 1,727,591 $ 1,001,754
----------- ----------- ----------- ----------- -----------
Shares of beneficial
interest outstanding
(Unlimited number of
shares authorized)
Ordinary Shares 3,757,939 964,744 3,184,634 2,688,423 1,200,611
----------- ----------- ----------- ----------- -----------
Institutional Shares 341,631 50,661 178,632 144,589 129,054
----------- ----------- ----------- ----------- -----------
Net asset value and
offering price per
share*
Ordinary Shares $ 17.80 $ 16.05 $ 20.85 $ 11.97 $ 7.70
----------- ----------- ----------- ----------- -----------
Institutional Shares $ 18.40 $ 16.24 $ 20.84 $ 11.95 $ 7.76
----------- ----------- ----------- ----------- -----------
</TABLE>
* A deferred sales charge amounting to 1% of the net asset value
of the Ordinary Shares redeemed is withheld and paid to the
Distributor. No deferred sales charge is withheld from redemp-
tions of the Institutional Shares. In addition, no deferred
sales charge is withheld from the Ordinary Shares of Mid Cap
purchased after August 1, 1996.
The accompanying notes are an integral part of these financial
statements.
- --------------------------------------------------------------------------------
23
<PAGE>
STATEMENT OF OPERATIONS Year Ended March 31, 1998
<TABLE>
<CAPTION>
Growth and International Emerging
Small Cap Mid Cap Income Equity Markets
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends* $ 330,963 $ 109,716 $ 933,347 $ 827,462 $ 220,734
Interest 68,968 19,230 -- 21,756 13,007
----------- ---------- ----------- ---------- -----------
Total investment income 399,931 128,946 933,347 849,218 233,741
----------- ---------- ----------- ---------- -----------
EXPENSES:
Compensation of Manager
(Note 3) 712,299 122,800 425,583 311,008 86,261
Distribution fees, Or-
dinary Shares (Note 3) 320,707 29,183 273,177 147,117 48,237
Custodian fees 65,338 45,025 50,320 98,890 110,850
Transfer agent fees
(Note 3):
Ordinary Shares 94,444 17,050 79,932 43,182 14,216
Institutional Shares 10,651 879 3,062 2,468 1,675
Audit and legal 63,514 10,607 49,977 27,883 9,703
Registration fees 31,703 5,185 24,465 13,792 4,853
Amortization of organi-
zational expenses (Note
2) 2,952 -- -- -- --
Insurance 20,556 3,408 16,065 8,996 3,143
Compensation of Trust-
ees (Note 3) 12,158 2,015 9,490 5,311 1,855
Printing 14,516 2,466 11,607 6,421 2,214
Miscellaneous 14,253 2,586 10,399 6,144 2,421
----------- ---------- ----------- ---------- -----------
Total expenses before
waivers and/or reim-
bursements, and reduc-
tions 1,363,091 241,204 954,077 671,212 285,428
Waivers and/or reim-
bursements of expenses
(Note 3) (40,002) (48,918) -- (351) --
Fees reduced by credits
allowed by Custodian
(Note 3) (7,665) -- (27,480) (25,878) (12,960)
----------- ---------- ----------- ---------- -----------
EXPENSES, NET 1,315,424 192,286 926,597 644,983 272,468
----------- ---------- ----------- ---------- -----------
Net investment income
(loss) (915,493) (63,340) 6,750 204,235 (38,727)
----------- ---------- ----------- ---------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS, FOREIGN
CURRENCY AND FOREIGN
TRANSLATION:
Net realized gain
(loss) (Note 2) on:
Investments 2,413,066 2,419,921 8,944,446 323,673 (2,126,425)
Foreign denominated as-
sets, liabilities and
currency -- -- -- (103,015) 37,072
Written options -- -- (80,117) -- --
Change in unrealized
appreciation (deprecia-
tion) of:
Investments 20,992,077 2,234,749 14,011,197 3,309,438 188,966
Foreign denominated as-
sets, liabilities and
currency -- -- -- 3,956 1,895
----------- ---------- ----------- ---------- -----------
Net realized and
unrealized gain (loss) 23,405,143 4,654,670 22,875,526 3,534,052 (1,898,492)
----------- ---------- ----------- ---------- -----------
Net increase (decrease)
in net assets resulting
from operations $22,489,650 $4,591,330 $22,882,276 $3,738,287 $(1,937,219)
----------- ---------- ----------- ---------- -----------
</TABLE>
*Dividends are net of foreign withholding taxes of $113,911 for International
Equity, and $14,795 for Emerging Markets.
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
24
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Small Cap Mid Cap Growth and Income
Year ended Year ended Year ended Year ended Year ended Year ended
March 31, 1998 March 31, 1997 March 31, 1998 March 31, 1997 March 31, 1998 March 31, 1997
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS :
Operations :
Net investment income
(loss) $ (915,493) $ 693,843 $ (63,340) $ 63,377 $ 6,750 $ 232,397
Net realized gain
(loss) on investments,
foreign denominated
assets, liabilities,
currency and written
options 2,413,066 21,319,089 2,419,921 1,308,543 8,864,329 4,161,193
Distributions of
realized gains from
other investment
companies -- -- -- -- -- --
Unrealized appreciation
(depreciation) of
investments and foreign
denominated assets,
liabilities and
currency 20,992,077 (16,690,396) 2,234,749 124,901 14,011,197 2,948,570
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease)
in net assets resulting
from operations 22,489,650 5,322,536 4,591,330 1,496,821 22,882,276 7,342,160
Distributions to
shareholders from :
Net investment income
Ordinary Shares (573,716) -- -- (71,413) (124,594) (259,327)
Institutional Shares (122,203) -- -- (616) (16,181) (23,323)
Distributions in excess
of net investment
income
Ordinary Shares -- -- -- -- -- --
Institutional Shares -- -- -- -- -- --
Net realized gains
Ordinary Shares (8,534,419) (17,582,327) (2,319,745) (1,007,841) (5,343,691) (4,775,270)
Institutional Shares (868,942) (7,604,417) (120,011) (37,397) (185,893) (235,639)
Distributions in excess
of net realized gains
Ordinary Shares -- -- -- -- -- --
Institutional Shares -- -- -- -- -- --
Return of capital
Ordinary Shares (99,481) -- -- -- -- --
Institutional Shares (10,129) -- -- -- -- --
------------ ------------ ----------- ----------- ----------- -----------
(10,208,890) (25,186,744) (2,439,756) (1,117,267) (5,670,359) (5,293,559)
------------ ------------ ----------- ----------- ----------- -----------
Fund share transactions
(Note 11) (5,460,907) (28,214,437) 5,061,374 (1,931,229) 8,109,863 (491,446)
------------ ------------ ----------- ----------- ----------- -----------
Increase (decrease) in
net assets 6,819,853 (48,078,645) 7,212,948 (1,551,675) 25,321,780 1,557,155
Net assets beginning of
year 66,342,161 114,420,806 9,094,141 10,645,816 44,798,536 43,241,381
------------ ------------ ----------- ----------- ----------- -----------
Net assets end of year
(*) $ 73,162,014 $ 66,342,161 $16,307,089 $ 9,094,141 $70,120,316 $44,798,536
============ ============ =========== =========== =========== ===========
(*) Includes
undistributed
(overdistributed) net
investment income of $ 947 693,843 $ -- $ 12,716 $ 5,642 $ 139,667
</TABLE>
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
25
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS--CONTINUED
<TABLE>
<CAPTION>
International Equity Emerging Markets
Year ended Year ended Year ended Year ended
March 31, 1998 March 31, 1997 March 31, 1998 March 31, 1997
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS :
Operations :
Net investment income
(loss) $ 204,235 $ 33,211 $ (38,727) $ (39,785)
Net realized gain
(loss) on investments,
foreign denominated as-
sets, liabilities, cur-
rency and written op-
tions 220,658 1,835,136 (2,089,353) (128,993)
Distributions of real-
ized gains from other
investment companies -- 47,975 -- --
Unrealized appreciation
(depreciation) of in-
vestments and foreign
denominated assets, li-
abilities and currency 3,313,394 (844,329) 190,861 1,119,489
--------------- --------------- ----------- -----------
Net increase (decrease)
in net assets resulting
from operations 3,738,287 1,071,993 (1,937,219) 950,711
Distributions to share-
holders from :
Net investment income
Ordinary Shares (284,663) (194,106) -- --
Institutional Shares (28,084) (12,144) -- (2,825)
Distributions in excess
of net investment in-
come
Ordinary Shares (157,497) -- -- --
Institutional Shares (15,539) -- -- --
Net realized gains
Ordinary Shares (565,604) -- -- --
Institutional Shares (30,405) -- -- --
Distributions in excess
of net realized gains
Ordinary Shares (118,443) -- -- --
Institutional Shares (6,367) -- -- --
Return of capital
Ordinary Shares -- -- -- --
Institutional Shares -- -- -- --
--------------- --------------- ----------- -----------
(1,206,602) (206,250) -- (2,825)
--------------- --------------- ----------- -----------
Fund share transactions
(Note 11) 2,208,378 (338,691) 916,061 2,579,464
--------------- --------------- ----------- -----------
Increase (decrease) in
net assets 4,740,063 527,052 (1,021,158) 3,527,350
Net assets beginning of
year 29,170,019 28,642,967 11,263,808 7,736,458
--------------- --------------- ----------- -----------
Net assets end of year
(*) $ 33,910,082 $ 29,170,019 $10,242,650 $11,263,808
=============== =============== =========== ===========
(*) Includes undistrib-
uted (overdistributed)
net investment income of $ (292,161) $ 445,299 $ (68,100) $ (101,346)
</TABLE>
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
26
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Income from
Investment Operations
Net Asset Net Realized
Value at Net and Unrealized Total from
Beginning Investment Gain (Loss) Investment
of Period Income on Securities Operations
<S> <C> <C> <C> <C>
SMALL CAP
ORDINARY SHARES
Year Ended March
31, 1994 $14.12 (0.09) 2.57 2.48
Year Ended March
31, 1995 (f) $15.33 (0.20) 1.67 1.47
Year Ended March
31, 1996 (f) $15.81 (0.21)(a) 5.54 5.33
Year Ended March
31, 1997 (f) $18.91 0.16 (a)(h) 0.77 0.93
Year Ended March
31, 1998 (f) $15.04 (0.23)(a) 5.60 5.37
INSTITUTIONAL
SHARES (D)
Year Ended March
31, 1994 $14.15 (0.05) 2.63 2.58
Year Ended March
31, 1995 (f) $15.46 (0.13) 1.71 1.58
Year Ended March
31, 1996 (f) $16.05 (0.12)(a) 5.63 5.51
Year Ended March
31, 1997 (f) $19.33 0.08 (a)(h) 0.94 1.02
Year Ended March
31, 1998 (f) $15.55 (0.15)(a) 5.79 5.64
MID CAP
ORDINARY SHARES
Oct. 3, 1994**
to March 31,
1995 (f) $10.00 0.05 (a) 0.07 0.12
Year Ended March
31, 1996 (f) $10.12 0.06 (a) 3.27 3.33
Year Ended March
31, 1997 (f) $13.20 0.09 (a) 2.29 2.38
Year Ended March
31, 1998 (f) $13.44 (0.08)(a) 6.06 5.98
INSTITUTIONAL
SHARES
April 17, 1995**
to March 31,
1996 (f) $10.27 0.10 (a) 3.09 3.19
Year Ended March
31, 1997 (f) $13.20 0.11 (a) 2.27 2.38
Year Ended March
31, 1998 (f) $13.55 (0.06)(a) 6.12 6.06
GROWTH AND
INCOME
ORDINARY SHARES
Year Ended March
31, 1994 $17.27 0.18 0.21 0.39
Year Ended March
31, 1995 (f) $13.86 0.14 1.44 1.58
Year Ended March
31, 1996 (f) $13.72 0.12 (a) 2.89 3.01
Year Ended March
31, 1997 (f) $14.57 0.08 (a) 2.53 2.61
Year Ended March
31, 1998 (f) $15.22 0.00 7.61 7.61
INSTITUTIONAL
SHARES (D)
Year Ended March
31, 1994 $17.28 0.28 0.19 0.47
Year Ended March
31, 1995 (f) $13.86 0.21 1.44 1.65
Year Ended March
31, 1996 (f) $13.72 0.20 (a) 2.89 3.09
Year Ended March
31, 1997 (f) $14.58 0.15 (a) 2.55 2.70
Year Ended March
31, 1998 (f) $15.24 0.10 7.60 7.70
<CAPTION>
Distributions
Dividends
Dividends in excess of Distributions Distributions Net Assets
from Net Net from in excess of Net Asset End of
Investment Investment Realized Realized Total Value End Total Period
Income Income Capital Gains Capital Gains Distributions of Period Return(c) (000's)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SMALL CAP
ORDINARY SHARES
Year Ended March
31, 1994 -- -- (1.27) -- (1.27) $15.33 17.80% $40,852
Year Ended March
31, 1995 (f) -- -- (0.99) -- (0.99) $15.81 10.24% $53,920
Year Ended March
31, 1996 (f) -- -- (2.23) -- (2.23) $18.91 34.25% $71,618
Year Ended March
31, 1997 (f) -- -- (4.80) -- (4.80) $15.04 1.72% $57,135
Year Ended March
31, 1998 (f) (0.16) -- (2.45)(i) -- (2.61) $17.80 37.79% $66,876
INSTITUTIONAL
SHARES (D)
Year Ended March
31, 1994 -- -- (1.27) -- (1.27) $15.46 18.50% $24,175
Year Ended March
31, 1995 (f) -- -- (0.99) -- (0.99) $16.05 10.88% $47,044
Year Ended March
31, 1996 (f) -- -- (2.23) -- (2.23) $19.33 34.89% $42,803
Year Ended March
31, 1997 (f) -- -- (4.80) -- (4.80) $15.55 2.21% $ 9,207
Year Ended March
31, 1998 (f) (0.34) -- (2.45)(i) -- (2.79) $18.40 38.44% $ 6,286
MID CAP
ORDINARY SHARES
Oct. 3, 1994**
to March 31,
1995 (f) -- -- -- -- -- $10.12 1.20% $ 420
Year Ended March
31, 1996 (f) (0.01) -- (0.24) -- (0.25) $13.20 33.01% $ 6,025
Year Ended March
31, 1997 (f) (0.14) -- (2.00) -- (2.14) $13.44 17.47% $ 8,733
Year Ended March
31, 1998 (f) -- -- (3.37) -- (3.37) $16.05 46.76% $15,484
INSTITUTIONAL
SHARES
April 17, 1995**
to March 31,
1996 (f) (0.02) -- (0.24) -- (0.26) $13.20 31.12% $ 4,621
Year Ended March
31, 1997 (f) (0.03) -- (2.00) -- (2.03) $13.55 17.51% $ 361
Year Ended March
31, 1998 (f) -- -- (3.37) -- (3.37) $16.24 47.01% $ 823
GROWTH AND
INCOME
ORDINARY SHARES
Year Ended March
31, 1994 (0.16) -- (3.64) -- (3.80) $13.86 1.51% $36,510
Year Ended March
31, 1995 (f) (0.16) -- (1.56) -- (1.72) $13.72 12.71% $37,048
Year Ended March
31, 1996 (f) (0.13) -- (2.03) -- (2.16) $14.57 22.17% $41,353
Year Ended March
31, 1997 (f) (0.10) -- (1.86) -- (1.96) $15.22 17.97% $43,266
Year Ended March
31, 1998 (f) (0.05) -- (1.93) -- (1.98) $20.85 51.52% $66,397
INSTITUTIONAL
SHARES (D)
Year Ended March
31, 1994 (0.25) -- (3.64) -- (3.89) $13.86 1.99% $ 3,990
Year Ended March
31, 1995 (f) (0.23) -- (1.56) -- (1.79) $13.72 13.29% $ 1,975
Year Ended March
31, 1996 (f) (0.20) -- (2.03) -- (2.23) $14.58 22.75% $ 1,888
Year Ended March
31, 1997 (f) (0.18) -- (1.86) -- (2.04) $15.24 18.62% $ 1,532
Year Ended March
31, 1998 (f) (0.17) -- (1.93) -- (2.10) $20.84 52.18% $ 3,724
<CAPTION>
Ratios and Supplemental Data
Ratio of Ratio of Net
Operating Investment
Expenses Income Loss) Average
to Average to Average Portfolio Commission
Net Assets Net Assets Turnover Rate(g)
<S> <C> <C> <C> <C>
SMALL CAP
ORDINARY SHARES
Year Ended March
31, 1994 1.83% (1.30)% 389.00% --
Year Ended March
31, 1995 (f) 1.84% (1.31)% 320.00% --
Year Ended March
31, 1996 (f) 1.97%* (1.17)% 324.00% --
Year Ended March
31, 1997 (f) 1.97%* 0.90 %(h) 393.00% $0.0305
Year Ended March
31, 1998 (f) 1.90%* (1.33)% 135.00% $0.0406
INSTITUTIONAL
SHARES (D)
Year Ended March
31, 1994 1.23% (0.70)% 389.00% --
Year Ended March
31, 1995 (f) 1.36% (0.82)% 320.00% --
Year Ended March
31, 1996 (f) 1.47%* (0.67)% 324.00% --
Year Ended March
31, 1997 (f) 1.47%* 0.41 %(h) 393.00% $0.0305
Year Ended March
31, 1998 (f) 1.41%* (0.86)% 135.00% $0.0406
MID CAP
ORDINARY SHARES
Oct. 3, 1994**
to March 31,
1995 (f) -- % 1.50 %(b) 0.00%(b) --
Year Ended March
31, 1996 (f) 2.34%* 0.46 % 181.00% --
Year Ended March
31, 1997 (f) 1.19%* 0.62 % 162.00% $0.0492
Year Ended March
31, 1998 (f) 1.57% (0.52)% 128.00% $0.0466
INSTITUTIONAL
SHARES
April 17, 1995**
to March 31,
1996 (f) 2.02%(b)* 0.87 %(b) 181.00% --
Year Ended March
31, 1997 (f) 1.44%* 0.77 % 162.00% $0.0492
Year Ended March
31, 1998 (f) 1.40% (0.35)% 128.00% $0.0466
GROWTH AND
INCOME
ORDINARY SHARES
Year Ended March
31, 1994 1.72% 1.02 % 110.00% --
Year Ended March
31, 1995 (f) 1.69% 1.01 % 121.00% --
Year Ended March
31, 1996 (f) 1.73%* 0.81 % 152.00% --
Year Ended March
31, 1997 (f) 1.73%* 0.50 % 98.00% $0.0397
Year Ended March
31, 1998 (f) 1.69%* (0.01)% 72.00% $0.0368
INSTITUTIONAL
SHARES (D)
Year Ended March
31, 1994 1.22% 1.52 % 110.00% --
Year Ended March
31, 1995 (f) 1.23% 1.48 % 121.00% --
Year Ended March
31, 1996 (f) 1.24%* 1.31 % 152.00% --
Year Ended March
31, 1997 (f) 1.24%* 0.99 % 98.00% $0.0397
Year Ended March
31, 1998 (f) 1.19%* 0.50 % 72.00% $0.0368
</TABLE>
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
27
<PAGE>
FINANCIAL HIGHLIGHTS--Continued
<TABLE>
<CAPTION>
Income from
Investment Operations
Net Asset Net Realized
Value at Net and Unrealized Total from
Beginning Investment Gain (Loss) Investment
of Period Income on Securities Operations
<S> <C> <C> <C> <C>
INTERNATIONAL
EQUITY
ORDINARY SHARES
Year Ended March
31, 1994 $ 8.03 0.00 (a) 2.28 2.28
Year Ended March
31, 1995 (f) $10.18 (0.03)(a) 0.04 0.01
Year Ended March
31, 1996 (f) $10.06 0.00 (a) 0.67 0.67
Year Ended March
31, 1997 (f) $10.70 0.01 (a) 0.40 0.41
Year Ended March
31, 1998 (f) $11.03 0.07 (a) 1.30 1.37
INSTITUTIONAL
SHARES (D)
April 1, 1991 to
March 19, 1992 $ 9.40 0.09 (a) (1.40) (1.31)
August 25,
1994** to March
31,
1995 (f) $11.00 0.01 (a) (0.73) (0.72)
Year Ended March
31, 1996 (f) $10.10 0.04 (a) 0.66 0.70
Year Ended March
31, 1997 (f) $10.73 0.06 (a) 0.41 0.47
Year Ended March
31, 1998 (f) $11.10 0.14 (a) 1.28 1.42
EMERGING MARKETS
ORDINARY SHARES
August 8, 1994**
to March 31,
1995 (f) $10.00 (0.05)(a) (2.71) (2.76)
Year Ended March
31, 1996 (f) $ 7.24 (0.07)(a) 1.21 1.14
Year Ended March
31, 1997 (f) $ 8.38 (0.04)(a) 0.90 0.86
Year Ended March
31, 1998 (f) $ 9.24 (0.04) (1.50) (1.54)
INSTITUTIONAL
SHARES
April 2, 1996**
to March 31,
1997 (f) $ 8.49 0.01 (a) 0.80 0.81
Year Ended March
31, 1998 (f) $ 9.27 0.02 (1.53) (1.51)
<CAPTION>
Distributions
Dividends
Dividends in excess of Distributions Distributions
from Net Net from in excess of Net Asset
Investment Investment Realized Realized Total Value End Total
Income Income Capital Gains Capital Gains Distributions of Period Return(c)
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL
EQUITY
ORDINARY SHARES
Year Ended March
31, 1994 (0.13) -- -- -- (0.13) $10.18 28.69 %
Year Ended March
31, 1995 (f) (0.13) -- -- -- (0.13) $10.06 0.07 %
Year Ended March
31, 1996 (f) (0.03) -- -- -- (0.03) $10.70 6.63 %
Year Ended March
31, 1997 (f) (0.08) -- -- -- (0.08) $11.03 3.82 %
Year Ended March
31, 1998 (f) (0.11) (0.06) (0.21) (0.05) (0.43) $11.97 12.95 %
INSTITUTIONAL
SHARES (D)
April 1, 1991 to
March 19, 1992 (0.15) -- -- -- (0.15) $ 7.94(e) (14.62)%(b)
August 25,
1994** to March
31,
1995 (f) (0.18) -- -- -- (0.18) $10.10 (6.57)%
Year Ended March
31, 1996 (f) (0.07) -- -- -- (0.07) $10.73 6.95 %
Year Ended March
31, 1997 (f) (0.10) -- -- -- (0.10) $11.10 4.38 %
Year Ended March
31, 1998 (f) (0.20) (0.11) (0.21) (0.05) (0.57) $11.95 13.50 %
EMERGING MARKETS
ORDINARY SHARES
August 8, 1994**
to March 31,
1995 (f) -- -- -- -- -- $ 7.24 (27.60)%
Year Ended March
31, 1996 (f) -- -- -- -- -- $ 8.38 15.75 %
Year Ended March
31, 1997 (f) -- -- -- -- -- $ 9.24 10.26 %
Year Ended March
31, 1998 (f) -- -- -- -- -- $ 7.70 (16.67)%
INSTITUTIONAL
SHARES
April 2, 1996**
to March 31,
1997 (f) (0.03) -- -- -- (0.03) $ 9.27 9.54 %
Year Ended March
31, 1998 (f) -- -- -- -- -- $ 7.76 (16.29)%
<CAPTION>
Ratios and Supplemental Data
Ratio of Ratio of Net
Net Assets Operating Investment
End of Expenses Income Loss) Average
Period to Average to Average Portfolio Commission
(000's) Net Assets Net Assets Turnover Rate(g)
<S> <C> <C> <C> <C> <C>
INTERNATIONAL
EQUITY
ORDINARY SHARES
Year Ended March
31, 1994 $26,222 2.01% (0.08)% 40.00% --
Year Ended March
31, 1995 (f) $27,657 1.91% (0.24)% 46.48% --
Year Ended March
31, 1996 (f) $27,402 2.15%* (0.04)% 43.00% --
Year Ended March
31, 1997 (f) $27,410 2.20%* 0.10 % 135.00% $0.0140
Year Ended March
31, 1998 (f) $32,182 2.18%* 0.62 % 61.00% $0.0095
INSTITUTIONAL
SHARES (D)
April 1, 1991 to
March 19, 1992 $ 0 1.63% 1.05 % 52.00% --
August 25,
1994** to March
31,
1995 (f) $ 3,052 1.66%(b) 0.13 %(b) 46.48%(b) --
Year Ended March
31, 1996 (f) $ 1,241 1.65%* 0.38 % 43.00% --
Year Ended March
31, 1997 (f) $ 1,760 1.69%* 0.51 % 135.00% $0.0140
Year Ended March
31, 1998 (f) $ 1,728 1.68%* 1.19 % 61.00% $0.0095
EMERGING MARKETS
ORDINARY SHARES
August 8, 1994**
to March 31,
1995 (f) $ 4,259 2.54%(b) (1.03)%(b) 10.72%(b) --
Year Ended March
31, 1996 (f) $ 7,736 2.74%* (0.84)% 9.00% --
Year Ended March
31, 1997 (f) $10,052 2.68%* (0.47)% 8.00% $0.0024
Year Ended March
31, 1998 (f) $ 9,241 2.69%* (0.43)% 52.00% $0.0008
INSTITUTIONAL
SHARES
April 2, 1996**
to March 31,
1997 (f) $ 1,212 2.01%(b)* 0.13 %(b) 8.00%(b) $0.0024
Year Ended March
31, 1998 (f) $ 1,002 2.19%* 0.24 % 52.00% $0.0008
</TABLE>
* EXPENSE RATIOS FOR THE YEARS ENDED MARCH 31, 1998, MARCH 31, 1997 AND MARCH
31, 1996 ARE SHOWN GROSS OF CUSTODY CREDITS (NOTE 3) IN ACCORDANCE WITH SEC
REGULATIONS. THESE CREDITS ARE GENERATED BY INTEREST EARNED ON UNINVESTED
CASH BALANCES MAINTAINED BY THE FUNDS, AND ARE USED TO OFFSET CUSTODIAL EX-
PENSES OF THE FUND. THE FUNDS' EXPENSE RATIOS NET OF SUCH CREDITS, AS RE-
PORTED IN PRIOR PERIODS, WOULD HAVE BEEN AS FOLLOWS: SMALL CAP ORDINARY AND
INSTITUTIONAL SHARES, 1.89%, 1.90%, 1.88% AND 1.40%, 1.40%, 1.38%, RESPEC-
TIVELY, FOR THE PERIODS ENDED MARCH 31, 1998, 1997 AND 1996; MID CAP ORDI-
NARY AND INSTITUTIONAL SHARES,1.11%, 1.92% AND 1.27%, 1.66% (ANNUALIZED),
RESPECTIVELY, FOR THE PERIODS ENDED MARCH 31, 1997 AND 1996; GROWTH AND IN-
COME ORDINARY AND INSTITUTIONAL SHARES, 1.65%, 1.70%, 1.64% AND 1.14%,
1.21%, 1.15%, RESPECTIVELY, FOR THE PERIODS ENDED MARCH 31, 1998, 1997 AND
1996; INTERNATIONAL EQUITY ORDINARY AND INSTITUTIONAL SHARES, 2.03%, 2.15%,
2.09% AND 1.54%, 1.64%, 1.59%, RESPECTIVELY, FOR THE PERIODS ENDED MARCH 31,
1998, 1997 AND 1996; AND EMERGING MARKETS ORDINARY AND INSTITUTIONAL SHARES,
2.57%, 2.56%, 2.59% AND 2.07%, 1.89% (ANNUALIZED), --, RESPECTIVELY FOR THE
PERIODS ENDED MARCH 31, 1998, 1997 AND 1996.
** Commencement of Operations
(a) Reflects expense waivers/reimbursements and reductions in effect during
the period. See Note 3 to the Financial Statements. As a result of such
waivers/reimbursements and reductions, expenses of the Small Cap Ordinary
Shares for the periods ended March 31, 1998, 1997, and 1996 reflect a re-
duction of $0.01, $0.02 and $0.02 per share; expenses of the Small Cap In-
stitutional Shares for the periods ended March 31, 1998, 1997 and 1996 re-
flect a reduction of $0.01, $0.02 and $0.02 per share; expenses of the Mid
Cap Ordinary Shares for the periods ended March 31, 1998, 1997, 1996 and
1995 reflect a reduction of $0.07, $0.15, $0.23 and $0.76 per share; ex-
penses of the Mid Cap Institutional Shares for the periods ended March 31,
1998, 1997, and 1996 reflects a reduction of $0.06, $0.10 and $0.11 per
share; expenses of the Growth and Income Ordinary Shares for the periods
ended March 31, 1997 and 1996 reflect a reduction of $0.01 and $0.01 per
share; expenses of the Growth and Income Institutional Shares for the pe-
riods ended March 31, 1997 and 1996 reflect a reduction of $0.01 and $0.01
per share; expenses of the International Equity Ordinary Shares for the
periods ended March 31, 1998, 1997, 1996, 1995 and 1994 reflect a reduc-
tion of $--, $0.01 $0.01, $0.01 and $0.01 per share respectively; expenses
of the International Equity Institutional Shares for the periods ended
March 31, 1998, 1997, 1996, 1995 and 1992 reflect a reduction of $--,
$0.02, $0.01, $0.01 and $0.04 per share; and expenses of the Emerging Mar-
kets Ordinary Shares for the periods ended March 31, 1997, 1996 and 1995
reflect a reduction of $0.01, $0.01 and $0.02 per share; expenses of the
Emerging Markets Institutional Shares for the period ended March 31, 1997
reflects a reduction of $0.02 per share.
(b) Annualized
(c) Total Return does not include the one time deferred sales charge of 1% for
the Ordinary Shares. Effective August 1, 1996 Mid Cap Ordinary Shares are
no longer subject to the deferred sales charge of 1%. The total return
would have been lower if certain fees had not been waived or if custodial
fees had not been reduced by credits allowed by the custodian.
(d) Investment income and expenses for the periods ending March 31, 1991
through March 31, 1994 were calculated for the Ordinary Shares and then
adjusted for the differences in distribution and transfer agency expenses
borne by the two classes of shares.
(e) Amount represents the last net asset value per share before the March 19,
1992 redemption which resulted in this Fund having no Institutional Share-
holders and no Institutional Shares of beneficial interest outstanding
from that date until August 25, 1994.
(f) Per share numbers have been calculated using the average shares method. In
accordance with SEC reporting requirements the average commission rate has
been calculated for fiscal years beginning on or after September 1, 1995.
(g) In accordance with SEC reporting requirements, the average commission ra-
tio has been calculated for fiscal years beginning on or after December 1,
1995.
(h) Net investment income per share and the net investment income ratio would
have been lower without a certain investment strategy followed by the
subadvisor during the fiscal year ended March 31, 1997.
(i) Represents $2.42 per share of distributions from realized capital gains
and $0.03 per share of a return of capital.
The accompanying notes are an integral part of these financial statements.
- --------------------------------------------------------------------------------
28
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS
1. Organization of the Trust.
The Quantitative Group of Funds (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a non-diversified, open-end management investment company. The
Trust currently has five series (individually a "Fund" and collectively the
"Funds") each with a distinct investment objective: Quantitative Small Cap,
Quantitative Mid Cap, Quantitative Growth and Income, Quantitative Interna-
tional Equity, and Quantitative Emerging Markets. Quantitative Small Cap,
Quantitative Mid Cap and Quantitative Emerging Markets were formerly known as
Quantitative Numeric, Quantitative Numeric II, and Quantitative Foreign Fron-
tier respectively.
The Quantitative Small Cap Fund ("Small Cap") seeks maximum long-term capital
appreciation by investing primarily in common stocks of companies with smaller
($1 billion or less) market capitalizations or larger companies with higher
than average expected earnings growth rates.
The Quantitative Mid Cap Fund ("Mid Cap") seeks long-term growth of capital by
investing primarily in common stock of companies with medium ($1 billion to $5
billion) market capitalizations.
The Quantitative Growth and Income Fund ("Growth and Income") seeks long-term
growth of capital and income by investing primarily in common stocks of larger
companies having substantial equity capital that are currently paying divi-
dends.
The Quantitative International Equity Fund ("International Equity") seeks
long-term capital growth and income by investing primarily in foreign securi-
ties. Generally, the Fund invests in Western Europe, Australia, and the larger
capital markets in the Far East.
The Quantitative Emerging Markets Fund ("Emerging Markets") seeks long-term
growth of capital by investing in securities of foreign issuers located in
emerging markets.
Holders of Institutional Shares bear no portion of the 12b-1 Plan expense of
the Funds and are not entitled to vote on matters involving the 12b-1 Plan.
Ordinary Shares are sold subject to a 12b-1 Plan and, for Small Cap, Growth
and Income, International Equity and Emerging Markets, a deferred sales
charge. Prior to August 1, 1996, Ordinary Shares of Mid Cap were sold subject
to the deferred sales charge.
2. Significant Accounting Policies.
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles for investment compa-
nies, which require management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual re-
sults could differ from these estimates.
Security Valuation.
Portfolio securities are valued each business day at the last reported sale
price on the principal exchange or market on which they are traded. If there
is no such reported sale, the securities are valued at the mean between the
last reported bid and asked price. Short-term investments that mature in 60
days or less are valued at amortized cost. Securities quoted in foreign cur-
rencies are translated into U.S. dollars based upon the prevailing exchange
rate on each business day. Other assets and securities for which no quotations
are readily available are valued at fair value as determined in good faith us-
ing procedures approved by the Trustees.
Security Transactions and Related Investment Income.
Security transactions are accounted for on the trade date (the date the order
to buy or sell is executed). Dividend income is recorded on the ex-dividend
date, except that certain dividends from foreign securities are recorded as
soon as the Funds are informed of the ex-dividend date. Interest income is re-
corded on the accrual basis. In determining the net gain or loss on securities
sold, the cost of securities is determined on the identified cost basis. Each
Fund's investment income and realized and unrealized gains and losses are al-
located among classes based upon the daily relative net assets.
Repurchase Agreements.
The Funds' custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-mar-
ket daily to ensure that the market value of the underlying assets remains
sufficient to protect the Funds. The Funds may experience costs and delays in
liquidating the collateral if the issuer defaults or enters into bankruptcy.
Options.
Premiums received by the Funds upon writing put or call options are recorded
as an asset with a corresponding liability which is subsequently adjusted to
the current market value of the option. When an option expires, is exercised,
or is closed,
- --------------------------------------------------------------------------------
29
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS--Continued
the Funds realize a gain or loss, and the liability is eliminated. The Funds
continue to bear the risk of adverse movements in the price of the underlying
asset during the period of the option, although any potential loss during the
period would be reduced by the amount of the option premium received. Pur-
chased options and the liability related to premiums received on written op-
tions are valued based upon their quoted daily settlement price.
Option Contracts Written.
The number of contracts and premium amounts associated with call option con-
tracts written by Growth and Income for the year ended March 31, 1998 were as
follows:
<TABLE>
<CAPTION>
Number of Premium
Contracts Amount
<S> <C> <C>
Balance at 3/31/97 -- --
Opened 390 94,411
Closed or expired (390) (94,411)
Exercised -- --
---- -------
Balance at 3/31/98 -- --
</TABLE>
Foreign Currency Transactions.
All monetary items denominated in foreign currencies are translated into U.S.
dollars based on the prevailing exchange rate at the close of each business
day. Income and expenses denominated in foreign currencies are translated at
the prevailing rates of exchange when accrued or incurred.
Reported net realized gains and losses on foreign currency transactions repre-
sent net gains and losses from currency gains and losses realized between the
trade and settlement dates on investment transactions, and the difference be-
tween the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects of changes in foreign currency exchange rates
on investments in securities are not segregated in the Statement of Operations
from the effects of changes in market prices of those securities, but are in-
cluded with the net realized and unrealized gain or loss on investments.
Restricted Securities.
The Funds are permitted to invest in securities that are subject to legal or
contractual restrictions on resale. These securities may be resold in transac-
tions exempt from registration or to the public if the securities are regis-
tered. One type of exempt transaction is a sale to certain qualified institu-
tional buyers under Rule 144A of the Securities Act of 1933. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period, re-
stricted securities amounted to $75,385 or 0% of net assets of International
Equity; $999,971 or 10% of net assets of Emerging Markets; and $0 for each of
Small Cap, Mid Cap, and Growth and Income.
Unamortized Organization Expenses.
Costs incurred with Small Cap's organization and registration were amortized
over the period of benefit, not exceeding 60 months. All costs are now fully
amortized.
Expenses.
The majority of the expenses of the Funds are attributed to the individual
Funds for which they are incurred. Expenses that are not attributed to a spe-
cific Fund are allocated in proportion to the respective net assets of the
Funds. Expenses allocable to a Fund are borne pro rata by the holders of both
classes of shares of such Fund, except that 12b-1 Plan expenses will not be
borne by the holders of Institutional Shares and each class has its own trans-
fer agency fee.
3. Management Fee, Advisory Contracts and
Other Affiliate Transactions.
The Funds have entered into a management agreement with Quantitative Advisors,
Inc. (the "Manager"). Compensation of the Manager, for management and adminis-
tration of the Funds, including selection and monitoring of the portfolio ad-
visors, is paid monthly based on the average daily net asset value of each
Fund for the month. The annual rate of such fees is 1.00% of the average daily
net asset value of Small Cap, Mid Cap, and International Equity; 0.75% of the
average daily net asset value of the Growth and Income Fund; and 0.80% of the
average daily net asset value of Emerging Markets.
Under the management agreement, the Manager has agreed to reduce its compensa-
tion with respect to Small Cap, Growth and Income, and International Equity to
the extent that the total expenses of any of these Funds individually exceed
2% of average net asset value for any fiscal year. The Manager has also volun-
tarily agreed to waive fees or assume certain operating expenses of Mid Cap
and Emerging Markets in order to reduce the total expenses of these Funds to
no more than 1.65% and 2.45%, respectively, of their average net assets. The
distribution agreement calls for the Distributor to reduce its fee similarly
after the Manager's fee has been eliminated. The Manager has also agreed to
assume expenses of any of these Funds if necessary in order to reduce their
total expenses to no more than 2% of average net assets for any fiscal year.
Fund expenses subject to this limitation are exclusive of brokerage, interest,
taxes and extraordinary expenses, which include incremental custody costs as-
sociated with international securities. Expenses are calculated gross of cus-
tody credits, if applicable.
- --------------------------------------------------------------------------------
30
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS--Continued
For the year ended March 31, 1998, the fees waived or expenses reimbursed by
the Manager amounted to $40,002, $34,313, and $351 for Small Cap, Mid Cap, and
International Equity respectively. The aggregate management fees, net of fees
waived or reimbursed by the Manager amounted to $1,583,285.
The Manager has entered into advisory contracts with the following advisors
(collectively the "Advisors") to provide investment advisory services to the
following Funds: Columbia Partners, L.L.C., Investment Management (Small Cap,
Mid Cap), State Street Bank and Trust Company (Growth and Income), and Inde-
pendence International Associates, Inc. (International Equity, Emerging Mar-
kets).
For services rendered, the Manager pays to the Advisor of a Fund a fee based
on a percentage of the average daily net asset value of the Fund. The fee for
each Fund is determined separately. The fees paid by the Manager to the Advi-
sors of the Funds are as follows: Small Cap and International Equity Funds--
0.50% of average daily total net assets; Mid Cap and Emerging Markets Funds--
0.40% of average daily total net assets; and Growth and Income--0.375% of the
first $20 million and 0.30% of amounts in excess of $20 million of average
daily total net assets, with an annual minimum of $25,000.
The Funds have entered into a distribution agreement with U.S. Boston Capital
Corporation (the "Distributor"). For its services under the distribution
agreement, the Distributor receives a monthly fee at the annual rate of (i)
0.50% of the average net asset value of Ordinary Shareholder accounts of Small
Cap, Growth and Income, International Equity and Emerging Markets and (ii)
0.25% of the average net asset value of Ordinary Shareholder accounts of Mid
Cap open during the period the plan is in effect. Prior to August 1, 1996, the
annual rate for Mid Cap accounts was 0.50%. No fees are received by the Dis-
tributor for Institutional Shares. For the year ended March 31, 1998, the Dis-
tributor voluntarily agreed to waive its fees in part with respect to Mid Cap,
which amounted to $8,737. During the year ended March 31, 1998, the aggregate
fees, net of fees waived by the Distributor, paid by the Funds pursuant to
such distribution plan amounted to $809,684. A deferred sales charge amounting
to 1% of the net asset value of Ordinary Shares redeemed of Small Cap, Growth
and Income, International Equity and Emerging Markets is withheld from the re-
demption proceeds and paid to the Distributor. The deferred sales charge is
also imposed on redemptions of Ordinary Shares of Mid Cap purchased prior to
August 1, 1996. The deferred sales charge is not imposed on redemptions of In-
stitutional Shares, and certain other transactions. The Funds have been ad-
vised that during the year ended March 31, 1998, such fees earned by the Dis-
tributor were $207,769.
Transfer agent functions are provided to the Funds by Quantitative Institu-
tional Services, a division of the Manager (the "Transfer Agent") pursuant to
a transfer agent agreement. The transfer agent agreement provides for base
fees that are payable to the Transfer Agent at an annual rate of 0.13% of the
aggregate average daily net asset value of each class of shares of each Fund
and for reimbursement of out of pocket expenses. During the year ended March
31, 1998, the aggregate fees, net of fees waived by the Transfer Agent, paid
by the Funds pursuant to such agreement amounted to $261,691. For the year
ended March 31, 1998, the Transfer Agent voluntarily agreed to waive its fees
in part with respect to Mid Cap which amounted to $5,868.
State Street Bank and Trust Company ("State Street") maintained the Funds' ac-
counting records and provided custodial services through January 20, 1998. Ef-
fective January 21, 1998, custody and fund accounting services are provided by
Investors Fiduciary Trust Company ("IFTC"), a wholly owned subsidiary of State
Street. Custody credits generated by interest earned on uninvested cash bal-
ances maintained by the Funds are used to offset custodial expenses of the
Funds.
Each Trustee receives an annual Trustee's fee of $4,000 allocated to each Fund
in proportion to the respective net assets of the Funds.
4. Federal Income Taxes.
It is the policy of the Funds to distribute all of their taxable income within
the prescribed time and otherwise comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies. Therefore, no Fed-
eral income tax provision is required.
International Equity and Emerging Markets utilized $103,200 and $261,255, re-
spectively, of capital loss carryovers during the fiscal year ended March 31,
1998.
At March 31, 1998, Emerging Markets had a capital loss carryover amounting to
$25,743 which will expire on March 31, 2005 and a post October loss deferral
amounting to $2,423,421. To the extent that these losses are used to offset
any future capital gains realized during the carryover period, no capital
gains tax liabilities will be incurred by Emerging Markets for gains realized
and not distributed.
5. Purchases and Sales.
During the year ended March 31, 1998, purchases of investment securities other
than U.S. Government obligations and short-term investments, for Small Cap,
Mid Cap, Growth and
- --------------------------------------------------------------------------------
31
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS--Continued
Income, International Equity and Emerging Markets were $93,201,740,
$17,394,360, $41,721,679, $19,436,601, and $5,677,003 respectively. Sales of
such securities for the Funds were $106,216,004, $15,053,824, $39,983,114,
$18,621,988, and $5,124,054 respectively. Purchases and sales of U.S. Govern-
ment obligations were $5,294,577 and $5,300,000 respectively for Emerging Mar-
kets.
6. Securities Loans.
As of March 31, 1998, International Equity loaned common stocks having a value
of $4,024,948 and received cash collateral of $4,198,112 for these loans.
Security lending income of $19,447 collected by State Street and IFTC was re-
corded in interest income on the Statement of Operations.
7. Reclassifications.
For the year ended March 31, 1998, certain reclassification adjustments were
made between undistributed/ (overdistributed) net investment income, accumu-
lated net realized gain/(loss), and shares of beneficial interest due to dif-
ferences between book and tax accounting, primarily due to current year net
operating losses for Small Cap, Mid Cap, Emerging Markets; passive foreign in-
vestment company holdings for International Equity and Emerging Markets; and
foreign currency translation for International Equity and Emerging Markets.
Such reclassifications were as follows:
<TABLE>
<CAPTION>
Increase/(Decrease)
Increase/(Decrease) Undistributed/ Increase/(Decrease)
Shares of (Overdistributed) Accumulated
Beneficial Net Investment Net Realized
Interest Income/(Loss) Gain/(Loss)
<S> <C> <C> <C>
Small Cap 1,266,089 918,516 (2,184,605)
Mid Cap 20 50,624 (50,644)
International Equity (144) (455,912) 456,056
Emerging Markets (5,195) 71,973 (66,778)
</TABLE>
8. Contingent Liability.
The Trust insures itself and all Funds under a policy with ICI Mutual Insur-
ance Company. The annual premium is allocated among the Funds and Quantitative
Institutional Services. Additionally, the Funds have committed up to 300% of
the annual premium, one third of which was provided in cash, with each Fund's
pro rata portion recorded as an asset. The remainder is secured with an irrev-
ocable letter of credit.
9. Shares of Beneficial Interest.
The following schedule shows the number of shareholders each owning 5% or more
of a Fund and the total percentage of the Fund held by such shareholders.
<TABLE>
<CAPTION>
5% or Greater Shareholders
------------------------------
% of
Fund Number Fund Held
<S> <C> <C>
Small Cap Inst. 5 66%
Mid Cap Ord. 2 22%
Mid Cap Inst. 4 75%
Growth and Income Inst. 4 81%
International Equity Inst. 1 91%
Emerging Markets Inst. 2 97%
</TABLE>
10. Concentration of Risk.
The relatively large investments of Emerging Markets in Latin American and
Southeast Asian countries with limited or developing capital markets may in-
volve greater risks than investments in more developed markets and the prices
of such investments may be volatile. The consequences of political, social or
economic changes in these markets may have disruptive effects on the market
prices of the Fund's investments and the income they generate, as well as the
Fund's ability to repatriate such amounts.
- --------------------------------------------------------------------------------
32
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS--Continued
11. Transactions in Shares of Beneficial Interest.
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1998 March 31, 1997
---------------------- ------------------------
Shares Dollars Shares Dollars
<S> <C> <C> <C> <C>
SMALL CAP
ORDINARY SHARES:
Shares sold 356,461 $ 6,027,298 351,818 $ 6,317,030
Shares issued in
reinvestment of
distributions 550,052 8,762,319 924,424 16,907,849
Shares redeemed (947,877) (15,988,184) (1,264,403) (22,735,475)
-------- ------------ ---------- ------------
Net change (41,364) $ (1,198,567) 11,839 $ 489,404
-------- ------------ ---------- ------------
INSTITUTIONAL SHARES:
Shares sold 76,347 $ 1,343,153 321,340 $ 5,965,533
Shares issued in
reinvestment of
distributions 34,000 558,954 213,876 4,116,247
Shares redeemed (360,913) (6,164,447) (2,157,817) (38,785,621)
-------- ------------ ---------- ------------
Net change (250,566) $ (4,262,340) (1,622,601) $(28,703,841)
-------- ------------ ---------- ------------
TOTAL NET CHANGE FOR FUND $ (5,460,907) $(28,214,437)
------------ ------------
MID CAP
ORDINARY SHARES:
Shares sold 323,072 $ 4,936,609 283,463 $ 4,013,410
Shares issued in
reinvestment of
distributions 153,778 2,265,150 76,221 1,064,046
Shares redeemed (161,738) (2,497,310) (166,383) (2,323,633)
-------- ------------ ---------- ------------
Net change 315,112 $ 4,704,449 193,301 $ 2,753,823
-------- ------------ ---------- ------------
INSTITUTIONAL SHARES:
Shares sold 24,031 $ 362,791 96,506 $ 1,350,989
Shares issued in
reinvestment of
distributions 8,065 120,011 2,350 33,070
Shares redeemed (8,069) (125,877) (422,182) (6,069,111)
-------- ------------ ---------- ------------
Net change 24,027 $ 356,925 (323,326) $ (4,685,052)
-------- ------------ ---------- ------------
TOTAL NET CHANGE FOR FUND $ 5,061,374 $ (1,931,229)
------------ ------------
GROWTH AND INCOME
ORDINARY SHARES:
Shares sold 411,100 $ 7,998,681 138,045 $ 2,136,905
Shares issued in
reinvestment of
distributions 253,654 4,723,028 293,065 4,442,864
Shares redeemed (322,168) (6,086,768) (427,154) (6,602,373)
-------- ------------ ---------- ------------
Net change 342,586 $ 6,634,941 3,956 $ (22,604)
-------- ------------ ---------- ------------
INSTITUTIONAL SHARES:
Shares sold 85,691 $ 1,602,542 9,058 $ 137,464
Shares issued in
reinvestment of
distributions 10,834 201,396 17,093 258,962
Shares redeemed (18,462) (329,016) (55,068) (865,268)
-------- ------------ ---------- ------------
Net change 78,063 $ 1,474,922 (28,917) $ (468,842)
-------- ------------ ---------- ------------
TOTAL NET CHANGE FOR FUND $ 8,109,863 $ (491,446)
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
33
<PAGE>
[LOGO OF QUANTITATIVE GROUP OF FUNDS APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS--Continued
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1998 March 31, 1997
--------------------- ---------------------
Shares Dollars Shares Dollars
<S> <C> <C> <C> <C>
INTERNATIONAL EQUITY
ORDINARY SHARES:
Shares sold 465,824 $ 5,430,040 288,056 $ 3,128,420
Shares issued in reinvestment of
distributions 102,951 1,093,343 16,596 182,722
Shares redeemed (365,138) (4,141,960) (380,548) (4,118,431)
-------- ----------- -------- -----------
Net change 203,637 $ 2,381,423 (75,896) $ (807,289)
-------- ----------- -------- -----------
INSTITUTIONAL SHARES:
Shares sold 5,215 $ 55,388 46,087 $ 502,388
Shares issued in reinvestment of
distributions 7,592 80,395 1,099 12,144
Shares redeemed (26,843) (308,828) (4,216) (45,934)
-------- ----------- -------- -----------
Net change (14,036) $ (173,045) 42,970 $ 468,598
-------- ----------- -------- -----------
Total net change for fund $ 2,208,378 $ (338,691)
----------- -----------
EMERGING MARKETS
ORDINARY SHARES:
Shares sold 308,029 $ 2,634,998 269,187 $ 2,347,110
Shares issued in reinvestment of
distributions -- -- -- -
Shares redeemed (195,299) (1,708,550) (104,973) (898,041)
-------- ----------- -------- -----------
Net change 112,730 $ 926,448 164,214 $ 1,449,069
-------- ----------- -------- -----------
INSTITUTIONAL SHARES:
Shares sold 2,349 $ 17,973 131,870 $ 1,140,389
Shares issued in reinvestment of
distributions -- -- 14 116
Shares redeemed (4,047) (28,360) (1,132) (10,110)
-------- ----------- -------- -----------
Net change (1,698) $ (10,387) 130,752 $ 1,130,395
-------- ----------- -------- -----------
NET CHANGE FOR FUND $ 916,061 $ 2,579,464
----------- -----------
</TABLE>
12. Subsequent Events.
In April 1998, the Board of Trustees approved a proposal to change the names
of certain of the Funds as follows: Quantitative Numeric Fund to Quantitative
Small Cap Fund, Quantitative Numeric II Fund to Quantitative Mid Cap Fund, and
Quantitative Foreign Frontier Fund to Quantitative Emerging Markets Fund.
Tax Information Notice (unaudited).
For the fiscal year ended March 31, 1998, the Quantitative Small Cap Fund dis-
tributed $1,769,788 of long term capital gain dividends (28% gain).
- --------------------------------------------------------------------------------
34
<PAGE>
FORM N-1A PART C
OTHER INFORMATION
Item 23. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Quantitative Small Cap Fund (formerly Quantitative Numeric Fund)
----------------------------------------------------------------
Per Share Income and Capital Changes, Years Ended March 31, 1998,
1997, 1996, 1995, and 1994; and for Institutional Shares
(formerly named "Class A Shares"), Years Ended March 31, 1998,
1997, 1996, 1995 and 1994
Quantitative Mid Cap Fund (formerly Quantitative Numeric II Fund)
-----------------------------------------------------------------
Per Share Income and Capital Changes, Years Ended March 31, 1998,
1997 and 1996, and Period from October 1, 1994 to March 31, 1995
for Ordinary Shares; and for Institutional Shares (formerly named
"Class A Shares"), Year Ended March 31, 1998 and 1997 and Period
from April 17, 1995 to March 31, 1996
Quantitative Growth and Income Fund
-----------------------------------
Per Share Income and Capital Changes, Years Ended March 31, 1998,
1997, 1996, 1995 and 1994 for Ordinary Shares; and for
Institutional Shares (formerly named "Class A Shares"), Years
Ended March 31, 1998, 1997, 1996, 1995 and 1994
Quantitative International Equity Fund
---------------------------------------
Per Share Income and Capital Changes, Years Ended March 31, 1998,
1997, 1996, 1995 and 1994, for Ordinary Shares; and for
Institutional Shares (formerly named "Class A Shares"), Years
Ended March 31, 1998, 1997 and 1996, Period from August 25, 1994
to March 31, 1995, and Period Ended March 19, 1992
Quantitative Emerging Markets Fund (formerly Quantitative Foreign
-----------------------------------------------------------------
Frontier Fund)
--------------
Per Share Income and Capital Changes, Years Ended March 31, 1998,
1997 and 1996, and Period from August 8, 1994 to March 31, 1995
for Ordinary Shares; and for Institutional Shares (formerly named
"Class A Shares"), Year Ended March 31, 1998 and Period from
April 2, 1997 to March 31, 1997
Included in Part B:
Quantitative Small Cap Fund
---------------------------
Report of Independent Accountants, May 5, 1998
Investments, March 31, 1998
Statement of Assets and Liabilities, March 31, 1998
Statement of Operations, Year Ended March 31, 1998
<PAGE>
Statement of Changes in Net Assets, Year Ended March 31, 1998 and
March 31, 1997
Selected Per Share Data and Ratios, Years Ended March 31, 1998,
1997, 1996, 1995, and 1994 for Ordinary Shares; and for
Institutional Shares, Years Ended March 31, 1998, 1997, 1996,
1995, and 1994
Notes to Financial Statements, March 31, 1998
Quantitative Mid Cap Fund
-------------------------
Report of Independent Accountants, May 5, 1998
Investments, March 31, 1998
Statement of Assets and Liabilities, March 31, 1998
Statement of Operations, Year Ended March 31, 1998
Statement of Changes in Net Assets, Year Ended March 31, 1998 and
March 31, 1997
Selected Per Share Data and Ratios, Years Ended March 31, 1998,
1997 and 1996, and Period from October 1, 1994 to March 31, 1995
for Ordinary Shares; and for Institutional Shares, Years Ended
March 31, 1998, and 1997 and Period from April 17, 1995 to March
31, 1996
Notes to Financial Statements, March 31, 1998
Quantitative Growth and Income Fund
-----------------------------------
Report of Independent Accountants, May 5, 1998
Investments, March 31, 1998
Statement of Assets and Liabilities, March 31, 1998
Statement of Operations, Year Ended March 31, 1998
Statement of Changes in Net Assets, Years Ended March 31, 1998
and March 31, 1997
Selected Per Share Data and Ratios, Years Ended March 31, 1998,
1997, 1996, 1995, and 1994 for Ordinary Shares; and for
Institutional Shares, Years Ended March 31, 1998, 1997, 1996,
1995, and 1994
Notes to Financial Statements, March 31, 1998
Quantitative International Equity Fund
--------------------------------------
Report of Independent Accountants, May 5, 1998
Investments, March 31, 1998
Statement of Assets and Liabilities, March 31, 1998
Statement of Operations, Year Ended March 31, 1998
Statement of Changes in Net Assets, Years Ended March 31, 1998
and March 31, 1997
Selected Per Share Data and Ratios, Years Ended March 31, 1998,
1997, 1996, 1995, and 1994 for Ordinary Shares; and for
Institutional Shares, Years Ended March 31, 1998, 1997 and 1996,
Period from August 25, 1994 to March 31, 1995, and Period Ended
March 19, 1992
Notes to Financial Statements, March 31, 1998
Quantitative Emerging Markets Fund
----------------------------------
Report of Independent Accountants, May 5, 1998
Investments, March 31, 1998
Statement of Assets and Liabilities, March 31, 1998
Statement of Operations, Year Ended March 31, 1998
Statement of Changes in Net Assets, Years Ended March 31, 1998
and 1997
<PAGE>
Selected Per Share Data and Ratios, Years Ended March 31, 1998,
1997 and 1996, and Period from August 8, 1994 to March 31, 1995
for Ordinary Shares and for Institutional Shares Year Ended March
31, 1998 and Period from April 2, 1997 to March 31, 1997
Notes to Financial Statements, March 31, 1998
(b) Exhibits
4. Advisory Contract with Polaris Capital Management, Inc.
Amendment to Management Contract
5. Amendment to Terms and Conditions of Distribution Agreement
10. Consent of Independent Accountants
14. Financial Data Schedule
Item 24. Persons Controlled by or under Common Control with Registrant
None
Item 26. Number of Holders of Securities
As of June 30, 1998, there were 2,000 holders of Quantitative Small
Cap Ordinary Shares of beneficial interest and 43 holders of Quantitative Small
Cap Institutional Shares of beneficial interest; 577 holders of Quantitative Mid
Cap Ordinary Shares of beneficial interest and 23 holders of Quantitative Mid
Cap Institutional Shares of beneficial interest; 890 holders of Quantitative
Growth and Income Ordinary Shares of beneficial interest and 25 holders of
Quantitative Growth and Income Institutional Shares of beneficial interest; 625
holders of Quantitative International Equity Ordinary Shares of beneficial
interest and 6 holders of Quantitative International Equity Institutional Shares
of beneficial interest; 54 holders of Quantitative Foreign Value Ordinary Shares
and 0 holders of Quantitative Foreign Value Institutional Shares; and 352
holders of Quantitative Emerging Markets Ordinary Shares of beneficial interest
and 5 holders of Quantitative Emerging Markets Institutional Shares of
beneficial interest.
Item 27. Indemnification
Article VIII of the Trust's Declaration of Trust provides in relevant
part:
Trustees, Officers, etc.
------------------------
Section 1. The Trust shall indemnify each of its Trustees and
officers (including persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the Trust has any interest
as a shareholder, creditor or otherwise) (hereinafter referred to as a "Covered
Person") against all liabilities and expenses, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of being or having
been such a Covered Person except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in any such action, suit or
other proceeding (a) not to have acted in good faith in the reasonable belief
that such Covered Person's action was in the best interest of the Trust or (b)
to be liable to the Trust or its Shareholders by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office. Expenses, including counsel fees so
incurred by any such Covered Person (but excluding amounts paid in satisfaction
of judgments, in compromise or as fines or penalties), shall be paid from time
to time by the Trust in advance of the final disposition of any such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
Covered Person to repay amounts so paid to the Trust if it is ultimately
determined
<PAGE>
that indemnification of such expenses is not authorized under this Article,
provided, however, that either (a) such Covered Person shall have provided
appropriate security for such undertaking, (b) the Trust shall be insured
against losses arising from any such advance payments or (c) either a majority
of the disinterested Trustees acting on the matter (provided that a majority of
the disinterested Trustees then in office act on the matter), or independent
legal counsel in a written opinion, shall have determined, based upon a review
of readily available facts (as opposed to a full trial type inquiry) that there
is reason to believe that such Covered Person will be found entitled to
indemnification under this Article.
Compromise Payment
- ------------------
Section 2. As to any matter disposed of (whether by a compromise
payment, pursuant to a consent decree or otherwise) without an adjudication by a
court, or by any other body before which the proceeding was brought, that such
Covered Person either (a) did not act in good faith in the reasonable belief
that his action was in the best interests of the Trust or (b) is liable to the
Trust or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office, indemnification shall be provided if (a) approved as in the best
interests of the Trust, after notice that it involves such indemnification, by
at least a majority of the disinterested Trustees acting on the matter (provided
that a majority of the disinterested Trustees then in office act on the matter)
upon a determination, based upon a review of readily available facts (as opposed
to a full trial type inquiry) that such Covered Person acted in good faith in
the reasonable belief that his action was in the best interests of the Trust and
is not liable to the Trust or its Shareholders by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office, or (b) there has been obtained an opinion in
writing of independent legal counsel, based upon a review of readily available
facts (as opposed to a full trial type inquiry) to the effect that such Covered
Person appears to have acted in good faith in the reasonable belief that his
action was in the best interests of the Trust and that such indemnification
would not protect such Person against any liability to the Trust to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Any approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in the best
interests of the Trust or to have been liable to the Trust or its Shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office.
Indemnification Not Exclusive
- -----------------------------
Section 3. The right of indemnification hereby provided shall not be
exclusive of or affect any other rights to which such Covered Person may be
entitled. As used in this Article VIII, the term "Covered Person" shall include
such person's heirs, executors and administrators and a "disinterested Trustee"
is a Trustee who is not an "interested person" of the Trust as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended, (or who has
been exempted from being an "interested person" by any rule, regulation or order
of the Commission) and against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees or officers, and other persons may be entitled by contract or otherwise
under law, nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, officers and controlling persons of the Fund
pursuant to the foregoing provisions or otherwise, the Fund has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
<PAGE>
payment by the Fund of expenses incurred or paid by a trustee, officer or
controlling person of the Fund in the successful defense of any action, suit or
proceeding) is asserted against the Fund by such trustee, officer or controlling
person in connection with the securities being registered, the Fund will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
There is set forth below information as to any other business,
vocation or employment of a substantial nature in which each director or officer
of Quantitative Advisors, Inc., the Registrant's investment adviser (viz. the
"Manager"), is or at any time during the past two fiscal years has been engaged
for his own account or in the capacity of director, officer, employee, partner
or trustee.
Name Business and other connections
- ---- ------------------------------
Willard L. Umphrey: President/Treasurer/Clerk/Director, U.S.
President Boston Insurance Agency, Inc.;
Treasurer President/Treasurer/Director, U.S. Boston
Director Capital Corporation, USB Technology, Inc.;
President/Director, USB Atlantic Associates, Inc.,
USB 95 Acquisition Corp., Waterfront Parking
Corporation; Director/Treasurer, USB Corporation
and U.S. Boston Corporation; Assistant
Secretary/Director, AB&T, Inc.; Director,
Cambridge Diagnostics Ireland Ltd., Pear Tree
Royalty Company, Inc., U.S. Boston Asset
Management Corporation, U.S. Boston Funding
Corporation, U.S. Boston Fiduciary Corporation,
U.S. Boston Institutional Services, Inc.,
Selfcare, Inc.; Partner, U.S. Boston Company, U.S.
Boston Company II, U.S. Boston Company III; U.S.
Boston Company IV; President/Chairman/Trustee,
Quantitative Group of Funds
Leon Okurowski: Director/President, U.S. Boston Corporation,
Clerk USB Corporation and U.S. Boston Asset
Director Management Corporation; Vice
President/Clerk/Director, Waterfront Parking
Corporation; Vice President/Director, U.S. Boston
Capital Corporation; Vice President, U.S. Boston
Insurance Agency, Inc. Director/Treasurer, U.S.
Boston Institutional Services, Inc., AB&T, Inc.;
Director, U.S. Boston Fiduciary Corporation, U.S.
Boston Funding Corporation, USB Technology, Inc.;
Partner, U.S. Boston Company, U.S. Boston Company
II, U.S. Boston Company III, U.S. Boston Company
IV; Treasurer/Vice Chairman/Trustee, Quantitative
Group of Funds
Mark A. Katzoff Clerk, Quantitative Group of Funds
Assistant Clerk
The principal business address of each U.S. Boston affiliate named above is
Lincoln North, Lincoln, Massachusetts 01773. The principal business address of
AB&T is 200 Franklin Street, Boston, Massachusetts 02109.
<PAGE>
Item 29. Principal Underwriter
(a) Not applicable.
(b) The directors and officers of the Registrant's principal
underwriter are:
<TABLE>
<CAPTION>
Positions and Positions and
Offices with Offices with
Name Underwriter Registrant
- ---- ------------- -------------
<S> <C> <C>
Carol A. Higgins Clerk None
Leon Okurowski Vice President Vice President, Treasurer
and Director and Trustee
Willard L. Umphrey President, President, Chairman,
Treasurer and Trustee
and Director
</TABLE>
The principal business address of each person listed above is 55 Old Bedford
Road, Lincoln, Massachusetts 01773.
Item 30. Location of Accounts and Records.
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder include Registrant's investment
advisers, Quantitative Advisors, Inc. and Polaris Capital Management, Inc.;
Registrant's custodian, Investors' Fiduciary Trust Company; and Registrant's
transfer agent and dividend disbursing agent, Quantitative Institutional
Services. The address of Quantitative Advisors, Inc. is 55 Old Bedford Road,
Lincoln, Massachusetts 01773; the address of Quantitative Institutional Services
is 55 Old Bedford Road, Lincoln, Massachusetts 01773; the address of Polaris
Capital Management, Inc. is 125 Summer Street, Boston, Massachusetts 02110; and
the address of Investors' Fiduciary Trust Company is 801 Pennsylvania Ave,
Kansas City, MO 64105.
Item 31. Management Services
None.
<PAGE>
Item 32 Undertakings
(a) Not applicable.
(b) Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of Registrant's latest annual report to
shareholders upon request and without charge.
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust of Quantitative Group of Funds,
as amended, is on file with the Secretary of the Commonwealth of Massachusetts
and notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the registrant acting as an officer and not
individually and that the obligations of or arising out of this instrument are
not binding on any of the Trustees or shareholders individually but are binding
only upon the assets and property of the Registrant.
-----------------
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the Town of Lincoln, and
Commonwealth of Massachusetts on the 29 day of July, 1998.
Quantitative Group of Funds
By___________________________________
Willard L. Umphrey, President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement of Quantitative Group of Funds has been
signed by the following persons in the capacities and on the dates indicated.
_____________________
Robert M. Armstrong Trustee July 29, 1998
_____________________
Edward A. Bond, Jr. Trustee July 29, 1998
_____________________
John M. Bulbrook Trustee July 29, 1998
_____________________
Edward E. Burrows Trustee July 29, 1998
_____________________
Leon Okurowski Trustee July 29, 1998
_____________________
Willard L. Umphrey Trustee July 29, 1998
_____________________
Ron Zwanziger Trustee July 29, 1998
<PAGE>
EXHIBIT 4
QUANTITATIVE ADVISORS, INC.
---------------------------
ADVISORY CONTRACT
-----------------
Advisory Contract ("Contract") dated as of May 18, 1998, between
QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and
POLARIS CAPITAL MANAGEMENT, INC. a Massachusetts corporation (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO TRUST.
(a) Subject always to the control of the trustees (the "Trustees") of
Quantitative Group of Funds, a Massachusetts business trust (the "Trust"), and
the Manager, the Advisor, at its expense, will furnish continuously an
investment program for the Quantitative Foreign Value Fund (the "Fund") of the
Trust. The Advisor will determine what securities shall be purchased, held,
sold or exchanged by the Fund and what portion, if any, of the assets of the
Fund shall be held uninvested and shall, on behalf of the Fund, make changes in
the Fund's investments. In the performance of its duties, the Advisor will
comply with the provisions of the Agreement and Declaration of Trust and By-Laws
of the Trust, as amended, and the stated investment objectives, policies and
restrictions of the Fund as set forth in the then current Prospectus and/or
Statement of Additional Information of the Trust and with other written policies
which the Trustees or the Manager may from time-to-time determine and of which
the Advisor has received notice. In furnishing an investment program to the
Fund and in determining what securities shall be purchased, held, sold or
exchanged by the Fund, the Advisor shall (1) comply in all material respects
with all provisions of applicable law governing its duties and responsibilities
hereunder, including, without limitation, the Investment Company Act of 1940
(the "1940 Act") and the Rules and Regulations thereunder; the Investment
Advisors Act of 1940, and the Rules and Regulations thereunder; the Internal
Revenue Code of 1986, as amended (the "Code"), relating to regulated investment
companies and all Rules and Regulations thereunder; the Insider Trading and
Securities Fraud Enforcement Act of 1988; and such other laws as may be
applicable to its activities as Advisor to the Fund and (2) use its best efforts
to manage the Fund so that the Fund will qualify, and continue to qualify, as a
regulated investment company under Subchapter M of the Code and regulations
issued thereunder. The Advisor shall make its officers and employees available
to the Manager or Trustees from time-to-time at reasonable times to review
investment policies of the Fund and to consult with the Manager or Trustees
regarding the investment affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all necessary
investment and management facilities, including salaries of personnel, required
for it to execute its duties hereunder, (2) keep records relating to the
purchase, sale or current status of portfolio securities, (3) provide clerical
personnel and equipment necessary for the efficient rendering of investment
advice to the Fund, (4) furnish to the Manager such reports and records
regarding the Fund and the Advisor as the Manager or Trustees shall from
time-to-time request, and, (5) upon reasonable notice, review written references
to the Advisor, or its methodology, whether in a Prospectus, Statement of
Additional Information, sales material or otherwise. The Advisor shall have no
obligation with respect to the determination of the Fund's net asset value,
except to provide the Trust's custodian with information as to the securities
held in the Fund's portfolio. The Advisor shall not be obligated to provide
shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of
portfolio investments for the Fund's account with brokers or dealers selected by
the Advisor. In the selection of such brokers or dealers and the placing of such
orders, the Advisor shall use its best efforts to obtain for the Fund the
<PAGE>
most favorable price and execution available, except to the extent that it may
be permitted to pay higher brokerage commissions for brokerage and research
services as described below. In using its best efforts to obtain for the Fund
the most favorable price and execution available, the Advisor, bearing in mind
the Fund's best interests at all times, shall consider all factors it deems
relevant, including by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission, if any,
the timing of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or dealer involved
and the quality of service rendered by the broker or dealer in other
transactions. Subject to such written policies as the Trustees or the Manager
may determine, and of which the Advisor has received notice and which the
Advisor has accepted in writing, the Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Contract or otherwise
solely by reason of its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Advisor and/or the Manager an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Advisor determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the Advisor's and/or Manager's overall
responsibilities with respect to the Trust and to other clients as to which the
Advisor and/or Manager or persons controlled by or under common control with the
Advisor and/or Manager exercise investment discretion. The Advisor agrees that
in connection with purchase or sales of portfolio instruments for the Fund's
account, neither the Advisor nor any officer, director, employee or agent of the
Advisor shall act as principal or receive any commission other than as provided
in Section 3.
(d) The assets of the Fund shall be held by the Trust's custodian in an
account which the Trust has directed the custodian to open. The Advisor shall at
no time have custody or physical control of any of the assets of the Fund. The
Manager shall cause such custodian to provide the Advisor with such information
and reports concerning the Fund or its assets as the Advisor may from time to
time reasonably request and to accept instructions from the Advisor with respect
to such assets and transactions by the Fund in the performance of the Advisor's
duties hereunder. The Advisor shall have no liability or obligation to pay the
cost of such custodian or any of its services.
(e) Advice rendered to the Fund shall be confidential and may not be used
by any shareholder, Trustee, officer, director, employee or agent of the Trust
or of the Manager or by the advisor of any other fund of the Trust. Non-public
information provided to the Manager on a confidential basis regarding the
methodology of the Advisor shall not be made publicly available by the Manager,
except that such information may be disclosed to the Trustees and may be
disclosed to the extent necessary to comply with the federal and state
securities laws and, after notice to the Advisor, upon order of any court or
administrative agency or self regulatory organization of which the Manager or
its affiliates are members.
(f) The Advisor shall not be obligated to pay any expenses of or for the
Fund not expressly assumed by the Advisor pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a shareholder, partner, director, officer or
employee of, or be otherwise interested in, the Advisor, and in any person
controlled by or under common control with the Advisor, and that the Advisor and
any person controlled by or under common control with the Advisor may have an
interest in the Trust. It is also understood that the Advisor and persons
controlled by or under common control with the Advisor have and may have
advisory, management, service or other contracts with other organizations
(including other investment companies and other managed accounts) and persons,
and may have other interests and businesses.
<PAGE>
Nothing in this Contract shall prohibit the Advisor or any of its
affiliates from providing any services for any other person or entity or limit
the services which the Advisor or any such affiliate can provide to any person
or entity, subject to the provisions of the Non-Competition Covenant in Section
11 of the Contract. The Manager understands and agrees that the Advisor and its
affiliates perform investment advisory and investment management services for
various clients other than the Manager and the Trust. The Manager agrees that
the Advisor and its affiliates may give advice and take action in the
performance of duties with respect to any other client which may differ from
advice given, or the timing or nature of action taken, with respect to the Fund.
Nothing in this Contract shall be deemed to impose upon the Advisor any
obligation to purchase or sell or to recommend for purchase or sale for the Fund
any security or other property which the Advisor or any of its affiliates may
purchase or sell for its own account or for the account of any other client, so
long as it continues to be the policy and practice of the Advisor not to favor
or disfavor consistently or consciously any client or class of clients in the
allocation of investment opportunities, so that to the extent practical, such
opportunities will be allocated among clients over a period of time on a fair
and equitable basis.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR.
The Manager will pay to the Advisor, as compensation for the Advisor's
services rendered and for the expenses borne by the Advisor pursuant to Section
1, a fee, computed and paid monthly at the annual rate of (i) 0.35% of the
aggregate average daily net asset value of the Fund for assets in the Fund up to
$30,000,000 and (ii) 0.50% of the aggregate average daily net asset value of the
Fund for assets in the Fund over $30,000,000. Such aggregate average daily net
asset value of the Fund shall be determined by taking an average of all the
determinations of such net asset value during such month at the close of
business on each business day, and for non-business days, the net asset value
determined on the previous business day, during such month while this Contract
is in effect. Such fee shall be payable for each month within 30 days after the
end of each month.
If the Advisor shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO
THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract between the Trust and the Manager is terminated generally, or with
respect to the Fund; and this Contract shall not be amended unless (i) such
amendment is approved at a meeting by an affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Trustees of the Trust who are not interested persons of the Trust or of the
Manager or of the Advisor. Notwithstanding the foregoing, shareholder approval
will not be required for amendments to this Contract if the Fund obtains an
exemptive order from the Securities and Exchange Commission permitting
amendments to this Contract without shareholder approval.
<PAGE>
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall remain
in full force and effect as to the Fund continuously thereafter (unless
terminated automatically as set forth in Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract
as to the Fund by not less than thirty days' written notice delivered or mailed
by registered mail, postage prepaid, to the Advisor, or
(b) The Advisor may at any time terminate this Contract as to the Fund
by not less than one hundred fifty days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager, provided, however, that if the
Manager has violated or breached any material provision of this Contract and has
failed to cure said breach within thirty days of receipt of written notification
of the breach from the Advisor, the Advisor may thereupon terminate this
Contract, or
(c) If (i) the Trustees of the Trust, or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of the Manager or of the Advisor, by vote cast in person at a meeting
called for the purpose of voting on such approval, do not specifically approve
at least annually the continuance of this Contract, then this Contract shall
automatically terminate as to the Fund at the close of business on the second
anniversary of the effective date hereof or the expiration of one year from the
effective date of the last such continuance, whichever is later; provided,
however, that if the continuance of this Contract is submitted to the
shareholders of the Fund for their approval and such shareholders fail to
approve such continuance of this Contract as provided herein, the Advisor may
continue to serve hereunder in a manner consistent with the 1940 Act and the
Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of the
Trust or the Fund, as the case may be, present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Trust or the Fund, as the case may be, entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Trust or the Fund, as the case
may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings defined in the 1940 Act and the Rules and Regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission ("SEC") under said Act; the term "specifically approve at
least annually" shall be construed in a manner consistent with the 1940 Act and
the Rules and Regulations thereunder; and the term "brokerage and research
services" shall have the meaning given by the Securities Exchange Act of 1934
and the Rules and Regulations thereunder.
7. NONLIABILITY OF ADVISOR.
<PAGE>
Notwithstanding any other agreement to the contrary, in the absence of
willful misfeasance, bad faith or gross negligence on the part of the Advisor,
its partners, officers, directors, employees or agents or reckless disregard of
the Advisor's obligations and duties hereunder, neither the Advisor nor its
officers, directors, employees or agents shall be subject to any liability to
the Trust or to the Manager, or to any shareholder of the Trust, for any act or
omission in the course of, or connected with, rendering services hereunder.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all
securities in which assets of the Fund may be invested from time to time and
shall not be required to seek or take instructions from the Manager or the
Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not
violate any obligation by which it is bound, whether arising by contract,
operation of law or otherwise, and that it has the power, capacity and authority
to enter into this Contract and to perform in accordance herewith. In addition,
the Manager represents, warrants and covenants to the Advisor that it has the
power, capacity and authority to commit the Trust to this Contract; that a true
and complete copy of the Agreement and Declaration of Trust and By-Laws of the
Trust and the stated objectives, policies and restrictions of the Fund have been
delivered to the Advisor; and that true and complete copies of every amendment
thereto will be delivered to the Advisor as promptly as practicable after the
adoption thereof. The Manager agrees that notwithstanding any other provision of
this Contract to the contrary, the Advisor will not be bound by any such
amendment until the Advisor has received a copy thereof and has had a reasonable
opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its
partners, officers, employees and agents and each person, if any, who controls
the Advisor within the meaning of any applicable law (each individually an
"Indemnified Party") from and against all losses, claims, damages, liabilities
and expenses (including, without limitation, reasonable fees and other expenses
of an Indemnified Party's counsel, other than attorneys' fees and costs in
relation to the preparation of this Contract; each party bearing responsibility
for its own such costs and fees), joint or several, (other than liabilities,
losses, expenses, attorneys' fees and costs or damages arising from the failure
of the Advisor to perform its responsibilities hereunder or claims arising from
its acts or failure to act in performing this Contract) to which the Advisor or
any other Indemnified Party may become subject under any federal or state law as
a result of any failure of the Manager or, if caused by any failure of the
Manager, of the Trust or the Fund, to disclose a material fact, or any omission
by the Manager, or, if caused by any failure of the Manager, of the Trust or the
Fund, to disclose a material fact, in any document relating to the Trust or the
Fund, except any failure or omission caused solely by (i) the incorporation in
any such document of information relating to the Advisor which is furnished to
the Manager in writing by or with the consent of the Advisor expressly for
inclusion in such document or (ii) a breach, of which the Manager was not aware,
by the Advisor of its duties hereunder. With respect to any claim for which an
Indemnified Party is entitled to indemnity hereunder, the Manager shall assume
the reasonable expenses and costs (including any reasonable attorneys' fees and
costs) of the Indemnified Party or investigating and/or defending any claim
asserted or threatened by any party, subject always to the Manager first
receiving a written undertaking from the Indemnified Party to repay any amounts
paid on its behalf in the event and to the extent of any subsequent
determination that the Indemnified Party was not entitled to indemnification
hereunder with respect of such claim. The Manager shall pay such expenses and
costs promptly upon presentment of invoices by the Indemnified Party.
(c) No public reference to, or description of, the Advisor or its
methodology or work shall be made by the Manager or the Trust, whether in a
prospectus, Statement of Additional Information
<PAGE>
or otherwise, unless the Manager provides the Advisor with a reasonable
opportunity to review any such reference or description prior to the first use
of such reference or description.
(d) The Manager covenants to the Advisor that, during the term of this
Agreement, the Trust and the Manager shall not knowingly solicit any
multiemployer plan subject to the Taft-Hartley Act or any governmental plan
described in Sections 401(a)(24) or 818(a)(6) of the Code (or portions thereof
and/or any group of such plans and/or trusts) (collectively "Plan Investors") to
purchase or hold shares of beneficial interest in the Fund or knowingly solicit
any advisor for a Plan Investor to purchase shares of beneficial interest in
the Fund for such Plan Investors or to advise such Plan Investors to purchase
Fund shares. The Manager acknowledges that the Advisor is party to a non-
competition covenant that restricts the Advisor's ability to provide investment
advisory services, directly or indirectly, to any such Plan Investors and,
accordingly, that this covenant is a material provision of this Contract.
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not
violate any obligation by which it is bound, whether arising by contract,
operation of law, or otherwise, and that it has the power, capacity and
authority to enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that
the Advisor or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Advisor from serving as investment
advisor pursuant to this Contract; or (2) becomes aware that it the subject of
an administrative proceeding or enforcement action by the SEC or any other
regulatory authority. The Advisor further agrees to notify the Manager
immediately of any material fact known to the Advisor respecting or relating to
the Advisor that is not contained in the Trust's Registration Statement
regarding the Fund, or any amendment or supplement thereto, but that is required
to be disclosed therein, and of any statement contained therein that becomes
untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect
to its services to the Fund as are required under the 1940 Act, and rules
adopted thereunder, and by other applicable legal provisions, and to preserve
such records for the periods and in the manner required by that Section, and
those rules and legal provisions. The Advisor also agrees that records it
maintains and preserves pursuant to Rule 31a-1 and Rule 31a-2 under the 1940 Act
and otherwise in connection with its services hereunder are the property of the
Trust and will be surrendered promptly to the Trust upon its request. The
Advisor further agrees that it will furnish to regulatory authorities having the
requisite authority any information or reports in connection with its services
hereunder which may be requested in order to determine whether the operations of
the Fund are being conducted in accordance with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly
representations regarding the compliance of its' employees with the Advisor's
code of ethics governing personal securities transactions. The Advisor shall
provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the
Fund, their partners, officers, employees and agents and each person, if any,
who controls the Manager or Fund within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation, reasonable
fees and other expenses of an Indemnified Party's counsel, other than attorneys'
fees and costs in relation to the preparation of this Contract; each party
bearing responsibility for its own such costs and fees), joint or several,
(other than liabilities, losses, expenses, attorneys' fees and costs or damages
arising from the failure of the Manager to perform its responsibilities
hereunder or claims arising from its acts or failure to act in performing this
Contract) arising from Advisor's (or its respective agents and employees)
failure
<PAGE>
to perform its duties and assume its obligations hereunder, including any action
or claim against the Manager based on any alleged untrue statement or
misstatement of a material fact made or provided in writing by or with the
consent of Advisor contained in any registration statement, prospectus,
shareholder report or other information or materials relating to the Fund and
shares issued by the Fund, or the failure or alleged failure to state a material
fact therein required to be stated in order that the statements therein are not
misleading, which fact should have been made known or provided by the Advisor to
the Manager. With respect to any claim for which an Indemnified Party is
entitled to indemnity hereunder, the Advisor shall assume the reasonable
expenses and costs (including any reasonable attorneys' fees and costs) of the
Indemnified Party of investigating and/or defending any claim asserted or
threatened by any party, subject always to the Advisor first receiving a written
undertaking from the Indemnified Party to repay any amounts paid on its behalf
in the event and to the extent of any subsequent determination that the
Indemnified Party was not entitled to indemnification hereunder with respect of
such claim. The Advisor shall pay such expenses and costs promptly upon
presentment of invoices by the Indemnified Party.
11. NON-COMPETITION COVENANT.
(a) For a period of two years from the date hereof, the Advisor shall
not, and the Advisor shall use its best efforts to cause its affiliates not to,
directly or indirectly, whether as owner, part-owner shareholder, partner,
member, trustee, director, officer, employee, agent or consultant, or in any
other capacity on behalf of itself or any firm, corporation or other business
organization other than the Fund, provide any advisory services to any
registered investment company offered within the United States with the
investment purpose of investing exclusively in non-US securities.
(b) During the term of this Contract, the Advisor shall not, and the
Advisor shall use its best efforts to cause its affiliates not to, directly or
indirectly, whether as owner, part-owner shareholder, partner, member, trustee,
director, officer, employee, agent or consultant, or in any other capacity on
behalf of itself or any firm, corporation or other business organization other
than the Fund, knowingly solicit any shareholder of the Fund, or knowingly
engage in any other activity, for the purpose (which need not be the sole or
primary purpose), or with the intended effect, of causing any shareholder to
withdraw any assets from the Fund (referred to herein as the "Shareholder
Competitive Activity"). Shareholder Competitive Activity shall not include any
activities undertaken by the Advisor pursuant to the Solicitor's and
Representatives Agreement dated May 18, 1998 between the Manager and the
Advisor.
(c) In addition to, and not in limitation of, the provisions of
Sections11(a) and 11(b) hereof, the Advisor agrees that, for the benefit of the
Fund and the Manager, from and after the termination of this Agreement and
continuing for six months following such termination, the Advisor shall not
knowingly, and the Advisor shall use its best efforts to cause its affiliates
not to, directly or indirectly, whether as owner, part-owner shareholder,
partner, member, trustee, director, officer, employee, agent or consultant, or
in any other capacity on behalf of itself of any firm, corporation or other
business organization other than the Fund engage in any Shareholder Competitive
Activity; provided, however, that upon a termination of this Contract under
Section 5(a) without Cause (as defined in Section 11(d) below) or under Section
5(b) due to a breach of this Contract by the Manager, this Section 11(c) shall
be void and of no further force and effect.
(d) For the purposes of Section 11(b) above, "Cause" shall mean any of
the following:
(i) The Advisor has engaged in any criminal act which is or
involves either (A) a violation of federal or state securities laws or
regulations or (B) a crime involving dishonesty or other serious felony
offense and has been convicted (whether or not subject to appeal) or pled
nolo contendre (or any similar plea) to any criminal offense in connection
with or relating to such act; or
<PAGE>
(ii) The Advisor has violated or breached any material provision
of this Contract and has failed to cure said breach within thirty days of
receipt of written notification of the breach from the Manager, and the
Manager, acting in good faith, has determined that harm that is not
immaterial or insignificant has or is likely to occur to the Trust, the
Fund or the Manager as a result of such violation, breach or activity.
(e) The Advisor, the Fund, and the Manager agree that the periods of
time and the limited geographic area applicable to the covenants of this Section
11 are reasonable in view of: (i) the Advisor's receipt of the payments
specified in Section 3 above; (ii) the geographic scope and nature of the
business in which the Fund is engaged; (iii) the Advisor's knowledge of the
Fund's businesses; and (iv) the parties' relative relationships with the
shareholders of the Fund. However, if such period or such area should be
adjudged unreasonable in any judicial proceeding, then the period of time shall
be reduced by the number of months or such area shall be reduced by such portion
of such area, or both, as are deemed unreasonable, so that this covenant may be
enforced in such maximum area and during such maximum period of time as are
adjudged to be reasonable.
<PAGE>
12. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time
to time while the Advisor provides services pursuant to this Contract) or any
derivative thereof or logo associated with that name is the valuable property of
the Trust and/or its affiliates, and that the Advisor has the right to use such
name (or derivative or logo) only with the approval of the Manager and only so
long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination
of this Contract the Advisor shall forthwith cease to use such name (or
derivative or logo).
It is further understood that the name of the Advisor and the name "Cloud
Hill Conference Companies" (as they may be changed from time to time while the
Advisor provides services pursuant to this Contract) or any derivative thereof
or logo associated with those names is the valuable property of the Advisor
and/or its affiliates, and that the Trust has the right to use such names (or
derivatives or logos) only with the approval of the Advisor, which shall not be
unreasonably withheld, and only so long as the Advisor is Advisor to the Trust
and/or the Fund.
13. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in
accordance with, the substantive laws of The Commonwealth of Massachusetts
without regard to its principles of conflicts of laws, except to the extent such
laws shall be preempted by the Investment Company Act of 1940 or by other
applicable laws.
14. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an
independent contractor and, except as otherwise expressly provided herein, shall
have no authority to act for, bind or represent the Fund in any way or otherwise
be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their
affiliates, agents and employees shall not be deemed agents of the Advisor and
shall have no authority to bind the Advisor.
15. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to
any action or proceedings in respect of which indemnification may be sought
hereunder, the party seeking indemnification shall promptly notify the other
party thereof. The party from whom indemnification is sought shall not be
liable hereunder for any settlement of any action or claim effected without its
written consent, which consent shall not be reasonably withheld.
(c) This Contract may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and POLARIS CAPITAL
MANAGEMENT, INC. have each caused this instrument to be signed in duplicate in
its behalf, all as of the day and year first above written.
QUANTITATIVE ADVISORS, INC.
By___________________________
Willard L. Umphrey
Chairman
POLARIS CAPITAL
MANAGEMENT, INC.
By__________________________
Bernard R. Horn, Jr.
President
<PAGE>
EXHIBIT 4
QUANTITATIVE GROUP OF FUNDS
---------------------------
AMENDMENT TO MANAGEMENT CONTRACT
--------------------------------
Amendment dated May 18, 1998 to Management Contract dated April 17, 1985,
as amended, between QUANTITATIVE GROUP OF FUNDS, formerly U.S. Boston Investment
Company, a Massachusetts business trust (the "Fund"), and QUANTITATIVE ADVISORS,
INC., formerly U.S. Boston Investment Management Corporation, a Massachusetts
corporation (the "Manager").
Witnesseth:
Whereas, the Fund desires the Manager to manage a new series, the
Quantitative Foreign Value Fund, and the Fund and the Manager desire to adjust
as to the Quantitative Foreign Value Fund only the fee payable to Manager under
the Management Contract; and
Now, therefore, in consideration of the mutual covenants set forth in the
Management Contract, the Fund and the Manager agree that the Management Contract
shall be amended as follows:
1. By striking the first sentence of the first paragraph of Section 3 and
replacing it with the following:
The Fund will pay to the Manager as compensation for the Manager's services
rendered, for the facilities furnished and for the expenses borne by the Manager
pursuant to Section 1, a fee, computed and paid monthly at the annual rate of
(i) 0.75% of the average daily net asset value of the Quantitative Growth and
Income Fund, (ii) 0.80% of the average daily net asset value of the
Quantitative Emerging Markets Fund and (iii) 1.00% of the average daily net
asset value of each other Series.
2. By striking the first sentence of the second paragraph of Section 3
and replacing it with the following:
In the event that the expenses of the Quantitative Small Cap Fund,
Quantitative Growth and Income Fund or Quantitative International Equity Fund
for any fiscal year exceed 2% of such Series' average net assets, the
compensation due the Manager with respect to such Series for such year shall be
reduced and, if necessary, the Manager shall assume expenses of the Series, to
the extent required to reduce the Series' expenses to 2% of average net assets.
With respect to the Quantitative Foreign Value Fund, this Amendment shall
not become effective until approved by an affirmative vote of a majority of the
outstanding voting securities of the Quantitative Foreign Value Fund.
IN WITNESS WHEREOF, QUANTITATIVE GROUP OF FUNDS and QUANTITATIVE ADVISORS,
INC. have each caused this instrument to be signed in duplicate in its behalf by
its President or a Vice President thereunto duly authorized on this 18th day of
May, 1998.
QUANTITATIVE GROUP OF FUNDS QUANTITATIVE ADVISORS, INC.
By:____________________________ By:____________________________
President President
<PAGE>
EXHIBIT 5
QUANTITATIVE GROUP OF FUNDS
---------------------------
AMENDMENT TO TERMS AND CONDITIONS OF DISTRIBUTION AGREEMENT
-----------------------------------------------------------
Amendment dated May 18, 1998 to the Terms and Conditions of the
Distribution Agreement dated April 17, 1985, between QUANTITATIVE GROUP OF
FUNDS, formerly U.S. Boston Investment Company, a Massachusetts business trust
(the "Trust"), and U.S. BOSTON CAPITAL CORPORATION, a Massachusetts corporation
("U.S. Boston Capital").
Witnesseth:
Whereas, the Trust desires U.S. Boston Capital to distribute a new series,
the Quantitative Foreign Value Fund;
Now, therefore, in consideration of the mutual covenants set forth in the
Distribution Agreement, the Trust and U.S. Boston Capital agree that: (i) the
Terms and Conditions of the Distribution Agreement shall be amended as follows:
1. By adding to the end of the second paragraph of Section 2 of the Terms
and Conditions of the Distribution Agreement the following:
The limitation set forth in this Section 2 shall not apply to the
Quantitative Mid Cap Fund, or Quantitative Foreign Value Fund, or Quantitative
Emerging Markets Fund.
and (ii) the Distribution Plan be amended as follows:
1. By replacing the first sentence of Section 1 of the Distribution Plan
with the following:
The Trust will pay to U.S. BOSTON CAPITAL COPORATION, a Massachusetts
corporation which acts a principal distributor of the Trust's shares (the
"Distributor") a monthly fee at the annual rate set forth in Exhibit A attached
hereto for each series of the Trust ("Series") of the average net asset value of
Ordinary Shares held in shareholder accounts opened during the period the Plan
is in effect ("Qualified Accounts"), as determined at the close of each business
day during the month, for acting as principal distributor. The fee computed for
each Series shall be paid from the assets of such Series.
<PAGE>
2. By adding the following Exhibit A to the Distribution Plan:
EXHIBIT A
to Distribution Plan
Quantitative Group of Funds
<TABLE>
<CAPTION>
Annual
Fund Name Fee
- --------- ------
<S> <C>
Quantitative Small Cap Fund 0.50%
Quantitative Mid Cap Fund 0.25%
Quantitative Growth and Income Fund 0.50%
Quantitative International Equity Fund 0.50%
Quantitative Foreign Value Fund 0.25%
Quantitative Emerging Markets Fund 0.50%
</TABLE>
IN WITNESS WHEREOF, QUANTITATIVE GROUP OF FUNDS and U.S. BOSTON
CAPITAL CORPORATION have each caused this instrument to be signed in duplicate
in its behalf by its President or a Vice President thereunto duly authorized on
this 18th day of May, 1998.
QUANTITATIVE GROUP OF FUNDS U.S. BOSTON CAPITAL
CORPORATION
By:____________________________ By:____________________________
President President
<PAGE>
EXHIBIT 10
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 18 to the Registration
Statement on Form N-1A (the "Registration Statement") of our report dated May 5,
1998, relating to the financial statements and financial highlights of
Quantitative Group of Funds, which appears in such Statement of Additional
Information. We also consent to the reference to us under the heading
"Financial Highlights" in the Prospectus, which constitutes part of this
Registration Statement, and under the heading "Experts" in the Statement of
Additional Information.
PricewaterhouseCoopers LLP
Boston, MA
July 29, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000722885
<NAME> QUANTITATIVE GROUP OF FUNDS
<SERIES>
<NUMBER> 1
<NAME> QUANTITATIVE GROWTH AND INCOME FUND ORD SHS.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 46,710
<INVESTMENTS-AT-VALUE> 68,305
<RECEIVABLES> 131
<ASSETS-OTHER> 14
<OTHER-ITEMS-ASSETS> 1,801
<TOTAL-ASSETS> 70,251
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 131
<TOTAL-LIABILITIES> 131
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 43,087
<SHARES-COMMON-STOCK> 3,185
<SHARES-COMMON-PRIOR> 2,842
<ACCUMULATED-NII-CURRENT> 7
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,864
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,011
<NET-ASSETS> 70,120
<DIVIDEND-INCOME> 933
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 927
<NET-INVESTMENT-INCOME> 7
<REALIZED-GAINS-CURRENT> 8,864
<APPREC-INCREASE-CURRENT> 14,011
<NET-CHANGE-FROM-OPS> 22,876
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 125
<DISTRIBUTIONS-OF-GAINS> 5,344
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 411
<NUMBER-OF-SHARES-REDEEMED> (322)
<SHARES-REINVESTED> 254
<NET-CHANGE-IN-ASSETS> 25,322
<ACCUMULATED-NII-PRIOR> 232
<ACCUMULATED-GAINS-PRIOR> 4,161
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 426
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 954
<AVERAGE-NET-ASSETS> 54,815
<PER-SHARE-NAV-BEGIN> 15.22
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 7.61
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 3.64
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.85
<EXPENSE-RATIO> .017
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000722885
<NAME> QUANTITATIVE GROUP OF FUNDS
<SERIES>
<NUMBER> 4
<NAME> QUANTITATIVE INTERNATIONAL EQUITY FUND ORD SHS.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 29,322
<INVESTMENTS-AT-VALUE> 33,834
<RECEIVABLES> 162
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 4,204
<TOTAL-ASSETS> 38,209
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,299
<TOTAL-LIABILITIES> 4,299
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,841
<SHARES-COMMON-STOCK> 2,608
<SHARES-COMMON-PRIOR> 2,485
<ACCUMULATED-NII-CURRENT> 204
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 221
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,313
<NET-ASSETS> 33,190
<DIVIDEND-INCOME> 827
<INTEREST-INCOME> 22
<OTHER-INCOME> 0
<EXPENSES-NET> 645
<NET-INVESTMENT-INCOME> 204
<REALIZED-GAINS-CURRENT> 221
<APPREC-INCREASE-CURRENT> 3,313
<NET-CHANGE-FROM-OPS> 3,738
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 285
<DISTRIBUTIONS-OF-GAINS> 566
<DISTRIBUTIONS-OTHER> 269
<NUMBER-OF-SHARES-SOLD> 466
<NUMBER-OF-SHARES-REDEEMED> (365)
<SHARES-REINVESTED> 103
<NET-CHANGE-IN-ASSETS> 4,740
<ACCUMULATED-NII-PRIOR> 33
<ACCUMULATED-GAINS-PRIOR> 1,883
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 311
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 671
<AVERAGE-NET-ASSETS> 29,505
<PER-SHARE-NAV-BEGIN> 11.03
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 1.30
<PER-SHARE-DIVIDEND> 0.11
<PER-SHARE-DISTRIBUTIONS> 0.21
<RETURNS-OF-CAPITAL> .05
<PER-SHARE-NAV-END> 11.97
<EXPENSE-RATIO> .022
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000722885
<NAME> QUANTITATIVE GROUP OF FUNDS
<SERIES>
<NUMBER> 5
<NAME> QUANTITATIVE INTERNATIONAL EQUITY FUND INST. SHS.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 29,322
<INVESTMENTS-AT-VALUE> 33,834
<RECEIVABLES> 162
<ASSETS-OTHER> 9
<OTHER-ITEMS-ASSETS> 4,204
<TOTAL-ASSETS> 38,209
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,299
<TOTAL-LIABILITIES> 4,299
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,841
<SHARES-COMMON-STOCK> 145
<SHARES-COMMON-PRIOR> 159
<ACCUMULATED-NII-CURRENT> 204
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 221
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,313
<NET-ASSETS> 33,190
<DIVIDEND-INCOME> 827
<INTEREST-INCOME> 22
<OTHER-INCOME> 0
<EXPENSES-NET> 645
<NET-INVESTMENT-INCOME> 204
<REALIZED-GAINS-CURRENT> 221
<APPREC-INCREASE-CURRENT> 3,313
<NET-CHANGE-FROM-OPS> 3,738
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 28
<DISTRIBUTIONS-OF-GAINS> 30
<DISTRIBUTIONS-OTHER> 22
<NUMBER-OF-SHARES-SOLD> 5
<NUMBER-OF-SHARES-REDEEMED> (27)
<SHARES-REINVESTED> 8
<NET-CHANGE-IN-ASSETS> 4,740
<ACCUMULATED-NII-PRIOR> 33
<ACCUMULATED-GAINS-PRIOR> 1,883
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 311
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 671
<AVERAGE-NET-ASSETS> 1,681
<PER-SHARE-NAV-BEGIN> 11.10
<PER-SHARE-NII> 0.14
<PER-SHARE-GAIN-APPREC> 1.28
<PER-SHARE-DIVIDEND> 0.20
<PER-SHARE-DISTRIBUTIONS> 0.21
<RETURNS-OF-CAPITAL> .05
<PER-SHARE-NAV-END> 11.95
<EXPENSE-RATIO> .017
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000722885
<NAME> QUANTITATIVE GROUP OF FUNDS
<SERIES>
<NUMBER> 6
<NAME> QUANTITATIVE GROWTH AND INCOME FUND INST. SHS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 46,710
<INVESTMENTS-AT-VALUE> 68,305
<RECEIVABLES> 131
<ASSETS-OTHER> 14
<OTHER-ITEMS-ASSETS> 1,801
<TOTAL-ASSETS> 70,251
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 131
<TOTAL-LIABILITIES> 131
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 43,087
<SHARES-COMMON-STOCK> 179
<SHARES-COMMON-PRIOR> 101
<ACCUMULATED-NII-CURRENT> 7
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,864
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,011
<NET-ASSETS> 70,120
<DIVIDEND-INCOME> 933
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 927
<NET-INVESTMENT-INCOME> 7
<REALIZED-GAINS-CURRENT> 8,864
<APPREC-INCREASE-CURRENT> 14,011
<NET-CHANGE-FROM-OPS> 22,876
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16
<DISTRIBUTIONS-OF-GAINS> 186
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 86
<NUMBER-OF-SHARES-REDEEMED> (18)
<SHARES-REINVESTED> 11
<NET-CHANGE-IN-ASSETS> 25,322
<ACCUMULATED-NII-PRIOR> 232
<ACCUMULATED-GAINS-PRIOR> 4,161
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 426
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 954
<AVERAGE-NET-ASSETS> 2,119
<PER-SHARE-NAV-BEGIN> 15.24
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 7.60
<PER-SHARE-DIVIDEND> 0.17
<PER-SHARE-DISTRIBUTIONS> 3.64
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.84
<EXPENSE-RATIO> .012
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000722885
<NAME> QUANTITATIVE GROUP OF FUNDS
<SERIES>
<NUMBER> 7
<NAME> QUANTITATIVE NUMERIC FUND ORD. SHS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 59,917
<INVESTMENTS-AT-VALUE> 72,084
<RECEIVABLES> 2,613
<ASSETS-OTHER> 21
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 74,719
<PAYABLE-FOR-SECURITIES> 668
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 888
<TOTAL-LIABILITIES> 1,557
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61,294
<SHARES-COMMON-STOCK> 3,758
<SHARES-COMMON-PRIOR> 3,799
<ACCUMULATED-NII-CURRENT> (915)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,413
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,992
<NET-ASSETS> 73,162
<DIVIDEND-INCOME> 331
<INTEREST-INCOME> 69
<OTHER-INCOME> 0
<EXPENSES-NET> 1,315
<NET-INVESTMENT-INCOME> (915)
<REALIZED-GAINS-CURRENT> 2,413
<APPREC-INCREASE-CURRENT> 20,992
<NET-CHANGE-FROM-OPS> 22,490
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 574
<DISTRIBUTIONS-OF-GAINS> 8,534
<DISTRIBUTIONS-OTHER> 99
<NUMBER-OF-SHARES-SOLD> 356
<NUMBER-OF-SHARES-REDEEMED> (948)
<SHARES-REINVESTED> 550
<NET-CHANGE-IN-ASSETS> 6,820
<ACCUMULATED-NII-PRIOR> 694
<ACCUMULATED-GAINS-PRIOR> 21,319
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 712
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,363
<AVERAGE-NET-ASSETS> 64,328
<PER-SHARE-NAV-BEGIN> 15.04
<PER-SHARE-NII> (0.23)
<PER-SHARE-GAIN-APPREC> 5.60
<PER-SHARE-DIVIDEND> 0.16
<PER-SHARE-DISTRIBUTIONS> 2.45
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.80
<EXPENSE-RATIO> .019
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000722885
<NAME> QUANTITATIVE GROU OF FUNDS
<SERIES>
<NUMBER> 8
<NAME> QUANTITATIVE NUMERIC FUND INST. SHS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 59,917
<INVESTMENTS-AT-VALUE> 72,084
<RECEIVABLES> 2,613
<ASSETS-OTHER> 21
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 74,719
<PAYABLE-FOR-SECURITIES> 668
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 888
<TOTAL-LIABILITIES> 1,557
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 61,294
<SHARES-COMMON-STOCK> 342
<SHARES-COMMON-PRIOR> 592
<ACCUMULATED-NII-CURRENT> (915)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,413
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,992
<NET-ASSETS> 73,162
<DIVIDEND-INCOME> 331
<INTEREST-INCOME> 69
<OTHER-INCOME> 0
<EXPENSES-NET> 1,315
<NET-INVESTMENT-INCOME> (915)
<REALIZED-GAINS-CURRENT> 2,413
<APPREC-INCREASE-CURRENT> 20,992
<NET-CHANGE-FROM-OPS> 22,490
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 122
<DISTRIBUTIONS-OF-GAINS> 868
<DISTRIBUTIONS-OTHER> 10
<NUMBER-OF-SHARES-SOLD> 76
<NUMBER-OF-SHARES-REDEEMED> (361)
<SHARES-REINVESTED> 34
<NET-CHANGE-IN-ASSETS> 6,820
<ACCUMULATED-NII-PRIOR> 694
<ACCUMULATED-GAINS-PRIOR> 21,319
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 712
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,363
<AVERAGE-NET-ASSETS> 7,017
<PER-SHARE-NAV-BEGIN> 15.55
<PER-SHARE-NII> (0.15)
<PER-SHARE-GAIN-APPREC> 5.79
<PER-SHARE-DIVIDEND> 0.34
<PER-SHARE-DISTRIBUTIONS> 2.45
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.40
<EXPENSE-RATIO> .014
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000722885
<NAME> QUANTITATIVE GROUP OF FUNDS
<SERIES>
<NUMBER> 9
<NAME> QUANTITATIVE FOREIGN FRONTIER FUND ORD. SHS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 8,897
<INVESTMENTS-AT-VALUE> 10,177
<RECEIVABLES> 13
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 785
<TOTAL-ASSETS> 10,983
<PAYABLE-FOR-SECURITIES> 691
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 50
<TOTAL-LIABILITIES> 741
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,483
<SHARES-COMMON-STOCK> 1,201
<SHARES-COMMON-PRIOR> 1,088
<ACCUMULATED-NII-CURRENT> (39)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,089)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 191
<NET-ASSETS> 10,243
<DIVIDEND-INCOME> 221
<INTEREST-INCOME> 13
<OTHER-INCOME> 0
<EXPENSES-NET> 272
<NET-INVESTMENT-INCOME> (39)
<REALIZED-GAINS-CURRENT> (2,089)
<APPREC-INCREASE-CURRENT> 191
<NET-CHANGE-FROM-OPS> (1,937)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 308
<NUMBER-OF-SHARES-REDEEMED> (195)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,021)
<ACCUMULATED-NII-PRIOR> (40)
<ACCUMULATED-GAINS-PRIOR> (129)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 86
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 285
<AVERAGE-NET-ASSETS> 9,669
<PER-SHARE-NAV-BEGIN> 9.24
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> (1.50)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.70
<EXPENSE-RATIO> .027
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000722885
<NAME> QUANTITATIVE GROUP OF FUNDS
<SERIES>
<NUMBER> 10
<NAME> QUANTITATIVE FOREIGN FRONTIER FUND INST. SHS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 8,897
<INVESTMENTS-AT-VALUE> 10,177
<RECEIVABLES> 13
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 785
<TOTAL-ASSETS> 10,983
<PAYABLE-FOR-SECURITIES> 691
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 50
<TOTAL-LIABILITIES> 741
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,483
<SHARES-COMMON-STOCK> 129
<SHARES-COMMON-PRIOR> 131
<ACCUMULATED-NII-CURRENT> (39)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,089)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 191
<NET-ASSETS> 10,243
<DIVIDEND-INCOME> 221
<INTEREST-INCOME> 13
<OTHER-INCOME> 0
<EXPENSES-NET> 272
<NET-INVESTMENT-INCOME> (39)
<REALIZED-GAINS-CURRENT> (2,089)
<APPREC-INCREASE-CURRENT> 191
<NET-CHANGE-FROM-OPS> (1,937)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2
<NUMBER-OF-SHARES-REDEEMED> (4)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,021)
<ACCUMULATED-NII-PRIOR> (40)
<ACCUMULATED-GAINS-PRIOR> (129)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 86
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 285
<AVERAGE-NET-ASSETS> 1,137
<PER-SHARE-NAV-BEGIN> 9.27
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> (1.53)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.76
<EXPENSE-RATIO> .022
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000722885
<NAME> QUANTITATIVE GROUP OF FUNDS
<SERIES>
<NUMBER> 11
<NAME> QUANTITATIVE NUMERIC II FUND ORD. SHS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 13,769
<INVESTMENTS-AT-VALUE> 16,745
<RECEIVABLES> 4
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 16,753
<PAYABLE-FOR-SECURITIES> 395
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51
<TOTAL-LIABILITIES> 446
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,958
<SHARES-COMMON-STOCK> 965
<SHARES-COMMON-PRIOR> 650
<ACCUMULATED-NII-CURRENT> (63)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,420
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,235
<NET-ASSETS> 16,307
<DIVIDEND-INCOME> 110
<INTEREST-INCOME> 19
<OTHER-INCOME> 0
<EXPENSES-NET> 192
<NET-INVESTMENT-INCOME> (63)
<REALIZED-GAINS-CURRENT> 2,420
<APPREC-INCREASE-CURRENT> 2,235
<NET-CHANGE-FROM-OPS> 4,591
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 17,582
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 323
<NUMBER-OF-SHARES-REDEEMED> (162)
<SHARES-REINVESTED> 154
<NET-CHANGE-IN-ASSETS> 7,213
<ACCUMULATED-NII-PRIOR> 63
<ACCUMULATED-GAINS-PRIOR> 1,309
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 123
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 241
<AVERAGE-NET-ASSETS> 11,713
<PER-SHARE-NAV-BEGIN> 13.44
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> 6.06
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 3.37
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.05
<EXPENSE-RATIO> .016
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000722885
<NAME> QUANTITATIVE GROUP OF FUNDS
<SERIES>
<NUMBER> 12
<NAME> QUANTITATIVE NUMERIC II FUND INST. SHS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 13,769
<INVESTMENTS-AT-VALUE> 16,745
<RECEIVABLES> 4
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 16,753
<PAYABLE-FOR-SECURITIES> 395
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51
<TOTAL-LIABILITIES> 446
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,958
<SHARES-COMMON-STOCK> 51
<SHARES-COMMON-PRIOR> 27
<ACCUMULATED-NII-CURRENT> (63)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,420
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,235
<NET-ASSETS> 16,307
<DIVIDEND-INCOME> 110
<INTEREST-INCOME> 19
<OTHER-INCOME> 0
<EXPENSES-NET> 192
<NET-INVESTMENT-INCOME> (63)
<REALIZED-GAINS-CURRENT> 2,420
<APPREC-INCREASE-CURRENT> 2,235
<NET-CHANGE-FROM-OPS> 4,591
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 7,604
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24
<NUMBER-OF-SHARES-REDEEMED> (8)
<SHARES-REINVESTED> 8
<NET-CHANGE-IN-ASSETS> 7,213
<ACCUMULATED-NII-PRIOR> 63
<ACCUMULATED-GAINS-PRIOR> 1,309
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 123
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 241
<AVERAGE-NET-ASSETS> 609
<PER-SHARE-NAV-BEGIN> 13.55
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 6.12
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 3.37
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.24
<EXPENSE-RATIO> .014
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
